Good afternoon, everyone.
Hope you all enjoyed lunch and had some value from the keynote presentation. This afternoon in Room 104B, we have six presentations, with the first from Medexus Pharmaceuticals. Please help me in welcoming Ken d'Entremont to the stage.
Thank you very much. I want to thank Bloom Burton for the opportunity to present the company here today. Medexus is a publicly traded company, trades under the ticker symbol MDP on the TSX. Lots of information available on our website, medexus.com, including our forward-looking statements. Let's start with what is Medexus? Medexus is a company that's literally trying to save people's lives. We've got some very innovative pharmaceutical products that make a significant difference in the treatment of some very devastating diseases. The company has got infrastructure built out across U.S. and Canada. We've got 14 products that make a base of business that in the last fiscal year that we reported, fiscal 2025, did over $100 million in revenue. These are all U.S. Dollars except for our share price.
We've got a very innovative product that is in the process of being launched that can more than double our current revenue. We're in a very unique phase in the development of the company in that we see this strong base of business with very strong growth going forward. I'm going to talk to that product in a bit. When you look at our 14 products within our portfolio, they're roughly divided into three therapeutic areas. Two of those therapeutic areas are fairly mature, so a steady base of business that drives $100 million of revenue that historically has driven about $20 million of adjusted EBITDA. The growth potential in our business is coming from hematology-oncology. That's currently about 50% of our revenue, and will be the strong growth driver going forward.
That's where you should expect to see really strong growth coming from a product called GRAFAPEX that I'm going to speak to some detail on future slides. Our products are extremely complex, but our business model is dead simple. Basically, what we're doing is licensing and acquiring products that other companies have developed. We're getting them registered, and then we're applying our commercial expertise to drive these things to peak sales. It's a very simple business model. We're not taking commercial development risk here, only the commercial risk. Obviously, business development is keenly important. Business development is the mechanism by which we bring our portfolio together. We are constantly out there looking for new and innovative products that fit within the therapeutic areas that we're interested, the three areas that I showed you before. That's how we build our portfolio.
Once the products are in our portfolio, we do spend time and energy and money to improve those products, whether that be expanding the label, improving the cost of goods in order to make a better product as it grows to peak sales. Business model is dead simple. The products are a little more complex. As I mentioned earlier, the beauty of our business is that once we have the base built, we can add products to that portfolio that drive strong return. We've got the 14 products that are generating positive EBITDA, and as we layer products on top of that base at a strong gross margin, that produces an excellent return. We have gotten the company to the point where it is generating positive EBITDA, positive cash flow.
Now as we enter this strong growth phase, you see really strong returns because the cost basis is largely flat. That's the real beauty of the business. As we're adding and growing our revenue line, the cost basis is flat at a very strong gross margin, obviously produce a really good return. This portfolio, this platform, obviously can take a lot more product. As we're adding products to this commercial infrastructure at good gross margins, it can really produce a very solid return. The most exciting product in our portfolio is something called GRAFAPEX. GRAFAPEX is the first and only product registered by the FDA for the condition of bone marrow prior to a stem cell transplantation for AML and MDS. Those are the two most common forms of leukemia, the two most common reasons to do an allogeneic transplant.
Basically, what our drug does is it gets the patient prepared for the transplant. AML and MDS are very high mortality type leukemias. It's almost 100% morbidity at five years. With our drug, you're able to cure what is almost certain demise. Treosulfan, GRAFAPEX in the U.S., can literally help cure certain types of leukemia and can be used in other forms of blood-borne diseases as well. It's a really, really exciting and innovative product in a space that hasn't seen any innovation for about 20 years. This product was approved by the FDA in January of 2025. We launched it shortly thereafter, and now we're in the process of building that business. In, I guess, the last quarter that we reported, we stated that there were 55 institutions that had purchased the product. That's now 64 hospitals have purchased the product since the last quarter.
This is constantly growing, and this is a strong indicator of the commercial uptake. There are only 180 transplant centers in the U.S. that do any of these transplants at all. Obviously a very, very highly concentrated market. About 42% of those hospitals do 80% of the transplants. Very, very concentrated. That's clearly where all of our focus is. Now we have those 64 hospitals who are already ordering the product and then reordering the product. We've got two-thirds of the hospitals that have either put it already on their formulary or are in the process of putting it on their formulary. We achieved an NTAP, a new technology add-on payment, which is a payment from Medicare. It's a very difficult reimbursement achievement. There were only 13 NTAP applications all of last year. Of the 13, only five got approved.
