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Edited Transcript of HSM.TO earnings conference call or presentation 12-Mar-20 9:00pm GMT

Q4 2019 Helius Medical Technologies Inc Earnings Call

NEWTOWN Mar 30, 2020 (Thomson StreetEvents) -- Edited Transcript of Helius Medical Technologies Inc earnings conference call or presentation Thursday, March 12, 2020 at 9:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Joyce N. LaViscount

Helius Medical Technologies, Inc. - CFO & COO

* Philippe Deschamps

Helius Medical Technologies, Inc. - Chairman, CEO & President

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Conference Call Participants

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* Anthony Lamport

Lambda Funds - Investment Professional

* Jeff Porter

Porter Capital Management

* Sukhvinder Kalsi-Ryan;KITE Research Institute;Affiliate Scientist

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Presentation

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Operator [1]

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Good evening, ladies and gentlemen. And welcome to the Fourth Quarter Fiscal Year 2019 Earnings Conference Call for Helius Medical Technologies. (Operator Instructions) Please note this conference call is being recorded and that the recording will be available on the company's website for replay shortly.

Before we begin, I'd like to remind everyone that our remarks and responses to your questions today may contain forward-looking statements that are based on the current expectations of management, including statements regarding the potential FDA marketing authorization of the PoNS device, the success of the company's planned study, the future commercialization of the PoNS treatment, expected future clinical and regulatory time lines, the potential receipt of regulatory clearance of the PoNS device in the United States and projected financial results. These forward-looking statements involve inherent risks and uncertainties that could cause actual results to differ materially from those indicated including those identified in the Risk Factors section of our most recent annual report on Form 10-K as well as our most recent 10-Q filing. Such factors may be updated from time to time in our filings with the SEC, which are available on our website. All statements made during this call are as of March 12, 2020. We undertake no obligation to publicly update or revise our forward-looking statements as a result of new information, future events or otherwise, except as required by law.

I'd now like to turn the conference over to Mr. Phil Deschamps, Helius Medical's Chief Executive Officer. Please go ahead, sir.

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Philippe Deschamps, Helius Medical Technologies, Inc. - Chairman, CEO & President [2]

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Thank you, Kevin. Welcome, everyone, to Helius Medical's Fourth Quarter and Full Year 2019 Earnings Conference Call. I'm joined on the call this evening by Joyce LaViscount, our Chief Financial Officer and Chief Operating Officer; and by Dr. Sukhvinder Kalsi-Ryan, who is an KITE Research Institute at the KITE Research Institute, the research arm of the Toronto Rehabilitation Institute and a member of the University Health Network or UHN.

Let me provide you with a quick agenda for today's call. We'll begin by having Dr. Kalsi-Ryan, provide you with a brief overview of her experience with our PoNS technology and its potential role in the treatment of neurological condition. I'll then review our fourth quarter revenue results and the operating progress that we've made during the quarter and in recent months, including updates on our early commercialization progress in Canada as well as our regulatory strategies in Canada and the U.S. Joyce will discuss our fourth quarter and full year financial results in detail and review our guidance for 2020, which we introduced in our earnings press release earlier this afternoon. I'll then provide a few closing thoughts before Joyce and I open it up for the call for questions.

With that, let me turn it over to Dr. Kalsi-Ryan, all over to you.

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Sukhvinder Kalsi-Ryan;KITE Research Institute;Affiliate Scientist, [3]

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Good afternoon. Thank you for the opportunity to speak about my experience with PoNS. My name is Sukhvinder Kalsi-Ryan, and I am an affiliate scientist at the KITE Research Institute in Toronto, Canada as well as Assistant Professor in the Department of Physical Therapy at the University of Toronto. I am a physical therapist by training and have worked in the delivery of rehab to neurological patients for approximately 25 years.

KITE is a part of the University Health Network and part of the largest rehab institute in North America. The KITE Research Institute is a driving force in rehab research worldwide. My role at the KITE Research Institute is to work at the intersection of discovery science, marketing and commercialization with an emphasis on implementation and uptake of new technologies. My particular research interest is neuromodulation, in the restoration of upper limb paralysis after stroke, traumatic brain injury and spinal cord injury. I am the clinical and scientific lead of the Rocket Clinic where we offer innovative therapies to patients not yet -- to patients that are not yet adopted by the publicly funded system as well as I'm running an active clinical research program where we study implementation science, knowledge transfer of intensified therapies coupled with neuromodulation.

