Q3 2021 IsoRay Inc Earnings Call

[music].

Greetings and welcome to isolate Inc, Q3 fiscal year, 2020 one call.

At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation.

And once you require operator assistance during the conference. Please press star zero on your telephone keypad.

As a reminder, this conference is being recorded.

And I'd like to share on the conference over to your host Mark Levin of Investor Relations.

Thank you operator, good afternoon, and thank you for joining us today for the Isa range fiscal third quarter 2021 earnings call for the quarter ended March 31st 2021.

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

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 and courage and similar expressions as they relate to the company or its management.

And 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 May 13 2021.

As with any projection or forecast they are inherently susceptible to uncertainty and changes in circumstances and the hunter 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 and subsequent events or otherwise.

Additional information concerning forward looking statements is contained under the headings of.

Safe Harbor statement and risk factors.

And from time to time, and the company's filings with the Securities and Exchange Commission.

We will begin today's call with Lori Woods ice arrays, Chief Executive Officer, and then Jonathan on ice arrays, Chief Financial Officer, who will discuss the fiscal third quarter 2021 financial results.

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

Now I'll turn the call over to Lori Woods.

Thank you Mark good afternoon, and thank you for joining us today for isolates fiscal third quarter 2021 earnings conference call for the quarter ended March 31st 2021.

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

I am pleased to share with you the progress we've experienced in our fiscal third quarter as we look with increasing confidence to the future opportunities for growth and Isa range.

Fiscal third quarter revenue only decreased 10% from the record quarter, a year ago, but increased 10% sequentially to $2 $6 million.

This was the best quarter revenue total since the onset of the pandemic.

Although our prostate revenue decline from the record quarter, a year ago I am encouraged by the 7% sequential growth we experienced in our core business as well as our growing strength and adoptions for the treatment of other hard to treat cancers.

The sequential uptick and prostate brachytherapy revenue in our fiscal third quarter reinforces our belief that there is a significant backlog of patients who will be seeking treatment as a result on the many men who have delayed annual checkups screenings and prostate cancer.

Treatments during the pandemic.

We expect continued gradual growth in our core prostate business as these patients come from the screening and treatment process and an increasing rate.

We are also experiencing greater access to hospitals and physicians than we have had and any other time since COVID-19 started last year.

At the same time, we believe the many strategic initiatives. We have added over the past couple of years should drive continued share gains and prostate as the expected post pandemic market rebounds.

Initiatives, including product introductions, such as Blu build our partnership with seafloor imaging and our active support of physician training programs are expected to serve us well in that regard.

Our non prostate brachytherapy business, which encompasses surgical applications for other cancers like brain head and neck and lung continues to grow and we're increasingly a more meaningful part of our total revenue again in fiscal third quarter.

Non cross state revenue increased 20% versus the prior year quarter, and 22% sequentially to a record $567000.

Once again, the majority of non prostate revenue was from brain cancer treatments.

Through the completed capital raise during the quarter and the subsequent strengthening of our balance sheet.

We have greatly enhanced ice arrays abilities to capitalize on significant growth opportunities.

We believe that ice raised enhanced capital position will allow us to make important strategic moves overtime.

First expect us to continue to focus on investing in our core prostate market with additional investments, particularly in sales and marketing.

The goal here is to foster increasing brand awareness and product adoptions.

It will also allow us to capitalize on the steps we've taken to build isolates leadership position over the past few years.

Reflecting on this focus on our sales and marketing team is the recent addition of Don afford as vice president of sales and marketing.

We believe Don and his extensive background in establishing and leading successful sales organizations within our industry uniquely positions her to lead our sales and marketing efforts.

You may remember in our recent announcement that her experience spans both biotechnology and medical device companies.

All of this with an emphasis on radioactive isotopes and monoclonal antibody technologies.

And it has had a pivotal role and launching numerous complex multi disciplinary products, including three radioactive isotopes for cancer.

Further we feel confident that Don and his valuable experience and combination therapy with oncologic agents, including immunotherapy will be particularly beneficial to Isa raised strategic vision for growing new markets.

