Q3 2021 InspireMD Inc Earnings Call

Greetings welcome to inspire MTS third quarter 2021 earnings call. At this time all participants are in a listen only mode. A question and answer session will follow the floor about 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 I will now turn the conference over to David Holmes with life Science Pfizer's. Thank you you may begin.

Thank you Sherry and good morning, everyone. Thank you for joining us for the inspire MD <unk> third quarter 2021 financial results and corporate update conference call joining us today from inspire at D. R. Martin Saltzman, Chief Executive Officer, and Craig Shore, Chief Financial Officer.

During this call management will be making forward looking statements, including statements that address inspire and expectations for future performance and operational results, particularly in light of the COVID-19 pandemic forward looking statements involve risks and other factors that may cause actual results to differ materially from those statements for more.

Information about these risks please refer to the risk factors described in inspire MD <unk>. Most recently filed periodic reports on Form 10-K, and Form 10-Q filed with the U S Securities and Exchange Commission.

And inspire <unk> press release that accompanies this call, particularly the cautionary statements made in it.

This call contains time sensitive information that is accurate only as of today November nine 2021, except as required by law inspire MD disclaims any obligation to publicly update or revise any information to reflect events or circumstances that occur. After this call.

It is now my pleasure to turn the call over to Marvin Saltzman Chief Executive Officer Marvin. Please go ahead.

Thank you David Good morning, and thank you all for joining the third quarter 2021 call also joining me today is Craig Shaw, our Chief Financial Officer, I'd like to begin with the reiteration of our mission at inspire and the.

Which is to establish <unk> EPS as the standard of care solution to change the way carotid artery disease is managed and strokes are prevented.

The CCAR carotid stent system enables this change through its unique design and proprietary micro mesh protection, which has yielded an unmatched and growing body of clinical evidence in real world practice as well as ongoing clinical studies, we serve equally all physician specialists treating carotid artery disease with focus on the <unk> system and <unk>.

And outcomes.

We create greater awareness of the advantages of <unk> as a first line option to a broad physician base is as well as advanced new delivery systems and accessory solutions. We believe we can enable the conversion of this surgically dominated 5 billion dollar global total addressable market to a less invasive endovascular standard of care.

The third.

A 2021 proved meaningful in our quest to deliver on our growing body of evidence further differentiating <unk> from all other first generation and dual layered stents in the market with the publication and Jack have a randomized trial, comparing <unk> Gard EPS against Abbott's first generation open sell to <unk> with clear differentiation.

A statistically significant reduction of approximately 80% and peri procedural cerebral embolization in favor of CCAR. We will further discuss the results of this breakthrough publication later.

Additionally, we continue to build market demand foresee guard, while gaining traction in our company objectives of global expansion commercial growth and development of pipeline offerings.

Commercial business grew for the quarter, 24% year over year in <unk> sales and for the nine months year to date increased 45% over the same period in 2020 during the quarter. We sold 1700 nine devices, an increase of 21% as compared to the third quarter of 2020 with schedule.

Procedures to normalized levels in most of our served markets.

In France, we received the anticipated reimbursement approval to combined with our previously announced clinical approval foresee guard from the French National Authority for health.

So currently launched <unk> into the French market with 18 cases completed in the first week post approval. These key commercial inflection points of expansion into new markets have also accelerated our plans to advance our direct sales efforts and selective strategic locations to capture higher average sales price and enabled <unk>.

Control of the sales process to drive growth as we have demonstrated previously in the United Kingdom and now France.

Strategy in Asia continues with talks in Japan amongst distributor partners interested in representing C Guard as we noted previously and consistent with our agreement in China. Several months ago I believe the Asian market offers an accelerated opportunity for CCAR as the existing standard of care for procedural intervention is predominantly endovascular focus and.

Less surgically dominated.

Additionally, with the advanced advanced enrollment in our seed Guardians FDA trial, and greater U S physician experience with <unk>, we're planning to establish a U S base of business, including addition of commercial leadership and operational infrastructure.

Thinking of the USC Guardians trial, we've completed over 10% of the enrollment to date led by our global principal investigator Dr. Chris Metsker at ballad Health system in Eastern Tennessee, as we launch the trial in the U S with the top carotid stenting leaders, we're encouraged by the growing foundation of awareness and credibility through the utilization of <unk>.

With investigator experience positioning us for a successful and accelerated post approval commercial launch in.

