Cardiol Therapeutics keeps “Market Perform” rating at Raymond James

Look for clinical advances over the first half of 2021 from Cardiol Therapeutics (Cardiol Therapeutics Stock Quote, Chart, News, Analysts: TSX:CRDL), says Raymond James analyst Rahul Sarugaser, who produced a company brief to clients on Cardiol Tuesday.

Cardiol Therapeutics is a biopharmaceutical company aiming to produce pharmaceutical cannabidiol (CBD) products and therapies for heart disease, including acute myocarditis and other causes of heart failure. The company introduced in October of this year the first pharmaceutically produced THC-free extra-strength CBD under the name Cortalex which is sold across Canada by Shoppers Drug Mart.

Oakville, Ontario-based Cardiol on Tuesday announced the completion of a Phase I clinical trial of CardiolRx, the company’s ultra-pure, extra strength cGMP-manufactured cannabidiol oral formulation, finding in the double-blind, randomized controlled trial that all tested doses were well-tolerated with no serious adverse events reported.

The trial, which was designed to test the safety, tolerability and pharmacokinetics (PK) of single and multiple ascending doses of CardiolRx among 52 healthy adult subjects, should generate full trial data to be presented sometime in the first quarter of 2021. Cardiol aims to file an IND application with the US FDA for an international Phase II clinical trial in acute myocarditis (AM), an inflammatory heart condition caused by viral infection that is the leading cause of sudden cardiac death in young people. The company said it aims for CardiolRx to gain orphan drug status, granted to drugs developed to treat medical conditions affecting fewer than 200,000 people in the US.

Cardiol noted in the press release that orphan drugs in the US and the EU are eligible for accelerated marketing approvals and companies developing such drugs typically receive other incentives including a prolonged period of market exclusivity.

“Based on the large body of experimental evidence of the anti-inflammatory and cardioprotective properties of cannabidiol in models of cardiovascular disease, the company believes there is an opportunity to develop a potential breakthrough therapy for acute myocarditis that would be eligible for designation as an orphan drug,” said Cardiol in the press release.

On the new announcement, Sarugaser wrote, “We view each of CRDL’s recent announcements as incrementally positive and believe the sum of this forward progress should lead to substantial clinical advances being made during 1H21. We are encouraged by the continued development of CRDL’s interconnected clinical programs and remain optimistic about initiation of its indication-specific trials.”

“CRDL’s strong preclinical data demonstrating CardiolRx’s cardioprotective effects (anti- inflammatory, anti-hypertrophic, anti-fibrotic) continues to motivate the company’s pursuit of cardiac indications and CRDL’s recent selection of Worldwide Clinical Trials as its CRO for the COVID-19/CVD trial — the same CRO Compass Pathways selected to assess psilocybin therapy trial in treatment-resistant depression — we see as a good indication of this trial’s forward progress,” Sarugaser wrote.

Meanwhile, Cardiol is also preparing across the United States a Phase II/III clinical trial on the safety and efficacy of CardiolRx among 422 hospitalized COVID-19 patients with a prior history of or risk factors for cardiovascular disease, including acute myocardial infarction, cardiac arrhythmias, myocarditis, stroke and heart failure. Sarugaser said success in this trial should benefit the company by producing its first approved therapeutic and should accelerate its core AM and heart failure programs with bridgeable data.

The analyst estimates the total addressable market of CardiolRx for COVID-19 patients at about 400,000 patients in the US in 2022, the year Sarugaser sees the drug coming to market.

“In 2022, we estimate the U.S.-only COVID-19 + CVD market opportunity at $4.1 billion, of which we estimate CRDL will capture two per cent (growing to ten per cent of 2026’s ~$1 billion market). By the end of 2022, we expect CRDL’s acute myocarditis orphan disease program (a CVD indication) to be accelerating toward Phase III, benefiting from bridgeable data gleaned during the COVID-19 + CVD trial,” Sarugaser wrote.

“We note that CardiolRx’s efficacy in this (or any other) indication has yet to be demonstrated in humans, so we regard it as a Phase I clinical asset (CRDL continues its Phase I safety evaluation of CardiolRx). As such, we calculate CardiolRx’s probability of reaching market at 12 per cent (typical of Phase I drugs), and use this to drive our rNPV analysis, which, in turn, derives a present value of the COVID-19 + CVD program at $25 million. We note that this asset’s value escalates significantly upon successful completion of the Phase II/III trial: ~$280 million, late 2021,” he said.

With the update, Sarugaser has maintained his “Market Perform 3” rating on Cardiol, calling for 2020 revenue and EBITDA of nil and negative $12 million, respectively, and 2021 revenue and EBITDA of $7 million and negative $13 million, respectively. Year-to-date, Cardiol’s share price is down 43 per cent.