Medicure Inc. (MPH) Earnings Call Transcript

Welcome to Medicure's earnings conference call for the quarter ended December 30, 2025. My name is Holly, and I will be your operator for today's call. [Operator Instructions] Before we proceed, I would like to remind everyone that this presentation contains forward-looking statements relating to future results, events and expectations which are made pursuant to the safe harbor provisions of the U.S. Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties, which could cause the company's actual results to differ materially from those in the forward-looking statements. Such risks and uncertainties include, among others, those described in the company's most recent annual information form and Form 20-F. Later, we will conduct a question-and-answer session. Please note that this conference call is being recorded, and today's date is August 21, 2025. I would like to turn the conference call over to Dr. Albert Friesen, Chief Executive Officer of Medicure Inc. Please go ahead, Dr. Friesen.

Thank you, Holly, and good morning to all on the call. We appreciate your interest and participation in today's call. Joining me today on the Q2 '25 call are Dr. Neil Owens, President and Chief Operating Officer; and Haaris Uddin, Medicure's Chief Financial Officer. The net revenue for Q2 '25 was $6.7 million, an increase from the previous year net revenue was $5.2 million. The company recorded a net loss of approximately $786,000 or $0.08 per share compared to a net loss in the previous year of $1.1 million and $0.12 per share. The noncash items contributing to the loss include amortization, stock options, et cetera, about the same as the net loss. And in addition, Medicure also invested $641,000 in research and development during the quarter, underscoring our commitment to achieve advancing innovative therapies such as the Phase III trial for Medicure's drug MC-1 for the treatment of PNPO deficiency and delivering long-term value to patients and shareholders. We recently added a fifth focus that being the development of a novel drug related to MC-1 with a significant market potential to further build long-term value for shareholders. So just to remind us, the 5 focuses are holding sales and profits of AGGRASTAT, growing ZYPITAMAG revenue and profits, growing Marley Drug, the pharmacy business and the online pharmacy the development of MC-1 for PNPO deficiency and the new chemical entity related to Medicure's historic drug development with large market potential. Now I'd like to turn the call over to CFO, Haaris Uddin, to review and provide some color on the Q2 financials.

Thank you, Dr. Friesen. A couple of quick items to note before I start. All dollar figures are in Canadian dollars, unless otherwise noted by each presenter. And as a reminder, you can obtain a complete copy of our financial statements for the quarter ended June 30, 2025, along with previous financial statements on the Investors page of our website. In addition, a copy of all financial statements and management's discussion and analysis can also be obtained from sedarplus.ca. I will now provide some key highlights of our financial performance for the 3-month period ended June 30, 2025. The Total revenue for the quarter was $6.7 million compared to $5.2 million for the quarter ended June 30, 2024. Net revenues earned from AGGRASTAT during the current period totaled $1.7 million, a slight decrease from the prior year, where net revenue from AGGRASTAT was $1.8 million. The decrease in AGGRASTAT revenue during the current period is the result of a lower volume of units sold as a result of increased competition from generic tirofiban hydrochloride. Net revenue earned from ZYPITAMAG through the traditional insured channel during the 3-month period ended June 30, 2025, totaled $751,000 and which is a slight increase from the $654,000 net revenue earned during the same period in the prior year. The increase in ZYPITAMAG revenue during the 3-month period ended June 30, 2025, can be attributed to an increased utilization of the product through insurance formularies during the current quarter. It is important to note that the ZYPITAMAG sales through Marley Drug are excluded from this number. For Marley Drug, net revenue during the current quarter totaled $3.1 million, an increase from the $2.7 million earned from Marley Drug during the 3-month period ended June 30, 2024. The increase in Marley Drug sales during the current period is due to an increased volume of products sold. Net revenue attributable to ZYPITAMAG through Marley was $908,000 during the current period, an increase from the 3-month period ended June 30, 2024, whereas ZYPITAMAG sales through Marley Drug were $791,000. On March 11, 2025, the company acquired Gateway Pharmacy. Revenue for Gateway Pharmacy for the quarter ended June 30, 2025, was $764,000. In addition, on June 16, 2025, the company acquired West Olympia Pharmacy. Revenue earned from West Olympia Pharmacy during the current quarter was $328,000. It is important to note that the revenue earned through West Olympia Pharmacy during the current period was from its acquisition date of June 