Cipher Pharmaceuticals: Questions to Craig Mull | Value Bridge
Archieve - Everything Craig Mull Said
Business Summary
Cipher Pharmaceuticals is a North American specialty pharma company focused on dermatology and niche therapeutics. Its Canadian business is anchored by Epuris, which holds about 60% of the severe acne market, generating $18–20 million annually. In the U.S., growth is centered on Natroba, with a current 23–25% share of the $165 million anti-parasitic market (1.1 million prescriptions annually), primarily competing against permethrin, which still controls about 71–75% of prescriptions. Cipher operates with lean infrastructure, deploying roughly 36 U.S. field reps and using targeted commercial partnerships. Margins are strong, historically around 50% EBITDA, with tax loss carry-forwards of $154–211 million shielding cash flow. The company maintains a $65 million revolving credit facility, with recent deleveraging positioning it near net debt–free. Its strategy balances organic growth, licensing, and disciplined M&A, with recent emphasis on U.S. tuck-in acquisitions and cross-pollination of Canadian assets into the U.S. market.
Catalysts & Milestones
2023 - Execution of CAD 6 million Substantial Issuer Bid, repurchasing over 1 million shares
2024 - Expected U.S. Phase 3 readout for MOB-015 with potential Canadian launch preparation
2024 - Acquisition of Natroba business from ParaPRO, expanding U.S. anti-parasitic portfolio
2025 - Targeted launch of MOB-015 in Canada pending favorable trial outcomes
2025 - Anticipated licensing deals for Natroba in Europe, Asia, and Middle East
2025 - Scabies market penetration opportunity, with ~500,000–600,000 prescriptions addressable
2026 - Expiry of Sun Pharma’s Absorica U.S. contract; Cipher regains rights and evaluates in-house marketing
2026 - Potential Canadian launch of Can-Fite psoriasis drug (market size $45–46 million)
Investment Highlights
Natroba holds 23–25% share of a $165 million U.S. anti-parasitic market
Epuris captures 60% of Canadian acne market with $18–20 million annual sales
Cash reserves of $40–45 million plus a $65 million revolver provide ample M&A capacity
EBITDA margins around 50%, with over $150 million in tax loss carry-forwards
Acquisition pipeline includes assets with revenue above $30 million annually
Future Growth Drivers
Expansion of Natroba in scabies, the largest sub-segment (~500,000–600,000 prescriptions)
U.S. Medicaid and Medicare access gains following Illinois preferred status precedent
Cross-border licensing of Natroba into Europe, Asia, and Latin America
Canadian MOB-015 nail fungus launch with market potential of $90 million
Pipeline expansion via U.S. tuck-in acquisitions and potential Epuris in-licensing for the U.S.
Risk Factors
Heavy reliance on Natroba, with only 23–25% share versus permethrin’s 71–75% dominance
MOB-015 Phase 3 uncertainty; negative outcomes would stall a $90 million Canadian market entry
M&A risk of overpaying or failed integration despite $65 million facility access
Medicaid wins vary by state; coverage renewals only annual or biannual
Expiry of tax loss carry-forwards starting 2026, reducing free cash flow shield
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Capital Allocation
09/08/2019 When will the company’s debt be fully paid off?
Our debt is due in November 2020 and should be paid in full by then. We also expect to accelerate repayment of that loan.
09/08/2019 Are there corporate development options such as divestments on the table?
We are reviewing a number of products from Galephar and hold first right of refusal on four, one in particular that we have serious interest in. We intend to build a stronger collaboration with Galephar, given our long history with them and their substantial resources and pipeline.
08/05/2020 Have you considered paying a dividend, and were there offers for Epuris during the strategic review?
At present, our strategy is to generate income from our products, reduce debt, and retain cash to pursue opportunities. We do not anticipate paying a dividend in the near term.
Regarding Epuris, we did sign confidentiality agreements with interested parties and cannot disclose details of any offers. What I can say is that Epuris is highly valuable to the company, and that was reinforced through the review process.
13/11/2020 What was the average purchase price of shares under the normal course issuer bid?
I am not sure of the exact price, but Cipher cannot purchase stock at any price greater than the last traded price.
13/11/2020 How many shares were purchased under the issuer bid after September 30?
We were under a blackout for much of that period, so we were restricted from buying. Going forward, we intend to be an active buyer of our stock, subject to regulatory requirements. The stock is very thinly traded, and we would like to purchase as much as possible.
17/03/2023 What are Cipher’s cash obligations to partners (Can-Fite, Moberg) over the next 24–36 months?
For MOB-015, the nail fungus product, milestone payments are scheduled based on results. The next milestone will be triggered if trial results show superiority over the leading product. Future milestones are tied to net revenue. We view these obligations positively, as a product performing better than Jublia would justify the payments.
17/03/2023 Can you quantify those milestone obligations?
These figures are disclosed in our financial statements, Note 17, under development milestones for both Moberg and Can-Fite.
17/03/2023 What are the contingencies and interest rates on your new line of credit?
I cannot disclose exact contractual rates, but they are either fixed fee or fixed to SOFR in the U.S. and CDOR loans in Canada. The spread ranges based on leverage and is between 1% and 3%.
12/05/2023 Are M&A opportunities focused on the U.S. or Canada?
We are looking at both. Much of our focus has been on the U.S., given its larger market size and greater potential opportunities. That said, Canadian opportunities have also emerged, and we are actively reviewing potential product or company acquisitions, as well as royalty arrangements.
We continue to spend relatively more time on U.S. prospects given the scale of growth possible, but both sides of the border remain active areas of interest.
12/05/2023 What is the status of the normal course issuer bid (NCIB)?
During Q1, we were largely in blackout due to annual results, which limited our ability to repurchase shares. The program is selective rather than automated, unlike prior years. As we exit blackout, we intend to restart the NCIB, as we view our share price as undervalued and believe it is an effective way to return value to shareholders.
26/05/2023 How should investors view your $68 million in growth capital, and what types of deals are you pursuing?
We are looking at both opportunistic and strategic opportunities. Opportunistic cases involve companies under financial stress, where we can provide capital or restructure. Our primary focus is U.S. companies, often NASDAQ-listed, with strong products but excessive overheads or oversized sales forces. In such situations, we could replicate what we did at Cipher: right-size expenses, move the business to positive EBITDA, and leverage the listing to create value.
We are also evaluating individual product acquisitions, particularly legacy assets that are stable, have passed their peak competitive phase, and generate steady revenue without large commercial efforts. Dermatology is our preferred category because Cipher’s portfolio is already dermatology-focused and these products often carry inherent protection, such as topical formulations. We are also interested in central nervous system (CNS) products, which tend to resist generic substitution because physicians avoid switching stable patients. It is very much a buyer’s market right now, and we have the capital and infrastructure, including external advisors for medical and market analysis, to act on the best opportunities.
26/05/2023 What challenges are you facing, and what keeps you up at night?
The biggest risk is doing the wrong deal. Our business itself is very stable, unlike many debt-laden competitors. Our pipeline includes MOB-015, a nail fungus treatment that could capture most of the Canadian market, worth about 80 million dollars. Currently, one product, Jublia from Bausch, holds 90 percent of that market, but exclusivity is ending within two months. We expect a mid-2025 launch, and if results meet expectations, we could dominate that category. We also hold Canadian rights to a psoriasis drug licensed from Can-Fite, with a 46 million dollar market. If the phase three trial succeeds, we could see launch in late 2025 or early 2026.
On capital, we believe there is never enough cash, especially in this environment. That is why we secured the revolving credit facility. We have been patient, avoiding overpriced acquisitions, but are now focused on deploying capital into the right opportunities. Once we complete a transaction and add new products, our cash generation will increase further. Longer term, we intend to return Cipher to a royalty-style company, generate steady dividends, and pursue a NASDAQ listing.
11/08/2023 I'm wondering if you could just provide a brief update on the status of the NCIB.
Yes. Thanks, Peter. So our NCIB, it's been open. Recall that we had in last September when we renewed the program, we moved from an automated program to one which is on our option where we can kind of turn it on and off. What I can say is during the second quarter, we weren't choosing any optionality. We were choosing to buy back the max amount that we could on an ongoing basis, but it's limited based on the trade volume of our shares.
And one area that we would say is sometimes the volume of shares that's traded on a daily basis doesn't give us the opportunity to buy back as much as the max amount would allow. So those factors are giving us some consideration when we're going to get our renewal point coming up in September. Considering we weren't able to buy back quite as much as we had hoped, we may choose to move to another buyback plan. But those are the things at our disposal that we'll consider for the September timeframe.
10/11/2023 How should we think about growth opportunities with your cash position, and how does the Substantial Issuer Bid fit into capital allocation?
From a business development perspective, the market is very competitive, with many pharmaceutical companies pursuing acquisitions. Access to capital is tightening, but there is still capital on the sidelines. We have numerous opportunities in our pipeline, and we are actively pursuing them with the help of advisors. It is much more than just turning over stones, and we hope to provide further announcements as we move into 2024.
Regarding the Substantial Issuer Bid, the Board earmarked CAD 6 million as a catch-up to prior years, when we had bought back over 1 million shares. Because of restrictions under the NCIB last year, we could not match prior volumes. The SIB allowed us to catch up, and we executed it exactly as planned. It was a strong return on capital and demonstrated share buybacks as a valid tool in our capital allocation strategy, so you can be confident we’ll consider it again in the future.
15/03/2024 Can you describe your M&A pipeline, therapeutic areas, deal size, and target multiples?
We are looking at both product and company acquisitions in Canada and the U.S. The focus is on legacy products with stable cash flow and some form of moat, whether safety programs, patents, or API restrictions. Our preference is to continue in dermatology, though we are also exploring CNS, where physicians are reluctant to switch prescribing patterns.
