VPH - CEO Interview Q & A, July 29, 2020VPH - CEO Interview Q & A, July 29, 2020 https://www.youtube.com/watch?v=J_k6v5b_mjY&feature=youtu.be Heavy paraphrasing going on here but should give the gist of what is being said and may save some time instead of watching the whole video.
0:00 – 34:00 Discussions on VPH PowerPoint Deck. Very informative.
Q&A with the CEO
34:00 CEO: We have 14 products in our pipeline that are all signed. We are also in discussions with a number of other companies for other drugs. This chart in 6 months will look much different from now, it will look much greener and the “hockey stick” will go much higher.
On the branded side we are looking at products that can generate $20M plus in revenue so if we add 2 more products that hockey stick is going to go up by another $40M. This is the modelling that we are going after.
35:00 CEO: There’s really no ceiling to how high we can go and how many products we can bring in and how big we can become regardless of the pandemic. We’ve looked at over 300 drugs over the last 5 years and we’ve got a few more we are negotiating right now and it really goes to show you just how much innovation there is in the pharma world and not just from the big names but smaller Nasdaq listed companies as well as European and Asian companies. This keeps our business development team very active.
38:00 Q So you choose roughly 1 in every 100 you look at.
CEO: Yes that’s about right, there’s a number of reasons for that, sometimes the market is just too small for an American or European company to want to come to Canada to have their product here. In terms of companies that have a presence in the therapeutic area (not the big ones who have their own pipelines already), we are a company that they are going to want to talk to as a potential partner for their new therapy.
39:00 Q What are the valuation multiples that other similar companies are valued at?
CEO: We think we stack nicely with comparables in the industry even with the recent run up in our stock price because of our pipeline.
If we think we are going to be a $90M company 3-4 years from now, we are currently trading at less than 1x sales. Our expectation is that we are going to have a several Hundred Million $ market cap in the next couple of years.
41:00 Q How many more products do you expect to add to the current pipeline per year?
CEO: On the branded side, 1-2 per year. Our expectations are that we could launch 2 products per year.
42:00 Q Do you need to raise any further capital?
CEO: In the short term no. We just did a convertible debenture that was done roughly 6 weeks ago for $1.7M. We had to limit it as it was oversubscribed. We could have probably raised $3-4M as there was a lot of interest there. After 6 months or so we are currently feeling out offers from investment banks literally every couple of days.
Analyst coverage we expect to happen over the next month or two. The bankers are circling us as the story is becoming more engrained in them as we have been talking to them for over a year and they are starting to see the product launches coming so we are going to sit here and wait to see what kind of proposals come in. Over time yes we will raise money but not in the short term 6 months or so.
43:25 Q How much cash to you need to get to be cash flow positive.
CEO: Basically we have the capital now to be cash flow positive. Any monies that we would be looking for in the future would be for product acquisition, milestone payments, and licensing fees to acquire new drugs, inventory of the drugs and things of that nature.
45:00 Q What is your timeframe for inclusion on the US OTC?
CEO: We filed yesterday so we are looking at 1-2 months for listing (not 3 weeks?) Break for holidays probably delays things by about a week or so but we feel we meet the criteria to be on the QB initially and then QX and eventually beyond.
46:00 Q What is your competition by product market share?
CEO: Take a look at one of our products a Parkinson drug Onstrive, there is literally no competition as nothing like it has been launched in 14 years. The drugs that are there now were developed 18 plus years ago. It’s a 3
rd generation drug so we believe it will dominate and expand its category. Parkinsons is a disease of age and as we get older there will be more people who have it and we basically have 100% of the voice when we go to see neurologists on Parkinsons.
Look at Redesca we are up against 3 big companies and we believe we will make a lot of headway with this biosimilar drug in the range of $30-40M and we should be alone here on this for a while. We have higher targets on this internally depending on various characteristics, pricing and things of that nature. This will be our biggest drug that we launch this year and in our history but it won’t be the biggest in the future where we are looking at others down the road. The goal is to build a specialty pharma company where we are trying to find drugs that “move the needle”.
49:00 Q Is all manufacturing done in country?
CEO: No. What differentiates us from others is we don’t have any R&D and no manufacturing. Most other similar companies with much larger market caps won’t have manufacturing either. The bigger money and where the most profit is, is made in selling drugs not manufacturing them. We are much better off having the experts manufacture our products where all they do all day every day is manufacture so they become very much specialized.
50:30 Q With no R&D expenses can we expect VPH to give a dividend in the next few years?
CEO: It’s very conceivable. Our revenue models all show substantial revenue growth. If you have an excess amount of revenue coming in which exceeds your ability to deploy it intelligently you are going to return it to your shareholders through a share buyback or dividend but don’t expect that to happen in the next 2-3 years but only once we hit that $70-80 Million in revenue range.
