Helius Medical Technologies Inc. Q1 2023 Earnings Call
Speaker 2: Good day, and thank you for standing by. Welcome to the Helios Medical Technologies Inc. Quarter 1, 2023 Earnings Conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 1 1 on your telephone.
Speaker 2: You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Michelle STUDIO of Inside Communications.
Speaker 2: Vine is now yours. Thank you, Garrett.
Speaker 3: Thank you, Gerald. Welcome to the first quarter 2023 earnings conference call for Helios Medical Technologies. This is Michelle Bolsky of Insight Communications, Investor Relations for Helios. With me on today's call are Dane Andreef, Helios Medical's President and Chief Executive Officer and Justin Thiepen, Chief Financial Officer.
Speaker 3: At this time, all participants have been placed in a listen-only mode. Please note that this call is being recorded and access to the webcast can be obtained through the investor section of the HELIUS website at www.heliusemedical.com. Before we begin, I would like to remind everyone that our remarks and responses to your questions today may contain forward-looking statements that are based on the current expectations of management.
Speaker 3: These forward-looking statements involve inherent risks and uncertainties that can cause actual results to differ materially from those indicated, including those identified in the risk factor section of our most recent annual report on Form 10-K and quarterly reports on Form 10-Q . Such factors may be updated from time to time in our other filings with the SEC.
Speaker 3: which are available on our website. All statements made during this call are as of May 11, 2023. We undertake no obligation to publicly update or revise our forward-looking statements as a result of new information, future events, or otherwise, except as required by law. I would now like to turn the call over to Dane Andrie, President and Chief Executive Officer of Helios.
Speaker 4: PONS therapy has been commercially available in the United States for one year and in that time we've seen a steady increase in the number of Americans who've used PONS to treat balance and gain impairment due to multiple sclerosis.
Speaker 4: as well as in the number of registered pawn therapists and physicians who have introduced pawns into their day-to-day practice.
Speaker 4: The ROLO continues and we've consistently seen you incur each week.
Speaker 4: Ponds is the only portable and readily accessible neuro stem therapy with the potential to generate neural plasticity which makes ponds therapy a game changer for those affected by MS.
Speaker 4: On devices are currently on a cash pay basis with a US cash price of $14,500. Discounted substantially from our list price of $25,700, which is comprised of a one-ton cost of $17,800 for the controller plus $7,900 for the mouthpiece.
Speaker 4: As mentioned in last quarter's call, they all can be difficult to predict in their subject to quarterly fluctuations.
Speaker 4: Our first quarter revenue came in below expectations due to a combination of these timing differences, as well as some cannibalization by our Therapeutic Experience Program, otherwise known as PONSTEP, at certain sites, and the short-term impact of refining our processes.
Speaker 4: as we transition to be commerce.
Speaker 4: With that said, we are excited about the potential of PONs to continue gaining traction in the US and our outlook for the year remains unchanged. We project 2023 revenues to exceed 2022. Even as PONs sales in the US are expected to remain on a cash pay basis.
Speaker 4: to achieve our full revenue potential. And we are pleased with the progress we're seeing.
Speaker 4: with the transitional coverage of emerging technology or the P-SAP program, which is CMS's proposed accelerated coverage pathway for new and innovative medical devices.
Speaker 4: In March, a bipartisan Breakthrough Designation Device Bill was reintroduced to Congress and the OMB, which would allow companies with a breakthrough designation to be covered by Medicare for four years.
Speaker 4: PONT has breakthrough designations in both MF and stroke in the U.S. and we are closely monitoring this legislation. While we actively pursue coverage, we are pleased to offer a patient therapy access program or P-PAP so that the cost doesn't have to be a barrier to treating.
Speaker 4: In January , we announced the extension of P-TAP through June of 2023, whereby qualifying patients can purchase unlabeled pawn therapy at an 85% discount callus price.
Speaker 4: We want as many qualifying patients as possible to benefit from pond therapy and cost is just one impediment we are trying to help patients overcome.
