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Good morning, and welcome to the Q4 and Fiscal 2020 Financial Results Conference call for HLS Therapeutics. On this morning, we have Gilbert Godin, the 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- and 12-month periods ended December 31, 2020. 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 Q4 and fiscal 2020 results 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 could affect results and 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, sir.
Thank you, operator. Good morning, everyone, and thank you for joining us. On our call today, I will start off with a review of key Q4 and 2020 operational highlights. Tim will follow with a more detailed look at our financial results, and then we'll hold a Q&A session. Q4 was a strong finish to a year, in which we made progress on launching significant organic growth drivers for the business despite the challenges posed by the COVID-19 pandemic. Our financial results reflect the resilience and the strength of Clozaril. As well as the Q4 revenue contribution from our new royalty portfolio, together, these serve as our foundational products. The reliable cash flow received from these products enables us to invest in the expansion of our product portfolio and in the significant organic growth potential of transformational products such as Vascepa. With a quick look at the headline numbers, Q4 revenue was $16.5 million, adjusted EBITDA was $8.7 million, and cash from operations was $5.8 million. Tim will look at quarterly and annual results in more detail, but we are very pleased with these results, especially in light of the impact from the pandemic. The investment we're making in the Vascepa launch and the commercialization of other products in our portfolio. Throughout 2020, we made great and constant progress on the launch of Vascepa. Over the past several years, we have laid out the key steps required to advance Vascepa towards broad adoption and its peak year potential. In 2020, we achieved a number of these key milestones and with each step, our confidence in achieving that peak year sales level has been growing. Among those milestones, Vascepa was granted data protection for 8 years, CADTH recommended that it'd be reimbursed for patients with established cardiovascular disease and the PMPRB provided its notification at Vascepa's introductory reprice submission is compliant. Finally, as of today, we have reached agreements for the reimbursement of Vascepa for more than 90% of the lives covered under private payer health plan in Canada, as approved for all patients studied in the REDUCE-IT trial. These are all significant achievements in the path towards our peak year sales estimates for the product and have occurred along time lines consistent with those we have outlined in the past. Quarter-to-quarter, the number of patients being prescribed Vascepa increased by more than 70% in Q4 to more than 2,000, and the number of prescribing physicians increased 55% to over 550. These growth numbers are also showing that we are gaining depth with prescribers as the average number of patients per practitioner is increasing. We're pleased to see this type of growth over the Q3 period as Q4 had this rising second wave of COVID, which led to strict lockdown in Canada's 2 largest provinces, among others. While COVID-19 has continued to present challenges in reaching physicians and physicians reaching patients, we are finding ways to make meaningful contact and are succeeding in raising awareness for the product with key opinion leaders and other prescribers. All things considered, we are very encouraged from what we see both in terms of the engagement and response from practitioners and in terms of the trends for prescribers and patient uptake. The important thing to remember is that as our cumulative efforts to reach prescribers add up to a smaller than expected, but sufficient level, we have growing evidence that the communication is productive and Vascepa's benefit results in usage that is consistent with the life-saving cardiovascular breakthrough product. 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 its indication. And as the only drug in its 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 miss 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 shows weekly script data through February 2021 since the launch of Vascepa in February 2020. So actually, a full year of weekly data. The big takeaway here is twofold. First of all, the steady growth and momentum in the number of scripts written since our launch, mostly through hardship. It reflects the creative and better mind effort of our team to reach physicians and raise awareness of the product during a period when in-person visits with practitioners have often been forbidden and when patients visit to the doctor have been significantly lower than in previous years. Secondly, while we shouldn't over read the data, the general trend of the data is now curving up, which could be a precursor of the inflection we should be seeing in 2021 as the market continues to open and the possibility of seeing Vascepa occupying its right place in prescribing guidelines. The next slide is an update to the one we shared on our third quarter call, comparing the uptake of Vascepa to the post-launch script performance of 2 other cardiovascular drugs, Eliquis and Pradaxa. As a reminder, all analogs are imperfect, but they are useful in helping create a sense of perspective. These 2 drugs are oral anticoagulants, and the oral anticoagulant market is a relevant analog for Vascepa. While they have a similar aim in terms of cardiovascular risk focus, a similar size potential and an overlap of health care practitioner, we include their historical experience here for illustrative purposes only. A quick recap of what that slide shows. Well, first of all, as we look at the first 4 quarters, it illustrates that product uptake is typically slow in the initial periods