Medexus Pharmaceuticals Inc. (the “Company” or
“Medexus”) (TSX-V: MDP, OTCQB: PDDPF) today provided an
update to its shareholders reaffirming the strength of its business
and outlining the measures it has taken in light of the COVID-19
healthcare crisis.
Since December 31, 2019, the outbreak of the
novel strain of coronavirus, specifically identified as “COVID-19”,
has resulted in governments worldwide enacting emergency measures
to combat the spread of the virus, including the implementation of
travel bans, quarantine periods and social distancing. The World
Health Organization has declared COVID-19 a pandemic and, as the
crisis deepens in North America, Medexus is actively assessing and
responding where possible to its potential impact on the Company’s
business.
“Our focus for the past six weeks has been
centered on four priorities: (i) the safety of our personnel; (ii)
ensuring the continuity of access to our products for our patients
who rely on them for their day to day health and well-being; (iii)
monitoring the status of our partners in our supply and
distribution process, such as the manufacturers of our products and
the operators of our warehouses and distribution sites; and (iv)
open and frequent communication with all of our key business
partners, including our lenders and shareholders,” said Ken
d’Entremont, Chief Executive Officer of Medexus.
The welfare and safety of Medexus’ personnel and
the individuals with which the business interacts is a key priority
for the Company. Medexus has taken prudent steps in accordance with
its business continuity procedures to help reduce the spread of the
virus and to support and protect the health of its employees,
partners and customers. For the most part, these are standard
procedures being adopted by companies worldwide that involve
working from home where possible and eliminating unnecessary
travel. The Company’s offices are being operated by skeleton crews
and its commercial team has done an outstanding job quickly and
efficiently shifting focus to communicating with the Company’s
manufacturers, licensors and customers to maintain a smooth supply
chain. While the Company’s sales representatives are no longer
visiting health care practitioners in hospitals, clinics or
pharmacies in order to respect recommendations for social
distancing, Medexus continues to support the growth of its products
in other innovative ways. The Company believes these strategies are
working well. At this time, none of the Company’s employees
have reported testing positive for the COVID-19
virus.
In a crisis situation such as the one presented
by the COVID-19 outbreak, it is critical that pharmaceutical
companies do everything possible to ensure that the patients who
depend on their products continue to receive them. This is of
paramount importance to Medexus. Medexus has dedicated resources to
daily communication with its manufacturing partners and is not
aware of any disruption to the supply of any of its products.
The Company continues to monitor the circumstances of its
manufacturers in light of COVID-19 and has been assured that
appropriate redundancies at the manufacturer level are in place to
facilitate the shipment of the Company’s products as planned. The
Company is also in regular contact with its downstream network in
the United States and Canada, including wholesalers and payors, as
well as the governmental and regulatory bodies with which the
Company interacts, to provide support and assurance that Medexus
will do everything possible to continue to meet their needs.
Ken d’Entremont commented: “We would like to
reassure the patients who rely on our products and the shareholders
who have invested in our growth that our business remains strong.
Our supply channel is secure and we are working to ensure it
remains so to support the demand for our products in the market. We
have three to six months of inventory in all key product lines and
expect additional shipments in the next two weeks that should
extend inventory levels to at least six months across all key
product lines. Given that older adults and people with
autoimmune diseases such as rheumatoid arthritis are more likely to
be seriously affected by COVID-19, our goal is to ensure no
disruptions in our ability to get our products to the patients who
rely on them to manage their disease. In particular, we would
like to reassure patients who rely on IXINITY®, the intravenous
recombinant factor IX therapeutic for Hemophilia B acquired by
Medexus at the end of February, that the product is readily
available and we will continue to work towards ensuring their
continued access to this life saving medication.”
Unfortunately, the Company expects that COVID-19
will result in meaningful delays in the enrollment of the pediatric
trial for IXINITY® as hospitals around the world close their doors
to all non-critical patients. Although it is impossible at
this time to know the extent of this delay, it does not materially
affect any of the Company’s revenue forecasts as the pediatric
indication of IXINITY® was considered incremental, and not core, to
the Company’s projections.
As the situation continues to be very dynamic,
the Company has been working diligently to assess the potential
risks posed by COVID-19 on an ongoing basis and to realign its
budgets in response to them. While revenue growth (beyond the
previously announced accretive impact of the acquisition of
IXINITY®) is likely unattainable this fiscal year, based on the
information currently available and assuming the continuity of
supply, the Company believes the impact of COVID-19 on its
prescription driven business, which accounts for approximately 90%
of the Company’s revenues, will be limited. The Company
expects that certain over-the-counter (OTC) products such as NYDA®
– a treatment for lice, the demand for which is closely linked to
children interacting – may be reduced in a world of social
isolation. However, the impact is far from determined at this time
given the seasonality of such products and the uncertainty around
how long the COVID-19 outbreak and the related public health
measures imposed in response will last. With respect to
Rupall®, the Company intends to continue to heavily sample
physicians on the product, with the goal of making Rupall® their
prescription of choice as allergy season approaches.
