Q2 2022 NeuroMetrix Inc Earnings Call
Yeah.
Good morning, and welcome to the in your metrics second quarter 2022 earnings call. My name is Michelle and I'll be your moderator on the call.
On this call the company May make statements, which are not historical facts and are considered forward looking within the meaning of the private Securities Litigation Reform Act of 1995.
Statements that are predictive in nature that depend upon or refer to.
Future events or conditions are forward looking statements any forward looking statements reflect current views of narrow metric about future results of operations and other forward looking information.
Speaker 3: Statements that are predictive in nature that depend upon or refer to future events or conditions or for looking statements. Any for looking statements reflect current views of neurometric about future results of operations and other for looking information.
Should not rely on forward looking statements because actual results may differ materially as a result of a number of important factors, including those set for forest in the earnings release issued earlier today. Please.
Speaker 3: You should not rely on forward-looking statements because actual results may differ materially as a result of a number of important factors, including those that first force in the earnings release you should earlier today.
Please your first the risks and uncertainties, including the factors described under the heading risk factors in the Companys periodic filings with the SEC available on the company's Investor Relations website at <unk> Dot com and on the SEC's website at SEC Gov.
Speaker 3: Please refer to the written uncertainties, including the factors described under the heading risk factors in the company's periodic follow-ups with the SEC, available on the company's Investor Relations website at neuroimetric.com and on the SEC's website at sec.gov. Neuroimetric does not intend and undertakes no duty to update the information to clothes on this conference call. I'd now like to introduce the neuroimetric senior vice president and chief financial officer, Mr. Thomas Higgins. Mr. Higgins.
Your metrics does not intend and undertakes no duty to update the information to close on this conference call.
Now I'd like to introduce the new metric senior Vice President and Chief.
Financial Officer, Mr. Thomas Higgins Mr. Hagan.
Thank you Michelle and thanks to those of you attending today's quarterly review.
And myself and Dr. Shai Giussani, the president and CEO of neuron metrics are participating to this call.
Speaker 4: Thank you, Michelle, and thanks to those of you attending today's quarterly review. Put myself and Dr. Shagazani, the president and CEO of Neurometrics, are participating in this call.
By way of background, we are a med tech company with a mission to reduce the impact of neurological disorders and.
Speaker 4: By way of background, we are a MedTech company with a mission to reduce the impact of neurological disorders and pain syndromes on individuals and on population health.
Pain syndromes on individuals and on population health.
Our commercial products are non invasive.
<unk> worldwide market market opportunities and have no direct competition alternatives to exist, but not substitutes.
Speaker 4: Our commercial products are not invasive, they address worldwide market opportunities, and have no direct competition. Alternatives do exist, but not substitutes.
<unk> is our leading product in terms of revenue generation. It is a diagnostic providing rapid point of care detection of peripheral neuropathy.
Speaker 4: DPN-Check is our leading product in terms of revenue generation. It is a diagnostic providing rapid point of care detection of peripheral neuropathy.
Quell is our over the counter Wearables Neurostimulation therapeutics indicated for lower extremity chronic pain.
Speaker 4: Quelas are over the counter wearables neuro stimulation therapeutic, indicated for lower extremity chronic pain. Quel recently achieved FDA authorization as a prescription offering for treating the symptoms of fibromyalgia. Quelas are over the counter wearables for treating the symptoms of fibromyalgia. Quelas are over the counter wearables for treating the symptoms of fibromyalgia.
<unk> recently achieved FTA authorization as a prescription offering for treating the symptoms of fibromyalgia.
Our business model as rates of razor blade with aftermarket revenue being the principal component of product line profitability.
Speaker 4: Our business model is raised erasably with aftermarket revenue being the principal component of product line profitability.
During the second quarter, our revenues were $2 1 million and year to date totaled $4 4 million Q2 revenues were down by three 4% year on year and first half revenues increased by one 6%.
Speaker 4: During the second quarter our revenues were $2.1 million and year-to-date totaled $4.4 million.
Speaker 4: Q2 revenues were down by 3.4% year on year, and first half revenues increased by 1.6%. Q2 revenues increased by 1.6%.
These modest changes in comparative period revenues for Q2 and for the first half of the year obscure the interesting revenue perspective and that is <unk>.