post-launch as companies engage with the few but the very influential specialists and key opinion leaders. Subsequently, typically during the second year, the uptake curve displayed the inlet point that I alluded to earlier, and an acceleration of the rate of prescription that is corresponding with the opening of market access on the public front, in particular. Secondly, on the far right side of the slide, we've posted where those 2 analogs ended at maturity in terms of patient counts. And we've done so to put those numbers into perspective with our anticipated peak year potential of 130,000 to 150,000 patients which is a base for our 275 to 325 peak year sales target. So what are the takeaways from this slide? First, it suggests that in spite of everything in the environment. The very good start of Vascepa continues. It also suggests that an apparently slow start can still result in a very robust -- robust patient penetration number at peak year. You will note that the number of scripts for Vascepa in the fourth quarter was about 4,050, which is at the lower end of the range we anticipated for the period. With the second wave of the pandemic, and the strict lockdowns in Ontario and Québec occurring in that period, we're actually quite pleased to have made a range despite that big headwind. For the same reasons, we have modestly adjusted the low end of our range for the next 2 quarters -- the next 2 quarterly periods, given the severity of the related lockdowns, but that may change as vaccination progress and -- or on the other side, if a third surge was to occur. The course that COVID-19 takes in the coming months and quarters is unknown. But as we have done until now, we will work as best we can to mitigate or neutralize those external factors. In this year of turmoil, we try to stay focused on the big picture. And that is that while the effect of COVID-19 is significant, it is transient, and it doesn't change the fact that the need for Vascepa is immense. The Vascepa solution is unique, and therefore, the Vascepa potential remains unchanged. As stated earlier with the milestones we have achieved with the product during 2020, and with the adoption rates we are seeing reflected in this chart, we remain confident in our ability to achieve our $275 million to $325 million peak year sales target at this stage of our launch. With more than 90% of private payer covered lives now eligible for reimbursement, the market is progressively opening up as we predicted, and we now have approximately half of the eligible patient population with access to reimbursement for the product. On the public payer side, which is the remaining 50% of population, our negotiations with the pCPA have begun and we're hopeful they could be completed during the third quarter of this year. In addition, with the prospect of updated cardiovascular guidelines in the near future, we're hopeful that Vascepa will gain the same degree of medical and scientific recognition in Canada that has been granted by leading medical societies in the United States, Europe and Asia. Looking now at Clozaril. Q4 and fiscal 2020 results reflect the strength and the stability of our foundational product, which continues to perform well in spite of a very fluid environment. Clozaril patient count and sales in Canada are up about 2% in 2020, reflecting the essential nature of this medication, and the significant difference it can make in the lives of those suffering from treatment-resistant schizophrenia, or TRS, a chronic and serious condition. New treatment initiation has been dramatically reduced during the last year. So the fact that we continue to grow patient numbers speaks volume about the product and the service organization we have in place supporting it. As we emerge from strict lockdowns, we do expect new patient access to the product will trend upwards at a strong clip. We still remain at the early roll-out stage for CSAN Pronto, our point of care, safety blood monitoring device, but the response from practitioners is enthusiastic, and we continue to expand the number of sites where the product is deployed. CSAN Pronto is now at 23 sites, which is up from 12 at the end of Q3. We have broadened our approach, which initially focused on the largest centers to now include smaller but nimble treatment centers that have shown a need and an ability to adopt and implement the technology. CSAN Pronto addresses the #1 barrier to clozapine treatment, and that is a demanding safety blood testing regimen. And we remain very optimistic with the potential of this product to bring an essential treatment option to a broader patient population. In the third quarter, we added to our foundational base of product with the acquisition of a long duration royalty portfolio, consisting of 4 diverse products that are or will be marketed globally by health care leaders, Takeda, Boston Scientific, Pfizer and once launched, Sanofi Genzyme. Tim will provide some details on progress to date in his section, but so far, we're quite pleased with the financial contribution from the portfolio. Q4 saw activity with a number of other products in our pipeline. With respect to Trinomia, we received a notice of deficiency from Health Canada that will, among other things, require that we wait for an independent clinical trial resulting -- result involving the TRI-COMBO product. This ongoing trial is expected to be completed at the end of the year. Following the results of that trial, we will determine the path forward for the product. On the positive side, 2 products in our neuroscience stable, PERSERIS and the MyCare psychiatry lab assays, were approved by Health Canada in the fourth quarter. Both assets are novel treatment options or clinical tools for practitioners in psychiatry and can leverage our existing commercial infrastructure. It can also leverage relationships and reach in the Canadian psychiatric market. 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 Q4 financials. Tim?
