Imagin Medical Inc. (IME) Earnings Call Transcript & Summary

Good day, ladies and gentlemen, and welcome to the Imagin Medical Fiscal 2020 First Quarter Results Investor Conference Call. [Operator Instructions] At this time, it is my pleasure to turn the floor over to your host for today, Mr. Stephen Kilmer with Investor Relations. Please go ahead.

Thank you, Jess. Good afternoon, everyone, and thank you for joining us. Before we begin, I would like to remind you that today's call may contain forward-looking information that represents our expectations as of today and are subject to change. Forward-looking statements can be identified by words such as expects, will, and other similar expressions, which reflect the company's current expectations regarding future events. The forward-looking statements involve risks and uncertainties that could cause the company's actual results and events to differ materially from those projected on the call. Investors should consult the company's ongoing quarterly filings and annual reports for additional information on risks and uncertainties relating to these forward-looking statements. I'd like to caution you not to rely on these forward-looking statements. The company disclaims any obligation to update these forward-looking statements, except as required by law. On the call today representing Imagin Medical are Jim Hutchens, our President and Chief Executive Officer; and John Vacha, our Chief Financial Officer. With that said, I will now turn the call over to Jim.

Thank you, Steve. Good afternoon, everyone, and I appreciate you taking the time to join us today for our first quarter 2020 conference call. Today in our more usual format. We'll provide a corporate update, then John, our CFO, will discuss the first quarter financial results, and we'll close with our upcoming milestones, and then we'll open up the call to questions. Since our last call at the end of 2019, which was only about 8 weeks ago, we continue to make progress with the i/Blue Imaging System's development. What we'll do is discuss just an array of some of the testing and give you a feel for the complexity of how we drive this product forward and all the tests and the documentation that we need to work on. Our design partner Optel, an independent laboratories, have completed preliminary radio frequency, emissions, mechanical and electrical safety testing on the i/Blue System control unit. Additionally, preliminary testing is underway, including analytical design calculations and measurements of all of the subcomponent parts and the physical characteristics of the products. Now the data from independent lab tests is being combined with data from our internal testing, engineering calculations, component suppliers and competitive device analysis, which costs us money to bring in all of the competitive devices, for the verification report as part of our FDA submission. Also, we're preparing our first pilot production runs, and the subset of these units from the pilot management, which is critically important, reprocessing, critically important integrity, and this data will also included into submission to the FDA. Let me provide just a quick summary of the development milestones. Many of you know, the many initial working units were presented to 10 of the leading urologists, primarily from the United States at the American Urologic Meeting, last May, in Chicago. And we had just overwhelmingly positive feedbacks -- feedback. Units that were -- we had incorporated the urologist feedback has been completed, and we're -- and are being tested to meet user-friendly, cost-effective performance and design specification goals. So we're excited about that. 5 additional functional products have been built and all necessary documentation to support these products, as I just mentioned to you, is underway. Discussions -- and I'd like to update you on the FDA. Discussions with the FDA, as you know, are ongoing, and we'll find -- and really it helped to -- helped us to finalize our regulatory plan. As we mentioned before, we've had 2 meetings with the FDA that has helped define this regulatory path that we're on. Now let me give you an update. The FDA approval is contingent on safety and effectiveness. That's what it's all about. Imagin will be using 2 already FDA-approved product as part of our final submission. This includes Photocure's imaging agent system, and a system that already uses the blue light. This should help us with the FDA. 3 different groups at the FDA are relative to Imagin's submission. That's the pharmaceutical group, the medical device group and the combinations product group. Now we've worked our way through the system. And now note, we're going to be working with the combination products group. And for those of you who have worked with the FDA, you know this is significant that we know, who we're dealing with in this agency. Imagin's key question centers around the number of clinical studies, potentially, if any, that will need to be conducted. And the number of these clinicals will help define the timing of when the i/Blue System will be available. Now to support our product programs. We're going to also be developing a full Good Manufacturing Practices, or GMP, compliant regulatory system. And now -- I'll now turn the call over to John to review our first quarter 2020 fiscal results. John?

Thank you, Jim. Today, we will discuss our financial results for the first fiscal quarter of 2020, which ended on December 31, 2019. First, I'd like to review our balance sheet. Our Q1 2020 ending cash position was slightly above $1 million versus $2.3 million in the previous quarter. The net change in our cash position was a reduction of $1.2 million, which was driven entirely by our net loss for the quarter. We will cover these expenses, which make up this $1.2 million when we discuss the Q1 2020 P&L statement. As everyone knows, we are a pre-revenue company, so we have no income to offset these expenses. Also on the balance sheet, the intangible of note, the intangible asset balance of $139,000 represents the capitalized fees associated with the foundational licenses, we exclusively hold from Lawrence Livermore Laboratory. With the only change from the previous quarter, being the depreciation of the capitalized license fees paid, this is on account of treatment that we take care of every quarter. For the liability section of the balance sheet, our accounts payable balance of $373,000 is $9,000 lower than the prior quarter and consistent primarily of product development, engineering, legal fees from our regulatory council and FDA consulting work. There were no unusual transactions in accounts payable outside of the normal course of business. Lastly, shareholders' equity decreased by $1.3 million compared to the prior quarter. Moving onto the consolidated statement of loss and comprehensive loss or P&L, here are the selected financial highlights. Total operating expenses for the first fiscal quarter of 2020 were $1.2 million compared with $1 million for the same quarter in 2019. And these consisted primarily, again, of product development and G&A expenses. Under the guides of product development, that includes our engineering, FDA and legal work, as the majority of our expenses are associated with product development, as would be expected for a company at this stage. Total product development expenses for the first quarter of fiscal year -- to fiscal 2020 were $798,000 compared with $669,000 in the same quarter in 2019. The increase in product development expenses is primarily attributable to R&D efforts, which included engineering, development, design, FDA and regulatory expenses. G&A expenses for the first quarter of fiscal 2020 were $325,000 compared with $546,000 for the same quarter in 2019. The decrease in G&A expenses was primarily attributable to decreases in accounting and management fees. Again, the net loss for the 3 months ended December 31, 2019, was $1.2 million or $0.01 loss per common share compared to a net loss of $1 million or $0.01 loss per common share for the 3 months ended December 31, 2018. Of note, subsequent to quarter-end, we completed a non-brokered private placement issuing 38 million shares via units at $0.05 per unit for a gross proceeds of $1.9 million and that concludes the summary of the selected financial highlights. And with that, I'll turn the call back over to Jim for closing remarks. Jim?