Q3 2020 InspireMD Inc Earnings Call
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Ladies and gentlemen, thank you for standing by good morning, and welcome thus far in the third quarter was 2020 financial research.
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Through February 1920 2021.
I'd now like to turn the call over to Mr., Scott Gordon President.
<unk> <unk> <unk> or the company's Investor Relations. Please go ahead.
Thank you Nick and good morning, everyone. Thank you for joining us.
The the Inspiremd de <unk> third quarter, 2020 financial results and corporate update conference call.
Joining us today, I'm inspired and D margins.
Deep pockets are inspired and quite sure Chief Financial Officer.
During this call management will be making forward looking statements, including statements that address inspiremd these expectations.
Womenswear operational results.
Right all the time.
Yep.
Forward looking statements involve risks and other factors that may cause actual results to differ materially from those sales.
More information about these risks please refer.
Factors described to inspire and <unk>. Most recently filed periodic reports on form 10-K.
Q 8-K filed today and its vitamin D press release that accompanies this call.
The cautionary statement in it.
I'll take that this call contains time sensitive information that is accurate only as of today.
2020.
Just required by law Byron de disclaims any obligation to publicly yet.
Yes, they should reflect that.
<unk> expenses.
Good.
It's now my pleasure to turn call over to Mark.
Bobby please thank you.
Right. Thank you Scott and thank you all for joining the call and the webcast today.
While we remain uncertain time specific to the ongoing koby 19 pandemic revenues for the third quarter of 2020 greed, both quarter over quarter from 2019 levels since sequentially versus Q2, 2020 levels, that's restoring a cautious optimism in our business direction and market recovery we under.
Standerford unpredictable nature of how this pandemic will affect our customers going forward I feel more prepared to address market needs, having accelerated at a higher level of awareness and communication with our channel partners.
Investing time over the last two quarters in online training the customer outreach programs have provided us a stronger foundation and transfer of knowledge, which we will continue during this recovery through.
Through it all our team remains committed and optimistic and we're thrilled to have announced the addition of new leadership to drive gold attainment and growth objectives.
As for the third quarter. This resurgence of elective procedures, you know key markets yield at the 213% increase in total third quarter sales versus the second quarter of 2020.
With nearly 50% of those sales occurring in the third month of the quarter.
This in no way relaxes, our resolve to continue to implement proactive policies and procedures to ensure continued strong performance, including the continued search for more efficient operations and cash management. However, this reinforces our assumption they cast procedures remaining necessity notwithstanding the training delays associated with the Cobi nineteena outbreak.
As for other meaningful milestones on June 25th 2020, the U.S. hefty a granted conditional approval of our investigational device exemption or I'd. He application to initiate a pivotal study of CRT P. S. During this quarter rear seat the final approval of the I'd application and have begun preparations for the pivotal.
Trial in the United States for CRT P S carotid artery stacked.
Shortly after the approval, we announced the initiation of our strategic advisory relationship with proper Christina Brennan to assist with the planning and execution of the Sea Guard pivotal study here in <unk> three in the United States Dr. Brendan brings a wealth of experience to inspire and d. and what specific expertise in vascular and staff related research and clinical trial design.
Element and execution with more than 20 years of extensive clinical research experience, particularly in the area of carotid artery disease. Her leadership will be invaluable now and as we progressed on a successful trial effort.
I'll return to our clinical development program in a moment, but first I wanted to mention two more recent key hires first we welcome Patrick do you have an <unk> as our new Vice president of business development and strategic initiatives.
Trickle oversee the company's business development activities and played a key role in advancing our short and long term strategic goals much of what much of which his focus will be in the U.S. market as we gain traction and leveraged the superior clinical results of our CRT P. Xtend platform, we will continue to develop new strategic pathways for grade and below.
To Patrick's leadership to help get us there.
The second higher as our new senior Vice President of global sales and marketing Andrea trauma solely Andres leadership of our global sales and marketing effort as an investment in our customer and commercial focus and provides the essential leadership needed to elevate our growth and acceleration of standard of care of CRT P. S. Andre his experience in leading.
Commercial teams in particular indirect channel partners globally, it's immediate value to our geographic expansion and higher performance in certain markets.
And finally, our announcement and appointment of Dr., Gary Rubin to our board of directors has reiterated tremendous credibility of our company's direction by the endorsement active contribution and financial investment of one of the most renowned then internationally recognized interventional cardiologist and Dr. Rubin. In addition to its formidable achievements in basket.