Speaker 4: These modest changes in comparative period revenues for Q2 and for the first half of the year obscure the interesting revenue perspective. And that is that DPN check our leading product posted another strong quarterly performance with overall revenue growth of 17.6% in the second quarter and 14.6% year-to-date.
CPM check our leading product posted another strong quarterly performance with overall revenue growth of 17, 6% in the second quarter and 14, 6% year to date.
Looking a little deeper into the TPN check numbers the U S. Medicare advantage business was up 23% in the second quarter and 14, 6% year to date.
Speaker 4: Looking a little deeper into the DPN check numbers, the US Medicare Advantage business was up 20.3% in the second quarter and 14.6% year to date.
Most of this growth was attributable to our existing domestic customers.
Bind with some early new account activity generated by our commercial team.
Speaker 4: Most of this growth was attributable to our existing domestic customers, combined with some early new account activity generated by our commercial team.
The remaining if you can check businesses, primarily with distributors in Japan, and China, where it is somewhat difficult to assess performance on a quarterly basis.
Speaker 4: The remaining VPN check business is primarily with distributors in Japan and China, where it is somewhat difficult to assess performance on a quarterly basis.
It appears that these markets and particularly China continued to be adversely affected by the COVID-19 situation.
Speaker 4: It appears that these markets, and particularly China, continue to be adversely affected by the COVID situation.
Regarding <unk> revenues in the second in the quarter and six month period were down reflecting limited promotion as well as our positioning for the transition to a prescription cloud portfolio with specific disease indications Shai will address this in his comments.
Speaker 4: Regarding QWEL, revenues in the second, in the quarter and six-month period were down, reflecting limited promotion, as well as our positioning for the transition to a prescription QWEL portfolio with specific disease indications.
The advanced diagnostic business recorded a decline in revenue with erosion of its user base. We manage this product line for its cash flow.
Speaker 4: So I will address this in his comments.
Speaker 4: The advanced diagnostic business recorded a decline in revenue with erosion of its user base. We managed this product line for its cash flow.
Gross profit was $1 $5 million in the quarter, reflecting a margin rate of 68%.
Speaker 4: Crost-Profit was 1.5 million in the quarter, reflecting a margin rate of 68%.
Year to date margin was three 2% on a margin rate of 73%.
Speaker 4: Year-to-date margin was 3.2% and a margin rate of 73%.
Q2 cost of goods and gross profit were adversely affected by PPV payments to secure critical parts and the second quarter, we experienced the highest total PPV that we've seen and we expect Q3 to be at the same magnitude are higher there simply isn't a viable alternative to paying a premium to.
Speaker 4: Q2 costs to goods and gross profit were adversely affected by PPV payments to secure critical parts.
Speaker 4: In the second quarter, we experienced the highest total PPV that we've seen, and we expect Q3 to be at the same magnitude or higher. There simply isn't a viable alternative to Banger Premium to secure the electronic parts and components. available components.
To secure the electronic parts and components that we need to produce our devices.
If one were to exclude the Q2 PPV payments our margin rate in the second quarter was 75, 5% or about 70 basis points better than in Q2 of last year.
Speaker 4: that we need to produce our devices.
Speaker 4: If one were to exclude the Q2 PPV payments, our margin rate in the second quarter was 75.5%, or about 70 basis points better than in Q2 of last year.
Along with the rest of the industry refine it impossible to forecast when parts supply will return to a more normal environment.
Speaker 4: Along with the rest of the industry, we find it impossible to forecast when part supply will return to a more normal environment.
And what if any of the PPV markups will make their way into the normal cost of goods.
Speaker 4: And what, if any, of the PPV markups will make their way into the normal cost of goods?
Operating expenses totaled $2 7 million in the quarter and $5 4 million year to date.
Speaker 4: Operating expenses totaled $2.7 million in the quarter and $5.4 million year to date.
R&D spending reflects our product development commitment and two strategically important areas TPN check Medicare advantage and prescription indications.
Speaker 4: R&D spending reflects our product development commitment in two strategically important areas, DPN check, Medicare advantage, and 12 prescription indications.
The spending increase includes variable cost out lies for engineering consulting for both of these initiatives.
Speaker 4: The spending increase includes variable cost outlies for engineering consulting for both of these initiatives. By default this will be pilots visiting the scraping station to enhance assessment measures for the management of engineering consulting for these initiatives.
