Good day, thank you for standing by, welcome to Nyxoah's second quarter 2023 earnings conference call. At this time, all participants are on a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask your question during the session, you will need to press star one one on your telephone. You will hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. Now I would now like to introduce your host for today's call, Michaela Kirkwood, Investor Relations and Communications Manager. Please go ahead.
Thank you. Good afternoon, and good evening, everyone, and welcome to our earnings call for the second quarter of 2023. I am Michaela Kirkwood, Investor Relations and Communications Manager at Nyxoah. Participating from the company today will be Olivier Taelman, Chief Executive Officer, and Loïc Moreau, Chief Financial Officer. During the call, we will discuss our operating activities and review our second quarter financial results, released after released after US market close today. After which, we will host a question-and-answer session. The press release can be found on the investor relations section of our website. This call is being recorded and will be archived in the event section of the investor relations tab of our website. Before we begin, I would like to remind you that any statements that relate to expectations or predictions of future events, market trends, results, or performance are forward-looking statements.
All forward-looking statements are based upon our current estimates and various assumptions. These statements involve material risks and uncertainties that could cause actual results or events to material 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 descriptions of the risks and uncertainties associated with our business, please refer to the Risk Factors section of our Form 20-F, filed with the Securities and Exchange Commission on March 22nd, 2023. With that, I will now turn the call over to Olivier.
Thank you, Michaela. Good afternoon, and good evening, everyone, and thank you for joining us for our second quarter 2023 earnings call. The evolution of Nyxoah enlarging its US footprint is well underway with our current focus on patient follow-up in our US pivotal study DREAM. As a reminder, we completed all 115 implants in the study earlier this year and expect to report 12-month results in the first quarter of 2024. We are highly confident in DREAM outcomes based on the over 500 implants in our prior clinical and commercial settings globally, and the DREAM efficacy and safety data released in a late-breaking poster session at SLEEP 2023 in June.
In the poster, we reported efficacy data on the first 34 DREAM patients reaching 12-month follow-up, which demonstrated a 65% AHI responder rate and a 76% ODI responder rate, and safety data on all patients enrolled in the study, which were in line with our expectations and compared favorably to other neuromodulation studies. As a reminder, for the trial to be successful, of the 115 patients, at least 63% need to be AHI and ODI responders at the 12-month follow-up. The model of PMA submission continues to progress, with the second module being filed during quarter two. We continue to anticipate submitting the third module later this year and the fourth and final module, which will include 12-month safety and efficacy data, shortly after the follow-up period is completed early next year.
We remain on track for FDA approval before the end The U.S. access pivotal study, focused on complete concentric collapse patients, continues to enroll, with implants expected to be completed in 2024. As a reminder, triple C patients represent approximately 30% of hypoglossal nerve stimulation eligible to treat OSA patients who are contraindicated to commercially available AGNS The U.S. and do not have suitable treatment options other than major palate surgery. The Access primary endpoints are similar to the DREAM Study primary endpoints, as Genio has demonstrated similar results in both CCC and non-CCC patients. This already resulted in a label expansion in Europe, where the first commercial triple C patients are being treated. Commercially, this quarter, we reported sales of $1.1 million and increased the number of German centers implanting Genio to 42.
This is the result of both strong underlying demand for Genio and commercial investments, including direct-to-consumer online campaigns launched in March. As a result of these DTC efforts, we are seeing approximately 50,000 monthly website visits and nearly 1,700 obstructive sleep apnea patients call the helpline in the second quarter, compared to 292 in the first. Guiding these patients to the appropriate therapy and shortening their time to treatment will contribute to our future success. AGNS in Germany remains highly underpenetrated, with 1.1 million CPAP patients, yet only 620 AGNS implants last year. Identifying CPAP refractory patients is the key to unlocking the market's potential, and we are working closely with sleep physicians and other industry participants to ensure these OSA patients receive appropriate therapy.
We continue to position ourselves as an innovation leader in the OSA space, with always putting patients first and listening to our surgeons. As a result, Genio is a different approach to AGNS than existing implanted battery with lead solutions. Genio offers patients a leadless, full-body MRI-compatible, non-implanted battery solution, powered and controlled by a wearable. Independent patient market research confirmed preference for a system with Genio's features. Thanks to the fully upgradable wearable component, Genio patients can always have the most advanced technology without needing a new surgery. Next generation Genio systems will provide patients with real-time feedback through data collection and offer remote monitoring that will improve the patient experience and provide physicians the ability to more efficiently optimize patient care.
