Q1 2023 Biotricity Inc Earnings Call
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Good day and welcome to the bio tragedy difficult first quarter 2023 financial results Conference call Today's conference is being recorded.
At this time I would like to turn the conference over to Valter Pinto managing director of K C. S. Eight strategic communications. Please go ahead.
Good afternoon, everyone. Welcome to Biocryst is fiscal 2023 first quarter financial results Conference call.
As a reminder, biocryst. These fiscal first quarter ended on June 32022, Therefore, all figures presented for this period will reflect that date.
Today, we issued our fiscal 2023 first quarter financial results press release, a copy of this press release is available on the Investor Relations section of our website. Additionally, our financials will be filed with the SEC on Form 10-Q and posted on Edgar.
Before we begin our formal remarks I'd like to remind listeners that today's discussion may contain forward looking statements that reflect management's current views with respect to future events.
Such statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected in these forward looking statements.
<unk> does not undertake to update any forward looking statements except as required.
Now I'd like to turn the call over to Biocryst is founder and CEO Doctor what costs also deep. Please go ahead.
Thank you Walter and thank you everyone for joining today.
Welcome to our first.
Quarter 2023 earnings conference call.
During the first quarter, we continued to advance our product development and commercialization strategy.
In order to position our company as the all in one go to solution for cardiac diagnostic and disease management.
<unk> revenue for fiscal Q1, 2023 continue to come from Bob flux or high precision single unit mobile cardiac telemetry device.
Real time monitoring and transmission of the patients ambulatory ECG diagnostics.
Revenues earned with respect to this device.
Sales and technology fee revenues or technology to service revenue.
During our fiscal first quarter, our revenue increased to $2 1 million I'm pleased that our technology as a service revenue increased to $1 9 million for the quarter year over year, which is a testament to our business model.
This recurring revenue model provides the LNG to the Doctor who can prescribing doctors.
Dr device within the clinic this creates a more streamlined process for the patient.
While also creating an additional revenue stream for the Doctor as our product is fully reimbursable.
Today, we have hundreds of centers across 29 states with over 2000 physicians using our bowflex products.
I was also pleased in our ability to maintain gross model, 60% during the fiscal first quarter gross profit margins can be improved over time as you reduce discounts provided to customers.
We expect that the cost of the devices sold as well as cellular and other costs associated with technology fees will become lower as a percentage of revenues as our business expects.
For moderate to severe cases remote real time model lifesaving tool. However, it is critical we capture the lifecycle of the patient and follow them through their cardiac care journey.
Through our internal innovation capabilities, we set out to build a complete ecosystem that fills in the current gaps in cardiac care.
We commercially launched <unk>, our FDA approved wireless wearable cardiac monitoring device by trade is.
Technology that represents.
The FICO remote patient monitoring and the delivery of real time diagnostic data serves as its really device designed to continue to see record ECG get.
This provides a significant advantage over a conventional one lead patch holter monitor which requires a longer analysis and diagnosis time.
I would say as a complementary product bowflex the key differentiator between these two products is the patient profile that each is designed to serve.
<unk> for high risk patients, which naturally and thankfully results and lower volume of patients.
On the other hand is designed for low risk patients of which are significantly higher volume.
Because <unk> is a high volume product, we will be able to go deeper within our distribution network and also focus on hospital integrated delivering networks.
These integrated delivery networks or hospital networks centralized purchasing for the largest hospital systems in the country and therefore represent asset sale target market.
What <unk> is meant for clinics and specialty groups within an estimated tam of $1 billion.
Thank you to the hospital integrated network and other life distribution outlets as a much larger tam of approximately $5 billion.
Since the internet okay.
Reception has been overwhelmingly positive we are currently collecting data from our early adopters and are strategically launching the product in limited release, while establishing our expansion plans.
Early in 'twenty.
We also launched <unk>, a cardiac monitor now directly available to consumers.
Did your device offers the same continuous harmonics technology used by physicians, allowing patients to manage hard conditions with retrospective snapshots and long term data collection, a true state of the art matter.
The hardest currently available for purchase by consumers at Www Dot <unk> dot com for $199.
