Nyxoah SA

Thank you for standing by and welcome to the NXOA fourth quarter 2022 earnings conference call. At this time, all participants are on a listen-only mode. After the speaker's presentations, there'll be a question and answer session. To ask a question at that time, please press star one one on your telephone. As a reminder, today's call is being recorded. I will now turn to conference studio host, Michaela Kirkwood, strategy and investor relations manager. Please go ahead.

Good afternoon and good evening, everyone, and welcome to our earnings call for the fourth quarter of 2022. I am Michaela Kirkwood, Strategy and Investor Relations Manager at Nixella. Participating from the company today will be Olivier Talman, Chief Executive Officer, and Malik Moreau, Chief Financial Officer. During the call, we will discuss our operating activities and review our fourth quarter financial results released after U.S. market closed today, after which we will host a question and answer session. The press release can be found on the investor relations section of our website. This call is being recorded and will be archived in the section of our investor relations tab of our website. Before we begin, I would like to remind you that any statements that relate to expectations or predictions of future events, market trends, results, or performance are looking forward statements. All SOAR looking statements are based upon our current estimates and various assumptions. These statements involve material risks and uncertainties that could cause actual results or events to materially differ for those anticipated or implied by these forward-looking statements. All forward-looking statements are based upon current available information, and the company assumes no obligation to update these statements. Accordingly, you should not place undue reliance on these statements. For a list and description of the risks and uncertainties associated with our business, These refer to the risk factor section of our Form 20F filed with Securities and Exchange Commission on March 22nd, 2023. With that, I will now turn the call over to Olivier.

Thank you, Michaela. Good afternoon and good evening, everyone. Thank you for joining us for our fourth quarter 2022 earning call. I am extremely excited to announce we have implanted all 115 patients in our US Pivotal Study DREAM and filed the first module in our Modular PMA submission. With the clock now ticking to our 12-month data, our focus shifts to strong patient follow-up. What pleases me even more is to see the first 34 DREAM patients completing 12-month follow-up showing a 65% AHI responder rate and a 76 ODI responder rate and safety in line with our expectations. This is supporting what we have already demonstrated in studies and European commercial patients. We have submitted this data as a late-breaking abstract to the SLEEP 2023 conference in June. While these data are preliminary and not conclusive of final dream success, they are highly encouraging. Commercially, our European sales and marketing organization continued its strong execution with sales of 1.3 million euros in the quarter. In Germany, we are exiting the year with roughly 34% market share and with 38 active accounts, up from 12 at the end of 2021. Finally, we continue to expand our commercial presence in Europe as we expect to record our initial sales in Austria during the first quarter. As a reminder, 2022 was the first full year of reimbursement in Germany and I'm extremely proud to see how leading German clinicians have embraced the Genio technology. driven by a single incision, a leadless system offering bilateral stimulation powered by an external battery and a full-body MRI compatibility. While it's strongly resonating with patients is the ability for Genio to always be upgraded to the latest technology without the need for another surgical intervention. We received clearance for our Belgium manufacturing facility adding a second manufacturing site and thereby strengthening our supply chain. This is an important milestone in securing capacity to meet growing demand in Europe ahead of our US launch. As for excess study for complete concentric collapse patients, we have implanted the first patients. CCC patients, once refractory to CPAP, have currently no hypoglossal nerve stimulation treatment options in the US. These patients represent roughly 30% of the moderate to severe OSA population. With a CCC label in the US, we would remove the important hurdle of a drug-induced lipendoscopy, so patients will have simpler and faster access to our hypoglossal nerve stimulation therapy. From an R&D perspective, we continue to innovate. Last year, we received regulatory approval for Genio 2.1. And we made further progress on the ANSA Cervicalis project in collaboration with Transbuilt University. We anticipate initiating a feasibility study in 2023. Now I would like to share our three key objectives for 2023. First is to focus on patient follow-up in the DREAM study, resulting in reaching the primary endpoints. Next is beginning preparations to enter the U.S. market with regulatory manufacturing and market access readiness. And last, it's driving further revenue growth in Germany and opening new European markets. Before I turn the call over to our CFO, Louis Moreau, I would like to invite all those on the call to join us for our first investor and analyst meeting tomorrow, March 23rd, in New York, beginning at 4 p.m. Eastern Time. Registration details can be found on our investor relations website. Louis.

