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Edited Transcript of HSM.TO earnings conference call or presentation 12-Nov-19 1:00pm GMT

Q3 2019 Helius Medical Technologies Inc Earnings Call

NEWTOWN Dec 4, 2019 (Thomson StreetEvents) -- Edited Transcript of Helius Medical Technologies Inc earnings conference call or presentation Tuesday, November 12, 2019 at 1:00:00pm 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

* Steven Michael Lichtman

Oppenheimer & Co. Inc., Research Division - MD and Senior Analyst

* Ryan Scott;Advantage 4 Athletes

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Presentation

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Operator [1]

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Good morning, ladies and gentlemen, and welcome to the Third Quarter of Fiscal Year 2019 Earnings Conference Call for Helius Medical Technologies. (Operator Instructions) Please note that this conference call is being recorded. (Operator Instructions)

Before we begin, I would 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 filed with the SEC on March 14, 2019, and as well as those in the Form 10-Q for the third quarter ended September 30, 2019, which was filed with the SEC this morning. 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 November 12, 2019. 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 would now like to turn the call 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 very much, operator. Welcome everyone to Helius Medical's Third Quarter of 2019 Earnings Conference Call. I'm joined on the call today this morning by Joyce LaViscount, our Chief Financial Officer and Chief Operating Officer; and by Dr. Ryan Scott, who is the clinic director at Advantage 4 Athletes Training Center and Therapy Clinic in Markham, Ontario, one of the Canadian clinics that is authorized to provide PoNS treatment.

Let me provide you with a quick agenda for today's call. We'll begin today's call by having Dr. Scott provide you with his perspective on our PoNS treatment and share his experience of one of the initial patients that was treated at his clinic. Following his remarks, I'll provide a brief update on outcomes from the patients that have recently completed PoNS treatment across the Canadian clinics, and then I'll review our third quarter revenue results and discuss some of the important operational progress that we made during the quarter, including updates on our commercial activities in Canada and our U.S. regulatory strategy. Joyce will discuss the third quarter financial results in detail and review our guidance for 2019, which we updated in our earnings press release this morning. I'll then provide a few closing thoughts before Joyce and I open the call to questions.

With that, let me begin with introducing Dr. Scott. Thank you, Ryan, for joining us today. And if you could just share your thoughts with the caller -- or the people on the call.

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Ryan Scott;Advantage 4 Athletes, [3]

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Great. Hello, everybody. Thank you for having me. I am indeed a chiropractor and have the rehabilitation clinic based in Markham, Ontario, which is in the Greater Toronto area. I have a practice which is focused on concussion management, sport therapy and neurologic conditions. I have been working with a variety of patients with neurological issues stemming from mild-to-moderate traumatic brain injury for over 6 years. And I'm now also a certified PoNS trainer. I first heard about the PoNS after reading Norman Doidge's book, The Brain's Way of Healing. This was initially of interest to me as my father suffers from Parkinson's disease, and I set out to learn as much as I could about the PoNS. While there is limited research on the PoNS and its impact on PD, I began to realize the impact it could have on the TBI population I was already servicing. Like many new treatments, I'm fully aware that the research and development takes time. As my father passes his 80th birthday this year, ultimately, this may not be the answer for him. But the way I see it, I can create a legacy in his honor. All the people I can help with this treatment will be as a result of the dedication of a son to his father.

The difficulty for many patients with mild-to-moderate traumatic brain injury is a dreaded term, maximum therapeutic benefit, which means that the individual has plateaued in his or her therapy. Such a designation tells them that they now have to get used to a new normal and learn to live with whatever chronic symptoms that remain. As I learned more about the PoNS and then became a certified PoNS trainer, I began to see the possibility of so much more. By improving a patient's balance, we can help restore some important aspect of their lives. We've seen grandmothers, students, husbands, wives and parents, whose life course was disrupted by their injuries, get back on track. They're able to better function in society and enjoy so many of life's pleasures that have eluded them due to their injuries.

