Nyxoah S.A. (NASDAQ:NYXH) Q4 2023 Earnings Call Transcript

Nyxoah S.A. (NASDAQ:NYXH) Q4 2023 Earnings Call Transcript March 5, 2024

Nyxoah S.A. reports earnings inline with expectations. Reported EPS is $-0.41 EPS, expectations were $-0.41. NYXH isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

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

Mikaela Kirkwood: Thank you, Carmen. Good evening, and good afternoon, and welcome to our earnings call for the fourth quarter and financial year of 2023. I am Mikaela 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 fourth 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.

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 for 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 fourth quarter and financial year of 2023 earnings call. I would like to open with our 2023 accomplishments that have strengthened our confidence for a transformational 2024. Clinically, we completed enrollment in our DREAM U.S. pivotal study in March and initiated enrollment in our excess complete concentric collapse U.S. pivotal study. From a regulatory perspective, we filed the first three modules in the model of PMA submission. The fourth and final module will contain the DREAM safety and efficacy data. Commercially, we reported 2023 sales of €4.3 million, an increase of 43% from 2022, benefiting from our direct-to-consumer initiatives launched early in the year.

We also initiated a partnership with ResMed Germany to further increase overall OSA therapy penetration, ensuring that patients have access to the right treatment. Finally, we continued building our U.S. leadership team, strengthening our U.S. presence. Looking ahead 2024 is set to be the most exciting year in company’s history. By early April, we expect to report safety and efficacy results from the DREAM study. Our confidence in DREAM outcomes is supported not only by roughly 500 commercial and clinical Genio implants globally, but also by DREAM efficacy and safety data released in a late breaking poster session at SLEEP 2023 in June. In this poster, we reported efficacy data on the first 34 DREAM patients reaching 12-month follow-up, which demonstrated a 65% AHI responder rate, a 76 ODI responder rate, and safety data on all 115 patients enrolled in the study that was in line with expectations.

As a reminder, for the trial to be successful, of the 115 patients, at least 62.6% need to be AHI and ODI responders at 12-month follow-up. We anticipate submitting the fourth and final module in our modular PMA filing, which will include DREAM 12-month safety and efficacy data during the second quarter this year. We are preparing for a launch by the end of 2024 as based upon modular PMA review cycle times. We anticipate FDA approval in late 2024 or early 2025 as we do not control FDA timelines. To ensure, we are fully prepared at launch, we are accelerating investments in our U.S. commercial team. We anticipate having the commercial U.S. leadership onboarded by mid-year and bringing on our sales force, patient management teams, and reimbursement specialists during the second half of 2024.

The current hypoglossal nerve stimulation market in the U.S. is very concentrated, allowing for a focused launch strategy on high volume sites complemented by robust prior authorization and patient care teams. A streamlined patient referral pathway from SLEEP specialists to these sites will accelerate market growth. A key differentiator of bilateral stimulation to unilateral stimulation is the ability to treat complete concentric collapse of CCC patients. The U.S. ACCESS pivotal study continues to enroll. As a reminder, CCC patients represent approximately 30% of hypoglossal nerve stimulation eligible to treat OSA patients who are contraindicated to commercially available AG&S therapy in the U.S. and do not have suitable treatment options other than major pallet surgery.

In the BETTER SLEEP study, we demonstrated bilateral stimulation can treat CCC patients, which led to a complete concentric collapse label expansion in Europe. Recently, Genio’s success in treating CCC patients commercially was demonstrated in a real world case series that showed an average Apnea-Hypopnea Index decrease of 73%. The excess primary endpoints are similar to DREAM, with the objective to expand our U.S. labeling to include complete concentric collapse indication and eliminate the need to perform a drug induced SLEEP endoscopy to determine whether a patient has CCC or not. Commercially, the fourth quarter was very strong with sales of €1.8 million showing 87% sequential and 42% year-over-year growth. This is a result of both strong underlying demand for Genio and recent commercial investments including direct-to-consumer online campaigns and a patient top-line.

