Q4 2019 Earnings Call

Thank you for holding ladies and gentleman you're currently in line for the entire life Sciences Conference call. At this time Aerostar gathering and just all participants will get started momentarily. We thank you for patients and I see please remain on the line.

[music].

Good day, ladies and gentlemen, and welcome to the enjoy life Sciences fourth quarter 2019 financial results Conference call. All lines have been placed on in listen only mode and the floral be opened for your questions and comments following the presentation.

At this time and it's my pleasure to turn the floor. What's your host for today Mr., David Wells interests, Chief Financial Officer, Sir the floor is yours.

Thank you, Jeff Good afternoon, and welcome to end dress fourth quarter and full year 2019 business update and financial conference call.

We issued a press release this after that.

For those of you don't have a copy of the release you could actually say in the Investor section of our website at Www dot indirect inc. dot com.

Before we begin please note that today's presentation includes forward looking statements.

All statements other than statements of historical facts, including statements regarding our strategies financial condition operations cost plans and objectives.

Objectives, as well as anticipated results of our development and commercialization efforts.

The timing for receipt of required regulatory approvals and product launches.

Forward looking statements.

Except as otherwise required by federal Securities Laws company disclaims any obligations were undertaking to update or revise any forward looking statements.

Please refer to our form 10-K, <unk> 2019 fiscal year.

I would think that's easy to get a better understanding of risks and uncertainties related to forward looking statement.

I will now turn the call over to our chairman and Chief Executive Officer, That's why I'm not sure that's why.

Thank you David Good afternoon, everyone and thank you for joining us today to review Andrews fourth quarter and full year 2019 performance and 2020 business update.

Along with David and me on todays call our were no Malibu parity Chief commercial officer.

Michael Fordham Andrus, Chief Technology Officer.

Let me quickly go through todays agenda.

First of all highlight our recent achievements David will review financials.

I will then provide an update on key topics in expectations, followed by Renaud who'll provide additional commentary I precommercial activities with the focus on Europe.

Finally, we'll open the call Q1 night.

Before I begin.

I want to acknowledge all the people who were dealing with coping 19 of the patient parent family member or friend.

Our thoughts and well wishes or with all of you are particular appreciation goes out to the frontline caregivers, providing helped to those in need.

As our unprecedented times.

Like you.

We hear it Andrew heard hearing to the recommended public health guidelines on social distancing.

We have implemented <unk> remote work protocols for our staff.

Well this is required some adjustment I'm proud to say that our team has all transition to a new normal.

And we remain unified in our commitment to make a positive impact on the care patients with chronic liver disease like NFL DNA match through better diagnosis and monitoring.

So let's focus on recent progress and what's that.

As many of you know Andrew as the pioneer of Thermo acoustic enhanced ultrasound known as Ted Yes.

Hey, this will allow clinicians to visualize tissue and waste similar to MRI.

Well, that's 50 times lower cost at the patient bedside.

Our goal is to develop applications for the taste technology in areas of high unmet clinical need and we've developed a taste application to assess and monitor elevated liver fat, which is associated with non alcoholic fatty liver disease also known as any F.L.D.

And non alcoholic Steatohepatitis also known as Nash.

These often asymptomatic chronic liver conditions effect over 1 billion people globally.

And there are currently no practical diagnostic tools available to clinicians.

We believe our test liver fat application is well positioned to address the unmet need by enabling clinicians to noninvasively assess liver fat, but the safe cost effective procedure at the point of care.

Andrew remains highly focused on bringing task liver fat application to market in 2020.

2019 was a productive year for Andrew and has given us strong forward momentum.

She 2019 highlights include.

We successfully completed a first in human feasibility study with the robots Research Institute, which provided data required to support first regulatory filings.

Informed a number of technology improvements and helped elucidate the initial clinical use case for test measurement of liver fat.

We also established two clinical partnerships with Rocky Vesta University, and the University of Pittsburgh Medical Center.

Widely regarded institutions will conduct independent clinical studies that will gather data on use of the device with our target patient population results of which will strengthen our clinical database and support our commercial activities.

In 2019, we expanded our leadership team in key areas with the addition of Chief Commercial Officer Renault Mellow Berti.

And vice President of engineering and programs Amy Setzler.

We built and strengthen relationships with a number of clinicians and key opinion leaders in Europe, and the U.S. and developed our go to market strategy.

