FDA has Accepted for Review the Treosulfan NDA
Management to host conference call at 8:00 AM Eastern time on Wednesday, June 26, 2024
Toronto, Ontario and Chicago, Illinois--(News - June 25, 2024) - Medexus Pharmaceuticals (TSX: MDP) (OTCQX: MEDXF) today announced its operating and financial results and provided a business update for the company's fourth fiscal quarter and fiscal year ended March 31, 2024 (the company's fiscal Q4 2024 and fiscal year 2024). All dollar amounts in this press release are in United States dollars unless specified otherwise.
Financial highlights
Record revenue of $113.1 million for fiscal year 2024, an increase of $5.0 million, or 4.6%, compared to $108.1 million for fiscal year 2023. The $5.0 million year-over-year revenue increase was primarily attributable to the recognition of 100% of Gleolan net sales in total revenue during the entire fiscal year 2024 and continuing strong Rupall demand growth. The total revenue increase was partially offset by declines in sales of IXINITY over fiscal year 2024 and the accumulating effect of continued effective unit-level price reductions for Rasuvo.
Revenue of $26.0 million in fiscal Q4 2024, a decrease of $2.6 million, or 9.1%, compared to $28.6 million in fiscal Q4 2023. This decrease is primarily attributable to trends affecting IXINITY and Rasuvo. Specifically, IXINITY revenue in the second half of fiscal year 2024 was affected by lower than expected purchases by pharmacy and wholesale customers relative to a decrease in patient unit demand, which Medexus believes is a result of those customers working through inventory on hand, and the accumulating effect of continued effective unit-level price reductions for Rasuvo.
Record Adjusted EBITDA* of $19.5 million for fiscal year 2024, an increase of $3.4 million, or 20.9%, compared to $16.1 million for fiscal year 2023. The $3.4 million year-over-year Adjusted EBITDA* increase was primarily attributable to the changes in revenue mentioned above, together with reductions in operating expenses over fiscal year 2024.
Adjusted EBITDA* of $4.4 million in fiscal Q4 2024, a decrease of $0.4 million, or 8.8%, compared to $4.8 million in fiscal Q4 2023. This decrease is primarily attributable to the changes in revenue mentioned above, together with reductions in operating expenses over fiscal year 2024.
Available liquidity of $5.3 million (March 31, 2024), consisting of cash and cash equivalents, compared to $13.1 million (March 31, 2023). The primary factor in this net decrease in cash was Medexus's use of cash to make the final maturity date payment in respect of the company's now-repaid convertible debentures in October 2023, partially offset by, among other things, cash provided by operating activities of $18.7 million for fiscal year 2024.
Operating income of $10.8 million for fiscal year 2024 and $0.8 million for fiscal Q4 2024, an increase of $3.2 million and decrease of $1.9 million, or 42.1% and (69.6)%, compared to $7.6 million for fiscal year 2023 and $2.7 million for fiscal Q4 2023.
Net loss of $0.2 million for fiscal year 2024 and net income of $0.8 million for fiscal Q4 2024, a decrease of $1.4 million and $6.1 million compared to net income of $1.2 million for fiscal year 2023 and $6.9 million for fiscal Q4 2023.
Adjusted Net Loss* of $0.3 million for fiscal year 2024 and Adjusted Net Income* of $0.8 million for fiscal Q4 2024, an improvement of $1.0 million and a decrease of $5.3 million compared to Adjusted Net Loss* of $1.3 million for fiscal year 2023 and Adjusted Net Income* of $6.0 million for fiscal Q4 2023. Adjusted Net Income (Loss)* is adjusted for the non-cash unrealized gain of $0.1 million and nil for fiscal year 2024 and fiscal Q4 2024 and $2.5 million and $0.8 million for fiscal year 2023 and fiscal Q4 2023.
* Refer to "Non-GAAP measures" at the end of this press release for information about Adjusted EBITDA and Adjusted Net Income (Loss).
