ProSomnus, Inc.

Good day and thank you for standing by. Welcome to the ProSomnus Q2 2023 Investor Update Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Mike Cavanaugh.

Thank you and good morning. Welcome to the Persomnus Incorporated second quarter investor update call. We thank you for joining us. Earlier today, Persomnus issued a press release announcing our financial results for the quarter ended June 30, 2023. and describing the company's recent business highlights. You can access a copy of the announcement on the company's website at www.investors.prosomnus.com. With me on the call today are Prosomnus Chief Executive, Len Liptak, and Chief Financial Officer, Brian Dow. Len will begin the call discussing the quarter's business and operational highlights. Brian will then provide a review of financial results in our financial outlook for the remainder of 2023, and we will then conclude with a question and answer session. Before we begin, I would like to inform you that comments mentioned on today's call may be deemed to contain forward-looking statements and that actual results may differ materially from those expressed or implied as a result of certain risks and uncertainties. These risks and uncertainties are described in detail in our Securities and Exchange Commission filings, including our most recent S-1, filed on May 30, 2023. Our SEC filings can be found through our company website at investors.prosomnus.com or at the SEC's website. Investors are cautioned not to place undue reliance on such forward-looking statements, and Prosomnus undertakes no obligation to publicly update or release any revision to these forward-looking statements. Please note that this conference call is being recorded and will be available for audio replay on our website at prosomnus.com in the news and events section under our investor relations page shortly after the conclusion of this call. Today's press release and supplementary financial data tables have been posted to our website. And with that, I will turn it over to Len Liptak.

