Q4 2023 Theratechnologies Inc Earnings Call

February 21, 2024

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Operator: Good morning, ladies and gentlemen, and thank you for standing by. Welcome to Theratechnologies' fourth quarter and full year fiscal 2023 earnings call. We would like to remind everyone that all figures on this call are quoted in U.S. dollars. At this time, all participants are in a listen-only mode.

Good morning, ladies and gentlemen, and thank you for standing by welcome to therapy technologies fourth quarter and full year fiscal 'twenty 23 earnings call, we would like to remind everyone that all figures on this call are quoted in U S dollars.

At this time all participants are in a listen only mode.

Operator: 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. Investors wishing to submit a question may do so by clicking 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.

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 may do so by clicking the ask a question link on the webcast platform.

If anyone has any difficulties hearing the conference.

Please press the star he followed by zero for operator assistance at any time.

Operator: I would like to remind everyone that this conference call is being recorded today, Wednesday, February 21st, 2024, at 8.30 a.m. Eastern Time. I will now turn the call over to Julie Schneiderman, Senior Director, Communications and Corporate Affairs at Theratechnologie. Julie, please go ahead.

I would like to remind everyone that this conference call is being recorded today Wednesday February 21st 2024 at 830, a M. Eastern time I will now turn the call over to Julie Schneiderman Senior director of Communications and corporate affairs at their other technologies jewelry.

Please go ahead.

Julie Schneiderman: Thank you, Operator, and good morning, everyone. On the call today will be Theratechnologie's President and Chief Executive Officer, Mr. Paul Lvesque, and Senior Vice President and Chief Financial Officer, Mr. Philippe Dubuc. During the Q&A session, we will be joined by Dr. Christian Marsolais, Senior Vice President and Chief Medical Officer, and Mr. John Leasure, the company's Global Commercial Officer. Before we begin, I'd like to remind everyone that the remarks today contain forward-looking statements regarding the company's 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 Theratechnologies may differ materially from those statements.

Thank you operator, and good morning, everyone on the call today will be as Darren Technologies', President and Chief Executive Officer, Mr. Paul Novak and senior Vice President and Chief Financial Officer, Mr. T D.

During the Q&A session, we will be joined by Dr. Jim <unk>, Senior Vice President and Chief Medical Officer and Mr. John measure the company's global commercial officer before we begin I'd like to remind everyone that remarks today contain forward looking statements regarding the company's 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.

<unk> <unk> technology 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. The company refers current and potential investors to the forward looking information section.

Julie Schneiderman: As such, the company cannot guarantee that any forward-looking statement will materialize, and you are cautioned not to place undue reliance on them. The company refers current and potential investors to the forward-looking information section of Theratechnologies' Management's Discussion and Analysis, issued this morning and available on CedarPlus at cedarplus.ca and on EDGAR at sec.gov. Forward-looking statements represent Theratechnologies' expectations as of this morning, February 21st, 2024. Additionally, today, the company is using the term adjusted EBITDA, which is not a financial measure under International Financial Reporting Standards, IFRS, or U.S. Generally Accepted Accounting Principles, U.S. GAAP. Adjusted EBITDA excludes the effects of items that primarily reflect the impact of long-term investment and financing decisions rather than the results of day-to-day operations.

And Darrin technologies management's discussion and analysis issued this morning and is available on SEDAR.

At Cedar plus dossier and on Edgar.

S E C.

Forward looking statements represent Darrin technology expectations as of this morning February 21st 2024. Additionally, today the company is using the term adjusted EBITDA.

Which is not a financial measure under international financial reporting standards, I FRS or U S. Generally accepted accounting principles U S. GAAP adjusted EBITDA excludes the effects of items that primarily reflect the impact of long term investment and finance and financing decisions.

Rather than the result of day to day operations, there and technologies believes that this measure can be a useful indicator of its operational performance and financial condition from one period to another the company uses this non <unk> measure to make financial strategic and operating decisions reconciliation of it.

Julie Schneiderman: Theratechnologies believes that this measure can be a useful indicator of its operational performance and financial condition from one period to another. The company uses this non-IFRS measure to make financial, strategic, and operating decisions. Reconciliation of adjusted EBITDA to net loss is found in our MD&A issued this morning, available on Cedar and on EDGAR at the web addresses mentioned earlier. Investors can also follow the company on LinkedIn and, formerly, Twitter, and sign up for alerts on Theratechnologies' investor website at www.theratech.com. With that, I would now like to turn the conference over to our President and CEO, Paul Levesque. Thank you, Julie. Hello, everyone, and good morning.

Adjusted EBITDA to net loss is found in our MD&A issued this morning available on SEDAR and Edgar at the time at the web address is mentioned earlier investors can also follow the company on Linkedin and ex formerly Twitter and sign up for alerts I'm Darrin technologies Investor website.

And Darren Tech Dot com with that I would now like to turn the conference over to our President and CEO Paul Navarre.

Thank you Julie Hello, everyone and good morning.

Paul Lvesque: I am pleased to be reporting on Theratechnologie's financial results for the fourth quarter and full year ended November 30, 2023. What began as a challenging year for the company shifted in the second half to end 2023 on a high note with record quarterly sales, a dramatic turnaround in adjusted EBITDA, and financing that strengthened our balance sheet with new high-quality institutional investors. Our strategy of pivoting our primary focus to commercial operations and minimizing resources for research and development activities is already paying off. We ended the year with strong four-quarter results and are well on our way to achieving a solid adjusted EBITDA number in 2024. Q4 2023 was the highest quarterly revenue we've ever recorded in the company's history.

Pleased to be reporting on <unk> technologies financial results for the fourth quarter and full year ended November 32023.

What began as a challenging year for the company shifted into second half two and $1 23 on the high note with record quarterly sales a dramatic turnaround in adjusted EBITDA and our financing debt strengthen our balance sheet with new high quality institutional investors.

Our strategy of pivoting, our primary focus to commercial operations and minimizing resources for research and development activities is already paying off we ended the year with strong fourth quarter results and are well on our way to achieving a solid adjusted EBITDA number in 2024.

Q4, 2023 was the highest quarterly revenue we've ever recorded in the company's history.

Paul Lvesque: Third-quarter momentum in new prescription growth continued through the fourth quarter, translating into $23.5 million in sales, ending 2023 with total annual revenue of $81.8 million. This is a significant accomplishment in light of the hurdles we faced in the first half of 2023, namely inventory drawdowns and unfavorable gross-to-net challenges. We also demonstrated strength on the bottom line in Q4 with a positive adjusted bid of $5 million. This was our second consecutive quarter delivering on the strategic imperative of more than doubling adjusted EBITDA from Q3 to Q4 and ending the year with an adjusted EBITDA loss of only $2.9 million. This is a dramatic turnaround in cooperation compared to year-end 2022, when we reported an adjusted EBITDA loss of $22 million.

Third quarter momentum in new prescription growth continued through the fourth quarter translating into a $23 5 million dollar in sales ending 'twenty to 'twenty three with total annual revenue of $81 8 million.

This is a significant accomplishment in light of the hurdles we faced in the first half of 2023, namely inventory drawdowns and non favorable gross to net challenges.

We also demonstrated strengths on the bottom line in Q4 with a positive adjusted EBITDA of 5 million dollar.

This was our second consecutive quarter delivering on the strategic imperatives more than doubling adjusted EBITDA from Q3 to Q4 and ending the year with an adjusted EBITDA loss to only $2 9 million.

This is a dramatic dramatic turnaround in Cup reason to year end 2022, when we reported an adjusted EBITDA loss of $22 million.

Paul Lvesque: Based on the strength of our performance over the last six months, we are providing guidance today of revenues between $87 and $90 million, with an adjusted EBITDA in the range of $13 to $15 million for the full year 2024. By doubling down on our commercial capabilities, we are more determined than ever before to create value for our shareholders in 2024. With the year already well underway, we are seeing a solid trend on key performance metrics such as enrollments and unique patients, signaling that our objectives can be achieved and even surpassed. However, based on the buildup and subsequent drawdown of inventories in the early part of fiscal year 2023, investors should expect some variability in revenue growth reporting in 2024, especially in the first half of the year.

Based on the strength of our performance over the last six months. So we are providing guidance today of revenues between $87 million to $90 million with an adjusted EBITDA in the range of 13 to 15 million for the full year 2024.

By doubling down in our commercial capabilities, we are more determined than ever before to create value for our shareholders in 2024.

With the year already well underway, we are seeing a solid trend on key performance metrics, such as enrollments and unique patients signaling that our objectives can be achieved and even surpassed however, based on the buildup and subsequent draw down of inventories in the early part of fiscal year 2023.

Investors should expect some variability in revenue growth reporting in 2020 for especially in the first half of the year.

Paul Lvesque: This being said, we are confident in delivering growth over full year 24, as evidenced by today's revenue and adjusted for the guidance announced. Now that the stage is set for our growth trajectory, let's dive deeper into what's driving our top line. Agrifta SV continues to be the standout product in our portfolio. Over the past six and eight months, our team has demonstrated the capacity to capture new patients in the ever-evolving competitive environment. In fact, our total number of unique patients hit an all-time high at the end of calendar 2023, up 13% year-over-year for the month of December. Allow me for a moment now to remind people about the great benefits and marketing position given the noise about weight loss drugs and particularly GLP-1s where recent clinical research has shown them to also induce muscle mass reduction. As the only medication of its kind approved in the U.S. and designed specifically for adults with HIV, Agrifta-SV's unique mechanism of action decreases excess visceral abdominal fat while actually increasing lean body mass. This is especially important for people with HIV where muscle loss can be a serious issue.

This being said we are confident in delivering growth over full year 'twenty four as evidenced by today's revenue and adjusted EBITDA guidance announcement.

Now that the stage is set for growth trajectory, let's dive deeper into what's driving our top line.

Okay.

A group that is continues to be the standout product in our portfolio over the past 678 months. Our team has demonstrated capacity to capture new patients and the ever evolving competitive environment.

In fact, our total number of unique patients hit an all time high at the end of calendar 2023 up 13% year over year for the month of December.

Allow me for a moment now to remind people about the grid edge these benefits and marketing position given the noise about weight loss drugs in particular, the <unk> ones, where recent clinical research has shown them to also induced muscle mass reduction.

As the only medication or its going to approved in the U S and designed specifically for adult with HIV a group that <unk> unique mechanism of action decreases access visual abdominal fat, while actually increasing lean body mass.

This is especially important people with HIV, where muscle loss can be a serious issue.

Paul Lvesque: Furthermore, healthcare providers are increasingly recognizing that excess visceral abdominal fat is a medical condition that can lead to very serious health consequences if left untreated. We welcome this shift in understanding and diagnosis that should support patient identification and market demand for Agrifta SV. Before we move on, I want to address the recent update concerning our SVLA for DFA formulation of Tessa Moreland and take a moment to review the facts and timeline. As you are aware, on January 22nd, we were notified by the FDA that they would not meet the PDUFA date. At the time, we had received very few questions and had responded swiftly to all FDA requests.

Further and more health care providers are increasingly recognizing the excess visceral abdominal fat is a medical condition that can lead to very serious health consequences if left untreated.

We welcome this shift in understanding and diagnosis that should support patient identification and market demand for <unk>.

