Q2 2020 electroCore, Inc. Earnings Call
Greetings and welcome to the Electric Corps second quarter 2020 earnings Conference call.
This time, all participants are in listen only mode.
Good question answer session will follow the formal presentation.
Anyone should require operator assistance during a conference. Please press star zero on your telephone keypad.
As a reminder, this conference is being recorded.
It's now my pleasure to introduce your host bonds, that's true with Lifesize visors like you you may begin. Thank you operator, and thank you all for participating in today's call. Joining me are Dan Goldberger, Chief Executive Officer, and Brian Posner, Chief Financial Officer, Dr., Peter starts electric worries Chief Medical Officer.
Sure well be available for culinary.
Earlier today electric we released results for the quarter ended June Thirtyth Twentytwenty.
A copy of the press releases are available on the company's website.
Before we begin I'd like to remind you that management will make statements. During this call that include forward looking statements. Good in the meeting at the Federal Securities laws, which are made pursuant to the safe Harbor provisions of the private Securities Litigation Reform Act of 1995.
Any statements contained in this call that are not statements of historical facts should be deemed to be forward looking statements.
Looking statements, including without limitation, our examination operating trends in our future financial expectations are based upon the company's current estimates and various assumptions.
These statements involve material risks and uncertainties that could cause actual results were events to differ materially from those anticipated or implied by these forward looking statements.
Accordingly, you should not place undue reliance on these statements.
Where list and description of the risks and uncertainties associated with the company's business. Please see the company's filings with the Securities and Exchange Commission.
Electric or disclaims any intention or obligation, except as required by law to update or revise any financial projections or forward looking statements, whether because of new information future events or otherwise. This conference call contains time sensitive information that is accurate only as of flight Brad.
Yesterday August 13th Twentytwenty.
And with that I'll turn the call over to dance.
Thank you Hans Hello, everyone and thank you for joining us today.
Began with an update before turning the call over to Brian to review our financial results.
You'll recall that electric cars in the early stages commercialization of our proprietary gamma core therapy for various indications.
I'd like to start with a review of our balance sheet.
We ended the second quarter with cash and cash equivalence of $18.9 billion.
Subsequent to the ended the quarter, we raised an additional $10.3 million through an additional draw down on our existing stock purchase agreement with Lincoln Park capital.
As a result, our pro forma at June Thirtyth cash balance is $29.2 million.
At the same time, we've made significant progress, reducing our cash burn to $5.2 million in the second quarter 2020, as compared to $8.4 million in the first quarter 2020 at $11.2 million in the second quarter 2019.
Together these actions provide us with a substantial cash runway that I believe is sufficient to achieve meaningful commercial milestones both in our crude headache indications an existing revenue channels as well as the emerging opportunity in coated 19.
Turning now to covert 19 on July 13th Twentytwenty, We announced that Ft age issued an emergency use authorization or noninvasive Vegas nerve stimulation therapy gamma core Sapphire CV.
A known or suspected covert patients who are experiencing an exacerbation.
It's my related symptoms <unk> currently available treatments cannot be tolerated or proof and effective.
Needless to say, we're thrilled that are you way, it's been approved and we look forward to making and BNS therapy available to both medical community and cobot patients.
I'm of course Sapphire CV is now one other very small group of therapeutics to have received you weigh designation.
Utility of N.S. encode 19 patients was initially highlighted in April 2020 through a paper published in the highly regarded peer reviewed journal Neuromodulation technology at the neural interface.
Vishal Journal of the International Neuromodulation Society.
That paper was entitled use of Noninvasive Vegas nerve stimulation to treat respiratory symptoms associated with Cowen 19, theoretical hypothesis and early clinical experience.
This paper describes the mechanistic rationale for the use of and BNS in patients with Cobot 19, and highlights to case reports from patients who experienced clinically meaningful benefits from and BNS therapy.
In case, one the patient use and being asked to expedite.
Symptomatic recovery at home after hospital discharge due to cope with 19 and was able to discontinue use of opioid and cost suppressant medications more rapidly than anticipated.
Case to the patient experience immediate and consistent relief from symptoms of chest tightness shortness of breath as well as an improved ability to clear as lungs and did not require hospitalization.
Paper concludes that and I quote preliminary observations and a strong scientific foundation suggest that end BNS might provide clinical benefits in patients with code 19 via multiple mechanisms.
