Q3 2020 Theratechnologies Inc Earnings Call
Ladies and gentlemen, this is the operator todays conference is scheduled to begin momentarily until.
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I would like to remind everyone that this conference call is being recorded today October 15th Twentytwenty at 838 am Eastern time.
I would now like to turn the conference over to Dennis <unk>, Vice President Communications and corporate Affairs Mr. Shane. Please go ahead.
Thank you very much and welcome Mr. Polys, I, President and Chief Executive Officer of technologies and Mr seed, Judith Senior Vice President and Chief Financial Officer will be the speakers on today's call acuity period open exclusively to financial analysts will fall with her presentation.
Before the call begins his remarks I've been asked by her technologies to read the following message regarding forward looking statements.
I would like to remind everyone that very technologies remarks today contain forward looking statements about its current and future plans expectations and intentions results levels of activity performance goals or achievements or other future events or developments in preparing these forward looking statements. Several assumptions were made by 30.
Apologies and there are risks that result actually obtained by the company.
Will differ materially from those statements as a consequence the company cannot guarantee you that any forward looking statements will materialize and you are cautioned not to place undue reliance on them.
Right technologies refers current and potential investors to the forward looking information section of its managements discussion and analysis issued this morning as to the risk factors sections over 10 real information for dated February 24th 2020 available at Triple W. Dot cheaters dot com and on Edgar at Triple.
W. Doug if you see that she will be as an exhibit to its reports on form 40 F dated February 25th 2020 under third technologies public filings.
Forward looking statements represent very technologies expectations as of October 15, 2020, except as maybe required by securities laws. There are 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.
Last few months have been both productive and challenging.
On September 10, we announced our intention to develop to some origins for the treatment of Nash in the general population, one, including a small cohort, but people living with HIV.
This is a major development for third technologies, which I will come back to in a moment.
On the revenue side the quarter was impacted by the COVID-19 situation, which continued to impair our ability to deploy our resources in the normal way, that's making us making it more difficult to bring our messages to health care providers and patients in fact.
In fact patients are no longer going to clinics and hospitals as much as they normally used to.
Well many thought we were going to see really from the coated crisis slowly, but surely as of June remote detailing remains a norm in key states, such as California, Florida and Texas for.
For a company like third technologies growth comes from capturing new patients and that comes from effective and tractions with our patients and physicians, which since cool bid had been significantly challenge our capacity to be effective at attracting with physicians and patients in the remote environment needed to be addressed.
Another underlying issue that we needed to address was to provide more education to physicians and patients on the medical benefits of true Gardasil integrative might do.
By doing so we can also increased their presence as two very innovative treatments in the fight against HIV deep.
These two medicines challenge existing treatment paradigm by.
By building a more effective educational activities. We believe we can evolve the current approaches to treating this disease.
The cobot environment, coupled with the education gap, we saw amongst patients and physicians were I will call for change.
And this is why we have to redeploy forward sales infrastructure differently to put more emphasis on a medical education and effective remote with interactions.
Revenue for the third quarter of 2020 decreased 13% compared to the same period last year, even though.
Even though our numbers were greatly impacted by one off items. It was clear to me that we needed to adapt immediately to our current environment and it is not lobbyists that even when dependent mic is over our way of doing business in the pharma industry will be changed for ever.
The same can be said about the you well, we're now adding resources to capitalize on recent launches. We're also considering deploying the changes we made in the U.S. to increase our effectiveness there as well on September 11, Germany became the first country in the EU, where trivago was commercialized.
We expect Norway to be next.
As a result, I expect that the contribution of Europe to our top line will gradually grow over the coming months extra bars, though becomes available in more countries. In addition, early access programs will continue to generate new patients in countries, where such programs exist.
Well, we're still a month and a half away from the end of the fourth quarter. The first six weeks are looking good and I think that we have and not optimal structure to generate growth in a rather challenging environment.
Now, let's talk about our plan for developing our pipeline on Sept.
On September 10, we needed hugely important announcements regarding our intention to pursue the development up to somewhere in and for the treatment of Nash in the general population.
We made this decision after asking our south.
If we had sufficient data to support conducting a phase three trial in non HIV patients if we couldnt be competitive in the marketplace.
And if we had a strong enough intellectual property.
To help us in reaching the right conclusion, we conveyed a group of six well world renowned experts in the field of Nash. These experts appreciated what they saw in our data and concluded that we had the basis to move forward with phase three development off this morning for the treatment of Nash in the general population.
Once our study protocol is submitted in the fourth quarter of 2020, we should have an answer from the authorities within 30 to 60 days.
At the same time, we are progressing with our oncology program. We have almost completed in our preclinical work for T.H. 19, or two and we aim to file an investigational new drug application in the fourth quarter of 2020.
Our objective remains to initiate phase one study with our lead compound th 19 or two in early 2021 the most.
The most recent data presented in June all point towards a potential new and novel approach to treating various types of cancer through better efficacy and tolerability.
So as you can see we have a number of important catalyst coming up for both of our promising pipeline programs. While much work lies ahead of us I feel strongly that we are building tremendous opportunities for the company going forward on that note I will now turn it over to Filip to present our financial.
