ENDRA Life Sciences Inc.

Q1 2021 Earnings Conference Call

5/17/2021

spk03: Good afternoon, ladies and gentlemen, and welcome to the Endra Life Sciences First Quarter 2021 Financial Results Conference Call. At this time, all participants have been placed on a listen-only mode, and we will open the floor for your questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, Yvonne Briggs. Ma'am, the floor is yours.
spk00: Thank you, Operator. This is Yvonne Briggs with LHA, Endra Life Sciences Investor Relations Firm. Good afternoon and welcome to Endra's first quarter 2021 business update and financial results conference call. Earlier today, Endra issued a press release on this topic. And for those of you who don't have a copy, you can access it in the investor section of Endra's website. Before we begin, please note that today's discussion will include four looking statements. All statements other than statements of historical facts, including statements regarding the company's strategies, financial condition, operations, costs, plans and objectives, as well as anticipated results of 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 obligation to update or revise any forward-looking statements. Please refer to the company's Form 10-K for the 2020 fiscal year filed with the SEC for more information about risks and uncertainties related to forward-looking statements. In terms of the structure of today's call, Francois Michelon, Chairman and Chief Executive Officer, will begin the prepared remarks, followed by Renaud Meloberti, NDRA's Chief Commercial Officer, and then David Wells, Chief Financial Officer. With that said, I'll now turn the call over to Francois Michelon. Francois?
spk04: Thank you, Yvonne. Good afternoon, everyone. Thank you for joining us today to review Endra's first quarter 2021 financial results and business update. I'm delighted that our business progress and investor outreach has attracted growing attention within the investment community and has positioned Endra solidly as we enter the second quarter with a record high level of cash. I'm also pleased that Endra has accomplished several key milestones thus far in 2021, which we'll review on today's call. We continue to advance our thermoacoustic enhanced ultrasound technology, known as TEAS, on multiple fronts. As you know, TEAS is a simple-to-use proprietary technology platform with a first application focused on measuring liver fat for the early assessment of non-alcoholic fatty liver disease, known as NAFLD, and its inflammatory stage, known as non-alcoholic steatohepatitis, or NASH. we believe there's a significant opportunity for TEIS in this first indication as NAFLD and NASH affect more than a billion people globally. By enhancing existing ultrasound systems, which today cannot alone accurately measure liver fat for clinical staging of NAFLD NASH, TEIS allows clinicians to visualize tissues in ways similar to an MRI, but at the point of patient care and at 50 times lower cost. Last year, We received a CE mark for the NAFLD-NASH application for TEIS, and we also submitted a 510K application with the US FDA. As I mentioned on our last conference call, the TEIS 510K submission continues to be in the normal process with the FDA. We've been supporting the process by responding to the FDA's questions as they arise. And these questions relate to information, for example, requesting additional information on how the TEIS technology functions or how it relates on a number of levels to our chosen predicate. We consider this back and forth with the agency to be a standard part of the process for a new technology like TAIS. And naturally, this Q&A with the FDA can extend historical review timeframes, and the FDA doesn't provide guidance in terms of timing, but I want to assure investors we're in compliance with the process and we remain optimistic about securing FDA clearance in 2021. In the meantime, continue to advance on several other fronts. We're growing our clinical evaluation partnerships to generate independent clinical data to support commercial sales. As a reminder, these clinical evaluations are not related to our FDA submission. We added a new partnership this year in Salisbethel University Hospital in Bern, Switzerland, bringing our total to six evaluation sites, three in the US and three in Europe. Our partner, Rocky Vista in Utah, is scanning patients And we look forward to leveraging all these sites clinically and commercially as markets reopen and as hospital procedure backlogs return to normal levels. We're maintaining a cadence of other activities to drive awareness for TEIS. In April, our Chief Technology Officer, Michael Thornton, was invited to present at the American Institute of Ultrasound and Medicine's annual Integrative Ultrasound Meeting, which is considered by many to be the most important U.S. ultrasound-focused conference of the year. This presentation focused on Arteus technology and its initial clinical application for the measurement of liver fat. Ultrasound is one of the world's fastest growing imaging modalities, and at the AIUM conference, we noted four key growth areas for ultrasound. The first is the evolution