Good day, ladies and gentlemen and welcome to the ENDRA Life Sciences Fourth Quarter 2019 Financial Results Conference Call. All lines have been placed on listen-only mode and the floor will be open for your questions and comments following the presentation.At this time, it is my pleasure to turn the floor over to your host for today, Mr.

David Wells, ENDRA's Chief Financial Officer. Sir, the floor is yours..

Thank you, Jess. Good afternoon and welcome to ENDRA's fourth quarter and full year 2019 business update and financial conference call. We issued a press release this afternoon.

For those of you who don't have a copy of the release, you can access it in the Investor 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 facts, 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 approvals 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 2018 fiscal year filed with the SEC to get a better understanding of 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. And thank you for joining us today to review ENDRA fourth quarter and full year 2019 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 today's agenda.

First I'll highlight our recent achievements and David will review financials. I'll then provide an update on key topics and expectations followed by Renaud who will provide additional commentary on precommercial activities with a focus on Europe.

And finally we'll open the call for Q&A.Before I begin I want to acknowledge all the people who are dealing with COVID-19 as a patient, parent, a family member or friend. Our thoughts and well wishes are with all of you and our particular appreciation goes out to the front-line caregivers providing help to those in need.

These are unprecedented times.Like you we herein are inherently recommended public health guidelines on social distancing and have implemented remote work protocols for our staff.

While this has required some adjustment I am proud to say that our team has all transitioned to a new normal and we remain unified in our commitment to make a positive impact on the care of patients with chronic liver disease like NAFLD and Nash for better diagnosis and monitoring.S let's focus on recent progress and what's ahead.

As many of you know ENDRA is the pioneer of thermal acoustic enhanced ultrasound known as TAEUS. TAEUS will allow clinicians to visualize tissue in ways similar to MRI but at 50 times lower cost at the patient bedside.

Our goal is to develop applications for the TAEUS technology in areas of high unmet clinical need and we've developed a TAEUS application to assess and monitor elevated liver fat which is associated with nonalcoholic fatty liver disease also known as NAFLD and non-alcoholic stay out of hepatitis also known as Nash.These often decent amount of chronic liver conditions affect over 1 billion people globally and are currently no practical diagnostic tools available to clinicians.

We believe our TAEUS liver fat application is well-positioned to address the unmet need by enabling clinicians to noninvasively assess liver fat with a safe cost-effective procedure at the point-of-care.ENDRA remains highly focused on bringing TAEUS liver fat application to market in 2020.

2019 was a productive year for ENDRA and has given us strong forward movement.

Key 2019 highlights include, we successfully completed the first inhuman feasibility study with the Robarts research Institute, which provided data required to support first regulatory filings, informed a number of technology improvements and helped elucidate the initial clinical use case for TAEUS measurement of liver fat.We also established two clinical partnerships with Rocky Vista University and the University of Pittsburg Medical Center widely regarded institutions will conduct independent clinical studies that will gather data on use of the device with our target patient population results of which will strengthen our clinical database and support our commercial activities.In 2019 we expanded our leadership team in key areas with the addition of Chief Commercial Officer, Renaud Maloberti and Vice President of Engineering Programs Amy Sitzler.

We built and strengthened relationships with a number of clinicians and key opinion leaders in Europe and US and developed our go to market strategy. We bolstered our strong intellectual property position.

Our IP portfolio currently stands at 67 assets defined, filed, issued and licensed.We also implemented in 2019 a companywide quality management system and secured our ISO-1345 certification. And finally we submitted our technical file for CE Mark review to our notified body for the TAEUS device in Europe.

We enter 2020 with notable momentum and enthusiasm for the year ahead which has and will include a number of important regulatory, clinical and commercial milestones for the company.Already in Q1 we secured our CE regulatory mark approval for the TAEUS fatty liver imaging probe also known as flip charging NAFLD and NASH.

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.

ENDRA is now registering it's CE mark in each initial target market including Germany and France to enable commercialization of the TAEUS product in each market.

