Profound Medical Corp. has a potential game-changer on its hands, Paradigm Capital says

Investors may be disappointed with Profound Medical Corp’s (TSX:PRN) second quarter results, but Paradigm Capital analyst Rahul Sarugaser insists that we look beyond the financials. He maintains that as early as next year, Profound’s TULSA-PRO prostate therapy could become the standard of card in treating mid-stage prostate cancer.

Yesterday, Profound reported its Q2 financials, which featured sales of $213,000 and a net loss of $5.8 million, with $32 million in cash. Those sales compare to last year’s Q2 at $957,000.

But Sarugaser says the company has its focus elsewhere at the moment, namely, in ramping up sales of its uterine fibroid treatment, Sonalleve, while at the same time advancing its Phase 3 trial of its TULSA-PRO prostate ablation therapy and preparing its sales and marketing strategy for the TULSA-PRO, which could have approval as early as Q3/2019.

“Fundamentally, we are optimistic that PRN should see sales increasing in H2/18,” says Sarugaser in a research note to clients on Wednesday. “We view 2019 as PRN’s break-out year: the company presents final data from its Phase 3 TACT trial; applies for (and, hopefully, receives) marketing approval from the FDA; and executes on its sales strategy for TULSA-PRO—which PRN is iterating on through 2018 and early 2019—thereby driving strong adoption through 2019 and 2020.”

On the Phase 3 trial, the analyst says that data presented at the American Urological Association Annual Meeting in May should be taken as resoundingly demonstrating the TULSA-PRO’s efficacy.

“We cannot underemphasize how important this AUA data is,” says Sarugaser. “PRN has fundamentally demonstrated that it has a profound effect in the treatment of prostate cancer as evidenced by a massive drop in PSA. More importantly, the treatment results in dramatically reduced rates of impotence and incontinence: a shift from 50–80 per cent seen in surgery/radiation, to ~10 per cent, which is the rate seen naturally among healthy male patients of this age.”

Sarugaser has reiterated his “Buy” rating and 12-month target price of $4.00, representing a projected return of 321 per cent at the time of publication.