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spk01: Good day, everyone. My name is Chelsea, and I will be your conference operator. At this time, I'd like to welcome everyone to the Helios Medical Technologies third quarter 2023 financial results. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer period. At that time, if you have a question, please press star 1 on your telephone keypad. As a reminder, this conference call is being recorded today, November 9, 2023. It is now my pleasure to turn the floor over to Michelle Bilski, Investor Relations for Helios Medical Technologies.
spk00: Please go ahead. Thank you, Chelsea. Welcome to the third quarter 2023 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 Andreece, Helios Medical's President and Chief Executive Officer, and Jeff Mathieson, Chief Financial Officer. At this time, all purchase events 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 www.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 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 November 9th, 2023. We undertake a 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 Andrees, President and Chief Executive Officer of Helios.
spk06: Thanks, Michelle. Welcome, everyone, to Helios Medical's third quarter 2023 earnings conference call. We began the quarter with the conclusion of our very successful patient therapy access program, which we launched in June 2022 to give qualified Americans suffering from balancing gait impairment due to MS the ability to purchase ponds at a significantly reduced price. The implementation of PTAP enabled us to accomplish two key objectives. By subsidizing the cost of ponds, we meaningfully reduced a major barrier to use while also adding to our MS patient registry. Through the registry, we can collect important health economic information to establish the value of ponds on key clinical and therapeutic outcomes, which is critical as we pursue reimbursement. As expected, quarterly sales of PON systems in the U.S. decreased following the expiration of the PTAP program on June 30th, as sales of PON systems reverted to the cash pay price. We continue to believe that broad third-party payer reimbursement is needed to achieve our full revenue potential, and I'm pleased to report we're moving closer to that goal. In September, the PON system and mouthpiece were assigned UPC numbers, the equivalent of NDC numbers for pharmaceuticals, with the listed price of $25,700 and $7,900 respectively. The UPCs are now included in the Walters Kluwer Health's Pharmacy Database. to which 17 of the top 20 grossing PBMs are subscribed. Receiving the UPC numbers was a game changer for Helios because with the DME accreditation announced last quarter, PONS is now one of the few products with pharmacy and device codes, which means two paths towards reimbursement. We are also steadily moving toward our goal of achieving U.S. authorization for stroke. We recently established relationships with two important Canadian healthcare providers, having received an order for 10 PON systems from the School of Rehabilitation at the University of Montreal, as well as a letter of intent from the Quebec Ministry of Health and Social Services to purchase 30 pond systems to treat gait imbalance in stroke patients. These are exciting opportunities and both come about due to the body of clinical evidence demonstrating the effectiveness of using PONS to treat stroke. Among other outcomes, PONS therapy has been shown to reduce the risk of fall in 28% of stroke patients as opposed to a reduction of just 1% to 3% with physical therapy alone, which is the current standard of care. Stroke patients experience a significant increase Improvement in gait, averaging a 6.74-point improvement in the functional gait assessment score over the 14-week treatment period. Overall, 69% of the patients experienced at least a 5-point FGA improvement, which is larger than the 4.2 minimal detectable change usually seen in stroke patients. The fact that these two institutions committed to purchase PONS reflects the medical community's strong desire to improve treatment for this patient population, and we believe that evidence from the treatment outcome will support health economic benefit and cost effectiveness of incorporating PONS therapy as a first-line treatment for stroke patients. Furthermore, this evidence should provide valuable benchmark for other Canadian health care providers and private payers as they evaluate reimbursement upon therapy. The data from these clinical application trials will also provide supporting evidence upon therapeutic benefit that can strengthen the registrational program for stroke currently ongoing in the U.S., where there are more than 5.5 million people experiencing impaired walking due to stroke. If and when PONS is approved to treat stroke in the U.S., it will be eligible for coverage under the proposed transitional coverage of emerging technologies or T-SET pathway, which would expedite Medicare coverage of certain breakthrough devices by allowing manufacturers the opportunity for increased pre-market engagement with CMS. Helios has two breakthrough designations granted by the FDA, putting us among the less than 1% of medical device companies that have a breakthrough designation, with our second one in balance and gait deficit due to stroke. While we don't know the outcome of this bipartisan piece of legislation, we are optimistic about its potential and the fact it provides another pathway toward reimbursement and greater access for patients. We are always looking for ways to help reduce barriers to PONS use. Earlier this year, we launched our Upscript e-commerce telehealth platform to make it easier for people suffering from MS to access pond therapy and start treatment more quickly