TriSalus Life Sciences, Inc.

Good morning, and welcome to Trisalis Science Second Quarter 2024 Earnings Conference Call. Currently, all participants are on listen-only mode. We will facilitate a question and answer session toward 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 your host, Jim Young. Senior Vice President of Investor Relations and Treasurer at Trisalis for a few introductory comments.

Thank you all for participating in today's call. Joining me today from Trisalis Life Sciences are Mary Zella, President and Chief Executive Officer, Sean Murphy, Chief Financial Officer, Dr. Alex Kim, Senior Vice President, Interventional Radiology, and Dr. Steven Katz, Chief Medical Officer. Earlier this morning, Trisalis released financial results for the second quarter ended June 30th of 2024. A copy of the press release is available on Trisalis' website. Before we begin, I would like to remind you that we will be making forward-looking statements based on our current expectations and beliefs. These statements are subject to certain risks and uncertainties, and our actual results may differ materially. Please see the risk factors in our SEC filings for additional details. And with that, I'll turn the call over to Mary.

Good morning, and thank you all for joining today's call. This quarter we made significant progress in advancing our strategic priorities and continued to achieve robust revenue growth. Today, We'll discuss the key highlights of the quarter and provide updates on our pioneering drug delivery technology, the PEDD technology, and our promising investigational therapeutic, melitolamide, for liver and pancreatic indications. Starting with our second quarter performance, I'm thrilled to report a substantial growth of 60% in TRYNAV revenues compared to the second quarter of last year. This impressive growth, driven by permanent, specific reimbursement, compelling clinical data, and the expansion of our sales force, reinforces our status as one of the fastest growing med tech companies in the United States, marking another consecutive quarter of over 50% growth. As previously shared, we're actively engaging with the interventional radiology community and hospital communities to disseminate the outcomes of our recent health economic and outcome research study. This study highlighted the value of the TriNAP system, particularly in treating complex patients with diverse clinical challenges and large tumor burdens in the liver. In short, the study demonstrated economic and clinical benefits to using the TriNAP system to treat sicker, treatment refractory, and higher disease burden patients. And given the high unmet medical needs of these patient populations and the significant impact of our technology, we are planning to launch a series of investigator-initiated clinical trials focusing on various complex patient types across numerous research sites and institutions in the U.S. This comprehensive clinical initiative aims to gather real-world clinical use data and further evidence supporting the use of TriNav technology in complex patient populations. This program, named the DELIVER program, is designed to further demonstrate TriNav's enhanced efficacy and safety across a broad spectrum of complex patient populations who may otherwise not be candidates for case and care procedures. We define these complex patients as those involving one or more of the following. previous embolization and therapy, multifocal diffuse or bilobular lesions, large tumors, eight centimeters in size, multiple comorbidities, including liver dysfunction, hypovascular tumors, and diffuse tumors throughout the liver. A new complex patient type has emerged based on the work of Dr. Juan Camacho from Sarasota General Hospital, who achieved significant treatment success using bland embolization via the TriNAP technology for multinodular goiter. Later in the call, Dr. Alex Kim will discuss the inherent benefits of trans-arterial embolization with the TriNAP technology compared to competing therapies. The DELIVER program encompasses a series of investigator-initiated clinical trials involving numerous research sites and hospitals across the United States, enabling access to a wide range of complex patient populations and clinical outcome data collection. A central theme of this program will be to investigate innovative approaches to highlight the impact of improved therapeutic delivery and enhanced safety through sparing of normal tissue when using the TRINAP system in these complex patients. Essentially, our goal is to explore the potential of combination therapies with transarterial chemo and radioembolization delivered via the TRINAP system, which we expect will demonstrate enhanced efficacy and overcome resistant mechanisms in difficult-to-treat cancers. We expect soon to initiate the first of our investigator-initiated clinical trials under the program called PROTECT for pressure-enabled retrograde occlusive therapy with embolization for control of thyroid disease, which aims to demonstrate the benefits of this approach versus surgery. We also intend to deliver studies to include ELIMINATE, which stands for embolization of liver metastasis in anatomically complex patients for therapeutic enhancement, integrating Y90 and the TRINAP system with systemic therapy for patients with anatomically complex colorectal and neural endocrine liver tumors. The second study is SPARE. It stands for pressurized redistribution of Embolic Chemotherapy Investigation for Safety Enhancement. This focuses on the benefits of TRINAV system with chemoembolization in complex sarcoma liver tumors. And the next study is called PRECISE. It stands for Embolization of Liver Metastases in Anatomically Complex Patients for Therapeutic Enhancement, CTASE, plus the TRINAV system, with systemic therapy for patients with anatomically complex colorectal and neuroendocrine liver tumors. We emphasize patient centricity in all our clinical trials, aiming to improve the overall patient experience during the procedure. This includes reducing the burden on patients, improving education, and ensuring their voices are heard throughout the clinical trial and development process. Importantly, the safety and tissue-sparing effects of our technology may enable patients to be treated with embolization who have not been eligible previously. Additionally, we believe these studies will allow us to update our real-world evidence to complement our clinical data and ensure we understand how our technology performs in everyday clinical practice. We will leverage advanced data analytics to generate insights from complex patients and datasets within our real-world evidence approach. Overall, the DELIVER program exemplifies our commitment to transforming the care of patients undergoing intravascular procedures for treatment of solid tumors or benign conditions with similar mechanical treatment barriers, ultimately striving to deliver a life-changing impact to the patients we serve. Regarding our pipeline, we plan to initiate the full launch of TrinabLARGE system later this year as well as share the full clinical results of PERIO-1, our Phase I clinical trial for uveal melanoma liver metastases, and PERIO-3, our Phase I clinical trial for locally advanced pancreatic cancer. At the end of the year, we'll provide results of PERIO-1 and PERIO-3, which will inform our next steps in clinical development in combination with the TRiNAV system. I'll turn the call to Dr. Alex Kim, our Senior Vice President of Interventional Radiology, to share further details on the initiation of PROTECT for multinodular goiter, and then have Dr. Stephen Katz, our Chief Medical Officer, briefly summarize the results of PERI-O2, our Phase I trial in intrahepatic cholangiocarcinoma and hepatocellular cancer. Before I hand it over to Alex, I want to conclude by saying We're pleased with the company's progress and confident in our ability to execute our company-building strategy. We remain on track against our objectives to achieve over 50% top-line revenue growth, advance our pipeline, and strengthen our operational foundations. Alex, over to you.

