I’d like to introduce Theratechnologies Inc., trading over-the-counter as THERF and listed on the Toronto Stock Exchange as TH. They describe themselves as ‘a specialty pharmaceutical company addressing unmet medical needs to promote healthy living and an improved quality of life among HIV patients’. They have a market cap of about $462 million.
Drug currently marketed: EGRIFTA (tesamorelin for injection) in the US and Canada. This drug reduces excess abdominal fat in HIV-infected patients with lipodystrophy. An Egrifta article entitled ‘You’re not fat, it’s just your HIV meds’ gives you the idea.
Drug in Phase III: Ibalizumab - a treatment for multidrug resistant Human Immunodeficiency Virus-1 (MDR HIV-1). Due to positive results in Phase I, II and III trials, the drugs’ Biologics License Application (BLA) has been accepted by the FDA with a Prescription Drug User Fee Act (PDUFA) target action date of January 3, 2018 (i.e., FDA decision expected by January 3); also granted Priority Review status (perhaps therefore a decision earlier than January 3), Breakthrough Therapy designation and Orphan Drug designation.
More about ibalizumab:
Approximately 20,000 to 25,000 Americans with HIV-1 are currently resistant to at least one drug in three different classes of antiretroviral therapies. This is the estimated USA patient population facing a serious, sometimes life-threatening illness who could benefit from ibalizumab.
Earlier this year THERF acquired the commercial rights to ibalizumab for all European Union countries in addition to Russia, Norway, Switzerland and Israel.
THERF partners with other drug companies, so they are not doing a lot of independent research and development work, and have under 100 employees. For ibalizumab the partner is TaiMed Biologics, for EGRIFTA it’s EMD Serono. The Theratechnologies website details the relevant marketing agreements (their % of sales, royalties, etc.).
As part of their ramping up for ibalizumab, earlier this year they increased their sales organization to 41 employees from 12. They state ‘Our sales team is now in position to reach close to 5,000 of the most important physicians in the field of HIV, whereas we used to be able to reach about 1,100 before. While our team is awaiting the potential launch of ibalizumab, its sole focus is on the sales initiatives targeting EGRIFTA’.
More about THERF:
June 2011 they listed on the NASDAQ. February 2013 they completed a delisting from the NASDAQ. So there have been dark days. According to crunchbase.com they were founded in 1993.
They are not profitable. But they do sell about $44 million of EGRIFTA annually, helping to fund their expansion to handle the expected approval of ibalizumab.
From MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE THREE-MONTH AND SIX-MONTH PERIODS ENDED MAY 31, 2017:
Adjusted EBITDA in the second quarter of fiscal 2017 was $(3,739,000), compared to $1,362,000 in the second quarter of fiscal 2016. In the six-month period ended May 31, 2017, Adjusted EBITDA was $(3,014,000) compared to $2,464,000 in the prior-year period. The decrease Adjusted EBITDA was in accordance with our plan and was principally due to significantly higher investments in the U.S. market related to the organizational expansion described above. John here – ‘described above’ refers to expansion of the sales organization in preparation for Ibalizumab.
There is no change in our previously reported guidance. Net sales revenue of EGRIFTA® for fiscal 2017 is expected to be in the range of $44,000,000 to $46,000,000. Adjusted EBITDA for fiscal 2017 is expected to be in the range of $(2,000,000) to $(3,000,000). An assumed average exchange rate of USD 1 = CAD 1.32 was used in providing this guidance’.
My position with THERF:
I bought a starter position in October 2016 and have been adding on the way up, allowing it to become by far the largest position in my stock portfolio (besides stocks I also have mutual funds, etc.). I don’t have a medical background nor significant experience investing in pharma.
For me, this is an investment in the possibility of ibalizumab receiving FDA approval, getting a high-enough price on the drug and successfully penetrating the USA market. No approval, poor pricing, lack of penetration into that market or other missteps are possible.