Q2 2020 Theratechnologies Inc Earnings Call
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To remind everyone that this conference call is being recorded today July 15th 2020 at 830 am Eastern time.
Now, let's turn the conference over to didn't even Cherry Vice President Communications and corporate Affairs. Mr. Boucher <unk>. Please go ahead.
Thank you very much. Thank you and welcome Mr., probably they president and Chief Executive Officer third technologies as well as Mr.. She didn't gibbins senior Vice President and Chief Financial Officer will be the speakers on today's call acuity period open exclusively to financial analysts will follow with her presentation.
Before Paul begins his remarks I've been out biker technologies to read the following message regarding forward looking statements.
We'd like to remind everyone that their technologies remarks today contain forward looking statements about its current and future plans expectations and intentions results and levels of activity performance goals or cheap branch or their future events or developments.
In preparing these forward looking statements several assumptions word made by third and acknowledge east and there are risks that results actually obtained by the company will differ materially from those statements.
Consequence to company cannot guarantee that any forward looking statement will materialize and youre cautioned not to pay undue reliance on that.
Technologies refers current and potential investors to the forward looking information section of its management's discussion and analysis issued this morning and to the risk factor section of its annual information form dated February 24 in 2020 available a triple double you got to see through Dot com and on Edgar.
Triple W. FCC Dutch you won't be as an exhibit which reports on form 40 F dated February 20 to 2020 Undersecretary knowledge these public funding.
Looking statements represent very technologies expectations as of July 15, 2020.
Yeah, that's may be required by securities austerity technologies does not undertake any obligation to update any forward looking statement, whether as a result of new information future events or otherwise I would now like to turn the conference over to Paul.
Thank you Denise good morning, everyone and thank you for being with us today.
Here, we are a border after in North American went into current climate.
For most companies companies. This has been one of the most if not the most challenging quarter ever from an operational and financial perspective.
All right technologies wasn't not immune to that.
We're salesforce went into confinement borders workflows traveling with all but ban our head offices in Canada in Europe went into kind of work moat nothing to help when you were looking at growing the company yet we managed to grow revenues my almost 10% compared to the same quarter last year through bars.
So did particularly well with net sales up more than 13% and agreed the sale up 7%.
Under the constraints in circumstances that the company experience, we're happy with a topline financial results.
It seems that free now with the coldest pandemic situation is slowly improving but uncertainty still lingers as we can see in some parts of the United States as we move on would want to ensure that we capitalize as much. We can on the current fine minute that couldn't continues to serve as a strong reminder, that treatment leniency has no.
Oh place in HIV.
During the conference call of our first quarter earnings in April I laid out my plan for the free 60 or 90 days.
Now trying to report back on many observational and initiatives made over the last three months.
Before joining started technologies I conducted my only due diligence and the company.
Concluded that both trocars, though many great stuff or truly unique and address significant unmet medical needs in HIV.
I can assure you now that after 100 days that third technologies I have not changed my mind.
Regardless of what team breakthrough drug designation in priority, we view into your Wes because it is truly unique but for physicians and patients you can only be meaningful as long as they need is well understood.
What I don't covered in my 100 day deep dive analysis is that HIV providers are we to lenient when it comes to detectable viral loads. Indeed do not carry a sense of urgency to tackle the issue.
In fact, I phone there is a false sense of satisfaction in this category for the way patients are currently being treated.
How can I make such a claim.
Well simply because there is still one in five patients what the non controlled HIV note.
Two factories or root causes are often to blame for that.
Firstly, many anti retroviral combinations that doctors use are no longer as effective as they used to be.
That's surprising.
In fact, it's not many are these lose effectiveness over time due to resistance, but there's more to it another significant reason to viral load is 40 control in as many as one in five patients is the fact that many patients do not to take their medicine as prescribed.
Taking many medications every single day, it's not easy when you also think of side effects associated with some anti retroviral overtime. It can become a burden for patients.
This can lead to the development of resistance into the resurgence of viral replication.
True bar soap assesses five key features that make it does that add on for many on control patients.
Complimentary motive action low resistance pattern.
Safe effective and a long duration of action ensures that patients are well control with only two short 15 minutes infusions per month.
Well this could sound like a disadvantage for 80% of the well controlled patients with their current therapies. It is reversely a key advantage for those 20% currently on control.
This is at a core of our messages to HIV providers and patients.
Furthermore, the Cobiz 19 crisis, that's wherever shattered the meant that the noncontrolled viral load is not a big deal.
