Onward Medical N.V. ($ONWD)

Good day, and thank you for standing by. Welcome to the ONWARD Medical Q1 2026 Results Webcast and Conference Call. [Operator Instructions]. Please be advised that today's conference is being recorded. I would now like to turn the conference over to your first speaker today, Sebastien Cros, VP of Communications. Please go ahead.

Thank you, Sharon. Good morning, good afternoon, everyone, and welcome to ONWARD webcast following the publication of our results for Q1 earlier today. Before we get started, as usual, please take a moment to read our disclaimer. This presentation includes forward-looking statements, which should be considered with the appropriate level of caution as outlined on this page. This deck and the recording of the webcast will be made available after our call. Today, I'm joined with 3 members of ONWARD leadership team, Dave, our CEO; Sean Sciara, our Chief Commercial Officer; and Ali Kiboro, Chief Financial Officer. As always, we will present the results and key highlights from Q1 before opening the floor for questions. You may submit your questions orally or via the Q&A module of the platform. With that, I'll hand over to Dave.

Thank you, Seb. We had another successful quarter and off to a very good start for the year. We could continue to accelerate the launch of ARCX achieving EUR 2 million in revenue in the first quarter that was comprised of 70 RX systems supplied for use in clinics in homes. That means that RX systems are now available in over 100 clinics across the U.S. and Europe as of the end of the first quarter. We also continued in our execution of the Empower pivotal trial for Arch IM to address blood pressure instability. In fact, the first participant was enrolled and implanted in the first quarter. And as we sit here today, we've now activated 12 sites within that study. We also advanced our pipeline, successfully implanting 1 additional patient in the Parkinson's disease blood pressure trial. That's an early feasibility study. And we initiated a new mobility feasibility study called IGR in which we aim to enroll 12 subacute and chronic spinal cord injury patients. We also, last month, raised over EUR 40 million in new equity capital supported by a EUR 25 million investment from EQT Life Sciences, extending our cash runway into Q1 of 2028. So now let's talk a bit more about the commercial traction with ARCX. Those of you who are new to the company, this is ARC-EX pictured in the presentation. This is an external stimulator. It stimulates the spinal cord through the skin to restore strength and sensation lost after spinal cord injury. And now I'd like to turn it over to Sean Sciara, our Chief Commercial Officer.

That's fantastic. Thank you, Dave. Well, in Q1, we crossed over 1 year of commercial availability. In the United States. And you can see the run rate that we're on from a unit perspective. And in 1 year of real-world use, we've established, as you mentioned, presence in over 100 clinics -- and we've had many thousands of uses with the technology and with multiple health care providers in most of the clinics we're in, we have many hundreds of health care providers using ARC-EX technology to care for their patients with spinal cord injury. And in this first year, it's been exciting to see the product performing as well as it is, and it's been really exciting to see real-world use where the technology is living up to the expectations that were set in the clinical trials. At the end of this -- at the end of Q1, we estimate that we're in approximately 30% of the clinics in the United States that are caring with -- for people with spinal cord injury that's across your Tier 1 institutions as well as some of the smaller activity-based centers across the United States that care for patients. And starting in Q1, we have technologies -- the ARC-EX technology available now not just in the clinic, but also in the home. One of our bigger focuses on the year is the United States Veteran Affairs Administration. And in the VA, we've exited Q1 in roughly 1/2 of the hubs that take care of spinal cord injury patients in the VA and have a number of them now actively prescribing for home use. In Europe, our commercial journey is just beginning as the CE mark came late in the year last year, but we've now launched clinics in over 5 countries across Europe. And our strategy, as can be seen on the slide, is a combination of both direct and indirect sales. This puts us in a position, I believe, to partner tightly with clinicians and the commercialization of this new therapy in Europe, leveraging a lot of the experiences that we've built in the United States. In the United States, these relationships, like in the United States, these relationships in Europe will be important for our commercial efforts, not just for ARC-EX, but they laid the foundation for Arch IM and our BCI to follow. In Q1, in Europe, we hired and onboarded direct hires for our key markets. We've identified distribution partners for key markets and in early April, held a distributor workshop to begin the process of onboarding key distribution partners. So we're very excited about the speed of progress that we've had across the first quarter. And back to you, Dave.