We are excited to rollout our ecosystem for the first time cardiologists will have a suite of products available for their patients all within one portal, we have purposely designed our ecosystem in a way that when we bring on new costs. They have full access to the portal, allowing seamless data collection as they adopt new devices for the entire cardiac care journey.
With Bayou flex in biotech in the market today, we have successfully increased our total addressable market from 1 billion to approximately 6%.
More importantly, we have designed scalability with minimal marginal cost into our business model as we can now offer additional products and services to current clients for little to no increased marketing spend.
During the remainder of 2022, we look forward to introducing <unk>, our virtual clinic and disease management platform with secure HIPAA compliant technology, enabling clinicians to provide outstanding patient care remotely ensuring at risk patients and those needing remote cardiac monitoring do not have to leave their homes.
It's user friendly platform ensures seamless integration to the clinics current workflow saving time and reducing costs.
Monthly care, it's a large market opportunity roughly about 35 billion.
We have seen other industries, such as diabetes and be very successful with this model, but no. One has attempted to execute this model in the cardiac space. We are the first.
We are of course at the beginning of this journey, our newly expanded product portfolio combined with the upcoming bio care cleaning platform will enable us to enter this market in the near future cardiac disease, often afflicts patients for the rest of their lives and is the leading.
Now let them across the globe. The current approach to care is often destroying did an unintegrated bankruptcies technology assist the patient throughout their cardiac care journey, beginning with diagnostics monitoring and lifestyle management.
This comprehensive data.
Our approach to help solve some of the major issues in cardiac care today.
And cost effective manner.
I will turn the call over to our CFO John .
Thank you well cost.
During the quarter ended June 32022, the company revenues totaled $2 1 million.
During this period by attrition or incurred a net loss of 5 million or a net loss per common share of <unk> 98 cents.
For the three months ended June 32022.
Christie's net loss included one time expenses related to convertible note conversions as well as one time fair value adjustments on the alert derivative liabilities.
We are pleased that year over year, we saw an increase in 425000 technology sees.
This quarter compared to the prior year quarter, which corresponds to a 30% increase in technology fees.
Gross profit for the fiscal quarter ended June 32022 totaled 1.2 million, yielding a gross profit margin of 60%.
We expect margin to improve as we reduced sales discounts provided to customers in order to generate increased volume sales as were cost mentioned, we expect that the cost of devices sold as well.
Cellular and other costs associated with technology fees to become lower as a percentage of revenues as business sales volumes expand in other words the economies of scale.
Total operating expenses for the fiscal quarter ended June 32022 were $5 7 million compared to $4 2 million for the fiscal quarter ended June 32021.
Our general and administrative expenses for the fiscal quarter ended June 32022 increased to $4 9 million compared to G&A of $3 6 million during the fiscal quarter ended June 32021.
The increase in G&A expenses was a result of investments made by the company and building Thats professional sales force.
That has been our focus.
During the fiscal quarter ended June 32022, we recorded research and development expenses of 821000 compared to 589000 recorded in the fiscal quarter ended June 32021, and the increase in R&D activity is directly related to the development of new technologies for our ecosystem as well as the <unk>.
Element of continuous product enhancements to our existing products.
You can see these developments as we announce various clearances from the FDA that will allow us to commercialize these products.
<unk> ended the fiscal quarter with $7 2 million in cash.
<unk> focused and confident in our fundamental business strategy to innovate commercialize capture share of our fast expanding marketplace and grow revenues. While revenue growth has been strong. We believe the business has great potential for growth, we expect to continue disrupting the cardiac care marketplace for devices and Biosphere cloud.
<unk> subscription services I would now like to turn the call back over to where costs for his closing comments. Thank you.
Thanks, Sean and thank you again for everyone, who has joined our call today, we're more confident than ever that our technology pipeline will produce major growth over the years as we build our cardiac ecosystem to further penetrate and monetize the patient population that we have already touch with our cardiac jeez, a small portion of the cardiac patients.
<unk> Sir.
For our most advanced remote cardiac marketing solutions, we expect our services will follow those customers throughout their lifetime to monitor tectum and ensure they are provided with technologically sophisticated and superior chronic care doing so within our recurring revenue business model is a powerful means to scale the business.