We have $40 million in cash and a $35 million line with RBC. That gives us capacity for at least a $75 million deal, and we could comfortably go higher, potentially up to twice that size. We do not need to stretch much further to execute the right transaction.
15/03/2024 Could an acquisition be executed in 2024?
Yes, that would be fair.
10/05/2024 How do you balance share buybacks, M&A, and internal sales investment?
Craig J. Mull: Organic growth comes from our pipeline products, where our role is mainly in preparing for submission and launch. M&A is likely the most significant growth driver. Investment in commercial expansion should be self-funding, as earnings from new salespeople or efforts will pay back immediately through market share gains.
28/08/2024 How does the acquisition affect your M&A strategy?
We remain aggressive in pursuing opportunities. Even before this acquisition, we were well along in evaluating several complementary products. This deal gives us a stronger base, but we still need to grow. Our focus is on adding products that can build significantly more revenue on top of that base.
28/08/2024 How would you describe your M&A pipeline?
We have a couple of U.S. products that align well with Natroba. They are acute treatments, aimed at pediatricians and dermatologists, fitting the same call points. In Canada, MOB-015 excites us greatly. We can’t share specifics, but the pipeline looks strong and well aligned with our core focus.
28/08/2024 How does higher share price and more capital markets attention affect you?
It gives us another option for raising capital if needed, but our view is still that the stock is undervalued. We recently negotiated attractive debt financing with National Bank, giving us flexibility to use debt as well as equity. We can draw another $25 million U.S. under the revolver and have an accordion feature for another $25 million. This dry powder allows us to keep growing without changing our disciplined approach.
28/08/2024 Are you considering a NASDAQ listing?
Yes. With our share price higher and the business more robust, a NASDAQ listing is in our near-term plans. It would give us access to a larger pool of life science investors and aligns with the transition to a more U.S.-based business.
08/11/2024 Can you update on U.S. M&A pipeline, deal sizes, and multiples?
Justin, Craig here. We have two to three serious opportunities that we are currently working on. I am not sure any will close given where we are in negotiations, but I am optimistic. Beyond that, we looked at six to eight other opportunities and narrowed to these three that would fit well with our sales force and their call points. It is too early to comment on multiples.
These are likely licensing deals with royalty payments rather than large capital requirements. If acquisitions occur, they must be complementary to Natroba and fit well with our U.S. geographic distribution.
08/11/2024 What potential revenue or EBITDA could the acquisitions add?
We are looking at assets generating over $30,000,000 a year in revenue. EBITDA figures are still being modeled as part of our current work on these deals.
09/05/2025 Does the $15 million credit facility repayment signal limited near-term M&A?
We evaluated how best to use our cash and determined paying down debt was better than leaving it idle. Our $65 million facility with National Bank can be redrawn at any time without cost. Since no deal is expected to close in the next couple of months, we reduced debt and interest expense. The funds remain available for future use.
09/05/2025 How is the pipeline and have deal multiples changed?
We haven’t seen major pricing changes. We are pursuing a number of targets after screening at least a dozen opportunities that did not fit. Our approach remains disciplined, but I am optimistic about finding deals at the right price that align with our strategy.
09/05/2025 Would these assets be dermatology or cross-border?
Our top priority is the US, where we already have infrastructure and 36 reps. At least two current opportunities would be North American products, allowing us to launch in the US and then expand into Canada.
09/05/2025 What explains Absorica’s decline and could you acquire rights to market it?
We are disappointed in Sun’s performance. Absorica’s issue is largely pricing in a generic-heavy segment. We have been pressuring Sun to adopt more aggressive pricing and marketing to reverse the decline.
The contract with Sun expires in December 2026. At that time, we are evaluating several options, including taking the product in-house and managing its distribution and pricing ourselves. At minimum, we regain full rights at the end of 2026.
08/08/2025 With strong deleveraging, what are current capital allocation priorities across M&A, buybacks, or debt repayment?
We are generating a lot of cash and have a $65 million revolver available. Without a near-term acquisition, we chose to pay down debt and reduce interest while retaining access to the revolver. Our top priority remains acquisitions, including in-licensing. Beyond that, we maintain a balanced approach of buying back stock through the NCIB or bulk purchases and further debt repayment. When the right acquisition arises, we will use the revolver and seek additional financing if required.
09/08/2025 When could we see licensing deals for Natroba outside the U.S.?
We believe licensing agreements could materialize within the next 12 months.
09/08/2025 For rest-of-world licensing, should we benchmark royalty rates at 15% like Absorica or Lipofen agreements?
Yes, 15% is a reasonable benchmark. We would also seek milestone payments in addition to royalties. The rest-of-world market is significant, and the key is how much value can be captured from it.
Fifteen percent is middle of the road and common across the industry. Other opportunities we are pursuing now also fall in the low to mid-teens range, so that estimate is fair for modeling purposes.
12/08/2025 How will you allocate ongoing cash flow going forward?
We are generating strong cash flow, and I’d remind people we also have a $65 million revolver with National Bank available to us at any time. We have used capital for share buybacks, acquisitions, and debt repayment, and those remain our priorities. We are not changing direction; rather, we intend to continue balancing organic growth with acquisitions that expand our U.S. platform while maintaining prudent capital allocation.
12/08/2025 How are you approaching debt repayment versus other uses of capital?
My view is why carry debt when we can access capital at any time. If we do not have an imminent acquisition, we prefer to pay debt down and save on interest, then draw from the $65 million line with National Bank when needed. Alongside that, we are running a normal course issuer bid and bought the maximum allowed last quarter, about $2 million US in stock. It’s been a balanced approach of debt reduction and equity buybacks. I expect we will be close to net debt free by year-end, at which point another substantial issuer bid is possible. The one we executed in late 2023 was very successful, and I only wish we had bought more stock back.
Competitive Advantage
26/05/2023 Why would physicians switch from Jublia to MOB-015?
Jublia requires daily application, while MOB-015 is applied once a week. More importantly, MOB-015 has a significantly higher mycological cure rate, meaning it clears the fungus more effectively. The current trial focuses on nail appearance, since patients and dermatologists care not only about eliminating the fungus but also about how the nail looks. With MOB-015, the nail is initially left white until it grows out, but we believe reducing the dosing will improve cosmetic results compared with Jublia. If we deliver both higher cure rates and better nail appearance, we expect strong physician and patient adoption.
12/08/2025 Can you update us on MOB-015?
I am not optimistic about this product anymore, which is a disappointment. The second Phase 3 trial results were damaging, and I believe the study design was flawed. Moberg missed the mark, and launching against Jublia, which controls 90% of the market, would offer no competitive advantage. Jublia is well established despite weak efficacy, and it will likely face generic competition in 12 to 18 months. That would lower prices, leaving us with an inferior product at a higher cost, which is not a viable equation.
Operations
09/08/2019 What is the strategy for Absorica and new isotretinoin formulations?
We have a product life extension agreement with Sun, so we expect continued royalty streams from the existing formulation. We are exploring reformulations that could extend the product’s life, such as by reducing side effects. At this point, we cannot disclose specific details, but it is a top priority.
13/08/2020 What is your ideal profile for in-licensing a new product?
Ideally, it would resemble Absorica: a late-stage development product with large unmet market potential. Absorica offered no food effect and strong absorption, adding clear treatment value. A product with those characteristics, preferably in dermatology, would be ideal.
13/08/2020 Can you provide details on the Galephar product under development?
The lead product is alitretinoin, targeting severe hand eczema. It belongs to the isotretinoin family, and Galephar brings extensive experience with this molecule, which supports our development efforts.
18/03/2022 When is the Canadian launch of MOB-015 and expected revenues?
MOB-015 was developed by Moberg, and we hold the Canadian licensing and distribution rights. Phase three trials showed excellent cure rates but also nail discoloration. Moberg decided to run another phase three trial in the U.S. at a lower dose to improve results. We are working with them and expect the new trial will produce stronger outcomes. Until those results are available, we will not move forward with commercialization in Canada.
18/03/2022 Update on Epuris launch in Mexico by Italmex?
Through Galephar, we partnered with a major Latin American firm in Mexico. Regulatory approval has been granted, and initial stocking orders have been placed. We expect royalties, but at lower levels than in Canada or the U.S. given pricing is significantly lower in Mexico.
18/03/2022 What initiatives are being pursued in South America, particularly Brazil?
We have a distribution agreement with Sun Pharma for Brazil, which is a very large market. However, the regulatory regime makes product approvals difficult. We are pressing Sun to move the project forward, but the challenge is that Brazil generally only wants to buy products manufactured locally. We are exploring ways to accommodate that requirement, but it is a complicated and intentionally difficult process.
17/03/2023 Any update on expanding the Galephar relationship to use the Lidose platform for other hydrophobic drugs?
We are working with Galephar on a number of potential products, though we are not ready to provide detail at this stage. Galephar has been our development partner for a long time, and we hold weekly calls with them regarding products under development. There is potential in this collaboration.
17/03/2023 Are the Galephar products later-stage or early-stage in development?
The products are likely to take a 505(b)(2) path, focusing on improvements to existing approved products. This has been our strategy with Galephar from the start. These are later-stage opportunities rather than early Phase 1 products.
26/05/2023 What happened in Q1, given revenues were down but EBITDA improved?
Licensing revenue was lower because we renegotiated our contract with Sun Pharma, which manages our largest U.S. product. With legacy assets, renegotiations typically involve lower royalty rates, so the decline reflects that adjustment rather than weakness in the product. Sequentially we were not trending far behind on licensing revenue, and product revenue held relatively flat, only slightly down.