Continued investing in understanding the patient’s journey resulted in the launch of a patient helpline and kicking off a ResMed Germany collaboration to ensure every patient gets the most appropriate OSA treatment. This is not only resulting in educating folks by calling the outline, but can be considered a key pillar in our fourth quarter success together with the strong growth of sales and commercial team in Germany is doing. In 2024, the recent ResMed Germany collaboration will further expand the OSA continuum of care, guiding patients to the appropriate therapy. For CPAP quitting patients suffering from moderate to severe OSA, Genio is a solution and for untreated patients CPAP remains the golden standard. We continue to position ourselves as an innovation leader in the obstructive sleep apnea space with always putting patients first and listening to our surgeons.

As a result, Genio is a different approach to hypoglossal nerve stimulation with its lead and tough solution. Genio offers patients a leafless full body MRI compatible non-implanted battery solution powered and controlled by a wearable. Thanks to the fully upgradable wearable component, Genio patients can always have access to the most advanced technology without needing another surgery. The recently launched Genio 2.1 enables greater stimulation adjustability and gives patients the autonomy to adjust stimulation amplitude within predefined boundaries. This will definitely help patients that are very sensitive to neurostimulation overall. While the Genio 3.1 implantable stimulator is under regulatory review and will further support or implant for life concept.

Future generations of the Genio system will have a more agronomic wearable component [indiscernible] that will adjust stimulation based on sleeping position and provide patients with real time feedback through data collection that will improve the patient experience. We are making strong progress towards our key objectives for 2024, which are to complete patient follow-up in the DREAM U.S. pivotal study and report efficacy and safety data by early April. File the fourth and final module on the model of PMA submission, complete patient enrollment in ACCESS U.S. pivotal study, continue preparations to enter the U.S. market with regulatory, manufacturing and 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 Chief Financial Officer, Loïc Moreau who will provide a financial update.

Loïc Moreau: Thank you, Olivier. Good day to everyone and thank you for joining us today. Revenue for the fourth quarter ended December 31, 2023, was €1.8 million, a 42% increase over the fourth quarter of 2022 and an 87% increase over the third quarter of 2023. I would like to point out that the fourth quarters benefit the most from seasonality and while we expect a strong year-over-year growth in the first quarter, we anticipate sales to be down sequentially. Total operating loss for the fourth quarter was €10.8 million versus €9.1 million for the fourth quarter of 2022, driven by an acceleration in clinical activities as well as commercial investments in Europe as well as U.S. As of December 31, 2023, cash and financial assets totaled €58 million compared to €95 million on December 31, 2022.

During the fourth quarter, our monthly cash burn was €4.9 million, a slight increase from 3Q driven by U.S. commercialization preparation activities. Based on our current cash position, we have runway into late 2024. With that, I will turn the call back over to Olivier.

Olivier Taelman: Thank you, Loïc. As I hope you all agree, we are entering the most exciting time in Nyxoah’s history. We are a few weeks away from DREAM clinical data readout, which if positive, should result in obtaining FDA approval in late 2024 or early 2025, depending upon FDA timeline. I look really forward to accelerating investments in the U.S. commercial organization, so we will be ready for the late 2024 launch and continued sales growth 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: Thank you so much. [Operator Instructions]. One moment for our first question. That is from Jon Block with Stifel. Please proceed.

Jon Block: Great. Thanks guys. Good afternoon. I’ll start the 4Q 2023 top line was certainly solid. I think ahead of most prior estimates and certainly ahead of hours. Olivier, maybe if you could just talk about what was that strength attributable to? Was it the DTC? Was it the ResMed partnership? I think there was a competitor that had some lead issues in Germany, pardon me. So maybe if you could just talk about the main drivers or even rank order them if you can, that’d be helpful as we think about our models.

