Meredith Corporation
Q4 2023 Earnings Call Transcript

Published: 22 Jun 2023

[Operator:]

Greetings. Welcome to the Medexus Pharmaceuticals Fourth Quarter and Fiscal Year 2023 Earnings Call. [Operator Instructions] Please note, this conference is being recorded.

[I will now turn the conference over to your host, Victoria Rutherford. You may begin.:]

[Victoria Rutherford:]

Thank you, and good morning, everyone. Welcome to the Medexus Pharmaceuticals Fourth Fiscal Quarter and Fiscal Year 2023 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 480-625-5772.

[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 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 are available on the company's website at www.medexus.com and on SEDAR at www.sedar.com. As a reminder, Medexus reports on the 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, Victoria, and thanks, everyone, for joining us on this call today. We are extremely proud of the financial results we're reporting for our fiscal 2023. We attained both record revenue and record adjusted EBITDA for the fiscal year 2023 plus announced our overall strongest fourth quarter to date. This accomplishment was driven by strong performance across all our leading prescription products and the addition of Gleolan net sales in the U.S. We're also proud to note that this has translated into positive net income for fiscal year '23.

[Our fourth quarter revenue was $28.6 million, that compares favorably to $20.3 million for the same period last year or 41% growth year-over-year. The $8.3 million increase is mainly due to an increase in net sales across our portfolio and the contribution from Gleolan.:]

[Fourth quarter adjusted EBITDA increased to $4.8 million compared to $1.1 million for the same period last year. The $3.7 million year-over-year increase is mainly due to the increase in net sales I mentioned and a reduction in research and development costs.:]

[I would also like to highlight, this is our sixth consecutive quarter of positive adjusted EBITDA, demonstrating the strength and stability of our product portfolio as we close out fiscal year '23 and look ahead to fiscal '24.:]

[We produced net income of $6.9 million for Q4 compared to a net loss of $5.3 million for the same period last year. Our adjusted net income, which adjusts for unrealized losses or gains related to our convertible debentures that are included in net income was $6.0 million compared to a net loss of $4.6 million for the same period last year.:]

[At March 31, 2023, we had total available liquidity of $13.1 million in cash and cash equivalents. We were pleased to announce a nondilutive debt financing in March of '23, which contributed to our cash position and demonstrated our access to capital on competitive terms. I will let Marcel comment further on this topic later in the call. Overall, we are thrilled to have achieved a record $108.1 million revenue for the year, which compares to $76.7 million for fiscal 2022 or 41% growth year-over-year.:]

[Adjusted EBITDA for the year was $16.1 million in 2023, representing another record for Medexus and comparing favorably to negative $3.9 million overall in fiscal year 2022.:]

[Turning to our specific product lines. Our core business is still growing and we continue to work on potential additions to our product portfolio to generate additional growth momentum. Unit demand for IXINITY in the U.S. remained strong during the trailing 12 months ended March 31, 2023, with the fourth quarter reflecting the best quarter of fiscal year '23 for new patient conversions on top of a stable existing base of patients. The strength was also attributed to the resumption of in-person selling earlier in the year. We continue to improve the IXINITY manufacturing process, which has had a positive impact on IXINITY manufacturing costs.:]

[Rupall continued to see strong unit demand growth, achieving 25% growth for the trailing 12 months ended March 31, 2023. This continues Rupall's trend as one of the fastest-growing antihistamines in the Canadian prescription market. This strong performance reflects successful execution of our sales and marketing initiatives over the 6 years since launch.:]

[Turning to Rasuvo. Unit demand remained strong for the trailing 12 months ended March 31, '23, maintaining the product's leading position in the moderately growing U.S.-branded methotrexate market with a highly efficient allocation of sales force resources. However, increased competition in the U.S. branded methotrexate market continue to impact Rasuvo product level revenue.:]

