Theratechnologies Inc

TSX:TH

Earnings Call Transcript 2018-Q4

[Operator]

Good morning, ladies and gentlemen, and thank you for standing by. Welcome to Theratechnologies' earnings conference call for the fourth quarter of 2018. [Operator Instructions] I would like to remind everyone that this conference call is being recorded today, February 21, 2019, at 8:30 a.m. Eastern Time.And I would now like to turn the conference over to Mr. Denis Boucher. Mr. Boucher, please go ahead.

[Denis Boucher]

Thank you, and welcome. Mr. Luc Tanguay, President and Chief Executive Officer of Theratechnologies; as well as Mr. Philippe Dubuc, Senior Vice President and Chief Financial Officer, will be the speakers on today's call. A Q&A period, open exclusively to financial analysts, will follow their presentation. Before Mr. Tanguay begins his remarks, I've been asked by Theratechnologies to read the following message regarding forward-looking statements. I would like to remind everyone that Theratechnologies' remarks today contain forward-looking statements about its current and future plans, expectations and intentions, results, levels of activity, performance, goals or achievements or other future events or developments. In preparing these forward-looking statements, several assumptions were made by Theratechnologies, and there are risks that results actually obtained by the company will differ materially from those statements. As a consequence, the company cannot guarantee that any forward-looking statement will materialize, and you're cautioned not to place undue reliance on them. Theratechnologies refers current and potential investors to the forward-looking information section of its press release issued this morning and to its Annual Information Form dated February 20, 2019, and the Risk Factors section therein available at www.sedar.com under Theratechnologies' public filings.Forward-looking statements represent Theratechnologies' expectations as of February 21, 2019. Except as may be required by securities laws, Theratechnologies does not undertake any obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise.I would now like to turn the conference over to Luc.

[Luc Tanguay, President, CEO & Non]

Thank you, Denis. Good morning, everyone, and thank you for being with us today. As we present our annual results for 2018, it gives me good opportunity to come back on what I will qualify as a landmark year for Theratechnologies. Many important milestones were achieved in 2018, and I think it's appropriate to briefly go back on them. Of course, the approval of Trogarzo is without a doubt the highlight of the year. Upon acquiring the rights to this innovative and breakthrough treatment, we say that it will be a game changer for us. After just few months on the market, it's fair to say that Trogarzo is having and will continue to have a profound impact on our company.We also mentioned that we thought that sales of Trogarzo could on a run rate basis surpass sales of EGRIFTA within a year of being on the market. Looking at where we stand today after only 2 full quarters of commercialization, we have every reason to believe that we will reach this goal.Trogarzo is already giving us great leverage despite the investments required to launch our new product in the U.S. and to prepare for the European submission. Trogarzo made it possible to record a positive EBITDA in our last quarter and in fiscal 2018. This gives an appreciation of what Trogarzo means and what it will mean for our company. Several important initiatives were implemented in the last 12 months to ensure that we unleash the full potential of Trogarzo. One of the central elements of our strategy was to rapidly obtain patient