Q3 2023 TriSalus Life Sciences Inc Earnings Call

Good morning, and welcome to Tri Palace, Lifesciences third quarter 2023 earnings Conference call.

At this time, all participants are on listen only mode.

We will be facilitating a question and answer session towards the end of today's call.

As a reminder.

Call is being recorded for replay purposes, I would now like to turn the call over to your host Jim Young Senior Vice President of Investor Relations.

Treasurer at Palace for a few introductory comments.

Okay.

Thank you all for participating in today's call joining me today from <unk> Life Sciences are married to our President and Chief Executive Officer, John Murphy, Chief Financial Officer, and Dr. Steven Katz, Chief Medical Officer.

Earlier. This morning, <unk> released financial results for the quarter ended September 32023, a copy of the press release is available on <unk> website.

Before we begin I would like to remind you that management will make statements. During this call that includes forward looking statements within the meaning of federal Securities laws, which are made pursuant to the safe Harbor provisions of the private Securities Reform Act of 1995.

Any statements contained in this call other than statements of historical fact are forward looking statements all forward looking statements, including without limitation statements relating to our sales and operating trends.

Business and hiring prospects financial and revenue expectations reimbursement proposals and future product development and approvals are based upon our current estimates and various assumptions. These statements involve material risks and uncertainties, including the impact of macroeconomic conditions and <unk>.

Mobile events 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 for a list and description of the risks and uncertainties associated with our business. Please refer to the risk factors section of our Form 10-Q on file with the SEC and available on Edgar and in our other reports filed periodically with the SEC.

<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. This conference call contains time sensitive information and is accurate only as of the <unk>.

Live broadcast today November 14 2023.

And with that I'll turn the call over to Mary.

Good morning, everyone and thank you for joining us today to review <unk>.

Right.

Third quarter results for 2023.

This marks our first quarterly earnings call.

Trading company and we're excited to report on our progress towards our mission to extend and improve the lives of people living with liver and pancreatic tumors. We greatly appreciate your profit today.

Now.

Alex.

In 2018 to address the two main barriers that didn't hit the treatment success and liver and pancreatic tumors via the combination of our proprietary technology that can deliver high concentration of a range of therapeutics to the silent disease.

With the novel therapeutic Okay.

Immunosuppressive environment, and enabling checkpoint inhibitor response.

Enter tomorrow hypertension is a pervasive and underappreciated problem.

Collapsing.

Tumors remaining blood flow and therapeutic uptake.

Our pressure in April kind of delivery P. E. B D technology has been shown to enable superior delivery.

Rod range of therapeutics into tumors.

<unk> accuracy predictability.

Our tissue levels in association with better clinical outcome.

BP allows enhance delivery to increase therapeutic delivery to the tumor while decreasing your exposure in normal tissue to minimize toxicity and enabled treatment of patients with more advanced disease.

Our <unk> infusion system.

Launched in 2020, Leverages, our <unk> technology to overcome the infusion barriers that limit therapeutic uptake in solid tumors, including pancreatic adenocarcinoma.

Carcinoma.

Okay.

China has demonstrated the ability to deliver a high concentration of therapeutics into high pressure tumors, while limiting exposure to normal tissue avoiding off target toxicity. We believe this is game changing first of a kind technology and the adoption by interventional radiologists, we have achieved to date.

It is a reflection of its patient impact and efficacy.

Our kind of business.

This growth rate of approximately 50%.

Cabin laws at the same time at the start of the pandemic and then the third quarter, we achieved our highest ever sales figure of $5 2 million.

We're delighted to report that this business continues to demonstrate robust revenue and market share growth throughout the United States.

Our strategic investments in physician education clinical and sales personnel.

Allowed us to successfully educate the interventional radiology physician community and drive adoption.

This business has single digit market share.

Superior gross margin, which provides significant opportunity for future profitability.

Following my remarks, Shaun Murphy, our Chief Financial Officer will provide a more in depth analysis of our quarterly results and key operating metrics.

In addition to our trying to have technology in 2020, we acquired SD 101, and investigation on toll like receptor agonist in.

In clinical studies performed prior to the acquisition.

101 demonstrated the ability to favorably reprogram, the tumor microenvironment and promote responsive to immunotherapy.

Later in the call Dr. Steven Katz, our Chief Medical Officer will share recent encouraging data from our phase one carrier one trial for Uveal melanoma with liver metastases.

And our carrier three trial for pancreatic adenocarcinoma.

These results further validate our company as proof of concept the effectiveness of our pressure enabled drug delivery in combination with FQ, one one and overcoming critical mechanical and biological barriers in the treatment of solid tumors.

In summary, we're very encouraged by the remarkable progress our team has made in our commercial and clinical endeavors.

