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Cipher Pharma is a Buy, says Leede Jones Gable

Cipher Pharmaceuticals (Cipher Pharmaceuticals Stock Quote, Charts, News, Analysts, Financials TSX:CPH) has a nice-looking pipeline of dermatology assets, according to Leede Jones Gable analyst Douglas W. Loe, who provided clients with an update on the company on Wednesday. Loe reiterated a “Buy” rating on CPH and C$4.25 target price, implying at press time a one-year return of 19.2 per cent.

Ontario-based specialty pharma company Cipher, which has a portfolio of commercial and early-to-late-stage products in markets in Canada, the United States and South America, announced that partner company Moberg Pharma AB has obtained EU approval for MOB-015 for nail fungus treatment, after demonstrating superior levels of mycological cure and a significantly better complete cure rate. 

Cipher said MOB-015 has been recommended for national approval in 13 European countries and will be commercialized through partners such as Bayer and Allderma, with a Scandinavian launch this year. Cipher has the exclusive Canadian rights to MOB-015, where its says the total prescription market for nail fungus treatment (onychomycosis) is “greater than $82 million”.

“We are excited about our partnership with Moberg Pharma, who have a strong track record developing and commercializing nail fungus products previously in both Europe and North America. This approval is a tremendous step in the right direction towards ultimately receiving market approval in Canada and the United States,” said Cipher interim CEO Craig Mull in a statement.

Loe said while the positive regulatory review in the EU is not directly relevant to Cipher’s partnered geography in Canada, it could still reflect favourably on regional regulatory risk for the drug.

“We are not surprised that MOB-015 was approved in at least one major medical market based on its Phase III history in conferring mycological cure in pivotal onychomycosis trials,” Loe wrote.

“The relevant trial to which we usually refer was a 365-patient Phase III placebo- controlled trial published in the Journal of the American Academy of Dermatology in 2021. The mycological cure rate at one year was 69.9 per cent for MOB-015-treated patients versus 27.7 per cent for placebo patients, with complete cure rate also favouring MOB-015-treated patients at 4.5 per cent versus zero per cent respectively,” he said.

Loe said MOB-015 is one of three development-stage dermatology assets that could in time contribute positively to Cipher’s revenue and EBITDA profile.

Loe sees Cipher’s revenue going from $20.7 million in 2022 to $21.9 million in 2023 and to $23.0 million in 2024, while EBITDA is forecasted to go from $12.4 million in 2022 to $12.8 million in 2023 and to $13.1 million in 2024. (All figures in US dollars except where noted otherwise.)

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