Cardiol Therapeutics has a huge upside, says Leede Jones Gable

The stock may be down considerably over the past year and a half, but investors can expect better times ahead for Cardiol Therapeutics (Cardiol Therapeutics Stock Quote, Charts, News, Analysts, Financials TSX:CRDL), according to Leede Jones Gable analyst Douglas W. Loe, who on Wednesday delivered an update on the company. Loe reasserted a “Speculative Buy” rating and $4.50 target price, saying there are a number of potential markets for the company’s ultra-pure CBD formulation CardiolRx.

Oakville, Ontario clinical-stage cardiovascular drug developer Cardiol Therapeutics announced on Tuesday study results from an international collaboration on pharmaceutically derived cannabidiol (CBD). Cardiol and collaborators presented pre-clinical data in two separate posters at an American College of Cardiology (ACC)-sponsored annual conference over this past weekend.

The company said the data showed that CBD “significantly prevents cardiac dysfunction and the development of fibrosis and cardiomyocyte hypertrophy” and that it “reduces expression of key inflammatory and fibrotic markers.

The two studies looked at CBD’s ability to reverse heart failure symptoms in a well-characterized mouse model of disease, with the data showing that CBD at clinically-relevant dosages could impact cardiovascular cellular functions through pathways thought to be relevant to clinical heart failure.

“The beneficial effects of cannabidiol in a pre-clinical model of heart failure are of great interest and importance in support of our ARCHER trial which is investigating recovery of cardiac function in patients with myocarditis,” said Cardiol’s Chief Medical Officer and Head of R&D Dr Andrew Hamer.

“The data provides further evidence of the anti-inflammatory and anti-fibrotic effects of CardiolRx and new insights concerning the drug’s impact on mitochondrial function both of which are significant as we continue to elucidate cannabidiol’s mode of action in heart diseases,” he said.

Commenting on the results, Loe said Cardiol Therapeutics is a Phase 2-stage drug developer, and thus, further pre-clinical data demonstrating the viability of its candidate doesn’t move the needle on his valuation or model; at the same time, he said the new results do highlight ways in which CBD could be cardio-protective.

“We are maintaining our Speculative Buy rating and one-year PT of $4.50 on CRDL, with our valuation still based on net present value and multiples of our F2028 EBITDA/EPS forecasts that are themselves driven by our expectations that CardiolRx/CBD can exhibit approval cardio-protective and disease-reversing activity in three distinct cardiovascular medical markets: acute myocarditis, recurrent pericarditis, both of which are actively enrolling subjects in ongoing Phase II studies using orally-administered CardiolRx, and diastolic heart failure (also called heart failure with preserved ejection fraction; HFpEF) for which an injectable CardiolRx formulation is expected to advance into Phase I/II testing in coming quarters,” Loe wrote.

Loe said he’s expecting interim two-month data over the first half of this year from Cardiol’s 25-patient Phase 2 recurrent pericarditis trial, while he’s also watching the pace of enrolment for Cardiol’s 100-patient Phase 2 acute myocarditis (ARCHER) trial, where three-month efficacy data is expected during the second half of the year.

At press time, Loe’s maintained $4.50 target represented a projected one-year return of 534 per cent.