Q4 2022 Theratechnologies Inc Earnings Call
Speaker 2: Good morning, ladies and gentlemen, and thank you for standing by. Welcome to Sera Technologies' fourth quarter fiscal year 2022 earnings call. We would like to remind everyone that all figures on this call are quoted in US dollars. At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session with analysts. Questions will be provided at that time.
Speaker 2: First time, all participants are in a listen and limo. Following the presentation, we will conduct a question and answer session with analysts. Instructions will be provided at that time for you to queue up for questions. Following the analyst Q&A session, investors wishing to submit a question made you so by clicking on the Ask a Question link on the webcast platform. If anyone has any difficulties hearing the conference, please press the star key, followed by zero, for operator assistance at any time. I would like to remind everyone that this conference call is being recorded today, February 28, 2023.
Speaker 3: Again, I'd like to remind everyone that fairyteknology's remarks today contain certain forward looking statements containing its current and future plans, expectations, and intentions with respect to future events. Forward-looking statements are based on assumptions and there are risks that results obtained by the company may differ materially from those statements. As such, the company cannot guarantee that any forward-looking statement will materialize and you are cautioned not to place undue reliance on them. We refer current and potential investors to the forward-looking information and risk factors section of our management's discussion and analysis issued this morning
Speaker 3: and available on Cedar at www.cedar.com and on Edgar at scc.gov. Forward-looking statements represent their technologies, expectations as of February 27, 2023. With that, it is my pleasure now to turn the call over to Sarah Technologies, President and CEO Paul Levec. Paul, go ahead. Thank you, Elise. Thank you, Elise. Thank you, good morning, everyone. Today, we will be providing a review of our fourth quarter and full year 2022 financial results. Business developments and discuss what lies ahead for the third technology in 2023. We have a lot to go over, so let's get started.
Speaker 3: First, I want to reduce some of our accomplishments and the milestones we have reached in the fourth quarter, bringing a strong finish to the year. 2022 wasn't just a successful year for Therath Technologies, but also one of big transformation. Well, Philip will be providing a deep dive into the financials later on. I can tell you that our fourth quarter consolidated revenues ended at 21.4 million, reflecting a 14.2 percent growth. More over and will revenues reach 80.1 million or approximately 15 percent growth in line with our 2022 revenue guidance. We are very pleased with these numbers because they revealed to us that the decisions we made during the years such as bringing the sales teams in-house under strong commercial leadership and withdrawing from Europe in order to focus on the United States have made a difference. In fact, these are the very reasons or results that give us the confidence to expect revenues for full year 2023 to come in between 90 and 95 million. With such revenues and tight expense management, we are confident we will achieve positive adjusted EBITDA by year end. Over the fourth quarter of 2022, our capital market's outreach was stronger than ever. And I was delighted to be able to grow within meeting investors face-to-face for the first time in a long time. We appreciated the support of our capital market partners, and we're pleased to welcome two new teams to our coverage. We look forward to working closely with Luis Chen of Canto or Federal.
Speaker 3: We are encouraged, however, that our largest shoulders and nearly 90th-pre million shares help strong. In fact, based on recent filings, our tough shoulders have added to their positions. I want to thank all of our shoulders, big and small, for their continued support. Thank you.
Speaker 3: and these answered in times. On the flip side, the takeaway from the investor reaction reveals to us that there is significant value assigned to the oncology program. Let me be clear. We believe today, as we did on December 1, that the decision to pause enrollment was the right one for our clinical trial, our patients, our company, and our shoulders. It was not an easy decision, but the right one.