Treosulfan or GRAFAPEX was one of the five. That's really, really important because obviously our technology, our drug is more expensive than the drug it's replacing. In the U.S., what that means is that the case rate has to catch up. It takes time to catch up. Typically, it takes about three years. Now we have an NTAP, which means for all Medicare patients, they cover the difference between the two drugs. There's no extra cost for the institution by using the more innovative new technology, which is Treosulfan. That really helps accelerate the uptake of the drug, and so we're really, really pleased to have that. We've just recently been informed that it has been renewed for a second year. It'll probably be renewed for a third year.
It typically takes about three years for the case rates to catch up for new technologies, and so a really, really positive reimbursement situation for our drug. The reason we're so bullish on Treosulfan or GRAFAPEX in the U.S. is because internationally, it's become the standard of care in places where it's been launched, primarily Western Europe, where it was developed. In Canada, several years ago, we launched it ourselves, and you can see the type of uptake that we've had. Once we achieved reimbursement in Canada, which takes a longer period of time, we saw a really rapid uptake. This bodes very, very well for what we expect to happen in the U.S., where we project the revenue from this single drug alone to be between $100 million and $175 million at peak sales, which will typically take three to five years.
The clinical data on the product is excellent. The phase III study, which was done by Beaten, showed a 26% improvement in overall survival for these patients at two years. Obviously a very, very strong improvement in survival. We did a study, a real-world study at Princess Margaret Cancer Centre here in Toronto, which is the largest transplant center in Canada, one of the largest transplant centers in North America. We demonstrated that by using our drug rather than the old technology, you can increase survival by over 50%. Fantastic survival improvement as a result of using the new drug. We're very, very bullish that that will therefore cause our drug to be standard of care. There's about 10,000 of these transplants that are done per year in the U.S. It's a very, very attractive market for us.
It's not the only drug we have. IXINITY, which is also in the same space. It's also a hematology product. This is for Hemophilia B. It's currently our largest product. It's been a very, very steady contributor for several years. We've been working on improving the cost of goods, and that has improved significantly. We've got a really steady base of business coming out of IXINITY as well. Rasuvo, which is our third largest product, also a product in the U.S., is another mature product. It's had some benefit from an exit of one of our competitors. We had about an 80% share in this marketplace. The competitor dropped out. We took basically all of that share. You've seen that nice bump that you could see towards the end of the chart.
Again, another nice piece of business that is extremely steady and durable as we go forward. Business development, as I mentioned earlier on, is a key part of our strategy. Obviously doing good deals, deploying our capital well is really, really important. As you can see here's two deals, products that we acquired, where we spent less than one-time revenue to acquire them. What we have been doing is putting the partners' economics based on success and growth of the product into the future. Efficiently deploying capital to get some attractive and very durable assets. If you now start to look at our financial results, you can see we've had this nice steady growth year after year until it plateaued a couple of years ago, and that was related to a regulatory delay associated with GRAFAPEX.
Now that regulatory delay has been overcome, and now we're in a stage where we're starting to see growth starting to happen again. As we go forward, we will see revenue growth coming from GRAFAPEX. We've always been EBITDA positive. Not always. We've been usually EBITDA positive, I think, for the past 15 quarters or something like that. We stayed EBITDA positive even as we were introducing GRAFAPEX. It took a dip down to $2.2. Since we launched GRAFAPEX, we have now been growing our EBITDA quarter after quarter, and we guided last time that we will expect the quarter that we'll put out in June to be accretive for GRAFAPEX on its own. GRAFAPEX will start to make a positive contribution as we go forward.
What we would expect to see is that as we're going forward, costs are the same, revenue growing, the return is going to increase from our portfolio. The balance sheet is extremely clean. We've got about 32 million shares outstanding. We've been aggressively buying back shares. As we put out last week, we purchased, I think, 700,000 shares since we put an NCIB in place at the end of November. We've been aggressive on the NCIB. We've got a very clean balance sheet. There's virtually no warrants, minimal options, so it's basically just straight equity, and then some debt. We've got a very nice debt package with National Bank, paying just over 6% on debt that's about $20 million. I think our net debt is $10 million.
