November 29, 2023 at 07:01 pm EST
Share Presentation Operator Message Operator (Operator)
Thank you for standing by, and welcome to the ImpediMed Limited 2023 AGM. I would now like to hand the conference over to McGregor Grant. Please go ahead.
Presenter Speech McGregor Grant (Executives)
Thank you very much. Good morning, and welcome to the Annual General Meeting for ImpediMed for the 2023 financial year. My name is McGregor Grant, and I'm the Executive Chair and Interim CFO of ImpediMed. I wish to advise that today's AGM is being recorded and the recording will be made available on our website after the meeting. It is now just past 11:00 a.m., the nominated time for the meeting, and I have been informed that a quorum is present. I note that the meeting has been validly constituted, and I declare the meeting open. The Notice of Meeting was made available to all registered shareholders within the notice period required. With your consent, I will take that document as read.
Firstly, I would like to introduce your directors who are joining us today in person and online. Christine Emmanuel-Donnelly, Nonexecutive Director and Chair of the Remuneration Committee; Andrew Grant, Nonexecutive Director, who joins us online from the company's offices in Carlsbad, and Janelle Delaney, Nonexecutive Director. We also have our Company Secretary, Leanne Ralph, and representatives from the company's share register, Link Market Services with us today. Our audit partner from Ernst & Young, Jennifer Barker is also present online to respond to comments and questions in relation to the audit.
There are 3 components to today's meeting. First, I will provide you with an update, which will be followed by an opportunity for general business questions. We will then move on to the formal business of the meeting where the items set out in the Notice of Meeting will be put to shareholders. Our shareholders have the choice of participating in today's meeting in person, via our online webcast and by phone. Shareholders and proxy holders will have an opportunity to ask questions on each item of formal business. There will also be an opportunity for shareholders and proxy holders to ask general questions or make comments relating to the management of the company going to consider the 2023 financial report.
There are 2 ways to ask a question, via your attendance in person here today and by submitting a question on the online platform. I will outline each of these options. We did not received any questions to submit -- so we did not received any request to submit questions by phone. Shareholders and proxy holders present in the room will be holding a yellow or blue card. If you need assistance, please ask one of the registry staff in the auditorium or the foyer. To ask a question, please raise your card and when indicated by me, identify yourself and ask your question.
Turning to online participants. The information I'm about to provide you is contained in the online meeting guide available in the Download section on your screen. You'll see at the bottom of your screen 3 boxes: Ask a Question, Get a Voting Card and Download. To ask a question, click the Ask a Question button, a box will appear with 2 sections that are shown on the screen. Select from the drop-down menu, you ask me business to which your question relates, then type your questions in the place provided. Online questions relevant to our business will be read out by our Company Secretary during the relevant item of business. The order in which we address questions for each item business will be: First, questions from shareholders present in the room; then questions received via the online platform. If we receive multiple questions on the same topic, we may amalgamate in the interest of time and clarity.
Turning now to voting procedures. All items of business will be voted on by poll and representative of the company's share registry, Link Market Services, is the returning officer for this meeting. I declare the polls now open. If you are eligible to vote, there are 2 ways that you can cast your vote, in person or via the online platform. If you are present in the room, you will have a yellow voting card, which you'll be asked to complete and hand it to the registry staff at the appropriate time. I will advise you when it is time to complete your voting cards. If you need assistance, please ask one of the registry staff in the room or the foyer. If you have a yellow voting card, and wish to leave early, you may if you wish, hand your completed voting card to the staff at the registration desk and you leave.
Online voting. To cast your vote online, please get a -- click to Get a Voting Card button, follow the prompts and follow prompt, you may cast your live vote at any time during the meeting. I will give you a 5-minute warning before we close the online platform. You will see a red bar appearing across the top of the online platform with a countdown timer of how long you have remaining to cast your vote. Where undirected proxies have been given to me as Chair of the meeting, I confirm as set out in the Notice of Meeting that I will vote the undirected properties in favor of all those resolutions. I will vote all directed proxies given to me as Chair of the meeting in accordance with the directions provided. I've been advised that all proxies received for the meeting have been checked, and I declare them valid for voting.
We will display on the screen the number of direct and proxy votes received prior to the meeting when each resolution is put to the meeting and prior to asking for questions or comments. The final results of the voting will be released to the market as soon as they are available. As announced to the ASX on 20 November 2023, Dr. Michael Seiden resigned as a Director of the company. And therefore we are withdrawing his election resolution from this meeting.
I will now provide my address.
As I'm sure you're aware, there have been a lot of changes at ImpediMed over the last 18 months, including, most recently, the departure of the CEO and the CFO announced last week. Accordingly, there will be no CEO presentation at this AGM. However, as part of my address, I will provide an overview of ImpediMed's operations and achievements during the 2023 financial year.
