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spk01: Thank you. Ladies and gentlemen, thank you for standing by. Good morning and welcome to SpireMD Third Quarter 2020 Financial Resorts. and corporate update conference call. At this time, all participants are in listen-only mode. If you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Participants of this call are advised that the audio of this conference is being broadcast live over the Internet and is also being recorded for playback purposes. A webcast replay of the call will be available approximately one hour after the call ends through February 9, 2021. I'd now like to turn the call over to Mr. Scott Gordon, president of CoreIR, the company's investor relations firm. Please go ahead.
spk00: thank you nick and good morning everyone thank you for joining us for the inspire md third quarter 2020 financial results and corporate update conference call joining us today from inspiremd are marvin slossman chief executive officer inspiring and craig shore chief financial officer during this call management we'll be making forward-looking statements including statements that address inspiremd's expectations will keep the performance or operational results, particularly in light of the COVID-19 pandemic. Forward-looking statements involve risks and other factors that may cause actual results to differ materially from those statements. For more information about these risks, please refer to Risk Factors described in InspireMD's most recently filed periodic reports on Form 10-K and Form 10-Q, the Form 8-K filed with the SEC today, and AspireMD's press release that accompanies this call, particularly the cautionary statements in it. Content of this call contains quantitative information that is accurate only as of today, November 9th, 2020. Except as required by law, AspireMD explains any obligations publicly updated or revised any information to reflect the events or circumstances that occur after this call. It is now my pleasure to turn the call over to Marvin Foster. Marvin, please. Thank you.
spk03: Great. Thank you, Scott, and thank you all for joining the call on the webcast today. While we remain in uncertain times specific to the ongoing COVID-19 pandemic, revenues for the third quarter of 2020 grew both quarter over quarter from 2019 levels and sequentially versus Q2 2020 levels, thus restoring a cautious optimism in our business direction and market recovery. We understand the unpredictable nature of how this pandemic will affect our customers going forward, but feel more prepared to address market needs, having accelerated a higher level of awareness and communication with our channel partners. Investing time over the last two quarters in online training and customer outreach programs have provided us a stronger foundation and transfer of knowledge, which we will continue during this recovery. Through it all, our team remains committed and optimistic, and we are thrilled to have announced the addition of new leadership to drive goal attainment and growth objectives. As for the third quarter, this resurgence of elective procedures in our key markets yielded a 213% increase in total third quarter sales versus the second quarter of 2020, with nearly 50% of those sales occurring in the third month of the quarter. This in no way relaxes our resolve to continue to implement proactive policies and procedures to ensure continued strong performance, including the continued search for more efficient operations and cash management. However, this reinforces our assumption that CAST procedures remain a necessity, notwithstanding the timing delays associated with the COVID-19 outbreak. As for other meaningful milestones, on June 25, 2020, the U.S. FDA granted conditional approval of our Investigational Device Exemption, or IDE, application to initiate a pivotal study of C-Guard EPS. During this quarter, we received the final approval of the IDE application and have begun preparations for the pivotal trial in the United States for C-Guard EPS carotid artery stent. Shortly after the approval, we announced the initiation of our strategic advisory relationship with Dr. Christina Brennan to assist with the planning and execution of the C-Guard Pivotal Study Care Net 3 in the United States. Dr. Brennan brings a wealth of experience to InspireMD and with specific expertise in vascular and stent-related research, in clinical trial development and execution. With more than 20 years of extensive clinical research experience, particularly in the area of carotid artery disease, her leadership will be invaluable now and as we progress on a successful trial effort. I'll return to our clinical development program in a moment, but first I wanted to mention two more recent key hires. First, we welcome Patrick Jamnik as our new Vice President of Business Development and Strategic Initiatives. Patrick will oversee the company's business development activities and play a key role in advancing our short and long-term strategic goals, much of which his focus will be in the U.S. market. As we gain traction and leverage the superior clinical results of our Seaguard EPS stent platform, we will continue to develop new strategic pathways for growth and will look to Patrick's leadership to help get us there. The second hire is our new Senior Vice President of Global Sales and Marketing, Andrea Tomasoli. Andrea's leadership of our global sales and marketing effort is an investment in our customer and commercial focus and provides the essential leadership needed to elevate our growth and acceleration of standard of care of Seaguard EPS. Andrea's experience in leading commercial teams, in particular indirect channel partners globally, adds immediate value to our geographic expansion and higher performance in served markets. And finally, our announcement and