KEY HIGHLIGHTS
- Q1 2024 revenue was
$12.5 million , Adjusted EBITDA1 was$2.7 million and cash from operations was$0.8 million , compared to$14.8 million ,$5.1 million and$4.0 million , respectively, in Q1 2023. - Canadian product sales grew 4% from
$8.8 million to$9.2 million , however, royalty revenues declined 75% from$2.7 million to$0.7 million . - Completed a Product Listing Agreement ("PLA") with the province of
British Columbia ("BC"), for the listing and public reimbursement of Vascepa. - On
May 1, 2024 , HLS provided Pfizer with a notice of termination of the promotional services agreement (the "Agreement") for the commercialization of Vascepa in primary care.
"We made progress on several fronts in Q1, but financial results for Vascepa and Clozaril were below expectations as ex-factory orders typically placed at quarter end were pushed into April due to the early Easter holiday. As expected, the large decline in royalty related revenue had the greatest impact on revenue and Adjusted EBITDA," said
Q1 2024 OTHER HIGHLIGHTS
- Vascepa unit demand increased by 54% compared to Q1 2023.
- The number of consistent prescribers2 for Vascepa increased 112% compared to Q1 2023.
- Vascepa net revenue was
C$4.5 million , up 27% compared toC$3.5 million in Q1 2023. - The number of patients on Clozaril in
Canada increased by 1.4% compared to Q1 2023.
"We have been closely examining the performance of our go-to-market model in primary care. We have concluded that the ROI for this model remains unprofitable and, despite best efforts, there are not enough signs of improvement to justify continuing at our current level of investment. As a result, we have provided Pfizer with a notice of termination of the Agreement between the two companies. We are working with them on an orderly wind down and transition back to HLS of all primary care related activities which we expect will be completed during the second half of 2024. We thank Pfizer for the commitment and effort that they have made towards trying to make this go-to-market model successful."
"We believe in the promise and long-term revenue potential of Vascepa and are confident we can effectively support both specialists and the growing base of primary care prescribers with our HLS sales team while retaining the flexibility to scale the team as demand grows. We are excited about this opportunity to bring both specialty and primary care in-house and to take an even greater role in ensuring this important medicine reaches its potential. Furthermore, the termination of the Agreement with Pfizer, once fully executed, could result in as much as
2024 UPDATED OUTLOOK
For both Vascepa and Clozaril, HLS expects to positively impact demand for the remainder of the year with the actions it is taking. However, based on year-to-date trends for Vascepa and some potential adjustments from the sales force transition, the Company is lowering its full year consolidated revenue guidance to a range of
Vascepa revenue is now expected to be in a range of
Based on lower expected sales of Vascepa, and not including any potential benefits the Company may derive in 2024 from the termination of the Agreement described above, HLS is also lowering its full year Adjusted EBITDA target to
Q1 2024 FINANCIAL REVIEW
The Company's Management's Discussion and Analysis and Consolidated Financial Statements for the three-month period ended
Revenue
Three months ended | ||||
2024 | 2023 | |||
Product sales | ||||
| 9,154 | 8,811 | ||
United States | 2,642 | 3,212 | ||
11,796 | 12,023 | |||
Royalty revenue | 677 | 2,734 | ||
12,473 | 14,757 |
Excluding royalties, revenue for the Company's marketed products (Vascepa, and Clozaril) in Q1 2024 was down 2% from Q1 2023. Lower than expected sales were driven in large part by the delayed timing of ex-factory orders for both Vascepa and Clozaril at the end of March and, in the case of US Clozaril, excess year-end inventory.
Product sales –
000's of CAD | Three months ended | |||||
2024 | 2023 | % change | ||||
Clozaril | 7,865 | 8,418 | (6.6) % | |||
Vascepa | 4,471 | 3,515 | 27.2 % | |||
Other | 13 | |||||
12,349 | 11,933 | 3.5 % |
Q1 2024 product sales in
Product Sales –
In the
Royalty revenues
Q1 2024 royalty revenues were down 75% from Q1 2023 as the term for what was the largest royalty in the portfolio came to an end midway through Q4 2023.
Operating Expenses
Three months ended | ||||
2024 | 2023 | |||
Cost of product sales | 1,774 | 1,444 | ||
Selling and marketing | 4,526 | 4,807 | ||
Medical, regulatory and patient support | 1,265 | 1,076 | ||
General and administrative | 2,201 | 2,351 | ||
9,766 | 9,678 |
Cost of product sales was up for the quarter due to the higher sales volumes of Vascepa.
