Q4 2019 Earnings Call
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Greetings and welcome to the New mask incorporated fourth quarter 2019 earnings call. At this time all participants are in listen only mode. A question answer session will follow the formal presentation.
Anyone should require operators to assist during the conference. Please press star zero on your telephone keypad.
Please note this conference is being recorded.
Well now turn the conference over to your host my capital from Westwicke Partners you may begin.
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Good afternoon, and thank you for joining us today earlier today Neal Basking released financial results for the quarter and full year ended December 31 2018.
So at least currently available on the Investor section of the company's website at Www Dot new your basket Dot com slash investors.
Brad Cohen, President and Chief Executive Officer, and Chris Clark, Chief Financial Officer will host this afternoons call.
Before we get started I would like to remind everyone that management will be making statements. During this call that include forward looking statements within the meaning of federal Securities laws, which are made pursuant to the safe Harbor provisions of the private Securities Litigation Reform Act 1995, and Canadian Securities laws.
Any statements contained in this call that are not statements of historical facts should be deemed to be forward looking statements.
Forward looking statements, including without limitation, our examination of historical operating trends.
Speculations regarding coverage decisions pricing and enrollment matters and our future financial expectations. I'm results are based upon current estimates and various assumptions.
Words, such as expect outlook will should continue strategy potential intend try but weve planned and similar words or expressions are meant to identify forward looking statements.
These statements involve material risks and uncertainties that could cause actual results could differ materially from those anticipated or implied by those forward looking statements.
Accordingly, you should not place undue reliance on these statements.
For more information about risks and uncertainties related to these forward looking statements. Please refer to the cautionary statement regarding forward looking statements and risk factor section of Neovacs annual report on form 20-F, and the discussion and Neovascular AMD DNA, which are available on Edgar and SEDAR.
The information provided on this conference call speaks only to the live broadcast today March 30 2020.
Do you have that disclaims any intention or obligation except as required by law to update or revise any information financial projections or other forward looking statements, whether because of new information future events or otherwise.
I will now turn the call over to Fred.
Thanks, Mike and good afternoon, everyone.
It was bought by he wants the year all significant parts for the company.
That's me Bill the clinical data points, you know and expand all of you do so commercial presence.
We involve oh welcomed value creation strategy, which focuses on advancing our two products.
We used our sales team to assist commercialization airports in Europe.
The company made a key hires in November appointing built little less chief operating officer to help drive our commercialization initiatives.
Well that's business development activities.
Bill has extensive experience in the medical device industry and we are confident that our management team is well positioned.
What's the teaching vision that 2020 and beyond.
Turning to they'd be do store group saw Nike saw several milestones for this device.
In September we do so what attitude the European Society, or cardiology guidelines want it to me Bundock, we practically on channel plus the new pipelines side do you wish diagnostics to differentiate between coronary artery disease and Michael basketball disease.
We believe this indicates that reduce towards meeting the way it interventional cardiology to find new an optimal treatment.
For chronic and your though.
The new guidelines, coupled with our increased commercial presence had lots to full but rose and reduced implants I didn't bore interest.
Additionally, we have taken concrete steps on the past when you do a pool in the U.S. markets, where the after <unk>. When you can see grom to reduce a breakthrough medical device status.
In the fall of 2019, we committed to submitting it would be an application to the yep Yep before the year was out and we did just that on December Thirtyth 2019.
Yes indication was formally accepted by after you get all the January and we also took this step partially because we believe that do we do so has the potential market for larger than that would be limited humanitarian use device.
Yep Yep has been you went over application and we are and ongoing information that changes with you.
We were recently informed that all application will not be delayed by current after you get restrictions, resulting from the cool enough virus.
We believe that the totality of data from the considerable studied they always do some one European post market study was all 400 400, I'm sorry with over 200 400 patients enrolled.
And multiple independent published studies will provide reasonably sure one oh safety and efficacy to support the Pmeight.
We hope that taking this more vigorous past demonstrates our confidence we have in its safety and efficacy helping me too.
We also continued to execute our reimbursement strategies in several European countries and an early 2000 why did you get the reduce are once again received and you'll be one status in Germany.
We continue to make meaningful progress in these international markets as we get involved our clinical reimbursement objectives.
During the first two months of 2020, we saw strong revenue growth.
And we were on track for the quarter ever.
Well I have to the postponement of many cases June critical own acquiring in March which for US is thought lumbar deal in Italy, Oh, what second largest markets in Europe.
We do expect to covert crisis to impact Oh, we do so rapidly 40 year, but we haven't actually repository, what's phone cases, which we intend to reactivate that's showing that hospitals. We stop me lack of cases, and we believe that dish would help us in old recovery.
