Acerus Pharmaceuticals has huge upside, Mackie Research says

Specialty pharma company Acerus Pharmaceuticals (TSX:ASP) produced soft results in its third quarter, according to analyst André Uddin of Mackie Research Capital Corporation, but with US sales ramping up for its testosterone replacement therapy Natesto and with its share price currently lagging, now’s the time to buy ASP, he says.

Acerus’ Q3 ended September 30, 2018, reported total revenues of $1.6 million and Adjusted EBITDA of negative $1.5 million, both of which missed Uddin’s estimates of $2.7 million and negative $1.2 million, respectively. (All figures in US dollars unless noted otherwise.) The company ended Q3 with $1.2 million in cash and $5.0 million in debt, but taking into account the new loan facility announced in October, Acerus’ debt is now $9 million.

“The third quarter was highlighted by further progress against our core strategic priorities, including continued year over year growth in Natesto sales as total prescriptions increased in both Canada and the US,” said Ed Gudaitis, President and CEO of Acerus, in a press release.

In a Tuesday update to clients, Uddin notes that Natesto, which is marketed in the US by Aytu Bioscience, has just recorded its highest ever prescription numbers in the US, driven by higher demand due to better marketing efforts and reimbursement support programs.

Coming up in 2019 and 2020, Uddin says that along with launching Natesto in other international markets, Acerus is expected to launch in Canada Gynoflor, Elegant and Avanafil and to conclude its Phase I trial of its cannabis oil delivery nasal platform.

ASP is now down 24 per cent for the year, which makes for a buying opportunity, says Uddin.

“Acerus’ stock has been weak – due to weak Natesto prescriptions. However, this Rx trend is now reversing and going up — investors should buy weakness today,” he writes.

The analyst maintains his “Buy” rating and C$0.65 target price for ASP, representing a projected 12-month return of 189 per cent at the time of publication.