Medicure Inc.

Welcome to Medicare's earnings conference call for the quarter ended March 31, 2025. 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. 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 this conference is being recorded and today's date is May 22, 2025. I would now like to turn the conference over to Dr. Albert Friesen, Chief Executive Officer of Medicure Incorporated. Please go ahead, Dr. Friesen.

Thank you, Jenny, and good morning to all on the call. We appreciate your interest and participation in today's call. Joining me today, excuse me, Joining me today on the Q1 2025 financial statements call is Dr. Neil Owens, President and Chief Operating Officer, and Horace Uden, Medicare's Chief Financial Officer. The net revenue for Q1 2025 was 5.5 million, a slight decrease from the previous year's net revenue, which was 5.7. The company recorded a net loss for Q1 of approximately $694,000 or $0.07 per share compared to a net income of $51,000 the first quarter of 2024. The net loss in the current period was due in large part due to significant R&D expenses of $570,000 mainly for the MC1 PNPO clinical trial. and a bit of a decrease in agri-staff revenue, a decrease in zypinimic revenue from the insured channel, amortization of the company's intangible assets. Offsetting this was decreases in selling and general and administrative costs. In addition, higher revenue through Marley Drug, including higher sales of zypinimic through Marley Drug. The company has five focuses. Agristat sales and profits holding them, growing Zypidemag revenue and profit, growing the Marley Drug online pharmacy, including new pharmacies we've recently added, the development of MC1 for PNPO deficiency, and a new chemical entity related to Medicare's historic drug development with a very large market potential. I'd now like to turn the call over to our Chief Financial Officer, Harasudan, to review and provide on the Q1 2025 statements.

