Mr. Craig Millian reports

HLS THERAPEUTICS ANNOUNCES THE SALE OF ITS XENPOZYME(TM) ROYALTY INTEREST TO DRI HEALTHCARE TRUST

HLS Therapeutics Inc. has sold its royalty interest and milestone payment obligations in the global sales of Xenpozyme (olipudase alfa) to DRI Healthcare Trust, effective June 28, 2024. All dollar amounts are in U.S. dollars, unless otherwise stated.

The transaction is valued at up to $45.75-million, which consists of $13.25-million paid up front in cash, $14.0-million in potential sales-based milestone payments and DRI Healthcare's assumption of $18.5-million of potential future milestone payment obligations. HLS will recognize revenue from its royalty interest in Xenpozyme through June 30, 2024. The upfront proceeds from the sale will be used to reduce the principal outstanding on the company's term loan. At current rates, the debt repayment is expected to reduce annual interest expense by more than $1.3-million.

"To strengthen our balance sheet and focus management efforts on the growth of our product portfolio, we are divesting a non-strategic asset," said Craig Millian, chief executive officer of HLS. "With the expectation that HLS would have had to make a substantial milestone payment related to Xenpozyme in 2025, we believe this is an ideal time to monetize this royalty. This transaction generates significant value for the company, enabling us to accelerate deleveraging, reduce our interest expense and enhance our future flexibility for the productive use of capital."

Following this transaction, HLS is lowering its 2024 royalty revenue guidance to a range of $1.5-million to $1.7-million from the previous range of $3-million to $4-million. HLS will have a remaining royalty interest in Takeda Pharmaceutical's Obizur, which is expected to contribute between $500,000 and $700,000 in 2024. Based on the change in outlook for royalty revenue, guidance for total revenue will be reduced to a range of $58.5-million to $59.7-million from the previous range of $60-million to $62-million. Accordingly, the company is lowering its adjusted earnings before interest, taxes, depreciation and amortization guidance to a range of $15.5-million to $16.7-million from the previous range of $17-million to $19-million.

During the second quarter, HLS also completed an amendment to its credit agreement to ensure operating flexibility during this transitional year. Based on financial covenants related to liquidity and coverage ratios, opportunities to repurchase stock under the normal course issuer bid program will be restricted in the near term.

About HLS Therapeutics Inc.

Formed in 2015, HLS is a pharmaceutical company focused on the acquisition and commercialization of late-stage development, commercial stage promoted and established branded pharmaceutical products in the North American markets. HLS's focus is on products targeting the central nervous system and cardiovascular therapeutic areas. HLS's management team is composed of seasoned pharmaceutical executives with a strong record of success in these therapeutic areas and at managing products in each of these life cycle stages.

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