CIBC World Markets initiated coverage of Profound Medical (TSXV:PRN; OTCQX:PRFMF) with an “outperformer” rating and 12-to-18-month price target of $3.50. The stock closed at 85 cents on Nov. 15.
Analyst Prakash Gowd writes that Profound has best-in-class complementary technologies: TULSA-PRO and Sonalleve, both of which are available in select markets outside North America.
TULSA-PRO is Profound’s answer to prostate cancer, combining real-time MR imaging with directional ultrasound to safely and accurately ablate prostate tissue from the inside out. Sonalleve is an MR-guided focused ultrasound device that can safely and non-invasively treat uterine fibroids, and alleviate the severe pain associated with bone metastases.
“TULSA-PRO minimizes the risk of urinary incontinence, rectal injury, and erectile dysfunction versus competing therapies,” Mr. Gowd said. “Both TULSA-PRO and Sonalleve allow for more rapid recovery and fewer complications than surgery.”
He said conversations with physicians have been very positive, and have also highlighted other key advantages of both platforms: compelling clinical data and the ability to customize treatment.
In addition, he said Profound leverages strong partnerships with Philips and Siemens to drive adoption. “We believe that adding on TULSA-PRO and Sonalleve to an MR purchase gives hospitals the opportunity to generate more revenue per MRI unit.”
Mr. Gowd figures Profound has the potential to reach profitability in three years and total revenue in excess of $100-million in five years.
He recommends investors take advantage of the current valuation in advance of significant value-generating clinical, regulatory, and commercial milestones over the next 12-to-24 months as Profound prepares for the U.S. approval and launch of both platforms while simultaneously building sales outside of the U.S.
