Medexus Pharmaceuticals Inc. (the “Company” or “Medexus”)
(TSXV: MDP, OTCQB: PDDPF) today provided a business update
and announced its financial and operating results for the fiscal
quarter ended June 30, 2019. All dollar amounts below are in
Canadian dollars.
Financial highlights1:
- Revenue was $16.1 million compared to $3.2 million for the
fiscal quarter ended June 30, 2018 (Q1 2019)
- Gross profit was $9.9 million compared to $1.7 million for Q1
2019
- Gross margin was 61.4% compared to 53.5% for Q1 2019
- Adjusted EBITDA2 was $0.5 million compared to ($0.3 million)
for Q1 2019 (net loss of $2.2 million compared to $0.7 million for
Q1 2019)
- The Company finished the quarter with cash and cash equivalents
of $27.4 million
Ken d’Entremont, Chief Executive Officer of
Medexus, commented, “I am pleased to report we generated strong
year-over-year revenue growth for the first fiscal quarter of 2020.
Revenue increased by $12.9 million versus the same period last
year, which increase is reflective of both the October 2018
acquisitions and strong organic growth. Importantly, we saw
strong growth in each of the key product categories. We were
particularly pleased to have achieved positive adjusted EBITDA2
despite incurring incremental expenses related to the sales and
marketing ramp-up for the allergy season, as well as our investment
in a development project aimed at reformulating an existing
FDA-approved product for use in the field of rheumatology. We
believe this reformulated product will be complementary and
accretive to our existing product portfolio, while at the same time
delivering true innovation to address unmet patient needs. We
believe these activities will support strong performance in the
second quarter and for the balance of the year.”
Operational highlights:
- Launch of Metoject® 15mg - On
May 1, 2019, the Company launched a new Metoject Subcutaneous 15mg
dose in Canada for the treatment of rheumatoid arthritis, psoriasis
and psoriatic arthritis. The new 15mg dose of Metoject Subcutaneous
is an important addition to the Metoject line offered in Canada,
and management expects this dose to be a significant portion of our
Metoject sales volume going forward. Metoject Subcutaneous
15mg is currently the third leading dose in terms of sales volume
in the Company’s Metoject portfolio. Metoject
experienced unit market demand growth of 122% in Q1 2020 as
compared to Q1 2019.3 Metoject is now publicly reimbursed in
Canada, which allows access for a large group of patients who
previously could not access the product.
- Rasuvo™ Demand Growth –
market demand of Rasuvo units increased by approximately 14% in Q1
2020 as compared to Q1 2019.4 This growth reflects strong payor,
prescriber and patient acceptance for Rasuvo in the United States.
This growth is expected to continue as prescribers adopt the most
effective and convenient form of methotrexate for their
patients. Management believes the Company is positioned as an
emerging leader in the methotrexate auto-injector market.
- Rupall™ Demand Growth –
market demand of Rupall units has shown very strong growth,
increasing by 68% in Q1 2020 as compared to Q1 2019.5 This growth
was a result of physicians switching patients from either the
generic prescription antihistamines or over-the-counter products.
The Company expects Rupall to be a leading prescription
anti-histamine in a total market that is valued at $131.4 million,
including $42.6 million from the prescription market, which is
growing at annual rate of 17%.6 During the three months ended
June 30, 2019, Rupall was the fastest growing anti-histamine in the
prescription market.7
Ken d’Entremont further commented, “We are
excited about the growth opportunities for the existing products
within our portfolio. As a result, we are very positive about
the outlook for fiscal 2020 as we continue to grow revenue and
leverage our North American sales force across products, while
maintaining strict financial discipline with respect to expenses.
We had $27.4 million of cash and cash equivalents and a working
capital surplus of approximately $31.1 million as of June 30, 2019,
which means we are well funded to continue our organic growth,
license new products, as well as explore opportunistic
acquisitions.”
“We are very pleased with the way the team has
come together and we are confident that they have built a highly
scalable business platform with significant incremental earnings
potential this year and in the future” said Peter van der Velden,
Chair of the Company’s board of directors. Mr. van der
Velden added, “Reflecting that confidence in the future growth of
the Company and the board’s and management’s view that the shares
of the Company do not reflect their fundamental value, the Company
also implemented a normal course issuer bid, pursuant to which the
Company has purchased 198,000 of its common shares for
cancellation.”
