Milestone Scientific Inc. (MLSS) Earnings Call Transcript & Summary

Hello, and welcome to today's webinar with Milestone Scientific, ticker symbol MLSS on the NYSE American. Presenting today will be interim CEO, Leonard Osser. And following the presentation, we will be opening up the line for Q&A session. If you do have a question, you can click the question button at any time and type those in even during the presentation, we'll get to those in the order that they're received. Again, this is a Milestone Scientific. Presenting for the company is interim CEO, Leonard Osser.

Hello. Thanks for joining me today. My name is Leonard Osser, I am the interim CEO of Milestone Scientific, MLSS, we are trading on the New York American market. Our presentation today will take about 15 minutes. Our company is Milestone Scientific. Please review the safe harbor. Milestone Scientific is the world leader and the inventor of the space of computerized injections. We can deliver any drug to any part of the body. Our competitor is the hypodermic syringe, which was invented in 1860. Our first foray into medical will be the epidural injection and the reason for that is the high cost and learning curve of training residents to do the epidural in labor and delivery. In labor and delivery, we have only one option for pain management and that is the epidural injection. The hypodermic syringe, as you may know, was invented in the 1860s, and the present standard of care utilizing the hypodermic syringe was developed in 1921. So that's our competitor. The training cycle takes about 90 injections in vivo in live patients, giving birth, in labor and takes about 2 years. The problem with the training is that the attending or professor sitting next to the student has no idea where the tip of the needle is. So the procedure is called the loss of pressure technique. What that means is that a syringe, loaded with saline solution -- sterilized water, is used to find the epidural space, which is prior to the spinal column. So as the needle is advanced, the student is pressing on the plunger, waiting to feel a loss of pressure against the thumb. And that loss of pressure may indicate that they're in the epidural space because the epidural space has a lower pressure signature than the surrounding tissue. The problem is that often, you will engage a fat pad, a different tissue. You believe you're in the space and you're not -- you remove the syringe, leaving the needle in the patient's back. You then put on another syringe with the drug, put that drug in and you wait for approximately 20 minutes for pain relief. If you inject it too soon, the patient receives no pain relief. So that's one of the problems with an epidural. And the technology being used today, our competitor you see here on the screen, was invented quite a while ago. The new standard of care using our instrument is a razor-razorblade model. The significant problem with our competitor is if you do not realize, using the loss of pressure technique in the syringe that you're in the epidural space, you go beyond the epidural space and the needle will touch the fine membrane that surrounds a spinal cord. Once the needle touches that membrane, what happens is you have leakage of cerebral liquid. That leakage will cause morbidity. The morbidity could be up to 6 weeks of migraine headache, severe migraine headaches. It could be a transient paralysis from the point of injection down. It could be permanent paralysis, and there's other morbidity associated with that. So the morbidity is very significant. It's important to get the injection right. Since doing our original study, we have approximately 9 studies that have been published in major journals throughout the world. We have had 100% success with a couple of thousand of injections locating the epidural space. So we have listened to providers. We have made certain changes with our instrument to make it easier for them to use, to make it faster for them to use and we have a team that is representing us throughout the world. We had Professor Giorgio Capogna in Europe, who is one of our key opinion leaders. Dr. Capogna just finished the study. All of these studies are available on our website. Dr. Mark Hochman is our full-time clinical director. He is the world authority on computerized injections, and he's been with us for over 20 years. He is also our resident inventor. We have a sales team as well, naturally. We are presently piloting in a number of hospitals in the United States. We are presently selling in Europe. Unfortunately, given the coronavirus at this point, salespeople are not allowed in hospitals in the United States. On the plus side, obviously, giving birth is not elective. So that has not changed our marketplace. What has changed considerably is another use of our product with a different disposable, and that product is called CathCheck. When you place a catheter anywhere in the body, it is imperative that it is in the correct location. Having it in the correct location means the drug will be deposited where the doctor wants it deposited. So in an epidural, you place -- you do your injection, you pull out the needle, leaving the catheter in the epidural space. You then take the other end of that catheter, the tubing to the back of the patient. The patient is then placed on a gurney after birth, move to recovery, placed on a bed, removed from that bed to another gurney and moved to the final bed. The problem with all of that movement and the movement that the patient experiences in labor allows the catheter to become this large from the epidural space, which means they will not get pain relief. So in a few hours, when the anesthesiologist is doing the rounds, if the patient does not