Avinger Q3 2023 Earnings Call Transcript

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October 26, 2023

There are 4 speakers on the call.

Operator

Greetings. Welcome to the Avinger Third Quarter 2023 Results Conference Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. Please note this conference is being recorded.

Operator

I will now turn the conference over to your host, Matt Kreps, Investor Relations at Avinger, you may begin.

Speaker 1

Thank you, and thank you all for participating in today's call. I'd like to welcome you to Avinger's Q3 2023 conference call. Joining us today are Avinger's CEO, Jeff Suwinski and Principal Financial Officer, Naveel Sainte. Earlier today, Avinger released financial results for the quarter ended September 30, 2023. A copy of the release is posted on the Avinger website under Investor Relations.

Speaker 1

Before we begin, I'd like to remind you that management will make statements during this call that include forward looking statements within the meaning of federal securities laws, We shall be pursuant to the Safe Harbor provision 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, our future financial expectations are based on our current estimates and various assumptions. These statements involve material risks and uncertainties that could cause actual results or events to differ materially from those anticipated or implied by these forward looking statements. Accordingly, you should not place undue reliance on these statements.

Speaker 1

For a list of a description of the risks and uncertainties associated with our business, please see our Form 10 ks and 10 Q filings with the Securities and Exchange Commission. Avizure 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. Today's presentation will also include reference to non GAAP financial measures, such as adjusted EBITDA. A reconciliation of these non GAAP financial measures to the most comparable GAAP financial measures is available within the earnings release, which can be found on Appanger's website. And with that, I'd like to now turn the call over to Jeff.

Speaker 2

Thank you, Matt. Good afternoon and thank you all for joining us. The Q3 was another exciting period for Avinger as we started commercial activities on 2 innovative new devices, TigerEye ST and Pantheris LV after receiving FDA 510 clearance in the 2nd quarter. These two products not only bring new capabilities to their respective markets, they also represent the first time we've had the opportunity to launch 2 new major catheter products in the same year. While revenue declined as a result of lower sales headcount during the quarter, we maintained good momentum in our business on a sales We announced today an exciting growth initiative for our sales team and we're confident that the commercial introduction of Tiger I T and Pantheris LV combined with an expanded field presence will provide meaningful growth opportunities for our PAD business in 2024.

Speaker 2

With the launch of these 2 new catheter products, the build out of our image guided peripheral portfolio is largely complete, Allowing us to focus our primary R and D efforts on the development of our first coronary product application. We believe we can redefine the market for coronary CTO crossing with a superior, simplified and more predictable image guided solution For a complex and challenging condition and we're excited to extend our proprietary image guided technology to this large and underserved market with established reimbursement already in place. We made significant progress on this initiative during the Q3, including successfully completing a 2nd round of animal studies and a first round of human cadaver heart studies at a leading clinical institution. Based on our progress to date, we believe we remain on track to file an investigational device exemption or IDE application with the FDA In the middle of next year to allow for initiation of a clinical study following approval. While we're excited about the potential for our new products Provide new growth opportunities for the company, we are also focused on improving operating metrics for our current PAD portfolio.

Speaker 2

While we saw a decline in total revenue related to a reduction in sales headcount, sales productivity or revenue per sales head with the prior quarter. In our press release today, we announced plans to expand our direct sales team by more than 25% in the 4th quarter. By investing in the growth of our sales team over the next 12 months, we expect to strengthen our selling capabilities in existing territories And enable our organization to provide more focused and consistent clinical support in high volume hospital centers. We also provide the opportunity to expand our sales footprint to new territories that are contiguous with our highest performing regions, as well as expand into new geographic areas over the next 12 months. Combined with our 2 new catheter product launches and our highly portable Lightbox 3 Imaging console launched last year.

