Meredith Corporation
Q1 2024 Earnings Call Transcript

Published: 10 Aug 2023

[Operator:]

Greetings, and welcome to the Medexus Pharmaceuticals, Inc. First Fiscal Quarter 2024 Earnings Call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to your host, Magda Gardner, Investor Relations. Magda, you may begin.

[Magda Gardner:]

Thank you, and good morning, everyone. Welcome to the Medexus Pharmaceuticals First Fiscal Quarter 2024 Earnings Call. On the call this morning are Ken d'Entremont, Chief Executive Officer, and Marcel Konrad, Chief Financial Officer. If you have any questions after the conference call, or would like further information about the company, please contact Adelaide Capital at [phone].

[I would like to remind everyone that this discussion will include forward-looking information as defined in securities laws. Actual results may differ materially from historical results or results anticipated by the forward-looking information.:]

[In addition, this discussion will also include non-GAAP measures, such as adjusted net income and loss, and adjusted EBITDA, which do not have any standardized meaning under IFRS and therefore, may not be comparable to similar measures presented by other companies. For more information about forward-looking information and non-GAAP measures, including reconciliations to net income and loss, please refer to the company's MD&A, which along with the financial statements is available on the company's website. at www.medexus.com and on SEDAR+ at www.sedar+.ca. As a reminder, Medexus reports on a March 31 fiscal year basis. Medexus reports financial results in U.S. dollars. I would now like to turn the call over to Ken d'Entremont.:]

[Kenneth d'Entremont:]

Thank you, Magda, and thank you, everyone, for joining us on this call today. We are very pleased to report another great quarter with continued strength and stability across the company's base business and notably strong Rupall performance driving the quarter's record revenues. These results demonstrate the robustness of our product portfolio and our ability to generate revenue growth and positive operating profit, net income, and adjusted EBITDA.

[Our fiscal Q1 '24 revenue of $31.6 million compares favorably to $23 million for the same period last year or 37% growth year-over-year. The $8.5 million increase is mainly due to continued strong sales of IXINITY, strong Rupall demand growth that also benefited from timing of orders, solid Rasuvo Metoject performance, and the inclusion of U.S. Gleolan net sales and total revenue.:]

[Adjusted EBITDA increased to $6.6 million for the quarter compared to $1.9 million for the same period last year. The $4.7 million year-over-year increase is mainly due to increases in revenue that I mentioned and a small reduction in operating expenses. We produced net income of $0.7 million for the quarter compared to a net loss of $1.4 million for the same period last year. Overall, we are thrilled to be reporting this strong quarter of financial results. I will let Marcel comment further on our financial results later in the call.:]

[Now turning to our specific product lines, our core business remains strong and stable, and we continue to work on potential additions to our product portfolio to generate additional growth momentum. IXINITY unit demand in the United States remained strong during the quarter, experienced a slight decrease over the trailing 12-month period ended June 30. This reflects the effects of lower observed average quantities of product assumed by newer patients following the particularly strong quarter for new patient conversions in fiscal Q4 '23.:]

[We have also continued to invest moderately in our manufacturing process improvement initiative, which has had a positive impact on batch yield and manufacturing costs. We will continue to monitor these benefits against expected increases in direct costs of our third-party contract manufacturing agreements.:]

[On Rasuvo, we maintained a market-leading position during the quarter as unit demand for Rasuvo remains strong in the moderately growing U.S.-branded methotrexate market. We continue to deploy a highly efficient allocation of salesforce resources and our position remains strong despite sustained competition in the U.S. branded methotrexate market.:]

[Rupall unit demand in Canada remained strong during the quarter, which is reflected in the unit demand growth of 26% over the trailing 12-month period ended June 30. This performance reflects successful execution of our sales and marketing initiatives as well as the timing of certain orders during the quarter. We see topical terbinafine, which we licensed in March, as a strategic fit with Rupall, and we expect that if and when approved by Health Canada, that new product will both contribute to our Canadian revenues and engage our in-place commercial infrastructure currently supporting Rupall.:]

