Full Year 2023 Daxor Corp Earnings Call
Yeah.
Mhm.
Ladies and gentlemen, thank you for standing by.
Speaker Change: Good afternoon, and welcome to the Doctor Corporation Conference call for the corporate update and financial results for the year 2023 at.
Speaker Change: At this time all participants are in a listen only mode. After today's presentation will be an opportunity to ask questions to ask a question select the Q&A button within the zoom call.
Speaker Change: During this call management will be making forward looking statements, including statements that address <unk> expectations for future performance or operational results.
Speaker Change: We're looking statements involve risks and other factors that may cause actual results to differ materially from those statements for more information about these risks. Please refer to the risk factors described in <unk>. Most recently filed annual reports on form N CSR and subsequent periodic reports filed with the SEC and Dexter.
Speaker Change: The press release that accompanies this call, particularly the cautionary statements in it.
Speaker Change: These reports are available on <unk> dot com.
Speaker Change: The content of this call contains time sensitive information that is accurately only asked off today March 25th 2024.
Speaker Change: As required by law <unk> disclaims any obligation to publicly update or revise any information to reflect events or circumstances that occur. After this call.
Speaker Change: It is now my pleasure to turn this call over to CEO and President Michael Phelps Ya.
Michael Phelps: Thank you Natalie and good afternoon, everyone and welcome to be sure.
Michael Phelps: <unk>.
Michael Phelps: I would like to turn the floor over to our Chief Financial Officer.
Michael Phelps: Michel for some highlights from our financial performance.
Michel: Thank you Michael good afternoon, everybody.
Michel: Here's a summary of our fiscal 2023 financial results.
Michel: For the year ended December 31, 2023, <unk> net assets increased 17, 4% to 34.010 million $384 or $7 eight per share as compared to $28 million $969469 four six.
Michel: 75 per share at December 31, 2022.
Michel: Valuation of the operating division increased $6 million to $32 million.
At December 31, 2023 from $26 million at December 31, 2022.
Michel: The increase during 2023 is based on an annual independent valuation performed for the year ended December 31, 2023 utilities utilizing a hybrid of methods of the income approach using a discounted cash flow method and the market approach <unk> recent arm's length transactions.
Michel: In 2023, 464599 tax with Treasury shares were sold at a price of $9 75.
Michel: The discounted cash flow utilized 35% of this waiting on the income approach and utilize 65% weighting.
Michel: On the.
Michel: The market approach for.
Michel: For year end December 31, 2023, <unk> had net dividend income of $157378 net.
Michel: Net realized gains on investment of activity of $603774.
Michel: There was a decrease to net decrease in the unrealized depreciation on investments of $885199 as we sold long held positions during the year 2023 from which prior year significant unrealized gains unwound into realized gains for the period.
Michel: Included in the net increase in net assets, resulting from operations of $280640. The noncash stock based compensation expense of 631701.
Michel: In an effort to provide incentives to employees officers agents and consultants to the company.
Michel: We utilized stock based incentive awards.
Michel: <unk> invested $4 million $552380 in the operating division relating to our continued investments in research development sales overhead as the company continues to invest judiciously in research and development.
Michel: Anticipated 2024 product launch ramping the commercial sales teams as well as production facilities for our next generation blood volume analyzers.
Michel: That concludes my summary of the financial results and I'd like to turn the call back to Michael Thank you.
Michael Phelps: Thank you Bob I appreciate it.
Michael Phelps: So I'm going to give a general update on the company.
Michael Phelps: A number of investors and other interested parties have thoughtfully submitted soon.
Michael Phelps: A series of questions for me to address after that in addition, it's possible to type in questions that you wish to the moderator, who can then pass them on to me. Unfortunately due to the very large volume of questions. We've received in the time allotted for this I can't get to every single person's question, but I will try to cover.
Michael Phelps: A lot of ground and hopefully that will satisfy people's needs.
Michael Phelps: Need for more details so let's just start at the top.
Michael Phelps: This is an incredibly exciting time for <unk> right now a number of different things are converging.
Michael Phelps: Things that we've been working on for years things that are critical to our development as a company as an ongoing concern as a company that's committed to changing the arc of health care and specifically to solving one of the largest challenges in medicine, which is specifically that of effective blood volume measurement to enable optimal care.
Michael Phelps: So I'll just start by saying that we as a company have never been more focused on our mission and our goals and we are right. Now every team member attacks or see as both of our marketable strides that we're making these different areas and I'm going to go into those details in a moment.
Michael Phelps: And we really feel that we are solidifying our position not only as a global leader in terms of blood volume measurement technology, but we are rapidly seeing just how fast this market is and the promise of what our rapid expansion means both for the company and for the potential for serving the tens of millions of patients that exist in the market.
Michael Phelps: Globally that would all benefit from having care optimize through better blood volume measurement.
Michael Phelps: For 2023, we've seen.
Michael Phelps: Very strong start.
Michael Phelps: <unk> growth of our revenues from 2022 to 2023 and into the start of 2020, we're and I'm going to go into more details on that as well.
Michael Phelps: We've been able to hit a number of key milestones and objectives from last year, including submitting our next generation fund VI analyzer for consideration under the 500 10-K approval process with the FDA to something that we did at the end of Q4.
Michael Phelps: We've received a number of new patents.
Michael Phelps: Those are.
Very important is we have a growing.
Michael Phelps: Family of patents around our technology, which will protect our lead in the marketplace for years, we have a number of patents pending as well we've been the recipient of awards from both the National Institute of Health and further contract awards from the U S Department of defense, which are not only wonderful where theyre non dilutive funding.
