Medexus Pharmaceuticals Inc.

Good day, ladies and gentlemen, and welcome to the Medexis Pharmaceuticals second quarter 2022 earnings call. At this time, all participants have been placed on the 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 with Investor Relations. Ma'am, the floor is yours.

Thank you, and good morning, everyone. Welcome to the Medexus Pharmaceuticals second quarter fiscal 2022 earnings call. On the call this morning are Ken D'Entremont, Chief Executive Officer, and Marcel Conrad, 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. MEDEXIS 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 any standardized meeting under IFRS and therefore may not be comparable to similar measures presented by other companies. For more information about both forward-looking information and non-IFRS financial measures, including a 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 the financial statements are available on the company's website at www.nexus.com and on the company's corporate filings on CEDAR at www.cedar.com. I would now like to turn the call over to Ken D'Entremont to discuss the second quarter.

Thank you, Tina. Thanks, everyone, for joining us on this call today. Before I discuss the financials, I would like to remind everyone that during the year ended March 31st, 2021, we changed our presentation currency to U.S. dollars from Canadian dollars. We applied the changes retrospectively and have restated the comparative financial information in our unaudited condensed interim consolidated financial statements for the three and the six-month periods ending September 30, 2021, as if the presentation currency had always been U.S. dollars. In the second quarter of fiscal 2022, we achieved revenue of $17.9 million compared to $17.8 million for the three-month period ending September 30, 2020. As a reminder, over $2.5 million in revenue, which was originally expected to be realized in September of 2020, was instead realized in early October 2020 due to the delay in receipt of the finished product from one of our manufacturing partners. So after adjusting for that event, which impacted the comparative period figures, we actually saw a drop in revenue compared to the prior quarter, mainly due to a drop in Xfinity net sales. This decline was partially offset by strong RuPaul sales, which saw unit demand growth of 33% in the trailing 12 months ended September 30th, 2021. Percival and Metaljet remained relatively stable. Adjusted EBITDA decreased to a loss of 2 million compared to positive 2.3 million for the same period last year, due in large to an increase in research and development costs over the comparative period, the significant investments we made to improve capacity for future business development, and the investments we made related to the plans for the commercialization of Trio Sulfan in the U.S., which we will discuss later. Our net cash outflow was $2.1 million for the period compared to $1.1 million for the same period last year. Our net income was $10.1 million compared to a loss of $1.6 million for the same period last year. This included a non-cash unrealized gain of $16.3 million in the current period on the fair value of the embedded derivatives in our convertible debentures, which was driven by a change in our share price at the end of the applicable periods. Our adjusted net loss, which adjusts for such unrealized losses or gains on the fair value of the derivatives, was $6.1 million compared to $1.3 million for the same period last year. As at September 30th, 2021, we had $8.1 million in cash and cash equivalents with $9.6 million of total available liquidity. Turning to our specific product lines, we continue to see strong demand from our core product portfolios. Even with the changes to the selling environment brought on by COVID-19, our U.S. team has seen positive trends in the Xfinity patient unit demand, indicating continued patient conversions on top of a stable existing base of patients. In fact, Xfinity unit market demand in the United States grew 3% in the trailing 12 months ended September 30, 2021. While net sales for Xfinity continue to be lower in the comparative periods, we believe this trend is temporary. Over the last few quarters, we have been implementing changes to improve the supply chain and selling process and we believe that Xcinity sales are on track to recover to previous levels in the coming quarters and well positioned to grow in the future. We're also investing in a pediatric study that, if successful, will facilitate the expansion of Xcinity product label to include the pediatric population. The study has now completed 100% of the patient enrollment, and we expect to finish the study by June 2022 and submit the full data set to the FDA by the end of 2022. Turning to RESUVO, a once-weekly subcutaneous single-dose autoinjector of methotrexate indicated for the treatment of rheumatoid arthritis, psoriasis, and juvenile idiopathic arthritis, or JIA, Unit demand in the United States remained steady in the trailing 12 months ended September 30th and continues to reflect strong payer, prescriber, and patient acceptance. Pursuval continues to perform reliably in an increasingly competitive market. Unit sales were up as we lowered price to protect our strong market position in the auto-injector segment. As I mentioned earlier, Rupal is experiencing very strong unit demand growth in its market, with an increase of 33% in the trailing 12 months ended September 30, 2021, as physicians are switching patients from either the generic prescription antihistamines