Q1 2025 Theratechnologies Inc Earnings Call
Speaker Change: Good morning, ladies and gentlemen, and thank you for standing by. Welcome to Theratechnologie's first quarter 2025 earnings call. We would like to remind everyone that all figures on this call are quoted in US dollars.
Speaker Change: He is president and Chief Executive Officer, and Phil East Dubuque, Senior Vice President and Chief Financial Officer.
Speaker Change: After their prepared remarks, we will open up the call for your questions, where we will be joined.
Speaker Change: My Doctor Christian Larsen, Lee Senior Vice President and Chief Medical Officer, and John Leisure the company's global commercial officer.
Speaker Change: Four we begin.
Speaker Change: To remind everyone that todays remarks contain forward looking statements within the meaning of securities laws, including our business and financial outlook actual results may differ materially from historical performance and those forward.
Speaker Change: Forward looking statements applied here at <unk>.
Speaker Change: These statements together with the assumptions.
Speaker Change: Underlying them into base related thereto are outlined in detail in the forward looking information section.
Speaker Change: Their technologies and DNA issued this morning and available on SEDAR plus Internet Kurt.
Speaker Change: Forward looking statements represent their technology expertise.
Speaker Change: As of this morning.
Speaker Change: 25.
Speaker Change: Additionally, the company using the term adjusted EBITDA, which is.
Speaker Change: Not a financial measure on your eyes I F. R S or U S. Generally accepted accounting principles U S GAAP.
Speaker Change: Adjusted EBITDA excludes the effects of items that primarily reflect the impact of long term investment.
Speaker Change: I didn't see decisions rather than the result of day to day operations.
Speaker Change: They're getting allergies believes that this measure it can be a useful indicator.
Speaker Change: Operational performance and financial condition from one period to another.
Speaker Change: We use this as a non I S, whereas measuring to make financial strategic and operating decisions.
Speaker Change: Reconciliation of adjusted EBITDA to net loss is found in our MD&A issued this morning, as well as on Cedar plus and Edgar as mentioned earlier.
Speaker Change: I'll now turn the conference over to our CEO Paul.
Paul: Thank you Joanne and good morning, everyone.
Paul: I'm pleased to report on our fiscal first quarter ended February ending February 28, with total revenues of $19 million, representing 17% growth from the same period last year.
Paul: The strong performance on a relative basis was driven by the strength of our lead asset <unk>, three which continues to carry the best momentum we have seen since its market introduction D.
Paul: There are two main reasons for this.
Paul: First access special abdominal fat or Ive that is increasingly being recognized by the medical community as a potentially serious condition requiring attention and treatment.
Paul: Also strong supporting evidence linking ethos with increased cardiovascular risk and metabolic disease, which I will expand upon a bit more on the call shortly.
Paul: This coupled with our specialized sales force focused on community education and product differentiation as truly been the driving force behind this uptake.
Paul: This brings me to the recent approval of our impede formulation of just more of it we are absolutely thrilled to be bringing this new and improved formulation to the market where he will continue to remain our engine of growth for years to come.
Paul: Grifter W. R comes with a host of new benefits for patients to start this new formulation only requires a once weekly reconstitution as opposed to daily which is a material enhancement designed with patients in mind for a simpler and less cumbersome and Australia.
Paul: And so each formulation requires a smaller volume of administration and comes with a smaller syringe and needle than the current F for formulation.
Paul: And finally in developing this new formulation, we conducted a very thorough human factor study.
Paul: This substantial investment resulted in crystal clear instruction for use for the patient.
Paul: We are very confident that this new and improved formulation will lead to better patient experience and drams and duration of treatment.
Paul: As you'll recall, we resumed distribution of Arista is V. In mid February following a temporary drug shortage that began in early January which resulted in a sales loss of six to seven weeks.
Paul: Fortunately, new and returning patients were able to fill their scripts within one or two weeks. After supply was restored and we are now fully back in business.
Paul: With March patient data and we're happy to report that our total number of unique patients is up year over year, indicating debates of patients is back on treatment in.
Paul: In addition, new enrollments were up 15% in the first quarter compared to last year.
Paul: This speaks to the dedication and performance of our field force, who were able to successfully market the benefits of a grip days V through that unfortunate period.
