Medexus’ stock trades around C$4.12 a share in Toronto.
The Canadian equity research firm noted that Medexus, which consolidated with Pediapharm Inc and Medac Pharma USA last year, has 18 products and 48 sales representatives and produces more than C$50 million in trailing revenue.
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“With 88% of current sales attributable to products in the growth or launch phase, we believe this is just the beginning of several years of double-digit growth,” analyst Tania Gonsalves wrote.
“Accounting for operating leverage off the partially fixed-cost sales infrastructure, we forecast EBITDA margins expanding from mid-single digits toward the industry average of 25-30% within five years.”
The Montreal-based company’s leading products are Rasuvo and Metoject, a unique formulation of methotrexate that is designed to treat rheumatoid arthritis and other auto-immune diseases.
“Although (both drugs) already represent an estimated 70% of MDP's sales, both products are still early in their life cycles,” Gonsalves said.
“We expect them to peak in F2024 and F2023 before falling off patent in July 2027 and June 2029, respectively. By F2023, they represent around 60% of our $125 million sales forecast.”
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Gonsalves also noted that Medexus’s consolidaition with Pediapharm and Medac is “expected to yield healthy synergies.” Pediapharm had acquired both companies but kept the Medexus name.
She also said “we believe MDP is now adequately funded ($27M of cash, $42M convertible debentures maturing October 2023) and fully staffed to execute its strategic vision.”
In other company news, Sylvain Chrétien will no longer serve as the company’s president of Canadian operations and will resign from the board. In addition. Benoît Hébert will be departing as the company’s vice president of business development & licensing.
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