Q3 2022 IsoRay Inc Earnings Call
Good afternoon, ladies and gentlemen, thank you for standing by and welcome to the ICU raised fiscal <unk> 2022 earnings call. At this time all participants are in a listen only mode. After management's prepared remarks, there will be a question and answer session.
I'd now like to turn the call over to the host Mark Levin. Please go ahead.
Thank you operator.
Good afternoon, and thank you for joining us today for the ISO rates fiscal third quarter 2022 earnings call for the quarter ended March 31 2022.
Before we get started I will take a few minutes to read the forward looking statements.
Certain statements in 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 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 May 10 2022.
As with any projection or forecast, there and Heracles 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 in the company's filings with the Securities and Exchange Commission.
We will begin today's call with Lori Woods, ISO rates, Chief Executive Officer, and then Jonathan Hunt Isolates Chief Financial Officer, who will discuss the fiscal third quarter 2022 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 raids fiscal third quarter 2022 earnings conference call for the quarter ended March 31 2020 to.
Following my prepared remarks, our Chief Financial Officer, Jonathan Hunt.
We will provide a more detailed review of our fiscal third quarter financial results.
I am pleased to share with you. The continued progress we experienced in our fiscal third quarter.
Total revenue for the fiscal third quarter increased 12% versus the year ago quarter to a record $2 $91 million.
Trends accelerated throughout the quarter, culminating with both record revenue and procedure volumes for the month of March.
I'm encouraged by the steadily increasing sales we have been realizing.
The path of the rebound primarily in our prostate business has not been as fast as we would have expected.
However, the trends in our core prostate business gives me incremental confidence that more and more men who had delayed treatment over the past two years are now seeking treatment at an increasing rate.
Complementing the ongoing steady rebound in our core prostate business in the March quarter was the continued growth of our breakthrough therapy treatments for other cancers.
Non prostate revenue and procedures reached records in the March quarter.
The growth was driven by increasing consideration and adoption of our proprietary isotope primarily for the treatment of brain head and neck and lung cancers.
We continue to see strong opportunities to bring ccm's therapeutic benefits to more patients battling critical cancers such as these.
Our sense is that the continued adoption of cesium 131 in the treatment of other cancers is going to be fueled by two key components.
Certainly our continued efforts to build awareness of the efficacy of using cesium 131 to address these difficult to treat cancers will continue to play a meaningful role.
At the same time, a key driver has been the expansion of compelling data from clinical studies, one such study, which we have been keeping you updated about is the ongoing phase one two trial led by researchers at the University of Cincinnati.
No doubt remember this significant study focuses on the combination of PD, one inhibition and cesium 131 breakthrough therapy in patients with recurrent head and neck cancer.
The phase one portion that evaluates the safety of the treatment combination is now complete.
The investigators will be following these patients closely and we hope to move on to the larger phase two part of the trial to start looking at treatment effect later this year.
At that time, we anticipate that the study will move to a multi institutional trial, we're happy to see the interest in using cesium 131 for the treatment of recurrent head and neck cancers with the additions of other prestigious institutions.
Given the high recurrence rate in head and neck cancers.
A deterioration in quality of life for many patients who apps to undergo subsequent surgery and radiation is often time substantial.
As was demonstrated in prior perspective studies Cesium 131 targeted approach offers a potential effective radiation treatment regimen, but with fewer side effects such as radiation related damage to adjacent healthy tissues and less collateral damage to adjacent critical straw.
<unk> in the head and neck.
We're excited about the potential that the combination of cesium 131 breakeven therapy with Merck's PD one inhibitor Keytruda may demonstrated the study in terms of safety impossible disease control.
We are confident in the promise it holds and the important contribution that it makes and continuing to build awareness of cesium 131 amongst key professional constituencies we.
We will continue to keep you updated as the study progresses.
Another interesting data series was presented last week at the American Association of neurological Surgeons scientific meeting in Philadelphia.
<unk> demonstrated compelling clinical outcomes for recurrent glioblastoma patients treated with <unk> therapy powered by Cesium 131.
Similar to the head neck studies, the unique targeted radiation of cesium 131 seeds embedded in the gamma tile implants suggest not only the effectiveness of the treatment option, but the.
Enhanced quality of life aspects relative to other radiation regimens, such as external beam radiation therapy.
We believe additional studies of the benefits of Cesium 131 for the treatment of certain cancers, such as these will be additional drivers for growth in our non prostate business.
Clinical trials and studies will remain a core part of our growth strategy and we will continue to invest in these key areas of R&D.
