Brian Bloom interviewed with The Life Sciences Report 6/12 Tribute Pharmaceuticals Canada is my favorite specialty pharmaceutical company right now, based on its valuation. CEO Rob Harris and CFO Scott Langille were both leaders in helping Biovail Corp. launch its Canadian, and then American, commercial infrastructure. They were responsible for Biovail's business development and commercial activity—via both licensing and acquisition—and growing Biovail into a multibillion-dollar company. Tribute Pharmaceuticals is an earlier-stage version of Biovail.
The Canadian specialty pharmaceutical sector has performed better than any other on the TSX in 2013. Multiples to both revenue and EBITDA have never been higher for this group. The reason we like Tribute is that it's trading at two to three times sales versus its Canadian peers, which are trading at four, five or more times annual sales. We believe this arbitrage will be closed soon.
Tribute recently listed its shares on the TSX Venture Exchange, and this will allow Canadian investors to buy its shares and assist in narrowing the valuation arbitrage. The company will also look to potentially list on an even higher-profile U.S. exchange in the future.
Many companies, such as Merus Labs and Concordia Healthcare, have done an amazing job at purchasing legacy pharmaceutical products at low multiples in a roll-up strategy that has served shareholders very well. However, in addition to purchasing legacy brands, Tribute is also a pharmaceutical company with a real sales and marketing infrastructure, with 25 sales reps in Canada. It's an ideal partner for American and European companies that get drugs approved internationally but don't yet have a commercial plan or infrastructure for the Canadian marketplace. Licensing the rights to drugs in Canada is a strategy that Biovail employed for many years. Paladin Labs also employed this model, and went from a startup to a $3B acquisition by Endo this year. Tribute is now employing this focused and proven strategy in a differentiated way from some of its peers.
Tribute has more than half a dozen drugs now, and many of them are just being introduced into the Canadian marketplace. Many of these drugs could peak at $10M or more. We love the idea that Tribute Pharmaceuticals is undervalued in comparison to its peers, and yet has tremendous growth potential with the products it has licensed from international pharma companies for launch into the Canadian marketplace. And, as mentioned, Tribute is actively seeking to acquire legacy pharmaceutical assets, which would provide it with cash flow that can be further invested in its growth products.