ProMetic Life Sciences has a huge upside, Canaccord Genuity says

Lengthening timelines for the commercialization of its drug Ryplazim are a negative for ProMetic Life Sciences (ProMetic Life Sciences Stock Quote, Chart, News: TSX:PLI), says Neil Maruoka of Canaccord Genuity. Nevertheless, the analyst sees huge potential in PLI. In an update to clients on Thursday, Maruoka has maintained his “Buy” rating and $2.00 target price, representing a projected 12-month return of 308.2 per cent at the time of publication.

Pharma company ProMetic hosted a conference call this morning to provide an update on its corporate action plan, but the call left things less than clear as to the progress on its Biologics License Application (BLA) to the FDA for Ryplazim, says Maruoka.

The analyst came away from the call feeling like FDA process validation runs could be delayed by two to three months beyond ProMetic’s earlier target of this summer. That would put a potential FDA approval into the first half of next year, meaning that ProMetic will need to raise capital or pursue non-dilutive funding, the analyst contends.

“We believe that the extended timelines to the potential commercialization of the company’s first major drug is a clear negative, extending the company’s elevated cash burn well into next year. While we continue to believe that Ryplazim ultimately has a good chance of approval, we nonetheless believe operational risks continue to increase for ProMetic,” he says.

“We believe that the key risk for ProMetic remains its cash burn. While a Priority Review voucher likely has some value and there is the potential for non-dilutive licensing deals, we are nonetheless looking for a reduced burn rate in 2018,” Maruoka adds.

The analyst sees PLI generating EBITDA in 2018 of negative $67.7 million on sales of $55.2 million, followed by EBITDA of $46.2 million on a topline of $183.2 million in 2019.