- Q2 2021 revenue of $14.9
million and Adjusted EBITDA of $6.6
million, up 19% and 36%, respectively, from Q2 2020
- Generated strong Vascepa® prescription growth -
amid persistent COVID-19 disruptions - achieving 4,100 patients and
1,050 prescribers at end of Q2, which are increases of 41% and 44%,
respectively, from the end of Q1 2021
- Vascepa revenue increased 42% sequentially from Q1
2021
- Generated cash from operations of $8.9 million year-to-date compared to
$1.1 million in the same period last
year
TORONTO, Aug. 5, 2021 /CNW/ - HLS Therapeutics Inc.
("HLS" or the "Company") (TSX: HLS), a pharmaceutical company
focusing on central nervous system ("CNS") and cardiovascular
markets, announces its financial results for the three- and
six-month periods ended June 30,
2021. All amounts are in thousands of United States ("U.S.") dollars unless
otherwise stated.
Q2 FISCAL 2021 HIGHLIGHTS
- Q2 2021 revenue was $14.9 million
compared to $12.6 million in Q2
2020.
- Q2 2021 Adjusted EBITDA was $6.6
million compared to $4.8
million in Q2 2020.
- Q2 2021 net loss was ($2.2)
million, or ($0.07) per common
share, compared to net loss of ($6.5)
million, or $(0.20) per common
share, in Q2 2020.
- Q2 2021 cash generated from operations was $1.7 million compared to cash used in operations
of ($4.2) million in Q2 2020.
- Cash and cash equivalents were $21.3
million at June 30, 2021
compared to $20.6 million at
December 31, 2020.
- Clozaril increased its leading market share as its patient
count in Canada increased 3%
annually.
"Q2 was another solid quarter financially despite the ongoing
challenges posed by the COVID-19 pandemic," said Gilbert Godin, CEO of HLS. "Q2 reflects the
emerging contribution from Vascepa. Vascepa is delivering strong
growth in its key operational metrics, despite the headwinds
imposed on the rollout by the pandemic, which has made physician
access a challenge since its launch. This reinforces both our
confidence in Vascepa and our conviction in its peak year sales
estimate of $275-325 million.
Clozaril also continues to deliver strong and reliable performance
and our patient count for the product increased in Canada by 3% annually driving the growth of
the market in the process."
"As the larger provinces began to open-up, we saw an uptick in
activity and if June is any indication of what is to follow, we
believe the second half of the year will be an exciting time for
Vascepa. We have previously spoken of 2021 being the year of the
inflection point for the product driven by five primary catalysts.
Of these catalysts, we have achieved reimbursement coverage for
more than 90% of privately covered lives in Canada and Vascepa has been added to the
treatment guidelines by the Canadian Cardiovascular Society,
Thrombosis Canada and more recently, the Heart & Stroke
Foundation's Canadian Stroke Best Practices. With vaccination rates
amongst the highest of any nation in the world, we are now seeing
the market in Canada open-up as
many of the strict COVID-19 restrictions are lifted and we continue
to prepare for our salesforce expansion later this year. The fifth
catalyst is to gain public market access for Vascepa in
Canada. On this front,
negotiations are in progress, and we continue to expect access to
the public market within the typical 18–24-month window post-launch
that is generally associated with products like Vascepa given the
endorsement by leading national and international medical societies
and the priority review from Health Canada."
DIVIDEND
On August 4,
2021, the Company's Board of Directors declared a dividend
of C$0.05 per outstanding common
share to be paid on December 15,
2021, to shareholders of record as of October 29, 2021.
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 (Canada).
Q2 & YEAR-TO-DATE FISCAL 2021 FINANCIAL REVIEW
The
Company's Management's Discussion and Analysis and Consolidated
Financial Statements for the three-and six-month periods ended
June 30, 2021 are available at the Company's website and at
its profile at SEDAR.
