IsoRay, Inc. Common Stock (DE)

Greetings and welcome to the ISO-RAE first quarter 2021 earnings conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mark Levin, Investor Relations. Thank you, sir. You may begin.

Thank you, operator. Good afternoon, and thank you for joining us today for ISARAY's Fiscal First Quarter 2021 Earnings Call for the quarter ended September 30, 2020. Before we get started, I will take a few minutes to read the forward-looking statement. Certain statements in this conference call constitute forward-looking statements within the meaning of the private securities Litigation Reform Act of 1995 as amended. When used in this conference call, words such as will, believe, expect, anticipate, encourage, and similar expressions as they relate to the company or its management, as well as assumptions made by and information currently available to the company's management, identify forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management's current expectations and beliefs about future events as of today, November 10, 2020. As with any projection or forecast, they are inherently susceptible to uncertainty and changes in circumstance, and the company undertakes no obligation to and expressly disclaims any obligation to update or alter its forward-looking statements, whether resulting from such changes, new information, subsequent events, or otherwise. Additional information concerning forward-looking statements is contained under the headings of safe harbor statement and risk factors listed from time to time in the company's filings with the Securities and Exchange Commission. We will begin today's call with Lori Woods, ISRA's Chief Executive Officer and then Jonathan Hunt, ISRA's Chief Financial Officer, who will discuss the fiscal first quarter 2021 financial results. Following their prepared remarks, we will take questions from our analysts and institutional investors. I will now turn the call over to Lori Woods.

