Good day, ladies and gentlemen, and welcome to your IsoRay Inc. Third Quarter 2020 Earnings Conference Call. All lines have been placed in a listen-only mode and the floor will be open for your questions and comments following the presentation. At this time, it is my pleasure to turn the floor over to your host, Mr. Mark Levin of Investor Relations. Please go ahead, sir.

Thank you, operator. Good afternoon and thank you for joining us today for the IsoRay fiscal third quarter 2020 earnings call for the third quarter ended March 31st, 2020. Before we get started, I will take a few minutes to read the forward-looking statements. Certain statements in this conference call constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. When used in this conference call, words such as will, believe, expect, anticipate, encourage, and similar expressions, as they relate to the company or its management, as well as the assumptions made by information currently available to the company's management, identify forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management’s current expectations and beliefs about future events as of today, May 12th, 2020. As with any projection or forecast, they are inherently susceptible to uncertainty and changes in circumstances, and the company undertakes no obligation to, and expressly disclaims any obligation to, update or alter its forward-looking statements whether resulting from such changes, new information, subsequent events, or otherwise. Additional information concerning forward-looking statements is contained under the headings of Safe Harbor statement and risk factors listed from time to time in the company's filings with the Securities and Exchange Commission. We will begin today's call with Lori Woods, IsoRay's Chief Executive Officer; and then Jonathan Hunt, IsoRay’s Chief Financial Officer, who will discuss the fiscal third quarter 2020 financial results. Following their prepared remarks, we will take questions from our analysts and institutional investors. I will now turn the call over to Lori.

