Q1 2022 Helius Medical Technologies Inc Earnings Call

May 12, 2022

Okay.

Welcome to the Helix Medical Technologies Q3, 2021 earnings Conference call. My name is Richard and I'll be your operator for today's call. At this time all participants are in a listen only mode. Later, we will conduct a question and answer session. During the question and answer session. If you have a question. Please press zero one on your touch.

Dot Com as a reminder, the conference is being recorded.

I'll turn the call over to Judy Diclemente, you may begin.

Thank you operator.

Welcome to the first quarter 2022 earnings conference call for helium Medical technologies. This is Judy diclemente of insight Communications Investor Relations for Helios.

With me on today's call are gain Andrey Helios, Medical's, President and Chief Executive Officer, Jeff Mathiesen, Chief Financial Officer.

Antonella.

Health, Chief Medical Officer, and Fred Fan, Acacia Vice President sales and marketing North America.

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 Helios website at Www Dot Helios 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 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 factors may be updated from time to time in our other filings with the SEC, which are available on our website.

Statements made during this call are as of May 12, 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 Andrey <unk>, President and Chief Executive Officer of helium.

Thanks, Judy welcome everyone to Julius Medical's first quarter 2022 earnings conference call.

This was the first quarter that pons therapy with commercially available in the United States and we are already seeing and enthusiastic response.

As a reminder, pons stands for portable Neuromodulation stimulator.

And it is currently indicated in the United States for short term treatment of gig deficit due to mild to moderate symptom of M. S.

It's designed to be used in conjunction.

With the supervisor therapeutic exercise program.

Until now.

Treatment options have been limited, but 14 weeks of <expletive> therapy has demonstrated significant improvement as compared to physical therapy alone.

Hans is both safe and effective and the launch is an important development not only for the company, but also for the over.

Over 1 million patients in the U S badly than that.

Before we provide more color on the rollout.

I wanted to introduce to you Dr. Antonella, David Van Pelt M D ph D. A board certified neurologists and helium.

Chief Medical Officer, who will go into greater detail about Pons therapy Antonella.

Thank you David.

I am truly excited about the recent launch of <unk>.

Paul.

Jason Patton and can greatly affect function and quality of life.

Especially considering that until now no pharmacological intervention has had that limitation.

With pumps now available to patients and health care provider and do not anticipate.

Those suffering from great that's it for now.

Access to a known and comfortable.

So the same therapeutic intervention.

<unk> mechanism of action employs neuromodulation.

It takes them a dislocation of near now that's typically triggered by one or more hesitant to spend it on.

Modulation can.

Can be life, changing unless something I recall, where there was previously a limited one or none Legion.

Bleeds into your persistency, which is the brand's ability to modify and change and adopt in response to modulations in Blaine activity.

Thanks Scott.

No plasticity has the potential to induce clinically meaningful changes in Blaine area.

Consolidated pathway that can offset function of that.

If patients with them that.

This might be to include Skype.

Neil modulation can be performed.

It's a simple non invasive non stop.

To look at sort of a change.

On the call that patient tests continued access to the treatment.

With a few barriers to treatment as possible.

Ponting juices trigeminal nerve modulation.

Finally, the toga and this mechanism of treatment globally, along with regular.

Consistent utilization.

They can just therapy unique.

And the first of its kind.

Both therapies is today, the only person that treatment combining trade agenda nerve simulation with physical therapy.

Just in terms of neurological diseases.

This combination of newest stimulation, but physical goods location intervention that reaches that modulate specific brain targets.

Does a pharmacological treatment book means that palms is not just a technological eight actual scale of it.

To better understand the extent to reach a patient for daring to pump therapy regimen can lead to a meaningful therapeutic outcome. We are partnering with some of the nation's premier academic medical centers, just true therapeutic experience program or Tech a company sponsored open label observed.

No trial.

Chuck offers us the chance to observe the post therapy.

Real wood pricing and also enables the key opinion leaders in M. S management to build a knowledge and upsize the build and medical community.

Ted was launched during the fourth quarter of 2021.

The goal is between 40 to 50 patients across 10 12 planned center of excellence.

Late in 2022 targets.

Targeting a neurologist and Europe invitation centers with identified.

Having the greatest potential to be early adopters of our technology.

