Nuo Therapeutics Inc
For the period ended Sep 30, 2024. Filed Nov 12, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 12, 2024
AURXStored price and day change unavailable
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-12.
0001437749-24-025952
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-12.
0001437749-24-034325
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 72 previous paragraphs and 74 current paragraphs.
52 unchanged; 18 reworded; 3 added; 2 removed; 0 previous and 1 current paragraphs rearranged.
Tables are not compared: 6 previous and 6 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (3)
Current report
Under the 2021 NCD, while coverage for Aurix was mandated in the physician office setting, the payment rate was subject to determination by the local MACs with payment rates received ranging from approximately $120 to $800 per treatment. Based upon our perception of inconsistent, inadequate, and heterogeneous payment rates from the MACs, we submitted a formal comment request that CMS establish a national payment rate to reduce access barriers to the Aurix product.
Current report
On November 1, 2024, CMS issued final rules for the OPPS as well as the Medicare Physician Fee Schedule (“MPFS”) which will both become effective January 1, 2025. Under the OPPS, the national average reimbursement rate for 2025 will increase to $1,829 per treatment, an increase of approximately 5%. Under the MPFS, which outlines the Medicare payment rates to clinicians in the physician office setting, CMS established a national payment rate of approximately $900. We believe that potential adoption in the physician office setting in multiple geographies could be favorably impacted by the establishment of the MPFS national payment rate.
Current report
Comparison of Nine Months Ended September 30, 2024 and 2023
Removed paragraphs (2)
Previous report
Commercially available Aurix product was first available in late May 2022 for demonstration and evaluation purposes. Through a growing distributor network, Aurix is presently being evaluated by various hospital/facility Value Analysis Committees (VACs) as part of the process of approving its clinical use. While limited commercial revenues were recorded during the second half of 2022 and revenues increased to approximately $610,000 in 2023 and approximately $599,000 for the six months ended June 30, 2024, we reasonably expect revenues to exhibit continued growth in future periods.
Previous report
Comparison of Six Months Ended June 30, 2024 and 2023
Reworded paragraphs (18)
Previous wording
Our current commercial offering consists of point of care technology for the safe and effective separation of autologous blood to produce a platelet-based therapy for the chronic wound care market. This offering is known as “Aurix” or the “Aurix System”. The FDA cleared the Aurix System for marketing in 2007 as a device under Section 510(k) of the Federal Food, Drug, and Cosmetic Act (“FDCA”). Aurix is one of two platelet derived products cleared by the FDA for chronic wound care use and is indicated for most exuding wounds. The advanced wound care market, within which Aurix competes, is composed of advanced wound care dressings, wound care devices, and wound care biologics, and is estimated to be an approximate $10.8 billion global market in 2021 with the North American market estimated at approximately $4.15 billion in 2020. Estimates remain that 1-2% of population in the developed countries will suffer from a chronic wound at least once in their lifetime. According to the National Institute of Health, treatment of diabetic foot ulcers cost an estimated $9-$13 billion annually in the U.S. alone. An aging population and the still increasing prevalence of diabetes suggests a continued increase in the patient population at risk of developing chronic, non-healing wounds.
Current wording
Our current commercial offering consists of point of care technology for the safe and effective separation of autologous blood to produce a platelet-based therapy for the chronic wound care market. This offering is known as “Aurix” or the “Aurix System”. The FDA cleared the Aurix System for marketing in 2007 as a device under Section 510(k) of the Federal Food, Drug, and Cosmetic Act (“FDCA”). Aurix is one of two platelet derived products cleared by the FDA for chronic wound care use and is indicated for most exuding wounds. The advanced wound care market, within which Aurix competes, is composed of advanced wound care dressings, wound care devices, and wound care biologics. Advanced wound care was estimated to be an approximate $10.8 billion global market in 2021 and estimated to be an approximately $4.15 billion North American market in 2020. Estimates indicate that 1-2% of the population in developed countries will suffer from a chronic wound at least once over their lifetime. According to the National Institute of Health, treatment of diabetic foot ulcers cost an estimated $9-$13 billion annually in the U.S. alone. An aging population and the still increasing prevalence of diabetes suggests a continued increase in the patient population at risk of developing chronic, non-healing wounds.
