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Good morning, and welcome to the Q1 Fiscal 2021 Financial Results Conference call for HLS Therapeutics. On this morning's call, we have Gilbert Godin, Chief Executive 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, 2021. This news release, along with the company's MD&A and financial statements, will be available on HLS' website and on SEDAR. Please note that slides accompanying today's call can be viewed via the webcast, a link of which is available in the company's earnings press release and at its website on the Events page. 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 results are detailed in the company's annual information form, which has been filed on SEDAR 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 conference over to Mr. Godin. Please go ahead.
Thank you, Colin. Good morning, everyone. Thank you for joining us. On our call today, I will start off with a review of our operational highlights. Tim will follow with a more detailed look at our financial results, and then we'll hold a Q&A session. HLS delivered solid financial results in the first quarter and achieved important milestones in the rollout of Vascepa despite the strict COVID-19 lockdowns that were in place throughout the quarter. Among those milestones are: one, the steady increases in patients and prescribers throughout the quarter; two, more than 90% of qualified privately insured lives in Canada are now eligible for reimbursement of Vascepa; three, the Canadian Cardiovascular Society issued updated guidelines that recommend Vascepa to reduce cardiovascular disease for qualified patients in label; and finally, complementary trial analysis presented at the International Stroke Conference 2021 showed that Vascepa as reducing not only first but also total strokes by 28% and 32%, respectively. With a quick look at the headline numbers, the first quarter revenue was $14.3 million, adjusted EBITDA was $6.7 million, and cash from operations was $7.2 million, all of which were increases over the first quarter of last year. Tim will look at quarterly and annual results in more detail, but of course, we're very pleased with these results, especially considering the impact from the pandemic as we will see in a minute. Quarter-to-quarter, the number of patients being prescribed Vascepa increased by 40% in the first quarter to almost 2,900, and the number of prescribing physicians increased 33% to over 730. These are robust growth numbers considering the challenges we face in reaching physicians and in patients reaching their physicians during lockdown conditions. As these numbers attest to, we continue to find ways to make meaningful contact, and we are succeeding in raising awareness and generating trials for the product with key opinion leaders and all other prescribers we call on. We remain encouraged from what we see both in terms of the engagement and the response from practitioners and in terms of the trends for prescribers and patient uptake. Cardiovascular disease remains the #1 killer worldwide. Statins alone are not enough. Vascepa is the first and the only Health-Canada-approved drug that has been proven to significantly reduce the risk of death or major cardiac event in patients having a persistent cardiovascular risk despite the use of a statin. As the only drug in this class, it has the potential to improve the lives of hundreds of thousands of Canadians. At this point, I would like to turn your attention to the slides that are viewable on the webcast. If you missed the opening preamble, the webcast link can be found in our press release issued this morning and on our website in the Events section. The first slide summarizes the updated lipid management guidelines of the Canadian Cardiovascular Society issued on March 26, as it relates to our in-label patients. The guidelines state that Vascepa should be considered when a patient with established cardiovascular disease or in at-risk diabetics has elevated triglyceride as a marker of the persistent risk despite being treated with a statin. The treatment chart also specified that Vascepa is the only product indicated in such circumstances. And that and I quote, "The strong recommendation is supported by high-quality evidence." Conversely, it also specifically strongly recommend against OTC omega-3 supplements. It couldn't be a clearer recognition of the unique, differentiated clinical benefits of Vascepa. The inclusion of Vascepa in the CCS guidelines is particularly gratifying for us. It is one thing for HLS to extol the virtues of the REDUCE-IT trial results and for Health Canada to approve the medication, but that does not provide physician with guidance relative to other approved therapy. So it is quite another thing when a highly regarded independent organization made up of specialized expert and key opinion leaders in the field of lipid disorder, cardiology and endocrinology strongly recommends the usage of icosapent ethyl, which is Vascepa, for the full in-label patient population. We're now up to 15 international medical societies that recommend Vascepa for cardiovascular disease prevention. The second slide shows weekly script data from the product launch last year through April 23, 2021. There are 2 key takeaways here. First of all, we've generated steady and now visibly accelerating growth in the number of scripts since our launch despite being very constricted in our interactions with physicians during the pandemic. I don't think we need to convince anyone about the challenges we've been facing in the field in Canada during these days. And I want to draw your attention to the graph on the right-hand side of the slide that shows the difference over time between a normal patient and practitioner engagement represented by the top line and the one resulting for the pandemic, which is the lower line over the past 14 months. The space in between indicates what we call the patient gap. For cardiovascular in particular, that patient gap is estimated at approximately 25%. Furthermore, additional data indicates that only 35% of those patients' visits are in-person today versus approximately 95% pre-COVID. A third data point is that patients and physicians' comfort at initiating a therapy over the phone is 35% to 50% lower than it is when they're visiting face-to-face. With that in mind, if we now return to the total script graph on the left side, it's a testament to our team and the product to have established such a steady uptake during a chaotic period, as shown by the jagged curve on the right when in-person visits with practitioners have been greatly reduced. It also goes to show that there is a large portion of the launch opportunity that is untapped, and that excludes, of course, the expansion of the market that will occur when we increase our promotional activity as the public markets open. Secondly, while we don't want to get too far ahead of ourselves here, the upward trend of the curve