Q2 2023 Avinger Inc Earnings Call
Greetings and welcome to the Avenger second quarter of 2023 results calls at this time all participants are in a listen only mode. A question and answer session will follow the formal 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'll now turn the conference over to your host Matt Kreps Investor Relations Avenger you may begin.
Thank you Paul and thank you everyone for participating in today's call I'd like to welcome you Jab in your second quarter 2023 conference call joining us there haven't your CEO , Jeff swept gate and principal financial officer, That'd be all Tonight.
Today I've injure released financial results for the quarter ended June 32023, a copy of the release is posted on the average your website under Investor Relations.
Before we begin I'd like to remind you that management will make statements. During this call that include forward looking statements within the meaning of federal Securities laws, which are made pursuant to the safe Harbor provision the private Securities Litigation Reform Act of 90 95.
Any statements contained in the call that are not statements of historical facts should be deemed to be forward looking statements.
All forward looking statements, including without limitation, our future financial expectations are based upon our current estimates and various assumptions.
These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward looking statements.
Accordingly, you should not place undue reliance on these statements.
He left in your description of the risks and uncertainties associated with our business. Please see our Form 10-K, and 10-Q filings with the Securities and Exchange Commission.
<unk> disclaims any intention or obligation, except as required by law to update or revise any financial projections or forward looking statements.
Whether because of new information future events or otherwise.
Today's presentation will also include <unk>.
References to non-GAAP financial measures such as adjusted EBITDA, a reconciliation of these non-GAAP financial measures to the most comparable GAAP financial measures is available within the earnings release, which can be found on <unk> website.
Now I'll turn the call over to Josh.
Thank you Matt Good afternoon, and thank you all for joining us the second quarter was an exciting time for avinger as we received FDA five 10-K clearance towards two innovative new devices Tiger I S T and pentair as Lv, providing the opportunity for two important new product launches in the second half of this.
Year, a first for average or.
We had good momentum in our business in the second quarter, increasing revenue by 8% on a sequential quarter basis, and adding new resources to our sales team.
We are confident that the introduction of these two new products will provide meaningful growth opportunities for our business as we move through the second half of the year.
Combined with our new Lightbox three advanced H D imaging console, we believe the launch of these two new catheter systems completes the build out of our image guided peripheral product portfolio, allowing us to focus most of our R&D efforts on the development of our first coronary product application by leveraging.
Our proprietary image guided platform. We believe we can redefine the market for crossing coronary C. T OS providing a superior simplified and more certain solution for a challenging condition.
And providing avon's yours first inroads to the high value CT coronary artery disease market.
We made significant progress on this initiative during the second quarter advancing design candidates through the first stage of animal trials, incorporating valuable feedback from coronary CTO specialists and preparing for the next round of animal studies this quarter with.
With this progress we believe we remain on track to filing an investigational device exemption or IDE application with the FDA in the first half of next year to allow for initiation of a clinical study in 'twenty 'twenty four.
While we made excellent progress on our new product initiatives. We also reported solid operating metrics during the second quarter, we maintained gross margin at 30% and Hell do our efficient operating cost model driving significant improvement in adjusted EBITDA compared to both the prior quarter and year ago period.
Sales productivity or revenue per sales had remained strong for our existing team members and during the quarter. We hired four additional clinical specialists to provide expanded case coverage capability in future quarters.
Let me take a few minutes to provide further updates on our two recently cleared peripheral products.
We received five 10-K clearance for our new Tiger I S. T high speed CTO crossing catheter in April and initiated a limited launch in May since that time physicians at nine sites have completed more than 30 cases with the new system.
We have sold catheters into an additional five sites and expect to support additional cases in both these in existing sites to complete our limited launch activities over the next month.
Based on the product reliability clinical success and positive physician feedback from the cases completed so far we bought begun preparations training our broader sales team and building product inventory for expansion to full commercial launch later this quarter consistent with the plans communicated earlier this year.
As a reminder, Tiger I S. T is a low profile five French system designed to cross chronic total occlusions or C. T OS which are completely blocked arteries in the peripheral basket vasculature, both above and below the knee.
