Theratechnologies Reports Financial Results and Provides Business Update for First Quarter 2024
- Q1 2024 revenue of $16.2 million with near-flat-to-positive Adjusted EBITDA.
- FY2024 revenue guidance confirmed between $87-$90 million with Adjusted EBITDA of $13-15 million.
- Acceleration of Phase 1 trial of sudocetaxel zendusortide in advanced ovarian cancer.
- Completion of enrollment for Phase 1 trial participants and appointment of new Board members.
- 18.4% decrease in revenue compared to the previous year, with EGRIFTA SV® and Trogarzo® sales declining.
- Net loss improved to $4.4 million from $10.4 million in Q1 2023.
- Lower revenues in Q1 2024 compared to the previous year.
- Decline in EGRIFTA SV® and Trogarzo® sales.
- Restructuring charge of approximately $600,000 in cash charges related to severance and other expenses.
- Uncertainty regarding the Company's ability to continue as a going concern due to liquidity covenant restrictions.
Insights
The reported Q1 2024 consolidated revenue of $16.2 million, which is a decline from the previous year, along with the reaffirmed FY2024 revenue guidance between $87 and $90 million and Adjusted EBITDA in the range of $13-15 million, are significant indicators of the company's financial health and future expectations. A third consecutive quarter of near-flat-to-positive Adjusted EBITDA suggests a stabilization in the company's operational performance, which could be attractive to investors looking for companies with improving financial control and potentially increasing cash flows.
The impact of inventory fluctuations on revenue highlights the importance of managing the supply chain and sales forecasting in the biopharmaceutical industry. The mention of a reduced net loss year-over-year indicates an improvement in cost management, which is a positive sign for stakeholders. However, the decline in net sales of key products like EGRIFTA SV® and Trogarzo® may raise concerns about market demand and competition.
It is also noteworthy that the company is actively managing its expense structure to align with its strategic focus on commercial operations and Adjusted EBITDA goals. The phasing down of preclinical oncology research activities to optimize costs underscores a strategic shift towards commercialization and could be seen as a move to streamline operations towards profitability.
The acceleration of the Phase 1 trial of sudocetaxel zendusortide in advanced ovarian cancer is a critical development milestone for Theratechnologies. The progression to a higher dose level in the next cohort of patients indicates a positive safety profile at the initial dose, which is an encouraging sign for the drug's development trajectory. This advancement may potentially shorten the time to market and lead to earlier revenue generation from the product if it gains regulatory approval.
However, the decision to phase down preclinical oncology research activities while continuing to prioritize the Phase 1 clinical trial suggests a more focused R&D strategy. This could be a double-edged sword; while it may reduce short-term R&D expenses and improve Adjusted EBITDA, it might also limit the company's long-term pipeline potential. Investors should consider the implications of this strategic shift on the company's growth prospects in the oncology space.
Furthermore, the anticipated restructuring charge due to these strategic changes should be closely monitored to understand its impact on the company's financials in the short term. The company's ability to attract a development partner for sudocetaxel zendusortide could be a pivotal factor in offsetting R&D costs and advancing the oncology program.
The financial results and strategic decisions of Theratechnologies provide a window into the broader economic trends affecting the biopharmaceutical industry. The reaffirmation of revenue guidance in spite of a revenue dip in Q1 suggests management confidence in the company's ability to rebound and meet annual targets. This may reflect broader market optimism or specific strategic initiatives that are expected to bear fruit later in the fiscal year.
Moreover, the mention of M&A as a key component of the growth strategy indicates that the company is looking to expand its portfolio and capabilities through strategic acquisitions. This is in line with current industry trends where companies seek to bolster their pipelines and market presence through consolidation. The ability to generate positive Adjusted EBITDA can make the company more attractive to potential acquisition targets and could facilitate financing for such transactions.
