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ECOR: First Quarter 2022 Financial and Operational Results

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By John Vandermosten, CFA



On May 5, 2022, electroCore Inc. (NASDAQ:ECOR) posted first quarter 2022 financial and operational results in a press release and Form 10-Q filed with the SEC. A conference call with investors and analysts was held immediately following the release. First quarter revenues of $1.9 million met upwardly revised company guidance and were a 58% increase over 1Q:21 levels. 1Q:22 loss per share of ($0.08) matched our estimates of ($0.08). 2Q:22 revenue guidance of $1.9 million was provided representing a 6% premium to our forecast. Since the beginning of the year electroCore has announced several publications on gammaCore performance, received breakthrough designation for PTSD, participated in multiple scientific and investor conferences, completed enrollment of the TRANSIT study, signed an agreement with Teijin for distribution in Japan, and initiated a new program with the DoD.

Operational and scientific highlights for the first quarter 2022 and to date include:

Publication of PREMIUM II trial results for migraine prophylaxis - January 2022

Launch of US telehealth portal and online store - January 2022

➢ nVNS receives Breakthrough Device Designation for Post-Traumatic Stress Disorder - January 2022

➢ Shareholder letter and 2021 business update - January 2022

➢ TRANSIT study enrollment completed - February 2022

➢ Three abstracts presented at International Stroke Conference 2022 - February 2022

➢ Julie Goldstein and Tricia Wilber join Board - March 2022

➢ nVNS selected for DoD BOOST program – April 2022

➢ Sale of New Jersey tax credits completed & funding received – April 2022

Details of SAVIOR-1 published in Frontiers in Neurology – April 2022

In the financial domain, revenues for 1Q:22 were $1.9 million, a 58% increase over the $1.2 million generated in 1Q:21. Net loss was ($5.6) million in 1Q:2 slightly better than our ($5.7) million estimate and comparable to 1Q:21 net loss of ($5.4) million. On a per share basis this was an ($0.08) and ($0.11) loss, respectively.

For first quarter 2022 ending March 31, 2022 and versus the same period in the prior year:

➢ Net sales were $1.9 million, increasing 58%, driven by strong growth in the VA channel with favorable comparative sales and the addition of new VA facilities; commercial revenues rose on the success of recently implemented cash pay models and the availability of online stores; revenue increases were partially offset by weakness in the United Kingdom due to the impact of COVID related issues;

➢ Gross margin was 81% versus 70% due to the favorable absorption of labor and overhead costs, and product mix tilted towards longer duration, higher margin therapy;

➢ Research & development expenses totaled $934,000, rising 87% from $500,000 on several factors including targeted investments to support product development, certain investigator-initiated trials, scientific publications, and investments in development of a next-generation, application-based platform;

➢ Selling, general & administrative expenses of $6.2 million were up approximately 8% from $5.7 million propelled by investments in Direct-to-Consumer awareness campaigns and our newly launched e-commerce platform;

➢ Net loss was ($5.6) million versus ($5.45) million with loss per share ($0.08) and ($0.11), respectively;

As of March 31, 2022, cash, equivalents and marketable securities on the balance sheet totaled $29.9 million. Cash burn was ($4.8) million. No financing cash flows were recognized. Cash burn guidance for the second quarter is operating use of ($3.5) million.


Distribution Agreements

On April 5, 2022, electroCore announced the addition of its first new distribution agreement for 2022 with Teijin Limited for Japan. This brings the total number of distributors to ten covering 23 different countries. The arrangement with Teijin provides upfronts, milestones and license fees in return for the rights to commercialize electroCore’s nVNS technology in Japan for a variety of primary headache disorders. Revenues from the upfront will be recognized over the next four quarters beginning in 2Q:22. Teijin is responsible for all aspects of shepherding the product through the device approval process with the Japanese Pharmaceuticals and Medical Devices Agency (PMDA) and, after approval and payor coverage, enter into an exclusive commercial supply agreement for gammaCore nVNS. Teijin is committed to minimum purchase commitments once the agreement is in place.

