Q1 2020 Earnings Call
[music].
Greetings and welcome to the path <unk> Inc. business update conference call.
Just talk all participants are in listen only mode.
Question answer session will follow a formal presentation.
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I'll turn the conference over to your host Mike How will you may begin.
Thanks, operator, good afternoon, everyone. This is Mike <unk> Petmeds director of Investor Relations.
Thanks for participating in today's business update call.
Joining me today on the core, but they'll be showing backlog chairman and Chief Executive Officer.
And Dennis Mcgrath, President Chief Financial Officer.
Before we begin I'd like to caution comments made during this conference call by management will contain forward looking statements.
Greetings operations in future results, a fab I encourage you to review the company's filings with the FCC, which identifies specific factors.
May cause actual results or events differ materially from those described in the forward looking statements.
Factors that may affect the company's results include but are not limited to uncertainties inherent in research and development.
Great and Costa Concordia advanced products regulatory submission.
Whether when products are cleared by regulatory authorities.
Market acceptance of products, one square to commercialize companys ability to raise additional capital now the competitive environment.
Probably does not yet received clearance from you have to narrow the regulatory bodies to market many of its products.
That's what it's been modern to cope with 19 pandemic impact on our business.
I bet expects the glip against all the covered 19 pandemic.
Putting the extent of its effect on financial and operational results.
You'd be dictated by among other things the success of efforts to contain it and the impact of actions taken response.
New risks or uncertainties niraj from time to time are difficult to predict all these factors are difficult or impossible to predict accurately.
He them or beyond the company's control.
For further listening description of these other important risks and uncertainties that may affect future operations see part one.
I don't want entitled Risk factors and perhaps most recent annual report on form 10-K.
With the Securities Exchange Commission.
And they subsequently filed quarterly reports on form 10-Q.
That does require no apartment disclaims any intention or obligation publicly update or revise any forward looking statements to reflect changes in expectations.
Already bets conditions or circumstances on which those expectations maybe base what do they affect the likelihood that actual results would be those contained in the forward looking statements.
That said I'd like turn the call over to we shouldn't backlog.
Directly.
Thank you Mike a good afternoon, everyone and thank you for joining us on this quarterly call.
Thank you on our business and discuss our recent financial results. Although it's only been six weeks weve been very active since our last update with many exciting accomplishment.
How many milestones to report.
Has with our last update let me first start with a few words about the ongoing challenges were all facing as a result of the cobot 19 pandemic.
Ill start by hoping saying, we hope and pray that all of you are holding up as best you can keep yourself and your loved ones.
We all members of the patent family are healthy safe and able to can do the important work our corporate structure and culture continue to serve us well as we can front. These challenges so far with minimal short term and really no anticipated long term disruptions to our strategic plan.
Before providing you with updates on our product portfolio, let's first discuss have each area of our business has ever has not been affected by the pandemic.
We are continuing to respond to those that are effective on the financial let administrative side as Dennis will explain in more detail. Shortly we recently completed a convertible note financing, but the same investor as our previous convertible note financings.
We also received proceeds of approximately $300000 from the picture protection program to PPP in the form of the forgivable loan.
Our balance sheet, a strong symbol support a few full strategic plan for the foreseeable future as we advance through upcoming milestones.
We remain confident our ability to continue to finance. These operations until we began to generate meaningful revenue through commercial sales or non dilutive financing through M&A activities. We continue to be laser focused on cash management, we remain at or under.
Our board approved budget I don't feel quite that count remains limit 50.
On the product development and manufacturing side, all of our product development and manufacturing partners. Fortunately they number over a dozen have remained fully operationalized essential services.
We've experienced no meaningful disruptions in their activities on our behalf. Our supply chain has also remained intact with one exception as a pressure sensor on the Corpak Circuit Board. That's on back order as a result of spike in demand due to the dramatic covert 19 related ramp up in ventilator production or this will distillate will.
This will delay the release of the first commercial lot of Capex devices in the first U.S. clinical cases, but.
But only a few weeks.
The regulatory front, the pandemic has not impacted any of our regulatory activity, including ongoing work by our regulatory consulting engagements of with the FDA in fact as most of you know the hefty a rapidly turned around our fight Capex five 10-K application clearing corvex and less than six weeks after submission.
Two areas, where we have successfully managed to covert 19 related disruptions or commercial and clinical research activities.
Commercial side. So you all know the health care system is faced a massive screen on resources as a result of a pandemic, which overhauled hospitals and hotspot areas not emergency care, including surgical and diagnostic procedures came to a standstill.
Although we can't predict whether or not future outbreaks will lead to renew disruptions. The engine is definitely starting up again.
Non emergency procedures are coming back online in most parts of the country elective procedures are being performed to get in many parts of the country.
