Liminal BioSciences Inc. PFSCF

Scotiabank: Sector Outperform rating & C$3.00 target for PLI

[shakerman640]

According to Scotabank:

https://tinyurl.com/pfnugnd

ProMetic Life Sciences Inc.

(PLI-T C$2.14)

Recent Weakness Provides Buying Opportunity

Rating: Sector Outperform

Target 1-Yr: C$3.00

ROR 1-Yr: 40.2%

Risk Ranking: Speculative

Valuation: DCF (11.4% discount rate, 2% terminal growth)

Key Risks to Target: Clinical & regulatory risk, commercial risk, financing risk

Event

- PLI reported its Q2 results last week and provided a detailed update of its clinical programs.

Implications

- The Q2 results were somewhat weaker than expected with resin sales of $2.7 million versus our $5.5 million estimate. However, the guidance provided by management of ~$20 million of resin sales in 2015 is in line with our previous estimate of $20.7 million. As a result, we have made only modest changes to our outlook for the current business.

- Our focus continues to be the product pipeline and the potential catalysts that should arise as new pipeline products are announced and data from ongoing clinical studies become available.

- In the near term, the biggest potential catalysts are likely associated with PBI-4050 as three clinical trials testing this drug in different indications are expected to read-out over the next 3-9 months.

Recommendation

- In our opinion, the recent weakness in PLI’s share price is unjustified given the progress of the pipeline. The company is in position to report results from as many as four clinical trials over the next 3-9 months and each has the potential to be a substantial catalyst for the shares. As a result, we maintain our Sector Outperform rating, $3.00 price target, and note our valuation does not include any upside for positive PBI-4050 data.