Visioneering Technologies, Inc. (VTI) Earnings Call Transcript & Summary

Hello, and welcome to the Annual Meeting of Stockholders of Visioneering Technologies, Inc. Please note that today's meeting is being recorded. [Operator Instructions] It is now my pleasure to turn today's meeting over to the Chair of the Annual Meeting, Ms. Kathleen Miller. Ms. Miller, the floor is yours.

Good morning and good evening to you all. My name is Kathleen Miller, and I'm the Interim Chair of Visioneering Technologies. It's my distinct pleasure to welcome you to our 2024 Annual Meeting of Stockholders. This meeting is being held via the Computershare virtual meeting services platform, which allows stockholders, proxies and guests to attend virtually while encouraging greater participation and engagement. The platform is designed to allow the meeting to be interactive to be assured that stockholders will be able to vote, ask questions and/or make comments during the meeting. [Operator Instructions] Please note that while you can submit questions at any time during the meeting, I will not address them until the relevant time in the meeting. Please also note that your questions may be moderated or if we receive multiple questions on one topic, consolidated. It is now just past 8:00 a.m. in Sydney, the nominating time for the meeting, and I've been informed that a quorum is present. I note that the meeting has been validly constituted, and I am pleased to declare the meeting in session. There may be a slight time delay experienced between the slides you are viewing and the audio. So again, I encourage stockholders who may have questions to please submit them as soon as possible to avoid any undue delay. Before getting to the formal business of the meeting, I will take this opportunity to introduce company management and my fellow directors who are present online today. Beside me is Dr. Juan Carlos Aragon, our Chief Executive Officer and Executive Director; Mr. Brian Lane, our Chief Financial and Chief Operating Officer; Dr. Ashley Tuan, our Chief Medical Officer; Mr. Andrew Silverberg, our Non-Executive Director; Dr. Allan Rubenstein, our Independent Non-Executive Director; and Dr. Dwight Akerman, our Independent Non-Executive Director. We also have several other parties from the company online, including Ms. Leanne Ralph, Corporate Secretary; representatives from Computershare, the company's share register; and representatives from Johnson Winter & Slattery, the company's Australian legal counsel. There are two components to today's meeting. We'll start with a business update from our Chief Executive Officer, JC Aragon. We will allow time for general questions on the business at the conclusion of his presentation. Then following the general business questions, we will then progress to the formal business of the meeting, where the resolutions provided in the notice of meeting will be put to stockholders. We will allow time for questions and answers regarding the resolutions before proceeding to vote on them. So without further ado, allow me to introduce our CEO, JC.

