Medexus Pharmaceuticals Inc.

Greetings. Welcome to the Medexus Pharmaceuticals fiscal fourth quarter in year end 2026 conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now like to turn the conference over to your host, Victoria Rutherford, Investor Relations of Medexus. You may begin.

Thank you and good morning everyone. Welcome to the Medexus Pharmaceuticals fiscal fourth quarter and year-end 2026 earnings call. On the call this morning are Ken d'Entremont, Chief Executive Officer, and Brendon Buschman, Chief Financial Officer. If you have any questions after the conference call or would like further information about the company, please contact Adelaide Capital at 480-625- I would like to remind everyone that this discussion will include forward-looking information as defined in Canadian securities laws that is based on certain assumptions that Medexis believes to be reasonable in the circumstances but is subject to risks and uncertainties. Actual results may differ materially from historical results or results anticipated by the forward-looking information. In addition, this discussion will also include non-GAAP measures such as adjusted EBITDA, adjusted EBITDA margin and adjusted gross margin and net debt which do not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other companies. For more information about forward-looking information and non-GAAP measures including reconciliations, please refer to the company's MD&A which along with the financial statements is available on the company website at www.medexus.com and on Cedar Plus at www.cedarplus.ca. As a reminder, Medexus reports on a March 31st fiscal year basis. Medexus reports financial results in U.S. dollars and all references are to U.S. dollars unless otherwise specified. I would now like to turn the call over to Ken d'Entremont.

Thank you, Victoria, and thanks to everyone for joining us on the call today. We're proud to report that product-level revenue performance for Graphapex net of working capital changes was accretive to quarterly operating cash flows in fiscal Q4-26, representing a significant milestone in the commercialization of the product. We're encouraged by Graphopex's strong progress to date with product level performance continuing to demonstrate strong momentum and continue to expect annual product level net revenue to exceed $100 million within five years of launch. For the 12-month period ending March 31, 2026, we recognized product level net revenue from Graphopex of $11.6 million. Exceeding the $11.2 million, we were invested in the Graphopex launch over the same period Building on this momentum, we expect Graphopex to generate product-level net revenue between $30 and $32 million for fiscal year 2027 and to drive our growth in operating cash flows moving forward. As of today, 74 of all 180 U.S. transplant centers have already ordered Graphopex for procedures in their institutions, and 54 of those institutions have reordered. Overall, our fiscal Q426 results remain strong, delivering positive operating income, adjusted EBITDA, and operating cash flow. These results reflect the portfolio evolution we have discussed in past quarters as we build on the continued growth momentum from Graphapex. We expect future periods to provide a clearer view of highlighting the growth of Graphapex relative to the underlying strength and resilience of the rest of our portfolio of products outside the Aloe HSCT space. The continued momentum of Grefopex and our ongoing business development initiatives focused on Aloe HSCT will build on that foundation and position NetNexus for sustainable long-term growth. Our fiscal Q4 2026 net revenue was $24.7 million, a decrease compared to $24.8 million for the same period last year. Our fiscal Q4 26 adjusted EBITDA was $4.3 million, an increase compared to $2.3 million for the same period last year. Our net loss of $2.7 million for fiscal Q4-26 is a decrease from the net loss of $0.6 million for the same period last year, and positive operating income of $1.2 million is an increase of $2.4 million compared to the operating loss of $1.2 million for the same period last year. We're also proud of the financial results we are reporting for our fiscal year 2026. Our fiscal year 2026 net revenue was $99.3 million, which compares to $108.3 million for fiscal year 2025. The $9 million year-over-year decrease in net revenue primarily reflects the lower product level net revenue from Glioland in the United States following the March 2025 termination of our U.S. Glioland agreement. and from Rupal in Canada due to generic competition. The decrease was partially offset by contributions from Grapepex and the strength in Resubo. We reported adjusted EBITDA of $16.5 million for fiscal year 2026, which compares to $20.2 million for fiscal year 2025. The $3.7 million decrease in adjusted EBITDA was primarily driven by the factors affecting net revenue that I just mentioned. We reported net loss of $2.4 million for fiscal 2026 compared to net income of $2.2 million for fiscal year 2025. Last, I want to touch base on a new business development opportunity we secured in the HSCT space. Earlier this month, we signed agreements for the exclusive Canadian rights to commercialize UM171 cell therapy. This is a proprietary advanced clinical stage investigational drug that recently received conditional marketing authorization in Europe from the European Commission as ZemCellPro. Given its current stage of development in Canada, we do not expect to begin commercialization of the product before calendar year 2028, with the exact timing to depend on a number of factors, including our ongoing evaluation of available regulatory pathways. The product candidate is an excellent strategic fit with Triosulfan, our existing hematology product, which we commercialize in Canada as Tricondyph. As you all know, our organization is already well acquainted with the Aloe HSCT field, and although the field continues to rapidly evolve, we see this product candidate as an important potential contribution to the Canadian market and to our medium-term product pipeline. We otherwise remain focused on delivering strong overall performance across our portfolio of products in both the United States and Canada. We have continued building our momentum with Graphitex United States and we look to strategically position the company to capitalize on future revenue opportunities in the ALO HSCT space going forward. I'd now like to turn the call over to Brendon who will discuss our financial results in more detail.

