Nyxoah SA Q4 FY2024 earnings call

Genio Efficacy

• DREAM study met primary and secondary endpoints with strong AHI and ODI responder rates, 63.5% AHI responder rate, 71.3% ODI respond rate, overall median AHI reduction of 70.8%, 82% super responders.
• Consistent efficacy across sleep positions, unique in clinical trial data.

Regulatory

• Submitted fourth and final module of PMA submission in June '24, expect FDA approval by end of March 2025, completed Belgium site visit.

U.S. Launch Prep

• Built U.S. team including CFO, CMO, CCO; 75 docs trained on Genio technology. Two-pronged strategy: target high-volume HGNS centers and develop referral networks with sleep physicians. Plan to launch with 50 commercial team members using CPT code 64568 for reimbursement.

International

• Growth in Europe, launched in UK and UAE; commercial proof-of-concept in Germany.

In the fourth quarter of 2024, Nyxoah recorded deferred revenue of €600,000 related to disposable patches. Recognized revenue was €1.3 million in Q4 and €4.5 million for the full year 2024. Total operating loss for Q4 2024 was €18.3 million vs €10.8 million in Q4 2023. Cash position remained strong at €85.6 million at December 31, 2024. Revenue contribution: Recognized revenue in Q4 was €1.3 million (4.5 million for full-year), with deferred revenue of €600,000 in Q4.

FDA Approval

• Expect FDA approval by end of March 2025, focusing on labeling discussion.

U.S. Commercialization

• Launch in U.S. with 50 commercial team members, scale quarter-after-quarter. Target 300-350 high-volume HGNS sites.

International

• Further expand Genio in Germany, UK, and selectively in new geographies like UAE.

Regulatory

• Potential delays in FDA approval beyond March 2025 due to agency changes or review processes.

Reimbursement

• Challenges in commercial payer adoption and ensuring sufficient reimbursement for Genio.

Manufacturing

• Potential supply chain issues impacting product availability upon U.S. launch.

Q: Hi, good morning, Olivier and John, thank you for taking the questions. And great to hear you still expect approval here by the end of the month. A lot of different questions that I could ask here, but maybe just to start. Reimbursement, new update there. You said you're going to use the 64568 Code. There is some investor consternation that, that level of reimbursement associated with the code is not overly attractive or sufficient for hypoglossal nerve stimulation, in particular, to the physician. So what's your response to that? And do you believe this coding strategy is sufficient to drive strong uptake of Genio? And then I have a follow-up. Thanks.

A: Thank you, Adam. So first of all, I do agree with you that from a physician's fee perspective, this is not the strongest code. On the other hand, if you look at Nyxoah, when we will enter the market, I think it's so important for us to be able to enter and having directly a CPT code that can represent payment for technology. So from our perspective, we are extremely pleased that we have identified a code because I realized that this was one of the open topics in our preparation for U.S. launch. Now, on the other hand, I do think there is still a lot of work that needs to be done in this coding and also reflecting either stronger pricing and making it even more attractive for physicians. Last, what I would like to comment on this, we will also explore in order to optimize the uniqueness of Genio and the technology offering a bilateral stimulation compared to the unilateral stimulation so that we can maybe make it even more attractive linked to our product differentiation. But, as a summary, we are happy that we have a code. And we also would like to point out that the code is the same for a physician for both the existing -- the current HGNS technology that is available and the Genio technology that will be available.

Q: Understood. And really helpful color there. Thanks, Olivier. For the follow-up, maybe just one on how you're thinking about the trajectory of U.S. launch. I'll ask the question kind of this way. So I think I heard you mentioned 75 docs. I think those are U.S. docs are trained on the Genio technology already. How do we think about the pace of new account openings this year? I know the strategy is concentrated deep, not wide. But just, is there a target number in mind for 2025? Just help us understand the strategy there? Thank you.

A: First of all, when we are talking about 75, it's a little bit more than 75. All physicians were part of the clinical study, DREAM, ACCESS and also the usability study we did. And I think what was enorm rewarding for us was hearing that all physicians are actively asking and reaching out when it will be available and that they want to have Genio integrated in their treatment of -- how to treat OSA patients. That's the first step. Second one is, as I mentioned, we have 50 added sales team that is currently fully trained and ready to launch. So now how will we approach this? You remember that the current HGNS business is very concentrated with roughly 300 to 350 sites representing, let's say, 70% to 75% of total HGNS revenue. So those will be the targeted accounts, the 300 to 350. With the 50 people, we will start, we will train and educate our surgeons. Every quarter we'll further scale up and we also have a playbook for scalability in adding additional sales reps quarter-after-quarter. So our first challenge will be, let's get the first physicians trained, then we start expanding quarter-after-quarter. And I do think that in a period of 12 to 18 months, we will be able to cover all those Tier 1 high volume HGNS accounts.

Q: Great. Thanks guys and good morning. Olivier, it seems that the dialogue with the FDA, per your comments, has been consistent and thorough. However, just when I look at the calendar, and the end of March is relatively soon, we hear about all these cuts at the agency that are taking place. So maybe if you can give us a little bit more color on why still the confidence by the end of this month, the end of March? And then maybe even more importantly, what are your thoughts for the label? Because again, it seems like you're in the final stages, your thoughts for the label and the likelihood that those supplying claims that you talked about are included upon approval? And then I'll ask my follow-up? Thanks.

