IceCure Medical Ltd.

Good morning, and thank you for standing by. Currently, all participants are in a listen-only mode. After management's discussion, there will be a question and answer session. Please be advised that today's conference call is being recorded. I will now turn the conference over to Michael Poliview. Please go ahead.

Thank you, Yoni, and welcome to iCure Medical's conference call to review the financial results as of and for the nine months ended September 30, 2024. and provide an update on recent operational highlights. You may refer to the earnings press release that we issued earlier this morning. Participating on today's call are IceCure Medical's CFO and Chief Operating Officer, Ronan Zimmerman, and the company's VP of Business Development and Global Marketing, Khalid Ruzi Del Cazor. Additionally, IceCure's VP of Regulatory and Quality Affairs and Clinical Applications, Shayla Vav, will also join the call for questions and answer sessions. iSecure's CEO, Eyal Shamir, is unable to join today's call due to a personal matter and asks that I wish everyone in the U.S. a happy Thanksgiving on his behalf. Eyal will be attending next week's Radiological Society of North America, or RSNA, annual meeting in Chicago, and I'm sure some of you will be seeing him there. Before we begin, I will now take a moment to read a statement about forward-looking statements. This call and the question-and-answer session that follows it contain forward-looking statements within the meaning of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. Words such as expects, anticipates, intends, plans, believes, seeks, estimates, and similar expressions or variations of such words are intended to identify forward-looking statements. For example, we are using forward-looking statements in this presentation when we discuss the belief that the company's financial results demonstrate growing adoption and traction for its cryoablation system worldwide. the prospective timing of the FDA decision concerning potential marketing authorization for ProSense, the belief that the FDA advisory panel meeting is a final milestone prior to the FDA's decision on the marketing authorization, the potential benefits from receiving FDA marketing authorization, the belief that the growing body of evidence on ProSense's safety and efficacy across indications gives doctors and patients confidence and supports the company's commercial efforts, the belief that the company has several upcoming catalysts that are value-enhancing that Terumo Corporation expected to file regulatory approval of ProSense for breast cancer in Japan in 2025. The belief that the company's balance sheet positions it well to execute on revenue growth opportunities worldwide should the FDA grant marketing authorization in the first quarter of 2025 ProSense in early-stage breast cancer. And the expectation that should the FDA grant clearance to ProSense prospective sales in the U.S. as a result would further add momentum to its current upward trend in revenue. Because such statements deal with future events and are based on IceCure's current expectation, they are subject to various risks and uncertainties, and actual results of performance or achievements of IceCure could differ materially from those described in or implied by the statements during this call. The forward-looking statements contained or implied during this call are subject to other risks and uncertainties, many of which are beyond the control of the company, including those set forth in the risk factor section of the company's annual report on Form 20F for the year end of December 31, 2023, filed with the Securities and Exchange Commission on April 3, 2024, which is available on the SEC's website, www.sec.gov. The company disclaims any intention or obligation except as required by law to update or revise any forward-looking statements, whether because of new information future events, or otherwise. This conference call contains time-sensitive information and speaks only as of the live broadcast today, November 26, 2024. In addition, during the course of this call, we will discuss certain metrics that are non-GAAP measures, and we will refer you to the reconciliation tables and other information about these non-GAAP measures included in the earnings press release that we issued earlier this morning. I will now turn the call over to Ice Chair Medical's VP of Business Development and Global Marketing, Khalid. Please go ahead.

Thanks, Michael. Hello, everyone, and thank you for joining us today to review our nine-month 2024 results. This has truly been a transformative year for us at IceCure, both in terms of milestones, improving financial metrics, and our growth trajectory. During the first nine months of 2024, process console and probe sales increased by 36%, non-GAAP growth profits more than doubled, growing by 104%, and non-GAAP gross margin increased to 40% from 27% as compared to the same period last year. Our financial results demonstrate growing adoption and traction for our cryoablation system worldwide, and Ronen will go over the numbers during his prepared remarks. In April 2024, we successfully completed our i3 trial. Following this, the impressive data for process as an alternative to lumpectomy in early-stage low-risk breast cancer patients, were published in highly prestigious peer-reviewed publications and were presented at leading conferences, including the influential American Society of Breast Surgeons. The positive outcome of the FDA advisory panel earlier this month brings us one step closer towards potential marketing authorization for ProSense. We believe this is the final milestone leading up to the FDA's decision on marketing authorization. We remain engaged with the FDA both regarding the authorization and to ensure the opinion of the panelists are addressed in the labeling of process. We continue to expect that the FDA decision will occur in the first quarter of 2025. If marketing authorization is received, it would potentially allow us to offer women in the U.S. a non-surgical alternative to lumpectomy as early as in the next few months. Our U.S. health team and infrastructure are ready and poised to deliver. We have already established a reimbursement code for facility expense. The upon marketing authorization, we will be applying for additional reimbursement, including the physician's expense, widely known as the CPT-1 code. We believe ProSense will become an indispensable tool for breast surgeons, interventional radiologists, interventional oncologists, and patients alike. We believe that the large and growing body of evidence on ProSense safety and efficacy in breast cancer, as well as in other indications, gives doctors and patients confidence and supports our commercial efforts. Since the start of the third quarter, an astonishing 11 independent studies have been published and presented on ProSense, most of which were for breast cancer. We are particularly pleased that ProSense was recently chosen as the exclusive cryoablation system in one of the world's largest breast cryoablation studies to date. The precise study, which is financed by the Umberto Veronese Foundation and the Italian Ministry of Health, and led by multidisciplinary collaborators, will treat 233 patients at the prestigious European Institute of Oncology. Interestingly, this study will expand on the treatment population in our I3 study. PRECISE will treat younger women, age 50 and older, and will also treat patients with both luminal B and luminal A breast cancer. Looking ahead at the rest of the year to 2025, We believe that we have several upcoming catalysts that are value enhancing. Interim results from our iSECRET study are expected in early December. iSECRET is a prospective multicenter single arm clinical trial of process for the treatment of kidney cancer. Prior interim results demonstrated an 89.5% recurrence free rate at a mean follow up of 22.2 months. Our partner in Japan, Terumo Corporation, is expected to file for regulatory approval of process for breast cancer in Japan in 2025 with the aim of receiving clearance. We also expect that numerous additional third-party data on process will be published in medical journals and presented at prestige medical conference throughout 2025. Now I will turn the call over to Ronen to go over the numbers. Ronen.

