Surmodics, Inc.

Hey, everyone, and thank you for standing by. Welcome to the Sermonix Third Quarter Fiscal 2021 Earnings Conference Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Tim Ahrens, Senior Vice President of Finance and Chief Financial Officer. Please go ahead, sir.

Thank you, Hannah. Good morning, and welcome to Sermonix Fiscal 2021 Third Quarter Earnings Call. Before we begin, I would like to remind you that during this call, we will make forward-looking statements. These forward-looking statements are covered under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and include statements regarding Sermatix's future financial and operating results or other statements that are not historical facts. Please be advised that actual results could differ materially from those stated or implied by our forward-looking statements. resulting from certain risks and uncertainties, including those described in our SEC filings. Sermotics disclaims any duty to update or revise our forward-looking statements as a result of new information, future events, developments, or otherwise. We'll also refer to non-GAAP measures because we believe they provide useful information for our investors. Today's news release contains reconciliation tables to GAAP results. This conference call is being webcast and is accessible through the investor relations section of the Sermatix website, where the audio recording of the webcast will also be archived for future reference. A press release disclosing our quarterly results was issued this morning and is available on our website at Sermatix.com. I will now turn the call over to Gary Maharaj. Gary?

Thank you, Tim. It has been an exciting quarter filled with many important accomplishments. We have these updates and developments to share with you in our strategic initiatives. In addition, we are pleased to announce in July the acquisition of Vitex Medical. I will provide an update on this important acquisition and certain key milestones and timing related to the Ravine Venus thrombectomy catheter, which is now an important and complementary product to our Pounce arterial thrombectomy platform. Let's begin with a summary of our third quarter financial performance. During the quarter, we generated $23.9 million of revenue compared to $26.9 million in the year-ago period. Recall that a respective period last year included $6.7 million in revenue from the receipt of a $10.8 million CE mark milestone payment from Abbott. Excluding the impact of this milestone payment, third quarter revenue grew 17 percent. Our performance was fueled by a second consecutive quarter of record IVD revenue, as well as significant royalty revenue growth. Also, as expected, we reported a gap loss per share of $0.24, which included a $0.03 of VTEX-related acquisition costs, and a non-gap loss per share of $0.17. Tim will provide additional details on our quarterly results, including the impact of the VTEX acquisition and an update to our full-year fiscal 2021 guidance. While I'm pleased with our financial performance this quarter, I'm extremely proud of the significant progress we have made executing on our key fiscal 2021 objectives, which I'll remind you include, first, completing the final PMA submission for our surveilled drug clod balloon, second, advancing and expanding our robust product pipeline, And third, optimizing cash flow from our IVD and medical device businesses that fuel our strategic growth initiatives. Starting with Surveil. I'm happy to announce that in June, we submitted the fourth and final module of our Surveil PMA submission to the FDA. As previously discussed, our submission was delayed since the FDA requested mortality follow-up data for patients at both two and three years from the time of treatment. Following the agency's administered review of our filing, they have informed us that our submission is complete and we have a filing priority date of June 21st. While it may still be possible to receive the PMA for surveyor approval by the end of December 21, that now appears to be a best-case scenario, as several pre-approval inspection visits have yet to be scheduled with the agency, and the type of feedback we receive during the process may also impact the timing. we will have much more clarity by October. As previously communicated, following receipt of the Surveil PMA, we expect to receive the final $30 million milestone payment from Abbott. While decisions related to Surveil's launch timing are ultimately to be made with Abbott, our commercialization partner, we are pleased to receive their non-binding estimate of order volume to support a U.S. commercial launch. Moving to our Sundance DCB. We remain on track to complete the six-month patient follow-up visits for our swing first-in-human clinical study for our Sundance below-the-knee serolimus-coated balloon at the end of Q4. With respect to our Avess AV fistula DCB, we have now completed a design verification for the full matrix of balloon sizes for the base balloon catheter. The team is continuing the process validation work on the base catheter and will begin the design verification and process validation steps for the drug-coated balloon in its entirety. We have already received pre-submission feedback from the FDA on the high-level expectations regarding a pivotal clinical trial design, 4FS, and I'm happy to report that we are in general alignment with the agency. Next is our sublime radial access