Status update

Aug 2, 2022

Good morning, ladies and gentlemen, and welcome to Valeo Pharma Inc.'s special webcast conference call. At this time, all participant lines are in listen-only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. Also note that the call is being recorded on Tuesday, August 2nd, 2022. I now would like to turn the conference over to Frederic Dumais. Thank you, operator. Good morning, everyone. Present with me today on the call are Mr. Steve Saviuk, our CEO, Mr. Frederic Fasano, our President and Chief Operating Officer, and Mr. Luc Mainville, our Senior VP and Chief Financial Officer. Before we begin our call, I'd like to remind everyone that this conference call may contain certain forward-looking statements regarding the company's expectations or future events. Such expectations are based on certain assumptions that are founded on currently available information. If these assumptions prove incorrect, actual results may differ materially from those contemplated by the forward-looking statements contained in this conference call. The company disclaims any intention or obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, other than as required by security laws. I would now like to pass the call over to our CEO, Steve Saviuk. Please go ahead, Steve. Thank you, Fred. Good morning, all, and thank you for joining us for this special event webcast. This morning we made 3 important announcements dealing with the addition of 3 new commercial stage products and a significant financing. Firstly, we completed a $40 million US dollar debt financing with Sagard Healthcare Partners on Friday. $30 million of this debt has been dispersed. $10 million is available for future product acquisitions. This is debt with no equity obligation. There's no requirement for us to raise any additional capital as a result of this debt. The funds will be used primarily for product and inventory acquisition, with the balance for working capital. We also announced that we've expanded our 1-year-old relationship with Novartis with the addition of XIIDRA, a prescription dry eye solution, and SIMBRINZA for glaucoma. These are commercial stage products and will form the cornerstone of our new ophthalmology business unit. We also announced a new relationship with Kaleo, Inc. of the U.S. for a product that has had history in Canada called ALLERJECT. It is an epinephrine auto-injector. It's a very innovative device and provides synergies with our existing physician base. All of the three products mentioned above are commercial stage products, all have significant revenue growth potential from this point forward that will surely benefit from Valeo's extensive commercial activities across Canada. What do these three announcements mean in a nutshell? Well, they double our current monthly revenue run rate. Revenues start now. In other words, we are starting to build these products effectively this week. These products add scale to our operations and thus provide us with leverage that scale can provide. The additional capital provides operational runway and the opportunity for future product acquisitions. With that, I'll now pass the microphone over to Frederic Fasano, who will provide you some more detail on these products and their competitive set. Fred? Yes. Thank you, Steve, and good morning, all. Well, as you have understood, important milestones this morning are reached by Valeo. I would say both in terms of portfolio management with the addition of three high potential products. In terms of strategic roadmap, we are adding a second strategic therapeutic area. We are also leveraging our current infrastructure. We have done a lot of efforts over the last 18 months to put in place our current infrastructure. We are now able to leverage it to the benefit of more product. Last, in terms of financials, since we are reinforcing our top and bottom line growth, cash position, and also accelerating our time to break even. An important morning, no doubt, for Valeo. At this point, if we start to talk about ophthalmology, we were actually very interested to seek product in ophthalmology since it is a therapeutic area characterized by large unmet medical needs and a rich pipeline of innovative products currently under development. Today, we are entering this therapeutic area with two innovative ophthalmic treatments licensed from our ongoing partner, Novartis. I'm talking here about XIIDRA and SIMBRINZA. In a nutshell, XIIDRA is a prescription eye drop solution indicated for the treatment of the signs and symptoms of dry eye disease. It is a first-in-class anti-inflammatory drug with outstanding clinical results on both symptoms and signs of dry eye disease. The latest new chemical entity marketed for this eye condition was introduced on the market 15 years ago. I'm talking here about cyclosporine, and it is still today the only competing molecule for XIIDRA. It is estimated that more than 6 million Canadians are affected to some degree by dry eye disease, and recognized risk factors are aging, contact lens wearing, or digital devices screen time. At the present time, only 1% of these patients are chronically treated for this condition. Disease