Ken d'Entremont, Chief Executive Officer of Medexus, commented, "We are thrilled with Medexus's performance over fiscal year 2024, with full-year revenue, operating income, and Adjusted EBITDA* each achieving company records. We responded swiftly to the trends affecting our business, particularly IXINITY and Rasuvo, and we are pleased with initial progress of our ongoing expense management initiative, which is reflected in our financial results for fiscal Q4 2024. This establishes a solid foundation for us to manage the future needs of the business, including any commercial launch of treosulfan in the United States."
Mr d'Entremont continued, "In addition, we are very pleased that our partner, medac, has done a thorough job collecting information and the FDA has accepted for review the April 2024 resubmission of the New Drug Application, or NDA, for treosulfan. If approved, extensive research indicates that treosulfan, in combination with fludarabine as a preparative regimen for allogeneic hematopoietic stem cell transplantation, has the potential to become the standard of care in North America. Given our launch of treosulfan in Canada under the brand name Trecondyv® in September 2021, combined with the encouraging results we saw from the Princess Margaret Hospital study and the pivotal phase 3 study, we believe that an FDA approval of treosulfan for commercialization in the US would be transformative for Medexus."
Marcel Konrad, Chief Financial Officer of Medexus, further noted, "We fully repaid our convertible debentures in cash in October 2023. This has simplified our balance sheet, and leaves our BMO credit facilities, which continue to benefit from an attractive interest rate, as our only remaining debt. As of March 31, 2024, we had a combined $51.7 million outstanding under those facilities, which we will continue to pay down over the term. Together with strong cash provided by operating activities in both fiscal year 2024 and fiscal Q4 2024, we believe we are on solid footing to continue maintaining and growing our business over the coming quarters."
Operational highlights
IXINITY (US): Unit demand in the United States decreased by 6% over the trailing 12-month period ended March 31, 2024. (Source: customer-reported dispensing data.) Demand continues to reflect the effects of lower observed average quantities of IXINITY consumed by newer patients and a greater than expected impact of other developments in the broader hemophilia B treatment solutions market specifically relating to greater availability and use of extended half-life products that compete with IXINITY. Medexus now believes that these emergent trends are likely to persist. Medexus expects that this challenging demand environment, together with the anticipated impact of additional statutory discounts and rebates under the Inflation Reduction Act of 2022, will have a moderately adverse effect on product-level revenue going forward. Medexus will continue seeking to maintain existing demand, including by taking advantage of the product messaging opportunity presented by the now-approved pediatric indication, but has reduced investments in IXINITY's growth.
Rasuvo (US): Medexus maintained its market leading position during the 12-month period ended March 31, 2024, with an estimated >80% unit share during the trailing 12-month period ended March 31, 2024, as unit demand for Rasuvo remained strong in the moderately-growing US branded methotrexate market with a highly efficient allocation of sales force resources. (Source: Symphony Sub National 03/31/2024 Data & Chargebacks, PAP.) Unit demand for Rasuvo has moderately benefited from its comparatively steady supply relative to ongoing shortages of competing product inventory throughout fiscal year 2024, which shortages Medexus does not expect to continue indefinitely. However, competition in the US branded methotrexate market continues to adversely affect Rasuvo product-level revenue. Medexus has also observed an increasing share of product-level revenue attributable to government-sponsored programs, which benefit from statutory discounts and rebates. This shift in the proportion of sales benefitting from such discounts and rebates, despite contributing to the product's strong market position, has adversely affected total product-level revenue. Medexus also expects that the anticipated impact of additional statutory discounts and rebates under the Inflation Reduction Act of 2022 will have an incrementally adverse effect on product-level revenue going forward. Medexus intends to continue to evaluate its unit-level pricing strategies, intended to defend its strong market position, in light of these evolving market dynamics.
