Generates $2.2 million of Adjusted EBITDA
Medexus Pharmaceuticals Inc. (formerly Pediapharm Inc.)
(the “Company” or “Medexus”) (TSXV: MDP, OTCQB: PDDPF)
today provided a business update and announced its operating and
financial results for the fiscal third quarter ended December 31,
2018. All amounts are in Canadian dollars.
Third quarter fiscal 2019 financial
highlights:
- Revenue increased 512% to $14.4 million compared to $2.4
million for Q3 2018
- Gross profit increased 657% to $8.9 million compared to $1.2
million for Q3 2018
- Gross margin increased to 62.1% compared to 50.0% for the same
period last year
- Adjusted EBITDA increased to $2.2 million compared to (582,381)
for Q3 2018
- Finished quarter with cash and cash equivalents of $28.9
million as of December 31, 2018
- Working capital surplus as of December 31, 2018 increased to
$34.6 million compared to $4.8 million as of March 31, 2018
Ken d’Entremont, Chief Executive Officer of
Medexus, commented, “The third quarter marked a period of
significant transformation for our Company and we are now well
positioned as a leading North American specialty pharmaceutical
company with a diversified product portfolio. That
transformation resulted in a six-fold increase in revenue,
reflecting both the merger of Pediapharm Inc. with Medexus Inc. and
Medac Pharma, Inc., as well as strong organic growth across much of
the product portfolio, along with an equally impressive five-fold
improvement in Adjusted EBITDA to $2.2 million. The integration is
progressing as planned, and we are just now beginning to see the
synergies of the combination, which should contribute to improved
profitability going forward. We also have $28.9 million of cash and
cash equivalents, a working capital surplus of approximately $34.6
million and shareholders’ equity of $57.2 million.”
“In the rheumatoid arthritis targeted segment of
the business, both the Canadian and US operations experienced
strong organic growth. With public reimbursement now in place in
Canada, Metoject, a pre-filled syringe of methotrexate that is
indicated for the treatment of rheumatoid arthritis and psoriasis,
enjoyed a 274% increase in sales compared to the same period last
year. Year-over-year sales growth for the lead US product,
Rasuvo, a once-weekly, subcutaneous, single-dose auto-injector of
methotrexate indicated for the treatment of rheumatoid arthritis,
psoriasis and Juvenile Idiopathic Arthritis (JIA), was also strong
coming in at 14%. Rasuvo gains have come as a result of excellent
payor, prescriber and patient acceptance, and our growth has
resulted in us emerging as a clear leader in the methotrexate
auto-injector market. We expect this growth to continue as
prescribers adopt the most effective and convenient form of
methotrexate for their patients. Toward this end, we are
planning to launch additional methotrexate products for the
treatment of rheumatoid arthritis and other auto-immune diseases
built around unique delivery methods. The registration
process for one of these products is taking longer than
anticipated. In the meantime, we are exploring other next
generation products and have initiated work on a product intended
to better address the needs of patients currently treated with oral
methotrexate.”
“Within the Company’s pediatric/allergy
business, recent product launches included Rupall™, Otixal™ and
Cuvposa™. Each of these products generated solid year-over-year
prescription growth with Rupall’s 89.5% increase being driven by
physicians switching patients from either the generic prescription
antihistamines or over-the-counter products. Otixal, a
prescription product for the treatment of acute otitis media with
tympanostomy tubes in pediatric patients, was launched in May 2017
and experienced 187% year-over-year growth this quarter.
Finally, the April 2018 launch of Cuvposa™, which is indicated for
sialorrhea in patients aged 3-18 years with neurologic conditions
such as cerebral palsy, has enjoyed an excellent reception from the
medical and patient communities, as it addresses an unmet medical
need in these patients.”