I represent KITE within the current partnership we have with Helius Medical Inc., and my role is to understand the PoNS, experience the product and determine how best it can be delivered to the patients that can benefit the most from it. Essentially, how can we optimize the use of this product within our current patient population and health care system? Within our Rehab Institute, there is a great deal of concussion and TBI research ongoing, and a strong recognition that there is an unmet need for patients outside of the globally funded program as well as within. We are certainly aware of the gap for TBI patients and have a strong commitment to optimizing their access to novel and successful rehab opportunities. We see the PoNS as a novel and potentially effective treatment opportunity, not only for TBI patients, but for many others who suffer chronic gait and balance deficits.

KITE has become involved with Helius Medical Inc. by participating in 2 projects. One is a clinical feasibility program, where Helius has -- is supporting the administration of therapy to 6 individuals so that we can have an experience with the product before embarking upon commercial distribution of the therapy. This clinical experience program alone has fostered 2 private clinics to become commercial distributors and garner familiarity with the technology, with a third clinic seeking out the commercial opportunity.

KITE so far has been flooded with patients, clinicians and caregivers seeking the opportunity to receive the PoNS treatment. At this time, we have enrolled 6 individuals into our clinical feasibility program, and treatment is being delivered at 3 separate locations in the Greater Toronto Area. KITE has created a unique model where we are a publicly funded institute and have built a collaboration with 3 reputable private neuro-rehab clinics to deliver this program. It has been a great success so far and has fostered much interest in this novel therapy that we are very excited to be working with. We are extremely happy that we are now able to deliver a new therapy and experience for ourselves the opportunity that we can deliver to our patients.

The second project we are participating in with Helius is to confirm the superiority of stimulation, coupled with therapy to therapy alone. We are very excited to work on the study as the data for intensification of therapy coupled with stimulation is extremely compelling.

Our experience with the product so far has been quite positive. We have had many referrals to the program, which indicates that there is a definite gap for people suffering with balance impairments. There are conventional options, however, I do not think there is anything like this on the market in Canada or the U.S. at the moment. The time is now, Helius is ahead of the epidural stimulation and transcutaneous markets at the moment. The expansion of the label at this time is key in order for PoNS to stake its claim in the field of neurological rehab.

As mentioned, we, at KITE, have a great deal of experience, with discovery science and then moving technology forward into the commercial area. We see immense promise with the PoNS. It is already Health Canada approved, so it is available commercially, while it is still being studied. This allows for access to the innovation, which will define it in the neuro-rehab world. Coupled with an intensified rehab program that has proven to be beneficial to chronic patients, it is delivered by trained clinicians. It requires no implication. It is safe and deliverable by rehab specialists. Access to the technology is not arduous, therefore, by making rehab specialists, the brokers of this technology. Entry into the clinical practice and the market will be much less challenging than previous similar technologies.

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Philippe Deschamps, Helius Medical Technologies, Inc. - Chairman, CEO & President [4]

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Thank you very much, Dr. Kalsi-Ryan. We really appreciate your insight with respect to your experience with PoNS. I'm going to turn to a review of our fourth quarter revenue performance now. We reported total revenue of $152,000 for the fourth quarter of 2019 compared with $478,000 in the prior year period. Our revenue in the fourth quarter of 2019 was driven by sales to clinics that have been authorized to provide our PoNS treatment in Canada, representing approximately 100% of the total revenue in the fourth quarter of 2019 compared to approximately 0% of the total revenue in the fourth quarter of 2018. As a reminder, for the reason for that, our revenue in the fourth quarter of 2018 was comprised of license fee revenues related to the strategic alliance agreement between HealthTech Connex and our wholly owned subsidiary -- and their wholly owned subsidiary, Heuro Canada or Heuro or Heuro.

Moving

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operational progress in Canada. For anyone on tonight's call, who is new to our story, our PoNS device represents the first and only device authorized and commercially available in Canada for the treatment of chronic balance deficit due to mild to moderate traumatic brain injury or MMTBI. During the fourth quarter, we authorized P3 Health, a leading health care facility located in downtown Toronto to provide PoNS treatment and ended the year with a total of 7 authorized clinical locations, exceeding our goal for the year.