Speaker 4: For those suffering walking challenges, simply leaving the house can be a daunting task.
Speaker 4: to bring pines literally closer to the home.
Speaker 4: We recently launched PON Therapy.com, which allows people living with MS who wish to seek PON's treatment to conduct an online health evaluation with qualified medical providers for fill prescriptions and arrange for PON's devices to be delivered directly to their doorsteps.
Speaker 4: The first pawn devices were delivered in January , shortly after the site went by and we've already seen strong adoption. Users appreciate the ability to shorten and streamline the process and achieve quicker a hardware leave.
Speaker 4: We continue to tweak the process and online experience for pond therapy patients and believe this will be the predominant method for cash pay patients to accept pond therapy in the US.
Speaker 4: Ponds devices must be used in conjunction with supervised therapeutic exercise program and quickly matching patients with trained physical therapists is an important part of the process.
Speaker 4: Since introducing an online training portal last year, we've been able to train physical therapists at a quicker pace, which we've patients no longer need to wait months for a trained therapist to be available.
Speaker 4: educating the broader community about the benefits of pond therapy is another key part of
Speaker 4: reaching as many patients as possible. Last month at the American Academy of Neurology, annual meeting in Boston, we exhibited pawns for the first time since its commercial launch. Because of the broader set of indications across North America, we were able to present new real-world efficacy and safety evidence.
Speaker 4: Approximately 70% of stroke patients had a statistically significant improvement in their date. And among them, 28% were no longer at risk of falling. A result of particular significance since routine rehabilitation, physical therapy. A result of particular significance since routine rehabilitation, physical therapy.
Speaker 4: Only provides a meaningful shift in the risk of falling in the one to three percent of strong patients.
Speaker 4: Furthermore, 74% of individuals with traumatic brain injury experience significant improvement in their balance.
Speaker 4: Ponds have authorized the US for MS.
Speaker 4: and has a breakthrough designation for stroke. But this evidence really sheds light on the ability upon therapy to mitigate the impact various life-altering neurological conditions can have on gate and balance.
Speaker 4: This is especially significant. Since according to the CDC, $50 billion is spent each year on medical costs related to non-stado falls and one out of five falls causes a serious injury.
Speaker 4: With that, I'll now turn to our Canadian activities.
Speaker 4: Ponds have been commercially available since 2019 for MS and TBI and was recently authorized for stroke.
Speaker 4: An estimated 878,000 Canadians are currently living with stroke, with more than 89,000 new strokes occurring each year, and gait impairment is a major source of post-stroke disabilities.
Speaker 4: due to stroke, but as I mentioned a moment ago, the broader set of authorizations highlights the therapeutic potential of ponds.
Speaker 4: The real world data we've gathered makes it increasingly evident that PON therapy can provide significant and clinically meaningful improvement in balance and or gate with regardless of the underlying medical condition. In March
Speaker 4: We extended our partnership with Health Tech Connect.
Speaker 4: a leading health technology company specializing in neural technology innovation.
Speaker 4: Our new agreement grants HTC the exclusive right to purchase, market, sell, and distribute pawns throughout the metropolitan Vancouver area subject to certain minimum. HTC has been an important partner for Helius.
Speaker 4: and we're excited to deepen our presence in Vancouver through HCC's network of leading edge neural rehabilitation clinics.
Speaker 4: Now let me turn the call over to Jeff to discuss our first quarter financial results in decal. Thanks, Jane. It is a pleasure to be with all of you today. A revenue for the first quarter of 2023 was $111,000. A decrease of $79,000 compared to $190,000 in the first quarter of 2022. Primarily attributable to lower Canada product sales.
Speaker 4: partially offset by net product sales in the United States. Canada, product sales for the prior year included approximately $120,000 of revenue recognized in connection with the sales of PONs devices.
Speaker 4: under our prior distribution agreement with HTC.
Speaker 4: With the first quarter of 2023, cost of revenue was 122,000 compared to 124,000 for the prior year period, remaining relatively flat due to fixed overhead costs. Operating expenses for the first quarter of 2023.
