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

Hello, and welcome to the Annual General Meeting of Shareholders of Spectral Medical Inc. Please note that today's meeting is being recorded. If you participate in today's meeting and disclose personal information, you will be deemed to consent to the recording transfer and use of same. If you disclose personal information of another person in today's meeting, you will be deemed to represent and warrant to Computershare and the company that you first obtained all required consents for the disclosure, recording, transfer and use of such personal information from all appropriate persons before your disclosure. [Operator Instructions] It is now my pleasure to turn today's meeting over to Paul Walker. Dr. Walker, the floor is yours.

Thank you very much. Ladies and gentlemen, welcome to the Annual Meeting of Shareholders of Spectral Medical, Inc. My name is Paul Walker, and as the Chairman of the corporation, I will act as Chair of today's meeting. I extend you all a warm welcome to this meeting. On behalf of the Board, I wish to express thanks to those shareholders who have submitted their proxies in advance of today's meeting. As this meeting is held both in person and via live audio webcast, we think it's necessary to set out a few rules for the orderly conduct of this meeting. If you have joined the meeting by way of live audio webcast, questions in respect of a motion can be submitted by a registered shareholder or duly appointed proxy holder by following the audio Q&A instructions on your screen to dial in and access to QA phone line. Once you're on the QA phone line or ask a question during the session, you will need to press Star 1 on your telephone. Please mute your computer audio while waiting to ask a question. Those of you here in person, please raise your hand to ask a question. When asking a question, please indicate your name and which entity you represent, if any, confirm that you are a registered shareholder or a duly appointed proxy holder. Questions will only be addressed during the question period at the end of the meeting, provided that the questions regarding procedural matters or directly related to the monitors -- motions before the meeting will be addressed during the meeting. For those attending via live audio webcast, voting is open online at the beginning of the meeting and will remain open throughout the meeting. This will allow you to choose to vote on each resolution now or wait until the conclusion of the discussion on each resolution prior to casting your votes. Only registered shareholders and duly appointed proxy holders of the corporation are permitted to participate in online voting shortly after the final resolution is proposed and voted on, we will close the online voting. For those attending in person, voting will be conducted by ballot. If you do not sign your ballot at the registration of the scrutineer, please raise your hand at the conclusion of the meeting, and your ballot will be collected by the scrutineer. Now I'll proceed with the formal portion of today's meeting. To expedite the formal part of the meeting, I will move all motions. Following the formal meeting, Mr. Christopher Seto, the CEO of the corporation, will give a short presentation. I now call to order the annual meeting of the corporation's shareholders. With the consent of the meeting, I appoint Chris Seto, the Corporation's Chief Executive Officer, as Secretary of this meeting. For the purpose of this meeting, I appoint Computershare Trust Company of Canada through its representatives as scrutineers to compute the votes of any ballots taken at this meeting and to report thereon to the Chairperson of the meeting. Scrutineers have advised that the requisite quorum of shareholders are present. A copy of the final report on attendance will be filed with the records of the meeting. Purposes of today's meeting are set out in the Management Information Circular of the company dated April 17, 2025. The notice calling this meeting, the circular and the form of proxy were mailed to shareholders on or around May 15, 2025. The annual audited financial statements of the company for the fiscal year ending December 31, 2024, and related MD&A were previously mailed to shareholders of the company who requested it and are additionally available on the company's profile on SEDAR+ and on the company's website. Our transfer agent's appointee has attested to the proper mailing of the notice of this meeting. Proof of service of mailing provided by the company's transfer agent has been provided to me. I direct that a copy of the notice of this meeting as well as the affidavit of the mailing of this notice, the company documents will be annexed to the minutes of this meeting. Unless there is any objection, I will dispense with the reading of the notice of the meeting. Copies of the circular and other materials are available under the company's profile on the SEDAR+ website. For the purposes of the meeting today, if attending via audio webcast, voting on all matters will be conducted online through the virtual interface. If attending in person, voting on all matters will be conducted by ballot that was provided to you when you arrived today. Those of you attending via audio webcast, you may choose to register your votes online now or you may wait until the conclusion of the discussion of each resolution prior to casting your votes online. As noted earlier, shortly after the final resolution is proposed and voted on, we will close voting. For those of you attending in person, vote by marking an X on the appropriate box of the appropriate ballot. Please print your name clearly on the ballot and sign it before returning to the scrutineer. At the conclusion of the meeting, please raise your hand, and your ballot will be collected by the scrutineer. The scrutineer will then compile the votes in respect to each business item and the corporation will release final results via a press release later today. As noticed earlier -- noted earlier, to further expedite the formal part of this meeting, I will move all motions. In accordance with bylaws of the corporation, no such motion needs to be seconded. I now declare that this meeting is regularly called and properly constituted for the transaction of business. We now move to the formal part of today's agenda. First item of business, the presentation of the corporation's consolidated financial statements of the financial year ended December 31, 2024, and the auditor's report thereon. Copies of such documents have been mailed to the shareholders who requested such statements. Unless there is an objection, I will dispense with the reading of the auditor's report. I will entertain questions with respect to the financial statements of the corporation in the general question period. We now move to the next point on today's agenda. Next matter to be acted upon is the election of 7 individuals to the Board of Directors. As per the Management Information Circular, Jan D' Alvise, Jun Hayakawa, David Feigal, Chris Seto, William Stevens, Paul Walker and Cristiano Franzi be nominated as directors for the ensuing year or until their successors are elected or appointed. Each of the persons nominated has confirmed that he or she is prepared to serve as a director. Each of them qualifies as a director under the provisions of the Business Corporations Act of Ontario. The motion to elect the 7 nominees is now on the floor. The act requires that the Board of Directors be elected. Proxies have been solicited for each of the 7 proposed qualified persons listed in the Management Information Circular. The form of proxy for voting on the election of directors sets out each proposed nominee separately and allows shareholders to vote for each director individually. Is there any discussion on this motion?

