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

Thank you, and good morning, good day, good afternoon, good evening to everyone. My name is Juan Carlos Aragon, and I am the Chief Executive Officer and the Executive Director of Visioneering Technologies. I am joined today by Jeff Pruett, our Chief Financial Officer; and Dr. Ashley Tuan, our Chief Medical Officer. Right now, we'll start with Jeff, providing us with a brief background on the company. Jeff, please?

Thanks, J.C. Hello, and welcome to our quarterly investor call for the quarter ended December 31, 2024, our fourth fiscal quarter of the year. We remind you that we may be making forward-looking statements during the call, and we ask that you keep this in mind if you use this information to make investment decisions. All dollar amounts we will discuss today are in U.S. dollars and VTI's fiscal year coincides with the calendar year. We also remind you that the financial metrics reported today and in our Appendix 4C are unaudited. VTI provides better vision to our customers by using innovative products to serve high-need patients. Our flagship product is a daily disposable self contact lens called NaturalVue Multifocal, a revolutionary and patented contact lens targeted at 2 patient populations, including children with nearsightedness that becomes worse over time, a condition called pediatric myopia progression. This condition has become much more prevalent over the past 40 years. It accelerated during the COVID-19 pandemic and is estimated to affect 80% to 90% of all children in parts of Asia and up to 40% of all children in the U.S. We project the patients receiving treatment to grow from around 10 million children and young adults today to 57 million by 2030 and for the wholesale category to grow from approximately $2 billion today to over $17 billion by 2030. The second patient population is persons over the approximate age of 40 who have difficulty seeing things within arms' reach, a condition called presbyopia, which affects almost all older adults. With the global population aging and millions of contact lens wearers needing to be upgraded to a multifocal alternative, we believe the market for presbyopia will experience strong growth for the foreseeable future. We also sell NaturalVue Sphere contact lenses currently only in the U.S. market for the simple correction of blurry vision. VTI has clearances or registrations to sell its products in the U.S., Europe, Australia, New Zealand, Singapore, Hong Kong, Malaysia, Canada, Vietnam and other select markets around the world. J.C., back to you.

Thanks, Jeff, and thanks for the background. Now I'll update the investment highlights we discussed last quarter. As noted previously, VTI has driven a 6-year compound annual revenue growth rate of 18%, and we continue to keep our costs under control. Interest in pediatric myopia management has increased dramatically over the past several years. And I believe that VTI is very well positioned to address this large and growing need in the marketplace. Our release of the astigmatism study results and the preliminary 2-year data of the PROTECT clinical trial completed in November and released in January of this year continues to generate much interest from ECPs, eye care professionals, distributors and strategic partners. VTI signed an agreement with a third-party logistics company for Europe and supplied the first inventory order to this company. This will foster more efficient services to the EU. The NaturalVue Multifocal 1-day contact lens received regulatory approval in Vietnam, and our existing distributor partner is ready to launch the product in this country in the first quarter of this year. We signed a new distribution agreement with a partner in South Africa, and the company has reached an agreement with a commercial partner for distribution rights in Germany, Austria and Switzerland. Now Ashley will discuss the recent clinical studies.

Thank you, J.C. A study conducted by Professor Gonzalo Carracedo from the University Complutense in Madrid reported that 100% of their study population with astigmatism up to 2 diopter were very naturally multifocal at 20/20 or better binocular vision. No matter the axis of their astigmatism. 83% of the subjects with astigmatism between 2.25 to 3 diopter also reported 20/20 or better binocular vision. Unlike traditional toric lenses that only provide 2 focal points to correct specific astigmatic error with a specific axis, NaturalVue Multifocal corrects an extensive range of astigmatism by enabling both meridian to focus simultaneously using its extended [ data ] focus and universal astigmatism power and axis. This clinical trial validated NaturalVue multifocal lens astigmatism correction indication. Astigmatism of up to 2 diopters covers over 90% of the general population's astigmatism distribution. This data demonstrated that NaturalVue Multifocal may address over 90% of the general public's contact lens demand and the fitting is as easy as the single vision contact lens. We would also like to share with you PROTECT's 24-month or 2-year preliminary analysis. There are 2 measures of effectiveness tested for myopia management. The graph on the left presents the unadjusted change in refractive error or myopia. Refraction is the bending of light rays as they pass through one object to another. Refractive error measures the change in how well a person's eye performs refraction measured in diopters. Effective myopia management will refract a minimal change of refractive error presented in the vertical axis. In this graph, NaturalVue multifocal demonstrated continuous retardation of myopia progression. The graphs on the right present the unadjusted change in axial length displayed on the vertical axis. Axial length is the length of the eyeball from front to back and is measured in millimeters. Children's eye grow with their bodies, but too much eye growth can lead to vision issues later in life. Effective management will reflect a minimal difference from the typical eye growth of a child without refractive error, which we have seen such as in NaturalVue Multifocal demonstrated that near ametropic growth in both 12 months and 24 months follow-up. After taking into account their confirm factors that can impact treatment results, the adjusted treatment effect for the common study population indicate at 24 months that is 0.60 diopters for the slowing of myopia and 0.25 millimeter for the retardation of axial elongation. We compared adjusted [indiscernible] from PROTECT randomized clinical trial preliminary 2-year results to those of other myopia management products based on their published adjusted 2-year results. NaturalVue Multifocal had the greatest reduction in magnitude compared to the control group. For all of the products in both myopia progression and axial length elongation, CooperVision's MiSight is the only treatment approved by the FDA for myopia progression control. At the bottom of this slide, we present the power curve of NaturalVue Multifocal and competing products. NaturalVue Multifocal has a smooth, rapid and continuous plus power progression to create a small virtual aperture to focus the image on the retina and create optical defocus, which is a known mode of action for myopia control. The other products have less plus power generated in abrupt changes that may cause visual disturbance for the wearer and do not work with small people sizes or astigmatism more than 0.75 diopters. The 2-year preliminary PROTECT data continues to indicate that NaturalVue Multifocal contact lens may be safe and effective in slowing myopia progression under diverse clinical settings and populations. In addition, NaturalVue Multifocal can address at least 2 diopters of astigmatism which means it can cover over 90% of the general public's refractive needs. Now I will turn it over to Jeff.

