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?

Thanks, Craig, and good morning, everyone. Let's start with the SEPA. Our brand objectives are to drive demand through increased breadth and depth of prescribers, target our investments for maximum impact, and stabilized the payer mix by accelerating growth in the private pay segment. We made good progress on each front in 2024. Q4 unit growth was 37%, and unit growth of 44% for the full year. And Q4 net sales were up 29%, and for the full year were up 27%, both in constant currency. We brought the primary care sales function in-house at the end of August, and the transition has gone according to plan. As Craig mentioned, this change has resulted in significant savings, and we don't believe these savings will come at the expense of growing the SEPA further. Over the past several months, we have seen a slight decline in the number of new patients started by GPs. However, this largely occurred amongst GPs that we intentionally scaled back call activity on in order to prioritize higher potential GPs with a more favorable pair mix. Importantly, we have not seen any negative impact on GPs renewing prescriptions for existing patients on therapy. Ultimately, we are confident in our ability to expand breadth and depth with the highest potential GPs. As a reminder, approximately two-thirds of our Salesforce effort is focused on existing prescribers. Here we want to increase prescribing depth amongst those physicians who are initiating new-to-brand patient starts. The other one-third of selling activity is allocated to targeting those high potential writers who have yet to prescribe. Growth and breadth and depth of prescribing are indicators of brand health. As a measure of breadth, total average monthly prescribers grew 41% in Q4 versus Q4 prior year. To evaluate depth, we measure consistent prescribers defined as those that prescribed at least four out of every five weeks. Consistent prescribers grew 50% in Q4 versus Q4 prior year. Stabilizing our payer mix Specifically, the proportion of our volume that comes from the privately insured segment remains a key area of focus. On this front, first, we are focusing our selling efforts on getting new privately insured patients. For example, we have incorporated data on payer dynamics at the practice level into our Salesforce targeting. This enables us to increase our focus on the accounts with the greatest private payer opportunity. This is beneficial since most private plans have broader patient eligibility criteria, a simpler reimbursement process, and a higher value per script. Second, to improve patient retention, we enhanced our copay program in May last year to offer a greater amount of financial assistance, which is exclusively offered to our privately insured patients. The insight is that privately covered patients with higher out-of-pocket copays have significantly lower retention rates. Since this change, We have observed an improvement in early retention rates and we are now keeping one out of every two patients on brand at the six month mark that we would have otherwise lost without any financial assistance. This indicates that over time the program can have a very positive impact on overall net sales. Since the program currently reaches only 20 to 25% of our privately insured patients, we are very focused on tactics that will further expand patient access to this program. And third, we also have dedicated field nurses who can work with practices to help clear hurdles and manage paperwork for plans that require prior authorization. Our investment in this program has proven to drive higher approval rates and lower waiting times for patients. While much of our focus has been on patients covered by private plans, we also made significant progress on the public payer side in 2024 by entering into listing agreements in both BC and Alberta. As a reminder, with these additions, VCIPA is now covered for over 90% of eligible Canadian lives in private or public plans. Prior to signing the listing agreements in BC and Alberta, those provinces had slowing growth rates. Since signing, we have seen growth pick back up in both provinces, and we believe there is further runway ahead. To sum it up, we now have full control over the commercialization for VCIPA, giving us discretion to allocate our field resources and marketing investments where we anticipate the highest return and the ability to adapt quickly. We expect 2025 will be the first year of profitability, a full year of profitability for the product, with more to follow as Vaseep has patent runway into the late 2030s. Now looking to Closero. Closero continues to be a reliable provider of significant cash flows for the business. Net sales in Canadian dollars for the Canadian business grew 1.6% in 2024. This growth is largely due to strong execution by the team of our regional strategies that we began implementing in half to 2023. Since adopting our new customer-facing model in Quebec in May, Clozeril has seen the lowest decline in net patients in Quebec since the changes from Bill 92 came into effect. This is due to a combination of improved patient retention, as well as targeted efforts to restart eligible patients on the brand. Closereal patient growth in Canada for the full year 2024 was 2%, while unit volumes were also up 2% versus the prior year. This is driven by patient growth of more than 12% in British Columbia and 3% in Ontario, offsetting patient decline of under 3% in Quebec. In the US, we continue to stabilize our Closereal business through targeted growth opportunities including our specialty pharmacy partnership. We are encouraged by the growth we experienced in our existing specialty pharmacy program last year. We believe we are well positioned to capitalize on potential increased utilization of clozapine over time in a post-REMS landscape in the U.S. With that, I'll pass it back to Craig to close out the operational review.