Tiger I S. T spins it speeds up to 1000, RPM and provides real time high definition O C T imaging during the procedure.
Providing valuable information for the physician to guide treatment and help them stay in the true lumen during crossing which is highly beneficial for the patient.
Tiger I S. T has a user controlled deflectable tip to precisely direct the catheter during treatment and incorporates multiple design upgrades in the chip configuration, and catheter shaft to increase crossing power and procedural success and challenging morphology.
It also adds design features to aid in image interpretation during the procedure and performs exceptionally well with our advanced Lightbox III imaging platform.
Tiger I S. T. A limited launch cases have already contributed to the growth of our CTO business in the second quarter and we're excited about the potential for this innovative new product to be a significant growth driver as we expand to full commercial launch through the back half of the year.
In June we received our second five 10-K clearance in the quarter with the FDA clearance of our new Penn Terrace L. B image guided atherectomy system.
We developed and there is L. B with the objective of streamlining the atherectomy procedure opening additional user in case opportunities for our platform and in combination with our Lightbox III imaging console expanding the mainstream appeal of our image guided platform.
But there it's L V builds on our success with our pant there that's the small vessel device incorporating several design features from this system for larger vessel application.
The Pan terrorists L. V device is designed to treat vessels three to seven millimeters in diameter and is ideally suited to treat lesions in the SFA and popliteal arteries above and behind the knee where the majority of P. E. D procedures are performed.
Terrace Lv incorporates a proprietary design for blackout position without the need for a balloon and operates at significantly higher rotational speeds than our current large vessel offering. It also introduces enhanced guidewire management and plaque management systems to the platform.
We initiated limited launch for Pentair, It's L. V. This month and expect to gain case experience in up to 12 clinical sites in the coming months.
As with Tiger I S. T. The limited launch period provides important benefits to fully understand the clinical capabilities of the new device Gage product performance and reliability in a real world clinical setting and prepare our clinical sales team for full national launch if all goes according to plan, we expect to expand pentair. It's L V.
The full commercial launch in the fourth quarter of this year.
We look forward to updating you on our continued clinical experience with these two new products and we're excited about their potential to positively impact our revenue as we expand both products to full commercial launch in the second half of this year.
Our advanced and highly portable Lightbox three imaging console continues to receive rave reviews from physician users and is the perfect complement for our new high speed catheter systems, allowing catheters to spin at higher speeds without image degradation.
While we continue to support the larger installed base of our legacy L. 250 platform Lightbox III is now responsible for approximately 25% of our case volume providing significant upside opportunity as we expand penetration of this platform.
Lightbox III is being used to efficiently engage with new accounts as well as provide upgrade opportunities in existing accounts, while most lightbox three procedures are performed on a portable console brought in by our clinical support team. We sold three lightbox systems in the second quarter.
Our best in class Pan <unk> S V small vessel atherectomy device continues to deliver exceptional patient outcomes and continues to be a strong market pro forma for avon's or.
Pat There is S. B is primarily used to treat patients with below the knee lesions, many of whom suffer from critical limb ischemia or CLI. The most severe form of P. E D.
Safety is of Paramount importance when treating lesions within these very small two to four millimeter diameter vessels and in CLI cases clinical outcomes can determine whether the patient will be able to avoid amputation.
The real time imaging and precise control provided by Pentair SSP allows physicians to precisely target the disease, while avoiding damage to the arterial vascular structures.
Hopefully restoring blood flow per limb preservation, and minimizing or avoiding adverse events or future re narrowing of the vessels.
<unk> is now responsible for approximately 50% of our atherectomy case volume. We are excited to extend design features of that have driven success with this device to the above the knee market with our new pentair as Lv system.
The unique and compelling benefits of Pentair is S. B have inspired art image be Teekay post market clinical study designed to evaluate pen Terrace S. D for the treatment of below the knee lesions in a real world clinical setting.
We continue to build the clinical dataset at the 12 months post procedure study endpoint and expect to complete patient enrollment this quarter.
Principal investigators for the study have recently presented updated interim results at major clinical conferences in the U S and Europe .
Clinical outcomes from image B T K continue to be outstanding.
