Greetings and welcome to the Cipher Pharmaceuticals' Investor Presentation. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. You may ask a question at any time by typing it into the Ask a Question feature on the left side of your screen. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. It is my pleasure to introduce your host, Glenn Axelrod. Please go ahead.
Thanks, Kevin. And thank you, everybody, for joining our webcast today with Cipher Pharmaceuticals. Again, the purpose of today's presentation is to introduce the company and to give you a better understanding of the business through a PowerPoint review and discussion that will be led by management. It will be led by CEO Rob Tessarolo, who's also joined by CFO Stephen Lemieux. Rob will conduct the PowerPoint overview presentation. He will have a Q&A session towards the end. And as a reminder, we're only taking questions via the web portal. If you are listening on the telephone, please access that web link that I sent earlier today if you want to ask a question. As mentioned, you'll be advancing the slides on your own today using the arrow keys in the top right-hand portion of the presentation.
You can also expand the PowerPoint by using the expansion feature on the top right of that PowerPoint. If these arrow keys should disappear, simply hover your mouse over the top right portion of the deck on your screen, and they should reappear. If for whatever reason your audio is having an issue, a dial-in phone number is provided. And remember, you can submit whatever questions you'd like, Rob, to answer using the question-and-answer text box within the webinar portal at any time. I'll ask the questions on the air for everyone to hear, and then Rob will answer them. I'm not going to reference anyone by name, but simply read the questions asked. And if I can't get to your question online, I'll come back to you via email.
If for some reason you're experiencing any issues once we start, please remember you can email me, glenn@bristolir.com, and I'll be happy to assist. I'm not going to read the forward-looking statements, but I simply state that they apply and I reference them on page two of this PowerPoint. With that said, once again, thank you for joining us, and now I'll turn the call over to Rob to start his part of the discussion and presentation.
Hey, thanks, Glenn. Much appreciated. And good morning. Welcome, everyone, to our investor webcast. We appreciate your interest in Cipher Pharmaceuticals. And for some of you on the call, Cipher may be a new investment you are considering. And we'll endeavor this morning to share details of our execution, our strategy, and our future growth plans. And for others who are more familiar with Cipher, we believe you will recognize the transformation that we've underwent and will understand the early steps towards building a differentiated Canadian specialty pharmaceutical company. And I reiterate what Glenn said, and please consider on slide two our forward-looking statements. On slide three, these are indeed exciting times for Cipher Pharmaceuticals. We've made real and concrete progress as a diversified specialty pharmaceutical company in developing our robust portfolio of commercial products and our pipeline programs. We consider Cipher.
We suggest there's three key highlights that should be considered. And most importantly, we're successfully executing our new strategy and while delivering double-digit organic growth from our current Canadian commercial portfolio. Through business development successes, we've begun deploying our available capital, and we've acquired several near-term high-growth products that will increase diversification across our portfolio. Second, we enjoy a profitable core business with positive cash flows, positive EBITDA, and a clean balance sheet. This solid financial position supports our future growth. And last, Cipher has underwent a significant transformation over the last 24 months, and we have clearly and successfully repositioned our company for growth under the direction of a highly experienced new management team. Numerous tangible improvements have created conditions for Cipher to deliver reliable and sustained growth in the future. Here on slide four, you see our strategy articulated, indicating what we set out to do.
We believe this industry has always been about novel, differentiated products that solve the unmet needs of patients and prescribers alike. Assembling a broad portfolio of Rx products will provide us, Cipher, the opportunity to introduce new products continuously over the next several years, thereby delivering reliable and sustained growth at Cipher. We've been deploying our capital against all three prongs towards building our pipeline: product licenses, mergers and acquisitions, as well as drug development. As we'll discuss today, we've been successful in adding to our pipeline through each of these approaches over the last 12 months. Clearly, as we set out to embark on this strategy, it's important for us to look for and secure high-novelty products that have differentiation and meet unmet medical needs. Slide five summarizes our deals that have been announced by Cipher in the last 12 months.
