Nyxoah Q2 2024 Earnings Call Transcript

Quartr
Provided by Quartr
August 6, 2024

There are 9 speakers on the call.

Operator

After the speakers' presentation, there will be a question and answer session. Please be advised that today's conference is being recorded.

Operator

I will pass the call over to your first speaker today, Mikaela Carewood.

Speaker 1

You, and good afternoon and good evening, everyone, and welcome to our earnings call for the Q2 and first half of twenty twenty four. I am Mikaela Kirkwood, Investor Relations and Communications Manager at Nextelas. Participating from the company today will be Olivier Talman, Chief Executive Officer and Elif Moro, Chief Financial Officer. During the call, we will discuss our operating activities and review our Q2 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 are linked 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 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. For a list of the description 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 20, 2024. With that, I will now turn the call over to Olivier.

Speaker 2

Thank you, Michaela. Good afternoon and good evening, everyone, and thank you for joining us for our second quarter and first half of 2024 earnings call. 2024 is a pivotal year for Nyxova with an increased focus on preparing for U. S. Market Antelope.

Speaker 2

In March this year, we announced our dream U. S. Pivotal study achieved its primary endpoints and demonstrated that Genio has the potential for best in class outcomes for OSA patients. Subsequently, our regulatory team filed the 4th and final module in our modular PMA submission, which has set the stage for FDA approval as early as the end of 2024. We strengthened recently our balance sheet with over €85,000,000 in new capital raised, which extends our cash runway into mid-twenty 26 and are actively building our U.

Speaker 2

S. Commercialization organization, led by our recently hired new Chief Commercial Officer, Scott Holstein. Commercially, we reported first half twenty twenty four European sales of €2,000,000 representing an increase of 29% from the first half of twenty twenty three and ended the Q2 with 55 active implanting accounts in Germany. To recap DREAM, the study had co primary endpoints of AHI respond rate per the share criteria at 12 months and ODI respond rate at 12 months. At baseline, subjects had a mean AHI of 28 and an ODI of 27 and a body mass index of 28.5.

Speaker 2

On an intent to treat or ITP basis, the DREAM study showed an HIV responder rate of 63.5% with a p value of 0.002 and an ODI responder rate of 71.3% with a p value less than 0.001. With these strong results, the DREAM study met its primary endpoints. Additionally, subjects demonstrated a median 12 month AHI reduction of 70.8% with similar AHI improvements in supine and nonsuppine sleeping positions. The safety results were favorable with 11 severe adverse events of SAEs in 10 subjects resulting in an SAE rate of 8.7%. Out of the 11 severe adverse events, 3 were device related and there were 3 expanse.

Speaker 2

We will present the full DREAM data at a launch symposium at the ISSS Conference in Miami end of September on September 27 to be precise and look forward to see many of you there. The DREAM results further distantly at GEMU as it was the 1st hypoglossum non stimulation study to require patients to sleep at least 60 minutes in the supine position and demonstrates strong efficacy that patients sleeping supine and non supine, just like mimicking a normal night of sleep. This is of particular importance since published data show increased OSA severity when a patient is on his back or in the supine position, with AHI doubling in the supine versus the lateral position. On average, people sleep 35% to 40% on their back during normal night or standard nights, which was in line with our PSD findings in DREAM. This means that irrespective of a patient's sleeping position, Jynneo maintains its efficacy, and that is unique.

Speaker 2

Based on feedback from the physicians, this will be very impactful on therapy selection. It supports our mission to make sleep simple again, and we have applied for the inclusion of the supine efficacy results into our label. With the positive DREAM results, we have completed our model of PMA submission. We have responded to all the FDA questions on the first three modules thus far and submitted the 4th and final module. Based upon model of PMA review cycle times, we anticipate FDA approval in late 2024 as we do not control FDA time lines early 2025.

Speaker 2

In anticipation of the FDA approval, we are actively building our U. S. Commercial organization. In July, Scott Holstein joined Nixoah as Chief Commercial Officer after 26 years in the medical device industry. In addition to Scott, key leadership in sales, marketing and market access are in place, and we are actively kicking off the recruitment of top sales and marketing talent.

