Medexus Pharmaceuticals Q1 2024 Earnings Call Transcript

Quartr
Provided by Quartr
August 10, 2023

There are 11 speakers on the call.

Operator

Greetings, and welcome to the Medexus Pharmaceuticals, Inc. 1st Fiscal Quarter 2024 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, Magda Gardner, Investor Relations. Magda, you may begin.

Speaker 1

Thank you, and good morning, everyone. Welcome to the Medexus Pharmaceuticals First Fiscal Quarter 2024 Earnings Call. On the call this morning are Ken D'Entremont, 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 Adelaide Capital at 416 2068,869. 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 income and 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, is available on the company's website at www.medexas.comandonsedarplus@www.sedarplus. Ca. As a reminder, Medexus reports on a March 31 fiscal year basis.

Speaker 1

Medexus reports financial results in U. S. Dollars. I would now like to turn the call over to Ken John Tramont.

Speaker 2

Thank you, Magda, and thank you, everyone, for joining us on this call today. We're very pleased to report another great quarter with continued strength and stability across the company's base business and notably strong Repel performance driving the quarter's record revenues. These results demonstrate the robustness of our product portfolio and our ability to generate revenue growth and positive operating profit net income and adjusted EBITDA. Our fiscal Q1 twenty twenty four revenue of $31,600,000 compares favorably to $23,000,000 for the same period last year or 37% growth year over year. The $8,500,000 increase is mainly due to continued strong sales of Xfinity, strong RUPEL demand growth that also benefited from timing of orders, solid RSUVO, METALJET performance and the inclusion of U.

Speaker 2

S. SqueoLand net sales and total revenue. Adjusted EBITDA increased to $6,600,000 for the quarter compared to $1,900,000 for the same period last year. The $4,700,000 year over year increase is mainly due to increases in revenue that I mentioned and a small reduction in operating expenses. We produced net income of $700,000 for the quarter compared to a net loss of $1,400,000 for the same period last year.

Speaker 2

Overall, we are thrilled to be reporting this strong quarter of financial results. I will let Marcel comment further on our financial results later in the call. Now turning to our specific product lines. Our core business remains strong and stable, and we continue to work on potential additions to our product portfolio to generate additional growth momentum. Xfinity unit demand in the United States remained strong during the quarter, experienced a slight decrease over the trailing 12 months period ended June 30.

Speaker 2

This reflects The effects of lower observed average quantities of product consumed by newer patients following the particularly strong quarter for new patient conversions in fiscal Q4 2023. We have also continued to invest moderately in our manufacturing process improvement initiative, which has had a positive impact on batch yield and manufacturing costs. We will continue to monitor these benefits against expected increases in direct costs of our 3rd party contract manufacturing agreements. On RASUVO, We maintained a market leading position during the quarter as unit demand for RASUVO remained strong in the moderately growing U. S.

Speaker 2

Branded methotrexate market. We continue to deploy a highly efficient allocation of sales force resources and our position remains strong despite sustained competition in the U. S. Branded methotrexate market. Rupaul unit demand in Canada remained strong during the quarter, which is reflected in the unit demand growth of 26% over the trailing 12 month period ended June 30.

Speaker 2

This performance reflects successful execution of our sales and marketing initiatives as well as the timing of certain orders during the quarter. We see tropical turbinifene, which we licensed in March, as a strategic fit with Repel. And we expect that If and when approved by Health Canada, that new product will both contribute to our Canadian revenues and engage our in place commercial infrastructure currently supporting RUPAL. On GLEOAND, we continue to execute our post transition commercial plan in the U. S, including new sales and marketing initiatives.

Speaker 2

As well, in May, we presented data at ISPOR 2023, demonstrating a 33% cost savings with glioblast compared to conventional white light surgery in U. S. Patients with high grade glioma. Based on the publication, we found that although gloant is additive to the cost of surgery, its use results in lower cost per imaging complete and therefore is a more efficient use of resources in the surgical resection of high grade glioma. Metal Jacket unit demand in Canada increased by 12% in the trailing 12 month period ended June 30 in spite of direct generic competition.

