Medexus Pharmaceuticals Q4 2023 Earnings Call Transcript

Quartr
Provided by Quartr
June 22, 2023

There are 10 speakers on the call.

Operator

Greetings. Welcome to the Medexus Pharmaceuticals 4th Quarter and Fiscal Year 2023 Earnings Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. Please note this conference is being recorded.

Operator

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

Speaker 1

Thank you, And good morning, everyone. Welcome to the Medexus Pharmaceuticals 4th fiscal quarter fiscal year 2023 earnings call. On the call this morning are Ken Deltramont, Chief Executive Officer and Marcel Conrad, Chief Financial Officer. If you have any questions after the conference call or would like further information about the company, please contact Abilade Capital at 480-625-5772. I would like to remind everyone that this discussion will include Forward looking information as defined in securities laws.

Speaker 1

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 and A, which along with the financial statements are available on the company's website at www.medexis.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.

Speaker 1

S. Dollars. I would now like to turn the call over to Ken D'Entremont.

Speaker 2

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 2023. We attained both record revenue and record adjusted EBITDA for the fiscal year 2023 plus announced our overall strongest Q4 to date. This accomplishment was driven by strong performance across all our leading prescription products and the addition of Gluoland net sales in the U. S.

Speaker 2

We're also proud to note that this has translated into positive net income for fiscal Year 23. Our 4th quarter revenue was $28,600,000 That compares favorably to $20,300,000 for the same period last year or 41% growth year over year. The $8,300,000 increase is mainly due to an increase in net sales across our portfolio and the contribution from GLEOLAND. 4th quarter adjusted EBITDA increased to $4,800,000 compared to $1,100,000 for the same period last year. The $3,700,000 year over year increase is mainly due to the increase in net sales I mentioned and a reduction in research and development costs.

Speaker 2

I would also like to highlight this is our 6th consecutive quarter of positive adjusted EBITDA demonstrating the strength and stability of our product portfolio as we close out fiscal year 2023 and look ahead to fiscal 2024. We produced net income of $6,900,000 for Q4 compared to a net loss of $5,300,000 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 $6,000,000 compared to a net loss of $4,600,000 for the same period last year. At March 31, 2023, we had total available liquidity of $13,100,000 in cash and cash equivalents. We were pleased to announce a non dilutive debt financing in March of 2023, which contributed to our cash position and demonstrated our access to capital on competitive terms.

Speaker 2

I will let Marcel comment further on this topic later in the call. Overall, we are thrilled to have achieved a record $108,100,000 revenue for the year, which compares to $76,700,000 for fiscal 2022 or 41% growth year over year. Adjusted EBITDA for the year was $16,100,000 in 2023, representing another record for Medexis and comparing favorably to negative $3,900,000 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.

Speaker 2

Unit demand for Xfinity in the U. S. Remained strong during The trailing 12 months ended March 31, 2023, with the 4th quarter reflecting the best quarter of fiscal year 2023 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 Xfinity manufacturing process, which has had a positive impact on Xfinity manufacturing costs.

Speaker 2

RUPEL continued to see strong unit demand growth, achieving 25% growth for the trailing 12 months ended March 31, 2023. This continues RUPAL'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 remains strong for the trailing 12 months ended March 31, 23, Maintaining the product's leading position in the moderately growing U.

Speaker 2

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 Resuvo product level revenue.

Speaker 2

On Metal Jet, 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 this decision later in calendar 2023. On Gleolan, unit demand in the United States continues to be in line with expectations with the 4th Fiscal quarter 2023 having included the best month of U.

Speaker 2

S. Unit sales of the fiscal year 2023. The 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 triosulfan, an agent used in conditioning regimens as part of allogeneic hematopoietic We have finally we have fully launched the product In the Canadian market under the brand name Trecando, recent data from a retrospective analysis of Toronto's Purchase Margaret Hospital We saw that 30% improvement in 1 year overall survival for patients treated with Triosulfan, which we find extremely encouraging and relevant to the U.

