ENDRA Life Sciences Q2 2024 Earnings Call Transcript

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Provided by Quartr
August 22, 2024

There are 7 speakers on the call.

Operator

Good afternoon, and welcome to the ENDRA Life Sciences Second Quarter 2024 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.

Operator

Please go ahead.

Speaker 1

Thank you, operator. This is Yvonne Briggs with LHA. Good afternoon, and welcome to ENDRA Life Sciences' Q2 2024 Business Update and Financial Results Conference Call. Earlier today, ENDRA issued a press release on this topic, which is available on the Investors section of ENDRA's website. Before we begin, please note that today's discussion will include forward looking statements.

Speaker 1

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 ks for the 2023 fiscal year and subsequent SEC filings for more information about risks and uncertainties related to forward looking statements. In terms of the structure of today's call, Alexander Tuchman, Acting Chief Executive Officer, will begin the prepared remarks followed by Ziad Rouagh, new Head of Regulatory and Clinical Affairs and then Michael Thornton, ENDRA's Chief Technology Officer. They will be followed by Richard Jacrue, ENDRA's new CFO, to review the Q2 financial results.

Speaker 1

With that said, I will now turn it over to Alex. Alex?

Speaker 2

Thank you, Yvonne. Good afternoon, and thank you for joining us today to discuss ENDRA's Q2 2024 financial results and business highlights. Before we proceed to the business update, let me address the reverse stock split and the subsequent trading of our common stock. As you know, after receiving shareholder approval earlier this month, the company authorized 1 for-fifty reverse stock split, which we announced last Friday and was effective this past Tuesday. The primary goal was to keep our share price above $1 and in turn maintain the NASDAQ listing.

Speaker 2

This plan was derailed because of an extremely high volume of exercise warrants, which were issued as a part of the $8,000,000 public offering that was completed in June. This public offering was necessary in order to keep the company operational and not to lose all the progress Android made over the years. We strongly believe that this sharp decline in our stock over the past few days is completely unrelated to Android business prospects.

Speaker 3

We

Speaker 2

have the intended outcome as we are trading below $1 right now. We recognize the seriousness of this situation on the company and our investors and we will keep you apprised of our actions as we move forward. Now let's turn our attention to the Q2 results and recent changes. I would like to start by reviewing with you 6 specific items we intend to do differently moving forward to become more actionable and predictable as we bring ENDRA's differentiating thermal acoustic technology to market. These six changes include stronger operating team, relentless prioritization of our activities, new approach with FDA, enhanced go to market strategy for TAEUS liver device, crystallization of our Android vision, and finally improved financial execution.

Speaker 2

Let me elaborate on each. First, we enhanced our management team by adding 2 experienced operators. We have proven track record of success in transforming new technology companies. Richard Jacrue is a seasoned CFO with public and private company experience, and he well understands lean operations and restructuring. He is already working very closely with Irina, formerly Senior Director of Finance, to ensure a smooth transition daily finance operations.

Speaker 2

Irina will remain as an advisor to the company moving forward. Ziad Roach has joined us as the Head of Clinical and Regulatory Affairs. Ziad has successfully led a number of emerging medical device technology companies through regulatory process and early commercialization. And he already made a huge impact on our most recent strategy and interactions with FDA. I anticipate that both Richard and Ziad experiences will greatly benefit ENDRA as we move forward through this critical phase for the company.

Speaker 2

Mike Thornton, our CTO, will continue to focus on product delivery as well as enhancing ENDRA's technology roadmap and intellectual property. 2nd change, after reviewing after all the priorities that we are facing, we as the new operating team are unanimous in our relentless prioritization and laser focus on the most critical deliverable for the company and is executing a statistically powered, multicenter, prospective clinical trial to obtain the necessary data that will allow us to successfully move forward. This clinical data is a foundational element for both regulatory and commercial success. It offers 3 important benefits. It allows for optimization of product design for maximum user utilization.

