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Thursday, January 28, 2021

Small-Cap Spotlight on Concordia International Corp (NASDAQ:CXRX)

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Concordia International Corp (NASDAQ:CXRX) is a small-cap specialty pharma play that has been murdered over the past 6 months on the adoption of a UK bill that promises to limit the ability of companies to raise prices on certain types of drugs. CXRX derives a meaningful piece of its revenue from the U.K. So this was key news. However, the stock is starting to find traction with the new year, spurred by its announcement of a new three-year, co-promotion agreement with RedHill Biopharma Ltd. through which the companies expect to expand sales of Donnatal, Concordia’s product used in the treatment of irritable bowel syndrome.

According to the press release, “Under the terms of the agreement, RedHill intends to increase the promotion of Donnatal among U.S. doctors who treat irritable bowel syndrome, with marketing efforts anticipated to begin during the current quarter. Over the three-year period, RedHill intends to promote the product in up to 30 sales territories.”

Concordia International Corp (NASDAQ:CXRX) trumpets itself as a specialty pharmaceutical company that owns a portfolio of branded and generic prescription products in the United States and internationally.

The company’s Concordia North America segment has product right sales of pharmaceutical products primarily in the United States. This segment offers a portfolio of branded and generic products, including Donnatal for the treatment of irritable bowel syndrome; Zonegran for the treatment of partial seizures in adults with epilepsy; Nilandron for the treatment of metastatic prostate cancer; Lanoxin for the treatment of mild to moderate heart failure and atrial fibrillation; and Plaquenil for the treatment of lupus and rheumatoid arthritis.

The company’s Concordia International segment engages in the acquisition, manufacture, licensing, and development of off-patent prescription medicines.

Its Orphan Drugs segment produces and distributes Photofrin, an orphan drug for the treatment of esophageal cancer, Barrett’s esophagus, and non-small cell lung cancer.

The company also provides products for the treatment of attention-deficit hyperactivity disorder, head lice infestation, and pulmonary diseases such as asthma; and control of severe or incapacitating allergic conditions such as atopic dermatitis, and seasonal and perennial allergic rhinitis.

The company was formerly known as Concordia Healthcare Corp. and changed its name to Concordia International Corp. in 2016. Concordia International Corp. is headquartered in Oakville, Canada.

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According to the release, RedHill will incur the sales and marketing costs associated with promotional activities, while Concordia will provide materials and samples. Concordia will keep all revenue up to a predetermined level of sales and only after reaching that predetermined level will revenue be shared between the Company and RedHill. Concordia also plans to continue to sell Donnatal in U.S. sales territories outside the scope of the RedHill agreement.

Management was quick to voice excitement over the deal.

“This agreement is a cost-effective approach to promoting Donnatal in a manner consistent with our long-term strategic focus on operational excellence,” said Allan Oberman, Chief Executive Officer of Concordia. “RedHill’s commercial team is highly motivated and has previous experience in gastroenterology sales. We look forward to partnering with them to market Donnatal to more key prescribers who we believe can help raise the product’s profile and potentially allow us to reach more patients in the U.S.”

Dror Ben-Asher, Chief Executive Officer of RedHill, said: “We are pleased to partner with Concordia for the U.S. promotion of Donnatal. With a core U.S. commercial team in place, we plan to initiate promotional activities in the U.S. in the coming months, with a specialty gastrointestinal sales force.”

The chart shows 7% tacked on to share pricing for the stock in the past week, but this action is running counter to the larger trend in the name.

Now commanding a market cap of $122.3M, CXRX has a significant war chest ($213M) of cash on the books, which compares with about $48.9M in total current liabilities. One should also note that debt has been growing over recent quarters. CXRX is pulling in trailing 12-month revenues of $1102.1M. In addition, the company is seeing major top line growth, with y/y quarterly revenues growing at 94.8%. We will update the story again soon as developments transpire. For continuing coverage on shares of $CXRX stock, as well as our other hot stock picks, sign up for our free newsletter today and get our next hot stock pick!

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