HLS Therapeutics Inc

TSX:HLS

Earnings Call Transcript 2022-Q4

[Operator]

Good morning, and welcome to the Q4 and fiscal 2022 Financial Results Conference Call for HLS Therapeutics. On this morning's call, we have Gilbert Godin, Chief Executive Officer; and Tim Hendrickson, Chief Financial Officer. [Operator Instructions] Earlier this morning, HLS issued a news conference announcing its financial results for the 3- and 12-month periods ended December 31, 2022. 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 at its website on the Events page.

A certain matters discussed in today's conference call or answers that may be given to questions could constitute forward-looking statements. Actual results could vary 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 conference over to Mr. Godin. Please go ahead, sir.

[Gilbert Godin, executive]

Thank you, Colin. Good morning, everyone, and thank you for joining us. On our call today, we will look at highlights for the quarter and the year. Tim will follow with a more detailed look at our financial results, and then we'll hold the Q&A session.

In 2022, we grew product sales in Canada by 11% in constant currency, that's 7% in reported U.S. dollars, which reflects the growing contribution from Vascepa and the steady performance from Clozaril. Total revenue was up 5% to $63 million in constant currency in 2022, here again, 2% in reported U.S. dollars.

At the same time, we are investing in the significant organic growth potential for Vascepa, we generated solid adjusted EBITDA and cash flow of $23.8 million and $16.9 million, respectively, with cash flow increasing on the year by 3%. Vascepa revenues in 2022 was CAD 12.3 million, up 67% over 2021.

We will discuss the outlook for Vascepa in a moment, but first, a look at activity and achievements for the product in 2022. On the first slide, we see the prescription curve for Vascepa alongside 2 of the top highlights for 2022, which were to achieve public reimbursement in Ontario and Quebec.

Along with several other provinces and territories, we achieved public reimbursement for more than 70% of all Canadians covered by a public plan and who meet the criteria for the therapy. On the chart, we have extended the data period beyond year-end and into February to give you a more current view of product growth.

The upward slope of the curve reflects a solid 85% growth in TRx in 2022 as well as the continued strong growth in prescribers, which was up 92%.

On a sequential basis -- quarterly basis, TRx were up 22% in Q4, which highlights the growing adoption as sales force expansion and public access make an impact. On the right-hand side, we see the impact from the public access in Quebec and Ontario, which was achieved in May and July, respectively.

TRx in Quebec rose 124% in Q4 2022. And in Ontario, they rose 67% versus the same period last year. While pleased with the rate of growth in Quebec, the rate in Ontario, while solid, is lower than we would have expected after having obtained public access.

We believe this is a result of the administrative process involved in approving new patients for the medication. Ontario prescribers are having to navigate a burdensome motorization process, which, in our view, is impeding access to Vascepa and is counterproductive to the objective of the product listing agreement that is in place, which is to procure access to cardiovascular prevention.

While we believe the authorization process will become more fluid over time, we are actively engaged with the interior drug benefit on the matter and working to improve access and to provide protection from a possibly life-saving medication to patients as intended by the doctors.

We're also working with all remaining jurisdictions to obtain access or improve the onboarding of new public claim patients.

The next slide illustrates how Vascepa is doing relative to other cardiovascular classes of drugs. The chart includes data through January 2023 and the data shows that Vascepa's growth continues to far exceed that of statin as it should as well as PCSK9 for every month, quarter and trailing 12 months period versus the same period last year.

The data shows the large difference of the growth rates, especially with NRx, where the growth rate is more than 7x greater or more depending on the time period.

Our next slide shows the evolution of physician groups and their relative level of prescribing volumes for Vascepa. At a high level, this chart shows the evolution of prescriber volumes from specialists, cardiologists and endocrinologists, and this is the blue and dark gray, respectively, and general practitioners, which is the green line. GPs are now the fastest-growing prescribing group, and this is the first time in our reporting that GPs have led the growth in both TRx and NRx, a progression very similar to the statin market, where today, in a mature statin market, 80% of prescriptions are written by GPs.

The growth in GPs engagement is consistent with the frequency of interactions that are increasing every month now. Because we started almost 2 years earlier with specialists, the percentage of those physicians who have prescribed Vascepa is about 4x greater than it is for GPs. Over time, it is our view that we will see a similar rate of adoption for Vascepa by GPs who represent 75% of the 10,000 physicians we see today. In addition, we're also working with hospitals to have Vascepa added to selective discharge protocols of patients institutionalized because of a cardiac event.

