Q3 2023 Biotricity Inc Earnings Call
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Greetings and welcome to the Biocryst <unk> first fiscal third quarter 2023 conference call. At this time all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad as a reminder, this.
The conference is being recorded I will now turn the call over to Debra Chen Investor Relations.
Good afternoon, everyone and welcome to bio Trinity's fiscal 2023 third quarter earnings call. As a reminder of Biocryst third fiscal 2023 quarter ended on December 31st 2022. So all figures presented for this period will reflect that and take that.
<unk> bio Tricipher issued its fiscal 2023 third quarter results press release, which highlighted financial results a.
A copy of the press release is available on the Investor Relations section of Biocryst. These website and full financials will be filed with the SEC on Form 10-Q posted on Edgar.
At SEC Gov.
Before we begin the companys 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 any such statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected in these forward looking statements by <unk> does not undertake.
To update any forward looking statements, except as required at this point I am pleased to turn the call over to <unk> founder and CEO Doctor what costs I'll speak. Please go ahead.
Thank you Debra and thank you everybody for joining us today I welcome you to our third quarter fiscal 2023 teleconference.
Is that prepared for this call I reviewed my teleconference notes from our fiscal year 2022 third quarter, a year ago and reminds me how incredibly far we've come in just 12 months.
It's easy natural that we momentarily lose side of this when focusing on the day to day, driving marketing initiatives and monitoring Rois building sales intervene for team expansion evaluating distributors and negotiating contracts all while closely watching our cash flow.
Just a year ago, we were still finishing and introducing our new products building out our cloud base biosphere, raising capital and training and fresh team members.
A year ago, we operate in 2016 today, we operate in 32 states.
Over the past year with our product launches and service introductions and upgrades, we have increased our total addressable market.
35 times from $1 billion to $35 billion.
Just our bio flex in biotech solutions alone address the market valued at $6 billion. We believe we are in the right place at the right time.
Today, we are recognized as a leader in providing state of the art remote cardiac monitoring devices combined with a sophisticated cloud ecosystem for data aggregation and AI capabilities that meet the needs of customers ranging from cardiologist to consumers all of whom desire less expensive more convenient and deeper data on heart health and wellness.
To date, our focus is largely on sales and marketing we have achieved an enviable customer retention of about 98%, which reflects the excellence of our proprietary hardware and cloud based services as well as our customer service support which is an often overlooked component of our success compared with other players in our space.
That high retention rate directly in geometrically increases our growing reoccurring technology the service revenue.
As heart disease is typically chronic and ultimately progressive our customer retention rate is a valuable leading indicator for raising our customer's lifetime value.
We believe it distinctly summarizes our strong competitive advantages.
What has not changed in the past year, Northern founding Biocryst City is a passion I and everyone. At Biocryst that you have for this business to win to disrupt to succeed and to positively transform cardiac care efficacy and outcomes.
<unk>, our long term goal remains unchanged from that seemed a year ago, the collapsed cardiac services within clinics and hospitals each one ecosystem.
Our biosphere, so that doctors are using our ecosystem not just to deliver diagnostics, but also for disease management remote management and telemedicine all in one place.
This is the future of medicine, and the future of Biocryst City.
In short I, Christy has grown by a huge leaps and bounds in the past 12 months setting us up for increasing growth ahead.
I'll now spend a few minutes covering our recent operational progress and our near and long term operational strategies.
As before we only pursue markets, where we are confident reimbursement exists upselling, our growing suite of services remains an important component of our sales strategy.
Technologically we are increasingly leaning into AI with its data and predictive capabilities to create better and faster analytics and data delivery targeting more pervasive forms of patient monitoring and lifestyle management.
Over the past three months, our most important strategic development has been the signing of three distribution agreements with two leading U S marketing and distribution partners and one group purchasing organization otherwise known as a GPO.
All three are prominent leaders with high visibility and market coverage in our sector in total just in the U S alone they cover over $20 billion in yearly purchasing.
While I regret not being able to name them at this time I can tell you. They are named everyone in the industry knows we're not naming them strictly for competitive reasons at this early launch of our distribution strategy.
We are also actively evaluating and in some cases negotiating with other medical device just few beers have geographic or vertical coverage that complements our existing distribution networks to further expand our distribution strategy.