One of our first patients treated with PoNS was a grandmother who had mild-to-moderate traumatic brain injury probably more on the mild side. Before her injury, she was an active member of her church community and just a fun outgoing person. When she arrived at our clinic after being referred by a nearby trauma center, she was 5 years post motor vehicle accident, her car being struck by a semi. She had difficulty walking a straight line, had great difficulty being in water, such as a pool. She fatigued very easily and was overwhelmed in noisy environments. This led her to retreat from all of her community activities, refrain from most social activities and heartbreakingly, she avoided spending time with her grandchildren. This patient had just recently completed the -- has just recently completed the 14-week PoNS treatment. Despite all I have read about the PoNS and its potential to help patients, I was completely in awe with her results. With her dedication to her therapy, we watched her balance steadily improve. And as a result, her gait corrected itself, such that she could now enjoy walks with her family. All while turning her head side to side and holding a conversation. She feels like she has her life back. It should be noted and she would be the first to tell you, she had 5 years of excellent therapy prior to PoNS treatment. She was a dedicated patient, and a patient who worked very hard to get better, yet she had plateaued. The PoNS treatment for her seemed to be the missing component to her recovery.

The fact that we now have an opportunity to potentially enhance and accelerate the brain's neuroplastic ability is exciting. We have been operating with the PoNS at our clinics since June of this year, and I'm happy to report that while individual results may vary, not all patients respond to PoNS. My patients have seen improvements in the areas of balancing gait each in different degrees, but improvement, nonetheless. As with any therapy, patient adherence, the amenability of the condition to the therapy will always play a determining role in how far the patient ultimately progresses or not. Our facility takes advantage of decades of coaching experience to drive home a message of relentless -- relentlessness in therapy and dedication to the process. In doing this, we arm our patients with new, yet realistic expectations. We are dedicating to help people live their best lives so they can positively enhance the lives of those they influence. The PoNS treatment is the next evolution in allowing us to fulfill this mission. And I thank you for the opportunity to join you today.

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

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Thank you very, very much, Dr. Scott, and I really appreciate what you do to help people get better. We'll talk to you later.

In addition to some of the positive feedback that we've received from Dr. Scott and other certified PoNS trainers, we continue to gather anonymized data on the initial MMTBI patients in Canada as they complete the 14 weeks of PoNS treatment. We've been pleased to see that the real-world results in Canada remain extremely consistent with the pattern of positive change that we saw in our 5- and 14-week randomized clinical trials in MMTBI. Patients treated at these clinics continue to demonstrate improvements in their balance and gait both during the first 2 weeks of PoNS treatment, which is conducted at the clinic as well as the following 12 weeks of treatment, which is primarily done at home. They also demonstrate a meaningful clinical difference in their comfortable gait speed, which represents an important indicator of their ability to walk. Additionally, we continue to see high patient adherence to treatment, which means patients adherent with mean patient adherence for treatment and over the 90% range. Bottom line, we've seen our product work and deliver the results expected based on the intended use and prior clinical evidence, and we're pleased to bring it to patients in Canada who need it.

Turning to a review of our third quarter performance. We reported total revenue of $150,000 during the third quarter of 2019. Our revenue consisted of sales to clinics that have been authorized to provide PoNS treatment in Canada. It's important to note that revenue recognition as required by generally accepted accounting principles or GAAP is not always indicative of a product's performance, especially during the launch phase of a novel technology like PoNS. One metric that helps to explain the current performance of PoNS is the monthly patient start information. While revenue recognized, which is based on orders received has fluctuated over the first 3 quarters, the actual patient treatment starts, which are driven by clinic activity have been fairly consistent on a quarter-to-quarter basis. In Q1, we had 23 treatment starts; in Q2, we had 38 treatment starts; and in Q3, we had 32 treatment starts. The modest decline in Q3 is due to the fact that patients were interfered with scheduling their 14 weeks treatment in the month of August due to summer vacations.

We're pleased with the progress of the PoNS treatment and look forward to continued growth in the fourth quarter. The primary drivers of our patient starts in Q3 were the 2 founding clinics in Montreal and Surrey as well as the 3 new clinics that became operational in Q3. As the founding clinics worked down their initial inventory purchase, the revenue performance for Q3 was primarily from the 3 new clinics. As of the end of Q3, we're seeing a better alignment between the revenue performance, patient starts and inventory levels in the clinics.

Moving to an overview of our recent operational progress in Canada. During the third quarter, we continued to make important progress in advancing our commercialization strategy in Canada where our PoNS device is the first and only device authorized for the treatment of chronic balance deficit due to mild-to-moderate traumatic brain injury, or MMTBI. First, we expanded access to our PoNS treatment by completing the site training and authorization process with the 3 new clinics that I just mentioned, which became fully operational in the third quarter and we expect to continue expanding the authorized clinics networks throughout Canada in Q4 2019.

