De Novo pathway could lead to better market positioning in the U.S.
On March 30, ENDRA Life Sciences reported 4Q21 financial results
and provided a business update on sales efforts and clinical progress
with the company’s Thermo-Acoustic Enhanced Ultrasound (TAEUS)
platform, that in our opinion, was positive. Recall, in June 2020, ENDRA
submitted a 510(k) application to the FDA, and after dialog with the
agency, decided to pursue a De Novo approval pathway for TAEUS.
The De Novo process, which is available for devices for which there are
no legally marketed devices of the same type, builds on the company’s
510(k) submission. Importantly, it potentially provides an opportunity
to set the bar for an entirely new product classification, which can
yield important and sustainable commercial advantages for the TAEUS
platform, once approved. ENDRA intends to include clinical data from
a subset of its existing global clinical research partnerships to satisfy
the data requirements for the De Novo request in the coming months.
While it appears TAEUS U.S. commercialization will take a while longer,
we look for further updates on TAEUS’ pathway in the U.S. as potential
positive catalysts, and reiterate our Buy rating with our PT adjusted to
$5 from $6.
Continued expansion of clinical study partners. ENDRA increased
its clinical research partnerships to eight global partners (three in the
U.S., four in Europe, and one in Asia). Notably, ENDRA is excited
about its recent partnership with Shanghai General Hospital, which
could provide an entry point into the Chinese healthcare market to
help address an estimated 350M people affected by non-alcoholic
fatty liver disease (NAFLD) and non-alcoholic steatohepatitis (NASH).
Additionally, healthcare access and operations are looking stronger
in 2022, which is an encouraging recent development. Management
remains committed to getting these sites up and running in the coming
months and anticipates scanning 200 to 300 patients globally by YE22.
Commercial activities continue to make progress. On the call,
ENDRA indicated that its European sales team continues to drive
awareness for the TAEUS system, and they are also continuing to
enhance commercial efforts in regions where COVID-19 restrictions are
easing. Currently, the company has four commercial representatives
in the U.K., France, and Germany. However, as sales and marketing
activities pickup, ENDRA intends to add personnel in high-value
markets, while diligently managing its cost structure. In addition to
clinician outreach, ENRA is pursuing different marketing initiatives,
including e-marketing activities, educational video campaigns, white
papers, social media, and leveraging information and data on the benefit
of TAEUS from the company’s website. Overall, management expects
the sale cycle for TAEUS to be several months from the time of the first
in-person customer interaction. We continue to be confident that the
TAEUS value proposition will gain traction in the marketplace as ENDRA
expands its commercial efforts with more product demonstrations.
Financial snapshot. ENDRA reported a fiscal 2021 net loss of $11.3M,
or $($0.28)/sh vs. our estimate of $11.2M and ($0.27)/sh. Cash and cash
equivalents were $9.5M as of December 31, 2021, which we believe is
sufficient to fund operations through 2022.
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