access. As of today, 83% of covered lives have access to Trogarzo. This include ADAP patient in 48 out of 52 states and territories and 100% of Medicaid patients. We also obtained a specific J-Code for Trogarzo, which came into effect on January 1 of this year. This will greatly facilitate the prescription process for physicians.In addition to making progress on the reimbursement front, we also succeeded in obtaining recognition for Trogarzo from a clinical perspective. This came in the form of duplication of the Phase III clinical trial results for Trogarzo in The New England Journal of Medicine, lending a great deal of credibility to the science behind Trogarzo.We also made it in 2 set of treatment guidelines in the U.S. The International Antiviral Society was the first to include Trogarzo in its guidelines and it was soon followed by the Department of Health and Human Services. Both sets of guidelines recognize the usefulness and potential of Trogarzo for patient battling detectable viral load. Such recognitions are helpful in building a market for Trogarzo. In a nutshell, it was crucial to bring down those operational barriers as we did in 2018. I believe that we now have all the right ingredients to foster and accelerate U.S. sales for Trogarzo in 2019 and beyond. In fact, in the first 2 months of the current quarter, the growth rate of our units sold to pharmacy is significantly higher than the one we recorded in Q4 over Q3. Philippe will give you more detail on this shortly.At the same time, the European file is moving very rapidly. Ever since our finding with the European Medicine Agency on August 28 of last year, we had been very busy at planning our European infrastructure. This means setting up a responsive team that will be capable of delivering on opening up market access quickly, building the right relationships with key opinion leaders and patient groups, developing a marketing plan to guide us through a successful European launch. This will be one of the first priorities of our new General Manager in Europe, Conor Walshe, whose hiring was recently announced. Conor comes with the expertise, knowledge, experience and acumen required to implement the key factor towards a successful launch of Trogarzo in Europe. Conor will also work closely with our contract sales organization, which will provide the required field infrastructure.From a regulatory standpoint, we expect a recommendation from the CHMP during our second quarter and a decision from the European Commission 60 days thereafter. Our European strategy is moving as planned, and we look forward to seeing our effort materializing from our sales in that territory.Of course, Trogarzo is only one part of the equation as it comes to Theratechnologies. We must not forget the significance of EGRIFTA for our company. EGRIFTA keeps contributing to our growth and still represents the backbone of our commercial platform as EGRIFTA margins basically cover most of our operating expenses.EGRIFTA delivered a strong performance in 2018, and we met our previously announced guidance. We still have a very positive outlook for EGRIFTA, especially given the fact that the new single-vial formulation was approved by the FDA last November. We expect to launch the F4 later this year upon completion of the validation lots. We believe that it will help to support the brand and sales growth given the several advantages it offers over the original presentation, such as being stable at room temperature, the reduction in volume of injection and the smaller needle size. We believe that EGRIFTA sales will continue to grow in 2019.On that note, I will now let Philippe present our results, and I will come back after for a few closing remarks.

