Q3 2025 HLS Therapeutics Inc Earnings Call
Investor Relations for the introductory remarks. Please go ahead.
Thank you good morning, everyone and thank you for joining us today with me on the call is Craig Millian, Chief Executive Officer, John Hanna Chief Financial Officer, and Brian Walsh, Chief Commercial officer.
Brian Walsh: LDL is the ultimate biomarker for cardiovascular risk. It's integrated into every clinical guideline and physician practice pattern. Forty percent of at-risk patients and half of high-risk atherosclerotic cardiovascular disease patients in Canada do not achieve their CCS guideline-recommended LDL target. These elevated LDL levels put patients at significant risk of future catastrophic vascular events like myocardial infarction, stroke, and cardiovascular death. The unmet medical need is significant, and we estimate more than half a million Canadians could potentially benefit from these medicines. This gives us a clear, well-established entry point for these products into the Canadian cardiovascular system. The clinical profile of these products is very compelling for physicians, patients, and payers.
Earlier. This morning, we issued a news release announcing our financial results for the three and nine months ended September 32025.
This news release, along with our MD&A and financial statements is available on <unk> website and on SEDAR costs.
Please note that slides accompanying today's call can be viewed by the webcast.
Link to which is available in our earnings press release and at our website on the events and presentations page.
Certain matters discussed in today's conference call or answers that maybe given to questions could constitute forward looking statements.
Actual results could differ materially from those anticipated.
Risk factors that could affect results are detailed in the company's annual information form which has been filed on SEDAR plus.
Brian Walsh: We will launch Nalendo with the results from the CLEAR outcomes trial, a nearly 14,000 patient randomized double-blind cardiovascular outcome study that demonstrated meaningful reduction in major cardiovascular events, major adverse cardiovascular events, or MACE, in patients unable to take recommended statin therapy. Nalendo and Nexlizet provide a novel oral pathway for LDL lowering, while being less likely to cause muscle-related side effects that limit statin adherence, and can be used alone or in combination with other LDL-lowering therapies. In terms of clinical practice, physicians typically start patients with a statin, then add ezetimibe if additional LDL lowering is needed. If patients still aren't at goal, the current standard of care moves to PCSK9 inhibitors, which are injectable, expensive, and generally reserved for only the highest-risk patients.
During the call we will refer to adjusted EBITDA adjusted EBITDA does not have any standardized meaning prescribed by <unk>.
Adjusted EBITDA as defined in our press release and annual filings that are available on SEDAR plus and on our website.
Please note that all financial information provided is in U S dollars unless otherwise specified.
I'd now like to turn the meeting over to Mr. Miller. Please go ahead. Thanks, Dave Good morning, everyone and thank you for joining us.
On our call today, I'll review quarterly and year to date highlights along with progress against our corporate priorities.
Brian will go into further detail on product performance, along with an update on launch preparations.
And then John will follow with a detailed look at the numbers.
Following John we will hold a Q&A session.
I wanted to start by highlighting the progress we've made over the past two years.
Brian Walsh: Nalendo and Nexlizet slot in ahead of PCSK9s in this treatment algorithm, providing a simpler, lower-cost oral option for patients who need additional LDL lowering but aren't appropriate candidates for injectable therapy. Our pre-launch preparations have accelerated since last quarter. We're finalizing our dossiers for pricing and reimbursement discussions. Our medical teams, who have been established for several years with our KOLs on Fasepa, have started engaging with their customers on bempedoic acid story this summer, and they have been met with a high level of enthusiasm regarding the significant unmet need that the product addresses. On timing, we expect to hear from Health Canada in Q4, which would put us on track for a Q2 2026 commercial launch. By that time, we expect to have product available and to have achieved meaningful coverage with private insurers.
Improving profitability and cash flow and strengthening our financial position.
We believe these improvements were essential to set the stage for future growth.
I'll start with adjusted EBITDA, which was $4 9 million in the third quarter up 19% year over year.
And $13 $9 million year to date up 25% over the same 2024 period.
With the progress we've made year to date, we are on track to reach our target adjusted EBITDA range for the full year.
Following an inflection 0.2 years ago in the third quarter of 2023, we've demonstrated steady quarterly improvement in adjusted EBITDA excluding royalties.
And in the third quarter, we continued that positive trend.
Brian Walsh: Our engagement on the public reimbursement will continue throughout 2026, with the goal of achieving favorable provincial listing agreements beginning in 2027. The strategic synergies with Fasepa are significant. The Canadian Cardiovascular Society guidelines recommend both further LDL lowering for patients not at goal, and consideration of Fasepa treatment for patients with elevated triglycerides as a marker of increased cardiovascular event risk. With our expanded portfolio, we'll be well-positioned as the Canadian leader in oral cardiovascular risk reduction, able to partner with physicians to address a much broader set of patients working to reduce their remaining risk. Our customer-facing teams are energized and ready to launch these new products. With that, I'll turn it over to John for the financial results. John?
And that two year period in that two year window of adjusted EBITDA, excluding royalties has increased by more than 85%.
This performance is a result of the operational improvements we've made over the past couple of years focusing on the key performance drivers for our promoted products, while significantly reducing operating expenses and delevering our balance sheet.
Financial discipline, we've instilled across the organization is generating results with strong operating cash flow and continued debt reduction.
Don will provide more details on our financial position in his section.
On the revenue side, while Canadian product sales have grown 2% year to date in local currency.
This performance is a result of the operational improvements we've made over the past couple of years, focusing on the key performance drivers for our promoted products while significantly reducing operating expenses and de-levering our balance sheet.
We have faced several headwinds throughout 2025.
And in the third quarter revenues were down 4%.
Financial discipline we've instilled across the organization is generating results with strong operating cash flow and continued debt reduction.
John Hanna: Thank you, Brian, and good morning, everyone. I'll focus my remarks on our Q3 and year-to-date financial performance, the continued strengthening of our balance sheet, and our capital allocation approach. Starting with revenue, total revenue for Q3 was CAD 13.5 million compared to CAD 14.1 million in Q3 last year. Year-to-date revenue was CAD 40.3 million compared to CAD 41.1 million in the same period last year. Craig and Brian have already covered off the key factors impacting revenue for the quarter and the year. Excluding royalties, revenue from Canadian product sales in local currency and revenue from US Clozaril sales were both up on a year-to-date basis by 2.3% and 1%, respectively. The timing of orders can impact quarterly results, and for this reason, we view year-to-date revenue as a more relevant measure of the comparison of year-over-year revenue performance. Royalty revenue was CAD 180,000 in Q3 compared to CAD 195,000 in Q3 last year.
Let's start with Vascepa.
John will provide more details on our financial position in his section.
With an eye towards strengthening commercial capabilities for both Vascepa and ahead of the <unk> launch.
on the revenue side, while Canadian product sales have grown 2% year to date in local currency,
We made substantial and purposeful changes to the sales force this year.
We have faced several headwinds throughout 2025.
In 2025 more than half of our territories turned over as we proactively recruited upgraded and Onboarding new talent.
And in the third quarter revenues were down 4%.
Let's start with the sea.
Those geographies are now filled with highly experienced and motivated sales representatives, who are building momentum in their territories.
with an eye towards strengthening commercial capabilities, for both PA and ahead of the FEMA dog acid launch
We made substantial and purposeful changes to the sales force this year.
With a fully deployed and customer facing organization.
This completes the transition that began late last year with our exit from the Pfizer promotional services agreement.
Our territories turned over as we proactively recruited upgraded and onboarded new Talent.
Even with the scope of these changes Vascepa has managed to grow prescriptions at a substantial rate of 24% year to date and.
Those geographies are now filled with highly experienced and motivated sales representatives, who are building momentum in their territories.
In the third quarter was its most profitable quarter since launch.
That said Vascepa prescription growth is below the ambition, we set for the year.
With a fully deployed customer-facing organization. This completes the transition that began late last year with our exit from the fiser, promotional Services agreement.
Based on year to date results, we now expect Vascepa revenue growth on a percentage basis in the mid teens for the full year on a local currency basis compared to our prior range of 18% to 26% growth.
Even with the scope of these changes, the sea has managed to grow prescriptions at a substantial rate of 24% year to date.
John Hanna: Royalty revenue comparisons have normalized here in Q3 2025 following the sale of the Zempezime royalty in Q2 2024. HLS has one remaining royalty interest. Foreign exchange continues to be a headwind when translating Canadian dollar sales to US dollars for reporting purposes. Year-to-date, foreign exchange has negatively impacted consolidated revenue by approximately $0.8 million. On the expense side, we continue to demonstrate strong operational discipline, helping to drive increases in adjusted EBITDA and cash flow. Q3 operating expenses, comprising sales and marketing, medical, regulatory, and patient support, and G&A, were down 22% compared to Q3 last year. Year-to-date, these expenses were down 20%. This performance reflects our focus over the past 12 to 18 months on operational efficiency and driving product profitability. Cost of sales have increased in the quarter and year-to-date periods, largely due to growth in unit volumes and net sales for Fasepa.
