Medicure Inc (CVE:MPH) Q2 2021 earnings call dated Aug. 30, 2021.
Corporate Participants:
Albert D. Friesen — Chief Executive Officer and Chairman of the Board
David Gurvey — Chief Financial Officer
Neil Owens — President and Chief Operating Officer
Analysts:
Sam Rebotsky — SER Asset Management — Analyst
Presentation:
Operator
Good morning, and welcome to Medicure’s Earnings Conference Call for the quarter ended June 30, 2021. My name is Chris, and I’ll be your operator for today’s call. [Operator Instructions] Before we proceed, I would like to remind everyone that this presentation contains forward-looking statements relating to future results, events, and expectations, which are made pursuant to the Safe Harbor provisions of the U.S. Securities Litigation Reform Act of 1995.
Forward-looking statements involve known and unknown risks and uncertainties, which could cause the company’s actual results to differ materially from those in the forward-looking statements. Such risks and uncertainties include, among others, those described in the company’s most recent annual information form and Form 20-F. Later, we will conduct a question-and-answer session. Please note that this conference call is being recorded, and today’s date is August 30, 2021.
I would now like to turn the conference call over to Dr. Albert Friesen, Chief Executive Officer of Medicure, Inc. Please go ahead Dr. Friesen.
Albert D. Friesen — Chief Executive Officer and Chairman of the Board
Thank you, Chris, and good morning to everybody on the call. We appreciate your interest and the time you’ve taken to participate on the call. Joining me today is Chief Financial Officer, David Gurvey; and Dr. Neil Owens, President and COO. This morning, we’ll be discussing the financial statements and the business for the second quarter of 2021.
COVID has provided challenges to a lot of businesses including Medicure. Despite the challenges, we are pleased with the positive trend of revenue and net income over the last few quarters. We experienced a modest but positive EBITDA for the second quarter of 2021, a positive change from the losses that had been reported in 2019 and the first half of 2020. The sales of AGGRASTAT have stabilized and we’re pleased with the early stage performance of our December 2020 acquisition of Marley Drug. One of the reasons we acquired Marley Drug as mail order pharmacy was to expand our sales reach for ZYPITAMAG, and we’re now exploring ways to further build on the pharmacy business. Our ongoing focus of our business is the sales and marketing of AGGRASTAT, the growing of ZYPITAMAG business with more direct marketing to patients with the help of Marley Drug, as well as continue the marketing through healthcare providers.
The revenue for the second quarter of ’21 was CAD5.09 million, which is up substantially from 2020 quarters due mainly to the added revenue from Marley Drug and up slightly from Q1 ’21. AGGRASTAT revenue of CAD2.8 million is similar to the previous quarters, as was Marley Drug at CAD1.87 million and ZYPITAMAG was up a bit at CAD403,000. As mentioned before, Medicure has transitioned away from the sales and marketing of ReDS device, which reduced significantly operating expenses and associated losses, while retaining the value in Sensible Medical. The main of focus at present is the sales and marketing of AGGRASTAT, ZYPITAMAG and further leveraging Marley Drug Pharmacy.
And we are pleased with a few quarters investments in our programs and on-boarding of new products will provide both growth and revenue profits for the coming quarters and years. Medicure has expanded business with a great team, energy, talent, and experience.
I’ll now turn over the call to Chief Financial Officer, David Gurvey.
David Gurvey — Chief Financial Officer
Thank you, Albert, and good morning, everyone. A couple of quick items to note before I start. All dollar figures are in Canadian dollars unless otherwise noted by each presenter. And as a reminder, you can obtain a complete copy of our financial statements for the year ended December 31, 2020 and the quarter ended June 30, 2021, along with previous financial statements on the investor page of our website, and a copy of all financial statements and management discussion and analysis can be obtained from sedar.com.
For the second quarter, revenues were CAD5.09 million, an increase of CAD150,000 from the previous quarter and CAD2.67 million from the comparable quarter in 2020. The increase in revenues between the two years was primarily a result of the Marley Drug acquisition. AGGRASTAT revenues were CAD2.79 million consistent with the prior quarter and slightly higher than the comparable period in 2020.
