EDAP TMS S.A.

Good day, everyone, and welcome to today's EDAP TMS third quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode. Later, you will have an opportunity to ask questions during the question and answer session. You may register to ask a question at any time by pressing the star and one on your telephone keypad. Please note this call is being recorded, and I will be standing by should you need any assistance. It is now my pleasure to turn today's program over to John Frantz. Francis of LifeSite Advisors.

Good morning. Thank you for joining us for the EDAPTMS third quarter 2024 financial and operating results conference call. Joining me on today's call are Ryan Rhodes, Chief Executive Officer, Ken Mobik, Chief Financial Officer, and Francois Dietsch, Chief Accounting 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 Chief Executive Officer, Ryan Rhodes. Ryan?

Thank you, John, and good morning, everyone. In the third quarter, we reported total worldwide revenue in U.S. dollars of $14.4 million, representing currency-adjusted growth of 11.6% on a year-over-year basis. Our core Focal One Haifu business continues to experience strong growth with a 48.2% year-over-year increase in revenues, reflecting continued adoption of Focal One throughout the global urology community. We placed three focal one systems in the third quarter, which included a system placement with Virginia Commonwealth University, as well as placements in Italy and Spain. All three placements were cash sales, and the focal one sale to Virginia Commonwealth University was our first placement in the state of Virginia. Virginia Commonwealth University is also one of only two National Cancer Institute designated comprehensive cancer centers in Virginia. As noted on our second quarter earnings call, a growing number of leading U.S. cancer treatment centers are now using Focal One based on our technology's proprietary robotic platform that targets cancerous cells in the prostate while sparing the surrounding healthy tissue. As a reminder, last year in the third quarter, we saw several engaged customers delay their purchase of Focal One to the fourth quarter. We are experiencing a similar pattern of purchasing behavior this year, and as such, We expect to finish 2024 with a strong fourth quarter performance. As positively noted, we have already closed a focal one sale in the US early in the fourth quarter with St. David's Hospital in Austin, Texas. St. David's is part of HCA Healthcare, the nation's leading provider of healthcare services, comprising of 186 hospitals and approximately 2,400 care sites in 20 states and in the United Kingdom. The cash sale at St. David's Hospital came at the conclusion of a successful evaluation period that demonstrated positive clinical outcomes, high procedure volumes, and favorable reimbursement while also meeting the hospital's strategic business objectives. This first sale in an HCA hospital has the potential to facilitate and accelerate the closing of future sales as we are currently in discussions with multiple hospitals within the HCA group. We also continue to experience strong growth in U.S. Focal-1 HIFU procedures. During the quarter, U.S. procedures grew 34% on a year-over-year basis, which reflects continued adoption by urologists who see Focal-1 as an important treatment option for delivering targeted focal therapy in earlier stage prostate cancer patients. As mentioned during our last call, We believe that as the results from the groundbreaking HIFI study become more widely disseminated, demand for the FOCAL1 platform will continue to grow. The HIFI study presents clear and compelling evidence that robotic HIFU therapy delivered by EDAP's proprietary technology is as effective as radical prostatectomy as a frontline treatment for the management of localized prostate cancer, while additionally offering patients better functional outcomes with respect to preservation of urinary continence and sexual function. As a reminder, EDAP technology was used exclusively to treat all patients receiving HIFU therapy in this study, including 90% with the FOCAL-1 platform. We anticipate the publication of the HIFI study results in a high-impact peer-reviewed medical journal which will provide focal one HIFU with important visibility to aid in accelerating market adoption. I will now provide a brief update on focal one reimbursement. The Center for Medicare and Medicaid Services, CMS, just released the final payment rules for 2025 on November 2nd. The HIFU procedure continues to be supported with favorable reimbursement with CMS finalizing a Medicare hospital payment rate of $9,247 as a national average per the adjusted corresponding local wage index factor. This rate will become effective on January 1, 2025, and represents a 5.4% increase over the 2024 payment. These reimbursement levels continue to support the favorable strategic business case for hospitals to both invest and integrate focal one HIFU while providing greater patient access to this valuable non-invasive treatment option. CMS also released the Physician Fee Schedule for 2025, which continues to provide strong physician reimbursement for HIFU with 17.73 work relative value units, or work RVUs, and 29.41 total RVUs. These figures are significantly higher than any other prostate ablation procedure. Additionally, it provides physicians with a level of reimbursement that is more than 80% of the payment for performing surgery, including robotic radical prostatectomy. In conclusion, we are pleased with the continued support of the defined reimbursement levels for the use of HIFU, which provides a financially sound and sustainable economic offering for both the hospital and the physician. I would now like to briefly discuss some of our recent strategic collaborative activities. On September 19th, we announced a very exciting collaboration with Avenda Health for the purpose of launching the world's first AI-assisted Focal-1 robotic HIFU procedures. Avenda's FDA-cleared Unfold AI technology builds 3D patient-specific cancer maps that reveal the extent of the tumor boundaries while enabling physicians to deliver more precise and tailored treatments. By leveraging Unfold AI's planning with the FOCAL1 robotic HIFU platform, we believe that urologists can provide a more customized, patient-specific HIFU ablation procedure for treating prostate cancer. The first series of these FOCAL1 AI-assisted procedures have already been conducted by Dr. Wayne Brisbing, Assistant Professor of Urology at the University of California, Los Angeles David Geffen School of Medicine. Thus far, we have received overwhelmingly positive feedback with respect to the combination of these two groundbreaking technologies. AI represents an important and strategic next step in the evolution of the FocalOne platform and will help us remain at the forefront of delivering the most advanced focal therapy treatment solutions for patients diagnosed with prostate cancer. During the quarter, we had a notable presence at several