Her medicine Dr. Rubin pioneering work in carotid stenting at Embolic protection devices brings a depth of experience and expertise to our business that will be invaluable in our future direction and focus.
During his tenure as chief Interventional Cardiology, <unk> chief of the interventional cardiology at the University of Alabama at Birmingham and later his department Chairman and Chief of services at Lenox Hill Hospital, cardiac and vascular programs in New York. He helped bring broad based programs to international standing and peripheral neurovascular in cardiac interventions.
Dr. Reagan's vast experience has enabled him to recognize advanced technical innovations and improve patient outcomes.
Could expound on Gary's numerous accomplishments and why we're so thrilled to have them as part of the board ultimately its dr. Rubin Peerless reputation as a clinical scientists innovator and interventional cardiologists that lends an important validation to our micronet technology and seek arch that system and we believe his presence on the board will all Super.
<unk> meaningful insight thoughtful direction, and unmatched perspectives and our focus to change the way carotid artery disease is treated and strokes are prevented.
He has expressed its confidence in our differentiated seek already EPS platform and then in our direction that we have undertaken for the business, which is a tremendous vote of confidence and we're very fortunate to have him join as a director.
I would like to turn now to our third quarter results for the three months ended September 20 of 2020, we generated total revenues of $980000 as compared to $939000 for the same period, a year ago and compared to $313000 during last quarter. That's.
This represents a 213% increase sequentially versus last quarter.
These results were turned to us to pre cobot revenue levels and while we remain cautiously optimistic about the fourth quarter were seeing new restrictions instituted to combat the spread of COVID-19, leading to uncertainty to this market impact.
Taking a step back as a reminder of the value of our story and foundation of our value proposition to seek art Embolic protection system is an advanced platform solution designed to deliver the flexibility of the traditional open sell stat with what we believe to be the most advanced protection for Perry procedural and post procedural embolic events created by PLAQPRO.
Absolutely the stench strike, which can lead to stroke see guards unique micronet technology mitigates, the pro lapped and associated Embolization and continues to demonstrate superior clinical outcomes for patients against alternative carotid stent types conventional or next day.
Generation double layer stats as well as invasive procedures, such as endarterectomy, a major surgical procedure see guard has created a new dimension and protected treatment of carotid artery disease with the potential to to really establish new standard of care for management of crowded artery disease like stroke prevention.
That said, our strategic pathway to business growth for CRT P. S. Its robust rooted in broadening market share in Endovascular cast procedures in our served markets expansion of CRT P. S. As first for swine extent solution and focusing ongoing conversions with vascular surgeons to cash who performed the vast number of carotid read that.
Colorization procedures more than 80% three carotid endarterectomy, we view carotid artery disease as the next significant vascular condition to advance toward an endovascular standard of care much of the same way cerebral aneurisms coronary artery disease thoracic abdominal aortic aneurism, EPS and peripheral artery disease hat.
This is why the vascular surgeon and I and our interventional neuro radiology communities remain a top priority.
The most critical step and procedural success as the stent system, which protects the patient just after the procedure, but more importantly, after they leave the hospital CRT P. S continues to demonstrate superiority against all other open sales and second generation covered stent systems and remains the core of our value proposition.
We continue to advance our development of the tool set of adjunctive delivery systems and supporting solutions to provide each clinical sub specialty and clinician range of options to bolster the use of CRT P. S. At the stent platform, including New next generation Transfemoral and transcribe the delivery platforms.
We look to advancing our efforts in these initiatives as we continue to work with our key opinion leaders, including vascular surgeons on this strategic direction.
And now a word on global expansion.
China, Japan represented more than double our current addressable market and as such these markets remain a high priority for the business. We continue discussions with potential just distribution partners in both of these regions to expand into these highly valuable Asian markets and look forward to announcing our future progress in Europe, we're progressing on our application for.
Reimbursement approval in France, which we plan to be a direct sales market watch registration is complete.
In Brazil as a reminder, following registration approval last quarter, we've received orders from our distributor partners completed our training and have successfully completed our first see guard EPS stent procedure. These combined efforts of global expansion, including approval in the U.S. market remain a priority and a pillar of our commercial focus and grow.
With that I'll turn the call over to Craig to review, our second quarter financials Craig.
Thank you Marvin and to everyone for joining today here are some key financial highlights for the third quarter of 2021.
Revenues for the three months ended September Thirtyth, 2020, $980000, an increase of 4.4% or $41000 compared to $939000 for the three months ended September Thirtyth 2019. This.
