Botanix Pharmaceuticals

I'm Vincent Polito, the Executive Chairman. I'm joining you from our U.S. headquarters in Phoenix, Arizona. Joined with me on this presentation this morning, live from Australia, are both our Chief Executive Officer, Dr. Howie McGibbon, and our Chief Financial Officer, Chris Lesovitz. We've got almost 350 people participants that were preregistered for this conference today. So following the presentation, we're going to take some Q&A. Obviously, with that many people, we'll take as many as we can in the time that is permitted here for it. With that, David, would you advance to the next slide, please? I'd like to point out in our investor update is an important notice and disclaimers that this presentation may contain certain forward-looking statements. I would encourage you to view our 4C quarterly cash report and this Q1 fiscal year 2026 investor update. But more importantly, I'll read our important notices and disclaimers. And with that, I'm going to turn the presentation over to Dr. Howie McGibbon. Howie?

Yeah, thank you, Vince, and thank you all for joining the Botanics Q1 quarterly update. Chris and I are out here in Noosa for the Canaccord Wilson's Drug and Device Conference, followed by a roadshow next week in Sydney and Milliburn. We're going to do this a few times a year, typically following one of our filings. Today, we'll provide a corporate overview for those of you that are new to the Botanics story. We're going to review our strong Q1 commercial performance, discuss our key financial highlights, which leave us in a very strong financial position to support profitability. And then we're going to preview our Q2 activity. Next slide, David. Again, for those that are new, Botanics is a fast-growing dermatology company. with the recent successful launch of our flagship product, Softra, for hyperhidrosis, commonly referred to as excessive sweating. Softra is the first and only new chemical entity for primary axillary hyperhidrosis, which affects over 10 million patients in the US alone. So to put that in perspective, the value of a new chemical entity There's only been 33 of those approved this year in the US for all therapeutic categories combined. And it cost about $250 million to get one approved. And that doesn't take into consideration any of the cost of the failures. What sets Botanics apart from other dermatology companies in the US is the innovative platform that we have. It increases patient compliance, improves gross to net, provides dermatologists with an experience that gives them confidence that when they prescribe Softra, their patients are going to get it quickly with little or no friction coming back to their office staff. We're in a strong capital position with cash of almost $50 million and another $15 million of undrawn debt. And finally, we're well positioned for growth. Softra is meeting an unmet need in a large marketplace. And as of today, we've expanded to 50 sales representatives actively selling our compound. The fulfillment platform is performing at a very high level. It's working well, extremely well, for both physician-patient experience along with refills. And we've scaled it so that you could add additional products to it as they become available. Now, keep in mind, before we go to the next slide, today we have 50 sales professionals. Everything that we're going to review today was done with 27. So we're very excited about our future prospects of what software can do. Next slide, please. We have a pretty experienced US-based executive leadership team here that's launched over 30 products in the dermatology space. And when I say launched, they've developed, secured approval for, and commercialized each of those products. They've also had a collection of successful exits from Anacor, Metasys, Dermavant, and Cassiopeia in multiple therapeutic areas. Next slide, please, David. Now, what's interesting about this category is that it's a third largest category or therapeutic area in dermatology. So we often think of psoriasis as a large therapeutic area, and it's done very well for the companies that are in that space. But to put that in perspective, Primary hyperhidrosis has twice the amount of patients that psoriasis has. So when you think about that from a U.S. population with the 300, now almost 350 million Americans that are out there, 16.1 million have some type of hyperhidrosis. 10 million have primary axillary hyperhidrosis or excessive sweating underneath the arms. 3.7 million of those patients are already in the doctor's office. That's allowed us to expand our sales force to meet that demand that patients need, and also to get to more physicians over time. Next slide, please. Let's talk a little bit about the product itself. Our FDA approved indication is the treatment of primary axillary hyperhidrosis in adults and pediatric patients nine years of age or older. We met our co-primary endpoints with high statistical significance on a patient-reported measure and an objective measure. What's unique about this product or unique about Softra is we've also hit on all key secondary endpoints. It was very safe and well-tolerated in clinical trials, no serious treatment of emergent adverse events, and what we really like about it is that in real world or in the real world data that we get back, it's performing at or even better than the profile that we see here. The proprietary drug delivery system allows patients to limit unwanted drug contact to hands during application ensures consistent dosing. Now, we believe this profile is directly related to the unique mechanism of action that software possesses. It binds selectively to the muscarinic 3 receptor of the sweat gland, blocks acetylcholine to inhibit the sweat signal, and just as important, is rapidly metabolized into a fairly inert molecule that's excreted, rendering this clean side effect profile. Next slide, David. I want to talk briefly about our fulfillment platform. And I said earlier that this really differentiates us from other dermatology companies in the United States. And it does this because it provides seamless fulfillment for physicians and patients. We have an increase in reimbursed prescriptions because we shepherd those physicians' offices through the prior author clearance process that's required for many insurance companies. We have adherence rates or refill rates that are two and a half times the industry standard. Just as important through all this, because we skipped the wholesaler, we're saving upwards of 18 to 20 percent over time in our gross to net. We're able to get very good insights with the data we get from SendRx, which allow us to make faster decisions. And one of those decisions was to expand the sales force significantly. because of the promotional sensitivity that we were able to identify much earlier than if we had to wait on the data. And one of the quotes from one of our derms, and there's many like this, is that I've never used a specialty pharmacy that's been as seamless as SendRx. Now, let me caveat this. This doesn't happen every time, but this did in this case. I put a prescription in on a Friday afternoon. The patient had their medication by Saturday morning. It does happen, but within a few days, the vast majority of patients do get their medicine. So let's turn to our strong commercial performance over the last quarter. Total prescriptions grew by 50% over Q4, and that was driven by our fulfillment platform and strong production from our sales team. 20,418 total prescriptions shipped for the quarter. We had 7.1 million net sales, an increase of 65% quarter over quarter, and a gross net yield of 23, which is two points higher than the 21%. gross to net yield for the prior quarter. Next slide. So when we take a look at this over time, we're seeing consistent growth in the volume of our total prescriptions shipped, which reflects on the production of the Salesforce, the activity of the Salesforce, and how well they've done to quickly get out to these physicians and get the right reach and frequency on our target base. Next slide, please, David. As you would expect, you see similar growth here with regard to your net sales going from 4.3 million to 7.1 million quarter over quarter. And the quarterly average gross to net yield has improved quarter over quarter, and we believe will continue to improve. You will see fluctuations in our gross to net. However, we're seeing all the right indicators that this will continue in a pathway that's positive for the company. Now we'll turn it over to Chris to talk about some of the financial highlights and the focus on the fiscal discipline that's allowed us to yield the results that we've got. Chris?

