Apollo Endosurgery, Inc.

Good afternoon, ladies and gentlemen, and welcome to the Apollo Endosurgery fourth quarter and full year 2021 results conference call. At this time, all participants have been placed on a listen-only mode, and we will open the floor for your questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, Matt Kreps. Sir, the floor is yours.

Thank you, John. And thanks, everyone, for participating in today's call to discuss Apollo's fourth quarter and full year 2021 financial and operating results. Joining me on the call today are Chas McConn, Chief Executive Officer, and Jeff Black, our Chief Financial Officer. Today's call will include slides to accompany the audio presentation. For those joining us by telephone, you can download a copy of the slides at our investor relations site, ir.apolloendo.com, and choosing events and presentations. Before we begin, I would like to caution listeners that comments made by management during this conference call will include forward-looking statements within the meaning of federal securities laws, including Apollo's financial outlook and Apollo's plans and timing for product development and sales. In addition, there is uncertainty about the continued spread of COVID-19 virus and the ongoing impact it may have on our operations, the demand for our products, global supply chains, and economic activity in general. These forward-looking statements involve material risks and uncertainties, and Apollo's actual results may differ materially. For a discussion of risk factors, I encourage you to review the company's most recent annual report on Form 10-K and our most recent Form 10-Q. The content of this conference call contains time-sensitive information that is accurate only as of the date of the live broadcast, February 22, 2022. As required, except as required by law, Apollo undertakes no obligation to revise or update any statement to reflect events or circumstances after the date of this call. Additionally, today's discussion will include certain non-GAAP financial measures, which we believe provide an additional tool for evaluating the company's core performance. Management uses these metrics in its own evaluation of continuing operating performance and a baseline for assessing the future earnings potential of the company. Included in the press release issued today with our financial results and corresponding 8 filing are supplemental tables reconciling non-GAAP figures to their closest GAAP comparable. And now I'd like to turn the call over to Chad.

Thanks, Matt. And thank you, everyone. Good afternoon. Thank you for joining us. Next week will mark one year since I joined Apollo Endosurgery. And I am truly grateful for having the honor of leading this team and this company with such unique products that impact patients' lives. Last year, I laid out a three-phase strategy as described on page three. The first phase was to energize the business by building momentum across all three of our product lines while executing on foundational initiatives that can set us up for growth in the years ahead. The second phase is to accelerate the business by developing new indications and markets. And the third phase is to lead in the fields of advanced defect closure and endoscopic treatments for weight loss. As we implement this strategy, we have bolstered the Apollo leadership team by bringing in new talent into the organization to join an already strong Apollo team. In addition, we are focusing our efforts on developing large market opportunities. I'm pleased to report today that in the past 12 months and in Q4 that we've made tremendous progress. We've strengthened the team at Apollo at all levels. At the leadership team, earlier in the year, we brought on new commercial leaders here in the U.S., We brought in Jeff Black as our new CFO who's with me today. And then just in January, we announced the addition of Keely Scamperly to lead our reimbursement and market access efforts. Keely is an experienced professional and is already working at building her team that will lead our reimbursement efforts in facilitating patient access for our products. We've nearly doubled our sales team in the US and we've added to our US team. We're building our marketing and training capabilities and becoming a more professional selling organization. We've strengthened our R&D and engineering team and are implementing new processes to strengthen our new product pipeline. And we are addressing a historical underinvestment in other critical functions like operations, supply chain, business analytics, and customer service. Simply put, we have very talented people at Apollo, and I'm very proud of the work that they've done. We've just not had a scalable organization. And so we're strengthening our capabilities across the organization to support our growth plans. We're also building and developing a new culture, focusing on a set of five core values that I'll come back to later in the discussion. And so in summary, at Apollo, we are undergoing substantial change in our team, our processes, and our culture. And we anticipate that these changes will allow the company that has historically struggled at times and underperformed to become a growth engine. Now, often when a company undergoes this much change, the business often needs to take a step backwards before moving ahead with renewed confidence. And I'm very pleased that that is not the case for Apollo in 2021. For the year, we delivered 50% revenue growth, and for Q4, we delivered 26% growth, despite a meaningful impact of the Omicron variant in many markets in Western Europe and the U.S. Our growth has been balanced across product lines with Overstitch, Orvera, and our newest product, XTAC, all contributing to growth. And we've seen balanced growth across geographies with strong performance in both the U.S. and international markets. And while we kick-started the business in 2021, we've also created a foundation for the years ahead. In our advanced GI franchise, X-TAC is an important new product for us. We've gained initial traction in the marketplace and published the first clinical data for the product. In our endoscopic weight loss franchise, obesity is a global epidemic that remains largely unchecked. and the opportunity for endoscopic weight loss therapies is tremendous. 2021 was a year of important strategic milestones. Early in the year, in the spring of last year, the AGA implemented new clinical practice guidelines for the first time ever in favor of intragastric balloon therapies. The investigators presented the initial results at the IFSO meeting in the fall. We submitted a new de novo application, de novo 510K application for Apollo ESG and Apollo Revise. And through the course of the year, we saw an emergence of new endobariatric programs in both academic and private practice settings. In the area of NASH, we received a breakthrough designation for the treatment of NASH in Q1 of last year. We've also been collecting data on ESG and working through the best strategy to address this large market opportunity. And then on our balance sheet, In 2021, we secured access to $175 million in capital. We now have a strong balance sheet to support our growth initiatives. And so page five gives you a sense of the balance that I just mentioned. On the left side of the page, you can see 50% year-on-year revenue growth, 55% for the ESS franchise, and importantly, 50% for the IGB franchise. And the figures relative to 2019 are shown as well. Another interesting development has been the growth in our top 10 accounts. We saw 85% year-on-year growth in our top 10 accounts, and the average sales for Apollo in those 10 accounts is more than $600,000. We think that gives a pretty good indication of the scale that we can drive as we increase penetration of our products into our largest customers. For XTAC, we continued to gain traction, and we saw 40% sequential quarter-on-quarter growth for XTAC. And as I mentioned, we had important milestones for both the MERIT study and the de novo 510 . Related to MERIT and clinical data for ESG and revisions, we do expect additional presentations of the data at the upcoming DDW meeting. That's the Digestive Disease Week meeting. That's in May. We also expect other presentations at that meeting on ESG and revisions from investigators around the world, so important additions to the clinical body of evidence. For MERIT itself, the investigators are working on the publication, and we look forward to that in the months ahead. Jeff will now provide a review of our financial performance, and then I will be back to provide additional commentary on our priorities for the year ahead.