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spk01: Good day and welcome to the Enduro Life Sciences second quarter 2023 financial results conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key then zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then 2. Please note this event is being recorded. I would now like to turn the conference over to Yvonne Briggs. Please go ahead.
spk00: Thank you, operator. This is Yvonne Briggs with LHA. Good afternoon and welcome to NDRA's second quarter 2023 business update and financial results conference call. Earlier today, NDRA issued a press release on this topic. and also issued a news release announcing the submission of a de novo request for its TAIS system to the U.S. FDA, both of which are 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 include 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 2022 fiscal year and subsequent SEC filings 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 Michael Thornton, NDRA's Chief Technology Officer. Mr. Thornton will be followed by Irina Pestrikova, Senior Director of Finance, to review the second quarter financial results. With that said, I will now turn the call over to Francois Michelon. Francois?
spk05: Thank you, Yvonne, and good afternoon, everyone. And thanks for joining us today to discuss NDRA's second quarter 2023 financial results and business highlights. As we announced earlier today, I'm extremely pleased that NDRA submitted its de novo request to the US FDA for the Thermoacoustic Enhanced Ultrasound Liver System, known as TEAS. Our de novo submission is a pivotal milestone for Andra, highlighting our team's commitment alongside our clinical partners to offer a non-invasive and cost-effective solution for measuring liver fat, which is the root cause of a disease affecting over 1 billion people worldwide. We see the de novo process as a gateway to establish a new regulatory standard, highlighting TEIS's groundbreaking capabilities, and we look forward to collaborating with the FDA during the review process. Gathering and analyzing the scan data along with assembling the submission itself was an enormous task, especially for a company the size of Endra. The process has taken a bit longer than we originally expected, but we're delighted to have made what we consider to be a first-rate submission to the FDA. Mike Thornton will provide more detail on our clinical and regulatory progress shortly. But before turning over to Mike, I'd like to mention a few other highlights from the second quarter. We showcased the TEIS liver system at two major European clinical conferences. Endra participated in the German Diabetes Association's 57th DDG Annual Meeting in Berlin, which underscored the role of liver health in managing type 2 diabetes. the company shared study findings in a peer-reviewed clinical abstract titled Thermoacoustic Assessment of Fatty Liver Disease, an Early Clinical Feasibility Study, at the esteemed European Association for the Study of the Liver Congress in Vienna, commonly known as EASL. This presentation served to elevate TEIS's profile amongst potential clinical users to support commercial adoption. At both conferences, In light of approaching commercial drug therapies targeting liver disease, we heard a lot of discussions about the clinical need for a safe and cost-effective way to suitably identify and monitor patients for their drug response. And this is where Endron tends to lead. In the second quarter, we also expanded our intellectual property portfolio to 64 issued patents globally. During the second quarter, Endra secured four additional patents, including one in the US and three in China. These newly issued patents not only reinforce Endra's unique position in assessing liver fat, but also open the doors for other potential applications of our thermoacoustic technology. The company is actively exploring licensing opportunities in non-core indications to augment the value of our growing IP portfolio. Finally, in May of this year, we raised approximately $4.7 million through an underwritten public offering. Management believes that ENDRA has sufficient cash to fund operations through several important milestones expected in 2023, including supporting commercial activities in Europe. Okay, over to Mike Thorne for more detail on our clinical and regulatory progress. Mike?
