Canadian Life Sciences stocks have been on a roller coaster ride so far in 2019.
The sector, which is comprised of drug and medical device companies as well as health care tech and clinical research companies, started the year off supremely well but as a whole has faced difficulties over the past few months, as witnessed by the S&P TSX Pharma & Biotech Index, which gained 140 points or about 50 per cent of its value between January and April, only to lose it all by August.
The same goes for the NASDAQ Biotechnology Index which gained 470 points between January and April and then lost a good chunk of that ground over ensuing months.
But while volatility may be a hallmark of biotech, where companies often either hit a home run with a new drug or procedure or sink into oblivion, the chances of picking a winner are what makes the space that much more exciting and potentially lucrative. So for those willing to jump in, here are three Canadian Life Sciences stocks that have recently been given positive ratings from analysts covered by Cantech Letter.
A medical device stock with huge upside…
Profound Medical Corp (Profound Medical Corp Stock Quote, Chart, News TSX:PRN)
Analyst: Raymond James, Rahul Sarugaser
Projected one-year return: 340 per cent
Medical device company Profound Medical last month released a update on progress with its TULSA-PRO novel tech for the treatment of prostate cancer, saying that it had received 501(k) clearance from the US FDA to market the device for the ablation of prostate tissue. The stock has spiked since then but there is still more upside available according to Raymond James’ Rahul Sarugaser.
“We use a conservative 1.25 per cent penetration rate during the first three years of TULSA-PRO’s commercialization, while revenues will still be patient-pay (i.e., pre-reimbursement),” writes Sarugaser in a coverage launch of PRN on August 26.
“For these years — 2020, 2021, and 2022 — we estimate revenues of $12 million, $27 million, and $54 million respectively. We view these as very achievable revenue estimates because by 2022 an installed base of just 110 devices, each treating 110 patients per year, would generate $46 million in revenue from TULSA-PRO, plus an additional $8 million from ancillary products and services.”
Sarugaser gave PRN an “Outperform rating” with a $4.00 per share target price.
A clinical stage drug developer due for a “seminal clinical inflection point”
Antibe Therapeutics (Antibe Therapeutics Stock Quote, Chart, News TSXV:ATE)
Analyst: Echelon Wealth Partners, Douglas Loe
Projected one-year return: 312 per cent
Clinical stage drug developer Antibe Therapeutics, which is starting a Phase II trial for its lead hydrogen sulfide-releasing naproxen analog ATB-346 and has two others in preclinical testing, also showed strong results in its latest quarter from the company’s regenerative medicine division Citagenix.
Loe says recently announced delays in getting ATB-346 to market are a minor, negligible setback for Antibe, which he views as having a money-making venture in its hydrogen sulfide-releasing chemistry platform.
“We can clearly see a seminal clinical inflection point on the horizon, if a bit more distant than we previously assumed now that projected timelines to Phase II data are shifted into FQ320. But that shift having no bearing on ATB-346’s underlying pharmacology in our view, nor on its medical potential for demonstrating naproxen-like pain relief without naproxen-like side effects and not just knee osteoarthritis pain even though that indication is the focus of initial clinical activities,” wrote Echelon Wealth’s Douglas Loe in a client update on August 28.
“We believe that once Citagenix can demonstrate sustainable profitability, it could be divested to private equity investors or strategic regenerative medicine/orthopedic partners on reasonable terms, perhaps in the 0.8x-to-1.0x T12M revenue range,” writes Loe.
Loe rates Antibe a “Speculative Buy” with a 12-month target of $1.40.
A “robust drug development pipeline…”
GW Pharmaceuticals (GW Pharmaceuticals Stock Quote, Chart, News NASDAQ:GWPH)
Analyst: AltaCorp Capital, David M. Kideckel
Projected one-year return: 51 per cent
Cannabinoid product platform GW Pharma continues to see strong US demand for Epidiolex oral solution for treating seizures, with the drug currently in the application process in Europe (Epidiolex already has a positive opinion from the EU’s Committee for Medicinal Products for Human Use).
Kideckel likes GW Pharma’s results in its latest earnings report where revenue and EPS beat both his estimates and the consensus forecast, but it’s the company’s pipeline that really stands out, says Kideckel, who feels confident in management’s ability to keep on executing on their business strategy.
“GW has a robust drug development pipeline and is progressing through several clinical trials, which will provide the Company with a strong pipeline of growth opportunities over the mid to long term,” wrote Kideckel in an an update to clients on August 7.
“To date, GW has reported positive results in the Phase 3 Tuberous Sclerosis Complex (TSC) trial, commenced the Phase 3 trial in Rett syndrome, and is advancing its Sativex program in the US, as well as other clinical studies, including the development of the cannabidivarin (CBDV) molecule in the field of autism spectrum related disorders,” he writes.
Kideckel rates GW Pharma as “Outperform” with a 12-month target of US$230.00.