Q1 2024 ENDRA Life Sciences Inc Earnings Call

Operator: Good day, and welcome to the ENDRA Life Sciences first quarter 2024 financial results conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key, followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then 1 on your touch-tone phone. To withdraw your question, please press star, then 2. Please note, this event is being recorded. I would now like to turn the conference over to Yvonne Briggs. Please go ahead.

Good day and welcome to the and your life Sciences first quarter 2024 financial results Conference call. All participants will be in a listen only mode should you need assistance. Please signal our conference specialist by pressing the Starkey followed by zero.

Conference Specialist: After todays presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one on your Touchtone phone to withdraw your question. Please press Star then two please note. This event is being recorded.

Yvonne Briggs: Thank you, Operator. This is Yvonne Briggs with LHA.

Conference Specialist: I would now like to turn the conference over to Yvonne Briggs. Please go ahead.

Yvonne Briggs: Good afternoon, and welcome to ENDRA Life Sciences' first quarter 2024 business update and financial results conference call. Earlier today, ENDRA issued a press release on this topic, which is available in the investor section of ENDRA's website. Before we begin, please note that today's discussion will include forward-looking statements. All statements by management, other than statements of historical facts, are forward-looking statements. These include statements regarding the company's strategies, financial condition, operations, costs, plans, and objectives, as well as anticipated results of development and commercialization efforts, the timing of clinical studies, potential partnership opportunities, and expectations regarding regulatory processes, receipt of required regulatory clearances, and product launches.

Conference Specialist: Thank you operator this is Yvonne Briggs without like Jay Good afternoon, and welcome to enjoy life Sciences first quarter 2024 business update and financial results Conference call.

Yvonne Briggs: Earlier today, and you issued a press release on this topic, which is available in the investors section of an insurance website.

Management: Before we begin please note that today's discussion will include forward looking statements all statements by management other than statements of historical facts are forward looking statements. These.

Management: These include statements regarding the company strategies financial condition operations costs plans and objectives as well as anticipated results of development and commercialization efforts the timing of clinical studies potential partnership opportunities and expectations regarding regulatory processes receipt of required.

Management: <unk> regulatory clearances and product launches.

Speaker Change: Except as required by federal Securities laws, the company disclaims any obligation to update or revise any forward looking statements.

Speaker Change: Please refer to the company's Form 10-K for the 2023 fiscal year and subsequent SEC filings for more information about risks and uncertainties related to forward looking statements.

Yvonne Briggs: Except as required by federal securities laws, the company disclaims any obligation to update or revise any forward-looking statement. Please refer to the company's Form 10-K for the 2023 fiscal year and subsequent SEC filings for more information about risks and uncertainties related to forward-looking statements. In terms of the structure of today's call, Francois Michelon, Chairman and Chief Executive Officer, will begin the prepared remarks, followed by Michael Thornton, ENDRA's Chief Technology Officer. Mr. Thornton will be followed by Irina Pestrikova, Senior Director of Finance, to review the first quarter financial results, and then we'll take your questions. I'll now turn the call over to Francois Michelon.

Speaker Change: In terms of the structure of today's call Francois Michelle on Chairman and Chief Executive Officer will begin the prepared remarks, followed by Michael Thornton Andrus, Chief Technology Officer.

Speaker Change: Mr. Thornton will be followed by arena Pester Koga senior director of Finance to review the first quarter financial results and then we'll take your questions.

Speaker Change: Now I'll turn the call over to Francois Michelle on friends walk.

Francois Michelon: Thank you, Yvonne, and thanks for joining us today to review ENDRA's first quarter 2024 financial results and key business developments. We're advancing on our mission to revolutionize metabolic health through the practical detection and monitoring of liver disease, and we've made good progress in the following year. First, activating new clinical research sites and target markets to build our body of clinical evidence at the local level across a range of sites, users, and patients.

Speaker Change: Thank you Yvonne and thanks for joining us today to review <unk> first quarter 2024 financial results and key business developments.