We also continued to make enhancements to our commercial strategy in Canada, which were informed by the feedback and experience gained during early commercialization of our PoNS treatment in 2019. We believe the enhancements of our commercial strategies leave us better positioned to drive improving adoption of this innovative technology in 2020. Recall that we began the commercialization of our PoNS treatment in Canada in March 2019 through our partnership with HealthTech Connex, and together, we created the Heuro Canada operating entity, which was responsible for identifying, authorizing and training the initial clinics in Canada to provide treatment. We learned over the summer and early fall that we needed to evolve this business model in order to directly drive our Canadian commercialization. So on October 30, we acquired Heuro Canada operating entity from HealthTech Connex.

As discussed on our Q3 earnings call, the acquisition of Heuro Canada has provided us with complete control of the marketing and sales function in Canada, which we believe will better position us to improve our process for identifying, authorizing and training new clinics while increasing the pace of adoption of our PoNS treatment over time.

As part of our decision to shift to a direct sales model in Canada, we hired an internal leadership team based in Canada to drive our commercial activities going forward. The team is headed by Mark Leno, our VP of Operations in Canada and includes a Commercial Manager, a Reimbursement Manager and 2 key employees from Heuro. After conducting additional market analysis and field intelligence, Mark and his team began developing our new approach to expand the number of authorized clinics and, in turn, increase the adoption of our PoNS treatment in Canada. A key enhancement to our new commercial strategy in Canada is based on refining the criteria for targeting the clinics we authorized to provide PoNS treatment. Specifically, we're now targeting clinics that fit the following criteria. First, they have to have a large existing commercial focus on strictly neurorehabilitation. Number two, they have to have an established referral network with other medical facilities for the treatment of patients with neurological conditions. And three, they have to have significant reimbursement experience and payer relationships with respect to neuromodulation treatment.

Our initial focus has been the development of the clinic system in Ontario, given the population density in this region, approximately 40% of all Canadians live in Ontario. We're very pleased with the traction we are seeing as a result of this new commercial targeting effort. In the first 2 months of the year 2020, we authorized 7 new clinics -- clinic locations, bringing our authorized clinical network to a total of 14 clinic locations that will provide PoNS treatment. We are currently focused on helping our recently recognized and authorized clinics to become fully operational. So in the first 2 months of this year, we've authorized as many clinics as we did all of 2019.

I want to highlight one other key enhancement to our commercial strategy in Canada that was introduced for 2020. We modified our pricing model based on market feedback from clinicians and patients throughout 2019. The new pricing model is intended to reduce the upfront cost to incent patients to initiate treatment. Initial feedback from clinics and patients so far has been very, very positive.

In tandem, enhancements to our clinic targeting expansion strategy, we continue raising awareness of PoNS treatment by pursuing several marketing initiatives. First, we continued to pursue our digital marketing efforts to raise awareness for our treatment among patients, physiatrists and physical therapists and to generate referrals to our network of authorized clinics. Specifically, we updated our Canadian website, ponstreatment.ca, and continued to develop our marketing on social media sites by creating new content for patients -- for potential patients and the broader traumatic brain injury community. And second, we also continued to leverage our medical affairs specialists to raise awareness among key opinion leaders, like Dr. Kalsi-Ryan, industry associations and advocacy groups. We're focused on collaborating with major concussion-focused advocacy groups in Canada to promote the PoNS treatment to their membership and to their conferences and events.

We are continuing to gather data on patient adherence and treatment outcomes as part of our strategy to generate the requisite support, demonstrating the quality of life and health economic benefits of our PoNS treatment. As I've shared with you on other prior calls, we've been very pleased with both the adherence-to-treatment outcomes for patients treated at our Canadian clinics throughout 2019. This positive trend continues in 2020. We believe the strong patient adherence and the improvements in balance and gait that are consistent with the results of our 2 clinical trials in MMTBI, and based on this gather data, we have produced value dossier, which analyzes the return on investment for insurance -- for insurers for the PoNS treatment, and we've begun to deploy that dossier in our conversations with payers. And as a reminder, our reimbursement strategy in Canada is initially focused on obtaining coverage for PoNS treatment from workers' compensation payers and auto and long-term disability insurance payers. While this is generally a multiyear process, we're very pleased with the developments and the progress to achieve this goal, especially now that we have the data to be able to show the ROI.

Turning on an update to our regulatory strategies. This is a really important part of our conversation because it represents quite a significant change. Beginning with Canada, during the second half of 2019, we began to pursue a label expansion for our PoNS device for the treatment of gait deficit caused by multiple sclerosis or MS. With approximately 93,000 individuals living with MS in Canada, this label expansion will significantly increase our addressable market opportunity. As MS is a progressive and incurable disease, we also believe that this patient population is highly motivated to evaluate and pursue treatment that can lessen the severity and delay the progression of their symptoms. For these patients, our PoNS treatment represents a novel approach to therapy with the potential to improve or restore their gait function, or in other words, help their ability to walk.

