Mithra Pharmaceuticals Sa

Hello and welcome to the METRA Half Year Results 2023. My name is Jess and I'll be your coordinator for today's event. Please note this call is being recorded and for the duration of the call, your lines will be on listen only. However, there will be the opportunity to ask questions. This can be done by pressing star one on your telephone keypad to register your question at any time. If at any point you require assistance, please press star zero and you'll be connected to an operator. I will now hand over to your host, Alex Sokolovsky, Head of Investor Relations, to begin today's call. Thank you.

Thank you, operator. And welcome, ladies and gentlemen, to the conference call on Mithra Pharmaceuticals financial results for the first six months of 2023. I'm Alex Sokolovsky, Head of Investor Relations for Mithra. Today's call is being recorded and a replay of this webcast and today's presentation slides will be made available later today on METRA's website. I'd like to call your attention to the forward-looking statements before I provide an overview of our agenda. Today's call contains forward-looking statements which are made based on information currently available to METRA and certain assumptions considered reasonable as of the date of this material. These forward-looking statements are not guarantees of future performance and actual operating results may differ substantially due to a number of factors. Today, our CEO, David Horn-Solomon, will make some introductory remarks before our CFO, Christophe Marchal, will guide us through the financial results highlights. Then David will cover the select operational highlights year to date. We will then hold the Q&A session before closing the call. David, the floor is yours.

Thank you very much, Alex, and welcome to everyone. I'm David Solomon. I'm the CEO of Mithra Pharmaceuticals, and I'm really glad you could all take the time today to join us for our 2023 half-year financial results. We've accomplished a lot already in this period. Some of the events we're going to report happened before I joined as CEO, but really under my leadership and with our management team, we're working hard to create what we now call Mithra 2.0, which is a company that will have strong results based on our assets, and we hope a new and valuable set of pipeline items that will be important for us as a biotech company and for all of you who are shareholders for creating value. Can we turn to the next slide, Alex? I want to tell you first about our fundamental strengths for success. At Mithra, we really work hard towards and using our innovative estetrol-based products to improve women's independence and improve women's health. Our lead products, as you know, based on estetrol, a novel fetal-based estrogen that has a differentiation from commonly used estrogens like estradiol or E2. Estetrol, often called E4, is the main product in our oral contraceptive called Estelle. We can announce now that in the U.S., we've launched sales and are ramping up, and we'll talk more about that. Estetrol or E4 is the singular product in Donesta where this medicine will be used to treat the symptoms of menopause, and we are now preparing for our U.S. NDA filing, and I'll tell you more about that. All of the work that we do is based on a very strong and experienced management team, and as I'll tell you, we've added some new members to the team who I believe will have a great impact on our future. We will talk also about our revenue growth and our strategic opportunities, specifically about the Novalon family of products. Novalon is a company wholly owned by Mitra, the Mitra Group, and it includes the product Myring, which is an implant that is a contraceptive, Tibalon for the treatment of the symptoms of menopause, and Zorilene that includes a feature for the treatment of prostate cancer. I'll also tell you a little bit later about the CDMO and how we hope to bring significant value to Mitra from our strategic options with the CDMO. But importantly, in Mitra 2.0, what we really hope to achieve is a new pipeline, a next generation of medicines for women's health that are innovative and important and valuable. And then together with Estelle and Genesta, we believe that this will bring significant value to the company especially as we also clean up our balance sheet. Next slide, please, Alex. Notable to run the company according to this vision is the need for a strong and experienced management team. I've met many of you already as chief executive officer, and I look forward to more engagement. Joining me as part of the management team are Graham Dixon, a very experienced scientist that has had significant experience at AstraZeneca and Galapagos. New to the company and joining us recently is Xavier Paoli in the role of Chief Operating Officer. Xavier brings a lot of experience from not only UCB GSK, but also Alexion that also was launching early products in Europe and in the United States. Joining us and continuing is our Chief Commercial Officer, Jean-Manuel Fontaine, who comes from Pfizer and Lundbeck experience and is a valued member of the team. And joining us on the call today is Christophe Maréchal, our Chief Financial Officer with deep experience in treasury controls and corporate financial strategy. Next slide. We've also added some key new members to the team to add to not only our integrity, but also our operations. Joining me in the office of the CEO is David Trude, who's the new Chief of Staff, or , or Chef du Cabinet, has deep experience from Pfizer, You've already met briefly now Alex Sokolovsky, who's now our head of investor relations that has a vast experience at BASF. And also new to the company and important in our role of communicating to all of you is our communications director, Frederic de Pretere, who comes with a significant experience also from here in Belgium. Now I'm going to pass the words to our chief financial officer, Christophe Marchal, who will give us our financial update. Christophe.

