Nyxoah SA (NYXH) 2024 Q1 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to Nyxoah first quarter 2024 earnings conference call. (Operator Instructions) Please be advised that today's conference call is being recorded. I would like now to turn the conference over to Mikaela Kirkwood, Investor Relations and Communications Manager. Please go ahead.

Good afternoon and good evening, everyone, and welcome to our earnings call for the first quarter of 2024. 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 first quarter financial results released after US markets 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 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 a list and description of the risks and uncertainties associated with their business, please refer to the Risk Factors section of our Form 20-F filed with the Securities and Exchange Commission on March 20, 2024.

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

Thank you, Michaela. Good afternoon and good evening, everyone, and thank you for joining us for our first quarter of 2024 earnings call. 2024 has been transformational for Nyxoah. In March, we announced our DREAM US pivotal study achieved its primary endpoints and demonstrated the Genio has the potential for best-in-class outcomes for OSA patients. I would like to congratulate our clinical team on these terrific results. Our regulatory team is working diligently to file the fourth and final module in our model of PMA submission this quarter, which will set the stage for entry in the US market upon FDA approval as early as the end of 2024.

Additionally, Dr. Maurits Boon, one of the pioneers in hypoglossal nerve stimulation joined us from Thomas Jefferson University as Chief Medical Officer, and we announced a partnership with the American Association of Otolaryngology, Head and Neck Surgery Foundation to drive Medicare and commercial payer coverage. Commercially, we reported first quarter sales of EUR1.2 million, almost tripling revenue from the first quarter of 2023 and benefiting from our focused approach on strengthening collaboration between implant surgeons and referring physicians.

To recap DREAM, the study had co-primary endpoints of AHI respond rate, better (inaudible) at 12 months and ODI respond rate at 12 months. At baseline, subject had a mean age of 28.0, ODI of 27.0 and a body mass index of 28.5. On an intent to treat or ITT basis, DREAM study showed AHI respond rate of 63.5% with a p-value of 0.002 and an ODI respond rate of 71.3% with a p-value less (technical difficulty) With these strong results, the DREAM study met its primary endpoint.

Additionally, subjects demonstrated a median 12 month HIV reduction of 70.8% with similar AHI improvements in supine and non-supine sleeping position. The safety results were favorable with 11 serious adverse events or SAEs in 10 subjects resulting in an SAE rate of 8.7%. Out of the 11 SAEs, three were device-related and there was three explants. The DREAM results further differentiate Genio as it was the first AGNS study to require patients to sleep at least 60 minutes in the supine position and demonstrated strong efficacy with patients sleeping supine and non-supine.

This is of particular importance since published data show increased OSA severity in the supine position with AHI doubling in the supine versus the lateral position. On average people sleep 35% to 40% in a supine position during a standard night, which was in line with our PSG findings in DREAM. This means that irrespective of a patient's sleeping position Genio maintains its efficacy. Based on early feedback from physicians, this can be very impactful on therapy selection.

It supports our mission to make sleep simple again, and we intend to apply for the inclusion of supine efficacy results in our label. With the positive DREAM results, we are now finalizing our model of PMA submission. We have responded to the FDA questions on the first three modules, and are on an interactive review and anticipate filing the fourth and final module this quarter. We are preparing for the launch by the end of 2024 as based upon modular PMA review cycle plans.

We anticipate FDA approval in late '24 or early '25 as we do not control FDA [panel]. In parallel, we continue making progress on the reimbursement side as we are establishing reimbursement pathways with commercial payers, Medicare and Medicaid. Reimbursement team is working closely with the AAO and reimbursement experts to secure coverage at FDA approval.

Ahead of approval, we will be conducting a payer feedback interview with the former CMS and commercial plan medical directors as well as participate in the early payer feedback program for the FDA. Designed to provide direct feedback from major payers such as UnitedHealthcare, BlueCross BlueShield, [Edna], as well as CMS. Upon commercialization, we will have a prior authorization team in place to assist with claims submission and payments.