Speaker 2

At launch, we will target the Tier 1 octopidrosso non stimulation implant in the U. S. That accounts for 85% of all procedures done in the U. S. The organization will be composed of territory sales managers, supported by field engineers and field lead specialists, each with their own responsibilities.

Speaker 2

The territory sales manager will be the owner of the territory revenue, interacting with surgeons and sleep doctors. Field engineers and sleep specialists will be focused on high quality implants and patient outcomes on the other hand. The advantage of this structure is that it's focused and scalable, providing territory managers the ability to drive increased therapy penetration without the distraction of covering implants and performing titrations. Consequently, we can have more focused DTC, helping territory managers locally increase patients and refocus for REGENIO implant. Independent market research and feedback from 31 top hypodal nerve stimulation implant surgeons in the U.

Speaker 2

S. Who participated in our recent usability study reinforced Genius differentiation versus current AGNS technology in terms of invasiveness, patient centricity, safety and the simplicity to treat OSA patients regardless of their sleep position. Genio offers patients a lead plus full body 1.5 and 3 Tesla MRI compatible, non implanted PET free solution, powered and controlled by a wearable component. Our vision of an Implant for Life concept powered and controlled by a wearable component allows patients to always have the most advanced technology without the need for neurosurgery. Given these characteristics, we expect Jynneo to be market expanding in the U.

Speaker 2

S. As a significant number of hyperosomal stimulation candidates currently are declining pacemaker based platform technology due to concerns over invasiveness and having an implantable battery in their chest. This view is supported by independent surveys demonstrating that over 20% of the U. S. Hypnosis nerve stimulation candidates are turning down existing technology and strong interest in system with Genio features and form factor.

Speaker 2

Going back to Europe. First half twenty twenty four sales was €2,000,000 representing an increase of 29% from the first half of twenty twenty three. And we ended June with 55 active implanting accounts. As a reminder, Germany is our commercial proof of concept. Although the German market has some different characteristics than the U.

Speaker 2

S. Market, there are key learnings will help us in developing a successful U. S. Commercialization strategy. Similar to the U.

Speaker 2

S. Market, the German market is highly concentrated, and GYNEO was embraced by doctors and patients in those Tier 1 orthopecomes, resulting in an acceleration in the hypoglossal neurostimulation market growth. Of the top 10 accounts, 9 are currently implanting Genio. And in 5, we have at least 30% market share after 24 months. This is a strong priority for the U.

Speaker 2

S. Launch, where we will initially focus on the top implanting Tier 1 accounts. To continue to drive growth into these accounts, establishing a referral pathway with top fleet specialists focused on CPAP quitting patients and converting them in a timely manner will be a key to sustain success. The ResMed and Myxova collaboration should confirm this strategy in the coming quarters. In summary, with strong DREAM data, a differentiated AGNS system and a cash runway into mid-twenty 26, it could not be more excited for the future of MYXOHA.

Speaker 2

With that, I'm pleased to turn the call over to our CFO, Louis Moreau, who will provide a financial update. Thank you, Olivier.

Speaker 3

Good day to everyone and thank you for joining us today. Revenue for the Q2 ended June 30, 2024 was 780,000. Total operating loss for the Q2 was €13,300,000 versus €11,900,000 in the Q2 of 2023, driven by an acceleration in commercial investments in U. S. As well as in Europe.

Speaker 3

During the Q2, we raised over €85,000,000 in gross capital through €48,500,000 equity offering and a loan facility agreement with the European Investment Bank for €37,500,000 This extends our cash runway to mid-twenty 26. As of June 30, 2024, cash and financial assets totaled €78,000,000 This excludes the first €10,000,000 tranche of the EIB launch, which we drew down in July. Finally, our monthly cash burn was €4,000,000

Speaker 2

for the quarter. This concludes

Speaker 3

the formal part of our presentation. Operator, I will turn the call over to you to begin our Q and A session. Thank

Operator

you. And it comes from the line of Suraj Kalia with Oppenheimer.