Francois Michelon: We are advancing on our mission to revolutionize metabolic health through the practical detection and monitoring of liver disease and we've made good progress in the following areas.

Francois Michelon: First activating new clinical research sites in target markets to build our body of clinical evidence at the local level across a range of sites users and patient types.

Francois Michelon: This clinical data is a foundational element to achieving commercial success in the future. Second, working closely with the FDA to align on clinical requirements for Artea Systems' de novo app. A pre-submission meeting is scheduled with the FDA in suburban Washington, D.C. Third, leveraging the accelerating market developments in the detection and treatment of liver disease to strengthen ENDRA's position. And fourth, looking beyond our current markets and technology to new opportunities to license our intellectual property. I'll elaborate on each of these elements.

Speaker Change: This clinical data is a foundational element to achieving commercial success in the future.

Speaker Change: Second working closely with the FDA to align on clinical requirements for our <unk> systems de Novo application.

FDA: Pre submission meeting scheduled with the FDA in suburban Washington D. C. This quarter.

Speaker Change: Third leveraging the accelerating market developments in the detection and treatment of liver disease to strengthen <unk> position in <unk>.

Speaker Change: Fourth looking beyond our current markets and technology to new opportunities to license our intellectual property.

Speaker Change: I'll elaborate on each of these elements.

Francois Michelon: In the first quarter, we achieved a milestone in one of our target markets by installing the first TAF system in the United Kingdom. King's College Hospital in London, a prestigious National Health Service institution, is leading the introduction of ENDRA's liver system in the UK market. This partnership entails a clinical study comparing TAIS's liver fat assessment versus MRI, the recognized research. The UK, along with other active clinical study sites in the US, are crucial for generating the body of clinical data needed to support the commercial adoption of our technology across radiology, hepatology, and endocrinology in global markets.

Speaker Change: In the first quarter, we achieved a milestone in one of our target markets by installing the first tier system in the United Kingdom King's College Hospital in London, the prestigious National Health Service institution.

Andrew: This is leading to the introduction of Andrew's liver system in the U K market. This partnership entails a clinical study comparing <unk> liver fat assessment accuracy versus MRI the recognized research standard.

Andrew Liver: The U K along with other active clinical study sites in the U S are crucial for generating the body of clinical data needed to support the commercial adoption of our technology across radiology, herpetology and endocrinology and global markets.

Francois Michelon: The clinical abstracts we presented last year at the European Association for the Study of the Liver were a great start, highlighting the impressive clinical performance of our technology compared to the MRI gold standard, but we need to continue to expand this pool of real-world evidence to demonstrate our clinical and economic value to potential users in our target market. In addition to the foundational work of building our clinical evidence, ENDRA is working closely with the FDA to achieve alignment on clinical requirements for Arcteus systems de novo. ENDRA has had several interactions with the agency since Q4 of 2023, and we've provided additional information about our technology in historical, clinical..., to advance a review process and further align expectations with the aim of ultimately achieving a successful regulatory outcome.

Speaker Change: The clinical abstracts, we presented last year at the European Association for the study of the liver where a great start.

Speaker Change: Lighting, the impressive clinical performance of our technology compared to the MRI gold standard.

Speaker Change: But we need to continue to expand this pool of real world evidence to demonstrate our clinical and economic value to potential users in our target markets at the local level.

Andrew Liver: In addition to the foundational work of building our clinical evidence Andrew is working closely with the FDA to achieve alignment on clinical requirements for T system's de Novo application.

Andrew Liver: Andrew has had several interactions with the agency since Q4 of 2023, and we've provided additional information about our technology and historical clinical test.

Mike: To advance a review process and further align expectations with the aim of ultimately achieving a successful regulatory outcome. Andrew has scheduled an in person pre submission meeting with the FDA this quarter focusing on clinical requirements, Mike will elaborate on this in a minute.

