Biotech Announces Topline Results From Cardiovascular Drug Trial
Research Report

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Cardiol Therapeutics (CRDL:TSX; CRDL:NASDAQ) announced the topline results from its Phase II ARCHER trial of CardiolRx in acute myocarditis.

H.C. Wainwright & Co. Analyst Brandon Folkes, in an August 6 research note, noted the firm sees the trial as highly supportive of further development of CardiolRx for inflammatory cardiac conditions, including myocarditis, cardiomyopathies, and heart failure. CardiolRx is a pharmaceutically produced oral cannabidiol formulation that contains no THC.

The safety profile was very clean, further validating the broader CardiolRx and CRD-38 development programs, Folkes noted1.

"We believe this morning's data further supports our positive view on CRDL stock, and enhances CardiolRx's attractiveness to a strategic partner," wrote Folkes, who rated the stock a Buy with a $9 price target, a moire than 566% increase from the US.1.35 per share he reported at writing. "However, in our view, CRDL could also target orphan indications within the cardiology space, including immune checkpoint inhibitor-induced myocarditis, and self-commercialize those to drive shareholder value as well. Acute myocarditis has no FDA-approved drug therapies currently, and we view this morning's results as supportive of future development in the space. The company has a cash runway through 3Q26."

CRDL’s current market cap (~US$112 million) does not reflect the positive readout from ARCHER, and Wednesday's announcement is a positive development, Folkes said. Success in the aforementioned indications could unlock an additional $500 million revenue opportunity for the company and potentially leverage the ARCHER trial data into broader cardiovascular indications.

Results 'Supportive' for Approval, Commercial Success

The ARCHER trial was a multi-center, randomized, double-blind, placebo-controlled Phase II study evaluating CardiolRx in 109 patients with acute myocarditis, the analyst reported. After 12 weeks of double-blind treatment, the trial showed a favorable trend in one of the two primary endpoints, extracellular volume (ECV), which improved in the CardiolRx group compared to placebo (p=0.0538). The other primary endpoint, global longitudinal strain (GLS), did not show a statistically significant difference in a patient population with preserved left ventricular function at baseline.

"We believe these two primary endpoints are independent predictors of cardiovascular outcomes, and thus the strong results in ECV are supportive of the potential for CardiolRx to benefit patients and thus increase the likelihood of approval and commercial success in this very difficult patient population," the analyst wrote.

According to the press release, the reduction in ECV was accompanied by improvements across multiple pre-specified cardiac magnetic resonance imaging (CMR) endpoints, including a significant decrease in left ventricular (LV) mass. The reduction in LV mass is particularly intriguing given the study's short duration (12 weeks), Folkes noted.

While specific figures were not provided, the company noted the reduction was "significant" in the press release, and seeing more data on the LV mass reduction could be a key catalyst for CRDL stock. CardiolRx was well-tolerated with no new safety signals observed. The results have been submitted for presentation at an upcoming scientific meeting and will also be submitted for peer-reviewed publication. Given the limited data in the release, we believe the publication of additional data and presentation at a scientific meeting could serve as meaningful catalysts for the stock.

Cash On Hand Into 3Q26

The company plans to integrate the results into its broader cardiovascular development strategy, including support for CardiolRx as a potential therapy in other forms of myocarditis and heart failure, he said. The findings also support future development of CRD-38, which shares CardiolRx’s mechanism of action but with a distinct oral formulation.

Folkes said the Buy rating and price target were based on a risk-adjusted net present value (rNPV) analysis using a discounted cash flow (DCF) model. The firm applied a 13.4% weighted average cost of capital (WACC) and assumed an exit multiple of 11.0x based on 2031E revenue forecasts.

"We ascribe a 70% probability of success to CardiolRx in recurrent pericarditis and take a very conservative approach to both the acute myocarditis and heart failure programs, and assign … 20% and 10% probabilities of success, respectively," the analyst wrote. "CRDL has cash on hand to fund operations into 3Q26."