Q3 2019 Earnings Call

Good afternoon, ladies and gentlemen, my name is Gabriel I will be your operation today.

Welcome to my Therapeutics incorporated 2019 third quarter financial results Conference call.

Before turning the call over to Jonathan Ross Goodman.

See overnight listeners are reminded that of course, the portions of today's discussion me by their nature necessarily involve risks and uncertainties. The could cause actual results to differ materially from those contemplated by the forward looking statements.

And he considers these assumptions on which these forward looking statements are based to be reasonable at the time. They were prepared cautions that these assumptions regarding the future events, many of which are beyond the control of the company and so it's tough to subsidiaries may ultimately prove to be incorrect.

Company disclaims any intention.

We're obligations to update or revise any forward looking statements whether result, new information future events.

But as required by law.

Also like to remind you questions during today's call will be taking from analysts.

Should there be any further questions. Please contact nights Investor Relations Department.

<unk> email to info at Goodnight Dot Com, that's Gee, you de Kate and high G.H.T. or via phone at five one for 6788 930.

I would like to remind everyone that this call is being recorded today November 12, 2019, and then I like to turn the meeting over to your host for today's call Jonathan Ross Goodman. Please go ahead mr. because.

Thank you gave real good afternoon, everyone and welcome Tonight Therapeutics third quarter 2019 conference call I'm joined on today's call with Tomorrow socket, our president and CFO I'm out of court RVP business Dipalma, Arpan, China RPP finance.

We're pleased to report that we've executed on our strategy of building a Canadian rest of world specialty pharmaceutical company with the transport <unk> acquisition appear to us kinda investments I say or GBT.

This transaction will establish night as the Pan American acts USA in licensing partner of choice.

In addition, during the past quarter, we do path or Canadian product pipeline would help kind of a poop off narrowing the submission upto, yes, though for regulatory approval and the lifting up probuphine for reimbursement through certain public insurance class. This will likely be our last quarterly conference call well, we don't have the topics.

Hi, Andrew.

How to account for hyper inflation or the weather Montevideo, the California, Uruguay and GP teeth headquarters I will now turn the call over the summer who'll walk to our progress.

Thank you Jonathan good afternoon, everyone I'm going to go over the advancement of our Canadian portfolio and pipeline. We just continue to advance during the quarter.

On July 16th two.

2019 health, Canada approve Norlake city extended given treatment of adult patients with early stage her to over expressed amplified breast cancer. Following advent herceptin therapy normally Susan novel treatment for patients with early breast cancer and is expected to be launch in early 2020.

Unfortunately, the Pancanadian hauling you drug review expert review committee or her publish their initial port recommending that normally should not be reimbursed through public insurance line.

Nice filed an opposition to this initial recommendation and were expecting a response from per by the end of 29 team.

Furthermore, in August nice reached an agreement with.

Pancanadian pharmaceutical alliance or PC period for Probuphine and as of today Probuphine is listed for reimbursement through the public insurance claims administered by Alberta, Saskatchewan, New Brunswick, Manitoba Veterans Affairs, Canada, and the non insurance health benefit program.

Have you seen is indicated for the management of opioid dependence in patients clinically stabilized or no more than eight milligrams, a sublingual buprenorphine in combination with counseling and psychological support our commercial team continues to work actively with other jurisdictions to finalize listings across the country to ensure patients have.

To access to this novel treatment option.

In November 2018, Health, Canada approved a late Louisiana sustained release Intravitreal impact for the treatment of diabetic monkeys diabetic macular edema.

September 2019, heavy Canadian agency for drugs and technologies in house publish their final report recommending that ILUVIEN should not be reimbursed through the public insurance.

Now he's working with Alimera sciences, Inc. to assess the resubmission process for reimbursement.

Subsequent to the quarter in October in October Health, Canada, approve nudell decks for the treatment of inside inventory all killer conditions of the anterior segment of the are falling cataract surgery, where I'd just topical therapy to reduce the risk of bacterial infection is appropriate or commercial team is now will now focus on mark.

Good access over the next few months related for foreign that'll docs. Furthermore, in October we submitted Joey Astro for regulatory approval by health, Canada for the treatment of post want it.

It's menopausal symptoms of over and Badgeville atrophy, you do estrogen deficiency.

Oh, yes, the an applicator for yesterday all soft rational.

Capsule is marketed as in fact see by Therapeutics M.D. in the U.S.

In addition, we expect to fall did you buy a bio identical combination HR team for the treatment of is a major system symptoms associated with menopause later this year.

I'm not going to turn the call over to Arvind to go over the financial results for the quarter a nine month.

Thank you Sarah.

I'm pleased to report that put a quota ended September 30 of 2019, we reported revenues of $4 million, an increase of $810000 or 25% versus the same period last year.

For the nine month period ended September for T. F 2019, we reported revenues of $10.2 million.

