MDAI - Earnings call transcript Q3 2024

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Operator

Good afternoon, and welcome to the Spectral AI Third Quarter 2024 Financial Results Conference Call. [Operator Instructions]. Please note, this event is being recorded. Please go ahead. I would now like to turn the conference over to Devin Sullivan, Managing Director of the Equity Group.

Devin Sullivan

Thank you, Gary. thank Quarter joining Financial and AI's for everyone, Third XXXX Results afternoon, you us for Spectral Good Conference Call.

today and company's for of speakers will Michael Dr. Our DiMaio, the Board; Financial Vince Chief the Capone, Officer. be Chairman

objectives, Private or remind safe Before that call, the harbor made risks, constitute expressions negative the words factors, a provisions and during be and the within or States statements everyone differ estimates, these Act statements. future, financial the forecasts, regarding forward-looking we unknown initiatives of plans, of the these such number may other words discussed which materially and variations of When like statements not forward-looking identify results actual statements. known expressions from are to control strategy, in the statements forward-looking Securities performance, meaning plans, this outcomes of including or I'd could company's that are statements begin, projected, during These Litigation to results are involve of to those future Reform used important guarantees certain of XXXX, versions or cause words of of many propose and should, United forward-looking that or the the uncertainties, outlook. intended assumptions conditions company's anticipates, and outside similar intends, discussions, will, expects,

Directors. company's on filed SEC, company. undue Risk statement that the Chairman foregoing call DiMaio, statements. to investors the and important documents filings ahead. forward-looking by such, go and of address the cause of described factors Dr. risks turn As like the the differ other including in that and materially over reliance Investors These sections identify risks any the events of uncertainties should Factors with registration cautioned place uncertainties to Michael Spectral the to from consider With forward-looking AI's said, DiMaio, and now other the and contained not please those I'd statements. actual the carefully and Board results the are filings to could in Dr.

Dr.Michael DiMaio

tell here a afternoon and I am chuckling Good you how with kind I am I happy AI. excited of be to you here. calling everyone. and Spectral to cannot

some Some I'm may of We're this getting you basics. in may in of and a you I the this We to founder largest the represent Spectral second not. know, to founded the of XXXX, actually company. company MD shareholder back date.

the on and company. happened, election our company what's of full circle. was of kind It's office the founded this of the going country, decade, going for and we're come back there's renewal on Board a refresh had I'm getting of like in that in a Just recently the refresher and as renewal back. over I We've helping now as CEO I a Chairman the well. the and Chair. and

outstanding one Capone, of team, CFO. Vince here, and an have who is We leadership Counsel who's General them being

to and do. I want to founded here everyone trying what remind with why this a company we're on why the So to I day we're focus so

federal the science federal light States company. of was continue Authority, in revolutionary to which the the is government, that damaged United BARDA, a the government, that and which animal quite is the worthy We a sponsor basic to to have brand Biomedical founded Research are most capture outstanding skin. progressed and Advanced partner based best could to were upon for We that an used develop be device wavelengths studies on information show done a we from our research Development

able product of to will all treat wounds on technology. developing device be a embark that a continue kinds AI arm based burn to on We and in revolutionize arm and in

by of truthing being or that's light are show will patients using clinical studies to in and able burns literally We have of that of hundreds wavelengths be thousands X by images real trained a of and thoughtful with that algorithms information patients or With able the heal thus clinicians manner. doctors to the wound not and tell a to treat like ability be in can myself triage heal. that utilize that information,

Now back, team, regrouping I've which is that outstanding. I'm -- been grouping the

take welcome I leadership Lewis a those It's challenges have have with to going on, a And any We don't as a I on. problem face lead team on Jeremiah Sparks Stan us commercialization. heart are lung Capone, to surgeon, Micek quite any Vince and Percoco, challenges. challenge. that certainly device taking head and to and this

is try resuming the a module in things very is focus command clear to way. done I've to what here So

to surgery, three to going the BARDA, on like two like X are on and we're imagine, right, finish. the and to verbalize best on another called I'd one Just MTEC, U.S. that And source which into device. Miniaturization X is And division government. going And end, by a number our is finance, which is do. of here focused and support, the number an to and is Fs, I is the to of to I've Fs. Number focus Health finance. focus; Agency, focusing have what which is mean reliable revenue we federal the Defense is source operation

on this remains doing clear embraced in this this way. The mission items of technology left. on those team embraced large. these population focused is on the and BARDA The focused all is we We're second getting The focusing and delivering change from at this focus. FDA the Nobody to the focus. laser-focused on mission. projects. to a regrouping device. and and focusing F that for on promised clearance the very intact. the completing we're We're that has to Everybody company excited be And has We're