[On Metoject, we saw unit demand increase in the trailing 12 months ended March 31, 2023. This was despite the ongoing impact of a generic entry into the Canadian methotrexate market in calendar 2020, although product revenue was negatively impacted by a decrease in effective unit level prices. The trial for the patent litigation we launched against a generic competitor in 2020 completed this past January '23. We anticipate that the Federal Court, which is the court overseeing the trial, will issue its decision later in calendar '23.:]

[On Gleolan, unit demand in the United States continues to be in line with expectations with the fourth fiscal quarter '23 having included the best month of U.S. unit sales of the fiscal year '23. This strong performance reflects successful execution of our commercial plans.:]

[We also actively pursue opportunities to build our portfolio by licensing and acquiring new products and by exploring additional indications within our current product portfolio. The advancement of any one of our product opportunities would provide a significant step up in our growth profile.:]

[As we have discussed in the past, we remain optimistic about treosulfan, an agent used in conditioning regimens as part of allogeneic hematopoietic stem cell transplantation protocols, or allo-HSCT. We have finally -- we have fully launched the product in the Canadian market under the brand name Trecondyv. Recent data from a retrospective analysis of Toronto's Princess Margaret Hospital found a 30% improvement in 1 year overall survival for patients treated with treosulfan, which we find extremely encouraging and relevant to the U.S. population as well. We expect that the commercial experience we are gaining in Canada and the growing body of positive information about the product like this PMH study will serve us well if and when the FDA approves treosulfan in the United States, where treosulfan is an important pipeline product for us.:]

[On that topic, medac, the licensor of our commercial rights to treosulfan and the party responsible for the regulatory matters under our license agreement, continues to work towards resubmission of the NDA for treosulfan. We expect that it will take medac up to a year to collect and submit the information requested by the FDA.:]

[On another business development front, in March 2023, we secured the exclusive Canadian rights to commercialize terbinafine hydrochloride nail lacquer, which has been widely used in other markets to treat nail fungus infections. This deal represents a positive addition to our allergy and dermatology franchise in Canada. The product fits strategically with Rupall. And we expect that it will both contribute to our Canadian revenues and engage the commercial infrastructure we have in place to support Rupall. We will submit for Health Canada approval later in calendar '23.:]

[IXINITY, already one of our leading products, presents another pipeline opportunity for us. The FDA recently accepted for review our IXINITY supplemental biological license application for pediatric patients. A successful BLA could support a significant expansion of the indicated patient population for IXINITY to hemophilia B patients under 12 years of age and we are exploring approaches to address this potentially expanded market.:]

[In another opportunity within the Medexus' pipeline, the licensor of our commercialization rights to Gleolan continues to pursue research and development activities for a meningioma indication for Gleolan. Our commercial rights include this additional indication.:]

[We also continue to explore new product opportunities in both current and planned therapeutic areas in both the United States and Canada as we evaluate transaction opportunities against our strategic plan. A key component of our growth strategy will be to continue to lever our infrastructure through new product acquisitions and partnerships. We will continue to look at optimizing our product portfolio and leveraging our resources with the goal of executing near-term accretive transactions to achieve our sales growth targets over the coming years.:]

[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:]

Thank you, Ken. The Medexus momentum is in full swing and like Ken, I'm also very happy with our overall strongest fourth quarter for Medexus to date.

[Total revenue for fiscal fourth quarter was $28.6 million, which is slightly better than we had anticipated when we previewed our expected revenue in April. Total revenue for the full year was $108.1 million. These fourth quarter and full year revenue numbers compare favorably to revenue of $20.3 million and $76.7 million for the same period in the previous year. In both cases, reflecting a significant year-over-year improvement. The $8.3 million increase in fourth quarter -- in fourth fiscal quarter 2023 versus the prior year fourth quarter is primarily attributable to an increase in net sales of IXINITY during the quarter.:]

[Continued strong performance of Rasuvo and Rupall, which continues to maintain its position as one of the fastest-growing antihistamines in its market. And then, of course, there's Gleolan, which we started selling during the fourth quarter last fiscal year before successfully completing our agreed transition period this past August.:]

