Q2 2023 Helius Medical Technologies Inc Earnings Call
Okay.
Good day and thank you for standing by welcome to the Helios Medical Technologies, Inc. Q2, 2023 earnings conference call. At this time, all participants are in a listen only mode.
After the Speakers' presentation, there'll be a question and answer session.
To ask a question during the session you will need to press star one one on your telephone.
You will then hear an automated message advising that your hand is raised to withdraw your question. Please press star one one again please.
Please be advised that today's conference is being recorded.
I'd now like to hand, the conference over to your Speaker today, Michelle Bilsky Investor Relations. Please go ahead.
Thank you operator welcome to the second quarter of 2023 earnings conference call for Helios Medical technologies.
This is Michelle Belsky of insight Communications Investor Relations for Helios with me on today's call are gaining Andrey you'll use medical President and Chief Executive Officer, and Jeff Mathiesen, Chief Financial Officer. 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 investors section of the heel.
Yes website at Www Dot Chiliast medical dotcom.
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. These forward looking statements involve inherent risks and uncertainties that could cause actual results to differ materially from those indicated including those identified in the risk factors section of our most recent annual report on form.
Our 10-K, and our quarterly reports on Form 10-Q.
Such factors may be updated from time to time in our other filings with the SEC, which are available on our website. All statements made during the call are as of August 10, 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 entries press.
And Chief Executive Officer appear yet.
Thank you Michelle welcome everyone to helium medical medical second quarter 2023 earnings Conference call.
I'm happy to report that we saw a significant increase in sales during the second quarter of 2023 with revenue up 115% compared to the prior year quarter and up 131% compared to the first quarter of 2023.
Increased U S sales of PON systems under the favorable pricing offered through the P. Tap program, which terminated on June 32023 in part drove the higher revenues.
The ongoing addition of neurologists and trained Pons certified therapist recommending <unk> to their patients.
<unk> therapy is a groundbreaking treatment for people suffering from balancing gait impairment.
Since the beginning our goal has been to get this important neuro technology into the hands of many qualified patients as possible by eliminating barriers to use we launched P. Tap one year ago to give qualified Americans suffering from balancing gait impairment due to en masse the.
Ability to purchase bonds at a significantly reduced rates lessening the cost burden, while we initiated efforts to pursue reimbursement by third party payers and CMS.
Tap was initially scheduled to expire on December 31st.
2022, but due to the program's popularity we extended it to June 30.
P tap was a great success.
Subsidizing Pons therapy for participants, we meaningfully reduce the major barrier to use and brought relief to a great number of patients than we otherwise would have.
He tap also enabled us to add to our M. S patient registry and collect important health economic information to establish the value of ponds on key clinical and therapeutic outcomes.
This patient registry data is a key element to pursuing reimbursement.
Going forward sales upon systems will be on a cash basis as we continually.
To aggressively pursue coverage, while also helping patients navigate the reimbursement pathway.
As I've mentioned before we believe broad third party payer reimbursement is needed to achieve our full revenue potential and we remain very optimistic about cms's transition or coverage of emerging technologies program or T cell, which is.
Posed accelerated coverage pathway for new and innovative medical devices.
In June this CMS announced its proposed T CEP pathway and provided greater clarification on its approach to coverage reviews in evidence development.
The proposed T cell pathway expedite Medicare coverage of certain breakthrough devices by allowing manufacturers the opportunity for increased pre market engagement with CMS.
Through pre market evaluation of technologies and identification of important evidence gaps. He said aims to reduce uncertainty about coverage options.
Under the new guidelines qualifying breakthrough designations would have temporary coverage within six months.
After F D a market authorization, allowing companies greater time to gather the necessary clinical data to prove efficacy of their products and address any evidence gaps.
This is great news for Helios as ponds has breakthrough designations in both MF and stroke in the United States.
In addition, Pons was recently awarded durable medical equipment.
Prosthetics, orthotics and supplies or D. M E. P. O S accreditation by the compliance team, which is authorized by CMS to a credit all D. M. B P O S products and services organizations that wish to Bill Medicare must have accreditation from.
An approved agency in this sort of certification is a key component in achieving coverage under T CEP and if and when it's Paris.
As of now we believe we are on a path toward achieving coverage in mid 'twenty 'twenty four and we'll keep you updated on further developments.
All right on our Pons therapeutic experience program, either otherwise known as PON step is another way, we're bringing our technology to a greater number of patients suffering from balancing gait impairment.
As a reminder, pons step is a company sponsored open label observational trial with a targeted enrollment of 50 to 60 patients that was designed to evaluate the impact of subjects adherence to pons therapy in patients with a mass in a real world setting.