We bolstered our strong intellectual property position our IP portfolio currently stands at 67 assets defined filed issued unlicensed.

We also implemented in 2019, a companywide quality management system and secured our ISO 13 45 certification.

And finally.

We submitted our technical filed for CE, Mark review to our notified body for the taste device in Europe.

We entered 2020 with notable momentum and enthusiasm for the year ahead, which has and will include a number of important regulatory clinical and commercial milestones for the company.

Already in Q1.

We have secured our CE regulatory mark approval for the test fatty liver imaging probe also known as flip.

Targeting any FLT in Nash.

The CE, marking indicates that the taste flip system complies with all applicable European direct isn't regulations in the European Union and other CE Mark geographies, including the 27, you member States.

He enter is now registering a CE mark in each initial target market, including Germany, and France to enable commercialization of the taste product in each market were no will provide more details on our commercialization strategy in Europe in a few minutes.

In Q1, we also renewed our collaboration agreement with GE healthcare.

Extending the agreements term to January of 2021.

Under the terms of the agreement GE healthcare will continue to support Andrus commercialization activities, where its test technology for use in a fatty liver application by facilitating introductions to GE healthcare ultrasound customers.

In return Andrew will afford GE certain rights of first offer with respect to manufacturing in licensing rights for the liver application.

And finally in Q1.

We expanded Andrew Scientific Advisory Board with the addition of Dr. RASM Malik director of Hepatology, and Associate Chief Division of Gastroenterology at Tufts Medical Center.

Dr Malik joints, Dr. Gambhir from Stanford Dr. Rubin from the University of Michigan, and Dr. Gal from Rocky Vista University, as a distinguished clinician and advocate for a non invasive and clinically practical tool to assess and monitor liver fat.

Dr. Malik addition to the team will aid us in delivering the task clinical value proposition to the worldwide liver health community, which is essential as we enter the commercialization phase of tests this year.

Now, let me provide more detail and other key topics.

Last week as you saw we provided updates on our EU commercialization plan and our ft, a regulatory timeline.

With the CE Mark in hand, Andrew as mobilizing. It's you commercialization efforts over the coming months focused initially on establishing clinical reference sites and target European markets as well as deepening our clinical relationships in a number of ways, including initiating test product marketing communication campaigns imply.

Mounting digital education tools, and education events as well as participation in key hepatology enrages radiology conferences.

Like other companies in our industry, we are anticipating the potential for conference cancellations or postponements due to cold at 19.

And we'll be able to deliver plan presentations and maintain awareness in those scenarios to our target audiences through digital communications, including Webinars and other learning tools.

These are all important activities to support the commercial ramp in Europe and were no will provide more details in a few minutes.

Regarding a regulatory pathway the U.S., we and our regulatory advisors remain confident in our strategy to pursue five 10-K clearance for Andrews taste liver system and we're in the process of finalizing or five 10-K package with additional testing that we believe will bolster our submission.

In early 2020 enter became aware of a recently cleared five 10-K submission for a device that enter believes offers regulatory advantages as a predicate device to take us.

Compared to what we had previously been able to utilize.

As a result, we made the decision to it and fast a modest amount of additional time and testing to support demonstration of substantial equivalent to this new predicate, which we believe will yield the strongest possible ft, a submission and further mitigate regulatory clearance risk.

We view this as time well spent.

We anticipate finally, the five 10-K application to the FDA during the second quarter of 2020, which would position us to receive FDA clearance of the test system and the second half a 2020.

We're working closely with our current U.S. clinical evaluation sites, Rocky Vistana University of Pittsburgh Medical Center, and making final preparations in support of their respective clinical trial initiation.

These sites will be using terrace systems with design elements that extend the CE Mark platform for compliance with the U.S. regulatory standards and include a number of recent enhancements and required features that will also be included in our upcoming fact encase admissions.

Recent communications with the sites is confirmed their enthusiasm to move forward. The clinical testing. We're also acutely aware that covert 19 may have an impact on existing and new clinical trials at least in the very near term as healthcare facilities refocus resources to fighting Thats pandemic.

So will work closely and collaborative Cook collaboratively with our clinical partners.

And if and when they need to make adjustments to the research plans bottom line.

When the health care facilities already Andrew will be ready and we'll keep you updated as best as weekend in this rapidly evolving environment.

I'd now like to turn the call over to David to review the financial results for the fourth quarter and full year ending December 31st 2019.

