Nyxoah SA

Good day, and thank you for standing by. Welcome to the NCSOA Third Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your cell phone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's call is being recorded. I would now like to hand the conference over to your first speaker today, Michaela Kirkwood, Investor Relations and Corporate Communications Manager. Please go ahead.

Good afternoon and good evening, everyone, and welcome to our earnings call for the third quarter of 2023. I am Michaela Kirkwood, Investor Relations and Corporate Communications Manager at Nixella. Participating from the company today will be Olivier Tailman, Chief Executive Officer, and Lalique Moreau, Chief Financial Officer. During the call, we will discuss our operating activities and review our third 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 events section of the 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 forward-looking statements. All forward-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 from 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, please refer to the risk factor section on 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. And thank you for joining us for our third quarter 2023 earnings call. During the third quarter, we maintained focus on clinical execution in our open-label US Pivotal Study dream, ensuring a steady course to complete data readout in March 2024. Based upon the dream data published back in June, in combination with commercial patient outcomes in Europe, our confidence is strengthened for a positive dream outcome. In anticipation of our US launch, We have made great progress as we continue to work with the AIO on our interim and long-term coding strategy. Next, we continue to invest in gradually building our leadership in the U.S. commercial organization, including market access to facilitate reimbursement. In Europe, we recently introduced a novel patient-centric approach by initiating a partnership with ResMed Germany. Together, we will strengthen our in-depth understanding of the obstructive sleep apnea patient journey, increasing patient overall OSA awareness, and guiding them from diagnosis to treatment. While CPAP remains the golden standard, there is a large pool of patients not tolerating it and needing therapy due to the severity of their OSA. Through this partnership, we aim to increase epirostal nerve stimulation penetration and accelerate geneal adoption. Now, with that said, Nixoa is entering one of the most exciting times in the company's history. In less than six months, we will report data from our dream US pivotal trial. We recently filed the third module in our modular PMA. and continue to anticipate submitting the fourth and final module, which will include DREAM 12-month safety and efficacy data shortly after the follow-up period is completed. We remain on track for FDA approval before the end of 2024. In anticipation of this, NICSOA continues to expand its U.S. footprint. Current gains on patient follow-up in DREAM. As previously stated, our confidence in DREAM outcomes is supported not only by the roughly 500 commercial and clinical gene globally, but also by the DREAM efficacy and safety data released in a late-breaking poster session at SLEEP 2023 in June. In the poster, we reported efficacy data on the first 34 DREAM patients reaching 12 months follow-up, which demonstrated a 65% AHI and the 76% ODI responder rate and safety data on all 115 patients enrolled in the study. As a reminder, for the trial to be successful of the 115 patients, at least 62.9% need to be AHI and ODI responders at 12-month follow-up. Next, the USXS pivotal study focused on complete concentric collapse patients, continues to enroll, with implants expected to be completed in 2024. As a reminder, CCC patients represent approximately 30% of hyperlossal nerve stimulation eligible to treat OSA patients who are contraindicated to commercially available AGNS therapy in the U.S. and do not have suitable treatment options other than major palate surgery. The excess primary endpoints are similar to the dream study primary endpoints, as Genio has demonstrated similar results in both complete concentric collapse and non-CCC patients, which resulted in a label expansion in Europe. When entering Germany, Nixoa drove hyperlossal nerve stimulation awareness and therapy penetration, increasing market growth from an estimated 15% to 35% over the last two years. This clearly illustrates the benefit of having multiple hyperglossal nerve stimulation treatment options and having multiple companies on the market. To further our patient-centric approach