Both revenues and gross margin we are excited for what fiscal years 'twenty 'twenty, three and 'twenty 'twenty four have in store for our company and our shareholders I would now like to open up the call for questions.
Thank you if you'd like to ask a question. Please signal by pressing star one on your telephone keypad, if you're using a speaker phone. Please make sure. Your mute function is turned off to allow your signal to reach our equipment.
Again press Star one to ask a question and we'll pause for a moment to allow everyone an opportunity to signal.
Okay.
We will take our first question from the line of Frank <unk> with Lake Street Capital markets. Please go ahead. Your line is open.
Hey, Thanks for taking my questions I wanted to start with the.
29 states and over 2000 physicians using the product it seems like it ticked up a little bit since last quarter and nice work wanted to understand the utilization opportunity when I say that I'm kind of talking about depth into the accounts. It sounds like you have a lot of breath right now and I assume theres, a really solid utilization opportunity for both bowflex as.
Well as a.
New products out there. So I was hopeful you could provide any commentary or metrics around that to give us a little better color.
Yeah excellent question, Frank So what I'll do is I'll speak to it in a you know in terms of an opportunity. So of course, we're expanding the network and the bio flux.
Cardiac telemetry is and as I indicated in the call higher risk patients. There's a smaller percentage of them in these and these are kind of extending the network.
So you're talking about a typical doctor Who's got about you know 2000 patients how many of them are high risk on a monthly basis, it's going to be 1%, 2%. It's a small small percentage, but as we build our product portfolio.
That product portfolio is complementary and designed to touch the.
Profiles within that clinic, and so that's where we get that depth.
And that increase in utilization and to your point are you know.
And how does that utilization and what does that opportunity look like so when we look at the biotech product. We were and we were talking about early adopters, who are those early adopters that are existing customers, who have lower risk patients.
And we are now offering them bio tray and the same thing's going to happen as we build out our chronic disease management and chronic Ah Ah solutions now in terms of me, giving you.
Numbers and ideas on utilization rates. It's it's early days right now probably you'll hear us talk to that in a you know.
One or two quarters as I as I mentioned.
In my earlier remarks, bio Trey we just launched it. So we're collecting data we have with early adopters what are those utilization rates going to look like across the network, how much better usability and penetration do we get in terms of.
Patient profiles within existing customers.
I think within a quarter or two we will be able to really nail it down what I can what I can say is the premise of that.
Product development.
Approach was.
To go deeper and to increase utilization by creating complementary product portfolios Io trade was the first of that and what I can say is based on our early data that is holding true as well as the interest from from our existing customers. So you know we we we had a strategy we tested that strategy.
<unk> through our surveys into contacting customers that we implemented a product we launched that product. We're now bringing in some revenue from that project, but all of it has lined up with our initial assessment. So I think that that's a positive.
About that are.
Coming down over the next couple of quarters.
Okay. That's great color and then I wanted to ask my next one on the commentary around the idms it sounds like it's a great opportunity to so maybe just.
So I have a little bit deeper into that opportunity and how you're thinking about these contract in conversations as you're looking.
Looking out over the next year or two.
Yeah, absolutely so I D and as you know for those who are not familiar our hospital purchasing groups right, where they are purchasing across multiple network systems.
Of course, the sales cycles on these things are much longer.
And they do take a long long time.
But you know when you go into higher volume product when you go into something like a box or a holter solution.
When you and just anecdotally I'm going to I'm going to go a little bit technical and in the world of cardiac so when you talk about holter monitoring within a hospital system. Its not just a cardiologist and electrophysiologist that utilize that product in fact, the bigger users are the internists right. The G. PS family Medicine Docs and so what ends up happening is that.
The volume in a hospital system generally is not actually coming from the cardiac specialty group is actually coming from the family Medicine, and a G P and the internal stuff and now they have a much less ah patient population in terms of yeah, but I bet. There's just so many more of them and so when you go to the hospital system opportunity. This is why you really.
You need Uh huh.
Holter specific solution for that network and with the biotech has and.
And so that's why we are now really looking at that the biotech product is truly a product that is <unk>.