The US focus is significantly increasing, highlighted by the recent addition of Dr. Mau Boon as Chief Medical Officer. Dr. Boon, who joined Nyxoah from the Thomas Jefferson University is internationally recognized as one of the most experienced surgeons in the field of OSA and AG&S. Being able to have such high-caliber talent joining Nyxoah is a strong validation of the opportunity for Genio to disrupt the OSA market.

We are actively building our US commercialization team to be ready to launch by the end of this year. The government agency market in the US is fairly concentrated, allowing for the laser focused launch, breaking the government monopoly with ELT side, while establishing a patient referral pathway from sleep specialists. As for the FDA approval process, we have a usability study with 31 physicians, the top AG&S implanters in the US and their feedback was overwhelmingly positive.

Providing a little more color on the usability study, [many] surgeons meeting surgeons without experience with Genio were invited to participate in a training session and (technical difficulty) and safely use the device. The training contains theoretical session, followed by both animals and cadavers implant. 12 hours later, mimicking a relo offsetting, surgeons had to repeat the implant without guidance to demonstrate that properly retain the knowledge on device programming and acquired the implantation technique, always ensuring patient safety and comfort during the procedure.

These surgeons were adamant, they want to be the first Genio implanters in their areas and convinced of the differentiation of Genio versus current AG&S technology in terms of invasiveness, patient centricity, safety and the simplicity to treat OSA patients regardless of their sleeping position. In addition, the recent independent survey demonstrated that over 20% of US AG&S candidates [for] declining a pacemaker based platform technology due to their concerns over the invasiveness and having implantable battery in the chest.

Going back to Europe, first quarter sales was EUR1.2 million, an increase of 177% of the first quarter of 2023. As part of our commercialization of commercial proof of concept in Germany, we see that, first, the majority of accounts became mixed implanting accounts embrace Genio in their practice. Second, [density] penetration is strongly accelerating as a result of Genio entering the market as a new player. And third, there is a large pool of seep up within patients in need of treatment, which can be addressed through establishing a strong collaboration between implanting surgeons and referrals with physicians highlighted by over [hazmat] collaborations.

In summary, we started 2024 strongly by reporting positive DREAM data, further differentiating Genio with our unique supine (technical difficulty) for the remainder of the year we are working towards FDA approval by the end of the year and commercial readiness for strong US launch in 2025.

With that, I'm pleased to turn the call to our CFO, Loïc Moreau, who will provide financial updates.

Thank you, Olivier. Good day to everyone, and thank you for joining us today. Revenue for the first quarter ended March 31, 2024, was EUR1.2 million, a EUR177 million increase over the first quarter of 2023. Total operating loss for the first quarter was EUR12.2 million. This is EUR11.4 million in the first quarter of 2023, driven by an acceleration in commercial investments in the US as well as in Europe.

As of March 31, 2024, cash and financial assets totaled EUR44.3 million, compared to EUR57.7 million on December 31, 2023. During the first quarter, our monthly cash burn was EUR4.5 million. Based on our current cash position, we have a runway into late 2024, which includes the building of the US commercial team.

This concludes the formal part of our presentation. Operator, I will turn the call over to you to begin our Q&A session.

(Operator Instructions) Jon Block, Stifel.

Thanks. Good afternoon. First question, Olivier, just any details on where market share should be out in 2023 for Genio in Germany and your thoughts on 2024? And then part two of that first question would just be the burn rate that we can expect as you ramp up the commercialization efforts in the coming months, I think head count and prepping for launch, as you mentioned, by potentially (technical difficulty) this year fourth quarter of 2024? And then I'll ask my follow-up. Thanks, guys.

Thank you. So, Jon, first of all, thank you for the questions. Looking back at 2023 and the annual market share, we ended up with 27% overall market share. And we had a very strong Q4 growth in 2023 bringing the market share close to 50%. So that was hitting the first part of your question. The second part was?

Just how we should view the -- I'm sorry, how we should view whether you want your monthly burn or quarterly burn as you ramp up some of the commercialization efforts to prepare by launch by the end of this year.

So we burned EUR4.5 million in Q1. We expect the burn rate to remain steady for the first half of the year and then begin to ramp up in the second half as we accelerate investments in the US commercial organization. As we said, we have cash until late 2024, and that includes the build of the US commercial team.

