Q1 2020 Earnings Call
These forward looking statements involved inherent risks and uncertainties that could cause actual results to defer materially from those indicated including those identified in the risk factors sections of our most recent annual report on form 10 K.
Such factors may be updated from time to time in our filings with the S.C.C., which are available on our website.
All statements made during this call our as of May 7th 2020.
We undertake no obligation to publicly update or revise our forward looking statements as a result of new information future events or otherwise except as required by law.
I would now like a turn the call over to Mr filled they shot.
<unk> Medicals, Chief Executive Officer. Please go ahead Sir.
Thank you Diego appreciate its welcome everyone to heel, yes, medicals first quarter of 2020 earnings Conference call I Hope every one is home and safe in this just really crazy time, and and certainly from from our perspective, we we hope that everyone is a and your.
Families in your communities is is doing well.
I'm joined on the call. This evening by Joyce My bike Count, our Chief Financial Officer, and Chief operating Officer.
Let me provide you with a quick agenda for today's call I'll begin by discussing our regulatory process in the U.S. in Canada.
Followed by a review of our first quarter revenue results and the operational progress that we made during the quarter and in recent months.
Then provide you with detailed updates on our business in light of the disruption caused by the covert 19 pandemic.
Joyce, we'll discuss our first quarter financial results in detail and the recent progress we've made to secure additional capital and enhance our balance sheet conditions.
Well then provide a few closing thoughts before Joyce and I opened it up for questions.
Before I begin into the formal program I like to share that the feedback we continue to receive from the authorized clinics treating patients in Canada continues to support our view that the real world performance of our pawns device and treatment is consistent with the performance that we observed in our clinical trials.
This encourages and motivates the clinicians and patients using pawns their loved ones and certainly our employees.
While not everyone responds to upon treatment.
It is extremely heart warming and gratifying to be able to make a significant difference in the lives of the majority of patients that we treat.
With that as a background, let's start with the review of our regulatory progress in the U.S. in Canada.
In the U.S., we made an important strategic decision during the first quarter to prioritize an indication in multiple sclerosis, or M.S. as our pathway to pursue our first as a noble classification of the ponds device.
This decision was based on the quality of the data included in our M.S. submission to health, Canada and to describe that a little bit more we have to peer reviewed clinical trials one of the clinical trials demonstrated the active group showed statistically greater improvements versus a control group in.
Dynamic data index or D.G.I., that's a measure to assess and individuals gate balancing risk of falls.
The other studies suggested that pawns stimulation can enhance motor performance and working memory, while also driving neuroplasticity.
In addition, we've generated evidence based on the real world data gathered in our validated database in Canada, which showed statistically significant improvement from baseline in the functional gate assessment.
We believe our results are sufficient to demonstrate a favorable risk profile.
I'm, sorry risk benefit profile as required by the dinovo pathway in the U.S.
Importantly from a business standpoint, M.S. represents a significant patient population in the U.S. with nearly 1 million individuals estimated to be living with this condition.
M.S.A.M.S. is also deemed to be a high unmet medical need by the F.D.A.
We believe that the medical necessity is another significant driver for us to pursue.
Therapeutic area.
With this is the backdrop, we believe this regulatory pathway represent our most effective and importantly efficient pathway to obtain our first U.S. clearance for the ponds device. We believe we will create the highest value for shareholders in this path.
Important lead to date are pursuit of our indication and M.S. has not significantly been affected by the coated 19 pandemic and we have remained focused on aggressively pursuing this initiative.
While future impacts of the pandemic on our regulatory submission remains unknown, we've been very pleased with our pace of progress and continue to anticipate submitting for dinovo classification for M.S. in the second half a 2020.
In Canada, our regular <unk> strategy continues to be driven by three primary objectives.
First our goal of bringing our innovative fat therapy to patients with high unmet medical needs check on that one.
Second to expand our Canadian label, specifically for M.S. to drive our addressable market and performance in Canada, and third degenerate sound evidence to build the scientific credibility of our novel treatment, which will also support our near term U.S. regulatory strategy specifically.
In our focus in M.S.
On February 27th we submitted a Canadian class to license Amendment application for this label expansion based on the data that I discussed earlier in my remarks.
We were very excited to receive marketing authorization from health, Canada on March 18th.
This label expansion significantly increases are addressable market opportunity in Canada, enabling enabling us to market are ponds device to the approximately 93500 individuals living with M.S. in Canada. In fact, it's one of the highest incidents in the world.
Given the chronic progressive in potential debilitating nature of this neurodegenerative disease, we have seen that M.S. patients are highly motivated to pursue treatments that can lessen the severity of their symptoms.
Were incredibly proud to provide these patients with a novel therapy that has the potential to improve and potentially even restore their ability to walk and we're focusing on making them aware of this new treatment option.
Patients in clinicians are excited to have a non drug non implantable option to relieve their symptoms of M.S.
