Q1 2023 InspireMD Inc Earnings Call

About the.

Good day and welcome to Inspire MD, 1st quarter 2023 earnings call.

All participants will be in list only mode. If you need assistance, please sign all conference specialists by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions.

Please note that this event is being recorded. Now I'd like to turn the call over to Mr. Plenty. Come on with life science advisors. Please go ahead, sir.

Thank you, operator, and good morning, everyone. Thank you for joining us for the Inspire MD first quarter, 2023 financial results and corporate update conference call. Joining us today from Inspire MD are Marvin Slossman, Chief Executive Officer and Craig Shore, Chief Financial Officer. During this call, management will be making forward-looking statements, which are not historical facts.

Please refer to the risk factors described in Inspire M.D.'s most recently filed periodic reports on Form 10K and Form 10Q filed with the US Securities and Exchange Commission and Inspire M.D.'s press release that accompanies this call, particularly the cautionary statements made in it.

The call contains time-sensitive information that is accurate only as of today, May 16, 2023, 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 Sosman, Chief Executive Officer. Marvin, please go ahead.

Thank you, Glenn, and thanks to everyone for joining the call this morning.

Without a doubt, the most significant developments since our last quarterly update and one of the most significant milestones in Inspire MD's history is our completion of a transformational financing through a private placement of up to $113 million. The financing was led by Marshall Waste with Participations by OrbyMed.

Folias, Nanahala, Rosalyn, and Vellan Capital. These are amongst the most highly regarded medical technology institutional investors.

It's also worth noting that certain number of our board members have also elected to participate in the offering. We're both inspired and humbled by this vote of confidence which fuels our company's growth and enables our strategic goal to change the therapy to standard of care and the carotid disease market.

We're suing to the engagement where we received an initial $42.2 million in gross upfront capital within additional four charges of 17.9 million each. Tied to milestones totaling $113.6 million fully exercised. The warrant for tied to the following milestones.

First to read out of top line 12 month data from our ongoing FDA C Guardian's IDE clinical trial. Second receipt of pre-market approval, PMA, from the FDA for the C guard Prime Karate Extend System.

Third, the announcement of receipt of FDA approval for the switch bar, trans-corrotted system, and CIGAR Prime ADCM, and fourth, the first five quarters of commercial sales in the US market.

The funds are intended to further catalyze our milestone execution, including approval and launching our new products in the US and in our current served countries, including the CE Mark territories, advancing our tandem lesion indication for CE Mark and establishing a US-based business operations and commercial architecture.

With our balance sheet significantly strengthened, we can accelerate our plan to drive value inflection by way of advancing C-Guard EPS through their US regulatory pathway. While commencing the build-out, the World Class Commercial Infrastructure deeply committed to making C-Guard broadly available to the many patients with crowded artery disease.

to stand the benefit from this novel advancement and sensing technology.

The mission of our business remains unchanged, which is to focus on implant performance and positive patient outcomes.

As a reminder of the superiority of our unmatched data from nine rigorously designed peer reviewed clinical studies that have enrolled approximately 1850 patients, C-Guard EPS demonstrated superior short and long term clinical outcomes measured by the lowest complication rates of death.

stroke and my own function as compared to those competing first generation systems as well as surgical and our reproductiveaming.

Turning now to the quarter, we generated total revenue of $1.2 million representing growth of 4.7% over the first quarter of 2022. This was driven by a 6.7% increase in sale of C-Guard APF in our 30 served markets.

As we shared in our last quarterly reporting, our temporary restriction of sales due to the loss of MDD certification in November 2022 created a gap in sales and shipments, which was resolved in the second half of the first quarter.

It is significant to note that we were able to generate year-over-year revenue growth despite this restriction, but more importantly, we're able to successfully maintain sufficient inventory in our channels to avoid loss of procedural volume and access for patients for a C-Guard stand for best patient care. It is a testament to the tireless work and focus.

of the entire Inspire MD team that we were able to maintain availability in our markets and address patient needs despite the temporary interruption of shipments.

We're called in November 12th of last year our CE Mark certification temporary last as European regulators transition from the existing MDD directive regulatory framework which govern the marketing approval and sale of medical devices in the EU to this medical device regulation framework for NDR.

This transition resulted in a well-documented and significant delays by the European regulatory bodies in processing of application and audits under the new MDR certification.

DMV art deadline for transition.

To update and certification has taken more than three years with multiple revision delays and requirement changes, putting the entire medical device industry serving the EU markets at risk.

This complexity combined with a constantly changing requirement and deadlines has made this a challenging undertaking for all medical device companies that fall under the MDD purview.

