Q3 2020 Earnings Call

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Okay, ladies and gentlemen, and welcome to the ice or re third quarter 2020 earnings conference call I'll lines have been placed on less than only node in the floor will be open for your questions and comments following the presentation.

At this time and it's my pleasure to tend to pour over to your host Mr. Mark Levin of Investor Relations. Please go ahead Sir.

Thank you operator.

Good afternoon, and thank you for joining us today for the ice Ray fiscal third quarter 2020 earnings coal for the third quarter ended March 31st 2020.

Well, we get started I.

I will take a few minutes to read the forward looking statements.

Certain statements in this conference call constitute forward looking statements within the meaning to the private Securities Litigation Reform Act.

1995 as amended.

When used in this conference call or such as will believe expect anticipate encourage and similar expressions as they relate to the company or it's management as well as assumptions made by an information currently available to the company's management.

Identify forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995.

These forward looking statements are based on management's current expectations and beliefs about future events as of today may 12th 2020.

As with any projection are forecast they are inherently susceptible to uncertainty and changes in circumstances and the company under takes no obligation to an expressly disclaims any obligation to update or alter its forward looking statements, whether resulting from such changes new information.

Subsequent events or otherwise.

Additional information concerning forward looking statements is contained under the heading south Safe Harbor statement.

And risk factors.

List it from time to time in the company's filings, what the Securities and Exchange Commission.

We will begin stays cool with Laurie Woods, Hi, surveys Chief Executive Officer.

And then Jonathan Alright, I surveys Chief Financial Officer, who will discuss fiscal third quarter 2020 financial results.

Following their prepared remarks, you will take questions from our analyst and institutional investors.

Now turn the call over to Laurie.

Thank you Mark good afternoon, and thank you for joining us today per <unk>. The school third quarter 2020 earnings conference call for the quarter ended March 31st 2020.

Following my comments are Chief Financial Officer, Jonathan Hunt will provide a more detailed review at the fiscal third quarter or financial results.

I am very pleased to share with you the considerable progress we continued to experience it ice right and the accelerated growth we realized in the quarter ended March 31st.

Record revenue for the third quarter increased 50 per cent versus the year ago quarter.

This quarter comprise the top three single highest revenue months in the company's history.

Well you continued to see substantial operational improvements in this quarter as gross margin expanded trade record 59.2%.

Combine that with the modern operating expense gross and we significantly decreased our operating loss, which was half of what it was in the fiscal third quarter of 2019.

Oh central factor in driving the strong momentum that is manifested in our financial results is our growing leadership role within the Breakey therapy industry.

We continue to expand our role as he trusted valuable partner, enabling more practitioners to better treat their patients.

This is evidence again this quarter by yet another increased in new customers.

As the trailing 12 months ending March 31st How're net nuisances shouldn't customer count increased 33% versus the previous 12 month period.

We continue to gain traction by highlighting the unique benefits of cesium Blue and are supporting delivery devices. In addition, our best in class customer service and support and are expanding digital presence should allow us to continue to grow our leadership position.

Oh, that's we ended the quarter in March the world. So a significant shift from the unfortunate implications of the Kobe 19 Global health pandemic.

I'm proud to report that from the onset ice Ray has been proactive in implementing plans to ensure that health and wellbeing of our employees, while remaining focused on providing and he interrupted products flow to the physicians and patients who counts on us.

We seamlessly transition to many employees to work from home and made other adjustments to ensure the continuity of our business through this time.

At the beginning of the pandemic, we moved quickly to ensure that are inventory of non isotope supplies, where appropriate in case, the our supply chain was disrupted.

In addition, we set in motion our strategy to maintain a continuous and uninterrupted supply the isotope from our suppliers in Russia.

Our partners <unk> nuclear facilities in Russia, I worked hard to adjust to our needs.

Going above and beyond to support us, which we appreciate immensely.

Fortunately, we have not experience any material supply chain issues today.

Since we think about how kobe's 19 is impacting ice raise business. It is important to remember the demographics of the patients cancer our customers commonly treat.

