Voyageur Stands Alone to Disrupt the $7 Billion Contrast Media Market

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Monday, December 9, 2019

If your body hurts in any way, there is a good chance that contrast media is going to have a role in figuring out what is wrong. Contrast media is integral to common tests like X-rays, MRIs, CT scans and ultrasounds used every day the world over to enhance visibility of internal body parts to help doctors make educated decisions regarding a broad array of maladies.

Aging populations and increased frequency of chronic conditions are propelling growth in the contrast media industry that Research and Markets forecasts to hold mid-single digits annual growth to reach $6.9 billion in the next five years. Some of the indications where these tests are utilized daily include cardiovascular disorders, cancer, gastrointestinal problems, musculoskeletal issues, neurological conditions and nephrological diseases.

Certain companies have established dominion in the industry, namely GE Healthcare (NYSE:GE), Bayer HealthCare (OTC:BAYRY), Lantheus Medical Imaging (NASDAQ:LNTH) and Italy’s Bracco Group.

Thing is, there is a common thread ripe for disruption across the markets for barium-based and iodinated contrast media, two of the most common types used in medical imaging. That thread is a lack of options. The barium-based market relies on a single Chinese company to supply natural barium sulfate to the world. The iodine contrast (iopamidol) market currently only has two FDA-approved suppliers for North America (one each in Europe and India). There was three, but the sole Chinese supplier recently removed from the approved list by the FDA.

In the pantheon of top contrast media market players, the name Voyageur Pharmaceuticals (TSX-Venture:VM), a tiny upstart relative to the aforementioned companies, could one day be added. Voyageur is on its way to becoming a fully-integrated company focused initially on barium and iopamidol.

Through its three subsidiaries - Voyageur Industrial Minerals, Voyageur Inc. and a JV with Chief Medical Supply called ImagingX Pharmaceuticals - the company is executing on a model that will see it control all input costs from mineral production to pharmaceutical manufacturing to manufacture radiocontrast in bottles for distribution. Chief Medical has one of the largest pharmaceutical manufacturing facilities in North America in Mississauga, Ontario, with multiple lines capable of producing over 500 sterile bottles per minute.

Through its resource unit, Voyageur owns three barite-bearing properties in its home province of British Columbia. Of particular significance is the Frances Creek project, which has a National Instrument 43-101 compliant report (July 2018), assigning the property a mineralized resource of 166,210 tonnes barite in the indicated category and 195,678 tonnes inferred grading 36.4% BaSO4 (barium sulfate). The company estimates that is enough to meet its anticipated supply for more than 30 years. It is important to note that the resource category was not based on pharmaceutical grade barite or a 50 % revenue split on the JV contrast sales, when the  43-101 report was written. Moving forward this new highly pure barium sulfate resource will be reclassified and gain significant asset value.

As for iodine, the company owns Lithium King and ULI, two iodine/lithium mineral brine projects in Utah, USA. ULI is a JV with Anson Resources (ASX:ASN), which has published a JORC report stating a resource of 21,800 tonnes iodine in the claims surrounding ULI.

The strategy is that once the minerals are mined and processed by Voyageur Industrial Minerals to pass them on to ImagingX, where Chief Medical’s team, decades of experience and more than $150 million in GMP pharmaceutical manufacturing infrastructure will take over to formulate and manufacture products that will be sold by an ImagingX team run by Voyageur.

As it develops Frances Creek into a producing mine, Voyageur will import barite in order to establish the market and economics. Next will come iopamidol imports in the same manner. Once the minerals come from company-owned property, expenses should drop significantly and give Voyageur a serious competitive advantage to material coming from overseas through middlemen.

Mining and drug manufacturing often invokes expectations for years of waiting. That is not the case with Voyageur. It’s months away and developments are ongoing. The first import order of barium sulfate is done. Formulation is complete. Three barium contrast products have been submitted to Health Canada for registration, with a total of 12 (8 barium, 4 iodine) product registration applications expected across 2020.

Construction of the Frances Creek mine is anticipated to commence in Q3 2020, according to Voyageur’s corporate presentation. That same presentation spells out the fact that Voyageur is the only medical company in the free world to own 100% of a long-term supply of barium sulfate and iodine to feed a GMP production facility and ultimately a robust North American market that right now is completely dependent on foreign products.

This is a savvy business model used previously by Bracco Group to establish its large industry footprint. Bracco didn’t build it internally, though, they paid up mightily for it. To secure its own barite reserves and supply chain, Bracco spent $250 million to acquire E-Z-EM Canada in 2007. The mine has since been exhausted.

That certainly begs the question as to what Voyageur will be worth as it advances its business model and potentially starts to eat into competitor’s share in the largest market in the world.

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