Sintx Technologies, Inc. (SINT) Earnings Call Transcript & Summary

Greetings, and welcome to the SINTX Technologies April 2022 business update. [Operator Instructions]. As a reminder this conference is being recorded. I would now like to turn the conference over to your host, Gina Moss, Director of Operations. Please go ahead.

Great. Thank you. Thank you all for joining our annual business update. As a leading, innovative, advanced ceramic company, we are excited for the opportunity to discuss our business progress over the last year and share what we hope to achieve in the coming years and to give you updates on several projects and give insight to where we are headed. Additionally, we have received several e-mails with questions, and we will address those throughout the call. During the course of this presentation, predictions, estimates, expectations and other forward-looking statements may be made concerning the company's future results. Actual results could differ from those projected. Please refer to the company's SEC filings, including the company's annual report on Form 10-K for the year ended 2021. Copies of those filings may be obtained from the company's website and from the SEC. I'll go ahead and turn it over to our CEO, Dr. Bal.

Thank you, Gina, and good morning. This is Sonny Bal, Chairman and CEO at SINTX Technologies. It's my pleasure to provide highlights of the past year, followed by a discussion, point by point, of each of our business segments here at SINTX. In terms of last year, we came through the pandemic with a healthy group of employees and no layoffs. And the company came through with flying colors. That's always our first priority. We invested money that we had raised intelligently back into SINTX, hiring key employees, acquiring new technology, investing in marketing and sales and new product development. Our R&D efforts paid off. We won a Phase I grant for 3D-printed spinal implants. And in the first quarter of this year, yet another grant for 3D printed craniomaxillofacial implants. These represent the first government grants the company has won in approximately 10 years and is a credit to our R&D efforts. These are highly competitive. We bought the assets technology and licensed technology to form a new business unit called SINTX Armor aimed at protective armor development, branching thereby into a new market with a new technical ceramic material platform. We also made and sold limited amounts of products and prototypes in the medical, aerospace, industrial antipathogenic and armor segments. Our key focus now is on increasing revenue, showing our investors a path to profitability and ensuring that our company SINTX is successful. Our strategy for doing so is through selected partnerships in a variety of industries, that involve product development and testing for the partners. Our R&D team is equally focused and has been redirected to put its times and efforts on those technologies and products that are most likely to lead to revenues. Some of these paths to revenue are longer term, others are closer to realization, not all will be a good fit going forward, which is to be expected realistically. The partnerships before us right now are all making progress at varying speeds and degrees since we're dealing with outside parties. As you may know, biomedical implants is our unique strength and that is tempered by the reality that new biomedical and antipathogenic products take a long time to generate revenues. They have lengthy regulatory pathways. That is why we chose to branch into the industrial and protective armor business segments related to our ceramic materials because they are both quicker paths to revenue. We have had questions submitted regarding the stock price and health of our company, and I'll make the following points. Our focus is ensuring the financial health of SINTX above all for the benefit of our employees and stockholders alike. Everyone internally is dedicated to making this company successful. In addition to exploring various pathways to revenue and diversifying revenue risk, we are also looking carefully at merger and acquisition opportunities, which could add immediate revenues or strategic opportunities that can grow our company. We believe passionately in our company, our work and our employees and fully anticipate that SINTX will succeed. Now let me address the 3 business segments, one by one, starting with the biomedical opportunities. Of note, we are the only FDA-registered ISO-certified facility, which makes a biomedical grade of silicon nitride. This puts us in a unique position to move silicon nitride into new and exciting markets in the biomedical segment. Our work is now backed by over 20 years of research, numerous peer-reviewed publications and 14 years of clinical spine use backed up by data. SINTX is very strongly positioned and poised to take advantage of the biomedical benefits of silicon nitride in the coming years. As such, we are exploring several new markets for biomedical implants with and without partners. Keeping in mind that this is not a quick process because entry into new medical markets requires regulatory clearance country by country, territory by territory implant by implant. SINTX is also pioneering the 3D printing of silicon nitride with the support from 2 NIH grants that I simply mentioned earlier. One that was awarded at the end of 2021 focuses on spinal implants. It's an area we know very well. The newest one awarded during Q1 of 2022, this year, is in the craniomaxillofacial implant space. Both grants are expected to last 9 to 12 months, after which Phase II awards to support commercialization and regulatory activities will be sought. At this point, both projects are on track, and we are optimistic about their outcomes. We, therefore, expect to apply for Phase II grants for both projects when the time comes. A Phase II grant is a longer multiyear project with obviously more money in which preparations are made for submission to the FDA and other regulatory agencies. FDA clearance can then take anywhere from 3 to 5 years, depending on various factors, this is simply a reality of biomedical implants. In addition to the current awarded grants, we are pursuing multiple additional funded research opportunities. While we cannot give specifics at this time because of the competitive nature of the grant application process, we can mention that they are focused on developing silicon nitride coatings and composites in new implant and related applications. More specifically, within the biomedical space, the markets and products we are working on are: first, spine, with extruded and machined silicon nitride PEEK composites, a 3D-printed silicon nitride PEEK product, continued support of CTO, our spinal partner, in new products, while we are actively talking to other partners and countries in anticipation of our exclusivity ending in the future with CTO. Number two, in foot and ankle, this is a growing market segment with worldwide need, specifically infusion. This is the logical next step as the requirements for the device are very similar to spine. And it leverages the same strength, i.e., osteogenic, antibacterial and ease of imaging. The implant design is also very similar to spinal implants. In this space, we have ongoing conversations with extremities companies, who are interested in silicon nitride improving their product offerings. Number three, dental. These partnerships were impacted the most by COVID. Many of the conversations and partnership discussions