Okay, got that. And if I have any additional questions I'll clarify offline. I think just to pivot for the second question post the release of the DREAM top-line data, we perform checks among 30 physicians and asked them how they view, the DREAM data relative to inspire [store] -- and I categorize the findings as upbeat. The majority view DREAM is equivalent to store.

There was about 20% saying superior and about 17% and saying inferior. So painting with a broad brush, largely equivalent here. Here we are just almost two months removed from the top-line data being released, Olivier, and I'm curious if maybe you can talk about what you've heard or others at Nyxoah have heard from the docs and maybe the reaction in the marketplace to the data? That would be very helpful.

Yeah. No, definitely, Jon. And also thank you for the work that you did on getting this data. Now, let me first of all remind you that the study was not designed for the head-to-head comparison. There was a few different characteristics making DREAM more challenging than stores. To name the most important one is having minimum 60 minutes supine sleep all of patients in order to qualify as a responder.

And there is also the broader AHI range wherein we have a range between 15 to 65, we installed in the range of 20 to 50. Now that being said, of course, I fully understand the nature of the question, and I also fully understand why physicians and other people are looking out to compare these data. So AHI-ODI respond rates are in line with our [competitors] study starts.

Calculated on intent-to-treat basis and our medium HIV reduction is even slightly higher. In general, as physicians are very aware of, it's harder to control or save patients of supine compared to non-supine because it's more difficult to maintain an open airway in a supine position, mainly driven by gravity. While we plan to hold the data for publication, I can already comment that Genio showed similar AHI reduction in both supine and non-supine position. While requiring patients to sleep supine make DREAM more challenging, the data provides evidence that the Genio will be able to control patients or say, regardless of their sleeping position.

And I do think and this is also the feedback that we are getting when we were talking more in-depth with physicians and also know that we have [Dr. Breidenbach] explaining it even better than I can to other physicians. We see that this is really perceived as a really, really differentiating factor making the choice for physicians simple because they do not need to worry whether the patient is sleeping supine or non-supine, knowing that in data 35% to 40% of normal standard night people are sleeping on their backs.

So I do think that the supine data aspect is really differentiating Genio from store, and it's also differentiating and showing a strong efficacy in this specific supine position, which we like to say and claim that this is showing a superiority compared what was demonstrated in the [software].

Very helpful. Thanks, guys.

Suraj Kalia, Oppenheimer.

Good afternoon, Olivier, Loïc. Can you hear me all right?

Yes, hello.

So Olivier, congrats on all the progress. Olivier, just piggybacking on your comments about supine, right? Obviously that piqued everyone's curiosity. And my first question is a multipart question, if I could, How is the debate on hypoglossal nerve stem efficacy supine on supine, how is that brewing in the field? And also recently, there was an Inspire paper that was talking about decreased efficacy in supine position? (multiple speakers)

Olivier, forgive me. Olivier, if you look at one of the arguments made as, well, the titration is done in supine position. So this whole debate becomes moot. I'd love to have your take on this. When is the titration really done? Is it supine, non-supine? If you could shed some color there? And also the implications for a label if really the titration is done in a supine position. Sorry, it was a multipart question. Hopefully you got the gist of it.

I hope I will be very complete in my answer, Suraj. But let me start with the first part. So yes, the supine versus the non-supine is also seeing a lot of further discussion within the ENT sleep surgeon community for the simple reason that when surgeons are deciding to choose for the therapy, it's really important that they tried to keep it as simple as possible. And knowing that you have the same airway opening in both supine and non-supine position is definitely an advantage.

So that being said, if we look at public data showing that 35% to 40% of the time people are sleeping in a supine position. You understand why this is becoming extremely important. On top, we also know that when a patient moves and turns into a supine position, that AHI is twice as high when they are supine position versus when they're non-supine. That will even patients who are not suffering from moderate or severe OSA when they're non-supine and become a severe OSA patients once they turn supine.