Lastly, I want to briefly discuss the pursuit of our U.S. indication for the treatment of chronic balanced deficit due to mild to moderate traumatic brain injury for M.M.T.B.I.
We are continuing to seek potential sources of funding in order to execute R.T.B.I.W. trial and other P.B.I. related research.
That trial has been temporarily halted as a result of the coded 19 related impacts on all clinical trial activity across the U.S. and Canada.
According Accordingly, this regulatory initiative is on hold for the foreseeable future.
Now, let's turn to our revenue performance in the first quarter.
We reported total revenue of $207000 during the first quarter of 2020 compared to 677000 in the prior year quarter.
Our review.
In both periods was driven by sales of neural plastic he in neural plastic I'm, sorry, neuroplasticity clinics in Canada that have been authorized to provide our ponds treatment.
In the first quarter of 2020, our revenue with large is comprised of sales to clinics locations that were authorized prior to the beginning of 2020.
As a reminder, we began 2020 with a total of seven clinic locations authorized to provide our plans treatment in Canada.
In the first quarter of 2019, when we originally launched our revenue benefited from strong initial sales to clinic locations as we began commercializing our ponds device. During this period. Both these clinics were clinical trials participated in our clinical trial and had significant database of patients were eagerly waiting.
For the pause treatment to be cleared in Canada.
Looking at our revenue performance in more detail <unk>.
Revenue performance during the first two months of 2020 was consistent with our expectations. However in the last two weeks of March our business was significantly impacted by the district. The by the disruption caused by the <unk>, 29th 19, pandemic, which led to the temporary closure of clinic locations that have been authorized to provide are.
Ponds treatment.
I will discuss this disruption and its impact in more detail later in my prepared remarks.
Moving to an overview of our operational progress in Canada.
By way of background, we began 2020 well position to build on our commercial progress in Canada.
During the quarter, we established a new direction for the Canadian business based on our strategy to drive patient treatment starts by building access credibility and awareness for the ponds.
The approach has significantly streamlined operations in Canada with the goal of improving our process for identifying authorizing and training new clinics, increasing the pace of adoption of our Ponce treatment over time and doing so as efficiently as possible.
In connection with this approach, we improve dark targeting criteria for the clinics that we engage with an off with with an authorized to provide ponds treatment. Specifically, we are targeting clinics now that have a large existing commercial focus on neuro read rehabilitation to enhance credibility.
We also focusing on clinics that have it established referral networks with the public hospital systems for the treatment of patience with neurological conditions to drive awareness and finally clinics with a significant reimbursement experience with pair relationships with respect to the neural rehabilitation treatment.
Treatment to drive access.
We've also implemented a new pricing model designed to facilitate patient adoption by reducing the up front cost of Ponce treatment and we're encouraged we are encouraging studies of our device by reputable condition clinicians through activities like our clinical experience programs.
Armed with this new commercial targeting in pricing strategy.
Our team made impressive progress during the first quarter authorizing seven new clinic locations to provide pond streetman doubling our Canadian capacity in the first quarter alone.
Our new focus of driving patient starts have made a big impact on our operational efficiency in the first quarter, leaving us better position to drive adoption of our innovative ponds technology as soon as the post covert business recovery begins.
Like many companies in our industry, our operational and financial performance has been adversely impacted by the emergence of the code 900 pandemic and the restrictions that had been implemented to slow it spread in Canada.
In March provincial and territorial governments in Canada began to implement policies to limit the performance of non life saving medical treatments and limit activity of the citizens, including restrictions similar to the shelter in place policies pursuit in the United States.
These policies varied across the 10 provinces into territory is in terms of their specific restrictions as well as the timing of their implementation.
But by mid March we began to see the authorized pup pawns clinics to suspend new patient treatments other than to provide emergency services required for select patients at the end of March all the 14 clinic locations that are authorized to provide ponds treatment. We're temporary closed as a result.
Our performance during the last couple of weeks of March was significantly impacted.
All of the patients who had completed their two week in clinic initiation prior to the Cove at 900 shut down we're able to continue with their 12 weeks at home portion of the treatment throughout the shut down and the support of the clinics by by with the support of the clinics by a virtual means.
With respect to our own business Healios reacted quickly and proactively to that.
<unk> 900 pandemic to protect the health of our employees and enable them to safely continue their work most notably we closed our physical offices and instructed our employees to respect the federal and local cobis related policies that had been inactive enacted in their regions.
I'm pleased to say that we also prepared we were also prepared with an I.T. infrastructure that was that enabled all of our employees to productively work remotely.
<unk> with respect to our commercial activities. We've made important changes to help mitigate the impact of covert 19, and ensure that we are well position when the impacts created by this pandemic survive subside.
First were engaged and closely monitoring the activities of our authorized ponds clinics to provide them with any support it needs in this challenging period.
And second while iron internal.
