*Disclosure: I own shares in CPH.to. I am not a professional. Please do your own due diligence.
Price: $8.10 CAD
MC: 194 million CAD
EV: 155 million CAD
1 year performance: +116%
CPH reported after the close Thursday and held a call yesterday morning. Results were in line with my expectations, although the call had quite a positive tone and the stock was up 13% after starting down 5-6%. Kind of reminds me of some of the XPEL trading action on earnings’ day.
I even managed to make an appearance on the call.
And your next question comes from the line of Dean [Indiscernible].
Quarter Recap
Revenue was 4.9 million. Essentially flat yoy.
Adj EBITDA was 2.9 million vs 3.1 million yoy.
Absortica revenue was 1.0 million for the quarter.
Q3 had revenue was over 2 million although they mentioned that was not to be expecting for Q4.
Full year revenue 6.1 million vs 5.2 million in 2022.
Absortica market share is up and the market seems to have stabilized post generic introduction.
Epuris was 2.9 million vs 2.6 million yoy.
Epuris revenue for the entire year 10.8 million vs 11.6 million in 2022.
Moberg is expecting results from the phase 3 study for MOB-015 in January 2025.
Call Notes
They have not seen an impact from Absortica being sold by Sun in Canada.
Absortica in Canada will compete against Epuris.
The recent news of toxic levels of benzene found in acne products may have a small positive result for Epuris as it is not a topical.
They feel that we have hit a more stable state for the Absortica product.
In regard to MOB-015
They seemed quite energized by the potential.
They will utilize a contract sales organization (Impress).
This is the same organization that launched Epuris in 2012.
They also launched Jublia for Bausch. This is the product that controls 90-95% of the TAM in Canada. So far the MOB-105 product looks to be superior.
M&A
It sounded like they are quite confident that a deal will get done in 2024.
Looking at both products and companies. Products will likely already be approved.
They may look outside Dermatology and into CNS.
They have 40 million in cash and access to 35 million but they mentioned that they would go bigger if the opportunity presented itself.
Closing Thoughts
I felt better about the business after the call. I was concerned that Absortica in Canada would affect Epuris and therefore threaten the cadence of diversification or force their hand in taking on a suboptimal deal. This doesn’t seem to be the case.
In the last couple months the legacy business has stabilized and the potential in the pipeline has become less muddy. Having said that, the stock has responded well. There have been more and more eyes on the story. The upside is there, but I think given the valuation from here the risk is higher as well. The company no longer trades at a low single digit free cash flow multiple. We are still well below market multiple, but that is probably something we should expect until the diversification efforts really hit the financials.
I am happy to be joined at the hip with management. They have executed well.
Thanks for reading.
Dean
* long CPH.to