Nyxoah SA (NYXH) 2022 Q4 法說會逐字稿

Good morning, and thank you for standing by. Welcome to the Nyxoah Full Year 2021 Earnings Conference Call. (Operator Instructions)

I would now like to hand the conference over to your speaker today, Jeremy Feffer with -- Vice President of Investor Relations. Please go ahead.

Thank you, Catherine. Good morning and good afternoon, everyone, and welcome to our earnings call for the full year 2021. 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 second half and full year financial results released after U.S. markets closed on March 24, 2022, 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 our Investor Relations 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 the currently 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 risks and uncertainties associated with our business, please refer to the Risk Factors sections of our Form 20-F filed with the Securities and Exchange Commission on March 24, 2022.

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

Thank you, Jeremy. Good morning and good afternoon, everyone. Thank you for joining us for our discussion of operating and financial results for the full year 2021. A special thank you also to the entire Nyxoah team for their tireless dedication and outstanding performance amid ongoing challenges posed by the COVID pandemic. I'm extremely proud of how our team has exceeded expectations in all our geographies.

2021 was an important year for Nyxoah, as we accomplished numerous clinical, regulatory, commercial and financial milestones and positioned ourselves for continued execution and sustainable success in 2022 and beyond. On the clinical and regulatory front, our BETTER Sleep study achieved its primary endpoint of statistically significant absolute reduction in AHI for the entire cohort, as well as for complete concentric collapse or CCC patients. As a result, we received an expanded CE-Mark indication to treat CCC patients in Europe. And in the U.S., FDA granted us breakthrough device designation for CCC patients.

Having achieved a 64% response rate across all cohorts at 6 months post implantation, including 67 amongst non-CCC patients, these BETTER SLEEP results help derisk our DREAM U.S. IDE pivotal study and are giving us confidence that we are incorporating the right learnings to this critically important trial. We have a much greater understanding about patient phenotyping as we advance the DREAM trial, and we look forward to completing implant next quarter.

Our patient-centric focus also includes our separated IDE trial for CCC patients in the U.S., which we anticipate commencing later this year to make this technology available to the 30% of patients who were contraindicated for hypoglossal nerve stimulation in the U.S. And we would know -- and who would no longer have to undergo an invasive drug-induced sleep endoscopy, also called DISE.

We also made MRI compatibility, a top priority from the get-go to ensure that patients always feel safe and do not have to worry about explanting their device to undergo an MRI, of which there were more than 40 million performed in OSA patients alone every year globally. We were, therefore, thrilled to secure CE-Mark MRI conditional labeling to ensure that patients implanted with Genio can undergo full-body 1.5 and 3 Tesla MRIs.

On the commercial side, we were extremely pleased to move from the innovation budget to securing a dedicated DRG code for hypoglossal nerve stimulation in Germany. We are also expanding rapidly and have generated strong demand in other European countries, as we managed to secure a dedicated DRG code in Switzerland and have obtained hospital reimbursement in Spain. We are also awaiting reimbursement decisions in Belgium and the Netherlands.

Our commercial strategy in Europe is based on a deep understanding of the patient's journey, engaging with the implanting ENT surgeon and sleep physicians as key stakeholders in guiding OSA patients to the most appropriate therapy. Building strong relations between both referrals and implanting physicians results in the creation of a center of excellence ecosystem, associated with faster therapy penetration and high-patient satisfaction.

On the financial side, we also successfully completed our second IPO in the span of 10 months, raising $97.8 million through our NASDAQ listing in July after raising EUR 84.8 million in our Euronext Brussels IPO in September 2020. We were proud to welcome a strong loop of high-quality investors to our existing U.S. and European shareholder base, and we look forward to building our roster further. More importantly, these offerings provided us with ample balance sheet liquidity, a cash balance of EUR 135 million as of December 31, 2021, that enables us to invest in our key clinical R&D and commercial priorities at this critical time for our company.

I will go into more detail on each of these pillars. Let me first read and reiterate to you our overarching strategy. Our proprietary patient-centric Genio system is the only hypoglossal nerve stimulation device that requires only one incision, which shortens procedure time to around 60 minutes and reduces the risk of infection compared to multiple incisions. It delivers bilateral stimulation, which we believe results in an expanded total addressable market; eliminates the need for patients to have to undergo the drug-induced sleep endoscopy procedure to determine if they have CCC or not; and last, it is compatible with both 1.5 and 3 Tesla full body MRI.

