Cannacord has a 13.5c price target on MGC Pharma, more than 3x its current stock price. The fundie says potential sales in the US underpin valuation.

A note out of fund manager Cannacord has put a stock price target on MGC Pharma (ASX:MXC) at GBP 7.2 pence (or around 13.5 cents ), more than three times the current share price of 4 cents.

While Cannacord trimmed its target price from GBP 8 pence (around 15c), the fundie still believes the UK and Australia-listed company has a compelling strategy that could see the company planting itself deep into US markets.

MGC Pharma is running several clinical trials, and rigorously pursuing multiple commercial opportunities in Israel, Europe, and soon the US.

In the key US market, MXC has partnered with distribution company AMC, which has already put an initial order US$3m for CimetrA with a further US$24m expected in the next three years.

AMC is a critical partnership for MXC that could potentially see CimetrA, CannEpil and Cognicann being sold in the US, the biggest healthcare market in the world.

An FDA approval on CimetrA is also expected to be sought in FY22.


Rich pipeline in the next few months

A substantial amount of newsflow is expected out of MGC Pharma over the next few months.

It’s currently completing a Phase 3 Israeli study on CimetrA, which should provide substantial clinical efficacy data in the first half of 2022.

In the US, the company plans to seek an FDA Emergency Use designation on CimetrA, and obtain significant near-term bulk orders from individual states using the US federal COVID-19 grant.

A Phase 2 in paediatric epilepsy trial of CBD-based drug CannEpil started in December 2021, with data possibly in 2H 2022.

In June last year, the drug became fully covered under Ireland’s Primary Care Reimbursement Service, meaning it will be free of charge for Irish patients prescribed the treatment.

CogniCann, which is currently being evaluated in a small Phase 2 trial for symptomatic relief of dementia, may produce initial data in the second half of 2022.

Meanwhile ArtemiC, the non-pharmaceutical food supplement version of CimetrA, is continuing to produce strong sales in Europe.

In November last year, MXC announced  an approximately $1,000,000 ArtemiC order from its European partner, Swiss PharmaCan.


Sales to grow rapidly in the years ahead

Cannacord believes that CimetrA could reach peak sales above €150m, potentially in calendar 2023.

The fund manager also estimates peak sales for CannEpil could be above €600m after 2027, while CogniCann could have sales over €150m.

Based on these figures, Cannacord believes there is upside potential to 13.2 pence (24.5 cents) a share by late 2022 if trials progress as anticipated, and the data readouts are positive.

The valuation is also based on the assumption there will be a period of eight-year data exclusivity (2026-2033) for CannEpil and CogniCann as pharmaceutical products.

There may be a further two years of market exclusivity, but this is not assumed as cannabinoids are already available.

Currently, Cannacord has a speculative “buy” recommendation on MGC Pharma at GBP 7.2 pence (around 13.5c) a share.

This article was developed in collaboration with MGC Pharma, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.