[Operator Instructions]

Can the operator please confirm whether there is any discussion or questions on the motion?

We have not received any discussion or questions on the motion.

Thank you. As mentioned at the beginning of this meeting, voting today is being conducted both online and in person by ballot. If you have not already done so, please vote on the resolution using the virtual interface by marking an X on the appropriate box on the appropriate ballot. I will now move to the next item of business. Next item of business is the reappointment of MNP LLP, chartered professional accountants, as the auditors of the corporation to hold office until the earlier of the next annual meeting, shareholders or their successors are appointed to authorize the directors of the corporation to fix the remuneration of the auditors. I move and second that MNP LLP be appointed auditors of the corporation to hold office for the earlier of the next annual meeting of the shareholders or their successors are appointed and that the Board of Directors be authorized to fix their remuneration. The motion is now on the floor. Is there any discussion or questions on this motion? Can the operator please confirm whether there is any discussion or questions on the motion?

We have not received any discussion or questions on the motion.

Thank you. If you've not already done so, please vote on this resolution using the virtual interface or by marking an X on the appropriate box on the appropriate ballot. I will now move to the next item of business. As previously mentioned, voting today was conducted both online and via the virtual interface and in person by ballot. Now that we have proposed and discussed all the resolutions to put to the shareholders, we will be closing the online voting momentarily, and the scrutineers will be collecting the ballots. Is there any further discussion or questions related to the matters at this meeting? Can the operator, please confirm whether there is any further discussion or questions?

We have not received any discussion or questions.

Thank you. We will reconvene in a few moments once the voting has been closed. Voting is now closed. Please raise your hand and your ballot will be collected by the scrutineer. Thank you for waiting. The scrutineer will prepare the scrutineer's report following the completion of the meeting, and we will announce the results of the meeting in a press release in accordance with policies of TSX and file a press release on SEDAR+. Is there any other formal business to be properly brought before this meeting? Can the operator please confirm whether there are any questions?

We have not received any questions.

Thank you. If there is no further business to be brought before this meeting, I move and second the formal portion of today's meeting be concluded. As the formal business of the meeting of the shareholders of the corporation has now been completed, I'd like to turn over the floor to Mr. Seto, CEO of the corporation, who will now proceed with this presentation. I just want to make one comment now that this is over. I want to thank the members of the Board who are all here from places in the world and are continuing their incredible contributions to the Board. And as Chairman, I appreciate each and every one contributions.

Great. Thanks, Paul. To the first slide. Thank you, and good afternoon, everyone. Today, during our presentation, I'm not going to dwell too much on 2024, other than to say it was a very productive year, both clinically and operationally. Progress we saw in 2024 culminated in closing on a very important milestone for Spectral in Q2 of this year, which was full enrollment of the Tigris study in mid-April. This is a monumental achievement in the world of sepsis clinical research. We ultimately enrolled a total of 157 patients to yield 100 patients who received the PMX treatment. If you could -- thank you. It's been a lengthy journey to get here, but I want to thank all our stakeholders, including our clinical site staff, the patients and their families, our Spectral team as well as our investors. That being said, while full enrollment is a significant milestone, it is not our ultimate endpoint. As such, our team is in full regulatory mode and commercialization readiness mode. John will discuss the process and time line on the regulatory front shortly. Aside from the clinical advancements, Spectral had an equally productive year on the operational side, where the company's cemented partnerships with many of our strategic partners. Our key commercialization partner, Vantive, exercised its right to maintain its exclusive distribution rights in the form of a non-dilutive milestone payment in early 2024. While we continue to receive strong financial support from our strategic capital pools, company-friendly terms from Pinnacle Island and Birch Hill, providing the company the financial runway to fully enroll Tigris. More recently, Vantive stepping up with the financing in the form of promissory note, which provides a path to fully fund the company to potential FDA approval and into commercialization. So once again, 2024 was a year of significant progression. We're excited to keep moving Spectral and PMX toward to commercialization. With that, I'm going to pass it over to John to discuss what the next phase looks like, specifically our regulatory path.