The program is progressing quickly we plan to soon provide Pos devices to NYU Langone health.

We're completing setup activities to enroll several of these timings of golf at centers of excellence, which we expect to announce soon.

As doctors.

Om to treat patients with the most appropriate and effective therapy.

And want to help them adopt.

And to know but equally.

Over the course of the season.

Currently <unk> is the only portable and readily accessible near stimulation therapy.

That would use consistently may lead to consolidated neoplastic changes.

Improved gait function.

The effectiveness of course therapy combined with its accessibility.

Make it a great option for patients suffering from gains impairment.

Use it regularly during the physical limitation jet.

Thank you antonella for the valuable insights.

When hearing about ponds from a neurologist perspective, it's clear why practitioners, who treat patients suffering from gate impairment are optimistic about this treatment option.

Before we move on I wanted to quickly review corn prices.

The established U S list price for the Pons devices 25700 comprised of a one time costs of 17800 for the controller and <unk>.

7900 for the moat piece.

We expect PON sales in the U S to remain on a cash pay basis, well into 2023 at a discounted price modestly below the anticipated CMS reimbursement rate, while we actively pursue third party coverage in.

In addition, we also expect to provide one or more patient assistant programs to expand accessibility upon therapy to a broad range of patients into accelerated adoption and enhance market penetration.

We are pleased to hear the recent announcement by CMS.

Of its new transitional coverage for emerging technologies or T SEC.

A proposed replacement for the former Medicare coverage of <unk>.

<unk> technology, or <unk>, which was repealed last November .

This proposed rule would established criteria for our next deviated coverage pathway to provide Medicare beneficiaries with faster access to innovation and beneficial technology.

The rules are not finalized yet, but we believe PON would be included in this new reimbursement program due to our SBA granted breakthrough designation in that.

Math and stroke.

Additionally, we are hopeful that <unk> will get pass later this year or in early 2023.

And we'll keep you apprised of any developments.

To date we.

We have already received 23 prescriptions and two patients had purchased the devices on a cash pay basis.

The timing of filling prescriptions will be dependent upon whether the patient desires to first pursue insurance reimbursement before.

Before committing to cash pay which we have found to be the case in the vast majority of prescriptions received so far.

To give more detail on the rollout I'd like to introduce Fred fans had yeah, Elyse as VP of sales and marketing North America Fred.

Thank you Dane, we've indeed seen a great response since our launch in the U S where PON therapy is authorized for the treatment of date deficit due to mild to moderate symptoms from multiple sclerosis.

Dysfunction is an extremely common symptom among people suffering from that met with over 70% reporting difficulties walking despite the pervasiveness of the symptoms there remains a huge unmet need in this area.

The only.

Portable neuro stimulation therapy that may lead to nor plasticity pump therapy offers patients hope and neurologists, a new differentiated tool in their tool belt.

During the rollout we've been able to be very targeted using data to guide our approach to the marketplace.

<unk> is a well characterized disease with a fast growing population cared for by a relatively small population up approximately 16000 neurologists.

An estimated 1 million people in the U S suffer from Manhattan with the majority concentrated in 10 states.

It's a very defined group and to further narrow focus.

New data to lead us to areas with strong early adoption, where we will deploy and enhance resources.

Including adding head count and ramping up marketing initiatives.

In hiring sales reps, we will continue to bring on top talent and look to hire individuals with deep experience in the neuromodulation space at.

As Antonella mentioned pond is the only portable neuro stimulation therapy than when you consistently may lead to consolidated Neuroplastic change that will impact gait function.

Second is some of the action is our differentiator and ponds is unlike any other therapy currently available.

As a first step to ensure this messaging is incorporated across all assets. We are in the process of overhauling our landing page in the U S to include among other things specific content on mechanism of action and information on clinical data.

Because Ms patients are in general a vocal active group with strong advocacy online we've expanded our social media and digital presence with targeted ads. Starting this quarter. We are currently active on Facebook and Linkedin.

The pod therapy Dotcom website is another important tool for engaging our target population.

We want to provide tools for a positive user experience for patients.

Therapist and physicians alike through.

Groupon therapy Dot com, we can offer valuable content for all stakeholders, such as information on how to obtain the pons device any screen lined on demand training platform for physical therapist.

To further spread our message we plan to intend.