An increase of $1.6 million or 18% as compared to the same period last year.

The increase was mainly attributable to the timing of sale of in probably do and the growth in Movantik sales.

According to I truly I'd tell more about big sales were 1.2 million those for the nine month period ended September 30 of 29 team.

Compared to $963000 put us in period last year.

Our operating expenses for the quota increased by $3.4 million or hundred and 4% over the third quota of 2018.

And increased by $7.8 million or 77%.

For the nine month period compared to the same from last year.

The increase for the quarter was mainly driven by diligence and advisory fees of $2.5 million for the acquisition of GBT.

For the nine month period, the increase was mainly due to the GBT diligence and advisory fees as well as expenses of 3.8 million those related to Mad Jack ups and the shareholder activist campaign.

[noise] night expects to incur additional expenses related to closing the GBT acquisition during the remainder of the year and into 2020 .

We don't the unusual acquisition and decided that expenses Jenny expenses for the quarter and nine month period remained fairly flat.

The remainder of the increasing operating expenses is due to an increase in both selling and marketing as well as research and development expenses driven by the preparation for the new product launches into submission of its will enjoy that to have kind of though.

We reported interest income for the quarter of $6.1 million, an increase of 22% or $1.1 million compared to deferred quota of 2080.

Drew to a higher average loan balances and an increase in interest rate offset by decreased in the average cash and marketable securities bonuses.

For the nine month period interest income was $18.1 million, an increase of 21% or $3.1 million over the same period last year.

Due to a higher average loan balances and an increase in interest rates offset by a decrease in the average cash and marketable securities balances.

I will show of income of associates relates to our investment in medicine and is driven by our share of medicines net income.

That does fair value adjustments of intangibles.

For the quarter I wish opened seven cents net income was $1.5 million and fair value I, just might were $1.4 million, which is flat compared to the same period last year.

We recorded and that's Lawson financial assets measured at fair value true profit or loss of $4.9 million for the quarter.

Due to an unrealized loss of $7.9 million explained by the revaluation of to fair value of nice finish all assets, partially offset by a realized gain of $3 million on our strategic fund investments.

For the nine month period, we recorded a net gain on financial asset of $19.6 million.

Due to unrealized gains of 15.5 million those mainly driven by stretched the strategic fun and loan investment.

And they realize gain of $4.1 million an hour financial assets.

Finally for deferred quota of 2019, we reported in net loss of $2.9 million.

Compared to net income.

$1 million into probably appeared.

For the nine month periods ended September for Jeff 2019, We reported net income of 21.2 million those it decrease of $2.7 million or 11% vis versus the same period in the prior year.

I will now turn over to coal to a mall to business development activities and the most specifically the acquisition of GBT. Thank you Arvind in October nine degrees fire and majority interest and be able to scana in Boston and established unprofitable Latin American pharmaceutical company headquartered in Montevideo Your.

Okay.

He is a lifetime partner of choice for multinational pharmaceutical companies and has a diversified portfolio of innovative products as well as a branded generics portfolio.

Before addressing GBT financials, I would like to remind participants that equivalent dollar amount or approximate and are based on the Brazilian real ticket Aegion dollars closing rate exchange rate as of October 18th 2019 of 3.14 or five.

For the trailing 12 month period, ending June Thirtyth 2019, GBT generated revenue of 754 million Ray <unk> or $240 million and adjusted EBITDA of 154 million <unk> or $49 million with Brazil, Argentina and Colombia.

Representing about 86% of revenue.

On October 18th 2019.

Right entered into a share purchase agreement to acquire 51.2% of GBT at 10.96, <unk> per share or approximately 596 million <unk> or $189 million.

The transaction is expected to close on November 29, 2019, upon which 80% of the purchase price wont be paid in cash to the sellers.

And the remaining 20% will be deposited in an escrow account as a guarantee against the sellers indemnification obligations.

The escrow will be released equally over a period of three years and that of claims according to the terms and conditions of the share purchase agreement.

Following the closing of the share purchase agreement nice will launch in mandatory tender offer to acquire the remaining 48.8% common shares of GBP, which straight as Brazilian depository receipts in Brazil.

Assuming all public shareholders tender their shares night expects to pay approximately 568 million <unk> or $180 million.

The tender process is expected to take four to eight months from launch to close.

Following the close of the share purchase agreement and the tender process nine expects to have paid a total of approximately 1.164 billion <unk> or $369 million for the common shares and an additional 154 million ray I or $49 million to cover GBT.

He is not financial debt.

I'll now turn the call back over to severe thank smell now moving onto an update on nights normal course issuer bench, we commenced on July 11 cleaner.

As a reminder, under the Antebi nightmare purchase for cancellation, just over 12 million of its common shares as of November 12, 2019, I had has purchased approximately 7.2 million common shares for an aggregate cost of $54.8 million or $7 at 56 per common share which refers.