And the third quarter was its most profitable quarter since launch.
We are optimistic that with a fully trained and deployed sales team. We will continue to grow vascepa in 2026 and beyond.
That said, the sea prescription growth is below the ambition, we set for the year.
Turning to cloud the role we had an ambitious plan to grow our patient numbers this year across Canada and.
And while we still see many targeted growth opportunities ahead.
Based on year-to-date results. We now expect the sea Revenue growth on a percentage basis. In the mid, teens for the full year on a local currency basis compared to our prior range of 18 to 26% growth.
Are taking longer to realize than anticipated.
We have adjusted our guidance and now projected decline of four 5% for the Canadian <unk> business in local currency for the full year.
We are optimistic that with a fully trained and deployed sales team, we will continue to grow the sea in 2026 and Beyond.
We estimate that about a third of the projected revenue decline is due to fluctuations in inventory at some hospital based accounts, which had which had the effect of shifting revenue into 2024.
Turning to clausel. We had an ambitious plan to grow our patient numbers. This year across Canada.
They are taking longer to realize than anticipated.
We expect these inventory effects to impact 2025 comparisons to 2024, but not beyond.
We have adjusted our guidance and now project client growth of 4% to 5% for the Canadian causal business in local currency for the full year.
<unk> also recently face increased competitive pressure in Ontario, where we maintain a very high market share.
We estimate that. About a third of the projected Revenue declines is due to fluctuations in inventory at some hospital-based accounts.
Earlier this year a number of hospital accounts in Ontario were in play due to a large buying group contract that was up for a multiyear renewal.
We successfully defended the vast majority of <unk> business in Ontario, where our satisfied patient base differentiated see some services and innovative product offering helped support the <unk> value proposition.
Which, which had the effect of Shifting Revenue into 2024. We expect these inventory to back to impact 2025 comparisons to 2024, but not Beyond
John Hanna: As Craig mentioned earlier, adjusted EBITDA growth in Q3 and the year-to-date period was strong, increasing 19% and 25%, respectively. Similar to the discussion on OpEx, this is due to our efforts to optimize operations and drive product profitability. I want to highlight the consistent improvement we've made in our profitability trajectory. As shown in the slide in our presentation, on a trailing 12-month basis, adjusted EBITDA, excluding royalties, has shown consistent quarterly improvement since bottoming out in late 2023. Q3 continues this positive trend. As Craig mentioned, since Q3 2023, adjusted EBITDA ex royalties has grown by 87%. For the third quarter, the direct brand contribution from Clozaril to adjusted EBITDA was CAD 6.3 million, while the direct brand contribution from Fasepa was CAD 0.6 million. Year-to-date contributions were CAD 19.2 million for Clozaril, and CAD 0.7 million for Fasepa.
Closer also, recently faced increased competitive pressure in Ontario, where we maintain a very high market share.
Despite the increased competitive competitive activity in Ontario, overall collateral patient numbers in Canada are down less than 1% versus prior year and this is due to sizable gains we have achieved in other parts of the country, particularly the western provinces.
Earlier this year, a number of Hospital accounts in Ontario were in play due to a large buying group, contract that was up for a multi-year renewal.
We successfully defended the vast majority of plausible business in Ontario, where a satisfied, patient base, differentiated sea sound services and Innovative Pronto, offering help support. The closer. It'll value proposition.
Taking a slightly longer view collateral patient numbers in Canada are actually up about 1% since the end of 2023.
In addition, our U S. <unk> business has shown resilience and is currently outperforming expectations for the year.
This stable U S performance represented a meaningful improvement over the historical trend.
Despite the increased competitive activity in Ontario, overall patient numbers in Canada are down less than 1% compared to the prior year. This is due to sizable gains we have achieved in other parts of the country, particularly the Western provinces.
So to summarize our outlook for the rest of the year profitability remains strong and we expect to grow adjusted EBITDA to meet our guidance range of 17% to 23% growth, which translates to 19 $5 million to $25 million.
Taking this lightly longer view, closer, location numbers in. Canada are actually up about 1% since the end of 2023.
In addition, our us clausal business has shown resilience and is currently outperforming expectations for the year.
This stable us performance represents a meaningful improvement over the historical trend.
Based on our updated product sales guidance, we are now providing a consolidated revenue estimate for the year of 55% to $56 million.
John Hanna: Cash from operations in Q3 was CAD 2.5 million, up 67% compared to Q3 last year. Year-to-date, cash from operations was CAD 10.6 million, up 121% versus the same period last year. This strong operating cash flow performance reflects our improved profitability. Another driver of our cash flow improvement has been the reduction in interest expense. Year-to-date, we've reduced interest expense by 38%, saving CAD 2.6 million. This reflects the significant progress we've made in paying down debt and lowering our effective interest rate. Turning to the balance sheet, at quarter end, the carrying amount of our term loans stood at CAD 53.1 million, down CAD 12.9 million, or 19%, from CAD 67.4 million at 31 December 2024, and down CAD 33.6 million, or almost 40%, since the end of 2023. As a result of our continued debt reduction, net debt stood at CAD 43.5 million at quarter end compared to CAD 50 million at 31 December 2024.
Looking toward 2020, we expect to grow both top line and adjusted EBITDA next year.
So to summarize, our outlook for the rest of the year profitability remains strong and we expect to grow adjusted ebita to meet our guidance range of 17 to 23% growth which translates to 19.5 to 20.5 million.
Although we saw some recent increased competitive activity against collateral in Ontario, we have successfully grown our existing patient base over the past two years and expect business to stabilize in Canada.
Based on our updated product sales guidance, we are now providing a Consolidated Revenue estimate for the year of 55 to 56 million.
For Vascepa now that our sales force is fully staffed we're starting to see the positive impact, including recent increases in new to brand patients. This makes us optimistic for growth prospects.
Looking toward 2026, we expect to grow both Topline and adjusted ebits on next year.
And of course, we are preparing to expand our cardiovascular portfolio with a second quarter launch of <unk> acid, which will contribute to revenue in 2026.
Although we saw some recent increased competitive activity, against Quadro in Ontario, we have successfully grown, our existing patient base over the past 2 years and expect business to stabilize in Canada
We will provide a more detailed financial outlook for 2026, when we issue our year end results in March.
For the sea. Now, that our sales force is fully staffed, we're starting to see the positive impact, including recent increases in new to Brand patients. This makes us optimistic for growth prospects.
While we manage the near term objective of profitably growing our existing product portfolio.
I want to emphasize how excited we are about the growth opportunity ahead of us as we build HOS into a leading cardiovascular company in Canada.
And of course, we're preparing to expand our cardiovascular portfolio with a second-quarter launch of benedic acid, which will contribute to revenue in 2026.
The introduction of the Delek asset will help address a large and growing patient population of more than half a million Canadians who could benefit from additional LDL cholesterol lowering.
We'll provide a more detailed Financial outlook for 2026. When we issue our year-end results in March,
John Hanna: Our deleveraging, combined with our improved operational performance, has fundamentally strengthened our financial position and created greater flexibility for capital allocation. Further strengthening our financial position, in August, we successfully refinanced our debt facility, entering into a new Canadian-denominated credit agreement with total borrowing capacity of CAD 107 million. National Bank of Canada is the lead, and the syndicate includes TD Bank, RBC, and Innovation Federal Credit Union. This replaces our previous US dollar facility and extends our maturity to August 2029. The Canadian-denominated structure provides a natural hedge against our predominantly Canadian operations, while reducing foreign exchange exposure. We've achieved meaningful interest rate savings of 25 to 50 basis points on the spreads, plus over 100 basis points from favorable Canadian base rates. This should net us annual savings of approximately CAD 1.5 million in interest expense. This enhanced financial flexibility supports our capital allocation priorities.
This novel Medicine will represent an important addition to the clinical armamentarium as there is a need for treatments beyond statin and ahead of the expensive Injectables currently available.
while we manage the near-term, objective of profitably, growing our existing product portfolio, I want to emphasize how excited we are about the growth opportunity ahead of us as we build hls into a leading cardiovascular company in Canada,
And we are excited to leverage powerful operational and platform synergies with Vascepa.
The introduction of memo acid will help address a large and growing patient population of more than half a million Canadians who could benefit from additional LDL cholesterol reduction.
To position <unk> as the leader in developing delivering novel cardiovascular risk, reducing oral therapies to the Canadian market.
Brian will provide more details on our launch preparations and the commercial opportunity.
To the clinical arm of Miriam. As there is a need for treatments Beyond statins and ahead of the expense of injectables currently available.