Rupall (Canada): Unit demand in Canada remained strong during the 12-month period ended March 31, 2024, which is reflected in the unit demand growth of 21% over the trailing 12-month period ended March 31, 2024. (Source: IQVIA CDH units - Drugstores and hospitals purchases, MAT March 2024.) This strong performance reflects successful execution of the company's sales and marketing initiatives to sustain the product's strong performance over the seven years since its January 2017 commercial launch. Rupall's market exclusivity, granted by Health Canada, will expire at the end of January 2025, and Medexus expects that Rupall will, following the end of that exclusivity period, face generic competition in Canada, including because Health Canada has now accepted two generic submissions for rupatadine fumarate (in September 2022 and April 2024), which will likely result in effective unit-level price reductions.
Gleolan (US): Medexus continued to execute its commercial plan, which has continued to evolve since the company completed the transition to full commercial responsibility for Gleolan in August 2022. Medexus expects to continue seeking to maximize product-level revenue, particularly in light of the minimum annual royalty amounts set out in the Gleolan license agreement for fiscal year 2025 and beyond. Although Gleolan performance has remained lower than expected, unit demand has been growing moderately over the course of fiscal year 2024, as new customers adopt the product. Medexus intends to continue putting appropriate focus on Gleolan in the context of the company's US product portfolio.
Metoject (Canada): Unit demand increased by 13% in the trailing 12-month period ended March 31, 2024 in spite of direct generic competition. (Source: IQVIA - TSA database.) Product-level performance continues to experience moderate disruption from the launch of a generic product in the Canadian methotrexate market in calendar year 2020, which is expected to continue following the outcome of the Metoject litigation (discussed below) and the launch of a second generic version of Metoject in March 2024. Unit demand for Metoject has moderately benefited from its comparatively steady supply relative to ongoing shortages of competing product inventory throughout fiscal year 2024, which shortages Medexus does not expect to continue indefinitely. In March 2024, following a January 2023 trial in Medexus's defense of the Canadian patent for Metoject, Canada's Federal Court issued a judgment declining to uphold the Canadian patent for Metoject. Medexus and medac, licensor of Medexus's commercialization rights to Metoject, initiated the Metoject litigation in August 2020 in response to the "at-risk" launch of a generic version of Metoject. Medexus expects this outcome to have a limited impact on the company and the product, in part because Medexus has and expects to continue implementing unit-level pricing strategies to defend its strong market position.
Product pipeline highlights
Treosulfan (US): In June 2024, Medexus was informed by medac, licensor of Medexus's commercialization rights to treosulfan, that the FDA had accepted for review medac's April 2024 resubmission of the New Drug Application, or NDA, for treosulfan. Medexus expects that the FDA will complete its review of the treosulfan NDA and issue a decision by October 30, 2024. The treosulfan NDA seeks approval of treosulfan in combination with fludarabine as a preparative regimen for allogeneic hematopoietic stem cell transplantation in adult and pediatric patients. medac's resubmission provided additional information that had previously been requested by the FDA relating to the pivotal phase 3 clinical trial of treosulfan conducted by medac. medac is the party responsible for regulatory matters under Medexus's February 2021 exclusive license agreement relating to commercialization of treosulfan in the United States. The FDA's commitment to review the treosulfan NDA brings Medexus a step closer to making the product a viable treatment option in the United States and is consistent with Medexus's plan to target a commercial launch in the first half of calendar year 2025. Given this positive development, and the revenue opportunity this product represents, Medexus therefore intends to begin making judicious investments in personnel to prepare for a potential positive FDA decision in October 2024. However, Medexus would not expect to begin recognizing significant US revenue from treosulfan until early financial year 2026 (or second calendar quarter 2025) at the earliest. Under the terms of a September 2023 amendment to the US treosulfan agreement, Medexus and medac now have a specified negotiation period, which is currently underway, to agree to a further amendment with respect to any adjustments to the value of unpaid regulatory and sales-based milestone payments that the parties may agree are appropriate in the prevailing circumstances. Medexus will have no obligation to make any milestone payments before the effective date of any such further amendment to the US treosulfan agreement.