In person industry conferences, this year, including CMC in June at ACR in November at <unk>.

We plan to present, some real world data.

Overall, we are very pleased with the progress of the rollout and we look forward to updating you on our progress.

Thanks for letting me speak with you today and now I'll hand, it back over to Dan.

Thanks, Fred I appreciate all you and your team have done to make sure a pond has a successful launch.

Before we move onto financial results, let's touch briefly on our commercial activities outside of the United States.

Since 2019 ponds has been authorized for sale in Canada for the treatment of deep deficit due to mild and moderate symptoms from MFS as well as for chronic balance deficit due to <unk>.

To moderate traumatic brain injury.

We now have 41 authorized pons clinics in Canada up from 37 at the end of 2021 more than 10% increase.

From a trial standpoint.

Continuing our clinical experience program with Toronto.

The location Institute.

Part of the University Health network and hope to publish results in late 2022.

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

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

Thanks, Tim.

It is a pleasure to be with you today.

Total revenue was $190000 for the first quarter of 2022.

Lightly above guidance provided in our year end call.

This compared to revenue of $84000 in the first quarter of last year for.

For an increase of 126%.

For the first quarter of 2022, our gross profit was $66000 compared to $69000 in the prior year.

Reflecting increased fixed costs in the current year period.

Operation of our anticipated revenue growth.

Operating expenses for the first quarter of 2022 increased to $4 6 million compared to $3 6 million in the first quarter of 2021, an increase of $1 million.

This planned increase was primarily due to increased compensation expenses related to personnel additions in late 2021, and the first quarter of 2022 to support the U S commercial launch.

Operating loss for the first quarter of 2022 was $4 $6 million.

Compared to a loss of $3 $5 million for the prior year period.

We reported a net loss for the first quarter of 2022 of $4 3 million or a loss of $1 15 per basic and diluted common share.

Compared to a net loss of $3 4 million.

Or a loss of $1 65 per basic and diluted common share for the same period last year.

Our cash burn from operations for the first quarter of 2022 was $4 7 million compared to $2 9 million.

For the first quarter of 2021.

The increase year over year resulted primarily from the increased operating expenses previously discussed as well as the amount and timing of annual bonus and franchise tax payments in 2022, which accounted for just under $1 million of this increase and will not be recurring.

And the remaining quarters of 2022.

As of March 31, 2022, we had $6 $3 million of cash.

And no debt.

In addition, we had approximately $14 $4 million available under our equity line of credit with Lincoln Park capital subject to the terms and conditions there and.

Ensuring a source of equity capital.

As needed.

Could extend our cash runway.

Turning now to our outlook.

We currently expect second quarter revenue to be modestly above the first quarter levels factoring in the potential delays for some portion of our U S patients.

<unk> insurance coverage prior to filling their prescriptions.

As we continued to build momentum and expand our sales coverage.

We expect future quarterly revenue to continue increasing sequentially quarter over quarter throughout the year and through 2023 as.

As the U S commercialization of ponds develops and third party reimbursement is established.

Based upon our current pricing structure.

Projected prescription rates and the anticipated reimbursement timeline in the U S.

We believe we can achieve positive quarterly cash flow from operations by the fourth quarter of 2023.

One final consideration.

Turning to the data analysis spread discussed earlier it was determined that on average approximately 128000 patients treated for EMS annually in the U S.

Immediately qualify for Pons treatment.

This translates into a multibillion dollar market opportunity and that mix alone.

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

Yeah.

Thank you.

We will now begin the question and answer session. If you have a question. Please press zero one on your Touchtone phone.

Do you wish to be removed from the queue. Please press zero two if youre using a speakerphone you may need to pick up the handset first before pressing the numbers once again for any questions on the line. That's zero one on your Touchtone phone and we're standing by for questions.

And our first question online comes from Mr. Jeffrey Cohen from Ladenburg Thalmann. Please go ahead.

So <unk> and Fred Hu.

Great Great, Jeff Thanks for joining us.

Sure.

Joe could you repeat.

The part of the combos you just move.

I'm referring to.

Qualifying.

I'm, sorry, you're referring to qualifying.

But as far as 128000 patients treated in the U S annually.

That was based upon an analysis of DRG codes for.

<unk> treated patients and theirs.

About I think a handful of DRG codes that.

Would indicate the qualification for pons treatment.

