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Medical Device Co.'s Q2/22 Results Better Than Expected

: Dr. Andre Uddin

 

November 10, 2022 (Investorideas.com Newswire) Along with improving its numbers during the quarter, this firm sold its first ultrasound ablation machines in North America, noted a Research Capital Corp. report.


The Canadian medical device firm, Profound Medical Corp. (PROF:NASDAQ; PRN:TSX), reported revenue and a net loss that were better than anticipated for Q2/22, ended June 30, reported Research Capital Corp. analyst Dr. Andre Uddin in an August 5, 2022research note.

"The stock is up 25% from our upgrade; our stock calls on Profound have generated a 367% return," Uddin added.

The Ontario-based company's two devices are TULSA-PRO, for prostate disease ablation, and Sonalleve, primarily for the nonsurgical treatment of uterine fibroids.

Uddin reviewed Profound's Q2/22 financial results. The company generated US$2 million (US$2M) in revenue, more than Research Capital's estimate of US$1.7M.

Profound posted a net loss for the quarter of -US$5.9M, or -US$0.28 per share, better than Research Capital and consensus' -US$0.39 per share projection. Also, this performance was better than the same time last year, when the biotech's net loss was -US$9M, or -US$0.35 per share.

At Q2/22's end, Profound had US$53.2M in cash.

Positive Product Updates

In other news, Uddin relayed, Profound sold its first Sonalleve devices in North America during Q2/22, both to children's hospitals, one in Canada, the other in the U.S., for treatment of pediatric osteoid osteoma.

"Sonalleve offers these young patients treatment that can be performed safely with clinical improvement but without any incisions, needles, or ionizing radiation exposure," Uddin noted.

Regarding Profound's other medical system, TULSA-PRO, three new factors should help grow sales and attract the interest of larger Medtech companies, Uddin purported.

One is the U.S. Centers for Medicare & Medicaid Services' proposed 5% reimbursement increase for C9734, the CPT code currently being billed by TULSA-PRO users. This would take the reimbursement amount nationally to US$13,274 and, if approved, would go into effect in January 2024. This change would be a nice boost for Profound, Uddin indicated.

"Garnering this CPT should turn Profound into a cash-flowing machine," he wrote. "We believe device companies would likely look at such an opportunity, and we speculate that an H2/23 acquisition [of Profound] would make logical sense."

The second factor is an upcoming clinical trial called CAPTAIN in which treatment with TULSA-PRO will be compared to radical prostatectomy, Uddin wrote. The trial is expected to start in 2023, with the first data set available by year-end.

"We believe positive outcomes of the trial should increase the adoption of TULSA-PRO," he added.

The third factor is Profound's continuing efforts to increase awareness of TULSA-PRO in the medical community, which should help boost sales, Uddin noted, "given the strong efficacy and clean safety profile of the device."

Research Capital has a Speculative Buy rating and a US$10.20 per share target price on Profound, the current share price of which is about US$4.85.

Disclosures:

1) Doresa Banning wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.

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Disclosures For Research Capital Corp., Profound Medical Corp., November 4, 2022

Analyst Certification: I, Andre Uddin, Ph.D., certify the views expressed in this report were formed by my review of relevant company data and industry investigation, and accurately reflect my opinion about the investment merits of the securities mentioned in the report. I also certify that my compensation is not related to specific recommendations or views expressed in this report. Research Capital Corporation publishes research and investment recommendations for the use of its clients. Information regarding our categories of recommendations, quarterly summaries of the percentage of our recommendations which fall into each category and our policies regarding the release of our research reports is available at www.researchcapital.com or may be requested by contacting the analyst. Each analyst of Research Capital Corporation whose name appears in this report hereby certifies that (i) the recommendations and opinions expressed in this research report accurately reflect the analyst's personal views and (ii) no part of the research analyst's compensation was or will be directly or indirectly related to the specific conclusions or recommendations expressed in this research report.

Andre Uddin, Ph.D. has visited Profound Medical Corp. in the past 18 months.

General Disclosures: The opinions, estimates and projections contained in all Research Reports published by Research Capital Corporation ("RCC") are those of RCC as of the date of publication and are subject to change without notice. RCC makes every effort to ensure that the contents have been compiled or derived from sources believed to be reliable and that contain information and opinions that are accurate and complete; RCC makes no representation or warranty, express or implied, in respect thereof, takes no responsibility for any errors and omissions which may be contained therein and accepts no liability whatsoever for any loss arising from any use of or reliance on its Research Reports or its contents.

Information may be available to RCC that is not contained therein. Research Reports disseminated by RCC are not a solicitation to buy or sell. All securities not available in all jurisdictions.

Potential Conflicts of Interest: All Research Capital Corporation ("RCC") Analysts are compensated based in part on the overall revenues of RCC, a portion of which are generated by investment banking activities. RCC may have had, or seek to have, an investment banking relationship with companies mentioned in this report. RCC and/or its officers, directors and employees may from time to time acquire, hold or sell securities mentioned in our Research Reports as principal or agent. RCC makes every effort possible to avoid conflicts of interest, however readers should assume that a conflict might exist, and therefore not rely solely on this report when evaluating whether or not to buy or sell the securities of subject companies.

RCC USA: Information about Research Capital Corporation's Rating System, the distribution of our research to clients and the percentage of recommendations which are in each of our rating categories is available on our website at www.researchcapital.ca. The information contained in this report has been drawn from sources believed to be reliable but its accuracy or completeness is not guaranteed, nor in providing it does Research Capital Corporation assume any responsibility or liability. Research Capital Corporation, its directors, officers and other employees may, from time to time, have positions in the securities mentioned herein. Contents of this report cannot be reproduced in whole or in part without the express permission of Research Capital Corporation. US Institutional Clients - Research Capital USA Inc., a wholly owned subsidiary of Research Capital Corporation, accepts responsibility for the contents of this report subject to the terms and limitations set out above. US firms or institutions receiving this report should effect transactions in securities discussed in the report through Research Capital USA Inc., a Broker - Dealer registered with the Financial Industry Regulatory Authority (FINRA).

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