Nyxoah SA

Welcome to Nextel's third quarter 2024 earnings conference call. At this time, all participants on a listen-only mode. After this week's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1. You will then hear an automatic message advising your hand is raised. Please note that today's conference is being recorded. I will now hand the conference over to you, Speaker Ho. Micaela Kirkwood, Investor Relations and Communications Manager. Please go ahead.

Thank you. Good afternoon and good evening, everyone. And I welcome you to our earnings call for the third quarter 2024. I am Micaela Kirkwood, Investor Relations and Communications Manager at Nixoa. Participating from the company today will be Olivier Tillman, Chief Executive Officer, and La'Leake Morrell, Chief Financial Officer. During the call, we will discuss our operating activities and review our third quarter financial results released after US 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 material 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 these risks and uncertainties associated with their business, please refer to the Risk Factor section of our Form 20-F Files with Securities and Exchange Commission on March 20, 2024. With that, I will now turn over the call to Olivier.

Thank you, Miquela. Good afternoon and good evening, everyone. And thank you for joining us for our third quarter of 2024 earnings call. 2024 has been an exciting year for NXOA. In March, we announced our Dream US Pivotal Study achieved its efficacy endpoints with a strong safety profile and demonstrated that Genio has the potential for best in class outcomes for obstructive sleep apnea patients. Subsequently, our regulatory team filed the fourth and final module in our Modular PMA submission at the beginning of June. Based on the timing of FDA site inspections, we expect FDA approval will be in the first quarter of 2025. We continue to be highly focused on the US opportunity ahead of our commercial launch. And we recently strengthened our balance sheet with 24.6 million euro in new capital raised in October from a single US health care dedicated fund. Throughout 2024, we have continued to bolster our US presence in anticipation of Genio's entry into the market with the hiring of executive roles in the US, which include the addition of our chief medical officer, Dr. Boone, chief HR, chief commercial and strategy officers. Additionally, I relocated with my family to the US in August to be on the ground during this critical time in the FDA approval and US commercialization process. As you have also seen, we have recently hired John Laundrie to be our new chief financial officer. John is an experienced US-based public company CFO and brings a wealth of experience as we prepare for the US launch. Louie Moro, the current CFO, will transition into the newly created role of president international. In this capacity, Louie will focus on strengthening the company's presence in key international markets. In September, we presented the full dream data set at this year's International Surgical Sleep Society, or ISSS, meeting in Miami. To recap dream, the study had co-privacy endpoints, apnea-hypopnea index or AHA responder rate per the shared criteria, and 12 months, and oxygen desaturation index or ODI responder rate at 12 months. We reached all our endpoints and demonstrated a favorable safety profile. Looking at the efficacy, the study shows AHA responder rates of 63.5 on an intent to treat ITT base, and a 66.4 on a modified ITT base with a p-value of 0.002, and an ODI responder rate of 71.3 with a p-value less than 0.001. With these strong results, the dream study met its primary endpoints of reducing the number of apneas and hypopneas, as well as the number of oxygen desaturation events that occur per hour of sleep. Now, what differentiates dream from previous AGNES studies is that it's the first study where patients were required to sleep at least 60 minutes or more in supine position and demonstrated comparable efficacy to non-sleeping sleep position, with a median 12-month AHA reduction of .8% when sleeping on their back. This will be of particular importance in the selection of physicians and the acceptance for patients, since in published data, it shows that AHA doubles in supine position, and people sleep on average between 35% to 40% of the night on their back. Currently, GINU is the only therapy with clinically proven evidence that it maintains its efficacy irrespective of patient's sleeping position. Another important criteria in the therapy selection will be reducing