Trellus Health (LSE:TRLS) — Full Year Results

0:01 Good afternoon, ladies and gentlemen, and welcome to the TRELLUS HEALTH PLC Investor Presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged. They can be submitted at any time via the Q and A tab that's just situated on the right hand corner of your screen. Please just simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company will review all questions submitted today and publish responses where it is appropriate to do so, and these will be available via your investor me company dashboard.

0:34 Before we begin, if I may, I would like to submit the following poll. And if you could give that your kind attention, I'm sure the company would be most grateful. And I would now like to hand you over to the executive management team from TRELLUS HEALTH PLC. Marla, good afternoon. Hi. Good afternoon, Jake. Thank you so much, and welcome, everybody. Good afternoon or evening, depending on where you are. Steve and I are delighted to be presenting our annual results for TRELLUS HEALTH, and these are our disclaimer slide. And now we'll sort of go back to the beginning and remind everybody a little bit more about what we are and what we're delivering. So just as a reminder, TRELLUS is a very patient centric digital health company that's focused really on the intersection between chronic physical conditions and those conditions that have a very high mental health comorbidity starting with GI conditions, and I'll get a little bit deeper into why GI is the perfect disease to start in. We also just a reminder, we're the first company that actually applies a validated psychological resilience assessment to actually identify those individuals that are at highest risk for, low resilience or high mental health burden, which obviously translates into often for these conditions, very high cost, high risk patients.

1:53 We're also the first to deliver a condition management program that is focused through the lens of resilience and positive psychology approach to condition management, which is actually proven to modify health behaviors, which are tied to outcomes, improve psychological resilience and health outcomes at a significantly reduced cost. So that's really the value proposition as we relate to what we do in the two key elements of our offering. We have three key components. We've got a health management platform or self management platform that is, scalable across multiple conditions starting with GI as noted. And within it, we deliver evidence based digital behavior interventions that were developed and validated by our cofounder, Lori Kiefer, who's an expert psychogastroenterologist and as well a trained support coaching and resilience team.

2:45 And just noted across sort of the various stakeholders, our customers do include consumers or the or the individuals themselves with the chronic conditions, health plans, employers, as well as pharmaceutical manufacturers. So just a couple of key 2022 highlights, which really speaks to, at a high level, sort of the building blocks or the flagship services and program development to lead us into 2023. So, as you remember, in in the summer of twenty twenty two, a new executive and nonexec leadership was appointed with myself as the CEO, Steve Young as our CFO, and Alex Stevenson, was already part of the company, came on as COO. We also added Tracy Entle to our board. We initially launched our first sort of early strategic adopter IBD program to direct to consumers by partnering with organizations that were supporting or sponsoring their members or other members on the platform. So it wasn't the members themselves that was paying, but we're sponsored by organizations, and we began that in July 2022.

3:53 I'm excited to show you the data that we have, so far. We also, invested and, really developed our platform, which is really in itself an important tool because we are not just an app based, solution. We really have a team that needs to engage members through the through the platform as well as all of our digital tools, and we've adapted the platform to be responsive to the type of condition an individual enters the program with. First, starting to adapt to IBS, but some of the customization features are allow us to adapt it to different, b to b, as well as d to c customers. We have some data that I'm gonna show you on some real world evidence. We did report it in the RNS, the annual report, and and I had previously mentioned the early adopter, results, but now we've expanded it and have more people into the program.

4:44 We signed our initial b to b to c contracts. There was discussion around them in October when we did our interims, announcing our partnerships with, different stakeholders, which I'll walk you through again. Strategic partnerships as noted not only to help pay for the unsponsored individuals, but also to, engage with a wider membership such as the Crohn's and Colitis Foundation, which is the largest patient advocacy group, as well as national provider societies such as the American College of Gastroenterology, which is the society that all GI providers would belong to. We also, built and launched application, a mobile app, so that we can actually engage and connect the providers with their patients so they can have visibility into the progress so that we are really removing any intermediate or stickiness between the provider and, their patient as it relates to the wraparound nutritional and behavioral health support that, TRELLUS offers and also had significant cost savings that we implemented to extend our cash runway into 2025.

5:48 So just to go back as to why GI is such an important condition where cost containment and solutions are in desperate need from the employer and or the health plan, as well as to the consumer themselves, but obviously to the paying customers who are looking for value based propositions that help them improve the quality of care they deliver to their members, but also reduce the cost. And we know that GI is a major player in this space. This was published last year by UnitedHealthcare and in collaboration with the Health Action Council, which showed employers how much they're spending, on their on their, solution and also showing that when you address the mental health comorbidities, you really are able to see that that's what's driving the biggest, cost drivers.

