Thank you for standing by and welcome to the CVRx Inc. Q1 2022 Earnings Conference Call. I would now like to turn the conference over to your host Mr. Mike Vallie from the ICR Westwicke. Sir, you may begin.

Good afternoon. Thank you for joining us today for CVRx's first quarter 2022 earnings conference call. Joining me on today's call are the Company's President and Chief Executive Officer, Nadim Yared and its Chief Financial Officer, Jared Oasheim. The remarks today will contain forward-looking statements including statements about financial guidance. The statements are based on plans and expectations as of today which may change over time. In addition, actual results could differ materially due to a number of risks and uncertainties including those identified in the earnings release issued prior to this call and in the Company's SEC filings, including the upcoming Form 10-K that will be filed with the SEC. I would now like to turn the call over the CVRx's President and Chief Executive Officer, Nadim Yared.

Thank you, Mike, and thank everyone for joining us. I'll begin today’s call by providing an overview of our first quarter performance; followed by an operational update; a review of our financial results by our CFO, Jared Oasheim; and then I will conclude with our thoughts for the rest of 2022 before turning to Q&As. Starting with the review of the first quarter, our total revenue was $4.1 million, slightly exceeding the top of the range of our guidance for Q1. These results were driven by continued strong growth within our U.S. heart failure business, which generated $2.9 million, an increase of approximately 133% over the first quarter of 2021. I am very proud of the resilience our business displayed during the first quarter, which was heavily impacted by COVID spikes in both the U.S. and Europe. We experienced significant headwinds in January followed by improvements in February and ending with a very strong March. Despite the challenges faced early in the quarter, we were able to grow our U.S. heart failure business revenue, expand our U.S. active implanting centers by 22% and delivered the highest number of revenue units in a quarter. Turning to an update on the operational progress we made during the first quarter aimed at driving the increased adoption and utilization of Barostim. As a reminder, our focus areas are: one, the continued expansion of our commercial infrastructure; two, innovation of our product portfolio; and three, the expansion of the clinical body of evidence. First, let’s focus on the continued expansion of our commercial infrastructure, specifically, our U.S. direct sales. During the quarter, we added three new territories bringing the total to 17. We continue to be very impressed with the quality of our sales organization that we are assembling. Our employees remain motivated by the buzz generated by our therapy and its visible impact on our patients. On our last earnings call, we announced two newly launched programs to support physician and patient education. First, a direct-to-consumer marketing pilot program in conjunction with a new branding campaign. We continue to see great early traction with the direct-to-consumer pilot within the select geographic locations where it is running. Additionally, we have started a pilot to expand the patient education components to a few select institutions to alleviate the workload of healthcare providers. If successful, we plan on rolling out this educational program out to a greater number of institutions across the country. Another area of focus is the innovation of our product portfolio. Earlier this year, we highlighted three recent PMA supplement submissions made to the FDA related to our Barostim platform. We received approval for the new implantable pulse generator during the first quarter. And subsequent to the end of the quarter, we received approval for the new programmer, which is a tablet form factor with even simpler programming software. With the approval of both, the new IPG and the new programmer, we are now planning an initial commercial launch of the new platform in 2022. We are incredibly proud of what we have accomplished in the first quarter despite the significant headwinds we continued to experience from COVID. The performance seen in February and particularly in March is very encouraging as it validates the growing demand for Barostim even during a challenging macro environment. We remain on track to deliver continuous growth in the balance of 2022 and help bring relief to patients suffering from cardiovascular diseases. I’ll now turn the call over to Jared to review our financials. Jared?