[Gross profit has also increased for both periods and was $15 million and $60 million for the 3- and 12-month periods ended March 31, 2023, respectively, compared to gross profit of $10.1 million and $37.9 million for the same periods in the previous year. The gross margin was 52.4% and 55.5% for the 3 and 12 months period ended March 31, 2023, respectively, compared to 49.8% and 49.4% for the 3 and 12 months period ended March 31, 2022.:]

[Selling and administrative expenses were $11.4 million and $48.3 million for the 3 and 12 months period ended March 31, 2023, compared to $9.9 million and $44 million for the 3 and 12 months period ended March 31, 2022. The $4.3 million full year increase in selling and administrative expense was primarily attributable to investments in personnel and infrastructure to support the sale of Gleolan in the United States.:]

[Research and development was $0.7 million and $2.9 million for the 3 and 12 months period ended March 31, 2023. This compares to $0.8 million and $5.9 million for the 3 and 12 months period ended March 31, 2022. During these periods, we continued to fund the now completed IXINITY pediatric study in advance of our submission of a supplemental biological license application, which was accepted by the FDA earlier this month as well as our ongoing IXINITY manufacturing process improvement initiatives.:]

[Adjusted EBITDA for the 3 and 12 months period ended March 31, 2023, was positive $4.8 million and $16.1 million compared to $1.1 million and negative $3.9 million for the 3- and 12-month periods ended March 31, 2022. The $20 million year-over-year increase was primarily attributable to the increases in net sales mentioned earlier, a reduction in research and development costs and an increase in gross margin.:]

[The net income for the 3 and 12 months period ended March 31, 2023, was $6.9 million and $1.2 million compared to a net loss of $5.3 million and $2.9 million for the same period last year. As shown in our income tax note, net income turned positive for the fiscal year 2023, in large part due to a change in our U.S. deferred tax assets. The change relates to the customer release of a valuation allowance against our deferred tax assets in anticipation of future taxable earnings, as it is typically in situations like ours, including in part based on our track record of 4 consecutive quarters of positive operating income and 6 comparative quarters of positive adjusted EBITDA.:]

[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 sold in shares.:]

[Our adjusted net income for the 3 and 12 months period ended March 31, 2023, was $6 million and negative $1.3 million compared to an adjusted net loss of $4.6 million and $24 million for the same period last year.:]

[Cash and cash equivalents was $13.1 million at March 31, 2023, versus $9.3 million at December 31, 2022. During the fourth quarter, we began to see a build in our cash position as the benefits from our investments in our core portfolio materialize, especially for IXINITY and Gleolan. You see our cash balance continuing to increase and expect to have approximately $20 million of total cash at December 31 this year -- at September 30 this year. Not including any additional amounts that may come available under the $20 million uncommitted accordion facility that was put in place at the time of our debt financing BMO in March.:]

[On the topic of our capital structure. In March 2023, we successfully completed a nondilutive debt financing with BMO, Bank of Montreal, which demonstrates our access to capital on very competitive terms. The credit agreement provides for a USD 35 million term loan facility and a $3.5 million revolving loan facility for working capital. The term loan facility benefits from the additional USD 20 million uncommitted accordion feature, I mentioned before. We used a substantial portion of the net proceeds of the $30 million term facility to repay our previous senior security credit facilities.:]

[The convertible debentures will mature on October 16, 2023. At maturity, we'll 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 30 million, depending on the prevailing Canadian U.S. dollar exchange rates. We may elect to satisfy any amounts payable in respect of the convertible debentures at maturity in cash or subject to any required approvals, common shares or a combination of cash and common shares.:]

[The extent to which we will be able to choose to sell these convertible debentures in cash and maturity will depend on the 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 are pleased that diligent pursuit of our business objectives together with careful monitoring of our capital structure has put the company in a strong year-end position with 4 consecutive quarters of positive operating income and 6 consecutive quarters of positive adjusted EBITDA. We look forward to continuing this momentum into the fiscal year 2024.:]

[Victoria Rutherford:]

Operator, we will now open the call to questions.