Speaker 2

S. Population as well. We expect that the commercial experience we are gaining in Canada And a growing body of positive information about the product like this PMH study will serve us well if and when the FDA approves Triosulfan in the United States, where triosulfan is important pipeline product for us. On that topic, Medac, The licensor of our commercial rights to triosulfan 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 Medact up to a year to collect and submit the information requested by the FDA.

Speaker 2

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 RUPEL, And we expect that it will both contribute to our Canadian revenues and engage the commercial infrastructure we have in place to support RUPEL. We will submit for Health Canada approval later in calendar 2023. Xfinity, already one of our leading products, Presents another pipeline opportunity for us.

Speaker 2

The FDA recently accepted for review our Xfinity supplemental biological License application for pediatric patients. A successful BLA could support a significant expansion of the indicated patient population for Xfinity to hemophilia B patients under 12 years of age, and we are exploring approaches to to address this potentially expanded market. In another opportunity within the Medexus pipeline, the licensor of our Commercialization rights to GLEOLAND continues to pursue research and development activities for a meningioma indication for GLEOLAND. 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.

Speaker 2

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 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

Speaker 3

Thank you, Ken. The Medexus momentum is in Full swing and like Ken, I'm also very happy with our overall strongest Q4 for Medexus to date. Total revenue for Fiscal Q4 was $28,600,000 which is slightly better than we had anticipated when we previewed our expected revenue in April. Total revenue for the full year was $108,100,000 These 4th quarter and full year revenue numbers compare favorably to revenue of $20,300,000 $76,700,000 for the same periods in the previous year, in both cases reflecting a Significant year over year improvement. The $8,300,000 increase in 4th quarter in 4th fiscal quarter 2023 versus the prior year 4th quarter is primarily attributable to an increase in net sales of Xfinity during the quarter.

Speaker 3

Continued strong performance of RASUVO and RUPAL, which continues to maintain its position as one of the fastest growing antihistamines in its market. And then of course, there's Gluoland, which we started selling during the Q4 last fiscal year before Successfully completing our agreed transition period this past August. Gross profit has also increased for both periods and was $15,000,000 60,000,000 for the 3 12 month periods ended March 31, 2022, respectively, compared to gross profit of $10,100,000 $37,900,000 for the same periods in the previous year. The gross margin was 52.4% 55.5% For the 3 12 months period ended March 31, 2022, respectively, compared to 49.8% 49.4% for the 3 and 12 months period ended March 31, 2022. Selling and administrative expenses were 11,400,000 and $48,300,000 for the 3 12 months period ended March 31, 2023, compared to 9,900,000 and $44,000,000 for the 3 12 months period ended March 31, 2022.

Speaker 3

The $4,300,000 full year increase in selling and administrative was primarily attributable to investments in personnel and infrastructure to support the sale of Clearland in the United States. Research and development was $700,000 $2,900,000 for the 3 12 months period ended March 31, 2023. This compares to $800,000 $5,900,000 for the 3 12 months period ended March 31, 2022. During these periods, we continued to fund the now completed Xfinity 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 executive de manufacturing process improvement initiative. Adjusted EBITDA for the 3 12 month periods ended March 31, 2023 was positive 4,800,000 and $16,100,000 compared to $1,100,000 and negative $3,900,000 for the 3 12 months period ended March 31, 2022.

Speaker 3

The $20,000,000 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 12 month periods ended March 31, 2023, $6,900,000 $1,200,000 compared to a net loss of $5,300,000 $2,900,000 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.

Speaker 3

The change relates to the customary release of a valuation allowance against our deferred tax assets in anticipation of future taxable earnings as it is typical in situations like ours, including in part based on our track record of 4 consecutive quarters of positive operating income and 6 consecutive quarters of positive adjusted EBITDA. All included in net income or loss is a non cash unrealized gain or loss from 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 Non cash fair value adjustments on liabilities, which may be sales and shares. Our adjusted net income for the 3 12 month periods ended March 31, 2023, was $6,000,000 and negative $1,300,000 compared to an adjusted net loss of $4,600,000 $24,000,000 for the same period last year. Cash and cash equivalents was $13,100,000 at March 31, 2023 versus $9,300,000 at December At December 31, 2022, during the Q4, we began to see We began to see a build in our cash position as the benefits from our investments in our core portfolio materialize, especially for Xfinity and GluoLAN.