Additionally to drive sales we are actively engaged in marketing initiatives that include a highly targeted advertising both in social and conventional media and trade shows and industry conferences and indirect marketing with our current engage and prospective physicians clinics and hospitals.
Further we are selectively adding sales professionals from the top of their field and to our team to increase our market coverage and penetration.
Our bylaws for your products and services are best filled with an in person demonstration so with COVID-19 concerns largely faded I now expect an increase in our sales teams number of in person demonstration of appointments with physicians and clinic and hospital purchasing managers that will help drive continued growth.
In fact passed sequentially flat sales in part reflects a reluctance by clinicians to schedule in person sales demonstrations to our advantage. This is now opening up.
Further I should add that our name recognition is infinitely higher than it was just one quarter ago with time magazine naming our biochar device to its list of the best inventions of 2022 and with the prestigious NIH Grant awarded to Biocryst City to further expand our technology with.
With that I'm going to turn it over to our CFO John Antiquities.
Thank you well cost.
For the quarter just ended revenue of $2 5 million was a healthy 27, 4% higher than the corresponding quarter of the prior year up 25% on a year to date basis.
Fluffy component of our technology as a service subscription recurring revenue from bio trillion bio blocks are continuing to ramp and grow both in gross terms and as a percentage of total revenue.
Just as a percentage of our revenue that we collect immediately after we invoice.
Our gross margin in the quarter was 57%, which is in line with our historical average and well above the prior year corresponding quarter or 42, 7%, which was affected by one time business mix impact that quarter.
Our business continues to scale well revenue expansion.
Reaching positive cash flow is a constant focus and we've worked hard to cut back on expenses in terming out of our spend on.
Unsurprisingly, we are data driven so as we gain more granular internal sales and marketing data, we continuously scrutinize and plan for our own R&D as well as our marketing initiatives and this includes the ROI of our individual sales professionals.
With our suite of state of the art products and services are established we balanced our R&D spend with our drive to innovate and lead our industry.
Our third fiscal quarter of 2023, we have reduced our R&D expense by just under 3% from the year ago quarter to $876000. Following from higher R&D activity earlier in the fiscal year, we also improved efficiency and where to reduce G&A by 4% year over year just.
Under $4 4 million for the quarter doing this while supporting a 27% larger base of sales admin and related marketing activities.
But the bottom line by electricity Merit, it's year over year net loss by about one third from seven $3 6 million or 14.9 cents per share to $4 eight 2 million or nine one cents per share we continue to pursue a path towards profitability I believe the next few quarters will indicated.
Actions are already growing revenue growth trajectory.
We are actively working on closing debt financing that will add the music capital to our balance sheet to get us there.
At this point I will turn the call back over to bill costs for his closing comments.
Thank you John for that report and we are doing an excellent job managing our finances to reduce cash burn while we build the company and its sales to achieve positive cash flow.
Our healthy gross margin is an important leading indicator of our future profitability and we believe that our business scales well are far higher marketplace name recognition and brand value maybe difficult to quantify but we are seeing it anecdotally in our internal sales and distribution reports from the field.
With our recently implemented U S distribution agreements covering large swaths of the $35 billion market.
I am quite confident of our positioning and outlook ahead with that I would like to open up the call for questions.
Thank you we will now be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May press star two if you'd like to remove your question from the queue for participants using speaker equipment and may be necessary to pick up your handset before pressing the sarkies one moment. Please.
While we poll for questions.
Thank you. Our first question is from Kevin Dede with H C. Wainwright. Please proceed with your question.
Oh of course, how are you.
Hi, John .
Hey, Ken.
You mentioned a high retention rate.
I missed the number that you offer and I was hoping you might have something that you can compare it to and maybe offer a little insight on why you see it as a leading indicator.
Yes sure so.
The number that we said with 98%.
And the reason, we say, it's a leading indicator is because.
Our customer retention rate essentially we're on technology as a service model. So a high retention rate is high and we continue to close the customers forward looking it gives us an indication of maintain.
Maintaining that revenue.
Our first part of the <unk>.
Months forward looking.
And do you have a comparison like maybe from a year ago or probably not right because it's.
We can yes, we have not actually Dan a comparison as it is a good metric that we should start tracking and we could probably go historically and do that.
Sure.
Our retention rate has always been high but that's a very good point and we will take it under consideration and I think that it would be it would be useful for people to see.
