Q2 2024 ENDRA Life Sciences Inc Earnings Call

August 22, 2024

Operator: ENDRA Life ENDRA Life[inaudible] ENDRA Life ENDRA Life ENDRA Life ENDRA Life ENDRA Life ENDRA Life ENDRA Life ENDRA Life ENDRA Life Good afternoon, and welcome to the ENDRA Life Sciences 2nd quarter 2024 Financial Results Conference call.

Operator: All participants will be in listen only mode. Should you need assistance please signal a conference specialist by pressing the star key followed by zero.

Operator: After today's presentation, there will be an opportunity to ask questions.

Operator: To ask a question, you may press star then one on your telephone keypad.

Operator: Do a draw your question, please press star then two.

Operator: Please note, this event is being recorded.

Yvonne Briggs: I would now like to turn the conference over to Yvonne Briggs.

Yvonne Briggs: Please go ahead.

Yvonne Briggs: Thank you, operator.

Yvonne Briggs: This is Yvonne Briggs with LHA.

Yvonne Briggs: Good afternoon, and welcome to ENDRA Life Sciences 2nd quarter 2024 Business Update and Financial Results Conference call.

Yvonne Briggs: Earlier today, ENDRA issued a press release on this topic, which is available in the investor section of ENDRA's website.

Yvonne Briggs: Before we begin, please note that today's discussion will include forward-looking statements.

Yvonne Briggs: All statements by management other than statements of historical facts, including 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 are forward-looking statements.

Yvonne Briggs: Except as required by federal securities laws, the company describes any obligation to update or revise any forward-looking statements.

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

Yvonne Briggs: In terms of the structure of today's call, Alexander Tokman, Acting Chief Executive Officer will begin the prepared remarks, followed by Ziyad Ruag, New Head of Regulatory and Clinical Affairs, and then Michael Thornton, ENDRA's Chief Technology Officer.

Yvonne Briggs: They will be followed by Richard Jacroux, ENDRA's new CFO to review the second quarter financial results.

Yvonne Briggs: With that said, I will now turn it over to Alex.

Alexander Tokman: Alex?

Alexander Tokman: Thank you, Yvonne.

Alexander Tokman: Good afternoon, and thank you for joining us today to discuss ENDRA's second quarter, 2024 financial results and business highlights.

Alexander Tokman: Before we proceed to the business update, let me address the reverse tax split and the subsequent trading of our common stock. As you know, after receiving shareholder approval earlier this month, the company otherwise won 50 reverse tax split, which we announced last Friday and was effective past Tuesday, this past Tuesday. The primary goal was to keep our share price above $1 and in turn maintain the NASDAQ list.

Alexander Tokman: This plan was derailed because of an extremely high volume of exercise warrants which were issued as a part of the $8 million dollar public offering that was completed in June. This public offering was necessary in order to keep the company operational and not to lose all the progress ENDRA made over the years.

Alexander Tokman: We strongly believe that this sharp decline in our stock over the past few days is completely unrelated to ENDRA business prospects.

Alexander Tokman: We have the intended outcome as we are trading below $1 right now. We recognize the seriousness of this situation on the company and our investors and we will keep you apprised about actions as we move forward.

Alexander Tokman: Now let's turn our attention to the second quarter results and recent changes. I would like to start by reviewing review six specific items we intend to do differently moving forward to become more actionable and predictable as we bring ENDRA's differentiating stormal acoustic technology to market.

Unknown Executive: Good afternoon and welcome to ENDRA Life Sciences' second quarter, 2024 Business Update and Financial Results Conference call.

Unknown Executive: Good afternoon and welcome to ENDRA Life Sciences' second 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, including 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 regulatory clearances, and product launches are forward-looking statements.

Unknown Executive: Earlier today, ENDRA issued a press release on this topic, which is available in the Investor section of ENDRA's website.

Unknown Executive: Before we begin, please note that today's discussion will include forward-looking statements, all statements by management other than statements of historical facts, including 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 regulatory clearances, and product launches are forward-looking statements.

Unknown Executive: Except as required by federal securities laws, the company disclams any obligation to update or revise any forward-looking statements. Please refer to the company's Forum 10K for the 2023 fiscal year and subsequent SEC filings for more information about risks and uncertainties related to forward-looking statements.

Unknown Executive: In terms of the structure of today's call, Alexander Talkman, acting Chief Executive Officer, will begin to prepare remarks.

Unknown Executive: Followed by Ziyad Ruag, new head of regulatory and clinical affairs, and then Michael Thornton, ENDRA's Chief Technology Officer.

