This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.
spk03: Good day, and thank you for standing by. Welcome to the Helios Medical Technologies Q2 2022 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today. Lisa Wilson, please go ahead.
spk00: Thank you, Operator. Welcome to the second quarter 2022 Earnings Conference Call for Helios Medical Technologies. This is Lisa Wilson of Insight Communications, Investor Relations for Helios. With me on today's call are Dane Andreev, Helios Medical's President and Chief Executive Officer, and Jeff Matthiesen, Chief Financial Officer. At this time, all participants have been placed in a listen-only mode. Please note that this call is being recorded and access to the webcast can be obtained through the investor section of the Helios website at heliosmedical.com. Before we begin, I would like to remind everyone that our remarks and responses to your questions today may contain forward-looking statements that are based on the current expectations of management. These forward-looking statements involve inherent risks and uncertainties that could cause actual results to differ materially from those indicated, including those identified in the risk factors section of our most recent annual report on Form 10-K and quarterly report on Form 10-Q. Such factors may be updated from time to time in our other filings with the SEC, which are available on our website. All statements made during this call are as of August 15, 2022. We undertake no obligation to publicly update or revise our forward-looking statements as a result of new information, future events, or otherwise, except as required by law. I would now like to turn the call over to Dane Andreef, President and Chief Executive Officer of Helios.
spk06: Thanks, Lisa. Welcome, everyone, to Helios Medical's second quarter 2022 earnings conference call. The second quarter saw the first commercial sales of our portable neural stimulation stimulator, or PONS device, which is indicated in the US for short-term treatment of gait deficit due to mild to moderate symptoms of multiple sclerosis, MS, and is to be used in conjunction with a supervised therapeutic exercise program. Gait dysfunction is an extremely common symptom among the estimated 1 million people in the U.S. suffering from MS. Over 70% of patients report difficulties walking, yet there remains a huge unmet need in this area. Until now, treatment options have been limited, but 14 weeks of PONS therapy has demonstrated significant gait improvement when compared to physical therapy alone. PONS therapy is the only available portable and readily accessible neurostimulation therapy that promotes neuromodulation and may lead to neuroplasticity, which is the brain's ability to modify, change, and or adapt in response to modulation of brain activity. It is safe, effective, and offers patients hope and neurologists a new tool in their tool belt. We are pleased to report that Pons continues to see a promising reception in the marketplace. We have received more than 300 inquiries to date that we are actively following up on and are working to convert as many as possible to prescriptions. We have also added a video advertisement at our landing page, www.ponstherapy.com, in the past week, which we believe will help drive interest and inquiries in ponds. I encourage each of you to take a look at it. Because the company has four stakeholders, patients, payers, physical therapists, and physicians, we have seen a few bottlenecks in the process of getting pond therapy to those who need it. One major impediment, has been in training the physical therapists who wish to treat MS patients with PONS therapy. Historically, therapists were trained through an in-person multi-day course with only five to 10 people able to participate at any one time. This has resulted in a slow process, leaving many physicians unable to find a trained physical therapist to fill the prescription. To solve this problem, we've implemented a self-paced online training module, which can be completed in three hours or less instead of over several days. Though the module was only introduced in mid-July, we've already onboarded practitioners from clinics around the United States, including UC Health Sports Med in Colorado, NEA Baptist in Arkansas, St. David's Rehabilitation Hospital in Austin, in the University of Rochester Medical Center. We currently have more than 80 physical therapists already trained or in the process of getting registered for or completing training. Another hurdle to PONS use will be lessened when we roll out our telehealth e-commerce online pharmacy initiative later this year. PONStherapy.com is an increasingly robust site, but we expect the direct-to-consumer e-platform to be a game changer for physicians and patients. Once live, the platform will be immediately available in all 50 states and will include a network of fully licensed providers with e-prescribing capabilities. Currently, it could take a patient several weeks to set up an appointment with their neurologist or primary care physician. Through this site, patients will have the ability to match with practitioners and make appointments online, shrinking the four-week window to as low as 24 hours. In addition, the online store will give patients the option to have the PONS device delivered directly to their door. Currently, sales in the U.S. are on a cash pay basis. The established US list price for PONS device is $25,700, comprised of a one-time cost of $7,800 for the controller and $7,900 for the mouthpiece. As we pursue commercial and government reimbursement programs, we want to make sure cost is not a barrier. To access on-label PONS therapy at a significantly reduced