Thank you, Ken. As Ken mentioned, fiscal year 26 was an important transitional year from DEXIS. being the first fiscal year reflecting product level performance of Graphopex. Throughout the anticipated evolution of our established product portfolio, largely now reflected in our results, the company delivered positive operating income and continued to generate strong financial performance, with Graphopex contributing positively to operating cash flows in fiscal Q4 26 as anticipated. Net revenue for fiscal Q4 26 was $24.7 million, a decrease of $0.1 million compared to $24.8 million for the same period last year. Net revenue for the full year was $99.3 million, reflecting a $9 million decrease compared to $108.3 million in the prior year. These decreases were primarily due to reduced product level net revenue resulting from the return of Glioland in the United States to the licensor and the genericization of Rupal in Canada. In all, Medex has generated approximately $87.7 million of net revenue from our established portfolio and $11.6 million of net revenue from Graphifex in fiscal year 26. Gross profit was $13.3 million and $54.4 million for the three and 12-month periods ended March 31st to 26th compared to gross profit of $12.4 million and $56.6 million for the same periods in the previous year. Gross margin was 53.8% and 54.8% for the three and 12-month periods ending March 31st to 26th which is an improvement compared to 50.2% and 52.2% for the same periods in the previous year. The increase in gross margin was driven by the change we are seeing in the relative contribution of product level net revenue, in particular, an increasing level of net sales of Graphopex and the absence of sales of Gliolan in the US. Selling, general, and administrative expenses were $10.6 million and $45.9 million for the three and 12-month periods ended March 31st, 26, compared to $12.2 million and $43.2 million for the same periods in the previous year. Adjusted EBITDA for the three and 12-month periods ended March 31st, 26, was $4.3 million and $16.5 million compared to $2.3 million and $20.2 million for the same periods in the previous year. The $2 million increase in adjusted EBITDA for fiscal Q4 26 benefited from product level net revenue from Graphpex of $3.4 million, exceeding the $2.7 million of Graphpex personnel and infrastructure investments in the same period. Net loss for the three and 12 month periods ended March 31st, 26 was 2.7 million and 2.4 million compared to net loss of 0.6 million and net income of 2.2 million for the same periods last year. We continue to generate cash from our operating activities with operating cashflow of 3.8 million and 18.9 million for the three and 12-month periods ending March 31st, 26, compared to 2.3 million and 24 million for the three and 12-month periods in the prior year. Even while continuing to invest in the launch of Graphifex, we have generated an average of 4.2 million of cash from operating activities per quarter in the five quarters since launch. Cash on hand was 6.5 million at March 31st, 26, compared to $24 million at March 31, 2025. The notable factor in these changes was our payment in full of the $15 million regulatory milestone under our Graphapex agreement over the course of fiscal year 2026. We've meaningfully strengthened our balance sheet with our new credit agreement with National Bank of Canada, which includes significantly lower quarterly principal repayments. With net debt to adjusted EBITDA of 0.95 for the trailing four fiscal quarters ended March 31, 26, our financial strength has enabled us to repurchase over 1.2 million common shares to date under our NCIB. As of March 31, 26, we had a combined 22.4 million of debt outstanding under our two national bank credit facilities. consisting of $2.5 million drawn under our revolving credit facility and the remainder outstanding under our term loan facility. As we mentioned previously, our fiscal year 2026 results highlight the strength of our established portfolio and position Medexus for a more growth-oriented future through Graphapex and within Allo HSCT. As always, there can be variability in quarter-to-quarter results, but we look forward and are energized to continue to build the company and its portfolio in the coming quarters and beyond. Operator, we will now open the call to analyst questions.

