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Edited Transcript of MYOS earnings conference call or presentation 25-Mar-20 3:00pm GMT

Q4 2019 MYOS RENS Technology Inc Earnings Call

RIVERSIDE Mar 27, 2020 (Thomson StreetEvents) -- Edited Transcript of MYOS RENS Technology Inc earnings conference call or presentation Wednesday, March 25, 2020 at 3:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Joanne Goodford

* Joseph Mannello

MYOS RENS Technology Inc. - CEO & Director

* Joseph DiPietro

MYOS RENS Technology Inc. - Controller

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Presentation

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Operator [1]

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Greetings, and welcome to the MYOS RENS Technology Year-End 2019 Conference Call and Webcast. (Operator Instructions) Please note that this conference is being recorded.

It is now my pleasure to introduce our host, Joanne Goodford, Project Manager. Please go ahead.

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Joanne Goodford, [2]

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Thank you, operator, and thanks to all of you for joining us today, and welcome to the MYOS RENS Technology Year-End 2019 Results Conference Call and Webcast. Joining us on the call today is Joseph Mannello, Chief Executive Officer; and Joseph DiPietro, Financial Controller.

I would like to remind our listeners that any statements on this call that are not historical facts are forward-looking statements. Actual results may differ materially from those projected or implied in any forward-looking statements. Such statements involve risks and uncertainties, including, but not limited to, those relating to product and customer demand; market acceptance of our products; the ability to create new products through research and development; the successful results of strategic initiatives; the successful launch of our products, including Yolked, MYOS Canine Muscle Formula, MYOS Enteral Nutrition Formula and Qurr product; [the aspects] of our research and development, including the clinical studies described above; the results of the clinical evaluation of Fortetropin and its effects; the ability to enter into new partnership opportunities and the success of our existing partnerships; the ability to generate revenue and cash flow from sales of our products; the ability to increase our revenue and gross profit margin; the ability to achieve a sustainable, profitable business; the effect of economic conditions; the ability to protect our intellectual property rights, competition from other providers and products; the continued listing of our securities on the NASDAQ stock market; risks in product development; our ability to raise capital to fund continuing operations; and other factors discussed from time to time in our filings with the Securities and Exchange Commission. We undertake no obligation to update or revise any forward-looking statements for events or circumstances after the date on which statement -- which such statement is made, except as required by law.

The statements made on today's call have not been evaluated by the Food and Drug Administration. Our products are not intended to diagnose, treat, cure or prevent any disease.

With that, I'd like to turn over the call to our first speaker, Joseph DiPietro, to go over the financial results. Good morning, Joe.

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Joseph DiPietro, MYOS RENS Technology Inc. - Controller [3]

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Good morning, Joanne. Thank you, everybody, for joining us.

Our net revenues for the year ended December 31, 2019, increased $672,000 to $1.032 million or 187% compared to the prior year sales of $360,000. This was primarily due to an increase in net revenues of $600,000 for our Yolked and MYOS Canine Muscle Formula products in 2019 and an increase in our white label sales of $221,000, offset by a decrease in our old products of $149,000.

Our cost of revenues for the year ended December 31, 2019, increased $149,000 or 60% compared to cost of revenues for the year ended 2018, primarily due to an increase of $179,000 in manufacturing costs associated with making new products.

Amongst our operating expenses, sales, marketing and research expenses for the year ended December 31, 2019, increased $382,000 or 43%, compared to the prior year, primarily due to an increase in sales and marketing costs associated with the development and launch of our new products.

Personnel and benefits expenses for the year ended December 31, 2019, increased $179,000 or 10% compared to the prior year due to the hiring of additional sales staff.

And our G&A expenses for the year ended December 31, 2019, decreased $149,000 or 8% compared to the year ended December 31, 2018, due to a decrease in professional fees.

Our liquidity and capital resources as of December 31, 2019, we had cash of $64,000, an increase of $49,000 compared to the prior year. This was primarily due to $2.4 million of net proceeds received from financing activities, which included proceeds of $1.8 million from the issuance of common stock, $211,000 from a registered direct offering and $355,000 from the drawdown on our related party promissory note.

On March 5, 2020, the company closed a private placement with a group of accredited investors. In the private placement, the company issued 1,533,058 shares of common stock to the investors, including 4 members of the company's Board of Directors, and $825,000 of the outstanding principal amount of the promissory note issued to our Chief Executive Officer was converted into 681,818 shares of common stock. The remaining 851,240 shares of common stock sold resulted in cash proceeds to the company of $1.030 million.

With that, I'd like to turn the call over to our Chief Executive Officer, Joe Mannello.

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Joseph Mannello, MYOS RENS Technology Inc. - CEO & Director [4]

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Good morning, everyone. Thank you, Joe. I hope everyone is safe and well during these very challenging times. I am sitting here at my home at my computer and trying to keep my 2 dogs from coming in and barking at this phone call. So again, I hope everyone is well and safe.

