Greetings. Welcome to InspireMD Fourth Quarter and Full Year 2023 Earnings Call. Please note, this conference is being recorded. I will now turn the conference over to Chuck Padala with LifeSci Advisors. Please proceed.

Thank you, operator, and good morning, everyone. Thank you for joining us for the InspireMD fourth quarter and full year 2023 financial results and corporate update conference call. Joining us today from InspireMD are CEO, Marvin Slosman; and CFO, Craig Shore. During this call, management will be making forward-looking statements, not historical facts, which are 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 any updates at our current reports on Form 8-K filed with the U.S. Securities and Exchange Commission and InspireMD's press release that accompanies this call, particularly the cautionary statements made in it. This call contains time-sensitive information that is accurate only as of today, March 6, 2024. 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 is now my pleasure to turn this call over to Marvin Slosman, Chief Executive Officer. Marvin, please go ahead.

Thank you, Chuck, and thanks to everyone for joining the call this morning. I'm pleased to share a tremendously productive fourth quarter, completing a remarkable end to 2023 for our company. We have carried this energy and enthusiasm into the new year as we continue our mission to lead the carotid revascularization market with our best-in-class CGuard carotid stent platform, looking forward to reporting 1-year primary endpoint results from the C-Guardians trial in the first half of this year with a view to potential approval and commercialization in the United States in the first half of 2025, as well as our continued focus on growth in our 30-plus served OUS markets. Our investment in both CAS and TCAR methods and tools, addressing the broadest market potential was purposeful and done anticipating a time when technology innovation and procedural reimbursement move the tides toward an endovascular standard of care. 2023 marked the beginning of what we believe to be a sea change towards this shift away from surgery with best-in-class outcomes, with CGuard catalyzing our leadership potential. We plan to continue to build our growing body of data and real-world evidence from our OUS markets as we create inertia to lead the U.S. market post-approval. Craig will cover the financials shortly, but I wanted to share a brief review of our fourth quarter performance. We generated record total CGuard revenue of $1.76 million, representing growth of 71.6% as compared to the fourth quarter of 2022. Recall that our fourth quarter 2022 sales were negatively impacted by the temporary expiration of our CE Mark in November of last year as European regulators transitioned from the Medical Device Directive, or MDD, to the new medical device regulation, or MDR, framework. We indicated at that time that the temporary suspension of our CE Mark impacted our fourth quarter 2022 sales by approximately $250,000. Even considering these circumstances, on an adjusted basis, we generated year-over-year sales growth of 38%, reflecting our commercial focus on building a growing awareness of CGuard's superior patient outcomes as we work to make it the gold standard of carotid implants globally. We sold 3,107 stents, up more than 74% year-over-year, advancing our global sales to date to more than 48,000 stents, building on our real-world market penetration and experience. Another significant highlight was the notification from the European regulators of our CE Mark recertification under MDR. The transition from MDD to MDR was challenging and required us, like the rest of the medical device industry broadly, to be patient, persistent, and comprehensive in our approach to addressing these changes and requirements, timelines, and priorities during this lengthy process. With our formal recertification under MDR now granted, we've derisked this topic and removed uncertainty in our ability to continue to sell in EU-certified countries while enabling our product development pipeline provided under MDR as we continue to invest in our OUS markets in parallel with our increased U.S. focus. Turning to C-Guardians, our U.S. pivotal IDE trial, which is designed to support approval of CGuard Prime in the U.S. Dr. Chris Metzger, System Vascular Chief at Ohio Health in Columbus, Ohio; and principal investigator of the C-Guardians trial presented 30-day follow-up data from the trial at VIVA 23 and then at VEITHsymposium, both of which took place in November of last year. As an important reminder of the results, the primary endpoint of the trial is a composite of the incidence of major adverse events, including death, all-cause mortality, any stroke or myocardial infarction, DSMI through 30 days post-index procedure or ipsilateral stroke from day 31 to day 365 post procedure. Between July 2021 and June 2023, 316 patients were prospectively enrolled in a single-arm study performed at 24 sites in the U.S. and Europe, including the CGuard carotid stent system, which also included our next-generation CGuard Prime. With the acknowledgment of the FDA, 30-day results were presented, reporting best-in-class data with the lowest 30-day MACE rate of any carotid pivotal trial to date. Patients with carotid artery stenosis at high risk for carotid endarterectomy, treated with CGuard, had a DSMI rate of 0.95% from procedure through 30-day follow-up. This data continues to validate the unique neuroprotective qualities of CGuard, utilizing our innovative MicroNet mesh, and it's consistent with our real-world experience. We remain on track to report 12-month primary endpoint results anticipated in mid-year, followed by the submission of our premarket approval application, or PMA, in the third quarter of this year. Based on these timelines, we anticipate possible approval of CGuard in the United States in the first half of 2025. These timelines remain consistent with our prior guidance. Turning now to our major product development and clinical programs. The C-Guardians II clinical study of our SwitchGuard neuroprotection system, along with our short shaft CGuard and accessory devices for TCAR procedures continues with intention as we look to advance our TCAR toolset with next-generation enhancements. As a reminder, SwitchGuard NPS is designed to prevent embolic debris generated during the carotid stenting procedure from traveling to the brain, passing the blood through an integrated filter and returning it to the patient in a closed circuit to minimize blood loss during the procedure. We were pleased to announce just a few weeks ago that Dr. Patrick Geraghty, Professor of Surgery and Radiology at Washington University School of St. Louis, Missouri; and Dr. Pat Muck, Director and Chief of Vascular Surgery at Good Samaritan Hospital in Cincinnati, Ohio, enthusiastically agreed to act as our lead PIs for C-Guardians II, and then Dr. William Gray, Systems Chief of Cardiovascular Division at Mainline Health and Wynnewood, PA, and Professor of Medicine at Thomas Jefferson University in Philadelphia, will act as an adviser to the company. Together, Dr. Geraghty, Muck, and Gray bring a wealth of knowledge and experience in the field of carotid interventions in both TCAR and CAS, and we are very fortunate to be able to benefit from their extensive knowledge, insight, and direction as we build our leadership objectives and strategy. They join an established multi-specialty group of thought leaders that are already providing guidance to us in these initiatives. Turning now to reimbursement. In October, the Centers for Medicare and Medicaid Services or CMS expanded coverage for CAS and TCAR to include both asymptomatic patients at either high or standard risk for carotid endarterectomy. The broader availability of these less invasive options will enable physicians to tailor treatment plans to meet the needs of their individual patients. This expansion of coverage by CMS validates our strategy, which is to be agnostic to whether the stent is implanted via CAS or TCAR, as we are unique in offering comprehensive solutions. The timing of these changes in reimbursements and our potential approval of CGuard in the U.S. provides us a tremendous opportunity to lead the market with a stent-first approach. Also during the fourth quarter, we announced a strategic agreement with the Jacobs Institute at the State University of New York and Buffalo and Dr. Adnan Siddiqui, Vice Chair and Professor of Neurosurgery to conduct an early feasibility study of CGuard Prime for severe carotid stenosis or occlusion in conjunction with thrombectomy in patients presenting with acute ischemic stroke and tandem lesions. CGuard Prime, with its proprietary MicroNet mesh, is designed to provide superior embolic prevention during carotid artery stenting. We believe that this study will demonstrate the safety and feasibility of using our stent in these acute stroke procedures. Our investment in this study reflects our unwavering commitment to the neuro community and represents a critical component of our long-term growth strategy. We are pleased to share that the FDA has approved our study, and we anticipate first patient enrollment in Q2 of this year. Before turning the call over to Craig to review the financials, I'd like to welcome Pete Ligotti, who joined in January as Executive Vice President and General Manager of North America. Pete brings more than 30 years of general management and commercial leadership experience to InspireMD and is the latest addition to what I believe is a truly world-class team, capable of achieving our goals and growth objectives. At this point, I'd like to turn the call over to Craig for the financials. Craig?