Speaker 2

We are confident that these investments will drive meaningful revenue growth for our PAD business in 2024. In our press release, we also announced that Phil Proust will lead these efforts in his new role as Chief Commercial Officer With executive management responsibility for all sales and marketing activities, Phil is one of Avinger's longest serving employees And he brings over 15 years of direct industry experience to this expanded role. He understands the clinical setting and our customer needs at a deep level and has led the commercial launch and development of our advanced product portfolio in his prior position as Chief Marketing Officer. Bill has the full support of our sales leadership team and I'm Confident he will make a positive impact in this new role. Let me take a few minutes to provide updates on our 2 newest peripheral products.

Speaker 2

We received 510 clearance for our new TigerEye ST high speed CTO crossing catheter in April and initiated limited launch in May. Based on the positive physician feedback, clinical outcomes and product reliability demonstrated during the limited launch period, We made the decision in September to advance Tiger IST to full commercial launch. 17 physicians at 13 sites have now completed approximately 60 cases with the new system. Our sales team is focused on expanding the penetration of Tiger IST into new sites new users in existing sites and we're excited about the potential for this advanced technology platform to drive growth of our CTO business in the Q4. For those new to the call, Tiger IST is a low profile 5 French system designed across chronic total occlusions or CTOs, Speeds up to 1,000 RPM and generates high definition OCT imaging during the procedure, providing real time information to guide treatment And health physicians stay in the true lumen during crossing, a critical advantage for the patient.

Speaker 2

Tiger I has an innovative and unique user controlled deflectible tip to precisely direct the catheter during treatment And incorporates multiple design upgrades in the tip configuration and catheter shaft to increase crossing power and procedural success. In June, we received 510 clearance for our new Pantheris LV image guided atherectomy system, Marking the first time Avinger has received 510 clearance for 2 new catheter products in the same year and making a tremendous leap forward for our high speed peripheral portfolio. We developed Pantheris LV with the objective of streamlining the atherectomy procedure, opening additional user and case opportunities for our platform and in combination with our LightBox 3 Imaging Console, expanding the mainstream appeal of our image guided platform. Pantheris LV represents a new device category for us, 3 to 7 millimeters in diameter and is ideally suited to treat lesions in the larger SFA and popliteal arteries above and behind the knee where the majority of PAD procedures are performed. Pantheris LV incorporates several design features from our highly successful Pantheris SV small vessel device and like Pantheris SV does not require a balloon for plaque opposition.

Speaker 2

Pantheris LV operates at significantly higher rotational speeds than our current atherectomy offerings with variable speeds up to 3,000 RPM during treatment. It also introduces enhanced guidewire management and plaque management systems to the platform. We initiated limited launch for Pantheris LV in August and consistent with our process, we're using the limited launch period to fully understand the clinical capabilities of the new device, gauge product performance and reliability in a real world clinical setting And prepare our clinical sales team for full national launch. We have now completed 25 cases at 10 clinical sites and expect to gain additional case Approximately 12 current and new sites by year end. Pending additional learning from our limited launch process, We anticipate expanding the full commercial launch early next year.

Speaker 2

While we're excited about the introduction of these new devices, Our highly differentiated Pantheris SV small vessel atherectomy device continues to deliver exceptional patient outcomes in daily clinical use And in our groundbreaking image BTK clinical study. Pantheris SV is primarily used to treat patients with below the knee lesions, Many of whom suffer from critical limb ischemia or CLI, the most severe form of PAD. The unique and compelling benefits of using Pantheris SV to treat these challenging patients was highlighted in 3 podium presentations at the AMP Amputation Prevention Symposium in August. During his presentation at AMP, Doctor. Tom Davis, a key opinion leading interventional cardiologist, Shared updated interim data from the IMAGE BTK post market study designed to evaluate the safety and The majority of the 46 patients enrolled in the study Suffered from an advanced stage of peripheral disease with an average stenosis or blockage of 94% prior to the procedure.

Speaker 2

Treatment with Pantheris SV is proving to be highly effective. Average stenosis was reduced to 26% following treatment with Pantheris SV alone and to 9% following the use of adjunctive therapy, representing a 90% reduction in the blockage following the procedure. Safety data are equally compelling with 100 Freedom from major reverse events reported in the study. Perhaps most exciting are the longer term results demonstrated in the study. Patients who have completed their 12 month follow-up exhibited 96% freedom from target lesion revascularization And 93% patency in LEMS treated.

