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Aequus Pharmaceuticals: Will Santen's Verkazia Be The Next In-Licensing Coup Of Doug Janzen?

|About: Aequus Pharmaceuticals Inc. (AQSZF), Includes: SNPHY

More than one year ago, Aequus and Santen announced a partnership where Aequus was to become the promotional and marketing partner for not yet defined ophthalmology products in Canada.

Health Canada recently approved Santen's Verkazia, an orphan drug and only treatment for a chronic allergic eye condition.

At the Proactive Investors Vancouver talk on 13 Mar 2019, Janzen announced the in-licensing of a new ophthalmology product.

After the last year's in-licensing coup with Zepto and the just a few days old securing of the 5Mio CAD revenue basket of dry eye products from Medicom Healthcare, is Aequus Pharmaceuticals (OTCQB:AQSZF) CEO Doug Janzen on the verge of landing his next coup with Verkazia?

In December 2018, Health Canada granted approval for Santen's (OTCPK:SNPHY) new orphan drug Verkazia. It is the only treatment for vernal keratoconjunctivitis (VKC), a chronic allergic eye condition for children and adolescents, and therefore closing a gap in the rare diseases space. Santen is expected to look for a sales and marketing partner in Canada for this product.

Since mid-2017, Aequus and Santen expressed several times their intentions to enter into a commercial collaboration where Aequus is intended to be the commercial partner for some new products. More specifically, they announced in June 2017 that "Aequus and Santen will plan to co-commercialize an undisclosed ophthalmology therapeutic product currently under review by Health Canada for marketing approval in Canada".

Unfortunately, in April 2018 Santen received a Notice of Non-Compliance by Health Canada for this undisclosed product, and Doug Janzen announced that "Aequus looks forward to continued discussions with Santen around potential future products".

In the recent Proactive Investors Vancouver talk on 13th March, 2019, Janzen mentioned that "we will see another ophthalmology deal pretty quickly".

So, here we are, with Santen having a new ophthalmology product ready for the Canadian market and Doug Janzen announcing that Aequus will shortly in-license another ophthalmology product. Do the math ...

Obviously, this is all speculation at this very moment but it would certainly make sense for both companies. The new product may be good for roughly around 2-4Mio CAD of annual peak sales in Canada. This is too low to be of interest for bigger players and just about the right size for Aequus, who would certainly welcome the addition to the portfolio. In addition, it would finally materialize the long awaited commercial collaboration between the two companies.

If this is indeed the deal to be announced soon, then Aequus would likely be able to add Verkazia to the revenue stream more or less immediately (probably starting in late Q2/2019) and the anticipated breakeven for 2019 would become more and more tangible.

I recommend you to watch the mentioned Proactive Investors Vancouver 5min video as Janzen provides some insights into Aequus' business strategy and the Canadian market. If you want to know more about Aequus, their products, revenue projections and any investment opportunities, feel free to have a look at my recent analysis on Aequus.

Disclosure: I am/we are long AQSZF.