Medexus Pharmaceuticals Inc.

Good day, ladies and gentlemen, and welcome to the Medexus Pharmaceuticals, Inc. Fiscal 2021 Year-End Business Update Conference Call. At this time, all participants have been placed on listen-only mode, and the floor will be open for questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, Tina Byers. Ma'am, the floor is yours.

Thank you, and good morning, everyone. Welcome to the Medexus Pharmaceuticals fourth quarter and fiscal year-end 2021 earnings call. On the call this morning are Ken D'Entremont, Chief Executive Officer, and Roland Boivin, Chief Financial Officer. If you have any questions after the conference call or would like further information about the company, please contact Adelaide Capital at 905-330-3275. I would like to remind everyone that this discussion will include forward-looking information that is based on certain assumptions and is subject to risks and uncertainties that could cause actual results to differ materially from historical results or results anticipated by the forward-looking information. Forward-looking information provided in this call speaks only as of the date of this call and is based on the plans, beliefs, estimates, projections, expectations, opinions, and assumptions of management as of today's date. There can be no assurance that forward-looking information will prove to be accurate and you should not place undue reliance on forward-looking information. Modestus disclaims any obligation to update any forward-looking information or to explain any material difference between subsequent actual events and such forward-looking information except as required by applicable law. In addition, during the course of this call, there may also be references to certain non-IFRS financial measures including references to adjusted net loss and adjusted EBITDA, which do not have standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other companies. For information about both forward-looking information and non-IFRS financial measures, including reconciliation of each adjusted net loss and adjusted EBITDA to net loss, please refer to the company's management discussion and analysis. which, along with financial statements, are available on the company's website at www.medexas.com and on the company's corporate filings on CEDAR at www.cedar.com. I would now like to turn over the call to Ken D'Entremont to discuss the fourth quarter and year-end results for fiscal 2021.

Thank you, Tina, and thanks, everyone, for joining us on this call today. Before I discuss the financials, I wanted to note that we have changed our presentation currency to U.S. dollars from Canadian dollars. We feel that this change better reflects our current activities, increases the comparability to peer companies, and enhances the relevance of the financial statements to users. Any numbers discussed on the call will be in U.S. dollars unless otherwise specified. So we continue to make progress on our growth objectives and are advancing several exciting initiatives that we believe will have a meaningful impact on the business going forward. I'd like to start by pointing out that fiscal 2021 was another record year for Medexus as we achieved $79.7 million in total revenue or 43.5% year-over-year revenue growth. and continue to build out our business in the United States. In addition, adjusted EBITDA increased to $8.2 million for fiscal 2021, compared to $4.4 million for fiscal 2020. Given our current trajectory, we could not be more excited about the outlook for fiscal 2022. As I'll discuss more in a moment, we are especially encouraged by the potential for triosulfan, which we believe could be a transformative for our business and has the potential to more than double our current revenue run rate with a very significant margin contribution. Turning to our results for the quarter, during fiscal 2021, fourth quarter ended March 31st, We achieved revenues of 17.6 million compared to 18.8 million for the same period last year. While patient unit demand for Xfinity continued to grow during the fourth quarter, net sales were lower as pharmacies and wholesalers worked through inventory on hand. Adjusted EBITDA decreased to negative 1.6 million. compared to positive 3.1 million for the same period last year, as we invested heavily in our personnel and infrastructure to support our anticipated growth going forward, including preparation for the commercial launch of Triosulfan. We were also impacted by an unexpected manufacturing expense related to the pediatric trial for Xfinity. However, we do not expect this to affect the timing for completing the trial. With a goal of long-term margin improvement, we are working with our manufacturing partners to improve the supply chain and manufacturing process in order to meet unit demand for Xcinity, which grew by more than 15% in the year ending March 31st, 2021. We are pleased to share that cash provided by operating activities improved significantly in the fourth quarter to $4.2 million compared to cash used by operating activities of $1.3 million for the same period last year. One final note on our financial results. The non-cash fair value of derivatives associated with the conversion rights of the existing debentures increased due to the significant appreciation in our share price. As a result, the adjusted net loss was $5.2 million compared to $5.1 million for the same period last year. Overall, we