to treating more OSA patients with the right solution, as I mentioned earlier, we partnered with ResMed Germany. This novel partnership creates an OSA continuum of care that will shorten the time from diagnosis to treatment and ensure patients are not left without an appropriate therapy. As an example, there are approximately 1.1 million CPAP patients in Germany, of which up to 35% fail within three years. This collaboration should increase the number of patients in Germany receiving and staying under OSA therapy. Concretely, to increase patient awareness, we will collaborate through OSA helplines and DTC marketing initiatives. We will run joint Salesforce efforts towards ENT surgeons, sleep physicians, and dentists, as well as educational programs. Both companies will work closely with scientific societies to further optimize patient care guidelines. In conclusion, this initiative exemplifies our mission to make sleep simple again. Commercially, this quarter, we reported sales of 1 million euro and increased the number of German centers implanting Genio to 46. Our direct-to-consumer campaigns, started in the second quarter this year, resulted in a strong website traffic with approximately 55,000 monthly website visits. We are anticipating the first results from these initiatives already in Q4 later this year, with strong year-over-year implant growth. We continue to position ourselves as an innovation leader in the OSA space with always putting patients at the center and listening to our surgeons. As a result, Genio is a different approach to AGNS compared to the existing implanted battery with leads solution technology. Genio offers patients a leadless full-body 1.5 Tesla and 3 Tesla MRI compatibility, non-implanted battery solution. powered and controlled by a wearable. Our vision of an implant for life concept powered and controlled by a wearable component allows patients to always have the most advanced technology without the need for another surgery. Independent patient market research confirmed preference for a system with Genio features and form factor. The recently launched Genio 2.1 wearable enables greater stimulation adjustability and gives patients the autonomy to adjust stimulation amplitude within predefined boundaries, while the Genio 3.1 implantable stimulator is under regulatory review and will further report or implant for life concept. We are also working on regulatory approval to activate existing sensors in the wearable component that will adjust stimulation based upon sleeping position. Future generations of the GENIUS system will provide patients with real-time feedback through data collection and offer remote monitoring that will improve the patient experience and provide physicians the ability to optimize patient care more efficiently. All this should further increase patient access to epiglossal nerve stimulation technology and have a positive impact on the company's gross margin. Our European commercialization experience Early dream data and Genio's differentiated design reinforce our confidence in a successful US launch. We commissioned independent clinician and patient surveys which demonstrate significant demand for Genio and support our view that we can more than replicate our European performance when entering commercially in the US. To ensure we are fully prepared at launch, we continue to invest in our U.S. commercial infrastructure and securing reimbursement. Last month, an advisory panel for the ENT Scientific Society discussed the CPT code that would best support Genio. While this is not the outcome of the meeting, we expect reimbursement to be at the minimum in line with the current AGNS payment rates in the U.S. Finally, we are making steady progress with our Antacervicalis program through our exclusive licensing agreement with Vanderbilt University. Under the lead of Professor David Kent in close collaboration with the Nixoa R&D team, we are evaluating stimulation of the Antacervicalis nerve to address current AGNS non-responders. We have entered the detailed design phase and anticipate beginning of feasibility study shortly. In summary, we continue to advance our key objectives for 2023, which are to focus on patient follow-up in the DREAM study, resulting in reaching the primary endpoints, begin preparations to enter the US market with regulatory, manufacturing, commercial, and market access readiness, and drive further revenue growth in Germany while opening new European markets. To that end, we implanted our first patients in Italy. With that, I'm pleased to turn the call over to our CFO, Loïc Moreau, who will provide a financial update.

