Q2 2022 Avinger Inc Earnings Call
you
you
results call. At this time all participants are in a listen-only mode. Later you'll have the opportunity to ask a question during the question and answer period. You may register to ask a question by pressing the star and one keys on your telephone keypad. You may remove yourself from the queue by pressing star two. Please note this call may be recorded. I'm standing by should you need any assistance. It is now my pleasure to turn the program over to Matt Krepp, investor relations for the company. Please go ahead.
Thank you, Leo, and thank you everyone for participating in today's call. I'd like to welcome you to Avangar's second quarter 2022 conference call.
Joining us there, Avinder's Chief Executive Officer, Jeff Delenski, and our Principal Financial Officer, Nabil Spinetti.
Earlier today, Avangar released financial results for the quarter ended June 30, 2022. A copy of the release is posted on the Avangar website under investor relations.
Before we begin, I would like to remind you that management will make statements during this call that include forward-looking statements within the Meaning of Federal Securities law, which are made pursuant to the safe level provisions of the Private Securities Litigation Reform Act of 1995.
Any statements contained in this call that are not statements of historical fact should be deemed to be forward looking statements.
All forward-looking statements, including without limitation or future financial expectations, are based upon our current estimates and various assumptions.
These statements involve material risks and uncertainties. They could cause actual results or events that materially differ from those anticipated or implied by these forms.
Accordingly, you should not place undue reliance on these statements.
For a list and description of the risks and uncertainties associated with our business, please see our Form 10-K and Thank You filing with the Securities and Exchange Commission.
AVRJ or DISS claims any intention or obligation, except as required by law, to update or revise any financial projections before looking at statements, whether because of new information, future events, or otherwise.
Additionally, today's presentation will include reference to non-GAAP financial measures, such as adjusted EBITDA. The reconciliation of these non-GAAP financial measures to the most comparable GAAP financial measures is available within the earnings relief, which can be found on Aperture's website.
And with that, I'd like to now turn the call over to Jeff.
Thank you, Matt. Good afternoon and thank you all for joining us.
While the healthcare markets continue to deal with an unpredictable environment, we've made significant progress across our business in recent months.
During the second quarter, we advanced several strategic initiatives that we believe will be important growth drivers for the company.
as we expand our technology platform and build our peripheral product portfolio.
generate compelling clinical data supporting the differentiating benefits of our technology and meaningfully advance our coronary product development program.
We delivered solid sequential revenue growth in the second quarter, growing revenue by 13% from a challenging first quarter, even with persistent hospital staffing challenges and contrast dye shortages limiting hospital procedures in certain geographic regions of the country.
We are seeing continued improvement as we enter the second half of the year and leverage the recent launch of our Lightbox 3 imaging console to expand our business and bring our LEN and life-saving technologies to more physicians and patients.
We saw improvement across all of our product lines in the second quarter. Our primary growth driver during the quarter was Pantheris SV, with sales from SV increasing 37% compared to the prior quarter. As a reminder, Pantheris SV is our small vessel image-guided atherectomy device, which is primarily used to treat PAD lesions below the knee.
Due to the small size of the vessels being treated and the challenging nature of this anatomy, physicians place a high value on the real-time imaging and precise control provided by Pantheris SV.
enabling them to precisely target the disease and avoid damaging the healthy vascular structures during treatment.
The patient outcomes that physicians are delivering with this unique device are inspiring. To document these outcomes, we've initiated a post-market study called ImageBTK, which evaluates Pantheris SB for the treatment of below-the-knee lesions in a real-world clinical setting.
We expect to enroll up to 60 patients in the study with patients evaluated at intervals up to one year post procedure.
We've been enrolling patients at two key opinion leader sites in the U.S. and opened two new clinical centers in Germany for enrollment late in the second quarter.
Most patients enrolled in ImageBTK suffer from critical limb ischemia, or CLI, the most severe form of VAD.
And the early clinical results we're seeing in this challenging patient population are exciting.
Interim findings from the ImageVTK study were featured in a podium presentation at the NCDH conference in June .
with the early data showing 93% freedom from target lesion revascularization, a measure of restenosis, and 94% patency after 12 months, with 100% freedom from major adverse events.
