Motus GI Holdings, Inc.

Ladies and gentlemen, thank you for standing by, and welcome to the MODIS GI Holdings Incorporated fourth quarter 2020 financial and operational update. At this time, all participants are in a listen-only mode. There will be a presentation by the MODIS management team, followed by a question and answer session. I must advise you all that the conference is being recorded. I'd like to turn the call over to Garth Russell of LifeSci Advisors. Please go ahead, sir.

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

Thank you, Garth, and thank you, everyone, for joining us today for Modus GI's fourth quarter and full-year 2020 earnings call. I'll start today's call by discussing our performance in the fourth quarter, provide detail of what we're seeing in the broader US hospital market, as well as discuss four upcoming value creation drivers that we believe have the potential to greatly enhance our business. I'll then turn the call over to Andrew, who will provide a review of our financial performance. At the end of our prepared remarks, we will open the call to take your questions. As a result of COVID-19, 2020 was a tumultuous year for everyone. However, as I reflect on the last 12 months, I am pleased to say that despite these challenges, our team exhibited impressive resilience, which allowed us to advance our strategy and establish a foundation for pure view in the market. It's important to remind everyone that we are in the early stages of tapping into the opportunity before us. In terms of market size, With more than 50 million procedures per year, colonoscopy is one of the single largest procedures in all of med tech. The unmet need associated with poor bowel prep is universally recognized, both from a clinical and economic perspective. The thesis which motivated me to join MODIS as its CEO two and a half years ago has not changed. Our PureView system has clear first mover advantage meaning we believe we currently have no direct competition and we continue to protect our core technologies through a growing portfolio of granted patents. The task at hand is now focused on establishing our entry position in this market and changing long-standing behaviors, both of which are challenging tasks that require focus, patience, and deliberate execution. We're asking physicians and their staff to think differently about patient flow with the goal of eliminating archaic and unnecessary delayed hospitalizations due to poor bowel prep. This shift in mindset requires an enhanced commitment to improving patient care and a focus towards fixing the unprofitable economics for the hospital under the current standard of care. Moreover, addressing unmet needs and solving these clinical challenges requires physicians, nurses, and support staff to adopt a new technology and learn to utilize it effectively in cases they encounter on a regular basis. My experience tells me that changing behaviors doesn't happen overnight. It requires tenacity, telling the story each and every day, and being highly targeted in our approach to influencing one physician at a time. While this process may take longer than we'd like, it doesn't change what we're playing for here. establishing peer view as a new standard of care in the large global colonoscopy market. I am confident that our shareholders, our customers, and their patients will greatly benefit as we execute toward our goal of long-term success. I'd like to highlight the decisive and disciplined approach we have taken in our business since COVID-19 began one year ago. We acted with urgency in March and April 2020, cutting our quarterly cash burn by about 50% as the year progressed. We streamlined our areas of focus and our internal projects, continuing only those projects that we believed would enhance our business and help build medium and long-term shareholder value. We strengthened our base of shareholders and our balance sheet in 2020 and early 2021, bringing in more than $20 million of additional equity capital. And finally, we continued to build strong customer relationships and gained evaluations at more than two dozen targeted hospitals across the U.S. Despite current market-related headwinds, which are mainly attributed to COVID-19, we are in the strongest financial position since Modus GI was established and are well-situated to come out of the other side of this pandemic. We believe our sales and marketing team's nimble approach to remain engaged with key physicians has been very effective, particularly when considering a unique environment with lockdowns and social distancing requirements. In the third quarter, we saw a nice rebound in our business, primarily driven by an uptick in procedure volume and having onsite access to most of our hospitals. While that trend continued into early Q4, the resurgence of COVID-19 in specific geographies particularly California and Texas, created a slowdown in our momentum in November and December. With that said, I'm pleased that from a revenue perspective, despite the uptick in COVID-19-related issues in Q4, we sold more disposable sleeves than in Q3 and conducted roughly as many peer review procedures. In Q4, we also successfully negotiated two new 12-month committed contracts at prominent medical centers, University of Texas and NYU, which are both in effect for 2021. In both instances, the customer made a commitment to minimum quarterly purchases for our PureView sleeves, and for doing so, we are allowing the early adopters, what we are calling centers of excellence, to utilize our capital equipment at no additional cost while these minimums are met or exceeded. We believe deploying this razor razor blade model works well in instances where capital funding is currently unavailable, as it permits the customer to expand use of the PureView system while providing us with more predictable sleeve volumes. Given