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spk02: Good day, ladies and gentlemen, and welcome to the Indra Life Science Second Quarter 2021 Financial Results Conference Call. All lines have been placed on a listen-only mode, and the floor will be open for questions and comments following the presentation. At this time, it is my pleasure to turn the floor over to your host, Yvonne Briggs.
spk01: Ma'am, the floor is yours.
spk03: Thank you, Operator. This is Yvonne Briggs with LHA, Indra Life Science's investor relations firm. Good afternoon and welcome to Endra's second quarter 2021 business update and financial results conference call. Earlier today, Endra issued a press release on this topic. For those of you who don't have a copy, you can access it in the investor section of Endra's website at EndraInc.com. Before we begin, please note that today's discussion will include forward-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 Malaberti, Endra's Chief Commercial Officer, and then Irina Pestrikova, Senior Director of Finance. Michael Thornton, Endra's Chief Technology Officer, will join us for the Q&A portion. With that said, I will now turn the call over to Francois Michelon. Francois?
spk05: Thank you, Yvonne. Good afternoon, everyone, and thanks for joining us today for Endra's second quarter 2021 financial results and business update. Ender is well capitalized, and we're putting in place the building blocks for the global success of our thermoacoustic enhanced ultrasound technology, known as TAIS. Although certain elements are out of our control, including regulatory processes and the COVID pandemic, we're focused on advancing our commercial plans for TAIS in Europe and supporting our clinical evaluation sites, as well as remaining highly responsive to the FDA regarding our 510K submissions. KS is a non-invasive, simple to use, proprietary technology platform with its first application focused on measuring liver fat for the early assessment of non-alcoholic fatty liver disease, known as NAFLD, and also its inflammatory stage known as non-alcoholic steatohepatitis, or NASH. By enhancing the capabilities of existing ultrasound systems, KS allows clinicians to visualize tissue in ways similar to an MRI, but at the point of patient care, and at 50 times lower cost. TAIS has the CE mark for the NAFLD-NASH application in Europe. In addition, we submitted a 510 application with the US FDA last year. Although the review period has been longer than expected, we remain optimistic about securing 510 clearance for TAIS this year. FDA review of a 510 submission requires careful review of indication for intended use, effectiveness and safety of both the predicate device and the submitted device. We understand that TEIS represents an advancement in medical ultrasound technology and may require more time and additional questions as part of the FDA's review when compared to a conventional ultrasound submission that typically only represents small incremental technical advancements and appear very similar to previously reviewed ultrasound systems. When compared to existing comparable ultrasound devices, we are confident of the technical performance of our device that is presented in our submission, and our safety analysis demonstrate that our first TEIS device presents no new safety concerns as compared to the FDA-cleared predicate devices. To date, we have a total of six TEIS clinical evaluation partnerships globally, three in the U.S. and three in Europe. The protocol at each site involves comparing hepatic steatosis or liver fat in patients scanned with the TAEA system first and those same patients scanned then on the MRI PDSF with both scans to be performed within a couple of weeks to ensure comparability of results. Given the pandemic restrictions in Europe, those three partners have not been able to commence scanning. However, here in the U.S., scanning is underway at Rocky Vista University in Utah with the goal of scanning 200 patients. In addition, the University of Pittsburgh Medical Center is approaching the end of its backlog of MRI procedures and is expected to start scanning patients in September. I remind our listeners that scheduling Endra's clinical evaluations is tied to the availability of MRI equipment, which is being heavily used in hospitals as many of the elective procedures that were postponed during the pandemic are now returning in high volume, causing temporary backlogs for MRIs. In addition, pandemic-related cleaning procedures are taking longer between each MRI scan, so MRI capacity is constrained for now. But we remain in close communication with our evaluation partners who remain eager and committed to working with Ender. As the hospitals work through their backlogs, We look forward to kicking off the remaining sites and generating valuable data for TEIS. As a reminder, these clinical evaluations are not related to our FDA submission. We continue to drive awareness of TEIS by participating in clinical conferences where many clinicians and pharmaceutical companies come to learn about new research and technologies, as well as to pursue collaborations. In June, we exhibited virtually at the annual European Association for the Study of Liver Conference, which was attended by approximately 7,500 clinicians, researchers, and industry members in gastrohepatology, endocrinology, and other specialties. We built up quite a network of clinical contacts through these