6:40 So in terms of what is so unique about us, really, it's what we're talking to our clients around and what is moving us forward in some discussions. The fact that what we have, which is really unique, is we have the ability to go in and actually determine in those patients who had in those members who had very high cost claims to tell them that in the traditional condition management, really, the factors that are driving the cost, it's hard to actually get in there and dissect

7:06 out what are the two cost drivers. And with our assessment, we can really dig in and say, these are the reasons why these members are costing you a lot. And by TRLS, being able to screen for that and address that and then intervene is really a big part of of where this is going and the importance of our of our condition management approach. But not only that, if you rely on claims alone, which is where health plans make their decisions about cost containment, you would note that if you just relied on claims from the last year or two, you'd be missing those individuals that are predicted to be high cost. And that's really where our proprietary resilience assessment does come in in terms of also explaining to our partners about the rising risk of members. And the other thing that's in that is really unique about what our offering is, again, it's not just that we detect or screen for those with low resilience, but our program is actually addressing that low resilience and converting individuals from low resilience to high resilience as a way to prevent mental health. So the typical traditional psych approach that's out there, which is often generic mental health apps or provider services, is really just ancillary, not synergistic, but often ancillary to the care that they're getting for their condition. And, really, there's no connectivity between their clinical care and the wraparound, management support that they're having to be better self managers and improve their, quality of life. What TRLS is focused on is really going in and

8:36 focusing on these five resilience targets, being proactive to actually lower

8:42 the rates of mental health comorbidity, and deliver a program that is all based in the science of resilience and positive psychology given that resilience is one of the few traits that can actually be taught and learned by individuals with chronic conditions. So just set a just as a reminder to put your eyes on sort of what we're doing and the value and why we're having these ongoing discussions and why we're advancing our discussions is really the what. And just to highlight, these are these are key elements of what we do. And as a reminder, our key deliverable is that we change health behavior. Because if you take what we do and convert it to the why, it's the fact that we demonstrate cost savings. We're able to actually, have a team that supports the digital application, which converts into better, quality of life for members, but also improvement in, a positive health behavior trajectory, which will result in better outcomes at lower cost for our partners.

9:41 So I'm really delighted to show you the, resilience, improvement by those members that we strategically launched our, strategic d to c, program with partners from across the country, meaning IBD programs from across the country, just to be able to start to engage and get data so that we can take this data to our discussions with our larger scale, clients, which is, again, showing you that just midway through our program for these members that are that have participated in the program, specifically in the data gathering part of this program, you can see that midway through the program, we're having significant impact on people's lives. Resiliency has improved. Self management, there'll be ability to self manage as in two thirds already just midway through the program, have already, developed self management skills to improve their, resiliency, also self efficacy and confidence, and probably most importantly to a lot of our members as well as to our clients is that we already have a significant reduction in that three quarters of the patients have a improvement in their mental health, which is what we're terming, emotional burden.

10:53 Also, Steve, I'll just, ask you to comment on our financial highlights if you don't mind. Yes. That's no problem. Afternoon, everyone. Certainly, looking at the financial position of the of the company, and our vest investors were very keen on finding out our net cash position and our extend extending our runway to allow us the opportunity to launch the platform as we've moved from the development phase into the commercialization phase. The net cash at the end of December was $19,100,000 as opposed to 24 in June 2022. We've continually invest in cap invested in the platform itself. And so far, we spent $76,700,000, of capital investment on the platform to get it up and running to sort of at the stage of commercialization.

11:42 As you can see, you've probably all seen the numbers today. The EBITDA loss is 8.1 compared to the half year loss of 4.6. There've been savings made across all areas of the business, and the combined savings there's a slight compare little comparison there. The savings from half one to half two, six point five to 4.6, including the capitalized development cost of 2,300,000 overall. And this sort of cost reduction exercise has continued into 2023. And I can't remember if everyone is on the call. I wouldn't know if any everyone is on the call, but our interim results, we indicated that the spend per month was about $700,000 per month at that point in time. That's continued to fall subsequently into 2023.