appointment of Dr. Gary Rubin to our Board of Directors has reiterated tremendous credibility of our company's direction by the endorsement, active contribution, and financial investment of one of the most renowned and internationally recognized interventional cardiologists in Dr. Rubin. In addition to his formidable achievements in vascular medicine, Dr. Rubin's pioneering work in carotid stenting and embolic protection devices brings a depth of experience and expertise to our business that will be invaluable in our future direction and focus. During his tenure as Chief of Interventional Cardiology at the University of Alabama at Birmingham, and later as Department Chairman and Chief of Services at Lenox Hill Hospital Cardiac and Vascular Programs in New York, he helped bring both programs to international standing in peripheral neurovascular and cardiac interventions. Dr. Rubin's vast experience has enabled him to recognize advanced technical innovations and improve patient outcomes. I could expound on Gary's numerous accomplishments and why we're so thrilled to have him as a part of the board. Ultimately, it's Dr. Rubin's peerless reputation as a clinical scientist, innovator, and interventional cardiologist that lends an important validation to our Micronet technology and the C-Guard stent system. And we believe his presence on the board will also provide meaningful insight, thoughtful direction, and unmatched perspectives in our focus to change the way carotid artery disease is treated and strokes are prevented. He has expressed his confidence in our differentiated Seaguard EPS platform and in our direction that we have undertaken for the business, which is a tremendous vote of confidence, and we're very fortunate to have him join as a director. I would like to turn now to our third quarter results. For the three months ended September 20th, 2020, we generated total revenues of $980,000 as compared to $939,000 for the same period a year ago. and compared to $313,000 during last quarter. This represents a 213% increase sequentially versus last quarter. These results return us to pre-COVID revenue levels, and while we remain cautiously optimistic about the fourth quarter, we're seeing new restrictions instituted to combat the spread of COVID-19, leading to uncertainty to this market impact. Taking a step back as a reminder of the value of our story and foundation of our value proposition, The C-Guard embolic protection system is an advanced platform solution designed to deliver the flexibility of the traditional open-celled stent with what we believe to be the most advanced protection from periprocedural and post-procedural embolic events created by plaque prolapse through the stent strut, which can lead to stroke. C-Guard's unique Micronet technology mitigates the prolapse and associated embolization and continues to demonstrate superior clinical outcomes for patients against alternative carotid stent types, conventional or next generation double layer stents, as well as invasive procedures such as endarterectomy, a major surgical procedure. C-Guard has created a new dimension in protected treatment of carotid artery disease with the potential to truly establish new standard of care for management of carotid artery disease and stroke prevention. That said, our strategic pathway to business growth for C-Guard APS is robust. rooted in broadening market share in endovascular CAS procedures in our served markets, expansion of C-Guard EPS as a first-line stent solution, and focusing ongoing conversions with vascular surgeons to CAS, who perform the vast number of carotid revascularization procedures, more than 80% through carotid endarterectomy. We view carotid artery disease as the next significant vascular condition to advance toward an endovascular standard of care, much of the same way cerebral aneurysms coronary artery disease, thoracic abdominal aortic aneurysms, and peripheral artery disease have. This is why the vascular surgeon and INR, interventional neuroradiology communities, remain a top priority. The most critical step in procedural success is the stent system, which protects the patient just after the procedure, but more importantly, after they leave the hospital. C-Guard EPS continues to demonstrate superiority against all other open-celled, and second-generation covered stent systems and remains the core of our value proposition. We continue to advance our development of a toolset of adjunctive delivery systems and supporting solutions to provide each clinical subspecialty and clinician a range of options to bolster the use of C-Guard EPS as a stent platform, including new next-generation transfemoral and transcarotid delivery platforms. We look to advancing our efforts in these initiatives as we continue to work with our key opinion leaders including vascular surgeons on this strategic direction. And now a word on global expansion. China and Japan represent more than double our current addressable market and as such these markets remain a high priority for the business. We continue discussions with potential distribution partners in both of these regions to expand into these highly valuable Asian markets and look forward to announcing our future progress. In Europe, we are progressing on our application for reimbursement approval in France, which we plan to be a direct sales market once registration is complete. In Brazil, as a reminder, following registration approval last quarter, we've received orders from our distributor partners, completed our training, and have successfully completed our first Seaguard EPS stent procedure. These combined efforts of global expansion, including approval in the U.S. market, remain a priority and a pillar of our commercial focus and growth. With that, I'll turn the call over to Craig to review our second quarter financials. Craig.