Speaker 2

In the quarter, Meadowjack unit demand benefited from unanticipated shortages of product inventory of the competing product. We continue to seek to defend and grow product the product's strong market position as we await a court decision following the January 2023 trial for patent litigation we initiated against Metal Jacket's generic competitor in 2020. We remain optimistic about triosulfan, an agent for use and conditioning regimens as part of allogeneic hematopoietic polypioidicstem cell transportation protocols or ALLO HSCT. In May 2023, we learned that researchers at Toronto's Purchase Margaret Hospital presented positive new data on Triosulfan at MDS 2023. The retrospective analysis of patient outcomes found improved 1 year overall survival for certain patients treated with Triosulfan among other positive findings.

Speaker 2

The study further supports our optimism regarding Triosulfan's potential positive impact in both Canada, where we have commercially launched Triosulfan under the brand name Trecondev and in the United States. In the U. S, Triosulfan remains under an ongoing regulatory review process with the FDA. MEDAC, as the party responsible for regulatory matters under our license agreement for triosulfan continues to work on responding to the FDA's request regarding the triosulfan NDA. We still expect it will take MEDAC until the first half calendar year twenty twenty four to collect and submit the information requested by the FDA.

Speaker 2

As set out in our license agreement, we are discussing with MEDAC what, if any, adjustments to our license agreement may be needed to reflect this extended FDA process, which has now continued beyond the agreed outside date for FDA approval in our license agreement. A key component of our growth strategy will continue to be to leverage our infrastructure through new product acquisitions and partnerships. We therefore continue to explore new product opportunities in both current and planned therapeutic areas in both the United States and Canada. 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 financial results in more detail.

Speaker 2

Marcel?

Speaker 3

All right. Thank you. Thank you, Ken. I'm also very pleased with what I see as our Overall strongest quarter for Medexus to date. Total revenue for the fiscal Q1 was 31,600,000 which is slightly better than what we had anticipated when we previewed our expected revenue in July.

Speaker 3

This quarterly revenue number compares favorably to revenue of $23,000,000 for the 3 months period ended June 30, 2022. As Ken mentioned, the $8,600,000 increase In the 1st fiscal quarter 2024 versus the prior year Q1 is primarily due to continuing strong sales of Xfinity, continuing strong recall of demand growth, including in part due to timing of orders and RASUVA performance and the recognition of 100 percent of Gliala net sales in total revenue. Gross profit was $17,200,000 for the 3 months period ended June 30, 2023 compared to gross profit of $12,900,000 for the same period last year. The gross margin was 54.4% for the 3 months period ended June 30, 2023 compared to 56.1% for the 3 months period ended June 30, 2022. As we mentioned on last quarter's call, we continue monitoring this metric and the factors that contribute to gross margin.

Speaker 3

The year over year decrease in gross margin primarily reflects changes in product mix, including changes in how we account for glialand sales in the United states under IFRS over the course of the fiscal year 2023. Specifically, in accordance with IFRS, we recognize GLN revenue as a royalty during the transition period before recognizing net sales together with corresponding cost of goods sold starting in August 2022. On the other hand, we have seen positive impact of the Axility gross margin due to the manufacturing improvement initiatives. Selling and administrative expenses were $11,900,000 for the 3 months period ended June 30, 2023, compared to $12,100,000 for the 3 months period ended June 30, 2022. Research and development was $400,000 for the 3 months period ended June 30, 2023.

Speaker 3

This compares to $700,000 for the 3 months period ended June 30, 2022. Adjusted EBITDA for the 3 months ended June 30, 2023, was positive 6,600,000 compared to $1,900,000 for the 3 months ended June 30, 2022. Again, as Ken mentioned, The $4,700,000 year over year increase was primarily due to increases in revenue that I mentioned and the small reduction in operating expenses. The net income for the 3 months period ended June 30, 2023, was $700,000 compared to a net loss of $1,400,000 in the same period last year. Also included in net income or loss is a noncash unrealized gain or loss on fair value of our embedded derivatives in our outstanding convertible debentures, which are sensitive to amongst obvious fluctuations in our share price.

