Good afternoon. My name is Cynthia and I will be your operator today. At this time, I would like to welcome everyone to the ENDRA Life Sciences’ Third Quarter 2019 Business Update and Financial Conference Call and Webcast.It is now my pleasure to turn today's call over to your host Mr. David Wells, ENDRA's Chief Financial Officer. You may begin, sir.

Thank you, Cynthia. Good afternoon. Welcome to ENDRA's third quarter 2019 business update and financial conference call. We issued a press release this afternoon. For those of you who don't have a copy of the release, you can access it in the Investors section on our website at www.endrainc.com.Before we begin, please note that today's presentation includes forward-looking statements. All statements other than statements of historical facts, including statements regarding our strategies, financial condition, operations, costs, plans and objectives, as well as anticipated results of our development and commercialization efforts and the timing for receipt of required regulatory approvals and product launches are forward-looking statements. Except as otherwise required by federal securities laws, the company disclaims any obligation or undertaking to update or revise any forward-looking statement.Please refer to our Form 10-K for the 2018 fiscal year filed with the SEC to get a better understanding of risks and uncertainties related to forward-looking statements.I will now turn the call over to our Chairman and Chief Executive Officer, Francois Michelon. Francois?

Thank you, David. Good afternoon, everyone. And thank you for joining us on our quarterly update call. Along with David and me on today's call are Renaud Maloberti, Chief Commercial Officer; and Michael Thornton, our Chief Technology Officer.Let me quickly run through today's agenda. First, I'll outline our recent progress and provide updates on key topics, then David will review financials and Renaud will provide insight on our near-term commercial priorities. Finally, we will open the call for Q&A.As many of you know ENDRA is the pioneer of Thermo Acoustic Enhanced UltraSound, known as TAEUS. Our goal is to develop applications for the TAEUS technology in areas of high unmet clinical need. We're currently in the advanced stages of developing an application for TAEUS to assess and monitor elevated liver fat, which is associated with non-alcoholic fatty liver disease, also known as NAFLD and non-alcoholic steatohepatitis, also known as NASH.These often asymptomatic chronic liver conditions affect over 1 billion people globally and there are currently no practical diagnostic tools available to clinicians. We believe our TAEUS liver fat application is well-positioned to address this unmet need by enabling clinicians to non-invasively assess liver fat with a safe cost-effective procedure at the point of patient care, and we remain highly focused on bringing the TAEUS liver fat application to the market, clinicians and patients in 2020.Let me now update you on our clinical, regulatory and operational progress since our last quarterly call. First, we completed the second and final part of the Robarts Institute feasibility study and reported top level findings in conjunction with the EASL-NAFLD Summit in Spain in September. We were happy to report that we achieved the main objectives of this study.First, to understand how TAEUS performed in the clinical setting, which has helped us to build the…

Thank you, Francois. Our detailed financial results are contained in our Form 10-Q that will be filed today with the SEC, and the press release we issued contains key highlights of our financial results for the quarter. So today I will provide only a brief review.In the third quarter we managed our expenses responsibly, maintaining our focus on development of the TAEUS liver application, preparing -- preparation for regulatory filing and pre-commercialization activities. Our operating expenses for the third quarter of 2019 were $2.6 million as compared to $2.4 million for the same period in 2018. The increase in operating expenses was due primarily to increased spending to develop and test TAEUS which included expenses for our contract development vendors.Our net loss for the three months ended September 30, 2019 was $3.4 million or $0.46 per basic and diluted share, as compared to a net loss of $2.8 million in the third quarter of 2018. Our cash balance as of September 30, 2019 was approximately $2.3 million as compared to approximately $6.5 million as of December 31, 2018.Now, let me turn things over to Renaud Maloberti. Renaud?