Previous wording
In 2012, a Medicare National Coverage Determination (“NCD”) from CMS reversed a twenty-year old non-coverage decision for autologous blood derived products used in wound care. This NCD allowed for Medicare coverage under the Coverage with Evidence Development (“CED”) program. CED programs have been employed for a selected number variety of other therapies. Under the CED program, CMS provides reimbursement for items or services on the condition that they be furnished in approved clinical protocols or in the collection of additional clinical data. Under the CED program, a facility treating a patient with Aurix was reimbursed by Medicare when health outcomes data were collected to inform future coverage decisions. The intent of the CED program is to evaluate the outcomes of Aurix therapy for the broader Medicare population when it is used in a “real world” continuum of care.
Current wording
In 2012, a Medicare National Coverage Determination (“NCD”) from CMS reversed a twenty-year non-coverage decision for autologous blood derived products used in wound care. This NCD allowed for Medicare coverage under the Coverage with Evidence Development (“CED”) program. CED programs have been employed for a selected variety of other therapies. Under a CED program, CMS provides reimbursement for items or services on the condition that they be used in approved clinical protocols or in the collection of additional clinical data. Under the CED program applicable to the Aurix System, a facility treating a patient with Aurix would be reimbursed by Medicare when health outcomes data were collected to inform future coverage decisions. The intent of the CED program was to evaluate the outcomes of Aurix therapy for the broader Medicare population when used in a “real world” continuum of care.
Previous wording
In May 2019, we transmitted a letter memorandum to CMS’ Coverage and Analysis Group (“CAG”) in support of our complete formal request for reconsideration of the then existing national coverage determination based on clinical data collected and published under the CED program. The complete formal public request for reconsideration was made on May 8, 2019 in accordance with the applicable requirements.
Current wording
In May 2019, we transmitted a letter memorandum to CMS’ Coverage and Analysis Group (“CAG”) in support of our formal request for reconsideration of the then existing NCD based on clinical data collected and published under the CED program.
Previous wording
On April 13, 2021, CMS issued a final coverage decision memo indicating that Medicare would nationally cover autologous PRP for the treatment of chronic non-healing diabetic wounds for a duration of 20 weeks under Section 1862(a)(1)(A) of the Social Security Act. This coverage applies when using devices whose FDA-cleared indications include the management of exuding cutaneous wounds, such as diabetic ulcers. Coverage of autologous PRP beyond 20 weeks for diabetic foot ulcers and for the treatment of all other chronic, non-diabetic, non-healing wounds will be determined by local Medicare Administrative Contractors.
Current wording
On April 13, 2021, CMS issued a final coverage decision memo indicating that Medicare would nationally cover autologous PRP for the treatment of chronic non-healing diabetic wounds for a duration of 20 weeks under Section 1862(a)(1)(A) of the Social Security Act. This coverage applies when using devices whose FDA-cleared indications include the management of exuding cutaneous wounds, such as diabetic ulcers. Coverage of autologous PRP beyond 20 weeks for diabetic foot ulcers and for the treatment of all other chronic, non-diabetic, non-healing wounds would be determined by local Medicare Administrative Contractors ("MACs").
Previous wording
Although FDA cleared the Aurix System for marketing in 2007 under Section 510(k) of the FDCA, CMS only established economically viable reimbursement for the product beginning in 2016 in conjunction with the CED program and its requirements and limitations. For 2024, the Medicare national average reimbursement rate for the Aurix System is $1,739 per treatment, which we believe provides adequate payment to facilities for product usage. Under the proposed rule for Hospital Outpatient Prospective Payment System (OPPS) released in July 2024, the national average reimbursement rate will increase to $1,822 per treatment effective January 1, 2025. We market the Aurix System at an approximate cost of $800 per treatment to wound care providers in the hospital outpatient setting.