12:29 So there'll be more savings achieved in 2023, and that has given us enough cash resources to extend the cash out until 2025 to allow us the opportunity to win some of the contracts which are currently being currently under discussion. Some of the pilot agreements which were signed in October are now coming to fruition in just at the end of q one and q two in 2023. So you'll start to see revenue coming through at that point in sort of slightly bigger numb numbers than you've probably seen previously. And it does give us the opportunity to now now the platform is commercialized to move forward and allows us the opportunity to win some of these health plan agreements, which we're currently negotiating moving forward in 2023.

13:19 Great. Thank you, Steve. So just as a reminder of our, as an illustrative breakdown for just IBD and sort of the path, forward for TRLS and the importance of these discussions that we're now in and could not, as Steve noted, really could not have been happening without all of the data that we've gathered and the customization to our platform. So we're at a point now where we can, show an example of how the impact of our discussions would have on

13:50 the business. So if we take this is just with IBD. If we make some member assumptions that the, population spend across all patients in a in a health plan, On average, it's 25,000. Obviously, the lower cost individuals have less, and the higher cost individuals are more, but I'm just showing you the average spend. And we negotiated, for example, a 10% savings, making it $2,500 a year, negotiated two to one ROI, meaning their investment of $12.50, results in $2,500 in terms of savings, negotiated on top of that a $50.50 shared savings if we do exceed the negotiated 10%. And the example here shows that TRELLUS actually resulted in 20% savings. So if you just take the annual member, fee that we would get per member on the platform.

14:46 As you note as I note here, the screening fee of $50, a monthly management fee of 100, and then you're looking at a total of

14:54 $12.50, for, per member per year, which to look at breakeven, just showing you here, is 6,200 members within this use case cost schema. And just overall, if you take the average large health plan in The US, you're looking at 50,000,000 individual members, and that's about two and a half percent of the total addressable market, just the 6,200, looking at, of course, the entire US market of point 2%. The point here is that that's the breakeven, obviously, where really there are significant growth opportunity and upside is the ability to share in the savings. I've just put you here a performance fee with the assumption it was $50.50, just showing you what happens on top of the annual membership fee where the revenue would be applicable.

15:44 And the goal is that, obviously, not only would you if you have shared savings as part of your agreements, you reduce the number of members that you need to break even by 50% in theory. But more importantly, we view this as that that is really the significant upside in profit, and our goal is just to continue to,

16:01 steadily increase our annual per member fee and meet these shared savings goals that are set out in some of the contracts to be able to continue to show the path to revenue. So just as a reminder about the three flagship programs, our first b to b to c program, which are really across the spectrum of different stakeholders here, our managed care health plan, which is our Medicaid managed care, which is a very important program for us. It's a demonstration project as noted, with the risk population having a certain health plan at Sinai that's part of population health management, and we've just begun the enrollment period for that. The other is the Mount Sinai employees, meaning those employees with, IBD within the health system have this as a wellness paid for wellness benefit.

16:50 And then the third, which is the provider agreement where you have members who are part of a labor union who seek care and their health sir health their IBD and their IBS management at Mount Sinai, and the, health system is providing TRLS at no cost to any 32 BJ member receiving care, at Sinai. Important perspective milestone events, and, really, this is where we're focused, as we speak, which is leveraging and continue to evaluate and build the data case and the real world evidence based on our ongoing paid DTC membership because our

17:29 free membership or the sponsored membership, I should say, ended, and we now have those members in the direct to consumer who are actual paying customers to, of course, continue our discussions, and scope, our growth opportunity with a large scale health plan, expanded access with pharma, be able to deliver a resilience program to,

17:53 IBD patients within the pharma space, and optimize strategic partnerships as well with our societies, both the provider societies and the member societies. Just to show you the readiness that is occurring as we speak, which is we need to do a few things to be, ready as part of our scope of work with our ongoing discussions with senior levels at our, at major health plans is to make the product American based on the American Disabilities Act compliance, for all disabilities, also enhance the user engagement, enhance our mobile first opportunities, as well as ensure that our digital behavior change strategies are indeed offering and continuing to offer, the ability to change behavior as well as from a technology perspective, ensuring the security and privacy of our health of our platform, also optimizing our reporting and analytics,