And we've been consistent in our message that the deal flow for new product licenses is very, very strong. Engagement from our partners and with whom Cipher has engaged and who we've presented our company's capabilities and our company's directions and our interests has been nothing short of outstanding. And today, we remain flush with opportunities to continue to build our long-range pipeline. These six transactions announced in 2018 have added several new and exciting growth opportunities for Cipher. And importantly, we've aimed for and we've secured products that have three components to their profile. First, they're highly novel, differentiated assets that have the potential to disrupt and compete in existing markets. Second, they enjoy low clinical and/or regulatory risk, as evidenced by their approval of these products in other major jurisdictions like the FDA or the EMEA.
And last, there's a relatively short period of time between the transaction close and first commercial sale. And through these initial efforts, again, on slide six, you can see the products on the left that are a near-term pipeline that have largely clinical development is completed, and there are regulatory milestones in front of them. And on the right, you can see additional products that are in our pipeline that have some clinical requirements behind them. We've quickly brought much-needed diversification into our portfolio and the potential near-term approval of launch and multiple novel growth assets. In terms of the development pipeline, we have three ongoing programs. The first two, the MOB-015 for onychomycosis, as well as the CF101 for plaque psoriasis and rheumatoid arthritis.
We hold the Canadian licenses for these two assets, and our partner bears the responsibility of completing the requisite pivotal phase three programs, and we expect phase three progress across these two assets over the next 24- 30 months. The last program identified as DTR-001 is an in-house program. It's a preclinical topical asset, which we are evaluating for the removal of unwanted tattoos, and we can talk more about that a little bit later in the deck. Looking at slide seven, we have provided peak sales estimates across our new portfolio, and all of these are Canada-only assets, and our Canadian commercial business generated approximately CAD 5.5 million in 2017.
While we're not providing specific calendar guidance across the new assets, we think that our Canadian portfolio is set up to generate reliable and attractive growth over the next several years when one takes a look at these assets, when they come on stream, and the estimated peak sales across these different products. Beginning on slide eight, the next several slides describe each of our near-term commercial assets in detail. They describe why we are interested in these products and why we think they're going to be successful. I'll make a couple of comments about each one, and we can come back and dive into them if there's specific questions about them. We'll start with Trulance. Trulance, we feel, is a significant material asset for our company in the next several years. This is a product which we have a very good understanding around here at Cipher.
Trulance is approved by the FDA already for irritable bowel syndrome and chronic idiopathic constipation, and these are markets that we know very, very well at Cipher. We had the opportunity. I had the opportunity at a prior place of employment to launch the current market leader, Constella, into the Canadian marketplace, so we know this market very, very well. We know how debilitating this condition can be. There's close to nine million Canadians that suffer from these two indications of these two diseases, IBS-C or CIC, and these patients are generally treated without Rx products. Current therapies include home remedies, OTCs, and other non-Rx therapies. This market can have explosive growth, and we like the way the Trulance target product profile measures up against the existing competition. On slide nine, we call out how we see Trulance stacking up.
And most importantly, we look at the tolerability profile of Trulance, and we'll be excited to bring this product to Canadians, whereby the tolerability profile is very, very acceptable with approximately mid-single-digit diarrhea rates and nausea that's similar to placebo. So it's a long-term Rx product that patients who suffer from these conditions can stay on. On slide 10 and 11, it talks about Eskata. And Eskata is a dermatologic product that we license from Aclaris Therapeutics. We're very interested in Eskata in that it has the potential to be the first and only prescription product for seborrheic keratosis or raised SKs, as they're commonly known. Currently, SKs are treated through invasive measures such as surgery, etc. And so Eskata could potentially be the first non-invasive therapy for these conditions.
And while SKs that are on the body can be removed by these other treatment options, on slide 11, you see why we feel that Eskata will be treatment of choice in the area of face, neck, and hands, areas on the body where the patients are going to be more concerned with the aesthetic outcome of the procedure. On the left, you can see the potential impact of cryotherapy. And on the right, you see before and after photos from our trials in using Eskata for the treatment of SKs. On slide 12, 13, and 14, this describes our entry into the hospital vertical here in Canada. Earlier this year, we had the opportunity to make an acquisition of the Canadian commercial portfolio of Cardiome. And we acquired a portfolio of products as well as the tax attributes that were associated with that Canadian business.
