Nyxoah Q1 2023 Earnings Call Transcript

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May 16, 2023

There are 8 speakers on the call.

Operator

Thank you for standing by, and welcome to the Nizola's First Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. As a reminder, today's call is being recorded. I would now like to turn the conference over to your host, Ms.

Operator

Michaella Kirkwood, Corporate Communication and Investor Relations Manager. Please go ahead.

Speaker 1

Good afternoon and good evening, everyone, and welcome to our earnings call for the Q1 of 2023. I am Mikaela Kirkwood, Corporate Communication and Investor Relations Manager at NextElla. Participating from the company today will be Olivier Talman, Chief Executive Officer and Lalique Moreau, Chief Financial Officer. During the call, we will discuss our operating activities and review our first quarter financial results released after U. S.

Speaker 1

Market closed today, after which we will host a question and answer session. The press release can be found on the Investor Relations section of our website. This call is being recorded and will be archived in the Events section of the Investor Relations tab of our website. Before we begin, I would like to remind you that any statements that relate to expectations or predictions of future events, market trends, results or performance are forward looking statements. All forward looking Statements are based upon our current estimates and various assumptions.

Speaker 1

These statements in order to reflect the results and uncertainties that require actual results or events To materially differ from those anticipated or implied by these forward looking statements. All forward looking statements are based Upon current availability, we are showing and the company assumes no obligation to update these statements. Accordingly, you should not place undue reliance on these statements. For a listen description of these risks and uncertainties associated with our business, please refer to the Risk Factors section of our Form 20 F With that, I will now turn the call over to Olivier.

Speaker 2

Thank you, Mikaela. Good afternoon and good evening, everyone, and thank you for joining us For our Q1 2023 earnings call. 2023 will be an important year for NKZOHA with DREAM patient follow-up And further PMA module submissions. We completed all 115 implants in our U. S.

Speaker 2

Pivotal study DREAM In the Q4 and the clock is sticking to 12 month data in the Q1 of 2024. We are highly confident in the RemoteCom based not only on our prior clinical and commercial experience, but also on the data released on the first 34 patients in the DREAM study. These 34 patients demonstrated a 65% AHI responder rate, a 76 ODI responder rate and safety in line with expectations. As a reminder, for the trial to be successful of the 115 patients, At least 63% need to be AHI and ODI responders at the 12 month follow-up. These abstract data will be presented at sleep 2023 on June 6 in a late breakeven poster session.

Speaker 2

The model of PMA submission was kicked off with the first module having been submitted during the Q1. We anticipate filing 3 out of the 4 modules in 2023. The final 4th module, which will include 12 month safety and efficacy data, will be submitted shortly after the follow-up period is complete. Our increasing conviction in dream outcomes and the market opportunity for Genio has driven our decision to accelerate Preparation to enter the U. S.

Speaker 2

Market. To that end, I'm very pleased to announce that Christoph Eigenmann Have joined Nixoa as Chief Commercial Officer. Christophe brings a wealth of medical device experience to Nixoa, Having spent over 20 years at Johnson and Johnson, leading orthopedic and neuro businesses in the U. S. And other global geographies.

Speaker 2

Christoph and his family are based in the U. S. And his priority will be preparing the U. S. Commercialization strategy And driving international sales growth and further market access.

Speaker 2

The U. S. Access pivotal study Focused on complete concentric collapse patients is well underway with implants expected to be completed in 2024. As a reminder, CCC patients represent approximately 30% of AGNS eligible to treat OSA patients Who are contra indicated to our commercially available hypoglossal neurostimulation therapy in the U. S.

Speaker 2

And do not have suitable treatment options other than major palate surgery. The access primary endpoints are similar to the DREAMM study primary endpoints As Gineo has demonstrated similar results in both CCC and non CCC patients. Commercially, we reported European sales of €441,000 during the quarter, which was below expectations. However, after an in-depth review, we see the quarter was impacted by several transitory factors. 1st, Our highest volume accounts saw a seasonal reduction in award capacity.

