Allurion Technologies, Inc.

and welcome to Ellulian fourth quarter earnings call. Please note that this call is being recorded. After the speaker's prepared remarks, there will be a question and answer session. If you'd like to ask a question during that time, please press star followed by one on your telephone keypad. Thank you.

Good morning, and thank you for joining us. Earlier today, Allurion Technologies Inc. issued a press release announcing financial results for the quarter ended December 31st, 2024, and provided a business update. You can access a copy of the announcement on the company's website at investors.allurion.com. With me on the call today is Shantanu Gaur, Founder and Chief Executive Officer. Before we begin, I would like to inform you that comments mentioned on today's call contain forward-looking statements within the meeting of federal security laws. Actual results may differ materially from those expressed or implied as a result of certain risks and uncertainties. These risks and uncertainties are described in detail in our Securities and Exchange Commission filing, including our quarterly report on Form 10-Q, filed on November 13, 2024. Our SEC filings can be found through our company website at investors.alurion.com or the SEC's website. Investors are cautioned not to place undue reliance on such forward-looking statements and Alurion undertakes no obligation to publicly update or release any revisions to these forward-looking statements. Please note that this conference call is being recorded and will be available for audio replay on our website under the events and presentations section on our investors relations page shortly after the conclusion of this call. Today's press release and supplementary financial data tables have been posted to our website. And with that, I will turn it over to Shantanu.

