Q2 2024 Theratechnologies Inc Earnings Call

Operator: Good morning, ladies and gentlemen, and thank you for standing by. Welcome to Theratechnologies' second 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. 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.

TheraTechnology's representative: Good morning, ladies and gentlemen, and thank you for standing by. Welcome to Theratechnologie's second quarter 2024 earnings call.

TheraTechnology's representative: We would like to remind everyone that all figures on this call are quoted in U.S. dollars.

TheraTechnology's representative: At this time, all participants are in a listen-only mode.

TheraTechnology's representative: 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.

TheraTechnology's representative: 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.

Operator: If anyone has any difficulties hearing the conference, please press the star key followed by zero for operator assistance at any time. I would like to remind everyone that this conference call is being recorded today, Wednesday, July 10, 2024, at 8.30 a.m. Eastern Time. I will now turn the call over to John Leasure, Global Commercial Officer at Theratechnologie. John, please go ahead.

TheraTechnology's representative: If anyone has any difficulties hearing the conference, please press the star key followed by zero for operator assistance at any time.

TheraTechnology's representative: I would like to remind everyone that this conference call is being recorded today, Wednesday, July 10, 2024, at 8.30 a.m. Eastern Time.

TheraTechnology's representative: I will now turn the call over to John Leasure, Global Commercial Officer at Theratechnologie. John , please go ahead.

John Leasure: 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, he'll be joined by Dr. Christian Marsolais, Senior Vice President and Chief Medical Officer, and myself, 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.

Speaker Change: 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.

John Leasure: During the Q&A session, he'll be joined by Dr. Christian Marsolais, Senior Vice President and Chief Medical Officer, and myself, the company's Global Commercial Officer.

John Leasure: Forward-looking statements are based on assumptions, and there are risks that results obtained by Theratechnologies 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 of Theratechnologie's management discussion analysis, issued this morning and available on CDER at www.cederplus.ca and on EDGAR at www.sec.gov.

John Leasure: 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.

John Leasure: Forward-looking statements are based on assumptions, and there are risks that results obtained by theratechnologies may differ materially from those statements.

John Leasure: As such, the company cannot guarantee that any forward-looking statement will materialize, and you are cautioned not to place undue reliance on them.

John Leasure: 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 CDER at www.cederplus.ca and on EDGAR at www.sec.gov.

John Leasure: Forward-looking statements represent Theratechnologie's expectations as of this morning, July 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. Theratechnologie believes that this measure can be a useful indicator of its operational performance and financial condition from one period to another.

John Leasure: Forward-looking statements represent Theratechnologie's expectations as of this morning, July 10, 2024.

John Leasure: 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.

John Leasure: 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.

John Leasure: Theratechnologie believes that this measure can be a useful indicator of its operational performance and financial condition from one period to another.

John Leasure: 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 CDER and on EDGAR at the web addresses mentioned earlier. Investors can also follow the company on LinkedIn and X 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 Lvesque.

John Leasure: The company uses this non-IFRS measure to make financial, strategic, and operating decisions.

John Leasure: Reconciliation of adjusted EBITDA to net loss is found in our MD&A issued this morning, available on CDER and on EDGAR at the web addresses mentioned earlier.

Speaker Change: Investors can also follow the company on LinkedIn and X and sign up for alerts on Theratechnologie's investor website at theratech.com

Speaker Change: With that, I would now like to turn the conference over to our President and CEO , Paul Lvesque.

Paul Lvesque: Thank you, John. Hello, everyone, and good morning.

Paul Lvesque: Thank you, John . Hello, everyone, and good morning. I'm pleased to be reporting on Theratechnologie's financial results for the second quarter ended May 31, 2024.

Paul Lvesque: I'm pleased to be reporting on Theratechnologie's financial results for the second quarter ended May 31, 2024. Today's call also puts us past the halfway point of what is shaping up to be a promising year. As you will hear in a moment, our second quarter was very strong.

Speaker Change: Today's call also puts us past the halfway point of what is shaping up to be a promising year.

Speaker Change: As you will hear in a moment, our second quarter was very strong. The top line has recovered and we continue to demonstrate strength on the bottom line.

Paul Lvesque: The top line has recovered, and we continue to demonstrate strength on the bottom line. In fact, for the first time in the company's recent history, we recorded a positive net income. We expect these trends to continue. In a mere 18 months, we have delivered financially on what we set out to do. Today's results mark the beginning of a new and profitable journey, sending the important message that we are on track to deliver growth and value for shareholders.

Speaker Change: In fact, for the first time in the company's recent history, we recorded a positive net income.

Speaker Change: We expect these trends to continue.

Speaker Change: In a mere 18 months, we have delivered financially on what we set out to do. Today's results mark the beginning of a new and profitable journey, sending the important message that we are on track to deliver growth and value for shareholders.

Paul Lvesque: This quarter, we witnessed a return to revenue growth with a reverse trend from what we saw in the first part of the year and as compared to the same period in 2023. Moving forward, and now that inventory levels have returned to normal levels, we expect sales for the second half of 2024, which is typically our stronger period, to be more in line with demand. In addition to reporting $22 million in revenue, we recorded $5.5 million of adjusted EBITDA this quarter, which is a solid 25% margin.

Speaker Change: This quarter we witnessed a return to revenue growth with a reverse trend from what we saw in the first part of the year.

Speaker Change: And as compared to the same period in 2023, moving forward and now that inventory levels have returned to normal levels, we expect sales for the second half of 2024, which is typically our stronger period, to be more in line with demand.

Speaker Change: In addition to reporting $22 million in revenue, we recorded $5.5 million of adjusted EBITDA this quarter, which is a solid 25% margin.