Thank you, David, and good afternoon, everyone. In Q3, ENDRA attended a number of global scientific meetings to connect with the clinician network and build awareness for ENDRA's technology. By year-end 2019, we will have had a formal presence at seven leading radiology and gastro-hepatology conferences in Europe and in the U.S. My interaction with the clinical community confirms that there is a strong need for an interest in a rigorous point-of-care cost effectiveness assistant tool like TAEUS.Earlier this week, we returned from the AASLD Liver Meeting in Boston. It is arguably the largest liver meeting in the world with over 100 exhibitors and 9,500 attendees, across gastro-hepatology, endocrinology and in general medicine. The atmosphere was very upbeat, energized by the anticipated approval of the first targeted therapy for NAFLD, NASH expected this year. We had a well positioned booth where we displayed for the first time our complete preproduction TAEUS system. Our partner GE Healthcare also loaned us a beautiful Absinthe scented booth. Our unique approach to non-invasive fat characterization along with a first look at the system really attracted considerable traffic and interest and generated a lot of worthwhile conversation with the clinical community.In addition to our booth, we hosted an event with a key opinion leader Dr. Raza Malik from Tufts University Medical Center. His presentation highlighted the difficulties in identifying patients with NAFLD and NASH. He also emphasized the need for a point-of-care diagnostic device to better assess this fast growing disease, actually Dr. Malik referred to it as an epidemic.I would encourage everyone to listen to Dr. Malik's enlightening presentation on our website. And I also want to emphasize that outside of the AASLD presentation, ENDRA has no formal relationship with Dr. Malik. So his perspective is particularly objective and compelling. So over the next six to 12 months, I will continue to focus on education and building awareness to seed the market ahead of our commercial launch. We will continue to build relationship with clinicians in Europe and in the U.S. to broaden the visibility of TAEUS and communicate the clinical values that TAEUS brings as well as we just did during AASLD.The customer relationship management system that we implemented will help us to manage and effectively target our growing list of over 800 radiologists and pathologists, gastroenterologists and endocrinologists, who have already opted in to learning about and collaborating with ENDRA. We will advance current and work to launch additional clinical studies together valuable feedback from clinicians in the liver space and strengthen our clinical value database. I am really pleased with our progress so far, and I am excited about the potential opportunity for TAEUS and look forward to keeping you updated.Now, I will turn to call back to Francois for some final remarks.

Thanks very much, Renaud. I'll wrap up our call with an emphasis on three forward-looking points. First, we're increasingly encouraged by the clinical relevance and market potential of the TAEUS liver device validated by discussions with clinicians and the latest research we’re seeing at conferences. There over 1 billion people with NAFLD, NASH. Targeted therapies will likely be available next year and clinicians still don't have a practical and rigorous liver fat measurement tool in their hands.Point number two, we're advancing our EU and U.S. regulatory documentation with anticipated approvals by mid-2020 to support commercial launches in both markets in 2020. And finally, point three, we're ramping up our pre-commercial activities, which began in 2018 by raising ENDRA’s visibility at key medical meetings, through social media, with KOL education sessions and a growing dialogue with our database of interested clinicians.With that operator, I'd like to open the call for questions. Operator?

Thank you. The floor is now open for questions. [Operator instructions]. Our first question comes from Frank Takkinen of Lake Street Capital Markets. Please state your question.

Just a couple for you guys here. So first, could you just talk us through the evolution we could see in the NAFLD and NASH space as we go from a market with only a few treatments to one that could have a handful in the relatively near term and how you could see this particularly impacting your business?

Great question. Yes and I'd refer you in part to some of the new elements of our investor presentation on our website. One thing that's become increasingly clear, are there these two sort of bookends, you got over 1 billion people affected by NAFLD and NASH and that's growing and we had paediatric gastroenterologists and hepatologists saying they're now looking at children who are with fatty liver. So this is a real epidemic. And on the other hand, the far right, you've got to our knowledge at least 50 compounds in development, about 35 of them are in Phase 2 and 3, and we expect about four of those compounds to be approved commercially in the next 24 months. So you’ve got a huge bolus of people who need care. You have a now first of its kind targeted therapy and there are many of them. And I'd say about half of those therapies, even if they're focused by name on NASH, are metabolically focused and targeting a reduction in fat. And in the middle, there's this bottleneck, there's no tool to screen and assess and help diagnose, and then monitor the efficacy of those patients. So that's where we come in. We have always said that we need something upfront to be more practical cost effective than MRI which is very accurate, but it's slow, it's expensive, it's bolted to the ground, there aren't that many of them globally, and surgical biopsy which is also quite accurate. But if you look through Dr. Malik's presentation, it's an ugly, brutal, painful and even life-threatening procedure in some cases. So those aren’t good tools.And ENDRA comes into this by really facilitating the connection of that population with the drugs and we think that not only do we offer this potential great point-of-care diagnostic tool but we’re also very, very helpful to the pharmaceutical companies potentially and I have mentioned this before, not only to screen the patients who might go on one of the commercially approved therapies. But the people and the companies in the pipeline developing drugs are themselves depending on MRI or biopsy. And so without replacing those tools for the study results, we think we could add some value and really amplify and accelerate in many regards the selection of subjects for those studies and really give pharmaceutical companies and CROs a greater efficiency.So I think we’re an enabler of better healthcare. I think we’re an enabler of -- we're an amplifier and enabler of the many drugs that are on the horizon and certainly ENDRA in and of itself would benefit from those two elements. Does that help answer part of your question, Frank?