Looking forward, we have a large public and private reimbursement in place, 70% of the public and 95% of the private plans are covered. We have 80 field personnel calling on 10,000 prescribers involved with patients at risk of cardiovascular events.

We have standard of care, medical guidelines endorsement from key medical societies, and we also have now additional clinical evidence supporting Vascepa in cardiovascular prevention with the completion and the publication in the fall of the Japanese RESPECT EPA trial, which had trial results consistent with the clinical outcomes from the REDUCE-IT and AGILIS trials.

The last 3 years have required perseverance, but we believe the outlook for Vascepa has made it worth it. They need a significant dissolution is still unique and the drivers are in place.

Now one of the big questions that our fourth quarter results raises is how can we grow Vascepa TRx volume by 22% quarter-over-quarter, but net sales by less than 10%. Part of the explanation is directly related to our recent success in gaining public access in the large provinces. It's an open secret that public rebates are more generous and for the same quantity of prescription growth, we recognized lower revenues. With the recent advent of Public Access, we saw a bolus, a disproportionate number of public prescriptions and claims now coming to the market as those markets opened.

There is a point in time when this will level off and both public and private volumes will grow in more steady proportion. That is the 50-50 ratio between public and private that we expect at steady state. At that point, the Vascepa growth in net revenues will catch up and master growth in prescriptions.

The other element that is unpredictable but has had a negative effect in our reporting, which is in U.S. dollar, is the weakness of the Canadian currency. The Canadian dollar lost almost 4% versus the U.S. dollar in the fourth quarter alone versus the previous quarter and 7% versus the same quarter last year.

That is one of the reasons why we are reporting Vascepa sales performance in Canadian dollars or constant currency, which is also consistent with how we have presented our peak year sales estimate for the product.

On the next slide, we show our 2023 outlook for Vascepa in which we expect Vascepa's net revenue to grow to somewhere between $22 million and $28 million, with the midpoint representing 2x 2022 net revenues in Canadian dollars, starting with a year-over-year growth of approximately 40% to 50% expected in Q1 of 2023.

Year-over-year growth rates for Vascepa are expected to increase through the year as a full-fledged physician detailing continues and in correlation with seasonal factors whereby Q4 is typically the strongest quarter of the year in the Crescendo fashion.

We believe that this growth rate can increase further in future periods as improvements are realized in the authorization process and as commercial outreach continues, -- but for now, we're pacing ourselves in our estimates until we see further evidence of those developments. Overall, we believe HLS's profile is an enviable one with steady revenues, margins and cash flows from Clozaril along with growth potential from Vascepa. Regarding other products in the portfolio, we have successfully maintained our leadership position for Clozaril in Canada.

During a 3-year period, when the delivery of care for mental health patients has been under pressure. During this time, Clozaril has continued to generate steady financial results.

In 2022, Clozaril revenues in Canada was essentially flat year-over-year or on a constant currency basis as the market leveled due to the effect of the pandemic had on access to mental health institution and hence on new treatment initiation for clozapine-refractory schizophrenic patients. We are seeing nascent improvement in clozapine enrollment patterns and looking for them to normalize over time as the market trends back towards historic growth rate of 2% to 4%.

We continue with our rollout of CSAN Pronto, a proprietary technology that addresses the #1 barrier to treatment and is helping strengthen our leadership position in the Canadian clozapine market as well as helping the market itself resumes its growth.

Our installed base increased 91% in 2022, and we now have 107 devices deployed compared to 56 at the end of 2021. More than 16,600 tests have been performed on more than 1,400 patients since we launched the product. We expect that the number of devices deployed will continue at a similar pace in 2023.

In the second half of 2022, we introduced -- my Car, our therapeutic drug monitoring diagnostic technology or TDM, to lab specialists and clinicians and completed several client lab certifications. We now have several sites clinically enabled with access to clozapine, risperidone and paliperidone testing and will continue to expand this footprint in 2023.

While they will be modest early on, we should start reporting revenues generated by MyCare in 2023. And finally, we have met with Health Canada to discuss the favorable results of the recent trial for Trinomia called SECURE trial and we aim to refill the product in the second half of this year.

As a reminder, Trinomia combines 3 important medications in 1 daily pill for patients who have experienced a cardiac event. The SECURE trial has shown that Trinomia helped improve compliance to treatment, and that compliance produced superior cardiovascular outcomes effectively reducing the risk of a subsequent cardiac event when compared to the 3 same products prescribed individually. With that, I will turn it over to Tim for a closer look at our numbers. Tim?

