AGM 2022

Apr 27, 2022

Thank you. To welcome you to our annual meeting, which I now call to order. Just a matter of housekeeping. For those who have questions, they will be addressed after the formal part of the meeting and after our corporate presentation. You may submit your questions in writing on the screen in the question area. In accordance with the requirements of the corporation's bylaws, I will act as chairman of this meeting, and I appoint Maxime Lemire, counsel at McMillan LLP, to act as secretary of this meeting, and Pina Pacifico and Theresa De Luca of Computershare Investor Services, our registrar and transfer agent, to act as scrutineers. The current directors of the corporation are Mr. Richard MacKay, Mr. Steve Saviuk, Mr. Frederic Fasano, Mr. Michel Trudeau, Mr. Vincent Hogue, Ms. Maureen Brennan. All the directors are present at this meeting. Notice of this meeting was published, and the notice calling this meeting and the management information circular and proxy forms were mailed to shareholders, and I have received a statutory declaration attesting to the publication and an affidavit attesting to the mailing. Accordingly, with the consent of the meeting, I will dispense with the reading of the notice, and I direct the secretary to attach the declaration and affidavit to the minutes of this meeting. I now ask the scrutineers to submit their report on attendance. Mr. Chairman, I confirm that we received the scrutineer's report and that quorum is present. I would like to remind everyone that only registered shareholders or proxy holders can move or second motions or vote at this meeting. Registered shareholders and proxy holders may ask questions and make comments, again, through the question portal at the bottom of your screen. First item of business is the presentation of the annual audited financial statements for the fiscal year ended October 31st, 2021, and the auditor's report thereon. The annual report was mailed with a notice of this meeting and other documentation to each registered shareholder. In the case of intermediaries, in the number of copies required by them. Extra copies are available, should anyone so require. Are there any questions on the financial statements or auditor's report? I will now entertain a motion to dispense with the reading of the annual report and receive the annual report, the financial statements, and the auditor's report thereon. Hi, my name is Luc Mainville, and I move that the reading of the annual report be dispensed with, and that the annual report, the financial statements, and the auditor's report of the corporation as at October thirty-first, 2021 be received. My name is Frederic Dumais, and I second the motion. Thank you, gentlemen. I declare the motion carried. Election of directors. The next item of business is the election of directors to hold office until the next annual meeting of shareholders. The management information circular sent to shareholders prior to this meeting refers to the election of six directors to be elected, and I declare the meeting open for nominations. Hi, my name is Luc Mainville, and I nominate the following to serve as directors of the corporation for the ensuing year. Mr. Richard MacKay, Mr. Steve Saviuk, Mr. Frederic Fasano, Mr. Michel Trudeau, Mr. Vincent Hogue, and Mrs. Maureen Brennan. There being no further nominations, I will entertain a motion for the closing of the nominations for directors. My name is Luc Mainville, and I move that nominations for directors of the corporation be closed, and that the six persons whose names have been read to this meeting be elected as directors of the corporation to hold office until the next annual meeting of shareholders or until their successors are elected or appointed. My name is Frederic Dumais, and I second the motion. I am advised by the scrutineer that management has received proxies representing more than 96% of the votes in favor of the election of each nominee. I declare the motion carried. Therefore, Richard MacKay, Steve Saviuk, Frederic Fasano, Michel Trudeau, Vincent Hogue, and Maureen Brennan are elected directors of the corporation to hold office until the next annual meeting or until their successors are elected or appointed. The next item of business is the appointment of auditors. Does anyone have a motion in this regard? My name is Luc Mainville, and I move that PricewaterhouseCoopers LLP be appointed auditors of the corporation to hold office until the next annual meeting of shareholders, and that their remuneration be fixed by the board of directors of the corporation. My name is Frederic Dumais, and I second the motion. I am advised by the scrutineer that management has received proxies representing 100% of the votes cast in favor of this resolution. I declare the motion carried. Therefore, PricewaterhouseCoopers LLP are appointed as auditors of the corporation until the close of the next annual meeting of shareholders, and that their remuneration may be fixed by the board. Ladies and gentlemen, that concludes the business for which this meeting was called. After the meeting, we will give a presentation on the corporation's activities and answer any questions. There being no further business to come before this meeting, I will now entertain a motion for the adjournment of the meeting. My name is Luc Mainville, and I move that this meeting be adjourned. My name is Frederic Dumais, and I second the motion. That being the case, this meeting is now adjourned. Formal portion of the meeting is now adjourned, and we will move over to the corporate presentation. As I mentioned earlier, for those that wish to provide