Sales and marketing personnel cost increased with the addition of our <unk> commercial team.
Speaker 4: Sales and marketing personnel costs increased with the addition of our DPN check commercial team. And this increased OpEx spending is guided by...
And this increased opex spending is guided by.
A 2022 and 2023 investment program with a target range of approximately $4 million.
Speaker 4: A 2022 and 2023 investment program with a target range of approximately $4 million.
The program is designed to address several aspects of the company that are essential to our future growth.
Speaker 4: The program is designed to address several aspects of the company that are essential to our future growth.
These aspects include corporate governance infrastructure product development and commercialization of talent.
Speaker 4: These aspects include corporate governance,
We're in the early stages of the program and expect that approximately half of the program spending will be onetime costs.
Speaker 4: infrastructure, product development, and commercialization talent.
Speaker 4: where in the early stages of the program and expect that approximately half of the program's spending will be one-time cost..
Net loss in the second quarter was $1 2 million or <unk> 17, a share year to date net loss was $2 1 million or <unk> 30, a share.
Speaker 4: Net loss in the second quarter was $1.2 million or 17 cents a share. Year-to-date net loss was $2.1 million or 30 cents a share.
Regarding cash flow and our balance sheet net cash consumption in the quarter was about $850000.
Speaker 4: Regarding cash flow in our balance sheet, net cash consumption in the quarter was about $850,000.
And year to date was $1 6 million.
We ended the period with a total of $23 million in cash cash equivalents securities.
Speaker 4: and your today was 1.6 million.
And we continue to maintain a simple debt free capital structure with approximately $7 1 million common shares outstanding.
Speaker 4: We ended the period with a total of 23 million cash, cash equivalent on securities.
Speaker 4: And we continue to maintain a simple debt-free capital structure with approximately 7.1 million common shares outstanding.
Radically capitalized in our funding on hand is adequate to support our growth initiatives this year and beyond.
Speaker 4: We're adequately capitalized and our funding on hand is adequate to support our growth initiatives this year and beyond.
And now for a Doctor goes on his comments.
Thank you Tom.
We are transitioning from a multi year effort to stabilize the companys financial health towards a focus on topline growth for the balance attention on the bottom line.
Speaker 4: And now for Dr. Gozzani's comments.
Speaker 5: Thank you, Tom.
Speaker 5: We are transitioning from a multi-year effort to stabilize the company's financial health towards a focus on top-line growth with a balanced attention on the bottom line.
There are three core elements to elements to our growth strategy.
The first is organic growth in our TPN check Medicare advantage business. The second is to launch the <unk> fibromyalgia indication.
Speaker 5: There are three core elements to our growth strategy.
Speaker 5: The first is organic growth in our DPN Check Medicare Advantage business.
The third is to advance our <unk> narrow therapeutics program at.
Speaker 5: The second is to launch the Quelphobromyalgia indication, and the third is to advance our Quelph Neuropetix program. The third is to advance our Quelph Neuropetix program.
I'll comment on each of these initiatives.
First with respect to VPN check.
The year over year revenue growth in the Tpa check Medicare advantage business was an encouraging 20%.
Speaker 5: I'll now comment on each of these initiatives. First, with respect to DPN check.
Speaker 5: The year-over-year revenue growth in the DPN check was an encouraging 20%
This growth primarily reflected increased utilization of <unk> biosensors by existing customers.
Speaker 5: This growth primarily reflected increased utilization of DPN check biosensors by existing customers. This growth primarily reflected increased utilization
We now have a value based care commercial team that focuses on the on increasing <unk> adoption in the Medicare advantage market. This includes large medical groups health systems, and health assessment companies or a substantial portion of the patients are covered under Medicare advantage.
Speaker 5: We now have a value-based care commercial team that focuses on increasing DPN check adoption in the Medicare Advantage market. This includes large medical groups, health systems, and health assessment companies, or a substantial portion of the patients that are covered under Medicare Advantage.
The sales cycle in this market is long and therefore, the bulk of the impact from the new commercial team will be felt starting in 2023. However, we are pleased with the sales activities and the quality and depth of the developing pipeline.
