Helius Medical Technologies Q3 2023 Earnings Call Transcript

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November 9, 2023

There are 6 speakers on the call.

Operator

Good day, everyone. My name is Chelsea, and I will be your conference operator. At this time, I'd like to welcome everyone to the Helius Medical Technologies Third Quarter 2023 Financial Results. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer period.

Operator

As a reminder, this conference call is being recorded today, November 9, 2023. It is now my pleasure to turn the floor over to Michelle Bilski, Investor Relations for Helius Medical Technologies. Please go ahead.

Speaker 1

Thank you, Chelsea. Welcome to the Q3 2023 earnings conference for Helius Medical Technologies. This is Michelle Dolsky of Incyte Communications, Investor Relations for Helius. With me on today's call are Dane Andreeze, Helius Medical's President and Chief Executive Officer and Jeff Mathieson, Chief Financial Officer. At this time, all participants have been placed in a listen only mode.

Speaker 1

Please note that this call is being recorded and access to the webcast can be obtained through the Investors section of the Helius website at www .heliusmedical.com. Before we begin, I would like to remind everyone that our remarks and responses to your question today may contain forward looking statements that are based on the current expectations 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 ks and quarterly reports on Form 10 Q. Such factors may be updated from time to time in our other filings with the SEC, which are available on our website. All statements made during this call are as of November 9, 2023. 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.

Speaker 1

I would now like to turn the call over to Dane Andreeff, President and Chief Executive Officer of Helius.

Speaker 2

Thanks, Michelle. Welcome everyone to Helius Medical's 3rd quarter 2023 earnings conference call. We We began the quarter with the conclusion of our very successful patient therapy access program, which we launched in June 2022 to give qualified Americans suffering from balance and gait impairment due to MS, the ability to purchase pawns at a significantly reduced price. The implementation of PTAAP enabled us to accomplish 2 key objectives. By subsidizing the cost of PoNS, we meaningfully reduced a major barrier to use while also adding to our MS patient registry.

Speaker 2

Through the registry, we can collect important health economic information to establish the value of PoNS on key clinical and therapeutic outcomes, which is critical as we pursue reimbursement. As expected, quarterly sales of PoNS systems in the U. S. Decreased following the expiration of the PTAB program on June 30th as sales of PON systems reverted to the cash pay price. We continue to believe that broad third party payer reimbursement as needed to achieve our full revenue potential and I'm pleased to report we're moving closer to that goal.

Speaker 2

In September, the PON system and mouthpiece were assigned UPC numbers, the equivalent of NDC numbers for pharmaceuticals with the listed price of $25,700 and $7,900 respectively. The UPCs are now included in the Wolters Kluwer Health Pharmacy database to which 17 of the top 20 grossing PBMs are subscribed. Receiving the UPC numbers was a game changer for Helius because with the DME accreditation announced last quarter, PoNS is now one of the few products with pharmacy and device codes, which means 2 paths towards reimbursement. We are also steadily moving toward our goal of achieving U. S.

Speaker 2

Authorization for stroke. We recently established relationships with 2 important Canadian healthcare providers, having received an order for 10 PON systems from the School of Rehabilitation at the University of Montreal as well as a letter of intent from the Quebec Ministry of Health and Social Services to purchase 30 PON systems to treat gait imbalance in stroke patients. These are exciting opportunities and both come about due to the body of clinical evidence demonstrating the effectiveness of using PoNS to treat stroke. Among other outcomes, PoNS therapy has been shown to reduce the risk of fall in 28% of stroke patients as opposed to a reduction of just 1% to 3% with physical therapy alone, which is the current standard of care. Stroke patients experienced a significant improvement in gait, averaging a 6.74 point improvement in the functional gait assessment score over the 14 week treatment period.

Speaker 2

Overall, 69% of the patients experienced at least a 5 point FGA improvement, which is larger than the 4.2 minuteimal detectable change usually seen in stroke patients. The fact that these two institutions committed to purchase PoNS reflects the medical community's strong desire to improve treatment for this patient population and we believe that Evidence from the treatment outcome will support health economic benefit and cost effectiveness of incorporating PoNS Therapy as a first line treatment for stroke patients. Furthermore, this evidence should provide valuable benchmark for other Canadian healthcare providers and private payers as they evaluate reimbursement of PoNS therapy. The data from these clinical application trials will also provide supporting evidence upon therapeutic benefit that can strengthen the registrational program for stroke currently ongoing in the U. S.

