Profound Medical is still a Buy, says Leede Jones Gable

With all the share price gains of late from medical device company Profound Medical (Profound Medical Stock Quote, Charts, News, Analysts, Financials NASDAQ:PROF), the stock is nearing “Hold” levels, according to Leede Jones Gable analyst Douglas W. Loe. But with catalysts up ahead and a big market for its now commercialized ultrasound tissue ablation device, the stock remains a “Buy,” according to Loe, who provided an update to clients on Wednesday.

Profound Medical, whose TULSA-PRO is an MR-guided prostate cancer ultrasound ablation technology, announced on Monday that it had published data in the Journal of Urology from four distinct clinical studies, with the data being presented last week at the American Urological Society meeting in Chicago. The company said the data show positive clinical outcomes in prostate-related diseases from using Profound’s FDA-approved TULSA-PRO.

“Evidence from clinical-trial and real-world settings establish the precision, flexibility and durability of TULSA treatment, which will complement important Level 1 evidence comparing TULSA to radical prostatectomy from our ongoing randomized controlled CAPTAIN trial,” said Arun Menawat, Profound CEO and Chairman, in a press release.

Looking over the results, Loe said the new clinical data is consistent with legacy studies already available on the TULSA-PRO, and thus, the analyst’s investment thesis and model on PROF are unchanged.

“Profound did not report any transformational data that compelled us to revise our already positive view on TULSA-PRO’s medical prospects, but we are nonetheless encouraged by the extent to which new MR-guided prostate tumour ablation data for the device was incrementally supportive of our PRN investment thesis and of TULSA-PRO’s ability to become a leading complementary technology for treating localized prostate disease,” Loe wrote.

“And in time, [thereby rival] radical prostatectomy as dominated by CA-based Intuitive Surgical and its da Vinci surgical robot, and radiation therapy as dominated by Siemens Healthineers/Varian Medical’s leading TrueBeam platform,” he said.

Loe said he’s looking forward to data from Profound’s 201-patient CAPTAIN trial which is comparing TULSA-PRO-treated patients to radical prostatectomy patients on treatment failure, survival and histological-biochemical endpoints at one and three years. He said the trial should have patient enrolment concluded by the first half of 2024, with a primary readout of patient outcomes available in early 2025.

By then, Profound will have its US insurance reimbursement status (expected by the end of 2023), Loe said. With his “Buy” rating, the analyst maintained a target price of US$14.00, which translated at press time to a projected return of 14.3 per cent.

“At current levels, our PT corresponds to a one-year return of 14.3 per cent and thus encroaching on Hold territory at current levels, but we have an upward bias to valuation,” Loe said. “This is based on sustained clinical documentation of TULSA-PRO’s clinical performance and on our assumption that this can support a favourable review of the device’s US reimbursement status by end-of-year (the American Medical Association’s CPT Committee Meeting is expected to convene this month).”