Q2 2024 Avinger Inc Earnings Call

Welcome to the Avinger second quarter 2024 results call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session. I'm now going to call over your host, Matt Kreps, Investor Relations. You may begin.

Operator: At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session. I'll now turn the call over to your host, Matt Kreps, Investor Relations. You may begin.

Matthew Kreps: Thank you, and thank you all for joining us on today's call. I would like to welcome you to Avinger's second quarter 2024 conference call. Joining us today are Avinger's CEO, Jeff Soinski, and Principal Financial Officer, Nabeel Subainati.

Speaker Change: Thank you, and thank you all for joining us on today's call. I would like to welcome you to Avinger's second quarter 2024 conference call. Joining us today are Avinger's CEO , Jeff Soinski, and Principal Financial Officer, Nabeel Subainati.

Matthew Kreps: Earlier today, we released financial results for the quarter ended June 30, 2024. A copy of the release is posted on the Avinger website under investor relations. Before we begin, I would 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. Therefore, any statements contained in this call that are not statements of historical fact should be deemed to be forward-looking statements.

Speaker Change: Earlier today, we released financial results for the quarter ended June 30, 2024. A copy of the release is posted on the Avinger website under Investor Relations.

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

Matthew Kreps: 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 the Just a Diva Doc. A reconciliation of these non-GAAP financial measures to the most comparable GAAP financial measures is available in the earnings release, which can be found on Avinger's website.

Speaker Change: Before we begin, I would 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.

Speaker Change: Any statements contained in this call that are not statements of historical fact should be deemed to be forward-looking statements.

Speaker Change: All forward-looking statements, including without limitation or future financial expectations and expected timing for commercial launch of products and filings with the FDA, are based upon current estimates and various assumptions.

Speaker Change: 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.

Speaker Change: Accordingly, you should not place undue reliance on these statements.

Speaker Change: 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.

Speaker Change: 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.

Speaker Change: Also, today's presentation will include reference to non-GAAP financial measures, such as the 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 Jeff.

Jeffrey Soinski: Thank you, Matt. Good afternoon, and thank you all for joining us. The second quarter marked significant progress for Avinger's therapeutic programs, as well as a meaningful shift in our operating structure as we move our company forward. Following the March announcement of our new strategic partnership with Xilox Tunbridge, which provided a substantial investment in Avinger and opened a pathway for the introduction of our image-guided devices to the greater China market, we further improved our balance sheet in the second quarter.

Jeffrey Soinski: In May, we announced the conversion of $11 million of debt held by CRG into shares of a new series of convertible preferred stock, which increased stockholders' equity by the same amount. In June, we announced a public offering providing up to $24 million in growth finance. The financing included $6 million up front at closing, with up to an additional $18 million available based upon the exercise in full of the coronary clinical milestone-linked warrants. In June, we also implemented an operating cost savings program that reduced our headcount by approximately 24%.

Jeff: Thank you, Matt. Good afternoon, and thank you all for joining us. The second quarter marked significant progress for Avinger's therapeutic programs, as well as a meaningful shift in our operating structure as we move our company forward.

Speaker Change: Following the March announcement of our new strategic partnership with Xilox Tunbridge, which provided a substantial investment in Davenger and opens a pathway for the introduction of our image-guided devices to the greater China market, we further improved our balance sheet in the second quarter.

Speaker Change: In May, we announced the conversion of $11 million of debt held by CRG into shares of a new series of convertible preferred stock, which increased stockholders' equity by the same amount.

Speaker Change: In June , we announced a public offering providing up to $24 million in growth financing.

Speaker Change: The financing included $6 million up front at closing, with up to an additional $18 million available based upon the exercise in full of coronary clinical milestone-linked warrants.

Speaker Change: In June , we also implemented an operating cost savings program that reduced our headcount by approximately 24%.

Jeffrey Soinski: This cost reduction program streamlines the operating costs of our peripheral business as we emphasize our field sales team's support of existing peripheral device users and allows us to increase focus on our coronary product development program. We expect the full effect of the cost reductions to be seen in the second half of 2024, with both improved gross margin and reduced operating costs anticipated in the period. Turning to some of the key operating accomplishments in the quarter.

Speaker Change: This cost reduction program streamlines the operating cost of our peripheral business as we emphasize our field sales team's support of existing peripheral device users.

Speaker Change: and allows us to increase focus on our coronary product development program.

Speaker Change: We expect the full effect of the cost reductions to be seen in the second half of 2024 with both improved gross margin and reduced operating costs anticipated in the period.

Jeffrey Soinski: We continued to make exciting progress on our first coronary product as we prepare for filing an IDE submission with the FDA. We are in the process of completing Phase 3 Verification and Validation Studies and initial clinical site selection for our proprietary CTO Crossing device. Pending successful completion of the remaining testing, we anticipate filing an IDE application with the FDA by the end of the third quarter.

Speaker Change: Turning to some of the key operating accomplishments in the quarter. We continued to make exciting progress on our first coronary product as we prepare for filing an IDE submission with the FDA.

Speaker Change: We are in the process of completing Phase 3 verification and validation studies and initial clinical site selection for our proprietary CTO crossing device.

Speaker Change: Pending successful completion of the remaining testing, we anticipate filing an IDE application with the FDA by the end of the third quarter.

Jeffrey Soinski: This is a critical step for Avinger, since FDA approval of our IDE submission would allow Avinger to initiate the first human clinical study for this groundbreaking new device and brings us one step closer to making our proprietary image-guided system available to physicians treating this challenging and complex condition in the coronary artery. We believe our first coronary device provides the opportunity to redefine a large and underserved market. Crossing chronic total occlusions in the coronary arteries today is typically a complex, time-consuming, and expensive procedure with a clinically documented high failure rate.

Speaker Change: This is a critical step for Avinger, since FDA approval of our IDE submission would allow Avinger to initiate the first human clinical study for this groundbreaking new device.

Speaker Change: and brings us one step closer to making our proprietary image-guided system available to physicians treating this challenging and complex condition in the coronary arteries.

Speaker Change: We believe our first coronary device provides the opportunity to redefine a large and underserved market.

Speaker Change: Crossing chronic total occlusions in the coronary arteries today is typically a complex, time-consuming, and expensive procedure with a clinically documented high failure rate.

Jeffrey Soinski: By leveraging our proprietary image-guided technology, we believe we can provide physicians with a superior, simplified, and more successful solution for crossing coronary CTOs. We have deployed our technologies into a low-profile, four-french catheter design that combines real-time OCT guidance with the precise control and steerability needed to facilitate an anti-grade approach, which we expect to significantly reduce procedure times and improve crossing success rates. 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.

Speaker Change: By leveraging our proprietary image-guided technology, we believe we can provide physicians with a superior, simplified, and more successful solution for crossing coronary CTOs.

Speaker Change: We have deployed our technologies into a low-profile, four French capital design that combines real-time OCT guidance with the precise control and durability needed to facilitate an integrated approach.

Speaker Change: which we expect to significantly reduce procedure times and improve crossing success rates.

Speaker Change: 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.

