Spectral Medical Inc. (EDT) Earnings Call Transcript & Summary

Greetings, and welcome to the Spectral Medical Tigris Trial and Investor Update Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Ali Mahdavi, Head of Capital Markets and Investor Relations. Thank you. You may begin.

Good morning, everyone, and thank you for joining us this morning for a corporate update on the back of Spectral reaching its interim 90 patient enrollment threshold in its Tigris Trial, and its positive implications and developments relating to our exclusive distribution partner, Baxter International. Joining me this morning are the company's Chief Executive Officer, Chris Seto; and Chief Medical Officer, Dr. John Kellum. If you have not seen the news release, which was issued after the close of markets yesterday, it is available on the company's website as well as on SEDAR. I would also like to remind you that a replay of this call will be accessible until midnight on March 7. Following management's remarks this morning, we will conduct a Q&A session. Instructions will be provided at that time for you to join the queue for questions. Before we begin, we are required to provide the following statements regarding forward-looking information, which is made on behalf of Spectral Medical Inc. and all of its representatives on this call. Remarks and answers to your questions today may contain forward-looking information about future events or the company's future performance. This information is subject to risks and uncertainties that may cause actual events or results to differ materially. Any information regarding forward-looking statements is made as of the date of this call, and the company does not undertake to update any forward-looking statements. The company will not provide guidance regarding future events during today's call and management does not anticipate providing guidance in future communications with the market. With that, I will now hand the call over to Chris.

Thank you, Ali, and good morning, everyone. This morning, we are here to discuss our announcement yesterday afternoon and provide some further color as to what it means for Spectral. Additionally, Dr. Kellum will provide a brief update on our Tigris Trial. After our prepared remarks, we'll open the floor to a Q&A session. The first part of yesterday's press release, I'll address is the Baxter milestone payment. As we close out 2023, we ended Tigris enrollment at 81 patients. This, as we had indicated at the time, put us within striking distance of our 90 patient enrollment milestone and what we considered a significant milestone for the company. As we began 2024, we believe that we would hit the 90 patient mark sometime around the end of February and possibly into early March. Subsequently, we have started 2024 enrollment in fine form, and we reached our 90 patient enrollment target last week. As such, we notified Baxter on reaching 90 patients enrolled. Well, why is this important? Why is this such an important milestone for the company? As per our distribution agreement, as the 90 patient enrollment mark, Baxter has the option to retain its exclusive distribution rights by paying Spectral a milestone payment within 60 days of notification. If Baxter declines its option, it would be appointed a nonexclusive distributor of PMX. So what's the importance here? First, the signal to the market is very positive. Our takeaway is, and this is our interpretation that Baxter has confidence in the outcome of Tigris, they believe in the PMX product as they continue to make significant commitments to our partnership. In exercising its option, the potential for future milestone payments on FDA approval is maintained along with distribution economics such as minimum quantity and pricing thresholds. On a nonexclusive basis, these commitments would fall away. While we had a little doubt that Baxter would exercise its right to maintain its exclusivity, there are never any guarantees. That being said, Baxter has shown significant commitment to our partnership since we executed our distribution agreement. Some of the tangible commitments include now 2 nondilutive payments to maintain exclusivity, participation in the last 2 funding rounds in 2022 and 2023 as a co-lead investor for an aggregate commitment of approximately $6 million in convertible notes. On very company-friendly terms vis-a-vis a low coupon, no warrant coverage, a 30% conversion premium and a 4-year term. Also, a collaboration on the PrisMax substudy for HPE mode clearance. And on the qualitative side, the focus and resources allocated to the PMX partnership, including marketing, regulatory reimbursement, et cetera. And not to mention the prominence of both EA and PMX and Baxter's investor presentations. So overall, we had a great deal of confidence that Baxter would exercise its right and they did so in very short order. The second key item from yesterday's announcement is the extension of the initial term of our distribution agreement with Baxter to 10 years post-FDA approval. When we executed the original agreement back in February of 2020, the initial term was 10 years ending December 2029. We also thought that the Tigris Trial would be fully enrolled in 15 months, so around mid-2022. As you well know, the actual time line to fully enroll Tigris has significantly differed from our initial assumptions. As such, both Spectral and Baxter mutually agreed to extend the initial term to 10 years post-FDA approval which brings the initial term of the agreement back in line with the initial intent. So how does this benefit Spectral? Well, once again, I will reiterate that Baxter is the best partner for Spectral. At the end of the day, Baxter has approximately 50% market share of the installed critical care devices that run PMX in ICUs across the U.S. Additionally, they already have the sales infrastructure in place. They have proven to be both a collaborative and supportive partner. As mentioned previously, they had provided financial support as well as bringing to bear their commercialization machinery. The amendment to the term means that Spectral has secured a long-term partner and sets the company up to benefit from a long-term agreement, an agreement that also motivates Baxter to continue to invest and allocate resources to the PMX partnership. I'll now hand the call over to Dr. Kellum, who will provide an update on the Tigris Trial.