ZYPITAMAG revenues increased to CAD403,000 for the second quarter, an increase of CAD161,000 from the prior quarter and up from CAD103,000 in the second quarter of 2020. The increase in revenues from ZYPITAMAG resulted from more aggressive marketing and being able to sell the product through Marley Drug, giving easier access to the medication for the consumer.
As a result of the acquisition of Marley Drug, which was completed on December 17, 2020, the company recorded revenue of CAD1.86 million during the second quarter ended June 30, 2021, which was approximately CAD200,000 lower from the prior quarter for Marley Drug. Cost of the goods sold remained at a constant percentage this quarter compared to the prior quarter at just over 40%. Selling expenses for 2020 totaled CAD2.5 million in the second quarter compared to CAD2.8 million in the first quarter.
The company consistently looks at ways to gain efficiencies at its operation and some efficiencies were realized causing selling expenses to moderately decrease in the quarter. General and administrative expenses were flat in the second quarter compared the previous quarter at CAD571,000 and CAD585,000, respectively. The company is working very hard to reduce general and administrative expenses where possible and costs have been substantially reduced from the second quarter of 2020, where they were CAD770,000.
Research and development expenses totaled CAD765,000 for the second quarter of 2021 and CAD100,000 for the comparable period in 2020. The increase is primarily a result of different levels of research and development during any particular quarter and potential refunds and payments of fees paid to government agencies. This resulted in a net loss for the second quarter of 2021 of CAD639,000, which equated to CAD0.06 compared to income of CAD19,000 or nil per share for the second quarter of 2020.
Adjusted EBITDA for the second quarter was CAD158,000 compared to adjusted EBITDA of CAD263,000 for the comparable period in 2020. The company is exposed to fluctuating currencies and in this quarter this negatively affected the company by approximately CAD200,000 as the Canadian dollar gained strength. As of June 30, 2021, the company had cash totaling CAD2.46 million compared to CAD2.7 million as of December 31, 2020. As of June 30, 2021, the company had net working capital of CAD3 million compared to net working capital at December 31, 2020 of CAD3.2 million.
The company does not have any debt recorded on the statement of financial position, however, we are in the process of finalizing a loan with the commercial banks to replenish the cash and the established liquidity due to the Marley Drug acquisition. I want to remind you that there will be an opportunity at the end of today’s call for you to ask questions regarding the financial results for the company as a whole.
And with that, I would like to turn the call over to our President and Chief Operating Officer, Dr. Neil Owens, for some additional commentary regarding our operations.
Neil Owens — President and Chief Operating Officer
Thank you, David, and good morning everyone. AGGRASTAT continues to maintain the majority of patient market share and remains the preferred glycoprotein IIb/IIIa Inhibitor inhibitor in more than 1,200 U.S. hospitals. In the past quarter, there was no notable price competition from generic eptifibatide. This reduced the pricing pressure on the net selling price of AGGRASTAT. Our team is pleased to report a 6% increase in net revenue compared to Q1 2021. We continue to work with key opinion leaders to effectively market AGGRASTAT and maintain market share.
Turning to ZYPITAMAG, which is a branded statin used to control cholesterol, our team is pleased to report a 40% increase in net revenue compared to Q1 2021. This growth comes as a result of promotion from our sales team as well as marketing to prescribers and consumers to share the benefits of ZYPITAMAG. Sales of ZYPITAMAG have also been facilitated by sales through Marley Drug. In Q4 2020, Medicure announced the acquisition of Marley Drug, which is a pharmacy located in North Carolina, with national distribution of prescription medications. It is known for its excellent customer service, home delivery and very competitive prices.
Marley Drug has built a nationwide customer base of more than 30,000. One of the aspects of marketing products through Marley Drug is that in addition to an existing sales base, it provides a truly innovative sales channel. Through Marley Drug, Medicure can sell branded products without the use of wholesalers and insurance companies, which hurt our profits and impose limitations on access through step through therapy and prior authorizations. It is also very appealing for healthcare providers who appreciate the simplicity and certainty of filling ZYPITAMAG prescriptions through Marley Drug, and the reaction has been extremely positive.