David.

Thank you Francoise I will now provide a summary of our reported full year 2019 financial results.

We had no revenue for the year ended December 31 2018.

As compared to $6000 for the same period in 2018.

Revenue earned in 2018 was the result of service revenue or now discontinued Nexus 128 product line.

Operating expenses increased to $10.8 million for the year ended December 31, 2019 up from $9 million for the same period in 2018.

The increase in operating expenses year over year was due almost exclusively to increase costs associated with the development of our task product line.

Our net loss for the year ended December 31 2019.

Was $13.3 million compared to a net loss of $9.8 billion for the year ended December 31 2018.

During the year, we incurred a charge were deemed dividend related to the sale of our preferred stock which totaled $4.2 million.

Non cash charge is a GAAP based adjustment to earnings only.

And does not represent a liability or other tangible obligation.

It resulted from the preferred stock and warrants that we sold in December.

As a result of this charge our net loss per share for the year ended December 31, 2019 was $2.34 per basic and diluted share.

Our cash as of December 31, 2019, total approximately $6.2 million as compared to approximately $6.5 billion as of December 31 2018.

The small decrease in cash year over year is the result of our spending pretty normal operations offset by our funding activity throughout the year.

With the current World crisis, It is easy to forget the successes of the past.

And considering the magnitude of the coded 19 dilemma makes future planning tenuous at best.

In December of 2019, we retired approximately $2 million at that and raised over $6 billion of new equity capital.

We are fortunate to have completed this funding which provides adequate capital as we all weather.

Well, the 19 impact on the financial and capital markets near term.

We are proud of our accomplishments and all there aren't that many investors and shareholders continue to express their faith and confidence in Indra and that's management team through continued investment.

Well, what we are experiencing today is unheralded in many regards I'm proud to say that Endress management team and our board of directors isn't experienced a well seasoned team, having seen emergencies anomalies and near panics a prior years and successfully emerged on the other side.

We intend to do just that Andrew.

For many quarters, we've used the phrase asset light operating model and this approach has never been more relevant and right now.

We continue to actively review our spending plans for the year adjusting projected growth related expenses balancing between capital preservation and product acceleration.

We are I am actively engaging with our vendors and suppliers as we focus on building our supply chain no easy task in this uncertain climate that you might imagine.

But we are fortunate to have assembled an impressive and resourceful setup suppliers, who appreciate the opportunity that enter and Tas support and are therefore able to secure what we believe it's a reliable chain of supplies and services.

Ready our finished product for delivery.

Like every going company in this uncertain environment, we don't know what we don't know what I can assure you will stay nimble unresponsive on the road, which lies ahead.

Lastly, we will continue to actively pursue and evaluate opportunities strengthen our balance sheet Ana and position our company for growth opportunities that lie ahead.

Including market based government funded or partner provided sources of capital.

Our focus remains on delivering great value proposition, we seem to test the benefit of patient admissions and our shareholders.

I will now turn the call over to window, where though.

Thank you David.

Since joining in dry in May 2019, we have made great progress in growing our condition network and building awareness for and Rustiest technology relevant clinician communities like radiology Hepatology and gastroenterology in total we had a formal present that seven leading radiology and guest hepatology conferences.

In Europe and into Us in 2019, my interaction with the clinical community a validated that there was a strong need for an interest in a non invasive cost effective and point of care assessment tool like T. S.

In the fourth quarter of 2019, we hosted a key opinion leader event, a D.A. sell de lever meeting with now and dry scientific advisor Dr. resume like from Tufts University Medical Center. His presentation highlighted the difficulties in diagnosing patients with any Flds Nash you also emphasized the need for it.

One of care diagnostic device to better assess this fast growing disease, which dr. maalik highlight as a massive healthcare birdie [noise].

The presentation is actually on our website and I encourage you to listen to it we are thrilled to have him join our Synta Scientific Advisory Board and believe is his insight will be invaluable as we work to breached a diagnostic gap or NAFLD and Nash and further define to clinical use case for the device into hepatitis.

Allergy and guess what Enterology community.

In addition to the liver meeting.

We also had a strong presence at the Radiological Society of North America are a city annual meeting in December we had a well positioned booth where were displayed and demonstrated the test system to a number of clinicians in industry leaders, our proprietary technology for assessing liver fat generated meaningful conversation and faceted did it.