of ultrasound beyond acute applications, not just looking for things like foreign masses that could be cancer, but now also using ultrasound to track biomarkers, that is, tracking things that correlate to clinical outcomes over time, like stiffness of breast tissue or liver fat. The second noteworthy area at the AIUM conference was obviously the growing role of artificial intelligence to improve ultrasound settings, image quality, and diagnoses. The third big trend focused on using alternative energy sources to generate an ultrasound wave with or without placing a probe directly on the patient for use with burn victims, for example. And finally, the fourth growth area was about using ultrasound therapeutically to treat tissue, for example, ablating disease tissue or opening up the blood-brain barrier to help treat Alzheimer's. What's noteworthy for investors is that Endra is well-positioned to capitalize on all four of these ultrasound trends. We're actively leading in two of the main areas, biomarkers and combining ultrasound with other energy sources, and we're developing AI enhancements for our TAIS liver application. We also have intellectual property that enables applications in the fourth area, therapeutics, with our TAIS tissue temperature mapping algorithm. Endra will continue to participate in these worthwhile clinical conferences, as many clinicians and pharmaceutical companies attend them to learn about new research and technologies, as well as to pursue collaborations. In fact, most of our clinical collaboration sites in the U.S. and Europe originated with people we met at these conferences. Given Endra's active participation in six or more global clinical conferences each year since 2018, we've built broad awareness for TEIS, and developed a substantial global network of clinical contacts which we're leveraging as sales leads. We look forward to attending the European Association for the Study of Liver Disease conference next month and several others in Europe and the US throughout the balance of the year. By the way, we've added an events page on our website that lists the conferences we plan to attend. We continue to build our commercial team to bring TEAS to market and recently added two more sales representatives in Europe, one in France and one in a pan-European responsibility, bringing our European team to four. As we gain traction in the market, we're looking to have an endosales representative in each target European country, working collaboratively with our partner GE Healthcare's representatives to call on radiologists and calling independently on other segments such as gastrohepatology and endocrinology. Upon 510K clearance, we plan to mirror that same sales strategy in the U.S., targeting major regions around our current and future U.S. clinical evaluation sites. Another significant milestone in the first quarter was the signing of our collaboration with Hepion Pharmaceuticals to incorporate Archaea's technology in their upcoming Phase 2B study of CRV431 for the treatment of NASH. This is our first pharmaceutical partnership with TAIS and will be used as an add-on technology to support patient screening and biomarker measurement of liver fat. We believe it's an important collaboration and the first of several as pharmaceutical companies and contract research organizations explore ways to drive efficiencies in drug development. We also believe that pharmaceutical partnerships will provide an additional commercial growth opportunity for NDRA beyond a clinical end-user market as we enable researchers in the metabolic disease space to measure liver fat as a biomarker for their studies the way they do today with blood glucose or cholesterol in a cost-effective and easy manner. Ender's technology, I remind you, can benefit pharmaceutical companies and CROs in three ways. Enders technology will enable pharmaceutical companies to more efficiently screen in or screen out patients during the trial enrollment phase before patients incur the time, cost, and inconvenience of a biopsy or an MRI. And I remind our listeners that currently many pharmaceutical companies and CROs suffer screening failure rates over 50%. Second, during the trial, Endres technology can provide easier liver fat measurements between MRI and biopsy measurements, adding potentially to the trial's data set and identifying liver trends more quickly. Finally, once drugs are commercially approved, TEIS can serve as an easy-to-use assessment tool to identify patients who are suitable for therapy and to help monitor their treatment. Turning now to our intellectual property, continue to strengthen our portfolio to protect our technology globally for both current and future applications. Earlier this month, we announced the issuance of two additional US patents, which increased our total issued patents to four since the start of the year. I'm very proud that our current IP portfolio has grown to 85 assets, which we define as filed, issued, licensed, or pending patent applications. With that update, I'd like to turn the call over to Renaud, our Chief Commercial Officer, to provide more details on our commercialization activities. Renaud?