For the idea in the hospital system a network is just because of the way the physician fishing is set up there and you know the contracting process is very long for sure but our products are unique in terms of what is out there in the holter.
As a market today, and we are able to provide our.
Results much faster and another thing that we have done is we've used standardized.
Disposable.
Elements at the hospitals already purchasing so it's not like they have to purchase our device plus to life.
<unk> the.
The consumable electrodes that theyre already purchasing it gets utilized so I think all of those actually reduce the barriers of course, the idea and strategy is a longer term strategy we have actually.
A couple people that are just focused on building that channel out for their sole job every single day about Christy is to build out that idea in our strategy and that has been a big big shift for us.
And we expect to see fruit from that no longer down the line but.
With our existing network, we can provide the data and the evidence to show the importance and of course show the efficacy of our product because that's another thing I wanted to see what is your footprint. Today have you have you. So I think all of that works.
In tandem together to really put us in a very strong position.
I will be you know and as anybody in health care knows that the the idea and strategy is a longer term play. So we will continue to focus on building out our existing network with our with our sales force and this is an added on add on strategy that is going to be worked on in parallel.
Okay.
Okay, and then maybe just last one gross margin looked really saw it again for the quarter, maybe provide any additional commentary on how new products are going to impact that gross margin profile on a go forward basis.
Yes, so and I think you'll you'll see that there is always a little bit of whenever bringing a new product, there's a little bit of that upfront.
We're cautious call it hardware light, but as as we get to steady state on these products and as we get economies of scale.
Working favorite that upload more of our revenue is going to shift more into the software as a service and technology as a service play so.
I expect our margins to really be where they are and and improve.
You know a little bit, but I'm I expect them to really settle around steady state around the 60 to 60.
60 to mid 60 range, depending on what mix of products.
We ended in terms of percentages right. So if you have it.
<unk> 25 per cent bowflex, 25% powertrain disease Mad at me. So what does that mix look like and that'll that'll indicate what are steady state margins are but I think.
They are going to really stay around here because I know we saw some fluctuation before but now what has certainly happened is that we are becoming more moral either service and software as a service.
Okay. That's good color I'll stop there thanks for taking my questions and congrats on all the progress.
Thank you.
Once again, if you'd like to ask a question Thats Star one.
We'll take our next question from the line of Kevin Dede with H C. Wainwright. Please go ahead. Your line is now open.
Thanks, Hi, John .
If I may can.
Can I just expand on where I think Frank was going is there I.
I mean.
I understand obviously 29 states 2000 physicians.
But is there any other quantitative measure you can offer.
In suggesting the success that you've had in selling through to physicians.
So I guess.
What are what are you exactly trying to ask them.
Like I'm sure I E I can speak to like what is our percentage.
You know shelf control within those physicians. So once we once we deploy like let's say, they're doing mobile cardiac.
We have basically.
I would say in most cases.
Most of these cases, we have 100% of.
Dare mobile cardiac telemetry business right now.
Now with the Holter solution.
No bias us could be used as a whole to products like.
Many of these doctors are still using their commodity holter devices, because those devices are not capable.
The mobile cardiac come to India had already vested or they were using some other holter provider just because you know they weren't really generating a lot of revenue off of the holter.
As it was and so you know the biotech really provides the same type of model, where it actually becomes.
You know our profit centers so.
The expectation is that we will have a control of that shelf with customers. So you know if.
If you're asking about what is the success rate of mobile cardiac telemetry in a doctor. So a few of our 2000 and physicians.
Who else is sitting beside you on that shelf.
I would say.
85, plus percent of those doctors if we in their clinic, we control that shelf right now it takes time right. So one of our customers.
It took us six months to convert just because it's a it was a very big big.
The groups.
And you know we launched with them. It was like 10 15. Please.
But you know over six months, we control the shelf so now any mobile cardiac telemetry.
Do they do with us now.
We're still doing holter.
But we're not using the bio flex for older just the economics didn't work for them on on that device and so now with the bio trade, they're piloting the bio tray and they will end up.
Taking on that shelf, so I can speak to that.
If you're asking me about so it just depends on what linear you're you're looking at like how much of those patients do we it.
