Sientra, Inc.

Hello, thank you for standing by and welcome to the CIENTRA fourth quarter and full year 2021 earnings 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'll need to press star one on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star zero. I would now like to hand the conference over to your speaker today, Oliver Bennett. Please go ahead.

Thank you, operator. Good afternoon and welcome to the CIENTRA fourth quarter and full year 2021 earnings conference call. I would like to remind everyone that in our remarks today, we will include statements that are considered forward-looking statements within the meaning of United States securities laws. In addition, management may make additional forward-looking statements in response to your questions. Forward-looking statements are based on management's current assumptions and expectations of future events and trends, which may affect the company's business, strategy, operations, or financial performance. Actual results may differ materially from those expressed in or implied by the forward-looking statement. The company undertakes no obligation to update or review any estimates, projection, or forward-looking statement. A detailed discussion of the risks and uncertainties that the company faces is contained in its previously filed quarterly reports on Form 10-Q and its annual report on Form 10-K for the year ended December 31, 2021, to be filed with the SEC and available on the company's website and at sec.gov. I would also like to note that Cientra uses its investor relations website to publish important information about the company, including information that may be deemed material to investors. Financial and other information about Cientra is routinely posted and is accessible on the company's investor relations website at www.cientra.com. Today on our call, we have Ron Menezes, Cientra's President and Chief Executive Officer, and Andy Schmidt, Cientra's Chief Financial Officer. I will now turn the call over to Ron.

