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spk02: Good day, everyone, and welcome to the Endura Life Sciences Second Quarter 2022 Financial Results Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star and then one using a touch-tone telephone. To withdraw your questions, you may press star and two. Please also note today's event is being recorded. At this time, I would like to turn the floor over to Yvonne Briggs at LHA. Ma'am, please go ahead.
spk01: Thank you, Jamie. This is Yvonne Briggs with LHA. Good afternoon and welcome to NDRA's second quarter 2022 business update and financial results conference call. Earlier today, NDRA issued a press release on this topic, which is available in the investor section of NDRA's website. Before we begin, please note that today's discussion will include forward-looking statements, all statements by management 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 regulatory processes Receipt of required regulatory clearances and product launches are forward-looking statements. Except as 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 2021 fiscal year and subsequent Form 10-Qs 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 Mike Thornton, Endra's Chief Technology Officer. Mr. Thornton will be followed by Renaud Malaberti, Endra's Chief Commercial Officer, and then Irina Pestrikova, Senior Director of Finance, will review the second quarter financial results. With that said, I will now turn the call over to Francois Michelon. Francois?
spk06: Thank you, Yvonne. Good afternoon, everyone. Thanks for joining us today to discuss UNDRA's second quarter financial results and business highlights. I'm happy to update you on our progress as we advance our business plan for the novel thermoacoustic enhanced ultrasound, known as TEIS, which facilitates the early assessment of liver disease. Despite the challenging global economy and uncertainties within the financial markets, we finished the second quarter with a strong balance sheet with $11 million in cash. This cash runway, combined with our capital efficient operating model, will enable us to achieve significant milestones in the coming months, including advancing the regulatory process in the U.S., building a base of clinical evidence for TEIS, and accelerating our commercialization activities and generating sales in Europe. Continue to be focused on the following four priority areas. Number one. We're building our base of clinical evidence to support our commercial activities and regulatory submissions in the U.S. We're ramping our global clinical evaluation sites, and I'm delighted to announce that we've recently installed another TAIS clinical study system in the U.S. We are on track to reach our goal of scanning at least 200 patients by year end. And Mike Thornton will provide more details in a few minutes. Priority number two, leveraging a portion of this clinical evidence to support our FDA de novo request, which we're diligently advancing for submission by the end of the current quarter. Priority number three, in parallel to the clinical evidence that's being generated in key commercial markets, we're accelerating our commercial activities by demonstrating our TAIS system in over 50% more clinical conferences in 2022 compared to last year. These and other activities will underpin the commercial adoption of TEAS in those markets, helping to catalyze our growing sales pipeline. Renaud will speak to our sales and marketing activities in a moment. And the fourth priority is that we're rapidly expanding the defensive and offensive capabilities of our intellectual property portfolio with the issuance of 13 patents in the first half of the year and 16 issued patents year to date. This has bolstered our IP portfolio to a total of 53 patents issued globally, of which 31 patents are issued in the US. A particular note, we recently announced several new US patents focused on cloud-enabled connectivity of medical devices. This novel technology was developed by Endra to enhance our own TEA system, but it also has the potential to help other equipment manufacturers easily collect data from their equipment, such as laboratory equipment, which may not have a direct internet connection. Ender's technology could help companies such as these reduce their service costs, and we're reaching out to potential partners for out-licensing opportunities. I'll turn the call over to Mike Thornton, our Chief Technology Officer, to provide some updates on our clinical evaluation sites and regulatory process. Mike?
spk03: Thanks, Francois. I'm happy to follow up on our last conference call with an update of end-risk clinical and regulatory activities. COVID restrictions are largely behind us. We're encouraged by global trends, and our ability to collect clinical data is accelerating. As evidence of this, we've recently installed a TAIS system at a new clinical site in the U.S. To date, in 2022, more than 50 TAIS scans have been performed on study participants, which is a 25% increase since our update in May. These current study sites plus the additional sites we plan to activate in the coming months will keep us on track to reach our goal of 200 plus patients scanned by year end. The clinical data provided from these sites will be essential to the commercial adoption of Artea's technology and will be key to converting the healthy pipeline of sales leads Renault's team has been building. clinical data from our study sites. We'll also support our de novo request to the FDA. The de novo process provides a pathway for an entirely new product classification for TEIS, and it will assist in strengthening TEIS's competitive position with its distinctive capabilities that are unique and novel. Our goal remains to submit the de novo request to the FDA by the end of the third quarter. We are in the process of completing the validation, testing, documentation required for the de novo application and supporting our clinical collaborators and their collection of data for our submission. Lastly, we feel that we've appropriately planned our inventory and parts supply to support the initial commercialization of the Endreteus liver application. We remain vigilant in maintaining control over component supply as we are all operating in a climate where supply chain shortages and lead times are an ongoing global issue. I'll now turn the call over to Renaud Malaberti for a commercial update. Renaud?