Jeffrey Soinski: We expect our unique image-guided system to allow physicians to cross coronary CTOs with less reliance on specialty wires, support catheters, and reentry devices, while also limiting x-ray radiation exposure and usage of iodine-containing contrast dye, which can pose significant health risks to physicians and patients. Based on multiple animal and cadaver heart studies completed during our development process, and extensive experience with our OCT-guided therapy in the peripheral arteries, we are confident our combination of onboard image guidance and precise control within the vessel will support a robust safety profile during clinical practice.

Speaker Change: We expect our unique image-guided system to allow physicians to cross coronary CTOs with less reliance on specialty wires, support catheters, and re-entry devices.

Speaker Change: while also limiting x-ray radiation exposure and usage of iodine-containing contrast dye which can pose significant health risks to physicians and patients.

Speaker Change: Based on multiple animal and cadaver-hard studies, completing during our development process.

Speaker Change: and extensive experience with our OCT-guided therapy in the peripheral arteries. We are confident our combination of onboard image guidance and precise control within the vessel will support a robust safety profile during clinical practice.

Jeffrey Soinski: We expect adoption of our coronary CTO crossing system to benefit from existing reimbursement dynamics. Following FDA clearance, our coronary device would immediately access existing high-value reimbursement codes for CTO crossing in the coronary arteries. We also expect our image-guided system to access existing reimbursement codes for coronary OCT diagnostic imaging with the same device. This is a key differentiator from the peripheral markets, where discrete reimbursement codes for CTO crossing and diagnostic OCT imaging are not currently available.

Speaker Change: We expect adoption of our coronary CTO crossing system to benefit from existing reimbursement dynamics.

Speaker Change: Following FDA clearance, our coronary device would immediately access existing high-value reimbursement codes for CTO crossing in the coronary arteries.

Speaker Change: We also expect our image-guided system to access existing reimbursement codes for coronary OCT diagnostic imaging with the same device.

Speaker Change: This is a key differentiator from the peripheral markets, where discrete reimbursement codes for CTO crossing and diagnostic OCT imaging are not currently available.

Jeffrey Soinski: In addition to attractive reimbursement dynamics, we expect our coronary CTO crossing system to allow for reduced crossing time, less contrast media usage, and require the use of fewer accessory devices, all of which would result in significant cost savings for the hospital system. We're excited to advance this revolutionary product through the clinical and regulatory processes and look forward to providing further updates on our progress in the coming quarter. While we've reduced the head count and streamlined operations for our peripheral business, we have taken steps to ensure our image-guided catheters remain available to treat patients with clinically challenging peripheral artery disease.

Speaker Change: In addition to attractive reimbursement dynamics, we expect our coronary CTO crossing system to allow for reduced crossing time, less contrast media usage, and require the use of fewer accessory devices, all of which would result in significant cost savings for the hospital system.

Speaker Change: We're excited to advance this revolutionary product through the clinical and regulatory process and look forward to providing further updates on our progress in the coming quarters.

Speaker Change: While we've reduced head count and streamlined operations for our peripheral business, we have taken steps to ensure our image-guided catheters remain available to treat patients with clinically challenging peripheral artery disease.

Jeffrey Soinski: We've maintained a field presence in existing sales territories and are focusing our clinical specialists and sales reps on supporting current users while seeking growth opportunities within or in close proximity to existing accounts. Underscoring our commitment to the clinical importance of our image-guided approach, earlier this week, we announced an important new addition to our leadership team. Dr. Tom Davis, a practicing interventional cardiologist and one of the preeminent leaders in the treatment of vascular disease, has joined Avinger as chief medical officer.

Speaker Change: We've maintained a field presence in existing sales territories and are focusing our clinical specialists and sales reps on supporting current users while seeking growth opportunities within or in close proximity to existing accounts.

Speaker Change: Underscoring our commitment to the clinical importance of our image-guided approach, earlier this week, we announced an important new addition to our leadership team.

Jeffrey Soinski: Dr. Davis serves as Director of Cardiovascular Research at St. John Hospital and Medical Center in Detroit, Michigan, and has served on several scientific advisory boards for interventional device development. He has authored numerous publications, presented extensively at the podium at clinical conferences, and participated as an investigator or principal investigator in multiple clinical trials for new endovascular technologies, including several of Avinger's clinical studies. We're excited to have Dr. Davis join the team and look forward to working closely with him on clinical strategy and medical affairs initiatives to advance our clinical and product development programs and drive awareness of Avinger's image-guided therapies in the broader medical community.

Speaker Change: Dr. Tom Davis, a practicing interventional cardiologist and one of the preeminent leaders in the treatment of vascular disease, has joined Avinger as chief medical officer.

Speaker Change: Dr. Davis serves as Director of Cardiovascular Research at St. John Hospital in Medical Center in Detroit, Michigan, and has served on several scientific advisory boards for interventional device development.

Speaker Change: Dr. Davis has authored numerous publications presented extensively on the podium at clinical conferences and participated as an investigator or principal investigator in multiple clinical trials for new end-of-ascular technologies, including several Avengers Clinical Studies.

Speaker Change: We're excited to have Dr. Davis join the team and look forward to working closely with him on clinical strategy and medical affairs initiatives to advance our clinical and product development programs and drive awareness of Avinger's image-guided therapies in the broader medical community.

Jeffrey Soinski: We've also made important progress in the commercialization of our new peripheral products, along with the introduction of our new Tiger Eye ST crossing catheter in the second half of 2023. We have completed the limited launch phase of our new Pantheras LV peripheral atherectomy catheter and are building product inventory for full commercial launch in the coming weeks. Our new Pantheris LV image-guided atherectomy system is designed to streamline the atherectomy procedure and, in combination with our Lightbox 3 imaging console, expand the mainstream appeal of our image-guided platform.

Speaker Change: We've also made important progress in the commercialization of our new peripheral products, along with the introduction of our new Tiger Eye ST crossing catheter in the second half of 2023.

Speaker Change: We've completed the limited launch phase of our new Pantheris LV peripheral atherectomy catheter and are building product inventory for full commercial launch in the coming weeks.

Speaker Change: Our new Pantheris 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.

Jeffrey Soinski: LV stands for Large Vessel, and consistent with its name, Pantherus LV is ideal for the treatment of the larger arteries above and behind the knee, where the majority of PAD procedures are performed today. Pantherus LV does not require a balloon for plaque opposition and operates at significantly higher rotational speeds than our current atherectomy offerings, with variable speeds up to 3,000 RPM.

Speaker Change: LV stands for large vessel and consistent with its name, Pantherus LV is ideal for the treatment of the larger arteries above and behind the knee where the majority of PAD procedures are performed today.

Speaker Change: Pantera SLV does not require a balloon for plaque opposition and operates at significantly higher rotational speeds that are current at the rectami offerings with variable speeds up to 3,000 RPMs.

