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Theralase to nearly double revenues as gears up for BRIC demand says Zacks

Last updated: 05:51 12 May 2016 AEST, First published: 00:51 12 May 2016 AEST

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"Theralase is diversifying its cancer therapy pipeline" - Zacks

Theralase Technologies Inc (CVE:TLT) revenues are expected to nearly double this year, as the company focuses on demand from BRIC economies, according to an upbeat assessment from Zacks Investment Research.

As reported by Proactive Investors earlier this month, Theralase achieved a 40% boost to revenues in 2015 to C$1.9mln versus 2014. See report

However, analysts at Zacks said that in fiscal 2016 Theralase revenues were estimated to nearly double to C$3.5mln and then mushroom to $8.9mln in 2017.

Theralase Technologies, which designs and manufactures super-pulsed, cold laser technology for a range of human, companion animal and equine applications, has been granted Health Canada and FDA 510(k) clearance for their second-generation pain management device, the TLC-2000.

"The long-awaited approval came by end of 2015. Theralase is diversifying its cancer therapy pipeline using three additional PDCs for various
cancer indications," said Zacks analysts.

"We are especially optimistic about its lead drug candidate TLD-1433 for the treatment of NMIBC. Phase Ib trials employing TLD-1433 with PDT are anticipated to commence by mid-2016," they added.

Zacks highlighted that Theralase is backed by a strong management team with significant knowledge and expertise along with a strong portfolio of IP and the ability to get regulatory approvals for therapeutic lasers.

"We believe that the company's focus on global market segments with significant unmet needs, the continued positive results from on-going pre-clinical trials and the upcoming TLC-2000 product launch bodes well for increased revenue coming from the laser therapy division in 2016," Zacks said.

"Expansion in international markets, Brazil, Russia, India and China (BRIC) countries with emerging economies that are increasing their uptake of medical devices due largely to growing medical awareness and economic prosperity, an aging population, government focus on healthcare infrastructure and expansion of medical insurance coverage, represents one of the best potential avenues for growth in 2017 and beyond."

Theralase is expected to validate its PDC technology in an animal cancer orthopedic model to support an Investigational New Drug application in the US and Clinical Trial Application that will allow Theralase to conduct both a Phase Ib and IIb human clinical trial for NMIBC to prove the safety and efficacy of its PDC technology in 2016 and 2017. The company will expand its platform of cancer indications in 2016 to include lung, brain and melonoma, Zacks highlighted.

"We view Theralase's pipeline as holding significant potential. While revenue has been modest to date, particularly relative to future potential, it has helped fund the company's R&D efforts. Theralase needs to strengthen its implementation of the logistical and servicing issues to handle all the necessary sales and promotion until international operations become more mature and profitable," Zacks added.

Theralase is well-positioned to deliver increasing revenue and Earnings Per Share due to expanding use of its cold laser therapy system. The company s portfolio of high margin products targets attractive growth areas such as chiropractic and physical therapy centers. We also expect to see positive results from clinical trials employing the PDT technology that could drive upside to outperform estimates. Lastly, Theralase is an attractive acquisition target given its position as a laser therapeutics company with a unique technology, expanding menu and growing installed base, the analysts said.

"2016 looks like an exciting year for Theralase. The near-term milestones include the clinical trials for bladder cancer treatment in humans commencing in 1H 2016 as well as the TLC-2000 roll-out in Q1 2016. Based on the slight delay in expected launch, we have pushed out our revenue estimates for the TLC-2000 device to Q1 2016. We are optimistic about the PDC technology and given the successful clinical trials thus far, we believe that this technology
could become the standard for cancer treatment."

Zacks said that based on its DCF model which goes out to 2026, using a discount rate of 10% and 1.5% terminal growth rate, Theralase is valued at $0.60 a share. That compares with a current value of $0.37.