spk07: Thanks, Mike. We've been quite busy over the past few months continuing our market development efforts in Europe. As we mentioned on the last call, we installed a TAIS system at our clinical site in Germany last quarter, and we are routinely performing subject scans with the system, gathering data and clinical evidence that will strengthen TAIS's credibility in the marketplace. We are excited about our progress in scanning patients in Europe with the expectation to get the other international sites up and running this year. In addition to the current German research site, we have four additional clinical evaluation site plans in Europe, including the UK, France, Switzerland, and a second site in Germany. And we believe the clinical evidence from these sites will provide the key catalyst to our local commercialization activities in those markets. In June, we attended the European Association for the Study of Liver, known as EASL, International Liver Congress, or ILC, in London, with great success. EASL ILC is the premier hepatology conference in Europe with over 7,000 in-person attendees. This conference was one of the first meetings that was cancelled in April 2020 as a consequence of COVID-19. And the ability to attend in person for the first time in over three years was a great opportunity to demonstrate our product, attend scientific talks, refine our understanding of clinical and technology trends, and have meaningful dialogues with European hepatologists. NAFLD NASH remains a key focus at those conferences, and the International Liver Congress dedicated an entire day to scientific presentations and well over 50 research posters related to the topic. That bodes well for TAIS adoption as we clearly continue to see the need for an accurate, non-invasive point-of-care system to measure liver fat to help physicians assess early liver disease and inform the patient care pathway. We also had a booth at the Dreiländer Treffen Conference, known as the DLT, in Zurich, Switzerland, also held in person for the first time in two and a half years. The DLT is a unique conference focused on ultrasound in medicine in the German-speaking countries. As such, we were able to meet radiologists, hepatologists, endocrinologists, as well as internal medicine specialists, all interested in better understanding liver fat and how to detect it early. These clinical conferences gave us an opportunity to perform test demonstration in the booth on clinical phantom, to develop relationships with key opinion leaders in various fields, as well as explore potential partnerships. And speaking of partnerships, we had a very positive meeting with our partner, Hepion Pharmaceutical at the ESOL ILC. will remain committed and on track to pilot Arteas technology at one of their clinical study sites in the fall. I remind our listeners that Endra has a great opportunity to demonstrate Thesis value at the front end of pharmaceutical clinical studies, helping companies like Hepion efficiently screen patients before incurring the time and expense of liver biopsy or MRI. As I have highlighted, the key catalyst for TAOS sales will be the clinical data that is rapidly building from our clinical study partners. In the meantime, our sales team is actively building awareness for our TAOS system. As I have discussed on previous calls, our outreach efforts have expanded beyond traditional ultrasound and into high-value clinical segments, including endocrinology and internal medicine. As we focus on early adopters in the field, we are confident in our ability to market TAIS and generate sales. So all the elements are coming together. A clear unmet clinical need to measure liver fat, Andra salespeople on the ground telling our story, a growing Andra presence at key clinical conferences, and soon TAIS clinical evidence from local country sites. Now I'd like to turn the call over to Irina to review the financial results for the second quarter of 2022. Irina? Thank you, Renaud.
