Nova Eye Medical Limited (EYE) Earnings Call Transcript & Summary

Good morning, everyone, and welcome and thank you for joining us for today's Nova Eye Medical Investor Webinar. My name is Mark Flynn, and I look after Investor Relations for Nova Eye. We're very pleased to have our record participation in the webinar today and following our release of our, again, record FY '25 sales results yesterday. As you can see from the numbers, it's been a very strong year for our company, and Tom and I are particularly excited and the team to share more about our progress and the outlook through this webinar today. Our lead product, iTrack Advance, is a minimally invasive surgical device gaining strong traction across key global markets, including U.S., Europe and China. Today's session will include a presentation around MD, Tom Spurling, and followed with time for a question-and-answer session. We've already received a lot of questions from investors, and we'd like to get through as many as we can. But if you like to submit one during the session, please use the Q&A function within Zoom. We'll do our best to address as many as we can before we wrap up. With that, I'll hand over to you, Tom, and all yours.

Thanks, Mark, and thank you, everybody, for coming on today. We're so excited with our sales results. We've got over 100 people registered and listening to this right now. That's double the interest we've previously had. So I'm excited about that. We sell and I say it every time that it's true, we sell useful products to doctors globally and particularly in the United States. Next slide. A quick recap. We talk about the company business too much, but glaucoma is about pressure. It's about a failure of the drainage systems in the eye that give rise to a buildup of pressure, which can progressively lead to blindness. Our products clear those blockages. The next slide. Let's get straight into the sales. Top line at USD 8.4 million. 99% of our revenue is denominated in U.S. $28.8 million that moved -- AUD 28.8 moves around a little bit with the currency, of course. I think what we're most proud of is that we've set out for the first time ever in the history of the company, and that includes [ Ellex ] for some of the long-standing shareholders. We gave guidance between $9 million and $10 million. People may say, well, that's only 6 months. It was the first time we did it, and we're pleased that we took -- meet our promises. That, to me, well, I believe anyway is a sharp sign of a maturing company where we can predict what's going to happen and meet that guidance, USD 9.6 million, excluding China. China, as we know, has been problematic with tariffs and things. We've also had solid growth in our international markets where we have made some targeted investments. Our primary market though is the U.S.A. $14.2 million of revenue, 25% growth. Quarter-on-quarter, we've grown quarter-on-quarter, and I've shown the last 2 quarters there as well. We're very, very pleased with that performance. And it gives us confidence in our outlook. We predict, we achieve. That means we should be able to predict again. Next slide. Every half, we've managed to increase our sales in the U.S. That shows that we have a good recipe, we have a good product and we manufacture it well. We lay on top of that a marketing message and a clinical build around the clinical benefits of the device. And then with that, we get doctors' support. And then on top of that, we lay a team of motivated sales reps in the United States to go and put it in the hands of doctors. Those 3 steps, the product, that marketing message and clinical startup and then the reps, off they go and they are delivering. So exciting. Next one. Our performance has been recognized by Needham. Needham is an investment broking house in New York City. It has an analyst there, David Saxon. They're not following us. We're a little listed company in Australia, but you can see we're outperforming. He's named us really the fastest-growing MIGS company in the United States, with his survey of 35 U.S. doctors saying that they expect to be trying or using iTrack Advance over the next 12 months. Our market share has grown from 2.5% (sic) [ 2.4% ] to 3.5% (sic) [ 3.4% ] . And you go, well, they're tiny numbers, yes, they are tiny numbers, but for all of us who are shareholders, 2.5% [ 2.4% ] meant 18 -- well in America, this is only in America, 2.5% (sic) [ 2.4% ] meant $14.5 million. So mathematics is very easy to predict what 3.5% might be. So it's really good to have the attention of a serious New York investment bank. So we're very pleased. I've got a nice letter from Needham, an e-mail from the analysts at Needham thanking us for putting his story in here. Next one. This is data for our shareholders. We balance our decisions about what we -- the amount of information we give to our shareholders because the industry looks at all these. But we're proud of these numbers. Revenue per rep, it's grown. Our number of reps has been constant because we're constantly managing reps. You've got to -- things happen, so we've hired and we've managed this month, this 6 months. And -- but the overall revenue per rep has gone up. And just on the 7th of July after the 4th of July weekend, we brought on 2 new reps there and another person in Germany. So this revenue per rep really does drive productivity, and it's a high number. It is the reason that it's driving