The majority of the cancers are in prostate.

In general prostate cancer is a relatively small progressing form of cancer and does not often present, an imminent life threatening emergency for many of our customers patients as cold in 19 began to spread many states implemented new guidelines in an attempt to mitigate spread of the virus <unk>.

Cancer certain medical supplies such as P.P.E.S.

Those guidelines led to the cancellation or post comment Oh elected and non emergency surgical procedures, including prostate break you'd be procedures.

Consequently at the very end of March we saw some procedures begin to be postponed in mini market research.

This resulted in poor women marry revenue for the month of April declining about 20% versus April in 2000 in 19.

In recent weeks as states begin to lift restrictions on nice central surgeries.

We've received an increasing amount of customer feedback, but those implants that had been cancelled in March and April well beginning to be rescheduled.

Oh order growth has been accelerating since the last week of April.

We firmly believe that most if not all treatments in process prior to the outbreak will take place over the next few months.

In the meantime, we continue to tightly manage our expenses and make fluid adjustments to isotope orders to meet potential increase treatment demands as restrictions left.

The cold is 19 pandemic has impacted the sourcing a person associated.

What do you assembly of our proprietary disposable delivery device glue built.

This was due to our parts manufactured temporarily converting their production capacity to making critical P.P.E. for the battle against the pandemic.

We have enough inventory to support our current customers and new customers in the pipeline until our parts manufacturer is back online.

We support their decision and as a result, no anticipate we build we'll see a slower than expected release through the remainder of fiscal 2020.

With the expectation the blue build will continue contributing revenue and the fiscal fourth quarter of 2020 and gain traction in fiscal 2021.

Turning together tile and our partners that G.T. medical technologies.

She medical technologies launch their full market release of gamma tile therapy in January.

In support of this launch they have extended beyond their current distribution partners to include indirect Chichi medical technology sales team.

And those of you who are not aware of our relationship with teaching medical technologies, we have a 10 year manufacturing in supply agreement to manufacture gamma tiles with cesium 131, Steve in the tiles to treat both recurrent and primary brain cancers.

We remain optimistic about the prospects for gamma tile and the benefit it can offer too many brain cancer patient.

Are looking forward to how the sales force expansion precedes.

Revenue from the sales a G.T. medical technologies were again nominal to ice raise overall revenue in the school third quarter ended March 31st.

On another friend, we continue to remain actively engaged with policymakers in Washington, D.C. on a number of key items I am very please to record that there is a new developments to share with you.

Yesterday evening, we were notified that we had received 64 I.C.D. 10, P.C.S. codes for reimbursement in the inpatient D.R.G. setting.

These codes allow hospitals to bill Medicare for specific surgical procedures that would benefit from the addition of cesium 131.

You will recall that the I.C.D. 10, P.C.S. codes are important for the growing surgical applications cesium 131 intriguing hard to treat cancers.

Just a few of the codes include lawn head and neck brain G.Y.N. pelvic and many others. These codes will take effect on October 1st 2020.

Another important matter is one you may recall from our fiscal 2019 year in earnings call back in September.

Shared with you that C.M.S. had proposed a significant change to the way Medicare currently pays for radiation oncology services in the outpatient setting.

They propose radiation oncology alternative payment method or our away P.M. would provide east single bundled payment for a 90 day episode of radiation therapy, including L.D.R. Breakey therapy, I.M.R.T.S.B.R.T. proton therapy and H.D.R. Breakey.

Therapy.

17 disease size, including the prostate are included in this proposal.

The comment period ended September 16th and after an initial delay this past fall. The final C.M.S. ruling was rescheduled for release on April 1st 2000, then 20, however, the onslaught of the pandemic in the U.S. in March the our way P.M. was not released on April 1st.

And then do you date has not been set.

We continue to watch for new developments in this matter because we believe that the implementation of this bundle may further level, the playing field for Breakey therapy overtime, given the various radiation treatments available to patients.

