Q2 2021 IsoRay Inc Earnings Call

Greetings and welcome to ISO Reis second quarter of fiscal year 2021 call for the quarter ending December 31, 2020 at the time, all participants will be in a listen only mode and the question and answer session will follow the formal presentation.

If anyone should require operator assistance during the conference. Please press star zero from your telephone keypad.

Please note this conference is being recorded.

At this time I'll turn the conference over to Mark Levin with ISO raised Investor Relations. Please go ahead, Mr 11th.

Thank you operator, good afternoon, and thank you for joining us today for the ICU Ray fiscal second quarter 2021 earnings call for the quarter ended December 31st 2020.

Before we get started I will take a few minutes to read the forward looking statements.

Certain statements and this conference call constitute forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995 as amended.

When used in this conference call words, such as will believe expect anticipate encourage and other similar expressions as they relate to the company or its management.

As well as assumptions made by and information currently available to the company's management identify forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995.

These forward looking statements are based on management's current expectations and beliefs about future events as of today February nine 2021.

As with any projection or forecast.

They are inherently susceptible to uncertainty and changes in circumstances.

And the company undertakes no obligation to and expressly disclaims any obligation to update or alter its forward looking statements, whether resulting from such changes new information subsequent events or otherwise.

Additional information concerning forward looking statements is contained under the headings of Safe Harbor statement and risk factors listed from time to time and the company's filings with the Securities and Exchange Commission.

We will begin today's call with Lori Woods, <unk>, Chief Executive Officer.

And then Jonathan Hunt.

Used to raise chief financial Officer, who will discuss the fiscal second quarter 2021 financial results.

Following their prepared remarks, we will take questions from our analysts and institutional investors.

I will now I'll turn the call over to Lori Woods.

Thank you Mark good afternoon, and thank you for joining us today for ice raised fiscal second quarter 'twenty 'twenty One earnings conference call for the quarter ended December 31st 2020.

Following my prepared remarks, our Chief Financial Officer, Jonathan Hunt will provide a more detailed review of the fiscal second quarter financial results.

And although our overall business continued to be impacted by the COVID-19 pandemic I am pleased that we once again and have achieved year over a year of growth.

And our fiscal second quarter of 'twenty 'twenty one.

Total revenue increased 7% versus the fiscal second quarter of 'twenty and 'twenty.

Similar to the trends we've been experiencing since the onset of the pandemic early last year, our core prostate revenue declined modestly versus the year ago quarter, while our non prostate revenue increased significantly year over year.

And again by treatments for brain cancer, including the sales of Cesium 131 powered gamma tile therapy Non-pros state revenue increased 92% year over year.

Despite the ongoing near term challenges, resulting from the pandemic, we continue to be very optimistic about the long term growth opportunities for cesium 131.

As we have discussed previously we believe that many men had been delaying annual checkups screenings and the treatment for prostate cancer over the last several months.

This unique situation is likely leading to a growing backlog of patients needing to be treated eventually.

This is evident in the American cancer Society is 'twenty 'twenty, one cancer facts and figures report that was released in January.

The widely respected annual publication and estimates that nearly 250000, new prostate cases will be diagnosed in 'twenty 'twenty one.

This represents a staggering 30% increase over 'twenty and 'twenty.

The report notes that this trend is expected to continue with further increases and new prostate cases in 'twenty and 'twenty two as well.

Well, we have yet to see a significant rebound in our prostate cancer business and the growing number of men with prostate cancer gives us continued confidence in the abundant opportunities for growth and our core business.

Leveraging the unique therapeutic benefits of our proprietary cesium 131 isotope ice array has continued to advance our leadership in the field with continued enhancements of our prostate product offerings. We believe that this will drive further adoption and.

Market share gains.

Most recently this can be seen with the S. T. A five 10-K clearance we received for the use of seafloor imaging serious M. R. I markers with cesium 131 seats.

We believe this partnership with C for imaging will further expand our market opportunity within prostate brachytherapy.