[Operator:]

Certainly. At this time, we will be conducting a question-and-answer session. [Operator Instructions] Your first question for today is coming from Andre Uddin at Research Capital.

[Andre Uddin:]

Ken and Marcel, just looking at your base business continues to build nicely. And just really looking at your pipeline, I had a couple of questions here. Are you -- or the firm planning to still file an NDA for triamcinolone? Or has that already been done?

[Kenneth d'Entremont:]

Yes, it's in the plan. It has not yet been done.

[Andre Uddin:]

Okay. And is there a time line? Or is that -- is there a time line for that?

[Kenneth d'Entremont:]

Yes. We haven't stated the time line. Obviously, we're working diligently on it. We've got the product being commercialized in Canada. And we are supplying it through various drug shortage programs for the U.S. So it is becoming available in the U.S. as well, but we do plan to file an application for proper registration.

[Andre Uddin:]

Okay. And also from -- just looking from a competitive perspective, is there any edge that terbinafine would have over Bosch's Jubilee?

[Kenneth d'Entremont:]

Yes, absolutely. So Bosch's product, which dominates that $90 million market has to be applied daily. Our product only needs to be applied to the nail once a week. So clearly, there's a compliance advantage for our product versus the current market leader.

[Andre Uddin:]

Okay. That's great. And lastly, just looking at Medexus' portfolio, is there anything else there that you could potentially bring in to add?

[Kenneth d'Entremont:]

Yes. As you know, we've got the role for a whole bunch of products within their portfolio. There's a couple that may fit as we expand the rest of our portfolio. And so we are constantly evaluating what's in that portfolio. We don't have any short-term plans.

[Operator:]

Your next question for today is coming from Justin Keywood at Stifel.

[Justin Keywood:]

Nice to see the swing to positive net income. Just within the expenses, I noticed the R&D has declined substantially down about 50% year-on-year. Are you able to provide an outlook on R&D plans going forward?

[Kenneth d'Entremont:]

Yes. Thanks, Justin. It's a good question. So the R&D came down significantly as a result of concluding the pediatric study. So the base that you're now seeing on a quarterly basis will continue for some period of time. And that's related to the improvements in the manufacturing process for IXINITY. So the benefit of those spends will show up in gross margin.

[Justin Keywood:]

Are you able to clarify the quarterly run rate of the R&D expense that you expect?

[Kenneth d'Entremont:]

I'll turn it over to Marcel. I think we reported, the most recent quarter would be an ongoing run rate that we would expect. Marcel?

[Marcel Konrad:]

Yes, I would look at this that we had quite a bit of spend in fiscal '22, declined quite a bit in fiscal '23. Now the last quarter gives you a good expectation for run rate going forward Year-over-year, it's expected to be in line or maybe slightly less even for fiscal '24.

[Justin Keywood:]

Okay. And then the pediatric indication, what is the expectations as far as expanded potential TAM? And what is the expected time line for FDA approval?

[Kenneth d'Entremont:]

Yes. So it's now been submitted. So the approval time line, I believe, is 10 months. So we would expect to have a decision within that time line. And then in terms of addressable market, we've said before that 30% of the patients with hemophilia B are under the 12 years of age. I wouldn't expect that the ramp up to be really quick because clearly, these are smaller patients. There's only a few diagnosed per year being a rare disease. There's only 4,000 to 5,000 total patients in the U.S. So the number of new diagnoses per year is pretty low.

[But over time, as some of these patients get started and put on to IXINITY, that obviously builds our base of revenue over time. So I think it's a longer term play. You're not going to see a quick ramp up, but more of a consistent growth.:]

[Operator:]

Your next question for today is coming from Michael Freeman at Raymond James.

[Michael Freeman:]

Congratulations on finishing the year strong. I'm going to continue questions on IXINITY. Congratulations on submitting the SBLA. I'm wondering if you can describe the pediatric study that Medexus undertook and Medexus' responsibilities there. Did you -- were you completely responsible for running this thing? And what were -- how long did it take to run the study?