Thank you, Sean. I also wanted to update those of you on the call on our progress with Empower BP. Again, this is the global pivotal study to gather the evidence required to submit for regulatory approval for ARC-IM blood pressure instability indication. We announced our first enrollment and first implant in the study in Q1. That was a Craig Hospital in Denver, Colorado, USA. And as of this call, we have activated 12 U.S. sites in the study and more to come. We also initiated the EGR feasibility study, and this is for mobility. Many of you have asked, "Hey, when is the company going to get back to mobility, what's going to come after blood pressure instability, -- we've done a lot of early feasibility work in mobility dating back to when the company was founded in 2015. Some of that work was done with highly modified pain stimulators just as proof of concept. Here, we're going to use the purpose-built Arch IM neurostimulator, and we're doing this study specifically to identify the most viable patient population and to inform the design of an eventual pivotal study that will occur globally. So again, it's called EGR. We're enrolling 12 patients, 6 of them with chronic SCI and 6 with subacute SCI. So those that have been injured less than 6 weeks -- the notion is that if we can implant these folks and help them with mobility before their muscles of atrophied a lot following their injury that they might have a better prognosis. This study is being done in collaboration with the shoes, the local hospital in Loan with nervous to, of course, and with the paraplegic Center up in Zurich called Novi, which is a leading center globally. And then lastly, we -- the big news, we had a very successful equity financing last month, raising EUR 40 million supported by a EUR 25 million investment from EQT Life Sciences and a number of other very high-quality investors. I think there were 30 investors who participated. Many of them high-quality, long-only sector specialists -- in fact, our top 2 investors are now EQT and Auto box. So that underscores the quality of our cap table and really validates the company and our future prospects. -- our cash runway now extends into Q1 2028. So very strong. I think that's as much runway as we've ever had here at least since I've joined in 2020, and it allows us to very much focus on now executing the business, not having so many investor meetings. So that's 1 of our operating philosophies is making sure that we raise money before we get too tight, keep a very high-quality cap table and focus on running the business. Now I'd like to turn it over to Ali to tell us more about the results.

Thanks, Dave. Next slide. Revenue for the quarter was EUR 2 million, of which $1.3 million of that was product and revenue sales. As you've heard from Dave, our -- we strengthened our balance sheet right after the end of the quarter. So -- at the end of Q1, our cash available was EUR 53.4 million post the raise of capital in early April, our cash balance at the end of April was EUR 89.8 million, which allows us to execute on our near-term plan and have runway through the first quarter of 2028. Back to you, Dave, for [indiscernible].

Thank you, Ali. Next slide. So as usual, we expect a lot of news flow here. We've completed a lot of major milestones, but many await. So with ARX, we still expect to announce first commercial home use sale in Europe and the first commercial clinic sale in rest of world with Arch IM, we expect to announce additional implants in mobility, particularly around the IGR trial that I just described. also first in human use of archiM to address bladder challenges following spinal cord injury. And then next spring, we expect to announce the interim analysis, the top line results from the power BP pivotal study. Again, that's for blood pressure. And we're continuing to support implants with our brain computer interface enabled system called ARC BCI both for upper limb and we also have a grant-funded study using ARC BCI in stroke. So a lot going on as usual. And thank you for those of you who support the company, and let's roll into the Q&A, Seb and Sharon.

Into the Q&A, maybe Sharon you want to remind people how to submit questions first.

[Operator Instructions].

Yes. Sharon, I think before we take any questions, we did get some questions that were submitted in writing from Ed Hall, the analyst at Stifel. The first question was the split of units placed, U.S. versus Europe? And clinic versus home. So as you would expect, the great majority of units were supplied in the U.S. We did penetrate 5 different European countries thus far. And so we're building out a nice foundation of clinics using the device in Europe, taking advantage of the direct and indirect field organization that we're currently putting in place. We're not going to share the exact numbers around U.S. versus OUS or clinic versus home. But I will tell you that for the first time, as you might expect, we sold more personal or home units than clinic units, and that's certainly a trend we would expect to continue going forward. Another question from Ed while we wait is just to describe the current VA clinic penetration. So Sean, could you take that one? And how are we doing with the VA currently?