Paul: Our teams are working hard Georgia Street, the success school lunch and effective transition from D. S. H D. D at board to D. S eight which will be available in pharmacies beginning in July importantly, this week's approval of the prior approval supplement lifts any remaining uncertainty regarding supply.
Paul: Good.
Paul: With ample as you know in the market and additional batches in production and ready for shipment. We look forward to a seamless transition from a grifter XE to our grip that W are to be completed in early 2026.
Paul: To further develop the strength of our HIV business were recently presented data from the promised U S and Bama studies at Croix in March.
Paul: The first poster featured data from the real World observational registry promised U S demonstrating the efficacy and safety.
Paul: He's with Madden, reducing HIV to undetectable levels in heavily treatment experienced patients with multi drug <unk>.
Paul: Resistance situation.
Paul: Researchers presented an interim on match subgroup analysis, comprising 112 participants results showed impressive reduction the viremia in patients who was regiments include Italy is a map despite having lower C D counts and higher viral loads at baseline than then.
Paul: Anybody's Mad control group.
Paul: At least a mab was wildcard rated with no infusion reaction and treatment emergent adverse events.
Paul: Despite the advent of new therapies multi drug resistance has persisted as the results. There continues to be a need to establish and maintain virologic control, especially for people who are heavily treatment experienced.
Paul: These latest data suggest that he believes a map is an indispensable agent for hard to treat patients and will continue to be used in combination with other long acting injectables.
Paul: We look forward to continuing to enroll patients in this first of its kind registry.
Paul: In the second poster researchers from the visual and deposit team measurement and observation study are very much demonstrated that ive asked drives cardiovascular risk in patients with HIV.
Investigators presented data highlighting the limitations of using BMI alone in assessing CV risk, particularly given the high CV risk observed in study participants with a normal or low BMI, but high levels of the vas.
Paul: Traditionally clinicians I've used b M I as a marker to assess the risk of cardiovascular disease and other comorbidities in this population, but have often overlook the importance of vivat.
Paul: These findings underscore that they've healthcare providers focused solely on BMI of.
Paul: A sizeable population of normal weight and overweight individuals with HIV eval and high CV risk will be missed.
Paul: We hope this study encourages the use of simple and more precise tools for assessing Eva such.
Paul: Such as measuring waist circumference as a proven means to identifying people with HIV, we're at risk of cardiovascular disease.
Paul: Shifting over to business development I want to start by sharing our approach to capital allocation in light of our new business strategy.
Paul: With the drug shortage now behind Us our HIV business remained strong from a demand perspective, and we're now on the brink of generating meaningful cash flow supported by our new operating structure.
Paul: When thinking about long term value creation, we made the strategic decision to commit ourselves to increasing the bottom line of this organization. This means that we will remain prudent in our spend to execute on the planned expansion of our portfolio through acquisitions and in licensing of late stage products.
Speaker Change: Central's Board philosophy is to invest in the airports communities that offer the highest return on investment. This is why we are prioritizing products, where we will have the ability to derive meaningful synergies from our current infrastructure. So that our topline will continue to outpace our expenses in <unk>.
Speaker Change: Conjunction we continued to make progress with the launches of all these are said and done your Delaware City in Canada with preparations for filing to be submitted later this year.
Speaker Change: Finally on oncology, we continue to engage with potential partners.
Speaker Change: Oncology is all about discovering new targets, particularly in advanced cancers. Our short one platform. It is in of itself an innovative technology that can have applications in many cancer treatments in the future.
Speaker Change: We will update you has development takes place.
Speaker Change: Before handing over the call to Filipe to review, our first quarter performance in more detail I would like to close with a few words on tariffs.
Filipe: We've been closely following the situation with tariffs and have mapped out with our supply chain, particularly for a rift is V which is pretty straightforward.
Filipe: While we cannot avoid any impact entirely as that we're manufacturing process. Currently takes place both in the U S and Canada, we do not expect to be significantly impacted by tariffs should they be enforced and with the approval of the feight formulation, we will soon be moving 100% of our menu.
Filipe: Factoring to our new C D M O based in the U S well.
Filipe: With that I will now turn over to Filip to radio where first quarter performance.
Filip: Thank you Paul.
Filipe: Everyone.