And are very excited about the future of trust Atlas at this time I'm proud to introduce Sean Murphy, our Chief financial Officer to discuss our operating results and key financial metrics.

Good morning, everyone and thank you Mary I'm pleased to announce that <unk> achieved outstanding results in the third quarter that ended September 32023, our revenue.

Solely driven by the success of the <unk> device reached $5 2 million.

This sales achievement represents the highest quarterly sales in the company's history, reflecting a 32% increase compared to the same period in 2023.

<unk> has a growth record as illustrated on slide one, which the company has grown at a compound annualized growth rate of approximately 50% since the launch of our product in 2020.

This segment of the business is approaching breakeven.

In 2024.

It is worth noting that the third quarter of 2022 was a particularly strong sales period, making this year's performance more remarkable in terms of the year to date revenues as of September 32023, we have reached $12 8 million.

39% increase from the prior year.

These results can be attributed to several factors, including the adoption of Tri Nab and new accounts.

Increased utilization of existing accounts and the continued expansion of our sales force all of which has led to an increase in our market share.

In the third quarter, we captured 15, new hospital accounts in the quarter.

And 44 accounts year to date.

Our account utilization reached 10 units per account an increase of two units or 25% increase over last year. Finally, we are increasing our sales team with the funding we received by going public at.

At the beginning of 2023, we started the year with 10 representatives and by the end of the third quarter, we had reached 21.

We expect to continue our sales force expansion during the balance of the year and into 2024.

We are proud to report a robust gross margin profile of 88, 7% in the third quarter of 2023, and 84, 2% gross margin year to date compared to 82, 1% in the third quarter and 84, 3%.

Year to date in 2022.

This favorable margin profile in 2023 can be attributed to increased factory volumes.

Improved batch yields and other operating efficiencies, we believe our facility in west Mr. Colorado has the capacity to support our growth over the next five years.

In terms of our investment in research and development expenses in the third quarter of 2023 totaled $9 4 million an increase of 95%.

From the third quarter of 2022.

Year to date R&D expenses amounted to $21 9 million.

These investments are primarily related to.

Due to the additional patient enrollment in our three <unk> clinical trials.

Our dedication to growth is also evident in our sales and marketing expenses.

In the third quarter of 2023, we invested a total of $4 7 million.

Up 55% increase from the third quarter of 2022.

Year to date sales and marketing expenses reached 11 4 million, marking a 29% increase from 2022.

These investments are closely tied to the ongoing sales force expansion.

Moreover, general and administrative expenses for the third quarter of 2023 totaled $9 million, representing a substantial increase of over 150% compared to the third quarter of 2022 year to date general and administrative expenses.

Mounted to slightly over 100% more than in 2022 at $17 5 million.

These increased costs include one time costs of $4 8 million in the third quarter and $7 $7 million year to date related to the completion of our <unk> process in August of 2023.

Our operating losses for the third quarter 2023 totaled $18 5 million compared to losses of $8 1 million in the third quarter of 2022.

Year to date losses in 2023 amounted to $40 million.

Pair to losses of $24 7 million in 2022.

The increased losses.

In 2023 can be attributable to higher operating expenses and research and development.

Wilson marketing and general and administrative expenses as mentioned earlier.

These increased expenses were partially offset by the increased gross margin.

<unk> from increased trying to add revenues and improved gross margin profile.

We believe that operating earnings provide the most accurate insight into our ongoing profitability.

This figure closely aligns with EBITDA and excludes noncash valuation adjustments related to equity issuance.

Fair value adjustments of the tranche and warrant liabilities.

And the fair value adjustments of contingent earn out liabilities.

It is important to note that these noncash valuation adjustments may continue.

To produce material fluctuations in our net earns resulting during the next several years.

In terms of net loss attributable to common stockholders, we reported a loss of $1 7 million in the third quarter of 2023 and $27 million.

Year to date compared to a loss of $8 1 million in the third quarter of 2022, and $24 $6 million year to date.

These results are significantly influenced by non cash gains and losses on the valuation of contingent earn out liabilities tranche and warrant liabilities and equity issuance.

In conclusion, we remain dedicated to our mission and excited by our future.

With this I will pass the call to Dr. Steven Katz, our Chief Medical Officer, who will provide further highlights about our <unk> clinical programs.

Good morning, everybody and thank you Shaun.

Sure your interest in learning more about the progress the company is making.

Half of patients with liver pancreas cancer.

While immunotherapy has unquestionably lead yielded a transformative results in several solid tumor indications patient continue to confirm unmet medical needs with primary liver cancer liver metastases pancreatic adenocarcinoma.

I noted earlier.

This approach harnesses the power of PDD so.

Overcome mechanical tumor microenvironment barriers.

We combined our PDD technology with SD 101, a carefully selected drug capable of addressing the biologic.