Thanks, Marvin. For the fourth quarter of 2023, total revenue increased 71.6% to $1.761 million from $1.026 million during the fourth quarter of 2022. This increase was predominantly driven by the CE Mark recertification, which occurred subsequent to the end of the fourth quarter 2022, and overall growth in existing and new markets. Gross profit for the fourth quarter of 2023 increased by $307,000 or 155.1% to $505,000 compared to a gross profit of $198,000 for the fourth quarter of 2022. This increase resulted from higher revenue offset by a decrease in miscellaneous expenses. Gross margin increased to 28.7% during the three months ended December 31, 2023, from 19.3% during the three months ended December 31, 2022. Total operating expenses for the fourth quarter of 2023 were $6.3 million, an increase of $1.2 million or 23% compared to $5.1 million for the fourth quarter of 2022. This increase is primarily due to increases in expenses related to salaries and share-based compensation, offsetting the reduction in clinical expenses as we near completion of the C-Guardians trial. Total financial income for the fourth quarter of 2023 was $468,000, an increase of $349,000 or 293% compared to $119,000 for the fourth quarter of 2022. This increase was primarily due to a $349,000 increase in interest income from investment in marketable securities, money market funds, and short-term bank deposits. Net loss for the fourth quarter of 2023 totaled $5.4 million or $0.16 per basic and diluted share compared to a net loss of $4.8 million or $0.60 per basic and diluted share for the same period in 2022. As of December 31, 2023, cash, cash equivalents, short-term bank deposits, and marketable securities were $39 million compared to $17.8 million as of December 31, 2022. That concludes our pre-prepared remarks, and we will now open the call for questions.

