Medexus Pharmaceuticals Inc.

2 large catalysts in hand and a hedge on Cipher Pharmaceuticals

I kind of feel bad for the last few months of content. It’s all of these complicated looking pharmaceutical companies. I promise I’m working on stuff others may enjoy. This certainly isn’t good for my readership as individuals typically stray away from pharmaceuticals, though I can’t be too personally upset given the performance of Cipher and Moberg.

The real problem here, and the cause for your misery and mine, is that these truly are some of the cheapest public companies that I can seem to find right now. What I find especially strange are all of these large, near-term catalysts jutting out of these things like tree branches without any sort of premium attached to the equity. It’s a strange situation to find yourself in that can make you question whether your heads on straight or if the market is really just upside down because a few sellers are rushing for the door.

During October & November this stock was trading like the company was about to keel over and file for bankruptcy or initiate a massive dilutive raise. A few months prior to this, negative price action may have been largely attributed to a considerable number of outstanding convertible debentures which were set to mature on October 16th, but these have been paid off in full. At the time of initially writing this (prior to publication) the stock was down 38% from the date of the debentures being fully repaid. And while there’s been some working capital swings which have polished some things up, for a moment the EV/FCF multiple was below 4x.

This was quite surprising as almost as soon as I began looking into various assets the company has approaching commercialization it became clear that there’s probably going to be a lot of growth coming in the next 3 years.

So, let’s get into it.