Thank you, Mary. I am excited to speak to you about our new registry study evaluating the real-world experience assessing the safety and efficacy of performing thyroid artery embolization, or TAE, with the TRINE app device. TAE is an emerging procedure being developed to treat thyroid goiters. The current standard of care is for patients to undergo surgery or radiation treatment for this benign disease, both of which are associated with significant comorbidities, including hypothyroidism and nerve injury. While TAE may significantly reduce or eliminate these risks, thyroid embolization itself carries with it a risk of stroke, which has muted the enthusiasm for this procedure in the interventional radiology community. We believe that performing TAE with the TRINAP system will significantly reduce the risk of stroke as the PEDD effect of the TRINAP system eliminates the need to catheterize the superior thyroid arteries for treatment where the great majority of the stroke risk from TAE resides. Dr. Camacho, who Mary mentioned earlier, introduced an approach in which PEDD TAE is performed only with catheterization of the inferior thyroid arteries which do not directly communicate with the cerebral vasculature. Dr. Camacho has currently performed over 25 PDDT-AE procedures to date without any cerebral adverse events and is currently developing a manuscript to describe his initial experience. Based on the mechanistic rationale and the early safety and efficacy data, We believe that PDD-TAE can be transformative in the treatment of the 50,000 or so patients who currently undergo a thyroidectomy for benign thyroid disease and has the potential to become the standard of care for this disease process. We are enthusiastic about the potential for this application to deliver better safety and efficacy to this large patient population. I would now like to turn the call over to Dr. Steven Katz, our chief medical officer, to speak about our perioclinical trial.

