Q2 2023 InspireMD Inc Earnings Call
Good morning, and welcome to the inspire in the second quarter of 2023 earnings call.
All participants are in a listen only mode should you need assistance. Please signal a conference specialist by pressing the stocky followed by zero. After today's presentation, there will be an opportunity to ask questions to ask a question. You May Press Star then one on a touchtone phone to withdraw your question. Please press Star then two please note. This conference is being recorded.
I will now turn the conference over to Glenn Coleman with lifestyle advisors. Thank you you may begin.
Thank you operator, and good morning, everyone. Thank you for joining us for the inspire MTS second quarter 2023 financial results and corporate update conference call.
Joining us today from inspire M D R. Marvin Saltzman Chief Executive Officer.
During this call management will be making forward looking statements not historical facts and are based upon managements current expectations beliefs and projections many of which by their nature are inherently uncertain Danville vallve risks and uncertainties that may cause actual results to differ materially from those expressed in the forward looking statements for more information.
These risks please refer to the risk factors described in inspire M. D. 's. Most recently filed public Peter periodic reports on Form 10-K, and Form 10-Q filed with the U S Securities and Exchange Commission and inspire empties press release that accompanies this call, particularly the cautionary statements made in it.
Contains time sensitive information that is accurate only as of today August eight 2023, except as required by law inspire M. D disclaims any obligation to publicly update or revise any information to reflect to reflect.
The events or circumstances that occur. After this call. It's now my pleasure to turn the call over to Marvin Saltzman Chief Executive Officer Martin. Please go ahead.
Thank you Glenn and thanks to everyone for joining our call. This morning.
I'm pleased to share that the second quarter of 2023 proved to be a transformational time for our company as we advanced our mission to lead the carotid Revascularization market with next generation solutions built on the foundation of our C Guard carotid stent platform.
The second quarter produced our highest revenue to date for our seat CCAR carotid stent system as well as the successful financing of up to $113 $6 million in new capital.
Specific to our financials, we generated total revenue of $1.649 million, our highest <unk> quarterly revenue to date representing growth of nearly 10% over the second quarter of 2022 and sequential growth of 33% over the first quarter of 2023.
We sold 20 804 <unk> systems during the quarter as compared to 20 602 during the second quarter of 2022 and 2033 during the first quarter of 2023.
Procedural volume continues to be the key metrics of our success measuring unit volume and market utilization.
This record record quarterly performance.
Flex de acceleration and use of CCAR to EPS.
Approved CE Mark territories, as we continue to focus on growing share.
Foundational we've established a baseline of real world experience and best in class data with more than 40000 <unk> sold to date as we drive market awareness and global expansion implant performance will remain the cornerstone of our focus.
We announced in May the completion of a private placement financing of up to $113 $6 million with $42 2 million upon closing of the transaction followed by issuance of warrants for an additional 71 4 million tied to the achievement of four pre specified milestones or 17.5.
$5 million each tranche.
Tranches are tied to the following milestones with warrants expiring 20 trading days following.
The first tranche is tied to the release of primary and secondary end points related to one year follow up.
Ah study results from our C Guardians pivotal trial.
Receipt of pre market approval of FDA for CCAR crime, $1 35, carotid stent system.
<unk> of FDA approval for the switch guard Trans carotid neuro protection system, and CCAR crime 80, <unk> stent system and completion of four quarters of commercial sales of the C guard in the United States.
The signet significance of this recapitalization of our company by some of the world's top tier health care investors, including Marshall wace or be made solely us rosalynn not a holler and valid as a validation of our business strategy and direction. It fuels, our long term growth plan tomorrow.
Leadership through advancement of our plans to serve the broadest specialist community treating carotid artery disease with the most complete offering of delivery and neuro protection systems as the only company developing and offering both transfer more cash and trans carotid neuro protection systems.
<unk> procedural optimization with a focus on the implant as the catalyst to best clinical results forms the foundation of our business and we look to lead the market by way of this comprehensive approach.
Shifting now to updates on our clinical programs.
Most recently, we announced enrollment completion of our C. Guardians E clinical trial, which is designed to support eventual FDA approval of the CCAR Prime EPS den system in the United States.
But the trial, which enrolled 316 patients across 20 centers in the U S and five in Europe is to evaluate the safety and efficacy of the <unk> carotid stent system for the treatment of carotid artery stenosis.
Trial's primary endpoint is a composite of the incidents of death stroke and myocardial infarction at 30 days and ipsilateral stroke from day 31 to a one year follow up.
Enrollment in the sea Guardians was completed in just 23 months offering a line of sight to results in a pre market approval submission planned in the second half of next year.
If we achieve those timelines with acceptable results, we anticipate launching segar crime in the United States in the first half of 2025.
