Clozapine

MILAN & MORRISTOWN, N.J. & TOKYO--( BUSINESS WIRE )--Newron Pharmaceuticals S.p.A. (“Newron”) (SIX: NWRN, XETRA: NP5), a biopharmaceutical company focused on the development of novel therapies for patients with diseases of the central and peripheral nervous system, and EA Pharma Co., Ltd. (Head Office, Chuo-ku, Tokyo, Japan; President, Hidenori Yabune; “EA Pharma”), a subsidiary of Eisai Co., Ltd., today announced that they have entered into a license agreement to develop, manufacture and commercialize Newron’s innovative modulator of the excessive release of glutamate, evenamide, in Japan and other designated Asian territories 1 . Under the terms of the license agreement, in exchange for full rights in the licensed territories, Newron will receive up to a maximum total of €117 million from EA Pharma, including an upfront payment of €44 million, financial contributions to its upcoming Phase III one-year study to be performed outside of the licensed territories, regulatory and commercialization milestones, and tiered royalties up to a double-digit percentage of net sales for evenamide. The execution of this agreement, especially the upfront payment of €44 million, is expected to materially impact Newron’s 2024 financial statements. Stefan Weber, CEO of Newron, commented: “This partnering agreement for evenamide is a key milestone in our goal to offer a truly innovative, evidence-based alternative to patients suffering from schizophrenia, those who are responding poorly to their treatments, or who have become treatment resistant to currently available medications. We are thrilled to work with the EA Pharma team and to have the opportunity to advance evenamide through a Phase III study and towards regulatory submission in Japan and other Asian territories by one of Japan’s leading pharmaceutical companies. Newron will now focus on the initiation of our Phase III one-year study in TRS and expect to start that study outside of the licensed territories in H1 2025. We are also pursuing further development opportunities for evenamide in other territories.” “EA is thrilled to acquire the license for evenamide in Japan and other Asian territories. Evenamide has a new mechanism of action involving glutamate regulation and is the first in the world with this mechanism of action to demonstrate therapeutic efficacy in clinical trials. It is the result of many years of outstanding research by the Newron team. We believe evenamide has the potential to be transformational for patients suffering from schizophrenia,” said Hidenori Yabune, President of EA Pharma. Jefferies International Limited (“Jefferies”) acted as the exclusive financial advisor to Newron. Orrick Herrington & Sutcliffe LLP advised as legal counsel to Newron. About schizophrenia Approximately 25 million people worldwide are affected by schizophrenia. Despite more than 60 different types of atypical and typical antipsychotics used for schizophrenia globally, a considerable number of patients remain severely ill or resistant to treatment. Overall, 30-50% of patients do not respond to the available medications and are defined treatment resistant. In addition to the patients with treatment-resistant schizophrenia (TRS), another 20-30% are described as “poor responders to anti-psychotic medication,” even if not meeting the criteria for TRS. New findings indicate that patients with TRS have abnormalities in the glutamatergic system, but not in dopaminergic transmission, so there is a huge unmet medical need for a glutamatergic mechanism of action, efficacious both in TRS patients and in those who are poor responders to the current treatments. About evenamide Evenamide is the first new chemical entity that has demonstrated significant benefits in this difficult-to-treat patient population, as seen in the potentially pivotal Phase III study 008A trial, as an add-on treatment to second generation anti-psychotics including clozapine, in 291 poorly responding patients with chronic schizophrenia. The primary endpoint, the Positive and Negative Syndrome Scale (PANSS) 2 , and the key secondary endpoint, the Clinical Global Impressions Scale – Severity (CGI-S), were met and showed statistical significance compared to placebo. Importantly, evenamide treatment was associated with statistically