the cardiovascular risk, bringing it in line with those of non-OSA population, which was the case in dream with 82% of patients reducing their AHA below 15. In addition to high efficacy, GINU demonstrated a strong safety profile driven by a single incision procedure. Dream safety results included 11 series adverse events, or SAEs, in 10 patients, resulting in an SAE ratio of 8.7%. Out of the 11 SAEs, only three were device related. These safety results compare favorably to existing AGNs therapies. In summary, dream data supports our mission to make sleep simple for patients, and reinforce our confidence that physicians will embrace GINU as a key treatment option for their OSA. Following the dream results, we submitted the fourth and final module of our PMA in June. We are currently in an interactive review with the FDA, which has already included several US clinical and manufacturing site visits completed without any deficiencies. Based on this progress made, in combination with the latest FDA communication regarding the final site visit timing in Belgium, we anticipate FDA approval first quarter of 2025. On our way to commercialization, we are progressing with our reimbursement strategy. In advance of obtaining our own CPT code, we have identified the CPT code that best fits the GINU technology, and is recognized by payers in the OSA indication. We are now working closely with the American Academy of Otolaryngology, or the AO, and reimbursement experts in addition to participating in the FDA-initiated early payer feedback program to begin the process of educating CMS and other large commercial payers, like United Healthcare, Blue Cross Blue Shield, and APM, to help with obtaining coverage post-FDA approval. Once approved by the FDA, we will have a dedicated team to support pre-authorization efforts at the site level. In anticipation of FDA approval, we continue to actively build our US commercial organization. We have already on board a senior commercial leadership team, including the chief commercial officer, the VP of sales, the chief commercial strategy officer, and director of market access. Additionally, we have send out offers for the first wave of territory managers, as well as key marketing and market access personnel with the aim of having the commercial team fully operational by the time of launch. We anticipate the size of the commercial organization will be approximately 50 people at this time, or at that time. As we think about a commercial loan strategy, it is two-pronged. First, we will focus on tier one, the prognostic nerve stimulation implanting accounts, where market research suggests that physician and patient are actively seeking an attractive alternative to currently available therapy. Second, we will focus on driving referrals from sleep physicians who currently manage a high number of patients with moderate to severe OSA, who are in need of an alternative treatment. Both of these efforts will be supported by focused DTC investments. We are coming into our US launch with a wealth of experience from our efforts in Europe, in particular Germany, which has served as a proof of concept for the technology and our go-to market approach. Although the German market size is much smaller than the US market, there are key learnings that has informed of US commercialization strategy. Similar to the US market, the German market is highly concentrated with tier one implanting accounts, making up a majority of the markets. Of the top 10 accounts, GENIO has quickly been embraced by nine of them. Additionally, we have focused on establishing a referral pathway with top sleep specialists, focused on patients who have quit CPAP. By the end of 2024, we will have 15 referral sleep centers across Germany. The ResMed-Niksoa collaboration should confirm this strategy in the coming quarters. These activities are being supported by focused DTC efforts. Our entry into the market has resulted in an acceleration of AG&S market growth in the region, and we have achieved a 25% overall market share only 24 months after launch. We believe that our approach to the German market and the success we have had in the region can serve as a good proxy for adoption trajectory in the US. In summary, with strong dream data, a differentiated AG&S system, upcoming regulatory approval, and a cash runway that has been extended to mid-2026, I could not be more excited for the future of Niksoa as we move closer to a US commercial launch. With that, I'm pleased to turn the call over to Ossi Affon-Wittmau, who will provide a financial update.