Topical terbinafine (Canada): In December 2023, Health Canada accepted for review Medexus's New Drug Submission, or NDS, for terbinafine hydrochloride nail lacquer to treat fungal nail infections. The topical terbinafine NDS seeks Health Canada approval for a distinctive once-a week treatment regimen. Health Canada's commitment to review the topical terbinafine NDS brings Medexus a step closer to making the product a viable treatment option in Canada and is consistent with Medexus's plan to target a commercial launch in the first half of calendar year 2025. Topical terbinafine has been widely used in other markets to treat fungal nail infections. If and when approved, the product will enter the Canadian topical fungicides market that is estimated to be C$88 million on an annual basis. (Source: IQVIA Canadian drugstore and hospital purchases, September 2023 MAT.) Management views this product as a strategic fit with Rupall and expects that it will both contribute to the company's Canadian revenues and engage the existing commercial infrastructure previously put in place to support Rupall. Management views the timing of Health Canada's acceptance of the NDS for review as consistent with Medexus's plans to target a commercial launch in the first half of calendar year 2025, subject to Health Canada approval.
Other highlights
With the successful completion of the company's fiscal year 2024, Marcel Konrad, who has served as Medexus's Chief Financial Officer since June 2021, has chosen to depart Medexus to pursue opportunities outside the company. Medexus appointed Brendon Buschman, who joined Medexus in June 2019 and has worked closely with Mr Konrad as Vice President, Finance & Corporate Controller through Mr Konrad's entire tenure, to succeed Mr Konrad as CFO. Mr Buschman brings to the CFO role 15 years of experience in accounting, finance, and business operations, holds a CPA, CA designation, and has extensive experience building and leading finance and accounting teams through periods of rapid growth. Mr Buschman's appointment as Chief Financial Officer and the conclusion of Mr Konrad's tenure with Medexus will both take effect as of June 28, 2024.
"I'd like to thank Marcel for his years of service on the Medexus senior management team," said Mr d'Entremont. "Since Marcel joined as CFO in June 2021, Medexus has completed numerous corporate finance deals, diversified and grown its revenues, and improved its overall financial profile. Most recently, in setting up our credit facilities with BMO and fully repaying our convertible debentures in cash, we have put in place a solid foundation to support continued growth over the coming years. Marcel's leadership in our finance and accounting function has been an important part of the company's recent successes. I wish him all the best in his future endeavors."
"Medexus has grown and evolved enormously over the past three years," said Mr Konrad. "I have been fortunate to be a part of Medexus's journey to become a leading North America based specialty pharma company and contribute to building a solid foundation for the future. I look forward to following Brendon's and Medexus's future successes with great interest."
In addition, effective June 24, 2024, Medexus appointed Richard Labelle as Chief Operating Officer, a newly created senior management position. In this role, Mr Labelle will oversee all day-to-day business operations across Canada and the United States and ensure they align with the company's strategic goals. His mandate includes commercial, medical, regulatory, supply, and other key operational functions. Mr Labelle most recently served as General Manager, Canadian Operations. His expanded role builds on his long tenure with the company and his extensive experience in the pharmaceutical sector, including his demonstrated success in leading Medexus's Canadian operations since May 2022. Mr Labelle's appointment was part of a reorganization of the Medexus management team intended to better position the company for future opportunities, including leveraging the company's successful experience with Trecondyv (treosulfan) in the Canadian market if and when treosulfan is approved in the United States.
Also effective June 24, Mike Adelman departed the company. Mr Adelman most recently served as General Manager, US Operations.
"My congratulations to Richard on this expanded role," said Mr d'Entremont. "I'd also like to thank Mike for his extensive service to Medexus. Mike has been an important part of the team since joining Medexus as part of our IXINITY acquisition in February 2020. I and the rest of the Medexus team wish him all the best."