But I want to underscore that this launch represents a pivotal moment for HOS and will drive growth for years to come.
And we are excited to leverage powerful, operational and platform synergies with Thea.
Even as we set the stage for future growth, we plan to largely hold the line on operating expenses in 2026.
To position hls as the leader, in delivering novel, cardiovascular risk, reducing oral therapies to the Canadian Market.
I said previously we build a cost structure that can support both our existing portfolio and the new product launches without significant incremental investment.
Brian will provide more details on our launch preparations and the commercial opportunity.
When I want to understand that this launch represents a pivotal moment for hls and will drive growth for years to come.
The financial Foundation Foundation for HOS was solid.
John Hanna: Our outlook for capital allocation remains balanced and is focused on three areas: one, continued debt reduction, returning capital to shareholders through share buybacks, and three, strategic portfolio expansion. Importantly, we've funded all three priorities: debt reduction, share buybacks, and portfolio expansion through operating cash flow without requiring additional financing. In summary, we're delivering on our profitability commitments, generating strong cash flow, and continuing to strengthen our balance sheet. We've built a solid financial foundation that provides flexibility to invest in our portfolio while also returning capital to shareholders. With that, I'll turn it back to Craig for closing remarks. Craig?
With improved profitability and cash flow.
Even as we set the stage for future growth, we plan to largely hold the line on operating expenses in 2026.
Our new credit agreement announced in the third quarter with favorable terms further strengthens our financial position.
The agreement has a new syndicate of lenders and provide stability lower interest expense and greater flexibility to pursue strategic growth opportunities to expand our portfolio.
I said, previously, we built a cost structure that can support both our existing portfolio and the new product launches without significant incremental investment.
The financial Foundation foundation for hls is solid with improved, profitability and cash flow.
With that I'll turn it over to Brian to discuss our commercial performance and launch preparations Brian.
Our new credit agreement announced in the third quarter, with favorable terms, further strengthens our financial position.
Thanks, Greg and good morning, everyone.
I'll walk through our Q3 and year to date product performance and provide an update on our <unk> launch preparations.
The agreement has a new Syndicate of lenders and provides stability, lower interest expense and greater flexibility to pursue strategic growth opportunities to expand our portfolio.
Starting with <unk>, our U S. Clos real business has performed well and year to date sales were up 1%.
Craig Millian: Thank you, John. In closing, our consistently improving profitability demonstrates that the operational transformation we've executed is working. We're generating improved cash flow, significantly reducing our debt burden, and building a more sustainable cost structure that can also support growth. The pending approval of bempedoic acid will transform our cardiovascular franchise in Canada and further establish HLS as a leader in delivering novel oral therapies to reduce cardiovascular risk. We remain focused on execution, and are confident that our strategy, our team, and our growing portfolio of important medicines will continue to deliver results and create value. That concludes our prepared remarks. At this point, I'll ask the operator to please provide instructions for asking questions. Operator?
With that, I'll turn it over to Brian to discuss our commercial performance and launch preparations. Brian.
This is a meaningful improvement over the historical trend and as a result of a durable established patient base, coupled with targeted new patient growth through our specialty pharmacy partnership.
Thanks Greg and good morning everyone. I'll walk through our Q3 and unitate product performance and provide an update on our beta acid launch preparations.
For <unk> in Canada as Craig noted.
We continue to drive strong growth in the west, including 11% patient number growth in British Columbia that was offset by expected patient attrition in Quebec, and some competitive pressures at select accounts in Ontario.
Starting with claw. Are you us? Claws are all business has performed well and year to date sales were up 1%.
And while we have experienced some unit impact from the pressures in Ontario, we have successfully defended our value proposition and the vast majority of accounts, while mark while maintaining our net pricing integrity.
This is a meaningful improvement over the historical Trend and as a result of a durable established patient base coupled with targeted, new patient growth through our Specialty. Pharmacy partnership.
For CL in Canada, as Craig noted.
We continue to track strong growth in the west including 11% patient number growth in British Columbia.
Which preserves the foundation for a healthy sustainable business moving forward.
Despite these pressures our patient numbers are down less than 1% at the end of Q3 versus the same time last year and up 1% versus the end of 2023.
There was offset by expected. Patient. Attrition in Quebec and some competitive pressures at select accounts in Ontario.
Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. To ask a question, you may press the star followed by the number one on your telephone keypad. If you're using a speakerphone, please speak up your headset before pressing the keys. To withdraw your question, please press the star followed by the number two. With that, our first question comes from the line of Michael Freeman with Raymond James. Please go ahead.
Demonstrating the solid fundamentals underpinning our cause of our franchise in Canada.
and while we have experienced some unit impact from the pressures in Ontario we have successfully defended a value proposition in the vast majority of accounts while May while maintaining our net pricing integrity
Importantly cause athene is significantly underutilized across Canada as the only approved treatment.
Which preserves the foundation for a healthy sustainable business, moving forward.
As the only approved product for treatment resistant schizophrenia.
This context creates multiple pathways for our team to bring the lifesaving clauser, our brand and our differentiated <unk> services to more patients across Canada.
Despite these pressures, our patient numbers are down less than 1% at the end of Q3 versus the same time. Last year, and up 1% versus the end of 2023.
Michael Freeman: Hey, good morning, everybody, and congratulations on all this progress. I think as a quick first one, I wonder if you could describe any interactions you've had with Health Canada on bempedoic acid.
Demonstrating the solid fundamentals. Underpinning. Our CL franchise in Canada.
Looking at Vascepa Q3 unit volume grew 22% compared to Q3 last year and year to date unit growth was 24%.
Importantly claim a significantly underutilized across Canada as the only approved treatment.
Is the only approved product for treatment resistant, schizophrenia?
Craig Millian: Thanks, Michael, for the question. I'll turn it over to Brian.
The key story with Vascepa at this year is that our sales force rebuilt following the Pfizer Transocean and ahead of our <unk> launch.
Brian Walsh: Hey, Michael, good morning. You were progressing with the regulatory review. We've had very good engagement on bempedoic acid, and you were expecting to hear from them this quarter. We're on track for a product launch in Q2 of next year.
This context creates multiple Pathways for our team to bring the life-saving closure brand, and our differentiated sea Sun services to more patients across Canada.
That's correct shared we made many of these changes with the aim of strengthening our commercial capabilities for both Vascepa.
Also before we launched economic assets.
Looking at the sea Q3 unit of volume through 22% compared to Q3 last year and year-to-date. Unit growth was 24%.
But as a result throughout 2025 more than half of our territories were opened for some period of time as we recruit and onboard a new representatives.
Michael Freeman: Okay. Now, on the Clozaril business, you described well some of these Canadian headwinds. I wonder what your overall plans are for maintaining or growing this business, I guess, broadly, but specifically in Canada. You have very strong market share in Ontario that maybe competitors are nibbling away at, but there does seem to be quite a lot of headroom in other provinces in Canada. I wonder what your game plan is.
The key story with the Seafoods this year has been our sales force rebuild, following the fiser transition, and the head of our methodic acid launch.
At the end of Q3, we had reached full deployment across all territories.
This is Craig shared. We made many of these changes with the aim of strengthening our commercial capabilities for both mipa.
And we are very excited about the talents that we have attracted to join <unk>.
but also, before we launched Beno acid,
And while everyone, we hired as an experienced specialty sales representative.
Will take several months for a new representative to get fully trained and established with their new customers.
But as a result throughout 2025, more than half of our territories were open for some period of time as we recruited and onboarded new Representatives.
We're seeing very good early signs that our new team members are becoming increasingly productive.
At the end of Q3, we had reached full deployment across all territories.
Which is evidenced by overall growth in new patient starts.
And we are very excited about the talents that we have attracted to join hls.
For the first time this year, we grew new patient starts each month in the quarter versus the prior year.
Brian Walsh: Yeah, it's a great question, Michael. That's where for this brand, given the significant underutilization of Clozaril, we see a lot of pathways to growth. Over the last couple of years, we've reported on significant growth, double-digit growth in the western provinces. We still have less than 1/3 of those markets, so we still see significant headroom, good profitability opportunities in those markets. We have been making subtle changes to shift resources to accelerate that growth. Even within Ontario, where there's some modest pressure, there's still significant population growth and growth opportunities throughout the province.
And while everyone we hired as an experienced specialty sales representative, it still takes several months for a new representative to get fully trained and established with their new customers.
We're also seeing improved depth of prescribing by growing consistent prescribers, 5% versus Q2 of this year and 29% versus Q3 of last year.
But you're receiving very good early signs that are new. Team members are becoming increasingly productive.
Which is evident by overall growth in new patients starts.
We expect this growth to accelerate in the coming quarters as our transform sales team gains further traction driving a more meaningful impact on our full year 2026.
