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Pediapharm bolstered by Mackie view

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Broker Mackie is upbeat on Pediapharm (CVE: PDP) and has repeated a ‘speculative buy’ rating and targets $0.50 on the shares.

Pediapharm is a specialty Canada-based pharma that exclusively distributes and licenses medicines to treat pathological conditions that mainly affect children from infancy through to 18 years.

It has just announced a $5mln private placing, which the broker expects to be used to acquire more products.

“Pediapharm hopes to acquire or in-license approved novel drugs for domestic market, with peak sales between $5mln and $8mln. Any new product additions should accelerate the company’s transition to become profitable,” said analyst André Uddin.

The group launched its flagship drug, Rupall in January this year, he notes.

Uddin believes Rupall is the key growth driver for the company and expect it to achieve over $8mln in peak sales in out years.

“We expect Pediapharm to launch Otixal in Q2 CY2017 and Cuvposa in Q4 CY2017 if approved.”

Combined Mackie reckons sales of the three products should eventually bring in over $16.5mln of annual revenues.

“Excluding new product acquisitions, we expect Pediapharm to become cash and net income positive around CY2018-2019,” it adds.

“Our investment thesis on Pediapharm is based on its organic growth. The company is growing in a very similar fashion to Axcan Pharma, which was successfully sold to TPGCapital for US$1.3bn.”

Shares in the firm are currently changing hands at $0.31 each – 12.73% up on the day.

Story by ProactiveInvestors


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