Jeffrey Soinski: Based on our learnings from the limited launch and the clinical outcomes we see physicians delivering with this streamlined new device, we're excited to get Pantheras LV into the hands of more physicians through the commercial launch process. Before I close, I'd also like to provide a quick update on our strategic partnership with Xilox Tonbridge. As a reminder, Xylox is a fully integrated medical device company and a leader in the peripheral vascular and neurovascular markets in China.

Speaker Change: Based on our learnings from Limited Launch, and the clinical outcomes we see physicians delivering with the streamlined new device. We're excited to get pantheras healthy and to the hands of more physicians through the commercial launch process.

Speaker Change: Before I close, I'd also like to provide a quick update on our strategic partnership with Xylox Tonbridge. As a reminder, Xylox is a fully integrated medical device company and a leader in the peripheral vascular and neurovascular markets in China.

Jeffrey Soinski: Xilox has developed and launched numerous products into the greater China market, operates an extensive sales and marketing network, and maintains a state-of-the-art manufacturing facility in Hangzhou, China. Since closing Xilox's $7.5 million first tranche investment in March, we've worked closely with Xilox operating teams to support their efforts in gaining regulatory approval to sell Avinger's peripheral products in the Greater China Region, as well as We could not be more impressed with the professionalism of the Xilox organization and are excited to support their goal of commercializing our image-guided catheters in the Chinese market in 2025.

Speaker Change: L'Ilox has developed and launched numerous products into the greater China market, operates an extensive sales and marketing network, and maintains a state-of-the-art manufacturing facility in Hongzhou, China.

Speaker Change: Since closing Xilox's $7.5 million first tranche investment in March, we've worked closely with Xilox operating teams to support their efforts in gaining regulatory approval to sell Avengers peripheral products in the Greater China Region.

Speaker Change: as well as establishing their own manufacturing capability for our products. We could not be more impressed with the professionalism of the Xilox organization and are excited to support their goal of commercializing our image-guided catheters in the China market in 2025.

Jeffrey Soinski: As previously disclosed, sales of Avinger products in the Xilox territory will be royalty-bearing to Avinger, and, following regulatory approval, Avinger will sell finished goods to Xilox until their self-manufactured products are available for sale in China. In addition, once Xilox has qualified its own manufacturing capability and been successfully registered as a manufacturer of Avinger's products with the U.S. FDA, Avinger will We believe this could provide the opportunity for Avinger to reduce the cost of goods sold, improve gross margin, and reduce facility and related overhead expense in the future. 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. I'll then return for Q&A. Nabeel?

Operator: At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session.

Speaker Change: As previously disclosed, sales of Avinger products in the Xilox territory will be royalty-bearing to Avinger and, following regulatory approval, Avinger will sell finished goods to Xilox until their self-manufactured products are available for sale in China.

Matthew Kreps: I'll now turn the call over to your host, Matt Kreps, Investor Relations. You may begin. Thank you and thank you all for joining us on today's call.

Matthew Kreps: I would like to welcome you to Avinger's second quarter, 2024 conference call.

Matthew Kreps: Joining us today are Avinger's CEO, Jesse Soinski, and Principal Financial Officer Nabeel Subainati. Earlier today, we released financial results for the quarter-ended June 30, 2024. The copy of the release is posted on the Avinger website under Investor Relations.

Speaker Change: In addition, once Xilox has qualified their own 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 product from Xilox.

Speaker Change: We believe this could provide the opportunity for Avinger to reduce cost of goods sold, improve gross margin, and reduce facility and related overhead expense in the future.

Matthew Kreps: Before we begin, I would like to remind you that management will make statements during this call that include forward-looking statements within the meeting of federal securities laws, which are made pursuant to the safe, horrible 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. All forward-looking statements, including without limitation or future financial expectations and expected timing for commercial-wantig products and filings with the SEA, are based upon 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.

Nabeel Subainati: Total revenue was $1.8 million for the second quarter of 2024 compared with $1.9 million in the first quarter of 2024 and $2 million in the second quarter of 2023, reflecting the impact of reduced field sales headcount in the last month of the quarter. Gross margin for the second quarter of 2024 was 20%, compared with 18% in the first quarter of 2024 and 30% in the second quarter of 2023. The change in gross margin primarily reflects lower production activity during the quarter as we continue to optimize inventory levels while conserving cash expenditure.

Nabeel Subainati: 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. I'll then return for Q&A. Nabeel? Thank you, Jeff.

Nabeel Subainati: Operating expenses for the second quarter of 2024 were $4.5 million compared to $5.4 million in the first quarter of 2024 and $4.3 million in the second quarter of 2023. In June, we reduced our headcount by approximately 24% as we refocused our peripheral business activities.

Nabeel Subainati: Total revenue was $1.8 million for the second quarter of 2024, compared with $1.9 million in the first quarter of 2024 and $2 million in the second quarter of 2023.

Speaker Change: reflecting the impact of reduced field sales headcount in the last month of the quarter.

Nabeel Subainati: Gross margin for the second quarter of 2024 was 20%, compared with 18% in the first quarter of 2024 and 30% in the second quarter of 2023.

Matthew Kreps: For a list and description of the risks and uncertainties associated with our business, please see our form 10K and thank you 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.

Speaker Change: The change in gross margin primarily reflects lower production activity during the quarter as we continue to optimize inventory levels while conserving cash expenditures.

Speaker Change: Operating expenses for the second quarter of 2024 were $4.5 million compared to $5.4 million in the first quarter of 2024 and $4.3 million in the second quarter of 2023.

Matthew Kreps: Also, today's presentation will include reference to non-gap financial measures, such as adjusted EBITDA. A reconciliation of these non-gap financial measures to the most comparable gap financial measures is available within the earnings release, which can be found on Avinger's website.

Speaker Change: In June, we reduced our head count by approximately 24% as we refocused our peripheral business activities.

Speaker Change: Severance and other separation costs associated with this action were included in the second quarter, so we expect to see the benefit of these cost reductions starting in the third quarter of this year with both improved gross margin and reduced operating expenses anticipated in the second half of 2024.

Nabeel Subainati: Severance and other separation costs associated with this action were included in the second quarter. Therefore, we expect to see the benefit of these cost reductions starting in the third quarter of this year, with both improved gross margin and reduced operating expenses anticipated in the second half of 2024. Net loss and comprehensive loss for the second quarter of 2024 was $4.4 million, compared to $5.5 million in the first quarter of 2024 and $4.2 million in the second quarter of 2023.

Jeffrey Soinski: And with that, I'd like to now turn the call over to Jeff. Thank you, Matt.

Jeffrey Soinski: Good afternoon, and thank you all for joining us. The second quarter marks significant progress for Avinger's therapeutic programs, as well as a meaningful shift in our operating structure as we move our company forward. Following the March announcement of our new strategic partner, partnership with Xylux Tumbridge, which provided a substantial investment in Avinger, it opens a pathway for the introduction of our image-guided devices to the greater China market. We further improved our balance sheet in the second quarter.

Speaker Change: Net loss and comprehensive loss for the second quarter of 2024 was $4.4 million, compared to $5.5 million in the first quarter of 2024, and $4.2 million in the second quarter of 2023.