Michael Phelps: But also because they are such a strong validation of the value of our technology and the importance of the problem that we're solving and the effectiveness of the solution that we present.
Michael Phelps: So with that being said why don't I dive into a little bit more about what we're doing.
Michael Phelps: Briefly on.
Michael Phelps: Say that blood volume measurement is a key.
Michael Phelps:
Michael Phelps: Peter then.
Michael Phelps: Is essential for improving and optimizing patient care.
Michael Phelps: While not all investors are familiar with why that is such a vital sign I'll briefly just explain that while the pressure and the temperature of a patient's blood can be easily determined even the ratio of red cells to plasma can be easily ascertained, knowing D and quantitate. The actual total amount of blood that a patient has has been one of the major challenges in modern medicine.
Michael Phelps: And <unk> has a.
Michael Phelps: Our 98% accurate gold standard method of solving this problem and the reason why that matters is because blood volume is vital for improving patient outcomes every.
Michael Phelps: Single intervention in medicine that involves a transfusion that involves the use of a diabetic.
Michael Phelps: Jim off some kind of supportive fluid management decision is really a blood volume management.
Austin and the problem has been that while we've had a.
Michael Phelps: Wide variety of interventions to guide blood volume and that's necessary obviously in areas like things that come to mind like critical care, but it's also the cornerstone for example of management things like heart failure.
Michael Phelps: And then also things like syncope and parts in hyponatremia and chronic fatigue syndrome. The list just goes on and on where volume is actually a central question of the management of the patient Theres been a lot of management of patient care, but without effective measurement of the patient's actual volume.
Michael Phelps: Management without effective measurement has been has been.
Michael Phelps: Meant that there has been a lot of really suboptimal outcomes for patients and that has a profound implications for patients both with chronic conditions and acute conditions that require them to be hotspots. It involves patients on the inpatient side, meaning hospitalize patients and it also involves the management of patients on an outpatient setting as well so when you look at.
Michael Phelps: The vast number of patients who are having some kind of volume management intervention in their care.
Michael Phelps: And that includes not only the 6 million people with heart failure.
Michael Phelps: 1 million of whom will be Horst plans. This year one in five patients will die from heart failure, that's how pervasive that problem. It's one of the leading causes of death in the United States. It also can really be expanded to include.
Michael Phelps: The very large number of patients for example, who are undergoing volume effective therapy for hypertension.
Michael Phelps: Just to name another population that involves $120 million a year. So if tax or has such a such a massive market what has been our strategy to try to.
Michael Phelps: To make an effective inroad into that and I'm going to go into that more but first I just wanted to set the stage of what's at stake and one of the things that's been very important for the arc of the development of the company over the last several years has been it's not just enough to show that you have a more accurate diagnostic you also have to actually then show this camp guided.
Michael Phelps: Might not more accurate diagnostic lead to better outcomes.
Michael Phelps: Specific better outcomes are they are they better clinical outcomes are they better health economic outcomes are they better quality of life outcomes and the good news is that index worse case more effective care.
Michael Phelps: Starts with having a very accurate diagnosis to guide the interventions that follow leads to an improvement in every single one of those areas and that's really what you want to see in AR and AR and effective product offering for our company something that improves the clinical outcomes for patients that means reducing the length of stay in the hospital reducing.
Michael Phelps: Their chances of readmission, reducing their mortality rate, but also something that then leads to a more effective and efficient results for the providers that means that the hospitals will spend less money treating these patients and ultimately the insurance companies payers will be on the hook for less as well and that's something that we are tax or have been proud to be developing.
Michael Phelps: Sensibly.
Michael Phelps: <unk> been gaining traction on that.
Let's talk briefly about the financial numbers, Bob obviously just.
Speaker Change: Hit upon the highlights of what's there.
Speaker Change: In our letter we covered the fact that we've been seeing strong revenue growth for the company.
Speaker Change: Obviously, one of the challenges with tax where is that.
Speaker Change: <unk> have been mandated to report asking 19 forties company, which means we presented consolidated balance sheet across all of our investments which includes the listed securities that we have as well as our fully owned operating company, but.
Speaker Change: I do want to give investors a sense of what our cadence of operations has been and how things have been improving so quite specifically.
Speaker Change: Between.
Speaker Change: The second half of 2022, and the second half of 2023, we've seen our kit sales.
Speaker Change: <unk> just to give a sense of that painful 37, 4%, obviously that number means so that's the number of tests that have been sold.
Speaker Change: Our tests are test kits, which are single use test kits are sold either in the form of kits.
Speaker Change: Kits, which are shipped to a hospital for use with their analyzer or they are in the form of reference lab, where the blood samples are sent back to tax was CLIA certified labs, we're reporting results.
Speaker Change: Uh huh.
Speaker Change: Uh huh.
Speaker Change: Types of tests are actually priced differently the price for our tests in 2023 was $385 per chip in the hospital perform the test.
Speaker Change: That price has since been increased to $460 per test. So that's for both new customers and for existing customers, who don't have price protection built in which is the vast majority of them we've been able to.
Speaker Change: Effectively have a 20% price increase starting march 1st so none of the numbers reflect that.
Speaker Change: We also introduced a so called easy BVA lap in 2023, that's a reference lab, where the tracer that is injected into the patient and ship to the hospital. The blood samples are sent back to us that it's been priced at $965 per test and we've been seeing increasing uptake of that product as well that really started to help particularly in.
Speaker Change: In the fourth quarter of 2023.
Speaker Change: What we've seen.
Speaker Change: For the start of.
Speaker Change: The first two months of 2024 has been a continued rise in the number of kits sold so the first two months of 'twenty 'twenty four we saw over a 95% increase in the number of kits sold versus the number of kits that were sold in 2023. So we're seeing a very strong rise.
