Theratechnologies Inc

TSX:TH

Earnings Call Transcript 2023-Q1

[Operator]

Good morning, ladies and gentlemen, and thank you for standing by. Welcome to Theratechnologies First Quarter Fiscal Year 2023 Earnings Call.

We would like to remind everyone that all figures on this call are quoted in U.S. dollars.

At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session with analysts. Instructions will be provided at that time for you to queue up for questions. Following the analyst Q&A session, investors wishing to submit a question may do so by clicking the "Ask a Question" link on the webcast platform. [Operator Instructions]

I would like to remind everyone that this conference call is being recorded today, Wednesday, April 12, 2023 at 08:30 A.M. Eastern Time.

I will now turn the call over to Ms. Elif McDonald, Head of Investor Relations. Ms. McDonald, please go ahead.

[Elif McDonald, Head of Investor Relations]

Thank you, Andrew, and good morning, everyone.

On the call today will be our President and Chief Executive Officer, Mr. Paul Levesque; and Chief Financial Officer, Mr. Philippe Dubuc; as well as our Global Commercial Officer, Mr. John Leasure. During our Q&A session, we will be joined by Dr. Christian Marsolais, our Chief Medical Officer.

Before we begin, I'd like to remind everyone that our remarks today contain forward-looking statements regarding our current and future plans, expectations and intentions with respect to future events. Forward-looking statements are based on assumptions and there are risks, that results obtained by Theratechnologies may differ materially from those statements. As such, the company cannot guarantee that any forward-looking statements will materialize and you are cautioned not to place undue reliance on them.

We refer current and potential investors to the forward-looking information and Risk Factors section of our management's discussion and analysis issued this morning and available on SEDAR at www.sedar.com and on EDGAR at sec.gov. Forward-looking statements represent Theratechnologies' expectations as of April 11, 2023.

Additionally, today, we are using the term adjusted EBITDA, which is in accordance with International Financial Reporting Standards, abbreviated as IFRS, or U.S. Generally Accepted Accounting Principles, abbreviated as U.S. GAAP. Adjusted EBITDA excludes the effects of items that are primarily reflect the impact of long-term investment and financing decisions rather than the results of day-to-day operations. Theratechnologies believes that this measure can be a useful indicator of its operational performance and financial condition from one period to another. The company uses this non-IFRS measure to make financial, strategic and operating decisions.

With that, I would now like to turn the conference over to our President and CEO, Paul Levesque. Paul?

[Paul Levesque, President and Chief Executive Officer]

Thank you, Elif, and good morning, everyone.

I'm excited to report results for the first time since we have announced our new journey towards profitability. I'm expecting this journey to be rewarding for all shareholders seeing value creation at the end of the line. This said, I'm also expecting that the journey will come with quarter-to-quarter challenges as I worked long enough in the industry to know that quarterly results may be impacted by external factors such as gross to net, inventory fluctuation and difficult-to-anticipate returns that may all affect quarterly performance. And as a matter of fact, many of these factors have played out in the first quarter of 2023. With sales growth of 7% over first quarter of last year, we've had headwinds and one-time events that have played out against us this quarter. Philippe will provide additional color later in his section.

However, and this is what counts, the underlying demand for our business is still very strong with both EGRIFTA and Trogarzo recording new enrollment growth of 26% and 22% respectively versus first quarter of last year. This is the reason why we are reaffirming 2023 full year guidance of between $90 million and $95 million. We maintain that all is in place for us to produce positive adjusted EBITDA towards the end of the fiscal year.

Along the way, not only do we intend to deploy resources to increase top-line sales, we will also monitor and cut expenses to drive that positive result. To be even more transparent on customer-facing activity, I've asked, at this time, John Leasure, our Global Commercial Officer, to provide additional colors and details on performance metrics. John will come in a bit later.

But before that, let's discuss our pathway to resuming clinical development of our oncology program. I also want to remind everyone that Sudocetaxel Zendusortide, which is the assigned generic compound name for TH1902, has been adopted. Moving forward, whenever we mention Sudocetaxel Zendusortide, it's in reference to TH1902.

Following the voluntary pause, we formed a Scientific Advisory Committee, or SAC, to help determine the best developmental path forward for TH1902. A meeting was held [Technical Difficulty]

[Operator]

Excuse me, this is the conference operator. There seems to be some interruption. Just one moment, please. Excuse me, this is the operator. Just one moment. Okay, if you could please continue on, please. Okay, please go ahead.