In anticipation, we proactively work with our distributor partners and provide as much available inventory as possible to avoid shortages while continuing to complete the MDR process to reestablish sales.

which we have successfully done and are now able to resume normal cadence in our sales effort.

As a reminder, we enjoy greater than 25% market share and over half of our served CE market territories with some exceeding 80%. We believe our continued efforts on the ground together with a launch of two new St. Delivery platforms will enable share growth and accelerate the conversion of surgeries to end a vascular standard of care with the CE Guard St. System.

Our mission remains unchanged, to convert the last surgery first segment of vascular medicine to an endovascular first line standard with a best in class implant to seek our DPS.

With a full range of delivery options, serving the broadest multidisciplinary position base, we believe we are uniquely positioned to accelerate this conversion. And turning now to our U.S. regulatory activities, our Sea Guardians U.S. IDE trial continues at a robust pace for enrollment with 20 active trial sites recruiting and training patients.

the clinical setting, marking significant steps forward and advancing more stinging procedures.

Since that first case, we've continued to rapidly enroll in the final patient set with C-Guard Prime, anticipating completion of enrollment by the end of this quarter.

As a reminder, the new C-Guard Prime offers numerous benefits and advantages to physicians performing carotid re-backed prioritization, including an innovative handle design, and capitol and tip construction, which makes sense, trackability and deployment much easier.

This gives physicians and staff a much higher degree of confidence, which we believe will contribute to its confidence and spend utilization once approved and launched.

After completing enrollment in Sea Guardians, we will advance our PMA submission and approval process to get us closer to the potential launch of Sea Guard Prime in the U.S. market. In parallel, we commenced critical commercial readiness activities in the U.S., including the hiring of Shane Gleason, a seasoned commercial executive in the vascular space, to lead our go-to-market preparation.

as the GM of the Americas. In terms of product pipeline, the C-Guard EPS STEM platform remains the core of our business as we focus on the value of the implant as the single most important variable in patient outcomes.

To fully realize the full potential of C-Guard, however, we've developed two new delivery platforms to drive utilization across the broadest vascular specialist community. As noted earlier, we continue to advance development, regulatory approval, and launch plans for our CAS platform, C-Guard Prime, which will be available in both standard and short-shaft versions.

compatibility with development of SwitchGuard, our TCAR neuroprotection platform.

In combination, we believe our transcarotid fit will enhance T-card utilization with the best implant. We believe the breadth of our total tool set with a Sten-centric focus will be a key differentiator for us as we work to unlock the tremendous potential of this rapidly evolving market segment.

The winds of change and focus on endovascular first and carotid revascularization reinforce that our investment in this space will yield tremendous value as we work to lead this market transition.

In summary, we're incredibly proud of this financing, which serves as a proxy of our direction and is a transformational time for our company as we look for a bright future.

With that, I'll turn the call over to Craig for review of the first quarter's financials. Craig?

Thank you Marvin. I would like to begin this morning with a review of our recent financing. We entered into a securities purchase agreement led by Marshall Waith with a significant participation by other highly regarded healthcare investors for the sale of common shares or pre-funded warrants at each investor's election and warrants that an aggregate can bring in up to $100,000.

$4 million if the warrants are fully exercised for cash.

This would bring us to a grand total of $113.6 million. The warrants are tied to the following milestones, including the reporting of the 12-month data from our ongoing FDA C-Guardians IDE clinical trial, the receipt of pre-market approval, CMS Rely, and the 100-day duration period of clinical trial.

from the FDA for the SEGAAR Prime Corridor STEM System, receipt of FDA approval for the switch guard trans carotid system and SEGAAR Prime 80 centimeters. And the first five quarters, the commercial sales in the United States market. Turning down to the quarter, we generated total revenue of $1,239,000, a 4.7% increase over one million

sales and shipments to the EU countries. The company worked the remainder of the quarter, shipping product reduced the backload of orders that accumulated over the past few months.

InspireMD believes that the quarter over quarter increase in revenue during the first quarter of 2023 is not representative of the real underlying market demand for CRDPS due to the company's inability to ship products for the first half of the quarter. We entered the quarter with a remaining backlog of approximately $600,000 due to the temporary legacy of CRDSP that courses 90% of dollars in revenue. Ent idiosyncrasies and

$133,000 from $122,000 when the three months ended March 31, 2022. This increase in gross profit resulted from a decrease in right off from $184,000 and a $71,000 increase in revenues as previously mentioned.

less the associated related material and labor. Growth margin increased to 30.1% during the three month end in March 31st, 2023, from 10.3% during the three month end in March 31st, 2022, driven by the factors just mentioned.

