Viveve Medical, Inc.

Scott Durbin - Chief Executive Officer Jeannie Swindle - Senior Director of Corporate Communications

Thank you, operator, and welcome everyone. Before we begin, we would like to remind you that this conference call may contain forward-looking statements regarding future events or the future financial performance of the company.

Any statement that is not a statement of historical fact is a forward-looking statement. This includes remarks about the corporation's projections, expectations, plans, beliefs and prospects.

These statements are based on judgments and analysis as to the date of this conference call and are subject to numerous important risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. These risks and uncertainties are described more fully in the company's annual report on Form 10-K and other filings made with the SEC, which are also available on the company's website.

Also, any forward-looking statements represent management's view only as of the date of this conference call and should not be relied upon as representing management's views as of any subsequent date. I will now turn the call over to Scott Durbin, Viveve's Chief Executive Officer.

Thank you, Jeannie. Good afternoon everyone.

We really appreciate you joining us today. I'd like to start the call this afternoon with a short strategic business summary, followed by a high level review of our 2020 full year financial results.

I'll then remark on our Stress Urinary Incontinence clinical development program and the pivotal PURSUIT trial that is underway in the United States. Before opening the call to questions, I will close with our plans to achieve an SUI indication and the enormous commercial opportunity it represents.

2020 was a challenging, yet transformational year for Viveve as a result of the dedicated efforts of the entire company and the achievement of critical milestones for our SUI program. Viveve successfully pivoted in 2020 becoming a euro gynecology company with a focus on SUI and launched our pivotal U.S.

PURSUIT trial. As we move forward over the next 18 to 24 months our core areas of strategic focus will be to first continue to advance the clinical development program in SUI, by successfully executing the currently underway PURSUIT trial and achieving a positive data read out.

Thereafter, if positive to commercially launch the first FDA approved, patent protected, endovaginal office-based treatment for urethral hypermobility to improve SUI in women. Secondly, continue to focus our commercial efforts on the United States and Asia Pacific regions and expand the installed base of systems throughout the world, additionally targeting core specialties of urogynecology, urology and gynecology.

And finally third, continue to support our customers, to our internal customer care team and successful initiatives, which continue to drive increased consumable treatment tip utilization and sales. Before I cover our financial results for the year, I'd like to comment qualitatively that after a challenging commercial market in 2020, conditions are improving.

Receptivity to new technologies from practices is increasing, patient flow and procedure volumes are improving and the stagnant and often dormant market we experienced, particularly in the U.S. is showing strong signs of improvement in early 2021.

Today we reported total revenue for 2020 of approximately $5.5 million from the global sale of 31 systems and in the U.S. under a recurring revenue model program an additional 29 systems were placed.

As of December 31, 2020, we now have a total installed base of 857 systems worldwide. Additionally, a total of approximately 8,900 disposable treatment tips were sold globally in 2020.

Total operating expenses for the year were approximately $18.8 million compared to $31.7 million for 2019. This significant decrease is the result of the company's strategic alignment, along with taking operational measures to lower costs and reduced cash burn as we focus our efforts on our SUI program.

On a pro forma basis, we ended the year in a strong cash position, cash and cash equivalents including the net proceeds of $25.2 million from the company's January 2021 financing were approximately $31.7 million. The success of this upsized public offering in January was a testament to the enormous market opportunity for the Viveve’s noninvasive, dual energy technology in SUI and underscores the confidence in the company's strategic path, capability to execute and potential to achieve positive clinical results in our U.S.

pivotal PURSUIT trial. Importantly, this financing provided us with the capital resources to support operations through the end of 2022, including the planned completion of the PURSUIT trial, and as we continue to operate efficiently and at a significantly reduced cash burn rate of $3 million to $4 million a quarter.

I'd now like to direct my remarks to our Stress Urinary Incontinence clinical development program. Our successful pivot to SUI in 2020 was fostered by many important milestones that were achieved.

These include the positive preclinical and SUI feasibility study results reported, positive data that validated our new inner sham treatment tip that produces no tissue, nor clinical benefit, FDA approval of the strengthened PURSUIT trial investigational device exemption, formation of our preeminent clinical advisory board and incontinence, and the issuance of a newly issued U.S., SUI method patent. At this point I'd like to summarize the condition of SUI and the opportunity it represents for those on the call who may be new to Viveve.

SUI is a condition that affects an estimated 25 million to 30 million women in the United States alone, and based on our estimates, it represents a $10 billion to $12 billion total available consumable market opportunity. Today few effective, non-invasive treatments exist that reduce leakage associated with SUI.

In fact, the current spectrum of therapeutic options for women is limited to physiotherapy at one end of the spectrum, such as Kegel exercises, electrical muscle stimulation or bio-feedback, which are all designed to strengthen the pelvic floor musculature. To the other end of the spectrum in invasive approaches such as bulking agents or sling procedures.

Accordingly there's a large gap in the treatment spectrum that represent a tremendous unmet need and an opportunity for a clinically proven treatment option. We believe Viveve has the potential to expand this continuum of care.

