Hi again ...
Here are the closing questions (not included in the transcript announcement above) from Reuters via Yahoo Finance :
https://finance.yahoo.com/news/edited-transcript-nxs-ax-earnings-030000530.htmlI wanted to highlight but restrained myself
cheers
Operator Instructions:
Your first question comes from Martyn Jacobs with Canaccord. Martyn Jacobs, Canaccord Genuity Corp., Research Division - Senior Analyst [2]
... Just (to ) start off with XPerience.
How do you assess the probability of the FDA turning around and finding something new of a substantive nature of this late-stage to delay you again? Or if not, some sort of minor delay?
Judith Mitchell, Next Science Limited - MD, CEO & Director[3]
This is the FDA, Martyn, and you've covered many health care companies, so you know that this organization defines anybody predicting anything.
We're on track. We've pulled the best experts we can find in on our submission, and we are totally in their hands.
We will certainly keep the market abreast of anything that happens along the way that should change the trajectory from the first half launch.
Martyn Jacobs, Canaccord Genuity Corp., Research Division - Senior Analyst [4]
Okay....In the clinical trial page, I noticed that the main arthroplasty trial has been cut back from 7,000 to 1,200.
Can you sort of talk to what's going on there?
Judith Mitchell, Next Science Limited - MD, CEO & Director [5]
Yes, I can, and thank you for the question.
So as we move through our medical Advisory Board group, that (
they?) suggested to us that the better contribution we can make to medicine is actually show people a way to reduce the infection rate in those patients nobody wants to treat.
So these are your high-risk patients, people who are overweight or they're diabetic or they've got cardiac issues or they’re smokers so there are plenty of clinics in the world that just won't accept these patients because they know the rate of infection, or the likelihood of infection, is so much higher.
So the suggestion has been that we do that... (
a?) ..study in those patients.
Because the rate of infection is so much higher, we need much fewer patients, remembering that it's between 0.9 and 1.3 in the general population in knees.
This is multiples thereof in people that are in this compromised group.
-So we can take our recruitment requirement from 7,000 to 1,500 or somewhere between 1,200 and 1,500.
And the other thing that allows us to do is actually get through the study in a year.
-So we're benefiting the world because this is medical data they're chasing, how to help these patients without just rejecting them from joint surgery.
-We're benefiting the market because we can get this data faster,
-and we're benefiting all the shareholders because there's seriously less cost in a study of those hundred 1,200 to 1,500 patients than there would be if this was 7,000.
Martyn Jacobs, Canaccord Genuity Corp., Research Division - Senior Analyst [6]
Okay. So in your balance sheet, is that inventory number? Is that only XP?
Judith Mitchell, Next Science Limited - MD, CEO & Director [7]
No. There are a few things that contribute to the inventory number, including the fact that we buy and stockpile our pharmaceutical-grade benzalkonium chloride for Bactisure and BlastX.
So it's a combination of work in progress, raw materials and experience, but we have 33,000 bags of experience to launch the product and will play out next quarter as soon as the approval is received.
Martyn Jacobs, Canaccord Genuity Corp., Research Division - Senior Analyst [8]
Okay. So it's 33,000 units to start off with, right?
And so you previously talked about 200 hospitals as a target to sign up by December, if all things go well from here.
How many orthopedic surgeons does that translate to?
Judith Mitchell, Next Science Limited - MD, CEO & Director [9]
Depends on your hospital. I mean, some have 15 to 30.
Martyn Jacobs, Canaccord Genuity Corp., Research Division - Senior Analyst [10]
The ones you're targeting?
Judith Mitchell, Next Science Limited - MD, CEO & Director [11]
Probably an average of 6 a hospital.
So about 1,200 people. So we've probably met 1/6 of that by now.
Martyn Jacobs, Canaccord Genuity Corp., Research Division - Senior Analyst [12]
Right. Okay.
And just finally, from me, with BlastX rebuilding it into the home health and acute care markets, two questions.
One, how are you going with finding a partner in Europe?
And secondly, are there other models, other commercial models you have could consider for the distribution of BlastX beyond home health?
Judith Mitchell, Next Science Limited - MD, CEO & Director [13]
There's three questions, but okay. So we're actually in discussions for several jurisdictions outside the U.S. that will be distributorship, but we're looking to learn from the things that didn't work for us with 3M to make sure we have partners who have a more complementary call regimen.
As I alluded to in the body of the announcement, 3M made a strategic choice that truly limited who got access to BlastX.
So we're doing that work right now, seeing that we have a CE Mark that gives us access to many markets not just Europe.
Then when we look in the United States, the first large segment will go after is actually in the acute care market.
And the reason I say that is there are 2.5 million patients in there, and the hospitals are not reimbursed treat Stage III and IV pressure uses.
So this is a burden on the hospital operating system that CMS refuses to pay for and their insurers refuse to pay for because they supposedly never have an event.
So we can give people help to take those off the table.
But the first thing we're actually going to do text month is actually lift and shift the existing business lines that have been through 3M.
So all of the VA customers ( we talk to them from our original business in 2018 ) all come back to us, all still doing business with us.
So first line into the revenue shift is that revenue, obviously, moving from .... back from wholesale price that we were with 3M to retail revenue values.
And then we build out from there. We ......you might remember that as part of COVID, we took several steps with different home health networks to assist them with their patient loans. And in fact, some of the case studies that will appear in our annual report come from home health.