Speaker 2

2nd, several newly activated accounts We're slower to implant due to the administrative burden necessary to clear procedure funding. Lastly, POXA availability was limited during the quarter and therefore several new accounts had to postpone procedures. The German team managed to resolve these challenges, resulting in sales thus far in the 2nd quarter, exceeding 1st quarter revenue. Finally, we reported our first implant in Austria during the quarter. We continue to achieve becoming an innovation leader in the obstructive sleep apnea space.

Speaker 2

Clinicians have embraced the Genio technology driven by a single incision leadless system offering bilateral stimulation powered by an external battery and full body MRI compatibility. For patients, Genio's ability to upgrade To the latest technology without the need for another surgical intervention is strongly resonating. This is demonstrated with our recent approval of the Genio 2.1, which improves patients' comfort and compliance without the need for a surgical procedure to replace the implantable component. Finally, We anticipate the ANSA cervicalis feasibility study to begin this year, which will explore the stimulation of the ANSA cervicalis in nerve in patients who are hypodontal nerve stimulation non responders. We are making strong progress So with our key objectives for 2023, which are to focus on patient follow-up in the DREAM study, resulting in reaching the primary endpoint.

Speaker 2

We begin preparations to enter the U. S. Market with regulatory, manufacturing and market access readiness And drive further revenue growth in Germany, while opening new European markets. With that, I'm pleased To turn the call over to our CFO, Louis Mourault, who will provide a financial update.

Speaker 3

Thank you, Olivier. Good day to everyone and thank you for joining us today. Revenue for the Q1 ended March 31, 2023 was 441,000. The average selling price in the quarter was 20,000 consistent with prior quarters. Total operating loss for the Q1 was EUR 11,400,000 This is EUR 7,300,000 in the Q1 of 2022, driven by an acceleration of clinical activities, Notably, the start of the ACCESS study as well as commercial investments in Europe.

Speaker 3

Last quarter, we raised €15,900,000 through a private investment and our ATM with historical shareholders, including ResMed, Cochlear And Robert Taube, Nextiva's Chairman and Founder. As of March 31, 2023, Cash and financial assets totaled €96,100,000 compared to €94,900,000 in December 31, 2022. During the Q1, our monthly cash burn was €4,900,000 and based on our current cash position, we have run rate until late 2024. With that, I will turn the call back over to Olivier.

Speaker 2

Thank you, Louis. I would like to reiterate our key objectives for 2023, which are focusing on patient follow-up in the U. S. DREAM study resulting in reaching the primary endpoint, Beginning preparations to enter the U. S.

Speaker 2

Market and driving further revenue growth in Germany, while entering additional European markets. This concludes the formal part of our presentation. Operator, I will turn the call over to you and begin our Q and A session.

Operator

Thank you. One moment for our first question. Our first question comes from the line of Jon Block of Stifel. Your line is open.

Speaker 4

Okay. I think that was me. It broke up a little bit. Hey, guys. Good afternoon.

Speaker 4

First question, Olivia, just maybe on your comments for the quarter and then the trends in 2Q, so I just want to make sure it's clear. The sales for the 2nd quarter to date have Seeded the full amount of 1Q, I guess, as we sit here in mid May, maybe if you could just verify that. And then if that is true and it sounded like that was the case, Are you comfortable with call it over $1,000,000 $1,000,000 in the second quarter And then sort of a Q over Q ramp from there for the balance of the year. I know you don't want to give specific guidance, but maybe if you could comment on That $1,000,000 for 2Q and then the sequential growth for the balance of $23,000,000 off that type of a number.

Speaker 2

Hello, Jean, and thank you for the question. We do not provide guidance, you know this, but what we do provide is And what we can confirm is that the momentum in opening new accounts and capturing patients is continuing. And I'm also very happy that the second quarter Sales already exceeded the Q1. So I think important to understand that Q1 was rather disappointing or below our expectations. We understand why we did an in-depth analysis and we are extremely pleased to see that the momentum is continuing.

Speaker 2

And you not only see this In the opening of new centers, but also in the lining up of new patients and of course the number of new surgeons that are newly trained. So answering your question, unfortunately, I cannot provide further guidance on Q2, but I can confirm that we started extremely strong.