Thanks, Chris. Good morning, everyone. With regard to enrollment and update in to the trial. I've heard that, and I'll say this at the beginning, I've heard that some of our investors have wondered why I haven't been quoted in recent press releases? Well, as you can imagine, I've been busy getting this trial finished. I will comment when necessary, but I think that our enrollment numbers actually speak quite well for themselves. Last week, we reported enrollment at 90 patients in the Tigris Trial, including 9 in the first 6 weeks of 2024. I'll remind you that this represents the fastest pace of enrollment since the trial started. And importantly, we've had strong enrollment activity across multiple sites and screening activity remains quite strong at all of our sites. We now have 21 sites in the trial, and we are finishing contracts with the 4 remaining. We've already scheduled training for all -- one of those new sites. Emory, Mayo Clinic in Rochester, the University of Texas at Houston and San Antonio have all recently been added, and we expect these sites to push our enrollment rate further. Our models indicate that the trial will complete enrollment sometime in the -- later this year or early in 2025. While enthusiasm of the trial at the sites is very high, we continue to add logs to the fire, and we're about to have another investigator meeting on March 12 and 13 to welcome new sites and prepare for final enrollment push. Part of our investigator meeting will be open to attendees of The 29th International Conference on Advances in Critical Care Nephrology. This is the largest blood purification meeting in the world. The theme on that presentation, which will be delivered by 2 of our Tigris investigators and 2 nurse research coordinators is on the early adoption of TMX and preparing for post-approval clinical use. With regard to confidence in our preliminary data, although we have not and we will not conduct any formal analysis of Tigris data until we complete the trial. We continue to be very pleased with the results so far, and our confidence in a positive trial remains high. In November, we published a simulation of the likely Tigris results using Bayesian statistical analysis. The paper was published in Critical Care, which is a leading journal in the ICU medicine space and was co-authored by our site investigators. The first author of the paper is George Tomlinson, a highly respected biostatistician, an expert in Bayesian and Statistics in the University of Toronto. The results of these simulations further our confidence in the trial outcome. You may have noticed, however, that the language that we're using -- have used in the past, exceeding expectations has been removed from recent press releases. On advice of our consultants and in deference to future FDA deliberations, we are taking a more conservative and less quantitative approach to describing our preliminary results. In particular, we're steering clear of any language that might suggest that we're conducting interim analyses, which result in statistical penalties. What we can say, however, is that we're quite pleased with the results, and we're confident in the outcome of the trial. Back to you, Chris.

Thanks, John. Just before I wrap up and move on to the Q&A session, I would like to address Spectral's balance sheet liquidity. With existing cash on the balance sheet and now the Baxter milestone payment, plus proceeds from some initial warrants exercised, we have cash runway to approximately the end of Q2 '24. We have a number of funding alternatives that we are evaluating, and we will look to find constructive pools of capital as we have done on the last 2 funding rounds. We feel very good about our prospects to fund Spectral and attract the right pools of capital as we enter the home stretch of this trial. With that, I'll hand the call over to the operator to open up to questions. Operator?

[Operator Instructions] Our first question comes from the line of Scott McAuley with Paradigm Capital.

Chris and Dr. Kellum, congrats on the news yesterday, certainly a long time coming. Maybe a few things for me. One, maybe just to confirm on the data side. So as part of this, Baxter didn't get a look at the interim data but obviously, from the quote in the press release, they're very supportive of the trial and the potential outcome. So just kind of confirming that? And that you, as Dr. Kellum, I think you said that you won't be doing any kind of interim analysis or releasing the data publicly before the trial is finished.

