ProMetic Life Sciences has a huge upside, Paradigm Capital says

Biopharmaceutical company ProMetic Life Sciences (ProMetic Life Sciences Stock Quote, Chart TSX:PLI) has received the green light from the US FDA concerning the manufacturing protocol for its therapeutic protein Ryplazim (plasminogen), an event which analyst Rahul Sarugaser of Paradigm Capital calls very positive news for PLI. In a Tuesday research note, Sarugaser reiterated both his “Buy” rating and 12-month target price of $1.50.

PLI’s share price jumped more than 12 per cent in trading Tuesday as investors reacted to the company’s reporting on its Type-C meeting with the FDA on its Ryplazim (plasminogen) manufacturing process, which had been put on hold as of March, 2018, due to an FDA request for a number of changes in ProMetic’s Biological License Application (BLA).

“We are pleased with the positive outcome of the Type C meeting regarding the plan that we submitted in response to the FDA’s list of items outlined in the CMC section of our Ryplazim™ BLA,” said Bruce Pritchard, ProMetic’s COO and CFO, in a press release on Tuesday. “As a result of the feedback received, we will now continue with finalizing the remaining steps necessary to proceed with the running of RYPLAZIM™ conformance batches.”

Sarugaser says that the FDA’s request in March materially disrupted the company’s anticipated ~$30 million in revenue for 2018 and ~$80 million in revenue projected for 2019, along with dashing the company’s hopes for a priority review voucher from the FDA to expedite Ryplazim’s review process.

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As a result of the delay, the analyst had trimmed his target from $4.25 to $1.75, and then again to $1.50, yet he expects that PLI should now be ready to resubmit its BLA in early 2019.

“We see this nod from the FDA as a critical, and extremely positive, first step down the path PLI intended to be walking six months ago,” says Sarugaser. “This is fundamentally good news for a company previously beleaguered by difficult regulatory interactions. Once PLI can effectively shore up its balance sheet by securing additional loans or issuing equity, we anticipate a re-establishment of value in the RyplazimTM (plasminogen) asset.”

Sarugaser’s $1.50 target represents a projected 12-month return of 206 per cent at the time of publication.