Welcome, everyone. I'm Frank Condella, the Chair of Mayne Pharma. It's my pleasure to welcome you to Mayne Pharma's 2024 Annual General Meeting being held here in Melbourne, Australia. As we have a quorum, I now declare the meeting open. And once again this year, we're offering a hybrid meeting, allowing shareholders to participate in person or on our live webcast. I'll briefly advise you now the procedural aspects of today's meeting. Shareholders and proxy holders present in the room can ask questions and submit their votes. If you're watching on the webcast and are a shareholder, you can ask questions through the meeting platform and submit your votes. To submit a written question, select the Q&A icon on the screen, select the topic of your question in the drop-down box, and type in a question and press send.
We encourage you to lodge any written questions now and help us get ready to answer them later in the meeting. For those participating online, also, voting all resolutions is open and will remain open during the AGM. You can change your vote up until the time I declare the voting is closed, at which time your most recent selection will be registered. If you experience any technical difficulties, there's an AGM helpline number included in the online meeting guide. I'd now like to introduce our board members, senior executives, and the company's auditor joining us here in the room today, our fellow Australian resident non-executive directors, Anne Lockwood, Professor Bruce Robinson, and Mr. David Petrie. Online, we have fellow U.S. resident non-executive directors, Dr. Katie MacFarlane, Ann Custin, and Pat Blake. Also with me here today is our CEO and Managing Director,
Mr. Shawn Patrick O'Brien, and our CFO, Aaron Gray. Our Company's Secretary, Laura Loftus, will be moderating shareholder questions along with our IR advisor, Dr. Tom Duthy. The company's auditor, Mr. Benjamin Lee of BDO, is here in the room, and we extend our thanks to our company's lawyers, from MinterEllison, who are hosting the AGM here today at their office. The procedure for today's meeting is as follows. First, I will present my chair's report. Then our CEO, Shawn, will provide an update to the fiscal year 2024 financial and operating highlights, along with a trading update for the first four months of fiscal 2025 and our outlook. We will then go into the formal part of the meeting, during which we will take questions and vote on the resolutions outlined in the notice of meeting dispatched to shareholders on the 18th of October, 2024.
A recording of the meeting will also be available on our website following the conclusion of today's meeting. So now, moving on to the chair's address. The 2024 financial year delivered a substantial operating and financial improvement across all of Mayne Pharma's three operating segments, namely women's health, dermatology, and international. At the start of the financial year, we set ourselves a number of important corporate goals. Under the leadership of Shawn and Aaron, I'm pleased to advise our shareholders today, as we did at the fiscal year 2024 year-end results, that Mayne Pharma achieved 100% of our key operating metrics or goals that we set ourselves during the financial year. Five key pillars driving improved performance were positive direct contribution in all three segments, returning the company to positive underlying EBITDA in fiscal year 2024, optimizing the cost base with reductions of greater than U.S.
$10 million, and achieving a break-even run rate of Nextellus, and returning the company to positive operating cash generation. In fiscal 2024, we saw solid revenue growth from our women's health, dermatology, and international segments, which altogether grew 112%. When overlaid with a modest 4% increase in our direct operating expenditures, the contribution improvement for each of these segments was significant and overall represented AUD 130.3 million improvement from fiscal 2023. We're not resting on our laurels, and despite this improvement, we believe that there are significant opportunities for the business to continue to improve sales and operating margins while making certain investments into the business to drive operational performance across the group. For fiscal 2025 and beyond, we see fundamental opportunities for growth in women's health associated with improved access to contraception in the United States and a much greater awareness of the impacts of menopause and its treatment.
For dermatology, there's a rising incidence of skin diseases translating to higher patient need, and we expect our unique channel will allow us to improve patient access to treatments and drive market share. International is expected to expand into new markets and continue to drive efficiencies in manufacturing and supply chain. The board continues to manage a conservative capital structure. Management is focused on delivering operational excellence and achieving our growth goals. We will continue to assess complementary and accretive product partnerships or acquisitions that we can leverage into our existing women's health or dermatology ecosystems. We also continue to invest in the upgrade of our physical plant and equipment at our facility in South Australia.
