Q1 2024 Theratechnologies Inc Earnings Call
Operator: Good morning, ladies and gentlemen, and thank you for standing by. Welcome to Theratechnologies' first quarter 2024 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 <unk> technologies first quarter 'twenty 'twenty four 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. 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.
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. 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 difficulties hearing the conference, please press the star key followed by zero for operator assistance at any time.
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 difficulties hearing the conference. Please press the star key 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, April 10th, 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 April 10, 2024 at 830, a M eastern time.
I will now turn the call over to Julie Schneiderman Senior Director Communications and corporate affairs at their technologies Julie. 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 Theratechnologie 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.
Julie Schneiderman: Thank you operator, and good morning, everyone on the call today will be Sarah technologies, President and Chief Executive Officer, Mr. Polymer Zac, and senior Vice President and Chief Financial Officer. Mr. Felipe you did during the Q&A session. We will be joined by Dr. Christiane Master.
Julie Schneiderman: <unk> Senior Vice President and Chief Medical Officer, and Mr. John Leisure 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>.
Julie Schneiderman: Future events forward looking statements are based on assumptions and there are risks that there are risks that results. The team by three 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 play.
Julie Schneiderman: Undue reliance on them the company refers current and potential investors to the forward looking information section therein technologies management's discussion and analysis issued this morning and available on SEDAR.
Julie Schneiderman: The company refers current and potential investors to the forward-looking information section of Theratechnologie's management discussion and analysis issued this morning and available on CedarPlus at www.cedarplus.ca and on Edgar at www.sec.gov. Forward-looking statements represent Theratechnologie's expectations as of this morning, April 10, 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.
Julie Schneiderman: At Www Dot Cedar plus got CA and on Edgar at Www Dot SEC Dot Gov forward looking statements represent their technologies expectations as of this morning April 10th 'twenty 'twenty four. Additionally, today the company is using the term.
Julie Schneiderman: Justice EBITDA, which is not a financial measure under international financial reporting standards I S Rs 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.
Julie Schneiderman: Then the result of day to day operations. There are 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 ifr S measure to make financial strategic and operating decisions reconciliation.
Paul Lvesque: Theratechnologie 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 and available on CedarPlus 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 Theratechnologie's 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, Judy. Have a wonderful morning!
Julie Schneiderman: The adjusted EBITDA to net loss is found in our MD&A issued this morning and available on SEDAR plus and on Edgar at the Web address is mentioned earlier investors can also follow the company and Linkedin and ex formerly Twitter and sign up for alerts on Tara technologies Investor website.
Julie Schneiderman: At Aerotech Dot com with that I would now like to turn the conference over to our President and CEO Paul in the deck.
Paul: Thank you Judy Hello, everyone and good morning, I'm pleased to be reporting on <unk> technologies financial results for the first quarter ended February 29, 2024 today.
Paul Lvesque: Good morning. I am pleased to be reporting on Theratechnologie's financial results for the first quarter ended February 29, 2024. Today I will be brief as we were together not that long ago for our fourth order and full year 2023 call. You may recall that we ended 2023 with a very strong second half.
Paul: Today I will be brief as we work together and not that long ago for our fourth quarter and full year 2023 call.
Paul: You may recall that we entered into 2023 with a very strong second half.
Paul Lvesque: This rounded out a six month positive trajectory with Egypta SV as our engine of growth and a robust adjusted EBITDA number to set us on a path to profitability in 2024. I also alluded to the fact that we should expect some variability in revenue growth reporting in 2024, especially in the first half of the year, based on the buildup and subsequent drawdown of inventory. For Q1, to little surprise, that has been the case.
Paul: This rounded out with each six month positive trajectory with a grifter S V. As our engine of growth any robust adjusted EBITDA number to set us on a path to growth.
Paul: <unk> in 2024.
Paul: You also alluded to the fact that we should expect some variability in revenue gross reporting and 'twenty 'twenty four is.
Paul: Especially in the first half of the year based on the build up in subsequent drawdown of inventory.
Paul: For Q1, two little surprising this has been the case, our first quarter 2024 sales results are a stark contrast, as it was reported in the first quarter of last year, which I will elaborate on shortly.
Paul Lvesque: Our first quarter 2024 sales results are a stark contrast to those reported in the first quarter of last year, which I will elaborate on shortly. Looking forward, a reverse trend is unfolding. In fact, we expect a stronger second quarter for 2024 versus the unusually weak second quarter reported in 2023. We also expect second half reporting to better reflect our overall performance. While sales reporting has been erratic, enrollments and unique patients show consistent growth, particularly when it comes to our priority brand, Agripta SV. First quarter momentum in new prescription growth continued with new enrollments up 21% and a number of unique patients up 14% compared to the first quarter of 2023. Interestingly, the number of unique prescribers is also steadily increasing, up 13% this past February alone as compared to the same month in 2023.
Paul: Looking forward a reverse trend is unfolding in fact, we expect a stronger second quarter for 'twenty 'twenty four versus the unusually weak second quarter reported in 2023.
Paul: We also expect second half reporting to better reflect our overall performance.
Paul: While sales reporting has been erratic enrollments and unique patients showed consistent growth, particularly when it comes to our priority brands and great day speak.
Paul: First quarter momentum in new prescription growth continued with new enrollments up 21% and a number of unique patients up 14% from ear to the first quarter of 2023.
Interestingly the number of unique prescribers is also steadily increasing up 13%. This past February alone as compared to the same month in 2023.