The next slide up shows the activities. The next slide shows the activities in 2025. As Chris has already noted, we will be -- we completed our enrollment into Tigris with 157 patients randomized. Our top line readout is scheduled for August. And I can say that with all the data cleaning and preparation for analysis, that we are on track to hit that. This readout will include our primary and our key secondary endpoints, which is the 28-day mortality and the 90-day mortality. Both of these will be analyzed using the Bayesian statistical analysis that we've been talking about for quite some time. And we'll report this both adjusted by baseline severity as well as without adjustment, include a posterior probability of benefit, as well as risk differences and odds ratios. Importantly, regulatory review of products like this that are used in other jurisdictions are generally based on the totality of evidence, and this includes safety and efficacy data from other sources in addition to our own. We believe this is actually a significant advantage for us because this product has been in use in multiple jurisdictions around the world for some time and there's significant safety data and at least retrospective studies showing efficacy. These reports will be available to the FDA and submitted as part of our final submission. Finally, we'll be submitting a manuscript which will have the complete analysis from Tigris. And all subsidiary analysis, we'll be doing that probably around the same time as the press release comes out in August, early September at the latest. And if you want to sort of get a preview of what is in that manuscript, I would say that it will basically follow our methods paper that was published back in 2023. That's the Tomlinson et al paper from the November issue of Critical Care. It has a number of simulations in the paper, and it's useful because you can see how Bayesian analyses are conducted and how those are reported. The output basically provides an analysis of the posterior probability, which is basically the prior probability plus the new data and a posterior probability, that number ranges from 0 to 100. We are expecting results well above 90%. And thus, our top line data will include both the 28-day mortality, both treated and controlled patients, absolute relative differences both before and after adjustment, as I've said. We'll also be doing that at 90 days for complete transparency and using the same analysis that we performed at day 28. Manuscript, we'll have, in addition to all of those things, will be submitted with all the rest of the analyses and all of the secondary analyses, all of the safety data, all of the additional analyses that are conducted. Although we can't predict the timeline for publication, it's likely that the manuscript will be published towards the end of this year, early 2026 at the [indiscernible]. If I could have the next slide, Slide 6 will show the remainder of our timeline. And our FDA submission is planned for October of this year, and I'm pleased to say that we are on track with that timeline. There's quite a lot of information that has to go into that submission, but it is already well underway. The FDA will take a bit longer to review the final clinical module than the other modules that they're already working on, but we predict about 9 months in total for them to review based on historical timelines. at least, this is the best information we have at this time. Full commercial launch by Vantive, our commercialization partner, is planned for really right on the heels of FDA approval. And with that, I'll turn things back over to Chris.

Thanks, John. Slide 7. So we discuss here our partnership with Vantive and their commitment to the commercialization of PMX. First off, who is Vantive? Vantive is our exclusive distribution partner for PMX. Vantive itself is a carve-out from Baxter, as some of you may recall. It's comprised of 3 former Baxter business units, including the division that we originally partnered with back in February 2020 called the Acute Therapies division. Baxter recently closed its sale of Vantive to the Carlyle Group, the large private equity firm, at the beginning of 2025. And as a result, our distribution agreement with Baxter was assigned to Vantive. From a commercial capabilities perspective, I will reiterate that Vantive is the best partner for Spectral. At the end of the day, Vantive has approximately 50% plus 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. So the reality is this is putting a high-margin product just in the bag of these same sales individuals. From a financial support side, Vantive has committed just over $20 million to Spectral to date. This has been comprised of $9 million in non-dilutive milestone payments, $6 million in convertible notes and an initial drawdown of over CAD 5 million on the recently announced promissory note. From a commercialization perspective, Vantive continues to allocate significant resources to our partnership across multiple businesses, sales and marketing, procurement, et cetera. And this number seems to grow with every quarter. Additionally, Baxter has put financial and clinical resources behind our collaboration on the PrisMax sub-study to get FDA clearance for the PrisMax device for hemoperfusion mode. This will allow for a smoother commercialization uptake. Next slide, please. In May of this year, we entered into a debt facility with Vantive for up to USD 10 million. The importance of this financing is that it provides a path to fully fund Spectral to potential PMX clearance and into commercialization. It allows the company to focus all its resources on the PMX program. Financing is what I would characterize as company-friendly. First, it's a facility that provides for the lowest cost of capital. The coupon is a 9% annual interest rate. We were in discussions with multiple parties on financing alternatives going back to last fall, and the indicative terms discussed were nowhere near as attractive as the Vantive debt. Second, this is a 4-year term and PIK interest. That should result in 0 dilution given the 4-year term. So we have a positive regulatory outcome for PMX, I would expect that we are beyond cash flow breakeven by the time this debt matures. And finally, this is a straight debt instrument, no bells or whistles such as warrants or conversion features. With respect to the drawdown of the debt facility, there are 4 separate tranches. First tranche was USD 4 million, which was triggered upon execution of the debt agreement. Second tranche is USD 3 million, which is triggered on top line data release and conditional on Tigris showing a 7% absolute mortality benefit at 28 days and a 10% absolute mortality benefit at 90 days. Third tranche is USD 1 million and is conditional on the amount of Spectral November 2025 warrants being exercised. If there is less than $1 million exercised, then Vantive will advance $1 million. As a reminder, we have approximately $5.5 million November 2025 warrants with an exercise price of $0.48. The fourth tranche is USD 2 million and is conditional on the FDA acceptance of our PMA submission. So once again, a very attractive financing. I think more importantly, it highlights the strength of our partnership and relationship with Vantive and the alignment of both Vantive and Spectral on our PMX partnership. Next slide, please. So we've shown this slide many times before. I think it's important to remind everybody sort of what's at stake here for our shareholders. This once again points to the robust financial returns and shareholder value potential for our platform. We're operating in an untapped $2 billion-plus annual market with no competitors. We are well positioned to unlock significant shareholder value. I'll quickly reiterate what I've said previously, we have the best commercial partner, Vantive. We said at day 1, we continue to say it today, they have shown themselves to be committed and collaborative partners and continue to allocate and invest commercialization resources across all disciplines. Not to mention, once again, they're greater than 50% market share in ICU CRRT devices, which, once again, we intend to run the PMX therapy. From a Spectral net economic benefit perspective, our platform has incredible shareholder value potential. In the table, we continue to show market penetration rates and what this could mean to Spectral from a net EBITDA perspective. You can see it's robust, anywhere from tens of millions to hundreds of millions in U.S. dollars. If I look at how this might translate into share price potential, I'll just lay down some illustrative math. Comparable medical device companies trade at anywhere from 10x to 15x EBITDA multiples. For the purpose of our math, I'll just use 10x. I'll multiply that across the various net EBITDA scenarios and then divide by, call it, 350 million shares outstanding on a fully diluted basis. The results in some very pretty attractive share prices. I won't call them out, but they are multiples of where we sit. So for a shareholder that invests today or invested yesterday or even longer than that, the potential total shareholder returns could be spectacular. Next slide, please. Once again, this is a simple chart showing Spectral's relative share price performance over the last 12 months. Since our last AGM, 1 year ago, Spectral's share price is up approximately 66%. And as you can see, it's well above any broader market indices or any of our peers. And certainly, we have benefited from finalizing enrollment and the anticipation of release of top line results as a near-term catalyst. But this is also attributable to the constant marketing and exposure of our story to new pockets of capital. Next slide, please. we've just summarized Spectral's upcoming catalysts. So once again, top line results this summer, FDA submission in the fall, Tigris manuscript near the end of 2025. And in mid-2026, potential FDA approval for PMX and the commencement of commercializing. So pretty straightforward catalyst. And certainly, we're all awaiting the August top line readout. So before we get to the Q&A session, I would just like to wrap up the presentation portion with some concluding remarks. We were able to move the business forward significantly in 2024, both clinically and operationally. Earlier this year, we closed on 2 very important milestones with the full enrollment of the Tigris study, commenting our strategic relationship with our financing partners and our commercialization partner. We've built a strong foundation for success. The company's resources are fully focused on regulatory submission and commercialization launch. Most importantly, we are positioned to unlock significant shareholder value. PMX economics are robust with an estimated $2 billion plus market, targeting the most malignant form of septic shock with no other therapeutic solution. Now I open up the call for your questions.