questions, there is a question box at the bottom of your screen. You can enter your questions and send them, and they will be dealt with at the end of this presentation. Again, thank you, everyone, for being here, and I assume many of you are shareholders of Valeo Pharma. I would like to bring your attention to the screen and the forward-looking statements. If you could take just a quick couple of seconds to review these, and the disclaimers that are included therein. Okay. Thank you. Thanks for that, Fred. If we could continue. Just giving you a little bit of background on Valeo Pharma. The company was founded back in 2003, so we're 19 years old this summer. We're a fully integrated specialty pharma company dedicated to commercializing innovative products in Canada. Our primary business model revolves around the licensing or acquisition of the Canadian rights to clinically de-risk commercial-stage proprietary drugs. When we say clinically de-risk, the company does not take the risk of clinical trials or research and development. We're looking for products that have passed that stage, that are ready to be registered or are already registered, that are ready to be commercialized, and that do bring some advantage to Canadians from a therapeutic point of view. The company operates in two separate business units. Our respiratory specialty and specialty products. These two units will be dealt with further by our president, Frederic Fasano, later in this presentation. Big milestone. A lot of changes this year in the company. Certainly from the annual meeting last year around this time to today, the company has been transformed both from a product perspective, revenue perspective, and even personnel and corporate structure perspective. TSX, we were listed recently, March 29th, we started trading on the big board, so the most senior exchange in Canada. I think that reflects a lot about where the company is and where it's going as a company that the TSX selected us or accepted us for listing. We have a recurrent revenue growth anticipated. We expect to have revenue growth for the foreseeable future. That, in our projections, is at least the next five years, and that'll be compounded growth on an annual basis. We have a strong commercial pipeline. With the existing products we currently have in our portfolio, we see peak sales of between CAD 150 million and CAD 180 million. Again, just from the products that we currently commercialize. Last year at this time, we were maybe 35 employees. We're over 100 employees across Canada. Strong commercial presence, strong presence medically, strong presence in various aspects of the business. Very much a small, big pharma. If you consider companies like Pfizer or like Merck Serono, Valeo does very much of those activities that these companies do, other than the research and development aspect and manufacturing. Very well-diversified and fully integrated pharma company. 2020 saw our revenues of approximately CAD 8 million. 2021, revenues grew to over CAD 13 million, and we expect this type of revenue growth to continue for the years to come. Again, like most pharma companies, there's certain key products will be the drivers of that growth, and we will discuss those further in several moments. Enerzair, Atectura, which are the anchors of our respiratory portfolio, have tremendous potential as innovative asthma therapies. Redesca, which was launched about a year ago, at this time a year ago, or late April of 2021, is a lead product in our specialty product portfolio, which continues to grow also. We have two strong business units. Respiratory, which has the upside potential. It's still in its very early days. These products were launched about six months ago only. The specialty side, which is a bit more established and growing. Again, when we look at our key therapeutic areas, we look at respiratory, Enerzair, Atectura. With Redesca, M-Eslon in our specialty group, which includes neurology products such as Onstryv and oncology products such as Yondelis. A total of eight branded products that we currently market. As I mentioned, 2021 and the beginning of 2022 has seen a number of milestones achieved by the corporation. Back last year in Q1 2021, Frederic Fasano joined us as our President and COO from Servier. In Q3, we launched our new business structure, which is the respiratory unit, which is our main driver going forward, and our specialty product units, which provides the base and the bulk of our revenues today. We completed our new head office. We completed it in the sense we expanded it to accommodate greater warehouse capability and additional personnel. We listed our shares on the TSX, more recently in Q2, as I mentioned previously. A number of other milestones were achieved, and these will be dealt with specifically within the business units. Frederic Fasano will now take over the presentation and discuss and give you some insight into our respiratory business unit. Thank you, Steve. Again, my great pleasure to be attending this important meeting and to be sharing with the audience basically what we have been doing for a full year of transformation at Valeo, as Steve just mentioned. One year ago, we started this transformation with the addition of core product. From the operational standpoint, the first step that we worked around with the team at Valeo was pushing those products once they were acquired from our partners, pushing those products towards the market access process, but also toward the process of putting the team together. Actually, I want to emphasize that because those are really outstanding results. We were able to bring both