Speaker Change: <unk>.
Speaker Change: In the past we've.
Speaker Change: We've put out that are over 65000 kits have been small to date.
Speaker Change: That number certainly needs to be updated it.
Speaker Change: It's several years old that number is at least 10000 kits more now than it was in the past and we should be updating that number as a reference but we're seeing a really strong increase in that number of kits being sold.
Speaker Change: We'll dive more into that later.
Speaker Change: Let's talk about.
Speaker Change: The number of accounts. So our sales have been rising through a combination of an increase in sales at existing accounts, meaning we're penetrating deeper into these accounts, but we've also been adding new accounts. So we added a dozen new hospital accounts one of the questions that I received was do we count a hospital system as one account or do we count the.
Speaker Change: Individual hospitals in a hospital system as an account the answer is the latter not the form. So for example, if we sell it into a three hospital system.
Speaker Change: Each one of those hospitals individually.
Speaker Change: As a as a so called new site for the use of BV because functionally they really arent. So just given a sense of the increase in the business. We added 12, new accounts in 2023, those accounts were a combination of sales.
Speaker Change: Rentals and services for the easy PVA lab in the first two months of 2024, we added six accounts.
Speaker Change: Again with a similar kind of combination so just to give people an understanding of what's going on we've seen a very sharp increase in the number of accounts opened the sales.
Speaker Change: The there's really been a pivot point in the business I would face from the third quarter of last year and the cadence of sales in the cadence of customer engagement has been much much higher which in some ways was potentially surprising I think that I've received a number of questions from investors who were concerned that because we have a.
Speaker Change: Next generation system that we're planning on launching that we're concerned that there would be a slowdown in adoption of our technology as customers waited to upgrade to the new system, we've actually seen the exact opposite with a 95, 7% year on year increase in the first two months of the year, we just actually had our best week of kit sales.
Speaker Change: And last week, so we're continuing to see stronger growth.
Speaker Change: We're also seeing.
Speaker Change:
Speaker Change: Our forecast now, where we anticipate being able to breakeven.
Speaker Change: Within 12 months from now.
Speaker Change: We are.
Speaker Change: Thinking that that will be driven by a combination of.
Speaker Change: The continued growth that we've been seeing in the adoption of our systems anticipated revenue from various different contracts that we are aiming to receive and of course the launch of our new system. The new BVA 200 system, which contains a number of very important.
Speaker Change: Potential upgrades and will be <unk>.
Opted by customers, we anticipate at a much higher rate.
Speaker Change: And with a higher rate of utilization so I'll go into that system now.
Speaker Change: So <unk> completed a clinical trial last year.
Speaker Change: At several sites, where we did.
Speaker Change: Paris and between lab results from our existing FDA cleared <unk> BVA 100 system and what we have use as an internal designation of so called next generation blood volume analyzer.
Speaker Change: Those are.
That clinical trial involved several hundred samples that were drawn from patients and a variety of conditions in real World Hospital situations and then that was packaged into a 550 page.
Speaker Change: Submission to the FDA that was under the so-called five 10-K slash clear dual waiver application system and that's a.
Speaker Change: Our system of approval, which involves.
Speaker Change: The submission to show the equivalents between an existing approved system and a.
Speaker Change: Post system.
Speaker Change: We were quite pleased with the data that we've collected.
We have validated this next generation device with the department of defense under contract with them and we were happy to do the civilian side validation for our submission.
Speaker Change: Just to review to everyone. Why is this next generation system. So important what is it our existing system as a carousel based CIS.
Speaker Change: System that sits in the lab typically of a hospital. So the workflow involves injection of our tracer into the patient usually at the point of care collection of blood samples, which are then sent to our lab for processing and then the results are entered into usually electronic medical record system of the hospital and then results are reviewed.
Speaker Change: By the clinical care team.
Speaker Change: The new system.
Speaker Change: Which was developed under contract by the U S Department of Defense is a portable battery operated winter care system, it's about the size of a shoebox.
Speaker Change: Was designed initially or under the specifications of the U S army to be Ruggedized. So that it could be used for forward deployment in combat casualty care, but it's also been made with the civilian market very much in mind. So the new system involves a completely different work.
Speaker Change: <unk> that the patient has the pace of injected into them, but as a blood samples are collected their process to immediately at the bedside and then our results is available to the clinical care team. So why is that so important monitor the current system that workflow can involve waiting for 60 to 90 minutes to receive the results of the test if the hospital is using or send.
Speaker Change: That service, it's actually 24 hour delay the new system was shown in our trials to be able to give an initial blood volume, resulting as quickly or 15 minutes at the bedside with considerably less effort by the technicians, because they don't have to bring samples back to lab et cetera.
Speaker Change: This is really something that opens up a very broad array of potential users. For example were timely blood volume measurement is really important to think about patients in a critical care unit, where they want to make a fluid intervention, but they need to make that intervention in them in a rapid way, it's something that makes our system more attractive.
Speaker Change: Or a potential hospitals to take time because of the resources required to workflow is just much more friendly towards adoption in the hospital system. So we're really excited about this the other thing is that we're looking for this device to be so called CLIA waived.
Speaker Change: Clear waiver certification would make adoption of the system and its utilization much more friendly to the hospital systems, we anticipate that with the approval of the system that there would be potentially significant adoption of that new system not only at existing customer counts, who would be very attracted to the new workflow and footprint of the.
Speaker Change: Some but it would also open up a large number of accounts at hospitals that have expressed interest.
Speaker Change: And our technology, but would like to see this new workflow that's available base.
