Nyxoah SA (NYXH) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by. Welcome to Nyxoah First Quarter 2024 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference call is being recorded. I would like now to turn the conference over to Mikaela Kirkwood, Investor Relations and Communications Manager. Please go ahead.

Good afternoon and good evening, everyone, and welcome to our earnings call for the first quarter of 2024. I am Mikaela Kirkwood, Investor Relations and Communications Manager at Nyxoah. 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 first quarter financial results released after U.S. markets closed today, 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 the Investor Relations tab of our 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 current 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 the risks and uncertainties associated with our business, please refer to the Risk Factors section of our Form 20-F filed with the Securities and Exchange Commission on March 20, 2024. With that, I will now turn the call over to Olivier.

Thank you, Mikaela. Good afternoon and good evening, everyone, and thank you for joining us for our first quarter 2024 earnings call. 2024 has been transformational for Nyxoah. In March, we announced our DREAM U.S. pivotal study achieved its primary endpoints and demonstrated that Genio has the potential for best-in-class outcomes for OSA patients. I would like to congratulate our clinical team on these terrific results. Our regulatory team is working diligently to file the fourth and final module in our model of PMA submission this quarter, which will set the stage for entering the U.S. market upon FDA approval as early as the end of 2024. Additionally, Dr. Maurits Boon, one of the pioneers in hypoglossal nerve stimulation, joined us from Thomas Jefferson University as Chief Medical Officer. And we announced a partnership with the American Association of Otolaryngology - Head & Neck Surgery Foundation to drive Medicare and commercial payer coverage. Commercially, we reported first quarter sales of EUR 1.2 million, almost tripling revenue from the first quarter of 2023 and benefiting from our focused approach on strengthening collaboration between implant surgeons and referring sleep physicians. To recap DREAM, the study had co-primary endpoints of AHI responder rate, per the Sher criteria, at 12 months and ODI responder rate at 12 months. At baseline, subjects had a mean AHI of 28.0%, ODI of 27.0% and a body mass index of 28.5. On an intent-to-treat or ITT basis, DREAM study showed an AHI responder rate of 63.5% with a p-value of 0.002 and an ODI responder rate of 71.3% with a p-value less [ than ] 0.001. With these strong results, the DREAM study met its primary endpoints. Additionally, subjects demonstrated a median 12-month AHI reduction of 70.8% with similar AHI improvements in supine and non-supine sleeping positions. The safety results were favorable with 11 serious adverse events, or SAEs, in 10 subjects resulting in an SAE rate of 8.7%. Out of the 11 SAEs, 3 were device-related and there were 3 explants. The DREAM results further differentiate Genio as it was the first HGNS study to require patients to sleep at least 60 minutes in the supine position and demonstrated strong efficacy with patients sleeping supine and non-supine. This is of particular importance since published data show increased OSA severity in the supine position with AHI doubling in the supine versus the lateral position. On average, people sleep 35% to 40% in a supine position during a standard night, which was in line with our PSG findings in DREAM. This means that irrespective of a patient's sleeping position, Genio maintains its efficacy. Based on early feedback from the physicians, this can be very impactful on therapy selection. It supports our mission to make sleep simple again, and we intend to apply for the inclusion of supine efficacy results in our label. With the positive DREAM results, we are now finalizing our model of PMA submission. We have responded to the FDA questions on the first 3 modules and ordered an interactive review and anticipate filing the fourth and final module this quarter. We are preparing for the launch by the end of 2024 as based upon model of PMA review cycle plans. We anticipate FDA approval in late '24 or early '25 as we do not control FDA time lines. In parallel, we continue making progress on the reimbursement side as we are establishing reimbursement pathways with commercial payers, Medicare and Medicaid. The reimbursement team is working closely with the AAO and reimbursement experts to secure coverage at FDA approval. Ahead of approval, we will be conducting a payer feedback interview with the former CMS and commercial plan Medical Director as well as participate in the Early Payor Feedback Program from the FDA, designed to provide direct feedback for major peers, such as UnitedHealthcare, Blue Cross Blue Shield, Aetna as well as CMS. Upon commercialization, we will have a prior authorization team in place to assist with claims submission and payment. Our U.S. focus is significantly increasing, highlighted by the recent addition of Dr. Maurits Boon as Chief Medical Officer. Dr. Boon, who joins Nyxoah from Thomas Jefferson University, is internationally recognized as one of the most experienced surgeons in the field of OSA and HGNS. Being able to have such high-caliber talent joining Nyxoah is a strong validation of the opportunity for Genio to disrupt the OSA market. We are actively building our U.S. commercialization team to be ready to launch by the end of this year. The current HGNS market in the U.S. is fairly concentrated, allowing for a laser-focused launch, breaking the current monopoly with ENT sites while establishing a patient referral pathway from sleep specialists. As part of FDA approval process, we have a usability study with 31 physicians that are the top HGNS implanters release in the U.S., and their feedback was overwhelmingly positive. Providing a little more color on the usability study, naive surgeons, meaning surgeons without experience with Genio, were invited to participate in a training session [ on notably ] and safely use the device. The training contained theoretical sessions, followed by both animal and cadaver implants. 12 hours later, mimicking real OR setting, surgeons had to repeat the implant without guidance to demonstrate they properly retained the knowledge on device programming and acquired the implantation technique, always ensuring patient safety and comfort during the procedure. These surgeons were adamant. They want to be the first Genio implanters in their areas and convinced of the differentiation of Genio versus current HGNS technology in terms of invasiveness, patient-centricity, safety and the simplicity to treat OSA patients regardless of their sleeping position. In addition, a recent independent survey demonstrated that over 20% of U.S. HGNS candidates are declining with pacemaker-based platform technology due to their concerns over the invasiveness and having implantable battery in the chest. Going back to Europe, first quarter sales was EUR 1.2 million, an increase of 177% over first quarter of 2023. As part of our commercialization or commercial proof of concept in Germany, we see that, first, the majority of accounts became mixed implanting accounts embracing Genio in their practice; second, therapy penetration is strongly accelerating as a result of Genio entering the market as a new player; and third, there is a large pool of CPAP-quitting patients in need for treatment, which can be addressed through establishing a strong collaboration between implanting surgeons and referral sleep physicians, highlighted by our ResMed collaboration. In summary, we started 2024 strongly by reporting positive DREAM data, further differentiating Genio with our unique supine [ data ]. For the remainder of the year, we are working towards FDA approval by the end of the year and commercial readiness for a strong U.S. launch in 2025. With that, I'm pleased to turn the call over to our CFO, Loic Moreau, who will provide a financial update.