Speaker Change: I am pleased to report that even though the Griffin as the shortage had an impact on our financial results for the first quarter of 2025, we managed to finish the three months period with $19 million in revenues and growth of 17% and a positive adjusted EBITDA of $2 $3 million versus an <unk>.
Speaker Change: The EBITDA loss of $247000 last year.
Speaker Change: This brings our laid our last 12 months adjusted EBITDA finger to $22 $7 million on LTM sales of approximately $89 million or a margin of over 25%.
Speaker Change: I will caution however that this performance is in part due to a few large orders for a grifter S V. At the end of the quarter to rebuild inventories at Mckesson and in our specialty pharmacy network with some pharmacy.
Speaker Change: Some pharmacies ordering larger than usual quantities, which will result in a longer drawdown the unusual.
Speaker Change: This should have an impact on Q2 revenues and this is why we are providing guidance. This morning of <unk>.
Speaker Change: $80 million to $83 million in revenues for 2025, along with an adjusted EBITDA of $10 million to $12 million.
Speaker Change: We estimate that we lost up to six or seven weeks of used sales due to the shortage, which translates into approximately $10 million in revenue.
Speaker Change: We also believe the shortage could have a small impact on our patient base, which could have an additional $1 million to $2 million impact on sales this year.
Speaker Change: For the first quarter of fiscal 2025 net sales a big Rooster as V reached $13 9 million compared to $9 6 million in Q1 of last year, which represents a 45% increase year over year.
Speaker Change: Recall that Q1, 'twenty 'twenty four sales a big birthday his feet were impacted by inventory drawdowns at the specialty pharmacy level.
Speaker Change: Regarding the 12 hours of net sales in the first quarter of fiscal 2025 amounted to $5 2 million compared to $6 $7 million for the same quarter last year or a decrease of 22%. The decrease is mainly due to the continuing impact of new competitors.
Speaker Change: In the past few years, and we do expect sales to stabilize at this level this year.
Speaker Change: In the first quarter of 2025 cost of goods sold came in at $3 $5 million down from $5 $3 million in the same quarter of last year.
Speaker Change: Our gross margins were positively affected by the reversal of a $713000 provision, which we just built.
Speaker Change: To the approval of our F a formulation.
Speaker Change: And these margins came in at around 90% when excluding this reversal, which is in line with historical values in regards of margins were 48% consistent with the transfer transfer pricing agreement.
Speaker Change: With time it.
Speaker Change: Again in the first quarter of 2025, our optimized operating structure helped us achieve a positive adjusted EBITDA, even with the effect of the drug shortage and the fact that we started spending on the preparation of filing of the Iona products with health, Canada and on an eventual launch should these products.
Speaker Change: Rude.
Speaker Change: R&D expenses in Q1 came in at $3 million versus $3 $8 million last year or a decrease of 21%.
Speaker Change: Again in the first quarter of 2025, we were able to claim non reimbursable federal R&D tax credits for an amount of $194000 to reduce our income tax expense.
Speaker Change: Selling expenses came in at $6 $5 million in Q1, 2025 compared to $5 7 million for the same period last year.
Speaker Change: Selling expenses have stabilized in 2024 and should continue at roughly the same level in the next few quarters as the focus on top and Bottomline growth remains our main objective.
Speaker Change: G&A expenses in Q1, 2025 amounted to $4 $2 million as compared to $3 8 million for the first quarter of 'twenty 'twenty, four or 10% increase the increase in G&A expenses is mostly due to higher stock based compensation and higher professional fees.
Speaker Change: Net finance costs were again lower in the first quarter of 2025 and came in at $1 $5 million.
Speaker Change: This includes interest of $1 million of long term debt compared to $2 3 million in 'twenty 'twenty four.
Speaker Change: Mostly due to lower interest rates and the lower debt balance.
Speaker Change: Finance costs also include a noncash loss on warrant revaluation.
$450000.
Speaker Change: As mentioned earlier adjusted EBITDA for the first quarter was $2 3 million up from negative 247000 in the same period last year.
Speaker Change: Every 25 or 28, 2025, we had cash and cash equivalents of $4 $6 million.
Speaker Change: We had an unusually high amount of accounts receivable at the end of the quarter or $22 million due to the concentration of orders for a rooftop and the last two weeks of the quarter. These were all collected during the month of March.
Speaker Change: During the first quarter, we temporarily drew an additional $5 million on the TD revolving credit facility.
