Q2 2023 Nyxoah SA Earnings Call
Yes.
Good day, and thank you for standing by and welcome to Nicaragua Second quarter 2023 earnings Conference call. At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session to ask a question. During the session you will need to press star one on your telephone you will then here in the automated mess.
The bodies in your hand is raised to withdraw your question. Please press star. One again, please be advised that today's conference is being recorded now I'd like to hand, I would now like to introduce your host for today's call Makayla Kirkwood Investor Relations and Communications manager. Please go ahead.
Thank you good afternoon, and good evening, everyone and welcome to our earnings call for the second quarter of 2023, I am Mackellar Kirkwood Investor Relations and communications manager at next tower.
From the company today will be Olivier Zelman, Chief Executive Officer, and Lee Brown, Chief Financial Officer.
During the call we will discuss our operating activities and review our second quarter financial results released after you released after U S market closed today.
After which we will host a question and answer session. The press release can be found on the Investor Relations section of our website.
Call is being recorded and will be archived in the events section of the Investor Relations tab of our website.
Before we begin I would like to remind you that any statements that relate to expectations or predictions of future events market trends adults or performance are forward looking statements.
All forward looking statements are based upon our current estimates and various assumptions.
Statements involve material risks and uncertainties that could cause actual results or events material differ from those anticipated or implied by these forward looking statements.
All forward looking statements are based upon current available information and the company assumes no obligation to update these statements.
Accordingly, you should not place undue reliance on these statements for.
For a list of descriptions of the rescue and uncertainties associated with our business. Please refer to the risk factors section of our form 20-F filed with the Securities and Exchange Commission on March 22023.
With that I will now turn the call over to Olivier.
Thank you Mikael good afternoon, and good evening, everyone and thank you for joining us for our second quarter 2023 earnings call.
The evolution of snakes was largely its U S footprint is well underway.
With our current focus on patient follow up.
<unk> pivotal study treatment.
As a reminder, we completed all 115 in lumps in the study earlier this year and expect the he booked 12 months results in the first quarter of 2024.
We are highly confident and dream outcomes based on the over 500.
Hi, its clinical and commercial settings globally, and the dream efficacy and safety data released in a late breaking poster session at sleep 2023 in June .
In the past, we reported efficacy data on the first 34 dream patients, reaching 12 months follow up which demonstrated a 65% HIV sponsor it.
76% ODI responder rates.
Safety data on all patients enrolled in the study, which was in line with our expectation and compared favorable to out of Neuromodulation studies.
As a reminder for the trial to be successful over the 115 patients at least 63% needs to be HIV, an ODI response at the 12 month follow up.
The model of PMA submission continues to progress with our second module being felt during quarter two.
We continue to anticipate submitting the touch module later this year.
And the fourth and final module, which will include 12 months' safety and efficacy data. Shortly after the follow up period is completed early next year.
We remain on track for FDA approval before the end of 2024.
The U S excess pivotal study focused on complete concentric collapse patients continues to evolve.
With <unk> expected to be completed in 2024.
As a reminder.
C patients represent approximately 30% or people, who also neuro stimulation eligible to treat OSA basin work Contra indicated to commercially available <unk> therapy in the U S.
And we look at suitable treatment options, although the major pellet strategy.
The excess primary endpoints of stimulus to the Dream study primary endpoints as Gino has demonstrated similar results in both CCC and non CCC basis.
This has already resulted in a label expansion in Europe , where the first commercial people see patients are being treated.
Commercially this quarter with reported sales of $1 1 million and increased the number of German standards and banking genome to 42.
This is a result of both strong underlying demand for <unk> and commercial investments.
Including direct to consumer online campaigns launched in March as.
As a result of the DTC efforts, we are seeing approximately 50000 monthly website visits and nearly 1700 obstructive sleep apnea patients skull to outline in the second quarter.
Compared to two almost 92 in the first.
Guiding these patients to the appropriate therapy and shortening the time to treatment will contribute to our future success.
Aegean is in Germany remains highly underpenetrated with $1 1 million SIPA persons, yet only 620 <unk> implants last year.
Identifying <unk> refractory patients is the key to unlocking the market potential.
And we are working closely with sleep physicians and other industry participants to ensure this OSA patients receive appropriate therapy.
We continue to position ourselves as an innovation leader in the OSA space with always putting patients first and listening to our services.