Revenue
The following table provides revenue
segmentation by revenue type for the three- and six-month periods
ended June 30, 2021:
|
Three months
ended
June
30,
|
Six months
ended
June
30,
|
|
2021
|
2020
|
2021
|
2020
|
|
|
|
|
|
Product
sales
|
|
|
|
|
Canada
|
8,912
|
6,875
|
16,745
|
14,354
|
United States
|
3,861
|
3,932
|
7,796
|
8,079
|
|
12,773
|
10,807
|
24,541
|
22,433
|
Royalty
revenue
|
2,172
|
1,798
|
4,718
|
4,062
|
|
14,945
|
12,605
|
29,259
|
26,495
|
Product Sales
Product sales grew by 18% in Q2 2021 and
9% for the 2021 year-to-date period. The increases reflect growth
in sales of Vascepa, growth in Clozaril's patient count in
Canada and the strengthening of
the Canadian dollar. Reflecting the 44% increase in Vascepa
prescribers and 41% increase in Vascepa patients from Q1 2021,
Vascepa product sales in Q2 2021 increased 42% sequentially,
despite the ongoing challenges from the COVID-19 pandemic during
the period.
Royalty revenues
On September
30, 2020, the Company acquired a diversified portfolio of
royalty interests on global sales of four different products. HLS
recorded royalty revenues of $2.2
million in Q2 2021 and $4.7
million for the 2021 year-to-date period from this royalty
portfolio.
Royalty revenues in the respective periods of the prior year
were $1.8 million and $4.1 million and were based on sales of Absorica
in the U.S. market. As intended from the outset of that agreement,
HLS terminated its ownership of those marketing rights effective
December 31, 2020.
Operating
Expenses
|
Three months
ended
June
30,
|
Six months
ended
June
30,
|
|
2021
|
2020
|
2021
|
2020
|
|
|
|
|
|
Cost of product
sales
|
896
|
671
|
1,670
|
1,490
|
Selling and
marketing
|
3,731
|
3,177
|
6,899
|
6,793
|
Medical, regulatory
and patient support
|
1,501
|
1,699
|
2,834
|
2,945
|
General and
administrative
|
2,256
|
2,244
|
4,627
|
4,384
|
|
8,384
|
7,791
|
16,030
|
15,612
|
Operating expenses in Q2 2021 were $8.4
million, an increase of 8% from Q2 2020, and for the 2021
year-to-date period were $16.0
million, an increase of 3% from the same period last year.
Operating expenses increased year-over-year due primarily to higher
cost of product sales related to the sale of Vascepa and the
deployment of CSAN Pronto as well as higher sales and marketing
expenses related to Vascepa, offset in part by lower medical,
regulatory and patient support costs.
Adjusted
EBITDA1
|
Three months
ended
June
30,
|
Six months
ended
June
30,
|
|
2021
|
2020
|
2021
|
2020
|
|
|
|
|
|
Net loss for the
period
|
(2,197)
|
(6,474)
|
(6,950)
|
(6,320)
|
Stock-based
compensation
|
(409)
|
918
|
1,938
|
754
|
Amortization and
depreciation
|
7,480
|
8,198
|
14,847
|
16,757
|
Acquisition and
transaction costs
|
—
|
234
|
84
|
323
|
Finance and related
costs, net
|
1,510
|
2,636
|
2,859
|
1,146
|
Income tax expense
(recovery)
|
177
|
(698)
|
451
|
(1,777)
|
Adjusted
EBITDA
|
6,561
|
4,814
|
13,229
|
10,883
|
Adjusted EBITDA in Q2 2021 was $6.6
million, an increase of 36% from Q2 2020, and for the 2021
year-to-date period was $13.2
million, an increase of 22% from the same period last year.
The increases were due primarily to higher sales of Vascepa and
higher royalty revenues from royalty interests, which were
partially offset by the increase in Vascepa selling and marketing
activities and the increase in cost of product sales related to
higher sales volumes.