Our non-invasive, endovaginal, office-based treatment which can be completed in a physician's office in approximately 45 minutes, may safely and effectively improve urethra hypermobility and significantly reduce leakage for women who suffer from SUI. Moving to an overview of the PURSUIT trial, PURSUIT is a randomized, double-blinded, sham controlled trial with an intended enrollment of 390 subjects with moderate SUI, defined as greater than 10 milliliters up to 50 milliliters of urine leakage on the 1-hour Pad Weight Test at up to 30 study sites in the United States.

Randomized in a 2:1 ratio, subjects in the active treatment arm will receive our Cryogen-cooled Monopolar Radiofrequency or CMRF treatment, while subjects in the control arm will receive an energy less or inner sham treatment, and again I want to highlight that the sham treatment administered in the control group for the study is a clinically inert or a true sham treatment. The primary efficacy endpoint of PURSUIT trial in comparison of the proportion of patients who experience greater than a 50% reduction in urine leakage compared to baseline on the standardized and objective 1-hour Pad Weight Test at 12 months post treatment versus the inner sham procedure.

The study also includes several secondary endpoints also assessed using the 1-hour Pad Weight Test, the three day bladder voiding diary and other behavioral and quality of life questionnaire. Subject safety will also obviously be monitored throughout the study.

I'd like to take this moment to acknowledge the guidance and support from the many experts who make up our newly formed clinical advisory board and who contributed to our strengthened and enhanced study design. Currently patient enrollment is under way and is going well and we continue to expect full 390 patient enrollment by the end of the second quarter or very early in the third quarter of this year.

And again, positive data results from PURSUIT may support a marketing application for a new SUI label in the United States and abroad and open a multi-billion commercial opportunity for Viveve. Today, Viveve is in a strong position to successfully execute our core strategies over the next 18 to 24 months, in advance of and in preparation for a potential FDA approval of an SUI indication in the U.S.

In 2021 we now have the capital and resources to execute this strategy, a lower cash burn rate, a newly designed and highly powered pivotal SUI trial under way in the United States, and a shifted commercial priority to the two largest markets in the world, the United States and Asia Pacific regions, with a focus on expanding our core market installed base and procedure volumes, all in a 2021 commercial environment that has begun to significantly improve. I thank the talented and dedicated team at Viveve for their tenacity throughout 2020, which has provided us with this tremendous opportunity to potentially expand the SUI continuum of care with a non-invasive endovaginal treatment option for millions of women who suffer from SUI.

Again, I'd like to thank everyone for participating in our conference call today. Operator, this concludes our prepared remarks and we can open the call to any questions.

Thank you.

Hi Scott! How are you?

Hi Jeff, how are you? Thanks for joining today.

No problem, it’s a pleasure to be here. So, a couple of questions on the enrollment.

You expect that, how has that occurred throughout the centers, number of centers that are enrolling now are how many?

Yeah, we are up to I’d say a little over 20 centers right now who are currently enrolling. We've got a handful that are in the IRB process or going through site initiation visits and training, but we expect them to be up to speed in the next couple of weeks.

Okay, and there's no type of eminent looks or the Pad Weight measurement is at month 12 or you are taking looks at earlier months?

So we are taking both three and six months looks on Pad Weight from a responder perspective and also from a mean change and baseline perspective, as well as 3-day voiding diary, you know collecting those at those time points as well. But we won't have, we won't have an unblinded [ph] look at any of those time points, but we will have them at the end of the 12 month study.

Okay, got it. And then back to your base business currently, could you talk about that a little more.

It feels like there's some upside that this had on the utilization in the revenues. Could you call that out as far as geographies that you're seeing recently and obviously we don't expect any guidance, but it feels like at the moment ‘21 could be guided into ‘20 on the top line, at least from how we are looking at it?

Yeah, we certain expect it to Jeff. You know 2020 was obviously difficult, particularly in the United States where the Asia Pacific region recovered far more quickly in 2020 and actually contributed quite strongly to the 2020 results.

But here at the beginning, as I mentioned in the prepared remarks and 2021, I think it's – we are certain the market is improving, we're certainly seeing clinics that had to close down in 2020, re-open up, order tips, start to treat patients, see and improve patient flow. So we're optimistic that we're on the up-tick here and that should translate into a better year for us from a financial perspective.

Okay and then as far as OpEx going forward, it sounds like the baseline from 2020 carries through to 2021, plus I don’t know, 10% to 30% based upon on the clinical work as well as perhaps additional resources needed for the higher trajectory on revenues.

Yeah, I think 10% to 30% is probably a good range in terms of increasing OpEx for 2021. We’ve worked hard as you know over the last 18 months or so to sort of reduce the cash burn and start to level set the financial statements and improve just operational efficiency.

And so we're going to continue to improve that as we go into 2021 and while we’ll see an uptick in 2021 on the R&D line due to the trial being mostly conducted this year, you know these are tremendously expensive trials and so it won't be significant.

