Q3 2023 InspireMD Inc Earnings Call
Good morning, and welcome to todays fire Emt third quarter of 2023 earnings call.
Currently all participants are in listen only mode.
A question and answer session will follow the formal presentation.
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Should you file for rate assistance during the conference. Please space, we're talking as Jim Ryan on your telephone keypad.
Please note that this conference is being recorded.
I've not had tender countries, Chuck but dollar that's probably Oh geez. Thank you you may begin.
Thank you operator, and good morning, everyone.
Thank you for joining us to be inspired and be third quarter 'twenty to 'twenty three financial results and corporate update conference call.
Joining us today from inspire and D markets, Washington, Chief Executive Officer, and Craig Shore, Chief Financial Officer.
During the call management will be making forward looking statements not historical facts, which are based upon managements current expectations beliefs and projections.
Which by their nature are inherently uncertain.
These forward looking statements involve risks and uncertainties that may cause actual results to differ materially from those expressed in such forward looking statements.
For more information about these risks please refer to the risk factors described it inspired <unk>. Most recently filed periodic reports on Form 10-K, and Form 10-Q or on any updates and our current reports on form 8-K filed with the U S Securities and Exchange Commission and inspired these press release that accompanies this call, particularly.
The cautionary statements made in it.
This call contains time sensitive information that is accurate only as of today November 620 23.
Except as required by law, it's Byron B 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 Bobbins Boston Yeah. Please go ahead.
Thank you Chuck and thanks to everyone for joining the call. This morning.
Third quarter proved to be a transformational time for our company with several milestones further validating our strategy in Michigan.
<unk> formed a carotid revascularization market with its superior next generation stent implant along with our focus on the broadest range of tools, providing both patients and physicians optimal procedural solutions.
The Houston against internal objectives remains our focus and I would like to start today with a brief mention of the recent national coverage decision by CMS, enabling a monumental shift by expanding reimbursement for carotid artery stenting or Cas procedures to include both standard surgical risk and he's thinking.
Patients neither of which were previously covered we won't get into those details shortly.
In terms of our financials for the third quarter of 2023, we generated total revenue of $1.556 million or 20, 734 devices sold representing nearly a 9% revenue growth over the comparable period in 2022.
Measuring procedural volume continues to be a key metrics of our success.
Our distributor model discounts, our average sales price by way of transfer pricing.
Unit sales more accurately measure market share in our served territories a key driver of our growth objectives as.
As we drive market awareness utilization and global expansion implant performance will remain the cornerstone of our focus having now established a baseline of real world experience in World class data with more than 45000, SEDAR instead sold to date and nearly 2200 patients enrolled in clinical studies.
We were pleased a few days ago, 2% to 30 day data from our seat Guardians I D E clinical trial at the Viva Conference.
As a reminder, the C. Guardians trial is designed to support a PMA submission in the second half of next year, which would give us line of sight to possible approval of CRT P. S. In the U S. In the first half of 2025.
If you had good results from July 2021 through June 2023, 316 patients or prospectively enrolled in a single arm carotid artery stenting or Cas study performed at 24 sites in the U S and Europe utilizing CRT P. S. It's a crowded stent system.
Primary endpoint is a composite of the incidence of major adverse events, including death, all cards cause mortality any stroke or myocardial infarction through 30 days post index procedure or its still lateral stroke from day 31 to date $3 65.
All events are adjudicated by clinical events Committee.
Dr. Chris Metsker the P. I N C. Guardians trial presented unprecedented data at 30 days total major adverse events D. S. M I L zero point, 95%.
Measured by intent to treat analysis considered to be the most rigorous measure of results.
These first in kind results demonstrate the neuroprotective effect of the CCAR stag and after the significant and growing body of evidence showing that she guard delivers outstanding short and long term patient outcomes as compared to alternative stent and the <unk>.
Current standard of care and Revascularization carotid endarterectomy.
We were pleased to share these compelling results in vivo, which is among the most important gatherings of endovascular specialists and should go a long way toward raising awareness to see guard among the end a basket of community key opinion leaders and other practitioners alike.
Staying on the topic of our IDE trial for a moment, we announced in June we had completed enrollment of this trial something that was achieved in just 23 months and recall that this study all stone close the first human cases performed with our new CCAR apply cast stent delivery system.
The only follow up is progressing as planned and we reiterated our expectation for the primary endpoint results in the second half of next year with anticipated approval in the first half of 2025.
