Mackie ups Profound Medical price target to $4.40

Mackie Research Capital raised its price target for Profound Medical (TSX-V:PRN) to $4.40 from $3.30 after the company reported third quarter results. The stock closed at $1 on Thursday.

Analyst Andre Uddin writes that his new valuation is based on applying a multiple of 4.2 times enterprise value to sales on a 2019 sales estimate to $86-million, discounted back by 50%.

“Profound’s share price was pushed down for a recent financing,” he said, adding that he expects a “run-up trade” to begin in the second quarter next year in anticipation of the interim clinical results from the company’s U.S. pivotal trial “as TULSA-PRO is targeting a major market opportunity.”

The TACT pivotal trial is a prospective, single-arm study of 110 localized, organ-confined prostate cancer patients aimed at evaluating the safety and efficacy to ablate cancerous prostate tissue with the TULSA-PRO.

The trial is expected to have 15 sites throughout the U.S., Europe and Canada. One site is operational and 1/3 of the sites should be on-line by the end of the year, with patient enrolment to be completed by the summer of 2017. Interim data are expected in the second half next year, with full data in the second half of 2018.

“We believe TULSA-PRO could be disruptive for treating localized prostate cancer,” Mr. Uddin said, noting that a U.S. launch could begin in the fourth quarter of 2018.

TULSA-PRO was approved for sale in Europe earlier this year. Three devices were shipped in the fourth quarter, with revenue to be recognized in the fourth and first quarters, representing an approximate one-quarter delay. The company expects that an additional one or two devices will be sold in the current quarter.