Thanks, Kathy. Good morning, and good evening to everyone. Apologies, I'm dealing with the cold, so my voice is rough. Certain statements in my presentation may constitute forward-looking statements or statements about future matters based on our current expectations and beliefs. Any such statements in my presentation speak only as of today's date and are not indications, guarantees or predictions of future performance. Unless otherwise noted, dollar amounts quoted are U.S. dollars. VTI is in the business of providing better vision to our customers by using innovative products to serve high-need patients. Our flagship product is a daily disposable, soft contact lens called NaturalVue Multifocal, a revolutionary and patented contact lens targeted at 2 patient populations. Children with nearsightedness that become worse over time, a condition called pediatric myopia progression. This condition has become much more prevalent over the past 40 years, has accelerated during the COVID-19 pandemic and is estimated to affect between 80% and 90% of children in parts of Asia and up to 40% of children in the United States. We project that patients receiving treatments to grow from around 10 million children and young adults today to 57 million by 2030. And for the category to grow from approximately $2 billion today to over $17 billion by 2030. The other patient population includes people over the approximate age of 45, who have difficulty seeing things within arm's length, a condition called presbyopia, which affects almost all older adults. With the global population aging and millions of current contact lens [indiscernible] needing to be upgraded to a multifocal alternative, we believe the market for presbyopia will experience strong growth for the foreseeable future. We estimate this category will grow from $1 billion today to $1.8 billion by 2030. We also sell NaturalVue Sphere contact lenses for the simple correction of blurry vision. VTI has clearances or registrations to sell its products in the United States, the United Kingdom, Europe, Australia, New Zealand, Singapore, Hong Kong, Malaysia, Canada and Vietnam. Here is a quick look back at 2023. I joined VTI in October of 2023, just as we were about to release the preliminary interim 1-year results of the PROTECT randomized clinical trial for which the study objective is to demonstrate safety and quantify the effectiveness of the NaturalVue Multifocal for myopia progression control in children. These preliminary results indicated that the interim 1-year treatment effect were consistent with those of the only treatment approved by the FDA for myopia progression control, which we view as being very positive. We announced the full 1-year interim results in January of 2024. Then the third party contract research organization, or CRO, conducting the PROTECT study performed an adjusted outcome analysis of the interim 1-year results in which it statistically adjusted the results for possible baseline imbalances in age, gender, ethnicity, country, baseline refractive error, the size of the people and repeated measurements over 2 eyes. The CRO applied this analysis of the population of all eligible subjects and to a common study population that matched the population range of 2 other myopia progression control studies. The adjusted outcomes for the common study population indicated that the NaturalVue Multifocal was 89% effective in slowing the progression of myopia as measured by refractive error and 58% effective as measured by the change in axial length compared to the control group. The 89% efficacy based on refractive error is approximately 50% better than the adjusted result for the only FDA-approved myopia progression control contact lens. We are obviously very, very pleased with this outcome. These results have generated significant interest from potential distribution and strategic partners in addition to eye care practitioners in the United States and around the world. Reflecting this increased interest we recently entered supply and distribution agreements in Belgium, Vietnam, the Middle East, Greece and Cyprus, Spain and Portugal, Italy and the Latin American region. As we speak, we are currently in negotiation for distribution agreements with distributors in several different territories, including China, the Netherlands, Germany, Austria, Switzerland and the Republic of Korea. Now to our fiscal 2023 operating results. VTI recorded net revenue of USD 8.7 million in 2023, up 19% over fiscal 2022. Shipment to U.S. ECPs, or eye care providers, were $8.2 million, up 4% over fiscal 2022. We improved gross margins from 45.5% in fiscal '22 to 54.9% in fiscal '23. We also lowered our net cash used in operating activities by 40% in 2023 compared to 2022. In addition, we converted our remaining convertible notes, leaving VTI debt-free. We are forecasting that our cash is sufficient to finance our operations through the first quarter of 2025. We plan to explore raising further capital in fiscal year '24 as necessary to support our long-term strategic plan. I'll now turn the meeting back to Kathy.

Thanks, JC. Now I'd like to open up the meeting to general questions on the business. You will have opportunities to ask questions pertaining to each resolution when we get to the formal business of the meeting. A reminder that this is a stockholder meeting, and therefore, only stockholders of record are able to ask questions at the meeting. Brian, have we received any general business questions?

We don't have any questions at this time, Kathy.

Great. Okay. We will now progress to the formal business of the meeting. The notice of meeting was sent to all registered stockholders within the notice period required, and I will take the notice convening the meeting as read. Voting on all resolutions will be decided on a poll. To provide everyone with an opportunity to vote and in case anyone cannot stay for the whole meeting, I will now formally declare the poll open. Stockholders can now cast their vote using the electronic voting system. Select the Vote icon at the top of your screen to bring up a list of resolutions and present you with voting options. To cast your vote, simply select for, against or abstain. There is no need to hit a submit button or enter button as the vote is automatically recorded. You do, however, have the ability to change your vote up until the time I declare voting closed. The results of the polls will be released to the ASX shortly after the close of the meeting. I have been advised that all proxies received for the meeting have been checked, and I declare them valid for voting. I will disclose proxy votes on your screen prior to the vote being taken for each item. These figures are as of the closing time for receipt of proxies, which was 8 a.m. Australian Eastern Standard Time, Monday, the 20th of May 2024. Resolutions 2, 3, 4 and 5 have voting exclusions that were outlined in the notice of meeting. As the Chair of the meeting and as detailed in the notice of the meeting, I will vote where authorized all undirected proxies in favor of each resolution. Resolution 1.1. I put this resolution to the meeting as displayed on your screen, that Mr. Andrew Silverberg, being a Director whose appointment expires at the conclusion of the annual meeting of the company and being eligible, offers himself for reelection, be reelected as a Class I Director of the company. I now open this item for discussion. I will check to see if there are any questions online.

No questions, Kathy.

Okay. Details of the votes received for this item are on the screen. If you have not already done so, please now select either for or abstain for Resolution 1.1 on your electronic voting card. Abstentions will count as a vote against this resolution. [Voting]

Resolution 1.2. The second item of notified business concerns the election of a director, myself, Ms. Kathleen Miller. As this resolution concerns myself, I will pass the meeting over to Mr. Lane to act as Chair for this resolution.