Speaker 2

It is a necessary piece of successful de novo application. And finally, it answers the big why as in why I as a clinician or pharmaceutical user should utilize this technology. The 3rd change we are implementing is we have fundamentally changed our FDA regulatory strategy under Zia's leadership. We are switching from the use of retrospective data to a hypothesis driven statistically powered prospective clinical trial, which is pre vetted through FDA. We are therefore expanding from a single clinical site to a multicenter trial and we are increasing the number of subjects by an order of magnitude from 20 to about 250, which is necessary to achieve acceptable statistical power.

Speaker 2

We are now fully engaged with the FDA on establishing the consensus and trial design prior to data collection. Later in this call, Ziyad will elaborate further on these changes. 4th, we are revisiting our go to market strategy for the TAEUS liver device. We have more and more evidence that hepatology may not be the beachhead market we should pursue. Hepatology will likely remain a market for us, but perhaps not the primary target.

Speaker 2

5th, the change in initiative number 5, we are preparing changes related to ENDRA's strategic direction. We will formalize our longer term business strategy and crystallize our vision as in what's next after we commercialize our taste flavor device. How do we add we have to answer questions such as how do we add more value to our customers beyond the liver fat test and become a metabolic disease biomarker company, which could be a lot more valuable. All of this is expected to be developed and assessed over the next 12 months. Lastly, we are focusing on improved financial stewardship.

Speaker 2

Our goal is to scrutinize every dollar we spend and as a result, we recently conducted significant reduction of our operating expenses and we were able to reduce them by $3,000,000 plus, which represents approximately 26% reduction on annualized basis, all of it without impacting the primary deliverable, which is clinical data collection in preparation for our FDA submission. Richard will elaborate on this further during the financial update. Now that I outlined what we will do differently moving forward, Ziad, Mike and Richard will now highlight for you the progress we made since Q1 conference call in 3 areas, clinical and regulatory, technology and IP and financial. Ziyad?

Speaker 4

Thank you, Alex. In May of this year, we met with the FDA at the headquarters in Maryland to demonstrate live the TAEUS technology and review the clinical and statistical plans for the proposed pivotal study. The meeting minutes from the FDA meeting confirmed alignment between ANDRA and the FDA on the final product configuration, clinical study design and regulatory pathway to a successful outcome. As part of our refocused clinical program, we are limiting initial data collection to 3 pilot sites, 2 U. S.

Speaker 4

And 1 EU. These pilot trial sites were selected based on their ability to recruit patients. We have already acquired data on 25 subjects through these efforts. In terms of timetables, these will be there will be sequential studies, meaning the results of the pilot study will inform the design of the pivotal Our goal is to have all clinical work completed and the data incorporated into our de novo submission targeted for mid-twenty 25. I've handled similar opportunities during the course of my career with complex trials and devices, including imaging studies, and I'm highly optimistic about the regulatory path we have set for the TAEUS liver device.

Speaker 4

Mike?

Speaker 5

Thank you, Siyad. Our patent portfolio now stands at 81 issued patents globally. During the Q2 of 2024, Enriol has issued 5 additional patents, 3 in Europe and 2 in China. The issued patent portfolio consists of 42 thermal acoustic device and foundational enabling technology patents, 22 patents related to estimating fat fraction and 17 patents covering others thermal acoustic applications and nonthermal acoustic technologies. Our broad intellectual property portfolio provides protection for the TAEUS system with its novel thermal acoustic technology and the opportunity to explore licensing opportunities beyond our core focus.

Speaker 5

I'll turn the call over now to Richard.

Speaker 6

Thank you, Mike. And it's a pleasure to be speaking with our investors in my first quarterly conference call as Entra's CFO. During the quarter, we raised $7,300,000 in net proceeds from the sale of common stock and warrants in a public offering. As of June 30, 2024, we had cash and cash equivalents of $6,400,000 Based on our current projections, our cash runway funds the company into the first half of twenty twenty five. Turning now to a review of our financial results.