Thanks, Nadim. Total revenue generated in the first quarter was $4.1 million, which is an increase of $1.2 million or 43% when compared to the same period last year. Revenue generated in the U.S. was $3.1 million in the current quarter, which is an increase of 90% over the same period last year. Heart failure revenue in the U.S. totaled $2.9 million in the current quarter on a total of 99 revenue units, as compared to $1.3 million in the first quarter of last year on 44 revenue units. The increase was primarily driven by the continued growth in the U.S. heart failure business, as a result of the expansion into new sales territories, new accounts and increased physician and patient awareness of Barostim. At the end of the current quarter, we had a total of 56 active implanting centers as compared to 19 on March 31, 2021 and 46 on December 31, 2021. At the end of the current quarter, we had a total of 17 sales territories in the U.S., compared to 6 on March 31, 2021 and 14 on December 31, 2021. Revenue generated in Europe was $1 million in the current quarter, which is a decrease of 18% when compared to the same period last year. Total revenue units in Europe decreased from 52 in Q1 of 2021 to 50 in the current quarter. The decrease is due to reduced procedure volumes due to COVID-related headwinds in the month of January. At the end of the current quarter, we had a total of six sales territories in Europe. Gross profit was $3.1 million for the three months ended March 31, 2022, an increase of $1.1 million over the three months ended March 31, 2021. Gross margin increased to 77% for the current quarter compared to 70% for the same period last year. Gross margin for the current quarter was higher due to a decrease in the cost per unit and an increase in the average selling price. This was partially offset by a larger percentage of our revenue units coming from full systems versus battery replacements. New patients receive a full system that includes an IPG and a stimulation lead and have a lower gross margin than a standalone IPG used for a battery replacement. Research and development expenses were $2.3 million for the current quarter, which is an increase of 29% when compared to the same period last year. This change was primarily driven by an increase in compensation expenses due to increased headcount, an increase in clinical study expenses and an increase in non-cash stock-based compensation expense. SG&A expenses were $10.8 million for the current quarter, which is an increase of 142% when compared to the same period last year. This was primarily driven by an increase in compensation expenses due to increased headcount, as well as an increase in marketing and advertising expenses related to the commercialization of Barostim. Other expense net was $57,000 in the current quarter compared to $3.8 million for the same period last year. The expense in the first quarter of 2021 was primarily driven by the increase in the fair value of the convertible preferred stock warrant liability from December 31, 2020 to March 31, 2021. All of the warrants were converted to common stock warrants as part of the IPO in July of 2021. Net loss was $10 million or $0.49 per share for the current quarter as compared to a net loss of $8.6 million or $23.92 per share for the same period last year. Net loss per share was based on $20,453,341 weighted average shares outstanding for the current quarter and 360,675 weighted average shares outstanding for the first quarter of 2021. At the end of the current quarter, cash and cash equivalents were $131.2 million. Net cash used in operating and investing activities was $10.9 million for the current quarter, compared to $5.1 million for the same period last year. Now turning to guidance. For the full year of 2022, we continue to expect total revenue between $20 million and $23 million, gross margin between 74% and 76% and operating expenses between $55 million and $61 million. For the second quarter of 2022, we expect to report total revenue between $4.5 million and $5 million.

Thanks, Jared. Before opening the line for questions, I would like to discuss our expectations for the balance of 2022 as we seek to drive the increased adoption and utilization of Barostim. First, the continuous expansion of our commercial infrastructure, especially our direct sales force in the United States. We expect to continue hiring top talent throughout the year and are targeting a total of approximately 26 U.S. territories by year-end, adding three new territories per quarter. As we noted previously, we rolled out our new branding campaign that simplified and streamlined our direct-to-consumer messages. The rollout will continue in the remainder of 2022 with the addition of new educational storylines. Our second area of focus is the continuous innovation of our product portfolio. With the FDA approval of both the new IPG and programmer, we are planning an initial commercial launch of the new platform in 2022. Our third focus area is the expansion of the clinical body of evidence, the BeAT-HF clinical trial is designed to demonstrate the mortality and morbidity benefits of Barostim in the heart failure with Reduced Ejection Fraction patient population. We remain on track to complete this study on our expected timeline. Looking ahead to the rest of the year, we are excited about the momentum we have built with just the first quarter. We are positioned to leverage that momentum and accelerate the adoption of Barostim. The opportunity remains large and, as always, we remain committed to bringing relief to as many patients as possible that are suffering with cardiovascular illnesses. And now, I would like to open the line for questions.

