EDAP TMS S.A.

Greetings and welcome to the E-DAP TMS third quarter 2020 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Jeremy Pfeffer, Managing Director of LifeSci Advisors. Thank you. You may begin.

Thank you, and good morning, and thank you for joining us for the EDEP TMS Third Quarter 2020 Financial and Operating Results Conference Call. On today's call, we will hear from Mark Ochetowski, Chief Executive Officer and Chairman of the Board, and Francois Dietsch, Chief Financial Officer. Before we begin, I would like to remind everyone that management's remarks today may contain forward-looking statements, which include statements regarding the company's growth and expansion plans. Such statements are based on management's current expectations and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in such forward-looking statements. Factors that may cause such a difference include, but are not limited to, those described in the company's filings with the Securities and Exchange Commission. I would now like to turn the call over to EDAP's Chairman and Chief Executive Officer, Marc Wojciechowski. Marc?

Thank you, Jeremy, and good morning, everyone. I will start with a brief operational update and then turn the call over to Francois Vitch to review our financial performance. We are pleased with our third quarter results. While the calendar's third quarter is seasonally our softest quarter of the year in terms of business volumes, this year it was the strongest quarter so far. So while restrictions in Europe and elsewhere began to lift, we did see a gradual shift back to a normal. Obviously, these trusted procedures cannot be delayed indefinitely. Total revenue in the quarter was €9.4 million, or $11.2 million, as compared to €9.3 million, or $10.3 million, in the second quarter of 2020. Another interesting sign was the fact that despite an 8% decrease in overall revenues in the third quarter this year compared to Q3 of last year, we generated a slightly higher amount of recurring treatment-driven revenues in our high-frequency emissions. and we sold the same number of focal one units. So following a difficult first half of the year, we are pleased with our third quarter performance. We announced just a few days ago that we entered into an agreement with EbiMedica, a leading distributor of medical technology in Italy. EbiMedica already distributes ExactView, so they are already familiar with our product line. Italy is the fourth largest medical technology market in Europe, and we are pleased to be able to partner with a recognized leader and significantly expand access to our portfolio in this important European market. COVID infection rates are again climbing in many parts of the world, including most of the US, and we are carefully monitoring our key markets. We are again seeing a modest impact on procedure volumes as hospitals continue to focus on the pandemic. However, halfway through the fourth quarter, I can say that, against this very challenging business environment, we continue to build our pipeline of FOCAL-1 and exact-due-cells prospects, while at the same time advancing our development programs into new soft-tissue indications that can potentially benefit from high-intensity focused ultrasound, or HIFU. As we recently announced, the clinical value of FOCAL-1 was further validated by the number of successful cells in the third quarter, despite the pandemic. This is a testament to the entire EDAT team that we were able to maintain our focus during these challenging times. During the third quarter, we announced 241 cells, and one of which also included the XactView high-resolution micro-ultrasound solution that we are now marketing as a result of our partnership with XactImaging. Recall that this micro-ultrasound resolution is comparable or better than MRI, and represents a 300% improvement over conventional ultrasound. Similar to MRI, it allows urologists to visualize and look at suspicious regions within the process and target biopsies in real time. Using this technology, urologists can see details that evade other imaging modalities. They can use the executive system to perform targeting biopsy, whether transrectal or transperineal, to confirm with a high success rate the suspicious reasons seen on the image. During the third quarter, we closed eight ExactView deals in different configurations, whether via bundled deals such as the Focal1-ExactView combo we sold to Mount Sinai Health System in New York, or as a standalone solution to existing HIFI users or to new accounts and prospects. Prostate cancer diagnosis and treatment can not only be delayed so long, but infinitely more direct. Therefore, we remain optimistic that the short-term impact of COVID will not affect the long-term momentum of market adoption of HIFU and its numerous benefits for patients, most notably quality of life preservation. We continue to host virtual education sessions with virologists and researchers, and in September, we hosted a key opinion leader call on focal one and exactly, featuring Dr. Brian Miles from Houston Metabase and Dr. Lawrence Cox from Sunnybrook Health Sciences Center. They spoke of the significant opportunity that exists between the current two extremes of prostate cancer treatment, radical prostatectomy on one side and active surveillance on the other side. With HIFU, suspect prostate tissue can be ablated while leaving the gland intact. These virtual outreach efforts have allowed us to stay in front of our case stakeholders. As noted, COVID infection rates are increasing, and we are tracking changes in other restrictions. To this point, we have stayed true to our long-term mission, which is to make these technologies available to the broadest possible patient population. We continue to build inventory so that we are in position to ship systems as soon as we are able to . Regarding reimbursements, as indicated last quarter, we expect CMS to publish the final rule for 2021 by the end of this year. We continue to prepare for a Category 1 CPP code effective January 1st, and we'll provide an additional update once the final rule is available. Turning to our endometriosis program, in August, we were granted full approval by French health authorities to initiate a Phase II clinical trial of HIFU for the treatment of deep invasive endometriosis. And we quickly completed the first patient treatment just a few weeks later. A total of 38 women will be enrolled in the study and treated at five major hospitals across France and assessed over a six-month follow-up period. During this study, investigators will evaluate the safety and efficacy of HIFU for this pathology. We have enrolled six patients and enrollment is continuing as we have scheduled an additional three patient treatments so far in December. And of course, should the results of this phase two study be positive, we will work to efficiently initiate a phase three program. The advancement of our endometriosis program is consistent with a strategic shift away from legacy lithotripsy business and toward high school. Endometriosis is just one example of the condition that we believe can benefit from this non-invasive technology. So we see significant opportunity to extend our HICU pipeline into very large global market opportunities. We look forward to keeping you apprised of our R&D efforts exploring HICU in other indications. Duplications of clinical data are key to our ongoing sales efforts. During the third quarter, we published two papers in the prestigious and peer-reviewed Journal of Urology. These studies represent the first U.S. publication detailing successful partial gland ablation using HIFU to treat prostate cancer patients since FDA cleared the technology in 2015. The studies conducted at USC and the University of Miami report on outcomes and follow-up of up to two years on the combined 162 patients. Importantly, radical surgery was avoided in the vast majority of study patients, participants, and incontinence and impotence were avoided or quickly returned to baseline levels. These results mirror what we have observed in prior European studies that involve larger patient cohorts and longer follow-up studies. Seeing some of our prominent reference center already publishing data demonstrating that our high-speed technology provides unmatched potency and accuracy marks another important milestone in our U.S. market penetration strategy. And now, our CFO, François Ditch, will provide some details of our financial results. François?