Nyxoah S.A. (NASDAQ:NYXH) Q3 2023 Earnings Call Transcript

Nyxoah S.A. (NASDAQ:NYXH) Q3 2023 Earnings Call Transcript November 11, 2023

Operator: Good day and thank you for standing by. Welcome to the Nyxoah’s Third Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s call is being recorded. I would now like to hand the conference over to your first speaker today, Mikaela Kirkwood, Investor Relations and Corporate Communications Manager. Please go ahead.

Mikaela Kirkwood: Good afternoon, and good evening, everyone, and welcome to our earnings call for the third quarter of 2023. I am Mikaela Kirkwood, Investor Relations and Corporate Communications Manager at Nyxoah. Participating from the Company today will be Olivier Taelman, Chief Executive Officer; and Loic Moreau, Chief Financial Officer. During the call, we will discuss our operating activities and review our third quarter financial results released after U.S. market closed 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 Events section of the Investor Relations tab of our website.

A team of doctors and nurses in the operating room, utilizing a variety of Masimo’s medical technology.

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 materially 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 list and description of the risks and uncertainties associated with our business, please refer to the Risk Factors section on our Form 20-F filed with the Securities and Exchange Commission on March 22, 2023.

With that, I will now turn the call over to Olivier.

Olivier Taelman: Thank you, Mikaela. Good afternoon, and good evening, everyone, and thank you for joining us for our third quarter 2023 earnings call. During the third quarter, we maintained focus on clinical execution in our open-label U.S. pivotal study dream, ensuring a steady course to complete data readout in March 2024. Based upon the DREAM data published back in June, in combination with commercial patient outcomes in Europe, our confidence is strengthened for a positive DREAM outcome. In anticipation of our U.S. launch, we have made great progress as we continue to work with the AAO on our interim and long-term coding strategy. Next, we continue to invest in gradually building our leadership in the U.S. commercial organization, including market access to facilitate reimbursement.

In Europe, we recently introduced a novel patient-centric approach by initiating a partnership with ResMed Germany. Together, we will strengthen our in-depth understanding of the obstructive sleep apnea patients’ journey, increasing patient overall OSA awarness and guiding them from diagnosis to treatment. While CPAP remains the golden standard, there is a large pool of patients not tolerating it and needing therapy due to the severity of their OSA. Through this partnership, we aim to increase hypoglossal nerve stimulation penetration and accelerate Genio adoption. Now, with that said, Nyxoah is entering one of the most exciting times in the Company’s history. In less than six months, we will report data from our DREAM U.S. pivotal trial. We recently filed the third module in our model of PMA and continue to anticipate submitting the fourth and final module.

Which will include DREAM 12-month safety and efficacy data, shortly after the follow-up period is completed. We remain on track for FDA approval before the end of 2024. In anticipation of this, Nyxoah continues to expand its U.S. footprint. [indiscernible] remains on patient follow-up in DREAM. As previously stated, our confidence in DREAM outcomes is supported not only by the roughly 500 commercial and clinical Genio [indiscernible], but also by the DREAM efficacy 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 months follow-up. Which demonstrated a 65% AHI responder rate and the 76% ODI responder rate and safety data on all 115 patients enrolled in the study.

As a reminder, for the trial to be successful of the 115 patients, at least 62.9% need to be AHI and ODI responders a 12-month follow-up. Next, 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, CCC patients represent approximately 30% of hypoglossal nerve stimulation eligible to treat OSA patients, who are contraindicated to commercially available HGNS therapy in the U.S. and do not have suitable treatment options other than major pellet surgery. The ACCESS primary endpoints are similar to the DREAM study primary endpoints as Genio has demonstrated similar results in both complete concentric collapse and non-CCC patients, which resulted in a label expansion in Europe.

While entering Germany, Nyxoah drove hypoglossal nerve stimulation awareness and therapy penetration, increasing market growth from an estimated 15% to 35% over the last two years. This clearly illustrates the benefit of having multiple hypoglossal nerve stimulation treatment options and having multiple companies on the market. To further our patient-centric approach to treating more OSA patients with the right solution, as I mentioned earlier, we partnered with ResMed Germany. This model partnership creates an OSA continuum of care that will shorten the time from diagnosis to treatment and ensure patients are not left without an appropriate therapy. As an example, there are approximately 1.1 million CPAP patients in Germany, of which up to 35% fail within three years.

This collaboration should increase the number of patients in Germany receiving and staying under OSA therapy. Completely, to increase patient awareness, we will collaborate to OSA outlines and DTC marketing initiatives. We will run joint sales force efforts towards ENT surgeons, sleep physicians and dentists as well as educational programs. Both companies will work closely with scientific societies to further optimize patient care guidelines. In conclusion, this initiative exemplifies our mission to make sleep simple again. Commercially, this quarter, we reported sales of €1 million and increased the number of German centers implanting Genio to 46. Our direct-to-consumer campaigns started in the second quarter this year, resulted in a strong website traffic with approximately 55,000 monthly website visits.