Unknown Executive: They will be followed by Richard Jacrue, ENDRA's new CFO to review the Second Quarter Financial Results.

Alexander Tokman: With that said, I will now turn it over to Alex.

Unknown Executive: With that said, I will now turn it over to Alex. Thank you, everyone.

Alexander Tokman: Thank you, everyone.

Alexander Talkman: Good afternoon. And thank you for joining us today to discuss ENDRA's Second Quarter 2024 Financial Results and Business Highlights. Before we proceed to the business update, let me address the reverse tax split and the subsequent trading of our common stock. As you know, after receiving shareholder approval earlier this month, the company authorized 150 reverse tax split, which we announced last Friday, and was effective past Tuesday, this past Tuesday. The primary goal was to keep our share price above $1, and in turn maintain the NASDAQ list.

Alexander Tokman: Good afternoon.

Alexander Talkman: This plan was derailed because of an extremely high volume of exercise warrants, which were issued as a part of the $8 million dollar public offering that was completed in June. This public offering was necessary in order to keep the company operational and not to lose all the progress ENDRA made over the years. We strongly believe that this sharp decline in our stock over the past few days is completely unrelated to ENDRA business prospects.

Alexander Tokman: The six changes include stronger operating team.

Alexander Tokman: We lend to us prioritization of our activities, new approach with FDA and hence go to market strategy for TS liver device, crystallization of our ENDRA vision and finally improved financial execution. Let me elaborate on each.

Alexander Talkman: We have the intended outcome as we are trading below $1 right now. We recognize the seriousness of this situation on the company and our investors, and we will keep you apprised about actions as we move forward.

Alexander Tokman: First we enhance our management team by adding two experienced operators.

Alexander Tokman: We have proven track record of success in transforming new technology companies.

Alexander Tokman: Richard Jacquo is a seasoned CFO with public and private company experience and he well understands lean operations and restructuring. He is already working very closely with Irina, former senior director of finance, to ensure smooth translation daily finance operations. Irina will remain as an advisor to the company.

Alexander Tokman: And thank you for joining us today to discuss ENDRA's Second Quarter 2024 Financial Results and Business Highlights.

Alexander Talkman: Now let's turn our attention to the second quarter results and recent changes. I would like to start by reviewing review 6 specific items we intend to do differently, moving forward to become more actionable and predictable as we bring ENDRA's differentiating thermal acoustic technology to market. The six changes include stronger upper identity, we lend to us prioritization of our activities, new approach with FDA, enhanced go-to-market strategy for TS liver device, crystallization of our ENDRA vision, and finally improved financial execution.

Alexander Tokman: Before we proceed to the business update, let me address the reverse tax split and the subsequent trading of our common stock. As you know, after receiving shareholder approval earlier this month, the company authorized 150 reverse tax split, which we announced last Friday, and was effective past Tuesday, this past Tuesday. The primary goal was to keep our share price above $1, and in turn maintain the NASDAQ list.

Alexander Tokman: Moving forward.

Alexander Tokman: The other work has joined us as the head of clinical and regulatory affairs. The ad has successful led a number of emerging medical device technology companies through regulatory process and early commercialization. And he already made a huge impact on our most recent strategy and interactions with FDA.

Alexander Tokman: It is I anticipate that both Richard and the other experiences will greatly benefit ENDRA as we move forward through this critical phase for the company.

Alexander Tokman: Mike Thornton or CTO will continue to focus on product delivery as well as enhancing ENDRA's technology roadmap and intellectual property.

Alexander Tokman: Second change after reviewing after all the priorities that we are facing, we as the new operating team are unanimous in our relentless prioritization and laser focus on the most critical deliverable for the company.

Alexander Tokman: And this is executed as statistical power, multi-center, prospective clinical trial to obtain the necessary data that will allow us to successfully move forward.

Alexander Tokman: This clinical data is a foundational element for both regulatory and commercial success.

Alexander Tokman: It offers three important benefits. It allows for optimization of product design for maximum user utilization.

Alexander Tokman: It is a necessary piece of successful dino application and finally it answers the big why as in why I as a clinician or pharmaceutical user should utilize this technology.

Alexander Tokman: The third change we are implementing is we will fundamentally change our regulatory strategy under ZAS leadership. We are switching from the use of retrospective data to a hypothesis driven, statistically powered, prospective clinical trial which is pre-vetted through FDA. We are therefore expanded from a single clinical site to a multi-center trial and we are increasing the number of subjects by an order of magnitude from 20 to about 250 which is necessary to achieve acceptable statistical power. We are now fully engaged with the FDA on establishing the consensus and trial design prior to data collection.

