RE:Doubled up Medexus Pharmaceuticals Inc. | MEDXF - $6.15 - OTCQX | Buy
Stock Data
52-Week Low - High Shares Out. (mil) Mkt. Cap.(mil) 3-Mo. Avg. Vol. 12-Mo.Price Target Cash (mil)
Tot. Debt (mil)
Year ending March 31
MEDXF: Treosulfan Could be a Game
$2.01 - $7.76
19.17
$117.89
18,095 We launch coverage of Medexus Pharmaceuticals, Inc. with a Buy rating and $12.00
$18.7 $55.0
a $12.00/share price target. The impetus for our Buy rating is our belief that the pipeline compound treosulfan (oncology conditioning agent) will be approved in the near-term and drive significant revenues and profitability.
Medexus Pharmaceuticals, Inc. is a Canadian specialty pharmaceutical company that sells into the U.S. and Canadian markets. Key drivers for our investment thesis include:
Driver #1 - We expect a near-term approval for the key pipeline compound treosulfan. We are optimistic in front of an August 11, 2021 PDUFA date for treosulfan as a conditioning agent prior to allogeneic hematopoietic stem cell transplantation. Our optimism stems from strong survival data versus busulfan and multiple ex-US approvals already (Europe, Canada).
Driver #2 - We expect treosulfan to produce significant revenues. We target peak revenues to approach $100M for treosulfan based on the prior experience of busulfan (and a potentially better label for treosulfan). We target a FY2022-25 revenue trajectory of $4M, $20M, $42M, and $57M.
Driver #3 - Base business sets up for positive leverage. We target the base business of specialty pharma products (Rasuvo, Ixinity, Metoject, Rupall) to already be approaching an $80M annualized revenue run rate (with EBITDA-positive results around a ~$50M run rate ex-investment in treosulfan). We expect that this base business can continue to grow with few near-term exclusivity concerns.
Driver #4 - Rapid return to profitability expected. We target the company to rapidly turn profitable post the launch of treosulfan. We target EBITDA to again be profitable in FY2023 with a 2024-25 EPS trajectory of $0.50 and $1.00.
Price target of $12/share. We value the company at $12/share, which is derived by an EPS multiple analysis. We apply a 20x multiple to our forecasted FY2025 EPS target of $1.00 and discount three years at 20% per year (higher discount rate given regulatory risk to treosulfan).
Catalysts/Risks. The key catalyst is an August 11, 2021 PDUFA date for treosulfan. Investors should consider this a binary risk, although the company can return to profits without the compound.
Changer
Revenue ($ millions)
Yr Dec —2021— —2022E— —2023E—
Curr Curr
1Q 20.0A 17.0E -
2Q 17.8A 20.2E -
3Q 24.3A 23.5E -
4Q 17.6A 23.2E -
YEAR 79.7A 83.8E 109.6E
Quarterlies are estimates as #'s recently restated from C$'s to $'s
EBITDA
Yr Dec —2021— —2022E— —2023E—
Curr Curr
1Q 3.6A (5.8)E -
2Q 2.3A (4.5)E -
3Q 3.9A (2.6)E -
4Q (1.6)A (3.0)E -
YEAR 8.2A (16.0)E 6.1E
EBITDA is adjusted to exclude non-recurring events and share-based comp
EPS $
Yr Dec —2021— —2022E— —2023E—
Curr Curr
1Q (0.24)A (0.54)E -
2Q (0.11)A (0.47)E -
3Q (0.88)A (0.37)E -
4Q (0.69)A (0.38)E -
YEAR (1.86)A (1.75)E (0.45)E
P/E NM NM NM
0.12 MEDXF One-Year Price and Volume History 9.00
0.1 8.00
0.08 0.06 0.04 0.02
7.00 6.00 5.00 4.00 3.00
0.0 2.00 Vol (m) Price
Important Disclosures & Regulation AC Certification