HLS Therapeutics Inc

TSX:HLS

Earnings Call Transcript 2021-Q4

[Operator]

Good morning, and welcome to the Fiscal 2021 Financial Results Conference Call for HLS Therapeutics. On this morning's call, we have Mr. Gilbert Godin, Chief Executive Officer; and Mr. Tim Hendrickson, Chief Financial Officer. [Operator Instructions]

Earlier this morning, HLS issued a news release announcing its financial results for the 3- and 12-month periods ending December 31, 2021. This news release, along with the company's MD&A and financial statements will be available on HLS's website and on SEDAR. Please note that slides accompanying today's call can be viewed via the webcast, a link of which is available in the company's earnings press release and on its website on the Events page.

Certain matters discussed in today's conference call or answers that may be given to questions could constitute forward-looking statements. Actual results could differ materially from those anticipated. Risk factors that could affect results are detailed in the company's annual information form, which has been filed on SEDAR at www.sedar.com.

During this conference call, HLS will refer to adjusted EBITDA. Adjusted EBITDA does not have any standardized meaning prescribed by IFRS. Adjusted EBITDA is defined in the company's press release and annual filings that are available on SEDAR and on the company's website. Please note that all financial information provided is in U.S. dollars, unless otherwise specified.

I would now like to turn the meeting over to Mr. Godin. Please go ahead.

[Gilbert Godin, executive]

Thank you, Kelsey. Good morning, everyone, and thank you for joining us. On our call today, I will start off with a review of operational highlights for the year. Tim will follow with a more detailed look at our financial results, and then we will hold a Q&A session. In fiscal 2021, we made important progress on the rollout of VASCEPA, generated steady and reliable performance from our core products and advanced other products through the pipeline and towards commercial launch. This was achieved despite the ongoing constraints put in place throughout the year due to the COVID-19 pandemic, culminating with the Omicron wave in December and into January and February of the first quarter of this year. The situation, among other things, restricted in-person interaction with physicians and limited the number of interactions overall.

At a high level, 2021 financial results were solid with revenues of $60 million, up 7% year-over-year and adjusted EBITDA of $26.3 million, up 9%. Product sales in Canada led the way with growth of 18% driven by VASCEPA and Clozaril. We are pleased to have delivered top line growth in a challenging environment and to have generated adjusted EBITDA growth and margin expansion even while increasing our investment in the launch of VASCEPA.

On the first slide, you will see that in 2021, we achieved several key catalysts related to VASCEPA and generated positive momentum with key metrics. Ultimately, this led to an upward trajectory in the prescription curve. VASCEPA is considered by a growing number of physicians to be the next pillar of cardiovascular protection in the battle against heart disease, which remains the #1 killer worldwide. In Q1 of last year, the Canadian Cardiovascular Society updated its guidelines to recommend VASCEPA to reduce the risk of cardiovascular event for qualified patients in label. This strong endorsement from the experts in the medical community illustrates the role that VASCEPA can play in addressing the significant health issue. Subsequently, we were also added to the guidelines of the Canadian Heart and Stroke Foundation and Thrombosis Canada.

Another key catalyst achieved in 2021 was sales force expansion through our promotion agreement signed with Pfizer in the third quarter. The agreement has led to a threefold increase of our commercial presence across the country and will enable us at maturity to reach between 10,000 and 12,000 specialists and general practitioners, a fourfold increase of that audience. For decades, our partner, Pfizer, has been synonymous with innovation in cardiology and the driving force behind the successes of Lipitor and more recently, Eliquis. This partnership enables a rapid, efficient and impactful expansion to an attentive primary care physician audience.

The next slide shows the VASCEPA prescription update curve through the end of the fourth quarter. It shows a continued upward trajectory of prescription volumes since the launch and it points to an uptake in the fourth quarter, resulting largely from the expansion of our commercial footprint. The number of patients, prescribers and prescriptions related to VASCEPA all continued to increase. Through the end of Q4 '21, more than 1,700 physicians have prescribed VASCEPA for at least in patients and more than 6,100 patients have received the VASCEPA scripts since the launch, representing increases over the previous quarter of 25% and 21%, respectively. This compares to 2,000 patients and 550 prescribers at the end of 2020.

