It may not have the buzz of biotech or the cachet of cannabis but the medical device space is definitely worth a look — especially if you can get the skinny on some of the players, that is. To that end, Cantech has three Canadian-listed, analyst-approved names for our faithful readers.
Starting as always in no particular order, we have Perimeter Medical Imaging AI (Perimeter Medical Stock Quote, Charts, News, Analysts, Financials TSXV:PINK), which is commercializing in the US its FDA-approved S-Series optical coherence tomography (OCT) diagnostic imaging system. Perimeter is focusing on providing high-resolution, real-time, advanced imaging tools initially launching the Perimeter OCT in the US for intraoperative margin (one to two mm below the surface) assessment during breast lumpectomy, which the company says can make for better long-term results for cancer patients and lower costs for healthcare systems.
Perimeter recently reported its second quarter 2021 earnings, which showed zero in revenue and a net loss of $3.2 million or $0.07 per share.
“We believe we have made significant progress this past quarter as we continue to ramp-up our commercialization efforts to bring Perimeter’s innovative, ‘real-time’ imaging technology to our target customers,” said Perimeter CEO Jeremy Sobotta in an August 30 press release. “Our initial market development managers, under the direction of our Chief Commercial Officer, are actively meeting with prominent surgeons to place Perimeter S-Series OCT in leading healthcare institutions throughout key regions the US.”
With a market cap of just $115 million, PINK started trading on the TSX junior board in June of 2020 after a reverse takeover and non-brokered private placement financing of $10 million. The stock had a huge ramp up from an initial $1.50 to as high as $4.84 by March of this year, followed by an almost as steep decline to where it now trades at $2.50-$2.60.
But PINK should be heading back to that March high, according to Research Capital analyst Yue (Toby) Ma, who delivered an update to clients on Perimeter Medical on August 31. Ma said Perimeter’s upcoming trial — the company will be testing the Perimeter OCT in conjunction with its ImgAssist AI software-as-a-medical-device — is expected to boost the use of its OCT system. The trial is set to begin in September 2021 with interim and final results expected in the first quarter 2022 and mid-2022, respectively.
“The results of the pivotal trial are important events to watch in the near term. We believe the Perimeter OCT/ImgAssist AI combo represents a paradigm-shifting imaging technology for breast cancer surgery, which should generate fast-growing revenues going forward,” Ma wrote.
With his update, Ma reasserted his “Speculative Buy” rating for PINK and target price of $4.90, which at the time of publication represented a projected 12-month return of 85 per cent.
Next is Profound Medical (Profound Medical Stock Quote, Charts, News, Analysts, Financials TSX:PRN), which is also in the commercialization stage in the United States for its non-invasive, image-guided therapeutic technology, the TULSA-PRO, which uses real-time magnetic resonance imaging, robotically-driven ultrasound and closed-loop thermal feedback control. The TULSA-PRO, which was cleared by the FDA in 2019, is used for the ablation of pathologic prostate tissue and has Profound currently ramping up its installations of units across the country.
Last month on August 25, Raymond James analyst Rahul Sarugaser released a report where he compared the TULSA-PRO specs to those of therapeutic ultrasound company EDAP TMS’ Focal One high-intensity focused ultrasound (HIFU) device for the treatment of prostate cancer. Sarugaser said head-to-head, the TULSA-PRO’s clinical data show “objectively superior safety” versus the Focal One. Further, Sarugaser said the TULSA-PRO shows much broader utility as it can be used not just in focal ablation (as is the case for Focal One) but for partial and whole gland ablation, thereby equating to a larger total addressable market — a TAM which Sarugaser puts at over one million patients.
“Whether for whole gland or focal ablation, we find PROF TULSA to have objectively superior safety to EDAP HIFU. We also find, using equal market assumptions, PROF TULSA captures 62 per cent higher revenue than EDAP HIFU. Further, considering its much broader utility, PROF TULSA’s TAM is, in fact, >10x larger than that of EDAP HIFU,” Sarugaser wrote.
With his report, Sarugaser reiterated his “Strong Buy 1” rating for PRN, a stock which, like Perimeter, had both a run-up earlier this year and a pullback. Currently, the stock is down 30 per cent for the year-to-date.
Last we have Theralase Technologies (Theralase Technologies Stock Quote, Charts, News, Analysts, Financials TSXV:TLT), a drug and device developer which is currently working on a photodynamic therapy for treating BCG-unresponsive non-muscle invasive bladder cancer (NMIBC). The company also has a legacy business in cool laser therapies for pain and inflammation.
Theralase is currently enrolling subjects for a Phase 2 pivotal trial involving 125 patients for its TLD-1433 photodynamic therapy, with the company recently reporting interim analysis from treatment of 27 subjects across a treatment period of 450 days. At 90 days of treatment, 33.3 per cent of the 27 subjects achieved complete response, which decreased to 18.5 per cent at 270 days and 11.1 per cent at 360 days.
Looking at the results in a report to clients on August 31, Research Capital analyst André Uddin wrote, “We believe what is most important with this preliminary dataset is that at 270 & 360 days, there were 37.0 per cent (10) and 40.7 per cent (11) of the 27 subjects which had not received both doses of TLD-1433.”
“As the Phase 2 pivotal trial continues to progress, we believe the results should elucidate the efficacy potential of TLT-1433,” Uddin said.
At $0.215 per share as of Friday’s close, Theralase is now up a hair from the $0.19 per share on which it ended the 2020 year. But Uddin sees lots of upside from here, reiterating in his report a “Speculative Buy” rating and $0.70 target price, which at the time of publication represented a projected one-year return of 233 per cent.