Medexus is heading higher, says Echelon

Impressive revenue growth and prospects for more of the same going forward are what you’re getting from specialty pharmacy name Medexus Pharmaceuticals (Medexus Pharmaceuticals Stock Quote, Charts, News, Analysts, Financials TSX:MDP). That’s according to Echelon Capital Markets analyst Stefan Quenneville, who reviewed the company’s latest quarterly results in a recent update to clients.

Medexus, which has products such as arthritis and auto-immune products Rasuvo and Metoject and intravenous therapeutic IXINITY for patients with Hemophilia B, released its fiscal fourth quarter 2023 last week for the period ended March 31, 2023.

The company, which had previously preannounced a Q4 revenue guidance, reported revenue up 41 per cent year-over-year to $28.6 million, with positive sales trends from IXINITY, strong demand for Rupall and the inclusion of Gleolan sales in the quarterly results. (All figures in US dollars except where stated otherwise.)

“We are very pleased with the performance we have seen in our base business, which has demonstrated continued growth,” said CEO Ken d’Entremont in a press release. “We are proud to note that this has translated into positive net income, an increase in cash, and record positive Adjusted EBITDA for fiscal year 2023.”

Quenneville said the numbers were in-line with expectations, with the $28.6 million topline comparing to his forecast at $28.3 million and the consensus call at $28.9 million. Adjusted EBITDA at $4.8 million was also in-line with Quenneville’s estimate at $4.9 million and the Street at $4.5 million.

Quenneville noted that Medexus ended the quarter with $13.1 million in cash and guided that it should have about $20 million in cash by the end of September. That plus a $20 million uncommitted BMO accordion facility should help calm concerns about the company’s ability to repay the $40 million convertible debt that matures in October, he said.

“While MDP continues to face delays with the Treosulfan FDA re-submission, cash generation guidance should help assuage investor concerns over the repayment of its convertible debt. We believe that MDP’s top line is poised to grow meaningfully in the coming years via successful growth product launches and label expansions,” Quenneville wrote in his June 22 update.

On the Treosulfan FDA re-submission, Medexus said in its quarterly commentary that it remains optimistic about the drug’s US prospects while at the same time saying the delays could take up to a year to resolve. 

Looking ahead, Quenneville is forecasting MDP to deliver full fiscal 2024 revenue of $122.2 million and EBITDA of $24.0 million. 

Medexus’ share price is down considerably over the past two years and down about 35 per cent year-to-date. With the update, Quenneville reiterated a “Speculative Buy” rating on MDP and C$3.00, which at the time of publication represented a projected return of 111 per cent.