Yes, Scott, thanks. Yes, that's confirmed. Baxter did not frankly want to see the data. John, do you want to address a little bit more or provide a little more color around -- at our release, et cetera.

Yes, sure. Baxter did have an option to "look at the data". I think as the milestone approached, it became clear to them that there was some risk in examining the data because that could be interpreted as a "an analysis". And frankly, Baxter doesn't want to do anything, even slightly to risk outcome of the trial. This is a small study and a penalty -- statistical penalty is something we certainly want to avoid. So there'll be no -- and in our statistical analysis plan, we've never planned for any sort of formal analysis. The goal with Baxter was to really just sort of give them a look at the crude mortality data, but they even wanted to pass on that because of the optics around it looking like it was an interim analysis, and they just didn't want to risk it.

Sorry -- thanks, John. And Scott, just to follow up just on a corporate side of things. It does allow Baxter to keep us options open, whether it's the potential to participate in a funding, et cetera, et cetera. So it certainly keeps away any potential conflict of interest or possession of MNPI.

Got it. That makes sense. And just on the timeline, obviously, good start to the year, the first few weeks and months and getting more trial sites online soon will definitely help. So Dr. Kellum, you know, highlighting that kind of expect the trial to be finished later this year, early 2025. Would you say that, that's kind of a conservative number that if we stay at the 6 per month or 7 per month or through kind of the next few months and that it could be sooner than that? Kind of where do you -- do you see that as that conservative estimate of the late '24 or early '25?

I can address that. So Scott, our models really incorporate not only recent activity, but some seasonal variation and things like that. So I think they're probably realistic. Is it possible that the trial could be finished a little sooner? It's possible, but I think that the safe money is on end of this year, early next.

Got it. And just lastly for me. Obviously, Baxter is going through the spin-out process with Vantive, that they're expecting should finish this summer. And obviously, a lot of the relationships so far are with kind of Baxter. So how do you see this going forward? The impact to Spectral and PMX both kind of from the approval side. And then as they're rolling it out commercially, how you see that spin out impacting Spectral and PMX?

Scott, so first of all, what I would say is, we're very pleased with actually the spin-off of Vantive from Baxter and our partnership will be transferred to the Vantive business unit or a company upon completion of their spinoff. It's still a part of a large entity. So it's one that generates approximately USD 5 billion in sales annually. While legacy Baxter has been, I'd say, great to deal with and has been a very good partner. Spectral was somewhat of a smaller fish in a big pond. And sometimes, it felt like there were a lot of other projects and interest that we were competing with for Baxter resources. With Vantive and since they've announced the Vantive spin-off, we feel that Spectral has been positioned as a key strategic priority. We've seen this in Baxter's investor presentations where both EA and PMX are key featured product launches for Vantive. Also, when you look at the portfolio of products within Vantive, PMX definitely has significantly higher growth potential and significantly enhanced gross margins relative to their other products. And that's the nature of our PMX product. It's unique. It's not a commodity. There's no alternatives. And if we get this right, PMX will be the standard of care for ESS and the US ICU population. And I think these are the characteristics that really excite Vantive and ultimately drive the enthusiasm and support that we have witnessed to date. So overall, we feel we're very important in -- well -- we feel we were very important in the legacy Baxter world. Our association with Vantive feels like that importance is certainly amplified, if you will.

[Operator Instructions] Our next question comes from the line of Prashant Rou, a private investor. [Operator Instructions] Our next question comes from the line of Kevin Veenstra, a private investor.

Three short questions. First question is what steps are the company taking to ensure that there's an adequate supply of PMX and EAA when FDA acceptance is received? Let's start with that question.

Yes. Thanks, Kevin. Our manufacturing partner, Toray -- first of all, they have significant capacity for the PMX cartridge. Additionally, Spectral has first call on all PMX product coming out of the Toray manufacturing facility. So we're quite confident over, call it, the next several years post FDA approval that we have certainly more than enough access to supply. Additionally, Spectral has significant manufacturing capacity to meet the demand. So at this point in time, we're not worried about meeting demand.