Certainly. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions. Your first question for today is from Scott Henry with Alliance Global Partners.

Thank you and good morning. A lot of progress. Congratulations. It's really commendable. For starters, GRAPHIPEX, it looks like your guidance is 30 to 32 million for fiscal 2027, which is pretty tight range, but also a pretty good range. Can you talk a little bit about The cadence to reach those numbers and where the inflection point would come, because it's certainly very strong growth over Q4, fiscal Q4.

Yeah, I'll take that. Thanks, Scott. Great question. Yeah, obviously we're seeing very strong uptake in Graphapex. You know, the 50% growth sequentially quarter over quarter is very meaningful. We've disclosed in previous quarters there are a large number of hospitals who have the product under formulary review. So we expect that the increase in revenue for Graphopex will come from two sources. One, hospitals who have already ordered will increase the volume of their orders. and then two new hospitals coming on board. So obviously we expect to see quarter over quarter progression to get us to that 30 to 32 million for the full year.

And is there any seasonality we should factor into the year when we think about the quarters because all the signals would be that that Q4 would have to be a double digit million quarter to reach these numbers. Can you talk to the seasonality and how we should expect that progression? Obviously, the tilt is upward throughout the year, but is there any kind of bolus quarter that we should think about?

Yeah, again, a good question. And so the seasonality that we observed last year was that in the summer months, there are fewer procedures, particularly for nonmalignant diseases. and so we would expect that that's going to probably replay so you know July August ought to be a little bit slower you know we've seen you know good quarter this quarter it's kind of with it so and then you know as we go forward summer ought to be slower and then it tends to accelerate through the fall months you know again December with the holiday season There are probably fewer procedures. So it's more related to the numbers of procedures and the availability of transplanters than anything else. And so we do expect to see that play out. The magnitude of the changes, we don't really know. We're only into starting year two now. So we don't know the magnitude of the change, but we do expect to see some seasonality.

Okay. It's an impressive target. I'll say that. And then With regards to Canada, obviously the quarterly run rate is a lot lower than it used to be. Should we think of that as kind of flattish for now, or do you expect some rebound? I'm sure the dollar strength is not helping those numbers either. But how should we think about the Canadian revenues in fiscal 2027?

I'll turn that over to Brendon.

Yeah, I think for the Canadian revenues and really all of our, what we can kind of call our established portfolio, which is everything but Graphifex, that the The noise that would have come through the return of Gliolan to the license or in the US and the genericization of RuPaul have been mostly we've just seen that noise kind of erased. So I think if if you're just kind of taking that and kind of considering that to be durable again on both sides of the border, that would be the right way to look at it. Okay.

Final question, Resuvo and Xfinity are still meaningful franchises for you. How should we think about the revenue growth rates for those two franchises in the U.S. in fiscal 27? Should we, you know, modest growth, modest decline, just trying to get a sense of big picture directionally how we should think about those two franchises? Thank you.