awareness campaign and intense promotional activities will allow XIIDRA to become one of the leaders on the market. XIIDRA in the U.S. is already a $500 million product, while in Canada, it has been growing despite the impact of the pandemic on access to patients and healthcare providers, and it has generated CAD 18 million gross revenues on an annual basis in 2021. The second product, SIMBRINZA, is a prescription eye drop solution indicated for the reduction of intraocular pressure in adult patients with open-angle glaucoma for whom a monotherapy provides insufficient intraocular pressure reduction. It is a fixed-dose combination of two active ingredients, but even more importantly, SIMBRINZA is the only beta blocker-free fixed-dose combination on the market, being therefore the fixed-dose combination of choice for glaucoma patients suffering from comorbidities like diabetes, asthma, depression, where beta blocker use is contraindicated. SIMBRINZA is already covered by provinces and by private payers across Canada. It is estimated that 400,000 Canadians suffer from open-angle glaucoma or ocular hypertension, which ultimately leads to optic nerve damages causing irreversible visual loss. Glaucoma is a cause of blindness, which can be prevented actually by an early diagnosis and by the use of effective treatments like SIMBRINZA. The fixed-dose combination market represents half of the total glaucoma market in Canada, approximately CAD 55 million. SIMBRINZA did enjoy a continuous growth over the last year, despite not being promoted anymore by Novartis. It has reached CAD 10 million gross revenues and 18% market share on this fixed-dose combination market. Accumulated 2021 gross revenues for these two products were just above the 28 million mark. We will open actually a new business unit dedicated to ophthalmology to support those two products, which will be detailing on ophthalmologists and also on a subset of optometrists involved in dry eye disease management. That's about ophthalmology, but we are also adding a third product to our portfolio, ALLERJECT, and this is through a 10-year license agreement with Kaleo, our new partner. Kaleo is a U.S.-based specialty pharma company commercializing the product in the United States and generating already more than $150 million revenues with ALLERJECT. In Canada, this product has generated an annual gross revenue of CAD 4 million with very limited commercial support so far. We are now at Valeo about to relaunch ALLERJECT in order to gain market share. What is ALLERJECT? As Steve mentioned earlier, ALLERJECT is a highly differentiated epinephrine auto-injector for the treatment of severe allergic reactions. ALLERJECT is a unique, high-quality, high-compliance technology with patient-friendly features such as voice instructions in English and French, and retractable needle. It is also highly portable, size of a small smartphone, and patents on this technology are protected for the 10 years ahead of us. It is estimated that more than 700,000 Canadians suffer from severe allergies, which is a life-threatening condition that can be treated effectively by an early and appropriate use of a epinephrine auto-injector. The overall Canadian market exceeds CAD 80 million annually, and we estimate ALLERJECT peak sales to be around CAD 25 million per year. ALLERJECT is a life-saving device, and we at Valeo are very proud to provide patient access to this product. ALLERJECT will be allocated to our existing business unit, which becomes a respiratory allergy business unit. All in all, three products, XIIDRA, SIMBRINZA, and ALLERJECT, they are accretive to our current business as of fiscal Q4. These products will allow us to double our current top line on an annual basis while requiring only 20% increase in our accounts. This is the benefit of leveraging our current infrastructure, and we do so while adding a second strategic therapeutic area to support our short and long-term growth as a leading Canadian specialty pharma company. Valeo's growth was supported by three growth drivers up to now. Enerzair, Atectura, our asthma assets, and Redesca, our low molecular weight heparin biosimilar. It is now supported by six growth drivers, including XIIDRA, SIMBRINZA, and ALLERJECT. This concludes the review of our new product, and I will now pass it over to Luc Mainville, our CFO, for a review of our largest financing ever. Thank you. Thank you, Fred. I will now provide additional comment on the non-dilutive $40 million US senior secured debt financing that we just secured from Sagard Healthcare Partners, as well as some additional comments on the licensing transactions. The debt is non-convertible and secured by a first-ranking lien on the company's assets. An initial $30 million US first tranche was secured on July 29, representing CAD 38.4 million Canadian gross proceeds or CAD 36.4 million net. A second tranche of $10 million will be available until December 23 to fund new business development transactions. Term is 5 years with interest only payable in the first 2 years. Quarterly capital repayments totaling $5 million per annum, 10 and 15 are going to be repaid over the last 3 years of the term. Interest payments are based on variable 3-month SOFR, which is secured overnight financing rate, plus a spread of 7.9%. In addition to interest, Valeo is committed to make quarterly royalty payments totaling 1.5% of net sales, calculated on a predefined basket of products. Total level of royalties payable under the transaction is capped to limit the total exposure for Valeo. 