We remain resolutely focused on driving shareholder value and believe our portfolio of branded medicines within women's health and dermatology, coupled with the leverage we can generate through our existing infrastructure and efficiencies, will continue to deliver improvements in our financial and operating metrics in fiscal 2025. In other words, we're well-positioned for future growth in the coming years. Finally, I'd like to express my gratitude to the board of directors, our employees, and our partners for all of their efforts during fiscal year 2024, which has delivered a substantial improvement in the business and renewed confidence in our business model. We acknowledge the support of our shareholders as we continue to prioritize our core strategies relating to the continued growth and operational excellence. We look forward to updating our investors throughout the 2025 financial year on progress and corporate initiatives.
So now I'd like to invite Shawn O'Brien to give the CEO presentation.
Thanks, Frank. I had three main messages I want to get through my presentation. First, as Frank highlighted, we're really proud of the FY 2024 results and the journey of turning this business around. Second, the first four months of the business are performing well. And third, management is razor-focused on driving revenue growth across significantly higher margin products than we've had in the past and deliver positive cash flow for the business through commercial excellence and operational excellence. So the agenda I have is to do a recap of FY 2024 results and then highlight our 2025 results so far and what we're doing in women's health, dermatology, and national, and give you an outlook. Next slide.
So over the last three fiscal years, we've transformed the company from having a large debt, significant discontinued operations, large amount of cash tied up in working capital, and mainly a generic-focused business to a company today with a strong net cash position, major reduction in working capital as a percentage of revenue, enabled to generate positive cash from operations in the last three out of the last four quarters and position the company for growth with our channel and IP strategy. And the next slide, we've navigated through this transformation over the last three fiscal years. Aaron and I have taken the business, which had a net debt of AUD 317 million and with only 19% of our U.S.
sales based on branded products, to a business that's delivering underlying positive EBITDA of AUD 22.9 million, a net cash position of AUD 107 million, or a gross cash position of AUD 149.3 million at the end of June, with over 65% of our products now in a branded IP-protected business. The next slide, I wanted to share the key operating highlights in FY 2024. In FY 2024, we delivered three new Orange Book FDA-listed patents for Nextellus that expire in 2036. As Frank highlighted, we delivered a positive run rate, a break-even run rate for Nextellus in December, and that continued every month since then. And we've seen an 85% increase in the demand cycles for Nextellus, and that continues to grow over the previous year. In addition, we saw a 31% growth in our licensed portfolio products of Annovera, Imvexxy, and Bijuva.
On the dermatology front, we completed the asset purchase of Rhofade from EPI Health, saw new product launches from Rhofade, Wynzora, Soolantra, generic Accutane, and the authorized generic Oracea. In addition, we validated our channel strategy, continued to scale it, and shift the portfolio to more favorable net selling prices. Really pleased on the results on our international business front with the growth of Nextstellis, Oxycodone, and Neura. The Modernization Initiative, or project that we have known as MMI, has progressed nicely in the business to allow us to launch 200-milligram Kapanol in FY 2024, which drove increased demand for Kapanol/Kadian in Canada and Europe, and the Salisbury facility has undergone significant transformation on operational metrics and demonstrated a step change that's sustainable in these metrics going forward. In the next slide, looking at our financial numbers, we have grown by 112% to a revenue of AUD 388 million.
The gross margin improved to 56%. The underlying EBITDA improved by over AUD 118 million to a positive AUD 22.9 million, and we had a positive contribution from all three business units, as Frank explained. This was an improvement of over AUD 130 million to a positive AUD 88.5 million. We generated AUD 8.1 million operating cash flow from continuing operations and ended June 30th with AUD 149.3 million in cash and marketable securities, so let's look at our strategy and progress in FY 2025. Looking at our main driver for the future of this business is really in women's health.
We expect to deliver the full profit potential of this portfolio through a sharp focus on sales execution and targeted marketing approaches as we continue to raise the scientific knowledge of these superior products we have in our portfolio and further leverage our commercial infrastructure to actually accelerate EBITDA growth of that business unit.