Operating and Financial Results
Summary
For the three months ended June 30, 2019, total
revenues were $16.1 million, compared to revenue of $3.2 million
for the three months ended June 30, 2018. Gross profit for
the three months ended June 30, 2019 was $9.9 million, or 61.4% of
sales, compared to $1.7 million, or 53.5% of sales, for the same
period last year. The operating loss for the three months ended
June 30, 2019 was $1.1 million compared to $0.4 million for the
three months ended June 30, 2018.
In line with our strategy to develop new
products that complement our existing product portfolio and deliver
true innovation to address unmet patient needs, during the quarter
the Company incurred $0.4 million of expenses related to the
aforementioned reformulation of a product for use in the field of
rheumatology.
Adjusted EBITDA2 for the three-month period
ended June 30, 2019 was $0.5 million compared to ($0.3 million) for
the three-month period ended June 30, 2018. Net Loss for the
three-month period ended June 30, 2019 was $2.2 million for Q1 2019
compared to $0.7 million for the three-month period ended June 30,
2018.
For the three-month period ended June 30, 2019,
gross profit reached $9.9 million compared to $1.7 million for the
three months ended June 30, 2018. Gross margin increased to 61.4%
compared to 53.5% for the same period last year due to higher gross
margins derived from the products acquired as part of the
Acquisitions (as defined below).
The improvements in first quarter revenue, gross
profit and Adjusted EBITDA2 compared to the same period in the
prior year are mainly due to the Acquisitions, as well as the
increase in gross profit driven by the increase in revenue from the
Company’s pre and post-Acquisitions products.
The Company’s financial statements and
management discussion and analysis (“MD&A”) for the period
ended June 30, 2019 are available on our corporate website at
www.medexus.com and in our corporate filings on SEDAR at
www.sedar.com.
Conference Call Details
Medexus will host a conference call on Thursday,
August 22, 2019 at 4:30 PM Eastern Time to discuss the Company’s
financial results for the first quarter of fiscal 2020, as well as
the Company’s corporate progress and other developments.
The conference call will be available via
telephone by dialing toll free 844-369-8770 for Canadian and U.S.
callers or +1 862-298-0840 for international callers, or on the
Company’s Investor Events section of the website:
https://www.medexus.com/events/.
A webcast replay will be available on the
Company’s Investor Events section of the website
(https://www.medexus.com/events/) through November 22, 2019. A
telephone replay of the call will be available approximately one
hour following the call, through July 9, 2019, and can be accessed
by dialing 877-481-4010 for Canadian and U.S. callers or +1
919-882-2331 for international callers and entering conference ID:
53404.
About Medexus Pharmaceuticals
Inc.
Medexus is a leading specialty pharmaceutical
company with a strong North American commercial platform. The
Company’s vision is to provide the best healthcare products to
healthcare professionals and patients, through our core values of
Quality, Innovation, Customer Service and Teamwork. Medexus
is focused on the therapeutic areas of auto-immune disease and
pediatrics. The 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; and Rupall, an innovative allergy medication with a
unique mode of action.
For more information, please
contact:
Ken d’Entremont, Chief Executive OfficerMedexus
Pharmaceuticals Inc.Tel.: 905-676-0003E-mail:
ken.dentremont@medexus.com
Roland Boivin, Chief Financial OfficerMedexus
Pharmaceuticals Inc.Tel.: 514-762-2626 ext. 202E-mail:
roland.boivin@medexus.com
Investor Relations (U.S.):Crescendo
Communications, LLCTel: +1-212-671-1020Email:
mdp@crescendo-ir.com
Investor Relations (Canada):Frank CandidoDirect
Financial Strategies and Communication Inc.Tel: 514-969-5530E-mail:
frank.candido@medexus.com
Neither the TSX Venture Exchange nor its Regulation
Services Provider (as that term is defined in the policies of the
TSX Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
Cautionary Note Regarding Comparative
Financial Information
On October 16, 2018, the Company (under its
former name, Pediapharm Inc.) completed two transformative
acquisitions (the “Acquisitions”) in acquiring of
all the issued and outstanding shares of Medexus Inc.