experience pain relief from the pump, pumping in the drug, there are only 2 things that can be determined from this. One is that there's not enough medication. Two, is that the catheter has become dislodged from the epidural space meaning that the drug is not going to the intended area, so the patient is not getting relief. In order to determine this, the anesthesiologist must shoot in through the catheter, a large bolus, a large amount of the drug. Wait 20 to 40 minutes, which is a very long period of time for the anesthesiologist, very costly to the institution, wait 20 to 40 minutes to see if the patient now has experienced pain relief. If they are, then the determination is they have not gotten enough of the drug, and they increase the dosage. What's probably the cause, however, is with all the movement, the catheter has become dislodged. So it is a long period of time to wait for the patient, who is in pain, and for the anesthesiologists and to the cost of -- to the facility. What we can do is we can connect our instrument to the tubing of the catheter and within 10 seconds, determine which is the issue, why is the patient not getting pain relief. This is of enormous value to the institution and obviously to the patient, because the doctor can then make a determination rather than waiting 20 to 40 minutes in under 10 seconds and supply the relief that the patient needs. This is a product that falls under our regulatory approval because it deals with location. It is already being piloted in the United States on the market, and we believe this will be very helpful to the economics of Milestone Scientific because you would use multiple catheters, multiple testing of the catheter, while the patient is in the hospital, which means you would use multiple disposables for Milestone Scientific. We have other products, other areas of medicine that we will go into. But as I say now, it is the epidural, and it is the CathCheck that we're looking for. So our basic business plan is to use our broad platform of our technology to answer different needs for different areas of medicine. As you see, the CathCheck and the epidural is our first foray. We have an instrument for delivery of -- for Botox or any drug similar to Botox that is in final development. We have an intra-articular instrument that is in final development as well. But we're putting all of our resources into the epidural at this point. So there are -- in the epidural area, it is a multibillion-dollar market in the United States. We have 4 million women approximately giving birth every year in the United States, 2.4 million women have the epidural. 1.6 million women do not, primarily, I would imagine, because they have read the risk factors, which are 4.5% to 5% morbidity, which is enormous, and that's why we went into this area first. We could have gone into any area of medicine where the hypodermic syringe is used. But we decided, first, to go into epidurals because of the high expense of the long learning curve; the missed injections, which could approach a 30% for residents; and the morbidity, which I've mentioned, is 4.5% to 5%, and this is worldwide. So the cost to the institution is enormous because of this to the insurance companies, to the group practices and to the patient. So we're looking to become the standard of care in this area and replace technology that was developed in the 1860s, and as I said, a technique developed in 1921. And thus far, as I've mentioned, we have had 100% success since our original study. We have FDA approval, CE approval, and we're working on approvals throughout the world today. I would like to now show you the instrument. This is the actual instrument. The instrument has been used for pressure force feedback in its original mode. And we can tell as the needle advances, as it experiences different densities of tissue, the algorithms of the computer will measure that instantaneously and allow the provider in a real-time to know exactly where the tip of the needle is, without radiation, without fluoroscopy. And this will avoid the morbidity that we have today, relying on our thumb for pressure force feedback. We have received patent coverage recently on a new invention of ours, which allows us to have a pulse wave. A pulse wave, a heart rate is in many, many parts of the body, including the epidural space. So if you look at the screen, which I'm showing you on the left-hand side, the arrow is pointing to it, you will see a graph, and that's a pulse wave indicator. So when the needle to do the epidural is in the epidural space, you will read a pulse wave. If it is not, the area surrounding the space, does not have a pulse wave, does not have a heartbeat. So you know definitively if you are in the epidural space or if you've come out of the epidural space. Now this can be used for the epidural, it could be used for CathCheck, but it could -- it could probably be used throughout the body for checking other catheters in other areas of the body, assuming that there is a pulse wave, assuming there is a heart rate in that area. So the possibility of your company advancing into many and many other areas of drug delivery is quite meaningful. So once again, I invite you to go to our website to further look into our company, see the possibilities in other areas of medicine, which we have, because keep in mind that Milestone Scientific is a research and development company. We are not an epidural company. We have chosen the epidural for the reason of long and extensive learning curve, very high morbidity, high insurance, high litigation costs. So we bring to the patient a more safer injection, and we're hoping to become the standard of care in that area. I invite you now to ask any questions.

