InspireMD, Inc. (NASDAQ:NSPR) Q3 2023 Earnings Call Transcript

InspireMD, Inc. (NASDAQ:NSPR) Q3 2023 Earnings Call Transcript November 6, 2023

InspireMD, Inc. beats earnings expectations. Reported EPS is $-0.15, expectations were $-0.17.

Operator: Good morning. And welcome to the InspireMD Third Quarter of 2023 Earnings Call. Currently, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions]. Please note that this conference is being recorded. I will now turn the conference over to Chuck Padala with LifeSci Advisors. Thank you. You may begin.

Charles Padala: Thank you, operator. And good morning, everyone. Thank you for joining us for the InspireMD third quarter 2023 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, not historical facts, which are based upon management's current expectations, beliefs and projections, many of which, by their nature, are inherently uncertain. These forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from those expressed in such forward-looking 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 or on any updates in our current reports on Form 8-K filed with the US Securities and Exchange Commission and InspireMD's press release that accompanies this call, particularly the cautionary statements made in it.

The call contains time-sensitive information that is accurate only as of today, November 6, 2023. Except as required by law, InspireMD disclaims any obligation to publicly update or revise any information to reflect events or circumstances that occur after this call. It's now my pleasure to turn the call over to Marvin Slosman, CEO. Please go ahead, Marvin.

A cutting edge medical device in a sterile surgical setting, being operated by a skilled surgeon.

Marvin Slosman: Thank you, Chuck. And thanks to everyone for joining the call this morning. The third quarter proved to be a transformational time for our company with several milestones, further validating our strategy and mission to transform the carotid revascularization market with a superior next generation stent implant, along with our focus on the broadest range of tools, providing both patients and physicians optimal procedural solutions. Execution against internal objectives remains our focus, but I would like to start today with a brief mention of the recent national coverage decision by CMS, enabling a monumental shift by expanding reimbursement for carotid artery stenting or CAS procedures to include those standard surgical risk and asymptomatic patients, neither of which were previously covered.

We will get into those details shortly. In terms of our financials for the third quarter of 2023, we generated total revenue of $1.556 million on 2,734 devices sold, representing nearly a 9% revenue growth over the comparable period in 2022. Measuring procedural volume continues to be a key metric of our success as our distributor model discounts our average sales price by way of transfer pricing. Unit sales more accurately measures market share in our served territories, a key driver of our growth objectives. As we drive market awareness, utilization and global expansion, implant performance will remain the cornerstone of our focus, having now established a baseline of real world experience and world class data with more than 45,000 CGuard stents sold to date in nearly 2,200 patients enrolled in clinical studies.

We were pleased a few days ago to present the 30 day data from our C-GUARDIANS IDE clinical trial at the VIVA Conference. As a reminder, that C-GUARDIANS trial was designed to support a PMA submission in the second half of next year, which would give us line of sight to possible approval of CGuard EPS in the US in the first half of 2025. Reviewing the results from July 2021 through June 2023, 316 patients were prospectively enrolled in the single arm carotid artery stenting, or CAS, study performed at 24 sites in the US and Europe, utilizing CGuard EPS as the carotid stent system. The primary endpoint is a composite of incidence of major adverse events including death, all-cause mortality, and a stroke or myocardial infarction through 30 days post index procedure or ipsilateral stroke from day 31 to day 365.

All events are adjudicated by clinical events committee. Dr. Chris Metzger, the PI of the C-GUARDIANS trial, presented unprecedented data at 30 days. Total major adverse events DSMI of 0.95% as measured by intent to treat analysis considered to be the most rigorous measure of results. These first-in-kind results demonstrate the neuroprotective effect of the CGuard stent and add to the significant and growing body of evidence showing that CGuard delivers outstanding short and long term patient outcomes as compared to alternative stent and the current standard of care in revascularization carotid endarterectomy. We were pleased to share these compelling results at VIVA, which is among the most important gatherings of endovascular specialists and should go a long way toward raising awareness of CGuard among the endovascular community, key opinion leaders and other practitioners alike.

