Valeo Pharma has turned a corner, says Industrial Alliance

Specialty Pharma company Valeo Pharma (Valeo Pharma Stock Quote, Chart, News CSE:VPH) has a number of product launches in the fourth quarter and looks ready to end the year as a profitable EBITDA company.

That’s the news from Industrial Alliance analyst Chelsea Stellick, who delivered a research update to clients on the company on Wednesday where she went over Valeo’s just released quarterly results.

Montreal-based Valeo acquires or in-licenses both brand name and generic late-development or commercial-stage drugs and, with two business segments in branded prescriptions and niche hospital injectable products, focuses on three therapeutic areas, neurology, oncology and hospital products.

The company announced its third quarter fiscal 2020 results on Tuesday for the period ended July 31, showing revenues of $1.5 million compared to $2.6 million a year ago and an adjusted EBITDA loss of $0.7 million compared to a loss of $0.1 million in Q3 2019.

In its comments on the quarter, Valeo said business was impacted by COVID-19 restrictions as well as adjustments related to prior reporting periods. Valeo expects to launch two drugs, HesperCo and Ethacrynate Sodium during the fourth quarter, both of which should aid its sales numbers, management said.

“We are seeing revenues returning to an uptrend with the recent launch of Ametop in the last few weeks of the quarter and the launch of Yondelis at the beginning of the fourth quarter, together representing 13 per cent of our fourth quarter sales to date,” said Steve Saviuk, President and CEO, in a press release. “We have high expectations for HesperCo, which will be launched nationally in the coming weeks, as the immune support it provides is needed in the current healthcare environment.”

Stellick said Valeo has a growing portfolio of products in the pipeline, including eight currently marketed products. Along with HesperCo, there’s Pip Tazo to be launched in the first quarter 2021, Redesca, to be launched in January 2021, and two generic products expected to receive Health Canada approval in October or November.

“While the results were tempered by COVID-19 restrictions and some seasonality in its sales, the Company highlighted fourth quarter to date has shown promising results as contributions from the recent launches of Ametop and Yondelis are positive, not to mention there will be additional momentum as HesperCo and Ethacrynate Sodium in the United States are scheduled to launch both in the fourth quarter as well,” Stellick wrote.

Stellick said both Redesca and HesperCo represent game-changing opportunities, with the analyst forecasting Redesca sales to hit probability adjusted revenue of $6 million in 2021, $12 million in 2022 and $18 million in 2023. Stellick is forecasting HesperCo to post revenue of $5 million in 2021, $9 million in 2022 and $10 million in 2023.

With the update, Stellick has reiterated her “Buy” rating for VPH but dropped her target price from $2.30 per share to $1.90 per share, which at press time represented a projected 12-month return of 68.1 per cent.