This increase was mainly driven by a 69% increase in sales volume of Vanguardia tee up from $87000. During the three months ended September Thirtyth 2019 to $147000. During the three months ended September Thirtyth 2000, it's funny. This increase was mainly due to the timing of shipments to one of the distributors.
We're a tender recently won.
The increase was offset in part by a 2.2% decrease in sales volume of cigar crime, yes from $852000. During the three months ended September Thirtyth 2019 to $833000. During the three months ended September Thirtyth two sales in the 20 largely driven by procedures.
And you got EPA asked which are generally schedule, our non emergency procedures only beginning to return to normal levels towards the end of the quarter as hospitals began to reach the re shift resources cannot COVID-19 patients.
Gross profit for the three months ended September Thirtyth 2000, a 20 lets $298000, an increase of 133% or $170000 compared to $120000 for the three months ended September Thirtyth 2019. This increase in gross profit resulted from a 94000.
Dollar increase in revenues for reasons I, just described last related material and labor cost you $56000 decrease in write off which were driven by a component supply issue. During the three months ended September Thirtyth 2019, which did not reoccur during the three months ended September Thirtyth 2020, and a deep.
<unk> $20000 and miscellaneous expenses during this quarter gross margin increased to 30.4% during the three months ended September Thirtyth 2020 from 13.6% during the three months ended September Thirtyth 2019, driven by the factors just mentioned.
Total operating expenses for the quarter ended September 30 of 2020 were $2.5 million, an increase of 17.3% compared to 2.1 million for the same period in 2000 or 19. This increase was primarily due to an increase of $127000 and compensation expenses.
$16000 in development expenses associated with regard to yes.
Mainly related to the new advanced delivery system $92000 of directors and officers liability insurance expenses due to recent economic changes in the insurance industry $71000 and regulatory expenses associated with compliance to new European Union standard $60000, mainly due to the timing of.
Our annual shareholders meeting and $79000, a miscellaneous expenses decent.
These increases were partially offset by a decrease in travel expenses of $177000 in light of restrictions imposed by governments worldwide in order to mitigate the spread of COVID-19.
Financial expenses for the quarter ended September Thirtyth, 2000, or 20 or $30000, a decrease of 48% compared to $73000 for the same period in 2019. The decrease in financial expenses, primarily resulted from changes in exchange rate net.
Net loss for the third quarter of 2020, total $2.233 million or six cents per basic and diluted share compared to a net loss of $2.070 million or $1.26 per basic and diluted share for the same period in 2019.
As of September Thirtyth, 2020, <unk> cash and cash equivalents were $10.882 million compared to $5.514 million as of December 31st 2019 with that I now would like to turn the call over for questions. Nick. Please go ahead.
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Your first question comes from Benjamin pain or of that line Global partners. Please go ahead.
Good morning, guys. Thanks for taking the questions first.
First the first for me congrats on all the the personnel additions it seems like quite the roster you've been able to assemble there and.
Dr. Rubin, that's a pretty high profile I think investors in the space are no him or know of him.
Can can you talk a little bit about how old that get came about.
Oh, how are you able to get him on the board and as an investor.
Yes. Thanks, Ben Thanks for the question, we're thrilled to have Gary Rubin as as a part of the organization and habits, having accepted as a director role.
The connection actually came indirectly through Christina Brennan talked the brand in north well known for a number of years and I think everyone. In this industry has known Gary Rubin, either personally or by reputation on Christina Brennan and Gary go way back in their history and work together and so well when we made the connection.
And with Christina There was just some follow up discussion and I connected with with Dr. Rubin and just found his his interesting insightfulness to be incredibly valuable and as we dug deeper into the discussions I. It just appeared that he had more than just a casual interest and we felt it would be.
A great addition to the board with his is like the experience in the industry and knowledge. So we're thrilled to have him a part of the organization and as you said I think the the roster of talent continues to grow and build toward helping at all aspects.
Excellent. Thanks for the color there and then.
It sounds like you have a little bit more read through than you've had in the past from your your distributor customers or your channel partners.
You know can you talk about how that might change how you.
Strategically to move the business drink cove, it or or otherwise.
Yes, I think we we have always said into place the strategic direction in the beginning of the year to be up a commercially focused customer driven outwardly thinking company and I think this is just the next step in the next level in both bringing talent to the organization did I understand that.
Distribution model, but most importantly on October 19 scenario has given us an opportunity to really dig deeply into making sure that the served markets that we're in are being covered by the best partners available into go into a depth of knowledge and understanding to try to make sure that cheap our EPS rises to the top of the bag.
