Earnings Call: Q3 2022

Nov 8, 2022

Earnings release

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 Weber, CFO. Dave and Lara will give a brief presentation, after which they'll be pleased to take your questions. To register your questions, please enter them in the Q&A window in Zoom. I will now hand over to Dave Marver, CEO of ONWARD Medical. Well, thank you, Skye, thank you everyone for joining us today. I'm coming to you from New York City. I'm in town to participate in an investment conference and serve on a panel today, then we have a number of meetings later this week with our partner at the Christopher Reeve Foundation. Lara Smith Weber, our CFO, is coming to you from Boston, Massachusetts, U.S.A. For those of you who are new to the ONWARD story, I just wanted to cover a few slides to give you an introduction. Here are the basic facts and information about the company. We were founded in 2015. We're now up to about 100 FTEs. Our headquarters are in Eindhoven, the Netherlands, but we have a large science and engineering center in Lausanne, Switzerland. We have a growing presence in the U.S., focused in Boston, Massachusetts. Then just a little over a year ago, we did an IPO on Euronext Brussels and Amsterdam. We're now up to 330 issued or pending patents worldwide. We now have five FDA Breakthrough Device Designation awards. We have two of our own proprietary hardware platforms, neuromodulation platforms, one pivotal trial complete with positive top-line results. That was called Up-LIFT. We expect to release interim clinical data on our ARC-IM platform later this year, we're of course preparing for commercialization in the second half of next year. Our vision, what brings us together, is that empowered by movement, people with spinal cord injury will enjoy life in every way that matters to them. We expect to fulfill that vision using one of these two technology platforms, both of which stimulate spinal cord to restore movement and other important functions. ARC-IM on the left, which is an implantable platform consisting of a proprietary purpose-built neurostimulator and a family of leads also purpose-built for our indications. On the right, an external stimulator that stimulates transcutaneously through the skin. That's called ARC-EX. Okay, now on to the Q3 update. We've continued to make important progress, including the release of positive top-line data from Up-LIFT and observational data from the LIFT Home study. Just marching through the recent updates at left. In September, we released top-line data from the Up-LIFT pivotal study. Again, these were 65 participants at 14 centers across the world, the top-line data showed that we demonstrated clinically significant, clinically meaningful and statistically significant improvement in the strength and function of the hands and arms. In September, we continued to strengthen our board of directors by appointing Vivian Riefberg as a director. Vivian retired from McKinsey & Company in 2020, where she was formerly head of the U.S. healthcare and public sector practices. In October, we released observational data from the LIFT Home study. There were seven participants who had previously participated in Up-LIFT, and there were no device-related significant adverse events, and 97% of the sessions were completed without usability issues. This, for us, was very good news because, as you know, we are doing a design update now to further improve usability and reliability. We were already at 97% with the Lift device that we used in the Up-LIFT trial. In November, actually just today, we announced that we received two additional Breakthrough Device Designation awards from the FDA. Here are those details. We now have five in total. For those of you who are not familiar with this program, this is meant by the FDA to recognize devices and therapies that are truly innovative and address an unmet need. This award is intended to result in a more flexible clinical trial design, more frequent interactions with FDA, and a streamlined approval process. We're very pleased to now have five of these in place. The three on the left we received previously. They cover each of the three indications in our current business plan. At right, you can see the new ones. For ARC-IM, our implantable platform, we received Breakthrough Device Designation for the bladder indications, this is treating neurogenic bladder dysfunction in people with spinal cord injury. We received the same award for ARC-EX, our transcutaneous platform, for lower limbs. This is for improving or restoring lower extremity sensory and motor function in people with chronic deficits resulting from SCI. Five in hand, and who knows, maybe more will come in the future. Lara, will you step in and give a cash update, please? Sure, happy to. Thanks, Dave, and hello to everyone from my side as well. As a company, we do not publish quarterly financial figures, but I wanted to give you an update on our cash position as one of our key financial indicators. Cash and cash equivalents were EUR 69.6 million at the end of September 2022 versus EUR 76.8 million at the end of June 2022. That means a cash burn of about EUR 7.2 million during Q3. This is fully in line with our expectations, and we are reconfirming our cash guidance so that our cash will be sufficient to fuel operations until the end of 2024. Back to you, Dave. Thank you, Lara, and certainly, this is one of the strengths of the company to have this cash position in these markets. We don't take it for granted. Okay. Now, in terms of going forward here, so one of the updates that we'd like to make today is that you can see here in the top line, we're currently undergoing a design update for our external device. I mentioned that earlier, improving the manufacturability, usability, reliability, interface, really a number of different improvements that we're making. Our development partner has come back with a bit of a delay with one of the components of that project. That's the electronics or the stimulation engine. As a result, we decided to bring that work back in-house. We have the expertise. We've already developed our own stim engine, quite a sophisticated one, for our implantable platform that's already being used in humans. What this does is it just increases the certainty that we can complete this project on time by mid-year next year and submit the application for De Novo clearance to FDA. This does not affect our expectation that we will get regulatory authorization in the second half of next year. The typical timeline for a De Novo clearance is fast response. Now, this is nothing published necessarily, but this is the word on the street, and again, we have breakthrough designation for this therapy, so we should be on the favorable side of that timeline. As far as home use, nothing has changed. As soon as we have an opportunity to discuss with FDA the results from the LIFT Home observational study, we'll know whether or not we need to