Building of relationships with the clinician community globally, we look forward to continuing to send Dave or as we work toward commercialization.

With the CE Mark approval, we are now positioned to enter Europe, which is a very large commercial health care market to put this in perspective in Germany alone. They are approximately 2000 acute care hospitals with an estimated 25000 ultra sound systems delivering around one.

Point 8 million abdominal ultrasound scans each year.

Germany is a large health care market into European Union, but it is just one state. So there are a lot of opportunity for Android to succeed.

My near term priority is to begin executing our European Union commercial plan, which comprises the following key elements.

Establish clinical evaluation reference sites in each target European market, including Germany.

France, Switzerland, and do you gave you get the taste products into the hands off early adopters and investigators and serve as commercial Springboards. We're picking these reference sites.

Based on a set of stringent criteria one level of interest of the investigators in Ts to center of excellence and reputation.

<unk> center location to maximize market distribution and for costs.

We plan to deploy our CE Mark Ts liver systems to this selected evaluation sites into second half Twentytwenty.

We plan to use it twentytwenty as a building here in both you and the U.S. to lay the foundation for longer commercial longer term commercial success.

Given the risk of cancellation or postponement of some clinical conferences, we had to plan to participate and we are adapting our approach to engage with our target audiences in a digital format to maintain a high degree of market awareness and grow our clinical relationships. This effort will be reinforced by it.

Initial telus products marketing communication camping digital education tools start getting interest at the base opt in conditions as well as a revamped well resourced liver focused company website in multiple languages [noise].

We also have begun recruitment efforts to build a team of Ts clinical specialists, who will provide direct support an onsite training to clinical reference site partners and work with our commercial partner GE healthcare at a local level. This whole team of market development specialists will focus on fostering relationship.

<unk> clinical opinion leaders exit kit, our lunch and learn and demonstrated GE and continue building awareness credibility for the teams technology in target markets.

We will continue to build new relationship was condition in Europe, and U.S., while engaging on a deeper level with early adopter, an investigator as well as the various national societies are the study of liver diseases. We will continue to communicate the clinical values that Ts is designed to break with marketing.

<unk> education activities on the Horizon, we will continue to leverage the customer relationship management system that we implemented to manage and effectively target are growing at least over a thousand radiologist hepatologists and Gastroenterologists and endocrinologist, who have already opted in and have shown interest E learning.

About Ts and collaborating with Andrew.

We're very excited to initiate a our commercial activities in Europe, and I look forward to updating you on our progress in the coming quarters now I'll turn to close to home swap who will make some final remarks.

Thanks, very much window and David.

I'll wrap up the call before the culinary with the following key points looking forward into 2025.

First.

We remain highly focused on our goal to make a positive impact on the care of patients with chronic liver diseases like NFL. The in Nash, we've been encouraged by the strong reception to date of our ongoing precommercial activities focused on the clinical community are very optimistic about the market potential of let's say as liberal device there were over 1 billion piece.

But with NAFLD Nash globally, well targeted therapies are starting to become available clinician still don't have a practical and rigorous liver fat measurement tool to identify and monitor patients. We're excited about the potential of tests to address this significant clinical need and diagnostic gap.

Second building on our CE Mark approval, we have a solid foundation in place to implement initial commercial launch activities in Europe and ramp up precommercial activities in the U.S. as we finalize our five 10-K submission to the FDA.

The submission is expected in the second quarter of 2020, which positions us to receive approval in the second half of 2020.

And finally, we're closely monitoring the covert 19 situation with respect to our businesses, our clinical community and will remain vigilant a nimble to adapt our plans where necessitated by the cobot 90 with that I'd like to open the call questions operator.

Thank you know the floor is open for your questions and comments. If you have a question. Please press star one on your telephone keypad at this time using a speaker phone, we ask that well pose your question you pick up your handset to provide the best sound quality.

Again for any questions or comments it is star one at this time.

Well take our first question from Brooks Oneil at Lake Street capital.

Oh, Yes, I wrote Guy they hope I hope they survive in that.

Recall that situation so.

[laughter] I.

That make it.

Simpler for me, how you see more and Mitchell.

Commercialization efforts haven't changed as a result of the cold the situation and could you just saying you know in a broad general said would you expect youre spending to slow as a result or are you thinking that responding to the current.

Firemen is going to cause you that spend more money that you had initially planned that's quite yet.