Speaker 3

We believe that adjusted net income or loss provides a better representation of performance of our operations because it excludes noncash fair value adjustments on liabilities, which may be settled for shares. Our adjusted net income for the 3 months period ended June 30, 2023, was $600,000 compared to an adjusted net loss of $3,600,000 for the same period last year. Our cash position has continued to improve in the Q1 of fiscal year 2024, increasing from $13,100,000 at March 31, 2023 to CAD 15,800,000 at June 30, 2023. In July, we used some of this cash to repurchase and canceled CAD1.7 million of principal amount of convertible debentures under our NCIB. Adjusting for that transaction, we continue to expect to have approximately US20 $1,000,000 of total cash at September 30, assuming successful execution of our cash management plan and not including any additional amounts that may become available under the $20,000,000 uncommitted accordion facility with BMO.

Speaker 3

The remaining convertible debentures will mature on October 16, 2023. At maturity, we will be obligated to repay 125 percent of the aggregate principal amount of the then issued and outstanding convertible debentures, plus accrued and unpaid interest. Altogether, this represents a near term liability of approximately $38,000,000 depending on prevailing Canadian U. S. Dollar exchange rates.

Speaker 3

Because of that NCIB repurchase, we expect to save approximately CAD 321,000 or about USD 240,000 depending on prevailing Canadian U. S. Dollar exchange rates, consisting of the awarded premium amount that would have been due at maturity and interest on principal that would have been accrued between July 18 at the maturity date. We may elect to satisfy Any remaining amounts payable in respect of the convertible branches as maturity in cash, common shares or a combination of cash and common shares. The extent to which we will be able to choose to sell the convertible debentures in cash at maturity will depend on 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.

Speaker 3

We have been consistent in executing our plan quarter after quarter, which has put the company in a strong financial position with strong quarterly revenue and improved profitability. This is the 2nd consecutive quarter with positive net income and the 7th consecutive quarter demonstrating positive adjusted EBITDA. As always, there can be variability in our quarter to quarter results, but we look forward to continuing to build our momentum over the coming fiscal year and beyond.

Operator

Thank you very much. At this time, we are opening the floor for questions. 20 Thank you. Your first question is coming from Andre Uddin of Research Capital. Andre, your line is live.

Speaker 4

Okay. Thank you. Nice quarter Ken and Marcel. Can you just elaborate a little bit more on the Medajak competitive environment and when you think that litigation should be resolved?

Speaker 2

Yes. Thanks, Andre. Good question. The Meadowjet competitive environment is experiencing some shortages of methotrexate and that has not Menotex has not been exposed to that. We've been able to keep it in supply.

Speaker 2

So we're certainly benefiting from that. And as a result, we're growing unit share and I think dollar share as well. The litigation, the trial was in January. There is no timeline on a decision, but we would expect it to come sometime in this calendar year. So we're waiting on that.

Speaker 2

We hope it comes soon.

Speaker 4

That's great. And just besides growing your sales, what is your cash management strategy right now to have About $20,000,000 in the bank by the end of September. Could you just discuss that a little bit? Thanks.

Speaker 2

Sure. I'll turn that over to Marcel.

Speaker 3

Yes. Thanks for that question, Andre. So we've said that we're growing our Cash, mainly because we've seen historically our sales growing. So we've you've also noticed Our receivables, for example, going up. We're obviously doing everything we can to put aside as much cash as we can towards the convertible debentures.

Speaker 3

But it is really just about now very, very mindfully, Obviously, watching every single spend towards that critical data folks over and manage the cash towards the balance we have projected P2P.

Speaker 4

Yes, that's great. And just can we also get a bit of a business development update in terms of are you seeing prices dropping In assets and what type of opportunities are you seeing right now? That'd be great as well.

Speaker 3

Yes.

Speaker 2

Good opportunities. We're seeing many opportunities. Prices appear to be fair. As you well know, many companies have difficulty getting funded. So there are some assets coming available.

Speaker 2

I think the terbinafine transaction that we did was at an extremely fair price. We do believe we'll get others like that. We're really seeking to build portfolio in the U. S. In order to broaden beyond the 3 products that we have now.

Speaker 2

So that's where our focus is. We think that there will be opportunities that come to the table.

Speaker 4

Okay, thanks. That's it for me. Thank you.

Operator

Thank you very much. Your next question is coming from Scott Henry of Roth Capital. Scott, your line is live.