Paul Lvesque: We've also continued to demonstrate strength on the bottom line, making this our third consecutive quarter of near-flat to positive adjusted EBITDA. Our new cost structure, together with our strategic focus on commercial capabilities, puts Athera Technologies on the brink of producing stronger cash flow and value for shareholders. As such, I'm pleased to reaffirm our guidance for full year 2024 of revenues between $87 and $90 million, and it just did a bit down in the range of $13 to $15 million. Let me take a moment now to circle back on the inventory challenges we have faced so that I can provide clarity on the disconnect we are seeing between our key performance indicators and top line results. To illustrate the situation, I want to highlight how sales of Egrifta SV to a few specialty pharmacies have been out of sync with demand, resulting in a historically low number of days on hand.
Paul: We've also continued to demonstrate strength on the bottom line, making this our third consecutive quarter of near flat to positive adjusted EBITDA.
Paul: Our new cost structure together with our strategic focus on commercial capabilities.
Paul: A thorough technologies on the brink of producing stronger cash flow and value for shareholders.
Paul: As such I'm pleased to reaffirm our guidance for full year 2024 of revenues between $87 million to $90 million and then it just didnt EBITDA in the range of 13 to 15 million.
Paul: Let's take a moment now to circle back on the inventory challenges we have faced so that I can provide clarity on the disconnect. We are seeing between our key performance indicators and top line results.
Paul: To illustrate this situation I want to highlight how sales would be great.
Paul: Two a few specialty pharmacies has been out of sync with demand, resulting in a historically low number of days on hand.
Paul Lvesque: When we take a closer look at the slide, you can see that inventory on hand at the end of first Q23 was approximately 55 days. In contrast, the inventory on hand at the end of first quarter 24 was only about 27 days. The difference in days on hand has impacted our first quarter revenues and growth. We are actively monitoring our distribution network with the goal of maintaining 30 to 35 days on hand at the pharmacy level. At the same time, I want to reiterate that patient demand remains strong, with total patient numbers up significantly from the same quarter last year. Together, these factors should lead to more stable revenue growth.
Paul: When we take a closer look at this slide you can see that inventory on hand at the end of first Q 'twenty three was approximately 55 days in contrast, the inventory on hand at the end of first quarter 'twenty. Four was only about 27 days, there's difference in days on hand as impacted that.
Paul: First quarter revenues and gross.
Paul: We are actively monitoring our distribution network with the goal of maintaining 30 to 35 days on hand at the pharmacy level at the same time I want to reiterate that patient demand remains strong with total patient numbers up significantly from the same quarter last year together. These.
Paul: Factors should lead to more stable revenue growth.
Paul Lvesque: Now, before we move on to oncology, allow me to provide an update concerning recent FDA submissions and how we are moving forward with the life cycle management of our product, with the FAA formulation of the Samoan. During our last earnings calls, I shared an overview of the complete response letter we received from the FDA in January and our plan of action for a timely meeting with the FDA. The meeting took place several weeks ago, and we received important feedback on our file. We are now awaiting the FDA's minutes of the meeting and remain on track with our resubmission and to receive an FDA decision before the end of 2024. Finally, I want to touch on the intramuscular administration of the Trigarzo maintenance dose.
Paul: Now before we move onto oncology allow me to provide an update concerning recent FDA submissions and how we are moving forward the lifecycle management of our products.
With D F eight formulation of just some warning.
Paul: During our last earnings calls I shared an overview of the complete response letter we received from the FDA in January and our plan of action for a type B meeting with the FDA.
Paul: The meeting took place several weeks ago, and we received important feedback on our file.
Paul: We are now awaiting the fda's minutes of the meeting and remain on track with our Resubmission and to receive an FDA decision before the end of 'twenty 'twenty four.
Paul: Finally, I want to touch on the intramuscular administration of the <unk> maintenance dose the refusal to file letter received from the FDA in February indicates that it would require the conduct of the new study to pursue the registration of the Iam methods administration.
Paul Lvesque: The refusal to file letter received from the FDA in February indicates that it would require the conduct of a new study to pursue the registration of the IM method of administration. Given the cost of this study and the evolving competitive landscape, we have decided to deprioritize this project for the foreseeable future. It is important to know that the IV-PUSH method of administration for Trugarzo is already simplifying the treatment burden for patients and their health care providers as a quicker and more convenient option. Trugarzo remains a vital therapy for a small subset of people with HIV who have very limited treatment options at their disposal to address multidrug resistance. Equally, it is an important companion to Grifta SV. Now on to oncology and the acceleration of our phase one clinical trial of pseudocytocels endosortitis.
Paul: Given the cost of this study and the evolving competitive landscape, we have decided to de prioritize this project for the foreseeable future.
Paul: It is important to note that the IV push method of administration petrol Garceau is already simplified we're simplifying the treatment burden for patients and their health care providers as a quicker and more convenient option for <unk>.
Paul: <unk> remains a vital therapy for a small subset of people with HIV, who have very limited treatment options at their disposal to address multi drug resistance equally it is an important companion to a grifter S V.
Paul: Now on to oncology and the acceleration of our phase one clinical trial of students at the AG sales into sort tight.
Paul Lvesque: The recent announcement that the enrollment of the new cohort of patients at the increased dose level is underway is an important milestone. The first patient has already been treated with the 2.5 milligram per kilogram dose, the equivalent of 1.5 times the dose of docetaxel when used alone, sets us well on our way to further characterizing pseudocetaxel-induced wartype as a potentially viable therapy for individuals with advanced ovarian cancer. Earlier this week, our team presented two preclinical posters at ACR in San Diego. I want to highlight the results of our new Kemptothecin peptide conjugates in the treatment of sirtuin-positive colorectal cancer, and in particular, the PDC with an Exatecan payload.