Perfect got it can you talk about the.

The progress out there.

On the payer front in discussions that Youre having.

In addition to or separately from this.

CMS 30 for 'twenty one.

Okay.

Yes.

Hi, Jeff It's Dean.

I'll start this question.

This the answer and Fred you might want to join in.

We're going down the normal path of helping our patients with the reimbursement claims at the moment.

And then second on the teeth that which is replacing the handset.

Was repealed.

Back in November .

This is pretty much the same program with a different.

Different initials different different lighters.

So this is pretty exciting that they revived us.

CMS and to widen administration since we have two breakthrough designations both.

MFS in stroke.

No.

Okay.

That's super helpful. Thanks, and could you talk about.

Any backlog and also perhaps.

Fred if you could talk about awareness out there.

First with your team and what type of reception and what type of order ensuring communication was.

Yes.

Fred or you off mute.

I'm off mute I didn't know if you wanted to go first or do you want me to go.

Once you start yes.

Okay.

So nice to meet you so as far as the audience is concerned is basically are our three key stakeholders are.

Obviously physicians.

Primarily neurologists, especially early on they are seeing the bulk of the patients that would be most appropriate for the diagnosis or physical therapist, and and obviously the patients. So the engagement. So far has been very good.

Very meaningful.

Folks are aware of the therapy. Obviously, we are just kind of working through the required steps with our physical therapist for them to better understand how the therapy is applied what type of training platforms are available to them.

For a neurologist.

And then just are very familiar with.

Neuromodulation and specifically your mechanism of action talk tracks from some of the other.

Options that they have for different disease states.

Pain or epilepsy, and things of that nature. So our mechanism of action seemed to resonate our mechanism of action message seems to resonate with that with those key stakeholders.

No.

I would say those are the primary and then obviously patients.

They are clearly an active group they advocate for themselves they tried to be as well informed as possible.

Yes.

Okay got it and then lastly could you talk about the experience of Canada, new or the or the.

Critics widely opened 41, new reference in.

How might you anticipate that contributes to revenue over the coming year or two.

So.

Fred I'll start this one so yes.

So right now.

Canada is open.

Covid definitely.

No.

Was a big factor in <unk>.

Trying to get patients to the clinic to start treatment.

If you remember there was only a 50% capacity limitations at the clinics, they're now back to 100, so what what's happening with the difference now is that these clinics these neural PT clinics.

To re.

<unk> higher.

<unk> hired new physical therapists to get back to capacity. So what we're hearing from those clinics.

But sure that some of them are actually doing that at the moment.

So we're hopeful that.

Not only.

We will have new.

Patients coming in for their 2014.

<unk> treatment, but also we're experiencing so consistent flow of second and third treatments, especially in MFS.

Okay got it and one last question from.

Third point on the manufacturing side and the assembly side in inventory, how do you think.

Stand there and have.

Have you had any issues.

Yes.

So this is Dave again.

So, but we were fortunate to have all our components in stock.

For two years.

The issue that we ran into Jeff like most folks were labor labor issues at our OEM.

Not only.

A function of Covid, but also the environment in general.

They were balanced shortly.

Labor.

That affected.

Building, our product on a timely basis.

But the issue.

That we don't have we have enough inventory to fill prescriptions.

Not only in the United States, but also.

The needs in Canada for our clinics in our patients.

Okay got it.

One more please.

The activity outside North America, thus far.

So far we have our TBA clearance in Australia.

Australia is.

A smaller countries in Canada at Sony 26 million people.

But it actually presents a bigger opportunity.

Since we received authorization in the broadest scope, which is balancing the deficit with no indication attached to it.

This means this basically means con therapy could be used for treatment beyond MFS traumatic brain injury.

And also be used for stroke and cerebral palsy in Parkinson's.

So therefore, it's definitely a larger market for us in Canada.

It's early for US we're working to evaluate our best commercial pathway there with the goal of generating cash flow from the onset.

Okay perfect. Good those are for us thanks for taking my questions.

Alright, Jeff just before you head out getting back to your first question.

Our presentation on our website on page 18 of it it shows the DRG codes that were used to come up with the number that I talked about and also Fred mentioned the concentration of top 10 states, which are shown on that slide as well. So that'll give you a better sense as to how that number.

