Good day, and thank you for standing by, and welcome to Helius Medical Technologies, Inc. Q4 2023 Earnings Conference Call. At this time all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Michelle Bilski, In-Site Communications. Please go ahead.

Thank you, operator. Welcome to the fourth quarter 2023 earnings conference call for Helius Medical Technologies. This is Michelle Bilski of In-Site Communications, Investor Relations for Helius. With me on today's call are Dane Andreeff, Helius Medical's President and Chief Executive Officer; and Jeff Mathiesen, Chief Financial Officer. At this time all participants have been placed in a listen-only mode. Please note that this call is being recorded and access to the webcast can be obtained through the Investors section of the Helius website at www.heliusmedical.com. Before we begin, I would like to remind everyone that our remarks and responses to your questions today may contain forward-looking statements that are based on the current expectations of management. These forward-looking statements involve inherent risks and uncertainties that could cause actual results to differ materially from those indicating, including those identified in the Risk Factors section of our most recent annual report on Form 10-K. Such factors may be updated from time to time in our other filings with the SEC, which are available on our website. All statements made during this call are as of March 28, 2024. We undertake no obligation to publicly update or revise our forward-looking statements as a result of new information, future events or otherwise, except as required by law. I would now like to turn the call over to Dane Andreeff, President and Chief Executive Officer of Helius.

Thanks, Michelle, and thank you to everyone joining us today on Helius Medical's fourth quarter 2023 and earnings conference call. I'm happy to report that during 2023 and over the past few months, we've taken several meaningful steps towards two important milestones in the United States, achieving widespread reimbursement for PoNS and FDA approval for stroke. I'll start with our pursuit of broad reimbursement for PoNS. As you know, PoNS is currently authorized in the United States to treat gait deficit due to mild-to-moderate symptoms from MS. We are thrilled that CMS recently assigned us unique HCPCS codes for both PoNS controller and the PoNS mouthpiece effective April 1st, 2024. These codes allow us to begin negotiating reimbursement with third-party payers and gives us the option to submit claims on a case-by-case basis. We now expect to engage with CMS in the coming weeks and at the public meeting this summer with the objective of securing Medicare reimbursement for the PoNS controller and mouthpiece in their next cycle. If we are successful, reimbursement will be effective October 1st, 2024. To further support our reimbursement efforts, we anticipate getting primary endpoint data from PoNS step during the third quarter with preliminary study results communication before year-end. As a reminder, PoNS step is a company-sponsored research trial designed to evaluate the impact of MS patient adherence to PoNS Therapy in a real-world clinical setting. We expect data from this program to underscore the effectiveness of PoNS in treating gait imbalance impairment as well as its long-term therapeutic benefit. Recently, we initiated efforts to target the Department of Veterans Affairs through their nationwide multiple sclerosis centers of excellence, the VA provides healthcare services to veterans with MS from the time of diagnosis and through the rest of their lives, and more than 28,000…

Thanks, Dane. It is a pleasure to be with you today. 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 attributable to the June 30, 2023 expiration of the PTAP program in the United States, along with lower Canadian product sales. For the fourth quarter of 2023, cost of revenue was $90,000 compared to $150,000 for the prior year period, with the decrease primarily due to decreased revenues in the current year. 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, primarily due to a decrease in compensation-related expenses. Cash and – 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, resulting primarily from a decrease in clinical and product development expenses in the current year. 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. The 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. Our 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, we had $5.2 million in cash and no debt. As Dane mentioned, we generated $1.3 million of net proceeds from the sale…

Thank you. [Operator Instructions] And our first question comes from Jonathan Aschoff from Roth MKM. Your line is now open.

Thank you, guys. Given the broad buy-in for all the PoNS evaluations that are going on and the positive data you've shown, and it certainly looks like positive data, more of that's coming. It kind of makes me focus on the key item of reimbursement. So once Medicare fully establishes the codes by October, what if anything, are any remaining possible reimbursement hurdles for a Medicare patient? And do you expect to encounter those if they exist?