Paul: The recent announcement that enrollment of the new cohort of patients and the increased dose level is underway is an important milestone.
Paul: The first patient has already been treated with the two five milligram per kilogram dose the equivalent of one five times the dose of Docetaxel when used alone.
Paul: Sets us well on our way to further characterizing pseudo Sid thanks, Zane do short tied as a potentially viable therapy for individuals with advanced ovarian cancer.
Paul: Earlier this week our team presented two preclinical posters at ACR in San Diego.
I wanted to highlight the results of our new camp do less in peptide conjugate in the treatment of certain <unk> positive colorectal cancer and in particular, the BDC with exactly can payload.
Philippe Dubuc: We have also completed the preliminary characterization of several additional novel PDCs. In addition to the human data we have on pseudocytactyls and Dusortype, these latest preclinical data highlight the promising tolerability and anti-tumor effects of our new PDCs, further demonstrating the versatility, flexibility, and effectiveness of our SORT1 positive technology class. Now that we have significantly advanced our oncology program with important evidence on multiple PVCs with different payloads, coupled with the more than 40 patients already treated with pseudocetac cells and Dusortype, we believe we are in a position of strength to continue engaging with a partner for additional developmental steps. We are now accelerating these activities and turning to commercial business development as we move further along our journey as a bottom line focused biopharma company.
Paul: We have also completed the preliminary characterization of several additional novel Pdc's.
Paul: In addition to the human data, we have on pseudo sit that Zane do sort tight. These latest preclinical data highlight the promising tolerability and anti tumor effects of our new bdcs further demonstrating the versatility and flexibility and effectiveness of our sort one positive technology class.
Paul: Now that we have significantly advanced our oncology program with important evidence on multiple pdc's with different payloads couples with the more than 40 patients already treated with students at that sales into sore type.
Paul: We believe we are in a position of strength to continue engaging with a partner for additional developmental steps.
Paul: We are now accelerating these activities.
Paul: Turning to commercial business development as we move further along our journey as a bottomline focused Biopharma company.
Philippe Dubuc: I know there is a great deal of anticipation for further details around product acquisitions and future growth. I want to reiterate that our growth trajectory for both the top and bottom lines has put us in a position of strength. This should facilitate the acquisition of new assets, which could be instruments of value creation for shareholders. With M&A more important than ever for Theratechnologie, the timing is ideal to welcome two new board members. Jordan Zwick and Elina T, both with an abundance of expertise and experience in this area. With that, I'd like to turn the call over to Philippe, who will go over the period's financials and details. Thank you, Paul. Good morning, everyone.
Paul: I know there is a great deal event station or further details around product acquisitions and future growth.
Paul: Want to reiterate that our growth trajectory for both the top and bottom lines has put us in a position of strength. This should facilitate the acquisition of new assets, which could be instruments of value creation for shareholders.
Paul: With M&A more important than ever for <unk> technologies. The timing is ideal to welcome two new board members.
Paul: Jordan Zwick and Illumina T. Both with an abundance of expertise and experience in this area.
Paul: With this I'd like to turn the call over to Filip, who will go over the periods financials in details today.
Paul: Yep.
Filip: Thank you Paul and good morning, everyone.
Philippe Dubuc: Consolidated revenue for the three month period ended February 29th, 2024 was below our expectations for reasons I will be getting into, but I wanted to stress that further to the readjustment of our cost base over the past nine months, we have recorded our third straight quarter of near flat to positive adjusted EBITDA, an improvement of $3.6 million over the first quarter of last year. Even though we recorded a drop in revenue. The right sizing of the organization bodes well for the future and is the basis for our confirming the adjusted EBITDA guidance of $13 to $15 million for 2024. For the first quarter of fiscal 24, net sales of Big Rift SV reached $9.6 million compared to $12.7 million in Q1 of last year.
Filip: Consolidated revenue for the three months period ended February 29, 2024 was below our expectations reasons, I will be getting into but I wanted to stress. It further to the readjustment of our cost base over the past nine months, we have recorded our third straight quarter of near flat to positive adjusted EBITDA.
Filip: An improvement of $3 $6 million over the first quarter of last year, even though we recorded a drop in revenues.
Right sizing of the organization bodes well for the future and is the basis for our confirming the adjusted EBITDA guidance of $13 million to $15 million for 2024.
Filip: For the first quarter of fiscal 'twenty four net sales a big rift S. V reached $9 6 million compared to $12 7 million in Q1 of last year as Paul explained a few moments ago net sales will be greater as we were affected by the significant realignment of inventory levels at our pharmacy partners and do.
Philippe Dubuc: As Paul explained a few moments ago, net sales of Agrifta SV were affected by the significant realignment of inventory levels at our pharmacy partners and do not reflect the growing demand that we are seeing based on the level of medicine dispensed to patients, the ultimate factor reflecting demand for the product. As mentioned, we are working closely with pharmacies to ensure stable inventory levels going forward. Igrifta SV sales were also impacted by larger government rebates and returns in the first quarter of fiscal 2024. For GarzoNet, sales in the first quarter of fiscal 24 amounted to $6.7 million compared to $7.2 million for the same quarter last year, representing a decrease of 7.4% year over year. The decrease was mainly due to lower unit sales in the quarter as compared to last year.
Filip: Not reflects the growing demand that we are seeing based on level of dispense to patients the ultimate factor, reflecting demand for the product.
Filip: As mentioned, we are working closely with pharmacies to ensure a stable inventory levels going forward.
