Release Date: August 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Successful launch of DefenCath in both inpatient and outpatient settings.
- Recorded unaudited quarter-to-date sales of $5.2 million as of August 13, 2024.
- Positive feedback from FDA on clinical pathway for adult Total Parenteral Nutrition (TPN).
- UnitedHealthcare and Humana confirmed TDAPA reimbursement for DefenCath.
- Strong engagement with small and midsized dialysis operators, with verified pull-through to the clinic level for more than 95% of shipments.
Negative Points
- Second quarter sales were modest due to the long inpatient sales cycle.
- Net loss increased to $14.2 million in Q2 2024 from $11.3 million in Q2 2023.
- Operating expenses increased by 32% to $15.6 million in Q2 2024.
- SG&A expenses more than doubled to $14.9 million in Q2 2024.
- Some larger dialysis operators are taking a wait-and-see approach, delaying broader adoption.
Q & A Highlights
Q: How do readmission rates for CLABSI compare to CRBSI, and how will you gear your education and marketing strategy for DefenCath accordingly? Also, how can the granted pass-through status for DefenCath be leveraged to facilitate uptake?
A: CRBSI is a subset of CLABSI, with CRBSIs requiring clinical correlations like signs of sepsis or positive peripheral blood cultures. CLABSI is a broader term, referring to a primary bloodstream infection in a patient with a central line within 48 hours before symptoms develop. Pass-through status allows providers to bill for DefenCath on a buy-and-bill basis during catheter installation, which is crucial for protecting the line from the start.
Q: How should we think about the $5.2 million run rate for 3Q and growth beyond that? Do you expect continued orders beyond the $5.2 million? How many centers in the outpatient setting are seeing pull-through?
A: We have seen consistent orders over the last four weeks, indicating minimal trade stocking. We are currently shipping to several hundred centers. While I can't predict the exact future, I feel good about the current revenue run rate.
Q: Can you walk us through the comments about hitting breakeven by the end of '24? What assumptions are needed to get to breakeven by then?
A: With operating expenses guided at $15 million to $18 million per quarter, and considering our current revenue run rate, breakeven EBITDA is achievable by the end of the year, assuming continued growth and onboarding of larger accounts.
Q: Can you talk about the progress on conversations with larger dialysis operators? What percentage of the market has your sales team touched, and are there any hesitations on adoption?
A: We are in discussions with one of the top two operators and feel close to finalizing. We are touching all top 20 accounts representing 99% of dialysis. Some smaller operators may need more education on TDAPA reimbursement, but overall, the response has been positive.
Q: Can you speak to the weekly progression of the $5.2 million and the 95% pull-through rate to clinics?
A: The weekly progression has been consistent, with repeat orders from clinics indicating utilization. While I can't provide exact future guidance, the current run rate is promising.
Q: How do you intend to fund the clinical studies, and what is the timeline for TPN enrollment? Can we expect interim top-line results before '27-'28?
A: We believe we can fund the studies with current cash flow and the ATM facility without large dilutive financing. The TPN study is a Phase 3 with 12 months of intervention, and we expect to see results before '28.
Q: Can you touch on the process for DefenCath trial and adoption across inpatient and outpatient segments? Are there notable differences? Is the TDAPA reimbursement process seamless and familiar to operators?
A: Inpatient adoption involves multiple steps like P&T approval and EMR integration, which can take months. Outpatient adoption is faster but still requires significant operational rollout. TDAPA is relatively new, and while many operators are familiar, some need education on the process.
Q: How is the contract going with the previously announced top-tier midsized dialysis provider? Can you provide any color on this contract's contribution to sales?
A: The relationship is strong, and they are our largest customer in terms of DefenCath utilization. We respect their request for privacy and focus on execution.
Q: Can you explain how Medicare Advantage is different from traditional Medicare for DefenCath? How is reimbursement handled today for Medicare Advantage patients?
A: Medicare Advantage plans assume risk for all costs associated with a patient, similar to private insurance. UnitedHealthcare has confirmed TDAPA reimbursement for DefenCath starting September 1, which is significant for long-term sustainable reimbursement.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
