Opinions
Michael Smedley
Cipher Pharmeuticals
CPH-T
COMMENT
Aug 05, 2015
Stock price when the opinion was issued
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(A Top Pick March 26, 2018. Down 16%). This initially popped higher but they preannounced a poor quarter because the market had been stuffed by a promotion. This quarter will be a little weak for the same reason but after that, it will do better. Cipher historically focused on dermatology. With their purchase of Cardiome Pharma Corp’s Canadian assets, they will now also be focused on arrhythmia and other cardiovascular conditions addressed by Cordiome’s drugs. He loves Cipher here. He thinks it is trading at half what specialty pharma companies, like Knight, sell for. He sees this as a good takeover target for Knight and sees it as a potential double.
This is a specialty pharma company. They have been focused on dermatology products, the lead being Absorbica. He’s excited by their development pipeline. They bought the Canadian assets of Cardiome and have successfully integrated them. This came with tax losses along with the pipelines. Together, they help make Cipher incredibly cheap at its current price. There was an issue with inventory of their US partner, but that has now been resolved. He expects the recovery to show good earnings momentum for the back half of this year, then the release of new products. The company has dropped from $18--it was caught up in the run-up of prescription prices (Valeant) and then the run-down. While their prices were high, they tried to get into the US in a big way, and that failed. That cost them about $10 million and hurt their share price, but that failure is long past. He likes it a lot at its current price. (Analysts’ price target is $6.06)
A very lively bunch of managers who are putting on a very impressive range of productive products in the Pharma area with a pipeline of development situations. This should continue to do very well. The more products it gathers in, the more it averts a single catastrophe.