Although there's a lot of pent up demand for these services the pace of the reboot will depend on how you safety measures impact procedural efficiency when patients believe it's safe to return to medical facilities.
I will discuss Easter guards commercial activities and more later in more detail later, but I'm proud to say that our commercial team has done an amazing absolutely amazing job adapting to the constraints of the pandemic. We continue to recruit independent sales reps train them have them participate with us and virtual sales calls opening accounts and shipping product or we expect procedure.
Volume to start picking up in a couple in the coming weeks and months as elective clinical activity ramps. So I.
One of our closest Gastroenterology advisors, if I could they told me that he has a full schedule of adopt cubbies, which is a good.
The clinical research side, nearly all vontobel related clinical research, both academic and corporate sponsored came to a grinding halt nationwide like worldwide by two months ago, which has impacted multiple pad minnelusa clinical trials, which I will summarize late work did continue on an uninterrupted on higher be approvals as well as negotiate.
Eating executing clinical trial agreements this actually there's also.
Starting to ramp up again with set are starting to recruit enroll patients are trials over the past week.
So I'll start with some recent accomplishments before diving deeper into the individual products.
I'm trying to limit those are the ones that have occurred since our last update.
As I mentioned in April we were thrilled to receive five 10-K marketing clearance from the U.S. 58, Oh for our Capex minimally invasive carpal tunnel device.
This month, we successfully recruited a capex national sales manager who started this week.
We enrolled the first three patients, including one today and our international Multicenter Ivan de <unk> clinical trials, comparing Isa guard and he so check to adopt could be at 60 sites in the U.S. in Europe.
We submitted our final Isa guard payment dossiers to the largest Medicare contractor Palmetto GBA and its molecular diagnostics program multi ex an important step in securing payment for Easter cart.
Oh, we successfully completed a pen acute animal study of argue so pure softgel inflation device, which will describe in detail later.
Both have made at least it received from dates for the stage one audit of their quality system by argue you notified body, which is a critical step required for us to pursue European Union CE Mark clearance for.
Our products.
Oh, our subsidiary Solus diagnostics completed initial benchtop testing of our.
Andy Andy I, our late laser based noninvasive blood glucose diagnostic device, demonstrating and linear response across a wide range of glucose concentrations.
Finally, our extensive intellectual property portfolio was always continues to expand and advance now includes over 130 issued and pending patents either signed or licensed to putting that in its subsidiaries.
So what are some of the key upcoming activities or milestones over the coming months here are here a few highlights we will commercially launch perplexing to create a world class Medical Advisory Board and searches, we will and we'll continue to accelerate our Isa guard commercial activities through an expanding network of independent sales representatives as medical facilities up it up.
We will transfer will transition excuse me from virtual sales and professional education to in person engagements and ultimately procedures.
We will submit the Easter guard coverage dossier axis, which is SR to the to the payment dossier to Palmetto Jeep GBA, another Medicare contractors and hopefully secure payment.
And coverage decisions for you So guard CPT code as soon as possible.
As elective procedures, we start we will accelerate enrollment in our Isa guard be one and two trials. We also launched four additional clinical trials involving diesel check in Puerto Rico, which our car, which had been currently on hold because of covered 90.
Oh, we will continue or whatever it is not very active M&A and partnership discussions involving next slow Isa guard Isa check and disappear, which we hope to cut spending becoming a.
Finally, we hope to achieve that critical accuracy milestone of human and animal testing of solar says, let 'em <unk> blood glucose diagnostic device, which will allow us to proceed data and initiate a commercial development path.
I'd like to provide down some more specific uptakes across our four divisions, which are G.I. health minimally invasive interventions.
Fusion therapy, and emerging innovations so starting with a g. I help or hurt your health Division is building a family of complementary products. You. So guard you so check and he spoke here, which are designed to diagnose and treat conditions of esophagus. These include the spectrum of conditions.
Moving barrels to soft goods, which rise from gastroesophageal reflux disease or Gert GRT also known as chronic heart burn it reflects and can lead to highly philosophically okay.
Other area, we are targeting with these products is yes, and I felt like us off which I guess, a very common but underappreciated allergy mediated condition that similar related to inflammatory bowel disease, which currently requires multiple invasive endoscopy during the course of treatment.
Last week, a mark the two year anniversary of the founding of our subsidiary elusive diagnostic listed diagnostics, which license fee Isa Guard at me So check technologies from our partners a case Western Reserve University.
I really can't say, how proud I am of what our team at our partners have been able to accomplishing really a short period of time.
With regard to me. So check are now commercially available diagnostic tools. We added he secure a groundbreaking complimentary technology from our emerging innovations division and this is making rapid progress and we hope to commercialize this in 2021.
