Liminal BioSciences Inc. LMNL

Canaccord Genuity comments on ProMetic Life Sciences Inc.

[stockwizard1970]

According to Canaccord Genuity:

https://alturl.com/3vxdq

ProMetic Life Sciences Inc.

RATING: BUY

PRICE TARGET: C$3.50

Finally! IVIG to move into the clinic

Investment Recommendation

After a very long delay, the FDA has finally approved ProMetic’s Investigational New Drug (IND) application that will allow the advancement of IVIG into the clinic. Investors have been waiting for this for almost a year, as it seems to have been held up in bureaucratic red tape. However, this approval will now allow ProMetic to move its second plasma-derived therapeutic into the clinic before the end of 2015. Based on that timeline, we expect the trial to be done by the middle of 2017 and a launch at the beginning of 2018.

We believe that the significant stock price decline that we have witnessed over the past two months is entirely unwarranted on a fundamental basis; however, a lack of news flow and catalysts has certainly sapped momentum. With several key milestones expected over the next six months (including efficacy data for PBI-4050, and potential partnerships for additional new plasma-derived therapeutics), we believe that ProMetic remains one of the most exciting names in our coverage universe and one to own into an expected transformational 2016.

Investment Highlights

• Technology should drive superior margins. We believe that, at its core, ProMetic is a manufacturing story. The partnership with Emergent provides additional validation for ProMetic’s disruptive technology; superior yields and purity support our view of industry-leading margins for both ProMetic’s orphan drugs as well as ‘commodity-like’ products such as IVIG.

• Renewable pipeline of products. ProMetic’s PPPS technology is an extremely powerful platform when applied to plasma-derived therapeutics, presenting a renewable pipeline of products that can be extracted from human blood plasma with modest variable costs. We believe that the expected announcement of additional new drugs should provide incremental upside to our valuation.

• Advancing the late-stage pipeline. ProMetic expects to have several plasma-derived therapies in the clinic by next year, including orphan drug plasminogen and IVIG. These drugs represent major growth drivers for the company, with an expanding pipeline generated from ProMetic's proprietary PPPS manufacturing technology.

Valuation

We value PLI based on a sum of the parts. We value the resin business using a DCF analysis (8.6% WACC and 2.0% terminal growth), plasma-derived therapeutics with an explicit NPV, and the small molecule pipeline with a pNPV. We have held back on reassessing the risk for PBI-4050 until the drug is advanced into a pivotal trial. Nonetheless, based on our assumptions, we arrive at a target price of C$3.50, which implies a 87.2% annualized return and supports our BUY recommendation.