Q2 2021 · Earnings Call Transcript

Aug 12, 2021

Operator

Good afternoon, and welcome to the Viveve Second Quarter 2021 Financial Results and Corporate Update Conference Call [Operator Instructions]. Please note this event is being recorded.

I will now turn the call over to Jeannie Swindle, Viveve's Senior Director of Corporate. Please go ahead.

Jeannie Swindle

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 company's future financial performance.

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

These statements are based on judgments and analysis as of 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 Web site.

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. Speaking on today's call will be Scott Durbin, Viveve's CEO; and Jim Robbins, Senior Vice President of Finance and Administration.

I will now turn the call over to Jim.

Jim Robbins

Thank you, Jeannie. Good afternoon, everyone, and thank you for joining the call today.

I will begin today's call with a brief review of our second quarter 2021 financial results. I will then turn the call over to Scott who will provide a corporate update and open the call to questions afterwards.

Today, we reported total revenue for the second quarter of $1.7 million from the global sale of 7 systems and approximately 3,500 consumable treatment tips. As of the end of the second quarter 2021, the company had an installed base of 859 Viveve system worldwide.

Second quarter total operating expenses were $5.1 million compared to $4.6 million for the same period last year. The increase is mainly a result of the company's efforts to advance our stress urinary incontinence, or SUI, clinical development program.

We ended the quarter in a strong cash position due to our continuing operational measures to manage our cash burn. As of June 30, 2021, we reported cash and cash equivalents of $25.4 million.

Thanks. I'll now turn the conference call over to Scott.

Scott Durbin

Thanks, Jim. Good afternoon, everyone.

And again, thank you for listening to today's call. I'll begin my remarks today based on the positive financial results and capital position to the company that Jim just reported.

Viveve's strong financial position is a result of the efforts of our entire organization, which is focused on advancing our stress urinary incontinence program toward a potential new indication. Initiation of our pivotal US PURSUIT trial in the first quarter represented a critical milestone in that effort, and we are looking forward to achieving the next milestone, completion of 390 patients randomized in the trial.

We have a high level of confidence in the strength of the Pursuit study design and in our ability to execute our strategy to achieve a potential SUI indication in the United States. With the capital resources to support operations through the end of 2022, including the planned completion of the PURSUIT trial, we plan to continue our strategic focus in the following core areas.

Number one, rapidly advancing the currently underway pursuit trial and achieving a positive data readout. If positive, preparing to commercial launch the first FDA-approved patent protected endovaginal office-based dual energy treatment for urethral hypermobility to improve SUI in women.

Secondly, focusing our commercial and market development efforts on the US and Asia Pacific regions through the expansion of our installed base, targeting urogynecology, urology and gynecology core specialties. And third, supporting our customers with successful initiatives to continue to drive increased consumable treatment tip utilization and sales.

As I previously stated, our entire organization is committed to these core areas of strategic focus as well as continuing to achieve critical milestones as we advance our SUI clinical development program towards a potential new indication in the US. I'd now like to direct my remarks to the specifics of our PURSUIT trial for SUI.

PURSUIT is a randomized, double-blinded, true sham-controlled trial with an intent to randomize 390 subjects with moderate SUI. Moderate SUI is defined as between 10 and 50 milliliters of urine linkage on the 1-hour pad weight test at up to 30 study sites in the United States.

Randomized at a 2:1 ratio, subjects in the active treatment arm will receive our cryogen-cooled monopolar radiofrequency treatment while subjects in the control arm will receive a true inert or energy-less sham treatment. The primary efficacy endpoint of the PURSUIT trial is a comparison of the proportion of patients who experienced 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 inert sham procedure.

The study also includes several secondary endpoints assessed using the 1-hour pad way test, the 3-day bladder voiding diary and other behavioral and quality of life questionnaires. Subject safety will also be monitored through the study.

As I previously stated, PURSUIT was launched in late January and enrollment is underway today at 28 study sites with 2 additional sites currently being activated. Over the course of the first couple of months as study sites were onboarded and trained patient randomizations were slightly lower than we originally anticipated.

However, in May, we launched supplemental patient and site-specific marketing efforts, which greatly accelerated patient enrollment and randomizations. Since May, patient interest in the study has been extremely high.

We now have seen over 8,300 patients complete the prescreening questionnaires, of which over 1,750 patients have been qualified from that process. It is important for me to underscore that the PURSUIT trial is highly powered with strict inclusion criteria for the proper diagnosis of moderate SUI.

The trial was intentionally designed to better assess the primary efficacy endpoint and potentially increase the probability of a positive outcome. That said, and with enrollment continuing to gain momentum, current PURSUIT enrollment stands at 653 patients with 202 patients randomized and an additional 100 patients currently in screening.

Further, our study sites have a goal to screen 3 patients per week, which puts us on target to complete enrollment early in the fourth quarter, just slightly behind our original Q3 estimate. Importantly, positive 12-month data results from PURSUIT may support a marketing application for a new SUI label in the US.

