Q3 2023 Helius Medical Technologies Inc Earnings Call
Good day, everyone. My name is Chelsea and I will be your cockpits operator.
At this time I'd like to welcome everyone to the Helios Medical technologies third quarter 2023 financial results.
All lines have been placed on mute to prevent any background noise.
After the Speakers' remarks, there will be a question and answer period.
At that time, if you have a question. Please press star one on your telephone keypad.
As a reminder, this conference call is being recorded today November nine 2023.
It is now my pleasure to turn the floor over to Michel Bilsky Investor Relations for Helios Medical technology.
Please go ahead.
Thank you Chelsey welcome to the third quarter of 2023 earnings Conference call for Helios Medical Technology. This is Michel Dulski of insight Communications Investor Relations for Helios with me on today's call are Dave Andrey you'll use medical's, President and Chief Executive Officer, and Jeff Mathijsen, 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 Heraeus website at Www Dot Hill used medical Dot com before we begin I would like to remind everyone that our remarks and responses to your question. Today may contain forward looking statements that are based on the current expectations of management. These forward looking statements involve in here.
Risks and uncertainties that could cause actual results differ materially from those indicated including those identified in the risk factors 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, which are available on our website. All statements made during this call as of Nova.
Nice 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 Dale Andres President and Chief Executive Officer of here.
Yeah.
Thanks Michelle.
Welcome everyone and thank you Elliot Medicals third quarter 2023 earnings conference call.
We began the quarter with the conclusion of our very successful patient therapy access program, which we launched in June 2022 to give qualified Americans suffering from balancing gait impairment due to and the ability to purchase pons.
Significantly reduced price P.
The implementation of P tap enabled us to accomplish two key objectives.
By subsidizing the cost of ponds, we meaningfully reduced a major barrier to use while also adding to our M. S patient registry.
Through the registry, we can collect important health economic information to establish the value points on key clinical and therapeutic outcomes, which is critical as we pursue reimbursement.
As expected quarterly sales upon systems in the U S decreased following the exploration of the P. Tap program on June 30th as sales upon systems reverted to the cash pay price. We continue to believe that broad third party payer reimbursement is need.
To achieve our full revenue potential and I'm pleased to report, we're moving closer to that goal.
In September the pond system and multi.
Were assigned U P. C numbers the equivalent of N D C numbers for pharmaceuticals, with the listed price of $25700 and $7900 respectively.
The U P fees are now included in the Walters Fluor helps pharmacy database to which 17 of the top 20, grossing pbms are subscribed.
Receiving the UPC numbers was a game changer for Elas, because with the D. M D accreditation.
And down last quarter <unk> is now one of the few products with pharmacy and device codes, which means two paths towards reimbursement.
You are also steadily moving toward our goal of the cheap U S authorization for stroke.
We recently established relationships with two important Canadian health care providers have you received an order for 10 PON systems from the school of rehabilitation at the University of Montreal, as well as a letter of intent from the Quebec minute.
Three of health and social services to purchase 30, PON systems to treat gate imbalance in stroke patients.
These are exciting opportunities and both come about due to the body of clinical evidence demonstrating the effectiveness of using ponds to treat stroke.
Other outcomes Pons therapy has been shown to reduce the risk of fall in 28% of stroke patients as opposed to a reduction of just 1% to 3% with physical therapy alone, which is the current standard of care.
Stroke patients experienced a significant improvement in gate, averaging a 6.74 point improvement in the functional gate assessment score over the 14 week treatment period.
Overall, 69% of the patients experienced at least a five point F. G. A improvement which is larger than the four point to minimal detectable change using usually seen in stroke patients.
The fact that these two institutions committed to purchase Pons reflects the medical community strong desire to improve treatment for this patient population and we believe that evidence from the treatment outcome will support health economic benefit and cost effectiveness I've been.
Cooperating Ponce therapy as a first line treatment for stroke patients.
Furthermore, this evidence should provide valuable benchmark for other Canadian health care providers and private payors as they evaluate reimbursement upon therapy.
Yeah.
The data from these clinical application trials will also provide supporting evidence of ponds therapeutic benefit that can strengthen the registrational program for stroke currently ongoing in the U S where there are more than 5.5 million people.
Experiencing impaired walking do district.
If and when Pons is approved to treat stroke in the U S. It will be eligible for coverage under the proposed transitional coverage of emerging technologies or T. SEC pathway, which would expedite Medicare coverage of certainty breakthrough devices by allowing menu.