We are leveraging our strengthened balance sheet to build a growing body of clinical evidence to ensure that this technology is available to as many moderate to severe OSA patients as possible, a population that numbers more than 1 million new patients per year, including more than 500,000 in the U.S. who are eligible to treat, with and without complete concentric collapse of the soft pallet. Last June, we announced that BETTER SLEEP had achieved its primary safety and performance end point of a statistically significant absolute reduction in baseline AHI at 6 months for the entire patient cohort, as well as for the non-CCC patient subgroup and importantly, the CCC patient subgroup.

This is a critical development for Nyxoah and these clinical results, which were presented in a poster at the World Sleep Congress earlier this month in Rome represent the first body of evidence to demonstrate that bilateral hypoglossal nerve stimulation can be an effective treatment for patients with CCC, who comprise approximately 30% of the moderate to severe OSA patient population and were contraindicated for other hypoglossal nerve stimulation options that are approved in the U.S.

The study also generated a statistically significant reduction in oxygen desaturation index or ODI across all patient cohorts. The Sher criteria as used in our DREAM U.S. pivotal study, BETTER SLEEP achieved a response rate of 64% for the entire population, 60% for the CCC cohort and 67% for the non-CCC cohort. Considering that as the growing body of clinical data and the real-world experience suggests that patient response improves meaningfully between month 6 and month 12, these strong responder rates in all patient cohorts already after 6 months, further increased our confidence in positive outcomes for the ongoing DREAM study, where we need to demonstrate a responder rate above 65% after 12 months.

We also note that the mean AHI reduction exceeded 70% amongst responders in both CCC and non-CCC arms, making them super responders. In other words, when a patient responds, the type of airway obstruction will not influence the outcomes using the Genio system. World Sleep was an outstanding success for us, as we not only present better sleep data, but also hosted a physician event entitled, Shifting Paradigm in OSA Therapy in Genio, that was attended by more than 55 key opinion leaders from the U.S. and Europe. It was invaluable opportunity for us to present our data directly and ask physicians questions. And we are encouraged by the growing interest and enthusiasm for hypoglossal nerve stimulation in general, and Genio in particular.

To this end, in October, the notified body in Europe expanded our CE-Mark indication to include CCC patients amongst those eligible to be treated with Genio. And Genio is now commercially available in Europe and the first CCC patients have been successfully implanted in Germany. As a reminder, the ability to treat CCC patients means that all moderate to severe OSA patients will no longer have to undergo a DISE procedure to determine if they have CCC. In addition, the U.S. FDA in September granted Genio breakthrough device designation for CCC patients, which provides us with priority review. More on this in a moment.

Turning to our clinical program in the U.S., the DREAM pivotal study. The DREAM pivotal study is our study in the U.S. that aims to, first, confirm safety and efficacy of the Genio system; and second, support marketing authorization of the Genio system in the U.S. The study plans to enroll 134 moderate to severe OSA patients who failed first-line PAP treatment with 12-month efficacy and safety primary endpoints. The trial includes 16 U.S. and 6 international sites currently activated, screening and rolling and implanting patients. Let me walk you through our progress on patient enrollment and the funnel that leads from initial enrollment to implantation.

As of today, we have enrolled 430 patients, of whom 52 have made it through the funnel to implantation. There are additional 104 patients in active screening who underwent an initial polysomnography and are awaiting a confirmatory PSG to determine if their baseline AHI meets the minimum criteria to be implanted. Based on our experience, approximately 70% of these patients in active screening move to implantation. Meaning, we likely have enough patients in the funnel to complete the necessary 134 implants. And we continue to enroll new patients as we speak to fill the funnel to ensure that we have more than enough to complete the study.

Of those enrolled patients who do not progress for enrollment, they screen out because a DISE procedure indicates they have CCC, their BMI is too high or an initial PSG determined that their AHI is not high enough. But to reiterate, we are encouraged by the pace of enrollment and by the number of patients who are moving through active screening. Today, our focus is further secure our work slope and making sure that the PSG, the baseline PSG can be performed as soon as possible.

