Sonoma Pharmaceuticals Inc (SNOA) 2019 Q2 法說會逐字稿

Good afternoon, and welcome to the Sonoma Fiscal Second Quarter 2019 Conference Call. My name is Justin, and I'll be your coordinator for today's call. (Operator Instructions) As a reminder, this call is being recorded for replay purposes.

下午好，歡迎參加 Sonoma 2019 會計年度第二季電話法說會。我叫 Justin，將擔任今天電話會議的協調人。(接線員指示) 提醒各位，本次電話會議將錄音以供重播。

I would now like to turn the call over to Mr. Jim Schutz. Sir, please go ahead.

現在我想把電話交給 Jim Schutz 先生。先生，請開始。

Good afternoon, and thank you all for joining us today. With me on the call are Bob Miller, Sonoma's Chief Financial Officer; and our Chief Operating Officer, Marc Umscheid will join us for the Q&A portion. Before we start, let me remind you that today's discussion contains forward-looking statements within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties that could cause our actual results to differ materially from those discussed in today's call, including risks inherent in the development and commercialization of potential products; our ability to become profitable; the progress and timing of our development programs and regulatory approvals for our products; the benefits and effectiveness of our products; the ability of our products to meet existing or future regulatory standards; our expected -- excuse me, our expectations related to the use of our cash reserves; our future capital needs and our ability to obtain additional funding; and other risks detailed from time to time in our filings with the Securities and Exchange Commission, including our annual and quarterly reports.

下午好，感謝各位今天加入我們的電話會議。與我一同參與電話會議的有 Sonoma 財務長 Bob Miller；以及我們的營運長 Marc Umscheid，將在問答環節加入。在開始之前，提醒各位，今天的討論包含《1995 年私人證券訴訟改革法》安全港條款所界定的前瞻性陳述，涉及風險與不確定性，可能導致我們的實際結果與本次電話會議所討論者有重大差異，包括潛在產品開發與商業化所固有的風險；我們達成獲利的能力；我們開發計畫與產品監管核准的進展與時程；我們產品的效益與有效性；我們產品符合現行或未來監管標準的能力；我們預期——抱歉，是我們對於現金儲備使用的預期；我們未來資本需求以及取得額外資金的能力；以及我們不時向美國證券交易委員會提交的文件中所詳述的其他風險，包括年度與季度報告。

These forward-looking statements are identified by the use of words such as expect, to expand, would, anticipate, amongst others. Identified product applications and/or users are intended to highlight potential applications for the investment community and do not infer that the company is marketing for these indications. These forward-looking statements speak only as of the date of this conference call and should not be relied upon as predictions of future events. Sonoma disclaims any obligation to update these statements except as required by law.

這些前瞻性陳述可透過使用例如 expect、to expand、would、anticipate 等詞語加以辨識。所識別的產品應用與/或使用者旨在為投資社群凸顯潛在應用，並不表示公司正在針對這些適應症進行行銷。這些前瞻性陳述僅截至本次電話會議日期有效，不應被依賴作為對未來事件的預測。除法律要求外，Sonoma 不承擔更新這些陳述的任何義務。

For today's call, I'll cover 3 areas: first, a review of our key financials from our quarter ending September 30, 2018; second, we've been receiving many calls from shareholders regarding our S-1 filing and a recent letter made public from Montreux Equity Partners and we'll address both of those; and then finally, look ahead at 2 upcoming product launches, one in Brazil and the other in the U.S. Bob will then follow with a thorough discussion of our financial results for the quarter, and then we'll open the call up for Q&A.

今天的電話會議我將涵蓋 3 個部分：第一，回顧截至 2018 年 9 月 30 日季度的主要財務數據；第二，我們收到許多股東來電詢問我們的 S-1 申報以及 Montreux Equity Partners 最近公開的一封信，我們將一併回應；最後，展望兩項即將推出的產品上市，一項在巴西，另一項在美國。接著 Bob 將就本季度財務結果進行更完整的說明，然後我們將開放問答。

We filed our press release and supplemental PowerPoint earlier today and are especially pleased with 3 key numbers for the quarter ending September 30. For those of you in front of your computer, you can see on Slide 4 of the supplemental PowerPoint our 3 key number for this quarter.

我們今天稍早已發布新聞稿與補充 PowerPoint，並對截至 9 月 30 日季度的 3 個關鍵數字特別感到滿意。若各位正在電腦前，可在補充 PowerPoint 的第 4 頁看到本季度的 3 個關鍵數字。

Total revenue was $4.9 million. $4.9 million is a record-high revenue for us and we think we're just getting started. That number is up 14% versus the same period last year and up 13% just since the June quarter.

總營收為 490 萬美元。490 萬美元是我們的歷史新高營收，我們認為這只是開始。該數字較去年同期成長 14%，也較 6 月季度成長 13%。

EBITDA, which is defined as earnings before interest, taxes, depreciation and amortization was a negative $1.95 million. Most financial experts believe that EBITDA is a good proxy for operating cash burn. And for those investors who have followed Sonoma, you heard us say repeatedly, we're pushing towards profitability and as our revenue increases, our EBITDA loss will shrink. Less than a $2 million loss in this quarter in EBITDA is a step in the right direction.

EBITDA（息稅折舊攤銷前盈餘）為負 195 萬美元。多數財務專家認為 EBITDA 是衡量營運現金消耗的良好替代指標。對於一路關注 Sonoma 的投資人，你們多次聽到我們說，我們正朝獲利邁進，隨著營收增加，我們的 EBITDA 虧損將縮小。本季度 EBITDA 虧損低於 200 萬美元，是朝正確方向邁出的一步。

Cash for the quarter closed at $4 million. The good news behind the numbers from this quarter is that 4 out of 5 of Sonoma's business units continue to be profitable and showed solid growth. In addition, we've made progress in our U.S. dermatology net profitability while growing quarter-over-quarter net revenue.