Thank you, Gilbert. Good morning, everyone. Starting with revenue and product sales. Total revenues of $16.5 million for the quarter and $56.1 million for the year were up 18% and 4%, respectively, from the same periods in 2019. Product sales grew by 2% in fiscal 2020, led by the 8% growth in product sales in Canada. These results reflect the resiliency of the company's Clozaril franchises, particularly in Canada, as well as the introduction of Vascepa in Canada. The number of Clozaril patients in Canada increased 2% year-over-year despite the challenges posed by COVID-19 in terms of patients seeking and receiving new treatments. This Clozaril product sales growth was strongest in Q1 due to additional trade stocking at the start of the pandemic. For Vascepa, the growing base of prescribers, patients and prescriptions over the course of the year resulted in growing Vascepa product sales, with Q4 sales 42% ahead of the previous quarter. Absorica royalty revenue for 2020 was $8.1 million, down $1.5 million from 2019. As we stated we would do, we terminated our ownership of these marketing rights effective December 31, 2020. As a result, the $2.3 million of Absorica royalties in Q4 2020 were our final Absorica royalties. Overall, this transaction served us well. As Gilbert mentioned, on September 30, 2020, we acquired a diversified portfolio of royalty interest on the global sales of 4 different products. Royalty revenues in Q4 from this portfolio were $2.3 million. The acquisition included an entitlement to the royalties receivable for Q3 2020 that were estimated to be $2.0 million which was included in the asset purchase price accounting allocation. Actual royalties related to Q3 that were subsequently received by HLS in Q4 were in excess of the estimated acquired receivable, thereby resulting in a realized gain of $500,000. Adding together by Q3 and Q4, the total royalties already received or receivable by HLS from this portfolio for that 6-month period from July 1, 2020, to December 31, 2020, were $4.8 million, tracking ahead of our company's expectation and comparing very well to the $8.4 million generated by the portfolio for the trailing 4 quarters up to when we acquired it. We continue to believe the transaction has great potential to drive steady and reliable cash flows for the business. We expect that this royalty portfolio will generate adjusted EBITDA, averaging just under $11 million annually over the first 10 years and annual IRR in excess of 20% during that period. In addition to the solid financial return, this acquisition provides revenue diversification and the stable additional cash flows from these royalty interests do not distract management's attention from our operational focus on Vascepa, Clozaril and our growing portfolio of products. Shifting now to operating expenses. The largest increase in operating expenses was for selling and marketing related to the investment in the launch of Vascepa including the addition of 30 customer-facing rules at the start of 2020. There is also an increase in general and administrative costs in Q3 related to CEO transition costs. The cost of product sales increased in fiscal 2020 as a result of the introduction of Vascepa and CSAN Pronto in Canada as well as additional costs related to expanding the Clozaril product lineup. With the pandemic impacting our ability to gain access to the relevant health care institutions, in order to roll-out CSAN Pronto for much of 2020, we also incurred some obsolescence charges in Q4 for CSAN Pronto test strip inventories as these carry relatively short expiration date. Adjusted EBITDA results were strong in Q4, up $1.5 million over Q4 in the prior year due to the addition of the new royalty portfolio as well as product sales growth in Canada. As was expected, adjusted EBITDA of $24.1 million for fiscal 2020 was $7.5 million lower than in 2019, due primarily to the investment in the launch of Vascepa as well as CSAN Pronto. Cash generated from operations was $5.8 million in Q4, an increase compared to the cash generated from operations of $2.3 million in Q4 of the previous year. For the full year, cash from operations of $9.3 million were lower than in 2019 by $17 million, reflecting the investment in our portfolio of products just noted, including the additional working capital investment for Vascepa. At year-end, HLS had cash on hand of $20.6 million compared to $47 million at the end of 2019. Factors impacting the change in cash balance since the end of 2019 include increased selling and marketing costs related to Vascepa's launch, the initial inventory purchases for Vascepa, the cash on hand that was put toward the purchase of the royalty portfolio and a $3.75 million milestone payment to Amarin when Vascepa received 8 years of data protection in Canada. Overall, we continue to have a very strong financial position with the $20 million of cash on hand at year-end, a $35 million revolving facility that remains undrawn as of today. And under the terms of our existing credit agreement, we're also able to request incremental loans up to a maximum amount of $70 million to support acquisitions and other growth opportunities. In addition, in May 2020, we filed a preliminary short-form base shelf prospectus to raise up to CAD 250 million, that remains available for a period of 25 months 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 June 15, 2021, to shareholders of record as of April 30, 2021. And with that, I'll pass it back to Gilbert for his closing comments.
Thank you very much, Tim. In closing, this continues to be a very exciting time for HLS. Q4 reflected solid continuation of the progress of the roll-out of Vascepa, our CSAN Pronto implementation, and we also saw the benefit of the royalty portfolio as a foundational driver of cash flows for the business. The progress for Vascepa can be measured in the undeniable engagement by physicians and the growing number of patients, addressing their cardiovascular risk factors by taking the medication. Had the pandemic not interfered at precisely the time of our launch, there's no doubt we would be further along the curve with our roll-out, but our team continues to find creative ways to reach physicians and raise awareness for this product, of which there is a tremendous need for. When compared to recent launches, our numbers are showing quite well, and our excitement is growing as we experience a progressive return to more normal operating conditions. Our top priorities through 2021 are to continue to successful -- the successful launch of Vascepa and the steady deployment of CSAN Pronto. We also look forward in the back half of the year of bringing other new products to the market to provide new and novel therapeutic options for patients and practitioners dealing with challenging medical conditions. That concludes my prepared remarks. At this point, I will ask the operator to please provide instructions for asking questions. Thank you. Operator?
[Operator Instructions] Your first question comes from Noel Atkinson from Clarus.
Well done in Q4. First off, I was wondering if you could talk a little bit about what you're seeing for Vascepa co-pay subsidy trends? So you're starting to see acceleration here in new patients coming on board, and you're also seeing more private insurers coming on board for reimbursement?
