HLS Therapeutics has upside left, says Stifel GMP

The analyst said the drug could reach peak sales in Canada of between US$15 and $25 million.

Toronto-based specialty pharma company HLS Therapeutics which focuses on the central nervous system and cardiovascular markets announced on Thursday that Health Canada has accepted PERSERIS for review.

CEO Greg Gubitz said that PERSERIS is complimentary to the company’s central nervous system business which already includes CLOZAIL and CSAN Pronto.

“We want to leverage our experience and our presence in this therapeutic area to provide practitioners with new and innovative treatments to help patients with schizophrenia. PERSERIS, if approved, with its unique sub-cutaneous long-acting injectable delivery formulation, could bring another treatment option to patients and practitioners,” wrote Gubitz in a press release.

HLS exclusively in-licensed PERSERIS from Indivior PLC, announced in May 2019, for $1 million and up to an additional $4 million in milestone payments along with a double-digit tiered royalty rate.

HLS’ share price spiked at the end of December with the company’s announcement that Health Canada had approved Vascepa to reduce the risk of cardiovascular events. Keywood estimates that the target market for Vascepa in Canada is about two million patients and slightly better than his earlier projections, implying that the drug’s sales could be worth between $16 and $75 per share, incremental to the company’s base business of primarily Clozaril at $10 per share.

Keywood said the Health Canada approval is further validation of HLS’ management’s solid execution, which he expects will continue.

“We see Vascepa as evidence of HLS’ ability to create shareholder value, where $5 million was paid up front for the drug asset that could be worth more than $500 million. Our thesis now evolves, where we believe HLS will in-license and commercialize other similar assets with a more robust and solid foundational platform in place with strong synergy implications,” Keywood wrote in an update to clients.

Looking ahead, Keywood sees milestones for HLS with the launch of Vascepa next month. While the company builds out its salesforce of up to 75 reps, it will likely receive spillover benefits in Canada from Amarin’s push in the United States with over 800 reps and large marketing resources, Keywood says.

“We find the situation to be very unique and possibly one of a kind that could lead to above average exposure for Vascepa, leading to higher sales estimates. Our near-term forecasts reflect very modest contributions for Vascepa that are anticipated to peak in sales around year four and we will look to refine these forecasts as milestones are achieved,” Keywood said.

The analyst is calling for fiscal 2020 revenue and EBITDA of $65.2 million and $29.0 million, respectively, and for fiscal 2021 revenue and EBITDA of $75.7 million and $39.6 million, respectively. With the update, Keywood is reasserting his “Buy” rating with a new target of $33.00 (previously $32.00), which at the time of publication represented a projected 12-month return of 42 per cent.