Paul Lvesque: Moreover, the company has realized an impressive $12.3 million in adjusted EBITDA over the past four quarters. This achievement paves the way for our full-year objective. With these positive indicators in hand, I can confidently reaffirm our guidance for full year 2024 revenues between $87 and $90 million and an adjusted dividend range of $13 to $15 million. Equally, this puts us in a strong position to realize new opportunities for business development that complement existing business drivers. With that in mind, let's now take a closer look at our engine of growth, Agrifta SV.

Speaker Change: Moreover, the company has realized an impressive $12.3 million in adjusted EBITDA over the past four quarters. This achievement paves the way for our full-year objective.

Speaker Change: With these positive indicators in hand, I can confidently reaffirm our guidance for full year 2024, revenues between $87 and $90 million, and an adjusted dividend range of $13 to $15 million.

Speaker Change: Equally, this puts us in a strong position to realize new opportunities for business development that complement existing business drivers.

Paul Lvesque: Agrifta SV remains our priority brand, with performance metrics showing consistent growth. Momentum in new prescription growth continued from Q1, marking a year-to-date increase of 13% in new enrollments and 16% in unique patients compared to the same period last year. Moreover, we are tracking the number of unique prescribers, which is also steadily increasing. As a result of the significant noise around weight loss driven by GLP-1s, our customers expect to see an increase in patients in the future with central adiposity who are seeking treatment.

Speaker Change: With that, let's now take a closer look at our engine of growth, Agrifta SV.

Speaker Change: Agrifta SV remains our priority brand, with performance metrics showing consistent growth.

Speaker Change: Momentum in new prescription growth continued from Q1, marking a year-to-date increase of 13% in new enrollments and 16% in unique patients compared to the same period last year.

Speaker Change: Moreover, we are tracking the number of unique prescribers, which is also steadily increasing.

Speaker Change: As a result of the significant noise around weight loss driven by GLP-1s, our customers expect to see an increase in patients in the future with central adiposity.

Paul Lvesque: Egrypta SV is the only FDA-approved medication to treat excess abdominal fat, specifically in people with HIV. We are actively leveraging these new market dynamics so that Grift SV will be uniquely poised to benefit patients and shareholders. Now, let's turn to the F8 formulation of Tessa Moran for a moment.

Speaker Change: or seeking treatment. Agripta-SV is the only FDA-approved medication to treat excess abdominal fat, specifically in people with HIV.

Speaker Change: We are actively leveraging these new market dynamics so that the Grift SV will be uniquely poised to benefit patients and shareholders.

Speaker Change: Let's turn to the F8 formulation of Tessa Moran for a moment.

Paul Lvesque: During our last earnings calls, I shared information on the Type A meeting with the FDA and some details on the important feedback we received on our file. We are still addressing the FDA's questions and will provide an update upon resubmission. The FDA has confirmed a four-month review. Now on to Oncology and our ongoing Phase 1 clinical trial of Pseudocytaxel Xanthussorti, our lead investigational PDC candidate. Recently, our team presented a poster at ASCO in Chicago, demonstrating signs of long-term efficacy and a manageable safety profile of pseudocetaxels andusorti in patients with solid tumors.

Tessa Moran: During our last earnings calls, I shared information on the Type A meeting with the FDA and some details on the important feedback we received on our file.

Tessa Moran: We are still addressing the FDA's questions and will provide an update upon resubmission. The FDA has confirmed a four-month review.

Speaker Change: Now on to Oncology and our ongoing Phase 1 clinical trial of Pseudocetaxel-Zandu-Sorti, our lead investigational PDC candidate.

Speaker Change: Recently, our team presented a poster at ASCO in Chicago, demonstrating signs of long-term efficacy in a manageable safety profile of pseudocetaxel-zendusortide in patients with solid tumors.

Paul Lvesque: In an updated analysis from Parts 1 and 2, of the trial, pseudocytactylsangiosortime induced durable disease stabilization for up to 45 weeks, lasting beyond treatment completion. The results suggest a unique, multimodal mechanism of action distinct from other cancer therapeutics.

Speaker Change: In an updated analysis from Parts 1 and 2 of the trial, pseudocetaxel xanthosortime induced durable disease stabilization up to 45 weeks, lasting beyond treatment completion.

Speaker Change: The results suggest a unique, multimodal mechanism of action distinct from other cancer therapeutics.

Paul Lvesque: Additionally, investigators observed an early efficacy signal primarily in female cancers, with 7 of 16 participants, or 44%, achieving a clinical benefit. In March, we announced that the study's medical review committee had deemed the dose level safe in the first cohort of patients in part three of the trial. I'm very pleased to confirm now that we have fully recruited for the second cohort of the study; six patients have completed the first treatment cycle at the higher dose of 2.5 mg per kg and are evaluable for safety.

Speaker Change: Additionally, investigators observed an early efficacy signal primarily in female cancers with 7 of 16 participants, or 44%, achieving a clinical benefit.

Speaker Change: In March, we announced that the study's medical review committee had deemed the dose level safe in the first cohort of patients in Part 3 of the trial. I'm very pleased to confirm now that we have fully recruited for the second cohort of the study.

Speaker Change: Six patients have completed the first treatment cycle at the higher dose of 2.5 mg per kilogram and are evaluable for safety.

Paul Lvesque: In parallel, we are engaging with potential partners for additional developmental steps around TH1902 and our overall SORT1 positive technology plan. To no surprise, many of our contacts are eagerly awaiting results from Part 3 of the trial. There is also a keen interest in the science we have advanced with three new PDCs using the same payloads as ADC technology, such as Xacti. The momentum we have generated was palpable at the recent BIO International meeting in San Diego, where we actively engaged with a number of interested parties, in addition to highlighting and pursuing products for acquisitions and commercial partnerships.

