Q1 2020 Earnings Call
Ladies and gentleman that said the opposite the conference will be getting just a few minutes. We thank you for your patience.
[music].
Greetings and welcome to the inspire M.D. first quarter 2020, <unk> earnings Conference call.
Time, all participants are listen only mode question answer session.
The presentation.
If anyone should require operator systems during the conference. Please press star zero on your telephone keypad as a reminder, this conference is being recorded.
I'll like to turn the conference over to your host Mr. Jeremy Feffer.
Investor Relations. Please go ahead.
Thank you Gerry good morning, everyone and thank you for joining us for the inspire MD first quarter 2020 business update conference call on the line with US today, our markets Losman, Chief Executive Officer of Inspiremd D and Craig Shore Chief Financial Officer.
He will start with an overview of the company results in a recent highlights.
Then open up your call for questions.
Before we began let me take a minute to note that this conference call may contain forward looking statements forward looking statements address future events in conditions, and therefore involve inherent risks and uncertainties actual results may differ materially from those currently anticipated such statements such information is subject to known and unknown risks uncertainties and other fat.
There's a kit includes actual results or events and cause actual results or events could differ materially from they stated anticipated or implied in the forward looking information.
Listeners are cautioned not to place undue reliance on forward looking information as no assurance can be given after the future results levels of activity or children.
I think address that it's my pleasure to return the call Liberty Marvin Schlossman. Please go ahead Marvin.
Thank you Jeremy and thank you all for joining the call in the webcast today.
First quarter of 2020 started with tremendous momentum and great promise only to and what the global challenge no one could have anticipated.
Our team rallied and adapted with great voice, an unwavering commitment to our customers needs along with the safety and well being of our staff.
Our team understands the where more than observers in this global pandemic, but a part of a greater health care system, serving those who are on the front lines of battling this virus in saving lives I'm very proud of all and more enthusiastic than ever about the potential of CRT P. S and its novel Micronet technology to fundamentally disruptive.
Current standard of care and crowded artery disease.
We look forward to regaining our momentum as elective procedures restart.
Turning to build on our share position in existing markets with CRT P. S well planting expansion and growth markets and South America Asia Pacific and of course the U.S.
I also see numerous opportunities for growing our pipeline leveraging new indications for use of see guard and micro <unk>, along with our research into proximal protection devices, using our reverse flow technology and capabilities.
I will spend my time this morning, recapping our progress since the beginning of the year and reiterate my vision for the future.
Got it first introduced in the March call.
I'd like to take a moment to address a bit more about the ongoing cobot 19 pandemic and its impact on our business first and foremost, let me say that the health and safety of our employees remains our top priority and we've incorporated all of the procedures and technologies necessary to ensure a seamless transition to an environment, where many of our associates are working.
Remotely.
So while the pandemic has clearly caused unprecedented business disruptions around the world. Our team continues to work toward our collective goal of delivering next generation vascular solutions.
During the first quarter it became clear that the virus with spreading and transitioning from a localized epidemic till global pandemic health care systems around the world experienced unprecedented strain on availability and capacity and resources due to the severity of symptoms experience by many patients, especially those in high risk categories older or.
He compromised immune systems and other underlying health conditions as a result, since most of carotid stent knows this treatment and selective at least in terms of timing we began to experience a decline procedure volume in our key territories, which include Italy, and Spain, which had been particularly hard hit by the virus.
We are using this time to ensure the both our support organization as well as our ability to supply product remains firmly intact.
Our goal is to immediately fulfills the needs of our distributor partners physicians and their patients as a more normalized health care system reemergence. It it's worth noting that as I speak today, there are indications that certain European healthcare systems are beginning to reopen to elective procedures, which is encouraging that the worse maybe behind us.
To ensure that our company emerges from this crisis as strong as possible senior leadership, the majority of our employees and the board of directors have agreed to a temporary reduction in cash compensation.
The action combined with additional cost cutting measures have been implemented will extend our cash runway and enable us to continue to maintain staff levels. So that we're prepared to respond quickly what our procedural volumes pick up we will continue to look for efficiencies in all facets of our organization.
Now for some good news, we generated total revenues of 1.034 million during the first quarter, representing an increase of 149% over first quarter 2019 revenue of $415000.
Recall that during the first quarter of 2019, our sterilization partner at the time experienced equipment issues that resulted in us being unable to sterilizer ship product for most of the quarter.
Based on our backlog, we estimated the impact to be approximately $600000 at sales there were ultimately deferred into subsequent quarters.
Our revenue growth, even with the sterilization issue previously measured.
Once again, driven by continued strong uptake with see guard in particular in key markets, such as Italy, Poland in Spain.
We'll see guard revenue in the first quarter 2020 was $971000 an increase of 158% over $376000 that we generated a year ago of course. This gross growth was partially reflective of the sterilization issue in the year ago period that I, just alluded to but it is worth noting.
But even if we normalize first quarter 2019 see guard revenue to exclude the estimated impact of the sterilization related sales delays. It's subsequent backlog revenue would have still increase more than 11% from the prior year period. We're pleased with this result, particularly as we started to see more decelerate.
