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 three-
and six-month periods ended September 30, 2019. All dollar
amounts below are in Canadian dollars.
Q2 2020 Financial
highlights*:
- Revenue was $16.4 million compared
to $3.4 million for the fiscal quarter ended September 30, 2018 (Q2
2019)
- Gross profit was $9.6 million
compared to $1.9 million for Q2 2019
- Gross margin was 58.6% compared to
53.8% for Q2 2019
- Adjusted EBITDA** was $0.5 million
compared to $0.5 million for Q2 2019
- Net income was $0.7 million
compared to net loss of $3.6 million for Q2 2019
- The Company finished the quarter
with cash and cash equivalents of $25.4 million
- 282,400 common shares were
purchased pursuant to the Company’s normal course issuer bid (NCIB)
during the quarter for aggregate consideration of $1.1
million* Refer to “Cautionary Note Regarding Comparative
Financial Information” at the end of this press release.** Refer to
“Non-IFRS Financial Measures” at the end of this press
release.
Ken d’Entremont, Chief Executive Officer of
Medexus, commented, “We achieved record revenue of $16.4 million
for the three months ended September 30, 2019, compared to $3.4
million for the same period last year. This improvement
reflects continued unit sales growth, as well as the increased
scale of the Company as a result of the acquisitions completed in
October 2018. Specifically, Metoject® unit market demand
increased 115%1, Rasuvo™ unit market demand increased 15%2, and
Rupall™ unit market demand increased 66%3 over the same period last
year. Despite the growing demand and unit sales growth for our
products, net revenue for Rasuvo™ was impacted by the consolidation
of several payers in the United States market, resulting in
increased discounts and a reduction in the net selling price.
We did not anticipate the pricing impact of this consolidation,
which is industry wide and not unique to Medexus. The Company
continues to analyze and monitor the impact of the consolidation
and is considering the alternatives available to it to address the
price reduction. We nevertheless anticipate sustained growth of
Rasuvo™ units going forward, and plan to leverage our strong U.S.
sales force by introducing new products through this channel, which
we believe has the potential to drive significant value for
shareholders going forward.”
Mr. d’Entremont continued, “Within the Canadian
market, Metoject® continues to benefit from the initiation of
public reimbursement in a number of provinces across Canada.
At the same time, Rupall™ continues to gain market share versus
generic anti-histamines. I am also pleased to report that
Gliolan® was recently granted priority review status by Health
Canada, which should significantly accelerate our path to
approval. This follows the recent draft recommendation for
public reimbursement of Gliolan® in Ontario by Health Quality
Ontario. Once Gliolan® becomes a fully registered product, we
expect it to gain much broader distribution in Canada, which
represents a sizeable, underserved market opportunity. In the
meantime, feedback from the medical community has been extremely
positive.”
Mr. d’Entremont concluded, “Despite the impact
on the margins of Rasuvo from the consolidation of payers in the
U.S. market, we have experienced strong unit sales growth and
continue to generate positive cash flow from operations.
Looking ahead, we have built a highly scalable organization and
look forward to leveraging our North American sales force by
licensing additional products and through accretive acquisitions.
As a result, we remain encouraged by the outlook for fiscal 2020,
as illustrated by the fact we have repurchased over 600,000 shares
year-to-date under the Company’s normal course issuer bid. At
the same time, we have maintained a solid balance sheet with $25.4
million of cash and cash equivalents, as well as a working capital
surplus of approximately $29.4 million as of September 30,
2019.”
Operational highlights:
- Metoject®
Demand Growth - Metoject experienced strong unit
market demand growth of 115%1 in Q2 2020 as compared to Q2 2019.
This is a continuing trend that has improved as we add additional
strengths, like the 15 mg dose. 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 15%2 in Q2 2020 as compared to Q2 2019.
This growth reflects strong payer, prescriber and patient
acceptance for Rasuvo™ in the United States. Management expects
this growth 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 66%3 in Q2 2020 as compared
to Q2 2019. 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%4.
During the three and six months ended September 30, 2019,
Rupall™ was the fastest growing anti-histamine in the prescription
market5.
Operating and Financial Results
Summary
For the three months ended September 30, 2019,
total revenues were $16.4 million, compared to revenue of $3.4
million for the three months ended September 30, 2018. Gross
profit for the three months ended September 30, 2019 was $9.6
million, or 58.6% of sales, compared to $1.9 million, or 53.8% of
sales, for the same period last year. The improvements in second
quarter revenue and gross profit 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, which impacts were
partially offset by the consolidation of the Company’s payers in
the US market, resulting in an increase in discounts given and a
reduction in net selling price for Rasuvo.
The operating loss for the three months ended
September 30, 2019 was $1.3 million compared to $3.3 million for
the three months ended September 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 $0.2 million
of expenses related to the reformulation of a product for use in
the field of rheumatology.
Adjusted EBITDA** was $0.5 million for the
three-month period ended September 30, 2019 and September 30,
2018. Net income for the three-month period ended September
30, 2019 was $0.7 million for Q2 2020 compared to net loss of $3.6
million for the three-month period ended September 30, 2018. Net
income for the three-month period ended September 30, 2019 included
a $4.3 million unrealized gain on the fair value of
derivatives.
Under the Company’s normal course issuer bid
(NCIB) it purchased and cancelled: (i) 282,400 common shares
in the market for consideration of $1.1 million during the
three-month period ended September 30, 2019, (ii) 418,000 common
shares in the market for consideration of $1.8 million during the
six-month period ended September 30, 2019, and (iii) an additional
185,700 common shares in the market for consideration of $0.8
million during the month ended October 31, 2019.
For the six months ended September 30, 2019,
total revenues were $32.5 million, compared to revenue of $6.7
million for the six months ended September 30, 2018. Gross
profit for the six months ended September 30, 2019 was $19.5
million, or 60.0% of sales, compared to $3.6 million, or 53.6% of
sales, for the same period last year. The improvements in six-month
revenue and gross profit 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, which impacts were partially
offset by the price impact of the payer consolidation described
above.
The operating loss for the six months ended
September 30, 2019 was $2.4 million compared to $3.7 million for
the six months ended September 30, 2018. Adjusted EBITDA** for the
six-month period ended September 30, 2019 was $1.0 million compared
to $0.2 million for the six-month period ended September 30,
2018. Net loss for the six-month period ended September 30,
2019 was $1.5 million compared to $4.3 million for the six-month
period ended September 30, 2018. Net loss for the six-month
period ended September 30, 2019 included a $5.0 million unrealized
gain on the fair value of derivatives.
The Company’s financial statements and
management discussion and analysis (“MD&A”) for the three
months and six months ended September 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 Monday,
December 2, 2019 at 8:00 AM Eastern Time to discuss the Company’s
financial results for the second 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/investors/news-events.
A webcast replay will be available on the
Company’s Investor Events section of the website
(https://www.medexus.com/investors/news-events) through March 2,
2020. A telephone replay of the call will be available
approximately one hour following the call, through December 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: 56859.
1 Source: IQVIA – TSA National
units.2 Source: Symphony Sub National 9/30/2019
Data & Chargebacks., PAP.3 Source: IQVIA –
Drugstores and hospitals purchases.4 Source: IMS
Data-MAT June 2018.5 Source: IQVIA: CDH units –
FQTR September 2019.
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 September 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 September 30, 2018
reflects only the unaudited pre-Acquisitions results for Pediapharm
Inc., whereas information provided as at and for the three-month
period ended September 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).
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