Before we move on I want to address the recent update concerning our S really for the Feight formulation of Dessau, Marlin and take a moment to review the facts and timelines.

As you are aware on January 22nd we were notified by the FDA that they would not meet the Paducah date at.

At the time, we had received very few questions. It had responded swiftly to all FDA requests.

On January 23rd at the end of the day, we received a complete response letter.

Paul Lvesque: On January 23rd, at the end of the day, we received a complete response letter. While we are disappointed by this turn of events, we are confident in DFA's formulation and plan to address the Agency's comments in due course. To this end, we have been working closely with external regulatory experts to develop a comprehensive plan of action. In addition, we have requested a Type A meeting with the FDA to ensure our approach is aligned with their expectations. Let's take a closer look at the details.

While we are disappointed by this turn of events, we are confident that DFA formulation and plan to address the agency's comments in due course.

To this end we have been working closely with external regulatory experts to develop a comprehensive plan of action.

In addition, we have requested a type a meeting with the FDA to ensure our approach is aligned with their expectations.

Let's take a closer look at the details.

As previously explained in the press release the questions outlined that the CRA all are largely related to chemistry manufacturing and controls also known that CMC.

Turning to microbiology assays, and purity and stability for both drug product and the final reconstituted product.

Paul Lvesque: As previously explained in the press release, the questions outlined in the CRL are largely related to chemistry, manufacturing, and controls, also known as CMC, concerning microbiology, assays, impurities, and stability for both the drug product and the final reconstituted product. We already have most of the information on hand to address these questions, and we have started work streams related to assays and microbiology. In addition, the FDA requested further information to address the potential impact of the new formulation on the immunogenicity risk. Based on this, after consultation with experts, we are preparing a risk assessment in accordance with DFD's guidelines, and we do not believe that additional clinical studies are required. Given the progress we have made since January 23rd, we remain focused on resubmitting our file to the FDA and obtaining approval for the F-8 formulation before the end of 2024.

We already have most of the information on hand to address these questions and we have started the work streams related to the assay and microbiology.

In addition, the FDA requested further information to address the potential impact of the new formulation on the Immunogenicity risk.

And this after consultation with experts we are preparing a risk assessment in accordance with <unk> guidelines and we do not believe that additional clinical studies are required.

Given the progress we have made since January 23rd we remained focused on resubmitting, our work file to the FDA and obtaining approval of the Feight formulation before the end of 2024.

Our upcoming interaction with the FDA will further inform and confirm our resubmission plan and timelines for launching.

In the meantime.

I want to emphasize that this delay in no way impacts our successful commercialization of a grip phase V, which as I mentioned earlier generated record sales in 2023.

Let's now shift gears and look at <unk>.

In spite of the new market entrants Jaguars will continues to be a viable treatment for people with HIV you have few options and it remains a good companion TUI grifter SV.

Paul Lvesque: Our upcoming interaction with the FDA will further inform and confirm our resubmission plan and timelines for launch. In the meantime, I want to emphasize that this delay in no way impacts our successful commercialization of Egypt SV, which, as I mentioned earlier, generated record sales in 2023. Let's now shift gears and look at Trugarzo. In spite of its new market entry, Trugarzo continues to be a vital treatment for people with HIV. You have few options, and it remains a good companion to Egrifta SV.

In order to maximize our reach and impact we have begun to tailor promotional efforts and home in on health care providers, who are.

Specifically addressing multi drug resistance.

We are determined to increase the value for the HIV community, while also enabling <unk> to be more profitable.

These efforts to maximize regards was benefits and wind down our R&D efforts for the lifecycle management of our products or further complemented by a series of regulatory milestones in December beginning with the FDA approval of the IV push loading dose of <unk>.

This simplified methods of administration takes only 90 seconds and means that new patients no longer require initiation of treatment by 30 minute infusion.

Using the IV push methods for both loading and maintenance doses makes <unk> a much more convenient option for heavily treated experience adults and their healthcare providers.

Paul Lvesque: In order to maximize our reach and impact, we have begun to tailor promotional efforts and hone in on healthcare providers who are specifically addressing multidrug resistance. We are determined to increase the value for the HIV community while also enabling Trigarzo to be more profitable. These efforts to maximize Tragarzo's benefits and wind down our R&D efforts for the lifecycle management of our products were further complemented by a series of regulatory milestones in December, beginning with the FDA approval of the IV push loading dose of Tragarzo. This simplified method of administration takes only 90 seconds and means that new patients no longer require initiation of treatment by 30-minute infusion.

Moreover, we are awaiting the paducah date for the SBA the submission of an intramuscular administration of the triggers a maintenance dose.

These line extension efforts exemplify our commitment to innovate further improve adherence and simplified the treatment experience for people with HIV.

Now that we have completed most of the significant parts of these important projects, we have reset our cost base to better align with our overarching commitment to profitability.

We are steadfast in realizing our strategic goal to reach more patients with new and improved products through organic but also inorganic opportunities.

As stated previously our U S commercial capabilities are trying to scale up for bolt on accretive products and new partnerships.

In this regard we remain committed to our investors and will leave no stone unturned as we looked at all our port <unk>.

Paul Lvesque: Using the IV PUSH method for both loading and maintenance doses makes Travarso a much more convenient option for heavily treated experienced adults and their healthcare providers. Moreover, we are awaiting the PDUFA date for the SBLE submission of an intramuscular illustration of the Tragarzo-Met-Net study. These line extension efforts exemplify our commitment to innovate, further improve adherence, and simplify the treatment experience for people with HIV. Now that we have completed most of the significant parts of these important projects, we have reset our cost base to better align with our overarching commitment to profitability. We are steadfast in realizing our strategic goal to reach more patients with new and improved products through organic but also inorganic opportunities. As stated previously, our U.S. commercial capabilities are primed to scale up for bolt-on creative products and new partnerships. In this regard, we remain committed to our investors and will leave no stone unturned as we look at all opportunities.

Our efforts to be stringent with operating expenses, while focusing on top line growth through organic and inorganic opportunities.

Not gone unnoticed in the marketplace in particular I want to highlight our recent financing which brought in new investors among them Avis to smoke, Quebec, and a smart Quebec is a local fund that identified thorough technologies is a company that can play a leadership role in Quebec, and the broader Canadian Biopharma.

Our ecosystem.

<unk> has chosen to invest in us because they believe in our capabilities.

They came in to facilitate the growth strategy and ultimately participate in the creation of shareholder value.

We welcome them to a thorough technologies thank them for their support on the business and look forward to their strategic contributions.

In addition to revenue expansion opportunities through our current commercial business and the growth potential that exists via acquisitions and partnerships.

We are encouraged by the continued interest in our oncology program. We recently announced that we have enrolled the first six patients in part three of the phase one clinical trial of our lead investigational anti cancer agent shouldn't say to ourselves and to a certain time.

With this milestones behind us, we're well on our way to generating new evidence for this asset in the treatment of advanced ovarian cancer.

Paul Lvesque: Our efforts to be stringent with operating expenses while focusing on top-line growth through organic and inorganic opportunities have not gone unnoticed in the marketplace. In particular, I want to highlight our recent financing, which brought in new investors, among them Abyss Smart Quebec. Abyss Smart Quebec is a local fund that sees Theratechnologies as a company that can play a leadership role in Quebec and the broader Canadian biopharma ecosystem.

Look forward to enrolling the next six patients at the higher dose and to reporting results in 2024.

With the stunning investment made by industry in anti body drug conjugates in the past year, we remain confident that our peptide drug conjugate platform will attract the attention of oncology players in the near future.

As a reminder, we have more than 40 patients who have been dosed with pseudo sit back sales, Andrew sort tight building safety and efficacy evidenced in confirming the role of the <unk> receptor.

We are also encouraged by the results shared into recent publications in frontier is in immunology, showing significant infiltration of tumor lymphocytes. Following the treatment of pseudo <unk> tied in a cold animal model.

Paul Lvesque: IQ chose to invest in us because they believe in our capabilities. They came in to facilitate the growth strategy and ultimately participate in the creation of shareholder value. We welcome them to Theratechnologie, thank them for their support in the business, and look forward to their strategic contribution. In addition to revenue expansion opportunities through our current commercial business and the growth potential that exists via acquisitions and partnerships. We are encouraged by the continued interest in our oncology program. We recently announced that we have enrolled the first six patients in part three of the phase one clinical trial of our lead investigational anti-cancer agent, Pseudocetaxels endosortium. With these milestones behind us, we're well on our way to generating new evidence for this asset in the treatment of advanced ovarian cancer.

In addition on the preclinical front, we are advancing new peptide drug conjugates with other potent payloads.

Therefore, while pseudo state tax sales and do sort tied as already demonstrated in human activity.

One has to remember that our sort one technology platform provides immense possibilities to advance other bdcs.

Our early data suggests that <unk> could be used alone or in combination with targeted therapies, including checkpoint inhibitors.

And finally, we believe our peptides could be conjugated with other anti cancer treatment modalities, such as radio isotopes and nanoparticles.

Before concluding let me highlight our objectives for 2024.

With growth and profitability as a cornerstone of our operating plan, we have set ourselves up for a promising year with four clear and focused strategic imperatives.

Paul Lvesque: We look forward to enrolling the next six patients at a higher dose and to reporting results in 2024. With the stunning investment made by the industry in antibody drug conjugates in the past year, we remain confident that our peptide drug conjugate platform will attract the attention of oncology players in the near future. As a reminder, we have more than 40 patients who have been dosed with pseudocetaxels and dusortine, building safety and efficacy evidence and confirming the role of the sortiline receptor. We are also encouraged by the results shared in recent publications in Frontiers in Immunology, showing significant infiltration of tumor lymphocytes following the treatment of pseudocytexels and Dusortide in a cold animal model.

First we are focused on growing the top line and delivering an adjusted EBITDA in the range of $13 million to $15 million.

This even considering a final $5 million investment in oncology.

We will accelerate the profitability of the company by leveraging our commercial capabilities in acquiring immediately accretive products that are aligned to our expertise.

Therefore, M&A activities will be a key priorities in 2024.

We will seek to derive value from our investment in oncology with our phase <unk> clinical trial, and we will continue to search for partners for pseudo sit that sells into short tight and our entire oncology platform.

And finally, we all know that the plan is only as good as the people executing on it.

Paul Lvesque: In addition, on the preclinical front, we are advancing new peptide drug conjugates with other potent payloads. Therefore, while Pseudosyntaxial Xanthusortide has already demonstrated human activity, one has to remember that our SORT1 technology platform provides immense possibilities to advance other PDCs. Our early data suggests that these PTCs could be used alone or in combination with targeted therapies, including checkpoint inhibitors. And finally, we believe our peptide could be conjugated with other anti-cancer treatment modalities, such as radioisotopes and nanoparticles. Before concluding, let me highlight our objectives for 2024. With growth and profitability as the cornerstones of our operating plan, we have set ourselves up for a promising year with four clear and focused strategic imperatives. First, we are focused on growing the top line and delivering an adjusted EBITDA in the range of $13 to $15 million. This, even considering a final $5 million investment in oncology.

To that end, we will continue to enhance and engage our talented team towards a new journey focused on commercialization.

With this I'd like to turn the call over to Filip, who will go over the periods financials in details.

Thank you Paul and good morning, everyone.