Importantly, there are two lead assets within that portfolio, one called Brinavess and one called Xydalba. Brinavess is an injectable used for life-threatening conditions in the emergency department, and importantly, with Brinavess, we see superior efficacy versus other IV products used in cardioversion. In cardioversion, chemical cardioversion is generally known to be effective but slow, and electrical cardioversion is known to be effective but requiring sedation and a significant duration of stay in the emergency department, and with Brinavess, the efficacy is very rapid. We see patients cardioverting in as little as 11 to 15 minutes, and we think this is going to be a very disruptive therapy in terms of the AFib marketplace in Canada. On slide 13, you see Xydalba and another product profile, another product that's going to be used in the acute care setting.
Again, a product that we think brings a much-needed innovation into the acute care setting. Currently, for acute bacterial skin and skin structure infections, patients are treated with very strong anti-infectives and generally require seven to 14 days of daily infusions. With the Xydalba, recently approved in September of this year, it's the first and only 30-minute one-dose treatment option for this important condition. We think this is going to have an important impact on Canadian hospitals and across the country, and we look to launch Xydalba early in 2019. Slide 14, you see the highlights of the transaction, and as I've mentioned, two commercial assets, two near-term assets that required at the time of this transaction, some regulatory events. Xydalba has since received NOC as well as the tax attributes.
On slide 15, 16, and 17, these three slides describe in some detail the product candidates that are in our pipeline. First, MOB-015, a product that we acquired from Moberg earlier this year in September. It's a topical terbinafine formulation. Terbinafine is a product that's used to treat onychomycosis. The onychomycosis market in Canada is extremely attractive and growing rapidly. There's a one-key competitor in this market called JUBLIA. It holds a significant portion of that market. And we feel that a successful MOB-015 approval will give physicians and patients an additional therapy option. What you find in the area of onychomycosis is there is a terribly high rate of retreatment or treatment failures. And having a second effective topical treatment, we feel, is going to position this asset well for growth and market share capture.
On slide 16, CF101 or piclidenoson, a product that we've acquired from Can-Fite BioPharma. We like the profile of this asset. As I've already mentioned, the phase three investments are being borne by Can-Fite. We like these markets. This oral small molecule has the potential to have safe and effective therapy and be a pre-biologic step therapy for these patients suffering from these diseases, and last, DTR-001. This is our in-house program. We acquired the rights from Dalhousie University in Halifax, and this is a preclinical topical treatment for the removal of unwanted tattoos. And we're obviously very, very early in development, this being a preclinical topical asset. But we feel we are advancing this towards potentially an IND in 2019, and we're excited about this potential opportunity, while at the same time recognizing the high-risk nature of a preclinical program.
Just to summarize, in terms of the value catalyst, I talked about the transformation of Cipher over the last 18- 24 months. As we look to exit 2018 and get into 2019, we have a variety of catalysts that we see happening in the near future. The continued success of the early launch of Ozanex, as well as the approval, sorry, as well as the recent launch of Brinavess in October of this year and Xydalba launch in 2019. As well, we feel we have regulatory events in our very near future for Trulance and Eskata. Provided we get successful approvals through Health Canada, we would look to have launches through the end of 2019 for both of those assets.
We think it's important to point out that the focus for the last 24 months has been entirely on execution, drive the growth in the Canadian commercial business, and achieve really critical milestones as we've completed these transactions. And we like to say that every transaction has potential value to be released for our organization. But it's not just a matter of completing the transactions. We need to hit the key milestones. And in this case, we're advancing programs. We're filing them with Health Canada. We're pulling them through Health Canada. And we're getting them in the Canadian commercial marketplace, all of which is going to bode well for the continued growth of Cipher over the long haul. At this point, I think I'm going to stop and ask for questions. I think that there are some questions that have come in.