Team in <unk>, sorry, while while our internal team in Canada has been unable to visit perspective, new clinics in person to engage in business discussion. They are continuing to target and cultivate relationships with Clinton clinics targeted specifically with our new criterion.
Virtual means.
We have been very pleased to find that many clinics have been receptive to engaging with our team in this way.
[noise] stepping back during the first quarter, we made considerable progress toward our primary goal of getting our pawns technology cleared in the U.S. and continue to scrutinize every expenditure to efficiently achieve that goal.
During the quarter, we raise approximately $3 million and gross proceeds to support or operations operational gold and activities.
Will continue to vigorously manage our expenses to focus on the activities that yield the highest value for our shareholders, namely R.U.S.M.S. submission and clearance and the development of the market for our technology by treating patients and building access credibility and awareness through our Canadian operations.
As the covert 19 pandemic remained ongoing and the pace timing and magnitude of recovery in Canada, and the U.S.R. highly uncertain. We're currently unable to provide expectations for future financial performance until the world recovers from these unprecedented times. However, we're encouraged.
By or continued pace of activity as we pursue <unk> regulatory clearance and M.S. and the commercial as initiatives in Canada that we're focused on to position Healy is to drive expanded access and patient adoption of our ponds treatment as soon as the Kobe 19 pandemic subsides.
With that let me turn it over to Joyce to walk you through the first quarter financials.
They still we played in total revenue at $210000 for the first quarter of 2020 compared to 677000 in the prior year period product sales have presented approximately 92% of revenue in the first quarter 2020, compared to 100% of total revenue in the first quarter.
2019 product sales in both periods were generated to the sales in the ponds device and math pieces to narrow plasticity clinics in Canada.
I still discussed product sales in the first quarter of 2020 were largely com pride compromise <unk> comprised of revenue from south of clinic locations that were engaged and authorized to provide times treatment prior to 2020.
First recorded 2020 product alpha impacted by the code they'd 19 pandemic.
Typically that tempered the temporary closure of clinic location.
As a reminder, product sales in the first quarter of 2019 benefited from strong initial demand from our first two clinic location as Healy is initiated the first commercial shipments of its palms device in Canada during that period.
Oh gross profit for the first quarter 2020, with $106000 compared to 441000 in the prior year period.
Trading expenses for the first quarter of 2020 decreased 3.2 million or 43% year every year to $4.1 million, it's important to know that the 43% year over year decrease in operating expenses.
Blacks that continued benefits of cost reduction initiative that we implemented during the past year.
By line item that changing operating expenses was driven by a decrease in selling general and administrative expenses at 1.7 million or 38% year over year as well as a decrease in research and development expenses at $1.6 million, what 58% year over year.
The decrease in S.G.N.A. expenses, with primarily due to reduce wages and salaries due to lower head count as well as reduced commercial operations expense associated with U.S. launch planning activities, which were terminated with the F.D.A. to know into two of 2000 in 19.
The decrease in research and development expenses.
Due to read dune development costs.
The completion of the ponds device development in 2019, and biggest wages and salaries due to lower headcount.
Operating lost for the first quarter of 2020 was 4 million compared to an operating loss of 6.8 million for the prior year period.
Total other expense for the first quarter of 2020 $755000 compared to total other income at 8.1 million in the first quarter of 2019.
Year over year change in total other income and expense was primarily driven by the change in therapy value of derivative financial instruments, which was a gain a 4 million in the first quarter of 2020 compared to a game at 8.3 million in the first quarter of 2019.
The change in fair value other companies derivative financial instruments was primarily attributable to the changing the company stock price volatility and the number of derivative financial instruments being measured during the period.
But the first quarter of 2020, we reported a net loss of 4.8 million or 15 cents per basic and deleted common share compared to net income of 1.3 million or five cents per basic common share and six cents per diluted common share for the first quarter.
2019.
Turning our discussion of our about turning to a discussion with our balance sheet in recent financing activities.
As of March 31st 2020, we had $4.4 million of cash compared to 5.5 million at December 31st 2019, we had no outstanding debt obligations in either period.
Decreasing cash during the first quarter of 2020 with primarily driven by net cash used in operating activities of 3.8 million and net cash used in investing activities of 10000, partially offset offset by 2.7 million of cash provided by financing activities.
Net cash provided by financing activities. During the three months ended March 31st 2020 consisted of proceeds from the following activities.
On January 27th we entered into an H.T.M. agreement with H.C. Wainwright during the first quarter, we sold and issued 1.1 million shares common stock under the A.T.N. and an average price of 75 cents per share the aggregated market value of these activities with $800000.
On March 20th we issued an aggregate at 6.3 million shares of our common stock and it registered direct offering at a price at 35 cents per share. Additionally, we issued unmet just stirred warrants in a concurrent private placement to purchase up to 6.3 million shares of our common stock at a price of 40.
Six cents per share net proceeds from the offering where approach approximately $1.9 million.
