Echelon Wealth Partners increases target to $2.15 from $1.50Event: RepliCel made a substantial advance on reducing its financial risk yesterday by closing on a $4.3M unit offering that will add about $4.1M in net cash to its balance sheet (current cash balance was probably at/near nil, so adjusted cash is probably at that level at month-end) and 8.2M shares/8.2M warrants to capital structure, bringing basic S/O in our model to 14.9M and fully diluted S/O to 26.2M.
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For our valuation, we still use three distinct methodologies, including NPV (now using a discount rate of 50% [was 40%] just to reflect extended development timelines that recent financial risk conferred), and multiples of our F2021 EBITDA/fully diluted, fully taxed EPS forecasts ($21.3M and $0.45, respectively), and by taking the average of these three methods, we derive a new one-year PT for RP of $2.15 while maintaining our Speculative BUY rating, corresponding to a one-year return of 46%. With a strong equity financing now consummated to provide cash to drive seminal clinical studies on RCT-01 and RCS-01 forward, and with forthcoming clinical milestones providing insight on RCT-01/RCS-01 medical prospects expected in the next two to four months, we encourage investors to augment RP holdings at current levels.