The focus on liquidity and covenant compliance, as detailed in the discussion of the going concern uncertainty, is a reminder of the financial constraints and risks faced by companies in capital-intensive industries. The management's ability to navigate these challenges, adhere to credit agreements and maintain operational flexibility is important for the company's sustainability and growth.
- Q1 2024 consolidated revenue of
$16.2 million
- Report marks third consecutive quarter of near-flat-to-positive Adjusted EBITDA1
- FY2024 revenue guidance confirmed between
$87 and$90 million and an Adjusted EBITDA in the range of$13 -15 million - Acceleration of Phase 1 trial of sudocetaxel zendusortide in advanced ovarian cancer with enrollment of next cohort of patients underway at higher dose level
MONTREAL, April 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 first quarter of fiscal year 2024 ended February 29, 2024 (Q1 2024). All figures are in US dollars unless otherwise stated.
“I am pleased to wrap up the quarter by reaffirming our full year 2024 guidance of revenues between
Lévesque added, “Following our recent Type A meeting with the FDA on the sBLA for tesamorelin F8, we remain on track to resubmit our file and receive a decision from the FDA on this new product formulation before the end of 2024. With M&A more important than ever to the evolution of portfolio and our overall growth strategy, I am confident that our positive trajectory of Adjusted EBITDA will facilitate the acquisition of new assets that should contribute to value creation for our business. We continue to prioritize our Phase 1 clinical trial studying sudocetaxel zendusortide in advanced ovarian cancer and welcome its acceleration with the recent milestone of the enrollment of the next cohort of patients at the higher dose level. Now that we have significantly advanced our oncology program with important evidence on multiple PDCs with different payloads, coupled with the more than 40 patients already treated with sudocetaxel zendusortide, we believe we are in a position of strength to continue engaging with a partner for additional developmental steps.”
First-Quarter 2024 Revenues
(in thousands of U.S. dollars)
| Three Months Ended | Change | |||
| February 29, 2024 | February 28, 2023 | |||
| EGRIFTA SV® net sales | 9,586 | 12,711 | (24.6 | %) |
| Trogarzo® net sales | 6,661 | 7,197 | (7.4 | %) |
| Revenue | 16,247 | 19,908 | (18.4 | %) |
Recent Highlights:
Sudocetaxel Zendusortide (TH1902) and SORT1+ Technology™
On February 15, 2024, the Company announced the completion of enrollment of the first six participants in Part 3 of its Phase 1 clinical trial of sudocetaxel zendusortide in patients with advanced ovarian cancer, and on March 21, 2024, we announced that we were moving to the next dose level in Part 3 of its Phase 1 clinical trial of sudocetaxel zendusortide in patients with advanced ovarian cancer. The study’s Medical Review Committee (MRC) has deemed the dose level in the first cohort of patients safe and has approved initiation of the next cohort with an increased dose, in accordance with the updated dose optimization protocol. Study centers are now actively recruiting patients for the second cohort, with one patient already enrolled and treated with the higher dose.
On March 22, 2024, the Company announced that it will phase down its preclinical oncology research activities. The Company will continue to prioritize its ongoing Phase 1 clinical trial of sudocetaxel zendusortide, in patients with advanced ovarian cancer. The phasing down of research activities is aligned with the Company’s focus on its commercial business and will further optimize its organizational cost structure, pursuant to the goal of generating positive Adjusted EBITDA. These changes are expected to result in a restructuring charge of approximately
Appointment of new members to the Board of Directors
On March 21, 2024, the Company announced the appointment of Jordan Zwick, Chief Business Officer at Mirador Therapeutics Inc., to its Board of Directors and as a member of the Company’s Audit Committee.
On April 5, 2024, the Company announced the appointment of Elina Tea, CFA, Chief Financial Officer at GLS North America, to its Board of Directors, as the designated candidate to Investissement Québec (“IQ”) pursuant to the shareholder rights agreement entered into between Theratechnologies and IQ in October 2023. Ms. Tea has also been appointed to the Company’s Audit Committee.