We now know that Noncontrolled HIV carriers are the most.
Risk populations to get secondary infections, such high school that 19, indeed bullet proof protection against any type of infections.
The need for guards always even more obvious now than it was prior to the crisis.
But our job is not done we need to scale up our education programs to both ichi piece and patients so that they understand the risk they face by not being control and the benefits Trocars will provide.
I believe this is starting to be visible correct were second quarter financial results, while cams were home not only did we maintain our base to patients with we grew sales by 13.2%.
We believe that this is signaling a positive trend for the future trocars him.
Let me know tearing too aggressive.
At the time of approval with 10 years ago, the scientific understanding of life with dystrophy wasn't what it is today most providers believes that likely dystrophy was a non serious customary conditions.
This mindset that's change science has revealed that lipid district is often the starting point for natural or fatty liver Nash fibrosis and liver failure.
Many patients migrate from like will distribute to natural Retime NAFLD and Nash are known to cause serious metabolic disorders, along with an inflammation cascade, which leads to long term damage to deliver due to the formation of scar tissue.
Since its launch we have continued to study aggressive though.
Leading to the recent publication of the Phase two trial, Glenn said HIV showing the efficacy of to someone in on this real fat and on the progression from progression of fibrosis.
Did they know what's so powerful that we decided to pursue the development of system Marlin into treat enough Nash and people living with HIV.
Similar to Trocars, though much education is needed among HIV providers, we must ensure they no longer see lipid district isn't medic issue, but rather as a serious medical condition to achieve this we will not be lines, a group of endocrinologists, who better than anyone can explain metabolic.
As orders and their consequences.
Treating like will disrupt the might be the best prediction patients can have at this time when it comes to the patient or the potential dire consequences associated to both NAFLD and Nash.
As announced earlier this month, we successfully completed the Bioequivalent study evaluating a new formulation of to someone and call DS eight.
New web based formulation provides much greater convenience to patients as it offers stability at room temperature and a much smaller volume of administration.
In addition, DFI formulation has the potential to attract new patients and significantly improve treatment demonstration for current patients being treated for like with district.
We intend to file a supplemental biologics license application or BLE for the S. Eight formulation in early 2022.
I believe we now have to Pat well paid and the tools needed to grow or to commercialize assets in the short and long term, our marketing sales and medical activities are now how worried with all the necessary to occasion programs to effectively communicate and influence both HIV providers and patients.
This new plan is being deployed with laser focus attention. Despite the complexity of having to navigate through co bid at the same time.
When I worked commercialized assets are only one part of the story as you know we have an exciting and promising pipeline.
During the last quarter additional data was presented on our unique sort one positive technology targeting sort of been receptor is on cancer cell.
Results are impressive and very exciting.
Most recently a three posters were presented that the virtual meeting up the American Association for cancer Research.
All three posters reported positive results the one on the impact on that's true low Janet mimicry was particularly interesting as it turns out it seems that targeting sort one receptors inhibits the formation of micro basket or channels, which are associated with cancer resistance. This is.
In huge finding.
The poster on the conjugation of our peptide structure came in was equally fascinating.
Turkoman, it's a well known anti cancer agent, but it would require swallowing on realistic quantities of turkoman to hope to observe a therapeutic effects.
Conjugated to our peptide curcumin has 50 to 100 times more anti cancer activity.
Then turkoman alone.
While we currently have no plans to pursue the development of curcumin in cancer. At this time. It provides further evidence that our technology potentiate anti cancer agents and that it has a white applicable applicability.
Finally in vivo results with our lead candidate th 19 or to continue to demonstrate very promising results in triple negative breast cancer.
Not only is it more effective than on conjugated ducs your tax up but it does not induced neutropenia neutropenia is one of the most dangerous consequences of traditional cytotoxic agents because its weekend. The immune system affiliation then makes them extremely vulnerable to all kinds of infection.
As you can appreciate the clinical development of our sort one positive oncology technologies progressing very well and the more we advance the more it looks promising.
The development of to somewhere in and for the treatment of Nash and HIV patients is another major element.
Our research pipeline.
As we reported two on our last earning calls we were in discussions with the Reagan seized to find a comment approach for the late stage clinical development of this program.
Based on discussions we believe we now have a very good understanding of what will be required to run the successful and competitive phase three clinical program.
We're now working with our scientific advisors, which is another important step towards implementing an efficient the three development strategy and regulatory pathway.