本季度期末現金為 400 萬美元。本季度數字背後的好消息是，Sonoma 的 5 個事業單位中有 4 個持續獲利並展現穩健成長。此外，在季度對季度淨營收成長的同時，我們也在美國皮膚科業務的淨獲利能力方面取得進展。

Our consistent message is that patient demand for Sonoma's product is strong and growing. Bob is going to cover Slide #9 in the supplemental PowerPoint in more detail, but Slide 9 shows this message visually. The demand for our U.S. dermatology prescription dispensed products through to September is up into the right, just like we like it.

我們一貫的訊息是，病患對 Sonoma 產品的需求強勁且持續成長。Bob 將更詳細說明補充 PowerPoint 的第 9 頁，但第 9 頁以視覺方式呈現了這個訊息。截至 9 月，我們在美國皮膚科處方配藥產品的需求呈現向右上成長，正如我們所樂見。

Like many U.S. pharmaceutical companies, we still face gross to net issues due to difficult managed care environment. However, we believe we're getting gross to net issues better under control through diligence with pharmacy and managed care partners who support the overall value proposition of our products. This value is driven by the key benefits of our products delivered to patients, doctors and the overall medical community.

如同許多美國製藥公司，我們仍因艱困的管理式醫療環境而面臨毛額到淨額（gross to net）問題。然而，我們相信透過與藥局及管理式醫療合作夥伴的勤勉合作——這些夥伴支持我們產品整體價值主張——我們正更好地將毛額到淨額問題納入控制。此價值來自我們產品為病患、醫師及整體醫療社群帶來的關鍵效益。

Moving now to the second topic. We've been getting telephone calls from shareholders regarding 2 recent documents filed with the SEC. We have short answers to both questions and fair warning, we'll be sticking to these short answers if asked again during the Q&A portion of this call. Specific to the S-1 filing, we amended the S-1 earlier this week. The S-1/A, or the amendment, is available on the website, sec.gov for review and contains an enormous amount of information. We're not at liberty to discuss anything more than what's already in that S-1/A and would encourage you to read it, because it's exhausted. Our phones have also been ringing off the hook regarding the recent letter we received from one of our shareholders, Montreux Equity Partners here in the Bay Area. What we can share as of today is that the board is currently evaluating Montreux's letter, and will formulate an appropriate response shortly.

接著進入第二個主題。我們收到股東來電詢問近期向 SEC 提交的兩份文件。對這兩個問題我們都有簡短的回答，先提醒各位，若在本次電話會議的問答環節再次被問到，我們也將維持這些簡短回答。就 S-1 申報而言，我們在本週稍早已修訂 S-1。S-1/A（即修訂版）可在 sec.gov 網站上查閱，內容包含大量資訊。除 S-1/A 已載明的內容外，我們無法進一步討論任何事項，並鼓勵各位閱讀，因為內容非常詳盡。此外，關於我們近期收到來自灣區股東 Montreux Equity Partners 的信件，我們的電話也一直響個不停。截至今天我們能分享的是，董事會目前正在評估 Montreux 的來信，並將在近期擬定適當回覆。

Switching gears to our third topic. On Slide 5 at the supplemental PowerPoint, we're pleased to announce our entry into the acne management regiment space. As many of you know, acne is the #1 reason why U.S. patients visit dermatologists. The #2 reason people wait to see their dermatologist is a general complaint regarding itch. Our leverage in product, already on the market, has made a small and interesting dent into the prescription itch market as an alternative to topical steroids. On Slide 5, you'll see a photograph of our new Epicyn Antimicrobial Facial Cleanser product as part of an acne management regimen that we're loading into the big wholesalers, AmerisourceBergen, McKesson and Cardinal in the next few weeks and will be available to pharmacies throughout the U.S. in December.

接著切換到第三個主題。在補充 PowerPoint 的第 5 頁，我們很高興宣布進入痤瘡（青春痘）管理療程領域。如各位所知，痤瘡是美國病患就診皮膚科醫師的第一大原因。人們等待看皮膚科醫師的第二大原因，是對搔癢的一般性抱怨。我們已上市的產品優勢，使我們在處方搔癢市場中，作為外用類固醇的替代方案，取得了一個小而有趣的突破。在第 5 頁，你會看到我們新產品 Epicyn 抗菌潔顏乳的照片，作為痤瘡管理療程的一部分；我們將在未來幾週把產品鋪貨至大型批發商 AmerisourceBergen、McKesson 與 Cardinal，並將於 12 月在全美各地藥局上架。

Following this load in, our sales force will begin detailing our customer dermatologists in January. And Bob will share just a few thoughts on a recent clinical study for Epicyn on Slide 7, I believe.

完成鋪貨後，我們的業務團隊將於 1 月開始向皮膚科客戶進行產品推廣說明。我想 Bob 也會在第 7 頁分享一些關於 Epicyn 近期臨床研究的看法。

On Slide 6 of the PowerPoint, you'll find a photograph of Gramacyn, our new acne product being launched in Brazil by our partner NC Group/U. SK as we speak. You may remember that NC Group/U. SK, the largest pharmaceutical company in Brazil, licensed 7 products from Sonoma earlier this year and is launching now Gramacyn as an acne treatment and Celacyn for scar management. NC Group estimates just a Brazilian acne market size for this product, to be greater than USD 100 million annually. NC Group's 70-plus person sales force and our own U.S. sales force of 33 sales reps will be marketing Gramacyn and Epicyn, respectively, as alternatives to 2 important classes of acne products you're probably familiar with, benzoyl peroxide and sulfacetamide-based products.

