Theratechnologies Inc.

Good morning, ladies and gentlemen, and thank you for standing by. Welcome to Thera Technologies' fourth quarter and fiscal year 2024 earnings call. We would like to remind everyone that all figures on this call are quoted in US dollars. At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a question and answer session with the analysts. Instructions will be provided at that time, for you to queue up for questions. Following the analyst Q&A session, investors wishing to submit a question may do so by clicking the Ask a Question link on the webcast platform. If anyone has any difficulties hearing the conference, please press the star key followed by zero for operator assistance at any time. I'd like to remind everyone that this conference call is being recorded today, Wednesday, February 23rd. 26, 2025, at 8.30 a.m. Eastern Time. I would now like to turn the conference call over to Joanne Choi, Senior Director, Investor Relations at TheraTechnologies. Joanne, please go ahead.

Thank you, Jamie. Good morning, and thank you for joining TheraTechnologies' fiscal fourth quarter and full year 2024 earnings call. On today's call, we are joined by Paul Levesque, TheraTechnologies' President and Chief Executive Officer, and Salif Dibouk, Senior Vice President and Chief Financial Officer. After the prepared remarks, we will open up the call for your questions, where we will be joined by Dr. Christian Marsolais, Senior Vice President and Chief Medical Officer, and John Lazor, the company's Global Commercial Officer. Before we begin, I'd like to remind everyone that today's remarks contain forward-looking statements within the meaning of securities laws, including our financial and business outlook. Actual results may differ materially from historical performance and those forward-looking statements implied herein. These statements together with the assumptions underlying them are outlined in detail in the forward-looking information section of Thera Technologies Management's discussion and analysis issued this morning and available on CEDAR Plus and on EDGAR at www.sec.gov. Forward-looking statements represent Thera Technologies' expectations as of this morning, February 26, 2025, and investors are encouraged to review the risk factor section contained in the MD&A. Additionally, the company is using the term adjusted EBITDA, which is not a financial measure, under international financial reporting standards or U.S. generally accepted accounting principles. Adjusted EBITDA excludes the effects of items that primarily reflects the impact of long-term investment in financing decisions rather than the results of day-to-day operations. Thera Technologies believes that this measure can be a useful indicator of its operational performance and financial condition from one period to another. The company uses this non-IFRS measure to make financial, strategic, and operating decisions. Reconciliation of adjusted EBITDA to net loss is found in our MD&A issued this morning, as well as on CEDAR Plus and EDGAR, as mentioned earlier. Thank you. I will now turn the conference over to our CEO.

