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Profound Medical is heading higher, says Raymond James

Investors can expect a big catalyst within weeks for Profound Medical (Profound Medical Stock Quote, Charts, News, Analysts, Financials NASDAQ:PROF), according to Raymond James analyst Rahul Sarugaser, who provided an update to clients on Wednesday where he maintained a “Strong Buy” rating on the stock.

Ontario-based Profound Medical is commercializing the TULSA-PRO, an incision-free, image-guided device combining magnetic resonance with ultrasound and closed-loop thermal feedback control for the ablation of prostate tissue in the treatment of prostate cancer. The TULSA-PRO has received FDA approval in the US and is currently recruiting for a study to compare treatment by the TULSA-PRO to radical prostatectomy (RP).

The company announced on Monday data from four posters presented last weekend at the 2023 American Urological Association Meeting. 

“In addition to the updated pivotal TACT trial data we first shared in September 2022, we were pleased to have the opportunity to present at this year’s AUA meeting three more posters reinforcing TULSA’s safety, efficacy and durability,” said Arun Menawat, Profound’s CEO and Chairman, in a statement.

In his report, Sarugaser spoke of the key takeaways from the poster presentation, starting with a FARP study which showed, in comparison to radical prostatectomy, significantly lower postoperative complications due to focal ablation with TULSA as well as with High-Intensity Focused Ultrasound (HIFU), with TULSA showing “significant benefit” over HIFU, as well. 

Further, Sarugaser pointed out that about 30 per cent of patients randomized to the RP group of the study declined participation, which was telling.

“Clearly, patients are doing their own research, and discovering that partial ablation (i.e. TULSA) is providing materially better quality of life (QoL) outcomes than RP. So it is very possible that patients—advocating for their own health—are voting with their feet for TULSA, and may indeed lead the ablative therapy revolution,” Sarugaser wrote.

The analyst said teaching hospitals and larger institutions are more readily seeing the benefits of ablative therapies over RP, recognizing the quality of life benefits. Meanwhile, speaking with a number of investigators leading relevant studies, Sarugaser found they all unanimously identified TULSA as providing superior outcomes to HIFU. 

“Specifically, they highlighted TULSA’s use of MRI which provides real-time thermometry in addition to very high resolution (versus ultrasound guidance) as providing exquisite control. These docs further identified that TULSA is applicable to both partial (hemi- or bi-lateral disease) as well as whole gland ablation, while HIFU is limited to ablation of the posterior prostate,” he said.

Up ahead, PROF will be presenting its first quarter 2023 earnings after market close on May 10. But Sarugaser predicts it to be a non-event, earnings-wise, and is instead saying attention will be focused on the AMA’s CPT Editorial Panel Meeting, from May 4-6, which will be considering the TULSA-PRO’s CPT-1 application for reimbursement. 

Decisions on the matter will be published on or before June 2, Sarugaser said.

“We have consistently highlighted that this is PROF’s most important upcoming catalyst, which we believe has a high likelihood of approval,” he said.

Sarugaser maintained a one-year target price of $17.00, which at press time represented a return of 32.5 per cent.

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