18:54 as well as, obviously, finalizing our brand strategy because the intent was, and there was discussions in the past around not needing to use, too much of our any kind of revenue, into ecommerce strategy. And we discussed that we don't have to be doing a traditional spending 80% of your revenue on ecommerce marketing because we can do some geo targeted digital marketing because this is not for the entire general population. This is specific to where, members with these certain conditions are most prevalent, and or where our b to b clients have the, have their members. So I think that's an important distinction, as it relates to where we are able to market specifically to providers and patients. So just summary and positive outlook when you look at sort of what we've built and where we are and where we're going is we have established that we have a comprehensive GI solution that addresses many GI lives, and I made the case for why GI is an important employer and health plan focus, market ready platform to be scalable and customized

20:03 to across multiple conditions, to be the best in class, digital behavior change intervention, continue to build and have now compelling real world evidence that supports the model, which was really the part of what we discussed in October, is the importance of being able to go to larger health plans and employers to say, look what happens to people on the platform. This could be how your members would also improve and turn that into a dollar savings, continue our ongoing, d to c paid memberships, as well as, continue the disciplined spend with cash runway and scope for significant growth from discussions with large health plans. So I thank you for your attention, and now, open it up for any questions that is in the q and a.

20:52 Marla, Steve, that's great. And thank you very much indeed for your presentation this afternoon. Ladies and gentlemen, please do continue to submit your questions just by using the Q and A tab that's situated on the top right hand corner of your screen. But just while the team take a few moments to review those questions that were submitted already, I would like to remind you that a recording of this presentation along with a copy of the slides and the published Q and A can be accessed via your investor dashboard. Marla, Steve, as you can see there in the Q and A tab, we have received a number of questions throughout today's presentation this afternoon. And thank you to all of those on the call for taking the time to submit their questions. But guys, if I may just hand back to you to respond to those questions where it's appropriate to do so, and then I'll pick up from you at the end. Thank you. Great. Thank you. So first of I'll answer the question, which was around our go to market strategy and building into both d to c and b to b and c.

21:46 So I just wanna highlight the difference between them because that's a really great question around, are they different offerings, but also how do we foresee continuing both? So the the reality is our b to b client offering is much more comprehensive and very focused on the combination of both providing the, team on the background of the TRELLUS side to actually connect with the provider through the provider app to be able to keep patients out of the ED and any unplanned hospitalization. So there's a large high touch component to the, b to b experience as well as the, rollout of the various assessments as well as the types of interventions. So it is important to note that the offering to a b to b client is quite different than the DTC based on the ROI.

22:36 So we incorporate different elements of the total offering based on whether it's a DTC or a b to b. Whilst large health plans and large employers are engaging with us in larger scale projects. There are many individuals out there, IBS, that will not have any access to a program like TRELLUS. So our goal is to continue to offer a resilience based offering to the direct to consumer, who is not yet connected or have this paid for by their, health plan or employer. And that's quite standard in The US is just to be able to offer somewhat more of a TRELLUS HEALTH solution, for example, to some of our d to c, engaged members so that their if their, you know, value prop is better quality of life, taking charge of their health, etcetera, they will be getting that as through, through the program. So there are different offerings, and there's a reason why, we're able to offer offer both. Now, Steve, maybe you can talk to because there was a question around, meaningful revenue growth a little bit in terms of timing and maybe how we've calculated our offering to the consumer and how we're covering the cost of delivering the program.

23:52 Certainly. In terms of where we see the meaningful revenue growth is really on the b to b, the business to business side with the health plans moving forward because that's the the health plans have the majority of The US market at their fingertips effectively. Like a tip an example of one health plan, which we currently in discussion with, well, they have 26,700,000 members. And, typically, one percent of that population would be IBD, sufferers. So we see the b to b the potential in b to b is is that will drive significant revenue. Particularly as from the slide which Mala showed earlier on, if you could get if typically on average, you'd get a thousand pounds sorry.

24:42 Thousand dollars per year, sorry, per individual member on the platform, then you could quite quickly see revenue growth picking up quite significantly. In terms of, I think there's another what what does the new business pipeline look like? Probably, Marla is best place to speak to that, but with we are in discussions early stage on, latter stage, I would say, discussions with several, health plans as we speak at the moment as we stand at the moment. Yeah. So, yeah, I can add to that. I think what we're realizing as we speak to multiple stakeholders is the fact that there are multiple lanes that TRELLUS' solution and the components and features of it can live. So, for example, as it relates to, you know, the pharmaceutical manufacturers, there's discussions around, as I noted in the past and at the interims, talking about clinical trial eligibility, for example. Is it that patients who have low resilience and don't have as much disease acceptance or are not as self managers, would that impact or lower the rates of abandoning clinical trials after even increasing enrollment and making sure that the right enrollment criteria and whether or not resilient should be a marker of that as an example? That's an important discussion point because that's something I personally have lived for a very long time and know that that, being able to be the right build the