Renaud will provide more details on our commercialization strategy in Europe in a few minutes.In Q1 we also renewed our collaboration agreement with GE Healthcare extending the agreement's term to January of 2021.

Under the terms of the agreement GE Healthcare will continue to support ENDRA's commercialization activities for its TAEUS technology for use in the fatty liver application by facilitating introductions to GE Healthcare ultrasound customers.

In return ENDRA will afford GE certain rights of first offer with respect to manufacturing and licensing rights for the liver application.And finally in Q1 we expanded ENDRA’s Scientific Advisory Board with the addition of Dr. Raza Malik, Director of Hepatology and Associate Chief Division of Gastroenterology at Tufts Medical Center. Dr.

Malik joins Dr. Gambhir from Stanford, Dr. Ruben from the University of Michigan and Dr. Dow [ph] from Rocky Vista University as a distinguished clinician and advocate for noninvasive and clinically practical tool to assess and monitor liver fat.Dr.

Malik's addition to the team will aid us in delivering the TAEUS clinical value proposition to the worldwide liver health community which is essential as we enter the commercialization phase of TAEUS this year. Now let me provide more detail on other key topics.

Last week as you saw we provided updates on our EU commercialization plan and our FDA regulatory timeline.With the CE mark in hand ENDRA is mobilizing it's EU commercialization efforts over the coming months focused initially on establishing clinical reference sites in target European markets as well as deepening our clinical relationships in a number of ways including initiating TAEUS product marketing communication campaigns, implementing digital education tools and education events as well as participation in key hepatology and radiology conferences.Like other companies in our industry, we are anticipating the potential for conference cancellations at this moment due to COVID-19 and will be able to deliver plan presentations and maintain awareness in those scenarios to our target audiences through digital communications including webinars and other learning tools.

These are all important activities to support the commercial ramp in Europe and Renaud will provide more details in a few minutes.Regarding our regulatory pathway in the US we and our regulatory advisors remain confident in our strategy to pursue 510K clearance from ENDRA's TAEUS liver system and we're in the process of finalizing a 510K package with additional testing that we believe will bolster our submission.

In early 2020 ENDRA became aware of a recently cleared 510K submission for devices that ENDRA believes offers regulatory advantages as a predicate device to TAEUS, compared to what we had previously been able to utilize.As a result we made the decision to invest a modest amount of additional time in testing to support demonstration of substantial equivalence to this new predicate which we believe will yield the strongest possible FDA submission and further mitigate regulatory clearances.

We view this as time well spent.

We anticipate filing the 510K application to the FDA during the second quarter of 2020, which will position us to receive FDA clearance of the TAEUS system in the second half of 2020.We're working closely with our current US clinical evaluation sites Rocky Vista and the University of Pittsburg Medical Center and making final preparations in support of their respective clinical trial initiations.

These sites will using TAEUS systems with design elements that extend the CE Mark platform for compliance with US regulatory standards and include a number of recent enhancements and required features and will also be included in our upcoming fact and case submissions.Recent communications with these sites has confirmed their enthusiasm to move forward with clinical testing but we're also acutely aware that COVID-19 may have an impact on existing and new clinical trials at least in the very near-term as healthcare facilities refocus resources to fighting this pandemic.

So we work closely and collaboratively with our clinical partners if and when they need to make adjustments to their research plans.

Bottom line when the healthcare facilities are ready ENDRA will be ready, we'll keep you updated as best as we can in this rapidly evolving environment.I'd now like to turn the call over to David to review the financial results for the fourth quarter and full year ending December 31, 2019.

David?.

Thank you, François. I will now provide a summary of our reported full year 2019 financial results. We had no revenue for the year ended December 31, 2019 as compared to $6,000 for the same period in 2018. Revenue earned in 2018 was a result of service revenue or are now discontinued Nexus 128 product line.