We are also continuing with our strategic efforts focused on leveraging opportunities to further brand awareness and to build our leadership position within our key markets and constituencies.
This week, we will be attending the American Urologic Association or <unk> annual meeting.
Meeting is considered the foremost meeting in urology.
Being a part of this gathering is critical because the organization provides urologists with information on the latest innovations and Urologic medicine.
It plays a central role in connecting industry with physicians and creating a partnership aimed at providing urologists the tools to more effectively diagnose and treat urologic diseases.
Another high profile event, we'll see ice array at center stage.
This year's American breakthrough therapy Society 2022 annual conference next month in November is widely anticipated in the breakthrough therapy community.
This will be the first in person annual meeting in almost two years and we're excited to have the central part in this year's events.
ABS annual meetings are well known for their outstanding attendance and impact on hands on educational opportunities interactive sessions with experts and industry demonstrations of state of the art equipment software and services.
Widely recognized for the value. It provides oncologists practicing in this field of medicine, a central role at this prestigious event is meaningful.
As the sponsor of ice already we will be hosting a lunch symposium on the benefits of MRI assisted radio surgery for the treatment of prostate cancer.
The lectures entitled eliminate uncertainty increased precision and reduce toxicity MRI assisted radiosurgery or Mars.
The MD Anderson technique using cesium 131.
Doctors, Stephen Jay Frank M D radiation oncologist at MD Anderson cancer Center, and inventor of the sea for serious marker will be presenting.
As described by Dr. Frank MRI assisted Radiosurgery is the next generation of breakeven therapy by utilizing MRI at every step of the quality assurance process to improve clinical outcomes Mark.
Mars enables treatment planning to the interim prosthetic dominant lesions reduces exposure to external urethral sphincter.
And insurers precise radiation dose delivery.
131 is the only isotope that is FDA approved to be used in conjunction with the serious marker.
We continue to work to finalize our validation and processes in anticipation of a formal launch later this year.
In addition to the luncheon ICA has two abstracts submitted from the Cesium 131 advisory group or CAG.
These abstracts are based on 12 years of experience in cesium 131 implants from each of the CAG physicians, who came together to provide recommendations on how best to implant using cesium 131.
This knowledge and experience targets, new practitioners, who can benefit from their cumulative experience and be confident in how they treat their patients using cesium 131.
Before I turn the call over to Jonathan I want to address our isotope supply chain.
Recall that we currently source our cesium isotopes from two separate reactors both of which are located in Russia.
We have not experienced any disruptions or significant delays to date and continue to have a consistent supply by the top from these reactors.
Of particular importance cesium 131 is a medical isotope that is not subject to any sanctions.
We continue to monitor the situation closely but do not believe that there is a risk to the supply chain at this time.
Now I will turn the call over to Jonathan to review the results of our fiscal third quarter in more detail.
Thank you Laurie.
Im going to discuss some of the financial information that was contained in our press release for the fiscal third quarter ended March 31, 2022 that we released a short while ago.
We anticipate that our Form 10-Q will be filed with the SEC on or before may 13th.
Revenue for the third quarter ended March 31, 2022 grew 12% to a record $2 $91 million.
Versus 260 million.
For the same periods last year.
Prostate brachytherapy revenue increased 8% versus the third quarter of fiscal 2021.
Third quarter revenue was comprised of 75% for prostate brachytherapy with the balance or 25% of revenue attributed to other breakthrough therapy.
Driven primarily.
Generally the result of the 19% increase in cost of product sales when compared to the year ago quarter.
The primary drivers were increased.
Costs due to ordering additional supply and <unk>.
Payroll and benefits expense due to merit increases.
Gross margin increased 620 basis points sequentially from fiscal second quarter, when we incurred higher iphoto costs as a result of the additional reactor coming online to support future growth of the company.
Third quarter gross profit dollars of $144 million.
Greece, five 8% when compared to the same period last year.
Total operating expenses, consisting of research and development sales and marketing and general and administrative increased 32% to $2 eight 2 million versus $2 $1 3 million in the third quarter of 2021.
Total R&D expense increased 52% versus the comparable prior year quarter to $549000.
The increase in total research and development expenses was primarily the result of increased payroll and benefits expense due to greater head count versus the prior year comparable period, and an increase in consulting expenses related to market research.
Sales and marketing expenses increased 18% versus the comparable prior year quarter to $687000.
The increase in sales and marketing expenses was driven primarily by increases in travel and trade show costs.
And increased payroll and benefits expense due to merit increases new hires and increased incentive compensation versus the prior year comparable period.
G&A expenses of $1 $5 8 million.
