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Good morning, and welcome to the Q1 2020 financial results conference call for HLS Therapeutics. On this morning's call, we have Greg Gubitz, Chief Executive Officer; Gilbert Godin, President and Chief Operating Officer; and Tim Hendrickson, Chief Financial Officer.[Operator Instructions] Earlier this morning, HLS issued a news release announcing its financial results for the 3-month period ended March 31, 2020. This news release, along with the company's MD&A and financial statements, will be available on HLS' website and on SEDAR. Certain matters discussed in today's conference call or answers that may be given to questions could constitute forward-looking statements. Actual results could differ materially from those anticipated. Risk factors that could affect the results are detailed in the company's annual information form, which has been filed on SEDAR and can be accessed at www.sedar.com. During this conference call, HLS will refer to adjusted EBITDA. Adjusted EBITDA does not have any standardized meaning prescribed by IFRS. Adjusted EBITDA is defined in the company's press release and annual filings that are available on SEDAR and on the company's website. Please note that all financial information provided is in U.S. dollars unless otherwise specified.I would now like to turn the meeting over to Mr. Gubitz. Please go ahead, sir.
Thank you, operator. Good morning, everyone, and thank you for joining us. On our call today, I'll start off with a look at recent operational developments. Gilbert will review activity with our product portfolio, and Tim will take a more detailed look at our financial results. Following Tim, I'll provide some closing remarks, then we'll hold the Q&A session.These are obviously challenging times for everyone, and we hope that you and your loved ones are healthy and safe. Here, at HLS, we are doing everything we can to minimize any potential impact of COVID-19 on our employees, patients and partners in the medical community.Our thoughts and utmost respect go out to the medical practitioners who are dealing directly or indirectly with COVID-19 and for their efforts to manage and contain this virus and also to those essential workers, who are out there on a daily basis, enabling us to partake in some of the routine functions that we may often take for granted. Turning to our results. Q1 was another solid quarter for HLS. Revenue was up year-over-year, and we continued to generate positive adjusted EBITDA and cash from operations in a period where the investment in our future growth has increased.Operationally, we have achieved important milestones toward increasing our number of in-market products and to driving our future organic growth.With a quick look at the headline numbers, Q1 revenue was $13.9 million, adjusted EBITDA was $6.1 million, cash from operations was $5.3 million, and at quarter end, the cash on the balance sheet was $41.6 million.The key operational event in Q1 was the mid-February launch of Vascepa in the Canadian market. Our focus now is to lay down the fundamental basis of the product's benefits with key opinion leaders, being cardiologists and endocrinologists, and seed the basis of private and public formulary coverage.In Canada, heart disease is an enormous economic burden, with the total forecasted annual cost of over $21 billion for 2020. On average, every 10 minutes, someone in this country dies from cardiovascular disease. So the problem is clearly defined. Gilbert will address how we are moving forward on our launch plans in light of COVID-19 in his section.In Q1, we also announced that Vascepa was added to Health Canada's register of innovative drugs. And as a result, it will benefit from data protection for a term of 8 years.At the time of that announcement, we announced an increase in our peak year sales estimate for Vascepa in Canada to CAD 200 million to CAD 300 million per year, up from our previous estimate of CAD 150 million to CAD 250 million per year, supported by the significant data results from the landmark REDUCE-IT trial, the endorsement from major medical societies around the world and the prevalence of cardiovascular disease in Canada. We believe as strongly in Vascepa's long-term potential today as we have at any time previously.Q1 continued to demonstrate the steady and reliable performance of Clozaril, our key foundational product and one that is viewed as an essential medication for those suffering from treatment-resistant schizophrenia, a chronic and serious condition.We were at the rollout stage for CSAN Pronto, our point-of-care safety blood monitoring device when we had to transition to the current work-from-home situation. Understandably, in light of COVID-19, many of the health care institutions that are our primary initial targets for CSAN Pronto have paused