AGM 2022

Jun 17, 2022

Hello, and welcome to the annual meeting of shareholders of HLS Therapeutics Inc. Please note that today's meeting is being recorded. During the meeting, we will have a question and answer session. You could submit questions or comments at any time by clicking on the message icon. It is now my pleasure to turn today's meeting over to Ryan Lennox, Senior Vice President, Law, HR, and Compliance of HLS Therapeutics Inc. The floor is yours. Good morning, and welcome to the annual meeting of shareholders of HLS Therapeutics Inc., taking place today, June 17, at 10:00 A.M. Eastern Time. Thank you to everyone for your attendance today. My name is Ryan Lennox, and I'm the Corporate Secretary and Senior Vice President, Legal, HR, and Compliance of HLS. I would like to briefly read the following forward-looking information statement before turning the meeting over to Greg Gubitz as Chairman of the Board. In the course of today's meeting, directors and officers of HLS may, in their remarks or in response to questions, make certain statements that are forward-looking statements and are prospective. Forward-looking statements are neither promises nor guarantees, but are subject to risks and uncertainties that may cause the actual results, performance, or achievements of HLS or developments in our business or industry to differ materially from the anticipated results, performance, achievements, or developments expressed or implied by such forward-looking statements. A more detailed discussion of risk factors affecting HLS' business and industry can be found in our current annual information form dated March 16, 2022, for the year ended December 31, 2021, and in our management's discussion and analysis. Forward-looking statements are based on management's beliefs and opinions at the time the statement is made, and undue reliance should not be placed on any of these forward-looking statements. There should be no expectation that these forward-looking statements will be updated or supplemented as a result of changing circumstances or otherwise. Other than as required by applicable laws, HLS disclaims any obligation to do so. We will now proceed with the formal business of the meeting, and I will turn the meeting over to Greg Gubitz, as Chairman of the Board. Thanks, Ryan. Good morning, ladies and gentlemen. My name is Greg Gubitz, and I am the Chairman of the Board and a Director of HLS. Before we get underway, I just want to take a moment to acknowledge and thank, on behalf of the company and our shareholders, the tremendous contributions made to HLS by Bill Wells. Bill recently decided to retire from his work at HLS to pursue his other business interests. Bill was a co-founder of HLS and served as our Executive Chairman and a Director since HLS was established. On behalf of the board and our shareholders, thank you, Bill, for all your leadership and for all your many contributions to HLS' success. On behalf of the Board of Directors of HLS, we wish all of our shareholders good health during the continuing COVID-19 pandemic. As you know, to ensure the health and safety of our shareholders, directors, officers, and other stakeholders, HLS, like other public issuers, is hosting this annual meeting virtually and not in person. Holding our meeting in a virtual-only format means there are some differences from an in-person meeting. However, our goal is to replicate as best we can the experience you would have if you were participating in person. The people who will be speaking today are not all in the same physical location. For this reason, I may pause from time to time to allow coordination from the different locations. I will also pause at certain points during the meeting to provide an opportunity for you to vote or ask questions online. Only shareholders and duly appointed proxy holders who have signed in to this online webcast will be able to vote on the resolutions tabled at this meeting and to ask questions. You can submit questions by clicking on the message icon, typing in, and submitting your questions. Given the virtual format of the meeting, and in order for us to expeditiously undertake discussion on any matter proposed for a vote, we encourage meeting participants who have specific questions on the formal items of business to submit such questions now, clearly identifying the applicable item of formal business. During the course of this meeting, at the appropriate time, such questions will be addressed prior to voting on the applicable motions. Before proceeding with the formal business of the meeting, I would like to take this opportunity to introduce you to the following officers who are attending today via webcast. Mr. Gilbert Godin, our Chief Executive Officer, Mr. Tim Hendrickson, our Chief Financial Officer, and Ryan Lennox, our Corporate Secretary and Senior Vice President, Law, Legal, HR, and Corporate Compliance. We thank them and our other directors who have joined the webcast of today's meeting. In addition, the following nominees for election as directors of HLS are also present in person and via webcast: J. Spencer Lanthier, Yvon Bastien, Rodney Hill, Don DeGolyer, John Welborn, and Norma Beauchamp. Now let's proceed with the business at hand. We have three