Speaker 4

Okay. That's helpful. Thank you. And then I'll pivot, kind of a different road to go down. On Jynia 2.1, Olivier, are there any data points That you can point to that show that implanted patients on Jynia 2.1, they have better outcomes, have better compliance.

Speaker 4

And I guess where I'm trying to go with this, Maybe then you can also answer, were any of the first 34 patients where you released the data, right, when you released the data in conjunction with the Analyst Day, Were they beneficiaries of 2.1 or were they not on that version? Thanks guys.

Speaker 2

Yes. No, no. And thanks again for the question, John. So commenting on the Jynneo 2.1, it's a little bit funny because 30 minutes before the call, We got the first patients in access that were activated using the Jynneos 2.1. And I can confirm that Mainly driven by the trimming option where we can gradually increase or decrease stimulation to reach an optimal outcome What's really beneficial for those 2 patients.

Speaker 2

We really saw immediately the added value and we were able also when activating patients to find optimal stimulation settings. So that is really very promising in going forward. Now when it comes to 2.1 in the first 34 patients that we have in the abstract for DREAM, There I can say that we did not yet implement the 2.1, so we're just using our initial device. But it's also clear that And going forward, in other dream patients where we believe 2.1 can be beneficiary that we definitely will start implementing this as well.

Speaker 4

Okay. And maybe sorry, just as a follow-up to that last one, 115 patients in DREAM, the 34 that you released data on, We're not using 2.1 to your point. Do you know approximately how many of call it the remainder or the roughly 81 Were beneficiaries of 2.1 as the trial progressed?

Speaker 2

So at this moment, so our strategy is fairly straightforward. Those patients who are doing extremely well, of course, we will not introduce the 2.1 because there is no need for it in patients in going forward that has Not yet reached 12 months and where our clinical team is seeing a need, we will phase in the 2.1.

Speaker 4

Okay. I think I'm good. I'll follow-up offline. Thank you, guys. Thank you, John.

Operator

Thank you. One moment, please. Our next question comes from the line of Adam Maeder of Piper Sandler. Your line is open.

Speaker 5

Hi, good afternoon, guys. Thank you

Speaker 6

for taking the questions. Maybe to start, I'll actually ask one on the P and L and just How to think about OpEx spend going forward? It looks like R and D spending stepped up in Q1. So Would love to get some more color in terms of how those dollars were spent. You also made, I think, a comment Olivier that you're accelerating in preparation for the U.

Speaker 6

S. So just any color you can give us both on the R and D and SG and A line would be helpful. Thank you.

Speaker 2

I will leave the first part of your question to our CFO, Solowiek.

Speaker 3

Thanks, Adam, for the question. So as you So acceleration in R and D. The biggest driver of this is that we are now running ACCESS On top of Dream. So if you compare with Q1 last year, we only had Dream and that's the driver for The increase in R and D, sorry.

Speaker 2

And when it comes to further acceleration in the U. S. Preparation of commercialization, I mentioned it already, we're extremely pleased to be able to recruit A caliber like Christoph Wiegenmann to join Nyxova with more than 20 years at Johnson and Johnson in neuro and in spine leading the U. S. Organization.

Speaker 2

I think it's very clear that he has a very strong proven track record and that he will add a wealth of experience and added value when we are preparing our launch in the U. S. And not only this, also internationally, we can also benefit from his experience and his proven track record, especially in Germany. So that's one part. Next to this, Adam, You know that we are in the interaction with AAO and AMA in obtaining more coding clarity.

Speaker 2

Also there, there was some work done and we are waiting for further results. And besides this, in going forward, as we always communicated, it is an open label study And the more confident we are getting, the more patients we are seeing reaching 12 months. We'll also explain our future hiring in

Speaker 6

And I guess just one kind of quick follow-up there. So it sounds like the level of R and D spend given that you have the AXIS study That's commenced given that dream is ongoing. This is kind of the new baseline to kind of work off of going forward in our models. Is that fair for R and D expense?

