Medicure Inc.

Welcome to Medicare's earnings conference call for the first quarter ended June 30, 2024. My name is Kelly and I will be your operator for today's call. At this time, all participants are on a listen-only mode. Before we proceed, I would like to remind everyone that this presentation contains forward-looking statements relating to future results, events, and expectations. which are made pursuant to the safe harbor provisions of the U.S. Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties, which could cause the company's actual results to differ materially from those in the forward-looking statements. Such risks and uncertainties include, among others, those described in the company's most recent annual information form in Form 20-F. Later we will conduct a question and answer session. Please note that this conference call is being recorded and today's date is August 15th, 2024. I would now like to turn the conference call over to Dr. Albert Friesen, Chief Executive Officer of Medicare Incorporated. Please go ahead.

Thank you, Kelly, and good morning to all on the call. We appreciate your interest and participation in today's call. Joining me today on the Q2 2024 financial statement call is Dr. Neal Owens, President and Chief Operating Officer at Horace Uten, Medicare's Chief Financial Officer. The net revenue for Q2 2024 was $5.2 million, which is down a bit from the previous quarter of $5.7 million, and a bit of an increase over the Q4 2023, which was $5.1 million. The quarter we had For the quarter, we had a loss of $1.2 million compared to a net income of $253,000 for the same quarter last year. The loss was primarily due to a significant increase in R&D expenses for the quarter, which were $868,000 for the MC1 PNPO clinical trial, as well as higher Marley drug costs of goods, lower Agristat revenue, as well as the general and administrative expenses. In summary, revenue for Agristat was down a bit and revenue for both Marley Drug and Zypidemag were up a bit. Again, our four focuses of the business are holding sales and profits for Agristat, growing Zypidemag revenue and profit, growing the Marley Drug online pharmacy and the pharmacy business, and the development of MC1 for the PNPO and deficiency I'd now like to turn the call over to our Chief Financial Officer, Harasudan, to review and provide some color on Q2.

Thank you, Dr. Friesen. A couple of quick items to note before I start. All dollar figures are in Canadian dollars unless otherwise noted by each presenter. And as a reminder, you will be able to obtain a complete copy of our financial statements for the quarter ended June 30th, 2024 by the end of day today, along with previous financial statements on the investor's page of our website. Alternatively, a copy of all financial statements and a management discussion analysis can be obtained immediately from CDAR.com. I will now provide some key highlights of our financial performance for the three-month period ended June 30th, 2024. Total revenues for the quarter end of June 30, 2024 were $5.2 million compared to $6 million for the quarter end of June 30, 2023. Net revenues earned from Agristat during the current period totaled $1.8 million, a decrease from the prior year where net revenue from Agristat was $2.6 million. The decrease in Agristat revenue during the current year is a result of a lower number of units sold in addition to pricing pressures from increased competition stemming from the launch of generic tyrophib and hydrochloride. Net revenues earned from Zipidimic through the traditional insurance channel during the current quarter totaled $654,000, which is a slight decrease from the $722,000 net revenue earned during the same period in the prior year. The slight decrease in Zipidimic sales through the traditional insurance channel can be attributed to higher insurance rebates due to a change in customer mix. For Marley Drug, net revenue during the current quarter totaled $2.7 million, which is consistent with the same period in the prior year, when net revenue was also $2.7 million. The slight increase in Marley Drug sales during the current period is due to an increased volume of sales, including an increased volume of Zepidimax sales through Marley Drug, which are included within this figure. Offsetting these increases are higher pharmacy benefit manager, or PBM, rebates during the current period. The company continues to focus on growing Marley Drug and growing the sales of Cepidemag through Marley Drug into 2024 and beyond. Agristat cost of goods sold for the quarter ended June 30, 2024, totaled $604,000, a decrease from the prior year where cost of goods sold totaled $659,000. The decrease in cost of goods sold is the result of a lower volume of Agristat sold during the current period. Zepidemec cost of goods sold for the current quarter totals $353,000, a slight increase from the prior year where cost of goods sold for Zepidemec for the quarter ended total $300,000. Included within cost of goods sold for Zepidemec is $199,000 relating to products sold to customers and $154,000 of amortization of the Zepidemec intangible assets. The slight increase in cost of goods sold noted during the current quarter is due to a higher volume of products sold during the current year. Marley Drug Cost of Goods Sold totaled $1.25 million during the period ended June 30th, 2024. An increase in the period ended June 30th, 2023 where Cost of Goods Sold totaled $900,000. The increase in Cost of Goods Sold during the current year is a result of a higher volume and the nature of products sold through both the mail order and e-commerce platform during the current year. Selling expenses totaled $1.8 million for the quarter ended June 30, 2024, a decrease from the same period in the prior year, where selling expenses were also $2.1 million. The selling expenses decreased in the current period as a result of less consulting expenses incurred by the company with regards to regulatory reporting on its government contracts, in addition to an overall decrease in revenue noted during the current quarter, resulting in less logistics fees paid by the company. General and administrative expenses totaled $1.4 million for the quarter ended June 30, 2024, in comparison to $1.1 million during the same quarter in the prior year. The increase in general and administrative expenses in the current period is a result of higher legal fees offset by lower share-based compensation expense on the previously granted stock options to key employees and directors of the company. Research and development expenses for the quarter ended June 30, 2024 totaled $868,000 compared to $668,000 during the same quarter in the prior year. The increase during the current period is primarily due to the timing of research and development expenditures related to each development project the company is currently undertaking, which in the current quarter primarily related to the development of MC1. The company recorded finance income of $36,000 during the period ended June 30, 2024, in comparison to finance income of $22,000 during the three-month period ended June 30, 2023. The finance income recorded during the current period consisted primarily of interest income earned on cash held by the company, offset by bank charges and finance expenses on the company's lease obligations. The company recorded a foreign exchange loss of $25,000 during the quarter ended June 30, 2024, in comparison to a foreign exchange loss of $30,000 during the quarter ended June 30, 2023. The change in foreign exchange loss relates to changes in the U.S. dollar exchange rate during the respective years, which led to an unfavorable foreign exchange loss during the current period. Adjusted EBITDA for the quarter ended June 30th, 2024 was negative $514,000 compared to an adjusted EBITDA of $948,000 during the quarter ended June 30th, 2023. The decrease in adjusted EBITDA during the current period is due to higher market drug cost of goods sold, lower agri-stat revenue, as well as higher research and development expenses and higher general and administrative expenses. Offsetting these increases was was a decrease in selling expenses and higher epidemic sales through the Marley Drug Pharmacy business. As of June 30, 2024, the company had cash totaling approximately $5.8 million, a slight decrease from the $6.4 million of cash held as of December 31, 2023. The company does not have any debt on its books. I want to remind you that there will be an opportunity at the end of today's call for you to ask questions regarding the financial results of the company as a whole. And with that, I would like to turn the call over to our President and Chief Operating Officer, Dr. Neil Owens, for some additional commentary regarding our operation.