matters of formal business to conduct today. First, the presentation of the financial statements of HLS Therapeutics at and for the financial year ended December 31, 2021. Second, the election of directors. Finally, the reappointment of the corporation's auditors as described in the information circular mailed ahead of the meeting. Once the formal business of the meeting has been completed, our management team will provide a brief corporate update. We will do our best to answer shareholder questions related directly to the presentation, but if for any reason we are unable to do so, we will endeavor to follow up with you after the meeting. I will now call the meeting to order. In accordance with the corporation's bylaws, I will preside as chair of this meeting, and Mr. Ryan Lennox will act as secretary of the meeting. I hereby appoint Computershare through its representatives to act as scrutineers for the meeting. The secretary has advised me that the notice calling this meeting, together with a form of proxy and management information circular, has been sent to each director of the corporation, the auditor of the corporation, and shareholders of record of the corporation as of May 13, 2022, which is the record date for the meeting. The financial statements for the financial year ended December 31, 2021, and the auditors' reports thereon were sent to each requesting holder of common shares of the corporation on May 24, 2022. Copies of these materials are also available on HLS's SEDAR profile at www.sedar.com. I will dispense with the reading of the notice of meeting. The scrutineer has provided me with his preliminary report on attendance at this meeting, and I confirm that the requisite quorum of shareholders is present in person or represented by proxy. Accordingly, I declare this meeting is duly and properly constituted for the transaction of business, and I direct that the confirmation of mailing of the notice of the meeting received by Computershare and the scrutineer's complete report on attendance be annexed to the minutes of the meeting. Finally, in order to expedite the meeting, I have requested that certain persons make the formal motions, and I will call on these persons at the appropriate time. Given this is a virtual meeting, the voting at today's meeting will be conducted by online ballot for all matters. If, as a registered shareholder or duly appointed proxyholder, you have used your control number provided by Computershare to log into the meeting, you'll be provided with the opportunity to vote by online ballot. If you are a registered shareholder and have already voted by proxy and you do not wish to change your vote, then there is no need for you to vote on the online ballot, as your vote will already have been recorded. Duly appointed proxyholders are reminded that they are bound to vote in accordance with the instructions provided to them. Votes have already been recorded in respect of such instructions, and proxyholders do not need to vote by ballot in order for such votes to be counted. The polls will be open momentarily for all items of business to be voted on at the same time. When the polls open, click the Voting button on the left menu on your screen. This will allow you to vote on each item immediately, or if you prefer, you may wait until the conclusion of discussion on each item prior to casting your vote. Registered shareholders and duly appointed proxyholders will be able to vote on each item of business until polls are closed, following the presentation of all formal items of business. Once discussion has concluded on all items of business, you will have another moment to enter your votes if you have not already done so. I will then declare voting closed on all matters of business. The summary results of the votes will be announced prior to the closing of the meeting. I now declare the polls open on all items of business. The first item of business is the presentation of the consolidated financial statements of HLS Therapeutics as at, and for the period ended December 31, 2021, and the auditors' reports thereon. We will dispense with the reading of the auditors' report to the meeting. Our next item of business is the election of directors. We have nine directors to be elected, and I now declare the meeting open for nominations. In the interest of expediency, I will ask Tim Hendrickson to make the nominations on behalf of management of the corporation. Mr. Chairman, I nominate those persons specified in the management information circular delivered with the notice of meeting, namely Gilbert Godin, Greg Gubitz, J. Spencer Lanthier, Yvon Bastien, Rodney Hill, Don DeGolyer, Laura Brege, John Welborn, and Norma Beauchamp, to serve as directors of the corporation to hold office until the close of the next annual meeting of shareholders or until their successors are duly elected or appointed in accordance with the articles and bylaws of the corporation. I thank you, Tim. In accordance with the advance notice provisions of Bylaw Number 1 of the corporation, no further nominations may be made at this time. Therefore, I declare the nominations closed. I request a motion that the 9 persons nominated as directors of the corporation be so elected. I so move. Thank you, Tim. At