HLS Therapeutics Announces Q2 2024 Financial Results
KEY HIGHLIGHTS
- Q2 2024 revenue was
$14.5 million , Adjusted EBITDA1 was$4.3 million and cash from operations was$2.5 million , compared to$16.4 million ,$5.5 million and$2.7 million , respectively, in Q2 2023. - Sold the Xenpozyme royalty asset in a transaction valued at up to
$45.75 million . - Excluding royalty portfolio revenue, Q2 2024 revenue increased 9% to
$14.1 million and Adjusted EBITDA increased 86% to$3.8 million , compared to$13.0 million and$2.1 million , respectively, in Q2 2023. - Completed a Product Listing Agreement with the province of
Alberta , for the listing and public reimbursement of Vascepa, effectiveAugust 1, 2024 .
"In Q2 we generated solid growth from our marketed products - Clozaril and Vascepa - particularly in
Q2 2024 OTHER HIGHLIGHTS
- Clozaril revenue in
Canada increased by 5% in local currency compared to Q2 2023. - A study demonstrating the positive impact of pharmaceutical support programs on persistence with clozapine treatment was published in the
Journal of Clinical Pharmacology and Therapeutics . - Vascepa revenue in
Canada increased 21% in local currency compared to Q2 2023. - Vascepa unit demand increased by 45% compared to Q2 2023.
- The number of consistent prescribers2 for Vascepa increased 76% compared to Q2 2023.
- Finalized termination agreement with Pfizer to transition Vascepa primary care sales responsibilities back to HLS by
August 31, 2024 .
BOARD OF DIRECTORS UPDATE
Effective
"On behalf of the Board and HLS Management, I want to thank Laura for the insights, guidance and leadership she provided during her five years on the Board. We wish her the best in all her future pursuits," said
2024 OUTLOOK
With the release of its Q2 2024 results, the Company reiterates its 2024 guidance, which was updated following the sale of the Xenpozyme royalty interest.
2024 consolidated revenue guidance is
2024 Adjusted EBITDA is expected to be
Q2 2024 FINANCIAL REVIEW
The Company's Management's Discussion and Analysis and Consolidated Financial Statements for the three and six months ended
Revenue
|
Three months ended
|
Six months ended
|
||
|
2024 |
2023 |
2024 |
2023 |
|
|
|
|
|
Product sales |
|
|
|
|
|
10,637 |
9,791 |
19,791 |
18,602 |
United States |
3,462 |
3,179 |
6,104 |
6,391 |
|
14,099 |
12,970 |
25,895 |
24,993 |
Royalty revenue |
420 |
3,447 |
1,097 |
6,181 |
|
14,519 |
16,417 |
26,992 |
31,174 |
Revenue for the three and six months ended
Product sales –
000's of CAD |
Three months ended
|
Six months ended
|
||||
|
2024 |
2023 |
% change |
2024 |
2023 |
% change |
|
|
|
|
|
|
|
Clozaril |
9,131 |
8,665 |
5.4 % |
16,996 |
17,083 |
(0.5) % |
Vascepa |
5,407 |
4,481 |
20.7 % |
9,878 |
7,996 |
23.5 % |
Other |
14 |
— |
|
27 |
— |
|
|
14,552 |
13,146 |
10.7 % |
26,901 |
25,079 |
7.3 % |
Canadian product sales of Vascepa and Clozaril in Q2 2024 increased 11% in local currency, compared to Q2 2023. Q2 2024 revenue in
For the six months ended
Product Sales –
In the
Royalty revenues
Royalty revenues for the three and six months ended
Operating Expenses
|
Three months ended
|
Six months ended
|
||
|
2024 |
2023 |
2024 |
2023 |
|
|
|
|
|
Cost of product sales |
2,303 |
1,777 |
4,077 |
3,221 |
Selling and marketing |
4,561 |
5,325 |
9,087 |
10,132 |
Medical, regulatory and patient support |
1,420 |
1,437 |
2,685 |
2,513 |
General and administrative |
1,977 |
2,373 |
4,178 |
4,724 |
|
10,261 |
10,912 |
20,027 |
20,590 |
Excluding cost of product sales, operational expenses for the three and six months ended
"With the primary care sales function transition to HLS expected to be completed by the end of August, we anticipate a further reduction in operational expenses for Q4 this year and beyond," said
Cost of product sales was up for the for the three and six months ended
Adjusted EBITDA1
|
Three months ended
|
Six months ended
|
||
|
2024 |
2023 |
2024 |
2023 |
|
|
|
|
|
Net loss for the period |
(5,682) |
(9,437) |
(11,788) |
(15,229) |
Stock-based compensation |
427 |
137 |
683 |
82 |
Amortization and depreciation |
5,856 |
8,366 |
11,775 |
16,685 |
Finance and related costs, net |
2,942 |
2,471 |
5,609 |
4,905 |
Other costs (income) |
(3,361) |
3,851 |
(3,361) |
4,064 |
Income tax expense |
4,076 |
117 |
4,047 |
77 |
Adjusted EBITDA |
4,258 |
5,505 |
6,965 |
10,584 |
Adjusted EBITDA for the three and six months ended
For Q2 2024, the direct brand contribution from Clozaril to Adjusted EBITDA was
Net Loss
Net loss for the three months ended
Cash from Operations and Financial Position
Cash generated from operations for the three and six months ended
Total borrowings under the credit agreement at
Q2 2024 CONFERENCE CALL
HLS will hold a conference call today at
CONFERENCE ID: 58793
DATE: Thursday, August 8, 2024
TIME: 8:30 a.m. ET
WEBCAST LINK: https://app.webinar.net/Bo1rqAKyNm9
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/3xE2Dl5
TAPED REPLAY: 1-888-660-6345 or 1-289-819-1450
REPLAY CODE: 58793#
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 (income)", and (v) "income tax expense" 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 .
