Buy IMV for a double and then some, Echelon Wealth says

Echelon Wealth Partners analyst Doug Loe is holding steady on his estimation of IMV (IMV Stock Quote, Chart TSX:IMV) after the clinical stage biotech company released its quarterly results last week.

In an update to clients last Friday, Loe reiterated his “Speculative Buy” rating and $12.25 target price, representing a projected 12-month return of 135 per cent at the time of publication.

IMV delivered its fourth quarter and 2018 year end financials last Thursday, featuring revenues of $0.01 million and a net loss of $7.8 million. The company’s R&D costs escalated during the quarter, which Loe says is consistent with the heightened clinical testing for its lead cancer therapy, DPX-Survivac. In all, Loe says that he has no major reservations about elevating clinical costs, as the company is showing no major issues with financial risk and has sufficient cash to fund DPX-based clinical activities into the first half of 2020.

“NS-based immune therapy developer/formulator IMV reported FQ418 financial data for the Dec-end quarter that was in line with most of our income statement expectations, and clearly with more focus on imminent clinical milestones for the firm’s DepoVax portfolio than on financial data itself, excluding new balance sheet data,” says Loe.

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“We calculate that EBITDA loss in the quarter was negative $6.6 million and thus was somewhat more negative than average quarterly EBITDA loss during the T9M period of about negative $4.1 million, with most of the FQ418 EBITDA delta arising from higher R&D costs as stated,” he says.

Projecting forward, Loe sees revenue starting to jump for IMV in the year 2023, where the top line should increase by 258 per cent to $17.9 million, followed by a 478 per cent increase in 2024 to $103.5 million. He predicts IMV will become EBITDA-positive in 2024 at $86.0 million.