Actuaries the opportunity for increased pre market engagement with CMS.
<unk> has two breakthrough designations granted by the FDA, putting us among the less than 1% of medical device companies that have a breakthrough designation with our second one in balancing gait deficit due to stroke.
Okay.
While we don't know the outcome of this bipartisan piece of legislation we are optimistic about its potential and the fact it provides another pathway toward reimbursement and graded greater access for patients.
We are always looking for ways to help reduce barriers to pons us.
Earlier this year, we launched start ups.
Up script E Commerce telehealth platform to make it easier for people suffering from en masse to access <expletive> therapy and start treatment more quickly instead of having to wait up to three months to see their neurologists.
Our platform offers among other services online health evaluations with qualified medical providers.
Filming of prescriptions required for Pons therapy, and the shipping of Pons devices directly to the homes of eligible patients in the United States.
As you can imagine this is a great benefit to those who face mobility challenges.
We are pleased to report that virtually all of the prescriptions in the United States are now fulfilled through up script.
<unk> also continued to expand PON staff, our company sponsored outcome research trial designed to evaluate.
The real world impact of M. S patient adherence to point therapy. We recently added Montefiore Medical Center, and I Act, New York to the program, bringing the total number of PON steps centers of excellence to six.
We have increased enrollment at each site with the goal of <unk>.
Rolling five to 15 patients per site.
Enrolment in PON step began during the fourth quarter of 2022 and will continue through March of 'twenty 'twenty four.
Okay.
Turning now to our Canadian activities.
Revenues in Canada were $72000 during the quarter up 29% over the third quarter of last year.
We are starting to see traction with the exclusive distribution agreement with health Tech connect for portions of Western Canada that we signed at the at the end of the first quarter and expect steady overlook overall growth to continue.
Okay.
Earlier. This week, we were proud to announce the results of a study performed by Pacific Blue Cross and health Tech connect with the ultimate goal of reducing long term disability and improving the quality of life for individuals suffering suffering from traumatic brain injury in.
Canada, where pons is authorized to treat T G I.
The program participants were all at least two years post injury.
And had not responded to standard rehabilitation treatments and not expected to return back to work.
The results were truly remarkable.
89% of the patients suffering from long term disability due to chronic T. B I said that balance and gait issues, we're no longer a barrier to return to work.
56%.
Of the participants actually returned to work.
And remember these patients were deemed unlikely to resume their jobs.
80% of those return to their prior occupations fulltime for at least six months.
In addition to significant improvements in balance and gait patients reported improvement in headache severity as well as in cognitive mental health symptoms.
It was also found that plants therapy reduce the financial burden to the insurance provider by at least $1.6 million for the five individuals who returned to work for nearly a 10 X savings on cost.
Yeah.
This was an important study given that 7 million people in North America suffer from chronic balance deficit in other disabilities related to tbi.
Rehabilitation therapy is the current standard of care, but it's returned to work rate is very low and a large percentage of patients end up on long term disability often permanently.
We believe the findings from this collaboration May promote RF.
Our efforts to gain reimbursement by Canadian insurance companies and health care providers as well as demonstrating that pons therapies significant health economic benefit and cost effectiveness as we negotiate coverage with U S payers.
It was a busy quarter for us at T O E S and we're excited.
About what we accomplished and the road ahead.
With our continued focus on cost management and a runway that will take us into the second quarter of 'twenty 'twenty four.
We have both the drive and resources necessary to continue pushing forward and bringing our life changing therapy to as many patients as possible.
With that let me turn the call over to Jeff to discuss our third quarter financial results in detail.
Thanks, Dan It is a pleasure to be with you today.
Total revenue for the third quarter of 2023 was 143000.
A decrease of $53000 compared to $196000 in the third quarter of 2022.
Primarily attributable to the decreased unit sales of <unk> systems in the U S.
Following the termination of the P. Tap on June 32023 this.
This was partially offset by increased sales of systems in Canada.
For the third quarter of 2023 cost of revenue was $187000 compared to $101000 for the prior year period due.
Due to the fixed overhead cost increases, which were primarily comprised of salaries and benefits of employees involved in management in the study of the supply chain in certain production costs.
Selling general and administrative expense for the third quarter of 2023, plus $2.2 million, a decrease of $1.2 million compared to $3 $4 million in the third quarter of 2022.
Primarily the result of a decrease in performance based.
Compensation expense.
Research and development expense for the third quarter of 2023.