Thank you, Olivier. Good. Thank you for joining us today. Revenue for the fourth quarter ended December 31, 2022 was 1.3 million euros, more than tripling from the fourth quarter of 2021. The average selling price in the fourth quarter was 20,300 euros, consistent with prior quarters. Total operating loss for the fourth quarter was €9.1 million versus €6.5 million in the fourth quarter of 2021, driven by an acceleration in clinical, commercial and R&D activities. As of December 31, 2022, cash and financial assets totaled €94.9 million compared to €135.5 million in December 31, 2021. This represents a monthly cash burn of 3.4 million euros. Based on our current cash position, we have a runway into the second half of 2024. With that, I will turn the call back over to Olivier.

Thank you, Louis. I would like to reiterate our key objectives for 2023, which are focusing on patient follow-up in the dream study, resulting in reaching the primary endpoints. beginning preparations to enter the U.S. market with regulatory manufacturing and market access readiness and driving further revenue growth in Germany while opening additional European markets. 2023 will be a pivotal year for Nixoa, which I look forward to reviewing in more detail during our investor and analyst meeting tomorrow. I look forward to seeing many of you there. With that, I will open the call to Q&A.

Thank you. Again, ladies and gentlemen, if you'd like to ask a question, please press star 1-1 on your touchtone telephone. Again, to ask a question, please press star 1-1. Our first question comes from the line of Adam Mater of PSC. Your line is open.

Questions, and congrats on the progress. A couple from me, and maybe just to start, wanted to ask about the announcement on the 12-month data that Uh, you submitted for a late breaker at sleep. I think I heard 34 dream patients. Um, can you put the 65% age? I respond to rate the 76 respond to rate in context with. The broader dream trial design and kind of what's needed for success. I guess that's that's my 1st question that I had a follow up. Thanks.

Yeah, thank you Adam. Thank you for the question. So just to put it in the right perspective, for the trial, the DREAM trial to be successful, out of 115 patients, at least 63% of patients need to be AHI and ODI responders at the 12-month follow-up. Within the abstract, the result is 65% AHI for the 34 patients and an ODI of 76%.

Okay, perfect. That's very helpful. Thank you for that. And also wanted to ask about DREAM, and congrats on finishing implants there. Can you put a finer point on when you did the last patient implant in the DREAM study? Just trying to get a sense for kind of exactly when that 12-month follow-up clock started. Yeah, any color there, Olivier? Thanks.

Yeah, yes, Adam, definitely. So the last patient was implanted in the first week of March. So next to this, we plan on completing the final PMA module submission soon after the data is released in the first quarter of 2024. That said, we do not want to predict the exact timing of FDA decision, given it will be subject to variables we cannot influence, but we do expect FDA approval before the end of 2024.

Okay. That's helpful. So I think on the Q3 call last quarter, you were kind of Aiming for Q to 2024 approval. So it sounds like a little bit of a. A push out there, but before ended 24, did I did I hear that correctly? Olivier?

Oh, yes, correct. And then I do mainly due to difficulties in scheduling PSG and dice procedures due to long waiting lists in the sites that we are active with, in combination with some of the holiday period, the final implants took longer to complete than expected. That is correct. But now we have officially started the clock, and that's why we are really confident with the timelines that I just disclosed.

Okay, perfect. Thank you for the clarification there. If I can just squeeze in one last question, maybe on the Q4 results, you know, can you kind of just talk about, I think you had some carryover from Q3, some orders that were impacted by supply issues that ended up in Q4. So maybe just talk about kind of, you know, the Q4 results, how much of that was kind of organic revenue in Q4 versus catch-up revenue? and help us think through, you know, just broad strokes, the pace of commercial sales going forward in 23. Thanks so much for taking the questions. Yes.