15/03/2024 How many sales reps will be required for the MOB-015 launch?
Those plans are still in process. We are looking at a specialized sales force dedicated to this product. Currently, we use Impres, a contract sales group that launched Epuris in 2012 and Jublia for Bausch, so they know the market well. We expect to start with eight to ten sales reps.
We do have requirements under our license with MOB, but they are well within that level. As we get closer to launch, we will finalize a clear plan.
10/05/2024 Are you still working with Galephar on research projects, and are any advancing?
Craig J. Mull: We continue to work with Galephar on new products, including possible modifications to existing ones. They have been an excellent partner since the origins of Cipher, having developed three products that still remain in our portfolio. We maintain a close relationship and are always in communication about opportunities they are involved in.
28/08/2024 What is the status of your Canadian pipeline, especially MOB-015?
In Canada, our business is solid and continues to grow, led by Epuris. In our pipeline, we have MOB-015, a nail fungus treatment. We are awaiting the readout from the U.S. phase three trial currently underway. That data is expected in January of the coming year, and we remain optimistic about its potential contribution.
28/08/2024 How has MOB-015 performed in Sweden, and what lessons apply to Canada?
Early indications show rapid onset and high mycological cure, which encourages compliance since patients see improvement early in a year-long treatment. Many competing products fail to cure fungus, so MOB-015 fulfills an unmet need. That explains its rapid uptake in Sweden. The North American phase three trial uses the same formulation but with reduced dosing, moving to once a week after the initial period. This should improve compliance and strengthen the launch profile. Within three months of launch, MOB-015 became the market leader in Sweden and grew the market by 52%, showing pent-up demand for an effective product. We expect similar success in Canada.
28/08/2024 If U.S. phase three results for MOB-015 are negative, will Cipher still launch in Canada?
That is something we debate internally. The key measure is the mycological cure rate, which was very strong in the first phase three trial and we expect similar results in the second. The issue was complete cure rate, which also includes cosmetic appearance of the nail. We believe excessive dosing affected cosmetic outcomes, so dosing has been reduced to once a week after the first eight weeks. If complete cure is still below Jubila’s, we are considering our options.
28/08/2024 How many new U.S. salespeople will you add?
We currently have 35 field reps and 16 inside reps. Adding complementary products will require more coverage in certain areas, but we won’t simply hire an army. Our approach is tactical: if we secure favorable reimbursement in a state, we might place a direct rep there. The total team is about 50 people today, and we will make adjustments where it makes business sense, not by adding unnecessary layers of cost.
08/11/2024 Any insight from Moberg on Phase 3 study issues, and updates on Can-Fite’s piclodenosine?
We have not received much detail on Moberg’s Phase 3 results, which seemed miscommunicated for a subset of patients. The concern is lower cosmetic cure rates affecting overall complete cure results. Physicians emphasize the mycological cure rate as more important, particularly for elderly and diabetic patients who struggle with existing treatments. Doctors are segmenting patients this way, and we see a compelling case for Moberg’s product in Canada given its strong performance in Sweden. We are still analyzing how and whether to launch in Canada.
On Can-Fite’s piclodenosine, we understand they are raising funds for a second pivotal Phase 3 trial in the U.S. It is a small company, but they have had past success, and we believe they intend to continue development with new funding.
19/03/2025 How many sales reps and MSLs do you currently have after the Natroba co-promotion?
After we completed the co-promotion transition, we had 30 external reps, 12 inside sales reps, and about five management employees at the end of the year.
19/03/2025 What feedback has your sales force received on Natroba from high permethrin prescribers?
The reception has been very strong because Natroba essentially sells itself. Permethrin was released 40 years ago, and physicians have had no new alternatives for scabies until now. With Natroba designated as a complete cure in one treatment, the response from physicians has been positive.
Doctors are well aware of resistance issues with permethrin and are looking for something more effective. Natroba is already established in the head lice market, but its potential in scabies is less known. Since Natroba has the only FDA designation of complete cure for scabies, we see this as a significant opportunity and a current area of focus.
19/03/2025 How is licensing of Natroba progressing and what is the timing?
We are on schedule and currently in discussions with at least eight parties across eight regions. Discussions with a potential partner in China are more advanced than most, and we also have strong interest from a Middle Eastern company that spans multiple countries, with talks well beyond confidentiality agreements.
Both of these discussions are advanced, and we are optimistic that we will secure a deal there, which could be the first of several.
09/05/2025 How many US sales reps do you currently have?
Hey, Andre. Our current field rep complement is about 36 reps.
09/05/2025 Have you hired medical science liaisons (MSLs)?
We use consultants rather than full-time MSLs. These are long-time key opinion leaders, mostly dermatologists and nurse practitioners, who help us at conferences. They are very supportive of the product and value it because it works. They effectively fill that liaison role for us.
09/05/2025 What US regions is your sales force focused on?
Looking at total prescriptions in the antiparasitic market, the largest states are Texas, California, Florida, and New York, which together represent about 40% of total prescriptions. The remaining 60% is spread across other states.
09/05/2025 What therapeutic areas make sense for portfolio expansion beyond derm?
Our reps primarily engage with nurse practitioners and physician assistants who treat lice and scabies. We are focused on products complementary to those call points. These do not need to be strictly dermatology; adjacent indications prescribed by those professionals are suitable.
12/08/2025 What new initiatives are you most excited about?
We’ve retooled the U.S. sales infrastructure and see strong potential in digital marketing. This product lends itself to awareness campaigns, and we’re launching a new website within months and pursuing partnerships with telemedicine platforms. Our goal is to raise awareness that Natroba is a one-use, complete cure, unlike competitors. Given reps cost over $200,000 each, supplementing with digital approaches could increase reach at lower cost.
We are also working with electronic medical record providers so that when a doctor codes for scabies, a prompt highlights Natroba as a treatment. This keeps it top of mind at the point of care. Overall, shifting toward direct-to-consumer and prescriber-focused marketing could lower costs, increase awareness, and drive sales, following the broader trend of greater drug advertising.
Competiton
10/11/2019 What are your market size and share assumptions in Canada for TRULANCE out-licensing?
I don't think we are in a position to discuss that at the moment, given the negotiations we are having with potential distribution partners.
08/05/2020 How does Absorica compare to Epuris in market share and performance?
You are correct that Sun has responsibility for marketing and sales of Absorica. It is in our interest to support them, and we share experiences from Canada where appropriate. We expect the marketing approach to evolve, and we are looking at ways to reach prescribing physicians more directly.
Some of the new approaches include telemedicine and virtual portals where we can discuss products with physicians. These channels may also be used more for patient consultations, so we are investing time in innovative ways to bring our products into the marketplace and gain more visibility in what we expect will be a changing environment.
13/11/2020 Any update on Absorica pricing strategy and generic launch timing?
The potential launch of a generic is something we are watching closely. We are gathering as much information as possible, but we have not seen any generic entries yet. We are in communication with Sun about pricing strategies, and we are preparing to launch an authorized generic to maintain significant market share if a generic comes to market.
This is a day-to-day monitoring effort. We stay in regular contact with Sun and conduct our own reconnaissance to assess any potential launch activity.
19/03/2021 Have you and Sun considered Epuris-like pricing in the U.S. to capture more Absorica market share given generics on the horizon?
We've had many conversations with Sun about the Absorica strategy. Both they and we believe that a reduction in price would not necessarily increase product volume. The product is known as a premium product, and if you start reducing the price, that premium image could disappear. We are constantly looking at this, but at this point in time we believe a price reduction would not necessarily yield increased volume.
19/03/2021 What were Absorica versus ABSORICA LD numbers in the quarter?
ABSORICA LD was launched in February 2020. Due to COVID and perhaps other issues, it hasn't gained the expected market share. It is growing and currently represents about a 25% share of the Absorica market. It has not gained traction as expected.
14/05/2021 What impact will Teva’s generic Absorica launch and revised pricing have on Absorica’s royalties and market share?
I agree with that. We are monitoring the situation closely and have had numerous calls with Sun. There is potential that with the reduced price, the product could expand into other acne market segments, including the Accutane market. Because it is a superior product now offered at a lower price, the market may broaden.
We are hopeful this will lead to increased volumes, although at a reduced price.
18/03/2022 Why did Epuris market share drop from 43% to 41%?
It is simply a normal variation. We monitor performance over longer periods, and Epuris continues to grow strongly. One quarter’s result does not change our positive outlook.
13/05/2022 Epuris market share declined from 43% to 41%. Is this meaningful?
We view this as normal variation. We monitor growth over longer periods, and the product continues to show strong performance. I do not take anything from a single quarter’s result.
11/11/2022 How will Sun address Absorica’s U.S. market share and strategy given strong Epuris performance in Canada?
Doug, thanks for your question. Sun is our commercial partner for Absorica in the U.S., and they ultimately make the pricing decisions. That said, we are in regular contact with them about their strategy. We are expecting to receive their upcoming business plan within the next few days, and we intend to review it closely and meet with Sun to discuss their marketing efforts and how best to highlight Absorica’s advantages compared to other products.
It is a valid point you raise, and we agree that further collaboration with Sun on marketing and promotion may create opportunities to strengthen Absorica’s position in the market.
17/03/2023 Can you confirm the Absorica market share figures from Q3 and Q4 MD&A?
Yes, that’s confirmed.
17/03/2023 Why is Absorica’s 1.5% overall isotretinoin market share so low and what strategies could raise it?
We are in discussions with Sun about their distribution channels. We also believe market share is low given the quality of the product. We are working with them to expand distribution channels, and we think there is work to be done at the wholesale level to ensure our product is in the right places at the right prices. This process is ongoing with Sun.