Thank you, Mike. Good day to everyone. Welcome to our second quarter investor call. On behalf of every member of Team Persomnus, I am pleased to report record financial results, operational excellence, and strategic progress that exceeded expectations for Q2 2023. Our vision is for Persomnus devices to be the leading treatment for the billion people worldwide suffering from obstructive sleep apnea. Our vision is based upon our assessment of the best available scientific data, feedback from expert clinicians, patient preference, medical guidelines, our technology development, and a belief that physicians, providers, payers, and patients will take a rational, scientific approach to selecting and reimbursing the optimal treatment option for every patient. Persomnus' immediate opportunity is to offer an effective, safe, and non-invasive treatment for the millions of people diagnosed with obstructive sleep apnea who have failed or refused continuous positive airway pressure, CPAP. We believe this immediate opportunity is estimated to be approximately $4 billion in the U.S. alone, representing one of the largest opportunities in medtech. Treating OSA is also one of the most compelling opportunities in medicine. the consequences of untreated OSA are well established, including significantly higher rates of mortality, an increased risk of heart attack and stroke, reduced cognitive function, impairment of everyday quality of life, and higher economic costs to payers and patients alike. We believe that our strong top-line revenues, steady and leverageable gross margin, compelling data reported in the period, and on-plan progress of our strategic initiatives represent meaningful progress towards realizing our vision and validates our value proposition. During the second quarter of 2023, Persommas generated record revenues of 6.9 million, representing a 43% increase year over year from the second quarter of 2022, and 19% sequentially from what was a very strong first quarter of 2023. Looking at the first six months of 2023, We're reporting revenues of $12.7 million, a 48% year-over-year increase when compared to the same period of 2022. Relative to percent of growth, these results place personas within the upper echelon of publicly traded medical device companies in terms of revenue growth. Our strong results year-to-date are reflective of the clinicians and patients who, in increasing numbers, are trusting, prescribing, and ultimately utilizing presomnist devices to provide a safe, effective, and noninvasive treatment for OSA. During the second quarter of 2023, clinicians prescribed nearly twice as many presomnist devices as surgical alternatives, for example, ultimately selecting our therapy, which clinical studies suggest is more effective, significantly more economical for providers, patients, and payers, and has fewer and less severe adverse events and side effects. Our EVO precision device family was a key driver of our growth in Q2 2023, representing 84% of sales volume. Post-market surveillance of 9,815 patients treated with Persomnus EVO indicate 97% patient satisfaction and 97% clinical satisfaction. 99% of clinicians stated that they would recommend EVO and prescribe EVO again. We believe these levels of patient and clinician satisfaction indicate a growing validation of our differentiation. In addition to the increasing clinical acceptance of our EVO precision devices, our revenue results for Q2 2023 and for the first six months of the year are also being driven by investments in our commercial capabilities. Based on the strong contributions from our excellent sales and manufacturing team members in North America and Europe, and an unprecedented opportunity to earn prescriptions from patients who have failed or refused CPAP, we invested in the expansion of our direct sales team and our targeted clinical marketing capabilities. Over the first half of 2023, we doubled our number of Prasamis direct sales consultants from 13 to 26. We expect that each new rep will generate $400,000 in incremental revenue within the first year and will build and carry on average a $2 million territory at maturity. a level our seasoned reps have demonstrated in the recent past. Once a territory reaches maturity, we will subdivide based on procedure volumes and provider locations with our current device offerings, labeling, and reimbursement rates. The objective for our sales consultants is to drive utilization rates at therapy providers who are primarily dentists trained in sleep medicine by originating and developing referral relationships with sleep-oriented physicians. Sales consultants accomplish this objective by clinical education, sharing data, and servicing, and fostering communications between sleep physicians and these therapy providers. We look forward to realizing additional revenue growth and leverage over the coming months from investments made in the first half of 2023 to expand our direct sales team. Looking forward, we have recently released and expect to have released additional data to further fuel growth as PROSOMUS devices were featured in the scientific abstracts and podium presentations at seven scientific conferences in Q2 2023 alone. Preliminary data from the frontline OSA treatment study, FLOSAP, was presented at the American Thoracic Society in May and the British Sleep Society in June. FLOZAT is a head-to-head crossover trial comparing the efficacy of precision oral appliance therapy as frontline treatment versus CPAP for patients with moderate and severe OSA. The preliminary readout from FLOZAT indicates that prosomnus devices are efficacious, safe, and patient-preferred as a frontline treatment relative to CPAP. Full results from FLOZAT are scheduled to be presented in August and also at the IBEDSMA conference in September and the World Sleep Congress in October. A secondary observation from the preliminary FLOSAT data is that the treatment of severe OSA is directionally more effective than invasive implantable treatments. The preliminary FLOSAT data demonstrate that 79% of patients with severe OSA were successfully treated to an AHI of less than 20 and a 50% improvement. HNS clinical studies routinely report success in the 65% range for moderate to severe OSA patients using the same success criteria but excluding concentric collapse patients due to a contraindication. Based on the flows and observations, we've begun designing a randomized controlled trial comparing precision oral appliance therapy and HNS for the treatment of severe OSA patients. The primary objective for this study is to provide physicians with the data to support optimal treatment selection for each and every patient. I'm also pleased to report progress on our severe OSA study known as the SOS study. The objective of our SOS study is to demonstrate the safety and effectiveness of treating severe OSA patients with persomnus evo. This data will be used to petition the FDA for expanding our label to include severe OSA. Severe OSA represents one-third of all patients, carries high perceived value amongst physicians, and is associated with opportunities for elevated reimbursement amounts. All six SOS investigational centers are fully online. with five centers enrolling patients and the sixth center expected to begin enrolling patients in Q3 2023. We anticipate full enrollment by the end of 2023 and a report on preliminary data in early 2024. One other notable data stream is the utilization of the sleep apnea specific hypoxic burden metrics. As you may know, the apnea hypopnea index counts sleep disordered breathing events. However, research indicates that AHI is not predictive of health risk. Alternatively, research has demonstrated that the sleep apnea hypoxic burden, a measure of hypoxia caused by a sleep apnea event, is predictive of all-cause mortality and cardiovascular risk. A scientific abstract presented at the American Thoracic Society in May 2023 demonstrated that treatment with prosomus precision medical devices successfully improved the sleep apnea-specific hypoxic burden for 91% of the 109 study participants, which included 36 mild, 35 moderate, and 38 patients with severe OSA. This result suggests that prosomnus is well positioned as the field of sleep medicine shifts to sleep apnea-specific hypoxic burden as a key metric for treatment planning and disease management. Our R&D team continues to make healthy progress on our RPMO2 project, our next-generation sensor-embedded device, The purpose of our RPMO2 sensor-embedded device is to enable the remote monitoring of patients' physiologic metrics, such as heart rate variability and sleep apnea specific hypoxic burden, that are predictive of OSA-related health risk. While our device treats the patient's OSA, the sensor embedded in our RPMO2 device will monitor the patient's physiologic response to the treatment. Data will be transmitted from the RPMO2 device to the patient's smartphone via Bluetooth, and then uploaded from the smartphone to the healthcare provider's portal. This medically important physiologic data will enable healthcare providers and their patients to actively and remotely manage OSA, enabling more evidence-driven treatment planning, reducing office visits and hospitalizations, and ultimately lower overall costs of care. In sum, our next hydration sensor device will be to OSA, what continuous glucose monitoring is for diabetes. This program remains on track. for first commercial use by the end of 2023. With that, I'd like to turn the call over to Brian Dow, our Chief Financial Officer, for a review of our financials. Brian?