ENDRA Life Sciences Inc. (NDRA) CEO Francois Michelon on Q1 2022 Results - Earnings Call Transcript

May 12, 2022 10:37 PM ETENDRA Life Sciences Inc. (NDRA)1 Like
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ENDRA Life Sciences Inc. (NASDAQ:NDRA) Q1 2022 Earnings Conference Call May 12, 2022 4:30 PM ET

Company Participants

Yvonne Briggs - IR

Francois Michelon - Chairman and CEO

Mike Thornton - Chief Technology Officer

Renaud Maloberti - CCO

Irina Pestrikova - Senior Director, Finance

Conference Call Participants

Vernon Bernardino - H.C. Wainwright

Edward Woo - Ascendiant Capital

Operator

Good afternoon everyone, and welcome to the ENDRA Life Sciences' First Quarter 2022 Financial Results Conference Call. All participants will be in a listen-only mode. [Operator Instructions] Please also note today's event is being recorded.

At this time, I'd like to turn the floor over to Yvonne Briggs with LHA. Ma'am, please go ahead.

Yvonne Briggs

Thank you, operator. This is Yvonne Briggs with LHA. Good afternoon and welcome to ENDRA's first quarter 2022 business update and financial results conference call. Earlier today, ENDRA issued a press release on this topic, which is available in the Investor section of ENDRA's website.

Before we begin, please note that today's discussion will include forward-looking statements. All statements by management other than statements of historical facts, including statements regarding the company's strategies, financial condition, operations, costs, plans, and objectives, as well as anticipated results of development and commercialization efforts, the timing of clinical studies, potential partnership opportunities, and expectations regarding regulatory processes, receipt of required regulatory clearances, and product launches are forward-looking statements.

Except as otherwise required by federal securities laws, the company disclaims any obligation to update or revise any forward-looking statements. Please refer to the company's 2021 Form 10-K filed later today and subsequent SEC filings for more information about risks and uncertainties related to forward-looking statements.

In terms of the structure of today's call, Francois Michelon, Chairman and Chief Executive Officer will begin the prepared remarks; followed by Mike Thornton, ENDRA's Chief Technology Officer; followed by Renaud Maloberti, ENDRA's Chief Commercial Officer; and then Irina Pestrikova, Senior Director of Finance.

With that said, I will now turn the call over to Francois Michelon. Francois?

Francois Michelon

Thank you, Yvonne. Good afternoon everyone, and thanks for joining us today for a discussion of ENDRA's 2022 first quarter financial results and an update on our business

We are very encouraged by the recent progress we've made and advancing our TAEUS system toward global commercialization. And I'm delighted to share some of the highlights with you today. As many of you know, subsequent to the quarter close we were able to raise $7.8 million through our aftermarket equity facility without the overhang of warrants or convertible debt. This fundraise bolsters our cash position to fund operations through several important milestones, including ramping up our commercial activities in Europe and advancing the TAEUS system through the regulatory process in the U.S.

What's more, I believe our ability to raise capital efficiently in this very challenging macro environment reflects investor confidence in our progress, our technology and our market opportunity. The six weeks since our fourth quarter earnings call has been a very productive time for ENDRA with several noteworthy accomplishments. First, we helped advance studies that are underway or being planned by our clinical research partners. These studies will support the commercial adoption of TAEUS in Europe and will provide the additional clinical data needed for our FDA De Novo submission in the U.S.

We're leveraging the vast majority of our previous 510(k) application and are gathering data from a subset of our clinical partnerships to submit the De Novo requests as quickly as possible. We're on track to do so in the third quarter. Mike Thornton will provide more details in a few minutes.

Second, we're ramping up our sales and marketing efforts across Europe as pandemic restrictions continue to ease. Renaud will speak specifically about these activities in a minute.

And third, we significantly strengthen our intellectual property portfolio, not only to protect our technology, but also to enhance out licensing opportunities. Year-to-date, 5 pounds were issued in the U.S., two in Europe and four in China. These additions bring our global IP portfolio that 90 assets including 46 issued patents.

