Trellus Health (LSE:TRLS) — Interim Results 30th June 2024

0:00 Good morning, Dick. Thank you very much. I'm here with our CFO, Joy Besacher, and we're delighted to be presenting our interim results for the period ending June 30. So here is our disclaimer slide. So let's dig in. As a reminder, it's always good to set the tone as to what Trellis is and do a company overview. So Trellis Health delivers a validated, personalized solution for managing chronic conditions called TRELLUS Elevate that's been proven to enhance outcomes, improve adherence to medications and treatment plans, and lowers the costs associated with complex chronic condition management. Leveraging proprietary resilience building approach, we provide significant value to both health plans and the pharmaceutical sector.

0:46 So in our interim 2024 highlights, I would like to share with you that we signed and launched our first commercial scale pilot, a large US health plan. We signed two licensing agreements with pharma for proprietary assessments and content. We announced our new board chair with extensive US health experience, Mr. Kevin Murphy. We received and maintain our SOC two Type two certification, meeting industry standards for system security and reliability. We have sustained operational scalability while extending our cash runway into late Q3 twenty twenty five, and we are advancing discussions with potential partners across all our verticals. Post period highlights include extended enrollment for our large health plan beyond the initial six month enrollment period, which we had described previously.

1:38 Brian Griffin was appointed to the Board of Directors and also brings U. S. Healthcare and pharmaceutical sector expertise. So a high level summary of our large health plan program. It was launched in March 2024 and as a reminder it was covering two states, both New York and Connecticut. The term of the contract, the initial term, was twenty one months and is twenty one months. There has been slower enrollment than expected with a smaller number of enrolled patients to date. However, given this and knowing the value to our partner, we have actually been able to extend the enrollment phase in a rolling enrollment over the entire term of the contract to support more enrollment so that we can continue to prove the value of our program to our health plan partner.

2:28 What we've noted also is we've been able to already, which we'll show you in just a moment, look at increased resilience scores as our key outcome metric. Early program data has demonstrated that this metric predicts lower health care costs. And enrollment that we're seeing, although slower than normal, as noted, is actually in keeping with industry standard. We continue to have our joint steering committee calls to review the metrics and the population. We continue to have marketing to providers as well as text campaigns from our partner to their members. And just as a reminder of the pricing model, we have a monthly fee per engaged member plus a one time implementation fee in the initial term.

3:15 These are interim program data, and we're thrilled to be presenting these. So we have ninety percent of individuals who actually have their first virtual visit with our team member actually joined Trellis Elevate. Seventy percent of members reported greater confidence in managing their condition within three months of starting their personalized Trellis Elevate program. And as I just mentioned, self efficacy and confidence is an important key early KPI, such that increased confidence in managing one's condition is associated with improved adherence to medication and medical treatment plan. Eighty nine percent of members experienced an increase in their resilience scores after completing their personalized TRELLUS Elevate program,

3:59 and members were active on the platform for an average of ten weeks with average three and a half times weekly platform engagement. I will now turn it over to Joy. Thank you, Marla. I'm going to present a couple of highlights from the interims on our financials. So we ended the first half of the year with $8,000,000 compared to $12,200,000 for year end. Our adjusted EBITDA loss was $3,600,000 for the period compared to $5,800,000 in the first half of 'twenty three. We've continued to start to decline our capital investment to date, only spending $400,000 excuse me, on technology platform development companion software. And that was largely to build out to enhance the program that we're offering to our various partners and potential partners.

4:53 Our net revenue was 50,000, and that was made up of licensing fees and fees from our large health care plan. Our cash burn projections continue to be in line with our guidance to market despite lower than anticipated revenue in the first half, which really just shows that we continue with our financial discipline. Our current cash resources are projected to take us to very late Q3 'twenty five, assuming current level of revenues only, and maintaining spend at disciplined and planned levels.

5:27 I'm going to talk a little bit about our levers for growth and value and a little bit also about the learnings from our first commercial scale health plan. So our focus is on high cost claimants and the TRLSS elevate quadrants, which Marla is going to go into in just a minute. The highest cost members in The US represent 50% of the medical and drug spend across the country. US health plan pricing assumed that across all four of our quadrants, the average of high and low cost members were a set amount. And our data shows we have substantial impact on the highest cost members by changing their beliefs, attitudes, and behaviors, and leading to greater self efficacy.

