ENDRA Life Sciences Inc. Q2 FY2020 Earnings Call

Good day, ladies and gentlemen. Welcome to ENDRA Life Sciences Second Quarter 2020 Earnings Call. All lines are in listen-only mode, and there will be an opportunity for questions and comments after the presentation. It is my pleasure to turn the floor over to your host, David Wells, CFO. The floor is yours, sir.

Thank you, Karen. Appreciate it. Good afternoon. And welcome to ENDRA’s second quarter 2020 business update and financial conference call. We issued a press release this morning. For those of you who don’t have a copy of the release, you can access it in the Investors section of our website at www.endrainc.com. Before we begin, please note that today’s presentation includes forward-looking statements. All statements other than statements of historical fact, including statements regarding our strategies, financial condition, operations, costs, plans, and objectives, as well as anticipated results of our development and commercialization efforts and the timing for receipt of required regulatory clearances and product launches are forward-looking statements. Except as otherwise required by federal securities laws, the company disclaims any obligations or undertaking to update or revise any forward-looking statements. Please refer to our Form 10-K for the 2019 fiscal year and subsequent Forms 10-Q filed with the SEC to get a better understanding of the risks and uncertainties related to forward-looking statements. I will now turn the call over to our Chairman and Chief Executive Officer, Francois Michelon. Francois?