On the next slide, we're sharing data in a format that we haven't done in the past. This is looking at a rolling 12-month period of November 2021 through October 2022, looking at November 2022 to October 2023, followed by November 2023 to October 2024. This shows the improvement in net revenue, gross profit, and direct contribution through our investment of $140 million, acquiring the assets from TXMD and driving the growth of Nextellus to generate $61 million in improvement in annual contribution in women's health, with a significant headroom for further growth going forward for all these brands. Next slide. In slide 15, we're really pleased with the early results that we've seen in Nextellus in FY 2025. This graph shows quarter by quarter the increasing number of demand cycles and sequential growth from each quarter.
We achieved a record amount in October of 51,000 demand cycles, up 33% from the previous comparable period, and a sequential growth of 10% on a monthly basis. This is despite the fact that we've gone through a significant change in some of our sales force to upgrade the effectiveness of our sales team and we expect this growth to continue as we get full implementation of our new effective sales team and sales leader. Looking at the entire women's health portfolio on the next slide, we've demonstrated sequentially and over the previous period a 28% increase with revenue now at $39.3 million in the last four-month period. We continue to have a focus on maximizing net selling price for all four brands and creating awareness of our brand promise to the prescribing customers.
On the longer term, looking at slide 17 here on Nextstellis, it's really four factors that are going to continue to drive significant growth for Nextstellis. We are minor in the market share for this brand in the U.S. market. Drive improved access through changes in the Affordable Care Act and also reducing the amount of prior authorization to drive the brand forward. We're continuing to look at improving the healthcare professionals and prescribers' knowledge on the brand through not only our commercial team, but also our medical affairs team and through publications of the unique data associated with Nextstellis. In addition, we're looking at opportunities to recapture milestone payments and reduce the COGS with our new partner, Gedeon Richter. And finally, we will continue to enhance our portfolio of patents that we have and continue to get patents that secure our Orange Book listing for 2036 and beyond.
Looking at Annovera in the next slide, which is becoming a very promising product going forward in our portfolio, we can continue to focus on supply. It's important that we continue to make sure that our supply will match the increasing demand that we see for this brand going forward. We are working with Population Council to actually improve this label. Currently, the label is using it once a month for a 12-month period, and we want continuous use for that 12-month period to enhance our ability to take on direct competitors in the ring business and perhaps some IUD products. We've also improved the expiry of the dating of this product. Currently, it was 18 months in the market, and we recently, last week, achieved a 24-month dating from the FDA on that.
And like Nextellus, we'll continue to improve the access through the Affordable Care Act changes that we see coming. On slide 19, Bijuva represents our flagship opportunity to treat menopausal symptoms. And we've launched the half-strength in addition to the one milligram to improve patients' acceptance and need in the marketplace. We're doing a lot of work to drive healthcare professionals' awareness of this unique bioidentical product and the benefits of hormone therapy treating VMS symptoms associated with menopause. In addition, there's a lot of social media going around in the last 12 months on how to seek and get proper treatment for menopausal conditions, and we'll continue to leverage that. And thirdly, we're going to co-pay optimization to improve the margin of this brand going forward. In dermatology, our focus is to use our differentiated channel strategy to create new patient access and improve prescriber experience.
We continue to evaluate capital-efficient and accretive business opportunities to drive further growth in revenue and margin. We'll continue to develop our channel strategy to drive that market share access and improve our financial performance. The next slide demonstrates our investment strategy in dermatology has paid off handsomely. Our $8 million investment in acquiring Rhofade helped drive a $29 million improvement in annual contribution. Like our women's health franchise, we've seen an ability to improve our cost leverage of our revenue versus cost structure, and we're excited to see the improvement of net revenue, gross profit, and direct contribution over these 12 months. Looking at our dermatology strategy in the next slide, it's showing strong growth on annual run rate. It's two times that of FY 2024, which was 10 times that of FY 2023.
We're pleased to see that Rhofade prescriptions are up 151% versus the same prior comparable period. For generic Oracea, we realize a market share now of 54%, down from 70% as a result of the launch of two generics in this marketplace. This is demonstrating the stickiness because we actually maintain the pricing in our channel. In addition to these FY 2025 results, they were not only impacted by the decline of Oracea in our business model, but also the seasonality of acne and rosacea. In the summer months, acne and rosacea products declined significantly, and we're already seeing a pickup in October and November in their script volume. 23 looks at the financial performance.