<unk> was developed and where we're focused.

Okay perfect. Thanks, Joe.

Hi.

Okay, and we have no further questions at this time I will now turn the call over getting inventory for closing remarks.

Well, thank you everyone.

And just one thing we're available for calls and zoom calls please contact our Investor Relations Lisa Wilson.

We continue to be pleased with the rollout of ponds as well as our progress with <unk> and look forward to.

Bringing this important therapy to more patients over the coming quarters. We are at the very beginning of a very exciting journey for all of US and we thank you for your time and interest in <unk> medical technologies.

Yes.

And thank you ladies and gentlemen. This concludes today's conference. Thank you for participating you may now disconnect.

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As a reminder, the conference is being recorded I will now turn the call over to Judy Diclemente you may begin.

Thank you operator welcome to the first quarter 2022 earnings conference call for helium Medical technologies. This is Judy diclemente of insight Communications Investor Relations for Helios.

With me on today's call are Dane, Andrey Helios, Medical's, President and Chief Executive Officer, Jeff Mathiesen, Chief Financial Officer.

And to an Ela.

<unk> Health, Chief Medical Officer, and Fred Fantasia, Vice President sales and marketing North America.

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 sections 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 other filings with the SEC, which are available on our website.

Payments made during this call are as of May 12, 2022, we would 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 Dane Andrey <unk>, President and Chief Executive Officer of Helios.

Thanks, Judy welcome everyone to Julius Medicals first quarter 2022 earnings conference call.

This was the first quarter that Pons therapy was commercially available in the United States and we are already seen an enthusiastic response.

As a reminder, pons stands for portable Neuromodulation stimulator.

And it is currently indicated in the United States for short term treatment of gait deficit due to mild to moderate symptoms of MFS.

It's designed to be used in conjunction.

With the supervisor therapeutic exercise program.

Until now.

Treatment options have been limited, but 14 weeks of Pons therapy has demonstrated significant improvement as compared to physical therapy alone.

Barnes is both safe and effective and the launch is an important development not only for the company, but also for the over.

Over 1 million patients in the U S fab lean M S.

Before we provide more color on the rollout.

I wanted to introduce to you Dr. Antonella, David Van Pelt M D ph D. A board certified neurologists and helium.

Chief Medical Officer, who will go into greater detail about Pons therapy.

Sure.

Thank you David.

I am truly excited about the recent launch of Paul.

Occasionally pediment can greatly affect function and quality of life, especially considering that until now no pharmacological intervention has had that limitation.

With pumps now available to patients and healthcare providers and do not anticipate.

Those suffering from gait deficit.

Access to a known and comfortable accessible for any therapeutic intervention.

<unk> mechanism of action employees Neuromodulation the.

Which is the modification of near no. That's typically triggered by one or more hesitant to spend it on.

Modulation.

Can be life, changing eliciting I recall, where there was previously a limited one one on leasing.

Leading to neurotoxicity, which is the brain's ability to modify and change and adopt in response to modulations in brain activity.

Thanks Scott.

Plasticity has the potential to induce clinically meaningful changes in Blaine area.

Consolidated pathways that can offset function of that.

If patients with them that.

This might lead to improved Skype.

Neuro modulation can be performed.

It's a simple non invasive non stop to elicit a change.

Critical that patient tests continued access to the treatment with a few barriers to treatment as possible.

Potent induces trigeminal nerve modulation.

Sorry, the tone and this mechanism of treatment delivery allows both regular and consistent utilization.

Making this therapy, Inc, and the first of its kind.

Post therapy is today.

Only persons that treatment, combining trigeminal nerve stimulation with physical therapy to reduce in terms of neurological status.

This combination of newest stimulation with physical goods location intervention that leaches and modulate specific brain target just as a pharmacological treatment fluid. It means that <unk> is not just a technological eight actual therapy.

To better understand the extent to reach a patient adherence to our pump therapy regimen can lead to a meaningful therapeutic outcome. We are partnering with some of the nation's premier academic medical centers as true therapeutic experience program or Tech a company sponsored open label.

The version of trial.

Chuck offers us the chance to observe the points therapy in a real wood pricing and also enables the key opinion leaders in EMS management.

To build a knowledge and upsize the broader medical community.

<unk> was launched during the fourth quarter of 2021.