For the first time this year, we grew new patient starts each month in the quarter versus the prior year.
The fundamentals supporting Vascepa remains strong.
The product remains prominent in the Ccs treatment guidelines.
We are also seeing improved depth of prescribing by growing consistent prescribers, 5% versus Q2 of this year and 29% versus Q3 of last year.
And Vascepa maintains excellent formula formulary access across both public and private payers.
We expect this growth to accelerate in the coming quarters as our transformed sales team gains further traction.
And we continue to take proactive steps to streamline the reimbursement process.
Driving in more meaningful impact, on our full year 2026.
And improved retention rates for patients that are covered by private plans.
Craig Millian: Just to add, even to come back, where you may recall a year or so ago, a little over a year, we actually changed our model there to really focus on patient retention due to some of the challenges in terms of acquisition of patients in Quebec. That's been a resounding success. We've been able to limit any sort of attrition in Quebec to low single-digit percentages, and really patient-by-patient work to retain every one of our patients. The stickiness of that patient population in Quebec is quite remarkable. Often when there is attrition, it's due to reasons such as a patient passing away, for example, not necessarily due to a switch. The strategy has worked in terms of maximizing our retention of patients in Quebec, defending our really dominant share in Ontario.
Now, let me turn to the exciting upcoming launch of <unk> acid.
As mentioned previously <unk> and <unk> are the commercial product names used in the U S. But we expect a variation in the brand name for the monotherapy.
And the Sea maintains excellent formula formulary access across both public and private payers.
Health, Canada approval is finalized.
And improve it retention rates for patients, that are covered by private plans.
The monotherapy is a daily oral non statin treatment continuing the novel compound <unk> acid.
Now, let me turn to the exciting upcoming launch of bedok acid.
Its brand name in Canada will be <unk>, which is aligned to the brand name in Europe.
The second product is the fixed dose combination of <unk> acid with a certain amount in a single daily pill and in Canada. It will be marketed as <unk> at the same name is in the U S.
As mentioned previously, next will tall and Nexus at are the commercial product needs used in the us, but we expect a variation in the brand name for the monotherapy.
1's. Health Canada approval is finalized.
The monotherapy is a daily oral non-statin treatment containing the novel compound bento acid.
What makes these products differentiated as they add a second completely independent pathway to cardiovascular risk reduction alongside Vascepa is unique mechanism.
its brand name in Canada, will be nmo, which is aligned to the brand name in Europe,
Craig Millian: We have fantastic relationships at the major accounts there, the major mental health institutions, and we think there are still opportunities to grow. Admittedly, it's certainly a competitive space. As Brian said, really a lot of headroom for growth out in the western provinces.
These new products address a very large addressable market focus on LDL cholesterol reduction.
<unk> is the ultimate biomarker for cardiovascular risk.
The second product is the fixed dose combination of benedic acid with a zettamine in a single daily pill. And in Canada, it will be marketed as nexo that the same name as in the US.
Integrated into every clinical guidelines and physician practice pattern.
40% of at risk patients and half of high risk <unk> cardiovascular disease patients in Canada do not achieve their Ccs guidelines that guideline recommended LDL targets.
What makes these products differentiated is, they add a second, completely independent Pathway to cardiovascular risk reduction, alongside the Sea's unique mechanism.
Michael Freeman: I wonder if you could provide similar color on Clozaril in the US.
these new products address a very large addressable Market focused on LDL cholesterol reduction
These elevated LDL levels per patient at significant risk of future catastrophic vascular events like myocardial infarction stroke and cardiovascular death the.
Brian Walsh: Yeah. Very different dynamic. It's more a very stable patient population, but a different share, lower share, higher value per patient. Our regular core business has been very stable. As accounts there, we tend to have more private pay patients. We've been able to offset some natural patient attrition through targeted growth through specialty pharmacy, where we're able to offer financial assistance and educational support programs. We continue to see that we've achieved, I think, a level of stability with that business, and we can see that continuing in the coming years.
LDL is the ultimate biomarker for cardiovascular risk, its integrated into every clinical guideline and physician practice pattern,
The unmet need unmet medical need is significant and we estimate more than half a million Canadians could potentially benefit from these medicines.
40% of at risk patients and half of high-risk arthritis. Cardiovascular disease patients in Canada. Do not achieve their CCS guideline guideline recommended LDL Target.
This gives us a clear well established entry point for these products into the Canadian cardiovascular.
The clinical profile of these products is very compelling for physicians patients and payers.
These elevated LDL levels, put patients at significant risk of future catastrophic. Vascular events like myocardial infarction stroke and cardiovascular death.
We will launch the lender with the results from the clear outcomes trial.
The mmet need unmet medical need is significant and we estimate more than half a million Canadians could potentially benefit from these medicines.
Our nearly 14000 patient randomized double blind cardiovascular outcome study that demonstrated meaningful reduction in major cardiovascular events major adverse cardiovascular events or mace and patients unable to take recommended statin therapy.
This gives us a clear, well-established entry point for these products into the Canadian cardiovascular market.
The clinical profile of these products is very compelling for Physicians patients and payers.
Michael Freeman: Excellent. Now, last one for me. There was some mention of pursuing business development as a result of you guys strengthening your balance sheet. What should we expect in terms of sort of structure of in-licensing, perhaps, or size of deal? Would we expect something similar to what we saw with bempedoic acid, or are you scaling up your ambition?
<unk> provide a novel oral pathway for LDL lowering.
While being less likely to cause muscle related side effects that limit statin adherence and can be used alone or in combination with other LDL lowering therapies.
In terms of the clinical practice physicians typically start patients with established that out is it a month of additional LDL lowering as needed.
We will launch an alma with the results from the clear outcomes trial, and nearly a nearly 14,000 patient randomized. Double blind, cardiovascular, outcome study that demonstrated meaningful reduction in major cardiovascular events, major adverse cardiovascular events or mace in patients unable to take recommended Statin therapy.
Nmo and nexo that provided novel oral pathway for LDL lowering.
If patients still arnett goal. The current standard of care moves to <unk> inhibitors, which are injectable expensive and generally reserved for only the highest risk patients.
While being less likely to cause muscle related side effects that limits Statin adherence and can be used alone or in combination with other LDL lowering Therapies.
Craig Millian: It's a good question. What I would say is, we love the bempedoic acid deal, and obviously, there are other deals of that magnitude. We think this is going to create significant shareholder value. We think these are products that will generate tens of millions of dollars in revenue, and again, fit so beautifully with the infrastructure we already have in place, really building our positioning as a premier cardiovascular company in Canada. Obviously, the opportunity to continue to do deals like that is very attractive, albeit not necessarily an infinite number of those opportunities. I do think with the strengthening balance sheet and the new debt facility, that does, I'd say, widen the aperture in terms of the type of deals we can do.
The <unk> slot and ahead of <unk> in this treatment algorithm, providing a simpler lower cost oral option for patients who need additional LDL lowering but arent appropriate candidates for injectable therapy.
In terms of clinical practice Physicians, typically start patients with a Statin, then add a zettamine. If additional LDL lowering is needed,
Our prelaunch preparations have accelerated since last quarter, we're finalizing our dossiers for pricing and reimbursement discussions are medical teams have been established for several years with our kols on Vascepa have started engaging with their customers on the <unk> acid on the <unk> story. This summer and they have been met with a high <unk>.
if patients still aren't at Gold, the current standard of care moves to pcsk9 Inhibitors, which are injectable expensive, and generally reserved for only the highest risk patients
The limbo and nexo at slot in a head of pcsk9, in this treatment algorithm providing a simpler lower cost oral option for patients, who need additional LDL lowering, but are appropriate, candidates for injectable therapy.
<unk> regarding the significant unmet need that the product addresses.
On timing, we expect to hear from health, Canada in Q4, which will put us on track for a Q2 2026 commercial launch.
At that time, we expect to have product available and drove achieved meaningful coverage with private insurers.
Craig Millian: I think right now, our focus is on continuing to bring in assets that are materially significant, that will add significantly material revenues to our top line. We think that's very important. Apologies, we're in a meeting room at a hotel, and the Wi-Fi dropped here. I'm not sure when the call dropped. I know we had a question from Michael.
Our engagement on the public reimbursement will continue throughout 2026 with the goal of achieving favorable provincial listing agreements beginning in 2027.
Our pre-launch preparations have accelerated since last quarter. We're finalizing our dossier for pricing and reimbursement discussions. Our Medical Teams who have been established for several years with our Ko's, on the sea. Have started engaging with their customers on Benedict acid on the benedic acid story, this summer and they have been met with a high level of enthusiasm regarding the significant up and need that the product addresses.