We'll look to try to engage and answer the questions that might come in. I'd also just reiterate that Stephen Lemieux, our CFO, is here with me as well. We have two additional key members of the management team, Chris Watters, our VP of Corporate Development, and Dr. Diane Gajewczyk , our VP of Scientific and Medical Affairs, are here as well. So it'll be the four of us answering the questions. Glenn, if you want to pick up the first question, that'd be great.
Super. Thanks, Rob. We do have a number of questions in the queue. First one is, how competitive have these six deals in 2018 been? How competitive do you expect deals to be in the near-term future?
Yeah, that's a great question. So maybe I'll make an opening comment. And then Chris Watters will chime in here. And I would say that we were, as we entered 2018, it was a very new team. And our investment and our focus on business development had been fairly fresh in terms of us looking for additional transactions. And so we came into the year with great hopes that what we had seen early on would play out and we would be able to be successful. And so the deal flow remains very, very compelling for us. We continue to find novel assets that are either on the market or where we've been successful in getting a process up and running. And we feel like that's been the state of the deals to date. Chris, do you want to add some color in terms of what we've seen?
Yeah. Yeah. Well, in terms of the deals that we've done to date, we've seen a good mix between healthy competition for the assets we were chasing and a couple of instances where we were able to secure exclusivity and negotiate with the partner on our own. So we see the marketplace competitive today. We continue to see it moving forward as a competitive marketplace, but one that we feel we can win confidently with the story that we've got and what we offer our partner here in Canada.
Okay. Super. Sort of a related question. What are your primary hurdles when you are looking to acquire these assets?
So I'm going to understand that question and mean our internal hurdles in terms of go, no-go on deals. And I would say a couple of things. First and foremost, we've been very disciplined in terms of trying to ensure that we've got a process where we are taking a robust look at the marketplace. We have a deep understanding of what the marketplace and the competition, both now and in the future, might look like. And we want to ensure that we've got a good experience set and a good experience base in terms of our being able to be successful in the marketplace. All of our deals we do, we try to do them on a fully loaded basis in terms of ensuring that we're not biasing our judgment.
We try to go into every deal knowing that it really comes down to whether or not these investments are going to pay off over the long run. I think our number one issue as we begin to deploy our capital is we want to ensure that differentiated assets come into Cipher. As I've mentioned a couple of times, we believe this industry is about novel products that meet unmet medical needs. The time is gone for me-too products and products where you're the fourth or fifth or sixth entrant into a tired old category. We think that the deals that we've done stand up very well in that regard in the sense of us being the second or third or, in some cases, first asset into a therapy.
For those reasons, we think it's going to give us a good chance to win and grab a significant amount of market share to drive future growth.
Okay. Thank you. Next question. Is there a reluctance by U.S. pharmaceutical companies to out-license Canadian rights to drugs due to concern about re-importation?
Yeah. Currently, based on our discussions, that's not an issue with the U.S. partners we've discussed and continue to have conversations with. That's an older issue that was in place back probably about seven years ago, but not a current issue today.
Yeah.
Okay. Thank you. Are such deals easier to negotiate on hospital-based drugs than they are for those available via retail pharmacy distribution?
Yeah. That's a great question. And it's something that we believe to be true on the way into the Cardiome transaction. There's a few factors there. One, we think that there are just fewer competitive companies chasing these assets in Canada. So we believe that the deal table will be that less full and give us more leverage as we look to bolster that portfolio. And then the second thing that we believe and we enjoy about the hospital vertical is it's a vertical that requires substantially less commercialization investment and somewhat higher margins in the Canadian sector. So for those two reasons, we feel like they are good assets for us to chase. And they can be valuable assets for Cipher over the long run.
Okay. Super. Thank you. Is there a range or average timeline from ramp to peak sales?
Yeah. That's a great question. And the answer is yes. There is a range. It depends on the product profile as well as the marketplace itself. Our view is that three years to peak is extremely fast. And six or seven years to peak is way too long. And so I think that gives you the appropriate range the way we look at things. And what our 25-odd years of experience in Canadian pharma launching different products and different brands has told us is three years is probably a little faster peak. And if you're waiting to six or seven years to hit your peak, you probably not necessarily done something wrong, but it's probably longer than you really would have liked. Four or five years is a sweet spot.