Speaker 5

Thank you and good morning. Ken and Marcel, really strong results, Really good momentum. Ken, I know you had a lot of prepared remarks, but I was wondering if you could just tell us in big terms, What do you attribute all of this strength to? My history has been when a company turns the gas on this heavy, It's usually driven by one product, but sometimes it's more than one. But could you just talk a little bit about why things are as good as they are now relative to the past?

Speaker 5

Thanks.

Speaker 2

Yes. Thanks, Scott. It's more broadly based for us. We clearly have momentum on 4 products. And I think that therefore speaks to the success that the 2 commercial teams, both the U.

Speaker 2

S. And Canada are having. There's tremendous momentum behind RUPAL in Canada. There's excellent momentum behind Xfinity, RSUVO, And Gluolan in the U. S.

Speaker 2

And so we just feel like we've got momentum. Clearly, when you acquire a product, there's always issues. We experienced that with Xfinity. We got through it and now we're having successful execution that's making a very nice contribution to our business. Same thing with glialette.

Speaker 2

You relaunch a product, it takes time, there's always issues and then it starts to get momentum. So I think really that's it, tremendous momentum from both teams.

Speaker 5

Okay, great. Thank you for that color. And you did mention in the beginning some benefit from timing of orders. I assume that some orders got pulled through into Q1. When I think about 2Q, your fiscal 2Q that is, Should we think about sequential growth from Q1 to Q2?

Speaker 5

Or might it pare back a little bit given just timing of orders? How should we think about 2Q?

Speaker 2

Yes. Rupal, obviously, there's some seasonality with Rupal tied to the allergy season in Canada. But also there were these additional orders on top of strong demand. So it wasn't like the demand wasn't there, it clearly was there, but It came in way stronger than we had expected. So wouldn't expect that to continue.

Speaker 2

And typically, this quarter we just reported is one of our stronger quarter. So sequential growth is going to be challenging. 31.6% I think is a really good number coming off what we were 28% and change last quarter. So that's really strong sequential growth. And So it's going to be tough to duplicate that.

Speaker 2

So sequential growth is going to be challenging, but certainly growth year over year, I think, will Continue to demonstrate that.

Speaker 5

Okay, great. Yes, it wasn't long ago you were in the 20s, and then even underneath the 20, Mark. So great work there. And then topical terbenefin, how should we think about timing of that in U. S.

Speaker 5

And in Canada?

Speaker 2

Only licensed in Canada. So only think of the Canadian market. I think we have said that we do expect to put that application into Health Canada in the fall of this year, likely take a 12 months to a decision, and then we would launch shortly thereafter. The market for topical Trebiniphene in Canada is Yes, dollars 80,000,000 to $90,000,000 There's only one player at this stage. So we'll be second entrant with a convenience advantage.

Speaker 5

Okay, great. Thank you, Ken. And just to get Marcel involved, Marcel, I know you spent a lot of time in the prepared remarks talking about debt. I'm just wondering if you could just walk it through in simple terms What the inflection point is, how much you expect to have to pay back in, is it September or October and in the game plan to achieve that? Just to make sure it's very clear as such a key factor.

Speaker 3

Yes. No, absolutely. Thanks for that question, Scott. So as a reminder, we had refinanced our midcap facility with BMO. So back then, we got a $38,500,000 facility in place at Yes, absolutely fantastic conditions at a really, really good rate.

Speaker 3

So we have a partner now with De Mo. The total facility we announced back then was €58,500,000 so meaning that we have this $20,000,000 of uncommitted facility sort of term loan out there, which we're waiting for BMO basically So I mentioned in my prepared remarks that in simple terms, what is coming due now in October is about $38,000,000 of sort of the payment. We have a choice, As we mentioned a few times, to sell that in cash, in shares or a combination. So we'll see how much we accumulate towards that $38,000,000 So then you have the $20,000,000 of the oncoming to the accordion facility. We said we're going to generate cash to in the tune now for around $18,000,000 Obviously, that includes, sorry, the payout for the convertible debenture.