On the expense side of the equation, the Company
expects to see material savings as travel, marketing and
promotional initiatives are materially curtailed during this period
of disruption. The Company also expects the aforementioned delay in
the IXINITY® pediatric trial to enhance near term cash flow. The
Company also notes that the steep decline in the Canadian dollar
relative to the US dollar, to the extent it persists, would result
in forex gains to the Company as it generates the bulk of its cash
flows in US dollars. In addition, while not part of our
COVID-19 response, the Company completed a reduction in its work
force at the time of its acquisition of IXINITY® to ensure that its
long-term business needs are aligned with retaining the right
people in the business. The Company anticipates these cost savings
largely offsetting any revenue related issues associated with the
impact of COVID-19, but will have better visibility in the coming
quarter.
Ken d’Entremont further commented: “We continue
to conduct business as usual to the extent possible despite the
global situation. We remain encouraged by our outlook and confident
that the Company we have built with the support of our partners and
stakeholders is well positioned to emerge from this global crisis
even stronger.”
Notwithstanding that the Company remains well
positioned and its business strong, given the unprecedented
circumstances and current market environment, the Company believes
it prudent at this time to take advantage of all available options
to preserve cash and maintain its healthy balance sheet. In
accordance with the terms of the debenture indenture entered into
between Medexus and Computershare Trust Company of Canada dated as
of October 16, 2018 (the “Indenture”), the Company
has elected to issue an aggregate of approximately 533,137 common
shares in the capital of the Company (the “Common
Shares”) to holders of the Company’s 6.0% unsecured
convertible debentures (the “Debentures”) in
satisfaction of the aggregate $1,260,000 interest payment due to
holders of Debentures on March 31, 2020 (the “Interest
Payment”). Medexus’ decision to make the Interest Payment
in Common Shares reflects the Company’s current focus on protecting
the strength of its balance sheet in light of the uncertainty
caused by the COVID-19 pandemic. The Company made this decision out
of an abundance of caution and, while the full impact of the
pandemic remains to be seen, Medexus is confident that it is well
positioned to successfully navigate the challenges posed by
COVID-19. The Board of Directors of the Company will continue to
re-assess this strategy with respect to the payment of the interest
on the Debentures on a regular basis.
Holders of Debentures of record as of March 16,
2020 will receive their pro-rata entitlement of the aggregate
number of Common Shares issued pursuant to the Interest Payment on
March 31, 2020. Common Shares issued pursuant to the Interest
Payment to certain insiders of the Company will be subject to a
four-month hold period in accordance with the policies of the TSX
Venture Exchange (the “TSX-V”). The issuance of
the Common Shares is subject to the terms of the Indenture as well
as receipt of the approval of the TSX-V. A copy of the
Indenture is available on the Company’s SEDAR profile at
www.sedar.com.
About Medexus
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
Pharmaceuticals is focused on the therapeutic areas of auto-immune
disease and pediatrics. The Company’s 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; IXINITY®, an intravenous recombinant
factor IX therapeutic for use in patients 12 years of age or older
with Hemophilia B – a hereditary bleeding disorder characterized by
a deficiency of clotting factor IX in the blood, which is necessary
to control bleeding; 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.comInvestor
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-V nor its Regulation Services
Provider (as that term is defined in the policies of the TSX-V)
accepts responsibility for the adequacy or accuracy of this
release.
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 the
potential impact of the COVID-19 pandemic and the Company’s
response thereto, including the Company’s balance sheet and cost
management strategies and any benefits thereof. 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, as well as the risks related to
COVID-19. Specifically, third parties on which the Company relies,
including its manufacturers, suppliers, licensors and/or
distributors, have operations around the world and are exposed to a
number of global and regional risks outside of the Company’s
control, including but not limited to those related to
COVID-19. As the current outbreak of COVID-19 continues or
increases in severity or results in expanded or prolonged travel,
commercial or other restrictions, it could adversely impact the
Company by causing operating, supply or other disruptions,
including creating difficulties in the execution of the Company’s
marketing plans. In addition, liquidity and volatility,
credit availability and market and financial conditions generally
could change at any time as a result. Any of these events, in
isolation or in combination, could materially and adversely affect
the Company’s business and could have a material adverse effect on
the Company and its financial results. Given these risks, undue
reliance should not be placed on the forward-looking statements
contained herein, 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.
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