Speaker Change: Based upon the speed.
Speaker Change: Convenience and of course.
Speaker Change: Its ability to provide timely information that will guide interventions.
Speaker Change: Touching on <unk>.
Speaker Change: <unk> area, our R&D, we continue to do further next generation tracer development into our plus a marker also would support by the U S military.
Speaker Change: And we have also been filing and receiving.
Speaker Change: Patents.
Speaker Change: Related to the utilization of blood volume technology, so specifically.
Speaker Change: <unk> has been receiving mess.
Speaker Change: Method patents that are related to the application of blood volume measurement and the guidance of care, we feel that these patents are.
Speaker Change: Quite important and will help to protect our valuable IP that the company has been developing for years.
Speaker Change: We've been seeing that.
There has also been an important.
Speaker Change: Amount of clinical outcomes that have been occurring we've seen over 25.
Speaker Change: Papers in peer reviewed presentations on blood volume analysis in the past 18 months alone and so we're seeing a very large upsurge of interest in blood by measuring technology when I go to.
Speaker Change: The type of society meetings at the Heart failure Society of America. For example featured a whole session on blood volume measurement.
Speaker Change: Last fall that's two years in order that they've been doing it when I go to conferences like the Phd conference, which is one of the leading heart failure technology conferences in the world again blood volume keeps coming up again, and again with important presentations and acceptance. So we're seeing that as we've had.
Speaker Change: It had much higher.
Speaker Change: Profile on the podium at these events are key opinion leaders have been bringing the system into their hospitals, there's just been a much higher profile and recognition or what blood volume analysis can do and I think that that's also what's underpinning and helping to drive increased utilization in our in our system. So this is this is something.
Speaker Change: That is really.
Speaker Change: Quite important we're seeing.
Speaker Change: Outcomes that have shown the substantial need for our technology.
Speaker Change: Two different randomized control trials.
Speaker Change: Presented pilot results last year and the amazing thing about these two different Rct's one was from Duke one was from the.
Speaker Change: The VA center is in both pilots they asked clinicians what they thought the blood volume was up to patients.
Speaker Change: Using the existing technology, and then measured it with blood volume our system, which is 98% accurate and then compare the two and what they found was really astonishing.
Speaker Change: It turns out that are pointing to the VA study, 70% of the time clinicians are getting either the total volume or the rental volume wrong with these patients categorically, 70% of the time to do so he also had a similar finding than.
Speaker Change: 50% of the time they were getting the volume wrong, you didn't actually look at what percentage of the time they were getting the red cells wrong, but that would probably be up a similar order of magnitude. If it matches. The VA study what does that mean it means that there's really a lot of suboptimal care going on out there that if the clinicians new the volume accurately they would be getting much better results than that.
Speaker Change: That's that's becoming increasingly they're in study after study.
Speaker Change:
Speaker Change: So.
Speaker Change: I'll sort of wrap up there and start to go into more of the very specific.
Speaker Change: Questions that I've received.
Speaker Change: And I think that that's going to be able to.
Speaker Change:
Speaker Change: <unk> lead to a good segue to talk about the acquisition that <unk> announced this morning, which is really quite important so just wrapping up in terms of the 2023 results.
Speaker Change: We're continuing to see a strong increase in the utilization of our product.
Speaker Change: We've made important strides in terms of the.
Speaker Change: Next generation analyzer, just to give people a sense of it we submitted for the 500 10-K as I said at the end of Q4 that is a.
Speaker Change: Traditionally it's a 90 day review process for the 500 10-K in a 90 day review process for the CLIA waiver.
Speaker Change: So we are about 80.
Speaker Change: Five days into the review for the.
Speaker Change: 500, 10-K, a piece of it we don't really know exactly when in this 180 day window, the FDA will give us any feedback.
Speaker Change: As soon as we do now and we are able to move fluids and of course, we're going to keep all of our investors and stuff that we've been making preparations though too bill.
Speaker Change: Build and manufacturing units in anticipation of clearance and we've been doing work behind the scenes in order to drive the adoption and the messaging that's necessary for the marketplace. Once we are allowed to actually market the products.
<unk>.
So with that I would like to just sort of briefly pivot and talk about the.
Speaker Change: Announcement that we made this morning.
Speaker Change: Isa Techs pharmaceuticals of Friendswood, Texas as a private radiopharmaceutical manufacturer they have been providing us with inputs into our test kits.
For the last period of time and they are what we would consider a key supplier.
Speaker Change: In addition, they also manufacture and sell a product called <unk>. So let me first explain mega, hoping volume X Mega Taupe and volume X are the two drugs that they manufacture on our behalf and combine those with other elements and then sell them in test kits.
Speaker Change: We have entered into an agreement that calls for us to acquire the exclusive worldwide rights to manufacture volume X and Mega Taupe from them. In addition, a third F. D. A moved drug called low fill will also required by tax or so.
Speaker Change: Dax or owns and operates a 20000 square foot state of art facility in Oak Ridge, Tennessee, we have clean rooms, there we have the ability to manufacture FDA approved products. There. So we will be taking those products in house. This agreement does not require tax or to make any sort of substantial additional capital investment.
We're going to really leverage the existing footprint that we have in order to.
Speaker Change: Operationalize these drugs for our purposes.
Speaker Change: Mega to hope is an input into digital into the manufacturing volume X volume ex itself is the drug that we.
Speaker Change: Our packaging into our test kit so.
Speaker Change: The impact of us taking volume ex in house.
Speaker Change: For our margins, we anticipate could be quite substantial it's going to really affect our margins.
