Research Capital ups Valeo Pharma PT on new drug licensing

Research Capital raised its price target for Valeo Pharma (CSE:VPH) to $1 (Canadian) from 70 cents and maintained a “speculative buy” rating after the company closed a $40-million (U.S.) non-dilutive financing from Sagard Healthcare Partners to fund the licensing/acquisition of three new drugs.

Shares of Valeo were quoted at 64 cents near the close on Aug. 2.

Analyst Andre Uddin writes that the transactions “diversify Valeo’s revenue base, add significant growth to the company’s current sales trajectory, add two new therapeutic fields – ophthalmology and allergy – and bring the company one step closer to turning cash flow positive.”

Mr. Uddin said Valeo has 60 sales reps currently and will add 12 ophthalmology reps. “The new products added were not being promoted – so growth is expected,” he said, adding that the company should turn cash flow positive in the second half of 2023.

Valeo licensed the Canadian rights to Allerject, an epinephrine auto-injector for the treatment of serious allergic reactions from Kaléo, a closely-held company owned by Marathon Asset Management.The Canadian market for epinephrine auto-injectors exceeds $80-million. The current run rate for Allerject was $4-million. “We expect this product to grow as it was not promoted,” Mr Uddin said.

In addition, Valeo entered into a commercialization and supply agreement with Novartis for the Canadian rights of Xiidra and Simbrinza.

Xiidra is a prescription eye drop solution indicated for the treatment of the signs and symptoms of dry eye disease. Simbrinza is a prescription eye drop solution indicated for the reduction of intraocular pressure in adult patients with open-angle glaucoma or ocular hypertension.

Mr. Uddin said both drugs combined had a 2021 run rate of $23-million and were not being promoted. “We would expect these drugs to grow with promotion.”