Good morning, and as always, thank you for joining us today. Before discussing our fourth quarter results and updating you on the business, I would like to begin today by sharing our vision for the future of obesity care. and how we believe Allurion can bring this vision to reality and can have a significant and positive impact for shareholders in 2025 and beyond. While GLP-1s have become a popular first-line weight loss therapy, challenges for them persist in becoming the long-term solution for obesity. 30% of patients on GLP-1s discontinued their medication within the first month, and 50% to 75% discontinued during the first year The adherence obstacle for GLP-1s is caused by three factors, side effects, muscle mass loss, and high costs. And importantly, each of these issues is exacerbated when higher doses are needed to achieve clinically meaningful weight loss, which is the standard path. We believe that combining the Illurion program with low-dose GLP-1s could become a new standard of care for obesity. A combination approach has several advantages. First, At lower doses of GLP-1s, side effects, including muscle mass loss, are mitigated. It is well established that the gastrointestinal side effects of GLP-1s are dose-dependent and that the loss of lean muscle when on GLP-1s alone can be up to 40% of the total weight loss. Thus, a lower dose of GLP-1s can help to limit side effects, loss of lean muscle, and may lead to better adherence. Second, the rapid weight loss achieved through the Illurion balloon, the lifestyle modification strategies offered through the Illurion program, and the remote monitoring through the Illurion virtual care suite are all synergistic with low-dose GLP-1s. Third, from a physiological perspective, the Illurion balloon and GLP-1s are highly synergistic. The Illurion balloon induces satiety, while GLP-1s reduce hunger. This dual action across two different mechanisms of action has shown to lead to greater weight loss when the two are used in conjunction and further opportunities for behavior change as patients learn to control their hunger while feeling full faster. We believe all of these synergies ultimately will lead to long-term weight maintenance and preservation of muscle mass, something we call metabolically healthy weight loss inside Allurion. Strong data have already been generated on such combination use, and it appears to be very promising. A study in 181 patients showed that starting liraglutide, which was a previous generation GLP-1 drug, after the first month of the Allurion balloon can lead to 19% total body weight loss at eight months or four months after the Allurion balloon passes. A double-line randomized controlled study in 115 patients in which patients who received the Allurion balloon and oral semaglutide lost 18% of their total body weight and had improved resolution of type 2 diabetes, hypertension, and obstructive sleep apnea. Initial data in 52 patients treated with the Allurion program and low-dose semaglutide, who lost 20% of their total body weight at eight months, increased lean body mass by 15% and remained fully adherent to their GLP-1 medication. On this point, at an Allurion Academy event in March, I had the opportunity to speak to our physicians in Europe who are using the Allurion balloon. Many of them were bariatric surgeons who have observed a drop in bariatric surgery volume due to the rise of GLP-1s. These physicians are either already using or considering using the balloon in combination with GLP-1s to both deliver better clinical results to their patients but also offer an option to patients that can mimic the effects of bariatric surgery without an invasive procedure. In fact, one physician called the combination of the Allurion balloon with a low-dose GLP-1 a non-surgical sleeve gastrectomy because of the weight loss that can be achieved and the dual effects on both satiety and hunger that mimic what is accomplished in bariatric surgery. We believe there is gold to mine in combination therapy where the Allurion balloon is paired with low-dose GLP-1s and intend to launch additional prospective studies to confirm our initial findings. The trials that we intend to conduct, for which we have already begun to select sites and formalize our protocols, will study the weight loss, muscle mass, and GLP-1 adherence results in patients treated with the Allurion balloon and low-dose GLP-1 therapy. We believe that, assuming these results validate our hypotheses, this clinical trial pipeline could define a new paradigm in obesity care where Allurion will be right at the center. I have deep conviction in this vision for the future and the importance of our clinical pipeline, and I look forward to providing additional updates on future calls. Shifting now to the fourth quarter and full year 2024, we ended the year with clarity and excitement about our path forward in 2025, a year where we expect several rich catalysts. Fourth quarter revenue was $5.6 million and full year revenue was $32.1 million, in line with our pre-announcement in January. Operating expenses in the fourth quarter decreased by 39% compared to the prior year as the restructuring and reorganization we conducted began to bear fruit. Despite these reductions, procedure volumes grew by 4% in 2024, higher than our previously issued guidance, something we believe is driven in part by patients entering the funnel after trying and stopping GLP-1 medications. Our excitement for 2025 stems from a clear plan that we shared on our last call. Our plan is built around five pillars. First, a new commercial plan focused on key geographies with deeper penetration within these geographies and a business-to-business-to-consumer or B2B2C direct sales model versus a direct-to-consumer or DTC marketing model. Second, gaining FDA approval for the Elerion balloon and preparing for U.S. launch. Third, achieving profitability for the ex-U.S. business by the end of 2025. Fourth, scaling our now proven AI product platform and leveraging a variety of business models. And fifth, resuming commercialization in France. In the fourth quarter of 2024 and thus far in the first quarter of 2025, we have made significant progress across many of these fronts. Regarding our new commercial plan, in the fourth quarter, we reorganized our sales and marketing teams, developed hiring plans for our direct markets where we plan on increasing the number of reps, and established new relationships with distributors in key markets. Thus far in the first quarter, we have begun hiring new reps experienced in B2B2C commercial approaches, conducted our first Allurion Academy focused on core customers in direct markets, and shifted the mindset and culture at Allurion to one that prioritizes profitability. We believe momentum is building in the first quarter of 2025 as our new commercial strategy and new commercial team takes hold. As I mentioned on our previous call, we have begun to pilot our new strategy with focus accounts in direct markets. In these accounts, procedure volumes are on track to increase by over 30% in the first quarter of 2025 compared to the fourth quarter of 2024, suggesting that our new plan could lead to significant future growth once rolled out globally. Regarding our pathway to FDA approval, in January, we announced positive top-line results for the Audacity trial that we believe will support the completion of our PMA application in the first half of this year. We have also begun to evaluate various models for a U.S. launch to enable the most efficient utilization of capital. The U.S. represents a massive opportunity for Allurion due to the high rates of obesity and widespread use of GLP-1. With over 40% of adults in the U.S. with obesity, 9% with severe obesity, and wide availability of GLP-1s, we believe the combination approach that I touched on at the beginning of the call could become the standard of care when the Illurion balloon launches in the United States. With the restructuring we completed in the fourth quarter of 2024, we moved Illurion one step closer to being EBITDA positive in 2026. We expect operating expenses to decline by approximately 50% in 2025 compared to 2024 as the cost savings from the restructuring take hold and are expecting revenues of approximately $30 million in 2025. Despite this reduction in operating expenses, we continue to invest in key areas at Illurion that will support our future growth. We expect our sales team to actually grow in 2025 compared to 2024. We also will continue to advance the design of the Allurion balloon by launching our next generation balloon with a smaller capsule, more radio opaque catheter and enhanced filling valve in additional markets and add new features to the Allurion virtual care suite to increase the productivity of our partner clinics. In the first quarter of 2025, we also raised additional capital through financings that provides the company with cash runway into 2026 and through expected FDA approval. With this additional financing in place, we have a strong balance sheet that can lead us through milestones that we believe will create significant value for shareholders. In February, we were pleased to announce that we were cleared to resume sales in France after Ansem, the French regulatory authority, reviewed the changes we made to our advertising, physician training, and patient follow-up programs. In addition to that review, Ansem also performed a bottoms-up review of the Allurion balloon's safety and efficacy profiles. and ultimately concluded that the benefits of our technology outweigh the risks. We are thrilled to be back on the French market and have begun reengaging with clinics so that we can once again serve French patients who are struggling with obesity. I will now turn the call over to Tara Brady, our Interim Chief Financial Officer. Tara?