6:13 We do get better outcomes, adherence, lower costs, increased savings. What we learned from our first commercial scale partnership and subsequent discussions with industry leaders, we are shifting towards an engagement payment closer to the value based industry standard. And we've identified real opportunities to increase platform engagement. As we expand into the pharma and clinical trial verticals, we're going to leverage our expertise and extend our access to a much larger pool of members.

6:43 Thank you, Joy. Let me now get into some of these concepts around when we talk about TRELLUS HEALTH and our ELEVATE Quadrant. So as a reminder, what we have that is really unique for TRELLUS is we have our proprietary assessment which measures resilience. Just as a reminder, as a key asset, not only do we have delivery of self management skills and teachings and education, we actually start our program by assessing an individual's resilience. Why is this important? So what we've laid out here, which is how we've been talking about how we have a unique opportunity to actually work with our partners and say that in individuals, by their claim Joy had mentioned the word claimant.

7:29 What that means is that the individual who has health care claims, which our health care partners, for example, know exactly who has dropped a health care claim in the last year, in the last two years, they're able to track that. And so what we work with our partners to say is, can you please let us know what the total spend of the various populations you have? And we, by measuring resilience, we could actually give some insight to our partners and say, the reason why that individual had a high medical spend or a high pharmacy spend is in addition they have low resilience. So that's where we divide up our way of delineating populations. We say, all right, individuals have a high spend to the health care system.

8:16 When they also have low resilience based on our assessment, we put them in quadrant one. Now, on average, these high cost claimants are $100,000 plus a year to manage these individuals. When you look at quadrant two and three, can see that there's a little bit difference, is that quadrant two also was a quadrant or a group of individuals who have a high medical spend. They're being admitted to the emergency room, being through the emergency room, multiple visits, multiple scans, multiple procedures. They may not be on a very expensive specialty med, but they have low resilience, which actually is contributing to why they're using the emergency room or why they're being admitted more often. Quadrant three, although an individual in our assessment had high resilience, they are though on expensive specialty medications and they've also had many procedures. They may have had a surgery, for example, but these are high resilient individuals, but they still cost a significant amount because of their medical spend.

9:15 And the fourth quadrant are those that have high resilience, but they are not on expensive medications like biologics or innovative small molecules, and they also haven't been hospitalized. So what Joy was getting is that we realized that where we have our best ability to really show our partners significant savings by delivering Trellis Elevate is really in these quadrants where there are higher costs. And obviously, the highest cost quadrant is quadrant one because they also have low resilience. So you could see the way that we think about talking to our partners about which individuals would we have most value to them and their program, And therefore, knowing that when we really focus on not just everybody and the average cost around all four quadrants, we're able to hone in on those that are actually more expensive, which is really a unique value prop for TRLS.

10:11 So another thing to remember about how it works and sort of how we get to a point where people engage or individuals engage on the platform is we start with the total addressable market. So we know in total how many individuals have a certain disease, how many individuals are on a certain medication, and that becomes our total eligible membership. In order to actually get them to a point where they engage, we make it very simple. They fill out their online risk assessment, which is what I just showed you in the quadrants, which is their resilience score. They also have what we call our condition complexity score. We would get some information around how many specialty meds they failed, how many hospitalizations have they actually had, so we can actually have visibility ourselves into the cost of care of these individuals.

11:00 And then they actually have their screening call with a team member that reviews the results, makes sure they qualify, and then engage in the platform. Joy had mentioned the term verticals and sort of our highlights around where we've noted from our learnings that in essence with our health plan partner, we're actually able to see early on that one of our key metrics is actually that they engage in their care and more effectively and more confidently, but they also actually have increased medication adherence. As we saw what value our method, which is this gold box here, our proprietary method, which has our validated results and adaptable to any KPI that our partners may want us to solve for and show value.

11:53 And so when we realize that medication and treatment adherence is such an important part of the value that we're providing to our health plan members, it was clearer and we have talked about and I have mentioned for almost two years now actually that we are really focusing in on also adapting and really partnering with pharmaceutical sector, particularly in the patient support program lane or vertical, which is where you wrap around an individual who has been prescribed by their primary physician or gastroenterologist in this case where they have been prescribed a specialty med and all of these pharmaceutical manufacturers have these patient support programs where they wrap around the patient, they provide some copay assistance, they provide some support. But what they realize is that that is not whole holistic support.