instead of having to wait up to three months to see their neurologist. The platform offers, among other services, online health evaluations with qualified medical providers, a fulfillment of prescriptions required for PONS therapy, and the shipping of PONS devices directly to the homes of eligible patients in the United States. As you can imagine, this is a great benefit to those who face mobility challenges. We are pleased to report that virtually all the prescriptions in the United States are now fulfilled through Upscript. We also continue to expand PondSTEP, our company-sponsored outcome research trial designed to evaluate the real-world impact of MS patients' adherence to Pond's therapy. We recently added Montefiore Medical Center in Nyack, New York, to the program, bringing the total number of PONSTEP centers of excellence to six. We have increased enrollment at each site with the goal of enrolling five to 15 patients per site. Enrollment in PONSTEP began during the fourth quarter of 2022 and will continue throughout March of 2024. Turning now to our Canadian activities, Revenues in Canada were $72,000 during the quarter, up 29% over the third quarter of last year. We are starting to see traction with the exclusive distribution agreement with HealthTech Connect for portions of Western Canada that we signed at the end of the first quarter and expect steady overall growth to continue. Earlier this week, we were proud to announce the results of a study performed by Pacific Blue Cross and Health Tech Connect with the ultimate goal of reducing long-term disability and improving the quality of life for individuals suffering from traumatic brain injury in Canada where PONS is authorized to treat TBI. The program participants were all at least two years post-injury and had not responded to standard rehabilitation treatments and not expected to return back to work. The results were truly remarkable. Eighty-nine percent of the patients suffering from long-term disability due to chronic TBI said that balancing gate issues were no longer a barrier to return to work. 56% of the participants actually returned to work. And remember, these patients were deemed unlikely to resume their jobs. 80% of those returned to their prior occupations full-time for at least six months. In addition to significant improvements in balance and gait, Patients reported improvement in headache severity as well as in cognitive and mental health symptoms. It was also found that PONS therapy reduced the financial burden to the insurance provided by at least $1.6 million for the five individuals who returned to work for nearly a 10x savings on cost. This was an important study given that 7 million people in North America suffer from chronic balance deficit and other disabilities related to TBI. Rehabilitation therapy is the current standard of care, but its return to work rate is very low, and a large percentage of patients end up on long-term disability, often permanently. We believe the findings from this collaboration may promote our efforts to gain reimbursement by Canadian insurance companies and healthcare providers, as well as demonstrating that PONS therapy's significant health economic benefit and cost effectiveness as we negotiate coverage with US payers. It was a busy quarter for us at Helios, and we're excited about what we accomplished and the road ahead. With our continued focus on cash management and a runway that will take us into the second quarter of 2024, we have both the drive and resources necessary to continue pushing forward and bringing our life-changing therapy to as many patients as possible. With that, let me turn the call over to Jeff to discuss our third quarter financial results in detail.
spk02: Thanks, Dane.
spk04: It is a pleasure to be with you today. Total revenue for the third quarter of 2023 was $143,000, a decrease of $53,000 compared to $196,000 in the third quarter of 2022, primarily attributable to the decreased unit sales of PON systems in the U.S. following the termination of the PTAP on June 30, 2023. This was partially offset by increased sales of systems in Canada. For the third quarter of 2023, cost of revenue was $187,000 compared to $101,000 for the prior year period due to fixed overhead cost increases, which were primarily comprised of salaries and benefits of employees involved in management of the supply chain and certain production costs. Selling general and administrative expense for the third quarter of 2023 was $2.2 million, a decrease of $1.2 million compared to $3.4 million in the third quarter of 2022, primarily the result of a decrease in performance-based stock compensation expense. Research and development expense for the third quarter of 2023 were $700,000, was essentially flat period to period over the third quarter of 2022. Total operating expenses for the third quarter of 2023 decreased to $3.1 million compared to $4.9 million in the third quarter of 2022. Operating loss for the third quarter of 2023 was $3.2 million compared to a loss of $4.9 million for the prior year period. We reported a net loss for the third quarter of 2023 of $3.7 million, or a loss of $5.49 for basic and diluted common share, compared to a net loss of $1 million, or a loss of $2.90 for basic and diluted common share for the same period last year. Our cash burn from operations for the third quarter of 2023 was $2.5 million, compared to $3.8 million for the third quarter of 2022, reflecting the results of our focus on managing cash burn. As of September 30, 2023, we had $6.6 million in cash and no debt, and $4 million in proceeds receivable from warrant exercises as of September 30, 2023, and we expect our cash runway to extend into the second quarter of 2024. With that, Chelsea, let's open the call for questions.