Thank you, David. Hello, everyone. It's been an eventful period, and it's my pleasure to walk you through our financial results for the first half of 2023. Next slide. Mitra reported revenues of €7 million in H1 2023 and finished the period with €23.7 million in cash, sorry. Revenues were driven primarily by sales of Myring for EUR 2.4 million and a sale for EUR 2.6 million. Not reflected here in the revenues is the cash collection of EUR 15 million from the EUR 55 million Donesta outlicensing upfront fees related to the European marketing rights given to gain enrichers. This amount of Euro 55 million net of the refundable part was already recognized as part as per IFRS 15 in 2022 before the total sum was actually collected. By way of reminder, the initial Euro 5 million were paid upon signature in H2 2022 and the remaining amount in February 2023. Estelle Nextelis, US product sales volume by Main Pharma increased by 80% in H1 2023 compared to H2 2022. However, this is not reflected in our Estelle H1 revenues, which were impacted by lower supply sales to Main. This is because Main sold trade units from inventory purchase in 2022 during H1 2023. In addition, Maine's promotional initiatives to ramp up next studies sales also led to Mitra predominantly supplying samples units for the US market during H1 2023 at reduced price compared to trade units. As a result, while US sales volumes by Maine improved, A similar increase in supply sales volume is not reflected in MICRA's H1 2023 as tell sales figures, which also were impacted by lower supply price as just explained. Given the 80% increase in sales volume by main pharma in H1 2023 compared to H2 2022, The continuing increase in sales volumes in the U.S. and Europe and the generally temporary nature of promotional product pricing, the average Estelle supply price and volume are in good shape to rebound in the future. Further contributing to revenue from Estelle are the EU and other ex-U.S. product drawback list sales, which achieved Euro 1.5 million in H1 2023, as Galeon Richter continue to launch the product in new countries like in Ecuador and Malta, as well as in Chile in August 2023. Considering H1 2023 revenues from Nextelis, we are revising our guidance for Mitra Zestel 2023 total product revenues to reach about €8.5 million which together with licensing revenues could be about €11.4 million. The €8.5 million should be compared to €12 million as shared by David Solomon in his shareholder letter in May. Sales of Novalon complex generic products, including Myring, Tibelian and Daphné, achieved €3.3 million, increasing by 36%, compared to the same period last year, primarily due to miring sales in Europe and Canada, and as of December 2022, the US. Our research and development expenses, excluding depreciation, increased by 19% to reach Euro 27 million compared to Euro 22.7 million in the first half of 2022. This increase is mainly attributable to Donesta clinical studies and the end of the phase 3 for the U.S. Mitra is maintaining a focus on innovation as the foundation of future growth while paying close attention to the R&D costs. GBDA for the first half of 2023 stands at €-33.7 million compared to €-1.5 21.2 million for the first half of 2022, mainly due to lower revenues and higher expenses incurred in research and development. Below REBITDA, the negative impact of Euro 900,000 booked in the change in fair value loss related to contingent consideration variables related to STEL is mainly due to the update of both discount rates and timing effect. No payment was done during the period to former owners of Uteron Pharma. Net financial expenses at Euro 10.3 million is reported in H1 2023 and is an increase versus 2022. It is the consequence of the drawdowns of the high bridge white box facility which was not existing in H1 2022. Equity was Euro minus 8.7 million compared to Euro 33.7 million at the end of December 2022. The total comprehensive loss for the period, which is 49 million Euro, was compensated for by the capital increase of High Bridge White Box and by multiple conversions of High Bridge White Box loans for a total amount of Euro 6.2 million net of transaction costs. Equity should be improved by the post-closing event on August 24, 2023, which relates to the €20 million gross proceeds via a private placement placed with Armitage Capital, a professional and qualified institutional investor in the United States. Next slide on the net cash situation. You can see here the net cash evolution for the period. We received net of transaction costs Euro 12.3 million under trend C1 of the renegotiated loan facility with high bridge white box as well as proceeds of Euro 2.5 million in equity. There was negative financing cash flow which includes amongst other items the repayment of straight loans and other loans lease for Euro 30.6 million and the payment of Euro 5.3 million of interest. The operating activities generated in net, euro 14.2 million, which do incorporate the euro 50 million from the upfront fee related to the Donesta licensing deal with Gedeon Richter, but also the expenses related to the R&D, SG&A, and CDMO. We monetized our investment in Main Pharma by selling shares and reducing Mitra's stake to 4.96% from 9.93% previously in exchange for cash proceeds of €10.2 million, which have been received by Mitra, by the way, of course. The investing activities which capture the main shares proceeds do show a net contribution of €2.4 million, as we also had expenses related to the E4 syntheses and acquisition of assets which have been reported to the intangible assets and do and so fall under the same section. The cash position stood at EUR 23.7 million as of 30 June. A further EUR 20 million received by Mitra when the private placement with Armistice Capital was completed on 24 August 23, bringing our cash position to EUR 34.1 million at the end of August. Next slide. As a reminder, our cash at the end of June 2021 was €23.7 million. Proceeds from the Armistice Capital Private Placement brought it up to €34.2 million at the end of August. In addition to this, the following facilities are still available subject to certain conditions. Euro 52.8 million in a framework of the LDA capital commitment agreement entered in April 2020 with a maturity date of April 2025. Trench C2 of the high bridge white box loan provides for Euro 12.5 million and may be exercised until August 2025. In addition, options granted as part of the armistice private placement may provide Mitra up to an additional €22.5 million during the next 18 months and up to a total of €45 million over a longer five-year term, subject to the exercise of these options by Armistice. So in conclusion, while there is still more to do in order to consolidate our debt and shore up our balance sheet, we are in good financial position and remain confident that we can access capital through partnering and financing as needed. With that, I turn the microphone back to David for our operational highlights.

