BioStem Technologies Q3 2024 Earnings Call Transcript

Quartr
Provided by Quartr
November 12, 2024

There are 6 speakers on the call.

Operator

Thank you for standing by. My name is Rebecca, and I will be your conference operator today. At this time, I would like to welcome everyone to the BioStim Technologies Third Quarter Results Webcast Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.

Operator

Thank you. I would now like to turn the call over to Adam Holdsworth, Managing Director of Investor Relations. Please go ahead.

Speaker 1

Good afternoon, everyone, and thank you for joining our conference call to discuss BioStim's Q3 2024 financial results and corporate highlights. Leading the call today will be Jason Manashevsky, the company's Founder and Chief Executive Officer and Mike Fortunato, the company's Chief Financial Officer. Before we begin, I'd like to remind everyone that our remarks today may contain forward looking statements based on the current expectations of management, which involve inherent risks and uncertainties that could cause actual results to differ materially from those indicated. These risks are described in the company's filings with the over the counter market. We're cautioned not to place undue reliance on any forward looking statements, which speak only as of the date made and may change at any time.

Speaker 1

While we may update or revise these statements from time to time, the company undertakes no commitment to do so unless required by typical securities laws. This call also includes references to certain financial measures that are not calculated in accordance with generally accepted accounting principles or GAAP. We generally refer to these as non GAAP financial measures. Reconciliations of these non GAAP financial measures to the most comparable GAAP measures are available in the company's press release on the Investor Relations section of BioSem's website. With that, I'm now pleased to turn the call over to Jason Monachevsky.

Speaker 2

Thank you, Adam, and thank you all for joining us today. I'm pleased to report that BioStim Technologies has achieved another milestone, marking our 3rd consecutive quarter of record setting growth. In Q3 of 2024, we posted revenue of $82,600,000 adjusted EBITDA of $9,900,000 and our cash position improved to $14,600,000 establishing a new revenue high for the company and demonstrating our robust financial performance. For the 1st 9 months of this year, we've generated $199,000,000 in net revenue, highlighting our continued momentum and resilience in the market. Our success this quarter is a testament to the strength of our portfolio of skin substitutes, especially our Amniorap 2 allograft powered by our patented biorepane technology.

Speaker 2

This innovative technology is driving strong commercial performance across a wide range of non acute segments. Our gross margin remains solid at 95%, reflecting our commitment to operational excellence and the efficiency of our manufacturing processes. I want to take this moment to recognize the dedication of the entire BioSEM team, your commitment to our vision and the honor you bring to the gift of donation are what drives these outstanding results. As part of our efforts to ensure patient access to high quality life changing products, we've been actively engaging with CMS, congressional leaders and industry partners to advocate for fair and effective Medicare reimbursement policies. We recognize that certain players have caused over utilization within the Medicare reimbursement system, impacting policy and patient access.

Speaker 2

Our goal is to help shape our reimbursement landscape that not only supports ethical practices, but also ensures that millions of Medicare beneficiaries have access to vital treatments. BioStim remains at the forefront of this conversation, collaborating with government and industry leaders to support responsible patient centered policy solutions. Turning to partnerships, I'd like to extend my gratitude to our commercialization partner, Venture Medical. Their role has been instrumental in our growth journey as they led the nationwide launch of Amnurant2 in Q4 of 2023 and are now preparing for Vendaj AC's launch in Q4 of 2024. Venture Medical is a key commercialization and marketing partner and we're thrilled to work side by side with them once again with Vendaj AC, which recently had a national ASP published for Q4 2024, allowing reimbursement across all MAC regions.

Speaker 2

Early in the quarter, we received IRB approval for 2 major clinical studies on non healing diabetic foot ulcers. These approvals are essential milestones in our clinical journey and support our commitment to rigorous and tactical research. We recently enrolled our first patients in 2 randomized controlled clinical trials this quarter evaluating our bioretaine allografts. We anticipate an early readout of these results from these studies by mid-twenty 25 and final results in early 2026, providing us with clinical data that will strengthen our clinical approach, broaden our payer coverage base and support expanded access to our innovative products. Additionally, we're in the final stages of designing a study protocol for venous leg ulcers with timelines to be communicated once finalized.

Speaker 2

We recently reported positive results from a retrospective data study comparing our BioRetain Allografts to the standard of care for diabetic foot ulcers, underscoring our commitment to advancing clinical data on our products. In October, these findings were published in an International Moon Journal providing valuable peer review validation of our technology's effectiveness. This achievement further reinforces BioSyn's standing as a leader in research backed innovation. In support of our equity capital market strategy, we filed our Form 10 on September 27 with the SEC and submitted an application for uplifting to NASDAQ at the same time. We are currently working through our initial SEC review comments and expect to submit a formal response in Q4, along with amended Form 10.