Thank you, Olivier. Good day, everyone, and thank you for joining us today. Revenue for the third quarter ended September 30, 2024, was 1.3 million euros. The total operating loss for the third quarter was 15 million euros versus 11 million euros in the third quarter of 2023, driven by an acceleration in commercial investments in the US. During the third quarter, we secured a loan facility agreement with the European Investment Bank of 37.5 million euros and drew down the first range of 10 million in July. We also raised 24.6 million euros through our ATM program on October 7 from a single US healthcare-dedicated fund. This additional capital provides incremental flexibility as we shift into our US commercialization and extends our cash runway until mid-2026. As of September 30, 2024, cash and financial assets totaled 71 million euros, and our monthly cash burn was 5.6 million euros during the quarter. September 30 cash position of 71 million euros excludes the proceeds from the 24.6 million raise that we talked about. This concludes the formal part of our presentation. Operator, I will turn the call over to you to begin our Q&A session.

Thank you. Ladies and gentlemen, if you wish to ask a question, you will need to press star 1-1 on your telephone and wait for your name to be announced. To remove yourself from the queue, simply press star 1-1 again. Please stand by while we compile the Q&A roster. And our first question coming from the line up, Adam Maither with Piper Stanley. Your line is now open.

Hi, good afternoon, Olivier and Luique, and thank you for taking the questions. I wanted to start with your dream data, which was presented at IEEE a couple months ago. Congrats on the presentation. Olivier, what's been the feedback from the clinician community on the data? In particular, as it relates to supine versus non-supine, how is that resonating? And then there were three cuts of data from dream that were presented on the primary end points, intention to treat, modified intention to treat and for protocol. Which of those data sets do you think is most relevant for physicians? And then I had a follow up, thanks.

Thank you, Adam. So let me maybe start by answering the first question, like how did, in fact, the audience at ISSS reacted on the published dream data and how we differentiate. So it's clear that we showed published data for patients sleeping 35 to 40% in a supine position. And we know that their AHI is twice as high when they go in the back compared to when they are sleeping in a non-supine position. And I have to say there was a lot of positive reaction from physicians on the fact that dream is currently the only study to require patients to sleep minimum 60 minutes in a supine position, that it was measured, no fact based, in a 12 month follow up visit, and that it resulted, and I think that's the most important topic, in a similar AHI reduction compared to sleeping in a non-supine position. I think that is maybe an answer to your first question. Now the next question, also when looking at ITT, the modified ITT, I do think that the modified ITT is the number that resonates most with physicians for the simple reason that in a modified ITT, we include all patients that have reached a 12 month follow up PSG, and there we see that we have data that are showing a response rate of 66%. So this is answering your question.

That's helpful, Olivier, thanks for the color there. And then I feel compelled to ask about reimbursement, and sorry to push there, but that's one of the big questions that we get from investors,

so

any more color details that you can give us around the CPT code that you're planning to use, and then I think you also have stated you have the expectation that you can onboard US payers pretty quickly after launch, so just talk about the competence there as well. Thanks for taking the question.

Yeah, no, thank you for this question. I can only confirm that this is a question I get on a regular basis from a lot of investors. So as you know, we are executing a comprehensive reimbursement strategy, and in fact, the reimbursement strategy includes a couple of different approaches. First, we're using an established CPT code that is recognized by payers for the OSA indication at launch, so that should answer the question, will we have a reimbursement the moment we have FDA approval? In our thinking, the answer is clearly yes. In parallel, we are planning to pursue the genealogy specific CPT code over time. In order to do this, we are working closely with the AO, the American Academy of Auto-Level Geology, and we're also very pleased that we can participate in the FDA early payers feedback program because it's putting us in closer contact, closer contact, engaging with CMS, but also major commercial payers, including United Health, Blue Cross Blue Shield, and Athnea, and being able to educate them on our technology, on the mechanism of action, and also how this is in fact also already a reimbursement indication for a possible reimbursement of the U.S. So I hope that this is answering your question, and maybe in conclusion, sometimes it's nice to be second, and then being able to piggyback also on the work and the hard and strong work that was done before by others.

Thank you. And our next question coming from the line of John Block with Stiefel, Yolana Sullivan.

Hey, everyone, this is Joe Federico for John Block. Thanks for taking the questions. I guess I'll just start with a two-parter, just following up on the recent conferences. I think the thought at the time was that the peer-reviewed dream data would be a little bit more complex was gonna be published kind of in short order following the conferences. Is there any update on the timing of that publication? And then I could be wrong. I don't think we ever saw the peer-reviewed better sleep data that was supposed to be published, I guess, a few years ago at this point, but I know it was due to COVID complications, but do you think you could face any challenges there with commercial payers on the reimbursement front without that breadth of peer-reviewed data?