Total operating expenses for the first quarter of 2023 were $4,754,000, an increase of $146,000 or 3.2% compared to $4,608,000 for the first quarter of 2022. This increase was primarily due to increases in expenses related to C-RD and FDA stuff.

per basic and diluted share for the same period in 2022.

As of March 31, 2023, cash equivalent and short-term bank deposits were $12.9 million compared to $17.8 million as of December 31, 2022. This, of course, excludes the transformational financing just described as the transaction closed subsequent to the end of the first quarter.

That concludes this financial review. We'll now open the call for Q&A.

We will now open the cloth for Q&A operator.

Thank you, and I'll begin the question and procession. That's the question you may press star than 100 touch-tone phone.

Using a speaker phone, please pick up your handset before pressing the keys. So, withdraw your question, please press stars and two. This time will pause momentarily to assemble the roster.

Thank you. First question will be from Benjamin Vayner of Alliance Global Partners. Please go ahead.

Good morning, gentlemen. Thanks for taking the questions and congrats on the finance team.

First off for me, just with the cap already, probably a little bit about Iowa and might accelerate other indications, particularly N-Guard and any other RG products that it could impact.

Hi, Ben. Thanks. Appreciate the question. It's an excellent, excellent call there. We consider this financing to be transformational for a number of different reasons, but I think you highlighted exactly the point, which is we've got a number of R&D projects.

which we're working on continuously as well as new indications. And this gives us the capital to be able to fuel those and accelerate those, I think, into a time frame that they gives us a good pathway and we're really excited about the possibilities of having that capital.

that move things forward. We've mentioned one in particular, which is this indication for acute stroke for tandem lesions and acute stroke, which we've been working on for quite some time. So we've mentioned that in prior calls. And that's just one example of the opportunity to move things forward so that we get the best of what C-Guard can offer in the marketplace. So this is a...

Our expectations of a protocol and a pathway to that and we'll have good information for you shortly as that unfolds. Obviously, this financing allows us to advance that effort more aggressively. So we'll be back to the market shortly on that one, but in the process of touching up the protocol and submission to FDA.

Okay, got it. So stay tuned there. And then let me, the commercial readiness, you know, what activities do you have kind of ongoing now? What's scheduled, you know, upcoming here? What should we be expecting to hear on that front? Yep, so as we mentioned, we hired Shane Gleason as the GM.

Next up, a few months, you can imagine there's a lot of architecture that goes into building a strong sales organization and strong presence in the market. One of the things we're proud of is the fact that we're currently participating in our IDE trial with about 20 sites in the US. And so we have a baseline of both contractual.

understanding what these hospital systems as well as these positions. So it gives us a great start just in terms of the administrative effort and how we think about leading into market launch on post approval. So there's a lot to be done, you know, between now and that point, but we have a very clear understanding of what it takes to architect and implement a plan so that we hit the ground running.

the first one trigger that you hit, is that a fair assessment and how soon could that come?

So I think sequentially, if you take a look at the first one, it would be on the readout of top line data. So we think that that one is obviously in the closest future point, if you will. The second would be on approval of the current IDE, the PMA for the current IDE for...

C guard prime and then the third Obviously is is for our T-car solution with switch guard and the short shaft C guard prime as well So I think if you just look at the sequence over time that that's the general time frame that we see things occurring in and You know obviously we've we've been able to separate those you know for

in quarter.

Yeah, I think that's the right way to think about it. Ben, obviously being able to complete those shipments and clear that backlog is a process in and of itself. We've prioritized all the major distributors and accounts in our European markets to make sure that everyone has sufficient inventory and will continue to work through.

That that backlog as well as new orders that are coming in and being able to get back to a normal cadence with demand So I think you're correct there. We're working through that as quickly as possible although we were Not in the market for a period of time our production continued and we had a readiness for the point where we're at now Which is to be able to to shift freely and sell into the European space

Okay, that's helpful. That's it from me. Thanks for taking the questions, gentlemen, and congrats again on the financing.

Thanks Ben.

Thanks Ben. Thank you.

And now to call back over to Mr. Marvin's Lawson for calls and remarks.

Thank you. I'd like to thank everyone for taking the time today to join the call and for the ongoing continued support. I'm extremely excited about what is the transformational financing and what that will allow us to achieve. More than at any other point in the company's history, we're extremely well positioned to execute on our plans to benefit patients and shareholders alike.

and we appreciate the ongoing support. Have a good day.

Thank you, conference and all concluded. Thank you for attending today's presentation. You may now disconnect.