we were having pre-COVID are now moving along again, which is good. Interest at the moment is on silicon nitride coatings on titanium dental implants, and we are exploring several different coating technologies from laser cladding to physical wafer deposition. Next in wound care, we're looking at ways to incorporate into wound care devices and testing the antipathogenic behavior of these devices using our silicon nitride. There are multiple development efforts in various phases of discussion with outside parties. As you may know, Oxford Performance Materials, OPM, is a company with whom we have a joint development agreement to codevelop composites of polymer with silicon nitride. This has made very good progress and the initial results are positive. Applications are broad. They can include implantable medical devices and high-touch surfaces. The next step is to outline a framework for a commercial agreement. The next segment, I'll move on to is the industrial business segment. The company is focused here on several applications, specific aerospace engine applications, components for outer space, welding tips and cups, ware components cutting tools, et cetera. As I mentioned, the industrial segment and the protective armor is the quickest path to revenue generation because of far less regulatory hurdles and the testing is a lot faster compared to medical devices. After COVID subsided in the second half of 2021, SINTX was able to resume attending conferences again, which is an important thing. It's a primary business development activity for us because that's what we -- where we find our customers and potential partners. We also launched a targeted marketing campaign and have since seen a nice uptick in requests for quotes and material specifications. Our engineering team is continually working to increase our capabilities for larger sizes and dimensions to increase our offering ability to the market and increase the range of our customers. Given world events, being what they are, customers are seeking a U.S.-made silicon nitride for a variety of highly technical applications and because of ITAR restrictions from the Department of Defense. We are very well positioned here. To repeat both the industrial and the body armor segment offer near-term revenue opportunities for SINTX, even as a biomedical R&D and product development continue at a quick pace. We have several product evaluations and progress at this point with several aerospace and industrial companies with a clear pathway to higher volume long-term production. We have received positive feedback on many of these prototypes. These prototype orders are predicate into production orders tomorrow. This process can take several months to develop to that stage and depending on external customers, their size, their internal review process, their testing and other variables. We also have several new prototype activities in evaluation. Now zoning down on the armor business update, there is much interest in the market, with several requests for quotes for body armor tiles and chest blades utilizing BoroShock and DuraShock, the 2 brands of ceramic technologies that SINTX Armor has to offer. Our future customers in the armor market will be integrators that integrate, that put together all of the pieces to form a ballistic vest or vehicle armor panel. That's the end product. These customers will then sell that product in the military or private sector. We have also gotten quotes for designs outside of the armor market as well, which is exciting and most welcome. The raw materials for these are already on site and the equipment and infrastructure install is underway. We expect the facility, SINTX Armor, to be operational in the first half of this year. We anticipate revenue in the second half of 2022. Supply chain delays have affected many companies, so we are no different. Supply chain issues with key infrastructure components have caused some delays with getting up and running. However, we expect SINTX Armor manufacturing to be up and running by mid-May this year and begin qualification of equipment that was waiting on power supplies. SINTX has also entered into a joint development agreement with a company called RMA Armament. This joint development agreement will focus on developing female-specific body armor, an area that is grossly underserved for which there is demand. This project, already underway, is expected to last 12 months and will then transition to a testing and assessment phase followed by production. Next, the antipathogenic business segment, which we are positioned as a distinct unit away from the biomedical implants. As an update, as you know, COVID is still very much a concern in many parts of the world. You can read that in the news. Scientific evidence is repeatedly clear that our silicon nitride is antipathogenic, as a powder, as a solid, in composites, even in fabrics, specifically against many viral pathogens, including SARS-2. We are exploring different manufacturing methods for different end-use applications, such as a wet process, a dry co-extrusion with North Carolina State and other institutions. Some of these activities are also happening internally with our R&D team. Others are in progress with interested partners outside. SINTX is also pursuing EPA registration for raw material. We are currently in the pre-submission phase. Silicon nitride is new to the EPA. We have some teaching to do. Having an EPA registration is highly desirable. And in some cases, indeed, it is needed for selling silicon nitride in the U.S. for antipathogenic applications in various markets that don't require other clearance such as FDA. The process is lengthy and detailed and can take anywhere from 2 to 3 years. It is well underway. Antipathogenic applications for raw material include face masks, filters, surgical gowns, drapes, flooring, paint and a variety of touch surfaces, all of which are in various stages of development. SINTX is in the process of negotiating a new commercial agreement around antipathogenic applications for silicon nitride and that will be announced as it moves forward. In closing, we are very excited about SINTX's future and the direction in which we are heading with a great team and some wonderful facilities. We are very excited about our company's recent milestones and continued traction in the important and foundational areas of the business. We truly believe in the products and materials that we are involved in, and we look forward to sharing updates as we have them. And we are attracting an increasing number of outside partners who are interested in our science, our technology and our products. In a world afflicted with viruses and wars, we have the goods. Our time and effort are therefore devoted to evaluating partnerships that can best utilize a unique technology and materials, and we are absolutely optimistic that we will be able to deliver. With that, let me turn it over back to Gina. Gina?

Thank you, Dr. Bal, and thank you to everyone who participated in today's call. This call recording will be available on the SINTX website in the coming days and will be available for 30 days. We look forward to sharing our progress during the next update. Please visit our website and refer to our ongoing newsletters for additional helpful information with specifics about our progress. Again, thank you for your participation in our journey, and we wish health to you and your families. Have a great rest of your day.

Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.