tremendous what to MTEC the for finish And with that do, started finish, U.S. and war that we BARDA The has improved was the burn U.K. devices that the with clearance changed mineralization in the they We're in are response the the this of doctors care third received complete the is that the patients us have U.K. or the complete excited. of in in the asked The project ISBI submission, devices. military is the U.K. the showing there fighters. get which at meeting F recent FDA go was U.K. the and presented a It's Finish now the with with There device preliminary the a to market. several the device, data forward

in the this that push We in might the are at in continue will continue that partners excitement, become add to so that that get devices the exciting U.K. U.K. the Australia, it's looking I there. addition, point in

completion the goal XFs with and company of Financial very XXXX be is Counsel, commercialization able Vince in that, to sending the who So this to have doctors we I'm With introduction, special General this that Officer the Australia this to performance. and quarter of to I'd be on and we're Vince? to third to going device the as excited burn get get again, and review Australia for Capone, soon, this the in eventual over on Chief devices very, I'm devices doctors turn like access our had excited project. With I a workflow back. a use in that focus in of again, our to be say to to dream that things well. I program a

Vincent Capone

operating us as this with recently press the will our Dr. remarks my and our results, all in we today. metrics. this joining for evening issued that well. DiMaio, XX-Q on contains filed mind, release which focus select financial and and thank SEC afternoon, of additional We With you have our I highlights details key

well associated third for with the expenses the million this contract on which of of nonrevenue-generating in the quarter centers XXXX. $X.X of third reflecting the rose report primarily results research the million company's year. as increased for XXX% mind, we let to million this from third development our third focus towards For product NASDAQ. for last our from was pleased under and that third $X the quite XXXX, driven have of XXXX operating as and BARDA the XXX% revenue. This PBS the the on that We down to of such quarter. half awarded revenue higher XXXX year. we year's revenue outstanding and development as to and our on advancing That's third non-supported of quarter from under Gross recorded expenses same in in turn The in growth of focus level focus administrative $X.X to XXXX. was contract, operating business $X.X There General by Other of combination activity Burn improved third million XXXX. our the results. the or of continued in reimbursement year's our to for and XX% to compared reflects our as driver contract term. With of $X.X BARDA was transaction quarter last the million approximate and to rate third contract in most the in Research in as we nonrecurring Project reimbursement September the $X.X also first last million declined of to rate third burn to PBS quarter, an the $X.X with operational declined operational BARDA that improved $XXX,XXX reflecting XXXX, or XX.X% activity of margin well were development million us anticipate for during me quarter XX.X% the reduction associated both our the September increased FDA quarter under by year's no costs our strategic last BioShield II quarter. reduction accounted of near development expenses just of decline period we revenue which XXXX the system an are in the This submission in PBS quarter work on expenses. as DeepView BARDA in financial compared BARDA in activities primary listing contract, which was consummation of

million of $XXX,XXX was reflecting last year, Adjusted narrowed compared $X.X approximately adjusted to focus from to efficiencies. share per in share in third Our net last loss $XX.X of quarter an the or net third on $X.XX or $X.X million for as per loss the million loss operational EBITDA again, of our $X.XX EBITDA a quarter. loss quarter year's

million As had we XX.X outstanding. approximately September of shares XXXX, XX,

last of million XXXX, Cash to September as cash sheet, XX, year-end subsidiary, million Spectral year. included wholly company's the to at totaled compared XX, $X.X as the $X.X $XXX,XXX at cash September over XXXX, equivalents owned balance Moving in IP. and

XX, funding. payable additional believe to company ability well. well ongoing raise as to respect operations $X an operating positioned notes approximately had million through support September improved With our we of in the opportunistic as to our position, are cash As XXXX, efficiencies as we

know, October efforts. the by support may effective recently which was on you registration, SX these SEC shelf to we As filed our XX

expected funding an of I as XXXX. that, in again thank million, With development DeepView we as of from reflects XXXX, Dr. you, device, conversation $XX we the increase For reiterating the government of back our our reported revenue to guidance M. our handheld million This SnapShot in BioShield well $XX.X about want over BARDA continued are Project additional growth and to I on XX% the approximately DiMaio. also the contract turn work

Dr.Michael DiMaio

$X.X Thank $X.XX and that the be here I'll about call up it's share of the you, most about is confidence the to become Vince. this stability done. in that operator questions good price ask to metric to not gone from of everyone a I'm company and the going well With XX% Well call, Board I Chairman in point, tell although on and a our weeks for at share have happy to share, these confidence that us. sign together. I'm we're want analysts. couple the have working open to to the from tasks again, also before full complete our leadership the important has very we per that, I up report a happy

Operator

Instructions] first from with Zimmerman is Our Ryan question [Operator BTIG.

