HLS Therapeutics Inc.

Good morning and welcome to the Q4 and Fiscal 2024 Financial Results Conference call for HLS Therapeutics. At this point, I would like to turn the call over to David Mason, Investor Relations, for the introductory remarks.

Good morning, everyone, and thank you for joining us today. With me on today's call is Craig Millian, CEO, John Hanna, CFO, and Brian Walsh, Chief Commercial Officer. Earlier this morning, we issued a news release announcing our financial results for the three and 12 months ended December 31st, 2024. This news release, along with our MD&A and financial statements, is available on HLS's website and on CDAR+. Please note that slides accompanying today's call can be viewed by the webcast a link to which is available in our earnings press release and at our website on the events page. Certain matters discussed in today's conference call or answers that may be 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 CDAR+, at www.cdarplus.ca. During the call, we will refer to adjusted EBITDA. Adjusted EBITDA does not have any standardized meaning prescribed by IFRS. Adjusted EBITDA is defined in our press release and annual filings that are available on CDARplus and on our website. Please note that all financial information provided is in U.S. dollars unless otherwise specified. I would now like to turn the meeting over to Mr. Millian. Please go ahead.

Thanks, Dave. Good morning, everyone. Excuse me. Good morning, everyone. Thank you for joining us. On our call today, I'll review our fourth quarter and full year highlights, along with our outlook for 2025. Brian will discuss product performance, and John will follow with a more detailed look at financial results. Following John, we'll hold a Q&A session. 2024 was a year of significant transition that required tough decisions and bold action to strengthen our leadership team, recalibrate our operating model, and drive improved business performance. We exited 2024 with momentum, positioning HLS for a return to growth and greater financial flexibility in 2025. I'd like to take a few moments to recap our key achievements from the past year. First, we grew our core products and ended the year with both Vesipa and Clozeril being profitable contributors to the business. We achieved success on this front with Vesipa prescription growth remaining strong throughout the year, while Clozeril Canada net sales grew for the first time since 2020. Second, we right-sized our spending. We reduced operating expenses by double digits without compromising our ability to sustain long-term growth. With a combination of product growth and OPEX reductions, we grew adjusted EBITDA, excluding royalty revenues, by 42% for the year. Of note, we exited the Pfizer Promotional Services Agreement and brought primary care sales for VSIPA in-house. This helped us achieve our commitment to VSIPA becoming a positive contributor to adjusted EBITDA starting in Q4, and we expect it will be a full-year contributor in 2025. Third, we strengthened our balance sheet, paying down over $20 million in debt. We divested non-core assets, including the sale of the Zempzyme royalty interest. This transaction, valued at up to $45.75 million, included $13.25 million in upfront cash that we used toward debt repayment. And last but not least, we strengthened our leadership team. John Hanna joined as interim CFO to start 2024 and transitioned to the permanent role in November, and we elevated Brian Walsh to chief commercial officer. Both John and Brian have made important contributions to building a performance-based culture at HLS. The actions we took in these four areas helped to deliver a solid performance during a challenging 2024, and we believe they position HLS for greater success in 2025 and beyond. Now to review our 2024 financial performance. 2024 revenue was $56.6 million, which came in at the lower end of the guidance range set on our Q3 call. For the Canadian business, we achieved what we set out to do, with full-year product sales growing 10% in constant currency and 8.5% when translated to U.S. dollars for reporting. 2024 Canadian clausural net sales grew 1.6%, and Vespa net sales grew 27% in constant currency. Foreign exchange obviously had a big impact and continues to on the translation of Canadian dollar sales to U.S. dollars for reporting purposes. With our U.S. clausural business, we achieved $12.6 million in net sales, a decline of about 7% from the prior year. We spoke previously of the impact from higher than typical levels of wholesaler inventory at the end of 2023. Excluding that transient event, U.S. closeral demand remains relatively stable, and we continue to explore opportunities to strengthen that business. At $16.6 million in adjusted EBITDA, we achieved expectations coming in near the top end of our $16 to $16.7 million guidance range for the year. We ended the year on a high note as Q4 consolidated adjusted EBITDA grew 4%, its highest year-over-year growth since the third quarter of 2021. On our November call, we provided a preliminary outlook for 2025, and with today's release, we're providing a formal 2025 outlook for the business. We're providing revenue estimates for our Canadian business and Canadian dollars, given the ongoing fluctuations in exchange rates. For 2025, we're expecting net sales for Visipa of $26.5 to $28.5 million in Canadian dollars, reflecting growth of 18% to 26%. For Clauseril in Canada, we're expecting net sales in Canadian dollars to be $35.5 to $36 million, relatively flat to 2024. Overall, this represents projected growth in a range of 6% to 11% for our Canadian business in local currency. We expect continued strong VSEPA unit demand growth in 2025, but where net sales lands within the guidance range will be largely driven by payer mix. Currently, prescription growth in the public channel continues to outpace growth in the far more profitable private insurance segment. Brian will talk more about the many steps he and his team are taking to drive utilization with privately insured patients. Now, switching to our U.S. business, the outlook for U.S. clozapine is 12 to 12.3 million in net sales, which represents a 2 to 4 percent decline over 2024. This would represent an improvement over the average annual sales decline of 6 percent over the past four years. Clozapine continues to be an underutilized therapy relative to the number of patients suffering with treatment-resistant schizophrenia. With the recent announcement from FDA that a REMS program will no longer be required in the U.S., we believe there could be increased interest in clozapine treatment, particularly for those who have had challenges complying with the rigid REMS requirements. Lastly, we do have one remaining royalty interest in Obazor that we expect to generate revenue of $600,000 to $750,000 in 2025. We're providing our guidance on adjusted EBITDA on a consolidated basis in U.S. dollars. Our outlook for 2025 is a range of $19.5 to $20.5 million, representing growth of 17% to 23%. Any variance from the preliminary 2025 outlook that we provided in November is due to a change in foreign exchange rate assumptions. As many of you know, the Canadian dollar has declined significantly relative to the U.S. dollar since early November, and with over three-quarters of our revenue generated in Canadian dollars but reported in U.S. dollars, this has impacted our outlook. To put it into context, if not for the change in the exchange rate from last year to this year, 2025 revenue projections would have been about $1.6 million higher. Another external factor we're monitoring closely and planning for is the potential impact of U.S. tariffs. This is obviously a very dynamic area, depending on how these tariffs are applied and to which countries. In the near term, we don't see this as having a major impact on our business. Finally, I'd like to mention an important addition to our HLS Board of Directors. Today, we announced that Christine Elliott has joined the HLS Board. Christine was Ontario's Minister of Health from 2018 to 2022 and served as Ontario's Deputy Premier during that period. Prior to that, she was a member of the Ontario Legislature from 2006 to 2015. Her deep understanding of healthcare policy, regulatory frameworks, and government relations will be beneficial in supporting HLS in advancing our existing therapies and bringing new medicines to market in Canada. On behalf of the board and management, we're very pleased to have Christine join us and look forward to her contributions and guidance. I'll now turn it over to Brian to provide further insight into 2024 brand performance and the initiatives we're pursuing in 2025 to help us achieve our objectives for the year. Brian?