Pulmonx Corporation

Good afternoon and welcome to Palmonic's second quarter 2022 earnings conference call. At this time, all participants are in the listen-only mode. We'll be facilitating a question and answer session towards the end of today's call. As a reminder, this call is being recorded for replay purposes. I would now like to turn the call over to Lane Morgan from the Gilmartin Group for a few introductory comments.

Good afternoon and thank you for participating in today's call. Joining me from Pomonix are Glenn French, President and Chief Executive Officer, and Derek Sun, Chief Financial Officer. Earlier today, Pomonix released financial results for the quarter ended June 30th, 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 the 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 opportunities, guidance for revenue, growth 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 the 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 factor section of our public filings with the Securities and Exchange Commission, including the quarterly report on Form 10-Q, followed with the SEC on May 9th, 2022. This conference call contains time-sensitive information and is accurate only as of the live broadcast today, August 2nd, 2022. Comanix Corporation displays 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. And with that, I will turn the call over to Glenn.

Thanks, Elaine. Good afternoon, everyone, and welcome to our second quarter 2022 earnings call. Here with me is Derek Sung, our chief financial officer. In the second quarter, we generated worldwide sales of $14 million, representing our highest quarterly revenue to date. We're pleased with our second quarter performance as we continue to see strong patient demand for our Zephyr valves, improving end market dynamics, and the ability of our team to execute and manage our business in a fluid environment. Our performance was driven by particularly strong results in the United States where we achieved sales 18% higher than our previous record in the fourth quarter of last year as procedure volumes recovered from the winter COVID surge despite continued pressures from hospital staffing shortages. The momentum exiting the quarter leaves us confident in our ability to deliver on our full year 2022 revenue guidance of $55 to $60 million, even in the face of ongoing macro uncertainties and incremental foreign exchange headwinds. Throughout the second quarter, we continued to execute on our initiatives to expand our global commercial footprint. In the United States, we added 18 new treating centers, bringing our total number to 248 and keeping us on track to meet our objective of establishing at least 280 trained Zephyr Valve Centers in the U.S. by year end. We also added one additional sales territory in the U.S. and two additional international sales territories, bringing our total U.S. and international sales territories to 55 and 36, respectively. One of our primary goals is to educate both healthcare providers and patients about endobronchial valves being part of the standard of care for severe emphysema. In the second quarter, we launched joint education campaigns with two leading lung advocacy organizations, the American Lung Association and the COPD Foundation. These collaborations will extend through 2022 and include educational materials for patients, physicians, nurses, and respiratory therapists, including accredited courses, videos, webinars, podcasts, and articles. We have also expanded our healthcare provider education outreach at the local level with a focus on a selection of community physicians who manage large populations of COPD patients. Together with our physician collaborators, we continue to build on the clinical evidence for Zephyr Valves. In June, the first prospective study to assess cardiac function following bronchoscopic lung volume reduction with Zephyr Valves was published in the American Journal of Respiratory and Critical Care Medicine. This study found that a reduction in lung hyperinflation using Zephyr Valves resulted in improvements in cardiac function such as preload, cardiac output, and heart muscle contractility. thus suggesting a role for Zephyr valves in modifying the risk for heart failure in severe emphysema patients. Innovative clinical work such as this continues to advance the scientific evidence demonstrating the clinical value of endobronchial valves. Turning to our longer-term growth initiatives to expand our addressable market, We are excited about two upcoming data readouts associated with our aerosol clinical development program. As a reminder, we are developing aerosol to provide a solution for severe emphysema patients not currently eligible for Zephyr valves due to the presence of a gap in the fissure separating lobes of the lungs, which results in collateral ventilation or airflow between the lobes. This collateral ventilation prevents a target lobe from deflating when Zephyr valves are inserted. Aeroseal is a polymeric foam that is delivered via a bronchoscope to seal the airways leading to the fissure gaps between the lobes of the lung, potentially enabling treatment of patients who were previously ineligible for valves due to collateral ventilation. Thus, we see Aeroseal as a potential way to increase the number of patients who are candidates for Zephyr valve therapy. We are looking forward to seeing the publication of data from a single center, proof of concept, investigator-led feasibility study from Australia that evaluated aerosol to eliminate collateral ventilation in the target lobe and is successful then followed up treatment of that lobe with Zephyr valves. This manuscript was recently accepted and is expected to publish in the coming months. Aracil is also currently being studied in our CONVERT trial, a multi-center, multinational study which we are conducting in Europe. We are also pleased that interim data from this trial has been accepted for a podium presentation at the upcoming European Respiratory Society International Congress in Barcelona, Spain on September the 4th. At this presentation, we expect to share data on an initial subset of convert patients that will shed light on the preliminary conversion with aerosol of targeted patients with collateral ventilation. This information should provide additional insight and proof of concept around the use of aerosol to expand Zephyr valves to severe emphysema patients with collateral ventilation in a larger multicenter study. Learning from the CONVERT trial continues to inform the design of our US IDE study, which we are discussing with FDA and expect to initiate sometime next year. Lastly, our initiative to expand geographically into the Japanese market remains on track. We recently hired an experienced leader in Japan to drive our commercial efforts. and we are engaged in a constructive dialogue with the Japanese authorities following the submission of our regulatory application late last year. We continue to expect regulatory approval in Japan by the end of this year, followed by the establishment of reimbursement and subsequent commercial launch in the back half of 2023. Again, we estimate Japan to be a billion dollar opportunity with approximately 100,000 patients in need of our Zephyr Valve treatment. In summary, I believe the record sales that we achieved in the second quarter along with the continued progress on our commercial and strategic initiatives positions us well for continued growth through the remainder of the year and well into the future. With that, I'll now turn the call over to Derek to provide a more detailed review of our second quarter results.