Second, in addition to expanding access to our PoNS treatment, we continued to pursue several marketing initiatives to raise awareness of PoNS treatment among patients, automobile insurance, injury lawyers and workers' compensation payers. Specifically, we continued our digital marketing campaign to increase awareness of the PoNS treatment among targeted patients, physiatrists and physical therapists, with the goal of generating new referrals to our clinics. Our efforts resulted in 66 million impressions that yielded 4 million video views, 41,000 site sessions and 356 clinic consultations during the quarter. We have gathered video testimonials from treated patients and clinicians discussing their experience with PoNS. The video testimonials can be viewed on our Canadian website, www.ponstreatment.ca. In addition, our medical affairs specialists continued to raise awareness of PoNS treatment among key opinion leaders through 3 grand round presentations in key trauma centers in cities in which we have clinics. They also targeted programs to other important constituents in the industry, including industry associations and advocacy groups.

Third and most importantly, during the third quarter, we made a strategic

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fee to establish an operating entity, Heuro Canada. Heuro was originally established under the joint control of both companies responsible for building our initial clinical infrastructure in Canada by identifying, authorizing and training new clinics and to market our PoNS treatment in Canada. This initial model for commercialization proved to be effective in opening clinics, helping us to meet our initial goals that we set out at the beginning of 2019 to engage at least 5 Canadian clinics to provide our PoNS treatment by year-end. However, we continued to gain more experience during the early commercialization phase in Canada. We recognized that this initial model was very effective in identifying, authorizing and training new clinics, but we felt we can improve the pace of adoption for PoNS over time by taking full control of the Heuro marketing and sales function.

This realization culminated in an agreement signed on October 30, to acquire Heuro Canada from HTC. The acquisition of Heuro Canada represents an important strategic decision for our company as we believe it will enable us to improve our commercial efficiency and effectiveness and ultimately accelerate the adoption of our novel technology in Canada. In anticipation of this strategic change, we moved quickly to hire our own personnel to drive our Canadian performance. We hired Mark Leno as our VP, Canadian Operations to lead our commercial efforts in Canada. Mark is an accomplished medical device commercial leader based in Toronto with prior experience at Boston Scientific and J&J. We also added a commercial manager, integrated 2 key employees from Heuro and added a reimbursement manager to complete the Canadian commercial team. We're very pleased with the way the new team has stepped into driving our commercial activities.

As a result of the decisions we've made during the quarter, we believe we're better positioned to drive faster adoption of our PoNS treatment in Canada, and we're seeing the benefits of these changes in early Q4 results already. Securing reimbursement by insurers for our treatment is a key goal of the company. We're happy to report that we've obtained 2 fully reimbursed patient treatments from different private insurance -- insurers in the quarter. We are now engaged through our reimbursement specialist to use these 2 successes to start multiple -- to target multiple insurers to formalize the reimbursement process and continue to expand reimbursement, which is critical to the ongoing success in Canada. We're also supporting these efforts by continuing to systematically gather anonymized outcomes and compliance data on patients treated in Canada, to make our reimbursement presentations more meaningful to private and public insurers.

Lastly, as a natural evolution of our regulatory strategy in Canada, we have engaged with Health Canada to pursue a potential important label expansion for the treatment of balance and gait disorder called by -- caused by multiple sclerosis or MS based on the positive results of 2 peer-reviewed studies in MS. We'll report further progress on this as things progress through Health Canada.

Turning to an update on our U.S. regulatory strategy. During the third quarter, we continued to engage with FDA as we refine our strategy to resubmit an application for de novo classification of the PoNS device for MMTBI in the U.S. Following an informational discussion with FDA in June, which was focused on the issues raised in its April response to our submission, we worked to develop our resubmission strategy with input from a team of external regulatory advisers, and we engage -- that we engaged to help us navigate this process. We continued to engage with FDA to discuss our resubmission strategy by participating in a pre-sub meeting with the FDA. The pre-sub meeting took place in October and provided us with important feedback needed to help finalize the design of a new study intended to support the request for de novo classification of the PoNS device.