Thank you, Mark. Good afternoon, and thank you for joining us today for ISO-RAE's Fiscal First Quarter 2021 Earnings Conference Call for the quarter ended September 30, 2020. Following my prepared remarks, our Chief Financial Officer, Jonathan Hunt, will provide a more detailed review of Fiscal First Quarter's financial results. As we continue to navigate through these uncertain times, I am encouraged by ISO-RAE's performance. In fact, I'm increasingly enthusiastic about the long-term opportunities for cesium-131. Revenue for the first quarter of fiscal 2021 increased 3% versus the year-ago quarter to $2.38 million. This is in line with the guidance of $2.3 to $2.5 million for quarter one revenues issued in our fiscal year-end 2020 earnings release dated September 17th Obviously, we are still not back to pre-pandemic levels as is evidenced in our year-over-year decline in revenues for prostate. This is understandable given the factors at play. Facilities are coping with a significant impact from the limited volume of patients. Patients have been delaying treatment out of concerns due to COVID-19. This is particularly evident in the treatment for low and moderate risk prostate cancer patients, which makes up the majority of the prostate brachytherapy market. Our patients are also typically older men who have not been inclined to go to the hospital out of concerns over COVID-19 exposure. We believe that the results of patients delaying treatment creates a backlog of procedures that, by necessity, will flow through the system. While these cancers are slow growing, the reality is that cancer is not going away and will ultimately need to be treated. We are seeing a gradual increase of prostate cancer patients being treated since the spring. Despite these challenges, we are continuing to move forward on a number of fronts, including building upon our leadership position within the prostate brachytherapy market. Clearly, this remains important given that the prostate brachytherapy market represents a substantial growth opportunity for the company. We took an important step forward with the full market release of our Blue Build disposable delivery system in the fiscal first quarter. We expect Blue Build to gain traction throughout fiscal 2021, now that it is readily available to a wider set of customers beyond those relatively few customers who have had access to the product previously. We continue to believe that this proprietary product will enhance the growth of our market share within the prostate brachytherapy market. We also expect our growing leadership role in prostate brachytherapy to serve us well in capitalizing on what we believe could be the future accelerated growth driven by the changing reimbursement landscape. In late September, CMS approved the Radiation Oncology Alternative Payment Method or ROAPM, which was to be effective January 1, 2021. As a reminder, this model provides for a single bundled payment for a 90-day episode of radiation therapy services. This applies to 17 different disease sites, including prostate, that take place in the outpatient setting. Since CMS action, they received feedback from the radiation oncology community regarding how the implementation of this model will affect provider practices. The feedback included comments relative to the already challenging COVID-19 environment. As a result, the model start date has now been delayed until July 1st, 2021. Importantly, it includes initial mandatory participation of 30% of all radiation oncology practices. It's important to note that this key reimbursement change in radiation oncology is part of the broader move to value-based healthcare in this country. While we expect the direct near-term benefits to ISRAE will likely be modestly incremental, we believe there could be more meaningful long-term gains. We see the brachytherapy industry as a likely net beneficiary relative to other radiation treatment options under this flat rate value-based model. The compelling attributes of cesium-131 brachytherapy position Isoray well in this involving reimbursement landscape. We believe it's all about the value proposition. The positive features of cesium-131 brachytherapy include its value as a low-cost, highly targeted treatment, which is supported by a series of long-term data demonstrating its efficacy. We are taking steps to leverage the many benefits of cesium-131, recognizing that providers are planning for the future. We are reaching out to an increasing number of providers who currently do not have a brachytherapy practice but are actively considering how brachytherapy may fit into their treatment paradigm. Turning to our efforts outside of our core prostate business, cesium-131 continues to emerge as an effective option for difficult-to-treat cancers like brain, head and neck and others. Understandably, treatments of these types of high-risk cancers have generally not been experiencing the same degree of pandemic-related delays that the prostate market has. In the first quarter, our non-prostate revenue increased 104% versus the prior year quarter to a record $494,000. The majority of this increase was for the treatment of brain cancers. There was growth in both the sales of cesium-131 seeds to power gamma-tyl therapy and sales of non-gamma-tyl brain cancer applications. GT Medical Technologies tells us the first patient has now been enrolled in the gamma-tyl registry trial. The focus of the registry trial is to continue to gather clinical data in support of gamma-tyl therapy and further adoption. We are also continuing to explore how our proprietary isotope may be effective in the treatment of additional cancers. We recently entered into a research grant agreement with a leading cancer center to study the treatment of metastatic melanoma. In this immuno-oncology study, cesium-131 will be used in combination with immune checkpoint inhibition. Metastatic melanoma is the most virulent form of skin cancer, often spreading to lymph nodes, the lung, liver, brain, and tissue under the skin. This study follows our recently announced agreement with the University of Cincinnati Physicians' Company to study the combination of cesium-131 with the immunotherapy drug Keytruda in recurrent head and neck cancers. We are excited about these exploratory studies and what they may mean for the potential expansion of immuno-oncology treatment options using cesium-131. We will continue to keep you updated as these studies progress. These and other investments in research and development lay the groundwork to bring the therapeutic benefits of cesium-131 to an increasing number of cancer patients over time. As we've been distinguishing ourselves and our role in the brachytherapy market, we have moved to make sure we safeguard our innovations. We recently secured a patent for our Blue Build Loader, which will be enforced until 2037. We have also filed a provisional patent application for a device designed to achieve directional dosing using our cesium-131 seeds. This device is a band that holds the cesium-131 seeds to focus the radiation to a specific treatment area. The device is fixed to a directional mesh that can be used to treat pancreatic cancers as well as retroperitoneal sarcomas. We see unidirectional brachytherapy utilizing cesium-131 as a highly attractive potential therapy for advanced abdominal cancers as well. In this practical application, the device would be aimed at cancers of the abdomen that invade the abdominal wall and pelvic floor, such as advanced cancers of the colon and rectum, and advanced GYN cancers such as ovarian and uterine cancers. The concept will likely be investigated initially with the recurrent cancers I just mentioned where external beam radiation therapy has previously been administered. Finally, I would like to update you on our October 20th public stock offering. I, along with the majority of the executive management team and the board of directors, participated in the offering that was largely bought by institutional investors. Through it, the company raised $9.5 million in gross proceeds, which significantly improved the company's liquidity position for the foreseeable future. It also solidifies our compliance with the New York Stock Exchange American listing requirements. In closing, our fundamentals have not changed. Cesium-131, or Cesium Blue as it is known commercially, represents an important treatment option for patients and the doctors who care for them. I remain optimistic about our growth opportunities and the additional potential for our growing product offerings. Now I will turn the call over to Jonathan to review the results of our fiscal first quarter in more detail.