Redesca and our asthma product to be covered publicly. As you will understand, this is a major milestone that is predicting how product will be behaving on the market later on. For both products, public listings have been completed for Redesca and almost completed for Enerzair and Atectura. Only one province is today missing, but all the other ones, including the major ones like Quebec and Ontario, are currently covering our asthma products. It took us 16 months from Health Canada approval to bring those products to full coverage. Interestingly, from the operational standpoint, it took us 83 days from signing the deal with our key partner, Novartis, on the Enerzair product, to be able to ship initially the product to wholesalers, and that was in June 2021. To have a full team operational in the field, having their core targets list defined, having full marketing campaign in place, and we started to be fully operational again in September 2021. It is five months. From a white paper to having a full team in place took us 5 months. I have to send kudos to the team at Valeo to having made that possible. On the following slides, Fred, maybe. One key message today to this audience is that with almost 1 year from the start of the project and with almost 6 months of being fully operational, meaning in direct contact with our customer, we want to confirm, we want to reaffirm our ambition. This ambition is turning around, of course, defining how we see our asthma product growing in the future. 350,000 patients will be receiving, in 2-3 years, a triple therapy in order to control better their asthma. Enerzair is a first in class. I'm still on the previous slides. Sorry, Fred. Enerzair is a first in class. It is the first to come into market. It is the first to be covered as a triple therapy in asthma. We hope based on those milestone and others as well, to be able to capture 42%-43% of this market. This is what will generate CAD 90 million net revenues on this product. Same mechanic for Atectura. It's a different market because other dual therapies are already competing on this market, but Atectura is coming as a best in class, and we hope to generate with this product CAD 25 million-CAD 35 million as a result of capturing 14% market share. The reason why we are optimistic, of course, but we are supporting this ambition, is first and foremost because there is tremendous unmet medical need over there, and there is tremendous gaps in asthma management. 3.8 million Canadians are suffering asthma. 1.4 million Canadians are taking medication every day in order to get a better control of their symptoms, a better prevention of the asthma attacks, and 250,000 Canadians are suffering from severe asthma. These diseases have been sending over the past 12 months, 70,000 patients to the emergency room in any hospital across the country. The second point is that the level of control is not good. It's simply not good, and it has eventually also been worsening with COVID taking place during the last 2 years. The level of control is not good. The level of symptom control is not good. The level of prevention of asthma attacks is not good, and it is definitely calling for better treatment options in order to help patients reaching a better control and therefore a better life. The second reason why we are supportive of this ambition is we are just in front of a major shift on the asthma market. As I said before, triple therapies are about to be introduced. No, they are now introduced practically since Enerzair was launched one year ago. This triple therapy segment will be taking over five years of time, more than 30% of the total market. This market will grow up to CAD 222 Canadian dollar value, and Enerzair is the first in class to be introduced on this market segment. The second point is, again, as you see on this slide, the dual therapy segment will decrease a little bit but will still be the main segment of market, and this is where Atectura is competing. You see 46% worth of this market is still a very important market. We are conservatively projecting Atectura to take 14% of this market, and therefore reaching CAD 25 million-CAD 30 million. Again, the market perspective is also very interesting for us. Now, the second key message to this audience is, whatever key performance indicator we take so far, they are all directed towards the right direction. They are all growing. We track our sales every week. That's coming from one wholesaler. We have more than one wholesaler, but this is the most important one. It's approximately 50% of our total sales. You see here the cumulative weekly sales for Enerzair and Atectura, and you see it's growing. It's growing up to a trend towards that will surpass 300 units per week. Definitely going into the right direction. If we take the tracking that we have on a monthly basis on the following slide, we are able to track prescribers and prescriptions. Actually, you take those KPIs, number of prescribers in Canada, they are growing month after month. Total number of prescriptions, same thing, they are growing very interestingly month after month. The product has started to be very consistently adopted by physicians over there, and it's translating, of course, in the trend on the following slide, on the sales trend that is also showing us the way, showing us the upcoming months. You see here, this is the monthly tracking of our sales. You see also in the orange box when the public coverage started to take place. Interestingly, what we see here is that in March, we have seen an inflection in the curve that is basically a result of having this nice pathway toward