Minerva Surgical, Inc.

Good day and thank you for standing by. Welcome to the Minerva Surgical second quarter 2022 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. Please be advised that today's conference is being recorded. To ask a question, simply press star 1-1 on your telephone keypad. I would now like to hand the conference over to your speaker today, Carolyn Corner with Investor Relations. Please go ahead. Thank you, Operator.

Welcome to Minerva's second quarter 2022 earnings call. Joining me on today's call are Dave Clapper, President and Chief Executive Officer, and Joel Young, Chief Financial Officer. This call will provide forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements made on this call that do not relate to matters of historical fact should be considered forward-looking statements, including statements regarding the markets in which Minerva Surgical operates, trends and expectations for Minerva's products and technology, trends and demands for Minerva's products, Minerva's expected financial performance, expenses, and position in the market, and outlook for fiscal year 2022, and the impact of COVID-19 and its variance on Minerva operations and Minerva's customers' operations. These statements are neither promises nor guarantees and involve known and unknown risks and uncertainties that could cause actual results, performance, or achievements to differ materially from any results, performance, or achievements expressed or implied by the forward-looking statements. Please review Minerva's most recent filings with SEC, particularly the risk factors described in Minerva's quarterly report on Form 10-Q for the quarter ended June 30, 2022, which was filed on August 9, 2022, for additional information. Any forward-looking statements provided during this call, including projections for future performance, are based on management's expectations as of today. Minerva undertakes no obligation to update these statements to reflect events that occur or circumstances that exist for today, except as required by applicable law. Minerva's press release, the second quarter 2022 results, is available on Minerva's website, www.minervasurgical.com, under the investor section, and includes additional details about Minerva's financial results. Minerva's website also has the latest SEC filings, which you are encouraged to review. A recording of today's call will be available on Minerva's website by 5 p.m. Pacific time today. With that, I will hand the call over to Dave.