our bottom line improvement, and it's certainly better than our competitors. Next slide Very simply, today is the 8th of -- 9th of July, there's been 5 or 6 business days. We do not have all our balance sheet reconciled in our -- all the remittances of things, mainly because the 4th of July [indiscernible] (008:27)America as well, we haven't got it done. But we can say that we're expecting breakeven, maybe a small positive in that glaucoma segment as we predicted. And the group EBITDA, the bottom line of the whole company will materially improve and that's placing us on a breakeven part during H1 FY '26. So to all the people that think there's going to be a capital raise because we'll run out of money again. We are on a path to breakeven, which is really exciting. We will provide cash flow information in the last week of July, not because, not because that's when you have to get it done. It's because that's when we are unable to get it done. We are a small company, our resources and getting that information together, compile and report it on takes a little while and audited financials will come later in August. So we are very pleased with these results. They are exactly as we promised and we're on that path to breakeven that our shareholders are [indiscernible] (009:40). I think we can -- I have a few more slides here in March, I guess, we'll just quickly run over those. Just for those, the interventional glaucoma market, traditional medication treatment is -- causes chronic eye damage. So we are intervening with a surgical approach, minimally invasive surgery to reduce or eliminate the problems associated with long-term medication use. Very importantly, 1 in 5 patients who present for cataract surgery also have glaucoma. So minimally invasive in conventional glaucoma surgery is conducted with cataract surgery often. A patient -- very, very simple concept. Patient has -- cataract is the world's most common operation. Most people live beyond 70, 75 years of age will need cataract operation. And at the same time, you go in to get -- so you can see the golf ball or drive at night better. And the doctor says, why don't we get you off those medications at the same time. And we do a nice minimally invasive surgery with iTrack, clear the blockages and putting a new lens either before or after the glaucoma surgery, and you go home with clear drains and you can see that very, very simply. And it's a big market and growing. Next slide. This is the iTrack Advance. We're probably up to about 150,000 or 160,000 procedures now globally, very safe. This is the next slide, inserted into the eye. Next slide, Mark, I think, yes. So nothing stays behind in the eye. We insert the catheter into the tissue on the inside of the eye into the navigation canal -- sorry, the drainage canal that runs around. We have a nice navigation light that shows where the doctor is. We push that catheter through that canal, 360 degrees, clearing block -- and then clearing blockages, then we gently remove it, leave nothing behind and flush the system with biocompatible hydraulic fluid, known as hyaluronic acid and called [ viscoelastic ]. And that flushes the system in a benign way with benign material and opens the pathways, angioplasty of the ocular system. Next slide. When our reps go out, shareholders and I courage you could do a lot of analysis of why ours is better or worse than our competitors. This is basically the message that our reps go out and tell the doctors. We have green ticks. We are -- and the main reason is there's no implant, and we don't cut anything. And we provide a navigation light that keeps the doctor informed as to where the catheter is in the -- in that pathway. The other devices cut, clear, or leave a cut and leave behind pieces of metal or plastic. So we think we have a very, very good product and the numbers are showing that we do. Next one. Reimbursement is strong and stable. U.S. -- we had the same reimbursement for -- not the same numbers, but the reimbursement has been in place for 15 years. And this -- the Medicare Administrative Contractors pay and that gives the doctors confidence to do the surgery. A very strong commercial base that provides a business model where we get a good return, the doctor gets a good return and the facility housing the surgery gets a good return. Next one. That's right. So the questions that we've received prior to the webinar. That's good to go through those, Mark.

Perfect. Tom, actually just received one live as well, which I'd like you to -- which you'll be able to answer. And good question is it like breakeven is a fine target to have as we've been -- as you've suggested, and some of our investors have pushed for. But given we're still a very small portion of the total market, we're growing strongly, are you comfortable with the capital spend is appropriate to ensure that capture or trajectory is optimized? So what -- how are you optimizing?

The absolute -- well, absolutely, the market is big. The opportunity is very large. We have a set of resources that we have to work with. And they're the resources we work with to optimize access to that within our resources. So that is the level of resources we have -- are the level of resources we have. And so that is how we're tackling at the moment. That is what our shareholders are calling for.

One that's come through as well, could you recap the clinical data collection program?

