TORONTO, Aug. 8, 2024 /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 and six months ended June 30, 2024. All amounts are in thousands of United States ("U.S.") dollars unless otherwise stated. KEY HIGHLIGHTS Q2 2024 revenue was $14.5 million, Adjusted EBITDA1 was $4.3 million and cash from operations was $2.5 million, compared to $16.4 million, $5.5 million and $2.7 million, respectively, in Q2 2023. Sold the Xenpozyme royalty asset in a transaction valued at up to $45.75 million.  Excluding royalty portfolio revenue, Q2 2024 revenue increased 9% to $14.1 million and Adjusted EBITDA increased 86% to $3.8 million, compared to $13.0 million and $2.1 million, respectively, in Q2 2023. Completed a Product Listing Agreement with the province of Alberta, for the listing and public reimbursement of Vascepa, effective August 1, 2024. "In Q2 we generated solid growth from our marketed products - Clozaril and Vascepa - particularly in Canada where sales grew 11% in local currency over prior year," said Craig Millian, CEO at HLS. "We also made progress against our strategic initiatives to drive future revenue growth and profitability, in part through effective cost management; of note, we reduced operating expenses by 13% while still generating growth from our marketed products. In addition, we strengthened our balance sheet and long-term financial flexibility by completing the sale of the Xenpozyme royalty interest, a non-strategic asset." Q2 2024 OTHER HIGHLIGHTS Clozaril revenue in Canada increased by 5% in local currency compared to Q2 2023. A study demonstrating the positive impact of pharmaceutical support programs on persistence with clozapine treatment was published in the Journal of Clinical Pharmacology and Therapeutics. Vascepa revenue in Canada increased 21% in local currency compared to Q2 2023. Vascepa unit demand increased by 45% compared to Q2 2023. The number of consistent prescribers2 for Vascepa increased 76% compared to Q2 2023. Finalized termination agreement with Pfizer to transition Vascepa primary care sales responsibilities back to HLS by August 31, 2024. BOARD OF DIRECTORS UPDATE Effective August 7, 2024, Laura Brege has decided to step down from the Board to focus on other endeavors. The Company is evaluating its board composition and will determine whether to fill the vacant position in due course. Norma Beauchamp, one of the Company's current Compensation and Governance Committee members, will replace Ms. Brege as Chair of that Committee. "On behalf of the Board and HLS Management, I want to thank Laura for the insights, guidance and leadership she provided during her five years on the Board. We wish her the best in all her future pursuits," said John Welborn, Chair of the Board at HLS. 2024 OUTLOOK With the release of its Q2 2024 results, the Company reiterates its 2024 guidance, which was updated following the sale of the Xenpozyme royalty interest. 2024 consolidated revenue guidance is $58.5 to $59.7 million. Comprising that number is Vascepa revenue of $17 to $18 million (C$22.5 to $24.5 million), Clozaril revenue of approximately $40 million and royalty portfolio revenue of $1.5 to $1.7 million.   2024 Adjusted EBITDA is expected to be $15.5 to $16.7 million. As communicated previously HLS expects Vascepa to make a positive contribution to Adjusted EBITDA starting in the fourth quarter, which would position the Company to enter 2025 with a growth portfolio of two profitable products, Clozaril and Vascepa.  Mr. Millian added: "We look to build-on the positive momentum generated in Q2 to drive a strong second half of the year for our marketed products. With Clozaril, our regional strategies are having a positive impact, and, in Canada, we are seeing encouraging growth trends. Additionally, we expect Vascepa to benefit over the remainder of the year driven by the evolution of our go-to-market model as well as the recent public plan listings in BC and Alberta." Q2 2024 FINANCIAL REVIEW The Company's Management's Discussion and Analysis and Consolidated Financial Statements for the three and six months ended June 30, 2024, are available at the Company's website and at its profile at SEDAR+. Revenue Three months ended June 30, Six months ended June 30, 2024 2023 2024 2023 Product sales    Canada 10,637 9,791 19,791 18,602    United States 3,462 3,179 6,104 6,391 14,099 12,970 25,895 24,993 Royalty revenue 420 3,447 1,097 6,181 14,519 16,417 26,992 31,174 Revenue for the three and six months ended June 30, 2024, decreased 12% and 13%, respectively, due