ENDRA Life Sciences Q2 2024 Earnings Report

ENDRA Life Sciences EPS Results

• Actual EPS: -$140.00
• Consensus EPS: -$122.50
• Beat/Miss: Missed by -$17.50
• One Year Ago EPS: N/A

ENDRA Life Sciences Revenue Results

• Actual Revenue: N/A
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

ENDRA Life Sciences Announcement Details

• Quarter: Q2 2024
• Date: 8/14/2024
• Time: After Market Closes
• Conference Call Date: N/A
• Conference Call Time: N/A

ENDRA Life Sciences (NASDAQ:NDRA), Inc. (NASDAQ: NDRA) is a medical technology company headquartered in Ann Arbor, Michigan, that focuses on the development and commercialization of Thermoacoustic Enhanced Ultrasound (TAEUS™) imaging. The company’s proprietary TAEUS platform combines conventional ultrasound with thermoacoustic signals to provide non-invasive, real-time temperature monitoring of soft tissue. This technology is designed to improve the safety, efficacy and outcomes of thermal ablation procedures and other heat-based therapies.

ENDRA’s core product line centers on a compact, easy-to-integrate device that augments existing ultrasound systems. Using patented algorithms and specialized hardware, the system captures thermoacoustic signals generated when tissue is exposed to low-power microwave pulses. These signals enable clinicians to visualize temperature distributions during procedures such as radiofrequency ablation, microwave ablation and high-intensity focused ultrasound. The company collaborates with hospitals, academic research centers and medical device partners to conduct preclinical and clinical studies that validate the performance and utility of TAEUS technology.

The company holds a growing portfolio of issued and pending patents across the United States, Europe and Asia, and it is advancing toward broader regulatory clearances and international market entry. ENDRA’s leadership team is led by President and Chief Executive Officer David Kaiss, who brings two decades of experience in medical device development, regulatory affairs and commercialization. Under his direction, the company has expanded its R&D capabilities, strengthened manufacturing partnerships and established key distribution channels to support future product launches.

ENDRA Life Sciences Q2 2024 Earnings Call Transcript

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.

Presentation

[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. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad. To withdraw your question, please press star, then two. Please note, this event is being recorded. I would now like to turn the conference over to Yvonne Briggs. Please go ahead.

[Yvonne Briggs, Senior VP at LHA]

Thank you, operator. This is Yvonne Briggs with LHA. Good afternoon, and welcome to Endra Life Sciences second quarter 2024 business update and financial results conference call. Earlier today, Endra issued a press release on this topic, which is available in the Investors section of Endra's website. Before we begin, please note that today's discussion will include forward-looking statements. All statements by management other than statements of historical facts, including statements regarding the company's strategies, financial condition, operations, costs, plans, and objectives, as well as anticipated results of development and commercialization efforts, the timing of clinical studies, potential partnership opportunities, and expectations regarding regulatory processes, receipt of required regulatory clearances and product launches are forward-looking statements. Except as required by federal securities laws, the company disclaims any obligation to update or revise any forward-looking statements.

[Yvonne Briggs, Senior VP at LHA]

Please refer to the company's Form 10-K 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 Tokman, Acting Chief Executive Officer, will begin the prepared remarks, followed by Ziad Rouag, new Head of Regulatory and Clinical Affairs, and then Michael Thornton, Endra's Chief Technology Officer. They will be followed by Richard Jacroux, Endra's new CFO, to review the second quarter financial results. With that said, I will now turn it over to Alex. Alex?

[Alexander Tokman, Acting CEO at Endra Life Sciences]

Thank you, Yvonne. Good afternoon, and thank you for joining us today to discuss Endra's second quarter 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 one for 50 reverse stock split, which we announced last Friday and was effective past Tuesday, this past Tuesday. The primary goal was to keep our share price above $1 and in turn, maintain the Nasdaq listing. This plan was derailed because of an extremely high volume of exercised warrants, which were issued as a part of the $8 million public offering that was completed in June.

[Alexander Tokman, Acting CEO at Endra Life Sciences]

This public offering was necessary in order to keep the company operational and not to lose all the progress Endra made over the years. We strongly believe that the sharp decline in our stock over the past few days is completely unrelated to Endra's business prospects. It did not 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 second quarter results and recent changes. I would like to start by reviewing with you six specific items we intend to do differently moving forward, to become more actionable and predictable as we bring Endra's differentiating thermoacoustic technology to market.

[Alexander Tokman, Acting CEO at Endra Life Sciences]

The 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 Endra vision, and finally, improved financial execution. Let me elaborate on each. First, we enhanced our management team by adding two experienced operators. We have proven track record of success in transforming new technology companies. Richard Jacroux is a seasoned CFO with public and private company experience, and he well understands lean operations and restructuring. He's already working very closely with Irina, formerly Senior Director of Finance, to ensure a smooth transition of daily finance operations. Irina will remain as an advisor to the company moving forward. Ziad Rouag has joined us as the Head of Clinical and Regulatory Affairs.

[Alexander Tokman, Acting CEO at Endra Life Sciences]

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. Mike Thornton, our CTO, will continue to focus on product delivery, as well as enhancing Endra's technology roadmap and intellectual property. Second 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.