To put this into perspective, SUI is a condition that affects an estimated 25 million to 30 million women in the United States alone. Based on our estimates, this represents a $10 billion to $12 billion total available consumable market opportunity with few effective noninvasive treatments that exist to reduce leakage associated with SUI.

As a result, a positive pursuit outcome in FDA approval opens a multibillion-dollar commercial opportunity for Viveve. On the commercial and market development front, medical practitioners and clinics worldwide have continued to show steady improvement from the COVID-19 cause challenges in the past year.

We will, of course, continue to monitor and assess any impact resulting from the current Delta variant surge in specific states and geographies. In the US and Asia Pacific, our targeted regions of focus, many practices have returned to full operations, patient flow and elective procedure volumes.

And our dedicated customer care team in the U.S. and distribution partners internationally continue to provide high-quality service and support to drive increased procedure volumes and treatment tip utilization.

These positive efforts resulted in approximately 3,500 consumable treatment tips sold globally in the second quarter, and this represents a 29% and 50% unit increase quarter-over-quarter in treatment tip sales for the US and international markets, respectively. As I previously stated, our commercial and market development efforts in the US and Asia Pacific are directed toward core specialties of urogynecology, urology and gynecology.

Although we have a very small commercial sales organization in the U.S. and Asia Pacific region, their efforts are demonstrating strong and growing physician receptivity for our innovative dual energy technology.

Further, several successful key opinion leader physician events were held in the second quarter in targeted Asia Pacific countries. In the U.S., the empowerment network of select female uro and urogyn physicians that I referenced in our Q1 call reconvened and more SUI physician influencer programs are planned in the coming months.

These programs continue to augment our relationship-building efforts with key opinion leaders in urology, urogynecology and with incontinence medical societies and associations. Our goal is to increase awareness of and build upon our tradition of scientific rigor and the body of clinical evidence that supports the safety and efficacy of Viveve treatment as we advance our clinical program towards a potential new SUI indication in the US.

Strategically, as the PURSUIT trial progresses, we initiated a long-term reimbursement effort to support and expand the potential long-term commercial opportunity of our noninvasive single-session durable SUI treatment. The company's announcement in early July of a new technology Category III CPT code from the American Medical Association establishes a long-term pathway for potential reimbursement pending a positive PURSUIT trial readout and FDA approval of an SUI indication.

Issuance the new code is a significant milestone and further reflects the strong clinical evidence and potential benefit of our dual energy procedure for improving SUI in women as reviewed by the AMA and supported by key medical specialty societies. Again, this is a long-term process, but one of great value to pursue as we believe the Viveve procedure.

It ultimately become a preferred SUI treatment option that may be broadly covered by insurance in the future. The second quarter of this year was one of diligence and focus as the entire organization advanced our SUI clinical development program and successfully executed our core initiatives.

Our focus through the remainder of 2021 is to complete pursuit enrollment, expand our installed base in the U.S. and Asia Pacific regions with core medical specialties support our existing customers to drive increased treatment tip utilization and sales and to continue the operational efficiencies we have achieved that has lowered our cash burn rate considerably over the past year.

Finally, I'd like to thank the dedicated team at Viveve for their continuing efforts this quarter as well as 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.

Operator

[Operator Instructions] Our first question will come from Jeffrey Cohen of Ladenburg Thalmann.

Destiny Hance

This is actually Destiny on for Jeff. Maybe we could begin with the CPT code.

Could you touch a bit more about how this could benefit you ahead of regulatory approval? And could you also touch upon the time savings this may have provided you with doing it ahead of approval as opposed to after?

Scott Durbin

So the standard process and reimbursement is for a new technology is to first get a new technology, CPT III code with the support approved by AMA and it requires a review of our data and the safety profile of the technology with key medical societies like AUA and others who govern urology and urogynecology. And it's an important first step in the long-term process towards ultimately gaining a Category I code and achieving a reimbursement level with private payers in the United States.

So what the Category III code does is it sets us on that trajectory, it allows us to track procedures and most certainly will accelerate the process of achieving that category code Category I code once we have and if we have a positive readout from PURSUIT and if we get a marketing indication from FDA. So it just shortens the process, but it's a necessary and a very important step for the long-term reimbursement prospects for a new technology.

Destiny Hance

And I know you had migrated our Viveve University to a more virtual setting, almost entirely virtual. Do you have any plans to bring that in person or maybe a hybrid event?

Scott Durbin

It was certainly an extraordinarily successful program Viveve, as you mentioned, for a lot of different reasons. We've missed it for the last 18 months.

We've tried to do our best in a virtual setting. For now, we're continuing in a virtual setting, but we continue to monitor the overall environment and physicians' willingness to travel and take part in that kind of event in person, and we're certainly anxious to get back to sort of the in-person education.

