Imricor Medical Systems, Inc. (IMR) Earnings Call Transcript & Summary

Good morning, and good evening, ladies and gentlemen, and welcome to the 2020 Annual Meeting of Imricor Medical Systems. I'm Steve Wedan, Imricor's Chair and CEO, and I'm pleased to welcome you to our first annual meeting as a publicly listed company. By joining our virtual meeting today, our stockholders and their proxies will have the opportunity to ask questions and register votes, if they haven't already done so. CDI holders will also have the opportunity to ask questions, but are entitled to vote at the annual meeting -- are not entitled to vote at the annual meeting, except as a proxy for CHESS Depositary Nominees. You can submit your questions at any time during the meeting via the speech bubble icon on your screen, and I will address these questions at appropriate times throughout the meeting. I'd like to point out that questions are being moderated by Carrie Barrack, Cato & Clive, to avoid duplication. Voting today will be conducted by way of a poll on all items of business. Once voting is open, if you're eligible to vote at this meeting, a polling icon will appear on your screen. Selecting this icon will bring up a list of resolutions and present you with voting options. To cast your vote, simply select one of the options. There is no need to hit a submit or enter button. Once you select an option, the vote is automatically recorded. You also have the ability to change your vote at any time up until the time I declare voting closed. Please also note that there are a number of voting exclusions that apply to the resolutions being put to today's meeting. These are outlined in the notice of meeting. With that, I now declare voting open on all items of business. The polling icon will soon appear on your screen. I'll give you a warning before I move to close voting. I'd like to take a moment to introduce you to my fellow directors who are also joining us today: Mark Tibbles, Doris Engibous and Peter McGregor. Online, we also have our CFO, Lori Milbrandt; Company Secretary, Kobe Li; and Laura [ Proppoli ], from our audit firm, Baker Tilly. Laura will be available later in the meeting to answer questions you may have regarding Imricor's audit report for the 2019 financial year. Under Imricor's bylaws, a quorum is required for this meeting. I have been advised that a quorum is present, and therefore, I declare this meeting open and authorized to transact business. I'd like to commence today's meeting with an overview of the financial and operational performance of Imricor during 2019 as well as provide an update on developments that have occurred during the current year. 2019 and the early part of 2020 were transformative periods for Imricor. In August last year, we were listed on the Australian Securities Exchange, raising capital for growth and commercialization, pending the CE mark of our consumable products. The remainder of 2019 was focused on pushing through the CE mark process, which was significantly delayed due to the well-known stresses placed on our notified body, TÜV SÜD, as a result of the new EU medical device regulations. However, on January 23, we were pleased to finally receive CE mark approval and we moved swiftly to commercial launch. Our first procedures were performed at the Dresden Heart Center in late January. This was an exciting moment for me personally and a tremendous milestone for Imricor as these were the first iCMR-guided ablations to be performed anywhere in the world with market-approved devices. Contributing significantly to the speed at which the Dresden Heart Center got started was a new imaging technique our engineers and scientists developed in the latter part of 2019, which we call Active Catheter Imaging. This technique uses native MR imaging to easily identify the location of an ablation catheter within the patient without the use of a mapping system or active tracking. It has opened the door for more clinical sites like Dresden to move more quickly and commence atrial flutter ablations guided by real-time iCMR. Active Catheter Imaging has proven to be highly effective in procedures undertaken at the Dresden Heart Center and feedback from physicians performing these procedures has been excellent. Further, anecdotal outcomes support reduced atrial flutter procedure times compared to traditional atrial flutter procedures in a conventional lab. It has therefore been highly disappointing for all of us that following the strength of our initial commercial launch, the COVID-19 pandemic has led to hospital restrictions banning outside personnel and postponing most elective