Paul? Thank you, Joanne. Hello and good morning to all. Just as we wrapped up our fiscal 2024 year, we shared a slew of material business developments that I will go over in more detail on this call. 2024 represented a real sea change for Athera Technologies. Since embarking on our strategic pivot to fully focus on scaling our commercial business 24 months ago, I'm extremely pleased to have ended the fiscal year with adjusted EBITDA of $20 million compared to minus $3 million a year ago. Our teams delivered exceptionally across all pillars of our business, and I'm proud of what we have achieved this past year. In fact, as you will see, we're only just getting started. Before I jumped into full-year performance, I want to start with some of our recent company developments to set the stage for 2025 and beyond. First, I am pleased to reiterate that we have resumed distribution of EGRIPTA-SVT. The brief shortage of the patient level is now behind us, and patients can once again fill their prescriptions. After many discussions with the FDA on February 13th, the agency via its drug shortage staff indicated that it would allow the company to sell and distribute two newly manufactured batches of Egrifta ASV while the review of the PAS is ongoing. These two batches represent up to six months of supply. We are grateful to the FDA for their continued collaboration and commitment to getting patients their therapy. We have manufactured one additional batches of Egrifta ASV and two additional batches are scheduled for production before the end of the third quarter of 2025. As a reminder, the FAA formulation will be manufactured with a new CDMO based in the US. In early December, we announced that we closed on new credit facilities, securing up to $75 million, which Philippe will expand on later in the call. In addition to replacing our prior credit agreement, this recent financing is truly fit for purpose. This will enable us to execute on our longer-term growth strategy, which is to strengthen and scale our commercial business underpin by our HIV portfolio. This brings me to another major announcement, our partnership with Ionis Pharmaceuticals. We entered into an exclusive licensing agreement with Ionis to bring Donny Dalorsen and Ollie Zarsen to the Canadian market for three distinct indications. Before I go into these exceptional assets and the disease areas they treat, I want to say a few words about our partner. My admiration for Ionis dates back several years to my days at Pfizer where, as the head of the global rare disease business unit, I had the opportunity to familiarize myself with their impressive discovery and development efforts. Ionis is an extraordinary organization and true pioneer in RNA technology. And it is also led by a leadership team that carries the same passion for innovation as we do here at Thera. The first product done in Allorsen is being evaluated for the treatment of hereditary angioedema, or HAE, which is a rare genetic and potentially life-threatening disease that involves recurrent attacks of severe swelling in various parts of the body. HAE. has an estimated prevalence of less than 1,000 patients in Canada. Patients with this condition have treatment options, but they're still on medical needs. Donnie-Dallorsen's efficacy, safety profile, and simplicity of self-administration demonstrate that it offers the many attributes patients are looking for. If approved, Donnie-Dallorsen could be the preferred prophylactic treatment for both patients new to therapy and patients currently on available therapies. Dunny-Dalorsen has been filed in the U.S. with a PDUFA action date of August 21, 2025, and we will also be filing in Canada this year. The second product, Olisarsen, was recently approved by the FDA and is marketed in the U.S. under the name of Tringulza for the treatment of familial chylomicronemia syndrome, or SCS. FCS is a rare genetic disease characterized by extremely elevated triglyceride levels and chronic debilitating symptoms. Those living with FCS have a high risk of potentially fatal acute pancreatitis, which is a painful inflammation of the pancreas, and chronic health issues such as fatigue and severe recurrent abdominal pain. There are less than 300 patients with FCS in Canada, many of them already diagnosed and overly represented in eastern Quebec, where the population is more likely to carry the gene mutation. Currently, there are no approved treatments for FCS in Canada. We will file all these ARCINs for the first indication mid-year in Canada, and we are excited to bring this potential first-in-class innovative treatment to market. In addition, There are three Phase III trials underway evaluating Olisarcin for a much more prevalent disease known as severe hypertriglyceridemia, or SHTG, which is a symptomatic disease where people can suffer debilitating chronic symptoms that impact all aspects of their lives, including severe abdominal pain and cognitive impairment. In the most severe manifestation, SHTG patients can suffer from life-threatening pancreatitis events that require intensive hospital care. As a result, physicians recognize the importance of lowering severely elevated triglycerides with established guidelines already in place. The total addressable market for this second indication represents patients in the millions in the U.S. alone, with a similar prevalence in Canada on a per capita basis. All three studies are fully enrolled with over 2,400 patients with data expected in the second half of this year. We eagerly await the results and enormous potential for this second indication of Olisarcin in Canada. The market opportunity for these products in Canada is significant and is expected to drive growth for years to come over and above our existing business. In Canada, based on recent pricing recommendations specifically for rare disease drugs, we anticipate the commercial opportunity of these assets to exceed $30 million in revenue. However, with the approval of the much larger indication in severe hypertriglyceridemia, we anticipate peak sales of double that amount. As mentioned, we will be submitting regulatory filings for both products to Health Canada in 2025, and preparations for submissions are already well underway. Market readiness, including the identification of specialized centers of excellence and KOL outreach is also moving along rapidly. We are confident in our ability to maximize revenue potential for these opportunities and deliver on additional assets with new and existing partners. As we look ahead, we remain active in building a robust portfolio of high-value innovative assets that can benefit from our established infrastructure and networks in the U.S., but also in Canada. Moving over to our existing portfolio, Agrifta SV realized unprecedented performance this past year. Full-year sales were $60 million, representing 12% growth year-over-year. More importantly, we saw an acceleration in performance in the latter part of 2024. Our field force has been extremely effective in highlighting Agrifta SV's differentiation and unique value proposition. We continue to benefit from a favorable selling environment supported by the continued momentum of GLP-1s. But it's important to understand how our product is different. A grifted ISV reduces excess visceral abdominal fat and actually increases lean muscle mass. While GLP-1s are very effective at lowering body mass index, people with HIV in particular cannot afford to lose muscle mass. Further, excess visceral abdominal fat is increasingly being recognized by treating physicians as a medical condition that requires attention. This supportive landscape has contributed to the strong performance this past year, which will only be further enhanced by the launch of our new F8 formulation with an expected approval on March 25th. This new formulation will be a once-weekly reconstitution as opposed to daily, with 50% reduction in volume of injection leading to a much less cumbersome administration and improved patient experience. Before handing the call over to Philip, I just want to wrap up with a quick update on our oncology program, where we are actively searching for a partner to continue the important evaluation of our novel PDCs. We recently announced preliminary efficacy and safety data from Part 3 of our Phase 1B trial of pseudocetaxel's endosortide. The purpose of this part of the trial was to improve the overall safety profile and improve efficacy for a heavily pretreated population of advanced ovarian cancer patients. Thirteen patients were recruited to two different dosing arms in Part 3. Seven patients received a weekly infusion of 1.75 mg per kg, and six patients received 2.5 mg per kg on a three-weeks-on, one-week-off schedule every 28 days. In the higher dose arm, we observed significant tumor reductions, including one patient with complete resolution of a liver lesion. This efficacy data was further supported by reduction in the CA-125 tumor biomarker in four of six patients. Investigators observed no dose-limiting toxicities in either arm. As a result, I'm very pleased to report that the FDA has agreed to amendments to our protocol to increase the dose of pseudocetaxel xanthosortide on the same weekly infusion cycle to 3.33, followed by 3.90 milligrams per kilogram per week. I want to remind you this oncology program carries a huge amount of favorable preclinical data, which led to the initial FAST-TRACK designation by the FDA. Moreover, we have those 48 patients to date. All in all, we have a meaningful data set for an oncology trial of this kind, and we are confident we can find the right partner to continue this important science. Thanks for now. I will now turn the call over to Philip.