[Kenneth d'Entremont:]

Yes. Thanks for the question, Michael. Yes, so we were completely responsible for it. We conducted it through zero. So it took us -- we think we started it just when we acquired the product, which was March of 2020 -- 2021, sorry. So that's roughly when it was started. And last patient enrolled, I think, it was like 6 or 8 months ago. And now product readout and application just completed. So 10 months from here to decision point.

[Michael Freeman:]

Okay. That's great. Well done. And you mentioned that you're readying your sales force and exploring their approaches to address this expanded market. I wonder if you could describe that a little bit further.

[Kenneth d'Entremont:]

Yes. So when we're simply looking for switches of patients to IXINITY, adult patients, obviously, it's a different strategy than seeking new starts. So the hemophilia treatment center becomes even more important because that's typically where new starts happen rather than switches, which may occur when patient runs into a problem with the current treatment. So it's a slightly different paradigm, and we've been preparing that for a while.

[This will give us an opportunity to almost relaunch IXINITY because this is obviously a significant expansion of the label to new starts. And so we think that this is a really good opportunity to relaunch the brand.:]

[Michael Freeman:]

All right. That's very helpful. And one more for me. This is the second full quarter contribution from Gleolan. I wonder if you could talk about adoption of the drug and how Medexus' recent pharmacoeconomic analysis has supported that adoption since its publication around May?

[Kenneth d'Entremont:]

Yes. So we've conducted a fair bit of primary research on Gleolan that didn't exist prior to us acquiring it. And it was clear that the #1 concern with the drug was price, which is not unusual, even though it's relatively small price compared to the cost of a resection. So with price being the #1 concern, there was a lot of misunderstanding as to the total overall cost when using Gleolan or without Gleolan just white light.

[The study that we published demonstrated that there's an overall cost savings when treating these patients with Gleolan because there are many fewer resections -- re-resections. And so clearly, when the biggest part of the cost is the surgery itself, if you have to repeat the surgery, that's a major issue. And so Gleolan significantly reduces the re-resections, and so therefore, it becomes quite cost effective.:]

[Michael Freeman:]

That's helpful. And just has that been incorporated, I guess, in your sales strategy or that information incorporated in your sales strategy? How has that affected adoption, I guess, only a month or so?

[Kenneth d'Entremont:]

Yes. It's significant because the biggest institutions are the ones that have the greatest resources to examine costs of the various therapeutics. And so having this evidence is very meaningful to the biggest institutions. And so we have seen new starts in some of the biggest institutions in the U.S., which is a major step forward. So that's where our focus is, is on these big centers that treat a lot of the patients that have the blue light capabilities that allow us to execute our plan.

[Operator:]

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

[Stefan Quenneville:]

Just a couple of quick ones for me. Can you guys -- just looking at the balance sheet, I think a lot of people have been looking at the converts and your ability to pay them down. With your guidance of $20 million and the $20 million accordion from BMO, it's obviously going to be pretty tight. Can you guys maybe just let us know what sort of the minimum cash requirements you guys need to have in working capital to kind of run the business? And if you could also just sort of repeat for everybody, the full accrued amount you expect to pay in mid-October?

[Kenneth d'Entremont:]

Thanks, Stefan. So I'll turn that over to Marcel.

[Marcel Konrad:]

Yes. Thanks for the question, Stefan. So the expectation at this point, as I mentioned in my prepared remarks, if you look at the actual dollar amount coming due plus premium in October and on accrued interest. It's roughly USD 40 million, that's what's roughly coming due. And we've now demonstrated over the last few quarters that we're able to grow the business.