Thank you, Olivier. Good day to everyone and thank you for joining us today. Revenue for the third quarter ended September 30, 2023 was 1 million euros. Total operating loss for the third quarter was 11 million versus 8.8 million in the third quarter of 2022, driven by an acceleration in clinical activities as well as commercial investments in Europe. As of September 30, 2023, cash and financial assets totaled 73 million compared to 95 million on December 31, 2022. During the third quarter, our monthly cash burn was 4 million. And based on our current cash position, we have a runway into late 2024. With that, I will turn the call back over to Olivier. Thank you, Loic.

As I opened with, we are entering one of the most exciting times in Ixolas history. I cannot emphasize this enough. We are less than six months away from the dream clinical data readout, which should result in obtaining FDA approval in late 2024 and initialization with reimbursement comparable to competition. The uniqueness of Genio's system resonates well with both physicians and patients, as we all know in Germany and other markets where we are available, also confirmed by independent market research. I look forward to continuing to scale the company in anticipation and continuing to grow in Europe. This concludes the formal part of our presentation. Operator, I will turn the call over to you to begin our presentation.

Thank you very much. As a reminder, to ask a question, you will need to press star 1-1 on your phone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. Stand by while we compile the Q&A roster. Our first question today comes from John Block with Stifle. Your line is open.

Hi, everyone. This is Joe Federico on for John. Thanks for taking the questions. I guess to start, I wanted to ask, I know GLP-1 has been a a hot topic lately. Do you have any expectations for the Surmount OSA data that, you know, is supposed to be released early next year? We've, you know, heard some commentary from other players in the space and was just curious to get your thoughts there.

Yes, no. Thank you for the question. And to confirm, there was a lot of, there is a lot of conversation around GLP-1 impact. So I keep giving the same and providing the same answers, meaning that By having GLP-1s lowering extreme high BMIs, we think and we know that we will have more patients that will become eligible for a successful AG&A treatment. Because if we look at literature, AG&S is shown the most effective with a BMI up to 35. So high BMIs lowering in the range of 30 to 35 will provide those patients with an optimal treatment of AG&S. And if you look at it net-net, we do believe that we will have more patients entering in that range than we will have patients that will go in a range below 15 and no longer be eligible for treatment.

Okay, great. That's a really helpful color. And I guess to follow up, I just wanted to follow up on... on the ResMed partnership in the quarter. What are you seeing after implementing that partnership? Is it still early to tell, or have you seen any benefits from that so far in Germany?

So through the partnership, we aim to further our patient-centering approach by developing a complete OSA ecosystem where patients can be guided to whichever OSA therapy best suits their needs. I think this is really important. We will collaborate on DTC initiatives, sales and marketing efforts to target both sleep physicians and ENT surgeons. The goal of this partnership are to expand OSA therapy penetration and increase market share. The collaboration just kicked off and we expect to start to see the benefit beginning next year.

Okay, okay, great. That makes sense. And then if I could just sneak one last one in here on access in the U.S., Are there any other data points from the trial that you can provide? Maybe, you know, patients implanted to date or number of active sites, just any more color there would be great. Thank you.

No, so when it comes to the access study, we are staying confident that we will close the enrollment by the end of 2024. So that's when we anticipate completing the implants. We continue to make progress with the study. We will not be disclosing the number of patients implanted. But that being said, I repeat myself, we do feel confident that we will close all implants by the end of 2024.

Okay, great. Thank you for the questions.

Thank you.

Thank you very much. Our next question is from Adam Mader with Piper Sandler. Your line is open.

Adam, your line is open.

Hi, Olivier. Hi, Louis. This is Simran on for Adam. Thanks for taking the questions. I guess first I wanted to just start off with the Q3 kind of commercial print. So could you elaborate on maybe what you're seeing in terms of just commercial trends? It looks like Volumes did take a step back sequentially. So any particular items to call out or seasonality impact, I guess I'm just trying to reconcile some of the disconnect between what the street was expecting versus the print.

Yeah, no, no, definitely. So while we do not provide revenue guidance, It is important to mention that the third quarter is seasonally weak due to summer holidays. However, our implanting accounts continue to increase, now being 46, which bodes well for the future growth. We do anticipate also a sequential increase in the fourth quarter, driven by the DTC initiatives that we started in the second quarter, driven by the helpline outcome that we are seeing and of course although it may become a little bit early but also about the collaboration that we are initiating that we have initiated with FASMAT thank you very much for your question one moment please

Our next question comes from Ed White with HC Wainwright. Your line is open.

Hi. Thanks for taking my questions. So, I just wanted to get your thoughts on the DTC activity in Germany. You mentioned in the call that you had about 55,000 monthly hits, and I was just wondering how you're thinking about that converting into commercial sales. And then I wanted to get your thoughts also on DTC, potential DTC activity in the U.S.

