Valeo Pharma Inc. (VPHIF)
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Earnings Call: Q2 2021
Jun 30, 2021
And gentlemen, and welcome to the Valeo Pharma Inc. 2nd Quarter Results Conference Call. At this time, all participant lines are in a listen only mode. Following the presentation, we will conduct a question and answer session. Also note that the call is being recorded on Wednesday, June 30, 2021.
And I would like to turn the conference over to Frederic Gillemet. Please go ahead.
Thank you, operator. Good morning, everyone. Present with me today on the call are Steve Saviak, our CEO Craig Pazano, our President and Chief Operating Officer and Luc Miville, our Senior VP and Chief Financial Officer. Before we begin our Q2 2021 results and highlights conference call, I would like to remind everyone that This conference call may contain certain forward looking statements regarding the company's expectations for future events. Such expectations are based on certain assumptions that are funded 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 I would now like to pass the call over to our CEO, Mr. Steve Sadioque. Please go ahead, Steve.
Thank you very much, Fred. Good morning to all and thank you for joining us for the Q2 2021 Results and Highlights Conference Call. I will start by quickly reviewing our Q2 product highlights and recent milestones. Then I'll pass the microphone over to Mr. Fred Fasano, our President and COO, who will provide more details on Our commercial efforts, our corporate structure, product status, following which our Senior VP and CFO, Luke Maybill, We'll provide a short review of the quarterly results before opening up the call for questions from financial analysts.
Q2 2021 was, I think, a milestone quarter for Valeo, a really transformative quarter. We're very pleased to report that we recorded our highest revenues ever during the Q2, and I'll go through some of the reasons why that is so. Again, we're at an inflection point where some of our existing products, Our products we've had for at least 12 months now, Emeslon, morphine sulfate, Yondellis Showing good sales, Emeslon sales increasing, OnStride sales increasing significantly. So Our current products are kind of legacy products, if you will, did provide quite a bit of the revenue jump for Q2 And only at the very, very end, the last 2 weeks of the quarter did we launch Radhesca. And even in that short period of time, Radhesca did start to show Some significant revenue and in addition to that, it has now become our best selling product in the space of less than 2 months.
We expect that Bradesco sales will continue strong in Q3. They are Over the course of the 1st 2 months of our quarter, our quarter ends July 31, have been quite strong and very much so into the next 8 to 12 quarters before they reach maximum peak sales. Again, we're estimating RODESCA can hit peak sales of somewhere in the vicinity of about $30,000,000 So Quite a ways to go, but we're making very strong head roads with hospital pharmacies and with retail pharmacies. We've also had quite a bit of success on the reimbursement front. We are reimbursed in Ontario.
We will shortly be reimbursed in a number of other provinces and that's a key feature of the use of Bradesco in the provinces. So very optimistic about and very pleased with our key account management team, Which has led the launch of Bradesca. EnerZair and Atechura are clearly 2 asthma products that will make a change for not only for the lives of asthma sufferers in Canada, but certainly for Valeo and its employees and its shareholders. In late March, we entered into the biggest and most transformative deal of our history when we signed a commercial By agreement with Novartis Pharmaceuticals Canada to be the Canadian commercialization arm of these 2 innovative asthma therapies. The signature of this deal and the subsequent buildup of our team and launch of these products immediately positions Valio as one of the leading respiratory companies in Canada, A company from a position from which we can build additional products and market and therapeutic area dominance.
We started shipping Enerzera Nat Tektura in June and Fred will provide more of a detailed update on how our Infrastructure is built out and the deployment of our national sales force. I'm very pleased with the quality of the people we're attracting. It was effort to have to build up a team in and launch within less than 90 days and it's really a testament to the management and the people that we were able to do so. That is a very quick launch turnaround period of time. Private payer coverage, Any drug sold in Canada relies to quite some extent on coverage by the various provinces and also by The life insurance companies that provide benefits to employees, we currently can have announced that about approximately 80% of privately insured lives in Canada Are covered and reimbursable for the use of Enerzare and Actura.
