Q3 2022 ENDRA Life Sciences Inc Earnings Call

Good day and welcome to the intra life Sciences third quarter.

2022 financial results conference call.

All participants will be in a listen only mode. So do you need assistance. Please signal conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. You ask a question you May Press Star then one on your telephone keypad and to withdraw your question. Please press Star then two please note. This event is being recorded I would now like to.

Turn the conference over to MS. Yvonne Briggs. Please go ahead.

Thank you operator, this is Yvonne Briggs, but that law Jay good afternoon, and welcome to interest third quarter 2022 business update and financial results Conference call earlier today, and you issued a press release on this topic, which is available in the investors section of Antares website.

Before we begin please note that today's discussion will include forward looking statements.

All statements by management other than statements of historical facts, including statements regarding the company's strategies financial condition operations costs plans and objectives as well as anticipated results of development and commercialization efforts the timing of clinical studies potential partnership opportunities.

And expectations regarding regulatory processes.

Receipt of required regulatory clearances and product launches are forward looking statements.

That's required by federal Securities laws, the company disclaims any obligation to update or revise any forward looking statements.

Please refer to the company's Form 10-K for the 2021 fiscal year and subsequent forms 10-Q for more information about risks and uncertainties related to forward looking statements.

In terms of the structure of today's call Francois Michelle on Chairman and Chief Executive Officer will begin the prepared remarks, followed by Michael threaten interest Chief Technology Officer, Mr. Thornton will be followed by Renault Malibu T Andrews, Chief Commercial Officer, and then arena Petro <unk> Senior director of Finance will review it.

The third quarter financial results with that said I will now turn the call over to Francois Michelle on Francois.

Thank you Yvonne and good afternoon, everyone. Thanks for joining us today to discuss <unk> third quarter financial results and business highlights.

Today, we'll review the progress we're making on many fronts to advance our thermal acoustic enhanced ultrasound system known as tariffs.

I'd like to start by underscoring that the collection of high quality clinical data.

That validate the Tia system is the top priority for Andrew.

These data will enable a compelling U S regulatory submission will also support global commercialization.

In the meantime, we're continuing to build awareness of our <unk> system with a steady cadence of marketing activities in Europe , and the U S and importantly, our balance sheet remains strong to enable the achievement of several significant milestones.

As wave background.

He is a proprietary technology platform.

With an initial application focused on accurately measuring liver fat.

For the early assessment of non alcoholic fatty liver disease notices novelty.

Which affects over 1 billion people globally.

<unk> allows for the noninvasive visualization of tissues in ways similar to an MRI.

At the point of patient care and at about 150th the cost.

<unk> was approved for sale in countries that recognize the CE mark including those in the European Union and in the U S. We're diligently working towards submitting a de novo request to the FDA.

Admittedly, it's taking longer than we expected to achieve our clinical milestones.

Partly because COVID-19 restricted or even halted work at our partner clinical sites for the better part of two years and also because Andrew is developing a completely new and game changing technology, which naturally comes with some challenges.

But as you'll hear from Mike sorted in a minute, we're making strong progress on the clinical data front and as you'll hear from Renault malleability, we're maintaining an excellent cadence of marketing activities to build awareness of our T. S fatty liver technology, among prospective customers in Europe and the U S.

We also continue to enhance our intellectual property portfolio to protect our technology for multiple applications.

In the third quarter, we had eight patents issued and now have a total of 56 patents issued globally.

Several recent Andrew patents focus on novel cloud enabled connectivity of medical devices, including Andrus payer system, and we're pursuing potential licensing opportunities for this technology to help other companies collect data from their equipment, such as laboratory equipment, which may not have a direct internet connect.

Sure.

Yeah.

On a separate point, we recently announced the special shareholder meeting to approve a reverse split of our stock.

And I want to make it very clear.

The reverse split is proposed to maintain compliance with NASDAQ listing requirements and.

And there was no capital raise connected with Andrew's reverse split.

Okay now over to Mike <unk>, Mike.

Thank you Francois let me summarize what we've accomplished particularly where we are currently and what we can expect in the near term.

In 2019, we conducted a first in human feasibility study for a thermal acoustic liver application at that time that had previously been some academic research and preclinical work in the field of thermal acoustics.

But very little clinical work in humans had been performed.

On the breast cancer research by Dr. Robert Kruger and colleagues in the late nineties and none.

For fatty liver applications.

Andrew its feasibility study with 19 human subjects provided an insight into the potential performance of our thermal acoustic application for fatty liver assessment.

So far this year using our clinically targeted platform.

Our clinical study sites have obtained 95 study participant exams, that's nearly double the number that we shared in our Q2 update.

We know that the payer system has low measurement variation based on instrument repeat ability and reproducibility studies.

This means that the Panther instrument provides consistent measurement day to day and across individually manufacturers.

Rices.

Those studies show variation is less than 3% for the Stewart.

Now we see that some of our clinical study users are also able to obtain clinical payoffs measurements repeatedly and with good reproducibility.