Speaker Change: In parallel, we are engaging with potential partners for additional developmental steps around TH1902 and our overall SORT1 positive technology platform.

Speaker Change: To no surprise, many of our contacts are eagerly awaiting results from Part 3 of the trial. There is also a keen interest in the science we have advanced with three new PDCs using the same payloads as ABC technology, such as Exatacan.

Speaker Change: The momentum we have generated was palpable at the recent BIO International meeting in San Diego where we actively engaged with a number of interested parties in addition to highlighting and pursuing products for acquisitions and commercial partnerships.

Paul Lvesque: As the team continues to follow up on this key industry event and other business development activities, it is evident that our refocused commercial position has put us in a position of strength to achieve our most important objective of value creation for all shareholders. With that, I'd like to turn the call over to Philippe, who will go over the period's financials in more detail. Thank you, Paul. Good morning, everyone.

Speaker Change: As the team continues to follow up from this key industry event and other business development activities, it is evident that our refocused commercial position has put us in a position of strength to achieve our most important objective of value creation for all shareholders.

Speaker Change: With this, I'd like to turn the call over to Philippe who will go over the periods financials in more detail. Philippe?

Philippe Dubuc: Thank you, Paul. Good morning, everyone.

Philippe Dubuc: As expected, and as reported in April during our Q1 conference call, revenues rebounded in the second quarter, and we recorded net sales of $22 million for 25% growth versus the same quarter last year. Furthermore, I want to highlight that the efforts to reorganize the cost structure of the company are paying off with $5.5 million of adjusted EBITDA, or 25% of revenues, and we recorded a net profit of about $1 million for the quarter, or $0.02 per share.

Philippe Dubuc: Thank you, Paul. Good morning, everyone. As expected and as reported in April during our Q1 conference call, revenues rebounded in the second quarter and we recorded net sales of 22 million dollars for 25% growth versus the same quarter last year.

Philippe Dubuc: Furthermore, I want to highlight that the efforts to reorganize the cost structure of the company are paying off with 5.5 million dollars of adjusted EBITDA or 25% of revenues and we recorded a net profit of about 1 million dollars for the quarter or two cents per share.

Philippe Dubuc: I want to take this opportunity to thank everyone at Theratechnologies for their continued support of our efforts to become profitable, as this has been a significant turnaround in the past 18 months, which were marked by a number of challenges.

Speaker Change: I want to take this opportunity to thank everyone at Theratechnologie for their continued support of our efforts to become profitable, as this has been a significant turnaround in the past 18 months, which was marked by a number of challenges.

Unknown Executive: For the second quarter of fiscal 2024, net sales of a grift at SVU reached $16.2 million, compared to $10.9 million in Q2 of last year, which represents a 49% increase year over year. Recall that Q2, 2023 sales were negatively affected by inventory drawdowns. As mentioned previously, inventory levels have reverted to normal levels and should continue to be stable going forward. For the six month period ended May 31, he grifted at revenues of growing 9.4%, a level which is more in line with what team performance indicators such as new enrollment and total unique patients are showing.

Philippe Dubuc: For the second quarter of fiscal 2024, net sales of Agrifta SV reached $16.2 million compared to $10.9 million in Q2 of last year, which represents a 49% increase year over year. Recall that Q2 2023 sales were negatively affected by inventory drawdown. As mentioned previously, inventory levels have reverted to normal levels and should continue to be stable going forward.

Speaker Change: For the second quarter of fiscal 2024, net sales of Agrifta SV reached $16.2 million compared to $10.9 million in Q2 of last year, which represents a 49% increase year-over-year.

Speaker Change: Recall that Q2 2023 sales were negatively affected by inventory drawdowns. As mentioned previously, inventory levels have reverted to normal levels and should continue to be stable going forward.

Philippe Dubuc: For the six-month period ended May 31st, T. grifta revenues grew 9.4%, a level which is more in line with what key performance indicators such as new enrollment and total unique patients are showing. Trigarzo net sales in the second quarter of fiscal 24 amounted to $5.8 million compared to $6.7 million for the same quarter last year, representing a decrease of 13.4% year over year. The decrease was mainly due to lower unit sales in the quarter, as compared to last year, mostly as a result of competitive pressures in the multidrug-resistant segment of HIV treatment, where Tregarzo remains an important part of the treatment arsenal but has lost market share to new market entrants in the segment.

Speaker Change: For the six-month period ended May 31st, EGRIPTA revenues have grown 9.4%, a level which is more in line with what key performance indicators such as new enrollment and total unique patients are showing.

Unknown Executive: Travarson at sales in the second quarter of fiscal 2024 amounted to $5.8 million, compared to $6.7 million for the same quarter last year, representing a decrease of 13.4% year over year. The decrease was mainly due to lower unit sales in the quarter, as compared to last year, mostly as a result of competitive pressures in the multi-drug resistant segment of HIV treatment, where Travarson remains an important part of the treatment arsenal, but has lost market shares, market share to new market entrance in the segment. In the second quarter of 2024, cost of sales came in at $4.5 million, down from $4.7 million in the same quarter of fiscal 2023.

Speaker Change: TrigarzoNet sales in the second quarter of fiscal 24 amounted to $5.8 million compared to $6.7 million for the same quarter last year, representing a decrease of 13.4% year-over-year.

Speaker Change: The decrease was mainly due to lower unit sales in the quarter.

Speaker Change: As compared to last year.

