ENDRA Life Sciences Inc. (NASDAQ:NDRA) Q4 2022 Earnings Call Transcript
ENDRA Life Sciences Inc. (NASDAQ:NDRA) Q4 2022 Earnings Call Transcript March 14, 2023
Operator: Good afternoon, and welcome to the ENDRA Life Sciences Incorporated Fourth Quarter 2022 Financial Results Conference Call. All participants will be in listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note, this event is being recorded. I would now like to turn the conference over to Yvonne Briggs. Please go ahead.
Yvonne Briggs: Thank you, operator. This is Yvonne Briggs with LHA. Good afternoon, and welcome to ENDRA's fourth quarter 2022 business update and financial results conference call. Earlier today, ENDRA issued a press release on this topic, which is available in the Investors section of ENDRA's website. Before we begin, please note that today's discussion will include forward-looking statements. All statements by management other than statements of historical facts, including statements regarding the company's strategies, financial condition, operations, costs, plans, and objectives, as well as anticipated results of development and commercialization efforts, the timing of clinical studies, potential partnership opportunities, and expectations regarding regulatory processes, receipt of required regulatory clearances, and product launches are forward-looking statements.
Except as required by federal securities laws, the company disclaims any obligation to update or revise any forward-looking statements. Please refer to the company's Form 10-K for the 2022 fiscal year which is expected to be filed by the end of this week, for more information about risks and uncertainties related to forward-looking statements. In terms of the structure of today's call, Francois Michelon, Chairman and Chief Executive Officer will begin the prepared remarks; followed by Michael Thornton, ENDRA's Chief Technology Officer. Mr. Thornton will be followed by Irina Pestrikova, Senior Director of Finance to review the fourth quarter financial results. With that said, I will now turn the call over to Francois Michelon. Francois?
Francois Michelon: Thank you, Yvonne. Good afternoon everyone, and thanks for joining us today to discuss ENDRA's fourth quarter financial results and business highlights. Let me start by saying that our top priority of the company is to complete the necessary TAEUS scans in order to submit our de novo request to the FDA. I'm excited that we've scanned over 100 subjects in 2022 and deployed our interactive software guidance tool to our global study sites last month. We're in the process of scanning the next cohort of subjects and we're seeing significant improvements in intra-operator performance in the hands of independent clinical users. There's no shortcut here. We must have the most robust clinical data that our TAEUS system is capable of achieving to enable a successful FDA submission and to support our global commercial adoption.
Admittedly, it's taken longer than we expected. But ENDRA is developing a completely new and game-changing technology, which naturally comes with some challenges. We're excited about our active clinical evaluation sites continuing to collect data with a newly deployed guidance tool and using this higher performance data to support our de novo submission as quickly as possible. As a reminder for any new listeners, ENDRA's Thermo Acoustic Enhanced UltraSound or TAEUS is a proprietary technology platform with an initial application focused on measuring liver fat for the early assessment of non-alcoholic fatty liver disease known as NAFLD. According to recent estimates, NAFLD affects over two billion people globally and is driven by a broad range of drivers, including obesity, diabetes, and genetics.
There are currently no diagnostic tools for NAFLD that combine accuracy, safety, cost effectiveness, and ease of use. ENDRA's TAEUS is intended to enable non-invasive characterization of tissue in ways similar to an MRI, but at the point of patient care, and at about one-fiftieth the cost. TAEUS is approved for sale in countries that recognize the CE mark, including those in the European Union. In the U.S., we're diligently working towards submitting a de novo request to the FDA. Before I turn the call over to Mike Thornton for more color on the clinical data front, I want to highlight a few other areas that will resonate with investors. In parallel to our clinical data progress, we're maintaining a steady cadence of marketing activities, including participating in 11 clinical conferences in Europe and the U.S. last year, where we showed our TAEUS system to hundreds of potential customers.
We've built a great pipeline of sales leads that will be catalyzed with the clinical data we're collecting. Once we submit our FDA application, we'll synthesize the TAEUS clinical data into a white paper to enable our commercial team in Europe to close sales. While in parallel, our clinical investigators submit their research to peer reviewed publications. I'm also very proud to say we renewed our longstanding partnership with GE HealthCare in December of 2022 for two additional years. We've been partnered since 2016, GE is the ultrasound market leader and we're energized by their interest in liver disease and emerging technologies like ENDRA's. Finally, we continue to aggressively strengthen our intellectual property portfolio to protect our technology from multiple indications.
In 2022 alone, we had 19 patents issued, bringing our portfolio to 56 globally issued patents. Investors should know that this is a robust portfolio that includes a mix of U.S. and international patents, balanced across method, system, and design claims with both defensive and offensive value for ENDRA. We have zero in-licensing dependencies, and our average remaining patent life is over 16 years. When we benchmarked ENDRA against a dozen similar microcap medical technology companies, ENDRA have three times more issued patents than our peer group average. I think that's remarkable for a company of ENDRA's small size. As we mentioned on the last call, several ENDRA patents focus on novel cloud-enabled connectivity of medical devices including ENDRA's TAEUS system, and we're actively pursuing potential licensing opportunities of this technology to help other companies collect data from their equipment, such as laboratory equipment which may not have an internet connection.
