Titan Medical Inc.

Good evening, ladies and gentlemen, and welcome to Titan Medical's first quarter 2021 earnings conference call. At this time, all participants are in a listen-only mode. After the presentation, there will be an opportunity for call participants to ask questions. As a reminder, today's conference is being recorded. If anyone on the line should require operator assistance during the conference, please press star zero on your telephone keypad. I will now turn the conference over to Kristen Galfetti, Titan Medical's Vice President of Investor Relations and Corporate Communications. Please proceed.

Thank you, Operator. Good evening, everyone, and thank you for joining us for Titan Medical's first quarter 2021 earnings conference call. During our call, we will review Titan's first quarter 2021 financial results and key business highlights, which were summarized in our earnings press release issued earlier today. A copy of the release can be found in the investor relations section of our website at www.titanmedicalinc.com. As a reminder, certain statements made during this conference call constitute forward-looking statements that reflect management's current expectations of the company's future growth, results of operations, performance and business prospects, and opportunities. Wherever possible, words such as may, would, could, will, anticipate, believe, plan, expect, intend, estimate, potential for, as planned, and similar expressions have been used to identify these forward-looking statements. These statements, including statements with respect to projected development plans, milestones, timelines, budgets, development status, anticipated regulatory pathways, anticipated license payments, the maintaining of worldwide rights to commercialize the technologies and intellectual property license to Medtronic, the goals that the ENO system is being designed to address, the features that the ENO system is designed to include, the medical outcomes that we expect the ENO system will improve, The advantages that we expect users of the e-mail system will receive, the anticipated market demand for the e-mail system, and the belief that the market is underpenetrated and plans to participate in certain investor conferences reflect management's current beliefs with respect to future events and are based on information currently available to management. Forward-looking statements involve significant risks, uncertainties, and assumptions. Many factors could cause the company's actual results, performance, or achievements to be material difference from any future results, performance, or achievements that may be expressed or implied by such forward-looking statements, including, without limitation, those listed in the risk factors section of the company's annual information form in Form 40F for the fiscal year ended December 31, 2020, which may be viewed at www.cedar.com. and at www.sec.gov. Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking statements prove incorrect, actual results, performance, or achievements may vary materially from those expressed or implied by the forward-looking statements made during this conference call. These factors should be considered carefully, and prospective investors should not place undue reliance on the forward-looking statements. Although the forward-looking statements made during this call are based upon what management currently believes to be reasonable assumptions, the company cannot assure current or prospective investors that actual results, performance, or achievements will be consistent with these forward-looking statements. With that, I will turn the call over to David Mellon, President and Chief Executive Officer of Titan Medical. David?

Thank you, Kristen. Good evening, and welcome to Titan Medical's first quarter 2021 earnings call. I want to thank our shareholders for their support and confidence in our ability to successfully develop the ENOS robotic single access surgical system. We are excited to share today's updates with shareholders who have been following the Titan story and with investors new to Titan Medical. Joining me on the call today will be Perry Genova, Senior Vice President, Research and Development and President of Titan Medical USA, and Monique Delorme, Titan Medical's Chief Financial Officer. 2020 resulted in an incredible year of accomplishments that positioned Titan nicely going into 2021. During the first quarter of 2021 and in recent weeks that followed, the company secured more than $44.5 million from equity financing, separated the role of chairman from president and CEO, expanded the board of directors, grew the senior leadership team, increased investor activities and communications, and launched Titan Living Labs. Most importantly, we continued to accomplish our milestones and move closer to bringing the ENOS surgical system to patients. We were opportunistic with market activities and, as noted, closed two equity financings totaling $34.5 million and received an additional $10 million from the exercise of warrants held by investors from previous offerings. As a result of those efforts, we believe we are in a strong financial position to execute our strategy. The board of directors believe that sound principles of corporate governance are critical to our success as a company and to earning the trust and confidence of each of our stakeholders. In keeping with corporate governance best practices, we have separated the role of chairman of the board from president and CEO. And today we announced that Paul Cataford has been appointed Titans chairman of the board. Paul joined Titans board last fall as our lead independent director. And during his tenure on the board, He has demonstrated his strong leadership skills and corporate governance experience. He is the CEO and co-founder of