Thank you, David. Good afternoon, everyone. Thank you for joining us today to review ENDRA’s second quarter 2020 performance and 2020 business update. Along with David and me on today’s call are Renaud Maloberti, Chief Commercial Officer; and Michael Thornton, ENDRA’s Chief Technology Officer. Let me quickly go through our agenda. First, I’ll highlight our recent achievements and David will review financials. And then Renaud will provide details on commercial activities with a particular focus on Europe and we’ll finally open up the call for a short Q&A. Before we get to operational business updates, I want to take a moment to comment on the recent loss of our Director, Dr. Sanjiv Sam Gambhir. Dr. Gambhir served as Chair of Radiology at Stanford University School of Medicine. He was an extraordinary clinician and scientist at the forefront of molecular imaging and cancer detection, and had served on ENDRA’s Board since 2008. We were deeply saddened by Dr. Gambhir’s passing. Sam was a rare combination of scientific brilliance and intensity, wrapped in a modest and approachable demeanor. He was one of ENDRA’s founders, helped us progress to our current state and he stayed actively engaged as a Board member until the very end. I want to share why Sam stayed involved with ENDRA, while he led a massive organization at Stanford and advised much larger and well-known biotech companies. His answer was immediate, 'Francois, it’s very simple. I stay involved because ENDRA has the potential to improve the health of millions of people and dramatically lower healthcare costs associated with later stage acute disease management.' ENDRA’s technology could be a game changer in the clinical care cycle of liver disease. Our thoughts and prayers remain with Sam’s wife and all of the extended Gambhir family. As we shared in July, no changes are anticipated to ENDRA’s day-to-day business activities as a result of Sam’s passing and we will continue to leverage the clinical expertise of our advisors, Dr. Rubin; Dr. Gao; and Dr. Malik. I can tell you that the team and company are more committed now than ever to making Sam’s vision for a practical liver disease diagnostics solution a reality. For those who may be new to the ENDRA story, we’re the pioneer of Thermo Acoustic Enhanced Ultrasound known as TAEUS. TAEUS is a platform that allows clinicians to visualize tissue in ways similar to an MRI, but at 50 times lower cost, and very importantly, at the patient bedside. Our goal is to develop multiple clinical applications for the TAEUS technology in areas of high unmet clinical need. Our initial focus is on helping the more than 1 billion people globally affected by Non-Alcoholic Fatty Liver Disease known as NAFLD and Non-Alcoholic Steatohepatitis known as NASH, where there’s an acute need for a practical tool to assess and monitor liver fat before the conditions progress to fibrosis, cirrhosis, and cancer. That brings us to discussing the company’s progress during the quarter on our stated 2020 objectives. During the second quarter, we achieved another major milestone on the path to commercializing TAEUS with our 510(k) Premarket Notification submission to the U.S. Food and Drug Administration. The submission represents a culmination of years of scientific research, quality system implementation, safety and performance data collection. I’m very proud of the ENDRA team, particularly for working tirelessly through an unprecedented global pandemic to ensure the submission was made on the aggressive schedule we set before COVID was a consideration. For any investors that are unaware, the 510(k) submission is not a simple application. It’s an extremely detailed piece of work and represents a significant undertaking in terms of time and company resources. To illustrate the enormity of the task and accomplishment for on-time completion, our final packets submitted to the FDA in June came in at approximately 1,700 pages to meet all of the information requirements. I’m happy to report, from our experiences so far, that it does not seem that the FDA is notably impacted by COVID-related delays. In fact, since our submission, the FDA has been very engaging and collaborative, asking technical questions as part of the customary review process. The 510(k) process typically takes five months on average from submission to clearance, and based on that, while we can’t control the process, we remain optimistic about the potential to secure FDA clearance for TAEUS in the U.S. before the end of the year. As we said last quarter, it’s also worth emphasizing that clinical data from our three U.S. evaluation sites is not currently required for FDA clearance. The agreements were signed using the Institutional Review Board process, also known as IRB, which allows research institutions to use technology that is deemed to be low risk ahead of FDA regulatory clearance. So we will be ahead of the game collecting clinical data that can support our U.S. commercial launch, even before we anticipate receiving the 510(k) clearance. Following 510(k), we can look forward to these sites as great reference sites for our U.S. commercial teams. We will continue to provide relevant updates to investors regarding the process as they materialize. While the FDA conducts its regulatory review, the ENDRA team is actively executing the key components of our European commercialization plan. You’ll recall, we received CE Mark approval for our TAEUS Fatty Liver Imaging Probe, also known as FLIP, toward the end of the first quarter of this year. The CE Marking indicates that the TAEUS FLIP system complies with all applicable European directives and regulations in the European Union and other CE Mark geographies, including the 27 EU member states. In spite of the global slowdowns brought on by the COVID-19 pandemic, we’ve continued to execute our business plan to capitalize on our CE Mark approval and first-mover advantage. A global commercial plan consists of three key elements. The first element is to establish clinical evaluation sites in each target country to build ENDRA's base of clinical evidence and cultivate reference sites for commercial teams. We’ve secured three sites in the U.S. and are expecting eminent signature on our first European site with several more in the pipeline. Second, build a small hybrid commercial team, one person in each target European country, and after we receive FDA clearance in key U.S. regions. These salespeople will support the clinical evaluation sites, work with GE sales teams to drive TAEUS sales in radiology, and independently pursue market development opportunities in hepatology and other clinical segments. The third element of our commercial plan is to build out our global e-marketing presence and clinical education tools for its own merits, but also as necessitated in the new COVID world. I’m going to let Renaud go into a lot more detail about these areas in a moment. Turning now to our collaboration agreement with GE Healthcare, which was renewed in the first quarter through January of 2021. The partnership remains strong, and we have regular commercial calls to update our progress, coordinate plans, allocate resources, and share market feedback. GE has been helpful in providing ultrasound equipment for ENDRA’s needs, and GE continues to view liver diagnostics as a key market opportunity. Under the terms of the agreement, GE Healthcare will facilitate introductions for ENDRA to GE ultrasound customers in key markets. Finally, we’ve made strong progress in building our intellectual property portfolio to defend our technology in current and future clinical applications. Our IP portfolio currently stands at 72 assets, defined as filed, issued, licensed patents, and pending patent applications. We’ve got a full-time patent agent on staff to help us grow this portfolio. Bottom line, I’m really pleased with the progress we’ve made during these challenging times to keep the company on track, advancing our regulatory position and commercialization activities in Europe and the United States. I would like to turn the call over to David to review the financial results for the second quarter ending June 30, 2020. David?