Regulatory & Clinical

Breakthrough Device Designation for nVNS in Post-Traumatic Stress Disorder (PTSD)

On January 12, 2022, electroCore announced that nVNS had received Breakthrough Device Designation from the FDA for the treatment of PTSD. The Breakthrough Devices Program provides an accelerated development, assessment and review pathway towards approval. The candidate must provide more effective treatment or diagnosis than existing approaches and meet at least one of the following criteria:

➢ Represents Breakthrough Technology

➢ No approved or cleared alternatives exist

➢ Offers significant advantages over existing approved or cleared alternatives

➢ Device availability is in the best interest of patients

The designation will help the electroCore team obtain feedback from the FDA in order to gain 510(k) clearance. electroCore held a meeting with the FDA on May 2nd to discuss the regulatory pathway forward for nVNS. Given both the Breakthrough Designation and the strong data to date, we anticipate that electroCore will pursue its next indication in this disorder.

Receipt of the Designation was supported in part by research by Drs. Bremner and Inan from the Emory University School of Medicine and Georgia Institute of Technology, respectively, showing that nVNS blocks sympathetic and inflammatory responses to memories of traumatic events in PTSD patients, modulates brain responses to traumatic memory, and reduces PTSD symptoms by 31% when compared to sham stimulation. The Breakthrough Device Program features accelerated development, assessment and prioritized review for devices that provide ‘more effective treatment or diagnosis for life-threatening or irreversibly debilitating human disease or conditions.

FDA Meetings

electroCore met with the FDA on May 2, 2022 in a pre-submission meeting to cover what is needed to successfully develop a number of indications including post-traumatic stress disorder (PTSD), mild traumatic brain injury (mTBI) or concussion, substance abuse and acute stroke among other conditions. Management expects to hold another meeting with the FDA regarding PTSD.

Publications & Patents

SAVIOR-1 COVID-19 Publication – Frontiers in Neurology

On February 11th, 2021 electroCore announced that it had completed enrollment of SAVIOR-1, an investigator-led trial conducted at the Hospital Clínico Universitario de Valencia in Spain for the treatment of COVID-19. On April 8, 2021, topline results for SAVIOR-1 were released. SAVIOR-1 was a prospective, randomized, controlled study evaluating the feasibility and safety of nVNS in COVID-19 patients, taking place between April 2020 and February 2021. The trial enrolled 110 patients, with 97 patients providing baseline data. Patient clinical and biochemical endpoints were tracked over first five days of therapy and adjusted means were compared. The nVNS group showed modest but not significant improvement in oxygen saturation. Adjusted mean decrease in C-Reactive Protein (CRP) from baseline was significantly greater in treated vs nontreated at the 1% level. Although not statistically significant, decreases in procalcitonin and d-dimer were directionally favorable. nVNS was well tolerated with no device-related adverse events.

In April 2021, details from the SAVIOR-1 trial were published in Frontiers in Neurology highlighting the improvements in CRP and procalcitonin, although the difference between the treatment groups did not reach statistical significance. The impetus for the study was guided by research showing that vagus nerve stimulation can reduce or prevent increases in circulating levels of proinflammatory cytokines. The article concluded that nVNS therapy is feasible to use in-hospital and was able to reduce inflammatory biomarkers.

Department of Defense BOOST Program

electroCore was selected to participate in the Department of Defense’s (DoD) Biotech Optimized for Operational Solutions and Tactics (BOOST) Program which is in part funded by the Defense Advanced Research Projects Agency (DARPA). The program seeks to improve training in the intelligence, surveillance, and reconnaissance (ISR) training environment. Investigations done so far using gammaCore have found a 20% acceleration in training and a 35% improvement in memory retention during intelligence, surveillance, and reconnaissance (ISR) training. The same participants also exhibited a 25% improvement in attention and mood. If further study under the BOOST study confirms the initial findings, electroCore may be asked to provide field ready devices to the US Air Force by 2H:23. electroCore is now working on device designs that would enable the device to conform to military specifications in terms of durability and electronic interference. A 510(k) filing may be required prior to use by the Air Force; however this has not yet been determined.

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1. electroCore, Inc. Provides Update on Global Distribution Partners | electroCore. Compiled by Zack’s analysts.

2. electroCore Corporate Presentation March 2022