Consolidated revenue for the three months period ended November 32023 was $23 5 million compared to $21 4 million for the same year ago period, representing growth of nine 5% compared to the fourth period of last year.

For Q4, 2023, net sales of a grifter sbe reached $17 million compared.

Compared to $14 5 million in Q4 of last year, a growth of 17, 3% year over year.

Higher net sales of a grifter SV were a result of higher unit sales fueled by strong year over year growth in new prescriptions.

Higher net selling price growth.

Growth in sales of the grifter SV for the full year is lower at six 4%, mostly due to the result.

The inventory situation described in our second quarter earnings call and higher rebates.

With regard on <unk> net sales in the fourth quarter of fiscal 2023 amounted to $6 5 million.

Compared to 7 million in the same quarter of 2022, representing a decrease of six 7% year over year for.

Paul Lvesque: We will accelerate the profitability of the company by leveraging our commercial capabilities and acquiring immediately creative products that are aligned to our expertise. Therefore, M&A activities will be a key priority in 2024. We will seek to derive value from our investment in oncology with our Phase I clinical trial and will continue to search for partners for pseudocytic cells and Dussault type cells across our entire oncology platform. And finally, we all know that a plan is only as good as the people executing on it.

The decrease was mainly due to lower unit sales in the quarter compared to last year.

Lower.

Sales in the fourth quarter of 2023 were also the result of higher inventory buildup in 2020 to a situation, which continued into Q1 of this year, but as resolve itself in 2023.

In Q4 of 2023 cost of goods decreased to $5 1 million from $5 9 million in the same quarter of fiscal 2020 to the.

The decrease in cost of goods sold was mainly due to a provision of $1 5 billion taken in Q4 of 2022 related to the write down of FAA material, which is expected to expire prior to the launch of the <unk>, if and when approved.

Paul Lvesque: To that end, we will continue to enhance and engage our talented team towards a new journey focused on commercialization. With that, I'd like to turn the call over to Philippe, who will go over the period's financials in detail. Thank you, Paul. Good morning, everyone.

This amount was offset by higher costs as a result of higher revenue.

I'm happy to report again in the fourth quarter through rigorous management of spending that R&D selling and G&A expense were all lower this year when compared to the fourth quarter of 2020 to helping us achieve our second straight quarter of positive adjusted EBITDA.

Philippe Dubuc: Consolidated revenue for the three-month period ended November 30, 2023, was $23.5 million compared to $21.4 million for the same year-ago period, representing growth of 9.5% compared to the fourth quarter of last year. For Q4 2023, net sales of Agrifta SV reached $17 million compared to $14.5 million in Q4 of last year, a growth of 17.3% year over year. Higher net sales of Agrifta SV were a result of higher unit sales fueled by strong year-over-year growth in new prescriptions at a higher net selling price. However, growth in sales of Egrifta SV for the full year was lower at 6.4%, mostly due to the inventory situation described in our second quarter earnings call and higher rebates. Targarzo net sales in the fourth quarter of fiscal 2023 amounted to $6.5 million compared to $7 million in the same quarter of 2022, representing a decrease of 6.7% year-over-year. The decrease was mainly due to lower unit sales in the quarter compared to last year.

As established and has as an objective early in the 2023 fiscal year.

R&D expenses decreased substantially in the fourth quarter of 2023 compared to the same period last year coming in at $5 2 million versus $9 $5 million last year.

Due to lower spending on our oncology program as well as lower expenses following the near completion of our life cycle management projects for <unk> and <unk>.

R&D expenses also include 876000, and severance and other expenses related to the reorganization.

Announced in July 2023, and completed in October 2023.

Selling expenses decreased to $6 8 million for the fourth quarter of 2023 compared to $7 8 million for the same three months period last year or a decrease of $1 million. The decrease in selling expenses in the fourth quarter is mainly related to our stated goal of the.

Philippe Dubuc: Lower sales in the fourth quarter of 2023 were also the result of higher inventory buildup in 2022, a situation which continued into Q1 of this year but has resolved itself in 2023. In Q4 2023, cost of goods decreased to $5.1 million from $5.9 million in the same quarter of fiscal 2022. The decrease in cost of goods sold was mainly due to a provision of $1.5 million taken in Q4 of 2022 related to the write-down of F-8 material, which is expected to expire prior to the launch of the F-8 if and when approved. This amount was offset by higher costs as a result of higher revenue.

Coming adjusted EBITDA positive in 2023.

Selling expenses should stabilize in the future as our focus on top and Bottomline growth remains our main objective and hence we will not be compromising on customer facing facing activities.

G&A expenses in the fourth quarter of 2023 amounted to $3 7 million.

Which includes approximately $290000 in severance and other expenses related to the reorganization as compared to $4 million in the fourth quarter of 2022 or a seven 5% decrease.

14, 8%, excluding the expenses related to the reorganization of the decrease in G&A expenses is largely due to our decision to focus on our U S commercial operations and focus on controlling expenses.

Philippe Dubuc: I'm happy to report again in the fourth quarter that, through rigorous management of spending, R&D, selling, and G&A expense were all lower this year when compared to the fourth quarter of 2022, helping us achieve our second straight quarter of positive adjusted EBITDA as established and as an objective early in the 2023 fiscal year. R&D expenses decreased substantially in the fourth quarter of 2023 compared to the same period last year, coming in at $5.2 million versus $9.5 million last year. It's mostly due to lower spending on our oncology program as well as lower expenses following the near completion of our life cycle management projects for Arrifta SV and Traversa. R&D expenses also include $876,000 in severance and other expenses related to the reorganization announced in July 2023 and completed in October 2023. Selling expenses decreased to $6.8 million for the fourth quarter of 2023 compared to $7.8 million for the same three-month period last year, or a decrease of $1 million.

As you can see from our reduction in expenses in R&D, selling and G&A in both Q3 and Q4 of 2023, we now have right sized the organization to ensure that we are well on our way in our journey towards becoming adjusted EBITDA positive.

As a result of this we are pleased to report adjusted EBITDA in the fourth quarter of 2023 up nearly $5 million versus negative.

<unk> $2 4 million in the same period last year and up from $2 2 million in the third quarter of fiscal 2023.

This significant improvement is due to the number of measures put in place during the year to control spending as well as lower R&D spending, reflecting the completion of many lifecycle management project.

<unk> year of 2023, we recorded adjusted EBITDA of negative $2 9 million compared to negative $21 4 million in fiscal 2022.

Net finance costs in the fourth quarter of 2023 amounted to $5 4 million.

And include interest of $2 4 million on the marathon loan facility costs associated with the amendment of the loan facility the write off of deferred financing costs and the change in fair values.

Philippe Dubuc: The decrease in selling expenses in the fourth quarter is mainly related to our stated goal of becoming adjusted to be top positive in 2023. Selling expenses should stabilize in the future as our focus on top and bottom line growth remains our main objective, and hence we will not be compromising on customer-facing activities. G&A expenses in the fourth quarter of 2023 amounted to $3.7 million, which included approximately $290,000 in severance and other expenses related to the reorganization, as compared to $4 million in the fourth quarter of 2022, or a 7.5% decrease, or 14.8% excluding the expenses related to the reorganization.

Of the marathon warrants.

As Paul briefly alluded to in his remarks, we arent providing guidance. This morning for revenues of $87 million to $90 million for fiscal 2024, and adjusted EBITDA of $13 million to $15 million keep in mind that we have allocated $4 8 million of our spending for our oncology program. This year.

And these are included in our adjusted EBITDA guidance pointing to the strong performance of our commercial operations.

As <unk> previously.

Previously mentioned any additional spending on oncology will be carried out through partnerships. So this program will no longer affect our adjusted EBITDA in 2025 and beyond.

We ended the 2023 fiscal year on solid financial footing, thanks to the public offering and concurrent private placement completed in October 2023, with net debt of $20 million.

Philippe Dubuc: The decrease in G&A expenses is largely due to our decision to focus on our U.S. commercial operations and focus on controlling expenses. As you can see from our reduction in expenses in R&D, selling, and G&A in both Q3 and Q4 of 2023, we now have right-sized the organization to ensure that we are well on our way in our journey towards becoming adjusted in the deposit. As a result of this, we are pleased to report adjusted EBITDA in the fourth quarter of 2023 of nearly $5 million versus negative $2.4 million in the same period last year and up from $2.2 million in the third quarter of fiscal 2023. This significant improvement is due to the number of measures put in place during the year to control spending, as well as lower R&D spending, reflecting the completion of many lifecycle management projects.

Cash bonds and money market funds at the end of the fiscal year amounted to $44 million. While we ended the year with $60 6 million drawn on the marathon facility.

As described during our Q3 call we agreed to modify certain covenants in the credit agreement.

The main change will be that we will no longer be required to hold $30 million in cash and equivalents.

Should the F. Eight formulation of the grifter not be approved by the end of March 2024.

The main covenants now center around liquidity and adjusted EBITDA, which are more aligned with our capacity to repay the interest and principal on the facility.

As a reminder, the amortization of the loan facility begins in Q3 of this year and alone will be repayable in 36 monthly installments beginning in August of this year.

With that I will have Paul will be back for final comments, but first we will now open the line to take the questions from analysts and from investors.

Thank you we will now begin the question and answer session to ask a question you May Press Star then one on your telephone keypad, if youre using a speakerphone. Please pick up your handset before pressing the keys.

Philippe Dubuc: For the full year of 2023, we recorded adjusted EBITDA of negative $2.9 million compared to negative $21.4 million in fiscal 2022. Net finance costs in the fourth quarter of 2023 amounted to $5.4 million and included interest of $2.4 million on the Marathon Loan Facility, costs associated with the amendment of the loan facility, the write-off of deferred financing costs, and the change in fair value of the Marathon Warrant.

At any time. Your question has been addressed and you would like to withdraw your question. Please press Star then two.

At this time, we will pause momentarily to assemble our roster.

The first question comes from Louise Chen with Cantor. Please go ahead.

Hi, Good morning, everyone. This is carvey onto Louise Thank you for taking our questions first.

First question is on SG&A and R&D can you provide more color on Opex for 2024 second question is on business development you spoke about acquiring new assets can provide more commentary on what targets you're looking for thank you.

Philippe Dubuc: As Paul briefly alluded to in his remarks, we are providing guidance this morning for revenues of $87 to $90 million for fiscal 2024 and adjusted EBITDA of $13 to $15 million. Keep in mind that we have allocated $4.8 million of our spending for our oncology program this year, and this is included in our adjusted EBITDA guidance, pointing to the strong performance of our commercial operation. As previously mentioned, any additional spending on oncology will be carried out through partnerships, so this program will no longer affect our adjusted EBITDA in 2025 and beyond. We ended the 2023 fiscal year on solid financial footing, thanks to the public offering and concurrent private placement completed in October 2023 with net debt of $20 million. And cash, bonds, and money market funds amounted to $40.4 million at the end of the fiscal year, while we ended the year with $60.6 million drawn on the Marathon facility.

Well. Thank you for your question. So <unk> I'll, let you answer the questions regarding the level of expenses and G&A and R&D when it comes down to business development.

We've said all along that we are looking for accretive opportunities in this space of HIV HIV adjacent but also small metabolic small liver disease. This is an area, where we have internal expertise, obviously with a grifter and it is.

Our model that we believe we could put.

