Onward Medical N.V. (ONWRY) Q3 2026 Earnings Call Transcript

Good day, and thank you for standing by. Welcome to the Onward Medical Q3 2026 results webcast. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 1 on your telephone. You will then hear an automated message advising And your honey's rice. To withdraw your question, please press star, one, and one again. Alternatively, you may submit your question via the webcast. Please be advised that today's conference is being recorded. I would now like to hand the conference service to your speaker today, Sebastian Cross, VP Communications. Please go ahead.

Thank you, Sandra. Good morning, good afternoon, everyone, and welcome to Onward's webcast. Following the publication of our Q3 2026 results earlier today. Before we get started, let's take a moment to review our disclaimer. The presentation includes forward-looking statements which should be considered with the appropriate level of caution as outlined on the slide. Note that the deck and the recording of the webcast will be available on our website after the call. Today, I'm joined by Dave, CEO, Ali, our CFO, and Shari, our Chief Clinical, Regulatory, and Quality Officer. We'll start with an overview of our third quarter results and key business highlights before opening the floor to questions. You may ask them verbally or submit your questions through the Q&A module on the platform. With that, I'll hand it over to Dave.

Thank you, Seb. Welcome, everyone. I think our first half results call was less than 60 days ago. And so, today, we're going to deliver a compact and efficient set of remarks to you, starting with the highlights. So, 88 Archex systems were sold or supplied via paid evaluation in Q3. That's 120% year-over-year growth. Thirty-one participants were enrolled and 16 centers activated to date in the Empower BP Global Pivotal Study, so we are well-positioned to deliver against expectations for a spring 2027 interim data readout. We advanced several of our AHRQ-IM clinical feasibility programs. Making important progress in Arc-IM mobility, incontinence, and in using Arc-IM to address blood pressure instability and Parkinson's disease. You're going to hear more about that progress from Sherry later. And we achieved 2.5 million euros in revenue and exited the quarter with more than 73 million euros in cash. Let's go into the details now, starting with ARC-EX. And commercial uptake. So as I mentioned, 88 Archiex systems were sold or under paid evaluation in Q3. That's 120% year-over-year growth in units. We are now in, so Archiex therapy is now offered in more than 150 U.S. clinics and VA facilities, and more than 170 clinics. I mean, this is really rapid penetration if you consider that full launch in the U.S. has been five quarters and about two quarters in Europe. So we're very pleased with how the marketplace is adopting ArcEx therapy. A reimbursement is an important growth driver now and going forward. So just wanted to walk you through how we're approaching that. We're starting today with customers and customer types where payment already exists. So this includes the VA system, which is the U.S. military healthcare system, and then self-pay. And then earlier this year, we stood up a market access program. To enable and support case-by-case submission to other payers. And that now includes Medicare. So in Q3, CMS confirmed DME as our category, and they assigned a miscellaneous HCPCS code to enable case-by-case pursuit of reimbursement within Medicare. So that was an important development for us. So using these case-by-case pursuits with private payers and Medicare, we're building real-world evidence history and claims history that will enable us to unlock broad reimbursement over the next couple of years. Moving on to Arc IM. I would like to show you actually not Arc-IM, but our general pipeline overview, and this really illustrates that Onward is a platform technology company. A lot of companies say that they are. We are making that very much a reality, and I want to focus on the use of Arc-IM as a platform. Here in the middle of the slide, you can see five different indications. That we're pursuing, and Sherry is going to tell you about important progress made in the last quarter in four of those. So, using Arc-IM to pursue blood pressure instability indication in the spinal cord injury population with the Empower BP clinical study, using Arc-IM to restore mobility in the spinal cord injury population in the Iger study, using Arc-IM to stabilize blood pressure in the Parkinson's population with funding from the U.S. Department of Defense. And using AHRQ-IM to restore bladder function in the STI population using funding from the Christopher Reeve Foundation. Take it away, Sherry.

Thank you, Dave. So I'm pleased to report the progress that we've made on the EMPOWER-BP pivotal clinical trial with AHRQ-IM. We've seen strong momentum building. We have 31 participants enrolled in the study to date. We're actively recruiting across 16 different sites in the U.S. and in Canada. We've recently activated a site in Germany, which is our first site in Europe. Enrollment is on track to achieve our interim analysis in spring of next year, with the regulatory approval anticipated by the end of 2028 and the commercial launch to follow. And on other clinical milestones beyond Empower VP, we've seen meaningful progress across multiple of our AHRQ-IM clinical feasibility programs. For STI mobility, we've achieved the first implants in both chronic and the acute cohorts of the IGR study, and the subacute cohort is really meaningful because that allows the treatment of patients early. in the recovery process soon after the initial injury. Which is the period of time where there's the greatest potential for recovery from the injury. So we're excited to see that program moving forward. We also have the first in human use of the Arc-IM therapy to restore bladder control in the Leboid study. And that's significant because bladder function consistently is ranked among the highest priority recovery goals for people with STI. And we've also treated two additional participants in the PD-HEMON study, and that study is designed to evaluate the ARC-IM in Parkinson's patients. for addressing blood pressure and stability. And that's relevant because of how we're able to demonstrate the applicability of the Arc-IM therapy in populations like Parkinson's that's beyond the STI area of focus.