I'll maybe quickly start on that one. Yeah, it would be the same answer. Think of it as durable. I wouldn't model in any sort of meaningful growth, nor would I model in any sort of meaningful erosion in both of those products. Okay, fair enough.

Great. Thank you for taking the questions.

Your next question for today is from Michael Freeman with Raymond James.

Hey, good morning, Ken, Brendon, Victoria. Congratulations on the quarter of the year. Graphopex is looking really good. So on Graphopex, I see that you've cited that 74 of 180 transplant institutions have ordered Graphopex as of, yeah, it looks like as of the date of the press release, so around first quarter end. I'm curious, well, one, if you could confirm that that's true, that is at first quarter, and second, I wonder if you have the information of how many of these institutions have graph effects on formulary today?

Hi, Michael, and great question. So the number of institutions ordering, that's as of the most recent information before the press release, so a few days ago. In terms of how many have them on formulary, most of them. You know, there's no standard answer here, but typically having on formulary creates access to the drug, but that's not always the case. There are some hospitals, many pediatric hospitals where it doesn't need to be on formulary. They still have full access to the drug. So we're only tracking the ones where We have been reporting on the ones where we have listings, but we don't need them all listed. There are some hospitals that have full access to the drug without having it on the formulary, and that's fine with us. The important thing is, can they use it without restrictions? And so we're reporting right now, I think, really good uptake in terms of formulary listings. It's very much on track for where we expect to be, and we'll continue to work on the rest of the hospitals, you know, through the rest of this year.

On commercial health plans covering Graf Apex, you in the MD&A cited some impressive total covered lives figures, also cited that at the end of March I noticed that this number has stepped down from the number cited in the third quarter, and I wonder what would explain the difference in those numbers?

Yeah, so It's an impressive number. I mean, there's always changing in the landscape on the commercial payer side, plans consolidating, etc. So I think the important number is how many lives covered. And that's a very impressive number. I forget it exactly, but it's over 200 million. So, you know, we've got most of the lives covered. and I would add that we've had no issues in terms of getting product for people commercially. And so that isn't a problem at all. And so, yeah, I think there's very broad access to the drug at the price that we've set. So on the reimbursement side, you know, we see it as quite positive.

All right. No issues with access. That's great. Now, I wonder if you could touch on your recent business development for UM171. I wonder if you could dive in a little further into the most likely regulatory pathways you see with Health Canada. And then I wonder how this... deal sort of reframes your business development focus. Do you see more opportunity to pick up assets in the LOHCSD space or do you expect to go broader in the future?

Yeah, again, great question because it speaks to the strategy behind the business. As In recent quarters, I think we've been describing a transition away from a diversified spec pharma company operating in three therapeutic areas to a rare disease orphan drug company operating in one therapeutic area, specifically HSCT and adjacent areas. And so that transition has largely happened. I think UM 171 is an example of that. We have developed a very strong presence and knowledge of HSCT transplant in adjacent areas. Yes, our business development effort is focused exclusively in HSCT and adjacent areas. That's where our strength is. That's where we have product portfolios. So UM171 is a perfect strategic fit aligned with Graphopex. If you think about it, Graphopex is the first step in a transplant where they condition the bone marrow and UM171 is a potential cell source. So where they replace you know what was there so it's a absolute perfect strategic fit and you know we're super eager to start to pursue that with respect to your question about the regulatory pathway we obviously are investigating that the way we see it is that there are two potential pathways one like Europe where you know there are patients who can't find donors where this could be a cell source and that would likely be a faster regulatory pathway because there's unmet medical need and the regulator we would hope would find an expedited path in order to serve that need. The second pathway is complete the clinical development through a phase three study that the partner would do and then register based on that clinical work. So those two pathways we think exist, but of course we have to sit down with the regulator and make sure that they see it the same way and take their advice and direction.

