Greetings. Welcome to the Medexus Pharmaceuticals fiscal fourth quarter and 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. 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 480-625-5772. 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 Medexus 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.
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 SEDAR+ at www.sedarplus.ca. As a reminder, Medexus reports on a March 31st fiscal year basis. Medexus reports financial results in US dollars and all references are to US dollars unless otherwise specified. I would now like to turn the call over to Ken d'Entremont.
Thank you, Victoria. Thanks everyone for joining us on the call today. We're proud to report that product level revenue performance for GRAFAPEX, net of working capital changes, was accretive to quarterly operating cash flows in fiscal Q4 2026, representing a significant milestone in the commercialization of the product. We're encouraged by GRAFAPEX'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 31st, 2026, we recognized product level net revenue from GRAFAPEX of $11.6 million, exceeding the $11.2 million we were invested in the GRAFAPEX launch over the same period.
Building on this momentum, we expect GRAFAPEX to generate product level net revenue between $30 million 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 GRAFAPEX for procedures in their institutions, and 54 of those institutions have reordered. Overall, our fiscal Q4 2026 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 GRAFAPEX. We expect future periods to provide a clearer view of highlighting the growth of GRAFAPEX relative to the underlying strength and resilience of the rest of our portfolio of products outside the allo-HSCT space.
The continued momentum of GRAFAPEX and our ongoing business development initiatives focused on allo-HSCT will build on that foundation and position Medexus 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 2026 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 2026 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 Gleolan in the United States following the March 2025 termination of our U.S. Gleolan agreement, and from Rupall in Canada due to generic competition. The decrease was partially offset by contributions from GRAFAPEX and the strength in Rasuvo. 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 year 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 Zemcelpro. 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 treosulfan, our existing hemato-oncology product, which we commercialize in Canada as Trecondyv.
As you all know, our organization is already well acquainted with the allo-HSCT field, 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 GRAFAPEX United States, we look to strategically position the company to capitalize on future revenue opportunities in the allo-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 2026 was an important transitional year for Medexus, being the first fiscal year reflecting product level performance of GRAFAPEX. 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 GRAFAPEX contributing positively to operating cash flows in fiscal Q4 2026 as anticipated. Net revenue for fiscal Q4 2026 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 Gleolan in the United States to the licensor and the genericization of Rupall in Canada.
In all, Medexus generated approximately $87.7 million of net revenue from our established portfolio and $11.6 million of net revenue from GRAFAPEX in fiscal year 2026. Gross profit was $13.3 million and $54.4 million for the 3- and 12-month periods ended March 31, 2026, 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 3- and 12-month periods ending March 31, 2026, 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 GRAFAPEX and the absence of sales of Gleolan in the U.S.
Selling general and administrative expenses were $10.6 million and $45.9 million for the 3- and 12-month periods ended March 31st, 2026, compared to $12.2 million and $43.2 million for the same periods in the previous year. Adjusted EBITDA for the 3- and 12-month periods ended March 31st, 2026, 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 2026 benefited from product level net revenue from GRAFAPEX of $3.4 million, exceeding the $2.7 million of GRAFAPEX personnel and infrastructure investments in the same period. Net loss for the 3- and 12-month periods ended March 31st, 2026, 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 cash flow of $3.8 million and $18.9 million for the 3- and 12-month periods ending March 31st, 2026 compared to $2.3 million and $24 million for the 3- and 12-month periods in the prior year. Even while continuing to invest in the launch of GRAFAPEX, 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, 2026 compared to $24 million at March 31st, 2025. The notable factor in these changes was our payment in full of the $15 million regulatory milestone under our GRAFAPEX 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 31st, 2026, our financial strength has enabled us to repurchase over $1.2 million common shares to- date under our NCIB. As of March 31st, 2026, 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 GRAFAPEX and within allo-HSCT. As always, there can be variability in quarter-to-quarter results, 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 one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two 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. Good morning. A lot of progress. Congratulations. It's really commendable. For starters, GRAFAPEX, it looks like your guidance is $30 million-$32 million for fiscal 2027, which is pretty tight range, 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? That's certainly very strong growth over fiscal Q4.
I'll take that. Thanks, Scott. Great question. Obviously, we're seeing very strong uptake in GRAFAPEX. The 50% growth sequentially quarter-over-quarter is very meaningful. As we've disclosed in previous quarters, there are a large number of hospitals who have the product under formulary review. We expect that the increase in revenue for GRAFAPEX will come from two sources. One, hospitals who have already ordered will increase the volume of their orders. Two, new hospitals coming on board. Obviously, we expect to see quarter-over-quarter progression to get us to that $30 million-$32 million for the full- year.
Is there any seasonality we should factor into the year when we think about the quarters? All the signals would be 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 [ballast] quarter that we should think about?