Certainly. Noel, thank you for your kind words. The -- I think what we expect to see in the next 2 quarters is an expansion, of course, of the usage of the brand, but also the expansion of the net sales. And that visibility will come from 3 things: continued increase in prescriber, therefore, more patients, but also penetration of each physician's practices. And that's the ratio we alluded to in the script earlier. The other element, not to be neglected, as you pointed out, is that as we are gaining now more than 80% -- having reached more than 80% -- 90% of all privately covered lives here, what we were first subsidizing through right -- an appropriate kind of patient financial assistance program, our contribution to that will diminish as the product is more and more covered by those insurers. And what that amounts to is, of course, an improvement in net price by a reduction of our gross to net. So I think that these 3 factors will combine will become more and more apparent. We think that, typically, in the first year of the launch, the focus should be on what we've been commenting on. And that is who's taking the product in their own hands, prescribing them to their patients and the velocity at which that progression occurs. And that's why we've been spending, especially the bulk of our time, talking about this progression in prescriber -- patient prescriptions overall and charting goes against competitive products.
Okay. And then -- so on the wholesale side. So in terms of inventories to distributors, do you see robust inventory still at those distributors? Are you now starting to see a more regular cadence of reordering?
Yes. I will ask Tim to comment on that one, how wholesale stocking is actually following or leading the demand. Tim?
Thanks, Gilbert. And thanks, Noel. Happy to report that we're seeing very regular cadence of orders from all of the key wholesalers, and it looks like it's tracking with the increase in demand very nicely.
Great. And then finally for me, just if you could talk a little bit about your plans for sales and marketing investment in 2021? So you're still having a bit of a COVID headwind probably on activities, at least for the first half of this year, but you're also launching PERSERIS and probably ramping up CSAN Pronto activity, too. So if you could talk a little bit about that, that would be great?
Yes. I'll talk in fairly general terms here. But I think you'll obviously relate to the conditions and the reasons why we're proceeding in that fashion. First of all, we're -- we continue to saturate the investments that are most productive. We've been selectively, I would say -- I wouldn't say pull back, but we've been deferring certain expenses that will be much more productive when face efficient directions resume. So overall, our level of spending -- and of course, there's been a lower level of spending because our people are not in the field. So travel-related expense typically have been trending down. We've been recycling in part some of those spending into other more adapted means. But overall, I think -- and Tim could have tested that, the spending was lower than anticipated. Some of that is just because we couldn't be on the field. And some of it is because we judged that it would be the smart way to defer some of those spending until the market more fully reopens and that we get the full rental impact of those expenses. So I think that you should expect to see those expenses to get to the normal expected levels as especially Q2 and more probably Q3 resumes. And this would apply to both cardiovascular and CNS, in particular.
Okay. One more question here. Just in terms of the your sales staff going into the doctors' offices and hospitals and that sort of thing. Do your sales staff qualify as essential personnel for early vaccinations at all?
They do not. They do not. I don't think that -- I mean, there might be some regional subtleties here that are escaping me, but I don't think that they do. Their interactions with the doctors are regulated by the physicians themselves. In other words, ultimately, a physician or their overarching institutions may elect to open up the interaction and permit the interaction with industry participants. And that ultimately is a decision that they make based on their needs. And some doctors will deem that being appraised of the latest innovation is of importance to them. And in those cases, in full compliance with whatever requirements could be in existence at those institutions or in those provinces, we do meet with those doctors on their terms. So I hope this gives you a sense of when we can come into play. It changes, I would say, on a week-to-week basis. It's very regional in nature. I can only praise our regional managers that are kind of juggling, the tools in the toolbox, the various constraints or opportunities that present themselves. There's no rigid game plan. There's just, I would say, a series of strategies and tools and tactics that we implement in nimble fashion on a case-by-case basis.
Your next question comes from Tania Gonsalves from Canaccord Genuity.
Okay. So to start with Vascepa here. Could you talk to maybe the impact of seasonality that we can expect in Q1? Just -- and we're not alarmed, if sales do decline quarter-over-quarter?
Yes. I can give a -- yes, I would say, a snippet of it. In terms of what we would call a prescription demand, there shouldn't be any actual seasonality in its pure sense, right? There's nothing in the winter months that should change how doctors prescribe Vascepa, it's not like an antihistamine or product that are season sensitive. What we're seeing more commonly in the first quarter are more induced by the trade, buying practices and maybe I will ask Tim to comment on those elements as it pertains to Vascepa, but any other product in our portfolio. Tim?
Thanks, Gilbert. And thanks, Tania. I think consistent with the earlier comment about the wholesale trade activity, we're not seeing any phenomenon like that on Vascepa. So I would expect that the -- from a trade stocking, it'll follow very much with the demand growth that we're seeing right now.
Excellent. That's good news. Okay. Perfect. And then secondly, on public reimbursement. You provided that private reimbursement has come along faster than expected. Given the pharmacoeconomic argument in favor of Vascepa, do you think there is a chance that public reimbursement will also be granted sooner than you previously expected, following the completion of the PCPA negotiations in Q3?