1.27 million 5-year warrants were issued to Sagard on closing and priced at market. During the term of the loan, the company will be subject to financial governance. Finally, in order to provide first-ranking lien to Sagard, Valeo terminated its line of credit arrangement with its short-term lender. Now let's discuss use of proceeds. The net proceeds of the financing will be used to pay license fees payable to each of Novartis and Kaleo for $10 million and CAD 1.5 million, respectively. An additional CAD 10 million will be required over the first months of the transaction to support working capital requirements as sales of the three products by Valeo have already started or are starting this week. Balance of approximately CAD 15 million will be added to our cash position. As mentioned, the first tranche was disbursed on July 29th and will be shown on our Q3 2022 financial statements for the quarter ended July 31st. Liquidity at the end of Q3 will be approximately CAD 28 million as some of the license-related disbursements only take place in the Q4 quarter. Now let's discuss some of the terms of the two license deals. The two transactions have been structured predominantly based on a varying transfer price to accommodate for below-market upfront license fee payments. The upfront cost to acquire the commercial rights to XIIDRA, SIMBRINZA, and ALLERJECT, three growing assets, represents less than 0.5 times annual revenue of approximately $28.3 million currently. Transfer price under the Novartis license is front-end loaded to accommodate for the low upfront, but will grow over time over the term of the deal and will also accelerate as sales increase. The transfer price actually will decrease over the term of the deal and will decrease as sales increase, sorry. The transfer price for Kaleo is fixed but will reduce if Valeo hits commercial milestones. No royalties or milestones are payable under the Novartis transaction. Small royalties after year five and commercial milestones are payable under the Kaleo contract if we hit sales targets. Over time, we estimate 30%-35% EBITDA contribution from the two transactions as we leverage our existing business and commercial operations. The two deals are accretive on day one and based on projected growing margin contribution from our existing and new commercial assets. We anticipate reaching break-even EBITDA within 12 months. The non-dilutive funds secured from Sagard will serve to support our operating requirements until then. This concludes my comments. I will now turn back the call to Steve. Thank you, Luc and Fred. We are now ready to open the call up for questions. Although this portion of the call is reserved for questions from financial analysts, we invite any of our shareholders or other interested parties on the line to contact us directly with any questions that they may have, and we will endeavor to get back to you as quickly as possible. Operator, you may now proceed with the question part of this call. Thank you, sir. Ladies and gentlemen, if you do have a question at this time, please slowly press star followed by one on your touchtone phone. You will then hear a three-tone prompt acknowledging your request. If you would like to withdraw from the question queue, please press star followed by two. If you're using a speakerphone, we do ask that you please lift the handset before pressing any keys. Please go ahead and press star one now if you do have a question. Your first question will be from Scott McAuley at Paradigm Capital. Please go ahead. Morning, gentlemen. Certainly, a lot of exciting news. Congrats, after a long weekend. Good way to start the week. Just want to start off, Luc, you just kind of mentioned right at the end there, the expectation to kind of reach EBITDA breakeven in the next 12 months. Just wanted to circle that back with kind of the prior discussions around kind of breaking even being kind of EBITDA or cash flow breakeven by the end of this fiscal year that have been made kind of in prior quarters. Just wanted to kind of square those two comments together, if you could. Okay. I guess, Steve, I'll take that one. Hi, Scott, and thanks for joining the call. Well, clearly we had made some comments in prior quarter, the conference call regarding our projected or our target to become EBITDA breakeven by the end of the current fiscal year. Based on actually a GPO contract that we had signed for Redesca and the acceleration of the asthma business. Clearly, there are things we control like overhead is clearly under control, but we were going to come short of that. Probably break-even was now projected in fiscal 2023. When we did our last conference call, we knew about these two transactions that we're trying to complete in Q3, and we successfully achieved that. Now, with the