on new device implementation protocols and certifications. However, our longer-term view on CSAN Pronto remains unchanged, but there will be delays in implementation due to the pandemic.Elsewhere in the portfolio, in Q1, Health Canada accepted the filing of our new drug submission for Trinomia. Trinomia is already commercialized in 31 countries by its manufacturer, Ferrer, and its other licensees. Trinomia is a polypill treatment option to help reduce the risk in patients of a second cardiac event. We believe there are excellent commercial synergies between Trinomia and Vascepa as both would be promoted with the same sales force calling on the same prescribers. Given the standard time line for review, we expect the response from Health Canada at the end of 2020. In Q1, our new drug submission for PERSERIS was also accepted for review by Health Canada. PERSERIS is already approved by the FDA in the U.S. and is a novel, long-acting injectable risperidone product for the treatment of schizophrenia.In our view, this product can bring another treatment option to patients and practitioners contending with a very difficult disease state. And from a business perspective, it is a nice complement to our existing Canadian CNS franchise.Based on time lines, we would expect a response back from Health Canada at the end of 2020. And if approved, for it to be in the market in early 2021. Finally, in our Q1 press release today, we announced that we have filed a preliminary short-form shelf prospectus. If approved, this would enable us to raise up to CAD 250 million over a 25-month period.We have no current plans to raise capital through the shelf filing, and we will continue to be reliable stewards of capital for the business. However, we believe this is a prudent and fairly standard way to provide flexibility for accessing capital if we are presented with compelling business opportunities.With that, I'll turn it over to Gilbert for a deeper look at developments in our portfolio. Gilbert?
Thank you, Greg, and good morning, everyone. Starting with our cardiovascular franchise and the launch of Vascepa. In mid-February, we deployed our new cardiovascular sales force for what ended up being 4 weeks of field activity before we had to adapt to the emerging reality and the impact of the coronavirus. We are now in our eighth week of work from home, restricted travel and physical distancing compliance. Since then, we have adapted to the situation and are carrying on with our launch, albeit in a modified way suitable to the environment we are in. We continue to maintain and support our team of more than 30 dedicated staff who are working to raise awareness and inform cardiologists, endocrinologists and other health care professionals on the benefits of Vascepa and how it can make an important difference in the lives of their patients at risk of cardiovascular events.For people who have existing cardiovascular disease or diabetes and at least 1 risk factor and are stabilized on a statin, Vascepa has been shown to reduce the risk of cardiovascular death by 20%, heart attacks by 31%, strokes by 28% and the need for a surgical bypass by 35%. As such, Vascepa represents a new and effective solution to the challenges that cardiovascular disease poses in this country.Due to COVID-19, we continue to promote Vascepa. But in the place of face-to-face meetings between reps, scientists and practitioners, we are pursuing a largely digital outreach plan, which, among other things, includes webinars, Zooms, phone calls and other digital and print communication. Where possible and desired, we're staying in contact with the medical community, albeit with a less physical presence, and we're moving forward with marketing activities, existing or new, that are deemed appropriate and effective. It is still early in the launch, but while many detaining opportunities are reduced or deferred, we are pleased with the reception by those physicians that have been sufficiently exposed to the product's credentials and the awareness on the practitioner's side is building.That said, it is fair to say that we think the growth curve for the product has shifted to the right somewhat due to the conditions created by COVID-19. To be clear, we continue to market the product as actively as possible and will ramp up efforts accordingly as conditions evolve. But it is prudent to acknowledge that COVID-19 has created unprecedent operating conditions for all businesses, including HLS, and especially in the context of a launch when frequent contacts are needed to create awareness than trial on the right patient profile.Simultaneously through our sales and marketing efforts, we're working through the respective processes to gain access to the market and to get Vascepa added to private and public drug formulary plans across the country. We continue to make