Contrast agents like barium and iodine, which increase the visibility of medical imaging, are suffering from a global shortage, opening the growing US$6.3 billion dollar market up to new players capable of fortifying the supply chain.
Voyageur Pharmaceuticals (TSXV:VM), the only vertically integrated radiology drug manufacturer that owns and controls its critical mineral resources, makes a strong case for being up to the task, revealing the stock’s approximately zero per cent return since 2017 as a high-potential deep-value play.
Voyageur’s value-added platform
Unlike the international conglomerates it competes with (slide 12), Voyageur owns its barium and iodine resources, including the preliminary economic assessment-stage Frances Creek barium project in British Columbia (slide 11), whose ultra-rare pharma-grade resource, supported by in-house processing capabilities, could supply the entire market for over 100 years at 10 times lower cost (C$650/ton) compared to standard synthetic barium sulfate (C$7,230/ton).
Frances Creek could significantly reduce North America’s 100-per-cent dependence on imports for radiology drugs and establish the continent’s first secure vertically integrated supply chain, adding value to hospitals, clinics, ambulatory surgery centers, diagnostic imaging centers and tens of thousands of patients’ lives.
From these raw materials, Voyageur intends to manufacturer a growing number of contrast agents. These include five Smooth and Vision-branded barium products approved by Health Canada designed to enhance diagnostic capabilities and improve existing market standards. Currently undergoing their final testing phase, the quintet is slated to hit the Canadian market in 2025.
The company’s supply chain is set up and ready for production through a third-party manufacturing partner in Calgary, Alberta, but it may soon break ground on its own facility, allowing investors to capitalize should initial revenue, expected at up to 60 per cent margins, encourage a share price re-rating. This is dependent on financing.
Management, composed of mining and radiology experts, continues to lay the groundwork for a thorough go-to-market strategy. Recent milestones include:
- Securing a C$2.7 million distribution contract for SmoothX 2 per cent Barium Contrast with a company specializing in the sale of radiology products in Latin America. SmoothX has been shown to outperform competitor Bracco’s Readi-Cat 2 Smoothie when it comes to taste (slide 2).
- Signing a letter of intent with a top-five contrast agent supplier to expand market reach and expedite vertical integration.
- Strengthening leadership with recent additions of a chief scientific officer and vice president of business development, whose medical track records across commerce and academics materially de-risk Voyageur’s long-term strategy discussed in the next section.
- Preparations for testing with the U.S. Food and Drug Administration (FDA) in Q2 2025, followed by the European Medicines Agency later in the year, maximizing momentum in established and reliable contrast agent markets.
Voyageur’s future is bright as barium contrast
Currently negotiating numerous regional and global distribution arrangements, Voyageur’s long-term plan is to grow its line of contrast imaging products and gain global market share, driven by its ability to deliver a low-cost, high-quality alternative to high-priced synthetic barium sulfate and hard-to-find iodine. Highlights from its innovation pipeline include:
- Developing low-cost iodine contrast production in the U.S., with preliminary bench-scale testing planned in 2025.
- An alliance with Rain Cage Carbon to produce endohedral fullerenes, compounds with the potential to significantly enhance precision and clarity while reducing the toxicity of radiological scans. The project’s first endohedral fullerene marks a new era in nanotechnology, before which they were among the most expensive materials on earth, with nitrogen-doped endohedral fullerenes valued at approximately $167 million per gram. Voyageur plans to run a drug development program for new lines of fullerene-based contrast drugs.
With a robust supply chain usually reserved for companies many multiples beyond its C$25.53 million market capitalization, a portfolio of value-added products, and a share price that hasn’t yet rewarded these barriers to entry, Voyageur finds itself at a turning point in its history, one where validation by dollars on the balance sheet gives the broader market the green flag it has been missing.
Voyageur’s pronounced dislocation between price and value
The draw of micro-cap cap stocks is that, when the broader market acts irrationally, individual investors have a good chance of noticing a drawdown and building a position long before institutions, which require larger-cap targets, decide to join in.
In the case of Voyageur Pharmaceuticals, investors have yet to look past the company’s pre-revenue operations, despite them being vertically integrated to enter the contrast agent market, with the stock returning about zero per cent since 2017.
The broad market’s obliviousness to Voyageur’s massive scaling potential, with shares last trading at C$0.14, offers readers a chance to invest on the ground floor of the company’s growth story, joining a growing wave of optimistic sentiment that has propelled the stock by 75 per cent year-over-year, driven by:
- Tailor-made management and a high-quality resource capable of delivering accurate results at significantly reduced cost, while still being value accretive to the company at C$650 per ton.
- Financings for over C$900,000 closed in December and C$488,500 closed in March signaling that investors are keying into Voyageur’s value proposition.
- The company being ideally positioned to step into markets that conglomerates consider too small, including Australia, adding leverage to its near-term U.S. and European expansion efforts.
To fully benefit from market-leading companies, you need to invest in their stocks before they become leaders, granting you maximum upside exposure.
While predicting the future is a fool’s errand, Voyageur’s highly prospective business is ready to scale into the global radiology drug market, granting it a high-conviction pathway to claiming one such leadership position as more partnerships and products define operations, enhance value creation and serve to quell the contrast agent shortage.
By the time initial sales start rolling in, it may already be too late to capitalize from the onrush of investors piling into the stock, wishing they had the foresight to allocate sooner.
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This is sponsored content issued on behalf of Voyageur Pharmaceuticals Ltd., please see full disclaimer here.
(Top photo of Voyageur Pharmaceuticals’ SmoothX barium contrast product: Voyageur Pharmaceuticals)
