10:50:41 EDT Fri 29 Mar 2024
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or Name
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Theratechnologies Inc
Symbol TH
Shares Issued 76,877,679
Close 2019-02-21 C$ 8.34
Market Cap C$ 641,159,843
Recent Sedar Documents

Theratechnologies loses $6.01-million in fiscal 2018

2019-02-21 09:19 ET - News Release

Mr. Luc Tanguay reports

THERATECHNOLOGIES ANNOUNCES FINANCIAL RESULTS FOR FISCAL YEAR 2018

Theratechnologies Inc. has released its financial results for the year ended Nov. 30, 2018.

Fiscal year 2018 financial highlights:

  • Record revenue with net sales of $58,553,000, up 36.6 per cent from previous year;
  • EGRIFTA sales reach $46,941,000, up 10 per cent from previous year;
  • Trogarzo sales reach $11,611,000;
  • Adjusted earnings before interest, taxes, depreciation and amortization of $2,259,000 in 2018;
  • Strong cash position of $71,637,000.

"We have every reason to rejoice at what was accomplished during our last fiscal year. The launch of Trogarzo is proving to be the game changer we thought it would become once launched in the United States while EGRIFTA continues to deliver growth and leverage. We will continue to build and develop our two assets in the United States while we keep on preparing for the potential launch of Trogarzo in Europe and the launch of the new formulation of EGRIFTA in the United States," said Luc Tanguay, president and chief executive officer, Theratechnologies.

Fiscal year 2018 financial results

The financial results presented in this press release are taken from the company's management's discussion and analysis, or MD&A, and audited consolidated financial statements for the 12-month period ended Nov. 30, 2018, which have been prepared in accordance with international financial reporting standards, or IFRS, as issued by the International Accounting Standards Board, or IASB. The MD&A and the audited consolidated financial statements can be found on SEDAR and on the company website. Unless specified otherwise, all amounts in this press release are in Canadian dollars and all capitalized terms have the meaning ascribed thereto in its MD&A. As used herein, EGRIFTA refers to tesamorelin for the reduction of excess abdominal fat in HIV-infected patients with lipodystrophy. Trogarzo refers to ibalizumab for the treatment of multidrug-resistant HIV-1 patients

For the year ended Nov. 30, 2018

Consolidated revenue for the year ended Nov. 30, 2018, was $58,553,000 compared with $42,864,000 for the same period ended Nov. 30, 2017, an increase of 36.6 per cent. Revenue growth reflects the added contribution of Trogarzo as well as the continued progression of EGRIFTA sales.

Annual net sales of EGRIFTA were the company's strongest ever. For the year ended Nov. 30, 2018, sales of EGRIFTA were $46,941,000 or $36,329,000 (U.S.) compared with $42,861,000 or $33.02-million (U.S.) for the same period last year, representing an increase of 10 per cent. Sales of Trogarzo reached $11,611,000 or $8,887,000 (U.S.) as at Nov. 30, 2018. Approved in the United States on March 6, 2018, Trogarzo has been commercially available since April 30, 2018. Trogarzo is increasingly contributing to revenue growth and financial results.

For the year ended Nov. 30, 2018, cost of sales was $17,225,000 compared with $10,273,000 in the comparable period of fiscal 2017. Cost of sales includes the cost of goods sold, which amounted to $12,188,000 in fiscal 2018 compared with $4,991,000 in fiscal 2017. The increase in cost of goods sold is mainly due to the introduction of Trogarzo and higher sales of EGRIFTA.

In fiscal 2017, the cost of sales also included other production-related costs of $1,296,000, which was principally due to the writedown of inventories as a result of losses incurred during conversion of raw materials to finished goods and losses associated with expired goods.

Prior to the third quarter of 2018, cost of sales included royalties due under the terms of an agreement terminating its collaboration and licensing agreement with EMD Serono. Following the closing of a note offering, the company used a portion of the net proceeds to make a full and final payment of $23.85-million (U.S.) to EMD Serono, which enabled Theratechnologies to realize savings from a reduction of future payment obligations including royalty payments.

The payment in connection with the settlement of the future royalty obligation has been accounted as "other asset" on the consolidated statement of the financial position. Consequently, during fiscal 2018, an amortization of $3,196,000 has been recorded in relation to this transaction.

Research and development expenses amounted to $10,324,000 for fiscal 2018 compared with $11,856,000 in fiscal 2017.