Yes. So thank you. Thank you for the questions. So to your point, in dedicating and building up a dedicated digital marketing team focused on Germany, as we launched the Nixoa Health Lab in Germany last year. We engaged resources in the search engine optimization and the search engine advertising. This is really driving more patients to Nix01. So that's already a first part of investment we did. And then next, our DTC advertising campaign was launched in March and has raised awareness for AGNS and Genio. As a result, we have seen a rapid growth in appointments requests to our helpline. The current time from patient identification to genio implant or the conversion time as it's sometimes referred to in Germany is six to eight months. So we anticipate beginning next quarter to see a real strong benefit. When it comes to the US, I think I have to start with saying that INSPIRE from a DTC perspective, did or has done a tremendous job establishing the AGNS market for patients, physicians, and payers in the US. In this regard, it is sometimes nice to be number two entering the market. We anticipate having our full sales force hired and trained by the time of launch. These reps will target both implanting ENTs and referring sleep physicians. supported by focused DTC investments. And I think that's really important. So we are planning to invest in DTC, but it will be very focused. Additionally, we are currently investing in market access to ensure CMS reimbursement is secured at launch and to expedite commercial coverage.

Sorry for being a little bit long, but there were also two questions.

No, that was great. Thanks so much for taking my questions.

Thank you.

Our next question comes, once again, from Adam Mader with Piper Sandler.

Hey, I just wanted to follow up with another question on just reimbursement. So, from a reimbursement perspective, can you remind us, one, on the coding, it sounded like last quarter that you would have a clear idea of what that code is by year end. Is that still the case? And then, two, just what is the strategy in terms of garnering payer coverage and

um what kind of initiatives are you guys putting in place to kind of work up to that um so that everything is squared away or um you know by launch yes so last month at the ao meeting in nashville an advisory panel for the ent scientific society discussed the cpt code that would best support genio and to your point This is one of the scenarios that I was mentioning earlier that has now been put more forward. So multiple CPT codes were evaluated, and while I cannot yet disclose the concrete outcome of the discussion, we expect reimbursement will be at minimum in line with the current AGNS payment rates. So that is already, I think, the first answer. Next, I have to, again, say that competition has done a terrific job educating the commercial payers about the benefits of AGNS, resulting... in all having AG&S coverage policies. We have already engaged in informal discussions with payers and expect to be able to leverage those policies. At launch, we anticipate being reimbursed through prior authorizations, and we would expect to be included in coverage policies within 12 months afterwards. Now, very complete from a market access perspective, We have a team in place that is working to secure reimbursement from both CMS and the commercial payers. That team will also work with customers through the prior authorization process when we launch in the U.S.

Okay, great. Thank you so much. Thank you very much.

Our next question comes from Siraj Khalia. from Oppenheimer and Company. Your line is open.

Hey, Olivier, Loic. This is Seamus on for Suraj. Hello. Hi. So I believe earlier you said that you had submitted the third module to the FDA. Have you received any questions on the submission so far, any feedback yet that you can share with us?

So the short answer is yes. We did receive some deficiency questions on module one and two. We answered them, and they will also be submitted shortly. So just to summarize, and as a reminder, you know that there are four modules in total. The first module was more product overview and preclinical data. We submitted. We got some questions. Nothing that is worrying us in the sense that we do feel extremely confident, and we also have answered all these questions. Second module, same thing, remaining preclinical data. Also there, we got, I think, I can say the normal or the expected questions that we are answering. And then with the third module, it's more on manufacturing and the manufacturing validation. So it was submitted a week ago. No, the last one, and that's where it gets really exciting. So module four, it will be the final module. And that is the one we can submit with including clinical data review and IFU labeling. And we expect to do this somewhere end of March, beginning April, after we have the time to analyze the data that we will have the first week of March of the dream study.

Got it. Thank you for that. Looking at, you know, Germany and kind of the competition there, there's some overlap. I know you've discussed it before between you and a competitor. So in those sites, you know, what's the driving factor for those accounts saying I'm going to implant a patient with Genio versus, you know, one of your competitors' systems?