Speaker 3: The decision was also supported by the FDA and our subsequent conversation with them. We strongly believe that by triggering some changes to the protocol, we will increase our probability of success. Our plan for TH1902 is to present an amended protocol to the FDA and resume those in patients thereafter. Once the Phase 1 clinical trial has resumed, the company will also evaluate potential partnerships for TH1902. As outlined in my letter to shareholders in January and on many discussion with investors,
Speaker 3: We have built a strong team under the leadership of industry veteran John Leisure, and our team has demonstrated their ability to drive business growth, and our infrastructure allows us to take on more to accelerate the growth trajectory. Let me take a minute now to go over the success we've had with our two brands. They have both clearly returned to solid double-digit sales growth in 2022. A 17.3% increase were at GRIFTA, and 10.4% increase for Trogarzo. Our lead product at GRIFTA is VS, had the best annual volume growth rate since 2017. In addition, when looking at the full of patients that started therapy in 2019, 40% of Trogarzo and 33% of GRIFTA and V patients are still on therapy after 24 months. Increasing long-term compliance was a key success factor for us in 2022, and it looks like we have moved the dial in the right direction.
Speaker 3: accretive opportunities from products that may no longer fit the portfolio of larger firms, but would be a great complement to work products such as those that are in HIV or HIV adjacent, allowing us to leverage our capabilities.
Speaker 3: Such opportunities could translate to in licensing deals, co-promotions, or even a small acquisition. And in the spirit of leaving no stone on turn, we have endured into an agreement with the World Orphan Drug Alliance, WOTA, for the distribution of eGRIFTA's V into 41 countries through name patient programs.
Speaker 3: This experiment may bring a grifter SV to a number of mutations outside of the United States and may be to additional revenues. While we are working towards achieving profitability, defined as positive adjusted EBITDA, I can tell you that we have turned to tightening our spending.
Speaker 3: Moving forward, we will be driving leverage P&L. This means that pivot to more stringent monitoring of expenses during the course of normal business. And we have many one off R&D expenses that will phase out as a function of time, such as the human factor study and the development costs associated to vectoristatic water projection. Talking about the human factor study.
Speaker 3: We are in track to complete the study for a Griffiths Vindepurse half of 2023. We're also confident in successfully addressing the shortage of bacteria's static water injection. We have now identified a third-party supplier for manufacturing the water and have already manufactured the vegetation batches. We are still in track to complete the work associated with the supplemental biological license application.
Speaker 3: We're also working closely with our partner's stimulants, biologics, in completing the data analysis from the study related to the development of an intra-mostrular method of administration for Tugarzo and subsequent filings of a new supplement will be d.na with d.n.
Speaker 3: These projects will serve to ensure life cycle management for horizontal for years to come. Coming back to our pipeline development of TH19-MU2, we are currently evaluating the changes needed to increase the probability of success of the clinical trial. The Scientific Advisory Committee will be providing experts advice and will be critical to examining different dosing strategies. Thank you.
Speaker 3: will serve to ensure life cycle management for Guarzzle for years to come. Coming back to our pipeline development of TH19-U2, we are currently evaluating the changes needed to increase the probability of success of the clinical trial. The Scientific Advisory Committee will be providing experts advice and will be critical to examining different dosing strategies, tumors and patient selections.
Speaker 3: These changes will be made in alignment with the SBA Project Optimus Guidelines, ultimately improving the chance of success of TH192. Let me speak for a moment about the Scientific Advisory Committee, as their collective experience and expertise in the field will be paramount to the future of TH192. In addition to the study's principal investigator, the SAC includes several medical oncologists from across the US were leading experts in the end-to-end life cycle of oncology drug development. We will also continue to seek advice and input from Mace Ruffinburg, which is a module for the latter half of March when the data analysis is expected to be ready. Once experts advice is considered, we plan to properly amend the protocol and resummit to the FDA. I also want to add in here that the FDA has agreed to responding to us within 30 days of receding of our submission. We are commitment to resuming our Phase 1 clinical trial for TH192 remains strong, and we are confident by having...