I shouldn't procedural volumes toward the end of the quarter, Craig will elaborate more on the financials and above it.
Taking a step back for those who may be new to the story. The C Guard Embolic protection system isn't advanced platform solution designed to deliver the flexibility of the traditional open sell said, what's what we believed to be the most advanced protection from carry procedural and post procedural embolic, that's caused by PLAQPRO lapse through the.
Stench strut, which can lead to stroke.
See guards unique Micronet technology mitigates, the Proto labs and associated Embolization and has shown superior clinical outcomes for patients against alternative carotid stent types conventional or next generation double layer stance as well as invasive procedures, such as endarterectomy, a major surgical procedure.
See guard has created a new dimension in protection treatment of carotid artery disease with the potential to truly establish a new standard of care for management of carotid artery disease and stroke prevention.
In January at the last conference, we were able to attend due to the cobot 19 shut down.
We weren't slated for the third consecutive year to showcase see guard at a lives clinical case format at the linked contracts, which brings together leading interventional whats in vascular surgeons from around the world. The case selected for see guard was very challenging involving an 82 year old patient presented with symptomatic high risk carotid artery disease.
Yes. The procedure lasted approximately 20 minutes and had an excellent out comedy and geographic result.
The link case demonstrated that the ease of use an exceptional patient safety features of see guard.
I had an opportunity to attend a number of presentations that link that highlighted the clinical superiority at sea guard.
The Iron guard to trial, which enrolled 729 patients with carotid artery disease, and they're real world large multicenter multi special specialist analysis suggested the use of C. Gardill Es and routine clinical practice is associated with no major Perry procedural or 30 day neurological complications.
Additional the paradigm extend trial conducted by Professor me Soak up Krakow University hospital, the largest running seek already P.S. study, thus far showed no procedural related or device related events out to five years, indicating a long term safety and sustained benefit.
Participation in high visibility medical conferences, such as link helped drive awareness in growth.
But some context around the potential to see guard within our addressable market. It may be helpful to understand the market convergence of vascular treatments from surgery to minimally invasive endovascular procedures.
When you look at cerebral aneurisms coronary artery disease thoracic abdominal aortic aneurisms and peripheral artery disease. The vast majority of these treatments for those conditions are now endovascular nonsurgical carotid artery disease remains the last frontier of converting from surgery, creating tremendous growth potential for see guard.
Hey, your suggested as many as 80% of C.A.D. treatments are still performed via carotid endarterectomy.
So given the other conditions I just listed we believe there is a sea change towards stenting, whatever micronized protected solution combined with the clinical advantages over traditional unprotected opened strep carotid stent, we believe the market to be very robust. This is why the vascular surgeon community remain very.
I'd and we continue to build strategic adjunctive solutions, such as reverse flow into our growth plan. We have what we believe as a superior technology platform in a market segment that is poised for rapid expansion in the coming years.
Our immediate focus remains creating awareness of the superior patient outcomes being reported seaboard, we continue to prioritize commercial execution at our key European markets, including Germany, Italy, Spain, and Poland, where market share it's been growing rapidly prior to the pandemic I've see guard commercial strategy can includes cultivation.
Of our physician outreach and education efforts in parallel with growing our centers of excellence program or see always our steel lead program. It's been established across Europe, and we're working to expand the program into India and South America. As a result of this initiative and growing interest of key physician to which to participate in C O East.
Along with the adjustments necessary with the cobot 19 restrictions or scheduling more online interactive programs to maintain the momentum.
Our hands on program, which will remain as an ongoing option and 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 toward making this happen by driving awareness and utilization particular in the vascular surgeon community.
We continue to develop additional product registrations in distribution contracts with channel partners in other countries in Europe, Asia, and Latin America, and while the timelines associated with these efforts have been elongated by cobot 19, we have been continuing our internal work to achieve these approvals and key milestones for growth.
Brazil represents the fifth largest carotid artery disease market in the world and is therefore important to our growth.
We have provided health authorities with all the information required for registration or optimistically waiting for an eminent approval, we believe Brazil in Latin America in general have great growth potential for us.
The French market remains a pillar of growth in our European strategy, but unfortunately has been particularly hard hit by the pandemic delaying our discussions with French health authorities regarding special reimbursement foresee guard, we continue to focus our work on advancing this approval for increased reimbursement.
In China, our discussions with potential strategic partners continue to progress and we both and we we hope to have both positive news on that front in the near future.
Both China, and Japan represent more than double our current addressable market and as such these markets are another priority for the business.
And overwriting strategic objective is the completion of the I'd approval process that will allow us to initiate a trial to support an eventual commercial launch of CRT P S and the United States.
We believe we have now successfully completed all bench testing required to satisfy the FDA is information requests. We previously indicated that the FDA had concurred with our clinical study design and data requirements to support the market approval of our device.
So we're now eagerly awaiting the agencies response, which at favorable would be an important step and commencing development and gaining regulatory approval and the all important U.S. market.
