Q3 2021 Helius Medical Technologies Inc Earnings Call
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Thank you all for standing by and welcome to the helium Medical Technology's Q3, 2021 earnings conference call and webcast.
Please note that all lines will be listen only mode until the question and answer session of today's conference.
He's also note that today's call is being recorded.
I will now turn the call over to your house.
Judy D. Clemente Ma'am you may now begin.
Thank you Jessie welcome to the Q3 2021 earnings conference call for helium Medical technologies. This is Judy Diclemente insight communications Investor relations for helium.
With me on today's call I can gain Andrey <unk> medical as President and Chief Executive Officer and.
And Jeff Tyson Chief Financial Officer at this time, all participants have been placed in a listen only mode.
Please note that this call is being recorded and access to the webcast can be obtained through the investors section of the helium website at www dot beliefs medical Dot com.
Before we begin I would like to remind everyone that Ah remarks, and responses to your questions. Today may contain forward looking statements that are based on the current expectations of management.
These forward looking statements involve inherent risks and uncertainties that could cause actual results to differ materially from those indicated including those identified in the risk factors section of our most recent annual report on Form 10-K, and quarterly report on Form 10-Q, such.
Such factors may be updated from time to time and our other filings with the S. P C, which are available on our website.
All statements made during this call are as of November 10th 2021, we undertake no obligation publicly update or revise are forward looking statements. As a result of your information future events or otherwise, except as required by law I would now like to turn the call over to Dane Andrey President and she thinks.
<unk> officer of helium.
<unk>.
Yep. Thanks Judy.
And welcome everyone to the Chilliest Medicals third quarter 2021 earnings conference call.
It's an exciting time for the company as we head toward Q1, 20 twenty-two commercial launch of our ponds therapy for gate deficit due to mild to moderate symptoms of multiple sclerosis.
With approximately 1 million Americans suffer suffering with M. S. There was a high unmet need in ponds is the enemy medical device for this indication approved in the United States.
A few days ago, we received market authorization from the Australian therapeutic goods administration or the T. G E for the sale of ponds as a class to a medical device.
We have since confirmed the authorization is for short term use by health care professionals as an adjunct to their therapeutic exercise program to improve balance in gate and this is the broadest possible scope. We are thrilled that we will be able to introduce this ground breaking.
Therapy to patients in Australia, who need to improve their balance and game.
Well now began pursuing the pathway toward commercialization in Australia with the objective of Love, Virginia to help fund R. U S commercialization launch.
Earlier this week, we announced the launch of our therapeutic experience program or tap with N Y U Lingo health as the first of 10 to 12 plan centres of excellence. The tap study is designed to assess.
Adherence to the portable Neuromodulation stimulator pawns therapies in patients with multiple sclerosis, and will go a long way toward helping helium and clinicians assess patients adherence to the ponds therapy in advance of commercialization.
We also expect these sensors to be among the first commercial sites to offer ponds.
For those who may be new to heal is let me provide some background on this innovative therapy that we believe has the potential to improve dynamic gate imbalance deficits across a variety of indications.
First ponds stands for portable Neuromodulation stimulator.
It is the first and only patented therapy, combining trigeminal nerve neuro stimulation via the tongue with physical therapy to reduce symptoms of neurological disease or trauma.
The ponds, most peace electrodes stimulate the tongue surface, sending signals to the brain.
This stimulation is believed to help strengthen the neural connections associated with balance and walking when combined with physical rehabilitation.
The mechanism of action works through Neuromodulation or the modification of the nervous system by targeted stimuli.
[noise] ponds is designed to induce transit and then you will neurostimulation that is trigeminal nerve neuromodulation via the time.
The device delivers 20, <unk> 25 million pulses per 20 minutes fish.
To the patient it feels like champagne or carbonated water bottles.
Water bubbles.
Another advantage is that there's no procedure or in plant involved with ponds, it's simply sits on your tongue.
Gate deficit is it disabling condition impacting the function independence and quality of life for people with M. S and until now non pharmaceutical interventions have had limitations.
In subjects with gate deficit due to mild to moderate symptoms of M. S.
14 weeks upon therapy has shown significant gate improvement compared to physical therapy alone meeting, it's both safe and effective.
You could see why we're excited about this ground breaking therapy.
I'll provide more color about our prelaunch strategy, including tap in a moment, but first I wanted to share another piece of exciting news.
August pawns was granted a second F D. A breakthrough designation this time for the treatment of dynamic gate imbalanced deficits, resulting from a stroke.
