Aroa Biosurgery Limited (ARX) Earnings Call Transcript & Summary

Welcome to Aroa Biosurgery Investor Update on the findings of the recently published MASTRR interim analysis. Joining us today are Brian Ward, CEO and Founder of AROA, Dr. Barnaby May our Chief Scientific Officer; and joining from the U.S. surgeon and MASTRR study here, Dr. Tracy Short. Please submit any questions using the Q&A function. If you'd prefer to ask a question live, you may use the raise hand function. Please note that this session is being recorded, and I will now hand over to Brian to begin.

Welcome. Thanks for joining today, and it's absolute pleasure to be here and present the interim analysis of our MASTRR study. So we've got a great lineup this morning. I'm going to provide a little bit of introduction at the beginning. And then Barnaby May is going to provide an overview and some background of the master registry. We're then going to move on to Dr. Short Dr. Short will review the analysis of the interim of the of the study and then take some questions. And then I'll wrap up in terms of what was being for us commercially. So I'm delighted to have you here, and I hope this is an informative session. is moving forward. So just in terms of these types of products, they have an established history of use in surgery. If you look across the field, there's a wide range of different products. And I think surgeons are not sure the extent to which these technologies are proven. And so at AROA, we've taken clinical evidence very seriously. And we believe having high-quality clinical evidence is absolutely imperative to adoption of these products. So for many of these products, there's not high-quality, large-scale clinical data. There's limited evidence in terms of their -- whether each product works in a particular procedure and the ability of these products to work across a wide range of procedures. There's also some clinical conditions that are very challenging. And so in more straightforward situations, these products may be effective but may be less effective in more challenging situations. So we believe there's a great opportunity to provide a lot better evidence and that evidence of surgeons' confidence about use. Also, if you can do that, then there's recognition of the value that they can bring both to patients and to hospitals. And if you can -- if you show that, then you uncover the possibility to use these products more extensively in a wider range of cases. So we've invested in clinical evidence. And I think today, we're going to review the outcomes of the large master registry, which we've been running. Next slide, please. So I'd like to introduce Dr. Barnaby May. Barnaby is our Chef side empiric. Burnaby has a PhD from the University of Canterbury. He's been with AROA almost since the beginning. He did postdoc at UCSF in San Francisco, spent 8 years there and then came back and joined our role. So Barnaby has been the instigator of this MASTRR study. It's been a baby and he's a fantastic job at getting this registry up and running. And we're really starting to see that this is delivering significant value for us. So Barnaby, I'll hand it over to you to provide an overview.

