Release Date: August 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- HLS Therapeutics Inc (HLTRF, Financial) reported solid growth in Q2 2024, with revenue from promoted products like Clozaril and Vascepa increasing by 11% in Canada.
- The company successfully reduced operating expenses by 13% while still achieving top-line growth.
- HLS Therapeutics Inc (HLTRF) completed the sale of the Xenpozyme royalty interest, strengthening its balance sheet and providing greater financial flexibility.
- Vascepa's Canadian revenue grew by 21% year over year, with unit demand increasing by 45% and a 76% rise in the consistent prescriber base.
- The company anticipates achieving brand profitability for Vascepa by the end of 2024, driven by unit demand growth, reduced operating expenses, and improved reimbursement rates.
Negative Points
- Total revenue for Q2 2024 was $14.5 million, down from $16.4 million in Q2 2023, primarily due to a decrease in royalty revenues.
- US Clozaril sales are down 5% year-to-date, affected by inventory build at the end of the previous year.
- The transition of the primary care sales function from Pfizer to HLS may cause some near-term customer impact.
- The company faces challenges in achieving balanced growth across payer channels, particularly in Ontario, where reimbursement processes are more complex.
- HLS Therapeutics Inc (HLTRF) is still working to optimize its portfolio and strengthen financials before pursuing new transactions or expanding its asset base.
Q & A Highlights
Q: What is HLS Therapeutics' strategy for targeting general practitioners who are not currently prescribing Vascepa?
A: Craig Millian, CEO, explained that the company is transitioning its sales model for Vascepa to focus on a smaller, more efficient sales force. This change is aimed at targeting physicians who are more likely to initiate patients on Vascepa, rather than just refilling prescriptions. The new model will cover most primary care physicians who have initiated patients on Vascepa and will also target high-potential specialists and general practitioners based on criteria such as patient reimbursement eligibility and payer mix.
Q: Has there been any impact on unit demand in Western Canada following the addition of Blue Cross and public reimbursement in BC?
A: Craig Millian noted that while growth has started to pick up, it has not yet reached desired levels. Sequential growth in BC from Q1 to Q2 outpaced the national average, and there is potential for further growth in the second half of the year. Alberta is expected to see faster growth than BC due to fewer economic barriers in its public plan.
Q: How will the proceeds from the Xenpozyme royalty sale be used?
A: John Hanna, Interim CFO, stated that the transaction closed at the end of June, and the proceeds were used in early July to pay down $14 million in principal on the company's term loan. This will save approximately $1.5 million in annual interest expense.
Q: What is the expected timeline for receiving milestone payments from the Xenpozyme transaction?
A: Craig Millian explained that the milestone payments are tiered, with a long runway for achievement. While the lower tiers are more achievable, it is unlikely that HLS will see an economic benefit from these milestones in the next two to three years. However, the upfront cash and elimination of a potential liability make the near-term value of the deal closer to $20 million.
Q: What is HLS Therapeutics' approach to expanding its portfolio and potential acquisitions?
A: Craig Millian stated that while the company is focused on optimizing its current assets, it is actively looking to expand its portfolio, particularly in cardiovascular and neuroscience therapeutic areas. The focus will be on commercial or near-commercial stage assets that are synergistic or accretive in the near term.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