Yeah, so let me start by maybe answering the first part of the question, the publication strategy. So yes, indeed, we presented the dream study at ISSS in September in Miami, and we anticipate the study being published in the leading medical journal. So the study is currently being prepared, or the submission is currently being prepared by our PI of the study, Dr. Wotson, supported by some other PI colleagues. They are doing this in a complete independent way. So we can, of course, not interact or not push them to submit the publication earlier before they feel that they have done appropriate work to submit. I expect that this will be done in the coming weeks, because that is based on the latest feedback we get directly from them. Second, when you are asking the question on better sleep, so totally correct, and for those who are relatively new to our story and the technology, better sleep was a study done in Australia, in which we have included patients suffering from non-CCC, comparable to the dream study, but also patients suffering from CCC. Based on the study data, we were able to have a label expansion already in Europe. As you know, we are reviewing a study in the US called ACCESS, specifically focused on CCC patients. To answer your question, Joe, in going forward, it's clear that we will use all the available evidence, including better sleep data, also commercial data on CCC patients, in combination with the ACCESS data, in going forward to also apply for a label expansion for CCC patients in the US.

Okay, thank you, that's really helpful. And then maybe just a clarifying question. The language around the FDA approval timeline for Genio seemed to change a little bit. I think last quarter it was, I think a sense of confidence was conveyed in the year end 24, and it kind of just read more leaning towards the 1Q this time around, and so just to clarify, did you say that was more just the manufacturing inspection, which I think is the third module? If you can just maybe give color around the change there, that would be helpful.

Thank you, thank you for this question. I think it's a very important one. So as you know, we submitted our final module in June, beginning of June, to be precise. We made a lot of progress since then, including US clinical site visits, the US manufacturing audit, all with our deficiencies. The timing has changed slightly because of Belgium site inspection was delayed. When the FDA investigators or inspector arrived in Belgium, the FDA had to reschedule the inspection to a later date due to unforeseen circumstances unrelated to NXOA. We are currently working with FDA to find a new date for this inspection. While we do not control FDA timeline, we know believe that approval in December is unlikely, and therefore staying cautious, we feel confident with the Q1 2025 approval.

Thank you. And our next question coming from the line of Suraj Kalia with Appenheimer, Yolanda Snalpen.

Hi, Olivier, congrats on all the progress. So, Olivier, I know a number of questions have been asked, and let me come at it from a different angle regarding your anticipated commercial launch. So, Olivier, you guys are making senior leadership changes. Fine, we understand all that. How do you expect your marketing strategy to be different than Inspire? And what do you consider as the low-hanging fruit?

Yeah, first of all, thank you, Suraj. Nice, nice hearing you, and thank you for the question. So, I would like to push back a little bit on changes in leadership and more rephrase it to additions. So, it's clearly that our focus has shifted to the US, because that's also where the market opportunity lies, and we are definitely strengthening our leadership in the US with the hiring of a chief commercial officer, a chief commercial strategy officer, marketing, but also the recent appointed CFO, John, that has joined us. And while we are doing this, we also make sure that we do not forget international markets. So, maybe as an introduction and answer as a first part of the question. Now, second, from a marketing perspective and from a strategic perspective in the US, how do we wanna make a difference? I think we have a two-prong approach. First, we will focus on tier one HGNF implementing accounts. As market research strongly suggests that physicians and patients are actively seeking an attractive alternative to current available therapies. So, that's, I think, already the first strategic approach. Second, we will work on driving referrals from sleep physicians who currently manage a high number of patients with moderate or severe OSA who are in need for an alternative treatment. I think this strategy will overall be supported by a commercial organization of approximately 50 people. We will add it with focused DTC. And we will have also, and I think this is really important, a dedicated team supporting pre-authorization efforts. When implementing this approach, based on our German experience, we see that we are able to secure adoption in tier one accounts. We see that we're also able in establishing referrals lead centers to start referring patients. And we also saw that this is really demonstrating also an acceleration in market expansion. Now last, and I wanna be very complete, Suresh, how do we differentiate? It's clear that we have clinical data that are both strong in efficacy, but also in safety. And I would like to point this out. When we look at the efficacy, you have the supine AHA reduction. I think this makes us unique. Then we are able to reduce AHA below 15, reducing the cardiovascular risk to patients without OSA. Then also we have more than 82% of patients in dream reaching this result. And as I mentioned, safety, we have SAAs below 10%, which is also very favorable if you compare with other AGMs treatments. And next to the clinical data differentiation, there is also the product differentiation. So let me just remind you, but there is no implantable pulse generator. We go for the implant for life contact. We are fully scalable. And we also have a single incision. And we learned through market research that these arguments are really resonating very strong with patients in their acceptance criteria, and especially with surgeons in their selection of therapy. Sorry to be a little bit longer, but I hope I was complete in answering