This partnership gives doctors, who prefer to use of MRI as the imaging component the flexibility to do so with our seeds incorporated with the <unk> four marker technology.

We won't be selling sea force MRI marker technology in conjunction with cesium 131 to those customers who prefer to use this type of imaging.

We are just now beginning a limited market release on the combination and expect it will be available for full market release later this calendar year.

And as I mentioned earlier, we are excited about the growth of our non prostate brachytherapy business that continues to become an increasingly important part of our operations.

Through the first half of fiscal year 'twenty 'twenty, one 'twenty per cent of total company revenue has been derived from the sales to treat cancers other than prostate using cesium 131.

Currently the growth in the surgical applications for hard to treat cancers is predominantly being driven by the treatments for brain cancer, including sales of gamma tile therapy.

GT medical technologies began enrolling patients and the gamut of Chile registered trials late last calendar year you.

You may recall that the objective of this multicenter observational study were twofold.

It is designed to evaluate real world clinical outcomes. In addition to patient reported outcomes that measure the effectiveness and safety of gamma trial powered by our proprietary cesium 131 and seeds.

We look forward to updates on the study from the GT medical technologies as compelling results of this trial and other clinical studies for gamma tile could accelerate adoption of this unique treatment for patients battling brain cancers.

Given the highly critical nature of brain tumors and typical fast growth. The study should begin to reveal results in a relatively short period versus similar studies for other types of slower growing cancers, such as prostate.

Yeah on the tile is a key example of ICR as R&D and business development efforts that aim to expand the application of our unique isotope two of variety of hard to treat cancers.

Four of these surgical applications, we are continually exploring innovative delivery technologies that highlight the effectiveness of excuse me and 131.

Whether these innovations of our internally developed at ice rate achieved through partnerships with other innovative companies or acquired expanding the breadth of delivery technologies will be central to the growth of cesium 131, and a variety of surgical applications.

Developments such as these are why we remain excited about the growth opportunities ahead in both our core prostate business and as long as the continued expansion into the treatment of other cancers.

We believe the use of cesium 131, and the treatment of such cancers as brain head and neck gynecological and long hold great promise.

As we look to the future of cancer treatments and housekeeping and 131 and the role of targeted radiation will play. Our vision continues to include a focus on the importance of immuno oncology.

And as we've shared with you we firmly believe the immunotherapy will increasingly be central to the treatment of cancers and the future.

He each of this will be the further investment in R&D resources, where the studies on the combination of immunotherapy utilizing cesium 131 for the treatment of different cancers.

And that regard we look forward to updating you on the progress of two studies moving forward that we have discussed previously.

The University of Cincinnati, Keytruda study for recurrent head and neck cancers remains on track.

This planned and 50 patient phase one two clinical trial will be the first breakthrough therapy, plus PD one inhibitor combination study.

We believe immunotherapy in tandem with resection, and cesium 131 mass just patients and the clearing of disease sites outside the surgical and radiation and fields.

The other study, which focuses on the treatment of metastatic melanoma will evaluate the effect of combining cesium 131, breaky therapy with an immune checkpoint inhibitor.

This pilot study should be enrolling their initial patients soon.

We are also actively evaluating potential new studies and developing collaborations with the additional institutions for similar combination therapies for the use of treating other cancers.

Opportunities and growth naturally and lead me to talk about our recent financing.

Last week, we had a successful secondary offering that raised gross proceeds of 51.7 and $5 million.

And this capital raise and positions us to properly evaluate and capitalize on the growth opportunities ahead.

In closing we believe the steps we have taken to reinvigorate the organization and build on our successes with expanded the adoption and new applications for the treatment of other cancers holds great promise for a bright future bill.

Building awareness has opened the door to capitalize on what we see as robust growth opportunities and our core prostate market.

The steps, we are taking today and expanding innovative delivery technologies like gamut tile to grow the applications of cesium 131 and difficult to treat cancers is another key part of that future.