In terms of scripts, 9,365 scripts were written in the fourth quarter, which is a 19% increase sequentially from the prior 3-month period. Collectively, the HLS Pfizer detailing team had a near threefold increase in the number of calls made to doctors in Q4. As a result, general practitioners represented 51% of prescribers and 26% of all prescriptions in Q4, leading to the highest weekly prescription total of the year at the end of December. We believe these are early indicators of the positive impact being realized so far from the expansion of our commercial footprint. Promotional success is resting on expanding the reach of potential prescribers and calling on them at a sufficient frequency to make them familiar enough with all aspects of this product to start prescribing it.

In the fourth quarter, the sales force expansion augmented the reach. And in the coming quarters, it will raise the frequency of calls on those new doctors. On the right-hand side of the slide are the 5 catalysts that we believe are essential components in reaching a key growth curve for VASCEPA. In 2021, we achieved reimbursement coverage, with firms representing more than 90% of privately covered lives in Canada. We saw VASCEPA get included in an expert society's cardiovascular treatment guideline, and we announced a partnership agreement with Pfizer. Two catalysts remain: the elimination of COVID-19 restrictions and public market access.

Throughout 2021, COVID related restrictions were in place to varying degrees and had an impact on the volume of interactions we had with physicians as well as the type of interaction we could have with them. In the fall, the trend was more favorable. And at the time of our Q3 call in early November, we spoke of an increase in face-to-face interactions with patients and physicians and the recommendation from governing bodies to further encourage those types of interaction. Like many, we have reasons for optimism at that time that things would continue to move favorably in that direction. However, the arrival of December coincided with the arrival of the Omicron wave in Canada. And by the end of December, most Canadians were back under strict lockdown measures.

The impact to us in December and into January and February of 2022 was again felt in the number of engagements with physicians as well as the type of engagement. Much of the sales force returned to virtual meetings whereas in November prior to Omicron, approximately 70% of physicians' interactions were face-to-face. In addition, the number of physician interactions either virtual or in person, fell about 40% once the Omicron restrictions kicked in as practitioners and patients once again became constrained by the pandemic measures. Fortunately, and I'm saying this with great caution. It does appear that the worst may be behind us with Omicron.

Infectious disease and vaccine experts were quoted saying that short of a new variant, the end of the pandemic phase of COVID-19 could be in sight with conditions moving more to those of an endemic situation. Further a study by John Hopkins found that the rolling 7-day caseload number for COVID-19 in the U.S. -- at the end of January. Closer to us in Canada as of mid-March, the majority of the provinces, including the largest ones, removed many restrictions with some provinces having done away with most, if not all of them. While we're about to claim the end of the pandemic is upon us, we're very encouraged by these recent developments and what they could mean for greater physician access in 2022.

The fifth catalyst we have spoken of previously is to obtain public market access. This is what everybody is waiting for. On this front, we're pleased to report that we are in the final stages of the process and near the finish line. I want to remind you that our aim pre-COVID-19 has always been to pursue terms for national public reimbursement status. And initially, we had expected those negotiations to be completed within 18 to 24 months of our launch. And as of today, that time frame has been exceeded by a couple of weeks. All along, we anticipated that this process could be long and arduous. And we're not surprised that it turned out to be the case given that VASCEPA is a new drug and a new class of drug and that negotiations have taken place during the pandemic. We look forward to providing a more detailed communication, including relevant details and next steps when the process formally concludes and that the outcome is made public, likely within a few weeks.

Finally, regarding VASCEPA, we're often asked how the product has fared since its launch compared to other products that were also launched in 2020 during the pandemic. I'm pleased to say that excluding high-priced biologic and oncology products, VASCEPA had the highest 2021 gross dollar sales amongst all Canadian innovative products launched in 2020. While this doesn't alleviate the frustration of having had 8 consecutive constrained quarters since the launch, it does provide some indication of the value the medical community ascribes to VASCEPA and its potential to tackle cardiovascular disease, a big problem for which there's a great unmet need.

With that, I would like to take a look now at developments with other products in our portfolio. Looking first at Clozaril, the product delivered steady financial performance in 2021 with the number of patients on the therapy increasing 2.5%. While a modest growth rate, we continue to grow our base at a greater pace than the market, and hence, we're gaining market shares. And we have done so during the COVID crisis, which is the root cost of a much lower rate of new patient initiation. We believe this growth reflects the strong competitive position of the product, our CSAN support and to a certain degree, the rollout of CSAN Pronto. As restrictions continue to ease and in-person interactions increase, we expect new patients access to treatment should improve and that the market could progressively trend back to the usual 3% to 4% growth rate.

