HLS Therapeutics Announces Q1 2025 Financial Results

Canada NewsWire

TORONTO, May 8, 2025

   -- Total Product revenue grew 5% compared to Q1 2024, with growth across 
      both the US and Canada 
 
   -- Canadian Product revenue grew 13% (in local currency) compared to Q1 
      2024, driven by 34% year-over-year growth in Vascepa net sales 
 
   -- Adjusted EBITDA grew 41% (or 78% excluding royalty revenue) compared to 
      Q1 2024 
 
   -- HLS expands Cardiovascular portfolio by securing Canadian rights to 
      NEXLETOL$(R)$ and NEXLIZET(R) from Esperion Therapeutics 

TORONTO, May 8, 2025 /CNW/ - HLS Therapeutics Inc. ("HLS" or the "Company") (TSX: HLS), a pharmaceutical company focused on addressing unmet needs in the treatment of psychiatric disorders and cardiovascular disease, announces its financial results for the three months ended March 31, 2025. All amounts are in thousands of United States ("U.S.") dollars unless otherwise stated.

Q1 2025 FINANCIAL HIGHLIGHTS (comparisons are to Q1 2024)

   -- Revenue was $12.6 million, Adjusted EBITDA1 was $3.8 million and cash 
      from operations was $3.5 million, compared to $12.5 million, $2.7 million 
      and $0.8 million, respectively. 
 
   -- Revenue for Vascepa increased 34% in local currency. 
 
   -- Revenue for Clozaril Canada increased 1% in local currency. 
 
   -- Revenue for Clozaril US increased 3%. 
 
   -- Excluding cost of sales, operating expenses decreased 20%. 
 
   -- Vascepa made a slightly positive contribution to Adjusted EBITDA in Q1 
      2025, compared to a negative $1.6 million contribution in Q1 2024. 

OTHER CORPORATE HIGHLIGHTS

   -- Announced an agreement with Esperion Therapeutics Inc. (NASDAQ:ESPR) to 
      in-license and commercialize NEXLETOL2 and NEXLIZET2 in Canada. See full 
      press release details here. 
 
   -- Launched Normal Course Issuer Bid. 
 
   -- Christine Elliott, ex-Minister of Health in Ontario, joined the Board of 
      Directors. 

"Our Q1 financial results demonstrated solid execution across the business, with product revenues and Adjusted EBITDA growing in line with expectations. We also made progress in building the foundation for future growth by expanding our product portfolio," said Craig Millian, CEO at HLS. "Product revenue in Canada increased by 13% in local currency, driven by growth in both Vascepa and Clozaril, while Clozaril sales in the U.S. rose by 3%. Our focus on operational efficiencies led to a 20% reduction in operating expenses, resulting in a 41% increase in Adjusted EBITDA, or 78% when excluding passive royalty revenue."

"The strengthening of our financial position has created new opportunities to enhance shareholder value. We initiated a share buyback program in Q1 while continuing to pursue strategic growth opportunities such as portfolio expansion. Today's announcement of our agreement with Esperion Therapeutics to in-license NEXLETOL and NEXLIZET for the Canadian market reflects this balanced approach to capital allocation."

"These promising therapies are strategically aligned with our portfolio, complementing Vascepa and leveraging our established cardiovascular infrastructure in the Canadian market, which will minimize incremental costs. The products address significant unmet medical needs and represent a substantial growth opportunity. In Q4 2024, Esperion submitted New Drug Submissions to Health Canada for NEXLETOL and NEXLIZET, with approval expected by late 2025 and preparations in progress for commercial launch in early 2026."

Q1 2025 FINANCIAL REVIEW

The Company's Management's Discussion and Analysis and Consolidated Financial Statements for the three months ended March 31, 2025, are available at the Company's website and at its profile at SEDAR+.

Revenue

 
                    Three months endedMarch 31, 
                    2025            2024 
 
Product sales 
 Canada                      9,708          9,154 
 United States               2,718          2,642 
                            12,426         11,796 
Royalty revenue                197            677 
                            12,623         12,473 
 

Revenue for the three months ended March 31, 2025, increased 1%, due to growth of the Company's marketed products and was offset, in part, by lower royalty revenues and FX rate fluctuations. Excluding royalties, Q1 2025 revenue for the Company's marketed products (Vascepa and Clozaril) increased 5% from Q1 2024.

Product sales -- Canada

 
000's of CAD      Three months endedMarch 31, 
                  2025       2024      % change 
 
Clozaril              7,929     7,865       0.8 % 
Vascepa               5,978     4,471      33.7 % 
Other                    32        13 
                     13,939    12,349      12.9 % 
 

For the three months ended March 31, 2025, Canadian sales of Vascepa and Clozaril increased 13% in local currency compared to Q1 2024, driven primarily by the 34% growth of Vascepa. However, when converted to U.S. dollars, the growth was only 6% due to the decline in the CAD/USD exchange rate.