Thank you, Sherry. And I want to point out here, you can see we have grant support for each of these important initiatives. That allows the company to focus our use of capital in a very efficient way on just two indications, so commercializing ARC-EX for upper limb function and then completing the Empower BP study so ARC-IM could be approved for blood pressure instability. Meanwhile, we're advancing the pipeline with the support of this non-dilutive funding.

So, let's turn it over to Ali to talk about financial highlights. Thank you, Dave. Revenue in the third quarter was 2.5 million euros, of which product revenue was 2 million euros. Our cash burn during the quarter was 8.1 million euros, which includes the effect of the refinancing of our senior secured note, which allowed us to put some Money on the balance sheet, as well as cost discipline. Our current cash balance at the end of the third quarter was 73.4 million euros. Back to you, Dave.

Thank you, Ali. Very good. So moving on to the outlook here, and this is a slide you're used to seeing. We've completed many of these milestones, so that reflects our execution over the course of the year. Looking ahead over the next two to three quarters, I would focus really on the middle row and the far right of that middle row. This is the most important piece of NUSLO for us, which was the top-line interim analysis for Empower BP. As Sherry mentioned, we remain very much on track to deliver that next spring, given that we now have 16 sites enrolling and 31 patients enrolled. I would also expect, as usual, that we'll make announcements around commercial milestones and we'll also publish BCI-related news as well. So more to come there. Why don't we open it up for questions?

Yes, maybe Sandra, do you want to remind everyone how to go about it?

Thank you. As a reminder, to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. To answer your question, please press star one and one again.

Thank you. I see a question from Ed. I think we can open his line.

We will now take the first question from the line of Ed Hall from Stifel. Please go ahead.

Thank you very much for taking my questions. The first one just on Iger, actually. Interesting to see the sort of the investment here. What would justify maybe a pivotal investment from your side? What would you guys want to see there? I mean, that would be my first question. And then sort of on Empower BP, sort of the progress from Let's say enrollment to implantation. Can you just walk through those steps and how that is progressing? And then finally, just on Archiex, sort of looking at at least near term on Q4 and the sort of the visibility, if you could just highlight sort of the methods and ways you have visibility on Q4 revenue. Thank you.

Sure, thanks, Ed. So Iger, it's an important study for us. You may recall that the company was founded to develop purpose-built technology to restore walking or mobility in the paralyzed population. And the early research was done using highly modified pain stimulators, but they weren't able to deliver the envisioned therapies. And so that's why Onward was created, and Arc-IM is the product of that founding. And we started using Arc-IM back in, I think it was 2023 for the first time. And even though we're pursuing blood pressure instability as the first indication, just out of pragmatism, we're really pleased to return to the company's founding purpose to restore mobility after paralysis. And what Iger is, and we've done some early feasibility work and mobility already in the STEMO trial and whatnot, but Iger is the first time we're using our Arc-IM device in this population, and we are seeking to define the terms and to inform the design of a pivotal study. As Sherry said, the other really important development here is for the first time ever, we've implanted somebody within six weeks of an injury. So this is before they have atrophying of their muscles, when they lose balance, coordination, and everyone believes that the long-term outcome is going to be better with earlier intervention. So really important study for us. In terms of how and whether we would invest in a pivotal study, I think that we would like to invest in a pivotal study for mobility, again, because it's the founding purpose of the company. And so as the company continues to grow and eventually we generate our own cash, we can invest in more things like this. But I would expect this to be the next indication after blood pressure instability for ArcIM. That could change if something amazing presents, but that's the way we're thinking about it today. Okay, second question is, and I think you're probably getting to yield, and so, like, what's the process between enrollment and implant? What we're observing, Ed, is that the sites are doing a lot of pre-screening, so the yield from enrollment to implant is fairly high at this point, and so you can take confidence in these enrollment numbers. You can see they've increased considerably in the last 60 days, you know, from 22 to 31. And as we add sites, the enrollments are just going to accelerate. And Sherry mentioned that we added our first European site just in the last week in Germany. We expect the other European sites to be activated in the coming weeks, so we'll be at full complement What, 19 or 20 sites? So, the enrollments are really going to accelerate, which is why we can speak with confidence that the expectation around the top-line interim data remains very, very sound for next spring. As far as Q4 is concerned, we mentioned during the last call that there were a couple of things that were not impacting demand but might impact the timing of revenue. One of those being this market access program that we stood up. So, this is to enable patients to pursue reimbursement coverage for ARC-EX through private payers and, again, now through Medicare. And those patients who did want to self-pay for the device, they want to try insurance first. And so that's going to take some time. And that's pushing some of the demand into early next year. The other thing that occurred, and we described this phenomenon during the first half call, was, and it's good news, that the VA is increasingly adopting ARC-EX. We're in now two-thirds of the VA hub centers in the U.S. And as a result of that, the national VA administration has issued guidelines for how RTX should be introduced into practice, and as part of those guidelines, they enlarge the paid evaluation period from two months to three months. So, that has also pushed out the, let's say, the sales cycle for VA home use, and that's going to impact, we think, Q4 and to some extent push revenue into next year. So, it's difficult for us. We don't give guidance. People like you have models, and we normally refer investors to your model. So, I'm going to stick with that convention. Bye-bye.