Thank you, Olivier. Good day to everyone, and thank you for joining us today. Revenue for the first quarter ended March 31, 2024, was EUR 1.2 million, a 177% increase over the first quarter of 2023. Total operating loss for the first quarter was EUR 12.2 million versus EUR 11.4 million in the first quarter of 2023, driven by an acceleration in commercial investments in the U.S. as well as in Europe. As of March 31, 2024, cash and financial assets totaled EUR 44.3 million compared to EUR 57.7 million on December 31, 2023. During the first quarter, our monthly cash burn was EUR 4.5 million. Based on our current cash position, we have a runway into late 2024, which includes the building of the U.S. commercial team. 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] The first question comes from Jon Block with Stifel.

First question, Olivier, just any details on where market share shipped out in 2023 for Genio in Germany and your thoughts on 2024? And then part 2 of that first question would just be the burn rate that we can expect as you ramp up the commercialization efforts in the coming months, I think headcount and prepping for launch, as you mentioned, by potentially the end of this year, fourth quarter of 2024. And then I'll ask my follow-up.

Thank you. So Jon, first of all, thank you for the questions. Looking back at 2023 and the annual market share, we ended up with 27% overall market share, and we had a very strong Q4 close in 2023, bringing the market share close to 50%. That was, I think, the first part of your question. The second part was?

