RBC Dominion Securities has initiated coverage of ProMetic Life Sciences (OTCQX:PFSCF; TSX:PLI) with an “outperform, speculative risk” rating and price target of $3.50. The stock closed at $2.20 on Wednesday.

Analyst Douglas Miehm writes that for more than 25 years, ProMetic has helped other biopharmaceutical companies bring drugs to market with its bioseparation technology, and it is now leveraging that expertise to develop rare plasma-derived products of its own.

“A small molecule program, PBI-4050, is in the early stages but has shown impressive anti-fibrotic activity in liver/lung diseases and may have blockbuster potential,” he added.

Roughly three-quarters of Mr. Miehm’s valuation comes from the base bioseparation business and the plasma protein platform, with relatively low development risks, and the remaining portion is derived from a high risk/reward anti-fibrotic agent.

PBI-4050 is an oral agent developed internally that has demonstrated impressive anti-fibrotic activity in a broad range of organs, including the kidney, liver, lungs and heart.

A Phase 2 study for idiopathic pulmonary fibrosis is under way and a Phase 2/3 trial is anticipated to start in the first half of 2016. Two other Phase 2 trials for metabolic syndrome and chronic kidney disease associated with diabetes are set to begin in the second half this year.

“With several development programs under way, trial news flow and regulatory filings are anticipated over the next 12-to-24 months,” Mr. Miehm said. “In order to address multiple global markets and as clinical programs mature, we are also anticipating partnership (commercial/manufacturing) deals to be announced.”