Good morning, and welcome to the NeuroMetrix second quarter 2022 earnings call. My name is Michelle, and I'll be your moderator on the call. On this call, the company may make statements which are not historical facts and are considered forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. Statements that are predictive in nature that depend upon or refer to future events or conditions are forward-looking statements. Any forward-looking statements reflect current views of NeuroMetrix about future results of operations and other forward-looking information. You should not rely on forward-looking statements because actual results may differ materially as a result of a number of important factors, including those set forth in the earnings release issued earlier today. Please refer to the risks and uncertainties, including the factors described under the heading Risk Factors in the company's periodic filings with the SEC, available on the company's investor relations website at neurometrix.com and on the SEC's website at sec.gov. NeuroMetrix does not intend and undertakes no duty to update the information disclosed on this conference call. I'd now like to introduce the NeuroMetrix Senior Vice President and Chief Financial Officer, Mr. Thomas Higgins. Mr. Higgins. Thank you, Michelle, and thanks to those of you attending today's quarterly review. Both myself and Dr. Shai Gozani, the President and CEO of NeuroMetrix, are participating in this call. By way of background, we are a MedTech company with a mission to reduce the impact of neurological disorders and pain syndromes on individuals and on population health. Our commercial products are non-invasive. They address worldwide market opportunities and have no direct competition. Alternatives do exist, but not substitutes. DPNCheck is our leading product in terms of revenue generation. It is a diagnostic providing rapid point-of-care detection of peripheral neuropathy. Quell is our over-the-counter wearable neurostimulation therapeutic indicated for lower extremity chronic pain. Quell recently achieved FDA authorization as a prescription offering for treating the symptoms of fibromyalgia. Our business model is razor and blades, with aftermarket revenue being the principal component of product line profitability. During the second quarter, our revenues were $2.1 million, and year-to-date totaled $4.4 million. Q2 revenues were down by 3.4% year-on-year, and first half revenues increased by 1.6%. These modest changes in comparative period revenues for Q2 and for the first half of the year obscure the interesting revenue perspective, and that is that DPNCheck, our leading product, posted another strong quarterly performance with overall revenue growth of 17.6% in the second quarter and 14.6% year-to-date. Looking a little deeper into the DPNCheck numbers, the US Medicare Advantage business was up 20.3% in the second quarter and 14.6% year-to-date. Most of this growth was attributable to our existing domestic customers, combined with some early new account activity generated by our commercial team. The remaining DPNCheck business is primarily with distributors in Japan and China, where it is somewhat difficult to assess performance on a quarterly basis. It appears that these markets, and particularly China, continue to be adversely affected by the COVID situation. Regarding Quell, revenues in the second quarter and six-month period were down, reflecting limited promotion, as well as our positioning for the transition to a prescription Quell portfolio with specific disease indications. Shai will address this in his comments. The advanced diagnostic business recorded a decline in revenue with erosion of its user base. We manage this product line for its cash flow. Gross profit was $1.5 million in the quarter, reflecting a margin rate of 68%. Year-to-date margin was $3.2 million on a margin rate of 73%. Q2 cost of goods and gross profit were adversely affected by PPV payments to secure critical parts. In the second quarter, we experienced the highest total PPV that we've seen, and we expect Q3 to be at the same magnitude or higher. There simply isn't a viable alternative to paying a premium to secure the electronic parts and components that we need to produce our devices. If one were to exclude the Q2 PPV payments, our margin rate in the second quarter was 75.5% or about 70 basis points better than in Q2 of last year. Along with the rest of the industry, we find it impossible to forecast when part supply will return to a more normal environment and what, if any, of the PPV markups will make their way into the normal cost of goods. Operating expenses totaled $2.7 million in the quarter and $5.4 million year-to-date. R&D spending reflects our product development commitment in two strategically important areas, DPNCheck Medicare Advantage and Quell prescription indications. The spending increase includes variable cost outlays for engineering consulting for both of these initiatives. Sales and marketing personnel costs increased with the addition of our DPNCheck commercial team. This increased OPEX spending is guided by a 2022 and 2023 investment program with a target range of approximately $4 million. The program is designed to address several aspects of the company that are essential to our future growth. These aspects include corporate governance, infrastructure, product development, and commercialization talent. We're in the early stages of the program and expect that approximately half of the program spending will be one-time costs. Net loss in the second quarter was $1.2 million or $0.17 per share. Year-to-date net loss was $2.1 million or $0.30 per share. Regarding cash flow in our balance sheet, net cash consumption in the quarter was about $850,000, and year-to-date was $1.6 million. We ended the period with a total of $23 million in cash equivalents, and securities, and we continue to maintain a simple debt-free capital structure with approximately 7.1 