So again, an illustration how important it is to have a technology that can guarantee that the airway is opening or stays open during the supine free position. Now, at this moment DREAM is the only study to require patients to sleep minimum 60 minutes supine as a 12-month follow-up visits and this result showed similar AHI reductions compare store. However, Genio it did not matter whether patients were sleeping supine or non-supine. Store did not have the requirements to sleep supine at a 12 month visits. It has not presented any data on supine efficacy from the study in the stockpile.

And that brings me to your next question. Recently, there was a publication done by Inspire on supine data. We have disclosed in DREAM that our median AHI adoption in supine and non-supine sleeping positions was similar, implying around 70% in supine. If you compare to the 70% that we showed to the 51% supine median AHI reduction reported in the issue publication, based on this, I hope you agree with me that I can conclude that Genio has a superior outcome in a supine position.

Now am I complete my explanation or am I missing still something?

No, sorry. It was a multipart. I mean, the titration part, Olivier, one of the arguments as, well, the titration for hypoglossal nerve stem is done essentially in supine position. So it should not matter the supine non-supine. In all honesty, I never thought about at what point is the titration done? And I'd love to get some clarity on how is titration done for Genio?

Yeah. So let me start by first commenting on the fact that titration is done in a supine position. So this is not the case for Genio. But if we just stay on the topic that titration is done for supine position, it would also implies that there is an oversupply creation in among supine position, and we all know how sensitive patients can be for stimulation. The last thing we want to do is lay them up. So they do think it's important that the patient will get the adequate stimulation and therefore, again, with all bilateral stimulation that we can offer.

And the way we do this on a tailor-made based studying the PLG exam and the programming for activation chip, we can offer a solution where we stimulate precisely for the patient in function of his or her needs to maintain the airway open. To that extent, knowing that we have similar airway opening effect using the same stimulation parameters, supine and non-supine. This is again a great advantage that we offer and that we can contribute completely on the fact that we have a bilateral stimulation.

Got it. And Olivier, for my follow-up question, if I could I presume the label discussions start in Q3? I'm guessing. And also the 31 physicians, high volume of Inspire docs that you're considering presumably as low hanging fruit. I'm preaching the virtues of Genio. I'd love to understand how you all are sensing the choice of device -- it's going to shape up once you become commercial. Gentlemen, congrats on the progress and thank you for taking my questions.

Well, thank you for the question, Suraj. And again, to your point, we also stopped opening the label discussion that is part of a module for submission. So that is what we will bring in and based on those data, we will really pursue the option to have the supine position really explicit in our in our label.

And I think based on this and I'm coming back to our mission, that is making sleep simple again, based on this four [physician] becomes obvious working with Genio, you know that you don't need to worry too much and that you can always maintain the airway of patients open regardless of their sleep position. And that is really, really, a clear pattern.

Adam Maeder, Piper Sandler.

Hi, good evening, guys. Thank you for taking the questions and congrats on the progress. I wanted to start by asking about some of the preparations that you're making from a sales force and manufacturing standpoint. If I heard some of the remarks correctly, it sounds like that's the onboarding of sales. So US sales folks is more back-half loaded.

But I was hoping you could get a little bit more granular there. So how many US sales reps have you hired at the moment? How should we think about that build in the back half of the year? Where do you expect to be at launch? And then I guess just kind of a similar question, just talk about manufacturing capabilities and capacity, and how you feel about that going into a US launch at the end of the year? And then I had a follow-up. Thanks

Yes. Well, thank you, Adam, for the question. So when we look at our launch strategy, as I mentioned earlier in the call, it's clear that currently AG&S in the US is a very concentrated business. So it allows us to have a laser focus launch on top AG&S accounts, which constitute the vast majority of (technical difficulty)

Next to this, we want to develop relationship with key sleep samples to [drive referrals]. So limited and efficient sales force sized appropriately for targeted launch, which we can scale down opportunistically over time. Being very concrete, we plan to launch with the sales team over 125 people be laser focused on those top AG&S accounts.

On the scalability, patient follow-up strategy, which includes field clinical engineers to monitor implants and patient management specialists to focus on titration and patient follow-up. This increases the sales force capacity as sales reps can focus on [lead] generation and can also focus on what they're hired for and that is increasing sales. There will be a limited DTC focus on product differentiation, of course. And on top of this, we also will have a pilot authorization team in place at launch.