Put in motion based on again, the fact that our business model. At this time is very very similar to a rare disease company, where we call on few individuals but at the same time have the expertise to have the surround noise with the different physicians and functions that insurer reimbursement.

Success in the marketplace. So Philip do you want to take the front part of the question sure Garvey.

The Q4 expenses or S. G&A are pretty good proxies for what we'll be spending in 2024.

Maybe as slight increases, but nothing nothing major.

Philippe Dubuc: As described during our Q3 call, we agreed to modify certain covenants in the credit agreement. The main change will be that we will no longer be required to hold $30 million in cash and equivalents should the F8 formulation of GRIFTA not be approved by the end of March 2024. The main covenants now center around liquidity and adjusted EBITDA, which are more aligned with our capacity to repay the interest and principal on the facility. As a reminder, the amortization of the loan facility begins in Q3 of this year, and the loan will be repayable in 36 monthly installments beginning in August of this year.

On the R&D side, however that $5 million that we're investing in the oncology program will be done mostly in the first two quarters of the year. So R&D should stabilize should be stable in the first half, but then go down in Q3 and Q4 of this year.

Great. Thank you so much.

The next question comes from Ontario, Odeon with research capital. Please go ahead.

Good morning, Paul Jonathan Krishna.

Nice to see the shift starting to turnaround here.

Were there any recent price increases for either aggressor and for Carrizo.

Yes. Thank you Andrew for your question and your complement so John that what were the price increases we took as of January one.

Operator: With that, Paul will be back for final comments. But first, we will now open the line to take questions from analysts and from investors. Thank you. We will now begin the question and answer session. To ask a question, you may press star and then one on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the key.

We took a three point.

339 on <unk> four point.

Around $4 nine with the breath.

That's great.

And I realize it's hard to predict but when should we see some initial <unk> data using the new dosing protocol.

So youre bumping about oncology so kits.

Now that we have completed the.

Sure.

We have dosed the first six patients we have to wait three months to actually enroll the next cohort of six patients.

Operator: If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. The first question comes from Louise Chen, who has cancer. Please go ahead.

Slide slightly higher doses when do you expect that we're going to have some data to report.

Thank you Paul.

So it's difficult to predict as you know because it depends on the results that we will see what I can say is that we have improved our protocol, meaning that we have.

Carvey Leung: Hi, good morning, everyone. This is Carvey Anson-Louis. Thank you for taking our questions. The first question is on SG&A and R&D. Can you provide more color on OPEX for 2024? The second question is on business development.

We are enrolling patients with <unk>.

Unless prior treatment.

Ovarian cancer patients and on the one prior resistance to Taxane.

Dosing the first dose now at this weekly it's 175 milligram per kilogram, which for the three doses is similar to the 200 milligram per meter squared that we had in the past then we're dosing in the range, where we could see efficacy.

Carvey Leung: You spoke about acquiring new assets. Can you provide more commentary on what targets you're looking for? Thank you. Well, thank you for your question. So, Philippe, I'll let you answer the questions regarding the level of expenses for GNA and R&D. When it comes down to business development, we've said all along that we are looking for creative opportunities in the space of HIV, HIV-related, but also small metabolic, and small liver disease. This is an area where we have internal expertise, obviously, with Ebrifta, and it is a model that we believe we could put in motion based on, again, the fact that our business model at this time is very, very similar to a rare disease company, where we call on a few individuals but at the same time have the expertise to have the surrounding noise with the different positions and functions that ensure reimbursement and success in the marketplace. So, Philippe, Sure, Carvey.

But as to when we will have it exactly it's difficult to say, but by in three months from now we will be able to recruit six additional patients as Paul mentioned, then it's usually it takes about four to five months before we can confirm efficacy that it should be sometime this year.

Okay. Thank you.

Thank you.

The next question comes from Justin Walsh with Jones trading.

Please go ahead.

Alright, Thanks for taking my question, you mentioned new market entrants in the HIV space I was wondering if you could comment on the overall emerging competitive landscape in HIV and how your portfolio is expected to remain competitive, especially in the context of reduced lifecycle management and R&D spend.

Thank you thank you Justin.

We foresee as we've said all along <unk> to continue to be a meaningful product for us and for the community.

Niche type of positioning that we have very much at the end of the line and we know that there is a category of patients that actually do need this product and we will continue to need it but John I think that the.

Paul Lvesque: So, the Q4 expenses for S, G, and A are pretty good proxies for what we'll be spending in 2024, maybe as slight increases, but nothing major. On the R&D side, however, that $5 million that we're investing in the oncology program will be done mostly in the first two quarters of the year. So, R&D should be stable in the first half but then go down in Q3 and Q4 of this year. Great, thank you so much. The next question comes from Andre Uddin with Research Capital. Please go ahead.

There has been some market entrants or do you want to comment on those entrants in the last 18 months or so yes.

As you know.

Suddenly it guys recently been launched a lot of capital here.

Last year.

Yeah.

We are seeing some competitive pressure from that with regard to the sales have been basically flat, but there is certainly a need for.

Agents for multi drug resistant infections, and there will always be that need and regards though is sort of the last line of defense.

One thing we've done is try to improve the administration through the IV push loading dose in the IV push to now.

Andre Uddin: Good morning, Paul, Philippe, John, and Christian. Nice to see the ship starting to turn around here. Were there any recent price increases for either Agresta or Tregarzo?

The <unk> submission. So we're trying to improve simplicity for the drug and make it more accessible for patients.

Overall, I think Thats regards though.

We are projecting.

Flat to moderate growth moving forward.

Paul Lvesque: Yes, thank you, Andrew, for your question and your compliment. So, John, what were the price increases we took as of January 1st? We took 3.39 on Trigarzo and around 4.9 on Agrifta.

Got it thanks for taking the question.

The next question comes from Bill <unk> with Canaccord Genuity. Please go ahead.

Good morning. So my first question is now that your adjusted EBITDA positive do you have line of sight on cash flow positivity.

John Leasure: That's great. And I realize it's hard to predict, but when should we see some initial 1902 Zeta results using the new dosing protocol? So, you're talking about oncology. Christian, you know, now that we have completed the dosing of the first six patients, we have to wait three months to actually enroll the next cohort of six patients at slightly higher dosages. When do you expect that we're going to have some data to report? Thank you, Paul. Andre, it is difficult to predict, as you know, because it depends on the results that we will see.

Do you want to comment on this.

It should be well on a on a free cash flow basis, we're looking at probably at the end of this year being free cash flow positive. Obviously, we are seeing the top line continuing to grow in the future and the expense level has been kind of a reset.

So that cash flow cash flow bottom line should should be coming in the next us.

Quarters or years.

Okay and then my next question is on the oncology asset so you've mentioned.

<unk> and reducing spend so just wondering what.

What the range of possibilities for our partnership May look like do you intend to fully offload all expenses or is there a world where you keep some amount of expense in exchange for better backend economics.

Christian Marsolais: What I can say is that we have improved our protocol, meaning that we are enrolling patients with less prior treatment. We're focusing on, over again, cancer patients and only one prior resistance to taxane. We're dosing the first dose, now it is weekly, it's 1.75 mg per kg, which for the three doses is similar to the 200 mg per m2 that we had in the past, then we're dosing in the range where we could see efficacy, but as to when we will have it exactly, it's difficult to say, but by, in three months from now, we'll be able to recruit six Okay.

Well in our journey towards profitability.

Commitment to our investors is that we will actually stop investing after this $5 million investment.

But at such point.

With th 19, new to what we said in the speech today that we already have 40 patients that they had been dosed with this so we have a fair amount of human data.

<unk> also said that the platform has a lot of potential we are advancing two additional pdc's with other payloads for toxic payloads. So at the end of the day, one plus the other.

It should be attractive to our partner.

I think that.

The pipeline of opportunities with Adcs is quite dry at the moment.

Christian Marsolais: Thank you. Thank you. The next question comes from Justin Walsh with Jones Trading. Please go ahead.

Other companies such as Novartis have already indicated that they will look for opportunities in the PDC segment.

Justin Howard Walsh: Hi, thanks for taking the question. You mentioned new market entrance in the HIS and the HIS and the HIS and the HIS and the HIS and the HIS and the HIS and the HIS and the, I was wondering if you could comment on the overall emerging competitive landscape in HIV and how your portfolio is expected to remain competitive, especially in the context of reduced life cycle management and R&D. Thank you, Justin.

At one point I think it will be what it will be with the data that we're going to have.

Im confident that were going to have.

Some effective.

Data coming out of the dosing that we're doing at the moment with the new protocol and that we will actually have better side effect profile than what we saw with.

The previous dosage. It we had we are in discussion with many oncology companies most of them.

You know fairly well what we do there just wanted to see a more clinical data and we're confident that by the end of the year, we could have some value creation for our shareholders. That's our goal.

Paul Lvesque: You know, we foresee, as we said all along, Truglarzo to continue to be a meaningful product for us and for the community. It's a niche type of positioning that we have very much at the end of the line. And we know that there is a category of patients that actually do need this product and will continue to need it. But John, I think that, you know, there have been some market entrants, so do you want to comment on those entrants in the last 18 months or so? Yeah, hi Justin.

Thank you.

Sure.

This concludes our question and answer session I would like to turn the conference back over to Paul Vivek for any closing remarks.

So just before we go to closing remarks, or a few questions coming in on the on the webcast mostly related to partnerships for both oncology and Nash you've addressed oncology. So maybe on the Nash I bought one we'll do that so we're still active on Nash as you can imagine, but the Nash category continues to be.

John Leasure: As you know, Sunlenka has recently been launched, and Lenacapivir, last year. We are seeing some competitive pressure from that. Trigarzo sales have been basically flat, but there's certainly a need for agents for multi-drug resistant infections, and there will always be that need. And Trigarzo is sort of the last line of defense.

Uncertain.

Magical should get their approval and the upcoming.

Weeks, what we also know is that <unk>.

John Leasure: One thing we've done is try to improve the administration through the IV push loading dose and the IV push, and now the IM submission. So we're trying to improve simplicity for the drug and make it more accessible for patients. But overall, I think Trigarzo, we're projecting, you know, flat to moderate growth moving forward. Got it. Thanks, Stacey. The next question comes from Bill Maughan with Canaccord Genetics.

Have or could have some impact in that market that has yet to develop.

So for now as I indicated in my speech. It one thing that we know is that we can build muscle mass with our compound.

Not only can we have an impact on the inflammation and ultimately fibrosis, which is what Nash is all about but we think that.

The <unk> ones in this space of weight loss.

William Patrick Maughan: Please go ahead. Good morning. So, my first question is, now that you're adjusted EBITDA positive, do you have a line of sight to cash flow positivity? Philippe, do you want to comment on that? Yeah, well, on a free cash flow basis, we're looking at probably the end of this year being free cash flow positive. Obviously, we are seeing the top line continuing to grow in the future, and the expense level has been kind of reset. So that cash flow bottom line should be coming in the next, you know, quarters or years. Okay, and then my next question is about the oncology asset. So, you've mentioned partnerships and reducing spend. So, just wondering what the range of possibilities for a partnership may look like. Do you intend to fully offload all expenses, or is there a world where you keep some amount of expenses in exchange for better back-end economics?

<unk> Nash.

As a part to play in if they need to actually complement their activities with something that can.