price, patients can now use the patient therapy access program. PTAP is expected to run through December 31st, 2022. In addition, we are setting up a registry program for all MS patients treated with PON therapy, which will collect important health economic information to support the value of PON on key therapeutic outcomes and help generate evidence for coverage. We expect the registry to be available to HCPs and patients by the fall. Helping all stakeholders understand the functional outcomes of PONS therapy and the ways it can improve the quality of life is an important part of reaching the broadest group of patients possible. PONStherapy.com website is one way we're working towards this goal. And our therapeutic experience program is another. TAP is an open label observational trial designed to gather information on the extent to which patient's adherence to a PONS therapy regimen can lead to a meaningful therapeutic outcome. By partnering with some of the nation's premier academic medical centers, we can observe PONS therapy in a real-world setting while keeping key opinion leaders in MS management build their knowledge. Through TEP, we aim to treat 40 to 50 patients across 10 to 12 planned centers of excellence, treating neurologists and neural rehabilitation centers identified as having the greatest potential to be early adopters of our technology. During the second quarter, We were thrilled to add the Shepherd Center in Atlanta as one of our centers, and we are currently engaged with approximately a half a dozen centers, which we hope to add in the near future. We also project to enroll the first patients for TEP late in August and expect to complete enrollment by early next year. Also by the end of the year, we expect to get additional clinical evidence to support long-term durability upon therapy for MS. Before I turn it over to Canadian Activities, I want to give a brief update about the pilot trial in stroke, which we partnered on with the Medical University of South Carolina. The study is designed to evaluate dynamic balance and neuromodulation in chronic stroke survivors. neuromodulatory translingual stimulation delivered using PONS therapy. We anticipate enrollment in the MUSC trial will commence soon and expect it to have full enrollment by mid 2023. Turning to our Canadian activities, since 2019, PONS has been authorized for sale in Canada for chronic balance deficit due to mild to moderate traumatic brain injury, and subsequently for the treatment of gait deficit due to mild to moderate symptoms from MS. We now have 41 authorized PONS clinics in Canada, up from 37 at the end of 2021. In addition, we currently have small trial programs with a few insurance carriers in Canada evaluating the benefit of PONS therapy which we hope will lead to coverage by some or all of those carriers in the near future. Having said that, while we have gained valuable data from our patients in Canada, some of which we've used to achieve FDA authorization in the US, our sales have not reached the levels we have targeted. We are currently evaluating additional measures and alternatives to achieve greater market adoption in Canada. With that, let me turn the call over to Jeff to discuss our second quarter financial results in detail.
spk04: Thanks, Dane. It is a pleasure to be with you today. Total revenue was $119,000 for the second quarter of 2022 compared to $71,000 in the second quarter of last year for an increase of 68%. This was the first quarter in which we reported product sales in the U.S., which comprised $63,000 of the total revenue. For the second quarter of 2022, our gross profit was $31,000 compared to $4,000 in the prior year. Operating expenses for the second quarter of 2022 decreased to 3.5 million compared to 6.2 million in the second quarter of 2021. a decrease of 2.7 million. This decrease was primarily due to a decrease in stock-based compensation expense as well as lower product development and clinical trial costs. Operating loss for the second quarter of 2022 was $3.4 million compared to a loss of $6.2 million for the prior year period. We reported a net loss for the second quarter of 2022 of $3.8 million or a loss of 97 cents per basic and diluted common share compared to a net loss of $6 million or a loss of $2.58 per basic and diluted common share for the same period last year. Our cash burn from operations for the second quarter 2022 was $3.7 million. compared to $3.8 million for the second quarter of 2021 and in line with our expectations. As of June 30th, 2022, we had $6.3 million of cash and no debt. Following the second quarter, we closed on an $18 million public offering, generating net proceeds of approximately $16.4 million bringing our pro forma June 30th cash balance to $19.7 million. Turning to our outlook, we currently expect third quarter revenue to be modestly above the second quarter levels, factoring in the timing required to pair patients with trained physical therapists and potential delays for some portion of US patients to pursue insurance coverage prior to filling their prescriptions. As we disclosed in our second quarter 10Q, certain performance criteria were achieved for outstanding performance-based stock options in August, resulting in the vesting of performance-based stock options for which we will recognize a one-time non-cash share-based compensation expense of approximately $1.2 million in this third quarter. As we continue to build momentum and expand our sales coverage, we expect future quarterly revenue to continually increase sequentially quarter over quarter throughout the year and through 2023 as the U.S. commercialization of ponds develops. With that, operator, let's now open the call for questions.
