In a research note to clients on Friday, Paradigm Capital’s Rahul Sarugaser laid out the argument for why investors should view 2019 as Profound Medical Corp’s (Profound Medical Stock Quote, Chart TSX:PRN) time to shine, beginning with the fact that in May the medical device company will be presenting Phase 3 data on its real-time magnetic resonance imaging and ultrasound technology, the TULSA-PRO, an event which could see PRN’s value double or even triple in the lead-up.
“Owing to the strength of data presented at American Urological Association (AUA) in May 2018, we continue to be confident that PRN is likely to present highly compelling final Phase 3 data at the 2019 AUA meeting in Chicago, May 3–6,” says Sarugaser. “While the AUA may be a good six months away, our research shows that for cancer companies approaching presentation of Phase 3 data, valuations on average double (and occassionally triple) over the five months leading up to said data. As such, investors looking to capitalize on this run-up should seek to establish their positions in PRN by the end of December.”
Sarugaser adds that with $35 million in cash and a quarterly burn rate of approximately $5 million, PRN has the funds to proceed through its Phase 3 and into commercialization in 2020. As well, the analyst states that Paradigm’s technical analysis shows that PRN has a firm floor of $0.60, making it a current risk-mitigated buying opportunity. (As of Friday’s close, PRN finished down 16.2 per cent to $0.62.)
Profound Medical stock has 441 per cent upside
The analyst reiterated his “Buy” recommendation and one-year target of $4.00, which represented a 441 per cent projected return at the time of publication.
On Thursday, Profound Medical reported its third quarter financials this week, recording revenue of $303,664 and a net loss of $5,134,000 or $0.05 per common share. Management highlighted a number of events over the quarter ended September 30, including PRN’s graduation to the TSX, a term loan agreement with CIBC and the presentation of a previously-reported Phase 1 Safety & Feasibility Study of the TULSA-PRO.
“We are pleased to report that, following the first sale of a Sonalleve system in China after receiving CFDA approval for the non-invasive treatment of uterine fibroids, we are now preparing to ship the system in the current quarter,” said Arun Menawat, Profound’s CEO. “We expect that the initial commercial launch of Sonalleve in China, combined with growing interest from European doctors, clinics and patients in TULSA-PRO, will increase our sales momentum during the remainder of 2018 and into 2019.”