Build muscle mass while that's what we do so we have conversation with some companies in that space I do not want to be overly optimistic but at the same time. This market is developing as I said weight loss in Nash and at one point be very very close and who knows what that can lead to in the future.

So what we're going to.

Play discard.

And keep it in our sleeves until it can strike and for now we're still actively in conversation with companies in the space of Nash. Thanks for the question.

Okay. So thank you everyone for attending the call today.

As discussed we have set out an ambitious plan driven by our commercial capabilities and our renewed strategic objectives that are bound to create value for shareholders.

Paul Lvesque: Well, I mean, on our journey towards profitability, you know, our commitment to our investors is that we will actually stop investing after this $5 million investment. But at such a point, with TH1902, we said in the speech today that we already have 40 patients that have been dosed with this. So we have a fair amount of human data.

By achieving positive adjusted EBITDA in the two consecutive quarters. The last quarters, we are demonstrating to investors that we are poised to deliver on our commitments in 2004 and over the long run.

Our corporate strategy and value proposition as already attracted new investors like <unk>, who have chosen to be part of our promising future.

Paul Lvesque: We've also said that the platform has a lot of potential. We are advancing two additional PDCs with other payloads for toxic payloads. So, at the end of the day, one plus the other should be attractive to a partner.

We are proud to be setting the bar high with our goals in 2024, we are guiding and adjusted EBITDA of $13 million to $15 million.

Even while spending $5 million in oncology.

Paul Lvesque: And I think that, you know, the pipeline of opportunities with ADCs is quite dry at the moment. Other companies, such as Novartis, have already indicated that they will look for opportunities in the PDC segment. So at a point, I think that will be what it will be with the data that we're going to have. Christian is confident that we're going to have some effective data coming out of the dosing that we're doing at the moment with the new protocol and that we will actually have a better side effect profile than what we saw with the previous dosage that we had. We are in discussions with many oncology companies, and most of them know fairly well what we do.

A remarkable pivot and our corporate strategy in less than a year and a testament to a thorough technologies to resolve thank you again for continual your continuing support and being part of our journey see you soon have a great day.

The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

Great to hear.

Okay.

[music].

Okay.

Paul Lvesque: They just want to see more pinnable data, and we're confident that by the end of the year, we could have some value creation on our shoulders. That's our goal. Thank you. This concludes our question and answer session. I would like to turn the conference back over to Paul Lvesque for any closing remarks.

Paul Lvesque: So just before we go to closing remarks, there are a few questions coming in on the webcast mostly related to partnerships for both Oncology and NASH. You've addressed Oncology, so maybe on the NASH as well. Well, on NASH, we're still active in NASH, as you can imagine, but the NASH category continues to be uncertain. You know, Madrigals should get their approval in the coming weeks.

Paul Lvesque: What we also know is that GLP-1s have or could have some impact in that market that has yet to develop. So for now, as I indicated in my speech, one thing that we know is that we can build muscle mass with our compounds. Not only can we have an impact on inflammation and ultimately fibrosis, which is what NASH is all about, but we think that if the GLP-1s in this space of weight loss slash NASH have a card to play, and if they need to actually complement their activities with something that can build muscle mass, well, that's what we do.

[music].

Paul Lvesque: So we are in conversations with some companies in that space. I do not want to be overly optimistic, but at the same time, this market is developing. As I said, weight loss and NASH can at one point be very, very close, and who knows what that can lead to in the future.

Paul Lvesque: So we're going to play this card and keep it in our sleeves until it can strike. And for now, we're still actively in conversation with companies in the space of NASH. Thanks for the question. Okay, so thank you everyone for attending the call today. As discussed, we have set out an ambitious plan driven by our commercial capabilities and our renewed strategic objectives that are bound to create value for showholders. By achieving positive adjusted EBITDA for the last two consecutive quarters, we are demonstrating to investors that we are poised to deliver on our commitments in 2024 and over the long run. Our corporate strategy and value proposition have already attracted new investors like Invesma Quebec who have chosen to be part of our promising future. We are proud to be setting the bar high with our goals for 2024.

Paul Lvesque: We are guiding and adjusted a bit down 13 to 15 million dollars even while spending 5 million dollars on oncology. What a remarkable pivot in our corporate strategy in less than a year and a testament to Theratechnologies' resolve. Thank you again for your continuing support and being part of our journey. See you soon. Have a great day.

Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect. [inaudible] ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? Good morning, ladies and gentlemen, and thank you for standing by.

Operator: Welcome to Theratechnologies' fourth quarter and full year fiscal 2023 earnings call. We would like to remind everyone that all figures on this call are quoted in U.S. dollars. At this time, all participants are in a listen-only mode.

Operator: 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. Investors wishing to submit a question may do so by clicking 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.

Julie Schneiderman: I would like to remind everyone that this conference call is being recorded today, Wednesday, February 21st, 2024, at 8.30 a.m. Eastern Time. I will now turn the call over to Julie Schneiderman, Senior Director, Communications and Corporate Affairs at Theratechnologie. Julie, please go ahead.

Julie Schneiderman: As such, the company cannot guarantee that any forward-looking statement will materialize, and you are cautioned not to place undue reliance on them. The company refers current and potential investors to the forward-looking information section of Theratechnologies' management discussion and analysis issued this morning and available on cedarplus.ca and on edgar.sec.gov. Forward-looking statements represent Theratechnologies' expectations as of this morning, February 21st, 2024. Additionally, today, the company is using the term adjusted EBITDA, which is not a financial measure under International Financial Reporting Standards, IFRS, or U.S. Generally Accepted Accounting Principles, U.S. GAAP. Adjusted EBITDA excludes the effects of items that primarily reflect the impact of long-term investment and financing decisions rather than the results of day-to-day operations.

[music].

Good morning, ladies and gentlemen, and thank you for standing by welcome to thorough technologies fourth quarter and full year fiscal 'twenty 23 earnings call, we would like to remind everyone that all figures on this call are quoted in U S dollars.

Julie Schneiderman: Theratechnologies believes that this measure can be a useful indicator of its operational performance and financial condition from one period to another. The company uses this non-IFRS measure to make financial, strategic, and operating decisions. Reconciliation of adjusted EBITDA to net loss is found in our MD&A, issued this morning, available on Cedar and on EDGAR at the web addresses mentioned earlier. Investors can also follow the company on LinkedIn and X, formerly Twitter, and sign up for alerts on Theratechnologies' investor website at www.theratech.com. With that, I would now like to turn the conference over to our President and CEO, Paul Levesque. Thank you, Julie. Hello, everyone, and good morning.

At this time all participants are in a listen only mode.

During 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 may do so by clicking the ask a question link on the webcast platform.

If anyone has any difficulties hearing the conference.

Please press the star he followed by zero for operator assistance at any time.

Paul Lvesque: I am pleased to be reporting on Theratechnologie's financial results for the fourth quarter and full year ended November 30, 2023. What began as a challenging year for the company shifted in the second half to end 2023 on a high note with record quarterly sales, a dramatic turnaround in adjusted EBITDA, and financing that strengthened our balance sheet with new high-quality institutional investors. Our strategy of pivoting our primary focus to commercial operations and minimizing resources for research and development activities is already paying off. We ended the year with strong fourth-quarter results and are well on our way to achieving a solid adjusted EBITDA number in 2024. Q4 2023 was the highest quarterly revenue we've ever recorded in the company's history.

I would like to remind everyone that this conference call is being recorded today Wednesday February 'twenty, one 'twenty 'twenty four at 830, a M. Eastern time I will now turn the call over to Julie Schneiderman Senior Director Communications and corporate affairs at their other technologies jewelry.

Please go ahead.

Thank you operator, and good morning, everyone on the call today will be Sarah Technologies', President and Chief Executive Officer, Mr Paulo back and senior Vice President and Chief Financial Officer, Mr. Feeney debentures. During the Q&A session, we will be joined by Dr. Christiane Massenet.

Senior Vice President and Chief Medical Officer, and Mr. John measure the company's global commercial officer before we begin I'd like to remind everyone that remarks today contain forward looking statements regarding the company's current and future plans expectations and intentions with respect to <unk>.

Sure events forward looking statements are based on assumptions and there are risks that results.

Paul Lvesque: Third quarter momentum in new prescription growth continued through the fourth quarter, translating into $23.5 million in sales, ending 2023 with a total annual revenue of $81.8 million. This is a significant accomplishment in light of the hurdles we faced in the first half of 2023, namely inventory drawdowns and unfavorable gross-to-net challenges. We also demonstrated strength on the bottom line in Q4 with a positive adjusted bid of $5 million. This was our second consecutive quarter delivering on the strategic imperative, more than doubling adjusted EBITDA from Q3 to Q4, and ending the year with an adjusted EBITDA loss of only $2.9 million. This is a dramatic turnaround in cooperation compared to year-end 2022, when we reported an adjusted EBITDA loss of $22 million.

Thank bioterror technologies 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. The company refers current and potential investors to the forward looking information section.

Darrin technologies management's discussion and analysis issued this morning and available on SEDAR at.

At Cedar plus dossier and on Edgar.

S E C.

Forward looking statements represent their technology expectations as of this morning February 'twenty, one 'twenty 'twenty four. Additionally today. The company is using the term adjusted EBITDA, which is not a financial measure under international financial reporting standards.

FRS or U S. Generally accepted accounting principles U S. GAAP adjusted EBITDA excludes the effects of items that primarily reflect the impact of long term investment and finance and financing decisions rather than the result of day to day operations, there and technologies believes that this measure.

Paul Lvesque: Based on the strength of our performance over the last six months, we are providing guidance today of revenues between $87 and $90 million, with an adjusted dividend range of $13 to $15 million for the full year 2024. By doubling down on our commercial capabilities, we are more determined than ever before to create value for our shareholders in 2024. With the year already well underway, we are seeing a solid trend on key performance metrics such as enrollments and unique patients, signaling that our objectives can be achieved and even surpassed. However, based on the buildup and subsequent drawdown of inventories in the early part of fiscal year 2023, investors should expect some variability in revenue growth reporting in 2024, especially in the first half of the year.

Can be a useful indicator of its operational performance and financial condition from one period to another the company uses this non <unk> measure to make financial strategic and operating decisions reconciliation of adjusted EBITDA to net loss is found in our MD&A issued this morning.

<unk> on SEDAR and on Edgar at the at the Web address as mentioned earlier investors can also follow the company on Linkedin and ex formerly Twitter and sign up for alerts on thorough technologies investor website and their attack Dot com with that I would now like to turn the conference over to our President and.

CEO Paula that.

Thank you Julie Hello, everyone and good morning.

Pleased to be reporting on <unk> technologies financial results for the fourth quarter and full year ended November 32023.

Paul Lvesque: This being said, we are confident in delivering growth over full year 24, as evidenced by today's revenue and adjusted for the guidance announced. Now that the stage is set for our growth trajectory, let's dive deeper into what's driving our top line. Agrifta SV continues to be the standout product in our portfolio. Over the past six and eight months, our team has demonstrated the capacity to capture new patients in the ever-evolving competitive environment. In fact, our total number of unique patients hit an all-time high at the end of calendar 2023, up 13% year over year for the month of December. Allow me for a moment now to remind people about the breadth of DSV's benefits and marketing position, given the noise about weight loss drugs and particularly GLP-1s, where recent clinical research has shown them to also induce muscle mass reduction. As the only medication of its kind approved in the U.S. and designed specifically for adults with HIV, Agrifta-SV's unique mechanism of action decreases excess visceral abdominal fat while actually increasing lean body mass. This is especially important for people with HIV where muscle loss can be a serious issue.