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 can obtain a complete copy of our financial statements for the quarter ended March 31st, 2025, along with previous financial statements on the investors page of our website. In addition, a copy of all financial statements and management's discussion and analysis can be obtained from CDARplus.ca. I will now provide some key highlights on our performance for the three-month period ended March 31, 2025. Total revenues for the quarter ended March 31, 2025 were $5.5 million compared to $5.7 million for the quarter ended March 31, 2024. Net revenues earned from Agristat during the current period totaled $1.7 million, a decrease from the prior year, where net revenue from Agristat was $2.3 million. The decrease in Agristat revenue during the current period is the result of a lower volume of units sold as a result of increased competition from generic Taro 5 and hydrochloride. Net revenues earned from Cepidemeg through the traditional insured channel during the current period totaled $519,000. which is a decrease from the $777,000 of net revenue earned during the same period in the prior year. The decrease in Zipidimic revenue during the three-month period ended March 31, 2025 can be attributed to a decrease in utilization of the product through insurance formularies, specifically Medicare Part D. It is important to note that Zipidimic sales through Marley Drug are excluded from this number. For Marley Drug, net revenue during the current quarter totaled $3.1 million. An increase from the $2.7 million earned from Marley Drug during the three-month period ended March 31, 2024. The increase in Marley Drug sales during the current period is due to an increased volume of products sold, including Zepidemeg. Net revenue attributable to Zepidimic through Marley Drug was $918,000 during the current period. An increase in the three-month period ended March 31, 2024 whereas Zepidimic sales were $567,000 through Marley Drug. On March 11, 2025 the company acquired Gateway Pharmacy. Revenue for Gateway Pharmacy between the period of March 11, 2025 to March 31, 2025 was $175,000 The company intends on offering Zepidimac to the pharmacy in subsequent quarters in addition to other product offerings which have increased revenue at Marley Drug. Moving to cost of goods sold, Agristat cost of goods sold for the quarter ended March 31st, 2025 totaled $699,000, an increase from Q1 2024 where cost of goods sold totaled $403,000. The increase in cost of goods sold is attributable to insurance proceeds received by the company during the three-month period ended March 31, 2024, of $281,000 for inventory which had been previously expensed during 2023. Normalizing for this, in addition to foreign exchange rate differences between the two periods, cost of goods sold for Agristat did decrease, which is consistent with the lower revenue for Agristat recorded during the current period. Zepidemec cost of goods sold for the current quarter totaled $244,000, a decrease from Q1 2024, where cost of goods sold for Zepidemec through the insured channel for the quarter ended, totaled $315,000. For the current period, included within cost of goods sold for Zepidemec is $82,000 relating to products sold to customers and $162,000 of amortization of the Zepidemec intangible assets. The decrease in cost of goods sold noted during the current quarter is consistent with a decrease in revenue noted during the current period. Margarity drug cost of goods sold totaled $1.6 million during the period ended March 31, 2025. An increase from the period ended March 31, 2024, where cost of goods sold totaled $1.1 million. The increase in cost of goods sold during the current period is a result of a higher volume and the nature of products sold through both the mail order and e-commerce platform. Gateway Pharmacy's cost of goods sold during the three-month period ended March 31, 2025 was $110,000. The cost of goods sold reported for Gateway Pharmacy is only from its acquisition date of March 11, 2025 to March 31, 2025. Selling expenses totaled $1.8 million for the quarter ended March 31, 2025, a decrease from Q1, 2024, where selling expenses were $2 million. Selling expenses decreased in the current period as a result of lower consulting and marketing expenses incurred by the company. General and administrative expenses totaled $1.1 million for the quarter ended March 31, 2025, in comparison to $1.2 million during Q1, 2024. The decrease in general and administrative expenses in the current period is a result of lower legal fees in the current period in addition to lower share-based compensation expense, which is based on the vesting schedule of previously granted stock options to key employees and directors of the company. Research and development expenses for the quarter ended March 31, 2025 totaled $570,000 compared to $680,000 during the same quarter in the prior year. The decrease in the current period is primarily due to the timing of research and development expenditures relating to each development project the company is currently undertaking, which in the current period was primarily the development of MC1. The company recorded finance income net of $34,000 during the current period ended of $34,000 in comparison to finance income net of $51,000 during the three-month period ended March 31, 2024. The finance income recorded during the current period primarily related to interest income earned, offset by bank charges, interest on the company's lease obligations, and non-cash accretion expense on the company's acquisition payable liability, which is in connection with the acquisition of Gateway Pharmacy. The company recorded a foreign exchange loss of $35,000 during the quarter ended March 31, 2025, in comparison to a foreign exchange loss of $7,000 during the quarter ended March 31, 2024. The change in foreign exchange loss relates to changes in the U.S. dollar exchange rate during the respective years. Adjusted EBITDA for the quarter ended March 31, 2025 was $28,000 compared to an adjusted EBITDA of $359,000 during the quarter ended March 31, 2024. The decrease in adjusted EBITDA during the current period is due to a decrease in operating income, which primarily relates to decreased revenues from the sale of Agristat and Zepidimeg through the insurer channel, offset by higher revenue through Marley Drug, including higher revenue of Zepidimeg through Marley Drug. In addition, the company also had lower selling expenses and general administrative and research and development expenses. As of March 31st, 2025, the company had cash totaling approximately $7.2 million, consistent with the $7.2 million of cash held as of December 31st, 2024. 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 operations.