Speaker 4: decreased by 3.8 million compared to 4.6 million in the first quarter of 2022, due primarily to lower product development expenses. As we transitioned,
Speaker 4: by $3.8 million compared to $4.6 million in the first quarter of 2022, due primarily to lower product development expenses as we transition to U.S. commercialization activities.
Speaker 4: Period. We reported a net loss for the first quarter of 2023 of $2.5 million or a loss of 9 cents per basic and deluded common share compared to a net loss of $4.3 million or a loss of $1.1 at 15 cents per basic and deluded common share for the same period last year. Our cash burn from operations for the first quarter of 2023 was $3.2 million.
Speaker 4: compared to $4.7 million for the first quarter of 2022, reflecting our focus on reducing cash burn and extending our cash runway beyond 2023.
Speaker 4: As of March 31st, 2023, we had $11.3 billion of cash and no debt.
Speaker 4: Turning now to our outlook, the company currently expects second quarter 2023 revenue to be above the prior year quarter and first quarter of 2023 levels, factoring in potential delays for some portion of U.S. patients.
Speaker 4: pursuing insurance coverage prior to filling their prescriptions.
Speaker 2: So we may continue to experience additional quarterly fluctuations as we make refinements to our US commercial grow out of POPs. With that, Gerald, let's now open the call for questions. Thank you. At this time, we will conduct a question and answer session. As a reminder, to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. To draw your question, please press star 11 again.
Speaker 2: Please stand by while we compile the Q&A roster.
Speaker 2: we compile the Q&A roster. One moment, please. Thank you.
Speaker 2: Our first question comes from Johnathan Ashkoth of Roth MKM. Your line is now open.
Speaker 2: Thank you. Good afternoon guys. I guess my first question is for Dane. What's the US reimbursement strategy taking into consideration the importance of CMS's new Cheatset Pathway?
Speaker 5: Yeah, so there are two pathways, Jonathan, and hello, and thank you for your question. It first is the old fashioned pathway of coding and receiving the economic benefits of your codes. We are going for two codes, one for the control, and of course, one for the most people.
Speaker 5: But what's transpiring right now, and it is becoming clear with the reintroduction of the bill to put the breakthrough designation back into TSEC, it would allow us to have a better understanding of the impact of the bill. So, I think that's a good point. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you.
Speaker 5: our first four years for MS to be reimbursed.
Speaker 5: And that would be the fastest and quickest way for us to receive reimbursement under Medicaid.
Speaker 5: Okay. Also, you know, what's your reimbursement strategy in Canada for KVI and stroke? Yep. So right now we are engaged with multiple, not only provincial, but nationwide, private insurers in the TBI area.
Speaker 5: for dozens of companies. Okay. What relevance, if any, does your stroke authorization can it mean for the pathway to US FDA stroke approval? Well, first and foremost, the data that we and our application to health care, we had some outstanding data with I mentioned, 28% reduction in pulse, in stroke versus one to three of just rehab therapy by itself. We'll be hopefully soon here launching our MUSC, the University of South Carolina.
Speaker 5: These key opinion leaders are getting great experience and we hope and look forward to them riding on what they've experienced with their MS patients efficacy and safety due to ponds there. Actually lastly, lastly, you're a quarterly R&D in S-GNA. Either way your cash would work the way you say it is if those expenses are flat quarter over quarter maybe even flat to down. Does that make sense to you? Yeah, this is Jeff. So yes it does. First quarter typically.
Speaker 6: pulled out.
Speaker 5: Thank you guys. That was very helpful.
Speaker 2: See you then. Thank you. Thank you. Thank you. Thank you.
Speaker 4: Our next question comes from Anthony Vendetti of Maxim Group. Your line is now open. Hi, this is Nick Sherwood speaking for Anthony Vendetti. Have you seen any sales or results from the HTC agreement? Yes, so we, again, we renewed that this quarter. We typically don't report sales by customer. Last year, we did have a big.
