Q4 2023 Avinger Inc Earnings Call

Yeah.

Speaker Change: Greetings welcome to Avengers fourth quarter and full year 2023 results call. 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.

Operator: Greetings. Welcome to Avinger's fourth quarter and full year 2023 results call. At this time, all participants are in a listen-only mode.

Operator: 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 will now turn the conference over to your host, Matt Kreps, Investor Relations at Avinger. You may begin.

Speaker Change: Is being recorded I will now turn the conference over to your host Matt Kreps Investor Relations that happened Sir you may begin.

Matthew Kreps: Thank you Paul and thank you everyone for participating in today's call I'd like to welcome you to <unk> fourth quarter and full year 2023 conference call. Joining us today are oven. Your C E O, Jeff So SK and principal financial officer, nobody else, but Eddie.

Matthew Kreps: Thank you, Paul, and thank you, everyone, for participating in today's call. I'd like to welcome you to Avinger's fourth quarter and full year 2023 conference call. Joining us today are Avinger's CEO, Jeff Soinski, and Principal Financial Officer, Nabeel Subainati. Earlier today, Avinger released financial results for the quarter and year ended December 31, 2023. A copy of the release is posted on the Avinger website under Investor Relations. Before we begin, I'd like to remind you that management will make statements during this call that are forward-looking statements within the meaning of federal securities laws, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements contained in this call that are not statements of historical fact should be deemed to be forward-looking statements.

Matthew Kreps: Earlier today I haven't been released financial results for the quarter and year ended December 31 2023.

Matthew Kreps: A copy of the release is posted on the average are website under Investor Relations.

Matthew Kreps: 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 provisions of the private Securities Litigation Reform Act of 1995.

Matthew Kreps: Any statements contained in this call. They are not statements of historical fact.

Matthew Kreps: Should be deemed to be forward looking statements all forward looking statements, including without limitation, our future financial expectations and expected timing for commercial launch of products in salaries with the FDA are based on our current estimates and various assumptions. These statements involve material risks and uncertainties could cause actual results or events.

Matthew Kreps: All forward-looking statements, including without limitation our future financial expectations and expected timing for the commercial launch of products and filings with the FDA, are based on 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.

Matthew Kreps: Sure really differ from those anticipated or implied by these forward looking statements. Accordingly, you should not place undue reliance on these statements.

Matthew Kreps: For a list and 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. Avinger 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. Also, today's presentation will include reference 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 Avinger's website. And with that, I'd like to now turn the call over to you. Thank you, Matt.

Matthew Kreps: A 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.

How about your 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.

Matthew Kreps: Also today's presentation will include reference 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 our website.

Matthew Kreps: And with that I'd like to now turn the call over to Josh.

Thank you Matt Good afternoon, and thank you all for joining us it's been an exciting time at Avon juror since our last earnings call. We recently announced a multifaceted strategic partnership with Xylogics Tonbridge, a leading company in the Internet interventional vascular space in China.

Jeffrey M. Soinski: Good afternoon, and thank you all for joining us. It's been an exciting time at Avinger since our last earnings call. We recently announced a multifaceted strategic partnership with Xilox Tunbridge, a leading company in the interventional vascular space in China. We've advanced commercial activities on two innovative new peripheral devices, Tiger iST and Pantheras LV. We've expanded our field sales force to broaden our geographic sales footprint and strengthen our presence in key markets.

Josh: We've advanced commercial activities on two innovative new peripheral devices Tiger I S. T intent there is L. B.

Josh: We've expanded our field sales force to broaden our geographic sales footprint and strengthen our presence in key markets and we've made significant progress towards an I D E filing for our exciting first coronary product application.

Jeffrey M. Soinski: And we've made significant progress towards an IDE filing for our exciting first coronary product application. But first, let's discuss our new strategic partnership with Xilox Conbridge. Xylox is a fully integrated medical device company and a leader in the peripheral vascular and neurovascular markets in China. They are an innovative company with a well-developed R&D capability, and since their founding in 2012, Xilox has developed and launched 36 products into the greater China interventional market. Xilox maintains a state-of-the-art manufacturing facility at its headquarters in Hangzhou, China, not far from Shanghai.

Josh: First let's discuss our new strategic partnership with Xylogics Tonbridge.

Josh: <unk> is a fully integrated medical device company and a leader in the peripheral vascular and neurovascular markets in China.

Josh: They are an innovative company with a well developed R&D capability and since their founding in 2012, Xylogics has developed and launched 36 products into the greater China interventional markets.

Josh: So I locks maintains a state of the art manufacturing facility at their headquarters in Hangzhou, China not far from Shanghai.

Jeffrey M. Soinski: They are certified to ISO 1345-2016 and have commercialized their products in 19 countries outside of Greater China. With a sales and marketing organization of more than 130 people and a vast and well-developed distribution network, we believe that Xilox is extremely well qualified to distribute Avinger products in the Greater China region. Our partnership with Xylox Tunbridge has several key elements which provide significant strategic benefits to both companies. First, under the terms of an equity financing agreement, Zilox will invest up to $15 million into Avinger through the purchase of preferred and common stock in two tranches. The $7.5 million first tranche investment has already been funded.