spk04: Thank you, Marvin, and to everyone for joining today. Here are some key financial highlights for the third quarter of 2020. Revenues for the three months ended September 30th, 2020 were $980,000, an increase of 4.4% with $41,000 compared to $939,000 for the three months ended September 30th, 2019. This increase was mainly driven by a 69% increase in sales volume of M-Guard EPS from $87,000 during the three months ended September 30th, 2019 to $147,000 during the three months ended September 30th, 2020. This increase was mainly due to the timing of shipments to one of the distributors for a tender recently won. This increase was offset in part by a 2.2% decrease in sales volume of Seaguar Prime EPS from $852,000 during the three months ended September 30th, 2019 to $833,000 during the three months ended September 30th, 2020. Largely driven by procedures with C-Guard EPS which are generally scheduled or non-emergency procedures only beginning to return to normal levels towards the end of the quarter as hospitals began to reshift resources to non-COVID-19 patients. Gross profit for the three months ended September 30th, 2020 was $298,000, an increase of 133% or $170,000 compared to $128,000 for the three months ended September 30th, 2019. This increase in gross profit resulted from a $94,000 increase in revenues for reasons I just described, less the related material and labor costs, a $56,000 decrease in write-off which were driven by a component supply issue during the three months ended September 30th, 2019, which did not reoccur during the three months ended September 30th, 2020, and a decrease of $20,000 in miscellaneous expenses during this quarter. Growth margin increased to 30.4% during the three months ended September 30th, 2020, from 13.6% during the three months ended September 30th, 2019, driven by the factors just mentioned. Total operating expenses for the quarter ended September 30, 2020, were $2.5 million, an increase of 17.3% compared to $2.1 million for the same period in 2019. This increase was primarily due to an increase of $127,000 in compensation expenses, $116,000 in development expenses associated with Seaguard EPS, mainly related to the new advanced delivery system, $92,000 of directors and offers liability insurance expense due to recent economic changes in the insurance industry, $71,000 in regulatory expenses associated with compliance to new European Union standards, $60,000 mainly due to the timing of our annual shareholders' meeting, and $79,000 in miscellaneous expense. These increases were partially offset by a decrease in travel expenses of $177,000 in light of restrictions imposed by governments worldwide in order to mitigate the spread of COVID-19. Financial expenses for the quarter ended September 30 of 2020 were $38,000, a decrease of 48% compared to $73,000 for the same period in 2019. The decrease in financial expenses primarily resulted from changes in exchange rates. Net loss for the third quarter of 2020 total $2,233,000 or 6 cents per basic and diluted share compared to a net loss of $2,070,000 or $1.26 per basic and diluted share for the same period in 2019. As of September 30, 2020, cash and cash equivalents were $10,882,000 compared to $5,514,000 as of December 31, 2019. With that, I now would like to turn the call over for questions. Nick, please go ahead.
spk01: Ladies and gentlemen, if you wish to ask a question on today's call, you'll need to press the star number one on your telephone phone. If your question has been answered and you withdraw your question, you may do so by pressing the pound key. Due to the speakerphone, please pick up your handset before entering your request and speaking into the call. One moment, please, while we pause for the first question. First question comes from Benjamin Hainor of Alliance Global Partners. Please go ahead.
spk02: Good morning, guys. Thanks for taking the questions. You know, first for me, congrats on all the personnel additions. It seems like quite the roster you've been able to assemble there, and congratulations I know Dr. Rubin, that's pretty high profile. I think investors in the space know him or know of him. Can you talk a little bit about how that get came about? How were you able to get him on the board as an investor?
spk03: Yeah, thanks, Ben. Thanks for the question. You know, we're thrilled to have Gary Rubin as a part of the organization and having accepted a director role. The connection actually came indirectly through Christina Brennan, Dr. Brennan at Northwell, who I've known for a number of years. And I think everyone in this industry has known Gary Rubin either personally or by reputation. Christina Brennan and Gary go way back in their history and work together. And so when we made the connection with Christina, there was just some follow-up discussion, and I connected with Dr. Rubin and just found his interest and insightfulness to be incredibly valuable. And as we dug deeper into the discussions, it just appeared that he had more than just a a casual interest and we felt it would be a great addition to the board with his, um, his lengthy experience in the industry and knowledge. So we're, we're thrilled to have him a part of the organization. And as you said, uh, I think the, uh, the roster of talent continues to grow and build toward, you know, helping in all aspects.
spk02: Excellent. Thanks for the color there. And then, you know, it sounds like you have a little bit more read through than you've had in the past from your, your distributor customers or your channel, uh, partners. Um, you know, can you talk about how that, you know, might change how you strategically move the business during COVID or otherwise?
