Good morning and welcome to the Artrya Investor webinar. My name is Danny Younis, and I assist with investor relations for Artrya. With me this morning, we have the CEO, Mat Regan, and co-founder, John Konstantopoulos. Before I hand over to Mat and JK, just to note that we will be having a Q&A session at the end. If you have any questions, please type them into the Q&A box at the bottom of your screen. I would now like to hand the webinar over to Mat and John. Please go ahead.
Thanks, Danny, and thank you, everyone, for joining us today. Thought I'd just start with a little bit of context setting, and then we'll walk through just a few slides. And then, as always, the real power of these sort of conversations are the questions that we get and any answers you need from us. So just like to just start with a few thank yous, firstly, to John Barrington and John Konstantopoulos, JK, namely, the two founders of which, you know, without their foresight, we wouldn't even have an organization. Obviously, two years ago, I was brought in with the goal of just righting the ship a little bit and moving us towards our FDA clearance, which we're very pleased to say that we have received now. And that's been two years in the making.
But, you know, in that time, we've also managed to sign up The Cardiac Centre here in Australia. We have regulatory approval to operate in the U.K., Europe, Australia, New Zealand, and now, of course, the USA. So we're very excited with what we've built and where we're moving. And, of course, we've recently signed up Sonic Healthcare as well and looking to chase, you know, a few others here in Australia. But really, the main game now switches to the U.S. So with that, obviously getting our 510(k) for this Salix Coronary Anatomy product, it is really, really important for us for a variety of reasons. One, obviously, is opening up commercial accessibility to the U.S. market, which we've done.
It also allows us to demonstrate that we've got the team in place that can actually navigate the FDA, so the people that we have in the U.S. and here in Australia as well, so we've proven that we have the team that can navigate that FDA process. It also sets the foundation for the pathway forward in that the next two products really are the ones that set the revenue base for us moving forward. The next one coming along is our Salix Coronary Plaque product, followed with our Salix Coronary Flow product, our blood flow product. Both of these will call against this current clearance as a predicate for it moving forward, so the work that we've done with our FDA product really does set the framework and eases that process in getting our SCP and SCF products through the FDA.
Now, of course, there's the delta to do. There's work that's been done, obviously, with our FDA product that we don't have to do again. But it doesn't mean that it's going to be straightforward or easy, but we have the team in place that can navigate that through. The other thing that Salix Coronary Anatomy does for us is it provides that platform, the entire platform that the other products will seamlessly plug into once we have those clearances. So that means the reporting toolset that we've given that we'll be able to give our U.S. partners now will seamlessly plug in SCP when it becomes available and then SCF when it becomes available. And it provides a frictionless transaction with our clients. The other thing I think that may be overlooked that is really, really important is that it really locks in our point of care approach.
So the FDA product that we've had approved really does lock in that differentiator that we have with everybody else in the market. And now that we have ours within 10 minutes, you know, the clinicians will be able to utilize our software and report against the CCTA in a point of care situation, unlike our competitors who often use a human-in-the-loop process. So, you know, we're enormously relieved, but also enormously happy, but also understand that we haven't run the race yet. We've just got to the starting blocks, and now the work really begins moving forward as we turn this organization from what was a startup with a great idea to a commercial-ready business looking to target, you know, cash flow positive in FY26.
As well as that, now, a couple of other things that people need to understand is we have our three strategic partners in the U.S.: Tanner, Northeast Georgia, and Cone, and our pre-FDA agreement saw us integrating our research- use-only product. Now we can move to the next step now that we have our commercial clearance in the U.S., so in the coming, you know, weeks and months, work will begin, well, it has begun, but it will begin more in earnest with our three strategic partners, and on top of that, and I'll let JK talk more about this in a second, you know, those sort of introductions with their strategic partners have introduced us into other hospital systems, of which we look to formalize some agreements with them in the remaining calendar year that we have.