The strategic synergies with Vascepa are significant the Canadian cardiovascular Society guidelines recommend both further LDL lowering for patients not a goal and consideration of vascepa treatment for patients with elevated triglycerides as a marker increased cardiovascular event risk.
A timing we expect to hear from Health Canada in Q4, which would put us on track for a Q2 2026 commercial launch.
By that time.
We expect to have product available and do have achieved meaningful coverage with private insurers.
Our engagement on the public reimbursement will continue throughout 2026 with the goal of achieving favorable provincial listing agreements. Beginning in 2027
With our expanded portfolio will be well positioned as a Canadian leader in oral cardiovascular risk reduction.
Michael Freeman: In the criteria.
Craig Millian: Yeah. Yeah. I mean, I'll just be brief. The answer is yes. We're looking at deals, I think, similar in scope to what we've done. I would say, again, with the strengthened balance sheet and with kind of the increased flexibility with the lending agreement, we're in a position, I think, to broaden the aperture. Looking at things that obviously fit with our model in Canada, and that can easily be broadened, but that have significant sales potential. Obviously, we'll be opportunistic as well. I think we're looking at opportunities to expand our business as well in the US, recognizing that those will be maybe challenging to identify. We're confident we can continue to build out our business there as well. Stay tuned.
We will partner with physicians to address a much broader set of patients working to reduce the remaining risks.
And our customer facing teams are energized and ready to launch these new products.
The Strategic synergies with the sea are significant. The Canadian cardiovascular Society guidelines recommend both further LDL lowering for patients. Not a goal and consideration of force of a treatment for patients with elevated. Triglycerides as a marker of increased, cardiovascular event risk,
With that I'll turn it over to John for the financial results John.
With our expanded portfolio, we'll be well positioned as the Canadian leader in oral cardiovascular risk reduction.
Thank you, Brian and good morning, everyone.
I'll focus my remarks on our Q3 and year to date financial performance.
Able to partner with Physicians to address a much broader set of patients working to reduce their remaining risk.
Continued strengthening of our balance sheet and our capital allocation approach.
And our customer, facing teams are energized and ready to launch these new products.
Starting with revenue.
<unk> revenue for Q3 was $13 5 million compared to $14 1 million in Q3 last year.
Results.
John.
Thank you, Brian. And good morning everyone.
Year to date revenue was $40 3 million compared to $41 1 million same period last year.
I'll Focus my remarks on our Q3 and year-to-date financial performance.
Craig Millian: We're very active, and we're very committed to continuing to grow top line now that we've really put our financial house in order and have a cost structure that we think can support a lot more growth.
The continued strengthening of our balance sheet and our Capital allocation approach.
Craig and Brian have already covered off the key factors impacting revenue for the quarter and the year.
Excluding royalty revenue from Canadian product sales in local currency.
Starting with Revenue, total revenue for Q3 was 13.5 million compared to 14.1 Million a23 last year.
Michael Freeman: Okay, thank you very much. I'll pass the line.
And revenue from U S. Basel sales were both up on a year to date basis.
Year-to-date Revenue was 40.3 Million compared to 41.1% last year.
By two three and 1% respectively.
Operator: Thank you. If you would like to ask a question, think to press the star one on your telephone keypad. Your next question comes from David Martin with Bloomburg. Please go ahead.
The timing of orders impact quarterly results and for this reason we view year to date revenue is a more relevant measure of the comparison of year over year revenue performance.
Craig and Brian have already covered off. The key factors, impacting revenue for the quarter and the year.
David Martin: Good morning. First question. The Fasepa scripts were up 22% in third quarter year over year, but the net sales were up only 2.1% in local currency. You mentioned inventory fluctuations. I'm wondering, are you seeing inventories more stable or even some restocking post Q3? Are you also seeing pressure on your net pricing? Did that feed into it as well?
Excluding royalties revenue from Canadian product sales in local currency.
Royalty revenue was 180000 in Q3 compared to 195000 in Q3 last year.
And revenue from Us bosal sales or both up on a year-to-date basis.
By 2.3 and 1% respectively.
Royalty revenue comparisons have normalized here in Q3 2025, following the sale of the <unk> royalty in Q2 2024.
The timing of orders can impact quarterly results. And for this reason, we view year-to-date Revenue as a more relevant measure of the comparison of year-over-year Revenue performance.
<unk> has one remaining royalty interest.
Craig Millian: Yeah. I don't know, John, if you want to comment on this. I mean, I would say that, and this has historically been the case, obviously, the growth and demand outpacing growth in net sales. This is really an artifact of having launched first into the private markets and then subsequently launching into the public markets with the different economics of that. Over time, we went from 100% of our business being private to now a blend. The good news is now we're starting to see stabilization, as we've expected. As we continue to grow in both segments, both channels, we continue to see more significant growth, I would say, on the public side. That does drive an increase in rebates, and that certainly has some impact on gross to net. The goal has been to stabilize that payer mix.
Foreign exchange continues to be a headwind when translating Canadian sales to U S dollars for reporting purposes.
Royalty Revenue was 180,000 in Q3 compared to 195,000 in Q3 last year.
Year to date.
Exchange negatively impacted consolidated revenue by approximately zero point $8 million.
Royalty Revenue comparisons have normalized here in Q3 2025 following the sale of the xenpozyme royalty in Q2 2024.
On the expense side, we continue to demonstrate strong operational discipline, helping to drive increases in adjusted EBITDA and cash flow.
Hls has 1 remaining royalty interest.
Foreign exchange continues to be a headwind when translating Canadian dollar sales to US dollars for reporting purposes.
Q3, operating expenses, comprising sales and marketing metal coal regulatory and patient support and G&A.
Year to date or exchange has negatively impacted Consolidated Revenue by approximately 0.8 million.
Down 22% compared to Q3 last year.
Year to date these expenses were down 20%.
This performance reflects our focus over the past 12 months to 18 months on operational efficiency and driving product profitability.
On the expense side, we continue to demonstrate strong operational discipline, helping to drive increases in adjusted EBITDA and cash flow.
Cost of sales have increased in the quarter and year to date periods largely due to growth in unit volumes and net sales for Vascepa.
Q3 operating expenses comprising sales and marketing metal, call Regulatory and patient, support and GNA.
We're down 22% compared to Q3 last year.
Your date is expenses were down 20%.
Craig Millian: When that occurs, we believe we'll see a narrowing of that difference between demand growth and net sales growth, but we're not quite there yet. I think probably the largest explanation for that, David, is payer mix. I don't know, John, if there's any other elements that you would.
As Craig mentioned earlier adjusted EBITDA growth in Q3, and the year to date period was strong increasing 19% and 25% respectively.
This performance reflects our Focus over the past 12 to 18 months on operational efficiency and driving product profitability.
Similar to the discussion on Opex. This is due to our efforts to optimize operations and drive product hospitals.
Cost of sales have increased in the quarter and year-to-date periods, largely due to growth in unit volumes and net sales for the sea.
Michael Freeman: No, I wouldn't. Craig, I think you covered well. We did comment a little bit on inventory for Clozaril, for the CEPA. It's really sort of the routine wholesaler orders that our biggest wholesalers place, big orders, and depending on where they drop, but there was nothing significant to comment on there for the quarter.
I wanted to highlight the consistent improvement we've made in our profitability trajectory.
As shown on the slide in our presentation on a trailing 12 month basis adjusted EBITDA, excluding royalties has shown consistent quarterly improvement since bottoming out.
As Craig mentioned earlier, adjusted EB and dog growth in Q3. And the year-to-date period was strong increasing, 19, and 25% respectively.
Similar to the discussion on Opex. This is due to our efforts to optimize operations and drive product profitability.
On the street.
Craig Millian: Yeah, there is lumpiness for certain in terms of order patterns, which is why we, especially with a limited number of products, any large order that takes place in one quarter versus another can influence year-over-year comparisons, which is why we tend to focus more on year-to-date versus quarter because there is that variability.
Q3 continues this positive trend.
I want to highlight the consistent Improvement we've made in our profitability trajectory
Mike mentioned since Q3, 2023, adjusted EBITDA ex royalties as chrome by 87%.
For the third quarter, the direct brand contribution from Clos roll to adjusted EBITDA was $6 3 million.
As shown in the slide, in our presentation on a trailing 12-month basis adjusted, EBA excluding royalties as shown consistent quarterly, Improvement since bottoming out in late 2023.
While the direct brand contribution from Vascepa with 0.6 months.
Q3 continues this positive trend.
David Martin: Okay. Was there a large order that got pushed from Q3 into Q4?
Year to date contributions were $19 2 million for <unk>, and <unk> 7 million for Vascepa.
Michael Freeman: No, as I say, nothing specific to this quarter.
as Craig mentioned, since Q3 2023 adjusted Eva at royalties has grown by 87%
David Martin: Okay. For Clozaril, the growth out west, is that mainly coming from taking share from competitors, or are you seeing increasing overall usage of clozapine?