12/05/2023 What lessons from fenofibrate stability can be applied to Absorica marketing, and which non-Epuris Canadian products drove growth?
On Absorica, your observation about royalty revenue is correct. We have been in discussions with Sun Pharma, who noted their market share has been declining with both brand and authorized generics competing in the U.S. They have since taken tactical steps with channel partners to prevent further erosion. Symphony Health data shows these moves are beginning to work, and we expect improvements in coming quarters. We believe Sun is on the right track and continue to meet with them regularly. In the U.S., our fenofibrate royalties have improved after changing commercial partners to one with stronger wholesale connections, which has helped maintain stability.
In Canada, two key contributors stood out. We moved to sell Durela directly, which has driven year-over-year growth since Q3 of last year. Additionally, Aggrastat sales contributed $0.5 million in the quarter, up from $0.1 million previously, after a competitor exited and faced supply issues. We see continued opportunity for Aggrastat as we work with Verity, our hospital partner, focusing on 45 cath labs across Canada. This should support ongoing growth.
26/05/2023 What drove Q1 revenue and EBITDA trends, and how is Epuris performing?
The revenue decline was mainly timing-related, not a trend. Epuris, our core product, continues to perform well. We are raising brand awareness among dermatologists, many of whom were unaware that Epuris has the same efficacy as Accutane but with a better food effect. Unlike Accutane, it does not require a fatty meal, which is a significant advantage for teenagers with severe acne. We expect continued growth from Epuris as awareness improves.
While licensing revenues declined due to renegotiated royalty rates, our earnings did not fall off because we tightly manage expenses. Our cash balances continue to grow, reflecting our strong cash generation. Many investors forget that the “I” in EBITDA, interest, matters. We carry no debt, and we use tax loss carry-forwards, so there are no cash tax payments. This means our EBITDA converts cleanly to free cash flow, underscoring the strength of our financial profile.
11/08/2023 Maybe just some commentary on what the existing market size is now in comparison to data that you put in the public domain?
Well, again, typically, we would try to access results through IQVIA or Symphony as they may call themselves. They don't have that type of service in the Latin American countries that we're aware of. So it's more of what the commercial partner, in this case Italmex, would estimate as the market. And I don't think they were in a position to share their forecast with you at this point in time. But we think it's in excess of what was earlier quoted from the 2018 press release.
11/08/2023 You indicated in the MD&A that the U.S. isotretinoin market experienced a bit of contraction in recent quarters that you said is down 3% year-over-year. Just wondering if you had any insight as to what that was attributable to? Is that like discontinuation of the competitive brand, or are there other competitive medical therapies that are sort of rivaling isotretinoin as a [indiscernible] therapy, just any thoughts that you had on that would be interesting?
Well, there is some new products for acne in the U.S. But they're targeted more towards mild acne, mild to moderate acne. And we think that perhaps some dermatologists are trying them on some of their patients to see how effective they are, because it would allow them not to have to move into a severe acne indication. So we think that there may be a step that dermatologists are taking with a less complicated drug to cure the moderate acne as part of their treatment steps, I'll call it. And that may have had some effect.
The market may have been just down a little bit. And it's not a severe drop in our view. And some of it may even be some seasonality of some type.
11/08/2023 The Epuris as a new competitive product, I guess, Sun Pharma introduced a generic just recently. I was wondering if you can comment on that.
I think that you're referring to Sun’s approval of a product that they call Absorica LD, which is not a generic. It's a branded product. And at this point, they've received Health Canada approval. And there are several issues that we have with what has gone on there. And we're in discussions with Health Canada about that. But turning the attention to the product itself, this product is just basically a copy of Epuris at a slightly lower dosage point.
So instead of a 10 milligram, they'd have a 7 milligram; instead of a 20 milligram, they'd have an 18 milligram. And their idea is that they would go to dermatologists and tell them that it's safer because it's slightly lower dose. And we don't believe that. It isn't significant enough of a difference. The doctors are very familiar with Epuris. They don't know anything about Absorica. And they're going to be selling a product that is likely no better than Epuris.
And as a result of the difference in dosing, the dermatologists will have to go through a complicated calculation in order to administer a dose to a patient or prescribe a dose to a patient. And in our discussions with physicians, there are very few that will be doing that. They do not need to go through an education about how to dose this product when it doesn't provide any real benefits. So we know that it's there.
The product has been sold in the U.S. for at least four years now. And it has been an absolute disaster in the U.S. They once obtained I believe a 10% market share of the isotretinoin market, and now it's practically at zero. So it has been a flop in the U.S. and we expect it will be a flop in Canada as well.
What I would add to that is just that we're very data-driven as an organization, I think as many are. Please feel free to look at the data for Absorica LD in the U.S., as Craig described. The product has not performed. It's not a generic to Epuris. We don't believe it poses any significant risk.
10/11/2023 What drove Epuris and Absorica AG growth this quarter despite seasonal weakness?
Andre, it's Craig here. I'll break it down into two questions. For Epuris, we started with our contract sales organization in March and it took time for them to fully engage. What you’re seeing now is the impact of that marketing, specifically to nonusers of Epuris. We’ve been targeting long-term Accutane users and demonstrating the benefits of Epuris over Accutane, which has driven significant success.
Much of Epuris’ performance, which we expect to continue, relates to the full engagement of the sales force and innovative marketing methods such as conferences and lectures. The product has gained better attention, and we expect that growth to continue. In the U.S., we’ve been working with Sun on clear distribution through the supply chains. Sun has adopted different marketing and pricing methods that have driven growth in Absorica AG.
10/11/2023 What is the size of the Canadian Accutane market and were there U.S. price changes?
In the U.S., Sun has been more aggressive with its pricing, and that has had a significant impact on business growth. In Canada, Epuris has 44.4% of the market, which is up almost 2% from last year and continues to grow. Based on that market share, you can work out the total market size.
15/03/2024 Are there any major changes in U.S. Absorica pricing or competition?
We are seeing a stable market now. The product has gone through the genericization process, and we still hold significant share. We do not see much switching taking place, and we believe the market has stabilized.
Our distribution partner has also made tactical moves to gain share, as disclosed. Different generic players take steps to drive volumes, but overall Absorica remains a stable product and royalty stream for us.
15/03/2024 Has Absorica pricing stabilized?
Pricing does not change much except when our distribution partner runs promotional programs, such as those in mid-2023. Most volumes are on the authorized generic, and both our price and competitors’ pricing remain relatively stable.
15/03/2024 Has Sun’s launch of Absorica LD in Canada impacted Epuris?
No, we have not seen any impact so far. Sun is promoting Absorica LD as the same as Epuris, but it is a lower-dose product. They imply it is safer, which is not true. Physicians in Canada are unfamiliar with the Absorica brand, so awareness is low.
Our focus remains on converting Accutane users while defending against Absorica LD. It offers no added value over Epuris and requires physicians to recalculate dosing, which reduces incentive to switch. We believe very few will convert.
10/05/2024 Can you elaborate on business development activity and competition for assets?
Craig J. Mull: André, it's Craig. This is more our feel than data, but we sense less competition and more reasonable pricing. Deal flow is very strong, especially in Canada, and we are also seeing increasing opportunities from the U.S.
10/05/2024 Do any non-Epuris hospital products, like Aggrastat, have growth potential?
Craig J. Mull: Aggrastat has potential because the main competing product was discontinued, and we gained sales as a result. A group is trying to make a generic equivalent, so growth will be modest. The Buenaveza non-approval in the U.S. was disappointing and has not helped sales in Canada. Still, this remains an area we will continue in for reasons beyond just revenue growth.
28/08/2024 What made the recent acquisition attractive, and how does the product fit Cipher?
Craig, the board, and I spent significant time looking at over 100 opportunities in Canada and the U.S. We landed on the Natroba business acquired from ParaPRO. It was essentially a family-run operation, tightly managed, with strong sales growth and earnings. Unlike many specialty pharma businesses that chase growth with expensive infrastructure, this one grew steadily and profitably.
The main product, Natroba, is an authorized generic of spinosad indicated for head lice and scabies. This was a go-to-market strategy to gain state-level payer access. Currently, Natroba has less than 25% market share. The majority of the market is controlled by generic permethrin, a product that parasites have built resistance against. Parents often report repeated, ineffective treatments. We see substantial room to grow by educating physicians, improving reimbursement, and positioning Natroba as the product that truly works.
28/08/2024 How large is the Canadian market for anti-parasitics compared to the U.S.?
The Canadian market is smaller, about one-tenth the size of the U.S. We estimate $15–20 million for anti-parasitics in Canada compared to roughly $150 million in the U.S. Because we already have the infrastructure here, Canada makes sense, but it is not our primary focus relative to U.S. growth.
28/08/2024 Do you have current sales data from Sun Pharma on Absorica?
For competitive reasons, we do not disclose exact figures. We do receive some data from Sun, but it is confidential. Investors can reverse-engineer estimates by looking at our reported royalty income. Put simply, our earnings from Absorica royalties are lower than Sun’s share.
08/11/2024 What feedback have you received from Sun Pharma on Absorica outlook?
Doug, Craig here. Q3 2023 was particularly strong for Absorica because Sun ordered a lot of product after being short in prior periods. That quarter was an outlier, and we expect stability going forward.
We are in discussions with Sun about their pricing strategy in the U.S. generic market. It is a typical generic product and not likely to grow, but we hope the slowdown stabilizes from here.
19/03/2025 With Natroba at 23% market share versus the 75% incumbent, is there a target share level for this year or next?
Our current market share is 23% and holding steady. We are commercializing, gaining physician demand, and promoting in a way that a 40-year-old product like permethrin is not. We expect script growth in the low to mid double-digit range annually.