Concretely, we are currently rolling out Genio 2.1, enabling greater stimulation adjustability, while Genio 3.0 will have a design change, integrating patient feedback and positive impact on gross margins by integrating the coil into the wearable component. All this should further increase patient access to AGNS technology. We are also working on regulatory approval to activate existing sensors in the wearable that will adjust stimulation based upon sleeping position. Our European commercialization experience, early DREAM data, and Genio's differentiated design reinforce our confidence in a successful US launch next year. We recently commissioned independent clinician and patient surveys, which demonstrates significant demand for Genio and supports our view that we can more than replicate our European performance when entering The U.S. to ensure we are fully prepared at launch, we have accelerated investments in our US commercial infrastructure.
Christoph Eigenmann joined as Chief Commercial Officer during the second quarter, and our market access team is making steady progress. We are working closely with the AAO, the American Academy of Otolaryngology, to define which CPT code would best support Genio at launch. While there are multiple CPT codes being evaluated, they all provide reimbursement that, at a minimum, is in line with current AGNS payment levels. We anticipate having Medicare coverage at launch, with commercial payers following shortly thereafter. Finally, we are making steady progress with our ansa cervicalis program through our exclusive licensing agreement with the Vanderbilt University. Under the lead of Professor David Kent, in close collaboration with the Nyxoah R&D team, we are evaluating stimulation of the ansa cervicalis nerve to address current AGNS non-responders. The ansa cervicalis preliminary design work has ended, and we have begun the detailed design phase.
We continue to anticipate beginning a feasibility study later this year. In summary, we continue to advance our key objectives for 2023, which are to focus on patient follow-up in the DREAM study, resulting in reaching the primary endpoints, begin preparations The U.S. market with regulatory, manufacturing, and commercial market access readiness, and drive further revenue growth in Germany while opening new European markets. With that, I'm pleased to turn the call over to our CFO, Loïc Moreau, who will provide a financial update.
Thank you, Olivier. Good day to everyone, and thank you for joining us today. Revenue for the second quarter, ending June 30, 2023, was EUR 1.1 million. Total operating loss for the second quarter was EUR 11.9 million, versus EUR 7.4 million in the second quarter of 2022, driven by an acceleration in clinical activities, notably the start of the ACCESS study, as well as commercial investments in Europe. Last quarter, we raised EUR 3 million pursuant to the company $50 million at-the-market program. As of June 30, 2023, cash and financial assets totaled EUR 84.5 million, compared to EUR 96.1 million on December 31, 2022.
During the second quarter, our monthly cash burn was EUR 4.8 million, based on our current cash position, we have a runway into late 2024. With that, I will turn the call back over to Olivier.
Thank you, Loïc. We are entering the most exciting time in Nyxoah's history. We are less than nine months away from the DREAM clinical data readout, which should result in obtaining FDA approval and initiating U.S. commercialization. The uniqueness of Genio system resonates well with both physicians and patients, confirmed by independent market research. I look forward to continue to scale the company in anticipation The U.S. market and continuing to grow in Europe. This concludes the formal part of our presentation. Operator, I will turn the call over to you to begin our Q&A session.
Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. One moment for our first question. Our first question comes from Jonathan Block from Stifel. Your line is now open.
Hey, everyone. This is Joe Federico on for John. Thanks for the questions. To start, I know you gave some color on the reimbursement details. I just wanted to ask, I think in the past you had said that you expected to hear from the AMA before the end of the year on some of the coding clarity. Can you give us an update on where that sits?
Yes, no, definitely. We are working, as I mentioned, with ENT Society AO, and they are collaborating with the AMA, making recommendations. There are two options that are fully and further discussed, and we are still sticking to the same timeline that we believe that before year-end, there will be clarity on which of the two options will be the one that we can use for the Genio system in going forward.
Okay, great. Thanks for the color. Just to follow up, I wanted to ask about gross margin in the quarter. It looks like it came in a little bit below our estimates. Can you kind of expand on some of the drivers there and maybe how you expect that to play out over the remainder of the year? Thanks, guys.
I will hand over this question to our CFO.
Yeah. Hi, thank you for the question. The gross margin for the second quarter was 62%. That's 64% for the first quarter. There is a 2% decrease in term of margin, which is due to the additional site we now have in Belgium. This said, with the acceleration of the business and the ramp up of the volumes, we expect the gross margin to increase over time, specifically in the second half of 2023 and then in 2024, based on volume and absorption of fixed costs.