Excluding cost of product sales, Q1 2024 operating expenses were
Adjusted EBITDA1
Three months ended | ||||
2024 | 2023 | |||
Net loss for the period | (6,106) | (5,792) | ||
Stock-based compensation | 256 | (55) | ||
Amortization and depreciation | 5,919 | 8,319 | ||
Finance and related costs, net | 2,667 | 2,434 | ||
Other costs | — | 213 | ||
Income tax recovery | (29) | (40) | ||
Adjusted EBITDA | 2,707 | 5,079 |
Q1 2024 Adjusted EBITDA was
For Q1 2024, the direct brand contribution from Clozaril to Adjusted EBITDA was
Net Loss
Net loss for Q1 2024 was
Cash from Operations and Financial Position
Cash generated from operations in Q1 2024 was
Total borrowings under the credit agreement at
Q1 2024 CONFERENCE CALL
HLS will hold a conference call today at
CONFERENCE ID: 64428
DATE: Thursday, May 9, 2024
TIME: 8:30 a.m. ET
WEBCAST LINK: https://app.webinar.net/lw3W7LjxZGA
TRADITIONAL DIAL-IN NUMBER: 1-800-836-8184 or 1-289-819-1350
RAPIDCONNECT: To instantly join the conference call by phone, please use the following URL to easily register and be connected into the conference call automatically: https://emportal.ink/3xw9YCV
TAPED REPLAY: 1-888-660-6345 or 1-289-819-1450
REPLAY CODE: 64428#
The taped replay will be available for 14 days and the archived webcast will be available for 365 days.
A link to the live audio webcast of the conference call will also be available on the events page of the investors section of
ABOUT
Formed in 2015, HLS is a pharmaceutical company focused on the acquisition and commercialization of late-stage development, commercial stage promoted and established branded pharmaceutical products in the North American markets. HLS's focus is on products targeting the central nervous system and cardiovascular therapeutic areas. HLS's management team is composed of seasoned pharmaceutical executives with a strong track record of success in these therapeutic areas and at managing products in each of these lifecycle stages. For more information visit: www.hlstherapeutics.com
1CAUTIONARY NOTE REGARDING NON-IFRS MEASURES
This press release refers to certain non-IFRS measures. These measures are not recognized measures under IFRS, do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement those IFRS measures by providing further understanding of HLS's results of operations from management's perspective. Accordingly, they should not be considered in isolation nor as a substitute for analysis of HLS's financial information reported under IFRS. HLS uses non-IFRS measures to provide investors with supplemental measures of its operating performance and thus highlight trends in its core business that may not otherwise be apparent when relying solely on IFRS financial measures. HLS also believes that securities analysts, investors and other interested parties frequently use non-IFRS measures in the evaluation of issuers. HLS's management also uses non-IFRS measures in order to facilitate operating performance comparisons from period to period, prepare annual operating budgets and assess HLS's ability to meet its future debt service, capital expenditure and working capital requirements.
In particular, management uses Adjusted EBITDA as a measure of HLS's performance. To reconcile net income (loss) for the period with Adjusted EBITDA, each of (i) "stock-based compensation", (ii) "amortization and depreciation", (iii) "finance and related costs, net", (iv) "other costs", and (v) "income tax recovery" appearing in the Consolidated Statement of Net Income (Loss) are added to net income (loss) for the period to determine Adjusted EBITDA. Adjusted EBITDA does not have any standardized meaning prescribed by IFRS and is not necessarily comparable to similar measures presented by other companies. Adjusted EBITDA should not be considered in isolation or as a substitute for net income (loss) prepared in accordance with IFRS as issued by the IASB.
2CONSISTENT PRESCRIBER
A consistent prescriber is a physician that has prescribed Vascepa in at least 4 of the past 5 weeks.
FORWARD LOOKING INFORMATION
This release includes forward-looking statements regarding HLS and its business. Such statements are based on the current expectations and views of future events of HLS's management. In some cases the forward-looking statements can be identified by words or phrases such as "may", "will", "expect", "plan", "anticipate", "intend", "potential", "estimate", "believe" or the negative of these terms, or other similar expressions intended to identify forward-looking statements, including, among others, statements with respect to HLS's pursuit of additional product and pipeline opportunities in certain therapeutic markets, statements regarding growth opportunities, expectations regarding financial performance, and the NCIB and ASPP. The forward-looking events and circumstances discussed in this release may not occur and could differ materially as a result of known and unknown risk factors and uncertainties affecting HLS, including risks relating to the specialty pharmaceutical industry, risks related to the regulatory approval process, economic factors and many other factors beyond the control of HLS. Forward-looking statements and information by their nature are based on assumptions and involve known and unknown risks, uncertainties and other factors which may cause HLS's actual results, performance or achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statement or information. Accordingly, readers should not place undue reliance on any forward-looking statements or information. A discussion of the material risks and assumptions associated with this release can be found in the Company's Annual Information Form dated
INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION | |||
Unaudited | |||
[in thousands of | |||
As at | As at | ||
ASSETS | |||
Current | |||
Cash | 19,443 | 21,952 | |
Accounts receivable | 9,566 | 10,608 | |
Inventories | 10,085 | 9,534 | |
Income taxes recoverable | 81 | 86 | |
Other current assets | 1,601 | 1,915 | |
Total current assets | 40,776 | 44,095 | |
Property, plant and equipment | 824 | 965 | |
Intangible assets | 154,458 | 162,344 | |
Deferred tax asset | 1,088 | 1,037 | |
Other non-current assets | 605 | 619 | |
Total assets | 197,751 | 209,060 | |
LIABILITIES AND SHAREHOLDERS' EQUITY | |||
Current | |||
Accounts payable and accrued liabilities | 13,128 | 14,107 | |
Provisions | 5,880 | 5,424 | |
Debt and other liabilities | 6,881 | 6,876 | |
Income taxes payable | 305 | 281 | |
Total current liabilities | 26,194 | 26,688 | |
Debt and other liabilities | 82,059 | 84,233 | |
Deferred tax liability | 432 | 442 | |
Total liabilities | 108,685 | 111,363 | |
Shareholders' equity | |||
Share capital | 261,359 | 262,127 | |
Contributed surplus | 13,996 | 13,865 | |
Accumulated other comprehensive loss | (5,211) | (2,838) | |
Deficit | (181,078) | (175,457) | |
Total shareholders' equity | 89,066 | 97,697 | |
Total liabilities and shareholders' equity | 197,751 | 209,060 | |
INTERIM CONSOLIDATED STATEMENTS OF LOSS | |||||||||
Unaudited | |||||||||
[in thousands of | |||||||||
Three months ended | |||||||||
2024 | 2023 | ||||||||
Revenue | 12,473 | 14,757 | |||||||
Expenses | |||||||||
Cost of product sales | 1,774 | 1,444 | |||||||
Selling and marketing | 4,526 | 4,807 | |||||||
Medical, regulatory and patient support | 1,265 | 1,076 | |||||||
General and administrative | 2,201 | 2,351 | |||||||
Stock-based compensation | 256 | (55) | |||||||
Amortization and depreciation | 5,919 | 8,319 | |||||||
Finance and related costs, net | 2,667 | 2,434 | |||||||
Other costs | — | 213 | |||||||
Loss before income taxes | (6,135) | (5,832) | |||||||
Income tax recovery | (29) | (40) | |||||||
Net loss for the period | (6,106) | (5,792) | |||||||
Net loss per share: | |||||||||
Basic and diluted | |||||||||
INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS | |||||||||
Unaudited | |||||||||
[in thousands of | |||||||||
Three months ended | |||||||||
2024 | 2023 | ||||||||
Net loss for the period | (6,106) | (5,792) | |||||||
Item that may be reclassified subsequently to net loss | |||||||||
Unrealized foreign currency translation adjustment | (2,373) | 93 | |||||||
Comprehensive loss for the period | (8,479) | (5,699) | |||||||
INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY | ||||||
Unaudited | ||||||
[in thousands of | ||||||
Share capital | Contributed surplus | Accumulated other | Deficit | Total | ||
Balance, | 262,127 | 13,865 | (2,838) | (175,457) | 97,697 | |
Shares repurchased | (768) | — | — | 485 | (283) | |
Stock option expense | — | 131 | — | — | 131 | |
Net loss for the period | — | — | — | (6,106) | (6,106) | |
Unrealized foreign currency | — | — | (2,373) | — | (2,373) | |
Balance, | 261,359 | 13,996 | (5,211) | (181,078) | 89,066 | |
Balance, | 265,206 | 13,821 | (5,260) | (148,449) | 125,318 | |
Stock options exercised | 178 | (44) | — | — | 134 | |
Shares repurchased | (219) | — | — | 35 | (184) | |
Share purchase obligation | — | 185 | — | — | 185 | |
Stock option expense | — | 319 | — | — | 319 | |
Net loss for the period | — | — | — | (5,792) | (5,792) | |
Dividends declared | — | — | — | (1,182) | (1,182) | |
Unrealized foreign currency | — | — | 93 | — | 93 | |
Balance, | 265,165 | 14,281 | (5,167) | (155,388) | 118,891 | |
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS | |||
Unaudited | |||
[in thousands of | |||
Three months ended | |||
2024 | 2023 | ||
OPERATING ACTIVITIES | |||
Net loss for the period | (6,106) | (5,792) | |
Adjustments to reconcile net loss to cash provided by operating activities | |||
Stock-based compensation | 256 | (55) | |
Amortization and depreciation | 5,919 | 8,319 | |
Accreted interest | 282 | 191 | |
Fair value adjustment on financial assets and liabilities | 187 | 551 | |
Deferred income taxes | (61) | (177) | |
Net change in non-cash working capital balances related to operations | 301 | 983 | |
Cash provided by operating activities | 778 | 4,020 | |
INVESTING ACTIVITIES | |||
Additions to property, plant and equipment | (2) | — | |
Cash used in investing activities | (2) | — | |
FINANCING ACTIVITIES | |||
Stock options exercised | — | 134 | |
Shares repurchased | (283) | (184) | |
Dividends paid | — | (1,182) | |
Repayment of credit agreement borrowing | (2,075) | (2,121) | |
Debt costs | (533) | — | |
Lease payments | (143) | (161) | |
Cash used in financing activities | (3,034) | (3,514) | |
Net increase (decrease) in cash during the period | (2,258) | 506 | |
Foreign currency translation | (251) | (15) | |
Cash, beginning of period | 21,952 | 20,723 | |
Cash, end of period | 19,443 | 21,214 |
SOURCE
© Canada Newswire, source