[We've got this facility in place now with BMO at very competitive rates. Those rates, in case we can draw the accordion, would also apply to that. We are also, as you've seen, we increased our cash position, $3 million, $4 million now quarter-over-quarter. And we've, at this point, sort of guided to approximately $20 million during the time.:]

[We will obviously see how we will be further performing the business. We've been going very strong at this point. We have a very solid foundation to sort of address this. And then between the accordion and our own cash, there is a -- the amount that is coming together then we will obviously see how that will evolve through the next few months and quarters.:]

[But so far, we've been doing really well, and we've performed according to expectation and just executing on our plan to address these debentures at this point. And just as a reminder, as you know, we have a -- we'll have a choice according to the feature to settle these debentures in cash, in shares or a combination thereof. And we would like to -- we'd really like to have the option, obviously, at this point. At this share price, our preference would be obviously to not use our equity for this with purpose. And the way we've been accumulating cash at this point is encouraging. But of course, there's a few months to go until then. And we will further update as we go throughout this period then.:]

[Stefan Quenneville:]

Yes. Guys, sorry, I don't know if this happens for everybody, but part of the answer was a bit choppy in terms of just hearing what you have to say. Could you please just repeat -- I caught most of it, just the part about what your minimal cash requirements are to operate the business if you, in fact, give a number there? And yes, one more question after that.

[Marcel Konrad:]

Sure, yes. Yes. No, we couldn't give a number -- a clear number at this point. There's various factors that go into this. And as we go along, we'll provide updates on how much we'll actually then use towards these debentures. Yes, it's simply too early to say at this point.

[Stefan Quenneville:]

Okay. That's great. And just one final question on treosulfan and your milestone payments. There's language in the press release about your ability to renegotiate some of the terms of the milestones with medac, given that they've sort of missed internal deadlines for FDA approval. Can you help us understand -- obviously, they are not going to negotiating downwards given the delays. But is it just in terms of the dollar amounts? Or is there's ability to maybe push out some of the timing of the payments? Or just maybe help us understand how is your thinking about that should be drug ultimately get approved?

[Kenneth d'Entremont:]

Yes. So good question. It's all of the above. So it's the amounts and the timing. And so all of those things are up in the air. And so clearly, we are working towards a resolution that recognizes the situation we're in. We've already paid them $15 million. And so we are working with medac to come up with a new arrangement.

[Just back to your question on cash, Stefan. So I think you can look back in our previous financial results and see we have operated with significantly less than $10 million of cash on hand. And our biggest expenses are typically inventory. So we don't have huge invoices. So it's really just regular business. So there's not a huge cash need. You can probably look back at some of the historical results and see what kind of number we've operated with in the past, I would say that is more or less the minimum.:]

[Stefan Quenneville:]

Okay. And just one final last one for me, so that to persist here. The really great data from Princess Margaret that was published. And obviously, you're having these ongoing back and forth with medac and the FDA. The -- now, that data will, in no way, will be part of your FDA submission I imagine. I just wanted to make sure that, that was the case. There's not a -- some of the delays...

[Kenneth d'Entremont:]

That's correct. Yes. This is not what they requested. The request is something else related to the pivotal study, the Phase III study. But clearly, this is real-world evidence that further supports the utility of the product. I mean it's -- the pivotal study showed 26% improvement in overall survival and event-free survival. This is a 30% improvement in overall survival at 1 year. So it's really good data, which, obviously, the whole community will be aware of.

[Operator:]

Your next question is coming from Tania Armstrong-Whitworth at Canaccord.

[Tania Gonsalves:]

Just a couple for me. So firstly, with respect to the improvement in IXINITY's manufacturing process and the positive impact it had on gross profit margin. I think there was some wording, you mentioned an expectation that this is going to be offset by increases in direct costs of your third-party contract manufacturing arrangements. Has that already flowed through the gross profit margin? Or will we see it flow through in future quarters and potentially negatively impact that gross margin?

[Kenneth d'Entremont:]

Tania, I'll let Marcel respond to that.

[Marcel Konrad:]

Yes. Thanks, Tania, for that question. It is not a very simple thing to decide for our gross margins. There's a lot that goes into that gross margin. As you can imagine, we've got product mix. We've got Gleolan. Ultimately, that is a 50% royalty in there. We have the improvements on the IXINITY manufacture initiatives. And now we're giving a little bit of a preview of the challenges we'll be facing with contract manufacturers, which across the board, I'd say, across the world probably, everybody is facing challenges on pricing.