Subsequent a quitter end on April 13th the company was granted eight 323000 dollar loan under that Paycheck protection program established under the <unk> aid me leave and economic security or cares active 2020, the company plan to use the proceeds from the P.P.
Repeat loan for covered payroll expenses rent and utilities in accordance with the relevant terms and conditions of the cares Act.
Has disclosed in our eight K. filing this afternoon based on subsequent guidance issued by the federal government, including a presumption that no publicly traded companies are eligible for I.P.P.P. loan. The company has decided to return the P.P.P. loan proceeds within the time period imposed under the new guidelines out of an.
Abundance of caution subject to any additional items that may be issued by the federal government on eligibility criteria for public companies, who have already been granted P.P.P. loan.
We continue to evaluate bowl evaluate multiple options to secure additional capital to strengthen our balance sheet and support our operation.
Let me now discuss our 2020 guidance as we mentioned in our earnings release. This afternoon, we have withdrawn our financial outlook for the full year 2020 due to the uncertainties associated with the code at 19 pandemic like many that companies in the medical device industry. We are currently unable to.
Estimate the duration impact of coded 19 on our operations and financial results at this time.
That I'll tend to call back over to fill thank you Joyce <unk>.
Look we're we're extremely proud of our achievements in the past quarter and we remain confident in the long term opportunity in store for healing as no medical technologies. Despite the ongoing challenges created by covert 19. The process. We've made progress sorry, we've made had has better positioned us to successfully some.
For you U.S. regulatory clearance and continue to drive the potential of our ponds technology.
Before we open it up for questions I'd like to close by thanking our employees for their exceptional efforts and dedication in the first quarter of 2020.
The challenging circumstances every navigate the global covert 19 pandemic and I'd also like to thank our customers certainly our shareholders for their support and those on the call. This evening for your interest in Healios Medical technologies I'm very thankful that together, we continue to provide this innovative treatment to people who need it.
Join Tonight, and I really happy to take questions from the audience.
Thank you.
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We went out take a moment to allow participants to join the queue.
[noise] I first question comes from Jeff, Puerto with Puerto Capitol You set your question.
Hi afternoon.
I I had been reading that a lot over the approved drugs for M.S. that are being taken by patients.
Have immunosuppressive characteristics.
Therefore.
Doctors are discouraging their patience for taking those drugs because they would be extremely vulnerable to cope with 19.
Does that create any opportunity.
For us in our dealings with the F.T.A.
To move along our application in light of the fact that we offer a a safe alternative.
So so here's how it answer that Jeff as I said in in my remarks, F.D.A. has identified M.S. as a a high priority or a high unmet medical need area and certainly the fact that we're a you know noninvasive not implantable non drug.
Is certainly really <unk> really consistent with what people are looking for and F.D.A. have been particularly you're you're absolutely correct. They they've issued some guidances around the the emergency use.
We actually discussed a v. emergency use for for pawns with with F.B.A. It really wasn't a an area because they're really focused on the C.N.S. area. There. So it wasn't an area in which we could pursue.
But under the envelope of the fact that this is a high unmet medical need and we're going through our submission precisely at a time, we're as you pointed out some people with M.S. might find it difficult to to start on an immunosuppressant drugs. We think that that plays very nicely in the environment for us to be applying to F.D.A. today.
Okay. Great second question is for Jewish.
Regard to the Paycheck protection program.
Why was the decision made to return the funds should the government rather than keep the funds.
And then possibly have it just be a debt that needs to be repaid to the government.
Yeah. So so when we went through that process staff with the the Paycheck Protection program. You know, we we followed all the rules in terms of the eligibility. Initially there were some questions around to the certifications that that were required and based on all the rules in the initial round of that program.
We we more than qualified you know we thought that we were basically the poster child for the program as as you know where a small company limited number of employees. We've kept our employees on on staff to continue to work forward on these important initiatives, but as we evaluated the the guidance that was coming out and.
On the advice of our legal counsel as as the a small business Association I did not feel that publicly traded companies regardless of their status should be a eligible for those loans. We felt it was in our best interests to avoid the potential disruption as.
Well as the the penalties both civil civil penalties and having to pay back three times. The amount. If it was determines that you know you were you should not have been eligible for that money. So it was it it was a risk analysis done and we just felt like that was that the best way to move forward.
Even though we had followed all the rules and made sure that you know our application was appropriate.
Okay think if.
Thank you Jeff Jeff.
Thank you just are minor to ask a question press star one on your telephone keypad.
Once again to ask a question press star one on your telephone keypad.
<unk> followed by the number two to remove yourself from the queue.
We'll send buys we pull for questions. Thank you.
[noise] well.
<unk> Star one on your telephone keypad.
Or next question comes from Randy Hog. Please do your question.
Yes, Hello, good afternoon, everyone I think before I get to my question I think it's important to kind of just.
Gives everybody an idea of some sexual historical.
Financial information on the financial person and I.
I like to know kind of what I'm talking about in dealing with four ask a question just a few sex.