[On Gleolan, we continued to execute our post-transition commercial plan in the U.S., including new sales and marketing initiatives. As well in May, we presented data at ISPOR 2023, demonstrating a 33% cost savings with Gleolan compared to conventional white-light surgery in U.S. patients with high-grade glioma. Based on the publication, we found that although Gleolan is additive to the cost of surgery, its use results in lower cost per imaging complete resection, and therefore, is a more efficient use of resources in the surgical resection of high-grade glioma.:]

[Metoject unit demand in Canada increased by 12% in the trailing 12-month period ended June 30, in spite of direct generic competition. In the quarter, Metoject unit demand benefited from unanticipated shortages of product inventory of the competing product. We continue to seek to defend and grow the product's strong market position as we await a court decision following the January 2023 trial for patent litigation we initiated against Metoject's generic competitor in 2020.:]

[We remain optimistic about treosulfan, an agent for use in conditioning regimens as part of allogeneic hematopoietic stem cell transportation protocols or allo-HSCT. In May 2023, we learned that researchers at Toronto's Princess Margaret Hospital presented positive new data on treosulfan at MDS 2023. The retrospective analysis of patient outcomes found improved 1-year overall survival for certain patients treated with treosulfan among other positive findings. The study further supports our optimism regarding treosulfan's potential positive impact in both Canada, where we have commercially launched treosulfan under the brand name Trecondyv, and in the United States.:]

[In the U.S., treosulfan remains under an ongoing regulatory review process with the FDA. Medac, as the party responsible for the regulatory matters under our license agreement for treosulfan, continues to work on responding to the FDA's request regarding the treosulfan NDA. We still expect it will take Medac until the first half calendar year 2024 to collect and submit the information requested by the FDA. As set out in our license agreement, we are discussing with Medad what, if any, adjustments to our license agreement may be needed to reflect this extended FDA process, which has now continued beyond the agreed outside date for FDA approval in our license agreement.:]

[A key component of our growth strategy will continue to be to leverage our infrastructure through new product acquisitions and partnerships. We therefore continue to explore new product opportunities in both current and planned therapeutic areas in both the United States and Canada. In the meantime, we continue working to increase revenue, develop and leverage our commercial infrastructure across existing products, and maintain strict financial discipline. I will now turn the call over to Marcel, who will discuss our financial results in more detail. Marcel?:]

[Marcel Konrad:]

All right. Thank you. Thank you, Ken. I'm also very pleased with what I see as our overall strongest quarter for Medexus to date. Total revenue for the fiscal first quarter was $31.6 million, which is slightly better than what we had anticipated when we previewed our expected revenue in July. This quarter revenue number compares favorably to revenue of $23 million for the 3 months period ended June 30, 2022. As Ken mentioned, the $8.6 million increase in the first fiscal quarter 2024 versus the prior year first quarter is primarily due to continuing strong sales of IXINITY, continuing strong Rupall demand growth, including in part due to timing of orders, and Rasuvo performance and the recognition of 100% of Gleolan net sales in total revenue.

[Gross profit was $17.2 million for the 3 months period ended June 30, 2023, compared to gross profit of $12.9 million for the same period last year. The gross margin was 54.4% for the 3 months period ended June 30, 2023, compared to 56.1% for the 3 months period ended June 30, 2022. As we mentioned on last quarter's call, we continue monitoring this metric and the factors that contribute to gross margin. The year-over-year decrease in gross margin primarily reflects changes in product mix, including changes in how we account for Gleolan sales in the United States under IFRS over the course of the fiscal year 2023. Specifically, in accordance with IFRS, we recognized Gleolan revenue as a royalty during the transition period before recognizing net sales together with corresponding cost of goods sold starting in August 2022. On the other hand, we have seen positive impact of the IXINITY gross margin due to the manufacturing improvement initiatives.:]

[Selling and administrative expenses were $11.9 million for the 3-months period ended June 30, 2023, compared to $12.1 million for the 3-month period ended June 30, 2022. Research and development was $0.4 million for the 3-months period ended June 30, 2023. This compares to $0.7 million for the 3-months period ended June 30, 2022.:]