the current capital environment, we expect to complete additional agreements like these with early adopter hospitals in the first half of the year. You may also recall that University of Texas and NYU are two locations that have implemented a protocol that identifies clear clinical circumstances where the Peerview system should be utilized, which is also resulting in more consistent usage patterns. Replicating similar patient identification protocols in additional Peerview sites is the key focus for our commercial team. In the fourth quarter, we also expanded our business by initiating product evaluations at new accounts, most notably the Mayo Clinic in Phoenix, and Mass General Hospital in Boston. While we may not see the current environment begin to normalize immediately, we believe as hospital access returns and GI procedures rebound to pre-pandemic levels, we are poised to drive an acceleration of PureView utilization. Due to the pandemic, we've yet to benefit from having all of our hospitals fully up and running at any one time over the past year. As part of our fiscal discipline, we are currently fielding a small customer-facing team. This team is doing a great job driving the results that I summarized, and as we see a more favorable environment emerge, we will look to thoughtfully invest in expanding our commercial organization with the goal of driving faster utilization and revenue growth. I want to switch gears to upcoming catalysts for the business. We have identified four value creation drivers that we believe have the potential to meaningfully enhance and accelerate our business in 2021 and beyond. They are reimbursement, product innovation, clinical data, and strategic partnerships. Let me start with reimbursement. In the back half of 2020, we began to develop a comprehensive strategy aimed at positioning Peerview for reimbursement coverage in both the inpatient and the outpatient setting. While there are many pathways to achieve both public and private coverage, we are initially focused on CMS programs designed to provide payment for new and unique technologies. In the fourth quarter, we submitted an application to CMS for a new technology add-on payment, sometimes referred to as NTAP. this program could provide reimbursement for Pureview during inpatient colonoscopy. As part of this submission, we also applied for an ICD-10 code. As you may have seen in a recent press release, on March 9th we participated in CMS's coordination meeting where I am pleased to share that they recommended Pureview to be considered for an ICD-10 code. CMS is now conducting an open comment period and then the final decision will be made through a subsequent clearing process. If a code is awarded and subsequently NTAP coverage, we believe adoption and utilization of Pureview in the inpatient market can be accelerated. We also submitted an application for CMS's transitional pass-through payment. This program could provide reimbursement for traditional outpatient procedures. We believe high medical need patients that can't successfully complete their pre-procedural bowel prep would benefit greatly from PureView. Securing pass-through coverage for our system could be a significant catalyst for our business as it would provide economic incentive for physicians to use PureView on the roughly 5 million high medical need procedures each year in the U.S. It would also mark our first entry into the large outpatient market. Next, I'd like to discuss new product innovation. I am pleased to report that our product development effort to launch our first PureView system for use in upper GI endoscopies is on track, and we expect to submit a 510K application to the FDA by early Q3. This would potentially position us with an approved and available product on the market by early Q4. We view this as a significant opportunity and believe our technology can potentially address a serious unmet need in the market as it relates to visualization and the treatment of upper GI bleeding, which has an estimated mortality rate of approximately 10%. There are roughly 400,000 upper GI procedures in the US annually, and we continue to receive significant inbound interest from GI physicians who are eager for a solution that allows them to clear adherent blood and clot from their field of view during this critical procedure. Next, let's discuss clinical data generation. I'm excited to announce today that we recently began enrollment in a study with the Cleveland Clinic, which will evaluate the clinical and economic benefits of using the PureView system in patients with emergent lower GI bleeding that are treated in the ICU or the rapid inpatient endoscopy suite. This study is designed to enroll at least 20 patients to undergo minimal bowel prep in order to provide patients a much faster diagnosis as compared to the current period of 24 to 36 hours or more typically required to complete a full bowel prep. The outcome we receive from this study could begin to challenge the current standard of care for emergent lower GI bleed patients who are facing urgent need for diagnosis and treatment but are currently delayed. We expect to have this study fully enrolled before the end of 2021. And lastly, I want to talk about strategic partnerships. As it relates to our strategic options, we've spent time evaluating a number of potential pathways during the back half of 2020 and into 2021. Our objectives in considering any potential partnership would be aimed at opportunities that could accelerate our commercial efforts and enhance our technology development. Any partnership would also need to unlock clear shareholder value. As we continue to grow awareness and uptake of the PureView system, we will consider which options best fit our criteria and are actionable. I will now ask Andrew to review our financial results for the fourth quarter and the full year. Andrew?