Allurion Technologies, Inc.

Hello, and thank you for standing by. My name is Mark, and I will be your conference operator today. At this time, I would like to welcome everyone to the Allurion third quarter earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, seem to press star, then the number one on your telephone keypad. And to withdraw your question, press star one again. Thank you. Now I would like to turn the call over to Tara Brady. Please go ahead.

Good morning and thank you for joining us. Earlier today, Illurion Technologies Inc. issued a press release announcing financial results for the quarter ended September 30th, 2025 and provided a business update. You can access a copy of the announcement on the company's website at investors.illurion.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 meaning of federal securities 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 filings, including our annual report on our Form 10-K filed on March 27, 2025, as amended by Amendment No. 1, thereto filed on August 19, 2025. Our SEC filings can be found through our company website at investors.allurion.com or the SEC's website. Investors are cautioned not to place undue reliance on such forward-looking statements, and Allurion undertakes no obligation to publicly update or release any revisions on these forward-looking statements. In addition to the company's GAAP results, management will also provide a supplementary result on a non-GAAP basis. Please refer to the press release issued today in the accompanying supplementary financial data tables for a detailed reconciliation of GAAP and non-GAAP results, which can be accessed from the investor relations section of the company's website. Please note that this conference call is being recorded and will be available for audio replay on our website under the events and presentation section on our investor relations page shortly after the conclusion of this call. And with that, I will turn it over to Shantanu.

Good morning and as always, thank you for joining us today. Before discussing our third quarter results, I would like to begin by sharing what we believe are several exciting updates regarding the FDA approval process for the Illurion Smart Capsule. As you may recall, in June we submitted the fourth and final module of our PMA submission to the FDA. Since June, we have passed several critical milestones on our way to a potential FDA approval. In July, FDA completed its acceptance and filing reviews, and we entered the substantive review phase. In August, we successfully passed our pre-approval inspection with zero findings. The pre-approval inspection is designed to assess a company's systems, methods, and procedures to ensure that the quality management system is effectively established. The inspection covered compliance with regulatory requirements, process quality, and documentation standards. There were no observations raised and no Form 483 issued. In October, the company underwent a bioresearch monitoring, or BIMO, inspection. The BIMO inspection is designed to assess a company's clinical trial systems, methods, and procedures to ensure data integrity. Again, there were no observations raised and no Form 483 was issued. In October, we held our Day 100 meeting with FDA, and we were quite pleased with the outcome. After reviewing our PMA submission, FDA did not request any additional human clinical data. We believe this is a very positive sign that we are entering the final stages of the review process. We believe passing these inspections with no observations and completing the Day 100 meeting in this manner are major milestones for Illurion on our path toward FDA approval, are testaments to our commitment to upholding the highest quality standards, and are indicative of our readiness to serve the U.S. market. In light of these developments, we have begun to advance our own launch preparations internally and intend to share further updates on upcoming calls. Shifting now to the third quarter, revenue was $2.7 million, reflecting the restructuring we conducted in the third quarter to refocus our efforts on accounts and distributors who promote metabolically healthy weight loss as part of a comprehensive obesity management strategy That includes combination use of the Illurion program with low-dose GLP-1s. We were pleased with our performance in the third quarter, despite the restructuring that we conducted in August and the seasonality we often observe due to the summer months. In my recent conversations with our customers, it is becoming clear that GLP-1 discontinuation can be a rich source of new patients for Illurion. Some customers have indicated that half of their Lurion patients have previously tried a GLP-1, validating our hypothesis that by focusing on accounts that offer multiple modalities of care, we can have access to a steady supply of patients. Even among clinics that offer exceptional follow-up to their patients who are taking GLP-1s, over half of these patients churn after one year. As a result, we continue to believe that the pivot we executed last quarter will lead to long-term growth and refinement of the strategy that we could utilize out of the gate in the U.S. market, especially if GLP-1 prices continue to drop in the future. Operating expenses were $10.9 million, a decrease in expense of 29% compared to the prior year. Operating loss was $9.6 million and narrowed by 22% compared to prior year. Adjusted operating expenses were $8.4 million, a decrease in expense of 42% compared to the prior year. Adjusted net operating loss was $6.9 million and narrowed by 39% compared to the prior year. These improvements reflect the improved efficiencies we have been able to gain from the restructurings we have conducted over the past year. We expect our new strategy to continue to bear fruit in the fourth quarter as we onboard new distributors who meet our criteria, and we have been encouraged by the results we have already seen in quarter so far. As we announced previously, we also plan to restructure our balance sheet and are on a path to being debt free. We have entered into a transaction to exchange all outstanding debt for convertible preferred equity and concurrently announced a private placement financing that strengthens our financial position. As we pursue FDA approval and plan a U.S. launch of the Illurion Smart Capsule, we wanted to have a clear path to being debt-free, and this transaction provides that path. The private placement further strengthens our balance sheet, helping to position us to achieve future catalysts, and we were very pleased to have participation from key existing stockholders and our strategic partner who has deep expertise in obesity. With this stronger balance sheet, I believe Illurion is better positioned to increase value for shareholders in the short and long term. I would like to now turn to the other two aspects of our strategy that we discussed on our last call, namely retooling our R&D pipeline and manufacturing capabilities in collaboration with our strategic partner and bolstering our clinical pipeline with additional data on combination therapy. We are pleased to report that we are exploring the development of a drug-eluting balloon in collaboration with our strategic partner. While this is a long-term project, the potential could be massive. First, eluting GLP-1 medications in a controlled release manner could be a game changer for obesity therapy. Delivering GLP-1s through an intragastric balloon directly addresses the adherence challenges of GLP-1 use, which we believe will become even more apparent with once-daily pills. while directly combining two independent mechanisms of action into a single therapy. Such an innovation could be the ideal therapy for the nearly 50% of patients who stop using GLP-1s before achieving any clinical benefit. Second, and perhaps more importantly, the drug-eluting balloon could become a platform to deliver a wide array of medications, supplements, and microbiome enhancers that are important for gut health and the treatment of chronic gastrointestinal diseases. We believe this project also dovetails nicely with our intention to create a longer-lasting device that remains in the stomach beyond four months. We have also now begun process validation of a new R&D and manufacturing line in collaboration with our strategic partner. This line has the potential to expand our current capacity, reduce costs, and accelerate the implementation of design changes in the future. Regarding our clinical pipeline, we have completed submissions of the combination therapy protocol to the institutional review boards, or IRBs, for approval, fielded questions from the IRBs, and made the necessary changes to the protocol. We believe that the protocol we are testing in this study, where patients will receive the Ovarian Smart Capsule, start on 0.25 milligrams of semaglutide at the end of balloon therapy, and scale up, if needed, to 1.0 milligrams of semaglutide over the subsequent eight months, directly addresses the issues related to high doses of GLP-1s and provides a compelling future clinical pathway for the U.S. market. I will now turn the call over to Tara Brady, our Interim Chief Financial Officer. Tara?