As a result of this evidence in combination with the early clinical trials that supported the issuance.
Two investigator initiated clinical trials are underway evaluating game of course, Sapphire, CB and hospitalized covert 19 patients.
In Spain, Dr., Carlos Port narrow hospitals clinics opened a better she patio dividends Ya is conducting a study called save your one.
Study assessing vegas nerve stimulation encode 19 respiratory symptoms.
This is a randomized open label study that is targeting 90 hospitalized patients with the confirmed diagnosis of presumed to be cobot 19 positive.
The United States Dr. <unk> Chammah Allegheny General Hospital in Pittsburgh is conducting the study called save your two targeting 60 hospitalized patients with the confirmed diagnosis of or presumed to be code 19 positive.
Both studies follow the recommendations outline for clinical trials by the Whx in their cobot 19, R&D blueprint and we'll measure the safety and efficacy of gamma core Sapphire CV plus standard of care versus standard of care alone in patients hospitalized with Cowen 19 across a broad range.
A clinical and laboratory endpoints.
We are grateful to doctors trained arrow and chairman and their staff for taking the lead on these important studies and we look forward to their results. We should note that it is difficult to predict when this studies will achieve full enrollment that's the number of hospitalized co would patient tends to fluctuate from one country to the next and within different regions of the country.
More recently, we've agreed to support clinical trial within the Veterans administration system.
And BNS to treat cobot 19 patients in an outpatient setting prior to any hospital admission thatll be coordinated by the Hampton, Virginia, The a medical center.
We will provide additional details on this study tentatively called Vanguard later in Q3.
In terms of pricing and availability of gamma core Sapphire CD.
Just price of Gamma course, Sapphire CV is $1750.
In light of the emergent pandemic, we're making the therapy available to all customers for $1250, a 29% discount until further notice.
We have instituted what we believed to be very simple process for hospitals physicians patients and D.A. military treatment facilities to access game of course, Sapphire CB and I'd refer you to the press release issued on July Thirtyth 2024 specific instructions.
Further support these you wait distribution activities, we are planning to launch a tele health option for Gamma course, Sapphire CB that will facilitate the immediate processing and fulfillment of prescriptions.
Note that our specialty pharmacy partner has expressed confidence that gamma course, sapphire TV will be eligible for reimbursement.
The Department of Veterans Affairs, Cobot 19 National summary available on the Internet shows more than 4000 active cases as of August 11.
You may recall that we have a small team of sales executives, calling on the V.A. system and military treatment facilities.
That team has been trained on game of course, Sapphire CV and have started promoting our therapy for coal with patients in that channel.
Since our July Thirtyth 2020 announcement, our team has reached out to almost 1500 providers within the VA system. In addition to all of our legacy headache relationships.
Operationally, the health and safety protocols that we put in place upon the emergence of the pandemic to protect our employees customers and suppliers remain in effect, we continue to manufacture and ship product on schedule and manage our inventory and supply chain with very few disruptions.
Turning now to our results for the quarter ended June Thirtyth 2020, we experienced softness in some of our key metrics, particularly paid months of therapy as physicians and hospitals pivoted to fight the pandemic physician appointments were postponed and travel and other restrictions made it difficult to conduct direct.
Switching outreach.
Total paid months of therapy in the second quarter 2020, what 2407, representing a sequential decline of approximately 8.5% from 2633 in first quarter.
However by the ended the second quarter more than 2890 positions have written at least one gamma core prescription as compared to 2850 at the ended the first quarter.
Total revenue for the quarter was $753000 a modest increase from $734000 in the first quarter. A result that we are pleased with given the logistical challenges posed by the pandemic.
As with prior quarters, the federal supply schedule and the United Kingdoms National Health Service contributed most of the revenue and we recognize revenue in the commercial channel for the first time this year.
I will now discuss each of our revenue channels in more detail some of which we previewed in our business update press release for July 14 2020.
During the second quarter 67 Department of Veterans Affairs, that's the VA and Department of Defense Deo D military treatment facilities purchase gamma core products as compared to 64 during the first quarter 2020, and 54 during the fourth quarter a 2019.
