Notes from Cipher Pharmaceuticals' Planet Microcap Interview dated 21 August 2024.

Cipher's CEO, Craig Mull, and President of U.S. Operations, Bryan Jacobs, have discussed their future aspirations for Cipher post-Natroba acquisition in a recent interview with Planet Microcap.

Introduction

Cipher’s CEO, Craig Mull, and President of U.S. Operations, Bryan Jacobs, recently participated in an interview with Planet Microcap on 21 August 2024. That interview is available here.

The purpose of this post is to share with you the notes that I took while listening to that interview.

I think the implications of what I have written here are fairly self-explanatory, though I may write about them in further detail in the future. For now, I will present the notes that I took during the interview here without further comment for your consideration. I hope they assist you with your own analysis of the interview and the implications of what was said.

As always, thank you for reading and supporting the blog.

Interview Notes

• Natroba business – run the way that Cipher has been run in recent years. Smaller outfit. Tightly run. Made sure it was managing its topline and bottom line and cash generating. Owner managed previously. ParaPro wants to focus on R&D and sold Natroba. Cipher liked Natroba because it perfectly aligned with how Cipher is being run.

• ParaPRO’s revenues prior to acquisition? Answer: more info to come on that. Business acquisition reporting will come out with more information. High-level guidance – revenue is more than doubled for Cipher post acquisition. $22-$23 million USD. Revenues have more than doubled. Almost identical additional EBITDA level.

• Acne product (Epuris/Absorica) is Cipher’s main product in Canada and U.S. In the U.S. it has gone through genericisation with stable sales. In Canada, main competitor is Accutane, which has held market share remarkably well, given that it’s an inferior product. The important difference between Epuris and Accutane is you don’t have to eat food to take Epuris. This is important given patient demographic (teenagers). Gaining market share against Accutane. Accutane still has 40% of the market in Canada. Cipher is laser focused on going after that category.

• MOB-015 – Canadian market for nail fungus. Jublia has 90% market share. Dermatologists have indicated to Cipher that they use it exclusively but it does not work. Read out of data from MOB-015’s second phase 3 clinical trial in the U.S. to occur in January 2025. Cipher hoping that changes to MOB-015’s dosing regimen result in complete cure rate higher than that of Jublia. If that happens, Cipher believes it can take the majority if not all of the market market in Canada. MOB-015 grew market in Sweden by 52%.

• Absorica earning stable royalties in U.S. Conzip is another U.S. product, which is tramadol. Sold through another commercial partner. Bryan Jacobs: “Now that we have our commercial platform in the U.S., we’re going to be examining possibly changing those relationships”.

• Natroba business: large opportunity for it to grow. “Natroba is growing at a low double digit rate, which is a conservative rate. We think we can grow it beyond that”. ParaPRO was a one product company. “So, having the ability to bring back products that we have licensed out to other partners – we can bring those back when those licensing arrangements expire. That’s something that we’re going to look at”. “Why would we license it to someone else when we have our own U.S. presence?”

• Also have the ability to add additional products for the U.S. sales force to sell.

• Three-pronged approach to U.S. growth: (1) bring out-licensed products in-house; (2) grow Natroba market share; (3) add complementary products to portfolio.

• Natroba launched in 2012. Original indication was for headlice. Permethrin was most commonly prescribed treatment. Lice bugs over time have developed resistance. Easy to grow Natroba where you have a product where permethrin has upwards of 75% market share and Natroba has less than 25%. That’s who we’re competing with in the U.S.

• Natroba only recently approved as a scabies treatment in 2021. Natroba is the only product on the market that has been designated as having a complete cure rate for scabies.

• Other opportunity for Natroba is the treatment cycle. It’s not one bottle to treat the patient. It’s recommended that everybody within the family treats themselves with the product. So one family member = four scripts in a four person household. Room for product to grow is tremendous.

• Acquired sales force is underutilized right now. Looking for complementary products for the same referring physician or assistant. “Have made quite an advancement in a couple of opportunities.”

• Craig: we have commercial partners in the U.S. Do we really need them? Natroba product should be launched in Canada. In the process of getting approval for this. Can sell Natroba anywhere else in the world, too. Spain, Italy, Germany – all markets we can find commercial partners for. Licensing agreements will come with royalties and milestone payments.

• How does Natroba change Cipher’s trajectory? “We don’t intend to stop here. We have got further aspirations”. Cipher could become a much, much bigger company than it is today. We will be seeking a Nasdaq listing in the not too distant future. We will migrate the business to being a U.S. based business. Potential is much greater.

• Concerning MOB-015 in Canada, “you can’t have a better competitive landscape. We won’t have to fight it out. It will just be a better product and physicians are waiting for it”.

• Craig’s vision for the company in the next 3-5 years: (1) taking market share from permethrin in U.S. Automatic low-hanging fruit. That’s where we’re going to significantly increase our revenues and margins. (2) MOB-15 coming to market in Canada. (3) Significantly increase revenues into hundreds of millions. (4) would like to see market cap above 1 billion. (5) Nasdaq listing. (6) Migrate to U.S. market.