TransMedics Group, Inc.

Ladies and gentlemen, thank you for standing by, and welcome to the Transmedics Q3 2020 earnings 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. To ask a question during this time, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded, and if you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Mr. Brian Johnston with Gil Martin Group. You may go ahead, sir.

Thanks, operator. Earlier today, Transmedics released financial results for the quarter ended September 30th, 2020. A copy of the press release is available on the company's website. Before we begin, I'd like to remind you that management will make statements during this call that include forward-looking statements within the meaning of federal securities laws, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements contained in this call that relate to expectations or predictions of future events, results, or performance are forward-looking statements. All forward-looking statements, including without limitation, are examination of operating trends, the potential commercial opportunity for our products, and our future financial expectations, which include expectations for growth in our organization, regulatory approvals and reimbursement, and guidance and or expectations for revenue and gross margins and operating expenses in 2020 are based upon our current estimates and various assumptions. These statements involve material risks and uncertainties that could could cause actual results or events to really differ from those anticipated or implied by these forward looking statements. Accordingly, you should not place undue reliance on these statements. For a list and description of the risks and uncertainties associated with our business, please refer to the Risk Factors section of our annual report on Form 10-K, filed with the Securities and Exchange Commission on March 17, 2020, as supplemented by our other SEC filings, including our quarterly report on Form 10-Q for the third quarter of 2020. Transmedics disclaims any intention or obligation, except as required by law, to update or revise any financial projections or forward-looking statements, whether because of new information, future events, or otherwise. This conference call contains time-sensitive information and is accurate only as of the live broadcast today, November 4th, 2020. And with that, I'll now turn the call over to Ali Hasmeen, President and Chief Executive Officer.

Thank you, Brian. Good afternoon, everyone, and welcome to Transmedics 2020 Third Quarter's earnings call. Joining me today are Stephen Gordon, Chief Financial Officer, and Dr. Tamar Kayal, our Chief Commercial Officer. I want to start by taking a few minutes to reiterate our overall strategy and plans to capitalize on the significant market opportunity in front of us. Simply stated, our goal is to establish and solidify transmedics OCS technology and services as the new gold standard for lung, heart, liver, and ultimately kidney transplants worldwide. Transmedics is uniquely positioned to provide a turnkey technology and service solution to streamline organ transplant process and expand transplant volumes. We are marketing this strategy in the U.S. under the National OCS Service Program. To achieve this, we have developed a multifaceted strategy designed to create a first of its kind national transplant ecosystem that leverages our OCS technology, establishes a new regional clinical OCS expertise that are strategically located across the United States and initiates a working relationship with leading organ procurement organizations. We do this to enable us to access the broadest number of potential donor organs for transplants in the U.S. In addition, we are creating a comprehensive new workflow that will enable us to clinically manage and transport donor organs from donor to potential recipients anywhere across the continental U.S. Despite the macro headwinds over the past few months, we have made significant and meaningful progress in implementing this strategy. And we expect to continue to grow our footprint and activities throughout 2021. This program will be another major catalyst for our near and long-term growth for transmedics. Securing FDA approvals for the OCS pipeline of clinical indications are paramount to maximizing the commercial opportunity within our three transplant markets. These are lung, heart, and liver transplantation. We are confident that despite the challenges posed by the COVID pandemic and the recent FDA panel delays, that we have a unique and frankly unrivaled offering and that our mid- and long-term prospects remain very strong. With that as a backdrop, let me turn to review our third Q results. Our third quarter net revenue was $7.1 million, outperforming expectations. While overall revenue was down 2% year-over-year, U.S. net revenue grew 36% from 3Q 2019. In terms of recovery, we saw transplant volume improve steadily throughout Q3, with lung transplants lagging behind heart and liver due to COVID impact. We expect this clinical phenomena for lung transplantation to continue throughout the COVID pandemic. Our performance was driven in part by our OCS heart DCD program, which continued to accelerate through Q3 as we completed enrollment of the OCS DCD heart trial. We recently secured FDA approval for an OCS DCD cap or continued access protocol that would enable us to transplant 90 additional patients. We expect this to be initiated in early 2021, given the needs for new IRB processes, et cetera, within the transplant centers. In the third quarter, we initiated and booked orders from eight new U.S. heart transplant centers. Meanwhile, our interactive review with FDA for our OCS liver PMA is ongoing, and we are confident that we remain on track for potential approval in 2021. This assumes, as we have noted before, an FDA advisory panel meeting, given that it is the first of its kind PMA for normal thermic perfusion indication for liver transplant in the US. As mentioned, Our national OCS service model is also continuing to progress nicely in its early days. In Q3, our service program in one OPO enabled four lung transplants. What's interesting is that three out of those four lung transplants were transplanted in new transplant centers that had never used the OCS before. We're excited about this because that shows the ability to grow our footprint within the U.S. using this national service program. Importantly, we have confirmed interest to expand to three new OPOs in Q4 and a robust pipeline of several OPOs to be initiated over the next several quarters. Turning now to our first OCS heart indication. While we continue to await the rescheduling of our FDA panel meeting, We have already submitted all relevant material to FDA review team. We continue to believe that the delay is a net positive for transmedics, given that all data would have been verified by FDA by the time of the new panel meeting. We've been notified that the FDA is currently working to schedule our panel meeting in Q1 2021, and we look forward to announcing the exact date as soon as it is scheduled by FDA. Let me be crystal clear. Despite this unforeseen delay, we remain extremely confident in the robustness and quality of our clinical data in the OCS Heart PMA. We remain extremely confident in our clinical positions and our ability to address FDA or panel questions relating to our OCS Heart PMA. Now let me cover COVID pandemic and potential impact on the remainder of 2020. In looking to the next several months, I would like to reiterate that we are cautiously optimistic with our expectations for the duration of this year. While we have seen incremental recovery in transplant procedures and revenue growth since earlier this year, we're also cognizant of the strong signs of a potential second major peak of COVID in the US and Europe. Depending on the ability of hospitals to mitigate impact, we may see capacity constraint and disruption to the normal flow of transplant operation, as we've seen in Q2. Given these uncertainties, we are not restating our guidance for 2020. That said, Given the strength of our balance sheet, we are confident in our ability to remain flexible and to drive the business forward despite the ongoing COVID impact and FDA delay on our revenue growth. Now let me turn to what we are foreseeing for next year, for 2021. In looking further out to 2021, in addition to achieving OCS HART FDA approval, hopefully early in 2021. We're also looking forward to a number of key catalysts and milestones that we are planning to achieve next year. One, we expect to achieve OCS liver FDA approval in the second half of 2021. Two, we expect to expand our national OCS service model to cover many of the major transplant and OPO regions throughout the year. Three, we expect to announce the results of the OCS heart DCD trial in 2021. Four, we plan to file our DCD PMA to FDA in 2021 for the expansion of our heart indication to include access to DCD donors. Overall, we fully expect that we will have all three OCS products approved and generating commercial revenues in the US in the second half of 2021. Finally, we expect several major scientific and clinical publications reporting the clinical results of OCS programs throughout next year. With that, I will turn the call to Stephen Gordon, our CFO, to review our financial results for the quarter.