Thank you. We will now take the next question from the line of Matisse Gerdsdanao from KBC Securities. Please go ahead.

Sure, go ahead, Matisse.

Yeah, thank you. Thank you for taking my question, and congrats on the quarter. I just wanted to know something more about the progress of ARC-BCI and the ARC-IM for mobility. When do you think that a pivotal trial could be initiated now? And also on ARC-EX, how do you see the sales evolving in 2027 as well? Do you have some visibility there, how pricing could evolve and volumes could evolve, given that you're probably going to expand worldwide, and how that will impact? Thanks.

The latter is for Archiex, pardon me, I just want to clarify. Yes? Yes, indeed, for Archiex. Yeah, for sure. Yeah, I mean, for Archiex and Archiex Mobility, we want to get the insights from Iger, and those insights would be which are the patients who are most likely to respond. And how do we design a study with very solid endpoints that are going to resonate with the regulators and with payers? So I think we want to give that study time to fully enroll and maybe get to 8 or 12 patients and take those data and combine them with what we already have for mobility through STIMO, for example. And so, I would imagine we can. Start that pivotal study at some point after completion of EmpowerVP and any follow-up study that we would like to do, continuation study that we would like to do to continue to accumulate data that will be compelling for payers primarily. I'd probably say like 20, 20, 8, 9 timeframe, not to be too specific on that, Matisse, at this point. We'll get more specific as we advance in the calendar. As far as ARC-EX is concerned and how we expect pricing to evolve, I think like anything else, pricing is likely to come down somewhat if you go out three to five years with ARC-EX. But we still feel very good about that product's ability to generate favorable economics because there are a lot of opportunities for us to reduce costs. And so, you'll see us reduce COGS commensurate with price reductions, and so we remain confident that the gross margins on that product will be 80% or so on a sustained basis.

Okay, thank you. One last, maybe. Also on the Empower BP trial, the spring 2027 interim readout, what should we really expect from that readout? Yeah, thanks. If you could get some...

Sure, Sherry will take that.

Sure. For the interim analysis in spring of 27, we'll expect to have a decision on the final sample size of whether we can stop at 60 or do we need to go to the 112. So it will be an assessment telling us if there's sufficient power in the sample size to meet our primary endpoint, and that's the decision we'll get at that point in time.

Thank you. Okay.

I see David on the call. We can open his line.

We will now take the next question from David from the Groove Peter Kamp. Please go ahead.

Hey, thank you. Congrats on the progress. Maybe question for Ali looking ahead to 2027. If you could maybe comment a little bit on... We should expect OPEX to evolve in the year to come, more specifically R&D and sales and managerial, perhaps in light as well of some additional hires you might envision. Thank you.

Thanks for the question. So the way we would think through it is, of course, we don't provide guidance on 27, but I'd think through it in a couple of different ways. If you look at what we've spent this year, including some of the pivotal studies that we're running, some of those should then be tailing off as we go into 2027. I think if you look at our run rate of the business right around in the first half of the year, I think that's probably a better representation of where we are versus this third quarter where we had a few items that I would say are unusual in terms of just the amount of capital that we spent or we put on the balance sheet. So I'd use that as the guidance of kind of where you think we're going to be in 2027. But of course, we're going to look at what opportunities we are pursuing and what investments we need to make. As you've heard us say, we think we have most of our team in place for the business across the clinical regulatory and our commercial footprint. There may be a few additions there, but for the most part, we believe we are staffed to execute on our plan in 26 and beyond.