Q4, 2023 was the highest quarterly revenue we've ever recorded in the company's history.

This is a significant accomplishment in light of the hurdles we faced in the first half of 2023, namely inventory drawdowns and non favorable gross to net challenges.

We also demonstrated strengths on the bottom line in Q4 with a positive adjusted EBITDA of $5 million.

This was our second consecutive quarter delivering on the strategic imperative more than doubling adjusted EBITDA from Q3 to Q4 and ending the year with an adjusted EBITDA loss of only $2 9 million.

Paul Lvesque: Furthermore, healthcare providers are increasingly recognizing that excess visceral abdominal fat is a medical condition that can lead to very serious health consequences if left untreated. We welcome this shift in understanding and diagnosis that should support patient identification and market demand for Agrifta SV. Before we move on, I want to address the recent update concerning our SVLA for DFA formulation of Tessamorland and take a moment to review the facts and timeline. As you are aware, on January 22nd, we were notified by the FDA that they would not meet the PDUFA date. At the time, we had received very few questions and had responded swiftly to all FDA requests.

This is a dramatic dramatic turnaround in Cup reason to year end 2022, when we reported an adjusted EBITDA loss of $22 million.

Based on the strength of our performance over the last six months. So we are providing guidance today of revenues between 87 and $90 million with an adjusted EBITDA in the range of 13 to 15 million for the full year of 2024.

By doubling down in our commercial capabilities, we are more determined than ever before to create value for our shareholders in 2024.

With the year already well underway, we are seeing a solid trend on key performance metrics, such as enrollments and unique patients signaling that our objectives can be achieved and even surpassed however, based on the buildup and subsequent drawdown of inventories in the early part of fiscal year 2023.

Investors should expect some variability in revenue growth reporting in 2020 for especially in the first half of the year.

Paul Lvesque: On January 23rd, at the end of the day, we received a complete response letter. While we are disappointed by this turn of events, we are confident in the FHA formulation and plan to address the Agency's comments in due course. To this end, we have been working closely with external regulatory experts to develop a comprehensive plan of action. In addition, we have requested a Type A meeting with the FDA to ensure our approach is aligned with their expectations. Let's take a closer look at the details. As previously explained in the press release, the questions outlined in the CRL are largely related to chemistry, manufacturing, and controls, also known as CMC, concerning microbiology, assays, impurities, and stability for both the drug product and the final reconstituted product. We already have most of the information on hand to address these questions, and we have started work streams related to the assay and microbiology.

This being said we are confident in delivering growth over full year 2004, as evidenced by today's revenue and adjusted EBITDA guidance announcement.

Now that the stage is set for our growth trajectory, let's dive deeper into what's driving our top line.

Okay.

<unk> continues to be the standout product in our portfolio over the past 678 months. Our team has demonstrated capacity to capture new patients in the ever evolving competitive environment.

In fact, our total number of unique patients hit an all time high at the end of calendar 2023 up 13% year over year for the month of December.

And not only for a moment now to remind people about the group does as these benefits and marketing position given the noise about weight loss drugs, and particularly GOP ones, where recent clinical research has shown them to also induced muscle mass reduction.

As the only medication or its going to approved in the U S and designed specifically for adult with HIV and <unk> unique mechanism of action decreases excess visceral abdominal fat, while actually increasing lean body mass.

Paul Lvesque: In addition, the FDA requested further information to address the potential impact of the new formulation on the immunogenicity risk. Based on this, after consultation with experts, we are preparing a risk assessment in accordance with DFD's guidelines, and we do not believe that additional clinical studies are required. Given the progress we have made since January 23rd, we remain focused on resubmitting our file to the FDA and obtaining approval for the F-8 formulation before the end of 2024. Our upcoming interaction with the FDA will further inform and confirm our resubmission plan and timelines for launch. In the meantime, I want to emphasize that this delay in no way impacts our successful commercialization of Agripta SV, which, as I mentioned earlier, generated record sales in 2023. Let's now shift gears and look at Trugarzon. In spite of the new market entry, Trigarzo continues to be a vital treatment for people with HIV. You have few options, and it remains a good companion to Egrifta SV.

This is especially important people with HIV, where muscle loss can be a serious issue for us.

And more health care providers are increasingly recognizing that excess visceral abdominal fat is a medical condition that can lead to very serious health consequences if left untreated.

We welcome as it shifts and understanding and diagnosis that should support patient identification and market demand for <unk>.

Before we move on I want to address the recent update concerning our S. VLA for the FAA formulation of disarm orlan and take a moment to review the facts and timelines.

As you are aware on January 22nd we were notified by the FDA that they would not meet the <unk> date.

At the time, we had received very few questions. It had responded swiftly to all FDA requests.

On January 20th third at the end of the day, we received a complete response letter.

While we are disappointed by this turn of events, we are confident that <unk> formulation and plan to address the agency's comments in due course.

To this end we have been working closely with external regulatory experts to develop a comprehensive plan of action.

Paul Lvesque: In order to maximize our reach and impact, we have begun to tailor promotional efforts and hone in on healthcare providers who are specifically addressing multidrug-resistant. We are determined to increase the value for the HIV community while also enabling Trigarzo to be more profitable. These efforts to maximize Tregarzo's benefits and wind down our R&D efforts for the lifecycle management of our products were further complemented by a series of regulatory milestones in December, beginning with the FDA approval of the IV push loading dose of Tregarzo. This simplified method of administration takes only 90 seconds and means that new patients no longer require initiation of treatment by 30-minute infusion. Using the IV PUSH method for both loading and maintenance doses makes Travarzo a much more convenient option for heavily treated experienced adults and their health care providers.

In addition, we have requested a type a meeting with the FDA to ensure our approach is aligned with their expectations.

Let's take a closer look at the details.

As previously explained in the press release the questions outlined in the CRM are largely related to chemistry manufacturing and controls also known as CFC.

Turning to microbiology assays, and purity and stability for both the drug product and the final reconstituted product.

We already have most of the information on hand to address these questions and we have started the work streams related to the assay and microbiology.

In addition, the FDA requested further information to address the potential impact of the new formulation on the Immunogenicity risk.

And this after consultation with experts we are preparing a risk assessment in accordance with the Fda's guidelines and we do not believe that additional clinical studies are required.

Given the progress we have made since January 20th third we remained focused on resubmitting, our file to the FDA and obtaining approval of the Feight formulation before the end of 2024.

Paul Lvesque: Moreover, we are awaiting the PDUFA date for the SBLA submission of an intramuscular administration of Traverso Maintenance Doctrine. These line extension efforts exemplify our commitment to innovate, further improve adherence, and simplify the treatment experience for people with HIV. Now that we have completed most of the significant parts of these important projects, we have reset our cost base to better align with our overarching commitment to profitability. We are steadfast in realizing our strategic goal to reach more patients with new and improved products through organic but also inorganic opportunities. As stated previously, our U.S. commercial capabilities are primed to scale up for bolt-on creative products and new partnerships. In this regard, we remain committed to our investors and will leave no stone unturned as we look at all opportunities.

Our upcoming interactions with the FDA will further inform and confirm our resubmission plan and timelines for launching.

In the meantime.

I want to emphasize that this delay in no way impacts our successful commercialization of a grip phase V, which as I mentioned earlier generated record sales in 2023.

Let's now shift gears and look at <unk>.

In spite of the new market entrance to regards who continues to be a viable treatment for people with HIV you have few options and it remains a good companion to Arista as we.

In order to maximize our reach and impact we have begun to tailor promotional efforts and home in on health care providers.

Specifically addressing multi drug resistance.

We are determined to increase the value for the HIV community, while also enabling <unk> to be more profitable.

These efforts to maximize regards to was benefits and wind down our R&D efforts for the lifecycle management of our products or further complemented by a series of regulatory milestones in December beginning with the FDA approval of the IV push loading dose of <unk>.

Paul Lvesque: Our efforts to be stringent with operating expenses while focusing on top-line growth through organic and inorganic opportunities have not gone unnoticed in the marketplace. In particular, I want to highlight our recent financing, which brought in new investors, among them Abyss Sysma Quebec. Abyss Sysma Quebec is a local fund that sees Theratechnologies as a company that can play a leadership role in Quebec and the broader Canadian biopharma ecosystem.

This simplified method of administration takes only 90 seconds and means that new patients no longer require initiation of treatment by 30 minute infusion.

Using the IV push methods for both loading and maintenance doses makes <unk> a much more convenient option for heavily treated experience adults and their health care providers.

Paul Lvesque: IQ has chosen to invest in us because they believe in our capability. [inaudible] We welcome them to Theratechnologie and thank them for their support of the business. [inaudible] In addition to revenue expansion opportunities through our current commercial business and the growth potential that exists via acquisitions and partnerships, we are encouraged by the continued interest in our oncology program. We recently announced that we have enrolled the first six patients in part three of the phase one clinical trial of our lead investigational anti-cancer agent, Pseudocytexels andusorti. With these milestones behind us, we're well on our way to generating new evidence for this asset in the treatment of advanced ovarian cancer.

Moreover, we are awaiting the paducah date for the SBA the submission of an intramuscular administration of the <unk> maintenance dose.

These line extension efforts exemplify our commitment to innovate further improve adherence and simplified the treatment experience for people with HIV.

Now that we have completed most of the significant parts of these important projects, we have reset our cost base to better align with our overarching commitment to profitability.

We are steadfast in realizing our strategic goal to reach more patients with new and improved products through organic but also inorganic opportunities as.

As stated previously our U S commercial capabilities are trying to scale up for bolt on accretive products and new partnerships.

Paul Lvesque: We look forward to enrolling the next six patients at a higher dose and to reporting results in 2024. With the stunning investment made by the industry in antibody drug conjugates in the past year, we remain confident that our peptide drug conjugate platform will attract the attention of oncology players in the near future. As a reminder, we have more than 40 patients who have been dosed with pseudocetaxel-zandu sortine, building safety and efficacy evidence confirming the role of the sortiline receptor. We are also encouraged by the results shared in recent publications in Frontiers in Immunology showing significant infiltration of tumor lymphocytes following the treatment of pseudocetaxels and Dusortype in a cold animal model.

In this regard we remain committed to our investors and we will leave no stone unturned as we look at all opportunities.

Our efforts to be stringent with operating expenses, while focusing on top line growth through organic and inorganic opportunities.

Not gone unnoticed in the marketplace in particular I want to highlight our recent financing which brought in new investors among them <unk>, Quebec and smart, Quebec is a local fund that identified <unk> technologies is a company that can play a leadership role in Quebec, and the broader Canadian <unk>.

Pharma ecosystem.

<unk> has chosen to invest in us because they believe in our capabilities. They came in to facilitate the growth strategy and ultimately participate in the creation of shareholder value.

We welcome them to thorough technologies, thank them for their support on the business and look forward to their strategic contributions.