Speaker 4

Olivier, Louis, can you hear me all right?

Speaker 2

Yes, we can.

Speaker 4

Pardon the background noise, it's raining pretty heavily here. So Olivier, congrats on all the progress in the modular PMA submission. Let me turn the direction what are the lessons learned from Germany that are translatable to the U. S? Is it or has it been a market that has met your expectations?

Speaker 4

And maybe if you could talk about other discussions about supine versus non supine in Germany?

Speaker 2

Okay. Thank you for the question, Suraj. So first of all, when we look at Germany or launch goals, we have to demonstrate proof of concept by, 1, breaking the monopoly that is currently for hypodosomal stimulation and 2, expanding the colossal neurostimulation market. Those two objectives we have accomplished. Now other things, to your point, where we see the European experience is showing our ability to take share.

Speaker 2

Just as a reminder, we have 27% German market share for the 2nd year of the launch. I think that is also something that exceeded our expectations. 9 of the 10 German accounts are implanting Genio, And we estimate that we go minimum above 30%. And in some of those top centers, we are even market leader after 24 months. So that is also a very concrete learning that will give us that is giving us confidence for the U.

Speaker 2

S. Launch. And also the fact that we see in Germany based on independent survey data but also done and talking and interacting with patients that we see that there is over 20% of it, but also nonstimulation candidates that are declining a PACE major due to the invasiveness of the procedure on the system. And therefore, Gino can further expand the market. So, so far so good.

Speaker 2

I think those were the learnings. That being said, let's also be very open on this. Germany still is a very small revenue market, and there is still the potential for quarter to quarter variability driven by limited number of current implanting and implant volume. But if you look at and we feel that it's more accurate looking at the performance in the first half of the year where we still were up to almost 30% versus the first half. So I do think overall we are pleased with what we see in Germany.

Speaker 2

We take the lessons helping us prepare for successful U. S. Launch. And also as a last reminder, the positive feedback in Germany since we were able to release the DREAM data is definitely helping us in driving future growth. So I think that's all the first question.

Speaker 4

And Olivier, for my follow-up question, maybe I missed it in your prepared remarks on the status of the AXIS trial. And also for the U. S, as you plan out for your commercial launch, the 31 sites that you referenced, how would you characterize the volume that these 31 sites do and the reps you would need? Thank you for taking my questions.

Speaker 2

Yes. So the thirty one sites to start with the end of your question, those are all high volume implanters or implanters that are part of what we call the Tier 1 AGNS implanters in the U. S. So that is the first part. 2nd part when it comes to access, so we continue to make progress with the study.

Speaker 2

We are not disclosing the number of patients implanted, but that said, we plan to close implant by the end of 2024. I do not want to I go back to Germany on this. But as you know, in Europe, we have CCC integrated in our label. And the response that we are getting there is that also physicians are confirming similar results for CCC patients as for non CCC patients. So this also is giving a confirmation that bilateral stimulation is a key differentiator when it comes to treating successfully CCC patients.

Operator

Thank you. One moment for our next question. It comes from the line of Ed White with H. C. Wainwright.

Speaker 3

Good afternoon. Thanks for taking the question. Hi, Ann. Olivier, maybe you could just tell us about your U. S.

Speaker 3

Reimbursement strategy.

Speaker 2

Yes. No, no, definitely, Anand. First of all, I'm really excited that we are having these questions because it also means that we are getting extremely close to launching in the U. S. Now as I already mentioned in the previous earning call, we are partnering with the American Association of Otolaryngologists, the AO, which will make a formal recommendation on established, what they call, bridge category 1 CPT code for use at launch.