progress here despite COVID-19 and believe that we continue to track to our expected time lines at this point of the rollout. As it relates to COVID-19 and the supply chain for Vascepa and Clozaril, we believe that in both cases, our inventory levels are robust and give us no immediate cause for concern. We do not currently see any issues emerging in the supply chain, but we are monitoring the situation closely.Looking now at our CNS products. Q1 was a good quarter for Clozaril. Revenue was up in Canada, as was our patient count. And in the U.S., we continued the introduction of the program we piloted last year around the Athelas One blood testing device.The Clozaril Refractory Schizophrenia Assistance Program, or RSAP, is more or less a U.S. counterpoint to CSAN Pronto in Canada, but customizable to the needs of the various mental health care and other institutions in terms of prescription fulfillment.Clozaril is the last line of defense and the only proven drug therapy for patients with treatment-resistant schizophrenia, or TRS. Dropping off treatment will inevitably result in a relapse. And as such, we would expect patients to continue to seek treatment even in the pandemic.In Canada, we did see an increase in trade activity in the second half of March. As the trade anticipated longer prescription refills, but while visible, this was not a material amount, and things seem to have settled back to more normal levels so far in Q2. It is still difficult to tell what kind of impact COVID-19 will have if it was long-lasting on new patient uptake. But we can report is that we did see continuity in Q1 with patient growth of more than 3%.Regarding CSAN Pronto, COVID-19 is having an impact on its rollout as we are unable to conduct the typical activities and face-to-face meetings with practitioners as we are compliant with health authority guidelines and respectful of the bigger challenges that Canadian health practitioners, hospitals and other medical facilities are facing right now.We continue to make appropriate efforts to raise awareness of CSAN Pronto and very much believe in its longer term potential. However, we think that given the delays inherent to the current environment that its growth curve is also shifting out to the right somewhat.In the U.S., we're also pacing ourselves in deploying the RSAP program that we pilot tested with our partner for more than 6 months in 2019. As in Canada, we continue to witness excitement and a sustained interest in the technology and see firsthand real benefit that can be brought to patients in defined segments of the market. This strategy should help us offset the natural erosion of our U.S. Clozaril franchise.With that, I will turn it over to Tim for a closer look at the numbers. Tim?
Thank you, Gilbert, and good morning, everyone. Starting with revenue, total revenue was up 5.5% in the first quarter. Product sales increased by 9% year-over-year due to Clozaril's 11.5% growth in Canada, up 13.1%, excluding foreign exchange impact as well as the initial sales of Vascepa in Canada. Clozaril's growth in Canada in the first quarter of this year benefited from sales levels in Q1 2019 that were negatively impacted by a larger than usual increase in trade inventory in the fourth quarter of 2018. This was a factor that we discussed on prior calls in 2019.As Gilbert mentioned, in Q1, Clozaril experienced higher than usual trade demand in Canada in the final 2 weeks of March, which was likely driven by the COVID-19 pandemic. This impact was notable, but not material, and the Clozaril numbers for April suggest that volumes have stabilized to a more traditional profile. Clozaril product sales in the U.S. market for Q1 2020 declined by $100,000 or 3% compared to last year. Clozaril unit volumes and gross sales in the first quarter were up slightly from the same period last year, which is attributable to the initial results from the RSAP program. This growth, though, was offset by small increases in distribution fees and government programs and our decision to stop sales of an authorized generic.Absorica royalty revenue was $2.3 million in the first quarter of this year, which was a little below the same period last year. In Q1 2020, the U.S. marketer of Absorica introduced Absorica LD, a line extension to Absorica, and the initial sales of this new product were included in the calculation of the royalty revenues for the quarter. The cost of product sales increased in Q1 2020, due primarily to higher Clozaril sales and the initial Vascepa sales in Canada.Q1 2020 selling and marketing expenses increased by $2.4 million year-over-year, due primarily to the addition of a 22 person sales team and other activities to support the launch of Vascepa in Canada. As Gilbert mentioned earlier, we don't see any potential issues in the supply chain right now. In addition, we have invested