Speaker Change: mostly as a result of competitive pressures.

Speaker Change: in the multidrug-resistant segment of HIV treatment.

Speaker Change: where Tregarzo remains an important part of the treatment arsenal.

Speaker Change: but has lost market share to new market entrants in the segment.

Philippe Dubuc: In the second quarter of 2024, cost of sales came in at $4.5 million, down from $4.7 million in the same quarter of fiscal 2023. Grifta costs were affected by a $251,000 provision related to the production of the F-8 formulation since the product is not yet approved. Excluding that provision, gross margins for EGRIFTA were 92%. Tregarzo margins were 48.5%, consistent with the terms of the time at agreement

Speaker Change: In the second quarter of 2024, cost of sales came in at $4.5 million, down from $4.7 million in the same quarter of fiscal 2023.

Unknown Executive: The grifter costs were affected by a $251,000 provision related to the production of the F8 formulation since the product is not yet approved. Excluding that provision, gross margins for a grifter were 92%. Travarson margins were 48.5%, consistent with the terms of the time at agreement. Again, in the second quarter of 2024, the rigorous management of spending in R&D and GNA helped us achieve a fourth straight quarter of near-flat positive adjusted EBITDA, as established and as an objective early in the 2023 fiscal year. Adjusted EBITDA in the past four quarters was 12.3 million, which puts us in a very good position to achieve our stated guidance of $13-15 million for fiscal 2024.

Speaker Change: EGRFTA costs were affected by a $251,000 provision related to the production of the F-8 formulation since the product is not yet approved. Excluding that provision, gross margins for EGRFTA were 92%.

Speaker Change: Pregarzo margins were 48.5%, consistent with the terms of the time at agreement.

Philippe Dubuc: Again, in the second quarter of 2024, the rigorous management of spending in R&D and G&A helped us achieve a fourth straight quarter of near-flat positive adjusted EBITDA, as established and as an objective early in the 2023 fiscal year. Adjusted EBITDA for the past four quarters was $12.3 million, which puts us in a very good position to achieve our stated guidance of $13 to $15 million for fiscal 2024. R&D expenses again decreased substantially in the second 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 Erythra SV and Trigarzo. R&D expenses came in at $4.7 million versus $10.4 million last year, or a 55% decrease. Selling expenses came in at $6.3 million for Q2 2024 compared to $6.5 million for the same three-month period last year.

Speaker Change: Again, in the second quarter of 2024, the rigorous management of spending in R&D and R&D and AI.

Speaker Change: helped us achieve a fourth straight quarter of near-flat positive adjusted EBITDA as established and as an objective early in the 2023 fiscal year.

Speaker Change: Adjusted EBITDA in the past four quarters was $12.3 million, which puts us in a very good position to achieve our stated guidance of $13 to $15 million for fiscal 2024.

Philippe Dubuc: R&D expenses, again, decrease substantially in the second quarter of 2024 compared to the same period last year, mostly due to lower spending on our R&D project, as well as lower expenses, following the near completion of our life cycle management projects for R&D, as V and R&D expenses came in at $4.7 million versus $10.4 million last year, or a 55% decrease. Selling expenses came in at $6.3 million for Q2 2024 compared to $6.5 million for the same three-month period last year. Selling expenses should continue to be stable in the future, as the focus on top and bottom line growth remains our top object.

Speaker Change: R&D expenses again decreased substantially in the second 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.

Speaker Change: For Agrippa SV, Andrew Garzow.

Speaker Change: R&D expenses came in at $4.7 million versus $10.4 million last year, or a 55% decrease.

Speaker Change: Selling expenses came in at $6.3 million for Q2 2024 compared to $6.5 million for the same three-month period last year.

Philippe Dubuc: Selling expenses should continue to be stable in the future as the focus on top and bottom line growth remains our top objective. G&A expenses in the second quarter amounted to $3.1 million, as compared to $3.7 million for the second quarter of 2023, or a 17% decrease. The decrease in G&A expenses is largely due to our decision to focus on our U.S. commercial operations and on controlling expenses.

Speaker Change: Selling expenses should continue to be stable in the future as the focus on top and bottom line growth remains our top objective.

Philippe Dubuc: Dubuc, G&A expenses in the second quarter, amounted to 3.1 million, as compared to 3.7 million dollars for the second quarter of 2023, or 17% decrease. The decrease in G&A expenses is largely due to our decision to focus on our U.S. commercial operations and on controlling expenses. Again, these expenses are expected to stabilize going forward. As we can see from our reduction of expenses in R&D and G&A in the past four quarters, we have now right-sized the organization to ensure that we're well on our way in our journey towards showing strong growth in adjusted EBITDA.

Speaker Change: G&A expenses in the second quarter amounted to $3.1 million, as compared to $3.7 million for the second quarter of 2023, or a 17% decrease.

Speaker Change: The decrease in G&A expenses is largely due to our decision to focus on our U.S. commercial operations and uncontrolling expenses.

Philippe Dubuc: Again, these expenses are expected to stabilize going forward. As you can see from our reduction of expenses in R&D and G&A in the past four quarters. We have now right-sized the organization to ensure that we're well on our way to showing strong growth in adjusted EBITDA. As a result of this, we are pleased to report adjusted EBITDA for the second quarter of $5.5 million versus $6.1 million in the same period last year, a significant improvement of over $11 million, a combination of a strong top line as well as a realignment of spending.

Speaker Change: Again, these expenses are expected to stabilize going forward.

Speaker Change: As you can see from our reduction of expenses in R&D and G&A in the past four quarters,

Speaker Change: We have now right-sized the organization to ensure that we're well on our way in our journey towards showing strong growth in adjusted EBITDA.