In addition, we're pursuing active research programs and partnership discussions for other products in the space, including other biomarker tests asking to stay tuned on that front.
Just two for those of you who are new to have met at least said Isa guard and he said check our groundbreaking products are designed to facilitate early detection of Barretts esophagus.
Pre cancerous changes that are called dysplasia and that highly yourself highly philosophical cancer and to do so using a noninvasive office space test, although screaming, although screening is recommended in over 10 million high risk their patients.
To detect and treat barracks before it progressed as to cancer fewer than 10% actually undergo.
Hi screening using invasive upper endoscopy, the tragic consequences that the vast majority of patients diagnosed with the sofitel cancer are just not aware that they have.
They have underlying barracks and that the progression of cancer could have been prevented through careful monitoring a treatment. If the parents had been diagnosed earlier over 80% of these patients will ultimately dive there that's offered you'll cancer within five years.
The potential lifesaving impact of East regard and he said check has been acknowledged by the National Cancer Institute, which highlighted them as one of the years significant advances in cancer prevention and it to 2020 report to Congress and the FDA, which granted a these products breakthrough <unk> device designation earlier this year.
I used to check was also a 2020 Edison award winner recognizing recognize its among the best new medical device products over the year.
Just a brief overview again for those of you were just starting about us on there how these devices work.
He said check as an FDA cleared fell collection device, which can perform targeted and protected sampling itself from the lining of the lower south because that's part of a five minute noninvasive office based procedures. It serves as an alternative to invasive under a upper das could be which is performed under anesthesia at a hospital or dedicated and off.
He still guard is a highly accurate DNA test, which detects epigenetic changes which occur in patients.
Along that berets to a softer jail cancer spectrum.
He said guard is performed by the samples collected with these are checking is commercially available in the U.S. as a laboratory developed test or LDC.
Our commissioned market assessments have estimate of the addressable domestic market opportunity for these products to be several billion dollars based on very modest penetration of U.S. for patients already recommended for the screening.
We are commercializing Isa guard using a hybrid model with internal sales management marketing and professional education working closely with independent sales reps.
The commercial team has grown rapidly since he cigars formally launched five months ago, our chief commercial officer director of marketing and communications and our eastern and Western sales managers are partnered with a rapidly growing network of highly experienced independent sales reps covering most of the country.
These are all senior professionals, averaging at least a dozen years in the field, most with leading companies and with long standing relationships with Gastroenterologists and their territory.
We are now currently up to 30 independent sales reps under contract in our adding new ones every week.
Over the last two weeks the number of virtual.
Sales halt with their physicians has increased dramatically as cobot 19 restrictions relaxing in anticipation of restarting elective procedures.
It may contact with several hundred accounts and the response broadly from the Gastroenterology community has been extremely positive.
We're not back to accepting new account applications. This week and our logistics provider has been shipping product to new sites as well.
Next week will Mark our first virtual training for one of our sites in the Midwest.
We feel strongly that the short term this will be a successful way to get accounts up and running and will continue and we'll continue one until we get on until we're allowed to go do outside support is regulations lift.
We're also recruiting clinical support specialists in anticipation of this reopening.
We continue our aggressive marketing campaign, and professional journals and social media targeting physicians and patients to strengthen east regarding so check brand recognition generally generate awareness of the underlying conditions and support the sales process. In addition, we will start to begin highlighting the clear advantages of our products over the alternatives and becoming much bigger.
But with the with these activities has been excellent growing and the feedback has been very positive.
We also continued to make solid progress on the reimbursement front.
Isa Guard received a CPT code last year and successfully advanced through the CMS process, allowing us to proceed with payment and coverage discussions.
Following the so called gap fill to designation.
We have successfully engaged with palmetto GBA, the largest Medicare contractor and its molecular diagnostics group moldings.
These efforts follow two parallel paths payment and coverage we have submitted the final payment dossier supporting or if he were few request and we'll submit the final coverage dossier in the coming weeks Oh, we're optimistic that we already that we will receive favorable favorable decisions on both payment in coverage.
Two days ago, we reached an exciting milestone in the development of our T., So cure suffered she'll ablation device.
Secure as a disposable single use thermal balloon ablation catheter, that's designed to advance through the working channel how the standard endoscope and uses our patented held us technology to a blade to sell for GL tissue.
Once cleared and commercialize you secure would allow clinicians to treat to slapstick Baird sort of dysplasia before it can progress to cancer and to do so without the need for complex and expensive capital equipment. The current leader in this large in high margin market is the met Medtronic barrick's greater frequency device, which requires an expense.
<unk>.
Piece of capital equipment, and disposable ablation tool multiple disposal waste and tools most of which are too large to pass through the endoscopes working together.
