Artivion, Inc.

Greetings. Welcome to Cryolife third quarter 2019 financial conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. It is now my pleasure to introduce your host. I will now turn the call over to Greg Honachek. Thank you, Greg Honachek. You may now begin.

Thank you. Good afternoon, and thank you for joining the call today. Joining me today from Cryolife's management team are Pat Mackin, CEO, and Ashley Lee, CFO. Before we begin, I'd like to make the following statements to comply with the safe harbor requirements of the Private Securities Litigation Reform Act of 1995. Comments made on this call that look forward in time involve risks and uncertainties and are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The forward-looking statements include statements made as to the company's or management's intentions, hopes, beliefs, expectations or predictions of the future. These forward-looking statements are subject to a number of risks, uncertainties, estimates and assumptions that may cause actual results to differ materially from these forward-looking statements. Additional information concerning certain risks and uncertainties that may impact these forward-looking statements is contained from time to time in the company's SEC filings and in the press release that was issued earlier today. Now I'll turn the call over to CryoWise CEO, Pat Mackin.

Thanks, Greg, and good evening, everyone. Thanks for joining us. Total revenue for the third quarter was $67.9 million, reflecting year-over-year growth of roughly 5% and 6% on a non-GAAP constant currency basis. Reveners were at the midpoint of our revenue guidance that were driven by revenue growth in both our Onyx and Yotech product lines. We also saw inline performance in our tissue processing business. We also executed an exclusive distribution agreement with Endospan, which we believe will provide additional growth in cross-selling opportunities in the future. Demand for our innovative product portfolio remains robust, and we continue to make good progress on the advancement of our product pipeline. Turning first to Yotech. Yotech grew 9% on a year-over-year, non-GAAP constant currency basis. Growth of the quarter was solid, but tempered by continued supply issues. We expect to resolve these supply issues over the next few quarters and anticipate growth trends for our Yotech products to accelerate as Enside, Enya, and Evita Open Neo hit the European market early next year. With respect to Enside, many of these patients are treated with risky, invasive open surgical procedures, which are characterized by lengthy hospitalization periods and prolonged recuperation. With our custom-made stent grafts, which can take up to, or they can be treated with our custom-made stent grafts, which can take up to 90 days to manufacture. Ensight is the only off-the-shelf, pre-cannulated thoraco-abdominal stent graft with inner branches that eliminate the waiting period experienced by approximately 70% of patients who would normally receive custom-made stent grafts. The Enya thoracic stent graft system is our next-generation, low-profile solution for patients with aortic disease. This includes both aortic aneurysms and aortic dissections. The Enya delivery system addresses one of the major challenges of the low-profile T-bar devices, which are high-deployment forces. The squeeze-to-release mechanism is simple and gives physicians much more control while treating both simple and challenging anatomies. It's one of the most versatile grafts on the market and is the perfect complement to our VitaOpen Plus hybrid stent graft system, as well as a line of custom-made devices, providing clinicians with a complete portfolio of products. Finally, regarding the VitaOpen Neo, which is our next-generation frozen elephant trunk, we expect to receive CE mark in the first quarter of 2020. Switching gears to Onyx. Revenue increased 12% on a non-GAAP constant currency basis, driven by the strength from our aortic valves, which were up 11% in the quarter. Revenues in North America grew 10%, while our OUS markets grew 14%. We expect Onyx revenue growth to remain in the high single or low double digits as we continue to take market share. We also expect to receive in the fourth quarter an IND approval to begin our PROACT-10A trial, a prospective randomized clinical trial to determine if patients with an onyx aortic valve can be maintained safely and effectively on Eliquis versus Warfarin. We believe the commencement of the PROACT-10A trial alone will drive additional market awareness from physicians and healthcare providers regarding the proven clinical benefits of the onyx aortic valve. Based on recent discussions with the FDA, we now expect the PROACT-10A trial will consist of approximately 1,000 patients at up to 60 sites in North America and potentially some sites in Europe. This is down from our previous estimate of up to 1,200 patients. As the only mechanical valve with