Thank you, Francois. I will now provide a summary of our reported second quarter 2020 financial results. Our operating expenses increased to $2.9 million for the quarter ended June 30, 2020, up from $2.3 million for the same period in 2019. Our research and development spending increased year-over-year by $182,000, and our sales and marketing costs increased to $135,000 for the quarter as we continued our efforts in the commercialization of our TAEUS product. Our general and administrative costs increased by $337,000, due to employment-related costs, which included non-cash expenses for stock compensation, additional spending on costs associated with being a publicly traded company, including Investor Relations, and increased costs for insurance. Our net loss for the quarter ended June 30, 2020 was $2.9 million, as compared to a net loss of $2.3 million for the quarter ended June 30, 2019. Our net loss included non-cash charges which totaled $584,000, comprised primarily of expenses for equity-based compensation and amortization of debt discount. Our net loss per share for the quarter ended June 30, 2020 was $0.20 per basic and diluted share. Our cash balance at June 30, 2020 was $749,000. However, as of August 14, 2020, it totaled approximately $2.4 million. This was due primarily to voluntary early warrant exercises from existing warrant holders, which were received in July. We received $2.2 million and retired 3.1 million warrants, as warrant holders approached the company offering to exercise warrants in cash at a discounted price. We’ve filed a consent solicitation statement proposing to allow us to accept additional early exercise offers and we currently have approximately 8.1 million additional unregistered warrants, which could be eligible for offers of reduced price conversions. As a reminder, ENDRA continues to benefit from an asset-light operating model, which keeps to a minimum the investment in our balance sheet and allows us to flex our spending as the product development cycle matures. This is especially relevant and advantageous in the current COVID-19 economic environment. Combined with previously announced cost-saving initiatives, including a one-third cash salary conversion for management and three full quarters of non-employee directors' annual retainers paid in the form of restricted stock units instead of cash. We are confident in the company’s ability to fund normal operations and generate revenue from the sale of TAEUS systems in 2020. We continue to actively pursue and evaluate additional opportunities to strengthen our balance sheet and position our company for the exciting commercial growth opportunities that lie ahead. This includes the exercise of outstanding and registered warrants, various market-based funding opportunities, strategic partnerships, as well as non-dilutive academic research grants. I will now turn the call over to Renaud Maloberti. Renaud?