[Philippe Dubuc, Senior VP & CFO]

Thank you, Luc, and good morning, everyone. As Luc just mentioned, we have to look at our numbers by keeping in mind that we made important investments that will provide unprecedented leverage to our company. In 2018, we recorded net sales revenue of close to $58.5 million or USD 45.2 million, which represents an increase of 37% over 2017.Looking at EGRIFTA sales first. They were up again in 2018 recording our best yearly sales ever. EGRIFTA still represents the lion's share of our revenue, with sales of CAD 46.9 million. In U.S. currency, sales grew to $36.3 million compared to $33 million, representing an increase of 10%, which, as Luc previously mentioned, is in line with the guidance we gave at the beginning of the year. In the meantime, Trogarzo sales are also growing at an interesting pace. Sales of Trogarzo in 2018 amounted to $11.6 million. This, of course, mainly includes the last 2 quarters of fiscal 2018. If you look at the progression from quarter-to-quarter, Trogarzo sales grew to CAD 5.5 million compared to $4.8 million in Q3 of 2018. In U.S. dollars, sales were $4.3 million versus $3.7 million in the previous quarter, which represents an increase of 14.5% on a sequential basis. As Luc mentioned, growth continues to gather momentum. The average weekly Trogarzo units sold to specialty pharmacies, which is more representative of actual customer demand, is up by over 30% in December and January compared to our fourth quarter of 2018. This reflects our success towards lowering barriers to patient access.The added contribution of Trogarzo combined to stabilization of selling and marketing expenses paves the way to a $2.6 million EBITDA in the fourth quarter of 2018. In fact, we managed to end the year with a positive EBITDA of $2.2 million overall, even though we invested significantly to support the launch of Trogarzo.Our cost of sales increased to $17.2 million in 2018 from $10.2 million last year. The cost of sales represents almost 30% of net sales, which is substantially higher than last year. This is mainly due to the introduction of Trogarzo and the obligations stemming from our contract agreement with TaiMed.Selling and marketing development expenses are now relatively stable. In 2018, they amounted to $28 million compared to $26 million in 2017. The increase is mostly due to activities associated to the commercialization of Trogarzo in The United States. Selling and market development expenses also include a noncash amortization of $2.3 million for the intangible assets associated with EGRIFTA and Trogarzo commercialization rights. In 2017, this represented an amount of $2 million. In 2018, R&D expenses came in at $10.3 million in comparison to $11.9 million for 2017. This reduction is mainly due to the decision by the FDA to release Theratechnologies from its postapproval commitments related to EGRIFTA.R&D expenses include, among others, fees associated to the Trogarzo European submission as well as expenses associated to the filing of the new formulation of EGRIFTA in the U.S.General and administrative expenses grew to $7.5 million compared to $5.8 million in 2017 as a result of the growth and development of the company, business development initiatives, preparatory work in Europe and other projects.Accretion expense on the long-term obligation remained practically unchanged in 2018, standing at $1.3 million. In 2017, the accretion expense was associated to the long-term obligation to EMD Serono. It is now mainly associated with the convertible debentures issued in June 2018.All in all, we recorded a net loss of $6 million or $0.08 per share in fiscal 2018 compared to a net loss of $18.5 million or $0.25 per share in 2017.Now shifting to our Q4 numbers. The impact of Trogarzo is even more palatable. Our total net sales for the fourth quarter were up 45% compared to the same quarter of 2017. They amounted to $18.3 million compared to $12.6 million.In the last quarter of 2018, sales of EGRIFTA grew slightly to $12.7 million compared to $12.6 million for the same period the year before. EGRIFTA sales for the last quarter of 2018 were negatively affected by inventory adjustments at the distributor level during the month of November. This decrease was offset by a higher selling price, the reversal of accrued liability and a favorable variation in the exchange rate. Sales of EGRIFTA so far in Q1 of this year actually show that these inventory adjustments were, in fact, temporary as unit sales have resumed growing on a unit basis. Cost of sales in Q4 was also up and reached $6.2 million compared to $3.5 million in the same quarter of last year. While the cost of sales no longer includes the royalty payment to EMD Serono, the higher figure reflects the introduction of Trogarzo, which carries lower gross margins than EGRIFTA.R&D expenses decreased to $2.7 million in Q4 compared to $3.1 million for the same quarter last year. As previously mentioned, this is largely due to the FDA decision to release Theratechnologies from the EGRIFTA postapproval commitments.For the 3 months period ended November 30, 2018, selling and marketing development expenses were down to $6.8 million compared to almost $8 million for the same period last year as Trogarzo prelaunch investments were no longer required in 2018. As for G&A expenses, they represented $2.5 million in the last quarter of 2018 compared to $1.6 million last year. As I already explained, this is a factor of the preparatory work in Europe as well as business development and other projects.In Q4 of 2018, we recorded $1.7 million in finance costs compared to $713,000 last year. Figures for the fourth quarter of 2018 include the interest on the convertible notes.We recorded an adjusted EBITDA of $2.6 million in Q4 of last year, a marked improvement over Q4 of 2017 when we had an EBITDA loss of $1.9 million.Our financial position is still very strong with over $71 million in cash and bonds at the end of our fiscal year. On the final note, I would like to inform you that given that our functional currency is the U.S. dollars -- the U.S. dollar and that most of our revenues and expenses are recorded in that currency, we will start reporting our earnings in U.S. dollars beginning in Q1 of 2019. This move makes even more sense since we will now start incurring expenses in euros and that we will hopefully start to record European sales as well.On this, I will now turn it back to Luc for his closing remarks.

[Luc Tanguay, President, CEO & Non]