preceded the guideline publication that took place at the very end of March. The guideline inclusion on its own will have a beneficial and progressive long-lasting effect. Achieving reimbursement coverage for more than 90% of eligible patients and private plans, becoming part of the CCS guidelines and completion of the public payer negotiations with PCPA are all 2021 events that individually or collectively will help accelerate script adoption this year and assist in reaching the inflection point. The next slide that we introduced 2 quarters ago compares the uptake of Vascepa to the post-launch script performance of 2 other cardiovascular drugs, Eliquis and Pradaxa launched over the past 10 years. We call that the hurricane cone slide internally. As a reminder, all analogs are imperfect, but we think they are useful in helping create a sense of perspective. These 2 anticoagulant drugs have a similar aim in terms of focus on cardiovascular risk reduction although they did not launch in a pandemic environment, but we include their historical experience here for illustrative purposes only. Quick recap of what this slide shows us. First of all, Vascepa continues to track as well or better than these 2 successful launches at the early stages. As we look at the initial quarters, it illustrates that we are approaching the inflection that typically occurs within the first 18 to 24 months. And as I alluded to earlier, this generally corresponds with the opening of market access with both public and private payers and an increase in field promotional activity. Secondly, as seen on the far-right side, we anticipate peak year potential of 130,000 to 150,000 patients, which is a base for our CAD 275 million to CAD 325 million in peak year sales target. When compared to where those 2 analogs ended at maturity in terms of patient counts and -- Eliquis is, of course, the big one, in particular, reaching almost 300,000 patients. It suggests that despite the obstacle course we operate in, Vascepa is up to a good start and is en route to our peak patient level. You will note that the number of scripts for Vascepa in the most recent quarter was 5,525. That includes a slight adjustment for the last week or 2 of that period. This is just below the low end of the range we anticipated for the product for the period. We believe the second wave of the pandemic and the strict lockdowns in Ontario and Québec during the first quarter have definitely impacted this number. With the benefit of insight and given the severity of that situation as we exited the first quarter, we have adjusted the ranges for the next few quarterly period and tried to route those into reality of what we have just observed. We believe it is responsible to revise the number despite it being difficult and ingrate to forecast in this environment. Nevertheless, the trend forward is upward, and we see 5 catalysts combining to shape this view of the coming quarters. They are, first of all, achieving 90% plus in-label patient reimbursement in the private market. We completed this during the month of March. We'll have -- we'll see -- we'll start to have greater impact in the coming quarter, notably providing a lift by improving the gross to net sales. Secondly, the guidelines create a long-lasting heavy trend, a groundswell. Thirdly, after the slow start, Canadian vaccination progress is being made now on the vaccine rollout and restrictions should evolve. And I can tell you if the U.S. is an indication, relief is underway. It definitely impacts favorably the business environment that we are in. Fourth, the completion of the public market access negotiations. And finally, the sales force expansion is the final element, where we will go from essentially 1x to 3x in scope. In the meantime, as evidenced by the first quarter's performance, we continue to work hard to mitigate or neutralize any negative external factor. And I'm sure all of you would agree that the shape of our hurricane cone and the inflection point it contains will leave very little doubt about where Vascepa will be heading. At the risk of sounding like a broken record, we're staying focused on the big picture. And the big picture is that while the effect of the pandemic is significant, it is temporary and it does not change the fact that the need for cardiovascular protection remains immense. The Vascepa solution is unique, and therefore, the Vascepa potential remains unchanged. Overall, the trend and engagement by physicians and the growing number of patients taking the medication is undeniable, and our excitement level remains high as we look forward to a progressive return to more normal operating conditions. Looking now at Clozaril, our solid first quarter results again reflects its resilience and strong attributes as a foundational product for HLS. Clozaril's patient count in Canada was up by about 2% annualized in the first quarter and is tracking marginally ahead of the overall market. We were encouraged that the March numbers showed annualized patient growth at twice that rate, but the end of the quarter coincided with stricter sanitary measures and the market closing again in Ontario, Québec and Alberta. When we emerge from lockdown, we expect new patient access to Clozaril to trend upwards at a stronger clip. In March, the Québec Ministry of Health announced a change in reimbursement that could limit our access to new patients. I'm talking Clozaril exclusively here. I want to clarify that this regulation is not aimed at Clozaril specifically and is applying to an entire subsegment of the market. Now the important thing to remember is that our large existing cohort of patients in Québec are not impacted by this change and that we are active in finding a way to provide unrestricted access to all Québec patients, old and new, under the new umbrella of the Clozaril CSAN support system. CSAN Pronto, our point-of-care safety blood monitoring device that is aimed at replacing traditional blood draw, which is the biggest barrier to Clozaril adoption, is also expected to help improve patient access to Clozaril. CSAN Pronto is now at 31 discrete location, which is up from 23 at the end of the fourth quarter. The response from practitioner remains positive, and usage is up more than twofold versus the previous quarter. We're starting to experience the potential of this product to bring an essential treatment option to a larger patient population. We're also looking forward to the introduction of 2 recently approved products in our neuroscience table, PERSERIS and the MyCare Psychiatry Lab Assays. Both assets are novel treatment options or clinical tools for practitioners in psychiatry and can leverage our existing commercial infrastructure relationship and reach in the Canadian psychiatric market. Plans for commercializations are ongoing, and we expect to have both in the market in the second half of 2021. With that, I will turn it over to Tim for a closer look at our first quarter financials. Tim?
