Helius Medical Technologies, Inc. (NASDAQ:HSDT) Q1 2023 Earnings Call Transcript May 11, 2023
Helius Medical Technologies, Inc. beats earnings expectations. Reported EPS is $-0.09, expectations were $-0.11.
Operator: Good day, and thank you for standing by. Welcome to the Helius Medical Technologies, Inc. Quarter One 2023 Earnings Conference Call. At this time, all participants are in listen-only mode. After the speakers’ presentation, there will be a question-and-answer session [Operator Instructions] Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker today, Michelle Bilski of In-Site Communications. The line is now yours.
Michelle Bilski: Thank you, Gerald. Welcome to the first quarter 2023 earnings conference call for Helius Medical Technologies. This is Michelle Bilski of In-Site Communications, Investor Relations for Helius. With me on today’s call are Dane Andreeff, Helius Medical’s President and Chief Executive Officer; and Jeff Mathiesen, Chief Financial Officer. At this time, all participants have been placed in a listen-only mode. Please note that this call is being recorded, and access to the webcast can be obtained through the Investors section of Helius website at www.heliusmedical.com. Before we begin, I would like to remind everyone that our remarks and responses to your questions today may contain forward-looking statements that are based on the current expectations of management.
These forward-looking statements involve inherent risks and uncertainties that could cause actual results to differ materially from those indicated, including those identified in the Risk Factors section of our most recent Annual Report on Form 10-K and quarterly reports on Form 10-Q. Such factors may be updated from time to time in our other filings with the SEC, which are available on our website. All statements made during this call are as of May 11, 2023. We undertake no obligation to publicly update or revise our forward-looking statements as a result of new information, future events or otherwise, except as required by law. I would now like to turn the call over to Dane Andreeff, President and Chief Executive Officer of Helius.
Dane Andreeff: Thank you, Michelle. Welcome, everyone to Helius Medical’s first quarter 2023 earnings conference call. PoNS Therapy has been commercially available in the United States for one year, and in that time, we’ve seen a steady increase in the number of Americans who’ve used PoNS to treat balance and gait impairment due to multiple sclerosis, as well as in the number of registered PoNS therapists and physicians who’ve introduced PoNS into their day-to-day practice. The rollout continues and we’ve consistently seen new inquiries each week. PoNS is the only portable and readily accessible neuro stem therapy with the potential to generate neuroplasticity, which makes PoNS Therapy a game changer for those affected by MS.
PoNS devices are currently on a cash pay basis with a U.S. cash price of $14,500 discounted substantially from our list price of $25,700, which is comprised of a one-time cost of $17,800 for the controller, plus $7,900 for the mouthpiece. As mentioned in last quarter’s call, sales can be difficult to predict and are subject to quarterly fluctuations. Our first quarter revenue came in below expectations due to a combination of these timing differences as well as some cannibalization by our therapeutic experience program, otherwise known as PoNS steps at certain sites and the short-term impact of refining our processes as we transition to e-commerce. With that said, we are excited about the potential of PoNS to continue gaining traction in the U.S. and our outlook for the year remains unchanged.
We project 2023 revenue to exceed 2022, even as PoNS sales in the U.S. are expected to remain on a cash pay basis throughout the remainder of the year. We believe broad third-party payer reimbursement is needed to achieve our full revenue potential and we are pleased with the progress we’re seeing with the transitional coverage of emerging technology or the TCET program, which is CMS’ proposed accelerated coverage pathway for new and innovative medical devices. In March, a bipartisan breakthrough designation device bill was reintroduced to Congress and the OMB [ph], which would allow companies with a breakthrough designation to be covered by Medicare for four years. PoNS has breakthrough designations in both MS and stroke in the U.S. and we are closely monitoring this legislation.
While we actively pursue coverage, we are pleased to offer our Patient Therapy Access Program or PTAP, so that the cost doesn’t have to be a barrier to treatment. In January, we announce the extension of PTAP through June of 2023 whereby qualifying patients can purchase on-label PoNS Therapy at an 85% discount to list price. We want as many qualifying patients as possible to benefit from PoNS Therapy and cost is just one impediment we are trying to help patients overcome. For those suffering walking challenges, simply leaving the house can be a daunting task. To bring PoNS literally closer to the home, we recently launched ponstherapy.com, which allows people living with MS who wish to seek PoNS treatment to conduct an online health evaluations with qualified medical providers, fulfill prescriptions and arrange for PoNS devices to be delivered directly to their doorsteps.
The first PoNS devices were delivered in January shortly after the site went live, and we’ve already seen strong adoption. Users appreciate the ability to shorten and streamline the process and achieve quicker relief. We continue to tweak the process and online experience for PoNS Therapy patients and believe this will be the predominant method for cash pay patients to access PoNS Therapy in the U.S. PoNS devices must be used in conjunction with supervised therapeutic exercise program and quickly matching patients with trained physical therapists is an important part of the process. Since introducing an online training portal last year, we’ve been able to train physical therapists at a quicker pace, which means patients no longer need to wait months for a trained therapist to be available.
