Motus GI Holdings, Inc.

Thank you. Thank you for watching. you Thanks for watching! Ladies and gentlemen, thank you for standing by. Welcome to MODIS GI Holding Incorporated Third Quarter 2020 Financial Results and Operational Update. At this time, all participants are in a listen-only mode. There will be a presentation by MODIS management team followed by a question and answer session. I must advise you that the conference today is being recorded. I would like to turn the conference over to Bob Edith of LifeSite Advisors. Please go ahead, sir.

Thank you, operator, and thank you, everyone, for joining us for the MODIS GI third quarter 2020 update call. Representing the company are Tim Moran, Chief Executive Officer, Andrew Taylor, Chief Financial Officer, Mark Pomerantz, President and Chief Operating Officer of MODIS GI. Before turning the call over to management for their opening remarks, I would like to take a minute to remind you that this conference call and webcast will contain forward looking statements about the company. These statements are subject to risks and uncertainties that could cause actual results to differ. Please note that these forward looking statements reflect our opinions only as of the date of this call. We will not undertake an obligation to revise or publicly release the results of any revisions to these forward looking statements in light of new information or future events. Factors that cause actual results or outcomes to differ materially from those expressed in or implied by such forward linking statements are discussed in greater detail in our most recent filings on Form 10-K and other periodic reports on Form 10-Q and 8-K filed with the SEC. With those prepared remarks, It's my pleasure to turn the call over to Tim Moran, CEO. Tim?