Thank you, Paul. Good morning, everyone. I'm pleased to report that we recorded another strong quarter, both on the top and bottom lines, with net sales of $25 million for 6.6% growth versus the same quarter last year. Furthermore, I want to highlight that through the continued efforts to optimize the cost structure of the company, we are reported a solid adjusted EBITDA figure of $7.8 million, again representing greater than 30% of revenues, reflecting a strong operating performance, enabling us to successfully withstand any challenges to our top line. For the fourth quarter of fiscal 2024, Net sales of Egrifta SV reached $17.7 million compared to $17 million in Q4 of last year, which represents a 4% increase year over year. The full year ended November 30th. Egrifta revenues have grown 12% with strong momentum in the second half of the year. For Garzo net sales in the fourth quarter of fiscal 2024, amounted to $7.3 million compared to $6.5 million for the same quarter last year, or an increase of 12.8%. The increase was mainly due to higher unit sales in the quarter as compared to last year, as well as a higher net selling price. As previously mentioned, Targarzo has been impacted by new competitors in the past few years, and we expect sales to be less affected in the upcoming quarters. Net sales of Trogarzo for the full fiscal year were down 8% and came in at $25.7 million. In the fourth quarter of 2024, cost of sales came in at $6.1 million, up from $5 million in the same quarter of fiscal 2023. EGRFTA gross margins were affected by a $661,000 provision related to our F-8 inventory build and came in at 91% when excluding this provision, which is in line with historical values. Trigarzo margins were 48%, consistent with the transfer pricing agreement with TimeEd. Again, in the fourth quarter of 2024, the rigorous management of spending in R&D, selling, and G&A helped us achieve our sixth straight quarter of strong adjusted EBITDA as established as an objective early in the 2023 fiscal year. Adjusted EBITDA for fiscal 2024 was $20.2 million above our recently upgraded guidance of $17 to $19 million. R&D expenses in Q4 2024 were negatively affected by an impairment loss on the intangible asset related to the acquisition of the oncology platform in 2019. While we remain confident we will find a partner to complete the Phase 1 program, we took the decision to record this impairment as we are no longer spending our own resources to continue the program. Excluding this impairment loss, R&D spending decreased substantially in the fourth quarter of 2024 compared to the same period last year, mostly due to lower spending in our oncology program. R&D expense came in at $2.4 million versus $5.2 million last year. Again, in the fourth quarter of 2024, we were able to claim non-reimbursable federal R&D tax credits for an amount of $838,000. Selling expenses came in at $7 million for Q4 2024 compared to $6.7 million for the same three-month period last year. 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 bottom line growth remains our main objective. G&A expenses in Q4 2024 amounted to $5.1 million, as compared to $3.7 million for the fourth quarter of 2023, or a 38% increase. This increase in G&A expenses is mostly due to higher stock-based compensation. Net finance costs were substantially higher in the fourth quarter of 2024 and came in at $7.8 million. This includes interest of $2.1 million on the long-term debt and various costs related to the reimbursement of the marathon loan, including a loss on debt modification of $5.9 million. as well as $0.3 million in write-offs of deferred financing costs. The above expenses were offset by interest and other income of $450,000. Adjusted EBITDA for the fourth quarter of fiscal 2024 was $7.8 million, or 31% of revenues, up 56% from the same period last year. As previously mentioned, At the end of the fourth quarter, we reimbursed all amounts outstanding and due to Marathon and replaced this facility with a credit facility from TD Bank for a total amount of up to $60 million, as well as a second lien subordinated loan of $15 million with Investissement Québec. At closing, we drew $30 million on the TD Bank facility, which includes a term loan of $25 million, and $5 million on the revolving credit facility, which left a total of $10 million immediately available on the revolver. The TD term loan has a three-year maturity and is repayable through quarterly payments of about $900,000 with the remaining balance due at maturity. The interest rate on this facility is currently based on the SOFR rate plus a variable premium depending on debt levels. this premium is currently set at 2.75%. The IQ loan is currently fixed at 11.45% and is due in full 42 months after closing. The interest rate can also be adjusted depending on our total debt to EBITDA ratio. As of November 30th, 2024, we had cash and cash equivalents of $19.8 million, which included $10 million in escrowed cash equivalents. This amount was paid to Ionis Pharmaceuticals for the Canadian rights to Donnie DeLorsen and Ole Zarsen in early December 2024. The flexibility of the new credit facilities enable us to keep lower cash balances while retaining access to capital to realize our business plan. In finishing, I would like to comment on the fact that we will not be providing guidance for the 2025 fiscal year at this point. While reloading of inventory has occurred rapidly since we resumed distribution of IGRISTA-SV two weeks ago, it's still too early to evaluate the impact, if any, on returning patients. We will provide guidance both on revenue and adjusted EBITDA once we have further visibility on the impact of the recent shortage on our EGRFTA patient base. We will now open the call for your questions.