Perfect. Thank you, Howie. I'm excited to share our Q1 fiscal year 2026 results and outlook. We've made meaningful progress this quarter. We've had strong revenue growth, disciplined cost management, and a solid liquidity position that sets us up for continued success. As you can see, our operating cash flow improved significantly to $13.1 million, down from the prior quarter of $28.4 million. This improvement reflects our lower operating and manufacturing costs, combined with our higher receipts to product sales. Our inventory closed at approximately $29 million, giving us the capacity to support our planned Salesforce expansion in Q2 without any disruption. And most importantly, available funding stands at $64.4 million. This is inclusive of $49.2 million in cash and $15.2 million in undrawn debt facility. The strong liquidity position provides the runway to support software growth and other strategic initiatives we have planned. Next slide, please, David. So on the cost side, we've delivered substantial improvements. Product manufacturing costs dropped 81%, from $11.2 million to $2.2. This quarter reflects no purchases of drug substance, commonly referred to as API. The cost during a quarter represent our steady state level when converting raw materials into finished goods without any API purchases. Next, our operating cost fell 29% from 14.4 million to 10.2 million. This was driven by the pre-launch activities around our marketing campaigns, which occurred during the fiscal year 2025 Q4. Our G&A cost declined 22%. This went from 2.4 million to 1.9 million. This decrease was also due to legal expenses associated with launch activities that occurred in Q4 fiscal year 2025. So our total net cash used in operating activities improved by 54%, from 28.4 million to 13.1 million. Looking ahead, we are focused on growth and execution. As Howie mentioned, we plan to expand our sales force from 27 reps to 50 in the coming quarters. This investment will accelerate our revenue growth, but it will also increase in sales and marketing expenses. Our manufacturing costs will remain at steady state levels when converting our raw materials into our finished goods, and again, without any API purchases in the near term. We're expecting double-digit revenue growth to continue with our expanded sales coverage and strong demand signals that we see ahead. With that said, next slide and send it back to Hallie.

