Profound Medical Corp.

Ladies and gentlemen, thank you for standing by, and welcome to the Profound Medical Fourth Quarter and Full Year 2020 Financial Resource Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To participate in that portion of the call, you will need to press star 1 on your telephone. And please be advised that today's conference is being recorded. Now, I would like to turn the conference over to your speaker today, Stephen Kilmer with Investor Relations.

Thank you. Good afternoon, everyone. Let me start by pointing out that this conference call will include forward-looking statements regarding Profound and its business, which may include, but is not limited to, expectations regarding the efficacy of Profound's technology in the treatment of prostate cancer, BPH, uterine fibroids, palliative pain, and osteoid osteoma. Often, but not always, forward-looking statements can be identified by the use of words such as plans, is expected, expects, scheduled, intends, contemplates, anticipates, believes, proposes, or variations, including negative variations of such words and phrases, or state that certain actions, events, or results may, could, would, might, or will be taken, occur, or be achieved. Such statements are based on the current expectations of management. The forward-looking events and circumstances discussed in this conference call may not occur by certain specified dates or at all and could differ materially as a result of known and unknown risk factors and uncertainties affecting the company, including risks regarding the medical device industry, economic factors, the equity markets generally, and risks associated with growth and competition. Although profound, it's attempted to identify important factors that could cause actual actions, events, or results to differ materially from those described in forward-looking statements. There may be other factors that cause actions, events, or results that differ from those anticipated, estimated, or intended. No forward-looking statement can be guaranteed, except as required by applicable securities laws. Forward-looking statements speak only as of the date on which they are made, and Profound undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise, other than as required by law. For the benefit of those who are new to the Profound story, I would like to take a moment to summarize our business. Profound develops and markets customizable incision-free therapies for the ablation of disease tissue. We are currently commercializing Tulsa Pro, a technology that combines real-time MRI, robotically driven transurethral ultrasound, and closed-loop temperature feedback control. The technology is designed to provide customizable and predictable radiation-free ablation of a surgeon-defined prostate volume while actively protecting the urethra and rectum to help preserve the patient's natural functional abilities. Tulsa Pro is CE marked, Health Canada approved, and 510K cleared by the FDA. We are also commercializing SaunaLeaf, an innovative therapeutic platform that is CE marked for the treatment of uterine fibroids and palliative pain treatment of bone metastasis. SaunaLeaf is also being approved by the China National Medical Products Administration for the non-invasive treatment of uterine fibroids. and has recently obtained FDA approval under a humanitarian device exemption for the treatment of osteoid osteoma. While we do not expect this FDA HDE approval to have a material impact on revenues in the near term, it is a significant milestone for our company, and we are making preparations for its U.S. commercial launch later in 2021. On the call today representing the company are Dr. Arun Menawat, Profound's Chief Executive Officer, and Aaron Davidson, the company's Chief Financial Officer and Senior Vice President of Corporate Development. With that said, I'll now turn the call over to Aaron.

Good afternoon, everyone, and welcome to our fourth quarter and full year 2020 conference call. On behalf of the management team and everyone at Profound, I would like to thank you for your ongoing interest in our company. And for those of you who are shareholders, we appreciate your continued support. I will turn the call over to Arun in a moment for an update on our commercial activities. However, before I do, I'd like to provide a brief update on our fourth quarter 2020 financial results. One major change you probably noticed from our press release today is that we have changed our presentation currency from the Canadian dollar to the U.S. dollar. We believe this will result in more relevant and reliable information for those looking at our financial statements and will more accurately reflect the results of our operations, especially given our focus on U.S. commercial activities. To streamline things, all of the numbers I will refer to have been rounded and are therefore approximate. For the three-month period ended December 31st, 2020, the company recorded revenue of $2.9 million, an increase of 36% year-over-year and 29% sequentially over the third quarter. When we announced our preliminary unaudited revenue estimate in early January 2021, ahead of the JP Morgan conference, we hadn't yet made the switch to U.S. dollar reporting. So for clarity, this translates to actual revenue of 3.8 million Canadian dollars versus the 3.7 million Canadian dollar estimate at the time. Total operating expenses, which consist of R&D, G&A and selling and distribution expenses were $6.1 million in the fourth quarter of 2020, an increase of 14% compared with approximately $5.3 million in the fourth quarter of 2019. Breaking that down further, on a year-over-year basis, expenditures for R&D increased 4% to $2.5 million. This was primarily driven by higher spending for the setup and administrative costs of new clinical trials, options awarded to employees, additional headcount, and overall increase to general expenses, partially offset by decreases in material costs, consulting fees, and travel expenses. G&A expenses decreased by 6% to $1.8 million due to lower consulting fees and travel, software, bad debt expense, and depreciation. which were partially offset by increases in salaries and benefits and share-based compensation. Finally, selling and distribution expenses increased by 79 percent to approximately $1.7 million. As noted in our press release, selling and distribution expenses have historically been lower than R&D expenses. However, We expect selling and distribution expenses to exceed R&D expenses in the future as we continue to invest in the commercialization of Tulsa Pro in the United States. Overall, the company recorded a fourth quarter 2020 net loss of $7.5 million, or $0.38 per common share, compared with a net loss of $3.9 million, or $0.33 per common share, for the same three-month period in 2019. As at December 31st, 2020, Profound had cash of $83.9 million. I'd like to close by saying that while our performance in the fourth quarter again speaks to the strength of our technology and our business model, we continue to remain cautious in the near term, mainly due to COVID-19 headwinds, the impact of which are unpredictable. With that, I'll now turn the call over to Arun.