Just as important is our pivotal involvement in the future of immuno oncology and the decisive role we expect cesium 131 to play.

From my Vantage point these steps speak to what I told you when I became permanent CEO two years ago.

At that time I noted that it was a start of a period that I believed would be punctuated by growth expansion and opportunities to better convey to all of our stakeholders. The ice raid has just begun to hit its stride.

Together, we are paving the way for new successes and seeing that vision and become a reality.

Now I will turn the call over to Jonathan to review the results of our fiscal second quarter in more detail.

Thank you Lori I'm going to discuss some of the financial information that was contained in the press release for the fiscal second quarter when the Sun.

The 31st 2020 that we released on a short while ago.

We anticipate that our form 10-Q will be filed with the SEC on or around February 11th.

Revenue for the second quarter ended December 31, 2020 grew 7% the $2.36 million versus $2.21 million per the same period last year.

Prostate brachytherapy revenue declined 4% versus the second quarter of fiscal 2020.

Procedure volume continued to be impacted by COVID-19.

Second quarter 2021, prostate revenue and procedure volumes were in line with the first quarter of fiscal 'twenty and 'twenty one.

The second quarter revenue was comprised of 80% of profit.

And the breakthrough therapy with the balance of where 20% of revenue attributed to other breakeven okay.

And as Lori mentioned earlier other brachytherapy revenue increased 92% versus the second quarter of fiscal 2020 and.

It was primarily driven by itself the treat brain cancer, which included revenue from GT medical technologies.

Okay.

Gross profit as a percentage of revenues from the second quarter ended December 31, 2020 was consistent at $49 five per cent compared to 54 per cent for the quarter ended December 31 2019.

Driven by the revenue growth second quarter gross profit dollars of one one and $7 million increased 5% when compared to the same period last year.

Total operating expenses, consisting of research and development sales and marketing and general and administrative totaled $2.04 million representing of the modest increase versus the second quarter of 2020.

Total R&D expense increased 3% versus the comparable prior year quarter to $285000.

The increase and total research and development expenses was primarily the result of increased protocol and stuff.

Which were partially offset by a reduction of the development expenses for the group delivery system versus the comparable prior year period.

Sales and marketing expenses decreased 11% versus the comparable prior year quarter to $619000.

The decrease of sales and marketing expenses.

Primarily driven by declines and travel and trade show costs due to COVID-19, the restriction as well as decrease the incentive compensation, resulting from lower revenue growth compared to the prior year comparable period.

G&A expenses of $113 million represented an increase in spite of course zone versus the fiscal second quarter 'twenty and 'twenty.

The year over year increase was primarily the result of increased GA and all of a certain insurance as well and.

The group's payroll due to the annual merit increases and consulting expenses.

And was partially offset by decreased travel costs due to COVID-19 restrictions.

And as long as decreased employee hiring costs and legal fees.

And it's really narrowed its net loss to $868000 because of the second quarter ended December 31, 2020 versus a net loss of $897000 per the quarter ended December 31 2019.

The net loss per basic and diluted share was one point virtually no net loss of one from for the quarter ended December 31 2019.

Basic and diluted shares results are based on weighted average shares outstanding of approximately 83.0 million.

The second quarter 2021.

First of the $67 4 million for the prior year period.

As of December 31, 2020, the company had cash cash equivalents and certificates of deposits. The total of nine $5 million compared to two point between $9 million and.

Fiscal year, 'twenty and 'twenty ended June 30 of 2012 of them.

The increase in cash was the result of the closing of our public stock offering in October of the fiscal quarter.

The company has zero long term debt.

Shareholders' equity at the end of the school like one quarter of 2021 totaled $12 $8 million versus $5.7 million.

And the fiscal year 'twenty and 'twenty.

During January 2021, 12, 6 million one from options were exercised.

The gross proceeds of approximately $7 $9 million.

And as Lori mentioned the company closed a public offering of $41 4 million shares of its common stock.

Price.

