U.S. markets closed

Edited Transcript of VIVE earnings conference call or presentation 19-Mar-20 9:00pm GMT

Q4 2019 Viveve Medical Inc Earnings Call

FRANKLIN Mar 27, 2020 (Thomson StreetEvents) -- Edited Transcript of Viveve Medical Inc earnings conference call or presentation Thursday, March 19, 2020 at 9:00:00pm GMT

TEXT version of Transcript

================================================================================

Corporate Participants

================================================================================

* Jeannie Swindle

Viveve Medical, Inc. - Senior Director of Corporate Communications

* Scott C. Durbin

Viveve Medical, Inc. - CEO & Director

================================================================================

Presentation

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

Good day. And welcome to the Viveve Full Year 2019 Financial Results Conference Call. (Operator Instructions)

Speaking today are Viveve's Chief Executive Officer, Scott Durbin; and Jeannie Swindle, Senior Director of Corporate Communications.

Please note, this event is being recorded.

I'll now turn the call over to Jeannie Swindle.

--------------------------------------------------------------------------------

Jeannie Swindle, Viveve Medical, Inc. - Senior Director of Corporate Communications [2]

--------------------------------------------------------------------------------

Thank you, operator. And welcome, everyone.

Before we begin, we would like to remind you that this conference call may contain forward-looking statements regarding future events or the future financial performance of the company. Any statement that is not a statement of historical fact is a forward-looking statement. This includes remarks about the corporation's projections, expectations, plans, beliefs and prospects. These statements are based on judgments and analysis as of the date of this conference call and are subject to numerous important risks and uncertainties that could cause actual facts to differ materially from those described in the forward-looking statements. These risks and uncertainties are described more fully in the company's annual report on Form 10-K and other filings made with the SEC, which are also available on the company's website. Any forward-looking statements represent management's views only as of the date of this conference call and should not be relied upon as representing management's views as of any subsequent date.

I would now like to turn the conference over to Scott Durbin, our Chief Executive Officer.

--------------------------------------------------------------------------------

Scott C. Durbin, Viveve Medical, Inc. - CEO & Director [3]

--------------------------------------------------------------------------------

Thank you, Jeannie. Good afternoon, everyone, and thank you for joining us today.

I'd like to begin the call today by reviewing some of the transformational activities of 2019, including our U.S. commercial shift to a recurring revenue model and the significant advances in our sexual function and stress urinary incontinence clinical development programs. Throughout my remarks, I will speak to some of our more recent progress and provide a high-level review of our financial results for last year, and I'll conclude with a perspective on our business going forward.

To begin, the change to our U.S. commercial business from a capital sales model to a recurring revenue model made in June of last year has been extraordinarily successful. The strategic intent of the change in commercial model was to increase physician adoption rates of the Viveve System by reducing upfront costs and thereby reducing barriers to entry or adoption.

The effectiveness of the new sales model was demonstrated throughout the second half of 2019 and resulted in an increased number of systems placed per sales rep in the United States. In fact, productivity per sales rep doubled throughout this period at a lower per customer acquisition cost. Between June of 2019 and December 2019, we acquired 84 new customers in the U.S. with only 6 sales reps. We believe this model and the resultant sales rep productivity clearly demonstrates the opportunity for greater long-term revenue per customer, lower selling costs per unit placed, improved revenue from consumable sales, more predictable quarterly and annual sales growth and improved profitability, which at scale, we believe, will lead us to cash flow breakeven.

In addition to the shift to the new U.S. commercial model in early 2019, we undertook a strategic organizational realignment which contributed to a reduction in total operating expenses in the first quarter of 2019 and additional operating cost savings throughout the remainder of the year. The restructuring included a reduction of approximately 40 full-time employees and aligned our organization around supporting the new commercial model in the United States. We launched an expanded suite of customer services that now support the new sales model and have been extremely effective and well received by customers. These programs are designed to enhance the success of new and existing customers offering the Viveve treatment and include a specialized customer care team, Viveve University and practice development marketing support.

While the change to the recurring revenue model in the U.S. was a massive transition from an organizational and financial perspective, we're extremely pleased with the results through 2019. Total revenue for the year ending December 31, 2019, was approximately $6.6 million from the global placement of 137 systems and the sale of approximately 7,850 treatment tips. Of the total 137 Viveve Systems placed worldwide in 2019, 82 were under the new recurring revenue model and nearly 45% of global tip sales were in the United States. Total revenue for the fourth quarter of 2019 was approximately $1.5 million from the global placement of 35 systems and the sale of approximately 1,985 treatment tips. We believe we will continue to demonstrate the growing success of this new U.S. model going forward as we further drive sales growth and better profitability.

Moving to our international business. Commercial distribution remains unchanged through Viveve's network of distribution partners. As previously reported, new distribution partnership agreements were secured last year, one for Canada and a second exclusive distributor agreement for Hong Kong, China, Macau with Paragon Meditech. As part of our previously described strategic organizational realignment, our international focus in the second half of last year and throughout 2020 will be predominantly directed towards growing Viveve System sales in key regions while supporting existing distributors and customers in other global markets.

Also in 2019, we achieved several significant regulatory milestones with clearances and launches of our next-generation Viveve 2.0 technology platform in key global markets. The Viveve 2.0, manufactured by a new large-scale manufacturing partner and its consumable treatment tips, have a significantly reduced cost to manufacture versus our first-generation system and is projected to have a positive impact on overall gross margins going forward.

In December of 2019, we announced registration clearance in South Korea by the Korean Ministry of Food and Drug Safety of the 2.0 System. Also in December, we announced a successful launch in China of our next-generation platform with our new partnership with Paragon Meditech.