Speaker 3

We see our cash balance continuing to increase and expect to have approximately $20,000,000 of total cash at December 31 this year at September 30 this year, not including any additional amounts that may come available under the $20,000,000 uncommitted accordion facility that was put in place at the time of our debt financing with BMO in March. On the topic of our capital structure, in March 2023, we successfully completed a non diluted debt financing with BMO Bank of Montreal, which demonstrates our access to capital on very competitive terms. The credit agreement provides for a US35 $1,000,000 term loan facility and a US3 $500,000 revolving loan facility for working capital. The terminal facility benefits from the additional US20 $1,000,000 uncommitted accordion feature I mentioned before. We used a substantial portion of the net proceeds of the $30,000,000 term facility to repay our previous senior security credit facilities.

Speaker 3

The convertible debentures will mature on October 16, 2023. At maturity, We will be obligated to read the 125 percent of the aggregate principal amount of the debt issued and outstanding convertible debentures, plus accrued and unpaid interest. Altogether, this represents a near term liability of approximately US3 $1,000,000 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 cash All subject to any required approvals, common shares or a combination of cash and common shares.

Speaker 3

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.

Speaker 1

Operator, we will now open the call to questions.

Operator

Certainly. At this time, we will be conducting a question and answer session. One moment while we poll for questions. Your first question for today is coming from Andre Uddin at Research Capital.

Speaker 4

Hi, 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 EthePharm planning to still file an NDA for Triamcin alone or has that already been done? Thanks.

Speaker 2

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

Speaker 4

Okay. And is there a timeline or is that is there a timeline for that?

Speaker 2

Yes. We haven't stated the timeline. Obviously, we're working diligently We're 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.

Speaker 2

So it is becoming available in the U. S. As well. But we do plan to file an application for proper registration.

Speaker 4

Okay. And also from Just looking at it from a competitive perspective, is there any edge that terbeneathine would have over Bosch's Jubilee?

Speaker 2

Yes, absolutely. So Bosch's product, which dominates that $90,000,000 market, It 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.

Speaker 4

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

Speaker 2

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

Speaker 4

Okay. That's great. Thanks, Ken.

Speaker 2

Thanks, Andre.

Operator

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

Speaker 5

Good morning. Thanks for taking my call. Nice to see the swing to positive net income. Just within the expenses, I noticed the R and D has declined substantially, down about 50% year on year. Are you able to provide an outlook on R and D plans Going forward?

Speaker 2

Yes. Thanks, Justin. It's a good question. So the R and D came down Significantly as a result of concluding the pediatric studies. So the base that you're now seeing on a quarterly basis We'll continue for some period of time.

Speaker 2

That's related to the improvements in the manufacturing process for Xfinity. So The benefit of those spends will show up in gross margin.

Speaker 5

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

Speaker 4

I'll turn it over

Speaker 2

to Marcel. Tal, I think we reported the most recent quarter would be ongoing run rate that we would expect, Marcel?

Speaker 3

Yes, yes, I would look at this. We had quite a bit of spend as you know in fiscal 2022, Declined quite a bit in fiscal 2020 3 now. The last quarter gives you good expectation for run rate going forward. Year over year, it's In line or maybe slightly less even for fiscal 2024.

Speaker 5

Okay. Thank you. And then the pediatric indication, what is the expectations as far as Expanded potential TAM and what is the expected timeline for FDA approval?

Speaker 2

Yes. So it's now been submitted. So the approval timeline, I believe, is 10 months. So we would expect to have a decision within That timeline. And then in terms of addressable market, we've said before that 30% of the patients So the hemophilia BER under the 12 years of age, I wouldn't expect that the ramp up to be really quick because clearly These are smaller patients.

Speaker 2

There's only a few diagnosed per year being a rare disease. There's only 4000 to 5000 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 Xfinity, That obviously builds our base of revenue over time.