Operating expenses increased to $10.8 million for the year ended December 31, 2019 up from $9 million for the same period in 2018.The increase in operating expenses year-over-year was due almost exclusively to increased cost associated with the development of our TAEUS product line.

Our net loss for the year ended December 31, 2019 was $13.3 million compared to a net loss of $9.8 million for the year ended December 31, 2018. During the year we incurred a charge for a dividend related to the sale of our preferred stock which totaled $4.2 million.

This non-cash charge is a GAAP based adjustment to earnings only and does not represent a liability or other tangible obligation. It resulted from the preferred stock and warrants that we sold in December.As a result of this charge our net loss per share for the year ended December 31, 2019 was $2.34 per basic and diluted share.

Our cash as of December 31, 2019 totaled approximately $6.2 million as compared to approximately $6.5 million as of December 31, 2018.

The small decrease in cash year-over-year is the result of our spending for normal operations offset by our funding activity throughout the year.With the current world crisis is it easy to forget the successes of the past and considering the magnitude of the COVID19 dilemma makes future planning tenuous at best.

In December 2019 we retired approximately $2 million of debt and raised over $6 million of new equity capital.

We are fortunate to have completed this funding which provides adequate capital as we all weather the COVID19 impact on the financial and capital markets near-term.We are proud of our accomplishments and honor that many investors and shareholders continued to express their faith and confidence in ENDRA and its management team through continued investment.

While what we are experiencing today is unheralded in many regards, I'm proud to say that ENDER's management team and our Board of Directors is an experienced and well seasoned team having seen emergencies, anomalies and near panics of prior years and successfully marched on the other side.

We intend to do just that at ENDRA.For many quarters we had used the phrase asset light operating model and this approach has never been more relevant than right now. We continue to actively review our spending plans for the year, adjusting projected growth related expenses, balancing between capital preservation and product acceleration.

We are, I am, actively engaging with our lenders and suppliers as we focus on building our supply chain.

No easy task in this uncertain climate as you might imagine but we are fortunate to have assembled an impressive and resourceful set of suppliers who appreciate the opportunity that ENDRA and TAEUS supports and are therefore able to secure what we believe is a reliable chain of supplies and services to ready our finished product for delivery.Like every growing company in this uncertain environment, we don't know what we don't know but I can assure you we'll stay nimble and responsive on the road which lies ahead.

Lastly, we will continue to actively pursue and evaluate opportunities, strengthen our balance sheet and position our company for growth opportunities that lie ahead, including market-based, government-funded or partner provided sources of capital.

Our focus remains on delivering the great value proposition we see with TAEUS and the benefit of patients, clinicians and our shareholders.I will now turn the call over to Renaud.

Renaud?.

Thank you, David. Since joining ENDRA in May 2019 we have made great progress in growing our clinician network and building awareness for ENDRAs TAEUS technology, relevant clinician communities like radiology, hepatology and gastroenterology.

In total we had a formal presence at seven leading radiology and gastrohepatology conferences in Europe and in the US in 2019.

My interaction with the clinical community validate that there is a strong need for an interest in a noninvasive cost-effective and point-of-care assessment tool like TAEUS.In the fourth quarter of 2019 we also did key opinion leader event at the AASLD Liver Meeting with now ENDRA a scientific advisor Dr.

Raza Malik from Tufts University Medical Center. His presentation highlighted the difficulties in diagnosing patients with NAFLD and Nash. He also emphasized the need for point-of-care diagnostic device to better assess this fast growing disease, which Dr.

Malik highlighted the massive healthcare burn.The presentation is actually on our website and I encourage you to listen to it.

We are thrilled to have him join our Scientific Advisory Board and believe his insight will be invaluable as we work to breach the diagnostic gap for Nashville and Nash and further defined the clinical use case for the device in hepatology and gastroenterology community.In addition to the liver meeting we also had a strong presence at the Radiological Society of North America RSNA Annual meeting in December.

We had a well positioned booth where we displayed and demonstrated potato system to a number of clinicians and industry leaders. Our proprietary technology for assessing liver fat generated meaningful conversation and faceted the building of relationships with the clinician community globally.