The goal is between 40 to 50 patients across 10 12 planned center of excellence.

In 2022.

Targeting a neurologist and your ability <unk> centers with identified.

Having the greatest potential to be early adopters of our technology.

The program is progressing quickly we plan to soon provide pons devices to NYU Langone health and we're completing set of activities to Angola several of the economy like all the centers of excellence, which we expect to announce soon.

As doctors.

Om to treat patients with the most appropriate and effective therapies.

And once we'll help them not just in the now but equally important over the course of that disease.

Currently.

<unk> is the only portable and readily accessible nearest stimulation therapy.

That would use consistently mainly to consolidated neoplastic changes that would improve gait function.

The effectiveness of post therapy combined with its accessibility.

Thanks have a great option for patients suffering from gains impairment, who could use it regularly during the physical event mutation Jed.

Thank you you answered an hour for the valuable insights.

When hearing about <unk> from a neurologist perspective, it's clear wide practitioners, who treat patients suffering from gate impairment are optimistic about this treatment option.

Before we move on I wanted to quickly review corn prices, yes.

He established U S list price for the Pons device is 25700 comprised of a one time cost of 17800 for the controller and 7900 for the milk piece.

We expect PON sales in the U S to remain on a cash pay basis well into 2023.

At a discounted price modestly below the anticipated CMS reimbursement rates.

While we actively pursue third party coverage.

In addition, we also expect to provide one or more patient assistant programs to expand accessibility upon therapy to a broad range of patients and two accelerated adoption and enhance market penetration.

We are pleased to hear the recent announcement by CMS.

Of its new transitional coverage for emerging technologies or T SEC.

Proposed replacement for the former Medicare coverage of innovation technology, or <unk>, which was repealed last November .

This proposed rule would established criteria for Nyx deviated coverage pathway to provide Medicare beneficiaries with faster access to innovation and beneficial technology.

The rules are not finalized yet, but we believe PON would be included in this new reimbursement program due to our SBA granted breakthrough designation in MF and stroke.

Additionally, we are hopeful that <unk> will get pass later this year or in early 2023.

And we'll keep you apprised of any developments.

To date, we have already received 23 prescriptions and two patients had purchased the devices on a cash pay basis.

The timing of filling prescriptions will be dependent upon whether the patient desires to first pursue insurance reimbursement before committing to cash pay which we have found to be the case in the vast majority prescriptions received so far.

To give more detail on the rollout I'd like to introduce Fred Phantasms, Elyse as VP of sales and marketing North America Fred.

Thank you Dane, we've indeed seen a great response since our launch in the U S where PON therapy is authorized for the treatment of gait deficit due to mild to moderate symptoms from multiple sclerosis.

Gate dysfunction is an extremely common symptom among people suffering from MFS with over 70% reporting difficulties walking despite the pervasiveness of the symptoms there remains a huge unmet need in this area.

As the only portable neuro stimulation therapy that may lead to nor plasticity pump therapy offers patients hope and neurologists, a new differentiated tool in their tool belt.

During the rollout we've been able to be very targeted using data to guide our approach to the marketplace.

MFS is a well characterized disease with a fast growing population cared for by a relatively small population up approximately 16000 neurologists.

An estimated 1 million people in the U S suffer from <unk> with the majority concentrated in 10 states.

It's a very defined group and to further narrow our focus.

We've used data to lead us to areas with strong early adoption, where we will deploy and enhance resources, including adding head count and ramping up marketing initiatives in.

In hiring sales reps, we will continue to bring on top talent and look to hire individuals with deep experience in the newer modulation space at.

As Antonella mentioned pond is the only portable neuro stimulation therapy, then when used consistently may lead to consolidated Neuroplastic change that will impact gait function.

Mechanism of action is our differentiator and ponds is unlike any other therapy currently available.

Because Ms patients are in general a local active group with strong advocacy online we've expanded our social media and digital presence with targeted ads. Starting this quarter. We are currently active on Facebook and Linkedin.

The pod therapy Dot Com website is another important tool for engaging our target population.

We want to provide tools for a positive user experience for patients therapist and physician delight through.

Groupon therapy Dot com.

Can offer valuable content for all stakeholders, such as information on how to obtain the pons device any streamlined on demand training platform for physical therapist.

