Marvell Technology CDR (CAD Hedged)

Good morning. My name is Julianne, and I will be your conference operator today. At this time, I would like to welcome everyone to Moravo Healthcare's Q4 2021 Results Conference Call and Audio Webcast. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, followed by the number one on your telephone keypad. If you would like to withdraw your question, please press star one again. Thank you. Jesse Ledger, President and CEO, you may begin your conference.

Great, thank you. Good morning, everyone, and thank you for joining our call today. On the call with me this morning from Marabo is Mary Jane Burkett, Marabo's Vice President and Chief Financial Officer, and Tina Lucades, Marabo's Vice President, Secretary, and General Counsel. This morning's call makes reference to a presentation on our website that should be viewed concurrently. If you have not downloaded this presentation, I would invite you to do so now by visiting marabouhealthcare.com and scrolling down to the bottom of the page. You can then click on the link. Before we begin, I'd like to remind everyone that some of the statements made during this presentation may be considered forward-looking. The company cautions investors that results of future operations may differ from those anticipated. We ask you to review the cautionary statements and other information contained in the company's filing on CDAR, including the company's Q4 and full year 2021 financial statements and MD&A, and the annual information form for fiscal 2021 that were filed today, which identifies certain factors that could cause actual results to differ materially from those projected in any forward-looking statements made during the call. Copies of the annual information form and other filings are available online. The Moravo business boasts a diversified commercial product portfolio of over 20 products. We are continuing to see organic growth of our key promoted brands through market share expansion and have also recently launched or anticipate launching in the near future new products both in Canada and international markets. Our existing business has a proven track record and is well positioned for continued growth. Our financial results for the year and our strong cash position demonstrate the resiliency of our business in the face of the COVID-19 pandemic. Despite the challenges posed by the evolving COVID-19 pandemic, our diverse business remains well positioned for growth, and we continue to pay down our debt on a quarterly basis. Our commercial business segment continues to grow organically through the efforts of our commercial sales and marketing team. This business segment contributed $11.8 million or 67% of total revenue for the fourth quarter of 2021. Our three key promoted products, Blexton, Cambia, and Suvex, continued to demonstrate year-over-year prescription growth and generated $8.8 million in revenue for Q4. Overall, our commercial segment represents 67% of our total revenue for fiscal 2021. All of our promotional efforts remain focused on Blexton, Cambia, Suvex, and Neovisc. However, the remaining mature products in our commercial segment, highlighted on the next slide, continue to contribute in a meaningful way to our bottom line. These mature products have either lost market exclusivity to their competitors or are not in our core therapeutic focus areas. During the quarter, the revenue in our licensing and royalty segment was $2.7 million, or 15% of our total revenue. Royalty revenue is generated from licensing of our intellectual property and related products globally under exclusive licensing agreements. Our royalty revenue has been negatively impacted by continued reductions in net sales of Vamopo in the United States as a result of generic competition, which entered the market in 2020. As well as a stronger Canadian dollar against the U.S. dollar reduced the contribution from certain U.S. dollar denominated royalty streams. We do see continued growth potential for our licensing and royalty business as we remain focused on identifying new international partnering opportunities for our products in this segment. The production and services segment revenue for the fourth quarter was $3.2 million, or 18% of total revenue. The sources of revenue in this segment are from products manufactured by our facility in Varennes, Quebec, or from product contract manufactured for Moravo and supplied to Moravo Distribution Partners. I will now turn the call over to Mary Jane, who will take you through our financial results for the fourth quarter and fiscal year 2021.

Thanks, Jesse. Today's presentation includes references to non-IFRS financial measures, specifically adjusted total revenue, adjusted EBITDA, and cash value of loans. These measures are not recognized under and do not have standardized meanings under prescribed by IFRS. These measures should be considered as supplemental in nature and not a substitute for the related financial information prepared in accordance with IFRS. The company believes that shareholders, investment analysts, and other readers find such measures helpful in understanding and assessing the company's financial performance. For a description of how Mirabo defines these non-IFRESH measures, as well as the reconciliations of these measures to our financial statements, please refer to slides 26 through 28 of this presentation, which is posted on the Mirabo website, as well as management's discussion and analysis filed on CDAR. For your reference, slides five through eight outline the products and related revenue streams that comprise each of the company's business segments, which are referenced throughout the presentation. Adjusted total revenue was $17.8 million and $69.4 million for the three months and year ended December 31, 2021, compared to $17.3 million and $71 million for the three months and year ended December 31, 2020. The $1.6 million decrease in adjusted total revenue in the current year was due to a decrease of $6.7 million of revenue from the licensing and royalty business segment and a decrease in revenue of $0.7 million in the production and service business segment, slightly offset by an increase in revenue of $5.8 million from the commercial business segment. Revenue attributable to the commercial business segment increased during the year ended December 31, 2021, due to a $7.3 million increase in sales of the company's promoted products, Blexton, Cambia, Subex, and Neobix, offset by a $1.5 million decrease in sales of the company's mature products. The production and service business segment revenue decreased in the current year, primarily due to a decrease in Pensee 2% and results product sales, as well as a stronger Canadian dollar against the U.S. dollar, which reduced the contribution from U.S. denominated product revenue streams, mainly Pensee 2% for the U.S. market. The decrease in revenue in the licensed and royalty business segment during the year ended December 31, 2021, was primarily due to a $4.5 million reduction in U.S. Vamobo royalty revenue as a result of a competitor launching a generic version of Vamobo in the U.S. during March 2020, as well as a stronger Canadian dollar against the U.S. dollar, which reduced the contribution from U.S.-denominated royalty streams during the current year. In addition, the comparative year the company received a U.S. $1.8 million milestone payment net of withholding taxes related to the use of its Yosprela intellectual property in Japan. Adjusted EBITDA was $3.4 million and $22.2 million for the three months and year ended December 31, 2021, compared to $6.2 million and $28.4 million for the three months and year ended December 31, 2020. During the current year, a $5.5 million increase in gross profit from the company's commercial business segment, net a $1.4 million decrease in inventory step-up expense, was more than offset by a $6.7 million decrease in contribution from the company's licensed and royalty business segment, a $1.5 million decrease in gross profit contribution from the production and service business segment, and a $1.9 million increase in sales and marketing expenses. During the three months and year ended December 31st, 2021, the company repaid US $2.5 million and US $10.8 million of the amortization loan to Deerfield, reducing its cash value of loans outstanding to US $88.4 million. Since the inception of the Deerfield financing on December 31st, 2018, the company has repaid US $30.1 million towards the Deerfield loan, The interest rate for both the amortization loan and convertible loan is fixed at 3.5%. The company anticipates making a U.S. $2.8 million payment to Deerfield this week. As of March 25th, the company had 11.4 million shares outstanding. Attached to the company's amortization loan are 25.6 million warrants issued to Deerfield at a $3.53 Canadian strike price. of which 12.3 million are currently classified as flexible exercise shares. The company's convertible loan may be converted into common shares of the company at Deerfield Options at a U.S. $2.70 per share conversion. Bravo shares closed at $1.40 per share on March 25th. The company's amortization loan and convertible loan mature and outstanding warrants expire on December 31st, 2024. As at December 31st, 2021, the company had cash on hand of $30.9 million with an enterprise value of $97.5 million. Jesse will now continue with our business update.