Q1 2022 Nyxoah SA Earnings Call

Yeah.

Yeah.

We do not anticipate asking a question via the phone you can alternatively access the call audio via the webcast link provided in a press release or on the IR website. Our conference coordinator would be with you momentarily. Thank you.

Okay.

[music].

Thank you for calling in.

Thank you.

Thanks for 44917.

Thank you May just have one last thank you.

David D a V.

<unk> Brown B R O W N.

Yeah.

Era a E R. A.

Thank you your line may be on hold until the conference begins from IC.

The key strategic objectives for 2020 that we laid out in our prior call.

Allow me to quickly remind you of these key objectives.

Completing the dream trial implants in the second quarter of 2022.

Accelerating commercial execution in Germany and.

Common thing the U S. IDE study for complete consumption collaboration.

In the fourth quarter 2020.

I first would like to acknowledge our dedicated team for their strong execution, resulting in an acceleration during Q1.

All four strategic priorities.

Our Q1 call was mainly be focused on the dream of home of acceleration and the rapid growth we saw in European sales.

Starting with our commercial performance in Germany, I'm proud to report that sales growth accelerated significantly during the quarter. We generated 660000 juul in the first quarter of 2022.

Which represents year over year growth of more than three and a half times.

And more than double what we achieved during Q4 the previous quarters in 2021.

Knowing omicron volume.

Impacting procedures across Europe during January to roughly mid February or all Cogs come Q1 performance.

For the execution focus by our commercial team.

Even more powerful and all of you is the impact we are having in the German market.

As a reminder.

Commercial proof of concept will be to become market leader in Germany by the end of 2022.

Our first quarter performance also exemplifies what we mean by ongoing deep <unk> strategy of targeting and developing sample excellent.

Exiting Q1, we had 15 active and planned sites in Germany.

5% growth over Q4 2021 and.

And we expect to add an extra stamps com by the end of Q3, bringing the total to 25 active German implanting a cogs.

Looking at our Q1 revenue, we estimate based on our knowledge of the German market, we achieved a program with 25% market share in Germany in the quarter.

Which is more than double of market share compared to the previous quarter.

For the quarters to come we expect to further accelerate the revenue ramp by increasing <unk> penetration in the existing sites open.

Opening more centers of excellence and further strengthening of relations with implanting E&P services and referring sleep physician.

Additionally, we expect to see the first result from direct to patients.

And we will continue putting the patient first.

Highlighted by having only booked Russell neuro stimulation therapy with a full body coupon Segal MRI compatibility.

We have also experienced strong tailwind as a result of the positive better sleep data on complete concentric collapse.

CCC patients that we see.

Presented in March during the World Sleep Congress and at home.

Yes.

This event gave us.

And valuable opportunity to interact with 55 international Kols during an exclusive with them we hosted in parallel to the Congress.

Among the most important takeaways from world sleep Watsco, many physicians expressed excitement that they know has an option to treat their complete concentric collapse basin.

Whom they previously had to turn away.

We are thrilled to have implanted our first complete concentric collapse of CCC patients during the quarter after receiving an ex sponsor local CE mark indication.

Based on the positive response, we have received from physicians both during and after the world sleep, we expect increasing numbers of people see patients implant in the coming quarters.

Taking all of these data points together, we remain confident that we can achieve market leadership status in Germany by the end of 'twenty two.

Next to Germany, We also made meaningful progress in other key European market market.

Based on our existing DRG code in Switzerland, we secured additional physical ready for their first commercial implant to be expected during Q2.

Progressing with reimbursement discussions in the Netherlands, Belgium and Standalone.

We have initiated discussions in the U K and we continue to assess opportunities and CRO and the Nordic countries.

While we are providing revenue guidance of 2022, we are extremely pleased with our first quarter performance and expect to see revenue totalled a ramping up of each.

Each quarter this year.

Let me now talk a little bit more about the dream pivotal study in the U S.

For those who of you the dream trial is a pivotal IDE study in the U S.

Let me first walk you through our process on patient enrollment and the funnel that leads from initial enrollment old way to implementation.

