Theratechnologies Reports Financial Results and Announces Positive Net Income for Second Quarter 2024
Theratechnologies reported a strong second quarter for fiscal 2024, with revenue reaching $22 million, a 25% year-over-year increase. The company achieved a positive net income of $1 million and an Adjusted EBITDA of $5.5 million. For the full fiscal year 2024, Theratechnologies affirmed its revenue guidance between $87 million and $90 million, with Adjusted EBITDA projected between $13 million and $15 million.
EGRIFTA SV® sales saw a significant rise of 49.3% year-over-year, whereas Trogarzo® sales dropped by 13.1%. The company has also progressed in its oncology pipeline, completing the recruitment for the second cohort of a Phase 1 trial for sudocetaxel zendusortide.
Recently, Theratechnologies reorganized its preclinical oncology research activities and presented promising Phase 1 data at the ASCO 2024 meeting. General and administrative expenses and selling expenses saw reductions, contributing to improved financial performance. The cash position as of May 31, 2024, was $36.03 million, providing sufficient liquidity for the next 12 months.
- Q2 revenue increased by 25% year-over-year to $22 million.
- Positive net income of $1 million achieved in Q2.
- Adjusted EBITDA for Q2 reached $5.5 million.
- EGRIFTA SV® sales rose by 49.3% year-over-year.
- Full fiscal year 2024 revenue guidance between $87 million and $90 million confirmed.
- Cash position as of May 31, 2024, was $36.03 million, ensuring liquidity for the next 12 months.
- Trogarzo® sales decreased by 13.1% year-over-year in Q2.
- R&D expenses included $766,000 in accelerated depreciation due to phasing down of preclinical research.
Insights
The financial results reported by Theratechnologies indicate a significant positive shift in the company's performance. The revenue growth of 25.5% year-over-year for Q2 2024 is a strong indicator of the company’s improving commercial operations. Particularly noteworthy is the positive net income of
The increase in Adjusted EBITDA to
Investors should also note the confirmation of the fiscal year revenue guidance between
Short-term, the positive net income is likely to have an immediate favorable effect on stock prices due to increased investor confidence. However, long-term sustainability will depend on maintaining this financial discipline and successfully navigating competitive pressures, notably in the HIV treatment market where Trogarzo® sales have declined.
The emphasis on the EGRIFTA SV® product, which showed a 49.3% increase in net sales year-over-year, suggests a strong demand and solid market positioning. This product's success could be due to its efficacy and the management of inventory levels aligning with patient demand. Investors should consider the potential for continued growth in this segment, which remains the company's priority brand.
Concerning the pipeline, Theratechnologies is progressing with its oncology research despite phasing down preclinical activities. The ongoing Phase 1 clinical trial of sudocetaxel zendusortide in advanced ovarian cancer has shown promising early efficacy signals and a manageable safety profile, making it a potentially valuable asset in their portfolio if later-stage trials confirm these results.
The company’s engagement with the FDA regarding the tesamorelin F8 sBLA and the further development of peptide-drug conjugates (PDCs) using advanced technologies signify a forward-looking approach that could yield high returns if successful. However, approval processes and trial outcomes are inherently uncertain and investors should be mindful of these risks.
In the short-term, positive developments in clinical trials and regulatory approvals can act as catalysts for stock appreciation. In the long-term, successful commercialization of pipeline products could significantly boost revenue streams and market share.
The market reception of Theratechnologies' financial results may be influenced by the company's strategic decisions and competitive landscape. The revenue increase, particularly in the EGRIFTA SV® segment, indicates robust demand. However, the decline in Trogarzo® sales, due to competitive pressures, highlights the challenges in the HIV-1 treatment market.
Investors should consider the impact of the company's decision to phase down preclinical oncology research, which aligns with its strategy to focus on commercial business and achieving positive Adjusted EBITDA. This reorganization could streamline operations and reduce costs, enhancing profitability.
Additionally, the anticipated fiscal revenue guidance reflects management's confidence in continued growth. However, the company's liquidity and ability to meet debt obligations remain critical factors. The need to maintain significant cash reserves as stipulated by the Marathon Credit Agreement is a potential constraint that investors should be aware of.
Short-term, the market may react positively to the improved financial metrics and strategic clarity. Long-term, sustainable growth will depend on successfully addressing competitive dynamics and effectively managing financial obligations.