Mm-hmm. So I first, I would like to point out that in quarter three, we are still estimating that our market share stays in the range of 20% market share during the quarter. I think this is a first really important point because as you know, since we entered the German market Two years ago, with having also CPT codes, we were able to immediately capture 20 to 25% market share. And this has been continuing always being in this range with a strong Q4 where we were slightly above 30%. So that is already the first part to your question. So if you look at in-plant sites that we are going after as a fast follower in sites where Inspire already was several years active, we see that in those sites or in all sites, we are able to take market share in a significant way. That's number one. Point two, what we are seeing is when you go to high-volume sites, We also saw that in the top five, we were able to take more market share than the 20%. So there was even stronger uptake in some top implanting sites in Germany. Now, I think when you have competition entering and there is a monopolistic market, you also can increase overall HLS penetration. And I'm really pleased to see that we are driving this. because that is something that we are hearing back from surgeons as well. First, they are extremely pleased that there is now an option to choose between two therapies. Second, by having this option, they're also seeing that more patients are being treated with one of those two options. results in an increased therapy penetration. And I keep repeating, and I have to come back to the uniqueness of our system, that a single incision, a CCC indication, a full body MRI compatibility, and also a real patient-centric approach is really something that is speaking very positively to physicians and patients. So forward to the next quarter, we are looking forward to beginning 2024 also in Europe commercially, to see the impact of the and, of course, to also further expand into new and other countries. And to that point, I'm sorry that I keep going, but to that point, we also have some good news coming from the UK, where we are now officially allowed to participate in an NHS standard. So that will also definitely help us accelerating revenue in Europe coming from more countries than mainly Germany.

Yeah, I appreciate all the color there. And if I can sneak one more in. Just kind of looking when you do the US launch, I know it's a little ways away, but I know you said about 100 to 150 reps. How many sites are you looking to initially launch at? How many centers? Just trying to tie the color of centers to reps, so to speak.

Although I would really love to answer your question, I think you can understand that I do not want to be going too concrete to that question for the simple reason that 24 will be the year where based on successful dream data, we will have FDA approval later at the end of the year and hopefully also start commercializing. Currently, we're looking at a couple of scenarios. One scenario is where we would go, of course, with a kind of focused launch and try to to go immediately after, let's say, roughly half of the Inspire site that we have today. On the other hand, it's also not a secret when you look at productivity for a sales rep, whether it now is with Niksola or with another neuromodulation company, we would be aiming to have one million of sales by sales rep.

Got it. Thank you very much for taking our questions.

Thank you for the question.

Thank you. Our next question comes from David Rescott with BEARS. Your line is open.

Oh, great. Hey, guys. Thanks for taking the questions. I wanted to start off on the partnership that you announced a couple weeks ago. I'm curious. I know it seems like it's something that can be pretty exciting. I know it's a couple weeks or so into it since the announcement. I'm just curious. you know, if you're at a point yet where, you know, things are kind of established and maybe, you know, you're starting to see some patients start to either roll in specifically to Nixoa, maybe through the partnership at all, or if there's anything, you know, anecdotal that you can provide just around how that maybe already is starting to impact the business, or maybe if it's a couple more quarters still before the potential benefits from that partnership could be realized.

Yeah, so first, since it's really important, I think it's difficult to exactly predict when we will see what kind of impact, but What I would like to come back to, and I think this is something where I also would like to give a lot of credit to the ResMed colleagues in Germany, it is really putting a patient at the center, really further looking beyond CPAP, epiglossal nerve stimulation, mandibular device treatment. Now, what is exactly and precisely the best solution for a patient suffering from OSA? And therefore, I keep repeating, CPAP is the golden standard. It works excellent, but the issue is that a lot of patients simply quit their CPAP after a period of time. Now, if these patients are suffering from moderate to severe OSA, it is so important to offer them a treatment. We all know the cardiovascular risks that are associated, the risk for strokes. the cost for healthcare systems if you do not treat patients suffering from moderate to severe osa so i i'm really proud in one hand and in one hand that we can say that together with resmed in germany we are really looking at what is best for the patient now that being said it's also clear that we need to first of all start and get used to each other a little bit that is ongoing sales teams are talking with each other marketing teams are talking with each other We are looking at DTC initiatives. We have a first major congress coming up in Berlin, where we both will be present and interacting with several KOLs. And I think a realistic approach would be that you would see the first impact in overall patient penetration increase and geneal specific increase as of Q1 next year.

