Asensus Surgical, Inc.

Good afternoon, ladies and gentlemen, and welcome to the Ascensus Surgical Fourth Quarter and Full Year Business Update Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session, and instructions will follow at that time. I would now like to turn the call over to Mr. Mark Klosner of Westwick. Please go ahead.

Thanks, Operator. Good afternoon, everyone, and thank you for joining us on today's call. On the call with me today are Anthony Fernando, President and Chief Executive Officer, and Shamiz Rampertab, Chief Financial Officer. Before we begin, I would like to caution listeners that certain information discussed by management during this conference call, including any guidance provided, are forward-looking statements covered under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Actual results could differ materially, from those stated or implied by our forward-looking statements due to risks and uncertainties associated with the company's business, including any impact from the COVID-19 pandemic. The company undertakes no obligation to update the information provided on this call. For discussion of risks and uncertainties associated with a census surgical's business, I encourage you to review the company's filing with the Securities and Exchange Commission, including the Form 10-K, expected to be filed later today, and other filings we make with the SEC. During this call, we will also present certain non-GAAP financial information related to adjusted net loss attributable to common stockholders and adjusted net loss per common share attributable to common stockholders. Management believes that non-GAAP financial measures taken in conjunction with U.S. GAAP financial measures provide useful information for both management and investors by excluding certain non-cash and other expenses that are not indicative of the company's core operating results. Management uses non-GAAP measures to compare our performance relative to forecast and strategic plans to benchmark our performance externally against competitors and for certain compensation decisions. Reconciliations from U.S. GAAP to non-GAAP results are presented in the tables accompanying our earnings release which can be found in the Investor Relations section of our website. It is now my pleasure to turn the call over to Ascensus Surgical's President and Chief Executive Officer, Anthony Fernando.

Thanks, Mark, and thank you all for joining us today. On today's call, I will begin by reviewing our recent progress. Then I will hand the call over to Shamice to review our financial performance after which I will discuss our priorities for 2021 before turning to Q&A. Now, shifting to an update on our key focus areas for 2020. As a reminder, these are first market development, which involves building awareness of the Sennheis system and effectively demonstrating the clinical and economic value in the marketplace by increasing the visibility of the success that our customers are having with the SENHANCE. Second, clinical validation, which emphasizes the development of clinical evidence, supporting the value proposition of the SENHANCE. And third, portfolio expansion, which focuses on broadening the applicability of SENHANCE by adding new indications, features, and new instruments. Starting with our first focus area, market development. Specific to new system installs, as of the end of the year, we initiated 10 new clinical programs, three in the US, four in Europe, and three in Asia. As it relates to our pipeline, the demand for SennHands remains strong. To help support that demand, we have added dedicated training facilities in key geographies. We launched a training center in Japan in the third quarter of 2020, and in February of 2021, we announced an agreement to launch a new surgical training center in Amsterdam. Through a partnering agreement with Amsterdam Skills Center, this site will serve surgeons and staff throughout Europe with training on Sennheis. In addition, the Skills Center will also provide us with a world-class facility to engage European surgeons in technology and clinical development studies. We face a growing need to train European surgical teams as we continue to expand our footprint and adoption in Europe, and adding this second training site alongside our site in Milan will go a long way towards doing so. Turning to procedure volumes. After hitting a low point during the second quarter of 2020, we have seen a continued rebound during the second half of the year, with fourth quarter volumes approaching 2019 levels and growing sequentially over the third quarter by over 20%. Performance varied between geographies, primarily driven by COVID and COVID-related shutdowns experienced in the respective areas of the world. It is encouraging to note that in all three of our geographic regions, procedure volumes improved on a sequential basis as compared to the third quarter of 2020. And two of the three regions showed year-over-year growth. the U.S. and Asia. Europe was and continues to be the most impacted region as various resurgences have forced shutdowns and significant slowdowns in procedure volumes. For the full year, over 1,450 procedures were performed using Senhance, down approximately 10% as compared to 2019. We expect this trend to revert as we move into 2021. Shifting to an update on our foundational sites. At the end of the year, we had 11 foundational sites, up seven at the start of 2020. As a reminder, foundational sites are hospitals that are performing or on track to perform clinical procedures with SENDHANDS at an annualized rate of greater than 100 procedures per year. The slowdown in elective procedures experienced during a significant portion of the year slowed the expansion of these foundational sites. We are optimistic that we should start to see an acceleration of new foundational sites as COVID subsides and we start to see a positive impact from the recent system placements, along with the tailwinds from our recently expanded portfolio. Turning to our second focus area, clinical validation. In 2020, we continued to focus on the development of health economic and clinical performance data, with an emphasis on the cost impact of SENHANCE relative to traditional laparoscopy, as well as other surgical robotic systems. During the year, there were 15 peer-reviewed clinical papers published providing further support of the clinical utility of the Sennhez across a variety of specialties, demonstrating the utility, breadth, and the complexity of procedures being performed. Beyond those published clinical papers, we made good progress on several studies, including two comparative studies, comparing the average cost per procedure between senhance, laparoscopy, and robotics. Turning to our third focus area, portfolio expansion. During 2020, and thus far in 2021, we made tremendous progress in what turned out to be a challenging regulatory environment given COVID. In February 2020, we received a CE mark approval that enabled Senhance to be used on pediatric patients. In October, the first cases were completed, and since then, a cadence of pediatric cases has increased. We continue to view pediatrics as a highly underserved market that will benefit significantly from the capabilities CENHANS provides. In March 2020, we received FDA 510 clearance for the Intelligent Surgical Unit, or ISU. In September, we announced the completion of the first surgeries using the ISU's machine vision capability, and cases are now being done on a regular basis with ISU-enabled systems. In early 2021, we received a CE mark for this version of the ISU, and early feedback from surgeons following the first cases completed in Europe has been very positive. We are excited about the early success of the ISU as it represents the initial building block of our digital strategy. We are working to add incremental ISU features, namely the next generation of machine vision and augmented intelligence capability, such as scene recognition and surgical image analytics. During the fourth quarter, we received regulatory approval in the Russian Federation. We believe that the Russian robotic surgery market is underserved and provides an opportunity to grow to enhance surgical system installations. Just last week, we announced we received FDA 510 clearance for expanded indications for general surgery. This is a major milestone for the growth and clinical applicability of our technology. General surgery is by far the largest area of manual laparoscopy which can benefit from robotic precision and digital insights of Sennhez. The indication expansion also allows Sennhez to be used in many high-value, complex reconstructive surgeries, such as those used to treat reflux and obesity. Taken together with our other indications for use in the U.S., Senhance can now be utilized in over 2.7 million general surgical procedures performed annually. Despite the challenging macroeconomic environment that persisted throughout 2020, we made great strides in the development of Senhance and achieved the vast majority of the goals we set for ourselves at the beginning of the year. In addition, We believe we put ourselves in a great position over the long term to bring innovative surgical technology to operating rooms around the world. With that, I will now turn the call over to Shamice to provide a financial overview.