The first completed bench testing of this working prototype, which consistently achieved ablation temperatures over 90 degrees centigrade within 10 seconds, that's significantly higher and more rapidly than the Medtronic radio frequency device. This week, we successfully completed initial animal testing of the prototype.
Results were studying has the device performed exactly as design.
The final Pathlogic analysis is pending the device consistently performed clear circumferential ablation without charring.
Over very short time intervals compared to what is required with existing expensive radio frequency and cryo platforms.
We expect to complete development enough D.A. five 10-K submission of a secure by early 2021 and hope to have a commercialized later, but here.
On the Easter Guard and he said check clinical trial fronts activities are starting to gear up following covered related slowdown our two international multi center clinical trials.
Regarding he wanted to.
Are designed to support a future P. may submission for ft, a registration of Easter Guard and he said Chuck has in vitro diagnostic or Ivy. These and includes over 60 sites in the U.S. and you're the screening study. The one has enrolled three patients including one today with three additional patients schedules. This month, we anticipate the reopening.
Sites in accordance with the CDC State and professional society guidance to be staggered over the next several weeks based on a few factors, including the type of practice of private versus larger academic institutions and the acceptance of research patients back on campus. The team is currently building a new enrollment forecast, which will drive the overall timeline or we've also execute.
There are multiple contingencies, which have played a key role, allowing us to keep our original timeline intact. We anticipate we anticipate that nearly all of our sites will be enrolled well be enrolling in the coming months the larger institutions as expected will take more time to reconfigure their infrastructure in order to gear up for research.
Two additional what used to check clinical trials are on hold but should also begin enrolling soon the first study at the Fred Hutch Cancer Center in Seattle Looking look is looking at the role of you saw check and Biomarkers design to detect progression from not just plastic to this plastic birds eye. This work could greatly facilitate the surveillance of berets.
And so they can be treated prior to the development of cancer and we as we previously announced we secured the exclusive option to license. These biomarkers if they prove effective in the clinical trial.
The University of Pennsylvania study of different study will look at the role of Isa check in monitoring treatment in patients with here soon it felt like a softer China's.
Finally, we have two active partnership discussions involving G.I. health products. We are strong interest from a established diagnostic company outside the U.S. to perform and market you took part in that region will be revisiting that once coveted related travel restrictions. He's up we also been offered the opportunity to license highly accurate you send it felt like a suffrage item.
Biomarkers for a major academic medical center for commercialization has and all the T. and we look forward to consummating, but in the near future.
So moving onto our minimally invasive interventions division, which encompasses capex Oh last month sick less than six weeks. After submission. We were very excited to announce they read received after your five 10-K marketing clearance for our car Beck's single use disposable minimally invasive device designed to treat carpal tunnel central.
Couple of tell syndrome is a widely prevalent condition that exact some very large clinical and economic burden on society balloon catheter is inserted under the scarred ligament pension and get while pushing the nerve and tendons away when activated bipolar radio frequency electrodes precisely cut to ligament from the inside out in a matter of seconds. So now.
Carfax CARPROOF is now the first and only five 10-K cleared minimally invasive device to utilize common catheter balloon in wire techniques to facilitate carpal tunnel release, we believe capex will revolutionize the treatment of carpal tunnel syndrome quite dramatically, reducing recovery times compared to traditional open surgery.
An estimated billion dollar U.S. market opportunity based on an estimated 600000 patients currently undergoing invasive carpal tunnel surgery, and many more who suffer in silence.
As we previously announced carpets performed very well and human to human clinical safety study, we performed in New Zealand and submitted to the FDA all the patients who complete as follow up met studies pre specified safety and effectiveness endpoints additional pre specified outcome assessments.
Were similar to or better than expected results from a traditional open surgery.
Importantly, procedural times fell after a short learning curve, indicating that the carpets procedure can be performed in the same more or less time as traditional open surgery.
Oh, we have recruited a car beck's national sales manager Dan Darkness, Oh. We're excited is starting this week that has decades of commercial experience and the orthopedic space and strong ties to both <unk>.
That's surgeons and the vast network of independent sales reps, calling on the surgeons, Dan is helping us recruit.
And World Class Advisory Board of Han Surgeons, who will perform the initial U.S. cases lead our professional education activities and advise us on Edward of procedural product development and he's also beginning because outreach to his network of independent sales reps are commercial launch. They mentioned has been delayed a few weeks because the because of the pressure sensor.
That's on back order, but we look forward to two to that launch in the coming weeks and months.
Oh next some brief highlights from our infusion therapy Division, which includes next slowing portfolio.
Like slow as a platform technology to deliver highly accurate infusions, we're pursuing a broad range of applications inpatient fusions disposable infusion pumps for home use pre packaged outpatient drug infusions military and trauma applications and intravenous nutrition, the application, which is furthest along as the next slow Ivy or intravenous.
