- Q1 2021 revenue of $14.3
million, Adjusted EBITDA of $6.7
million and cash from operations of $7.2 million, up $0.4
million, $0.6 million and
$1.8 million, respectively, from Q1
2020
- Vascepa revenue growth drives higher total revenues
offsetting impact of additional Clozaril trade purchasing in the
early stages of the pandemic in Q1 2020
- Generated strong Vascepa® prescription growth - amid
persistent COVID-19 disruptions - achieving 2,900 patients and 730
prescribers at end of Q1, which are increases of 40% and 33%,
respectively, from the end of Q4
- Achieved Vascepa reimbursement with private insurers
representing > 90% of privately covered lives in Canada
- Canadian Cardiovascular Society added icosapent ethyl
(Vascepa) to its lipid management guidelines to reduce
cardiovascular risk for all patients in-label
TORONTO, May 6, 2021 /CNW/ - HLS Therapeutics Inc.
("HLS" or the "Company") (TSX: HLS), a specialty pharmaceutical
company focusing on central nervous system ("CNS") and
cardiovascular markets, announces its financial results for the
three-month period ended March 31,
2021. All amounts are in thousands of United States ("U.S.") dollars unless
otherwise stated.
Q1 FISCAL 2021 HIGHLIGHTS
- Q1 2021 revenue was $14.3 million
compared to $13.9 million in Q1
2020.
- Q1 2021 Adjusted EBITDA was $6.7
million compared to $6.1
million in Q1 2020.
- Q1 2021 net loss was ($4.8)
million, or ($0.15) per common
share, compared to net income of $0.2
million, or $0.00 per common
share, in Q1 2020.
- Q1 2021 cash generated from operations was $7.2 million compared to $5.3 million in Q1 2020.
- Cash and cash equivalents were $23.2
million at March 31, 2021
compared to $20.6 million at
December 31, 2020.
- Independent panel of experts from the Canadian Cardiovascular
Society formulated guidelines that strongly recommend the use of
icosapent ethyl (Vascepa) and strongly recommend against Omega-3
supplements.
"HLS delivered solid financial results in Q1 and achieved
important milestones in the roll-out for Vascepa, despite strict
lockdowns related to COVID-19, which were in place throughout the
quarter," said Gilbert Godin, CEO at
HLS. "Among those milestones, more than 90% of qualified privately
insured lives in Canada are now
eligible for reimbursement of Vascepa and the Canadian
Cardiovascular Society issued updated guidelines that recommend
Vascepa to reduce cardiovascular disease for qualified patients.
The inclusion of Vascepa in the Canadian Cardiovascular Society
guidelines is particularly gratifying because it comes from highly
regarded independent experts in Lipid Management, Cardiology and
Endocrinology who are rigorous in their analysis and are practicing
at the cutting edge of science. These developments further
reinforce our positive outlook for the product and its potential to
enhance the lives of the many Canadians who are at risk for
cardiovascular disease, the number one killer worldwide."
"Our top priorities for 2021 are to continue the successful
launch of Vascepa and the steady deployment of CSAN®
ProntoTM. In the second half of the year, we plan to
launch PERSERIS® and the MyCare Psychiatry Lab Assays into the CNS
market, bringing new and novel therapeutic options for patients and
practitioners dealing with challenging medical conditions. Finally,
we will continue to explore opportunities to expand our product
portfolio through other in-licensing or M&A transactions in
Canada and the U.S."
DIVIDEND
On May 5, 2021,
the Company's Board of Directors declared a dividend of
C$0.05 per outstanding common share
to be paid on September 15, 2021, to
shareholders of record as of July 30,
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).