We look forward to continuing this endeavor as we work toward commercialization.With the CE Mark approval we are now positioned to enter Europe which is a very large commercial healthcare market.

To put this in perspective in German alone they are approximately 2,000 acute care hospitals with an estimated 25,000 ultrasound systems delivering around 1.8 million abdominal ultrasound scans each year. Germany is a large healthcare market in the European Union but it is just one state.

So there are a lot of opportunity for ENDRA to succeed.My near-term priority is to begin executing our European Union commercial plant which comprises the following key elements.

Establish clinical evaluation reference sites in each target European market including Germany, France, Switzerland and the UK to get the TAEUS products into the hands of early adopters and investigators and serve us commercial springboards.

We're picking this reference sites based on a set of stringent criteria.One, level of interest of the investigators in TAEUS. Two, center of excellence in recitation, three, center location to maximize market distribution and four, cost. We plan to deploy our CE mark TAEUS liver systems to this selected evaluation sites in the second half of 2020.

We plan to use 2020 as a building year in both the EU and the US to lay the foundation for longer commercial longer-term commercial success.Given the risk of cancellation or postponement of some clinical conferences, we had planned to participate in and we are adapting our approach to engage with our target audiences in a digital format to maintain a high degree of market awareness and grow our clinical relationship.

This effort will be first by initial TAEUS products marketing community camping, digital education tools targeting ENDRA at the base of opted clinician as well as a re-racked well resourced liver focused company website in multiple languages.We also have begun recruitment efforts to build a team of TAEUS clinical specialist who will provide direct support and on-site training to clinical reference site partners and work with our commercial partner GE Healthcare at a local level.

This whole team of market development specialists will focus on fostering relationship with key local community leaders, execute our lunch and learn demo strategy and continue building awareness and credibility for the TAEUS technology in target markets.We will continue to build the new relationship with clinicians in Europe and US while engaging on a deeper level with early adopter and investigator as well as the various national society for the study of liver diseases.

We will continue to communicate the clinical values that TAEUS is designed to bring with marketing communication and education activities on the horizon we'll continue to leverage the customer relationship management system that we implemented to manage and effectively target our growing 1,000 radiologist, hepatologist gastroenterologist and endocrinologists who have already updated and have shown interest in learning about TAEUS in collaborating with ENDRA.

We are very excited to initiate our commercial activities in Europe and I look forward to updating you on our progress in the coming quarters.Now I'll turn the call to Francois who will make some final remarks..

Thanks very much, Renaud and David. I'll wrap up the call before the Q&A with the following key points looking forward into 2020. First we remain highly focused on our goal to make a positive impact on care of patients with chronic liver diseases like NAFLD and Nash.

We've been encouraged by the strong reception to date of our ongoing precommercial activities, focus on the clinical community and are very optimistic about the market potential of the TAEUS liver device.There are over 1 billion people with NAFLD and Nash globally.

While targeted therapies are starting to become available, clinicians still don't have a practical and rigorous liver fat measurement tool to identify and monitor patients. We're excited about the potential of TAEUS to address this significant clinical need and diagnostic gap.

Second building on our CE Mark approval we have a solid foundation in place to implement initial commercial launch activities in Europe and ramp up precommercial activities in the US as we finalize our 510 submission to the FDA.

The submission is expected in the second quarter of 2020 which positions us to receive approval in the second half of 2020.And finally we're closely monitoring the COVID-19 situation with respect to our businesses our clinical community and will remain vigilant and nimble to adapt our plans where necessitated by the COVID19.With that I'd like to open the call to questions.

Operator?.

[Operator instructions] We'll take our first question from Brooks O'Neil at Lake Street Capital..

I hope you're surviving the COVID situation.

So can you just highlight make it simpler for me how you see more initial commercialization efforts having changed as a result of the COVID situation and could you just say in a more general sense would you expect your spending to slow as a result or are you thinking that responding to the current environment is going to cause you to spend more money that you actually planned?.