- Q2 revenue of
$22 million represents +25% growth year-over-year - Positive net income of
$1 million realized with Adjusted EBITDA1 of$5.5 million - Fiscal 2024 revenue guidance confirmed between
$87 and$90 million and an Adjusted EBITDA in the range of$13 t o$15 million
MONTREAL, July 10, 2024 (GLOBE NEWSWIRE) -- Theratechnologies Inc. (“Theratechnologies” or the “Company”) (TSX: TH) (NASDAQ: THTX), a biopharmaceutical company focused on the development and commercialization of innovative therapies, today reported business highlights and financial results for the second quarter of fiscal year 2024 ended May 31, 2024 (Q2 2024). All figures are in US dollars unless otherwise stated.
Revenue for Q2 2024 and First Half Fiscal 2024
(in thousands of dollars)
| Three months ended May 31 | % change | Six months ended May 31 | % change | |||
| 2024 | 2023 | 2024 | 2023 | |||
| EGRIFTA SV® net sales | 16,200 | 10,853 | 25,786 | 23,564 | ||
| Trogarzo® net sales | 5,817 | 6,696 | ( | 12,478 | 13,893 | ( |
| Revenue | 22,017 | 17,549 | 25.5% | 38,264 | 37,457 | 2.2% |
“I am pleased to wrap up this very strong second quarter with
“Regarding our pipeline, we are still addressing questions from the FDA on the tesamorelin F8 sBLA following our Type A meeting earlier this year. The FDA has confirmed a four-month review. In oncology, we continue to be focused on generating results from Part 3 of our Phase 1 clinical trial of sudocetaxel zendusortide in advanced ovarian cancer. I am pleased to confirm that we have fully recruited for the second cohort of the study, with six patients already having completed the first treatment cycle at the higher dose of 2.5 mg/kg and evaluable for safety. In parallel, we have advanced three additional peptide-drug conjugates (PDCs) using the same payloads as antibody-drug conjugate (ADC) technology, such as exatecan. We continue to engage with interested parties to further fund the development of our lead PDC candidate and SORT1+ TechnologyTM platform.”
Recent Highlights:
Reorganization of Preclinical Oncology Research Activities
On March 22, 2024, the Company announced that it would phase down its preclinical oncology research activities while continuing to conduct its ongoing Phase 1 clinical trial of sudocetaxel zendusortide in patients with advanced ovarian cancer. The phasing down of preclinical research activities is aligned with the Company’s business strategy to focus on its commercial business and generating positive Adjusted EBITDA and positive net income. As a result, for the three and six-month periods ended May 31, 2024,
Sudocetaxel Zendusortide Presentation at ASCO 2024 Demonstrates Signs of Long-Term Efficacy and Manageable Safety Profile in Patients with Solid Tumors
At the 2024 American Society of Clinical Oncology (ASCO) annual meeting, the Company presented Phase 1 data from Parts 1 and 2 of the clinical trial with its lead investigational PDC candidate sudocetaxel zendusortide demonstrating signs of long-term efficacy and a manageable safety profile in patients with solid tumors.
Study results suggest a unique, multimodal mechanism of action for sudocetaxel zendusortide that are distinct from other cancer therapeutics, including induction of immune cell infiltration even in “cold” tumor models, inhibition of vasculogenic mimicry, targeting of chemotherapy-resistant cancer stem cells, and activation of the cGAS/STING immune pathway. Additionally, investigators observed an early efficacy signal primarily in female cancers (ovarian cancer, endometrial cancer, triple-negative breast cancer [TNBC]), with seven of 16 participants (
Theratechnologies Reports on its Annual Meeting of Shareholders
At its annual meeting of shareholders held on May 9, 2024, shareholders proceeded to elect its candidates to the Company’s Board of Directors for a one-year term and appointed KPMG LLP as the Company’s auditors for the current fiscal year. All candidates proposed for the position of director were elected, including recently appointed Directors Elina Tea and Jordan Zwick. Frank Holler will now act as Chairman of the Board of Directors.
Fiscal 2024 Revenue and Adjusted EBITDA Guidance
The Company’s anticipated Fiscal 2024 revenue guidance range is confirmed between
Second Quarter Fiscal 2024 Financial Results
The financial results presented in this press release are taken from the Company’s Management's Discussion and Analysis (“MD&A”) and interim consolidated financial statements (“Interim Financial Statements”) for the three- and six month periods ended May 31, 2024 (“Second Quarter Fiscal 2024”) which have been prepared in accordance with International Accounting Standard (“IAS”) 34, Interim Financial Reporting of International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). The MD&A and the Interim Financial Statements can be found at www.sedarplus.ca, on EDGAR at www.sec.gov and at www.theratech.com. Unless specified otherwise, all capitalized terms have the meaning ascribed thereto in our MD&A.