$1 25 per share on February eight 2021.

Which includes the underwriters' exercise of the option to purchase an additional 15 per cent of the shares of common stock offered and the public offering.

Gross proceeds before underwriting discounts commissions and maybe offline costs were approximately $51 seven and $5 million.

I will now turn the call over to the operator to take questions from analysts and institutional investors.

Thank you well now be conducting a question and answer session.

And I had to ask a question. Please press star one from your telephone keypad and the confirmation tone and indicate your line is and the question queue you.

You May press star two if he would like to remove your question from the queue.

And for participants using speaker equipment, and it may be necessary to pick up your handset before pressing the star keys, one moment, please while we poll for questions.

Yeah.

Thank you. Our first question is from the line of my God with Oppenheimer. Please proceed with your questions.

Good afternoon, and thanks for taking my questions sort of the quarter.

It was pretty of mind, it looks like with your September quarter.

And it's still fair to characterize the revenue trajectory inside the gradual improvement from Covid spring 'twenty and 'twenty low point or did you like many other med Tech Spiel on me.

You know pressure and December as Covid cases picked up.

Hi, Mike. Thanks for your question today, So we've been recovering since our low point last April it has been slow and I think a lot of that is due to our core business, which is prostate and the demographic of the patient, which is 60 years and older and you know it's been a period of time when.

And it's been difficult to get in and a lot of people just don't want to get in and so we are encouraged that we continue to see improvement and we're really at this point and time watching for when this wave of patients who needs to get in to get their prostate cancer diagnosed will get be able to get back in the.

System and.

Really we've been feeling this way I think talking to everyone about the since the Covid pandemic started and one of the things that really we feel good about and I'm really backed up what we've been saying and what we've been hearing is that the American cancer Society and just in January of released their facts and figures publication of switches.

And I really well known publication.

And with estimates for the coming years cancer, and many areas and what was very interesting to US is they are estimating that there's going to be a 30% increase and prostate cancer diagnosis in this year and maybe more next year. So.

And what we feel like is that these patients out of the vaccine rolls out and they can become more mobile and feel better about getting in to see their doctors will get diagnosed.

Diagnosed and we will be able to help them fight their cancers.

Okay. That's very helpful. Thanks, and then on the G. T Registry trial, you mentioned debt I realize you just started but do you have any.

Estimate as to when we might start to see some early results on that one.

Oh, I'm, sorry, and Mike I don't I would think though that the results would come back certainly a lot quicker than our 10 year data since processors and <unk>.

Brain cancer.

And as more aggressive so I'm, hoping that we'll see something over the next year or too definitive on that.

Okay that makes sense and then finally you know.

Isn't that your sales force has certainly had the adapter and COVID-19, but can you give any additional color on you know Blu build traction so far the early launch how is appearing at the university of existing accounts are higher volume users anything like that and you can share and Laurie.

Yeah, absolutely so, although we're not giving specific guidance on it I'd love to give you some color on that we had to adapt when the pandemic hit like everybody else did and we're getting very adaptive zoom and being able to present to new facilities about Blu build during that period of time and we continue to do that and we're excited about the.

Existing customers, we have and the new customers that are looking at Blu build and we feel like once really things kind of even out in radiation oncology that we will see.

Several of these customers.

Who have shown interest really be able to E and an easier way to get their hands on it and be able to start using it like everyone else in the sector, we're having and the same issue of actually getting into the hospital physically. So we're starting to see that get a little bit easier and we're hoping that that will continue and that way.

Yeah.

That's it from me thanks for the updates.

Thanks, Mike.

Yeah.

Thank you.

Our next question is from the line of Frank of packing and with Lake Street. Please proceed with your question.

Hey, Thanks for taking my questions. Just a couple from me today I wanted to start with a little bit more of a big picture idea. So.

Phenomenon of Covid backlog and.

And the income being the reimbursement change next year as well as coming off of some positive 10 year day to get data for cesium on 31.