spk00: Our financial results for the second quarter of 2022 are as follows. For the quarter ended June 30, 2022, our operating expenses increased to $3.6 million from $3.2 million for the same period in 2021. The increase was primarily due to higher spending for commercialization and ongoing product development. Our research and development expense increased year over year by approximately $100,000 due to ongoing product development work. Our sales and marketing expenses increased by approximately $85,000 for the quarter as we began to expand our sales efforts, as Renaud just described, including adding to our headcount. General and administrative expenses increased by approximately $180,000 due to higher professional fees. Our net loss per share for the 2022 second quarter was $0.06, compared with a net loss of $0.08 per share a year ago. We continue to maintain our asset-wide operating model, and as we execute our regulatory and commercial strategy for TEAS, we plan to adjust the expense structure accordingly. As of June 30, 2022, we had cash and cash equivalents of $11 million. In the second quarter, we raised $7.8 million in gross proceeds through our ATM facility. With our current balance sheet, we believe we're well capitalized with cash runway to support the preparation of our de novo request for the FDA and continued commercial activities in Europe. Now, I'll turn the call back to François.
spk06: Thank you, Irina, Renaud, and Mike. For our listeners, as a recap, here are the key milestones we're focused on this year. First, we're on track to scan at least 200 subjects with TAIS by the end of the year. A subset of this data will be used for our U.S. regulatory submission, and all of it will support our commercial efforts. Second, as Mike pointed out, we're diligently working to complete our FDA turnover request for the TAIS liver system by the end of the third quarter. Third, we're accelerating our commercial market awareness activities to generate sales, including demonstrating at 12 clinical conferences this year compared with seven last year. And fourth, we're aggressively expanding our intellectual property portfolio in priority areas and geographies to protect our proprietary technology and expand its potential areas of use and enhance licensing opportunities. So now, operator, I'd like to open the call for questions. Operator?
spk02: Ladies and gentlemen, once again at this time, if you would like to ask a question, please do so by pressing star and then 1 using a touch-tone telephone. To withdraw your questions, you may press star and 2. If you are using a speakerphone, we do ask that you please pick up the handset before pressing the keys to ensure the best sound quality. Once again, that is star and then 1 to join the question queue. Our first question today comes from Edward Wu from Ascending Capital. Please go ahead with your question.
spk05: Yeah, thank you for taking my question. My question is kind of a very general broad macro question. As the economy gets a little bit shaky, how does that impact as you guys consider marketing your KS system both in the US and in Europe?
spk06: Hey, thanks for the question, Ed. I'd start by saying one, We're well capitalized, as we pointed out, which is an important distinction nowadays for many companies in this volatile market. So thrilled about that. Number two, we've always been very, very capital efficient. We've tried to do things in a lean way, collaborate where we can. I mean, we have under 30 employees. And you can see from our profile and our financials that our GNA and other, I would say, administrative elements highly disciplined. And then third, you know, Renault is really working on the ground with focus in key geographies. We've hired salespeople in Germany, France, the UK, and then a pan-European floater. And those individuals are targeting those markets as well as our CRM database of clinicians. But we're doing it in a very focused way. So again, to come back to your question of how are we spending the money and how do we know it's in the right areas, I think we started out by radiology. We grew through exposure to the market to understand that radiology was a great starting point, but that hepatologists and endocrinologists are equally if not more interested in this sort of technology as therapies approach. And we're working closely with partners. So not only do we have partnerships with GE who introduce us to their radiology customers, but we've also partnered with high-quality distributors. For example, our distribution agreement in Vietnam with a commitment over three years to 40 systems. So we're trying to do it smartly and not build out an army of cash-burning salespeople or other costly expenses. I don't know if Renaud, you have any other comments you'd like to add in terms of commercial activities and how we're spending our money?
spk07: No, I think you were right. We're very focused on the segment that we have identified as well as the one we've discovered through the clinical conference. And so far, we've been talking to many, many clinicians who are still very eager to try the system regardless of the economy out there. And we've put in place and we're rebuilding the tools such as, tools that will help our potential customer to acquire the system less pain-free than spending capital with leasing or rental option, for example.
spk06: Great. I hope that answers your question, Ed.
spk05: Yes, it does. And then congratulations on getting the 50 TAF scans so far. Is there a learning curve for people as they learn the system? Do they do it much faster and better? going on, or is there a pretty quick learning curve?
