EDAP TMS S.A.

Greetings and welcome to the EDAP TMS Fourth Quarter and Fourth Year 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. Please note, this conference is being recorded. I will now turn the conference over to your host, Jeremy Pfeffer. You may begin.

Thank you, Shamali. Good morning, and thank you for joining us for the EDAP TMS Fourth Quarter 2020 Financial and Operating Results Conference Call. On today's call, we will hear from Mark Archikowski, 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, Mark Okcikowski. Mark?

Thank you, Jeremy, and good morning, everyone. I will start with a brief operational update and then turn the call over to François Ditch to review our financial performance. As we previously announced on January 20th, we turned in record fourth quarter 2020 revenue, notwithstanding the continued effects of the pandemic. In fact, these results are all the more impressive given that COVID-19 case counts around the world began to rise again midway through the quarter. We generated total revenue of 15.4 million euros, or $18.3 million, driven by the sale of eight HIFU devices during the quarter, including to such renowned institutions as University of California San Francisco Medical Center and Cleveland Clinic. These are in addition to sell to Mount Sinai Health System in New York and Keck Medical Center at University of South California, that we reported during our third quarter report. These are highly regarding institutions and important reference sites for our technology. This represents growth in total revenue of 28% over the fourth quarter of 2019, and 51% growth in high school revenue over the same period. Notably, we generated a sequential increase in revenue every quarter throughout 2020, which again reflects the hard work of the entire EDA team in successfully adjusting to the drastically altered work environment caused by the pandemic. So even as hospitals devoted to treat the many patients infected with COVID-19, interest in a Formula One and executive solution remained high. As you may have seen in our press release presenting the complete financial results for 2020 that we issued yesterday evening, we also managed to maintain high growth margins and continue to perfectly manage our level of expenses during this difficult time. Thanks to our careful management of the business, we were successful in generating positive operating income for the full year. This is a great achievement for our company, particularly as it was achieved in such a complicated environment. This demonstrates the solid foundation that we have established here at EDAP and gives me great optimism for the future. We also managed to increase our cash position to more than 24 million euros, or 30 million dollars, at the end of 2020 from 20 million euros at the end of 2019. During the fourth quarter, we received very positive news on the U.S. reimbursement funds with the publication of final U.S. 2021 reimbursement rules for HIFU, which went into effect on January 1st of this year. And while final rates were consistent with the proposed rule previously reported, it bears repeating. On the hospital payment side, the final rule maintains the HIFU procedure in the Level 5 Urology Ambulatory Payment Classification, or APC. This translates into a payment for a hospital performing a HIFU procedure on a Medicare patient of around $4,500 as a national average, adjusted locally based on the wage index. This represents an increase of around 5% from the payment hospitals received from Medicare for a HIFU procedure in 2020 within the C code context. However, and the most exciting challenge, change, sorry, occurred in the physician fee schedule. For the first time, CMS has established a payment to physicians performing a HIFU procedure on malignant prostate tissue in the US. Based on the relative value unit set by CMS for physicians performing a HIFU procedure on a Medicare patient in a facility setting, this translates to an average payment of $996. As a reference, a comparable established minimally invasive therapy for prostate cancer, cryotherapy, and brachytherapy yield an average payment of $786 and $738, respectively, under the same setting and patient conditions. A radical prostatectomy would say $1,188 or $1,464 is performed laparoscopically. This is a higher amount, though the average time of performing surgery is much higher than doing a focal one treatment, and far more if it is done as a partial or focal treatment. So globally, and related to time spent, it gives HIFU a very competitive physician statement. We believe having established reimbursement, particularly on the physician side, will continue to be a catalyst toward more widespread adoption of our technology in 2021 and beyond. To further expand and accelerate both reimbursement and market access to HIFU, we recently announced that we have increased our support by partnering with two leading reimbursement consultancies, NTP and Argenta Advisors. With their guidance, we will assist hospitals, physicians, and patients with securing coverage and reimbursement of HIFU, whether Medicare or commercially insured. In parallel, we will work with medical directors and other payer decision-makers toward the creation of universal automatic coverage policies. This is just one example of the investments that we are making to make HIFU as broadly available to patients as possible in our most important market. Outside of the U.S., we took a significant step forward through the signing of an exclusive distribution agreement with AB Medica, who distribute focal volume and exact view across Italy. AB Medica is widely regarded as a leading distributor of cutting-edge medical equipment, including robotic prosthetic surgery solutions. so they are the perfect fit for us. Italy is the fourth largest medical device market in Europe, and we look forward to a long and mutually beneficial partnership. The growing interest in HIFU as a viable alternative to radical surgery is further supported by a large and growing body of evidence demonstrating the significant difference in efficacy in favor of HIFU versus radical prostatectomy. In January, We reported on the results of a study sponsored by the French Association of Urology, or AFU, and supported by the French Ministry of Health. The results were presented at the AFU Congress in November 2020. The study was a multi-center prospective non-randomized comparative and non-inferiority study of HIFU versus radical prostatectomy in men with primary prostate cancer. Between 2015 and 2019, the study enrolled 3,364 patients in 42 public and private hospitals in France, 1,988 treated with HIFU, and 1,376 with radical thoracotectomy, the current standard of care surgical approach. In terms of cancer characteristics, the two groups are comparable with a majority of ISUP Grade II and equivalent median PSAs at baseline. The results of the interim analysis show a significantly better 24-month recurrent free survival defined as the rate of salvage treatment by external beam radiotherapy and or hormone therapy for the patients treated with HIFU compared to the patients undergoing surgery. This significant superiority in efficacy was achieved with HIFU, despite the fact that the patients in the HIFU arm were more than 10 years older on average, and therefore naturally more likely to suffer from these issues. Turning to our endometriosis program, recall that in August 2020, we were granted full approval by French health authority 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 his pathology. To date, we have enrolled 10 patients at Croix-Rouge Hospital in Lyon by Professor Gilles DuBernard, the lead investigator for this phase 2 trial. Enrollment is continuing, and we are currently in the process of opening four additional trial sites to participate in the study. The advancement of our endometriosis program is consistent with a strategic shift toward HIFU is just one example of a condition that we believe can benefit from these non-invasive technologies. We see significant opportunity to expand our HIPAA pipeline into very large global market opportunities. We look forward to keeping you apprised of our R&D and clinical efforts in exploring HIPAA and other indications. And now, our CFO, François Ditch, will provide some details of our financial results.