Speaker 2

Where there are more than 5,500,000 people experiencing impaired walking due to stroke. If and when PoNS is approved to treat stroke in the U. S, it will be eligible for coverage under the proposed transitional coverage of emerging technologies or TSET pathway, which would expedite Medicare coverage of certain breakthrough devices by allowing manufacturers the opportunity for increased pre market engagement with CMS. Helius has 2 breakthrough designations granted by the FDA, putting us among the less than 1% of medical device companies that have a breakthrough designation with our second one in balancing gait deficit due to stroke. While we don't know the outcome of this bipartisan piece of legislation, we are optimistic about its potential and the fact it provides another pathway toward reimbursement and greater access for patients.

Speaker 2

We are always looking for ways to help reduce barriers to PoNS use. Earlier this year, we launched our Upscript e commerce telehealth platform to make it easier for people suffering from MS to access PoNS Therapy and start treatment more quickly, instead of having to wait up to 3 months to see their neurologist. The platform offers among other services online health evaluations with qualified medical providers, a fulfillment of prescriptions required for PoNS Therapy and the shipping of PoNS devices directly to the homes of eligible patients in the United States. As you can imagine, this is a great benefit to those who face mobility challenges. We are pleased to report that virtually all the prescriptions in the United States are now fulfilled through Upscript.

Speaker 2

We also continue to expand POND Step, our company sponsored outcome research trial designed to evaluate the real world impact of MS patients' adherence to PoNS Therapy. We recently added Montefiore Medical Center in Nyack, New York to the program, bringing the total number of concept centers of excellence to 6. We have increased enrollment at each site with a goal of enrolling 5 to 15 patients per site. Enrollment in POND Step began during the Q4 of 2022 and will continue throughout March of 2024. Turning now to our Canadian activities.

Speaker 2

Revenues in Canada were $72,000 during the quarter, up 29% over the Q3 of last year. We are starting to see traction with the exclusive distribution agreement with HealthTech Connect for portions of Western Canada that we signed at the end of the Q1 and expect steady overall growth to continue. Earlier this week, we were proud to announce the results of a study performed by Pacific Blue Cross and HealthTech Connect with the ultimate goal of reducing long term disability and improving the quality of life for individuals suffering from traumatic brain injury in Canada, where PoNS is authorized to treat TBI. The program participants were all at least 2 years post injury and had not responded to standard rehabilitation treatments and not expected to return back to work. The results were truly remarkable.

Speaker 2

89% of the patients suffering from long term disability due to chronic TBI said that balance and gait issues were no longer a barrier to return to work. 56% of the participants actually returned to work. And remember, these patients were deemed unlikely to resume their jobs. 80% of those returned to their prior occupations full time for at least 6 months. In addition to significant improvements in balance and gait, patients reported improvement in headache severity as well as in cognitive and mental health symptoms.

Speaker 2

It was also found that PoNS Therapy reduced the financial burden to the insurance provided by at least $1,600,000 for the 5 individuals who returned to work for nearly at 10x savings on cost. This was an important study given that 7,000,000 people in North America suffer from chronic balance deficit and other disabilities related to TBI. Rehabilitation therapy is the current standard of care, but its return to work rate is very low and a large percentage of patients end up on long term disability often permanently. We believe the findings from this collaboration may promote our efforts to gain reimbursement by Canadian insurance companies and health care providers as well as demonstrating that PoNS Therapy's significant health economic benefit and cost effectiveness as we negotiate coverage with U. S.

Speaker 2

Payers. It was a busy quarter for us at Helius and we're excited about what we accomplished and the road ahead. With our continued focus on cash management and a runway that will take us into the Q2 of 2024, We have both the drive and resources necessary to continue pushing forward and bringing our life changing therapy to as many patients as possible. With that, let me turn the call over to Jeff to discuss our Q3 financial results in detail.

Speaker 3

Thanks, Dane. It is a pleasure to be with you today. Total revenue for the 3rd quarter of 2023 was $143,000 a decrease of $53,000 compared to 190 $1,000 in the Q3 of 2022, primarily attributable to the decreased unit sales of PON Systems in the U. S. Following the termination of the PTAF on June 30, 2023.

Speaker 3

This was partially offset by increased sales of Systems in Canada. For the Q3 of 2023, cost of revenue was $187,000 compared to $101,000 for the prior year period due to fixed overhead cost increases, which were primarily comprised of salaries and benefits of employees involved in management of the study of the supply chain and certain production costs. Selling, general and administrative expense for the Q3 of 2023 was $2,200,000 a decrease of $1,200,000 compared to $3,400,000 in the Q3 of 2022, primarily the result of a decrease in performance based stock compensation expense. Research and development expense for the Q3 of 2023 were $700,000 is essentially flat period to period over the Q3 of 2022. Total operating expenses for the Q3 of 2023 decreased to $3,100,000 compared to $4,900,000 in the Q3 of 2022.