Q1 FISCAL 2021 FINANCIAL REVIEW
The Company's
Management's Discussion and Analysis and Consolidated Financial
Statements for the three-month period ended March 31, 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-month period ended
March 31, 2021:
|
|
Three months
ended
March
31,
|
|
|
|
2021
|
2020
|
|
|
|
|
|
Product
sales
|
|
|
|
|
Canada
|
|
|
7,833
|
7,479
|
United
States
|
|
|
3,935
|
4,147
|
|
|
|
11,768
|
11,626
|
Royalty
revenue
|
|
|
2,546
|
2,264
|
|
|
|
14,314
|
13,890
|
Product Sales
Product sales in Canada grew by 5% as higher Vascepa product
sales off-set a 2.9% decrease in Clozaril sales. Despite the
continued impact of the COVID-19 pandemic, Vascepa product sales in
Q1 2021 increased 45% compared to Q4 2020, reflecting the 33%
increase in Vascepa prescribers and 40% increase in Vascepa
patients over that period.
Continued initiation of new Clozaril patients in Canada resulted in net growth in the number of
Clozaril patients at an annualized rate of 2% in Q1 2021. Clozaril
net sales in Canada in Q1 2021
decreased year-over-year due to additional trade purchasing that
took place in Q1 2020 in response to the early stages of the
pandemic. Over time, HLS expects Clozaril net sales growth to
follow the growth in patients.
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 $2.5
million in Q1 2021 from this royalty
portfolio.
Royalty revenues in the prior year were $2.3 million 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
March
31,
|
|
|
|
2021
|
2020
|
|
|
|
|
|
Cost of product
sales
|
|
|
774
|
819
|
Selling and
marketing
|
|
|
3,168
|
3,616
|
Medical, regulatory
and patient support
|
|
|
1,333
|
1,246
|
General and
administrative
|
|
|
2,371
|
2,140
|
|
|
|
7,646
|
7,821
|
Cost of product sales in Q1 2021 was essentially flat as
increased costs for Vascepa and CSAN Pronto in Canada were off-set by lower volumes and costs
on Clozaril.
Other operating expenses of $6.9
million in Q1 2021 decreased 1.9% from Q1 2020. Selling and
marketing activities were $3.2
million, a 12% decrease from Q1 2021, which included the
initial Vascepa launch expenses. Medical, regulatory and patient
support activities, and general and administrative costs increased
$0.1 million and $0.2 million, respectively.
Adjusted EBITDA2
|
|
Three months
ended
March
31,
|
|
|
|
2021
|
2020
|
|
|
|
|
|
Net income (loss) for
the period
|
|
|
(4,753)
|
154
|
Stock-based
compensation
|
|
|
2,347
|
(164)
|
Amortization and
depreciation
|
|
|
7,367
|
8,559
|
Acquisition and
transaction costs
|
|
|
84
|
89
|
Finance and related
costs, net
|
|
|
1,349
|
(1,490)
|
Income tax expense
(recovery)
|
|
|
274
|
(1,079)
|
Adjusted
EBITDA
|
|
|
6,668
|
6,069
|
Adjusted EBITDA for Q1 2021 was $6.7
million, an increase of 10% from Q1 2020. This was primarily
due to increased products sales from Vascepa, higher royalty
revenues and modestly lower operating expenses than the year ago
period.
(2) See "Cautionary Note Regarding
Non-IFRS Measures" section of this press release.
|
Net Loss
Net loss for Q1 2021 was ($4.8) million, or ($0.15) per share, compared to net income of
$0.2 million in Q1 2020. Net loss
decreased year-over-year primarily due to $6.1 million of income recorded in Q1 2020 as a
result of the non-cash decrease in the carrying value of lender
warrants, $1.1 million of income tax
recovery in Q1 2020, offset in part by higher revenue in Q1 2021
and lower operating expenses in Q1 2021.
Cash from Operations and Financial
Position
Cash generated from operations was $7.2 million in Q1 2021, compared to $5.3 million in Q1 2020. As at March 31, 2021, the Company had cash and cash
equivalents of $23.2 million compared
to $20.6 million at December 31, 2020.
HLS has a strong financial position with $23.2 million of cash and cash equivalents, a
$35.0 million revolving facility that
was undrawn at March 31, 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.