do a pivotal, and we'll update you at that time. Some upcoming milestones here in the fourth quarter and the first half of next year with the ARC-IM, we expect to make additional progress toward development of brain computer interface therapies. This is a super interesting area. We've already announced previously that we, as part of a consortium, received a grant from the European Innovation Council to support this work, and we look forward to making another announcement in this vein later this year. We also, of course, expect to release interim data from HemON and STIMO-HEMO. This would be validating the early progress in use of our implantable system and therapy to restore normal blood pressure following spinal cord injury. With ARC-EX, of course, we want to submit for regulatory approval for the upper limb indication. As I just mentioned, we expect to do that in the second quarter of next year, mid-year, and of course, we also need to discuss findings of the LIFT Home study with regulatory authorities to determine whether we need to conduct a pivotal trial to get home use clearance. So that's the update, and I'm going to stop sharing now, and we would be very pleased to take your questions. Let me see here if I can pull that up. No open questions currently. I think our research analysts did a nice job of publishing notes this morning that probably took care of any questions that you might have. So we appreciate the ongoing work that David and John and Ed are doing to keep you educated about the company and our opportunities. Okay. Let's go live with David Alex if we can, so we can ask the question. David, you're live. Okay. Yeah, thank you very much. Good afternoon. This is David from. First, a question in the context of the filing. We know you pushed to H1 2022. Do you have to shift funds from elsewhere now that you will do some of the ARC-EX design works in-house? If so, will there be certain ongoing projects deprioritized as a result thereof? Secondly, if you could give a quick update on the sensor development and more in general on the closed loop capabilities of the ARC-IM platform. Thank you. Yeah, sure. First, with respect to bringing the electronics development in-house for ARC-EX, we have those capabilities and resources, and we don't expect that to affect the timeline of indications in our current business plan. It might affect how quickly we can maybe pursue some other rather interesting projects that we have in mind. Lara, will you comment on whether we have to shift resources and maybe the financial implications of bringing that in-house? I can also confirm that we can actually cover the cost within our current business plan. Just as Dave said earlier, it's a strength of our company that we expect to have cash until the end of 2024, and we expect also to be able to cover this development within our funding. Thank you, Lara. As far as sensor development, David, as we've discussed for some of these more interesting indications, when they do move from open loop to closed loop, we're in a way dependent on the state of technology advancing somewhat, such as beat-to-beat blood pressure measurement sensors and things of that nature. We're continuing to stay abreast of the landscape, and I believe we're working with and staying in contact with those that are most promising, but nothing to report on this particular call. Thanks. All right. Any other questions? I don't see anything coming in. We have Edward's hand up. Please, everyone, please write your questions directly on the Q&A. In this case, Edward, I'm giving you the opportunity to go live. Ed. Okay, I see you. Perfect. Yeah. Hi, guys. Hi. Thanks for your presentation. I just had actually a question on the BCI indication, in terms of timings, the cash you're going to deploy in the next few years on this. Maybe if you could talk a bit about Clinatec's WIMAGINE device, and how that sort of stacks up compared to Neuralink and Synchron. I know they just launched a new study in the U.S. I don't know if you could talk on the validity of this. Yeah, a bit. I don't want to get too much into it quite yet. The notion here is that some of our mobility-related therapies require the person to initiate the sequence of movement by pressing a button or by using voice command. If the volitional signals, the thinking signals, the desire to move can be harvested real time from a brain interface, that would enable a person who's moving to do so in a much more natural way. There'd be no latency. They could pause, they could control the amplitude and degree of movement more readily. It would make our existing therapies that much better, which is why it's something that we want to continue to explore as a sort of gen 2, gen 3 type thing. We don't anticipate at this point, it's not in our current business plan. We'd like to continue to fund this in non-dilutive fashion with grant funding. That seems to be a promising path at this point. In terms of timeline, I think the Clinatec, the EIC studies call for very early human or clinical feasibility work over the course of the next year or so. We would expect if everything goes really smoothly that we wouldn't likely have this commercialized before 2028, 2029. We'll update that timeline as we continue to develop the therapy and learn more, but this, at this point, would be the broad strokes. As far as comparing and contrasting the three technologies that you just mentioned. Synchron has an intravascularly delivered sensor. It has 16 channels, it's kind of navigated up through the venous system. That to some extent limits where it can be placed and the number of channels also limits the specificity of movement desires that can be expressed through that system. At the same time, it's less invasive as a procedure. That's out there. Neuralink has, at least in theory, this robot-delivered system with many channels. They haven't released much information around that. It's well-funded obviously, but it remains to be seen just technically how that might work. The Clinatec system is actually quite far along. In fact, our research partners at EPFL alongside Clinatec have already implanted the system in one person with spinal cord injury and he is walking and moving quite well. That system is far along. It's grant funded. The center itself in France has an excellent reputation. In fact, I believe it's founded or led by the person who created deep brain stimulation for tremor. They have quite a promising platform. It's a fun area. It's one that we think can make our therapies better, as I said, it's one that we're going to get involved in a smart way. Not take away current resources, but fund it through grants as long as we possibly can. Perfect. Thank you very much. Okay. Anything else? Alex, any hands up that you see? No. No hands up for now. All right. Okay, well, we appreciate everyone's interest, and Onward. We're going to just keep going and we'll talk to you in a quarter. Bye-bye. Thanks. Thanks, guys. Bye.