Good afternoon, ladies and gentlemen, and welcome to the ENDRA Life Sciences Inc. Fourth Quarter 2020 Financial Results Conference Call. At this time, all participants have been placed on a listen-only mode and we will open the floor for your questions and comments after the presentation.

It is now my pleasure to turn the floor over to your host, Yvonne Briggs. Ma'am, the floor is yours..

Thank you, operator. This is Yvonne Briggs with LHA, ENDRA Life Sciences’ Investor Relations firm. Good afternoon and welcome to ENDRA’s fourth quarter 2020 business update and financial results conference call. Earlier today, ENDRA issued a press release on this topic.

And for those of you who don’t have a copy, you can access it in the Investors section of ENDRA’s website at endrainc.com..

Thank you, Yvonne. Good afternoon, everyone, and thank you for joining us today to review ENDRA’s fourth quarter 2020 financial results and business update. Despite the headwinds of COVID-19, I am very pleased with the progress ENDRA made in 2020 and so far this year.

We accomplished several key regulatory and commercial milestones, which we will review today during the call. On the regulatory front, early last year, we received a CE Mark for the NAFLD/NASH application of our Thermo-Acoustic Enhanced UltraSound system, known as TAEUS. Then in mid-2020, we submitted a 510(k) application with the U.S.

FDA, while not required by either regulatory body, but in order to further demonstrate the clinical utility of TAEUS, we secured our sixth clinical study partnership and have started scanning patients at our first site in the U.S.

On the business development front, we extended our collaboration with GE Healthcare for two more years and established our first foothold in Asia, the distribution agreement in Vietnam in highly populated and fast-growing market.

More recently, we signed a collaboration agreement to include TAEUS as an add-on technology to support patient screening and biomarker measurement for Hepion Pharmaceuticals upcoming clinical study of their drug for the treatment of NASH..

Thank you, Francois, and good afternoon, everyone. I am also quite pleased by the progress we have made given the challenges that by launching initial commercialization efforts in the middle of a global pandemic. Not withstanding, I am confident we are building a strong foundation that positions TAEUS for success this year and beyond.

As Francois mentioned, I'd like to provide some additional updates on clinical evaluation partners, which totaled six worldwide. It is worth mentioning, our pending 510(k) is not dependent on this study, which are specifically for the purpose of demonstrating clinical utility of TAEUS as we commence our commercialization efforts.

These studies are independently run and are approved by each institutions – institute for process, which allows research institutions to use technology deemed to be a low risk prior to FDA or other regulatory clearance. Again, that applies to our U.S. partners, as TAEUS has CE Mark in Europe.

Our six clinical evaluation sites will each scan approximately 75 patients on our TAEUS system and compare the liver fat measurements to the gold standard MRI-PDFF. Typically, these types of study can be completed in around nine months. Rocky Vista will be a larger study targeting a total of 200 patients and may take a little longer to complete.

As healthcare facilities gradually returned to normal operation in 2021, we are seeing a number of factors putting temporary pressure on our clinical partners.

One of these factors is the limited availability of MRI resulting from the late elective procedures returning in volume, combined with a limited hospital staff and longer cleaning procedures between each patient. But this is a temporary situation that we believe is actually a good sign.

Hospitals are working through their backlog and returning to normal. Not withstanding those factors, two of our domestic sites, Rocky Vista University College of Osteopathic Medicine, and the University of Pittsburgh Medical Center have installed a TAEUS system and Rocky Vista has begun scanning patients.

Our European sites are expected to be up and running when the local markets reopen and we are confident these studies will gain traction in 2021. We look forward to collecting this valuable clinical data and having the sites to be great reference sites for our commercial teams.

Speaking of our European sales team, as I’ve mentioned on our last call, we added two sales people in Europe, one in the UK and one in Germany. And we currently have a pipeline of candidates for the rest of Europe that we will phase in hiring as COVID related restriction loosen.

We have always highlighted ENDRA's capital efficient model and adding resources as the mobility was severely restricted in most of Europe would not have been the best use of our capital. We have taken a methodical approach to expanding our sales team given market uncertainties and the inability for in-person meetings.

