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Operator
Good day everyone and welcome to today's Avenger second quarter 2022 results call. At this time all participants are in a list and only mode. Later you'll have the opportunity to ask a question during the question and answer period. You may register to ask a question by pressing the star and one keys on your telephone keypad. You may remove yourself from the queue by pressing star two. Please note this call may be recorded. I'm standing by should you need any assistance. It is now my pleasure to turn the program over to Matt Krepp, Investor Relations for the company. Please go ahead.
Matt Krepp
Thank you, Leo, and thank you, everyone, for participating in today's call. I'd like to welcome you to Avenger's second quarter 2022 conference call. Joining us there, Avenger's Chief Executive Officer, Jeff Silenski, and our Principal Financial Officer, Nabil Spinetti. Earlier today, Avenger released financial results for the quarter ended June 30, 2022. A copy of the release is posted on the Avenger website under Investor Relations. Before we begin, I'd like to remind you that management will make statements during this call that include forward-looking statements within the meaning of federal securities law, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements contained in this call that are not statements of historical fact should be deemed to be forward-looking statements. All forward-looking statements, including without limitation or future financial expectations, are based upon our current estimates and various assumptions. These statements involve material risks and uncertainties that could cause actual results or events that materially differ from those anticipated or implied by these four statements. Accordingly, you should not place undue reliance on these statements. For a list and description of the risks and uncertainties associated with our business, please see our Form 10-K and 10-Q filing with the Securities and Exchange Commission. Aventure disclaims any intention or obligation that is required by law to update or revise any financial projects or forward-looking statements, whether because of new information, future events, or otherwise. Additionally, today's presentation will include reference to non-GAAP financial measures, such as adjusted EBITDA. The reconciliation of these non-GAAP financial measures to the most comparable GAAP financial measures is available within the earnings relief, which can be found on Aventure's website. And with that, I'd like to now turn the call over to Jeff.
Leo
Thank you, Matt. Good afternoon, and thank you all for joining us. While the healthcare markets continue to deal with an unpredictable environment, we've made significant progress across our business in recent months. During the second quarter, we advanced several strategic initiatives that we believe will be important growth drivers for the company. As we expand our technology platform and build our peripheral product portfolio, generate compelling clinical data supporting the differentiating benefits of our technology, and meaningfully advance our coronary product development program. We delivered solid sequential revenue growth in the second quarter, growing revenue by 13% from a challenging first quarter, even with persistent hospital staffing challenges and contrast dye shortages limiting hospital procedures in certain geographic regions of the country. We are seeing continued improvement as we enter the second half of the year, and leverage the recent launch of our Lightbox 3 imaging console to expand our business and bring our limb and life-saving technologies to more physicians and patients. We saw improvement across all of our product lines in the second quarter. Our primary growth driver during the quarter was Pantheris SV, with sales from SV increasing 37% compared to the prior quarter. As a reminder, Pantheris SV is our small vessel image-guided atherectomy device which is primarily used to treat PAD lesions below the knee. Due to the small size of the vessels being treated and the challenging nature of this anatomy, physicians place a high value on the real-time imaging and precise control provided by Pantheris SV, enabling them to precisely target the disease and avoid damaging the healthy vascular structures during treatment. The patient outcomes that physicians are delivering with this unique device are inspiring. To document these outcomes, we've initiated a post-market study called ImageBTK, which evaluates Pantheris SB for the treatment of below-the-knee lesions in a real-world clinical setting. We expect to enroll up to 60 patients in the study, with patients evaluated at intervals up to one year post-procedure. We've been enrolling patients at two key opinion leader sites in the U.S. and opened two new clinical centers in Germany for enrollment late in the second quarter. Most patients enrolled in IMAGE-BTK suffer from critical limb ischemia, or CLI, the most severe form of BAD. And the early clinical results we are seeing in this challenging patient population are exciting. Interim findings from the IMAGE-BTK study were featured in a podium presentation at the NCVH conference in June, with the early data showing 93% freedom from target lesion revascularization, a measure of restenosis, and 94% patency after 12 months, with 100% freedom from major adverse events. While we are still early in the study, we expect to complete enrollment in ImageBTK over the next six months and will continue to provide updates as new data are released. In addition to sequential quarter improvement in our existing catheter business, we achieved strategic milestones that we believe will significantly enhance our platform and be important contributors to our growth. First, in April, we expanded availability of our new Lightbox 3 imaging console to full commercial launch. We continue to be thrilled with the performance of this next-generation console in the field. The Lightbox 3 has now been used in more than 250 cases and 40 accounts in both new and