Now how will we differentiate and how will we break the monopoly and take share from the competition, A, we will focus on our superior efficacy due to the supine AHI reduction. I think I already was pretty clear about this. And B, we will have a product differentiation. No implantable pulse generation, implant for life, fully scalability of technology, a single incision, no leads, no (technical difficulty). So those two will be of key factors and that we will use within our sales force. Superior efficacy based on supine HIV adoption and product differentiation making sleep simple again.

It's good color, Olivier. And just from a manufacturing standpoint, I don't think we need to spend too much time here, but just wanted to ask. I'd check that you guys are indeed feeling good about the ability to manufacture and hit the ground running in '25 in the US? And I had one follow-up. Thanks.

No. Correct. So for the US sales specifically, we have contracted with a leading US medical device manufacturer. Incidentally also the same as competition, if you will, that we'll provide systems for US market at the first stage. Currently, we are having of Belgium manufacturing sites for European commercial supply. That will be further expanded to also be able to supply for the US. And we are keeping our historical manufacturing facilities in [Tel Vista] for clinical trial inventory. The manufacturing lines are highly scalable, particularly as we will launch. We'll see how much encapsulation version of Genio, which is easier and less expensive to manage.

Good. Good color there, Olivier, thank you for that. And for the follow-up, I wanted to just switch over to reimbursement and ask for more color about the strategic partnership with AAO, HNSF. What more can you tell us about kind of the background of that agreement or the genesis of the agreement?

And then I'll also ask any update in terms of how we're thinking about coding vehicle for Genio in the US and just pace of payer coverage in the United States? It sounds like you expect US payers to come on pretty quickly after approval. But maybe just talk about the confidence there. And thank you for taking the questions.

No, definitely. So we have partners with AAO, which will make a formal recommendation on an interim CPT code for use -- for us to use at launch -- directly at launch when we (technical difficulty). At launch, doctors will also use Medicare claims using the AAO recommended CPT codes, which will closely match the Genio procedure and is currently covered by all Medicare administrative contractors or MACs. The reimbursement will be in line with current AG&S payment rates and I think that's also important.

We will pursue a Genio specific CPT code over time. But based upon precedent, this will likely take a couple of years. So in going forward, we know that all the MACs have local coverage decisions for AG&S and in collaboration with them, we will [have] limited coverage of ticket for general that will leverage those decisions. We have the full influence and support of the AAO for our strategy demonstrated in their (technical difficulty) partnership.

Ross Osborn, Cantor Fitzgerald.

Thanks for taking my questions. Maybe just one for me. I would be curious to hear if there's any update on the access trial? Then how you think education efforts will progress on post data there in the US in terms of being able to utilize your offering on the triple C patients, which historically has not been done? Thank you.

Thank you, Ross, and thank you for the question. So we continue to make progress with the access study. But as I mentioned before, we will not be disclosing the number of patients implanted. That said, we still plan to close the plant by the end of this year, by the end of 2024. Once we close the study, there will be a 12-month follow-up that will bring us to the end of 2025 then we will file a PMA supplement and therefore, we anticipate a six to nine month review period.

So we expect to receive a label expansion in mid '26. And I know this was not really the question, but I do think it's important also to strategically cover both. When I was talking about supine versus non-supine, we are also looking into remapped non-CCC patients. There, we are really making sleep simple again by physicians not having to worry about -- in what position people are sleeping, nor when you look at CCC patients versus non-CCC, again, this is under the same umbrella in our strategy in making sleep simple again. That over time also, physicians don't need to worry whether the patient is suffering from CCC or non-CCC.

Not to forget, this will also eliminate the (technical difficulty) in place to further determine whether the patient is CCC or a non-CCC patients. So all this together, Ross, is once again part of our mission. We want to make and we want to offer a solution that will make sleep simple and (technical difficulty) physicians and patients can realize they have a solution that will be effective regardless of their sleep and that can mimic, in fact, a natural (technical difficulty)

Okay. Thank you.

David Rescott, Baird.

