- Revenue of
$12.6 million and Adjusted EBITDA of$4.8 million - Increasing peak-year sales estimate for Vascepa to
C$275-325 million - Clozaril's Canadian patient count and sales in local currency increase 2.3% and 2.5%, respectively, demonstrating resilience during the COVID-19 pandemic
- Privately covered lives for Vascepa in
Canada increase to 40% as of today's date - CEO succession:
Gilbert Godin , President & COO, named CEO to replaceGreg Gubitz who is retiring
Q2 2020 HIGHLIGHTS
- Financial results for Q2 2020 reflect the resilience of the Company's foundational product, Clozaril, as well as significant ongoing investment in the launch for Vascepa, which HLS believes will be a strong organic growth driver for the business for years to come
- Revenue was
$12.6 million compared to$13.6 million in Q2 2019 - Adjusted EBITDA was
$4.8 million compared to$8.1 million in Q2 2019 - Net loss was
($6.5) million , or ($0.20 ) per common share, compared to net loss of($1.6) million , or ($0.06 ) per common share, in Q2 2019 - Cash generated from (used in) operations was
($4.2) million compared to$9.0 million in Q2 2019 - Cash and cash equivalents were
$33.7 million at the end of Q2 2020 compared to$47.1 million atDecember 31, 2019 - Became exclusive Canadian distributor for Saladax's MyCare™ Psychiatry Line including the Insite point-of-care device and its related line of diagnostic tests
- In collaboration with
Amarin Corporation (NASDAQ:AMRN), announced support for a trial to investigate the effects of Vascepa® (icosapent ethyl) on inflammatory biomarkers in individuals with COVID-19
HIGHLIGHTS SUBSEQUENT TO QUARTER-END
- CADTH recommended Vascepa be reimbursed for patients with established cardiovascular disease
- PMPRB notified HLS that Vascepa's introductory price submission did not trigger the pricing investigation criteria
- Based in part on those two favorable outcomes, HLS is increasing its peak-year sales estimate for Vascepa to
C$275-325 million , fromC$200-300 million - CEO succession:
Gilbert Godin , President and COO to become CEO and a member of the Board of Directors onOctober 1, 2020 .Greg Gubitz to retire and will remain a member of the Board of Directors
"Q2 again demonstrates the resiliency of Clozaril, our foundational product, which continues to perform well during the COVID-19 pandemic," said
"With Vascepa, we continue to press forward and make progress on our launch, and in recent weeks have begun to engage in face-to-face meetings with practitioners. These interactions are growing in number, which is encouraging. We are also making good progress expanding our private payer coverage for Vascepa and now have full-label coverage with 40% of the lives covered by private drug plans in
"Just over two weeks ago we received two favorable developments with Vascepa: one, CADTH's recommendation to reimburse Vascepa for patients with established cardiovascular disease and, two, PMPRB's positive notification on introductory pricing for Vascepa. Based on further analysis since announcing these positive developments, and aided by the significant clinical value of Vascepa and our overall confidence in the product and its prospects, we are pleased to be increasing our peak-year sales estimate for Vascepa to
CEO SUCCESSION
HLS is also announcing today that President and COO
"I am very pleased to announce the execution of our succession plan, with the appointment of Gilbert as our new Chief Executive Officer. Gilbert is a highly dynamic and creative thinker who brings exceptional experience and proven leadership to his new role. We believe Gilbert has displayed unique skills and experiences to envision, articulate and execute the next chapter in HLS' future. On behalf of the Board and the entire HLS team, we look forward to Gilbert's leadership," said
"I am thrilled to move into the CEO role," said
"It has been a privilege to lead such a talented and committed organization," said
DIVIDEND
On
These dividends paid on the Company's common shares are designated to be "eligible dividends" for purposes of section 89(1) of the Income Tax Act (
FINANCIAL REVIEW
Revenue
The following table provides revenue segmentation by revenue type and geography for the three- and six-month periods ended
Three months ended | Six months ended | |||
2020 | 2019 | 2020 | 2019 | |
Product sales | ||||
| 6,875 | 6,898 | 14,354 | 13,285 |
| 3,932 | 4,495 | 8,079 | 8,770 |
10,807 | 11,393 | 22,433 | 22,055 | |
Royalty revenue | 1,798 | 2,232 | 4,062 | 4,742 |
12,605 | 13,625 | 26,495 | 26,797 |
Revenue in the three-month period ended
The number of Clozaril patients in
Absorica royalty revenue decreased 19% in Q2 2020 and 14% on a year-to-date basis. Due to the potential impact from COVID-19 on royalty revenue, the Company entered into an agreement with the vendor that reduces the purchase price to be paid by HLS for the Absorica rights by up to
Operating Expenses
Three months ended | Six months ended | |||
2020 | 2019 | 2020 | 2019 | |
Cost of product sales | 671 | 523 | 1,490 | 910 |
Selling and marketing | 3,177 | 1,435 | 6,793 | 2,628 |
Medical, regulatory and patient support | 1,699 | 1,398 | 2,945 | 2,611 |
General and administrative | 2,244 | 2,164 | 4,384 | 4,286 |
7,791 | 5,520 | 15,612 | 10,435 |
Operating expenses for the Q2 2020 and YTD 2020 periods have increased due primarily to the investment in the launch of Vascepa and associated activities related to sales and marketing of the product as well as medical, regulatory and patient support. For the Q2 2020 and YTD 2020 periods, General and administrative expenses were relatively flat compared to the same periods in the prior year.