Thank you, Alex. As you know, we opened three phase one trials studying liver metastases, primary liver or bile duct cancer, and locally advanced pancreatic adenocarcinoma to test three hypotheses. One, the pressure-enabled drug delivery, or PEDD method, would overcome delivery challenges historically associated with toll-like receptor or TLR agonists and other innate immune stimulators. Two, Nelitolamide could eliminate suppressive immune cells, including myeloid-derived suppressor cells, or MDSC, in the liver or pancreatic tumors, while promoting broader immune stimulation and T-cell recruitment. Three, delivering Nelitolamide via PEDD could improve clinical outcomes when combined with systemic checkpoint inhibitors in patients typically considered to be refractory to these agents. Last fall, we reported initial Phase I results for PERIO-1 and PERIO-3 at the CITC meeting. PERIO-1 focused on patients with uveal melanoma liver metastases, and the CITC presentation highlighted a tolerable safety profile, evidence of liver metastasis MDSC depletion, and encouraging signals related to CT DNA or circulating tumor DNA responses, disease control, and survival in largely pretreated patients. The PERIO3 data was locally advanced adenocarcinoma data for pancreatic cancer patients and we focused on the initial three patients to highlight the early tolerability of Nelitolamide given directly into pancreatic tumors via PEDD and the immune signals aligned with what we reported in the liver cancer patient trials. PERIO3 remains open at MD Anderson. We plan to report the final phase one results for both programs by the end of this year. The PERIO2 study enrolled patients with hepatocellular carcinoma, HCC, or intrahepatic cholangiocarcinoma, or bile duct cancer. The primary objectives of PERIO-2 were to explore the safety of giving naloxetamol into the liver via PEDD in combination with systemic checkpoint inhibition in largely treatment refractory patients who often have underlying liver disease, including cirrhosis. The study is complete and our investigators from MD Anderson recently reported at ASCO 2024 on 23 patients across dose levels and cohorts. Let me walk you through the overall results. We'll begin with safety. Overall, the safety profile was similar to the reports from the uveal melanoma and pancreatic adenocarcinoma patients with a grade three or higher treatment-related adverse event rate of 13%, which we were pleased with given the underlying liver disease typically present in the HCC and cholangiocarcinoma patients. We believe this further supports the potential of PEDD to deliver immunotherapeutics in advanced liver and pancreas cancer patients. The immune monitoring data also aligned with prior reports from PERIO-1 and PERIO-3, with evidence of MDSC depletion and T-cell recruitment into immunologically cold tumors, along with evidence of systemic immune activation. We tested three doses in the study, two, four, and eight milligrams of Nelitolamide. And while efficacy was not a primary objective of the study, we observed evidence of disease control when using the checkpoint inhibitor doublet of ipilimumab and nivolumab in combination with nilitolamide via PEDD. Approximately two-thirds of patients had intrahepatic cholangiocarcinoma and the remainder hepatocellular carcinoma. Importantly, at enrollment, 83% of the patients overall had received two or more lines of prior therapy. indicating that this was a very difficult-to-treat population. We did not see any evidence of clinical activity for nilitolamide monotherapy or nilitolamide combined with single-agent checkpoint inhibition using pembrolizumab. However, in the 12 patients who received nilitolamide via PEDD in combination with IPI and NEVO, the disease control rate was 42%. with an overall response rate of 17%, and historically, we would typically expect a response rate of 10% to 12% in previously treated cholangiocarcinoma patients. Within the 4-milligram dose group in patients who received ipinevo in combination with nelitolamide, all three patients had disease control at best on treatment response, including one partial response and one complete response. The overall survival for the group is still evolving, with 5 of 12 patients remaining alive beyond 7 months and a median of 8 months. While we are pleased to see the consistency in safety and immunologic effects, along with encouraging outcomes in a limited number of patients in the checkpoint doublet cohort, the data from the cholangiocarcinoma and HCC patients was too limited for us to proceed, and therefore, we do not intend to proceed to phase two with this regimen. There is investigator interest in exploring niletolamide in combination with transarterial chemoembolization, or TACE, or transarterial radioembolization, TARE, for these patients, and we may consider investigator-initiated studies in the future. Despite this decision on TAREO2, We continue to be pleased with the results in PERIO 1 and PERIO 3, and we will provide an update on our plans for further development in these invocations by the end of the year. With that, I would like to turn the call over to Sean Murphy, our Chief Financial Officer, who will provide financial highlights of the quarter.