Sure, Dave. The progress in the VA has been really fantastic. The VA is truly a notoriously challenging institution with a lot of of highly regional and kind of localized policies instead of kind of 1 set of governance that governs the entire country. There are 25 hubs. So the for spinal cord care works on a hub-and-spoke model. There are 25 hubs. We're in approximately half of those with many of those that we're now in, in the clinic beginning the process of prescriptions for home use. So off to a really good start, and our target goal is to be in all of the VA hubs by the end of the year.

Okay. Thank you, Sean. And we do now Sharon have some calls in the queue from our equity research analyst, and we start with Clément Bassat BNP Pariba.

Of course.

Did you hear me?

Yes, go ahead, Clement.

So just a few questions. The first 1 about the top line. So you get EUR 2 million, but only EUR 1.3 million from the sales of -- just wondering what it comes from the EUR 0.7 million, maybe that's grown and for which programs. Also, you display the delivery in Q1 but not the units sold I guess this is probably less than 70 units. And last question, could you please provide the order you received in Q1, not the sales, but just the order.

Yes. Thank you, Clem. So first, I wouldn't say it's only $1.3 million. It's quite a few units. We continue to see accelerating demand -- and -- but I think 1 of the things you're probably getting to is about 1/3 of the units were VA units. And those undergo a bit of a different process. So those veterans, military veterans first, have a 2-month evaluation period, after which we expect a very high percentage to convert into sales. We think that process, even though it's a 2-month evaluation, it's probably going to take 3 months just in terms of the information gathering and generation of the IPO. So we have a lot of demand that we enjoyed in Q1, some of it in sales, the $1.3 billion. A lot of it is dry powder that you'll see result in sales next quarter, and we'll be reporting in this way going forward because of the importance of VA and the way that they are purchasing the device. And then I'm going to turn it over to Ali to talk about the the grants, the 7000 grants.

Yes, Clement. So the grant income that we had here in the first quarter, that's the EUR 0.7 million that you saw us report primarily from 2 grants One is a grant around Parkinson's, which we essentially advanced that during the quarter. And the second one is a grand around stroke -- and as you know, we use these to fund our development of our pipeline. And so as we discussed, these could be quite lumpy throughout the course of the year. But here in the first quarter, given where we were in our development we were able to recognize about $0.7 million across a variety of grants. Most of it coming from those 2 grants that I've mentioned.

And caution, for those of you who build models, don't straight line that $700,000 because as Ali said, it's likely to be lumpy and we do not expect grant income to be what 2.8 million to 3 million this year significantly less than that. Okay. Thank you, Clement. Let's move on to Mathijs from KBC.

Can you hear me?

Yes.

Yes. All right. Yes, I had a question on the -- also on the VA Home units. So -- how many do you expect to be converted to real sales next quarter? Or what I understood was that it happens normally after 2 months that there is like a sort of periods where they are on training? And then secondly, also on the home use again, how many units did you already sell for salt from the self-pay units or the workers' compensation -- that would be my question.