Thank you for the update. My name is [ Kevin Bimster ], Private Investor. My first question is around the first 3 modules. They've been submitted, right? I'm just wondering, are they close to approval or any comment on that?

It's actually -- well, I'll just start and I'll finish. It's actually 3 modules. First 2 modules have been submitted and are under review.

Yes. I mean, I don't -- I don't have too much to add to that. Maybe just a clarification. The last time we submitted the modules, we had 4 modules, the last module being the clinical module. For this time, because the FDA had already worked on and approved some of these things with their guidance, we shrunk them down to having just 2 preclinical modules and then the final module. Both of those preclinical modules have been submitted to the FDA and have been accepted and are currently under review, and we're just finalizing queries.

Okay. Sounds good. Next question is around any impact of Trump politics potentially on FDA, whether it's review time or scrutiny, things like that?

Very open-ended question there, Kevin. So I'll start on this as well. So from what we understand, yes, you've seen headlines out there with respect to changes at FDA. I think one thing we can say with respect to our interactions with the FDA, they are still working on historical timelines, at least responding to us and with our interactions. That could certainly change as more cost-cutting happens. But so far, I would say, turnaround times are holding to existing timelines.

Yes. I don't have much to add. I mean, I think the smart money is on. There'll be some disruptions. Will it impact us in a significant way or not? I don't think we can say and I would agree with Chris' observation that at least so far, things seem to be on track without any real slippage in terms. So we do have breakthrough designation, I'll remind you of that. And to the extent that we do have sort of favored status, we may be a little more insulated from the disruptions than those that don't have that. But again, that's hard to say at this point.

And we're not a vaccine or a food ingredient.

I always have a lots of questions, but I will let other people ask in a minute. In the slides today, we still see that old number of 140,000. I think Dr. Kellum had a recent paper where it was more 260,000, 270,000 in terms of target market. So wondering if you can comment on that?

Yes. So sure, I'll comment. So I agree, I think 140,000 is conservative, but I think that's a reasonable estimate. I think that it's likely to be -- market size is likely to be larger than that. But I think when you factor out some patients who may be eligible for the therapy are just not suitable because they've got severe underlying disease or whatever. So we're probably still talking about somewhere between 140,000 and 200,000 patients.

One more question for now. Going back to 2016, I remember when the results came out for EUPHRATES. Dr. Walker had a statement around -- there's a dose response between the amount of endotoxin removed and the mortality benefit. I'm just wondering how is your thought process evolved since that point in time, if at all? I think you were surprised at the time why the endotoxin load, at least as per the EAA, wasn't going down as much as you expected. But if it was going down, you saw the clear benefits.