Josh: They are certified to ISO 13, 45, 2016, and if commercialize their products in 19 countries outside of greater China.

Josh: With a sales and marketing organization of more than 130 people and a vast and well developed distribution network. We believe the dialogue is extremely well qualified to distribute avon's your products in the greater China territory.

Josh: Our partnership with dialogues Tunbridge has several key elements, which provides significant strategic benefits to both companies' first under the terms of an equity financing agreement Xylogics will invest up to $15 million into Avon juror through the purchase of preferred and common stock in two tranches.

Josh: The $7 5 million dollar first tranche investment has already been funded this the initial investment was priced at the market under NASDAQ rules at a purchase price of $3 66 per share on an as converted to common stock basis.

Jeffrey M. Soinski: This initial investment was priced at the market under NASDAQ rules at a purchase price of $3.66 per share on an as-converted-to-common-stock basis. A second-trunch $7.5 million equity investment will be funded upon achieving key milestones, including successfully registering Xilox as a manufacturer of Avinger's products with the U.S. FDA, and Avinger achieving $10 million in aggregate revenue over four consecutive quarters. Avinger's obligation to accept conversion of the initial shares of preferred stock and issue and sell shares of preferred stock upon completion of the milestones is each subject to the approval of Avinger's stockholders, and we expect to file a proxy for a stockholder vote on these proposals in the near term. Second, under the terms of a license and technology transfer agreement, Xilox has exclusive rights to distribute and manufacture Avinger's proprietary image-guided devices in the Greater China region, including mainland China, Hong Kong, Macau, and Taiwan.

Josh: Second tranche $7.5 million equity investment will be funded upon achieving key milestones, including successfully registering xylogics as a manufacturer of avon's yours products with the U S. F D E.

Josh: And avon's, you're achieving $10 million in aggregate revenue over four consecutive quarters.

Josh: Average avon's yours obligation to accept conversion of the initial shares of preferred stock and issue and sell shares of preferred stock. Upon completion of the milestones are each subject to the approval of Avon's your stockholders and we expect to file a proxy for a stockholder vote on these proposals in the near term.

Josh: Second under the terms of our license and technology transfer agreement Xylogics has exclusive rights to distribute and manufacturer Avon's yours proprietary image guided devices in the greater China region, including mainland, China, Hong Kong, Macau and Taiwan.

Jeffrey M. Soinski: With Avinger's support, Xilox will lead all regulatory activities for the registration of the Avinger products in the territory. We will sell products to Xilox to support their regulatory process and initial product launch following regulatory clearance, until such time as Xilox has established its own manufacturing capability and gained regulatory authorization for manufacturing Avinger products for the Chinese market. Sales of Avinger products in the Xilox territory will be royalty-bearing to Avinger

Josh: With Avon's your support Xylogics will lead all regulatory activities for the registration of the Avon's your products in the territory.

Josh: We will sell products design locks to support their regulatory process and initial product launch following regulatory clearance until such time as Xylogics has established their own manufacturing capability and gained regulatory authorization for manufacturing Avon's your products for the China markets.

Sales of Avon's your products in the Zilog territory will be royalty bearing to avon's or.

Third under the terms of our strategic cooperation framework agreement Avon's. Your has the right to access certain xylogics peripheral vascular products for distribution in the U S and Germany, where we have our own direct sales capability.

Jeffrey M. Soinski: Third, under the terms of a strategic cooperation framework agreement, Avinger has the right to access certain Xilox peripheral vascular products for distribution in the U.S. and Germany, where we have our own direct sales capability. In the U.S., this provides access to a suite of high-quality peripheral devices, such as PTA balloon catheters, including a proprietary scoring balloon, introducer sheaths, and other accessory products. In Germany, Xylex has already obtained CE marking for a number of peripheral products, including PTA balloon catheters, peripheral stent systems, including a drug-eluting stent and a drug-coated PTA balloon.

Josh: In the U S. This provides access to a suite of high quality peripheral devices, such as P. T. A balloon catheters, including our proprietary scoring balloon introduces sheets and other accessory products in Germany, XIAFLEX has already obtained CE, marking for a number of peripheral products, including PTA balloon.

Josh: Catheters peripheral stent systems, including a drug eluting stent, and a drug coated PTA balloon.

Josh: Avon jurors conducting a market and regulatory assessment of these products for potential distribution in markets, where we have a sales presence.

