Do you have any concerns about their leverage, especially given the weak print here? The $53m term loan with BMO has a pretty aggressive amortization to it, where does the cash flow come from for the required principal repayment? Any thoughts you have would be appreciated, thanks!
I've been thinking about this. I think it will come down to two things.
The primary determinant being treosulfan and its subsequent launch. As their lender, these will be estimates/numbers BMO will be looking at very closely.
The second measure will be how effective their cost saving measures are. If they can maintain cash accruals after serving the interest on their debt with a declining portfolio, refinancing should be in the cards.
Given approval will be 2 to 6 months out from its submission, this would give them about 12 - 18 months on the market before their latest slug of debt matures with BMO in 2026. They don't really have a window for another mistake on treos resubmission, and obviously the launch will need to go wel, so things are looking tight (Cant say i disagree with the most recent price movement of the stock, as the degree of risk seems to have climbed quite substantially).
In addition to this, the upfront regulatory milestone will undoubtedly require more debt at this point as the primary source of funding given the current situation with ixinity and proximity to the FDA's decision. It's an unfortunate situation, and I didn't expect their portfolio to take such a sharp turn after the last 3 quarters which looked very promising to myself.
Thanks, truly appreciate you taking the time to follow up. The bet seems more binary now, but I think the upside outweighs the downside. This was a tough print, but keep up the good work, love reading your stuff.
Any significant updates for the past 3 months?
Medexus is anticipating the submission of Treosulfan very soon. No news about milestone or funding for it. We'll see what happens soon.
Do you have any concerns about their leverage, especially given the weak print here? The $53m term loan with BMO has a pretty aggressive amortization to it, where does the cash flow come from for the required principal repayment? Any thoughts you have would be appreciated, thanks!
I've been thinking about this. I think it will come down to two things.
The primary determinant being treosulfan and its subsequent launch. As their lender, these will be estimates/numbers BMO will be looking at very closely.
The second measure will be how effective their cost saving measures are. If they can maintain cash accruals after serving the interest on their debt with a declining portfolio, refinancing should be in the cards.
Given approval will be 2 to 6 months out from its submission, this would give them about 12 - 18 months on the market before their latest slug of debt matures with BMO in 2026. They don't really have a window for another mistake on treos resubmission, and obviously the launch will need to go wel, so things are looking tight (Cant say i disagree with the most recent price movement of the stock, as the degree of risk seems to have climbed quite substantially).
In addition to this, the upfront regulatory milestone will undoubtedly require more debt at this point as the primary source of funding given the current situation with ixinity and proximity to the FDA's decision. It's an unfortunate situation, and I didn't expect their portfolio to take such a sharp turn after the last 3 quarters which looked very promising to myself.
Thanks, truly appreciate you taking the time to follow up. The bet seems more binary now, but I think the upside outweighs the downside. This was a tough print, but keep up the good work, love reading your stuff.
I am currently dying of a cold & congestion. Let me get back to you after some sleep.
Take care, Left