Ladies and gentlemen, at this time, we will begin that question and answer session. To ask a question, you may press star and then one using a touch-tone telephone. To withdraw your questions, you may press star and two. If you are using a speakerphone, we do ask that you please pick up the handset prior to pressing the keys to ensure the best sound quality. And also, if you would like to ask questions through the webcast, please use the Ask a Question link on the webcast platform. Once again, that is star and then 1 to ask a question on the audio side. Our first question today comes from Andre Uden from Research Capital. Please go ahead with your question.

Thanks, and good morning. Just looking at the F8 formulation, the PDUFA data is coming up, and assuming FDA approval, what will be your switch strategy in terms of inventory management from the SV formulation?

Thanks. Thank you, Andrew. You know, obviously the F8 formulation is key to us. Things are moving forward, John. What is the...

the phase in and phase out strategy that we have lined up? Yeah, Andre, it takes about six months is what we assume to phase in the new F8 and phase out the F4. The major limitation is getting the payers to adopt the new formulation into their systems. Sometimes that can happen relatively quickly. Other times through standard delay, it just takes a little bit longer. So we assume about a six month. We'll try to do that faster if we can.

Okay, that's useful. Thank you. And will there be any price increases for Tragarso and Negrifta in 2025 to match inflation? And even possible tariffs, I should say, also. So that's another thing.

