Nyxoah Q2 2023 Earnings Call Transcript

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Provided by Quartr
August 8, 2023

There are 10 speakers on the call.

Operator

Good day and thank you for standing by and welcome to Nixula Second 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 Please be advised that today's conference is being recorded. I would now like to introduce your host for today's call, Michaella Gerkewood, Investor Relations and Communications Manager. Please go ahead.

Speaker 1

Thank you. Good afternoon and good evening, everyone, and welcome to our earnings call for the Q2 of 2023. I am Mikaela Kirkwood, Investor Relations and Communications Manager at NextElla. Participating from the company today will be Olivier Tillman, Chief Executive with Mr. Emilyk Moreau, Chief Financial Officer.

Speaker 1

During the call, we will discuss our operating activities and review our Q2 financial results released after U. S. Market close 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.

Speaker 1

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. These statements involve material risks and uncertainties that could cause 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 available information and the company assumes no obligation to update these statements. Accordingly, you should not place undue reliance on these statements.

Speaker 1

For a list of descriptions of the risks and uncertainties associated with our business, please refer to the Risk Factors section of our Form 20 F filed with the Securities and Exchange Commission on March 22, 2023. 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 Q2 2023 earnings call. The evolution of NixoA's enlarging its U. S. Footprint is well underway with our current focus on patient follow-up in our U.

Speaker 2

S. Pivotal study dream. As a reminder, we completed all 115 implants in the study earlier this year and expect to report 12 month results in the Q1 of 2024. We are highly confident in dream outcomes Based on the over 500 implants in our prior clinical and commercial settings globally and the DREAM efficacy and safety data released in a late breaking poster session at Sleep 2023 in June. In the poster, we reported efficacy data On the first, 34 DREAM patients reaching 12 month follow-up, which demonstrated a 65% AHI responder rate And a 76% ODI responder rate and safety data on all patients enrolled in the study, which were in line with our expectations and compare favorable to other neuromodulation studies.

Speaker 2

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. The model of PMA submission continues to progress, with the 2nd module being filed during quarter 2. We continue to anticipate submitting the 3rd module later this year And the 4th and final module, which will include 12 month safety and efficacy data shortly after the follow-up period is completed early next year. We remain on track for FDA approval before the end of 2024. The U.

Speaker 2

S. Access pivotal study focused on complete concentric collapse patients continues to enroll, with implants expected to be completed in 2024. As a reminder, CCC patients represent approximately 30% of hypoglossal neurostimulation eligible to treat OSA patients Contra indicated to commercially available AGNS Therapy in the U. S. And do not have suitable treatment options other than major palate surgery.

Speaker 2

The access primary endpoints are similar to the DREAMS study primary endpoints as Genio has demonstrated similar results in both CCC and non CCC patients. This already resulted in a label expansion in Europe where the first commercial CCC patients Commercially, this quarter, we reported sales of 1,100,000 and increased the number of German centers implanting Genio to 42. This is the result of both strong underlying demand for Genio and commercial investments, Including direct to consumer online campaigns launched in March. As a result of these DTC efforts, We are seeing approximately 50,000 monthly website visits and nearly 1700 obstructive sleep apnea patients called the helpline In the Q2 compared to 292 in the first, guiding these patients to the appropriate therapy and shortening their time to treatment will contribute to our future success. AGNS in Germany remains highly underpenetrated With 1,100,000 CPAP patients, yet only 6 20 AGNS implants last year, Identifying CPAP refractory patients is the key to unlocking the market's potential, and we are working closely with sleep physicians and other industry participants to ensure these OSA patients receive appropriate therapy.