Thank you very much, Christophe. I'd like to now detail some of our operational highlights in the company and then also give you some future thoughts about where we're going at Mitra. So let's now turn to slide number 13. I want to go through some of the operational highlights the first half of the year 2023. Importantly, we had positive top line safety results from Zynesta. This is our medicine for the treatment of the symptoms of menopause and a phase three program that had two clinical studies, two phase three programs in North America for the treatment of vasomotor symptoms in post-menopausal women. We also completed the recruitment in a pediatric study of Estelle, our combination oral contraceptive in adolescent patients and those data will be expected in H1 2024. We've also carried out proof of concept studies for a novel manufacturing process of a key estetrol intermediate. This is important so that we are always ahead of the game on manufacturing estetrol and finding ways to give better yields and lower cost of ultimately the final product. We recently signed a binding term sheet and a license for a licensing and supply agreement with Searchlight of Canada for commercialization of our menopause medicine, Denesta, in Canada. We've signed a supply agreement with Gideon Richter for the production of the active pharmaceutical ingredient or API for both Estelle and Denesta. This is important so that we have a lower cost of goods, but also multiple sources of manufacturing for our product to decrease risk and increase opportunity. We've had a successful commercial launch of Myrin in the United States. This is a product that was licensed to Main Pharma that has been since sold to Dr. Reddy's. And Dr. Reddy's is very, very valiantly carrying out this program with big aspirations. We've had positive data from preclinical studies with our partner BCI on specific tyrosine kinase inhibitors called CSF1R inhibitors. and we're excited for those opportunities as we look at the BCI relationship. And of course, as I've mentioned, we've added to the executive leadership team and also made changes to the board that you're all likely aware of. Next slide, please. In terms of finally our strategic priorities and our outlook, it is key for us to be able to file DENESTA, our estetrol-based medicine for the treatment of the symptoms of menopause, in the U.S. for approval, and that filing is geared for the year-end 2023, and we're on target to do that. We are continuously looking at a U.S. licensing deal for Donesta. We're in the process of talking to lots of partners, and I want to highlight here that while we don't give a specific time guidance, it's clear to me and the team that we're working hard to finding the best deal uh, for Genesta that will benefit, uh, Mitra and its shareholders and its stakeholders. And when we have that completed, I look forward to announcing that to all of you. Finally, in terms of the CDMO, we're working on a range of strategic options, not only for the CDMO, but also for Novalon. And we've hired, uh, two significant global, uh, investment banks to help us with that. And, uh, I can report a significant progress. Again, we won't make any announcements until we have, uh, a deal ready to announce to you and to the markets. And then importantly also, we continue to restructure our debt, clean up our balance sheet. We've appointed advisors here and are doing significant work as we speak. And then finally, it's just to also tell you that we are updating our full year Estelle revenue guidance to 8.5 million euros from 12 million euros. And this is on account of what we anticipate to be not only the growth of the product, but importantly, changes in the pricing of the product as we look at events that will transpire over the second half of the year to give us a full year guidance. So with that, I will pause. I thank you for your attention. And now we're going to turn to a Q&A session. And I'll turn it back over to Jess, our operator, to guide us through that session. So Jess, over to you.