I would hope so, but I don't want to take my dreams for realities here. I think that the empirical evidence has been that drugs will gain public reimbursement any time between the 18th and the 30th month post commercialization. Now the more a drug is deemed essential and has a strong clinical track record, the earlier this could happen. So 18 months would put us essentially smack in the middle or towards the end of the third quarter. That is still the optimistic view. If we get it earlier, should it be, and we'll be very happily -- very pleased of that outcome, but we can't predict. These are negotiations, and they usually are following a process that we do not dictate. So we're active participants in the process. With respect to the outcome, we're kind of sticking to the view that it could happen and allow for provincial plans to opt-in the outcome of that negotiation in the back end of the year.
What's the typical lag time between the pCPA issuing a positive recommendation in the provinces opting in?
I don't know that the there -- there's a lot that has been commented upon. I think that from my understanding of that process, that template, right, that, that agreement is one that every individual -- publicly funded plans. We're talking about prevention plans, but any other publicly funded plan can opt into, they're not obligated to. But typically, there's a pattern where the larger provinces are often leaders in getting on board. So it's not uncommon from Ontario, Québec, BC, to be at the forefront and for the other ones to follow suit, but it's not a definite pattern. It's more of kind of an anecdotal evidence that I've experienced.
Understood. Okay. And then just quickly on Clozaril here. I'm sorry if I missed it in your prepared comments. And I think I read something in the MD&A about expanding the Clozaril product lineup for more dosing options. Could you provide some color on what this relates to?
Yes, I would call that as a minor development, but one that is a reflective of our intent to be there and satisfy every possible needs. We were in a situation in Canada where we were commercializing Clozaril with 2 dosages, a 25-milligram and 100-milligram. Now as you can expect, patients can be dosed to the tune of anywhere between 200 to 900 milligram per day, which would mean that they would have to juggle a pretty heavy pill burden. So we've decided some time ago to match all the available dosages on the market by developing and integrating into our offering a 50-milligram and 200-milligram. So you can imagine that this would, in the worst cases, divided by half the daily number of pills that the patients will have to take. So I think it's something that some would qualify as tactical in nature, but the focus was on the patient need.
Understood. Okay. Perfect. That's good insight. And just a housekeeping question here. I think you mentioned that Clozaril patient count was up 2% year-over-year for full year 2020. What was this number in Q4 specifically?
I would have to check. It's been -- my recollection is that has been positive through every single quarter, albeit at a different number. But if you don't mind, I will check that out and provide you with the specific in that case. For background, the Canadian market for the last 7 or 8 years have been growing anywhere between 2% to 4% per year, right? And therefore, 2% is on the lower side, but this is the only one of those 7 years that were subject to a pandemic. We're happy that this 2% put us in positive territory. We also know that this amounted to a small market share gain. So it's so granular that we don't want to comment on it. But at least it's indicative that through this hardship here, we haven't been going backward in terms of our leadership position of one thing. We've consolidated it and solidified it.
Your next question comes from Rahul Sarugaser from Raymond James.
I'd like to reiterate congrats on the strong finish to the year. So I'm not going to take anything away from that. We did notice that the number of prescriptions in Q4 for Vascepa sort of came in on the lower end of the range that you had indicated. Is this purely because of COVID? Or are there any other potential factors that we should be looking at?
Yes. 2 elements here. First one, we paint a picture, and we -- I think we provided what we call the Hurricane cone, which is kind of a brag where we think we could land. The one thing we don't want to be judged for is our ability to forecast the unknown, such as the impact of a pandemic. That's beyond our control. We have to withstand and adapt and therefore, we could have been the higher part of the cone had those conditions been much improved or even been returning to normal. So I can conclusively say that, yes, the number would be different. And better if we were not in the pandemic. Our efforts are impacted. They don't bear the same fruits that they would otherwise. And I think the notion here is to say that in spite of that, in spite of that, the progress is constant. I think the script chart is revealing that the momentum of the product has not been negatively impacted, meaning no flattening or whatever, the trend upward continues. So one can only positively view that if you remove some of those constraints, it could only buoy the overall demand and the progress. That's our vantage point. With respect to the projections and the ranges here, I think they need to be kept in context, right? We're not trying to read here and the tea leaves what the environment will be, but it does define a possible zone of impact.
Great. I really appreciate that. And again, just to reiterate, I don't want to take anything away from the success of the year. It was indeed a good end of the year. So speaking of good ends, you did have a bit of an EBITDA beat. Was this because you're finding that discounts in the early stages of adoption here are lower than expected? How should we be thinking about discounts in Q4 but also going forward?
Tim, do you want to have?
Sure. I think one of the really encouraging things about the announcement of the greater private coverage for Vascepa is that, that will allow us to see less of a subsidy going forward. And so we should see less discount and an improvement in our gross to net on Vascepa. And as we get through the first couple of quarters of 2021, we'll have that realized. So that was certainly part of the -- what was going on in Q4 of last year.
Yes, perfect. And my last question then is around the recently -- the recent data at the International Stroke Conference, where you showed essentially a 30% reduction in risk associated with stroke. So how are you finding physician response to the data that's come out over the last quarter? And then specifically to the data that was reviewed yesterday?