Commenting on this presentation at the Linc Symposium in June Dr. Michael Lichtenberg, Chief Medical Officer, and director of the Angiology Department and vascular center. It couldn't have come Arnsberg said pen Terrace S. V shows enormous promise for the treatment of P. A D and challenging below the knee anatomy backed by real World day.
And patients in Rutherford class three through six.
We have seen tremendous outcomes for patients at six and 12 month follow up at this point in the image be Teekay study with 96% freedom from T. L. R and 93% patency at 12 months and 100% freedom from major adverse events across enrollees as.
That's compared to restenosis rates as high as 70% using balloon angioplasty. These type of results support Oc T guided directional atherectomy as an excellent option to address vascular disease and the arteries below the knee.
In addition to the exceptional safety and durability of patient outcomes data discussed by Doctor Lichtenberg luminal gain or the opening of the vessel for blood flow has been equally impressive in the study.
On average the 41 patients treated at this point in the study began with a 94% stenosis or blockage of the target vessel.
This was reduced by 73% to a blockage of only 25% following treatment with <unk> alone.
And reduced further to a blockage of 9% following the optional use of adjunctive therapy, such as an angioplasty balloon.
Representing a 90% reduction in stenosis overall.
These clinical results are unprecedented in the treatment of advanced disease and below the knee vasculature emphasizing the value of our proprietary approach, which combines the safety of image guided therapy with the targeted luminal gain of directional atherectomy.
We currently have 46 patients enrolled in the image be Teekay study and anticipate achieving our 50 patient target enrollment this quarter.
<unk> will be followed to the 12 month endpoint of this study and we expect to continue to release interim results as additional data becomes available in the coming months.
As we look to the future we're excited to bring the benefits of our image guided platform to the large and growing coronary artery disease market. Our first product application targets development of a superior image guided solution to the complex expensive and uncertain procedures currently used across chronic total occlusion.
<unk> in the coronary arteries by.
By leveraging our proprietary technology platform. We believe we can redefine the standard of care in this market with the first and only fully integrated image guidance system for crossing coronary C. T OS.
Our coronary CTO development program focuses on low profile catheter designs that combine real time, OCG guidance with precise control and steer ability to facilitate an integrated approach and allow a larger number of physicians to safely and efficiently cross coronary C. T OS.
Our peripheral catheters, our coronary devices will incorporate a precise measurement capability to help physicians properly size balloons stents prior to placement, which is critical for optical optimal outcomes.
And image guided coronary CTO crossing device with diagnostic capabilities, such as we are developing would access existing reimbursement codes, both for the therapeutic procedure and for coronary OTT diagnostic imaging immediately upon FDA clearance. This is a key distinction from P. E D codes, we believe.
Is that an Oc T guided catheter designed for crossing efficiency combined with an immediately available attractive reimbursement scenario provides the opportunity for a highly compelling economic value proposition.
Having largely completed our peripheral R&D efforts, we are now primarily focusing development activities on this coronary initiative.
We have made significant progress and gained valuable feedback to the evolution of our design prototypes through our key opinion leader Advisory Board.
We successfully completed our first round up round of animal studies. This past quarter and are preparing for a second round of animal studies that are top Kols Center next week.
Based on our experience to date, we are even more excited about the potential for this groundbreaking product to change the standard of care for the treatment of coronary C. T OS and we believe we remain on track to volume violent I D applicant application with the FDA in the first half of next year to allow for initiation of a clinical study in 2020.
Four.
We made tangible progress across several fronts over the past quarter, securing FDA clearance for two strategically important peripheral products and advancing both devices to limited launch building, our revenue base and expanding our case coverage capability with new sales hires and making substantive progress on the development of our <unk>.
First coronary product application at the same time, we continued to carefully control operating expenses and delivered significant improvement in adjusted EBITDA performance.
As we look to the back half of the year, we're excited to expand our Tiger I S T and Pat Perez Lv devices to full commercial launch broadening the appeal of our product portfolio and creating new usage drivers for our platform. We will continue to leverage our new Lightbox three imaging console to drive new account activity and grow our user base.
And look to make strategic investment in our commercial field presence to increased case coverage capability as we move through the remainder of the year.