(1) See "Cautionary Note Regarding
Non-IFRS Measures" section of this press release.
|
Net Loss
Net loss for Q2 2021 was ($2.2) million, or ($0.07) per share, compared to a net loss of
($6.5) million, or ($0.20) per share, in Q2 2020. Net loss for the
2021 year-to-date period was ($7.0)
million, or ($0.22) per share,
compared to a net loss of ($6.3)
million, or ($0.20) per share,
in the same period last year. Net loss improved in Q2 2021 due
primarily to reduced stock compensation expense, reduced
amortization following the termination of the Absorica agreement
and higher revenues from Vascepa and royalty interests, offset, in
part, by increased investment in sales and marketing for
Vascepa.
Cash from Operations and Financial
Position
Cash generated from operations was $1.7 million in Q2 2021, compared to cash used in
operations of ($4.2) million in Q2
2020. For the 2021 year-to-date period, cash from operations is
$8.9 million compared to $1.1 million in the same period last year. As at
June 30, 2021, the Company had cash
and cash equivalents of $21.3 million
compared to $20.6 million at
December 31, 2020.
HLS has a strong financial position with $21.3 million of cash and cash equivalents, a
$35.0 million revolving facility that
was undrawn at June 30, 2021, and the
Company may also request to be provided with incremental loans, up
to a maximum amount of $70.0 million,
to support acquisitions and other growth opportunities. In
addition, in fiscal 2020, the Company filed a preliminary
short-form base shelf prospectus with the securities commissions in
each of the provinces and territories of Canada, other than Quebec, to raise up to C$250.0 million over a period of 25 months should
an appropriate strategic opportunity emerge.
Q2 FISCAL 2021 CONFERENCE CALL
HLS will hold a
conference call today at 8:30 am Eastern
Time to discuss its Q2 2021 financial results. The call will
be hosted by Mr. Gilbert Godin,
Chief Executive Officer and Mr. Tim
Hendrickson, Chief Financial Officer. To view the slides
that accompany management's discussion, please use the webcast
link.
CONFERENCE
ID:
|
49535873
|
DATE:
|
Thursday, August 5,
2021
|
TIME:
|
8:30 a.m.
Eastern Daylight Time
|
DIAL-IN
NUMBER:
|
1-888-664-6392 or
416-764-8659
|
WEBCAST
LINK:
|
https://produceredition.webcasts.com/starthere.jsp?ei=1479846&tp_key=5870717b9b
|
TAPED
REPLAY:
|
1-888-390-0541 or
416-764-8677
|
REPLAY
CODE:
|
535873
|
The taped replay will be available for 14 days and the archived
webcast will be available for 365 days.
A link to the live audio webcast of the conference call will
also be available on the events page of the investors section of
HLS Therapeutics' website at www.hlstherapeutics.com. Please
connect at least 15 minutes prior to the conference call to ensure
adequate time for any software download that may be required to
hear the webcast.
ABOUT HLS THERAPEUTICS INC.
Formed in 2015, HLS is a
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
1CAUTIONARY 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 expense (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, expectations regarding financial performance, and
the NCIB and ASPP. 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 March 17, 2021 and Management's
Discussion and Analysis dated August 4, 2021, both of which
have been filed on SEDAR and can be accessed at www.sedar.com.
Accordingly, readers should not place undue reliance on any
forward-looking statements or information. Except as required by
applicable securities laws, forward-looking statements speak only
as of the date on which they are made and HLS undertakes no
obligation to publicly update or revise any forward-looking
statement, whether as a result of new information, future events,
or otherwise.
HLS THERAPEUTICS
INC.
|
CONDENSED INTERIM
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
|
Unaudited
|
[in thousands of U.S.
