Canaccord morning commentCompany Update Cashing up with an inventive and strategic pick-up ProMetic has announced the acquisition of Telesta Therapeutics (TST:TSX; Not Rated) in an all-share transaction valued at ~$42.4 million. As part of the deal, ProMetic will acquire 100% of Telesta at a price of $0.14 per share. At current levels, this equates to an additional ~14.7 million PLI shares, or roughly 2.0% dilution. In our view, this is a relatively small price to pay compared to the expected benefits of the transaction, which include: i) $34 million of cash; ii) the potential for additional manufacturing capacity in a GMP facility; and, iii) up to $50 million of future tax savings. The deal is expected to close in early November. By acquiring $34 million of cash, we believe this should help quell investor concerns over PLIs high-burn rate coming out of Q2. In addition, ProMetic has added a 150,000 sq. ft. GMP manufacturing facility in Belleville, which should provide the opportunity for future vertical integration and additional downstream capacity to support its existing PPPS platform. Management asserts that with only minimal modifications (likely in Q4/17), this facility could be operational by the second half of 2018 to support the expected launch of IVIG and other products. Further, management estimates the replacement value of this facility to be >$40 million, which approximates the size of this deal on its own before consideration of the cash and tax shields acquired by ProMetic. We believe this deal underscores managements ability to execute and we expect additional deals going forward for '4050, which could bring in non-dilutive capital. We believe that a number of upcoming potential catalysts from both plasminogen and '4050 make PLI a very attractive opportunity at current levels; it remains one of our top picks. Investment highlights Balance sheet funded through 2017. With the addition of $34 million of cash, we estimate that ProMetic currently has access to >$100 million of cash, extending its cash runway by almost six months. Telesta presents two-fold benefits. The benefits of the Telesta deal are two-fold, in our view, providing the company with adequate cash to fund its programs through next year, while also adding additional manufacturing capacity. Potential catalysts abound in the second half of the year. We see a number of major potential catalysts lined up before the end of the year including the Phase III data for plasminogen, the filing of the plasminogen BLA with the FDA (along with the potential for a Priority Review), and clinical data from PBI-4050 (including the Phase II studies in IPF and Alstrm syndrome). Valuation We value ProMetic based on a sum-of-the-parts. We value the resin business using a DCF analysis (8.1% WACC and 2.0% terminal growth), plasma-derived therapeutics with an explicit NPV, and the small molecule pipeline with a pNPV. After updating our model for the Telesta acquisition, our target price remains at C$4.50, which implies a 56.3% annualized forecast return and continues to support our BUY recommendation.