Jeffrey M. Soinski: Avinger is conducting a market and regulatory assessment of these products for potential distribution in markets where we have a sales presence. We believe this could provide the opportunity for incremental revenue growth and increased productivity of our sales force without the need for significant R&D investment. And fourth, once Xylox has established its manufacturing capability and been successfully registered as a manufacturer of Avinger's products with the U.S. FDA, Avinger will have the option to source finished products from Xylox on a cost-plus basis. We believe this could provide an opportunity for Avinger to reduce the cost of goods sold, improve gross margin, and reduce facility and related overhead expense in the future. As mentioned in our press release and outlined in our 8K filing, concurrent with Zilox's initial investment, CRG Partners, the primary holder of Avinger debt and preferred equity, exchanged its Series A preferred stock with an aggregate liquidation preference of approximately $60 million for new Series A1 preferred stock with a value of $10 million. The new Series A1 Preferred Stock is convertible at a conversion price of $3.66 per share and carries no liquidation preference or dividend.

Josh: We believe this could provide the opportunity for incremental revenue growth and increased productivity of our sales force without the need for significant R&D investment.

Josh: And fourth one dialogues as established their manufacturing capability and been successfully registered as a manufacturer of Avon's theres products with the U S. F. D. A avon's you will have the option to source finished product from Xylogics on a cost plus basis. We believe this could provide the opportunity for avon's or two.

Josh: Our reduced cost of goods sold improved gross margin and reduce facility and related overhead expense in the future.

Josh: As mentioned in our press release and outlined in our 8-K filing concurrent with Zilog says initial investment C or G partners. The primary holder of Avon's your debt and preferred equity exchange that series, a preferred stock with an aggregate liquidation preference of approximately $60 million for new.

Josh: Series, a one preferred stock with a value of $10 million. The new series a one preferred stock is convertible at a conversion price of $3 66 per share and carries no liquidation preference or dividends.

Jeffrey M. Soinski: CRG also extended principal payments on our debt by three years from the first quarter of 2024 to the first quarter of 2027, with PIC interest payments accruing during this time. The Xilox-Tunbridge strategic partnership and related transactions with CRG are critical positive steps forward for Avinger. Strengthening our balance sheet and improving our capitalization structure, opening vast new markets for our products, providing access to new products for our existing markets, and creating the opportunity to improve our gross margin and cost structure over time. Most of all, we are excited about the opportunity for many more physicians and patients around the world to realize the benefits of our lumavascular technology as we advance our mission of radically changing the way vascular disease is treated.

Josh: C or G also extended principal payments on our debt by three years from the first quarter of 'twenty 'twenty four to the first quarter of 'twenty twenty-seven with pick interest payments accruing during this time.

Josh: The Zilog Tunbridge strategic partnership and related transactions with C or G are critical positive steps forward for AB injure strengthening our balance sheet and improving our capitalization structure opening vast new markets for our products pre.

Josh: Providing access to new products for our existing markets and creating the opportunity to improve our gross margin and cost structure over time.

Josh: Most of all we are excited about the opportunity for many more physicians and patients around the world to realize the benefits of our lunar vascular technology as we advance our mission of radically changing the way vascular disease is treated.

Josh: The dialogues investment also provides new funding to support our U S growth initiatives and the development of our first coronary product and at this point I'd like to provide updates in each area.

Jeffrey M. Soinski: The Xylox investment also provides new funding to support our U.S. growth initiatives and the development of our first coronary product. And at this point, I'd like to provide updates on each area. On our third quarter earnings call, we spoke about our plans to increase the size of our U.S. sales force by more than 25 percent in order to expand our sales footprint and deepen our presence in certain territories. We achieved this goal by adding six sales professionals to our organization since the end of the third quarter, including the addition of an experienced sales leader for the Midwest region, bringing our current sales headcount to 26.

Josh: On our third quarter earnings call, we spoke about our plans to increase the size of our U S sales force by more than 25% in order to expand our sales footprint and deepen our presence in certain territories. We achieved this goal by adding six sales professionals to our organization since the end of the third quarter, including the addition.

Josh: A an experienced sales leader for the Midwest region, bringing our current sales head count to 26 more.

Jeffrey M. Soinski: Most importantly, we are very pleased with the quality of hiring and how our new team members are progressing through their initial training period. Along with our more tenured sales team, we expect these new hires to be important contributors to our growth over the next 12 months as they build their sales pipelines and gain clinical proficiency with our devices. In addition to the investment in our sales team, we've also expanded commercial activities in the U.S. for two innovative new peripheral devices, Tiger IST and Pantheris LV, both of which we believe will be important growth drivers for our business. Let's begin with Tiger IST.

Josh: Most important we are very pleased with the quality of hiring and how our new team members are progressing through their initial training period.

Josh: Along with our more tenured sales team. We expect these new hires to be important contributors to our growth over the next 12 months as they build their sales pipelines and Glenn <unk> gained clinical proficiency with our devices.

Josh: In addition to the investment in our sales team. We've also expanded commercial activities in the U S. On two innovative new peripheral devices Tiger I S. T and pent there is L V. Both of which we believe will be important growth drivers for our business.

Josh: Let's begin with Tiger I S T.

