Q4 2021 Helius Medical Technologies Inc Earnings Call

Ladies and gentlemen, thank you for standing by and welcome to the Hill used medical technologies or earnings results call. At this time, all participants in a listen only mode. After the Speakers' 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. Please be advised that today's conference call is being recorded.

You require any further assistance. Please press star zero I would now like to hand, the conference over to your speaker today, Michelle Belsky. Thank you. Please go ahead.

Thank you Terry welcome to the Q4 and full year 2021 earnings conference call for Helios Medical technologies. This is Michelle Bell state of insight Communications Investor Relations for Helios with me on today's call are gaining Andrey you'll use medical President and Chief Executive Officer, and Jeff Macpherson 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 to the investors section of the Helios web site at Www Dot Hill used medical Dot com before we begin I would like to remind everyone that our remarks and responses to your questions. Today may contain forward looking statements that are based on current expert.

Patients manage that these forward looking statements involve inherent risks and uncertainties that can 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 factors may be updated from time to time in our filings with the SEC, which are available on our website. All statements made during this call are as of March 14th 2022, we undertake no obligation to publicly update or revise our forward looking statements as a result of new information future events or otherwise, except as required by law I would now like to turn the call over to.

Dana Andrey President and Chief Executive Officer of period.

Thanks Michelle.

Welcome everyone to <unk> Medical's fourth quarter 2021 earnings conference call.

This past quarter was one of remarkable achievements for the company as we prepared for the first quarter 2022 U S. Commercial launch our ponds therapy for treatment of mild to moderate multiple sclerosis.

<unk>, which stands for portable Neuromodulation stimulator is the first and only patented therapy, combining trigeminal nerve neuro stimulation with physical therapy to reduce symptoms of neurological disease or trauma.

The mechanism of action works through Neuromodulation for the modification of the nervous system by targeted stimuli and the pons devices designed to induce trigeminal nerve neuromodulation.

Tom.

During the quarter, we were issued a patent for a version of <unk>, which will allow us for a while wireless connection.

I mean, the mouthpiece and controller.

In subjects with gait deficit due to mild and moderate symptoms of MFS.

14 weeks of Pons therapy has shown significant gate improvement compared to physical therapy alone, meaning it is both safe and effective.

This is particularly noteworthy because until now other treatments have had significant limitations.

Though the current U S indication is for MF.

We believe <unk> has the potential to improve dynamic gate imbalanced deficits across a variety of indications.

As mentioned the commercial launch of ponds for EMS with plan for Q1 of this year and I am pleased to report that the first prescriptions were received earlier this month.

From what we observed patients and physicians are excited about the therapy, especially since the pons device sits on the tongue and no procedure or implants is involved.

They also appear receptive to the price.

During 2021, we contracted with the industry consultant to conduct a health economic study of ponds therapy.

Based upon the results of this study and comparing <unk> to other neuro stimulation devices utilizing similar patented technologies, we establish a U S list price for Pons device of $25700.

Comprising of 17800 for the controller.

$7900 for the Mt.

We are actively pursuing coverage under commercial and government reimbursement programs. However, we expect that process will play well into 2023, if not longer for some payers.

In the interim we expect U S sales could be cash paid.

Accordingly, we will be offering discounts to these patients with net cash pay price targeted to be modestly below the estimated reimbursement levels. We expect CMS will ultimately established.

<unk> is the only medical device approved in the U S for treatment of balancing gait deficit due to MFS.

We're thrilled to bring this treatment to 1 million American suffering from the disease and soon patients in Australia will have access to this groundbreaking therapy.

During the fourth quarter, we received marketing authorization from the Australian therapeutic goods administration or T. G. A for the sale upon as a class to a medical device.

To be used by healthcare professionals as an adjunct to a therapeutic exercise program to improve balancing game, which is the broadest possible scope.

We've begun the path towards commercialization and we are working to identify a distribution partner in Australia.

In order to facilitate the commercialization of <unk> in the U S. We have initiated our therapeutics experienced program or test.