Nabeel Subainati: Adjusted EBITDA, as defined under our non-GAAP financial measures provided in today's press release, was a loss of $3.8 million compared to a loss of $3.9 million in the first quarter of 2024 and a loss of $3.4 million in the second quarter of 2023. For more information regarding non-GAAP financial measures, please see Non-GAAP Financial Measures and the Reconciliation of Non-GAAP Measures.

Speaker Change: Adjusted EBITDA as defined under our non-GAAP financial measures provided in today's press release was a loss of 3.8 million dollars compared to a loss of 3.9 million dollars in the first quarter of 2024 and a loss of 3.4 million dollars in the second quarter of 2023.

Jeffrey Soinski: In May, we announced the conversion of $11 million of debt held by CRG into shares of a new series of convertible preferred stock, which increased stockholders' equity by the same amount. In June, we announced a public offering providing up to $24 million in growth financing. The financing included $6 million up front at closing with up to an additional $18 million available based upon the exercise in full of coronary clinical milestone-linked warrants.

Speaker Change: For more information regarding non-gap financial measures, please see non-gap financial measures and the reconciliation of non-gap measures to the nearest gap measure provided in the tables in today's press release.

Nabeel Subainati: The measures to the nearest gap measure provided in the tables in today's press release. We continue to take steps to improve our balance sheet in the second quarter, with cash and cash equivalents totaling $8.8 million as of June 30. In May, we announced the conversion of $11 million, or approximately 80% of CRG debt, into shares of a new series of convertible preferred stock, reducing the outstanding principal amount of debt to $2.6 million with no principal payments required until 2027.

Speaker Change: We continue to take steps to improve our balance sheet in the second quarter, with cash and cash equivalents totaling $8.8 million as of June 30th.

Speaker Change: In May, we announced the conversion of $11 million or approximately 80% of CRG debt into shares of a new series of convertible preferred stock.

Jeffrey Soinski: In June, we also implemented an operating cost savings program that reduced our headcount by approximately 24%. This cost reduction program streamlines the operating cost of our peripheral business as we emphasize our field sales team support of existing peripheral device users. Groups and allows us to increase focus on our coronary product development program.

Speaker Change: Reducing the outstanding principal amount of debt to $2.6 million with no principal payments required until 2027.

Nabeel Subainati: The debt conversion resulted in an $11 million increase in stockholders' equity. In June 2024, we announced a public offering valued at up to $24 million in total proceeds, including $6 million of upfront and up to an additional $18 million of aggregate gross proceeds upon the exercise in full of coronary clinical milestone-linked warrants. At this point, I'd like to turn the call back to Jeff for Q&A.

Speaker Change: The debt conversion resulted in an $11 million increase in stockholders' equity.

Speaker Change: In June 2024, we announced the public offering valued it up to $24 million in total proceeds.

Jeffrey Soinski: We expect the full effect of the cost reductions to be seen in the second half of 2024 with both improved gross margin and reduced operating costs anticipated in the period. Turning to some of the key operating accomplishments in the quarter, we continued to make exciting progress on our first coronary product as we prepare for filing an IDE submission with the FDA. We are in the process of completing phase three verification and validation studies and initial clinical site selection for our proprietary CTO crossing device.

Speaker Change: Including $6 million of upfront and up to an additional $18 million of aggregate gross proceeds upon the exercise in full of coronary clinical milestone linked warrants.

Jeffrey Soinski: Pending successful completion of the remaining testing, we anticipate filing an IDE application with the FDA by the end of the third quarter. This is a critical step for Avinger since FDA approval of our IDE submission would allow Avinger to initiate the first human clinical study for this groundbreaking new device and brings us one step closer to making our proprietary image guided system available to physicians treating this challenging and complex condition in the coronary arteries.

Jeffrey Soinski: Thanks, Nabeel. The second quarter has been busy for Avinger as we refocused our peripheral business and reduced our operating cost structure, advanced our coronary CTO program towards IDE filing, supported Xilox commercialization efforts for entry into the vast and growing Greater China market, and prepared our new Pantheras LV atherectomy catheter for full commercial launch. As Nabeel highlighted, we also took important steps to improve our balance sheet and increase stockholders' equity during the quarter. We believe we are well positioned going into the second half of the year and look forward to reporting our continued progress in the coming months. At this point, we'd be happy to take your questions.

Speaker Change: At this point, I'd like to turn the call back to Jeff for Q&A.

Jeff: Thanks Nabeel. The second quarter has been busy for Avager, as we refocused our peripheral business and reduced our operating cost structure.

Speaker Change: Advanced our coronary CTO program towards IDE filing, supported Zilox commercialization efforts for entry into the vast and growing greater China market, and prepared our new Pantheras LV at the rectumate catheter for full commercial launch.

Speaker Change: As Nabeel highlighted, we also took important steps to improve our balance sheet and increase stockholders' equity during the quarter.

Nabeel Subainati: We believe we're well positioned going into the second half of the year and look forward to reporting our continued progress in the coming months.

Operator: If you would like to ask a question, please press star 1 on your phone now, and you'll be placed into the queue in order to receive. Once again, to ask a question, please press star 1 on your phone now. Our first question comes from R.K. from H.C. Wainwright. Please state your question.

Speaker Change: At this point, we'd be happy to take your questions.

Speaker Change: If you would like to ask a question, please press star 1 on your phone now and you will be placed into the queue in the order received.

Jeffrey Soinski: We believe our first coronary device provides the opportunity to redefine a large and underserved market. Crossing chronic total occlusions in the coronary arteries today is typically a complex time consuming and expensive procedure with a clinically documented high failure rate. By leveraging our proprietary image guided technology, we believe we can provide physicians with a superior, simplified and more successful solution for crossing coronary CTOs. We have deployed our technologies into a low profile for French catheter design that combines real-time OCT guidance with the precise control and durability needed to facilitate an anagrate approach, which we expect to significantly reduce procedure times and improve crossing success rates.

Speaker Change: Once again, to ask a question, please press star 1 on your phone now.

Speaker Change: Our first question comes from RK from H.C. Wayne Wright, please say your question.

Swayampakula Ramakanth: Good afternoon, Jeff and Nabeel. Thanks for doing this.

Speaker Change: Good afternoon, Jeff and Nabeel. Thanks for doing this. So, in the prepared remarks you were talking about

Swayampakula Ramakanth: So, in the prepared remarks, we were talking about, I'm trying to lower some of the personnel. I'm just trying to understand if there is, Is the reduction in personnel anything to do with the Silox-Stonebridge collaboration? What I'm trying to ask is, if at all you lose any revenue by decreasing the force here, can you make that up on more than that through the collaboration with Zeta?

Speaker Change: Cost Reduction, I'm trying to lower some of the personnel. I'm just trying to understand, this is

Speaker Change: Is the reduction in personnel anything to do with the SILOX-Stonebridge

Jeffrey 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 expect our unique image guided system to allow physicians to cross coronary CTOs with less reliance on specialty wires, support catheters, and reentry devices, while also limiting x-ray radiation exposure and usage of iodine containing contrast dye, which can pose significant health risks to physicians and patients.