Speaker 2

Uplifting to a national exchange and becoming fully reporting with the SEC is the strategic commitment to enhance BioStim's visibility and provide wider accessibility to a broader investor base. As we look to the remainder of 2024 and beyond, BioSTEM is well positioned for continued growth and innovation. Despite industry challenges, our strong foundation evidenced by our robust portfolio and effective partnerships positions us to adapt and grow. We are confident that our strategic initiatives, groundbreaking products and dedicated team provide a solid foundation for future success. Looking ahead, we are optimistic about our upcoming clinical trial results and the potential for broadening our market access, which could provide further clinical validation of our products, superiority and drive broader payer coverage and adoption of BioSens allograft.

Speaker 2

These initiatives have the potential to diversify and expand our product offerings, positioning us on a strong trajectory to deliver value for our shareholders, expand our market presence and improve patient outcomes with our innovative solutions. Thank you to our shareholders, Venture Medical and our team members for their ongoing trust, dedication and support as we work to bring transformative solutions across the continuum of care to patients and providers. With that, I'll now hand the call over to Mike Fortunato, who will provide a detailed review of our financial results for Q3 2024.

Speaker 3

Thank you, Jason, and good afternoon to everyone. We appreciate you being here with us today. I am pleased to share BioStim's Q3 2024 financial results, which highlight continued strong growth and significant milestones for the company. 2024 has been a transformative year for BioStim. When we compare this quarter to the same period last year, the progress we made is significant and we're excited to share the results.

Speaker 3

For the Q3 of 2024, net revenue reached a record $82,600,000 reflecting an increase of $79,000,000 compared to the same period in 2023. This growth is primarily driven by continued strong demand for mbioRAP2, which has been performing exceptionally well across a range of patient applications. Our gross profit for Q3 was $78,300,000 or 95% of net revenue compared to $3,200,000 or 91% of net revenue in the prior year same period. This represents an increase of $75,100,000 driven by robust sales growth of Aviorap 2 and highlights our manufacturing and operational efficiencies. Operating expenses for Q3 2024 was 69,000,000 dollars up from $4,500,000 in the same period last year, an increase of $64,500,000 This increase was largely due to workforce expansion, higher bona fide service fees associated with our distributor agreements for Indorep 2 and increased share based compensation as we continue to scale our operations.

Speaker 3

For the 9 month period ended September 30, 2024, we reported net revenue of $199,000,000 an increase of approximately $194,000,000 compared to the same period in 2023. The majority of this growth was driven by amniorap2, which continues to experience strong market demand. Our gross profit for the 1st 9 months was $188,700,000 or 95 percent of net revenue compared to 4 point $5,000,000 or 88 percent of net revenue for the same period last year. This increase of $184,200,000 reflects higher sales volumes of Amneal RAP2 and improved manufacturing and operational efficiencies. Operating expenses for the 1st 9 months of 2024 were $166,000,000 an increase of $154,000,000 from the same period last year.

Speaker 3

This increase was driven by continued investments in scaling our operations, including workforce growth, higher bona fide service fees related to Amniorap 2 distribution and increases in share based compensation. We are pleased to report that we have achieved positive GAAP net income for the 3rd consecutive quarter. Net income and adjusted EBITDA for the quarter was $6,800,000 $9,900,000 respectively. These results demonstrate our ability to continue to scale the business to meet strong revenue growth while remaining profitable. In addition, our cash balance has increased from $6,800,000 from the previous quarter to $14,600,000 in the current quarter, an increase of $7,800,000 Regarding income taxes payable on the balance sheet, management has estimated income tax expense of $2,300,000 for the Q3 $5,800,000 year to date September 30, 2024, heading the completion of the Internal Revenue Code Section 382 study currently underway.

Speaker 3

This study will determine if there are any limitations on the timing of using previously generated net operating losses to offset current year taxable income. Although these amounts are recorded as income tax payable, management expects that most, if not all of this estimate will be offset by the NOLs by December 31, 2024. As we look to the remainder of 2024, we are confident that these strong financial results paired with the successful execution of our strategic initiatives position BioStim for continued success. We will continue to drive growth, enhance profitability and maximize value for our shareholders. I'll now turn over the call to Jason for closing remarks.