We are anticipating the first results from these initiatives already in Q4 later this year with strong year-over-year implant growth. We continue to position ourselves as an innovation leader in the OSA space with always putting patients at the center and listening to our surgeons. As a result, Genio has a different approach to HGNS, compared to an existing implanted battery with lead solution technology. Genio offers patients a leadless full-body 1.5 tesla and 3 tesla MRI compatibility. Non-implanted battery solutions powered and controlled biowearables. Our vision of an implant for life concept powered and controlled biowearable component allows patients to always have the most advanced technology without the need for another surgery. Independent patient market research confirm preference for a system with Genio features and foreign factor.

The recently launched Genio 2.1 wearable enables greater stimulation adjustability and gives patients the autonomy to adjust stimulation amplitude within predefined boundaries. While the Genio 3.1 implantable stimulator is under regulatory review and will further report our implants for life concept. We are also working on regulatory approval to activate existing sensors in the wearable component that will adjust stimulation based upon sleeping position. Future generations of the Genio system will provide patients with real-time feedback through data collection and also remote monitoring that will improve the patient experience and provide physicians the ability to optimize patient care more efficiently. All this should further increase patient access to hypoglossal nerve stimulation technology and have a positive impact on the Company’s gross margin.

Our European commercialization experience early DREAM data and Genio’s differentiated design, reinforce our confidence in a successful U.S. launch. We commissioned independent clinician and patient service, which demonstrates significant demand for Genio and support our view that we can more than replicate our European performance when entering commercially in the U.S. To ensure we are fully prepared that launch, we continue to invest in our U.S. commercial infrastructure and securing reimbursement. Last month, an advisory panel for the ENT scientific society discussed the CPT code that will best support Genio. While [indiscernible] outcome of this meeting, we expect reimbursement to be at the minimum in line with the current HGNS payment rates in the U.S..

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 and close collaboration with Nyxoah R&D team, we are evaluating stimulation of the ansa cervicalis nerve to address current HGNS nonresponders. We have ended the detailed design phase and anticipate beginning a feasibility study shortly. 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 to enter the U.S. market with regulatory, manufacturing, commercial and market access readiness and drive further revenue growth in Germany while opening new European markets.

To that end, we implanted our first patients in Italy. With that, I’m pleased to turn the call over to our CFO, Loic Moreau, who will provide a financial update.

Loic Moreau: Thank you, Olivier. Good day to everyone, and thank you for joining us today. Revenue for the third quarter ended September 30, 2023 was €1 million. Total operating loss for the third quarter was €11 million versus €8.8 million in the third quarter of 2022, driven by an acceleration in clinical activities as well as commercial investments in Europe. As of September 30, 2023, cash and financial assets totaled €73 million, compared to €95 million on December 31, 2022. During the third quarter, our monthly cash burn was €4 million. And based on our current cash position, we have a runway into late 2024. With that, I will turn the call back over to Olivier.

Olivier Taelman: Thank you, Loic. As I opened with, we are entering one of the most exciting times in Nyxoah’s history. I cannot emphasize this enough. We are less than six months away from the DREAM clinical data readout, which should result in obtaining FDA approval in late ’24, and initial [indiscernible] with reimbursement comparable to competition. The uniqueness of Genio system resonates well with both physicians and patients as well [indiscernible] The Germany and other markets where we are available, also confirmed by independent market research. I look forward to continuing to scale the Company in anticipation of 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.

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Q&A Session

Operator: [Operator Instructions] Our first question today comes from Jon Block with Stifel.

Joe Federico: This is Joe Federico on for Jon. I guess to start, I wanted to ask, I know GLP-1 has been a hot topic lately. Do you have any expectations for the surmount OSA data that is supposed to be released early next year? We’ve heard some commentary from other players in the space. I was just curious to get your thoughts there.

Olivier Taelman: Yes. No. Thank you for the question. And to confirm, there was a lot of — there is a lot of conversation around GLP-1 impact. So I keep giving the same and providing the same answers, meaning that by having GLP-1’s lowering extreme high BMIs, we think, and we know that we will have more patients that will become eligible for a successful HGNS treatment. Because if we look at literature, HGNS is shown the most effective with the BMI up to 35. So high BMIs lowering in the range of 30 to 35 will provide those patients with an optimal treatment of HGNS. And if you look at it net-net, we do believe that we will have more patients entering in that range, then we will have patients that will go in the range below 15 and no longer be eligible for treatment.