Cash from operations in Q3 was $2 5 million up 67% compared to Q3 last year.
For the third quarter, the direct brand contribution from Clouser to adjusting Eva was 6.3 million.
While the direct brand contribution from the sea was $0.69.
Year to date cash from operations was $10 6 million up 121% versus the same period last year.
Brian Walsh: It's both. We're population growth and utilization of clozapine, but our share has been increasing steadily as well. It's a population there, like other places in Canada, where there's this large installed population, and we're competing for the new starts. I think we're competing even ahead of our market share in that dynamic portion of the market. It's both. We're winning more in the new start population, but overall we're seeing utilization increase.
Year to date. Contributions, were 19.2 million for Claus, real, and 0.7 million for the sea.
This strong operating cash flow performance reflects our improved profitability.
Another driver of our cash flow improvement has been the reduction in interest expense.
Cash from operations in Q3 was 2.5 million up. 67% compared to Q3 last year.
Year to date, we have reduced interest expense by 38% saving $2 $6 million.
This reflects the significant progress we've made in paying down debt and lowering our effective interest rate.
To date cash from operations, was 10.6 million up 121% versus the same period last year.
This strong operating cash flow performance reflects our improved profitability.
Turning to the balance sheet at quarter end, the carrying amount of our term loans to $53 1 million.
Another driver of our cash flow Improvement has been the reduction in interest expense.
The $12 9 million or 19%.
From $67 4 million at December 31, 2024.
David Martin: Great. Last question. You've obviously got good infrastructure to take on additional cardiovascular drugs. If you took on another psychiatry drug, would you need to build out your salesforce, or could that be layered onto the group you've got now?
Year to date. We've reduced interest expense by 38% saving 2.69.
And down $33 6 million almost 40% since the end of 'twenty three.
This reflects the significant progress we've made in paying down debt and lowering our effective interest rate.
As a result of our continued debt reduction net debt stood at $43 5 million at quarter end.
During the balance sheet at quarter end of the carrying amount of our Term Loan, stood at 5 3. 1,
Compared to $50 million at December 31, 24.
Million down, 12.9 million or 19%.
Sure.
Our deleveraging combined with our improved operational performance is fundamentally strengthened.
Brian Walsh: It would depend on the indication specifically. I think most of the opportunities on the neuroscience side would require some incremental build. We believe we still have capacity to bring in additional cardiovascular products within our existing footprint, just given the coverage and life cycle of the CEPA.
From 67.4 million at December 31st 2024.
And down 33.6 million almost 40% since the end of 2023.
Okay.
And create a greater flexibility for capital allocation.
For.
Further strengthening our financial position in.
In August we successfully refinanced our debt facilities entering into a new Canadian denominated credit agreement the total borrowing capacity of $170 million.
Them compared to 50 million at December, 31st 2024.
Craig Millian: Yeah, we definitely have capacity, we believe, on the cardiovascular side, so that will certainly continue to be a focus. We think we've got a really, now with the upgrade in the salesforce and bringing on some super talented folks, a really strong customer-facing organization, in addition to our medical team. Similarly, on the Clozaril side, we have a very strong multidisciplinary team. As Brian said, there's some really strong foundational elements to that team, which gives us the versatility to bring in a range of products that we could then adapt accordingly. That would require most likely some additional salespeople. We have a fairly light footprint.
National Bank of Canada is the lead and syndicated with Citibank RBC.
Rd leveraging combined with our improved operational. Performance has fundamentally strengthened, our found financial position and create a greater flexibility for Capital. Allocation.
These federal credits.
This replaces our previous U S dollar facility and extends our maturity to August 2010.
The Canadian denominated structure provides a natural hedge against our predominantly Canadian operations.
Further strengthening our financial position in August. We successfully refinanced. Our debt facility entering into a new Canadian denominated credit agreement with total boring capacity of 107 million
While producing foreign exchange exposure.
National Bank of Canada is the lead and The Syndicate includes T, Bank, RBC and Innovation Federal Credit Union.
We've achieved meaningful interest rate savings of 25 to 50 basis points on the spreads plus over 100 basis points from favorable Canadian base rates.
This replaces, our previous US dollar facility and extends our maturity to August 2029.
This should net us annual savings of approximately $1 5 million and interest expense.
The Canadian denominated structure provides a natural Edge against our predominantly Canadian operations.
This enhanced financial flexibility supports our capital allocation priorities.
While reducing foreign exchange exposure.
David Martin: Okay, thank you.
Our envelope for capital allocation remains balanced and is focused on three areas.
Operator: Thank you. We have no further questions at this time. I would like to turn it back to Craig Millian for closing remarks.
We've achieved, meaningful interest rate Savings of 25 to 50 basis points on the spreads, plus over 100 basis points, from favorable, Canadian based rates.
One continued debt reduction.
Craig Millian: Well, thank you, operator. Thank you all for participating on today's call. We look forward to reporting to you on progress in the coming quarters, and speaking with you again soon. Thanks. Have a great morning.
Returning capital to shareholders through share buybacks.
This should net us annual savings, approximately 1.5 million in interest expense.
And three strategic portfolio expansion.
Enhanced financial flexibility supports our capital allocation priorities.
Importantly, we funded all three priorities debt reduction share buybacks and portfolio expansion through operating cash flow without requiring additional fundings.
our outlook for Capital, allocation remains balanced and is focused on 3 are
Operator: Thank you, presenters, and ladies and gentlemen. This concludes today's conference call. Thank you all for joining. You may now disconnect.
1 continued debt reduction.
In summary, we are delivering on our <unk>.
The building commitments generating strong cash flow and continuing to strengthen our balance sheet.
Returning Capital to shareholders through share BuyBacks and 3 strategic, portfolio expansion.
We've built a solid financial foundation that provides flexibility to invest in our portfolio. While also returning capital to shareholders.
Importantly, we've funded all 3 priorities, debt, reduction share, BuyBacks and portfolio expansion through operating cash flow without requiring additional financing.
With that I'll turn it back to Craig for closing remarks.
Thanks, John.
In summary, we're delivering on our profitability, commitments.
In closing our consistently improving profitability demonstrates that an operational transformation.
Generating strong cash flow and continuing to strengthen our balance sheet.
We're generating improved cash flow significantly, reducing our debt burden and building a more sustainable cost structure that can also support growth.
We built a solid financial foundation that provides flexibility to invest in our portfolio while also returning capital to shareholders.
With that, I'll turn it back to Craig for closing remarks. Right? Thanks, John.
The pending approval of <unk> acid will transform our cardiovascular franchise in Canada and further establish <unk> as a leader in delivering novel oral therapies to reduce cardiovascular risk.
We remain focused on execution and are confident that our strategy our team and our growing portfolio of important medicines, we'll continue to deliver results and create value.
In closing our consistently improving profitability demonstrates, that the operational transformation we've executed is working. We're generating improved, cash flow significantly, reducing our debt burden and building a more sustainable cost structure that can also support growth.
That concludes our prepared remarks at this point I'll ask the operator to please provide instructions for asking questions operator.
The pending approval of Benedict acid will transform our cardiovascular franchising Canada and further, establish hls as a leader in delivering novel oral therapies to reduce cardiovascular risk.
Thank you ladies and gentlemen, we will now begin the question and answer session to ask a question you May press star followed by the number one on your telephone keypad.
We remain focused on execution and are confident that our strategy our team and our growing portfolio of important medicines will continue to deliver results and create value.
A speaker phone please pickup your handset before pressing the keys to the Gabelli. Your question. Please press Star followed by then and thank you with that.
That concludes our prepared remarks at this point. I'll ask the operator to please provide instructions for asking questions, operator.
Our first question comes from the line of Michael Freeman with Raymond James. Please go ahead.
Hey, good morning, everybody and congratulations on all of this progress.
I think as I.
A quick first one I wonder if you could you could describe any interactions you've had with health Canada on.
<unk> acid.
Thank you, ladies and gentlemen, we will now begin the question and answer session to ask a question. You may press star followed by the number 1 on your telephone keypad. If you're using a speaker phone, please speak to your handset before pressing the keys to withdraw your question, please press the star followed by the number 2 with that. Our first question comes from the line of Michael Freeman with Raymond James. Please go ahead.
Thanks, Michael for the question.
I'll turn it went over to Brian.
Hey, Michael Good morning.
We're progressing with the regulatory review.
We've had very good engagement.
Pembroke asset and you were expecting to hear from them this quarter.
Hey, good morning everybody and uh and congratulations on all this progress. Um I think as as a quick first 1, I wonder if you could, you could describe any interactions you've had um with health Canada on the on the of the Doric acid.
So we're on track for a product launch in Q2 of next year.
Okay.