16, 2025 to June 30, 2025. The company intend on offering the ZYPITAMAG through both pharmacies in subsequent quarters in addition to other product offerings, which have increased revenue at Marley Drug. With regards to cost of goods sold, AGGRASTAT cost of goods sold for the quarter ended June 30, 2025, totaled $693,000, an increase from the prior year for cost of goods sold totaled $604,000. The increase in cost of goods sold is attributable to a slightly higher manufacturing costs, a less favorable FX rate, offset by a lower volume of products sold during the current period. ZYPITAMAG cost of goods sold for the current quarter totaled $233,000, a decrease from the same period in the prior year, where cost of goods sold for ZYPITAMAG for the quarter ended totaled $353,000 Included within cost of goods sold for ZYPITAMAG, in the current period is $76,000 relating to products sold to customers and $157,000 of amortization of the ZYPITAMAG intangible asset. Marley Drug cost of goods sold totaled $1.5 million during the period ended June 30, 2025, an increase from the period ended June 30, 2024, where cost of goods sold totaled $1.3 million. The increase in cost of goods sold at Marley Drug during the current period as a result of a higher volume and nature of products sold through both the mail order and e-commerce platform. Gateway Pharmacy's cost of goods sold during the 3-month period ended June 30, 2025, was $531,000 and West Olympia Pharmacy's cost of goods sold during the 3-month period ended June 30, 2025, was $241,000. As both pharmacies were acquired during the current year, there was no cost of goods sold recorded by either Gateway Pharmacy or West Olympia Pharmacy during the 3-month period ended June 30, 2024. Selling expenses totaled $2.1 million for the quarter ended June 30, 2025, an increase from the 3-month period ended June 30, 2024, where selling expenses were $1.8 million. Selling expenses increased in the current period as a result of the acquisitions of Gateway Pharmacy and West Olympia Pharmacy in addition to higher selling expenses through Marley Drug, which is also consistent with the higher revenue recorded through Marley Drug in the current period. General and administrative expenses totaled $1.3 million for the quarter ended June 30, 2025, in comparison to $1.4 million during the quarter ended June 30, 2024. The decrease in general and administrative expenses in the current period as a result of lower professional fees in the current period in addition to lower share-based compensation expense, which is based on the vesting schedule of previously granted stock options to key employees and directors of the company. Research and development expenses for the quarter ended June 30, 2025, totaled $741,000 compared to $868,000 during the same quarter in the prior year. The decrease during the current period is primarily due to the timing of research and development expenditures relating to each development project the company is currently undertaken, which in the current period was primarily the development of MC-1. The company recorded finance income net of $20,000 during the period ended June 30, 2025, in comparison to finance income net of $36,000 during the 3-month period ended June 30, 2024. The finance income recorded during the current period primarily relates to interest income earned, offset by bank charges, interest on the company's lease obligations and holdback payable and noncash accretion expense on the company's acquisition payable liability. The company recorded a foreign exchange loss of $49,000 during the quarter ended June 30, 2025, in comparison to a foreign exchange loss of $25,000 during the quarter ended June 30, 2024. The change in foreign exchange loss related to changes in the U.S. dollar exchange rate during the respective years. Adjusted EBITDA for the quarter ended June 30, 2025, was negative $28,000 compared to an adjusted EBITDA of negative $514,000 during the quarter ended June 30, 2024. The increase in adjusted EBITDA during the current period is due to a decrease in operating loss, which primarily related to higher revenue of ZYPITAMAG through Marley Drug, in addition to overall higher revenue of Marley Drug, in addition to lower general and administrative expenses in addition to lower research and development expenses offset by a lower revenue of AGGRASTAT and higher cost of goods sold during the current period. As at June 30, 2025, the company had cash totaling approximately $4.8 million, a decrease from December 31, 2024, where the company had $7.2 million of cash held. The decrease in cash balance -- the decrease of cash balance of the company is primarily attributable to the acquisitions of both Gateway Pharmacy and West Olympia Pharmacy during the current year. The company does not have any debt on its books. I want to remind you that there will be an opportunity at the end of today's call for you to ask questions regarding the financial results of the company as a whole. And with that, I would like to turn the call over to our President and Chief Operating Officer, Dr. Neil Owens, for some additional commentary regarding our operations.