Our first question is from Adam Maeder with Piper Sandler.

Congrats on the nice finish to the year. Maybe just to start, as we think about the international business for 2024, I know you don't have guidance out there, but I was hoping you could just kind of walk us through some puts and takes as we think about the business this year from a top line standpoint. And specifically wondering about some of the potential new products that may be coming down the pike with CGuard Prime and SwitchGuard in Europe? And then I had a couple of follow-ups.

Adam, thanks for the question. So, as it relates to our European business, we're continuing to invest heavily in our commercial effort. We'll continue to do so. As you know, this MDR overhang from a pipeline perspective has been a bit of a challenge. And now that we have the MDR certification, it allows us to open up some of those channels of product development and look to advance new products, which was a bit of a challenge before under the MDD. So I would say, on balance, we continue to invest heavily in the markets. We're looking to try to integrate our new product pipeline into the markets that are open to that, and we'll continue to hopefully grow it at a double-digit pace. But no plans to limit our access to that market. It continues to grow aggressively, and it's given us a great foundation to build our business.

That's helpful color, Marvin, I appreciate that. And sorry to push you a little bit, but just on CGuard Prime and SwitchGuard CE Mark approval, do you expect that to come in '24? Is that a '25 event? Just any finer point you can put on it?

Yes. Our hope is to have CGuard Prime in '24. We have been, as I said, somewhat restricted by our ability to get our files reviewed, which have been delivered to our notified body for some time. And so now that that's opened up that process, we hope that that review will go quickly, and we'll be able to integrate CGuard Prime into the market in '24. As it relates to SwitchGuard, we're still assessing the market potential of TCAR in Europe and trying to figure out how we advance that through our channels and what the return on that investment looks like. So that will likely shift outside of '24, but for CGuard Prime purposes, our plan is to get it into the market as quickly as we can.

I understand. That's useful information. Now, regarding the U.S., it's good to know that the timelines for potential commercialization remain consistent with previous expectations. I'm interested in the data disclosure strategy for the company. Specifically, will you be sharing the full results from C-Guardians through a press release or investor call, or should we expect to wait for a presentation at a medical meeting or a journal publication later in the year? Any additional details on the disclosure strategy would be appreciated.

Yes, Adam, I think our intention there is to obviously disclose this data as quickly as possible. There's a lot of reasons why we want to do that, and we're trying to pick the appropriate format. We certainly would prefer to do it in a conference setting as we did with the 30-day data. We're trying to time that out to see how that looks, but our intention is to do more than just press release that and do it in a much more robust setting as we've done previously. The challenge is being able to time that disclosure with what conferences are happening in what period of time. As you know, the summer gets a little quiet, so we're trying to match our intention to get it out as quickly as possible, but in a format that gives us the greatest response.

I got it. That's helpful. And if I was to ask about the commercial sales force and plans for hiring. I was hoping you could kind of illuminate that for us. Where are you today? When will you look to onboard folks? I presume that's more of a back half of the year exercise, but maybe just talk about kind of the plans there and for Craig, just any color around OpEx spend in '24?

So our intention is to begin to build commercial infrastructure in the back half of the year, as you mentioned. We've spent a tremendous amount of time with Shane, figuring out how to build and architect the optimal approach to territory size, coverage, and so forth, so on approval we get the most out of our launch and go-to-market strategy. So back half of the year would be the heaviest as far as hiring is concerned, but there's a lot of work to be done between now and then in terms of developing tools, training infrastructure, all those things that we're investing in. We've got Pete Ligotti on board as our General Manager now that's working on a U.S. infrastructure as well. So we want to be able to support the commercial effort in addition to having a full team of high-powered sales reps ready to go.

That's helpful. And just a couple more for me, if that's okay. So I wanted to ask about the U.S. TCAR study. So you've announced the PIs. Marvin, when should we expect that study to commence? And what can you share on the study design in terms of number of patients and patient follow-ups and even endpoints? And then as we think about commercial timing for SwitchGuard, is that a back half '25 event? I just want to make sure that those timelines are still good.