I'm also happy to announce that We are well on our way to advancing public coverage, which will be the 2nd leg, so to speak, of the full reimbursement package. Sure some of you are curious about where we stand with Asperco. Asperco, as you know, It is a flavonoid that has some very unique properties in terms of anti inflammatory response, Immune support and as you may know, the Montreal Heart Institute in February instituted a clinical trial using Asperico On double blind placebo controlled 216 patient trial using Asperico as the active arm, That trial has been completed. All patients enrolled, they are now reviewing the results, and we should have something to report later on in the month of July. We also during the 3rd the second quarter completed a $6,600,000 debenture financing, which was 40% Subsequent to the quarter end, Valio was admitted to The innovative and to a trade association known as Innovative Medicines Canada as a full member.
This association plays a central advocacy role in all major issues related to the pharmaceutical industry, and we're glad to be part of it. And certainly, I think it's important going forward that Valeo has a voice at the table of how the pharmaceutical industry in Canada develops and its relationship With the federal government and the provincial governments. And just recently, as of yesterday actually, we announced that we've Closed $11,500,000 bought equity financing agreement, including an over allotment. So a fully subscribed deal and Mr. Maybelle, our CFO, will provide more details on that and on our financial position.
Any company or any successful company needs a number of elements. And I think the key ones for value are great people, world class products and now finally the capital resources. With these three elements, We strongly believe that we will be building a leading Canadian pharmaceutical company focused on respiratory, Neurology, Oncology and Other Specialty Products. And with that, I'll pass the mic over to Fred, to give you a bit more detail and color on some of our
Thank you, Steve. We are actually very proud to have now officially launched And started commercializing our 3 transformative products, Redesca, Enose Brizhaler and Atektura Brizhaler We'll play a key role in the achievement of our ambitious growth objective. And as demonstrated by our just released quarterly results, The growth we anticipate has already started to materialize. In order to maximize and capitalize on the significant growth drivers And market opportunities we needed, as Steve mentioned before, to further update and upgrade our corporate structure. Based on our level of execution today, we are about to demonstrate to our current and future partners, our agile company like Gladiopharma Can promptly build infrastructures to support key brands at time of launch.
Our hiring plan has led To the addition of key talent, to the Vallejo leadership team and to the commercial team, and we have created recently 2 distinct business units supporting our branded product portfolio, respirology and specialty products, And we have one division composed of our hospital generic portfolio. As far as the As a result of this business line will support the promotion for both Enotherand AtekTura and potentially additional respiratory Product in the midterm as we are growing our expertise in the field. In terms of hiring plan, we are almost done with the hiring of Key talent to build up quickly and efficiently our commercial capability, the National Respiratory Salesforce is to be composed of more than 50 collaborators who have been deployed on the field across the country and will be by end of July fully operational. We have been able to rapidly recruit and deploy a very strong team of experienced people with impressive track records in the pharmaceutical industry, All the way from the business unit head, we just announced the arrival of Robert Wiseman as our business unit head respiratory, Regional sales managers and sales representatives to the support staff at head office were very pleased with the attraction of We have also started to deploy our digital platform with our strategic partner, Impress Pharma.
The digital platform, basically a customer relation management platform, CRM, will help our medical and commercial team connect With more than 10,000 healthcare providers in both a remote fashion, where access is still limited due to COVID-nineteen And all back in face to face as COVID-nineteen related conditions reopen access to doctors in person. Enozem Braziler and the texture of Braziler, we have just recently launched and the very early feedback we are getting from the field is very positive and encouraging. Both products are already well covered by private plans and we are now working on the public side to get them on public provincial listing as soon as possible. As far as the medical team of value pharma is concerned, we have now internally all the required And the full infrastructure, as we mentioned several times in the past, to register and properly manage Our growing product portfolio through all stages of commercialization from regulatory market access and now to medical affairs, Our new structure now allows us to manage every aspect necessary to ensure commercial success. The team is now led by our Senior Vice President, Scientific and Medical Affairs, who joined the company 2 weeks ago, Ms.