We have also been working with policymakers to help them understand the importance of cesium 131, as they turn their attention to ensuring that everyone can safely access the healthcare services necessary to diagnose entry life threatening diseases bianco bit 19, we believe that mini asked.

<unk> Breakey therapy, using cesium 131 support this process.

The procedure is a one time hospital visit reducing the risk of exposure to life threatening diseases like Kobe 19.

And is supported by long term clinical evidence demonstrating positive patient outcomes.

This one in done the advantage means vulnerable cancer patients do not need to keep returning from multiple in hospital treatment. That's typically required by other forms of radiation therapy.

This also lowers the overall use personal protective equipment and even the aggregate cost of the treatment is lower.

We look forward to continuing our dialog with policymakers and there's stuff to ensure the cancer patients have meaningful and timely access to break you therapy.

Before I turn the call over to Johnson I want to take this opportunity to think all ice or employees.

Words seem in adequate to describe how proud I am a this incredibly dedicated team.

They remained senior really focused on the company mission, even how's this unprecedented time of uncertainty has impacted all of us.

Seeing this latest demonstration of commitment and how successfully we adapted during this pandemic gives me even more confidence in the future success of ice right.

Now I will turn the call over to Jonathan to review the results of our fiscal third quarter.

Thank you Laurie.

Going to discuss.

Financial information that was contained in our press release.

Cool third quarter ended March 31st 2020 that we leave start while ago.

We anticipate that our own tend to be file with the L.C.C. on or around me 14.

Revenue from the third quarter ended March 31st 2020, 50% to $2.9 billion versus $1.9 million has the same period last year.

The third quarter revenue was comprised of 84% prostate Freaky therapy, which group, 42% <unk> recorder 2000 night.

With the balance or 60% revenue attributed to other Ricky therapy, primarily snow treat green, which included normal revenue gallon town. So did you to medical technology.

Gross profit that'd be percentage of revenues and third quarter did March 31st 2020 increase to a record 89.2% compared to 45.7%.

What are the quarter ended March 31st 2000 might.

The gross margin increase was primarily driven by higher cells I'm more isotope unit costs compared to the prior year comparable period.

Third quarter gross profit dollars $1.7 million increase 94% compared to the same period last year.

Total operating expenses, consisting of research and development.

<unk> in general and administrative increased 10% prior year comparable period to $2.3 million.

On third quarter 2020 revenue growth 50%.

Dollars to $400000 per quarter.

We are continuing to have discussions with institutions looking at the extended view of cesium 131.

Doesn't marketing expenses increased 25% versus the comparable pray your quarter to $805000.

The increasing sales and marketing expenses was driven primarily like increased incentive compensation related to the 50 per cent increase revenue.

As well as an increase in position on training expenses.

These increases what partially offset by decreasing travel costs due to cope with 19.

G.N.A. expenses of $1.16 million represented an increase of 5% versus $1.1 million in the fiscal third quarter 2019.

The year over year increase was driven primarily by increased incentive compensation related to the 50 per cent year over year increase and revenue incomplete that financial performance.

Count insurance premiums and public company related expenses.

These increases were partially offset by a decrease in our Washington state hazardous substance pack and reduce legal travel and simply hiring expenses.

Nicer, a posted a net loss of $545000 for the third quarter any March 31st 2020, a significant improvement compared to a net loss of $1.1 million for the quarter ended March 31st 2019.

Then that lost per basic included share was one step there's they've been that loss and two cents for the quarter ended March 31st 2019.

Basic undiluted shares results are based on weighted average shares outstanding approximately 67.6 million that is cool third quarter 2020.

Versus 67.3 million for the prior year period.

As of March 31st 2020 accompanying had cash cash equivalent and certificates of deposit that total $2.4 million compared to $5.3 million at the end of fiscal 2019 ended June 30th 2019.

The company has zero long-term debt.

Shareholders equity at the end up fiscal third quarter, 2020 totaled $5.8 million versus $7.7 million and a fiscal 2019.

I will now trying to call over to the operator to take questions from our analysts institutional investors.

Oh.