Infusion set which delivers highly accurate gravity driven infusions independent of the height of the Ivy back.
We believe it will eliminate the need for complex inexpensive electronic infusion pumps for most not all but most of the estimated 1 million infusions delivered each day in the United States, We're making really excellent progress with the next slow Ivy infusion sets design control development and testing and we're targeting 55 10-K submission beef.
For the end of the year.
Next well also remains the active a very subjective very active M&A discussions with key strategic in this space, particularly in but in the disposable infusion pump.
Space for home use as well as pre packaged drug a infusion applications.
On support I O Port I always our implantable in Trotskyist vascular access device, which allows direct access to the bone marrow to deliver medications fluids and other substances addressing an estimated $750 million market opportunity based on patients with poor veins and those with renal failure kidney failure, whose veins must be carefully preserved recur.
Current or future dialysis, we're now seeking.
We are seeking sorry, and initial short term implant duration indication through the FDA to Nova pathway earlier. This year, we participated in a successful pre submission with you have to pre submission meeting with the FDA focused on the clinical protocol for a single.
Senator clinical safety study, we have planned to perform the study in New Zealand like we did with Capex, but because of travel restrictions were moving it to the U.S. and will be submitting an idea you're an investigational device exemption application to the FDA soon.
We still do you plan to perform though a long term study in Columbia, South America to replicate the remarkable animal study results, which we documented showing six month patency of the portfolio device completely free of any maintenance or or flushes out we've locked down three sites in Colombia, and Colombia and have three princes.
Bill investigators and hope to begin trading in enrolling a once things open up.
And once again sort of time force me to just touch on the exciting projects. We're working on in our emerging innovations divisions, but a few highlights as I mentioned Solus diagnostics research and development plan for our noninvasive, Andy I, our laser based blood glucose monitoring technology is progressing very well the working prototype.
The thing completed and has been tested in a bench top model of these a fairly recent results show a very nice linear response curve across a wide range of glucose concentrations.
We expect to be to complete human and animal testing in the coming weeks, if that goes well and a we achieved our target accuracy threshold, we'll be able to proceed on a commercial development plan.
Our disappear resort will pediatric your tubes.
At or make from accurate cell technology and seek to revolutionize the care of the estimated 1 billion children, who undergo bilateral year to placement. Each year is also progressing as a limiting factor that is stalled or activities over over the recent past has been securing a commercial partner who has the capacity a scalable.
Basis to process silk into molded here teams Weve between me we've made good progress on that and expect to secure such a partnership shortly.
Our emerging innovations team is also working on several other exciting early earlier stage products, including products in the Ecmo cardiopulmonary support space and ventilator space. The Act Mcdaniel project has had some important breakthroughs in the coming in the last week. So we're very excited about that and the ventilator R&D project without was launched this week.
So I'll stop there and pass the Mike onto Dennis for a review of our financial results.
Thanks, Michelle and good afternoon, everyone I'll be brief as our preliminary results for the quarter ended March 31st 2020 recorded a press release that was published earlier this afternoon.
A quarterly report on form 10-Q will be available at the Si Dot golf and on our website early next week the complexities involved with accounting for the noncash charges related to our first quarter convertible debt financing, coupled with lawyers auditors consultants and staff working remotely made the extension unavoidable.
You'll recall that even as late as the end of April we were completing the S. Three registration for that financing, which also was the gateway to the additional $4 million convertible debt financing on April thirtyth.
So with regard to the preliminary financial results research and development expenses for the first quarter of 2020 were 2.6 million.
Up from 1.5 million, where the same period in 2019.
$300000 higher sequentially.
The year over year increase reflects incremental hiring.
Chief Medical Officer, Chief operating officer for Lucy Diagnostics, and a regulatory professional path that.
As well as approximately $1 million clinical trial costs.
She really related to Easter guard as the setup costs and first patient enrollment cost for the two Ivan de clinic child began in earnest.
General and administrative expenses were 2.6 million for the first quarter of 2020.
Compared with 1.7 million for the same period in 2018.
There were higher by about 300000 sequentially.
The sequential increases reflect the financing transaction cost in the first quarter related to completing the November 2019 convertible debt financing.
And the year over year increase reflects about 300000 dollar increase in compensation related costs.
Purely related to sales staffing levels and other sales related costs and.
At approximately half a million dollars in consulting services related to patents regulatory compliance legal cross the seeds for contract review.
Public company expenses.
There's also an increase of about 100000 in general business expenses.
Having said recorded a net loss attributable to common stockholders, a 14 and a half million or a loss of 33 cents per common share.
However, as I'll detail for you in a minute.
10 million of this loss is driven by noncash charges related to our financings.
