See below an extract of Mackie Research's recent update on Q2. They have a Target price of $0.70.
Summary:
Solid Q2 Results: PDP reported strong Q2 results. We are maintaining our BUY rating
and target price of $0.70/share. Our valuation is based on applying a 4.0x EV/Sales to
our FY2020 total revenues estimate of C$76.5M and discounting back by 10%.
Details: Solid Q2 Results (C$): PDP reported Q2 revenues of $3.4M – stronger than our estimate
of $3.0M. Revenues last year were $3.1M. The company reported Q2 net (loss) of
($3.6M) or ($0.04)/share, higher than our estimate of ($1.2M) or ($0.01)/share due to fees
associated with the recent $62M equity financings – without this item of $3.7M, PDP’s
net income would be $0.1M or $0.00/share, beating our estimates. PDP’s net (loss) was
($0.3M) or ($0.00)/share last year. PDP reported adj. EBITDA of $0.5M – ahead of our
estimate of ($0.6M). Adj. EBITDA was $0.1M last year. As of Q2 end (Sep. 2018), PDP
had C$2.8M in cash and C$4.6M in convertible debentures – the company was expected
to have $35M in cash on Day 1 after the Medexus and Medac acquisitions.
Transforming PDP into a Much Larger, More Diversified Specialty Pharma with a
U.S. Presence: PDP recently acquired Medexus and Medac Pharma. We believe the two
acquisitions would: (i) build significant critical mass for PDP, (ii) expand PDP’s presence
into the U.S. market, (iii) diversify PDP’s current revenue base and expand therapeutic
areas, (iv) give PDP a greater access to potential BD opportunities for the U.S. and
Canadian markets, and (v) be hyper-accretive to PDP’s revenues and adj. EBITDA going
forward. We expect PDP to turn profitable in CY2019-2020.
Rasuvo Rx Volume Continues Growing: The Rasuvo franchise (incl. a marketed
autopen version and a PFS version expected to launch in April CY2019) is PDP’s key
revenue growth driver - post merger. As noted in Figures 1 & 2, Rasuvo Rx volume is
climbing and is outperforming rival Otrexup due to better pricing and insurance
coverage.
More BD Expected ahead: In conjunction with the Medac acquisition, PDP was granted
the right of first refusal to in-license Medac GmbH’s other products for the U.S. and
Canadian markets. We believe potential transactions should be funded by PDP’s cash on
hand and operating cash flows from product sales.
Impact: Increasing Q3 & Q4 Financial Estimates: We are increasing our Q3 (from 6-->7M) & Q4 (from 6.7M-->7.7M) Medac
revenue estimates and revising our estimates of PDP’s COGS and operating expenses
We are maintaining our BUY rating and target price of $0.70. We believe PDP’s current
share price is ultra cheap - a great buying opportunity.
PDP is planning to do a 1:15 reverse split, which is subject to shareholder approval at the company’s AGM on December 12, 2018.
Pediapharm is also changing its name to Medexus Pharmaceuticals Inc, which is also subject to shareholder approval at the AGM. The company’s ticker on the TSX Venture would also be changed to MDP-V at the same time.