Cardiol Therapeutics Inc. (Nasdaq: CRDL) (TSX: CRDL) has in some ways burst onto the scene over the past few months after spending several years researching and developing therapies for heart conditions including pericarditis, myocarditis, and heart failure. The company is currently conducting two Phase 2 trials, and its treatment in one of the studies was granted Orphan Drug Designation (ODD) by the United States Food and Drug Administration (FDA).
The Orphan Drug Designation and the concurrent trials, conducted at esteemed heart health centers both in the U.S. and abroad, represent a major step into the limelight for Cardiol Therapeutics. Analysts and researchers have started to take notice of the microcap drug developer with a valuation hovering in the $130 million dollar range. The ODD itself can have a major impact on the market capitalization of a smaller company, and it certainly did with Cardiol. The stock opened the year trading at $0.81. By the end of February, two weeks after the ODD announcement, it hit $2.06. The stock rose 153% in two months.
The stock has held strong through its appreciation, closing trading yesterday at $2.01/share and analysts and researchers looking at Cardiol’s situation believe there is still plenty of headroom. The clinical trials are the main value drivers, and the company is anticipating topline results from its recurrent pericarditis trial (called the MAvERIC-Pilot study) during this quarter. If those results are positive, the combination of an ODD with a successful Phase 2 trial looks pretty good to people following Cardiol’s progress.
A Look at the Reports
Leede Jones Gable, an independent Canadian investment firm, issued an update in late March. Analyst Douglas W. Loe used a recent acquisition in the biotech sector, along with other analysis, to form his Speculative Buy rating.
Pharma giant Novo Nordisk recently acquired private Cardior Pharmaceuticals in a deal valued up to US$1.1 billion. Cardior is conducting a Phase 2 trial for a form of heart disease, and Novo plans to initiate another for a different heart condition. Both trials are testing Cardior’s lead drug candidate.
In light of this deal and Loe seeing Cardiol as a closely comparable company to Cardior, Leede Jones Gable reinforced a price target of CAN$4.50/share (about US$3.30/share). The updated research also notes that if Cardiol Therapeutics was acquired at a similar value to Cardior Pharmaceuticals, its implied price would be in the neighborhood of $16.14/share.
Chimera Research Group released a research report on April 3. Chimera analyst Joe Gantoss discusses Cardiol’s upcoming catalysts and looks at the stock from a technical standpoint. According to the analyst, the upcoming release of topline Phase 2 MAvERIC-Pilot clinical results, expected during this quarter, could represent a turning point for Cardiol and its valuation. Chimera calls Cardiol a strong buy, and the report contemplates pricing in the $3 to $5 range should the Phase 2 results indicate a clear success and path to a Phase 3 trial.
Canaccord Genuity then released an updated Cardiol report on April 4. Canaccord analyst Edward Nash remains bullish on the company’s prospects, offering a buy rating with a price target of $6/share. Nash, like the other analysts, points toward the upcoming Phase 2 results as the near-term catalyst to propel the stock forward should the trial be a success.
Most recently, H.C. Wainwright initiated coverage with a $9 price target. Analyst Vernon Bernardino gave the stock a Strong Buy rating, seeing it as an undervalued company with big market potential and pointing to the upcoming trial results as a major catalyst.
Interested investors are encouraged to read the reports and familiarize themselves with Cardiol’s positioning in the market. Though the recurrent pericarditis results are the next big event for the company, 2024 could hold other major developments as well. The Phase 2 trial for acute myocarditis (ARCHER; another orphan-eligible condition) is expected to reach full enrollment in Q3, while the company anticipates an Investigational New Drug filing with the U.S. FDA sometime in the second half of the year for the treatment of heart failure.
Cardiol has a lot of oars in the water for a company at this valuation, and the analysts seem to agree that they are all rowing in the right direction. This is a stock that should be on your radar.