Were $700000.
Essentially flat.
Period to period over the third quarter of 2022.
Total operating expenses for the third quarter of 2023 decreased to $3 $1 million compared to a core point $9 million in the third quarter of 2022.
Operating loss for the third quarter of 2023 was $3 $2 million compared to a loss of $4 9 million for the prior year period.
We reported a net loss for the third quarter of 2023.
$3 $7 million or a loss of $5.49 per basic and diluted common share.
<unk> to a net loss of $1 million or a loss of $2 90 per basic and diluted common share the same period last year.
Our cash burn from operations for the.
The third quarter of 2023.
It was $2.5 million.
Compared to $3.8 million for the third quarter of 2022.
Collecting the results of our focus on managing cash burn.
As of September 30th Slide 23, we had $6 $6 million in cash and no debt.
And $4 million in proceeds receivable from warrant exercises as of September 32023, and we expect our cash runway to extend into the second quarter of 2024.
With that Chelsea, let's open the call for questions.
At this time, if you would like to ask a question. Please press the star one Keith on your telephone keypad.
You may remove yourself from the queue at any time by pressing star Q.
Once again that is star one to ask a question.
And our first question comes from Nick Sherwood with Maxim Group.
Hey, guys How's it going.
Good Nick.
So my first question is about the letter of intent.
Ministry of Health and social services do you know what their timeline is to evaluate the benefit upon therapy.
With the stereo devices.
So this is Jeff all the Cepheid and in the press release.
We commented that the letter of intent their desire is to have.
The all 30 patients either beginning treatment are lined up by the end of March of next year. So it would be something that should play out fairly quickly.
Dan.
Is there any is there any additional sort of like agreement or ideas that based on success that they would buy additional or is that sort or are you looking to go through that go through the study work with them to the study and then.
Once that's completed work with them from there.
Their intent in the letter.
<unk>.
The intent that what they are looking to have come out of this.
If successful they would want to incorporate this as part of their standard of care.
But there is no specific.
Commitments to do anything beyond that.
Yeah, Stan and Nick and then Hey, Nick just Hey, Nick This is D. Just a little more color on who the Quebec The Ministry of health as it is their provincial health care provider.
Like a CMS Medicare.
And most strokes are covered.
Under government policies.
Mhm.
Okay.
Hi, This Ed and then sort of what is there any.
I mean, what sort of communication, what can that Quebec, Quebec Ministry of health have with other provinces.
Such as like Ontario, or is it kind of you had the reach each Canadian provinces health system sort of on an individual basis.
Yeah, I'll take that one.
So, yes, like Ontario, Oh hit plan.
We would have to reach out and and we provide.
A similar.
Asian.
There are lot of them.
Provincial health care providers with we'd like to do their own studies.
But they are also happy to see.
Quebec being the first one stepping in to do this balance and gait study in stroke.
Okay awesome.
And kind of switching gears can you just give a little bit of color on the relationship with <unk> connex and sort of.
Sort of any buying patterns, they have for pons therapy and I mean.
The numbers that back people getting back to work to add traumatic brain injury, a lot of really good results from that.
Get some more detail on that relationship.
Yeah, Hey, this is Jeff I'll step in for the first part of that question. So we do have a arrangement with them where they are.
Exclusive for the Vancouver area and that was something that we signed.
Earlier, this past year and so it's an agreement where they are as part of the having this exclusivity they do have a commitment to purchase.
Certain number of units.
Throughout the period of the agreement and also an opportunity to renew that agreement after the first.
Five year period.
With an additional payment in and then also additional.
Commitments for purchase.
So we've had a great relationship with them for a number of years there are big promoter of of ponds.
And.
<unk> have done a lot of things of studies and things on their own using pas.
And then we're part of.
A program.
With Pacific Blue Cross, where those two work together to evaluate.
Ponds with these.
These tbi patients that was just reported so I don't know I'll, let Dane talk a little bit more about that specifically, but.
In general we have a great relationship with them.
No Jeff I think he covered it all so thank you.
Awesome, and then I'll wrap it up with.
One final question looking at the.
Therapeutic experience program.
You still expect to enroll about eight to 10 centers by the end of the year and do you expect any of that enrollment to continue into next year.
Yeah right now we're.
We're at six sites.
And the enrollment keeps increasing.
And Oh.
Each site. The goal is five to 15 patients per site to get is in the 50.
Ah patients for the total.
Research trial that we deem is very valuable.
To bring all of these kols in to expand mind share.