Represented an increase of 34% versus the fiscal third quarter 2021.
Year over year increase was primarily due to increases in payroll and benefits expense due to annual merit increases and greater head count.
Employment hiring expenses.
Consulting expenses.
Insurance premiums public company expenses audit and legal expenses severance and travel expenses versus the prior year comparable period.
The third quarter net loss was $135 million versus a net loss of $745000. During the same prior year period.
The net loss per basic and diluted share was <unk> versus the net loss of one <unk> for the prior year fiscal third quarter.
Basic and diluted share results are based on weighted average shares outstanding of approximately $142 million at fiscal third quarter 2022 versus approximately $122 million for the prior year period.
As of March 31, 2022, the company had cash cash equivalents and certificates of deposit that totaled $58 9 million or approximately 41 cents per share compared to $63 8 million at the end of the fiscal year 2021 ended June 30.
2021.
The company has zero long term debt.
Shareholders' equity at the end of the fiscal third quarter 2020 to 60.
$63 $2 million.
Versus $67 4 million at the end of fiscal year 2021.
I will now turn the call over to the operator to take questions.
A list and institutional investors.
Certainly the floor is now open for questions. If you have any questions or comments. Please press star one on your phone at this time, we ask that while posing a question you. Please pickup your handset with listing on a speaker phone to provide the optimum sound quality. Please hold just a moment, while we poll for questions.
Your first question is coming from Frank <unk> with Lake Street Capital markets. Please pose your question. Your line is open.
Great. Thanks for taking my questions I wanted to start with just how youre feeling about the environment. If you could provide any month to month commentary that'd be fantastic January February March and then if you could just extend that into April and May and what you are feeling out there and if you're doing that we're approaching a more normalized environment at this point.
Hi, Brian good afternoon.
We were if we start back in January and we look at January and February we felt that there was maybe a slight impact from some ongoing COVID-19 related issues, but I think what we're seeing as we progress through to April and May is what everyone else is seeing is that impact seems to be <unk>.
Solving somewhat access to health care hasn't been impacted as much by some of these recent variance of some of the previous ones. So we continue to see access to hospitals and physicians stay pretty steady, which has been really nice to see.
Okay. That's helpful and then I recall from our last call and then I know there was some commentary on this call but.
Now is the time to accelerate our sales and marketing effort is the comment I'm remembering.
Just curious on some of the internal investments that have been made head cow marketing or what should we kind of be expecting what happened in the quarter and what do you think about accelerating revenue from some of these initiatives on a forward basis.
So we're working on that right now and as we've talked about in the past we are absolutely dedicated to increasing our.
Sales presence with sales people as well as investments into marketing things like direct to consumer and other areas and we're in the process of doing that right now it takes a little bit of time to get all the resumes through the system and get people interviewed and make the right choices there, but we're doing that on a daily basis and hope to have.
A lot to report next quarter.
Okay and then just last one for me I appreciate the commentary on the Russian reactors just curious if there's any initiatives in place to diversify outside of Russia or at this point you feel that's unnecessary and you feel like your supply is relatively predictable and not needing to extend to a new geography at this point in time.
Sure.
Well I'd have to say that we always look at what the different options are we had been prior to this particular incidents as well, but currently we feel very.
Comfortable with getting ours isotope supply from Russia, we have had no hiccups in terms of supply from Russia, either Russian reactor.
And we feel pretty confident that at this point in time, we don't mean to be looking to go anywhere else we will always.
To date other options like we have prior to this but right now we're feeling very comfortable.
Great. That's good color I appreciate you taking my questions and congrats on all the progress in the quarter.
Thanks Brent.
Your next question is coming from Mike <unk> with Oppenheimer. Please pose your question your line is live.
Hi, Laurie and Jonathan Thanks for taking my questions Tonight.
Picking up on that last question I know you said, obviously, the Russian supply chain intact no delays in your fiscal <unk> gross margin was ahead of our estimates, but how should we think about gross margin in the next few quarters. Following the new reactor that came online late last year and some of the higher costs, maybe around air freight or isotopes. If you expect those to continue.
Forward.
Absolutely you know there is a lot of supply chain cost pressure right now and I think everybody in any industry is experiencing that so we're going to continue to try to grow our gross margins.
As we always have in the best way possible, but I think.
Looking forward the key.
Lines of things that we're doing I don't know that it would have a huge impact. So I think if you look at where our margins are right now, although we will continue to manage those as well as we possibly can and always have.
I wouldn't expect to see a lot of change in that over the immediate timeframe.