And can you comment briefly, Chris, about the EAA side of things as well. I think the only manufacturing facilities in Toronto, right? Is there enough capacity there to ramp up?

Yes, yes, Kevin. We do that in-house right here in Toronto. And certainly, we have significant capacity to ramp up.

Okay. Second question I had was with respect to the funding. So you noted that you have sufficient funding through to the end of Q2. Can you provide any color or details around the form that you would expect the additional funding to come in? What do you think it's going to be mostly the exercise of the existing warrants? Maybe more convertible debt with Baxter? I'm just wondering if you can provide some more details there.

Thanks, Kevin. So certainly, as discussed, current liquidity provides runway until the end of the second quarter of 2024. This may increase as we see more of the July 2024 warrants exercise. Just as an FYI, there are just over 12 million warrants outstanding with a $0.50 strike expiring at the end of this July. And we have seen some warrant exercise in the last week or two. As mentioned, we have a number of funding avenues available. Once again, we'll look for constructive pools of capital as we've done on our last 2 financings. In terms of funding required to get to final enrollment requires approximately $7 million. And to get the FDA approval requires approximately an incremental $8 million on top of that. So a full funding package to get this business fully funded is around CAD 15 million. Now listen, we're cognizant of our runway. So we don't want to wait until we're on fumes. That being said, we don't have a gun against our head. We're highly confident on executing another financing transaction that's friendly for existing shareholders. And that's all I can say about sort of what that structure looks like at this point in time, Kevin.

Okay. And my third question, just around the crude mortality benefits. I know probably a year ago or so, I know you had said repeatedly, at least a couple of occasions, that you would be reporting crude mortality benefits at the end of the 90 patients, which would take us around the end of March or middle of March, given that the 90th was put into the trial in mid-February. I'm just wondering, and I understand your comment around Baxter doesn't want to see the details, but how much of this is really, and I don't know if you can share this or not. How much of this is Baxter's wish versus really a regulatory requirement that this would actually punish the trial findings, if you were to announce those crude mortality benefits?

Yes, Kevin, I'll start, and I'll let John finish. But -- what I would say at a very high level is they're actually both intertwined, whether it's Baxter, regulatory. It's basically one and the same. And this was certainly at the behest of Baxter and their medical affairs team. But John, I'll let you speak to potential penalties here.

No, no, I think that's right. And although I think the company felt that there was a pathway toward providing crude mortality data that would be relatively low risk. I think it's fair to say Baxter is really sort of all in on this. And they don't want to complicate the framework any further. They know whatever the other investor knows in terms of where the results have been in our confidence, they have the trial simulation data as well. And I think given all of that, they just feel like why risk it. And we could argue about whether the risk is high or moderate or low. But there is at least some risk that someone would say, well, this wasn't an interim analysis. You guys need to sacrifice some p-value to get there. In a small trial, that is that is a tangible risk. So I don't second guess that decision, but the reason for releasing crude mortality data to the market was that if we're going to release it to Baxter, it was important to release it to everyone else. But since Baxter is not -- exercised that right, we've decided to play it safe.

Just one follow-up quick question here. Does this open up the opportunity then -- I think Toray had a representative on the Board, right, would they not have access to this data. And in which case, they would potentially be able to, I don't know, act on it or buy shares without other people knowing?

Kevin, are you talking about Baxter or Toray?

Toray. No, no, no, Toray. Toray has a member on the board, right? So clearly, management and the Board knows what the crude mortality looks like. I'm just saying what steps would be put in place to ensure it's a fair playing ground for all investors? That's all.

Kevin, it's Ali. A couple of things from a Board member's perspective. There are some fiduciary duties that some of the discussions that happen at the Board, even if they saw that, they wouldn't necessarily be able to share it upwards. And/or they would be precluded from any discussions that they want to enter into outside of that prism then. So I mean, that'll come down to proper governance at the Board. And each director fulfilling their fiduciary duties, but fair question.

Our next question comes from the line of Thomas Zimmerman, a private investor.

I was hoping you could provide some more details on the accelerated enrollment of January and February because it's really nothing short of amazing. So yes, if you have any details on what caused this acceleration or Baxter possibly having more guidance to cause it?