your question. Got it, fair enough. And Olivier, my second question, I'll keep it two part and hop back in queue. So Olivier, our assumption still is that you all are seeking supine label on Genio. Could you just confirm that that is still on the deck? And when do you anticipate to start getting into labeling discussion? And the second part of your question, Olivier would also love to get your take on the current status of the AGMs market in the US. And the reason I ask that is, it seems at least based on the numbers right now, utilization for your competitors, relatively flattening out. It's basically a push into new sites. And as you guys launch Genio, how would you advise us to measure the ROI of Genio's launch, admittedly a few quarters down the line? Thank you for taking my questions.

Yes, so for the label question, I can already confirm that the label discussion is ongoing with FDA. And it's also clear that based on our dream data, we do wanna see the supine data reflected in our label. Of course, at this moment, I cannot make any statements as the discussion is undergoing. And I definitely do not wanna undermine or create the wrong expectations, but I can confirm that based on the data, based on the ongoing discussions, we are going and we would, I see it as more than appropriate to also see this reflected in our label. So that's, I think, the first part of the question. When we look at the hippoglossal nourishment market, I do think if we look in the US specifically, that the market is still growing strongly. I was also listening yesterday to what was presented, and I'm hearing almost like over 30% growth. So this is also having a positive impact on Mixo and on Genio. And it's even encouraging us to continue our even harder to get our US commercial market access in place. So that is already first part. Now when it comes to new sites and the return on investment measurements. So when we will be launching, it's also clear that of course, we will measure our revenue success, but next to this are other parameters. And that is the opening of new sites, that is one. That is also the further expansion of territories. And that is also the uptake of implants that are done by site. Because I do think to your point that it is important that you have a kind of center of excellence approach where you will educate centers and make sure and equip them to take an implant a high volume of course a patient. It will make them better in their quality outcome because they are doing it on a weekly base. It will also reduce the risk of complications because of their experience. And I also think it will have a positive overall impact on the healthcare system and the payers. If they know that when patients are referred, they will get the highest quality implant as possible. I do think that this is where we will be focused on. And we will shoot, if I can use marketing terms, we will shoot more in having a high number of center of excellence. And we will not shoot so broad in having more than 1000 centers of which the majority is only doing low number of implants.

Thank you. Now next question coming from the line of Ross Osborne with Kansas. Gerald Yolenes-Malpin.

Hi guys, congrats on the progress and thanks for taking our questions. So maybe starting off on your commercialization strategy for next year, can you walk us through the process of turning on or activating the 31 tier one accounts upon approval and following up on this, how do you define tier one accounts? Is there a quarterly or annual volume number you can share?

So first of all, I would like to be very clear that I'm not focusing on 31 accounts. If I misunderstood or if I understood correct. So what I am saying is we will first focus on the hypoglossal implanting accounts or the high volume tier one, not 31, but tier one accounts. I think that's important and it will be more than 31 accounts just for the record. And then the next thing also when we are talking about how to prepare physicians, also to do this, we are heavily investing in training and education team that will make sure that we can already onboard physicians right after the moment we have obtained the approval.

Okay, great. And then just the second part of that question on how you define tier one accounts, is there a volume number you can share?

Yeah, so if we currently look at the market, as you know, we have more than 1,300 agent implanting sites in the US and when you drill a little bit more deeper, you see that roughly 300 to 350 of those are representing more than 80% of current revenue. So those 300 to 350 that we have identified as tier one accounts and that we will start going after.

Okay, got it. And then lastly, how are you feeling about your ability to meet demand from a supply standpoint?