Thanks, Brian. With solid fourth quarter financial results, a strengthening balance sheet, and a positive outlook for EBITDA growth, We will have increasing flexibility with capital allocation as we progress throughout the year. Our two top priorities in this area are implementing a normal course issuer bid and restarting our share buyback program, which John will speak to in more detail, and portfolio expansion. HLS is highly regarded within Canada for our capabilities and customer relationships within specialty therapeutic areas, and this positions us well as a potential Canadian licensing partner. As such, we're interested in pursuing assets that are synergistic with our current portfolio and accretive in the near term. On the last call, I shared our targeted and disciplined approach to business development based on four criteria. One, identify commercial stage assets that are available to license in Canada. Two, that are within our therapeutic areas of focus. Three, that we believe have meaningful sales potential. And four, that won't require significant upfront capital or a large increase in OPEX. In summary, our intent is to bring in assets at a reasonable cost that could significantly grow the top line, while also allowing us to more fully leverage the infrastructure, expertise, and capabilities we've built in Canadian cardiovascular and CNS markets. Having made considerable progress in improving our operational efficiency and strengthening our balance sheet, the next step is adding to the portfolio, which will be essential to accelerate growth beyond 2025. With that, I'll turn it over to John to look at the numbers in more detail. John?

Thank you, Craig, and good morning, everyone. Starting with revenue, total revenue for Q4 was $15.5 million, and for the year was $56.6 million. Excluding royalties, revenue from marketed products in Q4 was up 7%, and for the year was up 4.5%. This reflects the positive momentum built through the year within the marketed product portfolio. Canadian product sales of Vesipa and Clozeril in Q4 and for the full year were up 14% and 10% respectively in constant currency. Vesipa Q4 and full year sales grew 29% and 27% respectively in constant currency. Clozeril Q4 and full year sales in Canada grew 6.4% and 1.6% respectively in constant currency. U.S. clause rule Q4 and full-year product sales were down 4.5% and 7% respectively. As discussed on prior calls, full-year results were impacted by wholesaler purchasing patterns, including a high level of wholesaler inventory at the start of 2024. We believe purchasing patterns have normalized, Q4 2024 had inventory stocking at more traditional levels than seen in the prior year, which impacted that year-over-year comparison. Royalty revenue was $0.2 million in Q4 and $1.5 million for the full year, compared to $1.6 million and $10.3 million in the respective periods of 2023. As you know, the royalty term for what was the largest royalty in the portfolio came to an end in Q4 2023. In addition, we sold our royalty interest in Zempozyme at the end of Q2 2024. So while prior year periods included contributions from multiple royalty interests, Q4 2024 royalty revenue included revenue from just one. On the expense side, we made further progress in Q4 with reducing our cost base. Q4 was the first quarter where operating expenses did not include selling and marketing costs related to Pfizer. before operating expenses comprising sales and marketing, G&A, and medical, regulatory, and patient support were down 9%, while promoted product revenue in Canada was up 14% in the same quarter. For the full year, operating expenses were down 10%. As said earlier, with the transition of primary care sales function to HLS completed at the end of August, We expect the transition to save us a net amount of approximately $4 million annually. This saving is seen in the selling and marketing line item, which was down 27% in Q4. G&A in Q4 increased 23% year-over-year. This was a result of two primary factors. Firstly, Q4 2023 was lower than the historical quarterly average because of the reversal of an accrual for performance-based compensation. Secondly, Q4 2024 saw higher expenses for professional fees and travel in the quarter. On an annual basis, we