Company sponsored open label observational trial designed to evaluate the impact of subjects adherence upon therapy in patients with Mds.

We set up that tap study during the fourth quarter enrollment is set to begin in the spring with NYU Langone health as our first clinical trial site.

The goal is to treat 40 to 50 patients across 10 to 12 planned centres of excellence in 2022 in parallel with our commercial launch.

When selecting future partners, we will target the neurologists and neuro rehab centers, we've identified as having the greatest potential to be early adopters of technology focused on the 10 states that comprise more than 50% of MF patients.

As I mentioned in last quarter's call in 2021 ponds was granted breakthrough designation for the treatment of dining.

Dynamic gate imbalanced deficits following a stroke.

During the fourth quarter, we launched the partnership with the medical University of South Carolina for a pilot trial in stroke, which will allow us for observation upon therapy in a real world clinical setting with unexpected and enrollment of 12 patients.

At the same time pending receipt of additional funding we will initiate a pivotal clinical trial in stroke patients with the aim of obtaining FDA clearance.

<unk>.

<unk> indication.

It's the PON therapies approved by the FDA for stroke. Following the pivotal trial on a timely basis, we would target a commercial launch during the first half of 2024.

Of the estimated 7 million Americans, who suffer from the physical effects of stroke.

80% experienced gain impairment and we see this as a tremendous opportunity for helium.

Okay.

Turning now to a brief update.

On our commercial activities in Canada.

Canada.

<unk> is authorized for the treatment of gait deficit due to symptoms and then ask.

And chronic balance deficit due to a traumatic brain injury.

As of December 31.

We had 37 authorized pons clinics in Canada up from 31 at the end of 2020.

Nearly 20% increase despite headwinds from COVID-19.

Fourth quarter revenue increased by 35% year over year and more than doubled compared to the third quarter.

Though we are pleased with these results.

Canadian revenue still remains uncertain due to the ongoing impact of COVID-19.

Clinically we are continuing our clinical experience program with Toronto Rehabilitation Institute, which is part of the University Health network and hope to publish those results in 2022.

We also plan to publish the real world evidence, we've seen from our Canadian commercial activities in MF.

With that let me turn the call over to Jeff to discuss our fourth quarter financial results in more detail.

Thanks, Dan.

Pleasure to be with you today.

Total revenue was 258000 for the fourth quarter of 2021 compared to 191000.

In the fourth quarter of last year.

Fourth quarter product sales this year increased by 149% sequentially from the third quarter of 2021, an increase of 146%.

Revenue in both periods was driven by sales to narrow therapy clinics in Canada that have been authorized to provide our pons therapy.

And remained impacted by the significant business disruption in Canada related to the COVID-19 pandemic.

As well as reduce introductory pricing.

However, beginning late in the third quarter of 2021.

Some of the Covid restrictions in Canada, where loosened, creating an uptick in activity.

For the fourth quarter of 2021, our gross profit increased to 129000 versus a gross loss of 10000 in the prior year, which was impacted by an increase in the inventory reserve.

Operating expenses for the fourth quarter of 2021 increased to $4 2 million.

Compared to $3 million in the fourth quarter of 2020 and.

An increase of $1 2 million.

The planned increase primarily resulted from increased clinical and development activities preparing for the U S commercial launch of pumps.

Operating loss for the fourth quarter of 2021 was $4 $1 million has.

Paired to $3 million for the prior year period.

We reported a net loss for the fourth quarter of 2021, a $4 $1 million.

Or a loss of $1 31 per share.

Compared to a net loss of $2 9 million or $1.70 per share 77 per share.

For the same period last year.

Turning to a discussion of our balance sheet condition and recent financing activities are.

Our cash burn from operations for 2021 was $13 4 million compared to $11 $7 million during 2020.

Adding $3 5 million during the fourth quarter.

It was only slightly above the average quarterly burn rate through the first three quarters as we manage spending while preparing for our U S commercial launch.

As of December 31, 2021, we had $11 million of cash and no debt.

In addition.

We have a $14 $4 million available under our equity line of credit with Lincoln Park capital.