Current wording
For 2024, the Medicare national average reimbursement rate for the Aurix System is $1,739 per treatment under the Hospital Outpatient Prospective Payment System ("OPPS') final rules. the national average reimbursement rate will increase to $1,822 per treatment effective January 1, 2025. We market the Aurix System at an approximate cost of $800 per treatment to wound care providers in the hospital outpatient setting.
Previous wording
Our current commercial focus is establishing engagement with providers treating chronic non-healing wounds to demonstrate the clinical benefits we believe result from the use of Aurix in the treatment of complex wounds. Increasing physician awareness of the differentiating attributes of Aurix will be key to establishing a base of product revenues upon which to grow. We anticipate developing these relationships with clinical providers and treatment facilities primarily by establishing a variety of distributor arrangements throughout the United States. Our commercial team consists of three senior employees who are leveraging their current and historical relationships to establish distributor arrangements. As of June 30, 2024, we had established contractual relationships with more than 200 individual distributor representatives including. a multi-state agreement with Pacific Medical, Inc. covering multiple large markets in the western United States. The number of distributor representatives may continue to expand modestly but the current focus is establishing commercial customer relationships with wound care providers in primarily hospital outpatient wound care clinics and ensuring that the reimbursement mechanisms are appropriately administered by the local Medicare Administrative Contractors in support of the April 2021 NCD.
Current wording
Our current commercial focus is establishing engagement with providers treating chronic non-healing wounds to demonstrate the clinical benefits we believe result from the use of Aurix in the treatment of complex wounds. Increasing physician awareness of the differentiating attributes of Aurix will be key to establishing a base of product revenues upon which to grow. We anticipate developing these relationships with clinical providers and treatment facilities primarily by establishing a variety of distributor arrangements throughout the United States. Our commercial team consists of three senior employees who are leveraging their current and historical relationships to establish distributor arrangements. As of September 30, 2024, we had established contractual relationships with more than 200 individual distributor representatives including. a multi-state agreement with Pacific Medical, Inc. covering multiple large markets in the western United States. While we anticipate the number of distributor representatives will continue to expand modestly, our current focus is establishing commercial customer relationships with wound care providers in hospital outpatient wound care clinics during the remainder of 2024 and preparing for the implementation of the MPFS national payment rate in the physician office setting beginning in January 2025. We also continue to be focused on ensuring that reimbursement mechanisms are properly administered by the local MACs under the April 2021 NCD and the MPFS final rule for 2025.
Previous wording
Product revenues for the three months ended June 30, 2024 totaled approximately $365,000 in comparison to product revenues of approximately $118,000 in the three months ended June 30, 2023. Associated gross profit was approximately $299,000 in the three months ended June 30, 2024 in comparison to approximately $98,000 of gross profit in the three months ended June 30, 2023. The increase in revenues and gross profit was due to an expanding customer base over the past year as hospital wound care facilities and providers become incrementally aware of the Aurix product and the 2021 Medicare NCD.
Current wording
Product revenues for the three months ended September 30, 2024 totaled approximately $371,000 in comparison to product revenues of approximately $232,000 in the three months ended September 30, 2023. Associated gross profit was approximately $270,000 in the three months ended September 30, 2024 in comparison to approximately $178,000 of gross profit in the three months ended September 30, 2023. The increase in revenues and gross profit was due to an expanding customer base over the past year as hospital wound care facilities and providers become incrementally aware of the Aurix product and the 2021 Medicare NCD. Gross profit for both the three months ended September 30, 2024 and 2023 were negatively impacted by provisions for inventory obsolescence of $30,000 and approximately $16,000, respectively.
Previous wording
Total operating expenses decreased approximately $128,000 to approximately $841,000 comparing the three months ended June 30, 2024 to the three months ended June 30, 2023. The decrease from the prior year was due primarily to a decrease in (i) compensation and benefits expense of approximately $101,000 and (ii) external consulting and professional fees of approximately $73,000 which was partially offset by an increase in sales infrastructure costs including distributor commissions of approximately $48,000.