Okay. We're now opening the line for our Q&A session with Milestone Scientific. If you have a question, you can click the question button underneath the presentation window, you can type those at any time. But we'll have several that have already come in, so we'll just jump right into those. Len, our first question, "Do you have any insight or outlook about the reopening of hospital sales channels?"

No. I don't think anybody really does. The problem is at the moment, reopening -- as we reopen in various states, various different areas for the economy, the hospitals remain in a situation where they want to keep approximately 30% available when they feel that we will have a resurgence of the virus. So they are still not allowing vendors in the vast majority of hospitals. Perhaps Florida will open up first, and they're beginning to do elective surgeries because that's the profit center for all hospitals. But as far as letting vendors in, that has not taken place yet. And I don't think that anyone really has insight into that at this point.

Thank you, Len. And our next question, "You released pricing for the disposable -- disposables a few weeks ago. Will you be releasing or revealing the price for the device itself?"

Yes. The device, the list price for the device is USD 25,000. However, we have different models that we use because we're not really -- so we have a reasonable margin on that. We're really in the disposable business. So we are selling the device now, at the moment, when we sell direct for USD 10,000. However, depending on the usage in the facility, we can do different arrangements. First, we can lease for 5 to 10 years at very, very low interest. We can also -- if there are enough disposables because they have a high patient rate for epidurals, a lot of births. Let's say, 5,000, some of them have as high as 16,000, we can make an arrangement where we lend them the instrument. So there's no capital cost as long as they commit to using a disposable on each patient. So it really depends on the situation. For example, there's this relatively small hospital in [Puglia], Italy that's using our product. They only do 10 to 20 epidurals a month. So they paid full price to the distributor there for both the instrument and full price for disposable. But we are able to adjust our plan depending on the hospital's needs. So our objective over the next 18 months is to get it into as many hospitals as possible. So we are very accustomed, and we have enough margin to be able to adjust to the specific facility and their need.

Very good, Len, and our next question, "We've actually had this from several different investors. But can you comment on the status of the potential sale of the Dental division?"

Yes. Unfortunately, we had a sale of the Dental division. We came to terms on it. And because of the virus, the banks pulled away, so the lenders pulled away from the acquirer. So at the -- at this point, in the dental area because dental offices are just beginning to come back, there is no discussion right now regarding that. We have an investment banker that's ready to represent us in this, but now would not be the time. We would have to see dental offices coming back, revenues moving up and then to go back into the market to the Dental division. So I don't see that happening this year based on where the virus is.

Very good, Len. And our next question, "With the device being sort of a new -- potentially new standard of care, are you finding it easy to convince doctors to adopt the technology? Or is it a bit of a challenge since the standard of care still ingrained? And what are you doing to overcome that challenge if there is a challenge?"