Now, to be perfectly candid, we fully expected to complete implant by the end of Q1 2022, which is next week. Based on the numbers I just shared with you, we will not hit that target in the next 6 days. While I do not like to make excuses, it's a fact that the Omicron variant caused significant disruptions for hospitals, particularly with respect to surgeries. Many U.S. states placed moratoriums on elective procedures as did European countries like Germany as well as Australia. Even as things began to open up, the backlog of delayed surgeries meant it was increasingly difficult for surgeons to schedule overtime. We therefore saw very little impacting activity in December and things gradually improved as we moved through January and into February.

I'm very pleased to see the strong momentum we have built over the last 6 to 8 weeks, as more key physicians have been activated and have accelerated the pace of implantation. We are now confident that we will be able to close out implants during the second quarter, which would put us on track to have full 12-month patient follow-up data in the mid of 2023. We will have much more to say on the specific regulatory pathway as we move through this year, but we expect to pursue a modular PMA pathway that we hope will enable us to secure FDA approval and commercial launch in the U.S. in early 2024.

Returning to the discussion of CCC. We have been encouraged by our sprint discussions with the FDA regarding the design of a separate IDE trial, focused on CCC patients. We will call this trial ACCCESS, with 3 Cs as in CCC, and we hope to commence enrollment later this year. We will have much more to say about this trial, including sample size, design, end points and timing once we have final word from the FDA regarding our IDE submission, which we anticipate occurring before this summer.

Turning now to our commercial progress for 2021. As with our other achievements in 2021, I'm extremely proud of the significant progress we made in our commercial operations. We remain committed to our strategy of going deep versus going wide, as we focus our efforts on creating a center of excellent ecosystem, with high level of clinical expertise between implanting ENT surgeons and sleep physicians, providing more treatment options to their large patient pools. We have first focused on experienced hypoglossal nerve stimulation samples, with an existing OSA referral part. Additionally, we have also managed to open new sites, feeding the funnel of new patients with a customized digital marketing strategy and targeted referral programs.

Our focus remains on Germany, where we invested in building a Nyxoah dedicated sales and marketing team of 13 people in order to demonstrate our commercial proof of concept. Supported by the strong endorsement of German KOLs and ENT society, we obtained a dedicated DRG coding in 2021. As of December 31, we were in 12 active implant sites and expect to be active in 25 before summer 2022.

Next to Germany, we also made meaningful headway in other key European markets during 2021. We secured DRG code in Switzerland, we obtained hospital reimbursement in Spain, we continue to await reimbursement decisions in the Netherlands and Belgium. We also further invest in wider market access in the Nordic countries.

Last, I would like to turn an update on our R&D activities. As mentioned earlier, in January 2021, we received the CE-Mark for MRI conditional labeling, ensuring that patients implanted with a Genio system can now undergo full-body 1.5 and 3 Tesla MRI scan. MRI compatibility is consistent with our patient-centric mission and aids in-patient quality of life, knowing that over 40 million MRI scans were performed in OSA patients globally in 2020. To date, we remain the only company with an MRI compatibility label for the full body and 3 Tesla, which is the most commonly used MRI setup.

We also have submitted to the modified body in Europe and to FDA our Genio 2.1 next-generation system, which includes a new patient-centric smartphone app that will empower both the physician and the patient to track progress. This app will also empower the patients, allowing them to adjust the stimulation amplitude at home. The Genio 2.1 activation ship will integrate multiple sensors, including a position sensor to adjust stimulation levels based on sleeping position and patient movement, what would also be making our technology intelligent.

We also remain focused on developing our longer-term pipeline to find new and innovative ways to treat a greater number of OSA patients. To this end, in February 2021, we announced our exclusive licensing agreement with the U.S. Vanderbilt University, allowing us access to technologies and capabilities to develop next-generation obstructive sleep apnea solutions. We are pleased that we can partner with Dr. David Kent, who is the Director of the Sleep Surgery at Vanderbilt University Medical Fund to develop new neurostimulation technologies, starting with one that focus on the ansa cervicalis nerve stimulation.

The ability to treat OSA patients in a different way will further expand treatment options for physicians, resulting in enlarging the eligible to treat OSA patient population. We are building first prototypes at the moment, and we will have further update on this project later this year.

Finally, I'm pleased to welcome our new CFO, Loic Moreau, who joined us January 1. I will now turn the call over to Loic for our financial discussion.