And immuno suppression related challenges and these organisms.

Accordingly, we believe the mechanical and biologic barriers that are trials seek to address are prevalent across multiple cancer types.

SD 101 broadly stimulates the immune system to eliminate a specific cell type known to be significant and enduring success of immunotherapy and deliver and pancreas.

<unk> or <unk>.

Delight derived suppressor cells.

Pre clinically we confirm that SD 101, as favorable properties relative to other classes of <unk> agonist and targeting MGIC.

Historically delivery and optimal dosing have posed challenges for this class of drug, but our clinical trials have been designed to address these challenges.

In 2021, we launched a series of perito or pressure enabled regional immuno oncology trials, starting with our <unk>, one trial involving patients with Uveal melanoma liver metastases.

We believe this data highlights <unk> has the potential to enable SD 101 across multiple indications Dr.

Dr Patel from the MD Anderson cancer Center.

We ended the data at the recent society of immunotherapy for cancer meeting in San Diego.

Key highlights from the presentation include.

Data encompassing 56 patients across various dose levels and cohorts in the phase one study, which was a dose escalation study.

Patients were treated with SD 101 deliver.

Delivered by the innovative trying to have device targeting the arteries feeding the liver and deliver metastasis.

After establishing safety with single agent SD 101 patients were then enrolled in treatment in combination with intravenous checkpoint inhibitors.

Enrolled patients had significant prior treatment with.

With 71%, having received previous therapies, including 16% treated with Kim track.

Safety data reported at 50 indicates that the SD 101 infusions.

With PDD with or without our intravenous checkpoint inhibition were well tolerated.

There were no serious grade three or four treatment related adverse events and the single agents SD 101 cohort.

4% with SD 101 in combination with the volume that.

These rates are aligned with our even lower than expected in the absence of.

Checkpoint inhibition.

The safety profile may be attributed to the pharmacokinetic data associated with the utilization of PDD, which demonstrated tight levels of SD 101 in the liver with limited systemic exposure as measured in the serum.

Immunologically, Dr Patel detail the elimination of immunosuppressive M DSC and regulatory T cells through examination of liver metastasis biopsy specimens.

There was also evidence of T cell activation within the liver.

Systemically.

Early efficacy data at the optimal dose of two milligrams of SD 101 in combination with intravenous <unk>.

Promising results.

These included a median progression free survival of 11 seven months.

A one year overall survival rate of 86%.

A disease control rate of 81%.

And a C T DNA clearance rate 57%.

The optimal dose in these seven patients was determined based upon the efficacy data in addition to multiple immune signals.

Across all Evaluable patients, 86% demonstrated a reduction in circulating tumor DNA.

In addition to carrier one Dr. Medically also from the MD Anderson Cancer Center presented safety and feasibility data from our carrier three study at the <unk> meeting.

The <unk> three phase one study is enrolling patients with treatment refractory locally advanced pancreatic adenocarcinoma.

They're receiving single agent SD 101, with our groundbreaking <unk> infusion system.

Utilizes a retro grade Venus approach to circumvent anatomical constraints on the arterial side.

There have been no serious grade three or four treatment related adverse events and the three subjects treated at the lowest dose level.

Immunologic data for pancreas tumor biopsy specimens indicates effect consistent with those observed in the <unk>, one study liver metastasis specimens, suggesting.

Effective SD 101 delivery into the pancreas and consistency in CLO, <unk> biology, and both organs.

In summary.

We are encouraged by the phase one uveal melanoma liver metastasis data and are optimistic that these findings will pave the way for success.

In other indications we are investigating.

Additionally, we are excited about the early experience in a locally advanced.

Pancreatic adenocarcinoma clinical trial with <unk>.

Holds promise due to the innovative delivery technology being employed.

We eagerly anticipate further follow up and enrollment in the <unk> studies.

And now I'll pass the floor back to Mary for closing remarks.

Thank you Dr Katz and.

A warm welcome to all of you participating in the call today.

Thanks Alice.

We're delighted to share our achievements during the quarter.

<unk> made meaningful progress in expanding our Chinese business.

Can you to advance our <unk> clinical program, both of which are shaping and exciting future for our company with that.

I'll open the floor for any questions you may have.

Your insights.

Are valuable to us.

Thank you as a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw your question. Please press star one again.

Please standby, while we compile the Q&A roster one moment for our first question.

Yes.

And our first question comes from Jason Mccarthy of Maxim Group.

Hi, guys chat on for Jason.

So what would be a meaningful response and liver tumors.

Any extension in overall survival and quality of life.

And what do you think you need to see to advance to a later stage program.

Chad This is Jim young it's nice to hear from you and I'm going to pass that answer over to Mary. Thank you.

Absolutely I think it's probably a better question for Stephen to respond to.