Earlier this week, we announced the addition of the Montefiore Medical Center in Nyack, New York to Pine staff Dr.
Doctor Christopher Langton, who is the leading.
Who is leading the trial is a re known clinical researcher of current and advanced topics and M. S management and was one of the first Pons prescribers, we expect Doctor Langston and his team at Madeleine Borelli multiple sclerosis center to be great contributors to the program.
We now have six centers of excellence participating upon staff with the goal of enrolling five to 10 patients per site.
This is higher than the five patients per se. We originally envisioned at several of our sites are fully enrolled and interested in adding more patients enrolled.
Enrollment in ponds that began during the fourth quarter of 2022 and will continue throughout 2023.
We recently announced the expansion of our medical University of South Carolina stroke trial from 12 to 60 patients.
This investigator initiated study evaluates the effects of cranial nerve noninvasive neuromodulation delivered using pons therapy on gay and dynamic balancing chronic stroke survivors.
In Canada, we're pons is already authorized for stroke, we've seen.
The significant improvement in gate and a.
Reduced risk of falling.
This meaningful real world data and expanded study are significant steps forward in our efforts to leverage the breakthrough designation and pursue approval for stroke in the United States.
As a reminder, we previously weren't able to use results from similar clinical studies and world World data to receive authorization for MFS in the United States.
Turning now to our Canadian activities.
The timing of some orders and activity originally anticipated in the first half of 2023 has slipped into the second half of 2023, resulting in lower than expected Canadian revenues. During the first six months of 2023.
Having said that we believe this timing difference.
Adult and a stronger third quarter, which typically experiences seasonal weakness and a strong finish to the year.
Because karnes is authorized in Canada for three indications and that stroke N T V. I the market could be much larger than the U S market in the near term.
Now, let me turn the call over to Jeff to discuss our second quarter financial results in detail.
Thanks Dane.
It is a pleasure to be with you today.
Our revenue for the second quarter of 2023 was $256000.
An increase of $137000 compared.
Due to the $119000 in the second quarter of 2022.
Resulting from increased U S sales of PON systems, primarily due to the favorable pricing offer the crude through the P tap which terminated on June 30th.
For the second quarter of 2023 cost of revenue was $184000 compared to $88000 for the prior year period.
Primarily attributable to the higher sales compared to the same period in the prior year.
Selling general and administrative expenses for the second quarter of 2023.
$2.6 million for comparable to the $2.5 million reported in the second quarter of 2022.
Research and development expenses for the second quarter of 2023 decreased.
Zero point $7 million compared to $1 million in the second quarter of 2022.
Driven primarily by a decrease in product development expenses and clinical trial activities as the company transitioned to U S commercialization activities.
Total operating expenses for the second quarter of 2023.
Decrease with $3.3 million compared to $3 $5 million in the second quarter of 2022.
Operating loss for the second quarter of 2023 was $3 $2 million.
<unk> to a loss of $3 $4 million for the prior year period.
We reported a net loss for the second quarter of 'twenty through 'twenty three.
$1.6 million.
Or a loss of six cents per basic and diluted common share.
Compared to a net loss of $3 $8 million.
A loss of 97 cents per basic and diluted common share for the same period last year.
Our cash burn from operations for the second quarter of 2023 was $2.7 million compared to $3.7 million for the second quarter of 2022.
Reflecting the results of our focus on managing cash burn and extending our cash runway further into 2024.
As of June 32023, we had $8 $6 million in cash and no debt.
On June 23, 2023, the company entered into an agreement to create an aftermarket offering program or ATM under which the company may offer and sell shares.
Having an aggregate offering price of up to $2 million, providing hayley has the ability to access additional cash opportunistically.
On an as needed basis.
As of June 32023, no issuances of securities have occurred in connection with the ATM.
Okay.
Turning now to our outlook.
Management currently expects third quarter and full year 2023 revenue.
Be above the comparable periods in the prior year.
The shift in sales mix to be more heavily weighted in Canada.
Offsetting an anticipated decrease in the U S.
Knowing the end of the P tap.
Future U S sales of ponds are expected to be at our cash pay price until we gain reimbursement by CMS and third party payers.
With that operator, let's now open the call for questions.
Thank you, Jeff we will now conduct the question and answer session. As a reminder to ask a question. Please press star one one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one one again, please standby, while we compile the Q&A roster.
Our first question is from Jonathan Aschoff with Roth and K. Please proceed.
Thank you. Good afternoon, guys I was wondering how exactly does receiving D E. P O S accreditation.
All to your approach to seeking U S reimbursement I mean, you just mentioned it or can you deal with payers in any materially different way.
Hi, Jonathan This is Dave Thank you for the question.
