This Canadian biotech inventory is undervalued, analyst says

Leede analyst Doug Loe reiterated a “Speculative Purchase” ranking on Toronto-based Satellos Bioscience (Satellos Bioscience Inventory Quote, Chart, Information, Analysts, Financials TSX:MSCL) in a Feb. 9 replace and revised his one-year worth goal to US$16.00, reflecting the corporate’s just lately accomplished share consolidation and fairness financing, whereas leaving his core medical thesis unchanged.

Loe stated current capital construction changes have “minimal bearing on our funding thesis for the agency’s lead drug SAT-3247”, whereas materially strengthening the stability sheet and decreasing monetary danger. Satellos just lately accomplished a 12-for-1 share consolidation, adopted by a US$50-million fairness providing, which Loe stated meaningfully improves the corporate’s capability to fund ongoing Section II and future Section III medical growth.

“Our ranking and the funding thesis that underpinned it are unchanged,” Loe stated, including that the financing “offers new sources of capital to fund SAT-3247 Section II/III Duchenne muscular dystrophy testing,” permitting the main focus to return to imminent medical catalysts.

Satellos is growing SAT-3247, a small-molecule, oral AAK1 inhibitor focusing on Duchenne muscular dystrophy, with a differentiated mechanism geared toward bettering muscle regeneration by muscle progenitor cells. Loe stated this method distinguishes Satellos from exon-skipping and gene-therapy rivals already available on the market or in late-stage trials.

The corporate is at present operating two Section II DMD research, together with the LT-001 grownup trial in Australia, the place Loe expects interim one-year information on muscle fats fraction, regeneration markers and grip energy later this quarter, adopted by periodic updates.

From a valuation standpoint, Loe stated the revised goal displays the brand new capital construction slightly than any change in medical expectations. His up to date mannequin assumes roughly 24.1 million totally diluted shares excellent and US$88.1 million in professional forma money, with valuation primarily based on a mix of risk-adjusted NPV and long-term earnings multiples. Loe maintained a 30% low cost fee, which he stated stays acceptable for a Section II-stage drug developer regardless of diminished balance-sheet danger.

“With capital markets issues now within the rear-view mirror, our consideration shifts to imminent Section II updates from LT-001 and BASECAMP,” Loe stated. “Our funding thesis predicts a constructive SAT-3247 impression on muscle physiology in DMD sufferers ample to justify development into Section III testing.”

At present ranges, Loe stated the revised goal implies roughly 42% one-year upside.

Loe expects Satellos to generate adverse $25.0-million in Adjusted EBITDA on nil income in fiscal 2025, deteriorating to roughly adverse $27.8-million in Adjusted EBITDA on nil income in fiscal 2026, reflecting continued funding in medical growth.

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