Thank you, Gilbert, and good morning, everyone. I'll start by taking a look at revenue and product sales. Revenue for Q1 was $14.3 million, up from $13.9 million in Q1 last year. Revenue increased due to higher sales from Vascepa as well as higher royalty revenues. On a sequential quarterly basis, it was another very solid quarter of sales growth for Vascepa despite continued lockdowns as Vascepa sales increased 45% from Q4 of last year, reflecting a 33% increase in prescribers and 40% increase in patients. As Gilbert mentioned, the number of Clozaril patients in Canada increased by an annualized rate of 2% in Q1 while Clozaril net sales in Canada in Q1 decreased 2.9%. The net sales decrease was due to additional trade purchasing that took place late in Q1 last year in response to the early stages of the pandemic. Over time, we expect Clozaril net sales growth to more or less follow the growth in patients. At the end of Q3 last year, we acquired a diversified portfolio of royalty interest on the global sales of 4 different products. Royalty revenues in Q1 from this portfolio were $2.5 million. Royalty revenues in Q1 last year were $2.3 million and were based on sales of Absorica in the U.S. market. As intended from the outside of that agreement, HLS terminated its ownership of the Absorica marketing rights effective December 31, 2020. As a reminder, we expect that the new royalty portfolio will generate adjusted EBITDA averaging just under $11 million annually over the next 10 years or an annual IRR in excess of 20% during that period. In addition to the solid financial return, this acquisition provides revenue diversification, and the stable cash flows from these royalty interests do not distract management's attention from our operational focus on Vascepa, Clozaril and CSAN Pronto and our growing portfolio of products. Shifting now to expenses. Cost of product sales in Q1 was essentially flat to Q1 2020 while other operating expenses of $6.9 million decreased 1.9% from Q1 last year. Selling and marketing activities were $3.2 million, a $0.4 million decrease from Q1 last year, which included certain expenses related to the initial launch of Vascepa. Medical, regulatory and patient support activities and general and administrative costs increased $0.1 million and $0.2 million, respectively, with much of that increase tied to appreciation in the exchange rate. We have kept a close eye on expenses during the pandemic, which puts us in a good position to invest some additional resources this year to support, among other things, education surrounding the inclusion of Vascepa in the Canadian Cardiovascular Society guidelines and increased sales and marketing activities as lockdowns ease. Adjusted EBITDA for Q1 was $6.7 million, an increase of 10% from Q1 last year. This was primarily due to increased product sales from Vascepa, higher royalty revenues and modestly lower operating expenses than Q1 last year. Going forward, we expect continued and accelerating Vascepa sales growth as well as planned increases to support Vascepa as the market opens and then as we expand sales coverage in conjunction with broader market access. Cash generated from operations was $7.2 million in Q1, up from $5.3 million in Q1 last year. At quarter end, HLS had cash and cash equivalents of $23.2 million, up from $20.6 million at the end of 2020. Overall, we continue to have a strong financial position with the $23.2 million of cash and cash equivalents, a $35 million revolving facility that remains undrawn as of today. And under the terms of our credit agreement, we are also able to request incremental loans up to a maximum amount of $70 million to support acquisitions and other growth opportunities.In addition, in 2020, we filed a preliminary short-form base shelf prospectus to raise up to CAD 250 million that is available should the appropriate strategic opportunity emerge. And finally, 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, 2021, to shareholders of record as of July 30, 2021. With that, I'll pass it back to Gilbert for his closing comments.
Thank you, Tim. In closing and I would say in spite of all the constraints, this continues to be very defining time for HLS as we're laying the groundwork for what we believe will be one of leading products for cardiovascular prevention in Canada. Over the past several years, we've identified the key steps required to advance Vascepa towards broad adoption and its peak year potential. Building on 2020's achievement in 2021, our momentum and progress has continued as we have expanded private payer reimbursement to more than 90% of eligible lives, watched Vascepa get added to the CCS guidelines for cardiovascular prevention and then engaged in negotiations with the PCPA regarding public payer coverage. Our top priority for 2021 are to reach an agreement with public payers through sales force expansion, augment our reach of all doctors, treating patients in label with persistent cardiovascular risk and continue the steady deployment of CSAN Pronto. In the second half of the year, we plan to launch 2 products into the CNS market. And finally, we will continue to explore opportunities to expand our product portfolio through other in-licensing or M&A transactions in Canada and in the U.S. That concludes my prepared remarks. At this point, I will ask the operator to please provide instructions for asking a question. Operator?