Thank you, Tlalit. As Tlalit mentioned earlier, growth momentum continues for process sales. For the nine months ended September 30, 2024, process systems and disposable probe sales increased by 36% to $2.32 million, compared to $1.7 million for the nine months ended September 30, 2023, driven primarily by higher sales in Europe, the US, and Japan. Total revenue, when including revenue recognition and other services from our Terumo Corporation agreement in Japan, grew by 22% to $2.42 million for the nine months ended September 30, 2024, as compared to $1.97 million for the nine months ended September 30, 2023. Due to the increase in sales of process systems and disposables, which was partially offset by a decrease in revenue recognition and other services in Japan of $100,000 and $274,000 in the first nine months of 2024 and 23 respectively. Gross profit increased by 41% for the nine months ended September 30, 2024, to $1.03 million compared to $731,000 for the nine months ended September 30, 2023. Gross margin increased to 43% for the nine months ended September 30, 2024 compared to 37% in the nine months ended September 30, 2023. We are pleased to report that Nolgap gross profit, which represent gross profit from sales of our products, not including revenue recognition from distribution agreement, more than doubled for the nine months ended September 30, 2024, to $934,000 from $457,000 for the nine months ended September 30, 2023, an increase of 104%. Non-GAAP gross margins for the nine months ended September 30, 2024 increased to 40% from 27% for the nine months ended September 30, 2023. Reconciliations of these non-GAAP figures are included in the earnings press release that are issued earlier today. Total operating expenses for the nine months ended September 30, 2024 decreased to $12.21 million compared to $12.89 million for the nine months ended September 30, 2023. The decrease is attributable mostly to reduction in research and development and general administrative expenses. Net loss narrowed during the nine months ended September 30, 10.84 million dollars or 0.2022 dollars per share compared to net loss of 11.66 million dollars or 0.26 dollars per share from the same period last year as of september 30 2024 company had cash and cash equivalents of approximately 10.7 million dollars And as of October 31, 2024, the company had cash and cash equivalents of approximately $10 million. During the first nine months of 2024, we raised $8.1 million in net proceeds from the sales of ordinary shares under our at the market facility. We believe that the expected milestones position us well to execute on revenue growth opportunities worldwide, and particularly sales in the U.S., should the FDA grant marketing authorization in the first quarter of 2025 for procents in early stage breast cancer. Operator, we will now open the call for Q&A.

Thank you. Ladies and gentlemen, at this time, we will begin the question and answer session. If you have a question, please press star 1. If you wish to cancel your request, please press star 2. If you are using speaker equipment, kindly lift the headset before pressing the numbers. Your questions will be polled in the order they are received. Please stand by while we poll for your questions. The first question is from Anthony Vendetti of Maxim. Please go ahead.

Thank you. So I want to talk about first the US and then Japan. Based on the nine to five adcom meeting vote in favor for ProSense, in your discussions with the FDA, have they given you guidance that they would likely make a decision before the end of March? Could it be sooner? Could it be later? And then in Japan, I know you mentioned in the press release that you expect Teromo, your partner, to file for regulatory approval in 2025, is that in the first half of 2025, second half of 2025, and then what's the approval process there once they file for approval? Thanks so much.

Hi, Anthony, and thank you for your questions. I will start with the FDA in the U.S. with your questions regarding that. So the FDA didn't provide us exact timing for providing clearance, but we do believe based on our discussions that we should expect to receive the final answer somewhere in Q1. Of course, when we have more data, we'll be happy to share with the public. As far as in Japan, we know that Terumo are working on their submission and we're assisting them, we're working with them very closely. They are using the trial data and they are planning to do it in 2025. We're not sure on the date, but again, we will probably update everyone as we go forward in our work with Terumo.