Gotcha. Thanks, Ken. And maybe one more for Brendon. I wonder if you could help us understand what we should expect for SG&A as revenue scales through this year.

uh yeah no good question so we've kind of guided to the three to four million uh that we expect to uh be incurring specific to graph effects uh i i am blanking on what it was this last quarter i think it was 2.7 and it was just in my uh what i what i said at the top of the call um so we we would see we do expect a little bit uh of an increase to sgna um over the course of 2027 if you kind of compare it to 2026. What I would also just say while we're kind of talking about OpEx or that part of the P&L, we also would expect an increase in R&D spending specific to IITs that are kind of happening in Graphopex, as well as we've augmented on the spend to continue to improve the Xenity process. So I think we'll see a modest increase in SG&A and then a little bit more of a meaningful increase in R&D in fiscal 27. Okay.

All right. Thank you very much for that. Congratulations again. I'll pass it on.

Your next question is from David Martin with Bloom Burton.

Yeah. Good morning. I've got a couple of questions first related to Michael's questions. You talked about potentially an expedited path or complete the clinical development, and I'm just wondering what the timeline for approval would be in both of those scenarios.

Thanks, David. I think that matches up with what we put in the press release, which was 2028 versus 2031, I think was the dates that we laid out.

Okay, second question. You talk about HSCT in adjacent areas. I'm wondering what the adjacent areas are.

Yeah, I think bringing patients into a transplant, obviously there's a lot of different disease states where they have to do the chemotherapy in order to prepare them for a potential transplant. So those areas we would be interested in. So AML, MDS, there's other Bloodborne cancers that we would be interested in. So anything that would be in the transplant space specifically, we now have in Canada at least two products in transplant specifically. It'd be nice to add something for GVHD prophylaxis, for example, other areas within transplant. but then the adjacent areas and patients coming into transplant that obviously would be a target that we would have infrastructure and experience that we could address.

Okay, thanks. I think last quarter you mentioned that wholesaler inventory was down to one and a half to two months and it looks like it was drawn down further this quarter with the patient level Use at $3.9 million and the revenues at $3.4 million. Are wholesalers starting to stock back up and should we expect a surge in the current quarter?

Yeah, I can speak to that. I certainly wouldn't guide to a surge. The amount that the wholesaler will hold at any given time could be anywhere from... It typically doesn't go below one month and it rarely goes... above two, but where it is at quarter end can be kind of anywhere in between those two things. So yeah, I would typically guide towards expecting that it'll probably stay somewhere in the one to one and a half months of inventory on hand going forward for this quarter, or sorry, for this coming year and onwards, but we have no control over that ultimately.

The only thing I would add, David, is that obviously as our monthly volume grows, the amount of inventory they're going to hold will grow appropriately. Yes.

Okay. And then last question on Resuvo. You talked about the increase because of withdrawal of a competitor, but then you finished with subject to future changes in competitive market dynamics. Are you anticipating the competitor will come back on the market? Are you anticipating another competitor might leave the market? Or is that just a general statement?

I think it's more or less a general statement. There's always the potential that the competitor could come back. There's work that would be needed to be done in order to come back. There aren't any other competitors that could leave. I mean, we're currently the only auto-injector of methotrexate So it's possible that there could be shortages in other forms of methotrexate, which has happened in the past. So all those dynamics could happen, but it's more of a cautionary statement than anything.

Okay. That's it for me.

Thanks.

Once again, if you would like to ask a question, please press star 1. We have reached the end of the question and answer session, and I will now turn the call over to Ken for closing remarks.

Great. Thank you. I just want to thank everyone for joining us on the call today. We continue to build and advance on GraphaPaks in the coming months and quarters, and it's driven strong performance. We look to reporting on graphs of the fiscal 2027. Thank you very much.

This concludes today's conference and you may disconnect your lines at this time. Thank you for your participation.