InspireMD, Inc.
Q4 2020 Earnings Call Transcript

Published: 9 Mar 2021

[Operator:]

Ladies and gentlemen, thank you for standing by. Good morning and welcome to the InspireMD Year End 2020 Financial Results and Corporate Update Conference Call. At this time, all participants are in a listen-only mode. After today's presentation, there will be an opportunity to ask questions. Participants on this call are advised that the audio of this conference call is being broadcast live over the internet and is also being recorded for playback purposes. A webcast replay of the call will be available approximately one hour after the end of the call through June 9, 2021. I would now like to turn the call over to Scott Gordon, President of Core IR, the company's Investor Relations firm. Please go ahead, Sir.

[Scott Gordon:]

Thank you, Andrew. Good morning, everyone and thank you for joining us for the InspireMD year end 2020 financial results and corporate update conference call. Joining us today from InspireMD are Marvin Slosman, Chief Executive Officer; and Craig Shore, Chief Financial Officer. During this call, management will be making forward-looking statements, including statements that address InspireMD's expectations for future performance or operational results, particularly in light of the COVID-19 pandemic. Forward-looking statements involve risks and other factors that may cause actual results to differ materially from those statements. For more information about these risks, please refer to the Risk Factors described in InspireMD's most recently filed periodic reports on Form 10-K and Form 10-Q, the Form 8-K filed with the SEC today, and InspireMD's press release that accompanies this call, particularly, the cautionary statements in it. The content of this call contains time-sensitive information that is accurate only as of today, March 9, 2021. Except as required by law, InspireMD disclaims any obligation to publicly update or revise any information to reflect the events or circumstances that occur after this call. It is now my pleasure to turn the call over to Marvin Slosman, Chief Executive Officer. Marvin, please go ahead.

[Marvin Slosman:]

Thank you, Scott and thank you all for joining the call on the webcast today. The year 2020 began as a year of transition and optimism and despite of the unprecedented historical impact throughout the work, and in particular, the healthcare community as a result of COVID-19, we not only weathered these challenges at InspireMD, but have become stronger by way of many important milestones achieved during the year. We set a focused direction in 2020 built around our CGuard EPS platform to advance awareness, utilization, and recognition within the medical community of the value and superiority of CGuard, as measured by our growing body of clinical evidence and positive patient outcomes in stroke prevention. CGuard's unique and proprietary design makes it the most advanced treatment of carotid artery disease of all other stent technologies and endarterectomy, a highly invasive surgical procedure. Inclusive of all vascular specialty and delivery system options, our goal is to continue to establish CGuard as a carotid device of choice amongst physicians across the multiple clinical specialties that treat carotid artery disease. Our team's performance during these times remained steadfast as we focused on availability of our products to our served market with a patient first mindset. Execution of our strategic priorities, financial stability, and the growth of our commercial footprint, all continued with focused determination.

[Craig Shore:]

Thank you, Marvin and to everyone for joining today. Here are some key financial highlights for our fourth quarter and year-end 2020 results. Total revenues for the three months ended December 31, 2020 was $158,000, a decrease of 84.4% compared to $1,013,000 during the three months ended December 31, 2019. Revenues were negatively impacted by our settlement of litigation with a former distributor relating to a 2014 transaction as Marvin alluded to earlier. Per the settlement we agreed to pay them $580,000. Under U.S. GAAP we were required to charge that amount against sales. Excluding such impacts, revenue was $738,000, a decrease of 27.1% compared to $1,013,000 during the similar period in 2019. This decrease was driven mainly by 25.2% decrease in sales volume of CGuard EPS from $921,000 during the three months ended December 31, 2019 to $689,000 during the three months ended December 31, 2020, mainly due to the postponement of procedures from CGuard EPS which are generally scheduled or nonemergency procedures at hospitals shifting resources to patients affected by COVID-19. The 46.7% decrease in sales volume of MGuard EPS from $92,000 during the three months ended December 31, 2019 to $49,000 during the three months ended December 31, 2020 was also mainly due to the impact of COVID-19 as previously mentioned. For the three months ended December 31, 2020 we had a gross loss of $390,000 compared to a gross profit of $259,000 during the three months ended December 31, 2019.

[Operator:]

The first question comes from Benjamin Haynor of Alliance Global Partners. Please go ahead.

[Benjamin Haynor:]

Good day, gentlemen. Thanks for taking the questions. First off from me, just on the CGuard trial here, when do you kind of expect or how do you expect the ramp up of sites of trial, when do you expect the first patient? And any color you can give us on kind of the kick off of this thing would be helpful?

[Marvin Slosman:]

Great, thanks Ben, thanks for the question. Yes, we're excited about the progress that we're making naming Chris Metzger as the PI was a huge advantage for us and we have subsequently been working diligently to make sure that all the setup is properly done, sites have been identified, protocols been reviewed and so forth. So I think it's one of those scenarios where we want to measure three times to cut once and so we're trying to make sure that everything falls in place nicely. We anticipate our first patient enrollment sometime around the June 1st timeframe, sometime beginning of June and everything since we've hired HCC as our CRO and brought Chris on board has gone very well. We're also in the process of building additional investigation sites in Europe and we feel that that's important given the experience of some of our operators in the European market as well. So we look to generally that timeframe to begin our enrollment of patients.