significant increase in proportion of patients who experienced “clinically meaningful benefit” on the outcome variables. Evenamide was extremely well tolerated, without any of the usual side effects of available anti-psychotics. Evenamide development milestones During Q1 2024, Newron reported final one-year results from study 014/015, a Phase II open label trial evaluating evenamide as an add-on therapy to a single antipsychotic in treatment-resistant patients. The data demonstrated that evenamide as an add-on treatment for patients with TRS was associated with sustained, clinically significant benefits that increased throughout the one-year course of treatment, with more than 70% of patients experiencing a clinically important reduction in disease severity. Overall, data from study 014 has demonstrated that evenamide was safe and well-tolerated at all doses, with 97% of patients completing six weeks of treatment. The incidence of treatment-emergent adverse events was very low, and more than 90% of the completers chose to continue with evenamide treatment into the long-term extension study (study 015). In Q2 2024, the Company announced two sets of data from study 008A, a potentially pivotal four-week randomized, double-blind and placebo-controlled study of evenamide as an add-on therapy in patients with chronic schizophrenia demonstrating inadequate benefit to their current second-generation antipsychotic. Topline data announced in April confirmed evenamide’s favorable safety and tolerability profile, followed by compelling data from additional analyses reported in May. The study met the primary endpoint (improvement of the Positive and Negative Syndrome Scale (PANSS) Total Score) and key antipsychotics, and there was no increase in EPS, weight gain, blood glucose, metabolic syndrome, sexual dysfunction or gastro-intestinal side effects, CNS or cardiac effects, or laboratory abnormalities. The study also met the secondary endpoint (improvement of the Clinical Global Impression of Severity (CGI-S)), with a high rate of study completion (96%). No new or specific concerns were raised in the study; only 25% of the patients in the study experienced at least one adverse event (evenamide 25% versus placebo 25.8%). The totality of these results validated evenamide as the first glutamate modulator to demonstrate efficacy in inadequately responding patients with schizophrenia in a placebo-controlled study. Newron is expected to initiate a Phase III randomized, double-blind, one-year trial in H1 2025 that will compare evenamide to placebo as add-on treatment in at least 600 patients with treatment-resistant schizophrenia (TRS). The primary efficacy endpoint will be change from baseline in the Positive and Negative Syndrome Scale (PANSS) scores at 12 weeks. Following this initial period, subjects will continue on their assigned treatment until week 52, for demonstration of long-term efficacy and safety and tolerability of evenamide. Newron continues to pursue further development opportunities for evenamide in other territories. About Newron Pharmaceuticals Newron (SIX: NWRN, XETRA: NP5) is a biopharmaceutical company focused on the development of novel therapies for patients with diseases of the central and peripheral nervous system. The Company is headquartered in Bresso near Milan, Italy. Xadago ® /safinamide has received marketing authorization for the treatment of Parkinson’s disease in the European Union, Switzerland, the UK, the USA, Australia, Canada, Latin America, Israel, the United Arab Emirates, Japan and South Korea, and is commercialized by Newron’s Partner Zambon. Supernus Pharmaceuticals holds the commercialization rights in the USA. Meiji Seika has the rights to develop and commercialize the compound in Japan and other key Asian territories. Newron is also developing evenamide as the potential first add-on therapy for the treatment of patients with symptoms of schizophrenia. For more information, please visit: www.newron.com About EA Pharma EA Pharma Co., Ltd. is a subsidiary of Eisai Co., Ltd. It was established in April 2016 by integration of the gastrointestinal business unit with more than 60 year’s history of the Eisai Group and the gastrointestinal business unit of the Ajinomoto Group having amino acid as its business core. EA Pharma