spk01: At this time, if you would like to ask a question, please press the star and one keys on your telephone keypad. You may remove yourself from the queue at any time by pressing star two. Once again, that is star one to ask a question. And our first question comes from Nick Sherwood with Maxim Group.
spk03: Hey, guys. How's it going?
spk06: Good, Nick.
spk03: Hey, Nick. So my first question is about the letter of intent from the Quebec Ministry of Health and Social Services. Do you know what their timeline is to evaluate the benefit of PONS therapy with those stereo devices?
spk04: So this is Jeff. I'll just step in. In the press release, And we commented that the letter of intent, their desire is to have all 30 patients either beginning treatment or lined up by the end of March of next year. So it would be something that should play out fairly quickly.
spk02: And then...
spk03: Is there any additional sort of like agreement or ideas that, you know, based on success that they would buy additional, or are you looking to go through the study, work with them through the study, and then once that's completed, work with them from there?
spk04: Their intent in the letter of intent, what they're looking to have come out of this, is if successful, they would want to incorporate this as part of their standard of care. But there is no specific commitments to do anything beyond that.
spk06: I understand. Hey, Nick, this is Dane. Just a little more color on who Quebec, the Ministry of Health is. It is their provincial health care provider, like a CMS Medicare provider. Um, and most strokes are covered under government policies.
spk03: Okay. I understand. And then sort of what, is there any, well, I mean, what sort of communication can that Quebec, Quebec ministry of health have with other provinces, you know, such as like Ontario, or is it kind of, you have to reach each Canadian province,
spk06: health system sort of on an individual basis yeah I'll take that one so yes like Ontario OHIP plan we would have to reach out and and provide a similar conversation where a lot of them provincial health care providers with would like to do their own studies But they're also happy to see, you know, Quebec being the first one stepping in to do this balancing gait study in stroke.
spk03: Okay, awesome. And kind of switching gears, can you just give a little bit of color on the relationship with HealthTech's Connex and sort of any buying patterns they have for PONS therapy and, I mean, the numbers, you know, people getting back to work who had traumatic brain injury, a lot of really good results from that. Can you just sort of give some more detail on that relationship?
spk04: Yeah, hey, this is Jeff. I'll step in. For the first part of the question, so we do have an arrangement with them where they are exclusive for the Vancouver area. And that was something that we signed earlier this past year. And so it's an agreement where they, as part of having this exclusivity, they do have a commitment to purchase a certain number of units throughout the period of the agreement and also an opportunity to renew that agreement after the first five-year period. with an additional payment and then also additional commitments for purchase. So we've had a great relationship with them for a number of years. They're a big promoter of ponds and have done a lot of studies and things on their own using ponds. And then we're part of a program with Pacific Blue Cross where those two work together to evaluate ponds with these TBI patients that was just reported. So I don't know. I'll let Dane talk a little bit more about that specifically. But in general, we have a great relationship with them.
spk02: Now, Jeff, I think you covered it all. So thank you.
spk03: Awesome. And then I'll wrap it up with one final question. Looking at the therapeutic experience program Do you still expect to enroll about eight to ten centers by the end of the year? And you expect any of that enrollment to continue into next year?
spk06: Right now we're at six sites and the enrollment keeps increasing and And each site, the goal is 5 to 15 patients per site to get us in the 50 patients for the total research trial that we deem is very valuable to bring all these KOLs in, you know, to expand mind share and really get experience treating their MS patients with PONS.
spk02: Okay, awesome. Thank you for all that detail, and I'll return to you. All right. Thanks, Nick.
spk01: Thank you. As a reminder, that is star one to ask a question. And our next question will come from Jonathan Ashok with Roth MKM.