The second half of the year is also a critically important time in the development of our first coronary product application as we continue to gain valuable learning on our design approach and complete phase III design selection in phase III verification and validation over the coming months to prepare for an IDE application I E application with the.
F D. A in the first half of next year.
We look forward to reporting our progress against these initiatives throughout the year and at this point I'd like to turn the call over to mobile Spinotti, Our principal financial officer, and accounting officer to take us through the financial results I will then return for Q&A mobile.
Thank you Jeff.
Total revenue was two point on <unk> for the second quarter of 2023, compared with $1 9 million in the first quarter of 2023, and $2 1 million in the second quarter of 2022.
Sales productivity for our existing team members remained strong during the quarter and the company hired four new clinical specialists to support expanded case activity in future quarters.
Gross margin for the first quarter of 2023 was 40%.
For the second quarter was 30% compared with 34% in the first quarter 2023, and 31% in the second quarter of 2022 operating expenses for the second quarter of 2023 were $4 3 million down from $4 9 million in the first quarter of 2023, and $4 4 million in the second quarter of 2022.
As the company maintains an efficient operating expense structure with the receipt of two FTA Kohl's notifications in the second quarter. The company has substantially completed its peripheral R&D programs and as redirecting its only be activities to focus on the development of this coronary CTO crossing device.
Net loss and comprehensive loss for the second quarter of 2023 was $4 2 million compared with $4 6 million in the first quarter of 2023, and $4 2 million in the second quarter of 2022.
Adjusted EBITDA as defined under non-GAAP financial measures in this press release was a loss of $3 4 million improved from a loss of $3 9 million in the first quarter of 2023, and a loss of $3 7 million in the second quarter of 2022.
For more information regarding non-GAAP financial measures discussed in this press release, please see the non-GAAP financial measures below as well as the reconciliation of non-GAAP measures to the nearest GAAP measures provided in the tables below.
Cash and cash equivalents totaled $7 1 million as of June 30 is at this point I'd like to turn the call back to Jeff for Q&A. Thanks to Bill. We're excited about the recent Tiger I S. T and Pentair is L. B clearance is the first time, we've had two devices cleared within a single year.
We're well into our limited launch with Tiger Tiger I S T and off to a good start with Panther as Lv and expect to move to commercial launch for both products in the second half of the year.
Our clinical studies continue to provide irrefutable evidence of the clinical advantages of our image guided approach with kols positions detailing superior outcomes achieved with our devices through podium presentations at major clinical conferences, and we're making definitive progress on the development of our first coronary product application.
Which we believe provides the opportunity to redefine a large and underserved market with a highly differentiated solution that can advance the standard of care for millions of patients and provide a transformational value opportunity for avon's or at this point, we'd be happy to take your questions.
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One moment, please while we poll for questions.
Once again Thats Star one if you wish to ask a question.
It did have a question come from RK from H C. Wainwright RK Your line is live.
Thank you good afternoon, gentlemen deal.
Couple of quick questions.
So if you look at the trajectory of revenues over the last say six quarters.
They have been around the 2 million Mark.
Your stake.
Sure.
So with this.
New products that.
We'll get into full launch.
Later this year or early next year.
How do you see growth from here, obviously, there are a few things, which are adding to it as well, including additional sales personnel.
Yeah.
Yes, Thanks, RK Ah, Yes, I think you hit on a very important point in your question and the number of sales personnel in especially clinical support personnel that we have in the field directly relate to our ability to support case volume and drive revenue.
We had a reduced number as you know a sales heads in the first quarter.
We've added since the beginning of the year six new salespeople are bringing our total sales head count at the end of the second quarter.
Got it back in line with where we ended the fourth quarter of 'twenty. Two we expect to continue to make strategic investment in this team as we move through the back of the year of course being cognizant of our cash utilization as well as being cognizant of time in and resource available.
Proper training and get those folks up to speed. So we were very pleased with the amount of productivity that we received out of our existing team members, which was actually higher than the year ago period in the second quarter and as we and I'll tell you I've been extremely impressed with the quality of the hiring and how quickly our new clinical specialists are coming up to <unk>.