Yes, absolutely. That’s great. And then just shifting gears a little bit to your new addressable market slide in your deck, I see the 9,000 number -- 9,000 facilities performing abdominal liver ultrascans in the U.S. Could you help us understand that number a little bit and break it down and what you might view as low hanging fruit there? And then if you could also do that with the EU market 5500, as well as...?

Yes. Thanks, thanks for noticing. Yes, that’s a new and I think that pretty compelling element to our presentation up on our website. Historically, ENDRA has defined the addressable market for technology to include all of our TAEUS applications for the liver and beyond in relation to the number of ultrasound sockets approximately 1 million systems that are currently in global use. I have also seen several analyses that speak of a larger market potential of the NAFLD and NASH therapeutic market, but I haven't yet seen a good analysis of the market potential for a NAFLD, NASH diagnostic tool like ENDRA’s TAEUS. So my team and I went back to square one and we used CMS Medicare data to identify the U.S. sites that are currently performing abdominal and liver ultrasound scans. And to your point, there are about 9,000 of these sites, which include a range of sites, hospitals, clinics, small practices across the U.S. Our thinking was, they are already doing the liver scans, so they are natural first adopter of ENDRA’s TAEUS technology, which works in concert with the ultrasound they already own. And then we added a proportion of these U.S. numbers to estimate the European and Asian sites doing liver scans. And although we’ve said before that there are actually more ultrasounds on the ground in Europe and Asia than there are in the U.S., we chose to add only a proportion of the 9,000 that we had gotten data are in the U.S. So we added 5,500 sites doing ultrasound scans of the liver in Europe and we also added 5,500 in Asia. It’s conservative but that’s what we wanted.And finally, we assume that each of these 20,000 global sites across the U.S., Asia and Europe that are currently doing ultrasound scans of…

Yes, absolutely, that was great. And then two more from me. If you can just -- I've heard your brief comments about the Rocky Vista study. Could you just briefly walk us through timelines of that one more time? And potentially how soon after you could have some sort of publication out there?

Yes. Let me turn that over to Mike Thornton, who is our CTO. I think he is particularly close to that site. And Mike, if you give us some color to that, that'd be great?

Yes. Hi, and thanks for the question. So we're looking forward to getting our first preproduction unit to Rocky Vista in the next couple of weeks and actually kicking off some of the initial work and setting up their MRI site as well. I'll personally be doing that. So we expect to add some of the initial studies just before the end of this year. And we'll find out how recruitment goes once the study starts, but they have a number of hepatologists, and general medicine specialists and family physicians who are already queuing up to refer patients in concordance with the IRB that’s been approved.Following the completion of that study, and we're targeting 75 patients, that's what the IRB currently allows for, we will obviously step back and carefully analyze the data and we'll look forward to presenting at conferences and liver related meetings in 2020.

Yes, and Mike, if I might piggyback on that, I think one of the challenges we face with our first Canadian studies that we're limited to recruiting healthy patients and investors who've been with us for a while, remember that it was a bit challenging and we ended up by luck of the draw getting some low liver fat people. I think this study is designed by its proximity within the healthcare system and drawing on those hepatology clinics that Mike referred, that I think we're going to have a much richer pool and a much more efficient process. So from a recruiting perspective, I'm very comfortable with that. And I think we will have learned a great deal and be very efficient.The other element that I just want to underscore is the study in Canada used our first feasibility design, and I was thrilled with the results we've gotten so far. As Mike said, the Rocky Vista University study will use our first preproduction system, the one we showed at the liver meeting at Boston. And that system, which is largely equivalent to the commercial system, will have benefited from all the improvements that we made in the feasibility study. So I think it's going to be a nice step up in both regards. And I want to emphasize that we have other sites that will be announced as soon as they're completed, and where we really have to go aligned with a couple of them. So I'm excited about announcing those in the future as well.