million common shares outstanding. We're adequately capitalized and our funding on hand is adequate to support our growth initiatives this year and beyond. Now for Dr. Gozani's comments. Thank you, Tom. We are transitioning from a multi-year effort to stabilize the company's financial health towards a focus on top-line growth with a balanced attention on the bottom line. There are three core elements to our growth strategy. The first is organic growth in our DPNCheck Medicare Advantage business. The second is to launch the Quell fibromyalgia indication. The third is to advance our Quell neurotherapeutics program. I'll comment on each of these initiatives. First, with respect to DPNCheck. The year-over-year revenue growth in the DPNCheck Medicare Advantage business was an encouraging 20%. This growth primarily reflected increased utilization of DPNCheck biosensors by existing customers. We now have a value-based care commercial team that focuses on increasing DPNCheck adoption in the Medicare Advantage market. This includes large medical groups, health systems, and health assessment companies where a substantial portion of the patients are covered under Medicare Advantage. The sales cycle in this market is long, and therefore the bulk of the impact from the new commercial team will be felt starting in 2023. However, we are pleased with the sales activities and the quality and depth of the developing pipeline. There are a number of R&D activities that will support continued growth in the Medicare Advantage market. We recently launched our second-generation device called DPNCheck 2.0. The initial devices are being strategically deployed in pilot trials with large potential customers. A full market launch will follow once we have built up our inventory position and have confidence in the supply chain. We hope to meet this goal before the end of the year. Another R&D program is development of the DPNCheck Cloud, which is a data analytics platform that allows our customers to monitor and optimize DPNCheck implementation and address key population health questions through a family of web-based dashboards. We anticipate launching DPNCheck Cloud by the end of the third quarter and expect that it will start to positively impact biosensor utilization in 2023. We have additional R&D efforts that should come to fruition in early 2023, which we'll talk about over the balance of the year. Moving to our Quell fibromyalgia indication. As we have discussed over the past couple of years, we are transitioning Quell from a nonspecific over-the-counter treatment for chronic lower extremity pain to a focused prescription neurotherapeutic platform, starting with the treatment of the symptoms of fibromyalgia. As a reminder, fibromyalgia is a complex chronic pain syndrome that affects as many as 10 million people in the U.S. The only FDA-approved treatments are three drugs, pregabalin, duloxetine, and milnacipran, which often have substantial side effects. We received FDA Breakthrough Designation for this indication in July of twenty-twenty-one and De Novo authorization in May of this year. FDA De Novo authorization in May. Quell is the first and only non-pharmacologic treatment for individuals with fibromyalgia. We are planning a limited launch in the fourth quarter of this year, and we'll proceed to a full launch in 2023. The purpose of the initial launch is to confirm the effectiveness of our prescription management solution, to refine the marketing messaging, and to collect key performance indicators that will allow us to plan further commercial expansion. If these events occur as planned, we expect Quell revenue to resume growth in 2023. Moving now to the overall Quell neurotherapeutics platform. The third element of our growth strategy is to continue to develop the Quell neurotherapeutics pipeline beyond the initial fibromyalgia indication. The program that is furthest along is for chemotherapy-induced peripheral neuropathy or CIPN, which affects as many as 70% of people who receive chemotherapy. It can be a chronic and debilitating side effect of cancer treatment. An NIH and National Cancer Institute-funded multicenter, double-blinded, randomized sham-controlled trial has been underway for the past couple of years and is now fully enrolled. Disclosure of study results will take some time, but preliminary findings could come out before the end of the year or the first half of next year. If the results are positive, we expect to file a De Novo request to the FDA in 2023. As a reminder, we received FDA Breakthrough Designation for treating moderate to severe CIPN in January of this year. We have other pilot studies ongoing or starting soon in long COVID and what is called COPC or chronic overlapping pain conditions. Many individuals with long COVID experience symptoms similar to fibromyalgia, and therefore we hypothesize that Quell will be beneficial in this population. COPC is a set of common health conditions that often occur together in the same patient. Includes fibromyalgia, chronic low back pain, migraine, temporomandibular joint disorder, and irritable bowel syndrome. These conditions are thought to share a common pathological process that is called central sensitization, which is a state in which the brain overamplifies pain and other sensory signals. We hypothesize that Quell decreases central sensitization and therefore may be beneficial in this overall syndrome. That concludes our prepared comments, and we'd be happy to take questions at this point. Thank you. If you'd like to ask a question, please press Star then one. Again, that's Star one to ask a question. I'm not showing any questions at this time. I'd like to turn the call back over to Dr. Gozani for any closing remarks. Thank you for joining us today, and we look forward to keeping you updated over the balance of the year. This concludes the program. You may now disconnect. Everyone, have a great day.
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