Okay, perfect. Thank you. Thank you.

There's one further question on the audio line.

Yes, I think we can open Ed's line. Thank you, Sandra.

From Ed Hall from Stifel. Please go ahead.

Perfect. Thank you. Sorry, just quickly following up. Just on the placements in the clinic that you guys are doing, I'd be curious to sort of understand how the potential reordering could occur maybe into the future or maybe how you're seeing it today. I assume that there will be certain high-volume centers that are maybe purchasing more than one device, but it would be good to try and understand that dynamic as well a bit further.

Yeah, thanks. Interestingly, one-third of U.S. clinics now have at least two devices, so we are seeing clinics invest more fully in the technology so they can offer the therapy to patients, and we continue to see wait lists, so we think that dynamic will continue.

Very clear. Thank you very much. Thank you.

No more questions on the audio.

As a reminder, it's star one and one, or if you wish to ask a question on the webcast, type it into the box and click Submit. Handing over to you for webcast questions.

Thank you. Thank you for your questions on the Q&A module. I see one from Clément about Archex. When could we expect the first sales in home use in Europe? And how many clinics are using RTX off-label?

Yeah, so the first commercial sale of RTX personal unit in Europe is something that we forecast as part of our upcoming news flow. So I'd say stay tuned on that one. And then in terms of off-label use, yeah, we're a very conservative company obviously, and so we don't do anything to promote off-label use. Having said that, reports or observations are that 40, even 50 percent of the use is off-label today, which on one hand is encouraging. It means that there are opportunities for label expansion with that device. And we're trying to pursue that in a very efficient way, leveraging investigator-initiated studies and leveraging clinical data and ways to enlarge the label that might not require a pivotal study. So I'd say stay tuned on that as well. We're very keen to expand the label and also learn from the clinical experience that's occurring out there in the real world.

And Cléron, as a follow-up on cash burn, could we provide some colors about our OPEX for 2027? Yeah.

Yeah, I think we answered part of that question earlier, so that really was – Saying we don't guide to 27, as you know, but what we have indicated is if you look at the first half of our usage, it's probably a more representative way to look at the business for his modeling purposes.

Thank you. Still on the platform, a question on Empower VP. What's the current plan total number of participants? Previously 112. Has the enrollment experienced any delays, and if so, what's the reason? Any impact on the overall timeline of the study?

Yeah, I think the study is sized for up to 112 patients, but we're leveraging our breakthrough device designation and frequent interactions with the FDA, their study design built in the opportunity for an interim analysis that would enable us to conduct a smaller study, as Sherry said, and we'll have a view on that in the spring. In our view, we've not experienced delays. We've been setting expectations for the past several quarters that we would have this interim analysis in the spring, and there's been nothing that would cause us to move off of that expectation.

Another one on the platform about RTX. How do we incentivize clinics to promote the sale of RTX for home use? And is this creating any conflict between revenues in the clinics and at home?

Yeah, it's a good question. I don't think that economic incentives or disincentives are in any way impacting care patterns in the U.S. These are the people that care for folks with spinal cord injury are very patient-oriented. They really care about helping these people and their families. They've long awaited something like ARCHE-X that could truly help these people. And so, we're not observing any of that kind of dynamic. In addition, as I mentioned, and some of the analysts have done survey work here, there are significant wait lists at these clinics. And one way to alleviate that pressure, which is a good thing, is to refer for home use. You know, to not do that requires maybe adding facilities, adding staff, you know, so it can be challenging for these clinics. So, again, we're not seeing any of that resistance to prescribing for home use.

And the last question about Archiex is about the dynamics observed in Q3 versus Q2 and Q1 this year. Any color on this?

Yeah, I'll reiterate what I said during the first half call and earlier in this call, which is we, in a way, expected this. It's a result of two things primarily. Our standing up of a market access program. To support and enable case-by-case reimbursement pursuits with Medicare and private payers, so people that would be self-paying for the device want to try to get insurance coverage first, and this takes time. The second thing is, given our adoption path within the VA, the National VA Administration issued guidelines for implementation of ARCHEX therapy in the VA, and they prolonged the paid evaluation period from two to three months. So that also has pushed out some of the demand. So for us, still a very strong quarter, 120% year-over-year growth, two and a half million euros. I'm very happy with Empower BP and its progress, and we're going to keep executing like we have been.

Thank you.

And no more questions on the line, I think. We can close the call.

Thank you, everyone, as usual, for joining. Thank you, Sherry and Ali. Thank you, Seb. Thank you, Sandra. And please follow us on social media, Seb.

Yes, we're there.

All right. Thank you, everyone. Bye.

Concludes today's conference call. Thank you for participating. You may now disconnect.