Ron. Thanks, Oliver, and hello, everyone. 2021 was a transformational year for Sientra. Sientra became the fastest growing breast implant company in the U.S. with market share gains that nearly doubled in both augmentation and reconstruction when compared to 2019. This performance has set the foundation for 2022 and beyond for accelerated expansion in the plastic surgery market and sustainable long-term growth. We had record plastic surgery Q4 revenue of 22.6 million, a 26% increase over Q4 2020, and brought our running total to six consecutive quarters of record revenue performance. Total plastic surgery revenue for fiscal year 21 was 80.7 million, as compared to 55 million for fiscal year 2020, an increase of 47%. The decision to focus our business on the plastic surgery market accelerated share gain in U.S. breast products markets, and separated Sientra from the competition. We started the year with the goal of advancing our position as the partner of choice for plastic surgeons by focusing on three key areas. One, taking action to shed non-strategic assets. Two, identifying, investing in, and executing commercial strategies targeted at accelerating Sientra's growth breast augmentation and reconstruction. And number three, a total commitment to bring innovation and superior technology to our surgeons, practices, and hospitals. As a result, in 2021, Sientra continued to rapidly gain market share, which has nearly doubled in both augmentation and reconstruction since 2019. Our existing accounts continue to perform extremely well, and drove more than 70% of our revenue in 2021. New accounts also served as a leading indicator of our long-term growth profile. We added more than 100 accounts in the fourth quarter, with 80% of them in the reconstruction area, reflecting our decision early in the year to focus on addressing this very important segment of the market. As a reminder, when we're bringing a new reconstruction account, it typically takes four to six months before we see significant sales volumes So we expect these new accounts to be accretive to Cientra's top-line growth in 2022 and beyond. We'll continue to drive patient demand through unique, direct-to-consumer marketing initiatives, including training events that result in high pull-through from participating surgeons. Now let's look a little bit more specific by market. Brass reconstruction was once again an important driver of our sales in the quarter. with 33% year-over-year growth and for the full year growing 70% versus 2020, resulting in the best year ever for a reconstruction business. While our market research estimates the reconstruction market actually declined 5% overall in 2021 versus 2020 due to hospital restrictions, our market share actually increased by almost 4% in the rest of the year with an estimated 14% market share. Early 2021, we made the decision to focus on reconstruction, leveraging the great clinical data of our products and the high GPO access, allowing us to bring in more hospital contracts. This is a critical market for us. It supports our profitability goal due to its higher margins in long-term hospital contracts. In support of this goal, we launched last week the six-stab version of our DermAspan Tissue Expander to address the surge in need for greater fixation options. This new version of DERMAspan provides all the benefits of a traditional DERMAspan tissue expander while also providing a 360-degree tab orientation for additional placement support options. DERMAspan 6 Tabs is another key product in our portfolio to support our initiatives to further increase share in the reconstruction market. We also recently submitted a 510K application for our next generation Allo X2 Pro tissue expander with an anticipated launch later this year. We believe this dual-port MRI-compatible tissue expander will be the first and only of its kind to be available in the U.S. and will be an important addition for patients and surgeons in the reconstruction market. We expect even stronger upside from this market in 2022. We have already started expansion of our sales force to continue to drive demand to an industry-leading reconstruction portfolio. Now, turning to the augmentation market. According to data from both the Aesthetic Society and American Society of Plastic Surgeons, brass augmentation remains one of the top procedures performed by plastic surgeons and one of the highest revenue generators for them. Market research indicates the brass augmentation market in 2021 grew to an all-time high, increasing more than 20% versus 2020 and plus 30% versus 2019. and Cientra continued to outperform this market, and we ended up the year with approximately 11% share. Domain remains strong in the fourth quarter, resulting in 22% year-over-year growth, and for the full year, increasing over 40%. We also doubled our consumer awareness over the past two years, growing at the highest rate in the category, and putting us in the number two position amongst all brands. The key drivers for the success in our augmentation business were the following. First, the shift towards consumerization, building on position and loyalty through sales and marketing support, and our product advantages, specifically our unmatched safety profile. We'll continue to market directly to the consumer. We have seen through our market research the impact of our programs. The consumer preference does influence surgeon implant choice. We had over 500,000 website visits and sent more than 20,000 referrals to our surgeon partners. The second thing we did, we started a physician loyalty program in 2021. They included revenue-driving benefits, and we're rolling it out to a broader group of customers in 2022 based on the initial success of the program. And finally, our safety messaging used in advertising collateral is making a very positive impact on our performance. The box warning put into place by the FDA last October now requires transparency in reporting complications among the manufacturers. and very clearly highlights Cientra's unrivaled safety profile. Safety remains a top driver in brand choice among patients. I'm proud that Cientra's unmatched safety profile, coupled with a 20-year Platinum 20 warranty program, are the cornerstone of our brand education among patients seeking breast surgery. To further advance our goal of making Cientra a diversified aesthetics company focused on plastic surgeons, on January 5th, announced a transformative acquisition of Orogen Aesthetics' novel fat grafting technology, developed by leading researchers and plastic surgeons at Mass General Hospital. This product has been clinically proven to provide superior fat retention and predictability in utilizing a patient's own fat to augment the breast and other areas of the body. The addition of fat grafting technology to our product portfolio is exciting for the present and future of Sientra, as we have an opportunity to expand our camp even further. This innovative product is a game changer for reconstruction where almost 80% of the surgeries use fat grafting. We also expect expanded use of fat grafting and augmentation due to its unique fat retention, predictability, and ease of use properties. Longer term, we plan to expand into additional aesthetics applications, including the significant opportunity for face, hands, and gluteal augmentation. Additionally, our new Senior Vice President of R&D Regulatory, Denise Dials, will be leading a 200-patient clinical study to further validate the benefits of the Orogen system in breast while we prepare for a commercial launch in the first quarter of 2023. On April 21, our team is planning to host our first R&D Day in San Diego, where we plan to highlight our product pipeline. And briefly, on the international expansion, we have entered into agreements with distribution partners in Canada, China, and the Middle East in preparation for approval in those markets. Our clinically superior portfolio continues to generate interest in a number of OUS markets, and we'll continue to strategically look for the right partners in the right markets for expansion. In closing, with strong momentum behind us, we have many exciting catalysts on the horizon. In 2022, we expect continue to expand our market share in a number of accounts in both the reconstruction and augmentation. We are focused on driving towards profitability in 2023 by further growing our top line and by optimizing expenses. We plan to fuel our future by transforming Sientra into a full aesthetics company, leveraging the full potential of our existing products and new fat grafting platform. Looking ahead, I'm confident that we're on track to double our revenue within the next three years. With that, I'll turn the call over to Andy.