spk03: Yeah, Ben, I think we have always set into place a strategic direction in the beginning of the year to be a commercially focused, customer driven, outwardly thinking company. And I think this is just you know, the next step and the next level in both bringing talent to the organization that understand the distribution model. But most importantly, the COVID-19 scenario has given us an opportunity to really dig deeply into making sure that the served markets that we're in are being covered by the best partners available and to go into a depth of knowledge and understanding to try to make sure that Seaguard APS rises to the top of the bag. in our partners sort of list of opportunities. So absolutely the right pickup here, which is, you know, as a fundamentally R&D based company, we're making a shift to, you know, a commercially focused organization. And a lot of that is on the backbone of all of the clinical results and value that are coming from our studies. We have great a great storyline to tell, and we need to do a much better job of getting that information disseminated through our channel partners ultimately to the customer. So that will continue to be a priority for Andrea in particular as he leads the sales and marketing group going forward.
spk02: Okay, and that's helpful. And then does that also help you kind of be able to convert – Surgeons from carotid endarterectomy over to CAS or doesn't that necessarily help you at all?
spk03: Yeah, I think it certainly does, Ben. I mean, this is a touch business. I think we all understand that this is one customer at a time, one procedure at a time. The credibility of what we sell and what we do has really manifested itself in the and how we connect directly with customers to make change in their practice. And so we are definitely focused on the surgery community, the interventional neuroradiology community, and cardiology as well. It's an interesting setup because we have a very broad range of operators who sort of follow carotid artery disease as a primary part of their practice, and they use different tools to get there. And so ultimately, our goal is to make sure that C-Guard is the stent that's used and that CAS is, you know, promoted and developed as, you know, first-line therapy for the disease. So our priority continues to certainly be on our existing customer base, but has been and will continue to be on the vascular surgeon as well.
spk02: Okay, got it. And then, you know, you mentioned in the press release the advanced tool set of adjunctive delivery options that you're working on. I guess, you know, how far have these advanced tools advanced in the development? And, you know, are these things that could see regulatory clearances and be marketed in the – geographies that you're in, say, next year, or what does the timeline look like at this point?
spk03: Yeah, Ben, fundamentally, InspireMD has done its best work as an R&D organization. We have a great team of people that are constantly looking at our tool set and looking at our products and trying to develop those next generation levels, whether it's within an existing part of the portfolio or something outside of that And so we have this multi-generational product development plan underway for a variety of different areas. And we certainly hope to have those products to market in a timeframe that's meaningful within 2021 potentially. And it really depends on the area that we're talking about. We've been working on a new trans-femoral delivery system for a while and are making great progress on that. So we look to be able to provide next level of detail in terms of how that rollout will occur, but we're making great progress in a number of different areas to really drive C-Guard as the primary stent.
spk02: Okay, got it. And then just, you know, with the FDA trial, now that you've got the IDE in place, you know, when do you expect the C-Guard trial to kind of enroll the first patient, first patient, excuse me,
spk03: So we're in the final touches of being able to make some decisions on a CRO partner as well as a primary investigator, principal investigator for the trial and also site selection, what percentage we'll use in the U.S. versus Europe and otherwise. And so we're down to the sort of the last details on making those selections and then we'll have a much more clear schedule as to how we begin patient enrollment. But we really felt fundamentally that we wanted to get all of these pieces solidly in place because the performance of the trial really depends on how well you prioritize this on the front end. And we've got some tremendous names being discussed right now in terms of principal investigators and people very interested in participating and enrolling. So hopefully in short order, we'll have a detailed schedule of how that rollout looks in patient enrollment, but we're making great progress in finding the right the right pieces and putting those in place with our CRO partner and, and investigators.
spk02: Sure. That's helpful. And, you know, obviously I would, I would imagine from the additions that you've been able to make on the personnel front that the Rolodex is there, get you in front of the right people. It's very, it's very comprehensive.
spk03: So it's, it's good and bad. A lot of people interested. So we're, we're really excited about having the,
spk02: So you actually have to worry about upsetting people.
spk03: Well, we hope to please everyone. But, yeah, that's right. It's a great place for us, though.
spk02: Excellent. All right, well, I'll leave it at that. You know, congrats on all the progress, gentlemen.
spk03: Thanks. Thanks, Ben.
spk02: Thanks very much.
spk01: Again, if you have a question, please press star, then 1. This concludes our question and answer session. I'd like to turn the conference back over to Mr. Marvin Slossman. Please go ahead.
spk03: Great. Thank you. Let me conclude by saying that in spite of the setbacks associated with the COVID-19, we are tremendously optimistic for our future. Seaguard EPS continues to outperform other competitive carotid stents, and we will continue to drive this awareness with our customers to provide the absolute best clinical and patient outcomes. We're investing in a very bright future. and are singularly focused as a company on maintaining our commitment to offering these best options for stroke prevention and carotid artery disease management. Thank you very much for the call today and for your support.
spk01: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
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