We've proven our value such that people see that this product makes such a difference that they can find a way for the cost fit even though it isn't reimbursed in their segment.
And I missed -- what was the third question, Martyn, I think I missed it?
Martyn Jacobs, Canaccord Genuity Corp., Research Division - Senior Analyst [14]
Are there other commercial models or sectors that you could have targeted or can target in the future?
Judith Mitchell, Next Science Limited - MD, CEO & Director[15]
Yes, there are, but I think we're going to try this direct for a while, at least in the United States.
Definitely outside the U.S., it will be partnership based.
But in the U.S., it will be direct for now until we find those people who think and act like we do.
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Operator [16]
Your next question comes from Elyse Shapiro from Bell Potter. Elyse Miriam Shapiro, Bell Potter Securities Limited, Research Division - Analyst [17]
Can you please just talk to the revenues and the orders that you've seen coming through since the end of December?
Judith Mitchell, Next Science Limited - MD, CEO & Director [18]
We're comfortable that we will keep our revenue rate from December into Q1 and into Q2.
We would hope in Q2 to then start to augment that run rate with additional revenues from XPerience, all being completely dependent on the FDA.
But the BlastX revenue, which was not present really at least in Q4 at all, will start to come through in Q2 as well as an addition.
So we've got a baseline. That baseline is heavily supported by growth in the Bactisure business from Zimmer Biomet. Zimmer, as I mentioned, had launched in Australia in Q4 and have already started to launch in Europe in Q1.
So that is getting us really quite significant growth on previous years.
And this month, I think there are 3 publications based on Bactisure in the orthopedic press, so it's going to continue to grow in volume as we go forward.
Elyse Miriam Shapiro, Bell Potter Securities Limited, Research Division - Analyst [19]
Yes. And just on Bactisure, do you have any visibility on the -- like the number of new accounts that are being added quarter-on-quarter? And is the growth, I guess, coming from new hospital accounts?
Or is it just based on increased volume from existing accounts?
Judith Mitchell, Next Science Limited - MD, CEO & Director [20]
The current growth is probably coming from new markets. So we grew -- we -- you won't open a new account, I don't believe. It would be quite hard through cover through last year. So we got to like 1,600 plus accounts.
They'd be finding it January for everybody in the medical device space, I believe, how was one of the worst month on record in medical devices. So I have no expectation that they managed to open new accounts in the U.S.
That being said, there are accounts opening in Australia every week, and we started to open accounts across Europe.
So that's probably where the growth is going to come in the first quarter while the U.S. get through this surge of the pandemic.
Hopefully, vaccinations will make a big change, and we can start to get something a little bit more normal.
Elyse Miriam Shapiro, Bell Potter Securities Limited, Research Division - Analyst [21]
Yes.
And then just on to BlastX, building out that internal sales force, will that sales force be up and running by April when you get BlastX back into your hands? Or do you think there's going to be a lag there? ...Just to get an idea of when we can expect to start to see that coming back?
Judith Mitchell, Next Science Limited - MD, CEO & Director [22]
No, I expect we'll be able to deal with it from April. These are customers that we already know. They're already in our system.
More importantly, we're already in their system, the majority of which are VA hospitals.
Probably 85% of the customer base that 3M handled were the customers we gave them and the VA customers.
We've already talked to some of them.
They're happy to come back, and we've lined up kind of the back-office processes to be able to go forward.
Our letters all go out to the customers in the next 2 weeks to bring them back into next science.
The VP of Wound Care, our new appointee, starts on Monday.
He'll be in the Jacksonville office on Monday, along with 3 additional new area sales directors for the surgical business.
So we're expanding our sales footprint across second quarter, particularly, to be ready to build out that revenue for the second half.
Elyse Miriam Shapiro, Bell Potter Securities Limited, Research Division - Analyst [23]
Got it. And just a follow-up on that.
With you having BlastX kind of back under your control, obviously, you're not going to be paying the distributor margin on that to 3M, so do you think gross margin could actually improve from here?
Judith Mitchell, Next Science Limited - MD, CEO & Director [24]
It is an option that we may see, yes, but don't forget, we're living in a COVID world. So the risk we run in a COVID world is that due to clogging in the shipping highways, we have to air freight everything out of Europe. We can't put it on a boat.
Benzalkonium chloride is an ingredient that is much more in demand than when we started this business or the execution of the commercialization of this business 3 years ago because it's in everybody's hand sanitizer.
So let's just say we're very comfortable at 85%, and if we can do better, we will let it flow through the operating statement.
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Operator [25] (Operator Instructions)
There are no further questions at this time. I'll now hand back to Ms. Mitchell for closing remarks.
Judith Mitchell, Next Science Limited - MD, CEO & Director [26]
Thank you, Melanie. Ladies and gentlemen, thank you very much for joining us today.
We appreciate everybody's support for the company.
As a group, we are very happy to have seen the company rebound from the troughs at the height of the COVID disaster.
As we move forward, as you've seen for the very first time, the company has been comfortable enough with our order book to give you the run rates for Q1 and Q2.
We look to be able to bring you very good news as we move through to the end of the first half with, not only our FDA releases, but also moving BlastX back to us and the various ways forward.
Once again, thank you for joining us, and everybody, have a good afternoon.
Operator [27]
That does conclude our conference for today. Thank you for participating. You may now disconnect.
(20min delay)