But for now, we're continuing to do it virtually.

Destiny Hance

And finally, are there any other trends OUS that you could call out that supported growth this quarter? And any insights in some of the trends for potentially Q3 as well?

Scott Durbin

We saw a remarkable increase, and we continue to see remarkable adoption and increased procedure volumes and utilization of the consumable treatment tips, as noted by the level of unit sales in Q2, really the strength in the APAC region is in South Korea and in Taiwan and China. We have very strong distribution partners that continue -- long-term distribution partners that have continued to support our technology and the clinics and physicians who perform our procedures in those countries.

So it's been a very steady state business for us. We continue to see growth there.

We're very encouraged just in the overall environment by the volume of procedures and utilization, both in Asia and in the United States. And pending anything delta variant related or other variant related, our hope is that we're going to continue to see that trend continue in the US as well.

Operator

The next question comes from Ben Haynor of AGP.

Ben Haynor

Well, first off, congrats on the quarter and the progress that you made in rolling it really sounds like you kind of have a pretty good visibility into the end in sight, so to speak. Could you remind me whether or not you guys plan to disclose any kind of immediate procedural success data once it's fully enrolled?

Scott Durbin

Do you mean sort of an interim analysis or in terms of…

Ben Haynor

All the treatments were successful or [indiscernible] were successful. I know you haven't had with this in the past.

But I just was wondering, if there's going to be any data before the big data?

Scott Durbin

I think our next disclosure will certainly be around enrollment of the trial when we -- our randomization numbers, the ones we highlighted of 202 patients completely randomized in the trial infers that they had a successful treatment. So we will announce when we hit the 390 mark, at which point all 390 of those patients will have received a successful treatment.

So we haven't really had any issues on the treatment side.

Ben Haynor

I got to figure out if that was the case, but I just wanted to confirm. And then just now that you've got code in place.

Obviously, there's a process to get into CPT I. And I apologize, I didn't have my full attention on your answer to Destiny's question.

So I do apologize there. But any special considerations to kind of keep in mind when you kind of go through the rock process and the value gets assigned to the treatment?

Scott Durbin

There's a lot to keep in mind, actually. And so as the CPT III code is released at the beginning of 2022, we'll begin to track procedures.

We will have that data. We intend to read out on a top line basis, the PURSUIT trial's primary efficacy endpoint, lease top line in Q4 of next year.

And as quickly as we can submit for marketing application to FDA. During that time, we'll be working towards a massive commercial launch in stress incontinence in anticipation of the label.

When the label comes or following the full clinical study report from the trial, we will look have that data published as quickly as we can. It is really the publication of the PURSUIT trial data that is the trigger point for the application of the CPT I code.

And so we will get it published as quickly as we can file for the CPT I code and begin that process. And from there, it takes 1 to 2 years to sort of get all the payers on board and work through that process.

But it's an important process, particularly for our procedure. And there are lots of considerations from a pricing perspective that we will spend a lot of time on between data readout and FDA clearance.

We've had a lot of conversations with many of the major payers -- private payers in the United States about the technology, about the trial, about the ultimate indication in the treatment and we've gotten great feedback from them on sort of bracketed reimbursement levels for our procedure specifically. And so we'll continue to work with them and refine that and gather more data ultimately, a lot of the reimbursement level will come down to the pricing of our treatment tips.

And again, that's something we will work through in the future if we have a positive trial readout.

Ben Haynor

And then just kind of thinking about it, if everything kind of tracks as planned and the publication gets ASAP. Presumably, you're going through the rock process in 2023.

I mean you mentioned 1 to 2 years. I mean, is there a possibility that you could have the reimbursement in place in January 2024 or it's too early to tell?

Scott Durbin

That's a good guesstimate, I'll say at this point in time. In the 2024 time frame, we'll certainly start to get some payers on board at that time.

We'll do a lot of work forthcoming to make that happen. All of that process happen as quickly as possible.

So our hope is certainly to have some level of coverage from some of the private payers by the early 2024 time frame.

Ben Haynor

And then just lastly for me. Just curious if any of the -- well, not any, but a lot of the existing accounts are kind of paying attention to the PURSUIT study, whether you get questions about that.

Just to -- what's your sense of the reaction from existing accounts to what you guys are doing?

Scott Durbin

Yes, people are thrilled. Our current accounts are thrilled with what we're doing.

They've long been aware of the fact that we've been data-driven and our ultimate goal has been to get a women's intimate health indication. The benefits of that are self-explanatory with respect to having being the first on-label device.

It opens up the market opportunity considerably. And so many of our physicians are paying very close attention to where PURSUIT is in the process.

And are hoping that the PURSUIT trial data reads out as consistently as many of our current providers see in their practices on a daily basis. I appreciate everybody dialing in today.

Thank you

Operator

This concludes our question-and-answer session. The conference has now also concluded.

Thank you for attending today's presentation, and you may now disconnect.