public coverage for both products. Ontario is covering, again, Quebec is covering, and we start to see the impact on the sales curve. Of course, we are competing over there now for several months. One thing that we shouldn't forget is not only we have a competitive organization, a competitive commercial, and medical structure in place, but we have two awesome products. Why are they awesome? Because they are just showing up, and they are just presenting themselves now with comparative data versus standard of care. Again, Enerzair Breezhaler is a first in class, it's doing better than the dual therapy, and Enerzair Breezhaler is doing better than the loose triple therapy, meaning 2 different product, not within the same product, but in 2 different inhalers and 2 different products, taken oftentimes 2, 3, 4 times a day. Both product are taken only once a day. Again, Atectura Breezhaler is presenting itself on this competitive market with data showing that it is better than the usual and conventional treatment like Advair. Better in preventing exacerbation, the so-called asthma attacks, better in improving symptoms, and better in improving lung function. You may ask, of course, we are supporting and we are meeting customers every day. We are supporting those products with a lot of passion and a lot of energy. What about the feedback we have with our caregivers? You have a series of feedback here. Again, the reason why we are saying they are all going in the right direction is that there is no signal that is telling us that we could have a barrier to adoption. If I just read some of them in Ontario, one doctor told us, "I've been so pleased with the result of switching my patients to Atectura or Enerzair Breezhaler. My patients said they just feel so much better. One patient asked me why I didn't put him on Enerzair Breezhaler earlier." Another one said, "Simple. My triple therapy of choice is Enerzair Breezhaler. It works well." Another one told us, "Atectura made a huge difference to my patient's life. I started him on Atectura, and after one month, his lung function was improved to 70%," and this patient said he never felt so good and was now walking to work and doing things he never did, and so on and so forth. Those feedbacks are coming from all across the country. That's not only about us, that's also another reason why, again, we support this huge ambition behind those products. Just as a summary, what did we do across the second part of 2021 and the initial part of 2022? We entered into this commercialization agreement with Novartis exactly on the 26th of March 2021. We reached private coverage in six months' time, approximately. We set up a new respiratory business unit launch with a head, with middle management, and with sales representatives. We did move the process again with PCPA ahead. LOI was signed at the end of September 2021, actually. We started the launch, and we are now a full again business unit operating on the field. In 2022, we completed the public reimbursement with additional provinces. Now again, more than 90% are publicly covered. More than 90% of the private payers are covering those products. We have gained continuous and sequential weekly growth, as you have seen in the previous slide. That's going in the right direction again. If respiratory is definitely inspiring all the team to do even better and accelerate the curve of sales, the second important contributor to this year's success is Redesca. As you know, it has been approved by Health Canada in 2020. It has been launched in 2021. It is a low molecular weight heparin biosimilar. In this game, it was of utmost importance to be among the first on the market. This is actually what the team at Valeo did. It is a product supported by 12 head count, mainly key account managers, working around hospital listings all across the country. Same thing, if we look at where do we stand. Interestingly, here you have the evolution of the three biosimilars on the market against the originator. You see here that in less than one year time, biosimilars have been capturing 26% of the total market. If you would consider some other comparators in terms of biosimilar introduction, it is a very fast erosion of the originator. In our case, we are talking here about Lovenox. It's promising that biosimilar will take over the vast majority of the enoxaparin market, and potentially even more, because we have potential also to gain hospital listings versus the other low molecular weight heparin. When we look at the biosimilar market, Redesca is the number one biosimilar in Canada. We are owning today 61% of this biosimilar market. So far, so good, but we have to do better. We have still hospitals not having been transferred to biosimilars, and one key priority for us is now to work very intensively on the Ontarian hospitals again, to support this growth, which is already there. You have the monthly sales here. We reached an interesting milestone in March. More than CAD 1 million dollars generated, CAD 1.2 million I should say, generated by Redesca in one month's time. You see, it's the number one biosimilar. It's providing growth, and it will continue to do so in the months to come. Again, key milestone for you know Redesca has been allocated to our specialty product business unit. Key milestone for this business unit are around, again, the approval of Redesca was a key milestone, of course, for us, the PCPA letter of intent signed in April 2021. The public reimbursement secured in 2021, but in seven provinces, but with more time. Again today, Redesca is covered everywhere. It is available as a covered product in all the