FDA approval for use with reduced amounts of warfarin, the onyx aortic valve reduces patient bleeding by over 60% compared to competitive mechanical valves. If the PROACT-10A trial is successful in proving that the onyx aortic valve recipients can be maintained effectively on Eloquus, we believe Cryolite will become the market share leader in the mechanical valve market, while simultaneously taking share from existing bioprosthetic aortic valves. Such an indication has significant potential to accelerate growth in our onyx business. Moving to our tissue business, we continue to see inline performance in our tissue business, which is up 5%, led by our cardiac tissue valve business, which delivered year-over-year 19% growth. We continue to experience strong demand for our pulmonary tissue valves, which we believe stems from a renaissance in the Ross procedure, as well as improved availability of our pediatric heart valves. We are confident these tailwinds will continue to drive growth in our cardiac tissue business. BioBoot continues to deliver solid results, increased 1% on a non-gap constant courtesy basis in the quarter. We submitted our application for regulatory approval to the Chinese FDA earlier this year and look forward to sharing updates on the process when available. Regarding U.S. per clot, The trial is now complete and we remain on track to submit our PMA for the FDA in early 2020. Lastly, we recently announced our EU distribution agreement with Endospan, an Israeli-based privately held developer of the Nexus device, which is the only endovascular stent graft system currently CE marked for the repair of both aneurysms and dissections in the aortic arch. As part of our collaboration with Endospan, We've become the exclusive distributor for the Nexus stent graft system in Europe. Additionally, we extended a loan of $5 million and a commitment to loan up to an additional $10 million to Endospan to support Endospan's U.S. clinical trial for Nexus and its commercialization of Nexus in the EU. As a reminder, there are approximately 36,000 procedures worldwide that are treatable with Nexus and Evita OpenNeo, which places a total addressable market opportunity at just over $1 billion. We estimate that approximately 75% of the worldwide market, or just over 800 million, can be addressed through an endovascular approach with Nexus. And approximately 25% of the worldwide market, or just over $250 million, can be addressed in an open surgical approach with the Evita OpenNeo. In Europe alone, there are approximately 7,000 ARCH procedures done annually, placing the overall EU market for aortic ARCH repair products at over $200 million. where the endovascular portion of the market is about 150 million. We expect our market share to grow as Nexus' unique value proposition affords our commercial European team with access to current competitive accounts, expanding our reach across the European market. Our current European commercial infrastructure, which includes an 88-person direct sales team, provides for significant cross-selling opportunities between Nexus, and our Yotech portfolio, given Nexus's synergies with our highly differentiated surgical hybrid graft, the Evita Open Neo. We will leverage this infrastructure to not only drive adoption of Nexus in Europe, but also to drive further market penetration of our branch technologies, as well as our other competitive Yotech product offerings. Over the coming months, we will focus on training sales reps, as well as surgeons on Nexus. We will target the top 50 plus centers performing these sophisticated and complex procedures. While we expect to commence cases in the fourth quarter, we do not anticipate material contributions from Nexus this year. As the most comprehensive and technologically advanced aortic stent graft portfolio, our Yochek products address the entire aorta from the aortic valve to the iliac arteries. We believe the addition of Nexus to Vita Open Neo, Enya, and Enside along with the rest of our aero repair products, positioned us to drive accelerating revenue growth in Europe through 2023 and beyond. Before I turn the call over to Ashley, I'd like to take a few minutes to talk about our fourth quarter guidance. As a reminder, over 40% of our revenue is derived from customers based outside of the U.S., and as a result, we are affected by fluctuations in currency exchange rates. At the end of the third quarter, our year-to-date gap and non-gap growth rates were 6% and 8% respectively, a 200 basis point difference. In addition to these currency headwinds, we also experienced an issue with a sole supplier of our TMR handpieces, and as a result, we will not have TMR handpieces during the fourth quarter and possibly longer. We therefore are updating our outlook for 2019 with expectations for revenue now in the range of $276.5 I will now turn the call over to Ashley for a detailed review of our third quarter results and our financial outlook. Ashley.