Unknown Executive: As a result of this, we are pleased to report adjusted EBITDA for the second quarter of 5.5 million versus negative 6.1 million in the same period last year, a significant improvement of over $11 million, a combination of a strong top line as well as a realignment of spending. Net finance costs in the second quarter amounted to 2.2 million and included interest of 2.3 million dollars on the Marathon loan facility. As further credit agreement, we will be starting the reimbursement of the principle in the next few weeks, and the loan will be advertised over the 36-month period beginning on August 1 of this year.

Speaker Change: As a result of this, we are pleased to report adjusted EBITDA for the second quarter of $5.5 million versus negative $6.1 million in the same period last year, a significant improvement of over $11 million.

Speaker Change: A combination of a strong top line as well as a realignment of spending.

Philippe Dubuc: Net finance costs in the second quarter amounted to $2.2 million and included interest of $2.3 million on the Marathon Loan Facility. As per the credit agreement, we will be starting the reimbursement of the principal in the next few weeks, and the loan will be amortized over the 36-month period beginning on August 1st of this year.

Speaker Change: Net finance costs in the second quarter amounted to $2.2 million and included interest of $2.3 million on the Marathon Loan Facility.

Speaker Change: As per the credit agreement, we will be starting the reimbursement of the principal in the next few weeks, and the loan will be amortized over the 36-month period beginning on August 1st of this year.

Unknown Executive: We ended the second quarter on solid financial footing with cash, bonds, and money market funds, amounting to $36 million, while we ended the quarter with 60.6 million drawn on the Marathon facility. I'm also happy to report that we recorded a net profit of close to $1 million, or $2 per share, in the second quarter of 2024. 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 spending on our oncology program this year, pointing to continued strong performance of our commercial operations for the remainder of the year.

Philippe Dubuc: We ended the second quarter on solid financial footing with cash, bonds, and money market funds amounting to $36 million, while we ended the quarter with $60.6 million drawn on the Marathon facility. I'm also happy to report that we recorded a net profit of close to $1 million, or 2 cents per share, in the second quarter of 2024. 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 spending on our oncology program this year, pointing to continued strong performance of our commercial operations for the remainder of the year.

Speaker Change: We ended the second quarter on solid financial footing with cash, bonds, and money market funds amounting to $36 million, while we ended the quarter with $60.6 million drawn on the Marathon facility.

Speaker Change: I'm also happy to report that we recorded a net profit of close to $1 million, or $0.02 per share, in the second quarter of 2024.

Speaker Change: As Paul briefly alluded to in his remarks.

Speaker Change: We are confirming our guidance this morning for revenues of $87 million to $90 million for fiscal 2024 and adjusted EBITDA of $13 million to $15 million.

Speaker Change: which includes a spending on our oncology program this year.

Speaker Change: pointing to continued strong performance.

Speaker Change: of our commercial operations for the remainder of the year.

Unknown Executive: As previously mentioned, any additional spending on oncology after 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.

Philippe Dubuc: As previously mentioned, any additional spending on oncology after 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. With that, Paul will be back for final comments, but first, we will open the line to take questions from analysts. And we will also take questions from the web platform. Operator.

Speaker Change: As previously mentioned, any additional spending on oncology after 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.

Unknown Executive: With that, Paul will be back for final comments. But first, we will open the line to take the questions from analysts, and we will also take questions from the web platform.

Speaker Change: With that, Paul will be back for final comments, but first we will open the line to take the questions from analysts and we will also take questions from the web platform.

Operator: Operator. We will now begin the question and answer session. To ask a question, you may press star, then one on your touch tone phone. If you are using a speaker phone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then two.

Speaker Change: Operator.

Operator: We will now begin the question and answer session. To ask a question, you may press star then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been answered and you would like to withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble the roster. The first question today comes from Andre Uddin with Research Capital. Please go ahead. Thank you.

Speaker Change: We will now begin the question and answer session.

Speaker Change: To ask a question, you may press star then 1 on your touch-tone phone.

Speaker Change: If you are using a speakerphone, please pick up your handset before pressing the keys.

Speaker Change: If at any time your question has been addressed and you would like to withdraw your question, please press star then 2.

Operator: At this time, we will pause momentarily to assemble the roster.

Speaker Change: At this time, we will pause momentarily to assemble the roster.

Andre Uddin: The first question today comes from Andre Edent with Research Capital. Please go ahead.

Speaker Change: The first question today comes from Andre Uddin with Research Capital. Please go ahead.

Andre Uddin: Thank you, operator. Good morning, everyone. Nice to see the company's back on the block again. I was wondering if you have a rough idea of when we should see the final data readout for 1902. Thank you.

Andre Uddin: Thank you, operator.

Andre Uddin: Good morning, everyone. Nice to see the company who's back and blocked it in.

Andre Uddin: Thank you, operator. Good morning, everyone. Nice to see the companies back in black again. Just wondering, do you have a rough idea of when we should see the final data readout for 1902? Thank you.

Andre Uddin: Just wondering, do you have a rough idea of when we should see the final data readout for 1902? Thank you.

Unknown Executive: Thank you, Andre, for the question. Christian is next to me. Christian, I've just said that we're fully recruited; that actually the six patients have completed the full cycle, the first cycle.

Paul Lvesque: Thank you, Andre, for the question. Christian is next to me. Christian, I've just said that we're fully recruited, that actually, the six patients have completed the full cycle, the first cycle. When do you think we could have signals?

Andre Uddin: Thank you, Andre, for the question. Christian is next to me. Christian, I've just said that we're fully recruited, that actually the six patients have completed the full cycle, the first cycle. When do you think we could have signals?

