The Canadian medical device firm, Profound Medical Corp. (PROF:NASDAQ; PRN:TSX), reported revenue and a net loss that were better than anticipated for Q2/22, ended June 30, reported Research Capital Corp. analyst Dr. Andre Uddin in an August 5, 2022research note.
"The stock is up 25% from our upgrade; our stock calls on Profound have generated a 367% return," Uddin added.
The Ontario-based company's two devices are TULSA-PRO, for prostate disease ablation, and Sonalleve, primarily for the nonsurgical treatment of uterine fibroids.
Uddin reviewed Profound's Q2/22 financial results. The company generated US$2 million (US$2M) in revenue, more than Research Capital's estimate of US$1.7M.
Profound posted a net loss for the quarter of -US$5.9M, or -US$0.28 per share, better than Research Capital and consensus' -US$0.39 per share projection. Also, this performance was better than the same time last year, when the biotech's net loss was -US$9M, or -US$0.35 per share.
At Q2/22's end, Profound had US$53.2M in cash.
Positive Product Updates
In other news, Uddin relayed, Profound sold its first Sonalleve devices in North America during Q2/22, both to children's hospitals, one in Canada, the other in the U.S., for treatment of pediatric osteoid osteoma.
"Sonalleve offers these young patients treatment that can be performed safely with clinical improvement but without any incisions, needles, or ionizing radiation exposure," Uddin noted.
Regarding Profound's other medical system, TULSA-PRO, three new factors should help grow sales and attract the interest of larger Medtech companies, Uddin purported.
One is the U.S. Centers for Medicare & Medicaid Services' proposed 5% reimbursement increase for C9734, the CPT code currently being billed by TULSA-PRO users. This would take the reimbursement amount nationally to US$13,274 and, if approved, would go into effect in January 2024. This change would be a nice boost for Profound, Uddin indicated.
Research Capital has a Speculative Buy rating and a US$10.20 per share target price on Profound, the current share price of which is about US$4.85.
"Garnering this CPT should turn Profound into a cash-flowing machine," he wrote. "We believe device companies would likely look at such an opportunity, and we speculate that an H2/23 acquisition [of Profound] would make logical sense."
The second factor is an upcoming clinical trial called CAPTAIN in which treatment with TULSA-PRO will be compared to radical prostatectomy, Uddin wrote. The trial is expected to start in 2023, with the first data set available by year-end.
"We believe positive outcomes of the trial should increase the adoption of TULSA-PRO," he added.
The third factor is Profound's continuing efforts to increase awareness of TULSA-PRO in the medical community, which should help boost sales, Uddin noted, "given the strong efficacy and clean safety profile of the device."
Research Capital has a Speculative Buy rating and a US$10.20 per share target price on Profound, the current share price of which is about US$4.85.
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Disclosures For Research Capital Corp., Profound Medical Corp., November 4, 2022
Analyst Certification: I, Andre Uddin, Ph.D., certify the views expressed in this report were formed by my review of relevant company data and industry investigation, and accurately reflect my opinion about the investment merits of the securities mentioned in the report. I also certify that my compensation is not related to specific recommendations or views expressed in this report. Research Capital Corporation publishes research and investment recommendations for the use of its clients. Information regarding our categories of recommendations, quarterly summaries of the percentage of our recommendations which fall into each category and our policies regarding the release of our research reports is available at www.researchcapital.com or may be requested by contacting the analyst. Each analyst of Research Capital Corporation whose name appears in this report hereby certifies that (i) the recommendations and opinions expressed in this research report accurately reflect the analyst’s personal views and (ii) no part of the research analyst’s compensation was or will be directly or indirectly related to the specific conclusions or recommendations expressed in this research report.
Andre Uddin, Ph.D. has visited Profound Medical Corp. in the past 18 months.
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