Titan Medical Inc.

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 in business prospects, and opportunities. Forward-looking statements involve significant risks, uncertainties, and assumptions. Many factors could cause companies' actual results, performance, or achievements to be materially different 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 caution regarding forward-looking statements and risk factors sections of the company's annual report for the fiscal year ended December 31st, 2021, which may be viewed at cedar.com and at sec.gov. Please read all forward-looking statements and risk cautions in these sections and in today's news release announcing our financial and operating results and be guided by their contents in making investment decisions or recommendations. The news release is available at www.titanmedicalinc.com. With that, I will turn the call over to Terry Vance, Titan's newly appointed president and chief executive officer. Terry?

Thank you, Kristen. Good morning and welcome to Titan Medical's second quarter 2022 financial update call. Also joining me on the call today is Stephen Lemieux, our chief financial officer. I'm very excited to join Titan as president and CEO. As many of you know, I've been a member of Titan's board of directors since September 2020. I have a passion for this space and a strong commitment to the company's mission to improve surgical outcomes. That is why I joined the board nearly two years ago, and that is why I so enthusiastically joined the company as CEO last month. Over the past month or so, my belief in Titan, the innovation built into the ENOS system, and the prospects for the company's future have never been stronger. On today's call, I want to review the opportunity that we see for Titan in the robotic-assisted surgery space. Specifically, our belief in the ability of our innovative, advanced single-access robotic surgical technology to change the surgical paradigm for patients, surgeons, and hospitals in positive ways. Titan Medical is an innovation leader in single-access robotic-assisted surgery, or RAS, with over 215 patents and applications. Titan's intellectual property provides a technological breadth and depth of coverage in RAS including covering novel aspects of highly dexterous articulating instruments, high-definition surgery vision systems, and ergonomic surgeon hand controllers. This portfolio includes patent families with early coverage dates, setting Titan apart from newer entrants in RAS. Importantly, our IP portfolio provides the company with potentially valuable protection and defense from competitive technologies, restoring potential commercial gains and benefits, including additional licensing opportunities. The ENO system was designed with the potential to, first, improve outcomes for patients by reducing the number of incisions or access points, resulting in smaller and fewer scars, faster recovery, and less pain and trauma to the body. Second, make surgical procedures easier, more comfortable, and more effective for surgeons. And third, drive adoption at hospitals by lowering costs decreasing the footprint required for the equipment to operate, and increased efficiency between surgeries. The eNOSystems ergonomic workstation enables the surgeon to interact openly with the operating room team members, promoting ease of communication for the surgical team. Our surgeon interface consists of foot pedals, hand controllers, and a 3D HD screen for displaying images of the surgical site in graphical overlays. In designing the ENO system, we have taken into account the feedback received from surgeons, including those that have interacted with prototypes of our system in order to design a technology that meets their preferences and needs. Titan has heard repeatedly that the ENO system is easy to learn and master. Furthermore, the system's dexterous and extendable 3D HD camera and precision instruments convert easy-to-learn and natural hand gestures into accurate surgical movements. We designed these instruments to allow surgeons to operate close to the abdominal wall or entry point in a tight surgical volume, as well as to increase versatility when required without having to reposition the patient card. The IngoSystem patient card is designed to deliver an integrated 2D HD camera with illumination, in addition to the dexterous and steerable 3D HD endoscope camera, with additional illumination and two multi-articulating instruments through a single 25-millimeter incision. Additionally, the patient cart is designed to offer swift docking, multi-quadrant positioning, easy to load instruments, and easy draping. We believe these features will allow hospitals to turn over the surgical suite faster and more efficiently. The market for RAS systems is robust and continues to grow. Currently, the market is dominated by multi-port surgical systems. While the current market for single access systems is somewhat small, Our research suggests that an opportunity exists for an innovative single-access system, such as the ENOS system, to comprise a more significant segment of the overall RAS market. During preclinical studies conducted by leading surgeons using the ENOS system, we collected a wide range of data in support of several procedures, including gynecology, urology, general surgery, and colorectal surgeries. Based on this data, we believe that the ENOS system may eventually, with appropriate regulatory clearances, be used for a range of procedures. We intend for the initial indication for the ENO system to be gynecology procedures for which the benefits of single access are likely most impactful. Upon regulatory clearance and launch of the ENO system, we intend to follow with urology and other indications for use. In meetings with members of the Surgeon Advisory Board, we have gained valuable insight on what surgeons are looking for in the next generation of single access surgical robotics. Their insight continues to be a critical part of our innovation pathway and will influence not only