Educating the broader community about the benefits of PoNS Therapy is another key part of reaching as many patients as possible. Last month at the American Academy of Neurology Annual Meeting in Boston, we exhibited PoNS for the first time since its commercial launch. Because of the broader set of indications across North America, we were able to present new real world efficacy and safety evidence regarding the effects of PoNS Therapy with stroke, MS and mild to moderate TBI traumatic brain injury for patients. For instance, data from Canada shows that at the end of a 14-week PoNS Therapy treatment period, approximately 70% of stroke patients had a statistically significant improvement in their gait, and among them 28% were no longer at risk of falling, a result of particular significance, since Routine, rehabilitation, physical therapy only provides a meaningful shift in the risk of falling in the 1% to 3% of stroke patients.
Furthermore, 74% of individuals with traumatic brain injury experienced significant improvement in their balance. PoNS is authorizing the U.S. for MS and has a breakthrough designation for stroke. But this evidence really sheds light on the ability of PoNS Therapy to mitigate the impact various life altering neurological conditions can have on gait imbalance. This is especially significant since according to the CDC, $50 billion is spent each year on medical costs related to non-fatal falls in one out of five falls causes a serious injury. With that, I’ll now turn to our Canadian activities. PoNS have been commercially available since 2019 for MS and TBI and was recently authorized for stroke. An estimated 878,000 Canadians are currently living with stroke with more than 89,000 new strokes occurring each year, and gait impairment is a major source of post-stroke disability.
Not only was this a huge win for Canadians suffering balance and gait impairment due to stroke, but as I mentioned a moment ago, the broader set of authorizations highlights the therapeutic potential of PoNS. The real world data we’ve gathered makes it increasingly evident that PoNS Therapy can provide significant and clinically meaningful improvement in balance and/or gait regardless of the underlying medical conditions. In March, we extended our partnership with Health Tech Connex, a leading health technology company specialized in neurotechnology innovation. Our new agreement grants HTC, the exclusive right to purchase, market, sell, and distribute PoNS throughout the metropolitan Vancouver area subject to certain minimums. HTC has been an important partner for Helius and we’re excited to deepen our presence in Vancouver through HTC’s network of leading edge neuro rehabilitation clinics.
With this partnership in place and the multiple indications of the Canadian market could be as large as the U.S. market in the near-term. Now let me turn the call over to Jeff to discuss our first quarter financial results in detail.
Jeff Mathiesen: Thanks, Dane. It is a pleasure to be with all of you today. Our revenue for the first quarter of 2023 was $111,000, a decrease of $79,000 compared to $190,000 in the first quarter of 2022, primarily attributable to lower Canada product sales, partially offset by net product sales in the United States. Canada product sales for the prior year included approximately $120,000 of revenue recognized in connection with the sales of PoNS devices under our prior distribution agreement with HTC. For the first quarter of 2023, cost of revenue was $122,000 compared to $124,000 for the prior year period, remaining relatively flat due to fixed overhead costs. Operating expenses for the first quarter of 2023 decreased by $3.8 million compared to $4.6 million in the first quarter of 2022, due primarily to lower product development expenses as we transitioned to U.S. commercialization activities.
Our loss for the first quarter of 2023 was $3.8 million compared to $4.6 million in the prior year period. We reported a net loss for the first quarter of 2023 of $2.5 million or a loss of $0.09 per basic and diluted common share compared to a net loss of $4.3 million or a loss of $1.15 per basic and diluted common share for the same period last year. Our cash burn from operations for the first quarter of 2023 was $3.2 million compared to $4.7 million for the first quarter of 2022, reflecting our focus on reducing cash burn and extending our cash runway beyond 2023. As of March 31, 2023, we had $11.3 billion of cash and no debt. Turning now to our outlook. The company currently expects second quarter 2023 revenue to be above the prior year quarter, and first quarter of 2023 levels factoring in potential delays for some portion of U.S. patients pursuing insurance coverage prior to filling their prescriptions.
Company currently expects 2023 revenues to exceed prior year levels, but we may continue to experience additional quarterly fluctuations as we make refinements to our U.S. commercial rollout of PoNS. With that, Gerald, let’s now open the call for questions.
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Q&A Session
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Operator: Thank you. At this time, we will conduct a question-and-answer session. [Operator Instructions] Our first question comes from Jonathan Aschoff of ROTH MKM. Your line is now open.
Operator: Thank you. [Operator Instructions] Our next question comes from Anthony Vendetti of Maxim Group. Your line is now open.
Operator: Thank you. [Operator Instructions] Our next question comes from the line of Jeffrey Cohen from Ladenburg Thalmann. Your line is now open.
Operator: Thank you. At this time, I would now like to turn it back to Dane Andreeff, CEO for closing remarks.
Dane Andreeff: Right. Thanks, Gerald. Thank you, everyone for following Helius Medical Technologies as we continue to bring PoNS Therapy to the millions who need it. We’re pleased so far. We’ve come in the past year and look forward to sharing our progress in the future quarters. Thank you.
Operator: Thank you for your participation in today’s conference. This does conclude the program. You may now disconnect.