Furthermore, is fueled by our stock pricing our stock price climbing significantly.
Our press release provides substantially more details related to the noncash charges occurring in the current and prior periods also press release provides cable and total non-GAAP measures childlike. These amounts along with interest expense and other non cash charges, namely depreciation and stock based compensation.
Dancing related cost enable you to give you a better understanding of the company's thing as you performance.
You will notice it from that table that after adjusting the GAAP loss by approximately 10 million for these type of noncash what financing related charges the company reported non-GAAP.
Adjusted loss for the three months and at March 31st of all and a half million were 10 cents per common share.
[noise], particularly I want to point out that the largest noncash charge an approximate 8 million dollar expense in this group of non-GAAP expenses in the change in fair value of the convertible debt God Bless accountants right. Although this impart reflects the increase in funding for the period. It is.
Sensibly influenced by the stock price more than doubling between the time, we entered into this transactional in November 2018, and again the first quarter.
Essentially a good thing for shareholders that is a sizable increase their stock price.
Caused increased charges to the piano.
Only while the convertible debt are still outstanding.
[noise] path Med had cash of 8.7 million as of March 31st However.
Subsequent to quarter end, just a couple of weeks ago.
The company received an additional net proceeds of approximately 3.7 million from the sale of convertible notes at a conversion price a $5 per share.
So on a pro forma basis had the financing closed the end of March.
Cash would have been.
Over $12 million.
So with that operator, we can now open up the call to welcome any questions.
At this time will be conducting a question answer session if you'd like to ask your question. Please press star one of your telephone keypad.
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One moment, please while we pull for questions.
Our first question is from anything even Daddy from Maxim Group. Please proceed with your question.
Yeah.
Hey, good good afternoon only show good afternoon, Dennis I don't.
Doing great.
Thanks to the overview out was that was very helpful and for all the detail. We shot I was wondering if you could just talk a little bit more about the.
The backlog pressure sensor for carfax.
You said you think it's a few weeks.
Oh that its backlog.
Can you give us a little more color about.
I think some up I'm just being.
Correct about that but I think from a practical point of view, it's not going to change a whole lot.
Because the.
No. The elective procedures are still are still ramping up slowly. So the delay was a few weeks two to three weeks a we expect a the we expect the.
Component the print circuit board, which has the pressure sensing sensor on it.
To be around in a couple of weeks and then a couple of weeks after that before the commercial I could be released so really in terms of when we would occur we would've expected the or car carpal tunnel surgeries are elective procedures.
And our will come online over the coming months it doesn't really delay our commercial launch from a practical point of view, but just the thought I'd point that out that that is one aspect of.
Evolved our supply chain that we've had to monitor closely [noise].
Okay. You know that's helpful. Like you said, an elective procedures that have been largely postponed or delayed so I guess as your as you just tired and you sales manager for her carfax.
What's what's the thought process in terms of a commercialization strategy as as we start to reopen as a country is this is this more like a July August timeframe, a slow ramp up okay walls, and then and then is it more of a september or so.
Full commercial launch.
Yeah, I mean, I've, probably probably won't be able to give you specific dates but I think that's a that's it was over a reasonable summary, capex. Unlike east regarding so check as they serve as a is an interventional procedures right. So you have to be.
Careful and the early launch and make sure that you identify.
The the appropriate early adopters to take take through the procedural steps and to be to be Frank to two do you sort of enhancements of the procedure itself. So that's really Dans first task is to get that group of Kao wells and and an experienced folks who were committed to being early adopters of this technology and.
To start doing cases, when I do think sort of a mid summer mid summer time point for that.
As appropriate.
Yeah. The ramp from that is all is going to is gonna be affected by a variety of factors. One is you know how does this how does the ramp up the opening of electric case is actually precede you know were fairly optimistic because outpatient facilities, which is where the vast majority of carpal tunnel surgeries are performed are less burden than terms.
Their ability to.
To reopen hub, but it'll depend really on on on that as well as sort of a steady.
Focused but say sort of outreach to increasing concentric circles of physicians and it's it's again, it's very important to do that in a very very careful way to make sure that the procedures being performed definitely in that people are being appropriately trained.
Okay makes sense and then just in terms of commercialization of a piece or check you so card or what's been what's been the.
<unk> 19 impact on that and then how do you expect that.
Two yeah, I mean, there's a lot for messenger.
Yeah, sorry, so the covenant package has been pretty straight forward, which is that no one is getting.
For the last few months there have been essentially no elective or not emergent procedures being performed and that you I offices, or whether they're endoscopy use or or other office based procedures, but whats amazing is is that I've sort of was bragging about this and like to brag about it again is that the team has was not an anyway.
Huh.