Also during the second quarter the company shipped approximately 988 paid much of therapy pursuant to the a indio de originating prescriptions compared to 1084 paid months of therapy. During first quarter 2020 at 829 during the fourth quarter 2019.
Revenue from the VA Indio D. in the second quarter was $415000 as compared to $454000 in the first quarter and $378000 in the fourth quarter 2019.
As we indicated during our first quarter conference call in light of the ongoing pandemic, our ability to visit hospitals and doctors has been limited and according to the officials. Some 5.7 million appointments would be a providers canceled between February and April.
Partly offsetting this is the V H advanced telehealth capabilities, which have increased almost tenfold from 2500 daily sessions in early March to nearly 25000 current daily sessions. According to the Federal News network.
As we said before but bears repeating gamma core can be prescribed easily during a tele health console and delivered directly to the patients home and this has allowed us to navigate through the crisis with only a modest sequential reduction in paid much of therapy.
We continue to see encouraging signs that certain VA hospitals are planning to host in personally meetings with our field staff and are starting to see patients in clinic.
Well the VA system is a long way from opening up the current quarter is off to a good start we shipped 435 paid much of therapy in July 2020, compared to an average of 329.
Per month in the second quarter.
Outside the U.S., turning now to the United Kingdom, and other O U S territories.
The UK was particularly hard hit during the.
Result, eight months of therapy decreased about 7% to 938 from 1008 during the first quarter 2020 961 during the fourth quarter 2019.
The modest sequential decline was also affected by discontinuation of operations in Germany.
Barring a second wave cobot related restrictions are loosening in the United Kingdom in as a reminder, gamma core is reimbursed through the innovation technology payment program.
During the second quarter 2020, total revenue generated outside the U.S. was $247000 as compared to $277000 in first quarter 2020, and $294000 in the fourth quarter 2019.
New patient starts have been impacted by the covert pandemic, but we're optimistic that we can return to growth in both revenue and months of therapy in the back half of the year.
So I was off to good start with 368 paid months of therapy as compared to an average of 313 per month during the second quarter.
Turning now to the U.S. commercial and pharmacy benefit managers I've previously said that I did not expect it to recognize any revenue from the commercial pharmacy benefit manager channel during 2020, because there appear to be adequate inventory in that channel.
Now appears that I was too conservative.
Commercial pharmacies had been filling 300 to 500 paid much of therapy per quarter. During the first two quarters of 2020.
Those prescriptions have been delivered from inventory purchased by a distributor in 2019.
During the second quarter 2020, we successfully transitioned our business model in the commercial space.
Work directly with the specialty pharmacies, we exited our remaining distributor relationship as it may 31, 2020, and that distributor was able to dispense all of the inventory that they had originally purchased last year.
We shipped a small replenishment order to pharmacies in June 2020, and we expect to ship at least 200 paid months a therapy per quarter going forward for the rest of the year.
Now that we've streamlined our commercial channel, we will start to look at making selective investments to grow that business more aggressively once the cobot related headwinds receipt.
Turning to our clinical programs beyond the Kobin trials discussed earlier the premium to trial in migraine prevention was closed due to the pandemic in March 2020, and we expect to have more than 225 patients in the intend to treat group and more than 110 patients in the modified intent to treat group.
We look forward to analyzing the data from this study and the data will subsequently reported it upcoming medical meetings I look forward to sharing that data with you.
The company is aware of several other investigator initiated trials and variety of indications. Many of these are having difficulty recruiting patients in the short term as the world managers through the Pendennis, we'll share updates as they become available.
On July 20, Eightth Twentytwenty, we announced the publication of the clinical update paper in the peer reviewed journal set for last year. The official journal of the International Headache Society.
The papers a narrative review of recent scientific and clinical research into the Noninvasive Vegas nerve stimulation for headache, including findings from mechanistic studies and their possible relationships to the clinical effect and then BNS.
Review concludes the scientific and clinical studies support the emergence of Nviant assets, an effective safe well tolerated and practical treatment for primary headache disorders and supports the consideration of Nviant s. as.
Number one a first line treatment for both acute and preventative treatment of cluster headache, and number two and effective option for acute treatment with migraine and number three highly relevant practical option for migraine preventative therapy.
The primary author of the paper is Dr., Stephen Silverstein past President of the American head exercise and director of the Jefferson Headaches Center at the Thomas Jefferson University Medical Center.