to lower royalty revenues and offset, in part, by growth of the Company's marketed products. Excluding royalties, revenue for the Company's marketed products (Vascepa, and Clozaril) for the three and six months ended June 30, 2024, increased 9% and 4%, respectively, from the prior year periods. Product sales – Canada 000's of CAD Three months ended June 30, Six months ended June 30, 2024 2023 % change 2024 2023 % change Clozaril 9,131 8,665 5.4 % 16,996 17,083 (0.5) % Vascepa 5,407 4,481 20.7 % 9,878 7,996 23.5 % Other 14 — 27 — 14,552 13,146 10.7 % 26,901 25,079 7.3 % Canadian product sales of Vascepa and Clozaril in Q2 2024 increased 11% in local currency, compared to Q2 2023. Q2 2024 revenue in Canada from Vascepa and Clozaril increased 21% and 5% year-over-year, respectively, in local currency. For the six months ended June 30, 2024, Canadian product sales of Vascepa and Clozaril increased 7% in local currency, compared to the same period in 2023. For the six months ended June 30, 2024, in local currency, revenue in Canada from Vascepa and Clozaril increased 23.5% and decreased 0.5%, respectively, compared to the same period last year. Product Sales – United States In the U.S., Clozaril revenue in Q2 2024 increased 9% compared to Q2 2023. For the six months ended June 30, 2024, Clozaril revenue in the U.S. decreased 5% compared to the same period in 2023. Key demand fundamentals remain in place with the year-to-date revenue variance to the prior year period largely due to wholesalers in the U.S. ending 2023 with an unusually high level of inventory, which impacted sales in Q1 2024. Royalty revenues Royalty revenues for the three and six months ended June 30, 2024, were down 88% and 82%, respectively, compared to the prior year periods as the term for what was the largest royalty in the portfolio came to an end midway through Q4 2023. Following the sale of the Xenpozyme royalty interest in Q2 2024, HLS has one remaining royalty interest, which is for Obizur. Obizur is a treatment to help control bleeding in acquired "Hemophilia A" and is marketed by Takeda Pharmaceuticals. Operating Expenses Three months ended June 30, Six months ended June 30, 2024 2023 2024 2023 Cost of product sales 2,303 1,777 4,077 3,221 Selling and marketing 4,561 5,325 9,087 10,132 Medical, regulatory and patient support 1,420 1,437 2,685 2,513 General and administrative 1,977 2,373 4,178 4,724 10,261 10,912 20,027 20,590 Excluding cost of product sales, operational expenses for the three and six months ended June 30, 2024, decreased 13% and 8%, respectively, compared to the prior year periods. This was due to the Company's focus on cost management while continuing to support the growth potential of its marketed products. "With the primary care sales function transition to HLS expected to be completed by the end of August, we anticipate a further reduction in operational expenses for Q4 this year and beyond," said John Hanna, CFO at HLS. "Overall, this transition is projected to save the Company around $5 million annually. Most of these savings will fall directly to our bottom line, after accounting for some modest reinvestment in expanding the Vascepa salesforce and supporting other reimbursement and retention initiatives." Cost of product sales was up for the for the three and six months ended June 30, 2024, due to higher Vascepa sales volumes. Adjusted EBITDA1 Three months ended June 30, Six months ended June 30, 2024 2023 2024 2023 Net loss for the period (5,682) (9,437) (11,788) (15,229) Stock-based compensation 427 137 683 82 Amortization and depreciation 5,856 8,366 11,775 16,685 Finance and related costs, net 2,942 2,471 5,609 4,905 Other costs (income) (3,361) 3,851 (3,361) 4,064 Income tax expense 4,076 117 4,047 77 Adjusted EBITDA 4,258 5,505 6,965 10,584 Adjusted EBITDA for the three and six months ended June 30, 2024, decreased $1.2 million and $3.6 million, respectively, compared to the prior year periods. The decrease was due to the decline in royalty revenue and was offset in part by growth in the Company's marketed products. Excluding royalty revenue, Adjusted EBITDA for the three and six months ended June 30, 2024, would have been approximately $3.8 million and $5.9 million, respectively, compared to $2.1 million and $4.4 million in the prior year periods, representing increases of 86% and 33%. For Q2 2024, the direct brand contribution from Clozaril to Adjusted EBITDA was $7.6 million, while the direct brand contribution from Vascepa to Adjusted EBITDA was a loss of $1.6 million. ...