Zephyr Sleep Technologies, a medical device company specializing in the treatment and diagnoses of sleep disordered breathing. Paul brings significant technology transfer and early stage company experience to Titan Medical's boards. and has served as an independent corporate director on a number of public boards of directors at companies listed on the TSX, TSX-V, and NASDAQ, including Sierra Wireless, Trekopolis IoT Corporation, Semibiosis Genetics, and AG Junction. We are proud to have him in place as our new chairman of the board. We are also delighted to announce today that Heather Knight has been appointed as an additional independent director to the board. Heather is a dynamic sales and marketing executive and brings to us nearly 25 years of proven healthcare commercial experience. Heather currently serves as general manager of US hospital products at Baxter Healthcare, where she is responsible for US commercialization, including sales, national accounts, marketing, commercial operations, and business integration. She previously served as global president of Sophradine, France, and vice president and general manager for surgical innovations, MITG, at Medtronic, where she led all portfolio strategy and growth initiatives for the global business, including commercialization in all regions across the globe. Heather is the executive sponsor for the Baxter Black Alliance Employee Business Resource Group and previously served as co-chair of the Medtronic Women's Network Executive Committee. She is a 2021 Healthcare Business Women's Association Luminary and the founding member of Chief Chicago. Heather serves on the Board of Directors of Technovation and Linkage, Women in Leadership. We are equally excited to announce that Kathy Steiner has been nominated to join the board upon shareholder approval at our annual meeting. Kathy brings over 20 years of investment banking and financial and capital markets experience in dealings with public and private healthcare companies. She is currently principal of Origin Merchant Partners an independent investment bank specializing in mergers and acquisitions and corporate finance, where she leads the healthcare practice. Previously, Kathy held the role of Chief Financial Officer for technology companies through capital raising and M&A transactions, being responsible for financial accounting oversight and risk management. For over a decade prior to that, she was managing director for Nucleus GC, a boutique healthcare advisory firm working with clients on financing and strategic transactions, as well as product development, commercialization, positioning, and launch. For nearly 10 years prior to that, Cassie led healthcare investment banking for CIBC World Markets and Yorkton Securities. Kathy is currently a director at Cipher Pharmaceuticals, a TSX listed company, and serves as a member of the audit committee. We are delighted to have these two talented professionals join our board and look forward to utilizing their expertise and insight to support Titan's success. Stephen Randall, who retired in September 2020 after previously serving as Titan CFO until September 2020, has remained on the board during the transition period during which we have augmented the independence of the board. We are grateful for Stephen's distinguished service during his more than 10 years as CFO and four years as a director. Please visit our website for additional governance details, policy, member bios, and committee compositions. We recently announced the expansion of the Senior Leadership Team, appointing Kristin Galfetti as Vice President, Investor Relations and Corporate Communications, and Chen Wang as Vice President, Finance. Each has over 20 years' experience in their respective fields and will contribute to Titan's continued growth and success. Kristen is responsible for executing our investor relations strategy and serves as the primary contact for our investors and media interests. Chen is applying his expertise to develop and implement financial systems that will support Titan's growth. We are very pleased that they have joined the leadership team and they are already contributing to our progress in meaningful ways. We also continue to augment our R&D team in Chapel Hill, North Carolina, adding experienced engineers, technical experts, and support staff, where the team now totals over 30 employees. Perry will provide more details on the exciting work the R&D team is doing in Chapel Hill. Overall, TITAN remains focused on achieving milestones both in regard to those established for our ENO system development and those under the Medtronic development program. The upcoming Medtronic milestone anticipated for completion this month includes an associated license payment to TITAN of $10 million. TITAN and Medtronic currently operate under a development and license agreement that leverages Titan's technology and provides Medtronic access to a portion of our intellectual property portfolio in exchange for milestone payments. Importantly, Titan maintains perpetual royalty-free worldwide rights to commercialize the licensed technologies for use with the Eno system. And furthermore, we have our own patent portfolio that continues to grow as we continue to innovate in robotic surgery with over 160 global patents and applications pending. The landscape for single access robotic surgery is rapidly evolving. We believe that there is high demand in the market for a versatile single access robotic platform. While improved patient outcomes are paramount, hospitals and surgeons are looking for greater cost effectiveness and efficiency and improved functionality. We remain committed to enhancing robotic assisted surgery using innovative technology through a single access point with the goals of improved patient outcomes, lower operating room costs, and greater