Q4 2019 Earnings Call
Greetings and welcome to the inspire M.D. fourth quarter 2019 earnings call.
This time all participants are in 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 I would now like to turn the conference over to your host Jeremy Feffer Investor Relations for Inspiremd <unk>. Thank you you may begin.
Thank you Melissa good morning, everyone and thank you for joining us for the inspire and be fourth quarter 2019 business update conference call.
On the wind with US today, our Marvin Slaw Smith, Chief Executive Officer, and Craig short Chief Financial Officer.
We will start with an overview of the company results in a recent highlights and we'll then open up the call for your questions.
Before we began let me take a minute to note that this conference call may contain forward looking statements forward looking statements are dressed future events in conditions, and therefore involve inherent risks and uncertainties actual results may differ materially from those currently anticipated in such statements such information is subject to known and unknown risks uncertainties and other factors that can influence.
Actual results were events can cause actual results or events to differ materially from their stated anticipated. We're implying the forward looking information listeners are cautioned not to place undue reliance on forward looking information.
No assurance can be given after the future results levels of activity or achievements.
Having a dress that it's my pleasure to turn the call over to Morgan's Losman Marvin. Thank you Jeremy and thank you for joining us on the call today and the webcast. This is my first quarterly calls since assuming the role as Chief Executive Officer on January to first and I'm pleased to have the opportunity to both to recap our progress during the past quarter and year at all.
So lay all my vision for the company going forward.
I'd first like to take a moment it share my relevant background I have 33 years leadership positions in medical device smoke in the medical device markets with both large blue chip companies, including GE healthcare and Cordis JNJ as well as several early stage companies Endovascular space.
Much of my experience in a big part of what drove me to inspire MD was based on my commercial background.
Switching many novel in life changing technologies I would play see guard firmly on this category.
See guard Embolic protection.
System is an advanced platform solution designed to deliver the flat flexibility of the traditional open sell instead, what we believed to be the most advanced protection.
From a perry procedural and post procedural embolic events caused by PLAQPRO lapse through the state struts, which can lead to stroke.
She guards unique Micronet technology mitigates this pro lapse and associated embolization additions superior clinical outcomes for patients against alternative stent types conventional or next generation double layered stats as well as invasive procedures, such as endarterectomy, a major surgical procedure.
See guard has created a new dimension in protected treatment of carotid artery disease, what the potential to truly established a new standard of care for management of carotid artery disease and stroke prevention.
In January I was able to witness the growing support by the medical community for see Gardy P.S. at the International Link Congress in Leipzig, which brings together, leading interventional west and vascular surgeons from around the world the feedback from leading physician the leading physician community was extremely enthusiastic and I along with a packed audience.
I was able to observe the placement of CRT P. S. First hand in a challenging life case with torturous anatomy and very tight stenosis. Their procedure was conducted by world renowned the interventional cardiologist Dr. Antonio Macquarie and Dr. fell so that's very old top of Humana's Hospital, and Bergamo, Italy and it.
Lets specifically chosen by the conference organizers for life transmission. The CRT P. S produced outstanding clinical results and it's very difficult case.
I also had the opportunity to attend a number of presentations that highlighted the clinical superiority of CRT P. S. Iron guard to trial, which enrolled 729 patients with carotid artery disease, and they're real world large multicenter multi specialty analysis suggest that the use of see guard S. It.
Routine clinical practice is associated with no major Perry procedural or 30 day neurological complications.
Actually.
The paradigm extend trial conducted by Professor Muse look of Crocker University hospital, the longest running C. Gardill S study, thus far showed no procedural related device events out to five years, indicating long term safety and sustained benefit.
We continue to explore opportunities for expanding indications for CRT P. S outside of carotid artery disease as well is broadening our portfolio within carotid artery disease and stroke treatment. The investigator initiated research studies presented at link demonstrated the potential of see guard to be used effectively in other indications such.
As treatment of iliac disease, so, claiming in artery disease and treatment of saphenous vein grafts are sbgs as well as other peripheral conditions. We noted these results and has begun to work closely with can clinicians who have made these very important clinical observations.