Thank you, Mark. Good afternoon and thank you for joining us today for IsoRay's fiscal third quarter 2020 earnings conference call for the quarter ended March 31st, 2020. Following my comments, our Chief Financial Officer, Jonathan Hunt, will provide a more detailed review of the fiscal third quarter financial results. I am very pleased to share with you the considerable progress we continue to experience at IsoRay and the accelerated growth we realized in the quarter ended March 31st. Record revenue for the third quarter increased 50% versus the year-ago quarter. This quarter comprised the top three single highest revenue months in the company's history. We continued to see substantial operational improvements in this quarter as gross margin expanded to a record 59.2%. Combine that with moderate operating expense growth, and we significantly decreased our operating loss, which was half of what it was in the fiscal third quarter of 2019. A central factor in driving strong momentum that is manifested in our financial results is our growing leadership role within the brachytherapy industry. We continue to expand our role as a trusted, valuable partner, enabling more practitioners to better treat their patients. This is evidenced again this quarter by yet another increase in new customers. As of the trailing 12 months ending March 31st, our net new physician customer count increased 33% versus the previous 12-month period. We continue to gain traction by highlighting the unique benefits of Cesium Blu and our supporting delivery devices. In addition, our best-in-class customer service and support and our expanding digital presence should allow us to continue to grow our leadership position. As we ended the quarter in March, the world saw a significant shift from the unfortunate implications of the COVID-19 global health pandemic. I am proud to report that from the onset, IsoRay has been proactive in implementing plans to ensure the health and well-being of our employees while remaining focused on providing uninterrupted product flow to the physicians and patients who count on us. We seamlessly transitioned many employees to work from home and made other adjustments to ensure the continuity of our business through this time. At the beginning of the pandemic, we moved quickly to ensure that our inventory of non-isotope supplies was appropriate in case our supply chain was disrupted. In addition, we set in motion our strategy to maintain a continuous and uninterrupted supply of isotope from our suppliers in Russia. Our partners at nuclear facilities in Russia have worked hard to adjust to our needs, going above and beyond to support us, which we appreciate immensely. Fortunately, we have not experienced any material supply chain issues to date. As we think about how COVID-19 is impacting IsoRay's business, it is important to remember the demographics of the cancers our customers commonly treat. The majority of the cancers are in prostate. In general, prostate cancer is a relatively slow-progressing form of cancer and does not often present an imminent life-threatening emergency for many of our customers' patients. As COVID-19 began to spread, many states implemented new guidelines in an attempt to mitigate spread of the virus and to conserve certain medical supplies, such as PPE. Those guidelines led to the cancellation or postponement of elective and non-emergency surgical procedures, including prostate brachytherapy procedures. Consequently, at the very end of March, we saw some procedures begin to be postponed in many markets we serve. This resulted in preliminary revenue for the month of April declining about 20% versus April in 2019. In recent weeks, as states begin to lift restrictions on non-essential surgeries, we've received increasing customer feedback that those implants that had been canceled in March and April were beginning to be rescheduled. Our order growth has been accelerating since the last week of April. We firmly believe that most, if not all, treatments in process prior to the outbreak will take place over the next few months. In the meantime, we continue to tightly manage our expenses and make fluid adjustments to isotope orders to meet potential increased treatment demands as restrictions lift. The COVID-19 pandemic has impacted the sourcing of parts associated with the assembly of our proprietary disposable delivery device, Blu Build. This was due to our parts manufacturer temporarily converting their production capacity to making clinical PPE for the battle against the pandemic. We have enough inventory to support our current customers and new customers in the pipeline until our parts manufacturer is back online. We support their decision and as a result now anticipate Blu Build will see a slower-than-expected release through the remainder of fiscal 2020, with the expectation that Blu Build will continue contributing revenue in the fiscal fourth quarter of 2020 and gain traction in fiscal 2021. Turning to GammaTile and our partners at GT Medical Technologies, GT Medical Technologies launched their full market release of GammaTile therapy in January. In support of this launch, they have extended beyond their current distribution partners to include an indirect GT Medical Technologies sales team. For those of you who are not aware of our relationship with GT Medical Technologies, we have a 10-year manufacturing and supply agreement to manufacture GammaTile with Cesium-131 seeds in the tiles to treat both recurrent and primary brain cancers. We remain optimistic about the prospects for GammaTile and the benefit it can offer to many brain cancer patients and are looking forward to how the salesforce expansion proceeds. Revenue from the sales to GT Medical Technologies were again nominal to IsoRay's overall revenue in the fiscal third quarter ended March 31st. On another front, we continue to remain actively engaged with policymakers in Washington, D.C. on a number of key items. I am very pleased to report that there is a new development to share with you. Yesterday evening, we were notified that we had received 64 ICD-10-PCS codes for reimbursement in the inpatient DRG setting. These codes allow hospitals to bill Medicare for specific surgical procedures that would benefit from the addition of Cesium-131. You will recall that the ICD-10-PCS codes are important for the growing surgical applications of Cesium-131 in treating hard-to-treat cancers. Just a few of the codes include lung, head and neck, brain, GYN, pelvic, and many others. These codes will take effect on October 1st, 2020. Another important matter is one you may recall from our fiscal 2019 year-end earnings call back in September: I shared with you that CMS had proposed a significant change to the way Medicare currently pays for radiation oncology services in the outpatient setting. The proposed Radiation Oncology Alternative Payment Model, or ROAPM, would provide a single bundled payment for a 90-day episode of radiation therapy, including LDR brachytherapy, IMRT, SBRT, proton therapy, and HDR brachytherapy. Seventeen disease sites, including the prostate, are included in this proposal. The comment period ended September 16th, and after an initial delay this past fall, the final CMS ruling was rescheduled for release on April 1st, 2020. However, with the onslaught of the pandemic in the U.S. in March, the ROAPM was not released on April 1st, and a date has not been set. We continue to watch for new developments in this matter because we believe that the implementation of this bundle may further level the playing field for brachytherapy over time, given the various radiation treatments available to patients. We have also been working with policymakers to help them understand the importance of Cesium-131 as they turn their attention to ensuring that everyone can safely access the healthcare services necessary to diagnose and treat life-threatening diseases beyond COVID-19. We believe that many aspects of brachytherapy using Cesium-131 support this process. The procedure is a one-time hospital visit, reducing the risk of exposure to threatening diseases like COVID-19, and is supported by long-term clinical evidence demonstrating positive patient outcomes. This one-and-done advantage means vulnerable cancer patients do not need to keep returning for multiple in-hospital treatments as typically required by other forms of radiation therapy. This also lowers the overall use of personal protective equipment and even the aggregate cost of the treatment is lower. We look forward to continuing our dialogue with policymakers and their staff to ensure that cancer patients have meaningful and timely access to brachytherapy. Before I turn the call over to Jonathan, I want to take this opportunity to thank all IsoRay employees. Words seem inadequate to describe how proud I am of this incredibly dedicated team. They remained singularly focused on the company mission even as this unprecedented time of uncertainty has impacted all of us. Seeing this latest demonstration of commitment, and how successfully we adapted during this pandemic, gives me even more confidence in the future success of IsoRay. Now, I will turn the call over to Jonathan to review the results of our fiscal third quarter.