[Adjusted EBITDA for the 3-months period ended June 30, 2023, was positive $6.6 million compared to $1.9 million for the 3-months period ended June 30, 2022. Again, as Ken mentioned, the $4.7 million year-over-year increase was primarily due to increases in revenue that I mentioned and a small reduction in operating expenses. The net income for the 3-months period ended June 30, 2023, was $0.7 million compared to a net loss of $1.4 million in the same period last year.:]

[Also included in net income or loss is a noncash unrealized gain or loss on fair value of our embedded derivatives in our outstanding convertible debentures, which are sensitive to, amongst others, fluctuations in our share price. We believe that adjusted net income or loss provides a better representation of performance of our operations because it excludes noncash fair value adjustments on liabilities, which may be settled for shares. Our adjusted net income for the 3-months period ended June 30, 2023, was $0.6 million compared to an adjusted net loss of $3.6 million for the same period last year.:]

[Our cash position has continued to improve in the first quarter of fiscal year 2024, increasing from $13.1 million at March 31, 2023, to $15.8 million at June 30, 2023. In July, we used some of this cash to repurchase and cancel CAD 1.7 million of principal amount of convertible debentures under our NCIB. Adjusting for that transaction, we continue to expect to have approximately USD 20 million of total cash at September 30, assuming successful execution of our cash management plan and not including any additional amounts that may become available under the $20 million uncommitted accordion facility with BMO.:]

[The remaining convertible debentures will mature on October 16, 2023. At maturity, we will be obligated to repay 125% of the aggregate principal amount of the then issued and outstanding convertible debentures plus accrued and unpaid interest. Altogether, this represents a near-term liability of approximately USD 38 million, depending on prevailing Canadian/U.S. dollar exchange rates. Because of that NCIB repurchase, we expect to save approximately CAD 321,000 or about USD 240,000, depending on prevailing Canadian and U.S. dollar exchange rates, consisting of the awarded premium amount that would have been due at maturity and interest on principal that would have been accrued between July 18 at the maturity date. We may elect to satisfy any remaining amounts payable in respect of the convertible debentures at maturity in cash, common shares, or a combination of cash and common shares. The extent to which we will be able to choose to sell the convertible debentures in cash at maturity will depend on availability of funds from our operations through the maturity date and from cash provided by financing activities, including any amounts that may become available under the BMO accordion facility.:]

[We have been consistent in executing our plan quarter-after-quarter, which has put the company in a strong financial position with strong quarterly revenue and improved profitability. This is the second consecutive quarter with positive net income and the seventh consecutive quarter demonstrating positive adjusted EBITDA. As always, there can be variability in our quarter-to-quarter results, but we look forward to continuing to build our momentum over the coming fiscal year and beyond.:]

[Operator:]

Thank you very much. At this time, we are opening the floor for questions. [Operator Instructions] Your first question is coming from Andre Uddin of Research Capital.

[Andre Uddin:]

Can you just elaborate a little bit more on the Metoject competitive environment and when you think that litigation should be resolved?

[Kenneth d'Entremont:]

Yes. Thanks, Andre. Good question. The Metoject competitive environment is experiencing some shortages of methotrexate. And that has not -- Metoject has not been exposed to that, we've been able to keep it in supply. We're certainly benefiting from that. And as a result, we're growing unit share and I think dollar share as well. The litigation, the trial was in January. There is no timeline on a decision, but we would expect it to come sometime in this calendar year. We're waiting on that. We hope it comes soon.

[Andre Uddin:]

That's great. And just besides growing your sales, what is your cash management strategy right now to have about $20 million in the bank by the end of September? Could you just discuss that a little bit? Thanks.

[Kenneth d'Entremont:]

Sure. I'll turn that over to Marcel.

[Marcel Konrad:]

Yes, thanks for that question, Andre. We've said that we're growing our cash mainly because we've seen historically our sales growing. We've also noticed our receivables, for example, going up. We're obviously doing everything we can to put aside as much cash as we can towards the convertible debentures. But it is really just about now very, very mindfully obviously, watching every single spend towards that critical date of October, and manage the cash towards the balance we have projected it to be.