Thank you, Chris. And sorry about that, folks. The landscaper is coming by at the most inopportune time. So we'll work through this. As we move to fiscal year Q2, we're encouraged by the fact that our sales team has averaged more prescriptions and more net revenue per rep in the first three quarters than any of the recent DERM launches and some of the more successful DERM launches that have occurred over the past few years. And we're encouraged because we've just, you know, expanded our Salesforce from 27 to 50. So let me just clarify here. What they've achieved so far was a Salesforce that wasn't at 100%, meaning at 50 sales reps. This is just with the 27. We did hire six additional sales representatives back in July on our way to 50. However, we did take that opportunity to turn over some of the underperforming territories. So we had five vacancies. So at any given point during the quarter, we had between 27 and 28 sales representatives. And we're very excited to see what the new sales reps are going to do. We're excited to see what the, or as the sales, old sales reps or original sales territories continue to grow, We now have a blueprint for both the success and the predictability of what the additional 23 will do in their new territories where they're calling on physicians who are naive to the softer message. Next slide. You can see here, February to June, 27 active sales professionals on our way to today actually being the first day we're all 50 are going to be actively selling software. So just to reiterate and clarify, and I've gotten this question a couple of times, 27 sales reps up until June, we hired six new sales reps. But during that time, five of the original territories were vacant. Now we are going to add on the production of what was done by 27 or 28 sales representatives up until now, moving forward as we go into Q2. Next slide. Also like to note as we go into Q2 that interest in software remains high amongst dermatologists, both key opinion leaders and practicing dermatologists. We're having multiple presentations that were accepted and will be presented at leading dermatology conferences, both fall clinical and the Society of Dermatology Physician Associates in October and November. So quite a bit of activity where first and foremost, they've authored the posters with a number of their colleagues. Second, they've taken part in the submission process. And third, they'll be at these meetings, and whether they're discussing the data from the podium or in front of a poster, there's additional conversations going on at a peer-to-peer level in the dermatology community. Next slide, please. So we're very pleased with the output and success of this quarter, both with regard to what the sales representatives or sales professionals have done, how the fulfillment platform has operated, and where our finances came in with regard to spend. So there's a strong opportunity, as we've shown or discussed today, for our lead assets software. And I'll just reiterate here, new chemical entities are They're rare. Again, there was only 33 approved so far this year, and we're 10 months in. Software is performing as we might expect, or better than we've expected with regard to the clinical and safety profile. Dermatologists are highly promotionally sensitive to the product, and as we... expand to 50 sales reps. We're excited to see the numbers that will come along with it. We've discussed our differentiated platform, both what it's doing now for patients, physicians, and refills, but also what it could do when and if other products become available. It's scaled now to be able to perform at a high level with exponentially higher throughput. So all those things give us a solid foundation for growth and a pathway to profitability. And we'll be focused on that and look forward to speaking to you again at our next filing. Thank you very much for your time. Vince?

Thank you very much. We're going to now turn to the Q&A. And we've got a number of questions here. So what I'm going to attempt to do is try to put a few of these questions together here, those that have been repeated a number of times. And I'm going to take these pretty much so in the order that they came in. The first question, it's a culmination of a number of questions, Howie, and it's on the Q1 gross to net that it was 23%. It was the same as the last quarter. And then there was a number of other questions about with the current performance that we have today, how do we expect to get to that 30% to 40% range that we've indicated?