Product Sales -- United States

In the U.S. market, Clozaril revenue for the three months ended March 31, 2025, increased 3% compared to Q1 2024.

Royalty revenues

As expected, royalty revenues for the three months ended March 31, 2025, were down 71% compared to Q1 2024. Following the sale of the Xenpozyme royalty interest in Q2 2024, HLS has one remaining royalty interest which generated $0.2 million in revenue in Q1 2025.

Operating Expenses

 
                                            Three months endedMarch 31, 
                                            2025            2024 
 
Cost of product sales                                2,398          1,774 
Selling and marketing                                2,830          4,526 
Medical, regulatory and patient support              1,436          1,265 
General and administrative                           2,139          2,201 
                                                     8,803          9,766 
 

Cost of product sales was up for the three months ended March 31, 2025, due primarily to higher Vascepa sales volumes.

Operating expenses in Q1 2025, excluding cost of product sales, decreased by 20% compared to Q1 2024, primarily due to lower selling and marketing expenses following the Company's discontinuation of co-promotional activities with its marketing partner in August 2024. While selling and marketing expenses will remain below 2024 levels throughout the year, quarterly expenses are expected to be moderately higher for the remainder of 2025 than in Q1. This difference is due to Q1 2025 benefiting from several staff vacancies and a one-time vendor credit, neither of which are expected to recur in upcoming quarters.

Adjusted EBITDA(1)

 
                                   Three months endedMarch 31, 
                                   2025            2024 
 
Net loss for the period                   (4,436)        (6,106) 
Stock-based compensation                      651            256 
Amortization and depreciation               5,360          5,919 
Finance and related costs, net              1,972          2,667 
Other costs                                   296             -- 
Income tax recovery                          (23)           (29) 
Adjusted EBITDA                             3,820          2,707 
 

Adjusted EBITDA for the three months ended March 31, 2025, increased 41% primarily due to the growth in the Company's marketed products and ongoing focus on cost management, and was partially offset by the previously mentioned decline in royalty revenue. Excluding royalty revenue, Adjusted EBITDA for Q1 2025 would have been $3.6 million compared to $2.0 million in Q1 2024, representing an increase of 78%.

The direct brand contribution from Clozaril to Adjusted EBITDA in Q1 2025 was $5.9 million, compared to $6.1 million in Q1 2024. Vascepa achieved a slightly positive direct brand contribution to Adjusted EBITDA in Q1 2025, compared to a brand loss of $1.6 million in Q1 2024. This was the second consecutive quarter of a positive contribution from Vascepa to Adjusted EBITDA.

Net Loss

Net loss for the three months ended March 31, 2025, was ($4.4) million, or ($0.14) per share, compared to a net loss of ($6.1) million, or ($0.19) per share, in Q1 2024. Net loss improved in Q1 2025 due primarily to higher revenue from marketed products, lower operating expenses and lower amortization and depreciation expenses, which were offset, in part, by lower royalty revenue.

Cash from Operations and Financial Position

Cash generated from operations for the three months ended March 31, 2025, was $3.5 million compared to $0.8 million in Q1 2024. Cash was $17.7 million at March 31, 2025, compared to $17.5 million at December 31, 2024.

Total borrowings under the credit agreement at March 31, 2025, were $64.5 million compared to $67.4 million at December 31, 2024, and $86.4 million at March 31, 2024.

During Q1 2025, HLS made principal payments on its term loan totaling $3.0 million and spent $0.2 million to purchase shares for cancellation under its Normal Course Issuer Bid, which was launched on March 17, 2025.

2025 OUTLOOK

Revenue projections for the Company's Canadian product portfolio are denominated in local currency to account for ongoing FX rate fluctuations. Importantly, the 2025 guidance fully incorporates all anticipated financial impacts from pre-launch activities related to the newly in-licensed NEXLETOL and NEXLIZET.

2025 financial targets are unchanged and as follows:

   -- Vascepa revenue of C$26.5-28.5 million (18-26% growth) 
 
   -- Canada Clozaril sales of C$35.5-36 million (flat year-over-year) 
 
   -- U.S. Clozaril sales of $12-12.3 million (2-4% decline) 
 
   -- Royalty revenue of $0.6-0.75 million (50-60% decline) 
 
   -- Consolidated Adjusted EBITDA of $19.5-20.5 million (17-23% growth) 

Future results could be impacted by continued exchange rate volatility.

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