Okay.
Now with the on the <unk> business.
You you described to Allison is some of these Canadian headwinds.
Thanks Michael for the question. Um I'll turn that 1 over to Brian. Hey, hey Michael, good morning. Um yeah, we're progressing when the regulatory review. Um, we've had very good engagement on benedic acid and you were expecting to hear from them this quarter.
I Wonder I Wonder what your overall plans are for maintaining or growing.
So we're we're on track for a, you know, product launch in in Q2 of next year.
Okay.
This business.
Okay. Um,
I guess broadly, but specifically in Canada.
Very strong market share.
Terrio that maybe competitors, enabling a layout.
But there does seem to be quite a lot of headroom in other provinces in Canada I Wonder what your game plan is.
Now, with the, uh, on the calls real business, um, you you you described well, some, some of these Canadian headwinds. Um, I wonder, I wonder what your, your overall plans are for, maintaining your growing, uh, this business.
Yes, yes, it's a great question Michael.
For this brand.
Given the significant underutilization of <unk>, we see a.
A lot of pathways to growth.
Over the last couple of years that we've reported on significant growth double digit growth in the western provinces, we still have.
Um, I guess broadly, um, but specifically in Canada, you know, you have very strong market share, uh, in Ontario that maybe competitors in nibbling a layout and then, but but there's does seem to be quite a lot of Headroom, in other provinces in Canada. Uh, I wonder what your game plan is.
You have less than a third of that those market. So we still see significant headroom to profitability opportunities in those markets.
We are we have been making subtle changes to ship to ship resources to accelerate that growth even within within Ontario, where there's some modest pressure there is still significant popular.
a lot of Pathways to growth, um, over the last couple years and we've reported on significant growth, double digit growth in the western provinces, we still have
Population growth and growth opportunities.
Opportunities throughout the province.
And just to add even into Quebec, where as.
You may recall, a year or so ago, well over a year, we actually changed our model there to really focus on patient retention.
Due to some of the challenges in terms of acquisition of patients and Quebec.
That's been a resounding success, we've been able to.
Limited any sort of attrition in Quebec to low single digit percentages.
Really patient by patient work to retain every one of our Ah patients and stickiness.
So that patient population in Quebec is quite remarkable often Linda there is attrition, it's due to reasons such as patient passing away for example, not necessarily due to a switch.
Um, you know, less than a third of that those markets. So we still see significant Headroom. Good profitability opportunities in those markets and and we are we have been making subtle changes to shift, shift resources to, you know, to accelerate that, that growth and even with on within Ontario, where the, there's some modest pressure. There's still significant, um, population growth and and growth, you know, throughout, you know, opportunities throughout the province. Yeah. And, and, um, just to add even in Quebec where you may recall, um, a year or so ago, a little over a year, we we actually changed our model there to really focus on patient retention. Um, due to some of the challenges in terms of acquisition of patients and Quebec and have that's been a resounding success. You know, we've been able to, um, limit any sort of attrition in Quebec to, you know, low single digit percentages. And
This strategy has worked in terms of maximizing our retention.
Ah patients in Quebec.
Defending our.
Really dominant share in Ontario, and we have fantastic relationships.
At the major accounts, there to major mental health institutions, and we think there are still opportunities to grow but.
Admittedly it's certainly.
Really, you know, patient by patient work to retain uh, every 1 of our, our patients and, and the stickiness um, of that patient population in Quebec is quite remarkable often. When, uh, there is attrition, it's it's due to reasons such as, you know, a patient. Um, you know, passing away for example, not necessarily due to a switch. So you know the strategy has worked in terms of maximizing uh our attention of of patients in Quebec. Um
A competitive space and then as Brian said really a lot of headroom for growth out in the western provinces.
And I Wonder if you could provide similar color on the on <unk> in the U S.
Yes sure.
Very different dynamic, it's more very stable patient population, but a different different share you've got lower lower share higher.
Defending our, um, really dominant, share in Ontario and we have fantastic relationships, um, at at the major accounts there, the major mental health, uh, institutions. And we think there are still opportunities to grow. But admittedly, you know, uh, certainly, uh, a competitive space and then as Brian said really, um, a lot of Headroom for growth out in the western provinces.
Higher value per patient.
Yeah.
Regular core businesses.
And I wonder if you could provide similar color on the on Clairol in the US.
It's been very stable.
As accounts accounts, where we tend to have more private private pay patients.
But we've been able to offset some of that natural patient attrition through targeted targeted growth through a specialty pharmacy, where we're able to offer financial assistance and educational support support programs. So.
Yeah, so very different Dynamic. It's more. Um, a very stable patient population but a different different share, you know, but lower lower lower share, you know, higher value for patient. Um, our
And we continue to see that.
We've achieved I think a level of stability with that business and you can see that see that continuing in the coming years.
Excellent and last one for me on the there was some mention of.
Pursuing business development as a result of you guys strengthening your balance sheet.
Should we what should we expect in terms of.
Regular the core business is um, has been very stable. Um as accounts accounts there we tend to have more private private pay patients. Um but we've been able to offset some na natural patient attrition through targeted, targeted growth through Specialty, Pharmacy, where we're able to offer, you know, financial assistance, and and educational support support programs. So, um, we continue to see that we we've achieved, I think a level of State stability with that business and can see that. See that continuing in the the coming years
So.
Structure of in licensing perhaps.
Size of deal would you expect something similar to what we saw with the Lake asset.
Or are you scaling up your ambition.
Okay.
Excellent. And now last 1 for me um, on the, you know, there was some mention of a of a pursuing Business Development, as a result of uh you guys strengthening your your balance sheet. Um, should we, what should we expect in terms of? Um, sort of
Good question.
What I would say is.
So we love the <unk> deal and obviously there is other other deals of that magnitude.
We think this is going to create significant shareholder value.
Structure of in licensing, uh, perhaps the or size of deal and would we expect something similar to what we saw with benno Lake acid, um, or or are you scaling up your ambition?
We think this is these are products that.
We'll generate tens of millions of dollars in revenue and.
A good question. Um,
what I would say is,
Again, so beautifully with the.
The infrastructure, we already have in place and really building our positioning as a premier cardiovascular company in Canada. So obviously the opportunity to continue to do deals like that are very attractive.
So we love the meido acid deal and obviously there's other other deals of that magnitude, um, you know, we think it was it was great. This was going to create significant shareholder value um,
Not necessarily.
A number of those opportunities so I do think with it.
The strengthening balance sheet and the new debt facility that does I'd say widen the aperture in terms of the type of deals we can do.
I think right now our focus is on continuing to bring in.
Assets that are.
Materially significant that will add significantly to <unk>.
Material revenues.
Our top line, we think that's very important.
So.
We think this is, these are the products that, you know, will generate tens of millions of dollars in in revenue. And um, you know, again it's so beautifully with the, uh, the infrastructure we already have in place and, and really building our positioning as a premier cardiovascular company in Canada. So obviously, the opportunity to continue to do deals like that or or very attractive. Um, albeit, you know, not necessarily, um, an infinite number of those opportunities. So I do think with um, the strengthening balance sheet. Um, and the new debt facility that does, I'd say widen the aperture in terms of the type of deals we can do. Um, I think
Apologies, we are now a meeting room at a hotel in Wi Fi dropped here so.
you know, right now our focus is on continuing to bring in
um, assets that are, um,
I am not sure when we when the call dropped I know we had a question for Michael.
<unk> yeah, yeah, So I mean, I'll just I'll just be.
The answer is yes, we're looking at deals.
Uh, materially significant that will add, you know, significantly um, material revenues, uh, to our our Top Line. Um, we think that's very important. Um, we're not interested in in, in, in things that are too.
Similar in scope to what we've done, but I would say again with the strengthened balance sheet and with the.
Both the kind of the increased flexibility with the lending agreement.
We're in a position I think the broadening aperture, but looking at things that obviously.
With our model in Canada, and that can easily be deeper that have significant sales potential and and obviously, we'll be opportunistic as well I think we're looking at opportunities.
excuse me, ladies and Gentlemen, please continue to stand by
To expand our business as well and you are recognizing that.
Sure.
Those may be challenging to identify.
But we're confident we can continue to build out our business there as well so stay tuned we're very active and we're very committed to continue.
Continue to grow the grow topline data, we've really put our financial house in order.
And got it and have a cost structure that we can support a lot more a lot more growth.
Okay. Thank you very much I'll pass the line.
Thank you and once again, if you'd like to ask a question. Thank you present star one on your telephone keypad.
Next question comes from David Martin with Bloom Burton. Please go ahead.
Hi, good morning.
First question.
Vascepa scripts were up 22% in third quarter year over year, but net sales were up only two 1% in local currency you mentioned inventory fluctuations I'm wondering are you seeing inventories more stable or even some restocking post Q3 and are you also seeing pressure on.
