Motus GI Holdings, Inc.

Ladies and gentlemen, thank you for standing by and welcome to the MODIS GI Holdings fourth quarter 2021 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 today is being recorded. I would like to turn the conference over to, I would like to turn the call over to Garth Russell of LifeSci Advisors. Please go ahead.

Thank you, operator. And thank you everyone for joining us for the MODIS GI fourth quarter 2021 update call today. 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 certain 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 any 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 I could call as actual results or outcomes that differ materially from those expressed or implied by such forward-looking statements are discussed in greater detail in our most recent filings on Form 10-K and our periodic filings reported on Forms 10-Q and 8-K filed with the SEC. I would now like to turn the call over to Tim Rand, CEO of Lotus GI. Tim, the floor is yours.

Thanks, Garth, and good morning, everyone. Thank you for joining our call today. I'm excited to share an update on our progress through the fourth quarter of 2021 and highlight several key upcoming catalysts that we believe will significantly accelerate our business in 2022. Following my updates, Andrew will provide an overview of our financial performance for the quarter and year ended December 31st, 2021. And then we will open up the call to take your questions. With that as an outline, let's get started. Over the last 18 months, despite the challenging market conditions, we've delivered on many of the key milestones of our long-term growth strategy and believe the foundation has been built to move from our market development stage, where we've established important KOL relationships, gained key procedural learnings, and advanced our technology, into the next stage of our plan, which is to begin to drive broad commercial adoption and growth in the US market. We are entering an exciting time in the evolution of the company as we are now armed with the right technology, an expanding commercial team, and a significant backlog of colonoscopy procedures as a result of the pandemic. First, let me quickly provide an overview of the past quarter, which will also help to frame the momentum that we see ahead. As has been widely reported, much of the fourth quarter was impacted by the resurgence of COVID due to the Omicron variant. At our existing and target hospitals, we saw delays in commercial progress due to staffing shortages and overall capacity constraints. This had an obvious impact on the quarter, including the rate of new placements of the peer review system and disposable revenues. While these issues continued into the first quarter of 2022, We have begun to see a general lifting of restrictions and improved resources over the last month. We are optimistic that the combination of vaccine deployment and improved therapies may provide greater stability, and as a result, are hopeful there will be less disruptions to our business in the future. With that said, in anticipation of our PureView EVS system gaining FDA clearance in the first quarter, we strategically postponed new customer evaluations and engagements for those accounts that were eagerly awaiting use of the new system. This strategy was validated when we received rapid FDA clearance for PureView EVS at the end of February. We now believe we have a commercial technology that is the most advanced and intuitive solution to address the significant unmet need associated with poor visualization prior to colonoscopy. Every change we've incorporated into the all-new PureView EVS was designed to enhance the overall ease of use for the customer. We have improved navigation capabilities, especially in tortuous colons, by streamlining the disposable sleeve, making it 50% lighter and 40% more flexible. This is accomplished by utilizing a single multi-channel tube that carries both irrigation and suction versus the five individual tubes that were utilized in our previous sleeve. The new system is a true on-demand solution as we have eliminated the reusable loading fixture and drastically simplified the setup. The new process allows for bedside loading of our sleeve even onto a dirty scope in 60 seconds. Therefore, if the physician starts a case and determines the patient colon is not prepped well enough, they can quickly load the PureView sleeve on their existing scope and complete the case rather than aborting the procedure. Further, the PureView sleeve can easily be removed after use in a case where the physician prefers to complete aspects of the procedure without the device attached. This ultra-fast setup and rapid breakdown in the procedure room makes PureView a simple intuitive go-to solution that requires minimal training for the GI staff. This will eliminate the need for our reps to provide ongoing in-person support. The sleeve suction capabilities have increased by 80% with a 25% increase in the number of irrigation jets, moving from four to five. Together, this allows for faster and more efficient colon cleansing providing pristine visualization. This increase in cleansing capabilities can be extremely beneficial as we look to take the EVS platform into the upper GI space and address acute upper GI bleeding. And finally, the new PureView EVS provides a significant reduction in overall cost of goods for both the sleeve and the workstation. We believe this reduction in COGS will improve overall margins, as well as allow for more flexibility in price-sensitive markets, including outpatient procedures and certain regions outside the U.S. in the future. The Pureview EVS was a focal point of our Innovation Day, during which we provided a detailed overview of the advancements I just discussed, as well