Acerus commercialises selected specialty pharmaceutical products in Canada and relies on partners for the US and other markets. Natesto sales growth in North America, along with other new products to be launched over the next 24 months, could potentially enable Acerus to deliver positive ongoing cash flows and EBITDA by the end of this period.
Acerus Pharmaceuticals |
Growing Canadian specialty pharma business
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Pharma & biotech |
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11 June 2018 |
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Acerus commercialises selected specialty pharmaceutical products in Canada and relies on partners for the US and other markets. Natesto sales growth in North America, along with other new products to be launched over the next 24 months, could potentially enable Acerus to deliver positive ongoing cash flows and EBITDA by the end of this period.
Natesto momentum building
Approved by FDA in 2014, lead product Natesto delivers testosterone intranasally. Aytu BioScience, the US licensee, provides Acerus with a tiered supply price per unit and Acerus markets the product in Canada. The shift to a higher US supply price tier in 2018 should increase Aytu-derived revenue and Acerus anticipates that the recent launch of a generic form of AndroGel in Canada, along with broader provincial reimbursement, should strengthen Canadian Natesto sales. Natesto has been out-licensed in 48 additional countries and marketing authorizations for these are anticipated in coming years. Since the FDA issued in 2015 a black box warning on all topical TRT products for cardiovascular risk, industry-wide growth had stalled but Acerus believes it has returned to mid-single digit growth in the past year.
Estrace sales stabilizing, Gynoflor to launch in H219
Estrace is a hormonal replacement therapy (HRT) product that Acerus acquired in 2014. Peak annual sales were c C$10m, but sales began to erode in 2016 due to generic competition; 2017 sales were C$5.8m (down c 35% y-o-y). Management believes recent trends suggest that sales are stabilizing. Acerus could achieve growth in a related segment from Gynoflor, which combines low-dose estrogen therapy with probiotic lactobacillus, and if approved, may be launched in H219.
Tefina and Stendra target sexual dysfunction markets
Stendra, a PDE5 (phosphodiesterase type-5) inhibitor intended for the treatment of erectile dysfunction, could be launched in H219. Acerus also has rights to Tefina, a use-as-required low-dose nasal testosterone gel intended for female sexual dysfunction. Tefina met its primary endpoint in a 2014 Phase II study and we believe Acerus is seeking potential partnership transactions for Tefina.
Valuation: EV of C$64m
Acerus had $2.0m in net debt at 31 March 2018 ($2.55m cash offset by $4.55m in debt). In the prior 12 months it had $7.1m in revenue and a near break-even cash burn rate. It announced a $5.75m financing ($0.30/share plus warrant) on 7 June.
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Consensus estimates
Source: Company data, Bloomberg |
EDISON QUICKVIEWS ARE NORMALLY ONE OFF PUBLICATIONS WITH NO COMMITMENT TO WRITING ANY FOLLOW UP. QUICKVIEW NOTES USE CONSENSUS EARNINGS ESTIMATES.
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Research: TMT
Keywords’ acquisition of Blindlight for up to $10m gives the group the ability to apply Hollywood movie production resources to the games industry. Factoring in Blindlight and the May acquisition of Fire without Smoke, EPS is enhanced by 2% and 4% for FY18 and FY19 respectively. With the €75m revolving credit now secured, with scope to extend to €105m, the company has plenty of headroom to continue its consolidation strategy while enhancing earnings.