Steve Lisi: Yeah, there’s no seasonal inventory stocking here for this stuff. That’s just the growth. I mean that’s just — the numbers are what the numbers are. There’s nothing — no seasonality about it. There’s no stocking up. I mean these hospitals, normally, they’re ordering what they need for the next — it depends on the hospital next 30, 60, 90 days, I mean, it’s really individual hospitals will have different needs, but they don’t need to stock up a year of supply of this stuff. This is not how it works. So, it’s just a true growth. So, on the VCAP study, I mean, look, this is safety study. If you’re doing efficacy, it needs to be in one season, safety doesn’t necessarily need to be in one season. Given that we won’t change our date for our pivotal study, to take a little pressure off of my team, we got the approval late in the June quarter last year.
It was tight to get all the sites up and running on time for the season. So, we made a decision around Thanksgiving that we would extend this over two seasons. It was always something that was in our back pocket, just in case, but we just couldn’t get all the sites up and running as quickly as needed. And rather than try to spread ourselves then, we decided to focus on a couple of core centers, and we’ll spread it out. I think it’s the best way to go, trying to get it done in one season, given the short time frame. We gave it a shot. I don’t think we didn’t, but you had to make a decision before we really got into the swing of the season on that, and that’s what we did. So, it was always something we considered internally. Again, as long as it doesn’t push out our pivotal study start, I don’t think it’s a problem at all.
I think it’s actually the right thing to do given the situation.
Les Sulewski: Got it. That’s helpful. Maybe from a high level, could you kind of quantify the pecking order, your pipeline strategy, anything that could be pushed back further if there’s risks involved, whether it’s financial or time? Any kind of color around the high-level strategy process and thoughts around the pipeline?
Steve Lisi: I mean I think we’re pretty much showing everybody what we’re doing. I mean VCAP, cancer, autism are the ones that we are working on right now. Again, autism is relatively inexpensive compared to the other two programs, obviously. I mean it’s preclinical. It’s not costing us a lot. And I think once getting it to first in humans for that one in ’25 and getting some data, I mean, that’s not a high cost. I mean, when we start to go into maybe Phase 1b or Phase 2a for that program, that’s when the cost will really kick in. But until then, it’s not overly expensive. NTM is our next program up. I think we’ll be meeting with FDA before the end of this year, calendar year that is, to get some ideas from them and work with them on a trial design.
Hopefully, that will be a pivotal trial design. That’s our goal. COPD, obviously, has not been moving forward. That’s evident in our corporate presentation. So that’s the one that’s kind of just sitting there on hold at the moment. Bronchiolitis also on hold. I think that’s been clear for the last couple of years. So, I think it’s very clear what our priorities are in the pipeline and where they are. So, I don’t know if there’s — I don’t know if I answered your question, but I think I gave the rank there.
Les Sulewski: No, that’s helpful. Thank you for that, Steve. Appreciate it.
Steve Lisi: Sure, yeah.
Operator: Our next question comes from the line of Yale Jen with Laidlaw & Company. Please proceed with your question.
Yale Jen: Good afternoon, and Steven, thanks for taking the questions. Maybe to start on the LungFit PH. Have you guys actually reported what the total number of hospital has been using the — including the three multi-contract ones that to be used or already using the device?
Steve Lisi: Yeah. We haven’t said how many hospitals are out there. We don’t want to give any information out to the general public about how many hospitals we’re in or where they are or who they are. So, we’re not going to comment on that. But…
Yale Jen: Okay. That’s fine. That’s good. Maybe just a little bit more color in terms of the software update in terms of the specific general aspect of the updates, which makes the — make a significant difference compared to the previous — earlier one.
Steve Lisi: Yeah. So, just to little tiny background. Remember, we froze the design of our system in early 2019. So then we had this lovely global pandemic. So, it took a while to extended the time to submission, extended time to approval. So, there’s a lot of things that three-and-a-half years of this — of no changes in our system where the rest of the world is having changes makes it difficult for us to catch up right away. So essentially, this software update gave us optimal accuracy with our sensors for monitoring and our delivery. It gave us compatibility with all the systems out there that are important. I would say all the systems, I don’t think we’re incompatible with anything at this moment in time. That’s very important for us to be compatible with all the ventilators and that are out there that are used.
There’s a little bit of noise from some of our compressors, so the software is able to reduce that noise. I don’t think that was a big deal, but certainly, nicer for the hospitals to have that, and we’re able to improve on the alarms. So that’s really it. I think the compatibility and the sensor accuracy are probably the two biggest things that it did for us. So, that’s it. I mean I would say those two things are really the driver for why we did this. And a little frustrating that it took as long as it did, but it’s here now, and the feedback is as expected. Everybody is very pleased and happy with it. And like I said earlier, we’re getting a lot of — a lot more interest and a lot more looks from hospitals since we displayed this in early November at the American Academy of Respiratory Care.