52:00 Q
Are you planning on selling treatments for Covid-19? CEO: We have a couple of products that help but there isn’t a magic bullet or one solution that will fix this but the best thing for me to say is
“stay tuned to our press releases coming out over the next several weeks” (from earlier 12:15) our bioflavonoid will be approved in early August and it (plus Redesca) will materially affect our revenue. Our year end is October 31, and so Redesca will launch in December which is Q1 2021.
53:00 Q Will provinces be switching to biosimilars?
CEO: For our low molecular heparin, biosimilars are being used more now whereas biologics have been used in the past. There are tremendous savings to be had by doing this. It’s about a $200M market and nothing has changed in it for the past 10 years and we will be priced at 25% less than our competing biosimilars which is significant as we are talking about provinces saving 10s of millions of dollars a year for something that has the same safety profile as biologics. Governments are favouring these biosimilars for this reason. Even though our product is not approved yet we are already talking to different provinces about it now.
57:00 Do you have plans to uplist to the TSX?
CEO: Yes our objective is to eventually list on the TSX.
58:00 Q Can you talk about your pipeline beyond what you have right now?
CEO: We have a very good business development team who prior to the virus was travelling all over the world meeting with people, attending conferences, things of that nature focusing on new therapies in our therapeutic areas. Our team has been pushed back into virtual meetings now instead and everyone is adapting to the new normal now. Drugs that treat various types of cancers, drugs that treat depression which is a billion dollar market in Canada and huge in the US, our focus is to increase the size of the “hockey stick” on our graph chart with new growth drugs into our pipeline.
In the short term you will be hearing more about our bioflavonoid drug over the next several weeks. In the medium term there will be other drugs that will be announced, some are approved in Canada and just not marketed yet, others aren’t registered yet so you have to start from scratch 18-24 month away from launching so it’s really a cross section of drugs that we are in discussions with but at any point in time there are roughly a dozen drugs in our pipeline.
1:00:30 Q What would be the minimum buyout offer if one came in this December 2020?
CEO: I hadn’t thought about that but let’s just say it wouldn’t be at the price the market is at today. I think we have too much potential that is still not reflected in our share price.
When you live it every day and get a sense for the opportunity you know we are just scratching the surface and have a long long way to go. Other Co’s in Canada that have market caps $700M and we aren’t even $100M, I’m still a young guy, I have a number of years ahead of me to build this to where we want to take this.
1:02:22 Q Steve, we at Wall Street Reporter want stocks that can go 10X. That means we need to get to $18.00 per share
CEO: I buy into that (laughs). What we have in discussion will take us too much higher levels and other opportunities that even 6 months ago weren’t even there. We are always searching for new drugs and new opportunities. We are focused but our vision is not narrow. We have to be opportunistic. Not just buy and build, it’s very dynamic. We can also work with other (companies) sales forces. Our focus is in therapeutic areas, other companies including big pharma companies are knocking on our door.
A 100M drug is big for us but for Pfizer wouldn’t have much interest. Valiant approached us before for a buyout we said no. They approached us again and upped the offer before we said yes the first time around. This time around we are focused to grow revenues and profits and I think everyone who is a VPH shareholder has to be pleased with our performance so far.
1.08 What about getting 10X share price from now?
CEO: A year from now I think our shareholders will be very happy. Insiders own 70% so we have big skin in the game. What drives our employees is not their salary but hey if we build our company as we expect to build it then we can really build significant wealth for our employees and our shareholders. Our employees shares are the same as everyone else’s, no Class A shares etc, and that puts them on par with everyone else who now buys shares, future shareholders and hopefully some of your viewers.
1:11 What are some valuations from competition?
CEO: Must compare Canadian Companies exclusively as some of our competition has assets in other countries, like South Africa and that would not be attractive as a buyout to some companies. Look at HLS, Market cap of 700M, 50M in sales because people have expectations of some of the products they have in their pipeline. Look at the products we have in our pipeline for the next 12 months.
1:12 Q How much revenue will you be making in 2022?
CEO: $40-50 Million just based on the existing 14 drugs we know are going to be coming into our pipeline. We are looking at products that are currently on the Canadian market. A good example is Yondelis. Our sales team has had to adapt in these times, they’ve had to make contact with physicians through phone, zoom or other online apps, it’s very difficult to get the same effectiveness of our sales activities and what we are seeing is growth in a number of areas which is a pretty interesting metric for us right now.
1:16 Q You take a look at your chart for existing products and that can expand widely if you have some surprises and get some new products in and investors will go wow he’s getting new products, let’s see what else is coming up.
CEO: This is true even as recently as April when we announced a number of new products. It’s one thing to announce new products that will be selling next year, we are announcing things that will be selling next week and these things are accretive to our revenues in the very very short term.
Take Redesca, when we started to talking about it to investors last summer its now very close to getting it approved by health Canada like 4-6 weeks away. The closer you get to launch the more your valuation starts to reflect that and the reality of it starts to become more evident and the timing becomes more precise.
1:18 You’ve got 12-18 months to get 10x your valuation now
CEO: We will do our best! We want to grow quickly and that’s what our charts are saying.