One of the issued U.S. patents we announced earlier this week has the potential to expand licensing and revenue opportunities for the company into a new space. The patent protects a proprietary method for acquiring, analyzing and sharing data on equipment not connected typically to the Internet. Although this technology was developed specifically for TAEUS system, based on our market research and industry discussions, it has broad applicability and out licensing potential within the healthcare industry, where it could help lower service and maintenance costs on things like laboratory equipment, thereby enhancing equipment uptime for laboratories and hospitals.

I'll turn the call over now to Mike Thornton, our Chief Technology Officer to provide updates on our clinical studies. Mike?

Mike Thornton

Thank you, Francois.

This is a very exciting time at ENDRA. Our team and development partners have accomplished a tremendous amount in creating a first of its kind clinical technology. To our knowledge, ENDRA's fatty liver assessment device is the first Thermo Acoustic Device that combines RF energy delivery and ultrasound detection in one handheld unit. Through the efforts of the ENDRA team, we produce the completely novel technology and achieved the first regulatory clearance in Europe for Thermo Acoustic application.

On a personal note, as the first employee at ENDRA, it's been incredibly gratifying to contribute to the development of TAEUS from concept to device deployment, and ultimately a first clinical application. Let me update you now on our recent clinical activities.

We deployed TAEUS systems to two U.S. sites last year, and I recently visited one of the U.S. sites and was able to observe study subjects undergoing TAEUS fatty liver exams. With each new clinical technology, there is naturally a new workflow, exam procedure, user interface and data display. I find it very encouraging to observe the learning curve where the clinical user transition from familiarization with TAEUS to completing routine exams all in the same day.

So far this year, approximately 40 study subjects have had TAEUS exams. We remain confident in our goal of achieving 200 plus subjects scan by the end of the year, as current studies progress and additional sites come online throughout the year.

To that end, I'm happy to announce today that we've deployed a TAEUS system, trained the staff and will begin scanning patients next week at a new clinical research collaboration site in Germany that will contribute clinical data, provide usability feedback, and help ENDRA validate new TAEUS product features. This is a big milestone for us as it represents our first active site in Europe.

These ongoing and planned studies in the U.S. and Europe are essential to the clinical validation of our technology and will support the commercial activities and additional regulatory submissions in new markets. On this last point, as we announced in February, ENDRA will leverage our existing clinical study sites and previous 510(k) application to support the expected submission of our De Novo request to the FDA in the third quarter.

Commensurate with the De Novo process, we intend to provide smaller scale TAEUS human study data from our existing market adoption sites. And importantly, this is not expected to add material expense to ENDRA.

I'll now turn the call over to Renaud Maloberti for commercial update. Renaud?

Renaud Maloberti

Thanks, Mike.

Indeed, we are really happy to start scanning patients on TAEUS in Germany and look forward to initiating the other European evaluation sites in the coming months. As a reminder, we have four clinical evaluation sites in France, Switzerland, and in the U.K., as well as a second site in Germany. We've recently returned from the DGIM conference in Wiesbaden, Germany. DGIM is the annual meeting for the society of internal medicine specialists, which attracts over 5000 attendees, including many ultrasound users. This was the first in-person gathering for this large clinical conference in over two years, and we received a lot of interest from visitors at our booth, where we demonstrated the TAEUS system on medical imaging platform -- phantoms and made new connection with potential customers in Germany.

Attending the street show was part of our outreach to clinical specialties, outside of radiology and hepatology, who are interested in the study of the liver. Like other specialties, the need in internal medicine for a non-invasive point of care device to assess liver health was evident in the multiple meetings we had with clinicians.

Coming up, we are actively focused on preparing for ENDRA's participation in the European Association for the Study of Liver, known as EASL. After a two year online only presence this event will be held in-person in London next month. This is the biggest liver focus clinical conference in Europe and typically is attended by over 10,000 hepatologist, endocrinologist and other specialists.

The conference will continue to reinforce the importance of NAFLD Nash and the growing need for innovative new diagnostics and treatments. ENDRA will have a booth at EASL and Mike Thornton and I will be staffing it along with our European team. We will be demonstrating our TAEUS product and we're looking forward to meeting our clinical partners and developing new relationships.