在 PowerPoint 的第 6 頁，你會看到 Gramacyn 的照片，這是我們由合作夥伴 NC Group/U.SK 正在巴西推出的新痤瘡產品。你可能還記得，NC Group/U.SK（巴西最大的製藥公司）在今年稍早自 Sonoma 授權了 7 項產品，目前正推出 Gramacyn 作為痤瘡治療產品，以及 Celacyn 用於疤痕管理。NC Group 估計，僅巴西的此產品痤瘡市場規模每年就超過 1 億美元。NC Group 70 多人的業務團隊，以及我們在美國由 33 名業務代表組成的團隊，將分別行銷 Gramacyn 與 Epicyn，作為兩大重要痤瘡產品類別的替代方案；你們可能很熟悉這兩類產品：過氧化苯甲醯（benzoyl peroxide）與以磺胺乙醯胺（sulfacetamide）為基礎的產品。

2017 Symphony prescription data, just in the U.S., shows that the -- that this market is large. Prescription benzoyl peroxide products alone, and by that I mean not in combination with any other acne medication, generated $50 million in sales in 2017. Sulfacetamide products for acne generated $262 million in sales in 2017.

2017 年 Symphony 處方數據（僅美國）顯示，這個——這個市場規模很大。僅過氧化苯甲醯（benzoyl peroxide）處方產品（我指的是未與任何其他痤瘡藥物合併使用者）在 2017 年就創造了 5,000 萬美元的銷售額。用於痤瘡的磺乙醯胺（sulfacetamide）產品在 2017 年創造了 2.62 億美元的銷售額。

Our marketing experts believe that the immediate U.S. addressable market for Epicyn in the U.S. is approximately $300 million per year. But where we'd really like to play in the future is in the space with products that combine benzoyl peroxide with atopic antibiotic like Clindamycin. An example, one brand product plus one generic that combined benzoyl peroxide with clindamycin and generated $691 million in sales just in 2017.

我們的行銷專家認為，Epicyn 在美國的即時可觸及市場（addressable market）約為每年 3 億美元。但我們未來真正想切入的，是將過氧化苯甲醯與外用抗生素（例如克林黴素 Clindamycin）結合的產品領域。例如，有一個品牌藥加上一個學名藥，將過氧化苯甲醯與克林黴素結合，僅在 2017 年就創造了 6.91 億美元的銷售額。

As Dr. Jim Leyden, a world-class acne expert, said in an important study published in the magazine [Tudes], over the last 20 years, dermatologists have grown more and more worried about the gradual worldwide increase in the prevalence of antibiotic resistant P. Acnes strains due to the use or overuse of clindamycin.

正如世界級痤瘡專家 Jim Leyden 醫師在一本名為 [Tudes] 的雜誌上發表的重要研究中所說，過去 20 年來，皮膚科醫師對於因使用或過度使用克林黴素而導致抗生素抗藥性 P. Acnes 菌株在全球盛行率逐步上升，愈來愈感到憂心。

Our performance stabilized hypochlorous acid antimicrobial solution in our Epicyn product to-date has shown no resistance issue due to a unique mechanism of action.

截至目前，我們 Epicyn 產品中的效能穩定型次氯酸（hypochlorous acid）抗菌溶液，因其獨特的作用機制，尚未顯示任何抗藥性問題。

There's not been much innovation in the acne market in the last many years. Just a quick history, benzoyl peroxide, or BPO, was first synthesized in 1905. First used as an ointment in the 1930s and was officially approved as an acne medication in the U.S. in 1960.

在過去很多年裡，痤瘡市場並沒有太多創新。簡單回顧一下歷史：過氧化苯甲醯（BPO）最早於 1905 年合成。在 1930 年代首次以藥膏形式使用，並於 1960 年在美國正式核准作為痤瘡用藥。

We view side effects include redness, burning and irritation. A quick pub med search indicates that about 33% of patients using BPO experience phototoxicity to ultraviolet light B, which by the way, is sunshine. And every family probably remembers the issue of using BPO and the impact on bleaching pillows and bed clothing when applying BPO right before sleep.

我們認為其副作用包括發紅、灼熱與刺激。快速的 PubMed 檢索顯示，約有 33% 使用 BPO 的患者會對紫外線 B（順帶一提，就是陽光）產生光毒性反應。而且每個家庭大概都記得，睡前塗抹 BPO 會造成枕頭與床單被漂白的問題。

The other big class of products in the space Sulfacetamides were first synthesized in 1930s in Germany before the advent of penicillin and antibiotics in World War II. By the way, the story of the invention of these sulfa drugs, the Nobel Prize awarded to the inventor. Nazi Germany's rejection of the Nobel Prize and the inventor's use of its own discovery, using these sulfa drugs on his own 6-year-old daughter, and it detailed in great form in science history, is I think, worthy of a screenplay. It's a fascinating quick read.

此領域另一大類產品——磺乙醯胺（Sulfacetamides）——最早於 1930 年代在德國合成，早於二戰期間青黴素與抗生素的問世。順帶一提，這些磺胺類藥物的發明故事，發明者因此獲頒諾貝爾獎。納粹德國拒絕接受諾貝爾獎、以及發明者將自己的發現——使用這些磺胺藥——用在他 6 歲女兒身上的故事，在科學史中有非常精彩的記載，我認為很值得拍成電影劇本。這是一篇非常引人入勝、很快就能讀完的故事。

Side effects from these sulfa-based products are dryness, erythema, parotitis and discomfort. Periocular use or the use of Sulfacetamide near the eye can cause conjunctivital -- excuse me, conjunctival irritation and one study reported that 19% of patients using sulfa-based drugs for acne experienced local side effects. So we believe our new Epicyn product in this space could be a much-needed innovation in a stale area that's ripe for disruption. Our performance stabilized hypochlorous acid antimicrobial solution in Epicyn, we believe is a better alternative to benzoyl peroxide and Sulfacetamides. And our many dermatologists that we work with in developing Epicyn and Gramacyn tell us it's about time for a new product here.