spk05: Thank you very much, guys. I was curious. The PBC estimate that five individuals who return to works save the provider like $1.63 million in net costs, netting out the cost upon. Can you tell us the number of years of those LTD claims that each of those five had coming to them that PBC doesn't have to shell out for?
spk06: Yeah. Hi, Jonathan. This is Dane. So the savings on the rest of those long-term disability claims according to their actuaries was at $1.6 million. The five patients, some of them averaged three and four years left on it. Some went as far as 20 years on it. But the way they calculate their savings using PONS therapy, it was $1.6 million in savings.
spk05: Okay. And what do you think of that number? Is that a very conservative number, or is that something that sounds kind of spot on?
spk06: I think it's a very conservative number, Jonathan. Some of these patients were, again, the minimum for the study that Pacific Blue Cross did with HealthTechConnect The minimum event was from two years and beyond. Some of these patients were four and five years away from their traumatic brain injury event, like a motor vehicle event or a worker's comp injury, just in general where TBIs come from. But, you know, my belief was the savings were north of 1.6 million.
spk05: Okay, so something was a little confusing in that publication. You know, did four or five of the nine patients actually return to work? Or did, you know, did just four and one was simply deemed work ready? Because it kind of like, it kind of says both. It's a bit confusing. Or, you know, to PBC, does it not even matter because simply deeming someone work-ready, despite not actually returning to any kind of work, cuts off the LTD payments?
spk06: Yeah, so good question. So they closed out five long-term disability claims based off going back to work.
spk05: Actually, four only went to work, right?
spk06: Actually, five did because their physical disabilities went away. So they were able to go back to work, and actually five did go back to work. So there is some ambiguity in timing to that, Jonathan. But I think the number that we focus on clearly was that eight out of the nine deemed balancing gait was no longer an issue to going back to work. So if you think about the three that haven't gone back to work yet, there is even more cost savings if they did. But the way that the study was done by Pacific Blue Cross, their primary outcome was going back to work so that they could close their long-term disability claims.
spk04: And Jonathan, I think the ambiguity comes from, I think four of the five went back to work in the same occupation that they had before. So I think that's where the ambiguity is. Five went back to work, but four actually went back to their same job.
spk05: Okay, so the eight, you mentioned the eight of nine. The eight that had the gait and balance fixed, but only five of them went back to work. Is that because, you know, the three... patients that differ between those two groups still had headaches? Was that the one reason?
spk06: Not necessarily. I mean, you know, if you read into this a little bit, the one thing, one, this is not our study. This is not Helios Medical's study. But second, you know, those patients, you know, even though they're able to, you know, and basically saying balance and gait or their physical disabilities are are no longer an issue to go back to work. We didn't have any color on their actual, you know, application resume, you know, and frankly going out and looking for new work. So, you know, our belief is those eight out of nine, you know, actually, you know, in 89% of the study, we felt like we met the goal of, the ability to go back to work. Does that make sense, Jonathan?
spk05: Yeah, it does.
spk06: The last question, I'm sorry, continue. Yeah, because PONS therapy treats balance and gait, that balance and gait deficit. Our claims are not in anything cognitive, headache, severity, and so forth. It is fabulous that their study reported the decrease in severities and increase in cognitive. Those are just wonderful things to see with using PONS therapy as hopefully a standard of care going forward in treating traumatic brain injuries.
spk05: Okay. And you had mentioned some warrant exercise contribution to give you some cash. Was there any ATM use after the 30th of June?
spk04: Yeah, so we did disclose in our 10Q that we raised $284,000 from our ATM during the quarter, and we sold 27,875 shares in doing so. Okay. Thank you very much. Thank you. Thank you, Jonathan.
spk01: And once again, that is star one to ask a question. All right, and it seems we have no further questions in the queue, so I'll turn the floor back over to Dane for any additional or closing remarks.
spk06: Great. Thank you. And thank you, everyone, for following Helios Medical Technologies. We're living in very exciting times for PONS therapy. We look forward to keeping you updated as we pursue coverage for reimbursement and continue bringing PONS therapy to the millions who need it. Thank you.
spk01: Thank you, ladies and gentlemen. This concludes today's call, and we appreciate your participation. You may disconnect at any time.
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