Thank you. Our first question comes from Robbie Marcus of JPMorgan. Your line is open.

Great. Congrats on a nice quarter and thanks for taking the question. Maybe to start, the second quarter guidance is in line with where expectations are, but it looks a bit conservative if we take the first quarter exit rate given the comments that January was the softest and just what we heard from other competitors about the fact that March was such a large component of sales for the first quarter. So, love to hear just how you left the quarter and what you’ve seen so far in April that informs the second quarter guidance? Thanks.

Yeah. Hey Robbie, thank you again for listening in and asking the first question. Listen, yes, you are correct. January was weak, driven by the COVID impacts in the United States and in Germany at the same time. Actually, by the end of January, we were concerned, but we started seeing light at the end of the tunnel. So when we had this conversation in the earnings release in early February, we felt encouraged by the early leading indicator signs. And let me remind you of one element. We have a high average selling price device with a relatively smaller number of units, i.e., smaller number of patients per center per month. So we have some ability to reschedule within the quarter. And what we have seen in the past two quarters is when we had a COVID impact at the beginning of the quarter, we’re able to recover by the end. But what we have not seen is a push from one quarter to the other. And that’s why I don’t label it as being conservative; I view it as maintaining the guidance for next quarter, but rather just playing the average here and not the result of the month of March. What I am – and I think it’s a little bit premature here is to take the month of March and extrapolate based on that single month when we know that some of the implants and procedures from January and early February were pushed into March. Does it make sense?

Yeah, yeah. I mean, if - I guess, also, I don’t know if you are willing, but what are you seeing so far in April, and just to help me form the guide?

Yeah. I knew you would ask me this question about April, and April is not over yet, so anything could happen. But what we are seeing in April first, no impact of COVID in the United States nor in Germany, or let me put it this way, very limited impact, if any. Even in Germany, this week, there is the German Congress of Cardiology, DGK, that is happening live for the first time in a couple of years. Although the attendance is still low, it’s finally a medical meeting in Germany happening live with our team able to meet cardiologists face-to-face and have meaningful conversations, and that was our opportunity to showcase our new brand in Germany. Similarly, in the United States, at the end of March, we had the American College of Cardiology. The attendance was low, but it was face-to-face, and we had really substantive discussions with the cardiologists on-site, and we are expecting to continue that trend with HRS hopefully, but at the end of this week, Thursday, Friday, the start with HRS. April seems to be solid and in line with our expectations for a regular month that does not have COVID impacts.

That’s really helpful. And maybe just last question for me, I would love to see if you have any data points you could give us from the DTC outreach in the limited markets? I know it’s still on a small scale and early, but it’s a great way to help gauge future patient interest. So, just wanted if you have anything there to share.

Yeah, absolutely, Robbie, and thank you for asking about my pet project here, the direct-to-consumer education campaign. The way we see this, it is an educational campaign. The more we can educate patients, the more we simplify the job of the healthcare providers. You know very well and you are probably hearing from hospitals and from medical technology companies that the tight labor is affecting hospital and healthcare providers across the country. So any education that we can provide to the patient directly simplifies the process and reduces the time constraints on the healthcare provider. So far we are very happy with the results of our limited campaign, and we are continuing to increase our investment in this space and expand the geography. And of course, we are not talking about states by states or even country by country. What we are talking about here is in the United States, we actually advertise on social media about Barostim to ask patients basically to click and learn more about our therapy in ZIP codes around a few centers that we have trained to be ready to receive those patients if they were sent to them. So, that is the process. We called it a pilot early on, and we keep increasing right now the number of ZIP code areas or geographical areas around the sites that have been trained. It’s not yet fully deployed in the entire country, far from it, but the early results on a side-by-side basis are extremely encouraging, and we will continue ramping up our investment in this field. Again, thank you for asking this question.

Thanks a lot.

Thank you. Our next question comes from Matthew O'Brien of Piper Sandler. Your line is open.