Adjusted EBITDA
Three months ended | Six months ended | |||
2020 | 2019 | 2020 | 2019 | |
Net loss for the period | (6,474) | (1,631) | (6,320) | (5,334) |
Stock-based compensation | 918 | 471 | 754 | 1,068 |
Amortization and depreciation | 8,198 | 8,103 | 16,757 | 16,221 |
Acquisition and transaction costs | 234 | 178 | 323 | 599 |
Finance and related costs | 2,636 | 1,096 | 1,146 | 4,313 |
Income tax recovery | (698) | (112) | (1,777) | (505) |
Adjusted EBITDA | 4,814 | 8,105 | 10,883 | 16,362 |
Adjusted EBITDA for the Q2 2020 and YTD 2020 periods was lower compared to the prior year periods due primarily to the increase in launch-related activities for Vascepa and lower Absorica royalty revenue.
Interest Expense and Debt
Interest on the senior secured term loan in Q2 2020 was
As at
Net Loss
Net loss for the Q2 2020 and YTD 2020 periods was
Cash from Operations and Financial Position
Cash used in operations was
As at
HLS has a strong financial position with
Q2 2020 CONFERENCE CALL
HLS will hold a conference call today at
CONFERENCE ID: | 11758189 |
DATE: | |
TIME: | |
DIAL-IN NUMBER: | 1-888-664-6392 or 416-764-8659 |
WEBCAST LINK: | https://produceredition.webcasts.com/starthere.jsp?ei=1348480&tp_key=c1f9fef9de |
TAPED REPLAY: | 1-888-390-0541 or 416-764-8677 |
REPLAY PASSCODE: | 758189 |
A link to the live audio webcast of the conference call will also be available on the events page of the investors section of
ABOUT
Formed in 2015, HLS is a specialty pharmaceutical company focused on the acquisition and commercialization of late stage development, commercial stage promoted and established branded pharmaceutical products in the North American markets. HLS's focus is on products targeting the central nervous system and cardiovascular therapeutic areas. HLS's management team is composed of seasoned pharmaceutical executives with a strong track record of success in these therapeutic areas and at managing products in each of these lifecycle stages. For more information visit: www.hlstherapeutics.com
CAUTIONARY NOTE REGARDING NON-IFRS MEASURES
This press release refers to certain non-IFRS measures. These measures are not recognized measures under IFRS, do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement those IFRS measures by providing further understanding of HLS's results of operations from management's perspective. Accordingly, they should not be considered in isolation nor as a substitute for analysis of HLS's financial information reported under IFRS. HLS uses non-IFRS measures to provide investors with supplemental measures of its operating performance and thus highlight trends in its core business that may not otherwise be apparent when relying solely on IFRS financial measures. HLS also believes that securities analysts, investors and other interested parties frequently use non-IFRS measures in the evaluation of issuers. HLS's management also uses non-IFRS measures in order to facilitate operating performance comparisons from period to period, prepare annual operating budgets and assess HLS's ability to meet its future debt service, capital expenditure and working capital requirements.
In particular, management uses Adjusted EBITDA as a measure of HLS's performance. To reconcile net income (loss) for the period with Adjusted EBITDA, each of (i) "stock-based compensation", (ii) "amortization and depreciation", (iii) "acquisition and transaction costs", (iv) "finance and related costs", and (v) "income tax recovery" appearing in the Consolidated Statement of Net Income (Loss) are added to net income (loss) for the period to determine Adjusted EBITDA. Adjusted EBITDA does not have any standardized meaning prescribed by IFRS and is not necessarily comparable to similar measures presented by other companies. Adjusted EBITDA should not be considered in isolation or as a substitute for net income (loss) prepared in accordance with IFRS as issued by the IASB.