In reference to the prior mentioned publication of the randomized trial, comparing <unk> to the Abbott <unk> stent trial compared to <unk> <unk> EPS against the first generation <unk> and our cash related ipsilateral cerebral embolism study measured by DW MRI following Cas and found a dramatic for <unk>.

Fold reduction in peri procedural cerebral embolism in favor of <unk>. Most significantly this reduction in procedural events was reflected in both volume and number of lesions in favor of <unk> consistent with the micro net covered prevention delivering cerebral protection both during and following cash.

Yes.

Ability of our micro mesh to present to prevent that migration of thrombus and aluminum the vessel. Following cash remains the foundational advantage of C guard against all other stent alternatives and this important publication adds further evidence to the advantages of our standpoint.

Although the study was not powered to show statistical significance of clinical outcomes. There were two observed into lateral strokes, which occurred in the Abbott accurate link arm, but no neurological events occurred with the C Guard arm further, suggesting the value of post procedural protection for from the micro net mesh.

Our investment in our pipeline of innovation continues with new advanced tools to enable more cast procedures, our progress with the previous mentioned new delivery systems continues with anticipated approval in 2022, which we believe will facilitate greater accelerated growth and overall global market demand and will significantly.

Address the conversion of surgical procedures to Endovascular stent to.

To summarize the quarter reflects our priority of execution and growth, which will continue to drive our objective of establishing C Guard carotid stent system as the foundational enabler of Endovascular conversions from open surgery.

So we chart a new course for <unk> is managed in stroke is prevented with our clinically proven C Guard EPS system, demonstrating superior clinical outcomes for patients compared to alternative carotid stent types conventional or next generation double layer stents as well as invasive surgical procedures such as endarterectomy, we're encouraged.

Our progress in mission as we continue to invest in our future to leverage and unlock the tremendous potential to change the way carotid artery disease is managed and stroke has prevented with that I'll turn the call over to Craig who will review the first quarter financials, Greg. Thank you Marvin and to everyone for joining today here are some key financial highlights for the third quarter.

Ended September 32021.

Total revenue for the quarter was $1 $71000, an increase of 9% compared to $980000. During the three months ended September 32020, CAGR EPS had revenue of $1 $31000, an increase of 24% from $833000 for the same period.

Last year.

This sales increase was mainly due to procedures with <unk> EPS, which are generally scheduled for non emergency cases began this quarter to return to normal levels in additional territories as compared to the three months ended September 32020, when procedures. The CCAR EPS, we're still somewhat postponed as hospitals shifted resources to patients affected by Covid.

This increase in sales of <unk> EPS was partially offset by a decrease of 73% and sales of <unk> EPS from $147000. During the three months ended September 32020 to $40000. During the three months ended September 32021.

For the three months ended September 32021, we had a gross profit of $92000 compared to $298000. During the three months ended September 32020. This decrease in gross profit resulted from a 136000 increase in material and labor costs, mainly due to an increase in sale.

Volume as well as a short term increase in production cost per unit, an increase of write offs of $66000 due to component supply issues at $57000 increase in new employee training costs and an increase of $38000 in miscellaneous expenses. During the three months ended September 32021.

This decrease was partially offset by $91000 increase in revenue mainly due to the increases in sales volume previously stated.

Gross margin decreased to 9% during the three months ended September 32021 from 30% during the three months ended September 32020, driven by the reasons just stated.

Total operating expenses for the quarter ended September 32021 were $4 million $123000, an increase of 65% compared to $2 million $493000 for the same period. In 2020. This increase was primarily due to increases of $700000 in expenses.

Related to the commencement of the sea Guardians FDA study $400000 in salary expenses and related accruals due to additional resources, mainly in our product development and sales infrastructure.

$51000 in development expenses associated with <unk>, EPS, new delivery system, and accessories solutions $147000 and share based compensation related to expenses due to the recognition of grants made from August 31, 2020, $102000 in sales and marketing expenses.

Associated with the expansion of existing and new markets $81000 or directors and officers liability insurance expense due to increased premiums caused by recent trends in the overall industry and $41000.

And miscellaneous expense.

Net loss for the third quarter of 2021 totaled $4 million $71000 or <unk> 53 per basic and diluted share compared to a net loss of $2 million $233000 or <unk> 96 per basic and diluted share for the same period in 2020, the average amount of shares outstanding used for the earnings for sure.

Fair calculation were $7 million 739463 in Q3, 2021, and 2.325 million 619 in Q3 2020, both adjusted to reflect the one for 15 reverse split effected by US on April 26 2021.