Great. Thanks for taking the question. So, Nadim, just to be clear, it sounds like there were some delayed procedures in January, but you were able to make all those up in February and March, and none of the March cases got pushed a little bit into April, because there is just enough capacity right now at these centers to get these cases done fairly quickly, because there are not as many. Is that fair?

That’s exactly right, Matthew. Thank you again for asking the questions. The sporadic business, I keep talking about, which is the high average selling price, smaller volume. Currently, in our procedure pace, when it’s done, outpatients do very well, so we don’t expect here that it will be deprioritized in an existing site that is already doing procedures, and that’s why we have not seen procedures pushed from March to April.

Okay, got it. And then, as far as the implant centers go, you’ve tripled the number of active implanting centers in the last year, and you doubled it in the last nine months. Can you talk about some of the recent additions on the active center side? Are they larger academic centers with a lot of patients? Or kind of how has the mix been going between the various centers? And are you starting to open up some big accounts?

Yeah, yeah, excellent question. So it’s a mix. Let me first say, based on our experience in clinical trials in the past, both in hypertension ten years ago and most recently with BeAT-HF, the academic centers do not necessarily equate to high volume centers. Sometimes, some community centers in a geography where a community hospital has a broader outreach end up collecting a higher volume of patients if you can see it in their databases. Case in point here is what goes on in Orlando in heart failure; that’s the area where we have the highest number of heart failure hospitalizations in the country. That said, we have a good mix, Matthew, a good mix of academic centers and smaller community centers. The smaller community centers are very practical since the navigation of the process by patients is simplified. So it’s not as impressive to the patients or daunting to the patients to navigate different departments and different buildings in a big academic institution. That said, we need the academic institutions where most of the interesting research is happening, and Barostim users can apply for a Barostim investigator-initiated research effort with CVRx to conduct their own post-market research on the therapy. But also, academic institutions are basically the flag holders in many geographies and the way they go is often the way these smaller community centers follow. That’s why we tend to have a good mix between academic institutions and smaller community centers.

Got it. And then, just last one for me is on access to hospitals. Did you have challenges in January or even part of February getting access to potential new centers, and has that pressure kind of eased at this point? Thanks.

Yes, we did, definitely in Germany, but also in some areas in the United States. I don’t – I have to recall – I don’t think we had any good block in January in the United States, but access was tricky and what was most tricky was the feel of patients to go to hospitals when all of the talks were about omicron and the impacts or the relative weakness of vaccines to fend off omicron. If you remember, that was the talk back in December. And also the staffing shortages at hospitals limited our impacts when the hospital is overloaded with COVID cases, and they have to do their usual cases on top of it. They really don’t have time to meet with our team, particularly when they are already in a shortage situation themselves.

Got it. Got it. Very helpful.

Luckily, we have not seen this in March, and we are able to deliver as a very solid month.

For sure. Thanks, Nadim. Thanks, Jared.

Thank you, Matthew. Thank you. Have a great day.

Thank you. Our next question comes from Margaret Kaczor of William Blair. Your line is open.

In for Margaret. Thanks for taking the question. First, can we just talk a little bit about just curious if you could talk a little bit about the mix of where growth was coming from in terms of new and existing accounts? In the past, we’ve talked about how some of these ramping accounts might be nine to twelve months out once they start to reach this exit velocity of doing meaningfully more cases. So is that the case you are seeing and maybe try to give a little bit of color about what kind of growth you are seeing from the new accounts?

Yes, that’s, Brandon, by the way, very nice seeing you were briefing at ACC. I hope that you had a good meeting there and good discussions. Listen, great question. And as we analyze the data, we are always trying to look backward to forecast what’s going to happen forward, right? Looking back at what we have accomplished so far, we still see a dichotomy between centers that have been activated with us for 12 months or more versus those that were activated in the last 12 months; almost doubling the number of revenue units per month. I don’t know, Jared, you can chime in whenever you want if you are ready to disclose those numbers. But it’s very telling, Brandon. The beauty about this is that we know that when a site is starting, they do a couple of patients, they wait to see the impact, they wait for those patients to come for the two month, six month visits. And once they see the impact on the patients, they feel more comfortable treating additional patients, doing three, four, five, six, and the longer the site is doing the procedure, the more they want to do it, and that’s a great sign about the visible efficacy of the procedure and its impact on the patients and the patients’ lives. Jared, I don’t know if you want to chime in and add more details?