are pleased with our performance despite some challenges in the fourth quarter, but we believe we are very well positioned heading into fiscal 2022. Turning to our specific product line, we continue to see strong demand for our core portfolio products. Our commercial hematology product, Xcinity, is an FDA-approved intravenous recombinant factor IX therapeutic for use in patients 12 years of age or older with hemophilia B, a hereditary bleeding disorder characterized by a deficiency in clotting factor IX in the blood, which is necessary to control bleeding. The hemophilia B market size in the United States alone is estimated to be in excess of 1 billion US dollars and continues to grow. The incorporation of Xcinity into our existing operations is now complete. Even with the extreme changes to the selling environment brought about by COVID-19, the newly integrated US team has experienced success with Xcinity in the form of continued patient conversions on top of a stable existing base of patients. In September of 2020, the U.S. Food and Drug Administration approved our application to supplement the Xcinity biologics license application to add the indication for routine prophylaxis. This label expansion provides additional flexibility in the prescribed dosing regimen for Xcinity and may appeal to healthcare professionals who prefer this dosing regimen. We believe this label expansion will help us further penetrate the market and enhance our ability to retain our existing base of business. We also continue to enroll patients in the ongoing phase four clinical trial to evaluate the safety and efficacy of Xcinity in previously treated patients under 12 years of age with hemophilia B. Once completed, This study may support a significant expansion of the indicated patient population for Xfinity, as approximately one in three patients treated for hemophilia B in the United States are 12 years of age or younger. To date, the study is over 95% enrolled, and we are aggressively pursuing patients to complete the enrollment. Turning to Resubo, a once-weekly subcutaneous single-dose autoinjector of methotrexate indicated for the treatment of rheumatoid arthritis, psoriasis, and juvenile idiopathic arthritis, or JIA. Unit market demand in the United States has remained steady in the year ended March 31, 2021, and continues to reflect strong payer, prescriber, and patient acceptance. We believe we will maintain a strong position within the methotrexate autoinjector segment. MetalJect realized a 9% unit demand growth in Canada in the year ending March 31st, 2021, due in part to public reimbursement through provincial formularies in all provinces except British Columbia and Manitoba. MetalJect is a pre-filled syringe of methotrexate, which is indicated for the treatment of rheumatoid arthritis and psoriasis. It is a highly effective and cost-effective treatment for these debilitating diseases, Public reimbursement creates access for a group of patients who previously could not get the product. In August of 2020, we responded to a competitive threat to MediJet from a generic entry with a commercial response to protect our market share and a legal action to defend the product's IP. With MedAct GmbH, we have jointly filed a statement of claim against Accord Healthcare regarding the launch of a generic version of MetalJack in the Canadian market. RuPaul is experiencing very strong unit demand growth in its market, with an increase of 36% in the year ended March 31st, 2021, as physicians are switching patients from either generic prescription antihistamines or over-the-counter products. We expect Rupal to be a leading prescription antihistamine in a total market valued at approximately $140 million, including $61 million from the prescription market, which is growing at an annual rate of over 15%. During the year ended March 31st, Rupal was one of the fastest growing antihistamines in the Canadian prescription market. On September 9, 2020, we announced that Glioland was approved by Health Canada. Glioland is used for the guiding of maximal surgical resection of high-grade gliomas and malignant brain tumors in adults. International studies have shown that the use of Glioland during brain tumor surgery has nearly doubled the rate of achieving a complete resection of the tumor, which in turn has resulted in a doubling of the number of patients without progression of their brain cancer six months after surgery. We announced a full commercial launch on February 25th, 2021. In Canada, there has been a long-standing drug shortage of triamcinolone hexacetidine, also known as TH, the drug of choice for juvenile idiopathic arthritis, or JIA. In October of 2018, we launched our own TH product, branded TriSpan, which we had previously made available to children with JIA through the Health Canada Special Access Program. With the commercial launch of TriSpan, children with JIA now have a reliable source of a product, which is a key component for the management of their disease. The commercial launch also allows us to promote the product for use in adults with other indications, such as osteoarthritis, rheumatoid arthritis, and other forms of joint disease. TriSpan is the longest-acting corticosteroid for interarticular injection, often lasting twice as long as competitive products. We have now achieved public reimbursement for TriSpan in all federal, provincial, and territorial provincial formularies