First ball you know.
Guys it's <unk>.
<unk>, we reported that <unk>.
You fill in your Joy.
Received quite a large salary increase.
Active.
March 31st 2019.
And as we all know days after you know the company was denied it F.T.A.
Application.
Which resulted in a significant dropping the value the shares doesn't thing that I noticed is that.
As a group of officers of directors.
You know you guys all owned it very very small percentage of the company is less than 10%.
And myself and other investors that I introduced healy's too, we've invested millions and millions of dollars into this company.
At around $10.
$10 a share price range so.
The time, we got in it and that your stock was on April 1st $2906.46.
Days later dropped 70% to $2.03.
And then since April 8th to make seven Strupp another 78%.
So the total droplets about 95%.
So.
Getting too is.
A couple of things I remember one.
You know.
We had 25.8 million shares we have over 38 million shares I mean every time you are raising capital you're almost diluting or like 10 per cent per month.
Because your current burn is a million dollars a month.
I mean.
I just don't know with all these delays how you can how you're going to continue to finance This company.
When you're burning a million a month, which.
Shockingly $600000 of that.
It's just for being a commercial company in Canada.
You've got $120000, a month and you know insurance.
Management's is taking $75000 a month.
And yet in 14 clinics, you're proud of the fact that 200000 or revenue in the first quarter.
Right.
You you need the last probably at least a year.
So if you keep selling stocks at the rate you are you're going out so 30.
Million shares.
Number while I don't see that happening number to what I think is going to happen if someone's going to come along and say Hey, you know what we're taking your private we'll get the you know the management team 15% Clawback.
And we're eliminating the common shares.
So I hear nothing from this call that gives me any sense.
Security.
About how we were going to get from point a.
<unk>.
30 million unemployed people last few weeks <unk> you guys are taking these very large salaries down.
And.
I just don't get it I mean is the device really works the only thing should matter it's survival from today.
To point, B., which is the endpoint of some kind of approval.
You know I know, there's all kinds of problems in Canada with reimbursement and if you. If you average the the revenue per clinic.
Candidate for the record wasn't $18000.
So unless I'm missing something and I apologize for.
Just laying the cracks out.
Homeland Max about what you guys you spending a month.
About what the future you know now there's no revenue guides because you don't know what's gonna happen up ahead, and I'm sorry to disagree with you, but I don't think coded 19 has really that much to do with your business. The last two weeks of March would not have made a significant difference in quarterly number so I don't want to hearing hiding behind cold.
Mid 19, I want to know where you and the board plan to do to keep this company afloat. So that shareholder it's a common holders aren't going to get completely burned out so that we have no chance ever make returned back on what we invested in.
You should your your comment to do you have US well you got your question. So let me let me.
Begin by saying that we think then you illustrated through your through your commentary that the number one value for the company is a U.S. clearance.
And that's where I think that we've made the most progress over the last.
Three to six months when we started to recognize that our revenue in Canada was one thing, but more importantly was preparing for us to take the patients that were treated up in Canada and and record their data.
If it was a clinical trials to be able to build build the the database so that we could.
Have an option to go back to the U.S.F.D.A.
So the the real the really big opportunity for US now is we did do that we did have some real world evidence gathered through our clinics and that's be extraordinarily valuable commodity that comes out of Canada, because ultimately it's the means by which we were able to.
Quickly respond to the to the the fact that we got denied on the T.B.I. side and prepare a submission based on our having the two clinical trials already done and with the Canadian data were able to prepare a submission that at least the based on the guidelines that F.D.A. have.
Have put out.
In terms of a reasonable assurance of clinical advocacy and safety.
We are you know, we're we're we're going to be submitting a and we're working a covert 19, you're absolutely correct and what's gratifying is it has nothing to do with that pathway and we do believe that that is the number one value creating engine for for our shareholders.
So what what we've done is we've tried to take the minimal amount of money that we need to be able to sustain our operations with that in mind and and we we continue to progress down the path with F.D.A. and we'll be making our submission as soon as we possibly can.
So that's I think the the the path and then should we be successful in that path there shouldn't be a a a return to to some value for our for our for our shareholders and that's the path that we chose to to to use and no Randy I.
From an expense standpoint, being a a medical device commercial company requires a certain amount of infrastructure for us to to maintain our our clearance and our clearance in Canada in our business.
So so we we scrub believe me a every month.
The the expenses to make sure that we well first of all we streamlined when we work on a and the the U.S.M.S. submission is number one.
And and the three executive taken anywhere from 25 to 50 per cent cuts and pay in order to to help help us along.
So so you know we're doing what we can what happened with F.D.A. last last year.
There were 19 submissions for dinovo clearances that F.D.A. 14 were denied and five were accepted so unfortunately, we didn't make it in the minority we made it in the majority and a and a and we're doing what we can to to to use the circumstances to get.
Back to F.D.A. get a clearance in the U.S. and restore some of the value for our shareholders. So that's that's basically our plan.