Again, a good question. The seasonality that we observed last year was that in the summer months, there are fewer procedures, particularly for non-malignant disease. We would expect that that's going to probably replay. July, August ought to be a little bit slower. We've seen a good quarter this quarter. It's kind of within. As we go forward, summer ought to be slower, and it tends to accelerate through the fall months. Again, December with the holiday season, there are probably fewer procedures. It's more related to the numbers of procedures and the availability of transplanters than anything else. We do expect to see that play out. The magnitude of the changes, we don't really know.
We're only starting year two now, 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. With regards to Canada, obviously the quarterly run- rate's 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. 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 call our established portfolio, which is everything but GRAFAPEX, that the noise that would have come through the return of Gleolan to the licensor in the U.S. and the genericization of Rupall have been. We've just seen that noise kind of erased. I think if you're just taking that and 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. Rasuvo and IXINITY 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 2027? 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. GRAFAPEX is looking really good. On GRAFAPEX, I see that you've cited that 74 of 180 transplant institutions have ordered GRAFAPEX, it looks like as of the date of the press release, around first quarter. I'm curious about, one, if you could confirm that that's true, that is at first quarter. Second, I wonder if you have the information of how many of these institutions have GRAFAPEX on formulary today.
Hi, Michael. Great question. The number of institutions ordering, that is as of the most recent information before the press release, a few days ago. In terms of how many have them on formulary, most of them. There is no standard answer here, but typically, having on formulary creates access to the drug, but that is not always the case. There are some hospitals, many pediatric hospitals, where it does not need to be on formulary. They still have full access to the drug. We are only tracking the ones where we have, and reporting on the ones where we have listings. We do not need them all listed. There are some hospitals that have full access to the drug without having it on the formulary, and that is fine with us. The important thing is, can they use it without restrictions?
We are reporting right now, I think really good uptake in terms of formulary listings. It is very much on track for where we expect to be, and we will continue to work on the rest of the hospitals through the rest of this year.
Gotcha. All right. Thanks, Ken. On commercial health plans covering GRAFAPEX, in the MD&A, you cited some impressive just total covered lives figures. Also cited that at the end of March, end of the year, there were 42 total health plans that have established coverage pathways for GRAFAPEX. 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?
Yes. It is an impressive number. There is always changing in the landscape on the commercial payer side, plans consolidating, et cetera. I think the important number is how many lives covered, and that is a very impressive number. I forget it exactly, but it is over 200 million. We have got most of the lives covered, and I would add that we have had no issues in terms of getting product for people commercially. That is not a problem at all. Yes, I think there is very broad access to the drug at the price that we have set. On the reimbursement side, we see it as quite positive.
Gotcha. All right. No issues with access. That's great. 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. I wonder how this deal sort of reframes your business development focus. Do you see more opportunity to pick up assets in the allo-HSCT space? Do you expect to go broader in the future?
Yeah. Again, great question because it speaks to the strategy behind the business. In recent quarters, I think we've been describing a transition away from a diversified spec pharma company operating three therapeutic areas to a rare disease orphan drug company operating in one therapeutic area, specifically HSCT and adjacent areas. That transition has largely happened. I think UM171 is an example of that. We have developed a very strong presence and knowledge of HSCT transplant and 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 portfolio. UM171 is a perfect strategic fit aligned with GRAFAPEX. If you think about it, GRAFAPEX is the first step in a transplant where they condition the bone marrow, UM171 is a potential cell source, so where they replace what was there.
It's an absolute perfect strategic fit and 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 there are patients who can't find donors, where this could be a cell source. 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 III study that the partner would do, and then register based on that clinical work. Those two pathways we think exist.
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.
Got you. Thanks, Ken. 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.
Yeah. No, good question. We've kind of guided to the $3 million-$4 million that we expect to be incurring specific to GRAFAPEX. I am blanking on what it was this last quarter. I think it was $2.7 million. I know it was just in my, what I said at the top of the call. We do expect a little bit of an increase to SG&A over the course of 2027, if you compare it to 2026. I would also just say while we're 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 happening in GRAFAPEX, as well as we've augmented on the spend to continue to improve the IXINITY process.
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 2027.
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. 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 and 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. Those areas we would be interested in, AML, MDS, there's other blood-borne cancers that we would be interested in. 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. 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 of $3.9 million and the revenues of $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.
Yeah.
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. 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 coming year and onwards. 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. Last question on Rasuvo. You talked about the increase because of withdrawal of a competitor, 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? 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. It's possible that there could be shortages in other forms of methotrexate, which has happened in the past. All those dynamics could happen, 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 one. 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 look to continue to build and advance on GRAFAPEX in the coming months and quarters, and it's driven strong performance. We look to reporting on the rest 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.