dollars]
|
|
|
As
at
|
As
at
|
|
June 30,
2021
|
December 31,
2020
|
|
|
|
ASSETS
|
|
|
Current
|
|
|
Cash and cash
equivalents
|
21,347
|
20,612
|
Accounts
receivable
|
12,867
|
12,497
|
Inventories
|
10,063
|
10,630
|
Prepaid expenses and
other current assets
|
3,010
|
2,172
|
Total current
assets
|
47,287
|
45,911
|
Property, plant and
equipment
|
1,172
|
1,384
|
Intangible
assets
|
246,737
|
253,404
|
Restricted
assets
|
—
|
2,034
|
Deferred income tax
asset
|
908
|
1,173
|
Total
assets
|
296,104
|
303,906
|
|
|
|
|
|
|
Current
|
|
|
Accounts payable and
accrued liabilities
|
15,321
|
14,223
|
Provisions
|
4,123
|
4,516
|
Debt and other
liabilities
|
14,078
|
16,358
|
Income taxes
payable
|
112
|
545
|
Total current
liabilities
|
33,634
|
35,642
|
Debt and other
liabilities
|
92,640
|
99,015
|
Total
liabilities
|
126,274
|
134,657
|
|
|
|
Shareholders'
equity
|
|
|
Share
capital
|
263,275
|
257,411
|
Contributed
surplus
|
11,474
|
11,393
|
Accumulated other
comprehensive income
|
6,200
|
2,020
|
Deficit
|
(111,119)
|
(101,575)
|
Total shareholders'
equity
|
169,830
|
169,249
|
Total liabilities and
shareholders' equity
|
296,104
|
303,906
|
HLS THERAPEUTICS
INC.
|
CONDENSED INTERIM
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
|
Unaudited
|
[in thousands of U.S.
dollars, except per share amounts]
|
|
|
Three months
ended
June
30,
|
Six months
ended
June
30,
|
|
2021
|
2020
|
2021
|
2020
|
|
|
|
|
|
Revenue
|
14,945
|
12,605
|
29,259
|
26,495
|
|
|
|
|
|
Expenses
|
|
|
|
|
Cost of product
sales
|
896
|
671
|
1,670
|
1,490
|
Selling and
marketing
|
3,731
|
3,177
|
6,899
|
6,793
|
Medical, regulatory
and patient support
|
1,501
|
1,699
|
2,834
|
2,945
|
General and
administrative
|
2,256
|
2,244
|
4,627
|
4,384
|
Stock-based
compensation
|
(409)
|
918
|
1,938
|
754
|
Amortization and
depreciation
|
7,480
|
8,198
|
14,847
|
16,757
|
Operating
loss
|
(510)
|
(4,302)
|
(3,556)
|
(6,628)
|
Acquisition and
transaction costs
|
—
|
234
|
84
|
323
|
Finance and related
costs, net
|
1,510
|
2,636
|
2,859
|
1,146
|
Loss before income
taxes
|
(2,020)
|
(7,172)
|
(6,499)
|
(8,097)
|
Income tax expense
(recovery)
|
177
|
(698)
|
451
|
(1,777)
|
Net loss for the
period
|
(2,197)
|
(6,474)
|
(6,950)
|
(6,320)
|
|
|
|
Net loss per
share:
|
|
|
Basic and
diluted
|
$(0.07)
|
$(0.20)
|
$(0.22)
|
$(0.20)
|
HLS THERAPEUTICS
INC.
|
CONDENSED INTERIM
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(LOSS)
|
Unaudited
|
[in thousands of U.S.
dollars]
|
|
|
|
|
|
|
Three months
ended
June
30,
|
Six months
ended
June
30,
|
|
2021
|
2020
|
2021
|
2020
|
|
|
|
|
|
Net loss for the
period
|
(2,197)
|
(6,474)
|
(6,950)
|
(6,320)
|
|
|
|
|
|
Item that may be
reclassified subsequently to net loss
|
|
|
|
|
Unrealized foreign currency translation adjustment
|
2,737
|
6,306
|
4,180
|
(7,738)
|
Comprehensive
income (loss) for the period
|
540
|
(168)
|
(2,770)
|
(14,058)
|
HLS THERAPEUTICS
INC.
|
CONDENSED INTERIM
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS'
EQUITY
|
Unaudited
|
[in thousands of U.S.
