Valeo Pharma Inc VPHIF

Institutional Coverage; Valeo Pharma-BUY rating $2.30 target

[Yamana]

Industrial Alliance Securities Inc. has initiated coverage on Valeo Pharma Inc. with a Buy recommendation and $2.30 target price.

The full institutional coverage analyst report is available at https://sectornewswire.com/IASecurities-Report-Valeo-Pharma-VPH-Sept14-2020.pdf online.

Highlights
• Specialty Pharma bringing innovative products to Canada. Valeo is a specialty pharmaceutical sales company whose strategy is to acquire the exclusive Canadian distribution rights to regulatory approved or latedevelopment stage products either via acquisitions, long-term in-licensing, or distribution agreements with pharmaceutical companies that do not have a presence in Canada. Valeo has a proven track record of partnering with pharmaceutical companies and commercializing their products for the Canadian market by providing all the services required for registration and commercialization in Canada.

• Growing portfolio. Valeo’s growing portfolio of products includes seven currently marketed products, two additional products to be launched in the upcoming months, and three more over the next 12 months. Two of these products (Redesca® and HesperCo™) represent game-changing opportunities.

• Focus on therapeutic areas with specialized expertise. Valeo’s strategy is to focus on three therapeutic areas: neurology, oncology, and generic hospital products. Valeo chooses to concentrate on these fields as there are a relatively small number of specialists, which enables the Company to utilize a smaller salesforce on a concentrated customer base in order to efficiently capture market share.

• Proven track record of bringing valuable products to Canada. From F2003 to F2014, Valeo focused on dermatology and hospital products before it sold its product portfolio to Valeant Canada L.P. (Private) in F2014. Valeo leverages its strong partnerships created over the past seventeen years to focus on building its portfolio to meet the needs of specialists within its three targeted therapeutic areas. The Company searches for products with potential Canadian revenues between $5-20M, which is generally below the threshold of interest for large multinational companies to pursue directly.

Valuation & Bottom Line
We are initiating coverage on VPH with a target price of $2.30 and a Buy rating. VPH’s growing portfolio of eight marketed products, with an additional five in the pipeline, represents good upside in the short to medium term. Valeo identifies products that are currently marketable or are late-stage development products in order to mitigate any clinical, regulatory, and commercial (i.e., binary event) risks. We value Valeo using a sum-of-the-parts (SOTP) valuation to assess each product on its individual timeline to commercial success and use the average of a DCF and EV/EBITDA valuation to arrive at our $2.30/share target price. We are initiating coverage on Valeo with a Buy recommendation.