CSAN Pronto, our point-of-care safety blood monitoring device, is also expected to help improve patient access to Clozaril. 56 CSAN Pronto devices, up from 51 at the end of Q3, have now been deployed and are being used by more than 600 patients and prescribed by more than 200 physicians. Feedback to date on the Pronto device is encouraging, and our deployment strategy in the coming quarter is to continue focusing on larger institutions.

In 2021, we also moved 2 products through the pipeline and towards commercialization. The first is MyCare therapeutic drug monitoring or TDM, which was introduced into the market in November. MyCare TDM is a diagnostic tool that runs on existing lab analyzers to accurately measure the patient drug levels for 6 of the most common antipsychotics used to treat schizophrenia and bipolar disorder and is a complementary product within our CNS franchise. Since the introduction, we worked to raise awareness of the product and its benefit through a dual-track campaign targeting both physicians and lab chemists and we are pleased with the interactions and discussions that are taking place with those audiences.

The second product is PERSERIS a first once monthly risperidone long-acting injectable indicated for the treatment of schizophrenia in adults and also synergistic to our CNS franchise. The timing to launch PERSERIS is contingent in large part with how our access to physician continues to improve. Should the market continue to open up along the path we are currently on, we believe we will have appropriate conditions to launch the product in the first half of this year. The fact is that mental health patients in their setting of care were much more impacted by COVID-19 than the average disease state. As such, until now, it simply didn't make sense to engage resources to introduce a new product in a market environment that is so disruptive. Until then, we will continue with our preparation and prelaunch activity.

With that, I will turn it over to Tim for a closer look at our financials. Tim?

[Tim Hendrickson, executive]

Thank you, Gilbert, and good morning, everyone. I will start with revenues and product sales. Revenues for 2021 were $60 million, up 9% from last year despite challenging circumstances through the year. HLS product sales, namely VASCEPA and Clozaril, grew by 11% in 2021, led by the 18% growth in product sales for the year in Canada. For the last quarter of the year, product sales in Canada were $9.2 million, up 21% over the same period last year. VASCEPA sales for the year were up by just under 300% with that growth supported by reimbursement from more than 90% of privately insured patients in label, the addition of VASCEPA to the guidelines for 3 of Canada's prominent medical societies and the promotional partnership with Pfizer that began in earnest in Q4.

Royalty revenue from the diversified royalty portfolio acquired at September 30, 2020, was $2.4 million in the fourth quarter and $9.4 million for the full fiscal 2021. In comparison, royalty revenues a year ago in 2020 were $10.5 million for the full year, with $4.6 million of that coming in Q4 2020. As for that quarter, the royalty revenues were comprised of both ABSORICA royalties of $2.3 million and $2.3 million from the then newly acquired portfolio of royalty interests. Looking at those components separately, the current portfolio of royalties slightly outperformed the same quarter a year ago with $2.4 million this year, just ahead of last year's $2.3 million.

While this year, there were no ABSORICA royalties as last year's Q4 ABSORICA royalties were the last ABSORICA royalties before HLS terminated ownership of those marketing rights on December 31, 2020, as was intended at the outset of that agreement. Looking at just the current businesses by excluding the impact of the ABSORICA royalties in the comparison, the current year's Q4 2021 quarterly revenues of $15.7 million are up 11% over the same period a year ago, a strong performance overall for our current businesses in a challenging environment.

Regarding the portfolio of royalty interests, you may recall that one of the royalty interests acquired in 2020 related to a product that was not yet commercialized. Sanofi has now announced that this product, olipudase alfa has been filed for approval in the U.S., Europe and Japan and that it has received a priority review in all those territories. Based on the target approval date, if all goes according to plan, the product could be approved by midyear or early in the second half of the year. Just a reminder that as with all of these royalty interests, our role is passive, but HLS will benefit from royalties on the worldwide sales of that additional product.

Shifting now to expenses. 2021 operating expenses were $33.7 million compared to $32.5 million in 2020. Cost of product sales increased in 2021 due to the expansion of VASCEPA, which was partially offset by a return to more historical levels of cost of product sales for Clozaril. Selling and marketing expenses increased by $1.8 million in 2021, reflecting the additional support costs related to VASCEPA in Canada, including the VASCEPA Primary Care sales force expansion at the end of Q3. Medical, regulatory and patient support expenses were up slightly year-over-year, while G&A expense was down by more than $1 million from 2020. Adjusted EBITDA increased 9% in 2021 to $26.3 million.