Speaker 5: The sale cycle in this market is long and therefore the bulk of the impact from the new commercial team will be felt starting in 2023. However, we are pleased with the sales activities and the quality and depth of the developing pipeline.
There are a number of R&D activities that will support continued growth in the Medicare advantage market. We recently launched our second generation device called <unk> to point out the.
Speaker 5: There are a number of R&D activities that will support continued growth in the Medicare Advantage market. We recently launched our second generation device called DPNCheck 2.0.
The initial devices are being strategically deployed and pilot trials with large potential customers a full market launch will follow once we have built up our inventory position and have confidence in the supply chain. We hope to meet this goal before the end of the year.
Speaker 5: The initial devices are being strategically deployed in pilot trials with large potential customers. A full market launch will follow once we have built up our inventory position and have confidence in the supply chain. We hope to meet this goal before the end of the year.
Another R&D program is development of the <unk> cloud.
Which is a data analytics platform that allows our customers to monitor and optimize <unk> implementation and address key population health questions through a family of web based dashboards.
Speaker 5: Another R&D program is development of the DPNC cloud, which is a data analytics platform that allows our customers to monitor and optimize DPNC implementation and address key population health questions to a family of web-based dashboards.
We anticipate launching <unk> cloud by the end of the third quarter and expect that it will start to positively impact biosensor utilization in 2023.
Speaker 5: We anticipate launching DPN to cloud by the end of the third quarter, and expect that it will start to positively impact biosensualization in 2023. Here a small assessment of the 2023.
And we have additional R&D efforts that should come to fruition in early 2023, which we'll talk about over the balance of the year.
Speaker 5: And we have additional R&D efforts that should come to fruition in early 2023, which we'll talk about over the balance of the year.
Moving to our <unk> fibromyalgia indication.
As we have discussed over the past couple of years, we are transitioning from a non specific over the counter treatment for chronic lower extremity pain to a focused prescription narrow therapeutic platform starting with the treatment of the symptoms of fibromyalgia as.
Speaker 5: Moving to our 12 fiber myology indication.
Speaker 5: As we have discussed over the past couple of years, we are transitioning well from a non-specific over-the-counter treatment for chronic low-extramly pain to a focused prescription neuro therapeutic platform, starting with a treatment of the symptoms of fibromyalgia.
As a reminder, fibromyalgia is a complex chronic pain syndrome that affects as many as 10 million people in the U S. The only FDA approved treatments or three drugs Pregabalin deluxe, a teen and though asset bran, which often have substantial side effects.
Speaker 5: As a reminder, however my algebra is a complex chronic pain syndrome that affects as many as 10 million people in the US.
Speaker 5: The only FDA-approved treatments are three drugs, pre-gablin, deloxetine, and milacipran, which often have substantial side effects.
We received FDA breakthrough designation for this indication in July .
2021, and de Novo authorization in May of this year FDA de Novo authorization may.
Speaker 5: We received FDA breakthrough designation for this indication in July of 2021 and de novo authorization in May of this year. FDA de novo authorization in May.
<unk> is the first and only non pharmacologic treatment for individuals with fibromyalgia.
We are planning a limited launch in the fourth quarter of this year and will proceed to a full launch in 2023.
Speaker 5: Kwell is the first and only non-pharmacologic treatment for individuals with fibromyalgia. The first is the first and only non-pharmacologic treatment for fibromyalgia. The first is the first and only non-pharmacologic treatment for fibromyalgia.
Speaker 5: We are planning a limited launch in the fourth quarter of this year and will proceed to a full launch in 2023.
The purpose of the initial launches to confirm the effectiveness of our prescription management solution to refine the marketing messaging and to collect key performance indicators that will allow us to plan further commercial expansion. If these events occur as planned and we expect <unk> revenue to resume growth in 2023.
Speaker 5: The purpose of initial log is to confirm the effectiveness of our prescription management solution to refine the marketing messaging and to collect key performance indicators that will allow us to plan for their commercial expansion.
Speaker 5: If these events occur as planned, we expect well-revenue to resume growth in 2023. Once again we expect well-revenue to resume growth in 2023. With meditation style meeting with Link in the description below the videoyou'll likely for the 2023.
And moving now to the overall 12 neuro therapeutics platform.
