Avinger, Inc.

Good day, and welcome to the Avenger Third Quarter 2024 Results Conference Call. At this time, all participants are on a listen-only mode. After management's prepared remarks, there will be a question-and-answer session. I would now like to turn the call over to Matt Krebs, Investor Relations for Avenger. The floor is yours.

Thank you, Kelly, and thank you, everyone, for participating in today's call. I would like to welcome you to Avenger's Third Quarter 2024 Conference Call. Joining us today are Aventure CEO Jeff Swensky and Principal Financial Officer Nabil Spinetti. Earlier today, we released the financial results for the quarter ended September 30th, 2024. A copy of the release is posted on the Aventure 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 laws. 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 our future financial expectations, expected timing for commercial launch of products, status of our clinical sites, the expected benefits of our products, filings with the FDA and regulatory filings in China, and the anticipated timing of Zalax's full manufacturing scale of our devices are based upon our current estimates and various assumptions. These statements involve material risks and uncertainties that could cause actual results or events to be materially different 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-K-5 with the Securities and Exchange Commission. Average or disclaim 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 to the most comparable GAAP financial measures is available with an earnings release. which can be 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. In the third quarter, we achieved notable improvements in operating efficiency and made meaningful strides toward our strategic objectives. This progress highlights our dedicated efforts to streamline our peripheral operations, focusing on high-value accounts and channeling resources into what we believe could be a groundbreaking advancement in the treatment of coronary artery disease. In June, we implemented a cost savings program that reduced our overall headcount by 24%, including a one-third reduction in our commercial team. The September quarter marks the first full operating period reflecting these savings, with a direct reduction in operating costs and cash needs, as well as improved efficiency in gross margin and revenue per sales head. Our field sales team, now comprising 16 professionals, is focused on supporting our most active peripheral clinical sites. These sites demonstrate steady case activity and a strong commitment to utilizing our best-in-class technology to achieve superior patient outcomes, especially for complex peripheral artery disease, or PAD. Despite a much leaner sales team, we maintained approximately 90% of revenue in the third quarter compared to both the prior quarter and the same period last year. We remain dedicated to supporting our user sites and expanding the tools available to provide the best therapeutic solutions for patients. This includes the ongoing commercialization of our Tiger IST crossing catheter and the full commercial launch of our new Pantheris LV large vessel peripheral atherectomy catheter. Pantheris LV is designed to streamline the atherectomy procedure and paired with our portable Lightbox 3 imaging console, expand the mainstream appeal of our image-guided platform. In August, we announced the appointment of Dr. Tom Davis, a highly experienced interventional cardiologist and director of cardiovascular research at St. John Hospital and Medical Center in Detroit as our chief medical officer. Joined by key opinion leaders in vascular intervention, Dr. Davis hosted a physician-focused webinar in October titled New Approaches to Treating Peripheral Artery Disease Below the Knee and Promising New BTK Data. During the session, Dr. Davis presented updated interim data from the IMAGE-BTK post-market study, which evaluates the use of Pantheris SV for treating advanced disease in the smaller vessels below the knee. The study continues to demonstrate exceptional clinical outcomes in this challenging patient population, showing 100% freedom from major adverse events at 30 days, 97% freedom from target lesion revascularization, an indicator of restenosis, and 94% primary patency as assessed by duplex ultrasound at 12 months. Turning to our coronary program, We've made substantial progress on developing our first coronary product application, an image-guided CTO crossing system based on our proprietary optical coherence tomography, or OCT, guided platform. Since our last earnings call, we have successfully completed all phase three verification and validation testing necessary to support an investigational device exemption, or IDE, application with the FDA. Working closely with our coronary physician advisors, we've defined the clinical study parameters, including inclusion-exclusion criteria, study endpoints, treatment protocol, and patient follow-up requirements. We've also completed a biostatistical analysis to determine the optimal sample size for our study, targeting 110 patients with a 30-day follow-up period. To maximize alignment with the FDA, we opted to submit a pre-submission package in September ahead of the IDE application. This approach enables us to seek FDA feedback on our study design, target patient population, and choice of predicate device for an anticipated 510 regulatory pathway. Once the pre-submission process is complete, which we anticipate in the fourth quarter, we'll be ready to file the IDE. In the meantime, we are actively engaging high volume clinical sites for participation in the trial with five identified and discussions underway with several