Mr. Ken d'Entremont reports

MEDEXUS GENERATES RECORD REVENUE OF US$113.1 MILLION IN FISCAL YEAR 2024

Medexus Pharmaceuticals Inc. has released its operating and financial results, and has provided a business update for the company's fourth fiscal quarter and fiscal year ended March 31, 2024. All dollar amounts in this press release are in U.S. dollars unless specified otherwise.

Financial highlights:

• Record revenue of $113.1-million for fiscal year 2024, an increase of $5.0-million, or 4.6 per cent, compared with $108.1-million for fiscal year 2023; the $5.0-million year-over-year revenue increase was primarily attributable to the recognition of 100 per cent of Gleolan net sales in total revenue during the entire fiscal year 2024 and continuing strong Rupall demand growth; the total revenue increase was partially offset by declines in sales of Ixinity over fiscal year 2024 and the accumulating effect of continued effective unit-level price reductions for Rasuvo;
• Revenue of $26.0-million in fiscal fourth quarter 2024, a decrease of $2.6-million, or 9.1 per cent, compared with $28.6-million in fiscal Q4 2023; this decrease is primarily attributable to trends affecting Ixinity and Rasuvo; specifically, Ixinity revenue in the second half of fiscal year 2024 was affected by lower-than-expected purchases by pharmacy and wholesale customers relative to a decrease in patient unit demand, which Medexus believes is a result of those customers working through inventory on hand, and the accumulating effect of continued effective unit-level price reductions for Rasuvo;
• Record adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of $19.5-million for fiscal year 2024, an increase of $3.4-million, or 20.9 per cent, compared with $16.1-million for fiscal year 2023; the $3.4-million year-over-year adjusted EBITDA increase was primarily attributable to the changes in revenue mentioned above, together with reductions in operating expenses over fiscal year 2024;
• Adjusted EBITDA of $4.4-million in fiscal Q4 2024, a decrease of $400,000, or 8.8 per cent, compared with $4.8-million in fiscal Q4 2023; this decrease is primarily attributable to the changes in revenue mentioned above, together with reductions in operating expenses over fiscal year 2024;
• Available liquidity of $5.3-million (March 31, 2024), consisting of cash and cash equivalents, compared with $13.1-million (March 31, 2023); the primary factor in this net decrease in cash was Medexus's use of cash to make the final maturity date payment in respect of the company's now-repaid convertible debentures in October, 2023, partially offset by, among other things, cash provided by operating activities of $18.7-million for fiscal year 2024;
• Operating income of $10.8-million for fiscal year 2024 and $800,000 for fiscal Q4 2024, an increase of $3.2-million and decrease of $1.9-million, or 42.1 per cent and (69.6 per cent), compared with $7.6-million for fiscal year 2023 and $2.7-million for fiscal Q4 2023;
• Net loss of $200,000 for fiscal year 2024 and net income of $800,000 for fiscal Q4 2024, a decrease of $1.4-million and $6.1-million compared with net income of $1.2-million for fiscal year 2023 and $6.9-million for fiscal Q4 2023;
• Adjusted net loss of $300,000 for fiscal year 2024 and adjusted net income of $800,000 for fiscal Q4 2024, an improvement of $1.0-million and a decrease of $5.3-million compared with adjusted net loss of $1.3-million for fiscal year 2023 and adjusted net income of $6.0-million for fiscal Q4 2023; adjusted net income (loss) is adjusted for the non-cash unrealized gain of $100,000 and nil for fiscal year 2024 and fiscal Q4 2024 and $2.5-million and $800,000 for fiscal year 2023 and Q4 fiscal 2023.

Ken d'Entremont, chief executive officer of Medexus, commented: "We are thrilled with Medexus's performance over fiscal year 2024, with full-year revenue, operating income and adjusted EBITDA each achieving company records. We responded swiftly to the trends affecting our business, particularly Ixinity and Rasuvo, and we are pleased with initial progress of our ongoing expense management initiative, which is reflected in our financial results for fiscal Q4 2024. This establishes a solid foundation for us to manage the future needs of the business, including any commercial launch of treosulfan in the United States."