Paul Lvesque: In addition, on the preclinical front, we are advancing new peptide drug conjugates with other potent payloads. Therefore, while Pseudocyte XLZ2 sort type has already demonstrated inhuman activity, one has to remember that our SORT1 technology platform provides immense possibilities to advance other PDCs. Our early data suggests that these PDCs could be used alone or in combination with targeted therapies, including checkpoint inhibitors. And finally, we believe our peptide could be conjugated with other anti-cancer treatment modalities, such as radioisotopes and nanoparticles. Before concluding, let me highlight our objectives for 2024. With growth and profitability as the cornerstones of our operating plan, we have set ourselves up for a promising year with four clear and focused strategic imperatives. First, we are focused on growing the top line and delivering an adjusted EBITDA in the range of $13 to $15 million.

In addition to revenue expansion opportunities through our current commercial business and the growth potential that exist via acquisitions and partnerships. We are encouraged by the continued interest in our oncology program. We have recently announced that we have enrolled the first six patients in part three of the phase one clinical trial.

All of our lead investigational anti cancer agent Shadow <unk> short time.

With this milestones behind us, we're well on our way to generating new evidence for this asset in the treatment of advanced ovarian cancer.

We look forward to enrolling the next six patients at the higher dose and to reporting results in 2024.

As a reminder, we have more than 40 patients who have been dosed with pseudo sit back sales, Andrew sort tight building safety and efficacy evidenced in confirming the role of the <unk> receptor.

We are also encouraged by the results shared then the recent publications in frontier is in immunology, showing significant infiltration of tumor lymphocytes. Following the treatment of <unk> in a cold animal model.

Paul Lvesque: This, even considering a final $5 million investment in oncology. We will accelerate the profitability of the company by leveraging our commercial capabilities and acquiring immediately creative products that are aligned to our expertise. Therefore, M&A activities will be a key priority in 2024. We will seek to derive value from our investment in oncology with our Phase I clinical trial and will continue to search for partners for pseudocytic cells, endosorti, and our entire oncology platform. And finally, we all know that a plan is only as good as the people executing it.

In addition on the preclinical front, we are advancing new peptide drug conjugates with other potent payloads.

Therefore, while Pseudocyst tech sales and do sort tied as already demonstrated in human activity.

One has to remember that our sort one technology platform provides immense possibilities to advance other bdcs.

Our early data suggests that <unk> could be used alone or in combination with targeted therapies, including checkpoint inhibitors.

And finally, we believe our peptides could be conjugated with other anti cancer treatment modalities, such as radio isotopes and nanoparticles.

Before concluding let me highlight our objectives for 2024.

With growth and profitability as a cornerstone of our operating plan, we have set ourselves up for a promising year with four clear and focused strategic imperatives.

First we are focused on growing the top line and delivering an adjusted EBITDA in the range of $13 million to $15 million.

This even considering a final $5 million investment in oncology.

We will accelerate the profitability of the company by leveraging our commercial capabilities in acquiring immediately accretive products that are aligned to our expertise.

Therefore, M&A activities will be a key priorities in 2024.

We will seek to derive value from our investment in oncology with our phase one clinical trial and we will continue to search for partners for <unk> sales into short tight and our entire oncology platform.

And finally, we all know that the plan is only as good as the people executing on it.

To that end, we will continue to enhance and engage our talented team towards a new journey focused on commercialization.

With this I would like to turn the call over to Filip, who will go over the periods financials in details.

Thank you Paul and good morning, everyone.

For Q4, 2023, net sales of a grifter sbe reached $17 million.

Compared to $14 5 million in Q4 of last year, a growth of 17, 3% year over year.

Higher net sales of a grifter SV were a result of higher unit sales fueled by strong year over year growth in new prescriptions at a higher net selling price.

Growth in sales of Big Grifter SV for the full year is lower at six 4%, mostly due to the result to the inventory situation described in our second quarter earnings call and higher rebates.

With regard on <unk> net sales in the fourth quarter of fiscal 2023 amounted to $6 $5 million.

Compared to $7 million in the same quarter of 2022, representing a decrease of six 7% year over year.

Philippe Dubuc: I'm happy to report again in the fourth quarter that, through rigorous management of spending, R&D, selling, and G&A expense were all lower this year when compared to the fourth quarter of 2022, helping us achieve our second straight quarter of positive adjusted EBITDA as established and as an objective early in the 2023 fiscal year. R&D expenses decreased substantially in the fourth quarter of 2023 compared to the same period last year, coming in at $5.2 million versus $9.5 million last year. It's mostly due to lower spending on our oncology program, as well as lower expenses following the near completion of our life cycle management projects for Erythra SV and Traversa. R&D expenses also include $876,000 in severance and other expenses related to the reorganization announced in July 2023 and completed in October 2023. Selling expenses decreased to $6.8 million for the fourth quarter of 2023 compared to $7.8 million for the same three-month period last year, or a decrease of $1 million.

The decrease was mainly due to lower unit sales in the quarter compared to last year.

Lower.

Sales in the fourth quarter of 2023 were also the result of higher inventory buildup in 2020 to a situation, which continued into Q1 of this year, but as resolve itself in 2023.

In Q4 of 2023 cost of goods decreased to $5 1 million from $5 9 million in the same quarter of fiscal 2020 to the.

The decrease in cost of goods sold was mainly due to a provision of $1 $5 million taken in Q4 of 2022 related to the write down of FAA material, which is expected to expire prior to the launch of the fate, if and when approved.

This amount was offset by higher costs as a result of higher revenue.

As established and has as an objective early in the 2023 fiscal year.

R&D expenses decreased substantially in the fourth quarter of 2023 compared to the same period last year coming in at $5 2 million versus $9 $5 million last year.

Philippe Dubuc: The decrease in selling expenses in the fourth quarter is mainly related to our stated goal of becoming adjusted to the top positive in 2023. Selling expenses should stabilize in the future as our focus on top and bottom line growth remains our main objective, and hence we will not be compromising on customer-facing activities. GAA expenses in the fourth quarter of 2023 amounted to $3.7 million, which included approximately $290,000 in severance and other expenses related to the reorganization, as compared to $4 million in the fourth quarter of 2022, or a 7.5% decrease, or 14.8% excluding the expenses related to the reorganization.

Mostly due to lower spending on our oncology program as well as lower expenses. Following the near completion of our life cycle management projects for <unk> and <unk>.

R&D expenses also include $876000 and severance and other expenses related to the reorganization.

Announced in July 2023, and completed in October 2023.

Coming adjusted EBITDA positive in 2023, selling expenses should stabilize in the future as our focus on top and Bottomline growth remains our main objective and hence we will not be compromising on customer facing facing activities.

G&A expenses in the fourth quarter of 2023 amounted to $3 $7 million, which includes approximately $290000 severance and other expenses related to the reorganization as compared to $4 million in the fourth quarter of 2022 or a seven 5% decrease.

As a result of this we are pleased to report adjusted EBITDA in the fourth quarter of 2023 of nearly $5 million.

Versus negative $2 4 million in the same period last year and up from $2 2 million in the third quarter of fiscal 2023.

Full year 2023, we recorded adjusted EBITDA of negative $2 9 million compared to negative $21 4 million in fiscal 2022.

Net finance costs in the fourth quarter of 2023 amounted to $5 4 million and include interest of $2 $4 million on the marathon loan facility costs associated with the amendment of the loan facility.

Philippe Dubuc: As Paul briefly alluded to in his remarks, we are providing guidance this morning for revenues of $87 to $90 million for fiscal 2024 and adjusted EBITDA of $13 to $15 million. Keep in mind that we have allocated $4.8 million of our spending for our oncology program this year, and this is included in our adjusted EBITDA guidance, pointing to the strong performance of our commercial operation. As previously mentioned, any additional spending on oncology will be carried out through partnerships, so this program will no longer affect our adjusted EBITDA in 2025 and beyond. We ended the 2023 fiscal year on solid financial footing, thanks to the public offering and concurrent private placement completed in October 2023, with net debt of $20 million. And cash, bonds, and money market funds amounted to $40.4 million at the end of the fiscal year, while we ended the year with $60.6 million drawn on the Marathon facility.

The write off of deferred financing costs and the change in fair value.

Of the marathon warrants.

As Paul briefly alluded to in his remarks, we are providing guidance. This morning for revenues of $87 million to $90 million for fiscal 2024, and adjusted EBITDA of $13 million to $15 million keep in mind that we have allocated $4 8 million of our spending for our oncology program. This year.

And these are included in our adjusted EBITDA guidance pointing to the strong performance of our commercial operations.

As <unk> previously.

Previously mentioned any additional spending on oncology will be carried out through partnerships. So this program will no longer affect our adjusted EBITDA in 2025 and beyond.

We ended the 2023 fiscal year on solid financial footing, thanks to the public offering and concurrent private placement completed in October 2023, with net debt of $20 million.

Cash bonds and money market funds at the end of the fiscal year amounted to $44 million. While we ended the year with $60 6 million drawn on the marathon facility.

Philippe Dubuc: As described during our 2-3 call, we agreed to modify certain covenants in the credit agreement. The main change will be that we will no longer be required to hold $30 million in cash and equivalents should the F8 formulation of GRIFTA not be approved by the end of March 2024. The main covenants now center around liquidity and adjusted EBITDA, which are more aligned with our capacity to repay the interest and principal on the facility. As a reminder, the amortization of the loan facility begins in Q3 of this year, and the loan will be repayable in 36 monthly installments beginning in August of this year.

As described during our Q3 call we agreed to modify certain covenants in the credit agreement.

The main change will be that we will no longer be required to hold $30 million in cash and equivalents.

Should the F. Eight formulation of the grifter not be approved by the end of March 2024.

The main covenants now center around liquidity and adjusted EBITDA, which are more aligned with our capacity to repay the interest and principal on the facility.

As a reminder, the amortization of the loan facility begins in Q3 of this year and alone will be repayable in 36 monthly installments beginning in August of this year.

Operator: With that, Paul will be back for final comments, but first, we will now open the line to take questions from analysts and from investors. [inaudible] If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. [inaudible] Please go ahead. Hi, good morning, everyone. This is Carvey Anson-

With that I will have Paul will be back for final comments, but first we will now open the line to take the questions from analysts and from investors.

At any time. Your question has been addressed and you would like to withdraw your question. Please press Star then two.

Carvey Leung: Thank you for taking your questions. The first question is on SG&A and R&D. Can you provide more color on OPEX for 2024? The second question is on business development.

At this time, we will pause momentarily to assemble our roster.

Our first question comes from Louise Chen with Cantor. Please go ahead.

Carvey Leung: You spoke about acquiring new assets. Can you provide more commentary on what targets you're looking for? Thank you. Well, thank you for your question. So, Philippe, I'll let you answer the questions regarding the level of expenses for GNA and R&D. When it comes down to business development, we've said all along that we are looking for creative opportunities in the space of HIV, HIV-related, but also small metabolic, and small liver disease. This is an area where we have internal expertise, obviously, with Agrifta, and it is a model that we believe we could put in motion based on, again, the fact that our business model at this time is very, very similar to a rare disease company, where we call on a few individuals but at the same time have the expertise to have the surrounding noise with the different positions and functions that ensure reimbursement and success in the marketplace. So, Philippe, do Sure, Carvey.

Hi, Good morning, everyone. This is carvey on for Louise Thank you for taking our questions first.

Well. Thank you for your question. So <unk> I'll, let you answer the question is regarding the level of expenses and G&A and R&D when it comes down to business development.

