Cipher Pharmaceuticals Quick Update - $CPH.to

Quick update after Q1 2024

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

*All items in USD unless noted otherwise.

Price: $9.41 CAD / $6.73 USD

MC: 161 million

EV: 120 million

1 year performance: +188%

CPH reported Thursday after the close and held a call earlier today. Results were ahead of my expectations and the stock was up/down%.

I have been piggybacking off the hard work of others on this one. I would recommend the following Left’s Newsletter, Raging Bull, and Framp Files. There are others that I’m sure I’m missing. As well there are quite a few smart investors on X posting about CPH. It’s worth your time to punch “CPH.to” into the search bar.

Quarter Recap

• Revenue was 5.9 million. Up 20%

  • Product revenue was up from 3.2 million to 3.3 million.

  • License revenue was up a whopping 55% to 2.6 million.

    • It should be noted that this is very lumpy.

• EBITDA up 12.6% to 3.6 million.

• They gave the update for MOB-015 that Moberg gave.

  • Launched in Sweden in February 2024.

  • Update in April that sales are strong.

  • Approved in 13 countries in Europe earlier this month.

Call Notes

• They reiterated all the important items from the news release.

• MOB-015 has demonstrated a mycological cure rate of 76%.

• Launch in Canada in H2 2026. They want the complete cure data before submitting the dossier.

• CF-101 phase 3 has been approved and should commence later in 2024.

  • Once phase 3 is complete, Canfite will submit a new drug application to FDA and marketing authorization to EMA.

  • They mentioned this is an opportunity in excess of 40 million CAD.

• They were confident that an M&A deal would be completed by end of year.

  • They mentioned it feels like less competition in Canada.

• They felt there would be growth in the existing product portfolio this year.

Valuation

I have them trading at 6-7x EV/FCF.

Closing Thoughts

This is the time in between meaningful news. The existing products are humming along and everything seems to be on track. It was good to see stability in the isotretinoin portfolio. I don’t read too much into the the quarter to quarter results, I’m more concerned about market share and continuing to generate cash to be deployed in productive ways.

We are at least 2 years away from the MOB-015 launch in Canada. I think most can’t wait that long. During this time, it’s easy to get a bit antsy. Staying the course and holding shares can be challenging. Our minds are geared towards activity and sitting on our hands can feel a bit lazy. Thankfully I am ok being lazy.

Thanks for reading.

Dean

* long CPH.to.