Notably the trial also included the first in human case. It says successfully treated with our next generation CCAR Prime cast delivery system, which includes advanced features and functional improvements that increase the ease of stent track ability and deployment and is included in our regulatory approval pathway.
In anticipation of potential approval of CCAR to EPS in the first half of 2025, we have initiated pre commercial activities in the United States to include the build out of a world class team and infrastructure to make CCAR broadly available to patients who stand to benefit from this novel Stenting technology.
By way of an update in market drivers towards stenting in July CMS issued a proposed decision memo recommending coverage of cast for both symptomatic and asymptomatic patients whether consider to be high our standard risk for surgery. This coverage decision is expected to be finalized in October and if.
Approved would represent a very meaningful expansion of the addressable market for cash and further shift this thing.
First approach it just adds to our enthusiasm U S market opportunity for CCAR Prime for both cash and T car, both of which are an integral part of our sales strategy broader access to endovascular options. It's good for patients and this expanded coverage for stenting optimizing.
Procedural results CCAR to EPS its demonstrated superior clinical results over 1800, 50 patients studied and rigorous peer review trials with over 40000 real world procedures performed to date, establishing a foundation for best in class results this potential expansion of reimbursement and trends.
Ford and Endovascular first shift away from surgery 50 approach we've advocated for some time.
Assistant driver.
Of outcomes remains the performance of the implant.
Which will remain our priority as clinical evidence remains the cornerstone of our story as we leverage our next generation <unk> with proprietary micro mesh.
Turning now to the quarter as our Chief Financial Officer, Craig Shore is recovering from a recent medical procedure I will now cover the quarterly financials in detail.
For the second quarter 2023, we generated total <unk> revenue of 1.6 $49 million or nine 6% increase over $1.505 million for the second quarter of 2022 and sequential growth of 33% over the first quarter of 2023. This includes $59000 of CCAR Prime Rev.
Recall that our first quarter of 2023 revenue was negatively impacted by the temporary suspension of our CE Mark until.
Until approximately mid February and as a result, we ended Q2 with a product backlog of approximately $600000.
Three months ended June 32023, gross profit increased by $60000 or 14% to $491000 from $431000. During the first three months ended June 30 of 2022.
This increase in gross profit resulted from a $90000 increase in revenue as mentioned before less the associated related material and labor offset by $30000 and miscellaneous expenses gross margin gross profit as a percentage of revenue increased to 29, 8% during the three months.
<unk> ended June 32023 from 28, 1% during the three months ended June 32022, driven by the factors mentioned above.
Operating expenses for the second quarter of 2023 or $5.806 million, an increase of $694000 or 13% <unk>, 6% compared to $5 million $112000 for the second quarter of 2022. This increase was primarily due to increases in share.
Based compensation related expenses to the expense recognition of grants made during the second quarter of 2023 increase in salary expenses, mainly due to hiring a general manager for North America, and VP of global marketing and increase in legal expenses.
Net loss for the second quarter of 2023 totaled $5.077 million or point to four cents per basic diluted share compared to a net loss of $4 million $636000 or <unk> 59 per basic and diluted share for the same period in 2022.
As of June 32023, cash cash equivalents and short term bank deposits and marketable securities were $47 million compared to $17 $8 million as of December 31, 2022.
<unk> includes an upfront payment of approximately $37 $5 million net of expenses that we received in may pursuant to the terms of the transformational private financing that I discussed earlier.
This concludes my personal remarks, and we'll now turn it back for questions operator.
We will now begin the question and answer session to ask a question you May Press Star then one on the phone.
Speakerphone, please pick up your handset before pressing the keys.
Any time your question has been addressed and you would like to withdraw your question. Please press Star then two at this time, we will pause momentarily to assemble our roster.
Our first question comes from the line of Adam meter with Piper Sandler. Please go ahead.
Hi, Marvin and good morning, and congrats on the progress I. Appreciate you, taking the questions and Greg <unk> wishing you a speedy recovery.
Maybe to start Marvin just wanted to go a little bit deeper on the performance outside the U S.
Just kind of better understand.
What drove that but the nice quarter share capture versus better market dynamics. It sounds like there's maybe a little bit of catch up as well so.
Just wanted to go a little bit deeper on the Q2 results and then I'll lump the second part of the question just on.
Q3, and Q4 I know you don't have guidance.
You know out there in the public domain, but just any broad strokes or color that you can provide on.
The back half of the year.
Thanks, Ed Thanks, Thanks for being on the call and thanks for the question as it relates to our strategy in Europe . There was a bit of catch up as you referenced there just in terms of us being able to transition that backlog, but I think in general the market strength.
<unk> to grow and carotid stenting continues to be our focus day to day, where in the field working with our customers and our distributor partners and I think you know this is a pay off for a lot of investment in that marketplace. Now that we have worked our way through the M. D. D. M. D. R scenario, we're kind of back to normal operating cadence.