Speaker 2

Thank you, Mike. As he just outlined, this quarter marks several significant milestones that have driven BioSense growth and demonstrated exceptional financial performance. With Q3 revenue reaching a new high of $82,600,000 and an adjusted EBITDA of $9,900,000 and a strengthened cash position of $14,600,000 Our results underscore the effectiveness of our strategy and the resilience of our team. I'd like to address some updates on coverage and payment policies for Skin Subsitutes, specifically for our products. Last Friday, the Centers For Medicare and Medicaid Services, CMS, finalized their pricing methodology for skin substitutes in a physician office space or non acute segment for 2025.

Speaker 2

CMS confirmed they will continue with ASP plus 6 as the pricing model. This decision bolsters our confidence and pricing stability for the coming year and ensures that BioSyn can maintain its current pricing and commercial strategy as we continue to scale our business. Now regarding the coverage policy, we're actively engaging with CMS, Congress, the MACs and industry leaders to address the proposed LCD. This proposal could impact hundreds of essential products, including ours, potentially limiting access for Medicare beneficiaries who rely on these treatments. Our goal is to advocate for a well founded and equitable coverage policy that balances ethical practice with patient safety.

Speaker 2

While we acknowledge over utilization by some parties in the market, we believe a more rigorous approach is needed, one that doesn't place patient access at risk. BioStent remains at the forefront of this effort, collaborating closely with government and industry stakeholders to support policies that responsibly expand patient access to life changing products. Our efforts, which include engaging closely with Capitol Hill leaders, aim to secure better, more equitable coverage for skin substitutes benefiting both the Medicare beneficiaries and BioStem. October marked the kickoff of a pivotal clinical trial on diabetic foot ulcers comparing our treatments to the standard of care. This study involving 60 patients across 10 sites is essential to building evidence of the clinical superiority of BioStim's products.

Speaker 2

Alongside an upcoming study focused on venous leg ulcers, these trials are key to demonstrating BioStim's value and expanding payer coverage across commercial plans, Medicare Advantage and Medicaid. In addition, we announced groundbreaking results in October from a retrospective study on diabetic foot ulcer wound closure, underscoring the clinical superiority of our bioreteum processed placental membrane over the standard of care published in the International Loon Journal. These results highlight the potential for biorutane to address significant gaps in the DFU market, often involving challenging treatment resistant wounds. This publication strengthens Biofins clinical credibility and supports our strategy to expand payer coverage and commercial traction across Medicare, Medicare Advantage and Medicaid and other payer channels. We are excited about the strategic value this study brings as it reinforces BioStem's position as a leader in providing effective evidence based solutions for chronic wound care.

Speaker 2

We remain optimistic that the current proposed LCD will not get implemented in 2025 without amendments being implemented, which could favor BioStem. Looking forward, we're confident that these trials will provide additional clinical validation for our commercial products, efficacy, driving expanded payer coverage and broader adoption of BioSymes allografts. Pivoting to the equity capital markets front, we made a significant advancement in September by filing a Form 10 with the SEC on 27th and simultaneously submitting our NASDAQ uplisting application. We are now working through our initial SEC review comments and plan to submit a formal response along with an amended Form 10 in Q4. This uplifting to a national exchange and transition to fully reporting status are key milestones in BioSom's strategy aimed at enhancing our credibility, broadening our investor reach and increasing access to capital, essential drivers of a long term shareholder value as we continue to execute on our growth initiatives.

Speaker 2

In closing, as we enter the Q4, we remain optimistic about BioSyn's continued growth and the significant milestones on the horizon. With the recent nationwide launch of Bendaj AC and established reimbursement across all MAC regions, we're well positioned to see strong revenue contributions from this product. This quarter marks our 3rd consecutive record of growth and we're excited about the initiatives underway that have the potential to diversify and expand our product offerings. As we continue to advance our strategic priorities, we're confident that BioSim is on a strong trajectory to deliver value to our shareholders, expand our market presence and improve patient outcomes with innovative solutions. We look forward to keeping you up to date on our progress and I appreciate your continued support as we work towards greater success.

Speaker 2

Thank you. And we'll now open the call for questions.

Operator

Your first question comes from the line of Kevin Bennett, an individual investor.

Speaker 4

Good evening, guys. Good job on the quarter there. Just had a few questions, I guess. The distribution cost maybe is like my biggest thing that I have. I don't know if we could restructure that, maybe give them like an exclusive deal with us or something, maybe more profit for us and then give them a security of having all of our business.

Speaker 4

2nd question is the I'm assuming this is like a cream that you put on diabetic wounds. Is it actually possible to have this like an airborne, like spray thing, like burn victims? Would that actually work on a product like that? And then my third question is on the uplifting, the share structure, what will happen with the share structure? I know we're like at about $16,000,000 $11,000,000 out $5,000,000 restricted.

Speaker 4

Just curious what will happen with that. Like I say, that's all the questions I have. I appreciate your work.