expect G&A to be relatively fat in 2025 as compared to 2024 with small inflationary increase. Finally, cost of product sales increased in Q4 and for the full year due to the growth of the SEPA. Q4 adjusted EBITDA was $5.6 million, up 4% compared to $5.2 million, in the prior year. Adjusted EBITDA for the year was $16.6 million compared to $21.1 million in 2023. Excluding royalty revenue, adjusted EBITDA for Q4 and the full year would have increased by 42% over the respective periods in 2023. This increase reflects growth in our promoted product revenue as well as our ongoing cost management. For Q4, the direct brand contribution from Clauseril to adjusted EBITDA was $7.7 million, while the direct brand contribution from Visipa to adjusted EBITDA was $0.2 million. For Visipa, this gain compares to a loss of $2.2 million in Q4 2023. For the full year, the direct brand contribution from Clauseril to adjusted EBITDA was $28.1 million. while the direct brand contribution from the SIPA to adjusted EBITDA was a loss of $3.6 million. Demonstrating how far we've come with the SIPA, this compares to a negative contribution of $9.2 million in 2023. For the SIPA, I would note that there is a seasonality to annual revenue, and that Q1 typically represents only 20% of annual net revenue. As a result, for SEPA in Q1 2025, we expect a small negative contribution to adjusted EBITDA, followed by three quarters of positive contribution. Overall, we expect the SEPA will generate a positive contribution for the year. Cash from operations in Q4 was $3.2 million compared to $3.7 million in Q4 2023. Cash and cash equivalents were $17.5 million year-end compared to $22 million at the end of 2023. As discussed, we made significant steps to de-lever the business in 2024, making debt repayments of more than $21 million, which translates to approximately $2 million in annual interest expense savings at recent rates. At year end, the principal balance on the term loan stood at $67.4 million, down significantly from $88.5 million at the end of 2023. Our net debt at the end of 2024 stood at $50 million. The improvements we made in 2024 to lower our cost base and de-lever the balance sheet put us in a stronger financial position to support the potential of our existing products while providing the optionality to buy back shares and or expand our product portfolio. I'm pleased to announce with the release of our 2024 results, we have implemented a normal course issuer bid enabling the company to begin buying back shares. And with that, I'll pass it back to Craig for his closing comments.

Thanks, John. To sum up, 2024 was a year of transition in which we did what we said we would do, executing our plan to grow our promoted products while significantly reducing operating expenses and paying down debt. We believe the changes we made have set up HLS for a return to modest top-line growth along with increased profitability in 2025, and creates greater flexibility for capital allocation starting this quarter. We have capable and committed leadership that can make tough decisions and take necessary actions, and I believe HLS today is fundamentally stronger than at any time since I joined almost two years ago, and I look forward to an exciting year ahead for us. That concludes my prepared remarks, and at this point, I'll ask the operator to please provide instructions for asking a question.

Thank you.

Operator?

Ladies and gentlemen, should you have a question, please press star followed by one on your touchtone phone. You will then hear a prompt that your hand has been raised. And should you wish to decline from the polling process, please press star followed by two. And if you're using a speakerphone, you will need to lift the handset first before pressing any keys. Please go ahead and press star one now if you do have any questions. First, we will hear from Michael Freeman at Raymond James. Please go ahead, Michael.

Hey, good morning, Craig, John, and Brian. Congratulations on a solid 2024. Now, my first question is on the streamlining of the company. You went through some significant cost reductions through 2024. I'm wondering if you anticipate doing some further streamlining, or are you feeling good about the profile of the platform today?