Finally, and central to our growth within the C.A.D. franchise is our continued focus on vascular surgeons and their use of see gardy piece as a viable alternative to vascular surgery part of this strategy includes exploring adding.
A procedural protection devices to our portfolio.
Including the principles of reverse flow of the carotid as an adjunctive alternative to femoral access.
We look forward to advancing our efforts in this initiative and working with leading vascular surgeons on our strategic pathway.
Our immediate focus however remains creating awareness of the superior patient outcomes that are being reported with CRT P. US we continue to prioritize commercial execution in our key European markets, including Germany, Italy, Spain, and Poland, where our market share is growing rapidly.
In large part the strength of see guard was driven by awareness in key European territories through cultivation of our physician outreach and education efforts in parallel with growing our centers of excellence or C O lease.
The Sealy program has been established across Europe, and will now be extended to India and South America. As a result of this initiative, we have a waiting list of key physicians, who wish to participate NRC always it's our goal to make see guard available to the broadest possible patient population and our centers of Excellence program will go a long way.
Hey toward making this happen by driving awareness and utilization, particularly in the vascular surgical community. We're also pursuing additional product registrations and distribution contracts with local distributors in other countries in Europe Asia and Latin America.
As a part of this effort we plan to pursue our application for reimbursement and France. This includes exploring an alternative higher reimbursement level to conventional extends through the possibility of conducting a randomized trial in partnership with the French government.
We continue to anticipate see guard EPS regulatory approval in Brazil, the worlds fifth largest that artery disease market and the first half of the here, we believe Brazil, and Latin America in general have great potential to emerge a significant contributors to our long term growth.
In addition, worst we're seeking strategic partnerships in both China, and Japan to gain approval and distribution of CRT P. S. In these territories.
China, and Japan represent more than double our current addressable market as such these markets are another priority for the business.
And overwriting strategic objective is the completion of the idea approval process that would allow us to initiate a trial to support an eventual commercial launch of see guard EPS in the United States are ongoing discussions with the FDA related to this application are positive and progressing satisfactorily last September the agency it Rick.
Adjusted additional information this is not unusual for this process and we're responding accordingly, continuing to work closely to deliver on the agencies requested a timely manner. According to the planned timeline.
Craig we will get into the financial shortly but I wanted to begin with a comment about fourth quarter revenue consistent with our revenue pre announcement that was issued in January revenue within the range of 1 million 2.025 million, we reported fourth quarter total revenue of 1.013 million representing growth of 23% over 822000.
We reported in the fourth quarter 2018.
Consistent with prior quarters Q4 revenue growth was driven largely by growing awareness of and demand for C. Gardill EPS. The C Garden revenue came in at 921000, an increase of 31% over the comparable period in 2018 and during the full year 2019 seek or see guard portfolio revenue.
Grew by double digits, notably we delivered this growth despite being unable to deliver product to the market for the majority of the first quarter due to issues with our third party Sterilizer, who has since been replaced the latter quarters in 2019, all showed record double digit growth for the year.
All the data has been generated to date continues to support our belief that seek already EPS is an important breakthrough representing a new paradigm and the treatment of carotid artery disease, which remains one of the major risk factors first scheme extra.
We estimate that see guard can address a 1 billion dollar near term market opportunity based on carotid artery disease patients who are currently treated with medical management conventional carotid stent and carotid endarterectomy. We believe this opportunity to grow exponentially. If we can convert approximately 1.6 million people estimated to.
Out there who are diagnosed but untreated.
I'd like to conclude my prepared remarks will comment on our intellectual property.
2019 proved to be quite fruitful and continuing to build our IP portfolio. We had four patents issued in the United States and 11 issued globally. Most importantly patents that issued in the second half of 2019 strength in both the coverage of our commercial products in particular see guard, but also bolstered protection of pets.
Central pipeline products, not only has the company obtain coverage using micronized to treat vascular disease, but it covers the treatment of ceiling aneurisms in supporting other devices and procedures that fill aneurisms. This includes not only aneurisms. So the brain, but also abdominal aortic aneurism.
Coverage has been broadened to other vascular beds beyond carotid artery and coronary artery to include peripheral artery devices, such as those that could treat superficial femoral artery. It's the largest market in peripheral artery disease. All contemplated devices include coverage for drug solution as well as devices composed of various.