It's publications such as this together with support from influential opinion leaders, including all the authors of that paper that are core to our ongoing marketing efforts and represent a very powerful tool as we work to drive adoption of Canaccord therapy in all of our channels.
At this point I'll turn the call over to Brian for you as our financials and other guidance items.
Thanks, Dan.
The quarter ended June Thirtyth 2020, Electra core reported net loss of $753000 compared to $734000 in the first quarter of 2020 and slightly above guidance range of 700000 to 750000 that we provided in our July 14th.
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The increase in revenue compared to the first quarter 2020.
Like sales from our commercial channel offset by decreased revenue within the V. Eight.
Paid monster therapy shipped to the V.A. Indio D.
9% sequentially 988 during the second quarter of 2020 from 1084 in the first quarter of 2020.
Revenue from the V. Eight India also decreased 9% sequentially to $415000. During the second quarter 2020 from 454000 in the first quarter of 2020 and 378000 in the fourth quarter of 2019.
Eight months a therapy shipped outside the U.S. decreased 7% sequentially to 938 during the second quarter 2020 from 1008, <unk> first quarter 2029, 61 in the fourth quarter of 2019.
Revenue from outside the U.S. decrease sequentially to $247000 in the second quarter 2020 from 277000, the first quarter 2020, and 294000 in the fourth quarter of 2019.
During the quarter ended June Thirtyth, 2020, electric or restructured its commercial distribution channel and exhausted all of the inventory that had.
Previously been placed in that channel.
As a result company record revenue of approximately $60000 during that period for small replenishment water and expects to be able to report recurring revenue in the commercial channel in the future.
Total operating expenses for the second quarter 2020 were approximately $6.4 million down approximately 50% compared to 12.7 million in the comparable period in 2019.
SGN a expenses declined approximately 44% for 5.3 million in the second quarter 2020 from approximately 9.4 million for the comparable period in 2019.
Primarily driven by a decrease in sales and marketing expenses consistent with the cost reduction plan that we first implemented in June 2019.
R&D expenses decreased by approximately 1.5 billion or 60% to one day in the second quarter 2020 from 2.5 million versus a year ago Perry.
This reduction is consistent with the company strategy it significantly reducing its near term investment in R&D.
During the second quarter 2020, the company recorded a tax benefit of approximately $1.2 million in connection with the sale of some of its new Jersey and allows.
GAAP net loss for the second quarter 2020 was $4.7 billion compared to a GAAP net loss of 12.1 million in the second quarter 2019.
Adjusted EBITDA net loss for the second quarter 2020 was a loss of $4.3 million as compared to adjusted EBITDA net loss of 10.8 million.
Same period in 2019.
The company defines adjusted EBITDA net losses, GAAP net loss, excluding income tax expense or benefit.
Compensation expense restructuring and other severance related charges legal fees associated with stock holders litigation and total other income and expense.
A reconciliation of GAAP net loss to non-GAAP adjusted EBITDA net loss has been provided in the financial statement tables included in our press released this afternoon.
Cash and cash equivalents and marketable securities at June Thirtyth 2020 totaled approximately 18.9 million as compared to approximately 24.1 billion at December 31st 2019.
Yes, because a second quarter accompany raised an additional $10.3 million.
Our previous now stock purchase agreement with Lincoln Park capital.
Adjusted for the race.
Subsequent to the under the second quarter.
Our pro forma cash and cash equivalents and marketable securities balance was $29.2 million as of June Thirtyth 2020.
Net cash used in operations for the quarter ended June Thirtyth 2020 was approximately $5.2 million not including approximately $1.2 million, we see from the sale of NJ and a wells.
This operating burn for the quarter is down from 8.4 million in the first quarter 2020, and 9.4 million for the fourth quarter of 2019.
Aseptic to the third quarter 2020.
We anticipate that revenue will be an excess of second quarter levels and that operating cash burn will be less than $4.5 million.
And now I'll turn the call back over there.
Thank you Brian.
Overall, we're pleased with our performance during the second quarter against a challenging backdrop the code 19 pandemic.
It's a testament to the entire electric core team that we're navigating through this crisis and remain well positioned to achieve our ultimate goal to make our end BNS technology available to the broadest possible patient population.