Speaker 3

So as you can see, Getting close. So we're obviously monitoring that cash situation very closely over the next few weeks months. But we're very pleased with the strong performance, which absolutely helps us now to tackle this sort of Liability as much as we can. So as you can see, it's getting very close, yes.

Speaker 5

Okay, great. When will you get a decision on that €20,000,000 uncommitted? Is there a specific deadline date for that?

Speaker 3

There isn't really a specific deadline. Of course, we would like to have clarity Sooner than later. All we can do at this point is what we do now, as you can see, these strong results. You see we perform. We execute Against our plan, we are even now as you've seen a little bit better than what we pre announced on the revenue side, for example.

Speaker 3

That's what we can do. We are in regular contact obviously with the bank and we'll see when we get an answer for that.

Speaker 5

Okay, great. Thank you for taking the questions and congratulations again on the strong results.

Speaker 3

Thank you.

Operator

Thank you very much. Your next question is coming from Rahul Sarugaser from Raymond James. Rahul, your line is live.

Speaker 6

Hey, good morning, Ken and Marcel. This is Mike on for Rahul. A couple of questions on indication expansions and introducing First, I'm glad to hear that there's some optimism around triosulfan resubmission. I wonder and you mentioned that there's some renegotiation that's possible with MEDAC in consideration for this submission process. I wonder if you could describe, I guess, the durability of the patents around Triosulf and how if you could remind us how far those go out?

Speaker 6

And also what sort of terms you might consider renegotiating with Medac, given the circumstances here?

Speaker 2

Hey, Mike. Thanks for the question. So just remind you that the trisulfan protection is related to orphan drug status in the U. S. So we're not relying on any patent protection.

Speaker 2

We're going to rely on orphan drug, which in the case of triloselfan, we think will be 7.5 years because it includes a pediatric indication. And that timeline doesn't start ticking until approval. So we would have 7.5 years from approval in order to be exclusive in the U. S. And then your second part of your question related to the renegotiation with MEDAC.

Speaker 2

As we mentioned, It's contractual that if it takes beyond the original outside date that we sit down and we try and figure out what the new terms are. So we are in the process of doing that now. So clearly, we believe that The market has had some changes. We still think it's a very good opportunity for triosulfan, but We're working with our partner to reset the contractual obligations with respect to the milestone payments and timing of such. And we will put that information out as soon as we've got that complete.

Speaker 6

Fantastic. Both really positive points. Thank you. And now I wonder if you could if there were any updates to report on the pediatric indication expansion for Ximetry?

Speaker 2

Nothing to report. So submitted, accepted for review. We think that process will take some months, probably 6 to 8 months, and then we should have a decision. Remember, this was a post marking commitment around the original approval. So we believe that the data that we've generated will be sufficient to support the registration, the label expansion.

Speaker 2

But clearly, that's up to the FDA to confirm that.

Speaker 6

Okay. Thank you very much. Those are my questions and very glad to see the strong performance and the increase in the cash balance continue. Thank you.

Operator

Thank you very much. Your next question is coming from Stephane Quenevile from Echelon Capital Markets. Stephane, your line is live.

Speaker 7

Thank you very much and congrats on the quarter guys. I just have a quick question on the BMO accordion. Are there any sort of financial covenants or legal requirements on your end in order to access the accordion? And if so, what

Speaker 3

are they and where do

Speaker 7

you stand on those measures? Thanks.

Speaker 2

Thanks, Stefan. I'll give that to Marcel.

Speaker 3

Yes. Stefan, good question in terms of The access. So yes, of course, we do have as part of the overall facility, we do have covenants in place That will apply to the facility. Right now, we have 38 point $5,000,000 as you know. And then when we get to when if we get to the to this uncommitted accordion, then of course, there's the covenant will be part of that Additional $20,000,000 yes.

Speaker 7

But just to be clear, you're on-site for all the current covenant to access The additional $20,000,000 or at least on track towards it. Is that correct?

Speaker 3

Yes. That is an important part that we, of course, could not, So to speak, go against any covenants we have in order to access the facility. Absolutely, yes. And We're absolutely in line with that at the moment, yes.

Speaker 2

Yes, I think just one additional point. Important to point out that clearly the results that we produced this quarter were beyond what the Street expected and It's also beyond what we had provided to BMO in terms of expectations. So I think this quarter bodes well for our discussions with BMO.