Thank you very much, Vince. You know, So the gross to net for last quarter was 21% and exited at 23. Now keep in mind, we're going to see month-to-month fluctuations over time. The quarterly gross to net provides the actuals. So when you see a monthly gross to net, we don't know exactly what it is until the rebates come in from a managed care perspective. So as I said earlier, the quarterly gross to net provides the actual. And this is because as those rebates come in and align with quarters, they align with quarters and not months. Each time we report the 4C, mid-year or full-year, we'll have the actual quarterly gross to net. Now, that said, how do we get from what's 23% over for this quarter, ultimately to 30% to 40%? A couple of drivers that get us there. First and foremost, as prior auths are approved at an exceedingly positive rate, The gross to net improves. There's a couple of components to that. First, the more they get approved, the better the gross to net. The more that are submitted, the more ultimately get approved. So those two levers, whether it be increased submission or increased approval rates, improve the gross to net over time. Number two, what we see is with each refill, the average net selling price of the fill goes up. It makes sense because you have time to get through the insurance clearance process. But it's certainly something that we watch over time. And along those lines, again, with refill rates two and a half times the industry standard, giving us so far five to six fills per patient in the time that's elapsed, we're confident that that trend will continue. I think that answers the question, Vince. If there's a part I didn't touch upon, let me know. If there's a follow-up that you see coming through, happy to address it.

Yeah, I think that covers the gross-to-net question here, because I'm just scrolling through right now. Let's turn – there was about three or four questions on the new patient arrivals, and – a couple of questions on reporting total prescriptions. What is the definition of total prescription? So how do we think about that metrics? And then why aren't we breaking out new patient arrivals and the refills anymore?

Yeah, that's a good question. You know, in my experience in over, you know, personally 20 launches, new patient arrivals are a good leading indicator for the first few months of launch. And we utilize those prior to having actual metrics like total prescriptions shipped, gross to net, and net sales. And we've discussed the reason why, you know, sometimes there's a lag there until you understand those trends. We focus on those metrics internally to understand not only the direction of the business, but also to make adjustments in real time. TRXs or total prescription shifts are everything that goes out the door. And that number encompasses a new prescription and a refill. So it's the total prescriptions that go out and obviously something that we measure and focus on. New patients and refills are both components of those new prescriptions that I spoke to earlier. You know, as an aside, you might continue to see in some cases new patient arrivals are typically utilized in rare disease categories because there's so few patients. And you'll see that from time to time. But with regard to small molecules, in my experience, it's not something that we continue to report on. Rather, look at total prescriptions gross to net and net sales.

Thank you, Howie. Let's go to the next question here. There was a couple here on the growth of the prescriber base. So the physicians who are prescribing softer right now, what does that growth look like today?

Well, I can address what it was. So, you know, in Q1, there were almost 2,900 unique prescribers. And the rate and change of that's going to change or differ based on what our strategy is. Some quarters, we will be focused on frequency or the number of calls sales professionals make on high potential targets. And other quarters, we'll be extending reach. Now, that said, unique prescribers are going to grow organically because we just added 23 sales representatives in parts of the country where physicians haven't been covered. So it's not a key metric we report on. I always happen to answer it. We consistently monitor that to ensure that quarterly goals being met based on our strategy, whether it's increased reach, meaning getting to more physicians, or increased frequency, getting to the most high value physicians. And keep in mind those 2,900 unique prescribers or roughly 2,900 unique prescribers were hit with 27 sales representatives. So you'll see that number grow over time. In some quarters, it will grow more than others based on the direction that we're giving the sales force and how the incentive compensation plan is created to support that strategy.

Good. Thank you. Another question just popped up, Holly, and I think you just answered it. What do you expect from the 50 reps that will be coming in? And obviously you expect the unique prescribers to grow as we get into these new territories. So for that.

And Vince, sorry to interrupt here. I do think there's a good blueprint here. for what the new sales representatives will do. Because they're not calling on territories that are already populated, right? They're going to areas where, for the most part, the majority of the physicians haven't seen a sales representative yet. I guess the difference would be They do have key learnings from the 27 initial territories, but we believe there's no reason to think the 23 wouldn't behave with regard to their output as the original 27 did starting back in February on the same ramp. Mm-hmm.

