SI-BONE, Inc.

Good afternoon and welcome to SI Bones' four-quarter earnings conference call. At this time, all participants are in a listen-on amount. We will be facilitating a question-and-answer session towards the end of today's call. As a reminder, this call is being recorded for replay purposes. I would now like to turn the call over to Matt Paxil from the Jill Martin Group for a few introductory comments.

Thank you for participating in today's call. Joining me are Jeff Dunn, President and Chief Executive Officer, and Laura Francis, Chief Financial Officer and Chief Operating Officer of SI Bone. Earlier today, SI Bone released financial results for the quarter and full year ended December 31, 2020. A copy of the press release is available on the company's website. Before we begin, I'd like to remind you that management will make statements during this call that include forward-looking statements within the meaning of federal securities law, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements contained in this call that relate to expectations or predictions of future events, results, or performance are forward-looking statements. These forward-looking statements are based on the company's current expectations and inherently involve significant risks and uncertainties. These risks... include the impact the COVID-19 pandemic will have on the ability and desire of patients and physicians to undergo procedures using the iFuse implant system, the duration of the COVID-19 pandemic, and whether the COVID-19 pandemic will recur in the future. Other forward-looking statements include, without limitations, our examination of operating trends and our future financial expectations, such as expectations of hiring, surgeon training, and adoption, active surgeons, new products, clinical trial enrollments, and reimbursement decisions are based upon our current estimates and various assumptions. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements. Accordingly, you should not place undue reliance on these statements For a list and description of the risks and uncertainties associated with our business, please refer to the risk factors section of our most recent quarterly report on Form 10Q filed with the Securities and Exchange Commission on November 3, 2020. SI bonus lends any intention or obligation except as required by law to update or revise any financial projections or forward-looking statements, whether because of new information, future events, or otherwise. This conference call contains time-sensitive information and is accurate only as of the live broadcast today, March 8, 2021. And with that, I'll turn the call over to Jeff. Thanks, Matt.