Yeah. Thanks. let me see if I can address that. So in terms of spending as David pointed out we're lucky in that we still have very low overhead and have had this asset light model of leveraging partners on the engineering side and elsewhere to help us. So we don't have a heavy burden.

If we are affected as many may be due to COVID in terms of timing for example of some implementations on the clinical evaluation sites.First of all we still have a lot to do.

We are very active in a lot of the activities that Renaud mentioned in terms of bringing our awareness building communication training to the clinical audiences through electronic.

Marketing is something that that goes on unperturbed and I would say it's probably more cost-effective than going to these conferences if necessitated.Obviously the regulatory approval in Q2 continues unabated as I pointed out that 510K filing just to be very clear does not depend on data from either Rocky Vista or UPMC.

So that is something important to highlight. Just to come back to your Spam scenario, I think Brooks we've been very, very capital efficient over the years.

We'll continue to do so and if for example we see that hospitals are locked down in certain markets and that it doesn't make sense to hire a sales rep in that country as early as we thought we have the flexibility today to build a pipeline of good candidates to identify those people and be ready to pull the trigger but not to hire the now in burden our spend.So I think we have the current model that allows us to be very flexible.

I would say spending if imposed on us with COVID restrictions would probably decrease, but I also want to make sure that everyone understands we have been and are very much engaged in pivoting as necessary to online marketing and other programs to maintain that forward momentum with our commercial plan. I hope that helps to answer your question..

So second question is about the predicate device with the 510K I am just trying to understand have you found a another competitive device or are you still feeling very confident that the commercial capability you bring to the market are unique?.

Yeah that's a great question. I am going to let Mike Thornton speak to a little more detail but no it's not a new competitive threat in any way. As you can imagine people have been interested in the liver and looking at the liver for a long time.

There are a number of ultrasound and other technologies that are trying to look at fibrosis, inflammation and fat.

Our technology to my knowledge remains unique and so far the highest performing but clearly as we seek a predicate example for the FDA which is a higher bar than the CE mark, it's good to find similar attempts at technology and reference points but to answer your question directly, there is no new competitive threat.

Clearly a lot of people are interested but it's more of a I would say an FDA submission exercise to find the best predicate on which to launch our application. Mike Thornton would you some color to that if possible..

Sure thanks François. As you know the 510K process is based on an existing clear predicate device requiring us to demonstrate substantial coolants to use or a technology. Sa a first time filer it's critical that we select the correct predicate device for a successful 510K submission.

As François mentioned earlier, identifying this newly clear device is really helpful to us and we are aligning our submission to reflect that and this is a great thing for us..

Can I just add one or two more real quick. So is there any change in the things that are advancing on the therapeutic side any approved drug any evolution that you….

Yeah as you know our estimate of the pipeline of liver therapeutic drugs focused on NAFLD and Nash are at a minimum of 50 therapies in the pipeline about three of which are in Phase 2 and 3 and as we picked up and demonstrated in our own press release recently, we did pick up that one drug in India from a company called Zydus has been approved in that market and we view that as the first among several in the coming 24 months that are targeting fat be it from fatty liver disease or Nash the root cause of both of those conditions is too much fat in the liver.

There is no blood test to measure fat in the liver.And so we think that this intersection of over billion people affected by liver disease and now these first therapies that are becoming available with Zydus and others to follow just highlight the bottleneck in terms of screening and monitoring these patients.

Just for those who haven't heard me say it before Brooks the only tools that effectively measure fat in situ in the liver today are MRI which is very good but it's extremely expensive, slow and is not a good tool for screening and monitoring ongoing patients and the other tool is a liver biopsy where you insert a large gauge needle between the ribs, you aspirate a section of liver, it's very invasive, painful and frankly there is a risk of internal bleeding.So these tools are typically only used for more advanced liver disease hepatocellular carcinoma for example and are completely impractical for daily screening and monitoring of patients with the early stages of liver disease which progress to these later conditions and that's what -- that's really the reason for being with ENDRA.