Speaker 2

This is unprecedented data for the treatment of advanced disease below the knee. We look forward to providing further updates on ImageVTK as the final cohort of patients reach the 12 month endpoint of the study. As we look to the future, we're excited to bring the benefits of our image guided platform to a large and growing coronary artery disease market. We've discussed our first product application extensively, targeting development of a superior image guided solution to the complex, expensive and uncertain procedures Currently used to cross chronic total occlusions in the coronary arteries. We believe Avinger can redefine the standard of care in this market By leveraging our proprietary technology platform to create the 1st and only fully integrated image guided system for crossing coronary CTOs.

Speaker 2

Our development program focuses on low profile catheter designs that combine real time OCT guidance With precise control and steerability to facilitate an integrate approach intended to allow a larger number of physicians Our CTO crossing device would access existing reimbursement codes for both the therapeutic procedure as well as for coronary OCT diagnostic imaging Immediately upon FDA clearance, we believe that an OCT guided catheter designed for crossing efficiency We are making excellent progress on the development of this exciting new device. Early in Q3, we completed a second round of animal studies design based on learning from these studies and feedback from our clinical advisory board and believe we remain on track to finalize design selection this year. As we advance this program, we anticipate being in a position to file an IDE application with We continue to make progress across our portfolio to provide a strong foundation for growth, advancing 2 And developing a game changing first coronary product application that targets a large and underserved market with an attractive economic value proposition. We look forward to reporting our progress in these and other areas on our year end call. At this point, I'd like to turn the call over to Nabil Spinnetti, our Principal Financial Officer and Accounting Officer to take us through the financial results.

Speaker 2

And then I'll return for Q and A. Nabil?

Speaker 3

Thank you, Jeff. Total revenue was $1,800,000 for the Q3 of 2023 compared with $2,000,000 in the Strong during the quarter and the decline in revenue was primarily due to attrition in our sales team. As Jeff mentioned, we expect to expand our sales team by more than 25% in 2023 were $4,400,000 compared to $4,300,000 in the 2nd quarter and $4,500,000 in the Q3 of last year. Net loss comprehensive loss for the Q3 of 2023 was $4,500,000 compared with $4,200,000 in the 2nd quarter and $4,100,000 in the 3rd of last year. Adjusted EBITDA as defined under our non GAAP financial measures in this press release was a loss of 3,700,000 up slightly from a loss of $3,400,000 in the 2nd quarter and a loss of $3,600,000 in the Q3 of last year.

Speaker 3

For more information regarding non GAAP financial measures discussed in this press release, please see non GAAP financial measures below as well as the reconciliation of non GAAP measures to the nearest GAAP measure provided in the tables below. Cash and cash equivalents totaled 8,700,000 As of September 30, we strengthened our balance sheet through the conversion of $1,900,000 or 12% of the then outstanding debt to a new series of convertible preferred stock and raise net proceeds of approximately $5,100,000 through the sale of stock in the company's ATM facility during the quarter. At this point, I'd like to turn the call back to Jeff for Q and A.

Speaker 2

Thanks, Nabeel. We're excited about the progress we're making on several fronts, gaining valuable case experience and advancing our commercial programs for Tiger I ST and Pantheris LV, Continuing to build the clinical body of evidence in support of our proprietary image guided approach and rapidly advancing the development of our 1st coronary product application, which we believe represents a transformational value opportunity for Avinger. We're investing in our sales organization under new executive leadership to extend our reach and drive the growth of our business. And through it all, we remain committed to making a difference in the lives of patients and the physicians who treat them with the most advanced

Operator

Thank you. At this time, we will be conducting a question and answer session. There are no questions in queue. I will now turn the call over to Jeff Cywinski This concludes today's conference and you may disconnect your lines at this time. Thank you for your participation.

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Avinger Q3 2023
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