As of September 32021, cash cash equivalents and short term bank deposits with $37 1 million compared to $12 $6 million as of December 31, 2020 with that I'd like to now turn the call over for questions. Operator. Please go ahead.

Thank you I would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May press star two if he would like to remove your question from the queue and for participants using speaker equipment may be necessary to pick up your handset before pressing the star keys.

Our first question is from Ben Hayner with Alliance Global Partners. Please proceed.

Good day, gentlemen, and thanks for taking the questions and congrats on all the progress.

First off for me just on the CRD as trial can you talk a little bit about how the other side other sites excuse me are.

On track for opening and enrollment kind of when do you expect all the sites to be up and running.

Yes, Hi, Ben Thanks for the question. So we have four sites currently that are approved and up and ready to enroll the process. As you may be aware is it's a bit complicated in terms of getting all the contracts in place and getting everything set plan to have another four sites completed.

By the end of the year. So in total I think we'll be looking at somewhere around seven or eight sites total by the end of the year for for enrollment purposes. So progressing.

During that during that process and then it will be a part of of going ahead and getting cases done.

Got it and then on the February data that look great obviously.

Have you gotten any feedback from clinicians.

The publication that you can discuss.

Yes, nothing nothing solid other than the fact that it's a recent publication and Jack and we certainly are trying to promote that in our in our commercial organization, but most recently, we just attended the TCT and visa is actually next week as well so were hopeful that both the outreach as well as just the overall <unk>.

<unk> of this by the industry and by physicians will be very positive and this was certainly an important trial and result for us because it was a randomized that head to head with the Abbott accurately extent. So we're really pleased with what the information and look forward to using it too.

Advance our storyline and clinical data.

It makes sense.

Is there any.

Saying that.

That surprised you coming out of that in terms of the performance I mean, it looks to be pretty fantastic to me, but.

Just curious on whether there's any surprise from year end.

Thanks.

Yes, I think I think Ben the.

Great part of the result is the fact that it continues to reinforce what we've observed from the very beginning from the trials that have taken place.

Investigator initiated trials as you know we've got about 500 patients enrolled in these efforts and it just continues to reiterate their performance of C Guard just in a different context, the Abbott <unk> stent, but no surprises, which is actually quite good because it shows the consistency of performance of the stent.

In previous work as well.

Okay that makes a lot of sense.

And then.

<unk> been running in France can you talk a little bit about what the kind of what the Asps look like there I know you're at roughly 600 Bucks overall, but.

Kind of where are those add in France, and then maybe talk a little bit more about the <unk>.

Asian opportunity as you see it developing.

Yes, so the French market in terms of reimbursement is somewhere around.

Somewhere around 800.

$800 for reimbursement in this particular category.

Our objective there obviously was to go on a direct sales model for for obvious reasons, which gives us the full benefit of the ASP, but also allows us to control the market. So in that particular case. It made good sense to make the transition to a direct sales sales effort in France.

In terms of Asia I think your second question was Asia, We've got three interested distributor partners in Japan right now.

All of which.

All of which are quite interested in are in the process of trying to sort out what is best in terms of our approach, which partner relationship and so forth, but it's nice to have three very strong options in the Japanese market is it's a very significant play for us. So we're we're encouraged by that and we will continue to negotiate the best option.

Got it and then any other color that you can share on the two new delivery systems that you mentioned earlier.

Yes, Im anxious to talk about that it's a little bit premature, we're just sort of rounding the edges in terms of regulatory strategy and pathway and commercial pathway and I'm certainly hopeful that in the near future, we're going to be able to talk more openly about what those delivery systems mean.

Our our overall commercial strategy, but coming soon.

Oh, Okay with Franklin.

Making great progress.

Okay.

And I know, it's one of my favorite question.

I want you to keep at a tuned we're getting.

Well, that's all I had gentlemen, thanks for thanks for taking the questions.

Thanks, Thanks, Dennis I appreciate it.

There are no more questions at this time I would like to turn the conference back over to Marvin Sussman for closing remarks.

Thanks, very much I'd like to thank everyone for taking the time to join the call today of course inspire MD is fundamentally a stronger company today than ever before we're really encouraged about our future and I'm very proud of the extraordinary efforts of our expanding team in creating an exciting future for the company. Thank you.

Thank you. This does conclude today's conference you may disconnect. Your lines at this time and thank you for your participation.

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