Nova Eye Medical Limited

Okay, good morning everybody and thanks again for joining us. My name is Mark Flynn, Investor Relations at Novi Medical. Today we're covering the June 26th quarterly report which we lodged last week with the ASX and also we'll provide some outlook on FY27. Presenting as always today is Tom Sperling, our Managing Director. Again, Q&A available if you look inside Zoom. Q&A function. We'll look to get to as many questions as possible. Also, we can follow up post the webinar, but I will ask a number of questions. So please place them in the Q&A function within Zoom. As we can see from the recent results, Tom's led the company through a wonderful four consecutive years of sales growth, above 25%. And our FY26 closed at just below US$24 million, up 26%. And the second half delivered the company's first positive EBITDA as guided by Tom and the team. So Tom will take you through these results, what drove it, and also it provides an FY27 guidance. So over to you, Tom.

Thanks, Mark. I'm very pleased, again, to be speaking and talking to our company. It's another record attendance, and having a lot of people interested in our company, another record attendance webinar, having a lot of people interested in our company is very, I'll just say heartwarming, because it is. Now you see our opening slide. Just leave it up there. Sorry, Mark. Just back, back, back. Our opening slide, I just want to say regular viewers will note that that's quite a change in our slide formatting and that's intentional. We've hit some major milestones in this last half and we are different. We are combining profitability with sales growth just as we promised. We promised it and we've delivered it. It's a big thing today. Thanks, Mark. Let's just not forget glaucoma. The second leading cause of blindness in the developed world is a well-documented statistic. We build and design devices that enable surgeons to treat patients with glaucoma. Glaucoma is incurable, but we can delay the progression of glaucoma. Nobody can cure it. It is about a failure of, on the slide there, it's a failing of the eyes, ocular irrigation. causing a rise in pressure which cuts the optic nerve. Our glaucoma solutions work with the body's anatomy, open up the natural outflow pathway, and use surgical interventions to stop this without leaving anything behind. Tissue sparing. Very, very important. We are promoting the body to do its own work. Next slide. There's the top line. We want the message you received today that the market we are in is early in the commercial growth stage of this market. We're early in our commercial rollout and we've achieved strong growth. 26% year on year to $23.7 million. EBITDA positive in the second half as we've guided and EBITDA positive in FY27. We haven't put our We haven't put a number out, but we will be EBITDA positive. We are FDA cleared and MDR compliant. That MDR is, some people may consider it very boring. Some people who follow healthcare stops know it was a milestone, a very important milestone we achieved during fiscal 25 to make sure that we converted from the CE mark regime into an MDR compliant regime. And the truth of the matter is that MDR has made it more, it is a higher bar than CE. It is closer to FDA. So, we have a, we're not, we are well positioned to move forward and grow. Now, I'll accept that I'm cheating with the scale a little bit here, but that's so what. I put the numbers there US $9.3 million in fiscal year 22. Following the release of our ITRAC advance over these last three years, four years, we've got to 23.7. And we can do all the corporate finance maths on that, and that is a 26% compounded growth rate. You almost couldn't make up a curve looking at that so strong and consistent. And I ask you to put your rulers on that so that you can say, well, what could it be next year? We've given guidance, but... I would like you to form your own view just on that trend. Next slide. Interventional glaucoma is the future. In this approach, surgeons treat the disease surgically and early instead of reliance on drops and the latency approach. I have, in our quarterly report, we flagrantly, and with the permission of Glaucos, inserted some of their statistics because I think they have a really good outlook. They have a really good description. 90% of patients don't take their drops as prescribed. The old legacy of drops and drops and when it gets really bad, you drill a hole in your eye to relieve that pressure. It's far-fetched. The idea of intervening surgically early to improve the outcomes with minimally invasive solutions like ITRAQ, particularly the tissue sparing nature of ITRAQ means that we provide better quality of life to patients, which is wonderful, better quality of life for patients, but there is a business to be made. Doctors can make money out of that and so it is a valid a real theme that is only in its infancy globally. Next slide. So currently glaucoma about 944 million, so that's not much. Well, I don't care. We only need a very small part of that. Gloufos have said that by 2035 they expect that there'll be just as many IG procedures as there are cataract procedures in America. Currently, there's about 500,000, 600,000, 700,000 cataract procedures, so they see that growing by 10 times. That is, currently, we estimate that we have about 4%, 3% to 5%, put 4% in the quarterly report, of the interventional glaucoma procedures. And that means I estimated in our quarterly report, we stated that there are about 30,000 to 35,000 procedures in the USA every month, and we're doing 4% or 5% of those and growing. So I often talk about this market share. Market share of 4%, oh, that's meaningless. It's a tiny market share. It doesn't matter. That has developed 23 or 24 million of revenue for us, or 19 in America, sorry. and that just shows there's room to grow and we're proving our platform can participate in that growth profitably. Next slide. Here's another depiction of the opportunity. These are estimates of cataract surgeons driving interventional glaucoma growth. That is, as I've said a number of times in these talks, 20% of the patients who present for cataract surgery have concurrent glaucoma, 15 to 20%. That presents the doctor with an opportunity to say to his or her patient, at the same time as me fixing your eye so you can see the golf ball or drive better at night, I can do a minimally invasive procedure that will ensure, or not ensure, which will get you off drops. The data says it will get you off the drops or reduce the number of drops you're taking and that will improve your quality of life. All at the same time. And that offering by cataracts and comprehensive surgeons is appealing to their patients. That is the space we're working on. That very, very