Thank you. One moment for our next question. Our next question comes from Edward White, from H.C. Wainwright. Your line is now open.
Good evening. Thanks for taking my questions. With the increase in the use of GLP-1 drugs, I just wanted to get your thoughts on the potential impact to the HGNS market?
Thank you for this question, and, and it's, it's really a hot question at, at the moment. The way we are looking at this, at Nyxoah, is the following: If you look at both published data and commentary from leading KOLs, indicating that to have the highest HGNS response, it's best to lower BMI to 35 than to treat high BMI patients. Our view is that lowering BMI from high BMI patients, thereby increasing the number of HGNS-appropriate candidates, will more than offset any patient that might drop out of the funnel. In other words, we are really welcoming GLP-1 into the market, and we do believe that the effect can be meaningful and benefiting in increasing the HGNS-eligible candidates.
Great. Thank you. Just another question. You were in 41 accounts in Germany in the first quarter, 42 in the second quarter. I just wanted to get your thoughts on how many co- accounts you're expecting to be in by year-end. Your competitor was in over 50 accounts, I believe, in the first quarter. Just where do they stand now and what's your overlap with them? Thank you.
Yes. First of all, I want to compliment the German team in driving and opening new accounts. They are doing really a great job on this. Today, we are at roughly 42 accounts. In going further, I do not want to provide specific guidance on exactly how many accounts we will be opening, but it's also clear that we will continue to anticipate a steady increase in the number of implanting centers over the course of the years. Just as some kind of reference, in our view, our competitors, they are having slightly above 50-55 accounts in Germany. We have 42 at this moment, and as I mentioned, we want to steady increase also the number of implanting centers over the course of the year.
Okay, great. Thanks for taking my questions.
With pleasure.
Thank you. One moment for our next question. Our next question comes from Adam Maeder, from Piper Sandler. Your line is now open.
Hi, Olivier. Hi, Loïc. Congrats on the progress, and thank you for taking the questions. Maybe just to start, wanted to ask about some of the pre-commercialization US activities that you're engaging on right now. I think I heard the word accelerated mentioned once or twice. Can you just level set us kind of exactly, you know, where does the infrastructure stand? How are you thinking about headcount at US launch? Maybe just remind us of kind of the initial go-to-market The U.S., and then I had a follow-up. Thanks.
Thank you, Adam, for the question, and I'm joining the call. When it comes to our go-to-market strategy, as I mentioned before, we will gradually increase-
... our investment in US pre-commercialization going hand in hand also with our increased confidence in the DREAM study data outcome. What I can say is that, first of all, we hired already our CCO, Chris. Next to this, we have our market access director. We also recently have refocused our VP of operations, fully dedicated also to help preparing the pre-commercialization. In going forward, of course, we will further expand. Also we are preparing an internal plan where we are, where we are anticipating having a full sales force of 100- 100 people, 100-150 people, hired and trained by the time of launch. These reps will target both implanting ENTs, but also referring, referring sleep clinicians, supported by a relatively modest DTC investment.
At this moment, we are doing the targeting of accounts, how many we aim to come and also to enter. On all this, I will come back during quarter three, the moment we get even more closer to US commercialization.
Okay, totally fair, and, and thank you for the additional color there. Maybe just for the follow-up, you know, obviously, you guys don't provide, revenue guidance. It, it looks like the Street's modeling around EUR 5 million or so for full year 2023. Curious if you have any reaction to that figure and, just any thoughts around kind of the, the back half cadence, Q3 versus Q4, that you can share, regarding your business. Thanks again.
Thanks for the question, Adam. I will take it. As you said, we're not providing revenue guidance, but we're very confident in the momentum of the business, and we're confident in term of high growth in Germany. This is the only thing I can comment on.
Thank you.
Thank you. One moment for our next question. Our next question comes from Ross Osborn, from Cantor Fitzgerald. Your line is now open.
Hi, thank you for taking our questions. Would you please provide an update on how some of the headwinds you called out during the first quarter played out year to date? Specifically, has hospital capacity and staffing improved, worsened, or stayed the same? How have new accounts dealt with administrative burdens you mentioned? Thank you.
Thank you, Ross. Thank you for this question, and, and you recall this very correct. In the first quarter, we were impacted with what we called transitory factors, mainly driven by product availability and reimbursement approvals in new open centers. The resolution of these issues, combined with our patient-focused initiatives, drove the sales rebound in the second quarter, and that's also explaining how we landed at more than EUR 1.1 million in quarter two.