Great. Thanks, Yeah. Thanks, let me see if I can address that so in terms of spending as David pointed out we're lucky in that we still have very low overhead and have had this asset light model of leveraging partners on the engineering side and elsewhere I'm to help us. So we don't have a heavy burden it.

If we are affected as many maybe due to covert in terms of timing for example of some implementations on the clinical evaluation sites up first of all we still have a lot to do we are.

Very active and a lot of the activities that were no mentioned in terms of you know, bringing our awareness building communication training to the clinical audiences through electronic marketing is something that that goes on unperturbed and I would say is probably more cost effective then going to these conferences if necessitated.

Obviously, the regulatory approval in Q2 continues unabated as I pointed out that five 10-K filing just to be very clear does not depend on data from either rocky Vesta or U.P.M.C.

So that that is something important to highlight.

Just to come back to your spend scenario I think.

Brooks, we've been very very capital efficient over the years, we'll continue to do so and if for example.

We see that you know hospitals are locked down in certain markets and that it doesn't make sense to hire a sales rep in that country as early as we thought we have the flexibility today to build the pipeline up good candidates to identify those people and be ready to pull the trigger but not to hire them now in burden.

Our our spend so I think we have the current model.

That allows us to be very flexible I would say spending if imposed on us through coded restrictions would probably decrease but I also want to make sure that everyone understands we have been and are very much engaged and pivoting as necessary to online marketing and other programs to maintain that forward my.

Sentiment there commercial plan I hope that helps to answer your your question. Yes. That's great. That's very helpful. So second question is.

Your comments about the predicate device for the five 10-K, I'm just trying to understand and have you found a complete another competitive device. It where are you still feeling very confident that.

Commercial capabilities, you're bringing to market are you [laughter] [laughter], yeah, I know that's a great question I'm going to let Mike Thornton speak to a little bit more detail, but no. It it's not a new competitive threat in any way as you can imagine people have been interested into liver and looking at the liver for a long.

Long time, they're not a number of ultrasound and other technologies that are trying to look at fibrosis inflammation and fat our technology to my knowledge remains unique and so far at the highest performing but clearly as we seek a predicate example for the FDA, which is a higher bar than the CE Mark.

It's good to find similar attempts at a technology and reference points, but to answer your question directly there is no new competitive threat clearly a lot of people are interested but it's more of a I would say an FDA submission exercise to find the best predicate on which to launch our application Mike affordable.

You add some color to that as possible.

Sure. Thanks, Francois as you know the five 10-K process is based on an existing cleared predicate device requiring us to demonstrate substantial coolants to use or technology as a first time filer. It's critical that we select the correct predicate device for <unk> successful five 10-K submission.

As fronts, while I've mentioned earlier identifying this newly clear device is really helpful to us and were aligning our submission.

To reflect that.

And right. This is a great thing for us.

Okay. That's good thanks.

Thanks, Mike could I, just had one or two more real quick okay. Sure alright. So is there any change in the.

Things that are advancing on the therapeutic side any approved drug any any you know yeah, Jim that yes things are moving yeah.

Yeah, I mean as as you know our our estimate of the pipeline of a liver therapeutic drugs focus on NAFLD and Nash or are at a minimum of 50 therapies in the pipeline about 30 of which are in phase two and three and as we picked up and demonstrated in <unk>.

Our press released recently, we did pick up that one drug in India from a company called Zydus.

Has been approved in that market and we view that as the first amongst several in the coming 24 months that are targeting fat be it for an fatty liver disease or Nash the root cause of both of those conditions is too much fat and deliver there is no blood test to measure fat into liver.

And so we think that this.

Intersection of over a billion people affected by liver disease and now these first.

Therapies that are becoming available with zydus and others to follow.

I'll just highlight the bottleneck in terms of screening and monitoring these patients I'm just for those who haven't heard me say it before Brooks the only tools at affectively measure fat in see too in the liver today.

Our MRI, which is very good but it's extremely expensive slow interest not a good tool for screening and monitoring ongoing patients and the other tool is a liver biopsy, where you insert a large gauge needle between the ribs, you aspirate a section of liver.

It's very invasive painful.

And frankly, there's a risk of internal bleeding. So these tools are typically only used for more advanced liver disease. It pedal cell carcinoma for example, and they're completely impractical for daily screening and monitoring of patients with the early stages of liver disease.

