Earnings Call: Q1 2023

May 16, 2023

Earnings release

Welcome to Onward's 2023 Q1 results and business update webinar. I'm Aditi Roy, Vice President of Communications at Onward. A reminder that today's event will contain forward-looking statements, which often differ from actual results. Any forward-looking statements communicated today reflect the company's current views and are subject to risks and uncertainties. Today's call will be hosted by Dave Marver, CEO, and Lara Smith Webber, CFO. Dave and Lara will give a brief presentation, after which they will be pleased to take your questions. Well, thank you, Aditi. It's a delight to speak with you today. For those of you who are new to the Onward story, I just have a few slides that provide a brief overview of the company. At left, you can see the key facts. We were founded in 2015. We have about 110 people on the team now. Our headquarters are in Eindhoven, the Netherlands. We have a science and engineering center in Lausanne, Switzerland. We have an office now in Boston, Massachusetts, U.S.A. We've raised about $170 million since inception, EUR 150 million, and we are listed on the Brussels and Amsterdam exchanges on the Euronext. As far as the business is concerned, we have two neuromodulation platforms, both of which stimulate the spinal cord. One does it externally, that's called ARC-EX. The other does it via implantable, that's called ARC-IM. We're a very innovative company. We have 9 FDA Breakthrough Device Designation awards. Now over 340 issued or pending patents worldwide. Our therapies are increasingly clinically validated. We've completed one pivotal trial, which met its primary endpoints. We announced positive top-line results from that. We have positive interim results from the first indication we're pursuing with our implantable platform called ARC-IM. That's the blood pressure management indication. We are expecting to launch into a large total available market. Our first commercial sale is expected late this year or early next year. Of course, we have important strategic relationship with the Christopher & Dana Reeve Foundation, which is the world's largest patient advocacy group. Our vision is that empowered by movement, people with spinal cord injury will enjoy life in every way that matters to them. We're addressing that vision with, again, these two technology platforms. At left, the implantable called ARC-IM. At right, the external platform called ARC-EX. On to Q1, where we have had another eventful quarter. We appointed two capable and experienced women to our management team. We were awarded 3 additional FDA Breakthrough Device Designation awards. We were awarded 10 additional patents. In April, we shared some additional results from our UPLIFT pivotal trial, namely the responder rate. Just yesterday, we announced first-in-human use of the ARC-IM Lead. On to more details, starting with the addition to our leadership team. The two that we added are highlighted here in color. First, Erika Ross Ellison, who is our new Global Vice President of Clinical, Regulatory, and Quality. She came to us from Abbott, where she led all clinical operations for their neuromodulation business worldwide. Erika also has a PhD in neuroscience, who served on the faculty of neurosurgery at the Mayo Clinic. Really very specific and germane expertise, and she's adding a lot to the company. Sarah Moore also joined us as Vice President of Global Marketing. Sarah came to we from Nevro, another global neuromodulation company, where she was responsible for all downstream marketing, and she's launched over 20 med tech and life science products over the course of her career, most of which was spent at J&J. Onto the pivotal trial called UPLIFT. If you're not familiar with UPLIFT, here's just some background. Sorry. Got a little ahead of myself. These are the FDA Breakthrough Device Designation awards. As you can see here, we have 9 now. 3 new ones awarded in the first quarter, one for blood pressure for ARC-EX, the other for spasticity for ARC-EX, and the last for spasticity for ARC-IM. If you're not familiar with this program, FDA Breakthrough Device Designation is designed to give new therapies that address an unmet need, a more flexible approval process, more flexible clinical trial design, and maybe some reimbursement advantages as well. I mentioned before, we're up to 340 issued or pending patents worldwide, 10 additional patents awarded in the first quarter. Some of these are from the exclusive licenses that we forged with leading neuroscience research labs from around the world. Just to characterize these 10 new patents, they're really in 2 primary areas. They cover multiple areas, but primarily closed loop control of stimulation for restoring movement and automated configuration of the stimulation therapy itself. Okay. Onto the trial called UPLIFT. Here's some