Yes. I think that we're at the point now -- because of -- it's a process, you invent, you reduce the practice, you get regulatory approval in your home country and then throughout the world. And then, you bring in key opinion leaders. And those key opinion leaders evaluate the product, and then they do their own clinical studies, which they've done for free for us because it is the only new technology, really. And then they submitted for publication in the top journals throughout the world. All of that has transpired already. So when a doctor purchases something -- when a GPO, general purchase organization, purchases or a hospital, hospital group, they look to the clinical study. So we have far more than enough clinical evidence away from Milestone Scientific, independent, that proves the efficacy of the product. Since our original study, we have, I believe, 10 studies now that are on our website, dealing with the efficacy of the product. And it's been, at this point, I believe, 100% in finding the location, which is what it's supposed to do. So there's no real -- there's no questioning of that on the part of doctors or administrators. What we were waiting for was the study from a U.S. institution in Texas on the economic value of the product. That was published about 3 weeks ago, and that closed the circle. That was the last thing that we needed, was to show the enormity of the economic value of using our products. So there hasn't been any question on the part of doctors to answer your question of the value of the product. They're not questioning what it can do because it's well-proven. So now that we have the economic study, we're ready to really move but unfortunately, we've been hampered because of the virus at this point. But the company is now ready to go. We have finalized all the studies. And as I say, you can view them on our website.

Very good, Len. And that looks like it might have been the last question submitted from the audience. I guess just in summary, I mean, what's the key takeaway? I mean why should investors take interest in Milestone Scientific today?

Okay. Well, we have a very broad platform of technology with a considerable amount of patents worldwide. We have invented the space of injection by computer and we have continuously, over the years, leapfrogged the technology. Therefore, if you believe history repeats itself, we will continue to do that. We did that. In fact, we received patent coverage as you know, for the pulse wave, which is very, very important. The investors should realize that we are not an epidural company. We are a research and developed company in drug delivery by computer with a razor-razorblade model. So there's a continuing annuity. The product that we have in the epidural, we developed that first because of the very long and very expensive learning curve, which I spoke about earlier, and the very high morbidity, 4.5% to 5%. That is very, very costly. And if you look at the study that came out of Galveston recently, you could surmise that an institution doing 12,000 births a year using our product, given effect to the cost of our disposable, would save over $6 million per year. That does not include litigation. That is merely operationally what it takes when there is an inadvertent puncture during the epidural. So it's self-evident. It's obvious of what this can do in the area of epidurals. It's obvious also with CathCheck, which I explained earlier, which is very important, very valuable. I don't know any doctors that are questioning that. That is the same instrument with a different disposable so it puts us in with another product. But for investors, such as myself, the most important thing is the broad platform because from the platform, we can obviously do cosmetics, such as Botox without pain, significant limiting the pain. We can do intra-articular, which is a very big market. We can go into any area and bring all the benefits to that of computerization of what we've been able to prove to anything that a syringe can do. So the company has chosen to do the epidural first because it was the easiest entry because of the very high learning curve and the morbidity and the litigation associated with it. But we plan to move into many, many other areas of medicine. So it's really wherever the syringes we could be that makes sense. Certainly, we're not going to do vaccines, but we can do many, many areas of medicine, which we're -- some of us were -- some of them were advanced in now like cosmetic, such as Botox, intra-articular. But there are many, many other areas that we have actual studies in rhinoplasty, podiatry, where our technology can make an enormous difference. But in order to keep the burn rate down, certainly, normally, but during this pandemic, we've decided to move into one area first to prove the efficacy and prove the economics of it, which we've done. And wait until that's proven successful and then enter the other areas. Does that answer the question?

Absolutely, Len. Very exciting story. And for our audience, if you want to stay abreast of all the developments as they happen, you can sign up for free news alerts by going to mlssinfo.com. It's the ticker symbol MLSSinfo.com and right on the top of the -- on the top left of the page, you can enter your e-mail and subscribe to free news alerts on Milestone Scientific. Len, I want to thank you for sharing the story. Definitely, a lot of great things going on. We do look forward to having you back to provide some updates as you continue to see some success.

Thank you very much, and thank you all for listening, and I hope you continue to watch us. You can easily go to our website. Thanks again. Stay safe.

Very good. Thank you -- thank you, Len, and thank you, everyone, for joining us today.