EDAP TMS S.A.

Greetings and welcome to the E-DAP TMS third quarter 2023 earnings conference call. At this time, all participants are in a listen-only mode. A brief 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. It is now my pleasure to introduce your host, John Francis. Thank you, John. You may begin.

Good morning. Thank you for joining us for the EDAP TMS Third Quarter 2023 Financial and Operating Results Conference Call. Joining me on today's call are Ryan Rhodes, Chief Executive Officer, Francois Dietsch, Chief Financial Officer, and Ken Mobeck, Chief Financial Officer of the U.S. Subsidiary. Before we begin, I would like to remind everyone that management's remarks today may contain forward-looking statements. which includes 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 Chief Executive Officer, Ryan Rhodes. Ryan?

Thank you, John, and good morning, everyone. I will start today's call by providing highlights from the third quarter of 2023 and then turn the call over to Ken Moback, our U.S. CFO, who will then present the corresponding details of financial performance. I'm pleased to report through the last fiscal quarter, we continue to see strong growth in U.S. Focal One HIFU procedures. We attribute this growth to HIFU becoming an important modality in the treatment of prostate cancer, with focal one being selected as a platform of choice amongst urologists. It is also clear that the strategic investments we continue to make in our commercial and clinical teams are further helping to drive increased utilization. In Q3, we recorded a 150% year-over-year increase in U.S. procedure volumes, as well as our fourth consecutive quarter of double-digit percentage procedure growth. The growing number of procedures across our install base provides the most compelling market-based evidence that FOCAL1 is fast becoming an essential part of prostate cancer management. FOCAL1 is the leading prostate focal therapy controlled by urologists. The advantages of FOCAL1 HIFU are clear, as it is a non-invasive procedure demonstrating excellent oncological control with minimal patient downtime while also avoiding the need for radical surgery or radiation. We are confident that these benefits along with strong clinical outcomes will continue to drive procedure growth as well as new focal one placements. We placed two new focal one systems in the third quarter of 2023. The first focal one was sold to the University of Florida which adds to the growing number of major academic medical centers which have adopted Focal 1. The second system was placed at Cleveland Clinic Abu Dhabi, the number one ranked hospital in the UAE in Newsweek World's Best Hospitals 2023, and now multiple sites within the Cleveland Clinic health system utilize Focal 1. Importantly, two additional FOCAL1 systems have already been placed early in the fourth quarter with the expectation of placing additional FOCAL1 systems throughout the remainder of the fourth quarter. Our continuing education efforts and growing presence at major medical meetings are also helping to drive urologists' demand for FOCAL1. A recent example of this was the partnered activity with Cleveland Clinic in conjunction the Society of Urologic Oncology. Focal One was a proud sponsor of the first Society of Urologic Oncology approved fellows focal therapy course hosted by Cleveland Clinic from September 21st through the 22nd. This two-day training program included lectures, hands-on simulations, and live procedures with the Focal One robotic HIFU platform. which reflects the growing awareness of Focal-1 HIFU amongst top experts in the field of prostate cancer management. Focal-1 was also showcased at multiple regional, national, and international scientific meetings during the quarter, including poster and podium presentations led by some of the most prominent specialists in the field of prostate cancer and focal therapy. In September, the Focal Therapy Society held its 13th International Symposium on Focal Therapy in Washington, D.C., where Focal 1 was featured in the main scientific program as part of a dedicated hands-on simulation session led by experts, which included Dr. Kerry Robertson, Associate Professor of Urology from Duke University. Additionally, FOCAL-1 robotic HIFU techniques and clinical results were also shared and presented by prominent experts from the Cleveland Clinic, the University of Southern California, and Duke University. Of significant importance was a plenary presentation delivered by Professor Edward Bocco from Oslo University Hospital, which highlighted the updated results from the randomized controlled trial comparing FOCAL-1 robotic HIFU ablation to robotic prostatectomy for patients with intermediate-risk prostate cancer. Noting that all of the patients have reached at least one year of follow-up post-treatment, Dr. Bocco stated that one year post-treatment, that focal ablation achieved good oncological efficacy, preserved continence and erectile function better, and resulted in significantly less Clavian-3 complications than radical prostatectomy. Another key development in the third quarter was reimbursement approval in Switzerland on July 1st for the use of HIFU in the treatment of prostate cancer. As a member of the DACH market region, including Germany, Austria, and Switzerland, with over 100 million combined total inhabitants, Switzerland has many hospitals ranked amongst the best 250 in the world, including the University of Zurich, an active and prominent FOCAL1 site. The University of Zurich is also the leading innovation center for HIFU in Switzerland and a member of the League of European Research Universities, placing it among Europe's most prestigious research institutions. Now we'd like to spend a few minutes talking about developments and expanding new clinical indications for use of FOCAL1 robotic HIFU. As noted, we continue to make solid progress in our endometriosis clinical program. In October, positive results from the EndoHIFU R1 Phase II study in deep infiltrating rectal endometriosis were presented by Professor Gil de Bonnard of the Annual Congress of the European Society for Gynecological Endoscopy held in Brussels, Belgium. As a reminder, we are currently enrolling patients in our phase three comparative double-blind randomized control trial. We are now 83% enrolled in the study and expect to complete enrollment by the end of 2023. If phase three results are positive, VOCA1 HIFU could represent a less invasive first-line treatment for deep infiltrating rectal endometriosis. while avoiding the considerable morbidity and complications often associated with surgical resection of the bowel and or rectum. As our phase three study continues to advance, we are already underway evaluating prospective next steps in preparation of a regulatory plan for engagement with the FDA and other competent authorities. I'm also pleased to announce that this morning, EDAP entered into a clinical research collaboration with the prestigious Icahn School of Medicine at Mount Sinai Department of Urology in New York to accelerate the understanding of the role of immunotherapy treatment in conjunction with high-intensity focused ultrasound, HIFU, in patients with prostate cancer. Vocal therapy using HIFU delivers precise ablative energy to a targeted prostate lesion, and existing research shows such treatment increases the immune response. The purpose of the collaboration is to understand if HIFU in combination with immunotherapy can generate measurable oncologic results in patients with prostate cancer. The research is being supervised by an internationally recognized leader in the field, Professor Ashutosh Tiwari, the chairman of the urology at the Icahn School of Medicine in Mount Sinai Hospital. Looking after the remainder of 2023 and considering our strong start to the fourth quarter, we expect a combination of continued procedure growth with our existing customers and placements of new focal one systems to result in strong operating performance as we close out the year. With 47.7 million euros or $50.5 million in cash and short-term investments, we will continue to strategically invest across our commercial operations to drive productivity and support the growing demand for Focal One Robotic Haifu. It's a leading technology platform in the management of prostate cancer.