[Paul Levesque, President and Chief Executive Officer]

Following the voluntary pause, we formed a Scientific Advisory Committee, or SAC, to help determine the best developmental path forward for TH1902. A meeting was held on March 22nd with several medical oncologists from across the United States, who are leading experts in the end-to-end lifecycle of oncology drug development.

Guided by key observations, the SAC made recommendations to modify the frequency of administration, selection of tumor types and criteria for patient selection to further improve our chances of a successful outcome. We are now finalizing the protocol and aim to get it to the FDA before the end of April.

When we restart enrolling patients again, we will update the market on our progress with the reinitiated trial, which we expect to be in the second half of the year. Collectively, we are confident that the amended protocol will ensure the best possible outcome in bringing this promising cancer therapeutic further along in its development lifecycle.

Furthermore, consistent with the company's 2023 objective of generating positive adjusted EBITDA, any new investments in TH1902 will be stage gated. Once the Phase 1 clinical trial has resumed, we will accelerate our evaluation of potential partnerships for TH1902.

We are also extremely happy to note our presentations at AACR and CROI. At the upcoming AACR meeting, incidentally this coming weekend, one of the studies highlights the synergistic effect of Sudocetaxel Zendusortide in combination with PD-L1 checkpoint immunotherapy in a melanoma mouse model. Additionally, a second study demonstrates Sudocetaxel Zendusortide as a potential therapy in SORT1-positive triple-negative breast cancer as well as in HER2-positive breast cancers.

As such, these exciting new data open up new avenues for partnering our oncology program. Our strategy is to get the oncology program back into the clinic following amendments to the trial protocol, which then puts us in a position of strength to further launch partnering discussions.

Additionally, earlier in the year, we presented new Tesamorelin data at CROI demonstrating further evidence of the potential utility of Tesamorelin in addressing metabolic syndrome and complement research in fatty liver diseases.

Now, before we go any further, I would like to invite John Leasure, our Global Commercial Officer, to share his perspective on our sales and marketing strategy for the year and some key metrics. John?

[John Leasure, Global Commercial Officer]

Thanks, Paul.

As you heard, underlying demand for both products is strong, and new prescription patient enrollments to our patient support program are ahead of our internal targets. Looking specifically at the territories and key HIV markets where we've upgraded our sales reps, we are seeing significantly higher growth rates in the national average.

For EGRIFTA, these six territories had year-over-year growth of 57%, and for Trogarzo, they grew by 70%. This is important because our goal has been to maintain steady growth in the highest volume territories, while accelerating the growth in the underperforming ones that have most potential, and it is exactly what we've seen in Q1.

The new formulations for both brands are also an important part of our strategy, and for Trogarzo, the IV Push is off to a great start. In Q1, 70% of our new prescriptions were for IV Push versus 28% in Q4. This is a clear sign that customers appreciate the new [ease] (ph) of administration, and this is the key reason for the strong growth of enrollments in Q1.

Another strategy that is really gaining traction is the digital patient activation campaign for EGRIFTA. With this program, patients that want to learn more about our products speak to a patient educator. And then, those that are still interested are given discussion guides while agreeing to speak to their doctor about EGRIFTA. These patients are what we refer to as activated patients, and we have seen a 72% increase in activated patients willing to speak to their doctor about EGRIFTA.

These are just a few of the exciting developments we are seeing as our new commercial team gets up to speed.

With that, I'll turn it back to you, Paul.

[Paul Levesque, President and Chief Executive Officer]

Thanks for sharing these insights, John.

We wanted everyone on the call today to get a strong sense of our handle on the business and how we will be steering the commercial franchises towards success. And what John talked about just now is pivotal to building long-term sustainable growth of our business.

Now quickly turning to the remainder of today's updates. We're happy to confirm that we have received comments from the agency in relation to the HFS EGRIFTA SV study protocol. Receiving the comments now allow us to conduct the summative study soon, and we will compile and submit the final study by mid-year as planned.

In parallel to this, the F8 sBLA submission scheduled for fourth quarter is moving ahead as planned. As you know, we believe the F8 Formulation will make it into more clinics as an improved next-generation product. Our F4 Formulation in turn will be phased out of the market over time. We also want to note that the F8 Formulation will provide additional IP protection for years to come.