Speaker 7

Okay, guys. Thanks again.

Speaker 2

Thanks, Difei.

Operator

Thank you very much. Your next question is coming from Antonia Borosina from Bloom Burton. Antonia, your line is live.

Speaker 8

Hi, Ken and Marcel. Thanks for taking my question. Just wondering if you could discuss a bit more on what you're seeing with the You mentioned that patients prescribed more recently are using lower quantities. So maybe just if you could go into what's driving that?

Speaker 2

Hi, Anthony. Thanks for that question. That's a good one and it's complicated. Obviously, growth for us is dependent on patient starts. Most patient starts are adults for us because we don't yet have the pediatric indication.

Speaker 2

And historically starts for these patients were in patients that were just using more product. They may have been using it prophylactically, and now maybe we're getting more who are on demand. And so just of late, there's been a high volume of new patient starts, Just that we're noticing that the average volume consumed by each of the new starts has been a little bit lower than what we've seen historically. So just a trend that we're noticing. I think the good news is that we do continue to generate these new starts, which is excellent.

Speaker 2

And we think that will continue. Just we're reducing The average volume per Newstart patient in our forecast.

Speaker 8

Okay. And then regarding the manufacturing process for Xfinity and extracting some greater efficiencies. Is there any additional room for improvement there or has that been fully implemented?

Speaker 2

No, absolutely more room for improvement. Being a biologic, it's kind of an ongoing process. And so we've made really good process progress to this point. And we do believe that there are additional efficiencies that we'll be able to generate as we go forward.

Speaker 8

Okay. And then just Finally, just a clarification regarding some of your earlier comments on the competitive environment for METAJAK. You mentioned that methotrexate was out of stock. Is this something that's an ongoing issue or has that been resolved with your competitors?

Speaker 2

Appears to be an ongoing issue. It's really difficult hotel, but we do see this situation in other markets, also U. S. Market. And so we think this is more of a global issue related to the availability of the API for methotrexate.

Speaker 2

And so we're certainly seeing it in the 2 markets that we serve and we've heard similar issues in other markets. So We think it's an ongoing problem, but it's very difficult to forecast what will happen with a specific competitor in a specific market.

Speaker 8

And no impacts on you?

Speaker 2

No. So Medact being one of the largest manufacturers with injectable Prex8 in the pre fill panel or auto injector format. It's got excellent control on the API. So far for us, it's been really good. We continue to hold on to significant inventories to avoid any short term issues.

Speaker 2

And so, so far so good for us.

Speaker 8

Great. Thanks. That's all for me.

Operator

Thank you very much. Your next question is coming from Justin Keywood from Stifel. Justin, your line is live.

Speaker 9

Good morning. Thanks for taking my call. On the triosulfan timeline for resubmission,

Speaker 4

it got

Speaker 9

a bit more precise in the first to half of calendar twenty twenty four. Just trying to understand the reasoning behind that, just given there's Still ongoing negotiations with MEDAC. And then also is there a consideration of new trials to be initiated for triosulfan?

Speaker 2

Yes. Thanks, Justin. Good question. So we're getting a little more specific on the timeline to resubmission as the work Much of the work has been done. So the process that Medac needs to follow in order to collect this data is ongoing, but so far so good.

Speaker 2

And they are collecting information pretty much on the timeline that we had anticipated. So we're able to get a little more specific as to when we think the resubmission will happen. So We've got a fair degree of confidence in that timeline. And sorry, so what was the second part of the question?

Speaker 9

If there is the potential to initiate new trials for triosulfan, given this is the 3rd attempt Or do you feel that you have enough of the data requested to ensure a successful outcome?

Speaker 2

Yes. Sorry about that. I forgot that piece of it. No, still no requirement for a new trial. I mean, the trial that had been conducted by MEDAC was a very large trial.

Speaker 2

There's 570 patients in the trial. So it's a big trial. There are a lot of patients in there. So at this stage, no, what the FDA is requesting is clarification on that pivotal study. So No need for that.

Speaker 9

Just one more question. What would be the next milestone to look out for as far as triosulfan?