And really.
Get experience treating their M S patience with the ponds.
Okay awesome. Thank you for.
All that detail and I'll return to the queue.
Alright, Thanks, Nick.
Thank you.
As a reminder, that is star one to ask a question.
And our next question will come from Jonathan Ashok with rocking km.
Okay.
Thank you very much guys I was curious the PBC estimate that five individuals who returned to works saved that provider like 1.63 million in net costs netting out the cost of ponds and can you tell us the number of years of those LTE claims at each of those five had coming.
To them that.
PBC doesn't have to shell out for.
Yeah, Hi, Jonathan this is Dave so the savings on the rest of those long term disability claims according to their actuary.
The actuaries was.
At $1.6 million.
The the five patients.
Some of them average debt.
Three and four.
Years left on it some when as far as 20 years on it but the way they calculate their savings.
Using pons therapy, it was $1 6 million in savings.
Okay, and what do you think of that number is that a very conservative number or is that something that sounds kind of spot on.
I think it's a very conservative number Jonathan some of these patients were and again that the minimum for the.
For this study that Pacific.
Pacific Blue Cross did with health Tech connect.
The minimum.
Advent was from two years and beyond some of these patients were formed five years away from their traumatic brain injury event like a.
Our motor vehicle of banners.
Our workers comp injury.
Just it just in general where <unk> come from.
But.
My belief was the savings were.
North of $1.6 million.
Okay. So some moves a little confusing in that publication.
Four or five of the nine patients actually return to work or did Gino did.
Hey, just for and one was simply deemed work ready because they kind of like it kind of says both it's it's a bit confusing or you know to PMC does it not even matter because simply teaming someone work ready despite not actually returning to any kind of work cuts off the L. T D payments.
Yeah. So good question. So they they closed out five long term disability claims based off going back to work so five of them to get their only went to work right.
Alright.
Actually five did because there it says physical disabilities went away. So they were able to go back to work and actually five did go back to work. So there is some ambiguity in timing to that Jonathan but I think the number that we focus on our core.
Clearly was that eight out of the night deemed balancing gait was no longer an issue to going back to work. So if you think about the three that haven't gone back to work yet.
There is even more cost savings, if they get but but the way that that the study was done by Pacific Blue Cross their primary outcome was going back to work so that they could close their long term disability claims.
And Jonathan.
Yearly comes from I think four of the five went back to work in the same occupation that they had before.
I think that's where the ambiguity is five went back to work before actually went back to their same job.
Okay. So the eight you mentioned the eight of nine the eight that had the gait and balance fixed but only five of them went back to work is that because you know the three patients that differ between those two groups still had headaches without the one reason.
Not necessarily I mean.
If he if you read into this a little bit the one thing one this is not our study this is not healy's medical study.
But second.
Those patients.
Even though there.
Able to you know.
And basically saying balancing gait or their physical disabilities are no longer an issue to go back to work we didn't have any color on their actual you know application resume.
And frankly going out and looking for new work so.
Our belief is those eight out of nine.
Actually you know an 89% of the study.
We felt like we met the goal.
<unk>.
The ability to go back to work does that make sense Jonathan yeah.
Yeah, Yeah. It does.
The last question I'm, sorry, because yeah, because you know PON therapy treats balancing gait.
And that's that balancing gait deficit.
Our our claims are not in anything cognitive headaches severity and so forth.
It is fabulous that their study reported.
The decrease in severities and increase in cognizant that those are just a wonderful things to see with <unk>.
Using pons therapy, as hopefully a standard of care going forward.
In treating traumatic brain injuries.
Okay and are you.
You had mentioned some warrant exercise contribution too.
Give you some cash was there any ATM use after the 13th of June.
Yeah. So we did disclose in our 10-Q that we raised.
$284000 from our ATM during the quarter.
And we sold 27875 shares.
In doing so.
Okay. Thank you very much.
Thank you thank you Jonathan.
And once again that is star one to ask a question.
All right and it seems we have no further questions in the queue. So I'll turn the floor back over to Dan for any additional or closing remarks.
Great. Thank you and thank you everyone for following Helios medical technologies, we're living in very exciting times for Pons therapy, we look forward to keeping you updated as we pursue coverage for reimbursement and continue bringing ponds therapy to the millions who need it. Thank you.
Thank you ladies and gentlemen, this concludes today's call and we appreciate your participation you may disconnect at any time.
Yeah.
Okay.
Okay.
Mhm.