In business development, I want to remind everyone of our priorities that were highlighted at the beginning of the year. First, we want to say that we have not given up on identifying a NASH development partner and the search continues. Meanwhile, we are also very active in looking for new products that will be immediately accretive to our existing commercial business.

And with that, I would like now to turn the call over to Philippe, who will provide a financial summary for the reporting periods before moving to Q&A. Philippe?

[Philippe Dubuc, Chief Financial Officer]

Thank you, Paul.

Consolidated revenue for the three-month period ended February 28, 2023 was $19.9 million compared to $18.6 million in the same year-ago period, representing an increase of 7.3% year-over-year.

For the first quarter of fiscal 2023, net sales of EGRIFTA SV reached $12.7 million compared to $11.7 million in Q1 of the prior year, representing an increase of roughly 9%. Growth in sales of EGRIFTA SV was mostly the result of increased unit sales and a higher net selling price, but were offset by greater rebates to government payers.

In the first quarter of 2023, Trogarzo net sales amounted to $7.2 million compared to $6.9 million for the same quarter of 2022, representing an increase of 5%. Trogarzo unit sales in the first quarter were up marginally and were positively impacted by a net selling price -- a higher net selling price and more favorable government rebates and chargebacks.

Sales growth in the quarter was also impacted for both of our products by greater than expected loading by specialty pharmacies in December in anticipation of larger price increases on January 1st given the current environment of high inflation.

All-in-all while Q1 growth was not quite where we wanted it as revenues will fluctuate from quarter-to-quarter, it does not affect our goal to become adjusted EBITDA-positive by the year end nor our stated guidance of $90 million to $95 million.

In the period, cost of sales decreased to $4.7 million from $6.1 million for the same quarter in fiscal 2022. The reason for the change is mostly explained by the fact that in the first quarter of last year, cost of sales included an amortization charge of $1.2 million in connection with the settlement of the repurchase of EGRIFTA rates from Serono in 2018. This asset was fully amortized during the first half of last year and thus this charge was zero in the first quarter of fiscal 2023.

Cost of goods sold this year decreased to $4.7 million compared to $4.9 million in the same period last year. This amount for the first quarter of last year was higher because of an adjustment to the cost of goods for Trogarzo in Europe related to the provision for rebates to the French government. In the U.S., cost of goods sold are in line with budgeted amounts.

R&D expenses amounted to $9.4 million for the three-month period ended February 28, 2023 compared to $8 million for the same period a year ago. The main reason for the increase was related to non-recurring expenses totaling $1.4 million; first, a $536,000 expense for the production of validation batches of BWFI, and second, $838,000 in expenses related to the production of clinical batches of TH1902. The remaining important expenses during the first quarter of fiscal 2023 were related to spending on the Human Factors Study for EGRIFTA SV, the intramuscular mode of administration program of Trogarzo and the TH1902 Phase 1 program.

While we paused enrollment in the TH1902 trial at the beginning of the quarter, we still recorded some expenses related to oncology, mostly related to keeping the clinical sites active to restart enrollment. We also incurred expenses related to the data analysis needed to resubmit the Phase 1 protocol. Spending in the TH1902 trial should moderate during the rest of our fiscal year, even as we restart the Phase 1 program.

Selling expenses amounted to $6.8 million for the first quarter of 2023 compared to $7.8 million for the same three-month period last year or a 12.7% decrease. The decrease in selling expenses is largely associated to the decision to exit the European market in 2022 and is offset by slightly higher spending in the United States.

G&A expenses in the first quarter of 2023 amounted to $4.5 million as compared to $4.4 million in the first quarter of 2022. The slight increase is due to an overall increase in activity to reflect the growth of our business in North America related to the onboarding of our field force last year and is offset by lower spending in Europe.

Net finance cost increased to $4.9 million in Q1 2023 compared to $1.3 million in Q1 of last year. Most of the increase or $2.7 million is related to the issuance of warrants to Marathon, related to the previously announced amendments to the credit agreement. The increase is also due to an increase in interest expense on our long-term debt.

Adjusted EBITDA for the first quarter of 2023 was negative $3.9 million versus negative four $4.1 million for the same period last year. In 2023, adjusted EBITDA was negatively affected by non-recurring expenses of close to $1.4 million related to the BWFI and the TH1902 manufacturing.