While we are still early in the study, we expect to complete enrollment in ImageBTK over the next six months, and will continue to provide updates as new data are released.
In addition to sequential quarter improvement in our existing catheter business, we achieved strategic milestones that we believe will significantly enhance our platform and be important contributors to our growth.
First, in April , we expanded availability of our new Lightbox 3 imaging console to full commercial launch.
We continue to be thrilled with the performance of this next generation console in the field.
The Lightbox 3 has now been used in more than 250 cases and 40 accounts in both new and existing sites.
The response to the new system continues to be outstanding, with physicians especially excited about the enhanced high definition imaging provided by the new device.
The highly portable Lightbox 3 brings a new dimension to our sales strategy by expanding our ability to effectively support hospitals with customized strategy.
including a new mobile capability that allows us to support catheter utilization and conduct on-site demonstrations and evaluations without permanent installation of a light box.
While still early in the launch process, we're already realizing the benefits of this approach, with eight new accounts launched in the second quarter.
The Lightbox 3 weighs less than 20 pounds and fits into a hard-sided case the size of a carry-on suitcase. It can be easily wheeled into a facility and set up on a portable stand by our clinical support team in minutes.
We have now deployed 12 portable system configurations to our sales territories and are excited about the potential of the new platform to bring increased efficiency and productivity to our commercial operations in the US and internationally.
A recent launch in Chile is being supported exclusively by the Lightbox 3 platform.
The Lightbox 3 is now available for sale to new accounts and as an upgrade option for existing accounts.
We look forward to reporting on our continued progress with the Lightbox 3 as we gain more experience with this exciting new system in the coming quarters.
The second important milestone achieved in the quarter was the filing of a 510K submission for our new TIGER-I ST catheter, a next generation chronic total occlusion, or CTO crossing system for use in peripheral arteries.
Tiger I ST is an extension of our Ocelot and Tiger I family of CTO crossing capitals.
This new image-guided device has an integrated spinning outer tip for penetrating challenging blockages and CTO caps.
It incorporates an advanced shaft design for pushability and torque response, and a three marker system similar to Ocelot.
to facilitate consistent image interpretation across our platform.
Tiger Eye ST continues to provide the high definition real-time intravascular imaging, deflectable tip, and faster rotational speed introduced to our CTO portfolio with the commercial launch of our first Tiger Eye device in early 2021.
By adding advanced capabilities to the platform, the new TIGER-iST device is expected to expand the utility and addressable market for our image-guided CTO catheters in a challenging patient population.
Based on our past experience, we hope to receive FDA clearance in the second half of this year and be in a position to initiate a limited launch for TigerIST in the fourth quarter.
In addition to achieving this important milestone for TIGER-IST, we made significant progress on the development of Pantherus LV, our new image-guided atherectomy device for the treatment of larger vessels, typically those above and behind the knee, where the majority of procedures are performed today.
Pantherus LV incorporates many of the design elements of our successful Pantherus SD catheter to streamline the procedure and expand our capabilities in this anatomy.
Pantherus LV utilizes a proprietary design for plaque apposition without the need for a balloon and is designed to operate at higher rotational speed to engage challenging PayPal plaque.
It also adds rotational control for efficient guide wire management and a modified plaque management system for tissue packing, as well as several other enhancements which we believe will bring more efficiency to the procedure and expand our user base.
We expect to file a 510k application for this new device by the end of this year. And if all goes according to plan, we hope to receive FDA clearance in the first half of 2023.
As we look to the future, we believe expansion into the high-value coronary market is a transformational opportunity for Avangyr.
due to its large addressable market, attractive reimbursement profile, and differentiated clinical advantages of our image-guided approach.
We are very excited about the progress we are making in the development of our first Coronary Product Application.
Our first entry into this market is anticipated to be an OCT guided catheter for the percutaneous crossing of CTOs in the coronary artery.
By leveraging our years of experience in the peripheral arteries, in the recent advances we've made across our platform, we believe we can redefine a category by providing a safe, reliable, patient-oriented solution to what is today a complex, extensive, and uncertain procedure.
Existing CTO PCI crossing procedures are highly complex, require specialized and demanding technique with a steep learning curve, and the use of multiple devices.