Co., Ltd., is a specialty pharmaceutical company with a full value chain covering R&D, production & logistics and sales & marketing. For further information on EA Pharma Co., Ltd., please visit https://www.eapharma.co.jp/ Important Notices This document contains forward-looking statements, including (without limitation) about (1) Newron’s ability to develop and expand its business, successfully complete development of its current product candidates, the timing of commencement of various clinical trials and receipt of data and current and future collaborations for the development and commercialization of its product candidates, (2) the market for drugs to treat CNS diseases and pain conditions, (3) Newron’s financial resources, and (4) assumptions underlying any such statements. In some cases, these statements and assumptions can be identified by the fact that they use words such as “will”, “anticipate”, “estimate”, “expect”, “project”, “intend”, “plan”, “believe”, “target”, and other words and terms of similar meaning. All statements, other than historical facts, contained herein regarding Newron's strategy, goals, plans, future financial position, projected revenues and costs and prospects are forward-looking statements. By their very nature, such statements and assumptions involve inherent risks and uncertainties, both general and specific, and risks exist that predictions, forecasts, projections and other outcomes described, assumed or implied therein will not be achieved. Future events and actual results could differ materially from those set out in, contemplated by or underlying the forward-looking statements due to a number of important factors. These factors include (without limitation) (1) uncertainties in the discovery, development or marketing of products, including without limitation difficulties in enrolling clinical trials, negative results of clinical trials or research projects or unexpected side effects, (2) delay or inability in obtaining regulatory approvals or bringing products to market, (3) future market acceptance of products, (4) loss of or inability to obtain adequate protection for intellectual property rights, (5) inability to raise additional funds, (6) success of existing and entry into future collaborations and licensing agreements, (7) litigation, (8) loss of key executive or other employees, (9) adverse publicity and news coverage, and (10) competition, regulatory, legislative and judicial developments or changes in market and/or overall economic conditions. Newron may not actually achieve the plans, intentions or expectations disclosed in forward-looking statements and assumptions underlying any such statements may prove wrong. Investors should therefore not place undue reliance on them. There can be no assurance that actual results of Newron's research programs, development activities, commercialization plans, collaborations and operations will not differ materially from the expectations set out in such forward-looking statements or underlying assumptions. Newron does not undertake any obligation to publicly update or revise forward-looking statements except as may be required by applicable regulations of the SIX Swiss Exchange or the Dusseldorf Stock Exchange where the shares of Newron are listed. This document does not contain or constitute an offer or invitation to purchase or subscribe for any securities of Newron and no part of it shall form the basis of or be relied upon in connection with any contract or commitment whatsoever. 1 Brunei Darussalam, the Kingdom of Cambodia, the Republic of Indonesia, the Lao People's Democratic Republic, Malaysia, the Union of Myanmar, the Republic of the Philippines, the Republic of Singapore, the Kingdom of Thailand, the Socialist Republic of Vietnam 2 Positive and Negative Syndrome Scale (PANSS) is widely used in clinical trials of schizophrenia and is considered the “gold standard” for assessment of antipsychotic treatment efficacy (Innvo Clin Neurosci, 2017: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5788255/ )