Speaker 2

We continue to position ourselves as an innovation leader in the OSA space with always putting patients first and listening to our surgeons. As a result, Genio has a different approach to AGNS than existing implanted battery with leads Solutions. Genio offers patients a leadless, full body MRI compatible, non implanted battery solution, Thanks to the fully upgradable wearable component, Jynneo patients can always have the most advanced technology without needing a new surgery. Next generation Jynneos systems will provide patients with real time feedback through data collection and offer remote monitoring that will improve the patient experience and provide physicians the ability to more efficiently optimize patient care. Concretely, we are currently rolling out Genio 2.1, Enabling greater stimulation adjustability, while Genio 3.0 will have a design change, Integrating patient feedback and positive impact on gross margins by integrating the coil into the wearable component.

Speaker 2

All this should further increase patient access to AGRS technology. We are also working on regulatory approval to activate existing sensors in the wearable that will adjust stimulation based upon sleeping position. Our European commercialization experience, Early DREAM data and Genio's differentiated design reinforce our confidence in a successful U. S. Launch next year.

Speaker 2

We recently commissioned independent clinician and patient service, which demonstrates significant demand for Genio and supports our view that we can more than replicate our European performance when entering commercially in the U. S. To ensure we are fully prepared at launch, we have accelerated investments in our U. S. Commercial infrastructure.

Speaker 2

Christoph Eigenmann joined as Chief Commercial Officer during the Q2 and our market access team is making steady progress. We are working closely with the AAO, the American Academy of Otolaryngology, to define which CPT code would best support Genio at launch. While there are multiple CPT codes being evaluated, They all provide reimbursement that at a minimum is in line with current AG and S payment levels. We anticipate having Medicare coverage at launch with commercial payers following shortly thereafter. Finally, we are making steady progress with our antacidigialis program to our exclusive licensing agreement with the Vanderbilt University.

Speaker 2

Under the lead of Professor David Kent, in close collaboration with the NKXSOLA R and D team, We are evaluating stimulation of the Anastasirvikalis nerve to address current AGNS non responders. The Anastasirvikalis Preliminary design work has ended and we have begun the detailed design phase. We continue to anticipate beginning a feasibility study later this year. In summary, we continue to advance our key objectives for 2023, which are to focus on patient follow-up in the DREAM study, Resulting in reaching the primary endpoints, begin preparations to enter the U. S.

Speaker 2

Market with regulatory, Manufacturing and commercial 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 Moreau, who will provide the financial update.

Speaker 3

Thank you, Olivier. Good day to everyone, and thank you for joining us today. Revenue for the Q2 ended June 30, 2023, was €1,100,000 Total operating loss for the Q2 was €11,900,000 This is €7,400,000 in the Q2 of 2022, driven by an acceleration in clinical activities, notably the start of the ACCESS study as well as commercial investments in Europe. Last quarter, we raised €3,000,000 pursuant to the company's $50,000,000 at the market program. As of June 30, 2023, cash and financial assets totaled €84,500,000 compared to $96,100,000 on December 31, 2022.

Speaker 3

During the Q2, Our monthly cash burn was €4,800,000 And based on our current cash position, we have a runway into late 2024. With that, I will turn the call back over to Olivier.

Speaker 2

Thank you, Louis. We are entering the most exciting time in We are less than 9 months away from the DREAM clinical data reloads, which should result in obtaining FDA approval and initiating U. S. Commercialization. The uniqueness of Genio System resonates well with both physicians and patients confirmed by Independent Market Research.

Speaker 2

I look forward to continue to scale the company in anticipation of entering the U. S. Market and continuing to grow in Europe. This concludes the formal part of our presentation. Operator, I will turn the call over to you to begin our Q and A session.

Operator

And thank you. And our first question comes from Jon Block from Stifel. Your line is now open.

Speaker 4

Hey, everyone. This is Joe Federico on for John. Thanks for the questions. To start, I know you gave some color on the reimbursement details. I just wanted to

Speaker 5

ask, I think in the past you had said

Speaker 4

that you expected to hear from the AMA before the end of the year on some of the coding clarity. Can you give us an update on where that sits?

Speaker 2

Yes. No, definitely. So we are working, as I mentioned, with E&P Society, AAO, and they are collaborating with the AMA making recommendations. There are 2 options that are fully and further discussed, and we are still sticking to the same time line that we believe that before year end, There will be clarity on which of the two options will be the one that we can use for the Genius system in going forward.

