Promis Neurosciences has 79 per cent upside, says Mackie Research

After publishing its second quarter results, Canadian biotech company Promis Neurosciences (TSX:PMN) got a target price reduction from André Uddin of Mackie Research Capital, who now sees a longer timeline for the potential licensing of the company’s Alzheimer treatment drug, which PMN expects still have its first clinical trial by the second half of 2019.

On Tuesday, the analyst reiterated his “Speculative Buy” rating with the new target of $0.50 (previously $0.70).

PMT posted its financials for the three and six month periods ended June 30, 2018, with a net loss for Q2 of $2.2 million on revenue of $0.0. The company ended the quarter with $6.8 million in cash and zero debt on its balance sheet.

Uddin says the financials are less important at this time than is the progress with getting its potentially best-in-class Alzheimer drug, PMN310, into clinical trials. The analyst compares Promis’ work on PMN310 with Biogen’s current research on the antibody aducanumab.

“PMN310 and aducanumab have a similar mechanism (targeting toxic Aβ oligomers) to treat Alzheimer’s, but PMN310 should have better safety,” says Uddin in a client update. “Potential positive results of the aducanumab Phase III studies and PMN310 Phase I study should further justify the science behind PMN310. For these reasons, we believe it is more reasonable to push out our assumed timing of a PMN310 licensing deal to 2020, as well as, to increase the deal size to $700 million. We previously assumed the company would out-license PMN310 in 2019 for $550 million.”

Uddin’s two-stage probability-adjusted DCF valuation results in his $0.50 target, which represents a 12-month projected return of 79 per cent at the time of publication.