Speaker Change: Depending upon how our business scales, which obviously will not surprise people, but I would say that it would probably.
Speaker Change: Lead to a minimum of a 15% increase in our margins.
Speaker Change: Or our volume of <unk> products, which would increase over time as our business continues to scale up we.
Speaker Change: We do have the ability we estimate at our facility.
Speaker Change: In Oakridge, Tennessee with what's there.
Speaker Change: Bank approximately between two and 300000 test kits a year. So there is ample room for expansion and for growth within our facility.
Speaker Change: So we have a lot of room to scale up in in our existing footprint without having to make further investments to bring the product to the next level as far as <unk> goes global is a product which is used for the measurement of formula filtration rate and this is an exciting product for us for a number of reasons.
Speaker Change: Automotive filtration rate is a different metric than blood volume, but it is often.
Speaker Change: A metric that is considered.
Speaker Change: By Nephrologists in relation to blunt on in other words people like to look at the kidney function of a patient along with the circulating volume on the red cell volume to understand a complete picture of whats going on typically in our cardio renal scenario or in the question of hypernatremia in cerebral salt wasting syndrome. So this drug.
Speaker Change: Fits in very very well for us in tax or it has an existing footprint of customers.
Speaker Change: And while its sales right now.
Speaker Change: Are really focused in the nephrology.
Speaker Change: Area, it's something that is very ripe for development.
Speaker Change: That they have an existing customer base of approximately 20 customers that are regularly ordering this product.
Speaker Change: We think that with a small amount of additional focus marketing et cetera will be able to substantially increase their sales.
Speaker Change: That <unk> been experiencing in this we have the ability to cross sell between <unk> Phil.
Speaker Change: Blood volume.
Speaker Change: And so in other words, the existing global customers will be great for us to sell our blood volume systems, reducing blood volume systems of our customers that would also be natural targets for profound. So we think that theres going to be really a <unk>.
Speaker Change: Substantial synergy between the new product that we're bringing in and the existing products that we have the terms of the deal.
Speaker Change: We're also quite favorable for docs or we.
Speaker Change: We will be working towards establishing the manufacturing of these products in our facility in tandem with a surtax once we take over the production of these products from Isotach isotactic intends to cease producing them. They will not have the right to to produce them further that will become <unk> sole and exclusive product.
Speaker Change: <unk> has entered into a seller financing agreement with <unk> pharmaceuticals that allows tax were to pay off in monthly installments over a two year time period.
Speaker Change: For the products in question.
Speaker Change: We have the option to pay for the acquisition.
Speaker Change: And a mixture of stock and cash.
Speaker Change: At our option and we built.
Speaker Change: <unk> believes that the terms of the agreement are such that we will.
Speaker Change: Cash flow accretive on the deal from the first month of its.
Speaker Change: Its inception. So this is going to be incrementally positive for our earnings from the beginning.
Speaker Change: It's really sort of a almost like a form of a buy out.
Based upon revenues, but in our case, it's not based upon the revenues gross revenues is based upon a minimum amount that we need in order to generate that number we've looked at the run rate.
Speaker Change: Our existing business plus the run rate of the existing customers that <unk> has we feel that this is going to be.
Speaker Change: A net positive.
As I said from the first month. So that's that's some of the details there. This is.
A really important thing thats going on for tactical right now what we're really seeing is the convergence of a number of different metrics here.
Speaker Change: Taking the manufacturer of our test kits in house entirely.
Speaker Change: Along with the manufacturer of our devices means that the company has synergies from being vertically integrated we have the ability to scale the business and to benefit from the economics of growing that business at scale.
Speaker Change: And it means that we are strategically really well placed as an integrated platform around the technology in other words, we're controlling both the.
Speaker Change: Important drugs used for fluid management now GFR. In addition to blood volume and we have the leading technology.
Speaker Change: Around the most accurate and effective way to measure. So we're very excited about how this folds in and the timing we feel is quite auspicious in relation to the launch of our next generation analyzers, which as I've said, we anticipate we will have substantially.
Speaker Change: More rapid and more comprehensive uptake.
Speaker Change: So with that haven't been covered.
Speaker Change: I would like to.
Speaker Change: Turn to.
Speaker Change: Two questions I would just like to say one final note as I noted in our shareholder letter.
Speaker Change: We were sad to note the passing of Mr. Jim Lombard Who's a director of the company for many years.
Speaker Change: He served on the board for two decades, and he passed away last October he was a smart dedicated.
Speaker Change: And very loyal director.
Speaker Change: We extend our condolences to his family and appreciate the service that he gave over many years.
Speaker Change: So that being said again you can type questions you might have into the Q&A on the button that's at the bottom of the.
Speaker Change: Screen that you have and I'll start and I'll beat some of the questions I've received some from some investors who submitted them before.
Speaker Change: Ah.
The first question was received.
Speaker Change: Does.
Speaker Change: How do we anticipate the revenue being generated from the purchased assets are related to ice attacks.
Speaker Change: The pricing of it cash or equity etc.
Speaker Change: <unk>.
Speaker Change: The.
Speaker Change:
Speaker Change: The revenue that we anticipate from the local product.
Speaker Change: Should served in and of itself to paid almost entirely for the acquisition.
Speaker Change: The of the two products themselves in addition to margin improvement from the.
Speaker Change: The bottom line will help us to fund the acquisition as well so we're going to be.
Speaker Change: <unk> <unk>.
Speaker Change: Probably.
Speaker Change: <unk>.
Speaker Change: Build out of the global product that will ramp up once we take on production of it et cetera.
Speaker Change: I think that it's it's a product that probably has the potential to be.
Speaker Change: Substantially larger than it is right now because <unk> currently has no salespeople and.