[Operator Instructions] Your first question comes from Noel Atkinson from Clarus Securities.
First off, you mentioned negotiations with PCPA. Can you give us a sense of that whether negotiations are still tracking to the time line that you had been hoping for before, where you get this basically done by midyear and be able to start getting on the public plans in the second half of the year.
Noel, thank you for your question. PCPA negotiations are indeed tracking. Our -- I guess I can mostly talk about our aim, recognizing that we're only on our end of the process here. Our aim, of course, is to try to get to mutually agreeable set of conditions during the course of the summer and to be in a position to leverage that opening of the market in the fall. I think that would be consistent with the very message we've delivered for more than a year now that gaining public market access between 18 and 24 months following the approval of product is a pretty good result, probably superior to the norm. So we think that given that Vascepa is a superior product, it could lead to this acceptance taking place in the front end of it. But I think that 18- to 24-month period is still notionally where we would like to land, but our aim is to try to make it happen earlier.
Okay. Cool. So secondly, on Vascepa, the script data that you've provided in the webcast, can you talk a little bit about patient retention that you're seeing? So as these early patients have come on to the -- taking the drug, are they sticking through -- are you seeing recurring scripts happening at the rate that you'd like to see?
Yes. I'll try to give a nuance an answer and within the limit of what really we can extrapolate. Some patients will be provided with a script. Those patients can meet a variety of reimbursement conditions, some of which are favorable to a much higher level of retentions and others less so. And what I mean by this is that if a patient gets a script and is covered by a plan that has already adopted the product, well, their out-of-pocket is much more reasonable. The likelihood of them not having to face a steep co-pay is much better. And we noticed that in those cases, especially when they're visible through our copay assistance program, the retention is at least as good as we expected, in some cases higher. What is higher -- is harder to read is, of course, if a patient is a cash patient because they're part of a public plan that has not yet make a determination or they're just cash payer because they don't have any specific coverage, we know that the burden of the full price is making it challenging in terms of retention. So I think some patients will make an educated decision. And they're more likely, if they're publicly covered, to try to estimate and maybe wait for the time at which the drug would be covered, lightening the burden for their out of pocket. So I think that the useful answer is that when conditions -- proper reimbursement conditions are met, we have encountered -- while it's still pretty early, I would say adherence to treatment that is superior to what we thought it could be kind of logical, considering that this is a cardiovascular prevention drug but surprising because these patients are often taking already a lot of drugs, and now we're kind of compounding that pill burden.
Okay. And then the last one from me right now. Could you talk a little bit about like the marketing that you're -- the physician marketing that you're attempting to do here and over the summer into the fall? And is the delay in the second vaccine doses that we're seeing in Canada versus some of the other countries, do you see that that's having any impact that doctors aren't as willing to reopen their offices or patients aren't willing to sort of come back and do more elective activities until they're getting their second dose?
Yes. I guess my comments here will be more of an opinion nature than a factual one. Even if south of the border, we're seeing the benefit of broadening the vaccination base, even if it's only one vaccine, I think the key element is the sanitary measures, right? How comfortable were the provinces, the institutions? How comfortable will they be at loosening some of the restrictions, allowing for the resumption of certain activities now that a certain portion of population has received at least 1, if not 2 vaccine doses. I think that's a key determinant. If the experience in the U.S. was to replicate itself in Canada, I think we will see that happening. There's a lot of hope permeating through the various commentaries from business and political perspective in the U.S. So I think there's no reason why it should be dramatically different in Canada. I think that in the meanwhile, to the front end of your question, it's been a year, 14 months now of adaptation, of creativity. Doctors are seeing fewer patients, 25% to 35% fewer. In addition, as I said, their comfort at prescribing over the phone because not seeing fewer patients face-to-face is lower, right, 35% to 50% lower, that produces the gap that we talked about and that was illustrated on that chart. Now on coming on our side of the equation, there's also some elements that are hampering the effectiveness of our sales force. And our rep productivity is, I would say, good month, bad month, anywhere between 60% to 75% of what it used to be pre-pandemic. That's the number of calls we're doing in relation to the one we would do normally. And of course, these calls that were for 95% of them face-to-face before the pandemic can fluctuate again. It was 45% in Q1. It was down from 58% in the fourth quarter. So lots of shifting elements here combining to either sometimes boast a little bit the picture and -- but in most cases, to reduce and creates a slippage of sort. So the tools that we have comprise also of a lot of virtual-driven means. We've been quite good at -- right out of the gate after the pandemic struck, converting a lot of activity on webinars, whether they were continuous medical educations or a variety of educational forms. We were quite successful in doing so, a, from past experience in managing webinars but also because all the material was ready. This was a launch. We were already ready. In the first quarter, that hit hard. And therefore, that conversion, while it took some retooling, was possible and probably more impactful than it could have been for, I would say, the average product being promoted.