Filip: As these sales were also impacted by larger government rebates and returns in the first quarter of fiscal 2024.
Filip: <unk> net sales in the first quarter of fiscal 'twenty, four amounted to $6 $7 million compared to $7 2 million for the same quarter last year, representing a decrease of seven 4% year over year.
Filip: The decrease was mainly due to lower unit sales in the quarter as compared to last year.
Philippe Dubuc: Lower unit sales in the first quarter also resulted in an inventory buildup in late 2022 and early 2023, a situation which has resolved throughout the rest of the fiscal 2023 year. This being said, we are expecting a stronger performance in 2024 from Higritha SV rather than Oritra Garza. In the first quarter of 24, cost of sales was affected by an $837 provision related to the production of the F8 formulation since the product is not yet approved. As such, cost of sales came in at $5.3 million, up from $4.7 million in the same quarter of fiscal 2023. While Tragarzo margins were stable during the quarter, Egrifta SV's cost of goods was also affected by slightly higher production-related costs.
Filip: Lower unit sales in the first quarter were also result of inventory buildup in late 2022 in early 2023.
Filip: Situation, which has resolved throughout the rest of the fiscal 2023 year.
Filip: This being said we are expecting a stronger performance in 2024 from a grifter S V rather than <unk>.
Filip: In the first quarter of 'twenty for cost of sales were affected by an 837 dollar provision related to the production of the F. Eight formulation since the product is not yet approved as such cost of sales came in at $5 3 million up from $4 7 million in the same quarter in <unk>.
Filip: 2023.
Filip: With regards on Mt margins were stable during the quarter a grifter as the cost of goods was also affected by slightly higher production related costs, we are expecting stable margins for Arista going forward.
Philippe Dubuc: We are expecting stable margins for Egrifta going forward. I'm happy to report that, again, in the first quarter, through rigorous management of spending, R&D, selling, and G&A expenses were all lower this year when compared to the first quarter of 2023, helping us achieve our third straight quarter of near-flat to positive adjusted EBITDA as established as an objective early in the 2023 fiscal year. R&D expenses decreased substantially in the first quarter of 2024 compared to the same period last year, 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 EGRIFTA-SV and for Tregard. R&D expenses came in at $3.8 million versus $9.4 million last year, or a 60% decrease. Selling expenses came in at $5.7 million for Q1 2023, compared to $6.8 million for the same three-month period last year.
None: I'm happy to report that again in the first quarter through rigorous manage spending.
None: R&D selling and G&A expenses were all lower this year when compared to the first quarter of 'twenty three helping us achieve our third straight quarter of near flat to positive adjusted EBITDA as established as an objective early in the 'twenty to 'twenty three fiscal year.
None: R&D expenses decreased substantially in the first quarter of 2024 compared to the same period last year, mostly due to lower spending on our oncology program as well as lower expenses. Following the near completion of our lifecycle management projects for <unk> and for with regards though.
None: R&D expenses came in at $3 8 million versus $9 $4 million last year or a 60% decrease.
Selling expenses came in at $5 7 million for Q1, 2023 compared to $6 8 million for the same three month period last year.
Philippe Dubuc: 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 activity. G&A expenses in Q1 of 2024 amounted to $3.8 million, as compared to $4.5 million last year, or a 15% decrease. The decrease in G&A expenses is largely due to our decision to focus on our U.S. commercial operations and our focus on controlling expenses. Again, these expenses are expected to stabilize going forward. As you can see from our reduction of expenses in R&D, selling, and G&A in both Q3 and Q4 of 2023, and again in Q1 of 2024, we now have the right-sized organization to ensure that we are well on our way to showing strong growth in adjusted EBITDA.
None: 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 activities.
None: G&A expenses in Q1, 2024 amounted to $3 8 million as compared to $4 $5 million last year or a 15% decrease.
None: The decrease in G&A expenses is largely due to our decision to focus on our U S commercial operations and our focus on controlling expenses again. These expenses are expected to stabilize going forward.
None: As you can see from our reduction of expenses in R&D, selling and G&A in both Q3 and Q4 of 2023 and again in Q1 of 24, we now have right sized the organization to ensure that we are well on our way in our journey towards showing strong growth in <unk>.
None: Adjusted EBITDA as.
Philippe Dubuc: As a result of this, we are pleased to report adjusted EBITDA for the first quarter of 2024 of negative $247,000 versus negative $3.9 million for the same period last year, a significant improvement considering that revenues in Q1 were lower than in Q1 of last year. Net finance costs in the first quarter of 2024 amounted to $2.1 million and included interest of $2.3 million on the Marathon loan facility.
As a result of this we are pleased to report adjusted EBITDA for the first quarter of 2024 of negative 247000 versus negative $3 9 million in the same period last year, a significant improvement considering that revenues in Q1 were lower than in Q1 of last year.
None: Net finance costs in the first quarter of 2024 amounted to $2 $1 million and included interest of $2 $3 million on the marathon loan facility.
Philippe Dubuc: As Paul briefly alluded to in his remarks, we are confirming our guidance this morning for revenues of $87 to $90 million for fiscal 2024 and adjusted EBITDA of $13 to $15 million, which includes the spending on our ecology program this year, pointing to the strong performance of our commercial operations for the remainder of the year. As previously mentioned, any additional spending on oncology after the completion of the Phase 1 trial will be carried out through partnerships, so this program will no longer affect our adjusted EBITDA in 2025 and beyond. We ended the first quarter on solid financial footing with cash, bonds, and money market funds at the quarter end amounting to $38.5 million, while we ended the quarter with $60.6 million drawn on the marathon facility. As a reminder, repayment of the Marathon facility will begin in August of this year in 36 monthly installments. Restrictive prepayment penalties will also start easing in July of this year.