dollars]
|
|
|
|
|
|
|
|
|
|
|
Share
capital
|
Contributed
surplus
|
Accumulated
other
comprehensive
income (loss)
|
Deficit
|
Total
|
|
|
|
|
|
|
Balance, December
31, 2020
|
257,411
|
11,393
|
2,020
|
(101,575)
|
169,249
|
Warrants
exercised
|
2,963
|
(192)
|
—
|
—
|
2,771
|
Stock options
exercised
|
2,901
|
(770)
|
—
|
—
|
2,131
|
Stock option
expense
|
—
|
1,043
|
—
|
—
|
1,043
|
Net loss for the
period
|
—
|
—
|
—
|
(6,950)
|
(6,950)
|
Dividends
declared
|
—
|
—
|
—
|
(2,594)
|
(2,594)
|
Unrealized foreign
currency
|
|
|
|
|
|
translation adjustment
|
—
|
—
|
4,180
|
—
|
4,180
|
Balance, June 30,
2021
|
263,275
|
11,474
|
6,200
|
(111,119)
|
169,830
|
|
|
|
|
|
|
Balance, December
31, 2019
|
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, June 30,
2020
|
256,283
|
10,690
|
(8,275)
|
(90,122)
|
168,576
|
HLS THERAPEUTICS
INC.
|
CONDENSED INTERIM
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
Unaudited
|
[in thousands of U.S.
dollars]
|
|
|
|
|
|
|
Three months
ended
June
30,
|
Six months
ended
June
30,
|
|
2021
|
2020
|
2021
|
2020
|
|
|
|
|
|
OPERATING
ACTIVITIES
|
|
|
|
|
Net loss for the
period
|
(2,197)
|
(6,474)
|
(6,950)
|
(6,320)
|
Adjustments to
reconcile net loss to cash provided by operating activities
|
|
|
|
|
Stock-based
compensation
|
(409)
|
918
|
1,938
|
754
|
Amortization and
depreciation
|
7,480
|
8,198
|
14,847
|
16,757
|
Accreted
interest
|
182
|
312
|
368
|
668
|
Fair value adjustment
on financial assets and liabilities
|
(384)
|
1,372
|
(695)
|
(2,099)
|
Foreign
exchange
|
—
|
—
|
—
|
176
|
Deferred income
taxes
|
59
|
(927)
|
265
|
(2,338)
|
Net change in
non-cash working capital balances
related to
operations
|
(3,016)
|
(7,615)
|
(873)
|
(6,465)
|
Cash provided
(used in) by operating activities
|
1,715
|
(4,216)
|
8,900
|
1,133
|
|
|
|
|
|
INVESTING
ACTIVITIES
|
|
|
|
|
Additions to
property, plant and equipment
|
(9)
|
(1)
|
(15)
|
(27)
|
Rights
acquisitions
|
(2,500)
|
(1,825)
|
(3,820)
|
(8,400)
|
Other additions to
intangible assets
|
(23)
|
(311)
|
(51)
|
(759)
|
Cash used in
investing activities
|
(2,532)
|
(2,137)
|
(3,886)
|
(9,186)
|
|
|
|
|
|
FINANCING
ACTIVITIES
|
|
|
|
|
Stock options
exercised
|
1,724
|
24
|
2,131
|
38
|
Warrants
exercised
|
915
|
—
|
920
|
1,590
|
Dividends
paid
|
(1,310)
|
(1,169)
|
(2,577)
|
(2,310)
|
Repayment of senior
secured term loan
|
(2,250)
|
(1,250)
|
(4,500)
|
(2,632)
|
Debt costs
|
—
|
(176)
|
—
|
(176)
|
Lease
payments
|
(162)
|
(123)
|
(317)
|
(244)
|
Cash used in
financing activities
|
(1,083)
|
(2,694)
|
(4,343)
|
(3,734)
|
|
|
|
|
|
Net increase
(decrease) in cash and cash equivalents during
|
|
|
|
|
the
period
|
(1,900)
|
(9,047)
|
671
|
(11,787)
|
Foreign currency
translation
|
44
|
1,060
|
64
|
(1,629)
|
Cash and cash
equivalents, beginning of period
|
23,203
|
41,649
|
20,612
|
47,078
|
Cash and cash
equivalents, end of period
|
21,347
|
33,662
|
21,347
|
33,662
|
SOURCE HLS Therapeutics Inc.