It can be conceivably touch well.
Well that all depends on which products.
And what does that mix look like and how we made that product available across the board right. So I can I can see very very openly and candidly about bowflex because we've been in the market.
We have enough data and that's where I can say listing 885, plus customers, we have 100% control of the mobile cardiac telemetry shelf there right.
Will that stand true for okay.
I suspect it will but you know it's early days.
Yeah.
Yeah.
Okay.
What was I think I lost you.
Oh, no I'm here.
Okay, sorry about that okay.
Okay, maybe we could slice it a different way.
I'm sure you don't want to speak to the specifics here, but could you.
Talk to how you framed out your sales teams quotas and how they're measured at least.
From a 20000 foot perspective.
From a 20000 foot.
Perspective mice.
We have a base line rep analysis that we have internal and we cannot assure that Odyssey Ah.
And we benchmark reps against that and we have an expectation that at plan they earn a certain amount of.
Certain salary and if they are at ease that they are opening up a certain amount of clinics and there's a certain revenue targets that they have to meet.
The revenue target their commissions are obviously not that pleasant.
But if they meet those targets their commissions are good.
And if they exceed those they're very good.
Okay could we expect at some point what was that you might speak to the number.
Physician doors that you open.
I mean and in terms of specific terms on a say.
Geez, maybe not monthly, but certainly in the quarter.
And so as we get bigger I think we will we will certainly disclose that information.
With US today is you know I think that that is just competitive Intel that you know why why do you have got out in terms of how many doctors I'm knocking on what is my comp plan look like Iraq, because somebody can go in and offer better comp plan.
Well I don't know I Wouldnt targeting my maths right.
No I just wanted.
Just I.
I guess, just some color on how they're.
Right.
Their targeted.
You were weaponized them.
Hum.
My Rex.
Yes, okay.
That's extremely helpful. Can you talk to now I know, it's still early days with its recent introduction, but can you talk to the synergistic effect that you might be seeing at least.
So far with bio trace and bio flux offered in the combination.
Yeah for sure. So so what I can say.
Cleaning that I was telling you about for six months have been transferred is it is a great example, right. So we went to them and we said well you know bio flux is holter capable right why won't you use the bio flux right and they said look.
Thing right the holter reimbursement for us.
I think it was like 101 hundred Bucks and where they are right and they said.
So we have to invest in your device right.
And then we have a technology fee and realistically with the flow of the patient how long it takes for the patient to come back and go back and whatnot.
Basically they can do to holders right on a monthly basis.
And so the economics on that and this is very specific to this clinic, just because of where they're located how far patients are et cetera, or whatnot, but it's a good example, and so they were using.
Different versions of of Oh, They were certainly using the bioscience certain cases for holter, but they were also using some legacy devices that they had already bought and purchased and then they were also using.
A third party service provider right like as I or a bharti or one of these guys in the marketplace.
We introduced bio tray suddenly, they're like Oh, well this is a much cheaper device.
From a from a purchasing standpoint and did so theyre able to current they're able to justify the turn better economically you started making a lot more sense and so then they ended up making when I can do it at the first or second customers that came in and so that became a very complementary.
Approach for them right, what do they have got a bio flux, they're already using the portal cleaning because already familiar with our ecosystem. The bio trace all the same system same environment, but now that device.
And that economic play in terms of rotation device cost plus reimbursement that they're receiving all of that started lining up like the bio fluctuated with the M. C. Diesel. So you know that's an early day example of something that <unk>.
Complementary customer that gave us all of their business on mobile cardiac telemetry was even using XIAFLEX in some cases for holter, but that last smile without having a holter specific product was not possible and nowadays.
Fair enough for that class of course, all examples won't be like that.
Oh, sorry.
As there are no further questions at this time I will turn the conference back over for any additional or closing remarks.
Thank you everybody for joining the call. If you know as I have you at all there John and I are always available for questions. If you have any question that you know we did not address or did not come up on this call. Please feel free to reach out to the company you will get back to you.
And happy to set up a call. Thank.
Thank you.
Thank you that does conclude today's conference. We thank you for your participation you may now disconnect.
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