Okay. So first of all, this is, I would call them, were defined as prespecified post-tuck analysis. So all of this traces back to the seminal landmark trial to REDUCE-IT trial. But now as the data is being mined, we're seeing trans patterns, confirmatory evidence emerging as they're now making a foray in every individual major adverse cardiovascular event, of course, that was one of them heart attacks. This one covers the topic of strokes and goes to show that the benefit is broad in general. Because sometimes, meeting a primary endpoint, especially with composite index, is an amalgamation of all kinds of data points on all kinds of different types of patients. And I think the value of those post-hoc analysis is that it firms up the notion that the benefit is broad. It broadly applies to patient types. It broadly applies to the level of risk that those various patients may have. And that truly is where the value is. And I think it needs to be done so that we continue to further the understanding of the benefit in very concrete ways because we all relate to death, of course. Heart attacks, of course. Stroke, the implications of strokes that can sometimes be crippling, can keep people from being able to resuming normal life. The financial impact of those, not to mention the quality of life. So I think that, that's the intent. Those numbers are now refined and be highly significant and to be extremely relevant to the patient population to which we cater.
Your next question comes from David Martin from Bloomberg -- sorry, Bloom Burton.
First question I have is, do you have a sense of what percent of physicians that you're calling on are turning around and prescribing Vascepa?
We do. It's not that simple. But I would say that to, again, here to paint a picture rather than to be into excruciating details, I would say that those 550 prescriber represent approximately 1/5 of the people that we've been trying to reach. I want to bring another element here of understanding because of the pandemic, we haven't been able to reach all of them even over the course of the year. So it just goes to show, when we say that we're rolling upstream here, that's another manifestation of the effect of the pandemic. We would normally be able to see pretty much all the people in our target, many of them as many as five, 6, 7, 8, 9x over the course of a year. The pandemic reduces the penetration and reduces the frequency. And that's why we can safely say that without a pandemic, we would be further along. But I bring those, David, for illustrative purposes, I wouldn't want to be quoted rigidly on those percentages.
Do you think, like, when doctors hear the story and they don't prescribe that, are reasons for it, like they're waiting for the guidelines? Or even though you have private coverage, we're waiting until all my patients are covered? Like could there be floodgates open with either or both of those events?
Yes. Well, in kind of a typical approach to, I guess, this environment where prescribers are learning and eventually trying and eventually adopting, we always try to foresee or to identify the objections, right? If a doctor listening -- who would go against the grain of 25% reduction in major risk, especially 20% reduction in death and 30% in strokes and so on and so forth. And the reason why I wouldn't say they resist, but they hold their judgment is that they have objections. And those objections can be as few as 1 or 2, can be as many as 5, 6 or 7. And part of this relationship that we established with the physician, bringing factual clinical vetted evidence is also to make sure that those objections that may not be obvious do surface during the course of the conversation over the 1, 2, 3, 4, 5, 6 visits. And if we address those objections properly with them, then eventually, the likelihood that they will try it is high. So that's kind of the generic nature of that process. We have to make sure that we understand where their concerns might be, what information they need to have, what makes it compelling to them. Sometimes it can be, of course, the financial coverage. It's a very important consideration. Sometimes, it can be -- well, what does Dr. Sachin tries to do? That's where key opinion leaders carry a lot of influence and weight. They lead the way, they reassure and in their own way, they are prescribers of sort for general practitioners or local physicians.
Okay. Great. Switching to Trinomia. What is Health Canada looking for? And what is this trial that's running, going to show that hasn't been shown for the drug already with its approvals in other markets? Is it a safety issue they're looking for?
I wouldn't say it's a safety issue. There were a few, I would say, technical and clinical considerations. Those notice of deficiency are fairly comprehensive. And in their view, the trial being conducted right now could allow them to, I guess, overcome some of the questions or kind of durations that they've been raising. As surprisingly, as it sounds, Trinomia was never the subject of an efficacy trial. Trinomia is developed by Ferrer in Spain and now commercialized in 30 countries, was developed on the basis of the individual usage of the components, right? So the statin is statin. And if you reach bioequivalent dosages, you should have the same effect. Similarly for the coagulant and for the blood pressure medication. And I think that Health Canada is probably the first regulator saying, well, if there's a trial going on here that's going to wrap all those elements and bring also a view on the -- the benefit as it relates to compliance because that's a big element and the thesis here, right? These patients are juggling multiple different drugs and combining them in a single pill makes them more compliant to all of the 3 important drugs. So I think that, that's conceptually here the benefit of those trial results may allow to check a few boxes that have been open-ended otherwise.
Okay. Last question, a quick housekeeping question for Tim, maybe. The $0.5 million, the $500,000 gain on the royalties, was that part of the $2.3 million revenue for royalties from that basket this quarter? Or was that accounted in a different way?
David, that $500,000 is in addition to the $2.3 million.
Your next question comes from Justin Keywood from Stifel.
I had a question on the projected scripts. So it's at 4,000 currently, and it's expected to go up to 45,000 to 65,000 in the next 4 quarters. Would that just include private reimbursement? Or is there a public reimbursement integrated in that outlook?