We already hold significant share in the head lice market, but scabies is lower. The 23% you referenced covers the full anti-parasitic market. Our clear focus is gaining share in the scabies segment, where the opportunity is larger.
19/03/2025 Can you quantify the relative size of the scabies market?
The total anti-parasitic market is about 1.1 million prescriptions. The scabies portion is roughly 500,000 to 600,000 prescriptions, and the overall market size is around $165 million.
09/05/2025 How should we interpret Illinois’ preferred Medicaid status and is it financially impactful?
On a state basis, Medicaid formulary wins are meaningful. When Natroba becomes preferred and the incumbent, such as 5% Permethrin, is non-preferred, we typically capture the full Medicaid business in that state.
Each state’s incremental share depends on how it structures its program. Illinois sets a precedent because pharmacy directors can see the clear value of Natroba. Medicaid contracts renew annually or biannually, and we now approach renewals with the Illinois model in mind. This gives states an option for preferred pricing in exchange for preferred status. We believe more states will replicate this, though timing and location are uncertain.
08/08/2025 Outside Illinois, how are Medicaid preferred step-through discussions for Natroba going?
Andre, each state Medicaid program operates differently, so our best opportunity is when contracts come up for renewal, usually annually or biannually. At that time, we submit proposals. If there is strong demand in a state, we can negotiate either a regular renewal price or a price tied to making our product the single preferred formulary option, as we did in Illinois. This strategy is best executed during the renewal process, not by cold outreach.
08/08/2025 Has Natroba market share changed from 25% versus incumbent 75%, and how should we view next year?
It's been steady, Justin. We integrated the business, focused on renewing state Medicaid, and negotiated pricing. We gained some price benefits and see further opportunity since the product had no historical price increases. Some contracts limit us, but we plan to grow share from a volume perspective. Single-digit market share gains are achievable, along with price adjustments. Unlike many acquisitions where sellers raise prices before selling, that did not happen here, so we still have that lever.
08/08/2025 Have you analyzed increasing sales and marketing to drive market share, and what could ROI look like?
Yes, we are rethinking the model. Traditionally, we rely on outside and inside reps for business development, but we see potential in direct-to-consumer channels. Competing products often sit in the pharmacy aisle, so a consumer-focused platform could be highly measurable for ROI. For example, online distribution lets us track click-throughs and conversion, providing tight ROI measurement. This aligns with the urgent, acute nature of the product where families need immediate access.
Craig: To add, overall Natroba has 25% of the antiparasitic market. Within that, we hold a much higher head lice share but low scabies share. Increasing scabies penetration is a focus, supported by improving Medicare coverage, which could open a relatively new market for Natroba.
09/08/2025 Is Jublia approved in Sweden, and is MOB-015 capturing market share from it?
I do not yet know Jublia’s exact market share in Sweden, but will confirm. In Sweden and other Scandinavian countries, MOB-015 is considered an over-the-counter product. I am unsure whether Jublia has that same designation. What is clear is that MOB-015 has been very effective, expanding the Swedish market by 52%, which demonstrates its impact.
12/08/2025 Will more states follow Illinois in preferring Natroba, and what is the TAM there?
We are working to replicate the Illinois model, where Natroba is the preferred product and must be tried first. It demonstrates the strength of the product, and we are targeting other states that may follow suit. I don’t have the exact total addressable market for Illinois at the moment, though it is a large state by population. Success there gives us a template to pursue in other jurisdictions.
Growth
08/05/2020 What is driving growth in Epuris and is the $2.4 million run rate sustainable?
We believe the revenue level is sustainable. Epuris is recognized as a very high-quality product in this therapeutic area, and more prescribers are shifting their habits toward it. Based on current dynamics, we expect this revenue to be maintained in the near term, if not longer.
12/05/2023 Can you update on South American distribution rights?
Through our partnership with Galephar, we hold rights across Latin and South America. Absorica was recently launched in Mexico, where Galephar supplies the product and pays us royalties on sales. The launch is being executed by Telemax, and we expect to begin collecting royalties in the near term.
26/05/2023 Can you remind us what Cipher is all about?
Thanks for having us back. Cipher has been reshaped into a cost-generating specialty pharma company. Over the past three years, we achieved average EBITDA margins of 50 percent and generated about 2 million U.S. dollars in cash annually. In Q1 2023 we reported adjusted EBITDA of 3.1 million U.S. dollars, and cash increased by 4.6 million U.S. dollars. This performance reflects our model of using commercial partners rather than maintaining costly sales forces, and avoiding direct spending on clinical trials, which can burn cash when unsuccessful. Instead, we pursue a balanced approach that minimizes risk while sustaining growth.
We ended Q1 with over 33 million U.S. dollars in cash. Earlier this year we also secured a revolving credit facility of up to 35 million U.S. dollars with RBC, giving us close to 70 million U.S. dollars in capital. Our focus is acquiring U.S. products because of the larger market, though we will consider other opportunities. Craig and I are spending nearly half our time on the next stage of inorganic growth, while also advancing pipeline products expected in 2025 and 2026. Cipher now generates about 1 million U.S. dollars per month after tax, holds a strong balance sheet, and sees many opportunities as other specialty pharma firms struggle with debt and weak cash flow. We are well positioned to act when the right deal emerges.
11/08/2023 Can you just discuss the market opportunity in Mexico for Epuris? And secondly, are there any key areas in Latin America that you can launch any of your legacy Galephar assets? Are there any other regions?
Hi, Andre. It’s Craig here. We have started to study the Mexico market in some detail as to the potential. We've just received approval down there. Obviously, it's a very large market. We're trying to work our way around how the government participates in any funding of the drugs and the formularies that need to be communicated with to make sure that we're on the correct formularies for any public reimbursement that there may be.
But we're going to have to see how it goes. We haven't been able to receive good data. There is very little competition in the severe acne indication in Mexico, so we believe that if the product is adopted, it could quickly become a market leader for severe acne. We'll keep monitoring the situation. And we'll keep shareholders and analysts updated on how we're doing on that. Andre, would you just remind me of your second question?
Sure. Just in terms of looking at your other legacy assets, like you brought in from Galephar, were there any other key areas in Latin America that you haven't launched yet?
We're in discussions with a number of commercial players, including in Mexico, for our other products and those discussions are advancing. Obviously, the Mexican market is one of the most attractive. Brazil, given its size, would also be attractive, although Brazil has quite rigorous regulatory requirements that we've seen and experienced already. So I think those are the two biggest countries. And I think that will be our initial focus.
And we’re looking and dealing with a partner that has operations in most, if not all, Latin American countries. So with their assistance, I think that there's a much better chance of getting approval.
10/11/2023 What is your development strategy for DTR-001?
The plan is to complete formulation work and establish proof of concept. From there, we think it would be best to partner with a larger pharmaceutical company to advance development. We have already had discussions with several large pharma players who are active in these markets and interested in potential development agreements. But first, we need to complete the proof of concept studies before moving forward.
15/03/2024 Any updates on the Epuris launch in Mexico?
Italmex has gotten off to a good start. Sales are progressing more slowly than expected, but overall we never had great expectations for that market. It will serve as a nice add-on business, and we are supporting Italmex to help them gain more traction.
10/05/2024 Is it worth investing more in sales?
Craig J. Mull: That is under analysis now. We are getting good traction with our sales team and solid penetration, especially in the Accutane market. I am reviewing proposals from our commercial team.
28/08/2024 Can you give a quick overview of Cipher and its current position?
Thanks for having me today. With me are Brian Jacobs, our president of U.S. operations, and Ryan Mailing, our new CFO. Cipher is a specialty pharmaceutical company operating in North America with a dermatology focus. Our lead acne drug is called Epuris in Canada and Absorica in the U.S. We generate significant ongoing cash flow from our dermatology portfolio, which includes products beyond acne. In Canada, growth is mainly driven by Epuris. In the U.S., we have products approved in the early 2000s that are still selling today through royalty-based arrangements with commercial partners. Over the last four years, we improved margins, produced strong EBITDA, and eliminated all debt. Before our recent acquisition, we held roughly $45 million U.S. in cash.
That acquisition involves a U.S.-based company focused on the anti-parasitic market with a long history of sales and growth. It has shifted our balance sheet, but strategically it brings us meaningful growth opportunities. I’ll let Brian describe the acquisition in more detail.
28/08/2024 How do you plan to grow following this acquisition?
Natroba currently holds about 22% of the U.S. anti-parasitic market, while permethrin dominates with roughly 75%. Because resistance to permethrin is well known, our first priority is to capture more share in the U.S., where we already have infrastructure to accelerate growth.
Beyond this, the acquisition allows us to cross-pollinate products between our Canadian and U.S. portfolios. Today, three products are sold in the U.S. through commercial partners, but we are evaluating whether we should market them directly to capture higher earnings. Another avenue is adding complementary products with similar call points among pediatricians, dermatologists, and family doctors. Natroba’s sales force is currently underutilized, giving us capacity to expand their bag.
Finally, we own worldwide rights to Natroba for scabies and lice. These are global problems, not just North American ones. We are in discussions with commercial partners in Europe and Asia to out-license the product. Such deals typically involve royalties and milestones, which would flow directly to the bottom line. Collectively, these initiatives provide us with multiple growth levers in both the U.S. and internationally.
28/08/2024 What is the potential of MOB-015 in Canada, and how does it compare to Jubila?
Because of changes in the dosing regimen, we expect a complete cure rate higher than Jubila, which holds about 90% of the Canadian nail fungus market, worth roughly $90 million. This represents a significant opportunity for us and will further drive Canadian growth. With these initiatives, Cipher could look like a much different company in two to three years than it does today.