spk06: Yeah, I'm going to answer from my perspective, and then I'm going to turn it over to Mike for his frontline perspective. But I will say, as in all users of all types of technology, you have some who are faster learners than others. And I think part of our own experience as we deal with different sites, some are radiology sites, and those sites are very comfortable and easily use ultrasound and really require as little, in some cases, as 15 minutes of training. Other highly interested stakeholders and clinicians like hepatologists and endocrinologists in Europe tend to use ultrasound more regularly than they do in the US. And so, said another way, I think we've experienced that there is a more natural learning curve with radiologists and hepatologists here in the U.S. But again, it's not a matter of can they get there or does it take a lot of time. It's a matter of a few hours as opposed to just 15 minutes. And they all, A, have an interest, and B, the clinical skill to use our system. And our system is designed to be user-friendly. Mike, I don't know if you have any other more specific thoughts on that.
spk03: Yeah, thanks, Francois. Well, it's definitely a new technology, and part of the process of ramping up a clinical study site is not only training them, which isn't very complicated as Francois described, but making sure that they're effectively collecting data. So it's just as important to know how to use the system as it is ensure that the data that we're collecting is high quality and that the user is capable of identifying when they've located over the incorrect anatomical position or just placed the probe incorrectly. So yeah, there's absolutely a learning curve and that's part of what we're doing. But we're really happy with the progress of our two active sites that have generated the bulk of the data so far and really encouraged by what's going on there and looking forward to adding the additional sites and increasing our accumulation of clinical data.
spk06: Thanks, Mike. I hope that gives you a good background and answers your question, Ed.
spk05: Yes, that's very helpful. Thank you very much, and I wish you guys good luck. Thank you.
spk06: Thanks again. Operator, do we have any more questions?
spk02: Our next question comes from Vernon Bernardino from HC Wainwright. Please go ahead with your question.
spk04: Hi, Vernon. Hi, Francois and team. Congrats on the 50 TAIA scans. Definitely exciting to see a quick ramp up in the number of scans. Thank you. Just had a question there. To me, that's exciting in a different way, and that is, You know, and as you mentioned, data will be collected from those scans. I was just wondering if you have plans and what kind of plans those are would be to present some of the data if, you know, some of that could be presented sooner rather than later, because obviously that's something, maybe not obviously, but something you could present as a marketing tool ahead of full blown commercialization of your TA system.
spk06: Sure. Sure, sure, sure. No, that's a fair question. So one of the things we have to balance is that these are independent sites. They're led by independent investigators, which we support, but we also have to respect their pace, their availability, as well as their publishing rights. So we've tried to find early adopters who are open and friendly and eager to try this type of technology and also have a good relationship with Andra. So I don't believe that they're going to be, you know, sitting on the data. I think they are sharing today their progress and I think at the right point will, you know, be able to share that data. in a more public fashion. I'd ask Mike Thornton, who's really leading this effort, if you have some thoughts to Vernon's point of how do we leverage this data at the right time for maximum effectiveness?
spk03: Yeah, so the studies belong to the investigators, and we really need to complete the studies and review the data, just as with any clinical investigation, whether it's purely academic or are tied to a device or drug. So, you know, our main job is just to effectively train the sites and work with them to complete the studies as quickly and as effectively as reasonable.
spk06: And I would add, Mike, and to give you, Vernon, confidence as well as our listeners, these are not large, several hundred patient studies. They were designed to be about 75 patients in total. And as you've seen, we're making quick progress and the study leaders are accelerating their collection of data. So to answer your question, I think we'll be able to leverage in some meaningful manner before year end to support sales that information. But I just wanted to at least speak sensitively to the fact that We don't own these studies per se. We have strong relationships, positive relationships with the investigators. And we'll find the right balance with those investigators to share that information for both their clinical and publishing privileges, but as well as NDRA's commercial support, which is a key element of that. I hope that's an honest and balanced answer, Vernon.
spk04: No, that is, and I just ask because obviously I'm excited that you are up to 50 scans now and with the potential for 200, and now you're telling me there's a whole bunch of independent studies. There is potential for some of these small studies to be presented sooner rather than later. So looking forward to that, and hopefully that's a very successful, positive discussion. Thanks for taking my question, and congrats again on the results.
spk06: Thank you as always, Vernon. Well, Operator, if we don't have any more questions, I'd like to thank our listeners for joining us today, and we look forward to advancing Endra's business plan and keeping you updated of our progress and speaking with you on our next quarterly conference call. And I wish everyone a good evening. Operator?
spk02: Ladies and gentlemen, with that, we'll conclude today's conference call and presentation. We do thank you for joining. You may now disconnect your line.
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