Right now, we're actually looking at multiple paths and just been DMA accredited.
And going towards CMS for coding and eventual reimbursement is just one pathway using the dnb approach. The other paths we of course, which we mentioned the T. CEP pathway and we would also need the DNV accreditation towards that.
Regarding our <unk>.
Private payers.
Right now given that we are in.
In the process of collecting our codes.
We were we are and we'll be doing more of going down the reimbursement pathway for patients on a miscellaneous code.
Okay. What can you say about the statistical power with 60 stroke patients in the stroke trial.
So we have a data development plan in place.
We're hopeful on increasing.
The number 60.
We just haven't.
Talk through that yet Jonathan but we're happy.
Where we are at 60 and hopefully we could.
Move that number up.
With our data development plan with the FDA.
Okay, and thank you and lastly, how many more sites you wish to add to our concept and when will we see any of those results given that the June corporate slide deck on your website. It looks to be out of date regarding time, yet for a concept as well as the stroke trial actually.
Yes, we expect at least a one to two more Jonathan as you noted and we noted that we were increasing the enrollment at each site.
Giving.
Patients more than five devices.
Per site now.
And yes.
That sounds great. That's all for me. Thank you.
Great. Thanks, Jonathan.
Thank you please standby for the next question.
Our next question comes from Jeff Cohen, with Ladenburg Thalmann and co. Please proceed.
Yeah.
Hi, Dan and Jeff This is actually destiny on for Jeff.
For taking our questions I guess I would like to kind of follow up on the previous question. That's a big step up from 12 patients to 60 and I'm wondering if you can just discuss a bit about the drivers of that increase.
Well I think the drivers are really connected towards our breakthrough designation in stroke, that's our second one.
We're definitely in the less than 1%.
The medical device companies that have a breakthrough to have two breakthroughs and we believe.
This stroke trial.
With Doctor Steve coach at the University of South Carolina could potentially become much larger.
And if so.
Potentially.
We will be able to use this data and other data.
Two.
To go down our breakthrough designation pathway with the FDA seeking.
Authorization.
In stroke.
Okay got it got it.
Okay, and then I'm curious Jeff maybe this one is for you that revenue that was pushed into the second half of 2023 is that because of any.
Macroeconomic factors you can call out or is it simply just the timing of orders issue.
It's more of the timing of orders issue, there's some things that have been.
Worked on in Canada that we had anticipated to play out earlier in the year.
That have slipped into the second half of the year, but.
There is still.
Okay.
A very active and we still expect them to happen and so as we had planned out our year. It was just something that.
Ended up slipping into the second half results.
Okay perfect. Thank you and then can you talk a little bit about how the funnel looks currently, especially since you're moving away from kind of that subsidized price and any changes there.
No changes, it's a very active funnel.
Our e-commerce.
Site with the partnered with Apt script.
Our folks are still coming in there's multiple ways.
Ah patients.
Interact with us.
A lot of inquiries come right to Elas.
And of course, then with that interests in those questions answered for the U S patients that are.
On label.
They would be directed to the e-commerce platform and remember the ecommerce platform does a number of things for the patient it reduces.
The patient's time to get an appointment with their neurologists.
That's that's that's a really big factor these days post COVID-19.
What we understand the average time to get a appointment with your neurologist is up to three months now.
They're having their telehealth telemedicine say E prescribing site.
We're able to.
Really allow the patient to <unk>.
To get Pons therapy.
Faster quicker and start their treatment with their physical therapists.
Okay got it thank you.
Couple more from me if that's all right can you just remind me.
The timing on the T SEC decision.
So right now we've got about 20 more days in the 60 day comment period.
It's fast and furious that I've been on probably two calls a week with lobbyists and also some of our.
Congressmen and senators.
It's.
With this comment period. This is where we're really allowed to change the policy, which was written at CMS and hopefully towards our favor.
Medical device companies right now without T sat on average it takes Scott would occur at Avon that said it takes on average five seven years for a medical device company to get reimbursement through CMS.
Well look therefore, yes.
Yes, that's a big number yes. So he said this is very important not only for commercializing a M best and our reimbursement, but if you've got if you think about it.
Our second breakthrough and stroke about 90% of stroke patients are covered by Medicare by CMS.
Okay, Alright got it and then lastly can you call out any scientific conferences, you'll be attending.
Second half of 'twenty, three and maybe the first half of 2024.
Yep.
We have one scheduled but its on the neurological.
Physical therapy side.
We will not be presenting any data there but.
We'll be in the right place with the neurologists and their narrow P T.
Excellent. Thank you so much for taking our question.
Great. Thank you destiny, thanks, a lot.