Your next question comes from Justin Keywood from GMP.
Nice to see the EBITDA in the quarter. Just on the public reimbursement, I understand the timing being in the summer, but I'm wondering with the analog and the slide presentation, does that embed scripts from public reimbursement? Or is it primarily just on the private side?
Yes. I want to be clear on the -- what we call the inflection point, right, is a sharp and fairly visible change and steepness of the curve. And it comes from a combination of factor, but clearly and evidently, the most important one is the public market opening. In other words, reaching an agreement that is now being joined by the largest and growing number of provinces over time. And the other component that is a tributary of that market opening is us, as explained, a long increasing our [ DTM ] activity. We're talking of going from 22, 23 sales territory layering on top of that, an additional $50 million or so. So these 2 elements here, one is an enabler. That's the market access. The other one is clearly a driver, and that's the promotional activity.
Okay. And then as far as the number of prescribers for Vascepa to their patients, I believe it was around 700 at the end of Q1. Are there some prescribers that aren't utilizing Vascepa just because public reimbursement is not in place yet? So the question is, are the prescribers -- do there need to be public reimbursement in place? Or are they already prescribing to the patients that have the private reimbursement?
Good question, Justin. It's never that clear cut, right? It's always a marbled picture here. We are trying to be as mindful as possible when we look at -- and when we did remind the physicians that we will detail. We're trying to understand if their clientele at this stage is made of a patient that have a greater access to private rather than a reliance on public drug coverage, right? So this is part of a large pool of information that we need to mine and make those determination because it's pretty clear that publicly covered patients will have a much lower likelihood of getting a script and continuing on the script before their script is indeed covered by their plan. So it doesn't exclude, however, certain cases where a physician will write the provincial drug plan to say in the case of my patient, this is the clinical picture and that drug, in this case, is a necessity. And therefore -- but these are exception cases that we've encountered that we've seen in various provinces. They're not the norm. They're useful because they signal to the provincial authorities that there's a drug that has yet to be the subject of a coverage determination and doctors are aware of it, then the demand will probably grow over time. But that's more the way that these 2 separate worlds evolve. Vast majority of the scripts we're seeing today are for patients privately covered, and doctors are aware that the drug is not covered by public plans. And therefore, they're often not suggesting it to a patient. They're waiting for the public coverage to emerge.
Okay. That's helpful. And I just had one other question. As far as the dividend, just given that today's business has shown an ability to generate really good cash and it is a bit unique for a specialty pharma company to have a dividend, is there any indication that you could see that dividend increasing? Or is the primary purpose of using the cash flow to reinvest in the business?
Yes. I think the territory of the dividend is the prerogative of the Board. We have instituted that dividend a number of years ago, and our narrative is still the same. It's a display of discipline. It shows our ability to grow the business, use cash from operations to grow the business and license product, advance some launches. Yet at the same time, continuing the dividend illustrates that we can actually be also true in the way we manage the business and return some of that benefit to our shareholders. I will not comment on likelihood of any kind of change, upward or downward, on the dividend. I can only reiterate that it has been in place now for a number of years, and we're confident in the future. We continue to follow the same plan, which is to use the cash coming from our operations to support and create growth for the bit of our shareholders. And I guess the dividend is a small component that has a special significance to us and hopefully to our shareholders as well.
Your next question comes from David Martin from Bloom Burton.
First question, the guideline inclusion, I'm wondering, a, has that accelerated your discussions and negotiations with PCPA? And then the second element to that is, how do you use that commercially with the doctors? You mentioned that 15 other countries had Vascepa in their guidelines already. Are there doctors that were waiting for the Canadian guidelines? Are you now able to promote guideline inclusion where you couldn't before? What does it mean on the ground?
Yes. David, and thank you for your question. The aspect of the guidelines, first of all, we're extremely happy. We were waiting and hoping for them, and we're more than content with the overall outcome. They're nice, crisp and very clear. And I think the effect of the guidelines will manifest itself over a long time frame, right? There will be something that will start to be visible very early on, but of course, as the masses of physicians that have yet to be exposed to the promotional activity of our sales force and that will grow as we expand the sales force, it will continue to get. Guidelines, as we mentioned in the -- earlier in the call are truly the most important, most independent vantage point that compares a therapy with everything else that could be done otherwise. And that's something that we can do ourselves, right, because we're HLS. We're the sponsor. We brought this product to market. And while everything that we've been forward is factual, it's always looked at with a certain grain of salt and with critical vantage point. And even an approval by Health Canada is deemed to be positive, professional and comprehensive. But Health Canada doesn't comment on where that drug fits in the clinical environment. So that's the benefit of the guidelines. It says having considered everything and being at the forefront of innovation, here's what we think. And this is coming from independent experts in all walks of life and specialties. So great benefit there. The guidelines is at the heart of what we will discuss with physicians over the next 3, 4, 5, 6 months, right? We were getting ready. But having not seen the guidelines, we couldn't exactly prepare too much ahead of time. Once the guideline came out, it became the vital content that has since been integrated in everything that we do. So face-to-face detailing but also CME and everything that we help accomplish in disseminating knowledge about the product. So it is permeating all aspects of detailing, and it's such a good confidence builder that -- I use the term groundswell. I think that's what it does, right? It kind of lifts the whole future, everything else kept equal.
