TELA Bio, Inc.

Ladies and gentlemen, thank you for standing by. Welcome to the Telebio Fourth Quarter Earnings Conference Call. At this time, our participant lines 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 need to press star 1 on your telephone. Please be advised that today's conference is being recorded, and if you require any further assistance, please press star 0. I would now like to hand the conference to your speaker today, Greg Fedacek from Gil Martin Group. Please go ahead, sir.

Thank you, Victor, and good afternoon, everyone. Earlier today, Telebio released financial results for the fourth quarter and year ended December 31, 2020. A copy of the press release is available on the company's website. Joining me on today's call are Tony Koblich, President and CEO, and Nora Brennan, CFO. Tony will begin the call by providing an overview of our operational highlights, and then Nora will provide a detailed analysis of our fourth quarter and full-year financial performance. Before we begin, I'd like to remind you that during this conference call, the company will make projections and forward-looking statements regarding future events. We encourage you to review the company's past and future filings with the SEC, including, without limitation, the company's forms 10-K and 10-Q, which identify the specific factors that may cause actual results or events to differ materially from those described in these forward-looking statements. These factors may include, without limitation, statements regarding product development, product potential, and the regulatory environment, sales and marketing strategies, capital resources, or operating performance. With that, I will now turn the call over to Tony.

Thanks, Greg, and good afternoon, everyone. We appreciate you taking the time to join us today. Before reviewing our operational highlights, I would like to recognize our team's hard work and dedication at Telebio. Despite the challenges and uncertainties of COVID-19, our company has made meaningful progress in all areas of our business over the past 12 months. In 2021, we plan to build on this momentum and continue to be a leader and innovator in developing tissue reinforcement materials for soft tissue reconstruction. Now turning to our results. Total revenue for the fourth quarter was 5.7 million, representing growth of approximately 17% compared to the fourth quarter of 2019. Like many med tech companies with product used in surgical procedures, we experienced both highs and lows in the fourth quarter. Throughout October and into November, sales for our Ovitex products were picking up, and we were cautiously optimistic about recording strong year-over-year growth However, as the holidays approached in the second half of the quarter, we experienced increase of volatility in demand for our products as COVID cases and hospitalizations increased. This trend continued into January with some areas of the country being worse than others. Starting in early February and continuing through today, surgical procedure trends have improved. While we are hopeful these trends will continue throughout the year, forecasting COVID-19 cases and hospitalizations is a challenge. and is best left to the experts. Before turning the call over to Nora, I would like to talk about some of our accomplishments from 2020. Starting with our BRAVO study, as a reminder, the BRAVO study is a multi-center prospective study designed to evaluate the clinical performance of OVETEX for the treatment of ventral hernias, and 85% of the patients met the criteria for ventral hernia working group grade 2 or grade 3. Last week, we submitted our latest data set for publication, and the data continues to be very good. Seventy-six of the 84 participants, or 90%, have completed their 12-month follow-up with only two having hernia recurrences, both of which occurred adjacent to the repair. In addition, 51 patients completed their 24-month follow-up, and none experienced a new hernia recurrence. Of these 51 patients, only one experienced the surgical site occurrence between 12 and 24 months, and this SSO did not require surgical intervention or implant removal. As we have noted in previous calls, the 24-month post-procedure data are considered to be the gold standard and is vital in persuading surgeons to adopt Ovatex. Based on the current BRAVO clinical trial data, the hernia recurrence rates for Ovatex at 12 months is 2.6%. and 0% for the 51 patients that are out at 24 months. These rates compare very favorably to results published for synthetics, resorbable synthetics, or biologics. Based on our latest estimates, which account for delays we are experiencing scheduling follow-up and site visits for data verification, we expect to have validated data on our 24-month patients by the end of the year. In 2020, another area of success for us has been robotic hernia repair. Today, most robotic hernia repairs use plastic mesh due to its strength and the ability to roll it tightly to fit down a troll car. However, due to the unique properties of Ovitex, we are gaining market share with minimally invasive and robotic hernia procedures. For the fourth quarter, we estimate that approximately 50% of our usage came from MIS and robotic procedures, and we saw a 32% sequential increase, in our LPR unit sales. This data point coincides nicely with our recently completed survey. Based on the data we compiled, synthetic mesh products have been the subject of an increasing number of lawsuits with over 13,000 cases filed in the state of Rhode Island alone. As this number continues to grow and make headlines, surgeons tell us that approximately 20% of their patients are concerned about the use of plastic mesh and would prefer something more natural could be used. Also, nearly 60% of the surgeons we surveyed believe that synthetic mesh probably causes long-term risk of complications. We believe the migration from plastic mesh will continue and we are hopeful that sales of Ovitex will benefit as a result. Regarding the plastic and reconstructive market, we are very pleased with the continued expansion of the PRS launch as we experience record unit volume and dollar growth in the quarter. This is very encouraging, giving the variability and access to supply chain administration for new products and technology. It is emerging that there is a real opportunity for a portfolio of PRS products that are tuned to different patient needs and surgeon technique preferences. This is a vastly different paradigm than what exists today with one material cadaver skin for all situations. As we mentioned last year, in response to the pandemic, we developed TeleLive, our virtual marketing sales solution designed to educate surgeons about our product portfolio and clinical data. Since the start of these programs, approximately 200 surgeons have participated, and roughly a third have been plastic surgeons. Engagement with plastic surgeons remains high, and many have told us they are seeking advancements in plastic reconstruction. especially as it relates to acellular dermal matrices or ADMs. This data point is consistent with the uptick in the number of IDN and GPO requests we are receiving for cross-referencing our PRS portfolio. We continue to grow our commercial team. And at the end of 2020, we had 45 territories filled by 40 sales reps. Our goal is to have 48 reps in place by the middle of 2021. and we expect to continue to increase our number of reps through the remainder of the year. These sales reps will be filling our health trust accounts, making sure that we have coverage in all of our major IDNs and GPOs. In the fourth quarter, we increased the number of hospital customers from 270 to 325, with the number of health trust accounts also increasing. And finally, we believe physical access to hospitals is beginning to ease. As our sales reps are seeing more requests to cover surgeries, we expect this trend to continue as more vaccines are rolled out. I would now like to turn the call over now to Nora to review our fourth quarter and full year financial summary.