The third element of our growth strategy is to continue to develop the club narrow therapeutics pipeline beyond the initial fibromyalgia indication. The program. That's furthest of August for chemotherapy induced peripheral neuropathy, or CIP, and which affects as many as 70% of people who received chemotherapy. It can be a chronic and debilitating side effect of <unk>.
Speaker 5: And moving now to the overall 12 nerve therapeutic platform.
Speaker 5: The third element of our growth strategy is to continue to develop the Quel neurotherapeutics pipeline beyond the initial fibromyalgia indication. The program that is furthest along is for chemotherapy induced peripheral neuropathy or CIPN, which affects as many as 70% of people who receive chemotherapy.
Treatment.
And NIH and National Cancer Institute funded multicenter double blinded randomized Sham controlled trial has been underway for the past couple of years and is now fully enrolled.
Speaker 5: It can be a chronic and debilitating side effect of cancer treatment.
Speaker 5: An NIH and National Cancer Institute funded multi-center double-glide and randomized sham-control trial has been underway for the past couple of years and is not fully enrolled.
Closure of study results will take some time, but preliminary findings could come out before the end of the year or the first half of next year.
Speaker 5: The disclosure of study results will take some time, but preliminary findings could come out before the end of the year or the first half of next year. The first half of next year. The first half of next year.
If the results are positive and we expect to file a de novo request to the FDA in 2023.
Speaker 5: If the results are positive, then we expect to file a D-NOW request to the FDA in 2023.
And as a reminder, we received FDA breakthrough designation for treating moderate to severe <unk> in January of this year.
Speaker 5: And as a reminder, we received FDA breakthrough designation for treating moderate to severe CPN in January of this year.
We have other pilot studies ongoing or starting soon and long COVID-19 and what is called COPD or chronic overlapping pain conditions.
Speaker 5: We have other pilot studies ongoing or starting soon in Long COVID and what is called COPC or Chrotic Overlapping Pain Conditions. The pilot studies on the Chrotic Overlapping Pain Conditions.
Many individuals with long COVID-19 experienced symptoms similar to fibromyalgia and therefore, we have potthast size that quell will be beneficial in this population.
Speaker 5: Many individuals with long COVID experience symptoms, similar to fibromyalgia, and therefore we hypothesize that Kuala Wild is that a medical Rocky which had a critical impact, part of every Chicken Care which had been a medical illness that will feed the skin? into the most self protected organs and relics control research. The critical situation impact symptoms, the sonic hemisphere has the you
<unk> is a set of common health conditions that often occur together at the same patient includes fibromyalgia chronic low back pain migraine.
Speaker 5: COPC is a set of common health conditions that often occur together at the same patient and includes fibromyalgia, chronicle, back pain, migraine.
Temporary <unk> joint disorder, and irritable bowel syndrome. These conditions are thought to share a common pathological process. It is called central sensitization, which is a state which is a state in which the brand over amplifies pain and other sensory signals.
Speaker 5: Temperament, diberial, or joint disorder, and irritable bowel syndrome. These conditions are thought to share a common pathological process that is called central sensitization, which is a state, which is a state in which the brain over-amplifies pain and other sensory signals.
We have passed the size of that coil decrease the central sensitization, and therefore may be beneficial in this overall syndrome.
Speaker 5: We hypothesize that Coel decrease essential sensitization and therefore may be beneficial in this overall syndrome.
And that concludes our prepared comments and we'd be happy to take questions at this point.
Thank you if you'd like to ask a question. Please press Star then one.
Speaker 5: And that concludes our prepared comments to the behalf of the questions at this point.
Speaker 3: Thank you. If you'd like to ask a question, please press star then one.
Again, Thats star one to ask a question.
Speaker 3: Again, that's star one to ask a question.
I'm not showing any questions at this time I would like to turn the call back over to Dr. Giussani for any closing remarks.
Speaker 3: I'm not showing any questions at this time. I'd like to turn the call back over to Dr. Ghazani for any closing remarks.
Thank you for joining us today, and we look forward to keeping you updated over the balance of the year.
Speaker 5: Thank you for joining us today and we look forward to keeping you updated over the balance of the year.
This concludes the program you may now disconnect everyone have a great day.
Speaker 3: This concludes the program. You may now disconnect. Everyone, have a great day.
[music].
Speaker 1: I.
[music].
What.
[music].