Nelly Kumari, and she has already onboarded field based medical position like MSL, so called MSL, medical science license covering entire Canada and like one H2B is positioned as a Scientific and Medical Manager. Now the second business unit that we created is Our Specialty Products business unit and this business unit this business line has also recently been created and supported promotion of our specialty branded Product, including our flagship product, Redeska, but also other specialty brands in neurology and oncology. The team is completed and fully operational and the recent launch of Redesco is already showing very encouraging signs of market capture Both in the hospital and retail market. The product is now listed on most of the provincial formularies across Canada And private payers are also largely covering Redescar as an open benefit product. Our team is now comprised of 15 dedicated people, including 11 cans and they are all working on how to include Bradesco on hospital listing.
And the unit Business Unit Support also the promotion and the whole P and L of Redescar, OnStride, Vamedevis, Esperco and Amital. The hospital generic division is including generic products, which have been deprioritized in terms of investment. This line of product is mainly supported through submission to hospital tenders, but no promotional support in the field with healthcare providers has been deployed. Overall, small revenue stream, but still profitable and we are now seeking to maximize the value of this business line. So as overall comments, Vallejo has now more than 80 employees.
We expect to complete our hiring plan and be above 100 by the end of July. The ongoing integration of our new employees is going very well and the great focus of all our team members It's now and clearly on the launches of our 3 key assets, namely Redisca in thrombosis and Energia and DEXTURA in asthma. The strategic transformation of value is well advanced since the organization itself, the business lines, including the product portfolio And the management accountability are now all aligned on our key priorities. We are ready to deliver on the value of our product portfolio and this has already started in Q2, But early signs of Q3 trends are showing that it's really on a good trend and it is again very encouraging. Our business development team is also continuously on at work to search for additional strategic assets to add to our portfolio And to take full advantage of our new corporate structure and commercial platform.
We'll keep you updated on our progress going forward, And we look forward to bringing you more details throughout the year. So this concludes the product review section of our call, And I will now pass it over to Luc for a quick review of our quarterly financial results. Thank you.
Thank you, Fred. Our revenues for Q2 2021 were up by 27% compared to Q2 2020 At CAD2.26 million compared to CAD2.1 million for Q1 2020. The increase in net revenue was due to the strong contribution of new products Over the past 12 months, which represented 25 percent of our Q2 2021 revenues and included revenues from Yandellis, Amitop, Aspericosezemetokinate in the U. S. And also Redeska, which was launched in April 21, a few weeks only prior to the end of the quarter, We still generated meaningful revenues for the period.
Revenues for the year to date 2021 period were up By 20% compared to year to date period 2020 at $4,500,000 compared to $3,800,000 Same as for the quarter, the increase in revenue for the year to date period was due to the contribution of new products launched over the past 12 months, Which represented 20% of our year to date 2020 revenue 2021 revenue, sorry. Due to the addition of revenues from new branded products such as Yandelis, Emetop, Redeska as well as the quarterly growth of OnStrives sales, our gross margin ratio for Q2 2021 has improved When compared to Q2 2020 at 27% versus 24% of product revenue. The 3% increase in gross margin ratio combined with a 27% increase in revenue contributed to a 43% increase in our gross margin For Q2 2021 at $700,000 compared to $500,000 for Q2 2020. Note that we were anticipating an even greater gross margin contribution for the quarter due to the mix of product revenues, but higher than Expected gross to net sales adjustments impacted our margins, but still ended up 84% above gross margins achieved in the prior Q1 2021 For the 6 months year to date 2021 period, our gross margin percentage has improved as compared to the prior year period.
The mix of revenue for the period contributed to increase our gross margin ratio from 22% to 24% of revenue. The combined impact of the improved revenue mix as well as growth in revenues led by a 34% increase in gross margin contribution For the year to date 2021 as compared to year to date 2020 at €1,100,000 versus €800,000 Now sales and marketing expenses. Vallejo commercializes branded products that require sales and marketing support as well as Aemetop and hospital injectable products, which require limited sales and marketing commitments. Because sales and marketing staff costs represent the bulk of the sales and marketing expenses, those expenses will increase as we expand our sales force To support the launch of Radhesca, Energir and Atekshura and other branded products. During year to date 2021 period, Valio implemented the Salesforce, relevant key account managers for Radhesca in anticipation of the April 2021 launch.