[Tim Hendrickson, executive]

Thank you, Gilbert, and good morning, everyone. I will start with revenues and product sales, led by the growth of Vascepa, our 2022 product sales in Canada increased by $4.7 million or 11% in Canadian dollar terms. The 3.9% decline in the value of the Canadian dollar resulted in a growth rate of 7% for the year as reported in U.S. dollars. Vascepa net sales were up 67% in Canadian dollar terms in 2022 and by 51% year-over-year in Q4. The difference in the rate of growth for Vascepa prescriptions compared to net sales growth reflects gross to net adjustments as the proportional number of patients on public plans increases. As Gilbert explained earlier, when the balance between public and private plan patients stabilizes, then we should see the rate of growth in net sales track the rate of growth in gross sales and prescription volumes. We expect that to occur in the second half of the year.

From that point, sustained prescription growth similar to the 22% sequential increase seen in Q4 would be expected to have a similar percentage effect on net revenues as well. Clozaril sales in Canada were relatively flat for the year and the quarter in Canadian dollars as the product continues to generate reliable results that contribute meaningfully to adjusted EBITDA and cash flow.

As Gilbert mentioned, patient enrollment in clozapine therapy was muted during the pandemic and is expected to resume a modest growth trajectory in due course. One of the ways we are doing our part to kickstart this growth is via the deployment of CSAN Pronto, which addresses the biggest barrier for patients to initiate and remain on the therapy. In the U.S., Clozaril net sales decreased 8% in 2022, reflecting several onetime benefits in 2021 as well as modest erosion of patients, offset in part by favorable trends in pricing, expired returns and government rebates. For our royalty portfolio, there is some variability in quarter-to-quarter results, but overall revenues were $9.8 million in 2022, up 4% from last year. 2022 included the first royalties from the fourth product in the portfolio that received approvals last year first in Japan, then Europe and then the U.S.

While still early and a modest contribution was made in 2022, we expect this product to be an important one for the portfolio in the coming years. Cost of goods increased in 2022 due largely to the year-over-year growth of Vascepa sales. Sales and marketing expenses were higher due to primarily activities related to Vascepa's growth, such as the expansion of the primary care sales force, increased marketing support following the achievement of public market access and greater physician interaction following removal of public health restrictions in late Q1 2022. Medical regulatory and patients for costs were flat year-over-year and general and administrative costs decreased modestly by 3% year-over-year. Sales and marketing expenses for Vascepa likely reached a high watermark in Q4 2022 as the number of physician interactions grew and reached steady-state operating levels.

This means that selling and marketing expenses should not fluctuate much on a quarterly basis in 2023, even as script levels for Vascepa are expected to increase. This implies operating leverage in our model above the annualized Q4 sales and marketing expense level.

Adjusted EBITDA was $23.8 million for the year compared to $26.3 million in 2021. The change was due primarily to the increased selling and marketing expense and increased cost of product sales related to the growth in sales of Vascepa. Even in a year like 2022, where we saw noticeably higher selling momentum for Vascepa, we continue to generate solid adjusted EBITDA results.

In 2022, we generated cash from operations of $16.9 million, up from $16.4 million the previous year. During the year, we made dividend payments totaling $5 million, share buybacks under the NCIB of $1 million and repaid $9.8 million on the senior secured term loan.

Cash and cash equivalents were $20.7 million at December 31, 2022, compared to $21.2 million at December year-end, the year earlier. On September 30, we updated our credit agreement and senior secured term loan with our existing syndicate of lenders led by JPMorgan as administrative agent.

The updates extended the maturity of the loan to August 2024 reduced the required amortization by an estimated $7.5 million per year and included other changes that increased our financial flexibility.

With solid fundamentals in place, increasingly diversified revenue, sustained adjusted EBITDA and reliable cash from operations, we have continued to deleverage the business from a total of $185 million of debt at the company's inception down to $97.3 million at the end of 2022, very consistent with the level at the end of 2021, effectively neutralizing the $10 million of borrowing for the approval milestone paid in July '22 related to the royalty portfolio.

Overall, HLS finished 2022 with positive cash flow from operations, more than $20 million in cash and strong prospects for improved cash flows for Vascepa and Clozaril in Canada. There's also an undrawn revolver facility and HOS can request incremental loans up to a maximum of $70 million to support growth opportunities.