However, we've identified some user variability and recognize that additional interactive guidance tools will enable consistent user performance across clinical sites.

Typically.

We have updated the instructions for use and added interactive graphical user feedback it will guide users and positioning the <unk> probe, enabling users to obtain measurements more reliably and with higher repeatability.

We expect.

Subsequent iterations of the user guidance tool will leverage machine learning and other AI approaches to further improve.

The intra and inter operator performance with our system.

So what's ahead in.

In addition to deploying the use of guidance tools, we will work with our current clinical study sites to complete the data collection for our U S regulatory submission.

We will then begin activating additional study sites to build the clinical evidence in support of our commercialization efforts.

As Francois mentioned, well, it's taken longer than we expected to achieve our clinical milestones. We believe the additional effort to ensure repeatability and reproducibility across clinical site is essential.

Our successful FDA submission.

The longer term.

It will also provide our nose commercial team with the clinical data to support commercialization.

I'll now turn the call over to Renault Mellow Berkley.

No.

Okay.

Yeah.

Thanks, Mike.

Last week as part of <unk> ongoing marketing activities.

Scott and I attended and draws 11 clinical meeting of the year. The American Association for the study of liver disease known as <unk> in Washington D C.

<unk> is the most important liver disease conference in the U S attracting well over 8000 clinicians and industry participants.

This was the first time in three years that the conference was held in person. So the meeting was packed and high energy and we were able to demonstrate our T assistant with good number of potential customers.

Andrew also sponsored a well attended presentation by two leading Herpetologist, Dr. Raj Malik and up to Chris Cowardly understate of diagnostics and therapeutics in liver disease. This presentation are available on <unk> website.

At <unk>, we also met with headcount pharmaceuticals, and the partnership remains strong.

With both companies looking forward to deploying rte assistant as a screening tool as hippie on ramps up their phase two b clinical site.

The three things things, we took away from the <unk> meeting with which reflect broader market trends were.

First with well over 1 billion people affected by natural be Nash growing at a 12% to 15% annually.

There is a growing unmet clinical need for accessible high quality noninvasive diagnostics to identify patients early window diseases reversible.

MRI used too costly and liver biopsies invasive and increasingly suspected of sampling and an interpreter errors.

We did notice a number of new diagnostic entrance in D. S. L D. But most added nothing new to existing ultrasound technologies, such as attenuation. So we feel very good about the continued differentiation of <unk> technology versus competitive alternatives.

Second we heard a lot of discussion about how liver biopsy, maybe a bottleneck of pharma therapeutic development in delivery space.

In other words, if you're using an endpoint measurement tool that is prone to sampling and interpreted error like biopsy, you may not be making optimal decisions about which drugs to advance our two stock.

Despite this it was encouraging to see positive clinical.

Results from Nashville, Dinesh therapeutic companies, such as <unk> on the Lam and Ah Chi-rho all of which.

Could assist in expanding the market for Ts.

Currently there are no FDA approved drugs for novelty dash.

And third naphthalene Nash is increasingly viewed as a multi disciplinary disease as the intersection at the intersection of Radiology Herpetology Endocrinology General practice, bariatric surgery, and even psychology for lifestyle and weight loss.

That's great for and draw because it broadens the market opportunity to deploy our technology outside radiology and herpetology into endocrinology and primary care settings, where checking liver fat should be as routine as checking blood pressure and cholesterol.

Yeah.

Sure.

So if you distill. These these three points you see that and drives goals of providing a high quality non invasive diagnostic tool is a current increasingly relevant for patients across a growing range of clinical care steadying and also for pharmaceutical developers and <unk> in the medium term.

As Mike and the clinical team build the body of clinical evidence that will be essential to our T cells activity on the ground in Europe and drives remaining flexible in our sales efforts by offering rental and lease options. In addition to direct capital purchases.

For the Tia system.

We believe this range of purchase options combined with the clinical data and the continued market need for a better diagnosis diagnostic tool for novelty across a range of high value value clinical segment will ultimately lead to our first sales and revenues.

Now I'd like to turn the call over to <unk> to review the financial results for the third quarter of 2020 to Irina.

Thank you Irina.

Our financial results for the third quarter of 2022 are as follows.

For the quarter ended September 32022, our operating expenses increased to three $4 million from $2 $7 million for the same period in 2021.

The increase was primarily due to higher spending for a commercialization of cats and ongoing product development.

Our research and development expense increased year over year by approximately $660000 due to ongoing product development work.

Our sales and marketing expenses increased by approximately $140000 for the quarter as we began to expand our sales and marketing efforts as well not just described including attending a growing number of medical conferences.

General and administrative expenses decreased by approximately $35000 due to lower payroll expenses.

Our net loss per share for the 2022 third quarter with five cent.

With a net loss of six cents per share a year ago.

Well continue to maintain our asset light operating model with pregnant hires in our operations team in anticipation of catch your breath.

As they execute our regulatory and commercial strategy for kit, but plan to just the expense structure Accordingly, and support of this extra days.