Thank you, Lori. I am going to discuss some of the financial information that was contained in our press release for the fiscal third quarter ended March 31st, 2020 that we released a short while ago. We anticipate that our Form 10-Q will be filed with the SEC on or around May 14th. Revenue for the third quarter ended March 31st, 2020 grew 50% to $2.9 million versus $1.9 million for the same period last year. The third quarter revenue was comprised of 84% for prostate brachytherapy, which grew 42% versus the fiscal third quarter of 2019, with the balance attributed to other brachytherapy, primarily sales to treat brain, which included non-prostate revenue and GammaTile-related sales to GT Medical Technologies. Gross profit as a percentage of revenues for the third quarter ended March 31st, 2020 increased to a record 59.2% compared to 45.7% for the quarter ended March 31st, 2019. The gross margin increase was primarily driven by higher sales and lower isotope unit costs when compared to the prior year comparable period. Third quarter gross profit dollars of $1.7 million increased 94% when compared to the same period last year. Total operating expenses, consisting of research and development, sales and marketing, and general and administrative, increased 10% from the prior year comparable period to $2.3 million. This increase occurred while third quarter 2020 revenue grew 50%. Total R&D expense decreased slightly to $294,000 compared to $299,000 in the comparable prior year quarter. Going forward, we continue to expect proprietary R&D expense to increase back to or above levels in recent quarters to roughly $300,000 to $400,000 per quarter as we are continuing to have discussions with institutions looking at the expanded use of Cesium-131. Sales and marketing expenses increased 25% versus the comparable prior year quarter to $805,000. The increase in sales and marketing expenses was driven primarily by increased incentive compensation related to the 50% increase in revenue as well as an increase in physician-led training expenses. These increases were partially offset by a decrease in travel costs due to COVID-19. G&A expenses of $1.16 million represented an increase of 5% versus $1.1 million in the fiscal third quarter 2019. The year-over-year increase was driven primarily by increased incentive compensation related to the 50% year-over-year increase in revenue and the company's financial performance, headcount, insurance premium, and public company-related expenses. These increases were partially offset by a decrease in our Washington State hazardous substance payments and reduced legal, travel, and employee hiring expenses. IsoRay posted a net loss of $545,000 for the third quarter ended March 31st, 2020, a significant improvement compared to a net loss of $1.1 million for the quarter ended March 31st, 2019. The net loss per basic and diluted share was $0.01 versus a net loss of $0.02 for the quarter ended March 31st, 2019. Basic and diluted shares results are based on weighted average shares outstanding of approximately 67.6 million at fiscal third quarter 2020 versus 67.3 million for the prior year period. As of March 31st, 2020, the company had cash, cash equivalents, and certificates of deposit that totaled $2.4 million compared to $5.3 million at the end of fiscal 2019, which ended June 30th, 2019. The company has zero long-term debt. Shareholders' equity at the end of fiscal third quarter 2020 totaled $5.8 million versus $7.7 million at the end of fiscal 2019. I will now turn the call over to the operator to take questions from our analysts and institutional investors.

Thank you. We'll go first to Jason Kolbert at Dawson James.

Well, congratulations. I know there's a lot of chaos going on across the United States, but you did put up great numbers. I think the best numbers I've seen since I'm following IsoRay, so that really is a great accomplishment. If I understand what you said, Lori, the majority of those revenues were driven by prostate cancer, but you're beginning to have a glimmer of hope that GT Medical will come online as GammaTile and their salesforce engages. Is that right?

Yes, that's correct, Jason. And thank you, we're very excited about what we did this last quarter. To your question, yes, most of it was from prostate and then we are hopeful that GammaTile will be gaining traction and moving forward now that they've done their full market release.

Okay. And I just want to make sure I understood a couple of things. You mentioned that there is going to be some interruptions from COVID, both in terms of Blu Build, the device, and just a lot of other factors, but at the end of the day, procedures that were being lined up are going to be rescheduled. So, we might see a dip in April that might come back to an increase in May or June and the quarter may end up being somewhat in line with prior expectations. Is that fair to say?

Well, I think it is fair to say that we've gotten a lot of feedback from our customers that indicates that those cases that were canceled toward the end of March and maybe didn't get scheduled at the beginning of April will be rescheduled. They all believe that those cases will be back and scheduled. I can't speak to exactly how next quarter will turn out, but we're very hopeful that over the next few months we'll get them all back and taken care of.

Sure, of course. And one last question: I wanted to make sure I understood the acronym ROAPM — this single bundled payment, multiple cancers that levels the playing field for brachytherapy — what does ROAPM stand for?

It's the Radiation Oncology — Jonathan will help me finish that.

Alternative Payment Method.

Got it, Alternative Payment Method. That's right, I just wanted to get it right so that we go in print. One last question, Lori: cash is starting to get tight — do you have any thoughts about how you're going to handle your cash capital needs?

I'm going to turn that question over to Jonathan.

Jason, we continue to believe that at our current cash levels and based on our current burn rate that we have sufficient cash to last us throughout the remainder of this calendar year. As you probably know, we do have an ATM in place which, although it's not an immediate financing, does give us the flexibility to sell stock at the current market price from time to time at our discretion. So, we'll continue to preserve the balance sheet and evaluate our options as needed.

Preservation of the balance sheet through an ATM — that makes sense. Okay. Sounds good. And Lori, any particular events or catalysts that we should look at? I mean, you and I have been doing this a long time, and IsoRay is the turtle: slow and steady, but really showing some nice progress. We all love catalysts and events. Is there a catalyst or an event that I could hang my hat on?