28/08/2024 What is the Canadian market potential for Cipher’s portfolio?
Epuris is our lead product with roughly 60% of its market, generating $18–20 million in annual sales, which demonstrates the market’s size. The Canadian nail fungus market is about $90 million and could grow with an effective product. In the U.S., Natroba for scabies and head lice targets a $150 million market, where patients are often forced to rely on ineffective over-the-counter treatments. Europe and Asia also represent large opportunities, though exact sizes are harder to calculate. Population is a reasonable proxy for potential demand.
28/08/2024 Will Cipher in-license Epuris for the U.S. market?
Yes, this is under active consideration. It falls under what we call cross-pollination, evaluating whether it is more lucrative to take the product in-house and sell directly in the U.S. rather than through partners. This is high on our list of strategic options.
28/08/2024 Can Cipher use its Canadian license for rare-disease products like low syndrome if trials succeed?
We are hopeful. The indication is for psoriasis, with the Canadian market estimated at about $45 million. There are competing biologics, but this product looks promising and addresses an unmet need. We need results from the Japanese trial first, but if successful it would be an excellent complement to our dermatology portfolio.
08/08/2025 What revenue lift could Natroba see from expanding preferred listings beyond Illinois?
Doug, I would not approach it on a state-by-state basis. Roughly 30% of the market is Medicaid. The 5% permethrin market share comes from within that 30%, and that applies nationwide. As we convert states from nonpreferred to preferred, the impact depends on the relative size of each state. That is the way I would quantify the revenue lift. We have already provided comparisons of our market share versus 5% permethrin’s share.
09/08/2025 What is the global opportunity for Natroba outside the U.S., and would Europe require a Phase 3 trial?
Andre, before the acquisition closed, the company had already received many inquiries from potential licensors and licensees. They lacked the bandwidth to pursue those while the 6–9 month acquisition process was underway, but those conversations are resuming. We have already had inquiries from potential partners in Europe and believe the FDA data for Natroba will likely be sufficient for European applications. It is early, but clear there is meaningful interest.
Natroba’s biggest opportunities are in warm climates where these conditions are more prevalent. Many smaller countries accept FDA approval as sufficient for their own health authorities. With its proven safety and efficacy, we see strong international potential.
09/08/2025 Have you estimated market size in Europe and other large regions?
It is too early for us to provide specific market size figures, but population can serve as one indicator. Resistance to permethrin, where lice and scabies have genetically adapted, is a worldwide issue. Information on this problem is widely available and suggests strong demand for alternatives like Natroba.
We are working to determine market size and potential pricing. That analysis is underway.
09/08/2025 Are genetic mutations resistant to permethrin already impacting revenue and creating growth opportunities for Natroba?
Yes, resistance is real and widely documented in the medical literature. Genetic mutations reducing permethrin’s effectiveness are occurring worldwide. This is not just theoretical; it has tangible implications.
We believe this resistance trend will drive stronger demand for Natroba, as physicians and patients seek proven alternatives where existing treatments are failing.
09/08/2025 How do patients perceive Natroba compared to permethrin, and what is your strategy to educate the market?
We spoke with a family directly impacted by lice. They shared that when lice spread through their household, permethrin failed to fully resolve the issue and it returned, disrupting sleep and daily life. They researched treatments and discovered Natroba was the only one that worked. They went to their doctor and specifically requested it. This story illustrates how critical it is for patients to know an effective solution exists. Our goal is to ensure both physicians and patients recognize Natroba as the one-shot cure, using digital and other outreach to drive awareness. As a parent myself, I would insist on the treatment that eliminates the problem completely so my family can move on.
Beyond patients, we see a huge opportunity to educate physicians who may still default to permethrin. By combining patient demand with physician education, we can expand Natroba’s adoption significantly.
09/08/2025 What is your immediate commercial focus relative to global opportunities?
Our first priority is the 71% of the U.S. market that still relies on permethrin. That is the lowest-hanging fruit and the most profitable near-term opportunity. Many doctors may be prescribing permethrin simply because they are unaware of effective alternatives. With the right marketing and sales execution, we can directly target that 71% share and shift prescribing behavior toward Natroba.
12/08/2025 Do you see any bottlenecks limiting growth?
In the U.S., the challenge is payer access. We have strong Medicaid coverage, which helps in the pediatric head lice segment, but Medicare access is weaker. Expanding Medicare coverage is key to driving growth in scabies treatment, as that market skews toward adults and older patients.
12/08/2025 What are your main priorities to drive growth?
We need to improve payer access and ensure product availability. If a pharmacy is stocked out, the sale is lost, so we are working with wholesalers and exploring telemedicine channels to deliver directly to patients’ homes. Our top priority is to increase Natroba sales, as it offers the best return. Beyond that, we want to add complementary products to the U.S. platform, secure Health Canada approval, and establish global out-licensing partnerships. Those four pillars define our growth strategy.
12/08/2025 What key message should investors take away about Cipher?
We really operate two businesses. First is the legacy Cipher business, which is a stable, highly profitable cash generator. In Canada, Epuris remains the leading acne product, widely prescribed by dermatologists, and continues to grow share. While the U.S. royalty stream is stable to slightly declining, the Canadian operations make the legacy platform low-growth but consistently profitable.
Second is the U.S. growth business, where Natroba holds only 23 to 24 percent share of the antiparasitic market and has a long runway. With our $65 million revolver, we have the capacity for smaller tuck-in acquisitions or larger strategic deals. That combination of cash generation and growth opportunity defines the company today.
Financials
09/08/2019 What is the SG&A run rate for the rest of the year?
If you adjust for the restructuring costs incurred in Q2, then the operating expense run rate will approximate what we expect for the remainder of the year.
09/08/2019 Will you remain cash flow positive if you invest in Galephar products?
Yes, we intend to remain cash flow positive. If an investment is beyond our means, we would look for other royalty partners to join the project.
13/08/2020 What caused the income tax impact on cash flow, and how do Correvio tax losses affect timing?
You are correct, the valuation issue related to the patent rights for the product portfolio. There were also disallowed expenses tied to three products. Regarding Cardiome, we are still assessing when we can take advantage of those tax losses and expect to have more information in Q3.
13/11/2020 Progress on utilizing tax losses?
Yes, we’ve made significant progress. We are in serious discussions, including drafting agreements with a partner to co-promote our hospital products. With that, we believe we will be able to access the Cardiome losses since we are conducting an active business in the areas Cardiome had participated in. We expect to begin utilizing those losses as soon as the end of 2020.
13/11/2020 Can you provide more detail on working capital changes this quarter?
Specifically, we had a reduction in accounts receivable and an increase in payables year-to-date, which drove the working capital change. The increase in receivables was due to a large payment from one licensed partner that arrived shortly after quarter-end. That timing created a temporary use of working capital, but it should reverse itself in Q4.
18/03/2022 What is the level and expiry of unused non-capital loss carry-forwards?
Unused non-capital loss carry-forwards total about $211 million, expiring between 2026 and 2039. We have already applied losses in 2020 and 2021. While auditors required us to accrue taxes in financial statements, in our tax filings we utilized the losses, resulting in virtually no Canadian federal income taxes paid in those years.
18/03/2022 How do tax loss carry-forwards impact cash flow?
They significantly enhance retained cash flow, and we expect that benefit to continue for some time.
13/05/2022 Do partners plan to increase product prices in line with inflation?
Each year, we and our distributors submit for price increases. Depending on the product and market, we generally seek increases at least in line with inflation.
13/05/2022 What is the level of unused non-capital loss carry-forwards and when is the nearest expiry?
Non-capital losses total $211 million, with expiries ranging from 2026 to 2039. The earliest expiry begins in 2026.
13/05/2022 Will these losses be used before expiry?
Yes, we have already applied losses through 2020 and 2021. We continue to use them when filing tax returns, which has resulted in virtually no federal income taxes being paid in Canada during that period. While auditors require us to accrue taxes in the financial statements, in our filings we utilize these losses. This enhances cash flow and retained cash, and we expect this benefit to continue for some time.
10/11/2023 Can you provide guidance on the increase in deferred tax assets and its impact on net income?
Yes, we saw an increase in deferred tax assets, which is an accounting mechanism reflecting the company’s future profitability. With several products in our pipeline, and Moberg getting closer to commercialization, the accounting rules required recognition of deferred tax assets tied to that future profitability. That was the driver this quarter.
I cannot provide guidance on whether we will see similar increases in future quarters, but the recognition was directly related to Moberg’s expected progress toward market entry rather than recent profits.
15/03/2024 Do you see Absorica royalties remaining stable despite the 30% year-on-year decline in the quarter?
We are seeing volatility, but overall the trend is strong. Year-over-year, royalties were higher, though Q4 was a bit lower. Q3 was sequentially much higher, which drove sales. Our distribution partner, being a large pharmaceutical organization, can leverage its scale to drive volumes. That has been beneficial for us, and we expect Absorica to remain a solid cash contributor.
10/05/2024 What are your total available tax loss carry-forwards?
Bryan Jacobs: We have been chipping away at them. Currently, we are sitting at about 170 to 175.
10/05/2024 Licensing revenue rose substantially year-on-year. Was anything unusual, like seasonality?
Craig J. Mull: Licensing revenue has two parts: net sales royalty and royalty on product shipments. Shipments can be lumpy, while net sales are steadier. This quarter, we had higher year-over-year shipments, which boosted results. Similar benefits appeared in Q3 last year.
10/05/2024 Is there a good licensing revenue level to assume for the rest of the year?
Bryan Jacobs: Look at the trend and run rate. Where shipments create lumpiness, average it out. We break down the split between the two in our financials.
28/08/2024 What margins do you expect on MOB-015 in Canada?