I wanted to go over some of the key highlights of 2019 and why I feel these events have been transformational for MYOS. One, we had a successful study at Kansas State University on 100 dogs, which is a pretty significant amount of subjects for a study. These dogs had gone through what is TPLO surgery, similar to ACL surgery in humans. And the results were very, very positive for MYOS. With those results, we created MYOS Canine Muscle Formula product and have made inroads into the vet community. Having this science is unique in the pet world. And we have specific science for our product. We're not a commodity. Remember, we are the only ones with Fortetropin. We added a vet strength line also to give veterinarians an exclusive product. We believe the results of this study will soon be published in a peer-reviewed journal. I've learned that in academia and with publishing, it takes longer than you thought, but we have a strong belief that this will happen soon, hopefully, within the next few weeks.

Number two, we had a extremely successful study at UCal Berkeley with Dr. William Evans. In 60- to 75-year-old men and women, the people who took -- the individuals who took Fortetropin had a 15% increase in muscle protein synthesis. As Dr. Evans said, it is rare for a nutrition product to show such efficacy. He presented that -- those results via video conferencing at the sarcopenia study in Toulouse, France, a couple of weeks ago. We now are using that video to help educate doctors, et cetera, on the benefits of Fortetropin in all different age groups, but clearly, to people who are 50, 60 and older. This has created an incredible opportunity in the anti-aging longevity market, a market that supposedly will grow to about $270 billion over the next few years. With that, we launched Physician Muscle Health Formula and in December at the Anti-Aging Conference in Las Vegas with anti-aging doctors, holistic doctors and are now out in the market with our sales force trying to get doctors to take the product and give it to their patients. We're excited about this demographic for our product.

In 2020 -- let me move on to 2020. We announced a partnership and distribution deal with KVP International. That will open the doors to over 10,000 veterinarians in the U.S. and abroad. We think this distribution agreement is going to be incredible for us. They make braces, if you look at what KVP does. And those braces are used by dog owners and veterinarians to support dogs that have CCL tears or TPLO tears, many of which who don't go for the surgery. These braces can cause muscle atrophy, and our product helps in disuse muscle atrophy. So it is a great fit for their braces. So we are co-marketing in both the vet space, in the direct-to-consumer space. This is just being launched as we announced in the press release, but I think it's an incredible opportunity.

We also announced an agreement, a distribution agreement with UNFI, one of the largest natural distributors in the country. That is supposed to get into our products, both MYOS Canine Muscle Formula and our product of Yolked, hopefully, will be in stores over the next couple of months. Obviously, with what's going on in the world, that could be delayed. But we're optimistic the fact that we were able to sign an agreement, a distribution agreement with them.

As Joe spoke to, we closed a $1.8 million financing in a private placement on March 5. And now I think we have the company in a great position to weather the storm that's going on right now.

There are tremendous things happening in MYOS, but in light of COVID-19, I wanted to address what MYOS is doing. We have been deemed an essential business in the State of New Jersey by Governor Phil Murphy. That is great for us. But about 1.5 weeks ago, we made a decision that all MYOS employees would work remotely. But we still have people going to the office to make sure we manage our supply chain-related issues, to make sure we have enough supply that's going into e-commerce, which is the area that still is very vibrant. We prepared for the possibility of this business shutdown and moved a much greater quantity of product to our fulfillment warehouse so we could complete e-commerce orders. We are actively working with our retail and vet partners and remain committed to helping them through these challenging times. While many physicians, vets and consumers are forced to reduce their caseload and to remain home, we've been actively engaging them through online webinars and want to use this time to create much more awareness for our product and the clinical research that backs it up. We are committed to retaining and building our future customer base by being sensitive to the needs of these physicians and veterinarians and all consumers in light of the current situation. So we will work with them. We will look at opportunities to build. So once we get this all past us that MYOS is even in a better situation than we are today.

Let me just say a little bit about our product. All the peer-reviewed clinical research away from MYOS has shown that improved muscle health can lead to a healthier and more active life. When Bill Evans talks about our product, Fortetropin, and people who experienced a 15% increase in the rate of muscle protein synthesis when compared with subjects who did not take Fortetropin, it shows that a small investment in muscle health can make a huge difference to one's overall health. And as we continue to tell the story of Fortetropin and why people who can take it should expect better outcomes and better health span, we think we will continue to grow and build this business.

So during these challenging times, our priorities are pretty simple. One, keeping all our employees safe; two, creating a greater awareness of the power of our products in both human and animal health; three, growing our revenue with a focus on e-commerce platforms; and four, supporting all our existing and new clients with enhanced marketing, advertising and e-learning opportunities. I can assure you that we're doing everything to build MYOS even through these challenging times. These times will end. MYOS will change and continue to adapt as we need to. We are committed to our shareholders to do whatever is necessary to succeed and we will.

With that, I want to open it up to questions.

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Operator [5]

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(Operator Instructions)

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Joseph Mannello, MYOS RENS Technology Inc. - CEO & Director [6]

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Diego, looks like there's no questions, which is fine. I can -- I'd like to conclude.

So again, thank you for taking the time and effort to be on the call. Please know, as I said in my statement, that MYOS is doing everything it can during these times to succeed. And I want to let you know that if you do have any questions, feel free to e-mail me, call me. We're around. We're working probably longer hours than we were working before, but we'll -- again, we'll do everything we can to build MYOS, and we think we're in a great position to succeed in the future. Thank you. Have a great day.

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Operator [7]

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Thank you. This concludes today's conference. All parties may disconnect. Have a great day.