Moving on to cheer up to date that happened 82 patients treated in our two clinical trials or through compassionate use cases.
That's previously an all new basket received approval in October two crolles enrollment in the chair I want you to be twice in the United States.
Enrollment is ongoing and to cheer up to a CE Mark Nicholls study.
Most importantly, we have determined that we have sufficient evidence so far for CE, Mark I'll watch atypical channel and the time by four pool of primarily depends on the European regulatory requirements, which are in transition and which are now being be viewed again by the European.
For these units sort of Corona light with situation.
Either way, we believed to be on schedule for approval by 2021 or earlier.
Well the results of the two studies have been encouraging ask a 30 day, so fiber wait for the patients treated with a generalized 89% was one patient that will happen so by over six years post implant.
That's yara have successfully treated boats functional and degenerative mitral regurgitation patients as well as patients with pre existing prosthetic aortic valves and whiteboard surgical and you look like.
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I will now discuss the next step in the evolution of tiara, the Transfemoral transseptal or cheer on T.F. program.
The geology of development program is based on the cheer up on April Bell and allows for a very controlled unpredictable implantation procedure asked me have experience and all of 20 people culture well.
Yeah office, the possibility, albeit less invasive delivery of the device and will allow interventional cardiologists to before the implantation.
As many of you know the team reach the design, we used this device brulee and Twentytwenty.
The company is benefiting from a real understanding of the anatomical and technical challenges due to our clinical experience much might look awfully policemen.
Our extensive clinical database.
Our next step will be to initiate an early small clinical feasibility study in humans before the end of Twentytwenty.
Sure Yeah, it's being designed to allow for which weve ability off the device up to the point final really.
Importantly, we also believe it looked great expand the pool treatable patients.
Oh, no low profile flexible delivery system, coupled with reduced footprint don't develop itself should provide better mindful about access and deployment that competitive systems, allowing for fossil trial enrollment and ultimately long abroad adoption.
We have also assembled a new medical advisory Board a prominent key opinion leaders in the structural hop space and we believe the caliber all these advisors 80 Testament to the potential all the chair about tee up.
I'll now like to make some comments on the nason you listening determination that was made in February.
We have requested a hearing with an aspect hearing panel and the hearing is scheduled for early April.
We will announce the penalty decision in a press release when did it received.
We will request continued listing on the act change.
We will pause on April but plan to regain compliance to support the request.
We believe to develop banks will be received favorably.
Hello.
Finally, before 9 million or do other than 17 financing notes will be retiring in may.
These have been is significant and when that accompanies financial position.
Secondly, we have developed a strong operational track records joined the past two years and we believe many value creating opportunities from all four valuation strategies will continue to come to fruition in the near future driving major company value increases.
The expected we took on on the cash reinvest to create these value creation program is significant.
Overall, we're very pleased with a quarter and 2019 and we believe that we have put the building blocks in place to achieve significant advancements in your best value creation strategy in 2020 <unk>.
I will now turn the call over to Chris will discuss all financial results.
Thank you, but okay.
Before I discuss the financial results.
Back to discuss a few automakers are important to put up on underperformance, He's got Bucks movement and perspective.
Firstly.
Investigation stop minutes election, we launched in February but she has been completed.
The findings or draw sure Mets, that's the best friend Columbia University I wasn't quite strong evidence of price manipulation. During the time period, which were trying to maintain compliance with the mass that 35 million dollar.
Minimum Mark you've got the quantum and before the February 17th deadline.
We will now Parsons fundings on both in real on the Department of Justice and allow these institutions to shoot Boston based on evidence.
We believe what an ongoing basis theres lucky more intense scrutiny and to the trading into companies still never before.
Good to restore that market trading activity.
Secondly, as Fred mentioned.
Revenue growth in the first part of Twentytwenty has been strong brought to the slowdown associated with the calendar, but we were on track cross strongest quarter ever.
We are continuing to monitor with changes in the European markets money, which was suspended elective procedures for the time bid and we were pulled back to you do better understand the outlook and our ability to rebound talk what we've got tree.
Turning to the income statement.
Well, a full year 2019 revenues increased 20% to 2.1 million compared to revenues of 1.7 billion. The same period in 2018.
Oh fourth quarter revenues for 2019 increased 8% to 566000.
That's a 523000 put the same period in 2018.
The company continues its can most pleasant constructions.
Physician interest is accelerating we are poised to capitalize on the favorable underlying market dynamics, but the market returns launches.
The contribution from a decent revenue has been positive reducing development expenses and high margins are the reducer.