Thanks, Philippe. While 2018 was a landmark year for Theratechnologies, I believe that 2019 will fully demonstrate the impact of the transformation the company has gone through. On its own, with the important contribution of Trogarzo, the U.S. market should generate significant growth for our company. The implementation of our strategic plan for Europe is now going at full speed given the expected recommendation in Q2 from the CHMP. This will happen as we also plan to launch the new single-vial formulation of EGRIFTA later this year once commercial lots are validated. The continued contribution of EGRIFTA, the growing leverage provided by Trogarzo and our strong cash position give us the means to aim higher and to deliver growth for the coming years.In the last few years, we have significantly transformed the company. We now have 2 commercialized products, our geographical presence is expanding, we are managing the life cycle of our product carefully, we are generating cash and retaining a solid cash position. We now need to look at our longer-term portfolio to achieve our goal and being a well-balanced specialty pharma. That's why we will continue to look actively in 2019 for new opportunities that could complement our current portfolio offering. In addition, we need to start rebuilding our early-stage pipeline to support long-term growth and optimal valuation.Before taking questions from financial analysts, I would like to take this opportunity to actually welcome Jovan Antunovic, who joined the company at the beginning of the year as our new Chief Commercial Officer. Jovan brings the type of experience that will be required to grow EGRIFTA and Trogarzo in the U.S. over the coming years.I also want to welcome Conor Walshe as General Manager of our wholly-owned subsidiary in Europe. As I mentioned already, Conor brings a set of skills and talent that will definitely be helpful to us reaching our goals in Europe. We wish them well, and we look forward to working with them on this new chapter in our company history.I want to thank you all for being on the call today, and we'll now take questions from financial analysts.

[Operator]

[Operator Instructions] Your first question comes from the line of Brian Abrahams from RBC Capital Markets.

[Brian Corey Abrahams, Senior Analyst]

First question. I'm wondering if there were any inventory changes or purchasing patterns that may have influenced the Trogarzo reporting number this quarter. I was hoping if you could maybe provide a little bit more detail around the uptick you're seeing in units dispensed coming out of the end of the year and into early 2019. What are some of the dynamics underlying that? Does this relate to perhaps starting to see repeat prescribers as physicians see viral load results from their initial patients? And then I have a follow-up.

[Luc Tanguay, President, CEO & Non]

Thanks. Brian, I'll let Philippe answer the first part of your question, maybe second part, and I will add the comments on this afterward.

[Philippe Dubuc, Senior VP & CFO]

Yes, the Trogarzo ordering patterns are becoming more stable. I would say that there was probably a bit more loading -- inventory loading in Q2 and Q3 of last year. It seems to be stabilizing. Specialty pharmacies aren't really loading up on the product. It's an expensive product, so -- and we can deliver it overnight pretty much. So it seems that Q2 and Q3, we had a bit of inventory loading, and that seems to have stabilized in Q4 and what we've seen in the past 10 or 11 weeks of Q1 2019.

[Luc Tanguay, President, CEO & Non]

On your second question, I think you have part of the answer, Brian. I think, definitely, we are seeing some physician that have already prescribed Trogarzo coming back and prescribe again. That's part of our strategy to -- and that was exactly what they were saying when we did market research few years ago, saying that they will first try with one patient. And if it works, and definitely it's going to work, that they were coming back for second and third and the fourth patient. That's the pattern we're trying to see -- starting to see at this point. The other thing also that helps, I think, the fact that, as I mentioned in the speech, all the barriers that we have gone through in 2018 is definitely going to help. You just think about the J-Code. And also one big part, I think, also is ADAP. It was one thing to be approved nationally, but we needed to go through each state to have -- to be put out their formulary. And now, for example, at the end of last quarter, we had 43 ADAP-only already in. At this point, we have 48 out of 52. So -- I mean, 43%. Now we have almost 100%, sorry about that. So I think that's going to help as well. All the barriers that are down will help, and this is what we're seeing over 30% growth in -- that we see so far in Q1.

[Brian Corey Abrahams, Senior Analyst]

That's really helpful. And you mentioned in your prepared remarks the new guidelines that cited Trogarzo. I was wondering if you could talk a little bit more about how those guidelines might influence or potentially expand the pool of patients eligible for the drug and the way you might position it.

[Luc Tanguay, President, CEO & Non]

Well, I'll ask Christian Marsolais, our Chief Medical Officer to answer.

[Christian Marsolais, Senior VP & Chief Medical Officer]

The guidelines and what was put in the guidelines reflects pretty much what we have in the indication in of the patients that are resistant to a number of treatment should have access to a product like Trogarzo. And in terms of the pool of patient, I think, it will remain most likely about the same. But it's indicating to all physicians that patient that's multidrug resistant should have access to Trogarzo, which is very good for -- it makes it a lot easier for our MSL team and the CAMs to go and see the physician and say, well, we haven't had a new -- lot of action in the past 10 years, now we have a new one that they need to administer patient, especially patient that would have a viral load and sometimes physician would keep them at a viral load of 1,000 or 200. Today, with Trogarzo, there are no more reason to keep those patients with a detectable viral load.