We expect to be able to provide more information on were Threethree plan, including further details on the protocol and endpoints in the coming months and we expect to initiate the phase three trial around Deanna this year.
Lastly, we announced last week that drove ourselves show in vitro efficacy with HIV too.
This is a new element to add to our pipeline, which represents another opportunity in Europe.
Our next step will be to assess how we try to patients could easily have access to true Arsenal.
As you can appreciate Colby there, we're not we're not wasting any time and missing any opportunities on that note I will turn now it over to believe to present, our financial results and I'll come back with a few closing remarks.
Thank you and good morning, everyone.
As Paul just mentioned, we managed to record respectable growth for a second quarter. Despite the whole covance situation.
While under normal circumstances, we would have looked for an even better performance I certainly believe that we can be satisfied with what was accomplished in the last three months.
Our second quarter consolidated revenues were up 10% compared the same to the same quarter last year, reaching $17.2 million up from 15.6 million.
Hey, Grifter sales amounted to 9.3 million, representing an increase of 7.3% I.
Im also happy to report that the transition phase from drift up to the grifter as fee is now mostly complete which means that we only actively market grifter as be going forward.
[noise] Trocars wholesale did particularly well with an increase of 30.2% compared to the same quarter last year.
In Q2 2020.
Regardless sales reached $7.9 million compared to $7 million for the same quarter last year.
As our sales reps gradually resume traditional detailing and implement more activities. We believe that the loot last two quarters of 2020 will generate stronger growth than the first six months of our fiscal year.
Cost of goods sold in the second quarter of 2020 amounted to $7.4 million up from 6.6 million for the same quarter last year. This is due in large part to all through the overall increase sales after garceau, which carries a higher cost of goods than a grifter.
Looking at R&D expenses, the increased to $3.6 million in Q2, 2020 compared to 2.3 million for the same quarter last year.
The increase can largely be attributed to the work done our drug pipeline as well as various medical education activities and regulatory affairs expenses.
Selling expenses in the second quarter were stable at $6.9 million compared to last year.
General and minute administrative expenses grew to $3.7 million in the second quarter 2020, compared to 1.8 million for the same quarter last year.
A nonrecurring expense related to the CEO transition.
Our listing on NASDAQ and the increased activities in Europe are behind this increase.
We recorded negative adjusted EBITDA of 1.5 million in Q2 2020 compared to positive adjusted EBITDA of $453000 in Q2 2019.
The EBITDA was most impacted by the CEO transition related expenses as well as by increased investments made towards the commercialization of regards over in Europe increased medical and regulatory affairs spending and our investment in our assort one positive technology.
In Q2, 2020 finance costs amounted to one point $37 million compared to $1.5 million in Q2, 2019 finance costs, mostly represent interest on the senior can better convertible notes issued in June 2018.
Well the second quarter 2020, we recorded a net loss of $5.8 million or eight cents per share compared to a net loss of 3.2 million or four cents per share for the same period last year.
At the end of second quarter, our financial position remains strong with $31.6 million in cash and bonds on this I will now turn to Paul for his closing remarks.
Thank you fill it in a world that almost came to a complete and sales for the whole quarter, we recorded 10% growth in revenue.
I think that we've been able to capture deal Fourtwenty coded represented.
In starting to instill a sense of urgency among physicians to treat HIV patients that are not well control.
Our job going forward will be to continue building that sense of urgency into position to bars. So as the perfect add on it actually fit.
With the transition to adrift ends the mostly completed I were staff can turn their full attention to changing to perception towards like with district.
Again like with Dystrophies, a serious admit metabolic disease, leading to kept that tropic endpoints, such as NAFLD and Nash, we are not sending cosmetic product here, we're selling a product to treat a condition that has to be taken very seriously with renewed focus a new narratives our full field forces.
Understand the potential of our two products.
And it is with the same enthusiasm that people here are working flat out to move our pipeline forward.
We have delivered growth in west must have been the most difficult conditions I have witness in my career and as I said before we are growing company, which was slowed down by cold it given to close it is not over we'll keep finding and implemented implementing creative ways to reach out to our audience in gen.
The rate as much growth as we can I want to thank you all for being on the call today, and we will now take questions from analysts.
Certainly at this time, if you'd like to ask a question. Please press star one on your telephone keypad again that is star one on your telephone keypad.
Brian Abrams with RBC capital markets. Your line is open.
Hi, a it's a leo on for Brian. Thanks for taking my question I guess I had one on some of the regulatory path do you guys see any read throughs for your Nash program from the recent CRL for Ocaliva Ocaliva.