background. We enrolled 65 patients at 14 centers worldwide. This was a 4-month trial, 2 months without stimulation, followed by 2 months with stimulation. The goal was to demonstrate statistically significant improvement in the strength and function of the hands and arms. This is the first-ever pivotal study to investigate non-invasive spinal cord stimulation, and we worked with many of the top centers around the world in the U.S., Canada, the U.K., and Europe. What we announced recently was that we met both primary safety and effectiveness endpoints, but also there was a 72% responder rate. Quite significant. Just yesterday, big news. First in human use of the ARC-IM Lead. This was used along with the ARC-IM IPG or neurostimulator as part of our ongoing HemON study to evaluate the use of ARC-IM therapy to better regulate blood pressure after SCI. This was a thoracic lead, which is part of the ARC-IM Lead portfolio, purpose-designed for our indication. It's a specific shape, specific electrode spacing that's designed to stimulate the spinal cord anatomy responsible for movement and function. A really important milestone for us. I'd like to hand it off to my partner, Lara Smith Weber, to provide a financing update or financial update. Thank you, Dave. Although we do not publish quarterly financials, we wanted to give you an update on our cash position as our key financial indicator. Net cash was EUR 53 million at the end of March 2023, representing a cash burn of EUR 8.8 million for the quarter. This is fully in line with expectations, and we reconfirm our guidance that we believe we have enough cash to fuel operations until the end of 2024. Back to you, Dave. All right. Thank you, Lara. Now for the outlook. We have several important milestones that we expect for the balance of this year and into next year, over the course of the next several months. Starting with ARC-EX, we wanted to share additional results from the UPLIFT study. We've done that now with the responder rate. We will look forward to sharing more detailed results concurrent with the publication of the manuscript. Again, we expect that later this year. We also expect late this summer to submit for regulatory clearance for ARC-EX. That means our FDA De Novo submission. Moving on to ARC-IM, we wanted to demonstrate first in human use of the ARC-IM Lead. That's now done as of yesterday. We also want to begin the pivotal clinical study for the blood pressure indication using ARC-IM. We hope to do that late this year or early next. We expect a major Brain-Computer Interface publication pairing a BCI with ARC therapy. Expect that to occur sometime this year. We also expect first in human use, really first in humanity use of a Brain-Computer Interface to facilitate or restore movement of the hands and arms. That's something we expect later this year. Finally, as we shared with you in March, we're going to look for ways to, in a smart way, strengthen our balance sheet. We've announced we have what we expect to be cash through the end of 2024 in a good position. We want to continue to stay strong. With that, we'll open it up for questions. I see one from Andrew J. coming in, asking about the potential for a U.S. listing. Why don't I take that one? Andrew, certainly, it's within the realm of possibility that we might pursue a U.S. listing. That's something that we discussed even when we did our Euronext IPO back in late 2021. The market isn't good right now. We want to migrate to NASDAQ when the market supports a strong listing, when it makes sense for us as a company. That's something that we're going to just continue to explore and assess over time. Okay, let's see what else came in. Another question here, what's our next move in the U.S.? Well, the next move in the U.S. is really to pursue regulatory clearance and then to launch the ARC-EX device. That's our transcutaneous spinal cord stimulation therapy. Initial indication is restoring strength and function of the hands and arms. Of course, as I shared earlier, we have positive pivotal trial data. We've met the primary safety and effectiveness endpoints. We have a strong responder rate. We look forward to filing that submission with FDA, which is called a De Novo submission. We're obviously preparing for launch operationally as well as starting to hire really talented Marketing and sales professionals. You heard about Mor earlier in the call, who's our new global VP of Marketing, very experienced and capable person. Now a question from Maria from Bryan Garnier. Maria, do you want to just ask that live? Alex, you can open up Maria's mic. Maria, I'm going to allow you to talk so that you can ask your question live. Maria, you're not allowed to talk. You don't have to, Maria. I'm happy to read the question if you prefer. Maria asks, well, first she says, "Congratulations on your progress on the HEMON study