Cipher Pharmaceuticals is a buy, this analyst says

Leede Financial analyst Douglas Loe said in an Oct. 14 update that Cipher Pharmaceuticals (Cipher Stock Quote, Chart, News, Analysts, Financials TSX:CPH) received “a major boost” following a positive arbitration ruling against its U.S. Absorica marketing partner Sun Pharma, removing a lingering risk to Cipher’s Epuris franchise in Canada and improving its financial outlook.

Loe reiterated a “Buy” rating and $19.00 target, saying the outcome “not only affirms Epuris’ market leadership in Canada but provides supplemental balance sheet cash and incremental royalty income.”

The arbitration centred on Sun’s launch of Absorica LD, an alternative isotretinoin formulation marketed in both the U.S. and Canada. Cipher argued that Sun improperly used Epuris-related clinical data to support its Health Canada application, and arbitrators agreed.

The binding decision grants Cipher a US$3-million cash award, a 15% royalty on Absorica LD net sales, and reimbursement for most of its legal expenses, estimated at up to US$2.0-million. Loe said the combined benefit could add roughly US$5-million to Cipher’s balance sheet.

Cipher’s flagship product, Epuris, continues to dominate Canada’s isotretinoin market with a 51.3% market share and US$3.6-million in gross sales for FQ2/25, outperforming competing brands such as Absorica LD, Clarus (Teva/Mylan), and Accutane (Cheplaspharm Schweiz).

“Sun’s Canadian launch of Absorica LD last year has had little impact on Epuris’ revenue trajectory,” Loe wrote. “This decision underscores Epuris’ brand strength and validates Cipher’s leadership in the Canadian dermatology market.”

Loe added that Cipher’s newly secured cash provides “financial flexibility for debt reduction or new in-licensing opportunities.”

He also noted strong momentum from Natroba, Cipher’s recently acquired spinosyn-based treatment for head lice and scabies, which generated US$7.8-million in FQ2/25, up from US$5.5-million in the prior quarter. He expects continued growth from international approvals and potential out-licensing agreements.

Leede’s valuation remains based on the average of 20× fiscal 2026 fully diluted EPS (US$0.71) and 12.5× fiscal 2026 Adjusted EBITDA (US$28.0-million), incorporating pro forma cash of US$16.3-million (C$25.8-million) and long-term debt of US$25.0-million (C$35.1-million). Loe said the stock has risen more than 1,100% since his coverage began in early 2021, and his target implies a 33% one-year return.

Loe said that Cipher should do US$24.4-million in Adjusted EBITDA on revenue of US$52.2-million in fiscal 2025, improving to US$28.0-million on revenue of US$58.5-million in fiscal 2026.

-30-