We're pleased to announce the submission of a Canadian Class II license amendment application for the treatment of gait deficit in patients with mild to moderate MS symptoms on February 27, 2020. This application to Health Canada was supported by data from our peer-reviewed published clinical studies focused on MS and the real-world data from patients treated in Canada gathered on our -- in our validated database. Specifically, our Canadian submission included positive clinical data from our peer-reviewed published data in MS, showing a clinical and statistically significant results in a comparison of PT plus active PoNS versus PT versus a placebo or nonstimulating PoNS. With a statistical significance of P equals 0.005. And real-world gathered -- real-world data, rather, gathered in Canada, which demonstrates a clear statistical significant improvement in gait function in 39 patients treated in Canada. We have included a summary of these data in our 10-K filed this afternoon for those interested in more detail.

Turning to an update on our U.S. regulatory strategy. As we announced in our strategic update press release on March 2, based on the quality of this data included in our MS submission package in Canada, we've decided to prioritize the MS indication as the pathway to pursue our first U.S. de novo clearance of the PoNS device. The principal reason for this important decision is the large patient population in the U.S., with nearly 1 million people estimated to be living with MS according to the MS society. Additionally, the FDA has deemed this disease with a high unmet -- this disease with a high unmet medical need and has approved a drug called AMPYRA to increase gait speed for patients with MS. Our data, although not exactly the same, compares very favorably to this already approved therapy.

So with all these factors to consider, we believe our data are sufficient to demonstrate a favorable risk-benefit profile as required by the de novo pathway. Thus, this became a more effective and efficient pathway to gain our first clearance for PoNS technology in the U.S. And as previously indicated, we expect to submit for de novo classification for MS in the U.S. in the second half of 2020.

Turning to an update of our application for the de novo classification of PoNS device for the treatment of chronic balance deficit due to MMTBI. We made considerable progress since we last updated the investment community. However, the pace of this progress was longer than our team originally anticipated. We had a presubmission meeting with the FDA in October 2019, which provided us with an important feedback to the potential design of a new clinical trial intended to address the FDA's feedback from our first submission in the spring of 2019, which included a request for additional data demonstrating the benefits of the PoNS treatment compared to physical therapy alone.

In January 2020, we received the FDA's final feedback on the minutes from October presubmission meeting. This included post meeting notes, with additional and very specific recommendations regarding the design of the new trial. We have since incorporated these recommendations and finalized the design for this new trial, we call TBI-002, which will be used to support our new request for de novo classification for the MMTBI. TBI-002 will be a multi-center randomized trial in the U.S. and Canada, consisting of 103 subjects with balance deficit due to MMTBI. It will proceed in 2 phases, a run-in phase, followed by a treatment phase. During the running phase, all subjects will receive 5 weeks of physical therapy alone. Subjects will then be randomized and assigned to 1 of 2 groups in the treatment phase, where they will either receive up to 10 weeks of physical therapy with the PoNS device or up to 10 weeks of physical therapy without the PoNS device. The primary effective endpoint will be a responder analysis.

Based on the design of the TBI-002 study, we estimate that this trial will cost approximately $6 million, approximately half of which we expect to incur in 2021. We have completed the revised protocol and have circulated the clinical trial sites for IRB approval. We expect to begin enrollment in April of this year and are targeting the submission of our application for de novo classification for the FDA for MMTBI in the second quarter of 2021. Given the estimate of the cost of the trial, we're currently evaluating potential sources of funding to continue to execute this trial. In the interim, we're prioritizing our submission for the de novo clearance of MS. And I will -- and as I mentioned earlier, we intend to submit for this indication in the second half of 2020.

With that, let me turn it over to Joyce to walk you through our fourth quarter full year 2019 financial results as well as a review of our 2020 financial guidance. Joyce?

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Joyce N. LaViscount, Helius Medical Technologies, Inc. - CFO & COO [5]

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Thanks, Phil. We've reported revenue of $152,000 for the fourth quarter of 2019 compared to $478,000 in the prior year period. Product sales represented approximately 100% of the total revenue in the fourth quarter of 2019 compared to 0% of the total revenue in the fourth quarter of 2018. Product sales in the fourth quarter of 2019 were generated through the sales of the PoNS device pursuant to supply agreements with 7 neuroplasticity clinics in Canada.