這些磺胺類產品的副作用包括乾燥、紅斑、腮腺炎與不適。眼周使用或在眼睛附近使用磺乙醯胺可能造成結膜炎——抱歉，是結膜刺激；且有一項研究報告指出，19% 使用磺胺類藥物治療痤瘡的患者出現局部副作用。因此，我們相信我們在此領域的新 Epicyn 產品，可能是在一個停滯、且適合被顛覆的市場中，迫切需要的創新。我們在 Epicyn 中的效能穩定型次氯酸抗菌溶液，我們相信是比過氧化苯甲醯與磺乙醯胺更好的替代方案。而我們在開發 Epicyn 與 Gramacyn 過程中合作的多位皮膚科醫師也告訴我們：這裡早就該有一個新產品了。

An important point to highlight regarding these 2 new product launches is that Epicyn and Gramacyn in Brazil expand our current hypochlorous acid-based product portfolio as opposed to being an offshoot that requires incremental spending and resources.

關於這兩項新產品上市，有一個重要重點要強調：在巴西推出的 Epicyn 與 Gramacyn，是擴充我們現有的次氯酸基產品組合，而不是需要額外支出與資源投入的旁支產品。

Communicating the benefits of Sonoma's core technology while maintaining hypochlorous acid use in a new and larger therapeutic space, we believe will benefit Sonoma's entire hypochlorous acid-based products by increasing our scale, further connecting all of our business units and improving the efficiency and return on investment of all of Sonoma's marketing and sales efforts.

我們相信，在維持次氯酸於一個更新且更大的治療領域中應用的同時，傳達 Sonoma 核心技術的效益，將透過擴大規模、進一步串聯我們所有事業單位，並提升 Sonoma 全部行銷與銷售投入的效率與投資報酬率，從而使 Sonoma 的整體次氯酸基產品受益。

We believe this is a critical strategic move that will fundamentally help improve our EBITDA and our path to profitability. Bob adores discussing P values, probability values and statistical significance.

我們相信這是一項關鍵的策略性舉措，將從根本上協助改善我們的 EBITDA 以及我們邁向獲利的路徑。Bob 很喜歡討論 P 值、機率值與統計顯著性。

So with that, Bob, I'll hand the microphone to you to cover Slide 7.

那麼，Bob，我把麥克風交給你，請你來說明第 7 張投影片。

Thank you, Jim. In August, Dr. Nestor, a world renowned clinical dermatologist presented at a dermatology conference in Colorado the results of not only his study of the effectiveness of HOCl on topical management of acne, but also 2 other studies which also evaluated the impact of HOCl topical treatment on acne, a total of 127 patients. Dr. Nestor has conducted treatment of acne studies not only using our HOCl products, but also using most of the products which are currently the standard of care for the treatment of acne. All 3 studies confirm statistically significant reductions in the inflammatory acne lesions of 60% plus and the non-inflammatory acne lesions of 40% plus, over a 12-week period with P values ranging from 0.1% to 0.02%.

謝謝你，Jim。8 月時，世界知名的臨床皮膚科醫師 Nestor 醫師在科羅拉多的一場皮膚科會議上，發表了他不僅針對 HOCl 在痤瘡外用管理之有效性的研究結果，還包括另外兩項同樣評估 HOCl 外用治療對痤瘡影響的研究；三項研究合計共 127 名患者。Nestor 醫師進行痤瘡治療研究時，不僅使用我們的 HOCl 產品，也使用目前多數被視為痤瘡治療標準照護（standard of care）的產品。三項研究皆確認，在 12 週期間內，發炎性痤瘡病灶減少 60% 以上、非發炎性痤瘡病灶減少 40% 以上，且具統計顯著性，P 值介於 0.1% 至 0.02% 之間。

The results of the largest study are shown on Slide 7, comparing our HOCl products to those of benzoyl peroxide and a placebo. Sonoma issued a more detailed press release on these studies on August 16, 2018, if you'd like to read more detail.

最大型研究的結果顯示於第 7 張投影片，將我們的 HOCl 產品與過氧化苯甲醯以及安慰劑進行比較。若您想閱讀更多細節，Sonoma 已於 2018 年 8 月 16 日就這些研究發布了更詳細的新聞稿。

Dr. Nestor is an Associate Professor in Department of Dermatology and Surgery at the University of Miami, Miller School of Medicine. He's conducted over 150 clinical trials and authored over 100 articles and book chapters. In the press release that we issued, Dr. Nestor stated, "I can envision a time in a very near future when this HOCl will become a standard protocol in the treatment of acne vulgaris, either alone or in combination with other treatments."

Nestor 醫師是邁阿密大學米勒醫學院皮膚科與外科系的副教授。他已進行超過 150 項臨床試驗，並撰寫超過 100 篇論文與書籍章節。在我們發布的新聞稿中，Nestor 醫師表示：「我可以想像在不久的將來，這種 HOCl 將成為治療尋常性痤瘡（acne vulgaris）的標準流程之一，可單獨使用或與其他治療合併使用。」

Moving on now, over the next 15 minutes, I will discuss the financial results for the September 2018 quarter and the status of our business units.