Second Quarter Fiscal 2024 Financial Results
For the three- and six-month periods ended May 31, 2024, consolidated revenue was
For the second quarter of Fiscal 2024, net sales of EGRIFTA SV® were
Trogarzo® net sales in the second quarter of Fiscal 2024 amounted to
For the six-month period ended May 31, 2024, Trogarzo® net sales were
Cost of Sales
For the three- and six-months ended May 31, 2024, cost of sales was
Cost of Sales
| Three months ended May 31 | Six months ended May 31 | |||||||
| 2024 | 2023 | 2024 | 2023 | |||||
| ( | % of Revenue | ( | % of Revenue | ( | % of Revenue | ( | % of Revenue | |
| EGRIFTA SV® | 1,549 | 1,187 | 3,436 | 2,226 | ||||
| Trogarzo® | 2,998 | 3,722 | 6,395 | 7,376 | ||||
| Total | 4,547 | 20.7% | 4,909 | 28.0% | 9,831 | 25.7% | 9,602 | 25.6% |
For the three- and six-month periods ended May 31, 2024, EGRIFTA SV® cost of sales was affected by a
R&D Expenses
R&D expenses in the three- and six-month periods ended May 31, 2024, amounted to
R&D expenses
(in thousands of dollars)
| Three months ended May 31 | Six months ended May 31 | |||||
| 2024 | 2023 | % change | 2024 | 2023 | % change | |
| Oncology | ||||||
| Laboratory research and personnel | 1,033* | 475 | 1,366* | 988 | ||
| Pharmaceutical product development | 44 | 3,394 | - | 157 | 4,343 | - |
| Phase 1 clinical trial | 588 | 482 | 977 | 1,602 | - | |
| Medical projects and education | 278 | 1,081 | - | 504 | 2,382 | - |
| Salaries, benefits and expenses | 1,271 | 2,491 | - | 2,614 | 5,121 | - |
| Regulatory activities | 376 | 415 | - | 807 | 798 | |
| Trogarzo® IM formulation | 6 | 320 | - | 26 | 850 | - |
| Tesamorelin formulation development | 448 | 379 | 1,052 | 1,108 | - | |
| F8 human factor studies | 5 | 454 | -99 | 7 | 613 | - |
| Pen injector | - | 44 | - | - | 339 | - |
| European activities | 50 | 113 | - | 52 | 339 | - |
| Travel, consultants, patents, options, others | 308 | 741 | - | 579 | 1,262 | - |
| Restructuring costs | 318 | - | - | 336 | - | - |
| Total | 4,725 | 10,389 | - | 8,477 | 19,745 | - |
*Including accelerated depreciation (
R&D expenses in the second quarter of 2023 were negatively impacted by a provision of
Selling Expenses
Selling expenses decreased to
The amortization of the intangible asset value for the EGRIFTA SV® and Trogarzo® commercialization rights is also included in selling expenses. As such, the Company recorded amortization expense of
General and Administrative Expenses
General and administrative expenses in the three- and six-month periods ended May 31, 2024, amounted to
Adjusted EBITDA
Adjusted EBITDA was
Net Finance Costs
Net finance costs for the three- and six-month periods ended May 31, 2024, were
Net finance costs for the three- and six-month periods ended May 31, 2024, also included accretion expense of
Net Income (Loss)
As a result of stronger revenues and the tight management of expenses over the past year, net income for the second quarter ended May 31, 2024, amounted to
Financial Position, Liquidity and Capital Resources
Liquidity and Going Concern
As part of the preparation of the Interim Financial Statements, management is responsible for identifying any event or situation that may cast doubt on the Company’s ability to continue as a going concern.
As of the issuance date of the Interim Financial Statements, the Company expects that its existing cash and cash equivalents as of May 31, 2024, together with cash generated from its existing operations will be sufficient to fund its operating expenses and debt obligations requirements for at least the next 12 months from the issuance date of the Interim Financial Statements. Considering the recent actions of the Company, material uncertainty that raised substantial doubt about the Company’s ability to continue as a going concern was alleviated effective from these second quarter interim financial statements.
In an effort to reach sustainable profitability, the Company has undertaken a number of measures to rationalize its operations, including a decrease in research and development expenses and has established a new operating structure focused on its commercial business (including, for example as described in note 6 (a) of the Interim Financial Statements). For the three-month ended May 31, 2024, the Company generated a net profit of
The Company’s Loan Facility contains various covenants, including minimum liquidity covenants whereby the Company needs to maintain significant cash, cash equivalent and eligible short-term investments balances in specified accounts, which restricts the management of the Company’s liquidity (refer to Note 7 of the Interim Financial Statements). As at May 31, 2024, the material covenants of the Marathon Credit Agreement, as amended, include: (i) minimum liquidity requirements to be between
The Company’s ability to continue as a going concern for a period of at least, but not limited to, 12 months from May 31, 2024, involves significant judgement and is dependent on the adherence to the conditions of the Marathon Credit Agreement or to obtain the support of the lender (including possible waivers and amendments, if necessary), on increasing its EGRIFTA SV® revenues and the continuing management of its expenses in order to meet or exceed the Marathon Adjusted EBITDA target and generate sufficient positive operating cash flows.