We note that one of the banks in our lending syndicate is Silicon Valley Bank. We did not have any funds on deposit at SBB, so we are not seeing any immediate effects of the events over the past week. We will continue to monitor the situation very closely, and we will work with JPMorgan, our admin agent as next steps become more clear for new ownership management steps in SVB.

We renewed our normal course issuer bid in November 2022 and significantly increased our activity through the year, returning $1 million of capital to shareholders last year, as mentioned. 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, 2023, to shareholders of record as of April 28, 2023.

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

[Gilbert Godin, executive]

Thank you, Tim. As we have said here on today's call, in 2022, the final pieces came into place, positioning Vascepa as an integral part of cardiovascular risk reduction for Canadians who are at risk. Sales execution is the primary focus right now, increasing the frequency of interactions with key physicians and making access broader and fluid for patients covered by public plans.

We look forward to reporting to you on our progress in the coming quarters. That concludes my prepared remarks. At this point, I will ask the operator to please provide instructions for asking questions. Colin?

[Operator]

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

[Noel Atkinson, analyst]

It's nice to see continued strong free cash flow again in Q4. And we appreciate the increased visibility that you're providing now into Vascepa revenues by giving it out specifically as well as the 2023 guidance. Can you give us some sense here of given the Q1 outlook for Vascepa, kind of where Q1 '22 Vascepa revenues were? And so are you expecting growth? Or is it flat or is it modestly negative?

[Tim Hendrickson, executive]

Noel, thanks for the question. We are expecting growth year-over-year in the range of 40% to 50%. The year ago, Vascepa net sales were just a little under CAD 2.5 million. There is variability quarter-to-quarter and seasonality in Q1 tends to be a little bit softer quarter, and so that's reflected in that.

[Noel Atkinson, analyst]

Okay. Good. Are you folks able to provide any guidance in terms of total company revenue or adjusted EBITDA for 2023?

[Tim Hendrickson, executive]

We weren't going to get into specific guidance around EBITDA, although we do expect to see modest sequential improvement in adjusted EBITDA.

[Noel Atkinson, analyst]

And then the last one before I jump back in the queue here. Do you folks have any change in your peak sales outlook for Vascepa in terms of either the amount or the year in which you hope to achieve it? I think it was CAD 250 million to CAD 300 million in 2026.

[Gilbert Godin, executive]

Yes. Thank you, Noel. We do not. That's the short answer. We do not. However, I think you realize that this quarter, we made a decision, a realization that really part of the disconnect in our discourse and some of the expectations is in part related to the focus on this long-term objective, which we still maintain.

We thought that bringing the focus back in the near term would probably translate in better ways, what we're trying to do, how those efforts are received and how the progress is actually putting us on a path.

So it was really purposeful. It was a reflection as we had internally and realize that it's probably much more important to try to create a good idea and a good picture for the quarters and the year to come. But with respect to your questions, we still believe that all the ingredients are there for this product to be reaching the peaker sales that we have alluded to in the past.

[Operator]

Your next question comes from David Martin from Bloom Burton.

[David Martin, analyst]

Kind of following on Noel's question. We haven't seen a big inflection up yet in Vascepa post the public coverage. You mentioned the authorization process in Ontario's dragging things. Are there other pushbacks you're getting from physicians or payers or any other impediments? And obviously, if you think your peak sales forecast is still good, you think these things are all transient, I guess.

[Gilbert Godin, executive]

Yes. So David, thank you for your question. First of all, with respect to what we kind of loosely alluded to is a pushback from doctors, doctors are usually rigorous critical because they deal with people's life and health. And therefore, the questions we encounter are usually -- and I would say sequentially pretty much always the same, right? They learn about the product and the virtues of the product and the patient profile. And eventually, when they're ready, they still make sure that the product is going to be accessible, that the price point in -- is going to be affordable to the patient as well.

And in that sequence, they will either encounter an open market, and they will get engaged. Sometimes, they will encounter an open market, they will get engaged and they will bump into some -- what we referred to as kind of burdensome situations. And the unfortunate part of that is that it may slow them down or temporarily stop them from adopting the product.

So we train our reps to face all those situations and assist in complementing the information, but also in cases where the access is a little cumbersome or complicated. We provide assistance. We try to make sure that if they need to be accompanied for the few, few times that we do so with them and provide at times also external assistance to do so.