With the appointments of Jordan Zwick and Elina Tea, the Company’s Audit Committee will now comprise four independent members including Gérald Lacoste and Frank Holler as Chair.
American Association for Cancer Research (“AACR”)
On March 28, 2024, Theratechnologies announced that two posters would be presented at the American Association for Cancer Research (AACR) Annual Meeting 2024, demonstrating the potential of its SORT1+ Technology™ platform – including novel camptothecin-peptide conjugates and its lead investigational peptide drug conjugate (PDC) candidate, sudocetaxel zendusortide (TH1902), as anticancer treatments.
These preclinical presentations reinforce existing data for sudocetaxel zendusortide to activate anti-PD-L1 immunotherapy tumor cell killing in SORT+1 cancers and provide the first evidence for novel camptothecin-peptide conjugates in the treatment of SORT1+ colorectal cancers.
2024 Revenue and Adjusted EBITDA Guidance
Our anticipated FY2024 revenue guidance range is confirmed between
First 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-month period ended February 29, 2024 (“First 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 amounts in this press release are in U.S. dollars and all capitalized terms have the meaning ascribed thereto in our MD&A.
First Quarter Fiscal 2024 Financial Results
Revenue
Consolidated revenue for the three months ended February 29, 2024, amounted to
For the first quarter of Fiscal 2024, sales of EGRIFTA SV® reached
In the first quarter of Fiscal 2024, Trogarzo® sales amounted to
Cost of Sales
For the three-month period ended February 29, 2024, cost of sales was
R&D Expenses
R&D expenses in the three-month period ended February 29, 2024, amounted to
Selling Expenses
Selling expenses in the three-month period ended February 29, 2024, amounted to
General and Administrative Expenses
General and administrative expenses in the first quarter of Fiscal 2024 amounted to
Net Finance Costs
Net finance costs for the three-month period ended February 29, 2024, were
Adjusted EBITDA
Adjusted EBITDA was
Net loss
Taking into account the revenue and expense variations described above, we recorded a net loss of
Financial Position, Liquidity and Capital Resources
Going Concern Uncertainty
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. Substantial doubt regarding the Company’s ability to continue as a going concern exists if events or conditions, considered collectively, indicate that the Company may be unable to honor its obligations as they fall due during a period of at least, but not limited to, 12 months from February 29, 2024. If the Company concludes that events or conditions cast substantial doubt on its ability to continue as a going concern, it must assess whether the plans developed to mitigate these events or conditions will remove any possible substantial doubt.
For the three-month ended February 29, 2024, the Company incurred a net loss of
The Company’s loan facility with its lender Marathon (the “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 6 of the Interim Financial Statements). A breach of the liquidity covenant (a “Liquidity Breach”) provides the lender with the ability to demand immediate repayment of the Loan Facility and makes available to the lender the collateralized assets, which include substantially all cash, bonds and money market funds which are subject to control agreements, and may trigger an increase of 300 basis points of the interest rate on the outstanding loan balance. During Fiscal 2023, the Company incurred a Liquidity Breach and entered into several amendments to the Marathon Credit Agreement to amend certain of the terms and conditions therein (see note 6 of the Interim Financial Statements).
As of February 29, 2024, the material covenants of the credit agreement providing for the Loan Facility, as amended ( the “Marathon Credit Agreement”) 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 February 29, 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), increase its revenues and the management of its expenses (including the reorganization mainly focused on its R&D activities) in order to meet or exceed the Marathon Adjusted EBITDA target and generate sufficient positive operating cash flows. Some elements of management’s plans are outside of management’s control and the outcome cannot be predicted at this time. Should management’s plans not materialize, the Company may be in default under the Marathon Credit Agreement, be forced to reduce or delay expenditures and capital additions and seek additional alternative financing, or sell or liquidate its assets. As a result, there is material uncertainty related to events or conditions that cast substantial doubt about the Company’s ability to continue as a going concern.