growing contribution of our existing products and these products, we're now very, very comfortable about reaching that profitability in the next fiscal year. The additional funds provided by Sagard will clearly cover the shortfall. One thing to note is that currently the products are coming in, the new products are coming in, and of course, there's no cost related, there's no operating expenses associated with those products. We're going to start increasing the spend to support the commercialization of those products. It's a little bit too early for us to know exactly how quickly the impact will have on the top line and how we'll expand the gross margin. Right now, based on conservative estimates and assumptions of growth for the products, and the fully loaded expenses that we committed based on our relations or discussions with the licensor, we're going to be breaking even over the next 12 months. As of now, Scott, that's about the only comment I can make. It's a little bit early to understand the true gross to net on the new products and to understand the full spend. Right now, everything is estimates and budgets, but we have significant upside on the sales, and I think we can do a very good job on controlling expenses to generate the expected margins. No, that's great. On the kind of upside opportunities that you mentioned, I think for the one product you'd given an estimated, I think it was CAD 25 million potential peak sales estimate, I think that was for the ALLERJECT, but not for the other two. I don't know if either you have numbers that you can share for that and/or where you see that upside opportunity. Is it just that these products haven't been commercially supported yet? Are there reimbursement or other opportunities that you see that could help drive increased usage? Just where you see the growth coming from these products as you take them over. For the company, I'll start in. Yep. Well, interestingly enough, SIMBRINZA has not been promoted by Novartis for a number of years. Xiidra promotion ceased at the end of December of 2020. They haven't been promoted for essentially the last two years. First of all, the two products are very synergistic together on an ophthalmic call. We believe that they're very promotionally sensitive, especially XIIDRA, which has an extensive sampling campaign that we'll be putting into place to support commercialization. Just to give you a sense of where your top-line number is, it's pretty close to a double from where we are right now. That's where we see the top line. We think that both products can grow. Obviously, XIIDRA has more growth potential than SIMBRINZA. It's a bigger market opportunity, but we think low to mid 40 is a reasonable number for those two over the course of the next 4 or 5 years. Fred, do you want to add something there? Yeah. Maybe, Steve, just adding the fact that SIMBRINZA and that the beauty of these commercialized products, SIMBRINZA is covered across Canada by private and public, so very favorable market access position. As far as XIIDRA is concerned, actually, all products dealing with dry eye disease are covered only by private payers, and that is exactly the same for XIIDRA as of now. The upside will come definitely from two aspects. Number one, the size of their respective market, and the second is getting there in a more structured and more intense way. XIIDRA, as Steve mentioned, did enjoy promotion, but I would say a limited promotion only from Novartis up to the end of 2021. Definitely it's a first-in-class new chemical entity on this market where patients have not seen anything for 15 years. We do believe, and again, the reference we like to look at, of course, is that this product is a $500 million product in U.S. where Novartis instead is fully promoting this product. We see here a largely, a very interesting upside. SIMBRINZA the same. Again, it is the only beta blocker free, and despite no promotion over the last two years, the product is continuously growing as a reflection of ophthalmologists' willingness to use this product. Again, main reason being no beta blocker means you can use the product in certain very specific category of patients. Sorry. Again, as far as ALLERJECT is concerned, well covered, as the other auto-injector, and it has been relaunched actually by Kaléo, but again in a very, I would say for now, in a very modest way, as they were concentrating actually their activity on the other side of the border in U.S. This is why actually they were seeking a partner. We hope now to go more structured and relaunch the product as it is really a. I would like to show it to you now, but if you can go to the allerject website, you will realize how much it is very different from the main competitor, being EpiPen. Again, big or large product differentiation that we believe, again, and based on past success as well, because the product was launched initially by Sanofi seven years ago. Again, we see here great potential of growth as well for ALLERJECT. On kind of why Novartis decided to stop promotion from these two products. Again, with ALLERJECT, I guess maybe they're looking for a Canadian specific partner. Do you have any comments on