2016-07-05



Merus CEO, Barry Fishman

After an 18-month company transformation under new CEO, Barry Fishman, Merus Labs International (NASDAQ:MSLI; TSX:MSL) is now ready to in-license new pharmaceutical products, in addition to optimizing existing products and continuing to acquire legacy products that are no longer strategic for major pharmaceutical companies.

“Since the fall of 2014, we’ve strengthened the management team and European platform, acquired additional products and improved the balance sheet and cash flow,” Mr. Fishman says in an interview with BioTuesdays.com.

“We’ve accomplished what we set out to do over the past 18 months and we’re now primed and ready to move to our next growth phase: in-licensing new drug products that have either been submitted for approval or recently approved,” he adds. “This would give us the opportunity to leverage our geographic platform and the skills of the team to drive demand and build markets necessary to successfully launch new therapeutics.”

Among other things, Merus now has 12 products in its portfolio, compared with two in August 2014; it has tripled its forward 12 months EBITDA and now sells its products in 36 countries, compared with 17. In addition, more than one million patients around the world benefit from Merus’ products.

Merus also has diversified its product portfolio with three accretive acquisitions focused on Europe since May 2015, investing more than $200-million in capital and doubling the size of the company.



Merus Labs now has 12 products in its portfolio that span oncology support, women’s health, urology, infectious diseases and cardiovascular disorders

“Our portfolio of legacy products creates a great foundation for growth and allows us to expand our offering to include new products at a much earlier phase of their lifecycle,” Mr. Fishman points out.

In March, Merus completed the acquisition of rights to Surgestone for menstrual irregularities; Provames, a hormone replacement therapy; Tredemine for the treatment of tapeworm; and Speciafoldine for folic acid deficiency in France and selected other markets from Sanofi.

In February, it acquired rights in Europe and selected other markets to three cardiovascular drugs – Elantan, Isoket and Deponit – from UCB of Belgium.

And in mid-2015, it acquired rights from Novartis to sell two products in certain European markets: Salagen for xerostomia following radiation therapy, in addition to Sjogren’s syndrome; and Estraderm MX for transdermal delivery of estradiol for symptomatic treatment of menopause.

The company sells products for oncology support, women’s health, urology, infectious diseases and cardiovascular disorders.

Revenue now exceeds $100-million, with a focus on European markets. UK revenue represents less than 10% of overall sales. Outside of Europe, Merus products are sold in Australia, South Korea, Turkey, Mexico and Canada. Merus uses numerous local and regional strategic partners to promote its products in select markets.



Merus Lab’s Business Development Funnel

“Our scalable European platform gives us an advantage to negotiate regional deals with Big Pharma, which Big Pharma likes, rather than country-by-country acquisitions,” Mr. Fishman points out. “We have an effective tax structure in Europe, and strong capabilities to optimize product potential.”

Laurentian Bank Securities analyst Joseph Walewicz, in a recent report, said investors should be buying Merus stock as part of a conservative pharma portfolio. He cited Merus’ well-diversified international portfolio of pharmaceutical products, strong cash flow and low valuation.

He rates the stock at “buy” with a one-year price target of $3.50. Merus closed at $1.65 on Thursday.

Mr. Fishman says the company has three pillars in its strategic plan for growth. They include acquiring targeted products through disciplined business development; integrating those products through productive outsourcing and internal competencies; and optimizing those products through sales and marketing and margin expansions.

While the company’s legacy products provide a strong base of cash flow and opportunity for margin expansion, he says Merus is moving up the value chain and spending more time on business development to acquire growth products at an earlier stage in their development.

“We see an opportunity to invest in new launches to create brand awareness, obtaining appropriate market access and educating physicians on the benefits of our products,” he adds.

Mr. Fishman cites drugs with a competitive advantage and a concentrated prescriber base that leverages Merus’ existing platform as key criteria for targeted growth products.

“We have successfully executed on our business priorities – strengthening the team, improving business processes, implementing existing product profit-enhancing moves and filling our pipeline with several value-creating pipeline opportunities. The Merus team is excited about leveraging our strong and scalable foundation to drive future growth,” Mr. Fishman adds.

Merus Labs has three pillars in its strategic plan for growth that include acquiring targeted products through disciplined business development; integrating those products through productive outsourcing and internal competencies; and optimizing those products through sales and marketing and margin expansion

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