[Alexander Tokman, Acting CEO at Endra Life Sciences]

This clinical data is a foundational element for both regulatory and commercial success. It offers three important benefits. It allows for optimization of product design for maximum user utilization. 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 third change we're implementing is we've fundamentally changed our FDA regulatory strategy under Ziad's leadership. We're 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're increasing the number of subjects by an order of magnitude from 20 to about 250, which is necessary to achieve acceptable statistical power.

[Alexander Tokman, Acting CEO at Endra Life Sciences]

We are now fully engaged with the FDA on establishing the consensus and trial design prior to data collection. Later in this call, Ziad will elaborate further on these changes. Four, we're 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. Primary care and Endo segments, and we'll lead with them over the next six to 12 months as we pursue the regulatory clearance for the TAEUS liver device. Hepatology will likely remain a market for us, but perhaps not the primary target. Fifth, or the change now, or initiative number five, 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 TAEUS liver device.

[Alexander Tokman, Acting CEO at Endra Life Sciences]

How do we add? You know, 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. Our goal is to scrutinize every dollar we spend, and as a result, we recently conduct significant reduction of our operating expenses, and we were able to reduce them by $3+ million, 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.

[Alexander Tokman, Acting CEO at Endra Life Sciences]

Now that I outlined what we will do differently when moving forward, Ziad, Mike, and Richard will now highlight for you the progress we made since Q1 conference call in three areas: clinical and regulatory, technology and IP, and financial. Ziad?

[Ziad Rouag, Head of Regulatory and Clinical Affairs at Endra Life Sciences]

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 Endra and the FDA on the final product configuration, clinical study design, and regulatory pathway for successful outcome. As part of our refocused clinical program, we are limiting initial data collections to three pilot sites, two U.S. and one 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 time frames, there will be sequential studies, meaning the results of the pilot study will inform the design of the pivotal study.

[Ziad Rouag, Head of Regulatory and Clinical Affairs at Endra Life Sciences]

Our goal is to have all clinical completed and the data incorporated into our De Novo submission, targeted for mid-2025. 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. Mike?

[Michael Thornton, CTO at Endra Life Sciences]

Thank you, Ziad. Our patent portfolio now stands at 81 issued patents globally. During the second quarter of 2024, Endra was issued five additional patents, three in Europe and two in China. The issued patent portfolio consists of 42 thermoacoustic device and foundational enabling technology patents, 22 patents related to estimating fat fraction, and 17 patents covering other thermoacoustic applications and non-thermoacoustic technologies. Our broad intellectual property portfolio provides protection for the TAEUS system with its novel thermoacoustic technology and the opportunity to explore licensing opportunities beyond our core focus.

[Michael Thornton, CTO at Endra Life Sciences]

... I'll turn the call over now to Richard.

[Richard Jacroux, CFO at Endra Life Sciences]

Thank you, Mike, and it's a pleasure to be speaking with our investors in my first quarterly conference call as Endra's CFO. During the quarter, we raised $7.3 million 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 $6.4 million. Based on our current projections, our cash runway funds the company into the first half of 2025. Turning now to a review of our financial results. For the quarter ended June 30th 2024, our total operating expenses decreased to $2.2 million from $3 million for the same period in 2023. The decrease was mainly due to declines in research and development and sales and marketing expenses.

[Richard Jacroux, CFO at Endra Life Sciences]

Year-over-year, R&D expenses decreased $684,000 or 49%, as we shift our resources and spending from development to clinical activities. In sales and marketing, costs 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. 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. To ask a question, you may press star, then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. Our first question today is from Edward Woo with Ascendiant Capital. Please go ahead.

[Edward Woo, Senior Research Analyst at Ascendiant Capital]

Yes, nice to meet you, Alexander and Richard. My question is more on, you know, as you guys are, you know, 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, you know, the situation?

[Alexander Tokman, Acting CEO at Endra Life Sciences]

Thank you for the question, Ed. In terms of the next nine to 12 months, we have a clear priorities described that we're going to execute. So this would involve completing the clinical study, 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 the longer vision, what happens following the introduction of TAEUS liver device? We're going to sharpen pencils over the next six to nine months, look at all the opportunities that our IP offer, and determine the optimal path going forward.

[Alexander Tokman, Acting CEO at Endra Life Sciences]

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

[Edward Woo, Senior Research Analyst at Ascendiant Capital]

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?

[Alexander Tokman, Acting CEO at Endra Life Sciences]

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

[Edward Woo, Senior Research Analyst at Ascendiant Capital]

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

[Alexander Tokman, Acting CEO at Endra Life Sciences]

Thank you.

[Operator]

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

[Alexander Tokman, Acting CEO at Endra Life Sciences]

Thank you. Given, I would like to wrap this call by telling you that given that everybody feels in the board and the operating team are bullish and there's technology and market opportunity. We expect that after implementing the six initiatives and changes I described earlier in this call, Endra'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 Micro Caps, and I think we can do this again here. I believe the team is energized. We know what we need to accomplish in the next six, nine, and twelve months, and you see, hopefully, different output from this team moving forward.

[Alexander Tokman, Acting CEO at Endra Life Sciences]

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 disconnect.

Participants

Executives

• Michael Thornton, CTO

Analysts

• Ziad Rouag, Head of Regulatory and Clinical Affairs at Endra Life Sciences
• Alexander Tokman, Acting CEO at Endra Life Sciences
• Yvonne Briggs, Senior VP at LHA
• Edward Woo, Senior Research Analyst at Ascendiant Capital
• Richard Jacroux, CFO at Endra Life Sciences