Valeo Pharma: One of the fastest growing specialty pharma companies in Canada

Fully integrated specialty pharma that generated rapid and significant revenues growth (from $7.5 million in 2020 to a forecasted $60 million + for fiscal 2023) with a current product portfolio with peak sales potential now exceeding $200M (>3x current revenue run rate)

Pharmed Out

What do respiratory/severe allergy issues, ophthalmology conditions or a hospital stay have in common? They make up some of the most common and significant medical needs faced by millions of Canadians.

If you’ve ever suffered from an ailment that falls into one of those categories, you can probably appreciate how important having access to leading prescription treatments to fight back is.

Unfortunately, bringing new and innovative drugs to market is really hard. Between the astronomical cost of R&D, clinical trials, adhering to local regulatory approvals and establishing effective manufacturing and distribution infrastructure, it’s no wonder that getting access to the highest quality and most effective drugs at a reasonable price can be hard for markets that aren’t as big as the U.S.

Enter Valeo Pharma, one of the fastest growing specialty Canadian pharma companies, bringing proven and innovative drug treatments to the Canadian market powered by a global licensing platform.

Summary

Canadian’s Like Prescription Drugs
High Growth, Diversified (Highly leverageable structure)
A Different Breed
The Bottom Line

Canadian’s Like Prescription Drugs

To say the Canadian pharma market is big would be an understatement. Despite its moderate population size, Canada punches above its weight. We’re not sure if that’s a good thing but that’s another story.

Globally, Canada ranks 10th in pharma sales, making up roughly 2% of global sales. According to IQVIA the Canadian Pharma market in 2020 totaled $32.5 Billion. Combined retail and hospital sales grew 4.6% YoY. 758 million prescriptions were dispensed in 2020, up 2.1% YoY. That’s almost 20 dispensed prescriptions per Canadian. Of those sales, branded pharmaceuticals represented 81% of dollars spent, but only 27% of total prescriptions (CGPA).

In a market so big and wide, focus is important.

With close to 4 million Canadians living with asthma (50% of which have uncontrolled symptoms), and over 700,000 suffering from severe allergies, Valeo has been revamping its drug portfolio to bring new leading solutions to market that will address these longstanding Canadian health issues.

High Growth, Diversified

Seeing the opportunity to help millions of Canadians live better lives through better drugs, Valeo is bringing new Respiratory/Allergy, Ophthalmology and Hospital Specialty Products to market. Based in Montreal and founded in 2003, the company is focused on drug commercialization for the Canadian market and has been growing at a rapid clip through new drug acquisitions and organic growth. In fact, the company has just transformed the composition of its portfolio in 2021 and grew from 30 employees to approximately 130 at the time of this report. Armed with a revamped, growing, and diversified portfolio of 12 drugs (including 6 high-growth, high-potential ones), 2023 run rate revenues are expected to increase more than 8X over 2020 levels. Furthermore, Valeo remains unequivocally committed to materially increasing its revenues and accelerating its path to profitability by fully utilizing the operational and commercial levers at its disposal through its existing infrastructure that currently allows for the addition of new products at nominal costs. With Valeo fast approaching the break-even point, additional revenue contribution will directly improve and increase margins and overall profitability. With peak sales potential from its existing product portfolio now exceeding $230M / year (that’s more than 3 times the current revenue run rate), its easy to see how impactful any new product addition can be. (1)

A Different Breed

Specialty pharma is a competitive biz, but Valeo’s got a few aces up its sleeves. There’s a reason why the company’s been able to grow at such blistering rates and is getting more attention from the Street. Unlike other players in the space, Valeo is all about commercialization with a pan-Canadian sales force composed of 85 sales representatives and account managers targeting 50,000+ doctor calls/visits per year from coast to coast. It doesn’t manufacture or conduct early R&D on the drugs it brings to market which results in no development risk and a highly scalable and laser focus platform centered on sales, marketing, and distribution. Valeo’s play is about finding best in class drugs that have been developed, validated, and approved in other markets, acquiring their Canadian distribution rights, and bringing them to Canada through a well-oiled and skilled sales and marketing engine. In addition to being highly scalable, the model is highly de-risked vs the competition. Valeo also operates in therapeutic areas, such as respiratory and ophthalmology, that are recognized as significant commercial markets and conducive to innovation. With its long standing partnerships with the globe’s largest and most prominent pharma players (like Novartis), Valeo is well positioned to add to its ongoing pipeline of high-quality licensing opportunities. Led by an experienced management team and high insider ownership (50+%), the company is a standout in the Canadian pharma space.

Having just acquired the rights to world-class asthma, ophthalmology therapies and new potentially market leading allergy drugs, the company is on pace to drive significant sequential growth ahead while maintaining stable operating costs for years to come.

The Bottom Line

Valeo may not be a household name yet, but it has a plan to get there and is executing to the letter. A committed and experienced management team combining 100+ years of commercialization success is hard to come by in this industry and is something to watch as the company ramps up its new drug offerings and significantly grows revenues from its existing product portfolio while keeping its operating costs structure under tight control.

Near term catalysts excluding any new products addition, include the full rollout of its ophthalmology recently acquired drugs (Simbrinza for glaucoma and Xiidra for dry eye), the continued growth of its first-in-class asthma drug Enerzair and best-in-class asthma drug Atectura and further commercialization following a relaunch of Allerject, an advanced solution to severe allergic reactions that will challenge the market leader Epipen.

Valeo is covered by the following analysts and firms:

Stefan Quenneville and Shane Colborne at Echelon Wealth Partners
Andre Uddin and Gireesh Seesankar at Research Capital Corp
Scott McAuley at Paradigm Capital

For additional information, feel free to reach out to Valeo management at frederic.dumais@valeopharma.com or 514-693-8847.

Learn more about Valeo Pharma here.

Sources:

(1) Valeo Pharma 2023 Annual Information Form

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