Thank you, David. Through the second quarter, we accelerated our efforts in seeding the market and building our brand to start the commercialization of ENDRA’s TAEUS technology in Europe after we received the CE Mark, and we continue building awareness in the U.S. as we submitted for 510 for FDA clearance. With that in mind today, I’d like to update investors on our Europe commercialization strategy and key progress. As Francois mentioned in his opening remarks, our commercial strategy centers on three key elements. The first commercial element is to establish evaluation sites in key markets. As widely reported, COVID-19 has impacted existing and new clinical trials for countless companies. However, as we mentioned on our call in May, we continue to be encouraged by the gradual return to normal operations we are seeing at healthcare facilities, though some facilities are facing a short-term backlog of delayed procedures and radiology exams. All signs are that this will smooth out quickly. With that in mind, I’m happy to report that we have a verbal approval and are waiting for counter signatures for our first European evaluation site in Germany. We are also in advanced stages of discussion with additional European sites in key markets and we will formally announce these when we start scanning patients at each site in the coming month, contingent on European business operations continuing to open. Another good example of this progress is our June announcement of a new clinical partnership with the Medical College of Wisconsin, or MCW. This would present the third clinical research partnership for ENDRA in the United States and is a natural progression from the feasibility study conducted by the Robarts Research Institute, which used healthy volunteers to establish the safety and efficacy of the TAEUS technology. The data from the MCW study, along with the German site and other ongoing or to be initiated studies will be used to bolster the clinical evidence and further establish the clinical utility of the TAEUS Ultrasound Device in patients within NAFLD to help accelerate commercialization in Europe and eventually the U.S. once the FDA clearance is secured. Our U.S. evaluation sites, University of Pittsburgh, Rocky Vista, and Medical College of Wisconsin are returning to normal operations and working through backlogs of COVID delayed procedures in radiological exams and remain very committed and eager to work with ENDRA. We plan to install our first TAEUS systems in September. The second commercial element centers on building a small European sales team to work alongside GE sales teams. We have hired our first salesperson starting in the U.K. next month and I’ve identified leading candidates in other target markets. While we’ve been very efficient at screening candidates, we also have been quarantined like everybody else. We have also been very careful not to hire people too early before the European markets and healthcare systems open up. We expect our salespeople to be able to capitalize on the extensive pre-marketing initiatives that ENDRA has been conducting for the last several years and leverage ENDRA’s CRM of over 3,500 global clinician names. We expect the level of their success to coincide with the rate at which hospitals return to more normal operating conditions in Europe. Although we’re not providing specific sales targets at this time, we do expect to report initial sales of TAEUS systems in Europe in the fourth quarter. ENDRA plans to contract manufacture our TAEUS systems in North America and deploy them to Europe, where, as I mentioned, we are hiring a salesperson in each key European market. These commercial ENDRA resources will drive sales in the following ways. The sales rep will support and assure the success of our clinical evaluation partners in each country or region. We want that first seed in each market to be fully satisfied with ENDRA’s technology and generate compelling clinical data to support our commercial plan and eventually become a potential customer and reference site in their markets. Our salespeople will also work with GE salespeople in each country or U.S. region to introduce ENDRA’s technology to existing and new GE ultrasound customers in radiology. What’s in it for GE? Well, offering a reasonably priced accessory like ENDRA’s, which enables GE customers to do more with their existing ultrasound capital is a compelling proposition, and GE wants to differentiate itself from its competitors. And finally, the ENDRA sales rep will drive awareness, interest, and trial for ENDRA’s technology outside of GE’s focus in radiology, specifically targeting clinicians in hepatology, endocrinology, and primary care. ENDRA’s salespeople will leverage our database of 3,500 global clinicians to solicit and conduct small group demonstration of our technology, and they will cultivate sales opportunities at regional, country, and international clinical conferences like the EASL or AASLD. Our hybrid strategy positions ENDRA to leverage our relationship with GE and other future strategic partners, while also directly controlling ENDRA’s commercial success with a small direct commercial team. This approach extends our asset-light approach to product development, where we work with engineering service companies rather than build out an army of engineers. The third key element of our commercial strategy is to increase ENDRA’s e-marketing and education efforts. Our website launched earlier this year is now available in French and German, with additional European languages coming online soon. We broadcast the first of several planned webinars featuring Dr. Malik, one of our hepatology clinical advisors, who explains the current need for point-of-care tools to assess NAFLD. We released a series of topic videos discussing the market, the TAEUS technology, and other relevant topics on liver disease. We published a comprehensive whitepaper providing a review of the current and emerging NAFLD-NASH diagnostic technologies. This is available on our website under Research and Media. And finally, we have just produced a video tutorial explaining how to install and use TAEUS in a clinical setting in preparation for our installation globally. This piece would enable ENDRA customers to install TAEUS, train their team, and use the system without having TAEUS personnel physically on location during these challenging times. These tools are being deployed on our website and have been very well received by our potential customers. All these efforts are typically not announcing press releases. Nevertheless, we believe they are relevant and indicative of the progress the team is making. So we encourage investors to regularly check out our website and social media channels to keep up-to-date on these efforts, which we expect will ultimately translate into meaningful sales of TAEUS. We believe this go-to-market strategy is the fastest way to establish clinical usage, secure initial sales, as well as achieve a faster sales ramp. In addition, since many trade shows and conferences have been either canceled or moved to a virtual setting, which is becoming an industry standard, we have also built a digital tradeshow booth that will allow us to attend global trade shows and conferences virtually and offer our potential customers a memorable virtual experience and the ability to learn and interact digitally with peers and the ENDRA team. ENDRA’s virtual booth has the distinct advantage of being open year-round, so clinicians can learn about our innovative TAEUS liver solution in their own time independent of conference dates. The ENDRA virtual booth will open for the European Association for the Study of Liver Disease Conference, the EASL, that will take place virtually in London on August 27th and 29th, and ENDRA will continue to be featured at global trade shows like AASLD or the RSNA in November and December. I encourage all of you to come and visit us at a trade show from the comfort of your own screen. We believe the work we’ve done to seed the market before and during the pandemic, building a network of interested clinicians and developing tools that can be deployed virtually will enable us to support the TAEUS market adoption and help clinicians tackle the growing NAFLD challenge. I am very excited about the future of TAEUS and ENDRA, and look forward to updating you on our progress in future calls. Now I’ll turn the call to Francois, who will make some final remarks.

Thanks very much, Renaud. I’ll wrap up the call by emphasizing that we remain laser focused on two key milestones: ramping up commercialization activities in Europe and supporting the FDA review of our 510(k) submission in the U.S. We look forward to providing investors with updates in the coming weeks and months, as we make specific progress on both fronts. With that, I’d like to open the call to questions, please. Karen?