Jeffrey M. Soinski: Tiger IST is a low-profile, five-french system designed to treat chronic total occlusions, or CTOs, which are completely blocked arteries, in the peripheral vasculature both above and below the knee. It spins at speeds up to 1,000 RPM and generates high definition OCT imaging during the procedure, providing real-time information to guide treatment and help physicians stay in the true lumen during crossing, a critical advantage This innovative new device has a user-controlled deflectible tip to allow the physician to precisely direct the catheter during treatment and incorporates multiple design features to increase crossing power and procedural success. We received 510K clearance and initiated a limited launch for Tiger IST in the second quarter of 2023. Based on the positive physician feedback, clinical outcomes, and reliability demonstrated during the limited launch period, we made the decision to expand a full commercial launch late in the third quarter.

Josh: Tiger I S. T is a low profile five French system designed across chronic total occlusions or C. T OS which are completely blocked arteries in the peripheral vasculature, both above and below the knee.

Josh: Tiger I S T spins at speeds up to 1000, RPM and generates high different definition O C. T imaging during the procedure, providing real time information to guide treatment and help position stay in the true lumen during crossing.

Josh: A critical advantage for the patient.

Josh: This innovative new device has a user controlled deflectable tip to allow the physician to precisely direct the catheter during treatment and incorporates multiple design features to increase crossing power and procedural success.

Josh: We received five 10-K clearance and initiated limited launch for Tiger I S T and the second quarter of 2023.

Josh: Based on the positive physician feedback clinical outcomes and reliability demonstrated during the limited launch period, we made the decision to expand a full commercial launch late in the third quarter.

Jeffrey M. Soinski: While still early in the commercial launch period, we are encouraged by the progress we are seeing in the field, with Tiger Eye ST revenue increasing by more than 50% in the fourth quarter compared to the prior quarter, and 32 physicians at 25 sites using the device since introduction. The more experience we have with this advanced device, the more excited we are about the potential for Tiger IST to drive growth in our peripheral CTO business throughout the year. Now, turning to Pantheras LB.

While still early in the commercial launch period, we are encouraged by the progress we're seeing in the field with Tiger I S. T revenue, increasing by more than 50% in the fourth quarter compared to the prior quarter and 32 physicians at 25 sites using the device since introduction.

Josh: The more experience, we have with US advanced device. The more excited we are about the potential for Tiger I S. T to drive growth of our peripheral CTO business throughout the year.

Josh: Now turning to patent there is L. B R.

Jeffrey M. Soinski: Our new Pantheras LV image-guided atherectomy system is designed to streamline the atherectomy procedure and, in combination with our Lightbox III imaging console, expand the mainstream appeal of our image-guided platform. LV stands for Large Vessel, and consistent with its name, Pantheras LV is ideal for the treatment of the larger arteries above and behind the knee, where the majority of PAD procedures are performed today. Pantheris LV does not require a balloon for plaque apposition and operates at significantly higher rotational speeds than our current atherectomy offerings, with variable speeds up to 3,000 RPM. It also introduces enhanced guidewire management and plaque management systems to our platform. We initiated limited launch for Pantheris LV in the third quarter, and since that time, we have been gaining valuable case experience with the device in a real-world clinical setting, with 19 physicians performing approximately 50 cases with Pantheris LV since limited launch.

Josh: Our new Pantera L V image guided atherectomy system is designed to streamline the atherectomy procedure and in combination with our Lightbox three imaging console expand the mainstream appeal of our image guided platform.

Josh: L V stands for large vessel and consistent with its name tent. There is L. V is ideal for the treatment of the larger arteries above and behind the knee where the majority of P. E. D procedures are performed today.

Josh: <unk> does not require a balloon for black apposition and operates at significantly higher rotational speeds that are current atherectomy offerings with variable speeds up to 3000 R. P M.

Josh: It also introduces enhanced Guidewire management and plaque management systems to our platform.

Josh: We initiated limited launch for Pentair as L V in the third quarter and since that time have been gaining valuable case experience with the device in a real world clinical setting with 19 physicians performing approximately 50 cases with pent. There is L V. Since limited launch we continue to gain additional case experience with the <unk>.

Jeffrey M. Soinski: We continue to gain additional case experience with the device, and based on our learning today, expect to be in a position to advance this exciting new device to full commercial launch mid-year 2024. With the buildout of our peripheral device portfolio now largely complete, we've shifted our primary R&D efforts to focus on the development of our first coronary product application. And we are very excited to bring the benefits of our image-guided platform to the large and growing coronary artery disease market. Crossing chronic total occlusions in the coronary arteries can be complex, challenging, and time-consuming, with uncertain outcomes.

Josh: Nice and based on our learning today expect to be in a position to advance this exciting new device to full commercial launch mid year 2024.

Josh: With the build out of our peripheral device portfolio now largely complete we've shifted our primary R&D efforts to focus on the development of our first coronary product application and we are very excited to bring the benefits of our image guided platform to the large and growing coronary artery disease market.