Got it. Thank you for that. Then just one more for us. Would you be able to disclose what % of total revenue Germany accounted for and how accounts outside of Germany performed?
Yeah. At this moment, German- the German revenue is really driving our revenue business with more than 90% of all international revenue coming from Germany. We are really pleased that we also see Switzerland having now a full DRG code in place. We recently also generated our first revenue in Austria. Besides Germany, we have Switzerland, Austria. We had Spain already, we expect more revenue to come in the second half from Spain. In going forward and further expanding, we are aiming at Italy, where we expect first revenue generation next year, we're also looking at The U.K.
Thank you. One moment for our next question. Our next question come from David Rescott from Baird. Your line is now open.
Oh, hi. Thanks for taking the questions. I wanted to start on the DTC campaign in Europe that you called out. I think you mentioned maybe 50,000 monthly website visits. Just wondered if you had any more color on, you know, if and how that's translating to revenue growth, toward patients going into centers, towards patients translating into, you know, ultimate implants, any, any color on the ROI you've seen there? I think you The U.S., you're expecting a modest kind of DTC campaign associated with the commercialization. Just wondering if that's something you're expecting to invest in ahead of the launch, maybe at the time of launch, or something that rolls out thereafter.
Mm-hmm. Let me start by answering the first part of your question on DTC in Europe. Our direct-to-consumer advertising campaign was launched in March in Germany and has raised awareness of AGNS and Genio. As a result, we are seeing and we have seen rapid growth in appointment requests through the helpline. The current time from patient identification to Genio implant, it's between six to eight months, so we would not anticipate appointment requests translating to implants until, in fact, Q4 this year. We are seeing that there is a really increased interest. Now, jumping and taking this The U.S., i think it's obvious, and also if we just see what is, what is happening with other company or with the leading company in AGNS, that DTC is really showing as effect and its positive effect on recruiting patients.
Also, when we slowly The U.S., we will invest in DTC. However, we want to do this in a more selective way, that we know that in line with the centers that we are opening and the centers that we call centers of excellence, that we can do really focused DTC investments, driving patients to these centers, resulting in an increased implant rate for Genio.
All right, great. That, that's helpful. Just on the cash balance, I think you called out maybe 100-150 or so US reps potentially in the sales force pre-commercialization. I think you also called out cash balance gets you to, you know, toward the late end of 2024. Do those comments or does the cash balance getting you there account for potentially bringing on this sales force in the, in, you know, the middle part maybe of 2024? Should we be thinking about, you know, any type of incremental, you know, investment in the cash position of the business ahead of that launch as well? Thank you.
Yeah. No, no, this is a really, a really interesting question, and it's also a question that we are debating internally. I will just start the answer, then I'm sure that Loïc will also follow in on this. In short, at this moment, we are having a really healthy cash position that will bring us to end 2024. We know that the major inflection point is coming with the 12-month green data readout in Q1 next year, in 2024. At that moment, it's also, I think, clear that in order to prepare a real successful commercial The U.S., where we will be making a big splash when entering, that we will also need to raise more money to finance this.
What the exact numbers are and will be, I don't think this is the correct moment to disclose this, but we have currently a healthy cash position. We have a big inflection point coming up, and we also know, and we are preparing an aggressive The U.S., trying to make a big splash when we enter. Therefore, most likely we will be raising more money, but the exact amount, again, it's not this moment that we want to comment further on this. Loïc, if I forgot something, please...
is, this is totally complete. The cash burn until end of 2024 covers the, all the pre-commercially, pre-commercial activities. Since we are, we are, we are looking at the launch plan, the detailed plans, and the, and the phasing of those plans, this will be a, this will be a incremental investment.
Okay, great. Thank you.
Thank you. One moment for our next question. Our next question comes from Suraj Kalia from Oppenheimer & Co.. Your line is now open.
Hi, Olivier, Loïc, can you hear me all right?
We can hear you perfect, Suraj.
Perfect. Olivier, congrats on all the progress. Hey, so Olivier, a number of questions have been asked. Maybe let me ask you a slightly different flavor. In Germany, what are the average procedure times for Genio? And is our math approximately right, that we are, you know, in Q2, we are talking about roughly one implant per site, or a little more than one?