As a result junior with a disciplined approach to ags than existing implanted battery with lead solutions Junior.
<unk> offers patients a littler full body MRI compatible non implanted battery solution.
Both and controlled by a workable.
Independent patient market research confirmed precedence for the system with genius features.
Thanks to the fully Upgradable variable component Jennie O patients can always has the most advanced technology without meeting a new surgery.
Next generation engineered systems will provide patients with real time feedback to data collection and offer remote monitoring that will improve the patient experience and provides physicians the ability to more efficiently optimize patient care.
Concretely, we are currently holding <unk> 2.1.
Labeling greatest stimulation adjustability, while general coupons zero without the design change integrating patient feedback and positive impact on gross margins by integrating the coil into the variable component.
Oh this could further increase patient access to <unk> technology.
We're also working on regulatory approval to activate existing sensors in the variable that's really just stimulation based upon sleeping position.
Our European commercialization experience early dream data and genius differentiated design reinforce our confidence in a successful U S launch next year.
We recently commissioned independent.
The mission and patient service, which demonstrates the significant demand for <unk> and supports our view that we get more of them replicate European performance, we're entering commercially in the U S.
To ensure we are fully prepared at launch we have accelerated investments in our U S commercial infrastructure.
First off <unk> joined as Chief commercial officer during the second quarter.
And the market access team is making steady progress.
We are working closely with.
The American Academy of Otolaryngology to define which CPT code with vessels G box <unk> at launch.
While there are multiple CPT codes being evaluated.
They all provide reimbursement.
At a minimum is in line with government Ags payment levels.
We anticipate having Medicare coverage at launch with commercial pace following shortly thereafter.
Finally, we are making steady progress with our <unk> program to our exclusive licensing agreement with the Vanderbilt University.
Under the lead of Professor David Kemp in close collaboration with <unk>, we are evaluating stimulation of the anchor cyclicality.
To address Cuddled Ags non responders.
But also sell regardless preliminary design work is amdocs.
And we have begun the detailed design phase we continue to anticipate beginning a feasibility study later this year.
In summary, we continue to advance our key objectives for 2023, which ought to focus on patient follow up in the Dream study, resulting in reaching the primary endpoint big.
Begin preparations to enter the U S market with regulatory manufacturing and commercial market access readiness.
And there are further revenue growth in Germany, while opening new European markets.
With that I'm pleased to turn the call over to our CFO Luis <unk>, who will provide a financial update.
Thanks, Julie and good.
Good day to everyone and thank you for joining us today.
Revenue for the second quarter ended June 32023 was $1 1 million Euro.
Total operating loss for the second quarter was $11 9 million.
$7 4 million in the second quarter of 2022.
Driven by an acceleration in clinical activities, notably the start of the access study as well as commercial and investments in Europe .
Last quarter, we raised 3 million Europe question to the company $50 million at the market program.
As of June 32023, cash and financial assets totaled.
$84 5 million Europe compared to $96 1 million on December 31, 2022.
During the second quarter, our monthly cash burn was $4 8 million Europe and based on our Q1 cash position, we have a runway into late 2024.
With that I will turn the call back over to Olivier.
Thank you Louise.
We are entering the most exciting time in <unk> history.
We have less than nine months away from the dream clinical data, which.
Which should result in obtaining FDA approval initiating U S commercialization.
The uniqueness of <unk> system resonates, well with both physicians and patients confirmed by independent market research.
Look forward to continue to scale the company in anticipation of entering the U S market and continuing to grow in Europe .
This concludes the formal part of our presentation, operator, I will turn the call over to you to begin our Q&A session.
And thank you as a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, please stand by while we compile the Q&A roster.
And one moment for our first question.
And our first question comes from Jon Block from Stifel. Your line is now open.
Hey, everyone. This is Joe Federico on for John Thanks for the questions.
Just to start I know you gave some color on the reimbursement details I just wanted to ask I think in the past you had said that you expected to hear from the MAA before the end of the year on some of the coding clarity can you give us an update on where that sits.
Yes, no definitely so we are working as I mentioned with E&P Society.
Collaborating with the AMA, making recommendations there are two options that will fully and further discussed and we are still sticking to the same timeline that we believe that before year end, there will be clarity on which of the two options will be the one that we can use for the <unk> system going forward.
Okay, great. Thanks for the color.