接下來，在接下來的 15 分鐘內，我將討論 2018 年 9 月季度的財務結果，以及我們各事業單位的狀況。

Looking first at the financials, I will cover the high-level results for the key financial metrics, including revenue, cash operating expenses, EBITDA and cash position. More details of these results are discussed in the press release and the 10-Q. In addition, the supplemental PowerPoint presentation, which Jim and I referred to earlier, displays these key metrics on Slide 8 compared to the same period last year, the September 2017 quarter and compared to the last quarter ended June 30, 2018.

先從財務面來看，我將概述關鍵財務指標的高層次結果，包括營收、現金營運費用、EBITDA 與現金部位。這些結果的更多細節已在新聞稿與 10-Q 中說明。此外，Jim 和我先前提到的補充 PowerPoint 簡報，於第 8 張投影片呈現這些關鍵指標，並與去年同期（2017 年 9 月季度）以及上一季（截至 2018 年 6 月 30 日止季度）進行比較。

Net revenue for the September quarter, as Jim mentioned, was $4.3 million compared to -- $4.9 million, sorry, compared to $4.3 million for the same period last year, up 14% and up 13% over the recent June 2018 quarter with increases in both the U.S., European and Latin American revenues.

9 月季度的淨營收，如 Jim 所提，為 430 萬美元，相較於——490 萬美元，抱歉——相較於去年同期的 430 萬美元，年增 14%，且較近期 2018 年 6 月季度成長 13%，美國、歐洲與拉丁美洲營收皆有所增加。

As Jim mentioned earlier, this is our highest quarter ever, followed by a $4.8 million of revenue in the December 2017 quarter.

如 Jim 先前提到，這是我們歷來最高的單季表現，其次是 2017 年 12 月季度的 480 萬美元營收。

Covering international first, as shown on Page 8. International revenue of $2.8 million is up 18% compared to the same period last year and up 4% compared to the June 2018 quarter. The revenue was primarily up due to the strong increase in Europe and the shipment to Brazil. These increases were partially offset by decreases in Middle East, Far East and New Zealand.

先從國際業務談起，如第 8 頁所示。國際營收為 280 萬美元，較去年同期成長 18%，較 2018 年 6 月季度成長 4%。營收增加主要來自歐洲的強勁成長以及對巴西的出貨。上述增幅部分被中東、遠東及紐西蘭的下滑所抵銷。

In Mexico, our HOCl products are standard of care with 40%-plus market share as an antiseptic in the pharmacy market. The shipments to Brazil -- to our Brazilian partner in the September quarter were $248,000 for launching our acne product in Brazil.

在墨西哥，我們的 HOCl 產品作為藥局市場中的抗菌消毒用品，已成為標準照護（standard of care），市占率超過 40%。對巴西的出貨——在 9 月季度出貨給我們的巴西合作夥伴——金額為 24.8 萬美元，用於在巴西推出我們的痤瘡產品。

As a result of the strong overseas distribution network and growing position of the U.S. market, Sonoma continues to be the worldwide leader in the manufacturing sale of HOCl products. We make or sell over 400,000 units of HOCl products every month.

憑藉強大的海外經銷網路以及在美國市場日益提升的地位，Sonoma 持續成為 HOCl 產品製造與銷售的全球領導者。我們每月生產或銷售超過 40 萬件 HOCl 產品。

Our HOCl technology enables Sonoma to sell unique, effective, safe -- and safe products for the use in dermatology and advanced skincare on humans and animals. HOCl is a unique combination of an anti-inflammatory and anti-infective while healing without any resistance and completely safe.

我們的 HOCl 技術使 Sonoma 能夠銷售獨特、有效、安全——且安全的產品，用於人類與動物的皮膚科及進階護膚用途。HOCl 結合了抗發炎與抗感染的獨特特性，在不產生任何抗藥性的情況下促進癒合，且完全安全。

U.S. product net revenue was $2.4 million, up 7% from the same period last year and up 23% from the June 2018 quarter, driven by higher sales in animal health care, partially offset by a slight decrease in acute care and acne products compared to last year.

美國產品淨營收為 240 萬美元，較去年同期成長 7%，較 2018 年 6 月季度成長 23%；主要由動物健康照護銷售增加所帶動，但部分被急性照護與痤瘡產品相較去年略為下滑所抵銷。

More specifically, animal health care was up $308,000 or 161% over the same period last year with strong demand for HOCl products at PetSmart and Tractor Supply under the brand name of MicrocynAH. HOCl is a premium animal health care product and is on its way on to becoming a standard in treating animals.

更具體而言，動物健康照護較去年同期增加 30.8 萬美元（或 161%），主要因 PetSmart 與 Tractor Supply 對 HOCl 產品需求強勁，並以 MicrocynAH 品牌銷售。HOCl 是高端的動物健康照護產品，正逐步成為治療動物的標準。

The dermatology net revenue was down 8% compared to last year, but up 23% compared to the June 2018 quarter, driven by factory unit decline compared to last year of 5%, and a factory unit increase of 24% compared to the June 2018 quarter. The factory unit shipments in sales are shown in graph form on Slide 10 in the supplemental PowerPoint. Compared to last year, we reduced the number of sales reps in the territories from 30 to 28, where there was lower volume, and transferred those territories to inside sales reps and reduced the number of sales managers.

皮膚科淨營收較去年下滑 8%，但較 2018 年 6 月季度成長 23%；其驅動因素為工廠出貨單位數相較去年下降 5%，但相較 2018 年 6 月季度增加 24%。工廠出貨單位數的銷售情況以圖表形式呈現在補充 PowerPoint 的第 10 張投影片。相較去年，我們在低量區域將業務代表人數由 30 人減至 28 人，並將這些區域轉交給內勤銷售代表，同時減少銷售經理人數。

This contributed to our EBITDA loss going below $2 million for the September quarter along with a corporate wide reduction in expenses, especially those not related directly to sales.