Can you can you make a comment though on is the you really not talking about so.
If you need another years worth of capital is it the intent really right now that the H.T.M. into can continue to be the primary source of.
You know keeping the company afloat, because I know that you're going to be voting on it.
Possible reverse split, which I know is going to be necessary to keep your listing active on the NASDAQ you know it typically historically <unk> don't bode well for share price. So in me trying to figure out you know what I do next or would I advise other people. If your H.T.M. is you're only source of keeping the company.
Funded and you're going to have a reverse split coming up which would be devoted on.
At your annual shareholder meeting.
You know.
Your self or Joyce hasn't mentioned any other possible for Nancy mechanism to give us any comfort in keeping this company funded for the next 12 months because listen I feel.
I believe in the device I think that I think it works I think it can be amazing and if we do get M.S. Clarence than you know, perhaps there's a return here for all of us but to get to that point.
Some more you know color on how you're going to do that when you're earning a million a month.
Uh-huh at 35 cents doesn't matter with this year prices now it always migrates down to that point when you're raising capital. What is your plan is the H.T.M. The only point and you have right now when you're looking at other options I guess, that's my follow up question.
Sure look Randy we're always looking at every possible option to raise money to to benefit the the shareholders in in the most efficient possible way.
The H.T.M. isn't efficient way to to to raise money.
But fundamentally it sites around trying to reach a milestone as fast as we possibly can to change the value proposition so that when we raise money.
We can make it an a much more.
A more dilutive way and so you know it's impossible for me to to outline precisely.
What options are in front of us, but no the joys and I are looking at every possible option, but mostly it's about reaching a an important milestone without the a a and a and they got some indication from F.D.A. that that there you know, they're considering our our our application and and that we hope will.
We'll we'll bring some enthusiasm with a with people on this on this really robust path back to F.D.A.
Okay I appreciate your answer still thank you very much.
Alright, Randy Thank you.
[noise]. Thank you to sort of minor to ask the question Press Star one.
[noise]. Our next question comes from Anthony Lamport with Lambda Fund management. Please their question.
I know that you.
Out that you would passed a milestone when you got approval in Canada for M.S.
Yeah is wonderful, but I noticed that had absolutely no effect on our market value Hmm and I I feel that.
We tend to.
Believe in ourselves too much I think it's terrific device or whatever but.
The market doesn't seem to think that and.
If we hear from the F.D.A. that they're considering our application that's not a milestone.
When they dine week clear it it could be another year from now and in any case as we saw in Canada, you know <unk> boiling away because.
Previous syndication was one that wasn't so urgent they couldn't get insurance so they weren't moving ahead.
We come to the U.S., we have to make sure we can get insurance clearances, we have to make sure that people.
Are willing to come to that clinics and so on going to be a long hard row to hoe and I.
Oh.
You can comment on.
Other things you looked at just to say.
Probably the market <unk> no market <unk> financing.
Is that.
Our market so low that it's just digs a bigger <unk>.
<unk> I understand yeah I understand your your question Tony and so here you know circumstance here. The circumstances, we were quite frankly, a expecting a a little bit a of a bigger bump because of our Canadian but here's the timeline of a of what happened we we the.
Canadian or the coded announcements I came back came out in the U.S. on March 16th and in Canada, roughly the same time I think perhaps a about a week before and that was the the domination of the news cycle.
Are clearance for M.S. in Canada.
Was for for M.S. in Canada was on March 18th So two days later.
All of the clinics that we authorize with this new focus on neural rehabilitation and who had a existing I missed the M.S. patients and stroke patients and so on and so forth in their in their clinics were essentially a week and a half later shut down.
So quite frankly right now we don't know the effect of of this new indication on the performance of our clinics. All we know is there's 100000 patients, but certainly have a a larger sense of urgency because they know that next year, they're going to be worse than this year quite likely with.
M.S., but traumatic brain injury patients as you pointed out there, saying, okay I'm not feeling greater I I have this balance deficit, but next year I'm going to be the same so I'm going to wait for reimbursement to come in that seems to be the the dynamic that we were seeing if not the same dynamic for M.S.. So we're confident that when coded goes away in there.
Linux get back together and perhaps right now is the time for the clinics to actually be scheduling these patients while a while they're while they're closed.
That that will see this come back I want to set the proper expectations. Though this is a a you know this is a scheduling issue and they have to do the the the P.T. So I don't think that the the day. The the clinics open that all of a sudden there's a thousand patients that come through right.
But the dynamics feel better so unfortunately on the stock response, the news cycle that was going on at the time was just miserable <unk> impossible for micro cap companies at the time.
So I'd like to believe that that that had the the the largest effects and then the dynamics that I spoke about it with respect to none of the the the expansion of our clinics has benefited from that new indication one iota yet.
Well <unk>, what sort of treatment where are the people with M.S., which is a very serious disease.