I also spoke that, you know, we are focused on our Salix Coronary Plaque and coronary flow clearances. We're targeting our SCP towards the latter part of July 31 this year. We've already done our Q-Sub for that particular FDA clearance that we'll be searching for, and we're well and truly underway with our clinical studies on that particular piece. We've brought as much work as we possibly can forward to deliver that as quickly as we can. We'll take some of the learnings that we've had with the FDA approach that we've just got through and apply that to the current ones moving forward. But we've got confidence that we'll find and be able to navigate a pathway forward on that particular piece. On the coronary flow piece, we're targeting the end of December for that one.
I just want everybody to bear in mind we have not done a Q-Sub for that one yet. We will do a Q-Sub for that particular piece. But the interesting thing here is that there are actually two distinct groups within the FDA. So it's not one then the other. We can operate a lot of that stuff in parallel, although they both rely on our currently cleared FDA product as a predicate. Aside from that, you know, we've just started to talk about our SAPPHIRE study. I'm going to allow John to talk a little bit more about that. You will hear more and more about our flagship SAPPHIRE study in the coming months, but we'll give you a little bit of a hint of that.
The final thing is, because we were born in Australia, a lot of our early shareholders really got into this to make sure that this sort of technology was available to Australians, and we're certainly going to continue to do that. We know we have the Cardiac Centre for more than six months now. I think it is, John, isn't it? So they've been operating, and we're very thankful for them for taking the lead early on. Obviously, Sonic have also come on board. Sonic give us real credibility and validation of our software, and we will be looking to chase more in the top five radiology providers there. We won't be chasing outside of that group, but if there are other groups inside Australia that want to come to us and work with us, we will certainly not turn them away.
We want Australians to be able to go and get a Salix-driven assessment in Australia as soon as they can, so we're very comfortable with where we're sitting at the moment, so maybe, John, do you want to just quickly talk about our strategic partners and then SAPPHIRE?
Sure. Thank you, everybody. So just to give more context to our U.S. commercialization pathway, we've mentioned in the past that Tanner, Northeast Georgia, and Cone will be the first groups, U.S. follow-up hospital systems off the rank, which we'll be looking to commercialize and that will really set the foundation for us in how we get those using our software and then bring other companies or systems on board as we start ramping through volumes with those respective hospital systems. We're not going to bring, at least initially, a large sales team on board to try and tackle the U.S. market. We focus very much on key opinion leaders.
That will be an ongoing process as we start using the key opinion leaders that we already have identified and others that will be coming on board to build our pipeline of other hospital systems within the U.S. itself. The SAPPHIRE study, as Mat mentioned, is our flagship study. It's very much an approach for us to take our novel plaque approach, which we call dispersion, and to try to show that there's additional value over and above standard of care by using this novel prognostic, this novel plaque dispersion model. If you think of the way patients are currently assessed through risk factors like body mass index, cholesterol, smoking, etc., those don't really equate to what's really causing the heart attack.
What this product will show, and this novel feature will show, is that we can change the way standard of care has been tackled currently and then hopefully also show that we can change medical therapy. We have a number of hospital systems already identified and some that are very close that we're working with at the moment as primary investigators for the study. They will really show the benefit of this type of product as we go forward. They'll also bring in other systems that will be using our software in a clinical setting and will also help us in our commercialization pathway beyond just the study itself.
Yeah. Maybe just go to the next slide, JK. So just to reinforce where this current clearance sits, you'll see along the bottom here our SCA product really providing that platform and process for the rest of our systems to plug into. That will form the basis of our subscription model for those that are keeping track. We're estimating that to be around the $50 per scan, but in a subscription type service. So it'll be a volume-based gain. So obviously, the more they use it, there'll be a discount required to that as well. But we really, really want our clients in the US to have that product plugged in. The next product that comes along will be our SCP product, of which we're working feverishly for at the moment. That comes with a CPT code rebate code of around the $950. We expect a discount from that.
Around $750 will be our charge, and that is a per scan click, so you can imagine it as easy as opening up an email. The scan will already have been processed. It will already be available, and it will just be seamlessly ordered, if you like, from the clinician at the point of care. Next to that will be our blood flow product, which we're looking to target towards the end of December this calendar year. That comes with a CPT rebate code of $1,017, and again, we'll be discounting 20% off that, so around the $800 mark, and again, that is a seamless click of the mouse button, and it is there. I will add that it's also interactive as well, so that the clinicians have control over their patients and their outcomes.