Speaker 2

I guess the next news you'll hear from us will be the new negotiation in license agreement, which should come out shortly. And then I think it will be The acceptance of the resubmission, that will be the next piece of information we'll put out. And so that will be in Sometime in the first half of calendar twenty twenty four.

Speaker 3

Thank you.

Operator

Thank you very much. Our next question is coming from Alan Richardson from Echelon Capital Partners. Alan, your line is live.

Speaker 6

Thank you very much.

Speaker 10

This is more addressed to Conrad than it is to you Ken. With regards to the reimbursement of your I'm wondering, do you know the number that BMO is looking for in order to fully activate that $20,000,000 accordion level. And do you know if you've surpassed that? Is this something where They just have to rubber stamp it? Or is there further negotiations required between now and maturity of the bond?

Speaker 5

Yes. Thanks for that question.

Speaker 3

The Negotiation per se, as you can call it, obviously happened during the time when we set up the facility. And as a reminder, yes, we got this $58,500,000 facility with the $20,000,000 of uncommitted accordion and the overall negotiation as part of that facility, Including all the conditions have been essentially negotiated back then, including all the terms and conditions, yes? So there's nothing sort of You're coming to the ADI. Now the process of accessing this accordion, obviously, at the discretion of the bank ultimately. But as Ken mentioned before, I think the key component to that and maybe a little bit as a side note also as a question follow-up From Stephane before, this is about what we said we're going to do.

Speaker 3

This is about delivering on the results. This is much about basically telling VIVA what we're going to do. We deliver on what we're going to do. And this Q1 has been very encouraging already For us to see that, what Ken mentioned before as well is even better than what we had anticipated. So as I mentioned earlier on, this is at this What we can do, focusing on the business and growing the business, delivering on the results and everything will be up to the bank as part of the process to Yes, the accordion ultimately, yes.

Speaker 10

Okay. Now if we just fast forward to 12 months From now, right. And I recognize that we're talking about the future and it's uncertain. I'm going to assume that you get The $20,000,000 is activated. With the amount of money that you're generating in cash every quarter, what would your debt level look like?

Speaker 10

Because right now I'm thinking that you're going to be somewhere around $55,000,000 to $58,000,000 in total debt by October, by the end of September, early October.

Speaker 2

If we're going

Speaker 10

to fast forward and look at either end of July or end of September of next year, where do you anticipate your debt level to be at that point in time?

Speaker 3

Yes, of course, that is overall a bit hard to quantify. But what you can assume At this point is that if you look historically where we came from and we've started to be Profitable and increased revenue, we're generating cash, yes. So we've gone in a good we're in a good place to basically continue to do that. And as we've said in the past, to look at this as the new normal now. Now yes, as you mentioned, assuming that access will happen as a 58 $500,000 sort of debt at this point.

Speaker 3

There is an amortization schedule obviously kicking in. So that will decrease, Yes. So we're definitely going to amortize that pay back as a half of that loan and being in a position with less debt and a strong business ultimately. So it's really good prospect to have As again, at an interest rate, at conditions that are very favorable relative to the markets we are right now. So really all good positive signs, I would say, from now on, yes.

Speaker 10

But that doesn't give me a number. So what number are we looking at? Should we be thinking about $40,000,000 I recognize that you might make acquisitions. So I'm talking about ceteris paribus, everything else being equal and assuming no dilution, Would you get to $40,000,000 in debt a year from now from $58,000,000

Speaker 3

That is yes, that is a bit aggressive as an amortization schedule. It's probably going to be a little bit more than that, but it's probably in the range, but a little bit more than that,

Speaker 10

Okay. Thank you. Thank you very much.

Operator

Thank you. That appears to be the last question in the queue. I will now hand back over to Ken for any closing comments.

Speaker 2

Thank you very much. Just want to thank everybody for joining us on the call today. We're extremely proud of the financial results that we've had in this Q1 of the year, And we're seeking to continue to build the core portfolio. We look forward to delivering continued strong performance and speaking to investors next quarter. Thanks very much.

Operator

Thank you, everybody. This does conclude today's conference call. You may disconnect your phone lines at

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Earnings Conference Call
Medexus Pharmaceuticals Q1 2024
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