Yes. Thank you very much. So yes, indeed, just to drill down a bit more on the VA process, so indeed, the veterans do go on a paid 2-month evaluation, but then I would build in another 30 days of buffer because -- the results of the evaluation need to be processed, the POs need to be generated. So we're counting on approximately 90-day sales cycle from the point at which the prescription for the veteran is written. We also expect a very high percentage of those to convert into device purchases in the subsequent quarter, by the way. Again, we're still early in this. So I don't want to give you a precise number. We'd rather do that based on actuals once we get further into the year. But again, based on what we're hearing and the feedback we're getting from the VA, we expect a very high percentage of those to indeed convert. The last thing is, again, we're not going to provide during these quarterly updates, granularity on numbers of units sold via the various -- in the various categories. But we will share that in the first quarter, the home or personal units, the number of units did exceed the number of units sold in the clinics, and that's that's a trend we expect to continue and indeed accelerate because the home use market opportunity is so much bigger. Okay. What else do we have here? Let's go back to another of the questions that Ed Hall asked, which was the comment on future indications for ARC-EX and how we should think about that. Indeed, we got ARC-EX approved with an indication of addressing hand strength in sensation in -- after spinal cord injury, but this is a versatile device and we think that it can potentially help patients in a number of different ways. That is reflected. Ed, in fact, did a survey of 13 clinics that are using ARC-EX in the United States, and he did find that there was a high percentage of off-label use. This is not something that we promote or encourage, but nonetheless it's happening, and we can learn from this real-world usage of RTX to help us inform the priorities for the next indications that we may pursue for regulatory approval and label expansion. In addition to that, we have an active program where we support and encourage investigator initiated studies using the ARC-EX device, there are a number of those studies that are ongoing or pending commencement. And those 2 will inform the most promising and the next indications that we might pursue for ARC-EX. So it's a very rich and fertile ground, and we just want to be careful and prioritize and really do what is of most need what the patient population finds the most important. So that's all TBD at this point, but we're monitoring off-label usage, and we're monitoring the investigator-initiated studies. Okay. We have another question here from David, our analyst from Degroof Petercam, commenting a bit more on IG. And okay, is sort of saying why do hiker since we already have compelling clinical feasibility evidence from Simo, for example, and we're also obtaining evidence through Box Switch. Those early trials were really proof-of-concept trials, David. They were really done. They were more scientific than commercial. Iger is very much a commercial early feasibility study where we're trying to use our device, not to see what's possible across the range of injury severities, but looking at the injury severities and the patient population that we think are most likely to be included in a pivotal study and labeling for our device when it's eventually commercialized. So you're seeing us go from the realm of scientific exploration and discovery, which was the case in 2015 through 2020, very much to getting on to a commercial pathway that would go from this study to a pivotal study to commercialization of a mobility label for Arch IM to follow the blood pressure instability label. So those are the key differences, I would say. -- we're not at this point going to share readout timing or anything else. We're just focused on enrolling and learning and more to come. Okay. A follow-up from Clément. Follow from Clément from BNP Paribas. We sold did you sell more home use than clinic use. Indeed, we did sell more devices for home use and clinic use in the first quarter, and that's a trend that we would expect to continue. We have another question from Investor Day, Nick, how do you interpret the share price performance over the past 6 months, which milestones do we think might influence share price for the remainder of the year. Yes. Obviously, we're not happy that the share price is down over the last 6 months, but looking at the entire medtech sector, it's down across the board. In fact, med tech is trading at an historic low, relative to the S&P 500. And ONWARD has held up very well relative to our peers despite the fact that our stock is down. I think that means that that is evidence that -- of the fact that the investor community recognizes that we're executing at a high level. They see the commercial traction that we have been achieving with -- they see the clinical traction, getting the IDE approved and the early progress with Empower BP. They see the quality of the equity financings that we're executing with a cap table led by EQT, followed by Auto Bond with others like AcenBNP-Pariba. So this is the reason that our stock is holding up well. Certainly, we wanted to start appreciating, but we also think there may be some sector rotation once AI maybe is not such a bright shiny object. We'll see. We just have to be a bit patient and thank you for your patience as well. In terms of milestones and upcoming catalysts, I did discuss some of those earlier. We've got a big data readout, the interim data from Empower BP that will -- we expect will occur less than a year from now. We expect continued commercial traction also to drive stock price. That's the way currently, med tech companies are being valued by top line and top line growth, and we also expect continued announcements in the area of brain computer interfaces, which is typically a catalyst for us and other companies. Thank you, Nick, for that question. Any other questions?

No more questions on the call.

All right. Again, I want to just thank all of you for participating. And to summarize, we're very pleased with the quarter, another quarter of strong commercial traction 70 units, more than 100 clinics across the U.S. and Europe now using RTX. And in the first quarter, let's not take for granted. We expanded the use of RTX into the home, which is quite significant. That's a larger market segment than the clinic and it also allows patients to be more independent, use the device in the privacy and convenience of their home. Also very pleased with the traction of Empower BP with first patient enrollment and implant occurring in 12 sites now activated. More to come. We reported ARC-BCI and use of ArchiMin Parkinson's, which is a huge adjacent population in the first quarter, and we're very pleased with the capital raise in this geopolitical environment, tough tough market for any company that's not in AI to raise money right now. And we raised EUR 40 million. We've got a very strong balance sheet into Q1 of 2028. So very happy with the quarter. Thank you for your continued support, and thank you for the team here on the call and the team at ONWARD that is driving this execution. Talk to you in a quarter, everyone.

Thank you.

Thank you. This concludes today's conference call. Thanks for participating. You may now disconnect.