Good. Thank you. Chris, I think this one is for you. There was a few questions here about the G&A and operating cost. And the questions really centered around compared to the last quarter, the significant drop that we had. So where did this drop really come from? Chris, you're on mute.

All right, David, that's a good question. So start with the operating costs first. As we mentioned during our last quarter, we're going to take a strategic look at the marketing expenditures. So two areas that contributed to the decrease were we transitioned to in-office programs. Prior, we were going down to traditional speaker programs. So moving from the traditional speaker program to in-office, it significantly lowered our event-related cost, and it also enhanced our quality of interactions with healthcare providers. In addition, we had a real allocation of promotional spend. We shifted our direct-to-consumer campaigns, and we went towards more of a targeted healthcare professional engagement. This also decreased our marketing expenditures. From a G&A perspective, lower legal and compliance related costs this quarter compared to last quarter. And again, a lot of this has to do with the launch activities like the speaker programs and compliance costs associated with those type of programs. I'd like to jump on one other question that I saw about the staff cost. The question I think was, how did it decline with the new hiring of reps? Just to be clear with everybody on the call, the rep costs are included in the operating costs line item. Staff cost is internal corporate employees. So you will see in the future operating costs increased with the additional hires from 27 to 50 reps. The decline in staff costs that we see currently in this current quarter was a one-time payment for an employee stock compensation exercise that we did in Q4 fiscal year 2025. The current quarter that we see in fiscal year 2026 is our current stable base staff cost. Thank you, Vince.

Yeah. Yeah. Chris, you know, uh, uh, a question just came up to, as I'm seeing this around just an understanding of the API purchases, um, that we make purchases from, from quarter to quarter here. We're not, you're not anticipating any API purchases as you state coming quarter. How does that work? Uh, can you maybe just talk a little bit about, you know, how we gate that and, and why are there periods when, um, You know, there's no API purchases versus those that we have them, such as what we reported last year in fiscal 2025. Sure.

So you see, last year we had a significant amount of API purchases sitting on our books. We have twenty nine million dollars in inventory. Again, as I stated prior, that's plenty of inventory for the additional reps and the future growth of software. The increase in inventory from year end to Q1, it went up a million dollars. This is the manufacturing cost that it takes to manufacture the raw material into a finished good. So every quarter you'll see that when we convert raw materials to finished goods. The big fluctuations is when we go out and we purchase the API, which that occurs during our supply chain processing based on demand when we have to pull the trigger on future API purchases.

Okay, great. I know we're running short on time here, but I do have a few more questions that I want to get out here that I've seen. Howie, this one's for you. When do we expect to reach profitability?

All right. It's... Can you hear me okay? Yeah, we have you, Howie. Thank you. Perfect. Sorry about that. We haven't given guidance as you typically wouldn't as early into a launch. That said, all the decisions that we've made with regard to cost shifting, From direct to consumer to additional sales representatives are done with a focus on getting to profitability as quickly as possible in the most efficient way, without making any sacrifices to the brand. We've been able to do that based on promotional sensitivity and response from physicians, the data that we're getting. from SendRx on a daily basis, and then an understanding of what the cash flow is going to be now that we have an idea of what the initial trends look like. So though we haven't commented on that specifically, as a company, that's our number one goal, right, to maximize the opportunity for Softra and get to profitability as quickly as possible and be the fastest dermatology company in the U.S. to achieve profitability. So I know that doesn't answer your question directly, and we're not trying to sidestep it. We just haven't given that guidance yet, but we will continue to provide the right metrics so that you can also make your estimates as to when the company will be there.