Yes. Cheers, Brian. And look, I'll be brief. If you want to advance the slide, please, Brian. I'll be brief, the intent of me jumping on the line, just to give a bit more context, particularly to the intent of the MASTRR register in terms of study design. And just sort of I suppose, set the scene for the most recent publication from this large database of clinical outcomes using the Myriad products. So sort of going into this, winding back the clock about 2019, we wanted to embark and develop clinical evidence to support safety and efficacy of our Myriad family of products. What we wanted to do in terms of study design was set up a framework where we could collect patient outcomes from reconstructive procedures where Myriad had been used and build up a data set across the spectrum of surgical procedures where we see our products being used. That would allow us to do individual subgroup analyses across sort of the spectrum of surgical subspecialties where we see the Myriad products being used. If you wouldn't mind, Brian, just advancing, thank you. Yes. So in terms of study design, we've taken a little bit of a different approach with the MASTRR register study in terms of study design. So if we think most typically with prospective studies, so prospective single-arm or. In terms of the study design, most typically what will happen with those types of studies as you end up using a very narrow inclusion/exclusion criteria. The reason being that invariably, there's a comparative study. So by narrowing the scope of your inclusion/exclusion criteria, you can reduce the heterogeneity in the patient population that gets enrolled into these types of studies. So that's fantastic in terms of the approach where you are comparing outcomes between, for instance, 2 different interventions. However, the drawback of that approach is that you end up excluding all of those patients and all of those defects that would otherwise be managed with your particular device. So for example, if we think about our typical patient population, where the Myriad products get used invariably, , these are complex patients. So for example, diabetes, vascular disease, the patients may be on immune suppressants. Those types of patients would most typically be excluded from a traditional prospective study design. So what we've done with -- in setting up the Myriad registry study is that we've ended up with a much more real-world snapshot of patient outcomes and particularly in the context of today's presentation safety outcomes with our devices. Next slide, please. So just a snapshot of where we are to date with the registry study. So this is -- obviously, this is an ongoing study. We have an approval to include up to 15 U.S. sites and up to 800 patients. And as you'll see from this slide, we've got a wide range of different sites that are utilizing the Myriad products and then enrolling and capturing patient data from those surgical interventions. The interim analysis that was recently published, and Dr. Short will talk about shortly, was sort of a halfway mark. And what we wanted to do with this particular study was present safety outcomes across the wide range of different surgical procedures where we see our products being utilized. Next slide, please. So the other great thing about the Myriad Registry is that it's been an amazing resource for us to produce high-quality scientific publications assessing the safety and efficacy of our devices across a range of surgical procedures where we see the Myriad products being utilized. So the most recent publication is the seventh in the series of publications that have come out of the MASTRR registery data set. Next slide, please. So a bit of a snapshot, what have we learned to date. So the first publication out of this study was the publication looking at. So lower extremity complex reconstruction that was 130 complex defects managed with the Myriad products. We've also published data from the Ohio State University Burn Center looking at the use of Myriad to reconstruct deep partial fitness burns. We've done a publication from 4 different Level 1 centers looking at the management and reconstruction of traumatic injuries with our Myriad products. And we've also done a really interesting comparative study looking at the differences between using -- sorry, the differences between outcomes disease reconstruction either with or without the application of Myriad devices and showing in that study that we could significantly reduce postoperative complications with the more products we used. Next slide, please. So without further ado, the reason we've all joined the call this morning is to hear from Dr. Short and an overview of the most recent publication from the Myriad registry data set. Just by way of introduction, Dr. Short is a U.S.-based burn surgeon with over a decade's experience in reconstruction reconstructive surgery, burn surgery and also a focus on atypical wounds, including. Dr. Short received a medical degree from the University of Texas Health Center and then completed a residency at the University of Pittsburgh Medical Center. Dr. Short undertook Burn Surgery Fellowship at the University of North Carolina. And several years ago, we managed to recruit Dr. Short to serve for the master registry study. And in that role, Dr. Short provides independent sort of oversight and guidance to the study execution. So without further ado, I'll pass over to you, Dr. Short.

