Viveve Medical, Inc.

Good afternoon and welcome to the VIVI First Quarter 2021 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. After today's prepared remarks, there will be a brief question and answer session. Please note this event is being recorded. I will now turn the call over to Jeannie Swindle, the Senior Director of Corporate Communications. Please go ahead.

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 of 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 statement. 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. Speaking on today's call will be Scott Durbin, LV's Chief Executive Officer, and Jim Robbins, Senior Vice President of Finance and Administration. I will now turn the call over to Jim.

Thank you, Jeannie. Good afternoon, everyone, and thank you for joining the call today. I will begin today's call with a brief review of our first quarter 2021 financial results. I will then turn the call over to Scott, who will provide a corporate update, and afterwards, we'll open the call to questions. Today, we reported total revenue for the first quarter of $1.5 million from the global sale of eight of these systems and approximately 2,450 consumable treatment tips. As of the end of the first quarter 2021, the company had an installed base of 860 VIV systems worldwide. Total operating expenses for the first quarter decreased to $5.5 million, a reduction from $6 million for the same period last year. The decrease is a result of the company's organizational realignment to focus on our current SUI clinical development program. We ended the quarter in a strong cash position due to the success of our public offering in January, and our lowered operating cash burn at $3.3 million in Q1. Cash and cash equivalents as of March 31st were $28.4 million. Before handing the call to Scott, I will remind Vaviv shareholders on our call this afternoon that Vaviv's recent 2021 Annual Stockholders Meeting was adjourned to June 2nd due to a lack of quorum. We would like to encourage all shareholders of record to please vote. Thanks. I'll now turn the conference call over to Scott.

Thanks, Jim. Good afternoon, everyone. And again, thank you for listening to today's call. I will begin my remarks today to give perspective on the positive financial results and capital position of the company that Jim just reported. Today, we are in a strong financial position as a result of the dedicated efforts of the entire Vaviv organization. achievement of critical milestones in our stress urinary incontinence or SUI clinical development program, and confidence in our ability to execute our SUI strategy to achieve a potential new indication in the United States. With the capital resources to support operations through the end of 2022, we plan to continue our strategic focus in the following core areas. Number one, advancing our currently underway pursuit trial and achieving a positive data readout in the middle of next year. Thereafter, if positive, commercially launching the first FDA-approved patent-protected endovaginal office-based treatment for urethral hypermobility to improve SUI in women. Secondly, focusing on our commercial and market development efforts in the United States and Asia Pacific regions through the expansion of our installed base targeting urogynecology, urology, and gynecology core specialties. And finally, third, supporting our customers with successful initiatives to continue to drive increased consumable treatment tip utilization and sales. The entire Vaviv organization is committed to these core areas of strategic focus. and successfully achieving critical milestones as we advance our SUI clinical development program toward a potential new indication in the U.S. I'd now like to direct my remarks to our pivotal SUI PURSUIT trial. PURSUIT is a randomized, double-blinded, sham-controlled trial with an intended enrollment of 390 subjects with moderate SUI. This is defined as greater than 10 mLs and up to 50 mLs 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 are receiving our cryogen-cooled monopolar radiofrequency, or CMRF, treatment. while subjects in the control arm are receiving an inert or energy-less sham treatment. The primary efficacy endpoint of the PURSUIT trial is a comparison of the proportion of patients who experience greater than 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 pathway test, the three-day bladder voiding diary, and other behavioral and quality of life questionnaires. Subject safety will also be monitored throughout the study. Launched in late January, pursuit enrollment is ongoing at nearly all 30 study sites. Although a bit slower than we anticipated, enrollment is now accelerating and we expect completion in the third quarter of this year. Importantly, positive 12-month data results from PURSUIT may support a marketing application for a new SUI label in the United States. SUI is a condition that affects an estimated 25 to 30 million women in the United States alone. Based on our estimates, this represents a $10 to $12 billion total available consumable market opportunity with few effective non-invasive treatments that exist today to reduce leakage associated with SUI. As a result, a positive pursuit outcome and FDA approval opens a multi-billion dollar commercial opportunity for Vaviv. On the commercial and market development front, we continue to see steady improvement from the COVID-19-caused challenges endured during the past year by medical practitioners and clinics worldwide. In the U.S. and Asia Pacific, our targeted regions of focus, progress is gradually returning to full operations, patient flow, and elective procedure volumes. We continue to provide high-quality service and support to increase VIV procedures and treatment tip utilization through our dedicated customer care team in the U.S. and distribution partners internationally. As I previously stated, our market development efforts in the U.S. and Asia Pacific are directed towards core specialties of urogynecology, urology, and gynecology. were pleased to report that receptivity for our innovative dual-energy technology is strong and growing. Two successful key opinion leader physician events were recently conducted, one in Beijing, China, with Paragon MedTech, our exclusive distribution partner in that country, and another in the United States. The U.S. event included a select group of female uro- and urogyne physicians who, with VIVV, will launch and grow an influencer network entitled EmpowHer Network. Several of these influencer programs are planned in the coming months, in addition to our relationship-building efforts with key opinionators in urology, urogynecology, and in continence medical societies and associations. Our goal is to increase awareness of and build upon our tradition of scientific rigor and the body of clinical evidence that supports the safety and efficacy of the VIV treatment as we advance our clinical program towards a potential new SUI indication in the U.S. In the first quarter of this year, VIV continued to make significant strides. Our focus through 2021 is to complete pursuit enrollment expand our installed base of Aviv systems in the U.S. and Asia Pacific, targeting core medical specialties, supporting existing customers to drive increased treatment tip utilization and sales, and to continue the operational efficiencies we have achieved, which has lowered our cash burn rate considerably over the past year. Finally, I'd like to thank the tremendous team at Aviv for their extraordinary efforts this quarter, as well as 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.