Speaker 2

And I think this is so important that at launch, we have our CPT code in place That is not the final code, but it's the bridging code. And in parallel, of course, we are pursuing a Genio specific CPT code over time. But based on precedent, we know that this likely will take a little bit longer even up to a couple of years. Now that being said, at launch, and I keep coming back to this and existing, doctors will submit Medicare claims using the Bridge Category 1 CPT code, which is currently covered by all Medicare administrative contractors of the MAX. Reimbursements will be in line with current AGNS payment rates.

Speaker 2

And I think that this is the most important update for today. Now to be really complete, and we have to give credit to our competitors because they have done a terrific job educating the commercial payers for both the benefits of hifoglossumorabstin, resulting in all having AGNS coverage policies in place. We have enrolled in the FDA early payer feedback program and we are conducting payer advisory interviews. We are already engaged in an informal discussion with the payers, and we expect to be able to leverage those policies at launch.

Speaker 3

Okay. Thanks for taking my questions.

Speaker 2

Thank you.

Operator

Thank you. One moment for our next question that it comes from the line of Jon Block with Stifel.

Speaker 5

Hey, everyone. This is Joe Federico on for Jon Block. Thanks for taking the questions. I guess just to start maybe on the revenue result in the quarter. That was a bit below what we were modeling and that follows stronger revenue results in the Q4 of last year and last quarter.

Speaker 5

During that time, your competitor was also having some regulatory dynamic issues. And I just wanted to ask for some additional clarity. Now that they've kind of sorted that out this quarter, revs took a step back. Do you think that played a role in kind of the revenue dynamics for this quarter?

Speaker 2

Yes. So first of all, let me start by saying that competition is good for the market. It's always nice to have 2 options to choose for physicians and for patients. And it also keeps everyone short and then really making sure that we can provide the latest and greatest technology and upgrades to patients. Now I have to repeat a little bit while I was answering to Suraj.

Speaker 2

Germany still stays overall a very small revenue market if you look at the total AG and S market. So that is one aspect. And therefore, potential quarter to quarter variability driven by limited numbers of an implant volume is the case and in fact, that is correct. Now going back and assuming that because of product shortage or issue with competition in Q4, This would have strengthened our Q4 results. I think it's not completely true because if I'm well informed, I do think there was quite some inventory of products in Germany, especially with the top accounts to continue having also competition in Q4.

Speaker 2

Overall, we see that the market of AG and S keeps growing strong. I think that's a confirmation of all this. And of course, without providing real guidance, it's also clear that we anticipate revenue in the second half of twenty twenty four to increase over the second half of twenty twenty three. But as mentioned, quarter to quarter sales are orders to forecast, but given the process in the Q3 of this fall, also the collaboration with ResMed on identifying new patients that are quitting their CPAP and actively converting them. It's something that maybe took a little bit longer than we expected, but we do see the results, and we are more than excited also to see the impact of this on our revenue in the second half of twenty twenty four.

Speaker 5

Okay, great. That's helpful color. And then just quick follow-up. You had said that FDA approval for Genio could come as early as year end 2024. Is your expectation to get approval by year end 2024?

Speaker 5

Could that maybe flip into early 2025? And then could you remind us just the number of sales reps you're targeting upon the eventual U. S. Launch and maybe train centers in the 1st 12 months? Thanks guys.

Speaker 2

Yes, definitely. So to your point, we have a more of PMA. You know that after you submitted the 4th and final module, there is the 180 days time clock that is currently activated. I can already share that there is a lot of activities from FDA that we have very positive engagements with them so forth. And if you then do simply the math, we should be good to have FDA approval by the end of 2024.

Speaker 2

So we are still very confident that this will happen. However, I want to be a little bit prudent in the sense that I'm not controlling FDA timeline completely. So that's why sometimes we're also mentioning up to early 25. But if you just stick to the math, we see the interaction, all the work has been done, the files have been submitted, everything interactive, reviews ongoing, site visits taking place. So we are also very confident that by the end of this year, we could have FDA approval.

Speaker 2

Now the second part of the question is like how would we launch? I think I already elaborated a little bit how important it is for us to work with territory managers fully focused on revenue and patient referral. And next to them, we would have field engineers fully focused on high quality implants, sleep specialists fully focused on post implant patient follow-up and titration. Some numbers. We will start and we will make our approach scalable since we are focused on the Tier 1 accounts in the U.