That's about 60% of the maximum purchases allowed under the NCB.

I'll now turn the call over to Jonathan for his concluding remarks. Thank you Sarah I am proud of our significant progress in creating a Canadian and rest of the world specialty pharmaceutical company.

Looking ahead, we're excited to welcome TBT his team.

I'll put professionals and to position night assay Pan American commercial solution of choice for biotech companies what late stage innovative.

Products.

Thank you for your support and confidence in the my team. This concludes our formal remarks I'd now like to open up the called questions.

Operator.

Thank you before we begin please remind you questions. During today's call will be taken from analysts only should there be any further questions. Please contact nights Investor Relations Department via email to info at good nice dot com or via phone at five one for 6788 930.

She would like to ask your question. Please press star followed by the number one on your telephone keypad. If you are using a speakerphone. Please lift your handset before pressing any keys.

First question will come from the line of David Novak Raymond James. Please go ahead. Your line is open.

Hey, guys. Thanks for taking my questions and I guess I'll leave my questions around hyperinflation in FX for a future calls, which we've been really just one question on.

On the public recommendation around neurotic <unk> I'm, just wondering if you could provide a bit of color around why the part came to this conclusion, specifically I'm trying to zero in on whether this is largely a recommendation based on the clinical efficacy of this therapeutic into her two positive therapeutic regimen or is it really based on something else.

Hi, So one of things is we're actually really disappointed with how they right. If the data because they really they only focused on a certain aspect of the submission and one of the reasons why we are appealing. This is because we wanted them to look.

Add more specifically at the information that was provided a we have also worked with some came allows as well as patient groups to relay that message. So this is a product that is medically necessary and it needs and it really covers an unmet need in the market.

Okay. So maybe just a quick follow up to that Dan are you getting any push back from the PERC and perhaps.

Typically focused on sort of the increase in trust choosing that based regimens, which in theory, you could maybe push back and Rotten <unk> into the leader active on setting is that something they're focused on specifically or we're not really.

No not really okay, great. Thanks, so much I'll jump back into queue.

Your next question will come from a line of Justin you wouldn't have JMP Securities. Please go ahead. Your line is open.

Good evening and thanks for taking my call just following that line of questions has additional sales rep spin on boarded or to launch the products nerlich. So in a women.

So for at this point in time, what we are we're being judicious we are working more with our medical team and we have added some additional medical.

Sam Science liaisons, but we have not added reps just yet.

Okay, and then how does the recommendations for commercialization plans is a wait and see a and then reevaluate or are you going through Oh, it was the ramp up.

So in the case Gnarling, we will be ramping not at the same pace as we thought we would and for ILUVIEN. We are more in a wait and see for now and.

Until we get reimbursed.

Right understood and then I thought I heard a additional expenses related to GBT for the remainder of this year are still expected.

Just wondering if we could get some clarity on what that could be thank you.

So as you know, we actually closed GBT in the fourth quarter and not in the third quarters or the third quarter was the first portion of diligence and support then Q4. There was obviously more work and as you can imagine there be.

Acquiring the second half a is going to have more work related to wasting each of these cases, there is legal financial and banking fees.

Okay is it fair to assume that Q4 will will show higher expenses than.

It'll be in the yeah.

And you will continue to see it in Q1 and two as well maybe not at the same pace for still fairly high.

Understood. Thank you for taking my questions.

Huh.

Again as a reminder to ask your question. Please press star followed by the number one on your telephone keypad.

Next question will come from a line of Andre Leno from National Bank. Please go ahead. Your line is open.

Hi, good evening, Thanks for taking my questions. Just a couple from me first on the Oh The park a recommendation I mean looking back historically, if you out that's kind of data how often do they are reconsider their opinion softer day of launch an initial a recommendation.

It depends it is rare, but it really depends on the reasons of.

Kind of watch the appeal is in relation to we have seen and Nick in a similar conditions similar kind of assessment that they did reverse there assumption at this point in time, we'd like I said, we expect our we expect to get news from them by the end of the.

And your we are still planning for a launch a next year.

Okay, great. Thank you and God.

Last one for ILUVIEN like what kind of a resubmission.

Would you resubmit there I mean is gonna be more data scientific or like what are you considering about it. Thanks.

What were looking to do is we resubmit the real world evidence because in their process. They actually don't look at <unk> real world evidence in the first review, so it'd be summarizing and putting that back in but we're working with alimera to look at how.

How and when and to the cost related to it.

Okay, and what do you have an approximate time line.

When we would resubmit or when they are one wouldn't recur.

So we're currently still assessing and it would be really in the.

First half of next year.

Okay, great. Thank you that's it for me.

We have no further questions at this time.

Turning the call over back to the presenters.

Thank you for your questions and the confidence we look forward to reporting next as a Pan American acts USA specialty pharmaceutical company.

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This concludes today's conference call you may now disconnect.