TransMedics Group, Inc.

Good afternoon and welcome to Transmedic's third quarter 2021 earnings conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask the question during the session, you need to press star 1 on your telephone. As a reminder, this call is being recorded for replay purposes. I would like to turn the call over to Brian Jensen from the Gilmartin Group.

Thanks, Operator. Earlier today, Transmedics released financial results for the quarter ended September 30th, 2021. A copy of the press release is available on the company's website. Before we begin, I would 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, our 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, gross margins, and operating expenses in 2021 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. 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 quarterly report on Form 10-Q filed with the Securities and Exchange Commission on August 6, 2021. 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 9th, 2021. And with that, I'll now turn the call over to Waleed Hastaneen, President and Chief Executive Officer.

Thank you, Brian. Good afternoon, everyone, and welcome to Transmedics' third quarter 2021 earnings call. Joining me today is Stephen Gordon, our Chief Financial Officer. The third quarter of 2021 was transformative for Transmedics. Our positive momentum throughout the year culminated in the achievement of four strategic catalysts, namely two FDA PMA approvals, one FDA 510K clearance, as well as the release of positive top-line results from our OCS DCD heart trial. In September, we secured FDA pre-market approval for OCS heart and OCS liver systems, both with broad labeling language. The OCS liver system was indicated for use with both DBD and DCD organs, while the OCS heart system was indicated for use with DBD organs. We look forward to expanding our OCS heart indication to include DCD once the PMA supplement that has been filed is approved by FDA. Now let me discuss the financial results for Q3. Net revenue for the third quarter was $5.4 million, a decline of $1.7 million from Q3 2020. As we expected and have spoken about previously, Q3 revenue results were adversely impacted by the lack of trial revenues from both liver and heart cap trials that were not renewed in anticipation for the PMA approvals. We also saw the resurgence of the Delta variant negatively impacting key lung transplant centers in Q3. Overall, September year-to-date revenue was $20.6 million, which represents 14% growth over 2020. I'm looking forward to leveraging all three OCS products to grow our revenue starting in Q4 of this year into 2022 and beyond. Now let me provide more detail on our progress across our key initiatives. For the DBD heart FDA approval, contrary to some pre-approval speculations, the OCS DBD heart label has very broad indications. We are thrilled by our competitive position with the approved label. This label gives us access to the large, unutilized DPD heart donor pool, as well as the approximately 25% of the current heart transplant market that has a cross-climb time of four hours or more. Following FDA approval, post-market commercial activities for OCS Heart were launched in late September. This is a true validation that the new process that we negotiated with FDA enabled us to quickly transition to post-market commercial activities. As I've stated before, we have a three-pronged go-to-market strategy. We are prioritizing the OCS heart centers that were involved in the recent CAP clinical activities. Then we will expand into pipeline centers that have expressed interest in the OCS heart product. And finally, we're expanding our national OCS program to include OCS heart technology in 2022. We're expecting to see early commercial traction starting in Q4 of this year, which should lead to tangible growth in 2022. The expected DCD heart PMA approval in the second half of 2022 will be an additional catalyst for our OCS heart growth next year. Now let me turn into the DBD and DCD liver FDA approval. We are also extremely pleased with our FDA approved label for the OCS liver system, which gives us access to the entire liver transplant market from both DBD and DCD donors. The go-to market strategy for liver is identical to our heart strategy. We are also prioritizing our OCS liver centers, expanding into a pipeline of new centers, and we are expanding our national OCS program to add the OCS liver technology in early 2022. Like OCS heart, we are experiencing early positive commercial momentum with OCS liver, and expecting to see early traction starting in Q4 2021, which should lead to tangible growth into 2022. On the national OCS program, we have expanded our regional presence into nine OPO regions, adding Northern California and San Diego's OPOs in Q3. We are on track to meet the target goal of 10 regions before year end. Importantly, Now that we have all three organs approved by FDA, we're expanding the national OCS program to include OCS heart and liver in early 2022. Meanwhile, we're continuing to build the necessary infrastructure and resources to ensure the long-term success of this important program. We expect this to continue throughout 2022. The next FDA initiative is OCS heart DCD indications. As we announced last week, we are thrilled by the top line results from our US randomized heart DCD trial. The use of the OCS heart to resuscitate, preserve, and assess DCD donor hearts resulted in a fairly high utilization rate of 89%. And clinical outcomes or post-transplant clinical outcomes that met or exceeded the very high bar of comparing it to U.S. standard criteria DBD heart transplant outcomes. The latter is considered to be the best in the world. We have already filed a PMA supplement last week and expect PMA approval of our DCD heart indication in 2022. Now, let me finish with a summary of our expectation and thoughts for the remainder of this year, 2021, and into next year, 2022. The OCS technology is now the only FDA approved extracorporeal perfusion system for lung, heart, and liver transplant across broad clinical indications. We fully plan to leverage this unique position to reach a tremendous inflection point on our growth trajectory starting in 2022. The early commercial signs from heart and liver are highly encouraging, and we are looking forward to delivering tangible results to dispel any lingering doubts about our ability to execute our commercial plan for the OCS in the United States. We are extremely confident in our ability to drive significant growth for transmedics business, leveraging all three FDA approved OCS technologies and transplant indications. COVID and any new variants will always disproportionately negatively impact lung transplantation compared to heart and liver. Today, our business is more resilient given that we are now commercial with both heart and liver technologies and not only relying on the lung indication for commercial growth. Finally, we expect Q4 revenue to be in the range of $7 to $8 million as we refocus the organization on our commercial efforts and begin to see initial contribution from OCS heart and liver commercial revenues. We intend to be in a position to provide full year 2022 revenue guidance during our next earnings call. With that, I will turn the call to Stephen Gordon, our CFO, to review the detailed financial results for the quarter and the full year.