Okay. That's helpful. Thanks, Laurie and then.
Great to hear on the University of Cincinnati, finishing the phase one portion of the trial and do you know yet when we might get the first readout from the phase II portion that you are hoping to start later this calendar year.
So they're going to follow those patients for a little bit. So I wouldn't expect in the next couple of quarters to be talking about that specifically because they want to make sure that those patients are doing very well, but assuming that that does progress like that we would expect to see then that the entry into phase two somewhere towards the end of the year.
And patients start to accrue for that phase as well, so we're pretty excited to get to that point.
And to also get the information out on phase one.
Great. Thanks, so much for taking my questions.
Thanks, Mike.
Your next question is coming from Tim Chiang with Northland. Please pose your question your line is live.
Hi, Laurie.
I think last quarter, you had mentioned.
Hospital staffing shortages as one of the.
Headwinds.
Greater brachytherapy procedures.
Are you still experiencing that right now and if so when do you think those will abate.
We're seeing employment pressures across the board and that does include hospitals and ambulatory surgery centers, although we see it less in the ambulatory surgery side, though.
Setting than we do in the hospital setting and I think that continues maybe to be part of the reason that we haven't seen that kind of.
Wave of patients coming through the system as a system as doesn't have the number of employees that might wish to have to be able to handle the kinds of volumes. They have in the past. So I think we are to your point seeing some of that still going on.
And I don't have a good crystal ball on when that will ease up I think across the board. If you look at many industries.
Employment is certainly a concern and having the right employees and the right numbers of employees will continue to be something that people watch very closely.
And maybe just one follow up.
<unk>.
I think Jonathan you had said that R&D expense was up around 50, 50% or so year over year is that sort of a good run rate going forward.
Yes that should be a pretty good run rate in that category.
We'll obviously keep you updated as things change.
It's been kind of in that neighborhood now.
Quarters, and we would anticipate it staying there.
Right.
And maybe one last question Laurie for you.
I know that you had been using proximity.
To leverage virtual training programs, but I mean are you still doing that or are you planning on doing more face to face type.
Programs going forward.
So we're pretty excited that we can get back into the face to face and it's really going to be based on what is easier for the physician. So we're going to offer both.
Some of the physicians, we found really want to have the opportunity to get out and meet with people face to face and getting training and do that together with another physician, but a lot of them don't have the time to leave their practices and so we're going to continue to supply both of those training opportunities to physicians and really let them decide what you.
Works best for them.
Okay.
And you mentioned the EUA meeting coming up I mean, how many.
Physicians do you plan to meet up with at this conference.
Just wondering.
So the EUA meeting its a huge conference and we have.
I'm sorry.
Excuse me.
Several of our staff there and we.
Reason, because it's such a large.
Meeting, we arent necessarily a big presence so some of the other big Urologic companies are but we're there. So that we can meet with physicians that are interested in CCM and spend time with physicians that we've met with prior to that meeting in many cases, where we know they're going to be there and they'd like to spend some additional time with us we use this meeting as an opera.
<unk> really for those one on one meetings that we've had with folks in the past and then having getting additional information to them as well as making sure that we have a presence there so that as physicians are on the exhibitor floor. They can come to us and ask any questions that they have.
I see.
Okay Alright.
Alright, well.
Thanks for the thanks for the color Larry.
Thanks, Tim so much.
Once again, if there are any remaining questions or comments. Please press star one on your phone at this time. Please hold just a moment, while we poll for any additional questions.
And Tim Cheng is back in the queue with follow up questions. Please pose your question. Your line is live.
Larry since I have you online as well as the.
The business development question, because obviously you have <unk>.
Significant amount of cash right and I'm just sort of wondering do you still have you guys still been looking at business development opportunities.
Do you plan on doing any business development this year.
We absolutely have been looking at business development opportunities and I think one of the things that was kind of telling today in our call is that our expenses for our market analysis is up significantly and so.
What.
Because we don't give specific guidance around this what I would say is yes. We are definitely looking at that yes. We have some things that we find are very interesting and we're doing the market research to really support.
Looking further at getting into those areas or participating with those companies.
On either distribution joint venture whatever it might be we're definitely in that process as we speak.
Okay.
Okay Super Thanks Laurie.
Yeah.
Thanks, so much.
There appear to be no further questions in queue. At this time I would now like to turn the floor back.
Switching remarks.
Thank you everybody for joining us today, we hope you have a great evening bye bye.
Thank you ladies and gentlemen, this does conclude today's conference call. You may disconnect. Your phone lines at this time and have a wonderful day. Thank you for your participation.
Okay.