And that's how essentially, we try to, first of all, continue to focus on resolving the problem. But in the meanwhile, we mitigate the effect of the problem and will alleviate the burden on the physician. So that's kind of the mindset. We mentioned specifically Ontario for an obvious reason.

And Ontario is by far the largest province in Canada. And we've had very good success, very good uptake in Ontario on the private front. And therefore, the willingness to prescribe is there.

The understanding of the product is there. We did notice, however, that on a proportional basis or on a per capita basis, the uptake on the public front was slower, which got us today and eventually engage with the jurisdiction to try to understand what could be the issue here or the rate limiting factor.

So it's been an open and positive dialogue. We're hopeful that it's improvement on an everyday to everyday basis until full resolution.

[David Martin, analyst]

Are you seeing the province make changes that improve access? Or are they just talking up? Yes, we're willing or are they not seeing anything at this point?

[Gilbert Godin, executive]

Yes. I think it's -- those -- let's call them, those transient situations are more administrative in nature. There's a new product. It has criteria. It requires to be verified before it's approved. And what we've attended to is that there's a bit of a learning curve.

There was a short one in Quebec. It doesn't seem to be an issue anymore. Even if the approval time is longer in Quebec, it's more fluid.

In Ontario, it's still from the anecdotal evidence that we gather on the field. It seems that there's a number of inconsistencies in how those scripts are being treated -- the claims are being treated. So I would put that more on the case of more learning, training-related issues, this being the latest product in more than 2,000 products that the office is we're seeing on a day-to-day basis.

So this is not something directed to Vascepa. It's more the fact that Vascepa's new, and it has criteria that needs to be understood and before the authorization is granted.

[David Martin, analyst]

Okay. One other question, and then I'll get back in the queue. Trinomia is going to reduce the coal burden of patients have taken. Is coal burden in one of the pushbacks you're getting with Vascepa, adding up to a polypharmacy pull burden that the patients are under. And if Trinomia can help the CBI wondering what kind of market share does Trinomia have in markets where it is approved?

[Gilbert Godin, executive]

Yes. I'll tell you we could -- I can try to obtain those market share data. I don't have them handy. I know that the product has been -- has had a nice career in the original country of Spain, but we can try to get information on that.

The pill burden is real. The pill burden is something that has been in existence in the field of cardiovascular in particular, because you treat the original condition. But in doing so, you also want to make sure that other parameters that can be attenuated such as the blood pressure, such as anti-using anticoagulants to facilitate the work that the heart has to do.

So it's always been a factor. I would say that the physician has a key role emphasizing the importance of compliance treatment and emphasizing that it's teamwork, right? All those drugs need to work in harmony, and they're complementary to one another.

And that's where, in the case of Vascepa, even though we are adding to the pill burden, there's no doubt about that. Any new drug will add to the full burden. The numbers are pretty compelling in that they clearly showed a benefit is on top of the benefit of the statin.

And that's why we refer for those patients to the residual cardiovascular risk that their condition implies even though they're treated with statin or a blood thinner or a blood pressure medication.

So I would say that's Trinomia, a good example of how all burden can be attenuated -- and the results are pretty stunning when you think about it to show improvement in cardiovascular [indiscernible] using a polypill at into patients to use 3 single drugs.

[Operator]

Your next question comes from Rahul Sarugaser from Raymond James.

[Rahul Sarugaser, analyst]

Most of my questions have been answered. I just want to drill down a little bit on your slide talking about the GPs versus specialists. We're seeing a bit of a -- its early days, but we're seeing a bit of a separation in terms of the adoption with GPs versus cardiologists and endocrinologists.

Is it a function of the sales team? Is it a function of that's a larger group. Could you give us a sense for how we should expect those trends to continue?

[Gilbert Godin, executive]

Yes. Rahul, thank you for your question. At the root of it, it's almost a mathematical equation. We started promoting the product to what we call subject matter expert, early adopters, and these are specialists, right? Everybody follows what the cardiologist does early on or the endocrinologist and therefore, that's how most specialty products are launched.

But the audience we called the -- we moved to the second phase. And typically, the plan was to do this as the market access opens on the public side of things, and that was, of course, delayed because of the pandemic. We now add or layer an additional 7,000 to 7,500 prescribers and their general practitioners.