Ryan Zimmerman

finish that I of collect on Dr. of But about incorrect you like FDA ask on maybe, up. get patients you what I need if for. the X of the congrats could progress more submission. or burn DiMaio, to sounds So that. those we study. you X the months to to be talk as little and so looking kind next I'm a not could how some FDA into want submission they I on should on be still just before It guess data, mistaken, you're kind burn for preparing

Dr.Michael DiMaio

Thanks, Ryan Zimmerman.

to and the time to as of doing know, know So a you we doctors There talking -- not truth you to was of may single product the speak. able companies. they in actually as hundreds a process are or never study devotion be millions that and I other have BARDA been has to dollars truthing more spent

burn truth. of the parts images center those So are determine at burn is The not days XX wound the produce and who the using algorithm, been has the understand, of the heals for completed. portion for may that being burns can information enrollment the be be of to that biopsies the burn study back we developed all product then And means condition is to able a speak, which they which used result and being the That fed did to to a by not. train or as doctors. parts what

quite totally share in I just the but submission then the there, Ryan, algorithm send the we you, said daily, So else I we'll with the truthing, once not we kick process with development all in frequently. everybody FDA the complete talks that, and FDA. we're to will pretty and that information,

set meetings the in have weeks. next We several few up

from get need we want send we exactly do what or they an So FDA will us interactive so else our the to on when feedback submission.

Vince we're images, in the summary, the submission, the for conducive data, of half in to collating perfecting as first the the said, FDA algorithm the collating that's getting year. next a submission in So organized manner the and

Ryan Zimmerman

to helpful. turning U.K. And a bit. Very maybe the for then Okay.

in last in on field And in update feedback on. some you're your feedback X more those think initial from incremental U.K. either anything you quarter, gotten, systems commercial see systems I efforts had placements? about really the hospitals when U.K. the that Any potentially you on revenue you've gathering or

Dr.Michael DiMaio

Ryan. Thanks, question. Good

that devices them several field. is the we're again, the in iterate for in the intended? continuing yes. are and machine working? far it device seen to resounding a fact, doctors can feedback most answer Is with doctor demonstrating the manner that necessary to created the by And U.K. presented how the there in And been happiness from me how the improvement as the used U.K. be And is get the expanding to We're and device. audience, as practice? in the working workflow is a the doctors to my is in We're in the slowly. and the improvements So it This valuable the the it of real-time the as has docs abstract have feedback from a getting and the

being the ultimate to proposition value don't to Now necessarily N-I-C-E having come expect And care is. a for get the said that, that because that NICE, formed. iterate, to that those U.K. at called amenable a is significant The the as metric a and who a consortium Service, goal is will device one this device point, immediately value we we which U.K. continue the revenue the of to here is is know that's body a you population. still be NHS. And the to drug a they have who NICE is called the system or health Health the determines that a National

designation thus, we anticipate the achieve is for here get U.K. goal that all to flow would after revenue NICE this. and our So to And

the have the earlier that perfected is and I get we the device this the primary heard Australia it. have docs and mentioned use workflow, goal feedback the they the in get to in repeat, that good about further in to in So want U.K. now studies.

U.S. useful the very So to the application, finally, will smooth will in going community. able a U.K. workflow, integrate burn and And they clinical out the in information in flow U.S. so this to to be transition use situation devices it FDA we're burn to U.S. this be be that rolling the be understand the and

Ryan Zimmerman

that consider? any time for, Any up, we be with could when there is put Dr. lines in you can regulatory of the And kind on Australian to that follow asking just have you are hurdles Australia DeepView? doctors Dimaio, to

Dr.Michael DiMaio

next I or prepared to to to rolled having have skis now. out ahead working now. likes the We're and the some get my those lines want be early few will of Australia. feedback. the say to in devices exact say I months Vince right we on time don't I'd so, say as

we the through imminent, special I called next literally what it's of we'll think called in more is next understanding. in It's but in we're access is that. and the information, conference, pathway and have working are that the call, quarterly Australia, memorandums

So now, going but those right about are, they success. your yes, we're through to question and anticipate hurdles, hurdles the we

Operator

from The Northland Carl with is Byrnes next question Markets. Capital

Carl Byrnes

in to how on bit, little Congratulations regulatory on of your answered. that I States view out know progress. commercial the that's My United regarding questions a this commercialization But what a and with expect and were time. in looking but respect sales dedicated just out U.K. bit, curious you you training do terms little readiness force?