Also in Q2 2021, following the licensing of Energir and Atekira from Novartis, the corporation started hiring sales and marketing staff to support the commercialization of these products. These two factors contributed to increase our sales and marketing expenses, While revenues from these new products have not yet reached their full potential, sales and marketing expenses for Q2 2021 were CAD1.1 million or 41% of net revenue as compared to $500,000 or 25% of revenue for Q2 2020. The increase between the two quarters is 109%. The Q2 2021 sales and marketing expenses include Non recurrent hiring charges for the new sales and marketing staff as compared to nil last year. Sales and marketing expenses for year to date 2021, sorry, were $1,900,000 or 42 percent of net revenues As compared to $1,100,000 or 30 percent of net revenues for year to date 2020, the increase between the 2 year to date period is 78%.
The year to date 21 sales and marketing expenses, including €200,000 of non recurrent hiring charges for the new staff as compared to nil last year. The increase in general and administrative expenses for each of the Q2 2021 year to date 2021 period as compared to prior year Results from mainly the addition of head office personnel required to support the strong growth anticipated in the current fiscal year and beyond. We expect to see further increased net office staffing for the coming quarters following the creation of the new structure required to support the growth of our commercial pipeline. The new structure will be completed this year and provide significant leverage thereafter. Consequently, general and admin For Q2 2021 was €1,000,000 as compared to €700,000 for Q2 2020, representing a 40% increase.
General and admin expenses for year to date 2021 was $2,000,000 as compared to $1,500,000 for year to date 2020, representing a 36% increase. Our financial expenses increased by 66% 111%, respectively, for the quarter year to date period in fiscal year 2021 As compared to the prior year period, these increases were due to the series of debenture financing closed over the past year. Valuable secured debenture financings of $2,200,000 in Q2 'twenty and $1,700,000 in Q3 'twenty As well as CAD 6,600,000 non convertible debenture financing in April 2021. These financings contributed to increase our financing cost From $100,000 in Q2 2020 to $200,000 in Q2 2021 and from $200,000 To $400,000 between the year to date 2020 and the year to date 2021 period. Our net results For the last quarter year to date period have been impacted by addition to sales and marketing and general and admin Staff and expenses required to position Vallejo for solid growth in fiscal year 2021 and beyond.
The creation of the new structure As well as the expansion of Vallejo's commercial team is required to capitalize in the significant market opportunities for Radhesca And there's there in Atekula as well as accelerate the growth of our existing pipeline such as OnStripe, Yandelis, Aspherco And new products to be added over time. We anticipate the strong sequential revenue growth of our sequential quarterly growth of our News and margins will contribute to lead value towards profitability during the course of fiscal year 2022. We already predict more than 50% increase in revenue In Q3 2021 as compared to 2022 Q2 2021 and with similar increases in margins. Net loss for Q2 2021 increased by 117% compared to Q2 2020 at $1,900,000 compared to 0.9 1,000,000. Our net loss for year to date 2021 has increased by 82% compared to year to date 2020 period at CAD3.6 million compared to CAD2 1,000,000 The increase in the net loss between the two quarters and year to date period was due to respective increases in sales, marketing, G and A, Share based comp and financial expenses, which were only partly offset by the increase of our gross margin.
EBITDA loss for the quarter increased from $600,000 in Q2 2021 to $1,500,000 in Q2 2021 Sorry, in Q2 2020 to $1,500,000 in Q2 2021, representing 139% increase. EBITDA loss for the year to date period increased from 1.6% to 2.9% between the 2 respective year to date periods, representing an 86% increase. Our adjusted EBITDA increased by $500,000 between Q220 to Q2 2021 at $1,100,000 compared to 0 €600,000 representing an 80% increase. Adjusted EBITDA loss for year to date 2021 was €2,200,000 as compared to 1,500,000 For the year to date period, the 45% increase can be attributed again to respective increases in sales and marketing And G and A expenses, which were required to position the company for growth. Finally, our adjusted EBITDA loss for Q2 Was the same level as Q1 2021 at €1,100,000 and indicative that the growth in sales and marketing and G and A expenses We're covered by the increase in our gross margin.