And then just a follow up I wanted to ask about gross margin in the quarter. It looks like it came in a little bit below our estimates can you kind of expand on some of the drivers there and maybe how you expect that to play out over the remainder of the year. Thanks guys.
Over this question to our CFO .
Hi, Thank you for the question the gross margin for the second quarter was 62%, 64% for the for the for the first quarter. So there is a 2% decrease in term of.
Margin, which is due to the additional sites, we now have enough in Belgium, So we said we'd be.
Acceleration of the business and the and the ramp up of the volumes, we expect the gross margin too.
The increase.
At the time specifically in the.
Second half of 'twenty, three and then in 2024 based on volume and absorption of fixed costs.
And thank you.
And one moment our next question.
And our next question comes from Ed White from H C. Wainwright. Your line is now open.
Good evening. Thanks for taking my question so with the increase in the use of <unk> one drugs I just wanted to get your thoughts on the potential impact to the H DNS market.
Thank you for this question.
It's really a hard question at the moment. So the way we are looking at this <unk> is the following.
If you look at both published data and commentary from leading Kols, indicating that who has the highest <unk> response.
Two lower BMI to justify.
<unk> to treat high BMI patients. So our view is that lowering BMI from high BMI patients, thereby increasing the number of Aegean is appropriate candidates will more than offset any patient that might to hop out of the funnel.
And all the work we are really welcoming <unk> into the market and we do believe that the effect can that can be meaningful and benefiting and increasing the AGM that political candidates.
Great. Thank you and just another question.
We're in 41 accounts in Germany in the first quarter 42 in the second quarter I just wanted to get your thoughts on.
How many accounts you are expecting to be in by year end.
Your competitor was in over 50 accounts I believe in the first quarter, just where do they stand now and what your overlap with them.
Yeah.
Yes, so first of all I want to compliment the German team.
And opening new accounts, they are doing really a great job on this today, we will have roughly 42 accounts.
And going forward I do not want to provide specific guidance on exactly how many have gone. So there will be we will be opening but it's also created that we will continue to anticipate a steady increase in the number of implanting centers over the course of the year and just have some kind of gasolines.
Overview of competitors, having slightly above $50 55 accounts in Germany. We have 42 at this moment and as I mentioned, we want a steady increase also the number of implanting centers over the course of the year.
Okay, great. Thanks for taking my questions.
Sure.
And thank you.
And one moment for our next question.
And our next question comes from Adam <unk> from Piper Sandler Your line is now open.
Hi, Olivier Hi, Louie.
Grafts on the progress and thank you for taking the questions.
Maybe just to start I wanted to ask about some of the pre commercialization U S activities that year.
Engaging on right now.
I think I heard the word accelerated mentioned once or twice shell can you just level set us kind of exactly.
Where does the infrastructure stand how are you thinking about head count at U S launch and maybe just remind us.
The initial go to market strategy in the U S. And then I had a follow up thanks.
Thank you Adam for the question and joining the call. So when it comes to our go to market strategy as I mentioned before we will gradually increase.
Investment in U S pre commercialization going hand in hand also with our increased confidence in the team studied data outcome. What I can say is that first of all we idled already oxy CEO Chris.
Next to this we have market access director. We also recently after he focused or VP of operations fully dedicated also to help prepare in the pre commercialization in going forward of course, we will further expand export explant of Mazor X pump and also we are preparing an IND.
Thermal plant.
We are anticipating having a full salesforce of one homes to amongst people one to 150 people hired and trained by the time of launch.
These are absolute target both implanting e&ps, but also here.
Referring sleep clinicians supported by a relatively modest DTC investment at this moment, we are doing the targeting of accounts. How many we aim to come and also to Andrew but on August I will come back here during quarter three the mobile to get even more closer to U S commercialization.
Okay.
Totally fair and thank you for the additional color there.
Maybe just for the follow up.
Obviously, you guys don't provide revenue guidance it looks like the street's modeling around $5 million Euro ourself for full year 'twenty three.
Curious if you have.
Any reaction to that figure.
Just any thoughts around kind of the back half cadence Q3 versus Q4 that you can share regarding.
Regarding your business. Thanks again.
Thanks for the question I will take it.
As you said, we're not providing revenue guidance.
Patrick very confident in the momentum of the of the business and we are confident in some of the.
High growth in Germany. This is the only thing I can comment on.
Yes.