And <unk>.
Continue to drive utilization and work in the field. This is a touch business as you know and I think we've assembled a very good group of distributors and a great team and we're just continuing to execute on a day to day basis, so that the market.
<unk> continues to strengthen and I think we continue to create awareness for example, with elite Linc conference in Leipzig. This year, we had two live cases. It was a well attended conference and so I think generally speaking that exposure helps us as does our work in the <unk> trial in the U S. So we really do operate in a in a global environment as it relates.
Uh huh.
Vascular specialist and so we're really pleased with those results and we'll continue to invest in that area.
As it relates to your question for Q3 and Q4, there is definitely a seasonal impact for Q3 that we we all tend to to predict in the European market, but on balance I think our expectation is that we will continue to advance the numbers and grow share and build our business.
<unk> strength in things as it as it relates to our European and by the way served market. So it's it's 30 markets not just in Europe , but South America as well.
Okay, Great. That's helpful color Marvin I appreciate that and.
The next question that I have is.
Just around the T.
T D.
United States, just kind of a bigger picture open ended question for you.
What are your key takeaways from the proposed Menno, how do you think about implications for your business.
The broader market is finalized.
Yes, so it's it's a great question and certainly a contemporary topic that we're all discussing first we believe that the proposed coverage decision first and foremost is good for patients. So I think above everything else opening procedural options that otherwise haven't been available to patients that will yield better outcomes and better.
<unk> and decisions with their physicians is good and I think clearly we benefit from this broadening of coverage as we're building a business around the technology platform that is intended to be this catalyst for changing standard of care with the broadest set of delivery options and we believe the best implant.
Alternatives in the marketplace. So we see this as a great direction and as the proposed coverage decision continues to unfold we support the decision memo and certainly look forward to that final decision in October but on balance I think this this really just helps this market transition as a whole and where.
Poised to take full advantage of this as we've invested in this carotid space for many years and we think the timing is it's perfectly suited for C guard and what we've been able to demonstrate and in terms of of patient outcomes. So we're really energized by the the direction here in and building our business around it.
Very helpful. Martin Thank you for that and a couple more if I may.
Our next wanted to ask about the <unk>.
T car system switch guard.
Just wanted to kind of better understand commercial timelines there both in the U S and Europe as well as what the regulatory strategy pathway looks like I think it's crystal clear.
And in terms of timelines for CCAR, what you've you've talked about today, but wanted to just get a little bit more color on the.
The T car system in particular.
Yeah. So so we are we continue to advance our work in that area right now Adam I would characterize it this way where we're following a regulatory pathway at this point, which will certainly be determined by studying the system. Following a protocol approach and we're sort of looking for guidance from that regulatory effort.
And so I think we've been able to develop a very interesting system and are looking forward to studying that in and real market access both in Europe , and the U S and so I think we'll be able to provide a bit more detail as it relates to specific timelines, but as we work through the regulatory pathway. There is still some.
Some clarity on that that we're looking forward just in terms of of overall.
Just of overall feedback we're meeting with the FDA this quarter to sort of finalize some of the the last touches on protocol and direction. So we hope that that's positive and we can begin to study to set up in a practical for them.
Helpful Marvin and not to press too much here, but you talked about CCAR.
Potential.
Commercial launch in the United States in the first half of 2025.
You know is it is it reasonable to assume that the T car system switch guard.
It could come.
And in the not too distant future after that subsequent quarters or just want to make sure.
Just broadly speaking I have timelines right for the <unk> product.
Yeah. So great. So so it's a very good question, Adam and again, we're waiting for for sort of final feedback from from FDA on this topic, but our expectation is that the approval of our C Guard stent system will run concurrent with our studying of T car and the short chat.
System as the stent itself and the device itself is the same and there will be able to to be able to take advantage of that approval process on the stent system and concurrent approval or close to a concurrent approval with with switch guard all things being equal obviously, we have to study the T car device itself, but the stent.
System remains the same and so where we're hopeful that we'll be able to to parlay that into a fairly quick approval process for both.
On or about the same time away.
Perfect. Thanks for the clarification, there and then just one last one last question for me and thanks for taking all the questions here.
Just on the go to market strategy in the U S.
You know maybe you can speak a little bit to kind of how you're getting prepared you talked about pre commercial activities in.
In the prepared remarks.
Yeah.
To elaborate on that please and how are you thinking about kind of building out a sales team and the infrastructure.
Ahead of that kind of a firm.
First half 'twenty five timeline.
Thanks, again, so sure no problem. So about five months ago, we hired chain Gleason to run the U S business and as the VP of global marketing and that was the first step into in a sequence of architects are planned for a direct sales organization and support structure in the U S and so Shane has taken on the challenge of building that enterprise.