Staying on the topic of our IDE trial for a moment, we announced in June that we had completed enrollment of this trial something that was achieved in just 23 months. And recall that this study also includes the first human cases performed with our new CGuard Prime CAS stent delivery system. Study follow-up is progressing as planned, and we reiterated our expectations for primary endpoint results in the second half of next year, with anticipated approval in the first half of 2025. Revisiting one of the key market drivers transforming revascularization towards stenting, no October 11, CMS issued a national coverage determination, or NCD, implementing coverage of CAS for both symptomatic and asymptomatic patients, whether considered to be high or standard risk for surgery.

This coverage determination is very consistent with the drafted memo that was released in July. The updated NCD creates a very meaningful expansion of the addressable market for CAS and will shift the standard of care toward a patient-first approach with greater procedural options, including stenting. This adds to our enthusiasm for the US market opportunity for CGuard Prime for both CAS and TCAR, both of which are an integral part of our long term sales strategy. We believe that broader access to endovascular options is good for patients. Recall that CGuard EPS has demonstrated outstanding clinical results now in the nearly 2,200 patients who were studied in rigorous clinical trials, published in peer reviewed journals, and tens of thousands of real world procedures performed to date, establishing a foundation of best-in-class results.

This expansion of reimbursement and the broader trend toward an endovascular first shift away from surgery support the approach we have advocated for some time. The consistent driver of outcomes remains the performance of the stent implant, which will remain our priority as clinical evidence remains the cornerstone of our story, leveraging our third generation CGuard stent with its proprietary MicroNet mesh. In anticipation of potential approval for CGuard, in the first half of 2025, we've initiated pre-commercial activities in the US and we continue to build out what I consider to be a world class leadership team. Last month, we announced the hiring of Dr. Patrick Verta as our new Executive VP of Clinical and Medical Affairs. Patrick adds tremendous experience in the carotid field having supported much of its clinical advancement over the last 20 years and he brings an impeccable reputation amongst key opinion leaders, medical and regulatory bodies.

We also announced the hiring of Cheryl Tal to lead our quality assurance and regulatory affairs function with tremendous expertise in building business scale and capability on a global level. And finally, after six months of having a significant impact as our General Manager of North America and VP of Global Marketing, Shane Gleason has been promoted to Chief Commercial Officer, expanding his responsibilities to support our global commercial growth. I would like to close with a word on behalf of our team based in Israel, to their remarkable tenacity and bravery to deliver on commitments and objectives, allowing our company to operate without interruption during such a profoundly difficult time. It is truly a testament to our team, fulfilling our mission to deliver the best life-saving and stroke preventing devices to patients worldwide.

I'm now pleased to re-welcome Craig Shore back to the call as our CFO. Craig?

Craig Shore : Thanks, Marvin. For the three months ended September 30, 2023, revenue was $1,556,000 compared to $1,431,000 during the three months ended September 30, 2022. This revenue increase of $125,000 was predominantly driven by an increase in commercial sales of $166,000 of CGuard EPS to existing geographies, offset by a $41,000 decrease in the United States as we completed in June 2023 the enrollment of our patients in our C-GUARDIANS IDE clinical trial and, accordingly, there was no further enrollments in the three months ended September 30, 2023. For the three months ended September 30, 2023, gross profit increased by 19.7% to $438,000 from $366,000 during the same period in 2022. This increase in gross profit resulted from a $85,000 increase in revenues less the associated related material and labor, offset by miscellaneous expenses.

Gross margin increased to 28.1% during the three months ended September 30, 2023 from 25.6% during the three months ended September 30, 2022, driven by the factors just mentioned. Total operating expenses for the third quarter of 2023 were $6,077,000, an increase of $1.1 million or 22% compared to $4,976,000 for the third quarter of 2022. This increase was predominantly due to an increase in compensation expenses. Total financial income for the third quarter of 2023 was $461,000, an increase of $380,000 or 469% compared to $81,000 for the third quarter of 2022. This increase was primarily due to the $412,000 increase in interest income from investment in marketable securities, money market funds and short term bank deposits. Net loss for the third quarter of 2023 totaled $5,178,000 or $0.15 per basic and diluted share compared to a net loss of $4,529,000 or $0.58 per basic and diluted share for the same period in 2022.

As of September 30, 2023, cash, cash equivalents and short term investments and bank deposits were $43 million compared to $17.8 million as of December 31, 2022. That concludes our prepared remarks. We will now open the call for questions. Operator?

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