Alexander Tokman: Later this call the ad will elaborate further on these changes.

Alexander Tokman: Fourth, we are revisiting our go-to-market strategy for the TS-weaver device.

Alexander Tokman: We have more and more evidence that hepatology may not be the beachhead market we should pursue.

Alexander Tokman: Primary care and medical treatment segments and we leave them over the next six to 12 months as we pursue the regulatory clearance for the TS-weaver device.

Alexander Tokman: Hepatology will likely remain a market for us but perhaps not the primary target.

Alexander Tokman: This plan was derailed because of an extremely high volume of exercise warrants, which were issued as a part of the $8 million dollar public offering that was completed in June. This public offering was necessary in order to keep the company operational and not to lose all the progress ENDRA made over the years.

Alexander Tokman: Fifth, or the change number five, we are preparing changes related to ender strategic direction.

Alexander Tokman: We will formalize our longer-term business strategy and crystallize our vision as in what's next after we commercialize our TS-weaver device.

Alexander Tokman: How do we add, you know, we have to answer questions such as how do we add more value to our customers beyond the liver fat test and become a metabolic disease by a marker company which could be a lot more valuable.

Alexander Tokman: All of this is expected to be developed and assessed over the next 12 months.

Alexander Tokman: Lastly, we are focusing on improve financial stewardship. Our goal is to scrutinize every dollar we spend and as a result, we recently conducted significant reduction of operating expenses and we were able to reduce them by 3 million plus which represents approximately 26% reduction on annualized basis.

Alexander Tokman: All of it without impacting the primary deliverable which is clinical data collection in preparation for FDA submission.

Alexander Tokman: Returns will elaborate on this further during the financial update.

Alexander Tokman: Now that the outline, what we will do, we will move in forward.

Alexander Tokman: Sia, Mike and Richard will now highlight for you the progress we made since one conference call in three areas, clinical and regulatory, technology and IP and financial.

Ziyad Ruag: Sia, thank you, Alex.

Ziyad Ruag: In May of this year, we met with the FDA at the headquarters in Maryland to demonstrate lives of terrorist technology and review the clinical and statistical plans for the proposal proposed pivotal study. The meeting minutes from the FDA meeting confirmed alignment between Andra and the FDA on the final product configuration, clinical study design and regulatory pathway successful outcome.

Ziyad Ruag: As part of our refocus clinical program, we are limiting initial data collection to three pilot sites to US and one EU. These pilot trial sites were selected based on their ability to recruit patients. We have already acquired data on 25 subjects through these efforts.

Ziyad Ruag: In terms of time, these will be, there will be sequential studies, meaning the results of the pilot study will inform the design of the pivotal study.

Ziyad Ruag: Our goal is to have all clinical completed and the data incorporated into our de novo submission targeted for May 2025.

Ziyad Ruag: I've handled similar opportunities during the course of my career with complex trials and devices, including imaging studies, and I'm highly optimistic about the regulatory path we have set for the TAO's liver device.

Michael Thornton: Mike, thank you, Sia.

Michael Thornton: Our patent portfolio now stands at 81 issue patents globally. During the second quarter of 2024, NREL has issued five additional patents, three in Europe and two in China. The issue patent portfolio consists of 42 thermal acoustic device and foundational enabling technology patents.

Michael Thornton: 22 patents related to estimating fat fraction and 17 patents covering other thermo acoustic applications and non thermo acoustic technologies.

Michael Thornton: Our broad intellectual property portfolio provides protection for the TAO system with its novel thermal acoustic technology and the opportunity to explore licensing options beyond our core focus.

Michael Thornton: I'll turn the call over now to Richard.

Richard Jacroux: Thank you, Mike, and it's a pleasure to be speaking with our investors in my first quarterly conference call as entrance CFL. During the quarter, we raised $7.3 million in net proceeds from the sale of common stock and warrants in a public offering. As of June 30th, 2024, we had cash and cash equivalents of $6.4 million. Based on our current projections, our cash runway funds the company into the first half of 2025.

Richard Jacroux: Turning now to review of our financial results, for the quarter-ended June 30th, 2024, our total operating expenses decreased to $2.2 million from $3 million for the same period in 2023. The decrease was mainly due to declines in research and development and sales and marketing expenses. Year over year, R&D expenses decreased 684,000 or 49 percent as we shift our resources and spending from development to clinical activities. In sales and marketing, cost decreased 85,000 or 34 percent as we restructured our European operations to support the company's near-term clinical study goals.