Good morning, everyone, and thank you, Stephen. I am pleased to report that Trisalis achieved outstanding results in the second quarter that ended June 30th, 2024. Our revenue, solely driven by the success of the Trinab device in the U.S., reached $7.4 million in the second quarter. This sales achievement represents the highest quarterly sales in the company's history, reflecting a strong 60% increase compared to the same period in 2023. Revenue in the first six months of 2024 reached $13.8 million, representing growth of 82% compared to the first six months of 2023. In the quarter, we captured 27 new hospital accounts, and our account utilization reached 15.2 units per account compared to 12.4 units per account in the second quarter of 2023. Chrysalis has a track record of growth, as illustrated on slide one, which demonstrates that the company has grown at a compound annual growth rate of over 50% since our product launch in 2020. We continue to forecast 2024 growth over 50%, and the segment of the business excluding Nelotolamide clinical costs is expected to approach positive EBITDA late in 2024. We are proud to report a very strong gross margin profile of 88% in the second quarter of 2024 and 86% year-to-date compared to 83% and 81% respectively in 2023. This continued favorable margin profile in 2024 can be attributed to increased factory volumes, improved batch yields, and other operating efficiencies. Of note, we are positioned well for the long term as our manufacturing facility in Westminster, Colorado, can support our growth over the next five years with minimal capital investments. Regarding our investments in research and development, expenses for the second quarter and the first half of 2024 total $4.7 million and $10.5 million, representing decreases of 32 percent and 16 percent, respectively, compared to the same periods in 2023. As noted in our first quarter call, we expect our clinical costs to continue to decrease over the balance of 2024 as we finish patient follow-up and analyze data from the trials. Our investment in sales and marketing continue to increase in support of our growth strategy. In the second quarter and the first six months of 2024, we invested a total of $6 million and $12.7 million, respectively, representing increases of 72% and 88% compared to the same period in 2023. These investments are closely tied to our ongoing Salesforce expansion from 10 representatives at the beginning of 2023 to our current level of 27 representatives and seven clinical specialists. Over the balance of the year, we will be adding 10 additional personnel to our team of representatives and clinical specialists to drive continued high uptake in our accounts. General and administrative expenses totaled $4 million in the second quarter and $8.6 million in the first six months of 2024, representing a decrease of 19% in the second quarter and an increase of 1% in the first six months compared to the same period in 2023. The second quarter spending levels represents a more steady state compared to the last several quarters, which we had larger increases due to becoming a public company in August of 2023. Our operating losses for the second quarter and for the first six months of 2024 totaled $8.2 million and $19.9 million, respectively, compared to losses of $11.4 million in the second quarter and $21.6 million for the first six months of 2023. As mentioned earlier, the decreased losses in 2024 can be attributed to increased sales, improved gross margins, and lower research and development costs. These improvements were partially offset by higher sales and marketing expenses to support our growth strategy as previously noted. Before I move to the balance sheet, let me speak to our announcement in June that we were negotiating the exchange of 79% of our publicly traded warrants and 10% of our private warrants outstanding. On July 1st, we closed the transaction and issued 2.1 million common shares in exchange for over 7 million warrants in the exchange of 0.3 shares of common stock for each tendered warrant. The purpose of this offer was to simplify our capital structure, reduce the potential dilutive impact of these warrants, and provide the company with more flexibility for financing and future operations. With regard to financing, we closed the debt financing facility in April with OrbiMet. Under the terms of the credit agreement, we borrowed $25 million at closing and have an aggregate up to an additional $25 million available in two tranches at our option, subject to the achievement of certain revenue thresholds. Moving to the balance sheet, we ended the quarter with 16.5 million of cash and cash equivalents. The financing I just spoke to, assuming we borrow the full 50 million along with our current cash on hand and other existing sources of liquidity, is expected to provide sufficient cash runway to fund the operation through the end of 2025. Looking forward, we continue to forecast 2024 revenue growth over 50%. With our commitment to top line revenue growth and operational efficiency, I am excited to report that excluding Nelotolamide costs, we expect to approach positive EBITDA late in 2024. And now I'll turn the call back to Mary for closing remarks.

Thank you, Sean. and a warm welcome to all participating in the call today. In brief, we at Trisalis are thrilled to share the significant strides we've made in bolstering our Trinab business and advancing our perio-clinical program. I want to thank the Trisalis team for their unwavering commitment to our patients' strategy and mission. Their performance has propelled our company forward on multiple fronts. With that, I'm pleased to open the floor to answer any questions you may have. Your interest in our company and your inquiries and perspectives are genuinely valued. Thank you. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Justin Walsh from Jones Trading.

Hi. Thanks for taking the questions. Congrats on the progress. I'm wondering if there's any context you can provide in terms of patient numbers for the types of complex patients you're looking at in your deliver program.

I'll hand that over to Stephen. Do you want to address that, Stephen?