why these companies were looking to partner out these products specifically? Why they saw Valeo as the best opportunity for them to out-license a license with you? Yes, sure, Scott. Yep. I would reiterate what we already said a little bit earlier at the time we started to work on asthma. Those products are actually developed by Novartis, or XIIDRA was actually bought from Shire by Novartis. Locally, it comes that other blockbusters are coming into play and they need to decide where putting their best effort. When it comes to deprioritizing product, it is interesting for companies like Valeo to be at the right place to take those products on board with an intellectual property that is still there, product that have been very nicely developed from the clinical standpoint. The only point is that from a promotional standpoint, they are putting their investment somewhere else. Therefore, this is certainly, again, we have said so in the past, but we are confirming that it is actually a sustainable business model, well-positioned, and why Novartis did choose Valeo, I think it's quite simple. We are already enjoying a very productive partnership so far on asthma. They confirmed the idea that they were willing to go. Again, it was a competitive process. We were chosen among others to be again partnering with Novartis. That's telling about the level of satisfaction we have on asthma that we hope to reiterate on the ophthalmology side. Definitely. Lastly for me, don't want to hog the mic. You mentioned 20% potential increase in headcount to support the new products. That'll be to build up the ophthalmology business unit, whereas the allergy would be folded within respiratory. Is there enough with asthma and allergy, there's kind of enough crossover there that those sales representatives can make those calls, whereas for ophthalmology, you will need to hire new heads, new people. Yeah ... to target those specialists and GPs that are focused on that? Yeah. A good question, Scott. I think from the allergy standpoint, the key customers we detailed on are definitely allergist, pediatrician as well, and primary care physician. This is what we are covering today for asthma. We are covering, of course, pulmonologist as well, but this is not a target for ALLERJECT. We are covering probably 80% of the needed target in terms of detailing. That's coming into a very synergistic organization. The other point is on the ophtha side, yes, the number needed of representative to cover our core target will be between 12 and 16, not more. We are creating actually an ophthalmology business unit, but it will be designed based on a specialty product business unit. No need to go to cover primary care physicians. The main customer by far for glaucoma are definitely ophthalmologists. For dry eye disease, it is probably a mix of optometry. Actually, some of them are even allowed to prescribe in dry eye disease. That's why we need to cover those, a subset of optometry. Also for dry eye disease, we need to cover ophthalmologists. Again, it will be a specialty business unit. That's great. Again, congrats, gentlemen, and thanks for taking the questions. Thank you. Thank you. Your next question is from Paul Stewardson at iA Capital Markets. Please go ahead. Good morning, Steve, Luc, and Fred. Calling in for Chelsea. A few questions for you guys. Congratulations on the new assets. In terms of the growth timeline, how long it will take to get these products to where you think you can get them to, can you talk about that? How long will it take to get to these peak sales numbers that you're looking for? Maybe Paul, I can start, and Steve, feel free to add anything. The business model we are developing so far is based on a continuous promotion over several years. We do think that up until we're not going to be reaching our peak of sales, we're going to continue to promote those products. To be maybe a bit more precise, I would say those are specialty products. I'm thinking here about ophthalmology. Because we need to cover a lower number of health care providers, it will probably take four, five years to really be close at least to where we hope to be. Remember, the deal is for seven years with potential two additional years to be dealt with at the end of the contract. It is what we think will be the case for ophthalmology, whereas for allergy, the market is a relatively big one, and probably a primary care physician, again, are part of the deal as far as those auto-injectors are prescribed. Probably a bit more time to get to our peak sales, so maybe five, six years ahead of us. If I'd add there, when Sanofi had the product, they were able to get a third of the market in two years. Now, that was at the time, it was six, seven years ago. Nothing has really changed in that marketplace other than it's gotten bigger. The EpiPen is still the king with well over 80% market share. Right now, we have a relatively small 5% market share. In our view, this is the sleeper of the three products. This is the one that is very small today, but it's going to get up to about CAD 25 million, so it's got the sixth annual growth potential, where the other ones have more of a doubling. You'll