Even so, approximately 50,000 CTO PCI procedures are performed in the U.S. each year, with an increasing number of hospital centers interested in treating these patients.
These procedures require extended time under fluoroscopy, which results in high X-ray radiation exposure and contrast media burden, creating health risks for both the medical team and patients.
In addition, it's estimated that more than 200,000 highly invasive coronary artery bypass grafting, or CABG, surgeries are performed in the U.S. annually, with estimates of up to 30% of these procedures related to the treatment of coronary CTOs.
This market provides an exciting target for our image-guided system, which would make a percutaneous approach accessible to more physicians and reduce x-ray radiation exposure and contrast burden during the procedure.
An image-guided coronary CTO crossing device with diagnostic capabilities would access highly attractive reimbursement for the therapeutic procedure immediately upon FDA clearance.
In addition, we anticipate our OCT guided catheters will qualify for existing OCT diagnostic imaging reimbursement in the coronary arteries.
We believe that an image-guided catheter designed for crossing efficiency with the need for fewer support devices
combined with an attractive reimbursement scenario, provides the opportunity for a very compelling economic value proposition.
Our coronary CTO development efforts are focused on low-profile catheter design that combine real-time OCT guidance with precise control and steerability to facilitate nanograde approach and allow physicians to safely and efficiently cross coronary CTOs.
Similar to our peripheral catheters, our coronary devices will incorporate a precise measurement capability to help physicians properly size balloons or stents prior to placement, which is critical for optimal outcomes.
We've advanced our design efforts and are in the process of evaluating prototypes and bench type models and through engagement with physicians.
Given its strategic importance, we have prioritized our R&D activities on development of this new device with the goal of filing an investigational device exemption, or IDE, with the FDA in 2023 to allow for initiation of a clinical study to evaluate safety and efficacy of the device in advance of a regulatory filing.
As we look to the second half of the year, we're excited by the increasing case volume opportunities we are seeing and the positive response to our new Lightbox 3, which is already providing new account opportunities for the company.
With a new 510k application recently submitted and another on the way for our PAD product portfolio, we are creating new usage drivers for our platform.
The outstanding patient outcomes we see in labs around the country every day and in our clinical studies support the adoption of our products and highlight the differentiating benefits of our image guided approach.
We are also making important investments for the future as we prepare for entry into the coronary market through a highly focused R&D effort to deliver the first ever image-guided CTO crossing device for the treatment of coronary artery disease, which we believe provides a transformational value opportunity for Avangar.
At this point, I'd like to introduce you to Nabil Spinetti, our VP corporate controller, who was recently named to the positions of principal financial officer and principal accounting officer for Avinger. Nabil will take us through the financial results, then I'll return for Q&A. Nabil?
Thank you, Jeff.
Total revenue for the second quarter of 2022 is 2.1 million, a 13% increase from 1.9 million in the first quarter as we experience reduced impact of COVID-19 in our markets.
offset by the lingering headwinds of hospital staffing challenges and the contrast dice of national rage in the second quarter that Jeff discussed earlier in the call.
Market conditions continue to improve and we are encouraged by the case activity we're seeing in the third quarter, which is typically a lower seasonal volume quarter.
Gross margin for the second quarter was 31%, improving from 28% in the first quarter, reflecting higher revenue levels for the quarter.
Avender's contribution margin on disposable products is far higher than our reported gross margin, translating to improved gross margin performance as you grow revenue base.
Operating expenses for the second quarter were $4.4 million, a decrease of 15% from $5.2 million in the first quarter.
With commercial release of the Lightbox 3 console, our R&D expenses have declined, even while we are investing in the development of two new pad catheters and the coronary CTO crossing device.
Net loss and comprehensive loss for the second quarter of 2022 is 4.2 million, down from 5.1 million in the first quarter of 2022.
Adjusted EBITDA, as defined under our non-GAAP financial measures in this press release, is a loss of $3.7 million, an improvement from the loss of $4.6 million in the first quarter of 2022. A copy of the reconciliation from net loss to adjusted EBITDA can be found in today's press release, which is also posted on our website under the investors section.
Lastly, cash and cash equivalents totaled $16 million as of June 30th. We subsequently raised gross proceeds of $5 million in a combination of registered direct and private placement offerings priced at the market under NASDAQ rules, strengthening our financial position as we continue to fund our strategic initiatives and invest in the accessible business.