Thank you. So if you would like to ask a question, please press star one on your telephone keypad. Please ensure your line is unmuted locally, as you will be advised when to ask your question. The first question comes from the line of Susila Hernandez from Van Lanschaun-Kedman. Please go ahead.

Yes, thank you for taking my question. Could you elaborate on how you ended up at the 8.5 million for Estelle sales guidance for the full year? This is also based on the guidance that you have received from your partners and what is included in this guidance. And a second question, could you also elaborate on when you expect that the inventory effects will subside and when Estelle sample sales will be converted to actually paid prescriptions? Thank you.

Yeah, thank you, Sunila, for your questions. The first one is the renewed guidance of 8.5 million for Estelle.

And for that question... David, we lost your audio.

Oh, no, you're back. You're back.

Yeah, sorry for that. The first question was on the 8.5 million new guidance for Estelle. So thank you, Sunila, for that question. To answer that, I'll turn to our CFO, Christophe Maréchal.

Christophe. Thank you, David. Indeed, we posted revenues of €2.6 billion on H1, and it is noted that Main Pharma has only ordered samples over H1 2023. and limited, let's say, amount of samples, 45,000 cycles that have been ordered in H1. So it's clear that they've made the biggest part of their revenues from the inventories of last year. And not only that, as you know, we are selling our samples products to main pharma, but we are not selling them at the same level than a product that is a trade product. And so, of course, selling samples is impacting just because of the selling price, the revenues of Mitra, but of course, as you know, a sample is not sold on the market in the US and does not generate those variable supply price revenues, which do come as a percentage of the net sales of the partner. And so that's why H1 was as it is. So the reason why we're confirming an 8.6 million is based on the binding forecast received from the partners. So it's clear that partners and certainly main pharma do reorder, not only samples, but trade products. And so this is why we are more comfortable. And unfortunately, we decrease, we revise downwards, because what has been lost in H1 cannot be recovered in H2. And so that's why we decided to review downwards our guidance for the revenues of Estelle in full year 2023. But as Main Pharma has said, sales are increasing month by month. They're going for next semester profitable situation in the United States. And so every month we see an increase which will certainly generate higher revenues with new orders of trade products to Mitra. This year is a specific year.

Thank you, Christophe. And to echo what Christophe just said, in the new Mithra, Mithra 2.0, we'd like to promise less and deliver more. So we've downgraded our guidance, but on the other hand, we're enthusiastic that Maine continues to outperform in terms of their expectation of selling the product. So we'll see what happens over the course of the next half year. Sunil, your second question was, inventory, when will the inventory that's been gathered by Maine run out and they'll start ordering more? And for that, Christophe, I'll turn back to you as well.

Yeah, so as I said, so now it's clear that the Fuse highly use their inventory that has been built in 2022. And now they start to pre-order, let's say, for H2. And so We have numbers that are fixed on which I cannot communicate because our partner is not allowing us to communicate on these orders. But the supply department of Mitra has received those binding offers and we are working to deliver these orders by the end of the year.

Thank you, Christophe. So, Jess, we'll turn to you for the next question.

Thank you. So the next question comes from the line of Maxime Stranard from ING Bank. Please go ahead.

Hi, good afternoon. Thank you for taking my questions. Two on my side as well. The first one will be on the product sales of Estelle as well, obviously. With the guidance downgrade, it basically implies that the product sales of Estelle would basically go down for the second time in three years' time, going from 2021. So I think you may understand that the market is skeptical on the growth path going forward. So any information, data you can provide us that would make the market more comfortable with regards to the guidance. Secondly, looking at... The milestone revenue you mentioned in your press release, 17 million per searchlight, for instance. And if I recall correctly, you still have a lot to collect from Maine as well. Could you provide us with a more detailed schedule on when those milestones may be reached? That would be all for me. Thank you. Yeah. Maxime, thank you.