Speaker Change: Collaboration and...

Speaker Change: And what I'm trying to ask is, if at all you lose any revenues by decreasing the force here, can you make that up more, more than that, by the collaboration with Xerox?

Jeffrey Soinski: Thanks for the question, R.K. First of all, the reduction in force, as we discussed, we reduced about 24 percent of our headcount, with headcount being our biggest operating expense, in the actions we took in early June. None of that reduction was related to Xilox. We did an assessment, as we talked about at the time, of where our investment would be required and where the board and the company wanted to focus our investment in the second half of the year, with so many critical milestones and activities coming up related to our coronary program.

Speaker Change: Thanks for the question, R.K.

Speaker Change: So first of all, the

Speaker Change: Reduction in force, as we discussed, we reduced about 24% of our head count with head count being our biggest operating expense.

Speaker Change: In the actions we took in early June. None of that reduction was related to thylox. We, you know, didn't assessment as we talked about at the time.

Jeffrey Soinski: Based on multiple animal and cadaver hard studies, completing during our development process, an extensive experience with our OCT guided therapy in the peripheral arteries, we are confident our combination of onboard image guidance and precise control within the vessel will support a robust safety profile during clinical practice. We expect adoption of our coronary CTO crossing system to benefit from existing reimbursement dynamics. Following FDA clearance, our coronary device would immediately access existing high-value reimbursement codes for CTO crossing in the coronary artery. We also expect our image-guided system to access existing reimbursement codes for coronary OCT diagnostic imaging with the same device.

Speaker Change: of, you know, where would our investment be required and where did the board and the company want to focus our investment in the second half of the year with so many critical milestones and activities coming up related to our coronary program.

Jeffrey Soinski: And so we took a step back in the peripheral business in terms of headcount, reducing about a third of the sales and marketing expense for that part of our organization. So that's where the majority of the reductions were.

Speaker Change: And so we took a step back in the peripheral business in terms of head count, reducing about a third of the sales and marketing expense.

Speaker Change: for that.

Jeffrey Soinski: We also made some other reductions across the operations manufacturing group and even in G&A to run the company even leaner in these financial markets as we move forward. However, we certainly are careful to maintain a full operating structure as a medical device manufacturer and marketer. We are maintaining a field presence in all of our existing territories, although a reduced presence in some territories where we did make a reduction at the senior leadership level in sales. We have maintained two very experienced regional sales directors, one for the north and one for the south, to guide those activities.

Speaker Change: So that's where the majority of reductions were. We also made some other reductions across the

Speaker Change: Operations, Manufacturing Group, and even in G&A to run the company, you know, even leaner in these financial markets as we move forward.

Jeffrey Soinski: This is a key differentiator from the peripheral markets where discrete reimbursement codes for CTO crossing and diagnostic OCT imaging are not currently available. In addition to attractive reimbursement dynamics, we expect our coronary CTO crossing system to allow for reduced crossing time, less contrast media usage, and require the use of fewer accessory devices, all of which would result in significant cost savings for the hospital system.

Speaker Change: We certainly are careful to maintain a full operating structure as a medical device manufacturer and marketer. We are maintaining a...

Speaker Change: field presence in all of our existing territories, although a reduced presence in some territories.

Speaker Change: where we did make a reduction at the senior leadership level in sales. We've maintained two very experienced regional sales directors, one for the north and one for the south, to guide those activities.

Jeffrey Soinski: So none of this was related to Zilox. However, we do believe that Zilox provides significant opportunity for us as they access a brand new market, a huge market with a very large sales and marketing infrastructure in place, both their own and distributors throughout the greater China region. We don't anticipate, you know, significant revenue from that until sometime, you know, well into 2025 as they get their regulatory approval. But we do think that will definitely provide upside to our total revenue base as they start to come online and sell the product.

Jeffrey Soinski: We're excited to advance this revolutionary product through the clinical and regulatory process and look forward to providing further updates on our progress in the coming quarters. While we've reduced headcount and streamlined operations for our peripheral business, we have taken steps to ensure our image-guided catheters remain available to treat patients with clinically challenging peripheral artery disease. We've maintained a field presence in existing sales territories and are focusing our clinical specialists and sales reps on supporting current users while seeking growth opportunities within or in close proximity to existing accounts.

Speaker Change: So, none of this was related to Zilox. We do believe that Zilox provides significant opportunity for us as they access a brand new market, a huge market with a very large

Speaker Change: sales and marketing infrastructure in place, both their own and distributors throughout the greater China region.

Speaker Change: We don't anticipate significant revenue from that until sometime well into 2025 as they get their regulatory approval.

Speaker Change: But we do think that will definitely provide upside to our total revenue base as they start to come online and sell the products.

Jeffrey Soinski: The other thing that the Xilox transaction brings to us is that while we are maintaining a full manufacturing capability here in the United States, they are in the process of establishing, and we're helping them establish their own manufacturing capability. Not only for eventual supply to the Chinese market, but under our agreements with Xilox, we have the opportunity to purchase products from them, finished goods, on a cost plus basis, which could provide the opportunity for us to significantly reduce our cost of goods, improve our gross margins, and also reduce our overall operating, our overhead expense.

Jeffrey Soinski: Underscoring our commitment to the clinical importance of our image-guided approach, earlier this week, we announced an important new addition to our leadership team. Dr. Tom Davis, a practicing interventional cardiologist and one of the preeminent leaders in the treatment of vascular disease, has joined Avenger as chief medical officer. Dr. Davis serves as director of cardiovascular research at St. John Hospital in Medical Center in Detroit, Michigan and has served on several scientific advisory boards for interventional device development.

Speaker Change: The other thing that the Xilox transaction brings to us

Speaker Change: is while we are maintaining a full manufacturing capability here in the United States.

Jeffrey Soinski: Dr. Davis has authored numerous publications, presented extensively on the podium at clinical conferences, and participated as an investigator or principal investigator in multiple clinical trials for new endovascular technologies, including several of Avenger's clinical studies. We're excited to have Dr. Davis join the team and look forward to working closely with him on clinical strategy and medical affairs initiatives to advance our clinical and product development programs and drive awareness of Avenger's image-guided therapies in the broader medical community.

Speaker Change: is they are in the process of establishing and we're helping them establish their own manufacturing capability, not only for eventual supply to the China market, but under our agreements with Zilox, we have the opportunity to purchase product from them, finished goods, on a cost-plus basis.

Speaker Change: which could provide the opportunity for us to significantly reduce our cost of goods, improve our gross margins, and also reduce our overall operating, our overhead expense.

Jeffrey Soinski: So there are a lot of elements in this deal that could be very positive for us. We do expect, you know, in the back half of the year, because we have reduced our team, some softening of revenue on the peripheral side, but we think that's the right strategic decision as we focus resources on the very high-opportunity coronary area and continue to support our Xilox relationship.

Speaker Change: So a lot of elements of this deal that could be very positive to us.

Speaker Change: We do expect, you know, in the back half of the year, because we have reduced our team, you know, some softening of revenue on the peripheral side, but we think that's the right strategic decision.