At this point, I'd like to turn the call back to Jeff for Q&A.
Thanks, Nabil. We're excited about the progress we made in the second quarter, advancing several important strategic initiatives and delivering solid sequential revenue growth, with market conditions continuing to improve into the third quarter.
Our new Lightbox 3 system continues to perform extremely well in the field and provides new opportunities to drive adoption of our image-guided platform.
We filed a 510K application for our new TIGER-iST CTO crossing system and significantly advanced our R&D and clinical programs, including the development of our first coronary product application.
In addition, we delivered improved financial results for the quarter and strengthened the financial position of the company by adding new capital to our balance sheet.
As we enter the second half of the year, we look forward to reporting our continued progress in all of these areas and remain committed to our mission of radically changing the way vascular disease is treated.
At this point, we'd be happy to take your questions.
At this time we'll take questions from our institutional investors. If you would like to ask a question, please press star 1 now on your telephone keypad. Star 1 at this time. One moment while we queue for questions.
And once again, that is star one to ask a question.
There are no questions at this time. I'm happy to return the call to Jeff Sawinski for any concluding remarks.
Thank you, Leo. And thank you all very much for joining our call this afternoon. We very much appreciate your interest in our company and your support and look forward to reporting our continued progress on our third quarter 2022 call. Have a great afternoon.
This does conclude today's conference. You may now disconnect. Everyone have a great day.
iccation COUR pro. Thank Pat, Please take stand. Day one and law. The second courar 2002. 20 Sul call asat this opp have the pport ity ask question. The question wer registrure to after question by pro Star and one telephone may re from the presenting Star two ase this call may be COUR stud Vice any assisted asure to the program over to V relation for the company ase. Thank o and thank. one call to aven second courarter out twent pro call ING their venagers, IE exeut of officeee and our financi officeee. The Ty early day ven release financi resul for courarter and 30 to 20 two the ly ven under before the mind management statement during call COUR four statementments in the fed se.curty. A prosu state posmissition of the priv curty itigation Form five statement contended call not statement for Act the statement all four statement COUR ment ation uture fincial ation based upon our courrent ment the Fion. The statement of tri risks thir the pro actual results or aterly de and Ed Form by COUR court new state list criptionof the ris and thir. Our Form 10-K FILLY for the Securities Exchange mission afterage DIS ings any intention obliglegation COUR by law D or Vice any financial project. Cour statement information uture or Li. Additionally propresent ational COUR on financial measureures. The address, the re fationof financial measures. The proable financial measures ailable ly found on the ED by ter over Jo. Thank afternoon and thank all pro joining. While the he care markets continue to deal with an UN redic able Vir ment, we made significant progress theacross our business re Mon uring the second quarter we advance several strategic initat that we believe will be COUR pro drivers for the company as we expand our techno platform bill our proipheral CT COUR folio, generate pelling clinical date, courorting the defer rentiating benefits of our techno and meaning vance our courtoninary CT development program. We lired Ed sequentcial revenue th in the second quarter ING revenue by thir teen persent from a challenging first quarter, even with assist hospital staf ING challenges and contract or ages limiting hosp the procedures. thir Graf reregions of the countrythree we are C continue improvement as we under the second half of the year and leverage the recent launch of our light box three imaging consusel to exexpand business and bring our and life stateing technoes to COUR posions and ation saw provement across all of our product lines in the second quarter our priimary th dri during the courter sals for creasing 30, seven persent pared the prior quarter. As the remind ER their's is our small vsel image gued after the CT device which priimmarly use to tre P a legions, the law, the ue to the small SES, the vessel tre in the challenging ure of the Y posicions place a high value on the real time imaging C control provideed by's may ING cite TAR the DISE and a void damaging the he? V structures during treatment, the patiation outcomes, the position or delivering with the device fing the documment, the comes initiated St market study called image T K which value ATE their's the atmentof the law, the LEGION in a real world clinical stud. We expect of 60 ation in the study, the pati valueuated ininter up tothe one year POS procedure. We been rolling Pat two opinion lead cite in the's and two new clinical centers in jment for rolement ATE the second quarter most patation Ro image B T K from clinical Lim, the most seve form of and the early clinical results in the