Thank you. We will now begin the question and answer session. To ask a question, you may press star then one on your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question from the queue, please press star then two. At this time, we will pause momentarily to assemble a roster. Our first question comes from Ben Hainor with AGP. Please go ahead.

Good afternoon, guys. Thanks for taking the questions. First off, congrats on getting it ramped up to nearly all the 30 sites. You mentioned that you expect completion in the third quarter. I think On the Q4 call, you talked about early Q3. I mean, is that still kind of the sense given the recent acceleration, or should we expect mid-Q3 or late Q3? Any color there would be helpful.

Yeah. Hi, Ben. Thanks for joining the call today. I appreciate it. Yeah, just with respect to the trial, you know, enrollment never goes as fast as anybody hopes it does. You know, I think we expected to see enrollment, you know, be a little bit greater through February and March, but, you know, sort of the COVID-19 impact on clinics and sort of the logistics of, you know, clinical trial execution, you know, played a part. And so, We're very encouraged by where we are. A little bit more color, I can tell you that we've got a lot of patients have been screened, and as you know, we have fairly strict inclusion criteria to make sure that we are enrolling in a pivotal trial the most appropriate patient population who is going to have strong outcomes from the treatment. So generally speaking, we're sitting in a good spot today. We see enrollment accelerating now that almost nearly all the 30 sites are fully operational and enrolling and randomizing patients. And so it's a little difficult to predict whether it's going to be early in the third quarter, mid-third quarter, but our hope is certainly in the first half of the third quarter we can complete enrollment.

Okay. Thanks for the call there. That's definitely helpful. And then, you know, just looking at kind of the revenue breakdown, it looks like U.S. revenue was a bit better than we expected. It was up, you know, 30 odd percent. You know, I suppose arguably you could say that there may have been more of a COVID impact in Q1 this year than last year even. So, I mean, is there anything specific on that that you can kind of attribute the performance to? I mean, is it certain regions that are performing well? Is it, you know, kind of across the board? What's the right way to think about that?

Yeah, I think, you know, remember that last year we were, it was prior to the readout of our sexual function trial. That was still a part of the our clinical development program and potential commercial opportunity, we were continuing to target a broad group of specialties. I think as we went through 2020 and began to focus and shift our focus to the clinical development program for SUI and the commercial opportunity around SUI, I think the focus of targeting urogyne and urology and gynecology has paid dividends, particularly following the positive preclinical and clinical data we achieved in SUI last August. And I think that's really what's driving, you know, the positive impact in the U.S., you know, as well. We, you know, we've got a tremendous customer care team who has really, you know, developed best practices for helping clinics and physicians be successful in recruiting patients for treatments. And so, you know, I think that's an element that contributed to the difference in Q1 this year as well.

Okay. That's helpful. Lastly, for me, on the EmpowHer program that you guys are going to initiate here, to the extent that you can kind of talk about it in the kind of current political environment, do you see that female physicians are, on average, more engaged or more receptive to the technology, or is it something that... you know, it's just a, you know, a good thing for the business overall.

You know, I don't want to, I don't want to, you know, sort of make gender characterizations for the position.

I figured it might be a little bit problematic.