So there's an expansion in the size of the target that is threefold. So that threefold expansion is expected to eventually translate into a number of prescriptions. And I would say that the job between the first phase and the second phase is to make sure that GPs understand that the diagnostic of the condition and the need for Vascepa can be learned, understood and performed by the GP, especially since he now has an expert that can explain.

And that's what's happening when you hear about various continuous medical education forms taking place across the country. It involves a specialist that has experience with the product that knows the data inside out and informs and eventually trains general practitioners.

So there's an element of leverage there that is consistent with the fact that we're going from 2,000 to 10,000 potential prescribers and maturity. So that's the math behind it.

That's why that curve is not going to go back. That's why the GPs will continue to shoot up as more indoor of them start using the product. And as we also make some inroads and the extent at which they're using it, to start prescribing is a good marker to start to then use it every time you encounter a patient that has the right patient profile in your practice, that's the other axis of expansion, and that's why it usually produces a pretty sharp rate of growth.

[Rahul Sarugaser, analyst]

Great. That's very, very helpful, Gilbert. And if I can actually drill down a little bit further on that latter part, your latter point. Certainly, there's a larger pool of GPs. And so as the Pfizer team goes and access to that we should see that trend continuing.

My question is more, I think, to do with the specialist then as your team accesses them and because a GP will do like maybe 1 in 10 patients all prescribe to whereas a cardiologist med 3 or 1 5 and moving them from 1 3 1 5 to 1 and 2, increasing the number of scripts that they're writing per patient that they treat is sort of -- is a key driver there. So how are you looking at increasing that penetration within the cardiologists that are already prescribing?

[Gilbert Godin, executive]

Yes. The -- we have those almost exactly internal metrics where I will, it's interesting to bring that up. But we have objectives that are to grow the number of specialists that are currently prescribing from X to Y. And we also have, for those specialists, the objective of growing the number of scripts that they write every year from X to Y another from Z to T, let's say.

So that we do have growth in prescribers and then growth in volume and prescriptions as they continue to generalize their standard of care to all of their patients. So we have this equation on the specialist side.

We also have this equation on the GP side. The numbers on the GP side are larger because there are many more GPs -- and it's also because our interaction with general practitioners, ours and that of our partner at Pfizer is more recent, right? So we know, and I think we shared that in the last quarter.

The rate of prescription in specialist is -- was at last quarter, 4x greater than the rate of prescriptions in the GPs. And that's only because we started 2 years earlier with the specialists. So we think that that there's going to be some catch up here, but it will apply on a much larger pool of physicians.

[Rahul Sarugaser, analyst]

Great. And if you into just one quick last question. We, of course, have seen pretty terrific data on Vascepa. We're also seeing continuing data coming out of Amarin. Could you perhaps speak to how the continuing evolving data should translate to one adoption to the total addressable market?

[Gilbert Godin, executive]

Yes. I think what we've attended to -- I don't know if that's at the heart of your question. But early on when the trial came out, everybody was quite impressed and expect the quality of the outcome. Then there were some doubts related to a factor. I think it was on the mineral oil in particular.

And that came back, I would say, periodically in the ensuing couple of years. Well, the fact is that since then, on the scientific front, there were a number of demonstrations of the reinforcing the outcome of the REDUCE-IT trial, some of them related to the demonstration of the mode of action being the reduction of atherosclerosis in those patients treated.

But more recently in the fall was the result that I've alluded to earlier in Japan, where a long open-label study showed results that clearly reinforced and eliminated the concern related in the views of many anyway, eliminated the concern related to mineral oil because there was no mineral or placebo in that study.

So I think that like many things in the medical world, over time, what we say in French defects are stubborn, right? And the facts here are that the results are strong and have been supported in continuous fashion by further or subsequent scientific development.

So I think that, that will continue to reinforce the adoptions of what is suggested in the guidelines. And hopefully, we still have more guidelines that will eventually rally the early ones, recognizing that the early ones are the most important ones.

[Operator]

Your next question comes from Tania Armstrong-Whitworth from Canaccord Genuity.

[Tania Gonsalves, analyst]

Most of our questions have been asked already, but just a couple more for me. In terms of public reimbursement, can you provide an update on what's going on with BBC negotiations?

[Gilbert Godin, executive]

Yes. What I can tell you about the negotiations here is that they're still very active. I would say they recently have been very active. That would probably be the proper word for it. I think that we've alluded to the nature of the issue, the issue being a consideration or requirement from those provinces.

