Raymond James - STRONG BUY -cantechletter.com After a huge rally over the last stretch of 2022 and into the new year, medical device company Profound Medical (Profound Medical Stock Quote, Charts, News, Analysts, Financials NASDAQ:PROF) pulled back over March. What’s next for the stock? It’s likely heading north again, says Raymond James analyst Rahul Sarugaser, who delivered an update to clients on Monday where he reiterated a “Strong Buy” rating on PROF.
Profound Medical is commercializing an incision-free, image-guided system for the precise ablation of prostate tissue. The TULSA-PRO has been granted 510(k) marketing authorization by the US FDA and is now ramping up sales and marketing efforts across the United States. And while the procedure is being installed at various locations, Profound is currently seeking CPT-1 approval for it to be covered for reimbursement by Medicare providers. Further, the company is conducting a trial to compare the outcome of TULSA-PRO for prostate cancer versus the standard of care, radical prostatectomy (RP).
Sarugaser and Raymond James recently hosted a key opinion leader call with urologist Dr. Y. Mark Hong, who spoke of the history of prostate cancer (PC) treatment.
Dr. Hong said that 20 years ago robotics ushered in a new era in treatment with RP taking over from open surgery prostatectomies. Yet, RP has not proven to be the ‘holy grail’ for PC treatment in terms of managing and curing the disease while minimizing harm, according to Dr. Hong, and there are now a wide variety of treatments available, including cryotherapy, focal laser ablation, high-intensity focused ultrasound and the TULSA-PRO.
Dr. Hong said that the TULSA-PRO should now be presented to patients as an option among others as part of informed consent, while at the same time, he noted the current out-of-pocket cost of the procedure ($30,000) is a definite barrier for patients. But he said he has a long list of patients deliberately wishing to remain on active surveillance until TULSA is covered by insurance.
“Even with [the cost of TULSA] being a major ask, people are ‘literally’ out the door wanting this technology,” Dr. Hong said.
As to Dr. Hong’s take on Profound’s comparison trial, Sarugaser wrote the following:
“While Dr. Hong is a key opinion leader and early-adopter, in his view, for the average urologist to adopt a new device, they need to believe in its safety and efficacy. The CAPTAIN data should show, in clear and unambiguous terms how TULSA measures up relative to RP: if TULSA shows a non-inferior/ superior safety profile, this should prove to amplify adoption through the median ‘meat- and-potatoes’ urologist,” Sarugaser wrote.
“Dr. Hong is an early adopter of TULSA, and has executed one of the highest volumes of procedures in the U.S. to date. His experience with TULSA—in his own hands—is showing better outcomes than the TACT trial. We do not underestimate the importance of this, because, the final mile of adoption will come down to physicians’ own (positive) experiences with TULSA,” he said.
With the update, Sarugaser maintained a one-year target on PROF of $17.00, which at press time represented a projected return of 80.9 per cent.