Speaker Change: And no marketing effort behind the product.
Speaker Change: And it is capable of generating.
About seven figures.
Speaker Change: <unk> revenue a year.
Speaker Change: With its current build out which means it's not much of a platform. So I think that this could be.
Speaker Change: This could be something that would be quite accretive to us.
Speaker Change: Another question around that was will we be marketing this through third parties.
And we will it will be able to sell this through distributors. That's an excellent question, we're going to have to explore that certainly that was a product that has a lot of uses including an apparently in the pediatric market and we're going to explore more about that to see how we can improve the footprint of this.
Speaker Change:
Speaker Change: Let's see skipping to the next question.
Speaker Change: Let's see.
Speaker Change: We'll dax will be the sole source provider for all of these products that are being acquired and can you discuss the competitive landscape, so dax or.
Speaker Change: Has the only FDA cleared product that measures blood volume directly along with the associated patient norms and so we've been continuing to increase our lead there.
Speaker Change: For measuring glomerular filtration rate I believe that there are one or two other products that exist in that space.
Speaker Change: But we from our due diligence have ascertained in fact will fill is not only the most accurate.
Speaker Change: Of them, but it also might be the most convenient for people to obtain so we will update the shareholders more as we become more familiar with all of the opportunity around this but we think that it's well positioned within the competitive landscape, especially for cross selling as we discussed earlier.
Speaker Change: The question was.
Speaker Change: Also given.
Speaker Change: What costs will be incurred over the next six to nine months to bring this capability in house and additional SG&A.
Speaker Change: So again, we'll be able to manufacture both <unk> and volume mix in house with our existing facility.
Speaker Change: The accompanying judiciously built out a world class facility about 10 years ago, and we've been really improving it ever sense. So we've already made the capital investments that are required in order to bring these products up to speed, we will be adding a few head count in order to to make the manufacturing possible, but that cost will be.
Speaker Change: More than offset from the savings from not buying it from third party. So we think that it's going to be really quite quite helpful.
Speaker Change: Sure.
Speaker Change: One another question I received is does this product contains radioactive component how does that Ah Ah.
Speaker Change: Fit into our strategy around having a so called non isotopic tracer local is a very mild radio isotope.
Speaker Change: There are advantages to that in the sense of <unk> a product that also has reimbursement in place which is quite important just as as our blood volume does so it is a well understood.
Speaker Change: Understood and.
Speaker Change: Reimburse product. So that's a positive tax where continues to move forward with our non isotopic straw.
Speaker Change: The strategy we have.
Speaker Change: Received last year funding from the National Institutes of Health catalyzed program, which has funded for the a lot of the testing and development of our tracer system.
Speaker Change: And we've been working hard on on this so called for some marker and our lapses proprietary so we're excited about the.
Speaker Change: The progress that we're making there and we're committed to developing and bringing to market a number of different technologies to solve this crucial problem in medicine.
Speaker Change: Lets see other questions well, we become a reporting company. This is a question that I get a lot and it's something that I talked about a lot. So we have been lowering the the portfolio of value through judicious sales over the last year.
Speaker Change: We continue to you can see the NCS ought to see some of the details of that.
Speaker Change: He has a.
Ben 1934 Act reporting company for the up until 2011 was not our choice to become a 19 forties and company we have been in touch with the SEC around this issue, but it is something that our attorneys have regularly been talking to the FCC about we continue to hope to make the transition back to.
Speaker Change: A so called 34 Act reporting company.
Speaker Change: We have been increasing our revenue.
Speaker Change: And we do feel that we should qualify for that designation again. This is something that's up to the regulator not up to us we're going to continue to be engaging with them.
Next question from this investor was.
Speaker Change: If we get FDA approval.
Speaker Change: Our next generation device will the revenue exceed $10 million, a year et cetera, well, let's let's talk about those numbers, we have not released pricing yet.
Speaker Change: For the.
Speaker Change: The next generation analyzer, we do intend to switch over towards the so called per use model for the test are easy BVA lab right now is priced at $965 per test. So in order to understand simple math round. There 10000 tests a year would obviously translate to about nine.
Speaker Change: $600 million worth of revenue and that's just obviously from our test kits.
Speaker Change: I think that.
Speaker Change: The confidence the grown confidence from management around our breakeven and turning a profit within 12 months is really driven by the substantial uptick that we're seeing what makes it difficult for the company around.
Speaker Change: A specific revenue forecast for numbers that we just don't know yet what the.
Speaker Change: Who will date or timeline won't be with our next generation system I do feel that once we have visibility of that way, we're going to be able to make a better.
Speaker Change: Presentation of both the cadence of the business and in the forecast for when that happens we are though feeling extremely excited about the.
Speaker Change: Fourth quarter of last year and the start of this year.
Speaker Change: As I mentioned earlier.
Speaker Change: We saw.
Speaker Change: Arise.
Speaker Change: 32, 9% and our test kits.
Speaker Change: Between the first half of 2023 in the second half of 2018, that's accelerated to over 95% in the first two months of this year. So our business is really rapidly growing and the revenue associated with it is growing as well and we're very very careful as a company to to invest and grow we're not interest.
Speaker Change: And just growing top line revenue.
Speaker Change: And.
Speaker Change: And at the expense of increasing losses actually just the opposite we're growing revenue substantially in narrowing the losses, so as to get to breakeven and profitability.
Speaker Change:
Speaker Change: Okay.
Speaker Change: Uh huh.
Getting in here sorry.
Speaker Change: I received a question why did the seller wants to sell the company that okay. So <unk> pharmaceuticals is not selling their company to us they are selling.