platform. In June, we received FDA regulatory clearance for sublime radial access 018 PTA dilation catheter. This is an important accomplishment since the sublime 018 balloon catheter complements our sublime 014 catheter and along with our sublime radial guide sheet provides the tools necessary for physicians to treat the entire lower limb segment via radial access with our sublime system. We now have not just one, but two different balloon platforms to treat patients suffering the consequences of PAD via radial access. Our team is currently working to complete the important and necessary manufacturing process validation of the sublime ONA balloon catheter, which will enable us to begin clinical product evaluations. continue to receive encouraging physician feedback on their recent clinical experiences using our sublime radial axis guide sheet and 014 balloon catheter. In fact, physicians who have completed the clinical product evaluation have expressed an interest to continue to access these products and use the sublime products based on their remarkable performance and benefits to their patients and practice. We are excited about this level of interest, and in order to facilitate their continued use, we have actually signed agreements with several clinics to sell these products directly to the clinic, even as we continue to build our clinical experience. On a side note, the Sublime Radio Guide Sheet and Radial O1-4 catheter were successfully featured in three live cases at the recent New Cardiovascular Horizons meeting in New Orleans in June. Next is our Pounce thrombectomy platform. We completed product and process validation for our Pounce arterial system during our third quarter as planned. In June, the first patient was successfully treated at our Pounce system. In this procedure, Pounce was able to restore blood flow in a patient diagnosed with an occluded superficial femoral artery without the use of thrombolytics after three passes of the device, which removed approximately 30 centimeters of thrombus. Since this first case, Pounce has been successfully used in eight additional procedures. As we expected, physician feedback has been encouraging, with positive comments on devices' ease of use and ability to remove clot, resulting in restoration of blood flow to distilled tissue beds. In addition to the progress of our Pounce arterial thrombectomy system in these clinical product evaluations, We have recently received a 510K indication expansion for smaller vessels down to 3.5 millimeters. This will allow us to extend the applicable treatment area to include not just femoral arteries, but infrapopliteal arteries, that is those below the knee, within the size range. This widens the therapeutic range of the pound system. We're continuously looking for opportunities that are synergistic with our technology platforms. Last month, we completed acquisition of Vitex Medical. Vitex's Revene mechanical thrombectomy catheter is designed to remove large mixed morphology clots commonly found in venous thromboembolism and complements our POMS arterial thrombectomy device. This acquisition strengthens our existing thrombectomy IP portfolio and provides us with opportunities to expand our thrombectomy platform to other vascular beds. We believe the VTEX technology, which has already received both US 510 clearance and CE mark, has meaningful advantages compared to existing devices in an exciting, large, and under-penetrated market. This technology was designed to be extremely intuitive and easy to use for efficiently removing large clot volume in veins. We believe that the Reveen system with the appropriate approach to the market and the clinical development has the potential to become the eventual market leader. Thermotics is now one of a small group of successful companies that has a portfolio of devices that can clear clots in both arteries and veins. Our team, which now includes all the key VTEX employees, is working to complete process and manufacturing validation efforts for the Ravine system. We expect these efforts to be completed in our second quarter of fiscal 22, which will then allow us to initiate clinical product evaluations. Following the successful completion of these evaluations, we anticipate the Ravine product will be ready for commercialization in the second half of calendar 2022. Regarding our third strategic priority, our medical device and IVD business segments, they continue to deliver solid performance. We continue to see strong growth in our serene coding technology, which essentially doubled from the year-ago period and helped us deliver a second consecutive quarter of royalty revenue growth. Our IVD business delivered its second consecutive record-setting quarter with revenue of $7.1 million, growing 12% versus last year's fiscal third quarter. These core product offerings and technology offerings have continued to generate strong operating performance and cash flows, which has been an important source of funds fueling our other strategic growth initiatives. In closing, we are firing on all cylinders and have made exciting progress across all our strategic objectives. I want to offer my heartfelt thanks to our team for their tireless dedication to our cause. We've been quietly but consistently building a portfolio of amazing products that will create significant long-term shareholder value. I believe we have an exciting future and many growth catalysts in front of us. Tim?