TORONTO, Nov. 7, 2024 /CNW/ - HLS Therapeutics Inc. ("HLS" or the "Company") (TSX: HLS), a pharmaceutical company focused on addressing unmet needs in the treatment of psychiatric disorders and cardiovascular disease, announces its financial results for the three and nine months ended September 30, 2024. All amounts are in thousands of United States ("U.S.") dollars unless otherwise stated. KEY HIGHLIGHTS Q3 2024 revenue was $14.1 million, Adjusted EBITDA1 was $4.1 million and cash from operations was $1.5 million, compared to $16.0 million, $5.1 million and $5.4 million, respectively, in Q3 2023. Canadian product sales of Vascepa and Clozaril grew 11% in Canadian dollars compared to Q3 2023. Operating expenses decreased 15%, excluding cost of product sales, compared to Q3 2023. Excluding the royalty portfolio, Q3 2024 Adjusted EBITDA increased 55% to $3.9 million, compared to $2.5 million in Q3 2023. Paid down $15 million of the term loan, ending the quarter with net debt of $52.4 million compared to net debt of approximately $66.5 million at the end of Q4 2023. Named John Hanna permanent CFO and promoted Brian Walsh to Chief Commercial Officer. "Q3 saw the continued growth of our promoted products in Canada driven by the strongest quarterly growth of the year for Vascepa. In constant currency, our Q3 net sales in Canada grew 11% with Vascepa leading the way with 30% year-over-year growth," said Craig Millian, CEO at HLS. "At the same time, we significantly reduced our operating expenses in the quarter, and we made a substantial debt repayment to strengthen our balance sheet and increase our future cash flows and financial flexibility. These achievements put us in a much stronger financial and operating position entering 2025 than when we started this year." Q3 2024 BRAND PERFORMANCE HIGHLIGHTS Completed the transition of Vascepa primary care sales responsibilities from Pfizer back to HLS on August 31, 2024. Vascepa revenue in Canada increased 30% in constant currency compared to Q3 2023 while the Q3 2024 loss attributed to Vascepa was $0.6 million, the lowest since product launch and a significant sequential decrease from a loss of $1.6 million in Q2 2024. Vascepa unit demand increased by 45% compared to Q3 2023. The number of consistent prescribers2 for Vascepa increased 66% compared to Q3 2023. Clozaril revenue in Canada increased by 1% in constant currency compared to Q3 2023. Clozaril patient growth in Canada was 2% compared to Q3 2023. 2024 and 2025 OUTLOOK With the release of its Q3 2024 results, the Company is updating its 2024 revenue and Adjusted EBITDA guidance. HLS is now guiding to a lower revenue range of $56.5-57.2 million compared to the previous range of $58.5-59.7 million. The revised guidance is attributable to year-to-date U.S. Clozaril sales being behind plan and from the negative foreign exchange impact on the Company's Canadian business due to the persistent strength of the U.S. dollar relative to the Canadian dollar in 2024. The underlying demand fundamentals for U.S. Clozaril remain sound. The decline in 2024 U.S. Clozaril net sales is largely due to higher-than-typical wholesaler inventory at the end of 2023, as previously disclosed. Management had anticipated that this impact would be mitigated through a modest mid-year price increase along with new business acquired through expansion of its specialty pharmacy program. However, the full implementation and impact of this program expansion will not be fully realized until 2025. Based on the positive progress being made in reducing operating costs, the Company is raising the low end of its 2024 full year Adjusted EBITDA guidance to $16.0-16.7 million compared to the previous range of $15.5-16.7 million. HLS continues to expect that Vascepa will make a positive brand contribution to Adjusted EBITDA starting in Q4 2024. Finally, the Company is providing a preliminary outlook for 2025. HLS expects that revenue growth from its promoted product portfolio will be in the high single-digit percentage range while consolidated Adjusted EBITDA growth will be in the mid-20's percentage range. The Company will update its 2025 financial outlook when it releases its 2024 year-end results in March next year. Added Mr. Millian: "We are making progress in executing our plan, continuing to grow our promoted product portfolio while significantly reducing operating expenses and paying down debt. We believe the changes we are making this year will position HLS for top-line growth and increased profitability in 2025, while also creating