You know there they were able to overcome that challenge and despite that I've had literally contacts with hundreds of accounts and numerous virtual sales calls you know these physicians I think as I mentioned last time are not necessarily on the front lines of covance or they have time and they're getting used to using telemedicine and so these.
Virtual calls have been I've got a remarkably well and the volume has increased almost exponentially. So as the case has the elective procedures start and as I said are one of our partners.
<unk> did a full day of endoscopy today, so that to me. It was very good sign that things are starting to OPEB open up. Then then then the that activity of opening accounts and getting ship kitting product shipped will actually start to translate I think very soon into into actual cases being performed and tests and test.
Being ordered and set.
So again theres still some uncertainty, but I, but there's some pretty good signs and the in the last week or two that that this activity will start to to ramp up hopefully fairly quickly.
Okay. That's helpful and then and then Dennis if we could put aside the noncash charges that we just talked about sort it sort of be the burn rate that you you see right now.
What's your what's your best guess as to.
What you expect that to be.
On a on a per quarter basis for for the remainder of this year and then and then what do you you what do you expect your your capital requirements to be.
As you move into.
As you move through this year and into next year.
If you dissect the first quarter, there's some clues there in terms of how that projects going forward. It it up 4.4 million non gap, which you could make <unk> the <unk>.
The a proxy for what that the cash burn for the quarter is it gave you the data point that about 1 million 1.1 million more clinical trials related that about to be at.
He so god related so the the baseline burn is just around a million dollars. The clinical trials will add to that really knowledge dependent upon when we can get to that.
The the planned for the year was about.
A EUR 1.7 million or so per month, we have $12 million pro forma at March 31st. So you can kind of laid out in their availability in multiple forms of financing for us and that will be dictated by not only the abuse.
We need to finance at the parent level, but the possibility financing inside the subsidiary level and also the non dilutive financing opportunities that we're pursuing particularly with next flow. So the ability to finance that we believe is readily available which choices we make those opportunities.
We will be dependent upon the timing of when they come about and when we get back to will come full scale clinical trial work.
Okay.
Very helpful. Thank you I'll hop back in the queue.
Thanks.
Thanks.
And our next question is from quick summary from the summer team. Please proceed with your question.
Yes, good afternoon.
Nissan and Dennis I Hope you guys are well congrats on all the recent accomplishments of milestones and seems like there is an exciting year to add here.
I think laundry agreeing with.
[laughter] I actually thought that's happened it maybe at that that's a trial or a study a u. Penn. So you guys might be in Philadelphia little bit more yeah, but my question kind of relates to I guess that the third question that the Maxim analysts just had yet as far as the yeah. The planning for funding these trials and it seems like Theres a lot.
Yeah, maybe additional funding yeah that lucid might require yeah for the east so product I mean, it seems like and then you probably can't comment too much but you know with that much activity and with that much funding potentially can you comment at all about the potential.
Yes spin off of Lucy I mean, it certainly seems by like the most.
I would kind of common or the best strategic I mean, do you guys, but no better opportunity you know the fund that company. Yes separately, you know investors can be in that separately and would be great way to raise cash for that company separately as well and unlock value tremendous value for the company.
And before it that's the answer to criticize well, let me clarify one thing as it relates to these clinical trial. So as you said there are numerous clinical trials, but the bulk of the bulk of the expense is really in the two IBT trials that are looking to support a PMA submission. Many of the other trials are actually part of partnerships with academic medical Center.
Where we're providing only nominal a financial support and were able to leverage the value of Isa check and we're providing isa check as a device and many of those actually have their own intramural academic funding as well so just to be clear that they're not that it's really the the bulk of vik the capital requirements.
I really on the on the East regard IBT trials.
Dentist, it's kind of follow.
Yes, so so yes, Chris obviously, there's been a lot of speculations like a lot of questions about Lou said in the it used to guard being the key jewel inside that subsidiary and the approaches to the finance that inside that subsidiary, whether it's a spin out its yes.
Private investment in there gets financed at the parent level or there are other ways to finance that that may not require issuing securities to do like no decision has been made we are talking to a variety of.
Financial pipes that fit all of those profiles and.
Once we have a little bit more visibility on some of those choices than the board's going to make a decision. So I I think we're an agreement that theres a lot of excitement about that technology and there are some proxies above their companies that have done similar things with products that are.
Not competitive with these are guard, but.
Surprised at the same mindset and those prospects are very encouraging and that's certainly helps in our flexibility of trying to make the right. You are smart shareholder so no decisions at this point, we'll keep you apprised since those decisions are made.
And we believe there all favorable outcomes and we're just trying to figure out what's the best approach out of all those treasures.
Awesome. Thank you so much for the yeah for that answer and again, yeah. Congrats on yeah, the accomplishments and so much to look for it to the future you guys are yeah, it's pretty remarkable so too does [noise].