Stephen you want to jump in.

Yes, I'd be happy to do some area.

This of course will vary by indication.

Taking uveal melanoma liver metastasis.

As an example, I think first and foremost we're very interested in the safety profile.

That we're seeing in the early carrier data.

I think that as a backdrop.

Is going to be critical to moving any program forward and then beyond that in terms of efficacy signals.

We believe that circulating tumor DNA provides a very useful early readout of biologic activity and then beyond that.

Returning endpoint, we're optimistic about using progression free survival.

As a measurement of disease control.

And then of course overall survival as a longer term measurement of outcome.

Okay great.

And so.

Given the unmet need in Uveal melanoma.

And this is the first proof of concept study for the combo is it possible a single arm open label phase two may be sufficient for registration.

We believe that ultimately for full approval a two arm study will be required there is precedent.

With the agency for openness.

A single arm study for an accelerated approval, but we believe that a two arm study would ultimately be needed for a full approval.

Got it.

And then in pancreatic cancer. The data I would say is I wanted to see does very encouraging, albeit early.

It would be a meaningful outcome in that study to move to a phase II.

Similar to the intra hepatic programs like <unk>.

We believe that progression free survival would be a very meaningful clinical endpoint to provide a signal.

For moving forward into a phase III.

One of the things that we've learned from the data, particularly that data set presented at <unk> is that conventional response assessment criteria like resist one one may not capture the full biologic activity of immunotherapy and these organs.

So looking at progression free survival, which captures both responses and durable disease control.

So we think a very comprehensive assessment of meaningful biologic and clinical activity.

So we're looking toward a progression free survival.

In excess of seven to eight months something that would be very meaningful in that disease.

Got it.

And then I guess last week.

In liver cancer since you're using SD 101 in combination with the checkpoint.

What is the impact of centric and a vast and moving to first line in liver cancer.

Actual use of docs not wanting to move a patient that may progress to another checkpoint does SD 101 sort of change that narrative.

So we hope it we hope so and we hope it has the potential to do that for HCC right. Now we're focused on second line and beyond.

So the addition of chicken divest in a first line.

It doesn't necessarily directly impact.

What we're doing in that regard and based on the immunologic data reported at <unk>.

We believe that SD 101 has the potential to.

Address the immunologic reasons and biologic reasons for checkpoint failure. So we are hopeful that medical oncologists will see the data.

And I agree that the rationale for using SD 101 on immunotherapy or checkpoint failure patients.

Is there and we hope to generate additional data to support this.

Great.

Congrats on the progress and thanks for taking the questions.

Thank you.

Thank you one moment for our next question.

And our next question comes from Justin <unk> of BT I E.

Thanks for taking my question and congrats on the progress here I'd like to ask Dr. Kathy Congrats on the promising.

Data here at city, just wanted to hear your view on how you see this fitting into the landscape in the treatment of metastatic uveal melanoma.

Thanks for the question Justin.

Right now as we all know we have one approved agents for.

Uveal melanoma stage four patients.

Kim track, which is limited by HLA type. So there's certainly an unmet medical need for patients that don't express that HLA haplotype.

So theres potential application there.

In addition to that for patients to progress.

Following receiving Kim track.

There is need for second line <unk>.

And beyond treatment, we believe that the safety profile.

That was presented at <unk>.

Where the serious treatment related adverse event rate grade three and four for SD 101 was the volume of over 4%.

Really places it very well and the therapeutic landscape for Uveal melanoma, liver metastases and if we see.

The disease control rate on the progression free survival and overall survival continue to play out as reported for those initial patients at the optimal dose.

We think it could offer a very compelling therapeutic opportunity for those patients.

Excellent.

Maybe just some of your thoughts on how this data.

<unk> some read through to other potential solid tumor indications as another oregon's thanks.

Yes, that's a great question and something that we think very deeply about.

We're hopeful that because we are targeting the same protein toll like receptor or <unk>.

Across all indications, which is present across all indications were hopeful.

That we will in fact see the same immunologic signals and similar clinical readouts and different liver metastasis in primary liver tumor.

Indications in addition to the pancreas the early data that we presented at.

At city from the carrier three locally advanced pancreatic adenocarcinoma trial indicates that the immune signals that.

We are seeing in the pancreas and deliver actually consistent with one another and so that early data set gives us hope that we'll continue to see residents across multiple indications and disease types.

Great. Thanks for taking my questions.

Thank you I'm showing no further questions at this time I would like to turn it back to Mary for closing remarks.

Thank you everyone for taking time to listen to our inaugural earnings call at Kris Elma Life Sciences.

So really appreciate your interest and I.

Hope it was evident to all of you our excitement about the progress that the company. Thank you for joining us today.

This concludes today's conference call. Thank you for participating and you may now disconnect.

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