[Andre Uddin:]

That's great. And just can we also get a bit of a business development update in terms of are you seeing prices dropping in assets? And what type of opportunities are you seeing right now? That would be great as well.

[Kenneth d'Entremont:]

Yes, good opportunities. We're seeing many opportunities. Prices appear to be fair. As you well know, many companies have difficulty getting funded, so there are some assets coming available. I think the terbinafine transaction that we did was an extremely fair price. We do believe we'll get others like that. We're really seeking to build portfolio in the U.S. in order to broaden beyond the 3 products that we have now. That's where our focus is and we think that there will be opportunities that come to the table.

[Operator:]

Your next question is coming from Scott Henry of ROTH Capital.

[Scott Henry:]

Thank you, and good morning. Ken, Marcel, really strong results. Really good momentum. Ken, I know you had a lot of prepared remarks, but I was wondering if you could just tell us in big terms, what do you attribute all of this strength to? My history has been when a company turns the gas on this heavy, it's usually driven by one product, but sometimes it's more than one. Could you just talk a little bit about why things are as good as they are now relative to the past? Thanks.

[Kenneth d'Entremont:]

Yes. Thanks, Scott. It's more broadly based for us. We clearly have momentum on 4 products. And I think that therefore speaks to the success that the 2 commercial teams, both the U.S. and Canada, are having. But there's tremendous momentum behind Rupall in Canada. There's excellent momentum behind IXINITY, Rasuvo and Gleolan in the U.S. We just feel like we've got momentum. Clearly, when you acquire a product, there's always issues. We experienced that with IXINITY. We got through it and now we're having successful execution that's making a very nice contribution to our business. Same thing with Gleolan. You relaunch a product, it takes time, there's always issues, and then it starts to get momentum. I think really, that's it, tremendous momentum from both teams.

[Scott Henry:]

Okay, great. Thank you for that color. And you did mention in the beginning some benefit from timing of orders. I assume that means some orders got pulled through into Q1. When I think about 2Q, your fiscal 2Q that is, should we think about sequential growth from Q1 to Q2? Or might it pare back a little bit given just timing of orders? How should we think about 2Q?

[Kenneth d'Entremont:]

Yes. Rupall, obviously there's some seasonality with Rupall, it's tied to the allergy season in Canada. But also, there were these additional orders. On top of strong demand, so it wasn't like the demand wasn't there, it clearly was there, but it came in way stronger than we had expected. I wouldn't expect that to continue. And typically, this quarter we just reported is one of our stronger quarters. Sequential growth is going to be challenging. 31.6% I think, is a really good number coming off what we were, 28% and change, last quarter. That's really strong sequential growth. It's going to be tough to duplicate that. Sequential growth is going to be challenging, but certainly, growth year-over-year, I think we'll continue to demonstrate that.

[Scott Henry:]

Okay, great. Yes, it wasn't long ago you were in the 20s and even underneath the 20% mark, so great work there. And then topical terbinafine, how should we think about timing of that in U.S. and in Canada?

[Kenneth d'Entremont:]

Only licensed in Canada, so only think of the Canadian market. I think we have said that we do expect to put that application into Health Canada in the fall of this year. Likely take 12 months to a decision, and then we would launch shortly thereafter. The market for topical terbinafine in Canada is $80 million to $90 million. There's only one player at this stage, so we'll be second entrant with a convenience advantage.

[Scott Henry:]

Okay, great. Thank you, Ken. And just to get Marcel involved, Marcel, I know you spent a lot of time in the prepared remarks talking about debt. I'm just wondering if you could just walk it through in simple terms what the inflection point is, how much you expect to have to pay back in is it September or October, and the game plan to achieve that, just to make sure it's very clear as it is such a key factor.