License and fee revenue represented 0% of the sales in the fourth quarter of 2019 compared to 100% of sales in the fourth quarter of 2018. As a reminder, the licensing fee revenue in the fourth quarter of 2018 was a result of the strategic alliance agreement between Heuro and HTC. Our gross loss for the fourth quarter of 2019 was $156,000 compared to gross profit of $478,000 in the prior year period. Operating expenses for fourth quarter of 2019 decreased $272,000 or 5% year-over-year to $5.5 million. The change in operating expenses was driven by a decrease of $560,000 or 28 -- 26% in research and development expenses. The decrease in research and development expenses was primarily due to reduced product development costs. The decrease in research and development expenses was partially offset by an increase of $224,000 or 6% year-over-year in selling, general and administrative expenses, primarily due to an increase in the severance expense over the prior year.

It is important to note that fourth quarter operating expenses reflect the continued benefits from our cost reduction initiatives. We reduced fourth quarter operating expenses by approximately 11% compared to the first quarter of 2019.

Operating loss for the fourth quarter of 2019 was $5.6 million compared to operating loss of $5.3 million for the prior year period. Total other income for the fourth quarter of 2019 was $294,000 compared to $147,000 in the fourth quarter of 2018. The year-over-year increase in total other income was primarily driven by the change in fair value of derivative financial instruments, which was a gain of $80,000 in the fourth quarter of 2019 compared to a loss of $221,000 in the fourth quarter of 2018. The change in fair value of the company's derivative financial instruments was primarily attributable to the change in the company's stock price, volatility and the number of derivative financial instruments being measured during the period.

For the fourth quarter of 2019, we reported a net loss of $5.3 million or $0.19 per basic and diluted common share compared to a net loss of $5.1 million or $0.21 per share -- per basic common share and $0.22 per diluted common share in the fourth quarter of 2018.

Turning to a brief review of our fiscal year-end results. For the full year 2019, total revenue for the full year was $1.5 million compared to total revenue of $0.5 million for the full year 2018. Product sales represented approximately 97% of total revenue for the full year 2019 compared to 0% of the total revenue for full year 2018. Product sales for full year 2019 was generated through sales of the PoNS device, pursuant to a supply agreements with 7 neuroplasticity clinics in Canada. License and fee revenue represented 3% of sales for full year 2019 compared to 100% of sales for full year 2018.

Operating expenses for the full year 2019 decreased $2.5 million or 9% year-over-year to $24.6 million compared to $27.2 million in 2018. The change in operating expenses was driven by a $1.9 million or 19% year-over-year decrease in research and development expenses, which was primarily due to reduced product development costs.

In addition, our selling, general and administrative expenses decreased by $693,000 or 4% year-over-year due primarily to the lower stock-based compensation expense, which was impacted by a change in the company's functional currency in second quarter of 2018.

Loss from operations for the full year 2019 was $24 million compared to a loss from operations of $26.7 million for the prior year period. Total other income for the full year 2019 was $14.2 million compared to an expense of $1.9 million in 2018. The year-over-year change in total other income expense was driven primarily by the change in foreign exchange gain/loss, which resulted in a gain of $14.1 million for the full year ended December 31, 2019, compared to a loss of $3.6 million in the prior year period. Net loss for the full year 2019 was $9.8 million or $0.37 per basic and diluted common share compared to a net loss of $28.6 million or $1.26 per basic and diluted common share for the full year 2018.

As of December 31, 2019, we had approximately $5.5 million of cash compared to $25.6 million at December 31, 2018. We had no outstanding debt obligations in either period. The decrease in cash during 2019 was primarily driven by net cash used in operating activities of $21 million and net cash used in investing activities of $769,000 partially offset by $1.7 million cash provided by financing activities.

As discussed on our third quarter conference call, we had an important strategic transaction during the fourth quarter. On October 30, 2019, we entered into a share purchase agreement with HTC, our commercial development partner in Canada, to purchase Heuro Canada Inc. Under the terms of the agreement, a total consideration of approximately CAD 2.1 million or USD 1.6 million was allocated as follows. A little more than half of the total consideration was for the repayment of HTC's investment in Heuro's initial commercial infrastructure, including the establishment of 5 authorized PoNS clinics across Canada. Approximately 35% of the total consideration was related to the outstanding receivable of $750,000 for exclusivity, which was signed as part of our original agreement in September of 2018. Finally, approximately 25% of the total consideration was related to 55 PoNS devices, which the company provided to HTC. These amounts were partially offset by the sale of exclusivity rights granted to HTC to provide PoNS treatment in the Fraser Valley and Vancouver metro regions of British Columbia. More details on the agreement and related co-promotion agreement are available in our Form 10-Q for the third quarter ended September 30, 2019, and our Form 10-K filed earlier this afternoon.