Okay. Switching gears over to Clozaril. You mentioned you now have 31 Pronto sites. First question on that is how many sites do you eventually see Pronto being in? And the second thing is, we haven't yet really seen a pickup in patients. Like you're continuing to grow them but at a similar pace as before. Is it just a matter of time before you start to see the impact of expanding the market? Or is this going to be a slow grind that may be harder than what we had expected?
Yes. First, to your first question, David, you can think in terms of hundreds.
Okay.
So sites, equipment is deployed. I'm not going to say there's 100 or 200 or 300, but it's that kind of scale. With respect to patients, just to ask you for one more quarter of patients, stay tuned. I think that Q2 will start to show the very concrete benefit of Pronto. And I think we forecasted that the growth in the market will be a component. Our ability to reintegrate patients into the treatment that would otherwise didn't want to go undergo clozapine therapy because of the traditional blood draws. And I think it might also show the competitive potential of this offering versus the traditional. And therefore, it could bring existing clozapine patient under the realm of Clozaril treatment over time. I think that Q2 will start to lift the veil on that.
Okay. And my last question is a follow-up to Justin. You mentioned something about 22 to 23 sales territories now and adding $50 million. Is that a geographical expansion? Or is that going from covering mainly specialists to specialists and primary care? Is that all going to happen this year? And are you still thinking of maybe using a third-party contract sales force for the primary care sales?
Yes. First of all, we're currently present in every single region in Canada. And therefore, the addition will be on the same footprint, but it will add prescribers that are not today currently in the portfolio of one of our reps, right? So it truly is going from, let's say, notionally, 2,500 doctors. In the future, at maturity, there might be 12,000 doctors, right? So it truly expands the people we're covering, but we are today in every single regions already. Sorry, your -- remind me, your second question was in relation to...
Is it going to go from the 22 to 23...
This year. Yes, yes, yes.
At all this...
Yes. Our aim is to do it this year, correct, yes. Sales force expansion happening in 2021. And the base case all along has been to do it ourselves with our own people. What we've allowed ourselves to do and is still ongoing is a possibility to join force with an existing participant in those physicians' office, not a contractual sales force.
Okay. And when do you think you'll finalize that decision?
Well, if you think of the sequence here, public markets opening becoming really the ultimate gate, if this happened during the course of the summer, it means that -- I would say at the latest in the fall, that sales force would start to be deployed one way or the other, right? The decision of whether it's going to be in-house or external is -- I don't mean this is secondary. The timing regulates some of our decisions and the process to constitute that deployment.
Your next question comes from Rahul Sarugaser from Raymond James.
Actually, most of my questions have been answered. So I've got 2 relatively smaller ones. So the first one is around your cost of goods. Recognizing that cost of goods came down quite materially and particularly given that revenue was essentially flat when you subtract the royalties, how should we be thinking about cost of goods as a proportion of total route going forward particularly as Vascepa revenue ramps.
Tim?
Certainly. Thanks, Rahul. I'm happy to help with that. Obviously, cost of sales will increase as sales increase. We're currently very fortunate to have a very low cost of goods on Clozaril. It's -- we're able to produce that quite efficiently. We will see higher cost of goods on Vascepa. So it will grow but it will be in line with the sales growth.
Terrific. And then my second question is, again, a little bit obscure. So we saw recently the appreciation of the Alzheimer's market with Knight's acquisition of Canadian rights to Exelon. So do you see any synergies between your current CNS drug portfolio. And of course, your CNS focused sales force and the Alzheimer's drug market, any significant opportunities there?
Yes. Thank you very much, Rahul. Good question here. They're both in the psychiatric field. However, when we look at the setting of care, they're dramatically different, right? Alzheimer's disease population is all often confined to retirement homes or specialized institutions of that sort. The psychiatric patients we're treating are usually schizophrenic or bipolar disorder, either treated in a physician's clinic but most often in the case of schizophrenic, treatment is initiated in an institution. So different settings of care. We don't think that in the case of Exelon, it would be or would have been fitting to our existing sales force and, therefore, like synergies. Contrary to PERSERIS and definitely contrary also to the MyCare Psychiatric Assay that is catering to the needs of the physicians that are treating schizophrenic patients, whether they're first-line or refractory, or bipolar patients that are not stabilized and for which those constant assessments are needed.
Your next question comes from Chelsea Stellick from IA Capital Markets.