Several factors contributed to the lowering of R&D expenses in fiscal 2018, including lower costs associated with two phase 4 clinical trials. On May 1, 2018, Theratechnologies announced that it had been released from its last postapproval commitments by the Food and Drug Administration.

R&D expenses include costs associated with the regulatory submission of Trogarzo in Europe, the filing of the F4 formulation of EGRIFTA in the United States and the medical science liaison and field medical education teams in the United States.

Selling and market development expenses for the year ended Nov. 30, 2018, amounted to $27.99-million compared with $26,017,000 for the same period last year.

Activities for the launch and marketing of Trogarzo in the United States are mostly responsible for the increase in selling and market development costs.

The amortization of the intangible asset value established for the EGRIFTA and Trogarzo commercialization rights is also included in selling and market development expenses. The company recorded an expense of $2,285,000 in fiscal 2018 compared with $1,968,000 for fiscal 2017.

General and administrative expenses for the year ended Nov. 30, 2018, amounted to $7,549,000 compared with $5,816,000 for the same period in fiscal 2017. The increase is mainly due to the growth and development of the company and to professional fees associated with business development initiatives, the company's preparatory work in Europe and other projects.

Finance income, consisting of interest income, for the year ended Nov. 30, 2018, amounted to $791,000 compared with $338,000 in fiscal 2017. Higher finance income is related to the interest on the company's higher liquidity position following the closing of the offering.

Finance costs for the year ended Nov. 30, 2018, came to $3,931,000 compared with $7.69-million for the same period last year. In 2018, finance costs include the interest on the notes representing $1,945,000 and a loss of $375,000 on the repayment of the long-term obligation.

Finance costs no longer include losses related to the change in the fair value of warrant liability ($6,654,000 in fiscal 2017) as the last outstanding warrants were exercised in the third quarter of 2017.

Accretion expense in fiscal 2018 was $1,347,000 compared with $1,371,000 in fiscal 2017. Accretion expense is mainly associated with the notes issued in June, 2018. Previously, accretion expense related to the long-term obligation with EMD Serono, which was settled in the third quarter of fiscal 2018.

Adjusted EBITDA for fiscal 2018 was $2,259,000 compared with $(6,947,000) in fiscal 2017, reflecting increased sales and margins, including the growing contribution of Trogarzo while maintaining expenses relatively stable.

Taking into account the revenue and expense variations described in this news release, the company recorded a net loss of $6,013,000 or eight cents per share in fiscal 2018 compared with a net loss of $18.45-million or 25 cents in fiscal 2017.

For fiscal 2018, cash flow used in operating activities was $444,000 compared with cash flow generated of $2,455,000 in fiscal 2017.

In fiscal 2018, changes in operating assets and liabilities negatively affected cash flow by $84,000 compared with a positive impact on cash flow of $10,989,000 in fiscal 2017. The most significant changes in 2018 were an increase in trade and other receivables of $4,523,000, an increase of inventory of $5.18-million offset by an increase of accounts payable and accrued liabilities of $10,125,000. Those changes are directly related to the increase in our commercial activities.

As at Nov. 30, 2018, cash, bonds and money market funds amounted to $71,637,000.

Fourth quarter 2018 financial results

Consolidated revenue for the three months ended Nov. 30, 2018, amounted to $18,295,000 compared with $12,596,000 for the same period last year, representing an increase of 45 per cent.

For the fourth quarter of fiscal 2018, sales of EGRIFTA reached $12,734,000 or $9,732,000 (U.S.) compared with $12,595,000 or $10,033,000 (U.S.) in the fourth quarter of the prior year. In Q4 2018, EGRIFTA unit sales were negatively impacted by inventory adjustments at the distributor level. This was offset by a higher selling price, the reversal of an accrued liability and a favourable variation in the exchange rate.

In the fourth quarter of 2018, Trogarzo sales amounted to $5,561,000 or $4.25-million (U.S.), representing an increase of 14.3 per cent from the previous quarter of 2018.

For the three-month period ended Nov. 30, 2018, cost of sales was $6,216,000 compared with $3,523,000 in the comparable period of fiscal 2017. Cost of goods sold was $4,599,000 compared with $1,393,000 for the same period last year. The increase in cost of goods sold is mainly due to the introduction of Trogarzo. For the same quarter of fiscal 2017, cost of sales included production-related costs of $1,024,000 which were mainly due to inventory writedowns. Other components of cost of sales include amortization of $1,597,000 in 2018 and royalty payments to EMD Serono of $1,106,000 in 2017.