None: As Paul briefly alluded to in his remarks, we are confirming our guidance. This morning for revenues of $887 million to $90 million for fiscal 2024, and adjusted EBITDA of $13 million to $15 million, which includes the spending on our oncology program. This year pointing to the strong performance of our <unk>.
None: <unk> operations for the remainder of the year.
None: As previously mentioned any additional.
None: Pending on oncology after the completion of the phase one trial will be carried out through partnerships. So this program will no longer affect our adjusted EBITDA in 2025 and beyond.
None: We ended the first quarter on solid financial footing with cash bonds and money market funds and the.
None: Quarter end amounting to $38 $5 million, while we ended the quarter with $60 6 million drawn on the marathon facility.
None: As a reminder, the repayment of the marathon facility will begin in August of this year over 36 monthly installments.
None: Restricted prepayment penalties will also start easing in July of this year.
Operator: Paul will be back for final comments, but first, we'll open the line for questions. We will now begin the question and answer session. To ask a question on the phone, you may press star then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the key.
None: With that Paul will be back for final comments, but first we'll open the line for questions.
Paul: We will now.
Paul: Thank you we will now begin the question and answer session to ask a question on the phone you May Press Star then one on your telephone keypad, if you're using a speakerphone. Please pick up your handset before pressing the keys.
Operator: If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. Investors wishing to submit a question may do so by clicking the Ask a Question link on the webcast platform. At this time, we will pause momentarily to assemble our roster. The first question comes from Louise Chen on Canter.
Paul: At any time. Your question has been addressed and you would like to withdraw your question. Please press Star then to infer.
Paul: Investors wishing to submit a question may do so by clicking the ask a question link on the webcast platform at this time, we will pause momentarily to assemble our roster.
Paul: The first question comes from Louise Chen with Cantor.
Carvey Leung: Please go ahead. Hi, good morning, everyone. This is Carvey on behalf of Louise Chen from Canada. Thank you for taking our questions. The first question is on TH1902. How many patients are you going to enroll at a higher dose level? When will we see data from phase one? The second question's on NASH. With the recently approved NASH treatment, how should discussions with potential partners change for testomerulin? Thank you so much. Thank you for the question. So first, I will turn to Christian to answer the TH1902 question.
Louise Alesandra Chen: Please go ahead.
Louise Alesandra Chen: Hi, Good morning, everyone. This is carvey onto Louise Chen from Cantor. Thank you for taking our questions. Our first question is on Th 19 O. Two how many patients are you going to enroll at a higher.
Louise Alesandra Chen: Dose level, where will we see data from the phase one.
Louise Alesandra Chen: Questions on Nash with the recently approved Nash treatment How's your discussions with potential partners change for test tomorrow, but thank you so much.
None: Thank you for the question. So first I will turn to Christina to ensure the th 19, two questions of Christiana, how many questions that we're going to have in the higher dosage cohort well maybe just start.
Christian Marsolais: So Christian, how many questions are we going to have in the higher dosage cohort? Well, maybe to start, as we announced, we already completed the first cohort, which was 1.75 mg per kilogram, which was the equivalent of the one we're following before at 200 mg per meter square. In the second cohort, now we're going for a total of six patients, of which two patients so far have been treated or have been enrolled. The dose is 2.5 mg per kilogram, which is the equivalent of 300 mg per meter square, the 50% dose in crows from the first cohort.
None: We already completed the first cohort, which was $1 75 milligram per kilogram, which was the equivalent of four to one we're falling before of the 200 milligram per meter square.
Christina: And the second cohort now we're waiting for a total of six patients of which two patients. So far have been treated or have been enrolled.
Christina: Did those as two five milligram per kilogram, which is the equivalent of 300 milligram per meter square, 50% dosing kroes from the first cohort and after dose six patient there should be an additional four patients to complete the safety requirement as requested by the FDA.
Paul Lvesque: And after those six patients, there should be an additional four patients to complete the safety requirement as requested by the FDA. When it comes to your last question, and thank you for the question, we see more inbound interest now that there's a product that has been approved. As you know, we have advanced a protocol ready to go for a phase 2b slash 3 trial. The last couple of years have been quiet, not because there was no activity, but a lot of parties were basically in a wait and see mode to see if one drug would get approved, and with the approval of Madrigal and the, A new interest in the NASH space, you know, a lot of people are reaching out to us and as you know, we will stick to our strategic direction of doubling down on the commercial line of business and therefore, we need a partner to advance that program.
None: When it comes to your Nash question and thank you for the question.
None: We see more inbound interest now that there's a product that that's been approved as you know we have advanced our protocol and ready to go for a phase to be slashed three trial.
None: Last couple of years had been quiet not because there was no activity, but a lot of parties were facing basically in a wait and see mode to see if one drug would get approved and with the approval of magical and the.
None: And new entrants in the Nash space, you know a lot of people are reaching out to us and as you know we will stick to our strategic direction on doubling down on the commercial line of business and therefore, we need a partner to advance that program, we haven't given up and we're still certainly interested in.
Paul Lvesque: We haven't given up, and we're still certainly interested in finding a partner because we do have evidence that the fundamentals of NASH can be tackled by the mechanism of action off to some more land, both on the NAS score and fibrosis. So thanks for your question. Thank you. The next question comes from Bill Maughan with Mechanical Genuity. Please go ahead. Good morning. I have a couple.
