ViewRay, Inc.

Ladies and gentlemen, thank you for standing by and welcome to the V-Ray Q3 2021 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 the session, you need to press star 1 on your telephone. If you require any other assistance, please press star 0. I would now like to turn the call over to your host, Cassie Marhar. You may begin.

Thank you, Operator. Good afternoon, everyone, and welcome to V-Ray's third quarter 2021 financial results conference call. Joining me today are Scott Drake, our President and Chief Executive Officer, and Zach Stassen, our Chief Financial Officer. Earlier today, V-Ray issued a press release and presentation for today's call. The presentation can be viewed live on our webcast or downloaded from the Financial Events and Webinars portion of our site at www.investors.vray.com. Today's call is being broadcast and webcast live, and a replay will be available on our website for 14 days. Before we begin, I would like to caution listeners that comments made by management during this call may include forward-looking statements within the meaning of federal securities laws. These statements involve material risks and uncertainties, and actual results could differ from those projected in any forward-looking statement due to numerous factors. For a description of these risks and uncertainties, please see V-Ray's annual report on Form 10-K for the fiscal year ended December 31, 2020, and its quarterly reports on Form 10-Q as updated periodically with the company's other SEC filings. Furthermore, the content of this conference call contains time-sensitive information accurate only as of today, November 4th, 2021. V-Ray undertakes no obligation to revise or otherwise update any statements to reflect events or circumstances after the date of this call. I will now turn the call over to Scott.

Thank you, Cassie. Good afternoon, everyone, and welcome to our Q3 call. Today we will begin with key patient metrics, then discuss our third quarter results and recent events. We'll share exciting progress in our clinical and innovation pipelines. Zach will cover our financial results, and then we look forward to answering your questions. If you're not on the webcast, I'll be referring to slides from the presentation on our investor relations site. Turning to slide three. Our mission is to treat and prove what others can't. We now have 46 Meridian systems installed and over 50 in backlog. About 16,000 patients have been treated on Meridian, thousands of them with clinically reported outcomes that are consistent and compelling. Clinical curiosity on our system is remarkable. Our customers have initiated over 60 clinical trials. This growing body of data is vital to our efforts to change and improve the paradigm of care. Let's begin with our Q3 results on slide four. We continue to have solid financial performance in 2021. This quarter we delivered another seven Meridian orders versus four in Q3 2020. We have received more orders in the first nine months of 2021 than all 12 months in 2020. Our backlog grew $56 million, or 24% over prior year, and now stands at $295 million. Revenue was 19 million for the quarter, based primarily on three revenue units. Total gross margin for the quarter was 10%, an increase of 2,100 basis points over prior year. All of this growth was achieved while keeping operating expenses roughly flat. Finally, from a cash perspective, we used approximately $17 million in the quarter and ended with $150 million of cash on hand. Beyond financial results, we continue solid execution on our clinical, innovation, and commercial pipelines. Turning to slide five, it's important to always anchor on two critical customer desires. First, the number one thing our customers want is meaningful clinical data. And second, they're very clear about how they define clinical success. They want to deliver an ablative dose with tight margins, no implants, in five or fewer fractions, and low to no grade three or higher toxicity. These elements represent the critical Meridian 5. Meridian continues to drive the only meaningful body of work that meets these criteria. Customer input has shaped our clinical pipeline and goals, which are twofold. First, to expand the utilization of Meridian Smart, and second, to become frontline therapy. The cycle of more clinical proof leading to more therapy adoption is greatly benefiting our customers' cancer programs and patient care. Turning to slide six. Last week we conducted a webinar with two key opinion leaders who provided insights on Meridian's value in both tough to treat and more ubiquitous cancers. Our goal in tough to treat cancers is to maximize local control and survival while minimizing grade three or higher toxicity. Dr. Michael Chung presented yet another compelling data set in pancreatic cancer. 148 patients were treated in a multicenter prospective study. Median survival was 26 months for Meridian patients, which compares favorably to 12 to 15-month survival, which is commonly delivered with conventional therapy. Two-year survival was 53% on Meridian versus about 20% commonly seen with conventional technology. These data are consistent with what's been demonstrated on Meridian across customer sites. Excellent survival and local control with minimal levels of side effects. On the next slide, Dr. Nagar highlighted the incredible results he delivers in prostate cancer and the upcoming data we eagerly anticipate. In more ubiquitous cancers like prostate, we strive to prove critical quality of life value Dr. Nagar highlighted a series of groundbreaking trials that are designed to prove the value of Meridian. First, the MIRAGE trial is designed to prove that Meridian delivers a 50% or greater reduction in grade two toxicity as compared to conventional radiation therapy. MIRAGE is a phase three randomized control trial and, if successful, represents a landmark event for Bure and prostate patients. Second, the SIMITAR trial is designed to prove that five-fraction meridian SBRT can safely be delivered post-prostatectomy versus the four to six weeks of treatment on conventional technology, another needle-moving trial. Finally, SHORTER, a phase two randomized control trial, and FORT are designed to prove first that five-fraction therapy is as safe and effective as 20 fractions, and second, The Ford trial is designed to prove that we can take five fractions down to just two. Dr. Nogger stressed that this clinical value is translating directly to strategic and economic value for Cornell, with a four-fold increase in their prostate volumes since the inception of Meridian. The aggregate effect of these trials has the opportunity to demonstrate the outstanding safety profile of Meridian SBRT versus conventional therapy and holds the promise for two fraction therapy to be a viable, non-invasive, no catheter alternative to surgery. Turning to slide eight. To summarize on the clinical front, it's important to highlight the depth and breadth of work our customers are doing. They have over 60 trials underway. They're studying dozens of cancer types. They're demonstrating value in the toughest to treat and ubiquitous cancers alike. They're experimenting with cutting edge things like single fraction therapy in a half a dozen tough to treat cancers. Everything from phase one feasibility studies to phase three randomized control trials. According to key opinion leaders, there's nothing else like it in the industry. Slide nine highlights the recent commercial activity at Astro last week. It was great to be back with customers. ASTRO afforded us the opportunity to highlight recent clinical data and our 510 filing. The customer presence and response was terrific. The excitement was palpable, and we cannot wait for imminent clinical data releases and the launch of our newest innovations. Speaking of which, moving to slide 10, on the innovation front, our 510 was recently accepted for review by the FDA on the newest generation of Meridian features focused on enhancing on-table adaptive workflow efficiency and expanding clinical utility. Advancements include features such as new MRI imaging sequences, automated workflow steps, on-table auto-contouring tools, multiplanar tissue tracking with automated beam gating, and the ability for clinicians to work in parallel throughout the workflow. The submission also includes a new brain treatment package and the integration of real-time patient feedback display. These elements are the highest priority items for our customers and prospective customers. Turning to slide 11, momentum in our clinical and innovation pipelines accrue to commercial efforts. We work hard to identify the clinical proof and innovations that really move the needle for our customers. With that clear understanding, we allocate capital and energy to deliver on exactly what our customers desire. This process has led to more and more customers purchasing incremental Meridian systems, an important sign that changing and improving the paradigm of care is actively underway. I will now turn it over to Zach to share our financial results.