Josh: Crossing chronic total occlusions in the coronary arteries can be complex challenging and time consuming procedures with uncertain outcomes by leveraging our proprietary image guided technology. We believe we can provide physicians with a superior simplified and more predictable solution for crossing coronary C. T OS.

Jeffrey M. Soinski: By leveraging our proprietary image-guided technology, we believe we can provide physicians with a superior, simplified, and more predictable solution for crossing coronary CTOs, with the need for less radiation exposure and contrast media use. We think this makes great sense from both a clinical and business perspective and believe our lumavascular approach has the potential to redefine the standard of care for the less invasive percutaneous crossing of coronary CTOs. Our development program focuses on low-profile catheter designs that combine real-time OCT guidance with precise control and steerability to facilitate an anti-grade approach intended to allow a larger number of physicians to safely and efficiently cross coronary CTOs.

Josh: With the need for less radiation exposure and contrast media usage.

Josh: We think this makes great sense from both a clinical and business perspective, and believe our lunar vascular approach has the potential to redefine the standard of care for the less invasive percutaneous crossing of coronary C. T OS.

Josh: Our development program focuses on low profile catheter designed that combine real time O C. T guidance with precise control and steer ability to facilitate an integrated approach intended to allow a larger number of physicians to safely and efficiently cross coronary C. T OS like.

Jeffrey M. Soinski: Like our peripheral catheters, our coronary device incorporates a precise measurement capability to help physicians properly size balloons or stents prior to placement, which is critical for optimal outcomes. We believe our coronary CTO crossing device will present a highly compelling economic value proposition. Reducing crossing time, contrast media usage, and the need for certain accessory devices would result in significant cost savings for the hospital system.

Josh: Like our peripheral catheters, our coronary device incorporates a precise measurement capability to help physicians properly size balloons stents prior to placement, which is critical for optimal outcomes. We believe our coronary CTO crossing device will presenting highly compelling economic value proposition reducing crossing.

Josh: Time contrast, media usage and the need for certain accessory devices would result in significant cost savings for the hospital system in.

Jeffrey M. Soinski: In addition, our coronary device would not only access existing high-value reimbursement codes for CTO crossing, but it would also access existing codes for coronary OCT diagnostic imaging immediately upon FDA clearance. We continue to make excellent progress on this initiative, including successfully completing a third round of animal studies and a second round of human cadaver heart studies with key opinion leaders physicians, enabling us to finalize design selection and complete phase two of our development process prior to the end of the year. We are working diligently on the verification and validation of our selected design and, at this point, anticipate being in a position to file an Investigational Device Exemption, or IDE, application with the FDA in the third quarter of this year to allow for the initiation of a clinical study following approval. The past few months have been transformative for Avinger.

Josh: In addition, our coronary device would not only access existing high value reimbursement codes for CTO crossing it would also access existing codes for coronary O C. T diagnostic imaging immediately upon FDA clearance.

Josh: We continue to make excellent progress on this initiative, including successfully completing a third round of animal studies and a second round of human Cadaver Heart studies with key opinion leader physicians, enabling us to finalize the design selection and complete phase two of our development process prior to the end of the year.

Josh: We are working diligently on the verification and validation of our selected design and at this point anticipate being in a position to file an investigational device exemption or IDE application with the F. D. A and the third quarter of this year to allow for initiation of a clinical study following approval.

Josh: The past few months have been transformative for avon's or our strategic partnership with dialogues Tunbridge opens a pathway to exciting new markets in Asia and provides the potential for incremental revenue and significant cost savings in the future.

Jeffrey M. Soinski: Our strategic partnership with Xilox Sunbridge opens a pathway to exciting new markets in Asia and provides the potential for incremental revenue and significant cost savings in the future. Our expanded sales team and the launch of two strategically important new peripheral products provide a foundation for growth in the U.S., and our progress on the development of our first coronary product brings the exciting opportunity represented by this revolutionary device closer to reach. We look forward to reporting our continued progress in these and other areas in the coming quarter. At this point, I'd like to turn the call over to Nabeel Subainati, our Principal Financial Officer and Accounting Officer, to take us through the financial results, then I'll return for Q&A. Thank you, Jeff.

Josh: Our expanded sales team and the launch of two strategically important new peripheral products provides the foundation for growth in the U S.

Josh: And our progress on the development of our first coronary product brings the exciting opportunity represented by this revolutionary device closer to reach we look forward to reporting our continued progress in these and other areas in the coming quarters.

At this point I'd like to turn the call over to Stuart to mobile Spinotti, Our principal financial officer, and accounting officer to take us through the financial results then I'll return for Q&A mobile.

Stuart: Thank you Jeff.

Nabeel P. Subainati: Total revenue was $1.9 million for the fourth quarter of 2023, compared with $1.8 million in the third quarter of 2023 and $2.0 million in the fourth quarter of 2022. As Jeff mentioned, we have expanded our sales force by more than 25% since the end of the third quarter to support our revenue growth as we advance through the year. Gross margin for the fourth quarter of 2023 was 20%, compared with 21% in the third quarter of 2023 and 34% in the fourth quarter of 2022.