To further spread our message we plan to intend several in person industry conferences this year, including <unk> in June and ACR M. In November at <unk>, We plan to present, some real world data.

Overall, we are very pleased with the progress of the rollout and we look forward to updating you on our progress. Thanks for letting me speak with you today and now I'll hand, it back over to Dan.

Thanks, Fred I appreciate all you and your team have done to make sure a pond has a successful launch.

Before we move onto financial results, let's touch briefly on our commercial activities outside of the United States.

Since 2019 Pons has been authorized for sale in Canada for the treatment of D deficit due to mild and moderate symptoms from MFS as well as for chronic balance deficit due to mild to moderate traumatic brain injury.

We now have 41 authorized pons clinics in Canada up from 37 at the end of 2021 more than 10% increase.

From a trial standpoint.

Our continuing our clinical experience program with Toronto.

Dilatation Institute, which is part of the University Health network and hope to publish results in late 2022.

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

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

Thanks, Tim.

It is a pleasure to be with you today.

Total revenue was $190000 for the first quarter of 2022 slightly above guidance provided in our year end call.

This compared to revenue of $84000 in the first quarter of last year for an increase of 126%.

For the first quarter of 2022, our gross profit was $66000 compared to $69000 in the prior year.

Reflecting increased fixed costs in the current year period and preparation of our anticipated revenue growth.

Operating expenses for the first quarter of 2022 increased to $4 6 million compared to $3 6 million in the first quarter of 2021, an increase of $1 million.

This planned increase was primarily due to increased compensation expenses related to personnel additions in late 2021, and the first quarter of 2022 to support the U S commercial launch.

Operating loss for the first quarter of 2022 was $4 6 million compared to a loss of $3 5 million for the prior year period.

We reported a net loss for the first quarter of 2022 of $4 3 million.

Or a loss of $1 15 per basic and diluted common share.

Parent to a net loss of $3 4 million or.

Or a loss of $1 65 per basic and diluted common share for the same period last year.

Our cash burn from operations for the first quarter of 2022 was $4 7 million compared to $2 9 million.

For the first quarter of 2021.

The increase year over year resulted primarily from the increased operating expenses previously discussed as well as the amount and timing of annual bonus and franchise tax payments in 2022.

<unk> accounted for just under $1 million of this increase and will not be recurring in the remaining quarters of 2022.

As of March 31, 2022, we had $6 3 million of cash.

And no debt.

In addition, we had approximately $14 $4 million available under our equity line of credit with Lincoln Park capital subject to the terms and conditions there and.

Ensuring a source of equity capital.

As needed, which could extend our cash runway.

Turning now to our outlook.

We currently expect second quarter revenue to be modestly above the first quarter levels.

Factoring in the potential delays for some portion of our U S patients to pursue insurance coverage prior to filling their prescriptions.

As we continue to build momentum and expand our sales coverage, we expect future quarterly revenue to continue increasing sequentially quarter over quarter throughout the year and through 2023.

As the U S commercialization of ponds develops and third party reimbursement is established.

Based upon our current pricing structure.

Projected prescription rates and the.

Anticipated reimbursement timeline in the U S.

We believe we can achieve positive quarterly cash flow from operations by the fourth quarter of 2023.

Yeah.

One final consideration, referring to the data analysis Fred discussed earlier it was determined that on average approximately 128000 patients treated for EMS annually in the U S with immediately qualify for Pons treatment.

This translates into a multibillion dollar market opportunity and M S alone.

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

Thank you.

We will now begin the question and answer session.

You have a question. Please press zero one on you touched on phone.

You wish to be removed from the queue. Please press zero two if youre using a speakerphone you may need to pick up the handset first before pressing the numbers once again for any questions on the line. That's zero one on your Touchtone phone and we're standing by for questions.

And our first question online comes from Mr. Jeffrey Cohen from Ladenburg Thalmann. Please go ahead.

So her game, Jeff there too and for who you are.

Great Great, Jeff Thanks for joining us.

So.

Joe could you repeat.

The other part of the call maybe just move.

Referring to or.

Qualifying.

Yeah.

I'm, sorry, you're referring to qualifying.

As far as 128000 patients treated in the U S annually and that was based upon an analysis of DRG codes for.

<unk> treated patients and theirs.

About I think a handful of DRG codes that.

Would indicate the qualification for pons treatment.