Thank you for the warm welcome, Olivier. Good day to everyone, and thank you for joining us today. I'm thrilled to be part of the team, and I'm excited to embark on this journey with the Nyxoah team and with all our stakeholders.

I will provide some highlights from our P&L and our balance sheet. For further details, please refer to our earnings press release issued earlier today in our annual report. Revenue was EUR 852,000 for the full year ended December 31, 2021, compared to EUR 69,000 for the full year ended December 31, 2020. The increase in revenue was attributable to the company commercialization of the Genio system, mainly in Germany and with some contribution from Spain and Belgium. Revenue for the second half of 2021 was EUR 497,000, a 40% increase versus the first half of the year despite headwinds related to the Omicron variant during the fourth quarter, which included a moratorium on elective procedures in Germany.

Total cost of goods sold for the full year 2021 was EUR 303,000, with gross profit of EUR 549,000 representing a gross margin of 64.4%. While we're not providing any specific guidance on gross margin for 2022 or beyond, we do expect gross margin to improve over time in line with other neurostimulation companies, as we achieve greater commercial scale.

General and administrative expenses rose to EUR 11.1 million for the full year ended December 31, 2021, from EUR 7.5 million in 2020, due primarily to increased commercial effort in Germany and other European markets. We have also scaled up our corporate infrastructure and expect to continue adding headcount across the organization going forward. Research and development expenses increased substantially to EUR 2.4 million in 2021 from EUR 473,000 in 2020 after capitalization of EUR 3.4 million, driven by our efforts to develop the next generation of our Genio system.

Clinical expenses increased to EUR 2.7 million in 2021 from EUR 1.1 million in 2020 after capitalization of EUR 6.1 million. The increase was mainly due to: number one, the completion of the BETTER SLEEP trial implantations; second, the ongoing recruitment for the ELiSA trial; and third, the initiation and ramp-up of the DREAM IDE trial in the United States. This will remain a key investment focus for us in 2022 as we work to complete DREAM plants and manage patients follow ups. We also anticipate commencing our ACCCESS IDE trial for CCC later this year. We expect that R&D and clinical expense will represent roughly 2/3 of our operating expenses in 2022.

We realized a net loss of EUR 27.6 million for the full year ended December 31, 2021, compared to a net loss of EUR 12.2 million for the 12 months ended December 31, 2020. At the end of 2021, cash and cash equivalents totaled EUR 135.5 million compared to EUR 92.3 million in December 31, 2020. The increase in cash and cash equivalents was due primarily to net proceeds that we generated from our July 2021 initial public offering in the U.S., in which we sold 3,260,000 ordinary shares, including overallotment at a price of $30 per share. This resulted in total gross proceeds of EUR 97.8 million before deducting underwriting discounts and commissions and estimated operating expenses.

The increase in cash from IPO proceeds was offset by net cash flows used from operating expenses of EUR 25.3 million. Based on our current cash balance and burn rate expectations, we have ample liquidity to go to U.S. commercialization in 2024.

With that, I will turn the call back to Olivier.

Thank you, Loic. In closing, I would like to reiterate my excitement for where we stand today as a company. Our dedicated team has built an execution culture that produced numerous significant clinical, regulatory, commercial and financial accomplishments in 2021. And I hope this gives you confidence in our ability to continue to execute in '22 and beyond.

For '22, you can expect our full focus to remain on, first, completing the DREAM trial; next, commercial execution in Germany; and commencing our CCC IDE study in the U.S. We are also excited to begin holding quarterly conference calls in 2022, and we look forward to providing our Q1 update in May.

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) Our first question comes from Adam Maeder with Piper Sandler.

Great. Congrats on the progress last year. Maybe, just to start, we can talk about the U.S. pivotal trial, the DREAM study. Recognize some of the challenges that COVID-19 has presented and you're certainly not the only medical technology company to be impacted here. But maybe just talk about the level of confidence in delivering against the revised expectation being done with implants in Q2. What informs that confidence given, I think, the math implies you need to implant 82 patients in the second quarter? And then maybe, just talk a little bit more specifically about the trends you're seeing in the trial in recent weeks. I mean it sounds like you're pleased with the recent momentum, but I was hoping you could put a finer point on that. And then I have a follow-up or 2.

