Buy Spectral Medical for a double, this analyst says

Paradigm Capital analyst Scott McAuley says Spectral Medical’s (Spectral Medical Stock Quote, Chart, News, Analysts, Financials TSX:EDT) FDA review remains on track after its Day-100 meeting.

McAuley maintained his “Buy” rating and $2.80 target on Spectral.

Spectral said it completed its Day-100 meeting with the FDA, reviewing the contents of a Deficiency Letter tied to its PMX premarket approval application.

The company confirmed that no additional clinical trials are needed as part of the review.

McAuley said that was in line with his expectations and does not change his timeline.

“We continue to see upside on EDT following the positive top-line Phase 3b trial results reported in August and the recent submission of the FDA PMA,” McAuley said in his Sept. 11 update.

He said Deficiency Letters are common during PMA reviews and do not necessarily signal approval risk. Since 2020, 84% of PMAs have received one.

McAuley said the important point is that the FDA is not asking for another clinical trial, which he views as a positive signal for potential approval.

The FDA has used about 90 days of its 180-day statutory review clock. The clock now pauses while Spectral prepares its response.

Based on the May 29 submission, McAuley said average PMA timelines point to possible approval around June 2027, with a reasonable range from December 2026 to August 2027.

The analyst said the balance sheet remains the main overhang. Spectral reported $800,000 of cash last quarter, excluding a US$1.0-million tranche payment from Vantive received after the PMA filing.

McAuley estimates the company has runway until the end of October and needs about $10-million to reach approval. Still, he does not view financing as a material risk given past support from Vantive and other strategic groups.

His valuation assumes a 100% probability of approval for PMX, first sales in Q3 2027, US$15,500 of revenue per patient and a 50/50 revenue split with Vantive.

McAuley said commercialization is materially de-risked through Spectral’s agreement with Vantive, the kidney care spin-off from Baxter International.

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