Thank you so much for the introduction, and good morning to those of you all who are on. We can go to the next slide. I'm super excited to be able to present the data as a user of the product and then being able to step into the role of study chair, it has been interesting to see the progression and the consistency to which people have been getting results in the various forms that they choose to utilize it in. So as Dr. May had instructed, I'm going to present our interim results from the MASTRR registry, which is going to look at what the safety measures outcomes have been across 474 soft tissue defects. We can go to the next slide. As he mentioned, this is a compilation of about 411 patients or subjects as you'll see on the top slide, representing 474 defects. Of this slide, I'm going to go through the various numbers, but as I go to each one, what I wanted to reference is the height of the benefit of a registry. So the fact that we have 10 sites participating in the median BMI of 28. So basically, these were not small patients overall. 35% of them had diabetes, 30% had vascular disease and 91% would not qualify to have operations at a surgery center. That's what an ASA grade 2 or higher means. So we're looking at, as you mentioned, with a registry, you're looking at a cross-section of all of the patients or subjects that it could be utilized on not simply excluding the healthy ones. So now when we look at the defect. So as I stated, we had 474 defects. Of those 474, almost 60% of them were over a month old. So we're not talking new loans, which are usually easy to resolve. We're talking wounds that had been present for at least 30 days. The 88% of them had a CDC grade 2 or higher, 11% had exposed structures, meaning tendon, bone, hardware, something along a vascular bundle. So these were complex wounds, 15% had osteomyelitis, meaning there was a bone infection present in the defect at the time of application and the mean area covered in the Myriad was 24 centimeters squared. Next slide. One of the things that both the registry indicates and my personal experience indicates is that median application of the product is one, needed to get a wound closed. Of the utilization in the registry, 65% were for dermal reconstruction, meaning it's applied topically to help regenerate or reconstruct the dermis. In 9.7%, it was utilized to help augment fistula and fistula repair. And then 25%, it was used as an implant. If we further break down the defects, 22% or 22.6%, excuse me, represented diabetic foot ulcers, 16.5% were traumatic 11.2% was an ostomy takedown, meaning we're taking down a colonic ostomy and ileostomy and repairing that fascial defect, 10.8% was for pilonidal disease. And of note, for those of you who may be on the call that are clinical we're talking about a wound that's not known for being clean. So in 10.8%, that represented the pilot idle cases, 9.7% were for pressure injury and 9.7% were for fistulas. Next slide. So the -- I'm going to do this slide kind of preface what's going to come next. So one of the things about any safety analysis is we standardize what an adverse event is. And so anytime someone is enrolled in a study, any adverse event, whether it is related or unrelated to the intervention still has to be reported. This is across the board. And so what that allows for you to do is then kind of categorize what was the severity of the adverse event and so that's classified from 1 being mild to 5 being death. And then it also forces the participant to look at or the clinician to look at causality. And so an adverse event may be unrelated to utilization of a product. It may be probable, possible, casual. So you're kind of looking at what was the likelihood that this event was related to utilization of the Myriad and then what was the likelihood that this was not related. So that's what this next set of slides will be. Okay. Next slide. So if you look at a device definitively device-related adverse events, there were 0 which, from a product utilization in a complex wound bed in complex patients says a lot. And then of 474 defects, there was one probable device related, meaning we can't say it's not, but we also couldn't say it was definitively related. So we're talking about one, and then this represented a median follow-up period of 27 weeks. So that also by having a registry set up we're able to get follow-up periods that we are typically able to sustain consistently in your traditional RCT. We usually lose people to follow up. But within the MASTRR registry, we were able to get a 27.1% follow-up period week-wise. So as you can see, though there may have been a reported AE that may have caused death, it was not related to product utilization. Next slide. So if we look at the adverse events or AEs, my apologies, I'll use those interchangeably. But if we look at the AEs that were index defect related, it boiled down to deep tissue infection, superficial infection and 0% at graft loss. So again, we're not looking at a product-related problem. So if I put a product in a room that is infected and then I grow a culture that says it's infected, that is still reportable, but it does not mean that it is related to the product. So we're looking at 32% were just incidental AEs, meaning they were adverse events that had nothing to even do potentially with a wound. -- but they're still reportable. And then 11.9% had defect-related AEs, but they weren't in defects that had utilization of the Myriad. Next slide. So this can be a little busy. We're going to kind of break this down and go sort of left to right across the screen. So the blue box simply indicates that there is the 474 total pool of subjects that had utilized wound defects that had utilized the Myriad product within the registry. The bigger the band indicates the higher of the prevalence. So that next column is what category of challenge was being addressed, the largest being the dermal reconstruction. Remember, I mentioned that a few slides back, then came your implantation and then came fistula augmentation. Then in this middle column, it breaks down each of those segments into what type of dermal reconstruction. And so then that's where it breaks down, you'll see at the top into burn wounds, diabetic foot ulcers. If you look at your next biggest category, it's the red with the sinus, then it gets down into your traumatic loons, then it gets down into your ostomy takedowns. Then as we move forward to the end, which is where we're talking about from a safety standpoint, you're looking at your index defects they're all less than 5%. And remember, the only 1 that was probable landed in the allergic reaction category. But these are all very low percentages. You could say, well, you've got a 3.2% for, but here's what I want to let you know about pilot idle disease. -- those wounds often be his with or without product. It's just the nature of the location, the closure and the tension that's present. So having in the grand scheme of things. One is not definitive and two, it's innate with the disease process. Next slide. So how does the deep tissue infection rate for Myriad compare? If we go kind of product by product. At the top, you'll have our Myriad product within the MASTRR registry sample size being 474. Remember, our detissue rate of infection was 0.7%. And -- so what I want you to kind of look at is there's not another study that comes close to having a low deep tissue infection rate when we're all looking at similar wound types. -- when it comes to the various wounds, burns, if you're throwing in, it doesn't come close. Right now, we're looking at less than 1, and the next closest rate is close to 17. Next slide. Right. as can we open it up for some questions and answers.