[Brian Corey Abrahams, Senior Analyst]

That's really helpful. Last one from me. NASH has been in the news quite a bit over the last couple of weeks. I was wondering if you could give us any updates on the status or time lines for the EGRIFTA -- exploration of EGRIFTA in NASH. And what we should be looking for expecting there?

[Christian Marsolais, Senior VP & Chief Medical Officer]

Yes, maybe before we start, I just have to say that this is a study that is led by Dr. Steven Grinspoon, who was the PI for our Phase III program. It is an independent study. And Dr. Grinspoon is working really hard at the moment. We have 2 sites: Harvard as well as the NIH. And they are putting the data together. The one thing that takes a bit of time you probably know that in this study, we have biopsies. Then in terms of assessing the latest biopsy of the studies that were treated in January put out this data together. We are expecting now to have the results sometime at the end of March, beginning of April.

[Operator]

Your next question comes from the line of Dewey Steadman from Canaccord Genuity.

[Dewey Steadman, Senior Specialty Pharma Analyst]

Can you guys hear me?

[Luc Tanguay, President, CEO & Non]

Yes.

[Dewey Steadman, Senior Specialty Pharma Analyst]

Sorry, I guess, on -- for Trogarzo, can you just remind us of how big that market is? Is this 100 patients we're talking about or 10,000 or 15,000 patients that can be addressed? And do you have any comments on how many patients are currently under therapy and how that aligns with your goals for the product?

[Luc Tanguay, President, CEO & Non]

Okay, there is -- if I remember correctly, there is around 25,000 patient in the U.S. that are triple resistant to at least 3 classes -- in 3 classes, okay? And every year, those patients, half of them will fail their current medication. So it brings down the addressable market to approximately 10,000 to 12,000 patients. So we're saying that on the long term, I mean, at peak sales, we still think that Trogarzo has the potential to be at least 5x bigger than EGRIFTA. And as I mentioned in my speech, I think that in the first year of commercialization, so in the next 2 quarters, that Trogarzo will be at least as big as EGRIFTA. And this means probably to have slightly over 400, 450 patients when we reach that goal. So -- and can, of course, continue to grow after that.

[Dewey Steadman, Senior Specialty Pharma Analyst]

Excellent. And then, on EGRIFTA, it seemed like at least through third-party data that the product had some volume challenges late in the fiscal fourth quarter. Can you comment on -- your thoughts on what caused that and how that's reversed itself? And then, I think the wording was very specific that Luc gave on volumes have rebound. But has revenue rebounded for EGRIFTA?

[Philippe Dubuc, Senior VP & CFO]

Yes. Actually, we did see those numbers come down in Q4. And as I mentioned, we think they were temporary because we have seen volumes come back to pretty much normal levels. And even -- usually, Q1 is our most difficult quarter. And we're seeing right now up to -- for the first 10 or 11 weeks of the quarter, we're seeing decent volumes. So we think it was inventory adjustments, but seems -- things seems to be back to normal.

[Dewey Steadman, Senior Specialty Pharma Analyst]

Okay, great. And then -- and just my final question on F4. How should we think about timing? And what kind of marketing efforts or investments would you need to make ahead of that launch? And can you remind us sort of your initial thoughts from payers, doctors and patients about that product and the launch progression there?

[Luc Tanguay, President, CEO & Non]

In terms of timing, we think that the F4 should be in the market. Of course, it's depending on the time we finish the validation lots, but it should be toward the end of the year, I will say, maybe in the fall of this year, that makes sense, if you look at the timing of the manufacturing of the lots, time to look at stability and so on. So fall make a lot of sense. In preparation of that, you will see in the coming weeks and months a very different approach to EGRIFTA. So that's the beginning, and it's the preparation for the launch of the F4. And we'll have a specific marketing campaign for the new formulation. So we're ready as we speak. We'll start soon with a new campaign, and this will increase towards the launch of the product.

