Treace Medical Concepts, Inc.

Good day and thank you for standing by. Welcome to the Treats Medical Concepts First Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. Ask a question during the session. You will need to press star 1 on your telephone. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Vivian Cervantes, Investor Relations. Please go ahead.

Thank you, Joelle. Good afternoon, everyone, and welcome to our first quarter 2021 earnings call. Participating from the company today will be John Treese, Chief Executive Officer, and Mark Hare, Chief Financial Officer. During the call, we will offer commentary on our commercial activity and review our first quarter financial results released after the close of the market today, after which we will host a question and answer session. The press release can be found in the investor relations section of our website at investors.trace.com. This call is being recorded and will be archived in the investor section of our website. Before we begin, we would like to remind you that it is our intent that all forward-looking statements made during today's call will be protected under the Private Securities Litigation Reform Act of 1995. Any statements that relate to expectations or predictions of future events and market trends, as well as our estimated results or performance or forward-looking statements. All forward-looking statements are based upon our current estimates and various assumptions. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements. All forward-looking statements are based upon current available information, and TREES assumes no obligation to update these statements. Accordingly, you should not place undue reliance on these statements. For list and description of the risks and uncertainties associated with our business, please refer to the risk factor section of our prospectus filed with the Securities and Exchange Commission on April 26th, 2021 in connection with our initial public offering. With that, I will now turn the call over to John.

Thank you, Vivian, and good afternoon, everyone. And thank you for joining us on our first earnings conference call as a publicly traded company. On behalf of the board and management team of Treece Medical, we'd like to take a moment to acknowledge all who supported us and to welcome new shareholders in our journey to drive market adoption of our novel and proprietary lapoplasty system. At Treece Medical, we're just getting started. We're addressing a market where there is a large unmet need. Relatively early in our commercial efforts, we estimate we penetrated about 2.5% share of the estimated 450,000 annual bunion surgical procedures in the U.S., and about 1% of the 1.1 million annual surgical candidates in the U.S., translating to a $5 billion-plus opportunity. So we have a long runway ahead of us. In the U.S., bunions affect approximately 65 million individuals, and they generally increase in severity over time. From this population, about 4.4 million patients seek medical attention for their bunions each year. Of these, about 1.1 million are considered surgical candidates. This population often suffers from symptoms that worsen over time, including severe and debilitating pain, emotional burden, and limited mobility. Yet, only 450,000 of this group choose surgery given limitations of traditional surgical procedures. Bunion surgery is performed to restore a foot's natural anatomy, and in doing so, relieve pain so that patients can get back to their normal lives and activities. In the past, it's been thought that bunions are simply a painful bump of bone on the side of the big toe that can be shaved off. However, more recent clinical science has demonstrated that bunions are actually complex three-dimensional deformities originating from an unstable joint in the midfoot known as the tarsometatarsal joint. And it's this unstable joint that allows the entire metatarsal bone to both shift and also rotate out of alignment, producing the bump we associate with the bunion. In fact, recent studies indicate that 87% of bunions have this rotational component to the deformity, and that failure to correct that translates to a 10 times greater risk of the bunion returning. And it's this rotational component that's been historically overlooked in traditional surgical procedures, contributing meaningfully to the high observed recurrence rates. Approximately 75% of bunion surgeries today are corrected with procedures known as metatarsal osteotomies, where the metatarsal bone is cut in half below the bump and the bump is shifted inward. This is primarily a cosmetic fix in that it does nothing to address the unstable joint, which again is the origin of this deformity and fails to reliably address the important rotational component. Due to these shortcomings, metatarsal osteotomies are associated with high recurrence rates. some as high as 78% in more recent clinical literature. The alternative conventional treatment known as lapidus fusion is performed in approximately 25% of bunion surgeries today. Lapidus fusion is very different from a metatarsal osteotomy in that it attempts to realign the entire metatarsal bone while addressing the unstable joint as we do with lapoplasty. That said, it is a much more technically challenging and sometimes even volatile freehand operation and one that is not historically focused on correcting the important rotational component of the deformity. As such, outcomes tend to be inconsistent from case to case and surgeon to surgeon. Given the unstable joint is secured in a lapidus fusion, this procedure is generally associated with lower recurrence rates than osteotomy, although lapidus recurrence rates as high as 46% have been cited in the clinical literature. In addition, lapidus is typically a hard sell to patients as it involves a much longer and more restrictive recovery than an osteotomy, with up to six to eight weeks non-weight-bearing and often in a cast. For these reasons, lapidus fusion has traditionally been reserved for only the most severe bunion patients where an osteotomy isn't a viable option. It's against this backdrop that we developed our novel Lapoplasty 3D bunion correction system, which is a combination of proprietary instruments, implants, and surgical methods designed to empower surgeons to consistently correct all three dimensions of the bunion deformity including that rotational component, and address the unstable joint. This comprehensive approach delivers significantly lower recurrence rates and allows patients to weight bear quickly, typically within just a few days to a couple weeks in a postoperative boot. To provide support, build awareness, and drive adoption of the lapoplasty procedure, we've embarked on several programs, including clinical studies that provide a body of evidence for our novel therapy. In 2018, we initiated the Align3D prospective multicenter study to evaluate for consistent and reliable correction of all three dimensions of the bunion deformity with lapoplasty, as well as maintenance of the correction following a rapid return to weight-bearing protocol. The primary effectiveness endpoint of this study is recurrence at 24 months post-surgery. At the recently concluded American College of Foot and Ankle Surgeons annual scientific conference, we were pleased to announce positive interim data on the Align3D study in a podium presentation. Data on 128 patients showed consistent positive radiographic and patient-reported outcomes starting at six weeks and maintained at 12 months. Building on our previous clinical studies, only one out of a total of 72 patients demonstrated a recurrence at the 12-month follow-up point. for an implied recurrence rate of just 1.4% in this interim analysis. While we still have a ways to go with our primary endpoint of recurrence at 24 months post-surgery and a final patient readout in the first half of 2023, we are encouraged by this positive trend that builds upon our prior clinical data sets. We believe the data on lapoplasty's recurrence rate compares quite favorably to those reported in the literature relative to both osteotomy and lapidus fusion. Importantly, Align3D interim data also showed an early return to weight-bearing with a boot at approximately eight days versus six to eight weeks for many traditional lapidus procedures. The data also demonstrated significant improvements in pain reduction and quality of life measured at six months and maintained at 12 months. As such, we are optimistic that our lapoplasty procedure satisfies the needs of patients who seek treatment to relieve the pain, reduce mobility, and quality of life caused by their bunion deformity. We're encouraged by our growing body of clinical evidence in addition to real-world data from more than 28,000 lapoplasty procedures performed through Q1 of this year. Early in our commercial efforts, we know traction in our patient and surgeon education initiatives, which are also benefiting from positive testimonies and word of mouth. All combined, we believe we're on solid footing to serve the unmet need of a large, underpenetrated market with our lapoplasty system designed to comprehensively address the bunion deformity. strong intellectual property covering our surgical methods and instrumentation creating high barriers, differentiated clinical data sets, an expanding direct sales team, active surgeon education programs, impactful patient awareness initiatives, and favorable reimbursement economics. Net-net, we aim to deliver premium quality care with data demonstrating a more reproducible and effective surgical procedure to bunion sufferers. With approximately 2.5% market penetration, of the estimated 450,000 bunion surgeries performed annually in the U.S., we believe we are well positioned to broaden adoption of our lapoplasty system, and we remain cautiously optimistic as the U.S. returns to normalcy in 2021. With that, I'll now turn the call over to Mark to go over our financial performance. Mark?