[Marcel Konrad:]

Yes. No, absolutely. Thanks for the question, Scott. As a reminder, we had refinanced our Midcap facility with BMO. Back then, we got a $38.5 million facility in place at absolutely fantastic conditions, at a really, really good rate. We have a partner now with BMO. The total facility we announced, that then was $58.5 million, so meaning that we have this $20 million of uncommitted facility sort of term loan out there. Which we are waiting for BMO basically to get back to us. I mentioned in my prepared remarks that in simple terms, what is coming due now in October is about $38 million of sort of a payment. We have a choice, as we mentioned a few times, to sell that in cash and shares or a combination. We'll see how much we accumulate towards that $38 million. Then you have the $20 million of the uncommitted accordion facility. We said we're going to generate cash in the tune now of around $18 million. Obviously, that includes, sorry, the payout for the convertible debentures. As you can see, getting close. We're obviously monitoring that cash situation very closely over the next few weeks and months. But we're very pleased with the strong performance, which absolutely helps us now to tackle this sort of liability as much as we can. As you can see, it's getting very close, yes.

[Scott Henry:]

Okay, great. And when will you get a decision on that $20 million uncommitted? Is there a specific deadline date for that?

[Marcel Konrad:]

There isn't really a specific deadline. Of course, we would like to have clarity sooner than later. All we can do at this point is what we do now. As you can see these strong results, you see we perform, we execute against our plan. We're even now, as you've seen, a little bit better than what we announced on the revenue side, for example. That's what we can do. We are in regular contact, obviously, with the bank, and we'll see when we get an answer for that.

[Operator:]

Your next question is coming from Rahul Sarugaser from Raymond James.

[Michael Freeman:]

This is Mike on for Rahul. A couple of questions on indication expansions and introducing products to the market. First, you -- I'm glad to hear that there's some optimism around treosulfan resubmission. I wonder -- and you mentioned that there's some renegotiation that's possible with Medac in consideration for this submission process. I wonder if you could describe I guess the durability of the patent around treosulfan. How -- if you could remind us how far those go out? And also what sort of terms you might consider renegotiating with Medac given the circumstances here.

[Kenneth d'Entremont:]

Mike, thanks for the question. I'll just remind you that the treosulfan protection is related to orphan drug status in the U.S. We're not relying on any patent protection. We're going to rely on orphan drug which, in the case of treosulfan, we think will be 7.5 years because it includes a pediatric indication. And that timeline doesn't start kicking until approval. We would have 7.5 years from approval in order to be exclusive in the U.S. And then the second part of your question related to the renegotiation with Medac. As we mentioned, it's contractual, that if it takes beyond the original outside date that we sit down and we try and figure out what the new terms are. We are in the process of doing that now. Clearly, we believe that the market has had some changes. We still think there's a very good opportunity for treosulfan. But we're working with our partner to reset the contractual obligations with respect to the milestone payments and timing of such. And we will put that information out as soon as we've got that complete.

[Michael Freeman:]

All right. Fantastic. Both really positive points. Thank you. And now I wonder if you could -- if there were any updates to report on the pediatric indication expansion for IXINITY?

[Kenneth d'Entremont:]

Nothing to report. Submitted, accepted for review. We think that process will take some months, probably 6 to 8 months, and then we should have a decision. Remember, this was a post-marketing commitment around the original approval. We believe that the data that we've generated will be sufficient to support the registration, the label expansion. But clearly, it's up to the FDA to confirm that.

[Michael Freeman:]

Okay, thank you very much. Those are my questions, and very glad to see the strong performance and the increase in the cash balance continue.

[Operator:]

Your next question is coming from Stefan Quenneville from Echelon Capital Markets.

[Stefan Quenneville:]

I just have a quick question on the BMO accordion. Are there any sort of financial covenants or legal requirements on your end in order to access the accordion? And if so, what are they and where do you stand on those measures?

[Kenneth d'Entremont:]

Thanks, Stefan. I'll give that to Marcel.

[Marcel Konrad:]

Yes, Stefan, good question in terms of the access. Of course, we do have, as part of the overall facility, we do have covenants in place that will apply to the facility. Right now, we have $38.5 million as you know, and then when we get to -- if we get to this uncommitted accordion, then of course the covenants will be part of that additional $20 million, yes.

[Stefan Quenneville:]

But just to be clear, you're long side for all the current covenants to access the additional $20 million, or at least on track towards it, is that correct?