The increase was primarily due to higher product sales in Canada, along with lower G&A expenses, which were partially offset by this year's higher VASCEPA selling and marketing activities and increases in cost of product sales also related to the growth in VASCEPA sales as well as the 2 sets of royalty stream payments the prior year in Q4 2020. The prior year period also benefited from the company's $0.5 million realized gain on the acquired royalties receivable. We are pleased that even in a year of investment for the expansion of a major product like VASCEPA that we were able to maintain good cost management through the organization and to grow our adjusted EBITDA for the year.

Even in Q4 2021, where we saw the impact of the additional VASCEPA expenses for the Primary Care sales force expansion, adjusted EBITDA of $6.2 million for the quarter compares favorably to the same quarter a year ago, excluding the impact of the last of the ABSORICA royalties and the onetime $0.5 million realized gain. The company continued to generate cash from operations in Q4 2021, adding $4 million to bring cash generated from operations for the full year to $16.4 million compared with $19.3 million the previous year in 2020. Sustained adjusted EBITDA and cash from operations have supported continued deleveraging. In 2021, $10.5 million of principal was repaid on the senior secured loan, bringing the outstanding balance to $97.1 million, which is supported by increasingly diversified operational results. Overall, we continue to have a strong financial position with $21.2 million of cash and cash equivalents, a $35 million revolving facility that remains undrawn as of today.

And under the terms of our existing credit agreement, we were able to request incremental loans up to a maximum amount of $70 million to support acquisitions and other growth opportunities. In addition, in 2020, we filed a preliminary short-form base shelf prospectus to raise up to CAD 250 million that remains available to us should the appropriate strategic opportunity emerge. And finally, yesterday, the Board of Directors declared that the subsequent quarterly dividend of CAD 0.05 per outstanding common share is to be paid on June 15, 2022, to shareholders of record as of April 29, 2022.

And with that, I'll pass it back to Gilbert for his closing comments.

[Gilbert Godin, executive]

Thank you, Tim. In summary, all being considered, and there were many things to consider, we had a solid year in 2021 with growth in revenue, adjusted EBITDA and cash flow despite all the disruptions in our environment. The growth in product sales in Canada gives us a taste of what is possible in the coming years as we see post COVID addressable market opens up, and our sales force expansion takes hold. At the same time, we continue to judiciously manage our cost structure during this expansion period, which was evidenced by the increase in cash flow and adjusted EBITDA. With the outcome of the public access getting closer, we remain very excited at the prospect of bringing this cardiovascular therapy to the many Canadians that plan to benefit from it. VASCEPA seeks to address a large and critically unmet need in the market. As we proceed with the question period, I know that you are very eager to ask about public reimbursement. And as eager as we are to provide an update, the rules of the negotiation process supersedes our desire to do so, and we have to wait for the disclosure of the outcome before we can address it with all of you. What we can tell you is that we will have a communication as detailed as possible within a few weeks once the outcome is made public and the normal course of the process. So bear with us, we will be able to comment on this subject in short order. However, in the meantime, I can tell you that our opportunity remains wholesome and material. That concludes my prepared remarks.

At this point, I will ask Kelsey, our operator, to please provide instructions for asking questions. Kelsey?

[Operator]

[Operator Instructions] And your first question comes from Rahul Sarugaser from Raymond James.

[Rahul Sarugaser, analyst]

So my first question is continuing on VASCEPA with pricing and discounts. So while, of course, COVID has limited face-to-face interactions, one lever that you have had in your control is, of course, pricing and discounts. So could you give us a sense for how that has trended over the last year? And how you're sort of seeing a trend into the early parts of 2022?

[Gilbert Godin, executive]

Well, I think what we can say on that topic is that on the public front -- on the private front, we did mentioned that we have achieved more than 90% coverage. Private companies are -- private insurance companies are more eager to -- because it's a very competitive market to offer innovation to their members. And usually, that is conducive not only to a rapid decision, but also negotiations are shorter, and I could say, more streamlined. And therefore, what happened during the course of 2021 was that we saw the level of involvement that we had to have to help support the initial usage of the product through, call it, different form of support, patient assistance subsidies of various sorts. But we saw those elements be high in the front end of the year and taper down as the private market reimbursement became a reality. And therefore, the impact on the difference between the gross price and the net price has continued to decrease throughout the year.