Okay, over to Mike Thornton now. Mike?
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Michael Thornton: Thank you, Francois. Let me summarize our clinical activities in 2022, where we are currently and what we can expect in the near-term. In 2022, our clinical study sites in North America and Europe obtain more than 100 study participant exams using our TAEUS clinical platform. As we shared in our Q3 update, we know that our TAEUS device has low measurement variation based on instrument repeatability and reproducibility studies. Those studies show that measurement variation is less than 3% for the instrument and can provide consistent measurements day-to-day and across separately manufactured devices. However, in 2022, we also observed that there was user variability across our clinical sites and even between users at the same site.
While some of our clinical study site users were able to obtain clinical TAEUS measurements with high repeatability and good reproducibility that is commensurate with the system's capabilities, other users had significantly higher variability. With the aim of normalizing operator performance across users and clinical sites, we updated the instructions for use and added interactive graphical user feedback that guides the user in positioning the TAEUS probe to enable the operator to obtain measurements more reliably and with higher repeatability. Intra and inter-operator performance is an important element in the clinical validation of a new technology and will be part of our de novo application. We have followed through with that plan and the new training and software guidance tools have been deployed to our active clinical sites in both North America and Europe.
I'm happy to say that our collaborators are actively scanning subjects and collecting data with these new tools. To-date, we've seen a significant improvement in intra-operator performance with some of our users demonstrating a threefold improvement. The response from users at clinical sites has been positive, with procedure time reduced significantly, typically less than 10 minutes. As Francois mentioned, what's taken longer than we anticipated to achieve our clinical milestones. The additional effort to ensure repeatability and reproducibility is an essential element of a successful FDA submission and will provide ENDRA's commercial team with a clinical data to support early commercialization. Now, I'd like to turn over the call to Irina to review the financial results for the fourth quarter of 2022.
Irina?
Irina Pestrikova: Thank you, Mike. Now let's turn to our unaudited financial results for the fourth quarter and year-end of 2022. As we mentioned in the call opening, ENDRA will be filing its 10-K this week ahead of the March 31 deadline. For the quarter ended December 31, 2022, our operating expenses increased to $3.3 million from $3.1 million for the same period in 2021. The increase was primarily due to an ongoing product development. Net loss per share in the first quarter of 2022 was $1.04 compared with the net loss of $1.48 per share in the fourth quarter of 2021. Overall, for the year ended December 31, 2022, our operating expenses were $13.2 million, up from $11.5 million for the same period in 2021. The increase was primarily due to ongoing product development and sales and marketing expenses.
Our research and development expense increased year-over-year by approximately $1 million due to an ongoing product development work. Our sales and marketing expenses increased by approximately $350,000 for the year, as we began to expand our sales and marketing efforts, as Francois has described, including attending a growing number of medical conferences. General and administrative expenses increased by approximately $230,000 due to higher professional fees. Our net loss per share for the 2022 was $4.56 compared with a net loss of $5.55 per share a year ago. We continue to maintain our asset-light operating model with further hires in our operations team in anticipation of future growth. As we execute our regulatory and commercial strategy for TAEUS, we plan to adjust the expense structure accordingly in support of these activities.
As of December 31, 2022, we had cash and cash equivalents of $4.9 million. I'll close by saying that in light of the liquidity concerns in the banking system arising from the closure of Silicon Valley Bank and appointment of the Federal Deposit Insurance Corporation as receiver, ENDRA maintains cash deposits at multiple banks to mitigate the risk associated with a failure of any specific bank. Now I'll turn the call back to Francois.
Francois Michelon: Thanks very much, Irina and Mike. In closing, here are the three messages listeners should take away from this call. Our primary focus continues to be the effective collection of clinical data with our newly deployed software guidance to enable both a U.S. successful regulatory submission and strong global commercialization. We're making excellent progress in this area, building on over 100 scans performed last year with the most recent software guiding scans, yielding 3x improvements in intra-operator performance. Second, ENDRA has a small and experienced commercial team in Europe, and I'm personally leading the commercial activities until we find a replacement for a commercial officer. We're maintaining a steady cadence of marketing activities to build awareness of our TAEUS technology with a growing number of clinical specialties.
These activities include participating in the key radiology, hepatology and endocrinology clinical conferences in the U.S. and Europe, and expanding our customer database, which now includes over 5,000 clinician names we cultivate across the globe. And third, we renewed our partnership with GE HealthCare for two additional years, which we view as indicative of GE's interest in the liver disease space and emerging technologies such as ENDRA's. With that overview, I'd like to turn the call back over to the operator and open the call for questions. Operator?
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