PDP.V - Pediapharm

[snowball82]

I bought shares of this company (0.39-0.41) in the very profitable sector of specialty pharma/licencing.

 

Almost 0.10 $ cash per share, close to be cash flow positive (without exceptional financement fees) and very promising products with Nyda et Easyhaler.

 

http://www.pedia-pharm.com/en/investors/corporate-presentation/

 

The company says sales will increase from 3 to 35-40 M$ 4 years from now !

 

Nyda product could be a catalyst :

 

1) On October 30, 2013, Pediapharm received the

acceptance of NYDA's reimbursement by the Ontario Drug Benefit (ODB), enabling

more patients to have access to the product when prescribed. Tel

qu'indiqué dans la circulaire: "The Canadian head lice market is

estimated at 1.1 million units annually and grew by 8.5% in the past twelve (12)

months, partly due to the introduction of NYDA®.

 

2) "Super lice on verge of

conquering Canadian scalps as mutant parasites develop immunity to insecticides

| National Post http://news.nationalpost.com/2014/03/12/super-lice-on-verge-of-conquering-canadian-scalps-as-mutant-parasites-develop-immunity-to-insecticides/

 

http://www.nyda.ca/

 

Do you believe the company has the same potential than Biosyent (rx.v) ?

What do you think about this investment idea ?

 

 

[Drokos]

"The Canadian asthma and chronic obstructive pulmonary disease ( "COPD " ) market is Estimated to Exceed $ 1 Trillion Annually"

 

I hope that is a typo.

 

I'd be skeptical of any company that is proclaiming its sales will grow from 3 to 35-40 in three years. Maybe they will, maybe they wont, maybe they will be way higher, but I see no upside in proclaiming that other than trying to pump up the stock. I'd prefer they focus on getting profitable rather than setting a 4 yr target for sales.

 

According to the company presentation, they're 7 years into the strategy but isn't yet profitable? they seem to be moving in the right direction, but it seems like the loss of the Sanofi contract will weigh on them turning the corner. A quick scan of their docs didnt reveal the size of those products, do you happen to know? Also why is the contract being terminated? Any sales seem to be a positive to help them leverage their fixed costs.

 

I'd like to get behind this stock, but at first glance I don't love it. I'd much prefer getting behind established management teams at BioSyent or Knight. Obviously those two are much pricier, but in this case I think its worth it.

 

[Liberty]

Someone made a market order?

[gary17]

I spoke to management in mid-August and understand the company's internal goal is to get to the following revenue levels (by 2018):

 

Easyhaler - $12 - $15M

NYDA - $6 - $8M

Cuvposa $5M

Naproxen suspension $2 - $4M

Kool effect, vapoluptus and epicerma  $3 - $5M

 

So about $30M - $35M

If the margin could be like Biosyent in the order of 25% , this could mean earnings of $7.5M - $8.7M

they have about 72M shares outstanding.... so perhaps when they achieved the above goals they may have 100M shares outstanding.... (30M x 0.3 = $10M more capital) 

 

$7.5M / 100M = EPS = $0.075    -- a 10x multiple would be a double from today's valuation. 

 

If this occurs 3 years from now...  that's a 33% return using the conservative 10x valuation. 

 

In my opinion the business model is a fairly solid one; it's just a matter of whether they can execute their strategy.  We should assume that they probably won't be as "lucky" as RX or Paladin but at $0.30/share the risk/reward seems decent. 

 

Gary