in sufficient inventories to fully support Vascepa uptake and to maintain prudent inventory coverage for Clozaril and CSAN Pronto. With initial quantities on hand now, we expect to continue to maintain inventory, driven by normal course business decisions rather than the need to -- for any adjustments because of concerns of potential COVID-19 impact to the supply chain. However, as Gilbert indicated, we will continue to monitor this closely.Adjusted EBITDA for Q1 2020 was lower by $2.2 million year-over-year due to the increase in launch-related selling and marketing costs and the higher cost of product sales, which were offset in part by higher revenue from Clozaril and the initial sales of Vascepa. Interest on the senior secured term loan in the first quarter of this year was $1.2 million compared to $1.6 million in Q1 2019. The reduction is due to both a lower principal balance and a lower interest rate in fiscal 2020.As at March 31, 2020, the principal debt balance outstanding under the new senior secured term facility was $92.4 million compared to $93.8 million at December 31, 2019, year-end. Our net debt balance at the end of Q1 was $50.8 million. We generated net income of $154,000 in Q1, but this was primarily due to the $6.1 million in noncash and nontaxable income resulting from the revaluation of the lender warrants during the quarter. With 43% of the outstanding lender warrants exercised in this quarter, this nonoperational noncash source of volatility in results will be greatly reduced.Cash generated from operations was $5.3 million in the first quarter of this year compared to $8.3 million in Q1 2019. As at March 31, 2020, we had cash and cash equivalents of $41.6 million compared to $47.1 million at December 31. Notable factors impacting the change in cash balance in Q1 from the end of 2019 included a $3.75 million milestone payment to Amarin upon Vascepa being granted 8 years of data protection in Canada as well as an increased selling and marketing cost related to Vascepa's launch. Overall, we continue to have a very strong financial position, with $41.6 million of cash and cash equivalents, a $25 million revolving facility that remains undrawn as of today, and we are also able to request incremental loans up to a maximum amount of $100 million to support acquisitions and other growth opportunities. In addition, as Greg mentioned earlier, we also filed a preliminary short-form base shelf prospectus today. While we do not need to nor do we have any intention to access that capital today, it can provide us with some financial flexibility in the future, should appropriate opportunities present themselves.And finally, the next quarterly dividend will be paid on June 15 to shareholders of record on April 30. And yesterday, the Board of Directors declared that the subsequent quarterly dividend of CAD 0.05 per outstanding common share is to be paid on September 15, 2020, to shareholders of record as of July 31, 2020.And with that, I'll pass it back to Greg for his closing comments.
Thanks, Tim. In closing, Q1 was another solid quarter for HLS. But to state the obvious, the world changed dramatically from the start of the quarter to the end. For many companies and individuals, these changes have brought a significant shift in their day-to-day circumstances. While not untouched by COVID-19, we believe that our product portfolio has resiliency even in challenging macro environments, as both of our therapeutic areas, cardiovascular and central nervous system tend to require treatments that are medically necessary and that address chronic ailments. Overall, this lends itself to some stability during very uncertain times.And finally, I want to commend the team at HLS for having adopted well to this new environment for continuing to push forward on our strategic priorities and for demonstrating a steady commitment to ensuring our patients receive their critical medications during this unprecedented time.That concludes my prepared remarks. At this point, I will ask the operator to please provide instructions for asking a question. And I would note, operator, that we'd ask you to take the questions, we're having a bit of communications problems on our end. So if you could take the lead on that. I appreciate it.
[Operator Instructions] And your first question in queue here comes from the line of Noel Atkinson with Clarus Securities.
Well done in Q1. First off, you sort of mentioned in your prepared remarks that you expect the growth curve has shifted to the right a bit for Vascepa. Is there any change to your peak sales target or for Vascepa or when you expect it to be achieved?
No. We are maintaining our peak sales estimates. And it's very difficult to forecast, Noel, how long the COVID-19 situation is going to last. But at the moment, we're still seeing between 4 and 5 years to peak sales.