So Sarah, I'll pass back to you to pose the questions.

Yes, absolutely. So if you have any questions, please just to use the Q&A function. If you prefer, you can raise your hand to ask the question in person. So first of all, Dr. Short, how important is this type of evidence in influence and clinician decisions on using a product?

So for me, from a clinical standpoint, 1 of the things when you're looking at your traditional RCTs, sort of how Dr. May had illustrated in his slides, the gold standard that we talk about is a traditional randomized controlled trial. But one of the challenges is most of the people that keep us scratching our heads and wondering how we're going to get wounds closed would never qualify to be put in a randomized controlled trial, partly because you're worried about outcomes. They don't fit the inclusion criteria. You don't want to put anything that may be coming in infected while you're trialing a product because it would negatively skewed things. So one of the things that I think has been amazing in the design is that simple utilization puts you into the study and into the data. So now it allows me to say, okay, this is real world. I can see that you've had osteo, I can see that you've had tendon and bone exposed, and you got this kind of outcome in this clinical scenario. So I think it makes it more applicable to my actual clinical decision-making. Because at the end of the day, when I'm trying to figure out what's going to be best for the patient, I need to be able to know that it's going to work in this patient population and not only in the most strict and pristine criteria. So I think it makes the product utilization more low-hanging fruit and easier to trust the outcomes that it would work in a particular patient population.

Excellent. Very full answer. So we've now got Shane Storey who would like to ask this question live Life, so Shane 1 of our ASX health care analyst. So Shane, I'm just going to put you off mute, and you can ask your question live. SP-6 Can you hear me?

Yes. Just a question for Dr. Schar, please. Of the 119 cases where the device was implanted, could you talk to the major anatomical applications there?

Okay. I lost you. I don't know if I'm the only one, but you kind of cut out.

Sorry, I'll try again. So it was a question relating to the 119 implant cases. Just maybe some commentary on the major anatomical applications where that was done, please?

Right. So that was in like a circumstance in which the product was laid as an overlay or an underlay, meaning we would slow down the myriad and then do a closure over. And so then in that case, it would be utilized as an implant.

In many of the studies, I noticed, and even the studies that have been broken out of master I've noticed across the whole group that the number of applications here is really about 1. So I guess my question then is typically, like comparing to what would have been used if you didn't have Myriad, I mean how many applications would typically be seen in other products -- and then another question -- so my final part of that question then is, does the -- like in many cases, can you see that as being like a 1 and done and how many subsequent procedures might Myriad have saved.

Right. So the interesting part is going to be in which wound category as far as what's traditional. So for example, in the classic diabetic foot ulcer model, what we have seen happen out of several wound care clinics is these patients would be getting product applied on a weekly basis, then maybe after a month or so, they would have a big debridement and then another product would be placed. So in that case, we may be looking at like double-digit application of product before something was utilized to actually augment the wound. If we look at a burn patient or your complex wounds. Oftentimes, you may be looking at a procedure that you like it needs to be clean, right? Because many of the products that were commonly used and preferred, the wound bed had to be pristine for utilization because it was prone to infection. So if you look at that product, then that means you won trip to the operating room, you had something that was used to temporize. Then you would take the patient back to the operating room once was clean and then you would put a competitor product on. That product requires pristine or close to sterile technique and changing dressings because it is highly prone to infection. And once it's infected, that's it. right? Now you're back to debridement and putting new product down. With the ultimate goal then you've got a wound bed that is vascular with good granulation tissue it's already done the angiogenic process, and now you do a skin graft on top. That was kind of the traditional the traditional model. It was not my favorite model because it required so much handholding in order to get the patient from start to finish. And so one of the things that I think Myriad encompasses is that, one, you can put it in without being pristine, right? You put it over structures, you can put it in with product. Obviously, you're going to debride the wound bed, but it's not like I need to be culture negative before I say, okay, now I'm going to apply the Myriad. And then it can also be changed like I don't have to have white glove service and sterile technique every dressing change, hoping and praying that it's going to last from week to week in between dressing changes. So it does give some -- an ability to manage a lot of things as an outpatient. It gives things the ability to do a lot of salvage even if it may not be the most pristine of wound bed situations. And I think the last part of your question was how many procedures does this ultimately someone from needing to undergo to get a wound closed. So if we're looking at that classic model of debride, temporize, debride, place product, hope product works and then come back and graft, you could be at a minimum saving that one procedure where you're not needing to do the whole temporize to product. But if we're speaking in the DFU space, we're looking at you're saving a month's worth of procedures in order to get wounds closed. And okay, may I do one answer. One of the things that this kind of highlights, and I'm not certain where everyone on the call is coming from. But like here in the U.S., there's been a recent change in how wounds are reimbursed. And from a standpoint of what can I do to get a wound healed that now will be reimbursable from an insurance standpoint and would still allow for the ability for the patient to not maybe have to come in as often or it would be amenable to having home care having a product where you can put it down with very low needs to reapply and very low infection rates is definitely favorable.