this time, I would ask the secretary to please advise of any questions received on this item of business. Mr. Chairman, I will pause for a moment to allow for questions to be submitted. Mr. Chairman, I can confirm that we have not received any questions specifically on this item of business. Thank you, Ryan. As previously noted, we will conduct a vote on this motion by way of online ballot. Registered shareholders or their duly appointed proxyholders can vote throughout this meeting by online ballot by selecting the applicable voting options on the voting panel displayed on their screen. If you are a registered shareholder and have already voted by proxy and do not wish to change your vote, then there is no need for you to vote online, as your vote will already have been recorded. Duly appointed proxyholders are reminded that they are bound to vote in accordance with the instructions provided to them. Votes have already been recorded in respect of such instructions, and proxy holders do not need to vote by ballot in order for such votes to be counted. We'll now move on to the reappointment of auditor. May I have a motion that Ernst & Young LLP be reappointed as auditor of the corporation until the next annual meeting of shareholders, or until a successor is appointed, and that the board of directors be authorized to fix the auditor's remuneration? Mr. Chairman, I so move. Thank you, Tim. At this time, I would ask the secretary to please advise of any questions received on this item of business. Mr. Chairman, I will once again pause for a moment to allow for questions to be submitted. Mr. Chairman, I can confirm that we have not received any questions specifically on this item of business. Thank you, Ryan. I will now call for a vote on the motion. As previously noted, we will conduct the vote on this motion by way of online ballot. Registered shareholders or their duly appointed proxy holders can vote throughout this meeting by online ballot by selecting the applicable voting options on the voting panel displayed on their screen. If you are a registered shareholder and have already voted by proxy and do not wish to change your vote, then there is no need for you to vote on the online ballot, as your vote will already have been recorded. Duly appointed proxy holders are reminded that they are bound to vote in accordance with the instructions provided to them. Votes have already been recorded in respect of such instructions, and proxy holders do not need to vote by ballot in order for such votes to be counted. We will now proceed with the process of completing the voting on the items of business of the meeting. For those of you who have not voted on all of these items of business, please do so now. If you have previously submitted a completed proxy, you will have voted in respect of the formal business of this meeting, and it is not necessary to vote again via online ballot. We will now take a short break to allow shareholders to complete the voting on all items of business of the meeting and to allow for the results to be tabulated by the scrutineer. Mr. Chairman, voting is now completed, and the polls are closed. Thank you, Ryan. That concludes voting at today's meeting. The scrutineer has now reported that all matters put to a ballot at this meeting have been passed with the requisite shareholder support. Accordingly, I declare that each of the nine directors nominated is hereby elected to serve as a director of the corporation to hold office until the close of the next annual meeting of shareholders, or until their successors are duly elected or appointed in accordance with the articles and bylaws of the corporation. I declare the motion on the reappointment of the corporation's auditor to have passed. A report disclosing the voting results in respect of each applicable item of business will be filed on SEDAR promptly following the meeting, and a report on the election of each director will be disclosed in a press release to be issued following the meeting. That concludes the formal business brought before the meeting. I wish to thank you for attending, and I now declare this meeting to be terminated. I will now ask Mr. Gilbert Godin, our CEO, to make a few remarks about HLS business and strategy. Thank you, Greg. Good morning, everyone. Over the past 18 months, we have made important progress on the rollout of Vascepa, generated steady and reliable financial performance from our core products, and advanced other products towards commercialization. This was achieved despite the ongoing measures and constraints put in place in Canada throughout 2021 and into the first few months of 2022 due to the COVID-19 pandemic. Our 2021 financial results were solid with revenue of $60 million, up 7% year-over-year, adjusted EBITDA of $26.3 million, up 9%, and cash from operations of $16.4 million, up 76%. We continue to manage our cost base prudently given the broader operating environment, and we are pleased to have delivered top-line growth and to have generated adjusted EBITDA growth and margin expansion even while increasing our investment in the launch of Vascepa. Our Clozaril patient grew 2.5% in 2021 in a Canadian market that saw no growth as a result of pandemic restrictions, and we continue to