These which progressed to these later conditions.

And that's what you know that's really the reason for being with Andrew So I hope that helps answer and expand a little bit on what what you asked.

Absolutely and one last one and then I'll get out of the way.

Have you gotten any initial reaction gear selling price I think you're talking about 50000. It in the marketplace is it it does that seem like it's up a pretty salable.

The year or so the if they so so yeah, great question I mean, I'm a commercial guy for 20 years, you build that target price as I've said before on multiple factors, the least being cost plus and the margins you want to get you have to understand what is the potential value of the.

Product, you're offering you have to understand a competitive offerings you have to understand the price sensitivity of the customers, which are very frankly by department radiology versus hepatology as well as geographic markets. So 50000 as a target point, because we think that this offers enormous value compare.

Her to a tools that are in that space. For example, like cart based ultrasound. The high end card based ultrasound not the portable kind that is really essentially like a stethoscope. It's something that's used in regular clinical practice to image the abdomen and deliver ranges in price from 75225.

Thousand go up to considerably more but we felt like the relative share of our offering into value would bring to an existing ultrasound in that price range.

Is appropriate we also have as you can well imagine through all the interactions at the clinical conferences been both sharing the clinical value proposition, but also the economic value proposition at that price point and what it could bring to a clinician and so.

Over the years since we've been in the field at these conferences. The feedback has been very supportive of that price personally I want to go out with that price and you try to take it up from there as we can determine the market more effectively but the best way to get there is to bring this to market with good clinical data as we're laying in place today.

And have the the marketing that were no mention.

No I'm, maybe I would just ask you to chime in a little bit because pricing is a great topic I think we put a lot of thought into it any additional thoughts on your end commercially.

No I think you're right I think it's important to understand that pricing is you know what do we bring from clinical value standpoint, and kinda market buried I think the price that we have determined around $50000 seems to be an adequate pricing, we I've not heard any push back from anybody we've talked to abuse the.

We haven't sold any yet, but but the price that we are talking about it's not something that has been a major caused a book pushback from anybody we've talked whether it's in the U.S. or or into various countries in Europe. At this point, Yeah, and Brooks one final piece because I love this kind of question.

I won't name the manufacturer, but there is a well established tool and a four measurement of fibrosis, which is the later stage of scarring of the liver in the marketplace.

And this company is a help develop the market there tool, which only measures the scarring separate from what we're measuring cells 400 $230000 in the market, we view that as a very very good comparable.

The us and therefore with the additional value of quantifying sad very early on.

We think that there's considerable attraction to the price point.

I hope that gives them more than enough to consider.

[laughter] no all that's great appreciate all that color. Thank you very much keep up all the good work. Thank so much Brooks.

Well in Mexico <unk> company.

Hi, Kyle.

This is actually a Greg I profile, but thanks for taking questions today, Yeah, Hi, you bet.

I guess first can you provide a little more color on the remaining steps that you have all before you're able to submit your up Sta application is there much more requirements than the CE Mark a technical file you submitted.

Sure, Let me ask Mike Sword, and who's our expert here to kind of articulate that please.

Yeah. It briefly in addition to all the quality systems and see technical file Miss a we require additional testing and documentation to comply with the actual ft. A regulation process that are different from the U.S standards.

One of these things as you might imagine is FCC regulations, but it's just a different form of a submission rather than a technical file audit.

Okay Awesome. That's a that's really helpful. And then regarding commercialization in Europe, how are you thinking about pricing or you're exploring leasing or local options.

Yeah remember them.

Since we were on that topic and I took up a lot of the air time, maybe you could speak to you know point of sale the price point capital budgets and weather leasing another type of avenues as a first consideration in your view.

Yeah, I think all those options are a good a capital standpoint abuse. The we updated the price point that we have chosen is actually a good price point, whether it's in the U.S. or or Europe, simply because being beautiful threshold provide us the ability to avoid certainly do you have to go to you don't have tender.

And then allow hospital to buy equipment outright.

And we will also considered any type of leasing option for for a social for our customers I mean, we have we haven't.

A completely different up that did that offering yet abuse sleep, but as we go to market. We will be developing this type of this type of option for our customers as well absolutely.

<unk>.

Okay great.

<unk>.

Yeah Arkema.

No. That's really helpful. And then just last question can you speak a bit more about your partnership and see it sounds like it will be leveraging this important parts of Europe, what sort of sales all fourth research you might be able to be employed at GE as it relates to your business.