Yes, Mary. Happy to do so. So the initial patient population that we're going to be addressing in the DELIVER program are patients with multi-nodular goiter, thyroid goiter, in the PROTECT program. We estimate that the total addressable market could get up to 50,000 patients. And we look forward to seeing the early data from that program early next year. You know, we also consider that a segment of the colorectal cancer liver metastasis patient market, in addition to hepatocellular carcinoma, are complex patients as well.

Got it. Thanks. And one quick follow-up for me. I'm wondering what you guys are looking for in the PERIO-1 and PERIO-3 results to convince you to move forward in those indications.

Sure, I'll take that. That's a really good question, Justin. One of the things that we're doing as a company, when we went into the wide array of phase one trials, what our mission was, was to define an indication where we had a very significant treatment effect. We wanted to have a large market and we wanted to be in a position where we knew we could have a regulatory program that would be straightforward and ultimately a smaller program that we potentially could fund ourselves. So, as we look at the criteria across the data, we're really pleased to see the favorable data that we see in the clinical trials, but it's really going to be a decision based on those parameters moving forward, and we'll announce that in the fourth quarter.

Great. Thanks for taking the questions.

Thank you. One moment for our next question. Our next question comes from the line of Bill Plovanec from Canaccord.

Hi, Mary and everyone. It's John on for Bill this morning. Thanks for your questions and congrats on the quarter. I want to start just on the perio trials and the update they gave today. You know, for HCC and IPC and perio 2, Is this really because of resource limitations not pursuing this further? Would you look to pursue this further in the future if you have the resources to do so down the line? And then just Ontario 3 and 1, if the data sets are both compelling, would you go and pursue both opportunities and advanced trials? Thanks.

Great question. I think you hit the nail on the head. You know, I think what we're trying to do is the data in PERI-02, and actually Dr. Javle out of MD Anderson, who was our lead investigator, is incredibly enthusiastic about it. I'll have Steven comment. And it's really that criteria that we were looking at and our ability to fund. And so that's really the decision we made. If we had the financial resources, we would clearly move forward on PERI-02. Steven, do you want to comment?

Absolutely. Yeah, the PERI-02 data, Overall, we're quite encouraging. Firstly, the safety data were very consistent with what we've been seeing in the other programs. In particular, the treatment-related adverse event rate, grade three or four, was 13%, which is notable because these patients have underlying liver disease, including early cirrhosis. The immune effects that we're seeing with Nelly Tullamore that we did see with the HCC and cholangiocarcinoma patients are also very consistent. with what we saw in uveal melanoma and the early data from the PERIO3 pancreatic adenocarcinoma trial. And then, as noted in the summary, we did see some encouraging survival signals in heavily pretreated patients, including a complete response in a fifth-line cholangiocarcinoma patient. So the data overall were encouraging, but as Mary noted, In the short term, we're making some strategic decisions to allocate our resources most effectively.

And, John, I'll come back and answer the second question on PERIO 1 and 3. You know, the one challenge we have with PERIO 1, which, you know, I know you've seen some of the data that we released today, which is quite favorable. The challenge with that indication for us is going to be, and we'll have to make this decision, you know, at the end of the year, it's just a very small patient market. it's roughly 1,200 patients per year. So we're going to be weighing that against Perio 3, which is a much larger and much more significant indication. So, you know, obviously all those factors will come into our decision in the fourth quarter.

Great. Thanks, Mary. And just as a follow-up on Trinav itself, just two questions there. Trinav large will be launching towards the end of the year. Is that the same ASP as the regular Trinav? And then just on the thyroid opportunity and protect, I do want to confirm, this would be just embolization. It's not radioembolization, right? I mean, you may have said it was bland. Is this regular in coils or there's more color around that would be great. Thank you.

Sure. For trying to have large, it's going to be the exact same price. So it's just a larger vessel size. So they would be priced identically. And secondly, it is going to be bland beads. I don't know, Alex, if you want to make some further comments on that.

Sure, happy to. So, yeah, these are going to be bland embolizations using particles of the interventional radiologist's choice. So, these are analogous to how uterine fiber embolizations are done currently with bland particles that aren't attached to chemotherapy or radiation, just delivered through the inferior thyroid artery. Great.

Thanks again for taking our questions.

Thank you. At this time, I'm showing no further questions. I would like to turn the conference back over to Mary Zella for closing remarks. Thank you again, everyone, for joining the call today. We really appreciate your interest and your active following of the company. Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.