Avinger, Inc.

Good afternoon, ladies and gentlemen, and welcome to the Avenger fourth quarter and full year 2022 results 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. If you would like to enter the queue at any time, you may press star 1 on your telephone keypad. Should you wish to remove yourself from queue, you may press star 2. It is now my pleasure to turn the floor over to Matt Kretz, Investor Relations for Avenger. Matt, the floor is yours.

Thank you, Tom, and thank you, everyone, for participating in today's call. I'd like to welcome you to Avenger's fourth quarter 2022 conference call. Joining us today are Avenger's CEO, Jeff Zawinski, and Principal Financial Officer, Nabil Spanetti. Earlier today, Avenger released financial results for the quarter and year ended December 31, 2022. A copy of the release is posted on Avenger's website under the Investor Relations tab. 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 laws, which remain 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 our 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 to materially differ from those anticipated or implied by these forward-looking 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 filings with the Securities and Exchange Commission. Avenger disclaims any intention or obligation except as required by law to update or revise any financial projections or forward-looking statements, whether because of new information, future events, or otherwise. Today's presentation will also include reference to non-GAAP financial measures, such as adjusted EBITDA. A reconciliation of these non-GAAP financial measures and the most comparable GAAP financial measures is available within the earnings release, which we found on AVENGER's website. And with that, I'd like to now turn the call over to Jeff.