Thank you. We’ll take our first question from Brooks O'Neil with Lake Street Capital. Please go ahead.

Good afternoon, guys, and congratulations on all the progress. I guess…

Hi, Brooks.

...just a couple of questions. First, I’m curious, Francois, in your experience you mentioned the five months timetable between submission and FDA approval. Number one, do you anticipate needing to do anything further or are we just in a kind of clock-ticking environment right now?

Great question. Yeah. Our experience says, so far, as I mentioned, has been very collaborative and open. So, yeah, it’s not as if you throw it over the fence and wait to hear; on the contrary, it’s very engaged by the FDA, which I’m very happy. As I mentioned, they seem to be interested and asking normal technical questions and wanting to understand the technology. As I also said, it’s a big document. So it’s natural that questions come up, clarifications. So it’s a back-and-forth process. The five months is really the best information we have in terms of averages. As an average, it could be shorter than that or longer than that. But we’ll continue to keep our investors informed of any material developments, and obviously, remain very engaged to support the process.

Sure. All that’s great. And then, maybe, could you just give us a sense of how you feel about capital availability recognized? There are still some warrants outstanding and money you have to pursue, but I always bite my fingernails down to the quick thinking about banks running short of money?

Sure. Yeah. I’ll let David kind of articulate that a little bit, if you would, David.

Sure. Brooks, if you're feeling anxious, I can relate because in this uncertain market, I share the same concerns. However, we have strong support from a dedicated group of shareholders and investors who continue to invest in our stock. The warrants exchange we are currently undergoing is voluntary, which is encouraging. We are also exploring additional market opportunities that would benefit both investors and the company. I wish I could provide a specific outlook, but we have not made forward-looking statements today. We have provided guidance, which limits what I can say. It is a challenging environment, but as long as we continue to perform well, maintain our loyal shareholders, and make smart decisions, I believe we will be okay.

Great.

That's great. Could you share your thoughts on whether the path to U.S. commercialization will follow a similar trajectory and pace as what you generally experience in the EU, or do you anticipate the market here evolving differently? Thank you for addressing my questions.

Yeah. Hey…

…for taking my questions.

Thank you, Brooks. That's a great question. The commercial strategy is global, while the implementation is local, mirroring our efforts in Europe. We are targeting specific regions by establishing evaluation sites and assigning an ENDRA salesperson to each area. In the U.S., we already have three evaluation sites located in the Mid-Atlantic with UPMC, the University of Pittsburgh Medical Center, the Medical College of Wisconsin in the Midwest, and Rocky Vista University in the Southwest, in Utah. We plan to divide the U.S. market as regional opportunities present themselves, likely assigning around five salespeople across the country in a similar manner. However, we want to be careful about hiring too soon. The funding question is important here; we have not significantly increased our overhead or hired staff who would be unable to actively sell. We are being strategic with this approach. Given our three sites and the data we expect to gather in the second half of the year, we believe we will be ahead of the curve when we receive the 510(k) clearance. To answer your question, we aim to use the same model. We want to manage our future while collaborating with strong partners like GE, but we recognize that GE is a large organization with many priorities, so we cannot solely rely on them. We also intend to reach out to customers with whom we have fostered relationships beyond GE’s main radiology focus, particularly in hepatology, endocrinology, and other areas. We believe that combining a small sales team with strategic partner sales channels is the best approach to achieve our goals. I hope this information is helpful. Thank you for your question.

Yeah. That makes a lot of sense. Thank you very much.

Thank you.

Hi. Good afternoon and congrats on the submission and kudos to the e-marketing. I am very want to and very excited to take a look and visit the virtual booth when it’s up and ready.

Yeah. An extra comment on that, Vernon. I think pre-COVID having a virtual booth was probably considered second rate to being there in person. But I would say that, nowadays everyone is exactly in the same boat, and that includes GE and very large companies. So we have to maximize visibility through a virtual booth, which will allow us to interact a little more interactively in three dimensions, interact with the product, interact with some of our materials. But it also comes after building for two years and attending 13 of these global conferences in person. I was in the booth, Renaud, David, Michael— we were all in the booth, and that’s a big reason why we collected those - built those relationships and started collecting those 3,500 names. We’re not just starting the process now. So we’re going to try and make as great a little booth as we can, along with every other virtual participant, and we will certainly be trying to capture more leads and develop relationships, but it’s thankfully coming on the heels of a lot of physical groundwork that we’ve done in the years past.