So, also on this one, so we had to push implants from Q3, quarter three, into Q4, and I'm really happy to see that we did not lose any patients, and the underlying demand remained high. Despite limited work capacity in some of the German sites where we were active in combination with Christmas season, Q4 still was our strongest quarter of the year. We remain, and I'm going to the second part of the question, about 2023. We remain highly confident in expanding Genium adoption and strong commercial execution. That being said, Adam, as you know, we are not providing guidance and would note that the first quarter is impacted by seasonality.

Thank you. One moment, please, for our next question. Our next question comes from the line of John Block. Steve, your line is open.

Thanks, guys. Good afternoon. Olivia, maybe the first one in Germany, I think you may have cited 34% market share exiting the year, and that arguably might have benefited from some of the push that we saw around the third quarter, and the 34%, I think, is below the ambitious plans that you had to exit north of 50%. Maybe you can just talk about why you think you didn't quite reach the 50%. You still had the label expansion with CCC. Maybe just talk to us on what prevented that exit rate from being a little bit higher than you initially expected.

It's clear, John, that when we started, we immediately had a result in 30% market share. Now, exiting the year with 34%, I can only be very complementing the team in germany to achieve this result so we do see this as really a strong result now being very ambitious and also saying that we would like to become market leader and even have a higher market share this is also the thing that we will continue pursuing during 2023 this year by opening more new sites by further increasing therapy penetration and of course to your point also having the ccc impact much more impacting the overall results now that being said if you look at the performance in the top 10 accounts that we have in germany there we do see that we managed to become market leader in really high volume account and this again is giving us a lot of confidence that the physicians are really embracing our technology and that it's also clearly illustrating from a patient perspective that there is a need for a second uh technology available so that they that patients and physicians have an option to choose so overall we are pleased with our result with 34 percent market share we expect to further increase in going forward in 23 hand in hand in parallel with opening more new accounts and we're also seeing that the ccc impact that this will also further accelerating our market share update okay great that was very helpful uh thanks for that and maybe just two more for me um

You know, you completed all 115 patients, and I think in the PR from a week ago or whenever it was, you also said the first module had been submitted. Obviously, the last module will come in with the data, but the next two, Olivia, I think I have that correct. Are there two more before the clinical data call-out, and will those two be submitted in 2023? I guess maybe walk us through the timing for the next couple of modules that you expect to submit, and then I've just got a final question to ask. Thanks.

In total, there are four modules. So the first one we have submitted, the next two modules to your point will be submitted before we have the 12 month dream safety and efficacy data. So they will be submitted this year. And our last module will be submitted, of course, upon 12 month dream data. To go a little bit more in depth, It's also what the module one is containing product overview and preclinical data. In the second module, it's the remaining preclinical data. In the third module, we have a manufacturing validation. So those three modules will take place in 2023. And then the last module of the final one is the clinical data review and the IFU labeling.

Okay, great. Thanks for that, Colin. The last question, let me see if I can get it across clearly on the phone. I think it's an important one. And you had the helpful footnote in the release that says, for the trial to be successful, of the 115 patients, at least 63% of the patients need to be AHI and ODI responders at 12-month follow-up, okay? And then for the first 34 patients, it's at 65 are an AHI responder and 76% are ODI responders. And so I guess what I'm trying to ask here, Are those apples to apples? In other words, of the 65% that are an AHI responder for those first 34 patients, are all of those ODI responders so that we could think about, for the first 34 patients, you hitting the threshold that seems to be necessary for the trial to be successful? And let me know if that made sense, and hopefully it did, and you can give us some color. Thanks.

I hope to welcome you tomorrow as well during the analyst day, because I'm sure that then we have more time to go more in depth on this with our vice president clinical also going more into depth on the abstract, but let me already start answering. So, the responders and the responders do not need to be the same patients. So you can, we have to show all of the co-op of 115. patients that will at least showing 63% AHI response. And then in the cohort of 115, we also have to show patients that are at least showing a 63% ODI response. But it does not need to be the same patient. I hope this is answering your question.