Current wording
Total operating expenses decreased approximately $120,000 to approximately $848,000 comparing the three months ended September 30, 2024 to the three months ended September 30, 2023. The decrease from the prior year was due primarily to a decrease in (i) provision for credit losses of $100,000, (ii) compensation and benefits expense of approximately $71,000 which was partially offset by an increase in (i) external consulting and professional fees of approximately $40,000 and (ii) sales infrastructure costs including distributor commissions of approximately $31,000.
Previous wording
Other income, net for the six months ended June 30, 2024 represents interest income on cash balances in excess of interest expense associated with the financing of insurance premiums and a nominal other income gain. Other expense, net for the six months ending June 30, 2023 primarily represents the same interest expense type charges in excess of nominal interest income.
Current wording
Other expense, net for the three months ended September 30, 2024 and 2023 represents interest expense associated with the financing of insurance premiums in excess of interest income earned on excess available cash balances.
Previous wording
Product revenues for the six months ended June 30, 2024 totaled approximately $599,000 in comparison to product revenues of approximately $179,000 in the six months ended June 30, 2023. Associated gross profit was approximately $483,000 in the six months ended June 30, 2024 in comparison to approximately $148,000 of gross profit in the six months ended June 30, 2023. In line with the three-month comparison above, the increase in revenues and gross profit was due to an expanding customer base as hospital wound care facilities and providers become incrementally aware of the Aurix product and the 2021 Medicare NCD.
Current wording
Product revenues for the nine months ended September 30, 2024 totaled approximately $970,000 in comparison to product revenues of approximately $412,000 in the nine months ended September 30, 2023. Associated gross profit was approximately $754,000 in the nine months ended September 30, 2024 in comparison to approximately $327,000 of gross profit in the nine months ended September 30, 2023. In line with the three-month comparison above, the increase in revenues and gross profit was due to an expanding customer base as hospital wound care facilities and providers become incrementally aware of the Aurix product and the 2021 Medicare NCD. Gross profit for both the nine months ended September 30, 2024 and 2023 were negatively impacted by provisions for inventory obsolescence of $30,000 and approximately $16,000, respectively.
Previous wording
Total operating expenses decreased approximately $140,000 to approximately $1,735,000 comparing the six months ended June 30, 2024 to the six months ended June 30, 2023. The decrease from the prior year was due primarily to decreases in (i) compensation and benefits expense of approximately $189,000 and (ii) external consulting and professional fees of approximately $40,000 which was partially offset by an increase in sales infrastructure costs including distributor commissions of approximately $71,000.
Current wording
Total operating expenses decreased approximately $260,000 to approximately $2,582,000 comparing the nine months ended September 30, 2024 to the nine months ended September 30, 2023. The decrease from the prior year was due primarily to decreases in (i) compensation and benefits expense of approximately $261,000 (ii) provision for credit losses of approximately $83,000, and (iii) operating lease costs of approximately $26,000 which was partially offset by an increase in sales infrastructure costs including distributor commissions of approximately $124,000.
Previous wording
Other income net for the three months ended June 30, 2024 represents interest income on cash balances in excess of interest expense associated with the financing of insurance premiums and a nominal other income gain. Other expense, net for the three months ending June 30, 2023 primarily represents the same interest expense type charges in excess of nominal interest income.
Current wording
Other income, net for the nine months ended September 30, 2024 represents interest income on available cash balances in excess of interest expense associated with the financing of insurance premiums and by a nominal other income gain. Other expense, net for the nine months ending September 30, 2023 primarily represents the same interest expense type charges in excess of nominal interest income.
Previous wording
As of June 30, 2024, we had cash, cash equivalents, and restricted cash of approximately $0.5 million, total current assets of approximately $1.2 million and total current liabilities of approximately $0.7 million. As an operational business, we have a history of losses and are not currently profitable. For the years ended December 31, 2023, and 2022, we incurred net losses of approximately $3.2 million in each year. As of June 30, 2024, our accumulated deficit was approximately $31.2 million and our stockholders’ equity was approximately $0.6 million.