這些措施，加上全公司範圍的費用削減（尤其是與銷售不直接相關的費用），使我們 9 月季度的 EBITDA 虧損降至 200 萬美元以下。

While the factory unit metric is important because it is how we recognize our revenue and is also impacted by product load-ins and wholesaler inventory reduction. We believe that the best underlying and used demand metric is the prescriptions filled by the pharmacies to the patient as measured by third-party vendors such as IMS or Symphony.

雖然工廠出貨單位數這項指標很重要，因為我們是依此認列營收，且也會受到產品鋪貨（load-ins）與批發商去化庫存的影響。但我們認為，最能反映基礎且實際使用需求的指標，是由藥局為病患配藥完成的處方量（prescriptions filled），並由 IMS 或 Symphony 等第三方供應商衡量。

On Slide 9, we show the prescriptions filled data of our product lines and the total of all products at the top. The total prescriptions filled for the September 2018 quarter were 17,410, the largest number of prescriptions filled per quarter in our history, up 12% from the same period last year and up 18% from the June 2018 quarter.

在第 9 張投影片中，我們展示各產品線的處方配藥數據，最上方為所有產品合計。2018 年 9 月季度的處方配藥總數為 17,410 張，為公司歷史上單季最高，較去年同期成長 12%，較 2018 年 6 月季度成長 18%。

Our unit growth trend in factory units and prescriptions filled over the March quarter has been very strong in the June and September 2018 quarters. The September and December 2017 quarters last year were strong quarters with a significant load in during the December 2017 quarter. The primary difference between these 2 metrics of factory units shipped and the prescriptions filled is fluctuations relating to changes in the wholesaler inventory. The factory units are shipped to the wholesaler distributor or directly to a mail order pharmacies. The prescriptions filled at the retail pharmacies are supplied by the wholesaler inventories. The factory unit shipped increased the inventory level and the prescriptions filled decreased the units in the inventory. The wholesaler inventory normally represents 1 to 2 months of expected prescriptions filled and all ordering is controlled by the distributors, not the company.

自 3 月季度以來，我們在工廠出貨單位數與處方配藥數的單位成長趨勢，在 2018 年 6 月與 9 月季度表現非常強勁。去年 2017 年 9 月與 12 月季度表現也很強，其中 2017 年 12 月季度有顯著的鋪貨（load in）。工廠出貨單位數與處方配藥數這兩項指標的主要差異，在於批發商庫存變動所造成的波動。工廠出貨單位數是出貨給批發經銷商，或直接出貨給郵購藥局。零售藥局的處方配藥則由批發商庫存供應。工廠出貨會提高庫存水位，而處方配藥會降低庫存中的單位數。批發商庫存通常相當於預期處方配藥量的 1 至 2 個月，且所有訂貨均由經銷商控制，而非由公司控制。

On Slide 11, in the PowerPoint supplement, we show in graph form the number of units of our products held as inventory by the major wholesale distributors, and the quarterly change in those inventory numbers from December 2015 quarter to the September 2018 quarter. As you can see, there have been significant reduction in these inventory levels in the March and June 2018 quarters into a lesser extent in the September 2018 quarter.

在 PowerPoint 補充資料的第 11 張投影片中，我們以圖表呈現主要批發經銷商所持有的本公司產品庫存單位數，以及自 2015 年 12 月季度至 2018 年 9 月季度各季庫存數的變動。如各位所見，2018 年 3 月與 6 月季度的庫存水位大幅下降，而 2018 年 9 月季度也有下降但幅度較小。

The reduction to -- in inventory to filled prescriptions reduces the factory units shipped, which reduces our recognized revenue. To reduce this inventory reduction risk, which we do start revenue in March through September quarters. Over the last 6 months, we have shifted to using mail order pharmacies, which represented about 42% of our units sold during the September 2018 quarter.

庫存下降——轉為處方配藥——會降低工廠出貨單位數，進而降低我們認列的營收。為降低此一庫存去化風險，我們確實在 3 月至 9 月季度開始（採取相關措施）以帶動營收。過去 6 個月，我們已轉向使用郵購藥局；在 2018 年 9 月季度，郵購藥局約占我們銷售單位數的 42%。

While the mail order program is effective and preferred by many, we will continue to maintain great relationships with the wholesalers, distributors and retail pharmacies. Many patients prefer filling their prescriptions at the local pharmacy -- retail pharmacies, as they've done for many years.

雖然郵購方案有效且為許多人所偏好，我們仍將持續與批發商、經銷商及零售藥局維持良好關係。許多病患仍偏好在當地藥局——零售藥局——領取處方藥，且多年來一直如此。

Now returning to the discussion of the financials for the September quarter and going back to Slide 9 -- Slide 8 from the PowerPoint. The operating expenses minus noncash expenses for the quarter ended September 30, 2018, was $4.5 million, up $231,000 or 5% from the same period last year and down $447,000 or 9% from the recent June 2018 quarter. The increase in operating expenses compared to last year were due to higher legal and marketing costs in U.S. On the other hand, the decrease from the June quarter represents cost reductions we have made throughout the company to reduce our EBITDA losses and the seasonal reduction in accounting expense.

