Release Date: June 24, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Revenue for the fiscal fourth quarter grew more than 20% sequentially.
- LungFit PH has been used in over 50 hospitals in the United States, treating more than 1,100 patients.
- Every hospital that used LungFit PH and had their contract conclude has renewed, with a 100% increase in multiyear contracts.
- The company has appointed a new Chief Commercial Officer, David Webster, who has extensive experience in bringing products to market.
- Beyond Cancer's Phase 1a study showed promising results, demonstrating evidence of immune system activation in a heavily pretreated population.
Negative Points
- Revenue guidance for fiscal year 2025 has been revised down to greater than $10 million from the previous $12 million to $16 million.
- The company reported a net loss of $64.3 million for the fiscal year ended March 31, 2024.
- Cash burn in the quarter ended March 31, 2024, was $12.8 million, with significant costs related to upgrades of LungFit devices.
- The company has reduced its headcount by over 20% to preserve capital, impacting R&D projects.
- There are delays in reaching milestones, including the CE Mark for LungFit PH and the PMA supplement for cardiac surgery, affecting near-term targets.
Q & A Highlights
Q: Why didn't we see more of a sequential lift in revenue between fiscal third and fiscal fourth quarter? What are the assumptions built into the fiscal '25 outlook?
A: The delay was due to ensuring that the upgraded LungFit PH systems worked perfectly with existing customers before expanding to new ones. For fiscal '25, the assumptions include an accurate pipeline of potential hospitals and a consistent success rate based on past experience. The new Chief Commercial Officer is also expected to drive growth.
Q: Can you give us some color around how the fiscal first quarter is doing, especially since we won't hear from you publicly next quarter?
A: The growth in the fiscal first quarter is better than the previous quarter, with a significantly higher growth rate compared to the growth from fiscal fourth quarter over fiscal third quarter.
Q: Can you remind us about the debt financing done a couple of quarters ago? Is the funding still available?
A: The first milestone funding is not available, but there is another pool of $12.5 million that could potentially be accessed through discussions with lenders.
Q: Given the conservative approach to R&D expenses, how should we think about the trend for fiscal 2025 in R&D and SG&A?
A: The plan includes a reduction of over 15% in operating costs year-on-year, with R&D expenses reduced by over 20% and SG&A by 5-10%. The selling component in SG&A remains largely untouched to support market expansion.
Q: Should we anticipate a greater portion of revenue in the second half of fiscal 2025 versus the first half?
A: Yes, the revenue is expected to ramp up, with higher growth in the next quarter and continuing that trend through Q3 and Q4.
Q: For the last quarter, were there any new accounts or mostly renewals of existing accounts? What do you anticipate for fiscal 2025?
A: Growth will be driven by new accounts. While existing customers may show marginal growth, the primary driver will be new hospitals. The trend of signing new hospitals is expected to continue and increase over the next several quarters.
Q: Where are you with respect to the software upgrades across existing devices?
A: Two lines are being used—one for building new systems and another for upgrading old ones. This process will continue for the next two to three quarters, ensuring no issues in meeting demand.
Q: How should we think about driving growth—expanding customers or increasing use at existing customers?
A: Both are important, but new customers will be the primary driver. Referrals from existing customers will also play a significant role in building the business.
Q: What is the status of the PMA supplement under review? What impact will it have on revenue upon approval?
A: The PMA supplement is expected to be decided in the fourth quarter of the calendar year. The current revenue guidance does not include any impact from the cardiac surgery indication for fiscal '25, but it is anticipated to contribute in fiscal '26.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