It is. In other words, got it. So you hit both criteria in the first 34. You're sort of well above on ODI and slightly north on AHI, but to your point, that is an apples to apples when we think about the 34 versus the 115. Is that fair?

That is completely correct.

Okay. I'll see you tomorrow and look forward to it. Thanks very much, guys.

Same. Likewise.

Thank you. One moment, please. Our next question comes from the line of Suraj Khalia of Oppenheimer. Your line is open. Hi, Olivia.

Lloyd, can you hear me all right?

Perfectly, Seraj. Hello. Good afternoon.

So, Olivier, congrats on DREAM enrollment. A few questions from my side, Olivier. When the final data set is presented next year, would there be cohorts or subgroups where the learning curve impact would also be assessed? Specifically, what I'm trying to understand is, you know, Most physicians are pretty well worse with INSPIRE, right? And now this is something different. So is there a learning curve part of the equation that different subgroups of patients would need to go through that we can analyze the data?

So guys, the short answer is no. When we look at the DREAM study design, this is not part of the study design. So that being said, Of course, we will further analyze the data, and we will also incorporate the learnings. And then if I understand the question also correct, I think what you are referring to is the fact that when a surgeon starts doing the first implant, they are going through a learning curve. And once they reach, and we saw already in commercial patients, and also in previous study patients that after four implants that they really passed the learning curve and that the placement and also the speed of the implant is only increasing. So, repeating a little bit of summary, no, it's not part of the study design. But we will definitely take the learnings and also incorporate them going forward. And we see that surgeons only get better after they pass the learning curve of 3-4 in blood.

Fair enough. Olivier, in terms of compliance, i.e., you know, they have turned on the genio and all. How is that being maintained in DREAM? Because, again, Inspire is an internal pacemaker, right? And you guys are not. So I'm just curious if that is a variable that we need to be cognizant of in the final data analysis.

Now, Suga, as you can understand, I cannot comment on compliance in the DREAM trial. but based on historical clinical and commercial compliance data, we know that we are reaching a 91% compliance reporting using the Genio system more than five days a week and minimum five hours a night.

Got it. In Germany, Olivier, and I'll keep this as the last question, in Germany, on an apples-to-apples basis, for the same site, It may be somewhat unfair. Forgive me, Olivia. I know it's early in the game, but let's say Suraj walks into Tubingen Hospital, right, and he needs a hyperglossal nerve stem. How is the decision matrix made between, let's say, Inspire versus Genio, all other things remaining equal? Thank you for taking my questions.

And it's a very interesting question, Suraj, that you're asking. So what we learned and what we noticed is that the influence or the voice of the patient is really important in the selection of the technology that they will get. And also, therefore, we are really increasing our efforts in DTC. We are increasing the effort that we are doing in having a patient helpline. And of course, we're also increasing our efforts in interacting not only with ENT surgeons that are doing the implant, but also with sleep physicians. So if you would enter the hospital, I'm sure that first of all, the surgeon would inform you what is available. And there are two systems at this moment. And then second, I also am sure that you as a patient would also have a clear say in the selection of which technology you will go. And that's one of the reasons where we feel very confident. Because if you explain a positional system as being the single incision, fast procedure, always benefiting from the latest and greatest technology update, I think not having to undergo a dice, let's not forget, in Germany, we have the label, in Germany, in Europe, we have the label expansion. The path to getting a treatment solution of hippoglossal nerve stim is much faster if you choose for Genio than if the surgeon or the patient would go for the competitor.

Got it. Thank you.

Thank you. I'm showing no further questions this time. I'd like to turn the call back over to Oliver Thelman, Chief Executive Officer, for any closing remarks.

Yes, thank you. And I just can say thank you for joining us today. We look really forward to welcome as many as possible on the Analyst Day and Investor Day that we're hosting tomorrow. And we are really excited of 2023 because, as I mentioned before, it will be a great year for Mixed Law. Thank you.

Thank you. Ladies and gentlemen, this does conclude today's conference. Thank you all for participating. You may now disconnect. Have a great day.