As of to date, we have enrolled five homes complete patients of whom 66 made it through the funnel to implementation.

And almost 20, Boston based on PSG and are awaiting implantation.

Therefore, an additional 86 patients and active screening and we accept that 60% to 70% of this will make it to implantation.

As a result, we.

Believe we have enough patients enrolled to complete the study.

<unk> priority now is to move these patients to the last step of the process in a timely manner.

We therefore expect to further accelerate our pace of implants.

For Gaslog.

In the weeks since over last earning calls we have averaged approximately four implants, but weak.

But we have seen that the rates accelerated over the last two weeks to six implants, but weak <unk>.

Based on order backlogs, having being largely clear.

The recently opened samples increasing their rate of implants, and adding private sleep labs, which has excess capacity. We remain confident that the implant base will remain at this level.

Might even accelerate further and that we will achieve.

Yet of inbound implant completion by the end of this quarter.

For those of you who.

We saw this earning go ask.

I am pleased to note that baseball new unfavorable data from the better sleep study. The FDA has approved our request to reduce the dream study sample size.

We are therefore DAU requires to implant one homeless 15 patients versus the original 134.

Aside from the updated sample size, all Opex study pack, including performing go acoustical polar after significant level remain identical to the original approved study.

Implication for US is that 19 fewer patients need to be implanted, which further strengthened our confidence in closing implant by the end of June .

As for CCC, we continue our dialogue with FDA as he go over them.

Submission or access or access trial.

And we still expect to implant the first patients before the end of the year.

As part of the breakthrough device designation process, we had our initial discussions with FDA and we all know incorporating their feedback.

I'd submission preparation.

We will provide more details about sample size design endpoints and timelines once we secure approval, which we anticipate will cure Inc. This summer.

Yeah.

I'm also extremely pleased to announce that we have nominated two outstanding individuals for appointment to our board of directors spending approval at our annual shareholder meeting on June eight.

Bill Heyman Cohen, Chief Executive Officer of electronics, less extensive expertise in developing and executing commercial strategies in medical device.

And Mrs Virginia Kirby.

<unk> has had them.

At the discovery loan spreads at the University of Minnesota Office of Technology, commercialization, who brings a wealth of clinical and regulatory experience and sleep disorders.

With that I am pleased to turn the call over to our CFO , Luke mobile who will provide a financial update.

Thank you Olivier.

Good day to everyone and thank you for joining us today.

Revenue for the first quarter ended March 31st 2022 was 660000 compared to 185000 for the first quarter of 2021.

The increase in revenue was attributable to the company's commercialization of Virginia system in Germany.

Total cost of goods sold for the first quarter of 2022 was 289000 with gross proceeds of 371000.

Representing a gross margin of 56, 2%.

Our gross margin declined from 64% last year as a result of a one off incident, our manufacturing site in Tel Aviv in February which has since been remediated.

We expect gross margin to rebound in Q2 and to expand over time in line with other neurostar.

Nation companies as we achieve greater commercial cattle.

Overall.

Q1 spend accelerated in line with our plan driven.

Driven by research and development and clinical expenses.

R&D increased to $3 million in the first quarter 2022 from $3 1 million Euro in Q1 2021 to support our R&D activities, mostly the development of the next generation of our general system as well as the advancement of our Dream clinical study in the U S.

Selling general and administrative expenses rose to $4 2 million Euro for the first quarter of 2022 from $2 4 million in the year ago quarter due primarily to increased commercial efforts in Germany and other European market.

We have also scaled up our corporate infrastructure and expect to continue adding head count to further strengthen our organization.

For total operating loss for the first quarter of 2022 was $7 3 million Euro.

<unk> five 3 million euro in the first quarter of 2021, driven by the acceleration of our R&D spending as well as commercial and clinical activities.

We realized a net loss of $6 7 million euro for the for the quarter ended March 31 2022.

At the end of the first quarter 'twenty to cash and financial assets totaled 127, 8 million euro compared to $135 5 million Euro at the end of December 2021.