Yeah, and I think we talked a little bit last quarter, Brandon, about those centers that have been with us for at least 12 months starting to approach their long-term goal of having one revenue unit per month. And we are continuing to see that trend here where all of those centers that have been with us for more than 12 months are starting to approach that one revenue unit per month. It looks like the long-term goal of hitting one per month is starting to happen right around that 18-month marker for a lot of those long-term centers. So, it feels like, like Nadim has said before in the past, the longer those centers are with us, the more experience they get with patients, the results they are seeing both on the reimbursement side and the efficacy side are just showing them more reasons to take on additional patients. And so, the longer they are with us, the more revenue units and the more patients that are being treated.

Got it. And then, that kind of brings up another interesting thought in terms of, you guys have obviously a strong balance sheet here. At what point do you kind of, or how do you balance maybe using some of this cash to potentially expedite, if possible, that 18-month timeframe and ramp accounts more quickly? Or is it something that just needs time, or is there no ROI there for you guys? So, how do you balance the cash spend versus the opportunities ahead of you?

Brandon, excellent question. Listen, it’s a tricky one, because think about it this way. If we go too slow, we will never reach cash flow breakeven. If we go too fast, we risk burning the cash before we achieve cash flow breakeven. So there is a window where we felt we did all of the analysis early on when we raised the money from the IPO proceeds. We felt this window is the line that will take us toward cash flow breakeven. So we have been very progressive and steady in our investment growth, adding three territories every quarter and we plan to continue that. Listen, I understand what you are saying, and I like to believe that if we could do it, we would have done it, meaning go ahead and hire 20, 50, 100 territory managers all at once and train them. But the fact is, we don’t believe that this is the right track forward, and we prefer that steady, slow progress that allows us to put our foot one step at a time on solid foundations. Does it make sense what I am trying to express here?

Yes. That’s helpful. That makes sense. Thank you.

Thank you, Brandon. Send our regards to Margaret, by the way.

We will. Thanks.

Thank you. Our next question comes from Bill Plovanic of Canaccord. Your line is open.

Great. Thanks. Good evening and thanks for taking my questions. I want to start off with innovation if I could, just you mentioned the rollout of the new programmer and the new IPG. How should we think about timing for that? Pricing for that? And then, are you going to wait for the MRI indication label for that, or is that just not necessary given that it will just be an add-on?

Bill, hey, how are you? First, excellent question. Listen, the MRI PMA supplement that was submitted to the FDA covers not only future products but also past products. So basically, every single Barostim neo that was implanted in a heart failure subject in the United States will be covered by this MRI conditional compatibility if or when FDA approves it. Therefore, knowing this, it’s disconnected from the launch of the new IPG and the new programmer. Does it make sense why that is disconnected? One is looking forward for the new product; this is the new IPG and the new programmer. The second, the MRI compatibility is not only for the new products but any patient that receives it, even in our trials starting from 2012 in the United States will now be – not now, but if FDA approves the MRI compatibility will be able to undergo an MRI scan in the future.

Right. And then how should we think about the timing of that and then, Jared, how do we think about the inventory of the original product, and do you end up taking charges for that or having the impact in other startup costs to manufacture the new IPG and programmer, and that’s why you are guiding gross margin is a little lower?