Richard Jacroux: General and administrative expenses increased $5,000 overall due to the administrative cost of the fundraising which offset decreases elsewhere.

Alexander Tokman: We strongly believe that this sharp decline in our stock over the past few days is completely unrelated to ENDRA business prospects.

Alexander Talkman: Let me elaborate on each. First, we enhance our management team by adding two experienced operators. We have proven track record of success in transforming new technology companies. Richard Jacroux is a seasoned CFO with public and private company experience and he well understands Flynn operations and restructuring. He is already working very closely with Irina, former with Senior Director of Finance to ensure a smooth translation daily finance operation. Irina will remain as an advisor to the company, moving forward.

Richard Jacroux: We continue to scrutinize our spending and will likely make further adjustments to our expense structure to focus on achieving our priorities as we reset our strategy.

Richard Jacroux: Now, I'll turn the call to the operator for questions, operator.

Alexander Tokman: We have the intended outcome as we are trading below $1 right now. We recognize the seriousness of this situation on the company and our investors, and we will keep you apprised about actions as we move forward.

Operator: We will now begin the question and answer session.

Operator: To ask a question, you may press star then one on your telephone keypad.

Operator: If you're using a speaker phone, please pick up your handset before pressing the keys.

Operator: To draw your question, please press star then two.

Operator: At this time, we will pause momentarily to assemble our roster.

Alexander Tokman: Now let's turn our attention to the second quarter results and recent changes.

Edward Wu: Our first question today is from Edward Wu with Accentient Capital.

Edward Wu: Please go ahead.

Edward Wu: Yes, nice to meet you, Alexander and Richard.

Alexander Tokman: My question is more on, as you guys are hitting the ground running, how quickly do you think you guys will be able to get your new strategic path fully implemented?

Alexander Tokman: Or do you still think it makes time to kind of evaluate the situation?

Alexander Tokman: Thank you for the question, Ed.

Alexander Tokman: In terms of the next nine to four months, we have a clear priorities described that we're going to execute. So this will involve completing the clinical studies, obtaining all the necessary data to prepare for regulatory submission with the FDA, as well as generating enough compelling data to use for promoter and this technology to future customers.

Alexander Tokman: So in terms of, again, this priority has been agreed upon and articulated to every employee within the company.

Alexander Tokman: In terms of longer vision, what happens following the introduction of Tayus Lever device, we give the sharpened pencils over the next six to nine months, look at all the opportunities that our IP offers and determine the obstacles going forward.

Alexander Tokman: One thing I can tell you for sure is that we're going to create a strategic roadmap that will include several growth opportunities, some which will pursue organically and some which could be licensed to others, more on this way.

Edward Wu: Great.

Edward Wu: And in just a final clarifying question, I wasn't sure if I heard right.

Alexander Tokman: Do you say that in 2025 you plan to file your FD application?

Alexander Tokman: Do you give a specific time in 2025?

Alexander Tokman: We haven't provided the specific guidance, I don't believe, but what I can tell you is that our goal is to complete the clinical study this year and initiate a pivotal study early next year with the goal of submitting sometimes by a mid of 2025.

Edward Wu: Great.

Edward Wu: Well, thank you and I wish you guys good luck.

Operator: Thank you.

Operator: This concludes our question and answer session.

Alexander Tokman: I would like to turn the conference back over to Alex Tokman for any closing remarks.

Alexander Tokman: Thank you.

Alexander Tokman: Given, I would like to wrap this call by telling you that given that everybody feels in the board and the operating team are bullish and there's technology and market opportunities.

Alexander Tokman: We expect that after implementing the six initiatives and changes I described earlier in this call and there's performance, we'll improve and we will reverse the course that the company has settled for in the past.

Alexander Tokman: I'm confident personally about this because I have led several successful turnaround of medical device and emerging technology companies for both Fortune 100 and microcops and I think we can do this again here.

Alexander Tokman: I believe the team is energized.

Alexander Tokman: We know what we need to accomplish in the next six, nine and twelve months and you see a hopefully different output from this team moving forward.

Alexander Tokman: Thank you.

Alexander Tokman: Thank you for joining us today and we look forward to keeping you updated on our progress.

Operator: The conference is now concluded.

Operator: Thank you for attending today's presentation.

Operator: You may now disconnect.