FORWARD LOOKING INFORMATION
This release includes forward-looking statements regarding HLS and its business. Such statements are based on the current expectations and views of future events of HLS's management. In some cases the forward-looking statements can be identified by words or phrases such as "may", "will", "expect", "plan", "anticipate", "intend", "potential", "estimate", "believe" or the negative of these terms, or other similar expressions intended to identify forward-looking statements, including, among others, statements with respect to HLS's pursuit of additional product and pipeline opportunities in certain therapeutic markets, statements regarding growth opportunities and expectations regarding financial performance. The forward-looking events and circumstances discussed in this release may not occur and could differ materially as a result of known and unknown risk factors and uncertainties affecting HLS, including risks relating to the specialty pharmaceutical industry, risks related to the regulatory approval process, economic factors and many other factors beyond the control of HLS. Forward-looking statements and information by their nature are based on assumptions and involve known and unknown risks, uncertainties and other factors which may cause HLS's actual results, performance or achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statement or information. Accordingly, readers should not place undue reliance on any forward-looking statements or information. A discussion of the material risks and assumptions associated with this release can be found in the Company's Annual Information Form dated
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION | |||
Unaudited | |||
[in thousands of | |||
As at | As at | ||
ASSETS | |||
Current | |||
Cash and cash equivalents | 33,662 | 47,078 | |
Accounts receivable | 10,545 | 11,858 | |
Inventories | 11,059 | 2,055 | |
Derivative financial instruments | 282 | 271 | |
Prepaid expenses and other current assets | 2,542 | 1,838 | |
Total current assets | 58,090 | 63,100 | |
Property, plant and equipment | 1,249 | 1,276 | |
Intangible assets | 229,465 | 252,050 | |
Restricted assets | 2,001 | 2,188 | |
Deferred income tax asset | 1,028 | 1,057 | |
Total assets | 291,833 | 319,671 | |
LIABILITIES AND SHAREHOLDERS' EQUITY | |||
Current | |||
Accounts payable and accrued liabilities | 15,315 | 13,466 | |
Provisions | 5,203 | 5,471 | |
Debt and other financial liabilities | 17,290 | 27,855 | |
Income taxes payable | 128 | 347 | |
Total current liabilities | 37,936 | 47,139 | |
Debt and other financial liabilities | 85,321 | 91,822 | |
Deferred income tax liability | - | 2,511 | |
Total liabilities | 123,257 | 141,472 | |
Shareholders' equity | |||
Share capital | 256,283 | 248,687 | |
Contributed surplus | 10,690 | 11,517 | |
Accumulated other comprehensive loss | (8,275) | (537) | |
Deficit | (90,122) | (81,468) | |
Total shareholders' equity | 168,576 | 178,199 | |
Total liabilities and shareholders' equity | 291,833 | 319,671 | |
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF LOSS | |||||
Unaudited | |||||
[in thousands of | |||||
Three months ended | Six months ended | ||||
2020 | 2019 | 2020 | 2019 | ||
Revenue | 12,605 | 13,625 | 26,495 | 26,797 | |
Expenses | |||||
Cost of product sales | 671 | 523 | 1,490 | 910 | |
Selling and marketing | 3,177 | 1,435 | 6,793 | 2,628 | |
Medical, regulatory and patient support | 1,699 | 1,398 | 2,945 | 2,611 | |
General and administrative | 2,244 | 2,164 | 4,384 | 4,286 | |
Stock-based compensation | 918 | 471 | 754 | 1,068 | |
Amortization and depreciation | 8,198 | 8,103 | 16,757 | 16,221 | |
Operating loss | (4,302) | (469) | (6,628) | (927) | |
Acquisition and transaction costs | 234 | 178 | 323 | 599 | |
Finance and related costs, net | 2,636 | 1,096 | 1,146 | 4,313 | |
Loss before income taxes | (7,172) | (1,743) | (8,097) | (5,839) | |
Income tax recovery | (698) | (112) | (1,777) | (505) | |
