ENDRA Life Sciences Inc.

Good day, ladies and gentlemen, and welcome to the InterLife Sciences Third Quarter 2020 Earnings Conference 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. At this time, it is my pleasure to turn the floor over to your host for today, Ms. Kim Galadetz. Ma'am, the floor is yours.

Thank you, Jess. This is Kim Galadetz with LHA, Andra's recently engaged investor relations firm. Good afternoon and welcome to NDRA's third quarter 2020 business update and financial results conference call. NDRA issued a press release on this topic earlier this afternoon. For those of you who don't have a copy of the release, you can access it in the investor section of NDRA's website at www.ndrainc.com. Before we begin, please note that today's presentation includes forward-looking statements, all statements other than statements of historical facts, including statements regarding Endra's strategies, financial condition, operations, costs, plans, and objectives, as well as anticipated results of Endra's development and commercialization efforts, the timing of clinical studies, potential partnership opportunities, and expectations regarding receipt of required regulatory clearances and product launches are forward-looking statements. Except as otherwise required by federal securities laws, the company disclaims any obligations or undertaking to update or revise any forward-looking statements. Please refer to NDRA's Form 10-K for the 2019 fiscal year and subsequent Forms 10-Q files with the SEC to get a better understanding of risks and uncertainties related to forward-looking statements. I will now turn the call over to our Chairman and Chief Executive Officer, Francois Michelin. Francois?