Even without focused cost optimization, so very encouraging that's the volumes increase.
The cost of goods sold for the full year 2019 was 458000 compared to 366000.
The same period in 2018 on a gross margin was 78 cents compared to 79% for each period respectively.
Well the cost of goods for the fourth quarter 2019.
Well, it's $109000 compared to $93000, but the same period in 2018 and the gross margin was 81 person that's 82%.
With respect to.
Overall, we saw a drop in deep on monthly expenses for the full.
And the fourth quarter 2019 compared to the prior periods.
Total expenses for the full year 2019, with 31.7 billion compared to 33.8 million same period in 2019.
Something a decrease of 2.1 billion <unk> son.
Total expenses for the fourth quarter 2019.
$10 million compared to $10.7 million for the same period in 2018, representing a decrease from 650000 Oh, 6%.
Notably, but then you streak. There's some expenses. It was also a transitional expenses general and administrative expenses in 2018 as a company affected the corporate transition.
Its own certain potential litigation issues.
The quarter development and clinical trials expenses as a company, we focus resources towards its value creation strategies.
General and administrative expenses for the full year 2019 decreased $7 million from $16.4 million for the same period in 2018.
Product development and clinical trials expenses <unk> full year 2009 to increase to $20 million.
60 million goes for the same period in 2018.
The numbers reflect the corporate turn around the prior to spoken about so regularly and so passionately.
The last and comprehensive loss for the yeah, the full year 2000, $9 million to $35.1 million $33.6 million respectively.
$5.40 basic and diluted loss per share.
As compared with the loss and comprehensive loss of $190 million $109 billion, respectively, well $76.26 basic and diluted loss per share the same period in 2018.
The loss and comprehensive loss for the fourth quarter 2019.
Well $9.6 million and $11.1 million, respectively, a $1.45 cents basic and diluted loss per share as compared with income a comprehensive income the 10.2 million gums, and 10.9 million doses, but like.
$5 incidents and basic and diluted earnings per share the same period in 2018.
The 75.3 million decrease and the comprehensive loss incurred for the full year 2019 compared to the same period in 2018.
Can be substantially explained by $7.7 million decrease in the charges related to the time can treat the November 2017, I may 2009, two financings.
The substantial change in our losses, a game points to the company moving towards burn rates pass me.
I can be managed within the context, the deals and the capital markets.
Yeah. That's one of this is operations and capital expenditures with cash generated from operations <unk> equity and debt financing.
The company open the our 2019, the passion classical coolants 9.2.
Unfortunately 26 million.
On operations not with the contribution from the do you see revenues.
The company funded the short too short cool, so cool crude the balance sheet.
And through the combination the remaining 20, some couldn't be something once the proceeds of $1.3 million.
The completion of Kim 5 million dollar goes pushing financings in February and March 29, Kim.
That's an $11.5 million gross proceeds button equity financing and May 29 to finishing yeah with $5.3 million.
The company also completed the 10 million dollar growth post Super supplements.
Early gentlemen, <unk> 20.
We anticipate the need for significant additional financing so and also continue to like a business.
Given the nature of the company's capital structure, I mean, no assurance that such financing will be available on favorable terms or tool.
However, we are reaching out to new investors and coalescing around the pound investors. So it's not exactly.
I'm not complaining value creation sections.
And as previously stated we are looking forward to made 17, twentytwenty, but they like 2017 minutes mature.
Finally, I will note that's up to date.
Well 11, 133319 common shares outstanding.
We remain laser focused on the potentially look to cool products for all patients.
Our investors Lucky.
Thank you Chris and thank you all are listening to opening remarks. So in conclusion, we are no less than two months away from the majority of the 2017 controllable that notes.
And we are not aware of any active downside pressure on the share price from these notes.
Well the more we identified evidence I'll be period I'll start manipulation, joining a critical time period of the company to stay in compliance with NASDAQ rules.
We will now to the evidence or doing fairly well and the department of Justice well them to investigate the perpetrators and we will lay out our case for continued listing at the NASDAQ hearing in early April.
We are continuing to make great progress with all four valuation strategies, all reduce a revenue growth would be impacted by the Cologne up by with situation, mainly Joe into second quarter.
We just saw strong growth in January and February and we were on old wage outperform our first quarter revenue plan well end up I would start to impact all March results.
We believe that we've all got through these difficult times and get back to significant growth again off the Europe gets to the issues related to the cool in the virus.
Yeah, you asked me your weighing all reduce up you may submission, which process has not been impacted by the pilot situation and we are beginning to see real appreciation for all reduce a therapy for the treatment of micro basketball refractory angina from although industry partners.
