IsoRay, Inc. Common Stock (DE)

Q4 2021 Earnings Conference Call

9/21/2021

spk01: Good day, ladies and gentlemen, and welcome to your ISO-RAE fourth quarter and fiscal year-end 2021 financial results call. All lines have been placed on a listen-only mode, and the floor will be open for your questions and comments following the presentation. If you should require assistance throughout the conference, please press star zero to reach a live operator. At this time, it is my pleasure to turn the floor over to Mark Levin with ISO-RAE Investor Relations. Sir, the floor is yours.
spk02: Thank you, Operator. Good afternoon and thank you for joining us today for the ISRA fiscal fourth quarter 2021 and fiscal year 2021 full year earnings call for the quarter and fiscal year ended June 30th, 2021. 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, September 21st, 2021. As with any projection or forecast, they are inherently susceptible to uncertainty and changes in circumstances. 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 Laurie Woods, ISO-RAE's Chief Executive Officer, and then Jonathan Hunt, ISO-RAE's Chief Financial Officer, who will discuss the fiscal fourth quarter and fiscal year 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.
spk04: Thank you, Mark. Good afternoon and thank you for joining us today for ISRA's Fiscal Fourth Quarter and Full Year 2021 Earnings Conference Call for the period ended June 30, 2021. Following my comments, our Chief Financial Officer, Jonathan Hunt, will provide a more detailed review of the Fiscal Fourth Quarter and Full Year 2021 financial results. I am very pleased to share with you the continued progress we achieved in both the fiscal fourth quarter and the full year 2021. Revenue for the fourth quarter increased 19% over the year-ago quarter to $2.71 million. This represented the best quarterly revenue total since the onset of the pandemic. Although our core prostate brachytherapy revenue grew modestly in the fourth quarter and declined 6% for the full fiscal year 2021, the significant growth in our non-prostate business led to record revenue for the full year into June 30th. Isolated sales for the treatment of these hard-to-treat cancers increased 92% and 68% for the fourth quarter and full year, respectively. The majority of this was the results of increased adoption of cesium-131 in the treatment of brain cancer, including sales of gamma-tyl therapy. We continue to believe that iso-raise opportunity in the treatment area of brain cancers is significant. At the same time, we see continued growth opportunities in addressing additional cancers such as head and neck and lung. While these cancer treatment areas are in earlier stages of development for us than brain cancer, we believe that we will continue to see growing opportunities for expansion. It is clear that Isoray's business is more diversified than it has ever been, with more than a quarter of the fourth quarter revenue derived from non-prostate cancer treatments. Let me be equally clear that we continue to believe the core prostate business is very well positioned. We have adapted and found ways to thrive in this environment that have become the new normal. Over time, we expect to resume the higher pre-pandemic growth rates previously achieved. And as we look forward to the nation emerging from this historic challenge, we expect to realize additional growth. At the same time, we intend to continue to selectively diversify our portfolio of targeted radiation therapies and thus our market opportunities and revenue streams going forward. Critical to ISRA achieving this is our ongoing evaluation of a number of potential strategic initiatives, some of which we hope to finalize over the coming months. We have over $60 million in cash, or approximately 45 cents per share on the balance sheet, to fund the company's growth initiatives. You may remember that we see accretive growth opportunities in a few areas. Investing to grow our position in the core prostate brachytherapy market, particularly in sales and marketing. Further market development of cesium-131 to treat other selective cancers through complementary delivery technologies and devices. Investment in clinical studies to strengthen cesium-131's use case in other cancers and in particular with immuno-oncology targeted therapies, and potential acquisitions or partnerships to broaden ISRA's portfolio of targeted radiation therapies. The strategic initiative involving the physician training programs, which we initiated in the spring of 2019, continues to yield benefits. These intimate hands-on events led by preeminent physicians in the prostate brachytherapy industry like Bernard Taylor of Texas Oncology, were instrumental in presenting the benefits of cesium-131 to the next generation of brachytherapists. Because of the pandemic, we have not been able to host as many of these in-person training programs, but we will soon be implementing an exciting new program we believe will have a positive impact. The Proximi virtual communication platform represents an enhanced option to increase our physicians' training efforts. Proxime's innovative technology is specifically designed to assist clinicians by sharing, in real time or streamed, all aspects of a medical procedure in tremendous detail. This platform will allow the leading brachytherapists we currently work with to share all aspects of a procedure with other clinicians regardless of their physical location. Consider what this represents in terms of opportunity and access for doctors, in communities nationwide, and the patients they treat. We are excited about how this unique offering can help us reach more customers in a convenient and highly detailed manner. At the same time, another facet of our strategic initiatives is focused on actively working to achieve greater engagement with some of the leading US medical teaching and research institutions. In concert with these efforts, We are also working to broaden our engagement with professional societies to place ice array in a more integral role and to support education and training of radiation oncology residents on the many benefits of prostate brachytherapy. We are partnering with ABS, the American Brachytherapy Society, in their 310 initiatives to train 300 brachytherapy teams in 10 years. We are excited to see the focus that ABS is putting on the training of future brachytherapists and are very happy to support and participate in this program. Given that we believe brachytherapy will become a more meaningful part of the radiation therapy treatment paradigm, we feel that now is a pivotal time to expand iso-ray's role in this area. We have also expanded strategic efforts to counter the resulting impact of the headwinds our prostate business has faced over the past year. As you are no doubt aware, the pandemic has impacted hospital