Okay. Super. Thank you. Can you give a little bit more color on your Epuris sales, I guess, effort and realization? Is it growing as fast as you thought it was going to grow, slower, about the right? Just some comments on that.
Sure. Glen, can you just clarify? I didn't hear the product name. I heard most of the question, but.
Epuris.
Oh, Epuris. Epuris. Yeah. So I would direct people to slide 19. And Epuris is our low-dose technology isotretinoin here in Canada. We launched this product several years ago. This is a marketplace where we are really Epuris is dominating the market in terms of growth. We currently hold close to 35% market share across the country. I would point out the fact that it's not depicted on this slide, but I point out the fact that in Ontario, Canada's largest province, we are almost at the 50% market share level, which is nothing short of incredible given Epuris was launched close to a decade after the original, the first isotretinoin was launched. Here, what you see is that six out of the last trailing seven quarters, we've had market share gains, somewhere between 1%-2% market share gains per quarter on a national basis.
And this is a product that is just tremendously promotionally sensitive. It's a market that is so as I should have mentioned, Epuris is indicated for moderate to severe acne. And it's a marketplace where there's always a tremendous number of patients who need this therapy. Course of therapy is 14-16 weeks. And so this is a promotionally sensitive marketplace. We continue to invest. And we continue to win share. And it continues to grow at a double-digit clip.
Okay. Thank you. Next question. Can you give some color on your sales force, i.e., headcount, any overlap on marketing between the assets and your plans for future hires or expected new hires that are needed for the new assets?
Yes. That's a great question. So in terms of our current approach, I'll maybe make a comment about our current approach and then give a few facts and figures thereafter. So as a company that's looking for differentiated assets that are novel, we can get to and we can impact the majority of these markets by going to the specialty call points. And so across our acne sorry, across our dermatology portfolio, we cover all the dermatologists in Canada and a small subset of the highest prescribing, most prolific healthcare GPs, family physicians. And so currently, our portfolio fits nicely together. And we cover the country very nicely with eight salespeople across the country. The hospital vertical is very different. Those two types of sales forces generally don't mix well together. They generally don't have overlap.
One team is going into the institutions on a daily basis. One team is going into general practitioner offices or family healthcare practitioner offices. So for the hospital business, we recently hired a five-person sales force to go out and launch the Brinavess asset. And we believe that this is the right size for that sales force for the products to come as well. In terms of additional products, Eskata, the Moberg MOB-015 onychomycosis asset, those will fit very nicely into our dermatology portfolio, again, depending on timing of approval. And as far as Trulance goes, that's an area where we may need to we may need to scale into that area to support the growth. But we do believe that we can get to the gastroenterologist first and to launch Trulance effectively. And we may have some resource available depending on launch timing.
Okay. Thank you. How do you see the pricing approval and the current regulatory changes in Canada evolving, and how does the uncertainty impact deal pricing or general market activity?
Yeah. Great. So I'm going to tee that question up for Chris Watters to answer. Chris?
Yeah. So, the pricing guidelines in Canada, I think those who have been close to it since June of 2016 have been on the table proposing changes to current guidelines. Those have continued to be delayed. Our current market knowledge is we're assuming we won't see any changes to current pricing guidelines in Canada until January 2020, so just over a year from now. When we look at the marketplace and those changes, at this point right now, it's been difficult to speculate what those changes are going to look like because there's been broad shifts to what they've been proposing. We look at the overall deal flow, though, and everything we've done to date and continue to evaluate, we're putting that through the lens of what the potential risks are around pricing in Canada.
We still view very, very viable opportunities for us to continue to operate successfully under new guidelines.