Midyear 2019, Viveve announced FDA 510(k) clearance in the United States of the 2.0 System and treatment tips. We believe this regulatory clearance represents another confirmation of the safety profile of Viveve's CMRF technology platform.

Preceding these clearances in April of 2019, Viveve announced CE Mark clearance for the 2.0 platform in the European Union and European Economic Area countries. The next-generation system and treatment tips are currently available in over 30 countries in Europe.

Viveve's ongoing strategy continues to be the aggressive pursuit of regulatory agency clearances to expand the commercial availability of our next-generation CMRF technology platform and consumable treatment tips. As of year-end 2019, the Viveve System is now cleared for marketing in 57 countries around the world.

On the clinical development side, there were significant advances achieved in 2019 in our pursuit of label expansions for sexual function and stress urinary incontinence or SUI. The advances have continued into 2020 as we have recently announced.

VIVEVE II, our landmark pivotal clinical trial for the improvement of sexual function in women, completed full enrollment in March of last year as reported. The Investigational Device Exemption or IDE to conduct this multicenter, randomized, double-blind, sham-controlled trial was submitted to the FDA in September of 2016 and approved by the agency in March of 2018.

The trial was initiated later in that year in May and advanced through the agency's required staged approach that included multiple submissions to the FDA to review patient safety data at 30 and 90 days post-treatment for a defined number of subjects enrolled in the trial. The staged or gated approach to patient enrollment and the agency's review of the safety data at the specified time intervals was completed in December of 2018. The FDA had determined that the company had provided sufficient data to support continuation of the trial and there were no safety concerns that precluded the continuation of the study to full enrollment.

And just recently, on March 12, 2020, we announced completion of the trial. All subjects' 12-month follow-up visits had been completed.

The VIVEVE II long and arduous journey is a testament to Viveve's commitment to rigorous clinical science and steadfast pursuit of a U.S. label for improved sexual function in women. Top line readout for this landmark trial is targeted for April of this year and, if positive, could support a marketing application in 2020 for a new U.S. commercial indication.

And the importance of this trial cannot be overstated. An estimated 12 million to 14 million women worldwide suffer from diminished sexual function following vaginal child birth who are candidates for our single-session CMRF treatment and represents an estimated $6 billion to $8 billion total available consumable market opportunity.

With respect to our SUI clinical program, we are encouraged with the progress we've made and the advances that are currently underway. On the heels of the positive yet inconclusive results of LIBERATE-International reported in August of 2019, Viveve submitted an Investigational Testing Application or ITA to the Canadian Ministry of Health in September, received approval of the ITA in December 2019 and quickly initiated the trial in January of 2020. The 3-arm, 3-month feasibility study compares our CMRF treatment and a cryogen-only sham to an inert sham treatment for the improvement of SUI in women. Enrollment in the trial was completed and announced in early March of this year. The short-term feasibility trial readout is targeted for the third quarter of 2020 and may provide us a strategic path forward in our pursuit of global label expansion in SUI. Importantly, an estimated 25 million to 30 million women worldwide are bothered by symptoms and leakage associated with SUI, representing a $10 billion to $12 billion total available consumable market opportunity.

As of the end of 2019, Viveve had a global installed base of 840 systems and had sold over 41,000 consumable treatment tips. Our international business continues to show strength and with the continued success in the U.S. of our recurring revenue rental model, we are demonstrating greater long-term revenue per customer, lower selling cost per unit placed and improved revenue from consumable sales, which we believe will lead to more predictable quarterly and annual sales growth. Combined with continuing advances in our clinical development programs and upcoming trial readouts, I believe that Viveve and the incredibly talented team of employees, consultants and advisers dedicated to our vision are on the precipice of more broadly advancing the science and commercial opportunity of women's intimate health.

As Viveve moves forward through 2020, we continue to have 4 core areas of strategic focus. First, continue to advance the success of our U.S. commercial efforts and continue to focus and improve our network of distribution partners internationally. Second, operating more efficiently. The result of our organizational realignment in 2019 has significantly reduced our operating expenses and cash burn, and these efforts will continue to provide financial benefits throughout 2020. Third, continuing to increase physician and patient awareness of the safety and proven efficacy of our CMRF technology and clinical data. And finally, fourth, continuing our clinical and regulatory progress towards additional indications in sexual function in the United States, stress urinary incontinence in the United States and internationally.

As a result of these dedicated efforts, we have major near-term clinical milestones forthcoming. Of great significance, the top line results readout from our VIVEVE II landmark sexual function trial in the U.S. in April of 2020, and in the third quarter of this year, the readout of our short-term 3-arm SUI feasibility study.

Before closing the call, I feel compelled to comment on the current coronavirus pandemic. First and foremost, Viveve is concerned about the health, safety and well-being of our employees, customers, distribution partners, investors and all with whom we are directly or indirectly engaged. We are committed to protecting our employees' health and providing information and guidance as we diligently monitor the status of this evolving pandemic.

To date, the situation related to COVID-19 has not changed our goal to advance our commercial and clinical development efforts. Viveve has been in regular communication with our manufacturing partners and suppliers to help ensure the health of their respective employees and operations. We've assessed and taken necessary steps to help ensure the continued and uninterrupted supply of inventory, our operations and quality service to our customers. We will continue to monitor the needs of our customers and adapt our standard operating procedures as needed to address any changes that may occur. Our hope is that the COVID-19 pandemic is effectively addressed as quickly as possible to stop and prevent continued mortality and morbidity risks.

Operator, this is the end of our prepared remarks, and we thank everyone for participating in our year-end conference call today.

--------------------------------------------------------------------------------

Operator [4]

--------------------------------------------------------------------------------

The conference has now concluded. Thank you for attending today's presentation, you may now disconnect.