Speaker Change: Amount was repaid in March.
Speaker Change: As per the terms of the T. G agreement, we also repaid approximately $900000 of capital on the TD terminal.
Speaker Change: We will now open the call for your questions.
Speaker Change: Operator.
Speaker Change: 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 if at any time. Your question has been addressed and you would like to.
Speaker Change: Withdraw your question. Please press Star then two 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.
Andre Modine: The first question comes from Andre Modine with research capital. Please go ahead. Thank you operator, Hi, Paul Felipe John Christiana and Joanne.
Graduations on year after year.
Andre Modine: Just in terms of business development or are you looking for new products and the same therapeutic areas.
Andre Modine: You also consider you know given where you are or would you also consider targeting a drug and drug acquisition that is a drug that's already approved or would you try to in license late stage drug candidates. Thank you.
Andre Modine: Well I think that we want to be making any of these acquisition. Thank you for your question I agree, but we wanted to make this as accretive as possible. So we never want to take any risks with a drug that is not approved or has at 50, 50% chance.
Andre Modine: Being approved so we want to focus on very late stage, where we know that the drug has a very high chance of success for it being approved and obviously if you want to draw more to the bottom line you want to drive synergies with the current infrastructure. We have so the first priority is to find.
Andre Modine: A product that would fit the bill.
Andre Modine: The bag that we currently have in the U S. You will recall that you know a handful of our targets in the U S. Our community infectious disease doctors, so anything that would actually match. These targets would drive synergies right away because we have 25 people on the ground that can be active on day, one and in Canada because we.
Andre Modine: Are you starting to have small rare disease and in rare cardio and where immunology you know having a second product in that bag for those few reps would obviously be a there are synergistic as well John do you want to add anything about what we have lining up.
Andre Modine: Yeah, I agree and we have.
Andre Modine: A number of nice targets that we're looking at inline with what Paul said in these areas that are synergistic.
Andre Modine: And to your other question about accretive assets that are already on the market well. We've also identified a number of opportunities there.
Andre Modine: Those are a little bit tougher to find a little more complicated but.
Andre Modine: I think it's not without possibility that we could find one there as well.
Andre Modine: Okay. That's great. Thank you.
Andre Modine: Good for me.
Andre Modine: Thank you Andre.
Speaker Change: The next question comes from Justin Walsh with Jones trading. Please go ahead.
Hi, Thanks for taking my questions can you provide more color on how you plan to facilitate the transition from a grifter W are rather from a grip. The S V. Two of grip. The W are and I believe that you had mentioned expecting replacement around early 2026.
Speaker Change: How should we kind of be viewing this transition and in the interim there.
Speaker Change: Thank you Justin for the question John when I answer your question in more details, but obviously.
Speaker Change: One of them the mutation as you can imagine is payers. So the transition is not orchestrated the best possible way you may have people.
Speaker Change: No.
John: Who wouldn't want to jump on DFA, it right away and if for some reasons. The insurers are not going to be ready to reimburse. So that's why we're planning for a very efficient a period of time with transition based on previous experience when would transition D. F. One two the F. Four John do you want to provide additional details.
John: Yeah, Wow as Paul said that we do have experienced the transition from the F. One out for so we bottled a similar timeline obviously the first step in the process as we've got two once we have now that we have the final label is the manufacturing and packaging of the new product and.
John: That just takes some time, so you're you're looking about three months.
John: Or more to get the product into the pharmacies.
John: We can't actually start the load the new pricing and then do you see numbers in the system prior to about 30 days to product availability. So that's the next stage, where we then began.
John: Contacting the payer to ensure that the new.
John: Pricing than anything.
John: N D. C numbers are loaded into the system and then it's a process of transition, which our patient support program is.
John: Prepared to manage very well and as seamlessly we have this as a transition period of in the neighborhood of six months.
John: Because some payers are slower than others to to update their systems, but obviously our goal would be to do this as quickly as possible and our sales meeting with our field Force has already said, we want to obviously build a fair amount of enthusiasm related to that but again it takes a well orchestrated transition and this has this is what.
John: We have laid out in front of us.
Speaker Change: Thanks, Chad, Thanks, and yeah, but one more question I'm just curious if you can maybe comment and remind us on your your medium to long term expectations for growth in the grip the franchise.