Yeah. And Glenn, thanks, Chris. And Glenn, maybe it's Rob. Maybe I'll just add to that. And I think the pricing question is tremendously important in Canada, as is the related market access question because that's ultimately in this country with our healthcare system, that's what it comes down to. And I think importantly for Cipher, and this was intentional, but when we look at Trulance, when we look at Eskata, when we look at the onychomycosis asset, all three of these markets are existing markets that largely have private insurance and/or cash-paying markets. And so we won't need to tap and access the public markets where there's generally a higher amount of scrutiny and downward pressure, buy-side pressure from the payers. So to Chris's point about pricing, I think is very apropos. And we've been looking at the new guidelines as we've done deals.
But also, we've been trying to get into marketplaces where we can avoid the public markets where there's a tremendous amount of pricing pressure.
Okay. Thank you. This is part of the past question, but I think there was some follow-up to it, just a little bit more clarity around it. Is that given the future product launches that are expected, what are your plans like to add on to your current sales force?
With the exception of Trulance, we believe we're scaled appropriately for all of our future products. Trulance may require additional sales support depending on the timing of approval and the number of indications we get approved.
Okay. Super. Thank you. Next question is, can you provide any kind of commentary about the tax losses that you have available?
Yeah. So that's related to the acquisition of the Cardiome portfolio. And I'm going to ask Stephen to make a comment on the tax attributes, tax position.
Yep. Thanks, Glenn and Rob. Yeah. As part of the Cardiome transaction, Cardiome had NOLs of approximately $200 million for Canadian loss pools. And those expire up to 2033. And there are about $50 million of Canadian SR&ED losses available as well. And they do not have expiry on those. So overall, there's about $250 million losses that are available to us to shelter profits in Canada, so.
Okay. Super. Thank you. How do you think about the valuation of the deal for MOB-015?
Yeah. So if I heard the question, how do we think about the valuation for the deal?
Yeah. I mean, that's the question.
Yeah. Yes. So I guess what I would say about MOB- 015 is, importantly, this is the first deal that went up the value chain in terms of how far along this asset was in terms of its development. So for the most part, the first several transactions we did, largely clinical development was completed. And regulatory events, well, maybe they weren't completed. We were in the queue. So for MOB- 015, the reason we like this asset is we went upstream a little bit, which allowed us to have a little bit less capital outlay at the front end and de-risk that transaction. And of course, so long as the partner pulls that transaction through and hits the clinical milestones and then we hit the regulatory milestones, the value of the deal will go up or the cost of the deal will go up.
But at this point, it got us to the front of the queue to be early. We thought that there was a good, it was the right risk profile of this asset given the early data that was associated with MOB-015. And so for us, it made a lot of sense. And we like this idea of getting a pipeline that's capital-sparing in the sense of not having to invest in regulatory and clinical development, but at the same time, getting ourselves in position for a license in Canada. Chris, do you want to add?
Yeah. The only thing I'll add to that is we're excited about the opportunity to look at this current market leader in this category. Its annual sales in Canada are over CAD 35 million right now. And for us to come into the market with a product that would be topical with an oral frankly, the molecule that's the preferred treatment orally and putting that into a topical treatment for this condition, we're excited about the potential that represents coming into the marketplace.
Okay. Thank you. Next question is, can you describe your licensing business in more detail, both historical changes and impacts and future strategy? And I'll sort of throw in another question into that from another attendee is maybe some clarity around your Sun transaction, both what it was and the changes made.
Okay. Great. Yeah. Thanks for that question. And I think this maybe I'll tee this up or speak to slide 20 in terms of describing the licensing business. So I think importantly, we segment out our business, Canadian commercial business and global licensing business. On the left, you see our global licensing business is largely a cash flow segment. There's five marketed products with an average royalty of approximately 10%. And this is high-margin royalty revenue. And it comes from those jurisdictions, U.S., Canada, and Latin America. I think that if you take a look at the graph on the bottom left, you see that essentially, aside from 2017, this business is trending down slightly. In 2017, it was an anomaly for us.