Speaker Change: Are the products that they manufacture to us that this is an.
Speaker Change: An important distinction this was an opportunistic.
Speaker Change: The moment for us to acquire it Isa Techs pharmaceuticals has been in business since 1975, there's a generational transfer.
Speaker Change: Associated with the company.
And so that was a natural acquirer. So we really took advantage of the timing of their own strategy their own desire in terms of their arc of developing their business.
Speaker Change: A very good time for us to make this to make this offer to them and after.
Speaker Change: Some negotiation around the terms, we were able to come to something that works for everybody.
Speaker Change: Next question and again I apologize, we have received a really huge number of questions.
Speaker Change: Which is great.
Just trying to sort through them and get to them.
Speaker Change: You get to them all.
Speaker Change:
Speaker Change: Uh huh.
Speaker Change: Next question.
Speaker Change: There's a question how much cash does the company have on hand, what is this before or the future again I refer you to the NCS hard to see a listing of our audited financial statements that's what.
Speaker Change: Is that accurate.
Speaker Change: Accurate and updated as of the 31st of last year.
Speaker Change: Yes.
Speaker Change: See what is the cash burn rate of the company.
Speaker Change: What we anticipate so again this is something that's that's very interesting where we're seeing that the revenues have been climbing substantially we anticipate that they're going to continue to climb now at an even greater rate. So the cash burn of the company is something that has been shrinking quite a bit.
Speaker Change: And we anticipate as I said earlier getting to a place of breakeven and profitability within 12 months, depending upon the timing of what the FDA has to offer us and looking at the pipeline of customers and systems that we have that number could be sooner.
Speaker Change: I don't want to speculate on exactly when it's very very hard to forecast. These things we've been seeing.
Speaker Change: An increasing number of sales and of course the revenue associated with every one of those sales is going up as I said, we just increased our prices by 20% and the absolute number of sales is going up a lot too. So these are all the kinds of things that honestly happening.
Speaker Change: Let's see.
Speaker Change:
Speaker Change: Okay, I'm very detailed set of questions.
Speaker Change: Let's see.
Speaker Change: <unk>.
Speaker Change:
Speaker Change: Has the kit revenue rate increased because of new accounts, where because of increased utilization from existing customers, but we've seen an increase in the utilization rates from increasing customers. So for example, we've seen certain physicians increase their utilization due to our outreach because of initiatives around.
Speaker Change: Customer education ran rounds, those sorts of things, but we've also been spreading more within a hospital system.
Speaker Change: In other words I'm getting other clinicians to utilize the test and make it part of their centered on their care. We've also been adding customers in new accounts as well too. So it's really a combination of both of those things.
Another question was I'm interested to learn what milestones tax or has to do to complete to lend an additional $2 $5 million of Dod funding.
Speaker Change: Answer is we don't have to do any more additional work on that we're anticipating.
Speaker Change: Receiving some news around those contracts.
In the next.
Speaker Change: Four to eight weeks.
Speaker Change: And we've done a substantial number of these contracts in the past with the D O D.
Speaker Change: It's been an honor to work with them and we will update shareholders as soon as we know more.
Speaker Change: Around there.
Speaker Change: <unk>.
Speaker Change: Let's see.
Speaker Change: How much more does the quarterly revenue run rate have to increase for you to reach breakeven.
Speaker Change: No.
Speaker Change: And how much of this is assumed based upon the FDA approval of the new device. So again.
Speaker Change: Our forecast of <unk>.
Speaker Change: Of breakeven within that timeframe or anticipation around that is based upon the increased utilization rates that we're seeing with the existing systems that <unk> BVA 100, along with the easy BVA lab and anticipation around the risk being the recipient of certain contracts and grants as well.
Speaker Change: But it's not predicated upon a specific approval date of the new FTA their system. That's under review right now which is there.
Speaker Change: So called next generation PD system.
Speaker Change: Are we to receive that.
Speaker Change: <unk> sooner rather than later, then we would think that that would help us to accelerate that timeline of of breakeven and profitability. So I think it's gonna be binding.
Speaker Change: Quite important.
Speaker Change: Let's see.
Speaker Change: A question from it out what is the reason that tax was involved in investing in stocks and financial vehicles, whether it be better focus on the BBA business.
Speaker Change: We are focused actually.
Speaker Change: Almost entirely on our operating business the background for investors, who aren't aware is that the company has a long history of being in the lab services business. We were also a very profitable company.
Speaker Change: Over those years, we had invested our retained earnings into a series of interest rate bearing securities and the SEC determined that they wanted investors to have more visibility into those investments that's why the.
Speaker Change: That's why the company was then has to file under 40 Act status.
Speaker Change: One of the things that's interesting for people, who followed the company we've been a publicly traded companies totaled 1971, we went public with 5 million shares or we actually have a lower share count now than when we went public over 50 years ago, that's because the company over the years. So it's not only profitable we engaged in a lot of share buybacks over that time period.
Speaker Change: Been very very selective about raising capital in those intervening years 1986 was.
Speaker Change: One of the last times that we raised money between between going public and a 19 six was an extended we raise money and then after 1986. The next time, we raised money was in 2020. So were management is really.
Speaker Change: Intensely focused on creating shareholder value.
Speaker Change: We have raised money in order to fund the development of our next generation systems all of the IP work all of the different things.
Speaker Change: <unk> been hearing about on this call, but we still have a very very clean cap table.
Speaker Change: We don't have any warrants or derivatives outstanding management is really focused on on on building the company.
Speaker Change: Very shareholder friendly way.
Speaker Change: Let's see.
Speaker Change: What is the USA army waiting for it to purchase the newest PVA.