Alexander Talkman: The other work has joined us as the head of clinical and regulatory affairs. The ad has successful led a number of emergent medical device technology companies through regulatory process and early commercialization. And he already made a huge impact on our most recent strategy and interactions with FDA. It is I anticipate that both Richard and the other experiences will greatly benefit ENDRA as we move forward through this critical phase for the company.

Alexander Talkman: Mike Thorden or CTO will continue to focus on product delivery as well as enhancing ENDRA's technology roadmap and intellectual property. Second change after reviewing after all the priorities that we are facing, we as the new operating team are unanimous in our relentless prioritization and laser focus on the most critical delivery role for the company. And this is executed as statistical power, multi-center, prospective clinical trial to obtain the necessary data that will allow us to successfully move forward.

Alexander Tokman: I would like to start by reviewing review 6 specific items we intend to do differently, moving forward to become more actionable and predictable as we bring ENDRA's differentiating thermal acoustic technology to market.

Alexander Talkman: This clinical data is a foundational element for both regulatory and commercial success. It offers three important benefits. It allows for optimization of product design for maximum user utilization. It is a necessary piece of successful Denova application. And finally, it answers the big why, as in why I as a clinician or pharmaceutical user should utilize this technology.

Alexander Tokman: The six changes include stronger upper identity, we lend to us prioritization of our activities, new approach with FDA, enhanced go-to-market strategy for TS liver device, crystallization of our ENDRA vision, and finally improved financial execution. Let me elaborate on each. First, we enhance our management team by adding two experienced operators.

Alexander Talkman: The third change we are implementing is we will fundamentally change our regulatory strategy under ZAS leadership. We are switching from the use of retrospective data to a hypothesis driven, statistically powered, prospective clinical trial which is pre-vetted through FDA. We are therefore expanded from a single clinical site to a multi-center trial and we are increasing the number of subjects by an order of magnitude from 20 to about 250, which is necessary to achieve acceptable statistical power. We are now fully engaged with the FDA on establishing the consensus and trial design prior to data collection.

Alexander Tokman: We have proven track record of success in transforming new technology companies.

Alexander Talkman: Later this call, the ad will elaborate further on these changes.

Alexander Talkman: For, we are revisiting our go-to-market strategy for the TS-weaver device. We have more and more evidence that hepatology may not be the beachhead market we should pursue. Primarily care, and we believe them over the next six to twelve months as we pursue the regulatory clearance for the TS-weaver device. Hepatology will likely remain a market for us but perhaps not the primary target.

Alexander Talkman: Fifth, or the change in the system number five, we are preparing changes related to end-of-strategic direction. We will formalize our longer-term business strategy and crystallize our vision as in what's next after we commercialize our TS-weaver device. How do we add, you know, we have to answer questions such as how do we add more value to our customers beyond the liver fat test and become a metabolic disease by a market company which could be a lot more valuable. All of this is expected to be developed and assessed over the next twelve months.

Alexander Tokman: Richard Jacroux is a seasoned CFO with public and private company experience and he well understands Flynn operations and restructuring. He is already working very closely with Irina, former with Senior Director of Finance to ensure a smooth translation daily finance operation.

Alexander Talkman: Lastly, we are focusing on improved financial stewardship. Our goal is to scrutinize every dollar we spend, and as a result, we recently conducted significant reduction of operating expenses. And we were able to reduce them by three million plus, which represents approximately 26% reduction on annualized basis. All of it without impacting the primary deliverable, which is clinical data collection in preparation for FDA submission.

Alexander Tokman: Irina will remain as an advisor to the company, moving forward.

Alexander Talkman: Returns will elaborate on this further during the financial update.

Unknown Executive: Now that the outline, what we will do, we will move forward. Seattle, Mike, and Richard will now highlight for you the progress we made since one conference call in three areas. Clinical and regulatory, technology and IP and financial.

Alexander Tokman: The other work has joined us as the head of clinical and regulatory affairs. The ad has successful led a number of emergent medical device technology companies through regulatory process and early commercialization.

Ziyad Ruag: Seattle. Thank you, Alex. In May of this year, we met with the FDA at the headquarters in Maryland to demonstrate lives of terrorist technology and reviewed the clinical and statistical plans for the proposal-proposed-privital study. The meeting minutes from the FDA meeting confirmed alignment between Andra and the FDA on the final product configuration, clinical study design and regulatory pathway successful outcome.

Alexander Tokman: And he already made a huge impact on our most recent strategy and interactions with FDA.