procedures, effectively stalling our lab rollout plans. At this time, hospital operations appear to be normalizing somewhat in Germany and The Netherlands and we have plans to restart procedures in Dresden and also ramp up our next 3 sites within the next several weeks. Across the medical community, we are seeing strong interest in our products and the opportunity to undertake MR-guided procedures. Thanks to our sales and marketing teams who have adapted but did not stop in response to the COVID-19, our pipeline is growing strongly and we are expanding our list of targeted sites every week. As an example, in early April, we successfully hosted our first online educational seminar led by Dr. Thomas Gaspar and Dr. Stefan Ulbrich of the Dresden Heart Center. The doctors described their experiences performing ablations in the iCMR lab and answered questions from attending physicians. You can find a recording of this webinar on Imricor's YouTube channel. As another example, last month, we signed a Master Purchasing Agreement with Sana, the largest group purchasing organization in Germany. The Sana network includes 600 cooperating hospitals and medical institutions across Germany and Switzerland. Importantly for us, approximately 80 of these sites perform cardiac ablations and are potential customers. Under this agreement, Imricor's products are included in Sana's catalog of approved materials with pricing set for any site that is part of the GPO. We have found that in establishing new sites, contract negotiations can be a time-consuming component of the process. The agreement with Sana will streamline this process as well as facilitate access to approximately 80 sites for sales and marketing activities, supporting the future success of our rollout strategy. Following the model of the online seminar I mentioned earlier, we're extending the style of physician engagement to relevant hospitals within the Sana GPO as well as high-volume sites across the countries we have identified in Phase I of our rollout plan. These seminars provide an effective alternative in the COVID-19 environment to educational programs we would typically deliver at congresses such as the European Heart Rhythm Association and Heart Rhythm Society. This enables us to support continued advancement in patient care and develop greater awareness of Imricor's products despite the social and travel restrictions in place today. Our research and development pipeline focused on the expansion of our products for use in iCMR ablation procedures remains a clear priority. Our diagnostic catheters development, along with regulatory strategy, are well advanced. As a scaled-down version of our ablation catheter, the diagnostic catheter will provide material improvements in our gross margin and is targeted for release in mid-2021, pending CE mark approval. We're currently in the prototype phase for our steerable sheath and transseptal needle, which, in the future, will enable access to the left side of the heart via the intra-atrial septum. At this stage, we're developing our regulatory strategy and aim to have these products ready for clinical trial during 2021. Further, we're developing improvements to our ablation catheter, which, while relatively minor, will develop -- deliver enhanced maneuverability when used for future indications other than atrial flutter. The delivery of these pipeline products is critical to our growth strategy of expanding indications for our ablation catheter to procedures in the left side of the heart, including atrial fibrillation and ventricular tachycardia, and will remain a key focus in the year ahead. We also continue to pursue expansion in geographies outside the European Union. In Australia, we are in the late stages of appointing a local agent to facilitate TGA approval. And our strategy on FDA approval in the United States is progressing well. We're targeting discussions with FDA in the coming months with the aim of undertaking an IDE clinical trial during 2021 to 2022. Our workforce continued to expand throughout 2019 and into 2020 as we focused on expanding capabilities across the company, particularly within sales, marketing and manufacturing to support our commercialization efforts and growth strategies. We have been fortunate to welcome a number of talented individuals from high-caliber organizations within the medical technology sector to the Imricor team. Our people, long-standing and new alike, are all passionate about achieving great outcomes for patients and their health care professionals. Each person on our team plays a crucial role in our achievements and I thank each one of them for their dedication