Thank you ladies and gentlemen, if you had a question or comment is star one on your touch tone telephone at this time.

Star one for any questions or comments, we do asset if yada speaker phone you pick up your hands hatch provide the best sound quality.

Well golfers to Jason call burn at Dawson Jane.

Well congratulations I know, there's a lot of chaos going on across the United States, but you did put up great numbers I think the best number of sex scenes and some following nicer right. So that really is great a great accomplishment and if I understand what you said Laurie the majority of those revenues were driven by prostate cancer, but you're a big.

Getting to have a glimmer of hope that G.T. medical will come online this gamma tile and their sales force engages is that right.

Yes, that's correct, Jason and and thank you were very excited about what we did this last quarter Gee to your question gets most of it was from prostate and then we are hopeful that gamut tile will be gaining traction in moving forward now that they've done their full market release.

Okay, and I just want to make sure I understood. A couple of things <unk>. You mentioned that you know there is going to be some interruptions and cove. It both in terms of blue built a device and just a a lot of other factors, but at the end of the day procedures that were being lined up you know are going to be rescheduled. So why we may.

Right C. adept in April that might come back to an increase you know in in May or June and the quarter may end up.

Being somewhat in line with kind of prior expectations is that fair to say.

Well I think it's it is fair to say that we've gotten a lot of feedback from our customers that indicates that those cases that were canceled toward the end of March and maybe didn't get scheduled at the beginning of April. They all believe that those cases will be back and be scheduled is like.

I can't speak to exactly how next quarter will turn out that were very hopeful that right over the next few months, we'll we'll get them all back into shore of course, and one last question too I want it to make sure I understood. The acronym N. Pro pound Fred the single bundle payment you know multiple cancers, but levels the playing field for a break.

Therapy, but what this row pants stand for.

It's the radiation oncology.

Jonathan help me out here.

Yeah, but I did get it right. It is R.O.P.A.N. right.

It's the R.O.H.T.M., so it's radio or A.G.

Alternative payment method got it alternate payment <unk>, that's why I just wanted to get it right. So that we go on <unk> within a one last question Lori cash is starting to get tight <unk>.

Do you have any thoughts about how you're going to handle the.

You know your cash capital needs.

You know I'm Gonna turn that question over to Jonathan Okay.

Jason So we we continue to believe that that our current cash flow based on our current burn rate that we have sufficient cash to last distraught the remainder of this calendar year.

And as you probably know we we do have H.T.M. place, which although it's not an immediate financing.

Does give us the flexibility to sell stock the current market price the market from time to time at our discretion and so we'll continue preservation of balance sheet through an A.T.M. that makes sense yeah.

Okay, Alright sounds good and so.

Lori any thank you very much for that I appreciate it Laurie any particular events or tattle us that we should look out I mean, you and I have been doing this a long time and I survey is the turtle slow and steady, but you really showing some nice progress is there you know, but we all love cattle less than events is there a catalog.

<unk> event that I could hang my hat on.

You know I might have answered that question differently. If we were in the middle of the pandemic, but I think right now really it's important that we stay focused on our course strategy, which is growing our prostate market and getting new patients in the door organic growth for those customers that we already have and keep the that.

Moving forward and as things clear out.

And this whole thing with Covenant 19, I think we'll be able to talk to you more about relationships were developing was research centres and some other ongoing things were just with this popping up in the middle here. The last couple of months, we're just not ready to have those <unk> sounds very reasonable. Thank you I guess, what I was going to ask one last thing it was.

You know <unk> at what point you start to see your ability to expand manufacturing margins are get more leverage out of the cyclotron. This that are producing the seats.

Actually we buy our radio isotope from facilities in Russia, and they constantly work on refining how we're going to get our isotope and one of the reasons. We're very pleased to partner with them as they've done a fantastic job of that and they should this very very pure isotope. So it is then one another.

Things. It has helped a drive our gross margins up is the fact that we don't have to refine the isotope once we get it we don't have to spend time and money doing that we get very very pure isotope from Russia. So that's been been very helpful for us.