challenging patiation propulation. Our cing in finding from the image B? T case study feat ort presentation that the N? C a conference in J the early date showing in three prosent ree from AR leadlegion rev ization measure re ES and nin 4% PA after we Mon one hundred propresentcent Ed from majure vers EV. While we are still early in the stud. We expect tted role ment age B T K over the next six Mon and continueto prov up D new date our rele. In addition, the sequentional courtter improvement, our existing captheit bus, we IE strategic miles stes that we believe significant ly hands, our platform and the courort contributers to our pro. First in a we exexpand ailability of our new light box three imageing consel to full commercial laun. We continue the thrilled with the formmentments of the next generation consusel in the F the light box three as now use in more two hundred fifty casees courty account in both new and existing cite. The response to the new system continue to be out standanding posicions. The speciion exciteded about the ance high de ition imimaging proved by the new device, the highly courortable light box three the new endion to our sals strategy by expanding our abilityity to a pected ly support hospitals ice strategy including new moable case capability that a allows the suppcourort the ization and conduct on's Mon ation valueuation out perman of the life. While orly in launch crosscess were allalready reizing the benefits of approach with eight new accounts launch in the second qucourarter the light box three ways 20 couns in to a cited case, the CED of the ary case, the be ly will to ability and sent up on courortable St by clinical suppt teen and minute. We now ploy we courtable system IG uration our sals teratories and our exc about the the entional. The new platform bring increas ions the COUR? Tiv to our commercial operation in the's and nationalally. Our recent launch a supported clus by the light box three platform. The light box three now avail for Sal to new account as an up GR option for existing account. We COUR to reporting on our continue progress of the box three and we G more experi the citing new system in the coming quarters. The second courort file IE in the courarter was the filing of the 5? 10 case submissition for our new Ti's T catheitter generation CT COUR apclus C? T o crossing system use proipheral arteries. Ti's T an extendion of our off law and Ti? Ar famly T? O acrossing theitters. The new image guid device, as in grated expending out propenittrating challenging lawck ages and C? T o CA in courporate advance designed pur ability and court respon and three market system. The off law abilitate Assistant image inter across our platform. Ti's T continue to provide the high definition real time ininter V? C imaging flect and F? Ro ation inroduced to our C? T o COUR folio with the commercial lach of our first Ti or device early twentthousand 20? one by adding vance capabities platform, the new Ti's T device expected to exexpand the T and addressable market for IM guid T o catheitters in challenging patiation propulation Ed on our AST experi PE to rec F a clear in the second half this year position to initiated Lim launch for Ti? T in the courth qucourarter. In addition to ieing the courort stone for Ti's T, we made significant progress on the development of their L V, our new age guited after direct device forthe treatment of large vesselals, typly vo o and H the the thejor procedures Form day their L? V courporate of the design element of our pectest their's catheitter the line the procedure and exexpand our capability in the at Y their L? V izes of ary, designed for AP position with the need for Lo and designed to operated ER tation to engage challenging Act. Also ads tation control for officeeeition guide lawor management and a mo? iffive management system for tissu acting well, veral other hance ment which we believe BR more icition the procedure and exexpand our use B we expect file 5, 10-K application for the new Dev by the end of this year and couring the plan we PE to rece D a arance in the first 20 20, three as we look to the future, we believe expandion in into the high value courtonary market, the Trans for ation opportunity for aven ue to large addressable market tract re imversement proof file and the fer? ated clinical advmanagees of our image gued approach. We are very cited about the progress MA the development of our first courtoninary product application, our first the market icipated to and C? T guited catheit for the COUR 10 crossing C T OS in the courinary artery. By leverageaging our year experi in the proipal arteries in the recent advance we made across our platform we believe we re fin CA? ory proveding a state law able patiation or lation to what day a extsenten and certain procedure. Existing C T o P TC proross procedures, our highly Act requor speciion ized anding tech, the learninging COUR and the use ulti device. Even prox five thousand C T o P C procedures or pro form in the? U's year. An increasing number hospitital senters in interests treing ation the procedures reprior extended time under COUR, the which results high radation proure and contract med created he ris the medical teen and ation. In addition, estimated that more two hundred thousand highly vase