greater flexibility for future capital allocation towards share buybacks and portfolio expansion opportunities." Q3 2024 FINANCIAL REVIEW The Company's Management's Discussion and Analysis and Consolidated Financial Statements for the three and nine months ended September 30, 2024, are available at the Company's website and at its profile at SEDAR+. Revenue Three months ended September 30, Nine months ended September 30, 2024 2023 2024 2023 Product sales Canada 11,087 10,153 30,878 28,755 United States 2,803 3,289 8,907 9,680 13,890 13,442 39,785 38,435 Royalty revenue 195 2,595 1,292 8,776 14,085 16,037 41,077 47,211 Revenue for the three and nine months ended September 30, 2024, decreased 12% and 13%, respectively, due to lower royalty revenues and was offset, in part, by growth of the Company's marketed products. Excluding royalties, revenue for the Company's marketed products (Vascepa, and Clozaril) for the three and nine months ended September 30, 2024, increased 3% and 4%, respectively, from the prior year periods. Product sales – Canada 000's of CAD Three months ended September 30, Nine months ended September 30, 2024 2023 % change 2024 2023 % change Clozaril 9,013 8,946 0.7 % 26,009 26,029 (0.1) % Vascepa 6,077 4,665 30.3 % 15,955 12,661 26.0 % Other 27 16 54 16 15,117 13,627 10.9 % 42,018 38,706 8.6 % Canadian product sales of Vascepa and Clozaril in Q3 2024 increased 11% in local currency, compared to Q3 2023, driven primarily by the 30% growth of Vascepa. For the nine months ended September 30, 2024, Canadian product sales of Vascepa and Clozaril increased 9% in local currency, compared to the same period in 2023. Product Sales – United States In the U.S. market, Clozaril revenue for the three and nine months ended September 30, 2024, decreased 15% and 8%, respectively, compared to the same periods in 2023. Results have been impacted by wholesaler purchasing patterns including a high level of wholesaler inventory at the start of the year and a key customer wholesaler transition that took place during Q3. Royalty revenues Royalty revenues for the three and nine months ended September 30, 2024, were down 92% and 85%, respectively, compared to the prior year periods as the term for Emblem, the largest royalty in the portfolio, came to an end midway through Q4 2023. Following the sale of the Xenpozyme royalty interest in Q2 2024, HLS has one remaining royalty interest which generated $0.2 million in revenue in Q3 2024. Operating Expenses Three months ended September 30, Nine months ended September 30, 2024 2023 2024 2023 Cost of product sales 2,235 1,870 6,312 5,091 Selling and marketing 4,208 5,048 13,295 15,180 Medical, regulatory and patient support 1,439 1,675 4,124 4,188 General and administrative 2,077 2,316 6,255 7,040 9,959 10,909 29,986 31,499 Cost of product sales was up for the three and nine months ended September 30, 2024, due primarily to higher Vascepa sales volumes. Excluding cost of product sales, operational expenses for the three and nine months ended September 30, 2024, decreased 15% and 10%, respectively, compared to the prior year periods. This was due to the Company's focus on cost management while continuing to support the growth potential of its marketed products. Sales and marketing expenses were lower in Q3 2024 in large part due to the discontinuation of co-promotional activities with the Company's marketing partner at the end of August 2024. Adjusted EBITDA1 Three months ended September 30, Nine months ended September 30, 2024 2023 2024 2023 Net loss for the period (4,844) (6,901) (16,632) (22,130) Stock-based compensation 511 (19) 1,194 63 Amortization and depreciation 5,508 8,207 17,283 24,892 Finance and related costs, net 2,389 4,223 7,998 9,128 Other costs (income) 621 42 (2,740) 4,106 Income tax expense (recovery) (59) (424) 3,988 (347) Adjusted EBITDA 4,126 5,128 11,091 15,712 Adjusted EBITDA for the three and nine months ended September 30, 2024, decreased due to the decline in royalty revenue and was offset in part by growth in the Company's marketed products. Excluding royalty revenue, Adjusted EBITDA for the three and nine months ended September 30, 2024, would have been approximately $3.9 million and $9.8 million, respectively, compared to $2.5 million and $6.9 million in the prior year