A: Well, thank you, Jon, for the question. And first of all, indeed, it has been very challenging times for government and lately. Now when it comes to our file and the review, I am pleased, and I say very carefully when I'm saying this, but I'm pleased that so far, we have not seen any negative impact of the ongoing political changes that are impacting the government procedures. So that is already one step. So from that end, we are still good. Now over the last weeks, it has been extremely interactive with the FDA going back and forth, closing and announcing the last questions and also entering the labeling discussion. So when you talk about timing and why we still feel confident by the end of this month, I think I mentioned earlier that there is something like a 90-day clock, and the 90-day clock is ending as of this month. So that's why we are still confident with no changes in our review, but entering the last stage with the labeling discussion and also knowing that the clock is ticking, that it makes sense to still say that we expect to have an approval by the end of this month. That is hopefully answering the first part of the question. On the second one, more specific on the labeling. I mean it's clear that we would like to have also the uniqueness with our supine data being reflected in the label. And that is also the part that we presented to FDA. It also has to be clear that with our existing clinical evidence of CCC patients and also the work that we are seeing in the U.S. in ACCESS study that we also do not see any reason to have CCC as a contraindication as compared to the current available HGNS technology that has CCC as a contraindication. We do feel strong that this will not be the case. But maybe conclusion, I do not want to jump to any conclusions until FDA made up its final remarks. But in our label discussion, to answer your questions, those are two things that we are currently actively discussing.

Q: Hey guys. This is Matthew Park on for Ross today. Thanks for taking the questions. I guess just to start off, can you walk us through any manufacturing supply chain that you guys currently have in place? And do you think it's sufficient to meet existing demand upon approval?

A: Yes. Well, thank you for the question. And you're pointing out such an important question. I mean this is what every company wants to have when you launch, you need to make sure you have product and you have sufficient manufacturing and inventory available. So also for Nyxoah, this is one of our key points that the team has worked so hard. And I'm happy to say that also there, we feel really confident. One more topic, what I also would like to point out is that we are manufacturing products for the U.S. market also in the U.S. This was a decision that was made already a couple of years ago. And I think I see also in the current landscape that this was also the right decision. So not only we have significant inventory. We also do not have to ship inventory around the globe. It is manufactured in the U.S. for the U.S., also being part of our U.S. focus as a company that we are having.

Q: Hey, Olivier and John, congrats on all the progress. Can you hear me all right?

A: Yes, I can.

Q: Perfect. So Olivier, obviously, you guys have had quite a bit of experience in Germany. As your prep for U.S. launch, the 75 or so docs that you all are targeting, Olivier, to the extent that the lessons learned from Germany, how do you think -- what do you think is the key catch for Genio versus Inspire? Is it the supine versus non-supine? Is it bilateral? Is it just physicians looking to diversify? Is it your CCC angle? Just help us understand where do you think the hook is going to be for these "initial low-hanging fruit" of 75 physicians?

A: Yes, thank you for this question. So going back to Germany and our initial learnings, offering physicians and patients a choice in HGNS implants and stepping away from an invasive pacemaker solution into a single incision procedure has been key in the first introduction with the technology. Then, of course, we explore product differentiation. They see the benefits from bilateral stimulation. They also see the uniqueness with patients in order to upgrade their system without the need for any surgery and also, of course, avoiding the risk for another surgery for the placement of a battery. And that's what we saw initially. While we are further scaling in Germany and learning, we're also seeing that physicians more and more also tend to understand how important it is that patients are very compliant with their technology. And also there, we are seeing that with our available component, that creates a habit of before you go to that, having your wearable -- ready to get a good night sleep, expressed in a compliance ratio of more than 85%. This is also something that is driving the physician next to the results that we are seeing in treating this and to continue to choose Genio.

Q: Great. Thanks for taking the questions here. Olivier, I heard your comments on the -- what's giving you confidence in the March approval time frame and the 90-day clock that you have. First, I want to clarify, I think you said the Belgium site did happen. So I wanted to clarify that. But second, I'm not sure if you have any event scheduled between now and April. But let's say we do get to April 1, and we haven't seen a press release at all from the team around approval, what would you maybe suspect, I'm not saying could have gone wrong, but could have been a cause maybe for you not to meet that window, just essentially trying to -- hope to get out in front of what could be a question arising in a couple of weeks or so.

A: Yes. So first of all, David, we are still planning, as I was mentioning, to have really a press release out before end of March based on the argument I used. If we want to go completely in detail, there is something like a 10-day grace period that FDA has that exists. We have no indication whatever that this would apply to us. So we are still -- we remain confident that before the end of March, we will have more communication coming out. And to your point, if we do not have any further news, I think it's highly unlikely for us. So, in conclusion, we remain confident. There is a grace period that exists, no indicators pointing in that direction.

Q: Hi, good morning guys. This is Paige on for Mike Polark. First question, on the code, CPT code 64568, the description, we believe includes pulse generator. So that's obviously different than Genio form factor. Why are you guys confident that Genio fits into this code category?

A: Because we do have a pulse generator. I mean you need to have a battery. And the only difference is that we have an external pulse generator. And with pacemaker, we have an internal pulse generator. And to your point, as you mentioned, very precise, the code [indiscernible].

Q: Awesome. Thank you. And then just one quick follow-up on the deferred revenue recognition change. Can you guys help us understand what portion of a new patient implant will be deferred in the future? And then does this mean that the patient needs to be compliant and use the patches over the period of use to be able to record the deferred revenue down the line? Thank you so much.

A: Yes. Thank you, Paige. So, in terms of the percentage, it's a small percentage of the total selling price of the Genio implant. So this is a small percentage that we'll be deferring over time at this point. And that percentage will continue to decrease over time for a couple of reasons. The cost and the ascribed value of the disposal patches decreased, they'll reduce the amount of the deferral that we have going forward. And then, in terms of compliance, there's no specific compliance requirements associated with the deferred revenue. So the deferred revenue will be recorded and recognized as revenue as the patient utilizes the devices and we ship the devices out to the patients. But there is no requirement for some sort of compliance metric similar to CPAP usage.