We still have to, in some instances, support patients that are waiting for the final approval of their prescription from their drug plan, their private drug plans. But overall, this has been trending in the right direction as we expected. But those programs will continue because they're a useful component in the adoption of a product and providing a favorable condition for the physicians to their patients get the product rather than wait on the sidelines. So the first objective is to grow prescriptions, support those in the early days, while they're waiting for a final reimbursement verdict. And therefore, as you can imagine, we went from a high level of subsidization to one that is now trending more towards what would be the normal course in the long term.

[Rahul Sarugaser, analyst]

Great. That's very helpful, Gilbert. So my second question is you discussed the macro environment around COVID having limited face-to-face physician visits. You talked about November being quite good and then reverting back sort of December through February. That said, given the last few weeks have as you said, been opening up a little bit. Could you give us a sense for how face-to-face physician visits are trending now? And how do you see that given the context of what you said going forward?

[Gilbert Godin, executive]

Yes. So in our world here, where we're dealing with a prescriber, which is not an end user. We're trying to monitor, I would call for like a better word, lead indicators. And of course, when we had the evidence that communication is hitting home with doctors, the best marker of what may happen in the near term is measure of activity, right? Doing more of something that works, yield more of that desired outcome and therefore, we could see, especially in the fall and with the expansion of the sales force, we saw that after the usual dwelling period, introduction and initial phases of detailing, we started to see in December the impact of that expansion. And in other words, it's correlated with the lead indicators that we were seeing beforehand and those for interaction from physicians between physicians and our sales personnel as well as those of Pfizer.

Conversely, we also saw that when we have to put our foot on the brake because -- or as a natural result of the lesser activity stemming from the constraints we're encountering, we also see within weeks that the velocity of what was happening and translating in terms of scripts is also impacted. So that's how we tie together 3 elements. The first one is the validation of the effectiveness of our communication, right, which is really stemming from the clinical benefit of the product and how we tell the story. Secondly, the volume of activity that we can deploy ideally in face-to-face, otherwise, we look at the other marker, which is total interaction irrespective of the fact that they'd be virtual or face-to-face, and then the outcome that we get on a week-to-week basis in terms of scripts, albeit with a couple of weeks of delay.

So we tie those elements together, and that's how we stay in the moment and realize the importance from the moment that the market or submarket or a province opens up to get back and use the most efficient way. So those elements in the nutshell, the 3 things, the last element I alluded to in the front end of the narrative is that we're still in the stage where we're building that mechanic of reach and frequency. I can go from seeing 5 doctors to 15 doctors, but until I've seen on average, those doctors 3 or 4x, they don't have the full story. They may not get fully comfortable and they will only start prescribing once all their questions and/or objections have been handled. So that's kind of a second phase within that overarching phase of expanding sales force interaction.

[Rahul Sarugaser, analyst]

That's very helpful. So to indulge one last question. I know that you said you will not talk about any more updates on public reimbursement. However, let's assume that, that comes through at some point in time. Obviously, you had your internal modeling as to how that should be an accelerator of the current prescription growth of around 20%, 25% sequentially. So how should we be thinking about that growth accelerating once public market reimbursement has come in?

[Gilbert Godin, executive]

Well, I can't talk to the timing element for the reasons that I mentioned here. We have to be respectful of the process and our commitment to it. Having said that, all along, I think we've stated that the entire addressable market, which is made for half of it of privately covered patients and for the half of publicly covered patients. They're linked in the sense that some doctors will only consider starting using a product when they know and they can confidently prescribe to everybody. That they won't have to tease out those that may be covered and those that are not or to deal with the fact that they prescribed it, and then the patient came back and it wasn't covered and all that stuff, right? So that's why the public market is a bigger catalyst than what the public market itself represents. It will actually potentialize the development of the private market.

And that's why these elements have somewhat of a disproportionate event, and that's why they triggered this elusive point where there is a sharp acceleration of the uptake and the usage of the product, right? The inflection point is as per past evidence related to a catalyst of that sort that potentializes the other catalyst. That's why it's important. That's why we've been working very hard at it. That's why we're saying bear with us. Finish line is in sight, but that's pretty much will be the sequence from terms to product listing and product listing now enabling access to the product for all because it kind of frees the prescriber of the concern that the scrip may not be filled in the end, and that's very frustrating for a doctor to see patients calling back saying I'm not covered.