The weeks leading up to EASL will be preceded by a cadence of targeted communication to clinicians in our ENDRA's proprietary database inviting them to our booth. As TAEUS gains recognition through our sales team activity and engagement, we are receiving a growing number of requests from clinicians asking us to share publicly available TAEUS product information so they can incorporate it in their peer-to-peer presentations. This is an extremely positive trend that augurs well for the future of TAEUS commercial acceptance as typically, physician prefer to learn about new products and technologies from other physicians.

In summary, we have a well-trained and active sales team on the ground in Europe. We are expanding our outreach to new high value clinical segments, including endocrinology and internal medicine. We are increasing our presence at clinical conferences by some 40% this year, and we are developing new rental programs to facilitate customer adoption of TAEUS as we look forward to generating revenue for ENDRA.

Now, I'd like to turn the call over to Irina to review the financial results for the first quarter of 2022. Irina?

Irina Pestrikova

Thank you, Renaud.

Our financial results for the first quarter of 2022 are as follows. For the quarter ended March 31, 2022 our operating expenses increased to $2.9 million from $2.6 million for the same period in 2021. The increase was primarily due to higher spending for commercialization of TAEUS, and ongoing product development.

Our research and development expense increased year-over-year by approximately $70,000 due to an ongoing product development work. Our sales and marketing expenses increased by approximately $180,000 for the quarter, as we began to expand our sales efforts as Renaud just described, including adding to our headcount.

General administrative expenses increased by approximately $30,000 due to higher professional fees. Our net loss per share for the 2022 first quarter was $0.07, compared with a net loss of $0.06 per share a year ago.

We continue to advance our commercial valuation initiatives with an asset light operating model and conservative cost structure. As of March 31, 2022, we had cash and cash equivalents of $7.1 million. Year-to-date, the company raised $8.7 million in gross proceeds through our ATM facility, of which $7.8 million was raised subsequent to the close of first quarter.

Given this additional funds, and our strength and balance sheet, we believe we're well capitalized and have cash runway to support our commercial activities in Europe as we prepare our De Novo request for the FDA.

Now, I'll turn the call back to Francois. Francois?

Francois Michelon

Thanks very much Irina, Renaud and Mike.

In summary, I'd like to reiterate the significant milestones we're focused on achieving this year. They include first advancing TAEUS through the U.S. regulatory process and submitting a De Novo request plan for Q3.

Second, demonstrating TAEUS clinical value by generating additional data with our strategically positioned study sites to support the regulatory submission and our commercialization. Third, accelerating our commercial channel and marketing activities in line with the reopening of global markets to generate orders and revenue for TAEUS in Europe.

Fourth, securing additional industry partnerships to expand the opportunity for TAEUS outside the clinical end user market. And finally, continuing to strengthen our intellectual property portfolio to protect our proprietary technology, expand us potential areas of use, and increase out licensing opportunities.

So with that review of our business highlights, and financial results, I'd now like to open the call for questions. Operator?

Question-and-Answer Session

Operator

[Operator Instructions] Our first question today comes from Vernon Bernardino from H.C. Wainwright. Please go ahead with your question.

Francois Michelon

Hi Vernon.

Vernon Bernardino

Hi Francois and thanks for taking my question and congrats on the progress. Just wondering if you could talk a little bit more about the happenings in Europe I was intriguing the comments you made as far as the growing interest there is wondering if you give a little bit more detail and insight, and especially how other people are coming to payment?

Francois Michelon

Sure and maybe I think, let's surpass that Renaud if you could give us a sense of some of the anecdotal feedback and themes that you're hearing at these conferences Renaud and as well as some of the tactics that were executing in Europe?

Renaud Maloberti

Yes no, absolutely. Thank you for the question. Yes, I mean, as we go hi, how are you Vernon. As we are going back to in person trade show in Europe and conference in Europe, it is becoming very clear to us that more and more specialists whether they're hepatologists or endocrinologist are very interested in our technology in order to start really understand liver health on their patients stat on their patient population.