Thank you, Kathy. I put this resolution to the meeting as displayed on your screen. And I open the question or the item for discussion, and I'll check to see if there's any questions online and there are not. So I'll wait for a minute just to allow for voting. The details of the votes received for this item are on the screen. If you have not already done so, please now select either for or abstain for the Resolution 1.2 on your voting card. Abstentions will count as a vote against this resolution. [Voting]

Okay. Thank you. I will now turn the meeting back to Kathy.

Thanks, Brian. Resolution 2. The next resolution concerns the approval of an increase in shares reserved under the 2017 Equity Incentive Plan. I put the resolution to the meeting as displayed on your screen. That pursuant to and in accordance with Exception 13 of ASX Listing Rule 7.2 and for all other purposes, including Section 16 of the 2017 plan, approval is given for the issue of equity securities under the company's 2017 Equity Incentive Plan as an exception to ASX Listing Rule 7.1. An increase in the aggregate number of shares of Class A common stock in the company, which may be issued pursuant to awards under the 2017 plan such that a total of 8,491,025 shares will be reserved for issuance under the 2017 plan and certain other amendments to the plan, including to reflect the share increase. I now open this item for discussion. Are there any questions online?

There are not.

Okay. Details of the votes received for this item are on the screen. If you have not already done so, please now select either for, against or abstain for Resolution 2 on your electronic voting card. [Voting]

Resolution 3. The next resolution concerns the approval of the grant of restricted stock units to the company's CEO, Dr. Juan Carlos Aragon. I put the resolution to the meeting as displayed on your screen. That, for the purpose of ASX Listing Rule 10.14 and for all other purposes, approval is given for the company to grant 425,000 restricted stock units to receive shares to Dr. Juan Carlos Aragon under the 2017 plan as described in and on the terms and conditions set out in the explanatory memorandum. And if Item 2 is not approved, approval is given to an increase in the aggregate number of shares, which may be issued pursuant to awards under the 2017 plan such that the number of reserved for issuance under the 2017 plan is increased by 425,000 shares. I now open this item for discussion. Are there any questions online?

There are no questions online.

Okay. Details of the votes received for this item are on the screen. If you have not already done so, please now select either for, against or abstain for Resolution 3 on your electronic voting card. [Voting]

Resolution 4. The next resolution concerns the approval of the grant of restricted shares to the company's CEO, Dr. Juan Carlos Aragon. I put the resolution to the meeting as displayed on your screen. That, for the purpose of ASX Listing Rule 10.14 and for all other purposes, approval is given for the company to grant 280,584 restricted shares to Dr. Juan Carlos Aragon under the 2017 plan as described in and on the terms and conditions set out in the explanatory memorandum. And if Item 2 is not approved, approval is given to increase the aggregate number of shares which may be issued pursuant to awards under the 2017 plan such that the number of shares reserved for issuance under the 2017 plan is increased by 280,584 shares. I now open this item for discussion. Are there any questions online?

No, Kathy. No questions.

Okay. Details of the votes received for this item are on the screen. If you have not already done so, please now select either for, against or abstain for Resolution 4 on your electronic voting card. [Voting]

Resolution 5. The next resolution concerns the approval of a 10% placement facility. I put the resolution to the meeting as displayed on your screen. That pursuant to in accordance with ASX Listing Rule 7.1A and for all other purposes, approval is given for the issue of up to 10% of the issued capital of the company at the time of issue, calculated in accordance with the formula prescribed in ASX Listing Rule 7.1A.2 and on the terms and conditions in the explanatory memorandum. I now open this item for discussion. Are there any questions online?

No, Kathy. No questions.

Details of the votes received for this item are on the screen. If you have not already done so, please now select either for, against or abstain for Resolution 5 on your electronic voting card. [Voting]

Ladies and gentlemen, this concludes the formalities of the meeting. If you haven't done so already, please complete your electronic votes as I will be closing the poll in one minute. As I mentioned earlier, the results of this meeting will be announced to the ASX as soon as they have been counted and verified. I now declare the poll for this meeting closed. I also now declare the meeting closed. On behalf of the Board of Directors and executive management of VTI, thank you for your attendance and participation today. I look forward to meeting with you at our next Annual Meeting of Stockholders.

This concludes the meeting. You may now disconnect.