Don and joins us at a pivotal time to take advantage of our expectation that projected prostate brachytherapy market growth will be fueled by some key developments, we have shared with you.

With the implementation of the previously discussed future reimbursement changes or R. O. A P M along with the anticipated increased prostate cancer diagnosis as we emerge from the pandemic, we see positives for ice res market position.

Beyond our core prostate market. We are pleased to see a growing use of cesium 131 for the treatment of brain cancers.

As we continue to look at the treatment of other cancers, we expect to increase investments and growing surgical applications, where we believe there's similar promise.

We are evaluating delivery technologies as well as further clinical studies to support the future growth of Cesium 131 treatments in these other cancers.

And as we've shared with you before much like brain cancer patients and the doctors, who treat them often run out of solutions to address aggressive cancers, like lung and head and neck.

We will also be increasing investments in research and development, particularly in the development of more clinical trials, which are essential given the weight of the data as such trials yield.

This is important not only for CZ and <unk> 31, as a standalone for radiation therapy, but increasingly in combination with immuno oncology targeted therapies.

As we have discussed we have two immuno oncology studies, which are just getting underway.

Those include the recurrent head and neck cancer trial with Keytruda.

The other is the metastatic melanoma trial with Opdivo.

True investments and similar combination therapies for the treatment of other cancers will be critical to our position and the evolution of our leading edge cancer treatment options.

The final area of investment focus we envision that this time will be for incremental opportunities to potentially broaden our portfolio of targeted radiation treatment therapies.

This may come in the form of new delivery devices and technologies that could complement cesium 131 or potentially looking at other radioisotopes, whose qualities may be valuable and best suited for treating various other cancers. We.

We are evaluating such strategic products, which could come via acquisitions partnerships or internal development.

It was with these growth opportunities and the execution of our strategic plans and mine that we hired and we saw lower.

And we recently announced as vice President of business development.

Leases accomplishments speak to her proven track record and commercial execution.

Market access reimbursement and strategic portfolio development and management.

We also believe leases direct responsibility over abroad, and Scopic device portfolio that was focused on the diagnosis and treatment of malignant and benign lung disease lends itself well to a key area of focus and expanding market adoption for cesium 131.

In addition, her previous experience at ice right and the development and implementation and excuse me and 131 seats for prostate cancer.

Is yet another value add as we also remain focused on expanding our market share in our core prostate business.

Leveraging these strengths will be instrumental and the evaluation and development.

Go to market strategies to position and ice array for the evolving cancer treatment marketplace.

And you can see these remain exciting times for ice array.

Despite the pandemic, we are more optimistic than ever before about our future path and the success of our efforts.

We remain focused on executing our strategic plans for continued growth.

We believe our efforts will have long lasting benefits to cancer patients and the doctors who treat them.

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

Thank you Laurie.

And I'm going to discuss some of the financial information that was contained on our press release for the fiscal third quarter ended March 31, 2021 that we released a short while ago.

We anticipate that our form 10-Q will be filed with the SEC on or around may 17th.

Revenue for the third quarter and at March 31, 2021 day.

Decreased 10% to $2 $6 million versus the record $2 $88 million for the same period last year.

Lori mentioned earlier total revenue increased 10% sequentially from the fiscal second quarter ended December 31 and 2020.

Prostate brachytherapy revenue declined 16% versus the third quarter of fiscal 2020. That's procedure volumes continued to be impacted by COVID-19.

Third quarter revenue was comprised of 78% for prostate brachytherapy.

The balance or 22% like revenue attributed to other breakthrough therapy.

Are there a breakthrough therapy revenue increased 20% versus the third quarter of fiscal 2020.

The majority of other revenue and the quarter was comprised of sales to treat brain and lung cancers.

Gross profit as a percentage of revenues for the third quarter ended March 31, 2021 was 52, 4% compared to 59, 2% for the quarter ended March 31 2020.

Driven by the year over year revenue decline third quarter gross profit dollars of 1.3 dollars $6 million decreased 20% when compared to the same period last year.