We ended the first quarter of fiscal 2023 with $29.2 million in cash, bonds and money market funds. Operations used $5.7 million in cash in the first quarter of 2023, unchanged versus 2022, and variations in operating assets and liabilities provided positive cash flow of $2.4 million, mostly due to decreases in inventories and accounts receivable, and this was offset by a decrease in accounts payable.

So, with that, Paul will be back for final comments, but first, we will now open the call to take your questions.

[Operator]

We will now begin the question-and-answer session. [Operator Instructions] The first question comes from Louise Chen with Cantor. Please go ahead.

[Louise Chen, Cantor]

Hi, congratulations on all the progress in the quarter and thank you for taking my questions here. So, I had a few questions for you. Wanted to ask you how you're thinking about operating expenses for the rest of 2023 and the cadence of that spend?

And then, also, what do you find could be an ideal partner or what are the characteristics of an ideal partner for TH1902 once you resume those trials and how quickly could we see you sign somebody on?

And then, on the NASH partnership, do you think we'll hear anything this year? Thank you.

[Paul Levesque, President and Chief Executive Officer]

Well. Thank you, Louise, for your questions. So, I'll turn to Philippe for the operating expenses. But as we said before, there are some expenses that we had in the first quarter that will go away, and will go away even more in 2024, and that's why we said and we will deliver on the fact that we will turn this organization positive from an adjusted EBITDA point of view towards the latter part of this year and obviously in 2024 and beyond.

So, there are some very specific expenses. I'll turn to Philippe who will provide additional color and I'll come back for the partnership on TH1902.

[Philippe Dubuc, Chief Financial Officer]

Good morning, Louise. So, the expenses going forward, if you look at the -- at what we spent in the quarter, obviously R&D was higher than what we guided for, but there's a few one-time expenses. So, I mentioned $1.4 million related to manufacturing, but also there were extra expenses on the oncology side, because we did a lot of data analysis with external consultants to really get an amended protocol and discuss with the SAC members. So, we did a lot of analysis on the Phase 1 and -- or 1a and 1b program. So, there was a bit of a blip in R&D.

On the selling and the G&A, that should be -- should stabilize for the rest of the year. R&D, again, we've been spending on the HFS study, on the intramuscular. So, these expenses will go down in the back half of the year. So, look for stabilization in SG&A, but lower expenses going forward on the R&D line.

[Paul Levesque, President and Chief Executive Officer]

So, Louise, in trying to address your second question, which is a good one about TH1902 partnership, let me just say first that we never try to partner TH1902 in territories other than China. So, this is the first time that we're going to go about it. And obviously, I think we're going to be in a position of strength when the product is going to be back in the clinic, and that is why we're extremely focused in making that happen.

I see three possibilities. So, I see a partner that will say, "I'm interested in partnering for Europe, I'm interested in partnering for the U.S., or both, or globally." So that is something that we have to try. I think this is certainly something very exciting.

The second thing is associated to the data that will be presented at this coming weekend at AACR. You saw that, it looks like we have synergistic activity with PD-L1. I think PD-L1 company needs to compare and differentiate from PD-1 agents. So, I think that there's a card to play over there. And as soon as the data is made public, I think that a lot of people will get excited. That was the highlight of that. That was in the press release a month ago, but the full abstracts will be presented over the weekend, and we have a great deal of excitement around this.

And the third option is that we think that we deliver through SORT1 receptors any payload or anything within the cancer cells very effectively. So, I think that once we're going to be back in the clinic with a higher probability of success for TH1902 to work in solo, it will grab people attention about what else can we conjugate? What type of technology can we conjugate and funnel through the cells very effectively? So, three possibilities as I said. TH1902 partnership based on geography. Second, in combination, PD-L1 seems to be very exciting, and potentially radioisotopes or any other technology that would benefit from being conjugated in leveraging the SORT1 receptor because we actually make that get to the cancer cells more effectively.

Last is your question about NASH. I think NASH is still an area that a lot of companies are questioning, but I think the context is more favorable. We said that a few times. I think it's a matter of finding the partner that wants to go for the long run. We have a clear compound that can work. This said, it's not a slam dunk. So, a lot of people will want to actually see the data that we have and probably see how far the two companies that have produced early data can go also. It looks way better than it did 12 months ago, but yet, there are some still question marks, and we will continue to work hard. We have a value proposition, and we think that a partner could come in for a Phase 2b/3 trial and be further along. So, we're not going to give up.