So great. Thanks for taking the questions and congrats on the progress so far, this year. I wanted to start on Germany. I want to make sure I heard a couple of things correct. That for the full year and [you add] to that 27% share, closer to 50% in the fourth quarter. Wondering if you have a sense for the number of centers that you're in today and then whether -- or not or just any more color on the progress would be a partnership you have with [Rosemont]? (technical difficulty) have a follow-up.

Yes. No, definitely. So first of all, to date, you are correct in understanding the 27% market share for the total year of 2023. And today, we can say that we have 51 centers that are fully trained and ready to implant and/or implanting the Genio technology. So 51, that's where we stand today.

When it comes to our [asthma] partnership, our main goal to the partnership further developing a patient-centric approach by developing a complete, say, ecosystem that patients can be guided to which, I will say, as a whole as a therapy that suits their needs. We are collaborating on DTC initiatives and sales and marketing efforts to target both sleep positions and ENT surgeons. The goal of the partnership to expound OSA therapy penetration and of course, to increase our market share in Germany.

Okay, great. I wanted to ask maybe about some of the commercialization -- high-level thoughts in the US. If I heard you correctly, I think you're looking to bring on 25 dedicated US salespeople and just wondering what you think the addressable or the immediate opportunity for those salespeople that could be?

Meaning if we're modeling 200 centers or so be coming online with about one implant per center per month, can the 25 sales reps that you initially have in 2025 expand that level or support that level of growth? Or do you need to continually add as you get into '25 and '26? Thank you.

(technical difficulty) it's a very valid question, and I can tell you it's also a question that keeps us busy internally in defining and see how we can make the most successful launch in going forward. Now as I mentioned, we will start with a laser focus launch on top (technical difficulty) to provide you some color. We are not going after 200 accounts from the get-go.

For the simple reason that we want to ensure higher quality and therefore, we need to train surgeons in a quality way. Of course, also being time conscious but we have to put the quality always first because we want to have of patients also showing success that we see in our clinical data. So that's number one.

So it will not be to 200 accounts, but more 75 to 100 accounts. And when we go a little bit more in-depth, how do we define our launch success? I mean there are a couple of parameters. First is breaking the monopoly that guarantees existing when it comes to AG&S in the US and expanding the AG&S market. That is one of our strategies.

Next, of course, we want to exceed the [Street] expectations. And third, we want to make sure that we can extend our cash runway to [mid-26] with a focused and scalable commercialization strategy. I think those three things are extremely important. So you can expect that the 25 salespeople will all have four to five implantables from the get-go and that we expect every account to do minimum an implant a week if not two implants a week. So then we can start modeling our (technical difficulty)

That's very helpful. Thanks so much.

Michael Polark, Wolfe Research.

Good afternoon. Good evening. I'm curious is Dr. Boon on the call?

He's not on this call. (technical difficulty) but he will be on the next call, Mike. You can be sure. And there will also be opportunities when we are hosting an Investor and Analyst Day that you can talk extensively to him.

Okay. Sounds good. We'll leave that for then. I did have one other personnel question. And I noticed Christoph Eigenmann left the company, the Chief Commercial Officer you hired last year. And I'm just curious what happened there and kind of what is the plan for US sales leadership? But it sounds like you're moving forward with hiring a field force, but I'm curious if you plan to backfill for Christoph? And if so, where is that process? And what kind of characteristics are you looking for in a candidate?

Yes, no, and definitely. So first of all, I will not comment too much because out of respect also for Christoph, when he was joining us we really, really worked off and did a good job. But sometimes it's not that easy to really make a transfer from a large company into a start-up company where we are, because they are totally different expectations. And I do think that it was the best solution for both Christoph and Nyxoah to explore other opportunities and to have our ways separating.

Now that being said, it illustrated again for us how careful we have to be in this recruitment process and how we, in fact, also incorporate the learnings to find -- I it the unicorn leaders that the US market deserves also the US team deserves to have a successful launch. So the process is ongoing. We have several candidates that we met. We now have a shortlist and together with our Board and also with some other members of our team, including Dr. Boon, we will be shortly announcing our new CCO and then also help us prepare the US launch.

Thank you so much.

Ladies and gentlemen, that does conclude the Q&A session and today's conference call. Thank you for participating. You may now disconnect.