No. Certainly…

Yeah.

…your innovation in these days is going to get to a lot of interests and I look forward to seeing it for myself.

Thank you, Vernon. So regarding the evaluation sites, can you further unpack the activities described? What’s involved in establishing these evaluation sites? And also what is the timeframe that it usually takes to establish and evaluate? So, great, great question. I think one comment is, first of all, now that we’ve got several existing evaluation sites, we’re naturally finding the process to be a little bit easier in terms of approaching subsequent sites, certainly in the U.S., because they see that others are participating. They know people there speak highly, and so it’s kind of snowballing in a nice way. But we don’t want to go too fast. So I think three sites in the U.S. is a very good start. In Europe, frankly, those relationships that I mentioned that we started cultivating at trade shows were seeded very often in meetings and clinical conferences. Looking back at UPMC, we were approached in the booth by UPMC, saying, 'Hey, this is interesting, tell me more about it,' and it led a year later to an agreement. So that’s the same process, Renaud, because of his deep relationships in Europe. His European background and language skills, has been advancing those discussions. As I said, we’re really on the cusp in Germany; we’re waiting for counter signature and that will happen. People are a little bit on vacation, as many of you know, in August. But those have advanced and we’re really confident that the signing, as well as deployment of our staff to support those evaluation sites, will coincide with a good opening in Europe we believe based on what we know today. So it takes time. Certainly, it’s taken several months to get to these levels, but we feel good about it. Does that answer your question, Vernon?

Yes. Perfectly. And if I may follow up, how might an outbreak, for example, affect these sites?

Oh! I’m sorry. I didn’t quite catch your question.

How might an outbreak affect these sites? Obviously, it is fair too cases within your control.

I can't predict that. I will say that each region is different, but based on our conversations with the sites we are in touch with, their operations are gradually returning to normal. Some of them are working through backlogs of procedures, including radiology, and we believe that will normalize and even out. To answer the other question you asked, which I forgot to address, we typically view these evaluations as taking six to nine months, involving about 75 patients per site, comparing our technology to an MRI, similar to what we did in the Robarts Canadian feasibility study. We expect to start these in the second half of the year and anticipate having visibility to the data in the first half of 2021. However, it’s about more than just data. It’s about building relationships with these sites, being recognized as a key opinion leader in countries like France and Germany, being able to reference these sites and show that Dr. Smith or Dr. Jones in your country is using our technology, and demonstrating it on patients for other commercial customers. This offers a multifaceted benefit; it’s not solely about the data. I hope that clarifies things.

Very helpful. And you mentioned expecting initial sales in the fourth quarter in Europe; might we perhaps know what pricing looks like in the fourth quarter?

Yeah. So we have historically indicated that we’re targeting a price point of around $50,000. That was derived from a host of factors, our market research, focus groups from clinicians, the relative price points of other technologies in this space, the price point of the ultrasounds that we hope to enhance, which typically are $100,000 or above. Therefore, we’re targeting that, as you know, and I think what’s inferred in your question is you don’t really know what the price elasticity is going to be until you get in the ground and ask someone to make a purchase. We believe that based on that analysis, based on the hundreds of discussions we’ve had over the years about the potential value of this product, and also how it aligns with other benchmarks that there’s a real appetite for this. We believe that even before a reimbursement code, the economic payback and value proposition since it is associated with our technology with a reimbursable procedure of ultrasound, that there’s an attractive increased utilization of the capital that’s already in the clinician's office. So we’re enhancing that ultrasound. We are driving appropriately increased procedures there, and we believe the payback can be as short as six months for clinicians. There’s a host of factors that we’re looking at, but very encouraged with that. Hope that’s helpful.

Great. Very helpful. Thanks for all the insights and congrats again. It was a very aggressive schedule and you guys did it. Congratulations.

Thank you so much, Vernon.

We’ll take our next question from Ed Woo with Ascendiant Capital. Please go ahead.

