Target Hospitality Corp. Price & Performance (TH)

Christian Marcelais, Senior Vice President and Chief Medical Officer and John Leisure, the company's Global Commercial Officer. Before we begin, I'd like to remind everyone that today's remarks contain forward looking statements within the meaning of securities laws, including our financial and business outlook. Actual results may differ materially from historical performance and those forward looking statements implied herein, These statements together with the assumptions underlying them are outlined in detail in the Forward Looking Information section of Theratechnologies management's discussion and analysis issued this morning and available on SEER plus and on EDGAR at www.sec.gov. Forward looking statements represent Theratechnologies' expectations as of this morning, 02/26/2025, And investors are encouraged to review the Risk Factors section contained in the MD and A. Additionally, company is using the term adjusted EBITDA, which is not a financial measure under International Financial Reporting Standards or U. S. Generally accepted Adjusted EBITDA excludes the effects of items that primarily reflects the impact of long term investment financing decisions rather than the results of day to day operations. Thera Technologies believes that this measure can be a useful indicator of its operational performance and financial condition from one period to another. The company uses this non IFRS measure to make financial, strategic and Reconciliation of adjusted EBITDA to net loss is sound in our MD and A issued this morning as well as on Cedar Plus and EDGAR as mentioned earlier.

Thank you. I will now turn the conference over to our CEO, Paul? Thank you, Joanne. Hello and good morning to all. Just as we wrapped up our fiscal twenty twenty four year, we shared a slew of material business developments that I will go over in more detail on this call. 2024 represented a real sea change for Avaya Technologies. Since embarking on our strategic pivot to fully focus on scaling our commercial business twenty four months ago, I'm extremely pleased to have ended the fiscal year with adjusted EBITDA of $20,000,000 compared to minus $3,000,000 a year ago. Our teams delivered exceptionally across all pillars of our business and I'm proud of what we have achieved this past year. In fact, as you will see, we are only just getting started. Before I jump into full year performance, I want to start with some of our recent company developments to set the stage for 2025 and beyond. First, I am pleased to reiterate that we have resumed distribution of EGRIFTA SVT. The brief shortage of the patient level is now behind us, and patients can once again fill their prescriptions. After many discussions with the FDA on February 13, the agency via its drug shortage staff indicated that it would allow the company to sell in the distribute two newly manufactured batches of EGRIFTA ASV while the review of the PAS is ongoing.

These two batches represent up to six months of supply We are grateful to the FDA for their continued collaboration and commitment to getting patients there at therapy. We have manufactured one additional batches of AGRIFTA ASV and two additional batches or scheduled for production, before the end of the third quarter of twenty twenty five. As a reminder, the FA formulation will be manufactured with a new CDMO based in The U. S. In early December, we announced that we closed on new credit facilities securing up to $75,000,000 Philippe will expand on later in the call. In addition to replacing our prior credit agreement, this recent financing is truly fit for purpose. This will enable us to execute on our longer term growth strategy, which is to strengthen and scale our commercial business underpin by our HIV portfolio. This brings me to another major announcement. Our partnership with IONIS Pharmaceuticals. We entered into an exclusive licensing agreement with Ionis to bring Donita Larsen and Ollie Zarsen to the Canadian market for three distinct indications. Before I go into these exceptional assets and the disease areas they treat, I want to say a few words about our partner. My admiration for Ionis dates back several years to my days at Pfizer where as the head of the global rare disease business unit, I had the opportunity to familiarize myself with their impressive discovery and development efforts Ionis is an extraordinary organization and true pioneer Theratechnologies, It is also led by a leadership team that carries the same passion for innovation as we do here At Thera, first product done in Alorcin is being evaluated for the treatment of hereditary angioedema or HAE, which is a rare genetic and potentially life threatening disease that involves recurrent attacks of severe swelling in various parts of the body.

HAE has an estimated prevalence of less than one thousand patients in Canada. Patients with this condition have treatment options but they're still unmet medical needs. Gundydal Orson's efficacy, safety profile and simplicity of self administration demonstrate that it offers the many attributes patients are looking for. If approved, done in the Lorcin could be the preferred prophylactic treatment for both patients new to therapy and patients currently unavailable Donnie, that Orson has been filed in The U. S. With a PDUFA action date of August 21, 2025 and we will also be filing in Canada this year. Second product, ollisnarsen, was recently approved by the FDA and is marketed in The U. S. Under the name of Tringalza for the treatment of familial chylomicronemia syndrome, or SCS. FCS is a rare genetic disease characterized by extremely elevated triglyceride levels and chronic debilitating symptoms. Those living with FCS have a high risk of potentially fatal acute pancreatitis, which is a painful inflammation of the pancreas and chronic health issues such as fatigue, and severe recurrent abdominal pain. There are less than three hundred patients with FCS in Canada. Many of them already diagnosed and overly represented in Eastern Quebec, the population is more likely to carry the gene mutation.

