Medexus Pharmaceuticals has an Outperform rating with Raymond James

Strong quarterly revenue looks good on Medexus Pharmaceuticals (Medexus Pharmaceuticals Stock Quote, Charts, News, Analysts, Financials TSX:MDP), according to Raymond James analyst Rahul Sarugaser, who reviewed the company’s latest quarter in an update to clients on Thursday.

Québec City-based Medexus is a rare disease-focused specialty pharma company that licenses, acquires or co-promotes near-market and on-market pharmaceuticals in the US and Canada. The company reported results on Wednesday for its fourth quarter and fiscal 2023 year ended March 31, 2023, coming in with record revenue for the year of $108.1 million, representing a 41 per cent year-over-year increase.

Medexus said  strong performance from IXINITY, Rupall and Rasuvo and the addition of Gleolan net sales all contributed to the topline growth.

Ken d’Entremont, Chief Executive Officer of Medexus, said in a press release, “We are very pleased with the performance we have seen in our base business, which has demonstrated continued growth.”

Looking at the fiscal Q4 numbers, Sarugaser said the $28.6 million topline compared to his estimate at $29.1 million and the consensus expectation at $29.1 million. Adjusted EBITDA came in at $4.8 million, which was ahead of Sarugaser’s call at $3.8 million and the Street at $4.5 million. (All figures in US dollars except where noted otherwise.)

The past year has had its challenges for Medexus, according to Sarugaser, where the company received an incomplete response letter from the FDA on treosulfan’s US New Drug Application, which was followed by a resubmission delay from the company. The result was a pronounced overhang in the stock, the analyst said, related to MDP’s convertible debentures coming due in October 2023.

But Sarugaser thinks Medexus has handled the issues well.

“We’re impressed by MDP’s capacity to deftly manage these challenges while growing the base business at escalating rates and pursuing new paths to growth (e.g. IXINITY pediatric sBLA submission; terbinafine acquisition, Health Canada filing soon); come October, we see a strong likelihood for MDP to have worked itself out of a material overhang, potentially giving rise to significant upside in the stock,” he wrote.

Medexus’ share price rose sharply after the release of the quarterly results this week, although the stock remains well off its highs set in 2021. Year-to-date, MDP is currently down about 32 per cent.

With the update, Sarugaser maintained an “Outperform” rating on Medexus and one-year target of C$4.00, which at the time of publication represented a projected return of 167 per cent.