I have a couple of questions. First off, I'm just hoping to grab some additional color on sort of the guidance for patient uptake for Vascepa. I see that you maintained your projected peak patient count. But if you could just provide some additional color on this current quarter and sort of the subsequent revisions to the range and the number of prescriptions, the 5,525 that you have in -- this quarter post launch, just kind of shy of the 6,000 to 10,000 range that was provided previously. And sort of how you anticipate on catching up in the later quarters, is this sort of related to vaccine rollouts, et cetera?
Chelsea, thank you for your question. Your question is a very tough one. That's why I used -- I think I used the word ingrate when I was talking about forecasting in the current environment. In other words, we look backwards and we can explain what happened, and we can patter our back if the growth has been strong, like it's been in the first quarter in spite of all of this, this noise and those disruptions. And I think when it comes to looking forward, that's what we're facing. And that's why we're adopting this notion of a cone of some sort, but even now this notion of a cone is predicated on certain things continuing to improve. In other words, a trend of improvement rather than a trend of deterioration. When I look at the next 2 or 3 quarters, what I expect and what I think will happen is more the shape of things to come than what will actually be truly embedded in the, call them, the absolute numbers. And the shape of things to come is what we keep referring to as the inflection point, right? The inflection point represents momentum, represents a movement and a wave that is the sum of more doctors getting into the treatment because we're detailing more doctors and because the news is reverberating and now thanks to the guidelines and all that, that stuff. It's also more doctors that are understanding that it's not about just 1 or 2 patients, it's about all of their patients. If a standard of care is well understood, it means that you don't discriminate between a patient that is very ill and one that may be very ill next year. You jump on the prevention to it right away. So I think that, that inflection point will be triggered by the public market expansion and our virtually tripling of the sales force impact. But the guidelines and the private reimbursement that is kind of purifying our gross-to-net process will be contributing factor that will compound all the whole thing. So I realize that I'm not giving you a precise answer because we've decided not to give more guidance than what we've put in that slide, and that defines a few boundaries. The condition is that the market is not going to plunge again. And we said that before, right? We thought, in the spring of 2020, that the market will only improve beyond that point. Well, we've been taken for quite a ride since, hence, a bit of prudent step that we're adopting now. But there seems to be -- we mentioned the 5 catalysts. I think that the vaccination program in Canada give us hope. You could pick a point on any part of that cone here, and I think that it will translate what I'm saying. That's the inflection point and a path towards the peak year sale. If we get that uptake, and that stems from those developments coming in the summer, the product will be a very material product with hundreds of thousands of patients. The exact path for us to get there is the one thing that we just haven't found a way to define with certainty, but we think that the end outcome is a pretty sure thing. And that's because we have laid down the impetus here and the prior example of life-saving drugs and major cardiac evac saving drugs.
I guess just kind of on top of that, sort of in the slide above, just looking at more color on how you estimate the gap in patient visits between the actual new patients and then the expected new patients if there's no pandemic, how much uncertainty would you expect for this patient gap that you estimated, for instance?
The chart on the right here is a chart that we didn't produce. It was produced by expert and referenceable organizations. And the intent here was not to try to say where is this curve heading. It really was -- the intent really was to say, here's a gap. Here's what we're trying to work against as it happens. And this is a vision on looking backward. Where are we today? I think that gap is hopefully going to be closing in the next 3 months. So it begs 2 questions, right? Returning to normal condition makes us more efficient, makes doctors more efficient. That in itself has some benefit. The second question is, well, what's happening with all that -- should we call it a backlog? Is it a reservoir of patient? We think it's not a reservoir of patient, but it will yield increases in doctor visits. In other words, there's going to be more coming back but not the totality of it coming back. So that was more the intent here to try to show here how we've done with the closest thing to a baseline of activity and to show that how we've done the stability of our performance in this erratic and fairly chaotic environment is hard to negate. And to provide a vision of hope that when things get back to normal, there should be a lift, and that lift is of 2 nature, right? Just normal activity returning, better proficiency -- better efficiencies and also maybe a little extra from all those patients that have missed appointments and have delayed their recourse to novel therapy over the last year.
And just the last question from me. Sort of given the recent M&A activity in the spec pharma space, sort of what you alluded to and then also Valeo, just kind of wanting to gauge your appetite on adding to your pipeline for the -- for 2021.
Yes. One of our focus, we always keep an eye open on existing therapeutic areas, making sales force more productive, making sure that the key assets in each of those sales force is not -- we don't distract ourselves from the benefit of making Vascepa the biggest possible product that we can, but there's always some running of benefits of adding products in the bag. So that's one element. It's -- in the Canadian environment, it's not easy. Price controls make it hard to find novel products that will get the favor of those various agencies as a preview to launches. But we're still looking all the time. That's how we added MyCare and how we added PERSERIS to the mix. Our focus continues to be on the possibility to significantly expand our presence in the U.S., and that would be under the form of an existing commercial platform. And that platform could be the base of future additions that in themselves could bring growth and possible synergies as well. In doing so, in that fairly segregated fashion, we can continue to maximize the outcome in Canada with those products being launched yet continue request for more scale, more scale, because more scale gives more means, gives -- also gives us a visibility to a much greater number of stakeholders. I think we've shared also openly our intent to eventually be traded in the U.S. Well, we'll do so when those elements of scales are being met to a certain level, to a minimal level. And I think that HLS as a company will continue to become more and more palatable and an exciting story not only because of Vascepa and Clozaril but because of those specific subsequent deployments that we might do in the U.S.