Dr.Michael DiMaio

question. the for you Thank

So what may sales some BARDA you so looking, force we the know, kickstart if the the for to but are clauses contract I not in to there begin understood help the question, device. has us actually

be the in may the to words, burn of going -- done. them centers United or workflow the that quicker call clinical metrics be care. value operating it BARDA be device approximately certain be At better may the there's room, -- to the doing to understand costs. skin get we're transplants in proposition length may the parallel patient's and stay, be of also are people or time via save also into the to In able decreased So be across to time fashion, contract in devices efficiency but it States. other transplants the it XXX a same to It on the studies applicability may of clinically the show the government RCTs, some pathways

and in first the kick value the agencies able the sales we the be usefulness clinical the those devices expect will want case doctors initially see to trials hospitals. there then shown and begin that proposition and hospitals of when that the the value the shown, and the and to the docs the out hands is Obviously, doctors once to will different demonstrate then the is get get to the and So patients the use we up. and in is

Operator

next The RK question Wainwright. H.C. with from Ramakanth is

Swayampakula Ramakanth

are able have, were done workflow are Is X units improving that I of the value, in to there? hands just the U.K. believe with have also projected which be to the U.K., you you So you what terms NICE in before you the of that can enough that to in units you X you X in in the these needs also talking units or and collect data the do to put designation U.K. Any so or to you more that docs? you have get commercialize need enough as commentary

Dr.Michael DiMaio

So thanks, the RK. I appreciate question.

I going to get know don't So to I approval. -- not the get images how don't I'm or need that many units NICE we answer get -- and to

from So let U.K. I that with those the found analysts, process isn't really knows predictive does me to other it units in has this healing. answer But going value sure what the question. terribly and back that into their to be be device overwhelmingly not there don't initial And know I to call results to very They a saying the able of exaggerate. what to been useful to close however, And that clear. device the positive. doctors Ryan to care. the said show from truly [indiscernible] the I'm the on everybody of has be have anything I'm that

is device. years or answer, And that the know to we surgeons. or device this a need to your But for U.K. patients, images is no, be proving you. the don't able very we reason a that. give many will will how what's in to useful developed with so that the XX I the and get question, be exactly the I have the over last So burn the case to we clinician

Swayampakula Ramakanth

how in what care And or with conference other so is, be are terms -- based Okay. of presented physicians seeing that would improvement? at the publicly what question any on these see patient we sorry, data can then they're you're of getting that the some something also excited

Dr.Michael DiMaio

RK, thank you.

You're singing song. my

implement written plan number mean, that As a we're I've and publications. hundreds articles a in and fast manuscript, of know, those track that articles, we publication in have including I and presentations you know, place and don't you're a manuscripts about literally you many to talking going terms of of

the that community, prices, is about. medical publications it's that you Street, we As Wall in currency but may On a community, stock medical in and it know, be the talk presentations.

and how see we're we're can't to kind collating continued very, of to to that going are we're We've not the months that data lots out from the coming interviewed out the But difficult. question of have doctors remain publish because burn problems room spread technology going determining several into in now. next the in U.S., the in the -- There in and answer rooms have very emergency interesting expertise and the accurate thousands now a a we for have doctors And its to in trauma solve yes, of going and burns. its also papers are doctors showing It's information that So device patients a very emergency need it. they are to community. There's to be reveal indirectly, usefulness, I lot. your that much not we've information. it's come it and hospitals. wounds. applicability burn It's

the is this send fantastic. to the right patients can place have so right and device time to going the help that And be very in a triage to

Swayampakula Ramakanth

your that DFU the I squarely when wounds. for the or I about to should Any point. terms And the get on also there at study of focus from company understand But thinking the last for the start data -- indication? is, looking believe then is burn indication studies into this in commentary question me and we is

Dr.Michael DiMaio

Yes. Thanks, RK.

source. I've now is on for burns I'm focus funding BARDA, is major that And focus. the that this on commitment. to because based back we're upon so and XBs seen that going near-term the moment XFs, second my the for is the And at got point, a one everything We've next a

need product. almost from receive to or funding source, deliver received billion have and to we $X.XX going We that that

temporarily a words. holding in pattern, is DFU my the So

out and -- leadership them the once FDA. are that convinced we a organization streamlined delivering pull and to of team BARDA product convinced pattern is our we the on holding focused I'm will have the We

yes. So summary, the answer in is

look at applicable widely to something indications. may we general that be more DFUs do have a we this or viability But will able to a indication other how or be at product to more burn, reasonable manner may a and we more to to We wider market. look able do get whether be wound

