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November 25, 2022

Equity.Guru

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MEDEXUS

Medexus Pharmaceuticals (MDP.TO) Q2 2023 earnings are the strongest in company history!

Specialty pharma company Medexus Pharmaceuticals have released Q2 2023 earnings post market. On October 6th 2022, Medexus announced preliminary revenue results for fiscal Q2 2023. The company was expecting the strongest fiscal quarter in the company’s history.

We also notified readers and investors that this company has a strong core business. Revenues this quarter is reflective of this as Medexus saw strong growth across all leading prescription products including IXINITY, Rupall and Gleolan.

That came true.

Here are the financial highlights from the strongest quarter in company history. All amounts are in US dollars:

  • Record total revenue of $27.7 million, a year-over-year increase of 55%, and a quarter-over-quarter increase of 20%. This represents the strongest fiscal quarter in Medexus’s history. Increased net sales of IXINITY and Rupall and recognition of 100% of revenue from Gleolan sales in the United States starting September 2022 were strong contributors to this substantial year-over-year improvement.
  • Adjusted EBITDA* of $4.2 million, a year-over-year improvement of $6.3 million and a quarter-over-quarter increase of $2.3 million. The primary drivers for this substantial year-over-year improvement were increases in revenues, a reduction in research & development costs, and an increase in gross margin.
  • Operating profit of $1.9 million, a year-over-year improvement of $6.9 million.
  • Net loss of $(2.7) million, a year-over-year change of $(12.8) million, primarily due to unrealized gains on the change in fair value of the embedded derivatives in Medexus’s convertible debentures in the prior year’s net profit.
  • Adjusted Net Loss*, which adjusts for the unrealized gains and losses included in net profit (loss), of $2.8 million, a year-over-year improvement of $3.3 million.
  • Cash and cash equivalents of $9.6 million (with $10.1 million of total available liquidity) at end of fiscal Q2 2023.

Ken d’Entremont, Chief Executive Officer of Medexus, commented, “This was an excellent quarter for Medexus, demonstrating both the robustness of our product portfolio and our initiatives to improve margins and drive sales. Preliminary results of our IXINITY manufacturing initiative have started to produce improved yields, which contributed to this quarter’s improvements in our gross margins. During the quarter, we delivered organic growth across all our leading prescription products, and completed the transition to full commercial responsibility for Gleolan in the U.S. We are excited to see Gleolan’s contribution over the coming quarters as we execute on our commercial plan, which includes improved sales and marketing initiatives.”

Unit demand of IXINITY across the US remained strong during the quarter and sales increased year-over-year. Medexus continues to invest in an ongoing initiative to improve the IXINITY manufacturing process. Preliminary results so far have indicated improved yields and moderate improvement in gross margins.

Medexus will explore opportunities to expand the patient population eligible to use IXINITY. In the first half of calendar year 2023, Medexus expects to submit to the FDA the results of Medexus’s phase 4 clinical trial evaluating the safety and efficacy of IXINITY in previously treated patients under 12 years of age with hemophilia B.

Unit demand for Rupall for the quarter increased year-over-year due to the peak allergy season across Canada during the quarter as well as execution of sales and marketing initiatives. Rupall continues to be the fastest growing antihistamines in the Canadian prescription market with demand growth of 25% for the 12 months ended September 30th 2022.

Gleolan, under the Medexus-labelled product, began shipping to customers across the US in August 2022. September 2022 was the first full month in which Medexus recognized 100% of Gleolan net sales. The company is in a position to successfully execute its commercial plan for the drug, including improved sales and marketing initiatives. Medexus expects strong performance from sales of Gleolan over the coming months.

Medexus also provided an update on Treosulfan. Medexus will provide an update to its shareholders and other stakeholders once management knows whether the resubmission has been accepted and is better able to assess the impact of this delay. The company has applied much of the infrastructure added in anticipation of a Treosulfan launch to support Gleolan, gaining experience in many of the same institutions that are expected to use Treosulfan if and when it is approved.

Medexus also implemented a restructuring plan in October 2022 to focus resources on existing products.

Financial statements and management’s discussion is available on Medexus’s website.

Medexus will host a conference call at 8:00 AM Eastern Time on Wednesday, November 9, 2022, to discuss the company’s operating and financial results and corporate updates for fiscal Q2 2023. Details on how to participate in the call can be found here.

TradingView Chart

The stock had a MONSTER rally today before earnings were released post market. The stock closed up 28% for the day.

Wednesday’s momentum continuation has the potential to be spectacular.

The stock is just under the $2.50 resistance zone, and I would be looking for a major breakout above this level. The next target is $3.50. Once we close above that, there is a lot of room to the upside. Remember, this stock was trading above $7.00 before the Treosulfan news hit the stock.

Earlier this month, I wrote an article titled, “Medexus Pharmaceuticals is not just a Treosulfan stock“. In this article, I highlighted the fact that the market over reacted to Treosulfan news as this company still is a real company with a strong base business. At the time of that article, the stock was trading at a market cap lower than its Q1 earnings. It didn’t make sense. Both the technicals and the fundamentals provided a strong probability investment.

The prudent investor will see that Medexus’ core business is growing and Treosulfan going forward will be the added cherry on top.

 

Full Disclosure: Medexus Pharmaceuticals is an Equity.Guru marketing client.

 

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