Yeah, Michael, thanks for the question. I would say in terms of the scale of reductions that we made in 2024, we wouldn't anticipate something of that scope. I think there's still opportunities for further efficiencies that we'll be looking at. I also think depending on our success in terms of bringing in additional assets that will allow us to leverage, obviously, the investments we have in our specialty therapeutic areas, that obviously will continue to make our business that much more efficient and profitable. So I think part of our plan would be dependent upon our success in bringing in additional assets. But I think for our current book of business, I think where our investment plan is pretty solid and the capabilities we have are commensurate with the opportunity. So we'll be able to kind of enjoy a full year of the changes that we made, many of which occurred in the second half of last year. So we'll kind of realize those efficiencies throughout 2025. And as I said, I think there will be opportunities for incremental improvements, but probably not to the same degree.

Great.

Great.

Thank you. One more question here. You're talking about multiple means of capital allocation. You're talking about portfolio expansion. launching a new NCIB. I'm curious about sort of another leg to that stool, thinking about debt. How are you thinking about your leverage ratio right now? You did significant debt paydowns during 2024. Are you anticipating allocating capital that way?

Yeah, I'll ask John to address that question.

Yeah, Michael, I would say that over the past several quarters, we've benefited from the pay down of debt and are moving our leverage ratio into the three and below three range. And that gives us more financial flexibility to consider all options in terms of capital allocation. And so we will continue to look at opportunities to pay down debt as we move into the later half of the year, expect to be active in the share buyback, and as Craig mentioned, continue to look at the landscape of opportunities to grow the portfolio.

Okay. That's terrific. I'll pass it on.

Thank you. Next question will be from David Martin at Bloomberg. Please go ahead, David.

Good morning. You mentioned at one point greater penetration amongst patients that are publicly reimbursed versus private. I'm wondering why the penetration into the privately insured patient population hasn't been as great.

I mean, I can start and then Brian maybe give additional insight. I mean, I think a lot of it, David, just comes down to timing. you know, we launched exclusively into the private markets, and then obviously over time we started to sign the product listing agreements, and as those phased in, you know, later in the product's life cycle, you know, we started to see the, you know, those pools of patients where POSIPA was accessible to them. I think as an example, you know, just last year we added BC and Alberta. And, you know, so now we're seeing, you know, significant growth, as Brian had said, in those provinces, which had, we had not seen as much growth. And a lot of that growth, as you would expect now, is coming in the public book. But we believe, you know, we continue to believe that providing broad access, you know, and making the product available universally to all patients in all provinces is you know, will ultimately increase utilization in the private side as well. So I think a lot of it's a timing issue, if there's anything to add.

Yeah, I agree with that completely, Craig. It's really a matter of timing. We had private access since the launch and public access comes on. A couple years later, and as Craig said, even as recently as last year in two key provinces, keep in mind the population of eligible patients is skewed towards public access. So we're growing at a nice rate in the private segment, but it's going to be very beneficial to the net sales to maintain and accelerate that.

Okay, thanks. Any visibility into getting the exceptional access removed to Ontario?

I'd say at this point, David, kind of status quo. As I mentioned, we continue to have dialogues with the folks that are responsible for that program. The good news is I think we have an ongoing dialogue, and we continue to kind of present our case. But to this point, they've decided to keep it on the expanded access tier. So we'll continue – Periodically, and especially as we see improvements in terms of the reimbursement rate to continue to give confidence that the drug is being used in the right, the appropriate patient population will continue to make that case. At this point, in our guidance, we don't assume the LU code, so I would say if we were to get that in 2025, I would consider that an upside to the guidance.

Okay, great. And last question. 75% of your revenues are in Canadian dollars. What percent of all your expenses are in Canadian dollars? Would you say about the same percent?

John, would you like to?

Yeah, it's going to be in that range, David.

Okay.

Give or take, it's going to be substantial.

So there's a natural hedge there. Are there any other currency hedges you have in place?