Speaker 2

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.

Speaker 5

Understood. Thank you for taking my questions.

Operator

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

Speaker 6

Hey, Ken, Marcella and Victoria. Thanks for taking our questions and congratulations on finishing the year strong. I'm going to continue Questions on Xfinity. Congratulations on submitting the SBLA. I'm wondering if you can describe the pediatric study that Medexus undertook and Medexus' responsibilities there.

Speaker 6

Did you were you completely responsible for running this thing? And What were how long did it take to run the study?

Speaker 2

Yes. Thanks for the question, Michael. Yes. So we were completely responsible for it. We conducted it through CRO.

Speaker 2

So it took us let me think, we started it just when we acquired the product, which was March of 2021, sorry. So that's roughly when it was started. And last patient enrolled, I think, was like 6 or 8 months ago. And now product readout and application just completed. So 10 months from here to decision point.

Speaker 6

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

Speaker 2

Yes. So when we're simply looking for switches of patients to Xfinity, 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 that for a while. This will give us an opportunity to almost re launch Xfinity because this is Obviously, a significant expansion of the label to new starts.

Speaker 2

And so we think that this is a really good opportunity to relaunch the brand.

Speaker 6

All right. That's very helpful. And one more for me. This is the second 4th quarter contribution from LEO LAND. 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.

Speaker 2

Yes. So we've conducted a fair bit of primary research on Gluoland that didn't exist prior to us acquiring it. And it was clear that the number one concern with the drug was price, which is not unusual, even though it's relatively small price compared to the cost of a recession. So with price being the number one concern, There was a lot of misunderstanding as to the total overall cost when using glialand or without gluland, 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 reresections.

Speaker 2

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 Gluoland significantly reduces the reresections and so therefore it becomes quite cost effective.

Speaker 6

That's helpful. And just has that been incorporated, I guess, in your sales strategy or that information Incorporated

Speaker 3

efficiency and strategy. Yes. Absolutely. Yes.

Speaker 6

And how has that affected adoption last, I guess, only a month or so?

Speaker 2

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. 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.

Speaker 6

Thank you very much. I'll jump back in the queue.

Operator

Your next question for today is coming from Stephen Queenieville at Echelon Capital Markets.

Speaker 7

Hi, guys. Thanks for taking the question. 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 $20,000,000 and the $20,000,000 accordion from BMO, it's obviously going to be pretty 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?

Speaker 7

And if

Speaker 3

you could also just sort

Speaker 7

of repeat for everybody the full accrued amount you expect to pay in mid October? Thanks.

Speaker 2

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

Speaker 3

Yes. So thanks for the question, Steven. 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 $40,000,000 that's what's roughly coming to you. 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.

Speaker 3

We are also, as you've seen now, we increased our cash position, dollars 3,000,000 $4,000,000 now quarter over quarter, and we've, at This point sort of guided to approximately 20 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 the amount that is coming together then. We will obviously see how that will evolve over the next few months quarters.

Speaker 3

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 really like to have the option, obviously, At this point, at

Speaker 6

this share price, our preference would

Speaker 3

be obviously to not use our equity for this With purpose and the way we've been accumulating cash at this point is very encouraging. But of course, there's a few months to go until then, And there will be further updates and as we go throughout this period.

Speaker 7

Yes. Hey, guys. Sorry, I don't know if this happened for everybody, but Part of the answer was a bit choppy in terms of just hearing what you had 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 could give a

Speaker 3

number there. And yes, one more question after that. Sure, yes. Yes, no, we couldn't give a number, a clear number at this point. There's various factors that go into this.

Speaker 3

And as we go along, we'll provide updates on how much we'll actually then use to our CCVetchers. Yes, it's a bit early to say at this point.

Speaker 7

Okay. That's great. And just a final question on Trio Sulfan 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 Correct the approval. Can you help us understand with obviously, the milestones will be negotiated downwards given The delays, but is it just in terms of the dollar amounts or is there ability to maybe Push out some of the timing of the payments or just maybe help us understand how it is you're thinking about that should the drug ultimately get approved.