Hope I answered your question.

[Louise Chen, Cantor]

Yes, you did. Thank you very much.

[Operator]

The next question comes from Justin Walsh with JonesTrading. Please go ahead.

[Justin Walsh, JonesTrading]

Hi, thanks for taking my questions. A couple from me. So, the first one, you talked about some of the favorable trends for EGRIFTA and Trogarzo and some of the factors that attenuated year-over-year revenue growth for the quarter. I'm wondering if you could provide some more details on what dynamics give you confidence that revenue growth will accelerate through the rest of the year and allow you to beat your guidance?

[Paul Levesque, President and Chief Executive Officer]

Yeah, sure. I'll turn to John, because John is just coming back from a sales conference. He can give you a bit more color and details on what he is seeing when it comes down to the underlying demand and what's happening at the customer-facing level. John?

[John Leasure, Global Commercial Officer]

Yeah, Justin. Thanks for the question. As Paul said, we just had a national sales meeting, and the engagement level of the team is really high. I'm really impressed with what I am seeing. As you know, when you launch a new sales force, it does take some time for them to build momentum and get up to speed, and everything is going in the right direction.

You heard my comments about the new territories in these six key markets that really make up significant part of the HIV sales growing significantly. On top of that, we're rolling out new marketing campaigns for both the products, and the enrollment trends are really strong and within our target. So, all those things together give me a lot of optimism for the rest of the year.

[Justin Walsh, JonesTrading]

Got it. Thanks for that. So, my last question here is, I'm wondering if you guys can provide any more color on the factors that went into the selection of certain tumor types for the go-forward plan for TH1902? I guess, how much of these decisions were informed by the clinical data you've seen so far versus general analyses of evolving treatment landscapes in different indications or the preclinical data that we're seeing at conferences like AACR?

[Paul Levesque, President and Chief Executive Officer]

Yeah, so thanks for your question, Justin. I think that you're touching on it, but I will turn to Christian for additional details. Obviously, we have done a deep dive in the analysis of the patients that had been treated through the dose-escalation phase, but also the basket trial. And that led to -- that crossing of data led to revealing a few things very interesting moving forward. Christian?

[Christian Marsolais, Chief Medical Officer]

Yeah, thank you, Paul. Thank you, Justin. To address your questions regarding the decision moving forward, we -- as you know, we had a lot of very good preclinical data. But we have now analysis -- complete analysis on more than 36 patients that received the drug, PK/PD, safety, efficacy, and based on that information, this is how we made the decision of moving forward with a limited number of tumor types.

We did all of the analysis also regarding safety. Looking at the drug and looking at the PK and we do believe that by changing the frequency of the administration of the drug, we'll be able to manage the safety profile, while improving the efficacy.

And finally, there's also a question of the selection of the patients. As you know, the patients that were enrolled, especially in the first portion and also in the second portion, had received more than 12 cycles of prior -- or not only cycles, prior treatment or anti-cancer treatment, and we will certainly select patients that have less exposure to vaccine in the past, in the future, and changing a few other criteria.

And the good thing about this is that we -- the team internally at Thera conducted all of the analysis. We looked at the data. We made some recommendation to an independent scientific advisory committee, and they all agreed and endorsed our way moving forward. And the next step is to include all of this data in the protocol and submitting it to the FDA by the end of April for restart hopefully by mid-year.

[Justin Walsh, JonesTrading]

Got it. So, maybe one very quick follow-up on that. I know you can't speak for the FDA, but just sort of wondering if there's any expected turnaround time on when they would give some comments back on the protocol amendments? I know you said, hopefully mid-year, second half of the year for the trial to restart.

[Christian Marsolais, Chief Medical Officer]

Yeah. As we have mentioned in the past, we had an interaction with the FDA at the beginning of the year and they had mentioned to us that there would be a review within 30-day period for the amended protocol. And as you know, there are also IRBs for the review of the amendment. And we do believe that we can restart recruitment mid next year -- middle of this year.

[Justin Walsh, JonesTrading]

Perfect. Thank you for taking the questions.