spk01: Thank you, Francois, and good afternoon, everyone. As Francois mentioned, we are making good progress with our commercial initiatives for the TAIS system. The environment in the U.S. continues to improve with the easing of restrictions as new cases of COVID-19 decline and vaccines are being administered on a broad basis. Europe, on the other hand, has liked with their distribution of vaccines and continues to implement restrictions, thereby hampering in-person interaction. Importantly, we are starting to see favorable trends regarding a lessening of new cases in Europe, and this will hopefully continue. Nonetheless, we are taking the appropriate measured steps to position ENDRA for future growth. I'd like to start by discussing the status of our six clinical evaluation partners. As we have mentioned in the past, the studies are approved by each facility's institutional review board, allowing this research institution to use technology deemed low risk prior to FDA or other regulatory appearances. Rocky Vista was our first partner to start scanning patients earlier this year, and they are targeting a study of some 200 patients comparing their liver fat measurement on our TAIS system with the gold standard MRI PDFF. MRIs continue to have a significant backlog as elective procedures were postponed during the pandemic, but most centers are making good progress in working through that backlog and are returning to pre-pandemic operations. As we continue to enhance our sales effort, as Francois mentioned, we added two more professionals to our commercial team in Europe. and now have Andrew a representative in the UK, France, and Germany. Initially, due to the pandemic, we implemented a cautious strategy and phased our hiring plans given the restriction and lack of mobility. However, that is beginning to change. We will monitor Europe closely and adjust our plans accordingly to maintain capital efficiency while being flexible to add resources when warranted. Currently, our commercial team's priority is to drive local awareness and garner interest for the TEIS system. Further, our team will support our clinical evaluation partners when they commence their studies. In addition, we are creating awareness through various e-marketing and education campaigns for TEIS. We continue to produce educational videos, publish white papers, and leverage our website, which contains valuable information and data on the benefits of TEAS. Industry trade shows continue to be a great resource for industry contacts and for sales leads. And as Francois mentioned, we recently participated in AIUM and expect to participate in several more well-attended conferences later this year. Most of the conferences taking place after the summer will be in person, and we are looking forward to meet our customers once again. As discussed on our call, as a result of our awareness initiative, we were approached by a premier distributor of value-added medical technology in Vietnam, which represents a substantial market opportunity. Fails to that distributor are expected to begin once TIAS receives 510 clearance from the FDA and local country approvals are secured. We believe the distribution agreement is the first of many we will be securing a global basis. Indirect distribution channels are an integral part of our go-to-market strategy, and we will continue developing a strong network of distributors in countries and regions where we feel they are more advantageous than a direct channel. It is clear through our discussions with clinicians there is a significant unmet clinical need for the TAIS system. Given the challenges of the pandemic over the past year, our commercialization efforts towards a first sale have taken longer than expected. However, we remain confident with the improving global trends, our continued awareness initiatives, and valuable clinical relationships that NDRA will advance its growth strategy I look forward to updating you on our future progress in future calls. Now I'd like to turn the call over to David to review the financial results for the first quarter of 2021. David.
spk02: Thank you, Renaud. Our financial results for the first quarter of 2021 are as follows. For the quarter ended March 31st, 2021, our operating expenses decreased to $2.6 million. down from $3.1 million for the same period in 2020. The reduction was due to reduced spending for outsourced product development and investor relations and legal fees. Our research and development spending decreased year over year by approximately $400,000 as we completed development of TEIS and prepared our system for commercial launch. In turn, our sales and marketing costs increased by approximately $50,000 for the quarter as we began to gear up our sales efforts. Now the COVID restrictions are starting to lift. General and administrative costs decreased by approximately $200,000 due to reduced spending for investor relations and legal fees. Our net loss per share for the 2021 first quarter was 6 cents. compared with 29 cents per share a year ago. Our cash balances as of March 31, 2021, were $16.8 million. This includes $2.8 million raised through the conversion of a majority of our remaining non-traded warrants and $9.8 million in proceeds from sales under our ATM facility. We believe these funds will provide adequate capital to fund planned operations at NDRA throughout the remainder of 2021 and into 2022. We continue to employ an asset-light model and will implement a conservative approach to spending as we continue to advance our commercialization initiatives. Given our solid balance sheet, we remain opportunistic regarding strategic investments that will leverage our operations and create shareholder value. Now I will turn the call back over to Francois.
spk04: Thanks very much, Renaud and David. In closing, I'd like to reiterate the five key objectives we're seeking to accomplish this year. Number one, securing 510 clearance for TEAS in the U.S. Number two, expanding the data set of clinical evidence through our strategically positioned study sites to support global commercialization efforts. Number three, accelerating our commercial channel and marketing activities in line with the reopening of global markets with plans to generate revenue in both Europe and the U.S. in 2021. Fourth, expanding our pharmaceutical and other industry partnerships to facilitate adoption of TEIS beyond the clinical end user market. And fifth, continuing to bolster our intellectual property portfolio to defend our technology and increase out-licensing opportunities. So with that review of the business highlights and financial results, I'd now like to open the call for questions. Operator?
spk03: Thank you. Ladies and gentlemen, the floor is now open for questions. If you have any questions or comments, please indicate so now by pressing star 1 on your touchtone phone. Pressing star 2 will remove you from the queue should your question be answered. Lastly, while posing your question, please pick up your handset if listening on speakerphone to provide optimum sound quality. Please hold while we poll for questions. Once again, that's star 1 if you have a question or comment.
spk04: Okay, operator, if there are no more questions, we can wrap up the call. I appreciate everyone's time. Again, thank you, everyone, for joining us today. We look forward to keeping you updated on our progress and milestones and to speaking with you during conference calls to discuss important news and events and accomplishments. I wish you all a good evening.
spk03: Thank you, ladies and gentlemen. This does conclude today's conference call. You may disconnect your phone lines at this time and have a wonderful day. Thank you.
Disclaimer

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