現在回到 9 月季度的財務討論，並回到 PowerPoint 的第 9 張——第 8 張投影片。截至 2018 年 9 月 30 日止季度，營業費用扣除非現金費用後為 450 萬美元，較去年同期增加 23.1 萬美元（或 5%），較近期 2018 年 6 月季度減少 44.7 萬美元（或 9%）。相較去年，營業費用增加主要因美國法律與行銷成本較高；另一方面，較 6 月季度的下降反映我們在全公司推動的成本削減，以降低 EBITDA 虧損，以及會計費用的季節性下降。

The loss from operations minus noncash expenses EBITDA loss, and Jim mentioned this earlier, for the September quarter was $1.95 million, down $313,000 from the same period last year and down $1.1 million or 37% from the recent June 2018 quarter. This is our lowest EBITDA loss in the last 2 years, which was caused by higher revenue, higher gross profitability and compared to the June 2018 quarter, lower operating expenses.

9 月季度的營業損失扣除非現金費用後（EBITDA 虧損），如 Jim 先前提到，為 195 萬美元，較去年同期減少 31.3 萬美元，較近期 2018 年 6 月季度減少 110 萬美元（或 37%）。這是我們過去 2 年來最低的 EBITDA 虧損，原因在於營收較高、毛利率較佳，且相較 2018 年 6 月季度，營業費用較低。

The cash position on September 30, 2018, was $4 million, as Jim mentioned, compared to $7.7 million on June 30, 2018. The reduction of $3.6 million in cash as explained by the $1.95 million of EBITDA loss, our operating cash burn. The remaining $1.6 million of decrease in cash is a result of an increase in working capital of $1.4 million, including increases in receivables of $752,000, inventory of $353,000 and prepaid expenses of $188,000. Most of the increases in receivables inventories and prepaid expenses occurred in the international group with receivables to our Brazilian partner of $248,000, an increase of inventory, which has been shipped to Europe and is being sold to our distributor partners. We expect that the increased receivables have been or will be collected in the December quarter and our payables have increased back to normal levels.

如 Jim 所述，2018 年 9 月 30 日的現金部位為 400 萬美元，相較 2018 年 6 月 30 日的 770 萬美元。現金減少 360 萬美元，主要可由 195 萬美元的 EBITDA 虧損（我們的營運現金消耗）解釋。其餘 160 萬美元的現金下降，來自營運資金增加 140 萬美元，包括應收帳款增加 75.2 萬美元、存貨增加 35.3 萬美元，以及預付費用增加 18.8 萬美元。應收帳款、存貨與預付費用的增加多發生在國際事業群，其中包括對巴西合作夥伴的應收帳款 24.8 萬美元，以及存貨增加（該存貨已出貨至歐洲，並正由我們的經銷合作夥伴銷售）。我們預期增加的應收帳款已在或將於 12 月季度收回，且我們的應付帳款已回升至正常水準。

Bottom line is that most of these increases have been or will be converted to cash or collected in the December quarter. And our EBITDA loss of $1.9 million represents our quarterly cash burn for the September 2018 quarter.

總而言之，這些增加中的大部分已經或將在 12 月季度轉換為現金或收回款項。而我們 190 萬美元的 EBITDA 虧損代表我們在 2018 年 9 月季度的單季現金消耗。

We look forward to the following for the rest of fiscal year 2019 and fiscal year 2020. One, the growth in sales rep productivity with increases in the average prescriptions per rep per quarter. This will be aided by the near term strong product launch of the Epicyn antimicrobial facial cleanser in the U.S. dermatology market, which Jim talked about.

我們期待在 2019 會計年度剩餘期間以及 2020 會計年度出現以下進展。第一，銷售代表生產力提升，表現在每位代表每季平均處方數增加。這將受益於 Epicyn 抗菌潔面乳在美國皮膚科市場近期強勁的產品上市動能，Jim 也談到了這點。

Number two, our animal health care, acute care and international businesses will continue to grow. As an example, the launch of our 7 products in Brazil by the largest pharmaceutical company in Brazil, starting with the acne and scar products in the near term will support our revenue growth and improve our profitability. Number three, we expect to have new partners in the U.S. and international similar to the Brill pharmaceuticals in Spain and others in the U.S. in our noncore businesses. Four, our cash operating expenses are expected to remain flat to down as a result of our general cost reduction program. And five, last, this should result in growth of revenue and a reduction in our EBITDA loss.

第二，我們的動物健康、急性照護與國際業務將持續成長。例如，由巴西最大製藥公司在巴西推出我們的 7 項產品，近期先從痤瘡與疤痕產品開始，將支持我們的營收成長並改善獲利能力。第三，我們預期在美國與國際市場會有新的合作夥伴，類似於西班牙的 Brill Pharmaceuticals，以及美國其他夥伴，主要在我們的非核心業務上。第四，由於我們整體成本削減計畫，預期現金營運費用將持平至下降。第五，也是最後，這應會帶來營收成長並降低我們的 EBITDA 虧損。

I will now pass the call back to the operator for questions and answers.

我現在把電話交回給接線員，進行問答。

(Operator Instructions) Our first question comes from Bruce Jackson from Benchmark.

(接線員指示) 我們的第一個問題來自 Benchmark 的 Bruce Jackson。

If we could discuss the mail order pharmacy program a little bit. Last quarter, I believe you said that about 20% of revenues went to this program. Was there any change in that number during the quarter?

我們能否稍微談一下郵購藥局計畫。上個季度，我記得你提到大約 20% 的營收來自這個計畫。本季度這個數字有任何變化嗎？

Yes. It went -- it is now for the September quarter unit volume is a little over 40%. So it's gone up.

有。它上升了——現在以 9 月季度來看，單位出貨量略高於 40%。所以確實增加了。

Okay. And then just broadly, how do you feel about the rebate situation with some of the channels? So is that -- are there any rebates hanging out there that you're still expecting to recognize? Or has that stabilized?