Our net and scaffolding materials, including bio degradable materials, we will continue to build our intellectual property to protect and expand and what we believe is one of the most unique and elegantly simple solutions to treat vascular and non vascular disease.
Finally, our organization will remain focused on accountability and execution to drive sustained operations and commercial results throughout the balance of 2020, and we intend to undertake these activities while carefully managing our expenses and cash resources with that I'll turn the call over to Craig to review the financials Craig.
Thanks, Marvin for the 12 month ended December 31st 2019 revenue increased by $120000 were 3% to $3.7 million from 3.6 million for the same period. In 2018. This increase was predominantly driven by 10% increase in revenue a seat.
EPS from 3 million during the 12 months ended December 31st 2018 to 3.3 million. During the 12 months ended December 31st 2019, as a result of our continued focus on expanding existing markets, such as Poland, Switzerland, Italy, and Spain and expansion into new geographies such as also.
Charlie in South Africa. This increase was offset by a 28% decrease in revenue of Mguard Prime E. Yes.
$831000 trying to 12 months ended December 31st 2018 to $456000. During the 12 month ended December 31st 2019. In addition, the overall increase mentioned above with offset across the board, but shipment delays in the three months ended March 31st 2019.
Associated with the company's decision the switches third party sterilizer the transition to the new sterilization company was completed in early April and the company does not currently anticipate any future disruptions and fulfilling new orders.
The company's gross profit for the 12 month ended December 31st 2019, with $756000 compared to a gross profit of $995000 for the same period in 2018. This decrease in gross profit resulted from a 142000 dollar increase in write offs predominantly driven by.
They are nonrecurring component supply issue, a few garden, es and slow moving and guar prion excess inventory, an additional $69000 with expenses related to upgrades made or production facility at $48000 like expenses pertaining to annual renewal employee training of production workers.
And offset by a reduction of $20000 and miscellaneous expenses.
Gross margin decreased to 20% and the 12 months ended December 31st 2019 from 28% on the same period in 2018 total operating expenses for the 12 months ended December 31st 2019 were $10.6 million, an increase of 23% compared to 8.6.
<unk> million for the same period in 2018. This increase was primarily due to an increase of $804000 and clinical expenses associated with regard to GPS mainly related to I'd efforts in 2019 payments of $684000 related to the separation agreement of the company and.
Into with his former Chief Executive Officer, and a settlement payment of $354000 may to a former service provider.
Financial expenses for the 12 months ended December 31st 2019 were $200000, that's compare to financial income $371000 for the same period in 2018, the increase in financial expenses, primarily resulted from the $430000 to financial income related to the revalue.
Relation of the embedded derivative of the series C convertible preferred stock recorded during the 12 months ended December 31, 2018, which had not occurred during the 12 months ended in December 31st 2019, and an increase of $144000 and financial expenses related to changes in exchange rates the increases in finance.
<unk> expenses were partially offset by a decrease of 11 came miscellaneous expenses. During the 12 months ended December 31st 2019 net loss for the 12 months ended December 31st 2019 totaled $10.040 million or 4.80 $4.80 per basic and diluted.
Share compared to a net loss of $7.240 million or $16 from 67 cents per basic and diluted share for the same period in 2018 as at December 31st 2019, cash and cash equivalents were $5.5 million compared to $9.4 million at December 30.
First 2018 at this point, we'll turn the call over to the operator for questions operator.
Thank you.
If you'd like to ask a question. Please press star one under telephone keypad a confirmation total indicate your line is in the question Q.
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Our first question comes from the line of Vernon Bernardino with HC Wainwright. Please proceed with your question.
Hi, guys.
Thanks for taking the question and.
Yes on getting through a challenging our 2019.
This does your questions if I may.
Ill get back on the Q.
Could you talk again about the India backlog.
Just a few more details because from what it whether it's going on there.
Vernon I think maybe you're referring to the backlog of physicians for the centers of excellence is that what was that specific to your question.
Yes. So so it's just more demand and we have scheduled offense at this point. So it's something we can certainly control easily.
We've had an overwhelming amount of interest on the part of of physicians to attend these centers of excellence and so it's simply an issue of scheduling more and and making those available. So we.