Yes, Andre, we obviously always, you know, do a thorough analysis before we complete the operating plan. And the reason why we need to do this is to ensure that You know, if we have a proportion of our sales coming from Medicare, Medicaid, we fully understand if by increasing the price, we're going to have to increase our rebates. So, Philippe, I mean, do you have any precisions to make? Do you want to make precisions for the F-8 in particular?

Yeah, so we have taken price increases, Andrea, on January 1st. and there are no further price increases planned for this year. The F8 formulation will be launched at the same monthly price as IGRIFTA SV. Remember, there's only a 28-day supply versus a 30-day supply with IGRIFTA SV, so there is an embedded price benefit in the F8 for us, but we will be launching it at the same price as IGRIFTA SV.

Okay, that's great. And just one last question. After the Ionis deal, are you still looking to add any additional commercial assets to your portfolio? Thanks.

Well, I mean, we have an infrastructure, Andre, that we would like to continue to capitalize on. So we have an infrastructure in the U.S. We call on a fair amount of infectious disease doctors. We've got two products in that bag. it would make a lot of sense for us to actually have a third product in that bag, knowing the synergy that we would derive. Now, in Canada, you got that we're going to have to set up small teams, but still, if we were to have a second product, we would be able to synergize a great deal. So, John, what is the thinking when it comes down to adding products to the bag that we already have in the U.S.

and soon to have in Canada? Yeah, Paul, like you said, I mean, we're looking for synergistic assets with both the U.S. and Canadian portfolios, so U.S. more outpatient infectious disease-focused, Canada cardiology and immunology with Alzheimer's and Downy-Dolores. So we have identified a number of interesting assets that we're working on, and there's, you know, a number that we're interested in. I'll leave it at that.

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

Once again, if you would like to ask a question, please press star and then 1. To withdraw your question, you may press star and 2. And ladies and gentlemen, at this time, I'm showing no questions on the audio side and would like to turn the floor back over to management for any closing remarks.

Well, before we get into closing remarks, there's a few questions from the webcast. So the first one is on any information on timelines related to the IONIS assets, time to projected peak sales and profitability.

Well, as you know, John, you can go over the timelines for submission, but we are already working hard to file and to prepare, as I said in my speech, for doing the KOL management, the identification of centers of excellence. So we are already active, and Canada is an HTA country, health technology assessment, so we need to prepare a full dossier when it comes down to pharmacoeconomics and advantages over existing drugs. As you heard me say, in the case of alizarcin, there's no therapies currently being used for that patient population, so we will certainly benefit from accelerated review. So, John, what is the plan for embedding sales, you know, in our long-term forecast?

Yeah, we'll plan to file both drugs this year to Health Canada. We should be booking revenue in Q1 2027. And then after that, we'll see peak sales somewhere in the range of 2030. Obviously, with the second indication, should we file that for SHTG, that would be another scenario that would be a little bit later than that, but a significantly larger opportunity.

And maybe just on the profitability that we're seeing, well, we're seeing this business as being at least as profitable as the company in its entirety, so at least 30% margins on the EBITDA line. And until launch, we are embedding spending of about $3 to $5 million, so $3 to $5 million a year between now and launch in Q1 2027. So those are the questions. Paul, so back to you.

Please note that all of the numbers we've been quoting today are in U.S. dollars. Before we conclude, I want to leave you with our priorities for 2025. Our objectives are clear. We will continue to strengthen our HIV franchise through product differentiation and the new FH formulation expected to improve patient experience and adherence. We will accelerate the growth and future profitability of the company through additional product acquisitions, prioritizing products that are synergistic with our assets in the U.S. and in Canada. We will submit regulatory filings to Health Canada for Olazarsson and Dunedal-Orson. And finally, the right value from our investment in oncology and continue to seek out partners for TH1902 and our entire oncology platform. With a flexible capital structure, we are now poised to scale our business for long-term growth and sustainability. I look forward to updating you on key developments on our next earnings calls. Thank you again for attending the call today and for your continued support. Have a great day.

Thank you for joining today's presentation. It has now concluded. You may now disconnect your lines.