Analyst Says Biotech's Data Supports Advancement Into Phase III
Research Report

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Disclosures for Leede Financial Inc., Cardiol Therapeutics, November 19, 2024

Important Information and Legal Disclaimers Leede Financial Inc. (Leede) is a member of the Canadian Investment Regulatory Organization (CIRO) and a member of the Canadian Investor Protection Fund (CIPF). This document is not an offer to buy or sell or a solicitation of an offer to buy or sell any security or instrument or to participate in any particular investing strategy. Data from various sources were used in the preparation of these documents; the information is believed but in no way warranted to be reliable, accurate and appropriate. All information is as of the date of publication and is subject to change without notice. Any opinions or recommendations expressed herein do not necessarily reflect those of Leede. Leede cannot accept any trading instructions via e-mail as the timely receipt of e-mail messages, or their integrity over the Internet, cannot be guaranteed. Dividend yields change as stock prices change, and companies may change or cancel dividend payments in the future. All securities involve varying amounts of risk, and their values will fluctuate, and the fluctuation of foreign currency exchange rates will also impact your investment returns if measured in Canadian Dollars. Past performance does not guarantee future returns, investments may increase or decrease in value, and you may lose money. Leede employees may buy and sell shares of the companies that are recommended for their own accounts and for the accounts of other clients. Disclosure codes are used in accordance with Policy 3600 of CIRO.

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Leede Financial Inc. analyst Dr. Douglas Loe, in a research note titled "Updated Phase II Recurrent Pericarditis (MAvERIC) Data Still Supports Advancing into Pivotal Phase III Study – Spec Buy," published on November 19, 2024, maintained his Speculative Buy rating on Cardiol Therapeutics (CRDL:TSX; CRDL:NASDAQ) with a target price of CA$11.00. The report follows updated Phase II data from the MAvERIC trial testing CardiolRx in recurrent pericarditis.

Loe highlighted the sustained efficacy of CardiolRx, stating, "CardiolRx-treated patients exhibited sustained pain relief (using the eleven-point numerical rating scale [NRS]) out to at least six months, with average pain score at enrollment of 5.8 for all 27 patients declining to 1.5 at 6-month analysis."

The analyst emphasized the drug's performance compared to existing treatments, noting, "MAvERIC eight-week NRS data actually compares favorably to rilonacept's NRS data at the equivalent timepoint in RHAPSODY." He added that "CardiolRx also performs well on normalizing circulating CRP levels, though not quite as rapidly as rilonacept did in RHAPSODY."

Regarding future development, Loe stated, "We endorse Cardiol's decision to advance aggressively into two Phase II/III follow-on recurrent pericarditis studies, one of which will be the 110-patient MAvERIC-2 trial that will exclusively enroll patients previously treated with but have discontinued rilonacept."

The report highlighted upcoming milestones, including the commencement of new Phase II testing in recurrent pericarditis expected "in a month or two" and Phase II data from the 100-patient ARCHER trial in acute myocarditis expected by FQ225.

Leede Financial's valuation methodology combines multiple approaches. Loe explained, "Our valuation is still based on NPV (25% discount rate) and multiples of our F2028 EBITDA/EPS forecasts. Our EV determination incorporates pro forma cash of CA$31.4M, no LT debt, and revised fd S/O of 87.1M."

In conclusion, Leede Financial's maintenance of their Speculative Buy rating and CA$11.00 target price reflects confidence in CardiolRx's clinical profile in cardiac inflammation pathologies. The share price at the time of the report of CA$2.54 represents a potential return of approximately 333% to the analyst's target price.