SI-BONE, Inc.

Good afternoon and welcome to SIPhone's first quarter earnings conference call. At this time, all participants are in a listen-only mode. 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 Basko from the Gilmartin Group for a few introductory comments.

Thank you for participating in today's call. Joining me are Laura Francis, Chief Executive Officer and Anshul Maheshwari, Chief Financial Officer. Earlier today, SI Bone released financial results for the quarter ended March 31st, 2021. 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 laws, 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 risk 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 our examination of operating trends and our future financial expectations, such as expectations for hiring, surgeon training and adoption, active surgeons, new products, clinical trial enrollment, 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 factor section of our most recent quarterly report on Form 10-K, filed with the Securities and Exchange Commission on March 10, 2021. SI-BOND explains 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, May 3rd, 2021. With that, I'll turn the call over to Laura.

Thanks, Matt. Good afternoon and thank you for joining us. Before we get into the details, I'd like to take a moment to thank all the healthcare workers who continue to work relentlessly, especially those who are administering the COVID-19 vaccine. to help reduce the spread of the virus and allow society to return to normal. I'd also like to officially welcome Anshul Maheshwari, our new CFO, who is joining us on today's call. Anshul is an experienced financial executive with an impressive record of building high-performance teams to scale global healthcare and manufacturing organizations. I'm very excited to be working with Anshul and know that he will be a great addition to our team. Now, turning to the results. I'm pleased to report that the SI bone team continues to navigate and push through these unique and challenging times with tremendous effort. We got off to a good start in the first quarter, generating total revenue of $20.4 million, a 22% increase compared to the first quarter of 2020. Although procedure volumes were negatively impacted by persistent COVID-19 headwinds and extreme weather conditions in parts of the country in January and February, We ended the quarter with a record March. I'm proud of our team's strong execution this past quarter and confident in our ability to accelerate our capture of the multi-billion dollar market opportunity in the SACRE public space, especially as COVID becomes less of a headwind to the overall economy and healthcare system. We also started to see signs of a recovery in Europe, with total international revenues increasing roughly 10% compared to the first quarter of 2020. Growth in the first quarter of 2021 was led by relative strength within Germany and France, partially offset by continued challenges in the UK and other parts of Europe due to COVID-19. We also received EU clearance for our trauma indication during the quarter, an additional growth driver as we focus globally on minimally invasive SI joint fusion, adult deformity, and trauma applications in the sacral pelvic space. As an organization, we continue to focus on execution, which is reflected not only in our revenue growth, but also our ability to manage expenses. 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. We now have 24 SI bone training simulators in worldwide use. This innovative training platform eliminates many of the barriers that we historically 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 exposure for surgeons and staff. Additionally, there are no travel requirements on the part of the physician, 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 reception from the surgeon community. The number of trainings continues to ramp, and we expect this remarkable capability will attract many more surgeons in the future. We're 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're also making an impact, but there is still much opportunity ahead. The enthusiastic reception of our simulators over the last nine months and the ease with which surgeons can be trained have allowed us to more effectively target new surgeons and reengage with inactive surgeons. While we've been able to manage expenses quite well to start the year, we continue to make great progress on expanding our sales force. Specifically, at the end of March, we had 75 direct sales reps and 52 clinical support specialists. and remain on track to end the year with 90 and 60, respectively. Our thoughtful strategy to expand our sales force will allow us to meet our long-term growth objectives. As we have communicated in the past, the productivity ramp for the average sales rep takes approximately 12 months. The reason for this ramp is due to the level of training we require our reps to go through to maximize their success in the field. Further, once in the field, our reps are instrumental in training surgeons through the first few cases, which includes precision diagnosis and treatment protocol. Next, I'd like to talk briefly on our direct-to-patient marketing initiative. Although