Thank you, Horace, and good morning, everyone. I'd like to start with some updates on our ZupytaMag business. Sales of Zipidimeg sold through Marley Drug grew by 17% from $770,000 in Q1 2024 to $900,000 in Q1 2025. To grow sales further, we plan to continue to use a field-based sales team as well as prescriber and consumer marketing. Patients still have challenges in accessing Zipidimeg through their insurance coverage, which is a reason why selling Zipidimeg through Marley Drug is such an effective approach. Similarly, due to wholesaler and coverage gap fees, low PBM reimbursement, and product returns, selling through Marley Drug provides a much higher gross margin. We've also found that the adherence rate for patients taking Zipidimac is more than 40% higher through Marley Drug compared to other retail pharmacies because of our customer service and engagement strategies. This helps for reducing our attrition rate and increasing revenue. Net revenue through insured channels and the standard retail pharmacy model fell from $777,000 in Q1 2024 to $519,000 in Q1 2025. This is due to a decrease in purchasing from wholesalers and changes in the mix of our insured customers. Overall, Zipidemic represents a priority for growth through efforts of our sales and marketing team. Further on our Marley drug business, net revenue grew by 15% from $2.7 million in Q1 2024 to $3.1 million in Q1 2025. This is due to an increase in Zipidimeg sold through the pharmacy business, as well as generic medication sales, and notably the sale of Rinzavi tablets, which is an accessible alternative SGLT2 inhibitor to Jardiance and Farcega. Medicare is working on leveraging Morley Drug's reputation for customer service, unique branded solutions, and national distribution to continue to drive growth. Challenges we've faced include competition and an increase in cost of goods, which impacts our margins. We plan to further invest in our e-commerce website to make it a best-in-class experience for customers. Recently, Medicare acquired, announced the acquisition of Gateway Medical Pharmacy, and signing of a definitive agreement with West Olympia Pharmacy. These additional pharmacy subsidiaries immediately grow our customer and prescriber base for both Cepidemag and other branded products and will be adopted under the Marley Drug brand. Additional benefits of these acquisitions include faster shipping times and redundancy, growing our brand nationally, increasing our revenue, and our cash flow positive. In terms of our Agristat business, net revenue fell from $2.3 million in Q1 2024 to $1.7 million in Q1 2025 due to generic tire five-band competition. Medicare remains the only manufacturer of the 3.75 milligram Bull's-file format, which is typically administered before the infusion unit. We continue to provide support to our U.S. hospital accounts and plan to remain price competitive in targeted ways. Medicare's R&D focus is primarily on its Phase III study to seek approval of MC1 as the first FDA-approved therapy for patients with PNPO deficiency, which is a rare pediatric disease leading to seizures and is ultimately fatal if untreated. A successful use of Medicare's legacy product MC1 could lead to a priority review voucher, which can be redeemed or sold, and provides significant value. The FDA granted approval to start enrollment and so enrollment is ongoing with patients receiving treatment with MC1. Medicare also recently announced fast-track designation for MC1 for its intended indication, which will facilitate the review of Medicare's FDA new drug application. Recently, the Phase III study's first patient has completed the study enrollment period and has moved into a continuation phase post-enrollment. Medicare recently announced that it has signed an asset purchase agreement for the acquisition of the patent and intellectual property related to the discovery of new chemical entities that can be developed for therapeutic use. We believe that these new chemical entities hold promise to provide improvements over existing lead compounds in alignment with treatment of diseases being targeted by Medicare and could provide significant long-term value upon completion of all required preclinical and clinical studies and regulatory approval. Medicare has yet to announce the clinical therapeutic target, however, has started preclinical testing and API development of the lead compound. Overall net revenue in Q1 2025 was $5.5 million compared to $5.7 million in Q1 2024, despite an increase in regulatory revenue due to lower revenue from Agristat and Epidemi-X filter insurance. In part because of higher Marley Drug cost of goods and R&D expenses of $570,000 in Q1 2025, we are reporting an adjusted EBITDA of $28,000 and a net loss of $694,000. Medicare remains debt-free, and to reiterate, the company's short-term goals are focused on growing Zipidimac, growing Marley Drug and our pharmacy business, maintaining Agristat sales, and development of new products. short-term seeking the approval of MC1 to receive a priority review voucher, and long-term the development of our new intellectual property for diseases with large market potential. With that, I'd like to turn the call back to Dr. Friesen for final comments.

Thank you, Neil. The overall revenue was consistent with last year. There were significant developments through the acquisition of additional pharmacies to our main one, Marley Drug, which we think strongly complements Medicare's business, including the sales and marketing of Zypinib. We are focused on growing the business and diversifying our revenue and asset base near-term through acquisition and long-term through R&D, carefully investing to grow our future profitability. My goal in that of our board, management, and staff is to continue to build this business with a stable long-term outlook to generate value for our shareholders. And as always, I want to express my sincere appreciation to our outstanding team of employees that we are blessed with. Thank you, our shareholders, for continued support and interest. Now I'll turn it over to our moderator for Q&A.

Thank you very much. We will now begin the question and answer session. If you have a question, please press Star 1 on your phone keypad now. We ask that while you're posing your question, you please pick up your handset if you're listening on a speakerphone to provide optimum sound quality. Please wait a moment whilst we poll for any questions.

Just a reminder, it's Star 1 if you would like to ask a question. I'm not seeing anybody in the queue for questions.

I'll just wait a little longer just in case. Okay. Well, I can hand it back over to the management team for any further remarks.

Thank you, Janice. And thank you for all that were on the call. We look forward to updating you on our next Q call. Thank you.

Thank you very much, ladies and gentlemen. This concludes today's conference. Thank you for participating. You may now disconnect.