Thank you.
And thank you.
And one moment our next question.
And our next question comes from Raws Osborne from Cantor Fitzgerald. Your line is now open.
Alright. Thank you for taking our questions would you. Please provide an update on how some of the headwinds you called out during the first quarter played out year to date, specifically has hospital capacity and staffing improved or center stayed the same and have new accounts dealt with the administrative burden you mentioned thank you.
Thank you all thank you for this question and you recall. This study collected in the first quarter, we were impacted with what we call transitory effects, mainly hitting by book to availability and reimbursement approvals in <unk>.
<unk> opened centers. So the resolution of these issues combined to the patient focused initiatives drove the sales rebound in the second quarter and Thats also explaining how we landed up more than $1 1 million vehicles in Clarksville.
Got it. Thank you for that and then just one more for US would you be able to disclose what percent of total revenue, Germany accounted for and how accounts outside of Germany performed.
So at this moment gentlemen, the German Avenue, it's really good.
Diving revenue business with more than 90% of all international revenue coming from Germany.
We are really pleased that we also see Switzerland, having no full DRG code in place. We recently also generated our first revenue in Austria, So besides Germany, Switzerland, Austria, We had Spain already and you would expect more revenue to come in the second half from Spain and in going forward and further expanding we are aiming at Italy, where we expect folks.
Revenue generation next year and we are also looking at the U K.
And thank you.
And one moment our next question.
And our next question comes from David Ross Scott from Baird. Your line is now open.
Oh, hi, thanks for taking the questions.
I wanted to start.
On the DTC campaign in Europe that you called out I think you mentioned, maybe 50000 monthly website visits just wonder if you had any more color on.
If and how thats translating to revenue growth toward patient going into centers towards patients translating into ultimate implants, any any color on the ROI, you're seeing there and I think you mentioned in the U S. You are expecting a modest kind of DTC campaign associated with the commercialization just wondering if thats something youre expecting to Mb.
<unk> ahead of the launch maybe at the time of launch or something that rolls out thereafter.
So let me start by answering the first part of your question on DTC in Europe .
Our direct to consumer advertising campaign was launched in March in Germany, and has raised the awareness of Ags in general.
As a result, we are seeing and we have seen record growth and appointment request to the health plan.
Ahead of time from patient identification to G new implants.
Between six to eight months. So we would not anticipate appointment request translating to implant until in fact Q4. This year, but we are seeing that there isn't really increased interest.
Jumping I'm, taking this logging into the U S. I think it's obvious and also it can be just two other than what is happening with other company all with a leading company in Aegean has a DTC is really showing the effect on its positive effect on recruiting patients. So also when we slow the launch in the U S. We will invest in DTC whoever who we wanted to do this in a more selective way.
That we know that in line with the assemblies that were opening and the standards that we call center of excellence that we can do really focused DTC investments driving patients to <unk>, resulting in increased implant rates for Joel.
Alright, great. That's helpful and then just on the cash.
Cash balance I think you called out maybe 100 to 150 or so.
U S reps.
And the sales force pre commercialization I think you also called out cash balance could get to toward toward delayed on the 2024.
Do those comments or does the cash balance and getting you there account for potentially bringing on salesforce.
Sales force.
In the middle part maybe of 'twenty 'twenty, four or should we be thinking about.
Any type of incremental.
Investment in the cash position of the business ahead of that launch as well. Thank you.
And it is really a really interesting question and it's also a question that we are debating and I think it should be historically answering them Im sure that we can also follow in on this.
In short at this moment, we are having a really healthy cash position that will bring us to enter 2024.
We know that the major inflection point is coming with the 12 monitoring data readout in Q1 next year in 2024.
At the moment, it's also I think clear that in order to prepare a real successful commercial launch in the U S. But we will be making a big splash when I'm, saying that we will also need to raise more money to finance this or what the exact numbers on them. It will be I don't think this is a great mobile to disclose this but we have currently.
A healthy cash position, we have a big inflection points coming up and we also know and we are preparing in the U S launch in the U S.
Trying to make a big splash, when we and therefore, most likely we will be raising more money, but the exact amount again, it's not that we want to comment further on this.
Louie give us we got something please this is.
This is totally complete.
The cash burn until end of 2024 covers the all the pre commercially pre commercial activities and since we are we are looking at the.