Okay. Great. We're seeing that COVID-19 appears to be more severely affecting people that have underlying health issues, obesity, heart disease diabetes. Given the nature of Vascepa and its cardiovascular risk protection, has there been any increased interest from physicians in Vascepa as a result of the outbreak?
Noel, yes, I can comment on that, albeit very lightly and anecdotally. I think the proximity and the comorbidity here has certainly been highlighted. The extent to which connection can be made clearly is harder. But I think that established cardiovascular disease, diabetes, in particular, have been shown to provide greater vulnerability to the virus. Anything beyond that point is hard to corroborate, but I think that it's more of a pragmatic observation than anything else.
Okay. Can you folks give us any update on the status of reimbursement activity for Vascepa in Canada?
Yes, certainly can. We said in our prepared remarks that we were tracking. We're pretty much where we thought we would be at this point in time. You may recall, we mentioned that we engaged right from day 1, following the approval with all large national private payers in the country. So that's a private payer track, if I may say. Our file is under review, certainly with the major -- with the top 5. Typically, we think that within 9 to 12 months, we would get at or above 80% of all covered lives to be on formulary and indeed be covered. At this point, with a mere 2.5 months into the process, we can report that we stand at approximately slightly more than 20% of all privately covered lives. And I would add that in the 2 largest markets, the 2 largest provinces, 1 of them is at 20%, the other 1 is at 30%. So steady progress. Nothing unexpected from our side of things. But clearly, we're anticipating a number of developments in the coming months with the top 5 payers. This is where close to 65% of all privately covered lives reside. So it's part of our process. We're tracking, and we want to reiterate our confidence that we will get to that 80-plus percent level.
Okay. Great. Just finally for me before I get back in the queue. You've announced this preliminary shelf that you're intending to file. Are you seeing even attractive opportunities for drug rates, acquisitions or corporate M&A arising in the current environment?
No. It's Greg. It's a good question. I think you're starting to see some transactions happening already in the market. It's hard to know how quickly opportunities will arise. Some people I expect from an M&A perspective will kind of hit the pause button and wait until there's a little more stability. And some may want to move ahead today because they either want to because they think it's a smart strategic move or they may have to because of the situation they're facing. And so the purpose of the shelf was really just to make sure that we're ready if and when opportunities arise.On the licensing side, I'm not sure the COVID situation is going to have a tremendous impact. I think companies will still be open to doing licensing. And as you know, in the Canadian context, that's an important part of our strategy going forward.
[Operator Instructions] Your next question here comes from David Martin from Bloom Burton.
You mentioned the 20% of privately covered lives that you've already got. So is COVID slowing up process down at all? Or is that exactly where you'd expect to be even if COVID wasn't around?
We have seen -- David, thank you for your question. We've seen no changes. And the -- I would say, the nature of the processes and the pace at which they are pursued, of course, we initiated those in face-to-face mode and we switched since then to virtual or other electronic modes, but it's continuing at what appears to be a normal and steady pace. So no real impact here. I think that the people on both sides of the equation here that are participating in those discussions have not been especially impacted or mobilized on the COVID-19 issues. So that probably enables us to continue. And I would add that this has been fairly similar also on everything that relates to the public market access processes.
Okay. Great. Can you provide any more details on the launch, such as how many physicians are prescribing? And how many patients are taking the drug?