This is a significant milestone for helium as an estimated 7 million Americans suffer from stroke complications and that's seven times, then number afflicted with that mess.
Let's take a minute to cover these highlights in more detail.
As I mentioned, we plan to bring pawn therapy for treatment, even that's related gate deficit. So the market during the first quarter 2022.
Our commercial efforts in the U S will focus on raising awareness upon therapy by engaging three primary audiences first neurologist and other physicians, who Nate prescriber therapy.
<unk> personnel like T.
At at key neuro rehab the location centers were likely patients will be treated and third M. S patients themselves through information campaigns and social media.
An important launching pad for commercialization is our therapeutic experience program or tap, which I mentioned at the start of this call.
<unk> is an open label intervention all observational outcome research study, which will be conducted at 10 to 12 centres of excellence beginning with N Y U line Gon' health one of the nation's premier academic medical centers and Doctor Lee Cheveret.
In addition to N y U we plan to partner with neurologist and they're a rehab centers, which identified as having the greatest potential to be early adopters of our technology and initial efforts will focus on the 10 states that comprise more than 50 per cent of the targeted.
Ms patients.
Through tap we can establish the relationship between patients adherence to ponds therapy program.
Which combines the plants device with a 14 week physical therapy program and functional improvement.
In addition to informing the commercial launch tap will enable key opinion leaders in the management of them S to build their knowledge of ponds therapy, we expect to treat 50 to 60 patients in our study.
Or other pre commercial activities, including building inventory finalizing our distribution model identifying onboard neuro rehab clinics currently treating M S patients, creating patient access programs and engaging with kols and potential strategic partners.
During the quarter, we introduced U S ponds treatment website pawns treatment dot com to expand our online resources for U S as clinicians.
And patients.
We'll also be presenting it several conferences, including actress, which is the EMIR America's Committee for treatment and research and multiple sclerosis in February 2022, and which is the American Academy of Neurology in April and then finally, the CMS C.
M. S C. The consortium of multiple sclerosis centers in March we will launch in the U S with cash pay customers first while actively pursuing coverage under commercial and government reimbursement programs.
Last quarter, we mentioned that we hope to obtain Medicare coverage for our pawn therapy in the United States through the proposed Medicare coverage of the innovative technology or the <unk> rule, which was due to go into effect in December and had the potential to provide FTA designate.
<unk> breakthrough medical devices, and Expediate pathway to obtaining nationwide Medicare coverage.
On September 15th CMS publish a proposal that would repeal BMC pathway.
A 30 day comment period was part of the proposal and while we were we will continue to monitor. This we also remain focused on building out a reimbursement strategy for both commercial and government payers.
We're also engaging with commercial payors to establish pawns pricing in line with prices for compared comparable devices used in the neuro rehabilitation space.
Turning now to a brief update on our commercial activities in Canada.
Falling following a period of increase restrictions due to a spike in Covid cases, we are pleased to see Canada, making.
Progress toward recovery.
An important market in its own right commercial activities in Canada greatly inform R. U S commercial launch providing valuable insight about the Pines therapy, Inc.
In Canada ponds is authorized for the treatment of gay deficit due to symptoms of M S and chronic balance deficit due to traumatic brain injury.
We have now established 36 clinics throughout the country of Canada.
As excited as we are about the commercialization of ponds for M. S. In the U S and Canadian markets, we see an even bigger opportunity for stroke patients.
Of the estimated 7 million Americans, who suffer from the physical effects of stroke, 80% experienced gate impairment.
With breakthrough designation now granted a pivotal trial upon therapy in stroke patients is plan for second quarter 20.
22, with the aim of obtaining clearance and a second indication if approved we are targeting launch commercially during the first half of 2024.
With that let me turn the call over to Jeff to discuss our third quarter financial results.
Thanks <unk>.
It is a pleasure to be with you today.
Total revenue was 109000 for the third quarter of 2021 compared to 131000 in the third quarter of last year.
Product sales in the third quarter of 2021, however increase sequentially by a 39000 from the second quarter of this year.
Revenue in both periods was driven by sales.
To narrow therapy clinics and can I have that have been authorized to provide are pawns therapy and remain impacted by the significant business disruption in Canada related to the COVID-19 pandemic as well as temporarily.
Reduced COVID-19 pricing.
Cause the third quarter of 2021 are gross profit decreased to 23000 versus 109000 in the prior year.
Even primarily by overhead costs, including wages and salaries of employees involved in the management of supply chain.
Operating expenses and the third quarter of 2021 increased by 0.6 million or 17% year over year, two 4.4 million.