and the successful first in human use of the ARC-IM Lead." She asks for some guidance on the number of additional patients who will receive that lead. Previous estimates indicated that up to 16 patients would be implanted in the ongoing trial. We have a number of clinical feasibility trials, either recently completed or ongoing. The one into which we're enrolling currently is called HEMON. We have permission to enroll as many as 16 participants. This is a study where we're assessing the use of ARC-IM therapy, implantable therapy, to in fact elevate low blood pressure. Low blood pressure or orthostatic hypotension is a very common problem among people with spinal cord injury. So far, there have been now five people implanted with the Onward IPG, our implantable neurostimulator. Now, as of yesterday, one person now has the full Onward system, including the ARC-IM Lead. We're going to continue to enroll participants in HEMON to gain experience. We'd like to add another center in Europe as well, so that we can begin to learn how to scale additional centers. All of this in preparation for initiation of the global pivotal trial, something we're calling Empower BP, and hopefully that will commence the end of this year or early next year. I don't have a specific number for you, Maria, just that we want to continue to enroll patients in HEMON until we're ready to initiate Empower BP. This allows us to learn, helps us to improve and refine the design and the outcomes measures of Empower BP, and so forth. I would look for maybe between one and five, but I don't have a specific number of additional participants in HemON at this point. Okay. Lots more questions. Okay. Maria also asks for the expected timelines for the release of top-line results. We released top-line results from UPLIFT, as you know. Met its primary endpoint. We also released interim results from the first 10 people treated with the blood pressure indication using ARC-IM. It was a combination of participants from HemON, STIMO-HEMO, which was a study that preceded that, as well as a study called HEMO that's being conducted in Canada. All of them administered Onward ARC therapy. The precise location, we call it the hemodynamic hotspot in the thoracic spinal cord, stimulating the way we stimulate and in the way that we are seeking to commercialize. It's unclear when we're going to release the top-line data from HemON, likely concurrent with a publication. As you know, our research partners are very, fortunately, they're very keen to publish things in top-level journals like New England Journal of Medicine and Nature. Whenever that occurs, it could be late this year, it could be the first half of next year, that's when you would get more results from HemON. So far, we've released quite positive interim outcomes. 10 out of 10 patients, in fact, have responded well to the therapy. All right. Okay, John Bergman from Kepler. Do you want to ask that live, John? If not, it's okay. John asked when we expect to publish the detailed results from the UPLIFT trial. The investigators are currently pursuing publication of those results in a top journal. I don't have a timeline for now. I expect it will be this half this year. That's my best guess. It's possible it could leak into next year, but it's something that I, again, I think is going to happen in the next six months. We want to get those data out there as soon as we can. Obviously, that will support our submission and also support the commercial launch as well. Don't have a date, but I would expect it to occur likely in the second half of this year. All right. We have a question from Dylan. Maybe Dylan will speak live. Dylan from Stifel. No? I don't think anybody likes to read. Some are keep reading. Can you guys hear me? Oh, yeah. Here we go, Dylan. Excellent. Hey, Dave. Just on the manuscript, I understand you can't say too much also on timing and which journal, these things always change anyways. Will the full data have each endpoint split out or only the composite, considering sort of what you would seek approval on? Also, will there be discussion on what is sort of driver responder, non-responder? That would be super interesting to read. Thanks. Sure. I don't think I can answer too much there. Certainly, the data that's revealed is going to be more fulsome than we've revealed thus far. You'll get more information about the locations of stimulation, the amplitude of stimulation. I think you'll get potentially some more detailed information on response, perhaps stratified by injury severity, time since injury, things of that nature. Nothing I want to commit to now other than it's definitely going to be more fulsome. Okay. David from Degroof, would you like to ask your? Oh, no, you can't connect to your microphone. David asks for an update. It should work now, I think. Okay, very good. Yeah. Okay, perfect. I