Okay, Frank. I hope that -- I'm happy to answer anything else if you have it.

Yes, great. Just one last one for David. Just as far as your cash balance growth, can you talk to your monthly burn in the quarter and how that looks going forward and then some potential solutions to that matter as we look forward?

Sure. During Q3, we burned about $2.5 million in cash. We expect that to be a lot closer to our anticipated of about $2 million for Q4. We're in a very envious position right now actually, because of, we have some long-term shareholders and long-term investors. We remain very consistent in looking at our mid and long-term prospects. And so, I think our burn will remain consistent as we move into 2020. And we'll be able to comfortably support that as we grow.

Yes. And David, if you don't mind my highlighting what we've said on prior calls, which is, we've by design, run a very lean and asset light business in partnering with high quality service providers like StarFish Medical on the engineering side. And as we've ramped down that engineering spend because the product is coming to completion, we are not just adding commercial costs on top of that same engineering run rate. So winding down engineering costs, ramping up commercial costs and keeping the business very lean in the process.

Our next question comes from Kyle Bauser of Dougherty and Company.

So appreciate the color on expectations for submitting the CE and 510 (k) applications. I’m just so unclear. So you have all the materials and data that you need for those submissions. Is that correct? Just at this point it's just kind of pulling everything together and getting the application in, is that right?

Correct. Correct. And Mike Thornton also on the phone. I think that I gave a high level point but I think you can certainly add a little bit of detail.

Yes. I mean, there's a lot of documentation as you probably can appreciate, including internal documentation, external testing, and that's all coming together for the final technical file submission, we are planning still for the end of this year.

And when you submit, will you press release that?

I think that's to be determined. Yes, I think that's a fair question. I don't know if we have historically done that, but I'll certainly consider it. And let's leave it at that.

So you kind of talked about how in the near future here you have over 200 subjects of data and likely in some orders. Can you talk a little bit more about how you leverage this? I mean, is it primarily to generate awareness through publications or potential subsequent applications or additional TAEUS indications or both? Just kind of I’d love to hear that.

Yes, yes, yes. No, great question. So I think there are multiple elements. One, we've always said, as a medical device we need to build that base of clinical data for us to have a compelling clinical value proposition when we go to market next year. And you build that base of clinical data both in number and in diversity of sites, so that you reach a critical mass and you have a nice diversity and distribution. Because as you can imagine people in Germany and France like they generally see people in Europe and preferably people they know in their home country and vice versa in the U.S. So that's why we're doing this. It serves the purpose of accumulating data of building relationships with clinicians and early adopters. And I would say, assuming that they like the results of the product, they become our most likely first early adopters when we are commercial. So it's a beautiful cycle when it works well to say, “Hey you've tried it, you've collected it, you got these results. We're now commercial. We would love to have you consider buying the product.” And it's a bit -- it's not quite try before you buy, but it has an opportunity to expose clinicians to that. I hope that's helpful. And Mike, I don't know if there's anything else you'd like to point out.

Yes, just we're looking at a wider variety of body types and disease states building on our initial feasibility study where we were just developing the workflow and methodology and all of the other collaterals required for our CE filing. We're looking forward to getting referrals to our study from subjects that comprise endocrinology, diabetes, in addition to liver disease states. So I think it's going to be exciting. And obviously, as a new technology the number of total subjects and the data makes it much more compelling commercial argument.

Okay, got it.

Hope that answers your question Kyle.

Yes, and following up on that, so it makes sense that those will probably be your initial targets once you are commercial. Can you maybe talk about how you anticipate rolling it out to other facilities and your strategy for targeting them? And the second part to that is, how do you feel about the ability to meet demand once you do commercialize from a manufacturing perspective?