periods, representing increases of 55% and 41%. The Company recorded Other Costs in Q3 2024 of approximately $0.6 million related to exiting its co-promotional agreement. For Q3 2024, the direct brand contribution from Clozaril to Adjusted EBITDA was $6.8 million, while the direct brand contribution from Vascepa to Adjusted EBITDA was a loss of $0.6 million. For the 2024 year-to-date period, the direct brand contribution from Clozaril to Adjusted EBITDA was $20.4 million, while the direct brand contribution from Vascepa to Adjusted EBITDA was a loss of $3.8 million. Net Loss Net loss for the three months ended September 30, 2024, was ($4.8) million, or ($0.15) per share, compared to a net loss of ($6.9) million, or ($0.21) per share, in Q3 2023. Net loss for the nine months ended September 30, 2024, was ($16.6) million, or ($0.52) per share, compared to a net loss of ($22.1) million, or ($0.68) per share, in the same period last year. Net loss improved in the year-over-year periods due primarily to lower operating expenses and lower amortization and depreciation expenses, which were offset, in part, by lower royalty revenue. Cash from Operations and Financial Position Cash generated from operations for the three and nine months ended September 30, 2024, was $1.5 million and $4.8 million, respectively, compared to $5.4 million and $12.1 million in the prior year periods. Cash was $17.5 million at September 30, 2024 compared to $22.0 million at December 31, 2023. Total borrowings under the credit agreement at September 30, 2024, were $70 million compared to $88.5 million at December 31, 2023. During the quarter, HLS made principal payments on its term loan totaling $15 million, which will save the Company an estimated $1.5 million annually in interest expense. Q3 2024 CONFERENCE CALL HLS will hold a conference call today at 8:30 am Eastern Time to discuss its Q3 2024 financial results. The call will be hosted by Mr. Craig Millian, CEO, Mr. John Hanna, CFO and Mr. Brian Walsh, CCO. To view the slides that accompany management's discussion, please use the webcast link. CONFERENCE ID: 84749 DATE: Thursday, November 7, 2024 TIME: 8:30 a.m. ET WEBCAST LINK: https://app.webinar.net/pK7MRDbWv52 TRADITIONAL DIAL-IN NUMBER: 1-888-699-1199 or 1-416-945-7677 RAPIDCONNECT: To instantly join the conference call by phone, please use the following URL to easily register and be connected into the conference call automatically: https://emportal.ink/4eQL014 TAPED REPLAY: 1-888-660-6345 or 1-289-819-1450 REPLAY CODE: 84749# The taped replay will be available for 14 days and the archived webcast will be available for 365 days. A link to the live audio webcast of the conference call will also be available on the events page of the investors section of HLS Therapeutics' website at www.hlstherapeutics.com. Please connect at least 15 minutes before the conference call to ensure enough time for any software download required to hear the webcast. ABOUT HLS THERAPEUTICS INC. Formed in 2015, HLS is a pharmaceutical company focused on the acquisition and commercialization of late-stage development, commercial stage promoted and established branded pharmaceutical products in the North American markets. HLS's focus is on products targeting the central nervous system and cardiovascular therapeutic areas. HLS's management team is composed of seasoned pharmaceutical executives with a strong track record of success in these therapeutic areas and at managing products in each of these lifecycle stages. For more information visit: www.hlstherapeutics.com 1CAUTIONARY NOTE REGARDING NON-IFRS MEASURES This press release refers to certain non-IFRS measures. These measures are not recognized measures under IFRS, do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement those IFRS measures by providing further understanding of HLS's results of operations from management's perspective. Accordingly, they should not be considered in isolation nor as a substitute for analysis of HLS's financial information reported under IFRS. HLS uses non-IFRS measures to provide investors with supplemental measures of its operating performance and thus highlight trends in its core business that may not otherwise be apparent when relying solely on IFRS financial measures. HLS also believes that securities