We had significant overperformance and unexpected performance from Absorica, our lead brand, which has now normalized and come back down to a trend that was more in line with pre-2017 and what we're expecting in 2018, so that's a bit of a historic situation for this global business. This is a mature business. This is a business that at Cipher, we had lots of success early on in terms of developing these programs and pulling them through regulatory approvals in a variety of jurisdictions, and that's really been the basis and the strength of this company originally and what has allowed us to be operating today and with a potentially interesting future. One of the things that occurred to me when I arrived here at Cipher in the beginning of 2017 was our largest asset, Absorica, which generates a significant amount of the royalty revenue.
There was no life cycle management plan. There was no strategic plan for us to extend that royalty stream. And likewise, for our marketing partner, Sun Pharmaceuticals in the U.S., we had no agreement with them to do anything beyond the term of the agreement. And with a generic settlement that was already negotiated and agreed to prior to 2017, with a generic settlement on the books, it was important for us to turn our attention to this business and try to bolster it any way we could. Slide 21, I think, shows the single biggest transaction or most important transaction for our company in the last 18 months. And that's the strengthening. We strengthened this licensing business by completing an amendment to the existing Absorica deal. And so we negotiated with Sun.
We came to terms with Sun to amend our agreement and ensure that our relationship was going to continue and be strengthened and create more value going forward, and so you can just describe this, I think, clearly by using the chart on the right on slide 21, so prior to doing the amendment, Sun did not have the ability and were precluded from launching any competing programs. Post-amendment, they can launch new isotretinoin products into the United States. There's no royalty on Absorica. The royalty on Absorica prior to the agreement is in mid-teens, and post-amendment, there's no change to that royalty. It remains in the mid-teen level. Pre-amendment, the royalty only covered Absorica. Post-amendment, it now covers all new isotretinoin products launched out to the end of 2024, and pre-amendment, the royalty expired in 2022, and post-amendment, the royalty expires in 2024.
And so when we look at this transaction and we look at the scope and magnitude of this royalty that's coming into Cipher, as I mentioned, this is, I think, the best way to describe the strengthening in the future of that licensing business. Hopefully, that answered the question, Glenn.
I would hope so, and if not, feel free to give me a follow-up, so I'm going to ask you one more question, and I know we jumped ahead with some slides, but then cover the remaining part of the slides, and we'll come back to whatever questions remain in the queue afterwards, so final question for this segment is, you said you were investing and gaining share in the promotionally sensitive Epuris market. How have the margins panned out over the past one to two years?
I'm going to understand that question to be the margins in our Canadian business. I'm going to turn that over to Stephen to talk about the margins in Canada.
Yeah. So for our Canadian portfolio, our margins are roughly around in the 62%-65% range. And as you look at kind of our existing products and the products that we're bringing in, that's kind of the margin we're targeting for the Canadian portfolio.
Okay. I'm going to ask you to continue the presentation then, and then we'll do a final Q&A once you've completed it.
Okay. Great. And I'm going to. It's really more of a wrap-up here at this point. So I'll direct to slide 23, which talks about a new direction for Cipher. And I think it's important to call out that we've got a new management team that has really been recruited here and is delivering results against our new strategy. We've announced six transactions in 2018. And we're injecting product diversification into Cipher, which is much needed given the existing business, the business that we where the business was at at the beginning of 2017. And I think importantly, as I've tried to describe in detail and hopefully sufficiently, and if not, I'll take more questions on it, but we've amended the distribution agreement for Absorica, which has a material impact on the future streams of revenue for this company.
I would just call out slide 24 that articulates the experience set across our leadership team. Clearly, we've brought industry veterans with great career experiences at both small, startup, and mid- and large-sized pharma across the Canadian and U.S. marketplace, and we think that we've got a team that we can win with, that we can lead Cipher forward with to deliver reliable growth in the future, and on slide 24, you see our relevant experience. I'll sum up on slide 25 and just point out the fact that today, we rely on our licensing business substantially, and we're looking for diversification to ensure that our product sales grow as we turn our attention to the future and delivering growth for Cipher. The Board of Directors articulated on slide 26, which is a new board of directors since the board was reconstituted in 2017.