Yeah, not being treated by it anywhere at the moment in Canada, you. It <unk>, yeah, we're going to shut down or is it Oh, we are at clinics that are using physical therapy that was shut down.
So our understanding and we we're very close contact with the clinics all 14 of the clinics that we have have shut down to the what what they call shut down to the public.
Oh and essential service so they do do emergency see emergency patients.
The think people, who who perhaps a need rehab from a a car accident or or spinal cord injury or things like that that's what they describe that they're doing today, but they're not open to the general public.
Out of all of the neural conditions like Parkinson's M.S., a traumatic brain injury.
M.S. is the one that uses P.T. services, the most and so right now they are staying at home and they're not going to their clinic and many of them do their exercises at home just the same as our as our treatment. So when the the economy opens backup there'll.
Be able to go into the clinics get there too weak initial training over and then a resume their normal life by doing their exercises at home. So.
So so we think that it's gonna be interesting to see whether M.S. patients, who who need to to to be careful how quickly. They go back into the clinics. So that's why we're it's really difficult for us to estimate how how the business rebounds in the in the in the uncertainty and that's why you know neither.
<unk> have a christa are clear enough crystal ball to be able to to give you a a better answer that event, yeah, that's very understandable to.
My knowledge people have had operations U.S., a recovering go to rehab hospitals and receive physical therapy. So this has not been shut down in the United States. I think is there is some way in Canada, you could work with.
Them. After all these clinics want to treat these people is there some will be sure that way. They can go it's jumped two weeks to somebody's home to give instruction or something is there are some method of setting that up hmm.
As an emergency procedure a lot of things are being done in the U.S. now that are technically a were never a possible before but it's really you know.
There's some twist way that you can get this going at least with some people I think just your ability to demonstrate that you're helping people would be very nice you could start building up further material for insurance companies or whatever if you were actually offering this service.
Yep, So a a good great. So you're exactly correct. We are engaged with these clinics to look at a at a you know virtual virtual training programs and things like that it's just right now that they're in Canada. The the stay at home or orders I guess I have no.
Idea, whether this is a Canadian cultural thing, but they're a they they've they've ah I'm honored it quite significantly so employees are not coming into the clinic. So like I said, it's usually the clinic director physical therapy in Canada is not a national health service issue. So all of these clinics or private.
And so what you're referring to perhaps in the U.S. is that to hospital a hospital based rehab clinics are providing services for in patients and things like that and understanding in the U.S., yeah, Yeah, and and in Canada. That's the same thing those are not the people, though that that treat.
V. outpatients that that we're we're talking about that are in the community. Those people have to work with the private clinics and it's really the private clinics that we found that we partner with and thus far they're not open so but we are in fact today, we had a two hour.
<unk> on a on a with a Canadian M.S. experts with all of our clinics and not only our existing clinics, but nine additional clinics that are thinking about joining one everything comes back up and giving them a a a tutorial on what's important and and how to set up.
Your clinic and how to set up your training system. So we're doing what we can given the circumstances to try and and get a get back going as fast as we can when the now when the economy reopens up there.
You had a a Chinese investor at one point and I know they and so on is there any way is China's seems to be reopening very aggressively you can.
Get some worked on in in China.
Hmm so our our Chinese partner is is still very very much a a partner is a is a board member the way the path into China is through through F.D.A., because China F.D.A. for medical devices recognize.
Recognize the F.D.A. and so that that opportunity is going to a is to is going to parallel our success with the F.D.A.
And honor Canada's a pool.
They they it's complicated.
And I'm, sorry to to get the technical but it it's essentially it needs to be the the approval needs to be in the country of residents of the company.
And and so if we wanted to do that we would have to completely change the domiciled and and it says and we looked into it believe me. We we turnover every rock and stone with a with the partnership of trying to medical systems, which is a very very large a 3 billion dollar.
You know very credible company in China, and we looked at a at every opportunity and a and unfortunately, the the path is still much much more.
A a secure through through F.D.A.
Okay. Thank you.
You're welcome.
Our next question comes from Sunny Green won't with Kobe Partners Police your question.
Good afternoon funny.
So we want your line is open.
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[noise] or question comes from 70 Greenwalt with Kobe partners pleased to your question.
Alright, a couple of questions, what's the Canadian Prime Minister going to open up Canada's he talk about it.
Yeah, they've they've so obviously Canada's up I'm, a card carrying Canadian by the way so I know a little bit about it I still have a almost in Canada and and looking forward at some point to to be able to up the go up there again.
So yes primary Prime Minister Trudeau said that pretty much. The next on the 15th there's going to be an announcement with respect to the recommends the the federal recommendations and they have set up the country in I red yellow and green kind.
That's a with guidelines on each on each of those guidelines for reopening on each of those.
And it does seem that's a a couple of provinces will will.
Likely make that criteria just based on the on the dynamic but the 15th is when we're really going to know and then whether whether Ah. How these clinics then obviously on the P.T. clinics are very very personal right. Here you are manipulating people and things like that so it'll be interesting to see.