I can give an update that is mainly activity based. And I think it's important to understand that our activity in the context of a launch, first of all, the aim is that first to create awareness, then to -- through frequency of reach of detailing to handle objections and get physicians to get a clear understanding of the patient profiles and then to trying the product. And once they tried the product, to eventually move in the direction of adopting the product for every such patient. So what I mean to say here, Dave, is that it truly is a process that is predicated on reaching the right physicians at inception and doing so in the proper frequency.And the point is that COVID-19 is hampering those efforts because the reach has changed the ability to meet with them frequently as we would otherwise has been changed. And therefore, the pace at which we can get them to a comfortable place so as to try the product with the patients is deferred.And that's the whole fundamental thing that's happening behind what we call the shifting to the right. It slows out everything. It disseminates everything. And therefore, either in terms of prescriptions or patient counts or number of physicians reach with sufficient frequency, we have to stretch the time line to get there.So first 4 weeks, pretty good outcome, good results, strong performance, good migration in the right direction. Then we had to reconvene, regroup, reanalyze the way that we could continue that work. And since then now for the past 4, 5 or even 6 weeks, we've been using different means recognizing that this is also only on those physicians that have remained accessible. Many others have been mobilized. So that's why we think it could only be misleading to talk numbers. We're trying to shape the curve, and this is now creating a bit of a plateau and a flat line. And now with the adaptation, change of means, broadening and changing the target, we're working at creating a resumption. And that's also why because -- why the potential of product doesn't change and the value of the product doesn't change, the need is still there. The need will still be there in the future when we can resume at full force, the product's performance will still be there. This trial is rock solid. Those results and the benefits are unquestionable. It's just a matter of making sure that we are deploying activities, resources in a way that's impactful. So sorry for the long convoluted answer, but that's essentially the nitty-gritty mechanics behind the launch, observing and believing in reaching frequency to move those KOL opinions and to see those KOL influence their peers and eventually to create a wave that steadily increases the uptake curve.
Got it. Got it. One more question, if I could, then I'll get back in the queue. The 3.1% year-over-year growth in Clozaril in Canada, how does that compare to growth you were seeing before you introduced CSAN Pronto? And is the patient growth coming from new doctors prescribing branded Clozaril because the device motivated them to or is it more from existing doctors prescribing the drug to more of their patients?
Yes. I would say, David, that, that 3% is smack in the middle of what we've experienced good year, bad year for the last 5 years since we took ownership of Clozaril. So it's an improvement because I think that for some parts of last year, we were hovering closer to 2%. So noticeable, 3% much better than 2, but the impact of CSAN Pronto has not manifested itself yet because again, we had to put on the brakes and slow down and only act in those places where the site was willing to continue the implementation.We've stated all along that we think that the growth of the market could increase as a result of CSAN Pronto bringing new patients into the realm of the treatment in the case of those patients that refuse to have the standard needle in the arm modality. And we think that this growth could be or should be closer to 5%, 6% or even 7% or 8% once we're in full implementation mode. So 3% is good.It shows that new treatments continue to be initiated. They're all related to the brand. This is only brand reported numbers in Canada. There's nothing else. But here, again, with the COVID-19, the objective continue to serve well and make sure that all existing patients remain on treatment, priority number one. Priority number 2, of course, if there's willingness from physicians and patients, to start a new treatment, even in the midst of COVID-19, we're there to help, we're there to support. But we think that this could diminish for some time before there's a resumption.
Your next question here comes from the line of Tania Gonsalves with Canaccord Genuity.
I'm wondering, so let's start with Vascepa. It's still early days, but can you provide us any color of how many different buyers you saw in Q1?
If you're talking of the true meaning of buyer, those paying for the product, we're dealing essentially in Canada with wholesalers. And what happened during the course of Q1, which was the time of launch, we launched on Feb '18, was essentially filling what we would call the trades pipeline. So we supplied the wholesalers, informed them what was coming and why they should have some product on hand. And similarly, some pharmacies got ahead of the curve and made sure that they would have a little stock of Vascepa should someone show up at the pharmacy to fulfill a scrip. So I would say the usual wholesaler buyers here, Tim, you might be in a position to be more specific in terms of numbers of organizations actually buying, but those were the ones that we've sold product directly.
Sure, Gilbert, just to add, all of the national and all of the main regional wholesalers that we presented to placed orders.