Mr. d'Entremont continued: "In addition, we are very pleased that our partner, medac, has done a thorough job collecting information, and the [Food and Drug Administration] has accepted for review the April, 2024, resubmission of the new drug application, or NDA, for treosulfan. If approved, extensive research indicates that treosulfan, in combination with fludarabine as a preparative regimen for allogeneic hematopoietic stem cell transplantation, has the potential to become the standard of care in North America. Given our launch of treosulfan in Canada under the brand name Trecondyv in September, 2021, combined with the encouraging results we saw from the Princess Margaret Hospital study and the pivotal phase 3 study, we believe that an FDA approval of treosulfan for commercialization in the U.S. would be transformative for Medexus."

Marcel Konrad, chief financial officer of Medexus, further noted: "We fully repaid our convertible debentures in cash in October, 2023. This has simplified our balance sheet, and leaves our BMO credit facilities, which continue to benefit from an attractive interest rate, as our only remaining debt. As of March 31, 2024, we had a combined $51.7-million outstanding under those facilities, which we will continue to pay down over the term. Together with strong cash provided by operating activities in both fiscal year 2024 and fiscal Q4 2024, we believe we are on solid footing to continue maintaining and growing our business over the coming quarters."

Operational highlights:

• Ixinity (U.S.): Unit demand in the United States decreased by 6 per cent over the trailing 12-month period ended March 31, 2024 (source: customer-reported dispensing data). Demand continues to reflect the effects of lower observed average quantities of Ixinity consumed by newer patients and a greater-than-expected impact of other developments in the broader hemophilia B treatment solution market specifically relating to greater availability and use of extended half-life products that compete with Ixinity. Medexus now believes that these emergent trends are likely to persist. Medexus expects that this challenging demand environment, together with the anticipated impact of additional statutory discounts and rebates under the Inflation Reduction Act of 2022, will have a moderately adverse effect on product-level revenue going forward. Medexus will continue seeking to maintain existing demand, including by taking advantage of the product messaging opportunity presented by the now-approved pediatric indication, but has reduced investments in Ixinity's growth.
• Rasuvo (U.S.): Medexus maintained its market-leading position during the 12-month period ended March 31, 2024, with an estimated greater-than-80-per-cent unit share during the trailing 12-month period ended March 31, 2024, as unit demand for Rasuvo remained strong in the moderately growing U.S. branded methotrexate market with a highly efficient allocation of sales force resources (source: Symphony Sub National March 31, 2024, data and chargebacks, PAP). Unit demand for Rasuvo has moderately benefited from its comparatively steady supply relative to continuing shortages of competing product inventory throughout fiscal year 2024, which shortages Medexus does not expect to continue indefinitely. However, competition in the U.S. branded methotrexate market continues to adversely affect Rasuvo product-level revenue. Medexus has also observed an increasing share of product-level revenue attributable to government-sponsored programs, which benefit from statutory discounts and rebates. This shift in the proportion of sales benefiting from such discounts and rebates, despite contributing to the product's strong market position, has adversely affected total product-level revenue. Medexus also expects that the anticipated impact of additional statutory discounts and rebates under the Inflation Reduction Act of 2022 will have an incrementally adverse effect on product-level revenue going forward. Medexus intends to continue to evaluate its unit-level pricing strategies, intended to defend its strong market position, in light of these evolving market dynamics.
• Rupall (Canada): Unit demand in Canada remained strong during the 12-month period ended March 31, 2024, which is reflected in the unit demand growth of 21 per cent over the trailing 12-month period ended March 31, 2024 (source: IQVIA CDH units -- drugstore and hospital purchases, MAT March, 2024). This strong performance reflects successful execution of the company's sales and marketing initiatives to sustain the product's strong performance over the seven years since its January, 2017, commercial launch. Rupall's market exclusivity, granted by Health Canada, will expire at the end of January, 2025, and Medexus expects that Rupall will, following the end of that exclusivity period, face generic competition in Canada, including because Health Canada has accepted two generic submissions for rupatadine fumarate (in September, 2022, and April, 2024), which will likely result in effective unit-level price reductions.
• Gleolan (U.S.): Medexus continued to execute its commercial plan, which has continued to evolve since the company completed the transition to full commercial responsibility for Gleolan in August, 2022. Medexus expects to continue seeking to maximize product-level revenue, particularly in light of the minimum annual royalty amounts set out in the Gleolan licence agreement for fiscal year 2025 and beyond. Although Gleolan performance has remained lower than expected, unit demand has been growing moderately over the course of fiscal year 2024, as new customers adopt the product. Medexus intends to continue putting appropriate focus on Gleolan in the context of the company's U.S. product portfolio.
• Metoject (Canada): Unit demand increased by 13 per cent in the trailing 12-month period ended March 31, 2024, in spite of direct generic competition (source: IQVIA -- TSA database). Product-level performance continues to experience moderate disruption from the launch of a generic product in the Canadian methotrexate market in calendar year 2020, which is expected to continue following the outcome of the Metoject litigation and the launch of a second generic version of Metoject in March, 2024. Unit demand for Metoject has moderately benefited from its comparatively steady supply relative to continuing shortages of competing product inventory throughout fiscal year 2024, which shortages Medexus does not expect to continue indefinitely. In March, 2024, following a January, 2023, trial in Medexus's defence of the Canadian patent for Metoject, Canada's Federal Court issued a judgment declining to uphold the Canadian patent for Metoject. Medexus and medac, licensor of Medexus's commercialization rights to Metoject, initiated the Metoject litigation in August, 2020, in response to the at-risk launch of a generic version of Metoject. Medexus expects this outcome to have a limited impact on the company and the product, in part because Medexus has implemented and expects to continue implementing unit-level pricing strategies to defend its strong market position.

