Company Interview / EBR Systems pacing FDA approval

John McCutcheon CEO of EBR Systems (ASX:EBR) shares that their financial performance aligns with market projections. The recent submission of their final PMA module to the FDA marks their biggest milestone since going public. John express his excitement about this step and its significance for investors.

John explains the rigorous testing and negotiations involved in finalising the submission, despite past delays. EBR Systems (ASX:EBR) is set for commercialisation, with leadership and a targeted launch strategy in place, aiming for FDA approval by Q1 2025 and subsequent commercial launch.

With $81 million AUD in the bank, EBR Systems is well-capitalised for the approval process. John outlines increased operational expenses due to testing for FDA approval. The addressable market in the US is $3.6 billion, aiming for sustained growth without hitting market limitations.

Full unedited transcript:

0:00

Financial performance is exactly as has been reported on and projected by the analysts and and the guidance that we've given to the market. So we're spot on there. The big news this quarter or the last couple of weeks is that we submitted our final module, PMA module, to FDA. So this is the biggest milestone we've met in the last two years, probably since we went public. And so very, very positive, exciting news for us and for our investors. Okay. Well then tell us how and why this should be exciting for investors because that's a submission to the FDA. It still takes quite a long time.

0:39

Yeah. Well, just getting to this point has been a major milestone. There's a lot of testing that goes in a lot of negotiation with the FDA. And we did disappoint a year ago when we announced a delay in that submission. So we're happy now that we rectified that and we're back on plan. And this is the final step to getting to commercial launch. So at this point, it starts the final clock for FDA to review the full package and come to a decision. And we expect to commercialize now in early 25, we expect the FDA approval in the first quarter of 2025. Okay. So that is big news when you're talking about approval and commercialization. How well are you set for commercialization? Because getting approval is one thing. Having systems in place to sell, to get the product medtech into the hands of those that will use it best is a whole nother kettle of fish.

1:35

Yeah, it takes quite a bit to to commercialize a medical device like ours. We are prepared. We've got leadership in place and and management in our field, in the US field, Salesforce. And we're going to do a kind of a targeted launch initially. So you sort of test how you're going to launch it. And so you go to targeted accounts system or hospitals that have worked with us before, so we're not new to them and vice versa. Those that have used the product in the clinic or in the clinical study, and so they're familiar with it. And this will help us kind of test our launch model, get through the administration, administrators and process of getting it on the shelf, uh, getting reimbursement coverage. And so then we'll scale gradually and then more aggressively once we've got some experience under our belt. Um, so, um, what is the cash position like? Do you have the funds to take you through that

2:35

process once, presumably you do get approval from the FDA.

2:40

Yeah. We had 81 million, uh, Australian dollars in the bank as the at the end of last quarter. So we're very well capitalized, and that should get us through FDA approval and into the early part of our launch. And then that would then be the basis for future financings. What about costs? Because I note that operational expenses did rise. What's driving that?

3:05

Most of the testing for FDA approval. So there's as I mentioned, there's a lot of testing that we have to do. Our system is very complicated. It's got hardware, implantable electronics, it's got software components, it's got disposables. And each one of those elements of the system have to be tested to a very high degree, very rigorous degree for the FDA. And so there's a lot of outside lab costs that go into that. And so we've absorbed those over the last quarters. And now we're, you know, kind of past that peak phase and then moving more in execution. And so subject to this FDA approval, um, you're looking to launch stateside primarily. Do you have any concept? I mean, we can talk total addressable market, but what's the Tam and what's the realistic, you know prospects for for the product.

4:01

Well, the Tam in the US, we expect it to be $3.6 billion US. And as you said, that's the kind of the asymptote or the the size of the addressable market with the indication we have when we launch. What that means for us. So is that as you're growing, you're not going to be governed or limited by that Tam. In other words, we should be very high growth revenue growth company, similar other medtech companies that have gone from zero to, you know, hundreds of millions of dollars in, you know, in, in a reasonable amount of time without having to worry about running out of patience or running out of opportunity. So you're not going to hit that, kind of that, that the soft part of the curve, you can kind of keep growing for some time with the current technology and the current indication.

4:54

Well, I've got to say EVR systems has slipped under my radar. I was just checking share price performance year to date, up 64, close to 65%. So presumably to help drive that share price higher, you'll have some updates coming through on the the process of this FDA approval. Is that correct?

5:14

Yes. And I think that the stock run up was likely. I'm speculating, but likely due to people anticipating that we're going to make this announcement. We had been signaling that we were confident that we would get the submission in. And so I think that was built into the, you know, the appreciation this year. And then as we get closer, as we get things that we're able to announce from FDA, we'll we'll start sharing more signals and we'll be able to be more precise on the timeline. So right now we're we're bracketing it based on the FDA's kind of statutory obligations to review these. But once we get further into the process, we'll get actual feedback from FDA, and we'll be able to titrate in exactly when we'll be getting approval.