I would like to take this opportunity to provide some context to the recent changes and why I believe that put the company in a stronger position to capitalize on the compelling commercial opportunity with SOZO and our unique bioimpedance technology offers.
At the General Meeting held on 28th September this year, ImpediMed's shareholders voted in favor of replacing 4 of the company's directors with new directors. Subsequent to that vote, the 2 remaining nonexecutives who were part of ImpediMed's previous board have resigned. As a result ImpediMed's board currently comprises the 4 directors who are elected at the general meeting.
I think it's important to recognize that many of ImpediMed's shareholders felt that it was necessary to make changes at the board level. In July this year, the company received a notice from a number of experienced long-term private shareholders requesting the company call a general meeting to consider a proposal to remove and replace 4 of the directors. While I do not intend to go through a detailed description of all the events leading up to the September General Meeting, the result of the meeting confirmed there was strong support for change.
I would also like to comment on the recently announced departure of CEO, Rick Valencia and CFO, Tim Cruickshank. As mentioned in the ASX announcement, having taken into consideration the strength and capabilities of ImpediMed's core management team and the need to deliver robust execution combined with tighter fiscal management, the Board determined that new leadership is required to drive towards profitable growth and maximize the company's long-term potential.
I have assumed the role of CFO, initially on an interim basis, and we'll be working with Tim over the next couple of months to ensure an orderly transition. For those who do not know, I was the CFO for 12 years at the ASX-listed company, Nanosonics. And during my time with the business, annual revenue grew from $2 million to $166 million. Like ImpediMed, Nanosonics' business model is based on generating revenue through the initial sale of capital equipment into health care settings, and then generating annuity revenue from the use of that capital equipment. So this is something that I have been living and breathing for the last 12 years.
It is also with delight that we announced the appointment of Dr. Parmjot Bains as Managing Director and CEO, again, initially on an interim basis. As well as being a medical doctor, Dr. Bains has an impeccable track record of setting and executing on commercial strategy, aligning team capabilities, driving public and private reimbursement, management of key accounts, implementing marketing programs and accelerating sales. Most recently, Parmjot was a senior executive at Pfizer, where she had several roles across the U.S., Asia, Middle East and Australia. Prior to this, Dr. Bains held CEO roles at 2 life sciences companies and was a Manager of the consulting firm McKinsey & Company. The Board believes Parmjot's breadth of experience across all of these areas will be invaluable in capitalizing on the opportunity available for SOZO in the United States, following the recent inclusion of bioimpedance spectroscopy in the NCCN guidelines and the subsequent nationwide expansion of private payer coverage.
I would also like to emphasize the Board believes, in our respective roles of CEO and CFO, Dr. Bains and I have the experience, capabilities and passion to drive commercial outcomes, provides strong discipline over expenditure and ensure strong corporate governance. Importantly, we are firmly of the view that our appointment will ensure stability and continuity of the business' operations, ensuring we maximize the significant commercial opportunity for SOZO.
It is the Board's intention that the CEO and CFO positions will convert to permanent roles in 3 to 6 months' time. However, the Board decided that it was prudent to make our initial appointments interim so that in the event that they do not work out, for any reason, the company is not exposed to any ongoing financial obligation associated with the appointment of new executives.
As I mentioned earlier, the Board currently comprises 4 recently elected directors, which will increase to 5 when Dr. Bains joins the company in early January. The Board has commenced a search process to identify potential directors to join the Board and expect to announce the appointment of 1 or 2 additional directors in the coming months.
I would like to conclude this portion of my address by adding that the last 8 weeks have provided the Board with the opportunity to gain a deeper understanding of the potential of the business. As I previously indicated, there is a very capable core management team and a unique and distinctive product portfolio, which combined to create an exceptional commercial opportunity. The Board is excited to be part of the ImpediMed story, and we look forward to supporting the business with a clear focus on achieving profitable growth.
I'll now provide an overview of the financial and operational highlights of FY '23, which shows why we are so excited by the commercial opportunity provided by this business. The summary of the financial results is -- for FY '23, as shown on the slide. The key metrics to note include: SOZO revenue in FY '23 was $10.6 million, which was an increase of 7% compared with FY '22. The net loss before tax for FY '23 was $20.5 million, which compares with a net loss of $19.8 million in FY '22. Free cash outflow of $24.1 million in FY '23 compared with free cash outflow of $20.9 million in FY '22. As of 30 June, the company was holding cash and cash equivalents of $45.7 million compared with $40.7 million a year earlier. I noted in the recent Q1 FY '24 Appendix 4C announcement, the company reported cash and cash equivalents of $42.4 million as of 30 September 2023.
As I've mentioned earlier, there have been many changes at ImpediMed over the last 18 months, including 3 CEOs and the refreshing of the entire board. The current board is fully aware that these changes have been disruptive for the business, and there is a need for stability. With these recent changes, the Board is confident we now have the right leadership in place, and the company can look forward to a period of stability, allowing the management team to focus on the immediate objective of successfully commercializing the lymphoedema opportunity.
