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spk00: Good day, and thank you for standing by. Welcome to the Helios Medical Technologies fourth quarter and year-end 2022 earnings conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question-and-answer session. Instructions will be given at that time. As a reminder, today's conference may be recorded. I would like to hand the call over to your speaker, Michelle Bilski, Investor Relations.
spk02: Please go ahead. Thank you, Operator. Welcome to the fourth quarter and year-end 2022 Earnings Conference Call for Helios Medical Technologies. This is Michelle Bilski of Insight Communications, Investor Relations for Helios. With me on today's call are Dane Andreef, Helios Medical's President and Chief Executive Officer, and Jeff Bateson, Chief Financial Officer. Also on the call today is Dr. Antonella Favit-Van Telt, Helios Medical's Chief Medical Officer, who will be available as needed during Q&A. 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 attained through the investor section of the Healius website at www.healiusmedicals.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 factor section of our most recent annual report on Form 10-K and quarterly reports 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 March 9, 2023. 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 Andrews, President and Chief Executive Officer of Helios.
spk04: Thank you, Michelle, and welcome, everyone. It was another strong quarter for Helios and our portable neuromodulation stimulator, or PONS device, which is indicated in North America for treatment of gait deficit due to mild to moderate symptoms of MS when used in conjunction with a supervised therapeutic exercise program. PONDS is also authorized in Canada for the treatment of chronic balance deficit due to mild to moderate traumatic brain injury, or TBI, and just announced this morning for stroke. In the US, PONDS also has an FDA breakthrough designation for stroke in addition to the breakthrough designation for MS, which we believe will be a significant benefit as we seek reimbursement in the United States. During the fourth quarter, the benefits of PONS therapy continued to resonate with healthcare providers, physical therapists, and patients in the US as we added prescribers and trained PTs. Because PONS is the only available portable and readily accessible neurostimulation therapy with the potential to generate neuroplasticity, essentially rewiring parts of the brain. It is a potential game changer for people suffering from gait imbalance impairment. Our mission is to make this important and innovative technology available to as many qualified patients as possible, and we are working to improve access on multiple fronts. Physical therapists, play a key role in PONS treatment, and training them quickly enough to meet demand was a bottleneck we faced early in the U.S. launch. To standardize the process and reduce training time, we introduced an online training module, which allows practitioners who wish to treat MS-related balance and gait deficit to learn remotely at their own pace in three hours or less. instead of through an in-person multi-day course. It has quickly become the primary method for training therapists, which means faster relief for patients. Another way we've improved access is through our recent partnership with Upscript, a leading telehealth company focused on providing medications and devices direct to the consumer. Through PonsTherapy.com, Americans with gait and balance deficits can now access online health evaluations to fill PONS therapy prescriptions through a network of fully licensed providers with e-prescribing capabilities and obtain PONS through home delivery. The initial response has been overwhelmingly positive, and the first devices were shipped in January 2023. patients who are motivated to improve their walking can now take the fight against ms into their own hands sales of pawns devices are currently on a cash pay basis but we don't want cost to be an impediment to use in june 2022 we launched our patient therapy access program or ptap which provides patients access to on label pawns therapy at an early 85% discount to list price. PTAP was scheduled to expire at the end of 2022, but we're pleased to announce that we're extending this program through June of 2023. The vast majority of U.S. Ponds device prescriptions in the fourth quarter were through the PTAP program. The Neurology Center of New England has been an important contributor to our PTAP program. And we were thrilled to add the institution to our PONS therapeutic experience program. PONS-STEP is an open-label observational trial that allows us to partner with some of the nation's premier academic medical centers to observe PONS therapy in a real-world setting while enabling the key opinion leaders in MS management to build their knowledge, and advise the broader medical community. During the fourth quarter, we also added MGH, Institute of Health Professions, and Oregon Health and Science University to the program, bringing the total number of PONSTEP centers of excellence to five as of today. To most effectively help those suffering from balance and gait impairment, it's critical that we engage not only the patients, but also the two other PONS therapy stakeholders, the neurologists who prescribe PONS and the physical therapists who oversee the treatment. You've already heard how we've improved and streamlined the training process for physical therapists, and we continue to maintain an active dialogue with the group in order to best serve them and their patients. We just returned from the American Physical Therapy Association's conference for physical therapists, national and regional PT clinics and neural rehab specialists, and have well over 200 leads to follow up on. Interacting with the broader neurology community, as we have with PONCEP, is another key to properly educating patients and providers about the mechanism of action and benefits of PONCE. In April, we will be attending