Stuart: Total revenue was $1 $9 million for the fourth quarter of 2023, compared with $1 $8 million in the third quarter of 2023 and $2.8 million in the fourth quarter of 2022.

Stuart: As Jeff mentioned, we have expanded our sales force by more than 25% since the end of the third quarter to support our revenue growth as we advance through the year.

Stuart: Gross margin for the fourth quarter of 2023 was 20% compared with 21% in the third quarter of 2023 and 34% in the fourth quarter of 2022.

Nabeel P. Subainati: The change in gross margin primarily reflects lower production activity during the fourth quarter of 2023 as we seek to optimize inventory levels as well as increase non-cash..., stock compensation expense during the quarter. Operating expenses for the fourth quarter of 2023 were $5.0 million, compared with $4.4 million in the third quarter of 2023 and $4.5 million in the fourth quarter of 2022. The increase in operating expense primarily relates to the increase in sales headcount, corporate expenses related to the Xilux tonne bridge transaction, and non-cash stock-based compensation expenses. Net loss and comprehensive loss for the fourth quarter of 2023 was $5.0 million, compared with $4.5 million in the third quarter of 2023 and $4.2 million in the fourth quarter of 2022. Adjusted EBITDA, as defined under our non-GAAP financial measures provided in today's press release, was a loss of $4.3 million, compared to a loss of $3.7 million in the third quarter of 2023 and a loss of $3.8 million in the fourth quarter of 2022. For more information regarding non-GAAP financial measures, please see Non-GAAP Financial Measures and the Reconciliation of Non-GAAP Measures to the Cash and cash equivalents totaled $5.3 million as of December 31st.

Stuart: The change in gross margin, primarily reflects lower production activity during the fourth quarter of 2023, as we seek to optimize inventory levels as well as increased noncash.

Stuart: Stock compensation expense during the quarter.

Stuart: Operating expenses for the fourth quarter of 2023, or five point to $1 million compared with $4 $4 million in the third quarter of 2023 and $4 $5 million in the fourth quarter of 2022.

Stuart: The increase in operating expense, primarily relates to the increase in sales head count corporate expenses related to the Zilog Tunbridge transaction and noncash stock based compensation expense.

Stuart: Net loss and comprehensive loss for the fourth quarter of 2023 was $5.1 million compared with $4 $5 million in the third quarter of 2023 and $4 $2 million in the fourth quarter of 2022.

Stuart: Adjusted EBITDA as defined under our non-GAAP financial measures provided in today's press release was a loss of $4 $3 million compared to a loss of $3 $7 million in the third quarter of 2023, and a loss of $3 $8 million in the fourth quarter of 2022 for.

Stuart: For more information regarding non-GAAP financial measures. Please see non-GAAP financial measures and a reconciliation of non-GAAP measures to the nearest to the nearest GAAP measure are provided in the tables in today's press release.

Stuart: Cash and cash equivalents totaled $5 $3 million as of December 31.

Nabeel P. Subainati: As Jeff discussed, the company subsequently raised gross proceeds of $7.5 million in March 2024 through the closing of the Xylox Tonbridge initial equity investment. At this point, I'd like to turn the call back to Jeff for Q&A. Thanks, Nabeel.

Stuart: As Jeff discussed the company subsequently raised gross proceeds of $7 $5 million in March 2024 through the closing of the XIAFLEX Tunbridge initial equity investment.

Stuart: At this point I'd like to turn the call back to Jeff for Q&A, Thanks, and Bill we're excited about our new partnership with dialogues Tonbridge in the progress, we're making across the company building our sales organization commercial product portfolio to support our growth and advancing our first coronary product application towards I D E filing this year.

Jeffrey M. Soinski: We're excited about our new partnership with Zilox Tunbridge and the progress we're making across the company, building our sales organization and commercial product portfolio to support our growth and advancing our first coronary product application towards IDE filing this year. We remain committed to making a difference in the lives of patients and the physicians who treat them, wherever they may be, with the most advanced image-guided devices available on the market. At this point, we'd be happy to take your questions. Thank you.

Jeffrey M. Soinski: Remain committed to making a difference in the lives of patients and the physicians, who treat them wherever they may be with the most advanced image guided devices available on the market at this point, we'd be happy to take your questions.

Jeffrey M. Soinski: Thank you at this time, we will be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May Press Star two if you would like to remove your question from the queue for participants using speaker equipment that may be necessary to pick up your handset before.

Operator: At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key.

Jeffrey M. Soinski: Pressing the star Keys once again, please press star one if you wish to ask a question at this time.

Jeffrey M. Soinski: Please hold while we poll for questions.

Jeffrey M. Soinski: Yeah.

Jeffrey M. Soinski: And our first question today is coming from RK from H C. Wainwright Your line is live.

Operator: Once again, please press star 1 if you wish to ask a question at this time, and please hold while we poll for questions. And the first question today is coming from RK from HC Wainwright. RK, your line is live. Thank you. Good afternoon, Jeff.