Speaker 3: that by having an improved protocol will increase our probability of success. Let's turn our heads to a reenergized part of our pipeline. The further development of Tessa Moreland allows Thera Technologies to maintain its positioning as one of the few options for drug developers to immediately partner with a company in order to launch Phase 2B3 Nash and it will triumph. What is more amazing is the fact that repeatedly quarter after quarter Nash was losing momentum as a target within the life science investment community. But that suddenly changed in the past few months as several companies reported extremely positive Nash data from Bureaucinical trials, putting the disease back into spotlight and highlighting partnering opportunities for our Nash program. Moreover, when we compare our Nash candidate to that of our competitor, deliver fat reduction percentages are favorably comparable. Taking this into consideration, we remain extremely optimistic about partnership problems.
Speaker 3: sales were $14.5 million in a quarter, up 13.4% from the same period last year. Increased sales of Agrifta SB with a result of higher unit sales and a higher net selling
Speaker 3: Tribal revenue is in Q4 2022 and it just shies up $7 million up from $6 million in the same period of 2021, representing an increase of 16%. Recall that during the fourth quarter of fiscal 2021, Tribal loan net sales were impacted by a provision related to greater than anticipated fallbacks on units sold in France prior to finalization of reimbursement terms.
Speaker 3: pursuant to temporary use authorizations. For Guards or Sales in the fourth quarter of 2022, we're up marginally in the US and we're affected by lower inventory levels that are in our distributor at the close of the quarter and slightly higher rebates to government payers. As our first quarter is ending today, I can confirm that we are having with unit sales for the quarter and that we are on track to mean our recently announced guidance of 90 to 95 million dollars representing growth of approximately 13 to 19 percent compared to 2022 rebates. Cost of good sold in Q4 2022 was $5.9 million.
Speaker 3: compared to $5.2 million dollars the same quarter last year. The increase is mostly due to certain write downs during the quarter of inventory related to the manufacturing of relaunch batches of the F8 formulation of Tessa, more
Speaker 3: R&D expenses amounted to $9.5 million in Q4 2022 compared to $8.7 million in the same quarter last year. This increase is largely due to higher spending in our oncology programs, including the Phase One, and the Human Factor Study for AgriFTA-SV and also spending related to the development of the Intermustular Formulation of Trogarzo. In Q4 2022, selling expenses amounted to $7.8 million.
Speaker 3: compared to $8.2 million for the same period last year. The decrease in selling expenses is largely associated to the decision to exit the European market in 2022, and is somewhat offset by a higher spending to support our commercial commercialization efforts in the US. G&A expenses amounted to $4 million in Q4 2022, up from $3.5 million in Q4 2021. The increase is due to an overall increase in activity to reflect the growth of our business in North America related to the onboarding of our field force during 2022, which is offset by lower spending in Europe .
Speaker 3: In Q4 2022, net finance costs were $2.1 million compared to $1.8 million in Q4 of 2021. Thyro net finance cost is mostly due to the increased interest rate paid on our long-term debt compared to the interest paid on the convertible debentures in 2021. Net loss for the quarters came in at $7.9 million compared to $9.9 million in the same Q4 class year, mostly as a result of higher sales in gross margins in 2022 compared to 2021. We ended the fiscal year with cash funds and money market funds of $33.1 million. As mentioned before, we anticipate an ending the year on a solid path to becoming adjusted eva.positive. We believe our continued anticipated top-line growth combined to lower spending, mostly in research and development will help achieve this objective.
Speaker 3: In particular, we should complete many important projects in the first half of this year, including the development of the IAM mode of administration of Tregarzo, both human factor studies for AgriFTA SV and for the F8 formulation, as well as the development of our own source of bacteriostatic water for injection necessary to reconstitute the F8 formulation. The completion of these projects, along with the stated goal of partnering or clinical development programs, should allow us to benefit from substantial leverage from our operations in the latter part of 2023 and through 2024 and 25. We also announced this morning that Marathon had removed the filing of BHFS with the FDA as a condition to access the second tranche of the Turnloon R20-M $1 million through an amendment to the credit agreement. As a reminder, the proceeds of this second tranche are earmarked.