Thank you, Kim. Good afternoon, everyone. Thank you for joining us today to review NDRA's third quarter 2020 performance and 2020 business updates. along with David and me on today's call are Renaud Malaberti, Andra's Chief Commercial Officer, Michael Thornton, Chief Technology Officer, and as I mentioned, David Wells, our CFO. Let me go through today's agenda. First, I'll highlight our recent achievements including major milestones achieved in the last week before handing it over to David to review the financials. Then, Renaud will provide details on commercial activities with an initial focus on Europe where we have our first regulatory approval. and finally we'll open the call for Q&A. For those of you who may be new to the Andra story, we're the pioneer of thermoacoustic enhanced ultrasound, also known as KS. KS is a disruptive technology platform that allows clinicians to quickly visualize tissue in ways similar to an MRI, but at 50 times lower cost. KS is simple to use as it can complete scans within minutes at the point of patient care. It works with existing ultrasound systems, which are in widespread global use. We have a collaboration with GE Healthcare, which supports our commercialization plans, but TEAS is compatible with all major manufacturers of ultrasound. As we've shared before, there's an acute need for a practical tool like TEAS to assess and monitor liver fat to help the more than 1 billion people globally affected by non-alcoholic, Liver Disease, or NAFLD, and non-alcoholic steatohepatitis, also called NASH. Accordingly, the NAFLD-NASH diagnostic market is our primary initial focus, and I continue to be very encouraged by our progress this year. As a reminder, in the first quarter of this year, we received CE mark approval for Arteus Fatty Liver Imaging Probe System. giving us regulatory green light to begin commercialization efforts in European countries that recognize the CE mark. The timing of this approval coincided with the outbreak of the global COVID-19 pandemic. However, we've continued to execute our business plan to capitalize on the CE mark in spite of the global slowdowns. I'll let Renaud get into the details of our progress in Europe in a moment. In June of this year, we submitted our 510 pre-market notification to the US Food and Drug Administration. The submission represented the culmination of years of scientific research, quality system implementation, safety and performance data collection. And despite unprecedented global pandemic issues, the ENDRA team worked tirelessly to finalize the roughly 1,700-page submission on schedule during the second quarter. At this time, we remain in the customary review process with the FDA And while we can't control the timing of the approval cycle, we remain encouraged by the fact that the FDA has been engaging and collaborative with us. We'll continue to provide relevant updates to investors going forward regarding the process as they materialize. During the FDA's review process, the Endra team is actively executing the key components of our global commercialization plan, which centers on three key elements. establish clinical evaluation sites in target countries to build NDRA's base of clinical evidence and cultivate reference sites for local market commercial teams. We currently have three global sites, three or four global sites, excuse me, three in the U.S. and one in Europe. Second element of our commercial plan is to build a small hybrid commercial NDRA team, one person in each target country in Europe, and then after we receive FDA clearance also in key U.S. regions. These salespeople will support the clinical evaluation sites, work with GE sales teams to drive TAIS sales and radiology, and independently pursue market development opportunities in hepatology and other clinical segments. The third element of our commercial plan is to build out our global e-marketing presence and clinical education tools to highlight TAIS's features and benefits as necessitated in a now much more online COVID world. With this plan in mind, I'm happy to report during the second quarter that we finalized our first clinical evaluation site in Germany and have advanced two more European sites at the final legal review, which we expect to execute before the end of the year. We'll formally announce these European sites when they start scanning patients in the coming months, contingent on European business operations remaining operational with COVID. As far as our U.S. clinical evaluation sites are concerned, we announced last week that Rocky Vista University has installed its first TAIS system for the clinical study. The study is being conducted at Rocky Vista's Ivins, Utah location and will include the first real-world NAFLD-NASH cases to be scanned with TAIS in the U.S. COVID permitting, we expect our two other evaluation sites, University of Pittsburgh Medical Center and the Medical College of Wisconsin, to be in place by year-end. It's worth reemphasizing that clinical data from our three U.S. evaluation sites are not currently required for FDA clearance. These evaluation and agreements were signed under the Institutional Review Board process, which allows research institutions to use technology that's deemed to be a low risk before FDA regulatory clearance. With Rocky Vista now active, we'll be ahead of the game in the U.S. before receiving the 510 clearance by collecting clinical data that can support our U.S. commercial launch. Following 510 clearance, we can look forward to these evaluation sites as great commercial reference sites for our U.S. commercial teams. Moving on to our collaboration agreement with GE Healthcare, the partnership remains strong. We continue to have regular commercial calls to coordinate plans, allocate resources, and share market feedback. GE continues to view liver diagnostics as a key strategic market opportunity and is introducing us to customers in Europe as we ramp up commercial efforts there and as COVID-19 conditions permit. This agreement is up for renewal in January 2021. We remain confident it'll be renewed as it has been over the last four years. During the quarter, we've also made strong progress in building our intellectual property portfolio to defend our current and future technology applications. Our IP portfolio currently stands at 76 assets defined as filed, issued, licensed, and pending patent applications. That's up from 64 assets at the end of 2019. It's worth highlighting that several of our recent patent applications and grants continue to expand the potential clinical applications for TEIS beyond the liver and the NAFLD-NASH applications. For example, The newest European patent provides protection for point-of-care tools to visualize microvascular fluid flows in tissues damaged by cancer or trauma. This represents an additional clinical market opportunity beyond Andra's current $21 billion addressable market in the liver disease diagnostic space. We have a full-time patent agent on staff and remain committed to growing this portfolio to bolster the IP protection of our core technology. as well as provide expansion opportunities into other compelling applications and markets. Speaking of expansion opportunities, we're seeing an uptick in interest from pharmaceutical companies and contract research organizations leading the development of therapies to treat NAFLD and NASH. There are around 50 NAFLD-NASH compounds in development, and the market is forecast to grow to over $20 billion in the coming years. Drug development companies face the same measurement challenges in clinical studies that use MRI and liver biopsy as end-user clinicians do. Endres technology represents a potentially cost-effective and non-invasive way for pharmaceutical companies to deliver time and cost savings in their clinical studies through simpler, faster measurements of biomarkers such as liver fat. Specifically, the value proposition of Endres technology for pharmaceutical companies is lies in three areas. First, to help speed clinical trial patient recruitment, which currently depends on MRI or liver biopsy and historically have recruitment rejection rates that exceed 50%. Second, to provide easier interim measures of liver fat between MRI and biopsy measures during the study. Liver fat can change quickly during a study, and pharmaceutical companies want to pick up trends sooner. While many of the NAFLD, NASH drugs in development target metabolic pathways that have a direct interest in liver fat, we're also learning that the pharmaceutical companies targeting other things directly, such as inflammation, have an interest in understanding a multitude of biomarkers, including liver fat, if the measurement tools are cost effective. Third, from a pharma perspective, After the drugs are approved, there's a natural synergy between pharmaceutical companies and Endra's point of care technology to identify patients suitable for the approved therapy and then monitor their treatment. On the other side, from Endra's perspective, the pharmaceutical sector offers three compelling opportunities. First, embedding Arteus technology in clinical trials could provide Endra with valuable clinical data that accelerates our volume of clinical evidence to support commercialization in the clinical market. The bolus of data from the pharma sector could also potentially feed the artificial intelligence research we have ongoing at Western University in Canada. Second for Endra, there could be a substantial commercial opportunity to sell our technology to the pharmaceutical companies and CROs for deployment across the hundreds of sites enrolled in their clinical studies. And finally, after the NAFLD-NASH drugs are approved, we could envision commercial relationships with the pharmaceutical companies to leverage Endrest technology on the front lines of prescribing physicians. It's important to note that these deals, if and when they occur with pharmaceutical companies, would not conflict with our GE partnership on the ultracide equipment side. To the contrary, pharmaceutical partnerships would complement and dramatically expand The initial market opportunity for TEAS and NAFLD-NASH beyond the clinical end-user market of radiologists and gastrohepatologists. So stay tuned here. Bottom line, I'm very pleased with the progress we've made during the challenging times to keep the company on track, deploying our first system at Rocky Vista, advancing our commercialization activities in Europe, and expanding our IP portfolio. I'd now like to turn the call over to David Wells to review the financial results for the third quarter ending September 30, 2020. David? Thank you, Francois.