Specialty pharmaceuticals is a unique niche in the pharma sector. Where companies like Eli Lilly pour billions into developing a drug candidate from scratch with the very real possibility that the drug will fail during trials and never make it to market, specialty pharma companies, like Medexus Pharmaceuticals (MDP.T), find already approved drugs from other jurisdictions and bring them to the North America market. Drug development risk averted.

Medexus has methodically built a diverse drug portfolio in both the U.S. and Canada that generates a sustainable growing revenue. We have seen this with earnings which have continued to break company records.

The streak is set to continue with Medexus expecting record revenue for fiscal year 2023. Annual revenue is expected to exceed US$107 million for the fiscal year ended March 31st 2023, an all time record high. This represents a year over year increase of at least 39%. Fiscal Q4 2023 revenue is expected to be at least US$28 million, representing a year-over-year increase of at least 38.1%.

For fiscal Q4 2023, Medexus expects these product key highlights:

• XINITY: Continuing positive trend in sales, with fiscal Q4 2023 reflecting the best quarter of fiscal year 2023 for new patient conversions on top of a stable, existing base of patients.
• Rasuvo: Continuing strong performance and maintenance of the product’s leading position in the moderately-growing US branded methotrexate market with a highly efficient allocation of sales force resources.
• Rupall: Continuing strong demand growth reflecting successful execution of the company’s sales and marketing initiatives and sustaining the product’s strong performance over the six years since launch.
• Gleolan: Continuing positive trend in US sales, with fiscal Q4 2023 including the best month of fiscal year 2023, reflecting successful execution of the company’s sales and marketing initiatives to date.

A reminder that these are preliminary estimates. The final reported results may diverge from these estimates.

Investment banking company, ROTH Capital Partners, have updated their financial model post preliminary fiscal year/Q4 2023 earnings.

The key takeaways from the analysis are:

• Preliminary FY4Q23 revenues. Medexus provided (4/11/2023) preliminary revenue estimates for FY4Q23 (ending March 31, 2023). Medexus expects FY4Q23 revenues of $28.0M – $28.5M. The company noted strength in the following franchises: Ixinity, Rasuvo, Rupall, and Gleolan.
• Takeaway #1 – Upside to our targets. We targeted FY4Q23 revenues of $26.8M, which was modestly below the bottom of the range.
• Takeaway #2 – Model changes. We made modest increases to our outer year forecasts pending greater clarity into the quarter. Our FY2024-25 revenue forecasts increased to $120.6M and $133.0M (from $119.9 and $132.8). Our 2024-25 EPS targets were unchanged at -$0.10 and +$0.15. Our 2024-25 adjusted EBITDA targets increased to $22.6M and $29.4M (from $21.8M and $28.9M).
• Takeaway #3 – Increased confidence in business model. We are encouraged by the upward revisions to our model. We did not adjust our price target, but we note that upward revisions (even modest) are particularly meaningful given the company’s significant financial liabilities.

Evaluating the updates from fiscal year 2023 preliminary earnings, and the potential risks such as regulatory, competition, forecasting and financial risks, ROTH capital has given a stock price target of US$3 for Medexus (US ticker MEDXF).

The US MEDXF listing is currently trading at $1.11 at time of writing.

The Canadian listing and stock chart is what I have been focusing on in my Medexus articles. As you can see, the technicals are the same when it comes to both US and Canadian listings. If we were to look at where the $3.00 zone on the US listing coincides with the Canadian chart, it would be around the $3.40 zone.

Medexus is seeing a reaction at the major resistance zone at $1.70. The reaction is evident by the long wick candle printed on April 11th 2023. However, a positive for bulls is the stock has not sold off from this rejection level. Instead, it appears as if buyers are stepping in on pullbacks, and we are seeing less of a sell off as we test this resistance zone.

A breakout looks imminent as price absorption decreases. Just a fancy way of saying the buyers keep stepping in, and we see less sellers jumping in at resistance.

A breakout would be huge as it would not only confirm a close above resistance, but also confirm a close above a downtrend line. A trend line which has seen Medexus stock reject with multiple touches. A trend shift would occur with a close above.

And guess what investors? A major catalyst is on its way. That being the finalized fiscal year and Q4 2023 earnings.