Spectral AI, Inc.

Good day and welcome to the Spectral AI first quarter 2024 financial results conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touchtone phone. To withdraw your question, please press star then two. Please note, this event is being recorded. I would now like to turn the conference over to Devin Sullivan, Managing Director of the Equity Group. Please go ahead.

Thank you, Chad. Good afternoon, everyone, and thank you for joining us for Spectral AI's 2024 First Quarter Financial Results Conference Call. Our speakers for today will be Peter Carlson, Chief Executive Officer of Spectral AI, and Vince Capone, the company's Chief Financial Officer. Before we begin, I'd like to remind everyone that during this call, certain statements may be made that constitute forward-looking statements within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995, including statements regarding the company's strategy, plans, objectives, initiatives, and financial outlook. When used in these discussions, the words estimates, projected, expects, anticipates, forecasts, plans, intends, believes, seeks, may, will, should, future, propose, and variations of those words or similar expressions or the negative versions of such words or expressions are intended to identify forward-looking statements. These forward-looking statements are not guarantees of future performance, conditions, or results, and involve a number of known and unknown risks, uncertainties, assumptions, and other important factors, many of which are outside the company's control and cause actual results or outcomes to differ materially from those discussed in the forward-looking statements. Investors are cautioned not to place undue reliance on forward-looking statements and Investors should carefully consider the foregoing factors and other risks and uncertainties described in the risk factors section of the company's filings with the SEC, including the registration statement and other documents filed by the company. These filings identify and address other important risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward-looking statements. With that said, I'd now like to turn the call over to Pete Carlson, Spectral AI's Chief Executive Officer. Pete, please go ahead.

Thank you, Devin, and good afternoon, everyone. We appreciate you joining us today for our first quarter financial results conference call. We had a strong start to the year with significant accomplishments in the areas of product advancement and deployment, clinical studies, and executive appointments. We also strengthened our financial profile and created a well-defined cash runway to support our growth initiatives. We are continuing to evolve from the clinical environment to commercialization and have a well-defined business focus for 2024 and beyond. As previously announced, in February 2024, we received UKCA authorization to commence sales of Deepview AI Burn in the UK. We are excited to share the deployment of DeepView systems at three UK hospitals, Royal Victoria Infirmary in Newcastle, Stoke Mandeville Hospital in Buckinghamshire, and Broomfield Hospital in Essex. First and foremost, we believe these deployments help professionals at these facilities provide more effective and more efficient care to patients. Additionally, Having machines deployed increases clinician familiarity with the device, integrates our technology into the facility's workflow, and provides real-world data related to its usage and outcomes. We will deploy a total of six DeepView devices at locations across the UK this summer. After a period of customer evaluation, we expect to initiate commercial transactions in the second half of this year. While we do not expect these transactions to represent a significant contribution to revenues in 2024, we are pleased to begin commercial activities. Our clinical work to develop the DeepView platform continues, and let me share these updates. For burn, we are enrolling patients for a pivotal study at multiple burn centers and emergency departments across the U.S. the study is expected to enroll 240 patients, both adult and pediatric. As of today, we are approximately 20% towards our enrollment goal. This is expected to be the final clinical trial for burn before seeking FDA approval in 2025. For diabetic foot ulcers, or DFUs, We are advancing our training and validation clinical studies in both the US and the UK. To date, we have enrolled 470 patients across 14 total sites and anticipate completing enrollment at both studies this year. We are often asked about timing of cash flows from the contracts with BARDA, and I want to take a few minutes to summarize this critical partnership. Through March 31, 2024, we have received approximately $113 million in cash payments from BARDA, most of which related to the burn one and burn two contracts that were completed in 2019 and 2020-23, respectively. This total includes approximately $11 million under the first portion of the project BioShield or PBS contract awarded in September 2023. The initial award of nearly $55 million from the PBS contract will take us through the first quarter of 2026 in support of the clinical validation and FDA approval processes for the burn indication. The next award which we expect to commence in the first half of 2026, is estimated to be $95 million for procurement and deployment of devices to burn centers and select emergency departments across the US, along with funding several years of annual license fees for the devices deployed. Final amounts under this next award are subject to discussions with BARDA. In summary, to date, BARDA has awarded contracts to Spectral AI totaling $250 million and, since 2013, has paid $113 million to the company under these contracts. Turning to updates on the continued strengthening of our leadership team and the board. We welcome Jeremiah Sparks as Chief Commercial Officer beginning April 1st, and I am pleased to say he hit the ground running including joining our team in Chicago at the annual meeting of the American Burn Association. Jeremiah was an executive at Aveda Medical prior to joining Spectral AI and brings more than 20 years of medical device marketing and business strategy, including experience in launching new products both nationally and globally. Prior to Aveda, Jeremiah worked at Johnson & Johnson, HealthPoint, and Allergan. Additionally, we named Stan Misik as interim chief operating officer on April 8th, providing continuing leadership to our engineering teams. Stan brings extensive experience in product deployments along with strong project management skills. As disclosed in our proxy filing last month, we nominated Marion Snyder to our board of directors. Marion is a highly accomplished healthcare executive currently serving as Senior Director Corporate Accounts at Shockwave Medical, a medical device focused on the treatment of cardiovascular disease. Her prior experience is in both med device and pharmaceuticals with executive positions at Memetics and Pfizer. My last update is about our newly formed healthcare intellectual property-focused subsidiary, Spectral IP. We are fortunate to have a well-known expert in intellectual property, Eric Spannenberg, as our largest shareholder. As you saw, we named Eric as CEO of this subsidiary, and his primary focus will be identifying assets for this entity to acquire and exploring the potential spinoff of Spectral IP to shareholders, providing additional value for our current investors. It is important to know that the activities of this IP focused subsidiary require limited management resources and no additional capital from the company. Additionally, no core operating assets of the company will be involved in the subsidiary. Fourth, turning things over to Vince, I want to stress that we believe we are on the proper path to deliver reduced pain and suffering, faster and more appropriate treatment plans, and reduced risk from complications for patients, better information for treatment decisions by clinicians, improved efficiencies and lower health care delivery costs for facilities, meaningful economic benefits for payers through objective and validated assessments, and long-term value for our shareholders. With that, I will have Vince Capone, our Chief Financial Officer, provide an update on our financial results.