Looking forward to the next 12 months, we're working towards multiple milestones and catalysts, including number one a return to revenue growth in Boca Deo D and O U S channels as well as increased revenue contribution from our U.S. commercial channel number to peer reviewed manuscript publications exploring and.
BNS in new indications, such as PTSD and traumatic brain injury.
Number three the launch of gamma core Sapphire CV for coated patients.
Number four data from the premium to trial.
Number five data updates from both Savior trials and the Vanguard trial and code 19 patients and number six data updates from the acute stroke trials progressing in Europe sometime next year.
I also want to point out that our cash balance and runway are substantially improved at June Thirtyth 2020.
More than $29 million, a pro forma cash cash equivalents in marketable securities at June Thirtyth, 2020, and to steadily decreasing cash burn electric cores healthier than it has been since I joined the company.
Finally, I want to thank our patients their physicians our hospital customers our suppliers, our shareholders and most of all our dedicated employees for working with us through these unprecedented times.
At this point I'll ask the operator to open the lines for questions.
Thank you ladies and gentlemen at this time, we won't be conducting a question and answer session. If you'd like to ask your question you May Press star one on your telephone keypad, a confirmation tone well indicate your line is then the question Q.
You May press star to if he would like to remove your question from the Q4 participants using speaker equipment, it maybe necessary to pick up your handset before pressing the star kick.
Our first question comes on the line of Ryan Zimmerman with BT Hi, Jay. Thank you very thank you you May proceed.
Hi, Thank you good afternoon, everyone.
Hey, Ryan Thanks for listening in.
Of course, I'm first going back to be has made tremendous progress.
Then he joined the company and we think that Brian as well. Thank you know.
Maybe to start I'd love to understand how you're thinking about the opportunity.
With Canaccord staffer CV and its overpopulation you gave us some metrics around you know your your sales force getting out there would be a physician population and so you know how should investors think about that over the coming quarters in terms of what it can result in revenue.
Actually if you're willing to it because we thought there and then I've a couple other questions.
Sure So look first and foremost.
We want to make sure that the therapy is available to anybody that will benefit from it.
This is about responding to the emergency.
And and revenue in commercial attributes are certainly important but there there are secondary to making the therapy available.
We have a small direct sales force and that the a system, we have a lot of relationships and to be a system. So that's that's sort of the passes or at least resistance for us to to making the therapy available and a and as I mentioned in the ER comments, we are talking to a the the a system at large about running.
Outpatient study with a gun of course, Sapphire CV for treating respiratory symptoms associated with coated.
Commercially.
Our pharmacy partners are ready to go and but there's a big.
Awareness hurdle and we're trying to figure out how to efficiently get the word out and everybody on this call can can help us get the word out that there is.
And it's back to therapy.
For treating you know.
Confirmed or suspected coated 19 patients with ER with respiratory distress.
Okay.
You gave a nice metrics out around the trends in July or in terms of what you're seeing in terms of a rebound.
July in all of the second quarter.
Just wondering if you can kinda talk about you know, whether we think that's pent up demand.
Whether you know you did enjoy their backlog in the second quarter, you Kinda didn't know hold pretty steady relative maybe from the month of peers out there. So maybe just talk about kind of how you're thinking about the July trends and.
You know, whether that's a surgery backlog.
Yes, and then what what you think that may or.
For 10 to in terms of August and September.
Yeah. So a good question Ryan So you know look headache is.
Generally speaking a chronic issue and we're offering a a chronic therapy.
We had some challenges around new patient starts in April and may or more in the United Kingdom than in the United States.
But I I think it's a it's a return reflects more of a return to the new normal our physician prescribers.
I have figured out, especially into the a system how to leverage the tele health.
Canceled and Ah So no I don't I don't think its pent up demand I think its figuring out how to deliver the therapy reliably in whatever this new normal is a in the United States going in the United Kingdom.
That's helpful. Then and then lastly from me and I'll Hop back you know you successfully managed your burn a very nicely whittled that down over the course of few quarters or cash balances is stabilizing in proven.
When you think about investments you want them they.
Given the cash you had and I appreciate the fact that you're you're managing the burn probably but.
Where do you think it's prudent to start making investments again I mean, when he starts.
Adding back the things that maybe have the because earlier, maybe just given a few quarters ago.
So you know certainly look we've made an investment in.