So I hope that helps answer and expand a little bit on what you asked..

Absolutely and one last one is and then I'll get out of the way, have you gotten any initial reaction to your cell price I think you're talking about 50,000 in the marketplace, does that seem like it's a pretty saleable failure or so..

Yeah great question. I am commercial guy for 20 years you build that target price as I said before on multiple factors the least being cost-plus and margins you want to get.

You have to understand what is the potential value of the product you're offerings, you have to understand competitive offerings, you have to understand the price sensitivity of the customers which are very frankly by department radiology versus hepatology as well as geographic markets.So 50,000 is a target point because we think that this offers enormous value compared to tools that are in that space for example in car-based ultrasound high-end car-based ultrasound not the portable kind that is really essentially like a stethoscope but something that is used in regular clinical practice to image the abdomen and the liver ranges in price from 75,000 to 225,000 and can go up to considerably more.But we felt like the relative share are offering and value it bring to an existing ultrasound in that price range is appropriate.

We also have as you can well imagine through all the interactions at the clinical conferences, been both sharing the clinical value propositional but also the economic value proposition at that price point and what it could bring to a clinician and so over the years since we've been in the field at these conferences the feedback has been very supportive of that price.Personally, I want to go out with that price and try to take it out from there as we can determine the market more effectively but the best way to get there is to bring us to market with good clinical data as we're laying in place today and have the marketing that Renaud mentioned.

Renaud maybe I would just ask you to chime in a little bit because pricing is a great topic and I think we put a lot of thought into it, any additional thoughts on your end commercially..

No I think you're right I think it's important to understand that pricing is where can we bring from clinical value standpoint in the market. I think the price that we have to turn around $50,000 and adequate pricing we have not heard any pushback from anybody we've talked to.

Obviously we haven't sold that yet but the price that we're talking about is not something that has been major cause of a push back from anybody we've talked to whether it's in US or in the various countries in Europe at this point..

And Brooks one final piece because I love this kind of question.

I won't name the manufacturer but there is a well-established tool and for measurement of fibrosis which is the later stage of scarring of the liver in the marketplace and this company has helped develop the market their tool which only measures the scarring separate from what we're measuring sells $400,000 to $130,000 in the market.

We view that as a very, very good comparable to us and therefore with the additional value of quantifying factory early on, we think that there is considerable attraction to the price point. I hope that gives you more than enough to consider..

All that's good appreciate that color. Thank you very much. Keep performing the good work..

Our next Kyle Bauser at Dougherty and Company..

This is actually Greg on for Kyle but thanks for taking questions today. I guess first can you provide little more color on the remaining steps that you have before you're able to submit FDA application. Is there much more requirements that the CE mark technical file you submiited..

Sure. Let me ask Michael Thornton who is our expert here to kind of articulate that please..

Briefly in addition to all the quality systems and key technical file, we require additional testing and documentation to comply with the actual FDA regulation process that are different from the EU standards. One of these things as you might imagine is SEC regulations but it's just a different form of submission rather than a technical file audit..

And as regarding commercialization in Europe how are you thinking about pricing? Are you exploring leasing or rental options?.

Yeah Renaud since we're on that topic and I took up a lot of your time maybe you could speak to point-of-sale, the price point capital budgets and whether leasing another type of avenues is the first consideration in your view?.

Global options are good from a capital standpoint obviously at the price point that we have chosen is actually a good price point whether it's in US or Europe simply because being in the threshold provide us the ability to avoid certainly Europe to have the tender and allow hospital to buy equipment outright.

We will also consider any type of leasing option 4444 for our customers and we haven't completely developed that offering yet obviously but as we go to market we'll be developing this type of -- this type of option for our customers as well absolutely..

And then just last question can you speak a bit more about your partnership at GE? It sounds like you'll be launching to support Europe what sort of sales for might be able to be deployed at GE as it relates to your business?.