Unknown Executive: When do you think we could have signals? The way the protocol is built, similar to the first phase of the trial, that the cities can are done at every second cycle. And usually, to see to assess if you have a response, you need to have a confirmation. Then, you need to have two city scans in a row, with a confirmation that you have either stable disease or decrease, and the tumor size. Then we're talking about a follow-up, minimum follow-up of the last format. And in the follow, we should have some; if we have some sign, we should have a read in the follow.

Christian Marsolais: Yeah, the way the protocol is built, similar as the first phase of the trial, the CT scans are done at every second cycle, and usually to assess if you have a response, you need to have a confirmation, then you need to have two CT scans in a row with a confirmation that you have either stable disease or decrease in the tumor size, then we're talking about a follow-up, a minimum follow-up of about four months, then in the fall we should have some, if we have some sign, we should have a read in the fall.

Andre Uddin: Yeah, the way the protocol is built, similar as the first phase of the trial, the CT scans are done at every second cycle.

Andre Uddin: And usually to assess if you have a response, you need to have a confirmation, then you need to have two CT scans in a row with a confirmation that you have either stable disease or decrease in the tumor size, then we're talking about a minimum follow-up platform.

Speaker Change: much. And in the fall we should have some, if we have some sign, we should have a read in the fall.

Paul Lvesque: Thank you, Andre, for the question.

Unknown Executive: Thank you, Andre, for the question. Thank you, thank you.

Andre Uddin: Okay, thank you. And in terms of...

Speaker Change: Thank you, Andre, for this morning.

Unknown Executive: One more question. Just in terms of the F8 formulation, when do you approximately expect the FDA format review to begin? Is that?

Paul Lvesque: Thank you. One more question, just in terms of the F8 formulation, when do you approximately expect the FDA four-month review to begin? As we explained during Q1, the questions from the FDA were related to microbiology, immunogenicity, and manufacturing. We had a type A meeting to clarify everything to ensure that we would be able to provide the appropriate data to the FDA. Then we're still working on the data, and we'll inform the market as soon as we can. Okay, that's great. That's it for me. Thank you.

Speaker Change: Okay, thank you. Thank you.

Andre Uddin: One more question. Just in terms of the F8 formulation, when do you approximately expect the FDA four-month review to begin?

Andre Uddin: As we had explained during the Q1, the questions from the FDA were related to microbiology.

Unknown Executive: I'm going to explain during the Q1. The question for the FDA were related to microbiology, immunogenicity, and manufacturing. We had a type Amy think to clarify everything to ensure that we would be able to provide the appropriate data to the FDA. Then we're still working on those data, and we'll inform the market as soon as we will be able to submit the dossier.

Andre Uddin: immunogenicity and manufacturing. We had a type A meeting to clarify everything to ensure that we would be able to provide the appropriate data to the FDA. Then we're still working on those data and will inform the market as soon as we will be able to submit the dossier.

Andre Uddin: Okay, that's great.

Andre Uddin: That's it for me. Thank you.

Speaker Change: Okay, that's great. That's it for me. Thank you.

Unknown Executive: You want to drink?

Speaker Change: Thank you, Andre.

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

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

Speaker Change: The next question comes from Justin Walsh with Jones Trading. Please go ahead.

Justin Howard Walsh: Hi, congratulations on the continued strong execution and thanks for taking my question. I was wondering if you could provide any updates on your efforts to find potentially accretive assets to bolster your product portfolio.

Justin Walsh: Hi, congrats on the continued strong execution, and thanks for taking my question. I was wondering if you could provide any updates on your efforts to find potentially a creed of assets to bolster your product portfolio.

Justin Howard Walsh: Hi, congrats on the continued strong execution and thanks for taking my question. I was wondering if you could provide any updates on your efforts to find potentially accretive assets to bolster your product portfolio.

Unknown Executive: Thank you, Justin. As you can imagine, we were extremely active. As if you weren't in the beginning of the year, we were very active.

Paul Lvesque: Thank you, Justin. As you can imagine, we were extremely active at J.P. Morgan at the beginning of the year. We were very active at Bio recently. We had over 45 meetings during the week, and most of them were related to finding additional companions for either the existing bag that we have in Salesforce or creating another bag in areas where we have expertise and could actually leverage our go-to-market model. So there are lots of conversations going on with many companies that have these sorts of assets that may not be a priority for them but could represent an opportunity for us. John, do you want to add anything to what I just said?

Justin Howard Walsh: Thank you, Justin. As you can imagine, we were extremely active at J.P. Morgan at the beginning of the year. We were very active at Bio recently. We had over 45 meetings during the week, and most of them were related to finding additional companions for either the existing bag that we have in CL4s,

Unknown Executive: As Viola recently, we had a work 45 meetings during the weekend. Most of them were related to finding additional companion for either the existing bag that we have in field force or creating another bag. In areas where we have expertise and could actually leverage our go-to-market model. So there's lots of conversations going on with many companies that have these sort of assets that may not be a priority for them, but could represent an opportunity for us.

Justin Howard Walsh: or creating another bag in areas where we have expertise and could actually leverage our go-to-market model.

Justin Howard Walsh: So there's lots of conversations going on with many companies that have these sort of assets that may not be a priority for them, but could represent an opportunity for us. John , do you want to add anything to what I just said?

John Leasure: John, do you want to write anything to what I just said? We've advanced a lot of discussions, and we have a lot of interesting assets that we're looking at. We're committed to making sure that we get the right assets for us and that we don't overpay on these things. So all I can say is there's a lot of opportunities, and we've advanced a number of these and hope that more information shortly.