patient throughput. As a reminder, Titan's innovative technology is being designed to be both effective and easy to use, to allow medical professionals to perform their best to improve patient outcomes. Our multi-articulating instruments are designed to allow a remarkable range of motion in a confined space and deliver the necessary strength for common surgical tasks. Our ENOS surgical system is being designed with an ergonomic focus and to provide for a surgical experience that imitates the real-life movements that surgeons regularly execute during minimally invasive surgery. We continue to work closely with key opinion-leading surgeons as we value their feedback and interest in seeing the ENOS system come to market. Additionally, we believe that the market we aim to serve is underpenetrated, thus presenting an exciting opportunity for our system to make a difference in patients' lives. Titan's eNode system is being developed as a single access surgical system aiming to become the new standard of care for single access robotic surgery. The eNode system is being designed to include the advantages of dual 3D and 2D high definition vision systems for improved visualization, multi-articulating instruments for increased dexterity, and an ergonomic surgeon workstation for surgeon comfort. The ENO system's initial clinical focus will include benign gynecologic surgery for the U.S. market. We believe that the associated patient population is particularly motivated to embrace a surgical solution that has the potential to reduce trauma, hasten healing, and reduce scarring. Additionally, based on our preclinical success, we anticipate that the versatility of the ENOS system will eventually be found attractive for broad use in multiple subspecialties. We continue to hone our relationships with leading surgeons that have provided us with excellent feedback and insights regarding opportunities for us to satisfy unmet needs across numerous procedures. As we shared previously, communications with the US FDA indicate that the regulatory pathway for our ENOS single access surgical system is expected via the de novo process reserved for novel medical devices. We plan to finalize product development of the ENOS surgical system this year. And upon approval of our application for an investigational device exemption, or IDE, We anticipate commencing IDE clinical studies in 2022. Upon completing the studies, we expect to file for marketing authorization with the FDA in the first half of 2023 with possible product launch in the second half of 2023 upon successful receipt of authorization from the FDA. We look forward to future correspondence and conversations with the FDA and communicating our progress on getting the ENO system cleared for marketing and into the hands of surgeons. Our relationship with Medtronic resulted in $20 million in license payments received in 2020, and we believe that we are well-positioned to meet the remaining two milestones in 2021, earning up to an additional $21 million in license payments. This month, we expect to complete the first of the two remaining milestones in the development program with Medtronic, which would result in an associated license payment of $10 million. Following receiving this payment, the final phase of development is anticipated to be completed later this year, providing an additional license payment of approximately $11 million. Monique will be providing you more detail with her update on our quarter-end finances as of March 31, 2021. During the first quarter, increased investor relations activities and improved stakeholder communications included, one, new analyst coverage. Suraj Kalia of Oppenheimer & Company initiated coverage on Titan on April 7, 2021 with a buy rating. David Martin of Bloom Burton & Company initiated coverage on April 19, 2021, with a buy rating as well. We appreciate the work these professionals invested in researching and reporting on prospects for our business. Two, as I mentioned earlier, we hired Kristen Galfetti as Vice President of Investor Relations and Corporate Communications. With over 20 years' experience, to serve as your point of contact and to build corporate communications with other audiences on behalf of Titan. Three, the board of directors established a shareholder engagement policy that recognizes and encourages regular and constructive communication between shareholders and the company. A copy of this policy is available on our website. Four, we have updated the investors section on our corporate website with enhanced navigation to facilitate access to information and improve communication with investors. Five, last Thursday we launched a second edition of Titan Living Labs on our website. That provides the opportunity for viewers to engage in our journey through product development. This second video builds upon the first released earlier this year and illustrates the enhanced kinematic engine improved independence of dextrous multi-articulating instruments, and displays the two independent LED light sources, one within our custom, steerable, 3D high-definition camera, and another in the insertion tube with integrated 2D high-definition camera. The video features our dedicated team and the detailed development work that is required as we work toward finalizing product development of our ENO system. And lastly, we invite you to visit our website to view the newest vignette and navigate the updated investors section. I will now turn the call over to Dr. Perry Genova, Senior Vice President of R&D for Titan Medical Incorporated and President of Titan Medical USA Incorporated, who will provide an update on activities in Chapel Hill, details on development activities relating to the ENOS surgical system, and advancements pursuant to the ongoing development and license agreement with Medtronic.