Sure. Thank you for the question, Adam. So today, as I already pointed it out, we are at 52 implants. So the calculation is correct that we need to do a little bit more than 80. What is giving us confidence is the fact that the large progress made on the enrollment with more than 430 patients enrolled. But I think more important is when we drill down one step further in this funnel, having over 100 patients that, in fact, already passed DISE, that passed the first PSG and that now are waiting for their baseline PSG.

As I mentioned, we calculate roughly 70%, but I think it can also be a little bit higher. It's a little bit specific, but 70% up to 75% of those that will end up in doing and getting an implant. So what we see today, enrollment what is in the funnel, what already has been done, we should be good to reach 134 implants.

Now, the other side that I would like to point out is that currently, we really have 16 U.S. sites fully up and running on doing implants. Now what the team did great is they started also finding and going after solutions in order to secure our time slots and also to collaborate with specialized sleep labs to have an acceleration in getting PSGs done where we have the patients that are waiting in the funnel. So if you combine all this, the focus on already locking our work time, getting more sleep labs to perform PSGs and having the patient base already in the funnel, passing the first screen out, where we lose them on DISE , on BMI, also on not being moderate, that gives us a lot of confidence that we will be able to close by the end Q2.

Okay. That's really helpful. And maybe, just to clarify, it sounds like in terms of baseline PSGs and securing OR time, it sounds like you have some visibility as we look ahead, and that kind of informs the confidence and expectation that you'll be able to complete implants in Q2. Am I thinking about that? Or did I hear that right, Olivier?

No, that is correct. So -- and when we look at the different centers that we are having, our team is, of course, in close and daily contact with them, and we also are introducing some dashboards on when we secure the work time, what patients will go into this funnel. So there is a concrete execution focus on getting them implanted.

Okay. Okay. Very helpful. And then for my next question, I wanted to ask just a little bit more broad strokes on the back half, commercial performance, back half '21 and then thus far, into 2022. Just curious to get more color on how that trajectory has looked. I think it would just be helpful to get some baseline for our models as we think about forecasting here in 2022. So any color there you can provide, Olivier, or Loic would be very appreciated.

So first, I would like to really point out that our commercial proof of concept, we have a full focus on Germany. So when we were talking about numbers, about implants, it's really focused on Germany, and that's also how we have defined our future success, by becoming market leader in the German market.

Now coming back second half of the year, more specifically Q4, we were really impacted by Omicron. And I am not -- I think I'm not the only one who's making that statement. I hate to use it as an excuse, but sometimes, when it's a fact, it's a fact. Now what we saw during this time is that the team really did a strong job in continuing, identifying and positioning our technology in new sites, and that will result that we will have up to 25 sites before summer this year. Today, we have 12. We will be doubling the number of sites in the coming 4 months. All those sites are identified and the conversations are ongoing, and we are setting them up to do successful Genio implant. That's the first thing.

The second thing is without disclosing really any implant rate or revenue, but we see a very strong traction in Q1. And as I mentioned, we are now aligning also during Q1, our quarterly earnings calls. So (inaudible) I will be more than happy to further update you with precise numbers on the Q1 activity. But we are really feeling confident and we're also seeing that specifically in Germany, again, the COVID days are really behind and things are returning back to normal. So that's the second thing.

The third thing is we significantly invested in digital marketing activities and then really fine-tuning and further filling the funnel of referral patients. So those are the 3 things we are doing. And I will -- we'll be very happy to come back to you Q1 and telling you the progress we've made with specific numbers.

Okay. Understood. We'll stay tuned there. And encouraging to hear, it sounds like Q1 is off to a good start, so I appreciate that commentary. And then maybe, just one last one for me, and I'll jump back into queue. But was hoping you could talk a little bit about the accounts that you're in today in Germany. Just any early learnings there, Olivier? How are clinicians utilizing Genio, how are they splitting -- are they splitting between devices? Are they picking one device over the other? I know it's relatively early still, but just curious about how your customers and physicians are utilizing the product at their respective practices.

No. First of all, what we hear back overall is that physicians are extremely pleased to have an alternative or to have a choice within hypoglossal nerve stimulation. So far, there was only one option they could propose to patients. And today, they have 2 options. And this is really something that we are hearing back as a great win, also to address more patients and some patients that maybe in the past would be lost for hypoglossal nerve stimulation. That's the one thing, having the option to choose.