Product pipeline highlights:

• Treosulfan (U.S.): In June, 2024, Medexus was informed by medac, licensor of Medexus's commercialization rights to treosulfan, that the FDA had accepted for review medac's April, 2024, resubmission of the new drug application for treosulfan. Medexus expects that the FDA will complete its review of the treosulfan NDA and issue a decision by Oct. 30, 2024. The treosulfan NDA seeks approval of treosulfan in combination with fludarabine as a preparative regimen for allogeneic hematopoietic stem cell transplantation in adult and pediatric patients. medac's resubmission provided additional information that had previously been requested by the FDA relating to the pivotal phase 3 clinical trial of treosulfan conducted by medac. medac is the party responsible for regulatory matters under Medexus's February, 2021, exclusive licence agreement relating to commercialization of treosulfan in the United States. The FDA's commitment to review the treosulfan NDA brings Medexus a step closer to making the product a viable treatment option in the United States, and is consistent with Medexus's plan to target a commercial launch in the first half of calendar year 2025. Given this positive development and the revenue opportunity this product represents, Medexus therefore intends to begin making judicious investments in personnel to prepare for a potential positive FDA decision in October, 2024. However, Medexus would not expect to begin recognizing significant U.S. revenue from treosulfan until early financial year 2026 (or second calendar quarter 2025) at the earliest. Under the terms of a September, 2023, amendment to the U.S. treosulfan agreement, Medexus and medac now have a specified negotiation period, which is currently under way, to agree to a further amendment with respect to any adjustments to the value of unpaid regulatory and sales-based milestone payments that the parties may agree are appropriate in the prevailing circumstances. Medexus will have no obligation to make any milestone payments before the effective date of any such further amendment to the U.S. treosulfan agreement.
• Topical terbinafine (Canada): In December, 2023, Health Canada accepted for review Medexus's new drug submission, or NDS, for terbinafine hydrochloride nail lacquer to treat fungal nail infections. The topical terbinafine NDS seeks Health Canada approval for a distinctive once-a week treatment regimen. Health Canada's commitment to review the topical terbinafine NDS brings Medexus a step closer to making the product a viable treatment option in Canada and is consistent with Medexus's plan to target a commercial launch in the first half of calendar year 2025. Topical terbinafine has been widely used in other markets to treat fungal nail infections. If and when approved, the product will enter the Canadian topical fungicide market that is estimated to be $88-million (Canadian) on an annual basis (source: IQVIA Canadian drugstore and hospital purchases, September, 2023, MAT). Management views this product as a strategic fit with Rupall and expects that it will both contribute to the company's Canadian revenues and engage the existing commercial infrastructure previously put in place to support Rupall. Management views the timing of Health Canada's acceptance of the NDS for review as consistent with Medexus's plans to target a commercial launch in the first half of calendar year 2025, subject to Health Canada approval.

