One day after TriSalus Life Sciences (TLSI), a maker of drug delivery technologies and immune-oncology therapeutics for liver and pancreatic cancer, posted its 2024 financial results the company revealed it had discovered accounting errors that may require the results to be corrected.

The revelation came in a filing disclosing that TriSalus cannot file its annual report on time as it considers the significance of the errors identified.

To its credit, TriSalus warned investors of the errors and its inability to file on time in the original news release announcing year-end results.

In the filing a day later, TriSalus provided this detail:

“The Company identified errors in the timing of stock-based compensation expense and clinical trial related research and development expenses and the use of incorrect assumptions. We are working diligently to evaluate the materiality of the errors to determine whether any corrections for previously disclosed 2024 quarterly results are required and to complete the Company’s year-end 2024 financial statements….”

The only real question remaining is what the company considers material:

“While the Company does not expect material changes to the aforementioned preliminary unaudited financial information, such preliminary financial information remains subject to change pending the completion of the Company’s financial statements as of and for the year ended December 31, 2024.”

TriSalus has four Phase 1 drug candidates with just one currently enrolling patients for clinical trial. Realizing clinical progress is the catalyst for the stock, we include the following model to illustrate investor expectations for clinical progress.

With an Enterprise Value (EV) of approximately $155 million, TriSalus is priced as if it will grow annual sales to more than $1.7 billion, up from an estimated $45 million in 2025. To justify its current share price of $5.50 our Reverse DCF— which quantifies investor expectations embedded in the current share price— indicates TriSalus must:

—Grow sales 50% annually for the next decade
—Increase NOPAT margin to 7%, versus our 2024 estimate of (357.1%)
—Increase Invested Capital (IC) Turns to 1.1, up from our 2024 average estimate of 0.06

Notably, the current share price also implies TriSalus increases Return on Invested Capital (ROIC) to 7.7% from our 2024 estimate of (18.6%):