Speaker Change: Yeah, well, what I said Justin is that we currently have you know the wind blowing our way because excess visceral abdominal fat is being recognized more than ever before it's being linked to cardiovascular risk in HIV patients more than ever before and.
Speaker Change: In fact, I suspect that the way we're balancing back after the drug shortage.
Speaker Change: Is it related to the demand that we have created for this product we're pretty impressed with the way we're bouncing back which tells me that this product is becoming more and more relevant John do you want to speak about the future well you know I mean, you're one of our best indicators of growth is our enrollments and you know year to date, we're at 15% growth at all much.
Speaker Change: Over last year, even with the <unk> to.
Speaker Change: Supply disruption that we had so I think that's a good indicator of of increasing demand.
Speaker Change: At our you know our unique patients have already bounced back above where they were the same period last year. So I think that's a good indication that the the patient base is it's back to where it was so we expect to see continued growth from.
Speaker Change: From here throughout the year and Justin Let me just add the fact that you've seen the publication coming from medical. So we are active to obviously, ensuring that theres publications publications that carry momentum for the <unk> sales on the ground for the reps. So every time that you leverage the medical.
Speaker Change: East to providing additional data to the field force do you sell more that's the business model that has worked for us.
Speaker Change: Great. Thanks for taking my questions.
Speaker Change: Thanks, Justin.
Speaker Change: And this is the operator, just a checking do you all have any questions on the webcast.
Speaker Change: Well, we do there there's a few I'll read them out. So our first question is on the decline in regards with sales. So we're seeing a stabilization why is it taking so long to stabilize it.
Speaker Change: Why is there a continued negative impact.
Speaker Change: Yeah. So we.
Speaker Change: With the duration of therapy being about two years and the fact that we had higher enrollments previously were actually losing more patients than we're gaining and that's why although they've enrollments have stabilized in fact actually grown this quarter, we're still losing some of the existing patient base, which we.
Speaker Change: Project will will level out so for Garza enrollments are.
Speaker Change: Up 16% year to date over last year. So that's a positive sign that we're not seeing further decline.
Speaker Change: Decline in utilization, but again.
Speaker Change: Some of those existing patients from the higher previous enrollments are transitioning out.
There's also a question on tariffs you've talked about tariffs for a rooftop, but do you see any trip tariffs on <unk> or the <unk> products, while we don't see any issue I mean, Philip you you're close to this fine we don't see an issue for trip ourselves when it comes out at the time it because this is a transfer price and then.
Speaker Change: What is the situation for I honest I honest the products are manufactured in Europe and they they won't.
Speaker Change: Asked through the U S borders so.
Speaker Change: We don't see any risk.
Speaker Change: So again, it's very difficult at this time to provide additional information, but what I wanted to make clear. This morning is that we are following the situation very closely we absolutely know the components that are passing through the border and for now the exposure we had as it related to D. S F and the current formulation of as before.
Speaker Change: A mutation of the grifter.
Speaker Change: And we don't foresee major applications and we will as we said transitioned to defeat the best possible way.
Speaker Change: And last question on that so we were waiting on the approval of BNP for the Nash program can you give an update or are we still looking for a partner there or what's the status of <unk>.
Speaker Change: Well in fact it this just comes once in a while in the different meetings and whenever we go to bio and whenever we see you know potential candidates, but there's so much action going on in the Nash space with our innovative and different types of targets that it's very difficult for us to.
Speaker Change: Actually.
Speaker Change: You know be a having a value proposition that can translate to a real value is being said, we will continue to be opportunistic and if there are some.
Speaker Change: You know compounds that are looking and we know that there are many you know compounds that are in need of adding you know a combination with a drug that can maintain lean mass, which we would do.
Speaker Change: And it has a double type of motive action on fibrosis and inflammation, we could be irrelevant.
Speaker Change: But at this time this is not where we're spending our time and creating expectation.
Speaker Change: And that's it for the questions.
Speaker Change: Well I would like to thank you for you know joining our earnings call. This morning, I want people to understand that the drug shortage was a one off it is behind us from a demand point of view our business is very robust and we are again gearing up now to have a plan that.
Speaker Change: We will further improve the top line and most importantly, the bottom line in return for investors. Thanks for joining again.
Speaker Change: This concludes the conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Yeah.