Thank you, Matt. Good afternoon, and thank you all for joining us. Over the past year, we made important strategic moves to advance our technology platform, build out our peripheral product portfolio, and create exciting new future growth opportunities for the company. In April, we launched our Lightbox 3 next-generation imaging platform, which incorporates a state-of-the-art laser system into a sleek, highly portable console. expanding our capabilities, and bringing new efficiencies to our engagement with both new and existing accounts. We've also filed FDA 510 submissions for two new image-guided catheters, Tiger IST for CTO crossing and Pantheris LV for atherectomy, which bring important new features and benefits to our peripheral portfolio and provide the opportunity for two new product launches this year. Over the past several months, we've made significant progress in the development of our first coronary product application, establishing a clinical advisory board made up of highly experienced interventional cardiologists in the fields of coronary CTO crossing and intravascular imaging and gaining important feedback on design prototypes for further development and evaluation. Our work to date has made us even more enthusiastic about the potential for our proprietary OCT-guided approach to revolutionize this market with the first and only image-guided system for crossing coronary CTOs. During the fourth quarter, we reported solid operating metrics, improving gross margin and driving continued improvement in our operating cost model compared to the year-ago period. While the direct impact of the COVID crisis itself has lessened, we continue to see the effect of staffing shortages on facility and procedure availability in certain areas. Our fourth quarter revenue was more directly impacted by turnover in our sales force, leading to reduced sales headcount and clinical case coverage capability. While total revenue declined in the fourth quarter of 2022, our sales productivity, measured by revenue per field sales head, remained consistent with the year-ago period. We are in the process of recruiting additional clinical specialists to expand our case coverage capability in key markets, and are beginning to see a larger pool of available talent as larger companies trim their head counts to reduce costs. By leveraging the flexibility provided by our new Lightbox 3 imaging console, we added five new accounts during the fourth quarter, bringing our total number of new accounts added during the year to 20. As we gain more experience with Lightbox 3, we continue to be thrilled with the performance and reliability of this innovative new platform. Lightbox 3 has now been used in approximately 600 cases by 85 physicians in more than 60 accounts. Our Pantheris image-guided atherectomy products continue to perform well in the market, with both our Pantheris 7 French and Pantheris SV devices each growing 6% on a sequential quarter basis. Atherectomy is a competitive and growing market with attractive reimbursement rates that continue to trend positively for Avenger. For 2023, the Centers for Medicare and Medicaid Services, or CMS, has increased outpatient reimbursement in the hospital by 4% to 5% and decreased atherectomy reimbursement in office-based labs, or OBLs, by approximately 6%. This is the second year in a row with increasing hospital reimbursement and decreasing OBL reimbursement, widening the gap in reimbursement between the two settings. We see this as a net positive for Avenger since approximately 90% of our revenue is derived from hospital accounts. Our Pantheris SV small vessel atherectomy device, introduced in 2019, continues to be a strong performer and is now our single largest selling SKU. Pantheris SV is primarily used to treat patients with below the knee lesions, many of whom suffer from critical limb ischemia, or CLI, the most severe form of PAD. Physicians rely on the real-time imaging and precise control provided by Pantheris SV to precisely target the disease while avoiding damage to the arterial vascular structures, of great benefit when treating lesions within these narrow 2 to 4 millimeter diameter vessels. Clinical outcomes in this challenging patient population continue to be excellent. To document these results, we're conducting a post-market clinical study called ImageBTK designed to evaluate Pantheris SV for the treatment of below-the-knee lesions in a real-world clinical setting. We have now enrolled approximately 40 patients in the study and expect to complete enrollment this year. Interim results continue to be outstanding. As of December 31st, 35 subjects have been enrolled in the study, with 25 patients completing their six-month visit and 22 patients completing their 12-month visit. Primary safety for this patient population has been excellent, with 100% freedom from major adverse events at 30 days. Performance against the efficacy endpoints are equally compelling, with 94% of lesions having a residual stenosis of less than 50% after treatment with Pantheris SV alone, and 100% of lesions having a residual stenosis of less than 30% post-adjunctive therapy. On average, patients had a stenosis or blockage of 95% prior to treatment. Treatment with Pantheris SV alone reduced the stenosis by 75% to 24% on average. This reduction in stenosis increased to 92% post-adjunctive therapy, with average stenosis of only 8% at the end of the index procedure. Most exciting are the longer outcomes reported so far in the study. At six months, patients exhibited 100% freedom from target lesion revascularization, or TLR, and 94% patency via duplex ultrasound, adjudicated by an independent core lab. These results are proving to be extremely durable, with patients showing 92% freedom from TLR and 92% patency at 12 months. Truly remarkable results in this challenging anatomy and challenging patient population, many of whom would otherwise be at significant risk of amputation. We plan to build on this success with the introduction of Pantheris LV, our new large vessel device that incorporates key design principles from our Pantheris SV device. We filed a 510K application for Pantheris LV in early January and anticipate FDA clearance by mid-year 2023. which would allow for commercial launch in the second half of this year. Pantheris LV is designed to treat vessels 3 to 7 millimeters in diameter and is ideally suited to treat lesions in the SFA and popliteal arteries above and behind the knee, where the majority of PAD procedures are performed. Pantheris LV utilizes a proprietary design for plaque opposition without the need for a balloon, and is designed to operate at significantly higher rotational speeds to streamline the atherectomy procedure and expand our capabilities in this anatomy. It also enhances guidewire management and implements a modified plaque management system to further improve procedural efficiency. In addition to our new Pantheris LV filing, in the third quarter of 2022, we filed a 510 submission for our new Tiger Eye ST catheter for CTO crossing in the peripheral arteries. While clearance for this device has taken a little longer than our most recent 510 filings, we've provided all documentation and additional testing, including some longer lead time biocompatibility testing requested by FDA as part of their standard review process. We have no open requests on our 510 submission at this time. Time to clearance for our 510K submissions typically takes from four to eight months, so we are still within our normal time frames with this filing. Given the completeness of our response and the strength of our data, we believe that we are nearing the end of the review process and anticipate FDA clearance in the coming weeks. We are making preparations to initiate limited launch on an expedited basis pending FDA clearance and are excited to gain clinical experience with this significantly advanced new device. Tiger IST incorporates design upgrades to the tip configuration and catheter shaft to increase crossing power and procedural success in challenging lesions. It also incorporates design enhancements for ease of image interpretation during the procedure. Tiger IST continues to provide the high-definition real-time imaging, user-controlled deflectible tip, and faster rotational speeds introduced to the platform in 2021. By bringing new capabilities to the system, Tiger IST is expected to expand the addressable market for our image-guided CTO catheters in the treatment of advanced peripheral disease. Taken together, we believe the anticipated commercial launch of our Tiger IST CTO crossing device in the first half of the year and launch of our new Pantheris LV atherectomy device in the second half of the year will bring excitement to our platform and expand addressable case opportunities for our products. Combined with our new Lightbox 3 imaging console, we believe these new catheters will assert our technology leadership in the peripheral vascular space and provide new growth opportunities for our company. As we look to the future, we're very excited about the progress we're making in the development of our first coronary product application. which provides the opportunity for first mover innovation in a large and growing market with existing reimbursement codes in place. Crossing chronic total occlusions in the coronary arteries is a complex, expensive, and challenging procedure utilizing currently available technology. By leveraging our proprietary technology platform, we believe we can redefine this market with the first and only fully integrated image-guided system for crossing coronary CTOs. Our coronary CTO development efforts are focused on low profile catheter designs 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. An image-guided coronary CTO crossing device with diagnostic capabilities would access existing reimbursement codes both for the therapeutic procedure as well as for coronary OCT diagnostic imaging immediately upon FDA clearance. We believe that an OCT-guided catheter designed for crossing efficiency with the need for fewer support devices and less contrast media usage combined with a highly attractive reimbursement scenario, provides the opportunity for a differentiating and highly compelling economic value proposition. To guide our development efforts, we've established a clinical advisory board made up of highly experienced interventional cardiologists who are key opinion leaders in the fields of coronary CTO crossing and intravascular imaging. Over the past several months, we've evaluated different design approaches and benchtop models and have recently shared our designs and findings with our clinical advisors, getting important feedback for further development and evaluation. We anticipate assessing prototypes and animal studies in the second quarter with a goal of filing an Investigational Device Exemption, or IDE, with the FDA in the next 12 months to allow for initiation of a clinical study to evaluate safety and efficacy of the device in 2024. There is a definite excitement around our development program and the opportunity to meet a large market need with an elegant solution to what is today an incredibly difficult procedure. Given the vast potential represented by the coronary markets, advancing coronary CTO product development is our principal R&D program for 2023. On a commercial basis, we're focused on execution in three strategic areas to drive growth of our peripheral business. First, increasing case coverage capability and catheter utilization in our core geographic areas through the expansion and training of our clinical sales team. Second, driving new account activity and expanding our user base through deployment of our new Lightbox 3 imaging console. And third, completing the regulatory approval process for our two new peripheral devices in preparation for commercial launch this year. which we believe will broaden the appeal of our product portfolio and create new usage drivers for our platform. We look forward to updating you on these initiatives, as well as the continued progress on our coronary product development program throughout the year. At this point, I'd like to turn the call over to Nabil Spinetti, our Principal Financial Officer and Accounting Officer, to take us through the financial results, and then I'll return for Q&A. Nabil? Thank you, Jeff.