see more of a sort of a less steep curve in terms of their revenue growth. Understood. Definitely. Sorry, go ahead. Maybe, Paul, just to add one point. You're right. Sanofi had great success of this product. We want to be conservative on the potential, let's say, speed of growth because we are relaunching the product. Again, it's a highly differentiated auto-injector, nothing to do with a pen. That is the case for the two other competitors. You're right. EpiPen is the king. I like your expression. We have to rebuild trust, and we have actually very good features to rebuild trust with patients and healthcare providers around this kind of product. We want to be a bit more conservative, but we'll see. Again, we could have a nice surprise in terms of speed of adoption by both prescribers and patients and caregivers. As you know, ALLERJECT is coming with two different dosages, one being indicated for pediatric patients. That's very much a point where parents actually need to know the product, of course, and need to know how to use it and potentially choose ALLERJECT as opposed to EpiPen. Right. Okay. Can you give some color on the pricing of ALLERJECT, just in terms of compared to EpiPen, compared to MyaAid. How much of the higher price for a obviously superior product, how much of it flows through to the patient versus gets covered at the insurance level? Do you have any sense of what the incremental cost to a patient would be? Yes. As you know, Paul, it's different from province to province, actually. I would say roughly in the 80, let's say, 85 to CAD 100, depending on the province, is the range of price that is actually applied for both EpiPen and ALLERJECT. We have one province where ALLERJECT is CAD 96, whereas the lowest, because we cannot take price increase in Quebec, as you know, the lowest price is CAD 81 in Quebec. Ranging from CAD 80, let's say, to approximately CAD 96-CAD 97. So far, not big price differentiation. The good side of it is equal coverage of all three products available on the market. Yeah. I think that's a good point, Fred. There's no product premium for what we believe is really the product advantages that ALLERJECT brings to the market. Yeah. Okay. That's very interesting. Thank you for that color. The next question would be in terms of building out a commercial unit for ophthalmology. You gave the 20%. Any color on sort of the dollar values behind those? Paul, it will be probably, if you mean in terms of cost or operational expenses, around CAD 2 million per year cost of structure, something like that. Perfect. That's helpful. Just in terms of the Sagard royalty as part of the financing. When you mention basket of products, is that referring to some existing portfolio products in your portfolio, or is this specifically for the three new assets? I'll take that. Yeah. I'll take that, Steve. Hi, Paul, and say hi to Chelsea. Thanks for being on the call. Actually, the predetermined set or basket of products are our existing products. Not all our existing products, but if you look at our current product, roughly 60% or 50%, 60% of our top line go into this royalty, plus any products acquired from the proceeds of the financing. Clearly, they want to build on the growth product, which are Redesca, the asthma, ophthalmo, and ALLERJECT. If we use the additional CAD 10 million for product acquisition, those products are going to fall in. It's not all our current products, but it's all the products that are coming into this deal. Okay, perfect. That's exactly what I was looking for. Last question from me, and I'll jump back into the queue. Just in terms of the cadence on how much is flowing through to the bottom line. You mentioned 30%-35% EBITDA contribution. I assume it's fair to say that that'll be substantially less in the near term, given that you said that a lot of the transfer prices were kind of front-loaded. They go down over time, they go down as sales increase. Do you have sort of an initial number for where we can start with the EBITDA contribution before it gets up to that run rate number? You should start with a high teen number, Paul. Of course, as you mentioned, you're right, transfer price is going to go down over time, and the margin is going to accelerate under the Novartis deal if we perform better. Those two factors are going to accelerate our margin. Of course, costs are costs and are going to be fixed. On the ALLERJECT again, the one thing to take into consideration is we do believe it's a premium product, not priced at premium to competition. Should there be any addition to the price, that of course, will increase our margins. Right now, the estimates are based on very conservative pricing assumptions. Answer to your question, high teens right now, growing quickly into the twenties and potential is well above 35%. Perfect. That's very helpful. Thank you very much for taking that question. Thanks, Paul. Thank you. As a reminder, ladies and gentlemen, if you do wish to ask a question, please press star followed by one. Your next question will be from Andre Uddin at Research Capital. Hi, Steve, Fred, and Luc. Nice transactions for the company and shareholders. Just looking in