reconnected. There you go. Thanks for the presentation, Dave and Lara. Perhaps on some of the early-stage programs that you're working on, the Parkinson's mobility and the spasticity programs. Could you give an update on those and when do you envision these to enter the clinic? Sure. Our focus as a company right now is on commercializing what we have, what's near term. That being the upper extremity indication with ARC-EX and the blood pressure indication for ARC-IM. I think the next area of focus for us, in addition to mobility, where as I shared in March, we have some additional clinical feasibility work upcoming, is really going to be in the area of Brain-Computer Interface. As I mentioned, really, I think quite critical upcoming milestone for us is the first in-human implant of a BCI to restore hand and arm function. We expect that to occur sometime this summer. That's really our focus as a company now. Our research partners, though, are continuing to explore new things, such as those that you mentioned. I don't have anything I want to report now, but I think there's some grants that are coming in that I think are going to be compelling in some of these large adjacent populations that, for us, represent upside. Okay. Thank you very much. Okay, Maria has another question as well. Maria from Bryan Garnier. In relation to the De Novo application for ARC-EX, your understanding is that technology has been undergoing refinements to enhance usability, durability, robustness, manufacturability. Are there any significant tasks remaining in terms of technology optimization or data preparation before submission? That's what we're doing now is finalizing the design of the updated ARC-EX. Just to provide context for others of you on the call, we used a device during the UPLIFT trial called LIFT, which was an older device. We felt that it needed improvements in usability, durability, feature set, and so on. It delivers the same therapy, so nothing's really going to change there, but it's just a better device all the way around. We've been in the process of finalizing those changes. That technical file, along with the UPLIFT data, is what constitutes the submission that De Novo submitted to FDA. We're in the sort of the last parts of that, and the completion of those activities really is what's going to dictate the submission timing, or at this point, where we continue to guide sometime this summer. Okay. Couple of additional questions we have. Edward Hall as well from Stifel. Ed, do you want to ask your question live? Yeah. Perfect. Can you hear me now? Yes. Perfect. Hi, guys. Good to connect again. Just, I think a question on the ARC-EX side, especially in terms of the sales force. I know you guys are planning to submit in the next couple of months. Could you give us a sort of quick update on your sort of sales force ramp-up, particularly in the U.S., and if there's a lag at all into the EU as well? Maybe a follow-up on the BCI side. I mean, we've seen Neuralink having a few issues the last couple of weeks. How is your progress going in terms of partnerships? Oh, thank you. Yeah. Yeah. I mean, first, with respect to the sales force ramp, we've hired leadership. We have a new VP of Global Marketing, Sarah Moore, whom I referenced earlier in the call. We have a VP of sales named Andrew Dolan, who has quite a bit of industry experience as well, experience in relationships, in particular, into the U.S. Veterans Administration hospital system, as well as into the rehab clinics. That's, I think, going to prove quite important. We've hired a sales director, Europe, based in Germany, which is the largest market in Europe, and he too has neuromodulation experience, both implantable and external, as well as quite a bit of experience with both direct sales as well as sales through distribution. We have the leadership in place now. The leadership is working together to put the strategy in place. As you know, the initial sales targets for ARC-EX are clinics. There's a finite number of them. We don't expect we're going to need a large sales force out of the gate. As a result of that, we're going to be fairly conservative about hiring, so we're not carrying a lot of costs ahead of the commercial approval. We, at this point, are expecting European regulatory approval to lag U.S. regulatory approval by roughly one quarter. I think that's a fair assumption. A lot of unknowns there just with MDR, but that's our current working assumption. As far as the BCI is concerned, yeah, there are some traditional tech firms who are having difficulty getting FDA approval to initiate trials of any sort, having difficulty finding neurosurgery clinics to partner with them on the initiation of clinical trials, and I think that's really an advantage for Onward. We have quite an experienced management team, many of us with decades of experience in med tech and