As of September 32022, we had cash and cash equivalents of $8 million.

With our current balance sheet, what are the liberal wild capitalized with cash runway to support the submission of our de Novo request, but they empty and continued congressional activity in Europe .

Now I'll turn the call back defense Huh.

Thanks, very much arena Renault and Mike.

In closing your the three key messages I want listeners to take away from this call.

First Andrew its primary focus is the effective collection of clinical data to enable both a successful U S regulatory submission in the short term and strong global commercialization over the long term, we're making excellent progress in this area as you heard from Mike with 95 scans a year to date nearly doubling our scan.

Since Q2.

Second we're maintaining a steady cadence of marketing activities to build awareness of artists technology with a growing number of clinical specialties in Europe and the U S. We've participated in 11 clinical conferences this year versus eight Congresses last year and our customer database now includes over 5000 clinician.

That we continue to cultivate across the globe.

Third we have a strong balance sheet that we believe will enable us to achieve several important milestones, including ramping up commercial activities in Europe , and submitting our de Novo regulatory filings in the U S.

With that overview I'd like to turn the call over to our listeners for questions operator.

We will now begin the question and answer session.

To ask a question you May Press Star then one on your Touchtone phone.

If youre using a speakerphone please pick up your handset before pressing the keys and to withdraw your question. Please press Star then two and at this time, we'll pause momentarily to assemble our roster.

And the first question will come from Edward Woo with <unk> capital. Please go ahead.

Yes, congratulations on the progress as you attended all these various conferences have you noticed any change in people being concerned about the macro environment.

Yeah.

Well, thanks listen I'm going to ask also my my colleagues to weigh and since we've been sharing the.

Burdening the in the market going out to these.

Conferences, Yeah, I think there's a growing optimism.

That wasn't there a year ago I mean, while there is a little more reality setting in R&D.

Mania that perhaps was in place pre COVID-19 about therapies for Napa Nash as we mentioned there is a realization that the main measurement tool for endpoints biopsies may maybe so stringent or prone to error that it may be hampering some development, where we're really excited about.

The progress with some companies like <unk> and others are making so I think overall there there's a realistic optimism that's building.

As you heard also from Renault the the macro epidemiology is daunting I mean, it's.

Well over 1 billion people affected growing in double digits. So for.

For us centrally located we don't really care what drugs succeed we hope many do but we're agnostic to that that will precipitate even more the need to screen. These patients put them on therapies and then monitor the results and we hope that Andrew can play a central role there so.

Aside from other factors that we can't control such as supply chain.

Interest rates, we think that in our space the clinical need remains large and a hungry clinicians are eager and in fact more are weighing in on this metabolic diseases Renaud mentioned, it's really becoming a multi disciplinary view of the disease. So primary care endocrinology.

Bariatrics surgery, and many others are increasingly aware and interested in treating this obesity and liver epidemic.

So we think that we continue to be very well placed in that despite the micro and macro trends.

Mike Jordan, perhaps you have some another perspective or you could add some more color to that from your time in the field.

Okay.

Sure. Thanks Francois.

Broadly endocrinology diabetologist she obesity specialists.

These conditions continue to be excited about our point of care fatty liver assessment tool that's cost effective.

You heard about the clinical need it's clear and we're excited about what our technology has the potential to uniquely do for liver and metabolic Hill.

I hope that touches on most of what you were asking yes.

Thank you very much.

My last quick question is congratulations on a 95 tests scans that you got year to date.

Have you guys been able to really.

Develop learnings and experience. So that's the next 95 would be significantly faster.

Get more comfortable with the system.

Let me again turn that over to Mike who is leading that effort if you would like.

Yeah. So first of all mentioned, we continue to remain focused on our target of 200.

But clearly achieving that goal depends not only on our.

Users' comfort.

With the device, but also the availability of MRI time and study subject recruitment, which.

Can vary from site to site, that's what we've seen.

You know one thing I want to be clear about is we are targeting 200 or more scans to support our commercialization efforts, but we don't believe we'll need.

200 scanners to complete our de Novo submission.

We're supporting our clinical investigation.

The Gators insights in every possible way to collect that necessary data effectively I think.

Some of what I talked about the great feedback, we get from our current sites.

It's a new technology, that's really critical.

Critical and these guidance tools are going to.

Drive engagement and.

Reliability and effectiveness. So we're excited.

Great well, thanks, Mike My question.

And I wish you guys. Good luck. Thank you.

Thank you Ed covered a lot of ground.

I don't see any other questions in queue. Operator, so I think we can wrap up the call and.

With respect everyones time.

Well. This concludes our question and answer session I would like to turn the conference back over to Mr. Fence Francois Mitchell on for any closing remarks.

Thanks, Chuck and again, just a quick thank you to everyone listening today. Thank you to all our listeners new and historical.

Association and also thank you to the Andrew team, who are working in a very lean and focused way to bring game changing technology to the marketplace. We look forward to speaking with all of you again at our next quarterly conference call and we wish you a good evening. Thank you.

The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

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