So the drivers of this decline that I was speaking about for dermatology in the previous reported periods and sequentially are driven by three issues: seasonality of acne, seasonality of rosacea, and the introduction of generic Oracea against our authorized generic. Also, keep in mind, back in October of 2023, we launched Rhofade, and in that first period of sales, we were actually replenishing the channel because it was driven down by the previous owners of the product. We're confident that we will, based on the scripts that we're seeing in October and November, that we're going to see our acne and rosacea products rebound and drive growth for our dermatology business on a full-year basis in FY 2025. Switching over to our international business, it's all about leveraging the capacity that we've created through operational improvement as we complete our modernization of this facility in Salisbury.
So we can improve the productivity and also our capabilities of acquiring products to manufacture that are profitable for us. We'll continue to drive, especially in generic product sales, including the growth of Nextstellis in Australia. On slide 25, the MMI project continues to progress in line with expectations. The equipment is being delivered. We're validating it as we speak now. And our transformation has actually improved in a very positive way. DIFOT delivery and full and on-time rate of the facility is around 93% versus 32% in October 2022. In the four months on the next slide of FY 2025, our international economic performance is showing a 16% increase over the prior comparable period and a 2% decline sequentially. This is a reflection of timing of some orders on the sequential basis.
We expect the international business to continue to show improvement in margin and EBITDA in FY 2025 with all the actions the team is taking there. Looking at the roll-up of the first four months of the entire business, we're proud that during the Q1, we demonstrated 6% improvement over the prior period in revenue and a 50% improvement in direct contribution. Underlying EBITDA is 14.7 million and represents almost 64% of what we delivered the entire FY 2024 period, with 22.9 million EBITDA reported at the time. This is a $13 million improvement over, or 765% on the comparable prior period and a 34% increase sequentially driven by higher growth of higher margin products and continued improvement in our operating leverage. We delivered AUD 16.1 million positive underlying cash flow.
Then when you take into account the one-time payment of AUD 33 million for the settlement and AUD 2.6 million for discontinued business, our operating cash flow was -AUD 6.3 million. We ended the period with a cash and marketable securities position of AUD 129.5 million versus AUD 149 million at the end of June. Slide 28. As I already showed, the business is doing well, and we have even a brighter future for Mayne Pharma. The company expects growth in underlying EBITDA and free cash flow in FY 2025 via revenue and cost leverage with all three segments: women's health, dermatology, and international delivering positive direct contribution. We expect women's health to continue to grow. And in our dermatology business, we expect new product launches to contribute. We maintain a continued focus on operating expenditures to drive operating leverage and positive underlying free cash flow generation.
We expect EBITDA to show a significant improvement on the prior comparable period and further growth on the first four months we've demonstrated so far as of October 31st, 2024. Sorry, apologies. That's my presentation on the performance of the business so far this year. And I'll turn it back to Frank.
Thanks, Shawn. We now move on to the formal part of the meeting. So this AGM provides an opportunity for you to reelect directors, to reflect on the company's performance over the past year, and to raise any questions you have about our company. All shareholders should have received the notice of meeting, which was dispatched to shareholders on the 18th of October, 2024. And it's my intention to take the notice of meeting as read. There are a number of procedural matters which I must draw your attention to.
This is a shareholders' meeting, and only shareholders, their attorneys, proxies, and authorized company representatives are entitled to vote or ask questions at this meeting. Shareholders and proxy holders present in the room can ask questions by raising your hand. As a reminder, if you're watching on a webcast and are a shareholder, you can ask questions through the meeting platform. To submit a written question, select the Q&A icon on the screen, select the topic of your question in the drop-down box, and then type in the question and press send. You can also ask verbal questions by following the instructions in the broadcast window. We encourage you to lodge any questions now. We will address questions at the relevant time during the meeting. Questions may be moderated, and if we receive multiple questions on one topic, they will be combined into a single question.
Finally, due to time constraints, it is possible that we may not be able to answer all questions. If that occurs, then we'll revert to you individually after the meeting about your unanswered question. Alternatively, investors can always follow up with our Mayne Pharma investor relations. Voting today will be conducted by way of a poll of all items of business. Subject to the voting exclusions specified in the notice of meeting, the persons entitled to vote today are all shareholders, representatives, and attorneys of shareholders and proxy holders who hold red admission cards. On the reverse of your red card is your voting paper, which details the motions that are being put to the meeting. Relevant instructions are also printed on the reverse of your admission card. Now, for those participating online, voting for all resolutions is open and will remain open during the AGM.