But we will certainly be able to present the data to them in a point of care within that 10-minute period. John, do you want to maybe just reinforce how the flow, how the ratios break up?
So maybe just as a context of that, if you look at our current partners like Tanner Health, Cone Health, and Northeast Georgia, they process around about 15,000 scans per year. Every patient will, all 15,000 will have the Salix Coronary Anatomy assessment at $50 per scan, which equates to roughly about $750,000 for those three hospital systems. 70% will go for the plaque assessment. They'll have some level of plaque, and that's around about another $7 million. And then about 50% of those will have some level of obstructive disease and will warrant a blood flow assessment, which will then attract the blood flow assessment. So in total, if you look at those three hospital systems, it's around about $12-$13 million in full flight, assuming we're processing all 15,000 scans.
If you really want to equate that to a per scan cost per patient across all three of these products, it's between $850-$1,000 U.S. dollars per patient if a single patient gets all three of these procedures. When you look at the U.S. and the size of the U.S. and Tanner, Northeast Georgia, and Cone are only the first three we're looking at, others like Mass General, HCA, Piedmont, MultiCare, the combination of all of those do about 400,000 scans per year. $1,000 per patient per scan, you can quickly see how large the U.S. market is for us and the opportunity that we have over there.
Yeah, and why the focus?
Why the focus?
What's the total size of the market, John?
About 4.4 million scans per year.
About 4.4 million scans per year. Perhaps we'll just now move on to the SAPPHIRE study, and then we'll come back for questions.
I think we can actually go there because I've gone into some detail already.
Okay. Dan, if you want to go to questions now, then we can just move along the slides from there. Are you on mute?
Okay. We'll now move to the Q&A session. So once again, if you have any questions, please type them into the Q&A box at the bottom of your screen. And we do have some questions coming through. Okay. The first question is really about some forward forecasts, which I'm sure you don't give, so maybe be a little bit general around this. So the first question is around cash flow. So what does cash flow in FY26 look like?
FY26, we're looking to be cash flow positive. That's our expectation at this stage. We probably won't give more forecasts than that at this stage until we start to land some of our US-based partners into commercial contracts.
Okay, and a follow-up to that is, will capital raise be required to reach cash flow positive by FY26?
So look, the potential is no. There wouldn't be. I can't rule that out, obviously. There may be an opportunity that we would like to scale up in the U.S. much more rapidly, and that would then warrant us having that conversation with our shareholders. But at this stage, with the cash we have, even bringing forward the spend that we need to get these products to market as quickly as we can, we have more than enough cash well into this time next year at least. So, you know, and then obviously, as we sign up more clients, we'll have more capacity to run further as well. So I can't rule it out, Danny, but equally, I don't see it as a real focus for us now, considering what we've done just in the very recent past.
Yeah. And the follow-up question points really to around the assumptions. So what revenue and how many scans are needed to achieve cash flow positive?
Yeah. Yeah. So if you look at the three hospital systems that I mentioned, those three at 15,000 scans per year are about $12.5 million in revenue from those three systems. That effectively is break-even between those three systems. In the Petra report, as Mat mentioned, they forecast break-even in FY26, and that is staggering both Tanner, Cone, and Northeast Georgia, and then bringing one or two others on board over the coming year.
Thank you. I've got a couple of questions from Andrew Wilkinson from Venn Brown. So I'll ask the first one. Can you explain how the SCA approval will assist in obtaining FDA approval for SCP and SCF?
Yeah. So I'll go first, and then I'll let John have a stab at this as well. So look, the SCA product, it's going to be one of the predicates for us moving forward. So a lot of the work that we've done in that, we will not have to redo and reprosecute with the FDA. You know, for instance, the managing of the walls, inner and outer walls, and those sort of things. So that has now been approved and accepted. It'll be now the things such as the plaque, the different types of plaques that you see. And as you would have seen demonstrations in the past, that is the stuff that is really difficult to see, even for experts. And we've got a multi-reader study that we are comparing ourselves against.
