InspireMD, Inc.
Q3 2017 Earnings Call Transcript

Published: 8 Nov 2017

[Operator:]

Good day, ladies and gentlemen and welcome to the InspireMD Third Quarter 2017 Conference Call and Business Update. [Operator Instructions] At this time, it is my pleasure to turn the floor over to your host, David Waldman. Sir, the floor is yours.

[David Waldman:]

Good morning and thank you for joining InspireMD’s third quarter 2017 business update conference call. On the call with us today is Jim Barry, Chief Executive Officer of InspireMD and Craig Shore, Chief Financial Officer. At the conclusion of today’s prepared remarks, we will open the call for your questions. If anyone has any questions after the call, please contact Crescendo Communications at 212-671-1021. Before we begin, let me take a minute to note that this conference call may contain forward-looking statements. Forward-looking statements address future events and conditions and therefore involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated in such statements. Such information is subject to known and unknown risks, uncertainties and other factors that could influence actual results or events and cause actual results or events to differ materially from those stated, anticipated or implied in the forward-looking information. Listeners are cautioned not to place undue reliance on forward-looking information as no assurance can be given after the future results, levels of activity or achievements. With that out of the way, please let me now turn the call over to Jim Barry, CEO. Please go ahead, Jim.

[Jim Barry:]

Thanks, David and good morning, everybody. As you recall from our call last quarter, we set our goal to deliver solid growth and today I am pleased to report that the momentum is continuing. For Q3 2017, we achieved a 90% year-over-year increase in the sales of CGuard EPS. It’s also important to note we achieved a 22% sequential increase in CGuard sales versus the second quarter of 2017. We achieved these strong results even though the summer season in Europe tends to be a relatively slow – particularly, Europe tends to be relatively so particularly for devices used in elective procedures. We attribute our success to several factors, but primarily our new distribution strategy, which is clearly working. As an example in Germany, Europe’s biggest market, our new distributor has been able to achieve a 65% increase in sales over the same period last year after just two quarters of distributing CGuard. This was achieved by increasing the number of hospitals since transitioning from our previous distributor. Additionally, our Italian partners continued to expand their client list and currently served 57 hospitals and are adding new ones every quarter. We are especially pleased that they were able to add the Villa Maria Hospital in Cotignola as a new customer. This is significant for two reasons. First, it shows our recent success in the newly entered Italian private hospital sector. Secondly, the Villa Maria Hospital is home to Dr. Alberto Cremonesi and his team who are probably the most experienced and prolific carotid stenting group in Italy and Europe today. The hospital evaluates all the latest technologies and products and recently given Dr. Cremonesi and team’s experience with CGuard, including their experience using CGuard in a live case of the EuroPCR Meeting in May. They have become an important and growing CGuard customer and reference center. We remain focused on replicating these successes across our new European distributor base. Many of which launched the CGuard for the first time in their territory. Based on what we are seeing, we believe we can substantially grow our European markets in the coming quarters. Additionally, our key opinion leader strategy is also working. CGuard is becoming more widely seen as the best product in its class as evidenced by the growing number of independent publications featuring clinical trials conducted with CGuard. This is being further supported in the major clinical conferences around the world, where CGuard is being featured. Most recently, CGuard is featured in a live endovascular interventional procedure that was transmitted real time at the Cracow Vascular Summit. The performance of our device was impressive in an extremely challenging case. Professor Kuczmik stated that CGuard and I quote allowed me to undertake this procedure which I would not have done with any other stents. The patient has significant bilateral carotid occlusions and was not a candidate for surgery. In addition, patient enrollment began in a randomized investigator-initiated trial in Russia to assess the clinical superiority of CGuard EPS versus Abbott’s RX ACCULINK Carotid Stent in subjects at high-risk for carotid endarterectomy, a surgical procedure. We are excited to have our device go head-to-head with Abbott’s market-leading carotid stent and based on past data are optimistic about the outcome of this trial. There is no better way to drive industry and physician awareness then going head-to-head with the market leading device. The first patients have already been treated and we look forward to the results at the conclusion of the trial. We also announced the publication of an independent clinical review that was authored by leading U.S. and European physicians supporting the safety advantages of treating carotid artery disease with next generation carotid devices. The review found that data from more than 550 patients in mesh covered and dual-layered carotid device clinical study showed an overall 30-day complication rate of about 1% with near elimination of all post-procedural events. This data combined with other historical data on patients with symptomatic and asymptomatic carotid stenosis that confirmed no difference between carotid stenting and carotid endarterectomy for long-term stroke risk served to illustrate the potential transformation of the carotid revascularization field using CGuard. We are especially pleased that the review highlights CGuard clinical data compared to its competitors making it the clear choice of the authors. In addition, we announced that an endovascular interventional procedure featuring CGuard was performed by two of the top key opinion leaders in Latin America and was broadcast at the SOLACI Congress of Cardiology in Buenos Aires. These publications and presentations further illustrate the growing interest and support of our technology across Europe and around the world. Europe’s leading KOLs are using, embracing and advocating CGuard among their colleagues as illustrated by the testimonials we recently posted on our website. I would encourage those of you have not yet already done so, go to our website and view these interviews featuring leading clinicians from the fields of vascular surgery, interventional cardiology and interventional neuroradiology. On the impact, CGuard will continue to have on the treatment of carotid artery disease. Now, that we have the ever-increasing support of the KOL community, we expect our growth to continue as the broader community of mainstream vascular surgeons, interventional cardiologists, interventional neuroradiologists and interventional radiologists begin to adopt our technology. This is a key initiative and an important component of our commercial strategy. Given the strong safety advantages of CGuard, we expect this minimally invasive procedure will not only become the standard of care, but it will begin to replace carotid endarterectomy, the surgical option as the safer alternative for patients thereby expanding the addressable market opportunity. So to wrap up, we are gaining tremendous traction with both distributors and KOLs. Now that we have a robust distribution network in place across Europe, we believe we have a highly scalable and cost effective platform to grow sales and we plan to replicate this model around the world. The results we reported today that 90% growth in CGuard over the same period last year and the 22% growth of CGuard over Q2 and a quarter that is usually a slow quarter for elective procedures demonstrates that we have the right strategy to make that happen. We continue to see CGuard EPS as a part of a multibillion dollar opportunity for our MicroNet technology platform across multiple vascular markets. Current devices do not adequately address the risk of post-procedural embolization and other complex vascular disease. CGuard is now being recognized as an elegant solution to the limitations of conventional carotid stenting and carotid endarterectomy. This trend is clearly gaining more and more traction and we continue to believe CGuard has the potential to become the standard of care for the treatment of carotid artery disease. At this point, I would like to turn the call over to our CFO, Craig Shore who will review our financial performance in detail.