Ziyad Ruag: As part of our refocus clinical program, we are limiting initial data collection to three pilot sites, two US and one EU. These pilot trial sites were selected based on their ability to recruit patients. We have already acquired data on 25 subjects through these efforts. In terms of time test, these will be, there will be sequential studies. Meaning the results of the pilot study will inform the design of the pivotal study.

Ziyad Ruag: Our goal is to have all clinical completed and the data incorporated into our de novo submission targeted for May 2000, in 2025. I've handled similar opportunities during the course of my career with complex trials and devices, including imaging studies, and I'm highly optimistic about the regulatory path we have set for the TAILS liver device.

Michael Thornton: Mike, thank you so much. Our patent portfolio now stands at 81 Issued Patent School Board. During the second quarter of 2024, ENDRA was issued five additional patents, three in Europe, and two in China.

Michael Thornton: The Issued Patent portfolio consists of 42 thermal acoustic device and foundational enabling technology patents, 22 patents related to estimating fat fraction, and 17 patents covering other thermo acoustic applications and non thermo acoustic technologies. Our broad intellectual property portfolio provides protection for the TAILS system with its novel thermo acoustic technology, and the opportunity to explore licensing options beyond our cost.

Alexander Tokman: It is I anticipate that both Richard and the other experiences will greatly benefit ENDRA as we move forward through this critical phase for the company.

Richard Jacroux: I'll turn the call over now to Richard. Thank you, Mike, and it's a pleasure to be speaking with our investors in my first quarterly conference call as ENDRA's CFO. During the quarter, we raised $7.3 million in net proceeds from the sale of common stock and warrants in a public offering. As of June 30, 2024, we had cash and cash equivalents of $6.4 million. Based on our current projections, our cash runway funds the company into the first half of 2025.

Alexander Tokman: Mike Thorden or CTO will continue to focus on product delivery as well as enhancing ENDRA's technology roadmap and intellectual property.

Richard Jacroux: Turning now to review of our financial results, for the quarter-ended June 30, 2024, our total operating expenses decreased to $2.2 million from $3 million for the same period in 2023. The decrease was mainly due to declines in research and development and sales and marketing expenses. Year over year, R&D expenses decreased 684,000 or 49%, as we shift our resources and spending from development to clinical activities. In sales and marketing, cost decreased 85,000 or 34%, as we restructured our European operations to support the company's near-term clinical study goals.

Richard Jacroux: General and administrative expenses increased $5,000 overall due to the administrative costs of the fundraising which offset decreases elsewhere. We continue to scrutinize our spending and will likely make further adjustments to our expense structure to focus on achieving our priorities as we reset our strategy.

Operator: Now I'll turn the call to the operator for questions. Operator? We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you're using a speaker phone, please pick up your handset before pressing the keys. To draw your question, please press star then two. At this time, we will pause momentarily to assemble our roster.

Edward Wu: Our first question today is from Edward Wu with Accentient Capital. Please go ahead. Yes, nice to meet you, Alexander and Richard.

Richard Jacroux: My question is more on, as you guys are hitting the ground running, how quickly do you think you guys will be able to get your new stretching path fully implemented? Richard, or do you still think it takes time to kind of evaluate the situation? Thank you for the question. In terms of the next 9th of all months, we have a clear priorities described that we're going to execute. So this will involve completing the clinical studies, obtaining all the necessary data to prepare for regulatory submission with FDA as well as generating enough compelling data to use for promote and this technology to future customers.

Alexander Tokman: And this is executed as statistical power, multi-center, prospective clinical trial to obtain the necessary data that will allow us to successfully move forward.

Alexander Tokman: This clinical data is a foundational element for both regulatory and commercial success.

Richard Jacroux: This priority has been agreed upon and articulated to every employee within the company. In terms of the longer vision, what happens following the introduction of Tay's liver device, we give the sharpened pencils over the next six to nine months, look at all the opportunities that our IP offers and determine the obstacles going forward. One thing I can tell you for sure is that we're going to create a strategic roadmap that will include several growth opportunities, some of which will pursue organically and some of it could be licensed to others. More on this way.

Alexander Tokman: It offers three important benefits. It allows for optimization of product design for maximum user utilization.

Alexander Tokman: It is a necessary piece of successful Denova application.

Richard Jacroux: Great, and just a final clarifying question, I wasn't sure if I heard right. Do you say that in 2025, you plan to file your FD application? Do you give a specific time in 2025? We haven't provided the specific guidance, I don't believe, but what I can tell you is that our goal is to complete the clinical study this year and initiate a physical study early next year with the goal of submitting sometimes by mid of 2025. Great, well thank you and I wish you guys good luck. Thank you.