Thank you so much for your question. Your first question was on Estelle. a real guidance about why is it underperforming. And I would actually sort of respond by saying that, as you know, in a pharma launch with a product, it's not a linear or straight line. And what you can see in this period is the increase of 80% of growth of the sales of the product. It's not the sales of the product, but the number of cycles of the product that are being provided to patients, their caregivers. And I think what you're going to see over time is significant and increased growth month on month. You can follow it not only through us, but through Maine. And as we get through this launch period and start to see better pricing because it's not sampled and you start to see, you know, the growth of the product significantly, I think this will significantly turn around. You know how these launch curves look. And we're in still, I would argue, for a product like this still in the early phases. In terms of milestones, you mentioned the Searchlight deal and $17 million. We don't announce the schedule with the breakdown of all these milestones. Suffice it to say that many of these agreements have an upfront payment and have milestone payments and then have royalties. And as we collect each component of these parts of each of these licensing agreements and make these announcements, we'll do so in the market. But we're not going to disclose right now what the breakdown and timing is of these agreements.

Very clear. Thank you for your answers. Yeah. Thank you, Maxime.

We'll take the next question, please.

The next question comes from the line of Jacob McHale from KBC Securities.

Please go ahead. Hi there, and thanks for taking my question. It's Jacob McHale here on the line for Thomas Rankin. I just have a few, if that's possible. On Estelle, could you please shed some light on the promotional activities that are being made by Maine, and how do you currently look at the long-term guidance that was given for Estelle sales? And then my other question was on the supply agreement with Gideon Richter. Is the supply of E4 now fully secured for future demand? And is there going to be an impact of this on the supply sales that are booked by Mithra?

No, thank you. Thank you, Jacob, for your questions. On the first question about Estelle and commercial activities, you know, we can't disclose other than exactly what Maine Pharma is saying about their commercial activities, but we do know that they have significant plans for growth. And I would, you know, refrain from making any assumptions about what Maine's plans specifically are, other than to address them to Maine on their upcoming earnings calls or referring to exactly what they've said. In terms of Estelle long-term guidance, I'll turn to Christoph again, our CFO, for providing more information about what he sees as being the long-term guidance. Christoph.

Yeah.

Yeah, I mean, long-term guidance on Estelle is clearly 2023 and 2024 are the years where the ramp-up is happening. 2023 is still low, as we said, but considering the ramp-up that our partners are indicating to the markets, because they've clearly said that they would be increasing significantly month by month and will be reaching profitability by the next semester. It's clear that we see a huge ramp-up of their sales, which will definitely, because they will need to complete and rebuild their stock in inventories. So that's going to have an impact, certainly, on the revenues of Vestal. And so 2024, based on our, let's say, business cases and the interaction with the partners, do show a much improvement of the revenues of SL, on which I will not give further guidance at this stage. But clearly, improvement is what it is. And it's in the magnitude that you, David, shared during your shareholder later in May. So for now, we don't change the guidance We've given in May this year, but we wanted to inform the market that this year would be a bit lower in terms of sales on Estelle. And while on the contrary, we do believe that my ring, but a good progress of Dr. Ready might contribute more than we were expecting a few months ago. So all in all, it's a good balance. will not be a bad year in terms of revenue, thanks to MyRing. And so going forward, 2024, all in all, Estelle plus MyRing will change the company. And certainly then 2025 and 2026 going forward, where we said 2026 for sure, going back to cash flow, positive cash flow of the company, it changed completely the investment case, for sure.

Yeah, thank you, Christophe. And to echo what Christophe said overall, you know, you have to look at total product sales of what we anticipate this year and then what will happen next year to start to begin to appreciate the value that these products bring to Mitra. So let's turn to the next question.

We currently have no questions in the queue, so as a reminder, if you would like to ask a question, please press star one.

Well, if there are no further questions, I'll turn it back to you, Jess, to conclude the session.

Thank you very much. There are no further questions in the queue, so I will now turn the call back over to Alex Sokolovsky to close the call.

Thank you. This concludes today's call, and I would like to again remind you that a replay of this webcast and today's presentation slides will be available, along with the half-year financial report, on the investor relations section of the Mithra website. Thank you for your interest and questions, and until next time, goodbye.

Thank you for joining today's call. You may now disconnect your line.