Expenses during the quarter of the current your included $900000 of one time severance costs related to our former chief operating officer, including $500000 of non-cash expenses related to the acceleration investing and the extension of the exercise period.
A options.
Sandy.
Operating expenses other than these one time charges were $3.5 million during the current court.
Operating loss for the third quarter of 2021 was $4.4 million compared to $3.7 million for the prior year period.
We reported a net loss for the third quarter of 2020, 147 million or a loss of $2.01 per share basic and diluted.
Compared to net loss of 3.5 million or a loss of $2.70 per basic and deluded common sure for the same period last year.
Turning to a discussion of our balance sheet condition in recent financing activities.
Our cash burn from operations for the first nine months of 2021 was approximately $9.9 million compared to 9969 6 million during the first nine months of 2020.
Current year.
Cash burn had a 3.2 million during the third quarter.
As of September 30th 2021, we had 4.7 million in cash compared to 3.3 million as of December 31st of 2020.
We also had $14.4 million available under our equity line of credit with Lincoln Park capital subject to the terms and conditions there in ensuring the source of equity capital Histon as needed, which could greatly extend our cash runway.
We had no upstanding debt obligations and either period.
This morning, the company announced the pricing of the 9.6 million dollar underwritten registered public offering which is scheduled to close this Friday.
I'd like to customary closing conditions.
Shortly before this call we received notice of the underwriters intend to exercise.
Over a lot and an option and Paul.
Which will add another 1.4 million in gross proceeds.
Following the closing the Springs are September 30th 2021.
For my cash balance to $14.5 million.
Looking ahead, while we expect our queue for expenses to sequentially increase in connection with our Precommercialization activities. We will continue to maintain a disciplined approach to spending while evaluating options to strengthen our balance sheet and support our operations <unk>.
<unk> R U S commercialization efforts.
Turning to our outlook.
Until we are able to better assess the impact of the listen Covid restrictions in Canada.
We are not currently anticipating fourth quarter revenues to be significantly different from third quarter levels.
As Dan mentioned, we expect to begin our commercialization in the U S. During the first quarter of 2022, and therefore did not anticipate any revenue from sales of ponds in the U S. During 2021.
In terms of operating expenses, we expect fourthquarter 2021 to reflect the incremental investment related to our pre commercialization activities as we prepare for you is commercialization.
With that operator, that's now opened the call for questions.
Since we will now begin to question and answer session. As a reminder, you May press star one from your telephone keypads to ask a question over the phone.
Otherwise you May press the pound key to withdraw your request.
Speakers are first question is from Joe Gomez of Noble capital your lines now open.
Good evening, David and Jeff.
Did you hear you though.
So I wanted to start out here maybe David.
Add a little more color.
You talk about the therapeutic experience that you're just starting up here, we're going to be.
At 10 to 12, and you've got the one laying on.
I'm going to begin enrollment late in the fourth quarter I think you said 50 to 60 people.
But you're still looking out of first quarter 22, commercial launch and I'm. Just wondering if you can kind of walk us through the process of.
Why are you still take the one Q22 commercial launch.
Will occur if the study really is not going to start until some time in the first quarter.
Yeah. So again the tap experienced program is there.
To really expand mind share with these M. S experts like Dr. Lee Cheveret at N y U.
It's there to not only expand mind sure but to educate them on the ponds therapy. So what we'd like to do is start these patients.
In the sights the centres of excellence and.
Our team is preparing.
And we've we've always <unk> stated that we would launch in the first quarter. So with this new program.
It really is an adoption study that we're offering to these M. S experts to bring him along to show them.
How great our ponds therapy is for their Ms patients.
We really are confident that.
Commercialization.
Eight in the sights in in the centres of excellence will progress.
Not only in the first quarter, but for the full year.
So it is a very targeted launch.
That were <unk>.
Starting out with.
Okay and.
On the call and I want to put words in your mouth at the.
The Medicare coverage under the <unk> rule is really looking like it's.
Not going to happen.
So how far advanced argue with other ways of getting insurance coverage, who you're talking to for insurance coverage for the product.
I'm going to hand that went over to Jeff at the moment.
Yes, hi, so as far as you say uhm targeting the insurance companies to pay four does that.
Yes that question total.
Yeah. So I usually go ahead.
I was just gonna say uhm it looks like you're.
Getting coverage under M set is not going to happen here from what I'm reading.
And so just trying to figure out where are you guys in the process, who you're talking to how far along are you what do you need to do or prove to the insurance companies in order for some of them to give you coverage.
Okay. Thank you so it'll be basically we'll be going out on a cash pay basis and with the experienced that we get from both the tech program and with those patients that are on cash pay.
