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Biosyent is undervalued, this investor says


If you’re looking for a pharma name with solid prospects you should be checking out Canadian company BioSyent (BioSyent Stock Quote, Charts, News, Analysts, Financials TSXV:RX). Portfolio manager Jason Del Vicario of Hillside Wealth Management says their new drug could be a big money-maker.

“This is a company that we’ve owned it since its inception seven years ago” says Del Vicario, speaking on BNN Bloomberg on Wednesday. 

Mississauga-based specialty pharma company BioSyent focuses on in-licensing or acquiring already-approved drugs and products with proven track records in other jurisdictions for marketing within Canada. The company has a number of drugs and products including FeraMax for the treatment of iron deficiency anemia and rated as the #1 iron supplement by Canadian pharmacists and doctors.

But it’s the company’s new product, Combogesic, a combination acetaminophen and ibuprofen tablet, that Del Vicario says could be a game-changer.

“The interesting thing about BioSyent is they have been heavily reliant on the one product which is FeraMax, an iron supplement, and they’ve been trying to diversify their product shelf. They’ve recently added a new product called Combogesic, which is a combination of ibuprofen and acetaminophen or Advil and Tylenol in one dose,” he said.

“I think this is a really interesting product for them, and I think that market is underestimating how this will impact their top line as well as the bottom line,” Del Vicario said.

Last month, BioSyent released its second quarter 2021 financials, showing revenue up a huge 53 per cent to $7.3 million compared to last year’s COVID-impacted second quarter. EBITDA climbed 40 per cent to $1.5 million compared to 2020’s Q2.

BioSyent said the launch of new brands Tibella and Combogesic had a positive impact on its topline for the quarter but that their overall effect has still been muted by the pandemic and related restrictions on in-person doctor’s visits. 

“Our established brands, led by FeraMAX, showed strength and resilience through the challenges of COVID-19 resulting in 51 per cent growth in Canadian pharmaceutical sales in Q2 2021 as compared to a nine per cent decline in the year ago period, which was impacted by short-term trade inventory rebalancing coming out of the first wave of COVID-19,” said René Goehrum, President and CEO, in an August 25 press release. 

“While our launch brands, Tibella and Combogesic, contributed to growth during the quarter, COVID-19-related access restrictions to healthcare professionals and persistently low patient traffic through the offices of these healthcare professionals have delayed the expected rate of uptake of these two brands,” Goehrum said.

“Although we are encouraged by the lifting of some COVID-19-related restrictions across Canada, the future impact of COVID-19 on the launch trajectory of these two brands remains uncertain,” he said. “While we continued with our planned launch investments in Tibella and Combogesic during the quarter, we delivered a 14 per cent net profit margin and marked our 44th consecutive profitable quarter in Q2 2021.”

BioSyent climbed a long way after the early 2020 pandemic pullback. The stock went from about $3.20 to $8.00 before the year was out. But 2021 has been a bit of a bust so far, with the stock currently down nine per cent. 

But with its current assets, BioSyent should be heading higher, says Del Vicario.

“We find the company quite undervalued. They have very high consistent returns on invested capital and their free cash flow yield — that is, their free cash flow divided by market cap — is about six per cent right now. They’re buying back shares, they’re founder-run. [René Goehrum] has done a really good job of running the company,” Del Vicario said. “It’s an under-the-radar type of company.”

“We own it, we like it and we think that it’s undervalued at this price,” he said.

For a sellside perspective on BioSyent, Raymond James analyst David Novak gave the stock a “Market Perform” rating after its second quarter report. Even though the $7.3 million in revenue was higher than Novak’s expected $6.7 million, the Q2 EBITDA of $1.5 million was a little under the analyst’s call for $1.8 million.

Novak said the quarter showed signs that the pandemic’s impact on BioSyent was lessening but the company may need to boost its stable of products to gain further investor attention.

“While the company is showing encouraging signs of growth relative to the comparator quarter, longer term portfolio growth could benefit from an increased cadence of business development activity, particularly considering the recent set backs of a number of growth stage assets including the Agguetant System, Cysview and the Cardiovascular portfolio,” Novak wrote in an August 25 report to clients.

“The loss of these assets may very well be offset by recent launches of Tibella and Combogesic. However, with BioSyent’s strong balance sheet, we believe further portfolio expansion could help provide the market with increased confidence in long-term growth prospects for the company,” Novak said.

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About The Author /

Jayson is a writer, researcher and educator with a PhD in political philosophy from the University of Ottawa. His interests range from bioethics and innovations in the health sciences to governance, social justice and the history of ideas.
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