[Operator]

[Operator Instructions] Your next question comes from the line of Andre Uddin from Mackie Research Capital.

[Andre Uddin, Managing Director of Healthcare Research]

Can you hear me?

[Luc Tanguay, President, CEO & Non]

No. Now we can.

[Andre Uddin, Managing Director of Healthcare Research]

Okay, great. Just actually wanted to find out in terms of Trogarzo, how many patients are currently on the drug? And are those patients primarily coming from Fuzeon switch?

[Luc Tanguay, President, CEO & Non]

We don't have the number of patients that switch from Fuzeon to Trogarzo. We don't have that. The number of patient we have today, as you know, we don't publish the number of patient. We prefer to publish sales number, but it's very easy since the -- for you, Andre, to calculate since the price of Trogarzo is the same since the beginning. So as Philippe mentioned, we have like $5.7 million sales in the last quarter, and this is growing quite rapidly.

[Andre Uddin, Managing Director of Healthcare Research]

And in terms of -- you also have the NASH study results that are going to be coming out. Do you plan on doing a Phase III study with EGRIFTA if the NASH results are positive?

[Luc Tanguay, President, CEO & Non]

I'll let Christian talk about what is our different game plans that we could do with...

[Christian Marsolais, Senior VP & Chief Medical Officer]

The data -- now that the data has been presented and some of the data that we presented in -- on liver fat in the HIV patient population long time ago, we are looking at different scenarios at the moment. There could be one scenario where we might have indication that could change the label for the HIV patient that, that would affect the U.S. market. Of course, we would have to set meetings with the FDA. If the results are significant enough, then if you have liver fat plus potentially ballooning or inflammation, maybe that would be enough to also get the approval for HIV in Europe. We would most likely have to do a second trial, but the first step will be to present and interact with EMA and FDA. And once again, based on the significance of those results, the team will certainly have to look and see and assess if it's something that we want to continue to develop in non-HIV patients. But there are a number of scenarios that would most likely, certainly all affect the potential future for EGRIFTA. And then when the results will come out, we'll be in a better position to address those questions more specifically.

[Andre Uddin, Managing Director of Healthcare Research]

Okay. So you think is it possible you could file a supplementary BLA? Is that what you're thinking?

[Christian Marsolais, Senior VP & Chief Medical Officer]

Sorry, Andre, I just want to make sure that I'm addressing the right question. Can you speak a bit louder?

[Andre Uddin, Managing Director of Healthcare Research]

Sure. Just in terms of -- so it's possible you could file a supplementary BLA depending on the results? Is that what you're sort of implying?

[Christian Marsolais, Senior VP & Chief Medical Officer]

Well, I think the -- to file would be difficult with the results of an independent investigator, but we will certainly have enough information to meet with the FDA and to propose a plan to the FDA. If the results are very significant, we might present the plan that we would like to change the label only with that study. Would that be possible? It's something which is difficult to address at this stage. It depends on the quality of the results. But if the results are positive, we would certainly present a plan to move forward with different level of the study. As an example, at the moment, if you're looking at the Phase III for the other compounds, it's including a very large number of patients because they want to assess as well the safety for those products. Those are new chemical entities. We have an advantage. We're already in the market. And significant number of patients have been exposed to the drug. And we're very well known to safety profile. The FDA also, as you know, last year was quite confident in our safety profile and they stopped both post-approval commitment trials that we had ongoing. Then would it be possible to present a plan with the FDA with only the biomarkers to change the label? Those are the type of things that we will need to discuss with the regulatory agency and see how we can rapidly have an impact on EGRIFTA.

[Operator]

Your next question comes from the line of Endri Leno from National Bank.

[Endri Leno, Associate]

Most of my questions have been asked and answered, but just a quick one. Are you able to quantify what the incremental costs for European preparations are going to be for 2019?

[Luc Tanguay, President, CEO & Non]

We're in the middle of finalizing all our negotiation with different parties. Our objective is to stay EBITDA positive. So it will be -- it's a large range, but we'll be able to disclose more about that probably in a couple of weeks or at the next conference call in early April. Our GM in Europe just joined us this week here in Montréal. And we're going through all the aspects of commercialization and implementation in Europe. So we'll finish our budget, and we'll be able to discuss that a little bit later as -- probably NASH conference, I'll be answer to -- able to answer to that easily, okay?