[Paul Levesque, President and Chief Executive Officer]

Thank you for your question. And needless to say that we're extremely excited by the SAC recommendation, and now Christian and his team will actually prepare the filing, and we will resubmit, as we said, a new protocol. Thanks for your question.

[Operator]

The next question comes from Edward Nash with Canaccord Genuity. Please go ahead.

[Edward Nash, Canaccord Genuity]

Hi, good morning. Thanks for taking my question. I just wanted to maybe see if we can just hammer down a little bit on EGRIFTA SV and Trogarzo growth. Just trying to understand, you mentioned, obviously, the growth in sales and price increases attributed to the change year-over-year. And if we just take the rebates to Medicare out of the equation at this point, I guess the only way to get to this, I guess, would be knowing how much growth you're getting organically on a per patient basis. I'm just trying to see what that growth is? If we take out pricing, how much organic growth are we seeing in the Trogarzo and EGRIFTA SV franchise? Because it's just kind of hard to figure it out, given the price increases that we've seen, the 5% last year and 7% this year for Trogarzo, and the 6% in '22 and 7% this year for EGRIFTA?

[Paul Levesque, President and Chief Executive Officer]

Thank you, Ed, for your question. And I certainly understand. There were many moving parts in the first quarter. And again, when you want to be producing profitability at the bottom-line level, as defined as positive adjusted EBITDA, we are bound to face quarter-to-quarter challenges, and that's what happened in the first quarter. And that's why we're putting emphasis on the underlying demand, because the underlying demand is very strong.

And I'll ask Philippe to provide some colors on the movement, the one-offs that have played out, but I just want to insist what the future indicator of success is, is the new prescriptions that we're generating, and those increased by 26% and 22%, respectively. So, we're pretty happy about what that is going to bear for the future.

Philippe, do you want to provide additional color?

[Philippe Dubuc, Chief Financial Officer]

Sure. Mostly, Edward, it's related to inventory building. I think in this inflationary environment, what we saw in November and December is loading in terms of specialty pharmacies trying to load up before anticipated price increases. I guess, most pharmacies were anticipating greater price increases this year than in the past because of the inflation that we saw.

So, while unit growth was not as strong as we were expecting, because of this, since the trends in the underlying business are there, we're confident in the rest of the year. And we always see a lag of probably one quarter. When you see strong or weak enrollments, there is a lag of one to two quarters when that materializes. So that's really why we're seeing a strong end of the year even though the unit growth was not as strong as we expected in Q1.

[Edward Nash, Canaccord Genuity]

Got it. And that's for both programs equally?

[Philippe Dubuc, Chief Financial Officer]

Yes, it is.

[Edward Nash, Canaccord Genuity]

Got it. Okay, thanks very much.

[Paul Levesque, President and Chief Executive Officer]

Thank you, Ed, for your questions.

[Operator]

The next question comes from Endri Leno with National Bank. Please go ahead.

[Endri Leno, National Bank]

Hey, good morning. Thanks for taking my questions. Most have been asked and answered, but the one I wanted to ask is you mentioned that you're looking for new products out there to add to the portfolio. Can you talk a little bit about what a potential new product could look like? Are you seeing anything interesting out there that might impact you to bid on?

[Paul Levesque, President and Chief Executive Officer]

Yes. Thank you for your question. And this is important. And I'm glad that you're raising the question, because this is part of the strategic plan that we've written for [ourselves] (ph). We believe that we can accelerate our profitability journey by having another product in the bag. And we've got capabilities that we can leverage. And that's why we keep saying that it could be in HIV, could be in HIV adjacent, or it could be in another therapeutic area where we would leverage our capabilities and infrastructure.

But John is leading this opportunity, so I'll turn to him for additional details. But I just want to tell you that we're committed to this. We believe it's feasible. Now it takes always more time to -- than we want, but at the same time, there's got to be some products that are deprioritized by big pharma or mid-sized companies that we could grab and do a good job on. And it could be simple, could be as simple as a co-promotion. It could be different ways so that we wouldn't have to set back our journey towards profitability to put our hands on some of those assets.

John, can you further elaborate on this?

[John Leasure, Global Commercial Officer]

Yeah, Endri, I think Paul pretty much said it all. But again, the focus is on these deprioritized brands, many of them coming from big pharma that fall under their radar, so under sort of the $100 million range. These are products similar to EGRIFTA that we acquired back some time ago. So, I think there is products that fit that profile that out there. We've identified a number of them, and we're going to make sure that we sort of find the ones that best fit our needs.