Francois Michelon: ENDRA has scheduled an in-person pre-submission meeting with the FDA this quarter, focusing on clinical requirements. Mike will elaborate on this in a minute. On a broader market base, eBuilding blocks for diagnosing, treating, and managing liver disease are rapidly evolving, providing hope for the millions who are affected and opportunities for companies like ENDRA. Leading clinical societies such as the American Diabetes Association and the American Association for Clinical Endocrinology have updated their guidelines and now recommend screening for fatty liver disease for prediabetic, diabetic, and obese patients. That's over 100 million people in the U.S. alone who need to be evaluated. An MRI is not a practical solution for a population this large.

Michael Thornton: On a broader market basis key building blocks for diagnosing treating and managing liver disease are rapidly advancing.

Francois Michelon: A second building block relates to the FDA's recent approval of resdifra, Madrigal Pharmaceuticals' pioneering drug therapy for NAFLD, marking the beginning of a new chapter in liver disease management. This therapy, along with other emerging targeted treatments for liver disease, will significantly impact health care providers, insurers, and patients. Major insurers like Blue Cross are requiring adherence to nine specific prescribing authorization criteria for res diffra, including an MRI-PDFF liver fat quantification exam, which can only be performed by the most advanced subset of the world's MRIs.

Michael Thornton: Providing hope for the millions who were affected and opportunities for companies like Andrew.

Speaker Change: Leading clinical societies, such as the American Diabetes Association and the American Association for clinical endocrinology of updated their guidelines and now recommends screening for fatty liver disease for pre diabetic diabetic and obese patients that's over 100 million people in the U S alone.

Michael Thornton: Need to be evaluated.

Michael Thornton: In MRI is not a practical solution where population is large.

Michael Thornton: Our second building block relates to the Fda's recent approval of residential Madrigal pharmaceuticals pioneering drug therapy for Naphthyl Nash, marking the beginning of a new chapter in liver disease management.

Madrigal Pharmaceuticals: This therapy, along with other emerging targeted treatments for liver disease will significantly impact health care providers insurers and patients.

Blue cross: Major insurers like Blue cross are requiring adherence to nine specific prescribing authorization criteria for rest of world, including an MRI P. D. F F liver fat quantification exam, which can only be performed by the most advanced subset of the world's Emma lives.

Francois Michelon: This underscores the complexity of managing this disease and highlights the need for precision in diagnosis and treatment. Resdifra and future drugs will consequently drive demand, we believe, for more accessible point-of-care diagnostic tools like Endrasteus that are capable of facilitating the assessment and monitoring of liver disease affecting over 2 billion people globally. Finally, we're actively exploring collaborations and strategic pathways to expand the applications of our TAIS platform beyond the lab. By leveraging our intellectual property and engaging in strategic partnerships and outlicensing initiatives, we aim to capitalize on the potential of Artea's platform in new therapeutic areas.

Blue cross: This underscores the complexity of managing this disease and highlights the need for precision and diagnosis and treatment.

Rez differ: Rez differ and future drugs will consequently drive demand, we believe for more accessible point of care diagnostic tools like <unk> that are capable of facilitating the assessment and monitoring of liver disease affecting over 2 billion people globally.

Speaker Change: Finally, we're actively exploring collaborations and strategic pathways to expand the applications of our <unk> platform beyond the liver by leveraging our intellectual property and engaging in strategic partnerships and out licensing initiatives. We aim to capitalize on the potential of our test platform and new <unk>.

Speaker Change: Pudic areas.

Francois Michelon: We have engaged PatentVest, a leading intellectual property advisory firm, to spearhead ENDRA's IP valuation, competitive landscape analysis, and licensing efforts. To that end, we're aggressively expanding our global intellectual property portfolio with the issuance of eight new patents so far this year. With these additions, ENDRA's patent estate has reached an impressive 80 issued patents worldwide. These patents safeguard key innovations that are integral to the TAIS system and reinforce our competitive edge in the market. I'll now turn the call over to Mike Thornton for an overview of our clinical and regulatory advancements.

Andrews: We've engaged patent vest, our leading intellectual property advisory firm to spearhead Andrews IP valuation.