I'll have David speak a little bit to that supply chain and capital element. But in terms of targeting, I think we've touched a couple of times on this internal customer relationship management database that we've been building since we started going on the road, building awareness. And as Renaud mentioned, we're now around 800 clinicians across the globe in radiology, gastro-hepatology, endocrinology and even in general medicine and primary care. These are all clinicians that have an interest in either imaging or in liver and liver-associated diseases. And as we build this database, which is as I mentioned come from our own outreach as well as support and lists from GE, we've been keeping them well informed.In fact, I'm surprised that when we send out a direct email to these clinicians before meeting, we get a very high open rate. These people have opted in. They're interested. We don't waste their time. We don't bombard them, but we're getting open rates in the 15% to 30% range. So, I think we've got this great audience. It takes time to build that from awareness to interest to then trial. But to answer your question, I now know in Germany who is a hepatologist, who has shown some interest in our technology and who I am going to go to, and it's not two or three people, it's 50 to 100 people in Germany and 50 to 100 people in the other countries and there’s even larger amounts in the U.S. So, in terms of who we are targeting, I think we've got a great pool and target list.In terms of operations, as we've always mentioned, our goal is to work in collaboration with our partner GE and any other complementary partners that we bring to join us, and leverage their…

Sure. I think from a supply chain standpoint, the real brains, the intricacy, sophistication in our product is as much in the software it is in the hardware, probably arguably more in the software. And while we have some very innovative specifically designed hardware for this application, many of the piece parts, many of the pieces we need to assemble the hardware is relatively off-the-shelf and very accessible from a -- and so as a result getting them built and having them available, we don't have any huge concerns. Of course, we need to be as cost-effective as possible, both from having them available, having them in the right part of the world. But the team that we’ve assembled has experience in all of those aspects. From a financing standpoint, the business cycle of cash to inventory to receivables to collection, my background has a lot of commercial banking. I'm very familiar with how to manage that both from a leverage standpoint but then also making sure that we're keeping a very close eye on cash. It’s -- companies can’t grow themselves out of business and that will not happen with us. It's a very -- I think a very manageable business cycle that we can find non-dilutive ways. And there's -- we can see far enough in the future so that there won't be any surprises. So I don't have any concerns with that.

Thanks, David.

I hope Kyle that gives you a lot of good stuff to think about. We appreciate your interest.Operator, do we have someone else, please?

Our next question comes from Vernon Bernardino of H.C. Wainwright. Please state your question.

Hi, Francois, good afternoon. Good afternoon, David, Michael and Renaud. I'm very excited about the reception and the presentation at the liver disease meeting. I wasn't there, but I heard there was definitely a lot of interest. Regarding that, you mentioned awareness and growing awareness. In the launch of this product, how much effort do you think you will need to spend as far as education is concerned? And more specifically, when you are trying to -- when you are presenting the TAEUS as a capability to the physician, the specialist at the point-of-care, what kind of process is usually involved? Is it something where let's say a sales person can accomplish a visit? Or does it actually require a real or equipment type demonstration? And you also mentioned about the relationship with GE Healthcare, very synergistic, definitely very favorable relationship. How much of that synergy will play a role as far as the launch of the product, how much assistance? I'm not talking about monetarily, but they have the ones the relationships with the people you want to target, how much of a presence will there actually be as far as during the launch is concerned?

So, I think I deserve a prize if I can remember all the questions you just asked in a row, but I'm going to try and get to them. I think to answer your question about raising awareness and education, as I mentioned, that's started. Since 2018, going to these conferences, reaching out to the clinicians, the research that we've just completed that's available on the Research section of our website. We ran out of -- I think we made 75 copies for the liver meeting and we ran out on the second day. It's a great tool, which I can just imagine once we have more data from more sites, that's what really hooks clinicians because they want to see data. And I will tell you understanding the context of our feasibility study, anecdotally speaking, the clinicians that I’ve talked to were very surprised, positively surprised. So that's part of what we'll be doing.On the ground and in terms of getting to the next level, I have done this most of my life or most of my career. You extend that into what are called regional and local lunch and learns. These are 45-minute demonstrations with a lunch to 20 or 30 clinicians that we may have in our database or our sales reps know, et cetera You bring them in, you demonstrate the product. And to answer your question, we demonstrated our product. So I know from experience having spent three days with Michael Thornton and Renaud Maloberti and booth at AASLD, it's a very simple and rapid training.It's important to always do the training. But to answer your question, it essentially leveraging the existing and well understood clinical workflow with ultrasound. And I want to make sure that everyone understands. While we're working with GE Healthcare, we…

No, that's perfect. So it sounds like part of their marketing effort, their education and training will be these lunch and learn type of events where you have a group of physicians you're targeting, perhaps at a central location to learn about the product and then be trained and that's how the actual -- once they’ve signed on, they will be trained and therefore you can I guess determine that a sale is going forward?