John, do you want to take this?

Yes, sure. So it's just all basically related to, I think, a couple of things. I think that we've added additional sites, and there's always a little bit of a lag between bringing a site on and getting site enrollment. So we've, I think, experienced some of that. There was a little bit of a hint, I think, if you recall what our enrollment looked like call it, November, December of last year. I think as we kind of entered into the holidays, we were getting a pretty good pace. And then it's sort of over the holidays, it kind of went down a little bit as expected. And I think this is just -- although I will admit it has exceeded my expectations. I think that it is kind of on track with what we were hoping to see with the additional sites that were added. And frankly, a lot of other efforts with existing sites to get them to sort of get back on track. We've had strong enrollment across both legacy sites that have been with us for quite some time as well as some of our new sites. So yes, and I think we have high hopes for even more increase in enrollment rate with some of these newer sites, Emory and Mayo Clinic in particular, University of Houston. Texas and Houston and San Antonio are all really strong sites, and we hope to see some strong enrollment from those sites as well.

I also wanted to follow up with are there any potential study or research reports coming out as far as the PrisMax study, the EDEN study, the endotoxic-sexy-again-study for lack of a better word. And also the [indiscernible], [indiscernible] is going to potentially be coming out with the guidance or recommendations on chemo perfusion or even PMX?

Thank you for that. So we continue to I think, stoke the literature, if you will, on the importance of both endotoxic septic shock as well as EAA and PMX and we will continue to do that, and we have sort of a robust portfolio of literature. I think that it's also fair to say that this has a ripple effect across the literature, and there are a number of other investigators and a number of other groups that are publishing information as well. We -- I give you an update on EDEN, we had completed enrollment a couple of months ago at 90 patients, at 92 to be exact. We anticipate that data will be locked in that study. This is -- for those of you who don't remember, this is a parallel observational study really sort of focusing on patients that couldn't be enrolled in Tigris, but who -- many of whom may be appropriate for the intervention, they were excluded often given exclusion criteria like end-stage kidney disease, for example. So these patients were enrolled in 4 of our trial sites as an observational study. That data will be locked in the next few days or the next few weeks at least, and we anticipate beginning analysis in April. We expect to have a preliminary draft of the manuscript sometime in June with submission in July. The purpose of this really is to identify to describe really the population that is outside the trial necessarily, but also a population that we would like FDA to not exclude for purposes of our label. And we feel that having some data on this will be important, but we feel pretty confident that the FDA won't exclude patients with, for example, HIV and end-stage kidney disease, that are sort of excluded for trial purposes but really don't make a strong scientific rationale or medical rationale for excluding them. So yes, we should be seeing that data coming out this summer. And then I can't divulge the time line, mostly because I'm not exactly aware of where it is, but [indiscernible] is continuing to publish recommendations concerning blood purification and sepsis, including hemoperfusion, hemoadsorption, as what we would like to call it with PMX, and that should be coming out in the coming months as well.

Last but not least, is there any update on where IMPLEMENT stands with SAMI and DIMI. Have they reached that machine, et cetera, please?

Yes. Sorry, Tom -- it's Tom, sorry. There's not much we can say on that as a minority investor in terms of what we can disclose. But what I would say is they continue to improve on the machines. The SAMI device was built -- purpose-built for basically hemoperfusion, to basically run a PMX cartridge. And there's some deficiencies to that product that need to be improved before it really has, what I would say is any chance of commercial adoption to be a sort of working horse in the ICU. And those deficiencies will take time, and they will take FDA clearance, so a 510(k) approval. So time line wise, it's certainly, I would say, 18 months out. And that's about all I can say from that perspective. And just condition-wise, for a DIMI trial, certainly, there are some deficiencies on the DIMI device for use in a trial. It's not that the device probably couldn't pass a trial. It's that at the end of the day, it's more ease of use and user interface and things like that, that need to be improved. And once again, we'll take FDA clearance prior to embarking on the trial.

Our next question comes from the line of Ray Galgash with Nova Sales Company.