If you're eligible to vote at this meeting, you'll see a vote icon displayed on your screen. Click on this icon, which will bring up a list of resolutions and present you with voting options. To cast your vote, select one of the available options. You have the ability to change your vote up until the time I declare voting is closed, at which time your most recent selection will be registered. In order to ensure that all shareholders' views are taken into account, all items of business before the meeting where a vote is required will be determined by way of a poll. I appoint David Squires, David's in the back of the room, of Computershare Investor Services as the returning officer to manage the poll process.
We will provide proxy information received from shareholders up until the start of this meeting after we have taken questions on the relevant item of business at today's meeting. Now, open proxies in favor of the chair will be voted in favor of resolutions one through four and against resolution five. So now I'll go through the items of business. The first item of business listed in the notice of meeting is to receive and consider the financial report of the company for the financial year ended 30 June 2024 and the reports of the directors and auditor. This item also gives shareholders the opportunity to ask questions about the company and its operations. The company's current, excuse me, auditor, Mr. Benjamin Lee from BDO, is also available today to answer any shareholder questions on the audit required.
So I'll first ask if anyone in the room has a question, then we can move to any questions that have been submitted online during the meeting. So I now invite shareholders to ask questions on the accounts or operations of the company. And if you have a question here in the room, please raise your hand. We'll pass you a microphone. And please also state your name. Okay. Laura and Tom, are there any questions online?
There is, Mr. Chairman. There's a question pertaining to shareholder asset. Is there any news regarding the ongoing U.S. DOJ investigation into price fixing?
Yes. There's really no news since we reported last on this in the annual report. Shawn or Aaron, do you want to comment any further on that?
There's been progress on that. It's been consolidated. Also, that there's been areas where it's been shut down. We're a minor player in the case itself. It was only one product. This was what gave rise to the shareholder lawsuit previously. We see no wrongdoing on behalf of Mayne, and we're continuing to defend the business. Some of the claims out there have been withdrawn from Mayne, but not all of them.
Yeah. And the DOJ criminal investigation has been closed. And there are some ongoing operations that are outlined in the annual report, but there's no further update than that. Any other questions, Tom?
We have a second question. Can the CEO please provide a dollar financial benefit gained by developing the alternative distribution channel that includes other things such as Adelaide Apothecary? And can the CEO estimate what that equivalent benefit is estimated to be in FY 2025?
Thanks, Tom. We don't give guidance directly, but as I said earlier, we've gone on a run rate now two times that which we achieved last year, which was 10 times that of what we achieved in FY 2023. We continue to use this, I think, the ratio business case of showing the stickiness of two generic products launched. That was not planned. These two products were launched at risk in the marketplace, and we didn't expect a generic ratio, but it's in our business plan for FY 2025. And having 54% market share, we've lost most of our market share in the big three channel and maintained our pricing in the existing channels that we do through specialty pharmacies and Adelaide Apothecary. So we're going to continue to scale this up.
It's working for us and drive it through and hopefully bring other products into this channel, not just our own.
Any other questions, Tom?
No further questions.
Any other questions in the room? Okay. Thank you. The following two items of business cover the reelection of non-executive directors, Professor Bruce Robinson, and Dr. Katie MacFarlane. Shareholders should note that the director's experience is set out in the notice of meeting. So the first item of business is resolution one, the reelection of Professor Bruce Robinson. I now move that Professor Bruce Robinson, who retires by rotation in accordance with the Constitution and being eligible and having signified his candidature for office, be reelected as a director. Are there any questions from the floor? Any questions online, Tom?
No questions.
Okay. I will now display the proxy votes received on this resolution. The next item of business is resolution two, the reelection of Dr. Katie MacFarlane. I now move that Dr. Katie MacFarlane, who retires by rotation in accordance with the Constitution and being eligible and having signified her candidature for office, be reelected as a director. Any questions in the room? Tom?
No questions.