Speed, so we think they'll be in a position to contribute to revenue in the second half of the year. So sales heads and continued training and development of our sales team, especially our newer folks as well as you know, making strategic investment in a reasonable way through the back half of the year will contribute to the growth in the second half. We also have is as you.
<unk> two new products that we'll be launching into full commercial launch. We expect later this quarter in the September timeframe to proceed to full commercial launch for Tiger I S. T. And then we expect in the fourth quarter. Once we get a certain number of cases under our belt and have an opportunity to train our team to <unk>.
Spanned in the fourth quarter for full launch for our pentair as Lv large vessel atherectomy device. So again two growth drivers as we move through the back of the year, but especially as they are fully available to us hopefully with a larger sales team as we go into 2024 at the same time, we're continuing to use our lightbox.
Free to engage with new accounts going to showcase some of the new catheter capabilities and as a platform to.
Drive our higher speed catheters with no image degradation, which we think is very exciting. So all of these factors together I think will continue to drive good growth opportunity for the company as you know the third quarter really for every company in our space is typically a lower seasonal quarter, but I think we're positioning.
The company very well for growth as we kind of move through the next four quarters.
Then of course on top of that we're setting up.
Very large future opportunity, but down the road with our coronary program.
Thanks for that detailed answer.
You know regarding.
Regarding holiday quarter could be a slow quarter.
So given that.
What's your confidence with this new folks coming on board.
And you know and <unk>.
Ooh better launches going on at the same time you know.
Oh, how confident are you that you know.
Again, that's seasonality.
The company can still perform and grow beyond beyond $2 million.
Yeah. So I think we have the pieces in place right with the with the incremental revenue from the Tiger I S. T launch continued revenue from the limited launch of Tigereye in August as well as revenue because all of our limited launch activities, we sell the product.
None of this product is placed or product that's given for free so that does provide incremental growth opportunities that we expect could offset kind of the typical seasonal seasonal.
Softness in the third quarter, but it's about keeping our people in the field keeping them engaged bringing our new people up to speed, which I feel and its been reported to me an end and observe that all of our new hires are completely capable of supporting cases independently now. So so I think we have the building blocks in.
Place to to to drive the revenue growth and all of that really comes from our case volume since as you know the vast majority of our revenue is in our disposable volume.
Hum do things.
Hum comments.
Now.
Careful Alaska Knox President.
The dollar amount or.
Sales person.
Is this hum.
Possible for you to give that number because.
I'm I'm just trying to understand because you said that it comes with it.
It's back to where it used to be but I don't know what that number is or is this.
P. J that you don't want to say it.
No no that's fine I I think I could share with you. So typically are our revenue per head is around 100 of sales had including sales manager is about $100000 per head when.
When you look at our even though we made the new hires during the second quarter of 'twenty. Three if you look at the average head count, including the new hires during the quarter that would be about 'twenty, just given the timing of their hiring so that averages right about that 100000, a head the reality is.
Is the new people really contributed very little to revenue during the second quarter because they are in their training period and Onboarding period. So our existing folks delivered revenue of over $110000 per head during the quarter, which was it was a substantial improvement.
Versus a year ago period.
Of course, all of this really needs to roll up into you know the total number for the quarter, but but we like to see that kind of continued improvement in efficiency.
Efficiency and productivity for our sales team as they have more and more tenure and I'm confident based on the quality of the hires we have here that that will continue to draw and the new activity. We have going on that will continue to drive that increase in our sales productivity per head you know as we go through the back half of the year.
One last question from me J&J this morning.
Talking about brand new ablation catheter.
And do you guys.
Looked into it and what sort of a competition is that or is it not something.
Similar to what you're offering.
Okay, I haven't seen that news yet so I will take a look and and share any thoughts we have on it.
Okay. Thank you.
Thank you very much.
Thank you there were no other questions from the lines at this time.
I would now like to hand, the call back to Jeff Slowinski for closing remarks.
Thank you Paul and thank you all for joining our call. This afternoon, we very much appreciate your interest in our company and look forward to reporting our continued progress as the year advances have a good afternoon.
Thank you. This does today. This does conclude today's conference you may disconnect. Your lines at this time and have a wonderful day. Thank you for your participation.
Okay.