existing sites. The response to the new system continues to be outstanding. with physicians especially excited about the enhanced high-definition imaging provided by the new device. The highly portable Lightbox 3 brings a new dimension to our sales strategy by expanding our ability to effectively support hospitals with customized strategies, including a new mobile capability that allows us to support catheter utilization and conduct on-site demonstrations and evaluations without permanent installation of a Lightbox. While still early in the launch process, we're already realizing the benefits of this approach, with eight new accounts launched in the second quarter. The Lightbox 3 weighs less than 20 pounds and fits into a hard-sided case the size of a carry-on suitcase. It can be easily wheeled into a facility and set up on a portable stand by our clinical support team in minutes. We have now deployed 12 portable system configurations to our sales territories and are excited about the potential for the new platform to bring increased efficiency and productivity to our commercial operations in the U.S. and internationally. Our recent launch in Chile is being supported exclusively by the Lightbox 3 platform. The Lightbox 3 is now available for sale to new accounts and as an upgrade option for existing accounts. We look forward to reporting on our continued progress with the Lightbox 3 as we gain more experience with this exciting new system in the coming quarters. The second important milestone achieved in the quarter was the filing of a 510K submission for our new TigerEye ST catheter, a next-generation chronic total occlusion, or CTO, crossing system for use in peripheral arteries. TigerEye ST is an extension of our Ocelot and TigerEye family of CTO crossing catheters. This new image-guided device has an integrated spinning outer tip for penetrating challenging blockages and CTO caps. It incorporates an advanced shaft design for pushability and torque response and a three-marker system similar to Ocelot to facilitate consistent image interpretation across our platform. Tiger Eye ST continues to provide the high-definition real-time intravascular imaging, deflectible tip, and faster rotational speeds introduced to our CTO portfolio with the commercial launch of our first Tiger Eye device in early 2021. By adding advanced capabilities to the platform, the new Tiger Eye ST device is expected to expand the utility and addressable market for our image-guided CTO catheters in a challenging patient population. Based on our past experience, we hope to receive FDA clearance in the second half of this year and be in a position to initiate a limited launch for Tiger Eye ST in the fourth quarter. In addition to achieving this important milestone for TIGER IST, we made significant progress on the development of Pantheris LV, our new image-guided atherectomy device for the treatment of larger vessels, typically those above and behind the knee, where the majority of procedures are performed today. Pantheris LV incorporates many of the design elements of our successful Pantheris SV catheter to streamline the procedure and expand our capabilities in this anatomy. Pantheris LV utilizes a proprietary design for plaque apposition without the need for a balloon and is designed to operate at higher rotational speed to engage challenging plaque. It also adds rotational control for efficient guide wire management and a modified plaque management system for tissue packing, as well as several other enhancements, which we believe will bring more efficiency to the procedure and expand our user base. We expect to file a 510K application for this new device by the end of this year. And if all goes according to plan, we hope to receive FDA clearance in the first half of 2023. As we look to the future, we believe expansion into the high-value coronary market is a transformational opportunity for Avenger due to its large addressable market, attractive reimbursement profile, and the differentiated clinical advantages of our image-guided approach. We are very excited about the progress we are making in the development of our first coronary product application. Our first entry into this market is anticipated to be an OCT-guided catheter for the percutaneous crossing of CTOs in the coronary arteries. By leveraging our years of experience in the peripheral arteries and the recent advances we've made across our platform, we believe we can redefine a category by providing a safe, reliable, patient-oriented solution to what is today a complex, expensive, and uncertain procedure. Existing CTO PCI crossing procedures are highly complex, require specialized and demanding technique with a steep learning curve, and the use of multiple devices. Even so, approximately 50,000 CTO PCI procedures are performed in the U.S. each year. with an increasing number of hospital centers interested in treating these patients. These procedures require extended time under fluoroscopy, which results in high X-ray radiation exposure and contrast media burden, creating health risks for both the medical team and patients. In addition, it's estimated that more than 200,000 highly invasive coronary artery bypass grafting, or CABG surgeries, are performed in the U.S. annually. with estimates of up to 30% of these procedures related to the treatment of coronary CTOs. This market provides an exciting target for our image-guided system, which would make a percutaneous approach accessible to more physicians and reduce x-ray radiation exposure and contrast burden during the procedure. An image-guided coronary CTO crossing device with diagnostic capabilities would access highly attractive reimbursement for the therapeutic procedure immediately upon FDA clearance. In addition, we anticipate our OCT-guided catheters will qualify for existing OCT diagnostic imaging reimbursement in the coronary arteries. We believe that an image-guided catheter designed for crossing efficiency with the need for fewer support devices combined with an attractive reimbursement scenario provides the opportunity