All results and come back with a few closing remarks today.
Thank you Paul and good morning, everyone.
Results for the third quarter of 2020 came in below our expectations, while prescription growth has clearly been impacted by the ongoing pandemic several nonrecurring items contributed to our Q3 revenue numbers.
The first item is related to the final transition grifter Tupi graft SVB.
A number of pharmacies have indicated that they would return original grifter units in exchange for a grip to SVP units why we book the returns in Q3, we will only book the corresponding revenue in Q4 since we had not shipped these replacement units at the end of Q3.
This is a one time event as there are no longer any original gripped our units at the pharmacy level.
Our net revenues were also affected by larger than anticipated rebates and charge backs to government payers in the United States and finally, our distributor adopted a tighter inventory management at the end of our third quarter, which resulted in lower orders in August.
The situation appears to have normalized judging from the ordering since the beginning of September.
Our third quarter consolidated revenues were down 12.8% compared to the same quarter last year, reaching $14 million compared to $16.1 million.
Congrats to sales amounted to $6.9 million, representing a decrease of 25% based on.
Based on the sales for six weeks of Q4, we are confident he grifter as V sales will Bruce will resume growing compared to Q4 2019.
Regardless sales did marginally better increasing 3.8% in Q.
In Q3, 2020 sales reached $7.2 million compared to $6.9 million in Q3 2019, despite the challenges of Goldman.
While new prescription prescription growth was lower than anticipated. We are encouraged by the high compliance and adherence rate of triggers all patients.
Cost of goods sold in the third quarter of 2020 amounted to $4.6 million down from $6.1 million for the same quarter last year. This is due in large part to lower sales of grifter and.
And it is somewhat offset by a higher proportion of trocars or sales, which carries a higher cost of goods.
As we advance the development of tests more than in Nash and of our Assort, one positive technology in oncology R&D expenses are increasing.
Q3 2020.
Good at $4.3 million compared to $2.1 million for the same quarter last year R&D expenses also include Ics.
Expenses related to the medical science liaison team and medical education activities in the us and in Europe.
Selling expenses in the third quarter were up 9% standing at $7 million compared to $6.4 million for the same period last year. This is.
This is mainly associated to increased activities in Europe, as we geared up to the launch of Tagrisso in Germany in September.
General and administrative expenses grew to $2.6 million in the third quarter of 2020 compared to $1.8 million for the same quarter of last year. The increase is mainly associated with the overall business growth.
Increased activity in Europe increased administrative expenses as a result of our U.S. and registration and listing of our common shares on NASDAQ in October of 2019, and the transition to a new CEO.
As a result of the various explanations I just provided we recorded a negative adjusted EBITDA of $3.2 million in Q3, 2020 compared to a negative adjusted EBITDA of 1.6 million last year.
In Q3, 2020 finance costs amounted to $831000 compared to $1.2 million Q3 19.
Finance costs, mostly represented interest on the senior convertible notes issued in June 2018, and were offset by a foreign currency gain in Q3 2020.
So the third quarter 2020, we recorded a net loss of $6.7 million or nine cents per share compared to a net loss of 1.6 million or two cents per share for the same period last year.
During the quarter, we paid the second and final installment of the 7 million dollar sales milestone owed to time at our.
Our operations, including working capital variations were mostly cash neutral generating $277000 of cash.
Our financial position remains strong with close to $27 million in cash and bonds at the end of the third quarter.
On this I will now turn to Paul for his closing remarks.
Thank you for that.
As you just heard from fit if we still have a strong cash position that gives us the latitude to move forward with our plans.
Our decision to go ahead with the development of to some more than for the treatment of Nash and the general population is a bold move grounded in the confidence we have but the simonton and its probability of success, which is widely supported by our scientific advisors sales.
Similarly to the Nash program, our oncology platform is demonstrating demonstrated nothing short of spectacular results in all animal models. It appears our sort one positive technology concentrate cytotoxic agents into cancer sales without creating new lenient, which is one of the main causes of cancer treat.
Men discontinuation. This is game changing addition.
Additionally, sort one receptor we tend to over express themselves in hard to treat or advanced cancers. Another key feature.
Based on these key findings, we intend to file Eni and de for a first in human phase one trial before the end of 2020.
Anyone following started technologies activities over the last several months likely observe how diligent we work in preparing the ground for the next phase of development of both this some more of that in Nash and I were sort one positive technology.
As far as our Q3 results our concern it is obvious that COVID-19, that's had an impact. However, we acted responsibly in launching a new U.S structured to adapt to the corporate environment.
Leveraging technology, and increasing our patient and physician interactions and education initiatives. We believe we can raise awareness about the medical need for our current HIV medicines with.
With our new U.S. sales infrastructure and the launch of Arsenal in Germany. We are confident that we are on track for growth as of the fourth quarter of 2020 and going forward.
Finally, while no one could have ever predicted the pandemic or how long it would impact us all we believe that we have effectively navigated through the challenges of coated and we acted with the responsible and decisive approach that that set the stage for future growth.
I want to thank you all for being on the call today, we will now take questions from analysts.