Your net pricing does that feed into it as well.
And ladies and gentlemen, thank you for standing by the presenter, is now reconnected. Please go ahead.
Yes, I don't know John if you want to comment on this and yes, I would say that in this historically has been the case of.
So, uh, apologies. Uh, we're in a meeting room at a, at a hotel in the Wi-Fi dropped here. So, um,
Obviously the.
The growth in demand outpacing growth in net sales and.
This is really an artifact of having launched first to the private markets and then subsequently.
Launching into the public markets with different economics.
Bob.
That and so over time.
We went from a 100%.
Of our business being private too narrow of a blend.
The good news is now we are starting to see stabilization as weak as we expected.
But as we continue to grow.
In both those segments both channels, we continue to see more significant growth I would say on the public side and so that drives that does drive an increase in rebates.
I, I'm not sure when when the the call dropped uh I know we had a question from Michael in the criteria. Yeah, yeah. So I mean, I'll I'll just I'll just be be briefed. The answer is yes, we're looking at the deals. Um, I think you know, similar in scope to what we've done. But I would say again with the strength and balance sheet, and with the um uh the the, you know, kind of the The increased flexibility with the lending agreement. Um, you know, we're in a position I think to broaden the aperture. Um, but looking for things that obviously fit, uh, with our model in Canada and that can easily be be broken, but that have significant sales potential and um, and obviously, we'll be opportunistic as well. I think we're looking at opportunities, um, to to expand our business as well in the US. Um, you know, recognizing that
That certainly has some impact on gross to net so.
The goal has been to stabilize that payer mix and when that occurs.
We believe we will see a narrowing of that difference between demand growth.
Net sales growth, but we're not quite there yet so I think probably the largest explanation for that David is as payer mix I don't know John if there's any other elements that you would.
Um, you know, they'll be those will be maybe challenging to identify, um, but uh, we're, you know, we're confident, we can continue to build, uh, build out our business there as well, so, you know, stay tuned. We're we're very active and we're very committed to, um, continuing the, the growth, the growth Topline now that we've really put our financial house in order, um, and, and got a half a cost structure that we think can support a lot more a lot more growth.
No I Wouldnt, Craig I think you've covered covered well, we didn't comment a little bit of inventory for <unk>.
Okay, thank you very much, I'll pass the line.
It's really sort of a routine.
Thank you. And once again, if you would like
Wholesaler orders that.
Your telephone keypad.
Our biggest wholesalers place take orders and depending on where they dropped but there was nothing significant to comment on there for the quarter.
Your next question comes from David Martin with Bloomberg and please go ahead.
There is lumpiness for certain in terms of the order patterns, which is why we especially with.
A limited number of products.
Any any large order that takes place in one quarter versus another can influence year over year comparisons, which is why we tend to focus more on year to date versus quarter, because there is that variability.
Okay was there a large order that got pushed from Q3 into Q4.
Uh, good morning. Uh, first question, uh, the sea, the sea scripts were up 22% in third quarter year-over-year but the net sales were up. Only 2.1% in local currency, you mentioned inventory, fluctuations. I I'm wondering are you seeing inventories more stable or even some restocking post Q3? And are you also seeing uh pressure on your net pricing did that feed into it as well?
No as I say nothing nothing specific to this quarter okay.
yeah, I I don't know John, if you want to comment on this, I mean I would I would say that and this is, um, historically has been the case of
And then for.
For Clos or all the growth out west.
Is that mainly coming from taking share from competitors or are you seeing increasing overall usage of clause opinion.
It's both.
Sure.
Population growth in utilization deposit piece, but our share has been increasing steadily.
As well.
Obviously the the growth and demand outpatient growth in net sales. And you know, this is really an artifact of having launched first in to the private markets and then subsequently uh launching into the public markets with, you know, the different economics uh of um uh of that. And so, you know, over time uh, we went from 100%.
Sure.
Population, there like other places and kind of where those large installed population than we are.
<unk> for the new starts and we're computing even ahead of our market share in that dynamic portion of the market. So it's both.
We're winning more in the new star population, but we are seeing.
The overall.
This increase.
Okay, Great and last question.
You've obviously got good infrastructure to take on additional cardiovascular drugs. If you took on another site psychiatry drug.
Of our business being private to now a blend. Um, the good news is now we're starting to see, you know, stabilization as we as we've expected. Um, but as we continue to grow, um, in both both segments both channels, you know, we continue to see more significant growth, I would say on the public side and so that drives that does drive an increase in rebates, um, and that that certainly has some impact on on Gross connect. So, uh, the goal has been to stabilize that, that, that payer mix, uh, and when that occurs,
Would you need to build out your sales force or could that be.
Layered on to the group the Scott now.
It would depend on the indication specifically.
Sales growth, but we're not quite there yet. So I think probably the largest explanation for that. Uh, David is, you know, is is payer mix. Uh, I don't know, John, if there's any other elements that you would,
But I think most of the opportunities would require.
Neuroscience and require some incremental built we believe we still have capacity.
To bring in additional cardiovascular products within our existing footprint just given given the coverage in.
Let's do the lifecycle of a different vascepa, yes, we do.
We added capacity, we believe on the cardiovascular side, so that will certainly continue to be a focus.
No, I I would be frank, I think you covered covered. Well, we did comment a little bit on inventory for fossil for the sea. It's really sort of the routine, uh, wholesaler orders that, um, you know, our biggest wholesalers, have placed big orders and depending on where they drop, but there was nothing significant to comment on there for the quarter. Yeah, there is lumpiness for certain in terms of order patterns, which is why we, you know, especially with
And we think we've got a really.
Now with the upgrade on the sales force and bring it on some super talented folks.
A really strong customer facing organization in addition to our medical team.
a limited number of products. Um, you know, any, any large order that takes place in 1 quarter versus another can influence year-over-year comparisons, which is why we tend to focus more on year to date versus a quarter. Because there is that, that variability
Similarly on the <unk> side, we have a very very strong multi disciplinary team.
Okay, what was there a large order that got pushed from Q3 into Q4?
Brian said, there's some sort of some really strong foundational elements to that team and then.
No, as I said, nothing, nothing specific to this quarter, okay? Um, and then
Which gives us the versatility to bring in a range of products that we can then adapt accordingly that but that would require most likely some additional.
for Clouser, all the growth out west.
Making sure from competitors, or are you seeing increasing overall usage of Clouseau?
Salespeople with a fairly light footprint.
Okay. Thank you.
Thank you and we have no further questions at this time I would like to turn it back to Craig <unk> for closing remarks.
Well. Thank you operator, thank you all for participating on today's call.
We look forward to reporting to you on progress in the coming quarters and speaking with you again soon.
Thanks have a great morning.
Thank you presenters, ladies and gentlemen. This concludes today's conference call. Thank you all for joining you may now disconnect.
It's, it's both. Um, we're the population growth and, and utilization of philosophy. But our share has been increasing steadily, um, as well. And, and it's a population there. Like other places in Canada where there's this large installed population. And we're, you know, competing for the new new starts and think we're competing even ahead of our market share in that Dynamic portion of the market. So it's both both. We're winning more in the new startup population, but we're seeing the overall, you know, we're seeing mutation increase.
Okay, great. And last question, um, you've obviously got good infrastructure to uh, take on additional cardiovascular drugs. If you took on another site Psychiatry drug. Would you need to build out your sales force or could that be, uh, you know, layered onto the group you've got now?
it would depend on the indication specifically, um,
So, but I think most of the opportunities would require on the Neuroscience side. Requires some incremental build. Um, we believe we still have to capacity, um, to bring in additional cardiovascular products within our existing footprint, just given given the coverage and um, life seen in life cycle of the different of of the sea. Yeah, we definitely have capacity We Believe on the cardiovascular side. So that'll certainly continue to be a focus. Um, and
Uh, we think we've got a, a really, um, now, with the upgrade, on, in the sales force, uh, and bringing on some some super talented folks, um, a really strong customer facing organization in addition to our, our medical team. Um, similarly, in the clausal side, we have a very, very strong multidisciplinary team.
As Brian said, you know, there's some some some really strong foundational, um, elements to that team and then, you know, which gives us the the versatility to bring in a range of of products that we could, you know, then adapt accordingly. Uh, that. But it would, that would require most likely some additional, um, sales people we have a fairly length footprint.
Good. Thank you.
Thank you. And we have no further questions at this time. I would like to turn it back to Craig million for closing remarks.
Well, thank you, uh, operator. Thank you all for participating on today's call.
Uh, we look forward to reporting to you on progress in the coming quarters and speaking with you again soon. Thanks have a great morning.
Thank you for centuries and ladies and gentlemen, this concludes today's conference call. Thank you all for joining me now this can