Medexus Pharmaceuticals ((TSE:MDP)) has held its Q1 earnings call. Read on for the main highlights of the call.
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The recent earnings call for Medexus Pharmaceuticals was characterized by cautious optimism. The company highlighted several strategic achievements, including the successful launch of GRAFAPEX and improved gross margins. However, these positives were tempered by challenges such as declining revenues and adjusted EBITDA, increased expenses, and concerns about tariffs affecting costs. The overall sentiment was one of cautious optimism, with a focus on future growth driven by GRAFAPEX.
Successful Launch of GRAFAPEX
GRAFAPEX has made a strong debut, generating $3 million in product-level net revenue in fiscal Q1 ’26. The drug has seen early adoption by major commercial payers and healthcare institutions, with 36 out of 180 transplant centers, representing 24% of total allo-HSCT procedures in the U.S., having already ordered the product.
Positive NTAP Reimbursement for GRAFAPEX
Medexus Pharmaceuticals secured NTAP reimbursement approval for GRAFAPEX from Medicare, which will provide up to $21,411 of additional reimbursement per eligible patient starting October 1, 2025. This approval is expected to enhance the drug’s market penetration and financial performance.
Trecondyv Growth in Canada
Trecondyv has experienced significant growth in Canada, with unit demand increasing by 38% over the past 12 months. The drug is now covered by reimbursement agreements in British Columbia, Manitoba, Ontario, and Quebec, further solidifying its market presence.
Gross Margin Improvement
The company reported an improvement in gross margins, which rose to 56.0% in fiscal Q1 ’26 from 54.4% in the same period last year. This increase reflects Medexus’s efforts to optimize its cost structure and enhance profitability.
Debt Reduction
Medexus has made progress in reducing its debt, with net debt decreasing to $12.6 million as of June 30, 2025, down from $13.2 million at the end of March 2025. This reduction is part of the company’s broader strategy to strengthen its financial position.
Decrease in Total Net Revenue
Despite the successes, Medexus faced a decrease in total net revenue, which fell to $24.6 million in fiscal Q1 ’26 from $27.3 million in the same period last year. This decline highlights the challenges the company faces in maintaining its revenue streams.
Adjusted EBITDA Decline
Adjusted EBITDA also saw a decline, dropping to $3.4 million in fiscal Q1 ’26 from $6.1 million in the same period last year. This decrease is attributed to increased expenses and other financial pressures.
Rupall Revenue Erosion
Rupall revenues have been adversely affected by the loss of exclusivity in January 2025, with unit demand decreasing by 29% over the six-month period ending June 30, 2025. This erosion underscores the competitive challenges in the pharmaceutical market.
Increased SG&A Expenses
Selling, general, and administrative expenses rose to $12.2 million in Q1 ’26 from $10.3 million in the same period last year, reflecting increased operational costs and investments in strategic initiatives.
Tariff Concerns
Medexus is facing potential challenges from an anticipated 15% tariff on branded pharmaceutical products imported from the EU, including GRAFAPEX and Rasuvo, into the United States. This tariff could impact the company’s cost structure and pricing strategies.
Forward-Looking Guidance
Looking ahead, Medexus Pharmaceuticals remains optimistic about its growth prospects. The company expects GRAFAPEX to continue contributing significantly to revenues, with projections of $3 million to $3.5 million in fiscal Q2 ’26. Despite a decrease in net income to $0.5 million from $2 million, Medexus anticipates positive cash flow impacts by fiscal Q3 ’26. The company is also exploring strategic opportunities, including potential new products and debt refinancing, while navigating the challenges posed by the EU tariff.
In conclusion, Medexus Pharmaceuticals’ earnings call reflected a balance of achievements and challenges. The successful launch of GRAFAPEX and strategic advancements were tempered by revenue declines and financial pressures. However, the company’s focus on future growth and strategic opportunities suggests a cautiously optimistic outlook.