John Leasure: We've advanced a lot of discussions, and we have a lot of interesting assets that we're looking at. We're committed to making sure that we get the right asset for us and that we don't overpay for these things. All I can say is there are a lot of opportunities, and we've advanced a number of these, and we hope to have more information shortly.

Justin Howard Walsh: We've advanced a lot of discussions and we have a lot of interesting assets that we're looking at. We're committed to making sure that we get the right assets for us and that we don't overpay on these things.

Justin Howard Walsh: All I can say is there's a lot of opportunities and we've advanced a number of these and hope to have more information shortly.

Christian Marsolais: Great, thanks. And I was wondering if you could provide any feedback you received from the ASCO presentation. I'm curious about the level of potential interest as you seek partners for that aspect.

Justin Howard Walsh: Great, thanks. And I was wondering if you could provide any feedback you received from the ASCO presentation. I'm curious about the level of potential interest as you seek partners for that asset.

Christian Marsolais: Christian? Yeah, we had a very good, very, like the poster was very well attended at ASCO. And as you mentioned, and the data that was presented, we have disease stabilization and clinical benefit in about 44% of the patients. And people are very curious about the reason as to why. We spoke with our main investigators, and usually, you don't see disease stabilization. If you give a cytotoxic to that patient population, a very advanced patient population, and you want just a cytotoxic, usually when you stop the treatment, you see progression in the tumor, it starts to regrow very rapidly.

Justin Howard Walsh: [inaudible]

Justin Howard Walsh: Yeah, we had a very good, very, like the poster was very well attended at ASCO and as we mentioned in the data that were presented is that we have disease stabilization and like clinical benefit in about 44% of the patient.

Justin Howard Walsh: And people are very curious about the reason as to why. We spoke with our main investigators and usually you don't see disease stabilization. If you give a cytotoxic in that patient population, very advanced patient population, and you want just a cytotoxic, usually when you stop the treatment, you see a progression in the tumor. It starts to regrow very rapidly. In our case, we think that that could be related to the other mechanism of action that are linked to Th19.02, mainly the one that is like inducing the immune cells infiltration, more or less like immunotherapy to some extent. Then it was well attended and we had very good questions.

Christian Marsolais: In our case, we think that it could be related to the other mechanisms of action that are linked to Th1902, mainly the one that is like inducing immune cell infiltration, more or less like immunotherapy to some extent. Then, it was well attended, and we had very good questions. It was similar also at AACR regarding the other PDCs that we have. It raised also significant attention.

Justin Howard Walsh: It was similar also at AACR regarding the other PDCs that we have, it raised also significant attention.

Justin Howard Walsh: Great, thanks for taking the question.

Speaker Change: Great, thanks for taking the questions.

Operator: As a reminder, if you would like to ask a question, please press star then 1 to enter the question queue. The next question comes from Louise Chen with Cantor. Please go ahead.

Justin Howard Walsh: Thank you, Justin.

Speaker Change: As a reminder, if you would like to ask a question, please press star then 1 to enter the question queue.

Speaker Change: The next question comes from Luis Chen with Kantor. Please go ahead.

Louise Alesandra Chen: Hi, good morning, everyone. This is Carvey Leung with Louise & Kander.

Speaker Change: Hi, good morning everyone. This is Carvey on for Louise O'Cannor. Congrats on the progress

Carvey Leung: Congratulations on the progress. A couple of questions from us. First, on Teslamoralin F8-SBLA, given the four-month period, are you still on track to receive potential approval sometime this year?

Speaker Change: A couple of questions from us, first on Tesla Moorland F8 SBOA.

Louise Alesandra Chen: Given the four-month period, are you still on track to receive potential approval sometime this year?

Paul Lvesque: Secondly, you spoke about advancing your three additional PDCs. Can you talk more about other targets? Are these all sorts of one, or is it some other target? And also about potential indications. Thank you.

Speaker Change: Secondly, you spoke about advancing your three additional PDCs. Can you talk more about other targets? Are these all SORT1 or is it some other target? And also on potential indications. Thank you.

Carvey Leung: So let me take the first question on Tessa Moreland and DFA. Our goal is still to actually get approval before the end of the current fiscal year.

Speaker Change: So let me take the first question on Tessa Morel and the NDFA. Our goal is still to actually get an approval before the end of current fiscal year. This is what we've said. We're working hard on addressing the questions, as Christian said.

Paul Lvesque: This is what we've said. We're working hard on addressing the questions, as Christian said. Define the questions in three different areas.

Paul Lvesque: And we have advanced, you know, all of the areas. We'll package, you know, what we have. And our intention is to file when ready and get an approval before the end of the year. Christian, when it comes to the additional PDCs, do you want to expand on that? Yeah.

Speaker Change: defiled the questions in three different areas and we have advanced you know all of the areas we'll package you know what we have and our intention is to file

Speaker Change: When ready.

Speaker Change: and get an approval before the end of the year. Christian, when it comes to the additional PDCs, do you want to expand on that? Yeah, this is a great question. And again, our technology is aiming or targeting the SORT1 receptor. And even if we do different PDCs with different payloads, we think that there's room for all of those PDCs.

Christian Marsolais: Yeah, the that is a great question. And again, our technology is aiming or targeting to sort one receptor, and even if we do different PDCs with different payloads, we think that there's room for all of those. The first one was using a payload that is already used as a single agent, docetaxel, but there are many reasons as to why we wanted to test that PBC, and we saw signs of efficacy.