analysts, investors and other interested parties frequently use non-IFRS measures in the evaluation of issuers. HLS's management also uses non-IFRS measures in order to facilitate operating performance comparisons from period to period, prepare annual operating budgets and assess HLS's ability to meet its future debt service, capital expenditure and working capital requirements. In particular, management uses Adjusted EBITDA as a measure of HLS's performance. To reconcile net income (loss) for the period with Adjusted EBITDA, each of (i) "stock-based compensation", (ii) "amortization and depreciation", (iii) "finance and related costs, net", (iv) "other costs (income)", and (v) "income tax expense (recovery)" appearing in the Consolidated Statement of Net Income (Loss) are added to net income (loss) for the period to determine Adjusted EBITDA. Adjusted EBITDA does not have any standardized meaning prescribed by IFRS and is not necessarily comparable to similar measures presented by other companies. Adjusted EBITDA should not be considered in isolation or as a substitute for net income (loss) prepared in accordance with IFRS as issued by the IASB. 2CONSISTENT PRESCRIBER A consistent prescriber is a physician that has prescribed Vascepa in at least 4 of the past 5 weeks. FORWARD LOOKING INFORMATION This release includes forward-looking statements regarding HLS and its business. Such statements are based on the current expectations and views of future events of HLS's management. In some cases the forward-looking statements can be identified by words or phrases such as "may", "will", "expect", "plan", "anticipate", "intend", "potential", "estimate", "believe" or the negative of these terms, or other similar expressions intended to identify forward-looking statements, including, among others, statements with respect to HLS's pursuit of additional product and pipeline opportunities in certain therapeutic markets, statements regarding growth opportunities, expectations regarding financial performance, and the NCIB and ASPP. The forward-looking events and circumstances discussed in this release may not occur and could differ materially as a result of known and unknown risk factors and uncertainties affecting HLS, including risks relating to the specialty pharmaceutical industry, risks related to the regulatory approval process, economic factors and many other factors beyond the control of HLS. Forward-looking statements and information by their nature are based on assumptions and involve known and unknown risks, uncertainties and other factors which may cause HLS's actual results, performance or achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statement or information. Accordingly, readers should not place undue reliance on any forward-looking statements or information. A discussion of the material risks and assumptions associated with this release can be found in the Company's Annual Information Form dated March 13, 2024, and Management's Discussion and Analysis dated November 6, 2024, both of which have been filed on SEDAR and can be accessed at www.sedarplus.ca. Accordingly, readers should not place undue reliance on any forward-looking statements or information. Except as required by applicable securities laws, forward-looking statements speak only as of the date on which they are made and HLS undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise. HLS THERAPEUTICS INC. INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION Unaudited [in thousands of U.S. dollars] As at As at September 30, 2024 December 31, 2023 ASSETS Current Cash 17,540 21,952 Accounts receivable 10,487 10,608 Inventories 7,683 9,534 Income taxes recoverable 98 86 Other current assets 1,766 1,915 Total current assets 37,574 44,095 Property, plant and equipment 897 965 Intangible assets 132,043 162,344 Deferred tax asset 619 1,037 Other non-current assets 607 619 Total assets 171,740 209,060 LIABILITIES AND SHAREHOLDERS' EQUITY Current Accounts payable and accrued liabilities 13,482 14,107 Provisions 5,649 5,424 Debt and other liabilities 4,811 6,876 Income taxes payable 149 281 Total current liabilities 24,091 26,688 Debt and other liabilities 64,543 84,233 Deferred tax liability 3,777 442 Total liabilities 92,411 111,363 Shareholders' equity Share capital 260,595 