Speaker 2

S, the high volume size, and we will start with 15 territory managers. They are under the lead of 1 Sales Vice President that we already have on board. Then all 15, there will be another 15 in total, field engineers and sleep specialists focused on the patients. So in summary, our sales leadership is in place. We will go for a scalable approach with 15 territory managers only focused on revenue and driving new patients and they will be supported with in total 15 field engineers and 3 backwoods.

Speaker 5

Great. Thank you.

Operator

Thank you. One moment for our next question. And it comes from the line of Ross Osborne with Cantor Fitzgerald.

Speaker 6

Hey, guys. Thanks for taking our questions. Starting off, I would be curious to hear how your manufacturing ramp efforts are progressing ahead of U. S. Launch.

Speaker 6

Do you believe you will have sufficient scale to meet demand in 2025?

Speaker 2

So the short answer is yes. We do believe we have significant demand. As you also know that we have currently our Genio 2.1 version. That is the one that we are using commercially in Europe. And it allows us to have stimulation trimming to be adjusted at small increments to provide patient sensitive to stimulation more options.

Speaker 2

And it also offers patients daily feedback using an app and even the autonomy to adjust stimulation amplitude with predefined boundaries. That is our current product that we have and that we are using commercially in Europe and that we also use clinically in our studies. Now we already have our 3.1 generation with a ceramic encapsulation of the internal component making genuine implant for life, a more ergonomic activation chip that will contain the coil, improving gross margins and eco friendlyness and a patient hub, which will be the base for cloud connected in advanced feedback. With this coil, we are planning to launch in the U. S.

Speaker 2

Right after the approval. And also there, we have manufacturing lines set up in the U. S. With the service provider and also in Europe and going forward so that we have also de risked our manufacturing and increased our capacity in the U. S.

Speaker 2

And also outside of the U. S.

Speaker 6

Okay, great. And then one modeling question. Looking at OpEx and anticipating an inflection ahead of the U. S. Launch, Should we think of that as more of a 3Q or 4Q activity?

Speaker 3

We so yes, if you look at the cash the shape of the cash flow, we expect an inflection. That will start in Q3 because as Olivier was saying, we have started to recruit the management for the U. S. Organization and we will add the 1st threat. So yes, the cash burn will start to increase in Q3 and continue to increase in Q4.

Speaker 3

So it will be a steady increase that we expect in the second half of the year before the sales start in Q1 next year.

Speaker 6

Okay, great. And then lastly, I realize it's early on, but following the hiring of Scott, how has he shaped your commercialization plan for the U. S. Launch?

Speaker 2

So next to Scott, we have also hired our sales leader. We have hired our marketing leader or reimbursement of market access leaders. We are finalizing a search for a human resource U. S. Or global leader.

Speaker 2

We're also looking at our operational director. And then we also started actively recruiting our sales force. And what really, really gave me great confidence is just seeing the high number of spontaneous applications that we are getting. And I do not want to, I mean, start throwing in numbers, but it's really high number of people reaching out that want to be part of the Nextiva team that will be launching in the U. S.

Speaker 6

Great. Thank you for taking our questions.

Speaker 2

Thank you.

Operator

Our next question comes from the line of David Rasco with Baird.

Speaker 7

Great. Thanks for taking the questions. I want to clarify a couple of pieces. I heard some numbers saying thrown around and have been hopped around calls as well. So I want to make sure I'm hearing everything correctly.

Speaker 7

I thought the last call you had talked about maybe the 75 to 100 higher volume centers. Again, I may have totally heard it wrong this quarter, but I heard the number 31 kind of called out there, also heard you're looking to go after where about 85% of the volumes in the U. S. Are occurring. So can you help kind of clarify what may be the near, intermediate and then kind of longer term go to market account opening strategy is in the U.

Speaker 7

S?

