TELA Bio, Inc.

Good afternoon, ladies and gentlemen, and welcome to the Telebio Second Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. As a reminder, this conference call is being recorded, and I would now like to turn the conference over to Louisa Smith from the Gil Martin Group.

Thank you, Chris, and good afternoon, everyone. Earlier today, Telebio released financial results for the second quarter 2023. A copy of the press release is available on the company's website. Joining me on today's call are Tony Kotwisch, President and Chief Executive Officer, and Roberto Cuca, Chief Operating Officer and Chief Financial Officer. Before we begin, I'd like to remind you that during this conference call, the company may 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 annual report on Form 10-K and quarterly reports on Form 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 and pipeline opportunities, product potential, the impact of various macroeconomic conditions, including the COVID-19 pandemic, recessionary concerns, banking instability, and inflationary pressures, the regulatory environment, sales and marketing strategies, capital resources, or operating performance. With that, I'll now turn the call over to Tony.

Thank you, Louisa. Good afternoon, everyone, and thanks for joining us today for our second quarter 2023 earnings call. We are pleased to report another quarter of strong financial results and operational execution. As you will hear, we continue to deliver on our financial goals and advance our key initiatives. Total revenue for the second quarter was $14.5 million, representing growth of 39% year over year, which significantly outpaced the growth of the markets in which we sell. I am happy to report we are seeing an improving sales environment as procedure volume and elective surgery demand is up. In the second quarter, we saw strong hernia sales, which may reflect the first steps towards addressing the tens of thousands of procedures delayed during the COVID-19 pandemic. If so, that bodes well for a solid second half of continued high growth. On this afternoon's call, as always, I'll provide an update on the progress we are making with the key drivers of revenue, and revenue growth that we refer to as the five factors. Then I'll ask Roberto to provide further color on our financial results before we open the line for your questions. Let me begin with GPO access. TELA now has contracts with three national group purchasing organizations. These agreements streamline the process by which a surgeon can choose to use our Ovitex products by providing access right off the supply room shelf rather than the surgeons having to go through an administratively burdensome utilization committee process. We recently entered into a four-year contract extension with Health Trust, which, as you may recall, was our first GPO. The original term of three years began in 2020, just as COVID-19 pandemic began impacting the healthcare system. Notwithstanding the significant headwinds, we were able to demonstrate the value of our products to the hospitals served by Health Trust, which led to the extended contract term of this renewal. Our second GPO contract was with Premier, which became effective on October 1st, 2022. As the second largest GPO in the country, it granted us access to over 4,400 hospitals. We are pleased with the progress we've made ramping up Premier in Q2, and it is already an important contributor to our revenue performance. Our most recently signed third GPO is structured as a dual source contract in the biosynthetic category. This means that we compete with only a single alternative supplier in this system, which is highly compliant with the contractual product offerings. These three GPO contracts together cover over 6,000 hospitals, providing significant access to our sales representatives. This leads us to two more of our revenue driving factors, Salesforce size and Salesforce productivity. GPO contracts give us access to hospitals across the country, but we can only convert this access into sales via representatives who can call on and educate the physicians in those hospitals. In order to capitalize on the figurative hunting license that contracts represent, we've been meaningfully expanding the size of our Salesforce we have in the field, targeting those geographies with the greatest GPO opportunity. As of today, we have 75 sales reps on board against the year-end target of 75 to 80 reps. We have continued to invest in the training of our sales force through our Playbook 90 program so that they are comfortable representing all of our products in our portfolio. We continue to revise and improve our training system with the result that our most recent cohorts of hires have reached break-even profitability in six months or less. Another important factor underlying revenues and their growth is our continued development of clinical data. The compelling results of our studies of OviTex have played an important role in our ability to take share from older technologies. Surgeons are impressed with the exceptionally low recurrence rate of 2.6% that OviTex exhibited in our BRAVO study compared to the double digit figures that competitive products show. We're continuously growing our data set and initiating studies to support physicians and patients in their consideration of Ovitex. We also continue to enroll patients in our BRAVO2 study, which captures data on the effectiveness of Ovitex when used in robotic procedures. As the use of surgical robotic systems in general surgery continues to grow, and with 45% of Ovitex herniators implanted robotically in the most recent quarter for which data are available, we expect that results from Bravo 2 study will be of great use to physicians and patients in making treatment decisions. In addition to collecting clinical data, we also study consumer behavior and interest in hernia treatment matters. In a study among consumers that we recently conducted, we found that there was significant concern over using permanent synthetic mesh and a strong desire for surgeon expertise in innovative, more natural solutions. A highlight of the study showed that 77% of consumers who had a permanent plastic mesh repair would prefer a more natural repair option for subsequent hernias requiring surgery. Additionally, 95% of all respondents considered it important or very important for their doctor or surgeon to be current with top innovations in medical care. The results of this study are indicative of the critical role that patients serve in their healthcare decisions and are at the heart of TELA's mission to optimize soft tissue restoration and preservation. The impressive set of data we've collected supports both patients' desire for a more natural repair product and encourages surgeon confidence to choose Ovitex in future surgeries. The last factor is our product portfolio. We strive to assemble a range of products that leverages our current call points to drive expansion in the soft tissue market. We do this through our internal R&D efforts and through external business development activities. We've already announced several new products in 2023, including two larger configurations of the Ovatex LTR products for use on ventral and incisional hernias in minimally invasive surgeries, and 510 clearance for Ovatex long-term resorbable, or LTR, in plastic and reconstructive surgery. TELA is committed to creating a broad portfolio that delivers next generation soft tissue preservation and restoration solutions and meets the varying needs of surgeons and patients. We look forward to announcing future portfolio offerings and developments as they become ready for commercialization. Continued execution of these five factors will drive meaningful sales growth and create value for the company and its owners, particularly and an improving procedure environment. We are highly optimistic about delivering a strong second half given where we are today. With that, I'll turn the call over to Roberto for more details on our third quarter financial results.