the American Academy of Neurology annual meeting in Boston, and at the end of May, we'll be at the Consortium of Multiple Sclerosis Centers annual meeting in Denver, which is attended by the MS Centers of Excellence focused on MS neurologists. Turning to our Canadian activities, at the end of 2022, PONS was authorized for sale in Canada for chronic balance deficit due to mild to moderate traumatic brain injury. as well as mild to moderate symptoms of MS. Yesterday, we learned that Health Canada extended PONS indication to include use as a short-term treatment of gait deficit to mild to moderate symptoms from stroke. An estimated 870,000, 78,000 Canadians are currently living with stroke, with more than 89,000 new strokes occurring every year and gait impairment is a major source of post-stroke disability. A real-world evidence database analysis showed that mild and moderate stroke patients using PONS therapy experienced an average six to seven point improvement in their functional gait assessment score over the 14-week treatment period. which far exceeds the 4.2 minimal detectable change usually seen in stroke patients. Before starting treatment, most patients were considered at risk of falling. But after 14 weeks of PON therapy, 28% of the patients were no longer at risk of falling. Routine rehabilitation physical therapy does not usually provide a meaningful reduction in this risk, usually in the 1 to 3% range. So this is a significant improvement. PONS has been commercially available in Canada since 2019 for MS and TBI, and we're happy that Health Canada authorized PONS for stroke, enabling Helios to deliver clinically meaningful benefits for stroke patients as well. This was a huge win for Helios and for Canadians suffering balancing gait impairment as it's become evidence that PONS therapy employs a shared mechanism of action and provides a significant and clinically meaningful improvement in balancing gait, regardless of the underlying medical condition. We also recently extended our partnership agreement with Canada's Health Tech Connect a leading health technology company specializing in neurotechnology innovation. This agreement grants HTC the exclusive right to purchase, market, and sell and distribute ponds through the metropolitan Vancouver area, subject to certain minimums. The initial term is for five years, with the possibility to extend it to 10 years. HTC has been an instrumental partner for Helios, and we're excited to strengthen our relationship and expand our presence across Vancouver through HTC's network of leading-edge neural rehabilitation clinics. Other exciting developments are underway in Canada, and we hope to share them very soon. Though it is currently a smaller market for us, we believe Canada's growth potential parallels the U.S. market in the near term due to the multiple indications, in particular, TBI and now stroke. With that, let me turn the call over to Jeff to discuss our fourth quarter financial results in detail.
spk05: Thanks, Dane. It is a pleasure to be with you today. Total revenue was $282,000 for the fourth quarter of 2022 compared to $258,000 in the fourth quarter of last year, an increase of 9% comprised primarily of product sales in both periods. Full year 2022 revenue was $787,000, an increase of 51% over 2021, reflecting the impact of the U.S. commercial launch of PONS for MS in April 2022, partially offset by a small decrease in revenue in Canada that resulted from exchange rate changes. For the fourth quarter of 2022, our gross profit was $132,000 compared to $129,000 in the prior year. Operating expenses for the fourth quarter of 2022 were $2.8 million compared to $4.2 million in the fourth quarter of 2021, a decrease of $1.4 million. The decrease was primarily the result of lower product development and clinical trial activity following the U.S. commercial launch of PONS. Operating loss for the fourth quarter of 2022 was 2.7 million compared to a loss of 4.1 million for the prior year period. The public warrants we issued in connection with the August 2022 financing are accounted for as a derivative liability instrument on the balance sheet. The increase in the valuation of these derivative instruments from the date of the offering to the quarter or year end resulted in an expense of $2.5 million during the quarter. The warrants will require revaluation in future quarters tied to our share price, resulting in non-cash income or expense for each reporting period. We reported a net loss for the fourth quarter of 2022 of $4.9 million, or a loss of 17 cents per share, compared to a net loss of $4.1 million, or a loss of $1.31 per share for the same period last year. Our cash burn from operations for the fourth quarter of 2022 was $2.1 million, a significant decrease from the average quarterly run rate of approximately $4.1 million over the previous three quarters of 2022, reflecting the results of our focus on reducing cash burn and extending our cash runway beyond 2023. As of December 31, 2022, we had 14.5 million of cash and no debt. Turning now to our outlook, we currently expect 2023 revenues to exceed prior year levels and to increase throughout the year as the U.S. commercialization of ponds continues to develop, though we may experience quarterly fluctuations as we make refinements to our U.S. commercial rollout of ponds. We believe broad third-party payer reimbursement will be needed to achieve our full revenue potential. Our 2023 quarterly cash burn is also expected to be below comparable quarters in 2022, reflecting the results of our actions in 2022, while recognizing that the first quarter cash burn is typically the higher quarter as a result of the concentration of cash payments for such things as bonus payments, audit fees, and public company-related expenses. With the projected increase in sales of ponds in the U.S. and Canada, 14.5 million of cash on hand at year end, and our reduced cash burn, we believe we have a cash runway to take us through 2023. With that, operator, let's now open the call for questions.