This represents a monthly cash burn of around $2 6 million for this first quarter.

We expect the burn to increase slightly as the year progresses with the advancement of clinical trials with the re dream and access.

We continue to have ample liquidity to get through U S commercialization in 2024.

With that I will turn the call back to you already do.

Thank you in closing I remain very excited about the progress we have made and how well positioned we are for the rest of 2022.

To reiterate our three key focus areas for Nic throughout this year. They are first completing the dream emblem.

Second accelerating commercial execution in Germany.

And tucked common thing.

People see IDE trial in the U S before.

2022.

As we have discussed on this call we are executing on all of these key objectives and expect continued progress.

This concludes the formal folivore presentation.

Operator, I will turn the call over to you and begin our Q&A.

At this time I would like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad.

Again, each SAR wanting a telephone keypad, we'll pause for just a moment ago, particularly in a roster.

Your first question comes from the lineup Jon Block from Stifel. Your line is open. Please ask your question.

Thanks, guys. Good afternoon, nice quarter Nice update Olivia I'll start in Germany, and you mentioned that 15 sites expect another 10 by the end of the third quarter and maybe if you could sort of compare and contrast, the early centers that you signed up.

First is the more recent ones essentially you know the share of those early centers and then the Onboarding time of the newer centers are you seeing that accelerators that quicker duly called the expanded label around CCC.

Okay.

Hello, Jonathan. Thank you will thank you for the question so coming back it is clear that we see with the early sites that they went to their surgical learning curve that they also outperforming malkin plants compared to new sites. We just started.

However, I do have to agree with you that since we will flip in home and the communication level better sleep data that we are seeing also an acceleration in the early sites by having the opportunity to also implant CCC patients because just as a reminder.

They don't need to do a dise procedures anymore to exclude CCC to be implanted.

We do see that this is really working in Australia.

Got it fair enough and I'll, maybe ask one or two more of lop over the financials. The gross margin that you laid out I know you mentioned there was a <unk> 22. So the incident around February just to be clear I think you said down in <unk>, because it down sequentially or down year over year and then.

Maybe the timing of the ramp back up in other words is it a situation where it's a pretty quick situation to rectify and exiting 'twenty. Two you know we can already be above what we saw in that late 'twenty one level of low Sixty's and then I'll just ask my my final question after that.

Yeah. Thank you so as I said, we experienced a one off incident in our Tel Aviv manufacturing site. This caused a slight description during a quarter and this is a reason for the growth gross margin. This has been fixed and remediated. So we expect a rebound.

Already in Q2, and we expect to end the year above the level of.

Of 2021.

I can also confirm them.

Yeah I can also confirm that we have sufficient inventory to meet our demand at least for the second and the third quarters of two.

2022, as we have now two manufacturing sites the one in Tel Aviv and another one in India.

In bedroom to ensure continued CEO of supply. So we have the continuity of supply and you'll see a rebound already in Q2, and we expect to end the year at a level, which is higher than 2021.

Mainly driven by a higher volume than 2021.

Okay got it thanks for that clarity, maybe I misheard you I know last one Olivia just sort of a big picture on dreaming, it's been a heavy lift you've made a lot of progress you mentioned the 66 patients actually implant that another 20, paas and the baseline and then 86, an additional active screening 60% to 70% of those make a deal but I guess my point is you're sort of knocking on the door.

You do that math.

134, and that's a pretty quick process in terms of getting those inactive screening through why change it right now and I get it the statistical significance supposedly has been altered but when you're so close I'm guessing it was $1 34 for a reason and not 115.

It sounds like if youre going to get to that 134 number based on the funnel you laid out why not just sort of leave it alone considering the importance, obviously and the scale of the trial and make little tweaks here when it seems like with all due respect you're sort of <unk>.

Eighth inning of getting across the goal line. Thanks for your time guys.

And thank you for this last question John because.

In fact, it is a question that will be also internally discussed around to your point. If you look at our funnel and the number of patients enrolled we should be able to make the one almost 34 implants by the end of June .

So with that is that is clearly clearly correct.