Yeah so as we pointed out GE's commitment to us through the development cycle was just that to help develop and finalize the product.

They’ve been very generous with us as well with demo systems which helps us not have to invest in $100,000 ultrasound system as we deploy these systems to either evaluation site or commercially the demonstration of our product.

So they’ve been very helpful there.They've also supplied insight and names and will continue in the field to introduce us to a certain number of their targeted ultrasound customers and as I pointed out we're targeting through them cart-based ultrasound users who are currently doing the ultrasounds of the abdomen and the liver today.

I think beyond GE's normal focus are the hepatologists and gastroenterologists who are very interested in the liver but probably today not doing a lot of liver scans and so my goal and my commitment to the business and to shareholders is to leverage GE wherever they can be helpful on the radiology side but certainly to control our own future and therefore by higher a small team of ENDRA specialists in Europe initially one person per key market working alongside that reference evaluation site in each market.That is the best way that I know to build that market to engage that sales reps also call on hepatologists, liver experts who may not own an ultrasound today and who GE may not call on but I want to call on and so it's a hybrid model.

GE understands this and I think it's a good partnership for us to leverage what they can provide and also control on future with a small capital efficient team..

So yeah thanks for the time and see you out there..

[Operator instructions] We'll go next to Georgia Michael [ph] at Catalyst Capital Group..

Couple of quick questions. I wanted to ask a little bit more about what you're seeing on the pharma side. Can you give number of compounds in development, are you receiving inbound interest on the drug development front and have you made any progress on potentially identifying maybe a pharma partner or something along those lines..

Yeah great question. Thank you for that.

So obviously we can't name names but we are seeing an uptick in people reaching out to us from the pharma community as well as the contract research organizations the CRO's who run a lot of these studies and really the appeal to both CRO's and liver pharma companies is obviously what we discussed once the drugs are clinically available to be able to help screen in patients for use of that drug and to monitor the effectiveness of that drug in the patient once it's approved.But looking even earlier Joe what we think we have a real opportunity to do with pharmas and CROs is help them be an added tool in their slow and costly clinical trials even before it reaches commercial stage.

I have anecdotal statistics that show that screening failure rates for some of these studies selecting someone to bring the men and scanning them and finding out that they're not appropriate for this study based on assorted factors and after an MRI scan.

Those screening failure rates can be upwards of 50% and one of the things that I like to highlight is we will not replace MRI or surgical biopsy as an endpoint measurement tool Joe for the pharma trials.However, we can add a very low cost site value screen early on just to lower the screening failure rates and help drive efficiencies in these trials.

So the answer is I think we've had several new approaches. Naturally I want to manage our expectations of our listeners that these things take time, but we view a pharma or a CRO partner as a natural complement and completely in line with our freedom to operate alongside with GE the ultrasound partner. I hope that helps to answer your question..

It does and specific to the CRO side obviously the initial screening or patient selection can be helpful but is there an ability for you to be tied in is there an ability to measure efficacy or progress in interim basis through this..

Yeah, yeah absolutely again not aspiring yet to replacing MRI which is the gold standard to which we compare ourselves to but one of the things we've heard Joe is surprisingly liver fat does vary considerably and can look very quickly up or down during a clinical study.

And if you imagine the bottleneck of a clinical trial saying hey, we've got baseline our subject, screen them in, put him on a drug, bring him back for an MRI which is expensive and takes a good half hour or more.Having a quick touch point along the way is seemingly a value and we're getting that feedback from the CROs.

So my goal is to highlight that reassure them that we're not looking to replace biopsy and MRI, conservative and rightly so sector but to highlight this addition in a non-disruptive way in our technology.

Is that helpful?.

It is that's great and then just one last question, we've discussed price a bit in sort of sales versus your model and you're in the process of going to market initially with the reference centers. Is this more really about awareness at this point or should we think of this as beginning to drive revenues..