Excellent point. Okay. Now we do have a few more questions that have come through. Andrew Grace has asked as noted that the infection rate at 0.7% is remarkable. We agree, Andrew. So what do you attribute the low rate to?

So I think it's a combination. I think the fact that it is an actual dermal structure. I think the fact that it has come from a space that was not pristine, right? It comes from stomach. So we're not talking about an area that was sterile. I think that may contribute to its robustness. I don't know, Barnaby, if that has actually been studied as to why it's so infection-resistant or not infection prone. I do know if you look at just the texture and consistencies, it's more like a dermis than, say, one of the competitors that's highly known for becoming infected. It does not look like or feel like a strong dermal tissue. And so that may be 1 of the differences. But I'll defer the potential details to our scientists.

Thanks, Dr. Shore. Maybe just one other comment from me. It's a great question, and we do get this question a lot from clinicians from users of our technology. The way I sort of think about it is that the most likely the major cause of this amazing low infection rate that we're seeing is the fact that we can revascularize our Myriad devices so quickly, right. Relative to some of the older style technologies in the sort of bioscaffold space. Some of those devices, their rate of cellular infiltration and revascularization is relatively slow. So you're looking sort of 4 to 8 weeks, right? And obviously, during that period, while that graft is being revascularized it is at risk of bacterial contamination and the infection developing just because you don't have the blood supply there to protect the graft from infection, right? When we look at the vascularization rates of the Myriad devices, typically, it's a lot shorter. So you can see the graph revascularized in a week in some instances, right? So you're shortening that time it takes for the body's own immune defenses to be delivered to that graft. And I think that's probably 1 of the key drivers. So the low infection rates that we're seeing.

Excellent. Okay. So let's move on to some more questions. So we have a question here from Shane Storey. Can you discuss the economic benefits of the health care systems by changing to using the product?

Is that to me?

Yes, from your perspective, that would be great.

So from an economic standpoint, especially with the wound changes that have happened here lately I think it's nothing but favorable. So if you look at what products are now being reimbursed for, the ability to prove that the product works by having wound closure within a specified period of time, and then this sort of need to reapply not existing with the product, I think that definitely makes it favorable. So if you look at, I think, the latest that you have to be able to show that you can get the wounds closed within what was it, 31 days, 42 days. It's a random number. Like I don't know where the number came from. But in a wound application standpoint, it would fit the bill. And then from a reimbursement standpoint, with a lot of our systems are going to value-based, so if you look at, okay, if we're putting X amount towards wound closure, if I can get the wound closed with a single application, then even if that product was slightly more, it would still have more value because I can put the product on and they can discharge. So then I'm saving in hospital days. So in the weird way that American insurance and reimbursement works, it's a win, whether it's an inpatient or outpatient because there were multiple instances where we can put a product in and the whole process, the patient didn't require an inpatient stay. So that decreases costs, especially if they don't have the best payers, -- so I mean, I think it's favorable all around.

Excellent. Now we also have Shane Storey again, who would like to ask us question live. So I will let Shane to ask that question.