NASDAQ:MDCX | TSXV:MDCX
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Third Quarter 2024 Financial Results
On November 22, 2024, Medicus Pharma (NASDAQ:MDCX) (TSXV:MDCX) reported financial results for the third quarter ending September 30, 2024.
Still being in the clinical trial stage, the company did not generate any revenues. With Medicus just having completed a reverse takeover transaction last year on September 29, 2023, it is more appropriate to analyze the company’s operating expenses on a sequential basis. Professional fees were at a high level over the last two quarters (above $1.1 million), primarily due to higher legal and accounting fees related to the private placement. The fourth quarter should be impacted by the expenses for the U.S. IPO. Consulting fees have hovered in the $400,000 range every quarter this year with fluctuations due on the nature of the advisory services needed by the company. Salaries, wages and benefits oscillated between $200,000 and $340,000 depending on headcount. General office, insurance and administration expenditures have been relatively steady in the $150,000-to-$160,000 range with the exception of the second quarter where it appears that more insurance expenses and general office expenses were incurred. Investor relations have steadily increased quarter-by-quarter as management seeks to increase investor awareness of the company’s progress toward commercialization of SkinJect patch through its Phase 2 clinical trial now in progress.
For the third quarter, Medicus reported a net loss of $2.96 million (or $0.31 per diluted share) versus a net loss of approximately $2.96 million (or $0.85 per diluted share) in the comparable quarter last year. Shares outstanding increased by 173% YOY to 9,514,738 shares from 3,479,509 shares (adjusted for 1 for 2 consolidation). At quarter-end, Medicus had US$5.3 million cash-on-hand; moreover, the subsequent IPO in the U.S. added approximately US$3.64 million to the company’s coffer.
IPO in U.S. Provides Additional Funding & Common Stock that Trades on Nasdaq
On November 14, 2024, Medicus Pharma Ltd. closed an IPO (Initial Public Offering) in the United States. Gross proceeds from the IPO were approximately US$4.0 million and consisted of 970,000 Units at a price of US$4.125 per Unit. Each Unit is comprised of 1 common share & one 5-year warrant exercisable at US$4.64 per share. The stock issued as part of the IPO trades under the same ticker in the U.S. (Nasdaq) as in Canada (TSXV), namely MDCX. The warrants are trading under the ticker MDCXW.
Net proceeds from the IPO will help fund the Phase 2 proof of concept clinical trial for treatment of basal cell carcinoma using its doxorubicin tip loaded Dissolvable Microneedle Array SkinJect transdermal skin patch. Some of the net proceeds may be used to extend the Phase 2 trial to a pivotal trial and/or to expand to clinical trials covering other non-melanoma skin diseases. We estimate that the net proceeds from the IPO to be approximately US$3.64 million. Maxim Group LLC acted as the manager and Brookline Capital Markets (a division of Arcadia Securities, LLC) acted as co-manager.
In connection with the IPO, Medicus Pharma consolidated its common shares on a 2-to-1 basis on October 28th.
New Chief Medical Officer Appointed
On November 18, 2024, Dr. Faisal Mehmud, MD, was appointed Chief Medical Officer. Dr. Mehmud has had senior roles at several pharmaceutical companies, including Sanofi, Novartis, Bristol Myers Squibb, Pfizer and GlaxoSmithKline. Dr. Mehmud has a successful track record of advancing drugs in later phases in a variety of therapeutic areas, particularly in developing partnerships and interacting with regulators. Dr. Edward Brennan, MD, has been promoted to Chief Scientific Officer & Head of R&D Program.
Latest News on Phase 2 Clinical Trial (SKNJCT-003)
The goal of the SKNJCT-003 Phase 2 clinical trial is to study the effectiveness of two different strengths of D-MNA (100μg and 200μg of doxorubicin hydrochloride) compared to placebo for the treatment of nodular basal cell skin cancer. The protocol is for a randomized, double-blinded, placebo-controlled clinical study with up to 60 patients with nodular BCC of the skin being enrolled at one of six (6) trial locations in the U.S.
The identified target lesion will be treated with a SkinJect patch once a week for three weeks. Then, after two weeks, the target lesion will be excised. An interim analysis is planned after about 28 subjects have completed the excision visit, which could potentially occur late in the fourth quarter of 2024. The SKNJCT-003 protocol follows the FDA guidelines for fast-tracking the approval process with its AI-powered protocol supported by confocal microscopy.
The official title of the clinical trial is “A Randomized, Double-Blinded, Placebo Controlled Trial to Evaluate the Safety and Efficacy of a Doxorubicin Microneedle Array (D-MNA) for the Treatment of Nodular Basal Cell Carcinoma in Adults.”
On August 27, 2024, Medicus Pharma announced that the first patient (of up to 60 subjects) had been randomized in the Phase 2 clinical trial (SKNJCT-003) for the treatment of nodular BCC (Basal Cell Carcinoma). This milestone indicates the culmination of the enrollment phase for first patient in this trial.
On July 15, 2024, Medicus Pharma announced that a full package of information was submitted to the FDA to support the approval for conducting a Phase 2 clinical trial (SKNJCT-003) on the company’s non-invasive treatment of basal cell carcinoma (BCC) of the skin that utilizes micro-needle arrays which contain doxorubicin.
The full comprehensive package of information was submitted in order to support an accelerated timeline of the FDA’s approval process. Management believes that by laying this groundwork. There is the potential ofconverting this exploratory Phase 2 trial into a pivotal trial through a Type C meeting with the FDA, hopefully in the 1Q 2025. If further alignment with the FDA can be achieved, management is hopeful that pivotal trial with 200-400 subjects can begin in 2Q 2025.
Valuation
Utilizing a financial model based on DCF methodology, which forecasts out to 2031 and uses a 12% discount rate (based on CAPM), and a terminal P/S multiple of 2.79 (based on Specialty Drug Manufacturers that focus on developing and commercializing novel therapeutics for unmet healthcare needs), the indicated value of MDCX.V is CDN$7.83 per share, and on Nasdaq, the indicated value of MDCX is US$5.61.
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