industry conferences and look forward to resuming trade shows in person once possible. We plan to exhibit the TEA system at several more industry conferences later this year as noted in the events section on our corporate website. Our sales team in Europe is hard at work as restrictions start to ease in key regions. We have a total of four people on our commercial team in Europe with the goal of adding a sales representative in each target country at the appropriate time. This team is working with our partner GE Healthcare to call on and leverage their existing ultrasound customer base of radiologists. In addition, our sales team is independently calling on both virtually and in person other customer segments, such as gastrohepatologists and endocrinologists. Renaud will provide more details on our commercial activities in Europe in a moment. Earlier this year, we signed a collaborative agreement with Hepion Pharmaceuticals to incorporate our TEIS technology in their upcoming Phase 2B study for the treatment of NASH. We're pleased to be working with Hepion, as TEIS will be used as an add-on technology to support patient screening and biomarker measurement of liver fat. As pharmaceutical companies and contract research organizations seek opportunities to increase efficiencies in drug development, we believe TEIS can provide three key benefits to these organizations. During the enrollment process, like Hepion, Endurus technology will allow pharma companies to efficiently screen patients to evaluate if they meet the study criteria. Currently, over 50% of potential recruits in the industry are typically rejected at this screening stage, and this can be costly and cause delays with the inconvenience of a surgical biopsy or an MRI to follow. Second, throughout the trial of the drugs, KS can also provide convenient liver fat measurements prior to MRI or biopsy measurements, which can help pharmaceutical companies and CROs identify liver fat trends earlier. Third and lastly, once a drug is approved for sale, KS can serve as an assessment tool to help identify patients who are suitable for therapy and then to monitor their progress. We're pursuing additional pharmaceutical collaboration opportunities beyond Hepion, and view these collaborations as an important first step to develop the pharmaceutical market as commercial customers for TEIS, in addition to the end-user clinicians in radiology and hepatology that our salespeople are targeting. Finally, we continue to bolster our intellectual property portfolio to protect our technology globally for both current and future applications with eight patents issued year-to-date, I'm very proud to say our current IP portfolio has grown to 87 assets, which we define as patents in preparation, filed, and issued. With that update, I'd like to turn the call over to Renaud Malaberti to provide more detail on our commercial activities.
spk00: Renaud? Thank you, Francois, and good afternoon, everyone. We are making solid progress with our commercial initiatives for the test system in Europe, even as COVID-19 restrictions continue to create a challenging environment. While vaccine administration has increased throughout the region, so have cases stemming from the Delta coronavirus variant. Even so, we have seen restrictions slowly easing across Europe, and we have had the opportunity to conduct in-person sales activities for the first time. Currently, as François mentioned earlier, we have four professionals as part of our commercialization efforts in Europe with Andra representative in the UK, France, and Germany. In addition to the historical video conference sales outreach by our team to customers in our database, we have started making physical sales visits in Europe where COVID restrictions are easing. The meetings are being well received and we look forward to conducting more as the market continue to open. We will continue to monitor Europe closely and adjust our plans as appropriate to optimize our cost structure and remain flexible to add sales and marketing personnel for growth opportunities. Interestingly, during one of our customer interactions, we were made aware of a growing interest in the transplant hepatology sector where transplant surgeons are seeking to assess liver fat in potential organ donors and to monitor liver fat in transplant recipients. As a result, we will be attending the AFCDV, the French Association of Visceral and Digestive Surgery, where we look forward to building relationships with key clinicians to better understand how we can answer the needs of this clinical segment with TEIS. To supplement this direct sales activities, our commercial team is focused on driving local awareness and building interest with TAIS system. We are creating awareness through various e-marketing and educational campaigns by producing videos, publishing white papers, and utilizing our website as a valuable resource for information and data on the benefits of TAIS. As Francois mentioned, we recently participated in the annual EASL International Labour Congress on a virtual basis. The theme this year was beating the disease with a focus on new drug targeting NAFLD national obesity, non-invasive liver disease diagnostics, and the extension to MAFLD or metabolic associated fatty liver disease, which includes diabetes, metabolic syndrome, and other diseases associated with NAFLD, such as hypertension and other cardiovascular comorbidities. This has the