Unknown Executive: This concludes our question and answer session.

Alexander Talkman: I would like to turn to the conference back over to Alex Talkman for any closing remarks. Thank you.

Alexander Tokman: And finally, it answers the big why, as in why I as a clinician or pharmaceutical user should utilize this technology.

Alexander Talkman: Given, I would like to wrap this call by telling you that given that everybody feels in the board and the operating team are bullish on their technology and market opportunities. We expect that after implementing the six initiatives and changes I described earlier in this call, and there's performance, we'll improve, and we will reverse the course that the company has settled for in the past. I'm confident personally about this because I have led several successful turnaround of medical, device, and emerging technology companies for both Fortune 100 and Microcops.

Alexander Tokman: The third change we are implementing is we will fundamentally change our regulatory strategy under ZAS leadership. We are switching from the use of retrospective data to a hypothesis driven, statistically powered, prospective clinical trial which is pre-vetted through FDA. We are therefore expanded from a single clinical site to a multi-center trial and we are increasing the number of subjects by an order of magnitude from 20 to about 250, which is necessary to achieve acceptable statistical power. We are now fully engaged with the FDA on establishing the consensus and trial design prior to data collection.

Alexander Tokman: Later this call, the ad will elaborate further on these changes.

Alexander Tokman: For, we are revisiting our go-to-market strategy for the TS-weaver device.

Alexander Talkman: And I think we can do this again here. I believe the team is energized. We know what we need to accomplish in the next six, nine and twelve months. And you see a hopefully different output from this team moving forward.

Alexander Tokman: We have more and more evidence that hepatology may not be the beachhead market we should pursue.

Alexander Tokman: Primarily care, and we believe them over the next six to twelve months as we pursue the regulatory clearance for the TS-weaver device.

Alexander Tokman: Hepatology will likely remain a market for us but perhaps not the primary target.

Alexander Talkman: Thank you. Thank you for joining us today and we look forward to keeping you updated on our program.

Alexander Tokman: Fifth, or the change in the system number five, we are preparing changes related to end-of-strategic direction.

Unknown Executive: The conference is now concluded. Thank you for attending today's presentation.

Alexander Tokman: We will formalize our longer-term business strategy and crystallize our vision as in what's next after we commercialize our TS-weaver device.

Unknown Executive: You may now disconnect. . [inaudible]

Alexander Tokman: All of this is expected to be developed and assessed over the next twelve months.

Alexander Tokman: Lastly, we are focusing on improved financial stewardship.

Alexander Tokman: Our goal is to scrutinize every dollar we spend, and as a result, we recently conducted significant reduction of operating expenses. And we were able to reduce them by three million plus, which represents approximately 26% reduction on annualized basis. All of it without impacting the primary deliverable, which is clinical data collection in preparation for FDA submission.

Alexander Tokman: Returns will elaborate on this further during the financial update.

Alexander Tokman: Now that the outline, what we will do, we will move forward.

Michael Thornton: Seattle, Mike, and Richard will now highlight for you the progress we made since one conference call in three areas.

Michael Thornton: Clinical and regulatory, technology and IP and financial.

Michael Thornton: Seattle.

Michael Thornton: Thank you, Alex.

Michael Thornton: In May of this year, we met with the FDA at the headquarters in Maryland to demonstrate lives of terrorist technology and reviewed the clinical and statistical plans for the proposal-proposed-privital study. The meeting minutes from the FDA meeting confirmed alignment between Andra and the FDA on the final product configuration, clinical study design and regulatory pathway successful outcome.

Michael Thornton: As part of our refocus clinical program, we are limiting initial data collection to three pilot sites, two US and one EU. These pilot trial sites were selected based on their ability to recruit patients. We have already acquired data on 25 subjects through these efforts.

Michael Thornton: In terms of time test, these will be, there will be sequential studies. Meaning the results of the pilot study will inform the design of the pivotal study.

Michael Thornton: Our goal is to have all clinical completed and the data incorporated into our de novo submission targeted for May 2000, in 2025.

Michael Thornton: I've handled similar opportunities during the course of my career with complex trials and devices, including imaging studies, and I'm highly optimistic about the regulatory path we have set for the TAILS liver device.

Michael Thornton: Mike, thank you so much.

Michael Thornton: Our patent portfolio now stands at 81 Issued Patent School Board. During the second quarter of 2024, ENDRA was issued five additional patents, three in Europe, and two in China. The Issued Patent portfolio consists of 42 thermal acoustic device and foundational enabling technology patents, 22 patents related to estimating fat fraction, and 17 patents covering other thermo acoustic applications and non thermo acoustic technologies.