It'll be kind of a case by case basis going to.
Carriers third party carriers looking for reimbursement and will initially target regional Uhm third party payers and then looking to expand from there and so as we go out through the year. It's just gonna take some time to build that.
The the data that we can bring to those payors to get reimbursement and it's it's just a process that plays out over time and so we're expecting by the end of the year to have some regionals in signed up and then into next year getting national <unk>.
Chairs and and and by then also looking to get.
CMS to reimburse us for the Medicare patients so.
Okay, Thanks for that and.
Maybe you can give us a little more color on the Australian market can.
Can you size it for us.
Again that's.
Cash pay first the same model cash pay first insurance.
Later in.
It's kind of a timing there.
In terms of getting a commercial launch there.
Yep. So Joe it's early we just received authorization.
It's the broadest label you could receive.
It's for balancing gate deficit, there's no indication attached. So you can basically use this it will be up to the neurologist. The caregiver the neuro physical therapist. So there's 30 million people that live roughly 30 million people that live in Australia.
In about $35 million in Canada. So in Canada, we have two indications boat M S and traumatic brain injury, but if you think about this label, it's not only for MS patients with wood gate deficit or traumatic brain injury for with balance and <unk>.
It's also a four.
Stroke cerebral palsy.
Potentially Parkinson's disease, and and the like so it's actually a much larger market in Canada because of the label that we did receive from the T. G. A.
Okay.
And one more if I may.
Today's announcement about the rays.
I was just wondering if you could kind of walk me through your thought process.
Looking at a chart of the company.
On a price chart Fox never traded as low as $8 and we were in the middle of last week. It was at 14, starting to slide back some and then it got priced at eight which it seems to be a fairly significant discount to where the stock was trading. So I was wondering if you could kind of walk us through.
Your thought process as to why that that price was was chosen.
Yeah.
Yeah.
Yeah go ahead and get up you could start right. So so you know the as you're probably well aware the price that was chosen is dictated by the investors coming into it. We you know it's as you said, it's traded pretty nicely over the last year I've been fairly said.
But we have very little liquidity and and so as we look to bring in institutional investors name institutional investors fundamental ones.
We wanted to have a straight stock.
Offering and and so we went out to basically looking at the future, making sure that we have a cash runway that allows us to.
Go through a commercialization and you know at the end of the day when when you're doing a financing like this it's our investors that that set the price and and we we needed to to to consider.
What we need from a cash standpoint, and we see a huge.
Pretty out there and you know this is is.
Peel at a price of of getting from here to there.
Yep and just to continue that this this was our first clean just stock on the deal after the last three deals.
Either a half warrant or a <unk> attached second uhm, we feel we brought in a whole new group.
Group of health care institutional investors into.
This deal as well so the Investor group, we believe was much stronger.
Third.
Again like the last two financings round I personally invested in this round.
As I also bought stock in September in the open market at a much higher price up in the 14 range. So as you could see Joe.
I'm a big believer.
In keeping our head down.
Hitting our milestones.
And.
I believe our launch into next year and are pivotal trial into stroke.
Will provide investors.
Optimal value for their sock.
Thanks for that insight much appreciate it.
And Joe just if I may go back to your first question and one.
One thing I didn't I mentioned in there is that you know we obviously as we go out there there's no really no other device out there like ours and so initially we will have a a generic code, but we are looking at getting six six code set up as well and we've that's some.
That's been in process and we'll be we've got some activities around that set up here in the fourth quarter and if all goes as expected to know April 1st. Shortly thereafter will have fixed code that will be using until we get.
You know something approve beyond that.
Thank you.
Thank you participants I'll now turn it back over to Dane Andrey for closing remarks.
Thank you operator, and thank you everyone receive in our second breakthrough designation from the F. D. A for ponds is a significant accomplishment for you is our team and our stakeholders as was the market authorization.
From the T J, the Australian and therapeutic gets administration with multiple validations of our innovative technology. We are looking forward to the U S commercial launch and furthering our studies of ponds therapy and stroke patients.
Internally, we have strengthened our leadership team and are well positioned to execute our plans are platform technology has the potential to help a large population across a variety of indications, including M. S stroke, Parkinson's disease, cerebral palsy and traumatic brain injury.
We continue to believe in our ability to unlock the full potential of Neuromodulation and become the standard of care for gate deficit in the U S and Canada, while bringing value to our shareholders.
Again, thank you for your time today and for your interest in helium medical technologies.
That concludes today's conference call. Thank you all for joining you may now disconnect.
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