HLS Therapeutics (HLS.TO), mcap=$249m, price C$10.31 vs C$9.95

HLS.TO pitch:
– Small cap Canadian pharma with the shares near an all-time low and the business fundamentals finally inflecting to the positive. 

– Investment case is mainly based on Vascepa, one of HLS’s two drugs that is in the initial stages of commercialization.
– Vascepa is approved, it’s clinically effective, it now has reimbursement coverage, and Pfizer Canada is the team pushing things forward for commercialization (and is well-compensated to do so).
– Vascepa sales in Canada are growing 30%-40% QoQ and only now reaching sufficient prescription levels to break even for this drug. 
– The difficulties of new drug commercialization, and in turn the reason for the low share price, was mainly caused by Canada’s lengthy COVID lockdown which delayed the company’s original plan by 18 months. 
Precedent drugs suggest management estimate of 10% penetration is overly conservative and that 20-40% levels could be reached.

HLS.TO valuation:
– The already commercialized drug Clozaril alone supports the current HLS valuation, implying less than zero value for Vascepa.
– With Vascepa roll-out, HLS is worth $25/share.

Exp. gain: +150% to $25/share.

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