Thanks, Chris.
[noise] and again if anyone has any question you May press star one any telephone keypad. Our next question from Dan paying Jaycee well was a private investor. Please proceed with your question.
And good afternoon.
Oh, good it definitely gentlemen, thank you for your hard work and I feel guilty writing your coattails you guys are amazing.
[laughter], they've got a lot of a lot.
The long term and Buster.
I will I heard just right I was listening to the <unk> conference call you guys matching the glucose monitor that.
The laser did you say you had a prototype device you're going to test the summer.
Yeah, you're right.
Yeah, let me have filling some of those details I did touch on it but again just try to keep it a bit brief. So this isn't so that the device. The technology, we licensed from our partners that Airware. The Doctor Your Jacob Wong's company, we've licensed that we're going to feel the views to create inpatient.
Well based glucose continuous glucose monitoring a without the need for doing blood tests without fingersticks whoever that blood draws just bye bye clamp on the skin that's similar to one of these oxygen.
Oximetry devices in the ones that clip on your finger. So wherever you are with that as we've been working on this R&D project, taking the laser technology that he developed and putting it into a working prototype basically in a box of of the that have the lasers coin and configured consistent with the with the invention that that's been.
Completed and we also have a prototype prototype.
Clip tissue clamped that basically will be applied to the whether the hand, so that device has been tested on the benchtop using these little tubes. These little Q vets of glucose at varying concentrations and the key is if you do the concentration is across the range that you would be looking at it.
In the patient do you get a linear response, so when the glucose is higher you get more of a signal glucose desire not to get more of a signal and as follows a nice linear response, and we have been able to document that just over the last week or two.
Next step is and we were hoping to get this done a this week, but it's been delayed a couple of weeks, but not too long is to actually take that box that working prototype and tested on human volunteers, who basically start off fasting and then take some weren't juice and see how their blood sugar goes up and also in a rat model type.
The graph model animal model, where we can get much higher glucose levels and confirmed that that the the non invasive testing works there very precise standards for accuracy.
That all glucose monitoring devices are held to its its Doug it's about plus or minus 15%.
So we're pretty optimistic that we'll get to that end of two once we cross that threshold then that the gun goes off and we can actually start a formal a commercial development process, where we manufacture a device that can be used in a hospital typically in the nicely you setting and continuously monitor glucose.
So that's where things aren't with them if they said we're very excited about.
Wow that's huge.
Great. Thank it's a big opportunity [laughter] I mean, it's useful I know so many people to hit that their fingerprint my daughter hates needle I mean, I mean, and then you could do the right at home use is that when you look and feel that the that would be the next step. So they're just to remind just to be clear our though the original why the initial licenses only for the hospital, but that's a big up.
Big markets so.
I see you.
Particularly in cardiac I see is 100% of the patients there are on an insulin drip so they're getting their blood triggered shut tech checked literally our hourly or every every other hour. So there's a huge opportunity in that sense, but obviously the gold. The next step in this would be to take this technology for use in inpatient setting and then license it can.
Thank you to let expand the license so that we can we can replace home fingerstick devices, the that sort of deck of cards size boxes that that wouldn't require finger stick, but it would but could but could measure glucose just by clamping onto them to escape.
That's that's not where we're not there yet just to be quick.
How much is that worse.
[laughter] I'll leave that up either that's it's it's it's a big market.
Huge oh the people realize it's huge.
Well I'm, sorry, I'm excited but.
Yeah.
I appreciate it thanks, so much and I love Roger Coattails. Thank you so much and have thanks. Thanks.
And our next question is from Mazuz amid who's a private investor. Please proceed with your question.
This is good it I definitely saw and high Dennis.
All right.
Thanks, So much soon because there was good I just wanted to ask you.
How much of its 10 cars per car device.
Oh, we have decided we have not set up price, but well we can tell you is based on our.
On our.
Understanding of the reimbursement as well as the cost of goods that we are confident that we'll be able to commercialize at volume so not necessary in the early stages when volume production is low but at higher volumes.
We'll be able to achieve an 80, 85% gross margin.
So that is plenty of margin for us to build a go to build a very robust business.
Got it.
Okay. All right guys. Thank you so mark I think before the great work. So I really excited for everything that you guys have done that's that's it.
Alright, Thanks, a lot.
And we have recently entered the question answer session and I'll now turn the call over to management for closing remarks.
So thank you very much everybody I'm for your attention and for joining US. This afternoon for these those great questions and we always appreciate the enthusiasm and that sort of go get them.
Feeling that we get from our investors every day, so truly it really inspires us.
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Thank you all.
This concludes today's conference you may disconnect your lines at this time. Thank you for your participation.
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