Speaker Change: The first one was using a payload that is already used as a single agent,

Speaker Change: As to why we wanted to test that PDC and we saw signs of efficacy, but the other PDCs that we are working on are we are using payloads that are used in the ADC technology. As an example, the Exact-A-Can payload is not used as a signal agent, but it is used in the ADC technology and the preclinical data that we have seen so far are extremely good.

Christian Marsolais: But the other PBCs that we are working on, we are using payloads that are used in the ADC technology. For example, the Exatacan payload is not used as a single agent, but it is used in the ADC technology.

Christian Marsolais: And the preclinical data that we have seen so far are extremely good. We have other PBCs where it's still confidential to some extent because we're working on patents, and we also see some very good results. The one thing that we were also able to do in terms of experiments, it's the first time now that we have a significant amount of two PBCs enough to conduct animal data. And we did the combination of two PBCs, TH1902 as well as SN381, not Exatacan but SN38, which is the same class of drug.

Speaker Change: We have other PDCs where it's still confidential to some extent because we're working on patent and we also see some very good results. The one thing that we were also able to do in terms of experiment, it's the first time now that we have.

Christian Marsolais: And the results of the combination of those PBCs were extremely good. With half of the dose, we had synergistic activity, and we think that that technology could eventually be a very good way to bring two very potent cytotoxics into the cell with a relatively good safety profile.

Speaker Change: Significant amount of 2PVCs, enough to conduct animal data. And we did the combination of 2PVC TH-1902 as well as the SN-38 one, not the Exoticam, but the SN-38, which is the same class of drug.

Speaker Change: And the results of the combination of those PDCs were extremely good. With half of the dose, we had synergistic activity, and we think that that technology eventually could be a very good way to bring two very potent cytotoxic inside the cell with a relatively good safety profile.

Paul Lvesque: So, in a nutshell, the additional PTCs we have will complement what we have that is in the clinic, which is our PDC-TH1902 with docetaxel. But we've received significant inbound interest for conjugating additional modalities such as radioisotopes. For now, we have not advanced that, but we will actually be very opportunistic. And we believe in the SWORT1 technology. And therefore, any partner who would like to actually team up to advance these sorts of modalities could actually, you know, be creating something very strong in the marketplace one day. So we are open to all kinds of partnerships. And I think that we have a platform that is very, very versatile. Got it.

Unknown Executive: So, in the nutshell, we have, we'll complement, you know, what we have that is endoclinic, which is, you know, our PDCTH-1902 with those attacks, but we've received a significant inbound interest for conjugating also additional modalities such as radio isotopes. For now, we have not advanced that, but we, we will actually be very opportunistic and we believe in the Swarth One technology, and therefore any partner who would like to actually team up to advance these sort of modalities could actually, you know, be creating something very strong in the marketplace one day. So we are open to all kinds of partnerships, and I think that we have a platform that is very, very versatile.

Speaker Change: So, in a nutshell, the additional PDCs we have will complement what we have that is in the clinic, which is our PDC-TH1902 with dose attack cell, but we've received significant

Carvey Leung: Got it. Thank you so much.

Speaker Change: Inbound Interests who are conjugating also additional modalities such as radioisotopes.

Speaker Change: For now, we have not advanced that, but we will actually be very opportunistic, and we believe in the SWORD1 technology, and therefore any partner who would like to actually team up.

Speaker Change: to advance these sort of modalities could actually, you know, be creating something very strong in the marketplace one day. So we are open to all kinds of partnerships, and I think that we have a platform that is very, very versatile.

Justin Walsh: You got it. Thank you so much.

Speaker Change: Got it. Thank you so much.

Operator: There are no further audio questions at this time.

Operator: There are no further audio questions at this time. I'd like to hand the call back over to the team.

Unknown Executive: I'd like to hand a call back over to the team. Thank you, Paul. There's a few questions on the F8 and on case 1902, which were, which were answered. So, product.

Speaker Change: There are no further audio questions at this time. I'd like to hand the call back over to the team.

Paul Lvesque: Thank you, Paul. There are a few questions on F8 and on page 1902 which have already been answered, so we're done.

Speaker Change: Thank you, Paul. There's a few questions on the F8 and on page 1902 which were answered, so we're done.

Paul Lvesque: Okay, well, thank you everyone for attending the call today. The second quarter has well positioned us to meet 2024 annual revenues between $87 and $90 million and an adjusted bid line in the range of $13 to $15 million. As previously said, we have become net income positive for the first time in recent history, thanks to our focus and dedication towards this new profitability journey. Again, thank you immensely for your support. Enjoy the summer, and see you soon in our third quarter reporting. Have a great day.

Unknown Executive: Okay.

Paul Lvesque: Well, thank you everyone for attending the call today. The second quarter has well positioned us to meet 2024 annual revenues between $87 and $90 million, and an adjusted a bit down the range of $13 to $15 million. As previously said, we have become net income positive for the first time in recent history. Thanks to our focus and dedication towards this new profitability journey.

Speaker Change: Okay, well, thank you everyone for attending the call today. The second quarter has well positioned us to meet 2024 annual revenues between $87 and $90 million.

Speaker Change: and an adjusted bid to the range of $13 to $15 million.

Speaker Change: As previously said, we have become net income positive for the first time in recent history thanks to our focus and dedication towards this new profitability journey.

Paul Lvesque: Again, thank you immensely for your support.

Paul Lvesque: Enjoy the summer and see you soon in our third quarter reporting.

Speaker Change: Again, thank you immensely for your support, enjoy the summer, and see you soon in our third quarter reporting. Have a great day.

Unknown Executive: Have a great day.

Operator: The conference is now concluded. Thank you for attending today's presentation.

Operator: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

Speaker Change: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

Operator: You may now disconnect.