Yes. So clinical data obviously supported our original product registrations, including with the FDA. Currently, our program is about we have a registry, which is independently run database that records data submitted by doctors. And we have a great cohort of doctors to keep putting data into that registry, where it's admitted -- independently managed. Currently, we have 500 eyes being followed in that registry and about 300 of them have already been in it for a year. And a year is important because you've got to look at disease progression over a year to see how effective the therapy is. And that is driving a flow of papers for peer review and for presentations by doctors on the podium. And most recently, over the last 6 months there at the ,AAO in last November, ASCRS, WGC, we make presentations, more presentations than any other MIGS company. So our data is great. Our data is strong. We've got a safe, clinically efficacious product.

Some questions coming in on the drug delivery process and interest as well. So one is, what is the progress of the drug delivery initiatives and what level of interest are you seeing from the large pharma companies? Any hurdles from this?

So since we last updated the market back in April on this topic or initiated the update, the opportunity has not gone away. It moves pretty slowly. In the meantime, we are waiting on our collaborating companies to do some more work and we are focused on delivering sales growth and profitability this year now for our shareholders.

Perfect. iTrack Advance in China. So what is the status of the iTrack Advance approval in China?

Yes. So currently, iTrack is being sold in China, what we would call the original version, the version without the handpiece. And with respect to Advance, we are making our way through the NMPA approval process. We believe we are not all the way through yet, and we have not made any promises or predictions when we will get there. In the longer term, the market for interventional glaucoma in China is very, very large. The idea of concurrent surgery with glaucoma and cataract surgery is not yet on board like it is in America. So the idea that in the future, Chinese people will have a combination of cataract surgery that they're not -- and glaucoma, that hasn't even happened yet. We estimate maybe they're 10 years behind. But it does seem like or it doesn't seem. It is an exciting opportunity in the longer term. And so we're patiently like have to do in China working through all the processes. And now in the meantime, there's tariffs and ups and downs and things and uncertainty. And that's the reason why we don't give guidance with respect to China because it is very hard to predict. But it is in the long term, we think, a great market.

Just switching tack a little bit. Molteno3 and 2RT, some of the other products in the Nova Eye stable, sort of can you give us some updates and status on that?

So first on Molteno3, we are actively selling it. We don't report the separate -- we talk about sales in America. We go to a doctor saying doctor, would you -- do you -- for your mild-to-moderate patients, please use the iTrack Advance. And if you've got a patient that's later in the disease, use the Molteno. Our sales are modest for those. The market for late-stage glaucoma products is very, very stable and will be there for the long term. Some may call that boring. Others may say that is just a great opportunity for long-term stability in your sales. So Molteno3 fits into that category. With respect to 2RT, our position has been for a long time now that the exploitation of 2RT because it requires funding that we do not have. Our shareholders have given us enough money to make sales, to get to profitability, and therefore, we're a partner. That -- we have scaled back our -- in the interest of getting to cash flow positive at the group level, we have scaled back considerably on this. It's now work that we do pretty much Victor and I work on the weekends in 2RT to be quite honest. And we -- but we still think there's a good opportunity there. Next one, Mark.

Just in the effect of broadening the investor base and obviously, liquidity in the market that I'm focused on here at the moment. So is Nova Eye promoting itself to the other funds or investor groups in the U.S. and giving people an update on how we're looking to improve liquidity and obviously, other sources going forward?

Well, there's liquidity means share price increase for some gravitational or physics type reason, I don't know, it seems to be. But we are constantly giving presentations to institutional investors. We constantly have a plan to develop our story, touch the market as often as we can in order to keep engagement and to be present with the institutional investors. A market cap right now doesn't help. I've had some nice feedback, to be honest, from a couple of people that I've shown results to that want to catch up. So that's not unusual, but it's exciting. I -- it is good that we've been mentioned in -- by U.S. analysts as well, I've got to say.

Our path to profitability and the cash position that we mentioned earlier, probably a double one, if you can answer that sort of path to profitability, plus all the U.S.A. market outlook. And Michael Youlden from MST has asked, could we win more than 1% market share over the coming 12 months? But yes, so profitability, market share and our cash position.

Well, we've made our promise with respect to the second half of FY '25. We have through sales growth expansion of our gross margin, manufacturing efficiencies improved the bottom line. We'll provide more cash flow details when our Appendix 4C is compiled because as I said, that's a bit of work to do. I'll probably go and work on that after this webinar. But we are very -- we are saying that we are on a path to breakeven in the group level during the first half of FY '26.