No. When we initially designed to dream. It was clear based on our interaction with FDA that the expectation was to closely mimic in spire storage trial that led up to that led us to the sample size of one of them with us before.

Based on the strong better sleep learnings.

And also understanding a little bit more on a co primary endpoint of ODI.

We went back to FDA and their pool that we could increase the ODI responder rate assumption really slightly we.

Without changing statistical polling while the efficacy endpoints as compared to the original study design.

To say, it's really crystal clear our vision.

Really we have to show an H I E. The response rate of 65% and know also after going back and slightly increasing ODI also to 65% that is what was impacting the sample size reduction of 19 subjects that we have to win bloodless.

And finally, John why not take the $1 15, even increasing our confidence also giving us the opportunity to leverage on the resources to do a very high quality study follow up.

And then not taking this opportunity.

I think and I hope you will convey that if that could be possible without changing anything that.

Everyone would make the same choice.

Yeah understood. Thanks for the color guys.

Your next question comes from the line Suraj Kalia from Oppenheimer. Your line is open. Please ask your question.

So I think everyone's Olivia.

Right.

Yes, yes, I can answer that.

Hey, Olivia just wanted to piggyback with Jonathan.

Okay. So.

Dream.

Right.

Blinded trial.

So what is the clinical significance.

Oh, 65%.

That you know what.

That has changed I'm, just trying to get my arms around all that.

Yeah.

If entry assumptions.

Yes.

And.

So all you guys.

So maybe just kind of walk us through clinical significance.

And what specifically are you see given that it's outlined it.

Great question Scott.

Okay.

So guys. Thank you for the question and first I would like to point out that.

When we went back to SBA. This was based on better sleep data. So there'll be no data that we are making available of that we'll be using in order to communicate with FDA. I think is really important to make this point festival.

When we look at the Dream, we have co primary endpoints of HIV with the disposal showing 50% reduction with nahi below 20, the so-called shaft criteria and for OTI.

Sputnik showing 25% reduction.

No by slightly increasing the ODI responder rate assumption of 65. The total sample size was used from 134 to $1 50.

No what made us confident in doing this if you look at Bluffed OSA published data you see an ODI responder rate of 70 plus percent.

If you look at the stockpile, what inspires you see an ODI responder rate of 70 plus percent and embedded sleep, we're seeing comparable numbers. So that is in fact, what really triggered us to say, okay. Let's go back let's take an increased slightly this responder rate with 1% and gain from the <unk>.

In fact, and having to do less patients which of course further derisk the dream the dream trial, including deal enrollment in a timely manner.

Yeah.

Hum.

True.

All of our dreams.

You talked about picking up or.

In the U S.

All right.

Concentrations sites specific concentration.

Would you say it is relatively small.

All right.

Great.

Yes.

No. So what we are seeing is and I think you can see this in several other studies you have sites and all in phosphorus and all enrolling more patients that initially we would have predicted so the distribution colorful of enrollment to say like this it's not equally Catherine there is a difference.

And I am just looking through is just to point out some of the strong sites I can already take for example, Cornell I have to point out.

Built University I have to I can point out.

The University of Iowa and.

And I'll also point out.

Last one and I'll, let me quickly have a look on this one.

Melissa Hancock in Boca Raton, Florida, just to name a few will really sticking out the oldest ones they are going after.

Lance.

Got it and final one of them.

In Germany, I know yours.

Yeah.

Right.

If I could just drill down.

Deeper.

At this time.

Sure.

Yeah.

But jamie.

Al.

Matrix decisions being made the choice.

Or are you winning versus bilateral.

C C C.

Is it lack of.

Other criteria that I, just kind of walk.

Walk us through Suraj opposite too.

Alright.

Others adopt eventually.

Choose either its fire or so.

Greatly appreciate it gentlemen, thank you congrats.

Thank you so suraj in all openness, what we see is that there is a surgical learning curve so and in the first let's say three to four implants, we see that the average inland times skin to skin.