Yes, hi Jonathan, this is Dane. Thanks for your question. We don't see too many hurdles. There is two things we're to be doing. We do have the codes, the HCPCS codes right now. So they go effective April 1, and we're able to begin negotiating with third-party payers, using those codes as well as submit claims on a case-by-case basis. All of this activity will provide further evidence for Medicare to establish pricing.

Okay.

And one other thing…

I am sorry. No, continue.

Yes. No, one of the things that we'll be doing as well, we mentioned we're going to be establishing a VA distributor and be able to be a supplier for PoNS therapy to the VA. There is four centers of excellence for MS. In the VA there is well over 250 hospitals, and we look forward to helping veterans with VA improve their daily activities using PoNS therapy.

Okay. And so is the open-label stroke trial, the one that's starting with the Florida Center, is that two arms or is it one arm?

The open-label is a single-arm study with the same primary, which is gait and balance but also has the key secondary of the risk of falling and a durability effect, like the ERPT.

[Indiscernible] Dane, my question is, will you have any cannibalism from the MUSC led trial, both of which you need for approval because a patient would rather go into a single-arm trial where they know they're going to get treatment. Do you expect that where you have overlapping sites like the Florida center? [Indiscernible]

We do not believe, though. Yes, we do not believe there will be cannibalization by any patient.

Okay. So will the OpEx track over the quarters of 2024 in line with the drop we see in just reported in 4Q 2023. Is that kind of a new, much less OpEx plan for the time being?

Yes, hi, Jonathan, I'll take that. This is Jeff. So we typically have, as you can – if you track on a quarterly basis, first quarter is typically the highest quarter expense, right, because we have to have legal and audit fees and that type of thing go in. And you see that start to step down a little bit in the second quarter, but there's still costs related to the annual meeting and those types of activities. And then it typically flattens out a little bit more in the fourth quarter. So, you'll see that kind of overall trend in general. And beyond that, we don't see significant cost changes or increases in the near future on a quarterly basis as we move forward in the year. As we start to ramp up revenues, there will be some costs, but those costs should be relatively modest when compared to the revenue growth that will come.

Thank you very much guys, that’s all that I had.

All right, thanks a lot. Appreciate it Jonathan.

And thank you. And our next question comes from Jeff Cohen from Ladenburg Thalmann & Company. Your line is now open.

Great. Dane and Jeff how are you?

Good Jeff how are you?

Good morning Jeff.

So, two questions from my end. Can you give us a sense on the Quebec order, deliveries and initiation with patients, do you expect that in the second quarter, third quarter, fourth quarter?

Hey Jeff, I'll take that. This is Jeff. Yes, so right now, the contract requires that we identify five sites, five different regions, so that process is going on. And we would expect that we will have those sites kind of coming under contract during the second quarter and then in the third quarter with deliveries following shortly thereafter. So there may be some activity here in the second quarter and more happening in the third quarter. But the idea is, initially, what was originally agreed to was extended to the end of September as far as having them all in place. And so that is something that when you're dealing with these types of centers, it's not a situation where you can walk in and within a week kind of have a relationship set up and the contract agreed to it becomes a process. And we've been doing that. We've got – we've made some good progress. We've got some of those sites that we believe are close to being under contract and we'll continue that process. So a long answer to your question, but it should play out here over the next couple of quarters.

Okay. Got it. And then second for us, maybe for Dane, could you talk about how things may look toward the end of the year as far as FTEs and personnel on your end and number of centers, number of folks trade out. There just a sense of what's going to exist commercially from the company by the end of the year?

Hey Jeff, can you repeat that first part? I don't think the Internet picked up that first part of your question.

My apologies. Got it.

Yes.

Just trying to get a sense of how things look commercially as 2024 plays out as far as how you're measuring yourself with personnel and number of centers, number of trained folks out there, et cetera?