Let me now turn our review to our 2020 revenue guidance, which we introduced in our earnings release this afternoon. For the full year 2020, we expect total revenue of approximately USD 2 million. For modeling purposes, the full year 2020, we expect to treat approximately 300 patients. Our revenue guidance assumes an exchange rate of CAD 1 to USD 0.75.

With that, I'll turn the call back to Phil.

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Philippe Deschamps, Helius Medical Technologies, Inc. - Chairman, CEO & President [6]

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Thank you so much, Joyce. Okay. So stepping back, it's pretty clear, 2019 was a very difficult year. Through the adversity, however, of the 2019 FDA denial, we're really proud of the significant accomplishments we've made during the course of this past year. Our team was successful in bringing our PoNS technology to clinics and patients across Canada, and we were able to hone our commercial strategy as we better understand the dynamics of commercializing this innovative therapy. We were able to develop another path to U.S. regulatory clearance based on solid clinical evidence of efficacy and safety in MS. Our team is focused on pursuing these opportunities as efficiently as possible, and we look forward to providing updates on future progress.

Before we open it up to questions, I'd like to close by thanking our employees for their exceptional effort and dedication in 2019. I'd also like to thank our customers and stockholders for their support and those on the call this evening for your interest in Helius Medical Technologies. I'm very thankful that you all have helped us provide this life-changing treatment to people who need it.

Joyce and I are happy to turn it over to Kevin for the questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question today is coming from Jeff Porter from Porter Capital.

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Jeff Porter, Porter Capital Management [2]

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You mentioned that there's an approved MS drug, I think you said it's called AMPYRA. Can you compare and contrast your data and safety with the data that the drug was approved with?

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Philippe Deschamps, Helius Medical Technologies, Inc. - Chairman, CEO & President [3]

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Certainly, so AMPYRA was approved about 4, 5 years ago, was generating in the U.S. about $700 million a year. Their approval came on the basis of an improvement in what's called gait speed. And so it's a measurement of your ability to walk. The speed with which you walk 25 feet. Their data showed that about 35% of the patients overall had about a 20% increase in their gait speed. So fairly limited. And the side effect profile was -- to neurological drug was quite significant. And the principal side effect in about 12% of patients was an increase in seizures. If we compare that to the data that we have both from our clinical trials and from our real-world evidence, about 57%, 56.7% to be precise, of patients had a response to our treatment. And for us, we measure gait function so it's not exactly gait speed. But in gait function, we saw a 56% -- I'm sorry, 57% increase in the functional capacity for your gait. So quite a bit more. And then the safety profile of our product after 42,000 treatments -- individual treatments, we've not seen any side effects related to the device, serious adverse events of any kind.

And so let me also add that when we looked and audited what the -- what other products have been approved through the same process, the data set that we have in MS is roughly similar to other data sets that have been supplied through the neuro division to be able to get approved. And the biggest difference between this data set and the TBI data set is right off the bat. We have statistically significant differences versus PT alone. That's what FDA was looking for when -- in their ask of us to give them new data on the TBI side. So quite significant differences, and we feel, obviously, pretty good about our opportunity to be able to get cleared.

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Jeff Porter, Porter Capital Management [4]

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So in 510(k) de novo filing, is there part of that filing that allows you to bring to the FDA's attention your data versus an approved drug out there as well as your data versus potentially any other therapies that have been approved?

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Philippe Deschamps, Helius Medical Technologies, Inc. - Chairman, CEO & President [5]

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Yes, indeed. That will be part of the preamble for our submission. So that's all a fair game. And that will be led by our counsel, who has an enormous amount of experience dealing with this division.

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Jeff Porter, Porter Capital Management [6]

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And will you be able to utilize the safety set and all the manufacturing parts of the previous 510(k) filing for the TBI? Can you just kind of lift those sections and include them in this one?