I'll make a brief comment on that. I think that the understanding of the role of endotoxin continues to increase, and the importance of it only continues to get more. I think John and the clinical team have further clarified a lot of those aspects with respect to and have published on and identified now what's called endotoxic septic shock. And I think this is a new and has been said, a very malignant form. I think our understanding of endotoxin. I have no other comments with respect to that. I think we recognize that endotoxin is bad and getting rid of endotoxin is good. And the more you can do that, the better it is.

Well, there may be some observation around -- I know we talked before about that the cartridge itself couldn't take the full load for people that are really, really sick. For this trial, though you were still limited to the 2 rounds, correct, of the PMX? Any other question?

[ Scott McDugal ], a shareholder. This is a question with regards to the -- a little bit regarding the market penetration and the EBITDA slide, but probably ends up being a little more medical than financial. So your range of acceptance -- market acceptance -- or sorry, penetration is some -- 15% to 50%. How should we think about that as shareholders? Is this -- is that where we fall on that range ultimately? Is that a function -- it's a function at least I presume about how well Vantive does in the marketing, number one. And number two, the absolute risk reduction percentage. I'm making the assumption, and maybe you can confirm this, that the higher that number, the more likely is doctors and ICUs will adopt the PMX solution. So can you comment on whether or not we'll be shifting towards the -- without saying what -- obviously, what the results are going to be because we don't know. But will be beyond the higher end of that scale with an absolute risk reduction that came in, say, for example, 15% versus 10%, would be at the bottom end of that scale. Would that be a reasonable conclusion for a shareholder to make?

Once again, I'll start, and John will chime in. So there's a couple of questions there, more than a couple. But one, certainly on -- as part of market penetration, of course, absolute mortality, what that number is will play into it. The other part though is Vantive's commercialization execution. And so just by the nature of the installed critical care devices and having greater than 50% market share, I personally -- where they end up would skew, in my view, skew closer to the right-hand side, the higher market penetration. Where do they start? And where do they end, though? And how quickly does that happen? I think there's a couple of ways you can look at it. And I think last year, in our AGM materials, we did have some commercialization of some medical devices. One was the ECMO therapy. And then the other was Xigris and their market penetration. One was certainly a lot slower. More -- a traditional, I think, ICU medical device adoption. I don't think we're there. One was a very aggressive push right out of the gate by Xigris. I'm not so sure where they're right out of the gate like that. I'd say we're somewhere in between. But ultimately, where we end up, given that there's no other therapy out there, given this is a huge unmet need that there's the potential that this therapy becomes de facto standard of care, certainly gives me confidence of where we end up being closer or even possibly beyond the right-hand side of that market penetration slide.

Yes. I mean, I agree. I think -- first of all, I wouldn't cap -- that's a very conservative slide. This idea that you have a life-saving therapy for something there's no other treatment for and you start at 10%, we could be criticized being way too conservative. And certainly, we've had discussion within the company about the fact that -- but again, it's a conservative estimate. So I wouldn't say it's capped at 50% by any stretch. I think you have to ask yourself, what are the reasons that hospitals would not adopt this technology? It's for a relatively small population of patients. We're not saying this is a therapy for everybody with sepsis, certainly, I mean that would be 1 million people a year in the United States, we're not saying that. We're saying this is really for patients that have circulating toxin in their bloodstream. And when we find those patients, we think they should be treated. And so I think adoption is going to be high. I don't actually -- I would challenge your comment about the size of the effect because if you could be certain, in other words, if the confidence intervals were very tight and you were like really confident that you had a 5% mortality benefit. I mean, right? Even a 2% mortality benefit, if you were confident? So I think it has much more to do with confidence in the data, then it has the absolute effect size. And so that's actually quite helpful because the Bayesian analysis provides us with a posterior probability. So if we come out with a posterior probability, 94%, 95%, you're pretty confident that this is going to have a benefit. The final thing I think that's important is that it does probably matter. If you look at what -- how doctors think -- and as a doctor, I can attest to that. If you think about how doctors think, it's not just am I going to save this patient's life. What's the patient's overall life expectancy? And does -- does this patient really have an opportunity to benefit? What are they going to look like in 90 days? What are they going to look line in 60 days? Do they have some severe underlying disease process, but that really isn't going to benefit them. And so I think that, to me, is a bigger factor in terms of working through the total adoption. Now there is one last point though, and that is -- and Chris alluded to this. It's not as simple as giving a drug. This is a device therapy. You'll have to be prepared to do it. Some clinician has to know how to do it. So there are going to be some preparatory steps, and that won't happen overnight. That will be -- that will take some time. It won't take as long as ECMO, because that's much more complicated. But it won't happen as quickly as just ordering a drug from the pharmacy.

Related to that is finding those endotoxic patients or the ones that have. So is it right to think of the EAA as a sort of a triage tool? And to what extent will ICUs -- once PMX is approved, to what extent would they say, okay, now that we have a therapy, it's a matter -- as a matter of course, based on the symptoms, everybody should be getting this EAA.