Other highlights

With the successful completion of the company's fiscal year 2024, Marcel Konrad, who has served as Medexus's chief financial officer since June, 2021, has chosen to depart Medexus to pursue opportunities outside of the company. Medexus appointed Brendon Buschman, who joined Medexus in June, 2019, and has worked closely with Mr. Konrad as vice-president, finance, and corporate controller through Mr. Konrad's entire tenure, to succeed Mr. Konrad as CFO. Mr. Buschman brings to the CFO role 15 years of experience in accounting, finance and business operations, holds CPA and CA designations, and has extensive experience building and leading finance and accounting teams through periods of rapid growth. Mr. Buschman's appointment as chief financial officer and the conclusion of Mr. Konrad's tenure with Medexus will both take effect as of June 28, 2024.

"I'd like to thank Marcel for his years of service on the Medexus senior management team," said Mr. d'Entremont. "Since Marcel joined as CFO in June, 2021, Medexus has completed numerous corporate finance deals, diversified and grown its revenues, and improved its overall financial profile. Most recently, in setting up our credit facilities with BMO and fully repaying our convertible debentures in cash, we have put in place a solid foundation to support continued growth over the coming years. Marcel's leadership in our finance and accounting function has been an important part of the company's recent successes. I wish him all the best in his future endeavours."

"Medexus has grown and evolved enormously over the past three years," said Mr. Konrad. "I have been fortunate to be a part of Medexus's journey to become a leading North America-based specialty pharma company and contribute to building a solid foundation for the future. I look forward to following Brendon's and Medexus's future successes with great interest."

In addition, effective June 24, 2024, Medexus appointed Richard Labelle as chief operating officer, a newly created senior management position. In this role, Mr. Labelle will oversee all day-to-day business operations across Canada and the United States and ensure they align with the company's strategic goals. His mandate includes commercial, medical, regulatory, supply and other key operational functions. Mr. Labelle most recently served as general manager, Canadian operations. His expanded role builds on his long tenure with the company and his extensive experience in the pharmaceutical sector, including his demonstrated success in leading Medexus's Canadian operations since May, 2022. Mr. Labelle's appointment was part of a reorganization of the Medexus management team intended to better position the company for future opportunities, including leveraging the company's successful experience with Trecondyv (treosulfan) in the Canadian market if and when treosulfan is approved in the United States.

Also effective June 24, Mike Adelman departed the company. Mr. Adelman most recently served as general manager, U.S. operations.

"My congratulations to Richard on this expanded role," said Mr. d'Entremont. "I'd also like to thank Mike for his extensive service to Medexus. Mike has been an important part of the team since joining Medexus as part of our Ixinity acquisition in February, 2020. I and the rest of the Medexus team wish him all the best."

"I share Ken's sentiments in thanking Marcel and Mike, and I look forward to continuing to work with Brendon and Richard in their new capacities," concluded Mike Mueller, chair of the Medexus board of directors. "Both have great experience, both in their respective professional spheres and as long-standing members of the Medexus team. I am confident that there will be a seamless transition of the CFO role and that this strategic reorganization will enhance our ability to embark on the next chapter in the Medexus growth story."

Additional information

Medexus's financial statements and management's discussion and analysis for the fiscal year ended March 31, 2024, are available on Medexus's corporate website and in the company's corporate filings on SEDAR+.

Conference call details

Medexus will host a conference call at 8 a.m. Eastern Time on Wednesday, June 26, 2024, to discuss Medexus's results for its fourth fiscal quarter and fiscal year ended March 31, 2024.

To participate in the call, please dial the following numbers.

For Canadian and U.S. callers:  888-506-0062 (toll-free)

For international callers:  1-973-528-0011

Access code:  160589

A live webcast of the call will be available in the investors section of Medexus's corporate website.

A replay of the call will be available approximately one hour following the end of the call through Wednesday, July 3, 2024. To listen to the replay, please dial the following numbers.

For Canadian and U.S. callers:  877-481-4010

For international callers:  1-919-882-2331

Conference ID:  50807

A replay of the webcast will be available in the investors section of Medexus's corporate website until Thursday, June 26, 2025.

About Medexus Pharmaceuticals Inc.

Medexus is a leading specialty pharmaceutical company with a strong North American commercial platform and a growing portfolio of innovative and rare disease treatment solutions. Medexus's current focus is on the therapeutic areas of oncology, hematology, rheumatology, autoimmune diseases, allergy and dermatology.

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