Speaker 4

Okay, great. Thanks for the color. And then just a follow-up, I wanted to ask about gross margin in the quarter. It looks like it Came in a little bit below our estimates. Can you kind of expand on some of the drivers there and maybe how you expect that to play out over the remainder of the year?

Speaker 4

Thanks, guys.

Speaker 2

I will hand over this question to our CFO.

Speaker 3

Yes. Hi. Thank you for the question. The gross margin for the 2nd quarter was 62% versus 64% for the Q1. So there is a 2% decrease in term of margin, which is due to the additional site we now have in Belgium.

Speaker 3

So this said, with the acceleration of the business and the ramp up of the volumes, we expect the gross margin to increase Over time, specifically in the second half of twenty twenty three and then in twenty twenty four based on volume and absorption of fixed costs.

Operator

And one moment for our next question. And our next question comes from Ed White from H. C. Wainwright, your line is now open.

Speaker 6

Good evening. Thanks for taking my questions. So with the increase in the use of GLP-one drugs. I just wanted to get your thoughts on the potential impact to the hGNS market.

Speaker 2

Thank you for this question, and it's really a hot question at the moment. So the way we are looking at this at NyxoA is the following. If you look at both published data and commentary from leading KOLs indicating that to have the highest AGRF response, It's best to lower BMI to 35 than to treat high BMI patients. So our view is that lowering BMI from high BMI patients, Thereby increasing the number of AGNS appropriate candidates will more than offset any patients that might drop out of the funnel. In other words, we are really welcoming GLP-one into the market, and we do believe that the effect Can be meaningful and benefiting and increasing the AG and S eligible candidates.

Speaker 6

Great. Thank you. And just another question. You were in 41 accounts in Germany in the Q1, 42 in the Q2. I just wanted to get your thoughts on how many accounts you're expecting to be in by year end?

Speaker 6

And your competitor was in over 50 accounts, I believe, in the Q1. Just where do they stand now? And what's your overlap with them?

Speaker 3

Thank you.

Speaker 2

Yes. So first of all, I want to compliment the judgment team in driving and opening new accounts. They are doing really a great job on this. Today, we are at roughly 42 accounts. In going forward, I do not want to provide specific guidance on exactly how many We will be opening, but it's also clear that we will continue to anticipate a steady increase in the number of implanting centers over the course of the year.

Speaker 2

And just as some kind of reference, in our view, our competitors, they are having slightly above 50, 55 accounts in Germany. We have 42 at this moment. And as I mentioned, we won a steady increase also the number of implanting centers over the course of the year.

Speaker 6

Okay, great. Thanks for taking my questions.

Speaker 2

My pleasure.

Speaker 6

And thank you.

Operator

And our next question comes from Adam Maeder from Piper Sandler. Your line is now open.

Speaker 7

Hi, Olivier. Hi, Louis. Congrats on the progress and thank you for taking the questions. Maybe just to start, wanted to ask about some of the pre commercialization U. S.

Speaker 7

Activities that you're engaging on right now. I think I heard the word accelerated mentioned once or twice. So Can you just level set us kind of exactly where does the infrastructure stand? How are you thinking about headcount at UF launch? And Maybe just remind us of kind of the initial go to market strategy in the U.

Speaker 7

S? And then I had a follow-up. Thanks.

Speaker 2

Thank you, Adam, for the question and joining the call. So when it comes to our go to market strategy, as I mentioned before, we will gradually increase Our investment in U. S. Pre commercialization going hand in hand also with our increased confidence in the DREAM study data outcome. What I can say is that, 1st of all, we hired already our CCO, Chris.