Speaker Change: as we focus resources on the very high opportunity coronary area and continue to support our Xylox relationship.

Swayampakula Ramakanth: Thanks for all that color. On the Xylox relationship, when do you think Xerox will be able to start filing applications within the, you know, with the Chinese regulatory bodies, so that you can get some product through the sales channels? I know you said sometime in 2025. I did hear that, but I'm just trying to understand where things are as we speak.

Jeffrey Soinski: We've also made important progress in the commercialization of our new peripheral products, along with the introduction of our new Tiger IST crossing catheter in the second half of 2023. We've completed the limited launch phase of our new pantheris LV peripheral atherectomy catheter and our building product inventory for full commercial launch in the coming weeks. Our new pantheris LV 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.

Speaker Change: Okay, thanks for all that, Carlo. On the Xylox relationship...

Speaker Change: That...

Speaker Change: will be able to start filing applications with the Chinese regulatory bodies.

Speaker Change: So that, you know, you can get some product, you know, through the sales channels. I know you said sometime in 2025, I did hear that, but I'm just trying to understand, you know, where things are as we speak.

Jeffrey Soinski: Yeah, so there are really two primary activities that Xilox is leading, and we're supporting them. One is to prepare for regulatory registration of our products as imported products in China. And as you're probably aware, China NMPA, which is the Chinese FDA, has very stringent and rigorous requirements, and there's a complete battery of verification and validation testing that has to be done. It's called type testing in China.

Speaker Change: Yes, so there are really two primary activities that ZiLox is leading and we're supporting them. One is to prepare for regulatory registration of our products as an imported products in China.

Jeffrey Soinski: LV stands for large vessel and consistent with its name, pantheris LV is ideal for the treatment of the larger arteries above and behind the knee where the majority of PAD procedures are performed today. Pantherous LV does not require a balloon for plaque opposition and operates at significantly higher rotational speeds than our current at-the-rectomy offerings, with variable speeds up to 3,000 RPMs. Based on our learnings from limited launch and the clinical outcomes we see physicians delivering with the streamlined new device, we're excited to get Pantherous LV into the hands of more physicians through the commercial launch process.

Speaker Change: and as you're probably aware, China and MPA, which is the Chinese FDA, has very stringent and rigorous requirements, and there is a complete battery of verification and validation testing that has to be done. It's called type testing.

Jeffrey Soinski: We're well along, or Xilox is well along in that process. And once that is completed, and they're also been, you know, performing a lot of work, again, with our support, on preparing the appropriate documentation for regulatory filing. So once that is completed, and, you know, we certainly don't want to speak for them on a timing basis, they would be in a position to file, we think, a very robust package with the NMPA, which would support the kind of timeframes that they've guided to, which is a 2025 potential launch. And I would expect that to be sometime in the second half of 2025, but again, it's not something that we're in control of.

Speaker Change: In China, we're well along, or Zylox is well along in that process. And once that is completed, and there have also been, you know, performing a lot of work, again, with our support on preparing the appropriate documentation for regulatory filing.

Jeffrey Soinski: Before I close, I'd also like to provide a quick update on our strategic partnership with Xilox Tonbridge. As a reminder, Xilox is a fully integrated medical device company and a leader in the peripheral vascular and neurovascular markets in China. Xilox is developed and launched numerous products into the greater China market, operates an extensive sales and marketing network, and maintains the state-of-the-art manufacturing facility in Hongzhou, China. Since closing Xilox, $7.5 million first-trunch investment in March, we work closely with Xilox operating teams to support their efforts in gaining regulatory approval to sell Avinger's peripheral products in the greater China region, as well as establishing their own manufacturing capability for our products.

Speaker Change: So once that is completed, and you know, we certainly don't want to speak for them on a timing basis, they would be in a position to file

Speaker Change: We think a very robust package with the NMPA.

Speaker Change: which would support the kind of time frames that Dave guided to, which is a 2025 potential launch. And I would expect that to be sometime in the second half of 2025, but again, it's not something that we're in control of.

Swayampakula Ramakanth: And then on the Panther, the limited launch that you have right now, when can that get turned into a full commercial launch?

Speaker Change: And then on the Panther is ELV, the limited launch that you have right now, when can that get turned into a full commercial launch?

Jeffrey Soinski: So, as you know, we've been in the market with the PantheraSLV product for a while now. We've had some wonderful case experiences and learned a lot about the device, and we identified a couple of areas where we wanted to make some minor improvements prior to commercial launch. Those have all now been completed and released, and we're in the process of finalizing inventory builds for transition to full commercial launch, which we would expect to happen in the very near term.

Speaker Change: So, as you know, we've been in the market with the Panteras LV product for a while now. We've had some wonderful case experience.

Jeffrey Soinski: We could not be more impressed with the professionalism of the Xilox organization and are excited to support their goal of commercializing our image-guided catheters in the China market in 2025. As previously disclosed, sales of Avinger products in the Xilox territory will be royalty-bearing to Avinger, and following regulatory approval, Avinger will sell finished goods to Xilox until their self-manufactured products are available for sale in China. In addition, once Xilox has qualified their own manufacturing capability and been successfully registered as a manufacturer of Avinger's products with the US FDA, Avinger will have the option to source finished product from Xilox. We believe this could provide the opportunity for Avinger to reduce cost of goods sold, improve gross margin, and reduce facility and relate it overhead expense in the future.

Speaker Change: Learned a lot about the device, identified at a couple of areas where we wanted to make some minor areas for improvement, prior to commercial launch. Those of all now have been completed and released.

Speaker Change: and we're in the process of finalizing inventory builds for transition to full commercial launch, which we would expect to happen in the very near term.

Jeffrey Soinski: On the cardiovascular catheter, you said you're getting ready to file the IDE. So let's say you file the IDE in the fourth quarter. How long after that can you start the study? And in terms of your initial conversations with potential clinics that can do the IDE for you, where do those conversations stand now?

Speaker Change: On the cardiovascular catheter, you said you're getting ready to file the IDE.

Speaker Change: So let's say you find the IDE in the fourth quarter, how long...

Speaker Change: After that, can you start the study, and in terms of your initial conversations with potential clinics that can do the IDE for you, where do those conversations stand now?

Nabeel Subainati: At this point, I'd like to turn the call over to Nobel Spanetti, our principal financial officer and accounting officer to take us through the financial results. All then, return for Q&A. Nobel, thank you, Jeff. Total revenue was $1.8 million for the second quarter of 2024, compared with $1.9 million in the first quarter of 2024 and $2 million in the second quarter of 2023. Reflecting the impact of reduced-field sales had counted the last month of the quarter.

Jeffrey Soinski: Yes, so first of all, to answer your first question, you know, assuming the filing of the IDE, you know, in the near term here, as we talked about, we would plan and assume, of course, out of our control, but typically, you know, four to six months for IDE clearance, which would put us into the early part of 2025. While we're waiting for IDE clearance, we would be contracting with and preparing for the, you know, certainly the pilot part of our study, where we would first go into five to ten patients, and then the expansion into the full clinical study. We have already identified several clinical sites. We've been in discussions with those sites, and our IDE filing will include the initial sites that we're planning on.