capacity at times, which has led to a number of canceled or delayed procedures. In an effort to mitigate this, our sales team is working with our customers to more consistently utilize alternative outpatient surgery settings. We believe this focus on driving more procedures to ambulatory surgery centers and licensed physician offices where these treatments can be performed will bring access and treatment to more patients as long as COVID continues to be a factor in hospital access. Another development involves the ROAPM. We have continued to update you on this proposed outpatient reimbursement change because of its potential impact as we look forward to its scheduled start of implementation at the beginning of 2022. A key development occurred in July when CMS proposed changes to the ROAPM reimbursement model that would see the removal of brachytherapy from the list of included modalities. This means that brachytherapy treatments will still be reimbursed under the current model. This holds great promise as is evident in the proposed rule language. CMS explains that the exclusion of brachytherapy from the ROA-APM is to ensure that providers would not be incentivized to forego brachytherapy in situations where a combination of brachytherapy and external beam radiation therapy is clinically indicated. Where this stands now is that we await the final rule that we believe may be released in late October or early November. Assuming this proposed final rule is implemented as is, we believe that this will prove to be the best outcomes for patients, physicians, and payers. As the adoption of cesium-131 for the treatment of cancers other than prostate continues to grow and diversify our business, we remain equally focused on developing the current clinical trials in which we are engaged, while we also look at potential new clinical studies involving other cancer treatment areas. The two immuno-oncology studies, which we have discussed previously, the University of Cincinnati recurrent head and neck clinical trial with Keytruda and a metastatic melanoma trial with Opdivo, each remain in the early stages of patient enrollment. Enrollment has been slower than originally anticipated, which we believe is understandable given the current environment. As enrollment progresses and data is collected in each of these trials, we will update you on these developments as they occur. We are in early discussions with several leading research institutions relative to another clinical study utilizing cesium-131 brachytherapy treatment for lung cancer. We are examining the insertion of cesium-131 sources or seeds directly into lung lesions without resorting to open surgery. We are looking at later stage non-small cell lung cancers among others for early phase study. We want to be clear that as we look to broaden iso-ray's presence as a diversified targeted radiation therapy leader, we have exacting standards. As we continue our evaluation of strategic opportunities with respect to complementary delivery technologies and or other products or technologies, we are being diligent that any target or venture meets certain criteria. These include they must have a high degree of synergy so that we can leverage much of our existing operational infrastructure. They need to address a growing market right for disruption and market share gains. and they possess strategic value to position ICER-A for future trends in the treatment of cancers, for example, immuno-oncology. To date, ICER-A has evaluated over 20 projects for viability, with about half a dozen of these projects continuing in various stages of evaluation and or due diligence. As we have more details on these growth opportunities over the coming months, I look forward to sharing these developments with you. Looking back at this fiscal year, we have made strides on many fronts. The increased diversification of ISRA's business, the deeply talented team we have assembled, and the strength of our balance sheet has allowed us to navigate the demanding operating environment over the past year and positions the company for enhanced growth opportunities in the future. I continue to firmly believe that we are embarking on exciting times for the company. Not only do we expect to return to growth in our core prostate business, but we look forward to building upon the growth of our non-prostate brachytherapy treatments. With our focus on growth and opportunity, we believe the year ahead is destined to expand ISRA's role as a leader in the broader targeted radiation therapy market. Now I will turn the call over to Jonathan to review the results of our fiscal fourth quarter and full year.
spk03: Thank you, Laurie. I am going to discuss some of the financial information that was contained in our press release for the fiscal fourth quarter and fiscal year into June 30, 2021 that we released a short while ago. We anticipate that our Form 10-K will be filed with the SEC on or around September 24. Revenue for the fourth quarter into June 30, 2021 grew 19 percent to $2.71 million versus $2.28 million for the same period last year. Fourth quarter revenue was comprised of 74% for prostate brachytherapy with the balance or 26% of revenue attributed to other brachytherapy, primarily cells to treat brain, which included revenue from Gamma Tile and GT medical technologies. As Lori mentioned, fourth quarter non-prostate revenue increased 92% to a record $704,000. Gross profit as a percentage of revenues for the fourth quarter end of June 30, 2021 increased to 49.7% compared to 47% for the quarter end of June 30, 2020. The gross margin increase was primarily driven by higher sales, which were partially offset by higher non-isotope material costs and increased payroll and benefits expense due to greater headcount. Fourth quarter gross profit dollars of $1.35 million increased 26% when compared to the same period last year. Total operating expenses consisting of research and development, sales and marketing, and general and administrative increased 8% to $2.44 million in the quarter versus $2.26 million in the fiscal fourth quarter 2020. R&D expense increased 45% versus the comparable prior year quarter to $468,000. The year-over-year increase in research and development expenses was primarily the result of increased payroll and benefits due to greater headcount and higher market research expenses versus the fourth quarter of fiscal 2020. Sales and marketing expenses were $659,000 in the fiscal fourth quarter of 2021, a decrease of 4% versus the comparable prior year period. The decrease was driven primarily by decreased incentive compensation, which was partially offset by increased travel expenses compared to the fourth quarter of fiscal 2020. G&A expenses of $1.31 million increased 5% versus $1.25 million in the fiscal fourth quarter 2020.
Disclaimer

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