simple concept that a patient doesn't have to go in and can get better vision through the cataract surgery and improve quality of life by getting off drops or reducing the drops. With our advice there, you know, this green light and the green eye track advance was just released in the last six months and it, with the Shear Clear technology, is a driving growth. It is driving growth, I have to say. Next slide. That's a cut-off version. We keep refining these pictures, but that's a cut version. The canal is theoretically wrapping right around that. You can see a picture of our brain catheter running through the canal. I actually personally believe that it's obviously a depiction. That canal is a bit fat on the left-hand side. It's thinner than that. But you can see the idea of our catheter running through that canal and clearing out clearing the blockages and then we withdraw the catheter and flush it with viscoelastic fins with the ShearClear technology, our proprietary ShearClear technology to make the way into the collector channels, into the whole ocular system to reduce pressure and clear blockages. It works with the anatomy. We do not have an implant and we do not tear the tissue. a note there about our reimbursement, or the reimbursement, $542 for the surgeon to do the procedure, $2,204. They're currently 2026. Draft of 2027 results were released and they're approximately by Medicare in America and they're approximately the same. That we highlight as a, they will be confirmed, or we hope they will be confirmed, they should be confirmed, in November later this year, but it provides confidence in our going forward American revenue and therefore our guidance for our business. We're approaching 20,000 procedures a year in the United States with the device. A tiny part of the market, but for us, 20,000 procedures is good. Thanks. ITRAC Advance is ready for the interventional movement. No trials to run. We have our approvals. There's no reimbursement to secure. Plenty of people on this call may be following various medtech companies that are trying to have a deciding note. Will we get a FDA approval? Will we get reimbursement? When will we get first revenue? How are we going to get first revenue? And on this slide, I debated whether to pick revenue growth. We decided that we finally ticked first revenue. Revenue growth is what's about to happen. Okay? Very important. Let's go. And here's the revenue growth. All lots of numbers, but it does show the dominance, 18.6 million in the United States, 30% year-on-year growth. Interestingly, in our quarterly, you'll see that our USA growth was 21%, quarter on quarter, really had a great quarter in America. Germany is steady, or it's growing steady. The rest of the world out. Guidance is sales, including China, 22.7, was above the midpoint of our guidance, 29% growth. And yet, China, we're only, there's a, you know, 18% theoretically is a big drop, and it's what, $200,000, it's not very much. That, we are growing in Europe, In China, it's lumpy and we're only just getting started. Next one. So further, the opportunity in China, we consider that interventional glaucoma is a nascent stage outside the US. China lags most on interventional glaucoma adoption. The statistics say that when interventional glaucoma picks up, China will be there. Our investment in peak... I've had a few questions about our investment in China and why has it gone back and et cetera, et cetera. Gone back was the 18% loss. Well, first of all, it's a tiny amount. It's about percentages on small numbers. But second, our investment, we are proudly putting forward our EBITDA positive position. We've put forward that EBITDA positive position because we're very careful with every dollar we spend. The opportunity in America is large. We invest in America. We are investing more slowly in China because we have that constant need to improve the bottom line at the same time. It will come. We are well positioned. We have our structure. We have our platform. But for the time being, we're excluding China from our guidance. Let's go. Now, dwelling a little, there's a lot of numbers here. but the messages are on the left-hand side. We hit our guidance target on revenue, revenue growth, and even our positive in the second half. And operating expense, regular followers will know, I often get asked about operating cost leverage. We've provided there a breakdown of the OPEX, sales and marketing, operations, product development, engineering, corporate and clinical data so that people can look at the history and have a look at what is varying with sales. And they say, what's your leverage? What's your leverage? Lots of people are telling me that our sales, our costs just keep going up at the same rate as sales. Well, it's not. Our sales and marketing costs in fiscal, in the first half of 2024 was 76% of sales. That's a big number. In this last half, it's 52. The trend between 76 and 52 has been very consistent improvement. That data has all been provided historically. It's all in our releases. But one can assume, then, that that progression will continue. However, we're not. So that, someone called it JAWS. I've got a note about it being JAWS, the widening of the gap between SARS-CoV-2 growing faster than OPEC. That's where we are. So we got there on the eve of that. We said we'd get there on FY26. Guidance we did, and in July we started F27 with continued growth in America. That's right up to today, or well, last Friday. Our guidance is 26 to 31 million US dollars in excluding China. people interested can add on to China after what they will. That's between 15% and 37% growth. As I said, we point out we always have achieved for years 26% growth. So some people may say that 15% is too low, but we're not. That's what we're saying. We want to hit our guidance. We have not forecast what our EBITDA will be, but we are saying that it's positive. and as I said, we're tracking at 30% above in July. We have liquidity in place that will facilitate us achieving these targets. You often get, say, we don't have enough money, when are you going to do a capital raise? We have enough money to meet our FY27 guidance. Next slide. I think this is the last one. It's just getting started. We built our business for this exact opportunity, and it is now hitting the market, hitting the streets, and turning into fiscal outcomes that we think are interesting to our shareholders, that add value, even that and sales growth. Nobody can tell me what's more important. Plenty of people say, oh, you've got to have sales growth. People say, you've got to have a profit. We're doing both. More than 25% growth and even that positive, I believe, we believe, makes a valuable company. And we think we do have a valuable company. Next one.