Patent Vest: <unk> landscape analysis and licensing efforts.

Andrews: Does that and we're aggressively expanding our global intellectual property portfolio with the issuance of eight new patents so far this year.

Andrews: With these additions Andros patent estate has reached an impressive 80 issued patents worldwide.

Andrews: These patents safeguard key innovations that are integral to the payer system and reinforce our competitive edge in the marketplace.

Andrews: I'll now turn the call over to Mike Thornton for an overview of our clinical and regulatory advancements Mike.

Michael Thornton: Thanks, Francois. Today, I'll provide an update on regulatory developments for ENDRA's TAS system. ENDRA secured a valuable opportunity for an in-person pre-submission meeting in the second quarter with the FDA at their Maryland facility to prepare and submit a new de novo application. The focus of this meeting will be clinical trial design, which is crucial for obtaining alignment with the FDA on our study design. We'll discuss key aspects, including the study design, study hypothesis, and the statistical analysis plan.

Michael Thornton: Thanks, Ron swap today, I'll provide an update on regulatory developments, where ingress test system.

Michael Thornton: Under our secured a valuable opportunity for in person pre submission meeting in the second quarter with the FDA at the Maryland facility to prepare and submit a new de Novo application.

Michael Thornton: The focus of this meeting will be clinical.

Ron: Trial design that.

Ron: That is crucial for obtaining alignment with the FDA on our study design.

Speaker Change: We will discuss key aspects, including the study design study hypothesis and statistical analysis plan.

Michael Thornton: Furthermore, we provided the FDA with a detailed description of the device and a master protocol that outlines a clinical study across multiple sites. This proposed study will cover a range of liver fat percentages mirroring the prevalence of steatotic liver disease in the U.S. population. ENDRA's pre-submission team for the upcoming meeting includes key technical staff and an experienced regulatory lead with over 20 years of first-of-a-kind medical device experience, a senior biostatistician that is familiar to the FDA, and several radiology clinical experts.

Speaker Change: Further we provided the FDA with a detailed description of the device at a master protocol that outlines that clinical study across multiple sites.

FDA: This proposed study will cover a range of liver five percentages mirroring the prevalence of <unk> toric liver disease in the U S population.

Speaker Change: And it was pre submission team for the upcoming meeting includes key technical staff and then experienced regulatory leader with over 20 years of first of a kind medical device experience.

Senior Biostatistician: Senior Biostatistician that is familiar to the FDA and several radiology clinical experts.

Michael Thornton: Why is ENDRA's approach different this time? Reflecting on our past regulatory strategies and the fast-evolving medical imaging regulatory landscape, it's clear that ENDRA's historical reliance on clinical data derived from multiple feasibility studies was insufficient for FDA's current standards. The current approach is to work hand-in-hand with the FDA through its pre-submission process to develop a prospective, statistically-powered, pivotal trial whose data will be acceptable to FDA for a de novo grant. We look forward to updating you on the outcomes of our FDA meeting and the next steps in our regulatory process. With that, I'll turn it over to Irina Pestrikova for our financial update.

Speaker Change: Why is andrus approach different this time.

Speaker Change: Reflecting on our past regulatory strategies in the fast evolving.

Andrus: CT imaging regulatory landscape. It is clear that endless historical reliance on clinical data derived from multiple feasibility studies was insufficient for Fda's current standards.

Andrus: Current approach is to work hand in hand, with the FDA to its pre submission process to develop a perspective statistically powered pivotal trial, whose data will be acceptable to FDA for our de Novo grants.

Andrus: We look forward to updating you on the outcomes of our FDA meeting and the next steps in our regulatory process.

Irina Pestrikova: Turning now to a review of our recent financial performance, for the quarter ended March 31, 2024, our operating expenses decreased to $2.8 million from $2.9 million for the same period in 2023. The decrease was mainly due to lower research and development expenses. Our research and development expenses decreased year over year by approximately $350,000 as we completed the development of our initial TS product. Our sales and marketing expenses increased by approximately $57,000, mainly due to higher consulting fees. General and administrative expenses increased by approximately $134,000, mainly due to higher professional fees.

arena petrochemical: With that I'll turn it over to arena petrochemical for a financial update arena.

arena petrochemical: Thank you Mike.