Yet we expect an opportunity for further expansion this year as restrictions ease. Our current reps are focused on engaging with their GE Healthcare colleagues, as well as with clinicians in local healthcare systems on a remote basis until they are able to meet face-to-face.

Their initial focus is to derive local awareness and interest on ENDRA's technology among radiologists, while also targeting clinicians in hepatology, endocrinology and primary care. In addition, our sales team will be tasked with supporting our clinical evaluation partners as they ramp their clinical studies.

We continue to be active with our e-marketing and education campaigns to build awareness for TAEUS by producing educational videos, publishing white papers and making our website a rich resource of information with translation into six different languages. We plan to continue to be active in virtual industry trade shows in the U.S.

and Europe, which despite being virtual are still quite effective in demonstrating the advantages of TAEUS and in sourcing contacts for potential customers would express interest in our solutions through our virtual booth. Indeed, the number of worldwide clinicians we've interacted with and added to our CRM currently stands well over 4,000.

Global conferences maybe opening back up to a full in-person or hybrid formula in the second half of this year, and we will exhibit at those conferences in whatever ways are available. Our interaction with many clinicians over the year confirms that there is a significant unmet clinical need for the TAEUS system.

As we continue to advance towards our first system sale, we acknowledge that it has taken longer than expected in part due to those challenges that the world has faced over the past year. We remain confident with the reopening of global economies and our strong industry and clinical relationship at ENDRA will be positioned for growth.

I look forward to updating you on our progress in future calls. As a final thought, let me remind you that ENDRA is pursuing multiple TAEUS revenue streams.

These will start with the sales of TAEUS liver equipment, software and service contract, and road to include sale of disposable product enhancing TAEUS performance, and eventually to licensing of TAEUS for liver and other applications to original equipment manufacturers building TAEUS technology into their ultrasound and other type of capital equipment, such as surgical systems.

Now I'd like to turn the call over to David to review the financial results for the fourth quarter of 2020.

David?.

For the quarter ended December 31, 2020, our operating expenses decreased to $2.3 million, down from $3.1 million for the same period in 2019. The reduction was due exclusively to anticipated savings from development cost associated with our TAEUS product.

We have indicated previously our asset-light model allows us to flex our spending based on our needs and this is evidence of that ability. Overall, for the year ended December 31, 2020, our operating expenses increased to $11.5 million, up from $10.8 million for the same period in 2019.

Increases in sales and marketing and general and administrative spending were offset in part by declines in development costs. Our research and development spending decreased year-over-year by approximately $700,000 as we completed development and prepared our TAEUS system for commercial launch.

Our sales and marketing cost increased by approximately $200,000 for the year as COVID-19 restrictions limited travel, in-person sales contact and in-person attendance at industry conferences. Our general and administrative cost increased by approximately $1.2 million to increases for legal, investor relations and other services.

Our net operating loss for the year ended December 31, 2020 was $11.7 million as compared to a net loss of $13.3 million for the prior year.

The portion of our net loss attributable to common shareholders, which includes non-cash charges for deemed dividends related to preferred stock and fair value adjustments for warrants repricing was $400,000 for the year ended December 31, 2020 and $4.2 million for the year ended December 31, 2019.

Our net loss per share for the year ended December 31, 2020 was $0.63 per share as compared with $2.34 per share a year ago. Our cash balance as of December 31, 2020 was $7.2 million. This includes $5.5 million in gross proceeds raised through a public offering in December of 2020 and proceeds from warrant exercises during the year of $4.8 million.

Subsequent to December 31, 2020 and therefore not included in our December 31, 2020 reported cash balance is $2.9 million raised through the conversion of a majority of our remaining non-trading warrants and $10.1 million in proceeds from sales from our ATM facility.

We believe these funds will provide adequate capital for ENDRA through 2021 and into 2022. As a result of recent increases in our market capitalization and as a function of good corporate governance, we are today filing revised Form S-3, which provides more flexibility to us, and is good for the next three years.

Not withstanding our full capitalization for the year, we will continue to exercise a conservative approach to our spending as we navigate the post-COVID environment and its uncertainties.

We will remain opportunistic to strengthen our balance sheet in a manner that preserves shareholder value or a combination of potential strategic investments or additional capital market transactions leveraging our current strong capitalization structure. Now I'll turn the call back over to Francois.