Speaker 6

For the quarter ended June 30, 2024, our total operating expenses decreased to $2,200,000 from $3,000,000 for the same period in 2023. The decrease was mainly due to declines in research and development and sales and marketing expenses. Year over year, R and D expenses decreased $684,000 or 49 percent as we shift our resources and spending from development to clinical activities. In sales and marketing, cost decreased $85,000 or 34% as we restructured our European operations to support the company's near term clinical study goals. General and administrative expenses increased $5,000 overall due to the administrative cost of the fundraising, which offset decreases elsewhere.

Speaker 6

We continue to scrutinize our spending and will likely make further adjustments to our expense structure to focus on achieving our priorities as we reset our strategy. Now, I'll turn the call to the operator for questions. Operator?

Operator

We will now begin the question and answer session. Our first question today is from Edward Woo with Ascendiant Capital. Please go ahead.

Speaker 3

Yes. Nice to meet you, Alexander and Richard. My question is more on, as you guys are hitting the ground running, how quickly do you think you guys will be able to get your new strategic path fully implemented? Or do you still think it needs time to kind of evaluate the situation?

Speaker 2

Thank you for the question, Ed. In terms of the next 9 to 12 months, we have a clear priorities described that we're going to execute. So this will involve completing the clinical studies, obtaining all the necessary data to prepare for regulatory submission with FDA as well as generating enough compelling data to use for promoting this technology to future customers. So in terms of again, this priority has been agreed upon and articulated to every employee within the company. In terms of longer vision, what happened following the introduction of TAEUS liver device, we get the sharpened pencils over the next 6 to 9 months, look at all the opportunities that our IP offer and determine the path going forward.

Speaker 2

One thing I can tell you for sure is that we're going to create a strategic roadmap that will include several growth opportunities, some of which we will pursue organically and some of which could be licensed to others. More on this later.

Speaker 3

Great. And then just a final clarifying question. I wasn't sure if I heard right. Do you say that in 2025 you plan to file your FDA application? Do you give a specific time in 2025?

Speaker 2

We haven't provided the specific guidance. I don't believe so. But what I can tell you is that our goal is to complete the clinical study this year and initiate pivotal study early next year with the goal of submitting sometimes by mid of 2025.

Speaker 3

Great. Well, thank you and I wish you guys good luck.

Speaker 2

Thank you.

Operator

This concludes our question and answer session. I would like to turn the conference back over to Alex Tuchman for any closing remarks.

Speaker 2

Thank you. Given I would like to wrap this call by telling you that given that everybody feels the Board and the operating team are bullish Endur's technology and market opportunity. We expect that after implementing the 6 initiatives and changes I described earlier in this call, Endur's performance will improve and we will reverse the course that the company has settled for in the past. I'm confident personally about this because I have led several successful turnarounds of medical device and emerging technology companies for both Fortune 100 and MicroCups. And I think we can do this again here.

Speaker 2

I believe the team is energized. We know what we need to accomplish in the next 6, 9 12 months. And you see hopefully different output from this team moving forward. Thank you. Thank you for joining us today and we look forward to keeping you updated on our progress.

Operator

The conference is now concluded. Thank you for attending today's presentation. You may now

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Key Takeaways

  • ENDRA executed a 1-for-50 reverse stock split to maintain its Nasdaq listing, but heavy warrant exercises have driven the share price below $1, and management is evaluating further steps.
  • The company bolstered its leadership team by hiring CFO Richard Jacrue and Head of Regulatory & Clinical Affairs Ziad Roagh to strengthen financial oversight and streamline FDA engagement.
  • ENDRA has shifted to a hypothesis-driven, multicenter prospective clinical trial with roughly 250 subjects, aiming to complete studies this year and submit a de novo FDA application by mid-2025.
  • The go-to-market strategy for the TAEUS liver device is under review, with hepatology remaining a market but exploring a broader metabolic disease biomarker vision beyond liver fat estimation.
  • In Q2 2024, ENDRA raised $7.3 million net, reduced operating expenses by 26% year-over-year, and has a cash runway into H1 2025 to fund its clinical and regulatory priorities.
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Earnings Conference Call
ENDRA Life Sciences Q2 2024
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