Speaker 3

Operating loss for the Q3 of 2023 was $3,200,000 compared to a loss of $4,900,000 for the prior year period. We reported a net loss for the Q3 of 2023 of $3,700,000 for a loss of $5.49 per basic and diluted common share compared to a net loss of $1,000,000 for a loss of $2.90 per basic and diluted common share for the same period last year. Our cash burn from operations for the Q3 of 2023 was $2,500,000 compared to $3,800,000 for the Q3 of 2022, reflecting the results of our focus on managing cash burn. As of September 30, 2023, we had $6,600,000 in cash and no debt and $4,000,000 in proceeds receivable from worn exercises as of September 30, 2023, and we expect our cash runway to extend into the Q2 of 2024. With that, Chelsea, let's open the call for questions.

Operator

And our first question comes from Nick Sherwood with Maxim Group.

Speaker 4

Hey, guys. How's it going?

Speaker 2

Good, Nick.

Speaker 3

Hey, Nick.

Speaker 4

So my first question is about The letter of intent from the Quebec Ministry of Health and Social Services. Do you know what their timeline is to evaluate the benefit of PoNS therapy Yes, with those 30 devices.

Speaker 3

So this is Jeff. I'll just step in. In the press release, And we commented that the letter of intent, their desire is to have the all 30 patients either beginning treatment or lined up by the end of March of next year. So it would be something that should play out fairly quickly.

Speaker 4

And then are Is there any additional sort of like agreement or ideas that based on success that they would buy additional or is that sort or are you looking to Go through the study, work with them through the study and then once that's completed, work with them from there.

Speaker 3

Their intent in the letter of intent that what they're looking to have come out of this If successful, they would want to incorporate this as part of their standard of care. But there are no specific commitments to do anything beyond that.

Speaker 4

I understand.

Speaker 2

And Nick, just Hey, Nick, this is Dane. Just a little more color on who Quebec, the Ministry of Health is, it is their provincial healthcare provider, Like a CMS Medicare and most strokes are covered under government policies.

Speaker 4

Okay. I understand. And then sort of what is there any Well, I mean, what sort of communication can that Quebec Ministry of Health have with other provinces, Yes, such as like Ontario or is it kind of you have to reach each Canadian province health system sort of on an individual basis?

Speaker 2

Yes, I'll take that one. So yes, like Ontario OHIP plan, we would have to reach out and provide a similar conversation, where a lot of them Provincial healthcare providers would like to do their own studies, but they're also happy to see Quebec being the first one stepping in to do this balancing gait study in stroke.

Speaker 4

Okay, awesome. And kind of switching gears, can you just give a little bit of color on the relationship with HealthTech's Connex and Sort of any buying patterns they have for PoNS Therapy and I mean the numbers that back people getting back to work who had Traumatic Brain Injury, a lot of really good results from that. Can you just sort of give some more detail on that relationship?

Speaker 3

Yes. Hey, this is Jeff. I'll step in. For the first part of the question, So we do have an arrangement with them where they are exclusive for the Vancouver area. And that was something that we signed earlier this past year.

Speaker 3

And so it's An agreement where they as part of the having this exclusivity, they do have a commitment to purchase a certain number of units throughout the period of the agreement and also an opportunity to renewed that agreement after the 1st 5 year period with an additional payment and then also additional commitments for purchase. So we've had a great relationship with them for a number of years. They're a big promoter of PoNS and have done a lot of things studies and things on their own using PoNS. And then we're part of a program with Pacific Blue Cross where those 2 work together to evaluate ponds with these TBI patients that was just reported. So I don't know, I'll let Dane talk a little bit more about That specifically, but in general, we have a great relationship with them.

Speaker 2

Jeff, I think you covered it all. So thank you.

Speaker 4

Awesome. And then I'll wrap it up with One final question. Looking at the therapeutic experience program, do you still expect to enroll about 8 to 10 centers by the end of the year. And do you expect any of that enrollment to continue into next year?

Speaker 2

Right now, we're at 6 sites and the enrollment keeps increasing. And each site, the goal is 5 to 15 patients per site to get us in the 50 patients for the total research trial that we deem is very valuable to bring all these KOLs in to expand mindshare and really get experience treating their MS patients with PoNS.

Speaker 4

Okay, awesome. Thank you for all that detail and I'll return to the queue.

Speaker 2

Great. Thanks, Nick. Thank

Speaker 1

you.