[Operator]

And your next question comes from David Martin from Bloom Burton.

[David Martin, analyst]

First question, do you remain confident in your prior guidance for average net pricing?

[Gilbert Godin, executive]

Well, that will be -- I would roll that one into what I call our overall equation for peak year sales. We have not made any changes to it today. We will have the opportunity to comment on this subject very specifically within weeks. But as I said earlier, in a manner, I will only say that our opportunity remains very wholesome and very material. Of course, this last step will bring clarity to call them the critical parameters in this equation and that's the very precise elements to which we will talk to at the time that we can, hopefully, as soon as possible, as we said, within weeks, so we think.

[David Martin, analyst]

Okay. Wondering if you can answer this next question. Are your negotiations now with pCPA or are they with individual provinces?

[Gilbert Godin, executive]

It's -- sorry, it's the latter. We're still -- the process that I alluded to all along is with the pCPA.

[David Martin, analyst]

And it remains with that. Okay. And then...

[Gilbert Godin, executive]

Here, I'll only refer to what is in the public domain and it's abundantly detailed on the pCPA website. They define very clearly the phases of the process and the outcome, which is the generation of a letter of intent that defines what terms would be acceptable to all parties involved.

[David Martin, analyst]

Okay. And then assuming you get an agreement in place, do all public formularies automatically start listing and paying? Or is it a rolling process like it was with the private payers to get individual groups on board?

[Gilbert Godin, executive]

Yes. To put it in my own words the letter of intent becomes a set of terms that all provinces and 3 territories, I believe can opt in and convert into a product listing agreement that puts the product on their drug formulary, right? So terms are defined, you opt in because in the end, you were also a signatory to the LOI would kind of make sense, right? It kind of just the natural achievement, but the product listing agreements are a different and subsequent administrative step.

[David Martin, analyst]

Okay. Great. And then 3 kind of linked questions as far as expenses going forward. You mentioned there was increased expense due to the primary sales force expansion. Was this training at the beginning and now all expenses of that sales force will be borne by Pfizer. And then as the pCPA negotiations wind down, is that going to reduce the G&A line in '22? And then you also mentioned that the patient support for reimbursement was high at the beginning of the launch and has tailed off now. When provincial coverage comes in, should we see that starting to tick up again because you have to give more assistance? Or will that not be the case, will that be continuing to stay down?

[Gilbert Godin, executive]

Yes. I will handle the latter and Tim will comment on the first part of your question. With respect to patient assistance and what eventually, I would say, will impact the gross to net in the near term. Our philosophy here is that we're building a franchise that will be beneficial to patients, and we need to use all the proper means, including financial means that amount to patient support. So as the market continues to open up, we will consider or reconsider our approach to those elements. I would say and take my comment into context here, this is not about optimization, right? This is about opening up and creating a franchise and a recognition of the benefit now and for the future of this great tool to help cardiovascular diseases. So there could be -- as the market opened up, there could be some elements that go forward or slightly backward on the patient support. To me, they are... [Technical Difficulty]

[Tim Hendrickson, executive]

Think of that period was when training was mostly done. I think if you look at the Q4 expenses, you'll see a very fulsome level of expenses that does reflect a full set of activities of those additional expanded sales force in the field. And so that's probably a good idea for what that looks like and what was starting to be a relatively unconstrained environment before things kind of started to shut down again in December with the Omicron variant. But I think that probably gives you a pretty representative idea of what that could look like from an expenditure standpoint. As for G&A, I would expect that that's also pretty representative of the going needs for the organization. And conclusion of public reimbursement won't have any significant impact on our G&A requirements.

[Operator]

And your next question comes from Chelsea Stellick from IA Capital Markets.

[Chelsea Bedrejo, analyst]

I think most of my questions were asked, but I have just a couple on the royalty side. I know that during the fourth quarter, the terms of one of the royalty interest were lessened. Which one was that? And sort of what -- why was it reduced from 5 to 3 years?

[Tim Hendrickson, executive]

Thanks, Chelsea. It was the royalty on the implantable defibrillator Emblem with Boston Scientific. And basically, we had the opportunity to get certainty on the scope and the term of the amendment. And so we were able to do that by way of an amendment and avoid the potential for disputer litigation down the road. So it's a cleanup.