We've had multiple requests for demonstration. We're organizing multiple Lunch and Learn with our partner GE at various sites in Europe. And as I commented earlier, we have multiple physicians was asking us from materials and they can talk about our technology in their own talk to their colleagues and friends when they do different talks and conferences as well as their students. So I see a very high uptick of interest in the in the solution that we provide, as well as the technology and how it differs from the existing the existing ways of measuring liver fat.

Francois Michelon

Hi, Renaud, if I could I just wanted to be back on that if I might Vernon as you know, we started with GE in the radiology part of their business which is their strength, but GE like a lot of medical device companies have other divisions, including what are called point of care, ultrasound. And these are the ultrasounds that are typically used in emergency rooms or in thro-medicine or non-radiology settings.

And we're seeing that that solution you know, portable ultrasound, the size of a laptop, the size of an iPhone, are an increasingly attractive element to combine with our technology when we're talking to an endocrinologist or hepatologist, who doesn't necessarily own an ultrasound, the way you have it, in radiology. So we're finding that the partnership and discussions and field work with GE are actually in many regards evolving as we learn more about the market and as customers draw on us with their needs. I hope that's helpful.

Vernon Bernardino

Definitely and that segued very neatly with my second question, and that is, how were people asking how to use it. Do any of them ask how much it cost? I know that it's too early, perhaps, but because they have familiarity with ultrasound. They I would imagine a doctor who already uses ultrasound might wonder what additional cost it may entail?

Francois Michelon

Sure, and I think we were as strategic as we could be when we originally started setting price now, we all know there's a difference between price set Putting in price getting. But our price setting and so far what we're hearing in the marketplace is the 50,000 U.S. price for our technology is something that is appealing because many in radiology, certainly the ones doing the ultrasounds of the liver today for gallstones and other reasons are investing $75,000, $150,000, $200,000 for an ultrasound.

So having an add-on technology that enhances their ultrasound at a reasonable price point was certainly something in our consideration. And so far, Renaud I don't know if you've got any additional feedback, but the feedback we're getting, along with the rental programs that we're putting in place to facilitate acquisition of the technology has certainly been well received. Any additional comments Renaud from your side?

Renaud Maloberti

No, I think the price point that we have talked about has been very well received and accepted by the customer. So I am very confident that we should be able to get that price point around that price point when we sell.

Francois Michelon

Great, thanks. I hope that's helpful to you Vernon and your investors?

Vernon Bernardino

Definitely, because obviously, these days, I think everybody's thinking about the cost of things. Thank you for taking my question and follow up question.

Francois Michelon

Always thank you so much Vernon.

Operator

And our next question comes from Edward Woo from Ascendiant Capital. Please go ahead with your question.

Edward Woo

Hi guys congratulations on the progress in the quarter and also on your first Germany, or first site in Europe, your clinical study partner, just how many of your eight partners are actually scanning today? And what is the timeline to get them all up and running?

Francois Michelon

Sure. So with the German site we just mentioned, that'll be our third site going live. We have the remaining sites certainly phasing in here over the coming months, our goal is to have all of them up and running COVID permitting, obviously. But certainly getting them all up and running this year.

And I would say even more essential goal that is to have upwards of 200 patients scanned, because we feel like that's really reaching a new level, a new level of critical mass needed to support both commercial activity, being able to say to clinicians who are considering a purchase, hey, we have scanned this many patients, that's always extremely confidence building.

And also to be able to support the regulatory submission for the FDA I want to emphasize the de novo path, as Mike Thornton described is not at all a long-term large study with hundreds of patients the way a pre-market approval for an invasive device or a drug might be a PMA, as they're called.

So I won't be able to define at this point, because the FDA has not prescribed it, we have to come back to the FDA with a representative a cohort of in vivo data to complement the fact and work we've done, we're definitely going to be able to do that within the pool of sites that we've already got started. And certainly, as we add more, we'll have even greater flexibility and volume in terms of clinical data. I hope that's helpful.