Speaker 2: the redemption of the remaining outstanding convertible notes due in June of this year. So Paul, we'll be back for a few final comments after the question periods. We're now ready to take questions from the line operator. Thank you. We will now take questions from analysts to ask a question you may press star then one on your telephone keypad. If you are using a speaker phone, please pick up your handset before pressing the keys. To withdraw from the question queue, please press star then two. At this time, we will pause momentarily to assemble our roster.
Speaker 2: Today's first question comes from Louise Chen with Cantor. Please go ahead. Hi, good morning, everyone. This is Carby on the Louise and Tanner. Thank you for taking more questions. First of all, we're wondering if you could provide additional color in terms of potential partners for phase three Nash opportunity. Has there been any recent events or changes in Nash based that, um, is there any kind of discussions with potential partners?
Speaker 3: Second, you mentioned that you are paying your spending moving forward. So how are you thinking about op-x in relative terms to quarter numbers? Thank you so much. Thank you very much for your question. Let me just address your first question about partnership for Dash. We have been active for a long time. We've said that in previous calls. I just want people to understand that there's something significant that has changed and it's the context. So the context we believe is far more favorable now than it was a year or a year and a half ago. Once a lot of people started challenging the fact that maybe the mission was impossible when it came to Nash. And with the data that was produced last fall by two active companies in Nash, I think has changed a perspective over the mission being possible. And what we are saying is that in that context, there are very, very few companies that are...
Speaker 3: moving forward. So what we mean by that is definitely having the top line growing faster than the expense line. So we've already factored that in in 2023, we will carry that philosophy forward in 2025. And we have many, one of the expenses that will go away as a function of time-fitted. We want to provide additional color. Sure, Carvean.
Speaker 4: It's mostly on the R&D that will be more reasonable in 2023 compared to 2022. And again, if you look at 2-4, it might not be the best comparator, but if you look at 2021, that's kind of where we think we'll end up in this year. And a lot of that spending will be in Q1 and Q2, so they're spending will decrease in Q3 and Q4.
Speaker 2: in 2023. Thank you for your question. Thank you. The next question comes from Andre Uden with Research Capital. Please go ahead. Good morning Paul Phillips, Johnny Christian. It sounds like your Nash partnership discussions have picked up. Can you please elaborate on what ideally you're looking for in terms of a partner?
Speaker 3: Well, I mean, there's a, at this stage of the game, I think that the global partner is what we have in mind. You know, there's obviously many companies that have activities in Europe only, so we could have that sort of a job-release split as well. But you know, what is at play now is global partnership, and that is what we would like to embark. As you may know...
Speaker 4: roses so the protocol you know should be equipped to actually satisfy both agencies and do time. If you want to carry on in terms of what would be an ideal type of partner? Yeah sure and in keeping with our objective to become if it's a positive and we'd be willing to do some R&D and do some of the development with the partner but the cost would have to be borne by the partner so it would be a neutral effect on our...
Speaker 4: on our bottom line. So that's really what we're looking for. It's for someone to share in the development and take some of the cost away from us. And Andrea, I would like just to add that as you know, the protocol as it stands now, we have embedded an interim analysis after the first 350 patients who are so are treated and pick up data on fibrosis and DNAS score. So just some extent that we believe that the full cost of the trial, if the signals are not good, will never have to be buried either by ourselves or the partner as we did mendicated. Okay, that's great. And so just maybe just another question here. Just could you please explain what would be required for the Agrefta SVHF. So, Andrea, do you want to... On the DHS, there are guidelines and what we have to do, we have to change the instruction for use to ensure and test it with some patient people that have used the Agrefta and the bus and people that have not used the Agrefta and the bus. We did a formative study indicating that the work that we've done so far is very good. Most of the patient has the test. We submitted the protocol to the FDA. Today we're waiting for their feedback and we're ready to do the study. And at the moment, our timelines are good for submission of the dossier by New Formative here this year.