262,127 Contributed surplus 14,907 13,865 Accumulated other comprehensive loss (5,016) (2,838) Deficit (191,157) (175,457) Total shareholders' equity 79,329 97,697 Total liabilities and shareholders' equity 171,740 209,060 HLS THERAPEUTICS INC. INTERIM CONSOLIDATED STATEMENTS OF LOSS Unaudited [in thousands of U.S. dollars, except per share amounts] Three months ended September 30, Nine months ended September 30, 2024 2023 2024 2023 Revenue 14,085 16,037 41,077 47,211 Expenses Cost of product sales 2,235 1,870 6,312 5,091 Selling and marketing 4,208 5,048 13,295 15,180 Medical, regulatory and patient support 1,439 1,675 4,124 4,188 General and administrative 2,077 2,316 6,255 7,040 Stock-based compensation 511 (19) 1,194 63 Amortization and depreciation 5,508 8,207 17,283 24,892 Finance and related costs, net 2,389 4,223 7,998 9,128 Other costs (income) 621 42 (2,740) 4,106 Loss before income taxes (4,903) (7,325) (12,644) (22,477) Income tax expense (recovery) (59) (424) 3,988 (347) Net loss for the period (4,844) (6,901) (16,632) (22,130) Net loss per share: Basic and diluted $(0.15) $(0.21) $(0.52) $(0.68) HLS THERAPEUTICS INC. INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS Unaudited [in thousands of U.S. dollars] Three months ended September 30, Nine months ended September 30, 2024 2023 2024 2023 Net loss for the period (4,844) (6,901) (16,632) (22,130) Item that may be reclassified subsequently to net loss Unrealized foreign currency translation adjustment 1,158 (2,154) (2,178) 236 Comprehensive loss for the period (3,686) (9,055) (18,810) (21,894) HLS THERAPEUTICS INC. INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY Unaudited [in thousands of U.S. dollars] Share capital Contributed surplus Accumulated other comprehensive loss Deficit Total Balance, December 31, 2023 262,127 13,865 (2,838) (175,457) 97,697 Shares repurchased (1,532) — — 932 (600) Share purchase obligation — 300 — — 300 Stock option expense — 742 — — 742 Net loss for the period — — — (16,632) (16,632) Unrealized foreign currency translation adjustment — — (2,178) — (2,178) Balance, September 30, 2024 260,595 14,907 (5,016) (191,157) 79,329 Balance, December 31, 2022 265,206 13,821 (5,260) (148,449) 125,318 Stock options exercised 178 (44) — — 134 Shares repurchased (1,798) — — 826 (972) Share purchase obligation — (295) — — (295) Stock option expense — 693 — — 693 Net loss for the period — — — (22,130) (22,130) Dividends declared — — — (1,182) (1,182) Unrealized foreign currency translation adjustment — — 236 — 236 Balance, September 30, 2023 263,586 14,175 (5,024) (170,935) 101,802 HLS THERAPEUTICS INC. CONSOLIDATED STATEMENTS OF CASH FLOWS Unaudited [in thousands of U.S. dollars] Three months ended September 30, Nine months ended September 30, 2024 2023 2024 2023 OPERATING ACTIVITIES Net loss for the period (4,844) (6,901) (16,632) (22,130) Adjustments to reconcile net loss to cash provided by operating activities Stock-based compensation 511 (19) 1,194 63 Amortization and depreciation 5,508 8,207 17,283 24,892 Gain on royalty sale — — (3,381) — Impairment charge — — — 2,352 Accreted interest 353 199 912 580 Fair value adjustment on financial assets and liabilities 18 2,030 523 3,151 Deferred income taxes (47) (541) 3,753 (803) Net change in non-cash working capital balances related to operations 2 2,392 1,146 3,950 Cash provided by operating activities 1,501 5,367 4,798 12,055 INVESTING ACTIVITIES Proceeds from royalty sale — — 13,250 — Payment of purchase consideration (1,500) — (1,500) — Additions to property, plant and equipment — — (2) (27) Additions to intangible assets — (40) — (148) Cash provided by (used in) investing activities (1,500) (40) 11,748 (175) FINANCING ACTIVITIES Stock options exercised — — — 134 Shares repurchased — (603) (600) (972) Dividends paid — — — (2,398) Repayment of borrowing under credit agreement (14,965) (2,173) (18,533) (5,683) Debt costs — (1,360) (1,191) (1,360) Lease payments (131) (155) (386) (474) Cash used in financing activities (15,096) (4,291) (20,710) (10,753) Net increase (decrease) in cash during the period (15,095) 1,036 (4,164) 1,127 Foreign exchange on cash 120 (160) (248) (42) Cash, beginning of period 32,515 20,932 21,952 20,723 Cash, end of period 17,540 21,808 17,540 21,808 SOURCE HLS Therapeutics Inc.