how the ENO system can address current unmet needs, but also provide a roadmap for applications and capabilities that might be added to enhance our technology to meet future surgical needs. Although it is early days for me at Titan, one theme rings clear. The team is committed to our project plan, working tirelessly and creatively to overcome challenges to get our proprietary technology in the hands of surgeons to benefit patients. We are fortunate to be collaborating with partners who share in our mission to get the ENO system authorized and on the market. We appreciate the role that all contributors have in our success and value those collaborations as we accomplish our goals. In addition to my recent announcement, Titan has shared several accomplishments during the second quarter and the weeks following, including we were granted an additional 180-day extension by NASDAQ to regain compliance with the minimum bid price rules. and will continue to reevaluate options to address the price deficiency to regain compliance prior to the December 26, 2022 deadline. We continued communications with the FDA utilizing the Q submission process as part of our ongoing plan to obtain additional guidance from the FDA regarding a de novo clinical submission for the ENO system. We expect to hear back from the FDA on this Q submission in the second half of this year. We participated in the 2022 Society of Robotic Surgery Annual Meeting. Chris Seibert, our VP of Upstream Marketing, participated on a panel featuring executives from companies recognized for their promising technology platforms in robotic surgery. He also provided an overview of Titan and the Enos system during the plenary session. We announced an agreement with Nisha Medical Technologies for the manufacture of surgical consumables. These single-use surgical components will be used for verification and validation testing and in preclinical and clinical studies of the ENOS robotic single-access surgical system. We held an annual and special meeting of the shareholders on June 8th. All nominees were elected as directors of the company by shareholders. The shareholders approved the renewal and amendment of the company's share unit plan and deferred share unit plan and adoption of the employee share purchase plan. We welcome Bill Fahey to the team as Vice President, Manufacturing and Operations. He previously served as SVP of Engineering at Precision Spine and as Senior Director of Engineering for Orthotics Blackstone Medical. Bill brings development, manufacturing, and commercialization experience to Titan and will be responsible for both in-house and contract manufacturing relationships. We are excited to have him on board. The path to manufacturing ENOS continues as we finalize design transfer to benchmark for capital components of the ENOS system, including the surgeon workstation and patient cart. Manufactured units of the ENOS system are expected later this year. Finally, we participated in the HC Wainwright Global Investment Conference in Miami on May 25 and met with investors. We encourage you to listen to the webcast that is available on our website. As previously communicated, we are proceeding with plans for marketing authorization utilizing the de novo classification request pathway. Our communications with the FDA continue to be constructive. On June 28th, we announced that multiple disruptions would result in an IDE submission expected in mid 2023 versus the first quarter of next year. We noted that supply of certain key components and materials would affect production of instruments and cameras. which in turn delays our verification and validation testing process. Additionally, slow recruitment and resourcing of software engineers and developers delays unit testing and documentation. Finally, the delayed procurement of disposable and consumable components postpone cleaning and disinfecting testing and the GLP study required for the IDE submission. With a watchful eye on these issues, we expect our human clinical trials to start next year. We are planning to perform total laparoscopic hysterectomies on approximately 40 patients at three to four clinical sites during our IDE clinical study. Upon completion of the clinical study, we plan to submit a de novo classification request with the FDA in 2024. Commercial launch of the ENO system is scheduled to begin upon receipt of marketing authorization from the FDA anticipated in early 2025. We will continue to carefully monitor and execute on our project plan. Additionally, we are monitoring economic and geopolitical factors, including the ongoing Ukraine-Russia conflict, market instability, COVID variants, supply chain issues, and a tightening labor market, trying to anticipate and mitigate risk and impact where we are able. We will continue to grow our intellectual property portfolio, our knowledge and experience, and our talented team to strengthen the company and promote our position within the industry. Additionally, we intend to leverage our industry partnerships to provide a product that we believe will make a meaningful improvement to single-access robotic-assisted surgery technology. We remain optimistic as we look at the long-term opportunity for our company and for our shareholders. We strongly believe that our innovative and differentiated single-access robotic-assisted endosurgical platform, when cleared by the FDA, will be well-received by surgeons and hospitals. I'm excited to engage with multiple audiences to continue developing Titan's narrative for the Eno system and share the effect we believe the system will have on improving surgical outcomes. We plan to meet with shareholders, physicians, members of the media, and others to share the exciting prospects of the Eno system and how it is uniquely positioned to positively impact patient outcomes, provide performance benefits to surgeons, and improve hospital economics. I will now turn the call to Stephen Mamou, our Chief Financial Officer, to review our financial results. Stephen? Thank you, Kerry.