Francois Michelon: Our net loss in the first quarter of 2024 was $2.8 million, or $0.26 per share. This compares with a net loss of $2.9 million, or $0.93 per share, in the first quarter of 2023. Cash and cash equivalents were $1.1 million as of March 31, 2021. In the first quarter, the company raised $420,000 in gross proceeds from the sale of common stock through the market equity facility and $77,000 from the exercise of foreign, We're focused on managing our current resources and financing opportunities to maintain the capital necessary to progress our operating plan. Now, I'll turn the call back to Francois Michelon.

arena petrochemical: Turning now to a review of our recent financial performance for the quarter ended March 31, 2024, our operating expenses decreased to $2.8 million from $2 $9 million for the same period in 2023.

arena petrochemical: The decrease was mainly due to lower research and development expenses.

arena petrochemical: Our research and development expenses decreased year over year by approximately $350000 as it completed the development of our initial tests on it.

Speaker Change: Our sales and marketing expenses increased by approximately $57000, mainly due to higher consulting fees.

Speaker Change: General and administrative expenses increased by approximately $134000, mainly due to higher professional fees.

Speaker Change: Our net loss in the first quarter of 2024, western by $8 million or 26 cents per share.

Speaker Change: This compares with a net loss of $2 $9 million or <unk> 93 per share in the first quarter of 2023.

Speaker Change: Cash and cash equivalents were $1 $1 million as of March 31, 2024.

The company: In the first quarter the company raised $420000 in gross proceeds from the sale of common stock at the market equity facility and $77000 from the exercise of warrants.

Speaker Change: We're focused on managing our current resource it and financing opportunity to maintain the capital necessary to progress our operating plan.

Operator: Now I'll turn the call back defense Huh.

Francois Michelon: Thanks Irina and Mike. In summary, we remain committed to driving innovation and a market presence through the following four levels. Number one, leveraging clinical partner sites in Europe and the U.S. to build our base of clinical evidence and achieve successful adoption of our technology. Number two, engaging closely with the FDA to advance our regulatory submission in the U.S. Leveraging Accelerating Market Development and the Detection and Treatment of Liberties to strengthen ENDRA's position.

Speaker Change: Thanks, Irina and Mike in summary, we remain committed to driving innovation and our market presence through the following four levers.

Speaker Change: Number one leveraging clinical partner sites in Europe, and the U S to build our base of clinical evidence and achieved successful adoption of our technology.

Speaker Change: Number two engaging closely with the F D a to advance our regulatory submission in the U S.

Speaker Change: Number three leveraging the accelerating market developments in the detection and treatment of liver disease to strengthen <unk> position.

Francois Michelon: And fourth, leveraging our intellectual property to grow beyond our current markets and clinical focus. On behalf of the entire ENDRA team, once again, I extend my thanks to the shareholders for their continued support of ENDRA. Now, Operator, we're ready to open the call to questions.

Speaker Change: And fourth leveraging our intellectual property to grow beyond our current markets and clinical focus.

Speaker Change: On behalf of the entire <unk> team once again I extend my thanks to the shareholders for their continued support of Android and now operator, we're.

Operator: We're ready to open the call to questions.

Operator: We will now begin the question and answer session. To ask a question, you may press star then 1 on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been answered and you would like to withdraw your question, please press star then 2. The first question comes from Edward Woo from Ascendant Capital. Please go ahead.

Speaker Change: We will now begin the question and answer session.

Speaker Change: Asked a question you May press Star then one on your Touchtone phone.

Speaker Change: If youre using a speakerphone please pick up your handset before pressing the keys.

Speaker Change: If at any time. Your question has been addressed and you would like to withdraw your question. Please press Star then two.

