Full Press Release Details
| To: | Jim Barry, Craig Shore |
| From: | David Waldman, Natalya Rudman |
| Subj: | Business Update Call |
| Dial- in: | 877-407-0781 |
morning and thank you for joining InspireMD's business update conference call.
the call with us today is Jim Barry, Chief Executive Officer of InspireMD and Craig Shore, Chief Financial Officer.
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.
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 assurances can be given as to the future results, levels of activity or achievements.
that out of the way, let me now turn the call over to Jim Barry, CEO. Please go ahead, Jim.
Overview - Jim Barry
you, David, and thanks to everyone for joining us for today's conference call.
know it's unusual for us to be holding a conference call in January, but given some of the recent developments, we thought
it would be helpful to update shareholders on where we have been and where we are heading.
when I took the reigns as CEO, I was committed to focusing on the operations of the company and building the company as opposed
to focusing on M&A, which in my experience, can be totally unpredictable. After eighteen months, I believe we are now very
well positioned in the market, and this is evidenced by our stronger year-over-year growth. As you may recall, for the third quarter
of 2017, we achieved a 90% year-over-year increase in sales of CGuard EPS. As announced this morning, I'm pleased
to report preliminary unaudited CGuard sales of $606 thousand for the fourth quarter of 2017 which represents approximately a
211% increase compared to the fourth quarter of 2016. The preliminary unaudited overall sales, including MGuard, for Q4
2017 are $833 thousand which represents approximately a 159% increase compared to the fourth quarter of 2016. Based on these numbers,
we believe our strategy is working, we have momentum and we are poised to continue our turnaround. At this point, as we head into
Q1 2018, we expect another strong quarter for CGuard.
last week, we announced we received regulatory approval for CGuard in India and that we had signed Hester Diagnostics as
our exclusive distributor. This partnership comes on the heels of similar distribution agreements across Asia, including Hong
Kong, Taiwan, Australia, New Zealand and Vietnam.
addition, CGuard continues to be featured in leading publications and at the leading clinical conferences across both western
and eastern Europe and the Middle East.
recently announced the preliminary 24-month follow-up results in the PARADIGM 101 Clinical Study. Professor Musia ek presented
these long-term follow-up results at both the 2017 VEITH Symposium and the 2017 ICI Meeting.
results from this trial are consistent with four other published CGuard studies, and further demonstrate the sustained
benefits of CGuard out to two years. To the best of our knowledge, this is the longest known clinical follow-up with any
such carotid devices to date. And most importantly, without CGuard , the majority of these patients would have otherwise
had to undergo a carotid endarterectomy, an invasive surgical procedure to treat their carotid artery disease.
enrollment is also continuing in an investigator initiated trial in Russia led by vascular surgeon Professor Karpenko comparing
Abbott's RX ACCULINK Carotid Stent Versus CGuard EPS. The objective of the trial is to assess the superiority of
CGuard EPS versus the market leading conventional carotid stent in patients at high risk for Carotid Endarterectomy or
this trial, being led by a vascular surgeon, we believe there are continued signs the market may finally be recognizing the advantages
of CGuard versus not only traditional stents, but the gold standard, more invasive, carotid endarterectomy surgical procedure.
We recently presented the preliminary results of a 50-patient study at the 7th Munich Vascular Conference, which demonstrated
improved outcomes using CGuard versus carotid endarterectomy. The study showed cranial nerve injury was significantly lower
in patients treated with CGuard versus patients undergoing carotid endarterectomy and it further showed that hospital discharge
was faster in the CGuard group compared to carotid endarterectomy. This trial was also conducted by a leading vascular
surgeon, Professor Ralf Kolvenbach, in Germany.
clinical trials illustrate that CGuard EPS is not only gaining acceptance among key opinion leaders that treat carotid
artery disease, but these physicians are approaching us, unsolicited, to be involved with our program. They are even spending
their own time and money to run independent trials around our technology.
believe this positions us for even stronger sales growth as these KOLs publish their findings, which in turn may influence the
mainstream group of users and thus support a broader expansion into the larger group of vascular surgeons, interventional cardiologists,
interventional radiologists and interventional neuroradiologists. We have had to make some significant and difficult decisions
to get where we are in this short period of time, and it appears to be paying off. For this reason, we are extremely encouraged
we have always defined the target market for CGuard as those patients more likely to undergo carotid artery stenting. But
based on the preliminary results of these ongoing clinical studies, and the level of interest we are getting from the vascular
surgery community, we believe we may be able to start making inroads into those patients that would otherwise undergo surgery.
