Trellus Health plc (TRLS) Earnings Call Transcript & Summary

Good morning, Dick. Thank you very much. I'm here with our CFO, Joy Bessenger, and we're delighted to be presenting our interim results for the period ending June 30. So here is our disclaimer slide. So let's dig in. As a reminder, it's always good to set the tone as to what Trellus is and do as a company overview. So Trellus Health delivers a validated personalized solution for managing chronic conditions called Trellus Elevate that's been proven to enhance outcomes, improve adherence to medications and treatment plans and lowers the costs associated with complex chronic condition management. Leveraging proprietary resilience building approach, we provide significant value to both health plans and the pharmaceutical sector. So in our interim 2024 highlights, I would like to share with you that we signed and launched our first commercial scale pilot, a large U.S. health plan. We signed 2 licensing agreements with pharma for proprietary assessments and content, we announced our new Board Chair with extensive U.S. health experience, Mr. Kevin Murphy. We received and maintained our SOC 2 Type 2 certification, meeting industry standards for system security and reliability, we sustained operational scalability while extending our cash runway into late Q3 2025, and we are advancing discussions with potential partners across all our verticals. Post period highlights include extended enrollment for our large health plan beyond the initial 6-month enrollment period, which we have described previously. Brian Griffin was appointed to the Board of Directors and also brings U.S. health care and pharmaceutical sector expertise. So a high-level summary of our large health plan program, it was launched in March of 2024. And as a reminder, it was covering 2 states, both New York and Connecticut. The term of the contract, the initial term is 21 months. There has been slower enrollment than expected with a smaller number of enrolled patients to date. However, given this and knowing the value to our partner, we have actually been able to extend the enrollment phase in enrolling enrollment over the entire term of the contract to support more enrollment so that we can continue to prove the value of our program to our health plan partner. What we noted also is we've been able to already, which we'll show you in just a moment, look at increased resilience scores as our key outcome metric. Early program data has demonstrated that this metric predicts lower health care costs and enrollment that we're seeing, although slower than normal as noted, it is actually in keeping with industry standard. We continue to have our joint steering committee calls to review the metrics and the population. We continue to have marketing to providers as well as text campaigns from our partner to their members. And just as a reminder of the pricing model, we have a monthly fee per engaged member plus a onetime implementation fee in the initial term. These are interim program data, and we're thrilled to be presenting these. So we have 90% of individuals who actually have their first virtual visit with our team member actually joined Trellus Elevate. 70% of members reporting greater confidence in managing their condition within 3 months of starting their personalized Trellus Elevate program and as I just mentioned, self-efficacy and confidence is an important key early KPI such that increased confidence in managing one's condition is associated with improved adherence to medication and medical treatment plan. 89% of members experienced an increase in their resilience scores after completing their personalized Trellus Elevate program, and members were active on the platform for an average of 10 weeks with average 3.5x weekly platform engagement. I will now turn it over to Joy.

Thank you, Marla. I'm going to present a couple of highlights from the interims on our financials. So we ended the first half of the year with $8 million compared to $12.2 million for year-end. Our adjusted EBITDA loss was $3.6 million for the period compared to $5.8 million in the first half of '23. We continue to start to decline our capital investment to date only spending for quick $4 million, excuse me, on technology platform development companion software and that was largely to build out to enhance the program that we're offering to our various partners and potential partners. Our net revenue was $50,000, and that was made up of licensing fees and fees from our large health care plan. Our cash burn projections continue to be in line with our guidance to market despite lower-than-anticipated revenue in the first half, which really just shows that we continue with our financial discipline. Our current cash resources are projected to take us to very late Q3 '25, assuming current level of revenues only and maintaining spend at disciplined and planned levels. I'm going to talk a little bit about our levers for growth and value and a little bit also about the learnings from our first commercial scale health plan. So our focus is on high cost claimants and the Trellus Elevate quadrant, which Marla's going to go into in just a minute. The highest cost members in the U.S. represent 50% of the medical and drug spend across the country. U.S. health plan pricing assumed that across all 4 of our quadrants, the average of high and low cost members were in set amount and our data shows we have substantial impact on the highest cost members by changing their beliefs, attitudes and behaviors and leading to greater self-efficacy. We do get better outcomes, adherence, lower cost increased savings. What we've learned from our first commercial scale partnership and subsequent discussions with industry leaders, we are shifting towards an engagement payment closer to the value-based industry standard. And we've identified real opportunities to increase platform engagement. As we expand into the pharma and clinical trial verticals, we're going to leverage our expertise and extend our access to a much larger pool of members.