Speaker 2

Apologies if things were not completely clear, but let me try to make it clear. So the 31 Tier 1 accounts that I was referring to were the surgeons that participated in our usability study and that provided us feedback. Just as a reminder, they were trained on the product from an anatomic perspective, from an implant perspective in both animal and catalysis. And then within 24 hours, they had to reproduce an implant in the cataract independently. And their overall feedback was extremely positive, and they were really waiting and asking when this technology would be available for them to be used in their accounts.

Speaker 2

That's the 31 month. The other numbers I was referring to, I'm always saying we focus on Tier 1 accounts. If you look at the Tier 1 accounts, in total, below representing 85 percent of all the gross margin origination revenue, we are talking about 200 to 250 accounts in the U. S. Out of this number, we will be focusing on 150 from the beginning.

Speaker 2

We will be doing this in a scalable approach, meaning with our 15 sales reps in quarter 1 of launch, they will go after the first, let's say, 50 to 75 accounts. And every quarter, the number of accounts will increase until we reach also the 200 plus Tier 1 top independent accounts. And in parallel, of course, we will increase also our number of territory managers, field engineers and sleep specialists. I hope this is more clarifying your question.

Speaker 7

Yes. That's great. Thanks. Maybe just on I heard some of the comments on the P and L, the cash balance where you're at today and how the ramp maybe should look over the next couple of years that mid-twenty 6 cash runway. Have you kind of thought about what that longer term kind of breakeven profit numbers look like?

Speaker 7

I know it's still pretty far away, but just wondering if we were to model out over the next 3 to 4 years, how we should be thinking about the rest of the

Speaker 3

of the P and L? Thank you. Thank you for the questions. So as discussed during the call, our U. S.

Speaker 3

Launch strategy will be focused at scaleable. We will initially target the top gNS account and selectively invest in DCC to drive patients referrals. With our commercial structure, the territory manager will be supported by field engineers and field specialists, which will enable a highly productive commercial organization. That's what we have in mind. So we need to approach, we anticipate achieving profitability at around $250,000,000 of sales in the U.

Speaker 3

S. So that's what we have in mind.

Speaker 2

And I think in addition to the next comment if I can add, for us it was crucial also to have a healthy balance sheet that is fully outstanding U. S. Launch. We have this because of the equity raise in combination with the loan facility. And we are now having more than €85,000,000 added to our existing balance sheet.

Speaker 2

I think it is also giving us some comfort to fully focus on the execution of the launch.

Operator

And it's from the line of Adam Meter with Piper Sandler. Please proceed.

Speaker 8

Hi, this is James on for Adam. Thanks for taking the question. Just one. I wanted to give you guys the opportunity to comment on the Surmount OSA study that was recently released at ADA. We were just curious to get your reaction to that data and if there's been any change to how you guys are thinking about GLP-1s and the impact on your business?

Speaker 8

Thanks.

Speaker 2

Saying from CPAP that we welcome GLP-1s overall because it will definitely help increase also the total OSA market and patients' numbers to treat. What we learn, if I go a little bit more in-depth, is that if we look at the data, we see a placebo adjusted 50% reduction in AHI and an 18% reduction in BMI coming out of the CIRMOND OSA data. The recent data demonstrated the placebo adjusted reduction in OSA severity and magnitude of OSA reduction that was below those shown by hypodosomal malar stimulation. I think that's also very important to point out. And then last, both published data and commentary from leading KOLs indicate that to have the highest hypodosumab stimulation response of therapeutic effect, it is best to lower BMI and bring it below 35 than to treat high BMI patients.

Speaker 2

And in that perspective, the CERMOND data reinforce our view that GLP-1s will increase the level of somersimulation patient funnel as in the GLP-one only arm AHI went from 50 to 22 with a BMI from 39 to 32. And that gives us great confidence as I was saying in the beginning and we welcome therefore also GLP-1s into the market.

Powered by Quartr
Earnings Conference Call
Nyxoah Q2 2024
00:00 / 00:00