FDA accepted our proposed plan to conduct a single-arm clinical study as opposed to a new randomized study. This study is designed to provide patients with 5 weeks of physical therapy or PT alone and compare these results versus the existing results from the active arm of our TBI 001 protocol. The FDA also recommended extending the study of PT alone patients for an additional 5 weeks of treatment involving PT and PoNS. This will allow us to compare the effects of 5 weeks of PT alone to the effect of an additional 5 weeks of treatment of 5 weeks of PT plus PoNS within the same patient population. We believe this strategy will maximize the probability of a successful trial to answer FDA's questions in its letter denying our initial application for the de novo classification. We estimate that we'll be able to submit a new request for de novo classification based on the results of this 42-patient study in the third quarter of 2020.

Following the presubmission meeting, we initiated formal study start up activities, including site selections, protocols, contracts, budgets, site engagement and planned initiation visits to support our first patient enrollment in January 2020. We're very pleased to have a solid direction in our clinical plan and remain in close communication with FDA as appropriate throughout the progress of our trial.

With that, let me turn it over to Joyce to walk you through the third quarter financial results. Joyce?

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

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Thanks, Phil. We reported revenue of $150,000 for the third quarter of 2019 compared to no revenue in the prior year period. Our revenue in the third quarter was primarily driven by sales of our PoNS devices to the 3 new clinics in Toronto, Calgary and Ottawa.

Our gross profit for the quarter -- for the third quarter of 2019 was $61,000 compared to no gross profit in the prior year period. Operating expenses for the third quarter of 2019 increased $907,000 or 19% year-over-year to $5.8 million. The change in operating expenses was primarily driven by an increase of $1.7 million or 66% in selling, general and administrative expenses. The increase in selling, general and administrative expenses was primarily due to a $1 million increase in stock-based compensation expense, a noncash charge resulted -- resulting from the accelerated vesting on options and severance-related to the elimination of the Chief Commercialization Officer position as well as an increase of $600,000 due to higher severance costs, combined with a higher headcount to support our commercial launch in Canada.

The increase in selling, general and administrative expenses was partially offset by a decrease of $803,000 or 35% year-over-year in research and development expenses, primarily due to reduced product development costs related to the completion of the PoNS device development. Importantly, our third quarter operating results reflect the early benefits from the cost reduction initiatives where we have reduced operating expenses approximately 20% compared to the first quarter of 2019. We expect to continue to reduce our operating expenses in the fourth quarter, which includes salary reductions and deferrals for executive staff compensation which will reduce our cash burn and extend our remaining runway into the first quarter of 2020.

Operating loss for the third quarter of 2019 was $5.7 million compared to an operating loss of $4.9 million for the prior year period. Total other income for the third quarter of 2019 was $148,000 compared to $373,000 in the third quarter of 2018. The year-over-year decrease in total other income was driven primarily by the change in fair value of derivative financial instruments, which was a gain of $196,000 in the third quarter of 2019 compared to $368,000 in the third 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 third quarter of 2019, we reported a net loss of $5.6 million or $0.21 per basic and diluted common share compared to a net loss of $4.5 million or $0.19 per basic and diluted common share for the third quarter of 2018. Our Form 10-Q for the period ending September 30, 2019, includes a reconciliation between basic and diluted net income and loss per common share for the third quarters of 2019 and 2018.

As of September 30, 2019, we had approximately $9 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 the first 9 months of 2019 was primarily driven by net cash used in operating activities of $16.5 million and net cash used in investing activities of $0.3 million, offset by $0.2 million of cash provided by financing activities. Excluding the impact of the Heuro acquisition, we anticipate our fourth quarter cash burn to be in the range of $5.0 million to $5.4 million, which will further reflect our cost reduction effort.

Subsequent to the end of the third quarter, on October 30, 2019, we entered into a share purchase agreement with HTC, the company's commercial development partner in Canada to purchase Heuro Canada. Under the terms of the agreement, a total consideration of approximately CAD 2.1 million or USD 1.60 million. The total consideration consists of one, a little more than half the total consideration was for the repayment of HTC's investment in Heuro's initial commercial infrastructure, including the establishment of the 5 authorized PoNS clinics across Canada. Second, approximately 35% of the outstanding receivable of CAD 750,000 for exclusivity, which was signed as part of our original agreement with HTC in September of 2018. Third, approximately 25% related to the 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 in Vancouver Metro regions of British Columbia. It is important to note that HTC operates one of the founding clinics, which is located in Surrey, British Columbia, and will continue to exclusively purchase PoNS devices from Helius.