Do you have any concerns that the regulatory agencies are reevaluating sort of the safety and efficacy bar and surrogate endpoints for Nash and how do you see that's affecting certain specialty the agencies in your own thoughts on the trial design.
Well. Thank you for the question actually we follow obviously, what's happening into space.
As you are.
I, just one Q will be clear.
No we are still consolidating the feedback that we got from the two agencies, we had very good understanding what needs to be done now were evaluating all our options you. When it comes down to a you know what would be the path forward. What I were scientific advisors, what is important to us.
Is to find a way to tip this over and get an approval and I don't think that you know what happened recently in that space as change anything to that although we keep monitoring the situation and I can assure you that whenever we're going to had additional details will be the first you know and we're confident that within the next couple of months, we'll have affirmed plan that.
We will be very happy to release and dosing patients at the end of this year. Thank you for your question.
Edward Nash with Canaccord Genuity your line is open.
Hello, everyone. This is Adam on for Edward and Thank you for taking my question. Congrats on the financial results and recent announcement on the bio equivalence studied formulation for test umbrella enough that's great news.
So if your question for us on the last earnings call you discussed, but R&D spending increase in 2021, given the new indication cancer sort one technology that youre targeting could you provide any additional color around R&D spending for the rest of the year 2020 and into 2021.
Well. Thank you for the question I mean, obviously on we have been spending a bit more money due to the development of the the pipeline.
If you want to give additional color, while we don't we're not going to discuss that right right now Adam but.
I will keep in touch with you.
As I said as as the clinical programs.
Get initiated R&D spending will go up.
But we're not quite ready to disclose that we're finalizing protocols and all that so we'll we'll be discussing that as the protocols become final.
Yes, thank you for that and another question the revolving around for cars, though could you provide any other update in regard to launching for GARS, though in different you jurisdiction.
That might affect.
Yes. Thank you.
We were very pleased with the.
For reimbursement strategy that is pointing in Europe. So we believe we're going to have a price that will be a very significant we don't have any finalization that this time, but it's very promising if everything goes well, we should be able to launch in both in Germany, and Norway before the end of this year. So with this is significant this is the beginning of it.
Good journey for us as all the other countries will actually rolled out in early 2021, you'll Don do you want to add anything to this no I think you you've covered it off 12, Paul the only thing I would add is at the same situation that we're facing us with the co bid.
We have a similar dynamic in Europe, although seems to be much better situation in Europe and this new restaurant.
Great. Thank you for taking my question.
Again, if you'd like to ask the question. Please press star one on your telephone keypad wondering leno with National Bank. Your line is open.
Hi, Good morning, guys. Thanks for taking my questions and congrats on the quarter I just two quick ones from me pardon me. If you are equal to provide a little bit more grand need Laurie I agree and clarity on the scale, particularly into your west is.
Endemic seems to have shifted from nor its more like from New York to more tech.
Florida, and California, any impact on sales or any color.
On how you expect those to develop in Q2.
Our Q3, rather sorry thanks.
Thank you injury for the question well suffice to say that has been challenging and I think we've been one of the first company to react into actually shift activities. As we were saying that face to face calls could not be made anymore. We're certainly not with the same frequency.
So we've been turning to webinars within turning to speaker programs, and we're going to be scanning that even further now that two things are developing the first one is that we need to do more education as I said in my speech.
And the second point is that you know as as some of the states are going back to confinement or some sort of confinement, we believe that might be difficult to what you know resumed normal activities with face to face calls you'll find do you want to provide additional color SaaS as Paul said education education.
Key any.
Significantly increased the webinars and educational programs.
We have actually been proactively scaling up on us and we recognize that we need.
Agile.
For that.
The the corporate banking situation should not prevent us from increasing these programs with providers as well as with patients and we continued to be very active in this space.
I'm sorry, but this is the machine here from measure technologies, there someone with a microphone opened that is preventing us from having a clear conference call.
So either in the people that.
Yeah, I don't know.
Okay.
Okay. Thank you very much.
Operator are there any further questions.
There are no further questions at this time I would now like to turn the call back over to Mr. Bouchey for final remarks.
Well. Thank you very much if there are no further questions. At this time, we will conclude this morning's conference call on behalf of everyone here at Theres acknowledges that we'd like to thank you for being on the call today and I wish you a very pleasant day. Thank you.
This concludes today's conference call. We thank you for your participation you may now disconnect.