Joe Federico: Okay. Great. That’s really helpful color. And I guess to follow up, I just wanted to follow up on the ResMed partnership in the quarter. There is — what are you seeing after implementing that partnership? Is it still early to tell? Or have you seen any benefits from that so far in Germany?

Olivier Taelman: So through the partnership, we aim to further our patient-centric approach by developing a complete OSA ecosystem where patients can be guided to which OSA therapy best suited the need. I think this is really important. We will collaborate on DTC initiatives, sales and marketing efforts to target both sleep physicians and ENT surgeons. The goal of this partnership or to expand OSA therapy penetration and increased market shares. The collaboration just kicked off, and we expect to start to see the benefit beginning next year.

Joe Federico: Okay. Great. That makes sense. And then if I could just sneak one last one in here. On ACCESS in the U.S. Are there any other data points from the trial that you can provide, maybe patients implanted to date or number of active sites? Just any more color there would be great.

Olivier Taelman: No. So when it comes to the ACCCESS study, we are staying confident that we will close the enrollment by the end of 2024. So that’s why — that’s when we anticipate completing the implants. We continue to make progress with the study. We will not be disclosing the number of patients implanted. But that being said, I repeat myself, we do feel confident that we will close all implants by the end of 2024.

Operator: Our next question is from Adam Maeder with Piper Sandler.

Simran Kaur: Olivier, Loic. This is Simran on for Adam. I guess, first, I wanted to just start off with the Q3 kind of commercial print. So could you elaborate on maybe what you’re seeing in terms of just commercial trends? It looks like volumes did take a step back sequentially. So any particular items to call out or seasonality impact. I guess I’m just trying to reconcile some of the disconnect between what the Street was expecting versus the print.

Olivier Taelman: Yes. No, no, definitely. So while we do not provide revenue guidance, it is important to mention that the third quarter is seasonally weak due to summer holidays. However, for implanting accounts continued to increase, now being 46, which bodes well for the future growth. We do anticipate also a sequential increase in the fourth quarter, driven by the DTC initiatives that we started in the second quarter, driven by the helpline outcome that we are seeing. And of course, although it may become a little bit early, but also about the collaboration that we have initiated with ResMed.

Operator: Our next question comes from Ed White with H.C. Wainwright.

Ed White: So I just want to get your thoughts on the DTC activity in Germany. You mentioned in the call that you had about 55,000 monthly hits. And I was just wondering how you’re thinking about that converting into commercial sales? And then I wanted to get your thoughts also on DTC — potential DTC activity in the U.S.

Olivier Taelman: Yes. So thank you. Thank you for the questions. So to your point [indiscernible] in dedicating and building up a dedicated digital marketing team focused on Germany as we launched the Nyxoah helpline in Germany last year. We engaged resources in the search engine optimization and the search engine advertising. This is really driving more patients to Nyxoah. So that’s already a first part of investment we did. And then next, our DTC advertising campaign was launched in March and has raised awareness for HGNS and Genio. As a result, we have seen a rapid growth in appointment requests through our helpline. The current plan from patient identification to Genio implant or the conversion time, as it sometimes referred to in Germany is six to eight months.

So we anticipate beginning next quarter to see a real strong benefit. When it comes to the U.S., I think I have to start with saying that Inspire from a DTC perspective, did or has done a tremendous job establishing the HGNS market for patients, physicians and payers in the U.S. In this regard, it is sometimes nice to be number two entering the market. We anticipate having our full sales force hired and trained by the time of launch. These reps will target both implanting ENTs and referring sleep physicians, supported by focused DTC investments. And I think that’s really important. So we are planning to invest in DTC, but it will be very focused. Additionally, we are currently investing in market access to ensure CMS reimbursement is secured at launch and to expedite commercial coverage.

Sorry for being a little bit long, but you had also two questions.

Operator: Our next question comes again from Adam Maeder with Piper Sandler.

Simran Kaur: I just wanted to follow up with another question on just reimbursement. So from a reimbursement perspective, can you remind us, one, on the coding, it sounded like last quarter that you would have a clear idea of what that code is by year-end. Is that still the case? And then two, just what is the strategy in terms of garnering payer coverage? And what kind of initiatives are you guys putting in place to kind of work up to that, so that everything is squared away or by launch?

Olivier Taelman: Yes. So last month, at the AAO meeting in Nashville, an advisory panel for the ENT scientific society discussed the CPT code that would best support Genio. And to your point, this is one of the scenarios that I was mentioning earlier that has now been put more forward. So multiple CPT codes were evaluated. And while I cannot yet disclose the complete outcome of the discussion, we expect reimbursement will be at minimum in line with the current HGNS payment rates. So that is already, I think, the first answer. Next, I have to again say that competition has done a terrific job educating the commercial payers about the benefit of HGNS, resulting in all having HGNS coverage policies. We have already engaged in informal discussions with payers and expect to be able to leverage those policies.