Speaker 2

Next to this, we have our Market Access Director. We also recently have refocused of the VP of Operations fully dedicated also to help preparing the pre commercialization. In going forward, of course, we will further expand and also we are preparing an internal plan where We are anticipating having a full sales force of 100 to 100 people 100 to 150 people higher than trained by the time of launch. These reps will target both implanting ENTs, but also referring sleep clinicians, supported by a relatively modest DTC investment. At this moment, we are doing the targeting of accounts, how many we aim to come and also to enter.

Speaker 2

But on all this, I will come back during quarter 3 the moment we get even more close to U. S. Commercialization.

Speaker 7

Okay. Totally fair and thank you for the additional color there. Maybe just for the follow-up, Obviously, you guys don't provide revenue guidance. It looks like The Street's modeling around €5,000,000 or so for full year 'twenty three. Curious if you have any reaction to that figure and just any thoughts around kind of the back half cadence Q3 versus Q4 that you can share regarding your business.

Speaker 7

Thanks again.

Speaker 3

Thanks for the question, Adam. I will take it. So as you said, we're not Providing revenue guidance, but we're very confident in the momentum of the business and we're confident in terms of The high growth in Germany, this is the only thing I can comment on.

Speaker 7

Thank you.

Operator

And our next question comes from Ross Osborne from Cantor Fitzgerald. Your line is now open.

Speaker 8

Hi. Thank you for taking our questions. Would you please provide an update on how some of the headwinds you called out during the Q1 played out year to date? Specifically, has hospital capacity and staffing improved worsened or stayed the same? And how have new accounts dealt with administrative burdens you mentioned?

Speaker 8

Thank you.

Speaker 2

Thank you, Rolf. Thank you for this question. And you recall this very correct. So in the Q1, we were impacted with what we called regulatory factors, mainly driven by proctor availability and reimbursement approvals in new open centers. So the resolution of these issues Combined with our patient focused initiatives drove the sales rebound in the 2nd quarter and that's also explaining how we landed at more than €1,100,000

Speaker 8

Got it. Thank you for that. And then just one more for us. Would you be able to disclose what percent of total revenue Germany

Speaker 2

So at this moment, the German revenue is really driving our revenue business with more than 90% of all international revenue coming from Germany. We are really pleased that we also see Switzerland having no full BRG code in place, we recently also generated our first revenue in Austria. So besides Germany, we have Switzerland, Austria. We had Spain already, And we expect more revenue to come in the second half from Spain. And in going forward and further expanding, we are aiming at Italy, where we expect 1st revenue generation next year and we're also looking at the U.

Speaker 2

K.

Operator

And our next question comes from David Riccotte from Baird. Your line is now open.

Speaker 5

Hi. Thanks for taking the questions. I wanted to start on the DTC campaign in Europe that you called out. I think you mentioned maybe 50,000 monthly website visits. Just wonder if you had any more color If and how that's translating to revenue growth toward patients going into centers, toward patients translating into ultimate implants, Any color on the ROI you've seen there?

Speaker 5

And I think you mentioned in the U. S, you're expecting a modest kind of DTC the campaign associated with the commercialization. Just wondering if that's something you're expecting to invest in ahead of the launch, maybe at the time of launch or something that rolls out thereafter?

Speaker 2

So let me start by answering the first part of your question on DTC in Europe. So a direct to consumer advertising campaign was launched in March in Germany and has raised awareness of AGNS and Genio. As a result, we have seen and we have seen rapid growth in appointment requests To the helpline, the current time from patient identification to Genu implant, it's between 6 to 8 months. So we would not anticipate appointment requests transferring to implants until in fact Q4 this year, but we are seeing that there is a really increased interest. Well, jumping and taking this learning into the U.

Speaker 2

S, I think it's obvious and also if we just see what is happening With other company or with a leading company in AGNS, the DTC is really showing its effect and its positive effect on recruiting patients. So also when Nixloa will launch in the U. S, we will invest in DTC. However, we want to do this in a more selective way that we know that In line with the centers that we are opening and the centers that we call center of excellence that we can do really focused DTC investments Driving patients to these centers resulting in an increased implant rate for GEO.

