2012 was a good year for Cipher Pharmaceuticals (TSX:DND)
The specialty pharma, which boasts three commercial products and has a fourth in development, delivered a return of 291% in 2012, making it the the best-performing life sciences company on the TSX and the second-best performing stock overall.
To date, Cipher has derived most of its revenue from cholesterol treatment drug Lipofen, which was buttressed late in 2011 when it began to market ConZip, a Tramadol treatment for moderate to moderately severe chronic pain. But the real spike in Cipher’s share price came in May, when the company announced it had received FDA approval for acne treatment Absorica, a treatment Cipher management believes could be their first to be truly differentiated from its competition.
Cantech Letter caught up with CEO Larry Andrews to talk about the year that was and whether 2013 can replicate its success.
Larry, what went right in 2012 to drive Cipher’s share price higher?
A few things stood out in 2012. Most significantly, we received FDA approval for our highest-potential product (Absorica – a novel formulation of isotretinoin, for severe acne) and our U.S. partner Ranbaxy launched it in the fourth quarter. This was the third of our original three products to get to market. Our financial results also improved significantly, with net revenue up 120% Q3 year to date and cash up 63%.
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What is it about the acne product that has you so excited?
It’s the first product from our portfolio that is truly best-in-class with first-to-market status and offers significant benefits relative to the other products on the market. In addition, it’s the only promoted formulation in its category, so we see a good opportunity to carve out meaningful market share in a $430 million U.S. market. We’re also launching it in Canada this year.
What about the other two products?
Well, our first product (Lipofen, a fenofibrate formulation used to treat high cholesterol) has really performed well. It has been the major driver of the revenue growth in our 2012 results to date. We also have a once-daily tramadol product that was launched in late 2011 in the U.S. and mid-2012 in Canada and has started to contribute to our results.
What should investors expect from Cipher in 2013?
They should expect continued total revenue growth from our current products, most significantly driven from Absorica. We’re introducing the product in Canada as well, and are making an investment in our own commercial sales and marketing team here (versus through partners, which has been our model to date). We’re also targeting growth in two other ways: new products, with a focus on the Canadian market; and additional out-licensing agreements for our current products in other countries.
How is the balance sheet to support these plans?
We’ve actually been steadily growing cash through operations over the last five quarters, so our cash balance has increased to just over $15 million at the end of Q3 and we are debt-free. With the growth we expect from our current portfolio, we have ample financial resources to execute the growth plans we have in place today.
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