Viveve Medical, Inc.

Good afternoon and welcome to the Verveve Full Year 2020 Financial Results and Corporate Update Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. Speaking today are Verveve's Chief Executive Officer, Scott Durbin, and Jeanne Swindle, Senior Director of Corporate Communications. After today's prepared remarks, there will be a brief question and answer session. Please note that this event is being recorded. I will now turn the call over to Jeanne Swindle.

Jeanne Swindle Thank you, operator, and welcome, everyone. Before we begin, we would like to remind you that this conference call may contain forward-looking statements regarding future events or the future financial performance of the company. Any statement that is not a statement of historical fact is a forward-looking statement. This includes remarks about the corporation's projections, expectations, plans, beliefs, and prospects. These statements are based on judgments and analysis as to the date of this conference call and are subject to numerous important risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. These risks and uncertainties are described more fully in the company's annual report on Form 10-K and other filings made with the SEC, which are also available on the company's website. Also, any forward-looking statements represent management's view only as of the date of this conference call and should not be relied upon as representing management's views as of any subsequent date. I will now turn the call over to Scott Durbin, FVIV's Chief Executive Officer.

Scott Durbin Thank you, Jeanne. Good afternoon, everyone. We really appreciate you joining us today. I'd like to start the call this afternoon with a short strategic business summary, followed by a high level review of our 2020 full year financial results. I'll then remark on our stress urinary incontinence clinical development program and the pivotal pursuit trial that is underway in the United States. Before opening the call to questions, I will close with our plans to achieve an SUI indication and the enormous commercial opportunity it represents. 2020 was a challenging yet transformational year for Vaviv as a result of the dedicated efforts of the entire company and the achievement of critical milestones for our SUI program. Vaviv successfully pivoted in 2020, becoming a urogynecology company with a focus on SUI and launched our Pivotal US Pursuit Trial. As we move forward over the next 18 to 24 months, our core areas of strategic focus will be to first continue to advance the clinical development program in SUI by successfully executing the currently underway pursuit trial and achieving a positive data readout. Thereafter, if positive, to commercially launch the first FDA-approved, patent-protected, endovaginal office-based treatment for urethral hypermobility to improve SUI in women. Secondly, continue to focus our commercial efforts on the United States and Asia Pacific regions and expand the installed base of systems throughout the world. Additionally, targeting core specialties of urogynecology, urology, and gynecology. And finally, third, continue to support our customers through our internal customer care team and successful initiatives which continue to drive increased consumable treatment tip utilization and sales. Before I cover our financial results for the year, I'd like to comment qualitatively that after a challenging commercial market in 2020, conditions are improving. Receptivity to new technologies from practices is increasing, patient flow and procedure volumes are improving, and the stagnant and often dormant market we experience, particularly in the U.S., is showing strong signs of improvement in early 2021. Today, we reported total revenue for 2020 of approximately $5.5 million from the global sale of 31 systems And in the U.S., under our recurring revenue model program, an additional 29 systems were placed. As of December 31, 2020, we now have a total installed base of 857 systems worldwide. Additionally, a total of approximately 8,900 disposable treatment tips were sold globally in 2020. Total operating expenses for the year were approximately $18.8 million compared to $31.7 million for 2019. This significant decrease is the result of the company's strategic alignment, along with taking operational measures to lower costs and reduce cash burn as we focus our efforts on our SUI program. On a pro forma basis, we ended the year in a strong cash position. Cash and cash equivalents, including the net proceeds of $25.2 million from the company's January 2021 financing, were approximately $31.7 million. The success of this upsized public offering in January was a testament to the enormous market opportunity for Vaviv's non-invasive, dual energy technology in SUI and underscores the confidence in the company's strategic path, capability to execute, and potential to achieve positive clinical results in our U.S. Pivotal Pursuit Trial. Importantly, this financing provided us with the capital resources to support