Speaker Change: The first question comes from Edward Woo from Ascendant capital. Please go ahead.

Edward Moon Woo: Hi Ed. Yeah, thank you very much for the update. You know, my question is about Asia. Yeah, I know you have distribution in Vietnam that will go live as soon as you get FDA approval. Are there any other parts of Asia that you're possibly thinking of going into?

Edward Moon Woo: Hi, Ed Yeah. Thank you yeah. Thank you very much for the update.

Edward Moon Woo: My question is on Asia, I know you have the distribution in Vietnam that will go live as soon as you get FDA approval is there any other parts of Asia that you're possibly thinking to go into.

Francois Michelon: Thanks, Ed. Yeah, a great question. I think to put it in context before I get to any specifics on Asia, as a small company, we have to focus our resources, obviously, starting strongly in Europe with a CE mark. The UK clinical site is our anchor there. And as we've announced, we plan to carefully add more sites in our target markets, resources permitting, and then concurrently manage the FDA process and the three active sites we have in the US on a pre-FDA basis to prepare the US market. You're absolutely right.

Edward Moon Woo: Thanks, Ed Yeah, Great question, I think to put it in context before I get to any specifics on Asia as a small company we have to focus our resources, obviously were starting strongly in Europe with a CE mark the UK clinical site is our anchor there and as we've announced we plan to carefully add.

Edward Moon Woo: More sites in our target markets resources permitting.

Ed Yeah: And then concurrently managed the FDA process and the three active sites, we have in the U S. On a pre F D a basis to prepare the U S market.

Francois Michelon: We've disclosed that we do have a distribution agreement in Vietnam, which is a surprisingly high-growth and highly populated market, and we're happy for that. That would go into effect upon FDA approval. And we also previously announced years ago, or rather a couple of years ago, the agreement we signed with Shanghai General Hospital as a clinical study site in the PRC. So we're definitely looking at Asia. We have a few anchor points through those two mechanisms.

Edward Moon Woo: You're absolutely right. We've disclosed that we do have a distribution agreement in Vietnam, which is a surprisingly high growth and high populated.

Speaker Change: Market and we're happy for that that would go into effect upon FDA approval.

Ed Yeah: And we also previously announced years ago or rather a couple of years ago.

Ed Yeah: Agreement, we signed with Shanghai General Hospital as a clinical study site in the PRC. So we're we're definitely.

Speaker Change: Looking at Asia, we have a few anchor points through those two mechanisms Asia, obviously is a large market where liver diseases quite prevalent, but I would say that I'd like investors to hear.

Francois Michelon: Asia, obviously, is a large market where liver disease is quite prevalent. But I would say that I'd like investors to hear, first and foremost, discipline and focus on being successful, first in Europe, then in the U.S., and then carefully leveraging all that knowledge and the basic clinical evidence that I've mentioned, which would be foundational for it all, to then go to Asia. So I hope that helps answer your question. Yes, it does.

Edward Moon Woo: Yes, it does. I wish you good luck with the FDA meeting, and thank you, and I wish you guys good luck. Thank you. Thank you so much, Ed.

Ed: First and foremost discipline and focus on being successful first in Europe than in the U S and leveraging then carefully.

Ed Yeah: With all of that knowledge and the base of clinical evidence that I've mentioned, which would be foundational for it all to that.

Speaker Change: Then go to Asia, So I hope that helps answer your question.

Speaker Change: Yes. It does I wish you a good luck with the FDA meeting and thank you and I wish you guys. Good luck. Thank you. Thank.

Speaker Change: Thank you so much Ed.

Francois Michelon: Operator, if we don't have any other questions, I think we can go ahead.

Speaker Change: Operator, we don't have any other questions I think we can.

Operator: Wrap up the call them.

Operator: Thank you. The conference. Thank you for attending today's presentation. You may now disconnect.

Francois Michelon: Thank you this concludes.

Operator: The conference. Thank you for attending today's presentation you may now disconnect.

Operator: Thank you everyone.