Sales through Q2 have remained consistent with Q1 and with an expanded marketing approach are expected to grow. We are expanding our online presence of Marley Drug and exploring multiple revenue channels, including partnerships and membership plans. We continue to evaluate branded products and products with high market share potential to add to Medicure’s product portfolio, and those that would align well with our focus and contracts in U.S. market, especially those that can be sold through Marley Drug.
The revenue generated through our hospital and consumer sales helps to support Medicure’s research and development activities, including cardiovascular abbreviated new drug applications or ANDAs and a new drug application or NDA.
Recently, Medicure announced the filing of an IND for a pivotal Phase 3 study defined the first FDA approved therapy for patients with PNPO deficiency, which is a rare pediatric disease, leading to seizures and is ultimately failed if untreated. A successful use of Medicure’s product MC1, which could lead to a priority review voucher, which can be redeemed to obtain priority review for any subsequent marketing application.
In summary, Medicure continues to see success from AGGRASTAT, ZYPITAMAG, and Marley Drug. We are pleased to see the increase in net revenue this quarter and are more motivated than ever to increase sales. Our team wants our investors to know that we are driven and dedicated to growing revenue and making Medicure a long-term success.
With that, I’d like to turn the call back to Dr. Friesen for final comments.
Albert D. Friesen — Chief Executive Officer and Chairman of the Board
Thank you, Neil. There was considerable learning and adapting in the past 12 months, which includes the integration of Marley Drug. I’m looking at now how to leverage further the Marley Drug asset for continued growth. AGGRASTAT sales and profitability has been maintained, further development of new products such as the development of our legacy MC1 for the treatment of PNPO patients is progressing well.
We’re thankful for the continued strength in AGGRASTAT markets and we continue to focus on growing the business with a pipeline of cardiovascular products that will further diversify our revenue and asset base, carefully investing to grow our future profitability. My goal and that of our Board, management and staff is to continue to build this business with a stable long-term outlook to generating value for our shareholders. And as always, I want to express my sincere appreciation to the outstanding team of employees we’ve been so blessed with. Thank you, our shareholders for continued support and interest.
And Chris, the moderator, I’ll turn it back to you for questions-and-answers. Thank you.
Questions and Answers:
Operator
Thank you. [Operator Instructions] Your first question comes from Sam Rebotsky, SER Asset Management. Sam, please go ahead.
Sam Rebotsky — SER Asset Management — Analyst
Yes. Good morning, Albert and Mr. Gurvey, and Dr. Owen. Tell me — the Marley Drug sales, is that the fact that it was lower, is there a rationale for that in the current quarter?
Albert D. Friesen — Chief Executive Officer and Chairman of the Board
Thank you very much for the question. Marley Drug sales can often be dependent on specific marketing efforts. And just prior to the end of the first quarter there was a substantial mail order campaign, which involved significant discounting as a promotion. So sales do fluctuate from those, but as a trend line, they appear to be increasing, especially with the addition of the availability of ZYPITAMAG, which is clearly showing an increasing trend line with Marley Drug.
Sam Rebotsky — SER Asset Management — Analyst
Okay. Now the money spent on R&D during this quarter, what did that apply to?
Neil Owens — President and Chief Operating Officer
This is Neil. I was going to add — the majority of that would be contributed towards our IND and study for MC1 and PNPO deficiency.
Sam Rebotsky — SER Asset Management — Analyst
Okay. What are our plans to tell a story on Medicure besides these conference calls? I know we hired an IR firm, what do we expect them to do for us?
Albert D. Friesen — Chief Executive Officer and Chairman of the Board
We continue to explore other IR options. And with the growth now, we are just following up with — expanded our interest base and that we’re going to follow-up with that expanded base that we’ve got for now, and then we’ll explore further IR programs, but we’re right now just looking at leveraging the database that we got with the last investor program.
Sam Rebotsky — SER Asset Management — Analyst
All right, Albert. Thank you very much. Good luck.
Albert D. Friesen — Chief Executive Officer and Chairman of the Board
Thanks, Sam.
Operator
Thank you. [Operator Instructions] There are no questions at this time. Please proceed.
Albert D. Friesen — Chief Executive Officer and Chairman of the Board
Thank you for all that were listening. Appreciate the interest and we look forward to our next call. Have a great day.
Operator
[Operator Closing Remarks]