operations through the end of 2022, including the planned completion of the Pursuit Trial. and as we continue to operate efficiently and at a significantly reduced cash burn rate of $3 to $4 million a quarter. I'd now like to direct my remarks to our Stress Urinary Incontinence Clinical Development Program. Our successful pivot to SUI in 2020 was fostered by many important milestones that were achieved. These include the positive preclinical and SUI feasibility study results reported, positive data that validated our new inert sham treatment tip that produces no tissue nor clinical benefit, FDA approval of a strengthened pursuit trial investigational device exemption, formation of our preeminent clinical advisory board in incontinence, and the issuance of a newly issued U.S. SUI method patent. At this point, I'd like to summarize the condition of SUI and the opportunity it represents for those on the call who may be new to VIVV. SUI is a condition that affects an estimated 25 to 30 million women in the United States alone, and based on our estimates, represents a $10 to $12 billion total available consumable market opportunity. Today, few effective non-invasive treatments exist that reduce leakage associated with SUI. In fact, the current spectrum of therapeutic options for women is limited to physiotherapy at one end of the spectrum, such as Kegel exercises, electrical muscle stimulation, or biofeedback, which are all designed to strengthen the pelvic floor musculature. to the other end of the spectrum in invasive approaches such as bulking agents or sling procedures. Accordingly, there's a large gap in the treatment spectrum that represents a tremendous unmet need and an opportunity for a clinically proven treatment option. We believe Vaviv has the potential to expand this continuum of care. Our non-invasive endovaginal office-based treatment, which can be completed in a physician's office in approximately 45 minutes, may safely and effectively improve urethral hypermobility and significantly reduce leakage for women who suffer from SUI. Moving to an overview of the PURSUIT trial. PURSUIT is a randomized, double-blinded, sham-controlled trial with an intended enrollment of 390 subjects with moderate SUI, defined as greater than 10 milliliters up to 50 milliliters of urine leakage on the one-hour Padway test at up to 30 study sites in the United States. Randomized in a two-to-one ratio, subjects in the active treatment arm will receive our cryogen-cooled monopolar radiofrequency, or CMRF, treatment, while subjects in the control arm will receive an energy-less or inert sham treatment. And again, I want to highlight that the sham treatment administered in the control group for the study is a clinically inert or true sham treatment. The primary efficacy endpoint of the PURSUIT trial is a comparison of the proportion of patients who experience greater than a 50% reduction in urine linkage compared to baseline on the standardized and objective one-hour Padway test at 12 months post-treatment versus the inert sham procedure. The study also includes several secondary endpoints also assessed using the one-hour Padway test, the three-day bladder voiding diary, and other behavioral and quality of life questionnaires. Subject safety will also obviously be monitored throughout the study. I'd like to take this moment to acknowledge the guidance and support from the many experts who make up our newly formed Clinical Advisory Board and who contributed to our strengthened and enhanced study design. Currently, patient enrollment is underway and is going well. and we continue to expect full 390 patient enrollment by the end of the second quarter or very early in the third quarter of this year. And again, positive data results from PURSUIT may support a marketing application for a new SUI label in the United States and abroad and open a multi-billion dollar commercial opportunity for Vaviv. Today, Vaviv is in a strong position to successfully execute our core strategies over the next 18 to 24 months in advance of and in preparation for a potential FDA approval of an SUI indication in the U.S. In 2021, we now have the capital and resources to execute this strategy, a lowered cash burn rate, a newly designed and highly powered pivotal SUI trial underway in the United States, and a shifted commercial priority to the two largest markets in the world, the United States and Asia Pacific region, with a focus on expanding our core market installed base and procedure volumes, all in a 2021 commercial environment that has begun to significantly improve. I thank the talented and dedicated team at Vaviv for their tenacity throughout 2020, which has provided us with this tremendous opportunity to potentially expand the SUI continuum of care with a non-invasive endovaginal treatment option for millions of women who suffer from SUI. Again, I'd like to thank everyone for participating in our conference call today. Operator, this concludes our prepared remarks and we can open the call to any questions. Thank you.