ViewRay, Inc.

Good day, and thank you for standing by. Welcome to the ViewRay third 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. To ask a question during the session, you will need to press star 1-1 on your telephone. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Matt Harrison, Director of Investor Relations. Please go ahead.

Thank you, operator. Good afternoon, everyone, and welcome to ViewRay's third quarter conference call. Joining me today are Scott Drake, our president and chief executive officer, and Zach Stassen, our chief financial officer. Earlier today, ViewRay issued a press release and presentation for today's call. The presentation can be viewed live on our webcast or downloaded from our website. Today's call is being broadcast and webcast live. A replay will be available on our website for 14 days. Before we begin, I would like to remind you that the discussion during this conference call will include forward-looking statements. Facts that could cause actual results to differ materially are discussed in the company's most recent filings with the SEC. I will now turn the call over to Scott.

Thanks, Matt. Good afternoon, everyone, and welcome to our Q3 call. Today, I'll begin with our financial results. Following that, I'll outline recent events, including commercial wins, clinical highlights, China approval, and key takeaways from ASTRO. Zach will go into depth on our financials and provide an update to our 2022 guidance, and we look forward to opening the line to Q&A. In Q3, we added another eight orders highlighted by key wins at MD Anderson, the Houston VA, and SUNY Upstate New York. MD Anderson is one of the premier cancer centers in the world, and they're looking to take their MR Linac program to a new level. We're excited to welcome them to the Meridian family. Houston represents our third VA order, and we're highly motivated to bring the best care possible to our veterans. Genesis Care announced their next two Meridian centers at Birmingham and Guilford in the UK, which brings their total number of orders to six. Our backlog now stands at $370 million, up 26% over prior year, and revenue grew 38%. Another highlight this quarter is gross margin, which came in at roughly 17%, or 700 basis points over prior year. Solid execution from our team puts us in a position to deliver 40% revenue growth for full year 2022 and for a second consecutive year, improve gross margin by 750 basis points with perhaps a bit of upside this year. Cash used in the quarter was about $15 million. Let me reinforce that we're utilizing cash to fuel growth mitigating supply chain risk by advanced purchase of key components, and investing in manufacturing processes and insourcing to improve gross margin. We expect that revenue growth we are seeing in our order book will continue to drive gross margin and operating leverage, and we're confident in our line of sight to break even without tapping equity markets. Turning to slide four, As we've shared many times, our mission is to treat and prove what others can't. Right in line with our mission and following the success of the Smart Pancreas Trial, we announced Lapablate. Lapablate is a phase three, global, multi-center, randomized control trial in locally advanced pancreatic cancer. The trial will compare current standard of care, chemotherapy, to Chemo Plus Meridian Smart Therapy. It's important to note that conventional radiation has failed to prove survival benefit in several pancreatic cancer trials. Headlining these failures is the LAPO7 trial, which examined a similar patient population to the one we're targeting in LAPOBlade. Survival in that trial was about 15 months in the Radiation Plus Chemo arm versus 16 months for chemo alone. Conventional radiation proved no survival benefit. We are in the process of attempting to prove a meaningful survival increase where conventional radiation has failed. We are striving for this proof in both pancreas and central and ultracentral lung in lap ablate and lung star respectively. With success, these trials will expand the addressable market for meridian therapy and provide a deeply valuable solution our customers seek and patients deserve. These clinical trials are critical in further differentiating meridian and accelerating our path of therapy adoption. Dr. Mike Chung states that he and other investigators are, quote, excited to launch the international LAPA blade trial intended to provide randomized evidence that five-fraction meridian SMART substantially prolongs two-year survival versus chemotherapy alone for locally advanced pancreatic cancer. And in doing so, change the paradigm of how this disease is fundamentally treated worldwide, end quote. Treat and prove what others can't, indeed. Turning to slide five, we're excited to announce the Chinese approval of Meridian. China's the second largest and fastest growing LINAC market in the world. China currently has roughly one LINAC per million people, leaving plenty of room to reach the industry recommendation of four LINACs per million. The Healthy China 2030 policy is focused on improving health, life expectancy, and the expansion of healthcare infrastructure. Meridian is well positioned to help address cancer needs in China. We're excited about this opportunity and the prospect of expanding access to the benefits of Meridian therapy. Turning to slide six, Astra was a great show for ViewRay. We took the opportunity to highlight the remarkable clinical data our customers are generating. there was great response to the full 12-month mirage prostate data. Quick punchlines include the fact that the meridian arm cut treatment margins in half, cut treatment volume by about 30%, and cut healthy tissue toxicity by about 60%. Acute toxicity for these patients takes the form of sexual dysfunction and the life-altering effects of incontinence. We are proud and grateful for UCLA taking on a head-to-head randomized control trial. Too often the calling card in this industry is good enough is good enough. Certainly this isn't true if your loved one is on the table. Clinical science will illuminate the path forward and this is our calling card. There was also great feedback regarding the smart pancreas data. This is the first time anyone has proven in a prospective trial the ability to safely deliver an ablative dose in pancreatic cancer. Customers are also very encouraged by the survival signal. As I mentioned, we're building upon the considerable pancreas data our customers have demonstrated as the foundation for Lap Ablate, our phase three randomized control trial. Also at the show, there was a lot of buzz about A3i. Current A3i users shared their stories about both the ease of use and clinical enhancements of these innovations. We are now expanding the launch of A3i and look forward to our global rollout. All of the clinical and innovation enhancements have led to impactful commercial meetings. It's fair to say interest in Meridian is high. Take a step back to see the combined impact of our clinical and innovation pipelines. I'd highlight three points. Number one, three years ago we had single center studies or small data sets reported as posters or brief talks. This year we had two large prospective trials as main session presentations. Number two, these clinical outcomes are energizing the next generation of clinicians. Young, hungry radiation oncologists and physicists are highly motivated to change the field with Meridian data and see this therapy very much as a career-defining opportunity. And number three, our strategy is working. Clinical data is driving demand. One West Coast customer saw a threefold increase in patients treated on Meridian from Q2 of 21 to Q2 of 22, and an East Coast customer increased their prostate program fourfold in the last four years on Meridian with zero marketing dollars. Both customers are preparing for more Meridian systems. I'm proud of our team and pleased with our progress as we pursue our strategy. With that update, I'll turn it over to Zach.