[Craig Shore:]

Thanks, Jim. Revenue for the third quarter ended September 30, 2017 was $718,000 compared to $469,000 during the same period in 2016. This was primarily due to an increase in sales of CGuard EPS as we continue to focus on developing existing markets such as Italy expanding into new geographies such as Russia and transitioning from our prior exclusive distribution partner for most of Europe to local distributors. Total operating expenses for the quarter were $2.2 million, an increase of 25% compared to $1.8 million for the same period in 2016. This increase was primarily due to an increase in sales and marketing expenses to support the commercialization of CGuard EPS. Net loss for the quarter ended September 30 totaled $2.1 million or $0.19 per basic and diluted share compared to a net loss of $2 million or $0.85 per basic and diluted share in the same period in 2016. Revenue for the 9 months ended September 30, 2017 was $1,927,000 compared to $1,572,000 during the same period in 2016. This increase was primarily due to an increase in sales of CGuard EPS. Total operating expenses for the 9 months ended September 30, 2017 were $7.2 million compared to $5.7 million for the same period in 2016. This increase was primarily due to an increase in sales and marketing expenses primarily to support the commercialization of CGuard EPS as well as an increase in salary expenses primarily due to a non-cash accrual. Net loss for the 9 months ended September 30, 2017 totaled $6.9 million or $0.87 per basic and diluted share compared to a net loss of $6.2 million or $5.98 per basic and diluted share in the same period of 2016. As of September 30, cash and cash equivalents were $4.8 million compared to $7.5 million as of December 31, 2016. At this point, we would like to open the call up to questions.

[Jim Barry:]

Thanks, Julie. In closing, I would just like to reiterate that I am pleased with our Q3 results, a 90% growth in CGuard EPS and continued double-digit sequential growth even our seasonally weak period is validating our strategy. We expect this growth to continue as we add new distributors further penetrate the existing markets, increase usage among new users and new KOLs joining the team to further influence uptake among mainstream physicians in their various regions. As always, we remain laser focused on managing expenses and driving shareholder value. I remain confident we have put the right strategy in place we have the right team and are adding to our partnerships to unlock shareholder value. Thank you again. And I hope you all have a good day.

[Operator:]

Thank you. This does conclude today’s teleconference. We thank you for your participation. You may disconnect your lines at this time. Have a great day.