spk00: Thank you. If you'd like to ask a question, please press star 1-1. If your question has been answered and you'd like to remove yourself from the queue, Please press star 11 again. Our first question comes from Jonathan Ascoff with Roth MKM. Your line is open.
spk07: Thank you. Good afternoon, guys. Congrats on the progress. And I'm curious, you know, the PTAP extension, is that, you know, driven overwhelmingly by, you know, the price, the cash price being, you know, prohibitive, let's say?
spk04: Hi, Jonathan. It's Dane. The answer is yes, first and foremost, because it is cash pay and we're implementing our reimbursement strategy. But we also want to share the adoption and increase awareness to the PTs that we're training up. to the neurologist so that they all get more and more experience with PONS therapy.
spk07: Okay. And how about the TEP traction? You know, what can you tell me about people in TEP?
spk04: So currently we are enrolling into our five sites at the moment. So we're pleased with the five sites that have signed up. So far, we're looking to hopefully get to the 10 to 12 level by year end.
spk07: Okay. And how's about trial enrollment for stroke?
spk04: At this time, we have not enrolled into our stroke trial.
spk07: Okay, and then lastly, when do you think, you know, it's obviously taking some estimation, and I'm not going to hold you to it, but when do you think you might have data ready to submit or, you know, to talk about that would be the data you'd want to underpin, you know, insurance reimbursement?
spk04: Well, if you recall, there is two ways that we're approaching our reimbursement in the United States for MS and gate deficit. First and foremost, we're looking through CMS right now and looking to meet with them over the next three to six months regarding our coding, first and foremost. And then second, also remember that the TSAT program will go live, and that's for emerging technology. What we understand right now, the law will come down, the rulemaking will come down in April. There will be a 60-day notice period of questioning regarding that TSAT emerging technology uh program and what we understand right now it's already scheduled for the white house in september so if you if you look at the programs that we're implementing one to uh to generate evidence for insurance uh would be our pond step uh program which we just spoke to but also our registry uh under uh uh what what under ms right now so we are collecting data, medical records, and so forth under our registry. And Antonella, would you like to just add to that as well?
spk01: Yes, absolutely. Thank you, Dane. Right now, we have, as I mentioned, the program, the PONSTEP program, which aims to provide data regarding the utilization, the real-world utilization of PONS and the ability of PONS therapy to be effective under different conditions of adherence to physical therapy. The other program is the registry program, which aims to collect not only information about therapeutic outcomes of PONS, but most importantly, therapeutic outcomes as it relates to the overall management of MS patients. Therefore, we have what we call soft outcomes that we are prepared to collect and present to both CMS and insurance partners to show cost effectiveness in management of patients with MS.
spk07: Okay, thank you. And PTAP is still $3,895, and the cash is still around $17,000, $18,000? Hey, this is Jeff. The
spk05: PTAP is $38.95. The cash pay pricing is around $14.05.
spk07: Okay. Thank you very much, guys.
spk05: Yep.
spk00: Thanks, Jonathan. Thank you. Our next question comes from Jeffrey Cohen with Leidenberg Bauman. Your line is open.
spk03: Hey, this is actually Destiny on for Jeff. Thank you for taking our questions. I just have a couple around... Well, a couple around a bunch of the things you talked about. So can we start with how many PTs you've trained today to date through your online training program?
spk04: We haven't announced that, but it's well over 100 right now. And if you look at just the ATPA follow-ups, which we have well over 200 follow-ups with PTs, with neuro-
spk03: uh pt centers and some of the the bigger national change like ati like pt solutions and also physical balance centers got it okay thank you and i'm wondering around ptap you said it was extended until june 2023 so what what kind of access strategy are for patients that is are you thinking about implementing or leveraging beyond June 2023? Is there the opportunity for it to be extended again, or would you have something a little different? Just high level, what are you thinking in terms of that?
spk04: You know, at the moment, we haven't . Okay, go ahead, Jeff. Yeah, yeah, yeah, sorry.
spk05: Yeah, so, you know, I think at the end of the day, we're going to be focused on, you know, making sure that there's access to ponds therapy. We're also very much interested in making sure that we're gathering data that allows for reimbursement. And so, I think that, you know, we will continue to look at ways to make sure that there's access to ponds, but also pushing towards getting reimbursement, you know, because ultimately reimbursement is going to be key. So, I think we've announced it until June 30th, and as June 30th approaches, we'll look to see what makes sense on a go-forward basis at that point.
spk03: Okay, perfect. Yes, I know you guys have been very diligent in trying to make this accessible, so awesome. Last one for us, you mentioned about 200 leads that you're going to follow up with. Can you just walk us through what that follow-up process looks like? And can you assign any like timing to any of those leads or is it still a bit too early to tell?