The Interim Financial Statements have been prepared assuming the Company will continue as a going concern, which assumes the Company will continue its operations in the foreseeable future and will be able to realize its assets and discharge its liabilities and commitments in the normal course of business.
Analysis of cash flows
The Company ended the second quarter of Fiscal 2024 with
For the three-month period ended May 31, 2024, cash generated by operating activities before changes in operating assets and liabilities improved to
In the second quarter of Fiscal 2024, changes in operating assets and liabilities had a negative impact on cash flow of
During the second quarter of Fiscal 2024, cash used by investing activities amounted to
Non-IFRS and Non-U.S. GAAP Measure
The information presented in this press release includes a measure that is not determined in accordance with International Financial Reporting Standards (“IFRS”) or U.S. generally accepted accounting principles (“U.S. GAAP”), being the term “Adjusted EBITDA”. “Adjusted EBITDA” is used by the Corporation as an indicator of financial performance and is obtained by adding to net profit or loss, finance income and costs, depreciation and amortization, income taxes, share-based compensation from stock options, and certain write-downs (or related reversals) of inventories. “Adjusted EBITDA” excludes the effects of items that primarily reflect the impact of long-term investment and financing decisions rather than the results of day-to-day operations. The Corporation believes that this measure can be a useful indicator of its operational performance from one period to another. The Corporation uses this non-IFRS measure to make financial, strategic and operating decisions. Adjusted EBITDA is not a standardized financial measure under the financial reporting framework used to prepare the financial statements of the Corporation to which the measure relates and might not be comparable to similar financial measures disclosed by other issuers. The Corporation has reinstated its use of Adjusted EBITDA starting this quarter and has included Adjusted EBITDA for the comparative period. A quantitative reconciliation of the Adjusted EBITDA is presented in the table below:
Reconciliation of Adjusted EBITDA
(In thousands of dollars)
| Three-month periods ended May 31 | Six-month periods ended May 31 | |||
2024 | 2023 | 2024 | 2023 | |
| Net income (loss) | 987 | (10,013) | (3,494) | (20,456) |
| Add : | ||||
| Depreciation and amortization2 | 1,262 | 932 | 1,779 | 1,871 |
| Net Finance costs3 | 2,183 | 1,943 | 4,308 | 6,883 |
| Income taxes | 118 | 126 | 228 | 222 |
| Share-based compensation | 340 | 702 | 967 | 1,278 |
| Inventory provision4 | 251 | 170 | 1,088 | 170 |
| Restructuring costs | 318 | - | 336 | - |
| Adjusted EBITDA | 5,459 | (6,140) | 5,212 | (10,032) |
Conference Call Details
The call will be held on Wednesday, July 10 at 8:30 a.m. ET and will be hosted by Paul Lévesque, President and Chief Executive Officer. He will be joined by other members of the management team, including Philippe Dubuc, Senior Vice President and Chief Financial Officer, Christian Marsolais, Ph.D., Senior Vice President and Chief Medical Officer and John Leasure, Global Commercial Officer who will be available to answer questions from participants following prepared remarks.
Participants are encouraged to join the call at least ten minutes in advance to secure access. Conference call dial-in and replay information can be found below.
| CONFERENCE CALL INFORMATION | |
| Conference Call Date | July 10, 2024 |
| Conference Call Time | 8:30 a.m. ET |
| Webcast link | https://edge.media-server.com/mmc/p/4mkgkywo |
| Dial in | 1-888-513-4119 (toll free) or 1-412-902-6615 (international) |
| Access Code | 0474907 |
| CONFERENCE CALL REPLAY | |
| Toll Free | 1-877-344-7529 (US) / 1-855-669-9658 (Canada) |
| International Toll | 1-412-317-0088 |
| Replay Access Code | 4477930 |
| Replay End Date | July 17, 2024 |
| To access the replay using an international dial-in number, please select this link: https://services.choruscall.com/ccforms/replay.html | |
An archived webcast will also be available on the Company’s Investor Relations website under ‘Past Events’.
