Q2 2020 Milestone Scientific Inc Earnings Call
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At this time will now turn the conference over to David Waldman with Investor Relations.
David you may now be it.
Good morning, everyone and thank you for joining milestone scientific second quarter 2020 financial results conference call on the call with US today I'm not sure interim Chief Executive Officer, or <unk>, Chief Executive officer worn dental Inc. and Joseph Yeah Casino Chief Financial Officer, The company issued a press release today Monday.
17th containing second quarter 2020 financial results, which is also posted on the company's website do you have any questions. After the call or would like any additional information about the company. Please contact crescendo communications that you want to 6711 zero choose euro the company's management will now provide prepared remarks, reviewing the financial and operational results for the second quarter.
We ended June Thirtyth 2024, we get started we like to remind everyone that during this conference call. We may make forward looking statements regarding timing and financial impact milestones ability to implement business plan expected revenues in future success. These statements involve a number of risks and uncertainties are based on assumptions involving judgments with respect to economic competitive and market conditions.
Future business decisions all.
I can't predict accurately and many of which would be on milestones control. Some of the important factors that could cause actual results to differ materially from those indicate about forward looking statements. Our general economic conditions failure to achieve expected revenue growth changes in our operating expenses at first patent rolling at their legal developments competitive pressures changes in customer market requirements and standards.
And the risk factors detailed from time to time milestones periodic filings with Securities Exchange Commission, including without limitation milestones report on form 10-K for the year ended December 31st 2019, and milestones report on form 10-Q for the second quarter ended June Thirtyth 2020 forward looking statements made during this call. It based on management's reason mobile leap as of today's date August 17 2020.
Milestone undertakes no obligation to revise or update publicly any forward looking statements for any reason would that we'll now turn the call over to lend officer interim CEO. Please go ahead Len.
Good morning, Good morning, David. Thank you thank everyone for joining us on the call today.
We continue to advance our commercial efforts around the comp you flow epidaurus system.
Although we experienced temporary setbacks due to the cobot 19 with hospital was on complete locked down I'm pleased to report our sales and business development pipeline.
It's expanding.
Importantly, we are in late stage discussions with a number of premier hospitals in the United States.
Moreover, the cap checked technology has resonated well with hospitals, given its ability to significantly minimalize anesthesiologist time by providing very quick information regarding pain management.
Checks added capability makes comp you blow the first and only commercially available instrument that can identify the presence of a pressure wave forms signal that can be used to confirm proper placement all the capital.
And this can be accomplished in an objective way.
In minutes as opposed to using the conventional subjective method, taking up to 20 to 40 minutes.
Using cats, Jack physicians and nurses can not only determine what is the objective pressure at the tip of the needle, but can now monitor the presence or absence of opposed to tie waveform to determine the placement of the catheter importantly.
This capability saves time, and money and provides better patient care.
Looking ahead, we are more encouraged by the outlook for the business than at any point during the company's history.
We have successfully trial dog comp you flow epidural system in multiple hospitals.
And we are now working with doctors and that committees and the respective hospitals.
Most importantly, the product is now proven in terms of safety efficacy and very importantly, economics.
For these reasons, we are confident does however that our technology, we will become the new standard of care.
Believed that our company is well positioned for a broad commercial rollout of our comp you flow epidural system.
Turning to our dental division the global pandemic has had a negative impact on revenue for the second quarter.
Due to industry wise reduced hours and and closings of dental offices throughout the country and the rest of the world the quarter watch a disaster for us and the industry. Nevertheless, we are encouraged by the study reopening of dental practices.
In the U.S., but some.
Some degree, but a large degree in Europe.
And the order flow this month.
As shown a turnaround for us.
In the meantime, we have utilized this period to significantly enhance our marketing activities to better educate dentists on how the one can help them because rebuilt and practice by providing a safer and more pleasant environment for the patients and staff.
With the recent appointment of origin high levels as Chief Executive Officer of one Dental Inc.
We are enhancing the sales and marketing activities around all that Lynch demands on our exploring new collaborations and distribution opportunities at this point I'd like to turn the call over to origin to describe the sales and marketing activities around the Wanda instrument in more detail. Please go ahead origin.
