THERF Q3 update

THERF, Theratechnologies announced 3rd quarter results last Thursday.

In previous posts I described this Montreal based biotech company with their 2 drugs EGRIFTA which is on the market and ibalizumab, a life-extending drug for multi-drug resistant HIV patients. FDA has given ibalizumab orphan drug status, breakthrough therapy designation, and it is under priority review and has a PDUFA date of January 3, 2018. The investment thesis depends on approval of ibalizumab and succesful marketing of the drug.

For the quarter ended August 31, net sales of EGIFTA were up 26% compared to same quarter last year, up 12% compared to 2nd quarter of this year. That’s 3 and 9 month figures of (Canadian dollars) $11,217,000 and $30,266,000 compared to $8,924,000 and $26,691,000 for 2016.

But increases in expenses – chiefly associated with the expansion of the sales force in anticipation of ibalizumab approval – resulted in a net loss of ($2,882,000) or ($0.04) per share for the quarter compared to a net profit of $888,000 or $0.01 per share in 2016. And with a stronger Canadian dollar, the company lowered guidance: net sales revenue of EGRIFTA for fiscal 2017 now $42-$44mil, down from previous guidance of $44-$46mil. Adjusted EBITDA now ($5)-($5,5mil) compared to previous guidance of ($2)-($3mil). They have about $30 million in cash on hand.

My conference call notes: A key point was potential pricing for ibalizumab, if approved. CEO Luc Tanquay said it will be priced at a premium to what is currently on the market and below USD$140,000, the (before discounts of 25-30%) average orphan drug price. Fuzeon is the closet drug on the market to ibalizumab and has an average wholesale price of USD48,000. So a big range but analysts revised their stock price targets after the conference, I think in part based on the potential price of the drug.

CFO called it their best quarter ever, explained by the increase from 11-36 sales people earlier in the year. CEO says they are doing everything to be able to hit the ground running on approval of ibalizumab. CEO said some of the increased costs came from consulting fees in Europe as the approval work they are doing there is going more quickly than expected, which he took as a good sign.

New territories are yielding EGRIFTA sales. So it shows they’re reaching more HIV doctors whom they’ll call on again if/when ibalizumab is approved.

At IDWeek October 4-8 in San Diego, a 48-week study of ibalizumab was presented and the results matched the efficacy of the 24 week trial in the Phase 3 testing, so further proof the drug works. Dr. Brinda Emu, Assistant Professor of Medicine, Infectious Diseases, Yale School of Medicine, New Haven, CT: “Seeing sustained virologic response out to 48 weeks is heartening and emphasizes the potential benefit that ibalizumab may bring to HIV patients in need of new treatment options.”

Bottom line: Increased EGRIFTA sales portends well for the sales force and ibalizumab. 12 weeks until PDUFA date. Approval – or an FDA problem with the drug - can come earlier.

John

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