Subject to the terms and conditions there in <unk>.

Ensuring a source of equity capital.

Has needed which could significantly extend our runway.

Turning to our outlook.

We currently expect first quarter 2022 revenue to range from 150 to $170000 approximately double the first quarter revenue in 2021.

We expect subsequent quarterly revenue to increase sequentially each quarter throughout the year as the U S commercialization of ponds takes hold.

To date, we have been successful in securing our first bonds prescriptions.

And we currently expect the first U S shipments to occur in April .

With that operator, let's now open the call for questions.

As a reminder to ask a question you will need to press star one on your telephone again, if you have a question. Please press Star then the number one on your telephone keypad.

A question you May press the pound can you. Please standby will compile the Q&A roster.

Your first question comes from the line of Jeffrey Cohen from Ladenburg Thalmann. Your line is now open.

Hi, This is actually destiny on for Jeff. This afternoon, and thank you for taking my questions I guess.

And maybe a little too soon for you to give me this metric, but I thought I'd ask anyway of that 150 to 170, what percentage should we assume is from.

From Canada, and what percentage would you expect from the U S. I would think it would be very little in Q1.

Thank you Tony.

Yeah, Hey, good.

Good evening so.

I conclude my comments I mentioned that we expect our FERC shipman.

Shipment in the U S to be in April and as such our first quarter revenues will be entirely from Canada.

Okay got it and then fill.

Going back to them.

Supply chain I know that you guys put a lot of effort before this commercial launch to ensure you had sufficient inventory are you seeing any issues with supply chain or it's not impacting you currently because you put all that effort forward.

Way before the commercial launch.

Yes.

Jeff I'll take that so the great thing that we had we had inventory.

For the next two years Destiny.

Our parts and being able to manufacturing but.

Unfortunately Oems ran into co did labor issues.

Also just timing.

<unk> been able to produce our product both for our Canadian.

Orders and also U S orders.

So like most people we were affected.

Frankly, it wasn't on on supply, but it was mostly on labor due to our Oems.

Okay. Okay. Thank you and then.

I'm curious about some of your R&D activity.

I know that you received a patent for a wireless device is there a chance that there could be a next generation device or any other technological updates.

At the moment there is no.

R&D update at the moment, we were excited to receive that pattern.

For wireless mouse piece, you can imagine too.

I understand.

The consequences of having Bluetooth.

<unk> to the mouth piece versus the controller. So we are.

Looking at that as a future pathway.

Going forward.

Okay, and then last one for me with your Investor Investigator initiated study how much insight do you have into that study I know sometimes when there.

By an investigator can be a little blurry on the information you get.

Do you have insight into some of the timing.

Treatment protocols enrollment endpoints et cetera.

Definitely are you talking about the tap program.

No I was actually talking about the stroke trial the pilot study.

Yes, so the pilots.

Study is.

Ready to go and to be implemented.

It has already been designed.

We've had some input but we've also put a stroke advisory panel of experts together to help us get the results that we.

We want to see so that.

It will help us with our our pivotal clinical design.

For the FDA and that application for stroke.

Okay got it that's super helpful I'm going to jump back in queue. Thank you.

Great. Thank you destiny.

I mean, everyone. If you have a question please press star one.

Your next question comes from the line of Anthony.

Okay.

I am showing no further questions at this time I would now like to turn the conference back to Dean Amtrust.

Thank you operator as you've heard today, we are already pleased with the reception of ponds in the U S marketplace and are looking forward to the results of the open label trial with the medical University of South Carolina, and our pivotal trials in stroke.

Our technology has the potential to help a large population across a variety of indications and we have more faith than ever in our ability to unlock the full potential of neuromodulation and become the standard of care for gait deficit in the U S, Canada and Australia, while at the <unk>.

Same time, bringing value to our shareholders I just want to thank you for your time and your interest in Helios Medical technologies Tonight. Thank you.

This concludes today's conference call. Thank you all for your participation you may now disconnect.

Thank you.

Im good.

Okay.

Okay.

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