Thank you, Joy. Let me now get into some of these concepts around when we talk about Trellus Health and our Elevate quadrant. So as a reminder, what we have that is really unique for Trellus is we have a proprietary assessment, which measures resilience. Just as a reminder, as a key asset, not only do we have delivery of self-management skills and teachings and education, we actually start our program by assessing an individual's resilience. Why is this important? So what we've laid out here is how we've been talking about how we have a unique opportunity to actually work with our partners and say that in individuals by their claim, Joy had mentioned the word claimant. What that means is that the individual who has health care claims, which are health care partners, for example, know exactly who has brought a health care claim in the last year, in the last 2 years, they're able to track that. And so what we work with our partners to say is, can you please let us know what the total spend of the various populations you have. And, by measuring resilience, we could actually give some insight to our partners and say, the reason why that individual had a high medical spend or a high pharmacy spend is, in addition, they have low resilience. So that's where we take -- divide up our way of delineating populations. We say, all right, individuals have a high spend to the health care system when they also have low resilience based on our assessment, we put them in Quadrant 1. Now on average, these high-cost claimants are $100,000 plus a year to manage these individuals. When you look at Quadrant 2 and 3, you can see that there's a little bit difference that Quadrant 2 also was a quadrant or a group of individuals who have a high medical spend, they're being admitted to the emergency room -- being through the emergency room, multiple visits, multiple scans, multiple procedures, they may not be on a very expensive specialty med, but they have low resilience, which actually is contributing to why they're using the emergency room or why they're being admitted more often. Quadrant 3, although an individual in our assessment had high resilience, they are low on expensive specialty medications and they've also had many procedures. They may have had a surgery, for example, but these are high resilient individuals, but they still cost a significant amount because of their medical spend. And the fourth quadrant are those that have high resilience, but they are not on expensive medications like biologics or innovative small molecules, and they also haven't been hospitalized. So what Joy was getting is that we realized that where we have our best ability to really show our partners significant savings by delivering Trellus Elevate is really in these quadrants where there are higher costs. And obviously, the highest cost quadrant is Quadrant 1 because they also have low resilience. So you could see the way that we think about talking to our partners about which individuals would we have most value to them and their program and therefore, knowing that when we really focus on not just everybody and the average cost around all 4 quadrants, we're able to hone in on those that are actually more expensive, which is really a unique value prop for Trellus. So another thing to remember about how it works and sort of how we get to a point where people engage or individuals engage on the platform is we start with the total addressable markets. We know in total how many individuals have a certain disease, how many individuals are on a certain medication and that becomes our total eligible membership. In order to actually get them to a point where they engage, we make it very simple. They fill out their online risk assessment, which is what I just showed you in the quadrants, which is the resilience score. And they also have what we call our conditions complexities score. We will get some information around how many specialty meds they failed, how many hospitalizations that they actually had. So we can actually have visibility ourselves into the cost of care of these individuals. And then they actually have their screening call with a team member that reviews the results, make sure they qualify and then engage in the platform. So Joy had mentioned the term verticals and sort of our highlights around where we've noted from our learnings that in essence with our health plan partner, we're actually able to see early on that one of our key metrics is actually that they engage in their care and more effectively and more confidently, but they also actually have increased medication adherence. So as we saw what the value our method, which is this gold box here, our proprietary method, which has our validated results and adaptable to any KPI that our partners may want us to solve for and show value. And so when we realize that medication and treatment adherence is such an important part of the value that we are providing to our health plan members, it was clearer, and we have talked about and I have mentioned for almost 2 years now actually, that we are really focusing in on also adapting and really partnering with pharmaceutical sector, particularly in the patient support program lane or vertical, which is where you wrap around an individual who has been prescribed by their primary physician or gastroenterologist in this case where they have been prescribed a specialty med. And all of these pharmaceutical manufacturers have these patients support programs where they wrap around the patient, they provide some co-pay assistance. They provide some support. But what they realize is that, that is not whole holistic support. And so therefore, wrapping around the patient that is on their product, for example, will increase persistency and medication refills because that is really the value to our pharma partners by having individuals stay resilient and stay adherent to their medication and then the same applies with clinical trials being able to adapt