Margins will be slightly lower than our existing portfolio due to import costs, but still strong overall. It is too early to disclose specifics for competitive reasons. One clarification: in Canada we will not collect a royalty. We will sell the product directly through our sales infrastructure and only pay a royalty back to Moberg.
08/11/2024 Should Q4 show normalized results for Natroba including net income and tax loss credits to free cash flow?
Hey, Justin, it's Brian Jacobs here. On Natroba, we will continue to have some transition from that co-promotion partner we inherited with the business. The run rate you are seeing in 2024 should continue, and it will not be until Q1 2025 that we are fully transitioned off. That is the way to think about the Natroba business.
On utilization of tax losses, that remains unchanged from what we previously disclosed. We believe we structured the transaction in a tax-efficient manner and should be able to utilize tax losses efficiently from the combined business.
08/11/2024 Were there elements in Q3 where tax losses were not utilized?
Nothing in particular. We continue to utilize those losses in the quarter. Nothing has changed from prior quarters.
19/03/2025 Will M&A fees and the fair value inventory adjustment roll off next quarter?
Yes, both items will roll off, though there will still be some impact in Q1 2025. However, the amounts will be far reduced compared with the past two quarters.
19/03/2025 Can you quantify the one-time items expected?
We cannot provide a precise figure right now, but they will be lower than what we have seen in recent quarters.
19/03/2025 Can you break out cash generation between organic operations and use of tax loss credits, and what remains available?
Remaining tax losses going forward are $154 million in U.S. dollars before any tax effect. In the quarter, about $11 million was utilized. The way we have structured the businesses allows us to apply those losses across both the Canadian and U.S. operations.
09/05/2025 Can you quantify Natroba seasonality in Q2 and Q3?
Historic financials from ParaPRO, which we reference in bar reporting, are the best guide. They clearly show seasonality in peak periods.
We expect stronger performance in the US, with revenues stepping up in Q2 and Q3. The magnitude should be in the high single to low double-digit percentage range.
08/08/2025 What are annual sales of permethrin in Canada?
Andre, it's Bryan. We have not done a formal analysis on permethrin because it's a generic product, and its sales level would not necessarily indicate what we could achieve with Natroba in Canada.
08/08/2025 What is the size of the Canadian permethrin market?
Andre, in Canada both 1% and 5% permethrin are over-the-counter products, making data hard to obtain. Our estimate is that the market is about CAD 10 million.
12/08/2025 For new listeners, can you remind us what Cipher is about?
Yes, we had a very good quarter, but let me step back. Cipher is a specialty pharma company originally spun out of CML Healthcare in 2003, and since 2004 it has developed several drugs with three FDA and Health Canada approvals. I rejoined the business in 2020, and since then we’ve made the company lean, profitable, and highly cash-generative. About a year ago, we acquired a U.S. business for roughly $90 million, fully transitioned it, and in the last 12 months more than doubled our sales and EBITDA.
Cipher’s base dermatology portfolio includes Acturel, Vanica, and our lead acne product, Epuris in Canada and Absorica in the U.S. Our U.S. growth is centered on Natroba, a treatment for head lice and scabies, where we hold 23% market share despite having what we believe is the best product. We have over 40 U.S. sales reps, and adding complementary products to their bag is a key priority. We are also seeking approval to launch Natroba in Canada and are pursuing out-licensing opportunities globally, with discussions underway but no signed agreements yet. Financially, we generate over $2 million per month in U.S. cash flow, reduced acquisition debt from $45 million to $18 million in 12 months, and remain focused on U.S.-oriented business development.
12/08/2025 What margins do you earn on Natroba?
Our overall gross margin is about 82 to 84 percent, and our EBITDA margin is above 50 percent. Thanks to a large pool of tax losses from prior management acquisitions, we do not currently pay tax and will not for some time. That means our EBITDA margins effectively translate to cash flow.
Outloook & Guidance
09/08/2019 What R&D expenses should we expect if Galephar products require pivotal trials?
It is difficult to estimate at this point because we are still in the process of selecting which products to invest in. We will provide updates as we move through that process.
09/08/2019 Are peak sales estimates for pipeline products still valid?
We do not have updated revenue estimates at this time, as they relate to assets we are currently seeking distribution partners for. The prior estimates are still under review.
10/11/2019 Any updates on Absorica life cycle management and prescription outlook for 2020?
We continue to work with Sun, our U.S. distribution partner, on extensions of the current product. We are positioning Absorica as a prestige product in its category, and we believe that through marketing we can retain a certain market share. The life cycle management project is ongoing, and we expect to reach an agreement with Sun on a potential adjustment to the product that would extend its life.
08/05/2020 What is the expected timeline for data on MOB-015 and CF101?
We are continuing to move through the regulatory process with these drugs. We believe value is created by validating the products and enhancing their credibility through this process. We also have other projects, such as the tattoo project, which is longer-term but progressing, and we continue to confirm the quality of results.
Under our partnership with Galephar, we are working on several products, including one for hand eczema. Overall, we are advancing through regulatory pathways and believe this strengthens the value of our pipeline.
13/08/2020 Any updates on Absorica royalties and licensed U.S. products like Can-Fite and Moberg?
The Moberg product is still in clinical trials. Results were weaker than expected compared to existing products, mainly due to whitening of the nail during treatment. They are reformulating, which pushes commercialization further out. As for Can-Fite’s adenosine analog in psoriasis, development has slowed. We need to get an update and will provide it when available.
13/08/2020 Update on Canadian portfolio out-licensing plans?
We are in advanced discussions with a marketing partner and expect to finalize a definitive agreement by the end of September. The process was deliberately delayed because sales reps cannot access physician offices during COVID-19, and we want to avoid unnecessary costs. As conditions improve, we will be ready to move forward. We are also exploring virtual engagement methods, such as online meetings and digital diagnostic platforms.
13/08/2020 Any update on potential Absorica generic launch at year-end?
Actavis has not registered the product with the FDA. That could mean delays or possible manufacturing issues, though at this point that is speculation.
13/11/2020 Update on Can-Fite psoriasis Phase 3 program status and timelines?
We are working to set up discussions with Can-Fite to better understand their process and overall schedule. The product shows potential with positive early signals, but we need more details on their results and plans. Those conversations are ongoing, and we expect to gain a clearer view of timelines for Phase 3 conclusion and regulatory milestones.
13/11/2020 What are the company’s next 12-month goals and Trulance arbitration timeline?
For the next 12 months, we will focus on continuing to grow our Canadian commercial business, managing cost structure, and advancing development programs such as the Tattoo program, the Moberg nail fungus program, and new projects with Galephar, particularly Alitretinoin for hand eczema. For Absorica, once a generic is launched, we will launch our own authorized generic with Sun to maintain significant market share.
Regarding arbitration with Bausch, the process is ongoing. We expect a decision from the arbitrator no later than the end of January 2021, unless the matter is settled before then.
13/05/2022 When do you expect MOB-15 to launch in Canada, and what revenues could it generate?
MOB-15 is developed by Moberg, and we hold the Canadian licensing and distribution rights. Phase III trials showed excellent cure rates but raised issues with nail discoloration. Moberg has decided to conduct a second Phase III trial in the U.S. at a lower dose to enhance results. While we do not yet know the timeframe for completion, it is in our best interest to wait for those results, which should be stronger than the first trial, before moving ahead with commercialization in Canada.
13/05/2022 Do you expect to change reporting currency to Canadian dollars?
There is a possibility of switching from U.S. to Canadian reporting. The decision will depend on business development activity. If we make a large U.S. acquisition, reporting will likely remain in U.S. dollars. If a large Canadian acquisition occurs, we may move to Canadian-dollar reporting. Timing and choice of currency are tied to future business development opportunities.
13/05/2022 Can you update us on Epuris in the Mexican market and 2022 expectations?
Through Galephar, we partnered with Telemax, a large Latin American distributor. The product received regulatory approval in Mexico, and Telemax has placed initial stocking orders. We expect meaningful royalties from this market, but not at the scale of Canada or the U.S. given significantly lower pricing in Mexico.
13/05/2022 What initiatives are being pursued in South America, specifically Brazil, for the isotretinoin portfolio?
We have a distribution agreement with Sun Pharma for Brazil, which is a large market. However, the regulatory regime makes product approval very difficult. We are pressing Sun to move the project forward, but challenges remain with regulatory authorities. Brazil generally prefers to purchase products manufactured domestically, so we are exploring ways to accommodate this requirement. It is a complicated process and intentionally challenging due to Brazil’s preference for local manufacturing.
17/03/2023 When should Phase 3 data on MOB-015 be available?
We expect data within the next nine months. Enrollment of 350 patients is complete, and investigators are now going through protocols. Based on what we have heard from Moberg, we should see results in that timeframe.
17/03/2023 If Phase 3 MOB-015 data is positive, when will the Canadian NDS be filed?
It would be filed immediately. Health Canada has a six-month period to review the file.
17/03/2023 When could the Can-Fite psoriasis product NDS be filed in Canada?
Can-Fite must complete its ongoing study first. That filing is likely about 12 months out, compared with nine months for MOB-015.
17/03/2023 Can you raise U.S. drug prices in line with 7% inflationary increases?
It is possible, but the FDA has pushed back on some increases around 7%. We believe we can achieve price increases in the 4% to 6% range for our U.S. portfolio.
17/03/2023 Do you expect year-over-year top-line growth from 2022 to 2023?
For our Canadian assets, we are budgeting growth on most products. In the U.S., Absorica genericization has slowed growth, but we expect price increases and some top-line growth in other products. Foreign exchange is a headwind, as the strong U.S. dollar compared with last year will impact reported results despite Canadian portfolio growth.