Now let me comment on our financial resources. Our cash balance at the end of Q2 CAD3,700,000 as compared to CAD2,800,000 at year end, representing a 29% increase. Our cash reserves have increased as a result of our successful $6,600,000 private placement secured in April and helped Vallejo cover Cash flow from operation, but more importantly, fund working capital requirements required to support the respective launch of Radhesca and EZRA NetEkTura as well as the payment of the licensing fee to acquire the products from Novartis. Cash used in operation was €4,300,000 in year to date 2021 Compared to CAD2.5 million in year to date 2020, CAD1.7 million increase came from CAD1.6 million increase in net loss And $700,000 increase in non cash working capital, which were partly offset by the large increase in items not affecting cash Of $600,000 Item not affecting cash increased were due to the increased depreciation and amortization on intangible asset As well as the share based compensation and non cash effective interest expense on the ventures. The increase in non cash working capital Requirements resulted mainly from the respective $600,000 and $4,600,000 increases in trade receivable and inventory, which were only partially offset by the $3,300,000 increase in trade payables.
Verdeskka inventory alone represented $3,500,000 As of the end of the Q2, cash used by investing activities was CAD 2,200,000 in year to date 2021 as compared to CAD 0.4 For the prior year, the $1,800,000 variance was mainly due to license fee paid to Novartis on signing of the Endozere Tectiva license. During year to date 2021, financing activities provided cash of $7,400,000 compared to $2,600,000 for the year to date 2020 period. During the year to date 2021 period, Vallejo secured the CAD6.6 million from issuance of non convertible debenture, but also CAD1 1,000,000 from the exercise of warrants and options. During the corresponding year to date 2020 period, Vallejo secured $1,100,000 net cash from commitments into the Q2 2020 debenture financing as well as a $1,500,000 increase in its operating line of credit. Following a series of successful financing In fiscal year 2020 year to date 2021, but also taking into account the closing of the successful $11,500,000 bought deal financing announced yesterday, We have secured significant capital to strengthen our balance sheet and have required activities to support the launch of our new respiratory franchise And to continue supporting the rest of our commercial pipeline.
Our working capital efficiency of $2,300,000 at the end of the second quarter, Including the short term maturity of our $6,600,000 bridge financing closed in April and has been addressed by the net proceeds of the 11 €500,000 financing announced yesterday. After considering yesterday's financing, Valio now has warrants outstanding representing €29,000,000 In addition to our existing cash reserves and the possible cash injection to be derived from the exercise of warrants, The company continues to enjoy a $2,500,000 unused line of credit at the end of Q2, which was increased from $2,000,000 during the quarter. Due to the strong growth in our receivable since Q2 receivable and inventory, sorry, we are now currently in negotiation For a further meaningful increase in our line of credit with our bank, we believe we have now a strong balance sheet and access to the required capital to support our commercial efforts And meet our growth objective going forward. This concludes the financial review part of our call, and I will now turn back the call over to Steve.
Thank you, Luke 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 any other interested parties to contact us directly With any questions, we will get back to you as quickly as we can. Operator, you may now proceed with the questions part of this call.
Thank you, sir. Three tone prompt acknowledging your request. And if you're using a speakerphone, we do ask that you please answer the question and answer session. And your first question will be from Scott McCauley at Paradigm Capital. Please go ahead.
Good morning, gentlemen. Good morning. Thanks Congrats on, I think that's a pretty milestone quarter. Just on the great to see the sales growth, Obviously, kind of the new product launches. I just wanted to kind of check-in on the kind of 2021 revenue estimates.
You guys have in the back about $17,000,000 to $20,000,000 for the year. Do you remain confident in these numbers, especially with kind of the initial trends that you're
Right. Luc, maybe you should answer that.
Yes. Thanks, Scott, and for your question and attending the call. Yes, right now, we feel comfortable with that range. As you know, we're just starting to see commercial information or data For the launch of the EndoZera Tektura and we have a portion of those revenue that are part of our estimates. But based on the current tracking of Radheska, the PLAs that are being the provincial listing agreements that are Being signed, we feel comfortable, but at this point in time, we're not going to move that estimate.