as why we believe this next generation of our platform will be key to our commercial success. This event also featured valuable market insight into the clinical need of our system from guest KOL Dr. Seth Gross, Clinical Chief of the Division of Gastroenterology and Hepatology at NYU Langone Health. I'd invite you to listen to the replay of this event, which is available on the MODIS GI website. In summary, the new PureView EVS system simplifies our technology for real-world utilization and addresses the valuable feedback we've received from physicians and staff over the last 18 months. We believe we can now drive wider adoption of the EVS product, getting it into the hands of general GI physicians and positioning its utility for both hospital inpatient and targeted hospital outpatient procedures. I am pleased to report that in the first few weeks since our FDA approval, we already have PureView EVS deployed at multiple hospitals and would expect us to reach our first dozen sites in the very near future. The end user feedback from both GI physicians and their staff has been very encouraging. Rather than hear from me, let me share a few quotes directly from the physicians at these hospitals. The first is from Dr. Sri Kamanduri at Northwestern Medicine. And Sri commented, the new lightweight and slimmer sleeve design feels and functions much more like a bare scope than the second generation, providing me much better control and the ability to retroflex as needed. The next quote comes from Dr. John Rabine at Sinai Hospital LifeBridge Health. And he stated, The five focused water jets versus the four on the earlier generation provide improved irrigation capabilities that allow me to target and cleanse in a more precise and effective way. As we lean into our commercial efforts in 2022, we've discussed our plan to grow the sales force in support of the PureView EVS launch. I am excited to report that since our last call, we have already doubled the size of our sales team, moving from three to six reps. And we expect to continue to invest in additional commercial expansion throughout 2022. By strategically expanding our team, we expect to be able to go both deeper and wider, which we believe will lead to significant future revenue growth for the company. Now let's discuss our progress on key upcoming catalysts. First, let me review our outpatient reimbursement strategy and our plan for the generation of new clinical data. In Q1, we hired a new vice president of clinical affairs who came to us from Medtronic and will lead and oversee our clinical activities moving forward. As discussed previously, we have developed a multi-pronged strategy to seek and secure reimbursement of the PureView system procedure by both private and public payers. Over time, if we can secure reimbursement, we believe it will help to further accelerate our commercial expansion into the large colorectal cancer screening market for outpatients. We believe the high medical need portion of this market represents approximately 4.7 million patient procedures per year in the United States. As such, we are currently designing a large multi-center clinical trial that we expect will generate clinical and economic endpoints in the outpatient cancer screening segment that we believe will support future applications for reimbursement of the Pureview EVS system. Moving now to active clinical studies. I am pleased to announce that the European Outpatient Clinical Study is fully enrolled and remains on track for completion in the second quarter. This study is evaluating the clinical outcomes in patients with a history of poor bowel preparation using a low volume prep with limited diet restrictions and the PureView system. This investigator-initiated study is being conducted at two health centers in the European Union and has enrolled all 44 patients. The primary endpoint for this study is improvement of the bowel preparation from baseline to post-procedure as assessed by the Boston Bowel Preparation Scale. In the U.S., we are planning to incorporate PureView EVS into the existing investigator-initiated clinical study being conducted at the Cleveland Clinic. This study is designed to examine PureView in patients with lower GI bleeding utilizing minimal pre-procedural bowel prep. As such, the physician will utilize just two tap water enemas in conjunction with PureView, allowing for faster time to diagnosis compared to the standard of care. In terms of ongoing product innovation, now that we've received FDA clearance for the PureView EVS system, we have initiated a project to add upper GI capabilities to the new PureView EVS platform. If you recall, we've been running a limited pilot using our Gen 2 approval and expect the larger suction port and more flexible sleeve design to optimize PureView EVS for use in upper GI bleed cases. There are approximately 400,000 upper GI bleed procedures performed in U.S. hospitals each year and has been reiterated to us from KOL's proper visualization is a critical requirement for the physician to locate and treat the bleed. We will provide project updates and timelines in the months ahead. And finally, turning to potential strategic partnerships and collaborations. We continue to advance our relationships and dialogue with several potential strategic partners. Our focus is on evaluating all pathways to accelerate and expand our commercial efforts in the U.S. and in targeted regions outside the U.S., enhancing our technology development and unlocking value for shareholders. As we continue to drive greater awareness and utilization of Peerview EVS in the market, we believe strategic options that fit our criteria and are actionable will become available for consideration. With that, I will now turn the call over to Andrew to provide detail on our Q4 financials.