the attitude, beliefs and behaviors, try to uncover why an individual may not want to enroll in a clinical trial. What are the barriers and being able to actually take away and/or solve for the psychological impact of having a chronic incurable debilitating condition where yet this may be another medication that I may not respond to or there's a placebo and all of the queries and fears that individuals have around a clinical trial, we're able to determine whether individuals are resilient, ready for a clinical trial and then be able to improve the ability to get the right individuals into clinical trials and be able to decrease the amount of screen failures, which means right now, about 50% of individuals who have gone through an extensive screening in a clinical trial are not even eligible to be recruited. So solving for that screen failure rate is a really important value for us, and that's really where we are focused. And another way of talking about how do we expand our program access and growth. I just sort of talked claiming around sort of the ideas of that there are 3 verticals that we are focusing in. We are in the health plan vertical as noted, and moving hopefully in not-too-distant future into these other verticals. And so what we've also learned is that we really need to be focused on sort of those that are commercially scalable right now. We understand that health plans take a while to actually go through the process, the sales cycle is quite long. And while we continue to focus on health plans, we've got one of the largest health plans that we are delivering our program to, we have also realized acutely aware that these other verticals that we've just talked about actually have a shorter sales cycle. And so really, there's an urgency in clinical trials because every day that there are less individuals that get randomized in a trial or make it to the end of the trial, that's actually delaying their ability to come to market. So we know there's an urgency with our pharma partners as it relates to clinical trials as well as if a drug is on the market and they want to have more access, more refills, more adherence to medication, there's a greater urgency to partner with -- someone to partner with Trellus as we deliver on that value. And of course, we just talked about health plans. So that is one lesson learned, but also our focus. In terms of other focus, which is to think about, we understand that inflammatory bowel disease for example is about 1% prevalence. So whatever our client pool of individuals or what we call eligible members, it must be large enough, so we must be partnering as we are now with large health plans because they have the largest number of lives that are covered by that insurance that have inflammatory bowel disease. We also, as noted, you can see that we continue to push forward our goal of partnering with the larger pharmaceutical manufacturers as they also have large number of IBD patients that are on these expensive specialty medications. And the third point around our ability to expand and access was the idea to include also should we go towards including conditions beyond inflammatory bowel disease, right? Should we be managing health plan members across multiple high-cost conditions because our model is adaptable. It is not solely about the attitudes, beliefs and behaviors around inflammatory bowel disease patients behavior, behavior and most individuals with these immune conditions, for example, psoriasis, rheumatoid arthritis, multiple sclerosis, they also have similar struggles and condition management struggles and need better control of their health and need a tool like Trellus to improve their self-management and self-efficacy and their resilience. Secondly, we also have pharma patients who have one drug that is used in IBD, but most of these drugs that are used for Crohn's and ulcerative colitis are also used for psoriasis, rheumatoid arthritis, psoriatic arthritis, ankylosing spondylitis. There's a list, a laundry list of other immune conditions that share the same biology and share the same therapeutic approach. And then similarly managed pharma patients who have more than one drug. So many of our pharma partners have more than one therapy. They've had a legacy. They've been in this space for 20-plus years, some of them delivering these medications, specifically for IBD plus other immune conditions. So what we wanted to lay out here is sort of the road map, the playbook, where do we partner, where do we spend our focus and time being able to deliver what we know the Trellus Elevate method actually does and across the multitude of verticals. And that's really where we are focused, and we are focused on those that can progress faster, while still maintaining our focus on changing the lives of individuals through their health plan to be able to build more self-effective empower patients and gain control of their health. So a summary and outlook. We have positive commercial progress with our agreement signed with our large health plan. We've now extended the enrollment period to allow more individuals to access the program. And even as of yesterday, we continue to get new individuals into the program, starting their assessment and engaging in the platform. We have opportunities for Trellus Elevate across multiple new verticals now, including the pharmaceutical sector, and we focus on clinical trials and patient support, as I noted, I've been talking about the patient support concept and partnering with pharmaceutical industry, and now we are moving closer to that with ongoing commercial discussions across these verticals, including 2 later-stage discussions and, of course, we continue to learn systems, playbooks and insights for successful execution. So I would like to thank you for joining us today on this IMC. If you have any questions, please direct them to Walbrook, and they will answer those in due course. So thank you, and have a great rest of your day.