terms of your reps, how many reps do you have right now, and how many will that go to with these new transactions? Good morning, Paul. Frederic answering the question. We actually have, considering all our field positions, approximately 60 field positions. We will be adding 12 field positions for ophthalmology. Okay. Just also Luc, I just didn't catch everything in terms of the debt facility. If you could just clarify a couple of things, just the debt interest payments. Is that SOFR plus 7.9% and is there any holiday on the debt? SOFR plus, it's a three-month SOFR, plus 7.9%. That's the spread. The repayment is interest only first two years. On the third year, we'll repay $5 million divided by 4, so quarterly payment, then growing to 10 and 15. The $30 million is going to be repaid $5, $10, $15 in the last three years. Quarterly payments. Got it. In terms of that royalty, is the royalty, is it a fixed royalty amount? Yeah, it's a fixed amount on the basket of products, as I mentioned earlier. Of course, it's not a fixed dollar amount. It's fixed 1.5 of top line of the specific product. As those products grow, it's quarterly payment. Basically, we do an in arrears calculation. We look at the quarterly net sales, given time to calculate the gross to net calculation, and we pay on that. That starts on day one, actually. Okay. Would that disappear, though, once the debt is repaid? Or is that- No, it's going to stay for 7 years, worst case scenario, 7 years. If we hit our numbers, we're not going to get to the last couple of years because it's capped as a percentage of the debt financing. There's a total maximum return they will get, and if we hit our numbers, it's not going to last the full term, 7 years on the royalties. It's a 5-year term loan and a 7-year royalty payments. As I said, it's capped. We may not see royalties in year 7 or even 6 total, but likelihood right now is that we'll probably get into the last couple of years. By the way, should we add any additional products that are not funded through the last CAD 10 million facility, they will not be part of the royalty calculation. I know this is a little bit hard to predict, but if you look at that CAD 27 million 2021 run rate for the three products, how much of a growth rate range would you expect in fiscal 2023? If you could give a rough range there. Well, I'll take that, Fred, but I think the 20% top line growth for those three products is something that makes sense. Could be even more than that if we accelerate ALLERJECT, but a big driver of the top line is going to be XIIDRA. I think the key is right now we need to put the promotion plan into place. Actually hire the team and get going with the promotion. That's going to take 3-6 months to really hit the road and start accelerating the top line on these products. I think you'll see significant growth on 2023, but then we feel 2024, 2025, 2026 are going to be the big years. Maybe to add one point, you could read the range of the 20% is something we could really expect. At the same time, we also have to manage our current business. As you know, Redesca and Onstryv, Atectura are also big drivers, so we'll be careful at the beginning to put in place the right balance between establishing our promotional effort in between all six assets. As you know, we have big expectations in the coming years, and momentum is there in terms of adopting those three products. We want to make sure that we capitalize, of course, on those assets as well. I think the three new products have a lot of potential, but we can't take the eye off of the real jewel in our crown, is our asthma products. These two products have CAD 100 million-plus sales targets for us. The other ones complement well and will be bigger than the asthma products initially. Over time, asthma is the product that's going to drive a significant portion of our top line. Okay. That's great. Thanks, guys. Thanks, Andre. Thank you. At this time we have no further questions. Please proceed with closing remarks. Thank you, operator. Well, again, thanks everyone for being on this call. As we've outlined over the last 45 minutes, Valeo has made a major step forward with these three announcements that we've talked about today. We've broadened our product portfolio significantly. We've increased our revenue base and our revenue potential significantly. We've opened up a new therapeutic area, which Fred and I have been talking about for probably the last two or three conference calls, saying that we'd like to have a second therapeutic area in addition to respiratory. The financing provides us with a solid financial footing, both for our current operations, future acquisitions, future operations. Again, thank you for your continued interest and support. We look forward to keeping you up to date on the new developments coming in the following months. Once again, thank you. Any questions, you're all welcome to call us at any time and get updates or share your models with us and what have you. Again, thanks for being here. Thank you, sir. Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending, and at this time, we do ask that you please disconnect your lines. Have a good day.