26:14 right eligibility criteria is important. Secondly is is that all of us, so beyond the pill or the injection, it's important that individuals have the right, self management skill set in addition. So discussions around, providing this as part of a patient support program as another resource to help patients actually get good access and good care. Because when it comes to the IBD total addressable market, for example, there's really three main buckets. There's health plans and employers. There is the consumer, direct to consumer, and then there are individuals who are receiving a multitude of advanced therapies for which there are many patient support programs that help wrap around the patient. So, these are sort of where the discussions are in addition to, as Steve mentioned, you know, larger health plans as well as large employers.

27:06 I think there's another question, I think, in terms of is it, justifiable to still be a publicly listed company? Certainly, revenue has been there's been very small revenues since we've since we've listed, but this is the year where we see that starting to take off as the contracts which had been signed at the tail end of twenty twenty two now start to come to fruition. I know these were just pilot agreements and which, Marla, had put on a slide earlier on. But we start we are starting to see a bit of traction with revenue coming through now in 2023. How as extending our cash runway to 2025, which was, one of the things our investors wanted us to some of our key investor or major investors were looking for us to do to allow us the opportunity to take advantage of the large marketplace and and to prove ourselves.

28:06 And it does the being listed still does give us the opportunity to raise further funds in the future if we get significant growth at any point in time. That's right. I think there's a couple of more questions if we can go. I think those are the main ones. Yeah. Follow-up question to what you just said. Yeah. This is one again. A question about the cash runway with the impact negotiations with health care providers, in 2024. I think it's probably extending the cash runway is more key for our investors. I'm I'm not sure if the health care providers in The US have looked at that in a in sort of any sort of great detail, but it does allow us the opportunity. I suppose if we hadn't have extended the cash runway, then, we wouldn't have been able to speak to health care providers in 2024 because the spend probably in the early part, as you've probably seen from the slide earlier on, the spend in the early part of twenty twenty two was in excess of $1,000,000 a month, and that's reduced significantly now to below $700,000 a month, which we imply which we said at the interim.

29:24 That's come down further. So that has given us the opportunity to just take advantage or give us more time to negotiate some of these contracts with some of these large health care providers, which can be always take a little bit longer than you think because due to the very nature of the size of these organizations, they can be a little bit bureaucratic and not as fleet of foot as we might be because we are a relatively small team. That's right. I think that's, that's it. Yeah. I think that was it. Yeah. Marla, Steve, that's great. And thank you very much indeed for being so generous of your time then addressing all of those questions that came in from investors this afternoon. And, of course, if there are any further questions that do come through, we'll make these available to you immediately after the presentation has ended just for you to review and to then add any additional responses, of course, where it's appropriate to do so. And we'll publish all those responses out on the Investor Meet company platform.

30:22 But, Marla, perhaps before just really looking to redirect those on the call to provide you with their feedback, which I know is particularly important to yourself and the company, if I could please just ask you for a few closing comments to wrap up with, that'd be great. Sure. No problem. Thanks, Jake, for everything as well today. Yeah. I think, you know, the important point is, and I'm looking at the q and a and all the questions that came in, which were very appropriate, and aligned sort of with with where we're where we came from and where we're going. You know, it's been, so we took over in July, made the decision to launch a DTC early adopter program to get data, and that data has translated us to be able to have these later stage discussions and and mapping out scope. And I think, really, as noted in the RNS and in the announcements is that 2023 is a very important year for TRLS because we have literally set the foundation for us now to be having the conversations that we need to be having in terms of scope. And I think that that's really what you're gonna see for the remainder of the year for TRLS is us being able to take what we've built and move that forward and deliver on the promise of of what TRLS is intended to do and deliver to our b two b clients in particular.

31:38 Marla, that's great. And Steve as well, thank you once again for updating investors this afternoon. Could I please ask investors not to close this session as you'll now be automatically redirected for the opportunity to provide your feedback in order that the management team can better understand your views and expectations? This will only take a few moments to complete, but I'm sure will be greatly valued by the company. On behalf of the management team of TRLS Health PLC, we would like to thank you for attending today's presentation. That now concludes today's session. So good afternoon to you all. Thank you so much. Good evening. You very much. Bye bye.