RK: Thank you.

RK: Afternoon.

RK: Yes.

Speaker Change: So a couple of good afternoon market.

Couple of quick questions here.

Speaker Change: Well congratulations on those dialogues bill.

Speaker Change: So you are saying that dialogues.

Jeffrey M. Soinski: So, a couple of quick questions here. First of all, congratulations on the Xylox bill. So you were saying that Xylox... would need to get approval in China for it to start commercializing your product. So, in general, how long does it take for such products to get approved to start commercialization? Yes, so although it's difficult to put a precise timeline on it based on, you know, our interest in supporting Xilox to make this happen as quickly as possible. We actually started the process with them while we were finalizing the deal, so we got a bit of a head start. Zilox is anticipating that the clearance process for our products will take somewhere around nine to 15 months.

Speaker Change: We would love to get up to well in China.

Speaker Change: So that commercializing your product so in general how long does it take pardon.

Speaker Change: Pardon me for such products to get up crude.

Speaker Change: Commercialization.

Speaker Change: Yeah. So so although it's difficult to put a precise timeline on it we are based on on.

Speaker Change: You know our our interest in supporting Xylogics to make this happen as quickly as possible. We actually started the process with them. While we were finalizing the deal. So we got a bit of a head start.

Speaker Change: Xylogics Ah is anticipating that the clearance process for our products will take somewhere around.

Speaker Change: Yeah nine.

Speaker Change: Nine to 15 months. So we're hopeful that within the first half of 2025 that there they will have regulatory clearance for our products and can start selling into the China market of course, theres a lot that needs to be done between now and then and a lot out of our controller Xylogics is control.

Jeffrey M. Soinski: So we're hopeful that within the first half of 2025, they will have regulatory clearance for our products and can start selling into the Chinese market. Of course, there's a lot that needs to be done between now and then and a lot out of our control or Zilox's control. But the goal is to launch our products in the Chinese market sometime in 2025. Okay, so how big is the Greater China opportunity for peripheral vascular catheters and what is the competition out there? You know, it's a good question because it's a very different dynamic than we have in the U.S. As you know, the atherectomy market in the United States, which is a subset of the larger peripheral vascular market that we compete in, is a large market, around $600 million to $700 million. It is characterized by a lot of competition with all of the big peripheral companies having atherectomy entries. The atherectomy market overall in China is not nearly as well-developed; it's more in the early stages. There are currently only a couple of products approved in China and marketed.

Speaker Change: But the the goal is to launch our products into the China market sometime in 'twenty five.

Speaker Change: Okay. So I'll take as they collateral China opportunity for peripheral vascular catheters and what is the competition out there.

Speaker Change: You know it's a it's a good question because it was a very different dynamic than we have in the U S. As you know the atherectomy market.

Speaker Change: In the United States, where which in the subset of the larger peripheral vascular market that we compete in is a large market you know over right around 600 million to $700 million market. It is characterized by a lot of competition with all of the big peripheral companies having a.

Speaker Change: Direct to me entries.

Speaker Change: The atherectomy market overall in China is not nearly as well developed its more in the early stages, there's only a couple of products approved.

Speaker Change: In China currently and marketed so one of the opportunities that both we and Zilog sees as for for them as part of their very comprehensive full suite of peripheral products to be a a an early mover to to really help.

Jeffrey M. Soinski: So one of the opportunities that both we and Zylock see is for them, as part of their very comprehensive full suite of peripheral products, to be an early mover to really help establish and grow this atherectomy market with a highly differentiated device backed up by strong clinical data. So think of it more like the atherectomy market years ago in the United States, where there's a lot of opportunity and a huge population that's growing significantly of patients suffering from PAD. Okay, um, since, um... Zilogs may not have the facility approved by then, by mid-2025. Do you have enough resources and capacity to not only take care of your growing business in the U.S. but also help Zilogs with its products in China? Yes, we do!

Speaker Change: Establish and grow this atherectomy market with a highly differentiated device backed up by strong clinical data. So it's think of it more like atherectomy. The atherectomy market you know years ago in the United States, where there's a lot of opportunity and a huge population.

Speaker Change: It's growing significantly.

Speaker Change: <unk>.

<unk> of patients suffering from P E D.

Speaker Change: Okay. So.

Speaker Change: No.

Speaker Change:

I'm, sorry, I'm, sorry, I may not have the facility or approved by then by by mid 2025, do you have and enough resources and capacity.

Speaker Change: To not only take care of your growing business in the U S. But also help.

Speaker Change: Dialogues with that product in China.

Speaker Change: Yes, we do in our current facility, we have the manufacturing capability to not only support our growth but to support incremental demand from xylogics.