[Endri Leno, Associate]

Okay. And I presume the same goes for which market or which country are you going to address initially in Europe, right?

[Luc Tanguay, President, CEO & Non]

It's tough to have a pretty good idea. The typical suspect, I suppose, Germany, U.K., France are probably the first 3 we'll look at. We don't have yet though our final pricing strategy regarding that. So it's a thing we need to discuss with Conor.

[Endri Leno, Associate]

Okay. And one last follow-up on that one. There have been some concerns, especially in the U.K. market about high-priced drugs and that they've even rejected a few of them. Would you expect any initial resistance there?

[Luc Tanguay, President, CEO & Non]

Pricing will be a challenge in Europe. Everybody knows that. It's not as open as it is in the U.S. But we have a good team working on that. We have very good consultant, and our objective is to have the highest price as possible in each territory, including U.K. You have to know that it's a limited number of patient like in the U.S., although we haven't received for technical reason the orphan drug status in Europe, but it's, by the fact, a niche market. So we believe we can propose some strategy to the authorities there to be able to have a significant price in each country.

[Operator]

Your next question comes from the line of Doug Loe from Echelon Wealth Partners.

[Douglas W. Loe, Analyst of Healthcare and Biotech]

Just a couple of supplemental things for me. So just with your EMA review concluding imminently here, just wondered if you had any tangible data on what the market size would be for multidrug-resistant HIV-1 infection in Europe? Define Europe, however, you want to define it, but just kind of wondering if the broad patient prevalence characteristics are similar in anyway distinct from what they are in the U.S.? And then I have a follow-up.

[Luc Tanguay, President, CEO & Non]

Okay. Thanks, Loe. We have a pretty good idea of the market size in terms of patients. We believe that the number of patients with multidrug resistant in Europe is quite similar to the one in the U.S. The big question here is price. So depending on the price, of course, in dollar, the market size could be between 50%, 60%, 70% depending where we'll end up in term of pricing in each different countries. But in terms of patients, it's quite similar.

[Douglas W. Loe, Analyst of Healthcare and Biotech]

Perfect, okay. And then just secondly, we certainly see a lot of commentary in the medical literature and the sort of trade journals about the reality that Trogarzo was approved on a small open-label study, and of course, that was an FDA-endorsed study where your drug performed wildly positive in the FDA standards. I was just wondering if any feedback from your early marketing, specifically in the U.S.? Are you seeing any pushback on those 2 clinical study themes? And if that's something that -- for which -- just wondering how you directly respond to that if indeed it comes up in commercial practice? And if so, if you had any plans to perhaps perform any longer-term Phase IV controlled studies to directly address that limitation? And I'll leave it there.

[Christian Marsolais, Senior VP & Chief Medical Officer]

At the moment, we have very limited question. I think that the mechanism of action is very well understood. The work that was done when we started working on the project, different medical conferences, medical presentation, the MSL and the team as well as The New England Journal of Medicine, which is like the most -- the highest ranked journal, is very useful in that aspect. But at the moment, physicians understand the mechanism of action and are no concerned in terms of the size of the study. If you recall the primary endpoint was to show a decrease of 0.5 log after 7 days of functional monotherapy and the fact that we reach 1.1 log decrease after only 7 days of functional monotherapy in a highly-resistant patient population is extremely reassuring for the treating physicians. The other thing is that we also presented the 48-week data that shows that once patient reach undetectable level, regardless of their level of resistance with ibalizumab, they remain undetectable up to week 48. And we have a bit more information. We submitted the abstract to probably -- that will probably present additional data soon on the long-term durability of the effect.

[Operator]

There are no further questions at this time. I turn the call back over to management for closing remarks.

[Denis Boucher]

Well, thank you very much. As there are no further question at this time, we will conclude the conference call. On behalf of everyone here at Theratechnologies, I would like to thank you for being on the call today. Have a very nice day.

[Operator]

This concludes today's conference call. You may now disconnect.