Good afternoon, and thank you for joining us. Before we get into the details of the quarter, I want to thank all the healthcare workers taking care of COVID patients, as well as the over 100 SI bone field personnel who are in hospitals and ASCs virtually every day. as well as the almost 600 surgeons who treated sacroiliac joint dysfunction patients with eye fuse during the quarter. In accordance with our pre-announcement on January 7th, total revenue for the fourth quarter was a record $22.1 million, a 12% increase compared to the fourth quarter of 2019, and a 9% increase compared to the third quarter of 2020. As an organization, we continue to execute at a high level, which is reflected not only in our revenue growth, but also our ability to control expenses and manage operating losses. As we proactively adapted during the early days of the pandemic, one of the most impactful initiatives that has increased surgeon utilization rates and reduced costs has been the rollout of the SI bone simulator surgeon training system. This innovative training platform eliminates many of the barriers that we historically have had to overcome prior to the COVID-19 pandemic. Our sales and medical affairs teams can now train surgeons on demand, bypassing the cadaver lab, which eliminates radiation exposures for surgeons and staff. Additionally, there are no travel requirements on the part of the physician and reps. which significantly reduces overall costs and logistical planning. While this has been a positive for the company from an efficiency perspective, the key driver has been the positive perception from the surgeon community. Specifically, approximately 45% of all first-time U.S. surgeon trainings from July to December were executed using SI bone simulators. The number of trainings continues to ramp, and we expect this remarkable capability will attract many more surgeons in the future. We are targeting the approximately 7,500 spine surgeons in the United States, of which 1,600 have been trained and completed a procedure to date. We are making an impact, but there is still much more opportunity ahead. The enthusiastic reception of our simulators over the last six months has and the ease with which surgeons can be trained have allowed us to more effectively target new surgeons and re-engage with inactive surgeons. Four additional simulators were deployed to the field for training on February 15th, and we expect 16 additional units to be deployed by the end of the second quarter. We completed a follow-on offering in October 2020, yielding net proceeds of $71.6 million. We believe that our cash and marketable securities of $196.4 million we had at the end of the fourth quarter, including the proceeds from the offering, will allow us to continue focusing on driving sustainable growth, specifically given the improved reimbursement landscape with expanded insurance coverage from private payers, as well as the 23% increase in surging payments. which became effective at the beginning of 2020, before the pandemic began impacting our operation, we believe we are in a unique position to expand the market for minimally invasive SI joint fusion. We estimate the U.S. market in 2020 was a little over $100 million, with the potential to be over $2 billion per year in the future. As the current market leader, we are the we will be the primary beneficiaries of market expansion, and to capture this opportunity, we are investing in a number of growth initiatives in 2021. We intend to grow our field sales force, leverage our simulators to train surgeons, invest in patient awareness, expand product offerings in sacroiliac fusion, trauma, and deformity, and engage in process improvements and systems initiatives to scale the business to profitability. At the end of February, we had 70 direct sales reps and 53 clinical support specialists. We have also added to our sales leadership team to manage our expected headcount and sales growth in 2021. Effective January 1, 2021, we added a third area vice president of sales, in the central U.S. to complement our east and west regions. Finally, we expanded from 12 to 14 regions, promoting three of our top direct sales reps to regional sales director, while backfilling their areas with high-performing sales reps. Additionally, we have hired a vice president of digital marketing, Brian Brovolite, to spearhead our direct-to-patient efforts and digital marketing initiatives to increase awareness and utilizations of SI bone technologies. Brian has an extensive background and expertise in digital marketing, was formerly with Starkey Hearing, a medical device company, and Kellogg Company, and has years of advertising agency experience. We look forward to Brian's impact on our growth. Our initial strategy is to pilot direct-to-patient marketing tactics Although it is still early, we are encouraged by the results. We are in the midst of a second TV marketing test program in multiple cities, as well as making improvements in the operations related to patient inquiries to our call center. We will be evaluating the results of this second direct-to-patient TV test in the next few months. On the reimbursement front, we continue to add exclusive coverage from some of the largest health insurance providers in the United States. Specifically, in December, Humana established exclusive coverage for iFuse in minimally invasive SI joint fusion procedures, adding approximately 13 million covered lives. In addition, Priority Health became the 36th payer to announce an exclusive coverage policy in late December, adding roughly 800,000 lives, mostly in the state of Michigan. Lastly, Blue Cross Blue Shield Association Evidence Street updated its policy to continuing to support only triangular implants. Overall, reimbursement continues to be a tailwind for the company with broad coverage across the United States with total covered lives eclipsing 300 million, including approximately 80 million lives covered exclusively for procedures using iFuse. In other reimbursement news, the International Society for the Advancement of Spine Surgery, or ISS, which is the largest spine surgeon-only society in the United States, published its updated policy and guidelines on MIS-SI joint fusion. The policy and guidelines remain supportive of continued adoption of MIS-SI joint fusion procedures by the clinical and payer communities limited to procedures using a lateral transiliac approach, which includes the IFUSE procedure. While the ISS policy did not endorse any specific MIS-SI joint fusion system, the updated policy states that most high-level clinical evidence supporting the safety, effectiveness, durability, and economic benefit of lateral MIS-SI joint fusion is derived from the use of IFUSE. ISAS does not recommend minimally invasive posterior or dorsal SI joint fusion procedures, whether using an implantable device or a product such as bone allograft. In addition to the reimbursement momentum we benefited from in 2020, the number of clinical studies reporting positive outcomes of IFUs continues to increase. Specifically, at the end of 2020, There were 92 different published papers highlighting the breadth, positive results, and consistency of our clinical data. Despite COVID challenges to clinical trials, we were able to enroll more than 40 patients in our Sylvia adult deformity study, a randomized controlled trial of iFuse bedrock against S2AI screws alone in multilevel fusions. We expect to have our first readout from the study in 2022. We expect to talk to you quite a bit about new product introductions this year. Our goal is to become the global leader in sacral pelvic surgical solutions. In addition to iFuse, we have been pleased with the reception by surgeons to iFuse Bedrock, our second product intended to fuse the SI joint in long construct adult deformity cases. We expect to launch a next generation adult deformity product by the end of the year. We've also spoken about applications for our current products for general trauma. iFuse is currently indicated for acute, non-acute, and non-traumatic fractures involving the SI joint. We will be launching a product in the first half of this year that is targeting trauma patients. The product will also have applications for our SI joint fusion core market. To conclude, I would like to take a minute to thank the SI Bone family. As many of you know, we announced in early January that while I will remain with the company as executive chairman, I will be handing off the role of CEO to Laura on May 1st. It has been a privilege and honor to work with our remarkable team and lead the effort to help over 50,000 patients to date. Laura has been an exemplary leader and operator for SI Bone since joining the company in 2015. She's an exceptional executive who is passionate about our mission. She's highly respected by investors in our team as well as our board of directors. She's committed to our principles and values and knows how to lead and execute our strategy to invest in future growth. As executive chairman, I look forward to remaining highly engaged with SI Bone and its strategy and supporting Laura in her new role as CEO. We also announced the promotion of Tony Recupero to President of Commercial Operations. Tony is one of the industry's leading executives and has been with the company for the past five years as Chief Commercial Officer. In his new role, he will be heading up worldwide sales, marketing, reimbursement, and medical affairs. Since announcing these senior leadership changes, we are also in the process of searching for our new CFO. We anticipate they will have a new CFO in place by May. We're also excited to welcome Mika Nishimura to our board of directors. Mika brings a wide range of financial, strategic, and commercial leadership expertise, having launched disruptive medical technologies around the globe. Most recently, Mika was vice president of commercialization at Envision Medical and currently an operational partner with Guild Healthcare Partners, a $1.2 billion life science-focused venture fund. Nika holds a BA in economics from Yale and an MBA from Harvard. With that, I will now turn the call over to Laura Francis, our Chief Financial Officer and Chief Offering Officer, to provide more detail on our financial results.