Yeah, but let me just say this. I think, you know, the concept was derived by our sales team, you know, certain individuals in our sales team, and it was a tremendous idea. And I'll tell you that It's in its infancy right now. We have had our first event. It was very well attended. And enthusiasm for the opportunity to participate in a sort of female-only physician network, which is focused on stress urinary incontinence for a female population, was incredibly overwhelmingly positive. And so we had our first event. Again, it's in its infancy right now. We have several more events planned. We think it could gain a lot of momentum and is certainly good for business. But it's also, you know, we are a women's health company and, you know, try to do what we can to advocate in that area. And this is, you know, this is a step forward in that regard.

Okay, great. Well, that's it for me. Congrats on the progress, guys.

Thanks, Ben. I appreciate you dialing in today.

Our next question comes from Jeffrey Cohen with Ladenburg Thelman. Please go ahead.

Oh, hi, Scott and Jim and Jeannie. How are you? Good, Jeff. How are you? Hi, Jeff. I'm doing just fine. I'm going to skip any questions on what the current political environment is and we'll go straight to the few that I had. So I'm Firstly, can you talk about the – give us a better sense of the pace of the trial. You gave us some sense about the number of sites and how it looks. Will that kind of accelerate linearly throughout the second and third quarter, or will that accelerate more swiftly?

We think it's going to accelerate sort of linearly. You know, let me give you some perspective there. You know, we've screened 280 subjects. across 25 centers, roughly. And obviously, these numbers change on a daily basis. We have some strict, as I mentioned in the previous response, we have some strict inclusion criteria really aimed at making sure that we have a predominant stress incontinence patient population in this trial. Incredibly important for the ultimate outcome of measuring you know, responders from a pad weight reduction perspective. We don't want a bunch of patients who are predominantly urge incontinence patients. And so, you know, a proportion of those 280 have been randomized and treated today, but now we've got all 30 centers up and enrolling. I'll tell you that just from a, you know, from an interest level perspective, we are doing local social media advertising around all of our sites, and we've seen 3,500 forms be submitted by women who are interested in participating in the trial. So we're confident that the numbers are there. You know, I think it took in the COVID environment a bit longer than we had anticipated early in the first quarter to get up and rolling. But I think we're there now, and I think we'll continue to see sort of randomizations and treatments accelerate as we move through the next couple of months.

Okay, got it. Could you talk about with and if an approval, how that data may play out outside the U.S.? Would it be something that you would, with a clearance here, go for CE and others directly?

Yeah, we will certainly do everything we can to best leverage a positive clinical outcome from pursuit in the United States. And, you know, I don't want to speculate about the possibilities there, but, you know, Health Canada, CE Mark, and other countries may be willing to accept that. you know, that data, particularly on an FDA clearance to allow for an approval in that country. So we believe there's an opportunity to significantly leverage it, but we'll have to go through that process at that time.

Okay. Could you give us a sense of demographic age as far as the current trial and then maybe compare that or contrast that with how you think about the TAM and what that may look like in the U.S. and abroad?

Well, we're focused from a trial perspective. I think the single biggest differentiator there between the TAM and our enrolled population is we are focused on a pre-metapausal patient population for the trial. We did that because it has been our history that's been part of the inclusion criteria of historical effort in SUI, and we didn't want to introduce new variables going into our pivotal. I think that is, you know, the single biggest factor from a type of patient perspective between the trial and the total available market. That being said, I don't believe that's going to limit our opportunity if we have a positive trial outcome and get an FDA clearance for a stress incontinence indication. There's nothing to suggest that our treatment can't be used in a post-menopausal patient who has similar SUI characteristics and severity. So that's the biggest difference.

Okay, got it. And then lastly for me, Jim, on the income statement, can you give us a sense of the R&D line? Does it seem like that's going to kind of peak out in the second quarter or the third quarter? I think we previously thought it would be toward the latter part of the year. Is that going to come a little bit earlier for us?

Yeah, I mean, we expect it to, you know, it's going to peak up. a little bit more in the second quarter, and then it's going to level back down after that. I mean, but so it's not going to be anything too dramatic, but it will peak in the second quarter and then start to level back down in the third quarter and then come back down later in the fourth quarter and then through the next year.

Okay. I got it. That's helpful. Thanks for taking the questions. I appreciate it. Sure. Thanks so much, Jeff. Appreciate your participation.

This concludes our question and answer session, and the conference is also now concluded. Thank you for attending today's presentation. You may now disconnect.