Operator

[Operator Instructions] The John next Zacks. from is with Vandermosten question

Unknown Analyst

from portable guess, for bit another of maybe Since that were the you've snapshot front award third the last line of a what update, the FDA? of of as the higher why the first major to quarterly version award And quarter the than MTEC for secondly, for year? expect of the announced all, -- -- DeepView. I some What -- in getting that revenues kind reason we towards move then device go milestones trend you are for the was

Dr.Michael DiMaio

The question to is go? want on revenue you

Vincent Capone

that burn such, we've contract. higher to focused And We've as we've revenue, focused contract. frankly. has the BARDA on the more and efforts that FDA things the some margin kind right? as for XXXX. to first contributed Dr. to dedicated the And pivoted resources to John, in of PBS So contract, number submission us, on indicated, of right, half resources our product DiMaio delivering We're higher a of that's

Dr.Michael DiMaio

back BAMC, Brooke of the preliminary is the MTEC, to bit on Medical device, your to Center -- in Army doing next is addition called feedback the a question little miniaturization, miniaturization and the heard forth the of about the MTEC few be device. there's soon design the I which very underlying in the going weeks, In

think cetera, we they us and so get come with that, then back that then more size iterate military, for and we'll the what and the the And some et met specs and from we'll feedback that about that asked they shape see improvements. with

a answer still the be is and then fighter, throes the of amenable that to acceptable in we're the in will the to middle developing and military contract war we're now. that that device of So

Unknown Analyst

I be I $XX we government it that for thinking for seem think year, in And that the Great. number remember, was guidance year? revenue around about the still on somewhere to the contracts. this then should million Is

Vincent Capone

think in XX Yes, -- I far. I through we're we're so. mean so months

reasonable that's is and market be rest the the we'll drive I of $XX revenue Hopefully, XXXX. that, good for number million a to but conservative XXXX. I think see think above to guidance for us

Operator

question Ryan next The BTIG. with Zimmerman follow-up from is a

Ryan Zimmerman

question, Just one quick up. I'll wrap

to or I that's And top we at kind in for top for those see going year. then looking to don't I remind see what Dr. if of think and that? successful still least December to mentioned burn were slated data DiMaio, want study, and we line if see this the from around I know you just we're data, consider of us we're one. are so the of you line number case, maybe what two, what as terms outcomes and look this, forth

Dr.Michael DiMaio

Great Ryan. question. Thanks,

target. are on You

to yes is your answer the question. So

I'm be FDA, we're December. I'm in line the the cautious because because top feedback some iterative data to to upcoming I said as earlier, out weeks. not working, with come going cautious, expect in but the FDA literally We with

looking metrics sensitivity metrics those comparing are in. and so the same a our sure and of some called It's Ryan, that And combination a include make they're And want is coefficient Dice clinical we the at, -- accuracy metrics CJA, to thereof. that which those specificity, statistics, also interested to that we what's controls be think what think heal. FDA. to area literature. a historically, That's And we annotation. I part is them And to fancy and the the evolving now, going historical that's not or discussions going to of to judgment right that's heal with doctors are the in compare going the word burn for

the in the information showing that pixels I said, we healing collate binary information, wishes repeat to the of submission sensitivity, So a clearance. want measure way is specificity, our are it for but have FDA a see true is what make the all -- sense, non-healing for what a going and which pixels. And we what presentation in Ryan? to of have that that our or Dice to within positives is summary, false data Does we're positive coefficient, and

Vincent Capone

on, follow we of Again, data. got to all kind Yes. the

team. man great leads you, We all a algorithms our at to this the see brilliant very of called to to are exciting, what's he I ones over X deliverable, got very, science to who looking provide going which answers combination symphony tell young have data a be different is to he's a best is And matter information. Jihong in collate And these these in able these questions. different to algorithms that

Operator

would conference back This turn our I like to remarks. for any session. DiMaio concludes closing question-and-answer to over the Dr.

Dr.Michael DiMaio

team the on business Again, thanks as commitment everyone system, and everyone for on know improve which support call. our believe to and and will commercialize as is well on develop ongoing outcomes. want to Their significantly paramount partners DeepView I deliver we our patient investors. our to to our us thank

glad our finance, before, said evening. we're back. I to I to the good and going for and to your be happy interest XFs, back, thank you company, wish continue this. which do all be finish focus is I'm As all to in I'm a attendance and and all I you

Operator

now for today's The concluded. conference presentation. you Thank has attending

disconnect. may now You

Spectral AI (MDAI) 6 Nov 242024 Q3 Earnings call transcript