[Marcel Konrad:]

Yes. That is an important part that we of course could not so to speak go against any covenants we have in order to access the facility. Absolutely, yes, and we're absolutely in line with that at the moment, yes.

[Kenneth d'Entremont:]

Yes. I think just one additional point. Important to point out that, clearly, the results that we produced this quarter were beyond what the Street expected, and it's also beyond what we had provided to BMO in terms of expectations. I think this quarter bodes well for our discussions with BMO.

[Operator:]

Your next question is coming from Antonia Borovina from Bloom Burton.

[Antonia Borovina:]

Just wondering if you could discuss a bit more on what you're seeing with the IXINITY dosing. You mentioned that patients prescribed more recently are using lower quantities, so maybe just if you could go into what's driving that?

[Kenneth d'Entremont:]

Thanks for that question. It's a good one and it's complicated. Obviously, growth for us is dependent on patient starts. Most patient starts are adults for us because we don't yet have the pediatric indication. And historically, starts for these patients were in patients that were just using more product. They may have been using it prophylactically. And now maybe we're getting more who are on demand. It's just of late there's been a high volume of new patient starts, just that we're noticing that the average volume consumed by each of the new starts has been a little bit lower than what we've seen historically. Just a trend that we're noticing. I think the good news is that we do continue to generate these new starts, which is excellent, and we think that will continue. Just we're reducing the average volume per new start patient in our forecast.

[Antonia Borovina:]

Okay. And then regarding the manufacturing process for IXINITY and extracting some greater efficiencies, is there any additional room for improvement there? Or has that been fully implemented?

[Kenneth d'Entremont:]

No, absolutely, more room for improvement. Being a biologic, it's kind of an ongoing process. We've made really good progress to this point. And we do believe that there are additional efficiencies that we'll be able to generate as we go forward.

[Antonia Borovina:]

And then just finally, just a clarification regarding some of your earlier comments on the competitive environment for Metoject. You mentioned that methotrexate was out of stock. Is this something that's an ongoing issue? Or has that been resolved with your competitors?

[Kenneth d'Entremont:]

Appears to be an ongoing issue. It's really difficult to tell, but we do see this situation in other markets, also U.S. market. We think this is more of a global issue related to the availability of the API for methotrexate. We're certainly seeing it in the 2 markets that we serve, and we've heard similar issues in other markets. We think it's an ongoing problem, but it's very difficult to forecast what will happen with a specific competitor in a specific market.

[Antonia Borovina:]

And no impacts on you?

[Kenneth d'Entremont:]

No. Medac being one of the largest manufacturers of injectable methotrexate, in the prefilled pen or auto-injector format, has got excellent control on the API. So far for us, it's been really good. We continue to hold on to significant inventories to avoid any short-term issues, and so, so far, so good for us.

[Operator:]

Your next question is coming from Justin Keywood from Stifel.

[Justin Keywood:]

On the treosulfan timeline for resubmission, you got a bit more precise in the first half of calendar 2024. Just trying to understand the reasoning behind that just given there's still ongoing negotiations with Medac. And then also, is there a consideration of new trials to be initiated for treosulfan?

[Kenneth d'Entremont:]

Yes. Thanks, Justin. Good question. We're getting a little more specific on the timeline to resubmission as the work, much of the work, has been done. The process that Medac needs to follow in order to collect this data is ongoing, but so far, it's so good, and they are collecting information pretty much on the timeline that we had anticipated. We're able to get a little more specific as to when we think the resubmission will happen. We've got a fair degree of confidence in that timeline. And sorry, Justin, what was the second part of the question?

[Justin Keywood:]

If there is the potential to initiate new trials for treosulfan given this is the third attempt? Or do you feel that you have enough of the data requested to ensure a successful outcome?

[Kenneth d'Entremont:]

Yes. Sorry about that, I forgot that piece of it. No, still no requirement for a new trial. I mean the trial that had been conducted by Medac was a very large trial, it was 570 patients in the trial. It's a big trial. There are a lot of patients in there. At this stage, no. What the FDA is requesting is clarification on that pivotal study. No need for that.