R&D expenses in the three-month period ended Nov. 30, 2018, amounted to $2.7-million compared with $3,094,000 in the comparable period of fiscal 2017. As previously explained, this decrease is largely due to the FDA decision to release Theratechnologies from its last postapproval commitments relating to EGRIFTA.

Selling and market development expenses in the three-month period ended Nov. 30, 2018, amounted to $6,848,000 compared with $7,985,000 in the comparable period of fiscal 2017.

The reduction in selling and marketing expenses from quarter to quarter is mainly due the upfront investments made in 2017 to prepare the launch of Trogarzo.

The amortization of the intangible asset value established for the EGRIFTA and Trogarzo commercialization rights is also included in selling and market development expenses. The company recorded an expense of $638,000 for the fourth quarter of fiscal 2018 compared with $474,000 for the same quarter last year.

General and administrative expenses in fourth quarter of fiscal 2018 amounted to $2,449,000 compared with $1,591,000 reported in the same period of fiscal 2017. The increase is mainly associated with business growth and various business development initiatives related to the company's preparatory work in Europe and other projects.

Finance income, consisting of interest income, for the three-month period ended Nov. 30, 2018, was $362,000 compared with $94,000 in the comparable quarter of fiscal 2017. Higher finance income is related to the interest on the company's higher liquidity position following the closing of the offering.

Finance costs for the fourth quarter of fiscal 2018 were $1,737,000 compared with $713,000 for the same quarter of fiscal 2017. As previously stated, finance costs include the interest on the notes and a loss on the repayment of the long-term obligation.

Finance costs also include accretion expense, which was $471,000 for the fourth quarter of 2018 compared with $281,000 for the same period last year. In the fourth quarter of 2018, the accretion expense was mainly associated with the notes issued in June, 2018. Previously, accretion expense related to the long-term obligation with EMD Serono, which was settled during the third quarter.

Adjusted EBITDA for the fourth quarter of 2018 was $2,599,000 compared with $(1,887,000) in same period of fiscal 2017.

Taking into account the revenue and expense variations described herein, the company recorded a net loss of $1,293,000 or two-cent loss per share in the fourth quarter of fiscal 2018 in comparison to a net loss of $4,216,000 or six-cent loss per share in the fourth quarter of 2017.

For the three-month period ended Nov. 30, 2018, operating activities generated cash of $3,678,000 compared with $1,958,000 in the comparable period of fiscal 2017.

In the fourth quarter of fiscal 2018, changes in operating assets and liabilities had a positive impact on cash flow of $1,946,000. These changes include an increase of $4,933,000 in accounts payable and accrued liabilities and a decrease in accounts receivable of $815,000, which were mainly offset by a $3,297,000 increase in inventories. These changes are related to the increase in the company's commercial activities.

                             (in thousands of Canadian dollars)

                                Three-month periods ended Nov. 30,                 Year ended Nov. 30, 
                                               2018          2017           2018       2017      2016
Net (loss) profit                            (1,293)       (4,216)        (6,013)   (18,450)      410
Add (deduct)
Depreciation and amortization                 2,244           480          5,507      1,992     2,108
Finance costs                                 1,737           713          3,931      7,690     2,993
Finance income                                 (362)          (94)          (791)      (338)     (104)
Income tax (recovery) expense                    --            --         (1,662)        --       639
Share-based compensation for
stock option plan                               225           194          1,097      1,015       563
Writedown of inventories                         48         1,036            190      1,144       (36)
Adjusted EBITDA                               2,599        (1,887)         2,259     (6,947)    6,573

Conference call details

A conference call will be held today at 8:30 a.m. ET to discuss the results. The conference call will be open to questions from financial analysts. Media and other interested individuals are invited to participate in the call on a listen-only basis.

The conference call can be accessed by dialling 1-877-223-4471 (North America) or 1-647-788-4922 (international). The conference call will also be accessible via webcast on-line. Audio replay of the conference call will be available two hours after the call's completion until March 8, 2019, by dialling 1-800-585-8367 (North America) or 1-416-621-4642 (international) and by entering the playback code 9488739.

About Theratechnologies Inc.

Theratechnologies is a specialty pharmaceutical company addressing unmet medical needs by bringing to market specialized therapies for people with orphan medical conditions, including those living with HIV.

We seek Safe Harbor.

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