[Chelsea Bedrejo, analyst]

And won't impact anything in terms of the projections going forward.

[Tim Hendrickson, executive]

No. We can say more on that going forward as well.

[Chelsea Bedrejo, analyst]

Okay. Okay. And then the update -- you got the regulatory update on the fourth product, still planning first half of 2022? Or what is sort of the time line looks like for that?

[Tim Hendrickson, executive]

It's probably around midyear. It could be early Q3, late Q2 or early Q3 for approval timing.

[Operator]

[Operator Instructions] And your next question comes from Noel Atkinson from Clarus Securities.

[George Ulybyshev, analyst]

This is George standing in on behalf of Noel here. A few questions. Now that you guys are getting close on pCPA negotiations being concluded for VASCEPA and you've ramped up your sales force. Are you starting to get more active on the M&A front? What's the environment right now? And is there anything you can share there?

[Gilbert Godin, executive]

George, thank you for your question. Here's what I can say because M&A is a very sensitive topic and an element of disclosure that can only be done once final. What I can tell you with absolute certainty is that the activity in our BD group is the highest it's been. Certainly, over the last 12 months, if not more than that. And I would say that the conditions or the predisposition to talk business development in our industry is also pretty good, obviously, superior to what it might have been over the last little while. And as you know, probably not disclosing anything that nobody knows here. In biopharma, and especially small-cap companies, specialty pharma companies and so on, it's been a tough run. The pandemic certainly put everybody into the spin cycle. And I guess this kind of breeds the kind of reflection that is conducive to what I just described. So without again here making any promise, we never could or should I can tell you that our intent remains the same. Our intensity, if one thing has increased because it is being enabled by those very conditions I just described.

[George Ulybyshev, analyst]

Got it. Got it. And just a couple of more specific questions here. What's the current expected launch date for PERSERIS? And how many CSAN Pronto units were deployed at the end of Q4?

[Gilbert Godin, executive]

So with PERSERIS, I think we told you that we had an approval, we could have launched that product, have elected -- we're dealing with VASCEPA, which was launched a few months or weeks before the pandemic, and we had to have all hands on board here to address, adjust and pivot. We thought that it would not make sense to consciously launch the product while still in that kind of environment, that level of disruption, especially since it did impact mental health centers more so because of reasons of comorbidities in particular. So PERSERIS, if conditions were to remain as they are now, which means improved and continuing to improve, I think, before the end of the first half of this year. So during the course of Q2 is a reasonable assumption.

I want to be clear, however, for any kind of reasons we were to hear again face lockdown situations and call it, the third, which I certainly hope we will not have, we would reconsider because it's about productivity of promotional resources, and there's no point in just launching a product to say we launched a product. We want to launch it and control the parameters that could ensure success and is especially important in that mental health therapeutic area. Sorry, there was another segment to...

[George Ulybyshev, analyst]

Yes. Thanks for clarifying. The other question is how many CSAN Pronto units were deployed in the fourth quarter.

[Gilbert Godin, executive]

In Q4, we added, I think, 5 units. We're now at 56. The rate was lower than previous quarter, and that's because you may recall, we had at the inception of the pandemic or as a result of it, we stopped focusing on large institutions because they were pretty much impervious to accepting or getting involved into innovation at that time. We pivoted towards smaller, more nimble centers. We reversed that approach in the summer of '21 as conditions were improving and as I think the coping mechanism towards the pandemic started to improve somewhat. And essentially, the deployment in Q4 were fewer, but we're in larger centers, which to us is the way we prefer to go. So we'll continue to adapt if we need to.

But right now, the focus on larger institutions appears to be the right way to go. It is still not the launch plan that we had envisioned. We never got to the overall conditions that would, I would say, justified that we follow that initial launch plan. But here again, I use the word coping mechanism. We're coping. We're adapting. We're trying to make smart use of resources even if it means having to settle for a different set of outcomes in what a normal ideal situation would have been conducive to.

[Operator]

Thank you. And there are no further questions at this time. Mr. Godin, you may proceed.

[Gilbert Godin, executive]

Thank you very much, Kelsey. And I want to thank you all for participating on today's call. We look forward to speaking with you in the very near future. Thank you very much. Have a good day.

[Operator]

Ladies and gentlemen, this concludes your conference call for today. We thank you very much for participating and ask that you please disconnect your lines. Have a great day.