In March this year, the NCCN guidelines were updated to include bioimpedance spectroscopy or BIS, as an objective measurement tool to identify early signs of lymphoedema. These guidelines now recommend regular screening for all cancer survivors at risk of lymphoedema, not just breast cancer patients. Most significantly, ImpediMed has the only FDA-cleared BIS technology for the assessment of lymphoedema. Inclusion in the NCCN guidelines in oncology for Survivorship will help establish BIS as the standard of care and will accelerate the adoption of ImpediMed's technology by private payors and providers.
Inclusion in the NCCN Oncology Survivorship Guidelines also significantly expands the addressable market opportunity beyond breast cancer. There are 1.9 million new breast cancer diagnoses in the U.S. each year and breast cancer-related lymphoedema represents approximately 300,000 new cancer diagnoses in the U.S. each year or 15% of all cancer diagnosis. However, based on the inclusion of BIS in the cancer survivorship guidelines, ImpediMed's SOZO technology is relevant for over 1.1 million new cancer diagnoses in the U.S. each year, which equates to approximately 58% of all cancer diagnosis. These 1.1 million cancer patients are treated at over 5,600 inpatient and outpatient facilities across the United States.
In the recent Appendix 4C quarterly activities report, the company confirmed: 12 positive medical policies have been published since inclusion of SOZO and BIS in the NCCN guidelines, including top 5 national payer, Cigna Healthcare and 7 Blue Cross Blue Shield policies. There were 3 confirmed regional medical policies revisions pending publication, and 27 payers were providing silent coverage for CPT code 93702.
Significantly on 3 November 2023, the company announced that UnitedHealthcare, the largest private payer in the U.S., had amended its policy to state that CPT code 93702 no longer required clinical review effective from 1 January 2024, i.e., they will provide silent coverage.
During FY '23, Michigan achieved critical mass with over 97% of lives covered. Michigan is a key market with strong reimbursement rates. In Q1 FY '24, the company signed a master services agreement for a large Michigan IDN, representing over 20 hospital systems. In this quarter, the company expects an additional 3 to 6 states will achieve critical mass, and a number of these states are considered to be key markets.
In addition to securing the expanded reimbursement coverage from private payers, we are also starting to see some momentum around patient testing. In November '22, the company reported that the 500,000th patient assessment using SOZO had been conducted. By the time of the annual report, this number had increased to 650,000 assessments. While we have yet to see a significant acceleration in the rate of testing since the announcement of the NCCN guideline inclusion, we do expect this to occur over time, due to, the greater number of eligible patients under the survivorship guidelines, and greater reimbursement coverage leading to greater adoption of routine monitoring. The number of new patients indicated in dark blue on the bars provides a useful lead indicator of future testing as they transition into a routine follow-up and monitoring programs.
It's useful to review the company's progress in terms of the number of SOZO systems sold. Since the launch of SOZO, a total of approximately 500 SOZO units have been sold in the U.S. and approximately a further 500 units sold in markets outside of the U.S., predominantly in Australia. During FY '23, a total of 78 SOZO systems were sold in the U.S., including 34 systems sold in quarter 4 FY '23. Recently, we reported an additional 19 units were sold in the U.S. in Q1 FY '24.
It is important to recognize a number of other achievements in FY '23. These include: Obtaining FDA clearance for SOZO Pro, which is expected to be launched in calendar '24. I note that the FDA clearance was recently modified to remove the contraindications for implantable pacing and cardioverter defibrillator devices. Extending the clinical trial contract with AstraZeneca also occurred during FY '23, although I note that revenue under this contract ended in quarter 1 FY '24. And raising a total of $30 million in capital via a $20 million institutional placement announced in May '23 and $10 million via an oversubscribed share purchase plan announced in June.
Turning to the outlook for FY '24 and beyond. The key focus is to drive ImpediMed towards profitable growth. There is a compelling opportunity with guidelines and expanding private payer coverage. There will be an increased internal focus on execution to achieve robust sales and commercial outcomes. And importantly, we will seek to achieve growth with an appropriate cost structure and cost controls. The organization is in place to achieve profitable growth. We have a very capable and motivated core management team. We have a distinctive product portfolio with an undeniable commercial opportunity. And we have a new board completely aligned with the interests of its shareholders. Finally, we have experienced new leadership focused on driving towards profitable growth. Thank you.
I would now like to open the meeting to general business questions. You have the opportunity to ask questions pertaining to each resolution when we get to the formal business of meeting. I would like to remind you that this is shareholder meeting, and therefore, any shareholders or proxy holders are entitled to ask questions or make comments at this meeting. I now like to questions or comments from shareholders or proxy holders present in the room. Please state your name and then ask your question.
IPD Price at posting:
13.5¢ Sentiment: Buy Disclosure: Held
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