And one of the learnings that we found is that we have to take our time and care about getting that gold standard correct because that's what we're compared against. And because it's so difficult to see, you want to make sure you've got the right level of expertise getting that gold standard as perfect as possible so that when we compare ourselves to it, we're comparing it to an accurate gold standard. So that's where a lot of the energy and effort is going at the moment. And they all are U.S.-based clinicians doing these studies for us. So that's also where a lot of the costs are in doing that process. But really, it's about it is a predicate for us moving forward, particularly with the next two products. John, do you want to?
No, no. That's good. Yeah.
Okay. There are some follow-on questions from Andrew about that, so we'll go to SCF first. What is the current state of SCF, and when do you expect to have it completed?
So we're targeting December 31 to get accurate for that. Now, obviously, the further out you are, the less certainty you have of that piece. But at this stage, we're looking okay. I would suggest that on the software development side, we're probably a little bit over 50% complete on that. The models we're doing some work with are clinicians based out of Europe, aren't we? Switzerland and a few here in Australia as well. So we've got a good pipeline of activity in that. Now, certainty will start to come in, but at this stage, we're targeting the 31st of December. The real key there will be when we do our first QSUB on that. That will give us real direction and clarity. What I will say is that the gold standard is very different in the blood flow assessment. It's not comparing clinicians' eyes, essentially.
It's comparing ourselves to known actual results. So in that way, that part is a lot easier. It's now getting the product ready to go.
There's a couple of questions from Andrew around the Salix Coronary Anatomy, the SCAs. So is SCA fully implemented and operational with all three U.S. partners?
It's implemented. It's been pre-tested and implemented non-clinically with Tanner Health. It's about 90% done with Northeast Georgia. We're just waiting for the EMR provider to give us some additional information on how the report flows. With Cone Health, we're progressing that. You may or may not be aware, they were acquired by Risant, a subsidiary of Kaiser, in the middle of last year, which derailed a few things within the group, but now we're accelerating with them on that pathway, and that we expect to have completed in the coming months.
Should we expect to see much of a revenue impact from SCA in the fourth quarter?
Yeah. We are still targeting some revenue with SCA in the fourth quarter of this financial year, and we stick to that target. Yeah.
Okay. Looking at other questions at the moment. So the next question is around the U.S. administration and the changes there. So do you expect the changes being made by the current U.S. administration will impact FDA approvals?
So look, it is possible. I think it was about a month ago. Our context and information was that there were quite a few people, particularly in the AI FDA space, that were let go and then actually brought back. So it didn't affect our FDA application or that timeline. So for people like us working with the FDA, we are yet to see any impact, negative impact on that. But clearly, if you're inside that organization, you would be feeling a little bit of angst. So we can't rule that out moving forward. And of course, I can't control that. So we will just continue to be the perfect FDA client. That's been our target all along, and we'll continue to do that. So Danny, I'll just add a little bit more flavor here.
But some may recall when we put our FDA application in, we received six questions back from the FDA, and then we went about responding to them. We actually had an opportunity at that point to push back on the FDA on three of those questions as not being super relevant to, well, we consider not being super relevant to the clearance of the FDA product, but we took a very different path and in fact went, "If that's what the FDA are asking, then we will give them exactly what they want." And we will continue to do that. We'll continue to take the more conservative and congenial path through with the FDA so that we can maintain this relationship that we're continuing to build. We will be mindful of what's going on with the U.S. administration, I think.
Danny, just maybe a bit of comfort to our shareholders. There was an announcement that was released by HHS late last week around, obviously, the cuts that have been made there. But one of the key points they heard in that announcement is that they will not be cutting any of the reviewers as part of the medical device and some of the other groups that are reviewing FDA applications. So that is maybe some comfort for our shareholders.
Yep. Okay. The next question is around some of your potential U.S. customers. So was the lack of FDA approval impacting the progress of discussions with other potential U.S. customers, or was it assumed you'd get approval?
