Artivion, Inc.

Greetings and welcome to CryoLife's third quarter 2020 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. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host. I will now turn this call over to Ms. Lynn Lewis. From the Glenn Martin Group, thank you. You may begin.

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 in our 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 those 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 releases issued earlier today. With that, I'll turn the call over to Cryolife CEO, Pat Mackin.

Thanks, Lynn, and good afternoon, everyone. Thanks for joining us. I'm pleased to report that we had a solid third quarter. As trends continue to improve from the first day of the COVID crisis, we attribute our recovery to the critical indications that many of our partners addressed. Our team's efforts have been extraordinary over these past two quarters. They have proven they can supply devices and support procedures, both in person and virtually. They can also employ creative solutions to ensure continued customer service and patient care. I have no doubt that their incredible dedication and resolve have helped save many patients' lives throughout this pandemic. I want to sincerely thank our entire organization for their outstanding performance during these challenging times. Today, I'll provide some color on our Q3 performance, as well as our expectations for the remainder of 2020. Then Ashley Lee, our CFO, will review the third quarter financial results and liquidity in greater detail. I will then make closing remarks and open up the call to your questions. As I will explain later in more detail, through the third quarter, we advanced on a number of our key initiatives and delivered solid results. Our third quarter revenue performance was driven by the fact that the vast majority of our products are using procedures that cannot be postponed at all, or they cannot be delayed for very long. In Q3, we achieved revenues of $65.1 million, which reflects a decrease of 4% versus third quarter 2019. both a GAAP and constant currency basis. If you exclude TMR revenues for the third quarters of 2019 and 2020, total revenues decreased 2% on a constant currency basis. As we saw in the second quarter of this year, throughout the third quarter, we saw improving procedure volume. In fact, revenues in September increased over September 2020 increased over September 2019. These trends corroborate our belief that hospitals and providers have become increasingly adept at managing procedural continuity during the COVID-19 pandemic. As we look to Q4 revenue performance, we were optimistic that we could return to growth versus 2019. In fact, our October 2020 revenue performance was a strong 99% of October 2019. Unfortunately, this pandemic is a fluid situation, and in the past two weeks, we've seen spikes in infection rates in both the U.S. and Europe. and more recently have seen lockdowns in Ireland and the UK as well as other countries in Europe. As a result, we are less optimistic that we'll see the return to growth in Q4. But we do anticipate that we will begin to benefit from recently launched or soon to be launched next-generation duct tape products, AMDS and Nexus, in our continued expansion into Asia Pacific and Latin America, as well as positive news on the regulatory front that should benefit us beginning in 2021. We are particularly optimistic on the outlook for AMDS. This is the world's first ARCH modeling hybrid device used for the treatment of acute type A aortic dissections, which we now own as a result of our acquisition of Osiris Medical back in September. The acquisition of AMDS aligned exceptionally well with our vision to provide the most technologically advanced, simple, and elegant solutions for patients with aortic disease. As we discussed on our call immediately following the Osiris acquisition, AMDS has the potential to reduce complications as well as re-operations associated with acute type A aortic dissections, which should improve patient care and reduce hospital costs. We believe the hemi-arch repair with the AMDS technology added has the potential to become a new standard of care for the treatment of acute type A aortic dissections. So far, we're off to a great start. We posted revenues of approximately $465,000 for the month of October, which was a 295% increase over October of 2019. Regarding our operations, fortunately, nothing has changed since our last update, as we've continued to run at our near capacity across our three manufacturing facilities with few, if any, disruptions, and have continued to avoid any significant supply chain disruptions. At each of our sites, the work from home and safety protocols we implemented earlier this year remain in place, and we believe they've been very effective in minimizing the impact of COVID-19 on our workforce. As mentioned previously, the slowdown in procedures in the past few months has allowed us to continue to improve our YOTIC inventory position. We also remain on track to have a second source sewing supplier by the end of the year, assuming, considering the worsening pandemic conditions in Europe, don't allow or preclude our notified botting for coming in and conducting their inspection. As we look ahead, we remain in a position of strength by continuing to mitigate operational risk, diligently managing our expenses, and strategically investing for growth now and when the pandemic subsides. In fact, we've been able to make significant progress on several strategic initiatives and R&D projects. First, we've made continued progress on our Yotech product launches. Our limited market release for the Avita Open Neo and Enside are progressing very well, and to date we've received very positive customer feedback on those technologies. We also remain on track to initiate a limited market release for Enya this quarter and have already resumed the limited launch of Nexus. We continue to anticipate full market release for all three new Yotech products in early 2021. As mentioned on our last earnings call, our teams are continuing to gear up to train physicians as well as build supply to support the full market launches of these three new Yotech products. Second, with the improvement seen in Q2 and Q3, We've ramped up our enrollment efforts in the PROACT-10A trial, which is a prospective randomized clinical trial to determine if patients with the onyx aortic valve can be maintained safely and effectively on Eliquis versus Warfarin. We currently have 34 sites fully qualified to begin enrollment and 54 patients already participating in the study, and feedback from surgeons and patients has been very enthusiastic. Enrollment to date represents solid progress towards our approximately 1,000 patient enrollment target, across 60 North American sites that we expect to enroll over the next year. As a result of our progress, despite pandemic headwinds and assuming the trial meets its endpoints, we believe we can still achieve FDA approval for the use of Eliquis with the Onyx Aortic Valve in 2024, which we believe will contribute to the Onyx Aortic Valve becoming the market share leader in the mechanical valve segment, as well as taking share from existing bioprosthetic aortic valves. On the regulatory front, we remain on track to file our PMA for per-clot in the U.S. and also a response to the Chinese FDA for BioGlu before year-end. And finally, Endospan received FDA approval to begin their U.S. clinical trial for Nexus and anticipates enrolling their first patient later this quarter. With that, I will now turn the call over to Ashley for a detailed review of our financials in the quarter. Ashley.