Speaker 3

Yes and no, because we expect in the second half of twenty twenty 3 to see a decrease of the DREAM monitoring costs with more and more patients exiting the study. In terms of overall burn, we're not expecting the to see an increase for the next quarters in 2023.

Speaker 2

But I would like to highlight I would like to further comment on this that it's clear that driving patient centered innovation is key and crucial for Onyxor. I think Genio 2.1 already demonstrated the added value in the first access patient. Next to this, also the Amphastarvicales project Starting off the feasibility study in collaboration with the Vanderbilt team is also very exciting for us to further explore and to offer solutions On patients that are currently non responding to lipoglossum nonstimulation. So I just want to summarize with this. We will be continue showing innovative leadership And investing strongly in further innovation that will help benefiting our patient.

Speaker 6

That's helpful color. Thanks, guys. And just for the follow-up, Olivia, you just touched on reimbursement considerations for the U. S. I was hoping just to get a little bit more details there.

Speaker 6

Do you have any sense for when you should expect to get an answer in Q3, I think is when You've previously kind of said you expect to learn more. So when will we get an update in terms of path forward And any more visibility on that process that you can share at this point in time. Thanks so much for taking the questions.

Speaker 2

Yes. So we are working with the ENT Scientific Society, AAO, the American Academy of Otolaryngology To define our CPT code, what would best support Ginyu, the recommendation has been made to AMA and we are waiting for the response. Unfortunately, this is not completely in our control. I hope the timing of the response is not completely in our control, but we definitely expect some kind of response Definitely before we hand or even sooner. There are 2 options.

Speaker 2

I explained this already in the past. One option would be using the existing AGNS code. 2nd option would be using the existing neuromodulation code that is closest to our technology. Under either scenario, we anticipate reimbursement Being at least the same as for the existing AG and S procedure. So that's where we are from a reimbursement perspective.

Speaker 2

I can again also add a little bit more color on the regulatory perspective. There the first module has been submitted. We expect to submit Module 23 before year end and then the final model with clinical data review and IFU labeling will be submitted the moment we have 12 month data In the Q1 of

Speaker 6

2024. That's perfect. I'll leave it there. Thank you.

Operator

Thank you. One moment please. Our next question comes from the line of Michael Pollock of Wolfe Research. Your line is open.

Speaker 5

Hey, good afternoon, good evening. Thanks I want to follow-up on the revenue in the quarter and just want to make sure I understand what happened in the Q1 specifically. It's a really low number measured anyway. I mean, last year, you were averaging €800,000 a quarter Throughout the year, I heard the influences you flagged, but kind of what else can you say to provide some comfort that this isn't Center is not interested in the product, share loss, that sort of thing. I guess it strikes me as A low enough number such that I'd hope for a little more than maybe just kind of timing of OR access and Slow to ramp new accounts.

Speaker 5

So any other color you can provide there as to kind of what you see on the ground in Germany?

Speaker 2

Yes. No, no, definitely, Mike, and hello and Thank you for the question. So let me first be very straightforward also. The Q1 sales is really below our expectation. There is no need in hiding.

Speaker 2

This is below the expectations. When we dig them, and I keep repeating myself, we see that we were really faced with seasonality Mainly of leading accounts. On the other hand, we also are experiencing in opening new accounts that have not yet Funding experience with ipadrosal null stimulation that this is taking longer than we expected. And last, also A little bit part of the success in opening new account is also the need for proctors. And we are also struggling with this more specifically That being said, I'd like to look really positive to the future.

Speaker 2

And to answer your question, Do you see further momentum? Yes. We now have 41 accounts that are fully trained, that are activated And we're the first patients are lined up. So that's a continuous growth of opening new accounts. Just for the reference, You know that competition is having over 50 accounts in Germany.

Speaker 2

We are now getting more and more close with 41 accounts. That's one thing. Second thing we are seeing is also the results, the patient results and the feedback that we get In account with our experience with Nexoah, they are really, really very positive. And this will also lead in further case report And also further publications on these first experiences that will be shared in going forward. That's the second thing.