And it's part of the the unknown, how many patients regardless of whether they open whether this this is something that they will go down, but yes about another week or so Canada will make some announcements.
Alright.
The M.S. indications for the dinovo.
What data are you going to use and you have to get in front of the same F.D.A. panel that with them.
Rather brutal for the company.
The last time through yeah.
So interestingly a a sunny when we originally founded the company. We we thought we were going to be an M.S. company.
You know necessities the mother of invention, we had the the relationship with Montel, but introduced us to the U.S. Army.
The U.S. Army had a P.B.I. issue. They originally funded are clinical trial. So we became a T.V.I. company and develop to develop the T.B.I. clinical trials and yes I agree with you you know we we had every we felt we felt very confident that the the T.V.I. data.
That we generated was certainly a above the criteria. So the reason I'm telling you. This is that we the the the inventors of the of the Pond had originally done back in 2010. It was published in a peer review journal in 2014.
A a study of ponds versus placebo, so a placebo ponds, which remember is one of the big issues that F.D.A. had that in the control grew I didn't show a difference right no in this case the control arm and the active arm, we're showing a highly statistical difference between the two.
And and then when we founded the company. So this was before the company was was formed one of my first ideas was hey, I know a great tentative sciences reproduce something that one that's already been done so yeah. The Montreal Neurological Institute, we could do the study with for 30 cents, a almost 30 cents on the.
A dollar based on I'm, sorry, 30% discount and so on before and and we reproduce the M.S. study and the results were when it was a different endpoints, but the results were similar. So these were up studies that were a 20 <unk> 20 patients study in a 14 patient study so not a lot not enough.
To submit a Canadian I'm, sorry, a a an F.D.A. an F.D.A. submission.
Then we got our clearance in Canada and immediately we said, we're going to be treating patients and and and then we'll if we put them in a database that's validated it like a clinical trial.
Then we'll be able to gather real world evidence and certainly anybody who follows the <unk>. The F.D.A. knows it real world evidence is now something that's legitimately considered as part of a as part of this so we generated a data in a in 39 between 39 and 50 patients.
And I'm, saying this because obviously they continue to to come off treatment. So so it changes every day and it's really on the basis of those patients in the consistency you'd with which they improved over baseline that makes our our submission with those two studies robust enough to be able to go down combined with the.
Fact that we've had now 45000 treatment sessions in Canada, and no significant side effects. So the safety profile has been validated by what we've done in Canada. So I understand that the the Canadian performance hasn't been what's anybody as expected, but for US Canada was always a.
Means to be able to get data as we plan from day, one to get our U.S. submission for whatever indication, we would be able to gather data for of course, we thought that was going to be T.B.I., but that was the plan. So so based on our outside counsel and inside experts with respect to to the process the high on my medical.
That I mentioned, we just feel that the the M.S. pathway here is a is a stronger one.
It's it's a stronger one.
<unk>, okay, well in the sense that you know we don't control F.D.A., we we feel we're going to be able to put a strong application together based on the guidance that they that they gave us.
They give everybody.
Panel for.
So the panel changes all the time the same division, though sunny so it's likely that some of the same people remember that when we were denied our our application. It was removed. So essentially this will be a new application.
To the a C.D.R.H. division Neuro you were modulation division and so are we suspect it's not a large division we suspect that some of the players will be the same but we don't know that yet.
Okay. So can you give me some time frames on T.B.I.N. and that so you're only at bottom up.
Behind on trials on T.V.I.. So <unk> when can you maybe get something into the F.D.A. on that won't we'll be now next year or.
Yeah, there'll be by though this year.
Yeah. So the the reason the reason for our decision Sunny to to go with M.S. is Oh the environment does I've described it. The fact that we don't have to get new data. The fact that that M.S. is a a a high higher unmet medical need in the eyes of F.D.A. that we can essentially start for.
Bearing the submission today and not have to gather new data in a new clinical trial is is is what makes the M.S. pathway much more efficient than having to go and do a clinical trial that would then be submitted two F.D.A. So the clinical trial would take us roughly a little less than a year to complete.
And then and then we would have to submit to the same process. So I don't want people on the phone to think that this is a sort of a rebound because ultimately with with the data we generated in Canada and the fact that we have placebo controlled.
Highly statistically significant data to to submit to F.D.A. some of the issues that they raised in our T.B.I. application sort of go away.
And so that means that if you can submit this what did you say by the end of the year.
Yep.
I said I said, the second quarter I'm, sorry, second half of the year and the only reason we're second same second half is because you know with Kobe. We just don't know what the environment is gonna be we're we're working as diligently is weekend to get it done as fast as we can.
Okay. Thank you okay.
You're welcome.
Or next question comes from Carmelo cut out della with H.G.P. Please to your question.
Good afternoon Carda Carmel.
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Thank you yeah.
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