We have determined that we have sufficient clinical evidence to fall for CE, Mark all trends either cultural mitral valve and we are waiting clarity around the European regulatory requirements due to transition in may.
The European Commission has just recommend that European authorities to postpone the make NDR regulations by one year well all domestic industry in general to focus on and combat the Corona virus pandemic instead of focusing on these new regulations.
We believed to be fine either way, but we need to know which rules apply.
We continue to make great Park West, but development of a new best in class Chair about P.F. system, which remains on track way first human implied before the end of this year.
That's fine unbelievably tumultuous times, we held together old valuable employee base.
We're all things.
Adam Great German sales reps and build at all and all the high caliber and messed up executive.
The company is doing well, we believe that we are operationally already well beyond the thrown around point.
Financially the upcoming retirement of the 2017 death notes in May it's significant positive event.
We believed to have a strong case for continued NASDAQ listing and we have great interest by investors to in basketball company at reasonable terms and what many perceived to be our undervalued assets. Once we retire the 2017 death notes in May.
I would like to thank our loyal investors for their relentless trust and confidence in us and goes past most difficult and painful times with unbelievable stock price declines.
I sincerely hope that all one best of now indeed see that the company should only be moving forward and upwards from people.
I would know like to open the call up with some questions operator.
Sure at this time will be conducting a question and answer session. If he would like to ask your question. Please press star one on your telephone keypad, a confirmation tune would indicate your line is in the question in queue. You made fresh start to she would like to remove your question from the Q4.
Hard to screens using speaker equipment, it may be necessary to pick up your hands. It before Christian discard keys, one moment, please when we pull for questions.
Our first question is from it Danielle ancillary. Please proceed with your question.
Hi, good afternoon, guys. Thanks, so much for taking the question I hope everyone is healthy and see I've two questions one financial one product related on that financial side to appreciate and it may 17th is then or at the upcoming date may as an important event, but can you talk about how the current dynamics around coal bed.
The lack of revenue generation is impacting.
Your cash position and does it change sort of that they need to give me some sort of a capital raise or bring in some money from somewhere and at what point should we expecting you to be in a position to shore up the balance sheet.
Yes, Thanks, Danielle everything is fine roll save thank you for asking and that we hope to same is true for your team as well that that leerink. So to your question, yes, there isn't impacts to revenue off reduce or again, there will be a slight impact.
In Q1, because all.
The fact that we see that we saw postponement of K says as of March but that was also partially offset by strong growth in January and February. So there will be some in fact in Q1 Q2 will be a larger impact, but you need to keep into account that the reduce it was still only a.
Microsoft all that cash generation for us.
We still are in need all general cash raises a and we are confident that we have enough cash to get us well beyond the may 17 state. So.
There is really no change from that standpoint.
We are we have enough cash the last us into a July August.
Around that time period, and so at that situation is not really changed meaning that we have a enough cash to last is beyond the may 17 to date and we believe that there may 17th date is important because at that point in time, we will have been able to clean up the balance sheet, a and we have.
Back quite a few investors interested in investing in our company at once we're through that data have been able to clean up the balance sheet and the other cap table. So.
That is the situation on the financial side does that answer your question.
That does that perfect and then and then on the product side.
Yep tiara.
So I know next step now I believe you said, it's piece ability, but when can we think of of you starting discussions with FDA on in a on a pivotal trial for the T.S. system and I guess, just trying to get a sense of what the upcoming sort of clinical milestones will be over the next two years could this be in a pivotal.
Oh, Oh by the end of next year or how should we be thinking about timing for the past system in the U.S. Thanks, so much.
Yes, Yeah, well you know as always we take it one step at a time.
So first of all I can tell you that we have already been in discussions with FDA also for our chair Rod Transfemoral system, a we have calibrated with them on the expectations for an approval, albeit first human use a clinical trial, a we have ER.
Gone through some key questions athletes to one of the requirements what do we have two or two to demonstrate to them.
So that we would be comfortable with filing that submission.
So calibrated we understand with a common problem and we have built that into all or a work activities.
I'm very happy to tell you that we are less than a months away from all wolfberry force chronic animal implants.
We are going to have our very first chronic implants form de cheer up T.F. system before the end of April.
And then there are a series of animal implants that all scheduled out from there on a through the summer time, there are a chronic implants to basically evaluate the blood flow from both US rifts are often design that vendor acute a implants or two.
Demonstrates <unk> ability to deliver the felt the transfemoral transseptal manner.
All that is planned out a and then should called me late accumulate in a in a force or.
Submission for a post human use.