Yes, Bill. Thanks for the question. So just on the first part about when will the release come out. The expectation here is we are building up the inventory for the new programmer and the new IPG. So we are expecting the launch here in the back half of 2022. As far as the inventory levels for the existing IPG and programmers, we are not expecting significant charges associated with that inventory. It can still be used for other purposes, whether for clinical trials or for other customers. As far as the gross margin piece of it, so we did hit 77% gross margin in the first quarter, and the full year guide is 74% to 76%. The real reason for that staying at 74% to 76% just comes down to expectations for the rest of the year. We did exceed expectations on the average selling price in the first quarter. So that, as it comes down, as we add more new centers and continue to see pricing pressure, we could see gross margins come down a little bit. And then also the sales mix piece of it. So, as we sell more and more systems or a higher percentage of our revenue units come from systems to treat new patients, that will have a negative impact on gross margins. So it could come down slightly there, as well. And that’s the main reason for keeping that guide at 74% to 76% for the year.

Okay. Would the new IPG and programmer have a higher ASP, or do we just keep the same ASP at this point?

Yes, we are keeping the same ASP at this point.

Okay. And then, last on the innovation topic, it’s just the BATwire. I don’t think we had any update on that. Just we’ll have to get just an update on where we are with the trial and kind of expectations on timing for that.

Yeah, hey, the BATwire trial is ongoing, and therefore we do not have access to the efficacy data. However, we have access to the safety data of the procedure. So far, it’s looking really good. I am very excited with the safety profile that we are seeing of the procedure of implanting the current IPG and the current lead, particularly with the BATwire toolkit. However, that said, and you have seen it possibly with other cardiovascular or heart failure trials, enrollments are going very slow this past couple of years as compared to previously. That has surprised us like it’s surprising other companies, as well. We keep a very open eye about the enrollment rate, and we know that enrollment in a trial is not a linear progression. It often follows a geometric or exponential progression, and if you go back to other trials, you would see that more than two-thirds of the patients enrolled in the last one-third of the time on many clinical trials, not only in cardiovascular, but outside. That said, when we map all of this, taking this into account, we still believe that we have the time to enroll the trial and get approval in 2024. But it’s not going as planned right now; the enrollment is slower than planned.

Okay. Thanks for that. And then, just two things for me. I mean, my understanding is you have a prior auth backlog that you are working off of. Just any commentary on that and how that looks versus prior auth quarters or what have you, and just any scale on that would be helpful? And then, just any upcoming medical meetings of which we should think for you? And that’s all. Thanks for taking my questions.

Yeah, I know, thank you, Bill. Listen, the medical meetings, next – this coming weekend, HRS in San Francisco will be regularly smaller presence at HNC but our stronger presence with the new brand will be at HRS in San Francisco. Regarding the prior auth, we have nothing to discuss metrics at this stage. However, qualitatively, we are still very excited about the results we are accomplishing here. Our prior authorization team is doing a fantastic job; they do a lot of the work behind the scenes again to alleviate the workloads of healthcare providers. They have to do this work. We try to do it on their behalf. Now, that said, what is maybe if you are comparing our prior auth program with other companies, for example, Inspire Medical, the difference could be that we have a higher percent of patients covered by Medicare due to the age profile of heart failure. About two-thirds of heart failure patients are covered by Medicare. For these patients, we usually do not need prior authorization. For Medicare Advantage, we need prior authorization, and the approval comes very fast. So, we are not building a long pipeline here for a lot of the patients. Only private payer patients who are not covered by Medicare Advantage where the approval process could take months rather than days, and that volume is relatively smaller for our business. So for us, the prior auth program is not a good proxy for how the next quarter is going to shape. Kind of unfortunately, I wish I had more visibility on the next quarter. I am just like you; I look at the results of the last month and the current month and try to project forward.

Great. Okay. Well, thanks for taking my questions.

Thank you, Bill.

Thank you. I am showing no further questions at this time. Let me turn the call back over to the company for any closing remarks.

Excellent. Thank you, Operator. And thanks, everyone for joining us for our first quarter earnings call. We appreciate your ongoing support and we look forward to updating you on our progress during our next update. Thank you.

Thank you. Ladies and gentlemen, this does conclude today's conference. We thank you all for participating. You may now disconnect. Have a great day.