Net loss for the period | (6,474) | (1,631) | (6,320) | (5,334) | |
Net loss per share: | |||||
Basic and diluted | |||||
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | ||||
Unaudited | ||||
[in thousands of | ||||
Three months ended | Six months ended | |||
2020 | 2019 | 2020 | 2019 | |
Net loss for the period | (6,474) | (1,631) | (6,320) | (5,334) |
Item that may be reclassified subsequently to net loss | ||||
Unrealized foreign currency translation adjustment | 6,306 | 3,210 | (7,738) | 6,168 |
Comprehensive income (loss) for the period | (168) | 1,579 | (14,058) | 834 |
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY | ||||||
Unaudited | ||||||
[in thousands of | ||||||
Share capital | Contributed surplus | Accumulated other | Deficit | Total | ||
Balance, | 248,687 | 11,517 | (537) | (81,468) | 178,199 | |
Warrants exercised | 7,544 | (1,652) | — | — | 5,892 | |
Stock options exercised | 52 | (14) | — | — | 38 | |
Stock option expense | — | 839 | — | — | 839 | |
Net loss for the period | — | — | — | (6,320) | (6,320) | |
Dividends declared | — | — | — | (2,334) | (2,334) | |
Unrealized foreign currency translation adjustment | — | — | (7,738) | — | (7,738) | |
Balance, | 256,283 | 10,690 | (8,275) | (90,122) | 168,576 | |
Balance, | 210,360 | 12,973 | (7,455) | (57,389) | 158,489 | |
Common shares issued | 37,329 | — | — | — | 37,329 | |
Shares issuance costs | (2,411) | — | — | — | (2,411) | |
Warrants exercised | 35 | — | — | — | 35 | |
Warrants granted | — | 470 | — | — | 470 | |
Stock option expense | — | 513 | — | — | 513 | |
Net loss for the period | — | — | — | (5,334) | (5,334) | |
Dividends declared | — | — | — | (2,189) | (2,189) | |
Unrealized foreign currency translation adjustment | — | — | 6,168 | — | 6,168 | |
Balance, | 245,313 | 13,956 | (1,287) | (64,912) | 193,070 | |
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS Unaudited | ||||
[in thousands of | ||||
Three months ended June 30, | Six months ended | |||
2020 | 2019 | 2020 | 2019 | |
OPERATING ACTIVITIES | ||||
Net loss for the period | (6,474) | (1,631) | (6,320) | (5,334) |
Adjustments to reconcile net loss to cash provided by (used in) operating activities | ||||
Stock-based compensation | 918 | 471 | 754 | 1,068 |
Amortization and depreciation | 8,198 | 8,103 | 16,757 | 16,221 |
Accreted interest | 312 | 530 | 668 | 1,098 |
Fair value adjustment on financial assets and liabilities | 1,372 | 170 | (2,099) | 1,443 |
Foreign exchange | — | — | 176 | — |
Deferred income taxes | (927) | (449) | (2,338) | (1,104) |
Net change in non-cash working capital balances related to operations | (7,615) | 1,762 | (6,465) | 3,846 |
Cash provided by (used in) operating activities | (4,216) | 8,956 | 1,133 | 17,238 |
INVESTING ACTIVITIES | ||||
Additions to property, plant and equipment | (1) | (57) | (27) | (94) |
Asset acquisitions | (1,825) | (1,825) | (8,400) | (4,650) |
Other additions to intangible assets | (311) | (475) | (759) | (688) |
Cash used in investing activities | (2,137) | (2,357) | (9,186) | (5,432) |
FINANCING ACTIVITIES | ||||
Common shares issued | — | 37,329 | — | 37,329 |
Common share issuance costs | — | (2,277) | — | (2,277) |
Stock options exercised | 24 | — | 38 | — |
Warrants exercised | — | 35 | 1,590 | 35 |
Dividends paid | (1,169) | (1,022) | (2,310) | (2,023) |
Repayment of senior secured term loan | (1,250) | (1,250) | (2,632) | (2,500) |
Debt costs | (176) | — | (176) | — |
Cash portion of debt refinancing costs | — | — | — | (1,000) |
Lease payments | (123) | (110) | (244) | (223) |
Cash provided by (used in) financing activities | (2,694) | 32,705 | (3,734) | 29,341 |
Net increase (decrease) in cash and cash equivalents during the period | (9,047) | 39,304 | (11,787) | 41,147 |
Foreign currency translation | 1,060 | 192 | (1,629) | 231 |
Cash and cash equivalents, beginning of period | 41,649 | 12,812 | 47,078 | 10,930 |
Cash and cash equivalents, end of period | 33,662 | 52,308 | 33,662 | 52,308 |
SOURCE
© Canada Newswire, source