Perfect got it.

Can you talk about the.

The progress out there.

On the payer front in discussions that you're having.

In addition to or separately from this.

CMS 30 for 'twenty one.

Okay.

Yes.

Hi, Jeff It's Dean.

I'll start this question.

This answer and Fred you might want to join in.

We're going down the normal path of helping our patients with their reimbursement claims at the moment.

And then second on the teeth that which is replacing the handset.

Which was repealed.

Back in November .

This was pretty much the same program with a different.

Different initials different a different lighters.

So.

This is pretty exciting that they revived us.

You may ask them to widen administration since we have two breakthrough designations.

Uh huh.

And MFS in stroke.

So.

Okay.

That's super helpful. Thanks.

Can you talk about.

Any backlog and also perhaps.

Fred if you could talk about awareness out there in commercial efforts with your team and what type of reception and what type of order ensuring communication was.

Yeah.

Fred or you off mute now I'm off mute I didn't know if you wanted to go first or do you want me to go.

Once you start.

Okay.

So nice to meet you.

As far as the audience is concerned is basically are our three key stakeholders are.

Obviously positions.

Very meaningful.

For a neurologist.

You know neurologist are very familiar with.

Neuromodulation and specifically the mechanism of action talk tracks from some of the other.

Options that they have for different disease states.

Pain or epilepsy, and things of that nature. So our mechanism of action seems to resonate our mechanism of action message seems to resonate with that with those key stakeholders.

No.

I would say those are the primary and then obviously patients.

They are clearly an active group they advocate for themselves they tried to be as well informed as possible.

Yes.

Yeah.

Okay got it and then lastly could you talk about the experience of care under the new or the or the credit's widely opened 41, new reference in.

How might you anticipate that contributes to revenue over the coming year or two.

Fred I'll start this one so yes.

So right now.

Canada is open.

You know COVID-19 definitely.

No.

A big factor in.

Trying to get patients to the clinic.

Start treatment.

If you remember there was only a 50% capacity limitation at the clinics, they're now back to 100, so what what's happening with the difference now is that these clinics with neuro PT clinics have too.

Re hire or hire new physical therapists to get back to capacity. So what we're hearing from those clinics are slow, but sure that some of them are actually doing that at the moment.

So we're hopeful that.

Not only.

We will have new.

Patients coming in for their 14th week.

<unk> treatment, but also.

We're experiencing so a consistent flow of second and third treatments, especially in MFS.

Okay got it.

One last question from Sam point on the manufacturing side.

We signed an inventory tied to things stand there and.

Have you had any issues.

Yes.

So this is Dave again.

So we were fortunate to have all our kimono components in stock.

For two years.

The issue that we ran into Jeff like most folks were labor labor issues at our OEM.

Not only.

A function of Covid, but also the environment in general.

They were found shortly.

Labor.

That affected.

Building our products on a timely basis.

But the issue.

We don't have we have enough inventory to fill prescriptions.

Not only in the United States, but also.

The needs in Canada for our clinics in our patients.

Yes.

Okay got it.

One more please.

The activity outside North America, thus far.

So far we have our TGI clearance in Australia.

Australia is.

A smaller countries in Canada, it's only 26 million people.

But it actually presents a bigger opportunity.

Since we received authorization in the broadest scope, which is balancing gait deficit with no indication of attach. So this means this basically means con therapy could be used for treatment beyond MFS traumatic brain injury.

And also be used for stroke and cerebral palsy in Parkinson's.

So therefore, it's definitely a larger market for us in Canada.

It's early for US we're working to evaluate our best commercial pathway there with the goal of generating cash flow from the onset.

Okay perfect that those are for us thanks for taking my questions.

Alright, Jeff just before you head out getting back to your first question.

<unk> was developed and where we're focused.

Okay perfect. Thanks, Joe.

Hi.

Okay, and we have no further questions at this time I will now turn the call liquid getting inventory for closing remarks.

Well, thank you everyone.

And just one thing we're available for calls and zoom calls please contact our Investor Relations Lisa Wilson.

We continue to be pleased with the rollout of pons as well as our progress with cap and look forward to.

And thank you ladies and gentlemen. This concludes today's conference. Thank you for participating you may now disconnect.

Q1 2022 Helius Medical Technologies Inc Earnings Call

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