Solana Co Q4 FY2023 earnings call

• Pursuit of broad reimbursement for PoNS: CMS assigned unique HCPCS codes for PoNS controller and mouthpiece effective April 1, 2024, allowing negotiation with third-party payers and case-by-case claim submission; expect to engage with CMS in coming weeks and at public meeting to secure Medicare reimbursement by October 1, 2024; PoNS step study to get primary endpoint data in third quarter with preliminary results by year-end; initiated efforts to target Department of Veterans Affairs through their MS centers of excellence.
• Achievements towards U.S. commercial authorization for stroke: Clinical evidence from Canada shows PoNS Therapy improves gait imbalance; real-world database analysis shows significant reduction in fall risk with PoNS Therapy; received letter of intent from Quebec Ministry of Health and Social Services to purchase 30 PoNS devices; ongoing investigator-initiated placebo-controlled study and open-label study in U.S. aligned with FDA on development plan, targeting regulatory submission by early 2025 and marketing authorization by late 2025 with breakthrough designation; if authorized, eligible for TCET pathway.
• Canadian activities: Pacific Blue Cross and HealthTech Connex published white paper in fourth quarter showing PoNS Therapy can drastically improve return-to-work outcomes for TBI patients; 89% of study participants said balancing gait was no longer a barrier to work, 56% returned to work, 80% of those full-time after six months.
• 2024 milestones: $1.3 million raised under ATM program since year-end extended cash runway into third quarter of 2024; several upcoming milestones on path to goals.

Total revenue for the fourth quarter of 2023 was $134,000 compared to $282,000 in the fourth quarter of 2022. The decrease was primarily due to the June 30, 2023 expiration of the PTAP program in the United States and lower Canadian product sales. Cost of revenue for the fourth quarter of 2023 was $90,000 compared to $150,000 in the prior year period. Selling, general and administrative expense for the fourth quarter of 2023 was $1.6 million, a decrease of $0.4 million compared to $2 million in the fourth quarter of 2022. Research and development expenses for the fourth quarter of 2023 were $0.7 million compared to $0.8 million in the fourth quarter of 2022. Operating loss for the fourth quarter of 2023 decreased to a loss of $2.2 million compared to an operating loss of $2.7 million in the fourth quarter of 2022. Net loss was $1 million for the fourth quarter of 2023 compared to a net loss of $4.9 million in the fourth quarter of 2022. Basic and diluted net loss per share for the fourth quarter of 2023 was $1.47 compared to a net loss per share of $8.66 in the fourth quarter of 2022. Cash burn from operations in the fourth quarter of 2023 was $2 million compared to $2.1 million in the fourth quarter of 2022. As of December 31, 2023, there was $5.2 million in cash and no debt. $1.3 million of net proceeds were generated from the sale of shares of common stock under the ATM program since the end of the year, extending the cash runway into the third quarter of 2024.

• Expect revenues to significantly increase and grow sequentially once Medicare reimbursement is secured by October 2024.
• Plan to further augment and accelerate revenue growth by adding third-party payer reimbursement and establishing relationship with VA to penetrate MS market in U.S.
• Potential authorization in stroke in U.S. as soon as second half of 2025, which will allow addressing larger stroke market and growing revenues at greater rate.

Forward-looking statements involve inherent risks and uncertainties that could cause actual results to differ materially from those indicated, including those identified in the Risk Factors section of the most recent annual report on Form 10-K, which may be updated in other SEC filings.

Q: Given the broad buy-in for PoNS evaluations and positive data, what are the remaining possible reimbursement hurdles for a Medicare patient once Medicare fully establishes the codes by October and do you expect to encounter them?

A: Dane Andreeff said there are not too many hurdles; have HCPCS codes effective April 1, able to negotiate with third-party payers and submit claims on a case-by-case basis, activity provides evidence for Medicare to establish pricing; also, will be establishing a VA distributor to be a supplier for PoNS therapy to the VA.

Q: Can you give a sense on the Quebec order, deliveries and initiation with patients, expecting them in which quarter?

A: Jeff Mathiesen said the contract requires identifying five sites in five different regions, process ongoing, expect sites to come under contract during second quarter and deliveries in third quarter.

Q: How many centers of excellence did you add in 2023 for the PoNS step clinical trial and any updates on goals?

A: Dane Andreeff said there are six total sites of centers of excellence for the PoNS step; at full enrollment for now, will provide additional information on results for first 14 weeks in third and fourth quarters.