Q1 FISCAL 2021 CONFERENCE CALL
HLS will hold a
conference call today at 8:30 am Eastern
Time to discuss its Q1 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:
|
33591613
|
DATE:
|
Thursday, May 6,
2021
|
TIME:
|
8:30 a.m. Eastern
Standard Time
|
DIAL-IN
NUMBER:
|
1-888-664-6392 or
416-764-8659
|
WEBCAST
LINK:
|
https://produceredition.webcasts.com/starthere.jsp?ei=1454077&tp_key=e02123aad9
|
TAPED
REPLAY:
|
1-888-390-0541 or
416-764-8677
|
REPLAY
CODE:
|
591613
|
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
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
2CAUTIONARY 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 May 5, 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
|
|
|
March 31,
2021
|
December 31,
2020
|
|
|
|
|
ASSETS
|
|
|
|
Current
|
|
|
|
Cash and cash
equivalents
|
|
23,203
|
20,612
|
Accounts
receivable
|
|
11,135
|
12,497
|
Inventories
|
|
10,205
|
10,630
|
Prepaid expenses and
other current assets
|
|
2,347
|
2,172
|
Total current
assets
|
|
46,890
|
45,911
|
Property, plant and
equipment
|
|
1,263
|
1,384
|
Intangible
assets
|
|
247,612
|
253,404
|
Restricted
assets
|
|
—
|
2,034
|
Deferred income tax
asset
|
|
967
|
1,173
|
Total
assets
|
|
296,732
|
303,906
|
|
|
|
|
|
Current
|
|
|
|
Accounts payable and
accrued liabilities
|
|
16,126
|
14,223
|
Provisions
|
|
4,837
|
4,516
|
Debt and other
financial liabilities
|
|
13,740
|
16,358
|
Income taxes
payable
|
|
393
|
545
|
Total current
liabilities
|
|
35,096
|
35,642
|
Debt and other
financial liabilities
|
|
94,178
|
99,015
|
Total
liabilities
|
|
129,274
|
134,657
|
|
|
|
|
Shareholders'
equity
|
|
|
|
Share
capital
|
|
259,825
|
257,411
|
Contributed
surplus
|
|
11,772
|
11,393
|
Accumulated other
comprehensive income
|
|
3,463
|
2,020
|
Deficit
|
|
(107,602)
|
(101,575)
|
Total shareholders'
equity
|
|
167,458
|
169,249
|
Total liabilities and
shareholders' equity
|
296,732
|
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
March
31,
|
|
|
|
|
2021
|
2020
|
|
|
|
|
|
|
Revenue
|
|
|
|
14,314
|
13,890
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
Cost of product
sales
|
|
|
|
774
|
819
|
Selling and
marketing
|
|
|
|
3,168
|
3,616
|
Medical, regulatory
and patient support
|
|
|
|
1,333
|
1,246
|
General and
administrative
|
|
|
|
2,371
|
2,140
|
Stock-based
compensation
|
|
|
|
2,347
|
(164)
|
Amortization and
depreciation
|
|
|
|
7,367
|
8,559
|
Operating
loss
|
|
|
|
(3,046)
|
(2,326)
|
Acquisition and
transaction costs
|
|
|
|
84
|
89
|
Finance and related
costs, net
|
|
|
|
1,349
|
(1,490)
|
Loss before income
taxes
|
|
|
|
(4,479)
|
(925)
|
Income tax expense
(recovery)
|
|
|
|
274
|
(1,079)
|
Net income (loss)
for the period
|
|
|
|
(4,753)
|
154
|
|
|
|
|
Net income (loss)
per share:
|
|
|
|
Basic and
diluted
|
|
|
|
$(0.15)
|
$0.00
|
HLS THERAPEUTICS
INC.
|
CONDENSED INTERIM
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
|
Unaudited
|
[in thousands of U.S.
