Q3 2020 Rewalk Robotics Ltd Earnings Call

Biotics Ltd earnings Conference call at this time, all participants are in a listen only mode. After the speaker presentation. There will be a question and answer session to ask a question. During the session you will need to press star one on your telephone keypad. If you require any further assistance. Please press Star then zero.

I'd now like to hand, the conference over to your speaker today or heat gone. Thank you. Please go ahead.

Thank you Brad.

Good morning, and welcome to Rewalk Robotics third quarter 2020 earnings calls. This is already gone Rewalk Chief Financial Officer are with me on today's call. It is now reaches inscape chief executive.

This morning, the company issued a press release detailing financial results for the three and nine months ended September Thirtyth doesn't weigh these.

Its press release and a webcast of this call can be accessed through the Investor Relations section of the Rewalk website at Www Dot Rewalk Dot com.

Before we get started I would like to remind everyone that any statements made on todays conference call that express a belief expectation projection forecast anticipation or intent regarding future events and the company's future performance may be considered forward looking statements as defined by the private Securities Litigation Reform Act.

These forward looking statements are based on information available to reopen it went as up to date anyway.

And involve risks and uncertainties, including those noted in this mornings press release and Rewalks filing with the SEC.

Such forward looking statements are not guarantees of future performance actual results may differ materially from those projected in the forward looking statements.

Walk specifically disclaims any intent obligation to update these forward looking statements, except as required by law.

Telephone replay of the call would be available shortly after completion of this call will find the dial in information in todays press release.

The webcast will be available on the company's website at www Dot <unk> dot com.

For the benefit of those who may be listening to the replay <unk>. Okay. What that this quarter was held and recorded on November 10 2020.

Then rewalk may have made announcements related to the topics discussed so.

So please reference the company's most recent press releases and SBC fight.

And with that I'll turn the call over to Rewalks CEO, Larry two cents.

Thank you Laurie good morning, everyone.

Our market development results in the third quarter continued to be very positive as we sell fundamental progress in Germany, and with CMS in the United States.

In Germany, the insurers are proving trainings at an increasing level of expected in additional insurers are moving forward with contracts.

In the U.S. the procedure code K 107 was formally issued and took effect on October one 2020.

In parallel Rewalk achieved full accreditation to be a direct supplier to Medicare and Medicaid through the CMS review processes.

Regarding revenue our Q3 outcome was limited by a variety of factors to $747000.

Limitations or in Q3 were mostly due to limited market access with individuals and clinics as well as delayed processing by payers under the current cold environment.

When we look ahead, we are encouraged by the growing pipeline of trainings in process.

Were completed and a weighted supply.

We have also strengthened our financial position with the addition of $9 million in gross proceeds we raised in July.

Operating costs were reduced by 6% over the prior year quarter and our original long term debt 20 million continues to be paid down monthly and we now have less than 3 million remaining which will be completely paid off in Q1 2021.

Operationally there are several central measurements.

Number one German contracts are working although more slowly than we would like.

As of September Thirtyth 2020, we had 15 active trainings in five completed trainees that are waiting final decision.

We are expanding the pool for training every week.

Coal that is limiting getting some of the patients in training and we have found pass to move forward through using local clinics in home training.

There have also been limitations and processing that we will address with direct interaction with payers and the contract administrators.

Number two German contracts are expanding as we achieved our first contract with a large private insurer.

The others are the national public Workmens compensation and for statutory public health groups.

Two additional major groups are in active discussions on contracts and several smaller groups are looking to join these agreements.

Number three in the U.S. the center for Medicare and Medicaid services issued the experts code on July 15th as we previously announced that became effective on October 1st.

This was built on data from publications are extensive historical demonstration of successful function.

Very attentive detail in our submission for this code.

To build on the code issuance.

We achieved CMS authorization to be a Medicare provider on October twentyth.

This is part of our roadmap to establish a U.S. Medicare coverage position.

As a result of this expanding status we have now initiated interaction with the medical directors of the Dnbi Medicare administrative contractors Macs, we administer the national Medicare and Medicaid plans.

And before infrastructure we.

We elected to maintain our entire commercial structure during the call. The pandemic and had this newly expanded team focus on lead development and building the pipeline for Rewalk.

And to prepare for our customer base and relaunch of the other three major product lines.

In the month of October we have begun to see the customer access is returning as we were able to conduct more in clinic demonstrations that month and we've done it from March until September.

Well, we expect to see continuing access limitations, we see that this carefully managed reopening by the rehab centers and clinics has established standards and guidelines. We believe our team will be able to safely and effectively present these technologies to clinics and developed market for use of robotic technology and everyday life.

Last quarter I emphasize that the creation of this new market is almost solely depended upon the economic driver of insurance reimbursement.

It's a slower process that is data driven.

This quarter demonstrates that this economic shift is occurring but the German policies and we expect that you asked about when something like that.