[Justin Keywood:]

Just one more question. What would be the next milestone to look out for as far as treosulfan?

[Kenneth d'Entremont:]

I guess the next news you'll hear from us will be the new negotiation in the license agreement, which should come out shortly. And then I think it will be the acceptance of the resubmission. That will be the next piece of information we'll put out. And so that will be in some time in the first half of calendar '24.

[Operator:]

[Operator Instructions] Our next question is coming from Alan Richardson from Echelon Capital Partners.

[Alan Richardson:]

This is more addressed to Konrad than it is to you, Ken. With regards to the reimbursement of your -- I'm wondering, do you know the number that BMO is looking for in order to fully activate that $20 million accordion level? And do you know if you've surpassed that? Is this something where they just have to rubberstamp it, or is there further negotiations required between now and maturity of the bond?

[Marcel Konrad:]

Yes. Thanks for that question. The negotiations per se as you can call it, obviously happened during the time when we set up the facility. And as a reminder, we got this $58.5 million facility with the $20 million of uncommitted accordion and the overall negotiation as part of that facility, including all the conditions, have been essentially negotiated. That is including all the terms and conditions, yes. There's nothing "newcoming" to that. Now the process of accessing this accordion obviously at the discretion of the bank ultimately, but as Ken mentioned before, I think the key component to that and maybe a little bit as a sidenote also, as a question follow-up from Stefan before, this is about what we said we're going to do. This is about delivering on the results. This is much about basically telling people what we're going to do, we deliver on what we're going to do. And this first quarter has been very encouraging already for us to see that what Ken mentioned before as well is even better than what we had anticipated. As I mentioned earlier on, this is at this point what we can do, focusing on the business and growing the business. Delivering on the results and everything will be up to the bank as part of the process to access the accordion ultimately, yes.

[Alan Richardson:]

Okay. Now if we just fast forward to 12 months from now, right, and I recognize that we're talking about the future and it's uncertain, I'm going to assume that you get, that the $20 million is activated. With the amount of money that you're generating in cash every quarter, what would your debt level look like? Because right now, I'm thinking that you're going to be somewhere around $55 million to $58 million in total debt by October, by the end of September, early October. If we're going to fast forward and look at either end of July or end of September of next year, where do you anticipate your debt level to be at that point in time?

[Marcel Konrad:]

Yes, of course, that is overall a bit hard to quantify, but what you can assume at this point is that if you look historically where we came from, and we've started to be profitable and increase revenue, we're generating cash, yes. We're in a good place to basically continue to do that. And as we've said in the past, to look at this as the new normal now. Now, yes, as you mentioned, assuming that access will happen as a $58.5 million sort of debt at this point, there is an amortization schedule obviously kicking in. That debt will decrease. We're definitely going to amortize that, pay back some of that loan, and being in a position with less debt and a strong business ultimately. It's really good prospects to have, at again, at an interest rate, at conditions that are very favorable relative to the markets we are right now. Really, all good positive signs I would say from now on, yes.

[Alan Richardson:]

But that doesn't give me a number. What number are we looking at? Should we be thinking about $40 million? I recognize that you might make acquisitions, so I'm talking about ceteris paribus, everything else being equal, and assuming no dilution, would you get to $40 million in debt a year from now from $58 million?

[Marcel Konrad:]

That is -- yes, that is a bit aggressive as an amortization schedule. It's probably going to be a little bit more than that, but it's probably in the range, but a little bit more than that I would think.

[Operator:]

That appears to be the last question in the queue. I will now hand back over to Ken for any closing comments.

[Kenneth d'Entremont:]

Thank you very much. I just want to thank everybody for joining us on the call today. We're extremely proud of the financial results that we've had in this first quarter of the year, and we're seeking to continue to build the core portfolio. We look forward to delivering continued strong performance and speaking to investors next quarter. Thanks very much.

[Operator:]

Thank you everybody. This does conclude today's conference call. You may disconnect your phonelines at this time, and have a wonderful day. Thank you for your participation.