Scott, I would just add that our based on the Q3, our run rate is at or above that number, And we expect that the run rate for the Q4 will be above that number.
Yes. That's On a quarterly
basis. Yes.
And then for the gross margin expansion, obviously, again, kind of great to see those numbers pick up As a kind of gross margin percentage basis as that product mix kind of switches to the new higher margin products. I just wanted to kind of confirm, I thought you had said you're expecting Henne's margins to also increase by about 50% Over the next quarter, I've seen the note on the expected kind of at least 50% revenue growth. But Luke, I thought I heard you say that on the margin as well. And just kind of want to confirm that this is on that's kind of on a dollar basis and not kind of a margin Sanddge basis or just any additional color you can provide there?
Yes. Well, good catch, I guess, Scott. I guess you were listening well. So Yes. I mean, clearly, the growth of our revenue is coming from more profitable product.
And so the revenue mix over time is going to increase. As you know, we're projecting that in a few years from now, we'll move from the current 27% gross margin ratio to something close to 50%. So the growth is coming from those 50 plus or 50 ish percent products. So and of course, it dilutes the products such as Ennis loan, which is providing a lower contribution. So as we go from the current sales level and if we pick up 50%, you can assume the 50% comes when Comes with that 50% -ish plus gross margin and you can easily predict that 50% estimate and gross margin increase is fairly reasonable.
So I hope that covers your question.
Yes, definitely. And just lastly, before I kind of jump back in the queue, just on
the Hesperico.
I guess, obviously, great to hear that the trial is fully enrolled and that you're kind of expecting results in the next 4 weeks or so. Do you have a sense in terms of kind of what would be considered a success from a clinical basis and really allow you to add those additional claims To the product label, kind of moving forward or are you kind of waiting to hear what the Montreal Heart Institute says?
Fred, maybe you can answer that.
Yes. Yes. Thank you, Steve, and thank you, Scott. So Two things here. We are already filing for additional claims that is based on the scientific data already available.
No. What is what could be looking like a success, of course, this is a comparative trial versus placebo It's having a clinical and significant and meaningful impact versus placebo in reducing symptoms related to COVID. Okay. And that would lead us of course to a subsequent submission As a product able to reduce symptoms of COVID-nineteen virus that is more going more specifically towards COVID-nineteen patients. So It's not preventing us to file already for other additional claims, but certainly the results of the trial will try Another subsequent submission with a very important claim, of course.
That's great. And just quickly follow-up on that. Is the Montreal Heart Institute going to be press releasing those results themselves, are they passing those results to you to direct the press release in terms of just where we should be looking for those results
to come out from? It's a good point, Scott. The point here is don't forget this is a trial that is sponsored by the Montreal Heart Institute.
So they
have they will probably press release themselves. And of course, we're going to be exposed We're going to be exposed very early to the results so that we can also press release on our side. But they will press release by themselves. That's helpful.
No, that's great. Thank you, guys. I'll hop back in the queue
in case there's other questions.
Thank you. And your next question will be from Paul Stewardson at IA Capital. Please go ahead.
Good morning. Thanks for taking my questions. Just calling in for Chelsea. Just wondering about in terms of now that you have the $11,500,000 you're talking about the larger Line of credit potentially, can you talk about sort of cash runway? How far into the launch does this take you for Enerzene and Atektera into next year?
Luc, maybe I have a question for you.
Yes, no problem. Hi, Paul, and thanks for joining. Right now, we have the bridge financing to address and we've already secured commitments from some of the debenture holders, Participating in that bridge to not request a repayment as expected following the close of the financing. So Meaning that the $6,600,000 some of that's going to be only repaid in early 2022. So with the expanded line of credit, What we see in our balance sheet is that putting the bridge aside, we only have $4,000,000 of debt, More than half of which is convertible and will be convertible within a year from now.
So very little leverage. And so we feel that we have leverage on the balance sheet due to the very strong pickup in our cash flow and the progress of our Commercial performance to secure additional non dilutive debt and we hope to have news on that over the next Couple of quarters. So with that, we estimate that we're in very good shape to cover any Operational cash flow requirement to support the company until we get breakeven cash flow wise mid next year. So I hope that answers your question.