Perfect. Now with respect to what's going on in the U.S., I don't personally see any risk of generic entrants in Canada as a result of Amarin's patent ruling. But could you talk to maybe other potential negative? For instance, will you need to increase your marketing budget to offset the decrease in the U.S. that would have surely had a financial impact on you, but it seems like Amarin will spend less on marketing there. Does it mean you need to spend more?
Yes. We're not to privy to -- good question, Tania. We're not privy to the actual strategic or tactical changes with respect to the marketing plan. However, it's our understanding that the one activity that could be beneficial to us that appears will continue is the direct-to-consumer. So we're looking forward. I think if it happens, it will happen in the early days of summer, if not late spring. It remains to be seen. But if that happens, that always has a benefit in terms of awareness creation in Canada. It's not something we count on. It's not something that we've modeled at having any kind of precise impact. It's just a nice -- a great -- nice to have addition and a pretty unique one, right, because of the simultaneity of the launch of our product and the launch of their new indication.For the rest, I would say that it's more the impact of COVID-19 on large national or international conferences that there might be a bit of a gap because those -- most of those [ at the moment ] have been either deferred, canceled and are now taking place virtually. So these really were the 2 buckets where we were hoping to get some windfalls, but our launch is self-sufficient, doesn't need those to achieve the kind of numbers and progression that we've devised. If we get those, however, it will be additive and definitely nice to have.
Excellent. And then just one 1 last one for me. Could you talk to maybe what were the deciding factors in the Athelas One pilot in the U.S. that made you go ahead with the RSAP rollout in the U.S.? And maybe specify which regions and settings of care you're going to target initially?
Yes. First of all, the pilot took place in the state of California, right? We wanted to have a footprint here that was conducive to the analysis of the results. But the main focus was to try to understand which kind of setting of care would be a good fit with the -- what we call the RSAP offering. And of course, the benefit we're bringing with that technology is at the front end, right? There's mandatory blood testing for those patients without which their drug can't be delivered or renewed.But the plan was to make it easy to deal with those patients, not only on that front end, but offering support, and I want to say that it's an optional support. They can opt into additional facilities that are offered through the RSAP of unloading the burden of the -- what we call the prescription fulfillment process. And what that means is that a doctor having used a technology, gain the results, populated the results and the ramps can then subsequently decide if they want to see a scrip be sent to a specialty pharmacy that will handle everything it relates to claim processing, supporting the patients and sending the scrip to the desired location, whether that's a patient or the physician's office, and provide reminders for subsequent testing. So we had to find -- or as a result of the pilot, identify the sites and the clinic and both in terms of size because there's an efficiency factor here, right, a clinic with 2 patients may not make much sense so what's the optimal size where a device can be used and productive. And also, I would say, there's somewhat of a cultural inclination towards that kind of modern current for its time, right for its time technology. So that was the pilot help identify. Now we're branching out of California, but we're doing so with finite means. And therefore, we're focusing more on the size that fit a number of criterias of acceptance and having proper size.
Our next question here comes from the line of Justin Keywood with Stifel GMP.
I'm not sure if I missed this, but on the public reimbursement for Vascepa, has there [ been ] an expected timing there given COVID-19? And also, do you have an update on the CADTH review and how that process is progressing?
Yes. First of all, on the public front -- public timing, I think that we've been broad in our forecast, you're saying that 18 to 24 months is not uncommon for public payers to come on board and eventually list a product, they're long, protracted negotiations, I would say, sometimes a little bit by design. And there is now an effort to federate those through an organization called the pCPA in Canada. So no real change on that front. COVID-19 has not been creating any kind of delay. It's more the nature of the process itself.With respect to CADTH. The CADTH Expert Committee is scheduled to meet on May 20. And what would likely be their final report should follow thereafter in due courses. Depending on the outcome, it could take a week or 2 or 3. The -- this process is highly regulated. And we're under a very strict embargo. We are following the guidelines. And accordingly, we're not able to comment on any of the specifics, but that process through the back and the forth and what is called the reconsideration is common, certainly not unusual, and we're playing by the rules, and we're putting forward our best foot and our best arguments to make sure that in the end, the final recommendation will recognize the full benefit and potential of the product.