Yes. So as we mentioned in our previous call, Adam, we had a very productive pre-sub meeting with the FDA to map out our strategy for SwitchGuard and our TCAR entry into the U.S. And so we're following their lead. We also gathered a tremendous amount of feedback from our Strategic Advisory Board and the vascular surgery community to make sure that the toolset that we're developing addresses some of the open topics that they felt were important. We want to make sure that this is world-class next-generation technology. We like the position of a second mover advantage as long as we can take advantage of addressing some of those things. So we've integrated that feedback into our design and device approach and that adds the next layer of validation, and then we get into the regulatory pathway. So the simple and short answer is we've identified our PIs. We've got a structure in place. We have to validate that with the FDA, but we hope to get started in that study late this year and our direction in terms of availability will depend on enrollment and the FDA finalizing our approach there. But I think the timelines that we've previously discussed remain consistent, likely late '25 for approval.

Our next question is from Ben Haynor with Alliance Global Partners.

First off for me, just on the stent design, the tandem lesion 15-patient study. How quickly do you expect that to enroll? It sounds like that will pick up next quarter? Any other color you can provide there?

Ben, good to hear from you. I think the EFS, as we've structured it with Dr. Siddiqui and the group at Jacobs Institute is really intended to test drive the thesis behind how CGuard performs in this acute setting or thrombectomy and other things are being applied. We're going to go at a pace that allows us to continue to provide data to the FDA as we go along. This is not going to be a fast march to the finished event. The whole theory behind the EFS is to do things in a very deliberate manner, carefully, to make sure that what we believe to be the case from a safety profile perspective is true. And so I wouldn't put any timelines to enrollment. I think what's most important is our commitment to the neuro community and making sure that we're acting on the feedback. We know that there's a lot of carotid stenting that's taking place. There's not a dedicated label for that in some of these settings, and we think that CGuard, based on the feedback from the physicians, is optimally suited for that. So we're going to take it a step at a time and use EFS as a big first step to make sure that that thesis is validated, and then we'll go from there.

Okay. Got it. So the methodical approach there, I guess not a big surprise with you guys, that's good. And then just seeing reactions that you can share from the 30-day data for C-Guardians, and I know we talked about VIVA on the last call, but anything that's kind of flowed in since then?

Ben, overall, I think it was a remarkable presentation that I won't say caught a lot of people by surprise, but was very favorably received. From our perspective, it was consistent with our real-world experience, which was also great to have. Obviously, we have to take next steps here to follow up on the 1-year data so that we've got a comprehensive package to prepare and present to the FDA. But so far, on the foundation of our 30-day data, there's been a tremendous amount of confidence in our movement forward and the ability to get and secure FDA approval. So we'll look to this next readout as the next step in that process, but excitement up to this point.

Okay, that makes sense. I have a question for Craig. Regarding the C-Guardians II and the expenses related to R&D, how should we expect to model that as the year progresses? Will there be an increase in any specific quarter when you kick off the project later this year, or is there anything particular we should consider?

Yes. I think for R&D, you should think that there's going to be a step-up for the ESS as well as the trial for SwitchGuard, C-Guardians II. So yes, I would just, within the first couple of quarters, already start to include a step-up.

Okay. Should we expect an increase initially for a couple of quarters, followed by a plateau, or will the growth continue to rise?

No, no, no. In the first couple of quarters, a step up and then just level it off.

That's helpful. Marvin, you mentioned a full team of high-powered sales reps. How big is that team and how quickly do you bring them on? Is there anything else you can help us with regarding this?

Yes. I think we've seen to spend a considerable amount of time modeling this, and we're working through some different scenarios. We've both done this before. I think for the U.S. market, the optimal number is somewhere in the ballpark of 60 dedicated full-time direct sales reps, with obviously a support structure clinically and other things. And so we're building our models around that. In terms of absorption in the market, our goal is to make sure that we're addressing each of the markets appropriately, and we're not getting ahead of our skis. But at the same time, we're anticipating a very robust response to that approval. So we're working hard to kind of configuration, to figure out how we take these people on in what period of time. It's probably about a 2-year runway I would anticipate to sort of get fully locked and loaded on our commercial go-to-market strategy. But we're obviously going to address those markets that are most robust, and we're going to go as fast as the market sends us signals that they're ready to buy and use CGuard. So architecting the plan is the first step. And as you can imagine, we've had a lot of inbound inquiries from a lot of really talented reps in this market that see us as being sort of this next step in carotid revascularization, and they love the direction we're headed. So inbound inquiries are always a good indicator of how we can land in a good place.

This concludes our question-and-answer session. I would like to hand the conference back over to Marvin for closing comments.

Great. Thank you, operator. We appreciate everybody calling in today, and we're really looking forward to a very robust 2024. Thank you for calling in.

Thank you. This will conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.