Solana Co Q2 FY2023 earnings call

Management Statement and Operational Highlights:

• PTAP was successful in reducing barriers to PoNS use for MS patients and helped build a patient registry for reimbursement pursuits.
• CMS's proposed TCET pathway could expedite Medicare coverage for PoNS, which has breakthrough designations in MS and stroke.
• PoNS obtained DMEPOS accreditation, a key step for Medicare billing and TCET participation.
• The PoNSTEP trial expanded with the addition of Montefiore Medical Center, aiming to enroll more patients in a real-world setting.
• The stroke trial was expanded to 60 patients, with plans to further develop data for regulatory purposes.
• The company transitioned to U.S. commercialization activities, leading to a decrease in research and development expenses.

Segment Performance: In the second quarter of 2023, Helius Medical Technologies reported total revenue of $256,000. This represents an 115% increase compared to the prior year quarter and a 131% increase compared to the first quarter of 2023. The growth was driven by increased U.S. sales of PoNS systems, particularly due to the favorable pricing under the PTAP program which ended June 30, 2023. Canadian revenues were lower in the first half of 2023 due to timing of orders, but the company anticipates a stronger third quarter. Revenue from PoNS systems was the primary contributor, with U.S. sales boosted by PTAP and Canadian sales showing potential for growth as reimbursement efforts progress.

Guidance: Management currently expects third quarter and full-year 2023 revenue to be higher than comparable prior year periods. The sales mix is shifting to be more weighted towards Canada, offsetting the anticipated decline in U.S. sales following the end of the PTAP program. Future U.S. sales of PoNS are expected to be at cash-pay prices until CMS and third-party payer reimbursement is achieved.

Risks: Uncertainties exist regarding the timing and outcome of CMS reimbursement efforts, including the TCET pathway. Timing differences in Canadian orders could impact revenue projections. Dependence on third-party payer reimbursement for full revenue realization poses a risk if coverage is not attained as expected.

Q: How does receiving DMEPOS accreditation alter the approach to seeking U.S. reimbursement?

A: Dane Andreeff responded that DMEPOS accreditation is part of multiple pathways, including the DME approach towards CMS coding and eventual reimbursement, as well as the TCET pathway. For private payers, they are working on reimbursement using miscellaneous codes.

Q: What can you say about the statistical power with 60 stroke patients in the stroke trial?

A: Dane Andreeff mentioned they have a data development plan in place and are hopeful to increase the patient number, but are satisfied with 60 patients for now and have a plan to work with the FDA to develop data.

Q: How many more sites do you wish to add to PoNSTEP, and when will we see results?

A: Dane Andreeff expected at least one to two more sites, and noted they are increasing enrollment at each site with more than five devices per site now.

Q: Talk about the distribution agreement with HealthTech Connex in Canada?

A: Jeff Mathiesen stated the agreement provides exclusive distribution in Western Canada, is progressing well, includes purchase requirements and promotion efforts to work with insurance companies on PoNS reimbursement in Canada.

Q: How is the e-commerce platform tracking?

A: Dane Andreeff explained they track 12 steps in the funnel, with steady inquiries coming in despite an expected slower second half until reimbursement, and they monitor various touchpoints like website, phone, email, and partnership with UpScript for orders.