I might have answered that question differently if we weren't in the middle of a pandemic, but I think right now it's important that we stay focused on our core strategy, which is growing our prostate market and getting new patients in the door, organic growth from those customers that we already have, and keep that moving forward. As things clear out with COVID-19, I think we'll be able to talk more about relationships we're developing with research centers and some other ongoing things. With the pandemic popping up the last couple months, we're just not ready to have those discussions yet.

Sounds very reasonable. Thank you. I guess one last thing: at what point do you start to see your ability to expand manufacturing margins or get more leverage out of the cyclotrons that are producing the seeds?

Actually, we buy our radioisotopes from facilities in Russia and they constantly work on refining how we're going to get our isotope. One of the reasons we're very pleased to partner with them is they've done a fantastic job of that and they ship us very pure isotope. That has been one of the things that has helped drive our gross margins up: the fact that we don't have to refine the isotope once we get it and we don't have to spend time and money doing that. We receive very pure isotope from Russia, which has been very helpful for us.

Thanks, Lori. Congratulations, everybody at IsoRay. Really appreciate it. Stay safe. Thank you.

Thank you, Jason, so much. You too.

We'll go next to Ed Woo with Ascendiant Capital.

Yes, I'd also like to say congratulations. This is a very great quarter, especially in this environment. Congratulations also on getting the additional billing codes from Medicare. Just walk them through some of the details: does that mean that hospitals can now bill Medicare for these additional procedures? And what are the reimbursement rates?

So, the reason you want to have ICD-10-PCS codes is because they play a really important role in communicating claims information and that helps ensure the establishment of appropriate groupings. In the inpatient setting, it's going to be a group of codes around a specific type of treatment. There hasn't historically been a Cesium-specific portion, and so it's been very difficult to set payment levels in relation to using Cesium. It's very key for us to get these ICD-10-PCS codes because now that really helps ensure that we get the appropriate groupings and levels of payments for hospitals in the inpatient setting.

So, does that mean a hospital today can now use Cesium-131 and get reimbursed for it, whereas yesterday they wouldn't be able to?

Well, many hospitals have been using Cesium-131 to date and they just didn't have a code to tell Medicare that they were actually using it. As of today, they have a code that they will use when they use Cesium-131 to tell Medicare and, by extension, other insurers that they are using Cesium in this particular type of surgery and that it justifies additional payment for that procedure. Over time, they'll gather data to help determine what the appropriate reimbursement rates will be, but it's a big step toward working for a strong reimbursement for Cesium in the inpatient setting where we've historically been focused on the outpatient setting.

Great. So, the reimbursement rate for the inpatient setting is still a work in process?

Exactly. This was a key milestone to really move that process forward.

Great. Is there any timeline on when the next step would be?

That's something CMS works on, and each year as they set new reimbursement rates they will take this into account. Now that the codes are in place, Medicare will pull that into their system and it's an evolving process from year to year. We don't have control over CMS's timing, so there's not an immediate next step for us beyond obtaining the codes and continuing our engagement with policymakers and hospitals.

Okay, but this is definitely a good positive first step or milestone?

Yes.

Great. Another question: obviously, fortunately your business hasn't been affected relatively. What about outreach to physicians and getting the word out on Cesium-131 — has that been slowed as well with shelter-in-place or do you still see good outreach to new physicians?

That's a great question, Ed. Of course, our salesforce loves being right in front of physicians and talking to them, so it has been an adjustment. It's been one we've found works better than we thought it would. We have new physicians who have come on board. We've had really great interaction with physicians on conference calls — multiple physicians on conference calls — lots of things where we're all adjusting to seeing each other on video and working day in and day out that way. We're finding that works with physicians. The feedback we've gotten is that in many ways they like it because it allows them to manage their time better and they can still have good communications with us. It's an adjustment like for many businesses across many sectors, but so far it's been going very well.

Great. Well, thank you for answering my questions and wish you continued luck going forward. Thank you.

Thank you so much.

We'll go next to Bill Urschel, Accord Partners.

I'd like to echo my congratulations, guys. My questions were answered in the earlier answers, so I'm good to go. Thank you.

Thank you so much, Bill.

I have no other questions holding at this time. So, I'll turn the conference back to Ms. Woods for any additional or closing comments.

Thank you, everyone, for joining us today. We're really excited about what we've been able to share with you today. We're going to work hard to ensure that we get this very valuable treatment out to physicians and their patients and that we really help work with our policymakers in Washington, D.C. to understand how important it is that cancer patients have access to treatment during this difficult time and what a great treatment brachytherapy is during this time as well. Thank you for your time today and have a great evening.

Ladies and gentlemen, that will conclude today's conference. We thank you for your participation. You may disconnect at this time and have a great day.