That was outside of the scope or the terms negotiated when we negotiated the letter of intent and those considerations were uniquely voiced by Alberta and BC, and that's why we have agreements in Quebec, Ontario and many other provinces and territories.

So they are important. We have explained our positions. We've been, I would say, communicating and exchanging on the way to get to a resolution. I think that there's no doubt in my mind that all the parties involved want to find a resolution to the situation.

And I would say that I'm encouraged by the recent and the active discussions that we've had with both jurisdictions, I cannot predict what the outcome will be or when we don't control all means related to that outcome.

But I can only commit and reiterate that we have bagged ourselves available the minute that the other party was available to engage and discuss and we will continue to do so, so as to resolve it in the way that is property and satisfactory.

[Tania Gonsalves, analyst]

And just a follow-up. Is there a situation where that outcome could be negative and both parties would walk away, if that were to happen, what would that do to your peak sales estimates?

[Gilbert Godin, executive]

I think that with respect to the short term and 2023 in particular -- we hope, of course, that we will have Alberta and BC coming into the market as early as possible, but we don't think that it would be detrimental to what we stated earlier. On the longer term, it's different. We think that we need to have a national full market access in the country to reach peak year sales.

So the only reason why we're doing it. We're doing it because it's important for our patients, and it's -- I guess, it's the only appropriate objective that we should have is to have universal coverage in Canada, public and private.

But bigger sales without 30% of the country on the public front could probably require that we review those numbers as it came to that.

[Tania Gonsalves, analyst]

Okay. And then I apologize if you mentioned this already, but are you able to give more color around how many patients have now been stabilized on Vascepa?

[Gilbert Godin, executive]

I think that -- do you want to have that do you have... Okay. We -- I don't think we should -- we provide a number of positions, but we can certainly provide that number. I don't know I think you have it handy… 13,000 is the number.

[Tania Gonsalves, analyst]

Okay. Excellent. And one last question.

[Gilbert Godin, executive]

By the way, any just to be clear. 13,000 patients are the number of unique patients that have been using Vascepa. We don't have the degree of resolution that would say, I think you used the word stabilized...

[Tania Gonsalves, analyst]

Yes. Okay. And then one last one for me. I think we've probably talked about this before, but just given where public pricing came in, is there a risk that over time, commercial payers will also drop their pricing once they kind of get a sense of where public reimbursement is?

[Gilbert Godin, executive]

I don't know that there would be any kind of precedent for that for a simple reason. I think that everything with respect to product listing agreements in Canada, whether they're private or public, have always been historically, for as far as I know, has always been confidential information and combination between the parties.

So the conditions of the reimbursements and the -- all the parameters and the implications of the coverage are negotiated on a case-by-case basis with the payers based on their jurisdictions, their patient bases and so on.

I'm not aware of any situation where one situation would leach into the other for all of those reasons. As far as we're concerned, we have had a pretty perfect course with the PMPRB and subsequently in negotiating access with the say the market that we have today. Usually, these elements are not subject to renegotiations in the out years, unless there was an analogous reason to do so. Sorry, I just got to make a correction here. I'm being given here at a different -- I said 13,000 earlier, the right number -- I'm sorry, is 11,500 and that's 90% year-over-year. Not 13. 11,500.

[Operator]

Your next question comes from Justin Keywood from Stifel.

[Justin Keywood, analyst]

I just want to circle back on the peak sales estimate for Vascepa -- just so we understand it. The target still remains intact of $250 million to $300 million in sales. And I believe that the timing for that was -- 2025 to 2026. Is that correct?

[Gilbert Godin, executive]

The estimate range that you mentioned is correct. And I think we mentioned the -- by the end of 2026.

[Justin Keywood, analyst]

So how do we bridge where Vascepa is expected to do $25 million at the midpoint for 2023. How do we bridge that getting up to that $275 million in essentially 3 years?

[Gilbert Godin, executive]

Yes. I think it would be constant and rapid growth phase of growth that is expected in the middle of the life of the product as it usually is the case in products that are -- now have gathered their full momentum.

So I think we've alluded in the past to the way pharmaceutical products have slow starts, periods of very high growth and then eventually stabilize and taper down in the out years. That's usually the time when the product will on a year-over-year basis can double or triple.

And that's because the numbers we alluded to before those 7,500 additional physicians will now compound on the rate of growth that is augmenting and the penetration of the practice of each of those physicians will yield the volume of prescription that will be extremely large and compounding on a growing number.