None: Finding a partner because we do have evidence that the fundamentals of Nash can be tackled by the mechanism of action. After some orlin both on the NTS score and fibrosis. So thanks for your question.
None: Yeah.
None: Thank you.
None: The next question comes from Bill <unk> with <unk>.
Bill: Canaccord Genuity. Please go ahead.
Bill: Good morning, I have a couple so.
William Patrick Maughan: So you've previously talked about and alluded to today, bringing in another potential asset to add to the commercial effort. I'm just wondering what the status of those efforts is and what the biggest, I guess, hurdle is or, you know, what are the things you need to see before you can bring in another asset. My next question is on, you've had a consistent focus on adjusted EBITDA for the last year or so at least, and obviously, you've gotten to a level where you're about flat to up. As you approach other metrics, for example, net income or cash flow positivity, do you expect the focus to change towards those metrics going forward?
Bill: You've previously talked about and alluded to today, bringing in another potential asset to add to the commercial effort just.
Bill: Just wondering what the status of those efforts is an and.
None: What the what the biggest I guess hurdle or alright.
None: Alright.
None: I guess, what you need to see before before you can bring in another asset.
None:
None: My next question was on you've had a consistent focus on adjusted EBITDA for the last year or so at least.
None: And obviously you have gotten to a level where you're about.
None: Flat to up.
None: As you approach a other metrics for example, net income or or.
None: Our cash flow positivity do you expect the focus to change towards those metrics going forward.
Paul Lvesque: And then finally, at the meeting with the FDA following your CRL, what were the main either...misunderstandings or just differences of opinion that were hashed out and that you got on the same page with the FDA on to clear the way to resubmission? Thank you. Thank you for your questions. So, let me tackle the first one on business development.
None: And then finally on the meeting with the FDA following your your CRM.
None: What were the main either.
None: Misunderstanding or just differences of opinion that that were hashed out and that you are that you got on the same page with the FDA on to clear the way to a to a resubmission. Thank you.
None: Thank you for your question. So let me tackle the first one on the business development then.
Philippe Dubuc: Then, Philippe, you can take the adjusted bid question and Christian, the meeting with the FDA and the questions that were discussed as part of the Taipei meeting. So on your first question, and I think we have said that before, but let me restate our interest in business development. So obviously, we have capabilities in HIV, HIV at J, that Tessa Martin is more HIV-adjacent, but also in small metabolic and small liver disease. We have hired a lot of people on the ground in sales and in medical that have expertise in small metabolic and small liver disease, meaning that we do not have to create a huge new sales force and rather stick to, you know, covering the centers of excellence. We believe we could actually undertake such efforts and be successful.
None: Philipp you can take the adjusted EBITDA question and Chris Young the meeting with the FDA and the questions that were discussed that as part of the type a meeting. So on your first question and I think we have said that before but let me restate our interests for business development. So obviously, we have capabilities in HIV.
None: HIV at Jay.
Philipp: But somewhere and it is more HIV adjacent but also in small metabolic small liver disease. We have hired a lot of people underground in sales and in medical that have expertise in small metabolic and small liver disease, providing that we do not have to create a huge.
Philipp: New sales force and rather stick to.
Philipp: Covering the centers of excellence, we believe we could actually undertake such efforts and be successful. This is advancing very nicely. We have opportunities that are moving forward.
Christian Marsolais: This is progressing very nicely. We have opportunities that are moving forward, and I would be more than happy to reveal those once they are finalized, which is not the case yet, but I can tell you this is key to our activities at the moment, and I'm very optimistic about the outcome being positive within a decent period of time. Next question, Philippe, on the adjusted EBITDA, when are we going to be net income positive? Well, I'm not going to comment on when we are.
And I would be more than happy to reveal those are once they are finalized which is not the case, yet but I can tell you. This is key to our activities at the moment and I am very optimistic about the outcome being positive within a decent period of time.
Philipp: Next question Philip on the adjusted EBITDA when are we going to be net income positive.
Philip: Well I'm not going to comment on when we're going to be but just on the reporting you're right. Bill you know we are transitioning from being EBITDA negative to EBITDA positive and if you look at our guidance.
Paul Lvesque: But just on the reporting, you're right, Bill. You know, we are transitioning from being EBITDA negative to EBITDA positive. And if you look at our guidance, you'll see that it will be improving over the year. So at some point, we'll be talking more about cash flow, about free cash flow, and also about the bottom line.
Philip: You'll see that it will be improving over the year. So at some point, we will be talking more about cash flow about free cash flow and also about the bottom line.
Philippe Dubuc: We're really turning the corner, and these these metrics will become more and more important in the next quarter or two. Christian, we had a very important meeting with the agency that we call the Type A meeting. We just wanted to have clarity on some of the questions. So what have we learned, and what is the step forward now? Yeah, the FDA, when we requested a Type A meeting, we had proposed to the FDA a plan of action for all of the questions, and there were only two questions that were remaining to be clarified. The first one was regarding antimicrobial testing.
Philip: Where we're really turning the corner and these that these metrics will become more and more important in the.
Philip: And the next quarter or two.
Philip: So we had a very important meeting with the <unk>.
Philip: And see that we call the type a meeting we just wanted to have clarity on some of the questions. So what have we learned and what is the step forward now.
Philip: The Oh, well the idea when we replace a type C meeting we had.
Philip: [laughter] proposed to the FDA the plan of action for all of the questions and there are only two questions that were remaining to be clarified.
Philip: The first one was regarding the antimicrobial testing and since we started discussion with the FDA during the review process.
