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 nine- month periods ended December 31, 2019. All dollar
amounts below are in Canadian dollars.
Ken d’Entremont, Chief Executive Officer of
Medexus, commented, “We achieved revenue of $16.2 million for the
three months ended December 31, 2019, compared to $14.4 million for
the same period last year. This improvement reflects both the
Acquisitions in October 2018, as well as continued unit demand
growth across our key products. Specifically, Metoject® unit market
demand increased 88%1, Rupall™ unit market demand increased 62%2,
and Rasuvo® unit market demand increased 8%3 over the same period
last year. Rasuvo® has received strong payor, prescriber and
patient acceptance in the United States, which has positioned us as
an emerging leader in the methotrexate auto-injector market. As
reported last quarter, while gross revenue continues to grow, net
revenue in the United States continues to be impacted by the
consolidation of the Company’s payors in the United States
market. As a result of this consolidation, we have
experienced an increase in the discounts given to payors in the
form of rebates, and a corresponding reduction in the net selling
price of Rasuvo®. We received a substantial rebate invoice
from one of our main payors in the United States, which negatively
impacted net revenue and gross margin for Rasuvo® in respect of the
three-month period ended December 31, 2019. The late receipt of the
invoice in respect of these additional rebates was due to an error
in the payor’s internal reporting system. We continue to
investigate the cause of the late receipt of this rebate invoice,
and to analyze and monitor the impact of the consolidation of the
Company’s payors in the United States and the potential impact such
consolidation has on the net selling price of Rasuvo®.
Nevertheless, we anticipate sustained growth of our key products
going forward.”
Mr. d’Entremont continued, “During the third
quarter, we launched new Metoject® Subcutaneous doses of 10mg/0.2ml
and 12.5mg/0.25ml. The new strengths are important
additions to the Metoject® product line as it enables flexibility
for physicians to accurately prescribe an appropriate strength for
their patients. We anticipate the majority of provinces will
reimburse these new strengths in the near-term, in turn, driving
new prescriptions and unit growth. As previously announced,
Gliolan® was granted priority review by Health Canada, which should
significantly accelerate our path to approval. Additionally, we
reported that Health Quality Ontario, under guidance of the Ontario
Health Technology Advisory Committee, has recommended public
funding of Gliolan®. We believe Gliolan® will gain much broader
distribution in Canada once it becomes a fully registered
product.”
Mr. d’Entremont concluded, “Overall, we have
built a highly scalable business model and we are actively
evaluating additional products and potential accretive acquisitions
that would enable us to leverage our North American sales force
going forward. Within our existing product lines, we have
experienced strong unit sales growth and expect to generate
positive cash flow from operations for the remainder of the 2020
fiscal year and beyond. Meanwhile, we continue to maintain strict
financial discipline and a solid balance sheet with $22.6 million
of cash and cash equivalents as of December 31, 2019. During the
nine-month period ended December 31, 2019, we have
repurchased 779,900 shares, further illustrating our confidence in
the outlook for the business and our commitment to driving value
for our shareholders.”
Operational highlights*:
- Metoject® Demand Growth -
Metoject® experienced strong unit market demand growth of 88%1 in
Q3 2020 as compared to Q3 2019. This is a continuing trend that has
improved as we add additional strengths. Metoject® is now publicly
reimbursed in Canada, which allows access for a large group of
patients who previously could not access the product.
- Rupall™ Demand Growth –
market demand of Rupall™ units has shown very strong growth,
increasing by 62%2 in Q3 2020 as compared to Q3 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 $144.7 million,
including $53.5 million from the prescription market, which is
growing at annual rate of 16%4. During the three- and
nine-months ended December 31, 2019, Rupall™ was one of the fastest
growing anti-histamine in the Canadian prescription market5.
- Rasuvo® Demand Growth –
market demand of Rasuvo® units increased by 8%3 in Q3 2020 as
compared to Q3 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.
Operating and Financial Results
Summary*
For the three months ended December 31, 2019,
total revenues were $16.2 million, compared to revenue of $14.4
million for the three months ended December 31, 2018. The
increase was mainly due to the Acquisitions; however, the increase
also reflects the unit demand growth of the Company’s key products
in the market. While gross revenue continues to grow, net
revenue in the United States continues to be impacted by the
consolidation of the Company’s payors in the United States
market. As a result of this consolidation, the Company has
experienced an increase in the discounts given to payors in the
form of rebates, and a corresponding reduction in the net selling
price of Rasuvo®. The Company received a substantial rebate
invoice from one of its main payors in the United States, which
negatively impacted net revenue and gross margin for Rasuvo® in
respect of the three-month period ended December 31, 2019.
The invoice also included unexpected rebates covering a period of
several months prior to the three-month period ended December 31,
2019, which resulted in a further reduction in net revenue for the
three-month period ended December 31, 2019. The late receipt
of the invoice in respect of these additional rebates was due to an
error in the payor’s internal reporting system. Occasionally, the
Company experiences extensive time delays between the recording of
the accrual in respect of such rebates and the ultimate settlement
of US Medicare Part D, commercial and performance-based
contracts. The Company continues to investigate the cause of
the late receipt of this rebate invoice, and to analyze and monitor
the impact of the consolidation of the Company’s payors in the
United States and the potential impact such consolidation has on
the net selling price of Rasuvo®.