and determination. I'd also like to take the opportunity to highlight our Board of Directors. During 2019 and in preparation for our IPO, we were fortunate to welcome Doris Engibous and Peter McGregor to the Board. Doris has over 40 years of experience in the medical device industry, including executive roles in early commercialization stage medical technology companies. She brings deep industry experience to the Board and we greatly value her contribution. Peter, our Australian-based Director, has over 30 years of experience across investment and institutional banking and has held CFO roles in large ASX-listed entities. His deep financial and commercial experience, combined with his extensive experience as a company director, brings him -- brings a valuable contribution to the Imricor Board. Mark Tibbles, our longest-standing Nonexecutive Director, brings a breadth of experience in entrepreneurial business and venture investing in the medical device space. His -- Mark has helped guide the company toward and through our IPO and continues to bring unique value to the Board. In addition, we as a Board are fortunate to have ongoing support of our Board advisers, Tom Borillo and Professor Niels Kuster, who have deep expertise and experiences in sales and technology, respectively. As former Board members, Tom and Niels combine their specialties with a strong knowledge of the Imricor business and the markets in which we operate. Across the Board, along with high standards of governance, there is a deep commitment to the success of Imricor and the delivery of value for our stockholders and CDI holders. I thank each of my fellow Directors for their commitment and support. While we are extremely disappointed that COVID-19 has temporarily stalled our rollout plans, I remain very pleased with the position we're in. We have adapted well across all functional areas with little negative effect aside from site installations, and we're well positioned to swiftly recommence rollout plans once hospital restrictions are lifted. I've completed in February -- having completed in February an institutional placement, we maintain a robust balance sheet with the capacity to manage the financial impacts of the current situation with available cash at March 31 of about USD 13.3 million. On behalf of the Board and management of Imricor, I'd like to thank our stockholders and CDI holders for your ongoing support. We look forward to sharing the next exciting phase of the Imricor journey with you. Ladies and gentlemen, we will now turn to the formal business of the meeting. As mentioned previously, you may ask questions online during the meeting via the speech bubble icon on your screen. If eligible to vote at this meeting, you may do so up until the time I close voting by clicking on the polling icon on your screen. If you've already sent in your proxy, voting instructions or voted by Internet or telephone before the meeting, your shares have already been voted accordingly. Therefore, stockholders do not need to vote today unless they are voting for the first time or want to change their previous vote. Voting is currently open for all items of business and I will provide you with a warning before I move to close voting. Prior to the commencement of this meeting, valid votes have been received, representing approximately 14 point -- I'm sorry, 44.84% of Imricor's issued capital or 47,031,079 shares of Class A common stock. As stated in the proxy statement, I intend to vote all available undirected proxies in favor of all items. Ladies and gentlemen, a copy of the notice of meeting and proxy statement, including the explanatory memorandum, has been distributed to or made available to all stockholders and CDI holders. If you do not have a copy with you, please be reminded that you can download these documents from the ASX website. I propose that these documents be taken as read. As required by the bylaws, a copy of the full register of stockholders is available for viewing at Imricor's place of business in Burnsville and at Imricor's registered address in Melbourne, Australia. Given current restrictions, you are encouraged to make prior arrangements with either myself in the U.S. or Kobe Li, Imricor's Company Secretary in Australia, should you like to view the register. Before we move to the agenda items, I'd like to address questions in relation to the presentation I made today or any other businesses of the company. I will defer questions on any of the items of business until we come to that particular item. I'll provide you with a moment to ask your questions online. Carrie, are there any questions at this time?