It's a little bit above one <unk> or more in the range of 120 and once the surgeons is going to play for this sixth implant. We see this being reduced to 60 minutes. We even have one patient that was implanted in 51 minute. So that is to answer the question on the skin to skin surgical time.

I think we can summarize that it's around 60 minutes.

On average one of the sort.

Has passed that surgical learning curve. That's what we are seeing in several accounts are coming from several surgeons in Germany.

But when it comes to choosing Nick so overly inspire based on surgical learning curve.

I think that is one component another very important component is the fact that we offer the only technology with a single incision procedures and this won't be a hearing back a lot from patients and from something that is really driving and explaining why did we choose for the next one and then lost also the fact that we have a scalable.

Energy platform that we can.

<unk> pushed through software upgrades with patients do not need to come back when the battery is depleted that is also clearly, helping and making the choice or having an excellent implant compared to an inspire implant, but finally, I'm always saying this and I would like to repeat at ESMO. The market is so large.

I think by just having a second company and that's what we hear from a lot of surgeons.

Having this option to choose will only accelerate penetration also capable of amongst stimulation.

I Hope this answer your question.

Yes. Thank you.

Your next question comes from the line of Ross Awesome Osborne from Cantor Fitzgerald. Your line is open. Please ask your question.

Hi, Thanks for taking our questions and congrats on the quarter and all the progress.

Maybe just starting off with a couple on your operating and then would you be able to just provide some additional color on your commercialization experts that are dropping out the step up in SG&A expenses.

And then as a follow up are there any quantitative results you can share at this point on your digital marketing work in Germany.

Yes, I will take the evolution of our SG&A expenses in commercial.

Increase you see in Q1 2022 is mainly related to AR.

Our team in Germany, we have now.

Place.

In Germany sales marketing and digital marketing as well, which we did not have in a in a in Q1 last year. So you see a ramp up.

In terms of costs associated with.

The team that is now fully are fully in place.

As you pointed out rightly we are starting a number of.

Digital marketing campaign.

And what do you view, we will make a couple of comments on what we can already.

Sure in terms of output of this of this campaign.

Thank you Luke so coming back to direct to patient campaign. It is clear that we have increased our presence on Instagram Facebook and on these different codes. What we sold so far is already a three times increase over the number of visits will further building it up during Q2, and we expect that to be able to.

Also very complete hits a measurement in over the next call, but it's clear that we launched it in Q1, we see the triple increase of business already and we see it growing in fact day by day.

Okay, Great I'm glad to hear that and then maybe just one more for me bigger picture question is there anything you can share from the banner about collaboration at this point.

Besides the fact that we are working hard together with terminal build and then getting through the first prototypes.

Putting them in place and also Florida.

Debating and discussing on how we could at the technology of anthracite decal stimulation and make.

Make this increase the responder rate or the overall responder rates for patients suffering from obstructive sleep apnea.

That is where we are currently working on two in.

Yeah.

To be very complete what you can expect this year is a prototype.

Both studies with animals.

Florida the discussions on the positioning of the product next to Ebola from other stimulation.

Okay sounds great. Thank you.

Your next question comes from the lineup at the mater from Piper Sandler. Your line is open. Please ask your question.

Hi, good morning, Thanks for taking the questions and congrats on the Q1 result, and a nice start to the year.

Maybe just to start on Triple C.

Sounds like you've done some commercial implants there.

Would just love to get a little bit better.

For the number of implants that you've done in a triple C patient cohort commercially.

All of those cases gone whats the feedback and then how quickly should we expect this part of the marketplace to ramp and then I had one follow up thanks.

Yes, Hello. Thank you Adam for this question. So when it comes to Triple C. Implants. So we did our first implants in Germany, and I have to admit that it was still modest.

The reason why the number was modest and they were talking about the three patients that were implanted was driven by the fact that it took some time before everything was already in milk.

And also we see that there are physicians that we're waiting for is simple to hear back from the better sleep data. That's the only part that's the only communicated during the world sleep in home. So that's why it took maybe a little bit longer than initially expected, but the first three cases, what I can report on it is that the the cases on the procedures one studies.

Successful.

Just two for me for your reference.