(“Medexus Canada”) and Medexus Pharma, Inc. (under
its former name, Medac Pharma, Inc.) (“Medexus
US”) and, subsequently, on December 12, 2018, changed its
name to “Medexus Pharmaceuticals Inc.”.
As the three-month period ended June 30, 2019 is
within the first full year of operation since the Company completed
the Acquisitions, readers are cautioned that while certain
financial information included herein for, and comparisons to,
prior periods have been presented in this press release, changes
from a pre-Acquisitions period to a post-Acquisitions period may,
in the opinion of management, be of limited value in understanding
changes to the financial condition, financial performance, or
business of the Company from period to period given the
transformative nature of the Acquisitions. Readers are
advised that the comparative information included in this press
release for the three month period ended June 30, 2018 reflects
only the unaudited pre-Acquisitions results for Pediapharm Inc.,
whereas information provided as at and for the three-month period
ended June 30, 2019 reflects the unaudited consolidated results of
the post-Acquisitions Company, including the acquired entities
(Medexus Canada and Medexus US).
Forward Looking Statements
Certain statements made in this press release
contain forward-looking information within the meaning of
applicable securities laws (“forward-looking
statements”). The words “anticipates,” “believes,”
“expects,” will,” and similar expressions are often intended to
identify forward-looking statements, although not all
forward-looking statements contain these identifying words.
Specific forward-looking statements contained in this press release
include, but are not limited to, statements with respect to future
business operation and results, including with respect to future
earnings, the anticipated growth in sales of, and the market for,
certain of the Company’s products, and expected purchases pursuant
to the Company’s normal course issuer bid. 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 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. The Company cautions that although it is believed
that the assumptions are reasonable in the circumstances, these
risks and uncertainties give rise to the possibility that actual
results may differ materially from the expectations set out in the
forward-looking statements. Material risk factors include those set
out in the Company's MD&A under the heading “Risk Factors and
Risk Management” and elsewhere in the Company’s other disclosure
documents filed with the applicable Canadian securities regulatory
authorities from time to time. Given these risks, undue reliance
should not be placed on these forward-looking statements, which
apply only as of the date hereof. Other than as specifically
required by law, the Company undertakes no obligation to update any
forward-looking statements to reflect new information, subsequent
or otherwise.
Non-IFRS Financial Measures
This press release uses the term “Adjusted
EBITDA” which is a non-IFRS financial measure, which does not have
any standardized meaning under IFRS and therefore may not be
comparable to similar measures presented by other companies.
Rather, this measure is provided as additional information to
complement IFRS measures by providing a further understanding of
operations from management’s perspective. The Company defines
Adjusted EBITDA as earnings before financing costs, interest
expenses, income taxes, interest income, depreciation of property
and equipment, amortization of intangible assets, non-cash
share-based compensation, income from sale of asset, impairment of
intangible assets as well as fees related to the Acquisitions and
Offering. The Company considers Adjusted EBITDA as a key metric in
assessing business performance and considers Adjusted EBITDA to be
an important measure of operating performance and cash flow,
providing useful information to investors and analysts. These
non-IFRS measures presented are not intended to represent cash
provided by operating activities, net earnings or other measures of
financial performance calculated in accordance with IFRS.
Additional information relating to the use of this non-IFRS
measure, including the reconciliation between Net Loss and Adjusted
EBITDA, can be found in our MD&A, which is available through
the SEDAR website (www.sedar.com).
1 Refer to “Cautionary Note Regarding Comparative Financial
Information” at the end of this press release.
2 Refer to “Non-IFRS Financial Measures” at the end of this
press release.
3 Source: IQVIA – TSA National units.
4 Source: Symphony Sub National 6/30/2019 Data
& Chargebacks, PAP.
5 Source: IQVIA – Drugstores and hospitals
purchases.
6 Source: IMS Data-MAT June 2018.
7 Source: IQVIA: CDH units – FQTR June 2019.
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