spk03: Thank you, Francois. We're extremely pleased to have submitted our de novo request to the US FDA for the Thermoacoustic Enhanced Ultrasound Liver System, known as TEIS. The clinical data submitted as part of our de novo application compared TEIS estimates of liver fat fraction in 24 subjects to MRI liver fat fraction scores, also known as MRI PDFF scores, in those same subjects. The study data submitted was consistent with our study design and only included study participants where the TAIS, ultrasound, and MRI data was obtained successfully. The data was collected at a U.S. site and involved volunteers with liver fat fraction ranging from healthy normal to severe fatty liver disease. The BMI of the subjects ranged from 24, which is normal, to 42, which is severely obese. It is significant to note that no subjects were excluded because of high BMI or liver fibrosis. TAIS estimates of liver fat fraction were highly correlated to MRI PDF scores of liver fat fraction with an R value of 0.78. The sensitivity of the TAIS FLIP system in detecting fatty liver disease was 90%, with specificity of 71%. To provide some reference of performance, the sensitivity of X-ray mammography in detecting breast cancer is approximately 87% with a specificity of 88%. The negative predictive value, which is the probability of a negative test being correct, was 91%. Negative predictive value is an important measure of test performance because in a cost-constrained healthcare environment, it's often as important to correctly identify healthy subjects as it is to correctly identify those with the disease. We believe the submitted data with 24 subjects sufficiently supports our de novo application. In an additional submitted study of intra and intraoperator variability, no statistical significant differences were found between operators in estimating liver fat fraction with the TAIS-FLIP system for either an individual with normal liver fat fraction or an individual with moderate fatty liver disease. All operators demonstrated a highly statistically significant difference in comparing a healthy individual to an individual with moderate fatty liver disease using the TAIS-FLPS system. This is extremely encouraging, and we're very happy to submit this data. This is an incredibly important technology milestone for ENDRA. There's a growing interest in point-of-care quantitative measures of liver fat fraction among clinicians. Quantitative attenuation and backscatter applications for estimating fat fraction are now available from several vendors of premium diagnostic ultrasound system. Although their use is largely limited to liver imaging and radiology, The interest in these quantitative measures goes far beyond radiology. Andrus thermoacoustic-based approach to estimating liver fat leverages unique capabilities that potentially provide four significant advantages when compared to conventional ultrasound-based point-of-care approaches for assessing liver fat fracture. The first of these advantages is molecular signal contrast. Unlike ultrasound approaches that are sensitive to structural changes in tissue, both TAIS and MRI are sensitive to chemistry when differentiating fat from lean tissue. That means the thermoacoustic signal is directly related to the accumulation of fat molecules in liver cells that underlies the progression of fatty liver disease. The second advantage of our approach is its insensitivity to fibrosis. Fibrosis is an excessive accumulation of extracellular proteins that is a common comorbidity of fatty liver disease. Fibrosis is a significant confounding factor for ultrasound-based techniques and hinders their ability to estimate fat fraction accurately. In contrast, thermoacoustic signal generation is relatively insensitive to the addition of extracellular proteins to lean tissue, and thus The presence of fibrosis is largely inconsequential for thermoacoustics. In our clinical studies, we did not exclude any TAIS exams with fibrosis. The third advantage of TAIS is tissue depth penetration. The loss of signal in obese patients is significantly lower for thermoacoustic signals than that of conventional ultrasound for two reasons. First, the distance thermoacoustic signals travel is half the distance of that conventional ultrasound pulse travels. And secondly, thermoacoustic signals detected with the TEAS flip system are much lower in frequency than the standardized 3.5 megahertz transmit-receive signal in conventional ultrasound approaches to estimating liver fat fraction. Thus, the difficulty to image patients, large or obese patients, conventional signal attenuation in ultrasound can be many orders of magnitude greater than thermoacoustic. As a result, thermoacoustic methods are potentially more effective than ultrasound-based approaches to quantifying fat fraction in high BMI subjects. We excluded no subjects from our FDA submission for reasons of high BMI. And the fourth advantage of TAIS is within-image calibrations. Endres Payas approach to estimating liver fat fraction is unique in that each measurement has its own integral calibration data derived from the individual's own fat and muscle that is contained in each measurement. That ensures measurement uniformity across individuals and across devices. Several other point of care devices in the market require periodic calibration and have varying efficacy across patient size that should not be present with the TAS device. In terms of next steps and timeframes for the FDA review process going forward, there are a number of elements that should be considered. First, ENDRA submitted its de novo request via the FDA's electronic submission template and resource tool, known as eSTAR, which guides applicants through the submission process with a standardized online format, ensuring the submission is complete, and structured in a way that facilitates efficient review by the FDA. Second, we can expect back and forth dialogue with the FDA. The FDA's published goal is to make a decision within 150 days of submission. Investors should remember that the FDA routinely engages in interactive discussions with companies in seeking additional information or clarification. One factor that may benefit NDRA during the review process is the FDA's familiarity with our previous 510 submission and our interactions in that review process that detailed our technology's principle of operation and safety profile. Naturally, NDRA will keep investors informed of material updates as we advance through the FDA process. Now I'd like to turn the call over to Irina to review the financial results for the second quarter of 2023. Irina?
spk02: Thank you, Mike. For the quarter ended June 30, 2023, our operating expenses decreased to $3 million from $3.6 million for the same period in 2022. The decrease was mainly due to a decrease in research and development and sales and marketing expenses. Our research and development expenses decreased year over year by approximately $450,000 as we completed the development of our initial TS products. Our sales and marketing expenses decreased by approximately $95,000 for the quarter, mainly due to the departure of our chief commercial officer. General and administrative expenses decreased by approximately $35,000 due to decreased spending on professional fees. Net loss per share in the second quarter of 2023 was $0.43 per share compared with a net loss of $1.17 per share in the second quarter of 2022. Cash and cash equivalents were $4.8 million as of June 30, 2023. During the second quarter of 2023, the company raised approximately $4.7 million in net proceeds through an underwritten public offering. We believe our current capital position provides a runway into the fourth quarter of 2023. We maintain our asset-light operating model with prudent hires in our operations and commercial team in anticipation of future growth. As we execute our regulatory and commercial strategy for TAIS, we plan to adjust our expense structure accordingly in support of these activities. Now, I'll turn the call back to Francois.