Okay, Tom.

There we are. So thank you. We'll just go back to the... Let's go back one slide there and we'll leave it on that and we'll hear any questions, I guess, Mark.

Yeah, a couple of questions. One from Tom Wagner at EMP straight off the bat is, given the EBITDA are positive, where do you plan on spending or investing that cash and will it be in the sales force?

So we want to continue our growth. Investments in sales people are, we're finding, have a very good payback period. would worry about cash greatly as one would expect. We don't have much. We have enough, though. And so, yes, the answer to that, Tom, is yes, we will be investing in sales growth.

And we've gone through the numbers, and FY26, obviously, the numbers have closed up, you know, 23.7 in US dollars, so up 26%. You sort of covered a little bit. What really drove that growth this year?

Well, it's hard to go past America. That 30% growth 79% of our revenue comes in the US and it grew at 30%, particularly that last quarter with 21% quarter on quarter growth. We think that in the last six months we've released the sheer clear proprietary technology, the sheer thinning technology that makes the OBD travel more through the ocular system, and the green light has been very well received by doctors. That navigational beacon, giving doctors the safety of navigation as they place the catheter in the eye of the patient, the doctors have liked it a lot better than the rep one. So we have high-performing, we have a bunch of good reps. From what I can gather, industry-needing revenue per rep, in our quarterly. We talked it to approaching, I think it was $1.9 million, close to $2 million annualized revenue per rep. Going back to Tom Wiggins' question, we should have more reps. So that's where we are.

People are unpacking and coming through to me asking around corporate costs falling from 1.7 to 1.3 and also product development fell too. one of the questions was, were we under-investing to make the EBITDA number, per your guide?

So, corporate costs have come down. There has been a... Unfortunately, we have had to wind down our investment in... well, our spending on 2RT. That is... And so that has been a big contributor. That has been a contribution to EBITDA positive. So, in that last context, we are limiting... We think 2IT is really good tech, but we're not funded to be able to do it, as we've said a number of times. So in that context, maybe we are. But in terms of iTrack Advance, we have an approved product. We are making changes, as you can see by the sheer clear and the green light. And that is working within that sort of incremental improvement, is working within our budget which is make a profit, Tom, make a profit.

Good question from Paul Jones at Pack Partners. Are we expecting any changes to the reimbursement in the USA?

So we have, on July 2nd, we received, the CMS announced the reimbursement for 2027 and as I've said, that was roughly in line with what it is for 2026. So one can never know what's going on beyond that 18 months from today. And those next 18 months follow the last 18 years that that reimbursement thing has been in place. So we have no reason to believe it's going to be charged.

Okay. Just on FY27 guidance, we've provided a guidance of between 26 to 31. The question is, it's a wide range. What separates the bottom from the top?

Well, I can be really honest and say, well, we want to hit it is one thing, but the top is what we think we can achieve, and I guess the bottom is what we know we can achieve. And think and know, I don't, for a little company like us looking at 12 months, it does relate to the... we could have confidence that I think it will narrow over time and that may and will lift, I expect we'll be lifting that lower one but it is about our ability to keep getting new accounts and keeping those accounts. So lots of stuff goes into that. For now, for our little company, we think that gives our shareholders something to have confidence in.

One from Nick Lowe at Taylor Collison. With the previous new sales rep hires that have been onboarded, have they transitioned into under-penetrated territories? How are they progressing and what are they seeing on the ground?