About Theratechnologies
Theratechnologies (TSX: TH) (NASDAQ: THTX) is a biopharmaceutical company focused on the development and commercialization of innovative therapies addressing unmet medical needs. Further information about Theratechnologies is available on the Company's website at www.theratech.com, on SEDAR+ at www.sedarplus.ca and on EDGAR at www.sec.gov. Follow Theratechnologies on Linkedin and Twitter.
Forward-Looking Information
This press release contains forward-looking statements and forward-looking information (collectively, “Forward-Looking Statements”), within the meaning of applicable securities laws, that are based on our management’s beliefs and assumptions and on information currently available to our management. You can identify Forward-Looking Statements by terms such as "may", "will", "should", "could", “would”, "outlook", "believe", "plan", "envisage", "anticipate", "expect" and "estimate", or the negatives of these terms, or variations of them. The Forward-Looking Statements contained in this press release include, but are not limited to, statements regarding our 2024 fiscal year revenue and Adjusted EBITDA guidance, the resubmission with the FDA of the sBLA for tesamorelin F8 for approval of this new product formulation and the timeline to receive a decision from the FDA, the generation of results from Part 3 of our Phase 1 clinical trial studying sudocetaxel zendusortide in advanced ovarian cancer, and the Company’s business strategy to focus on its commercial business and generating positive Adjusted EBITDA and positive net income. Although the Forward-Looking Statements contained in this press release are based upon what the Company believes are reasonable assumptions in light of the information currently available, investors are cautioned against placing undue reliance on these statements since actual results may vary from the Forward-Looking Statements. Certain assumptions made in preparing the Forward-Looking Statements include that (i) sales of our products will continue to grow in 2024 and beyond; (ii) we will control expenses as planned and no unforeseen events will occur which would have the effect of increasing our expenses in 2024 and beyond; (iii) we will file a resubmission with the FDA of the sBLA for tesamorelin F8 for approval of this new product formulation and the FDA will approve such new formulation allowing us to start its commercialization; (iv) we will be in compliance with the terms and conditions of the Loan Facility; (v) we will be able to generate positive results from Part 3 of our Phase 1 clinical trial studying sudocetaxel zendusortide in advanced ovarian cancer; and (vi) no event will occur that would prevent us from executing the objectives set forth in this press release. Forward-Looking Statements assumptions are subject to a number of risks and uncertainties, many of which are beyond Theratechnologies’ control that could cause actual results to differ materially from those that are disclosed in or implied by such Forward-Looking Statements. These risks and uncertainties include, but are not limited to, a decrease or stagnation in sales of our products in 2024 and beyond, product recalls or change in the regulation that would adversely impact the sale of our products, the occurrence of events which would lead us to spend more cash than anticipated, the effect of which could result in a negative Adjusted EBITDA position by the fiscal year-end and beyond, defaults under the Loan Facility triggering an increase of 300 basis points on the loaned amount and a decision by the lenders to declare all amounts owed under the Loan Facility as immediately due and payable, the inability to complete the resubmission with the FDA of the sBLA for tesamorelin F8 and/or to get approval from the FDA of this new product formulation, financial difficulties in meeting our contractual obligations or default under contractual covenants, and changes in our business plan. We refer current and potential investors to the “Risk Factors” section of our Annual Information Form in the form of a Form 20-F Annual Report dated February 21, 2024, available on SEDAR+ at www.sedarplus.ca and on EDGAR at www.sec.gov, under Theratechnologies’ public filings for additional risks related to the Company. The reader is cautioned to consider these and other risks and uncertainties carefully and not to put undue reliance on Forward-Looking Statements. Forward-Looking Statements reflect current expectations regarding future events and speak only as of the date of this press release and represent our expectations as of that date. We undertake no obligation to update or revise the information contained in this press release, whether as a result of new information, future events or circumstances or otherwise, except as may be required by applicable law.
Contacts:
Investor inquiries:
Philippe Dubuc
Senior Vice President and Chief Financial Officer
pdubuc@theratech.com
1-438-315-6608
Media inquiries:
Julie Schneiderman
Senior Director, Communications & Corporate Affairs
communications@theratech.com
1-514-336-7800
1 This is a non-IFRS measure that is forward looking. The amount indicated diverges significantly from amounts achieved historically. See “Non-IFRS and Non-US GAAP Measure” below for such historical amounts and a reconciliation thereof to the most directly comparable IFRS measure.
2 Includes depreciation of property and equipment, amortization of intangible, other assets and right-of-use assets.
3 Includes all finance income and finance costs consisting of: Foreign exchange, interest income, accretion expense and amortization of deferred financing costs, interest expense, bank charges, gain or loss on financial instruments carried at fair value and loss on debt modification and gain on lease termination.
4 Inventory provision pending marketing approval of the F8 formulation.
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