Launch plan, the detailed plans and the phasing of those plans. This would be this will be incremental investments.
Okay, great. Thank you.
And thank you.
One moment for our next question.
And our next question comes from Suraj Kalia from Oppenheimer <unk> Company. Your line is now open.
Hi, Olivia Lloyd can you hear me all right.
We can hear you perfect for us.
Correct.
Olivia Congrats on all the progress.
So Olivia a number of questions have been asked maybe let me ask you a slightly different flavor.
Germany.
What are the average procedure times for <unk>.
And is there a math approximately right that we are.
In Q2, we are talking about roughly one implant per site.
Or a little more than one.
Okay. So what youre seeing from inbound procedure in Germany. We are having we are seeing a range that is varying between 45 to 60 minutes, so I'll be spending a little bit on the surgical.
The hand surgeons, but we see roughly that 45 to 60 minutes that is what it is taking the surgeons to do an implant procedure.
No when it comes to one implant by site. If you look at it purely mathematically, yes, you could come up with this calculation. However, the size that we are opening or not.
Same state is a site that to open before so we also have the variability between sites that all sites that are doing 10 implants that oxides that are doing one of two implants, but it'll aiming going forward is also making an increasing overall implant numbers.
The whole can be difficult to hear it would inspire hope can be drive success in the U S and going forward. So first of all yes, we do believe and we are convinced that the product differentiation will convince the majority of patients to cruise for genial or a pacemaker platform technology that is what I believe.
That is what we are seeing <unk> confirm let me do independent market research. So we do believe that based on suffering from OSA will choose the <unk> technology, the safest technology, where he got for example, the full body BMI compatibility <unk> that he will always have access to the latest and greatest.
Technology update without having to undergo a he obligations that's already one four.
On the other hand.
We also.
Do believe that in going forward and launching the effect of DTC cannot be underestimated because it directly also linked to the patient choice of hostile off of technology and we will also be investing in this.
I'm always disconcerting <expletive>. This when you speak to surgeons and you listen also with the bilateral stimulation effect. The option to also have the label Expunction treating CCC patients, which would make it for <unk>. They don't have to think about the size of a similar identification model to select.
Identify CCC if you combine all these things floating with a clear differentiation with a patient acceptance <unk> with a <unk> in various technology in combination with surgeons, who do not need to exclude come with come with some pre investigations before the noise. They can implant I think those will be.
Winning arguments with an excellent going forward.
No jumping spot.
Part of of of of.
Question, it's the performance in Germany, and the market chair.
I do have to give credit to belong so who needs to get credit them. It's clear that inspired will be able to very strong.
Second quarter. They did no. This is what we are selling already it's precisely competition entering a moment policy market can increase overall achiness penetration antibody benefits will will benefit patients will benefit from it needs for treatment. So.
So all spasms in Germany, it's clearly driving therapy adoption and capturing patients that would be lost for <unk> treatment.
<unk> a.
<unk> still continues to be totally understand notated and to unlock the market and the potential patients have to be captured at the moment when they become refractory to see pop and should not be left without therapy.
And that is one of the reasons why we increase our investment in D. C. In Germany. It's also one of the reasons why we increase of sleep physician presents and it's also one of the reasons why we are exploring strategic partnerships to identify those patients.
Answering also very very precise on the market share at this moment. It all estimates, we ask a little bit more than 20 per cent market share in quality.
Got it and one last question for you would find me what do you anticipate is gonna be the spent on access you know assuming it gets wrapped up by next year gentlemen, Thank you for taking my questions.
Yeah, So a sturdy like like access will cost around 15 million dollar.
And we we will ensure this your.
Close to 4 million. So the reminder will be for next year.
And thank you.
And I am showing no further questions I would now like to turn the call back over to Olivier town Tilman C E L for closing remarks.
Yes. Thank you.
Again, thank you all for joining thank you for the introduction Fiat.
And also the good questions I would like simply to close by repeating whether it was already saying we are entering the most exciting time of <unk> nine months away from USA data remote Oh. He knows we are looking also info to expanding of European Avenue and commercialization.
<unk>, we offer the scaling of the organization, we're getting ready also from a manufacturing perspective, so it's really all excitement at <unk> at this moment.
Really looking forward into the coming months and yellow here. So thank you all four of dissipating up all your questions.
This concludes today's conference call. Thank you for participating you may now disconnect.
Mmm.
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