Currently, there are no approved treatments SCS in Canada. We will file olizar since for the first indication mid year in Canada and we are excited to bring this potential first in class innovative treatment to market. In addition, there are three Phase three trials underway evaluating olicarsen for a much more prevalent disease known as hypertriglyceridemia or SHTG. Which is a symptomatic disease where people can suffer debilitating chronic symptoms that impact all aspects of their life including severe abdominal pain and cognitive impairment. In the most severe manifestation, SHTG patients can suffer from life threatening pancreatitis events that require intensive hospital care. As a result, physicians recognize the importance of lowering severely elevated triglycerides, which with established guidelines already in place. The total addressable market for the second indication represent patients in the millions in The U. S. Alone, with a similar prevalence in Canada on a per capita basis. All three studies are fully enrolled with over two thousand four hundred patients with data expected in the second half of this year. We eagerly await the results and enormous potential for the second indication of olizarsen in Canada. The market opportunity for these products in Candace significant and is expected to drive growth for years to come over and above our existing business.

In Canada, based on recent pricing recommendations specifically for rare disease drugs, we anticipate the commercial opportunity of these assets to exceed $30,000,000 in revenue However, with the approval of the much larger indication in severe hypertriglycerid we anticipate peak sales of double That amount. As mentioned, we will be submitting regulatory filings for both products to Health Canada in 2025 and preparations for submissions are already well underway. Market readiness including the identification of specialized centers of excellence and KOL outreach is also moving along rapidly. We are confident in our ability to maximize revenue potential for these opportunities and deliver on additional assets with new and existing partners. As we look ahead, we remain active in building a robust portfolio of high value innovative assets that can benefit from our established infrastructure and networks In The U. S, but also in Canada. Moving over to our existing portfolio. EGRIFTA is the realized unprecedented performance this past year. Full year sales were $60,000,000 representing 12% growth year over year. More importantly, we saw an acceleration in performance in the latter part of 2024. Our field force has been extremely effective in highlighting EGRIFTA ISV's differentiation and unique value proposition.

We continue to benefit from a favorable selling environment supported by the continued momentum of [indiscernible] AGRIFTA ISV reduces excess visceral abdominal fat, and actually increases lean muscle mass. While GLP-1s are very effective at lowering body mass index, people with HIV in particular cannot afford to lose muscle mass. Further, excess visceral abdominal fat is in increasingly being recognized by treating physicians as a medical condition that requires attention. This supportive landscape has contributed to the strong performance this past year which will only be further enhanced by the launch of our new F8 formulations with an expected approval on March 25. This new formulation will be a once weekly reconstitution as opposed to daily. With 50% reduction in volume of injections leading to a much less cumbersome administration and improved patient experience. Before handing the call over to Philippe, I just want to wrap up with a quick update on our oncology program, where we are actively searching for a partner to continue the We recently announced preliminary efficacy and safety data from Part III of our Phase 1b trial [indiscernible] The purpose of this part of the trial was to improve the overall safety profile and improve efficacy for a heavily pretreated population of advanced ovarian cancer patients.

Thirteen patients were recruited to two different dosing arms in Part three Seven patients received a weekly infusion of one point seven five milligram per kilogram and six patients received two point five milligram per kilogram on a three weeks on one week off schedule every twenty eight days. In the higher dose arm, we observed significant tumor reductions including one patient with complete resolution of a liver lesion. This efficacy data was further supported by reduction reduction in the CA125 tumor biomarker in four of six patients. Investigators observed no dose limiting toxicities in either arm. As a result, I'm very pleased to dose of pseudo setaxel Zendeskortide on the same weekly infusion cycle to three point three three followed by three point one nine milligram per kilogram per week, I want to remind you this oncology program carries a huge amount of favorable preclinical data, which led to the initial fast track designation by the FDA. Moreover, we have dose 48 patients to date All in all, we have a meaningful data set for an oncology trial of the kind and we are confident we can find the right partner to continue this important sign. Thanks for now.

I will now turn the call over to Fitbit. Thank you, Paul. Good morning, everyone. I'm pleased to report that we recorded another strong quarter both on the top and bottom lines with net sales of $25,000,000 or 6.6% growth versus the same quarter last year. Furthermore, want to highlight that through the continued efforts to optimize the cost structure of the company, we are reported a solid adjusted EBITDA figure of $7,800,000 dollars again representing greater than 30% of revenues reflecting a strong operating performance enabling us to successfully withstand any challenges For the fourth quarter of fiscal twenty twenty four, reached $17,700,000 compared to $17,000,000 in Q4 of last year which represents a 4% increase year over year. For the full year ended November 30, EGRIFTA revenues have grown 12% with strong momentum in the second half of the year. For Garzo net sales in the fourth quarter of fiscal twenty twenty four, amounted to $7,300,000 compared to $6,500,000 for the same quarter last year, or an increase of 12.8%. Increase was mainly due to higher unit sales in the quarter as compared to last year as well as a higher net selling price. As previously mentioned, Trogarzo has been impacted by new competitors in the past few years and we expect sales to be less affected in the upcoming quarters.

