Cipher Pharmaceuticals Q1 2025 Update - $CPH.to

Absorica down. Epuris up. Natroba steady. Now we wait.

May 09, 2025

*Disclosure: I own shares in CPH. I am not a professional. Please do your own due diligence.

Price: $13.82 CAD / $9.70 USD

MC: 254 million USD

EV: 272 million USD

1 year performance: +54%

CPH reported last night and held a call this morning. Results were roughly in line with of my expectations and the stock is down about 4% at time of writing.

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*all numbers in USD unless stated otherwise

Quarter Recap

Revenue came in at 12 million
EBITDA came in at 6.2 million
License Revenue
- Absortica
  - Revenue down to 0.3 million from 1.9 million
  - Market share down to 58%
- Lipofen
  - Revenue of 0.4 million compared to 0.7 million last year
Product Revenue
- Epuris
  - Revenue was up to 4.1 million vs 2.9 million last year
  - Market share at 52.5%, a new record
- Natroba and Spinosad
  - Revenue of 6.7 million
- All other
  - Revenue 0.1 million vs 0.4 million last year
On April 29 they announced that Natroba received preferred step-through status on Medicaid in the state of Illinois. Permethrin 5% was downgraded to non-preferred on the state's preferred drug listing. This move by Illinois Medicaid will require all prescriptions for Permethrin 5% to first 'step-though' Natroba representing the treatment of choice in the state.
- I think this is a big data point that validates Natroba and the CPH strategy
They repaid 15 million in debt in May

Call Notes

Natroba performing as expected
- There is some seasonality and it will perform better in Q2 and Q3
Growth strategy
- Build the US business where studies have shown Permethrin based products are no long effective
  - Natroba named preferred product in Illinois is an example
- Launch Natroba in Canada
  - Pre-meeting with Health Canada before end of Q2 2025
- Out-license the product globally
  - Discussion with 7 different parties
- In-license or acquire complementary products to be sold by US sales force
  - Continuing to search for deals
They don’t see closing any deals in the next couple months so they thought they would pay down some debt and lower interest costs
- They have access to 65 million with National Bank at any time if needed
M&A
- Pricing hasn’t changed much
- Would prefer US as they have the sales team and infrastructure to support a new product
Disappointed in Sun’s performance of Absorica
- Contract ends December 2026

Valuation

I have CPH at about 10-11x EV/2025 estimated EBITDA.

Closing Thoughts

I have been doing this investing thing for quite a while, and one of the hardest things to do is wait. Wait while the share price meanders and changes hands from skeptics to believers, however long that takes. Wait while others on X take victory laps on what is working in their portfolio. Wait while another substack gives you another potential great investment. Wait while the macro guys tell you to what is going to happen and how to position yourself (and none of it involves a random Canadian listed specialty pharma stock).

They are stuck with Absorica performing however it does until the end of 2026. It sounds like they have a plan on how to support Absorica once the contract expires, but until then we have to wait. That’s over 6 quarters from today.

They paid off some debt (which is the prudent thing to do), but this indicates that there are no major deals expected in the near term. We have to wait for an announcement.

The initial meeting (a “pre-meeting” as they have indicated) with Health Canada happens before the end of Q2. Then there is still all of the approval process. That will no doubt take some time. We wait.

Even if they manage to close an out-license deal for Natroba, it will take time for it to impact the financials in a meaningful way.

MOB-015 has effectively been written off by investors at this point. So until there is more news or a plan, we have to wait for something.

The hardest thing to do is wait for news. Who knows when it comes, but I have faith it will come. As investors, it can feel like “nothing” happens until it does. If you are seeking dopamine hits, then CPH in 2025 may not be for you….until it is.

I continue to hold my shares.

Thanks for reading.

Dean

* long CPH.to

Petty Cash