Chair, I have just one question at the moment from a shareholder who has just asked if this meeting will be recorded and whether the slides will be made available.

So the slides are available on the ASX website now. The Chair address that I gave previously is also available and posted on the ASX website. This meeting is not being recorded and will not be available online for review.

I have no further questions at this time.

Thank you.

Then we will move to our first item of business, the election of Class I Director, Mr. Mark Tibbles. I refer stockholders and CDI holders to the explanatory memorandum for details of Mr. Tibbles' background and experience. The resolution is that Mr. Mark Tibbles, being a Director whose appointment as a Director expires at the conclusion of the annual meeting of the company, and being eligible, offers himself for election, be elected as a Class 1 Director of the company. Are there any questions in relation to this resolution?

Chair, I have no questions at this time.

Thank you. I would like to point out that the laws of Delaware, where the company is domiciled, do not provide for casting stockholder votes against certain type of resolutions, including the election of directors. As stated in the notice of meeting, the ASX has granted the company an appropriate waiver to enable the company to comply with these laws. The vote required to approve Item 1 is a for vote by the holders of a plurality of the voting power of the voting stock that is present or represented by proxy at the meeting and entitled to vote on such proposal. Prior to the commencement of the meeting, the company received combined direct and proxy votes as shown on your screen. I now put the resolution to the meeting and ask that you complete your voting. [Voting]

We will now move to the next item of business, the ratification and approval of the prior issue of CDIs under the February placement. Details of this item are set out in the explanatory memorandum. I ask you to consider, and if thought fit, to pass the resolution as a separate ordinary resolution. And for the purposes of ASX Listing Rule 7.4 and for all other purposes, the stockholders ratify and approve the prior allotment and issue of 12,083,333 CHESS Depositary Interests, CDIs, equivalent to 12,083,333 shares of Class A common stock in the company at an issue price of AUD 1.68 per CDI on the terms and conditions in the explanatory memorandum. Are there any questions in relation to this resolution?

Chair, I have no questions at this time.

Thank you. Prior to the commencement of the meeting, the company received a combined direct and proxy votes as shown on your screen. I now put the resolution to the meeting and ask you to complete your voting. [Voting]

We will now move to the next item of business, the approval of an increase in shares reserved under the 2019 Equity Incentive Plan. Details of this item are set out in the explanatory memorandum. I ask you to consider and, if thought fit, to pass this resolution as an ordinary resolution. And for the purposes of Section 19.2 of the plan defined below, Exception 13 of ASX Listing Rule 7.2 and for all other purposes, the stockholders approve: one, an increase in the aggregate number of shares which may be issued pursuant to awards under the company's 2019 Equity Incentive Plan, the Plan, such that a total of 16,889,425 shares of Class A common stock will be reserved for issuance under the Plan; and 2, consequential amendments to the Plan to reflect this increase. Are there any questions in relation to this resolution?

Chair, I have no questions on this resolution.

Thank you. Prior to the commencement of the meeting, the company received combined direct and proxy votes as shown on your screen. I now put the resolution to the meeting and ask you complete your voting. [Voting]

As the next 2 items involve the proposed grant of options to myself, I will hand the chair to Mr. Mark Tibbles, who is the Chair of the Remuneration and Nomination Committee.

Thank you, Steve, and ladies and gentlemen. The next 2 items of business relating to the grant of option to Steve Wedan, Chief Executive of the company, as long-term incentives under Imricor's 2019 Equity Incentive Plan. Moving first to Item 4.1, the approval of the grant of options to the value of USD 69,867 to Mr. Wedan as long-term incentive in respect to the 2019 financial year. Details of this option grant are set out in the explanatory memorandum. I ask you to consider, and if thought fit, to pass this resolution as a separate ordinary resolution. That, subject to Item 3 being approved, for the purposes of ASX Listing Rule 10.14 and for all other purposes, approval is given for the company to grant options to purchase shares to the Chief Executive Officer of the company, Mr. Steve Wedan, under the 2019 Equity Incentive Plan as a long-term incentive in respect to the 2019 financial year, as described in and on the terms and conditions set out in the explanatory memorandum. Are there any questions in relation to this resolution?

Chair, we have no questions on this resolution.

Thank you. Prior to the commencement of the meeting, the company received combined direct and proxy votes as shown on your screen. I now put the resolution to the meeting and ask you to complete your voting. [Voting]

We will now move to the next item of business, the approval of the grant of options to the value of USD 256,392 to Mr. Wedan as long-term incentive in respect to the 2020 financial year. Details of this option grant are set out in the explanatory memorandum. I ask you to consider and, if thought fit, to pass this resolution as a separate ordinary resolution. That, subject to Item 3 being approved for the purposes of ASX Listing Rule 10.14 and for all other purposes, approval is given for the company to grant options to purchase shares to the Chief Executive Officer of the company, Mr. Steve Wedan, under the 2019 Equity Incentive Plan as a long-term incentive in respect of the 2019 financial year as described in and on the terms and conditions set out in the explanatory memorandum. Are there any questions in relation to this resolution?

Chair, there are no questions at this time.

Thank you, Carrie. Thank you. Prior to commencement of the meeting, the company received combined direct and proxy votes as shown on your screen. I now put the resolution to the meeting and ask you to complete your voting. [Voting]

Thank you, ladies and gentlemen. I will now hand back to Mr. Steve Wedan to resume as chair of the meeting.