2 CONSISTENT 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 |
|
32,515 |
21,952 |
Accounts receivable |
|
9,115 |
10,608 |
Inventories |
|
8,796 |
9,534 |
Income taxes recoverable |
|
95 |
86 |
Other current assets |
|
2,338 |
1,915 |
Total current assets |
|
52,859 |
44,095 |
Property, plant and equipment |
|
701 |
965 |
Intangible assets |
|
136,387 |
162,344 |
Deferred tax asset |
|
777 |
1,037 |
Other non-current assets |
|
598 |
619 |
Total assets |
|
191,322 |
209,060 |
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY |
|||
Current |
|
|
|
Accounts payable and accrued liabilities |
|
12,317 |
14,107 |
Provisions |
|
7,054 |
5,424 |
Debt and other liabilities |
|
6,591 |
6,876 |
Income taxes payable |
|
158 |
281 |
Total current liabilities |
|
26,120 |
26,688 |
Debt and other liabilities |
|
78,514 |
84,233 |
Deferred tax liability |
|
3,982 |
442 |
Total liabilities |
|
108,616 |
111,363 |
|
|
|
|
Shareholders' equity |
|
|
|
Share capital |
|
260,595 |
262,127 |
Contributed surplus |
|
14,598 |
13,865 |
Accumulated other comprehensive loss |
|
(6,174) |
(2,838) |
Deficit |
|
(186,313) |
(175,457) |
Total shareholders' equity |
|
82,706 |
97,697 |
Total liabilities and shareholders' equity |
191,322 |
209,060 |
|
|||||||||
INTERIM CONSOLIDATED STATEMENTS OF LOSS |
|||||||||
Unaudited |
|||||||||
[in thousands of |
|
|
|||||||
|
Three months ended
|
Six months ended
|
|||||||
|
|
2024 |
2023 |
2024 |
2023 |
||||
|
|
|
|
|
|
||||
Revenue |
|
14,519 |
16,417 |
26,992 |
31,174 |
||||
|
|
|
|
|
|
||||
Expenses |
|
|
|
|
|
||||
Cost of product sales |
|
2,303 |
1,777 |
4,077 |
3,221 |
||||
Selling and marketing |
|
4,561 |
5,325 |
9,087 |
10,132 |
||||
Medical, regulatory and patient support |
|
1,420 |
1,437 |
2,685 |
2,513 |
||||
General and administrative |
|
1,977 |
2,373 |
4,178 |
4,724 |
||||
Stock-based compensation |
|
427 |
137 |
683 |
82 |
||||
Amortization and depreciation |
|
5,856 |
8,366 |
11,775 |
16,685 |
||||
Finance and related costs, net |
|
2,942 |
2,471 |
5,609 |
4,905 |
||||
Other costs (income) |
|
(3,361) |
3,851 |
(3,361) |
4,064 |
||||
Loss before income taxes |
|
(1,606) |
(9,320) |
(7,741) |
(15,152) |
||||
Income tax expense |
|
4,076 |
117 |
4,047 |
77 |
||||
Net loss for the period |
|
(5,682) |
(9,437) |
(11,788) |
(15,229) |
||||
|
|
|
|
||||||
Net loss per share: |
|
|
|
||||||
Basic and diluted |
|
|
|
|
|
||||
|
|
|||||||||
|
|||||||||
INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS |
|||||||||
Unaudited |
|||||||||
[in thousands of |
|
|
|||||||
|
Three months ended
|
Six months ended
|
|||||||
|
2024 |
2023 |
2024 |
2023 |
|||||
|
|
|
|
|
|||||
Net loss for the period |
(5,682) |
(9,437) |
(11,788) |
(15,229) |
|||||
|
|
|
|
|
|||||
Item that may be reclassified subsequently to net loss |
|
|
|
|
|||||
Unrealized foreign currency translation adjustment |
(963) |
2,297 |
(3,336) |
2,390 |
|||||