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Philippe Deschamps, Helius Medical Technologies, Inc. - Chairman, CEO & President [7]

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Not quite, Jeff. What we have to do for the other section is we have to make sure that everything that we had said for TBI before is also true for MS. And that's why we -- it'll take us about 3 or 4 months to complete our filing because ultimately, we have to compare and make sure that we prospectively compare human factors, if someone with MS similar to someone with TBI and all of these kinds of things, and then make sure that we update all of the files based on the experience that we have around the world and, obviously, mostly in Canada now.

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Jeff Porter, Porter Capital Management [8]

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And finally, you mentioned that, I think, it was February 27, you filed for label extension in Canada. What is the expectation of the time line for your response to that filing?

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Philippe Deschamps, Helius Medical Technologies, Inc. - Chairman, CEO & President [9]

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So in a noncoronavirus world, it's supposed to be 15 days. So I can only rely on what our experience has been, Jeff. Last time, our submission went in and 2 weeks later or 14 days later, we got cleared. We submitted on the 27th. We actually audited over the last couple of years. In normal times, it looks a little more like 25 to 30 days. But who knows with the coronavirus, what impact that has, if any, we really don't know. So our best guess is that, but I stopped predicting when a clearance has come through. All I know is that we had a really strong submission based on the questions that Health Canada asked us.

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Jeff Porter, Porter Capital Management [10]

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Okay. And just a last follow-up. We're all aware that the addressable market for MS is large. Do you feel like, up in Canada assuming we get clearance there that your pace of PT and patient adoption will be accelerated from what you experienced in TBI?

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Philippe Deschamps, Helius Medical Technologies, Inc. - Chairman, CEO & President [11]

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So yes, here's a couple of dynamics that we're looking at. First of all, patients with TBI and the therapy, the treatment cost is quite high. And so patients with TBI know that next year, they won't be any worse. There's no disease process going on there. So essentially, their patients -- or a lot of them are patients saying, hey, I'm going to wait for reimbursement. The dynamics of an MS population are very different. They know that next year, they will be worse, or likely be worse off than they are today. Canada has the highest incidence of MS anywhere in the world. So it has a really, really well-organized patient support system, advocacy and all of these things. So we believe that those dynamics are going to be better for that. And then, of course, we have the benefit of Montel Williams who has MS and will be able to go across the country and talk about -- finally talk about what produced his recovery. So we think that those dynamics will certainly help us in making sure that we accelerate things. But let me just conclude with, we do believe that the clinics that we just signed up with the new criteria are also going to make a really big difference regardless of that dynamic.

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Operator [12]

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(Operator Instructions) Our next question is coming from Anthony Lamport from Lambda Management.

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Anthony Lamport, Lambda Funds - Investment Professional [13]

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Could you comment on why the increase in revenues for this year is only maybe 30% over the revenues for last year, since you have so many more clinics operating?

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Joyce N. LaViscount, Helius Medical Technologies, Inc. - CFO & COO [14]

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Yes. So the way we're looking at that is the $2 million in the U.S. revenue guidance, it seems approximately 300 patients will be treated. When we compare that to 2019, we had 122 patients that were treated over the course of the time. As we look at the number of clinics, the number clinics has certainly increased. It does take some time to get those clinics up and running in terms of being operational. In general, from a clinic perspective, they're usually booked about 2 months out. So even once they get authorized, it will take a little bit of time for them to work the PoNS treatment in and identify the appropriate patients for the treatment.

The other thing, from an overall revenue guidance perspective, Tony, is that our model. We had a price reduction in 2020, and it's basically what we're looking at is, we're looking at CAD 9,500 for the PoNS as opposed to it was closer to CAD 14,000 in the past. So we have taken down our price. We're treating more patients than we were, and we'll continue to expand across. But we really want to focus on the number of patients that are being treated as opposed to looking at the number of clinics and clinic capacity and the rest.

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Philippe Deschamps, Helius Medical Technologies, Inc. - Chairman, CEO & President [15]

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Did you have a follow-up, Tony? Or does that answer your question?

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Anthony Lamport, Lambda Funds - Investment Professional [16]

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Well, I guess it seems to me that the -- when you get the clearance for MS, are you also budgeting in those 300 patients, treating people for MS? Or are you saying you won't treat anybody next year -- this year?

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Philippe Deschamps, Helius Medical Technologies, Inc. - Chairman, CEO & President [17]

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So right now, since we don't have clearance, we don't count on anything happening. So basically, this is a forecast based on our clinics with our existing framework.