Total operating expenses, consisting of research and development sales and marketing and general and administrative totaled to one $3 million, representing a 6% decrease versus the third quarter of 2020.

Total R&D expense increased 23% versus the comparable prior year quarter, two and $362000.

The increase and total research and development expenses was primarily the result of increased payroll benefits and share based compensation from greater head count and increased protocol expenses, which were partially offset by a reduction of development expenses for the Blu build delivery system.

As the comparable prior year period.

Sales and marketing expenses decreased 28% versus the comparable prior year quarter to $581000.

The decrease in sales and marketing expenses was driven primarily by declines and travel and trade show costs due to COVID-19 and limitations as.

And as well as decreased incentive compensation, resulting from lower revenue growth compared to the prior year comparable period.

G&A expenses of $1, one $8 million represented an increase of 2% versus the fiscal third quarter 2020.

The year over year increase was primarily the result of increased director and officer and insurance expense.

<unk> payroll due to merit increases.

I T and consulting expenses and bad debt expense that was partially offset by decreased travel costs due to COVID-19 restrictions as well as decreased employee hiring costs and legal fees.

<unk> net loss for the third quarter ended March 31, 2021 was $745000 compared to a net loss and a $545000 from the quarter ended March 31 2020.

The net loss per basic and diluted share was one cent versus the net loss of one seven for the quarter ended March 31 2020.

Basic and diluted share results are based on weighted average shares outstanding of approximately $122 6 million.

<unk> third quarter 2021.

Versus 67 6 million from the prior year period.

As of March 31st 2021, the company had cash cash and equivalents and certificates of deposits totaled $64 $8 million or approximately 46 cents per share.

Compared to $2, three $9 million and see kind of history.

Full year, 2020 ended June 30th 2020.

The company has zero long term debt.

Shareholders' equity and the fiscal third quarter, 2021 totaled $68 $1 million versus $5 $7 million at the end.

And our fiscal year 2020.

Yeah.

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

Thank you.

And I'll be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad on a confirmation tone will indicate that your line is on the queue.

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One moment, please while we poll for questions.

Our first question is from Frank Tacking on with Lake Street Capital markets. Please proceed.

Hey, Thanks for taking my questions. Congrats on the return to sequential growth and growth in the quarter.

Wanted to start with your primary prostate breaky market share I was hoping that you could share some.

And once we procedural information with us as it trended over fiscal Q3, and if you could maybe give us and early taste and Oh, those procedural volumes have been trending and the early part of fiscal Q4.

Okay.

So we don't give guidance on specific numbers per se, but I would love frame to address kind of what we're seeing and the marketplace and what's starting to happen and how excited we are about.

And what we view as kind of coming out of the pandemic and starting to to move forward. We've had a lot of access to hospitals and to physicians that we haven't had since the pandemic started and we hear from our physicians and that they're seeing an increased number of patients coming through the system.

Not an immediate sort of.

And that happens the patient has to work through a couple of different physicians before they get to actually a breakthrough therapy procedure, but they are starting to see that those those channels are filling up with patients who've gotten and you've got and diagnosed and are moving through so we're very excited to see that and we are excited to see that about our numbers are star.

Moving to reflect that as well so we feel like that.

A lot of credibility to what we're seeing.

Got it and that's helpful.

Wanted to move over to the nonprofit or non prostate brachytherapy revenue is particularly brain and this continues to perform well I was hoping you could just take a moment to kind of give us a broader overview of the brain cancer market specific to breakthrough therapy, and how you feel you're positioned and how it how would you feel that can.

Trend overtime.

Yeah, absolutely, so and brain for acute therapy surprisingly, we've seen kind of the same kind of problems and subject to some degree that we've seen with prostate and that is I think most likely because patients haven't gotten diagnosis to begin with or aren't getting into the system. So surprisingly we saw them early on and.

The pandemic that those numbers were a little bit flat, but now we're seeing a return to growth and those numbers, which youre seeing definitely as we report here today and what we're expecting is to see that number continue to grow there've been a lot of initiatives started.