Olivier Taelman: So thank you, Jon. Thank you for the question. And I can only agree, I think we can say that the fourth quarter was a very strong quarter in Germany. We estimate also that we have nearly took 50% of the German market share in the fourth quarter. Now, the drivers, I think first of all, it’s a confirmation that there is a high acceptance from our German physicians. That is one thing. Second, we have the 48 centers that are now fully trained and also implanting. We are offering doctors a patient, a choice in the hypoglossal nerve stimulation implants, and stepping away from an invasive pacemaker solution into a single incision procedure. This is definitely helping. Further, there is the product differentiation, putting patients at the center. And of course, there is the sleep physician focus through DTC. I think those components are really driving our Q4 strong results.

Jon Block: Perfect. Great. That was very helpful. And maybe just to pivot for the second question, you touched on some of the next steps for U.S. approval and then commercialization. Maybe just to probe a little bit more, can you comment on the status of, call it the first three modules, right, that have already been submitted. And then, is there anything new or incremental when we start thinking about the reimbursement path and which road you’re going to go down? Thanks for your time guys.

Olivier Taelman: Yes. As you mentioned correctly, in total there are four modules. We have submitted the first three modules already. The fourth and final module will contain the transformed DREAM safety and efficacy data and will be filed shortly in the second quarter. So the first three are done, the fourth will go hand in hand with the DREAM safety data. Now when we are coming to our further market access strategy, because I think that was also part of the question. Currently, we have a team in place that is working to secure reimbursement from both CMS and the commercial payers. That team will also work with customers through the prior authorization process when we launch in the U.S. We are currently also in close conversations at the AAO who will make a recommendation on CPP codes to AMA.

There are a few different strategies. One would be using — another one would be using an existing neuromodulation code that covers off technology very well. But I think most important is that the reimbursement in both scenarios will be in line with current AG&S payment rates. So I hope that is providing your answer, Jon.

Operator: Thank you. One moment for our next question, please. And it’s from the line of Ed White with H.C. Wainwright. Please proceed.

Ed White: Hello, thanks for taking my questions. Perhaps if you could just quantify, if you can the impact of seasonality in the first quarter of this year that you’re expecting.

Olivier Taelman: Thank you, Ed, for this question. And I think the best place person to answer this is our CFO. So I’ll hand it off to you.

Loïc Moreau: Thank you. Thank you, Olivier, and thanks for the question, Ed. So, as you are aware, the fourth quarter seasonality is driven by the phasing of hospital budgets and spending in Germany. And as you know, we do not provide revenue guidance. But last year, if you observe, the German AG&S market declined approximately 25% from the fourth quarter 2022 to the first quarter 2023, and we would anticipate a similar seasonality in the first quarter 2024. Given we still have high customer concentration, the impact of seasonality on our first quarter could be more pronounced. That’s what we anticipate.

Ed White: Okay. Thank you. And also, just to clarify, are essentially all of your sales right now coming from Germany? Is there a number you can use to quantify that?

Olivier Taelman: 90% of our sales in Europe are currently in Germany.

Ed White: Okay. Great. Thank you. And my last question is just on the ResMed, how should we be thinking about the ResMed impact on sales so far? What are you seeing? Is there any way to determine if it’s having an impact already or if it should be a later in 2024 event? And also, is there the possibility of a ResMed agreement in the U.S. as well?

Loïc Moreau: So thank you again for this question. Olivier again, I will answer this in fact these two questions. So first of all, in ResMed Germany collaboration, we announced the collaboration end of September 2023. We do not expect to see an impact for the first six months. So we are anticipating beginning to realize benefits in the second quarter this year. That is, I think, the answer on the first part. Now the second, do you anticipate also partnering with ResMed in the U.S.? Our strategy is to go direct in the U.S. If there are opportunities to augment direct approach with partnerships like with ResMed touching on their relationship and tapping over their relationships with key physicians, we will definitely explore those in going forward.

Operator: Thank you. One moment for our next question, please. And it’s from the line of Ross Osborn with Cantor Fitzgerald. Please proceed.

Ross Osborn: Hey guys, congrats on progress. Thanks for taking our questions. So, starting off just on the U.S. market, would you walk us through how you’re thinking about initially commercializing Genio in terms of targeting existing inspire users versus growing the market? Or in other words, getting first time HGNS users to adopt Genio?