provinces in Canada. In parallel, we gained GPO, group purchase organization, listing and agreements for Redesca. Again, as you see, public reimbursement has been progressing very nicely. As a kind of wrapping up, so again, we are still very strongly committed to succeed, of course, and committed to deliver on our numbers. We do believe, as Steve mentioned before, that we have the potential today with our current transformative product to bring the company to CAD 150 million, if not more. CAD 150 million. We were good, and the team has done a really great job all around the reimbursement processes. We have a full commercial and platform in place to support those products and eventually even more products. We finally have, again, it's very early and we are, again, talking with the team every day, in order to evaluate how we can accelerate that. So far so good. Early positive signs are coming from the adoption of both Redesca as a biosimilar and in Enerzair and Atectura as a new innovative treatment option for asthma patients. Again, a lot of ambition, but very excited to be part of this journey. With that, I conclude my presentation and hand it over to Steve. The investment highlights, year-over-year growth. We've de-risked our business model from research and development, clinical risks. We've got excellent partners, companies like Novartis, Zambon in Europe, Takeda. We've got our three key products. In the short term, Redesca is our number one selling product, which will soon be surpassed by Enerzair and Atectura, around which this CAD 100+ million of revenue will be built. Our portfolio and our pipeline are growing. We've got a strong structure, both commercially and in commercial support. We have ongoing business development activities that we believe we'll be able to leverage this strong infrastructure. We're trading on the strongest, most senior platform in Canada, and we believe Valeo has a very bright future in Canada with, again, a great shareholder base. We thank you all for supporting us and look forward to continuing to develop and keep you informed with these developments. At this time, for those that do wish to ask any questions, again, at the lower part of your screen, you have a question box where you may enter those. They go to our Director of Communications, Frederic Dumais, who will then read them out to myself, and either myself or Fred Fasano will gladly answer them. Fred, any questions? Thank you, Steve. First question is regarding our asthma products. Now that they've been on the market for a few months, how are they comparing against the competition? Fred, do you want to answer that? Yeah, sure. The best way to look at how we are performing against competition is to look at prescriptions. Interestingly, what I can share here today that on the triple therapy in there, we are already doing better than the competitor, which is Trelegy, a product from GSK. Now, if we look at the number of new prescriptions generated every month, we are basically at a pace that probably in the months to come, we will be surpassing other major brands like Zenhale, like even Breo or even Advair. From the prescription standpoint, I think again, it's growing and growing nicely, and we see as a source of business also we can evaluate where our prescription are coming from. I don't want to be too long here, but if we look at those source of business, actually we are gaining against major treatment like Symbicort as well. Symbicort is to their product over in asthma only, not asthma plus COPD, but in asthma only, Symbicort is a product over CAD 170 million. We are gaining prescriptions in patients that were previously treated with Symbicort that are going to either Atectura or Enerzair. I would say so far so good. Adoptions again are kind of starting to deliver on expectation. Thank you, Fred. Another question that we often get. When can we expect to see new products being added to our product portfolio? Would they be necessarily in the same therapeutic areas? The business development activities of our company are essentially our R&D. That's where we find and develop products. We've been doing this since inception with the same team, and it's an ongoing process. We do expect to add products to our existing portfolio. As I mentioned earlier, we'd like to add products that can leverage. When I say leverage, what does that mean? It means by being able to use the same commercial teams to sell more than one product. It's not adding a lot of additional sales and marketing expense when you add an additional product. That's leveraging what you've already built. Yes, we're looking at specifically those. Could we open up a new therapeutic area? I think that's part of your question. Absolutely. I think it's something that we would consider if the circumstance were right. Respiratory is our primary therapeutic area. We'd like to add products in respiratory. The specialty business unit is a bit more eclectic, with products in hematology, oncology, and neurology. To have a second real standalone therapeutic unit, is something that we're strongly considering. Thank you, Steve. Another question. Now that the private and public reimbursements have basically been completed and secured for our three lead products, what are the next steps to ensure that sales target will be achieved and met? Yes, Steve. What remains to be done is the most important, which is being commercially effective and commercially good at putting in place our marketing programs. Basically working around, first of all, detailing on the product. Today, our sales force is covering 10,000 prescribers, and is pushing doors every