spk04: You know, we've actually had a number of PTs access or upon therapy online training already. Before the conference, we actually did a teach-in. Our director of physical therapy at Helios, Whitney, did a great job. So she actually trained PTs live right there and then at our booth after hours. So we're getting actually a great response. But really, definitely a bigger movement would be going after the super regional PT clinics like Physical, like ATI, like PT Solutions, and a few others that we would like to be able to just roll it out at a national or a corporate level, the PONS training, because it's so easy. It's free to the PT and to the clinic. They could do it in three hours or less at their own time. They could break it up. It's actually a wonderful resource for them, but also for the patient.
spk03: Got it. Okay, that's great. Really great. All right, that does it for us. Thank you so much.
spk04: Thank you, Destiny.
spk00: Thank you. As a reminder, to ask a question, please press star 1-1. Our next question comes from Anthony Vendetti with Maxim Group. Your line is open.
spk06: Thanks. Good to see you, Dane, out at the PT conference in San Diego.
spk04: No, that was a wonderful meeting. Thank you, Anthony, for spending time with me.
spk06: Absolutely. Most of my questions were answered, but can you talk a little bit about your operations in Australia? I know it's approved. They were authorized for sale for short-term use. Is that still early stages or just an update on what status there?
spk04: Well, sure. So, you know, again, just to remind everyone on this call, our investor base, the TGA, which is the regulatory body, approved teleus for balancing gait deficit with no indication. So if you think about that, it really puts the PONS device, PONS therapy, back into the practitioner's hands. So if they have a stroke patient in one corner with gait deficit or an MS patient with gait deficit or a TBI across the room with balance deficit, they're able to treat the patients. So that is a very exciting potential for us. We are talking to consultants and looking at distribution partners for Australia, but no news yet at the moment.
spk06: Okay. Okay. But that broad sort of indication seems like a – you know, a significant market opportunity potentially in Australia.
spk04: Very much so. Even though it's a smaller country than Canada's 40 million people, I think Australia is 26. Like you said, you know, PONS therapy or PONS device could be treated for any of their balance and gait deficits across any neurological indication or traumatic brain injury. Okay, great, great.
spk06: Just remind us, you mentioned that there's another conference upcoming, a neurology conference you're going to be attending. When is that? And what's the goal when you attend that?
spk04: Yep. So that's the, in April, it's going to be in Boston. It's the American Academy of Neurology. And that's for general neurologists, so remember. All neurologists and prescribers can prescribe for MS, for gait deficit due to MS. So we definitely want to be there. We have a booth there and really provide our clinical data, our real-world data in MS, but also talk to them about our platform right now in the U.S., how easy it is for any rehab hospital or clinic for their PTs to get trained up and really educate them so that they understand that PONS is an effective treatment for gait deficits due to MS. And then the one in Denver is the MS Centers of Excellence that's CMSC, and that is solely focused on MS neurology. So remember, we have three stakeholders that we have to educate. The patient, the neurologist, both general and the MS specialist, and the physical therapist and or the rehab hospital.
spk06: Okay, great. And then maybe more for Jeff. I guess the guidance of revenues to exceed what they were in 22, in 23. But at this stage, obviously, there could be a lot of quarterly fluctuation. Should we expect that fluctuation to be similar to or trend according to the cadence that it was in 21 and 22? Or literally, it could be up and down every quarter just because of the stage of growth you're at?
spk05: You know, I think it's more of the latter. It's just, you know, we're doing a number of things, getting the rollout happening here in the U.S., so I think that there's going to, you know, just be fluctuations in how things, the uptake occurs here in the U.S. You know, having said that, there always is in, you know, in the Canada side, third quarter is always a soft quarter in Canada, and that's because With the weather, that's when people are vacationing, and so that's typically the softest quarter there. But really the biggest factor for us is we don't really have any history yet to really understand what the trends are going to be like, and so don't want to be committing to anything until we see things play out here for a bit.
spk06: Sure, that makes sense. All right, thanks so much. Thanks, Dane. Thanks, Jeff. Appreciate it. Thanks, Dan. Thanks a lot.
spk00: Thank you. There are no further questions at this time. I'd like to turn the call back over to Dane Andrews for closing remarks.
spk04: Great. Thank you, everyone. We at Healius continue to be gratified by the marketplace's reception to PONS and are very proud of the foundation we've built. PONS is an important therapy that has the potential to improve the lives of millions, and we remain committed to bringing this innovative technology to all those who can benefit. Thank you for your time and interest in Helios Medical Technologies, and we'll speak again next quarter. Thank you.
spk00: This concludes today's conference. Thank you for participating. You may now disconnect.
spk04: Everyone, have a great day.
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