In the emergency use authorization for cold. It you know we're not the Savior trials are investigator initiated but.
We're helping out there.
And we're going to investing in awareness campaign around code around game of course Sapphire CV.
On on the headache side, especially in the commercial channel.
You know now that are we have quietly restructured our distribution channel.
That business model in the commercial channels for headache, now works for the company and so I think you'll see us I'm starting to make some investments in growing the commercial headache business sooner than I had originally expected. So we're we're going we're going to see revenue in that channel in this.
Second half of this year.
Which is oh pulling it forward from the last time that spoke.
All right thanks for taking the questions.
Yes.
Yes.
Our next question comes from the line of Swayampakula Ramakanth with H.C. Wainwright. Please proceed with your question.
Okay.
No.
Hi, I cannot make our high RK.
Exactly right.
[laughter].
So.
A couple months you seem to be very comfortable well so what is happening.
Mm Hmm.
The new coal.
HM Club assessment Huh.
I'm just trying to understand walk me through yeah.
Confident warm so any color.
Welcome.
I'm, assuming there's some CLO.
Almost.
Yes.
So it's it's very as you know it's very regional there are some parts of the country that are still suffering either a second wave or from the original.
Ah Kogan environment, but what's been very compelling for US is a is how well our therapy sits into a virtual dispense tele health modality and on the headache side our position prescribers.
Our our sort of.
Not coming back to normal, but they're getting more comfortable dispensing our therapy in.
And as we've discussed in previous announcements that said this competitive advantage for us over injectable therapies for headache. So.
It gets its a mix of some parts of the country.
Getting back to normal and opening up to having in person visits in the clinic and in other parts of the country that are still challenged.
Leveraging the the telehealth capabilities.
Okay well.
On the commercial side.
You know what this work including.
Yeah.
We expect this now but then there's nobody is going up I know that this is a whole notes so.
Oh, yes.
I blame them up with somebody itself.
Awesome.
Yes.
No taking on.
It's normal call but.
HM.
So.
Oh, well they put it in more than <unk> funds.
No.
On on that space.
Yeah. So you know, we previously announced that we.
We shipped a more than 500 paid months of therapy in the in the first quarter more than 400 paid months a therapy in second quarter, certainly the E. S. I express scripts relationship.
Helped to to accelerate that business the challenge or poor electric core has been the the.
Legacy distribution agreement that was in place.
In the channel.
So you know going forward.
We are conservatively forecasting 200 to 300 paid months of therapy, but there's no. There's every reason to believe that that's a conservative forecast given a that we shipped more than 500 in the first quarter and more than 402nd quarter.
So for the second half of the year, we'll be able to recognize revenue from those are paid much et cetera, but even the commercial channel, which we were not able to do in first half year.
Beyond that.
Now that Weve.
Now that we have restructured the distribution channel were much more comfortable.
Making investments and so accelerating additional conversations with the pharmacy benefit managers talking to the insurance companies that are a behind the pharmacy benefit managers to go planned by plan I'm as well as looking at what we're doing with deploying ourselves assets.
Thanks for that and then Oh, we call than mine.
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Well in loans in this business in dollars.
Especially the citadel loans and the flu.
Oh boy.
Oh, well you were able to them whose.
Visibility because all of this time.
Oh I'm also no.
What sort of book runs on how our wood.
No and was.
One was done by them.
Thank you.
So more among others.
Okay Yeah.
Okay.
As long as Stan.
No I'm sure.
Yes.
Yeah, So savior, one saved her to our hospitalized patients and those are investigator initiated trials.
Now that are we have the emergency use authorization.
We're getting a lot more interest from investigators.
That either would be interested in adding to the adding their sites to the the save your two trial in the United States or initiating their own trials and then as I mentioned on the call. We're also very excited and leveraging our relationships are within.
The V.A. system, a round as an outpatient trial that could be done at scale, because just because of the reach of the the a system in the United States. There are more than 4000 active cases in the V.A. system as of yesterday.
Colgate Unfortunately is not going away and so there's there's a real opportunity to do something on accelerated basis within the be a system.
Sure.
Patients in the home environment, not not hospitalized patients.
Yeah.
And then does a lot I.
And then so among congratulations.
Yeah, well attended a personal expenses down to the names.
Just one I'm sorry.