Yale Jen: Okay. Maybe my last question here is that in terms of the NTM, just a company recently, AN2 Therapeutics, has a pause there Phase 2/3 study of a similar indication at this point based on I guess the efficacy as they indicated. Do you see any impact on your development in the LungFit go for this indication? Or any comments on that?
Steve Lisi: I’m sorry, what company was it that you were mentioning? I didn’t hear the name.
Yale Jen: It’s called AN2 Therapeutics and pause there.
Steve Lisi: Yeah, AN2 Therapeutics.
Yale Jen: Yes.
Steve Lisi: Yeah, I believe that these are using an antibiotic, is that correct?
Yale Jen: Right. And basically, they suggest that they have subpar efficacy, at least that they hinted in their press release and that’s the reason they paused the Phase 2/3 study.
Steve Lisi: Look, anything that’s positive for these patients is a big win. So, I’m very happy to hear that they may be able to help patients, that’s fantastic. So, it’s more options for these patients. They have very few. So, I think it’s a good thing. And I think that it could even make the path easier through FDA, perhaps we have to see. We have to wait and see what happens with them. But right now, our studies are being done on top of antibiotic therapy. So, I think we would just be used together with antibiotics. I don’t know if we’re going to be doing any monotherapy studies in the near term. So, at this point, any success with antibiotics is great for us, great for patients. Nitric oxide enhances the efficacy and certainly helps with the tolerability of antibiotics as we’ve seen in our studies. So, I think they are all positive.
Yale Jen: I think they actually — I think they paused their study because they don’t have enough efficacy on their study.
Steve Lisi: It was a failure, Yale. I hadn’t the data.
Yale Jen: Yeah.
Steve Lisi: So, it was stopped for negative reasons?
Yale Jen: For negative reasons. It’s not the early stop.
Steve Lisi: Okay. Well, that’s too bad again, these patients need options. So, we’ll be hoping that things would work for them. So, it doesn’t change our strategy at all. I mean, we’re just going to be used with existing antibiotic background therapy. If there’s any way we can go upfront due to [indiscernible] patients as a monotherapy, that would be great. But at this point in time, I think it’s a little early to do that. But we’ll speak with FDA, you never know. But in any case, this doesn’t change our strategy. We are certainly a unique mechanism of action for treating NTM lung disease. So, it’s not going to change the way we look at things. Our data speaks for itself. I mean we had very strong data in the last study we did, so we’re pretty excited about it.
Yale Jen: Okay. Great. I appreciate it. Congrats on the progress at this moment.
Steve Lisi: Thanks, Yale. Appreciate it.
Operator: Our next question comes from the line of Marie Thibault with BTIG. Please proceed with your question.
Sam Eiber: Hey, good afternoon. This is Sam Eiber on for Marie. Thanks for taking the question this afternoon. Maybe I can start on the CE mark as we get closer to approval here. Just any thoughts on how to think about the ramp both in Europe and APAC? Any target markets that you’d highlight for us, revenue contribution? And anything included in the fiscal ’25 guidance for international at this time?
Steve Lisi: Yeah. Sam, I don’t think that we’re going to have anything from the European Union in ’25. I mean, we still have to get the CE mark, then we’ll ink a deal and then we’ve got to ramp things up. It takes time in Europe. Australia, New Zealand, I think that the TGA approval in Australia will lag the CE mark, give or take, 90 days. I mean you can’t be sure, but that’s a rough estimate, and then we’ll have to ramp things up. So, if there’s any effect from there, it would be minimal in ’25, fiscal ’25. So, I wouldn’t think it would be very impactful. I think that this is more of a fiscal ’26, ’27 impact for us on both fronts.
Sam Eiber: Okay. That’s helpful to think about. And maybe I can just use my follow-up here on, some of the comments around adding to the field team. I guess just any way to quantify or think about that ramp here, and obviously, incremental contribution to operating expenses in the back half of this year and fiscal ’25?
Steve Lisi: Yeah. I mean we already budget for this, right? In our budget, in our forecast, we already have people being added. And what we’re doing now is adding based upon the interest in what we see coming our way, right? So, we need to be prepared for this. We need to bulk up our team a little bit for the interest in our system. So, it’s in our budget. It’s not going to change anything. Whether we are one or two people ahead or one or two people behind in a certain quarter, it’s all going to smooth out over the next four, six quarters. I mean we’re probably going to be where we are in four to six quarters. Just each quarter might be a little bit different in terms of who starts when. But this is all part of the plan. It’s in our budget. It’s in our guidance for burn, it’s all there. This is nothing new. It’s not going to increase our expenses. I mean it’s exactly what we expect to happen when we see the demand coming, we’re going to bring people on.
