A Feb. 14 research note revealed Cantor Fitzgerald initiated coverage on PolarityTE Inc. (COOL:NASDAQ), with an Overweight rating and a $70 per share price target, which reflects more than a triple, or 359% upside, from where the stock is currently trading at around $17.19. "We believe PolarityTE has demonstrated strong potential to disrupt the skin regeneration market," wrote analyst Elemer Piros.
PolarityTE has developed an autologous cell wound-healing product, SkinTE, which uses a small amount of a patient's own healthy skin to cover a wound up to 500 to 1,000 times its size, and results in skin regeneration in the affected area without the typical degree of scarring and/or contracture that can accompany natural healing.
With the use of SkinTE, the company has demonstrated "previously unseen results" of "flawless healing" in animals and positive early evidence in humans, Piros indicated. One of the first users of the product on a human was a physician who excised a "badly scarred, sizable (200 square centimeter) wound from the chest of a 10-year-old burn victim" and treated it with SkinTE. A month later, about midway through the healing process, the medical provider "proclaimed that the treatment 'definitely works.'"
Piros purported that "regeneration of fully functional skin while limiting these negative effects of natural wound healing has broad application in a market that is already commercially developed, but underserved."
With the commercial launch of SkinTE underway, PolarityTE continues building a 200,000-square-feet campus that can process about 230,000 products annually. At this scale with a single daily shift, at $7,300 apiece, revenue can reach $1.7 billion, Piros forecasted.
Cantor estimated the overall market potential of SkinTE at more than $600 million, "when reaching conservative peak market penetration of 85,000 wounds in 2023," added Piros. That figure increases as PolarityTE commercializes its additional products for bone, cartilage, heart and muscle, currently in development. Based on the results to date, PolarityTE has "already generated tremendous physician interest for use of the product in a variety of settings," Piros reported. Commercialization of the bone product OsteoTE is expected by year-end.
The next catalyst for PolarityTE, according to Cantor, is the release of SkinTE treatment case study data, anticipated in mid-2018.
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Disclosures from Cantor Fitzgerald, PolarityTE, Initiation of Coverage, Feb. 14, 2018
The analyst primarily responsible for this research report, and whose name appears on the front cover, certifies that: (i) all of the views expressed in this research report accurately reflects his or her personal views about any and all of the subject securities or issuers featured in this report; and (ii) no part of any of the research analystís compensation was, is, or will be, directly or indirectly related to the specific recommendations or views expressed by the research analyst in this report.
Investment banking (next 3 months): Cantor Fitzgerald and/or its affiliates, expect to receive, or intend to seek, compensation for investment banking services within the next three months from all of the companies referenced within this report.
Cantor Fitzgerald and/or its affiliates is a market maker in PolarityTE Inc.