except British Columbia, and we have initiated a full commercial launch of the product. On December 18th of 2020, we entered into an exclusive agreement with EpiPharm for the rights to register and commercialize TH injectable suspension in the United States. While we are continuing to pursue FDA approval for a commercial product launch in the near term, we are pleased to make the drug available immediately through the FDA's CDER drug shortage staff in an effort to address the ongoing drug shortage in the United States. On September 10th of 2020, Health Canada granted priority review for Triosulfan. Triosulfan is an innovative orphan-designated agent developed for the use as part of a conditioning treatment for patients undergoing allogeneic hematopoietic stem cell transplantation. It is used as a conditioning treatment to clear the bone marrow and make room for the transplanted marrow cells, which can then produce healthy blood cells. We are currently negotiating the license in anticipation of a full commercial launch following Health Canada approval. Until then, we will continue to supply the product to the market through the special access program. On February 2nd of 2021, we announced the exclusive license to commercialize Triosulfan in the United States. If approved by the FDA, we expect that Triosulfan-based regimen will be the first in a new conditioning treatment class, reduced toxicity conditioning, resulting in a unique combination of improved survival outcomes compared to reduced intensity regimens and decreased toxicity compared to standard myeloblative regimens. A prescription drug user fee act date to review the initial NDA has been scheduled for August 11th of 2021. This transaction is expected to be highly accretive with near-term launch potential and expected seven and a half year exclusivity under the Orphan Drug Act. This will be our largest product launch to date, and as such, it is critical that we invest in the proper team and resources to meet the anticipated demand. To prepare for this launch, new positions have been staffed The medical affairs team has engaged the hematology thought leader community, and market research is confirming the key launch assumptions around demand, pricing, and product positioning. We expect that Triosulfan will become a leading product for use in the conditioning regimens as part of allogeneic hematopoietic stem cell transplantation protocols. In addition to our current product portfolio, we also have a right of first refusal on current product from the previous owner of Medexis US with whom we entered into the Medexis US supply agreement. We believe that several of these products represent a commercial opportunity in North America and are in the process of assessing the licensing of these drugs. We are also in discussions with several partners regarding other licensing agreements and believe that those products have the potential to materially contribute to revenue within the next few years. A key aspect of our growth strategy will be to continue to leverage and grow our infrastructure through acquisition and partnerships around new products. To that end, in September 2020, we added a new member to our management team in the role of SVP business development and strategy. with a focus on identifying, evaluating, negotiating, and acquiring new products to commercialize. We are exploring a large number of opportunities, including a portion of our deal pipeline in the negotiation phase in both the US and Canada. We will continue to look at optimizing our portfolio and leveraging our resources with the goal of executing near-term accretive transactions to achieve our sales targets over the coming years. As part of our growth strategy, we were pleased to announce the uplisting to TSX earlier this week. We have demonstrated significant growth since our listing on the TSX Venture Exchange, and given the success and size of our company, it is a logical step in our growth path to graduate to the TSX. We feel confident that graduating to a senior exchange will positively impact access to a broader range of institutional shareholders. The common shares, the convertible debentures, and awards are all expected to begin trading on the TSX effective this morning at market open. The listed securities will continue to trade under the ticker symbols MDP, MDP.DB, and MDP.WT, respectively. In light of this accelerated listing opportunity, we have decided to delay our previously announced plans to list on the NASDAQ capital market. We continue to believe that a dual listing would be beneficial and reaffirm our intention to obtain a NASDAQ listing in the future. However, at this time, we have demonstrated that a graduation to the TSX will provide an opportunity to increase exposure and liquidity while advancing our other ongoing initiatives to enhance shareholder value as we evaluate the timing of a dual listing on NASDAQ. In summary, we believe we have built a highly scalable business platform which should provide significant incremental earnings potential. We continue to grow revenue, leverage our North American sales force across products, realize synergies of the combined entities, and maintain strict financial discipline. We have a solid cash availability from which to execute our business plan including the launch of several new products. I will now turn it over to Alain, who will discuss the financial results in more detail.