Speaker 2

Last, we are also seeing That we continue building momentum not only with ENT implanting surgeons, but also with referral physicians. So we get more and more requests from sleep physicians To better understand what our technology is doing, we also continue to invest in DTC in Germany, Because we see that outline, we see also the number of hits on our website is really showing an increased interest Resulting also in concrete patients that are eligible to be treated. And last, we also invested in a dental sales force that is now actively visiting sleep physicians Positioning Genio. So that's what I can that's the color that I can provide on what we are doing in Germany.

Speaker 5

That's helpful. I'll leave it at 1. I thank you for the response.

Speaker 2

Thank you, Mike.

Operator

Thank you. One moment please. Our next question comes from the line of Suraj Kalia of Oppenheimer. Your line is open.

Speaker 7

Hi, Olivier. Can you hear me all right?

Speaker 2

Yes, I can. Good evening or good afternoon.

Speaker 7

Good afternoon to everyone. So Olivier, a few questions from my side. What percent Okay. 41 German sites overlap with Inspire.

Speaker 2

So I can be very precise. So we have 34 that are overlapping and we have 7 sites that are unique or exclusive with MiX-one.

Speaker 7

Fair enough. Maybe do you expect U. S. Pricing also to be 20 Excuse me, was it 30,000 euros and reimbursement approximately around 30,000? Is that sort of the thought process?

Speaker 2

So the short answer is yes. As I was explaining, so we have 2 different scenarios, but in both scenarios, the price point will be around the same And also in line with what you just mentioned and in line with the current price point for AG and

Speaker 7

S in the U. S. Yes. Sudipi, one of the questions we both asked and I'd love your clarification on this is, Is there a requirement in terms of permit to shape every time you have to attach the Just trying to determine if that's another burden

Speaker 2

So first of all, is there a requirement? The answer is no. There is no requirement. But what we learned in our daily clinical practice is, of course, to have the best adhesive Connection with your friends that it's best when there is no facial hair. So we do recommend that people are shaving, but as you can understand, It's different man to man, but there is no official requirement to shave.

Speaker 2

But we do recommend that a very Or do you say that chin without facial hair is the best way to have the adhesive connecting to the skin?

Speaker 7

Fair enough. And Olivier, if I could just ask my last question. Will it be correct me if I'm wrong, the last patient in dream Was implanted in, I believe it was January or February. Please correct me if I'm wrong. And more specifically, what I'm curious about is, let's say Q1, 2024, the last patient 12 month follow-up would be over, Right.

Speaker 7

You'll think you all can turn around the data analysis and mining and everything And deliver the outcomes or at least report the outcomes by Q1. Thank you for taking my questions.

Speaker 2

Thank you, and then I will try to answer very clear. So the last patient was implanted in the 1st week of March, to be very precise. We plan on completing the final PMA module submission soon after the data, the 12 month data is released In the Q1 of 2024. That said, we do not predict the exact timing of FDA decision, Given it will be subject to variables we cannot influence, but we expect FDA approval before year end 2024. No.

Speaker 2

I think also a question was, is 2024 still realistic? And there the answer is yes, it is realistic based upon the review time lines Around the model of PMA.

Speaker 7

Thank you.

Operator

Thank you. One moment please. Our next question comes from the line of Ross Osborne of Cantor. Your line is open.

Speaker 4

Hi, guys.

Operator

One moment please. Looks like you disconnected. I'm showing no further questions at this time. I'd like to turn the call back over to Olivier Talman for any closing remarks.

Speaker 3

So thank you.

Speaker 2

And for the closing remarks, I would like to repeat again that our key objectives for 2023 are focusing on patient follow-up in U. S. DREAMS study, resulting in reaching primary endpoints. And of course, we will continue with the preparations of the U. S.

Speaker 2

Market and driving So thank you all for joining. Thank you for the questions. I'm happy to connect more if there should be more questions. Good evening or good afternoon.

Operator

Thank you. Ladies and gentlemen, this does conclude today's conference. Thank you all for participating. You may now disconnect. Have a great day.

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Nyxoah Q1 2023
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