spk02: Certainly. As a reminder, to ask a question, you will need to press star 1-1 on your telephone. Please stand by while we compile the Q&A roster. One moment. And our first question will come from Jeffrey Cohen of Leidenberg. Your line is open.
spk05: Hi, Dana and Jeff. How are you? Good, Jeff. Doing well.
spk04: Jeff?
spk05: A few questions from Aaron. So, firstly, the... foreign exchange loss for the quarter. Do you expect any pull through on that into the back half of the year? I assume that's from the, uh, the strength of the dollar to, uh, the Canadian dollar.
spk04: Yeah. So we don't really, um, you know, I think it really has to do with, um, our balance sheet balance on the intercompany activity. And so it, uh, you know, is something that we don't necessarily forecast what FX is going to do. Um, it's just something that, um,
spk05: know we're not we're not into forecasting fx so got it okay uh that's helpful um could you talk about the size of your commercial organization now and uh number of territories number of people and then talk a little bit about um the audience uptake out there as far as your uh your marketing sales directives and focus is it going toward more toward patients, less toward physicians, or vice versa? And how might that look over the coming quarters?
spk06: Yeah. Hey, Jeff, I'll break this up. Well, we have two Jeffs on the call. But I'll begin the call. Sorry for the confusion. But just the U.S. commercial uptake, you know, again, we were in the top half of the first inning here. You know, we had to wait for the the software, the PT module training software. A lot of PTs were waiting for that. So our sales team had been initiating and having great conversations with neurologists, but also with PT clinics, especially larger rehab hospitals as well. The other thing we've been waiting for is prescriptions. Because of the PT training, which didn't start until after the second quarter, we've had physicians out there waiting for PTs to get PONS trained, PONS certified, before they wrote their prescriptions. And then because they know it takes a few weeks for that patient to schedule with the PT. So if you look at that circle of stakeholders, the physicians, prescribers, the PTs and payers, there's a lot of push-pull between them right now. And with the new PT module training, we can train all over America in all 50 states. And we expect in the fourth quarter, the same initiative going across the e-commerce, telemedicine will really help bring demand forward when you have a physician being able to e-prescribe within a 24-hour period. That's going to help not only our sales team, our hub services, but it's really going to help our digital marketing presence as well. So again, with the financing, it helps us to launch into new initiatives like the telemedicine e-commerce, but it also helps us to look at where sales and marketing can be increased given the new financing on our balance sheet.
spk05: Okay, got it. And one more, if I may. Could you talk about the payers out there, at least domestically in the U.S., and Have there been any one-offs or discussions or applications or payers stepping forward on a patient-by-patient basis?
spk06: So right now, we're in the early stages of that initiative, Jeff. You know, right now, if you recall, the MSIT rule was taken away last fall, and the new TSIT rule potentially could replace that for sometime next year. That would be the fastest way for Helios, given our breakthrough designation, to be granted reimbursement. But if you notice, we talked a little bit about a Canadian initiative. We've had some very good pilot studies going on in Canada with payers, and we look to potentially have those similar strategies in the United States as well.
spk05: Okay, perfect. And one more, if I could squeeze it in. What's the enrollment size on the pilot trial from South Carolina for stroke? It's 12. Okay, perfect. Got it. Thanks for taking our questions. Great. Thank you, Jeff. Thanks, Jeff.
spk03: I would now like to turn the conference back to Dane Endries.
spk06: Thank you, everyone.
spk02: This concludes today's conference.
spk06: Oh, I'm sorry. Sorry. I just want to say thank you, everyone. Despite some of the challenges we faced, it was an overall strong quarter. We have great momentum going into the second half of the year. And I just want to thank everyone for your time and interest in Helios Medical Technologies. And we look forward to speaking to you next quarter.
spk03: This concludes today's conference. Thank you for participating. You may now disconnect.
spk01: The conference will begin shortly. To raise your hand during Q&A, you can dial star 1 1. The conference will begin shortly. To raise your hand during Q&A, you can dial star 1 1.
Disclaimer