What we are seeing from implant procedure in Germany, we are seeing a range that is varying between 45-60 minutes. It's all depending a little bit on the surgical technique, the handiness of surgeons, but we see roughly that 45-60 minutes, that is what it's taking the surgeons to do an implant procedure. When it comes to 1 implant by site, if you look at it purely mathematically, yes, you could come up with this calculation. The sites that we are opening are not at the same state as the sites that were opened before. We also have a variability between sites. There are sites that are doing 10 implants. There are sites that are doing one or two implants. Our aim in going forward is also making an increasing overall implant number.
To this one, we recalculated further, and that's what we're aiming for with, with our most experienced site, that we can come with weekly implants or even multiple implants on a weekly basis, depending on the OR availability that they're having.
Got it. Olivier Taelman, when, when you look at Germany, I remember, you know, you had talked about a 50% market share by year-end. Love to get the status update, if possible, on that. Olivier Taelman, as you think about The U.S., how do you envision this hand-to-hand combat with Inspire? Do you think it'll be determined by DTC spend? Do you think it'll be determined by outcomes, feet on the ground, price differential? You know, just kind of give us some additional color on how you guys are The U.S. market especially.
Yes, before I answer the question of, of Germany and the market share, I would like to, to answer the second part of your question, if, if, if that is okay with you, Suraj, because I think you touched on something that is really, really important. How can we differentiate with Inspire and how can we drive success in The U.S. in going forward? First of all, yes, we do believe, and we are convinced that the product differentiation will convince the majority of patients to choose for Genio over a pacemaker platform technology. That is our belief. That is what we are seeing. That's what we are seeing confirmed when we do independent market research.
We do believe that patients suffering from OSA will choose the less invasive technology, the safest technology, where you have, for example, the full-body BMI compatibility, where you have 1 incision, where you will always have access to the latest and greatest technology update without having to undergo a reoperation. That's already 1 part. On the other hand, we also do believe that in going forward and in launching, the effect of DTC cannot be underestimated, because it's directly also linked to the patient choice of technology. We will also be investing in this. Another differentiating point is when you speak to surgeons and you listen also with the bilateral stimulation effect and the option to also have the label expansion treating CCC patients, which would make it for surgeons less cumbersome.
They don't have to think about DISE or a similar identification model to select or identify CCC. If you combine all these things, starting with a clear product differentiation, with a patient acceptance ratio, with a less invasive technology, in combination with surgeons who do not need to exclude or come with cumbersome pre-investigations before they know if they can implant, I think those will be the winning arguments for Nyxoah going forward. Jumping to the first part of question, it's the performance in Germany and the market share. You know, I do have to give credit to who belongs, who needs to get credit, and it's clear that Inspire delivered a very strong second quarter. They did. This is what we are telling already.
It's precisely how competition entering a monopolistic market can increase overall AGNS penetration and where benefits will benefit, where patients will benefit from a need for treatment. Our presence in Germany, it's clearly driving therapy adoption and capturing patients that would be lost for AGNS treatment. However, AGNS still continues to be strongly under-penetrated, and to unlock the market and the potential patients have to be captured at the moment when they become refractory to CPAP and should not be left without therapy. That is one of the reasons why we increase our investment in DTC in Germany. It's also one of the reasons why we increase our sleep physician presence, and it's also one of the reasons why we are exploring strategic partnerships to identify those patients. Now, answering also very, very precise on the market share.
At this moment, in our estimate, we have a little bit more than 20% market share in quarter two.
Got it. And Loïc, one last question for you, if I may. What do you anticipate is going to be the spend on ACCESS, you know, assuming it gets wrapped up by next year? Gentlemen, thank you for taking my questions.
Yeah. A study like ACCESS will cost around $15 million . We will ensure this year close to $4 million, so the remainder will be for next year.
Thank you.
I am showing no further questions. I would now like to turn the call back over to Olivier Taelman, CEO, for closing remarks.
Yes. Thank you. Again, thank you all for joining. Thank you for the interaction we had and also the good questions. I would like simply to close by repeating what I was already saying. We are entering the most exciting time of Nyxoah, being less than nine months away from US data dream mode readout. We are looking also in further expanding of European revenue and commercialization. Of course, with that hand in hand, we are further scaling up the organization. We are getting ready also from a manufacturing perspective. It's really all excitement at Nyxoah at this moment, and we are really looking forward into the coming months and the end of the year. Thank you all for participating and for your questions.
This concludes today's conference call. Thank you for participating. You may now disconnect.