Comprehensive loss for the period |
(6,645) |
(7,140) |
(15,124) |
(12,839) |
|
||||||
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 |
|
(1,532) |
— |
— |
932 |
(600) |
Share purchase obligation |
|
— |
300 |
— |
— |
300 |
Stock option expense |
|
— |
433 |
— |
— |
433 |
Net loss for the period |
|
— |
— |
— |
(11,788) |
(11,788) |
Unrealized foreign currency |
|
— |
— |
(3,336) |
— |
(3,336) |
Balance, |
|
260,595 |
14,598 |
(6,174) |
(186,313) |
82,706 |
|
|
|
|
|
|
|
Balance, |
|
265,206 |
13,821 |
(5,260) |
(148,449) |
125,318 |
Stock options exercised |
|
178 |
(44) |
— |
— |
134 |
Shares repurchased |
|
(623) |
— |
— |
254 |
(369) |
Share purchase obligation |
|
— |
(305) |
— |
— |
(305) |
Stock option expense |
|
— |
679 |
— |
— |
679 |
Net loss for the period |
|
— |
— |
— |
(15,229) |
(15,229) |
Dividends declared |
|
— |
— |
— |
(1,182) |
(1,182) |
Unrealized foreign currency |
|
— |
— |
2,390 |
— |
2,390 |
Balance, |
|
264,761 |
14,151 |
(2,870) |
(164,606) |
111,436 |
|
||||
CONSOLIDATED STATEMENTS OF CASH FLOWS |
||||
Unaudited |
||||
[in thousands of |
|
|
||
|
Three months ended
|
Six months ended
|
||
|
2024 |
2023 |
2024 |
2023 |
|
|
|
|
|
OPERATING ACTIVITIES |
|
|
|
|
Net loss for the period |
(5,682) |
(9,437) |
(11,788) |
(15,229) |
Adjustments to reconcile net loss to cash provided by operating |
|
|
|
|
Stock-based compensation |
427 |
137 |
683 |
82 |
Amortization and depreciation |
5,856 |
8,366 |
11,775 |
16,685 |
Gain on royalty sale |
(3,381) |
— |
(3,381) |
— |
Impairment charge |
— |
2,352 |
— |
2,352 |
Accreted interest |
277 |
190 |
559 |
381 |
Fair value adjustment on financial assets and liabilities |
318 |
570 |
505 |
1,121 |
Deferred income taxes |
3,861 |
(85) |
3,800 |
(262) |
Net change in non-cash working capital balances related to operations |
843 |
575 |
1,144 |
1,558 |
Cash provided by operating activities |
2,519 |
2,668 |
3,297 |
6,688 |
|
|
|
|
|
INVESTING ACTIVITIES |
|
|
|
|
Proceeds from royalty sale |
13,250 |
— |
13,250 |
— |
Additions to property, plant and equipment |
— |
(27) |
(2) |
(27) |
Additions to intangible assets |
— |
(108) |
— |
(108) |
Cash provided by (used in) investing activities |
13,250 |
(135) |
13,248 |
(135) |
|
|
|
|
|
FINANCING ACTIVITIES |
|
|
|
|
Stock options exercised |
— |
— |
— |
134 |
Shares repurchased |
(317) |
(185) |
(600) |
(369) |
Dividends paid |
— |
(1,216) |
— |
(2,398) |
Repayment of borrowing under credit agreement |
(1,493) |
(1,389) |
(3,568) |
(3,510) |
Debt costs |
(658) |
— |
(1,191) |
— |
Lease payments |
(112) |
(158) |
(255) |
(319) |
Cash used in financing activities |
(2,580) |
(2,948) |
(5,614) |
(6,462) |
|
|
|
|
|
Net increase (decrease) in cash during the period |
13,189 |
(415) |
10,931 |
91 |
Foreign exchange on cash |
(117) |
133 |
(368) |
118 |
Cash, beginning of period |
19,443 |
21,214 |
21,952 |
20,723 |
Cash, end of period |
32,515 |
20,932 |
32,515 |
20,932 |
SOURCE