Speaker 5

All right, great. That's helpful. And then Just on the cash balance, I think you called out maybe 100 to 150 or so U. S. Reps Pansy, in the sales force pre commercialization, I think you also called out cash balance gets you to toward the late end of 2024.

Speaker 5

Do those comments or does the cash balance getting you there account for potentially bringing on this Sales force in the middle part maybe of 2024 or should we be thinking about any type of incremental investment in the cash position of the business ahead of that launch as well? Thank you.

Speaker 2

Yes. No, no, this is a really interesting question and it's also a question that We are debating internally. I think it should be I will just start the answer and then I'm sure that we could also follow in on this. In short, at this moment, we are having a really healthy cash position that will bring us to end 2024. You know that the major inflection point is coming with the 12 month marine data readout in Q1 next year in 2024.

Speaker 2

At that moment, it's also, I think, clear that in order to prepare a real successful commercial launch in the U. S. Where we will be Making a big splash when answering that we will also need to raise more money to finance this. Now what the exact numbers all and will be, I don't think this is the correct moment to disclose this, but we have currently a healthy cash position. We have a big inflection point coming up, And we also know and we are preparing an aggressive pre launch in the U.

Speaker 2

S, trying to make a big splash when we enter. And therefore, most likely, we will be raising more money, but the exact amount again, it's not this moment that we want to comment further on this. Louis, could you add something please? No,

Speaker 3

this is totally complete. So the cash burn until end of 2024 covers the all the pre commercial activities. And since we are looking at the Launch plan, the detailed plans and the phasing of those plans, this will be incremental investments.

Speaker 5

Okay, great. Thank

Speaker 6

you. And thank you.

Operator

And our next question comes from Suraj Kalia from Oppenheimer and Company. Your line is now open.

Speaker 9

Olivier, Louis, can you hear me all right?

Speaker 2

We can hear you perfect, Subhash.

Speaker 9

Perfect. Olivia, congrats on all the progress. So Olivia, a number of questions have been asked. Maybe let me ask you a slightly different flavor. In Germany, What are the average procedure times for Jynneo?

Speaker 9

And is our math approximately right that we are in Q2, We are talking about roughly one implant per site

Speaker 3

or a

Speaker 9

little more than 1.

Speaker 2

Okay. So what we are seeing from implant procedure in Germany, we are having we are seeing a range That is varying between 45 to 60 minutes. So depending a little bit on the surgical technique, The handiness of surgeons, but we see roughly that 45 to 60 minutes that is what it's taking the surgeons to do an implant procedure. When it comes to one implant by site, if you look at it purely mathematically, yes, you could come up with this calculation. However, the sites that we are opening are not at the same state as the sites that were opened before.

Speaker 2

So we also have a variability between sites. There are sites that are doing 10 implants. There are sites that are doing 1 or 2 implants. But our aim in going forward is also Making an increase in overall implant numbers and to this one we calculated further and that's what we're aiming for with the most experienced side That we can come with weekly implants or even multiple implants on a weekly basis depending on the overall availability that they're having.

Speaker 9

Got it. So Olivia, when you look at Germany, I remember you had talked about a 50% market share by year end. Love to get the status update if possible on that. And Olivia, as you think about launching in the U. S, How do you envision this hand to hand combat with Inspire?

Speaker 9

Do you think it will be determined by DTC spend?

Speaker 6

Do you

Speaker 9

think it will be determined by outcomes, feet on the ground, price differential? Just kind of give us some additional color on how You guys are thinking about the U. S. Market especially.

Speaker 2

Yes. And before I answer the question of Germany and the market share, I would like to answer the second part of your question, if that is okay with you, Suraj, because I think you touched on something that is really, really important. And how can we differentiate with Inspire and how can we drive success in the U. S. In going forward?