Christian Marsolais: And since we started discussions with the FDA during the review process, we initiated another study with the final component, the component that will be commercially available, mainly the bacteriostatic water for injection from Pfizer and the drug product, which is now produced by PCI. And we have good results. We share those results with the FDA, but they couldn't comment during the meeting because there were no data presented to them. They will include their comments in the minutes, which should be coming any day, probably by the end of this week.
Philip: We initiated a another study with the final component the component that will be commercially available mainly the bacterial static water for injection from Pfizer and the drug product, which has now produced.
Philip: Produced by PCI, and we had good results we shared those results with the F D. A.
They couldnt comment in during the meeting cause or new data presented to the FDA. They will include their comments in the minutes that should be coming in at 90 days probably by the end of this week. The other one that was very important for us to clarify about their understanding was regarding the immunogenicity risk assessment and we wanted to.
Christian Marsolais: The other one that was very important for us to clarify their understanding of the immunogenicity risk assessment. We wanted to ensure where the FDA was standing. The question was more related to the degradants.
Philip: We insure where do you view withstanding.
Philip: The question was more related to the bigger than <unk> as you know not in our formulation.
Christian Marsolais: As you know now, in our formulation, it is a life-or-death drug product that needs to be reconstituted and stay reconstituted for a period of seven days. And we have tightened our spec to meet the same values, if you want, as the ones that were for the F4. Then we think that those two questions were well-addressed, and we're ready to complete the work and submit it to the FDA for a decision this year. Thank you. So we are awaiting minutes from the type A meeting, we are working on the resubmission, and we expect a decision before the end of the year. Thank you.
Philip: There's a lot of your flights drug product that needs to be reconstituted and stay reconstituted for a period of seven days and we have tightened our specs to meet the same.
Philip: The same values, if you want us and the one that were a 40 F. Four then we think that those two questions, where we will address and we're ready to complete the work and submit the a to D. M D.
Philip: A decision this year.
None: Thank you. So we are waiting minutes from the type a meeting we are working on the Resubmission and we expect a decision by before the end of it yet.
Paul Lvesque: Thanks for your question. This concludes our audio question and answer session. I would like to turn the conference back over to Paul Lvesque and management if there are any webcast platform questions or for any closing remarks. Okay, thank you, operator.
Thank you. Thank you for your question.
None: This concludes our audio question and answer session I would like to turn the conference back over to Paul Vivek and management. If there are any webcast platform questions and for any closing remarks.
Paul Lvesque: Okay. Thank you operator, so there there are a few questions and the first one is you mentioned that there has been an acceleration in your oncology trial can you expand on this.
Paul Lvesque: So there are a few questions. And the first one is that you mentioned that there has been an acceleration in oncology trials. Can you expand on this?
Paul Lvesque: So we actually released the fact that we had one patient. So what's the update? Well, the update is that now all of the sites are active and up and running and looking for patients. Then we have a second patient that was treated yesterday, which is very good. We also like the sites are active and are now trying to recruit the six patients as fast as possible. We have another patient which is in screening at the moment, and we're in regular contact with all of our sites to ensure that those six patients will be recruited. I don't have the date in mind.
None: So yeah.
Paul Lvesque: We actually released the fact that we had one patient so let's the update well the update is that now the all of the sites are active up and running and looking for patients are then we add a second patient that was treated yesterday, which is very good.
Paul Lvesque: We also like the sites are active and they're trying to recruit the six patients as fast as possible. We have in other patient, which is screen screening at the moment and we're in regular contact with all of our sites to ensure that those six patients will be recruited don't have the date in mind, it's always a bit difficult to give a date, but hopefully in the coming weeks or months. Thank you.
Paul Lvesque: It's always a bit difficult to give a date, but hopefully in the coming weeks or months. Thank you. And can you expand on the partnering strategy for oncology? Well, we are still extremely active. What I said is very important because this is something that we have not maybe clearly explained before. But there are two things now that are coming together very nicely. We have Th1902 in the clinic in Part 3 with a new protocol. That is being dosed, and we're doing the last cohort at a higher dose of 1.5 times the dose of dosing Taxel when used alone. That is more than 40 patients, humans, that have been dosed with H1902 and some of them with the new protocol.
Paul Lvesque: Yeah.
None: Can you expand on the partnering strategy for oncology.
None: Well, we are still extremely active what I said is very important because this is something that we have not maybe clearly explained before but there are two things now that are coming together very nicely. We have T. H 90, new and two in the clinic in part three with a new protocol.
None: That is that is being dosed and we're doing now.
<unk> cohort at a higher dose of one five times the dose of Docetaxel when used alone that is more than 40 patients you've and that had been dosed with <unk> 19 to <unk> and.
None: And some of them with the new protocol, that's one thing, but we also wanted to advance other pdc's with different payloads. Some of them are more potent and dose attacks L. We've done that and in fact over the weekend you presented pretty stunning data.
Paul Lvesque: That's one thing, but we also wanted to develop other PDCs with different payloads. Some of them are more potent than those at Axel. We've done that. And in fact, over the weekend, you presented pretty stunning data with those PDCs, sometimes in combination, sometimes alone, but it's pretty stunning information again. So we think that now, with those at Axel and our peptide drug conjugate advancing and showing signs of efficacy, because we have seen signs of efficacy, and we may see even more with the new protocol now with the last cohort that we're dosing at the And you know what those companies are.
None: Those at Pdc's and sometimes in combination sometimes alone, but it's pretty stunning information again. So we think that now with don't sit that excel and our peptide drug conjugate advancing and showing signs of efficacy because we have seen signs of efficacy and we may see even more with the new protocol.