We've said all along that we are looking for accretive opportunities in the space of HIV HIV adjacent but also small metabolic small liver disease. This is an area, where we have internal expertise, obviously with a grifter and it is.

Our model that we believe we could put.

Success in the marketplace. So Philip do you want to take the front part of the question sure Harvey So.

Paul Lvesque: So, the Q4 expenses for S, G, and A are pretty good proxies for what we'll be spending in 2024, maybe as slight increases, but nothing major. On the R&D side, however, that $5 million that we're investing in the oncology program will be done mostly in the first two quarters of the year. So, R&D should stabilize, should be stable in the first half, but then go down in Q3 and Q4 of this year. Great, thank you so much. The next question comes from Andre Uddin with Research Capital. Please go ahead.

The Q4 expenses for S. G&A are pretty good proxies for what we'll be spending in 2024.

Maybe as slight increases, but nothing nothing major.

Great. Thank you so much.

The next question comes from Andre <unk> with research capital. Please go ahead.

Andre Uddin: Good morning, Paul, Philippe, John, and Christian. Nice to see the ship starting to turn around here. Were there any recent price increases for either Agresta or Tregarzo?

Good morning, Paul Jonathan Krishna.

Nice to see the ship starting to turnaround here.

Were there any recent price increases for either aggressor and triggers though.

Paul Lvesque: Yes, thank you, Endri, for your question and your compliment. So, John, what were the price increases we took as of January 1st? We took 3.39 on Trigarzo and around 4.9 on Agrifta.

Yes. Thank you Andrew for your question and complement so John that what were the price increases we took as of January one.

We took a three point.

339 on <unk> four point.

Around $4 nine with the Raptor, Okay, that's great and I realize it's hard to predict but when should we see some initial <unk> data using the new dosing protocol.

Christian Marsolais: That's great. And I realize it's hard to predict, but when should we see some initial 1902 Zeta results using the new dosing protocol? Thanks. So, you're talking about oncology. So, Christian, you know, now that we have completed the dosing of the first six patients, we have to wait three months to actually enroll the next cohort of six patients at slightly higher dosages. When do you expect that we're going to have some data to report? Thank you, Paul. Andre, it is difficult to predict, as you know, because it depends on the results that we will see.

<unk>.

So you're talking about oncology, so we'll kick.

Now that we have completed the.

We have dosed the first six patients we have to wait three months to actually enroll the next cohort of six patients.

Slightly higher dosage when do you expect that we're going to have some data to report.

Thank you Paul.

<unk> to predict because you know because it depends on the results that we will see what I can say is that we have improved our protocol, meaning that.

And we are enrolling patients with less prior treatment, we are focusing on ovarian cancer patients and on the one prior resistance to taxane.

We're dosing the first dose now at this weekly it's 175 milligram per kilogram, which for the three doses is similar to the 200 milligram per meter squared that we had in the past then we're dosing in the range, where we could see efficacy.

Christian Marsolais: Then, we're dosing in the range where we could see efficacy, but as to when we will have it exactly, it's difficult to say, but by, in three months from now, we'll be able to recruit six additional patients, as Paul mentioned. Then it usually takes about four to five months before we can confirm efficacy, which should be sometime this year. Okay, thank you.

But as to when we will have an exactly it's difficult to say, but by in three months from now we'll be able to recruit six additional patients as Paul mentioned, then it's usually it takes about four to five months before we can confirm efficacy that it should be sometime this year.

Okay. Thank you.

Justin Howard Walsh: Thank you. The next question comes from Justin Walsh with Jones Trading. Please go ahead.

Great. Thank you.

The next question comes from Justin Walsh with Jones trading. Please go ahead.

Justin Howard Walsh: Hi, thanks for taking the question. You mentioned new market entrants in HIV. I was wondering if you could comment on the overall emerging competitive landscape in HIV and how your portfolio is expected to remain competitive, especially in the context of reduced life cycle management and RNA. Thank you, thank you, Justin.

Thank you thank you Justin.

Paul Lvesque: You know, we foresee, as we've said all along, ChocoBarzo to continue to be a meaningful product for us and for the community. It's a niche type of positioning that we have, very much at the end of the line, and we know that there is a category of patients that actually do need this product and will continue to need it. But John, I think that, you know, there have been some market entrants, so do you want to comment on those entrants in the last 18 months or so? Yeah, hi Justin.

We foresee as we've said all along <unk> to continue to be a meaningful product for us and for the community.

Niche type of positioning that we have very much at the end of the line.

And we know that there is a category of patients that actually do need this product and we will continue to need it but John I think that.

There has been some market entrants or do you want to comment on those entrants in the last 18 months or so yes, hydroptic not as you know.

John Leasure: As you know, Sudden Lanka has recently been launched on a capital beer, last year. We are seeing some competitive pressure from that. Trigarzo sales have been basically flat, but there's certainly a need for agents for multidrug-resistant infections, and there will always be that need. And Trigarzo is sort of the last line of defense.

Suddenly it guys recently been launched a lot of capital here.

Last year.

Sure.

We are seeing some competitive pressure from that regard to the sales have been basically flat, but there.

There is certainly a need for <unk>.

<unk> for multi drug resistant infections, and there will always be that need and <unk> is sort of the last line of defense.

John Leasure: One thing we've done is try to improve the administration through the IV push loading dose and the IV push, and now the IM submission. So we're trying to improve the simplicity of the drug and make it more accessible for patients. But overall, I think Trigarzo, we're projecting, you know, flat commodity growth moving forward. Got it. Thanks, Stacey. The next question comes from Bill Maughan with Canaccord Genetics. Please go ahead. Good morning.

One thing we've done is try to improve the administration through the IV push loading dose in the IV push to now.

Im submission so we're trying to improve simplicity for the drug and make it more accessible for patients, but overall I think thats regards though.

We're projecting.

Flat to moderate growth moving forward.

Got it thanks for taking the question.

The next question comes from Bill <unk> with Canaccord Genuity. Please go ahead.

William Patrick Maughan: So my first question is, now that you're adjusted EBITDA positive, do you have a line of sight to cash flow positivity? Philippe, do you want to comment on that? Yeah, well, on a free cash flow basis, we're looking at probably the end of this year being free cash flow positive. Obviously, we are seeing the top line continuing to grow in the future, and the expense level has been kind of reset. So that cash flow bottom line should be coming in the next, you know, quarters or years. Okay, and then my next question is about the oncology assets. So, you've mentioned partnerships and reducing spend. So, just wondering what the range of possibilities for a partnership may look like. Do you intend to fully offload all expenses, or is there a world where you keep some amount of expenses in exchange for better back-end economics?

Good morning. So my first question is now that your adjusted EBITDA positive do you have line of sight on cash flow positivity.

Do you want to comment on this.

Should be well on a on a free cash flow basis, we're looking at probably at the end of this year being free cash flow positive.

Obviously, we are seeing the top line continuing to grow in the future.

The expense level has been kind of a reset.

So that cash flow cash flow bottom line should should be coming in the next quarter.

Quarters or years.

Okay and then my next question is on on the oncology assets, So you've mentioned partnerships.

Partnerships and reducing spend so just wondering what.

Well in our journey towards profitability.

Our commitment to our investors is that we will actually stop investing after this $5 million investment.

But at such point with Th 19, new to what we said in the speech today that we already have 40 patients that had been dosed with this so we have a fair amount of human data.

Paul Lvesque: We've also said that the platform has a lot of potential. We are advancing two additional PDCs with other payloads or toxic payloads. So, at the end of the day, one plus the other should be attractive to a partner.

We've also said that the platform has a lot of potential we are advancing two additional pdc's with other payloads for toxic payloads. So at the end of the day, one plus the other should.

Should be attractive to partner.

Paul Lvesque: And I think that, you know, the pipeline of opportunities with ADCs is quite dry at the moment. Other companies, such as Novartis, have already indicated that they will look for opportunities in the PDC segment. So at a point, I think it will be what it will be with the data that we're going to have. Christian is confident that we're going to have some effective data coming out of the dosing that we're doing at the moment with the new protocol and that we will actually have a better side effect profile than what we saw with the previous dosage that we had. We are in discussions with many oncology companies, and most of them know fairly well what we do.

I think that.

The pipeline of opportunities with Adcs is quite dry at the moment.

Other companies such as Novartis have already indicated that they will look for opportunities in the PDC segment. So at one point I think it will be what it will be with the data that we're going to have <unk>.

Confident that we're going to have some.

<unk> effective.

Data coming out of the dosing that we're doing at the moment with the new protocol and that we will actually have better side effect profile than what we saw with the.

The previous dose at jet we had.

We're in discussion with many oncology companies most of them.

You know fairly well what we do did just wanted to see a more clinical data and we're confident that by the end of the year, we could have some value creation for our shareholders. That's our goal.

Thank you.

This concludes our question and answer session I would like to turn the conference back over to Paul Vivek for any closing remarks.

So just before we go to closing remarks, or a few questions coming in on the on the webcast are mostly related to partnerships for both oncology and Nash you've addressed oncology. So maybe on the national one we'll do that so we're still active on Nash as you can imagine, but the Nash category continues to be.

Uncertain.

<unk> should get their approval and the upcoming.

Weeks, what we also know is that <unk>.

Have or could have some impact in that market that has yet to develop.

For now as I indicated in my speech. It one thing that we know is that we can build muscle mass with our compound.

Not only can we have an impact on the inflammation and ultimately fibrosis, which is what Nash is all about but we think that.

The <unk> ones in this space of weight loss Slash Nash.

Has a card to play and if they need to actually complement their activities with something that Ken.

Paul Lvesque: So we're going to play this card and keep it in our sleeves until it can strike. And for now, we're still actively in conversation with companies in the space of NASH. Thanks for the question. Okay, so thank you everyone for attending the call today. As discussed, we have set out an ambitious plan driven by our commercial capabilities and our renewed strategic objectives that are bound to create value for showholders. By achieving positive adjusted EBITDA in the two consecutive quarters, the last quarters, we are demonstrating to investors that we're poised to deliver on our commitments in 2024 and over the long run. Our corporate strategy and value proposition have already attracted new investors, like Investissement Québec, who have chosen to be part of our promising future. We are proud to be setting the bar high with our goals for 2024. We are guiding and adjusting a bid of $13 to $15 million, even while spending $5 million on oncology.

So we're going to.

Played this card.

And keep it in our sleeves until it can strike and for now we're still actively in conversation with companies in the space of Nash. Thanks for the question.

Okay. So thank you everyone for attending the call today.

As discussed we have set out an ambitious plan driven by our commercial capabilities and our renewed strategic objectives that are bound to create value for shareholders.

Our corporate strategy and value proposition as already attracted new investors like <unk>, who have chosen to be part of our promising future.

We are proud to be setting the bar high with our goals in 2024, we are guiding adjusted EBITDA of $13 million to $15 million.

Even while spending $5 million in oncology.

Paul Lvesque: What a remarkable pivot in our corporate strategy in less than a year and a testament to Theratechnologie's resolve. Thank you again for your continuing support and being part of our journey. See you soon. Have a great day! The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

A remarkable pivot and our corporate strategy in less than a year and a testament to a thorough technologies to resolve.

Again for continual your continuing support and being part of our journey see you soon have a great day.

The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

Q4 2023 Theratechnologies Inc Earnings Call

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