Net sales of Trogarzo for the full fiscal year were down 8% and came in at $25,700,000 In the fourth quarter of twenty twenty four, cost of sales came in [indiscernible] related to our F-eight inventory build and came in at 91% when excluding this provision. Which is in line with historical values. [indiscernible] Trogarzo margins were 48% consistent with the transfer pricing agreement with TimeET. Again, in the fourth quarter of twenty twenty four, the rigorous management of spending in R and D, selling and G and A helped us achieve our six straight quarter of strong adjusted EBITDA as established as an earn. An objective early in the 2023 fiscal year. [indiscernible] Adjusted EBITDA for fiscal twenty twenty four was $20,200,000 above our recently upgraded guidance of $17,000,000 to $19,000,000 R and D expenses in Q4 twenty twenty four were negatively affected by an impairment loss on the intangible asset related to the acquisition of the oncology platform in 2019. While we remain confident we will find a partner to complete the Phase one program, we took the decision to record this impairment as we are no longer spending our own resources to continue the program. Excluding this impairment loss, R and D spending decreased substantially in the fourth quarter of twenty mostly due to lower spending in our oncology program.

R and D expense came in at $2,400,000 versus $5,200,000 last year. Again, in the fourth quarter of twenty twenty four, we were able to claim non reimbursable federal R and D tax credits for an amount of $838,000 Selling expenses came in at $7,000,000 for Q4 twenty twenty four compared to $6,700,000 for the same three month period last year. Selling expenses have stabilized in 2024 and and should continue at roughly the same level in the next few quarters as the focus on top and bottom line growth remains our main objective. G and A expenses in Q4 twenty twenty four amounted to $5,100,000 as compared to $3,700,000 for the fourth quarter of twenty twenty three, or a 38% increase. This increase in G and A expenses is mostly due to higher stock based compensation. [indiscernible] Net finance costs were substantially higher in the fourth quarter of twenty twenty four and came in at $7,800,000 This includes interest of 2,100,000.0 on the long term debt and various costs related to the reimbursement of the Marathon loan including a loss on debt modification of $5,900,000 as well as $300,000 in write offs of deferred financing costs. The above expenses were offset by interest and other income of $450,000 Adjusted EBITDA for the fourth quarter of fiscal twenty twenty four was $7,800,000 31% of revenues up 56% from the same period last year.

As previously mentioned, at the end of the fourth quarter, we reimbursed all amounts outstanding in due to Marathon and replaced this facility with a credit facility from TD Bank for a total amount of up to $60,000,000 as well as a second lien subordinated loan of $50,000,000 with Avis Simone Quebec. [indiscernible] At closing, we drew $30,000,000 on the TD Bank facility, which includes a term loan of $25,000,000 and $5,000,000 on the revolving credit facility which left a total of $10,000,000 immediately available on the revolver. The TD term loan has a three year maturity and is repayable through quarterly payments of about $900,000 with the remaining balance due at maturity. Interest rate on this facility is currently based on the SOFR rate This premium is currently set at 2.75%. The IQ loan is currently fixed at 11.45%. And is due in full forty two months after closing. The interest rate can also be adjusted depending on our total debt to EBITDA ratio. As of 11/30/2024, we had cash and cash equivalents of $19,800,000 which included $10,000,000 in escrowed cash equivalents. [indiscernible] This amount was paid to Ionis Pharmaceuticals for the Canadian rights to Donnie Delorsen and Olizarsen in in early December twenty twenty four.

The flexibility of the new credit facilities enable us to keep lower cash balances while retaining access to capital to realize our business plan. In finishing, I would like to fiscal year at this point. While reloading of inventory has occurred rapidly, since we resumed distribution of EGRIFTA SV two weeks ago, it's still too early to evaluate the impact if any, on returning patients. We will provide guidance both on revenue and adjusted EBITDA once we have further visibility on the impact of the recent shortage on our EGRIFTA patient base. We will now open the call Ladies and gentlemen, at this time, we will begin that question and answer session. On the webcast platform. Our first question today comes from Andre Uden from Research Capital. Please go ahead with your question.

