Author: Hitanshi Mehta

Categories
Australian Small Caps Small Cap

MYX’s NEXTSTELLIS launch momentum accelerating – Affordable Care Act to be a tailwind over the medium-term

Investment Thesis:

  • Any stabilization (competition or price) in the generic segment will be viewed as a positive.
  • New product launches and healthy development pipeline.
  • While generic brands are going through a tough trading environment at the moment, the long-term outlook remains positive given consumers and regulators need a healthy generics market to keep the price of medication down.
  • Positioning the product portfolio to higher margin products. 
  • Potential industry consolidation on lower growth outlook.
  • Leveraged to a falling AUD/USD.

Key Risks:

  • Intense competition from new products.
  • Lower demand. 
  • New product launches fail to deliver the growth expected by the market.
  • Regulatory changes.
  • Litigation.
  • Adverse currency movement.

Key Highlights:

  • Reported revenues of $196.4m, declined -6%, with +180% increase in BPD, +19.5% increase in MCS and +29.6% increase in MPI more than offset by -19.6% decline in PPD as retail generics business segment continued to erode due to sustained competitive pricing environment.
  • Expenses excluding NEXTSTELLIS launch investment declined -12%.
  • Reported EBITDA of $48.8m, was up +20%, affected by the non-cash NEXTSTELLIS deferred consideration reassessment due to Covid-19 and associated longer time period for physician and patient activation and higher cost of payer coverage and reimbursement (underlying EBITDA was down -38% to $23.7m and underlying EBITDA excluding NEXTSTELLIS launch investment was up +11% to $44.4m).
  • Reported net loss after tax was down -74% to $50.4m despite intangible asset impairment associated with the generic business. 
  • Net debt increased +10% over 2H21 and the Company remained compliant within all bank covenants with a leverage ratio 3.2x (covenant <4.25x), interest cover 7.7x (covenant >3x) and shareholders’ funds of $754m (covenant >$600m).
  • The launch of NEXTSTELLIS continues to gather momentum despite the headwinds of Covid-19 with 2,100 healthcare professionals (HCPs) have now written the product since launch (bulk of which came in the 2Q22) with the aided awareness of NEXTSTELLIS amongst target HCPs grown to 79%, and the Company approaching to acquiring 100 new writers.

Company Description:

Mayne Pharma Group (MYX) Mayne Pharma is a specialty pharmaceutical company focused on applying its drug delivery expertise to commercialize branded and generic pharmaceuticals. Mayne Pharma provides contract development and manufacturing services to more than 100 clients worldwide. Mayne Pharma has an extensive portfolio of branded and generic drugs in multiple therapeutic areas, including women’s health, oncology, dermatology and cardiology.

(Source: Banyantree)

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