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On Thursday, H.C. Wainwright analyst Vernon Bernardino maintained a Buy rating on Edesa Biotech Inc. (NASDAQ:EDSA) with a steady price target of $21.00, representing significant upside potential from the current price of $2.38. According to InvestingPro data, this target aligns with the consensus among analysts, who maintain a $17.00 price target despite the stock’s recent volatility. Edesa Biotech, a company focused on inflammatory and immune-related diseases, recently prioritized EB06, an anti-CXCL10 monoclonal antibody candidate for the treatment of vitiligo. Bernardino highlighted the potential market opportunity for EB06, given that vitiligo affects an estimated 1.9 million people in the U.S. and has been the focus of significant transactions in the industry.
Edesa Biotech’s fiscal first quarter of 2025 results, which ended on December 31, 2024, included an operational update that emphasized the development of EB06. While InvestingPro analysis indicates the company is not yet profitable, with an EBITDA of -$6.95 million in the last twelve months, Bernardino noted the strategic importance of the prioritization of EB06, drawing a parallel to Incyte (NASDAQ:INCY)’s 2022 acquisition of Villaris Therapeutics for more than $1.4 billion, which involved a similar therapeutic area.
Although EB06’s contributions are not currently factored into H.C. Wainwright’s financial models for Edesa, the analyst expressed optimism about the potential impact of the upcoming Investigational New Drug (IND) application and the initiation of a Phase 2 study for EB06 on the company’s valuation. Bernardino suggested that the commencement of this study could be a positive catalyst for revisiting projections around mid-2025.
Edesa Biotech’s financial position appears strong, buoyed by $15 million in gross proceeds from a private placement conducted last month. InvestingPro analysis shows the company holds more cash than debt on its balance sheet, with a current ratio of 1.09, providing adequate resources to support the manufacturing of clinical-grade supplies of EB06. The company’s overall Financial Health Score stands at "FAIR," suggesting stable near-term operations despite development-stage status. The company anticipates that, pending FDA clearance for the IND, top-line Phase 2 results for EB06 could be available within 12 to 18 months.
In summary, H.C. Wainwright’s reiteration of a Buy rating and a $21 price target on Edesa Biotech stock reflects confidence in the company’s strategic direction and the potential of its EB06 candidate to address a significant market need in the treatment of vitiligo.
In other recent news, Edesa Biotech has successfully raised approximately $15 million through a private placement funding round. The funds are intended to advance the company’s CXCL10 monoclonal antibody program through the end of fiscal 2026. The financing round was led by Velan Capital, with significant contributions from new investors such as Nantahala Capital, Rubric Capital Management LP, Stonepine Capital Management, and Broadfin Holdings LLC. Notably, company insiders, including officers and directors, contributed approximately $1.1 million to the offering. The private placement included 834 Series B-1 convertible preferred shares and 3,468,746 common shares, with prices set at $10,000 and $1.92 each, respectively. As part of the investment, David Liu from Velan Capital has been appointed to Edesa’s Board of Directors. Edesa plans to utilize the net proceeds to fund a Phase 2 clinical study of its EB06, an anti-CXCL10 monoclonal antibody, for treating nonsegmental vitiligo, alongside general corporate purposes and working capital. The securities sold in this private placement have not been registered under the Securities Act of 1933 and were offered to accredited investors as defined under Canadian regulations. Edesa has also committed to filing a registration statement with the Securities and Exchange Commission for the resale of the common shares and Conversion Shares within 30 days post-closing.
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