Thanks, Florrie congratulations everybody at nicer I really appreciate it stay safe. Thank you.

Thank you Jason so much you too.

Okay next to add with Ascendiant capital.

Yeah I also like I say, congratulations is a very great quarter, especially in this environment. My question is you know congratulations also on getting the additional building codes from you know Medicare, but you know just walking through some of the details does that mean that you have now have approval for a hospitals.

Bill Medicare for these additional procedures and what is the reimbursement rates.

Oh I see the reason you want to have I see each S.P.C.S. coats is because they play a really important role in communicating claims information and that really helps ensure the establishment of appropriate groupings. So in the in patient setting it's going to be a group of codes around.

Specific type of treatment well, there's never been able to be a cesium portion of that and it's it's been very difficult to 'em set payment levels in relationship to using cesium. So it's very key for us to get these I.C.D. 10, P.C.S. codes, because now that really helps ensure that we get the appropriate.

<unk> groupings and levels of payments for hospitals in the in patients setting.

So does I mean, a hospital today can now use cesium 131, and get reimbursed for whereas yesterday, they wouldn't be able to.

Well many hospitals have been using cesium 130 wants to date and they just didn't have a code to tell Medicare that they were actually using it and so as of today. They have a code that they will use when they use cesium 131 to tell it to tell Medicare and by extension other insurers.

That they are using cesium in this particular type of surgery and that it justifies additional payment for that procedure and those gathered data over time to help determine what the appropriate reimbursement rates will be but it's it's a big step toward working for a strong reimbursement for cesium in the in pace.

Setting, where we've always just been in the outpatient studying before.

Great. So the reimbursement rate for in studying is still working process.

Exactly and this was this was the key milestone to really makes that move forward.

Great is there any time on on one the next step would be.

So that's that's something that C.M.S. works on and each year as they sat new reimbursement rates. They will take this into account. So now it's an evolving process from year to year as to how they're going to set those rates and we don't we don't have any control over that so there's not a next step for us to take we've taken.

Step of making sure we got these codes in place and now Medicare pulls out into their system.

Okay, but but this is definitely a good positive first step or milestone.

Yeah, right and then don't use it all happen.

Great and another person I have is you know obviously you know Fortunately lucky your business hasn't been affected relatively what about outreach to physicians in getting the word out on C.C. 131 has that been snow that as well with you know sheltered place or do you still see good or we are.

Switched to a new positions.

That's a great question and and and it's been very interesting because of course, our sales force loves being right in front of that positions in talking to them. So it has been an adjustment is the one that we found has been working better than we thought it was going to we have new patients that have come so I knew physician.

Oh come on board and we also have had some really green interaction with positions on conference calls multiple decisions on conference calls lots of things that I think we're all adjusting to you know seeing each other on video cameras working day in and day out that way, we're finding networks with physicians and the the feedback we've.

Gotten is sit in many ways they like that because it allows us to manage their time better and they can still you know have good communications with us so.

It's an adjustment like I think it is for for many businesses across many sectors, but so far it's been going very well.

Great well thanks for answering my questions that we should continue a lot going forward. Thank you.

Thank you so much.

Well go next to <unk>, an accord partners.

[noise] on like the Echo my congratulations guys, but my questions are answered by in the earlier earlier answer so I'm I'm. Good to go thank you.

Thank you so much bill.

And just to remind her it was star one for any questions or comments.

I have no other questions holding at this time, it's alternate conference back to Miss words for any additional are closing comments.

Thank you everyone for joining us today, we're really excited about what we've been able to share with you today and we're going to work hard to ensure that we get this very valuable treatment out to physicians and their patients and that we really helpful work with.

Are policymakers in Washington, D.C. to understand how important it is that cancer patients have access to treatment. During this difficult time and what a great treatment break you therapy is during this time as well. Thank you for your time today and have a great evening.

Ladies and gentlemen that will conclude today's conference. We thank you for your participation you may disconnect at this time and have a great Dane.

Oh.

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