Second, what we also are hearing back is by not having the battery implanted, it gives them also a lot of, how shall I say, a lot of convincing power with patients who are a little bit afraid of surgery. Here, we stay with a single incision procedure, 60-minutes, skin-to-skin time. It goes fast and patients that are afraid of surgery are more open also to accept hypoglossal nerve stimulation.

And then last, what we are hearing back is the scalable software platform that we are offering with patient application, with the opportunity to interact without seeing the patient physically. So I think those are the 3 major learnings. We are broadening the number of patients eligible to treat hypoglossal nerve stimulation by giving physicians a choice. We see that by making it less invasive, only one procedure, it helps also convincing patients that are a little bit afraid of surgery. And last, with a scalable technology platform, this is also -- and being able to monitor patients without seeing them physically, it's really a big win.

Our next call -- question comes from Jon Block with Stifel.

Great. Olivier, maybe the first one for you, and I'll start on DREAM as well. The 104 active screening, and then I think you said 70% active screening usually go to implants. And I want to focus there for a second. Is there any color, thinking about like the timing of those in active screening to get to implant where then the 12-month clock starts? Is that a 1-month process, a 3-month process, just as many details that you can give. Because that's a big number, the 104, at the high percentage, the 70%. But maybe, if you can talk to the timeline that usually accompanies that process would be very helpful.

Jon, this is really an excellent question. And to answer this, first, I have to say this is really site-specific. So when we talk -- when we look at some sites, it's a question of a couple of weeks to push them through where in other sites, it's a question of a couple of months to push them through. But on average, we are seeing that in order to do this, we are talking about 5 to 6 weeks. So after doing the baseline PSG to the implant, it's 5 to 6 weeks on average. But no, as I mentioned before, of course, the challenge of our team and the focus of our team is to shorten those push-through timelines to a maximum and to also incorporate the learnings from sites that are doing this in a couple of weeks. But on average, 5 to 6, 5 to 6 weeks, the fastest one. A couple of weeks, the slowest one, they go all the way up to 2 months.

Okay. That's very helpful. So maybe, to your point, the 5 to 6 weeks, it gives you the high conviction that you're across the goal line, so to say, by the end of the second quarter when you extrapolate that back to the 104 or the 70% of the 104. Got it.

And then maybe just to pivot a little bit. I believe, and I might be mistaken, but I believe your filings calls out 4 SAEs in DREAM. And I think, one, is that correct? And two, much more importantly, are any of those device-related or any color that you're able to provide on those SAEs? And I ask because I want to be clear, per Inspire STAR study, we know that SAEs are not uncommon at all, but they're, call it, a lot less common for device related. So maybe, if you could comment on that, the number and then any color you can provide on those would be helpful.

No, it's correct. So having SAEs is not uncommon, and I think it's -- it's something that also surgeons and companies are learning from. In our study, we see that there is no higher number of SAEs than you would expect with other studies. So the 4 that you are referring to, at this moment, there are still, I think -- and let me try to be precise. I think there are still 2 that need to be further determined whether it be device-related or procedure related.

So far, what we saw was not device related, the 2 that are still under examination. It will become -- it will become more clear going forward. But I also would like to go back to the BETTER SLEEP study and even to our BLAST OSA when it comes to SAEs and pointing out that also there, we saw nothing abnormal, to say it like this. We had a low number, most of them resolved after time or related to the procedure. And if you put this into perspective with other studies, it was completely comparable. So we expect no difference at all in the DREAM study.

Okay. And I'm sorry, just for clarity purposes. Of the 4 that we know of, 2 have been defined as not device-related and 2 are so called, TBD, to be determined?

That is correct.

Okay. Great. And last question, just to go over to the commercial side of things. Maybe just -- well, you've got the expanded indication for CCC or the [construction] taken away and it's a big move and you can treat a whole other subset of patients and you can do it without the DISE. Just at a high level, if you can talk to what those active centers, those 12 centers are telling you, how maybe the feedback has changed since you've been able to treat that whole other subset of patients and how you think you can build upon that momentum into '22 and beyond?

So first, it was great to be able to talk and interact with over 50 implant surgeons joining the World Sleep Congress in Rome and also talking about this question and [and also] take till February before we had the first CCC patients implanted commercially in Germany, it has simply to do with the fact that we had to wait for the IFU to be adaptive and also to give some time to talk and position this with physicians.

I think we can go to the next line because I thought Jon was saying it was his last question.