Thank you, Bob, and thank you, everyone, for joining our call today. I hope you and your families remain healthy and safe. I will begin by providing a business update and discuss MODIS GI's performance in the third quarter. I will then turn the call over to Andrew, who will review our financial results. At the end of our prepared remarks, we will open the call to take your questions. I'd like to start by discussing the current environment we are seeing in U.S. hospitals, specifically as it relates to inpatient colonoscopy procedure volume, sales rep and clinical support access to hospitals and procedures, physician mind share as it relates to evaluating a new technology like the peer review system, and value analysis committee or VAC timelines. It goes without saying that the COVID-19 pandemic created significant challenges for US hospitals. During the second quarter, the New York Society for GI Endoscopy published a report showing endoscopy volumes had declined by 57 to 96%. This massive reduction in endoscopy procedures significantly hindered our commercial introduction of PureView in the first half of 2020. With that said, I'm pleased to report that we saw a positive turn in our commercial progress towards the end of Q3. In speaking to our GI customers, we saw inpatient colonoscopy volumes ramp up to approximately 80% to 90% of pre-pandemic levels, and we are resuming the trajectory we started in Q1 prior to the COVID-19 pandemic. As procedure volumes started to return to more normal levels, In August and September, we began to see a positive turn in our results in terms of Pureview utilization. We now have on-site sales rep and clinical support access at about 80% of our accounts. All of our accounts have implemented stricter controls, but gaining on-site access is critical when launching a new product, particularly as it relates to conducting efficient, successful evaluations. While the remote access support tools we have developed have been very useful, we believe in-person sales and support is simply more effective with a new product launch. We have also seen positive momentum in physician mindshare at our targeted accounts. We have provided our investors and analysts a window into the traction we are building with various physicians and hospitals through our podcast series that began in the third quarter. This series currently has four episodes featuring leading GI physicians from across the US. For anyone who hasn't had a chance to review this material, please visit the Motus GI YouTube channel. In addition, we recently held a KOL event for the investment community with Dr. Seth Gross of NYU Langone Health. Dr. Gross touched on a number of topics, including the unmet needs and challenges associated with inpatient colonoscopy, the benefits to patients in reducing time in the hospital, and mitigating increasing cost to hospitals due to delayed or incomplete procedures. A replay of the webcast for this event is available on the events page in the investor section of our website. The key takeaway from these events as it pertains to you, our investors, is our belief that we have established a solid foundation of leading GIs that are vocally supporting the use of our system. It is important to note that since the pandemic started, our overall sales process has taken longer than expected, specifically related to delays in the hospital value analysis committee process. This is a result of the burden the pandemic has put on hospital staffing and priorities. However, with each month, our sales team continues to conduct shorter and more effective evaluations, which helps to mitigate some of these delays. There have been a number of notable wins in Q3, and I'd like to take a moment to highlight one in particular. I mentioned earlier the KOL call we conducted with Dr. Seth Gross at NYU. Last week, we also announced our partnership with NYU with an aim of improving the management of inpatient colonoscopies. Let me provide some background on how this came together. In Q3, through our collaboration with Dr. Gross and Dr. Melissa Latour, Director of Inpatient GI Services, we conducted an evaluation that was completed in just two short weeks. Following their positive experience, Pureview was submitted to their value analysis committee for review. After receiving approval from their VAC, NYU placed their first purchase order for Pureview Sleeves and began full implementation. In addition to adding NYU to our base of key reference sites, we are thrilled to be supporting their new clinical protocol that incorporates Pureview for the effective management of inpatient colonoscopies. NYU has indicated they will now utilize PureView for any patient that presents with an inadequate bowel prep, which we believe will improve their overall clinical and health economic outcomes. We believe the success at NYU illustrates several points that align with our strategy. First and foremost, the implementation of a proactive protocol for the effective use of PureView is significant. We believe this will allow NYU to optimize the use of Peerview for patients who would otherwise be delayed. For MODIS, we believe it will provide more predictable and consistent usage because it will allow us to train additional physicians and staff based upon the hospital's protocol, helping to ensure optimal use of the Peerview system. Next, winning at NYU's flagship hospital and leveraging their clinical and economic data can provide us a clear path to expand to other hospitals within the NYU system. This is part of our land and expand strategy, which we plan to replicate across other health systems in order to accelerate future growth. As it relates to strategically adding new hospitals, our team is doing so by implementing a meticulous pre-evaluation planning and site qualification process to ensure optimal success. As an example, In advance of initiating an evaluation at a large Midwestern hospital this past quarter, we worked with the site to track their inpatient colonoscopies for a 30-day period prior to kicking off. In their analysis, they found that 50% of their inpatient colonoscopy patients presented with poorly prepped colons, resulting in 21 additional nights of unnecessary hospitalization, which represented substantial additional costs to that hospital that are typically not reimbursed by commercial insurers or Medicare. This data was critical to supporting the hospital's decision to move forward with an evaluation of the peer review system, which will conclude in the fourth quarter. Employing learning such as this will be paramount towards driving efficient and sustainable results in the quarters ahead. I am pleased to see that our efforts are beginning to bear fruit, as we had several new hospitals initiate evaluations and several existing hospitals resume and complete their evaluations in Q3. I am encouraged by the renewed engagement we saw from our targeted customers and expect continued momentum in Q4 and in 2021. We currently have more than 20 major hospitals who have peer review on site, and in Q3, we initiated new evaluations at additional target institutions. As I reflect on the quarter, I want to reiterate the incredible opportunity we believe is before us at MODIS GI. We've created a solution that addresses a significant unmet need associated with inpatient colonoscopy in a market that comprises approximately 1.5 million annual procedures in the U.S. and approximately 4.8 million every year worldwide. We believe the PureView system continues to demonstrate the potential to improve outcomes and lower costs for hospitals by reducing the time to a successful colonoscopy, minimizing delayed and incomplete procedures, and improving the quality of an exam. We've protected our technology with a robust global patent portfolio and believe we have first mover advantage in the large addressable inpatient colonoscopy market. Clearly, the pandemic slowed us down, but I am encouraged by the renewed enthusiasm we are seeing from our targeted physicians and hospitals. We have now become a lean and efficient organization adapting to changing market conditions, and we plan to continue our focused efforts to build upon the positive indicators we saw at the end of Q3. I believe Q4 is off to an excellent start, and I expect we will see clear indicators of acceleration of our Q3 progress in our next quarterly results and beyond. As it relates to our strategic outlook, we continue to evaluate all potential options including commercial partnerships with large medical device companies that can provide scale to bring PureView to customers more quickly. We also view these potential strategic partnerships as a means of expanding the commercialization of the PureView system and sleeves to Europe, Asia, and other markets. Finally, as it relates to the resurgence of COVID-19 cases across the U.S., Our hospitals have indicated that they have a greater confidence in their ability to respond to COVID based on their experience principally in Q2 and are implementing safety measures to avoid another period of lockdown. We will continue to monitor this closely and respond with efficient and effective commercial strategies. I will now ask Andrew to recap our financial results for the third quarter.