Current wording
As of September 30, 2024, we had cash, cash equivalents, and restricted cash of approximately $0.7 million, total current assets of approximately $1.3 million and total current liabilities of approximately $0.7 million. As an operational business, we have a history of losses and are not currently profitable. For the years ended December 31, 2023, and 2022, we incurred net losses of approximately $3.2 million in each year. As of September 30, 2024, our accumulated deficit was approximately $31.8 million and our stockholders’ equity was approximately $0.9 million.
Previous wording
During the six months ended June 30, 2024, we sold 867,833 shares of common stock to certain accredited investors pursuant to a Securities Purchase Agreement in a private placement which closed in May 2024 for total proceeds of $650,875. Additionally, during the six months ended June 30, 2024, we received proceeds of $151,200 from the exercise of warrants by Pacific Med.
Current wording
During the nine months ended September 30, 2024, we sold 2,000,000 shares of common stock to certain accredited investors pursuant to Securities Purchase Agreements in two private placements which closed in May and September 2024 for total proceeds of $1,500,000. Additionally, during the nine months ended September 30, 2024, we received proceeds of $151,200 from the exercise of warrants by Pacific Med.
Previous wording
Cash used in operating activities for the six months ended June 30, 2023 of approximately $1.7 million primarily reflects our net loss of approximately $1,728,000 adjusted by (i) approximately $33,000 net change in operating assets and liabilities and (ii) approximately $59,000 total depreciation and amortization expense and stock-based compensation expense.
Current wording
Cash used in operating activities for the nine months ended September 30, 2024 of approximately $1.7 million primarily reflects our net loss of approximately $1.8 million adjusted by (i) approximately $57,000 net change in operating assets and liabilities, (ii) approximately $95,000 total depreciation and amortization expense and stock-based compensation expense and (iii) provisions for inventory obsolescence and credit losses totaling $47,500.
Previous wording
Cash used in operating activities for the six months ended June 30, 2024 of approximately $1,254,000 primarily reflects our net loss of approximately $1,249,000 adjusted by (i) approximately $76,000 net change in operating assets and liabilities, (ii) approximately $53,600 total depreciation and amortization expense and stock-based compensation expense and (iii) a provision for credit losses of $17,500.
Current wording
Cash used in operating activities for the nine months ended September 30, 2023 of approximately $2.5 million primarily reflects our net loss of approximately $2.5 million adjusted by (i) approximately $0.2 million net change in operating assets and liabilities and (ii) approximately $97,000 total depreciation and amortization expense and stock-based compensation expense and (iii) a combined provision for credit losses and inventory obsolescence of approximately $116,000.
Previous wording
We had limited investing activities for the six months ended June 30, 2024 and 2023.
Current wording
Cash used in investing activities for the nine months ended September 30, 2024 of approximately $155,000 primarily represents our initial purchase of centrifuges since our restart of commercial operations in the amount of approximately $151,000. We had limited investing activities for the nine months ended September 30, 2023.
Previous wording
Cash flows from financing activities for the six months ended June 30, 2024 reflects proceeds of (i) $650,875 from the sale of 867,833 shares of common stock in a private placement closed in May 2024 and (ii) $151,200 from the exercise of 270,000 warrants in June 2024. We did not have any financing activities for the six months ended June 30, 2023.
Current wording
Cash flows from financing activities for the nine months ended September 30, 2024 reflects proceeds of (i) $1,500,000 from the sale of 2,000,000 shares of common stock in two private placements that closed in May and September 2024 and (ii) $151,200 from the exercise of 270,000 warrants in June 2024.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
Cash flows from financing activities for the nine months ended September 30, 2023 reflects $1,035,000 of proceeds raised from the sale of 517,500 shares of common stock in a private placement closed in August 2023.