Great question. So the evaluation sites for example University of Pittsburg Medical Center, Rocky Vista and the initial sites in each country in Europe are not going to be revenue-generating but they will be the seeds and the springboard that are absolutely critical for sales in that market.

So our goal as you can imagine in France having a reference site in one of the major universities with a key opinion leader is exactly what you want when you walk into Dr. Smith's office and say hey we're partnered with GE. We have this proprietary technology that allows you to take a liver scan in a couple of seconds and by the way Dr.

DuPont in this French University is using the product. We love to demonstrate for you there and you can actually to talk to Dr. DuPont.So for us in the second half putting these key opinion leader evaluation sites in place is critical for our success.

They will not be a flood of revenue quite the contrary they will enable us to drive revenue in the back half of the year..

I assume it does and it helps me think about the process.

Can I assume that we'll sort of hear this rollout as an ongoing basis for each new center you're going into, can you expect to use as a source milestone?.

Yeah absolutely and I've certainly good feedback that over communication and during this difficult time for everyone is critical. So we certainly will be announcing, we have a good pipeline. These are not new discussions. These are discussions we've had started.

Now with the CE mark Joe, you can imagine that the European sites despite the COVID situation over there announcing oh this thing is I can actually use it even sell it if I want in my country. So we certainly will announce those and point those out along the way..

We'll go next Ed Woo with Ascendiant Capital..

My question is after nine [indiscernible] to getting the liver approval in Europe and also in the US is there any thought of going full steam ahead on other applications here?.

Well great question. We do get that inquiry periodically. My goal is to do an A plus job in the liver. We have these other applications that TAEUS platform allows us to bring to market. For example we're able to show tissue temperature change during energy-based surgical procedures for cancer or cardiology that completely novel.

Those procedures are largely done blind to date. We could show a surgeon real time where he or cold is going into the tissue. It's very compelling.The bottom line is though it's a very different regulatory process a different call point a different commercialization plan and I don't want to create a Swiss Army knife business.

I think the liver is a big enough opportunity for ENDRA to build itself on, but beyond that I wanted to kind of do the liver first and then move on with the same focus and success on a subsequent application. So I answer your question and say focus is key, keeps our capital low.

I think increases the chances of success in this target space, but it's a great reminder to our listeners that ENDRA is first a liver company but the technology, our IP and platform is much, much bigger than the liver. Thank you for that question..

Then commercialization that you're getting a head start in Europe for the US, is there a roadmap for commercialization kind of be the same exact fan as Europe or will it be significantly differ..

It's really the same model which we believe, which we practice Renaud, myself and others over the years is establishing those reference sites.

So in the US although we don't have the FDA approval we do have the formal agreements with the University of Pittsburgh Medical Center and Rocky Vista University under what is called an IRB investigation review board which allows universities to perform research pre FDA approval in limited circumstances and that's the conditions under which we will be doing the studies here in the US.But these very sites UPMC, Rocky Vista and others that we'll announce in the US are going to be those same reference sites regionally with UPMC in the mid-Atlantic, Rocky Vista in the Southwest and the other sites those are to become our reference sites for the key geographies in the US where we want to develop.

So I'm going to use UPMC assuming they're happy with our product and the results as a reference site and I hope that we will earn, there's absolutely no command on their part at this point but I hope we will earn their interest as a commercial anchor account after we get FDA approval when we do commercialize in the US.

So it's a nice entry point but have them try our product if it works could be very, very interesting for ENDRA..

Thank you for answer my question and I wish you guys good luck. Thank you..

Operator, I think we're done with questions and if you may have like to just wrap up then really appreciate everyone's time today..

Thank you and if you would like to provide any additional or closing remarks..

Thank you very much Jess. So really just in closing thank you to everyone joining us today in this incredible time we're living in. I wish everyone well. I appreciate everyone's interest and support of ENDRA and we look forward to updating you on our next quarterly call Good bye..

Thank you. Ladies and gentlemen that will conclude today's teleconference and we thank you for your participation. You may disconnect at this time and we hope you have a good day..