expand the number of deployments for CSAN Pronto, which increased from 23 to 56 at year-end, and most recently, we were at 69 at the end of the first quarter of 2022. Also, in our CNS franchise, we launched MyCare Lab Assays in 2021, which is a diagnostic tool that will be used to measure the drug concentration of up to six different antipsychotics, most used in treating schizophrenia and bipolar disorder. This is a novel solution to a difficult disease state and will leverage our CNS presence and build on the commercial scale of Clozaril and CSAN Pronto. We delivered significant developments with Vascepa over the past 18 months, most notably with 4 key catalysts that will accelerate the patient and prescription rate of growth, and the sum of those would result in our demand curve getting steeper. Catalyst number 1, broad private reimbursement in excess of 90% was obtained by early 2021, and this opened up about half of the addressable market for Vascepa. The second catalyst will come from formulary listings on public provincial drug plans, which will open up the other half of the addressable market. In April, we achieved a key milestone, paving the way for product listing agreements for Vascepa with all of Canada's provinces and territories. We have since signed a product listing agreement with the province of Quebec, which represents close to 25% of all public plan patients in Canada. Other provinces and territories are expected to follow in the coming months. Universal access, both private and public payer reimbursement, simplifies the message that can be conveyed to physicians and help remove the inhibitions that certain physicians may have when faced with reimbursement uncertainty. The third catalyst is sales force expansion. Last fall, we entered into a co-promotion partnership with Pfizer, which has increased our commercial presence across the country threefold, allowing us to reach in excess of 10,000 specialists and general practitioners, of which 80% are GPs. For decades, Pfizer has been synonymous with innovation in cardiology, and this partnership enables rapid, efficient, and impactful expansion to the primary care physician audience with whom they have had solid relationship and a lot of equity already. The fourth catalyst is the inclusion of Vascepa in the cardiovascular guidelines of large Canadian and international medical societies. These formal recommendations by leading subject matter experts in the field of lipid management induces a steady, long-term positive effect on doctors' awareness of Vascepa's benefit, how it should be used, and what is a profile of the patient in need. The next chart represents this progress, as the curve illustrates the steady and sturdy prescription growth of Vascepa. The chart covers a period from product launch into April 2022. Script progression has been tracking reliably with field activity. As we have all experienced collectively, this has gone through multiple waves of lockdowns and restrictions. With a few days to go, this current quarter could be our first COVID-free quarter in terms of public health restrictions since our launch. Importantly, we're seeing strong growth in annualized key metrics related to Vascepa. The number of prescriptions year-over-year through March 31st was up 111%, while the number of physicians prescribing Vascepa was up 177%, and the number of patients having used the product was up 139% year-over-year. Promotional efforts right now are focused on continuing to expand the base of potential prescribers with an initial call on Vascepa, and then increasing the frequency of interaction with prescribers to help them become more familiar with all aspects of the product to start prescribing it. Reach and frequency is the key to product trial and adoption. At this point, the strategy and the desired outcome is relatively simple. More calls on more doctors in a context of broader reimbursement equals more usage and the benefit of cardiovascular risk reduction to Canadians. We look forward to reporting to you further on our progress and these key metrics throughout the year. For those who would like to attend an in-depth investor presentation on HLS, I would like to invite you to join us Wednesday, June 22nd at noon Eastern Time. Tim Hendrickson, our CFO, and I will present the HLS story and will answer questions as part of Renmark's virtual non-deal roadshow series. To attend the presentation, you can find the link to sign up on the event page of the investor relations section of our website. We hope to see you there. This concludes my portion of the meeting. Thank you for being with us today, and thank you for your continued support. Goodbye. Thanks, Gilbert. This concludes the meeting. Thank you to everyone for attending today. If anyone has any questions you'd like to follow up with us on, please do not hesitate to reach out to us, and we will get back to you. Our second quarter ends June 30th, and at this point, we expect to report our Q2 results early in August. Further details will be released closer to that date. On behalf of the board of directors and the broader team of HLS, we hope that you stay safe and healthy. Thank you again for participating, and goodbye. This concludes the meeting. You may now disconnect.