The chances are good that you've become more familiar with the name Pfizer (PFE -1.00%) in the past 18 months than in all of your years combined before the COVID-19 pandemic hit. Once vaccines started rolling out, Pfizer news became commonplace. Now, it's that branded name recognition that could help bolster sales of a therapeutic treatment in Canada for another pharmaceutical company.
HLS Therapeutics (HLS 0.80%) announced on Aug. 16 that it has reached an agreement with Pfizer to co-market Vascepa, an innovative therapeutic prescription medicine for treating cardiovascular disease, and used in conjunction with medicines called statins, such as Pfizer's Lipitor, which help fight high cholesterol and reduce heart attack and stroke. Can Pfizer's name recognition and resources also help boost sales for HLS?
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HLS on its own
HLS went public in 2018, seeing its stock price settle in at $11 per share after the first seven months. Since then it has seen a gradual, yet unexciting, increase in stock price to around $14. The minimal stock price movement is representative of the revenue and earnings numbers over the past three years.
Revenue has been steady on an annual basis, in a range of $55 million to $60 million. Earnings has seen a tight range with an annual average basic and diluted per-share loss of $0.46. That range has continued through the first half of 2021, which represents a 31% improvement since an annual loss of $0.67 in 2019. Those numbers have an opportunity to show even greater improvement at the conclusion of the year with the help of Pfizer.
Teaming up with a big dog
Per the agreement, HLS will have responsibility of Vascepa commercialization and will record all revenue related to sales in Canada. It will also continue to use its own sales team to market and provide education about Vascepa to roughly 2,500 specialist care providers such as cardiologists and endocrinologists.
Pfizer will take the reins on marketing the medication to primary care physicians, which includes a little more than 25% (10,000) of the 45,000 doctors in Canada. That 25% is responsible for nearly 80% of the prescriptions within the target base, while it expands the target audience to an end user base four times the size of the specialists that HLS will focus on.
If the strategy to co-market Vascepa plays out well for HLS, analysts think the stock will begin to show big-time movement based on stronger revenue growth.
Analyst reaction
The announcement of a co-market agreement was received well by analysts Tania Gonsalves of Canaccord Genuity and Noel Atkinson of Clarus Securities, resulting in two reiterated buy ratings along with stock share-price targets with a minimum 80% premium over the current share price.
Atkinson noted that the ability to speak with physicians about Vascepa in conjunction with Pfizer's Lipitor -- a statin medication -- should prove successful, leading him to say, "We remain bullish on the potential for Vascepa to become a blockbuster drug in Canada."
Based on the bullish sentiment, he believes the company can hit $61 million in revenue for 2021, followed by a huge leap to over $100 million in annual revenue for 2022. This would put the company revenue a bit ahead of its current pace of $58.6 million for 2021 based on numbers through the first half of the year, and would result in a 64% increase year over year when comparing 2022 to 2021 projections.
If the reminder of the year mirrors the first half, those projections may be on target. The company released its second quarter results on Aug. 5, highlighted by 42% sequential revenue growth from sales of Vascepa. That was driven by a quarterly increase in the number of patients and prescribers of the drug, reaching 4,100 and 1,050, respectively, resulting in a percentage increase in the low 40s for each.
A final word
Including the two analysts mentioned earlier, the average analyst price target for HLS is $24 per share, a 70% premium over the current share price of $14. If Pfizer's name recognition and use of its sales teams can go uninterrupted in its quest to successfully market Vascepa to an expanded prescriber base of primary physicians and a growing customer base, it should bring a big boost to HLS revenue.
But as we've seen in the past 18 months, not everything in the healthcare sector always goes as planned. In the case of the COVID-19 delta variant causing disruptions, investors can't ignore the potential for disruption as Pfizer prepares to roll out booster shots. It is worth noting, however, that none are planned in Canada as of now.
Depending on what type of investor you are, a slightly riskier but more highly rewarding move could be to jump in now. For those who need a bit more evidence, HLS' third-quarter numbers and a possible Vascepa sales outlook should be available around Nov. 4.