Medicure Inc.

Welcome to Medicare's earnings conference call for the quarter ended September 30, 2024. My name is Jenny, and I will be your operator for today's call. At this time, all participants are in a listen-only mode. And 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 and Form 20F. Later, we will conduct a question and answer session. Please note that this conference is being recorded and today's date is November 26th, 2024. I would now like to turn the conference call over to Dr. Albert Friesen, Chief Executive Officer of Medicure Incorporated. Please go ahead, Dr. Friesen.

Thank you and good morning to all on the call. We appreciate your interest and participation on today's call. On the call today with me, is for the Q3 2024 financial statement is Dr. Neil Owens, President and Chief Operating Officer, and Horace Uden, Medicare's Chief Financial Officer. The net revenue for Q3 2024 was $5.2 million, which is similar to the previous quarter. The net income for the quarter was $680,000 or $0.07 per share compared to loss. in the previous quarter and a net income of $84,000 in Q3 of the previous year. The significant income was due in large part due to a settlement payment. Included in the quarter expenses was an R&D expense of $785,000 largely due to the MC1 PNPO clinical trial. Revenue from AcroStat was down a bit and revenue from both Morley Drug and Zipidimac were up a bit. We've added a fifth focus, that being the development of a novel drug related to MC1 with significant market potential. So we now have five focuses in the business. Number one, holding sales and profits from Agristat, growing Zypidemag revenue and profit. Three, growing the Marley Drug online pharmacy business. Four, developing MC1 for the PNPO deficiency, which has large market potential. And the fifth, a new chemical entity related to Medicare's historic drug development with a large market potential. I would now like to turn the call over to our Chief Financial Officer, Horace Uden, to review and provide some color on the financial results for Q3.

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 copy of our financial statements for the quarter ended September 30th, 2024 by the end of day today, along with previous financial statements on the investors page of our website. Alternatively, a copy of all financial statements and management discussion and 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 September 30th, 2024. Total revenue for the quarter ended September 30th, 2024 was $5.2 million compared to $6 million for the quarter ended September 30th, 2023. Net revenues earned from Agristat during the current period totaled $1.9 million, a decrease from the prior year where net revenue from Agristat was $2.4 million. The decrease in agri-start revenue during the current year is the result of pricing pressures from increased competition stemming from the launch of generic Tyro-5 and hydrochloride. Net revenues earned from Zipidimeg through the traditional insured channel for the current quarter totaled $553,000, which is an increase from the $398,000 net revenue earned during the same period in the prior year. The increase in Zipidimax sales through the traditional insurer channel can be attributed to greater utilization of the product through insurance formularies, specifically Medicare Part D. This increase is offset by increased wholesaler fees in addition to higher coverage gap payments to pharmacy benefit managers. For Marley Drug, net revenue during the current quarter totaled $2.7 million, an increase from the prior year where net revenue totaled $2.2 million. The pharmacy business has undergone a change in its product mix since the prior year, resulting in the increase in revenue during the current period, and continues to focus on fulfillment partnerships, its e-commerce platform, and increased sales of Cipinameg. Offsetting the increase in revenue is a decline in reimbursements from pharmacy benefit managers, which only impact insured prescription revenue. Agri-Stack cost of goods sold for the quarter ended September 30, 2024, totaled $720,000, an increase from the prior year where cost of goods sold totaled $648,000. The increase in cost of goods sold is the result of an inventory write-down of $71,000 recorded in the current period related to expired unfinished product inventory. Zepidemec cost of goods sold for the current quarter totaled $299,000, an increase from the prior year where cost of goods sold for Zepidemec for the quarter ended totaled $34,000. Included within the cost of goods sold for Zepidemec in the current year is $144,000 relating to products sold to customers, $155,000 of amortization of the Zepidemec intangible asset. The increase in cost of goods sold during the current quarter is due to higher volume of products sold during the current year, in addition to a recovery of $281,000 in Zepidemeg royalties, which were recorded during the same period in the prior year. Marley drug cost of goods sold totaled $1.3 million during the period ended September 30th, 2024, an increase from the period ended September 30th, 2023, where cost of goods sold totaled $680,000. The increase in cost of goods sold during the current year is the 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 $1.97 million for the quarter ended September 30, 2024, a slight decrease from the same period in the prior year where selling expenses were $2 million. The decrease in selling expenses during the current quarter in comparison to the same period in the prior year is a result of decreases in consulting, commercial salaries and marketing expenses. General and administrative expenses totaled $1.2 million for the quarter ended September 30, 2024 in comparison to $1 million during the same quarter in the prior year. The slight 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 previously granted stock options to key employees and directors of the company. Research and development expenses for the quarter ended September 30, 2024 totaled $795,000 compared to $508,000 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. Other income during the quarter ended September 30, 2024 was $1.9 million. The other income recorded during the current period was a result of a legal settlement between the company and its contract development and manufacturing organization. The company received a settlement payout subsequent to quarter end During the quarter ended September 30, 2023, the company did not record any other income. The company recorded finance income of $18,000 during the period ended September 30, 2024 in comparison to finance income of $3,000 during the three-month period ended September 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 $46,000 during the quarter ended September 30, 2024, in comparison to a foreign exchange loss of $17,000 during the quarter ended September 30, 2023. The change in foreign exchange loss related to changes in the U.S. dollar exchange rate during the respective years, which led to an unfavorable increased foreign exchange loss during the current period. Adjusted EBITDA for the quarter ended September 30th, 2024 was negative $467,000 compared to an adjusted EBITDA of $429,000 during the quarter ended September 30th, 2023. The decrease in adjusted EBITDA during the current period is primarily due to higher monthly drug cost of goods sold, lower agri-stat revenue as well as higher research and development expenses and general and administrative expenses. Offsetting these increases were decrease in selling expense and higher epidemic sales through both the Marley Drug Pharmacy business and traditional insured channel. As of September 30, 2024, the company had cash totaling approximately $4.9 million, a 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.