And finally, in connection with the share purchase agreement, the company entered into a clinical research and co-promotion agreement with HTC, whereby each company will promote the sales of the PoNS treatment and neuro-patch device throughout Canada. 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.

Now let me turn to a review of our 2019 revenue guidance, which we updated in our earnings release this morning. For 2019, we now expect total revenue in the range of USD 1.5 million to USD 1.6 million compared to our prior revenue guidance range of USD 1.6 million to USD 2 million. The updated revenue guidance range contemplates lower revenue contribution from one of the founding PoNS clinics in Surrey, British Columbia. Specifically, our prior guidance range of $1.6 million to $2 million had assumed contributions from sales to the Surrey Clinic during the second half of 2019 of approximately $500,000. The expected demand from the Surrey Clinic in the second half of 2019 was included in the total consideration for our new agreement with HTC, and thus will not be recognized in our revenue in 2019 as our original guidance had contemplated. Partially offsetting the impact from the lower-than-expected Surrey revenue in the second half of 2019 is the incremental contribution from the 3 new clinics that became fully operational in the third quarter.

Additionally, for modeling purpose, for the full year 2019, our revenue guidance assumes an exchange rate of CAD 1 to USD 0.75. We continue to expect our revenue will be generated primarily from contributions by the neuroplasticity clinics that are fully operational in treating patients in Canada.

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

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

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Thank you very much, Joyce. In closing, we're encouraged by how quickly we're learning and responding to the dynamics of commercializing PoNS in Canada. Our new team led by Mark Leno has already made tremendous progress, including getting the first reimbursed PoNS treatments in Canada to build on. The early commercialization progress we've made during the first 9 months of this year, which enabled us to generate $1.3 million in revenue in an authorized 5 clinics is consistent with our expectations other than the change related to the devices included in the Heuro transaction.

Likewise, we're equally pleased with the progress that we've made with respect to our U.S. regulatory strategy, where we're pursuing resubmission in informed, efficient and strategic manner. In the fourth quarter, we're going to focus our efforts on establishing new authorized clinics and driving our Canadian sales, exploring label expansion in Canada in MS, aggressively pursuing reimbursement for our initial indication in Canada and continuing our planned U.S. clinical trial work to enable resubmission to FDA. We look forward to building on these accomplishments and bringing 2019 to a strong close by driving continued execution of our commercial and regulatory strategies, with the ultimate goal of providing relief to patients suffering from the symptoms of neurological disease or trauma.

I'd like to thank our employees for their dedication to this goal and for their efforts during the third quarter as well as everyone on this morning's call for their interest and support for Helius Medical Technologies. I'd also like to particularly thank the executive staff for compromising their -- and deferring some of their salary and to help support the effort of making sure that our cash lasts as long as we possibly can.

Joyce and I are happy to take questions now. If everyone has any questions following the call, please feel free to submit them to our Investor Relations e-mail address at investorrelations@heliusmedical.com.

Alternatively, if you'd like to set up individual sessions, we'd be happy to accommodate you. With that, operator, I'll let you open it for call -- for questions right now.

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Questions and Answers

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Operator [1]

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(Operator Instructions) And our first question will come from the line of Steven Lichtman with Oppenheimer & Co.

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Steven Michael Lichtman, Oppenheimer & Co. Inc., Research Division - MD and Senior Analyst [2]

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So you talked about marketing efforts and mentioned a number of metrics. Can you talk about increased traffic at the opened PoNS centers in Canada as a result of some of the online work that you've done? Any sort of trend that you can provide, what you're seeing on the ground here over the last several months would be helpful?

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

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Sure. As I indicated in the script, about 356 different engagements were had in the clinics. The dynamics of those engagements were -- people are essentially identifying and saying, well, this is potentially good for me, there is a mix of people who are early adopters, who basically say, sign me up. There's also a group of people who say, okay, I'm looking forward to seeing how the first group of people do. And based on the results that we see, we may take -- partake in this. And other people since this right now is an out-of-pocket expense, basically say, while I'd love to do this, but right now, I can't afford to do that. So I'll wait for reimbursement. So those are the kinds of dynamics that we get through all of our clinics. And with a continued effort on the reimbursement front, we hope to help drive the ability for those interactions to turn into more and more PoNS treatments in sales.