Yeah. Also congratulations on the quarter. I was going to say I’m going to love your virtual tradeshow and booth, but how am I going to get my free pens and free phone chargers off from now on?

We’re going to miss that, as well as shaking everyone’s hand and coming home with a cold every single tradeshow. Yeah, we’ll definitely miss that.

Sounds good. And then, going back to your comment about six months to nine months in getting about 75 patients, is that from when you expect to sign the contract or is there still going to be some lead time to get a site up especially in Europe?

Great question.

Where you haven’t had a site built yet?

I believe that six to nine months is a reasonable estimate for the time it takes to start scanning patients. This timeline accounts for various phases such as system setup, staff training, initiating scans, and then analyzing and publishing the data. Unfortunately, we can only ensure that the product functions effectively, as our control is limited. This is not a project we are driving directly; rather, it relies on the independent work of the clinicians conducting the studies, which adds value to the process. I hope that clarifies things.

Great. And do you also plan to have interim data to report?

Not likely. Simply because I think, harkening back to my closing statement there a second ago, these really are independent researchers. So if they feel like sharing something midstream, obviously, we’d welcome and support it. But I don’t want to set people up to think that they’re going to get data beforehand. Now, I also want to be clear; this process we have the initial study up in Canada. So there is some human data. As we’ve always said, we need more, but we don’t necessarily feel we need to wait in Europe. We have the CE Mark. Certain clinicians, including the ones that are poised to kick off the European studies have expressed interest and really are curious and they want to try it. So you can see the snowball effect of having those sites, having people in the country go and visit these reference sites, talk to the clinicians. The commercial power of being able to see something like that in your country can help you make a decision even before data for the early adopters, we believe is compelling.

Great. And then, just talking about the economics of these studies, how much do you have to invest in these studies or reference sites?

Yeah. Good question. So suffice it to say, we’ve not disclosed what we invest there. But I want to be very clear. Unlike a pharmaceutical study that could cost millions and millions of dollars and take two to three years, these are well-scoped studies, which we’ve negotiated with partners, who are not in it to make money. They are in it to perform the best medicine and are on the leading edge of exploring new technologies to benefit healthcare. I think you’ll see that it’s— I’m sorry to dodge the question, Ed, but suffice it to say, these have been very cost effective and we’ll support it by providing our product initially and having a body in the country to support the studies along the way. Then at a reasonable time flip the switch and hopefully that customer or that investigator becomes a commercial customer. We find that to be very compelling.

Great. That sounds good. Then my last question is on your GE partnership; when does the term end?

January 2021. By the way, that is the third time we’ve renewed it with GE since 2016. As you’ll recall, I, Renaud, Mike Thornton, and several others are long-term friends and ex-employees of GE. We have good relationships with GE. As Renaud mentioned, we think it’s a very interesting synergy. One, we get some exposure and introductions from GE, a market leader in ultrasound. GE potentially gets a differentiating technology that it can add on to its installed base of ultrasounds. GE has approximately 30% to 35% of the global market share in ultrasound. It has a lot of ultrasounds in the field and those units turnover typically every five to seven years. So in the meantime, GE and all its competitors enjoy maintaining a relationship, adding value through accessories, new software, new features, including we believe ENDRA’s technology to their customers, saying, 'Hey, Dr. Smith, you’ve got a GE system. Here’s an accessory that works well with it. We have an exclusivity with ENDRA, and it could allow you to measure hepatic steatosis.' You’re doing liver scans today. Here’s something you couldn’t do before measuring liver fat. We think it’s very compelling for GE and certainly for us to be associated with them.

Great. Well, thanks for answering my questions and good luck. Thank you.

Thank you so much. I think, Karen, based on what I see, I think we’re out of questions. I want to respect everyone’s time and just jump in proactively here to thank everyone for joining our call today. We’re really excited with our progress, especially in this tumultuous world, but I think we’re making excellent progress on the regulatory front commercially, as Renaud mentioned, and on the capital front also we feel that we’re making great progress. Thanks to David and our investors. I look forward to updating everyone on the next quarterly call and wish everyone a very good evening.

Ladies and gentlemen, this does conclude today’s teleconference. We thank you for your participation. You may disconnect your lines at this time and have a great day.

Bye-bye.

Thank you.