In terms of future business development, we continue to explore opportunity to expand indications for CRT P. S outside of carotid artery disease as well as broadening our portfolio within C.A.D. in stroke treatment. The investigator initiated research presented at link demonstrated the potential of see guard to be used effectively and other.
Indications such as treatment of iliac artery disease simply being artery disease saphenous vein grafts are sbgs as well as other peripheral conditions. We noted these results in had become to begun to work closely with clinicians who have made these important observations. We've used this time of cobot 19 procedure.
All reduction to work with our Coke Kale wells on study design and positioning of C. Gardill Es and these expanded applications.
Additionally, as mentioned previously central to our growth within the C.A.D. franchise as our continued to focus on vascular surgeons and their use of CRT P. S. As a viable alternative to endarterectomy part of that strike strategy includes exploring and adding a perry procedural protection device to our portfolio.
Incorporating the principles of reverse flow as an adjunctive alternative to femoral access we look forward to advancing our efforts in this initiative and working with leading vascular surgeons on this strategic pathway.
In 2019 was a prolific here for us in terms of further bolstering our intellectual property franchise. We had four patents issued in the U.S. and 11 issued globally more importantly patents that issued in the second half of 2019 were brought in coverage in particular see guard, but also bolstered protests.
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And potential pipeline products in 2020, we will continue to build on our intellectual property to protect and expand the what we believed as one of the most unique and elegantly simple solutions to treat vascular disease.
I'm pleased to share that our commercial team has been working through a process to further refine our messaging of CRT P. S. As a uniquely advanced technology platform, demonstrating clinical superiority and segmented differentiation in addressing the C.A.D. market. The unique advantage of CRT D. S into micronized solution deserve a level of.
Definition and standard of care, we reversed referred to as Mike when that protected caps with over 18000 devices sold in an unmatched clinical performance record, we believe that Mike Burnett protected Cas as a category definition will be meaningful to our positioning and product performance, we will afford today.
And the other investments in new and comprehensive branding and marketing awareness and our campaign in 2020 with that I'll turn the call over to Craig to review our financials Craig.
Thanks Martin.
The three months ended March 31st 2020 revenue increased by $619000, 149%.
Well $1.044 million from $415000 one to three months ended March 31st 2019.
The increase was predominately driven by 158% increase and for volume. He got he P.S. from Threed handling $76000 trying to three months ended March 31st 2019 to $941000. During the three months ended March 31st 2000, that's funny, mainly due to the company's Korea third party.
There are larger equipment failures, which caused a significant interruption that stabilized product supply for the majority of the first quarter 2019 develop the company's continued focus on expanding revenue base in the company's major markets.
In addition, and guard Prime you pass sales increased from $39000 trying to three month ended March 31st 2019, $63000 run three months ended March 31st 2020, due to the delayed shipments and centralized products trying to three months ended March 31st 2019, that's previously.
I mentioned the company's gross profit for the quarter ended March 31st 2020, $295000 compared to what were flaw of $73000 for the same period in 2019. This increase in gross profit was primarily driven by a higher volume of failed.
Regarding T.S. north because they didn't material labor cost and a decrease in write off of inventory. During the three months ended March 31st 2000, and funny you did the celebration equipment failures as previously mentioned.
Gross margin increased to 28.5% in the first quarter 2020 from a negative 17.6% for the same period in 2019.
Total operating expenses for the quarter ended March 31st 2000, $22.316 million, a decrease of 24% compared to $3.057 million for the same period. In 2019. This decrease was primarily due to a reduction of $320000 to clinical expenses.
Associated with regard to U.P.F., mainly related to the idling approval process decrease of $354000 due to settlement expenses may to a former service provider pursuant to a settlement agreement during the three months ended March 31st 2019, which that occurred during the three months ended March 31st.
2020, as well a $59000 a miscellaneous expense reductions.
Financial income for the quarter ended March 31st 2020, with $43000 compared to financial expenses and $77000. The same period in 2019. This increase in income of $120000 was predominately due to changes in exchange rate.
Net loss for the fourth quarter of 2020 totaled $1.970 million.43 per basic and diluted share compared to a net loss of $3.207 million $3.82 per basic and diluted share for the same period in 2019.
As of March 31st 2020, cash and cash equivalents were $3.141 million compared to $5.514 million at December 31st 2019 at this point, we'll turn the call over to the operators for questions operator.
Thank you.
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Great and let me I'm stuck over the Marvin Slawson go ahead Sir.
Great. Thank you, let me wrap up the call by saying that the entire team and inspire MD has continued to work diligently during these difficult times to continue to deliver on our commitments to addressing patient needs and highest quality solution for C.A.D., we stand ready to respond to the market as well as look forward to normal.
As a nation for US all we appreciate all of the exceptional an extraordinary efforts a ball who are on the front lines of this battle and stand with you and look forward to better days ahead in the meantime be safe and thanks again.
This concludes todays conference you may disconnect your lines at this time and thank you for your participation.