Thank you, Caroline. And thanks to all of you for joining us on our second quarter earnings call. Minerva Surgical is solely focused on women's uterine health. Our line of four products, Minerva ES, Symphion, Genesis HTA, and Receptor address abnormal uterine bleeding, or AUB. AUB is caused by either a dysfunctional lining of the uterus called the endometrium, or by abnormal intrauterine tissue structures called fibroids and polyps. Minerva has a complete line of products for either the ablation of the endometrium or the resection of fibroids and polyps. As I've mentioned on previous calls, AUB affects one in three women, which equates to 18 million women in the U.S. between the ages of 25 and 50. Importantly, AUB is the leading cause of hysterectomies. Next to C-sections, hysterectomy is the highest volume women's surgical procedure in the U.S. with approximately 500,000 hysterectomies performed each year. It is often underappreciated that hysterectomy is a major surgery. In most cases, it requires general anesthesia, an overnight stay in the hospital, a four to six week recovery time, and a mortality rate directly attributed to the surgery of up to one and a half patients per 1,000 hysterectomies. Our mission at Minerva is to eliminate the unnecessary hysterectomies performed for AUB. Our flagship product, the Minerva ES Endometrial Ablation System, received FDA premarket approval in July of 2015. and is indicated for women with abnormal uterine bleeding for whom childbearing is complete. The Minerva ES ablates the endometrium to significantly reduce or eliminate heavy menstrual bleeding. Our Genesis HTA system performs a similar procedure to the Minerva ES, but uses hot saline as the energy source for the ablation, providing the gynecologist with an instrument that is better suited for irregular shaped uterine anatomies. Our Symphion® uterine tissue resection system is indicated for resecting fibroids and polyps. Fibroids are a significant cause of pain and excessive bleeding and are another leading cause of hysterectomies. And finally, resector addresses polyp removal and is generally used in office settings to round out our portfolio of products. Now let's turn to our performance in the second quarter. We reported revenues of $13 million in the second quarter of 2022 versus $10.9 million in the first quarter of 2022 and $14.1 million in the same period for 2021. While we were disappointed with the year-over-year revenue decline, we were very encouraged by recent positive trends in Symphion sales. The ablation markets have experienced challenges that we believe are due to lingering impacts from COVID, hospital access, nursing shortages, and patient reticence to seek out elective treatments. However, indications are that the tissue resection markets are returning from their low points. Our Symtheon system saw 20% growth over last year's second quarter. We continue to make progress with new account evaluations and trials, and believe that as the macro environment improves, we are well positioned to continue this growth. In fact, overall, we have added 238 new accounts during the past 12 months, approximately 40% of which were new Symfion accounts. In spite of this continued progress with new accounts, We are seeing the lingering impact of COVID on both limiting patients who are seeking treatment, as well as hospital staffing challenges and Salesforce access. But we believe we are seeing the light at the end of the tunnel, particularly with Symfion. We know, and the data underscores, that Minerva ES is the best product on the market. Our FDA approved efficacy results which come from our clinical trials conducted for FDA approval, showed that our treatment success rate, i.e., reducing a woman's excessive menstrual bleeding to a normal or less level, was 93%. This compares to our biggest competitor's NovoSure product FDA approved success rate of only 77.7%. And in that same clinical trial for FDA approval, The Minerva product treatment amenorrhea rate, which is the complete elimination of a woman's menstrual bleeding, was 72%, which is double the 36% zero bleeding rate from our biggest competitor's NovaSure treatment. Finally, the rate of hysterectomies experienced in our clinical trial during the three-year follow-up period was less than 1%. compared to our biggest competitor's NovaSure hysterectomy rate over that same three-year period of 6.3%. In summary, the FDA approved our Minerva ES endometrial ablation labeling to read that when compared to the efficacy results of the group of five previously FDA-approved endometrial ablation devices, the objective performance criteria, or OPC, the Minerva ES generated statistically significantly greater efficacy. We believe these are compelling statistics and data, and when doctors and patients are given the facts, uncolored by our major competitors' marketing claims supplied to physicians for their practice websites, they will choose to select the best device for the treatment. Let's lay out the facts on what we have done to ensure women and their physicians are given the correct information. Several years ago, we lodged a formal complaint with the FDA and asked that they require WholeLogic immediately correct the false efficacy claims on their corporate websites and to officially recall and replace all the NovoSure website modules and images that WholeLogic sent to thousands of physicians and healthcare providers across the U.S. The misleading claim, which today still appears on physician websites, inflates the FDA-approved 77.7% NovoSure treatment success rate by saying, in quotes, for 90% of women, menstrual bleeding is dramatically reduced or stopped altogether. Following our complaint to the FDA, the U.S. corporate website of our competitor was changed to reflect the more accurate efficacy data. However, their ex-U.S. corporate websites continue to this day to erroneously promote inflated efficacy claims which were not approved by the FDA. the misleading 90% efficacy claims still appear on Hologic's Canadian NovoSure website at www.novosure.ca. Additionally, the same misleading efficacy data were sent to thousands of healthcare providers across the United States to display on their websites, and they are still displayed today, resulting in physicians and patients using this misleading data as the basis for their treatment decisions. Today's U.S. Hologic NovoSure website has even gone so far as to claim that NovoSure is the gold standard. Again, we have requested that the FDA take steps to correct these claims, but to date have not seen full and satisfactory action to protect women and their physicians from relying on these misleading marketing claims. Because there is no post-treatment diagnostic test to evaluate the efficacy of the endometrial ablation treatments, patients and doctors rely on the medical device companies to provide them with accurate information. Moving on to our tissue resection product, Symfion, sales were a bright spot this past quarter having increased 20% over Q2 of 2021 and 19% over Q1 of 2022 sales. We believe this rate well exceeds market growth, indicating we are successfully taking market share in this important and growing market. The product safety features unique to Symfion and our ability to compete with a full suite of products are beginning to show results. We are actively hiring and training our dedicated women's health sales force. Our field sales force is now comprised of 80 sales territories covering most major metropolitan areas. It takes three to six months for a sales representative to get up to speed, and we are encouraged by our progress and the enthusiasm of our sales team. With a full slate of four products, we continue to gain access to group purchasing organizations and independent delivery networks through new contracts. We are progressing on our national account strategy, and today we are approaching 50% of our current business under contract. I'd now like to turn to our direct-to-consumer digital marketing initiative, which, as I mentioned last quarter, is underway in 10 select markets. With our DTC pilot, we are seeking to educate patients on their AUB treatment options and the clinically proven advantages of Minerva treatments. Initial website traffic is very encouraging, showing early signs of success and increasing overall awareness of treatment options for AUB, as well as connecting patients with treating physicians. With that, I'd like to remind you of our growth drivers. One, completing the expansion of our sales and marketing team. Two, signing complete product line contracts with GPOs and IDNs. Again, almost 50% of our business is now under contract. Three, increasing our installed base of controllers in both new and existing accounts. Four, cross-selling our products to drive new Symphion business in established Minerva accounts and new Minerva ablation business in established Symphion accounts. And five, leveraging our DTC marketing efforts to increase consumer awareness of our products. We have a lot of work ahead of us, but we are very excited to deliver on our mission to treat women with AUB and eliminate unnecessary hysterectomies. With that, I'll hand things over to Joel for our financial results. Joel?