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Anthony Lamport, Lambda Funds - Investment Professional [18]

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If you just gave a guess, this is not your official forecast, but you've indicated that people are -- have a greater urgency of getting treated in MS because they're going to deteriorate if they don't. I guess if you receive approval by the end of March, so I'd say, or end of April, doesn't make too much difference, what might revenues be -- addition of revenues be from this new area?

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Philippe Deschamps, Helius Medical Technologies, Inc. - Chairman, CEO & President [19]

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Look, I feel much, much more comfortable, Tony, and for everyone on the phone to make those predictions when we get our clearance and know exactly when it comes, how it's going to come through, and we'll update it as soon as that comes through. But right now, I just don't feel comfortable speculating. We haven't been able to promote. We don't know how people are going to come into the system. So there's too many unknowns right now to be able to give -- it would be a wild guess.

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Anthony Lamport, Lambda Funds - Investment Professional [20]

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Well, so your wild guess is 0, right?

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Philippe Deschamps, Helius Medical Technologies, Inc. - Chairman, CEO & President [21]

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Today, it is. It will be different once we get our clearance.

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Anthony Lamport, Lambda Funds - Investment Professional [22]

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Well, I hope your stock doesn't hit 0 first. What -- the second question, obviously, is how are you coming on financing?

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Joyce N. LaViscount, Helius Medical Technologies, Inc. - CFO & COO [23]

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So as of the -- as we said, that we had a $5.5 million in cash as of year-end, we expect to burn about $5 million through April. And as we disclosed in our 10-K, we have cash to fund our operations into May. Based on our current strategic plan and what we're doing is we put an ATM in place in the first quarter of 2020. And we're thinking that our strategic plan has -- that we need about $17 million for 2020, with an additional $3 million to fund the TBI trial. So when we look at all of those pieces, what we'd like to do is, we're evaluating the different sources of capital. We'd like to raise a portion of the $17 million that we feel that we need at a time rather than raising it all at once. And we plan to execute our plans to deliver milestones so that we can create value during the year as we look to take additional funding in.

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Anthony Lamport, Lambda Funds - Investment Professional [24]

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And your milestones are to basically show about $2 million of revenue and get clearance in Canada for MS, right?

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Joyce N. LaViscount, Helius Medical Technologies, Inc. - CFO & COO [25]

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Right.

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Philippe Deschamps, Helius Medical Technologies, Inc. - Chairman, CEO & President [26]

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We think that the -- obviously, the $2 million milestone is a year-end one. We'd like to believe that we're going to get our clearance for MS and that would signal strength with respect to our ability to get to a regulatory clearance. And then we expect that, that would -- although we can't guarantee, but we expect that, that will give us a good response for our stock and try to do the raise before then. All of that will depend on the timing, of course, of the MS indication when we hear from Health Canada.

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Operator [27]

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(Operator Instructions) Our next question is coming from [Randy Hag], a private investor.

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Unidentified Participant, [28]

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Great updates. Actually, my question was the same as the last caller. I was just curious about what the funding strategy is? And more on that what's your -- kind of what's your monthly burn is at right now? I think that was sufficiently answered by the previous caller. So I get kind of trying to raise capital in tranches as you move forward. I think, obviously, that's really only option at this point. And this approval would certainly be helpful in getting that done. So all of the shareholders have been through quite a roller coaster with some previous financings. And obviously, we've talked about what's up ahead, and there is no certainty. But I think this new MS opportunity, both here in Canada, does give us incidentally more upside and potential to raise capital at some more meaningful levels than what we've had to do in the past. So I'm very encouraged by that, and very thankful to hear that on the call today.

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Philippe Deschamps, Helius Medical Technologies, Inc. - Chairman, CEO & President [29]

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Thank you, Randy. We certainly are too. And I get to be the one that shares that information. And I just want to use this opportunity to compliment our regulatory team and our medical team. It's all due to their incredible expertise and our outside advisers that we were able to -- and not the least of which is Joyce in putting together our real-world validated database in Canada that allowed us to generate that data. Without those things, we would not have been able to submit for our clearance for MS. So we're excited about a very tough year, as you said, Randy, that we've tried everything we can to create value.

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Operator [30]

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Thank you. We've reached end of our question-and-answer session. Ladies and gentlemen, that does conclude today's teleconference. You may disconnect your lines at this time, and have a wonderful day. We thank you for your participation today.

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Joyce N. LaViscount, Helius Medical Technologies, Inc. - CFO & COO [31]

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Thank you.

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Philippe Deschamps, Helius Medical Technologies, Inc. - Chairman, CEO & President [32]

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Thank you.