Release Date: August 22, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Mayne Pharma Group Ltd (ASX:MYX, Financial) achieved 100% of their key operating metrics for FY24.
- Revenues increased by 112% to $388 million, driven by strong growth in women's health and dermatology segments.
- Gross margin expanded to 56.3%, representing a 24% improvement.
- Underlying EBITDA improved significantly to $22.9 million from a negative $95.3 million in FY23.
- Positive underlying operating cash flow from continuing operations of $8.1 million, an improvement of $59.6 million from FY23.
Negative Points
- The company faced a negative impact of $11 million due to legacy ANNOVERA short product returns.
- Second half fiscal year '24 revenue for women's health was slightly lower due to seasonality and product returns.
- Operating expenditure growth was moderated but still saw a 4% increase due to inflation and variable costs.
- Cash and marketable securities decreased to $149.3 million from $220.1 million in fiscal '23.
- The company is involved in ongoing litigation, which could result in significant legal costs.
Q & A Highlights
Q: With the ANNOVERA impact in that $11 million channel impact, is it right to think that might have been channel inventory acquired at the time of acquisition of TXMD? And what are the future plans to avoid this?
A: Yes, the products returned were inventory acquired from TXMD. ANNOVERA has been difficult to manufacture, leading to higher inventory levels. To address this, we increased the shelf life from 8 to 21 months, improved inventory management with wholesalers, and educated the channel on product expiry differences.
Q: Regarding the half-on-half revenue of the TXMD assets, why were IMVEXXY and BIJUVA slightly lower in the second half?
A: The lower revenue in the second half was primarily due to the seasonality of patient deductibles, which reset and increased out-of-pocket costs for patients after December.
Q: Can you provide more color on the favorable gross-to-net product mix in dermatology?
A: The improvement was driven by pricing changes, adjustments to co-pay support, and significant revenue from RHOFADE, which has a favorable gross-to-net profile. RHOFADE alone contributed USD29.6 million in revenue with a high margin profile.
Q: How should we think about the forward pipeline for dermatology product launches in FY25?
A: We expect to see the full effect of RHOFADE's growth and have recently added a new product to the portfolio. The focus will be on growing existing products like SOOLANTRA, generic ACCUTANE, and RHOFADE, while continuing to find capital-efficient opportunities.
Q: Is the organization now rightsized in terms of resourcing for women's health, or are there plans to add more capabilities?
A: The organization is currently rightsized, and there are no plans to increase the sales force. The focus will be on leveraging the existing cost base to drive growth.
Q: Are you seeing a positive impact from having a low-dose offering of BIJUVA?
A: Yes, the low-dose offering has brought new patients and allowed physicians to adjust doses according to patient needs. However, not all patients will escalate from low to high doses.
Q: Can you quantify the impact of the disintermediation strategy now that it has been fully rolled out?
A: The strategy has improved margins by 14% using the GoodRx and AssistRx platform, which helps adjudicate claims and determine co-pay costs efficiently.
Q: How significant was the impact of Change Healthcare on your business?
A: The impact was nominal, roughly $340,000 on NEXTSTELLIS. The slope of the demand growth curve has since steepened under new leadership.
Q: Are you happy with the relationship with Gedeon Richter for NEXTSTELLIS manufacturing, and is there an opportunity to renegotiate terms?
A: Yes, we are happy with the relationship and see opportunities to improve the manufacturing supply chain and economics.
Q: Is there any cost provisioning for the new patent infringement litigation against Sun that would be material in FY25?
A: Paragraph 4 litigation can take 3-5 years and cost USD5-10 million. Fiscal '25 will focus on preparing for this litigation.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
