Canaccord starts Profound Medical at buy; PT $2

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Canaccord Genuity initiated coverage of Profound Medical (TSX:PRN; OTCQX:PRFMF) with a “buy” rating and price target of $2. The stock closed at 94 cents on July 23.

“Profound Medical has the makings of an exciting med-tech story, possessing the total addressable market, technology and business model capable of delivering rapid, accelerating revenue growth, strong gross margins and profitability over the long term,” writes analyst Jason Mills.

The company possesses a novel robotic surgery platform called TULSA-PRO, which harnesses the visualization power of MRI coupled with minimally-invasive ultrasound ablation technology to precisely target tumors in the prostate, enabling “both partial or whole-gland treatment, customizable to each patient, and attacking the tumor from the inside out, thereby seeking to spare adjacent organs and nerves,” he added.

As a result, Mr. Mills said TULSA aims to kill the cancer with “fewer side effects than traditional prostate cancer treatment modalities.”

Profound has invested in clinical studies that have already generated an attractive dossier of clinical evidence. “We further await one-year follow-up data from the TACT U.S. pivotal trial (early 2019E), which we think may be a positive catalyst for the stock, as well as a precursor to FDA clearance (2H:19E) and material revenue ramp.”

In addition to Profound’s large opportunity in prostate cancer with TULSA-PRO, Mr. Mills cited a potential indication expansion for TULSA-PRO, including benign prostatic hyperplasia; a second leg of growth via the firm’s proprietary Sonalleve system, a next-generation ultrasound ablation system that targets uterine fibroids and bone metastases; and an accomplished senior management team led by CEO, Dr. Arun Menawat, the former CEO of Novadaq Technologies.

Jennifer Poland