potential to expand the interest in liver disease to additional medical specialties and bodes very well for NDRA's addressable markets. We are planning to participate in several more conferences this year with a few in the fourth quarter expecting in-person attendance. These industry trade shows, both virtual and in-person, have proven to be a great venue to network and to expand our sales leads and industry contacts. Our sales team is also working with our partner GE Healthcare to leverage a significant base of ultrasound clients. We have regular commercial goals to coordinate plans, allocate resources, and share market feedback. GE views liver diagnostics as a key strategic market, and with that long-term perspective, our collaboration agreement is in place through the end of 2022. Our commercial team is also tasked with supporting our clinical evaluation partners when they commence their studies. Currently, we have six facilities signed worldwide. We are seeking additional partnership to generate independent clinical data to support commercial sales with the expectation that the evidence will be submitted for publication and will drive adoption of our technology. We also believe building indirect distribution channels in certain markets is a vital part of our global commercial strategy. As we have discussed, we signed a premier distributor of value-added medical technology in Vietnam, which represents a substantial market opportunity. Upon the receipt of the 510 clearance and local approvals, we will immediately be able to initiate sales to this distributor. We look forward to executing more of these distribution agreements on a global basis. We continue to lay the foundation for TEAS as a valuable, cost-effective device to measure liver fat. Our efforts to enhance awareness along with our valuable clinical relationships are key elements of advancing our growth strategy. Although the pandemic has made the sales process more challenging, we remain confident we will book our first TEAS sale this year. I look forward to updating you on our progress. Now I'd like to turn the call over to Irina to review the financial results for the second quarter of 2021. Irina.
spk01: Thank you, Renaud. Our financial results for the second quarter of 2021 are as follows. For the quarter ended June 30, 2021, our operating expenses increased to $3.2 million from $2.9 million for the same period in 2020. The increase was primarily due to increased spending in commercialization of TAIs and ongoing product development. Our research and development expense increased year over year by approximately $257,000 due to increased spending for regulatory activities and ongoing product development. Our sales and marketing expense increased by approximately $120,000 for the quarter as we began to expand our sales efforts, including adding to our headcount. General and administrative costs decreased by approximately $70,000 due to reduced spending for investor relations and legal fees. Our net loss per share for the 2021 second quarter was 8 cents, compared with 20 cents per share loss a year ago. As of June 30, 2021, we had cash and cash equivalents of $14 million. We believe our current cash on hand is adequate to fund planned operations through the first half of 2022. As mentioned in previous conference calls, we have a current ATM facility and expect to utilize the facility on an opportunistic basis in the future. Last quarter, we did not realize any sales from this facility. We continue to maintain a conservative approach to our cost structure as we advance our commercialization initiatives. As we believe we have a solid balance sheet, we will continue to evaluate strategic investment that have the potential to leverage our operations and create shareholder value. Now, I'll turn the call back to Finca.
spk05: Thanks very much, Renaud and Irina. I want to mention that this is Irina's first conference call. She was recently appointed Senior Director of Finance. Irina has supported Endra since 2014 and has been deeply involved in our financial planning and analysis, accounting, and SEC reporting functions. Irina has hit the ground running, and we are very fortunate to have her on board. In closing, I'd like to review the five key objectives we're seeking to accomplish this year. Number one, securing FDA clearance for TEAS in the U.S. Number two, expanding the data set of clinical evidence through our strategically-possession 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. Number four, expanding our pharmaceutical and other industry partnerships to facilitate adoption of TEIS beyond the clinical end-user market. And number five, continuing to bolster our intellectual property portfolio to protect our technology and enhance out-licensing opportunities. With that review of our business highlights and financial results, I'd like to now open the call for questions. Operator? While we're waiting... Go ahead, operator. I'm sorry. Please jump. Go ahead.
spk02: The floor is now open for questions. If you do have a question, please press star one on your telephone keypad at this time. Questions will be taken in the order they were received. If at any time your question has been answered, you can remove yourself from the queue by pressing one. Again, ladies and gentlemen, if you do have a question, please press star one on your telephone keypad at this time. Okay, our first question comes from Ed Wu. Please state your question.