Justin, thank you for your question. We expect -- and I think we've commented here and then on the inflection, right? When you look at that slide, the early days slope changes in velocity, and this will become much more steeper. And that is typically when those -- in the following 2 or 3 years for the product, get much closer to peak here and then they flatten out. And that is typically associated with the public market component opening up as well.
Okay. But just if I maybe ask in a different way, like it appears that the scripts are projected to go up by potentially 10x over the next 4 quarters. And I believe the public reimbursement probably wouldn't kick in until after then. I guess my question, is that achievable that script projections just with the private reimbursement in place?
Well, that's why we're doing this analog curve, right? What does this analog curve show while imperfect? Take a look at Eliquis. Eliquis is real data, right? So between Q4 and Q5, Eliquis went tenfold. Then they went more than twofold, then they went twofold again, then they went twofold again. But between Q4 and Q8, they went, what, 100-fold? Between Q5 and Q8, they went tenfold. So I'm not saying that because it happened for Eliquis, it will happen for recipe. What we're saying here is that when a number of conditions reunite, it does create an expansion in a number of different axis, right? The product is better and better known by more and more doctors. So they use it more within their own practice. Today, we have like 3.7 scripts per physician. And in a year or 2 years, it could be 15 scripts per physician. So there's an expansion within the use of a practice. There's a growing number of physicians happening also because a lot of them also are conditioned by the extent of our coverage now that we've committed to expand with additional PCP-focused sales force as the market open. So the target open, the penetration of these targets open. And then the third component is, as we stated, is more on the cost side of things. But -- with the reimbursement we get, I would say, greater amount or better amount in net sales. But these are the elements that are typically combined, and I would say that this analog, you could probably find in different therapeutic areas, many, many other analogs that display the same pattern, right? And that is why it an S curve, it's slow at the beginning, then it becomes steep, almost vertical, and then it flattens out when the product reaches maturity, and that is defined by our product's fullest potential, but also the quality of the execution.
Okay. And then if I may just slip in one more question. I'm just wondering with the vaccine programs rolling out across Canada, is this an opportunity for perhaps patients contacting their doctors either for virtual or in-person visits and probably for a much needed checkup? Or is that just too early to tell as far as potential increase in Vascepa adoption?
Yes. Very hard for us to comment. Our hope is clearly on the side of what you expressed. We hope that the vaccine can bring a pretty rapid normalization. But the rate at which Canada will actually proceed with this vaccination is the unknown, right? Will it be pretty much in a deal by the middle of the summer? Or will it continue to drag? Will there be either spikes or surges regionally or nationally? All these elements here are completely unknown to us. I don't think anybody a year ago could have predicted 2020 and the front end of 2021, why should we be able to be definitive on what lies ahead. I think vaccination is truly the solution. The pace at which will be implemented, short of getting an absolute undeniable plan and rate of vaccination, is something we're not going to speculate on.
Your next question comes from Paul Stewardson from iA Capital.
Just in for Chelsea here. Congrats on the quarter. Great to see. And just wondering about CSAN Pronto in terms of -- obviously, this is a pretty major draw for Clozaril, one would expect in terms of competitive advantage. You mentioned that the COVID situation, the pandemic restrictions made it a little bit difficult for Clozaril this year, even in the last quarter say. Is that largely offset by CSAN Pronto? Or has that really not yet come into play in terms of actual -- it's just on the margin, and it's still sort of in the next quarters, it's in the works? Or how do you see that playing out?
Paul, thank you for kind your comments here. It is clear that the pandemic has delayed and deferred the implementation of CSAN Pronto, and therefore, its benefit. Probably exacerbated in the case of treatment-resistant schizophrenia. We're talking here, the patients that are most seriously ill that are often from a social demographic here patients in great need, often homeless, high level of comorbidity. And therefore, when they end up in an institution where the treatment will be initiated, those patients are treated with extreme care, especially as it relates to possible contagious diseases. So that's why in that little concentrated area where those patients get treated, the impact was quite visible. It also goes to show that conversely. Once this market open up, we think and pretty convinced that we will benefit disproportionately.
And in terms of the roll-out of CSAN Pronto. So is this something we're going to see kind of steady a few more sites each quarter for a long time? Or how do you see it playing out?
Yes, I think we have ahead of us here many quarters of constant progression. The market is quite large. The opportunities are numerous. Right now, we're focusing on those institutions that don't have the constraints. And that means that the smaller ones actually that we were not planning to cover in the early stages that have been coming at the forefront. And they have been producing quite interserting results in terms of the onset of this implementation. but there is a very large reservoir of locations and patients that can benefit from it. So I think that you will see quarter-to-quarter, the reporting morphed from a site-based reporting to a true concrete patient-base reporting. And I think that will probably become a recurring item in our reporting probably by midyear.
Great. On the royalty package, so you mentioned it was kind of higher than expected. Just looking at the run rate from Q3 with the adjustment, it looks like it's already kind of -- even before the last product comes on the market, it looks like it's kind of already above what your guidance was? Is that something we can sort of look for? Or was this more of a onetime upward adjustment?