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Steven Michael Lichtman, Oppenheimer & Co. Inc., Research Division - MD and Senior Analyst [4]

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Okay, great. And then, I guess, for my follow-up, just on that reimbursement, can you talk about the reimbursement levels that you were able to establish, I think, in those 2 instances that you mentioned? And then how you think the experience there may help in terms of opening up some broader reimbursement?

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

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Sure. So the reimbursement amounts were between $22,000 and $30,000 for the 2 treatments that were provided by 2 separate private insurers. So what we've done through our reimbursement specialists that we now have on the ground is we've analyzed those cases and figured out exactly what kind of language and what kind of pattern of reimbursement, for example, splitting up the demand with respect to initial evaluations, then the PoNS device, then the PT. And by splitting them up that way, that's how these 2 insurance companies were able to -- or saw their way to be able to reimburse. So now we're templatizing those kinds of things and having further discussions with both those companies to continue to expand in those companies since they've already accepted and then use that experience to visit other companies to be able to convince them to do this. Both these reimbursements were different clinics.

And so that's also encouraging. It wasn't the sort of the same person being successful. And that's also the pattern of how reimbursement happens. Every patient, so everybody knows, every patient that does a PoNS treatment, there is an insurance submission that is paid. So that's the way we get the profile of our treatment into the insurance companies and then when we get positive reimbursement, then we use those to continue to drive that reimbursements in other companies. It typically takes between a year and 2 years to get broader reimbursement. So I want to set the proper expectations here, but it's certainly very encouraging to have these first 2 under our belt.

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Operator [6]

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(Operator Instructions) Your next question will come from the line of Jeff Porter with Porter Capital.

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Jeff Porter, Porter Capital Management [7]

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This one is actually for Joyce. You mentioned cost-cutting efforts and deferring of executive salaries. Could you give us a range of what the burn is expected to go down to here in Q4?

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Joyce N. LaViscount, Helius Medical Technologies, Inc. - CFO & COO [8]

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excluded from that would be any of the cost associated with the Heuro acquisition that we took everybody through today.

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Jeff Porter, Porter Capital Management [9]

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Okay. And in terms of getting the burn down, have you identified areas where you can sort of get duplicate functionality out of certain physicians in the company and just getting more efficiency out of the labor?

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Joyce N. LaViscount, Helius Medical Technologies, Inc. - CFO & COO [10]

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Yes. Absolutely. We have -- the workforce that we have, everybody wears a number of

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no stones unturned here in terms of the nature of the investments. We've learned a lot throughout the third quarter in terms of the commercial activities and what works and what doesn't. And thankfully or luckily, whatever way you want to look at it, some of the more expensive activities like doing direct media is something that doesn't drive as well as some of the other conference attendance and building the key opinion leaders and everything else is where we're experiencing the success. So it's a combination of every angle of the business, both internal in our infrastructure expenses here in Newtown as well as what we're doing and how we're -- market-facing activities that we are undertaking.

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Operator [11]

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(Operator Instructions) Your next question comes from the line of Anthony Lamport with Lambda Funds.

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Anthony Lamport, Lambda Funds - Investment Professional [12]

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Any comment about how you would finance the company during 2020? Because if and with the reduction in expenses, obviously, you'll need some more money?

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Philippe Deschamps, Helius Medical Technologies, Inc. - Chairman, CEO & President [13]

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Yes. So Tony, of course, we are looking at every possible way in which we could raise money. And especially with a focus on our fiduciary duties to protect our existing shareholders. We're not at liberty to share the specifics of that right now, but we are engaged in those activities right now, and will certainly communicate them as they become transparent over the next several weeks and months.

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Anthony Lamport, Lambda Funds - Investment Professional [14]

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All right. I should point out, by the way, they've been just about 3 dropouts in the telephone conversations, once we got into the question period. For instance, I missed a good deal of what Joyce said about reducing expenses. So you should have somebody on the call who can log these so you can work with your conference operator.

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

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Of course, I apologize for that technical glitch. Any other questions, Tony?

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Operator [16]

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And we are currently showing no additional participants in the queue. That does conclude our conference call for today. Thank you for your participation.

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

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Thank you very much, everyone.

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Joyce N. LaViscount, Helius Medical Technologies, Inc. - CFO & COO [18]

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Thank you.