or over-the-counter products. We expect Rupal will be a leading prescription antihistamine in a total market valued at $123 million, including $70.1 million from the prescription market, which is going at an annual rate of more than 17%. During the 12-month period ended September 30th, 2021, Rupal was one of the fastest-growing antihistamines in the Canadian prescription market. Medijac unit demand in Canada remained steady in the trailing 12 months ended September 30th, 2021, but saw unit demand growth of 16% for the three months ended September 30th, 2021, compared to the same period in 2020. Mediject is a pre-filled syringe of methotrexate which is indicated for the treatment of rheumatoid arthritis and psoriasis. It is highly effective and cost-efficient treatment for these debilitating diseases. Public reimbursement creates access for a large group of patients who previously could not get the product. We have responded to a competitive threat to Mediject from a generic entry with a commercial response to protect its market share and a legal action to defend the product's IP. On August 28, 2020, we, along with our licensing partner, MedAct GmbH, jointly filed a statement of claim against Accord Healthcare regarding the launch of Accord Healthcare's generic version of Metal Jack in the Canadian market. The trial date has now been set for the beginning of 2023. During the year ending March 31, 2021, we entered into an exclusive license to commercialize Tritosulfan in the United States. Creosulfan is an innovative orphan-designated agent developed for use as part of a conditioning treatment in combination with fludarabine as a preparative regimen for patients undergoing allogeneic hematopoietic stem cell transplantation, or alloHSCT. On August 2, 2021, we received a notice from MedAct, our licensing partner, that it had received a complete response letter, or CRL, from the U.S. Food and Drug Administration with respect to the new drug application for use of trisulfan in the United States. The FDA has provided recommendations on how to address what they see as the outstanding issues, primarily around provision of additional clinical and statistical data and analyses pertaining to the primary endpoint of the completed pivotal Phase III studies. These recommendations are already covered by MED Act's existing development plan for Triosulfan, which MED Act is contractually responsible to execute and fund. We are in active discussions with MED Act to meet the agency's request. It is our belief that the CRL provides a path to review and approval that does not require additional clinical studies, provided we can satisfy the FDA's data requirements and post-marketing commitments. We are actively working with MedAct to address comments of the FDA and have scheduled a Type A meeting with the FDA on November 23rd, 2021. The resubmission plan will be discussed at that meeting and we would expect to receive minutes from the meeting within 30 days. We continue to believe Triosulfan could eventually overtake the current marketing leading product Busulfan which realized 126 million in U.S. sales prior to genericization. In the meantime, we do not expect to make additional payments to MEDAC until we have received FDA approval. In fact, on September 30th, 2021, the company and MEDAC signed an amendment to the licensee agreement in which, among other things, MEDAC agreed to credit the company in the amount of 2.5 million attributable to prior regulatory milestone payments made by the company to MEDAC, which was used to offset certain existing invoices and payments the company owed MEDAC. Upon FDA approval, such amounts would again become payable to MEDAC. As Marcel will touch on later in the call, we did see an increase in costs over the comparative period, which increases related in part to investments the company made in connection with the anticipated commercialization of Trilosulfan in the United States. However, I would like to point out we had not yet hired the additional sales representatives for Triosulfan, and we're reallocating certain new non-field sales hires to focus on Xfinity, and that we otherwise acted quickly to defer or cancel any further significant expenses related to Triosulfan launch after receiving notice of the complete response letter. On August 5th, 2021, we held a webinar to discuss the complete response letter in full detail, which can be viewed on our media section on our website. On July 12th, 2021, we also formalized our licensing agreement with MedActor Triosulfan in Canada and subsequently announced on September 21st, 2021, that we initiated the first commercial shipment of the product under the brand name Tricondyph. The product is currently being used by a number of reputable centers, including Princess Margaret, the largest cancer center in Canada, and one of the largest in the world. We believe that a key aspect of our growth strategy will be to continue to leverage and grow our infrastructure through the acquisition and partnership of new products. We are exploring a large number of opportunities, including a portion of the 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 sales growth targets over the coming years. In summary, we believe we have built a highly scalable business model 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. With the available liquidity at the end of the second quarter, we are in a good position to execute our business plan, including the launch of several new products. I will now turn the call over to Marcel, who will discuss the financial results in more detail.