Yes. No, it's a really good question because the natural history of diagnostics are that they start up being very niche and very specific. If you look at BNP, a B type natriuretic peptide for heart failure, it was a test where everyone said, "Oh, we don't need this task, the heart failure experts said we don't need this test. And now it's admission orders to emergency departments because they want to know as quickly as possible whether this symptom complex can be related to heart failure. Will that happen with EAA? I mean, we're not as easy of a test. We're not a test you can put on a multichannel analyzer and just send it out with the sodium level. I mean, it's not quite that simple. So I don't think we'll have that as rapid an adoption of EAA. But if you're -- particularly, if you're a hospital that really can't deliver PMX because you don't have -- let's say you don't even have acute dialysis at your hospital. You're some rural hospital. You still may want to measure EAA so you can get that patient to a place that can deliver the therapy quite early. So I think historically, you're probably right that it will move in the direction of being more of a triage test. I think the early adoption will be more conserved because it's a difficult test to run relative to just sending a blood sample to a lab and running a multichannel analyzer. It's a separate piece of equipment that has to run it on. And although it's not a complicated test, it's not as simple as ordering a sodium.

Okay. And just one last quick follow-up. With regards to the Vantive agreement, which is -- and I think it's more for Chris, more of a -- at this point, a redacted document. So I've been involved in some distribution agreements in a completely different business or industry. But typically, there is a provisions and therefore, the distributor reaching certain milestones. Otherwise, they potentially lose their ability to continue with that product. In other words, they have to achieve a certain level of adoption penetration. Do those exist in the Vantive contract?

Yes, they do. And I think we've addressed this originally when we entered into this agreement. So there are minimum quantities at minimum prices. They're robust enough that we would see, I would say, significant positive cash flow out of it. And the reason we did this and as we explained, well, 5 years ago now, I guess, Baxter themselves had a product called oXiris. And while not approved in the U.S. we didn't want them -- and it sort of competes, but sort of doesn't. Anyways, we didn't want Baxter to lock us up into an exclusive arrangement, us spend all this time and money, get FDA approval for this and then for them to sit on the product when it was time for commercial launch. So we wanted to hold their feet to the fire. And that was certainly a very important clause to put in there.

Just quick -- and that's not necessarily a function of the end mortality benefit. There's no...

No. No.

My name is [ Dan Musilli ], I'm a private investor. Just a simple question. Top line results will be given in August. Is the cat out of the bag at that point? Is everything made known at that point? All the results, everything that anybody would need to know as a potential investor at that time? Or would there be any other information or data that would be provided to the FDA that would extend kind of put people into like another waiting type environment at all? In other words, is everything clear?

So it certainly won't be all of the analysis. The FDA submission is a 300-page document, right? So it won't be everything. It's the top line data. So it will be the most important results, right? The posterior probability, the effect size, all that stuff. But the all of -- and we -- between -- when the results are available and the final manuscript submission is when we'll have all of the additional analyses. And even then, I mean, what happens whether you submit a manuscript is reviewers want more details. So we have to go back and do more analysis. So that's going to be a back and forth until that manuscript publishes. When the manuscript is published, then you will have, I would say, 80%, 90% of every piece of information. The FDA is always going to have details that frankly, I don't even need to see, right? I mean, they're going to have all kinds of stuff about the use of the product outside the United States, a bunch of historical things, details around the chemistry, I mean stuff that certainly, I think most investors won't have much of an interest in. So I would say the point at which you would have all of the really important data is when the manuscript is published, and I'm anticipating that would be the end of this year.

But you get the absolute benefit, like percentage of the 28 and the 90?

Correct.

That will be in August?

That's right. And I think most people, that's what they want to see, right? I mean at that point, you'll be able to say, okay, this is what we have.

Private investor, [ Toby Beam ]. Just a couple of questions. With the trial, I know we've sort of given feedback from time to time. And I know earlier last year in January, we were around 80 or 90 patients at that time. And we categorized things as being exceeding efficacy targets and exceeding expectation. And it was both at 28 days and at 1 year. Was our expectation -- what was -- I guess, in order to exceed something, I guess, it helps to know what the expectation was. And it may be different things at different times. And -- but anyway, any color you can provide there would be helpful.

I could start. I think early on in the study, when you didn't know very much, I think people were very interested in understanding, well, like is this killing people or -- so I think in those days, it was important for us to share with the market that at least the preliminary data we saw, unfiltered as it was, was showing what we would expect. Now if you want sort of a benchmark, I would point you again to that Tomlinson paper, right? So we basically -- and it says right there in the paper, right, what the threshold for an expected result is, okay? Now it's a little bit complicated because it's a Bayesian analysis. And so the relationship between the effect size and the posterior probability is dependent on things like the covariate adjustments and things like that. But I still think if you look at that paper, you can see sort of what the expectation was, and we expect to see a 95% or better posterior probability using the Bayesian analysis. Now I don't -- at this point where we stand, I won't know the results until the final analysis is complete. And so I can't really comment on whether we're exceeding expectations or not, but that's what we're targeting.

Right. I guess for us, Lehman, I know one of the presentations that talked about the Bayesian trial was designed to show sort of a minimum of 10% absolute mortality.

Well -- yes. So it is important to distinguish between sort of how you power -- in other words, what your target sample size is or things like that. And that was designed based on an idea that you would have a 10% absolute risk reduction because that's what the prior showed, right? And so the power of the trial was driven off of that. Now that's different than the minimum threshold that's required for a positive outcome. And for that, I would point you to that paper.