So also here we made quite some progress in the sense that we have no manufacturing site in Belgium that is up and running, but we also have a company manufacturer in the US that already had the pleasure of having FDA visiting the site and where I'm extremely pleased to say that they pass without any for a three or any deficiency questions. So we have two manufacturing sites with several manufacturing lines and based on our forecasting, it's also we will have inventory built and we will have definitely enough supply present to sort of the US and European market.

Great, thank you for taking our questions.

Thank you, Rolf.

Thank you. And our last question comes from the line of David Rizkoff with Bayer Golanus Open.

Oh, great, thanks for taking the questions. I appreciate the comments you gave on reimbursement already, but wondering if you could provide maybe some more color on that. I'm more curious on kind of what gives you the confidence that the existing codes or the identified codes that you have out there that are well understood, at least it sounds like by the physician or payer community is something that you can achieve. I know that on the backend, obviously, whether it be maps or CMS, there's some things that probably have to be done to make sure that the code is eligible to be mapped to or to be used. So just wondering if you can give us any color on the back and forth or the conversations that you've had, with some of the payers that lead you to believe that you'll be able to utilize this, kind of on day one of the launch next year.

Yeah, well, first of all, we are fully recognizing the strong work that has been done in this field by having US payers covering hyperlossal nerve stimulation. And as I mentioned before, sometimes it's nice to be second and to be able to piggyback a little bit on this hard work that has been done. So that's number one. As I mentioned before, most important for mixwise to have a coverage, a coding and a coverage in place right after FDA approval. And there we are establishing a CPT code that is recognized by payers for the OSA indication, but also the code that is really covering the technology that we are offering, including the mechanism of action. So we have identified the code. At this moment, I don't think it would be wise to comment further on this. As you know, you will see the code once that is FDA approval and once you have submitted, in fact, your first files to payers and then they accept and reimburse for your technology. So that is step number one. In the meantime, I think we are doing what we have to do in the right order, meaning working closely with the physician association, in our case, the American Academy of Otolaryngology. Next, with FDA's early payers feedback program, it gives us a unique opportunity to present and to educate CMS, but also major commercial payers so that they are prepared, what technology can do, what it can bring, and also the clinical data and safety data behind. So I'm feeling really confident that we are making the right steps, that we are making the progress. We feel support from both organizations, AO, but also the good discussions at the early payers feedback. And then I think last, we will also make sure that we help the sites when they work with periodization to relieve them a little bit from this administrative burden and make sure that the files are complete and fully prepared when they submit to payers. So that's our strategy for now.

Okay, thanks. I'm not, maybe just on the P&L, on the investment that you've talked about, I think in the past you called out maybe this 50 million or so of incremental investment ahead of the launch, just looking at the difference in OPEC that you have in the quarter, appreciate that the hiring process is kind of really starting to ramp up. So from a cadence perspective, I mean, is the fourth quarter of this year, a quarter in which we're gonna start to see a more substantial sequential step up in kind of the OPEC line associated with a lot of new onboarding, or is that something that might be pushed closer to the first part of 2025? Thank you.

No, that's one of the difficult questions I have to answer. So,

Louis? No, thank you for the question. So indeed, as you have seen, our burden is increasing in Q3. It's now 5.6 million per month. We anticipate it will continue in Q4 with the hiring of the first wave of territory manager, notably, and continue to ramp up in Q1 and Q2 next year. We then believe that it will reduce with the ramp up of the sales in US. So with this, we have cash into 2026. So that's what we have in mind. So first we see this acceleration and that has started, then it flattens around mid next year, and it starts to decrease with the ramp up of sales in US.

Any just high level thoughts on maybe how you kind of quantify what that Q4 OPEX number looks like? I mean, does it double quarter over quarter? Is it up five to 10 million? Just any thoughts there would be helpful?

No, I will not give you precise guidance, but definitely we will not double the OPEX. Far from this. Thanks. And an important point there is we are increasing the commercial investment, but at the same time, we decrease the clinical and R&D investment because we are shifting from the pure R&D clinical organization to a commercial organization. So that's what you're gonna see in the next quarters.

Thank you. And ladies and gentlemen, at this time we have no further questions in the Q&A queue. This will conclude today's conference call. Thank you for your participation, and you may now disconnect.