Yes. So what we've done, Jeff, we've laid a lot of leverageable areas in our business that – the old model of hiring 50 people and going out on sales and another $30 million in reimbursement and customer service and support, that's not what we really need to do. We're going to be able to – with reimbursement, hopefully effective October 1 with CMS; we see three areas of leverage. First and foremost we already have our manufacturer OEM. They could start producing very, very quickly with this future demand, and we are collecting a lot of future demand with our inquiries and folks wanting PoNS therapy. The second area of leverage, Jeff, is just our hub, our telemedicine, tele appointment, e-commerce e-prescribing hub that is highly leverageable. A patient can come in there and our greatest advocate is the patient right now, and they could come in there with a prescription and get that sold and the PoNS device is sent to that patient within two days, and they bring that their device PoNS therapy straight to their registered PoNS physical therapists and start training for the first two weeks. Another leverage point in our model is, right now it takes almost three months to get a neurologist appointment post COVID. It used to take 30 days on average now three months. If a patient wants to come through our site, we have partnered with UpScript and a third-party group of neurologists and prescribers if they're willing to be diagnosed, they could have an appointment for $25 and meet with a neurologist and have that basically online meeting. And if they are diagnosed with gait deficit, that neurologists will fill out a prescription and e-prescription for PoNS, and it will be fulfilled and they'll start their process. The last place where we see a lot of leverage is our online PoNS module training for physical therapies for them to become registered PoNS physical therapists. Right now, all they have to do is send us an e-mail, their clinic, their name, their number, and once we validate their PT number, OT number, they are now – they gather access to the software and it's free to them. And within three hours or less, they are – they become registered PoNS strain. So we could fill in the map very quickly with demand for patients so that they do not have to drive 30, 40 minutes for a registered PoNS trainer. They could either have their own, be trained up. If they already use a PT or they could look at our map and see the closest PT registered PT trainer, so that their first two weeks can start very quickly.

So Dane, could you give us a sense of number of PTs that you anticipate being trained this year or give us a quarterly update as it plays out throughout the quarters?

Yes. Jeff, we haven't give those – haven't given those numbers out for investors just yet. We are looking to eventually plan to do that with reimbursement so that analysts like yourself can track all our financial numbers that could track sales, and that includes prescribers, PTs and the like.

Got it. Okay. Perfect. That’s it from us. Thanks for taking the questions.

Great. Thanks Jeff.

And thank you. [Operator Instructions] And our next question comes from Anthony Vendetti from Maxim Group. Your line is now open.

Thank you. Yes, good afternoon. So my question is about surrounding the therapeutic experience program. How many centers of excellence did you add in 2023? And any updates on the goals for the program? And then if you had specifically how many added in the fourth quarter?

Yes, that would be the PoNS step clinical trial you're referring to, correct, Anthony?

Yes. Yes, Dane.

Yes. Yes. So we have six total sites of centers of excellence for the PoNS step. And I believe – yes, I believe – yes, I think we believe we've announced all six of them.

Okay. And in 2024, how many would you like to add?

We are at full enrollment for now. We will not be adding any more. And I think we announced third and fourth quarter, we'll be providing additional information on some of those results for the first 14 weeks.

And I don't – I may have missed this because I was on another call, but I know you went to the Physical Therapy Association Conference last year in San Diego and this year in Boston. I was wondering if you could talk about the recruitment efforts, how that went also new potential whether it's physical therapists or what else you were able to learn lean from the conference.

Yes. So the APTA is one of our best conferences that we present. We have a wonderful booth. Our mechanism of action is on the TV. It usually brings in a lot of people that are – that never hurt of PoNS, they become very, very curious. We are the only prescribed treatment there for all these PT clinics, both nationally, super regional and regional and also mom-and-pop. There was roughly 17,000 APTA members and the like that show up in the conference in Boston. We've had a tremendous amount of inquiries from the PTs. One big notice this year was a lot of VA rehab specialists, neuro rehab PTs given that veterans do have a tremendous amount of balancing gait issues, and that's not only in MS, but that's in traumatic brain injury and the number one indication that the VA treats is in stroke.

Perfect. Perfect. Okay, I think with that all I'll hop back in the queue. Thanks, Dane. Appreciate it.

Thank you, Anthony.

And thank you. And I am showing no further questions. I would now like to turn the call back over to Dane for closing remarks.

Thank you, everyone, for following Helius Medical Technologies. As you just heard we are very excited to be right in front of some very significant milestones, and we look forward to keeping you updated as we pursue coverage and reimbursement and continue bringing PoNS therapy to the millions who need it. Thank you.

And thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.