“In terms of additional new product offerings,
we launched two important initiatives in the quarter. The first of
these was with respect to our strategy to address Canada’s chronic
drug shortage of Triamcinolone Hexacetinide (TH), a leading
treatment for JIA. To address this need, Medexus in-licensed, got
approval for and launched our own TH product in October of
2018. We believe we are now positioned to ensure that
children with JIA and the clinicians who care for them have a
reliable source for a product which is a key component in the
management of their disease. The second initiative was with respect
to the launch of Gliolan®, an orally administered drug used for the
visualization of certain brain tumors. During the quarter, Health
Canada, via the Special Access Program, granted the Company
authorization to distribute this product in Canada.”
“In the very short time since the merger of the
businesses, our team has made significant progress refining and
accelerating our sales strategy. Looking ahead, we are
focused on strong organic growth, coupled with licensing and/or
acquiring additional products where we can leverage our North
American sales force and infrastructure. This strategy includes an
evaluation of the medac GmbH portfolio, where we enjoy a first
right of refusal on current products in their portfolio. Several of
these products represent potentially significant commercial
opportunities in North America and we are assessing licensing
certain of these drugs. Overall, we believe we have built a highly
scalable business platform, which will afford us significant
incremental earnings potential as we continue to grow revenue,
leverage our North American sales force across products, realize
synergies of the combined entities, and maintain strict financial
discipline. We appreciate the commitment and passion of all
our employees, as well as the strong support of our shareholders
during this exciting period. We look forward to providing
further updates on our progress in the weeks and months ahead.”
Financial Results
For the three months ended December 31, 2018,
total revenue reached $14,421,084 compared to revenue of $2,356,782
for the three months ended December 31, 2017. Gross profit for the
three months ended December 31, 2018 increased 657% to $8.9
million, or 61.9% of sales, compared to $1.2 million, or 50.0% of
sales, for the same period last year. Operating loss for the
three months ended December 31, 2018 was $77,871 compared to
$716,585 for the three months ended December 31, 2017. There was an
additional $927,889 of expenses related to the acquisitions of
Medac Pharma, Inc. and Medexus Inc. ("Acquisitions") and the
capital raise in October 2018 ("Offering"). Furthermore, the
additional amortization related to the two aforementioned
acquisitions had a negative impact of $986,811. Excluding
transaction-related expenses and all amortization included in cost
of goods sold, the result would have been an operating income of
approximately $1.9 million. Adjusted EBITDA, as defined below, for
the three-month period ended December 31, 2018 was $2,191,272
compared to a loss of ($582,381) for the three-month period ended
December 31, 2017. The improvement is mainly due to the
Acquisitions, as well as increase in gross profit driven by
increase in revenue from Pediapharm pre-transaction.
For the nine months ended December 31, 2018,
total revenue reached $21,119,426 compared with revenue of
$7,905,728 in the nine months ended December 31, 2017, representing
an increase of $13,213,698. Gross profit for the nine months ended
December 31, 2018 was $12.5 million, or 59.3% of sales, compared to
$4.2 million, or 52.9% of sales, for the same period last
year. Operating loss for the nine months ended December 31,
2018 was $3,814,138 compared to $1,606,522 for the nine months
ended December 31, 2017. There was $4,548,795 of expenses related
to the Acquisitions and Offering. Furthermore, the additional
amortization related to the Acquisitions had a negative impact of
$986,811. Excluding transaction-related expenses and all
amortization included in cost of goods sold, the result would have
been an operating income of approximately $1.9 million. Adjusted
EBITDA for the nine-month period ended December 31, 2018 was
$2,370,859 compared to ($1,191,899) for the nine-month period ended
December 31, 2017. The improvement is mainly due to the
Acquisitions, as well as increase in gross profit driven by
increase in revenue from Pediapharm pre-transaction.
EBITDA and Adjusted EBITDA are non-IFRS
financial measures. The term EBITDA (earnings before interest,
taxes, depreciation and amortization,) does not have any
standardized meaning under IFRS and therefore may not be comparable
to similar measures presented by other companies. Rather, these
measures are 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. See "Non-IFRS
Measures" below.