Yeah. So as we pointed out GE his commitment to us through the development cycle was just add to help develop a and finalize the product they've been very generous with us as well with a demo systems, which helps us not have to invest in 100000 dollar ultrasound system as we deploy these systems too.

Either evaluation sites or commercially to demonstration of our product. So they've been very helpful. There. They've also supplied insight and names and will continue in the field to introduce us to a certain number of their targeted ultrasound customers and as I pointed out we're targeting through them.

Cart based ultrasound users who are currently doing the ultrasounds or the abdomen and delivered today I think beyond jeez normal focus are the hepatologists and Gastroenterologists, who are very interested in the liver, but probably today not doing a lot of liver scans and so my goal and Michael.

Let me into the business into shareholders is to leverage GE wherever they can be helpful. On the radiology side.

But certainly to control our own future and therefore by hiring of small team.

Andrew a specialist in Europe initially one person per key market working alongside that reference evaluation site in each market that is the best way that I know to build that market to engage the GE sales reps also call on Hepatologist liver X.

<unk>, who may not on an ultrasound today, and who G.E. may not call on but I want to call on them. So it's a hybrid model GE understands this and I think it's a good partnership for us to leverage what they can't provide and also controller on future with a small capital efficient team I hope that's helpful.

Well, yes, absolutely that was really good things of that thank God, Hey, Thanks for your time and a healthy out there.

I appreciate it thank you so much.

Again, it was star one for any questions they'll go next to Joe Jean Michel at catalyst Capital Group.

Hey, Joe.

Hey, how are you guys. A couple of quick question I wanted to ask a little bit more about what you're seeing on a pharma side.

Given the number of compounds in development are you receiving inbound interest on the drug development front and have you made any progress on potentially identifying maybe a pharma partner or something along those lines.

Yeah. Great question. Thank you for that so obviously, we can't we can name names, but we are seeing a an uptick and people reaching out to us from the pharma community as well as the contract research organizations. The CR Rose who run a lot of these studies and really the appeal to.

Both CR rose and liver pharma companies is obviously, what we discussed once the drugs are clinically available.

To be able to help screening patients for use of that drug and to monitor the effectiveness of that drug in the patient once it's approved but looking even earlier Joe.

What we think we have a real opportunity to do with farmers NCR Roses helps them be an added tool in their slow and costly clinical trials even before.

It reaches commercial stage I have anecdotal statistics that show that screening failure rates for some of these studies.

Selecting someone bringing them in and scanning them and finding out that they're not appropriate for the study based on assorted factors and after an M or ice scan on those screening failure rates can be upwards of 50% and one of the things that I like the highlight is we will not replace.

And MRI or surgical biopsy as an endpoint measurement tool Joe for the pharma trials. However, we can add a very low cost high value screen.

Early on just to lower though screening failure rates and help drive efficiencies in these trials. So the answer is we I think we've had several new approaches naturally I want to manage expectations of our listeners that these things take time, but we view a pharma RCR ROE partner as a natural.

Complement and completely.

In line with our freedom to operate alongside with GE. The Ultra sound partner I Hope that helps answer your question. It doesn't specific to the CRL side, obviously, the initial screening or patient selection can be helpful. But is there an ability for you to be tied in is there.

An ability to measure efficacy or progress.

In interim basis through this she beforehand, I think raw fish, yeah, yeah, absolutely again, not aspiring yet to replacing MRI, which is the gold standard to which we compare ourselves too, but one of the things. We've heard Joe is surprisingly liver fat does vary considerably.

And can look very quickly up or down during a clinical study.

And if you imagine the bottleneck of a clinical trial, saying, Hey, we've got to baseline are subject to screen them and put them on a drug bringing back for an M or I, which is expensive and takes you know a good half hour at or more [noise], having a quick touch point along the way is a seemingly a value and we are good.

Thing that feedback from these the CR ROE. So my goal is to you know highlight that to reassure them that we're not looking to replace biopsy and MRI, there a conservative and rightly so sector, but to highlight. This addition in a non disruptive way of our technology.

Is that helpful.

It is that that's great and then just one last question you know we've.

We've discussed price a bit in sort of sales versus leasing model and you're you're in the process of going to market. Initially with the reference centers is this more really about awareness at this point or should we think of this is beginning to drive revenues.