spk05: Thanks very much, Irina and Mike. In closing, during the second quarter and subsequent weeks, Endra's made a great amount of important progress. I couldn't be more proud of the business. As we've discussed, we submitted our FDA de novo request for the TEAS liver application with confidence that our work will set a benchmark for a new product class. We had our first TEAS liver clinical abstract published by the leading European association for the study of the liver. And third, we raise capital with long-term investors to support key milestones throughout the second half of 2023. Mike spoke about the next steps and timetable between Andrew and the FDA. And I remind listeners that although there are various due dates in place for regulatory reviews and processes, we don't control the FDA process. However, I can assure you we'll do everything necessary to keep things moving along quickly and productively. And we obviously commit to keeping shareholders apprised of developments with the agency during our quarterly conference calls and to make public announcements when there are material developments to report. In closing, I couldn't be more excited about the future of TEIS and the future of ENDRA. The U.S. represents the largest market opportunity for TEIS and we're confident that our technology's various advantages along with a price that's one-fiftieth the cost of MRI, will secure a place for TEAS in the hands of clinicians. So, with that overview, I'd like to turn the call over for questions. Operator?
spk01: Thank you. We will now begin the question and answer session. To ask a question, you may press star, then one on your telephone keypad. If you're using a speakerphone, please pick up your hands up before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then two. At this time, we will pause momentarily to assemble our roster. Our first question comes from Ed Wu with Ascendian Capital. Please go ahead.
spk04: Yeah, first off, I wanted to say, Congratulations for the submission today. It was very good news and wish you guys all the best in getting a quick approval. My question is, you know, you previously had a distribution agreement in Vietnam. Is that still in place? And will you, I think previously it was, you will recognize revenue as soon as you get U.S. FDA approval. Is that correct?
spk05: Good question. Yeah, so the exclusive distribution agreement with a distributor in Vietnam is in place, and it takes effect and is activated by the approval by the FDA of our application in the U.S. That'll kick off a three-year process with a commitment of 40 systems at an agreed upfront transfer price, so that is a good example of an important but secondary market opportunity that is going to be directly revenue generating in addition to Europe, where we're currently focused, then the U.S., and then, as you point out, other opportunities like Vietnam through partners.
spk04: Great. And then my next question is, how much commercialization efforts can you do now in the U.S. before you get approval? Are you able to really get things up and running, or do you still have to kind of wait until you get the formal approval?
spk05: Yeah, good question. If I might, I'll sort of put it under the broader umbrella of commercialization, and we expect to record our first sales in Europe before the end of the year. But it's important to understand, as you're asking, that we've been putting in place a number of key elements to support a successful commercial ramp, both in international markets as well as the U.S., attending the FDA clearance. First, I'd say we've been building our base of clinical market awareness by participating in key medical conferences and by hosting people in our exhibit and our booth. So as a case in point, although we've been at Eazl and focusing on Europe, we're attending and we'll have a booth at the American Association for Study of Liver Disease, which is the preeminent liver society in the US in November being held in Boston. Second, you know, we were delighted to have the EASL peer-reviewed abstract publication. And building now on our submission with the FDA, we're going to continue to build our base of clinical evidence and sharing it broadly as it comes in. So, you know, that applies and is interesting to clinicians all over the world. We've had the abstract from EASL already translated into multiple languages and It's something that we're sharing that's on our website for U.S. customers along with everyone else. The third and I'd say final thing is you've heard a lot this year about how we've been gaining real-world clinical user feedback and improving our system through user training, the development of active software guidance. And these are key considerations we're putting in place that are global in nature and that will benefit customers globally because learning how they use the product, how we should train them, how we should help them perform their job more effectively and giving them a good experience is really the bedrock of our system. If our system works only in the hands of experts that are highly supervised, that's going to be tough to kind of scale the business. And we feel like these improvements, the clinical data we've supported and built this year is going to be globally valuable. So for Europe and the U.S., as you were asking. I hope that's helpful.
spk04: Yes, that's very helpful. Thank you for answering my questions. And I wish you guys good luck. Thank you. Thank you again, Ed.
spk01: This concludes our question and answer session. I would like to turn the conference back over to Francois Michelin for any closing remarks.
spk05: Great. Well, at this point, I just want to thank everyone for joining us today. A lot of work, a lot of accomplishments in the quarter through today with the FDA announcement. We look forward to keeping everyone updated on our progress and to speaking with you again on our next quarterly conference call. Have a nice evening.
spk01: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
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