dollars]
|
|
|
|
|
Three months
ended
March
31,
|
|
|
|
2021
|
2020
|
|
|
|
|
|
Net income (loss)
for the period
|
|
|
(4,753)
|
154
|
|
|
|
|
|
Item that may be
reclassified subsequently to net loss
|
|
|
|
|
Unrealized foreign
currency translation adjustment
|
|
|
1,443
|
(14,044)
|
Comprehensive loss
for the period
|
|
|
(3,310)
|
(13,890)
|
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
|
|
1,857
|
(1)
|
—
|
—
|
1,856
|
Stock options
exercised
|
|
557
|
(150)
|
—
|
—
|
407
|
Stock option
expense
|
|
—
|
530
|
—
|
—
|
530
|
Net loss for the
period
|
|
—
|
—
|
—
|
(4,753)
|
(4,753)
|
Dividends
declared
|
|
—
|
—
|
—
|
(1,274)
|
(1,274)
|
Unrealized foreign
currency translation adjustment
|
|
—
|
—
|
1,443
|
—
|
1,443
|
Balance, March 31,
2021
|
|
259,825
|
11,772
|
3,463
|
(107,602)
|
167,458
|
|
|
|
|
|
|
|
Balance, December
31, 2019
|
|
248,687
|
11,517
|
(537)
|
(81,468)
|
178,199
|
Warrants
exercised
|
|
7,544
|
(1,652)
|
—
|
—
|
5,892
|
Stock options
exercised
|
|
19
|
(5)
|
—
|
—
|
14
|
Stock option
expense
|
|
—
|
441
|
—
|
—
|
441
|
Net income for the
period
|
|
—
|
—
|
—
|
154
|
154
|
Dividends
declared
|
|
—
|
—
|
—
|
(1,164)
|
(1,164)
|
Unrealized foreign
currency translation adjustment
|
|
—
|
—
|
(14,044)
|
—
|
(14,044)
|
Balance, March 31,
2020
|
|
256,250
|
10,301
|
(14,581)
|
(82,478)
|
169,492
|
HLS THERAPEUTICS
INC.
|
CONDENSED INTERIM
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
Unaudited
|
[in thousands of U.S.
dollars]
|
|
|
|
|
Three months
ended
March
31,
|
|
|
2021
|
2020
|
|
|
|
|
OPERATING
ACTIVITIES
|
|
|
|
Net income (loss) for
the period
|
|
(4,753)
|
154
|
Adjustments to
reconcile net income (loss) to cash provided
by operating
activities
|
|
|
Stock-based
compensation
|
|
2,347
|
(164)
|
Amortization and
depreciation
|
|
7,367
|
8,559
|
Accreted
interest
|
|
186
|
356
|
Fair value adjustment
on financial assets and liabilities
|
|
(311)
|
(3,471)
|
Foreign
exchange
|
|
—
|
176
|
Deferred income
taxes
|
|
206
|
(1,411)
|
Net change in
non-cash working capital balances related to operations
|
|
2,143
|
1,150
|
Cash provided by
operating activities
|
|
7,185
|
5,349
|
|
|
|
|
INVESTING
ACTIVITIES
|
|
|
|
Additions to
property, plant and equipment
|
|
(6)
|
(26)
|
Rights
acquisitions
|
|
(1,320)
|
(6,575)
|
Other additions to
intangible assets
|
|
(28)
|
(448)
|
Cash used in
investing activities
|
|
(1,354)
|
(7,049)
|
|
|
|
|
FINANCING
ACTIVITIES
|
|
|
|
Stock options
exercised
|
|
407
|
14
|
Warrants
exercised
|
|
5
|
1,590
|
Dividends
paid
|
|
(1,267)
|
(1,141)
|
Repayment of senior
secured term loan
|
|
(2,250)
|
(1,382)
|
Lease
payments
|
|
(155)
|
(121)
|
Cash used in
financing activities
|
|
(3,260)
|
(1,040)
|
|
|
|
|
Net increase
(decrease) in cash and cash equivalents during the
period
|
|
2,571
|
(2,740)
|
Foreign currency
translation
|
|
20
|
(2,689)
|
Cash and cash
equivalents, beginning of period
|
|
20,612
|
47,078
|
Cash and cash
equivalents, end of period
|
|
23,203
|
41,649
|
SOURCE HLS Therapeutics Inc.