12/05/2023 Can you quantify expected Aggrastat growth in coming quarters?
What you saw in Q1 is a good indication of expectations going forward, and we hope to build on that. We intend to report stronger outcomes in future calls.
We are working closely with Verity and targeting 45 cath labs across Canada that require Aggrastat. Progress has been solid, and we expect momentum to continue into the future.
12/05/2023 What updates can you share on your pipeline with Galephar?
We are in discussions with Galephar on several potential products in their development pipeline. While nothing is ready to announce, we are hopeful of securing another successful product, similar to Absorica and fenofibrate. Galephar excels at improving existing products, often through the 505(b)(2) pathway. We expect to report progress on these discussions in coming quarters.
26/05/2023 What should investors focus on as key catalysts or metrics?
Cipher trades at roughly three times EBITDA, holds nearly half its share price in cash, has no debt, and generates strong free cash flow. For investors, this represents a very stable and undervalued business with meaningful upside. Our discipline means we will not rush into deals, but in today’s buyer’s market, sellers are motivated. Our strong balance sheet allows us to move quickly when the right opportunity appears, often with fewer competing bidders.
Investors should track our pipeline closely, particularly progress on MOB-015 with our partner Moberg. They are confident in the product, already preparing for European launch, and running an additional U.S. study. Positive updates there, combined with our acquisition strategy, are the most important signals that we are on the right path.
26/05/2023 What is the key takeaway message for investors today?
Cipher has transformed over the past two and a half years by focusing on profitability, eliminating debt, and stabilizing the business. We now generate about 1 million U.S. dollars in free cash each month and will continue to do so until the right acquisition comes along. We are disciplined, patient, and prepared to strike when the right opportunity presents itself.
Our balance sheet is strong, our capital structure is solid, and our track record proves we can execute. Investors see that we trade at a low valuation relative to cash and earnings, while competitors in specialty pharma are struggling. This is the right time and place for Cipher. We are positioned to grow through opportunistic acquisitions, expand our pipeline, and continue building shareholder value.
10/11/2023 Will EU approval of MOB-015 support an earlier Canadian filing before U.S. Phase 3 data?
Yes, we could file in Canada now, but we are waiting for the enhanced indication that we believe will come out of the North American trial in the U.S. We also have milestone payments tied to the clinical trial results, and we want to wait until those are achieved before filing in Canada.
10/05/2024 Assuming Moberg Phase 3 results are positive in January 2025, when would Cipher file an NDS?
Bryan Jacobs: Good question, André. We are already preparing our Canadian dossier, which is based on European approval. Health Canada has a more streamlined process with the EMA than with the FDA. Since the formulation does not change with the Phase 3 trial, we can move quickly. Once results are in during Q1 2025, it will take us another quarter to file. With Health Canada’s one-year window, approval would be expected in Q2 2026, targeting a launch in the second half of 2026.
10/05/2024 Why not file an NDS now based on EMA data instead of waiting for U.S. Phase 3?
Craig J. Mull: Doug, it's Craig. We are getting a head start on our submission, but we want to secure the claim that our complete cure rate is superior to the current market product. That requires the Phase 3 data, so we are holding for that before filing.
10/05/2024 Can product revenue still grow for the remainder of the year?
Craig J. Mull: Yes. We see a positive trend and expect further growth.
10/05/2024 Does confidence in executing one or more M&A deals in 2024 remain?
Craig J. Mull: Yes, I feel confident and optimistic. That said, Cipher has made mistakes in the past, and we will make sure those are not repeated.
28/08/2024 How aggressively will Cipher pursue U.S. rights to MOB-015?
Aggressively.
28/08/2024 What key metrics or catalysts should investors watch?
First, U.S. market share gains with Natroba. Second, continued sales growth of Epuris in Canada. Third, the phase three readout for MOB-015 in January, which will be pivotal.
28/08/2024 What is the main takeaway about Cipher today?
Cipher’s base business was already a strong, cash-flowing platform. With the Natroba acquisition and U.S. infrastructure, we now have multiple growth levers that didn’t exist before. In the near future, Cipher will be a much larger revenue company, with steady earnings growth as we have delivered for the last several years. We believe the stock remains very cheap relative to our trajectory.
08/11/2024 What is the timing for potential execution of transactions?
Yes, I believe 2025. These deals often take longer than expected.
08/08/2025 How are out-licensing discussions for Natroba progressing and could agreements arrive in 2026?
That's possible, Andre. We have many interested parties, and the key issue is pricing in other jurisdictions. We are closely watching the Trump administration's discussions on most favored nation pricing to avoid selling at lower prices abroad that could later affect U.S. pricing. Things are going well, with significant interest from multiple countries and specialized pharmaceutical companies. It is likely we will have an agreement in place by the end of 2026.
08/08/2025 What is the status of Can-Fite’s Phase III trial with piclidenoson for plaque psoriasis?
We do not have much recent information but have a call scheduled next week. We believe the trial is going well. We were surprised to see Can-Fite raise about $75 million, which should fund the work required. We expect to get a more detailed update during our upcoming call.
12/08/2025 What is the timeline you expect for out-licensing deals?
Within the next six months, we would like to have at least a couple of out-licensing agreements finalized. This effort is independent of our Health Canada submission, which we will handle ourselves given our infrastructure.
12/08/2025 Is the growth from this past quarter sustainable?
The second quarter is always strong for the U.S. business, and I expect the third quarter will be even stronger. There is some seasonality: warmer weather tends to bring more head lice and scabies cases, while December sees fewer. Overall, the growth trend is intact, though it naturally fluctuates with seasonality.
12/08/2025 Where should investors focus when evaluating Cipher right now?
Investors should monitor our continued execution. I expect acquisitions in the not-too-distant future, though many opportunities fall away during diligence. We discard the vast majority, which is the right choice in hindsight. Bad acquisitions consume time and value, and historically the company made missteps I do not want to repeat.
12/08/2025 Where do potential deals usually break down?
Most often, sellers overvalue their products, assuming stronger growth than is realistic, which translates to asking for too high a price. Everyone tries to put lipstick on what they are selling. We prefer to be patient, and passing on many of the deals we’ve reviewed has proven to be the right call.
12/08/2025 What is your long-term vision for Cipher?
My goal is to double the size of the business in sales and earnings within the next five to ten years, primarily through U.S.-based acquisitions of products or companies. Once we achieve that scale, I’d like to secure a NASDAQ listing, ideally within three years or less. That would broaden our investor base and mark the next stage in Cipher’s growth.
Risks & Macro
13/08/2020 What is your position versus the CRA in the tax dispute, and what is the expected resolution timeline?
We will file a notice of objection in September, mainly focused on differing views of valuation. Resolution speed is uncertain given the pandemic, but based on current conditions, six months seems likely. We expect ongoing dialogue with Revenue Canada and hope to reach agreement sooner.
13/11/2020 Has the Trulance arbitration process concluded and is it now with the arbitrator?
At this point, the matter is in the arbitrator’s hands, though there could still be further discussions among the parties. The pandemic has slowed legal processes, including this arbitration, which has extended timelines beyond what they would normally be.
19/03/2021 What is your market analysis for Brinavess adoption in Canada despite U.S. regulatory risk?
We believe the product is a strong candidate for the hospital sector. Verity, who has a background with these products through Cardiome, will do a good job of increasing the number of hospitals on our roster. They will have feet on the ground and will be promoting those products, particularly Brinavess.
10/11/2023 Any insight on Moberg’s capital needs or partnership activities for psoriasis development?
We are expecting to meet with them in the coming 10 days. We have a few questions on those lines ourselves and hope to get clarity. We’d be happy to come back to you afterward with more information.
15/03/2024 Does Health Canada’s review of benzene in acne products have implications for Epuris?
These are a different category of products. If physicians grow concerned about over-the-counter acne products, they may prefer prescribing a safe option like Epuris. This could provide a slight boost, though I believe the probability is low.
28/08/2024 What challenges keep you up at night?
Our biggest challenge was finding the right new growth leg, and we’re confident we’ve solved that with the acquisition. The U.S. payer market is always changing and requires vigilance. The risk of generics is always present, though not pressing right now. Beyond that, execution is our main focus. We finally have the base to grow meaningfully, and that is exciting.
12/08/2025 What issues or risks concern you most right now?
The pace of our global out-licensing is slower than I would like. Two key challenges are achieving acceptable pricing in other jurisdictions and uncertainty around potential U.S. “most favored nation” pricing rules. Entering into agreements at lower prices could backfire if such rules take effect. For now, we remain patient. We are not desperate to do deals, and I prefer to wait for the right opportunity as we did with Natroba.
12/08/2025 Do you expect tariffs to affect your business?
Very little.
12/08/2025 How significant are tariffs for your business?
Very, very little. We import one component of the product that already carries tariffs, but with gross margins of 82 percent, the cost impact is minimal. It is just a small part of the total product cost. At this point, tariffs are not material, though with policy changing daily, we prefer to stay out of the spotlight.
Other
18/03/2022 Will you switch reporting currency to Canadian dollars?
There is a possibility of moving from U.S. to Canadian reporting, but it depends on business development. If a major acquisition occurs in the U.S., we would likely stay with U.S. dollars. If a significant Canadian acquisition occurs, we may move to Canadian reporting. Timing will be driven by future opportunities.
18/03/2022 Do partners plan to increase prices of licensed products?
Each year we apply for price increases and so do our distributors, depending on product and market. In general, we aim for increases at least in line with inflation.
18/03/2022 Closing remarks?
Thank you for joining us today. We look forward to updating you on our progress throughout 2022 as we execute on the priorities discussed. Thanks again, and have a great day.
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