No, we periodically will look at putting forward contracts in place with respect to the CAD-US pairing, but we don't have any at this time.

Okay. That's it for me. Thanks.

Thank you. Next question will be from George Ulubishev at Claris Securities. Please go ahead, George.

Good morning, guys, and thank you for taking our questions. On with SIPA. Now that you guys have had a full quarter since transitioning the SEPA sales from Pfizer, have you guys seen any meaningful improvement in either new-to-brand prescriber or new-to-brand prescription growth under the in-house model? Any additional color on that would be helpful.

Yeah, good question, George. I'm going to ask Brian to address that one.

Yeah, thanks, George, for the question. In the comments, I noted that we've seen some slight decline in new patient starts within the GP segment, but we believe that just during this transition, those that we did not see prescription new starts from were primarily physicians that we deprioritized to focus on higher potential primary care physicians. We have continued to see growth within the specialty segment quarter over quarter in terms of new patient starts.

Yeah, just to add, I mean, I think, you know, obviously this, the transition, which went very smoothly, it took place last summer, Q4 was the first full quarter, as you've noted, where we took this on ourselves. So I think there is, you know, a little bit of transition here as our HLS sales reps, you know, reacquaint themselves with a lot of the high prescribing general practitioners who they called on in the past, but then had transitioned to Pfizer, now are coming back. So And obviously, you know, the call cycles are such that we're not necessarily seeing everybody, you know, every month. So it could take a few months for one of our reps to get in to even see, let's say, a lower potential general practitioner. So I think over time we'll start to see that, you know, that activity pick up and we expect that we'll start to, you know, see incremental improvements even within the GP space. And as Brian mentioned on the specialty side, we maintained a high level of performance throughout.

Got it, got it. Thanks for that, guys. And just switching gears a little bit, with regards to the co-pay assistance program, do you view it as a long-term initiative or is it a temporary strategy just to drive early adoption? And just on that also, can you give us a sense of what percentage of Vaseba prescriptions in Q4 came from private versus public payers as well?

So to your first question, George, we view that as a long-term commitment to ensuring patient access to Vaseba. So we We've improved that program, but even the early results we're seeing, we think will improve the lifetime value of patients. We see meaningfully improved longer-term retention when that out-of-pocket is reduced. So it's a positive investment, well worth making and continuing to make over time.

We don't comment public... Do we usually share that, John, in terms of the split, the public-private? Yeah, that's fine. Yeah, so, George, we're... roughly low 40s for public, you know, low to mid 40s, mid to high 50s on the private side percentage wise. I think what we've said is at equilibrium, we expect something on the order of 50-50. So, you know, I think even in reference to David's earlier question, you know, we still can would expect, until that levels off, slightly greater growth on the public side than the private side. But with the interventions that we're taking, we hope that we can actually get to that plateau even sooner. And ideally, we'd love to see the privately insured book of business outpaced public.

That makes sense. Thanks, Greg. And just one last question from you guys. Can you give us an update on your current business development pipeline as well as the general market environment for licensing yields at the moment?

Yeah, I would say there's a number of opportunities at various stages that we've had discussions around related to the criteria that I laid out in my opening comments. can't comment in terms of, you know, how close or how far from potentially completing a deal. But we do have, you know, a number of assets at various stages that we're looking at. And I think we're optimistic that we'll be able to move forward with one or more in 2025. I think, obviously, our priority last year, you know, was to delever and to, you know, get our balance sheet in a position where we had more flexibility to be able to do this type of deal making. And so we're finding ourselves in 2025 now with greater flexibility. And so more to come on that front.

Great. That's it for me. Thank you, guys.

Thank you. Next question will be from Justin Keywood at Stifel. Please go ahead, Justin.