strategically important urology-focused scientific meetings. We conducted numerous FOCAL1 simulated procedures at the 2024 joint meeting of the Focal Therapy Society and Society of Urologic Robotic Surgeons, which took place from September 19th through the 21st in Washington, D.C. During this scientific meeting, there was significant interest surrounding our FOCAL1 technology, And this meeting serves as an important venue for building our relationships with the leading neurologists in the United States. We also had a major presence at the 2024 Focal Plus annual meeting, which took place from October 17th through the 19th in San Diego, California. The Focal Plus meeting is particularly relevant to our business as the majority of attendees have a growing interest in utilizing focal therapy for prostate cancer. There were numerous presentations highlighting focal one HIFU at the meeting, and we continue to see strong interest amongst urologists who recognize the need to offer a suitable treatment option between active surveillance and radical therapy. Early in the third quarter, we attended the 41st World Congress of Endourology and Eurotechnology meeting, which took place in Seoul, South Korea, from August 12th through the 16th. During this meeting, we provided dozens of hands-on focal one simulations, which garnered strong engagement from the intending urologist. To quote Dr. Indaber Gill, addressing a large audience of urologists at the meeting, going forward, if you don't offer focal therapy, your prostate cancer practice will start shrinking. Dr. Gill is a pioneer in robotic surgery and world-renowned expert on urological disease and chairman of urology at the University of Southern California Keck School of Medicine. The WCET scientific meeting also featured a semi-live moderated FOCAL-1 clinical procedure conducted by Dr. Tarek Benadir, clinical assistant professor at the University of Florida, which demonstrated numerous benefits of the FOCAL-1 robotic platform. I will now briefly touch on our clinical development programs in BPH and endometriosis. On October 1st, we announced that the first patients were treated in our combined Phase 1-2 study, evaluating Focal-1 robotic HIFU for the treatment of benign prostatic hyperplasia, or BPH. As a reminder, BPH represents an enormous market opportunity for Focal-1. Globally, 94 million prevalent cases of BPH were estimated in 2019, and in the U.S. alone, as many as 15 million men currently have BPH symptoms. The Phase 1-2 study is a company-sponsored prospective multicenter clinical trial and is designed in two parts. The first part of the study is taking place at three leading institutions in France with a recognized expertise in the treatment of BPH, as well as in the use of FOCA-1 HIFU technology. Part one is designed to define the treatment parameters per protocol to effectively treat BPH with the goal of achieving optimal patient outcomes. Part two of the study will expand patient enrollment across a larger number of clinical sites in order to validate the safety and efficacy of the parameters as defined in part one of the study. We are particularly excited about this program as the FOCAL-1 approach, when compared to other treatment options, has the potential to better protect the integrity of the urethra and other critical structures. We believe that FOCAL-1 could become an important, effective, and less invasive treatment approach for addressing BPH. The ongoing Phase I-II study will also serve as a foundation for initiating a clinical trial in the United States next year. I'll now provide a brief update on our endometriosis program. As previously announced in July, interim results from our phase three study evaluating robotic HIFU technology for the treatment of deep infiltrating endometriosis showed that robotic HIFU therapy maintained an excellent safety profile while demonstrating greater reductions in endometriosis lesion volumes as compared to patients in the sham arm of the study. Both arms of the study also showed significant improvements in pelvic pain reduction at three months from baseline as measured by the standardized visual analog scale. As previously reported, the primary endpoint of superior reduction in acute pelvic pain in the HIFU arm compared to the sham arm was not reached. However, upon further review by the clinical investigators, This outcome was likely attributed to comparing differences in pain scores between the two arms of the study after only three months following the procedure. In our view, a therapeutic benefit favoring robotic HIFU is more likely to be confirmed over a longer period of time post-procedure, as suggested by the stabilization of pain scores at 6 and 12 months from our published peer-reviewed Phase II studies. At present, the study is now unblinded and patients have been allowed to cross over to the HIFU arm protocol. I'm pleased to report now that 85% of the patients from the sham arm have already elected to cross over into open-label extension arm of the study and thus receive treatment with robotic HIFU. This is not surprising as the pain symptoms for these sham patients return back to their high baseline levels after one year post-procedure. In contrast, the patients from the HIFU arm who were evaluated one year following robotic HIFU treatment maintained a similar level of improvement over their baseline pain symptoms as measured at three months post-procedure. Importantly, these findings are consistent with a significant reduction in lesion volume as measured by MRI, which was observed in the HIFU arm only following the unblinding of the study. This additional data continues to suggest that HIFU therapy is a safe, non-invasive treatment that has significant potential to reduce pain for women suffering from this debilitating condition. Between now and year-end, we anticipate meeting with the FDA to discuss this additional data while determining the next steps for this program. Before handing the call over to Ken to review our third quarter financial results, I want to briefly mention a change to our board of directors. Following the departure of Mark Ozakowski, we appointed our existing board member, Dr. Lance Wilsey, to serve as interim board chair, effective September 30th. Dr. Wilsey is playing an active role assisting the executive team while we continue to search for a permanent replacement. Dr. Wilsey was first appointed to the EDAP Board of Directors in December of 2023 and has since made valuable contributions to help guide our strategic planning as we expand the Focal One platform across the global urology market. Dr. Wilsey is a trained urologist who has over 35 years of private and public board experience focused in the area of cancer diagnostics and therapeutics. He completed his surgical and neurology training at the Massachusetts General Hospital and additional postgraduate training in the Steele Lab at Harvard University and the Dana-Farber Cancer Institute. I will now turn the call over to Ken to review our third quarter financial results.