Answer for you, Tim?
Definitely, yes. We're quite pleased with the initial results so far. It is tracking ahead of expectations. We should be cautious. It is only data from 2 quarters. And there are a lot of things in the market right now that are unusual. I think some of the results in Q3 may have been a rebound after a very soft Q2, which probably was influenced by the initial pandemic lockdown. So I think let's give it some time for that to play out, but it does seem to be tracking ahead of our expectation.
Okay. That's good to have in mind. And then final question. Just in terms of hasn't really come up yet. Is there any perspective on kind of an acquisition pipeline, or where you guys are looking for future growth? Or is it really just unless something opportunistic comes up focus on Vascepa for now and sort of return to that in the future?
Thank you. Good question, Paul. I think that we stated and we'll always repeat growth through licensing, mergers, acquisitions in our DNA, it's part of our strategy. We're looking all the time. There are always opportunistic in the sense that we -- I think we gain a positive reputation for responsible capital allocation. So everything has prescribed and looked at in great detail. The primary operational focus remains Vascepa and Clozaril, for obvious reasons, right? We can't elect such important transformative activities. But the playing field here is broad. The circumstances stemming from the pandemic or post-pandemic continue to generate opportunities that we're looking at. Still equally interested in further growing in Canada, but also in the U.S., where commercial platform is an area of definite interest, notwithstanding all those other elements related to this disciplined capital allocation. So not something that we are putting aside or abandoning is being pursued in fairly clear but compartmentalized fashion. The operational focus remains on making Vascepa a success and growing the Clozaril franchise.
We have a follow-up question from David Martin from Bloom Burton.
You had quite a jump in the CSAN Pronto sites by the end of Q4. I'm wondering did most of those get installed right at the end of the quarter, and we'll start to see the impact this year? Or were they rolling out throughout the quarter?
There -- thank you, David. They're usually pretty steady. Because an implementation requires that we be along their side in location, and there's only so much you can do in parallel. So I think they're usually staggered and spread across. So they happened in continuous fashion. The only other consideration is, of course, the sites constraint. But no, you should expect them to continue to happen. And when we report, it could look like a big lump. But it's being done day-to-day, week-to-week. The -- and from what we can judge here, there's a deployment phase as an implementation phase when it becomes clinically available and we hope that we get them to the generalization of the usage of it for all of their patients. And so this kind of steps here will eventually start to show up in aggregate in terms of usage. Also important to understand that there are at least 3 types of patients that will benefit from CSAN Pronto. We've got patients already on Clozaril and will now switch to this more less invasive modality. You have completely new patients that didn't want to go -- undergo a clozapine therapy because of that demanding regimen and CSAN Pronto is enabling that. So we're growing the market and we're taking ownership of those patients exclusively. The third category that we can exclude is that patients currently being treated with competing clozapine product may be switched to the CSAN registry and the Clozaril product base because of the superiority of the modality of the safety monitoring, right? So we're -- we think that these things will continue to grow and probably snowball in a sense.
Is it a requirement at the site that all of the patients at that site that have taken on the program will get treated with your Clozaril? Or will only patients treated -- they may treat some with generic, some with branded Clozaril, only the brand to get treat -- get assessed with the CSAN Pronto? How is it?
Actually, CSAN Pronto is an integral part of the Clozaril support and assistance network, that's what CSAN means. And that's a registry. And the registry is uniquely associated with Clozaril. And if we deploy this technology in a clinic or in an institution, they don't have to use it. But if they use it, they use it through the CSAN registry, and it means the patient has to be in the registry. It's a service that we provide that is part of the whole suite of other services that CSAN provides. And what we're doing here is -- we're trying to make sure that physicians make the best decisions for their patient. And if CSAN Pronto is meeting that criteria and becomes a motivating element for them to adhere to the CSAN registry and CSAN suite of services, then they come to the brand for all the right reasons.
Okay. Okay. Just one more quick question, if I could. Amongst the royalties that you purchased, 3-year drugs, and we can track the trends. We know the patent expiries and things like that for the drugs. But the emblem ICD is rather harder to track. And I'm wondering, can you comment on what the current sales are of that product? And what the trajectory is? Or are you allowed to speak in the granularity?
Tim?
David, no, I don't think that is actually something that we can comment on at that level of specificity. I think the one thing that we do have some visibility on is that hospital-based procedures like this were directly impacted, particularly by the initial lockdown. And that, that appears to no longer be the case as the importance of the procedure of an implantable defibrillator, that has kind of resumed and that even with the ongoing pandemic, there's an importance placed on making sure that those procedures continue to happen.
There are no further questions at this time. Please proceed.
Thank you, operator, and thank you all for participating on today's call. And on a closing note, we will be participating in a virtual Non-Deal Roadshow Event powered by Renmark tomorrow at 11 a.m. Eastern Time. A link to view the presentation live will be available in the Events sections of our IR website, and a replay will also be available there afterwards. For now, thank you again, and goodbye.
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