Just how we should view the -- I'm sorry, how we should view, whether you want to do a monthly burn or quarterly burn, as you ramp up some of the commercialization efforts to prepare by launch by the end of this year?

So we burned EUR 4.5 million in Q1. We expect the burn rate to remain steady for the first half of the year and then begin to ramp up in the second half as we accelerate investments in the U.S. commercial organization. As we said, we have cash until late 2024, and that includes the build of the U.S. commercial team.

Okay, got that. And if I have any additional questions there, I'll clarify off-line. I think just to pivot for the second question, post the release of the DREAM top line data, we performed checks among 30 physicians and asked them how they view the DREAM data relative to Inspire's STAR. And I'd sort of categorize the finding as upbeat, the majority of your DREAM is equivalent to STAR. There was about 20% saying superior and about 17% saying inferior. So painting it with a broad brush, largely equivalent. Here, we are just almost 2 months removed from the top line data being released, Olivier, and I'm curious if maybe you can talk about what you've heard or others at Nyxoah have heard from the docs and maybe the reaction in the marketplace to the data, that would be very helpful.

Yes. No, no, definitely, Jon, and I also thank you for the worry that you did on gathering this data. Now let me, first of all, remind you that the study was not designed for a head-to-head comparison. There are a few different characteristics, making DREAM more challenging than STAR. To name the most important one is having minimum 60 minutes supine sleep for all our patients in order to qualify as a responder. And there is also the broader AHI range where in DREAM, you have a range between 15 to 65; where in STAR, the range was 20 to 50. Now that being said, of course, I fully understand the nature of the question. I also fully understand why physicians and a lot of people are looking how to compare this data. So our AHI and ODI responder rates are in line with our competitor's study, STAR. Calculate it on an intent-to-treat basis and our median AHI reduction is even slightly higher. In general, as physicians are well aware of, it's hard to control OSA when patients are supine compared to non-supine because it's more difficult to maintain an open airway in a supine position, mainly driven by gravity. While we plan to hold the data for publication, I can already comment that Genio showed similar AHI reductions in both supine and non-supine positions, while requiring patients to sleep supine made DREAM more challenging. The data provides evidence that Genio will be able to control patients' OSA regardless of their sleeping position. And I do think -- and this is also the feedback that we are getting when we are talking more in-depth with physicians and also now that we have Dr. Boon onboard explaining it even better than I can to other physicians, we see that this is really perceived as a really, really differentiating factor making the choice for a physician simpler because they do not need to worry whether the patient is sleeping supine or non-supine, knowing that in data, 35% to 40% of a normal standard night, people are sleeping on their back. So I do think that the supine data aspect is really differentiating Genio from STAR, and it's also differentiating and showing a stronger efficacy in the specific supine position, which we like to say and claim that this is showing a superiority compared to what was demonstrated in the STAR trial.

The next question comes from Suraj Kalia with Oppenheimer.

So Olivier, congrats on all the progress. Olivier, just piggybacking on your comments about supine, right, obviously, that piqued everyone's curiosity. And my first question is a multipart question, if I could. How is the debate on hypoglossal nerve stim efficacy, supine, non-supine, how is it brewing in the field? And also recently, there was an Inspire paper that was talking about decreased efficacy in supine position. Olivier, forgive me, Olivier, if you look at -- one of the arguments made is, well, the titration is done in supine position, so this whole debate becomes moot. I'd love to have your take on this. When is the titration really done? Is it supine? Non-spine? If you could shed some color there. And also the implications for a label, if really the titration is done in a supine position. Sorry, it was a multipart question. I hope you got the gist of it.