Yes, I understood there's a difference for sure. But certainly, our goal was obviously double digits. And, obviously, as high as possible.

I think that's fair.

Yes. I noticed in the -- with this last -- with our partnership with Vantive in this last $10 million, they basically had a 7% for 28 days and 10% for 90 days. So first sort of I've seen something to that. Any color on what they're thinking about that?

Again, I mean, Chris may want to comment on this. I think they read that paper. The one that I'm pointing at, right? Because if you look in the paper, that 7% effect size is with a lot of assumptions because this was simulations, right. That 7% effect size translated to a 95.7% posterior probability. Okay? Now that's a simulated result, right? So the final result may be a an 8% effect size, translates to a 9% or a 6% effect size translates to a posterior probability of 95%. But in that paper, that 7% was about what you would expect to have for a 95% posterior probability.

[ Rogers St. Germain ]. I'm representing my private corporation. I was just wondering, last year, we vote for the last annual meeting from some -- one auditor and then 1 month after, the auditor changed. What's the main reason for that?

Yes. It was quite simple. And PwC have been our auditors for years, but we're sort of too small of a fish for them from an auditor fee. And so they made the decision that they just don't want to service companies that have a $250,000 audit fee. They'd rather have $1 million audit fee. As simple as that.

Okay. On the -- the consolidated financial statement of last year -- of this year, the operating loss carry last year in -- for year [ 2042 ] was 11,000,017. And this year, it has been reported, 15,000,018. It was a correction or loss?

No. Sorry, we have our VP of Finance here as well. So the change or the increase in operating losses, a lot of that is noncash, right? So it actually relates to the convertible notes and the derivative feature in there. And so based on volatility of stock price, et cetera, et cetera, that changes, whether it's a gain or a loss. But if you look actually in the statement of cash flows, basically what gets backed out, it's a lot of that has to do with the change in value of the derivative.

Okay.

So just in terms of where our operating expenses are, you can actually look at the cash flow statement from an operating cash perspective, and it's pretty consistent quarter-over-quarter, year-over-year. So although the bottom line from an EPS perspective looks like it's ballooned out, the reality is it's a noncash feature.

Okay. I just want to know with Dialco, what is going on there? We still...

Well, so we don't report on them any more because we wrote down the investment. And the reason we wrote down the investment is that the business just was not performing from a commercialization perspective. I think we talked about some of the items that they had issues with that they had to improve their devices, we'll need further FDA clearance. My understanding is they are going through those processes. But the key question is how do they commercialize those products. And it's an intense sales cycle for capital goods such as those into hospitals. We still own 30% of them. They're still funded, they're still operating. We have no financial commitments, though, towards I-Dialco. One of the things I can point you to, Roger, though, in terms of why ultimately, this was a good decision by this company to basically carve out that business at the end of the day, you can look at the market leader at the time, Outset Medical, which was the shining new dialysis company. There was a point in time they had, I think, a greater than $2.5 billion market capitalization. They've had a little bit of a rebound over the last few years, but they've sunk down to, at one point, about the same size as Spectral, actually even smaller. Now I know they've had a little more commercialization success. I think their market cap is probably somewhere around $400 million now. It's a fraction of where they were. And the reality is that I believe that they will continue to have a going concern given the cash burn required to operate in such a capital-intensive business as theirs. So long -- that's where we are with I-Dialco at this point in time.

Another question is, I did ask you, doctor, last year about the number of cases treated yearly. The change did not come, it is still about the same. But is in Japan, it's increasing or it's just stable with the number?

I don't have a lot of visibility on Japan. My sense is that the technology has not really changed much in terms of its utilization in Japan. But that's just what I know from colleagues. I think there's a general expectation -- and Paul may want to comment on this as well. But I think there's a -- I think a lot of these markets are sort of waiting for the results from Tigris. And because it's the only clinical trial that's really been in Japan, they don't consider it to be ethical to do a trial where you randomize patients that are appropriate for the therapy to not get the therapy, right?

You mean in Japan, they did not did the trial?

No, there were some old trials done, but they were very small. And today, you could not do a clinical trial in Japan because Japanese doctors would say, "I can't randomize a patient to standard of care -- the standard of care is the device, so I can't randomize the patient to not get the therapy if they're appropriate for the therapy." So Japan is -- and the same thing for Italy. I mean, our colleagues in Italy do not feel that -- they published the EUPHAS data, which is now there's been several publications, but I think the last one was maybe 6 months ago or something like that. And it was a registry because, again, they didn't feel like they had equipoise to randomize patients, right? It's only in a place where the product is not approved, like the United States, where you can do these randomized trials. So yes, there are people who I think are a bit on the fence about -- I'm not sure it works. I use it, I'm not really sure, and then we're waiting for the Tigris results to really change clinical practice.

It will change, yes. Okay.

Just 3 more quick questions. Number one, when the results come out in August, the top line results, are those results controlling for differences in baseline characteristics between treatment and control?

Yes and no, we'll do it both ways. So there'll be an adjusted analysis, which we think is the most important analysis and that's consistent with the FDA's guidance in terms of adjusting for baseline covariants. But because people are also interested in an unadjusted analysis, we'll provide it that way too.

