Leede Jones Gable analyst Douglas W. Loe provided an update to clients on Monday on Canadian cardiovascular disease drug developer Cardiol Therapeutics (Cardiol Therapeutics Stock Quote, Charts, News, Analysts, Financials TSX:CRDL), saying news of a trial initiation is a positive logistical step for the company. Loe retained both a “Speculative Buy” rating and $4.50 target price, which at press time represented a projected one-year return of 346 per cent.
Cardiol Therapeutics is working on applications for its ultra-pure cannabidiol formulation, CardiolRx, in inflammatory heart diseases, including recurrent pericarditis, acute myocarditis and diastolic heart failure. The Oakville, Ontario-based company announced on Monday the start of its multi-centre Phase 2 pilot study of CardiolRx for the treatment of recurrent pericarditis, where the study is expected to enrol 25 patients at clinical centres in the US specializing in pericarditis care.
Cardiol said it recently presented pre-clinical data on CardiolRx in recurrent pericarditis at the American Heart Association Scientific Sessions, saying the data showed a “strong scientific basis” for investigating CardiolRx for the condition.
“The data generated from patients who enroll in the study at our collaborating research centers will provide further information in support of the use of CardiolRx as a novel therapy for this debilitating and frequently undertreated disorder. We are pleased to have the study underway, and we share the enthusiasm demonstrated by the study investigators in evaluating the clinical potential of CardiolRx in pericarditis,” said Cardiol President and CEO David Elsley in a press release.
Commenting on the trial initiation, Loe said the Phase 2 trial’s start is already embedded into his forecasts and valuation for CRDL.
“We endorse the firm’s decision then as now to preferentially advance CardiolRx into this Phase II program and away from its now-discontinued Phase III LANCER/COVID-19 cardiovascular pathology trial. Today’s advance is a positive logistical step toward data in this new heart inflammation market, but since our model already incorporated pericarditis-specific economics, we are maintaining our Speculative Buy rating and one-year price target of $4.50 on CRDL,” Loe wrote.
Loe said his valuation stems from a net present value (NPV) assessment and multiples of his fiscal 2028 EBITDA/EPS projections. His forecast has Cardiol generating 2027 total revenue of $32.6 million and EBITDA of $14.3 million and 2028 total revenue of $105.4 million and EBITDA of $83.8 million.
“At current levels, our PT corresponds to a one-year return of 346%, a magnitude of return that is imminently achievable in our view based solely on pericarditis/myocarditis clinical milestones in F2023/24, milestones that have a substantially high probability of success in our view based on published preclinical evidence we described in our legacy CRDL reports,” Loe said.