I hope I will be very complete in my answer, Suraj, but let me start a little bit the first part. So yes, this supine versus non-supine is also creating a lot of further discussion within the ENT sleep surgeon community for the simple reason that when surgeons are deciding to choose for the therapy, it's really important that they try to keep it as simple as possible, and knowing that you have the same OSA and on the same airway opening in both supine and non-supine position is definitely an advantage. So that being said, if we look at published data showing that 35% to 40% of the time, people are sleeping in a supine position, you understand why this is becoming extremely important. On top, we also know that when a patient moves and turns into a supine position that AHI is twice as high when they are supine versus when they are non-supine. There were even patients who are not suffering from moderate or severe OSA when they are not supine and become a severe OSA patient once they turn supine. So again, a demonstration how important it is to have a technology that can guarantee that the airway is opening or stays open during a supine sleep position. Now at this moment, DREAM is the only study to require patients to sleep minimum 60-minute supine at a 12-month follow-up visit, and this result showed similar AHI reductions compared to STAR. However, for Genio, it did not matter whether patients were sleeping in supine or non-supine. STAR did not have a requirement to sleep supine at a 12-month visit and has not presented any data on supine efficacy from the study in the STAR trial. And that brings me to your next question. Recently, there was a publication done by Inspire on supine data. We have disclosed in DREAM that our median AHI reduction in supine and non-supine sleeping positions were similar, implying around 70% in supine. If you compare the 70% that we showed to the 51% supine median AHI reduction reported in the recent publication, based on this, I hope you agree with me that I can conclude that Genio has a superior outcome in the supine position. Was I complete in my explanation or am I missing still something?

No, sorry, it was a multipart. I mean the titration part, Olivier, one of the arguments as well, the titration for hypoglossal nerve stim is done essentially in a supine position. So it should not matter the supine, non-supine. In all honesty, I never thought about at what point is the titration done. And I'd love to get some clarity on how is titration done for Genio?

Yes. So let me start by first commenting on the fact titration is done in a supine position. So this is not the case for Genio. But if we just stay on the topic that titration is done for a supine position, it would also imply that there is an over-titration in a non-supine position. And we all know how sensitive patients can be for stimulation. The last thing we want to do is wake them up. So I do think it's important that the patient will get the adequate stimulation. And therefore, again, with our bilateral stimulation that we can offer and the way we do this on a tailor-made based studying the PSG exam and preprogramming for activation chip, we can offer a solution where we stimulate precisely of a patient in function of his or her needs to maintain the airway open. To that extent, knowing that we have similar airway opening effects using the same stimulation parameters, supine and non-supine, this is, again, a great advantage that we offer and that we can contribute completely on the fact that we have a bilateral stimulation.

Got it. And Olivier, for my follow-up question, if I could, I presume the label discussions start in Q3, I'm guessing. And also the 31 physicians, high-volume Inspire docs that you are considering presumably as low-hanging fruit and preaching the virtues of Genio, I'd love to understand how you all are sensing the choice of device is going to shape up once you will become commercial. Gentlemen, congrats on the progress.

No, thank you for the questions, Suraj. And again, to your point, we also will start opening the label discussion that is part of our module for submission. So that is what we will bring in. And based on our data, we will really pursue the option to have the supine position really explicit in our label. And I think based on this, and I'm coming back to our mission, and that is making sleep simple again, based on this, for a physician, it becomes obvious, working with Genio, you know that you don't need to worry too much and that you can always maintain the airway of patients open regardless of their sleep position, and that is really, really a clear asset.

Our next question comes from Adam Maeder with Piper Sandler.

Congrats on the progress. I wanted to start by asking about some of the preparations that you're making from a sales force and manufacturing standpoint. If I heard some of the remarks correctly, it sounds like that's the onboarding of sales -- U.S. sales folks is more back-half loaded. But I was hoping you could get a little bit more granular there. So how many U.S. sales reps have you hired at the moment? Kind of how should we think about that building in the back half of the year? Where do you expect to be at launch? And then I guess just kind of a similar question, just talk about manufacturing capabilities and capacity and how you feel about that going into U.S. launch at the end of the year? And then I have a follow-up.