Okay, great. That's helpful. Just on access in the U.S., I'm wondering the level of visibility maybe you have into that trial. I know that with this kind of complete concentric collapse patient population, they're you know, maybe is a higher concern around, you know, those patients having higher BMIs and maybe there being a bigger impact from GLP-1s. So just wondering what, you know, level of visibility you have into that and whether or not you have a better informed view maybe on what the potential impact could be either into that specific patient population or just broadly across all nerve stimulators. Thank you.

Yes, so let me start first with some facts. So in the access study, per protocol, we have up to 40 sites that will implant. Although we do not anticipate activating that many, we have so far activated four sites, but we can go up to 40. That's step one. Second fact is that we are feeling comfortable that we will close the enrollment by the end. of 2024. Everything is going in this direction. So it's trending really in a positive way. Now, another fact is that in the access study or BMI, the patient's BMI cannot be above 35. I think this is important. As I already was commenting earlier, we believe, and we see this in clinical literature, that to have an optimal therapeutic effect from AGNS, a patient should not be having a BMI that is higher than 35. What we also learned is that patients suffering from CCC and also the correlation with their BMI is present. So we see that we have a lot of patients with a BMI somewhere in the range of 30 to 35. Now what you can expect is that there are also quite some patients with a BMI above 35 that are suffering from CCC. And that is precisely where we are seeing a very positive impact from GLP-1s. And if you speak to KOLs, what we did extensively, we're also hearing there that it's clear that lower a BMI that is above 35, bring the patient in a range of 30 to 35, implant with AGNS, and have a successful therapeutic response. physicians are more behind that concept than increasing or implanting patients with a BMI above 35, and where there is a risk that there will be not a strong therapeutic response. So, I'm welcoming, honestly, the GLP-1 impact to lower and to bring those really obese patients into this range below 35. And then, regardless if they suffer from CCC or non-CCC, with Genio, we know that we can offer them a successful therapeutic solution.

Okay, great. Thanks.

Thank you for your question. Our next question comes from Ross Osborne with Cantor Fitzgerald.

Your line is open.

Hi guys, thanks for taking our questions. In terms of commercialization activities outside of Germany, would you provide an update on how Spain is receiving your system following first implants this summer? Additionally, we'd be curious to hear what other countries you had implants in during the quarter, in addition to Italy, and where we should be thinking about for the balance of this year and 2024. Thank you.

Yes, so to your point, so today we are reimbursed in Spain, in Switzerland, And also, of course, in Germany, where we generate like 95% of our revenue. In going forward, we did it for Italy, because in Italy, in order to obtain reimbursement, there was a demand for country-specific data, and that's why we did the first patients already. We are going up to 10 patients in Italy, and then based on these data, we will submit them together with the existing data, and hopefully this will result also in a reimbursement in Italy. In the Nordic countries, same thing goes for Finland. So there we did some implants already. And based on these data, we are trying to secure hospital reimbursement, hospital by hospital, and also generate more commercial implants in Finland. And what I was mentioning earlier on, I think a very important market will be the UK. First step to enter the UK is to being allowed by NHS to participate in a tender. We have received this official communication that we are. Now the next steps will be how to compete in this tender and how to make our case strong so that we can enter. So that's in a nutshell where we are and where you can expect us to be reimbursed shortly.

Great, thank you.

Thank you very much for your questions. I am showing no further questions at this time. Thank you for your participation in today's conference. This does conclude the program. Enjoy your evening, and you may now disconnect.