My question has to do with funding. I think in the past, shareholders have been led to believe that there would be a milestone payment. And you touched on that earlier in your conference call and referenced 60 days that Baxter has regarding a milestone payment. I think a lot of shareholders are under the impression that there was going to be a significant payment made to Spectral once 90 patients were enrolled. And I would like to hear some clarification as to whether shareholders interpretation was accurate as to expecting a milestone payment that would be potentially $3 million, $5 million or $10 million in order to confirm Baxter's interest going forward. Can you elaborate on that indication of a milestone payment?

Yes, Ray, thanks for the question. The Baxter milestone payment is just over CAD 2 million. The original amount was higher when we entered into this contract. However, when Baxter participated in our 2022 financing, they pulled forward from that milestone payment, ultimately ended it up approximately 18 months in advance of us hitting the 90-patient enrollment mark. In turn for that investment, the milestone payment was amended, and we did file that when that amendment to the agreement back in 2022 and that ultimately reduced the size of the milestone payment in exchange for approximately $3.5 million investment in convertible notes in 2022.

And just, Ray, on that point, there has been no changes to the final milestone payment, which is on FDA approval.

Okay. So there would be no other additional milestone payments until FDA approval at this point in time?

That's correct, Ray.

Our next question comes from the line of Salman Mehmud, a private investor.

Congratulations on the interim milestone. Just a couple of questions. I know Dr. Kellum, you mentioned that there is some seasonal variation in that, I guess, in this area. Can you share as to roughly when that -- if that has had any impact in the high enrollments seen in the first 6 weeks of the year? And then I have one question -- one additional question after that.

Yes, thank you for that question. So yes, I mean, I think -- although I think we think we understand the seasonal variation, something sort of surprises us. There is definitely a relationship between influenza and subsequent bacterial infection and sepsis. We really haven't seen a lot of that. There's been, I think, some increase, obviously, in hospitalization with this year's flu season, but it hasn't necessarily translated into large amounts of patients with sepsis. And frankly, I haven't seen any of our patients enrolled in January and the first part of February that really sort of relate to influenza at least not that was obvious to the [indiscernible] clinicians. There's -- sometimes you don't know exactly. But I think in general, there is a bit of variation around seasonal events in terms of things like influenza driving it. I think this year has been complicated also by RSV, which doesn't really wipe out the immune system and predispose you to sepsis quite the same way. And then I think there's just -- I think there's just some random variation that occurs. Some months are just better than others from our perspective, I guess, worse than others patient perspective that can't really be explained, I think, scientifically.

So I guess the accelerated enrollment is potentially just pure acceleration, which is good to see. My other question, I guess, would be more for Chris and the rest of the team. In regards to the fact that Health Canada has approved EAA and PMX for a few years now. So a lot of the discussion has always been around the U.S. Can you share what the plans are to get this product into Canadian ICUs and potentially saving Canadian patients' lives?

Yes, Salman, thanks for the question. What I would say is, so first of all, Baxter is actually the distributor for us or now a sub-distributor for us in Canada, and really is in their hands from a commercialization perspective. Where and what is the plan or at least interest in Canada? Certainly, Canada is a much smaller market than the U.S. But the reality is that Baxter would like or Vantive would like for FDA approval prior to launching regardless of whether it's approved or not in Canada prior to launching in Canada. And for them, it is really much more of a value proposition that on the back of a gold standard FDA approval, there would be certainly pricing power and potential and leverage for the Canadian market as well and hence an economic business model here.

As someone who has lost relative to septic shock, that's the not an answer that someone who you'd like to hear. I'm sure you can understand that, right? So...

Sorry. I mean, listen, [indiscernible] I'd say a little bit of a -- it's a double-edged sword here. I mean, certainly, if companies can't make money on it and they're just not going to bring the product to market, right? And so if this is the path to open up a much broader market and marketing push by Baxter, it's unfortunate, but that's the path that sort of has been chosen.

Our next question comes from the line of Scott McDoug, a private investor.

I echo the congratulations on the 90 patient milestone, well done. Chris, are there any plans to bring more attention to the stock, particularly in the short term, particularly as this might impact the future cost of capital, capital raises, et cetera, and the impending raises that look like they're necessary by mid this year? That's the first part. And then I'll have a couple of follow-ups.