Good morning. Thanks for taking my call. Nice to see the automation efforts pay off. Just on capital allocation, some of the areas mentioned, the share buybacks in licensing or potential M&A and debt repayment, is there a priority among those three buckets? And if there's any commentary on how you're looking at capital allocation as far as a return on invested capital or some parameters. Thank you.

Yeah. I mean, I'll give general comments and maybe I'll pass it over to John for his view. I think we have the ability to do all of the above. And so, again, our BD approach is very targeted. And one of the principles I laid out is that any assets that we bring in, we would like to manage the capital requirements upfront and really look at ways to de-risk those assets so that we ensure that we can bring them to market and make a good economic profit on those before we lay out a lot of capital. So I think we're trying to be thoughtful and creative in terms of how we structure those things so it's not a huge drain on capital in the near term. Obviously, the NCIB and the share buyback is something we're very committed to and excited about. as well as continuing to delever. So I think we'll have the ability to do all of the above. But, John, any additional color in terms of the return question?

Yeah, I guess it's a dynamic situation. I think in the immediate term, I would consider one of our highest priorities is around at least getting rolling with the share buyback. We certainly think shares are undervalued. And then as we progress forward, it's looking at the balance between paying down the debt, giving ourselves the financial flexibility that will allow us to consider the M&A opportunities. So looking as we move forward at which of those are the best options and considering the impact of them on a return basis.

Thank you for the additional color. And on the share buyback, is there like a target return there or or target level where you would consider the shares to be more appropriately valued? I know historically, this is probably prior to going back a couple of years, but the share buyback was initiated at much higher levels. I know it seemed to work last year, but if there's any additional parameters of the focus on the share buyback, it would be appreciated.

Yeah, so within the confines of the flexibility we have on the buyback, I think sitting here today with the shares trading in the $4 range, there's plenty of headroom here. We won't pick an exact number, but I would say in the $4 to $5 range, we certainly would think that there's a benefit of doing that and probably well beyond that.

Thank you for taking my questions. Thanks, Justin.

Once again, ladies and gentlemen, a reminder to please press star 1 on your telephone keypad should you have any questions. Next, we will hear from Tanya Armstrong-Withworth at Canaccord Genuity. Please go ahead, Tanya.

Good morning, gentlemen. Just a couple questions for me. Firstly, on Vesipa seasonality, you mentioned Q1 is typically a little light. Where do we see the balance of that volume made up? Is that typically in Q4?

You see sort of a bit of a roller coaster that Q2 and Q4 are the heavier quarters. Q1 is the lightest, and then Q3 sort of in between. I think if you look at historically over the last couple of years, that percent spread has been fairly consistent amongst those four quarters.

Okay, excellent. And then a couple of questions ago, you commented on the mix of private versus public at low 40s and high 50s. Just to clarify, is that on a script basis for the SEPA?

Yeah, on a unit basis, which is what we typically use, which runs parallel to, more or less, to prescriptions. There tends to be some difference in terms of size of script between private and public, so we tend to equalize that by using units instead. So that would be in units dispensed.

Perfect, okay. And then just lastly, Those potential high-prescribing physicians that haven't yet written a script, I believe you said about one-third of your efforts are focused on this group. What kind of public versus private mix are you seeing in the patients within that group, if you do have that data?

Yeah, we do have that data in aggregate, and there's a distribution around that. We've tried to... There's not... There's not many purely private practices. They all have a mix, so it's kind of a two-by-two of those that have higher volume and high percentage of private amongst that. I mean, the range tends to flow in a range between 80% private and 20% private at the account level. We're leaning in on the higher proportion and factoring that in as you move up in potential.

Okay. That's all for me. Thank you, guys.

Thanks, Daniel.

And at this time, Mr. Millian, we have no other questions registered. Please proceed, sir.

Great. Thank you. And thanks, everyone, for participating on today's call. We look forward to reporting to you on our progress in the coming quarters and speaking with you again soon. Goodbye. Have a great day.

Thank you, sir. Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending. And at this time, we ask that you please disconnect your line.