12:49 And so therefore wrapping around the patient that is on their product, for example, will increase persistency of medication refills because that is really the value to our pharma partners by having individuals stay resilient and stay adherent to their medication. And then the same applies with clinical trials. Being able to adapt the attitudes, beliefs, behaviors, try to uncover why an individual may not want to enroll in a clinical trial, what are the barriers, and being able to actually take away and or solve for the psychological impact of having a chronic incurable debilitating condition where yet this may be another medication that I may not respond to or there's a placebo and all of the queries and fears that individuals have around a clinical trial, we're able to determine whether individuals are resilient, ready for a clinical trial and then be able to improve the ability to get the right individuals into clinical trials and be able to decrease the amount of screen failures, which means right now about fifty percent of individuals who've gone through an expensive screening in a clinical trial are not even eligible to be recruited. So solving for that screen failure rate is a really important value for us, and that's really where we are focused.

14:16 In another way of talking about how do we expand our program access and growth, I just sort of talked plainly around sort of the ideas that there are three verticals that we are focusing in. We are in the health plan vertical, as noted, and moving hopefully in the not too distant future into these other verticals. And so what we've also learned is that we really need to be focused on sort of those that are commercially scalable right now. We understand that health plans take a while to actually go through the process. The sales cycle is quite long. And while we continue to focus on health plans, we've got one of the largest health plans that we are delivering our program to, we have also realized acutely aware that there are these other verticals that we've just talked about actually have a shorter sales cycle.

15:05 And so really there's an urgency in clinical trials because every day that there are less individuals that get randomized in a trial or make it to the end of the trial, that's actually delaying their ability to come to market. So we know there's an urgency with our pharma partners as it relates to clinical trials, as well as if a drug is on the market and they want to have more access, more refills, more adherence to medication, there's a greater urgency to partner with TRELLUS as we deliver on that value. And of course, we just talked about health plans. So that is one lesson learned, but also our focus. In terms of other focus, which is to think about, we understand that inflammatory bowel disease, for example, is about one percent prevalence.

15:52 So whatever our client pool of individuals or what we call eligible members, it must be large enough. So we must be partnering, as we are now, with large health plans because they have the largest number of lives that are covered by that insurance that have inflammatory bowel disease. We also, as noted, you can see that we continue to push forward our goals of partnering with the larger pharmaceutical manufacturers as they also have large number of IBD patients that are on these expensive specialty medications. And the third point around our ability to expand and access was the idea to include also, should we go towards including conditions beyond inflammatory bowel disease, right? Should we be managing health plan members across multiple high cost immune conditions because our model is adaptable.

16:43 It is not solely about the attitudes, beliefs and behaviors around inflammatory bowel disease patients. Behavior is behavior. And most individuals with these immune conditions, for example, psoriasis, rheumatoid arthritis, multiple sclerosis, they also have similar struggles and condition management struggles and need better control of their health and need a tool like TRLS to improve their self management and self efficacy and their resilience. Secondly, we also have pharma patients who have one drug that is used in IBD, but most of these drugs that are used for Crohn's and ulcerative colitis are also used for psoriasis, rheumatoid arthritis, psoriatic arthritis, ankylosing spondylitis.

17:31 There's a list, a laundry list of other immune conditions that share the same biology and share the same therapeutic approach. And then similarly, manage pharma patients who have more than one drug. So many of our pharma partners have more than one therapy. They've had a legacy. They've been in this space for twenty plus years, some of them, delivering these medications specifically for IBD plus other immune conditions. So what we wanted to lay out here is sort of the roadmap, the playbook. Where do we partner? Where do we spend our focus and time being being able to deliver deliver what what we know know the the TRELLUS TRELLUS HEALTH HEALTH across the multitude of verticals? And that's really where we are focused, and we are focused on those that can progress faster while still maintaining our focus on changing the lives of individuals through their health plan to be able to build more self effective, empowered patients, gain control of their health. So a summary and outlook.

18:37 We have positive commercial progress with our agreement signed with our large health plan. We've now extended the enrollment period to allow more individuals to access the program. And even as of yesterday, we continue to get new individuals into PLC the program starting their assessment and engaging in the platform. We have opportunities for TRELLUS across multiple new verticals now including the pharmaceutical sector and we focused on clinical trials and patient support. As I noted, I've been talking about the patient support concept and partnering with the pharmaceutical industry and now we are moving closer to that with ongoing commercial discussions across these verticals, including two later stage discussions.

19:22 And of course, we continue to learn systems, playbooks, and insights for successful execution. So I would like to thank you for joining us today on this IMC. If you have any questions, please direct them to Walbrook and they will answer those in due course. So thank you and have a great rest of your day.