Mackie Research downgraded Medexus Pharmaceuticals (TSXV:MDP; OTCQB:PDDPF) to “speculative buy” from “buy” and lowered its price target to $8.70 (Canadian) from $10.50 after the company acquired Ixinity, a recombinant Factor IX product for Hemophilia B, from Aptevo Therapeutics (NASDAQ:APVO). Shares of Medexus closed at $4 on Feb. 28.
Medexus paid $30-million (U.S.) upfront for Ixinity, a further $11-million in milestones and a 2% royalty that would increase to 5% after a pediatric trial with the drug is completed. Medexus also funded the acquisition with a new $20-million term loan.
Analyst Andre Uddin writes that his rating change reflects Medexus’ leveraged balance sheet. He is forecasting revenue of $121.5-million (Canadian) and adjusted EBITDA of $13.7-million for the fiscal year ending March 31, 2021.
“Ixinity would allow Medexus to build a presence in hematology, an orphan disease, which should facilitate future business development,” Mr. Uddin said. “Overall, we view [the] transaction as accretive for fiscal 2021 and beyond.”
In addition, he said the pediatric and international markets represent two major opportunities for Medexus. The pediatric use of Ixinity could potentially be approved in 2023 and the company could forge EU and rest-of-word partnerships for Ixinity going forward.