Speaker 2

So first of all, yes, We do believe and we are convinced that the product differentiation will convince the majority of patients to choose for the Genio over a base major platform technology. That is our belief. That is what we are seeing. That's what we are seeing confirmed When we do independent market research, so we do believe that patients suffering from OSA will choose the laser technology, the SAFR technology, where For example, the full body BMI compatibility, where you have 1 incision, where you will always have access to the latest and greatest Technology update without having to undergo reoperation. That's already one part.

Speaker 2

On the other hand, We also do believe that in going forward and in launching, the effect of DTC cannot be underestimated Because it's directly also linked to the patient choice of technology, and we will also be investing in this. Another differentiating point is when you speak to surgeons and you listen also with the bilateral stimulation effect And the option to also have the label expansion treating CCC patients, which would make it for surgeons less cumbersome. You don't have to think about DICE or a similar identification model to select or identify CCC. If you combine all these things starting with a clear product differentiation, with a patient acceptance ratio, with a less invasive technology in combination with surgeons We do not need to exclude or come with cumbersome pre investigations before they know if they can implant. I think those will be the winning arguments for Nixoa in going forward.

Speaker 2

Now jumping to the first part Of question, it's the performance in Germany and the market share. I do have to give credit to who belongs who needs to get credit. And It's clear that Inspire delivered a very strong Q2. They did. No, this is what we are telling already.

Speaker 2

It's precisely Our competition entering a monopolitic market can increase overall AGNS penetration and where patients will benefit from in need for treatment. So all present in Germany, it's clearly driving therapy adoption and capturing patients that would be lost for AGNS treatment. However, AG and S still continues to be strongly underpenetrated and to unlock the market And the potential patients have to be captured at the moment when they become refractory to CPAP and should not be left without therapy. And that is one of the reasons why we increased our investment in DTC in Germany. It's also one of the reasons why we increased our sleep solution presence, And it's also one of the reasons why we are exploring strategic partnerships to identify those patients.

Speaker 2

Now, Answering also very, very precise on the market share. At this moment, in our estimate, we have a little bit more than 20% market share in the quarter too.

Speaker 9

Got it. And, Dewey, one last question for you, if I may. What do you anticipate is going to be the spend on access assuming it gets wrapped up by next year. Gentlemen, thank you for taking my questions.

Speaker 3

Yes. So a study like access will cost around $15,000,000 and We will incur this year close to €4,000,000 So the remainder will be for next year.

Speaker 6

And I

Operator

am showing No further questions. I would now like to turn the call back over to Olivier Tillman, CEO for closing remarks.

Speaker 2

Yes. Thank you. And again, thank you all for joining. Thank you for the interaction, Fiat, and also the good questions. I would like simply to close by repeating what I was already saying.

Speaker 2

We are entering the most exciting time of Nyxoah being less than 9 months away From U. S. Data, it's remote, readout. We are looking also in further expanding of European revenue and commercialization. And of course, with that hand in hand, we are further scaling up the organization.

Speaker 2

We are getting ready also from a manufacturing perspective. So it's really All excitement at Nyxoah at this moment, and we are really looking forward into the coming months and the end of the year. So thank you all for participating and for your questions.

Operator

This concludes today's conference call. Thank you for participating. You may now disconnect.

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Key Takeaways

  • NextElla completed all 115 implants in its U.S. DREAM pivotal trial and expects 12-month results in Q1 2024, remaining on track for FDA approval before the end of 2024.
  • Q2 sales in Germany reached €1.1 million across 42 implanting centers, boosted by direct-to-consumer campaigns that generated ~50,000 monthly website visits and 1,700 helpline calls.
  • Q2 operating loss widened to €11.9 million (from €7.4 million in Q2 2022) due to accelerated clinical activities and increased European commercial investments.
  • The Genio system offers a leadless, MRI-compatible, fully upgradable wearable solution, with Genio 2.1 and future 3.0 versions adding real-time feedback and margin-enhancing coil integration.
  • As of June 30, 2023, cash and financial assets totalled €84.5 million with a monthly burn of €4.8 million, providing a runway into late 2024 ahead of additional fundraising post-DREAM data.
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Earnings Conference Call
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