for a very compelling economic value proposition. Our coronary CTO development efforts are focused on low-profile catheter design that combine real-time OCT guidance with precise control and steerability to facilitate an integrated approach and allow physicians to safely and efficiently cross coronary CTOs. Similar to our peripheral catheters, Our coronary devices will incorporate a precise measurement capability to help physicians properly size balloons or stents prior to placement, which is critical for optimal outcomes. We've advanced our design efforts and are in the process of evaluating prototypes and bench-type models and through engagement with physicians. Given its strategic importance, we have prioritized our R&D activities on development of this new device with the goal of filing an Investigational Device Exemption, or IDE, with the FDA in 2023 to allow for initiation of a clinical study to evaluate safety and efficacy of the device in advance of a regulatory filing. As we look to the second half of the year, we're excited by the increasing case volume opportunities we are seeing and the positive response to our new Lightbox III, which is already providing new account opportunities for the company. With a new 510K application recently submitted and another on the way for our PAD product portfolio, we are creating new usage drivers for our platform. The outstanding patient outcomes we see in labs around the country every day and in our clinical studies support the adoption of our products and highlight the differentiating benefits of our image-guided approach. We are also making important investments for the future as we prepare for entry into the coronary market through a highly focused R&D effort to deliver the first-ever image-guided CTO crossing device for the treatment of coronary artery disease, which we believe provides a transformational value opportunity for Avenger. At this point, I'd like to introduce you to Nabil Spinetti, our VP Corporate Controller, who was recently named to the positions of Principal Financial Officer and Principal Accounting Officer for Avenger. Nabil will take us through the financial results, then I'll return for Q&A. Nabil?
Matt
Thank you, Jeff. Total revenue for the second quarter of 2022 was $2.1 million, a 13% increase from $1.9 million in the first quarter as we experienced reduced impact of COVID-19 in our markets. offset by the lingering headwinds of hospital staffing challenges and the contrast die shortage in the second quarter that Jeff discussed earlier in the call. Market conditions continue to improve, and we are encouraged by the case activity we're seeing in the third quarter, which is typically a lower seasonal volume quarter. Gross margin for the second quarter was 31%, improving from 28% in the first quarter, reflecting higher revenue levels for the quarter. Avenger's contribution margin on disposable products is far higher than our reported gross margin, translating to improved gross margin performance as we grow our revenue base. Operating expenses for the second quarter were $4.4 million, a decrease of 15% from $5.2 million in the first quarter. With commercial release of the Lightbox 3 console, our R&D expenses have declined, even while we are investing in the development of two new pad catheters and the coronary CTO crossing device. Net loss and comprehensive loss for the second quarter of 2022 is $4.2 million, down from $5.1 million in the first quarter of 2022. Adjusted EBITDA, as defined under our non-GAAP financial measures in this press release, was a loss of $3.7 million, an improvement from a loss of $4.6 million in the first quarter of 2022. A copy of the reconciliation from net loss to adjusted EBITDA can be found in today's press release, which is also posted on our website under the Investors section. Lastly, cash and cash equivalents totaled $16 million as of June 30th. We subsequently raised gross proceeds of $5 million in a combination of registered direct and private placement offerings priced at the market under NASDAQ rules, strengthening our financial position as we continue to fund our strategic initiatives and invest in the growth of our business. At this point, I'd like to turn the call back to Jeff for Q&A.
Leo
Thanks, Nabil. We're excited about the progress we made in the second quarter, advancing several important strategic initiatives and delivering solid sequential revenue growth. market conditions continuing to improve into the third quarter. Our new Lightbox 3 system continues to perform extremely well in the field and provides new opportunities to drive adoption of our image-guided platform. We filed a 510 application for our new Tiger Eye ST CTO crossing system and significantly advanced our R&D and clinical programs, including the development of our first coronary product application. In addition, we delivered improved financial results for the quarter and strengthened the financial position of the company by adding new capital to our balance sheet. As we enter the second half of the year, we look forward to reporting our continued progress in all of these areas and remain committed to our mission of radically changing the way vascular disease is treated. At this point, we'd be happy to take your questions.
Operator
At this time, we'll take questions from our institutional investors. If you would like to ask a question, please press star 1 now on your telephone keypad. Star 1 at this time. One moment while we queue for questions. And once again, that is star 1 to ask a question. And there are no questions at this time. I'm happy to return the call to Jeff Sawinski for any concluding remarks.
Leo
All right. Thank you, Leo. And thank you all very much for joining our call this afternoon. We very much appreciate your interest in our company and your support and look forward to reporting our continued progress on our third quarter 2022 call. Have a great afternoon.
Operator
This does conclude today's conference. You may now disconnect. And everyone, have a great day.
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