Which we anticipate it could be into United States, or Canada, Canada, but in any case, we are applying to U.S. After you rules that we want to fulfill so that's kind of like where we are that we take a step by step a we think it's going to be a major possibly event for us at the habit first human or.
In plan and that is still scheduled before the end up 2020, a into way that I, just outlined so and well well got through that first we'll probably have somewhere in the range of five to 10 implants, which will.
Go into 2021 and.
And then well start planning for the next steps.
Thank you.
And once again, if you have a question you can press or start wondering your telephone keypad.
Our next question is from Jason Mills from Canaccord Genuity piece, we'll see what your question.
Hi, Treading, Chris This is actually Cecilia on for Jason. Thank you for taking our question I'm trying to <unk> I was hoping you could provide just a little more color on what you've seen the out of Europe with reduced or mark on the country specific standpoint, just in and how different countries have dealt with that.
And then just that you're looking for it the ability of your reps today that continue can communicate and engage with their customers and and as you move past. That's a moment right now just the ability to recapture postponed procedures.
Right, Thanks to Syria, or actually a question. So it is and indeed quite different poor country and even for region I would say a the hardest hit Legion and you see does on the TV as well if lumber idea and north from Italy, that's the Milan area or and.
That urea happens to be a very strong or reduce the implantation area for us as well that area is essentially completely shut down a there's nothing happening at that thought through impact all results are ready in March and certainly has continued so as you know, Italy is all a second biggest market.
In Europe after Germany.
In Germany. The situation is it's actually quite different from that from Italy, a there was not really a complete the total shut down though or there are certain hospitals that have stopped a elective procedures, including to reduce or are there are some hospitals are still implanting do we do so in fee.
We had the ER and nimble and last week or somewhere in Germany. Similarly in the UK and some other countries, we have to end blinds and in the UK a last weekend, we have that employees as well as well. So it is not that it's it's not so that's completely shut down everywhere.
Our but that's certainly D. The virus situation has a has a as they you know I would say substantial impact.
On the implementations and ER revenue generation that we have.
We have a lot of older postpone cases by now about 30 patients three zero or are in deadlock all patients where are the patients wanted to have their <unk> do we do what sort of positions were ready to go and then the procedure was postponed.
That is all in.
In dialogue no of those patients at both sites on the physicians, who wants to do those procedures. So that we believe that that situation will continue and we will continue to Oh I have an increased Oh law golf all patients that Oh wait dig it reduced procedure so long.
The hospitals will stop doing yet he was again, a which probably will differ from country to comfortably in from region to region.
Well I'll have a quick a restart of the reduced implementations that we believe we should be a back on track again that way sooner than later.
Great. Thank you I appreciate all the color and then if I could.
I'm sorry go ahead I'm sorry.
Yeah, I would just gonna say, so I do believe that the majority of the impact is going to be in the second quarter like I sat there was some in fact in March but I think the vast majority of the impact will be into second quarter and I do believe that we will be back to strong gross a into third and fourth quarter over this year.
Great. Thank you and then if I could also just ask on your thoughts around the potential postponement of MDR I know you mentioned that at the end in your prepared remarks, but just as you're thinking about bringing Chad to the marketing at what impact that could have on if it is concerned on approval time.
Mines, and then just going forward with implementation and your later I'm kind of how you think about that too. Thank you.
Yeah as it relates to that trend typical Cherokee Mark. So most importantly, and this is true when will that from a regulatory system.
We have determined to have sufficient clinical evidence for a CE mark.
The the European regulatory rules were going to be updated to the AMDR requirements in maybe a and now the European Commission or has recommended to postpone that by year and that is basically to allow the medical technology industry at large to be able to focus on.
On the delivery into supply of critically needed a medtech supplies a in those countries, a and I'm not too worrying about a d. So updated rules so that seems to make sense, what big picture perspective, but it needs to be especially we view it into who by the authority is in Europe and into countries.
And the timelines data here for that or are looking like it's probably going to happen by the end of April if it happens.
For us.
No we can live either way, we can live with the requirements, although the M.D. system, but also under the M.D. all systems, we basically have to know what it is because there's a lot of nomenclature changes into regulations and the filings that you do have to address those changes.
So one way or the although we will be able to file a once we know what the walls are a if the M.D.R. rules like ought to be postponed for a year. It will make that are likely easier for us.
You can probably filed faster for at CE, Mark and potentially get the CE mark approval faster than under M.D.R.
But in general we are confident to have our CE marked by 2021 or earlier asked me have always stated.
Great. Thank you for all the color.
Thank you Cecilia.
Okay. At this time, we have reached the end of the question and answer session and this is also concludes todays conference and you may disconnect you lines at this time. Thank you for your participation.
Thank you.