Should you sell your Cardiol Therapeutics stock?

Leede Financial analyst Douglas Loe cut his target on Cardiol Therapeutics (Cardiol Therapeutics Stock Quote, Chart, News, Analysts, Financials TSX:CRDL, NASDAQ:CRDL) to $7.00 from $11.00 while maintaining a “Speculative Buy” after the company released fuller Phase II ARCHER data in acute myocarditis.

The 109-patient study, presented at a cardiology meeting in Italy, tested Cardiol’s oral cannabidiol formulation CardiolRx in patients with acute myocarditis over 12 weeks.

Loe said investors sold off the stock because the trial missed its two main MRI goals, something Cardiol had already disclosed in August. But he stressed that missing those measures does not mean the drug doesn’t work. In his view, investors are putting too much weight on p-values that were just slightly above the standard cutoff.

He pointed to clearer signs that the drug was having an effect. Patients on CardiolRx showed statistically significant improvements in two important measures of heart structure — the left ventricular mass and left atrial end-systolic volume. Other MRI measures of inflammation and heart function also improved compared with placebo, but because this was a relatively small Phase II study, those results didn’t quite reach formal statistical significance even though the trends were consistently positive.

In plain terms, Loe sees a consistent pattern: on most imaging measures, hearts treated with CardiolRx looked healthier than those on placebo, even if not all results cleared a strict statistical bar. He said this is consistent with the drug’s anti-inflammatory mechanism, including effects on pathways such as the NLRP3 inflammasome that have been documented in preclinical work.

What concerned him more was Cardiol’s messaging on strategy. On the update call, management framed ARCHER primarily as mechanistic support for other programs, recurrent pericarditis (the Phase III MAvERIC trial) and diastolic heart failure with injectable CRD-38, and “gave no real colour” on a Phase III plan in acute myocarditis. Loe inferred that myocarditis has slipped down the priority list, likely until pericarditis and heart-failure data are further advanced.

As a result, he has pushed out his timelines. His model now assumes pivotal Phase III testing in acute myocarditis between 2027 and 2029, with a U.S. filing around 2030 and a potential launch in 2031, versus a 2029 launch previously. He still views ARCHER as supportive for CardiolRx’s broader cardiovascular opportunity set, especially in recurrent pericarditis and heart failure, but assigns more modest value to myocarditis than before.

On the numbers, Loe now projects no meaningful revenue before 2029, then about $33-million in royalty revenue that year, rising to roughly $184-million by 2031. EBITDA remains negative through 2028, turns positive around $11-million in 2029, and reaches approximately $158-million by 2031 as royalty streams from CardiolRx and CRD-38 ramp.

Using a 25% discount rate and updated 2031 forecasts, he arrives at a new $7.00 one-year target, which he said still implies substantial upside if Phase III pericarditis data and early heart-failure results land as expected.

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