And I think that the result is going to be something that is.
Going to look very similar.
I know youre not comfortable releasing the names of your distribution partners. The new one with World class that you spoke to three of them.
Is there a chance, though you can maybe offer a little more detail on.
There.
The breadth of their business and how it might take you I think you said 32 states beyond 32 states.
And maybe whether or not you think there is any cannibalization given that they're not necessarily the same types of businesses I'm wondering.
How.
Their customers might see their offering with you included.
Yeah for sure so.
This is early days and this is why we wanted to kind of.
So you see the traction and the distribution partners first before we start providing more information and guidance on it what I can say is that they are.
Across the entire United States, So it'll give us national exposure almost immediately.
In terms of cannibalization, we've mapped it out so.
They are aware of our customer list and we have to it's not a.
And on organized distribution relationships at very organized tightly integrated relationship. So we're very excited about it.
And in terms of their business.
These organizations are also switching over and Theyre looking for SaaS like model right. So there have.
Some commodity business distributions distributors are often selling.
Product that is either a commodity or a consumable that's it.
They're inside of these facilities on a regular basis.
And what it gives it gives to us, whereas our sales force is very focused on the cardiology network and specialty groups and multiple groups. There is application for cardiac diagnostics.
Beyond those particular areas.
Obviously for those areas the volume of cardiac studies is lower and so partnering with distribution partners that have a much wider scope and a lot more resources to go after the different types of clinics that exist. So.
Even though the cardiac volume is lower.
They had the ability they're selling other things in terms of their portfolio. So it becomes a more advantageous for us because those are markets that we werent even looking at.
Okay that sounds great.
Could you sort of address that.
Same question, though by product type that <unk> offering given though the holter and <unk>.
Yes for sure so.
The holter product in the Biofuels.
A great example, right like the GP market right in general practitioner market and the smaller clients, we don't really focus on them.
Because they don't have the volume.
They might have a few devices. Each now of course as you scale that up and you have hundreds and hundreds of clinics to the volume becomes very meaningful.
With the with the company of our size, we focus on the higher volume lower hanging fruit right, which is the cardiac centers of specialty groups, and where we have higher volume and so.
That's advantageous for products like <unk>.
On the other side is the <unk>.
Using the same product analogy. If you are going into the hospital systems right. The hospital system, you have to be on contract with them.
Do you have many.
Many offices, they sometimes have outpatient centers they have multiple sites. So they are using these products across multiple sites.
And the purchasing and the integration into their ecosystem and that whole aspect of getting on contract is a process. When you have a distributor that is already on contract that can move that product in the understand how the supply chain works.
And they've got staff that that is supporting that entire ecosystem and all of their specialty and sub clinics.
It becomes a much easier and faster sales cycle for us. So in our case, we can we can focus on the areas that we have relationships and where we don't have relationships and the opportunity is and the sales cycle is longer.
Let our distributor.
Take the mantle on in those cases.
Okay Alright.
As you look.
Forward, I know youre, not comfortable offering guidance, but.
Could you give us your insight on how you see overarching.
Market growth rate given this general trend to do outpatient monitoring and how you see.
<unk> products stacking up against competitors given.
It just seems that the.
The potential of the market is attracting lots of other technology providers.
Yeah, I think that.
Of course, the market is growing.
We know that post Covid post COVID-19.
They talked about how this is the trend everything shifting this way it's more cost effective for the health care system. So we know we know anecdotally we know from what we're seeing that there is certainly a shift in the marketplace and then that outpatient is the approach now in terms of when you. When you look at a market like that yes. There are people that are getting attracted to this space.
Looking at it and Theyre trying to get in.
What we focus on from a technological perspective, as we try to really focus on best in class technology, Our technologies All award winning but we don't rest.
On our on our tails. If you will right. If you look at the number of FDA clearance is the number of FTE filings that we do we're constantly innovating and we are upgrading and we're making changes to our platform and our solution and it's an entire ecosystem.
And I think that that.
<unk>.
It is very clear when you look at some of the awards and accolades that we that we've got in the space in terms of other people are jumping in do you have to start.
And position themselves and we have.
A lot of data, which we are applying from a deep learning from an AI perspective from optimizing our algorithm. So it's been a space that we've been so Ken somebody coming in and compete yes.