Revisiting one of the key market drivers transforming revascularization towards stenting on October 11th CMS issued a national coverage determination or N C. D implementing coverage of castle, both symptomatic and asymptomatic patients what are considered to be high or standard risk for surgery.
This coverage determination, it's very consistent with the draft memo that was released in July.
The updated NCD creates a carrying meaningful expansion of the addressable market for cash and will shift the standard of care toward a patient first approach with greater procedural options, including stenting.
This adds to our enthusiasm for the U S market opportunity for CCAR Prime for both cash and T car, both of which are an integral part of our long term sales strategy.
We believe that broader access to endovascular options. It's good for patients well call that CRT P. S. H demonstrated outstanding clinical results now of nearly 2200 patients who were studied in a rigorous clinical trials published in peer reviewed journals and tens of thousands of real world procedures performed to date, establishing a foundation.
One of the best in class results this expansion of reimbursement and the broader trend toward an endovascular first shift away from surgery support the approach we have advocated for some time.
The consistent driver of outcomes remains the performance of the stent implant, which will remain our priority. That's clinical evidence remains the cornerstone of our story leveraging our third generation CCAR stead with its proprietary microdose mesh.
In anticipation of potential approval for C guard in the first half of 2025, we've initiated pre commercial activities in the U S and we continue to build out what I consider to be a world class leadership team.
Last month, we announced the hiring of Dr. Patrick photo is our new executive VP of clinical and medical Affairs, Patrick It's tremendous experience in a crowded field, having supported much of its clinical advancement over the last 20 years and he brings an impeccable reputation amongst key opinion leaders medical and regulatory bodies.
We also announced the hiring of Cheryl toll to lead our quality assurance and regulatory affairs function with tremendous expertise in building business scale and capability on a global level and finally after six months of having a significant impact as our general manager of North America, and VP of global marketing Shamefully thing has been promoted to chief commercial officer.
His responsibilities to support our global commercial growth.
I would like to close with a word on behalf of our team based in Israel for their remarkable tenacity and bravery to deliver on commitments and objectives, allowing our company to operate without interruption during such a profoundly difficult time.
It is truly a testament to our team fulfilling our mission to deliver the best lifesaving and stroke preventing devices to patients worldwide.
I'm now pleased to re welcome Craig sure back to the call as our CFO Craig.
Thanks, Marvin for the three months ended September 30th 2023 revenue was $1.556 million compared to 1 million and $471000 going to three months ended September 32022.
This revenue increase of $125000 was predominantly driven by an increase in commercial sales of $166000 or single heart E. P. S. Two existing geographies offset by a $41000 decrease in the United States as we completed in June 2023, the enrollment of our solutions.
I mean, our C Guardians IV clinical trial and accordingly, there was no further enrollments in the three months ended September 32023.
For the three months ended September 32023, gross profit increased by 19, 7% to $438000 from $366000. During the same period in 2022. This increase in gross profit resulted from an $85000 increase in revenues last year.
She is a good lead in material and labor offset by miscellaneous expenses gross margin increased to 28, 1%. During the three months ended September 32023, and 25, 6%. During the three months ended September 32022, driven by the factors just mentioned.
Yeah.
Total operating expenses for the third quarter of 2023 or $6.077 million, an increase of $1.1 million or 22% compared to $4.976 million for the third quarter of 2022. This increase was predominantly due to an increase in.
Compensation expenses total financial income for the third quarter of 2023, $461000, an increase of $380000 of 469% compared to $81000 for the third quarter of 2022. This increase was primarily.
Due to the $412000 increase in interest income from investment in marketable securities and money market funds and short term bank deposits net loss for the third quarter of 2023 totaling $5.178 million or 15 cents per basic and diluted.
Sure compared to a net loss of $4.529 million or 58 cents per basic and diluted share for the same period in 2022.
As of September 30th 2023, cash cash equivalents and short term investments and bank deposits were $43 million compared to $78 million as of December 31, 2022 that concludes our prepared remarks, we will now open the call for question.
Operator.
Thank you, Sir ladies and gentlemen, we will now be conducting a question and answer session.
If you talk off the question Keith Smith, Jonathan One let me try to put in key pad.
Confirmation tone will indicate taking on eastern the question queue.
You May press star two to leave the question queue.
It's all about this cause it's making yourself specie equipment it may be.
A necessary to pick up the handset before pressing disc jockeys.
Our first question comes from Adam <unk> of Piper Sandler.
Please go ahead.
Okay.
And thank you for taking the questions. Congrats on the excellent interim data presentation last week the.
The print and the operating progress.