With GT medical technologies that we've reported previously about clinical trials and those kinds of things where.

They are going to be having centers that are enrolling patients I think we're starting to see some of that I think we're also starting to see that both they and us have been able to get back and front of neurosurgeons and radiation oncologists.

And again, where are we haven't for the last few quarters, how that same flexibility and being able to.

Talk to these physicians and help them understand the benefits of cesium 131 for brain and all of that is really coming back and youre seeing that and the numbers and we expect that to grow and to continue because.

We have Oh, as we reported before and GT medical technologies has expanded their approval for treatment and now they can treat any metastatic cancer in the brain and so that and.

Allows a broader group of patients to be selected for this particular procedure. So we see this this area continuing to grow and and we expect to see some upticks and the upcoming quarters on this definitely.

Perfect and then just last one from me I was hoping you could remind us of some timelines around potential milestones associated with your studies underway and the head and neck area with Keytruda as well as and the melanoma area without people.

Absolutely so milestones would really be reflective of patients starting to accrue for it and the trials and then you look at going out and unlike our Prostates data, where we had to go out 10 years. We are expecting this to be a lot faster accrual cell getting out a year.

And for 18 months 24 months, we would expect that these centers would be wanting to talk about what's happening with that the data set from the patients involved and these clinical trials.

Perfect. Thanks for taking my questions.

Thanks Frank.

Thank you. Our next question is from Mike <unk> with Oppenheimer. Please proceed.

Good afternoon, and thanks for taking my questions and congrats on a nice quarter Laurie and Jonathan.

And maybe bill.

And do better because on the C. Unique to you guys mentioned debt hostile access is improving and have you seen any new customers.

And are start using do build or are they all still fairly preoccupied with COVID-19.

Yeah, they tend to be fairly preoccupied preoccupied with COVID-19 and what we've noticed during this period of time is that a lot of the physicians are staying with the types of procedures that they're familiar with so if you. If you categorize them as in the evaluation process, we have several and and increasing number of people in that price.

In terms of actually having them on.

Using the product and I think COVID-19 has slowed us down and certainly in this area and I think we'll start seeing as we come out of COVID-19 and they start seeing more patients filling up and.

And coming into their offices and getting scheduled breakthrough therapy, we'll start seeing them then move from on evaluation process and to using the product.

That's great to hear Okay, and then shifting gears on the sea for MRI and marker that was cleared back in January I Wonder if you could just update us on any traction with Kols and also your own internal validation work or are you still targeting and I believe it was fiscal 'twenty two and for the full launch of that before.

Yes. So we are definitely still targeting that timeline, we have and proceeding with our internal valuations I think we're very close to being finished we have engaged with them.

And with Kols and and M D Anderson and particular to do some evaluation for us make sure that we're ready for our full market launch, where so I would I would say that all of the things that we had put in place that we needed to accomplish and the milestones for this are moving along just fine and our.

And we're on our timeline on that to be able to release this product a little later this year.

And <unk>.

Finally back in March you, saying, you're purchasing agreement J S C isotope and despite COVID-19 and tapering off and the U S anyway, we seem to be reading more about supply chain disruption just curious how your supply chain and doing these things.

That's a great question and our supply chain has been very solid for us throughout this entire epidemic and that really speaks to how well that day.

The group over and Russia has managed and what's happening and their particular facilities. We have not had any issues at all any I think I've spoken to this before is our biggest issue was with airlines and that was easy to overcome by switching to different plants that we already had in place so from a <unk>.

On the ground perspective, and Russia, and getting our isotope, we're not expecting any issues. There nor are we expecting any issues on getting the isotope here to us and the U S and and that has been backed up by this last year of not having any issues at all.

Excellent.

Thanks, Larry.

Thanks, so much Mike.

Thank you there any more questions.

Okay, and so on and.

And more questions and this will end and question and answer session and I would like to turn the call back to Lori Woods for closing remarks.

Thank you everyone for joining us. This afternoon, we appreciate your time and attention and have a great afternoon.

Bye.

And you hang up.

Yeah.

Okay.