Thank you Uh huh.
First let me say, how excited I am going milestone I didnt exciting time.
Despite the temporary impact of the current pandemic I'm confident that the yet be dual instrument will become standard of care and they're similar potential for this technology across a wide range of indications.
As Lance previously commented a lot of my initial focus has been on revamping sales and marketing activities.
Around our dental instrument.
We are adding more resources, including a more focused international effort and educational activities to build awareness in the marketplace.
As an example, we are reaching out to members of the Academy of General Dentistry to highlight the clinical benefits of the one anesthesia system, which can improve the safety of dental procedures for the patients and stop during the cold It 19 endemic.
Patients are concerned about expose your potential to viruses and infection control more than ever.
The advantage of the one anesthesia system is that the anesthesia is delivered through its still well disposable for single use.
Which adds peace of mind to the patient with the potential of degrees exposure risk.
The key element of this strategy is to educate the dentists in terms of safety efficacy and economics.
We are educate them dentists on how the ones anesthesia system cannot only helping that daily activities, but also play a role in getting that business back to normal levels by fostering a safe environment for patients.
We also change the value proposition of identical product.
From purely clinical two more business driven in order to prove that I dental products can help keep patients coming back.
As an example, it's estimated that over 40 million Americans dental folding.
And avoid go into dentist because of the inside to your fear the day experience, let's assume the dental practice as thousand patients. It is widely reported that approximately 25% second deployments are canceled out of fear.
Therefore, it wouldn't be reasonable to assume that we don't want instruments that dental practice could be able catch your up to $200000 per year, bringing those stations back into the practice by using our product, thereby reducing or eliminating decile.
So as we sit today, we are gradually see improved uptake in United States and markets are slowly opening across Europe, although not yet at the level they used to be.
Most important we're not sitting around and being reactive.
Our team is working aggressively to exploit every opportunity possible [laughter] and believe we will be very well positioned as it then dynamic eventually subsides.
Turning to our medical instruments for just a moment as Glenn mentioned, we're trialing, our computer flow epidural system in multiple hospitals and medical schools, placing the system with key opinion leaders and working with some of the top anesthesiologist into United States and Europe.
In Europe, we're targeting hospitals in Italy, Germany, France, Denmark, Switzerland, and Sweden and other countries as we are pleased with the feedback we've received.
In the United States, we are in late stage discussions with a number of leading hospitals and will provide further updates as soon as we are at Liberty to do so I.
At this point I'd like to turn the call over to our CFO Joseph the Atlas Dino to go over the financials in detail. Please go ahead Joseph.
[noise]. Thank you argued revenue for the three months ended June Thirtyth 2020 was 167000 versus 2.2 million for the second quarter 2019.
Dental revenues decreased by approximately 2.1 billion due to the impact of the Cobi 19 pandemic on the company's customers suppliers vendors in other business partners.
Medical revenues for the three months ended June Thirtyth 2020 in June Thirtyth 2019 were nominal reflecting our strategy to place the issues with K wells at no cost to drive awareness and adoption of making sure.
Gross profit for the second quarter ended June 30 year, 2020 was approximately 112000 or 67% revenues.
Versus approximately 1.5 million or 68% of revenue.
For the second quarter ended June Thirtyth 2019.
Operating loss for the three months ended June Thirtyth 2020 was approximately $1.3 million.
Versus approximately 1.4 million for the quarter ended June Thirtyth 2019.
The increase in was the result of decreased revenue from the dental business.
Net loss for the three months ended June Thirtyth 2020 was approximately 3.1 million or six cents per share.
First as a net loss of 1 million or two cents per share in the prior period.
Now I'd like to turn our attention liquidity in capital resources.
As of June Thirtyth 2020, the company had cash cash equivalents of $16.6 million.
Compared to cash cash equivalents of two point Threemillion as of December Thirtyth 2019.
As of June Thirtyth, 2020, total actually [laughter] 19.9 million in working capital was 16.5 million.