We're really, really pleased with the situation that the company's in, particularly with the growth that we have, because it's all completely funded as we go forward. I think, when you're looking at Medexus, what you're looking at is a company that's got a really solid base of business. It's got a tremendous growth asset in GRAFAPEX, which can grow and more than double the company at a better gross margin. I've neglected to point out that our average gross margin in the portfolio is about 60% now. GRAFAPEX comes in at an 80% gross margin. Obviously, as that grows, you're going to see margin improvement as well. I think now is a really interesting time to get into the company, because we're on the verge of really strong growth, both revenue and EBITDA.
As we go forward, we would expect that we will be doing more business development in this same space. Obviously, transplant is a place where we're strong. We will be adding other hematology, oncology products in transplant and adjacent areas. That's how we'll grow the company going forward. A good time to be associated with Medexus. Happy to take any questions anybody might have.
Thank you, Ken. Medexus Pharmaceuticals.
I wanted you to expand on GRAFAPEX. The last time we spoke, I thought that you were estimating somewhere between $100 million-$120 million, and unless I misunderstood, you said $100 million-$175 million. That would indicate that you're expecting potentially 40% more sales. Can you elaborate on that?
Yeah, it's a great question. We initiated this launch, and we were targeting $100 million in peak revenue. We are witnessing strong uptake, strong interest from the hospitals that are using it. We've set the range to $100 million-$175 million. That's informed by various market share across the segments. $100 million is approximately a 27% market share. $175 million is a 42% market share. All of the countries that have launched the drug, the lowest market share we see is mid-20s. We're very comfortable with the low end of the range. The average uptake in some countries is well above 42%, but we think 42% is a good target, and we have hospitals already in those ranges. We are seeing some key hospitals that have adopted it quickly, and are using it kind of in that range.
We're comfortable with the $100-$175 million.
Okay. Now, when you got approval in January, I think it was January 23rd or 24th of last year, stock went wild. Right? I know that a lot of people, including myself, were anticipating very big things for GRAFAPEX, both in the short term and in the long run, but I feel that it's taken a little longer than expected. Are your sales in line with what your expectations are? To get to, let's say, 80% of your terminal sales, we'll call it, how long do you think that will take? You launched. The first product was shipped March of last year, if I'm not mistaken.
Correct. Yeah.
14 months ago.
Yeah.
Can you elaborate on that? Can you also elaborate on marketing for the product? What you're spending?
Sure. I'll start with peak sales. Peak sales will occur between three and five years. That's kind of how we target peak. Uptake has been exactly as expected. I think most analysts had us coming in at $12-$13 million revenue from GRAFAPEX first year. We're comfortable with that. GRAFAPEX is right on target, if not a little bit ahead of target, because the reimbursement situation is stronger than we had anticipated at the price that we went out with. We're really comfortable with reimbursement. We're really comfortable with uptake thus far. No, our expectations are very much in line with what we've achieved so far. We would expect to see strong growth this year, and next, and then it starts to plateau for the next couple of years.
Can I go with the price difference between your drug and the previous one? You said Medicare will cover up most of the amount on that.
Yeah.
Can you talk about what the number is? Also, share that stuff with us.
Yeah. The NTAP will cover $21,000-$22,000 per patient. That's basically the difference between the two drugs. The NTAP is covering Medicare patients, which are roughly 20%-30% of patients in the market. The rest of the patients would be covered either through the institution, their DRG, or through commercial payers. Commercial payers are largely reimbursing GRAFAPEX with few discounts associated.
We have time for a few more questions if there are any.
Sorry. To just elaborate, the first year, since you shipped in March of last year, I would assume that your fiscal year, which ended March 31st, and the first year of adoption is the same thing. In other words, you're saying you're comfortable with $12 million-$13 million in sales in a period of time from April 1st to March 31st of this year. Is that correct?
Right. Most analysts have got us producing $12 million-$13 million revenue demand in the first year, and that's comfortable.
Okay.
Any other questions for Ken and Medexus? Great. Well, thank you so much.
Thank you.