Great question. So the evaluation sites for example, a university of Pittsburgh Medical Center Rocky Vest on the initial sites in each country in Europe are not going to be revenue generating but.

They will be the seeds and the springboard that are absolutely critical for sales in that market. So our goal as you can imagine in France, having a reference site in one of the major universities with a key opinion leader is exactly what you want when you walk into Dr. Smith office, and say Hey, what part.

Third with GE, we have this proprietary technology that allows you to take a liver scan in a couple of seconds and Oh by the way Dr. do pole in this French a university is using the product we'd love to demonstrated for you there and you can actually talked a doctor to pump so.

For us.

In the second half and putting these key opinion leader evaluation sites in place is critical for our success. They will not be a a flood of revenue quite the contrary they will enable us to drive revenue in the back half of the year.

Got it and I hope that helps I assume that it does it helps you think about the process. So I can I assume that will sort of here.

This rollout as an ongoing basis for each new center, you're going into can we expect the most important milestone yeah, absolutely and you know I certainly gotten good feedback that over communication and during this difficult time for everyone.

<unk> is critical so we certainly will be announcing we have a good pipeline. These are not new discussions. These are discussions. We've had started now with the CE marked show you can imagine to the European sites. Despite the covance situation over there now, saying Oh. The thing is you know I can actually use it even solidify one and my country.

So we certainly will announce those and point those out along the way.

Got it. Thank you very much thank you Joe.

Well go next to add will add Ascendiant capital.

Yeah. Thanks for taking my question. My question is not a younger nine finish line forget you know the never approval in Europe as long for me you Oh, let's talk about going full steam ahead on other applications that.

Well great question, we do get that you know inquiry periodically my goal add is to.

Do an a plus job in the liver.

We have these other applications that the test platform allows us to bring to market. For example, we're able to show tissue temperature change during energy based surgical procedures for cancer or cardiology.

Completely novel, a those procedures are largely done blind today, but we could show a surge in real time, where heat or cold is going into the tissue. It's very compelling the bottom line as though it's a very different regulatory process a different call point, a different commercialization plan and I don't want to create a.

You know a Swiss army knife business I think the liver is a big enough opportunity for Andhra to build itself on but beyond that I wanted to kind of do deliver first and then move on with the same focus and success on a subsequent application. So I answer your question and saying focus is key.

He keeps our capital low I think increases the chances of success in this target space, but it's a great reminder, to our listeners that andra is first a liver company, but the technology, our IP and our platform is much much bigger than the liver.

Thank you for that question.

Great to hear a commercialization of the you're getting I had starting in Europe for do you do your own out for commercialization.

Either thing.

Plan as as your own or will it be significantly crap.

It's really at the same model add on which we believe which we practice were no myself and others over the years its establishing those reference sites. So when the U.S.. Although we don't have the FDA approval. We do have the formal agreements with the University of Pittsburgh Medical Center and the Rocky Vista.

A university under what is called an IR be investigation will review board, which allows universities to perform research pre FDA approval and limited circumstances, and that's the conditions under which we will be doing those studies here in the U.S., but these very sites you PMC Rocky Vista.

And others that will announce in the U.S. are going to be those same reference sites regionally with U.P.M.C. in the mid Atlantic Rocky vested in the southwest and the other sites [noise] those are gonna become a reference sites for the key geographies in the U.S., where we want to develop so I'm going to use you'd be M.C., assuming they're happy with.

Our product and the results as a reference site and I hope that we will earn there's absolutely no commitment on their part at this point, but I hope we will earn their interest as a commercial anchor account after we get to FDA approval.

When we do commercializing the U.S. So it's a nice entry point, let's have them try our product if it works could be very very interesting for Indra.

Turned out very well.

Great. Thank you for actually my question I wish you guys. Good luck. Thank you. Thank thank you.

Operator, I think where Ah.

One with questions in there.

You may I'd like to just wrap up then I really appreciate everyone's time today.

Yes.

Thank you I'd like to provide any additional are closing remark.

Thank you very much just so really just in closing thank you to everyone. Joining us today and this incredible time, we're living in a I wish everyone well I appreciate everyone's interest and support of Andrew and we look forward to updating you on our next quarterly call.

Bye.

Thank you, ladies and gentlemen that will conclude today's teleconference. We thank you for your participation you may disconnect at this time and we hope you have a good day.

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