Michael Thornton: Our broad intellectual property portfolio provides protection for the TAILS system with its novel thermo acoustic technology, and the opportunity to explore licensing options beyond our cost.

Richard Jacroux: I'll turn the call over now to Richard.

Richard Jacroux: Thank you, Mike, and it's a pleasure to be speaking with our investors in my first quarterly conference call as ENDRA's CFO. During the quarter, we raised $7.3 million in net proceeds from the sale of common stock and warrants in a public offering. As of June 30, 2024, we had cash and cash equivalents of $6.4 million.

Richard Jacroux: Based on our current projections, our cash runway funds the company into the first half of 2025.

Richard Jacroux: General and administrative expenses increased $5,000 overall due to the administrative costs of the fundraising which offset decreases elsewhere.

Richard Jacroux: We continue to scrutinize our spending and will likely make further adjustments to our expense structure to focus on achieving our priorities as we reset our strategy.

Unknown Executive: Now I'll turn the call to the operator for questions.

Unknown Executive: Operator?

Unknown Executive: We will now begin the question and answer session.

Unknown Executive: To ask a question, you may press star then one on your telephone keypad.

Unknown Executive: If you're using a speaker phone, please pick up your handset before pressing the keys.

Unknown Executive: To draw your question, please press star then two.

Unknown Executive: At this time, we will pause momentarily to assemble our roster.

Edward Woo: Our first question today is from Edward Wu with Accentient Capital.

Edward Woo: Please go ahead.

Edward Woo: Yes, nice to meet you, Alexander and Richard.

Edward Woo: My question is more on, as you guys are hitting the ground running, how quickly do you think you guys will be able to get your new stretching path fully implemented?

Edward Woo: Richard, or do you still think it takes time to kind of evaluate the situation?

Richard Jacroux: Thank you for the question.

Richard Jacroux: In terms of the next 9th of all months, we have a clear priorities described that we're going to execute.

Richard Jacroux: So this will involve completing the clinical studies, obtaining all the necessary data to prepare for regulatory submission with FDA as well as generating enough compelling data to use for promote and this technology to future customers.

Richard Jacroux: This priority has been agreed upon and articulated to every employee within the company.

Richard Jacroux: In terms of the longer vision, what happens following the introduction of Tay's liver device, we give the sharpened pencils over the next six to nine months, look at all the opportunities that our IP offers and determine the obstacles going forward.

Richard Jacroux: One thing I can tell you for sure is that we're going to create a strategic roadmap that will include several growth opportunities, some of which will pursue organically and some of it could be licensed to others.

Richard Jacroux: More on this way.

Edward Woo: Great, and just a final clarifying question, I wasn't sure if I heard right.

Edward Woo: Do you say that in 2025, you plan to file your FD application?

Edward Woo: Do you give a specific time in 2025?

Richard Jacroux: We haven't provided the specific guidance, I don't believe, but what I can tell you is that our goal is to complete the clinical study this year and initiate a physical study early next year with the goal of submitting sometimes by mid of 2025.

Edward Woo: Great, well thank you and I wish you guys good luck.

Unknown Executive: Thank you.

Unknown Executive: This concludes our question and answer session.

Alexander Tokman: I would like to turn to the conference back over to Alex Talkman for any closing remarks.

Alexander Tokman: Thank you.

Alexander Tokman: Given, I would like to wrap this call by telling you that given that everybody feels in the board and the operating team are bullish on their technology and market opportunities.

Alexander Tokman: We expect that after implementing the six initiatives and changes I described earlier in this call, and there's performance, we'll improve, and we will reverse the course that the company has settled for in the past.

Alexander Tokman: I'm confident personally about this because I have led several successful turnaround of medical, device, and emerging technology companies for both Fortune 100 and Microcops.

Alexander Tokman: And I think we can do this again here.

Alexander Tokman: I believe the team is energized.

Alexander Tokman: We know what we need to accomplish in the next six, nine and twelve months.

Alexander Tokman: And you see a hopefully different output from this team moving forward.

Alexander Tokman: Thank you.

Unknown Executive: Thank you for joining us today and we look forward to keeping you updated on our program.

Unknown Executive: The conference is now concluded.

Unknown Executive: Thank you for attending today's presentation.

Unknown Executive: You may now disconnect.

Unknown Executive: [inaudible]

Q2 2024 ENDRA Life Sciences Inc Earnings Call

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