it's still early, we're encouraged by the results. Our team was particularly excited to see our first patient case from our direct-to-patient marketing test. We're now in the midst of a second TB marketing test program in multiple cities, as well as making improvements in the operations related to patient inquiries to our call center. We'll be evaluating the results of this second direct-to-patient TV test in the next few months. The direct-to-patient advertising strategy is an additional tool to educate patients, and we'll continue to take a measured approach. Turning to product updates, we're also excited to announce the recent launch of iFuse Torque, a highly differentiated, 3D-printed threaded implant. for pelvic trauma and minimally invasive sacroiliac joint fusion applications. iFuse TORC solves an unmet clinical need for low-energy pelvic ring fractures compared to bedrest, sacroplasty, and traditional trauma screws. We're also targeting chronic sacroiliac joint pain after high-energy pelvic ring trauma. Our engineering team incorporated features for stable, bone integrating scaffolding across the joint and fracture site for fusion, improved healing, and earlier patient mobility. Our torque lock threads have a hook design and anatomical zone-specific thread pattern for enhanced fixation, providing approximately 10 times the rotational resistance upon insertion of trauma screws. Based upon these trauma applications, we believe iFuse Torque opens up an attractive adjacent market worth approximately $350 million, where we were not able to compete before. iFuse Torque also has applications in the primary SI joint fusion market. Last year, we estimate our competitors generated approximately $40 million of business in our core market. iFuse Torque leapfrogs these other products, creating an opportunity to convert competitive business. Our Fusion 3D surface mimics cancellous bone for better bony on-growth, in-growth, and through-growth. And our IntelliHarvest technology includes cutting flutes that self-harvest host bone and funnel it into the fenestrations for optimal bone integration. These technological advances may result in more robust and faster fusion of the SI joint. Our corporate web deck on the Investor Relations website has more information on iFuse Torque. While we do not anticipate a meaningful revenue contribution from TORC in 2021, we believe the trauma market represents a key element of our strategy to improve sales synergies, expand our total addressable market opportunity, and become a comprehensive sacral public surgical solutions company. We continue to be pleased with the progress of bedrock. Interest in the bedrock technique among deformity surgeons, including many key opinion leaders, has provided our sales reps with access to important medical centers. This enables our reps to train a broader group of spine surgeons, including residents and fellows at these centers, on both the bedrock technique and minimally invasive sacroiliac joint fusion. To date, we've conducted training courses at over 100 academic centers in the U.S., where more than 600 surgical residents and fellows have been trained. In addition, bedrock is helping drive the growth of our business. We also continue to make progress on our second-generation adult deformity product. On the reimbursement front, we continue to add exclusive coverage from some of the largest health insurance providers in the United States. Most recently, MVP Healthcare established exclusive coverage for the iFuse implant system effective April 1st. MVP Healthcare is now the 38th iFuse exclusive payer, adding an additional 500,000 covered lives. 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. We're also excited to welcome Helen Lowe to the Board of Directors. Helen joins SI Bone with over 25 years of experience in brand and growth marketing at both Fortune 500 and early-stage technology companies. Currently, Ms. Lowe is the Senior Vice President of Digital, Product, and Client Marketing at Charles Schwab, where she's held roles of increasing responsibility since 2004. Helen holds a BS in Industrial Engineering and MBA from Stanford University. Finally, the appointment of Anshul completes the recently announced senior leadership transition, which includes me succeeding Jeff Dunn as CEO and being added to the Board of Directors. and Tony Recupero becoming president of commercial operations. As a reminder, Jeff is not going anywhere and will continue to be very involved in the company as executive chairman. Before I turn it over to Anshul, let me close by mentioning our ongoing focus on ESG matters. This focus is an important aspect of our business, and it's an expectation we hear from investors, employees, and other stakeholders. And it's one we take very seriously. In the next few days, we plan to publish an updated environmental, social, and governance shareholder letter on the investor section of our corporate website. If anyone has any questions or interest in our ESG efforts, please reach out to myself, Anshul, or Matt Baxo at Gilmartin. With that, I'll now turn the call over to Anshul, our Chief Financial Officer, to provide more detail on our financial results.