Just to follow up on that, though, what is the approval process like once you actually file? Is there a clock ticking? I don't know how Japan works in terms of reviewing the actual application.

So I will defer this question to Shai. Shai, can you please answer?

Yes. Hi, Antonio. Taking into account the submission that will be done by Terumo in Japan with the I3 study data, including the outcomes from the FDA, we expect that it will be approximately a year from submission until Terumo will get approval from the PMDA in Japan.

Okay, that's helpful. Thanks so much. I'll hop back in the queue. Thanks.

The next question is from Kemp Dolliver of Brookline Capital Markets. Please go ahead.

Hi. Thank you for taking the question. Where do you stand with regard to your U.S. sales effort? And as you look into 2025 and 2026, assuming the approvals in the timetable you've mentioned, what's the expected pace of build out of the U.S. commercial team?

So thank you, Kemp, for the question. We will start the year, we will start 2025 with the same number of sales reps we currently have. And currently we have our VP, Mr. Shad Good, two sales reps and clinical support. As we get the FDA clearance, hopefully we will continue to grow and add sales reps. um it will be a step approach based on our plans but we expect that we will finalize 2025 probably at around between six to ten sales reps right and with regard to your r d expense um

It has decreased this year as you expected, though it appeared in this period the decline was smaller. I'm assuming that was probably spending in preparation of the adcom. So as we look into, say, the balance of the year and early next year, do you expect the Any further sequential decreases in R&D spending or somewhere around the current level?

So as far as the R&D expenses, we did expect to see a reduction in costs for R&D since we finalized the development of our new accent system. uh we are working also on new probes but the costs are definitely not the same as developing a completely new system in in 2025 it's too early to say right now but we do expect to work actually we did start to work on our multi-prop system. So we will continue to work on that in 2025.

Super. Thank you. The next question is from Yi Chen of HC Wainwright. Please go ahead.

Thank you for taking my questions. So for those five panelists who did not believe that process benefits outweigh the risks and voted no. Do you think the viewpoint is valid? And do you think there's any aspects of process that could be improving the future to address those panelists' concerns? Thank you.

Hi, and thank you for your question. I will defer it to Shai. Yes.

Thank you for this question. So the five panelists that voted no, actually they also mentioned it during their explanation to the voting. So three of them said that they would have voted maybe if they could. The main reason for Most of them was to encourage FDA to work with ICU closely and to define special controls post-marketing in order to have a continuous control on the safety and efficacy of the product and the way it performed in the field. One of the additional one who voted no, it was the statistical person who believed that there are some uncertainties in our I3 study. And this is something that by getting the approval and start to use the product more widely, we will be, and collecting the data, we will be able to determine that the results that are being seen out there in the field are similar to what we have seen in the I3 study.

I would like to add that some of the panelists who voted no also said that they're a little bit worried about other companies using our de novo clearance in order to get their own predicate device and this is some of the special controls that they requested for the fda to work with us okay thank you

If there are any additional questions, please press star one. If you wish to cancel your request, please press star two. Please stand by while we poll for more questions. The next question is a follow-up question from Anthony Vendetti. Please go ahead.

Yes, hi. On the ICE secret trial, are you still expecting interim top-line results in 24 by the end of December? And then can you also talk about, because we know the ProSense can treat other tumors and there's other indications, liver, lung, kidney. Can you discuss the U.S. kidney cancer treatment market, what that opportunity is and, you know, how far down the road is that in terms of, I know the breast cancer indication is the priority. But I'm just curious as we think out in 25, 26, what's the opportunity for kidney? Thank you.

Great. Thank you, Anthony. So regarding the iSECRET trial, we expect to list the results or see them at the beginning of December. um somewhere in the first week and this is these are uh interim results still and with the about approximately three years follow-up As far as the indication in the US, we know that there are about 80,000 new patients every year. So this is also an unmet need and we're definitely looking at it. But as you said, our first priority is first of all to use our process for breast cancer. mostly because the unmet need in breast cancer is extremely high, and we do see the demand, and we also see the utilization in the U.S. and the traction that we have.

Okay, great.

Thank you for that call.

Great. Thank you. There are no further questions at this time. I will turn the call over to Ronen Zimmerman for a concluding statement.

Thanks everyone for participating on today's call and for those listening in the U.S., have a happy Thanksgiving. We look forward to the FDA's decision on marketing authorization of process in early stage breast cancer. Should the FDA grant clearance, Then we expect sales in the U.S. to add further momentum to our current upward trend in revenues. Also, Eyal and I will be in San Francisco in early January and meeting investors during the J.P. Morgan Healthcare Conference. Please reach out to Michael if you want to schedule a meeting. Thank you all.

Thank you. This concludes the iSecure Third Quarter 2024 Results Conference Call. Thank you for your participation. You may go ahead and disconnect.