Thanks, Mark. We'll now move to the next item of business, the grant of options to the Nonexecutive Director, Mr. Peter McGregor. Details of this option grant are set out in the explanatory memorandum. I ask you to consider and, if thought fit, to pass this resolution as a separate ordinary resolution. That, subject to Item 3 being approved, for the purposes of ASX Listing Rule 10.14 and for all other purposes, approval is given for the company to grant options to purchase shares to Mr. Peter McGregor, Nonexecutive Director of the company, under the 2019 Equity Incentive Plan, as described in and on the terms and conditions set out in the explanatory memorandum. Are there any questions in relation to this resolution?

Chair, I have no questions at this time.

Thank you, Carrie. Prior to the commencement of the meeting, the company received combined direct and proxy votes as shown on your screen. I now put the resolution to the meeting and ask you to complete your voting. [Voting]

We will now move to the next item of business, the grant of options to Nonexecutive Director, Ms. Doris Engibous. Details of this option grant are set out in the explanatory memorandum. I ask you to consider and, if thought fit, to pass this resolution as a separate ordinary resolution. That, subject to Item 3 being approved, for the purposes of ASX Listing Rule 10.14 and for all other purposes, approval is given for the company to grant options to purchase shares to Ms. Doris Engibous, Nonexecutive Director of the company, under the 2019 Equity Incentive Plan as described in and on the same terms and conditions set out in the explanatory memorandum. Are there any questions in relation to this resolution?

Chair, I have no questions on this resolution.

Thank you. Prior to the commencement of the meeting, the company received combined direct and proxy votes as shown on your screen. I now put the resolution to the meeting and ask you to complete your voting. [Voting]

We will now move to the next item of business, the grant of options to Nonexecutive Director, Mr. Mark Tibbles. Details of this option grant are set out in the explanatory memorandum. I ask you to consider and, if thought fit, to pass the following resolution as a separate ordinary resolution. That, subject to Item 3 being approved, for the purposes of ASX Listing Rule 10.14 and for all other purposes, approval is given for the company to grant options to purchase shares to Mr. Mark Tibbles, Nonexecutive Director of the company, under the 2019 Equity Incentive Plan as described in and on the same terms and conditions set out in the explanatory memorandum. Are there any questions in relation to this resolution?

Chair, we have no questions at this time.

Thank you. Prior to the commencement of the meeting, the company received combined direct and proxy votes as shown on your screen. I now put the resolution to the meeting and ask you to complete your voting. [Voting]

We will now move to the final item of business, the approval of an additional 10% placement facility. Details in relation to the 10% placement facility are set out in the explanatory memorandum. I ask you to consider and, if thought fit, to pass this resolution as a separate special resolution. That, pursuant to and in accordance with ASX Listing Rule 7.1A and for all other purposes, approval is given for the issue of up to 10% of the issued capital of the company at the time of issue, calculated in accordance with the formula prescribed in ASX Listing Rule 7.1A.2 and on the terms and conditions in the explanatory memorandum. Are there any questions in relation to this resolution?

Chair, we have no questions at this time.

Thank you. This item is a special resolution under ASX listing rules, meaning that to pass the item requires at least 75% of the votes cast by stockholders present and eligible to vote to be in favor of the resolution. Prior to the commencement of the meeting, the company received combined direct and proxy votes as shown on your screen. I now put the resolution to the meeting and ask you to complete your voting. [Voting]

Ladies and gentlemen, that concludes our items of business. Are there any further questions at this time?

Chair, there are no further questions.

I will shortly close the voting system. Please ensure that you have cast your vote on all resolutions. I'll now pause for 90 seconds to allow you time to finalize those votes. [Voting]

Thank you, everyone. Voting is now closed. The voting results will be released to the ASX later today. I thank you for taking the time to join the Board and me today. Your ongoing support is greatly appreciated. I look forward to sharing the next phase of Imricor's journey with you all. Stay safe and well. Good night.