Exactly identical procedures them to non CCC patients just to avoid any confusion so they've been very successful and resilience while enthusiastic about having no surgical solution to also offer to their CCC patients.

No as you also know it will take approximately two months post certainly before we switch on the device and we are slowly getting to the point of switching them. So in the next earning call I can also give you a further update on the response of those folks to treat patients in their HIV deduction, but so far so good procedure went well so I wasn't happy page.

<unk> happy no complications so that is what I can update you on doing going forward and to answer. The question is as you know in literature, we are talking about roughly 30% of the entire module to severe OSA.

Patient population that would suffer perform complete concentric collapse. So in all expectations and that is also a pillar that we are working on and going forward, we expect to see a comparable number increase coming from people see and going forward.

Great. Thanks, Olivier that's very helpful. And then just quickly on the follow up.

I'll ask one on just the.

The topline I know you don't have financial guidance, but.

It certainly sounds like you expect.

Quarterly sequential improvement throughout each quarter of this year I also think I heard you make.

I make a comment that volume has accelerated significantly throughout Q1. So I'm wondering if you can put a finer point.

Just on kind of intra quarter trends for the exit rate in Q1.

Or just whatever puts and takes you can give us here as we think about our models for the remainder of the.

For the year would be helpful. Thanks, so much.

Adam you are.

Asking the challenging questions and then you know that we are not providing guidance. So Hugo motivator for me, but maybe maybe you have more of a chance with Louis can leak or do you want to comment on this.

So on the founder says, we're obviously very encouraged by the positive feedback and momentum we are seeing in AR. In Q1, we do expect to see revenue increase every quarter this year and to continue this momentum.

That's clear.

Even if we don't give formal guidance what we can say is we are generally comfortable with the current analyst consensus for 2022.

Okay. That's great really appreciate the color and congrats again.

Thank you.

Your next question comes from the line of Michael <unk> from Wolfe Research. Your line is open. Please ask your question.

Hey, good morning, good afternoon.

On the rest of 2022 is it fair to say, it's still a Germany story from a revenue perspective or do you expect.

Some of these other European countries to contribute more meaningfully.

It will stay a German story in the sense that we wanted to do a commercial proof of concept in the largest market outside of the U S where competition is PRASM, but.

But next to this you can also expect a strong acceleration from the countries like Switzerland, where we already have the DRG than there is Spain of course, we expect also to start generating our first revenue in the Nordic countries and we.

We are hoping that we can also get a positive reply on a reimbursement files in the Netherlands and in Belgium.

Yeah.

If I can ask one follow up on the access study in the U S.

Can you remind us.

I believe it's expected to be smaller than dream do you have a better sense of what the sample our target sample will be at this stage and.

General expectations for timing if you implant your first patient by the end of this calendar year is that is that a project that could fully implant in 12 months or would you potentially need need a little longer than that thanks, so much for taking the questions.

Thank you Mike for asking this so when we look at the Triple C without jumping to any conclusions, but in our discussions with FDA. We think that it's realistic to aim for a sample size of 92 maximum 100 patients that's where do we expect to end up with but once again it needs to be approved.

No answering the second part of your question, saying, how fast can you implant. So that of course, we have a great advantage coming out of the Dream study that we know have identified in the U S and not only identify but also trained surgeon who can do implants.

We already are actively.

Following the servicing that once the CCC study over the access study will be approved that they can participate for the patients that today they cannot offer the April month.

Stimulation solution because they have tripled.

All lined up in these sites. So I think it is realistic to expect that once we do the first patients in 12 months or maybe even less than 12 months, we will finish also.

Fleet access patient on all of them.

There are no further question at this time I would like to turn the call over to the CEO , Mr. All of their tillman.

I would like to thank everyone for joining and attempting to school I Hope you share the same excitement as we do in <unk> with a strong Q1 results and we will be working extremely Oct continue this ramping up continue showing the results and you will hear back from us during our Q2, earning call. Thank you for coming and have provided a nice day.

Bye bye.

This concludes today's conference call. Thank you for participating you may now disconnect.

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