So the last two reps we hired, the first one was in the Pacific Northwest, was absolutely an under-penetrated territory. under-penetrated territory and the other one is way up in the northeast where we split the territory where it was under-penetrated. We consider the revenue per rep number of 1.9 being an amalgam of bringing people on so that we don't let the sum drop to 1.9. Now the person in the Pacific Northwest is not at 1.9, but she is not far behind. The person up in the northeast is right up there. So it just depends, and we work on the total number because we are bringing on reps so that we try not to have too much of a dip in that annualized revenue per rep. a leading indicator of profitability.

Okay. Just on the 4C itself, talking cash and obviously the under-earned receivables and lots of questions throughout the last couple of days. So we had that cash plus the receivables. Is that enough to fund that growth and hit those targets?

Well, we've been very specific that our liquidity is enough to hit our targets. I know people would like to see more cash there, but that doesn't mean we have to have it. We are operating our company with great discipline, investing absolutely. You can see those long-term investments in China are being deferred. So there are deferrals being made, but in the growth markets, we're making the investments we need using the cash we have.

And there's 18 quarters of funding, so obviously based on that June quarter run rate, if we knock it out of the park, if and when we knock it out of the park, what happens if you spend, and do we need to spend to hit the top of that guidance?

We think that our, what we've stated is our liquidity, our liquidity position is enough to hit our guidance. That's what we've said. And 18 quarters, it's an interesting ratio, isn't it? I don't think in the history of Novari we've ever had that much cash on hand. It's a relative thing, isn't it? We've never had 18 quarters of cash on hand. So there you go. We've got an unprecedented amount of cash at the moment.

From the MarketScope reports and sort of claiming that the market is a sort of US $944 million a year market and Glaucos is obviously the incumbent and we've referenced them in the presentation as well. How does Noviro win against Glaucos and get more of that $944 million?

So our pitch is tissues-bearing implant-free. The Glaucos solution is about putting a piece of titanium in the patient's eye and providing a an additional drainage pipe just like we've been talking over the years about drilling a hole in order to let the aqueous humour flow. Now, we provide a tissue sparing working with the body's anatomy and that offering is appealing to doctors because it's appealing to patients and patients are what drive the doctor's behaviour. Now, plenty of people will say doctors are only in it for the money. Everybody has to make a living, but everyone also wants enduring demand for whatever service they're providing. And so enduring demand comes from offering good outcomes to your patient. And we think we've got a tissue-sparing, implant-free solution that is appealing. Morgan Micheletti, we walked around Sydney with one of our good customers, Dr. Morgan Micheletti from Houston, and his message to some of the fund managers we talked to there was absolutely tissue sparing, good for the patient, is why he chooses EyeTracker Pass.

The numbers sort of show that the EyeTracker is about 4% of the US procedures. It has grown. some would say that's still low after several years. What's the growth rate from here?

So I think it's still low. Yeah, it is still low after several years. However, across those years, we've grown every year at 25%, and now we're making a profit. So I think we've grown at the right rate. Now, that just means we've got room to grow, not that we've got something wrong with what we're doing. Simple as that.

A couple of questions on China. There's always questions on China. We've made some statements in the presentation, but obviously China down 18%, you know, on a low number, as you mentioned. But is there anything else happening in China to update people?

No. I'll just reiterate what I said. China is a nascent market. We had our approvals in place. Our investments... will be conducted very slowly because we get fast return at the moment in America and in Europe. It's just massive. It's about managing that cash. It's just delivering what we promise.

One, noting the time, just we might, if there's any further questions, get them into the Q&A, but what is the one metric investors should watch this year?

Well, I think... I think we've provided a lot of guidance on that operating leverage. There's statistics in the history which show operating leverage. You can't go past the United States though. We've got a very, we have our own sales force. I know where we control exactly what's going on. We have not passed our the responsibility for talking to doctors to some big multinational who doesn't care about us. They are our own people that love us, selling our product, they do love the product. So it's 80% or 79% the last six months. That's going to continue to dominate. So watching our quarterly sales, watching the quarterly sales in the US is the main indicator.

would be a good one just through now. If patient demand certainly is controlling our growth and doctor demand, I should say, rather than patient, how do we get more patients and more doctors to find out about our product?

That's about goods on the ground. That is about that line item, sales and marketing. And plenty of people have their opinions on how much marketing we should do. And in the end, having reps in the territory talking to doctors is what gets our name out there. And having peers, having the clinical data, having the people so that the reps can talk to a new doctor and say, look at all this clinical data doc. It works. And look at your peer down the road. He or she is using it. Why don't you give it a go? That message and know the eyes. We're a substantial company. We've got and we're becoming well known. We have a group of doctors that follow us. That gives confidence to potentially new accounts and that's what drives us.

Thank you, Tom. Just again noting time, just gone past 12 o'clock Sydney time, but thanks very much to everyone for joining. If there's any questions, Tom and I's details are on all the releases. Please feel free to give us a call or drop us an email, but thanks again and thanks to Tom.

Thanks, everyone. Thank you.