Speaker 4: revenue component that came out from that agreement. It was kind of more of a one-time type of thing, and we commented on it last year. It had to do with the delivery of the remaining devices that had been of value to security when
part of the original agreement. And so those original devices were included in deferred revenue since that agreement was initially put in place. And so we would report on what came out of the deferred revenue and into revenue each quarter.
But we're not going to necessarily be reporting by customer on a go-forward basis. Thank you for that detail. And do you have the number for how many physical therapists you trained in the first quarter or the total number of physical therapists you've trained through the online training program?
We haven't released those numbers. All I could say is that they're increasing every quarter since we started the new online.
PONDS software to register physical therapists. And that's not only in the US, but we have been offering and training up new therapists and new clinics in Canada as well.
Okay, perfect. Those are all my questions. Thank you for your time and answer them.
Thank you. Thank you. One moment, please..
Hey, thank you. This is actually destiny on for Jeff. We appreciate you taking our questions. I guess I'd like to start with, I guess what was some of the feedback you saw from the physicians and the teachers and all that from the presentations at the neurology meeting? You could just give us an idea of the feedback that you received. I'm sure it was positive, but more detail would be great. Yep, first and foremost, I think Stephanie and you sound so much better than Jeff, but first and foremost, that AAN, which was the last conference we attended. We had a full booth there.
or CMO with their medical affairs, our cell team weren't there. You know, the biggest response was, we didn't know about you guys. We never heard about you guys. Matt, this is amazing. Look at, you know, we had our TV up at our booth and there is a wonderful video.
that was put together from our medical team, how we separate ourselves from the rest of non-implanable devices regarding our mechanisms of action, how we promote the potential of neuroplastic effects.
to your point. So that was the first thing. And the second thing was there was a little bit of misinformation that we corrected immediately. Some neurologists thought you would have to be 14 weeks all in a PT clinic and that is just not true.
The first two weeks are done with your physical therapist, and then the last 12 weeks, you take your device at home and complete your PUNS therapy, your physical exercise regime.
Wow, very interesting. So broader awareness and then kind of, I want to call it, busting submits. That's really interesting. OK. And then maybe I'll just pivot over to your e-commerce strategy. How are you progressing with that? What are any updates you can give us?
So again, the first quarter was a full first quarter. Definitely the way I looked at it is we launched it at year end and we knew that the first new inquiry is coming in.
was a learning experience for us and our partner. We believe over the quarter, especially near the end of the quarter and even into April and May, we're improving the site. We are doing a lot more for the patients and the inquiries starting at the top of the funnel and helping them.
explaining how to get through to the bottom, meaning where they actually check out and use their credit card. There's multiple steps. If you have a prescription, you've already gone to your neurologist, they were getting confused how to get through our funnel.
We believe now that there is a much simpler way if you do have a prescription. If you don't have a prescription, then it's a standard way. Fill out your questionnaire, ask for your telehealth appointment. That usually gets set up within 24-48 hours.
And again, if you are an MF patient with GATE, you potentially could be viable and be approved for the PTAF, the Patient Therapy Access Program. And also we offer
on a volunteer basis to be a part of our registry. And our registered data is very important for us because it's a three year registry. And we are collecting longer term data for our MS patients and the MS community. Not only for the patient, but also.
the neurologist and hopefully the payers. Okay, got it. Thank you for all that. I appreciate it. I think that does it for us. I'll go ahead and jump back in. Thank you. Thanks again. Great. Thanks, Stephanie.
and hopefully the payers. Okay, got it. Thank you for all that. I appreciate it. I think that does it for us. I'll go ahead and jump back in queue. Thanks again. Great. Thanks, Stephanie. Thank you.
At this time, I would now like to turn it back to Dane Undrieff, CEO , for closing remarks. Thanks, Jared. Thank you, everyone, for following Helios Medical Technologies as we continue to bring PON therapy to the millions who need it. We're pleased so far. We've come in the past year and look forward to sharing our progress in the future quarters.
Thank you. Thank you.
Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.