Baudax Bio (NASDAQ: BXRX) is a biopharmaceutical company that focuses on developing and commercializing innovative products for acute care settings.
The company was spun off from Recro Pharma in November 2019, and has since been trading as a separate entity. In this article, we will decode the financial performance, prospects, and challenges of Baudax Bio, and provide some insights for potential investors.
What is Baudax Bio?
The company’s mission and vision
Baudax Bio’s mission is to address the unmet medical needs of patients in acute care settings, such as hospitals, ambulatory surgery centers, and urgent care clinics. The company’s vision is to become a leading provider of innovative therapies that improve patient outcomes and reduce healthcare costs.
The company’s products and pipeline
Baudax Bio’s lead product is ANJESO, a non-opioid analgesic that is indicated for the management of moderate to severe pain in adults. ANJESO is the first and only intravenous formulation of meloxicam, a long-acting nonsteroidal anti-inflammatory drug (NSAID) that has a well-established safety and efficacy profile.
ANJESO was approved by the U.S. Food and Drug Administration (FDA) in February 2020, and was launched in the U.S. market in May 2020.
Baudax Bio also has a pipeline of other product candidates that are in various stages of development. These include:
- BX1000, a novel neuromuscular blocking agent that is designed to provide rapid and predictable paralysis for surgical procedures, and to have a shorter duration of action and faster recovery time than existing agents.
- BX2000, a reversal agent for BX1000 that is intended to reverse the neuromuscular blockade and restore normal muscle function in patients who have received BX1000.
- BX3000, a long-acting local anesthetic that is aimed to provide prolonged pain relief for post-operative and chronic pain conditions.
How is Baudax Bio performing financially?
The company’s revenue and expenses
Baudax Bio’s main source of revenue is the sales of ANJESO in the U.S. market. The company reported net product sales of $2.9 million for the third quarter of 2020, which was a 243% increase from the previous quarter.
The company attributed the growth to the expansion of its sales force, the increase in customer adoption, and the improvement in reimbursement coverage.
Baudax Bio’s main expenses are related to the cost of goods sold, the research and development, and the selling, general and administrative activities.
The company reported total operating expenses of $18.4 million for the third quarter of 2020, which was a 9% decrease from the previous quarter. The company attributed the decrease to the lower spending on clinical trials, regulatory fees, and stock-based compensation.
The company’s cash flow and balance sheet
Baudax Bio’s cash flow from operations was negative $14.6 million for the third quarter of 2020, which was a 13% improvement from the previous quarter. The company attributed the improvement to the increase in net product sales and the decrease in operating expenses.
Baudax Bio’s cash and cash equivalents were $24.4 million as of September 30, 2020, which was a 38% decrease from June 30, 2020. The company attributed the decrease to the cash used in operating activities and the repayment of debt.
The company’s profitability and growth
Baudax Bio’s net loss was $15.5 million for the third quarter of 2020, which was a 10% improvement from the previous quarter. The company attributed the improvement to the increase in net product sales and the decrease in operating expenses.
Baudax Bio’s revenue growth rate was 243% for the third quarter of 2020, which was a significant acceleration from the previous quarter. The company attributed the acceleration to the factors mentioned above.
What are the risks and opportunities for Baudax Bio?
The regulatory and competitive environment
Baudax Bio faces regulatory and competitive challenges in the acute care market. The company’s products are subject to the approval and oversight of the FDA and other regulatory agencies, which may impose delays, restrictions, or additional requirements on the development, manufacturing, and marketing of the products.
The company’s products also face competition from existing and potential alternatives, such as opioids, other NSAIDs, and novel analgesics, which may have lower prices, higher efficacy, or better safety profiles.
The market potential and demand
Baudax Bio has a significant market opportunity and demand for its products in the acute care setting. The company estimates that the annual U.S. market for ANJESO is approximately $1.2 billion, based on the number of patients who undergo surgical procedures that require moderate to severe pain management.
The company believes that ANJESO has a competitive advantage over opioids and other NSAIDs, as it offers a rapid onset of action, a long duration of effect, a low risk of addiction, and a favorable gastrointestinal and renal safety profile.
Baudax Bio also expects that its pipeline products will address large and underserved markets in the acute care setting. The company estimates that the annual U.S. market for BX1000 and BX2000 is approximately $1.3 billion, based on the number of patients who undergo surgical procedures that require neuromuscular blockade and reversal.
The company believes that BX1000 and BX2000 have a competitive advantage over existing agents, as they offer a faster and more predictable onset and offset of action, a lower risk of residual paralysis, and a better compatibility with other drugs.
The company estimates that the annual U.S. market for BX3000 is approximately $2.5 billion, based on the number of patients who suffer from post-operative and chronic pain conditions.
The company believes that BX3000 has a competitive advantage over existing local anesthetics, as it offers a longer duration of effect, a lower risk of systemic toxicity, and a better biodegradability.
The investor sentiment and outlook
Baudax Bio has a mixed investor sentiment and outlook, as reflected by the stock price performance, analyst ratings, and earnings expectations. The company’s stock price has declined by 76% since its spin-off from Recro Pharma in November 2019, and has traded below $1 per share since August 2020.
The company’s stock price has been affected by the negative impact of the COVID-19 pandemic on the elective surgery volume, the uncertainty about the future cash flow and profitability, and the dilution risk from potential equity offerings.
The company’s analyst ratings are also mixed, as shown by the consensus estimates from Yahoo Finance. As of December 18, 2020, the company has two buy ratings, one hold rating, and one sell rating, with an average target price of $2.75 per share, which implies a 195% upside potential from the current price of $0.93 per share.
The company’s earnings expectations are also mixed, as shown by the consensus estimates from Yahoo Finance. For the full year of 2020, the company is expected to report a net loss of $1.38 per share on revenue of $8.6 million, which represents a 15% improvement in net loss and a 1,433% increase in revenue from the previous year.
For the full year of 2021, the company is expected to report a net loss of $1.16 per share on revenue of $28.7 million, which represents a 16% improvement in net loss and a 234% increase in revenue from the current year.
Conclusion
Summary of the main points
Baudax Bio is a biopharmaceutical company that develops and commercializes innovative products for acute care settings.
The company’s lead product is ANJESO, a non-opioid analgesic that was approved by the FDA in February 2020, and was launched in the U.S. market in May 2020. The company also has a pipeline of other product candidates that are in various stages of development, such as BX1000, BX2000, and BX3000.
Baudax Bio’s financial performance, prospects, and challenges are mixed, as shown by the revenue and expenses, the cash flow and balance sheet, the profitability and growth, the regulatory and competitive environment, the market potential and demand, and the investor sentiment and outlook.
The company faces significant risks and uncertainties, but also has significant opportunities and potential.