Jeffrey M. Soinski: In our current facility, we have the manufacturing capability to not only support our growth but to support incremental demand from Xilox. And we obviously will have time to prepare, but we currently only operate on one shift here at our facility. You may have also noticed we filed an 8K that we extended our lease on this facility for a year to provide sufficient time to support the Xilox business prior to them having their manufacturing capability cleared for supplying to the Chinese market. Okay. And then here in the U.S., you know, you added six new personnel to your sales force. In general, how long would it take for them to be productive, and I don't mean it in a negative way, but in a way such that it helps their top-line growth?

Speaker Change: And we.

Speaker Change: We are obviously, we will have time to prepare but we currently only operate on one shift here in our facility. You may have also noticed we filed an 8-K that we extended our lease in this facility.

Speaker Change: For year to provide sufficient time to support the Xylogics business.

Speaker Change: Prior to them, having their manufacturing capability cleared for supplying to the China market.

Speaker Change: Okay.

Speaker Change: Yeah in the U S. You know you said you added some new personnel are their sales force.

Speaker Change:

Speaker Change: In general how long would it take for them to to be there and I don't mean, it in a negative way but.

So that it helps our topline growth.

Jeffrey M. Soinski: Yeah, typically, it takes us around six months for us to start to see the productivity increase from the folks. We have hired some experienced TSMs and territory sales managers, so they need to build their pipelines. We've also hired new clinical specialists, so they are working to gain clinical proficiency with the devices so that they can independently support cases. But, you know, that process typically takes around a six-month time frame.

Speaker Change: Yeah. So so typically it takes.

Speaker Change: So around six months for us to start to see the productivity increase from the folks.

Speaker Change: We have hired some experienced T S EMS and territory sales managers, so they need to build their pipelines. We've also hired new clinical specialists. So they are working to gain clinical proficiency with the devices. So that they can independently support cases, but that process typically takes around a six month timeframe all.

Jeffrey M. Soinski: Obviously, we did hire some of these employees in the fourth quarter. We hired some in the first quarter, so we'll expect, you know, over the second and third quarters for them to really start to contribute, you know, to our growth as we advance through the year. And also, we will hopefully have access, hopefully, in the second half to the full commercial launch of our Pantheras LV image-guided atherectomy device.

Speaker Change: Obviously, we did hire some of these employees in the fourth quarter, we hired some in the first quarter. So we will expect you know over the second and third quarter for them to really start to contribute to our growth as we advance through the year and also we will have access hopefully in the second half for the full commercial launch of our <unk>.

Speaker Change: Terrace L V image guided atherectomy device. So a couple of things both our investment in the sales team as well as the the expanded product portfolio, providing a foundation for that growth as we move throughout the remainder of the year.

Jeffrey M. Soinski: So a couple of things, both our investment in the sales team as well as the expanded product portfolio providing a foundation for that growth as we move throughout the remainder of the year. Okay, so my last question. So you exited with 1.9 million per quarter. So for you to get to the 2.5 million per quarter range so that you can get the next tranche from Zilogs, roughly how long would it take you to get there, do you think?

Speaker Change: Okay. So my last question.

Speaker Change: So you exited that.

Speaker Change: 23, with a one 9 million per quarter.

Speaker Change: So far.

Speaker Change: For you to get to the $2.5 million per quarter range. So that you can get the next tranche.

Speaker Change: From Zilog.

Speaker Change: Hum.

Speaker Change: Roughly how long would it take you to get there.

Do you think.

Speaker Change: Yeah, you know as we as you know really relates to your earlier question as the new folks come up to speed and start to make more and more contribution as we continue to go a little deeper in our current productive markets and then we have the benefit of the new products coming on board.

Jeffrey M. Soinski: Yeah, you know, as we all know, this really relates to your earlier question, as the new folks come up to speed and start to make more and more contribution, as we continue to go a little deeper in our current productive markets, and then we have the benefit of new products coming on board. You know, we look to deliver that kind of growth as we go through the second half of the year and into the next 25. Okay, perfect. This is very helpful; thank you very much for taking time to answer all my questions. Thank you very much, RK. Thank you, and that does conclude our Q&A session. I will now pass the call back to Jeff Soinski for his closing remarks. Well, thank you very much for joining us on our call this afternoon. We very much appreciate your interest in our company and look forward to reporting our continued progress on our next call. Thank you so much. Thank you. This does indeed conclude today's conference. You may disconnect your lines at this time and have a wonderful day. Thank you for your participation.

Speaker Change: You know, we look to deliver that kind of growth as we go through the second half of the year and into 'twenty five.

Speaker Change: Okay perfect.

Very helpful. Thank you very much for taking all my questions.

Thank you very much RK.

Speaker Change: Yeah.

Speaker Change: Thank you and that does conclude our Q&A session I will now pass the call back to Jeff Sowinski for closing remarks.

Jeffrey M. Soinski: Well. Thank you very much for joining our call. This afternoon are we very much appreciate your interest in our company and look forward to reporting our continued progress on our next call. Thank you so much.

Jeffrey M. Soinski: Thank you. This does conclude today's conference you may disconnect. Your lines at this time and have a wonderful day. Thank you for your participation.