Thank you at this time, we will be conducting our question and answer session in order to ask a question. Please press Star then the number one on your telephone keypad, we'll pause for a brief moment to compile it came in a roster.
Your first question comes from the line of Brian Abrahams with RBC capital markets. Brian Your line is open.
Hi, This is Lee on for Brian. Thanks for taking my question I guess I'm curious if you guys have had any additional interactions with the agency since you announced the Nash trial plan and particularly whether you have any additional clarity on whether you need to show biopsy or histology data in Nash patients.
Before progressing to phase three and I guess, what kind of what the last EPS yarn finalizing a protocol you know any of.
Any of the latest thoughts there, perhaps key secondary endpoints. Thanks.
Well. Thank you for the question and that is as you know, we basically announced that we had that decided to go into the Nash General population. We have a protocol that is being developed but as you know there is a lot of activities in that space at this time and while we are finalizing our protocol, we want to make sure that we.
Don't deprive ourselves from any insights anything that can actually make us learn what can make a difference. We know we have a medicine that can prove to be effective and safe in the treatment of Nash, we absolutely want to prove that and to prove it we need to have the right protocol. So we're looking at final.
Anything you know our protocol by cooling from all what we can learn companies that that sale inputs from the agencies and any advisories that actually have a you know, but some additional insights in the last couple of months based on what has happened in the Nash space. So this is very important to us and.
We just want to have the right protocol to bid over its John do you want to add anything out of the I guess as a feedback thats, where obtaining and when we're looking at at the moment and the protocol should be competed.
And the coming weeks for submission to the agencies.
Got it thanks.
And again, if you would like to ask a question. Please press Star then the number one on your telephone keypad. Your next question comes from the line of Andrew Leno with National Bank. Your line is open.
Hi, Good morning, guys. Thanks for taking my questions I had a couple of.
A couple of quick ones for me I was wondering if you can quantify what had the most impact on on sales.
This quarter I mean was it the tighter inventory larger rebate, the new drug formulation.
Well. Thank you for your question.
I'll try to summarize it for you, but I'll leave it to 50 give you color when it kind of comes down to the one off items, but you know the cobot environment has impaired as I said.
Our ability to reach out to our customers and we found out as well that patients were not going to clinics.
The normal way so that is going to change you may have seen at any type of campaigns going from doctors themselves to say, there's something going on now we don't we're not making EPS as many diagnosis as as we used to and as such you know patients will suffer from that in the long run so I think that slowly but surely as of.
September things are somehow resuming to a new normal and were getting out of that words phase that we had in the third quarter. So the Colgate environment was certainly an issue and we acted to to become more efficient in the way that we're going to be reaching out to our doctors in the remote fashion in the next.
Couple of months.
Fewer patients going to to the clinics I think that that is going to resume and you know as I said there were a few one off items that I will actually asked where they have to cover.
Yes, and there wasn't really one item that that had more impact than the other obviously for both products the inventory levels at our distributor.
Had an impact on both products.
Egress out was was more of a perfect storm where they were.
Inventories were lowered.
We had the returns of the F. One units the charge backs. So it wasn't really one item that was pretty much all items that impacted equally but just the.
The fact that we have three or four.
That is why the results are up are what they are.
Okay in other words that change.
Go ahead.
Oh, no I was just trying to.
Asking so.
3 million write down from the inventory, we expect that I mean that is sort of the quantum to reverse in Q4.
Yes, but.
That that number will be reversed in Q4, if we had done it intra quarter. It would have been zero, but since we did at the end of the quarter and.
There was an impact on on Q3.
The corresponding impact will be in Q4.
Okay, great. Thank you and the last one for me Paul you mentioned that Germany.
Going to well initially and you're going to launch in Norway.
I was wondering I mean, you can provide some kind of sort of broad strokes on how we just comparing the initial launch in Germany, and I know, it's impacted by Colby I mean, excluding that.
Excluding that how is that developing versus your expectations and number one versus the us launch number.
Number two but that means adjusting obviously for that Covidien back.
Well. Thank you for the question again, the Trocars Awards launch in June.
In regards to was launch in Germany mid September and at the time, a Germany was not confined so would the symposium that we had a we which was conducted with light life doctors. So it was extremely well attended the interest is very high the queue well understand the medicine and as I said there.
Earlier, there's an education phase that is tremendously important parts regards to regards always unique doctors have to understand that the viral load needs to be control and to regards always probably the best add on because it has a long half life long duration of action provides good coverage for the month in combination with other medicines.
So I think it will impose itself nicely the only concern that we have at this time is the Colgate environment. Because you know things are not pretty in Europe. At this time, so one more reasons to set up to be efficient in the remote detailing environment in a way to reach out to our customers and patients now.
Bridging technology and this indication to say that it is extremely important we'll make sure that we learn from the U.S. and more.
More it's more when it comes down to that.
Great. Thank you thats it thank you guys.
This concludes our question and answer session I will now turn the call back over to Dan is pushing for closing remarks.
Well. Thank you very much as there are no additional questions. At this time, we will conclude this mornings conference call on behalf of everyone here at their technologies I would like to thank you for being on the call today and I wish you all a very pleasant day. Thank you.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.
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