Speaker 2

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.

Speaker 2

And so clearly, we're working towards a resolution that recognizes the situation we're in. We've already paid them $15,000,000 and so we are working with MEDAC to come up with a new arrangement. Just back to your question on cash defense. So I think if you look back in our previous financial results and see, We have operated with significantly less than $10,000,000 of cash on hand and our biggest Expenses are typically inventory. So we don't have huge invoices.

Speaker 2

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 that is more or less the minimum.

Speaker 7

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

Speaker 6

some of the delay Yes.

Speaker 3

That's something you guys said.

Speaker 2

That's correct. Yes, this is not what they requested. Their request is something else related to the pivotal study, The Phase 3 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.

Speaker 2

This is 30% improvement in overall survival at 1 year. So it's really good data, which obviously the whole community will be aware of.

Speaker 7

Great. That's it for me. Thanks guys.

Speaker 3

Thank you.

Operator

Your next question is coming from Tanya Armstrong Whitworth at Canaccord.

Speaker 8

Good morning, gentlemen. Just a couple from me. So firstly, with respect to the improvement in Xfinity's manufacturing process and the positive impact it had on gross Profit margin, I think there was some wording that you mentioned an expectation that this is going to be offset by increases in direct costs of your 3rd 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?

Speaker 2

Hey, Tanya. I'll let Marcel respond to that.

Speaker 3

Yes. Thanks, Tanya, for that question. It is not a very Simple thing to decipher our gross margins. There's a lot that goes into that gross margin. As you can imagine, we have we've got product mix, we've got Grouilan, ultimately, that is a 50% royalty in there.

Speaker 3

We have the improvement on the Xfinity Manufacturer 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 had 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 Xfinity of our 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. We used to have quite a lot of write offs and registers.

Speaker 3

So it's going to be a little bit mix and you'll see it in the future And this is what we talked about.

Speaker 8

Okay. That's very helpful. Thanks, Michael. And then with Septiclia land sales, I'm not sure if you're able to provide Additional color on this, but I believe you had initially guided to upward of $3,000,000 to $4,000,000 in quarterly sales. Are you able to say if we're still kind of within that Guidance threshold or how do you surpass this now, especially considering fiscal Q4 included the best month of U.

Speaker 8

S. Unit sales this year?

Speaker 2

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.

Speaker 2

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 So I think we'll start to see expansion of Gleolan beyond that band that we previously announced.

Speaker 8

All right. Excellent. Thank you, gentlemen.

Speaker 2

Thank you.

Operator

Your next question is coming from Antonia Borovina at Boomburtin.

Speaker 9

Hi, good morning. Thanks for taking my question. I just have some housekeeping questions on Xfinity. 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?

Speaker 2

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.

Speaker 9

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

Speaker 2

No. So we won't increase our footprint, our sales force Allocation, that's not going to change. We're going to use 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.

Speaker 9

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?

Speaker 2

Yes. There's a whole portfolio of patents So range from next year out to 2,030. We don't expect to see any biosimilar competition for the drug Even past 2,030, Benefix, which is the market leader, the originator, has been on market 22 years and Patents have long expired. There's no competition for them. They're a $250,000,000 product in the U.

Speaker 2

S, 600,000,000 Worldwide, so it's just too costly to develop biosimilars and so at a net revenue of $30,000,000 $40,000,000 or $50,000,000 is Just not viable. So we don't expect to see any direct competition.

Speaker 9

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

Speaker 2

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

Speaker 9

Okay. That's all for me. Thanks.

Speaker 2

Thank you.

Operator

We have reached the end of the question and answer session. And I will now turn the call over to Ken for closing remarks.

Speaker 2

Great. Thank you. Just want to thank everyone for joining us on the call today. We're really proud of the financial results for fiscal 2023 And the strong performance we are 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 Xfinity, We think both of these things will be significant opportunities for us.

Speaker 2

We continue to work towards the approval of Triosulfan 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.

Powered by Quartr
Earnings Conference Call
Medexus Pharmaceuticals Q4 2023
00:00 / 00:00