Revenue for the six month at June Thirtyth, 2020 was 1.9 million versus 4.1 million for the six months ended June Thirtyth 2019.
Dental revenues decreased by approximately 2.1 million, which is related to the decrease in the sales of hand pieces and devices throughout the country internationally due to the Colby 19th pandemic.
Gross profit for the six months 2020 was one point Threemillion was 71% revenue.
Versus 2.8 or 68% revenue for the first six months of 2019.
Operating loss for the first six months of 2020 was approximately 4.7 million versus approximately 1.9 million for the first six months of 2019.
This increase in was is a direct result, whoever decrease in dental revenues.
Net loss for the six month ended 2020 was 4.7 million or nine cents per share.
Versus a net loss of 1.8 million or four cents per share for the comparable period in 2019.
At this point I'd like to turn the call back cold winter weather.
Three Joseph.
We remain encouraged by the outlook for the business and especially the market potential for the comp you flow epidural instrument for a variety of epidural procedures and other medical applications. However, our initial focus is on the labor and delivery market. We believe that aren't technology has the potential to trend.
On the industry and ultimately become the standard of care.
Given the uncertainty in the market, we took the opportunity this past quarter to raise capital.
As of June Thirtyth 2020, we had cash cash equivalents of 16.6 million.
We believe the strength of our balance sheet provides a substantial runway to help mitigate the risks related to cope with 19 as well as provide additional resources to accelerate our sales and marketing activities around the comp you flow epidural system and the Wanda instrument.
Moreover.
We now plan to resumed development and commercialization of other indications for proprietary Dps dynamic pressure sensing technology.
We believe this technology platform is quite broad with multiple indications and launch and underserved markets.
Let me be clear, we did not intend nor did we want to raise this capital, but given the uncertainty that uncertainty.
Presented by the pandemic.
It was poor what's the prudent thing to do to protect the company and our shareholders not knowing how long the pandemic will persist and be a fact that that will have on the overall economy.
Caused us to raise this capital.
We are committed to driving shareholder value and look forward to providing further updates as developments unfold.
I'd like to thank you for joining the call today at this point, we would like to open the call the questions [laughter].
Thank you.
It's time live investing a question answer session. If you like to ask a question. Please press star one from your telephone keypad and a confirmation total indicate your line is question Q.
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One moment, please hold the poll for questions.
Thank you.
First question is from the line of Anthony Vendetti with Maxim. Please proceed with your question.
Hey, good morning, guys.
Good morning, Anthony.
Well welcome aboard Arjun.
Thank you and I.
All right. So I wanted to just.
A little bit first about that.
The medical side.
I think he said.
Dental offices are beginning to reopen this month.
Obviously there were in mid August here, what about in July did you did you see a slowly.
<unk>.
Okay, I reopening starting July to continue into August and getting better in August or.
I didn't know you reopening really not start in any meaningful way into August.
Let me answer your question beat the reopening what we see is beginning to start and going back to let's say closer to normal levels of course at reduced activity, but definitely for them on August.
Okay. That's helpful and then.
In terms of the medical business, you mentioned that the sales pipeline is developing interest levels, increasing your your trial.
Multiple hospitals in the U.S. as well.
Multiple countries in Europe.
Trials going on and I know you have a.
And agreement with GP GPL, how are the negotiations going with the actual hall holes in the GPL.
About actually purchasing or has that really been severely limited by corporate 19 in right. Now. It's just it's just more of a pipeline of.
Interest.
Well everything has been limited around the world, particularly in the United States, given the fact that weve, a lag significantly compared to.
Other western countries.
Certain areas opened up which gave us an opportunity to go into those areas. One was Florida, one was Texas. They obviously.
Opened up too soon and that close down again, but we've made headway there a with.
Some news, we we've hired a cup.
A couple of new salespeople, we now have three sales people reporting to our head of sales in the United States. Fortunately, a new York State has done.
Very very well and flattening the curve. So we're putting a lot of attention and into New York stayed at the moment.
The.
The problem at the moment because of coal, but 19 is both the doctors.
And the staff.
And the Vac committees.