Speaker Change: Yes, so first of all, to answer your first question, assuming filing of the IDE in the near term here, as we talked about.

Speaker Change: We would plan and assume, of course, out of our control, but typically, you know, four to six months for IDE clearance.

Speaker Change: which would put us into the early part of 2025.

Nabeel Subainati: Gross margin for the second quarter of 2024 was 20 percent, compared with 18 percent in the first quarter of 2024 and 30 percent in the second quarter of 2023. The change in gross margin primarily reflects lower production activity during the quarter as we continue to optimize inventory levels while conserving cash expenditures. Operating expenses for the second quarter of 2024 were $4.5 million, compared to $5.4 million in the first quarter of 2024 and $4.3 million in the second quarter of 2023.

Speaker Change: While we're waiting for ID clearance, we would be contracting with and preparing for the, you know,

Speaker Change: Certainly, the pilot part of our study where we would first go into five to ten patients and then the expansion into the full clinical study.

Speaker Change: We have already identified several clinical sites. We've been in discussion with those sites. And our IDE filing will include the initial sites that we're planning on. So that's how far along we are in those discussions.

Jeffrey Soinski: So that's how far along we are in those discussions, and I will say there's a lot of enthusiasm among the physicians, not only who have been involved with the development of this product as part of our advisory board, but also other physicians who've learned about it, who we've shared information with, and who are interested in participating in something that could be so really groundbreaking for this market. As you know, R.K., this is an extraordinarily challenging condition to treat, and it is no exaggeration to say that physicians will spend four to five hours under fluoroscopy using many, many devices and accessory devices and often not having a successful outcome.

Speaker Change: And I will say there's a lot of enthusiasm with the physicians, not only who have been involved with the development of this product as part of our advisory board, but also other physicians who've learned about it, who we've shared information with.

Nabeel Subainati: In June, we reduced our head count by approximately 24 percent as we refocused our peripheral business activity, and other separation costs associated with this action were included in the second quarter. So we expect to see the benefit of these cost reductions starting in the third quarter of this year, with both improved gross margin and reduced operating expenses anticipated in the second half of 2024. Net loss and comprehensive loss for the second quarter of 2024 was $4.4 million compared to $5.5 million in the first quarter of 2024 and $4.2 million in the second quarter of 2023.

Speaker Change: An interest in participating in something that could be so really groundbreaking for this market.

Speaker Change: As you know, okay, this is an extraordinarily challenging condition to treat and is no exaggeration to say that physicians will take four to five hours under fluoroscopy using

Speaker Change: Many, many devices and accessory devices, and oftentimes not having a successful outcome.

Jeffrey Soinski: And so if we can help these physicians make this more efficient, reduce the X-ray radiation, reduce the contrast media burden on the patient, and most of all have a safe and successful crossing of that coronary CTO in a much less invasive fashion, I think we really can make a huge difference in the standard of care. So, and I think physicians see that, too. So assuming that we, you know, file on the timeframes we expect, assuming we get the clearance on the timeframes we expect, I would assume that we would be in the clinic, you know, in the first part of 2025, first half of 2025, and while we are defining the number of patients required for our IDE filing, we do not see this as a large study in terms of number of patients required, and as we've discussed previously, there's only 30-day follow-up required for a CTO crossing device in the coronary arteries.

Speaker Change: and so if we can help these positions make this more efficient, reduce the x-ray radiation, reduce the contrast, media burden on the patient.

Nabeel Subainati: Adjusted EBITDA as defined under our non-gap financial measures provided in today's press release was a loss of $3.8 million compared to a loss of $3.9 million in the first quarter of 2024 and a loss of $3.4 million in the second quarter of 2023. For more information regarding non-gap financial measures, please see non-gap financial measures and the reconciliation of non-gap measures to the nearest gap measure provided in the tables in today's press release.

Speaker Change: and most of all have a safe and successful crossing of that coronary CTO in a much less invasive fashion.

Speaker Change: I think we really can make a huge difference in the standard of care. So, and I think physicians see that too. So, assuming that we file on the timeframes we expect, assuming we get the clearance on the timeframes we expect, I would assume that we would be in the clinic.

Nabeel Subainati: We continue to take steps to improve our balance sheet in the second quarter, with cash and cash equivalence totaling $8.8 million as of June 30. In May, we announced the conversion of $11 million or approximately 80% of CRD debt into shares of a new series of convertible preferred stock, reducing the outstanding principal amount of debt to $2.6 million with no principal payments required until 2027. The debt conversion resulted in an $11 million increase in stockholder's equity.

Speaker Change: You know, in the first part of 2025, first half of 2025.

Speaker Change: And while we are defining the number of patients required for our IDE filing, we do not see this as a

Speaker Change: Large

Speaker Change: Study in terms of number of patients required and as we've discussed previously there's only 30 day follow-up required for a CTO crossing device in the coronary arteries. So we would hope.

Jeffrey Soinski: So we would hope that we could get the study enrolled in a relatively efficient timeframe and be in a position to file a 510-K based upon the clinical data in 2026. Those are the timeframes that we're operating against, and as I said, this has become a primary focus and certainly a priority of the company. Thank you.

Speaker Change: that we could get the study enrolled in a relatively efficient time frame and be in a position to file a 510K based upon the clinical data in 2026.

Nabeel Subainati: In June 2024, we announced the public offering valued it up to $24 million in total proceeds, including $6 million of upfront and up to an additional $18 million of aggregate gross proceeds upon the exercise in full of coronary clinical milestone link warrants. At this point, I'd like to turn the call back to Jeff for Q&A. Thanks, Nabil. The second quarter has been busy for AVIDJER as we refocused our peripheral business and reduced our operating cost structure, advanced our coronary CTO program towards IDE filing, supported Xilox commercialization efforts for entry into the vast and growing greater China market and prepared our new pantheris LVF rectumic capitol for full commercial launch.

Speaker Change: Those are the timeframes that we're operating against and as I said, this has become a primary focus and certainly a priority of the company.

Jeffrey Soinski: Thank you. Thanks for taking all my questions, Jeff.

Speaker Change: Thank you. Thanks for taking all my questions, Jeff.

Operator: At this time, we have no further questions. I'll now turn the call back over to Mr. Jeff Swayampakula. Well, thank you.

Arcade: Thank you, Arcade.

Speaker Change: At this time we have no further questions. I'll now turn the call back over to Mr. Jeff Soinski.

Jeffrey Soinski: Well, thank you again for joining our call this afternoon. We very much appreciate your interest in our company and look forward to reporting further progress in the coming quarters.

Operator: This concludes today's...

Jeff Soinski: Well, thank you again for joining our call this afternoon. We very much appreciate your interest in our company and look forward to reporting our further progress in the coming quarters.

