Pulmonx Corporation

Thank you for standing by, and welcome to the Pulmonix Q1 2022 Earnings Conference Call. At this time, all participants are on listening mode. After the speaker's presentation, there will be a question and answer session. To ask a question at that time, please press star then 1 on your touchtone telephone. As a reminder, today's call is being recorded. I will now turn the call over to your host, Mr. Brian Johnson at the Gil Martin Group, where you may begin.

Thanks, operator. Good afternoon, and thank you all for participating in today's call. Joining me from Pomonix are Glenn French, President and Chief Executive Officer, and Derek Sung, Chief Financial Officer. Earlier today, Pomonix released financial results for the quarter ended March 31st, 2022. A copy of the press release is available on the company's website. Before we begin, I'd like to remind you that management will make statements during this call that include forward-looking statements within the meaning of federal securities laws, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements contained in this call that relate to expectations or predictions of future events, results, or performance are forward-looking statements. All forward-looking statements, including without limitation, those relating to our operating trends and future financial performance, the impact of COVID-19 on our business and prospects for recovery, expense management, expectations for hiring, growth in our organization, market opportunity, guidance for revenue, gross margin and operating expenses, commercial expansion, and product pipeline development are based upon our current estimates and various assumptions. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements. Accordingly, you should not place undue reliance on these statements. For a list and description of the risks and uncertainties associated with our business, please refer to the risk factors section of our public filings with the Securities and Exchange Commission, including the annual report on Form 10-K, filed with the SEC on March 1, 2022. This conference call contains time-sensitive information and is accurate only as of the live broadcast today, May 3, 2022. Pomodos Corporation disclaims any intention or obligation except as required by law to update or revise any financial projections or forward-looking statements, whether because of new information, future events, or otherwise. With that, I'll turn it over to Glenn.

Thanks, Brian. Good afternoon, everyone, and welcome to our first quarter 2022 earnings call. Here with me is Derek Sung, our Chief Financial Officer. Overall, we were encouraged by the progress of our business in the first quarter. We saw widespread impact from the Omicron wave followed by a recovery that gained momentum as treatment centers began to reschedule and conduct procedures. The strength and timing of this recovery enabled us to achieve $10.8 million in worldwide sales above the high end of our expectations. We observed recovery trends which extended not only to hospital procedure upticks, but also to leading indicators such as stratix uploads and calls into our patient reimbursement support team. Based on these trends, we have increased confidence in our ability to achieve our previously communicated full-year revenue guidance of $55 to $60 million. Despite the impact of COVID, we also continued to make steady progress on initiatives to expand our global commercial footprint and to drive clinician and patient awareness of our Zephyr Valve. Centers and physicians remained eager to begin offering our treatment, resulting in the addition of 16 new treating centers in the US during the first quarter, bringing our total US treating centers to 230. We remain on track to meet our year-end objective of offering Zephyr Valves to at least 280 treating centers in the United States. As we accelerate sales, we are investing in infrastructure to support increased patient and physician demand. To help respond to the significant levels of patient interest in our technology, we have launched a call center to field product-related patient inquiries. Further, we recently opened our second U.S. physician training center to provide clinical education for the growing number of clinicians interested in performing our Zephyr Valve procedures. On the reimbursement front, we secured yet another positive policy win, adding over 3 million covered lives with Independence Blue Cross, the third largest payer in Pennsylvania and a key payer in the mid-Atlantic region. Independence Blue Cross is the 12th Blue Cross Blue Shield plan to post positive coverage for Zephyr Valves, and we have now streamlined access to treatment with Zephyr Valves to over 75% of all Blue Cross Blue Shields covered lives and over 90% of all US commercially covered lives. Reflecting additional progress on the clinical front, the Society of Cardiothoracic Surgery in Great Britain and Ireland released its standards for lung volume reduction, which endorsed the use of endobronchial valves to improve outcomes in patients with severe emphysema. We were also pleased that the journal Respiratory Medicine published a study in April finding that bronchoscopic lung volume reduction may extend the life expectancy of patients with COPD and severe lung hyperinflation. In this observational study of nearly 1,500 severe COPD patients, those treated with valves to reduce their lung volume survived significantly longer than those patients who did not receive an implant. And treatment with valves was found to be an independent predictor of survival. The study adds to the ever-growing body of evidence demonstrating the clinical benefits of our Zephyr valves. We also look forward to attending the American Thoracic Society International Conference from May 13th through the 18th in San Francisco. Our treatment remains a central topic of discussion across the pulmonary medicine space, as reflected by the numerous scientific posters and presentations that will feature bronchoscopic lung volume reduction at ATS this year. This will be the first major pulmonary medical congress since the start of the pandemic where we will have an in-person booth presence, and we look forward to driving commercial and clinical awareness of our Zephyr valve therapy. We also continue to make good progress with our clinical development initiatives. We're excited about our AeroSeal clinical development program, which stands to expand our addressable market to patients not currently eligible for Zephyr valves due to an incomplete fissure between lobes, which allows collateral ventilation. We estimate some level of collateral ventilation to be present in just under half of severe emphysema patients, presenting a tremendous opportunity for Aracil to complement our Zephyr valve therapy. Our development program is now focused on using Aracil to seal fissure gaps. This will provide a path to treatment with Zephyr valves for many patients who are not candidates today. This application of Aracil is being studied in our CONVERT trial, a multicenter, multinational feasibility study which we are running in Europe. We hope to present a first look at the preliminary data from a subset of these CONVERT patients later this fall. Information that we learn from CONVERT will be used to inform the design of our US IDE study. Lastly, from a geographic expansion perspective, we continue to expect regulatory approval of our Zephyr Valve treatment in Japan by the end of the year. Following the establishment of reimbursement, we expect to launch commercial efforts in the back half of next year, entering what we estimate to be a $1 billion opportunity with approximately 100,000 patients in need of Zephyr Valve treatment. In summary, I'm optimistic about the trajectory of our business as we accelerate out of the pandemic. In particular, I'm looking forward to the back half of this year when we expect to demonstrate our ability to grow our business in the absence of significant COVID headwinds, and when we hope to achieve some of the previously mentioned long-term growth milestones to expand our addressable market. With that, I'll now turn the call over to Derek to provide a more detailed review of of our first quarter results.