好的。然後更廣泛地問一下，你對某些通路的回扣情況感覺如何？也就是說——是否還有任何尚未入帳、你們仍預期要認列的回扣？還是已經穩定下來了？

That's generally stabilized. With a lot of the mail order houses, we actually have a program that we've -- if somebody does not have a cash -- somebody has to pay cash that we will basically sell it to them for a lower price and a lower co-pay, so -- to get them to go through mail order and that's $35 as a repay -- as a co-pay. So that's been a successful program and is basically -- in effect, controlled our rebate costs, if you will, by doing it that way. So our rebate -- we have not seen -- it's been a similar rebate cost but it's been controlled at this point.

整體而言已經穩定。對於許多郵購藥局，我們其實有一個方案——如果有人沒有現金——有人必須自費現金支付時，我們基本上會以較低價格、較低自付額賣給他們，讓他們透過郵購通路購買，而自付額是 35 美元。所以這個方案很成功，基本上——可以說——用這種方式控制了我們的回扣成本。因此我們的回扣——我們沒有看到——回扣成本大致相近，但目前已受到控制。

Okay, great. And then last question about the growth potential for your new relationship in Brazil, the Latin American sales ticked up nicely this quarter. How much of that was due to the shipping of the new products? And then do you foresee any acceleration in the sales to Latin America over the next couple quarters?

好的，很棒。最後一個問題是關於你們在巴西新合作關係的成長潛力：本季度拉丁美洲銷售額上升得不錯。其中有多少是因為新產品出貨所致？接下來幾個季度，你是否預期對拉丁美洲的銷售會加速？

The shipment that we had actually mentioned was $248,000 is what we got -- is what we -- in terms of dollar, what we shipped to them at this point. They are in the process of launching. We expect -- and that was only acne, and we expect them to be launching the scar products. So we expect to see a good volume growth continued out of that going to Brazil with the 7 launches that we have at this point. They far exceeded what their contractual agreement was with us at this point already. So we expect to see good strong growth out of that.

我們先前提到的那批出貨金額是 248,000 美元——也就是到目前為止我們出給他們的金額。他們正在進行上市推廣。我們預期——而那批只有痤瘡產品，我們預期他們也將推出疤痕產品。因此，隨著目前這 7 項上市產品推進到巴西，我們預期會持續看到良好的出貨量成長。到目前為止，他們已遠遠超過與我們的合約約定。所以我們預期會看到相當強勁的成長。

(Operator Instructions) I'm showing no further questions.

(接線員指示) 目前顯示沒有其他問題。

Just a little wrap up. Just a quick final note. Thank you all for joining today's call and for your continued support. And as Bob said, in our September quarter, we think we made solid progress in putting our dermatology business back on track with the growth of prescriptions filled. And bear with me here, March 2018 quarter, we filled 13,667 prescriptions. In the June 2018 corner, it ticked up slightly to 14,726 prescriptions filled. And then September was our largest prescription quarter ever up to 17,410 units filled. We've also -- we also think we diversified our channel distribution in U.S. dermatology to include now these mail order programs, which Bruce was just asking us about, which represented 42% of our unit sales in the September quarter. We think this diversification reduces the risk of inventory reductions and our patients like it. We've implemented a cost reduction program to reduce our operating expenses while growing the improved productivity of our derm sales group; the growth of current products and the launch of the new antimicrobial facial cleanser in the -- as part of an acne management regimen; and finally, the launch of these approved acne products in current large addressable markets. Our product launches are supported by strong clinical studies, a sales force of 33 people, a Brazilian sales force of 70-plus people with the support of the largest pharmaceutical company in Brazil.

做個簡短總結。最後補充一點。感謝各位參加今天的電話會議並持續支持我們。如 Bob 所說，在我們的 9 月季度，我們認為在處方填充量成長的帶動下，我們在讓皮膚科業務回到正軌方面取得了扎實進展。請容我說明一下：在 2018 年 3 月季度，我們填充了 13,667 張處方。在 2018 年 6 月季度，處方填充量小幅上升至 14,726 張。而 9 月則是我們史上最大的處方季度，填充量達到 17,410 單位。我們也——我們也認為我們已在美國皮膚科領域分散了通路分銷，現在納入這些郵購計畫，正如 Bruce 剛才詢問的那樣，在 9 月季度占我們單位銷售的 42%。我們認為這種分散化降低了庫存縮減的風險，而且患者也喜歡。我們已實施成本削減計畫，以在提升皮膚科銷售團隊生產力的同時降低營運費用；推動現有產品成長並推出新的抗菌潔面乳——作為痤瘡管理療程的一部分；最後，在目前可觸及的大型市場中推出這些已核准的痤瘡產品。我們的產品上市由強而有力的臨床研究支持，並有 33 人的銷售團隊、在巴西由 70 多人組成的銷售團隊，以及巴西最大製藥公司的支援。

And then finally, the combination of revenue growth and holding our operating expenses at the current level should continue to reduce our EBITDA loss.

最後，營收成長與將營運費用維持在目前水準的結合，應可持續降低我們的 EBITDA 虧損。

We look forward to sharing our progress on the next call as we build Sonoma to becoming a multi-technology dermatology company and achieving our purpose of relentless passion for healing. So Justin, that's it from us. Thank you all for joining.

我們期待在下一次電話會議分享進展，因為我們正將 Sonoma 打造成一家多技術皮膚科公司，並實現我們「對療癒的無盡熱情」之宗旨。所以 Justin，我們這邊就到此為止。感謝各位參與。

Ladies and gentlemen, thanks for participating in today's conference. This concludes today's program. You may all disconnect and everyone, have a great day.

各位女士先生，感謝參與今天的會議。今天的議程到此結束。各位可以掛線，祝大家有美好的一天。