Is MDP stock a buy? (June, 2024)

Following a new development, Echelon Capital Markets analyst Stefan Quenneville has raised his price target on Medexus Pharmaceuticals (Medexus Pharmaceuticals Stock Quote, Chart, News, Analysts, Financials TSX:MDP).

On June 6, MDP announced that the U.S. Food and Drug Administration had accepted the company’s resubmission of the new drug application for treosulfan.

“We are pleased to report this positive new development in the regulatory review process,” CEO Ken d’Entremont said. “We were encouraged to see the FDA engage with medac. We remain optimistic about the prospect of a treosulfan approval in the United States, and about treosulfan’s potential in the U.S. market, because we continue to believe that treosulfan would prove to be the gold standard in this therapeutic space, as it has in Europe and Canada. If approved by the FDA, we expect that treosulfan would have a meaningful impact on Medexus’s total revenue.”

The analyst summarized the news.

“Medexus announced today that the FDA has accepted for review the New Drug Application (NDA) resubmission for treosulfan in combination with fludarabine for allogeneic hematopoietic stem cell transplantation in adult and pediatric patients based on additional requested data collected by its partner medac on its fourth attempt at submission,” the analyst wrote. “We are encouraged by the news and remain optimistic on an ultimate FDA approval given treosulfan’s
demonstrated survival benefit and its prior approvals in Canada and Europe.

In a research update to clients June 6, Quenneville maintained his “Speculative Buy” rating, but raised his price target on the stock from $3.00 to $3.30, implying a return of 104% at the time of publication.

The analyst thinks the company will generate EBITDA of $18.6-million on revenue of $114.0-million in fiscal 2024. He expects those numbers will improve to EBITDA of $19.0-million on a topline of $117.3-million in fiscal 2025.

“We have accordingly increased our revenue forecasts for treosulfan, reflecting an upsized probability of approval to 75% (from 40%)resulting in a price target raise to C$3.30/shr (from C$3.00/shr) which is derived using the average of our DCF (13% discount rate, 3% terminal growth) and 7.5x C2024 EV/EBITDA,” he concluded. “MDP currently trades at 4.3x C2024 EV/EBITDA, a significant discount to Specialty Pharma peers at 8.8x, despite the meaningful upside optionality from a potential FDA approval for treosulfan.”