Last year. So I was hoping you could kind of help us better understand how you feel about breakthrough therapy coming back into a standard treatment option and some maybe anecdotal feedback you're getting from radiation oncologists about reintroducing and using breakthrough therapy more frequently with the different tail winds that are coming together at the same time.

Well I think you've described it really well we've got several really positive things that can come together here coming to where we get some vaccines out there and hopefully get the pandemic more under control. So patients can feel comfortable going back in and then the Ro APM, which was moved to January one 'twenty and 'twenty two.

And I think we've got several different things here that are going to be very positive for prostate brachytherapy certainly.

Hopefully for the rest of our fiscal year, and then certainly moving towards the end of this coming calendar year and then right into January I think we just have things lined up very well and we're working very hard right now our sales force is very focused on making sure that we have a broad base of customers who went on as these things happen and trigger.

Interest and breakthrough therapy, we can be positioned to help as many people and as possible.

And I'm sorry can you repeat your second part of that question.

And just what Youre hearing anecdotally from radiation oncologists about the adoption of breakthrough therapy and the.

The fields.

And the expectation that it could come into more of the regular standard treatment option for prostate cancer patients.

Yeah, absolutely. So we are getting currently inbound calls from a radiation oncology departments and institutions, where maybe in the past they had a breakthrough therapy program and they don't necessarily know where they never had one wanting to find out if we can help them with setting those up again and and why.

Of the things. We're finding is we have this discussion is they're quite aware of the change in reimbursement and how that may affect.

There are institutions and what's really heartening is that because we have so much clinical data when you combine clinical data with unfavorable reimbursement you really have the opportunity to grow our sector of like ours significantly. So we're looking forward to and we're really happy with what we're hearing from folks about the resurgence and.

Interest and prostate brachytherapy.

Okay.

Great and then moving on to your recent five 10-K clearance with Syria, and the serious MRI marker could you just take us a little bit deeper on the significance of this milestone and if there's any opportunity to further improve reimbursement for.

Those radiation oncologists, who elect to use these MRI markers.

Yeah, absolutely. So we look on a lot of things like this and as we're assessing these things there's there's different things that jump out to our attention and one of the things that jumped out and.

It made us look more seriously at sea for the MRI marker is that a lot of the thought leaders. We're beginning to look at this and use of MRI imaging technology. It's the technology that we haven't used that much in the past, it's typically been C T and ultrasound base, but as the imaging improves.

And there's more options and the imaging certainly we want to make sure that our seeds combine with on.

And those imaging options. So that we can make sure that the residents coming out of residency programs and out of the medical school that are being taught how to use the MRI have that option. So we felt like as we look to the future we want to be well positioned to be able to take care of all physicians and their imaging preferences.

And I think that you know going forward, we have some interesting opportunities here to work with C. Four and really looking forward to what we can do together.

Perfect and then last one from me and thanks for taking all my questions. Just a housekeeping question, where does the share count and cash stand after the raise as well as the warrant conversion and I know, there's and there's quite a few moving pieces. So I think it would be useful to level set everybody on where that standing after.

All of these transactions.

Yeah.

You bet Frank this is Jonathan so after this transaction.

So with the $1 75 million gross proceeds.

Warrant exercises that occurred.

During January and as well and.

And the cash position, we anticipate the.

And the neighborhood of about $60 million or so.

At this time and then.

In terms of the.

The shares.

There was the.

83 that was outstanding.

At the end of December once and additional.

12, or so that were issued as part of the warrants and then the.

And $41 4 million the.

Issued through the the range that was completed on the closed earlier this week.

Perfect. Thanks, again for taking all my questions.

Thanks Frank.

Thank you as a reminder, yes per star one to ask the question.

Thank you at this time and there are no additional questions I'll turn the floor back to Lori Woods for closing remarks.

Thank you everyone for joining our conference for today. We appreciate your time have a great afternoon Bye bye.

This concludes today's conference. Thank you for your participation you may now disconnect your lines at this time.