Ms and beginning to put in place all the pieces, both operationally as well as how will play in our go to market strategy, but I think it's safe to assume that we're going to build a world class sales organization that support structure and in the ability to serve multiple sub specialties within this community both vascular surgeons as well as <unk>.
<unk> and so I think we're building that playing out and we'll continue to to invest in that over the next 18 months until we get to a point, where we're able to launch but the whole point here is to create a lead in for our approval process in the U S. And so we can we can have a very warm start and take full advantage of.
This tailwind that's been created both with the D. N C D and just overall stenting is as a whole. So we're looking forward to leveraging our European experience and parlay that into a strong U S launch.
Our next question comes from the line of Matt Jimmy painter with Alliance Global Partners. Please go ahead.
Good morning, Thanks for taking the question Harlan.
Now that you've got see guardians enrolment ramped up it.
It seems like everything is moving along well.
What's going to take most of your focus I mean, you've got the F. D. A covenant meeting coming up this quarter, but beyond that in the pre commercial activities.
What are you and the management team going to be most focused on are.
Kind of in the coming quarters until CRD as a result.
Yeah, Hey, Ben Thanks for the question. So there's a tremendous amount of work as you know related to executing on the PMA in order for us to accomplish that approval goal in 2025. So the team is working hard to make sure that now that enrollment is complete we're following all the necessary steps to get to the PMA approval.
Certainly studying switch guard in the context of its of its own regulatory pathway is a tremendous amount of work as well and then finally, just managing and maintaining our growth plan and strategy in Europe . So I would characterize it this way where we're in very much in execution mode. Now that our financing has has been accomplished and.
We've been able to secure good funds going forward, it's all about putting our heads down and executing on these milestones that we've set forth I think it's a pretty clear pathway at this point, but nothing is easy and where we're all focused on making sure that we manage all of these variables successfully so that we can meet these commitments.
Okay, Great that's helpful and then.
And internationally.
Any plans to.
Kind of go direct any changes to the commercial organization that take place that take place outside the us here.
Yes, Ben I think you know we've discussed this at length. We continue to evaluate every one of our international markets and try to figure out what the best go to market strategy is for that we want to certainly keep the momentum and the growth going but in terms of any immediate shifts toward making changes in our current go to market strategy.
G outside of the U S, where we're pretty much stable for the moment I think it's in our best interest to focus our attention in the U S and many of the tests that are in front of us related to building a direct organization, which is not a small task to accomplish so we don't want to distract ourselves from the next 18 months effort to get a successful U S law.
And I think we've been able under great leadership in Europe to stabilize our distributor partners and kind of maintain that cadence for for growth.
Okay.
Certainly makes sense and then just maybe.
Maybe I didn't catch this correctly.
On the CE Mark recertification, it sounds like Youre, a document review by the notified body.
And that will kind of get everything complete for the MTR is that kind of where you're at a is that correct correct.
Yeah, that's that's correct Ben.
We're actually given the all clear by our notified body and it's in the midst of document review within the European Health system for sort of those final touches of review, which seemed to take a life of their own [laughter] as as we've all come to expect with this M D. Our process, but I think we're in good shape and expect that.
To be officially formalized in the in the coming weeks, but as it relates to our ability to continue to ship and sell in Europe , where we're in good shape there under the M. D. R. A D M D D certification that we reestablished in April .
Okay got it and then lastly for me more of a housekeeping question on G&A and lets say you add I don't know 401000, or so of legal expenses and miscellaneous expenses are those things.
Not to recur you know maybe associated with the transaction that you had.
During the quarter or whats the right way to think about those.
So I'm actually a mere cowen is with US today, who is our senior VP of finance and maybe I'll, let a mirror address that question in the absence of Craig being with US if that's okay I mean, yeah.
Right.
Hi, So there there is some interesting now.
<unk> half of it relates of actually are expecting prepaid expenses.
Last year, so, it's noncash and nonrecurring and also wonder.
If we get from that specific transaction, we hate to do it after the fund raising.
Including our share based compensation and grant letters and et cetera.
So that simple answer Ben is that its non reoccurring.
Those were more calculated both through last year as well as through our fund raise so we're we're set for that.
Okay, perfect just what I needed.
Right well, that's all I had gentlemen, thanks for taking the questions and congrats on the progress.
Thanks, a lot Ben I appreciate it.
This concludes our question and answer session I would like to turn the conference back over to Marvin Kauffman for any closing remarks.
Yes, Thanks again for everyone for joining our call today, and we're very encouraged by our progress into 2023 and look forward to the balance of the year being very successful time for inspire M. D. Thanks for joining.
Yeah.
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Yeah.
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