Solana Co Q1 FY2024 earnings call

• Pursuit of PoNS reimbursement: CMS established HCPCS codes, preliminary Medicare payment determinations released, working to argue for higher rates, final determination expected late summer effective Oct 1, 2024.
• Stroke authorization: Added 6 sites, Brooks Rehabilitation Hospital started enrolling, Shepherd Center recruitment begins, aligned with FDA on development plan, targeting regulatory submission by early 2025.
• Canadian activities: Working on sites in 5 regions for stroke validation.
• Financing: $6.4 million public offering completed, extending cash runway into 2025, including warrants for additional proceeds if exercised.

Total revenue for the first quarter of 2024 was $135,000, an increase from $111,000 in Q1 2023. Cost of revenue was $123,000 in Q1 2024 vs $122,000 in Q1 2023. Selling, general and administrative expenses decreased to $2.6 million in Q1 2024 from $2.9 million in Q1 2023. Research and development expense decreased to $0.8 million in Q1 2024 from $0.9 million in Q1 2023. Operating loss was $3.4 million in Q1 2024 vs $3.8 million in Q1 2023. Net loss was $2.5 million in Q1 2024. Cash burn from operations decreased to $3 million in Q1 2024 from $3.2 million in Q1 2023. As of March 30, 2024, cash was $3.6 million with no debt. The $6.4 million financing extends cash runway into 2025.

• Revenues expected to remain muted but with CMS reimbursement by Oct 1, 2024, expecting boost in revenues and path to positive cash flow.
• Warrants included in financing could provide additional proceeds if exercised, funding operations into next year.

• Uncertainties in CMS reimbursement rates differing from preliminary determinations.
• Dependence on FDA approval for stroke.
• Market adoption challenges due to high price point for most patients.

Q: Congrats on the quarter. Can you just go into a little bit more on the time line with the Lovell Government Services agreement that you signed? Kind of like where are you at with that agreement and get like build out a sales team with them? Or just kind of give some more color on it?

A: Nick, thanks for your question and your comment. So we're in the process right now of having our PoNS therapy be on contract with the FSS and the GSA contracts, the general service administration. This should go public very soon in the next days, weeks. And then by January 1, our team and their team will be all trained up internally, and we could start receiving prescriptions, invoices and training VA rehab experts on PoNS therapy so that they could start treating their patients. Jeff Mathiesen: So Dane, I think you misspoke. You said January 1... Dane Andreeff: Oh, I'm sorry. I mean June 1. Nicholas Sherwood: Okay. So June 1 you'll start -- you expect to start receiving prescriptions? Dane Andreeff: Sometime in, hopefully, early June. There's some training on both sides, but we do have a couple of the VAs looking at PoNS therapy for their MS patients right now. So it's very exciting. They've already targeted at least we know one VA of 25% of their MS population at that VA. Nicholas Sherwood: Understood. And then kind of... Jeff Mathiesen: I was just going to say, so there's a little bit of an order process. So as they are looking to write a prescription, they would need to make sure that they've got someone trained there before the order could get placed with us. So there's a little bit of an order process that plays out as we're developing these new relationships. Nicholas Sherwood: You mean the PT? Jeff Mathiesen: Correct. Yes. Physical therapists that would be the one to administer a help with the treatment. Dane Andreeff: And just to follow on that, yes. So if you remember, we modularize our PT training. So once they receive access to the modulized software, they could do it within 3 hours or less.