spk04: Meet you, Irina. I wish you good luck. My question is on the evaluation sites. Have the ones in Europe started up yet, or are they still in process?
spk05: Hi, Ed. Yeah, thanks for the question. So the European sites have not started yet because of COVID reopening restrictions. We anticipate those opening up later this summer and early fall, but definitely this year. As I've mentioned in previous calls, Those studies are each approximately 75 patients in protocol. And so those are not long-term studies. They'll typically in normal times run six to nine months. So we can anticipate getting interim results from these studies in the first half certainly of next year. And we think that these sites do more than obviously just create a base of clinical evidence for its own value. But also locally, since we've positioned and partnered ourselves in France, Germany, Switzerland, and three in the U.S., they're also the local and regional reference sites for our commercial teams. And so they play both roles that way. But we remain very much in contact with each of these sites. They remain committed to us. But as you can read in the press, you know, Europe is reopening slowly until we're ready to pounce as soon as they open up. I hope that answers your question.
spk04: Yes, it did. Would you consider expanding beyond the six, or would you just focus on the six for now?
spk05: No, that's a great question. So if you think of it in terms of clinical sites, we've got the six that I mentioned plus Hepion, and we have been cultivating a pipeline of additional sites. And the goal there is, one, to find good representative sites in geographic areas that we want to develop commercially, number one. Two, we have to find the right partner. These are typically early adopters who can help work with us and, you know, speak to the benefits of the technology. And so that's another condition or quality that we're looking for. And I'd say the third one is just making sure that we phase the pipeline of other sites beyond the six plus HEPI-ON in a manner that we can very effectively support them. I think we could probably sign up twice that many, Ed, and yet we're a small team and we're proud of the capital efficiency we have. And so we want to make sure that we can properly support them, train people, and therefore we're going to have a good cadence beyond the six. Definitely want to expand, definitely want to expand into Asia, but again, this is about focus. executing on what we have already in the pipeline and building that pipeline going forward. So six will not be the end of it, but it's about managing that pipeline very effectively.
spk04: Great. Well, thank you for answering my question. Good luck. Thank you. Thank you so much, Ed.
spk05: Actually, Yvonne, while we're waiting to see if there are some more questions, perhaps you've got some investor questions coming to you on your end.
spk03: Yes, I did receive a few emails from investors. And one question that kept coming up is asking for more color on how your commercialization efforts are going in Europe and what kind of reception you're getting.
spk05: Yeah, I'm going to turn that over to Renaud because I do think it's exciting. It's a good evolution. I mean, we've been obviously prospecting and conducting virtual sales calls now for quite a few months. but it's not quite the same thing as being there in person demonstrating the product and being in the same room with a clinician. So Renault has been leading that charge, and I'd love to get your perspective on that, Renault, from your sales team.
spk00: Yeah, that's a good question. We're actually starting to get very good traction on our commercialization effort in Europe. Our team in Europe has been approaching customers in two ways, obviously virtually as well as in person as COVID rules allow. Our salespeople have been very encouraged by the level of interest they have seen from physician, actually. If you look at in France, for example, even during the very slow summer vacation period, as we all know, they have had multiple receptive face-to-face meetings, and they continue to schedule product demonstrations in the weeks ahead. So that's very encouraging. Clinicians are confirming their interest in measuring liver fat easily at the point of care as a means of detecting liver disease early. when it's still reversible. So it's also interesting to note that the transplant surgery screening opportunity that we've talked about earlier came from various prospecting discussion we had with physicians in the UK and elsewhere. So I'd say that despite some of the challenges we are having, we're doing pretty well per expectation and we're starting to get very good traction.
spk05: Thanks, Renaud. Yeah, and our goal remains and with high confidence of generating revenue this year. And we're looking forward to announcing that, certainly. Operator, if we don't see any other calls, I know it's a busy time of the year with earnings. I think we can wrap the call and let investors get back to their evening. So at this point, I'd like to thank everyone who's joined, as well as the Endra team who are working tirelessly to move things forward. Greatly appreciate everyone's efforts, and we will continue to keep investors informed of our progress as it happens in the weeks and months ahead. Thank you all.
spk02: Thank you. This concludes today's conference call. We thank you for your participation. You may disconnect your lines at this time, and have a great day.
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