Yes, and I -- I mean I think it obviously depends on each market and user. But we know where the customers are and who fits the profile, just to slow it down from our database. We know the hepatologists in the Berlin area, who may be interested in us who have expressed an interest, we met, and we're going to target them, we're going to invite them to a lunch and learn. We're also going to send them training videos and other things that we've done. I mean, it's not just a one-time event. And then clearly upon delivery and demonstration of the product at their site. We're going to demonstrate that for them and make sure that they're comfortable with it. But I think we're being rigorous. But again, leveraging the existing workflow and the sort of simplicity of ultrasound. So, I think pulling all those things together, it will be very successful.

[Operator instructions]. Our next question comes from Ed Woo of Ascendiant Capital. Please state your question.

Yes. My question is, it looks like you delayed a little bit in your filing of the C mark. And is there any risk through delays heading into next year?

Yes, I think part of the delay for us in terms of documentation was earlier in the year with the Health Canada approval of the study from which we needed to derive some elements in terms of human factors and otherwise. So I think that that's certainly the way you called it out which we've been signaling since middle of the year. We are on track otherwise, so I don't believe it would push into next year. But I do think everyone is already aware that the European community is shifting from what is today called the MDD, Medical Device Directive to the Medical Device Regulation, which is a new set of data and we are indeed -- our file which we've started submitting since middle of the year and that I've mentioned through the ISO Certification process and other things are certainly in scope and grandfathered into the current MDD and somewhat easier process. So, yes I have confidence that we're doing that. What I can't speak to Ed is on the flip side the length of time for approval because of that regulatory -- regulation change in Europe which affects all companies, it’s just not ENDRA specifically, I did mention on our last earnings call that notified bodies in Europe, the auditors if you will, companies like ours are adding 200 headcount at our auditor alone. So we have messaged that while we thought typically an approval process would take six to eight weeks, we've communicated since mid year that we believe it'll take more like 15 to 20 weeks, which is still very much in scope, with our guidance in terms of getting the clearance in the first half and commercializing mid-year.So I hope I'm clear in what we're saying. We're on track. There are changes afoot globally. But I believe we're in a good position to be grandfathered into the current standard and our planning continues to be focused on a midyear commercialization in Europe and in the U.S.

And just to clarify, do you plan to submit to the FDA after you get approval from the EU?

No. Thank you for asking, no. We simply said we're finishing the CE documentation from which we will derive much of the same content for the FDA application. So, the FDA application would follow that. But we are certainly not waiting for CE approval. So, we're filing the CE documentations this year. We will file the 510(k) closely after that, and we believe we will get both the CE clearance and the 510(k) in the first half of 2020.

So it’s not necessarily you will market in one area or other, it’s just based on whoever gives you the approval first, whoever approves first is where you will be launching first?

Correct. And we're ramping up again in a leaned manner with our own resources and also with our global partner GE who is obviously strong in both markets. We're ramping up in both in terms of our awareness building. We're going through a great deal of conferences in Europe and in the U.S. Our database is over in Europe and here are. And yes, whoever goes first will have our first attention, but it's not like we have to scale both markets in a very capital intensive way as I’ve described, so will be happy to address both quite quickly.

Great. Well, thank you for answering my questions and I wish you guys best of luck. Thank you.

Thanks so much. Operator, I think if we don't have any more questions, we can wrap this up. But I'm grateful if we’ve had more -- I think more questions and a good discussion than our prepared remarks, which is the way I like to go.

And Mr. Michelon, you may proceed with your closing remarks.

Great. Well, thanks. Just a very quick. Thank you, operator, and thank you everyone who has listened today. Very exciting time for ENDRA. We look forward to keeping you updated on our progress and wish you all a Happy Year End holidays. Bye.

Thank you. This does conclude today's teleconference. We thank you for your participation. You may disconnect your lines at this time, and have a great day.