We are suffering from success I guess in this case, because we're seeing a lot of club of interest in vascular surgeons in particular attending these these events for training.
I see and then in France, so what again or their requirements for.
What are the Erika acquirements.
Yes, so so in France, there is a reimbursement established for for carotid stenting at this time and we are approaching the French government to try to set up a clinical registry.
As a unique product definition to see if we can increase that because of the unique capabilities of see guard and do it through a registry trial on to demonstrate the unique qualities of see guard and we feel.
We feel very comfortable with what taking that process on to increase increase our reimbursement potential in France and opened this market.
And well my question, though given that Q.
Brazil can you remind us again on whether the next that's there.
I think it's still work in progress, but what are the next steps that need to occur.
Yes, so in Brazil, we've we've concluded the registration paperwork process, we're simply now waiting for.
For the government to respond with hopefully an approval.
For for our registration and the ability to sell in Brazil, we already have signed agreements with distribution partners in the market and so it's simply a matter of getting approval to sell and we will be we'll be ready to execute in that market and we're excited about the possibilities.
Of entering Brazil.
Okay and doesn't seem a question going back into queue for now thank you.
Yes, you're welcome to ask them if you'd like.
Okay.
So.
So.
The gross margin went down and.
Pardon me if I didn't.
Yes, it or.
Figure it out quickly enough.
What was the driver of the gross margin going down.
So I think I think it's I would care.
Go ahead go ahead Greg.
I'll go ahead Marvin sorry.
I was going to say I think I think Bernie that's a combination of.
Of of growing our market presence in growing volume in the market.
And there being some some offsetting margin transfer cost to our distributor partners.
In order to open these new markets and grow that so I think I think overall I would characterize it as just.
Pressure from market pricing.
Offset by volume and we're also spending a lot of time, focusing on improving our cost of goods as well in order to to net higher overall margins Craig I don't know if you have additional.
But yeah, we just had some one time issues with one of our component suppliers, which caused us to half from unusual write off for a couple of months during the year, which we've resolved the problem. So that's behind US on Marvin said, hopefully will now volume we should start seeing improvements in our growth.
Margin.
I see.
Okay. That's all the questions for now sounds like.
Got a few things.
Still to work through.
Okay. One last question as far as to if there is concern what.
What is the next time, perhaps that we could have an update as far as that process concern.
We are finalizing the test results, which were required to sometime ago and as soon as we have results back from that tests those testing results and submit those back for final discussion with the FDA will will be in touch with with any significant details there, but everything as well.
Going according to plan and we're executing on those on those test methods that that has been requested.
Okay terrific and anything you can say comment as far as the industry is concerned.
For the specifically targeted by Sea guard.
I know you guys. Thanks.
1.6 move people and then.
Maybe still untreated but.
Anything that's new as far as developments are concerned.
I think that there is a momentum being gained within the vascular surgeon community of converting to took carotid stenting, which is giving us great tailwind and.
Opening up a lot of conversations where we're focused on converting those vascular surgeons as as a primary mechanism and obviously continuing to grow share within the current carotid stenting market. So we're we're encouraged by the fact that they're there seems to be a high receptivity on the part of vascular.
Surgeons to learn more to go through our centers of excellence in training and the outcomes that we are realizing because of see guard.
Our really resonating at these congresses, and I think that organically. We're we're growing because we have great performance characteristics and the data is very solid. So we'll continue to work on the conversion of vascular surgeons and where we're we're very encouraged by that.
Terrific. Thanks for taking my questions and my follow ups.
Thank you weren't.
Thank you, ladies and gentlemen that concludes our question and answer session I'll turn the floor back to Mr. Smith for any final comments.
Sure. Thank you.
So again thanks. Thank you.
Thrilled really to be a part of this opportunity at inspire I've spent the last 75 days purposefully with our team our customers and shareholders sharing our vision plans and directional focus on commercial commercial execution and advancing our technology platform and expanding our global foot print.
For growth, we know what we want to achieve a we know how to get there and we really look forward to a bright future and.
It's a great opportunity so thank you.
Thank you. This concludes todays conference you may disconnect. Your lines at this time. Thank you for your participation.