Thank you, Haaris, and good morning, everyone. I'd like to start with some updates on our ZYPITAMAG business. Total sales of ZYPITAMAG Q2 2025 were $1.7 million, which was a 21% increase from $1.4 million in Q2 2024. Sales of ZYPITAMAG sold through Marley Drug grew by 15% from $790,000 in Q2 2024 to $908,000 in Q2 2025. To grow sales further, we plan to continue to use a field-based sales team as well as prescriber and consumer marketing. Sales of ZYPITAMAG through Marley Drug has proven to be an effective approach. Due to the pharmacies customer service, the absence of the typical hurdles put in place by insurance companies and transparency in pricing. In addition, due to removing wholesaler and coverage gap fees, low PBM reimbursement and product returns, selling through Marley Drug provides a much higher gross margin. We've also found that adherence rate for patients taking ZYPITAMAG is more than 40% higher through Marley Drug compared to other retail pharmacies. That's because of our service and engagement strategies, and this helps for reducing our attrition rate and increasing revenue. Net revenue through insured channels and the standard retail pharmacy model increased from $654,000 in Q2 2024 to $751,000 in Q2 2025 due to an increase in purchasing from wholesalers and changes in the mix of our insured customers. Overall, ZYPITAMAG represents a priority for growth through efforts of our sales and marketing team. Further on our Marley Drug business, net revenue grew by 15% from $2.7 million in Q2 2024 to $3.1 million in Q2 2025. This is due to an increase in ZYPITAMAG sold through the pharmacy business as well as generic medication sales and notably the sales of BRENZAVVY tablets, which is an accessible alternative SGLT2 inhibitor to Jardiance and Farxiga. Medicure is working on leveraging Marley Drug's reputation for customer service, unique branded solutions and national distribution to continue to drive growth. challenges we face include competition and an increase in cost of goods, which impacts our margins. We plan to seek additional partnerships and branded products to offer through our e-commerce website. Recently, Medicure announced the acquisition of Gateway Medical Pharmacy and West Olympia Pharmacy. These additional pharmacy subsidiaries immediately grow our customer and prescriber base for both ZYPITAMAG and other branded products. Combined, they contributed $1.1 million in revenue in Q2. Additional benefits of these acquisitions include faster shipping times and growing our brand nationally. In terms of our AGGRASTAT business, revenue fell from $1.8 million in Q2 2024 to $1.7 million in Q2 2025 due to generic Tirofiban competition. Volume of product units sold and revenue in Q2 was consistent with Q1 2025. Medicure remains the only manufacturer of the 3.75 milligram bolus vial format, which is typically administered before the infusion unit. We continue to provide support to our U.S. hospital accounts and plan to remain price competitive and targeted ways. Medicure's R&D focus is primarily on its Phase III study to seek approval of MC-1 as the first FDA-approved therapy for patients with PNPO deficiency, which is a rare pediatric disease leading to seizures and is ultimately fatal if untreated. If successful use of Medicure's legacy product MC-1 could lead to a priority review voucher, which can be redeemed or sold and provides significant value. The FDA granted approval to start enrollment and so enrollment is ongoing with patients receiving treatment with MC-1. Medicure also recently received Fast Track designation for MC-1 for its intended indication, which will facilitate the review of Medicure's FDA new drug application. The Phase III study had its first patient to complete the study enrollment period, and we are targeting the end of 2025 to complete enrollment. Medicure recently announced that it had signed an asset purchase agreement for the acquisition of the patent and intellectual property related to the discovery of new chemical entities that can be developed for therapeutic use. We believe that these new chemical entities hold promise to provide improvements over existing lead compounds in alignment with the treatment of diseases being targeted by Medicure and could provide significant long-term value upon completion of all required preclinical and clinical studies and regulatory approval. Medicure has yet to announce the therapeutic -- clinical therapeutic target, however, has started preclinical testing and API development of the lead compound. Overall net revenue in Q2 2025 was $6.7 million compared to $5.2 million in 2024 due to an increase in ZYPITAMAG and Marley Drug revenue and the acquisitions of Gateway Medical and West Olympia pharmacies. In part because of higher Marley Drug cost of goods, and selling expenses as well as R&D expenses of $741,000 in Q2 2025, we are reporting an adjusted EBITDA of negative $28,000 and a net loss of $786,000. Medicure remains debt free and to reiterate the company's short-term goals are focused on growing ZYPITAMAG, growing Marley Drug and our pharmacy business, maintaining AGGRASTAT sales and developing new products. Short-term seeking the approval of MC-1 to receive a priority review venture and long term, the development of new intellectual property for diseases with large market potential. Now I'd like to turn the call back to Dr. Friesen for final comments.