day in a context in the previous months where COVID was instead closing doors. I think we have to maintain this ability to be interesting enough for our doctors to be willing to accept to be detailed and presented with the clinical trials. First off, the operational excellence is coming from our ability to detail. But other programs are also aiming at educating. It is important that, again, we share all the clinical data that Novartis has generated behind those products, because again, they are very interesting. Other marketing programs are supportive of sampling, for instance, sending samples to doctors or even patient support program that is allowing us to support, in some cases, that is allowing us to improve the access to our medication for some patients that are in need and that needs our treatment. Maybe they cannot afford them, and therefore, we are providing some support in the form of a patient support program. All in all, this is in place, and we are now, of course, looking at what is supportive of the fastest adoption in order to accelerate sales. Another last component, and again, I don't want to be too granular here, but certainly the input coming from our specialists is so important now. If specialists are adopting our product, general practitioner will do the same. Thank you, Fred. Another question is regarding COVID-19. It's been a big factor in the past couple of months. Do we still expect COVID-19 to play a role in meeting with the prescriber and physicians? Steve, if you allow me, I'll jump on this one, and just to say that things are improving, definitely. With containment measures starting to reopen, all, I mean, to a certain extent, we all need more, at least nearer to normal life, and this is the same for doctors. Yes, it's going the right direction, and along with that, we see that our number of in-person detailing is increasing. That's one point. The second important point as well is around the idea that doctors are again visiting their patients in person. Because you don't do the same in terms of asthma management if you're visiting your patients remotely as opposed to seeing them in your clinic. Same thing here, we see doctors seeing more and more in-person patients, which will allow to better assess the level of control and to make the appropriate treatment adaptation in favor of products that are providing a greater efficacy. This is where, again, we see a great opportunity at this point in time to detail Atectura and Enerzair as new treatment options for those patients. Thank you. Our last question concerns revenue. Can we still expect to see sequential quarterly growth for the rest of 2022? That's certainly a good question. Certainly, Valeo is a commercial stage company. It's not an early stage company. It's not a company that has products in development. We are a commercial stage, eight commercial products. Key drivers, again, in the short term being Redesca and Amelon, and in the mid to long term, Atectura and Enerzair, as the detailing activities Fred talked about take effect, and we see that sales growing on a monthly basis. Clearly that's our objective. We see quarter-over-quarter sales growth. We see that sales growth on an annual basis, and that, again, is just with our existing products. We see the margin growth. We've shown that in Q1. We're showing that again in Q2. Very strong. It's a bumpy ride, as you mentioned. There is COVID that's still out there. Reimbursement, thankfully, is behind us in the sense that we have reimbursement from all the provinces. I think we're missing BC for Enerzair and Atectura, which should come shortly. We have all the commercial forces going in the right direction right now. Our team is aware of the product. Physicians are becoming more and more aware of the benefits of our product. I think it's very realistic to expect quarter-over-quarter revenue growth. For as far as we can see, Enerzair and Atectura, these are products that are going to keep growing for six, seven, eight years. They'll be the prime drivers of that growth, and other products will be added during that time, which will accelerate that growth. Steve, maybe if you allow me just one additional comment, which is the recurring nature of our markets, which means that every time we gain a new patient, a new asthma patient is starting to be treated with Enerzair and Atectura, he will be treated for a certain period of time. The key here, in order to grow on a month-to-month basis or quarter-over-quarter, is this idea that we need to work on acquiring new patients. The same applies for Redesca, because you know that when we are signing a hospital contract, we get the market for three years, and then what will provide the incremental growth is adding new hospital listings. The recovery of the market is also telling us that every time we gain new patients, every time we gain new hospitals, this is an incremental growth that is coming to us. Yeah. Point well made. No further question at this point in time, gentlemen. Well, thank you, Fred. Both Freds, and again, thank you to all our shareholders who've signed in on this meeting, and thank you for your support. We look forward to bringing you some very exciting times in the future as the company continues to grow and evolve. We'll keep you as informed as we can, and certainly encourage you to reach out to the company through, specifically, Frederic Dumais, who will be happy to get back to you with answers to your questions. Again, thanks again, and we will look forward to convening at our next quarterly update meeting after our quarterly results are published sometime around mid-June. Thank you.