Okay. I will now display the proxy votes received on this resolution. The next item of business is resolution three and concerns the company's remuneration report, which is set out in the annual report. I now move, for the purposes of section 250R(2) of the Corporations Act, the remuneration report that forms part of the director's report of the company for the financial year ended 30 June 2024 be adopted in accordance with section 250R(3) of the Corporations Act. The vote on this resolution is advisory only and does not bind the directors. Any questions in the room? Tom?
We have one question. Can the Chair of the remuneration committee please summarize the actual targets for STIs for the CEO in FY 2025?
I can. Briefly, the main driver of the STI in fiscal 2025 is a pretty significant increase in EBITDA, underlying EBITDA. I'm not going to say the actual number of what that is because that's competitively sensitive, and it would be giving guidance. There's other goals that will form the basis of the STI award, which include direct contribution goals from each of the three. Three separate goals related to direct contributions to each of the businesses, and then there is also a people and culture goal, and that forms the basis. Now, the majority of the STI award is determined by these very easily measurable and non-debatable goals, but there's also a small portion, around 10% of the total STIs, determined on individual performance, and that's a little more broadly determined by the board.
The board can always use discretion in awarding the STI for the CEO and the CFO. I hope that answers the question. Anything else, Tom? All right. I'll display the proxy votes on this resolution. The next item of business, let's see, concerns remuneration of the Chief Executive Officer and Managing Director. Resolution four seeks approval for the issue of a short-term incentive grant of restricted stock unit performance rights and a long-term incentive grant of performance rights under the Employee Performance Rights and Option Plan to Shawn Patrick O’Brien. Further details on the terms of these instruments are set out in the notice of meeting.
I now move, for the purposes of the ASX listing rule 10.14.1, and all other purposes, approval will be given to the issue of a restricted stock unit performance rights as the deferred component of the annual short-term incentive award for the year ended 30 June 2024, and performance rights as the annual long-term incentive grant for the year ending 30 June 2025 to the CEO and Managing Director, Mr. Shawn Patrick O'Brien, under the PROP, or Performance Rights and Option Plan, on the terms summarized in the explanatory information. So does anybody have any questions here in the room? How about online, Tom?
No questions.
Okay. I'll now display the proxy votes. So now I move on to resolution five, which is the spill resolution, which is a conditional resolution pending the outcome of resolution three, the remuneration report. So I have to go through this because we don't know the final vote until the end of this meeting. So as a shareholder would be aware, the notice of meeting, if there is a second strike against the remuneration report at this meeting, then we're required to ask shareholders to consider this resolution five to call an extraordinary shareholders' meeting to spill the board. And conversely, if there's no second strike, then this resolution isn't required. Since all resolutions are conducted on a poll, we plan to poll shareholders of all five resolutions at the same time.
However, the results of resolution five, the spill resolution, are only relevant if more than 25% of the votes cast on the remuneration report are against that resolution. If there is a second strike on the remuneration report and this resolution also passes following the poll, all directors, except the managing director, will need to stand for reelection at a spill meeting within 90 days. Now, the board recommends against this resolution. A spill of the board would create a period of significant disruption and uncertainty for the company at a time when stability is crucial for achieving our strategic goals. Are there any questions in the room? Any online, Tom?
No questions.
Okay. Then I display the proxy results so far. So if there are no further questions, let's see. If there's no further questions, then that brings us to the conclusion of today's business. I now ask all shareholders and proxy holders with red voting cards to complete each of the items of business in your cards, print your name, and sign them. If anyone present believes they are eligible to vote but have not yet registered, please raise your hand, and assistance will be provided. Once you've completed your voting card, kindly place it in one of the ballot boxes located on the side of the room. If you need any help, please raise your hand, and a representative from Computershare will assist you. For those attending online, please make sure you have submitted your votes on all resolutions.
Once the votes are all tallied, the results of the poll will be lodged with the ASX later this afternoon in line with the Corporations Act and will also be posted on the company's website as soon as they're available, and now I'll allow two minutes to complete both online and in-room voting. Okay. We're just going to extend it for another little bit of minute here while we wait for voting to be completed in the room. I now declare the poll closed, so thank you for your attendance and support. Mayne Pharma looks forward to your continued support for the coming year, and if you have any follow-up questions, please feel free to reach out to Dr. Tom Duthy and investor relations at Mayne Pharma. I think we have tea and coffee out front for those who are here in person.
Of course, the directors will stay for that. Thank you very much.