Okay. And has the position of the FDA evolved over since 2016 around this top line 28 day is primary. And now you added the 90 days. Has the kind of subjective analysis sort of changed?

Really no -- yes, there's really no change. The FDA told us really at the very beginning that they're interested in 90 days and 1 year. And of course, we're like, okay, but 28 days is the primary endpoint, right? So -- but we're going to provide -- and it's actually not difficult for us now because of the timing. Assuming that all the patients -- and we're still waiting to find some of the patients because once you're discharged, you have to track down the patient and all that sort of stuff. But I think with reasonable -- [ Paul ], I certainly never promise anything in a meeting like this. So I can't promise that we'll have 100% of the 90-day data in time for the top line. But the hope is that we'll have it all, and we'll be able to do the full Bayesian analysis on both the 28-day and the 90-day just to be as transparent about the results as possible.

Okay. And supply concerns about PMX and EAA upon approval, has that all been addressed?

Well, I'm not so concerned about sort of near-term supply. Certainly, we manufacture the EAA in Toronto, and we have lots of capacity on our manufacturing line. With respect to Toray and their ability to supply the device, I would say that, call it, at some point, maybe 4, 5 years down the road, there will have to be some form of increasing manufacturing capacity, which is a good thing. So...

Okay. And my last question, going back to EUPHRATES, I remember there was a 3-hour time gap between sham versus treatment group, and a lot of that had to do, I think with getting the -- maybe the nephrologist in or getting approval from the next of kin. Once it becomes standard of care, I would imagine the treatment will be faster. Do you have any estimate or guess around how much maybe extra benefit you're going to get by being able to implement PMX faster compared to the trials?

Well, I think there are 2 separate questions. I think in terms of how much faster things can be used in clinical practice, I think there's no -- you're absolutely right. There's no question that it takes much, much longer to go through the clinical research operation, reading through the consent forms and all those other sort of stuff, right? Even just the consent to do the EAA, right? I mean, even just that process was a gating element, took time. So I think that's going to all be much, much faster. I would view this as a medical -- I mean, of course, it is a medical emergency and there will be much more time pressure to get patients on. The second question -- and you and I have had conversations about this is just how important is time. And I tend to agree with you. I think the data suggests and there's more data that's sort of circulating. I don't know if all of it's published now, but there's data from Asia as well that suggests that the earlier you can get the therapy started, the better the effect is. And I think that makes perfect sense, right? You're dealing with a toxin, and the faster you remove it from the bloodstream, the more likely it is to be beneficial. Unfortunately, for the clinical trial, we're stuck with probably a less optimal, right, situation than will occur clinically.

I'll leave it for after.

Just a quick one, too, has to do with the price [ effects ]. For many years now, we've been using this $15,000 treatment cost. And I believe that was based on some sort of study done many years ago. And we all know that inflation is picking the hell out of everybody in a lot of terms. So I'm just curious, is that $15,000 figure something -- it's based on something that we can hold -- we can hang our hat on? Or is that possibly going to go higher due to inflation because that will make a pretty significant difference in the analysis of when used a higher number?

So just how we arrived there. Certainly, this is -- as we all know, this is being utilized already outside of the U.S. Real-world pricing, at least in Italy, it's about EUR 6,000 a cartridge, so EUR 12,000. So close to the same pricing in the U.S. We did have a consultant come in. Now, it's been a number of years, but based on their benchmarking of therapies in the ICU, they had actually had recommended a higher price closer to USD 7,500 per cartridge. As we have discussions for commercialization launch with our partner, certainly, they believe that this is a premium product. And so we are looking to price this as high as possible, right?

It could go higher?

It could go higher, but when you talk about inflation, I don't necessarily know if in the hospital system in the U.S. that things just get inflated because of inflation. I think in this environment, they're actually looking to cut costs. So it's not that we could say, well, 10 years ago, we had planned to launch this at USD 7,500. And it's 10 years later. And so this really should be a $10,000 column. I'm not so sure about that. I don't know what the appetite would be for that. I think there's many components to pricing. Certainly, one is how does this impact hospital costs? And I think we're undergoing economic studies at this point, but I think we have directionally a decent view that although this might cost a hospital, it can also save them hospital costs.

Yes. And the other argument is the cost of running a trial now versus 10 years ago is probably significantly different. So that would be another counterargument I would guess, but...

Can I ask the operator to confirm if there are any questions?

We have not received any questions.

Well, I think we've had a pretty thorough discussion. I appreciate our loyal shareholders who have come, [ Roger ] all the way from Quebec to come and hear what we have to say. And I think that it has been information rich. I'm hoping that you all appreciate all the work that's gone on to get us to this point. And I think that I want to complement the management for their presentation today, but they've gotten us here, right? We finished the trial, we're funded, and we're moving on. And I think you can see that there's been a great deal of progress. So it appears that there are no questions for the corporation. On behalf of management and our Board of Directors and our employees, I'd like to take the opportunity to thank everyone for attending the meeting today. And I would like to thank all the shareholders for their commitment and continued support. We very much look forward to your attendance next year.

This concludes the meeting. If you are -- if you're joining via live audio webcast, you may now disconnect.