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. The Interim Financial Statements do not include any adjustments to the carrying values and classification of assets and liabilities and reported expenses that might result from the outcome of this uncertainty and that may be necessary if the going concern basis was not appropriate for the Interim Financial Statements. If the Company was unable to continue as a going concern, material impairment of the carrying values of the Company’s assets, including intangible assets, could be required.
Analysis of cash flows
We ended the first quarter of fiscal 2024 with
For the three-month period ended February 29, 2024, cash used in operating activities before changes in operating assets and liabilities improved to
In the first quarter of fiscal 2024, changes in operating assets and liabilities had a positive impact on cash flow of
During the first quarter of 2024, cash provided 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 U.S. dollars)
| Three-month periods ended February | Years ended November 30 | |||||||
| 29, 2024 | 28, 2023 | 2023 | 2022 | |||||
| Net loss | (4,481 | ) | (10,443 | ) | (23,957 | ) | (47,237 | ) |
| Add : | ||||||||
| Depreciation and amortization3 | 517 | 939 | 3,315 | 12,471 | ||||
| Net Finance costs4 | 2,125 | 4,940 | 12,909 | 6,886 | ||||
| Income taxes | 110 | 96 | 421 | 443 | ||||
| Restructuring costs | 18 | - | 2,215 | 3,872 | ||||
| Inventory provision | 837 | - | 220 | 1,477 | ||||
| Share-based compensation | 627 | 576 | 1,963 | - | ||||
| Adjusted EBITDA | (247 | ) | (3,892 | ) | (2,914 | ) | (22,088 | ) |
Conference Call Details
The call will be held on Wednesday, April 10 at 8:30 a.m. ET and will be hosted by Paul Lévesque, President and Chief Executive Officer. Mr. Lévesque 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 | April 10, 2024 |
| Conference Call Time | 8:30 a.m. ET |
| Webcast link | https://edge.media-server.com/mmc/p/pozhpvit |
| Dial in | 1-888-513-4119 (toll free) or 1-412-902-6615 (international) |
| Access Code | 4991919 |
| CONFERENCE CALL REPLAY | |
| Toll Free | 1-877-344-7529 (US) / 1-855-669-9658 (Canada) |
| International Toll | 1-412-317-0088 |
| Replay Access Code | 3783831 |
| Replay End Date | April 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.sedar.com and on EDGAR at www.sec.gov
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, our 2024 objectives and strategies, including the acquisition of new assets to add to our portfolio and create value for the business, the resubmission with the FDA of the sBLA for tesamorelin F8 for approval of this new product formulation, and our ability to continue as a going concern. 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; and (viii) 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 get approval from the FDA of this new product formulation within the timeline anticipated, 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.sedar.com 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” for such historical amounts and a reconciliation thereof to the most directly comparable IFRS measure.
2 This is a non-IFRS measure. See “Non-IFRS and Non-US GAAP Measure” for a description of such measure and a reconciliation thereof to the most directly comparable IFRS measure.
3 Includes depreciation of property and equipment, amortization of intangible, other assets and right-of-use assets.
4 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.
FAQ
What was Theratechnologies Inc.'s Q1 2024 revenue?
What is Theratechnologies Inc.'s FY2024 revenue guidance?
What is the Adjusted EBITDA range for FY2024?
What is the status of the Phase 1 trial of sudocetaxel zendusortide in advanced ovarian cancer?
What recent business highlights did Theratechnologies Inc. announce?
What was the percentage change in revenue for Theratechnologies Inc. in Q1 2024 compared to the previous year?
What was the net loss recorded by Theratechnologies Inc. in Q1 2024?
What caused the decrease in EGRIFTA SV® and Trogarzo® sales?
Why is there uncertainty regarding Theratechnologies Inc.'s ability to continue as a going concern?