Maybe just to start wanted to give you the opportunity to kind of flesh out the Q3 performance just a little bit more.
Can you talk about kind of the key trends messages in the quarter and then a handful of follow ups. Thanks.
Good morning, Adam. Thanks. Thanks for the question. So are our progress in our commercial growth outside of the U S continues to be strong and I think the message continues to be consistent which is to drive clinical outcomes and performance by way of of data. Our distributors are I think are becoming.
More and more comfortable with C Guard in fact, we had a full distributor called the other day with all of them.
And I think the momentum that we're building just in recognizing what's happening in the U. S is also engaging them more and as is paying residual benefits to our markets outside the U S. So in terms of real numbers in growth, we're seeing consistency there and we'll continue to drive that in those in those market.
As are our foundation of revenue at this point.
That's helpful color. Thank you for that.
My next question is a multipart question on the Israel Hamas War and you know I I hope all of your team members are staying safe.
Can you just talk about.
Kind of.
Any.
That's around you know your ability to supply the market do you anticipate any.
You know future impacted commercial sales are or any kind of.
Hindrances to push for the U U S initiatives in an efficient manner.
And then I guess all of them. This one in as well just are you taking any precautions are proactive steps with inventory management, our alternative manufacturing efforts.
Yeah. Thanks, Thanks for the question Adam.
Thus far we've not had any direct impact on our ability to deliver and perform by way of the war and.
But we're not sitting still obviously, we're keeping a very close eye on things and put has put into place.
Some examples of mitigation mitigating risk there by way of advancing our supply chain building inventory looking at alternative locations for securing finished goods than just other things that are good practices under the circumstances.
Our shifts toward a U S focus continues as well, but in the short term.
All of our team is operating pretty much. According to plan. There. We have a couple of folks that have gone to active duty firm reserve, but everybody is picking up the extra work to be done in terms of our progress toward U S approval nothing changes there were all on plan many of our consultants and activities are actually based outside of his.
As it relates to our regulatory effort and work and testing and those kinds of things. So I think most critical right now is to make sure that our supply chain and production remain sound and we're continuing to just see see good results. There, but are also looking at making sure that if this progresses.
To a different direction that where we're all good good ground as well there.
Okay, that's great to hear Marvin and thank you for the the fulsome response there.
Maybe switching over to Canada.
The forward outlook certainly recognize you don't have guidance, but I was wondering if you can give any broad strokes or color.
How youre thinking about the business in Q4.
As well as 2024 from a topline standpoint.
Yeah, So I think the way to frame our growth direction. At this point is to say that we continue to operate effectively in the 30 countries that we serve we we want to see consistent growth in those countries.
Until we're able to offer new tool sets, which we're working on aggressively in the area of T car and obviously, our new C Guard Prime trends femoral cast delivery system I think things will remain consistent according to what we've presented up to this point, but obviously those new tools at a very different dimension to how.
We believe we can penetrate the market our objective outside of the US This is the same as it will be in the U S, which is to convert surgeries to endovascular first by by using our stent performance to do that and that is no different outside of the U S. So there's still a lot of endarterectomy being practiced theres a lot of.
Surgeries being done and so our goal is not just to have the the premier stent in the market, but most importantly to continue to convert surgeries. So that will remain consistent that I think are our growth plan is to is to continue to show consistency there as well.
That's helpful. If I was to maybe push a little bit there Marvin the CCAR prime and the key car European.
CE Mark approval.
Are you able to kind of given an update at this point, obviously I know MTR is.
Little bit unpredictable, but just any any latest thoughts on when you could have those.
Commercially available internationally.
Yeah, I think as you said the the whole M D. Our process and just the regulatory environment in Europe in general has been somewhat frustrating. We're certainly prepared but are waiting for the longest pole in the Ted here, which which remains the you know the ability to get this through the regulatory cycles, but I'm anticipating that mid year.
2024 will be at a a good position to hopefully be able to launch new tools into the into the 30 countries that we're serving now.
That's helpful. Thank you.
Wanted to ask a similar kind of forward outlook question. This one for Craig and Craig Welcome back nice to hear from you.
Wanted to ask you about Q4 and 24 in terms of the P&L components gross margin do you think you can continue to drive year over year growth.
Improvement there.
And then how do we think about the pace of Opex spend in 'twenty Flores.
As you guys start to prepare for U S launch.
Okay. So thanks, Adam So welcome you back to.
2000, and what was the fourth quarter.
No.
Dissipating a higher spend as we start doing more of the studies that we talked about.
Particular, CCAR and also as we start focusing a little bit more on the sales and marketing activities in Europe.