Nabeel Subainati: As Nabil highlighted, we also took important steps to improve our balance sheet and increase stockholders' equity during the quarter. We believe we're well positioned going into the second half of the year and look forward to reporting our continued progress in the coming months. At this point, we'd be happy to take your questions. If you would like to ask a question, please press star 1 on your phone now and you'll be placed in the queue in order to receive. Once again, to ask a question, please press star 1 on your phone now.

Operator: Our first question comes from R.K, from H.C. Wainwright.

Jeffrey Soinski: Please say your question. Sure. Good afternoon, Jeff from Nabil. Thanks for being this. So in the prepared remarks, we were talking about cost reduction and trying to lower some of the personnel. I'm just trying to understand. If the reduction in personnel, anything to do with the siloctromburg collaboration, what I'm trying to ask is if at all you do any revenues by decreasing the force here, can you make that up one more, more than that by the collaboration result?

Jeffrey Soinski: Thank you for the question of R.K. So, first of all, the reduction in force as we discussed, we reduced about 24% of our head count with head count being our biggest operating expense in the actions we took in early June. None of that reduction was related to Xilox. We, you know, did an assessment as we talked about at the time of, you know, where would our investment be required and where did the board and the company want to focus our investment in the second half of the year, with so many critical milestones and activities coming up related to our coronary program.

Jeffrey Soinski: And so we took a step back in the peripheral business in terms of head count, reducing about a third of the sales and marketing expense for that part of our organization. So that's for the majority of reductions where we also made some other reductions across the operations, manufacturing group and even in GNA to run the company, you know, even leaner in these financial markets as we move forward. We certainly are careful to maintain a full operating structure as a medical device manufacturer and marketer.

Jeffrey Soinski: We are maintaining a field presence in all of our existing territories, although a reduced presence in some territories, where we did make reduction at the senior leadership level in sales. We've maintained two very experienced regional sales directors, one for the north and one for the south to guide those activities. So none of this was related to Xilox. We do believe that Xilox provides significant opportunity for us as they access a brand new market, a huge market with a very large sales and marketing infrastructure in place, both their own and distribute distributors throughout the greater China region.

Jeffrey Soinski: We don't anticipate, you know, significant revenue from that until sometime, you know, well into 2025 as they get their regulatory approval. But we do think that will be definitely provide upside to our total revenue base as they start to come online and sell the products. The other thing that the Xilox transaction brings to us is what we are maintaining a full manufacturing capability here in the United States is they are in the process of establishing and we're helping them establish their own manufacturing capability, not only for eventual supply to the China market, but under our agreements with Xilox, we have the opportunity to purchase product from them, finish goods on a cost-plus basis, which could provide the opportunity for us to significantly reduce our cost of goods, improve our gross margins, and also reduce our overall operating our overhead expense.

Jeffrey Soinski: So a lot of elements of this deal that could be very positive to us. We do expect, you know, in the back half of the year because we have reduced our team, you know, some softening of revenue on the peripheral side. But we think that's the right strategic decision as we focus resources on the very high opportunity, coronary area and continue to support our Xilox relationship.

Jeffrey Soinski: Thanks for all the color. On the Xilox relationship, when do you think Xilox will be able to start filing applications within the Chinese regulatory bodies so that, you know, you can get some product through the sales channels. I know you said sometime in 2025, I did hear that, but I'm just trying to understand, you know, where things are as we speak. Yes, so there are really two primary activities that Xilox is leading and we're supporting them.

Jeffrey Soinski: One is to prepare for regulatory registration of our products as imported products in China. And as you're probably aware, China NMPA, which is the Chinese FDA, has very stringent and rigorous requirements. And there is a complete battery of verification and validation testing that has to be done. It's called type testing in China. We're well along or Xilox is well along in that process. And once that is completed, and they're also been performing a lot of work, again with our support on preparing the appropriate documentation for regulatory filing.

Jeffrey Soinski: So once that is completed, and we certainly don't want to speak for them on a timing basis, they would be in a position to file. We think a very robust package with the NMPA, which would support the kind of timeframes that they've guided to, which is a 2025 potential launch. And I would expect that to be sometime in the second half of 2025, but again, it's not something that we're in control of.

Jeffrey Soinski: And then on the Panthers LV, the limited launch that you have right now, when can that get turned into a full commercial launch? Yes. So as you know, we've been in the market with the Panthers LV product for a while now. We've had some wonderful case experience and learned a lot about the device, identified in a couple of areas where we wanted to make some minor areas for improvement prior to commercial launch.

Jeffrey Soinski: Those have all now been completed and released, and we're in the process of finalizing inventory builds for transition to full commercial launch, which we would expect to happen in the very near term. On the Cardio Waskler catheter, you said you're getting ready to file the IDE. So, let's say you file the IDE in the fourth quarter, how long after that can you start the study? And in terms of your initial conversations with potential clinics that can do the IDE for you, where do those conversations stand now?

Jeffrey Soinski: Yes. So first of all, to answer your first question, assuming filing of the IDE in the near term here as we talked about, we would plan and assume, of course, out of our control, but typically, you know, four to six months for IDE clearance, which would put us into the early part of 2025, while we're waiting for IDE clearance, we would be contracting with it and preparing for the, you know, certainly the pilot part of our study where we would first go into five to ten patients and then the expansion into the full clinical study.

Jeffrey Soinski: We have already identified several clinical sites. We've been in discussion with those sites, and our IDE filing will include the initial sites that we're planning on. So that's how far along we are in those discussions. And I will say there's a lot of enthusiasm with the physicians, not only who have been involved with the development of this product as part of our advisory board, but also other physicians who've learned about it, who we've shared information with, and interest in participate in something that could be so really groundbreaking for this market.

Jeffrey Soinski: As you know, RK, this is an extraordinarily challenging condition to treat, and is no exaggeration to say that physicians will take four to five hours under floraoscopy using many, many devices and accessory devices, and oftentimes not having a successful outcome. And so if we can help these physicians make this more efficient, reduce the x-ray radiation, reduce the contrast media burden on the patient, and most of all have a safe and successful crossing of that coronary CTO in a much less invasive fashion, I think we really can make a huge difference in the standard of care.

Jeffrey Soinski: So, and I think physicians see that too. So assuming that we, you know, file on the timeframes we expect, assuming we get the clearance on the timeframes we expect, I would assume that we would be in the clinic, you know, in the first part of 2025, first half of 2025, and while we are defining the number of patients required for our ID filing, we do not see this as a large study in terms of number of patients required, and as we've discussed previously, there's only 30 day follow-up required for a CTO crossing device in the coronary arteries.

Jeffrey Soinski: So we would hope that we could get the study enrolled in a relatively efficient time frame and be in a position to file a 510K based upon the clinical data in 2026. Those are the timeframes that we're operating against, and as I said, this has become a primary focus and certainly a priority of the come.

Jeffrey Soinski: Thank you. Thanks for taking all my questions, Jeff. Thank you, Arkay.

Operator: At this time we have no further questions.

Jeffrey Soinski: I'll now turn the call back over to Mr. Jeff Soinski. Well, thank you again for joining our call this afternoon.

Jeffrey Soinski: We very much appreciate your interest in our company and look forward to reporting our further progress in the coming