Yes, definitely. Thank you. And then just in terms of The Enerzaurin Atektura launches, so for public coverage, Do you have a timeline on that of what you're expecting? And in terms of the time between now and then, is there a way to sort of bridge patients Into the time when they can get public reimbursement or how are you working on that?
Yes, I can take this one, Poland, and thank you for the question. So expectation of In order that Tektura becoming covered publicly on provincial listings is expected by beginning of 2022, 1st quarter beginning Q1 2022. Now one point on this specific to this market, one feature specific to this market is that 50% of the market is privately covered. So you may consider bridging with Some patient support program when you rely much more on public coverage. But in this specific case, actually half of the almirall patients Are privately covered.
And we actually are covered by more than 80% Of the private payer plans, so basically it means that in terms of operations, the first market we're entering to is definitely the Private market from now to time of public coverage where we're going to have another inflection point for the sales At the time, the provinces are listing the product on their provincial listing. So there is ample there is very large Space on the private market for us to operate and that's clearly our focus for today.
Thanks, Fred. And just a quick follow-up on that. In terms of when the public reimbursement does come through in Q3 or so, Is that a point when promotional activities will increase in terms of expense wise? Or is that You're already going to be pushing as hard as you can just based on the private side of things, and so it'll just be more of the same.
I think we are already full fledged, All in a sense that we started to operate, as we have mentioned before, some days ago, actually last week. So I think we want to raise the awareness of those 2 brands in Canada, which was kind of starting from scratch. So I don't think that we're going to really increase, but this is due to the fact that as of next fiscal, we're going to be full fledged already. So We need to prepare the field and the more we can do in terms of raising the awareness of the clinical data, the Population of patients eligible to both products, then we will really take advantage of the public coverage at time of coverage. But from the Promotional support, we are not waiting again.
Remember, this is a the maintenance market is worth $700,000,000 Approximately. So we have space to operate. If we consider only the private part of it, it's still a market of $350,000,000 So I don't think we're going to wait up until we have a public coverage, but we want to go full fledged some months before. And don't forget, again, we are working out also to anticipate this time of public coverage. So all in all, Again, next fiscal, we will already be full fledged in terms of promotional support.
Perfect. That's very helpful. And one last one from me and then I'll jump back in the queue. But just In terms of the HEVERCO trial, obviously, an exciting time coming up to the results. If they do come out the way that you're hoping they do, What's that going to look like in the next couple of quarters in terms of how do you capitalize on that?
Is this something where you really push in the U. S? Or how are you thinking about it?
Yes, yes. Paul, I think U. S. Is part of the story of this purpose since the beginning. So I don't think U.
S. We'll be modified upon the results, but certainly, you understand that If the results are positive, this is a different story starting. If they are not, actually, we will continue to rely on the current case, which are Still supporting the immune system, which is worth considering in different settings and different population of patients. So U. S.
Will continue to be part of how we are looking at developing sales for Esperco.
And the product is approved in the U. S. And we actually have inventory ready to ship to go to the U. S. So we're ready for the results.
Okay, fantastic. Thanks so much guys. Thank you, Paul.
Thank you. And currently, gentlemen, we have no further questions. Please proceed.
Well, thank you, operator. Just in finalizing, I would like to thank everyone for being on this call and We've launched some major products in the last several months. In Crease Aventor's Zarinet There are clearly world class products and it will change the treatment paradigm for many asthma sufferers. We're expecting our revenues to grow In excess of 50% in Q3 compared to Q2. We've built a team.
It's almost done. But we don't want to The important part is it's a lean team. You need the team in the field, the commercial team to be able to support the magnitude of these products. But there's certainly a lot of consciousness about cost and trying to operate with the view of breakeven And positive cash flow as quickly as possible. But we are this team does position us to be one of the leading independent Canadian pharma companies.
We're well capitalized to support this growth, and I think we have all of the elements right now to really have a good End of 2021 in a really strong fiscal 2022. So again, thank you for your continued interest and support and look forward to interacting with you in the weeks to come. Thank you.
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