[So that is something that has not gone through the gross margin yet and is something that we should see in the next few quarters to come. But again, there's other factors in gross margin that will impact that.:]

[On the positive side, obviously, the IXINITY process manufacturing initiative that we've started and launched that will help to improve the yields but also the stability of the product itself, yes, that is also addressing that, that we used to have like a lot of write-offs and reserves. So it's going to be a different mix, and you'll see that in the future, and that is what we talked about.:]

[Tania Gonsalves:]

Okay. That's very helpful. And then with particularly Gleolan sales, I'm not sure if you're able to provide additional color on this. But I believe you had initially guided upward of $3 million to $4 million in quarterly sales. Are you able to say if we're still kind of within that guidance threshold? Or have you surpassed this now, especially considering fiscal Q4 included the best month of U.S. unit sales this year?

[Kenneth d'Entremont:]

Yes. So good question. So we're within that band. I think we remain to be within that band. We do expect to expand beyond that band as we get these new customers on board. So as I think we mentioned in the previous call, we relaunched the product basically this past September. Those initiatives are starting to result in new accounts coming on board, and the focus has been the largest accounts. And so I think we'll start to see expansion of Gleolan beyond that band that we previously announced.

[Operator:]

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

[Antonia Borovina:]

I just have some housekeeping questions on IXINITY. Just wondering, this quarter, did any of the growth in the product come from price increases? Or was it all due to growth in the unit volumes?

[Kenneth d'Entremont:]

I'll ask Marcel to confirm for me, but I do believe we had a low single-digit price increase. So a small part of it could have been price. The majority of it is new patient starts.

[Antonia Borovina:]

Okay. And then regarding the pediatric label expansion, you mentioned you're going to be targeting the treatment centers and uniquely diagnosed patients. Do you expect that's going to have an impact on your sales and marketing expense?

[Kenneth d'Entremont:]

No. So we won't increase our footprint, our sales force allocation. That's not going to change. We're going to use the people that we have. They're already familiar with these centers and are able to cover them. So we will use existing sales and marketing infrastructure.

[Antonia Borovina:]

Okay. And what about the exclusivity period for the drug? Like I believe there were some patents that were scheduled to expire next year. Can you maybe provide an update on what the status is there?

[Kenneth d'Entremont:]

Yes, there's a whole portfolio of patents that range from next year out to 2030. We don't expect to see any biosimilar competition for the drug even past 2030. [ BeneFIX ], which is the market leader, the originator, they've been on market 22 years and patents have long expired. There's no competition for them. They're a $250 million product in the U.S., $600 million worldwide. So it's just too costly to develop biosimilars. And so at a net revenue of $30 million, $40 million, $50 million is just not viable. So we don't expect to see any direct competition.

[Antonia Borovina:]

Okay. And then finally, with the pediatric supplemental BLA submitted, do you plan to pursue any additional markets for the product?

[Kenneth d'Entremont:]

It's possible. The additional markets would be dependent on our ability to continue to reduce the cost of goods.

[Operator:]

[Operator Instructions] We have reached the end of the question-and-answer session, and I will now turn the call over to Ken for closing remarks.

[Kenneth d'Entremont:]

Great. Thank you. I just want to thank everyone for joining us on the call today. We're really proud of the financial results for fiscal '23 and the strong performance we're seeing out of our core portfolio. We're continuing to look forward to building upon and advance the products in our portfolio, most recently with the addition of terbinafine, submitting our supplemental BLA on the pediatric indication for IXINITY. We think both of these things will be significant opportunities for us. We continue to work towards the approval of treosulfan in the United States, which, again, if approved, we would expect to be a leading agent in conditioning of allo-HSCT. We look forward to a strong 2024 and keeping you up to date on our progress. Thanks very much.

[Operator:]

This concludes today's conference and you may disconnect your lines at this time. Thank you for your participation.