couronary ter by AST after COUR C age proced C age juries form in the U's an with estim of up 30% procedures related the treatment courtonary C T o. this market provide exciting TAR for our age guited system which would make a COUR approach expectable to more position, position in radation expos and contract during the procedure in image guided courtonary C T o prorossing device case ability Act ly tractti re verssement for the their procedure med F D a clear. In addition we icipate our o C T guid catheters five for existing o C T not imimaging verssement in courtonary arteries. We believe that image guid catheit designed for crossing officeeeition C with the need for support Dev bed an a tract imversement aryo proved the opportunity for a very pelling IC value proposition. Our court ary C T o development afterforts. Our cus on low pro file cathe designed that B real time C T guid with cite control and ability facilitate grated approach and the allow posic to statefe officeeeition across courinary C T o AR to our proipal catheitters. Our court inary device courporated ITE measurement capability, the he posions pro properly C Lo sent prior placement which couritical for PT optim lawile comes advance design effor and in theprorosscess of the valueuateding pro Ty and vent Ti modes and to engagement position strategic courort pri. We have prior izes our activity on development of the new device the, the goal filing and investigation device exemption or E with the F a 20 twent three to allowed for initiation of clinical study to a valueuate statefe the device in advance. The regulatory filing. As we look to the second half of the year, excited by the increasing case law opportunities, we C the posit respon, our new light box three which allalready provide account opportunities for the company, the new five K applloication recently submitted and another on the way for our P? A product COUR folio. We are created new use drivers for our platform, the tanding patiation outcomes we C ABS around the country every day and clinical studies, the court the adoption of our product and the high light, the de tiating benefits of our age guited approach. We are also ING courort investments for the future as we P for and thecourtonary market a highly focus AR D to deliver the first ever image guid C T o acrossing device for thetreatment of courtoninary arter disease which we believe provide Trans formation value opportunity for aven DIS point intrduced to the bill Ty our V P courpor control was recently named to the POS of inable financial officeeeice and inciable accouning officeee for avenure bill. Take to the financial resul that all return the bill Thank. Court revenue for the second courarter 20: two to point one teen percent incre COUR .0.9 in the first qucour, arter as we experi CED Act COUR marke all the ING had hospit AF coun in the contr reregion. The second quarter the address's call COUR conditition continue to pro the COUR the case activity thir quarter typically law C qucourarter lawg. For the second court prosent proing cent in the first quarter reflecting high revenue leve for the quarter contr bution COUR DIS products. The four higher in our reportty vers TR improved courortg Form law case opering. For the second COUR COUR COUR Form crease six teen percent F COUR two in the first quarter. Commercial release of the life box: three our sent have couring even weare investing the develop of two catheitters and the COUR ary C T prorossing Vice law law. For the second courarter two thousand twent 2: one in the first courarter 20 Y two address the on ation in pro ase law seven in improvement the the law COUR six in the first courarter twentthousand 20: two pro cation law to addressjust the found pro also Ed in the V sixion last C cash to 16 Ion subsequently RA pro the five and come the ation of direct priv lawicings. The market in the's strenging the. Our financi position continue to form ategic initi vest disiness point the COUR the un.y Thank bill C about the progress. We in the second quarter vancecing several ort strategic initives deliver soled sequentional revenue. Pro market conditions continue to proved into the third quarter. Our new light box three system continue to form extre, ly well in the fil and provide new opportunities to drive option age guiteded platform. We filed the 5, 10-K application for our new Ti's T C T o crossing system and significant advance our R clinical programs, including the development of our first courtoninary product application. In addition, we delired improved financi results for the quarter and streng in the financial POS of the company by adding new catheital to our C as we ENT or the second half of the year. We court reporting our continue progress and all of areaas re committed to our missition of rat changing the way V disees tre Ed DIS point. We be happy to take questionion at this tyit question to Al of V ask question Please. Star one telephone. Star law that this Ty two question and that AR ask question that that this happ re the call to Mars. Thank o. thank all very joining our call afternoonwe very pre ininterest in our company and Su court and the COUR reporting our continue progress on our third quarter two twentythousand 20, two call. grate afternoon. clud ferenress made out every one day.