Thanks, Ashley. Net revenue for the quarter was $1.8 million. That was a decrease of 4% from Q4 of last year. Shipments to U.S. ECPs were $1.9 million, up 6% over Q4 last year. Shipments to U.S. ECPs are an internal measure of patient level demand, reflecting sales from the company's distributors to ECPs in the U.S. at the price VTI supplies those products to its distributors. We consider shipments to be an important measure for gauging our patient level demand. Net revenue year-to-date was $8.8 million, an increase of 1% from the prior year and shipments to ECPs year-to-date were $8.5 million, up 4% from the prior year. Cash receipts from customers in the fourth quarter of '24 were up 36% from the fourth quarter of '23. The number of active U.S. accounts, which have purchased products within the fourth quarter was 2,200, down 1% from the fourth quarter of 2023. Shipments to U.S. ECPs per active account were $851, an increase of 7% from the same period in 2023. Our repeat customer rate was 93.8%, which was up from 92.7% in the fourth quarter of '23. Gross margin was 57.1% of net revenue in the fourth quarter, up from 57% in the fourth quarter of '23. And this is primarily due to the lower per unit cost of products and a minor increase of prices at the beginning of the year. Net cash used in operating activities was $623,000 in the quarter compared to $1.5 million in the fourth quarter of '23, a decrease of 59%. We finished the quarter with $649,000 of cash based on our forecasted net cash use. We believe our current cash is sufficient to finance our operations into the second quarter of '25. We do plan to explore additional financing to support our long-term strategic plan in the next several months. J.C., I'll hand it back to you.

Thanks. Thanks again, Jeff. Well, again, in summary, a lot going on at Visioneering Technologies. We have made significant progress in expanding our U.S. sales team. That effort started last year and concluded in the fourth quarter of '24 as we hired our third new sales rep, this very experienced sales rep, this last one based in the northeastern part of the country. Not only have we strengthened qualitatively and quantitatively our U.S. sales team, but we continue with our efforts to expand internationally. And as mentioned before, we have added a third-party logistics company in Europe that will definitely help us in controlling costs and providing better services to our growing network of distributors within the European region. As also noted before, we know that children react differently to the various myopia management interventions that exist. We can't change interventions during a clinical trial, but an eye care practitioner seeing a patient in a real-world setting should consider whether he or she should try a combination therapy, more than one treatment or should switch therapeutic interventions altogether to help these patients better control, better slow down their myopia. Our message to our prospective customers and existing customers is that they should use multiple products in their practices to address the needs of a diverse patient population. The preliminary 2-year PROTECT trial results show that the NaturalVue Multifocal lens should be one of the products they employ to ensure the best care for all of their patients. And to you, our investors, we appreciate your ongoing support and ask that you continue this journey with us as we continue to improve our operating results and expand the reach of our products to more and more patients and eye care practitioners around the world. With that, I will now turn it back to the operator and open the line for any questions.

[Operator Instructions] We are showing no audio questions. So I'll hand over to Mr. Jeffrey Pruett for questions from the webcast.

At this time, there are no questions from the webcast.

That does conclude our question-and-answer session. I'll hand back to Dr. Aragon for closing remarks.

Thank you again, operator, and thank you, everyone, for your attendance. Thank you to all of the VTI employees for their ongoing efforts at improving the performance of the company. We appreciate their support also. Stay safe and well, and have a great rest of your day. Thank you very much.