Thank you please standby for our next question.
Our final question comes from Anthony Vendetti with Maxim Group. Please proceed.
Thanks.
Hey, good evening, Jeff just in terms of.
Hey, how are you guys doing.
Yes.
Okay.
Can you talk about the distribution agreement that you signed with health tectonics.
How is that going is that is that.
Starting to.
Bear fruit can you just talk about.
Where that's at at this point and then I have one follow up.
Oh.
Okay.
Sure sure. This is Jeff I'll take that.
So again it was a we had an agreement with them previously and we.
We ended up entering into a new agreement that replace the previous one.
So that the agreement provides them exclusive distribution and.
In Western Canada area and that is something that.
I is going well, we've got a good relationship with them and so on.
The agreements there are.
Purchase requirements that they have to make from us.
And.
And they also do a lot in working with us and promoting ponds and as we're trying to.
Established other programs and reimbursement in Canada.
And we also are working with them too.
Yeah.
Get insurance companies interested in reimbursing ponds in Canada, so, they're a very strong partner and that that agreement is progressing well.
Okay, Great and then.
In terms of the E Commerce platform.
How do you how do you track or.
Do you track the traffic okay.
That you see there.
You know what.
Obviously.
That helps.
Helps you a lot in terms of.
Reorders and so forth.
Maybe just talk about what trends are you seeing.
On that platform.
Yeah, so in that funnel.
Theres about 12 steps that we track towards that funnel.
Anthony so.
Of course.
We get a lot of inquiries they come in they they fill out a questionnaire.
Do they have a mass, yes, do that gay deficit yes.
There is a large question here before.
They go down the pathway towards.
A tele medicine appointment.
Some of them already have prescriptions and we use our online.
E prescribing.
Platform to Ah <unk>.
Defense.
The product to the patient if they have a prescription and then if they asked for an appointment.
They they if they qualify.
The Doctor.
Prescribed any prescription to them they could have it so that way we ship out the product.
That day and they could have had the product at their home within two days from that right.
Right now like Jeff said, we expect to.
A slower.
The.
Second half until we get reimbursement, but that doesn't slow the inquiries are the inquiries are are very steady.
Coming into not only our UBS website R. R.
Phone number inquiry phone number email inquiry.
But we also get them to up scripts, our partnership with <unk> scripts.
To fulfill an order as well so we track everything Anthony.
We track, our Google searches and awareness there what our brands doing what people are looking for searching for and really the biggest thing they're searching for is a viable treatment for for balance and gait deficit.
It comes across as the most common symptom and and neurological diseases like Ms.
But.
He leaves medical and ponds therapy gets picked up on Google searches now continuously and we continually see Inc.
Inquiry, so that we can educate the patients.
Okay. Okay.
The point being is.
Until reimbursement.
Until there is reimbursement.
You wouldn't be surprised.
Bob.
If clicks to the site or visits to the site.
Slowed a little bit in the second half.
I would say.
Constantly growing.
Through the second half.
Because you're talking about really.
Getting through the first part of the funnel and once we collect that inquiry and whether they are willing to.
Pay cash of course or go down the reimbursement pathway.
Remember the way, we see it as we have that patient as a future paying.
Future ponds.
Patient.
It just might be delayed three months to six months.
If there.
Unable to pay cash or go down the reimbursement pathway.
Okay, so they'll still they'll still be coming to those who will be visiting the site. It's just a matter of not whether it would fall through happens depending on weather.
They elect to pay cash.
Wait until the reimbursement and at which point when that happens the ones that are waiting.
Because youre tracking so many different metrics, so youll be able to reach out to them at that point.
Correct.
That's correct, yes, okay.
Alright, good alright. Thanks, Thanks, very much I appreciate that I'll hop back in the queue.
You bet Anthony I'd say, one thing before you leave just getting back to your first question I did want to point out as you look in the 10-Q in the sales breakdown, Canada for the U S.
You talked about the fact that Canada was lighter than expected and you asked about the agreement with HTC, but I did want to point out that Canadian sales in the second quarter were more than double the first quarter level and were above the prior year comparable quarter level as well so.
We are seeing good activity there, we just had some other things that.
We had planned on that have gone into the second quarter.
Second half congrats.
That's helpful color. Thanks, Jeff.
You bet.
Thank you at this time I would now like to turn the conference back to Dan for closing remarks.
Alright, Thank you hope and thank you everyone for following Helios Medical technologies, we look forward to keeping you updated as we perceived coverage reimbursement a continue to be.
Bring pons therapy to the millions who need it.
Thank you.
This concludes today's conference call. Thank you for participating you may now disconnect have a great evening.
Okay.
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