We remain very bullish about the prospects for Merck creation and expansion in the coming quarters.

I'd now like to turn the call over to Ori for review financial details.

Right.

Thanks, Larry.

Our Q3 revenue was $747000 compared to $1.2 million in the prior quarter. The decrease is mainly due to a lower number of TV told this quarter compared to the prior year quarter.

During two or three we have received 10, you rented approvals in Europe, which represents our highest number of friends on approvals in Europe in a single quarter and two units converted from prior quarters. In addition, this quarter, we placed our first mile in V.A. home user device.

Our total number of FDIC pending insurance cases was 96 at the end of the quarter compared to 98 to the previous quarter would 80 fold in Germany and 12 in the U.S. did show we have stable demand from the end customer population to our personal 6.0 product.

Our quarterly gross margin in the third quarter of 2020 was 52% and remain generally flat compared to the prior year quarter.

On the operating expense side, we had a total of three and a half million dollars this quarter compared to $3.7 million into play sports and $3.6 million in the previous quarter.

The main decrease compared to the third quarter was 1019 was in the R&D, where we have decided to reduce our spending whether we stole development completion and invest a higher portion of our spending on the <unk> commercialization efforts.

To recap what that any thoughts on when that loss for the third quarter was $3.3 million compared to a net loss of $3.4 million in the third quarter of 2019.

Our non-GAAP net loss for the third quarter of 2020 was $3 million compared to a non-GAAP net loss of $3.1 million in the third quarter 2019.

We ended the quarter with $18.1 million in cash and our long and short term loan balance was $3.4 million as of September 32020.

With that I'd like to turn the call back to Larry for some final remarks.

Thank you Laurie.

I'd now like to discuss activities for each of our four product franchises and close by reviewing the results compared to our stated objectives for the second half of 2020.

Well the Rewalk community at home walking system.

I'd like to step back and review, what we now believe about the market potential and the path to achieving meaningful market penetration.

The promise and benefit of allowing the paralyzed community walk again, Hezbollah captivating and disappointed the financial markets.

The experiences and data from walking together been well reported and are very positive.

The disappointment in the market has been because only a few of those that could walk in these systems were actually able to get.

The primary limiting factors have been data and subsequent coverage policies and contracts.

The data expanded significantly over these past six years and that has supported the recent actions by governments issuing codes and the completion of contracts by insurers.

For reference on the potential from 2021 forward if.

If we examine the most up to date market information on applicable patients in Germany in the U.S.

Along with CMS insurance coverage establish in a similar fashion as in Germany.

These markets are in the range of $90 million in annual revenue.

With achieving about a 3% market penetration rate.

These coverage accomplishments and goals are the next step in achieving true commercial development of this sizable market.

The tedious detail a building acceptance of reimbursement is lengthy.

Germany, you set the standards and they are now implementing.

The U.S. and Medicare system has moved forward with the code and in parallel the BA already has a coverage policy in place.

Now looking at the process of the relaunch first store and the launch of the micro cycle for exercise with the Sci community and the Meditouch glove leg and arm balance systems. They have all become active in October as we were finally able to engage a portion of the clinics regarding our two technologies.

We are finding interest from the national account change in the U.S. and in the E U each of these products.

In some cases for bundled offerings.

We have previously presented the clinical value of each of these franchises and been able to restart over these past six weeks we.

We look forward to presenting more in the quarters ahead.

On our Q2 call, we provided six measurements and objectives for the second half of 2020.

Here's our status.

Number one expansion of contracts in Germany, we've expanded from four to five contracts effective in Q3 and have two additional contracts presently being negotiated here, we are progressing as well or better than planned.

[noise] CNS progress number two.

In Q3, the code is firmly established and we ever achieved accreditation as per our stated goal.

We also submitted supporting materials for pricing and were subsequently informed the duty total bid pricing will be done with the local Max the Medicare administrative contractors for the time being.

As a result of these prior steps and due to the data that we have we have now initiated interaction on contracts and have the first meeting schedule.

We cannot yet for construction is forecasted results or timeline for any level of coverage, but we are satisfied we met our goals in the second half of 2020.

Number three expansion of supporting data with Rewalk.

We're building upon six years of experience and have gained access to multi year data on the users health pre and post injury.

This ongoing review of medical records and historical data pre Sci injury and.

And post their provision of an exoskeleton.

It will examine the economic cost of treating FCS healthcare in the period before and after the user was able to walk again.

I or be approval for the data we do have the data of about 45 exoskeleton users was received and we are presently sorting and analyze the data.

This will continue to progress and hopefully will result in any future publication.

Number four expansion of data service store.

The store has formal studies ongoing for two of our original U.S. study sites and we have evaluations underway with national and regional chains in the UK in the U.S. isn't.

These new evaluations will build our experience and allow for data in consideration of future contracts.

Number five an effective relaunch of the store.