Wouldn't be expecting a huge amount of money to be spent in the United States until we get closer to the launch.
Physicians here and there and nothing major.
Okay.
Thank you for the color there and.
That's a good segue.
Into.
My last question, which is on some of the clinical work you're doing outside of the pivotal.
The U S T car study.
I think you've pointed to early 'twenty four for a start date.
What's the latest there any more specifics on timing of our trial design and then also the tandem lesion early feasibility study are you still targeting first half 'twenty four for that.
That clinical work thank.
Yes, let's start with there yeah. Thanks, Adam let's start with the last one first we are still anticipating for the tandem Etfs.
First half of 'twenty 'twenty four for enrollment in that and continue to progress in that area. Just just to note. We've had two conversations separate conversations with the FDA on a pre sub basis for both our <unk> study as well as the tandem <unk>.
Yes, which have gone very well so we're just in the in the midst right now of buttoning up all of the.
The procedural details the protocols are lining the investigators to begin this process of enrollment and so I think it's safe to assume that both of them will initiate those studies in the first half of 2024 as we as we get to all those details as you know theres a lot of administrative effort that goes.
Into the the setup in that roll in to get started there, but what I will mention is that we've had a remarkable response on both fronts. Both from the surgical community on our T car system as well as the E. S. S. Within the narrow community, we think that the neuro community has been underserved by carotid focus.
And we're looking forward to having both those added to our you know our tool set for our foundational cash system.
Thanks for the color Marvin that's all from me I'll hop back in queue. Thanks.
Thanks.
Yeah.
The next question comes from Dan Hey out other lines Global partners. Please go ahead.
Good morning, gentlemen, thanks for taking the questions.
First off for me congrats on the national coverage determination, but.
But regarding that I guess, what's your view on the expansion in terms of numbers.
The address all but if the addressable patient population was X and now it's X plus y.
Are those taxes and wise.
Yeah, Great question, Ben Thanks, I think some of that is certainly to be determined right. What we know is that there is a tremendous amount of energy behind this decision by CMS.
What we think about over the next several years is a shift from surgery first let's call. It a 70 or 80% surgery first to a 70 or 80% Endovascular stenting first how that plays out in terms of what percent of that market is cast procedures versus T car, it's still to be.
Determined we know that both are very viable options, which is why we invested in both of those tool sets in order to to give us the broadest range.
Within carotid Revascularization, it's interesting that at the conference as some of the discussion now is becoming is status dental lesion.
Which you've never heard before as opposed to just assuming the default on endarterectomy or surgery being being sort of the baseline. So the the CMS coverage really opens up the market opportunity for us and I think puts perfectly to our strategy, which is to make sure that we've got the full coverage of tool set regardless of.
Of which access is used for the best implant. So I think we're in good shape, there and feel feel good about the transition the question of timing and percentage is still to be determined.
Okay.
Helpful and then.
Just regarding the you mentioned in the discussion that's going on at these conferences and obviously at Veeva.
Any additional color there and.
Any surprises on.
The discussions were.
Is that a sensible lesion.
Things that maybe you hadn't thought of or.
Just anything surprising there.
Well I think what's been most surprising is just the remarkable results that we presented I mean, let's think about the unprecedented nature of being able to deliver even in 30 days a sub 1% complication rate is really unprecedented. So I think it goes beyond just <unk> become standard of care. It's really a question of if this is a.
Unique platform that frankly has never been seen before in terms of these outcomes now I will mention also that this validates our previous experience.
And the <unk> thousand 850 patients we've studied it about a one 2% rate. So I think it's listen it's a combination of a lot more discussion momentum and transition, but we like being in a position of being able to lead that way by talking about clinical outcomes and procedural op.
<unk> that really result in best implant and best outcomes, because that's going to be the trend right. There will be more momentum in cats and in T car, but I think ultimately the decision points will be what's best for the patient and how do those outcomes translate from the implant itself and not just the procedure.
Okay.
That makes sense.
That's all I had gentlemen, thanks for thanks for taking the questions.
Thanks, Pam good to hear from you.
Thank you ladies and gentlemen, we have reached the end up our question and answer session.
I will now hand dividend, Jim Martin Saltzman for closing remarks.
Now I'd like to thank everyone for joining the call today, we look forward to a strong finish in 2023 and advancing our plans of growth toward great execution for 2023 and beyond thank you.
Thank you, Sir ladies and gentlemen that concludes today's event. Thank you for attending and you may now disconnect your lines.
Yeah.
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