I want to extend my welcome to you from the Titan team. We are pleased that you've joined us and look forward to working with you on our common goal to bring the innovative ENO system to market. Turning to our quarterly financial results, please note in the following discussion all numbers are in U.S. dollars. As of June 30, 2022, we had cash and cash equivalents of $20.2 million, compared to $32.3 million at December 31, 2021, representing a decrease of $12.1 million. We continue to anticipate that our cash on hand will fund operations into the first quarter of 2023. For the three months ended June 30, 2022, total expenses were $12.7 million, a slight increase from $12 million in Q2 2021. For the six months ended June 30th, 2022, total expenses were $24.8 million compared to $23.9 million for the same period in 2021. R&D expenses were 75% of total operating expenses for the second quarter of 2022 compared to 70% in the comparative period of 2021. This shows the continued effort by the company to focus more financial resources on the development of the ENO system while keeping the overall expenses relatively unchanged. R&D expenses were $9.5 million in the second quarter of 2022 compared to $8.4 million for the three months ending June 30, 2021. For the six months ending June 30, 2022, R&D expenses were $19.1 million versus $17.6 million for the same period in 2021. R&D expenses for the three- and six-month period ending June 30 of 2022 were related to the development of the ENO system and an increase in labor costs as the company continues to add the required resources to its engineering, regulatory, and quality teams to advance the ENO system. During the six-month period, the company's focus was on completing product development and transferring key components of the ecosystem to our external manufacturing partner. During the second quarter, the company transferred substantially all of these components to its manufacturing partner. G&A expenses decreased to $3.1 million for the quarter ending June 30, 2022, compared to $3.6 million for the three months ended June 30, 2021. The decrease in G&A expenses in the quarter is related to a decrease in stock-based compensation of $1.1 million, partially offset by an increase in seller's costs and public company costs. For the six-month ended June 30, 2022, G&A expenses were $5.7 million versus $6.2 million for the comparable period in 2021. The decrease in G&A expenses in the six-month period primarily related to a decrease in stock-based compensation of $1.4 million and a decrease in professional consulting fees, partially offset by an increase in severance costs and public company costs. We continue to improve our processes and streamline activities expected to result in efficiency and generate savings to create a company that is efficient and supports efforts to reach our corporate goals and bring the ENO system to market. We also continue to investigate capital market options that will support financing the ENO system through the de novo regulatory pathway and eventual commercialization. Our discussions with interested parties continue, and we plan to show the results of this work in the coming months. Tightened shift from product development to the collaboration between our manufacturing partners and in-house expertise to build units of the ENO system continues successfully. We remain focused on our IDE submission, building units for use in planned IDE clinical trials, and ultimately commercialization of the EMO system. Our driving purpose is to improve outcome for patients. We have made solid progress and will continue our hard work to see our goals through. With that, I will now turn the call back over to Kerry.