And our partners sort of list of opportunities. So absolutely the right pick up here, which is you know as a fundamentally R&D based company were making a shift to a commercially focused organization in a lot of that is on the backbone of all of the clinical results and value.
You that are coming from our studies, we have great a great story line detail and go we need to do a much better job of getting that information disseminated through our channel partners ultimately to the customer so that will continue to be a priority for Andrea in particular as he leads the sales and marketing group going forward.
Okay. That's helpful and then.
Does that also help you kind of be able to convert a.
Surgeons from credit lender Directory me over to take Kassere or.
Doesn't necessarily help you at all.
Yes, I think it fits so it certainly does Ben I mean, this is a touch business I think we all understand that this is one customer at a time one procedure at a time the credibility of of.
Of what we sell and what we do is really manifested itself in and how we connect directly with customers to make change and in their practice and so we are definitely focused on the list the surgery community. The intervention the radiology community in cardiology as well, it's it's an interesting set up because we have a very broad.
Todd range of operators.
Who sort of follow carotid artery disease, you know.
As as a primary part of their practice and they use different tools to get there and so ultimately our goal is to make sure that see guard is the extent that used and that cash is promoted and developed as first line therapy for for the disease. So our our priority continues to certainly be.
On our existing customer base, but has been and will continue to be on that the vascular surgeon as well.
Okay got it and then you know do.
You mentioned in the press release, the advance tool set of adjunct of delivery option said that.
You're working on I guess, how far.
However, these advanced tools advanced in the in the development and you know are these things that are.
It could see regulatory clearances, and then be marketed and the the.
Geography is that you're in you know say next year or what was it what does the timeline look like at this point.
Yes, Ben fundamentally Inspiremd D has done its best work as an R&D organization, we have but we have a great team of people, they're constantly looking at our tool set in and looking at our products and trying to develop those next generation levels, whether it's within an existing part of the portfolio or something outside of that.
And so we have this multi generational product development plan underway for for a variety of different areas and we certainly hope to have those states products to market in a in a timeframe that you know thats meaningful.
Within you know 2021, potentially and it really depends on the area that we're talking about we've been working on a new transdermal delivery system for a while and and are making great progress on that so we we look to be able to provide a next level of detail in terms of how that rollout will occur, but we're making making great progress and.
The number of different areas to really drive see guard as as the primary stat.
Okay got it and then just a you know what the FDA trial now that you've got the I'd in place you know when do you expect the cigar trial to kind of enroll the first patient first patient excuse me.
So where we're in the final touches of being able to make some decisions on on a C.R.O. partner as well as.
The primary investigator principal investigator for the trial and also site selection.
What what percentage will will use in the us versus Europe, and otherwise and so we're we're down to the sort of the last details on making those selections and then we'll have a much more clear schedule as to how we begin patient enrollment, but we really felt fundamentally that we wanted to get all of these these piece is solidly in place because the.
The performance of the trial really depends on how well you prioritize this on on the front end and we've got some some tremendous names being discussed.
Discussed right now in terms of principal investigators and people are very interested in participating in enrolling so hopefully in short order will have a a detailed schedule of of how that rollout looks and patient enrollment, but we're making great progress in finding the right the right pieces and putting those in place with our EPS Euro partner end and investigate.
Matters.
Sure that's helpful and then obviously it.
I would imagine from the additions that you've been able to make on the personnel front that the.
Rolodexes there get you in front of the the right people.
It's very very comprehensive so [laughter].
Good and bad so a lot of people interested so we're really excited about adding the interest or whatever so you actually have to worry about upsetting people.
Well, we hope we hope to please everyone, but yes, that's right. It it it's a it's a great place for us though.
Excellent alright.
I'll leave it at that congrats on all the progress on that one.
Thanks, Thanks, Ben Thanks very much.
Again, if you have a question. Please press Star then one.
This concludes our question and answer session not like to turn the conference back over to Mr. Marvin's Lawson. Please go ahead.
Great. Thank you, let me conclude by saying that in spite of the setbacks associated with the COVID-19 on we are tremendously optimistic for our future seek already EPS continues to outperform other competitive carotid stent and we will continue to drive this awareness with our customers to provide the absolute best clinical and patient outcomes.
We're investing in a very bright future and are singularly focused as a company on maintaining our commitment to offering these best options for stroke prevention and carotid artery disease management.
You very much for the call today and for your support.
Conference is now concluded.
Thank you for attending today's presentation you may now disconnect.
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