"I share Ken's sentiments in thanking Marcel and Mike, and I look forward to continuing to work with Brendon and Richard in their new capacities," concluded Mike Mueller, chair of the Medexus board of directors. "Both have great experience, both in their respective professional spheres and as longstanding members of the Medexus team. I am confident that there will be a seamless transition of the CFO role, and that this strategic reorganization will enhance our ability to embark on the next chapter in the Medexus growth story."
Additional information
Medexus's financial statements and management's discussion and analysis for the fiscal year ended March 31, 2024 are available on Medexus's corporate website at and in the company's corporate filings on SEDAR at .
Conference call details
Medexus will host a conference call at 8:00 am Eastern Time on Wednesday, June 26, 2024 to discuss Medexus's results for its fourth fiscal quarter and fiscal year ended March 31, 2024.
To participate in the call, please dial the following numbers:
888-506-0062 (toll-free) for Canadian and U.S. callers
+1 973-528-0011 for international callers
Access code: 160589
A live webcast of the call will be available on the Investors section of Medexus's corporate website or at the following link:
A replay of the call will be available approximately one hour following the end of the call through Wednesday, July 3, 2024. To access the replay, please dial the following numbers -
877-481-4010 for Canadian and U.S. callers
+1 919-882-2331 for international callers
Conference ID: 50807
A replay of the webcast will be available on the Investors section of Medexus's corporate website until Thursday, June 26, 2025.
About Medexus
Medexus is a leading specialty pharmaceutical company with a strong North American commercial platform and a growing portfolio of innovative and rare disease treatment solutions. Medexus's current focus is on the therapeutic areas of oncology, hematology, rheumatology, auto-immune diseases, allergy, and dermatology. For more information about Medexus and its product portfolio, please see the company's corporate website at and its filings on SEDAR+ at .
Contacts
Ken d'Entremont | CEO, Medexus Pharmaceuticals
Tel: 905-676-0003 | Email: ken.dentremont@medexus.com
Marcel Konrad | CFO, Medexus Pharmaceuticals
Tel: 312-548-3139 | Email: marcel.konrad@medexus.com
Victoria Rutherford | Adelaide Capital
Tel: 480-625-5772 | Email: victoria@adcap.ca
Forward-looking statements
Certain statements made in this news release contain forward-looking information within the meaning of applicable securities laws, also known and/or referred to as "forward-looking information" or "forward-looking statements". The words "anticipates", "believes", "expects", "will", "plans", "potential", and similar words, phrases, or expressions are often intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words, phrases, or expressions. Specific forward-looking statements in this news release include, but are not limited to, statements regarding: Medexus's business strategy or outlook and future growth plans; expectations regarding future financial or operating performance; expectations regarding availability of funds from operations, cash flow generation, and capital allocation (including anticipated cash needs, capital requirements, and needs for and ability to secure additional financing, and specifically including the effects and potential benefits and costs of the January 2024 cost reduction initiative discussed in this news release); the occurrence, timing, and expected outcome of the FDA review process for treosulfan (including any related collection and submission of information to the FDA and the FDA's acceptance and review of that information) and the Health Canada review process for terbinafine hydrochloride; and, if approved by the FDA (in the case of treosulfan) and Health Canada (in the case of terbinafine hydrochloride), the expected timing of any commercial launch of the product in the relevant market and related expectations regarding the product's prospects, and the potential competitive position of the product and anticipated trends and potential challenges in the market in which the product is expected to compete; and competitive position of and anticipated trends and challenges in the company's business and the markets in which it operates. These statements are based on factors or assumptions that were applied in drawing a conclusion or making a forecast or projection, including assumptions based on regulatory guidelines, historical trends, current conditions, and expected future developments. Since forward-looking statements relate to future events and conditions, by their very nature they require making assumptions and involve inherent risks and uncertainties. Medexus cautions that, although the assumptions are believed to be reasonable in the circumstances, these risks and uncertainties mean that actual results could differ, and could differ materially, from the expectations contemplated by the forward-looking statements. Material risk factors include, but are not limited to, those set out in Medexus's materials filed with the Canadian securities regulatory authorities from time to time, including Medexus's most recent annual information form and management's discussion and analysis. Accordingly, undue reliance should not be placed on these forward-looking statements, which are made only as of the date of this news release. Other than as specifically required by law, Medexus undertakes no obligation to update any forward-looking statements to reflect new information, subsequent or otherwise.