Got it, and then lastly for us is just walk us through share count as of current inclusive of the additional shares from our end-of-year or beginning of the year.

Yes, so we ended, we ended 2020 with 10.3 or we filed the 10-K with 10.3 million common shares outstanding which reflects the shares issued - common shares issued in the January financing.

Okay, got it, perfect. That does it for us.

Thanks for taking the questions.

Okay, thanks so much for joining Jeff. I appreciate it.

Good afternoon, guys. Thanks for taking the questions and congrats on the transformation and progress over the last year or so.

Thanks so much Ben. Welcome, and thanks for joining.

Yeah, no problem. So you said you’re at 20 or so sites, a handful more kind of going through the process.

It sounds like the way you're characterizing the enrollment, its effectively on track with what you expected there. Is that the right read and then also is there a chance that you ultimately don't get to the 30 sites, just to maybe some of these sites that are more impacted from COVID or other matters, just ultimately don't get ramped up before you roll the thing.

Yeah, I think it's fair to say, you know we're at where we expect it to be. It's always a ramp up when you begin and we began – we announced enrollment on January ’21, so it's been a little less than two months here.

And then it tends to accelerate as you get all the sites up and screening and treating patients and dealing with the flow through of the various advertising campaigns that are going on locally around each of our clinic sites. And so you know right now we feel like we're on track to hit our enrollment target of the end of the second quarter or you know very early in July.

Okay, so by the 4th of July you’ll have it all enrolled, right?

Well, we certainly hope so, and we're certainly on track for that right now. You know we obviously always wanted to go quicker.

We knew we were going to face certain challenges coming into the execution of the trial from enrollment and follow-up perspective in this environment, but I think we learned a lot in 2020 having run the feasibility study and you know try to incorporate those learning’s into this very important study for us and I think we're on track and I expect we'll get you know right up to or at or very near to the 30 site at the end of the day.

Okay. That’s defiantly helpful.

And then just looking at some of these secondary endpoints and it looks like you've kind of altered them or at least a couple few on them since the original trial design came out before you boosted the patient count. Can you maybe talk about some of these secondary end points and you know why you add some, or simple ones that are chosen.

I mean it seems like there are few that maybe could help us kind of get the patient guidance on when they could expect the results, or was that a consideration. What went into some of these changes?

Yeah, I think the most important change is really the addition of the three month time point and that was really done for precisely the reason you just highlighted, which is you know if as we expect sort of to get to a positive outcome from this trial, it will be important from there as we achieve an FDA clearance and begin to be able to finally market on-label in the United States and elsewhere for SUI. That you know physicians have a sense for the on-set of improvement in symptoms or leakage and by adding the three month end-point it really gives a nice time history of improvement, because we can look back at voiding episodes, we can look at mean change from baseline on the Pad Weight Test in addition to responder rates, and really get a sense of the time sequence of outcome and that can be communicated to patients once we're on a label from the physician in terms of setting expectations.

Because as you know, ours is a tissue mechanism of action that based on our history in the many clinical trials we've run and the sort of vast commercial experience we have today, we know that it takes 30 to 90 days for the tissues to remodel and for women to start seeing clinical improvement in their symptoms. And so that's the main change to – is really adding the three month time point to the pad Weight Tests and to the voiding diary.

Got it. That makes a lot of sense and then, obviously SUI is an embracement conditions.

So it makes sense that people are suffering from it or are kind of reluctant to discuss and that's why you get that kind of broad spectrum of estimates in terms of you know what's the number of women in the U.S. that have it.

But I did notice, it sounds like you're looking more at 25 million to 30 million based upon some of the prepared remarks, where you said in the press release, whereas like we caught you previously talking more or less kind of the 11 million range. Is that maybe including a little bit more of a mixed UI or why the higher figure now.

Yeah so, it’s a great question and thanks for asking it, because I think it's important to clarify that when we talk about you know 25 million to 30 million women in the U.S. with you know with stress incontinence, its was some form of stress incontinence and as you know there's pure stress incontinence, there is pure urge incontinence and then there is this enormous population of patients who have a little bit of both, which they refer to as mixed.

And so when we talk about 25 million to 30 million women in the United States have some form of stress urinary incontinence, it's including pure SUI and most of the mix patience. But as you drill down on that and really what we're focused on, you know with stress in particular is making sure we're identifying patients who have predominant SUI, and so when we talk about 10 million or 11 million 12 million of those patients who would be candidates for as of the procedure, we're really honing in on those patients who are predominantly SUI and there are a variety of clinical mechanisms to differentiate whether a patient has more stress incontinence or more urge incontinence.

And so that's the difference in those two numbers Ben.

Okay, that masks sense. You know obviously, either way it’s a fairly massive market.

It certainly is.

Good deal. Well, I think that’s all I have for this afternoon.

Good luck with the enrolment and thanks for taking the question again.

I really appreciate it. Thanks Ben, thanks for joining and I appreciate everybody joining the conference call today.

Thanks so much.