Gross profit for the three months ended December
31, 2019 was $9.0 million, or 55.4% of sales, compared to $9.0
million, or 62.1% of sales, for the same period last year. The
lower gross margin for the third quarter ended December 31, 2019
compared to the same period last year, was mainly due to the
consolidation of the Company’s payors in the United States market
as well as the aforementioned unexpected rebate invoice the Company
received from one of its main payors in the United States, which
included a catch-up rebate invoice covering a period of
several months prior to the three-month period ended December 31,
2019.
The operating loss for the three months ended
December 31, 2019 was $3.3 million compared to $0.1 million for the
three months ended December 31, 2018. Operating loss for the three
months ended December 31, 2019 included approximately $2.1 million
of termination benefits and $1.2 million of business development
and regulatory affairs expense, compared to $0 of termination
benefits and $0.7 million of business development and regulatory
affairs expense for the same period last year. The increase in
business development and regulatory affairs expense was due to
accelerated business development activities and an increased volume
of transactions under consideration.
Adjusted EBITDA** was $0.7 million for the
three-month period ended December 31, 2019 compared to $2.2 million
for the same period last year. Net loss for the three-month period
ended December 31, 2019 was $2.6 million compared to net loss of
$1.3 million for the three-month period ended December 31,
2018.
Under the Company’s normal course issuer bid
(NCIB) it purchased and cancelled 361,900 common shares in the
market for consideration of $1.4 million during the three-month
period ended December 31, 2019, and 779,900 common shares in the
market for consideration of $3.2 million during the nine-month
period ended December 31, 2019.
For the nine months ended December 31, 2019,
total revenues were $48.7 million, compared to revenue of $21.1
million for the nine months ended December 31, 2018. Gross profit
for the nine months ended December 31, 2019 was $28.5 million, or
58.4% of sales, compared to $12.5 million, or 59.4% of sales, for
the same period last year. The lower gross margin for the nine
months ended December 31, 2019 compared to the same period last
year, was mainly due to the consolidation of the Company’s payors
in the United States market as well as the aforementioned
unexpected rebate invoice the Company received from one of its main
payors in the United States, which included a catch-up
rebate invoice covering a period of several months prior to
the three-month period ended December 31, 2019.
The operating loss for the nine months ended
December 31, 2019 was $5.8 million compared to $3.8 million for the
nine months ended December 31, 2018. Adjusted EBITDA** for the
nine-month period ended December 31, 2019 was $1.8 million compared
to $2.3 million for the nine-month period ended December 31,
2018. Net loss for the nine-month period ended December 31,
2019 was $4.1 million compared to $5.6 million for the nine-month
period ended December 31, 2018.
The Company’s financial statements and
management discussion and analysis (“MD&A”) for the three and
nine months ended December 31, 2019 are available on our corporate
website at www.medexus.com and in our corporate filings on
SEDAR at www.sedar.com.
* 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.
Conference Call Details
Medexus will host a conference call at 8:00 AM
Eastern Time on Wednesday, February 19, 2020 to discuss the
Company’s financial results for the third quarter ended December
31, 2019, 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 May 19, 2020. A telephone
replay of the call will be available approximately one hour
following the call, through February 26, 2020, 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:
33141.
1 Source: IQVIA – TSA National units.2 Source: IQVIA –
Drugstores and hospitals purchases. 3 Source: Symphony Sub National
12/31/2019 Data & Chargebacks, PAP4 Source: IQVIA Data - CDH
MAT December 2019 5 Source: IQVIA: CDH units – FQTR December
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- and nine-month periods ended
December 31, 2019 are 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- and nine-month periods ended December 31,
2018 includes certain unaudited pre-Acquisitions results for
Pediapharm Inc. (i.e., the comparative information for this period
consist of results prior to October 16, 2018 which reflect only the
unaudited pre-Acquisitions results for Pediapharm Inc. and results
subsequent to October 16, 2018 which reflect the unaudited
consolidated results of the post-Acquisitions Company, including
the acquired entities (Medexus Canada and Medexus US)), whereas
information provided as at and for the three- and nine-month
periods ended December 31, 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 and the Company’s evaluation of additional products and
accretive acquisitions, the anticipated growth in sales of, the
market for and distribution of, certain of the Company’s products,
and the Company’s investigation of the consolidation of the
Company’s payors in the United States, as well as the anticipated
impact such consolidation may have on the Company, including with
respect to the net selling price of Rasuvo®. 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
the Company’s results of operations from management’s perspective.
Accordingly, they should not be considered in isolation nor as a
substitute for analysis of the Company’s financial information
reported under IFRS. In particular, management uses Adjusted EBITDA
as a measure of the Company’s performance. The Company defines
Adjusted EBITDA as earnings before financing and special
transaction costs (including, for greater certainty, fees related
to the Acquisitions and financing announced on October 16, 2018),
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, gain or loss
on the convertible debenture embedded derivative, foreign exchange
gains or losses, and impairment of intangible assets. 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
of Adjusted EBITDA to Net Income (Loss), can be found in our
MD&A, which is available through the SEDAR website
(www.sedar.com).
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