Our totally in golf because of Cobot 19.
Hospitals, However have opened up in New York State. So, we're taking advantage of that and moving.
Wherever the opportunity you ever the opportunity lies so.
To to answer as best as I can go funnel or because of what I just mentioned, both with new salespeople. Additionally, salespeople and with New York State opening has increased dramatically. So we're moving much closer.
Having the product in hospitals, but the attention.
Right now is on coal, but 19, so I cannot predict when we will start closing hospitals, but we are at the end of the process and I can say that both the epidural product.
And the cats check product.
Very very well received.
By the doctors and the staff.
Does that answer your question Anthony.
No. That's that's very helpful. Just <unk> just a follow up though on it so it.
Assuming.
You get an actual trial.
Go through the process of saying, Okay. We we agree this is significantly better than the current standard of care.
What do you anticipate in a normal environment.
The sales cycle to be once you make talk at the hospital and trial. It is this a <unk> three to six month process that the six to 12 month process.
In terms of being able to close it maybe relate that to the dental or what's the general cell cycle, there and do you expect it to be around the same or a little bit longer on the medical side.
Well the medical traditionally to get a product.
To a very high level of acceptances wondering I have to three years. However.
We've been doing this for one and a half years. So we're we're at a point now the product has been accepted.
By the vast majority of anesthesiologists that have tried it we've already piloted and in many many different hospitals successfully so we are now waiting.
With a number of hospitals, so that the Vac Committee.
Proves the purchase of the product.
We are selling disposables. This at the some hospitals as they continue to use it having finalize the the pilot so what's.
What's keeping us from actually.
Making arrangements with hospitals, where they use our product exclusively to replace the hypodermic syringe.
Is the bad committees because of covert 19, and the enormity of the expenses.
Because of the pandemic.
So so that's the that's the problem at the moment.
That being that the but both products both the cat checking the epidural.
Oh are working as they are supposed to and it's obvious to the doctors.
The answer to put part of your question is eight months ago.
We would have been in many hospitals, we wouldn't be having this conversation today, we'd be having a very different conversation if not for the pandemic. We would have at this point.
I believe that our head of sales Eric Gilbert believes that we have we would have been quite a number of hospitals at this point, especially given the economic study that has been released the enormity of savings with using our product.
As you noticed a.
Unfortunately in New York we.
Yeah again had the death of a young woman.
Probably because of the epidural.
Although these things can be avoided by using our product, including the other a less significant morbidities. So.
I think it's quite obvious what we can do replacing 18 60 technology with a technique there was developed in the 19 twenties.
It's a matter now of Ah, we had the vac committees or spending money.
And the fear that the Vac committees don't know how long the virus will be with us and what that cost will be so this is our this is our problem at the moment and this is why we raised the capital that we read that we raised because we're not aware.
Or is there anyone else with how long the virus will be but.
Nor the underlying economic effects.
Understood one yet that's very helpful on the cap check if you could.
I'll just clarify.
For all.
For the Busters.
That was just a.
It's using the same.
Paul talk you flow system, it's just checking now to make sure a catheter is properly placed all hasn't been displays.
And so that doesn't require any type of all five 10-K clearance you just had to put a letter to your file correct.
Yeah, you're you're exactly correct, what the cap check does.
Keeping in mind that the anesthesiologists have told us in many cases and that's why we had to redo the disposable that they work in seconds not minutes. So time is of the essence.
And labor in delivery with anesthesiologists, so one of the major problems that they have.
Is.
When the catheter is left in.
The pain management for the EPA Durrell after the needle is removed. The woman has is going through labor. The woman is now placed on a gurney move to another room. Once again placed on a gurney move to the other room with the.
End of the catheter tubing.
Taped to her back they then place that tubing and in a pump and they pump in.
Pain pain medication.
That's the woman is still experiencing paying an hour to three hours when that when the anesthesiologists a different anesthesiologists is doing the rounds. It can only be two reasons one.
Is that there's not enough medication. The other is that with all the movement. The catheters become this large than the medication as being deposited in the wrong location. If you will in order to determine this the procedure calls for the anesthesiologist to pump in a bolus a large amount.