Edward Woo

That is very helpful, then congratulations on, obviously, a lot of progress in Europe in the UFC [ph] your devices already been, you know, like CE Mark, do you anticipate, you know, focusing a lot more of your marketing in Europe until you do get FDA approval in the US?

Francois Michelon

Absolutely, yes I mean we as Americans, often forget how large, although culturally diverse Europe is, but it's, you know, a very large market and certainly from healthcare market, very, very attractive. We believe we have people on the ground in the key markets in France, in Germany, in the UK. And I think our focus should be there, we've been very careful not to spread ourselves too thin.

Obviously, by getting the clinical study sites in the U.S. up and running ahead of our regulatory approval will give us a head start when we do get approval to add salespeople here in the US. And as we mentioned also, earlier in the year, we signed a prestigious partnership with Shanghai General Hospital in China, and I would say after Europe, and the U.S. will be certainly turning our attention to Asia, which is, as we all know, the world's most populous healthcare market.

But I want you to hear I want investors to hear we're not trying to be everywhere at the same time. One we're preserving capital, we're focusing on what we think is going to be the highest return and that's starting in Europe definitely.

Edward Woo

Great well, thanks for answering my questions and I wish you guys good luck. Thank you.

Francois Michelon

Thank you so much Ed. Yvonne have we received any additional questions possibly by email?

Yvonne Briggs

Yes, one question we got is can you further discuss the licensing opportunities with the recently issued patent regarding data transfer?

Francois Michelon

Yes, that's actually really exciting. Before I turn it over to Mike to kind of give you a real sense of that one I do contextualize it. I mean, Andrew has been very active in the last five years, patenting, you know, comprehensive range of innovations that spans thermal acoustic applications and enabling technologies. And those are focused on fatty liver as well as other applications and temperature monitoring, things that could allow a surgeon or interventional radiologist who's trying to treat cancer or cardiological conditions to be able to see the tissue being treated with heat or cold.

We've mentioned that before, we think that's a very compelling opportunity, a real game changer for companies who are involved in that because today, there's no way to easily see tissue temperature change when you're burning or freezing something below the skin. So, you know, clinicians tend to do their very best, but they obviously have limited visibility to that. So we think that's a key area for ENDRA and the Ks platform.

But I'd love for Mike Thornton to speak a little bit more about this new space. And I want to emphasize that this new space is a derivation of some work we were doing on TAEUS. So this is not a pivot of the company. This is an incremental opportunity for ENDRA, which we're very excited about from an out-licensing perspective. So Mike, if you give us a sense of the most recent U.S. data point, that would be great.

Michael Thornton

Sure, and thanks. Yes, the most recently issued U.S. Patent broadly covers the transfer of equipment performance data in a really novel way. Specifically, our patent enables manufacturers of laboratory diagnostic and other types of equipment to easily extract performance data and service metrics where conventional wireless or network connectivity isn't available.

Surprisingly, a lot of that information is not automatically downloadable from equipment is often copied by hand, by service techs in the field. As you can imagine, this is a fairly inefficient process, this IPs an example of and renovations potentially expanding far beyond ENDRA's Cortez [ph] technology.

Francois Michelon

Thanks, Mike. I think that's exciting. I mean, I want investors and our listeners to hear two things from us. One, we're laser focused on making TAEUS liver a success in Europe, generating revenue, as well as securing us regulatory approval. But we're also you know, advancing in a very efficient way without distracting ourselves from those primary goals, other opportunities that we can leverage from our technology platform, including the IP that Mike mentioned, which might be of interest from an out-licensing perspective.

So I think that's compelling. I think investors understand that broader longer term potential to scale the business but obviously we're focused on the immediate and we're looking forward to achieving some great things this year. Yvonne if we don't have anything else, I think operator we can close the call now.

Yvonne Briggs

That's it for me.

Francois Michelon

Okay.

Operator

Ladies and gentlemen with ladies and gentlemen, with that will conclude today's conference call and presentation. We do thank you for joining today's conference call. You may now disconnect your lines. Thank you.

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