Newtopia Inc.

Welcome to the Neutopia Incorporated second quarter 2024 earnings call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. I would now like to turn the conference over to Ms. Rikki Benney. SVP of Experience and Operations, please go ahead.

Good evening, and welcome to Newtopia's second quarter 2024 earnings conference call. I'm Rikki Benny, Senior Vice President with Newtopia. Joining me today are Jeff Ruby, Founder and Chief Executive Officer, Colin Swenson, Chief Financial Officer, and Lara Dodo, Chief Growth and Operating Officer. Please note that today's call is being broadcast live over the internet and will also be archived for both telephone and online listening upon completion of the call. Details on how to access the replays are available in the company's press release issued this afternoon and can be found on the investor section of Newtopia's website at www.newtopia.com. Before we begin, Let me remind you that certain matters discussed during today's call could constitute forward-looking statements, which are subject to certain risks and uncertainties relating to Newtopia's future financial and business performance. Actual results could therefore differ materially from those anticipated in such forward-looking statements. Newtopia is under no obligation to update any forward-looking statements discussed today, and investors are cautioned not to place undue reliance upon these statements. The risk factors that may affect results are detailed in Neutopia's Periodical Results and Registration Statements, which you can access via the CEDARplus database at www.cedarplus.ca. Also, please note that all figures stated on today's call are in Canadian dollars, unless otherwise noted. I would now like to turn the call over to Jeff Ruby, founder and CEO of Neutopia. Please go ahead, Jeff.

Thank you, Rikki, and thank you to everyone for joining us today. I would like to speak about the progress we are making in some key growth areas for Neutopia, which Lara will also discuss, and will then turn over the call to Colin to discuss the financial results. Over the last 11 years, Neutopia's habit change solution has repeatedly proven our unique ability to produce industry-leading patient engagement and healthy habits that prevent, slow, and even reverse chronic metabolic disease. Beginning with our industry-first randomized controlled clinical trial between 2013 through 2016 and extending to the Fortune 500 employers that adopted our solution, Neutopia has consistently delivered patient weight loss and reductions in A1c that are not only clinically significant, but also sustainable over time. This has translated into meaningful cost savings for our employer partners and program sponsors and has improved the health and well-being for the more than 100,000 individuals whom we have served, irrespective of their geography, health equity, or socioeconomic status. Most recently, Nootopia embarked on a partnership with American philanthropist Alice Walton and her Heartland Whole Health Institute, where we are delivering our best ever engagement rates, as well as compelling weight loss outcomes in both provider and employer environments across the state of Arkansas. On the strength of this foundation, Today, we see three distinct and significant opportunities to accelerate Newtopia's growth, including one, expanding our key employer, provider, and provincial innovation partnerships. Two, combining Newtopia's proven habit change platform with GLP-1 drugs for obesity and type 2 diabetes. And three, partnering with health AI and clinical discovery innovators to improve our collective ability to deliver best-in-breed outcomes that prevent, reverse, and slow chronic disease. During the first half of 2024, we've continued making great strides in reducing our cost to serve and increasing our operational efficiencies, all while impressively maintaining and improving our industry-leading engagement and whole health outcomes. Importantly, in the second quarter of 2024, our industry-leading engagement and clinical outcomes continued to improve. Revenues were $1.6 million for the second quarter of 2024. Our top line continues to be impacted by a change made by a client with a long-standing incentive program. From 2020 through 2023, we participated in a behavioral economic trial to evaluate the impact of novel monthly incentives with regards to enrollments and monthly engagements. This client decided to ultimately shift the program's incentives which unfortunately resulted in a larger-than-expected participation decrease. This behavioral economic trial provided a valuable lesson on the power of extrinsic financial incentives. Fortunately, our relationship with the client remained strong, and commencing in Q2, we began working with them on strengthening new registrations through market expansion and the reintroduction of Dutopia to existing markets where we hope to overcome the declines experienced as a result of the change to the incentive program. Revenue in the quarter was also impacted by a decision by a client in March of 2024 to stop providing our program to employees at the beginning of its new benefit year on June 1, 2024. This decision came as a result of broad internal strategic change and cost-cutting measures across all employee benefits. To address the financial impact of the departure of this client, we are actively reducing variable costs associated with this lost revenue accelerating new market opportunities, and exploring a variety of strategic alternatives. Given macro conditions, material client changes described earlier, and the need to ensure all stakeholder interests are accounted for, management and the Board of Directors decided that a strategic review process was the best next step for the company. As such, during the quarter, we announced the strategic alternative review process to maximize shareholder value and repay indebtedness. A special committee of the Board of Directors of the company is working with financial advisors to explore and evaluate all value-maximizing alternatives to the company, which may include, among other things, a corporate sale, a merger, or other business combination or strategic investment. Turning to our strategic growth drivers, beginning with the continued development and growth of our novel innovation partnerships with key employer, provider, and provincial innovation partners that discussed earlier, Following the delivery of exceptional six-month trial outcomes, our collaboration with Heartland's Whole Health Institute offers an exciting opportunity to expand not only within Northwest Arkansas, where the program first launched, but also statewide and nationally. Our second growth driver will be in the combination of Newtopia's proven value-based habit change platform alongside GLP-1 drugs for obesity and type 2 diabetes. the GLP-1 market is experiencing massive growth, largely due to the increased prevalence of type 2 diabetes and obesity worldwide, along substantial marketing spend from pharmaceutical companies, celebrity endorsements, and a groundswell of influencer activity on social platforms. While medications like GLP-1s can be effective alone in the short term, they were clinically tried and are most beneficial when used in conjunction with lifestyle modifications, such as improved diet, increased physical activity, and management of mental and emotional health. Lifestyle changes can help improve insulin sensitivity, reduce blood sugar levels, and promote weight loss, all of which are crucial in achieving sustainable clinical and economic outcomes for patients and payers. Many payers are placing restrictions on use of GLP-1s, including outright bans, annual spending caps, or requirements to pair the drug with lifestyle change. Cost-effective and value-based lifestyle change programming, such as Nootopia, could be a potential solution to these challenges. We are in active discussions with a number of U.S. and Canadian payers about the requirements to co-prescribe Nootopia alongside a GLP-1 medication in order to unlock and ensure ongoing reimbursement of drugs, like Wegavy and Zetbound, for prediabetes or obesity. The third and final growth driver is partnership opportunities with health AI and clinical discovery innovators that leverage Neutopia's unique genetic and phenotypic data set to target at-risk cohorts and identify new drug candidates. As the pipeline for additional and improved GLP-1 weight loss medications increases amongst big pharma players, so will the demand for proven behavior change that plays a significant role in clinical trials for new drugs. Newtopia has the opportunity to leverage its industry-leading habit change approach alongside its rich data set as a partner to health AI, clinical discovery, and clinical trial work. The most relevant example would be in the identification, clinical discovery, and clinical trials for next-generation GLP-1s or other similar medications for metabolic disease. As evident from each of the three growth areas described, Utopia could not be better positioned to strategically participate in these important market inflections taking place. With that, I'll turn the call over to Colin Swenson to discuss our financial results in further detail.