Thanks and good morning. Just looking at the F8 formulation, the PDUFA date is is is coming up. And assuming FDA approval, what will be your switch strategy in terms of Thanks.

Thank you, Andrew.

Obviously, the FA formulation is key to us. Things are moving forward, John. What is the phase in and phase out strategy that we have lined up?

Andre, it takes about six months is what we assume to phase in the new F8 phase out the F4. The major limitation is getting the payers to adopt the new formulation into their systems. Sometimes that can happen relatively quickly. Other times, through standard delays, which just takes a little bit longer. So we assume about six months. We'll try to do that faster if we can.

Okay. That's useful. Thank you. And will there be any price increases for Trogarzo and Agrysta in 2025 to match in and even possible tariffs, I should say, also. [indiscernible] that's another thing. [indiscernible] do a thorough analysis before we complete the operating plan. And the reason why we need to do this is to ensure that if we have a proportion of our sales coming from Medicare, Medicaid, we fully understand if by increase the price, we're going to have to increase our rebates. So Filip, I mean, do you have any precisions to make? Do you want to make a precisions for the F-eight in particular? Yes. So we have taken price increases, Andrea, on January 1. And there are no further price increases planned for this year. The F8 formulation will be launched at the same monthly price [indiscernible] But remember, there's only a twenty eight day supply versus a thirty day supply when with EnGRIFTA ISV. So there is an embedded price benefit in the F-eight for us, but we will be launching it at the same price [indiscernible] Okay. That's great. And just one last question. After the Iona Steel, are you still looking to add any additional commercial assets?

To your portfolio? Thanks.

Well, I mean, we have an infrastructure, Andre, that we would like to continue to capitalize on. So we have an infrastructure in The U. S. We call on a fair amount of infectious disease doctors. We've got two products in that bag. It would make a lot of sense for us to actually have a third product in that bag knowing the synergy that we would derive. Now in Canada, you got that we're going to have to set up small teams, but still if we were to have a second product we would be able to synergize a great deal. So So John, what is the thinking when it comes down to adding products to the bag that we already have in The U. S. And the soon to have in Canada.

Yes, Paul, it's like you said, I mean, we're looking for synergistic assets with both The U. S. And Canadian portfolios. So U. S. More outpatient infectious disease focused Canada cardiology and immunology with ALSARIS and Donnie Doloresin. We have identified a number of interesting assets that we're working on and there's a number that we're interested, I'll leave it at that.

Okay. That's great. Thank you. That's it for me.

At this time, I'm showing no questions on the audio side and would like to turn the floor back over to management for any closing remarks.

Before we get into closing remarks, there's a few questions from the webcast. So the first one is on the any information on timelines related to the Ionis assets, time to projected peak sales and profitability.

Well, as you know, John, you can go over the timelines for submission. And but we are already working hard to file and to prepare, as I said in my speech, for doing the KOL management and the identification of centers of [indiscernible] PANDAS is an HTA country Theratechnologies assessment. So we need to prepare a full dose when it comes down to pharmacoeconomic and advantages over existing drugs. As you heard me say, in the case of olizarsen, there's no therapies. Currently being used for that patient population. So we will certainly benefit from accelerated review. So John, what is the plan for embedding sales in our long term forecast?

Yes. We'll plan to file both drugs this year to help Canada We should be booking revenue in our estimates are in Q1 twenty twenty seven. And then after that, we'll see peak sales somewhere in the range of 02/1930. Obviously, with the second indication, we file that for FHTG that would be another scenario that would be a little bit later than that. But a significantly larger opportunity.

And maybe just on the profitability that we're seeing, well, we're seeing this business as being at least as profitable as the company in its entirety. So at least 30% margins on the EBITDA line. And until launch, we are embedding spending of about $3,000,000 to $5,000,000 so $3,000,000 to $5,000,000 a year between now and launch in Q1 twenty twenty seven.

So those are the questions, Apollos. So back to you.

Please note that all of the numbers that we've been quoting today are in U. S. Dollars. Before we conclude, I want to leave you with our priorities for 2025. Our objectives are clear. We will continue to strengthen our HIV franchise through product differentiation in the new FH formulation expected to improve patient experience and adherence. We will accelerate the growth and future profitability of the company through additional product acquisitions [indiscernible] prioritizing products that are synergistic with our assets in The U. S. And in Canada. We will submit regulatory filings to Health Canada for olizarsen and Donita Doloresen and finally, the right value from our investment in oncology and continue to seek out partners with TH1902 and our entire oncology platform. With a flexible capital structure, we are now poised to scale our business for long term growth and sustainability. I look forward to updating you on key developments on our next earnings calls. Thank you again for attending the call today. For your continued support. Have a great day. Thank you for joining today's presentation. It has now concluded. You may now disconnect your lines. [indiscernible]