Understood, and I appreciate that. For Absorica, with the line extension by the U.S. market, does that impact your view of the near-term royalties? And also on the business development front, do you plan on introducing another royalty like asset in the business?
Justin, it's Greg. The introduction of the line extension for Absorica, we saw some impact on the Q1 royalties. Hard to say going forward what that's going to be like, but our expectation is that it's not going to have a material impact. And as you know, the economic benefit of that transaction expires at the end of this calendar year. So there's only 3 quarters left for Absorica, and we'll just see how that unfolds. It's very hard for us to predict the scrips for that product. It's not in the same category of medically necessary as Clozaril or Vascepa, but it is a very important and effective drug. So we'll just have to see over the next couple of quarters, how that goes. But we have 3 quarters left on that transaction.I'm sorry, I forgot the second question you were asking, Justin?
So assuming the economic benefits of this royalty ends at the end of 2020, are you looking to replace that royalty stream with another royalty asset?
Royalties were never -- have never been really part of our strategic focus. We viewed the Absorica transaction as a very opportunistic deal, and it's worked out quite well for us over the period of time that we owned it. So I would say the best way of thinking about it is we're not opposed to royalty deals if one was to materialize. But it's not something that we're out actively looking for. I would put it very clearly in the opportunistic category.
Your next question here comes from the line of David Martin with Bloom Burton.
All right, couple more follow-ups. Do you have any insight as to what will be said about Vascepa in the Canadian treatment guidelines? Is there going to be a recommendation for its use?
Thank you, David. We certainly hope so. We're remaining available, and we're responding to any request we have from any of the stakeholders that will be involved in the guidelines. In fact, the matter is that we don't always know who is and who isn't and how they will proceed about it. I think that it's reasonable, however, to say that those guidelines, the cardiovascular guidelines could pretty well be evolving before the end of the year. There's always contingent on the COVID-19 situation as well. I'm sure that it makes things a bit more complicated. So we've -- if we are in the receiving end of the request, if we're asked about anything on the scientific, clinical or medical basis that is about Vascepa for the purpose of helping -- future guideline definition, we are there and we're answering present every single time, but we don't have any active role nor do we barge in or do anything improper there.
The only thing I'd mentioned is that so far, worldwide, there's been 7 major medical societies that have updated their guidelines related to Vascepa.
Yes, yes. I was just -- I know there was a timing issue. And if they had stuck to their timing, Vascepa wouldn't have made it in based on the year-end approval. But I guess the timing is good now. And if it's going to be in it, timing shouldn't be an issue?
Yes. I think if there is indeed an iteration this year, I think that there will be discussions about whether or not Vascepa should be in there. So that's good -- you're right, I could tell you about the timing, had it taken place late in 2019, were the product not approved as of yet, that could have been more questionable.
Okay. And then back to Athelas One and even the CSAN Pronto in Canada, are the devices a revenue item? Or are they -- you give them away for free, and it's the expectation that Clozaril will be used in return for letting them use the device?
Yes. We want the device to be -- not to be an impediment. And therefore -- but we can't carry alone the burden of its costs. So I think what you can picture is something that is the closest thing to being cost-neutral, so that we can provide access at the lowest possible cost to the institution or the provider of the clinics that will want to have one of those. And therefore, it's not a profit item, not a profit center for us per se. It's another tool in the toolbox for the sake of serving well Clozaril patients, existing or future.
[Operator Instructions] And I'm not showing any final questions that are coming into the queue. I will turn the call back over to Mr. Greg Gubitz for closing comments.
Thank you, operator, and thank you all for participating on today's call. We hope that you and your loved ones are able to stay safe and healthy. And we look forward to speaking with you and reporting to you in the coming quarters. Bye-bye.
And ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.