life sciences. We understand how to navigate the regulatory requirements to design things in accordance with the requisite quality standards and so forth. We may not be getting the buzz that those companies are getting, but we're getting things done. You're going to see a publication upcoming that demonstrates that, and you'll also see again later this summer, first in human use of a BCI to restore hand and arm function. I mean, a huge step forward relative to the other companies, in terms of not just implanting a BCI, but actually doing something quite remarkable with that BCI. It's not done yet, but I think that's something that you can expect and look forward to, and we're certainly looking forward to it. Perfect. Thanks a lot. Congrats on the implant news. Thank you. Niall, I haven't heard from you in a while. I'm in the U.K. as well today, hello. Niall's question is, when will ARC-EX be done and ready for production, what's the planned pricing? We expect the design to be done later this summer. At that point, that's when we'll submit for regulatory approval. We've not guided on price to this point. What we have done, however, is just share the pricing of, let's say, similar devices that might stimulate the muscles, for example, that are used in SCI clinics and sometimes in homes as well, such as an FES bicycle, where the pricing can range from EUR 20,000, EUR 25,000 even to EUR 35,000 or euros. That isn't to say that we're going to price at that level, but there are similar price devices that really don't offer the utility that our device we expect will offer, that are priced at that level and enjoy a lot of uptake. That's about as far as we want to go now in terms of pricing, because we want to give ourselves as much flexibility as we can up until the point where we will in fact dictate price. Okay. Let me see if I missed anything here. Okay. There's a question from David Pepper. He wants to understand how ARC-EX will be used for hand and arm applications. Well, actually, we have a couple of different pathways to help restore arm and hand function after SCI. The first that we expect to commercialize is with the ARC-EX. Here, what we did in the clinical study is we placed electrodes on the skin near the cervical spinal cord, and we stimulated. As a result of that, 72% of people responded to the therapy. By respond, I mean they showed improvement, statistically significant improvement, and clinically meaningful improvement in both strength and function of the hands and arms. We want to make that device available in SCI clinics, self-pay gyms, really wherever people undergo rehabilitation, and then as well, hopefully make it available for use in the home to sustain and augment gains made in the clinic. Or if you're chronically injured and you want to try something new, perhaps you can start directly with use of the device in the home. All of this is, of course, pending FDA clearance and CE mark. We're also, though, pursuing use of our implantable platform, ARC-IM, to restore hand and arm function, the intent being that it would provide 24/7 availability of stimulation, far more precision and specificity, so perhaps you could recover finer motor function using ARC-IM. As I mentioned previously a couple of times, we want to explore use of ARC-IM in combination with a Brain-Computer Interface to explore how that works to restore hand and arm function. We believe that thought-controlled movement is particularly important for the hands and arms because normally one uses one's hands to pick things up, grasp them for a period of time. It's important to control the pressure that one exerts on one's fingers and so forth. This is something we're very keen to explore. We have multiple tracks ongoing to help restore hand and arm function currently. With that, let me see. I think that's all of the questions. I'll just pause one more moment here. Okay, one more question. Okay, this is from Andrew. Will we file a PMA in the U.S.? Indeed, we have two different tracks, regulatory pathways really. For the external device, ARC-EX, that's a non-significant risk device for which there's no predicate. Never been a device like it before. That's a De Novo submission, sort of like a 510 with no predicate, shorter kind of cycle, less intense clinical study. For the implantable device, that's called a PMA, longer, more expensive, more rigorous. Yeah, that's our pathway for the implantable device, starting with blood pressure management. Okay, so I think that's everything. Aditi, do you want to take us home? I would love to do that. Thank you so much, Dave, and thank you so much, Laura. For more company information and updates, please come to onwd.com. There you can sign up for email updates by clicking Menu. You'll also find links to follow us on our social channels. Thank you everyone for joining us today, have a great week. Thank you.