It has not impacted us. In fact, we've had more demand than what we've been able to handle. We've had to scale back our pipeline with the US and start managing that more effectively. Now, with SCA approval that's come through, we are starting to see more and more push to talk to other hospital systems and will do, as we've done before, manage that process quite well because we want to be able to service and deliver quality outcomes, not only from a product perspective, but also from a support perspective to the respective customers.
Okay. The next question is around reimbursements. So is there a risk of cancellation of the U.S. Medicare reimbursements for AI-assisted cardiac imaging diagnostic tools?
Same as I think as Mat mentioned, we don't believe so, and there's been nothing that's indicated that. It's actually the other way around, where there is such a big cost burden to the hospital system and the U.S. system as a whole for heart disease that these reimbursement codes are increasing and not decreasing because of the belief to save further downwind cost by using a platform like ourselves, so we actually see those costs increasing, and you can see that with the CCTA scan cost that's gone up from $180 and almost doubled to $357, the new plaque code of $950, the increase of the blood flow assessment from $950 to $1,017, so those codes are increasing and not decreasing.
Okay. A reminder, if you've got any questions, please type them at the bottom of your screen where you'll see the Q&A box. We've got two or three more. The next question is, "Congratulations on a successful result from the FDA. SCP was previously described in December as possibly being submitted in April. Now you mentioned July. Where has the slippage come from in only four months?
Thanks, Danny. So no, so look, we are still targeting an April submission. We're looking at a clearance in late July. So if you work back from late July, you get to the end of April for a submission. So we're still targeting that. And at this stage, we're still on track. But I think, as I just said, we will make sure we will put in the best quality submission we can so that we have the fastest pathway to clearance that we can. So we will certainly keep people abreast of our submission date and when we submit and whether it's slipping or staying there where it is. But our eyes are really focused on clearance and clearance towards the end of July.
Okay. The next question is around your commercial agreements. So further commercial agreements of new U.S. hospital systems. How advanced are these discussions?
There are quite a few that we already have that are fairly well advanced, and we'll continue to push those along. And we do expect to have at least one or two more this calendar year. And we'll start moving those towards clinical use as those start being signed up. And some of it's what we did with Tanner Health and the others, the current partners, where we'll do the integration testing, the EMR testing, and so forth before they start using that clinically. But we are well advanced with many of these discussions.
Okay. The next question is around your geographies. In fact, there's two questions about it, so I'll ask the first one. So now that you have FDA approval, how important is the Australian market given the size of the US market?
So look, it's important for a couple of reasons. Revenue-wise, it is not going to make a dent really enough. Of course, we would always like revenue coming through the door, no Mater how big or small. So that's good. What the Australian market really gives us, though, is validation and credibility. And that's really what we're searching for in Australia. And of course, as we were founded here, we would love to be able to provide our software to anybody in Australia to be able to utilize it. So that's why The Cardiac Centre was so important to us early on, and they will remain that way for us going forward. And Sonic was the real deal for us because they have a name in the US as well.
And it's the sophistication of our medical system here in Australia, which is comparable, obviously, to the U.S., that gives us real credibility and validation of our software. So we'll always maintain that presence here in Australia, but it's not something that we're actively going to pursue outside of people coming to us in our current pipeline.
The second question around the geography is, outside of the U.S. and Australia, what other markets are you looking at for clearance to sell?
So we're not actually actively looking at other markets. What the FDA gives us, though, along with the Australian and the U.K. and the CE mark, gives us is the ability to go to other markets globally and rapidly get our clearances through because we have that credibility from those well-known agencies. So there is a host of nations that we could be looking to access. But the reality is, with the size of the U.S. market and now having got access with at least SCA to the U.S. market and being so close to SCP, that our focus really is fully on that and servicing the current Australian clients that we have.
Okay. We're down to the last two questions. So here's a final reminder. If you want to ask a question, please type them into the Q&A box. I've just seen another one's come up. Okay. The next question is, "If you're already throttling the US pipeline, when do you expect to ramp up your sales team to capitalize on this demand?