more. We expect to expand to 10 or more sites ahead of study initiation and are planning to begin patient enrollment upon receiving FDA approval of the IDE, which is anticipated in the first half of 2025. We're excited to complete this process and advance this revolutionary new technology through the clinical study and regulatory approval process. We believe our coronary device has the potential to redefine a large and underserved market. Crossing chronic total occlusions, or CTOs, in coronary arteries is currently a complex, time-consuming, and costly procedure with a documented high failure rate. By harnessing our proprietary image-guided technology, we aim to provide physicians with a superior, streamlined, and more effective solution for crossing coronary CTOs. Our technology is deployed within a low-profile catheter system, integrating real-time OCT guidance with the precise control and steerability needed for an anti-grade approach. We expect this to significantly reduce procedure times and improve crossing success rates while remaining within the true lumen. Similar to our peripheral devices, our coronary system also incorporates precise vessel measurement capabilities, enabling physicians to accurately size balloons or stents prior to placement, a critical factor for optimal patient outcomes. The design of our unique image-guided system is expected to allow physicians to cross coronary CTOs with less dependence on specialty wires, support catheters, and reentry devices. Use of real-time OCT imaging minimizes X-ray radiation exposure and iodine-based contrast dye usage, which pose significant health risks to both physicians and patients. Our extensive animal and cadaver studies along with our experience with OCT-guided therapy and peripheral applications support our confidence that this combination of onboard image guidance and vessel-specific directional control will deliver a strong safety profile in clinical practice. We expect our coronary CTO crossing system to benefit from favorable reimbursement dynamics. Upon FDA clearance, our device would immediately qualify for existing high-value reimbursement codes for coronary CTO crossing and OCT diagnostic imaging. This advantage sets it apart from peripheral markets where dedicated reimbursement codes for CTO crossing and diagnostic OCT imaging are not available. Additionally, our system is expected to drive substantial cost savings for hospitals by reducing crossing times, lowering contrast media usage, and minimizing the need for accessory devices. These benefits enable a more favorable cost profile, allowing hospitals to treat more cases or allocate resources more efficiently. We look forward to sharing our continued progress in the development of this exciting new clinical and business opportunity in the coming quarters. Before I turn the call over to Nabeel, I'd like to take a few minutes to update you on our strategic partnership with Xilox Tunbridge, a leader in the peripheral vascular and neurovascular markets in China. This relationship consists of three important components. First, investment alignment. Earlier this year, Xilox made a substantial equity investment in Avenger, aligning their interests with ours as shareholders in our future success. Second, market access. Our agreement has paved the way for introducing our image-guided devices to the vast and growing greater China market through Xilox's extensive and well-established sales and marketing network. And third, cost-effective manufacturing. The partnership provides a pathway for lower-cost offshore manufacturing of our devices for use in worldwide markets. We're excited about the rapid progress Xylox is making in expanding access to our proprietary image-guided products for the estimated 50 million people in China affected by peripheral artery disease. Our team has been working closely with Xylox to support their efforts in completing regulatory filings for our high-speed peripheral catheters and the Lightbox 3 imaging console in China before the end of this year. with registration clearance anticipated in 2025. Related to these efforts, Xilox recently received the prestigious Innovative Medical Device Review designation for our Pantheris device in China, akin to the breakthrough device designation in the U.S. This recognition enables priority regulatory review and underscores the impact of our technology in this important new market. We are also supporting Xilox's professional education initiatives and initial premarket promotion activities in China. Our products were presented for the first time at the China Endovascular Course, CEC, the leading clinical conference for Chinese endovascular surgeons, where many physicians expressed strong interest in our image-guided technologies. In addition, we are working with Xilox's operations group to support the development of manufacturing capabilities for Avenger products at their state-of-the-art manufacturing facility in Hangzhou, China. We anticipate that Xilox will complete its full manufacturing scale-up for our devices by mid-2025, which is expected to enhance production efficiency and provide the opportunity for additional cost reductions in the future. As a reminder, sales of Avenger products in the Xilox territory will be royalty-bearing for Avenger. Following regulatory approval, we will sell finished goods to Xilox until their self-manufactured products are available for sale in China. We're excited about the potential of this partnership and the positive impact it could have on our growth. At this point, I'd like to turn the call over to Nabil Spinetti, our Principal Financial Officer, to take us through the financial results. Nabil? Thank you, Jeff.