Speaker Change:
Speaker Change: So.
Speaker Change: United States Army.
Speaker Change: Generally we will only purchase a FDA approved products for its use.
Speaker Change: With the military or within the VA system, we have bloodline analyzers in use in the veterans administration system right now or the PVA 100 unit as soon as the next generation system is available with a proper FDA clearance then that would be something to consider to to use but I want to be clear with people that the largest opportunity and it is.
Speaker Change: A really substantial opportunity just look at critical care things like sepsis with several million patients a year alone.
Speaker Change: And fluid management is at the center of that care.
Speaker Change: The largest opportunity for us is not necessarily in military medicine per se, although that is an opportunity really in civilian.
Speaker Change: And that's really a very substantial market its too to address them.
Speaker Change: <unk>.
Speaker Change: Somebody also ask are there any research coverage prospects will be that depending on reclassifying, let's say no actually that's where is covered.
Speaker Change: By analysts they do issue independent research reports right now.
Speaker Change: Suppose you should be in touch with our Investor relations people that complaint in the right way, but there there is coverage.
Speaker Change: By I believe.
Speaker Change: The investment bank Maxim as well as of Sunday in capital markets.
Speaker Change: Mongst others. So there are companies that are covering our stock.
Speaker Change: Hmm.
Let's see.
Speaker Change: Here.
Speaker Change: Are you surprised to see this increase in revenue in the first two months of 'twenty or considering the next MPV.
Speaker Change: Virtualization, what do you attribute this to.
Speaker Change: Really again, we can we attribute the growth that we've been seeing to the fact that there has been this convergence of awareness of the product amongst key opinion leaders there's been.
Speaker Change: Really exciting clinical outcomes, showing the intense need and the benefit of utilizing blood volume analysis and the need of customers to solve this problem. So just to review for a second studies have come out showing that you can cut to length of stay for heart failure patients for example by two and a half days when they received our test at the beginning of their hospital.
Speaker Change: Okay.
Speaker Change: That translates into a savings of thousands and thousands of dollars foster care about that kind of patient and why does that work. If you start by diagnosing what's wrong with the patient from the beginning the treatment is optimized.
Speaker Change: Cares more effective they get out of the hospital sooner, they're much less likely to die and they're much less likely to re admit this is a huge problem across the entire health care system in other words value value based care is is really at the central piece of everything that's going on in American medicine, It's something that wasn't true 10 years ago as much but now it really is so.
Speaker Change: When we go to hospital administrators, we talk to service and directors. We say what are you focused on what do you care about they also have weren't really interested in understanding how to improve the health economics of treating these patients more effectively tax, whereas an inexpensive solution to a break costs. The problem that they are all really focused on and our messaging has become very clean and very clear.
Speaker Change: Have a really strong sales and marketing team of over a dozen people that are focused on that.
And I think that the word is getting out and customers are now telling other customers about how they've been getting really good results with it I think that that's that's just.
Adding to the groundswell that is increasing.
Speaker Change: Warehouse and desire for.
Speaker Change:
Speaker Change: Let's see.
Speaker Change: <unk>.
Speaker Change: Hum.
Speaker Change: Since.
Speaker Change: Okay.
Speaker Change: Hum.
Speaker Change: I meant.
Speaker Change:
Speaker Change:
Speaker Change: Alright.
Speaker Change: So the last question that I'll see to address a little bit is around you know the cadence of the business and giving people a sense of.
Speaker Change: You know how to think about it I want to emphasize that all the numbers that I've given around.
Speaker Change: Changes in revenue and changes in sales et cetera are unaudited numbers.
Speaker Change: Because again the audited numbers that we have are from the.
Speaker Change: Our from the.
Speaker Change:
Speaker Change: Filings you can find in the N CSR.
Speaker Change: Number is around our operating company because we file consolidated statements are unaudited so I just want to.
Speaker Change: To make sure that our investors are aware of that.
Speaker Change: In terms of understanding where we're at.
Speaker Change: You know this is something where I think that the company.
Speaker Change: Got.
Speaker Change: Is clearly focused on wanting to penetrate the market and is in a substantial way when we think about hospital sales.
Speaker Change: And what hospitals are capable of doing typical hospital, you know might start out at doing 100, 200, 300 tests a year 500 to 1000 starts to look like really ample penetration if you're talking about one indication like.
Speaker Change: Heart failure, you had in critical care and <unk>.
Speaker Change: Apology cardio renal concepts et cetera, you start to realize that a typical hospital could have as much as 502000 tests a year total addressable market. That's why our next generation systems are really important because of the speed and utility that they have.
Speaker Change: Or what what we're really aiming to do is to really scale up into this business.
Speaker Change: And a really profound way at this point you know.
Speaker Change: The numbers start to look very compelling as I said earlier you start to look at what our revenue numbers look like as we achieved.
Speaker Change: Marker of 10000 tests you look at the.
Speaker Change: The ability of our facility to produce 20 times that number of doses and you start to get a feeling for what the total revenues with our existing footprint that we could scale into will be looking to step up into that and giving more clarity around that as we achieve our milestones.
Speaker Change: With that I'm going to thank you for your time and attention and all of your thoughtful questions and I'll turn it back over to Bob If theres anything else that we need to think before closing.
Bob: Bob Youre on mute.
Yes.
Bob: I would just like to thank everybody for joining the call and.
As Michael said as we reach these milestones we will be.
Making announcements for.
Bob: The path forward.
Bob: It's just very exciting time to be a.
Bob: At the XOR and if you're an investor at that store. So thank you very much.
Speaker Change: For your support.
Speaker Change: Goodbye.