Yes, Scott. And certainly, I can have Ali jump in here as well. But certainly, we do market this company. We market it fairly often. And certainly, what I could say is we've had, I'd say, performance with our market share appreciation certainly year-to-date, certainly over the last 12 months. And if you benchmark this against broader indices or even peers. Certainly, we've out performed them by a significant margin. I would say, though, that Scott as we continue our prospects in share price appreciation, at least sticky share price appreciation. What we're not looking to do is just throw kindling on the fire, and then it goes up and then sort of burns out quickly. I think we're at the point now where as we update the market on progress and we do see the end in sight for this trial and to full enrollment. We're now putting logs on. And certainly, with the pace of enrollment, we've seen an appreciation in share price. But one that, for the most part, has had staying power. And I think we're going to continue to do that. Certainly, there will be at a point in time where we do have to pull the trigger on a financing. And so we are doing our best to expose this company so that at the end of the day, we have a lower cost of capital.

Does -- second part, does Baxter have more to do in order to realize post-approval sales, i.e., example, I've heard they have to get some sort of approval on their Prism machine to get it approved for hemoperfusion. If so, what just an example. If so, what are the time lines from Baxter's perspective? Or would you say they're ready to go once and if PMX is approved?

Yes. So Scott, I'll take the beginning of this, and then John can talk about the actual substudy itself and sort of timing. But it is anticipated that -- it's the PrisMax device, Scott, we are running a step study for hemoperfusion -- sorry, HPE approval. It's somewhat -- it's basically concurrent. So we expect that shortly after PMX approval that there would be clearance for the PrisMax device for HPE mode. John, I don't know if you want to add anything to that?

No, I think that's accurate. We anticipate -- we've just begun really enrolling patients or about to start enrolling patients into the sub study. We don't need very many because it's not a comparison with anything. It's really just to acquire data to ensure that the device does what it's intended to do. We have pretty high confidence -- extremely high confidence in that given that the device is used in that mode elsewhere in the world. So it's as close to a no-brainer as you get in this business in terms of collecting that data. But obviously, it is -- there is a 510(k) approval process for approving not the device because that's already approved but the HPE mode and the disposable lines, et cetera. So I think it will be finished really right at the same time as the Tigris main trial. Obviously, the PMA will take longer than the 510(k), so approval may even be provided before the PMX device is approved or concurrent with that, and that's really in the FDA's hands.

And then just a quick follow-up on EAA. Do you expect that with an FDA approval of PMX, should it happen, that there will be an increased demand for the EAA worldwide, not just with use with PMX, but perhaps as a screening tool for ESS or Endotoxic Septic Shock. And if so, what is the marketing strategy and who might be the world distributor be in such a product.

John, do you want to take that one?

Well, from a scientific perspective, yes, I mean, I think you're exactly right. I think there will be a demand. We've already, I think, seen some increase in EAA demand really since we've begun the Tigris project and then the foundation from a scientific perspective in terms of selecting a population that's going to benefit from the therapy. And we do anticipate further upward pressure in that as we move forward. I'll let Chris talk about sort of our distributors and plans for getting that out.

Yes, Scott, what I would say is, certainly, we would expect increased demand on the back of FDA approval for PMX, it certainly sends a strong signal to the rest of the world. On top of that, though, and what I would say is that territories externally and the rest of the world, they would need a distribution partnership with Toray for the PMX device. Obviously, it's no good to just have a diagnostic without a therapeutic. Now there are distribution arrangements all through Europe, where we've seen, I'd say, limited utilization or sort of green shoots of utilization of PMX. So certainly, throughout Europe, I would expect increased demand and also in areas Asia as well as the Middle East as well.

There are no further questions at this time. I'd like to turn the floor back over to Chris for closing comments.

Just to close out this update, we're entering the final push to fully enroll the Tigris Trial. We are now at 60% enrolled. Compared to this time last year, we were only 33% enrolled. So I can imagine for many shareholders here, especially those who were here in late 2019 and even before that when we kicked off Tigris, there certainly were days when it felt like there was no end in sight for Tigris. Today, where we stand, it feels very different. The finish line is truly in sight. We look forward to continuing to update you on enrollment progress, and thanks, and have a great day.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful day.