Theratechnologies Inc.
Q1 2021 Earnings Call Transcript

Published: 14 Apr 2021

[Operator:]

Good morning, ladies and gentlemen, and thank you for standing by. Welcome to the Theratechnologies Conference Call. At this time, all participants are in a listen-only mode. I would like to remind everyone that this conference call is being recorded today, April 14 at 8

[Denis Boucher:]

Thank you and welcome. Mr. Paul Levesque, President and Chief Executive Officer of Theratechnologies; and Mr. Philippe Dubuc, Senior Vice President and Chief Financial Officer, will be the speakers on today's call. A Q&A period, open exclusively to financial analysts, will follow their presentation.

[Paul Levesque:]

Thank you, Denis. Good morning, everyone, and thank you for being with us today. I would like to begin today reflecting on the last 12 months and also give thanks to what the Theratechnologies team has accomplished in this time helping to position us for growth in the medium and long-term. Coincidentally have been with Theratechnologies for a year now and in my time here as CEO we've made strong headways toward unlocking the additional potential of the company's commercial and pipeline businesses. I am confident in the strategic plan that we have mapped out and believe that Theratechnologies is at a unique point in its evolution. We have a tremendous support ahead of us to further strengthen our business. Nonetheless while setting our roadmap in motion over the course of the year, the pandemic was also taking hold of the world on a global scale and placing additional and unforeseen challenges in front of us. As a result of the pandemic global economies, businesses of all sizes and sectors, families and individuals were thrusted into operating in a completely different way. And we were certainly not immune to this. But we're now aligned with the company's mission and values more than ever, which is to bring new treatment options to healthcare providers and patients by developing and commercializing innovative therapies in areas of high unmet need. For people living with HIV this was even more poignant in 2020 as a result of the pandemic.

[Philippe Dubuc:]

Thanks Paul and good morning everyone. Consolidated revenues for the first quarter of fiscal 2021 were $15.4 million, essentially flat over Q1 of 2020 and what is usually our most difficult quarter of the year, mostly because of public and private insurance factors in the United States. Revenues from EGRIFTA SV were $8.7 million, up 2% from the same period last year. While unit sales compared to Q1 2020 were essentially flat, inventory levels at our distributor, the end of the quarter were somewhat lower. And this was compensated by higher selling price. Trogarzo revenues were down 6% year-over-year as a result of lower unit sales to specialty pharmacies compounded by lower inventory levels at the distributor level. Although patient retention continues to be quite strong for Trogarzo, new patient starts remain below where we think they should be. As the U.S. emerges from COVID related lockdowns, we are confident this situation will be resolved. In the EU, we are seeing evidence of sales trends are moving up, but it's still early days yet to see a major impact from our sales and marketing efforts. Additionally, COVID in the EU is still problematic and is affecting patients initiation of therapy. Our team in Europe is identifying patients, and we are confident that once restrictions related to COVID-19 ease, we will see a meaningful flow of patient initiated therapy. Pricing discussions are progressing in the EU. Reception has been positive. With this in mind, we have laid the groundwork to growing revenues of the Theratechnologies franchise, both in the U.S. and the EU and expect to see our efforts bear fruit from these strategic initiatives. Cost of sales in Q1 2021 was down to $5.4 million compared to $6.8 million for the same quarter last year. The decrease is mostly due to higher gross margins EGRIFTA SV compared EGRIFTA as well as the lower transfer price for Trogarzo, given the achievement predetermined sales milestone in Q3 of last year. R&D expenses amounted to $4.9 million in Q1 2021 compared to $3.4 million for the same quarter last year. This increase is largely due to higher spending in our oncology and NASH programs, increased spending in medical and patient education, as well as higher medical affairs initiatives in Europe. For the three month period ended February 28, 2021, selling expenses were down to $6.1 million compared to $6.3 million for the same period last year. The decrease is mostly associated with the transfer of resources for marketing to medical education activities. General and administrative expenses amounted to $3.6 million in Q1, up from $2.6 million in Q1 of 2020. This increase is mainly attributable to the overall increase in business activities, as well as increased activity in Europe. Q1 2021, we recorded $1.4 million of finance costs compared to $1.3 million in Q1 2020. As previously stated, finance costs comprise of interest on convertible notes as well as accretion expense. For the first quarter of 2021, we recorded a negative EBITDA of $1.8 million compared to negative $1 million in Q1 2020. The difference is mainly due to a higher net loss during the quarter. Reflecting the impact of the capital raise during Q1 2021, we ended the first quarter with the cash and equivalents balance of $57 million. I will now turn the call back to Paul for some closing remarks.

[Paul Levesque:]

Thank you, Philippe. As we proceed to build momentum in 2021 and beyond, I can't stress enough that Theratechnologies today is far from where we were in the past, and we're well-positioned for future growth. In line with our growth efforts is our continued progress to strengthen our business with key talent that has a proven track record of being innovative and successfully leading organization in developing and more medicines. This is particularly highlighted by our recent announcements of two new strategic additions to our team. I would like to take this opportunity to formally welcome and introduce John Leasure as Theratechnologies newly appointed Global Commercial Officer and Peter Kowal as the company's Vice President of our U.S. HIV Commercial Operation. Both John and Peter bring in more capabilities that are needed to bring Theratechnologies through our next stage of growth. Peter's experience and leadership will be integral in enhancing our efforts to grow sales for HIV business in the U.S., while John will lead our global efforts to build our capabilities to be more competitive in HIV and take on the global landscape for NASH and oncology. I am very pleased that we're able to attract such talented and experienced individuals with sales and marketing expertise across HIV, endocrinology, and oncology. And I look forward to their contributions toward the growth of our commercial assets and the development of our pipeline. Additionally, we have added a newly created functions to our commercial organizations with the appointment of a Head of global manufacturing sourcing and pharmaceutical development to oversee our North American and European supply chain procurement, logistics, and pharmaceutical development operations. On the capital market side, the recent offering we closed in January has afforded us the resources to further support our strategy to enhance our commercial initiatives, R&D development and working capital needs. Additionally, we are devoting more resources to enhance our outreached to the investment community and the deal has allowed us to cultivate new institutional investors who are focused on life sciences and support our strategy. I am absolutely confident that Theratechnologies now has the resources, talent, and infrastructure needed to succeed, and we're committed to doing so to drive future sustainable growth and value creation for all our stakeholders. Thank you for your time today. And with that, we will now open the call to take your questions.

[Paul Levesque:]

Thank you very much operator. As there are no questions at this time, we will conclude this morning's investor conference call. Thank you very much for being with us this morning. Have a very good day. Bye-bye.

[Operator:]

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.