[Benjamin Haynor:]

Okay, that's helpful. So we're about a quarter out from there. And then, the European sites, so how, I know, you can't do more than half, but how many do you expect to add or is it too early to be talking about that?

[Marvin Slosman:]

Yes, we don't have a firm number at this point, Ben but I think it's safe to assume that the quality of the sites is most important more than quantity. And we anticipate that, up to about 20% of the enrollment, we believe is reasonable from the European sites and operators who have had, a breadth of experience using CGuard at this point. So, we look forward to fine tuning that number, but at this point, that's where we think we're at.

[Benjamin Haynor:]

Okay, so stay tuned, got it. And then just the reimbursement process, how's that moving along in France? Is that something that we could see before the year is out? And then, what's your expectation once you do gain the reimbursement, do you have kind of that early adapter cohort kind of defined over there?

[Marvin Slosman:]

We do, the process is going quite well. We submitted the dossier at the beginning of the year and so far, all the indications back from the French Health Authority has been positive, and we hope to be able to get the reimbursement finalized and approved within, let's call it the third quarter. So we hope that for 2021 we will be able to realize the benefit of entering the market commercially. We've already put into place our commercial backbone, but begun to think about locations, operators, and we want to certainly be prepared that once we get that reimbursement and approval, we're ready to go full speed ahead. So there's great momentum from that standpoint and an awareness within the French market, obviously of CGuard, even though we've not been commercially available there before the European market in general is well aware. So we have a couple of KOLs in particular that are really excited to have the product in their hands.

[Benjamin Haynor:]

Okay Great. And then, now that you've launched in, I believe you've launched in Brazil I think.

[Marvin Slosman:]

Yes.

[Benjamin Haynor:]

A lot of stuff in place there, what's been the initial feedback there?

[Marvin Slosman:]

Yes, the uptake has been quite strong. Unfortunately, the Brazilian market was affected by COVID in a really terrible way. And so, it's been a bit of a challenge, and the country in general, is quite large and diverse. We've got five sub distributors that are in place, but the results so far have been remarkably positive and we've tried to focus on the operators that are really at the high volume centers, and the innovators and really kind of build our base of business from there and so far it's gone really well. So we hope that that will continue to get out into deeper segments of the market as we get into 2021, but so far, so good.

[Benjamin Haynor:]

And then on the R&D front in terms of the new delivery and accessories solutions that you mentioned, was more of that spending the half million bucks or so that you saw last year, it was more that in the latter half of the year, and then it does sound like we could hear more on what those products look like in the near future, any more color you can provide there?

[Marvin Slosman:]

Yes, I mean, the spend was generally level loaded, but as we get closer to submitting to DEKRA and other regulatory bodies, the spend obviously increased as we get closer to the end here. And certainly, we want to discuss those in detail. It's a little bit premature at this point. But we're really excited about the fact that we've got a couple of new delivery systems available coming to the market, which we hope will broaden both access and acceptance to the CGuard EPS platform. Generally speaking, our goal is to make sure that our stent is used by the broadest range of vascular operators. And, we want to make sure that we have a full breadth of delivery systems that allow this as a first line stent solution.

[Benjamin Haynor:]

Got it, and then lastly from me, one of the other players in the crowded market, has I guess now filed a PMA for standard risk patients. I just wanted to get your thoughts there. I mean, if it's, I know that's, whatever, a third of the market or so, but your thoughts on that? And, whether that kind of expands the market or kind of, if they get any or kind of paves the way for adoption of CGuard once you guys are able to taking the U.S. perhaps?

[Marvin Slosman:]

Yes, Ben. I think we certainly value the fact that the converting surgeries over to stenting is certainly our priority and our focus has been and will continue to be on the value of CGuard as the best stent in the marketplace. But we certainly welcome that trend of transition into the endovascular world from surgery and we'll continue to do our efforts to support those things, but certainly we believe that that transition was inevitable. And I think the value of multiple companies approaching the same objective maybe a bit differently, but approaching the same objective will only benefit that conversion from taking place in getting surgeries converted over to stenting. So we're encouraged by all of that adoption and conversion.

[Benjamin Haynor:]

Excellent, well, I'll leave it there. Thanks a lot, gentlemen and again, congrats on the progress.

[Marvin Slosman:]

Thanks, Ben. I appreciate it.

[Operator:]

This concludes the question-and-answer session of the call. I will now return the call to Marvin Slosman for closing remarks.

[Marvin Slosman:]

Thank you. I'd like to thank everyone for their ongoing support of InspireMD and to remind you that despite the challenges of 2020, we are well positioned for a successful and impactful 2021. In spite of the continued COVID associated challenges to-date, CGuard EPS continues to outperform with clinical evidence all other competitive carotid stents, and we will continue to drive this awareness to our customers and provide the best absolute clinical and patient outcomes. We are expanding our reach and preparing for perhaps the most exciting year ahead in the company's history as we prepare to execute on our U.S. pivotal trial, and we look forward to continuing to report on our success, and we thank you for your support.

[Operator:]

The conference has concluded. You may disconnect your line at this time. Thank you.