And so that's really what we're looking for us for someone to share in the development and take some of the costs away from us. And, Andrea, I would like just to add that as you know, the protocol, as it stands now, we have embedded an interim analysis after the first 350 patients who are so are treated and pick up data on fibrosis and the NES score. So, to some extent, we believe that the full cost of the trial, if the signals are not good, will never have to be buried either by ourselves or the partner as we did mendicated. Okay, that's great. And so, just maybe just another question here. Just could you please explain what would be required for the EGREFDA SVHFS? Yes, I understand. Do you want to? On the DHS, there are guidelines and what we have to do, we have to change the instruction for use to ensure and test it with some patient people that have used the EGREFDA and the BAS and people that have not used EGREFDA and the BAS. We did a formative study indicating that the work that we've done so far is very good. Most of the patient has the test. We submitted the protocol to the FDA. We're waiting for their feedback and we're ready to do the study. And at the moment, our timelines are good for submission of the dossier by the format here this year. That's great. It's just one last one.
more in the sort of rare disease space. And again, they don't have to be necessarily HIV or in the metabolic space, but if there are chase of that, obviously, we have expertise that would be nice, but we're looking at other categories as well.
So, yeah, I think we're open to different things. We're also looking at potentially co-promote deals where our Salesforce would other companies take advantage of our commercial capabilities in Salesforce. Thank you, John . So, the bottom line here is that it has to be accretive, you know, generated, generating, you know, positive, it bit that, just that it bit that.
so that we don't have any setback in our journey to, you know, turn this organization, you know, positive front of it, and it just a bit at a point of view. No, that's great. Thank you. And the other question, perhaps, I'm still for John , but I mean, it was also mentioned that, you know, you're looking to expand awareness and, and utilization of a grift and trogros. I mean, the question there is that like, is there room to actually do that? I mean, a grift has been in the market for a very long time and in regards to for five years now. Like, how could you expand awareness more, more than what it already is? Well, well, first of all, I mean, we have a new sales and marketing team completely. So we're looking at new strategies all the time. We're looking at programs with Paul mentioned and activating patients through social media, creating awareness and driving them into positions.
This is proven to be very successful. There's also a lot of increased interest in weight loss drugs in particular, the GLP ones, which you all may be familiar with. We're finding is causing increased interest in markets, its expansion. We're seeing increased interest in testing with waste to hip to identify patients with lipidistrophy. So there's a lot of things happening in this space. And if you look at the amount of literature being published around weight loss in HIV, it's grown exponentially. So I think for those reasons I'm optimistic. And similarly, if you look at Tragarzo, there's increased interest in long-acting injectable products and new ones are being released. And that sort of opens up the market to new possibilities of combinations that are either never existed before. So for both those reasons, I'm fairly optimistic. The great thing to end one last for me. Is there any way you can give us guidance in the sense that for 2023 sales, would you possibly break down the girls, what you expect between price and volume there? And that's it for me. Thank you. Well, we've taken price increases on January 1st of 7%.
And so the rest that should come through unit growth sales. Great. Thank you for like, thanks everybody. You can read, you can read. As a reminder to ask a question, you may press star and then one. Seeing no further questions, I would like to turn the call back over to Paul for final word. I have any questions. There are a few questions from the webcast and most of them have been addressed, but there is one on the TH1902 program. So in a general sense, knowing that the SAC will be looking at the full data in the CMO's opinion, what is the main issue with the construct of the PDC? Is it the short one of the target?
or prior treatment for cancer. This is normal in the dose escalation, but we certainly want to reduce the number of prior treatment in the new basket trials, a new part of this study. And there will be also selection of tumor type because of the moment we have seen signs of efficacy and we'll certainly select the tumor type in which we have seen the best signs of efficacy.
Okay, well thank you very much for attending this morning. Thank you operator and thank you everyone for joining us on this call and for being a part of our journey. We look forward to our next quarterly call with you and providing an update on our efforts. Thank you and have a great day. The conference is now concluded. Thank you for your participation. You may now disconnect your line.
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