On top of that, though, because of our new commercial capabilities, as Paul also mentioned, there is some interest in utilizing our sales force through co-promotion agreements and things like that. So, we're looking at it in a number of different angles. We're going to make sure that we find products that have a strong value proposition, and we think we can grow.

So, with that, I think I'll turn it back to Paul.

[Endri Leno, National Bank]

Sounds great.

[Paul Levesque, President and Chief Executive Officer]

Thank you for your question.

[Endri Leno, National Bank]

Thank you. That's good color. The other question I had, it has a little bit more to do with the cost, but the question is, especially with the TH1902, I mean, let's say we get a positive answer if FDA accepts the protocol and you decide to go ahead and continue those trials, how do you square that with the goal to become EBITDA positive by the end of the quarter? I mean, are you going to be looking out actively for a partner? Is that going to be on hold until you find a partner or -- anyway, yeah, any thoughts around there? Really appreciate it.

[Paul Levesque, President and Chief Executive Officer]

Okay. So, thank you for your question. It's a step-wise approach, that's how we want to approach it. But this is an important candidate for us. We believe we'll be successful. So, it's a step-wise approach. First, we wanted to go back to the clinic, and Christian will have a new protocol, approved, then we're going to go back into the clinic, and we're going to dose patients, but in a different way, and those patients will be selected differently, and we're going to have different tumor types. So, we're going to actually do what increases the probability of success. And that's part of the new protocol that will be submitted.

We have what it takes to do that, but once the product is back in the clinic, we will accelerate our search for a partner. And I think for the next phases of development, we'll do it together. So, the point is that it should not actually be a setback in our journey towards profitability.

Philippe, do you want to add anything to this?

[Philippe Dubuc, Chief Financial Officer]

Well, the only thing I can add is that the way that we're restructuring the new protocol, it will not be as expensive to finish the Phase 1, so it will be a smaller Phase 1b trial, and so the cost going forward is not going to be as high. And once we find a partner, we're looking to share these expenses.

[Endri Leno, National Bank]

Great, thank you. And the last one from me, I think John, you mentioned that the majority of new Trogarzo patients are in the Push formulation. So, the question I have is that, do you have any plans to transfer the IV ones to push, or what is the general kind of your outlook and expectation for the IV product going forward?

[Paul Levesque, President and Chief Executive Officer]

Yeah, well. I think as we may have mentioned before, the product is exactly the same, it's the mode of administration that's different. And so, physicians have the option to prescribe it either way. There are some -- we have heard some from some physicians that still prefer the IV and they feel like they could administer it relatively quickly in their offices and patients like it, so they can continue to use that formulation. But I think the IV Push by most physicians is just a lot more convenient both for the patients and the physician. It's a faster time to administration. It's simpler. And so, I think the majority of physicians will go in that direction. But again, they have the option to do what they want and hopefully in the future, they will also have the option for the intramuscular.

[Endri Leno, National Bank]

Great. Thank you. That's it from me.

[Operator]

The next question comes from Andre Uddin with Research Capital. Please go ahead.

[Unidentified Analyst]

Hi, good morning. This is [Girish] (ph) on behalf Andre. Most of my questions have already been asked, but I do have one question around Trogarzo sales. So, given that the FDA had recently approved the Gilead drug lenacapavir for HIV, do you foresee this having any impact on Trogarzo sales? And how do you plan on addressing this kind of competition? Thanks.

[Paul Levesque, President and Chief Executive Officer]

Thanks for your question. And as you can imagine, we did a fair amount of research on this, and John has not only the research outcome, but he has the day-to-day interaction with customers. John, do you want to provide additional details?

[John Leasure, Global Commercial Officer]

Yeah. Well, I think the biggest indication is that we're seeing a 22% increase in our Trogarzo enrollments. These are new prescriptions into our patient support program over last quarter. So, even with lenacapavir out, it hasn't had an impact on our new patient enrollment.

As Paul alluded to, our market research suggested that a significant amount of the lenacapavir business would be in combination with Trogarzo, and that was in their clinical trial, about a third of patients were in combination with Trogarzo.