We've had a number of recent placements in October.

We have begun to present the product in key accounts again.

Potential with the larger changes encouraging, but we must get them fully trained and have them achieve excellent clinical data and cub and outcomes in this process.

The market appears to be reopening to this breakthrough compact lightweight less expensive exosome technology.

Number six.

Measurable placements of the micro cycle in Meditouch, it's still a work in progress, but we are now achieving placements of the miles cycle due to the V.A. contract and our work with workers comp.

We should achieve our goals.

Many touch has excellent potential, particularly in field of telehealth.

We now have a total package and have recently presented it to our first accounts.

We anticipate placements are both offerings in 2020, but realize volume they take a little longer for the new technology and capital processes for the industry.

We see these as an important portion of our 2021 growth.

The panoply of building the company for the end of 2020 and for 2021 through careful financial then.

Growing the Rewalk home product by a substantive amount in 2021.

Gaining significant 2021 grow two or three new product lines.

The Rewalk will be based on the German per a German product line pipeline, the U.S. growth rely on or workman's comp and be a focus combined with CMS activities that will all play since its start in that segment.

The other lines will grow effectively it's clinics are open to new technology as cold It is manage control.

Thank you for your time and interest today I'd like to turn call over to the operator for questions at this stage.

Later, please go ahead with the instructions.

At this time, if you would like to ask a question. Please press Star then the number one on your telephone keypad again that is star then the number one we will pause for just a moment to compile bikini roster.

Your first question comes from the line of Sean Kane with H.C. Wainwright.

Hi, Thank you for taking my question.

Hello.

Hi, Joe.

Hi.

Yes, so you assume it's a.

Called it hasn't been it seems it's effective now right it means.

It hasn't been decided in the dollar amount.

The code is effective as of October Onest. So yes. It is effective.

The dollar amount, which we had booked.

Looked to be set up in a similar cycle and had made a submission.

Due to coal that they did not complete pricing so they have left us well.

Pricing will be done with the local Max so each of the individual Medicare.

Contractors will work with us on the pricing and those are some of the meetings that we have now set up.

I think so how are your.

Yes, I mean based on top.

Are progressing with private payers.

Now now that you have us in CMS.

CMS, causing the second is it helping anyway.

In the short term it has not affected us greatly I would note some of the private payers did support the issuance of the code, which is very important and.

We are going to try to set up specific contracts with private payers in parallel, but working with CMS, but our immediate focus at least for the past few months has been specifically with CMS to get everything aligned accreditation as well as Oh, all the supporting material to move that towards the contract and we will.

Be doing similar follow ups with the private payers subsequently, but we haven't done any yet.

I see.

So and what are your plans for the launch Oh, we store. It. So it's probably 2021 event like do you have oh.

Ballpark time timeline for that.

Well, we've actually started here in October.

Oh, great. Okay, Yes, we and we're fortunate we have accounts that have brought in the product and our focus initially has been a little more national accounts.

So we at least have a couple of national chains that have brought the product and revaluation.

During the cold period, they simply were not taking on any new technology, we're only gonna stay with active products because they didn't want to train their physiotherapists on a new technology because in many cases, they were those physical therapist reader furloughed or.

Yes, I was told that they simply Werent seeing new technologies. So we're starting out here in October.

And that obviously runs well into 2021, but we see a significant amount of our growth next year from those three product lines being able to be effectively launch.

Since they were put on hold and cold.

I see it sounds good one last one quick.

Could you provide you know commentary on cash runway in operating expenses going forward for Q and maybe at RBC.

And.

[noise] already would you pick that up.

Yeah no problem. So as mentioned we ended the quarter with $18.1 million in cash you can see that our operating expenses are a pretty much stable in the last Oh.

A couple of quarters and about 3.53 0.6, depending on specific quarters.

This is currently through the current structure of the company will obviously always.

Always monitor and see if we can find other specific segments to be a little bit more efficient.

But currently that's generally the board bug and on the capital side I think it's also again important to note that we are almost done with the Creo Sloan. So on the cash burn side, we will be reduced at the end of Q1. So this is a.

This is something we we wouldn't that be overweight soon.

On the operating cash flow side, you see this quarter are lending at about.

$2.6 million in operating cash burn so that's also a very.

Very positive improvement.

Improvement, if you compared to previous quarters and.

A year before that so we've done a very significant effort there and with the growth that we hope would come in the future we can even take it lower.

Sounds good very helpful. Thank you.

And again to ask your question. Please press Star then the number one on your telephone keypad.

There are no further questions at this time I would now like to turn the call back over to Larry just Penske for closing remarks.

Thank you operator, and thanks, everybody for joining us today.

We look forward to continuing providing information on the growth and development of our markets going forward.

And we're in a period, where Oh, we're finally, starting to see these markets. We opened which is really important to all of us. So thanks for your time today have a great day.

This concludes today's conference call you may now disconnect.

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