We've been growing now on a small base, disseminating information to the early adopters, and we're now in the first stages of that growth that involves a material number of prescribers and that brings into the real of it because of the public reimbursement, hopefully, with BC and Alberta, the totality of the patients in scope in Canada.

[Justin Keywood, analyst]

And just given -- understandably, there were some launch challenges with Vascepa just in the early days of the pandemic. Do you think that has impacted the trajectory at all? Just given when you're launching a new drug, it's best to not have these obstacles in place? Or do you still feel that we're largely past that and there could still be a substantial traction going forward?

[Gilbert Godin, executive]

Yes. Justin, I will say that the effect of the pandemic and take that in context, has essentially been that we've lost a year. So I think that we are today where we would have been a year earlier, right? Do I have scientific explanations and rigorous demonstration for that? No.

But I know that the impediments to our detailing the circumstances in which the doctors were evolving, has materially slowed down and reduced the impact of the resources we've devoted to launch the product.

So if you picture this here, I think we'd probably have a different perception if we were where we are today, 2 years after the launch rather than 3, right? So that's the effect of the pandemic. Having said that, I see no reason why the pandemic would have reduced the potential of the product.

It simply has slowed us down and reaching the point where we are today, which is a platform on which we plan to grow at accelerated fashion.

So I'm trying to paint an image here, and I think we all relate to the impediments of the pandemic. I want to remind you, even in 2022, the first 5 months of the year, Ontario and Quebec were in lockdowns or effects related to those. And it really is only in the back end of the year that we could produce a response that is more proportional to the level of resources that we've engaged.

So -- it's -- I know there's a lot of fatigue and about the topic, and we -- I don't think we mentioned the pandemic in the script this year that was this quarter that was something we were trying to avoid. But the reality is that if we want to look back and analyze what has been happening, you can't ignore that this was monumental in its effect, but we're going to move on, right? We're past that point.

We're making the best out of it. We persisted through those rough times. And now there is a much clearer way forward. So that really is where we're focusing.

[Justin Keywood, analyst]

Understood. And some obvious challenges there. Just one final question on the peak sales target. I believe there was a target EBITDA margin stated in the past. I think it was around 30% to 35%. Does that still hold?

[Tim Hendrickson, executive]

Justin, yes. That would hold as well.

[Operator]

We have a follow-up question from David Martin from Bloomberg -- or sorry, Bloom Burton.

[David Martin, analyst]

So for public coverage, it's just for secondary prevention, whereas private was primary and secondary prevention, -- are you seeing GPs prescribe the drug for primary prevention for patients covered by private insurance? Or are GPs generally just prescribing for secondary prevention...

[Gilbert Godin, executive]

They are prescribing in both cases. They are presented with the full scope of benefits of the product, which means the 2 patient populations. But of course, they're also informed of some of the limitations they might encounter in those jurisdictions where the patient is publicly covered.

We factored the lack of coverage for primary cardiovascular pretension in the public, in our estimates, and our patient population estimates and our penetration rates.

[David Martin, analyst]

Okay. And then one last question. How do the authorization processes differ in Ontario and Quebec? Are they pretty much the same in Ontario is just learning how to do it? Or are there major differences in the 2 provinces?

[Gilbert Godin, executive]

Yes. I would say that the -- in practice, it's almost identical. It's a form the form that is either a paper fax form or an electronic form depending on the level of automation of the physicians, and it's sent to the authorities that are overseeing the adjudication of the claim.

So from that standpoint, it's identical. What differs of core Quebec started 4 months earlier. Ontario was late July, early August, Quebec was in May, I believe. And therefore, there was a learning curve in Quebec also. No doubt about it. We don't see all the intricacies of what's happening behind the scene. But early on, it was obvious that what was coming out was not equal to what was going in.

So that's why we think that over time, and with the engagement that we've had with the Ontario benefit that there was a realization that, yes, there might be an issue here in the way they're dealing with Vespa in particular product is conditional on the use of a statin and certain biomarkers.

So that's where we focus our dialogue in addition to focusing our dialogue on what would be the normal per capita progression in Ontario for a drug that -- for which we have a similar experience in other provinces.

[Operator]

There are no further questions at this time. I'll turn it back to Gilbert for closing remarks.

[Gilbert Godin, executive]

All right. Well, thank you very much, Colin. I'll be very brief. Thank you, and thank you all for participating on today's call. We look forward to speaking to you again in the near future.

Thank you. Goodbye.

[Operator]

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.