Francois?.

Thanks very much, David and Renaud. As a final topic before we take your questions today, we reviewed numerous important milestones achieved and planned for the remainder of the year.

In order to provide our shareholders with more timely updates of these future accomplishments going forward, in addition with the calendar-driven quarterly calls, we will also be conducting conference calls that are news-driven and catalyzed by major events, including regulatory, clinical and commercial accomplishments.

We hope you'll appreciate the additional effort to share substantive updates in a more thorough manner instead of waiting for particular calendar-driven schedules. We are really excited about the milestones in front of us for this year with a strong balance sheet enabling us to achieve five key objectives.

First, securing 510(k) clearance in the U.S.; second, growing the body of clinical evidence to our strategically positioned study sites to support commercialization; third, accelerating our commercial channel and marketing activities in line with reopening of global markets to generate revenue in Europe and the U.S.

in 2021; fourth, expanding our pharmaceutical and other industry partnerships to expand adoption of TAEUS beyond the clinical end-user market; and fifth, continuing to grow our intellectual property portfolio to defend our technology and increase out-licensing opportunities as well.

So with that review of our business highlights and financial results, we'd like to open up the call for questions.

Operator?.

Thank you. Ladies and gentlemen, the floor is open for questions. .

Thank you, operator. While we are waiting for our first question, I'd like to mention that ENDRA recently participated in two virtual investment conferences. Earlier this month was the H.C. Wainwright Global Life Sciences Conferences, and last week was the 33rd Annual ROTH Conference.

Our presentation from the ROTH Conference is available in the Investor section of our website at endrainc.com. Okay. Operator, if there are any questions, we are happy to take them, otherwise we can proceed..

We have no questions in queue. And we do have one question from Ed Woo. Go ahead. Your line is open..

Yes. Thank you for taking my question. My question is on the six universities that you have – or medical centers that you have your ENDRA system.

Is there a ceiling a maximum centers that you guys are thinking about doing? Should we expect more additional announcement shortly? Or is it something like you think that you're at a comfortable level at this point?.

Yes. Great question. Thank you, Ed. So we need to balance a couple of things when we make a commitment, and six feels for us close to optimal based on our resources, based on the learning we're going to gain through the process. We want to assure that we support and engage closely with each of these clinical sites and also carefully manage costs.

These studies can be quite expensive. I think we've done an incredible job of managing the costs individually with these partners because we both believe in the potential of the technology. I think to answer your question directly you can anticipate seeing a few more.

But we believe that it'll be under 10 for the foreseeable future that will give us a critical mass by the end of the year of the several hundred clinical data points, geographically dispersed that will further allow us to commercialize the product.

So I hope that's helpful, but it's a thoughtful process, if not, just hey whoever wants to be a study partner joins the mix. They have to have the right profile and we also want to be very careful about our resources to support it. Thanks so much for the question. Ed..

Edward Woo:.

.:.

So, it really – yes, it varies. I can't speak day-to-day for each facility. But the fact that we have three in the U.S. in different regions, and three now in Europe, just illustrates for us that things are starting to turn the corner in some sites faster than others are Rocky Vista in Utah. As we said, we started scanning patients.

They’re still facing an MRI backlog. Other places in Germany and in Europe, as you can surely see in the news are under a little bit more of a lockdown. But we see that abating and the feedback we're getting from the sites is clearly there's some mobility is increasing relative to last year.

I can't forecast exactly when, but we are optimistic that these sites will be up and running by the summer according to the COVID mobility that we see in the marketplace..

Great. Well, thank you, and I wish you a continued luck. Thank you..

Thank you very much, Ed..

Well, operator. I think we – I'm looking at our pipeline. We don't have any other questions, but I appreciate everyone's participation. We've had a very good turn out here today. And if anyone – we've missed anyone, please reach out to LHA.

Our Investor Relations partner would be happy to have follow-on conversations and answer any questions we may not have answered today. Again, thank you for your participation. We look forward to speaking with all of you again at our next event-driven conference and keeping you informed of our progress as we have it. Have a nice evening..

Thank you, ladies and gentlemen. This does conclude today's conference call. You may disconnect your phone lines at this time and have a wonderful day. Thank you for your participation..