Your next question comes from Tania Gonsalves from Canaccord Genuity.
Most of them have been answered. So just a couple from me here. Firstly, I'm wondering if you can provide more color on when is the best time to introduce or suggest Vascepa to a patient in the course of that, that means in-label. Would it be at the immediate time when they actually enter the label requirements? Or several years when they've been living with elevated CV risk? And why not that is coming out of the COVID pandemic? I think you made some previous comments about how many patients have delayed seeking therapy. Has this created any kind of bolus in your addressable population coming out of the pandemic, where perhaps patients are going to be more amenable to starting a new therapy having just entered the label?
Thank you very much, Tania. It's a very good question. It's a foray to current and longer-term strategies and the psyche of the physicians as this thing evolve. If you think of statin as an example, when statins were first introduced, they were used in the population at greater risk because their bad cholesterol is through the roof. Over time, there was a recognition that the lower the number, the better, right? So the threshold for LDL levels kept going down and down and down. And the benefit of the statin kept being reflected in the reduction in cardiovascular event. So with Vascepa, it's a different situation. We're not -- as we say, we're not treating to a number, right? We're not reducing LDL. Triglycerides are marker of risk but even low triglycerides, the presence of a certain level, 135 or 150 and up here, is sufficient to mark the risk. And therefore, when using Vascepa, you don't necessarily see a biomarker result. So it has to come from the full appreciation and understanding, the clinical demonstration that there's a reduction in all those 5 major cardiac events, including that when you use Vascepa for anyone, anyone that is meeting 1 of the 2 population criteria. So established cardiovascular disease, that's usually pretty straightforward. We all recognize that the risk is greater in them. They're more at the center of the bull's eye. But all those diabetic patients that are -- have stabilized their cholesterol with a statin, have elevated triglyceride and at least one risk factor. REDUCE-IT has shown the benefit in an undeniable way. So waiting in prevention, waiting very rarely leads to anything good. But it's not going to happen over the year. I think that in similar fashion to the statins, I think that the clinicians will first prioritize patients with established cardiovascular disease or the ones -- the diabetic patients that have more than one risk factor and are kind of more obvious in terms of their risk. The other bias, and I'll stop after that, is that clinicians now are mindful of the reimbursement status of the patient. So that creates a selection of sort right now, right? You could have a patient with a somewhat higher perceived risk. But if the patient is publicly covered, the doctor will probably wait until the coverage occurs. In the case of the private, it's an easier decision to make.
Okay. Understood. And then following up on David's previous question, not to harp on this, but in terms of the sales build-out, are you going to wait until you have public reimbursement before starting to hire that 50- to 55-person additional sales team? Or will you start adding them in anticipation of gaining public reimbursement?
Yes, it's more the latter. It's both an art and a science to try the dovetail process is one that we control and that we don't. Ideally, they would happen in sequence, but it's more the latter. The planning and some of the operational steps are being taken as we speak. Our aim is to come to a positive conclusion on the negotiation and to see those elements then converge. But the planning and the execution of the sales force expansion is going to happen on a time frame that we control. And if something is going to give, it's not going to be that one.
Understood. Okay. And does this occur -- this jump in your sales team size, would this occur all at once? Like would you hire all 50 people and have a training program in place that they all go through and they are all deployed? Or is this more of a gradual build?
No, it would -- most of the time, you want to do this in a clear, one-shot fashion. Otherwise, you end up having to re-draft territories time and time again, and that's very counterproductive. We want to create strong relationships with the prescribing physicians and have some continuity here. And too many shifts in sales force configuration can be disruptive. So it would be a kind of a one bang.
Excellent. And then lastly here, just some housekeeping question. I've noticed that your share-based comp line has been a little higher than normal over the last 2 quarters. Is this a new run rate? Or like where should we see that line stabilize?
Tim, do you want to comment?
Happy to do so. Thank you, Tania. Yes, the last couple of quarters have been more representative. I think if you go look at the year ago period, there was -- there were some income inclusions based on the share price decreasing that resulted in a benefit or an income inclusion of share-based compensation. So what we're seeing right now is probably more representative going forward.
That's all the time we have for questions today. I'll now turn it back to Gilbert for closing remarks.
All right. Thank you very much, Colin. Thank you. And thank you all for your participation on today's call. We look forward to reporting to you on our progress throughout the year. Goodbye. Have a good day.
Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.