None: Now with the last cohort that we're dosing at the moment that combined with the new Bdcs that we have advanced we think that we are in the sweet spot for attracting interest we're getting interest from oncology companies and you know you know what those companies are they are the companies that are very act.
Paul Lvesque: They are companies that are very active in oncology, and we are putting our value proposition together with a very clear next step on what we should advance further. And I remain extremely optimistic that we'll find some interest and get some activity going. And we will be reporting in due time.
None: In oncology and we are putting our value proposition together with a very clear next step on which he should advance further and I remain extremely optimistic that we'll find some interest and get some activity going and we would be reporting in due time.
None: Yeah.
None: Okay. Thank you and then there's a question on on the impact of <unk>. One. So can you expand a little bit on any insights that you are seeing in the market on your on the impact. So thank you for the question So John.
Paul Lvesque: And there's a question about the impact of GLP-1. So can you expand a little bit on any insights that you're seeing in the market about that impact? So, John, you know, we've said that the Grifta now is recording many quarters of pretty, pretty good performance. So how is that panning out with the GLP-1 pressure and news that, you know, that category of medicine is making on a daily basis? Yeah, thanks, Paul. We continue to see interest in injectable drugs to decrease fat, and where nobody was talking about this a couple of years ago, now everybody is talking about it. So we think that is creating some tailwinds for us. And the patient type for Grifta is much different than the patient type for GLP-1, where that's mainly a high BMI patient in the GLP-1, where the Grifta patient frequently has an increased hip-to-waist ratio. The other major difference is that Grifta increases lean mass, whereas GLP-1s have been associated with a significant decrease in lean mass.
John Leasure: Said I think Rick So now is a recording many quarters, a pretty pretty good performance. So how is that panning out with the <unk> pressure and news that that category of medicine is making on the daily basis, yeah. Thanks.
John Leasure: Paul Yeah, we continue to see interest in an injectable drugs to decrease fat and.
Rick: Where nobody was talking about this a couple of years ago now everybody is talking about it. So we think that is creating some tailwind for us.
Rick: And the patient type for a for a big rift that is much different than the patient type of G. L. P. One where that's mainly a high BMI patients and the G. L. P. One worthy grifter patients frequently has an increased shift to weight ratio enel.
Rick: The major difference is that that I grew up to increases lean mass and where the G. L. P ones have been associated with significant decrease in lean mass into the big problem, especially in the HIV population. So.
John Leasure: And this is a big problem, especially in the HIV population. So there are different patient types, but there's increased interest. And, you know, we're continuing to see strong new enrollment growth and total patient growth. So I think that that sort of speaks for itself.
Rick: There are different patient types, but there is increased interest and we're continuing to see strong new enrollment growth and total patient growth.
Rick: I think that that sort of speaks for itself.
John Leasure: Thank you, John. Our last question is a little bit more information on the plan with Marathon, so I can call address that. Certainly, yes. Go ahead.
None: Thank you John.
Last question is a little bit more information around the plan with marathon.
None: I can I'll address that certainly yes go ahead. So the facility is $60 million or $60 $6 million and it's reimbursable over 36 equal monthly payments, which works out to $5 million a quarter. So with the cash that we have on hand, and the cash that we'll be generating from operations. So we believe that we have enough to to reimburse the facility.
Philippe Dubuc: So the facility is $60 million or $60.6 million, and it's reimbursable over 36 equal monthly payments, which works out to $5 million a quarter. So with the cash that we have on hand and the cash that we'll be generating from operations, we believe that we have enough to reimburse the facility in its entirety. This being said, there are some restrictive prepayment penalties, such as make whole payments, on the facility two years after drawdown.
None: And in its entirety.
None: This being said.
None: There are some restrictive prepayment penalties such as make whole.
None: Payments.
None: On the facility two years after drawdown so the first.
Philippe Dubuc: So the first of these restrictive penalties goes away on the first $40 million trunch in July of this year. And the second restrictive penalties on the $20 million go away in a year and a few months in June of 2025. We don't have specific plans right now to prepay, but we are looking at all options available.
None: Of these restrictive penalties goes away on the first $40 million tranche in July of this year and the second a restricted penalties on the $20 million go away in a year and a few months in June of 2025.
None: We don't have specific plans right now to prepay, but we are looking at all options available.
Philippe Dubuc: And when we are ready to proceed with something, we will keep the market informed. But that is definitely something that we are considering right now. So Paul, I'll turn it over to you. There are no more questions. Thank you everyone for attending the call today and for your questions. The second quarter is shaping up nicely, setting the stage for 2024 annual revenues between $87 and $90 million and an adjusted bid in the range of $13 to $15 million.
None: And when we are ready to to proceed with something we will keep the market abreast, but that is definitely something that we are considering right now.
None: So Paul I'll turn it over to you there are no more questions.
Paul: Thank you everyone for attending the call today and for your questions. The second quarter is shaping up nicely setting the stage for 2024 annual revenues between 87 and $90 million and an adjusted EBITDA in the range of $13 million to $15 million.
Paul Lvesque: We remain confident in our strategy of doubling down on our commercial capabilities, completing part three of our phase one oncology sample trial, and acquiring assets to create value for our shareholders in 2024. Thank you again for continuing to be part of our journey. See you soon on the second quarter call. Have a great day.
Paul: We remain confident in our strategy of doubling down in our commercial capabilities completing part of three of our phase one oncology clinical trial and acquiring assets to create value for our shareholders in 2024.
None: You again for continuing to be part of our journey and see you soon on the second quarter call have a great day.
None: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Yeah.
None: [music].