We believe such expansion would broaden the addressable market for our device from the reported approximately $500 million to
well over a billion in the carotid market alone.
continue to focus our resources on CGuard, where we see the most immediate near-term opportunity. Once we are on sounder financial
footing, we can exploit the full potential of CGuard in the United States, further develop CGuard product extensions that can
help accelerate penetration into the surgical market, and further exploit our platform technology by developing products for the
neurovascular and peripheral device markets. It is important to note that we expect these projects to have relatively low development
risk and thus expense, as we would be leveraging our existing product configuration of our MicroNet mesh technology.
that the fundamentals of the company are now in a better place, and we had an improved third quarter in 2017, as previously reported,
we felt it was time to turn our attention to our capital structure. In November, we announced a plan to begin the process of recapitalizing
the company and I'd like to take a moment to discuss the rationale behind this move.
the course of our last 2 capital raises, we were just beginning our turnaround and changing our focus. Unfortunately, that limited
our funding options and resulted in a complicated capital structure.
the growth and operational success we have achieved since our last financing, our capital structure turned out to be a continued
impediment to driving shareholder value and completing our turnaround. Specifically, many of the larger institutional investors
and fundamental healthcare funds have expressed their unwillingness to invest in our stock, despite their interest in the company,
due to the complicated share structure and multiple preferred share series, which carry certain preferential features, especially
the Series B Preferred Stock, which I will refer to as "Series B shares" in this call.
rationale for the sale of $750,000 of Series D Preferred Stock, which was announced on November 29, was to reset the conversion
price on the Series B shares, with the goal of eliminating all of the outstanding Series B shares by having the current Series
B shareholders convert their preferred holdings into common stock. Without eliminating the Series B shares, we believed that it
would be difficult, if not impossible, to attract any new institutional or fundamental investors as well as potential strategic
a result, all Series B shareholders eligible to convert, have fully converted all of their Series B holdings. The one remaining
Series B shareholder's shares will convert in a qualified financing with the identical terms of the new investors. In addition,
the holder of more than 60% of the outstanding shares of Series C Preferred Stock has agreed to convert their Series C Preferred
Stock into the securities offered in such qualified financing with the identical terms of the new investors. This is very important
since new investors will no longer have to worry about the vast majority of the preferred shareholders holding preferential terms
as of today, the shares outstanding, assuming conversion of all the preferred shares is 66.5 million. We strongly believe the
steps we have taken are necessary and will ultimately prove beneficial for shareholders given the operational success we are now
December 15, we filed a preliminary proxy statement that we will be holding a shareholder meeting on February 7 to approve certain
proposals that we believe are necessary to complete the recapitalization plan and take advantage of strategic financing opportunities
we are seeking approval for a reverse split of our common stock at a ratio in the range of 1-for-25 to 1-for-50. We realize this
is not popular for existing shareholders and this is not something we would do if we had any other options. But the truth is,
we do not believe we have other reasonable options. Without the option of a reverse split, we believe we will be unable to raise
capital in the future because we would not have sufficient authorized, unissued and unreserved shares and we will likely be delisted
from the NYSE for the lack of shareholder equity. We also risk being delisted for low trading price if the stock were to remain
under $0.20 for an extended period. The consequences of either of these events would put the Company in serious jeopardy.
said, we have received positive feedback from a variety of groups given the progress we have made. However, it was also conveyed
to us that the stock would need to be over $1, and in some cases $5, in order for the key healthcare funds to invest, and for
many of the brokers to recommend our stock to their clients.
we do not believe the current share price is reflective of the fundamental value we have built. For this reason, we will be prudent
in how, when and on what terms we would contemplate any potential future financing. It would not make sense to work this hard
to clean up our cap structure only to put the company back into a difficult situation.
we are seeking approval to issue more than 19.99% of the Company's common stock at a price per share of $0.20 upon conversion
of the Series D convertible preferred stock, which was less than the greater of book or market value of the Company's common