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Medexus Pharmaceuticals has a potential company-maker in Treosulfan

Snapshot

Treosulfan is an innovative, orphan-designated agent developed for use as part of a conditioning treatment for patients undergoing allogeneic hematopoietic stem cell transplantation

rasuvo

Quick facts: Medexus Pharmaceuticals Inc

Price: 7.04 CAD

TSX-V:MDP
Market: TSX-V
Market Cap: $134.02 m
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  • Rapidly growing, North American focused, specialty pharmaceutical company
  • Diversified product portfolio and expanding product pipeline
  • Highly scalable business platform with significant cash flow potential

What Medexus Pharmaceuticals does:

Toronto-based Medexus Pharmaceuticals Inc (CVE:MDP) (OTCQX:MEDXF) is a specialty pharmaceutical company created by a combination of three firms -- Pediapharm, Medexus Inc, and Medac Pharma -- through a transformational transaction completed in October 2018.

The transaction provided Medexus immediate and needed scale, along with sales infrastructures in both Canada and the US to support greater business activity.

The company’s leading products are:

  • Rasuvo and Metoject, a unique formulation of methotrexate (auto-pen and pre-filled syringe) designed to treat rheumatoid arthritis and other auto-immune diseases.
  • IXINITY, an intravenous recombinant factor IX therapeutic for use in patients 12 years of age or older with Hemophilia B – a hereditary bleeding disorder characterized by a deficiency of clotting factor IX in the blood, which is necessary to control bleeding.
  • Rupall, an innovative allergy medication with a unique mode of action.
  • Treosulfan, a conditioning agent used prior to stem cell transplantation
  • Gleolan, a powder-based imaging agent that makes glioma tumors fluoresce under blue light

Medexus Pharmaceuticals is led by CEO Ken d’Entremont, a former general manager and vice president of business development at Sanofi, where he led the in-licensing initiatives for Sanofi Canada.

How is it doing:

The latest news out of Medexus is largely focused on Treosulfan – and the company is reporting a number of positive developments.

In early February, Medexus revealed it had struck a licensing agreement with Germany’s medac Gesellschaft für klinische Spezialpräparate mbH to commercialize bifunctional alkylating agent Treosulfan in the US.

If approved by the US FDA, Medexus expects that a Treosulfan-based regimen will be the first in a new conditioning treatment class, Reduced Toxicity Conditioning, that will lead to improved survival outcomes and decreased toxicity compared to standard treatment regiments.

Medexus said it plans to leverage its existing commercial infrastructure in the US to address the underserved allo-HSCT market. medac conducted a phase III randomized study that compared results of Treosulfan-based therapy with busulfan-based reduced intensity conditioning in advance of allo-HSCT for adult patients with acute myeloid leukemia and myelodysplastic syndrome who were considered ineligible for standard myeloablative conditioning regimens. Interim analysis of the data demonstrated that non-inferiority was achieved in the 64% of the Treosulfan group compared to the 50.4% of the busulfan group in two-year event-free survival.

The firm raised C$32.5 million through an upsized bought deal financing in late February.

In other positive news, Medexus recently initiated the Canadian commercial launch of Gleolan, a powder-based optical imaging agent taken orally by patients to help surgeons identify brain and spinal cord tumors called gliomas. 

On the financial front, Medexus reported 3Q 2020 revenue that rose to a record C$31.5 million from C$16.2 million during the same period last year, which it attributed mainly to its acquisition of IXINITY as well as solid performances from key products.

Adjusted net loss improved by C$4.7 million to C$500,000, compared to $5.2 million in the same period a year earlier. The revenue for the period included about $3 million from its Hemophilia B treatment IXINITY, which was expected to be realized in September 2020 but came in October after a delay in receipt of the finished product from the company’s contract manufacturing partner.

The company also applied to list on the NASDAQ stock exchange earlier this year in a bid to gain greater exposure within the US investment community. Medexus derives about 74% of its sales from the US, as it continues to execute on key upcoming financial and operational milestones.

Inflection points:

  • Prescription Drug User Free date to review the New Drug Application for treosulfan by the FDA scheduled for August 2021
  • Commercial sales of Gleolan in Canada
  • Continued market penetration of key product lines
  • Potential acquisitions and in-licensing new products

What the broker says:

Following the company's fiscal 3Q 2020 results, analysts at Canaccord Genuity Capital Markets upgraded the firm’s rating to Buy from Hold, albeit on valuation grounds, maintaining its price target at C$9.50. 

In a note to clients published March 2, Canaccord's analysts wrote: “Yesterday evening, MDP reported a relatively in-line set of results for the quarter ended December 31, 2020. Revenue of C$31.5 million modestly missed our C$32.9 million estimate but was in line with the consensus of C$31.6 million. Gross profit of C$16.4 million was in line with our $16.5 million forecast, equating to a gross profit margin of 52%. Adjusted EBITDA of C$5.1 million came in just ahead of our C$4.9 million forecast and above the Street’s C$4.4 million.”

The analysts were bullish on potential Treosulfan sales in the US.

“[Treosulfan is] a drug we estimate could hit US$242 million in peak sales,” the analysts said. “Despite the work that comes with launching a drug such as this, for instance building out a brand new sales team, MDP continues to deepen its pipeline of high-quality in-licensing opportunities. It is prioritizing those that provide the best potential to leverage the existing North American commercial infrastructure.”

What the CEO says:

Commenting on the company's fiscal 3Q results, CEO Ken d’Entremont said he's optimistic about Medexus’ future after the company secured an oversubscribed financing and signed the licensing deal for Treosulfan.

“Subsequent to the end of the quarter, we completed a transformative licensing deal for treosulfan in the United States and materially enhanced our ability to fund our growth initiatives, with the completion of an oversubscribed financing of $32.5 million,” d’Entremont said in a statement. “In the coming quarters, we will continue to invest in our business, putting in place the people and infrastructure required to support the launch of treosulfan. This investment will be the key to supporting and enabling the significant revenue growth that we expect from treosulfan. 

“Despite this material addition to our product portfolio, the quality of our in-licensing opportunities continues to broaden and deepen and we are working diligently to prioritize and pursue those that will best enable us to further leverage our North American commercial infrastructure.”

Contact Andrew Kessel at andrew.kessel@proactiveinvestors.com

Follow him on Twitter @andrew_kessel

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Medexus Pharmaceuticals reveals record quarterly revenue of C$31.5M

Medexus Pharmaceuticals Inc (CVE:MDP) (OTCQX:MEDXF) CEO Ken d’Entremont tells Proactive its fiscal third quarter results revealed record quarterly revenue of C$31.5M, nearly doubling its revenue year-over-year from C$16.2M in the same period in 2019. d’Entremont added given significant share...

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