On slide 27, you see some market facts. In closing, just bringing people's attention on the line to slide 28, investment highlights include our cash flow and the adjusted EBITDA positive company. We've had really significant deal closing in 2018, bringing diversification to the portfolio. We've got a variety of catalysts over the next several years that'll bring new lines of revenue into the organization. Management comprised of industry veterans delivering on our new strategy and full and diverse product portfolio and pipeline in various stages of regulatory and clinical review and delivering growth ahead for us here at Cipher. Glenn, if there's any other questions, we'd be happy to take them now.
Perfect. And again, ladies and gentlemen, if you do have a question, please use the question and answer textbox feature of the presentation. I've got a couple in the queue here for you, Rob, and we'll see if others come in. Do you have a sense of when your Canadian business will become profitable on its own?
Yeah. So I think when we put everything together and we look at the estimated peak sales for these products and the approvals with the assumptions that are obviously our long-range plans, right, for the assumptions. And if the assumptions provided hold, somewhere between three and four years as we invest in these new products. As I've mentioned a couple of times on the call, this industry is about new, novel, differentiated products. But pharmaceutical products, when they're put into the marketplace in existing markets, they require investment and they require attention. And they don't sell themselves, and they don't create market share without a significant amount of effort. So for us, we're looking in the three to four-year timeframe for Canada and possibly sooner if things overperform.
I would also just point out that a related important note on that is the Sun Amendment goes out to 2024, which extends the line of sight for Absorica related royalties, and we think that plays into our growth strategy.
Okay. Thank you. Question here regarding slide 25. It shows that by 2023, product sales will increase to about 75% of total sales. And then licensing sales will decrease to about 25%. Do you expect the licensing sales to fall, or is the change mainly coming from increased product sales?
Yeah. That's a great pickup. And it's really coming from both. As I mentioned, there is a generic settlement on the books agreed to for Absorica. And that's public knowledge. And it's the end of its December 2020. And so we've extended that. At the same time, we've extended our Absorica business out beyond that by giving Sun the opportunity to launch innovative new isotretinoin products. And so most certainly, we expect the existing licensing business to decline. We also expect product sales to increase dramatically, as I've depicted, I think, on slide seven, if I'm not mistaken, with the estimated peak sales across the portfolio. And then, of course, this is today's snapshot. We have an investment thesis at this organization where we are deploying our capital against great, novel assets.
And if we don't do depending on how we deploy that, our capital moving forward, if nothing else changes, then that would be the mix. But we fully expect to continue to try to grow the portfolio and across the portfolio, both licenses, M&A, as well as importantly, drug development, which has been an underlying capability and competency here at Cipher for years.
Okay. Thank you. And I guess sticking to the same slide one as you received a comment on the creation of that slide. So thanks for that. And then could you mention what your 2023 revenue assumptions are as you build out that pie chart or targeted revenue CAGR?
Yes. So thanks, Glenn, for that comment. And so we're just going to stick to slide seven as far as the estimates around our future business. We don't guide. We're not going to give specific long-range planning guidance or long-range CAGRs. But we will just refer folks to our estimates, our point estimates on slide seven for the portfolio.
Okay. And again, ladies and gentlemen, we have no further questions in the queue right now. If you still have a question, please go ahead and ask. Okay. I'll just ask you, Rob, with the absence of any additional questions, to give some closing remarks, and then we'll end the call.
Great. Thanks, Glenn. And thank you to everybody on the phone who've dialed in and who've downloaded our investor deck. And if you've got follow-up questions, there's a means and a mechanism to generate that. We'd love to talk to you if you're interested in Cipher, the Cipher story. And we thank you for your interest in Cipher and Cipher story today and giving us 50 minutes of your time. And thanks for the questions that came in. Very much appreciated. Exciting times at Cipher. I think it's a business that has a tremendous growth platform for us to generate a lot of excitement and future returns for our current and future shareholders. So thank you, everyone. And at this point, I'll sign off. Thanks, Glenn.
Thank you. Thank you, everybody, which completes the call.
Thank you. That does conclude today's teleconference and webinar. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.