Oh, you know how much how much more you know tons is done not in backlog or how do.
No.
All the systems.
And then more more off of it I know it's no.
Yeah, I I think there's some more I think the R&D line will go down as you know premium to is wrapping up number one we're still looking at G and H. A you know we did switch waters a in the second quarter. So that'll start you know being represented in the numbers, we factored into numbers, if you know Q3 and beyond and they're still.
Some other things were looking at obviously, you know and I. Thank you for the.
Kudos there you know under Dan's leadership, we've really made a lot of strides there. So I still think there's some slack some things RK that we can continue to do.
Two out to the boy our capital efficiently.
Okay.
Thank you gentlemen, thanks for taking my questions.
Thank you thank her care.
As a reminder, ladies and gentlemen, it is star one to ask your question.
Our next question comes from the line of John Vandermosten with Zacks Investment Research. Please proceed with your question.
Thank you and Hi, Dan Brown, how you doing.
Let's start off with a question on me a innovation Technology Program Award a that's that's supporting some of the sales in the UK and also congratulations on the strong a strong results there and a in the British child.
How well that expire at some point and will it be passed often to another program later, how how does that work.
So we've been.
On six months.
Annex six month grant cycle and so the current grant goes through September and a and we've had conversations about getting the next.
Getting the next cycle of the grant for six months that'll take us October through April of 2022.
These are supposed to be bridges until we get broader NHS coverage. Unfortunately between coded and Brexit the bureaucracy in the United Kingdom is little bit slow these days so.
And where we're comfortable continuing to work under the six months extensions, but of course, a we'd like to be able to get to the next step. We've also made progress in extending to two Scotland and into Wales, and other parts of the United Kingdom. Besides.
Decide to England, a we've also had some initial success in other parts of Europe, So the future.
Post coded is very very exciting for us overseas.
Okay.
And I've seen.
I'm looking at about three different areas, where you where you have opportunities said, there's there's Medicare one of the big payers or potentially a new geography, and how our each one of these areas coming along and which seems most likely probably to generate a incremental sales next between are among the three the Medicare big payer.
Hours or a new geography.
So that's a very good question, John So with respect to Medicare a we we met with CMS back in November of 2019, we filed an application for a unique H.C.P.C.S. code. Unfortunately that Bureau.
Rockers. He is also slowed down.
Due to coated so we've got some uncertainty about when we're going to hear back on that hit picks code process with Medicare.
The large insurance players are starting to.
Come back to life. So I think that's where our next big win is gonna be in the United States, but it's very difficult to predict timing in a in the pandemic environment.
The other wildcard our distribution agreements in.
Other geographies around the world.
Where are you know where again [laughter] keep saying it but you know Colgate is slowing everybody down, but we've got increasing excitement, especially around the news a of the emergency use authorization in the United States, So very difficult to to put calendar on it.
But it's very exciting time for the company.
Okay. Thank you and last one from me so if there's a big spike in demand for covered related.
Devices, well I mean, I guess are all the same but is there enough supply and inventory to meet that a and what what kind of demand could you could you absorbed.
Spikes. So yeah. So that's a bit of a good news news answer.
If you looked at our statements we have more than $7 million inventory on our balance sheet that translates to a at least 40000 a units. So we can handle that a initial surge of demand I look forward to to reporting to you that.
We've had to accelerate our supply chain beyond the inventory that we currently have in hand.
Thank you guys.
Thank you John.
There are no further questions in the queue I'd like to end the call back to management for closing remarks.
All right. Thank you Doug and thank you all for a for joining our call.
Just a quick plugs that a that dr. Peter starts our chief Medical officer, one of the founders as a company is on the call with us, but more importantly, a you'll be a featured speaker on tomorrow afternoon on the Fox business claim in count down tentatively scheduled for.
Three P.M. tomorrow afternoon, and that timing of course could be a.
Pre empted or could be earlier or later, depending on whether theres any breaking news that that gets ahead of us, but if you've got nothing better to do tomorrow afternoon joined Docker stocks and and watch him on TV.
We greatly appreciate.
Everybody support during these very difficult times, and and we look forward to getting past. This pandemic. Thank you everybody.
Ladies and gentlemen, this does conclude todays teleconference. Thank you for your participation you may disconnect. Your lines at this time and have a wonderful day.