Operator

And our next Question will come from Jonathan Aschaug with ROTH MKM.

Speaker 5

Thank you very much guys. I was curious, The PBC estimate that 5 individuals who return to works save the provider like $1,630,000 in net cost netting out the cost upon. Can you tell us the number of years of those LTV claims that each of those 5 had coming to them that PBC doesn't have to shell out for.

Speaker 2

Yes. Hi, Jonathan. This is Dane. So the savings on The rest of those long term disability claims according to their actuaries At $1,600,000 The 5 patients, some of them averaged 3 4 years left on it, some went as for as 20 years on it. But the way they calculate their savings Using PoNS Therapy, it was $1,600,000 in savings.

Speaker 2

Okay.

Speaker 5

And what do you think of that number? Is that A very conservative number or is that something that sounds kind of spot on?

Speaker 2

I think it's a very conservative number, Jonathan. Some of these patients were, again, the minimum for the study that Pacific Blue Cross did with HealthTech Connect. The minimum event was from 2 years and beyond. Some of these patients were 4 5 years away from their traumatic brain injury event like a motor vehicle event or a workers comp injury, just in general where TBIs come from. But my belief was the savings were north of 1,600,000

Speaker 5

Okay. So something was a little confusing in that publication. Did 4 or 5 of the 9 patients actually returned to work or did you know I mean did just 4 and one was simply deemed work ready because it kind of like it kind of It says both, it's a bit confusing. Or to PBC, does it not even matter because simply deeming someone work ready despite not actually returning to any kind of work cuts off the LTD payments. Yes.

Speaker 2

So a good question. So they closed out 5 long term disability claims based off going back to work. So 5 of them, so

Speaker 5

yes They only went to work, right?

Speaker 2

Actually, 5 did because their physical disabilities went away. So they were able to go back to work and actually 5 did go back to work. So there is some ambiguity and timing To that, Jonathan. But I think that number that we focus on clearly was that 8 out of the 9 Dean, balancing gate was no longer an issue to going back to work. So if you think about the 3 that Haven't come back to work yet.

Speaker 2

There is even more cost savings if they get. But the way that The study was done by Pacific Blue Cross. Their primary outcome was going back to work, so that they could close their long term disability claims.

Speaker 3

And Jonathan, I think the ambiguity comes from, I think 4 of the 5 went back to work in the same occupation that they had before. So I think that's where the ambiguity is. 5 went back to work before actually went back to their same job.

Speaker 5

Okay. So the 8 you mentioned the 8 of 9. The 8 that had the gate and balance fixed, but only 5 of them went back to work. Is that because the 3 patients that differ between those two groups still had headaches? Was

Speaker 2

Not necessarily. I mean, if you read into this a little bit, the one thing One, this is not our study. This is not Helius Medical study. But second, those patients, Even though they're able to and basically saying balancing gait or their physical disabilities are no longer an issue to go back to work. We didn't have any color on their actual application resume and frankly going out and looking for new work.

Speaker 2

So our belief is those 8 out of 9 Actually, in 89% of the study, we felt like we met the goal of ability to go back to work. Does that make sense, Jonathan?

Speaker 5

Yes, it does. The last question I'm sorry, continue.

Speaker 2

Yes, because pawns therapy treats balance and gait and that balance and gait deficit. Our claims are not in anything cognitive, headache, severity and so forth. It is Fabulous that their study reported, the decrease in severities and increase in cognitive. Those are just wonderful things to see with using PoNS Therapy as hopefully a standard of care going forward in treating traumatic brain injuries.

Speaker 5

Okay. And you had mentioned some warrant exercise contribution to Give you some cash. Was there any ATM use after the 30th June?

Speaker 3

Yes. So, we did disclose in our 10 Q that we raised $284,000 from our ATM during the quarter and we sold 27,875 shares in doing so.

Speaker 5

Okay. Thank you very much.

Operator

Thank you.

Speaker 2

Thank you, Jonathan.

Operator

All right. And it seems we have no further questions in the queue. So I'll turn the back over to Dane for any additional or closing remarks.

Speaker 2

Great. Thank you. And thank you everyone for following Helius Medical Technologies. We're living in very exciting times for PoNS Therapy. We look forward to keeping you updated as we pursue coverage for reimbursement and continue bringing PoNS Therapy to the millions who need it.

Speaker 2

Thank you.

Operator

Thank you, ladies and gentlemen. This concludes today's call and we appreciate your participation. You may disconnect at any time.

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Earnings Conference Call
Helius Medical Technologies Q3 2023
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