So -- and these are multi-drug resistant patients. They are typically on two and three drugs. They can't be managed just on one agent. And there is increasing interest in these non-oral regimens and long-acting injectables like Trogarzo and lenacapavir. So, we think it's a net positive and there will be increased utilization in combination together.

[Paul Levesque, President and Chief Executive Officer]

Thank you, John. I think it's suffice to say that our value proposition, I think, is stronger now than ever before.

[Endri Leno, National Bank]

Yeah. All right. Thank you very much. And one more question. You mentioned that you are planning to deploy some resources just to improve overall top-line sales. Can you just provide more color on that? Like, how do you measure the success of the sales team? And like, what -- are you planning on growing the sales team going forward or more efficiently allocating it?

[Paul Levesque, President and Chief Executive Officer]

Well, as I said, I think it could be -- John and I are convinced that the infrastructure that we've built can actually take on another product. And if it's a product that comes and has to be detailed on the target that we already have, then we'll decide if we have enough of those reps. But if we were to take on something in the adjacent therapeutic area, we could actually leverage the infrastructure, while hiring a few additional reps, because that could be good for the business we currently have as well. So, we're open to that as well, providing that this drug is approved and reimbursed or soon to be, because the drug is in clinical development, now in Phase 3 clinical program that would come with a risk, and we're not willing to take that sort of risk at this time. If the drug is already on the market generating some sales, but deprioritized, that's another case altogether.

John, that's what we're talking about, right?

[John Leasure, Global Commercial Officer]

Yeah. No, exactly. And the sales force really is getting up to speed. We have the platform built, we have the capabilities, we've improved pretty much the commercial capabilities across the board from sales, marketing and market analytics, market access. And so, these -- all these resources are not going to be leveraged to open up new markets. And so, I think this sales force is basically at capacity. It's building momentum. I think it's getting stronger every day, as I mentioned, from what we're seeing and the growth in the new territories. But I think there's also opportunity now to leverage this platform with additional products, and we'll certainly be looking out for those the rest of this year.

[Endri Leno, National Bank]

Excellent. Thank you very much for that, guys.

[Elif McDonald, Head of Investor Relations]

Okay. There's a one last question from the webcast that we will take is related to combination trials. Would any partnerships in the new combination area depend on the success of the current trial or are they more standalone?

[Paul Levesque, President and Chief Executive Officer]

Well, thanks for the question. I think that we are convinced that with the changes that we're making now, TH1902 will be successful as is in solo. And that's the reason why it has to go back in the clinic, and we have to continue to collect positive data. Now this being said, is that once that is in the clinic, I think that we will publish additional data on what we have and therefore we will grab additional attention for partnership. So, it's a two-pronged approach, but obviously TH1902 for us is an agent that will actually serve a purpose in the clinic as a solo compound.

Christian, you agree with that, I suppose.

[Christian Marsolais, Chief Medical Officer]

Yeah, absolutely. And in addition, the new data that we have seen, what we just announced and will be presented at AACR are very interesting. When we administer TH1902 in this animal model, we see a significant infiltration of tumor lymphocytes, which means that in that experiment, we use what we called a cold tumor and it looks like TH1902 can turn this cold tumor into a hot tumor, meaning that there would be immune cells infiltration into tumor, which means that in addition, if you add PD-L1 inhibitor, you potentiate the activity of those PD-L1. And this is what we have shown in the animal model and we do believe that this could lead also to very interesting partnership and combination as we move forward with the Phase 1 trial.

[Operator]

Were there any other web questions?

[Elif McDonald, Head of Investor Relations]

No, that's it.

[Operator]

Okay. So, now I'd like to turn the call back over to Paul Levesque for any closing remarks.

[Paul Levesque, President and Chief Executive Officer]

Thank you, Philippe and John, and thank you everyone for joining our update call.

I hope that you saw from John's comments that our business fundamentals are solid and that will be yielding good growth for the rest of 2023 and beyond. Meanwhile, our commitment to achieving positive adjusted EBITDA is real and despite quarter-to-quarter challenges, we have set a new direction and we'll will be executing towards that. While we are at the very beginning of this new journey towards profitability, we are very serious about achieving our goals and our commitment is very real. We're also well on our way to resuming clinical trials for Sudocetaxel Zendusortide with an amended protocol that is well supported by external oncology experts. This is a major achievement and it bodes well for the near future.

Thank you, everyone, for listening today, and have a great day.

[Operator]

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.