Conference Call Details
Medexus will host a conference call today,
Monday, February 25, 2019 at 4:30 PM Eastern Time to discuss the
Company’s financial results for the fiscal third quarter ended
December 31, 2018, as well as the Company’s corporate progress and
other developments.
The conference call will be available via
telephone by dialing toll free 866-682-6100 for Canadian and U.S.
callers or +1 862-298-0702 for international callers, or on the
Company’s Investor Events section of the website:
https://www.medexusinc.com/events/.
A webcast replay will be available on the
Company’s Investor Events section of the website
(https://www.medexusinc.com/events/) through May 25, 2019. A
telephone replay of the call will be available approximately one
hour following the call, through March 4, 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:
43906.
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
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@medexusinc.com
Roland Boivin, Chief Financial OfficerMedexus
Pharmaceuticals Inc.Tel.: 514-762-2626 ext. 202E-mail:
roland.boivin@medexusinc.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@medexusinc.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.
READER ADVISORIES
Forward Looking Statements This press release
contains “forward-looking information” within the meaning of
applicable securities legislation. Forward-looking information
includes, but is not limited to, statements with respect to future
business operation and results, including with respect to future
profitability and financial results. All statements, other than of
historical fact, that address activities, events or developments
that the Company believes, expects or anticipates will or may occur
in the future are forward-looking statements. Forward-looking
statements are generally identifiable by use of the words “may”,
“will”, “should”, “continue”, “expect”, “anticipate”, “estimate”,
“believe”, “intend”, “plan” or “project” or the negative of these
words or other variations on these words or comparable terminology.
Forward-looking statements are subject to a number of risks and
uncertainties, many of which are beyond the Company's ability to
control or predict, that may cause the actual results of the
Company to differ materially from those discussed in the
forward-looking statements. Factors that could cause actual results
or events to differ materially from current expectations include,
among other things, without limitation, the risk that the
operations of the Company, Medac Pharma, Inc. and Medexus Inc. will
not be integrated successfully, the Company's inability to
commercialize products in the medac GmbH portfolio or its inability
to realize upon potential opportunities presented thereby, as well
as other risks applicable to the Company disclosed in the Company's
public disclosure record on file with the relevant securities
regulatory authorities. Although Company believes that the
expectations and assumptions on which such forward-looking
information is based are reasonable, undue reliance should not be
placed on the forward-looking information because Company can give
no assurance that they will prove to be correct. Since
forward-looking information addresses future events and conditions,
by its very nature they involve inherent risks and uncertainties.
The Company’s actual results, performance or achievement could
differ materially from those expressed in, or implied by, the
forward-looking information and, accordingly, no assurance can be
given that any of the events anticipated by the forward-looking
information will transpire or occur, or if any of them do so, what
benefits that Company will derive therefrom. Management has
included the above summary of assumptions and risks related to
forward-looking information provided in this press release in order
to provide securityholders with a more complete perspective on the
Company's future operations and such information may not be
appropriate for other purposes. Readers should not place undue
reliance on forward-looking statements. Readers are cautioned that
the foregoing lists of factors are not exhaustive. Additional
information on these and other factors that could affect the
Company's operations or financial results are included in reports
on file with applicable securities regulatory authorities and may
be accessed through the SEDAR website (www.sedar.com). The
forward-looking statements included in this news release are made
as of the date of this news release and the Company does not
undertake an obligation to publicly update such forward-looking
statements to reflect new information, subsequent events or
otherwise unless required by applicable securities legislation.
Non-IFRS MeasuresThis press releases uses the
term "Adjusted EBITDA" which is a non-IFRS financial measures,
which does not have any standardized meaning under IFRS and
therefore may not be comparable to similar measures presented by
other companies. Rather, these measures are 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 Acquisition 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 management's discussion and analysis
for the period ended December 31, 2018, which is available through
the SEDAR website (www.sedar.com).
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