I'll answer that again, and we just got to be careful that we don't throttle and sort of throttle too quick, throttle too much, but also open up too much either. We are using those key opinion leaders to get us access to a lot of the hospital systems there, and they've opened up of those five or six that I mentioned earlier, like Mass General, HCA, MultiCare, Wellstar, Piedmont, and a few others. Those key opinion leaders have already opened up those other systems, and with the combination of those, that's about 400,000 scans per year. That will keep us busy for a long time coming.
What we will be looking to do is not build up a sales team to go generate more pipeline, but really start focusing on our customer success, customer support to be able to support those customers once we have converted those, because that will also help us keep the product in the system, but also keep our competitors out of the system as well.
Okay. The next question is around the competitor landscape. So can you talk a little bit more about the competitor landscape, specifically who your competitors are and where their product development timing sits?
Yep. So they're very much the similar ones that we've spoken about in the past, like HeartFlow, Cleerly, and Elucid. They all follow a human-in-the-loop approach, which means that a scan has to be sent somewhere, processed, and then sent back. And that usually takes about 24-48 hours before the result comes back. It's expensive, and the clinicians don't have any editability function to perform any edits on the software or the result. They are continuously focusing on that approach. They have not brought out any new products since then. They are trying to get those products into the different systems, which they are not having, as far as we can tell, as much success as what I think they would have had.
That is primarily because of those three points that I mentioned: the human-in-the-loop approach, the ability for the clinician not to be able to edit any of the results, and it being extremely expensive, which is making a lot of these hospital systems cost centers.
Okay. Another question has come through, which makes two more. "In order to allow our product into markets outside our primary targets, i.e., USA, Australia, would you consider licensing agreements into those markets?
Look, the short answer is yes, but we would have to really consider if we need to do that or not. So yeah, we would consider something like that.
The challenge with that, Danny, is that the license agreement's one thing. You still have to provide all the support and everything around that backend, which takes a lot of focus away from our primary focus, which is the U.S.
Yep. Okay, and the final question, it's the inevitable question around the share price. Okay. When can we expect all these developments to have some positive impact on the share price?
I'd love it to be today, Danny. But look, we can't control, obviously, what everyone decides to do with their own money and what the share price is. What we can control, though, is delivering. And I think, I hope at least, and I think we've shown that we have a team now that can deliver, has been delivering. We will continue to deliver. We'll continue to make the best possible decisions we can to give the shareholders and people that would potentially want to buy our shares the best possible case for buying those shares. So we'll just continue to do the right things, and the share price hopefully will take care of itself in a positive manner. I will say that in the two years I've been here, the shareholder support from some of those very early on has been very positive and sticky.
And our new shareholders that have come on recently and some of the placements have also been very supportive and very much understand where we're going. So I thank everybody for that. And hopefully, we can continue to bring more people like that into our share registry.
Okay. We do have one final question from Andrew Wilkinson again from Veritas Securities. "Is it safe to assume the hospital sales cycle from first meeting to generating revenue is at least nine-12 months?
No, I don't think it's that. It's a fair amount faster. And that goes back to that point that I mentioned around using the key opinion leaders. They're not introducing us to the mid-level management level. We've been introduced to CEO level, Chief Medical Officer level, which is really driving that push down to accelerate our pathway into different systems. So it's definitely not nine to 12 months. It's considerably faster than that.
Okay. That concludes the Q&A session. I will now hand back over to Mat and JK for any closing remarks.
Thank you, Danny. And thank you, everyone, for taking the time to listen to us. Look, we're very proud, obviously, of what we've achieved. Getting to this point with our commercial-ready software, our regulatory approvals in the UK, Europe, Australia, New Zealand, and now the USA, we're very proud. But we also understand that this really is sort of the key starting point, and we're actually in the game now. So it's now up to us to take advantage of the opportunity ahead of us. We'll see that with us starting to solidify some of these strategic partners into commercial agreements and other commercial agreements we'll see in the states. That also gives us more credibility for more commercial agreements into the future. And obviously, focusing in on our SCP and SCF clearances. Those things combined really give us a foundation to really push forward with this business.
I thank everybody for their support so far and hope that they will continue to support us moving forward.
Thank you, Mat. Thank you, JK. You can now disconnect. Thank you.