Of anesthetic solution to see whether the.
The amount of the solution is not enough to mitigate the pain.
They wait 20 to 40 minutes to see if the woman now has the pain mitigated.
That is a very long period of time for the doctors and nurses, but particularly for the woman that some pain.
What we can do is because of our location ability.
Then.
Given our ability to read the Hawk rate if you will the pulse wave we can tell.
In a very short period of time within a minute within two minutes weather, depending on if it's a dry wet.
Epidural.
So we reduced that time from perhaps 40 minutes to admitted or two minutes that is enormous and its definitive it's conclusive. So they know immediately whether to increase the dosage or to do another epidural and replace that capita that's why that is still very imports.
Excellent.
Thank you for that explanation I'll hop back into queue.
Thank you very much Anthony.
Thank you as a reminder, you mean press star one to ask a question well possible to assemble the queue.
Once again anyway press star one to stick to ask a question.
Okay.
Thank you.
Our next.
Next question is from the line or Jim Daly with Jefferies Capital. Please proceed with your questions.
Hey, good morning, everyone you referenced the additional uses for your technology could you just give us a sense of what those additional uses our.
Sure.
Well the were enormous applications because whatever the hypodermic syringe can do we can do not naturally a we're not going to do vaccines, but any subcutaneous injection. We can do so if you look at we have entered labor in delivery first because.
At the very high morbidity rate I'm speaking out morbidity in no not mortality, it's 4.5% to 5%.
And labor and deliberate however, labor and delivery is a relatively small market compared to pain management with Epidurals. We can do that as well also epidaurus also use for operations of short duration, even under general anesthesia. So we can do that as well.
Tops is another area botox.
His paper play very expensive and the fallout for people that want to use the boat botox cosmetic purposes is due to the excruciating pain of injecting into the knows the islands someone and so forth. So we have an instrument.
That we can use for that now we haven't pursue that.
Because we were husband in the capital for the epidural now that we've raised the capital we're looking into pursuing that as well.
Intra articular and.
Injections are a much much bigger market.
And that's for osteoarthritis, when you're placing highly run a gas would because the so novel fluid has dissipated in the joint.
The synovial fluid is not replaced by the body. So the procedure quotes were approximately seven years of continuing the patient with injections three to four times, a year with highly ironic acid or.
The other drugs, which will replace this ennobled fluid and it does that very well eventually the patient would have would have a joint replacement. So in one instance, you can't do that in the small joins the fingers in the hands because its excruciatingly painful and the other instance, and the launch joint the problem is.
Finding the right location.
When you when you're delivering a drug.
For example, the epidaurus on the Womanising pain.
The indication that you haven't placed in the correct spot. The catheter is the fact that the women's and paying the woman's telling you that when you when you inject in other areas unrelated the pain, you don't really know if youve injected into the right spot.
Possibly for weeks whether its.
It's not a systemic like chemotherapy, but a drug going to a specific location, what we could do.
Because of our multiple areas of finding the spot one being pressured forced feedback. The other is the pulse way, we can assure the physician or nurse in real time, whether they're delivering the drug into real spot. So the answer is anywhere.
Do you want to.
Significantly reduce or eliminate the pain of the injection or be assured that you're delivering the drug in the proper location. So the potential markets are enormous.
Thank you.
Youre welcome.
Thank you at this time with reached the end of our question answer session I'll turn the call back to management for closing remarks.
Okay. Thank you very much for attending this call we are continuing to husband, our capital to work diligently to both bring our.
Dental product.
And our epidural product.
Commercially to market even in this situation.
And we are also looking at develop and other products based on our underlying technology keeping in mind that a recent Pat patent was issued over the last few months, which gives us. Another 20 years of patent life on pulse way, which is obviously very important to the company.
We keep of course, as a research and development company continuing to leap frog ourselves.
So stay healthy. Thank you very much and we will keep the market informed as we progress.
All the best.
Thank you. This will conclude today's conference you may disconnect. Your lines at this time. Thank you for your participation.