Protected names and marks
This news release contains references to trademarks and other protected names and marks, including those belonging to other companies, persons, or entities. Solely for convenience, trademarks and other protected names and marks referred to in this news release may appear without the "®", "™", or other similar symbols. Each such reference should be read as though it appears with the relevant symbol. Any such references are not intended to indicate, in any way, that the holder or holders will not assert those rights to the fullest extent under applicable law.
Non-GAAP measures
Company management uses, and this news release refers to, financial measures that are not recognized under IFRS and do not have a standard meaning prescribed by generally accepted accounting principles (GAAP) in accordance with IFRS or other financial or accounting authorities (non-GAAP measures). These non-GAAP measures may include "non-GAAP financial measures" and "non-GAAP ratios" (each defined in National Instrument 52-112, Non-GAAP and Other Financial Measures Disclosure). Medexus's method for calculating these measures may differ from methods used by other companies and therefore these measures are unlikely to be comparable to similarly-designated measures used or presented by other companies.
In particular, management uses Adjusted Net Income (Loss) and Adjusted EBITDA as measures of Medexus's performance. Adjusted Net Income (Loss), EBITDA (earnings before interest, taxes, depreciation, and amortization), and Adjusted EBITDA are non-GAAP financial measures. In addition, Adjusted Net Income (Loss) may be presented on a per share basis.
An explanation and discussion of each of these non-GAAP measures, including their limitations, is set out under the heading "Preliminary Notes-Non-GAAP measures" in Medexus's most recent management's discussion and analysis. A reconciliation of each of these non-GAAP measures used in this news release to the most directly comparable IFRS measure can be found under the heading "Reconciliation of Adjusted Net Income (Loss) and Adjusted EBITDA to Net Income (Loss)" below.
Reconciliation of Adjusted Net Income (Loss) and Adjusted EBITDA to Net Income (Loss)
The following tables are derived from and should be read together with Medexus's consolidated statement of operations for the three- and 12-month periods ended March 31, 2024. This supplementary disclosure is intended to more fully explain disclosures related to Adjusted Net Income (Loss) and Adjusted EBITDA and provides additional information related to Medexus's operating performance. However, Medexus's non-GAAP measures have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of Medexus's financial information as reported under IFRS.
(Amounts in $ '000s)
Quarter ended March 31,
Financial year ended March 31,
2024
2023
2024
2023
Net income (loss)
$
762
$
6,856
$
(214
)
$
1,221
Add back:
Unrealized gain on fair value of derivatives
-
(827
)
(82
)
(2,533
)
Adjusted Net Income (Loss)
$
762
$
6,029
$
(296
)
$
(1,312
)
(Amounts in $ '000s)
Quarter ended March 31,
Financial year ended March 31,
2024
2023
2024
2023
Net income (loss)
$
762
$
6,856
$
(214
)
$
1,221
Add back:
Depreciation and amortization (property, equipment, intangible assets)
1,449
1,487
5,806
6,081
Interest expense
2,224
3,612
13,364
13,606
Income tax expense (recovery)
228
(6,844
)
320
(6,262
)
EBITDA
4,663
5,111
19,276
14,646
Add back:
Share-based compensation
125
509
939
1,579
Transaction-related fees
282
93
282
265
Termination benefits
823
-
823
610
Foreign exchange loss (gain)
377
44
165
1,689
Unrealized loss (gain) on fair value of derivatives
-
(827
)
(82
)
(2,533
)
Unrealized gain on fair value of business combination payables
(2,759
)
(107
)
(2,759
)
(107
)
Impairment loss
888
-
888
-
Adjusted EBITDA
4,399
4,823
19,532
16,149
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