They can they first have to meet us.
Technically, which so far nobody has right on the on the <unk> side.
They are still using third party cell phone communicated with you don't have a full encompassing device and we are constantly updating that platform as well.
People that got caught up in the <unk> and DLP issue, we didnt have that issue because we have our own FCC I'd in the biotech device, we're seeing tens and tens of patch monitors, but they're all one channel devices, they're happening.
Custom electrodes.
The custom electrodes are cheap, but it's still a problem in manufacturing and a whole cycle that you have to deal with we don't have to deal with that because where we're using standard electrodes.
We're focusing on three channels, which provides a better clinical quality and more data and so if you. If everything is equal a physician will always pick three channel device over a wide channel device because youre diagnostic yield is better and so if we focus on the clinic and the clinical aspects and the technical aspects.
And we continue to keep our eyes on that I think will continue to continue to succeed so far we're a leader and that means that we cannot rest we just need to maintain that lead so were seeing the opportunity. We're seeing other people jumping in but so far nobody has really.
Come to us and be detecting me and I think that goes back to our retention rate like we've been in the market for about four years now.
We're not losing customers ciena. So all of these guys are coming into going after the going after this space why are they not able to boot us out right and the reason is because we are technically superior were clinically superior we're constantly updating and were also going deeper into the accounts with our product portfolio.
Last question for me what was you mentioned a couple of times.
No I know, it's right. It's the rage Buzz word on Chad GDP right, but can you.
I am assured that youre not trying to integrate that can you just give us a little more insight on how youre using AI.
And how you think it'll help differentiate your solution.
Yes, I mean part of this is proprietary right. So all I'll give you a higher level of response, perhaps.
So look we don't think people are looking at AI.
In all types of different ways right. So I would I would say that we use AI in three or four different ways right and we really look at it from an <unk>.
Application applied perspective, right. So what do I mean by that right. So first thing is.
Can you just hold deep learning piece right and deep learning is how do we look at our.
Data insights and understand where is our algorithm performing well and whereas our algorithm not performing well. So we can optimize our algorithm right and so that's a deep learning piece you take the datasets that you already have which are based on your device right because when we first launched our device our datasets were based on.
That was some clinical data and some data that was provided by the FDA now we've got our own data set right after it.
Hundreds of thousands of patients we have our data set which allows us to understand exactly how.
Our algorithms are working with our devices and we use that to understand and get insights and analyze us to update all our algorithms and how that works. So that's that's really about.
Detection and understanding what to focus the physicians timeline now why is that important because.
The more data you provided a physician the last time they have so if you can if you can make it more focused and more accurate every little bit helps from a scalability perspective. The other area that we look at AI has nothing to do with our device and our technology, it's really about internal automation and making things more seamless.
And simplified from an internal process level, so that allows us to get operational efficiencies. So we need less people to support right and what that means is the patient has an issue we understand that patients are having.
A question about.
How to charge the device for example, right do we really need a tech a level one tech support to respond to that or can we have an AI bot that is going in and responding to that great.
Can we do a lot of remote troubleshooting and an automated form factor is one of our customers physicians and nurses, they're asking a question how do we automate and supply.
Responses to that and in a faster way.
And then the last piece of where.
Where we are looking at.
The application of AI is really in the world of and this is more of our future stuff that we're working on is we understand what the nurses doing right. So how can we support the nurse. So if the nurses supporting let's say 25 patients on cardiac studies on a monthly basis.
How do we get that nurse to support 50, or 75 rate and the way we do that is by understanding how the nurses working in our system and our workflow and automate as much of that as possible. So that's really.
Trying to build a.
Digital nurse that is supporting the physical nurse. So that's kind of the areas that we are applying AI. It is very operational.
Very efficiency oriented and it's very specific to our business and our workflow and then of course to our technology.
Thank you Sir appreciate it.
Always.
Thank you there are no further questions at this time I'd like to turn the floor back over to well costs.
For any closing comments.
Thank you everybody for joining our call. We appreciate you guys attending and taking time out of your busy schedule is there any other questions that pop up or that we can help answer please feel free to reach out to US. We are always available you can reach out.
Investors at Biocryst that your dot com or reach out to any of our social channels for Lincoln channels. Thank you very much.
This concludes today's conference you may disconnect your lines at this time. Thank you for your participation.