Speaker 2

Thanks, Kevin, for being a long term shareholder and really appreciate the questions. 1st and foremost on the distribution side with Venture Medical, right now we're continuing to kind of work through that team and they've done an amazing job of expanding access to our product across all the MAC regions. I think right now we're looking at continuing that type of relationship in the near term. And to kind of compare it to, I guess, maybe competitors, if we were to internalize this type of sales force from a W2 perspective, I think we would see similar costs associated with this marketplace in getting product out into the marketplace. On the second question in regards to a cream, actually our products are considered what they call tissue allografts.

Speaker 2

So we actually harvest a piece of tissue off of the placenta. And so it's like a sheet like format that's laid into the wound bed across the wound and it acts as a barrier or cover for these chronic type wounds, so diabetic foot ulcers, pressure ulcers and venous leg ulcers? And then 3rd, in regards to the capital structure excuse me, the equity capital structure, right now, I believe there's about 16 and so 1,000,000 shares outstanding in common stock. That would be kind of ultimately move from OTC up to NASDAQ. And then any of the warrants and options that are outstanding would also move up to NASDAQ.

Speaker 2

So currently, that's kind of the plan with the direct listing.

Speaker 4

Okay. Thanks a lot.

Speaker 2

No problem, sir.

Operator

Your next question comes from the line of Paige Taggart with APT Capital. Hey, Jason, congrats on another record quarter. Just a quick question, if you could provide some more color around distribution channel with Venture Medical, I guess specifically the sales cycle would be helpful for me. Thanks.

Speaker 2

Yes. Thanks, Dave. So just kind of get a little bit more color to kind of how we fulfill and manage the pipeline with Venture Medical. So Venture Medical on a daily basis is ordering product from us and we are shipping it out on a daily basis. It's very lean and FIFO type arrangement with that organization.

Speaker 2

And then secondly, they're continuing to have weekly conversations with us about what is the demand pipeline looking like and we're continuing to kind of monitor from a manufacturing perspective how quickly we need to increase production in specific sizes and that's associated with their robust platform called Venture 1View that they utilize with their downstream customers to ultimately kind of see where these types of wounds are going. In this process, typically these wounds or these providers ultimately run what's called an IVR, insurance verification request, And they can see kind of where and what size the wound is and can kind of get an idea of, okay, where is the wound going from an initial size and then kind of as the wound gets closer to closure. So that allows us to have a little bit more insight on product needs and kind of product production. So thanks for your question.

Operator

Thank you. Your next question comes from the line of Ernest Watts with Watts Associates.

Speaker 5

I appreciate the progress that you're showing and the comments that you made today. You mentioned in the release that build up costs were significant and apparently much more significant than the Q2. Could you give a comment on roughly what they were in each of the 2 quarters, please?

Speaker 2

Ernest, could you clarify your question a little bit? When you say build up costs, what do you mean?

Speaker 5

It costs money to get your product out into the field and you have to have people to do that, those people are hired before the actual revenues come in. So I'm referring to costs that precede revenues.

Speaker 2

Got it. So, yes, as mentioned on the income statement, notice there's obviously elements of SG and A. Obviously, the biggest one is bona fide services. Those services are specific to Venture Medical being out into the field and commercializing our product. And those are a direct correlation to the revenue, top line revenues specifically.

Speaker 2

So as top line revenue increases, those specific bonafide services, which make up a large portion of the SG and A, kind of incrementally shift in that direction.

Speaker 5

Could you give a rough figure for the 2 each of the 2 quarters?

Speaker 3

Go ahead, I can help with that, Jason, if you want. So sales and marketing so Bonafide service fees are included in sales and marketing expenses for a few for Q3, they were $65,100,000 for 3 months. And for the previous quarter, I want to say they were around 50, around mid-50s, dollars 50 something million. And again, that's indirect. Those costs go up or down with in relation to revenue.

Speaker 3

So as revenue increases, you can expect those bonafide service fees and sales and marketing expenses to go up. Does that help?

Speaker 1

That's it.

Speaker 5

Okay. Thank you

Speaker 2

for your questions.

Operator

I will now turn the call back over to Jason Monachevsky for closing remarks.

Speaker 2

Well, thanks everyone for joining the call today. We had an amazing Q3 results And I want to thank everybody, specifically all of the BioSEM team members as well as the folks at Venture Medical for all the amazing success that we've had in Q3 of this year and looking forward to sharing our results for the end of the year and Q4 results with you all in the near term. Thank you everyone and have a great night.

Operator

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.

Powered by Quartr
Earnings Conference Call
BioStem Technologies Q3 2024
00:00 / 00:00