Okay. Our next question comes from Laura Roba with Degroof Petercam.

Yes. Thank you for the presentation. One question from my side regarding a bit the OpEx trend going forward. You mentioned in the press release this morning further investments to be made in headcount ahead of the U.S. commercial launch. Could you provide more granularity on that in terms of timing, for example?

I will give this one to our CFO.

Yes. Absolutely. So in 2022, this year, we expect to increase headcount, mainly in clinical and R&D. We are starting with precommercialization in U.S., but fairly lightly this year, as you can imagine. And we would accelerate only when we would have more visibility on the DREAM data and the 12 months, which is planned mid-2023. So you can expect OpEx increase for the next 12 months. And then based on DREAM data, we will see what level of investment is required to make a successful launch in U.S. in the second half of 2023. That's how we're looking at this.

Okay. And then another question regarding the number of active sites. So am I wrong here? Because I think that in H1, you already announced 12 active sites. Does it mean that there were no new active sites in H2?

So I think you are referring to Germany. And that is -- yes. No, and that is correct. That is correct, Roba. So we opened the first 12 sites. So we focused on what we call Tier 1 or high-volume sites. In the second half, we identified further, but then the Omicron variant came in, in Q4, and we really dedicated our focus, in fact, on the ones that were activated. And that's also why you will be seeing, but now, you make me say things that I want to say for Q1, but that's why you will also see the acceleration in the first quarter in opening more new sites with active in Germany.

Thank you. And we have a question from Ross Osborn with Cantor Fitzgerald.

Congrats on the progress. So I guess, just a couple of questions on cost. I know you haven't set formal gross margin guidance, but could you walk through some of the headwinds and tailwinds you saw during the second half of 2021 and just how that's progressing year-to-date and how you think that's going to shape out for the rest of the year?

Yes, we have a gross margin in '22 of 64.4 million -- sorry, 64.4%. This was broadly in line with H1. We are not providing guidance for 2020. We are not providing guidance for 2022. But as we reach greater scale in terms of volumes, basically, we expect the gross margin to increase substantially and be in line with the other neurostimulation companies. So progressively, '22, '23, it will increase gradually as our volume increases.

Okay. And then I guess -- sorry, go ahead.

No, sorry, I want -- I may just add something to this one as well. If you look at our technology, we do not have an implantable pulse generator, which is the highest cost if you look at the total implant. Also there, we are really feeling confident that we are aiming and we will be ending up more in the second, let's say, 85% plus gross margins. So that's where our aim is in going forward, in line, of course, with -- goes hand in hand with the volume increase.

Okay. Great. That's helpful. And then I guess just on the OpEx. Can you just look through some of maybe the marketing activities that you currently have going on and maybe any new ones that are going to come out in 2022? And then lastly, can we just talk about maybe some rep hires planned for this year?

Yes. So in terms of marketing cost, this is mainly related to our activities in Europe, specifically in Germany. So we have our team of 13 heads in Germany, and we have digital marketing -- sorry, directly visiting customers, and we are digital marketing as well. So we will be expanding slightly in other countries in Europe, but this is the majority of the team we have in head count and in Europe for the time being.

Maybe, in addition to this, do we plan to further hire new headcount. This goes hand-in-hand with the market access or the reimbursement in countries. As I mentioned before, we are waiting Belgium, Netherlands, Nordic countries. We saw that we also made our first hospital budget securitization in Spain. So important for Nyxoah is that we have a dedicated sales force. And the moment we have a good view on obtaining reimbursement in a specific country, of course, we start hiring and we will further expand.

So complete, yes, you can expect, let's say, 5 to 6 additional headcounts in Europe. And what Loic already touched on also in the pre-commercialization for the U.S., there, we want to make sure that we're also making the needed investment in head count, like, for example, a market access director in the U.S. preparing and already preparing the landscape for future reimbursement in the U.S. as well.

Thank you. And that's all the questions I have. I would like to turn it back to Olivier Taelman for closing remarks.

Yes. Thank you. And the closing remarks will be very short.

So first of all, thank you for joining us again. Thanks for the great questions, and thank you very much, and looking forward to update you again in the near future, and the near future will be our Q1 earning call that we will be hosting on May 10. So within 6 weeks, if I'm not mistaken.

Thank you, and enjoy the rest of the day.

This concludes today's conference call. Thank you for participating. You may now disconnect.