Okay, thank you. Alla, you know what, I'm going to take this next one here. There was about three questions on the CBD platform and what we're doing that, the acne programs, Rogesia, the anti-infective programs. So currently those development projects are on hold right now. So when we acquired Softra, all time and attention and every resource went to making Softra a great success. And that is currently our focus today. Now, those programs, we got some good results. Matter of fact, the rosacea programs, the anti-infective programs, we're very pleased with the results. Those particular assets that we have sitting there in development right now, we've got long patent protection, so we're comfortable in not having to have to accelerate them through right now. At this time, every dollar that the company has is being poured into Softra to make it a success. I hope we get back to a time where we could turn our attention back to development. The next phase of those particular clinical trials that would have to be done would be very costly, and the company would have to make the decisions themselves. Are those resources better used to accelerate sales of software, purchase additional assets, or begin to continue to move forward those development programs? Okay. Howie, there was a question about managed care. And did we have any significant movements, meaning new insurance companies come on, anybody change their requirements significantly on the prior authorization process? What kind of occurred in the last quarter here relative to our commercial insurance?

As we discussed earlier, we've had contracts with the major pharmacy benefit managers or PBMs in place for quite some time now. There's an opportunity for regional plans to sign up for rebates over time. And some of them will take advantage of it and some of them will not. And why they do that one way or the other will depend on the requirements of the prior auth that the PBM puts out. That's a long-winded, confusing way to say that a few regional plans have signed on that now get coverage or make coverage a little bit easier for software. However, on the flip side, you now pay a rebate for it. But not a major change in managed care. Medicaid, we go through state by state. So said another way, a vast majority of states are covering Medicaid patients now. Before we roll that out broadly to our physician base, we make sure that we test the process of getting the prescription for Medicaid patients through the prior authorization or clearance. We do that because the physicians are so happy with the way that SendRx works right now. We want to make sure that we give them the same experience with a Medicaid patient that they do with a commercial patient. Okay. And as you may or may not know, we can't buy down the copay or gap payment for Medicaid patients. So we take that in a stepwise fashion. So just to summarize, minor shifts in managed care coverage, but not significant with regard to the number of lives. And Medicaid is currently being rolled out on a state-by-state basis. We haven't taken full advantage of that yet. It's part of the plan to do so. It was part of the plan in our pre-launch activity to get coverage for Medicaid. So more to come on that, but certainly excited about the future opportunities there for those Medicaid patients.

Great. Question here about Kaken. The question came around the fact that they noticed cacan has a couple of different strengths. How are we thinking about different strengths of soft peronium bromide and any type of life cycle management at this time?

That's a good question. You know, without saying too much from a competitive perspective, I'll just start with we're pleased with with Katkin's results. They continue to grow year over year with with their their total prescription count and to be four years, you know. past their launch and continuing growing at this rate is encouraging for us that the initial life cycle could be longer than other derm products. So very positive there. They've had a very good experience with their twist top applicator. Patients love it. They're getting the majority of their patients to either start on their twist top applicator or switch to that. So we're exploring that as an opportunity in the United States as well, right? Of course, you can't just assume that because it's liked there, they'll like it here. There's a little bit of market research that goes on with that, but we're ensuring that we put the opportunity in place for us to potentially use their applicator. With regard to strengths in the future, They're out there with a 5% and potentially over time, we could go out with a different concentration as well to elongate the product lifecycle. But just keep in mind, first and foremost, this product goes out all the way to 2040. And we're excited about maximizing what we do have with the current product. while ensuring that you have what we call a product or a pipeline at a product where you might have a new applicator, a new strength, and potentially someday it goes over the counter for a certain strength. Those are all things that we plan for. I don't think you look in the short term for this because to have a new chemical entity with IP or patent protection that goes out to 2040 is a rare opportunity. So our focus now is, in the next two years is just to continue on with this launch curve.

Great. Thank you. And probably the other thing that's worth noting, too, about Kaken is that now they're in their fourth year of launch. And we're very impressed still with their ability to be able to market the product and continue to grow the product. And uniquely, what we see is when they put investments into promotional programs there. The product is still very highly promotionally responsive, even in its fourth year. So it's great to have a partner like Kaken, and most certainly with the experience being four years out. Howie and Chris, that is all the time we have for right now. I'd like to thank the two of you, and I'd like to thank all the panelists for their participation here, but most certainly all of you that have joined us here today. As I mentioned, we had over 350 people pre-registered for this webinar. We greatly appreciate you spending time with us here on this update and look forward to speaking to you again. Thank you, and have a good day.