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

Hello. I'd like to welcome everyone to the 2021 Annual Meeting of Imricor Medical Systems. My name is Steve Wedan, Imricor's Chair and CEO. During the course of today's meeting, our stockholders and their proxies will have the opportunity to ask questions and register votes if you haven't already done so. CDI holders will also have the opportunity to ask questions but are not entitled to vote at the meeting, except as a proxy for CHESS Depositary Nominees. You can submit your questions at any time during the meeting as outlined in our meeting guide, and I will address these questions throughout the meeting. Voting today will be conducted by way of a poll on all items of business, and I will shortly open up voting for all resolutions. 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 open a list of resolutions and present you with voting options. To cast your vote, simply click on the appropriate option. Once you select an option, the vote is automatically recorded. You have the ability to change your vote at any time up until the time I declare voting closed, and I'll provide the meeting with a warning before the close of voting. Please also note that there are a number of voting exclusions that apply to the resolutions being put to today's meeting, and these have been outlined in the Notice of Meeting. I now declare voting open on all items of business. I'd like to take a moment to introduce you to my fellow directors who are joining us today: Mark Tibbles, Anita Messal and Peter McGregor. Online, we also have our CFO, Lori Milbrandt; Company Secretary, Kobe Li; and John Dauwalter from our audit firm, Baker Tilly. John will be available later in the meeting to answer questions you may have regarding Imricor's audit report for the 2020 financial year. I've 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 2020 as well as provide an update on our activities during the current year. We commenced the year in a strong position, achieving 2 important milestones. The first of these was granting of our CE mark certification, which enabled Imricor to commence selling its products in the European Union. CE mark was quickly followed by our first procedures using our products at the Dresden Heart Center. And this was an exciting moment for me personally, a tremendous milestone for Imricor as well as these were the first iCMR guided ablations to be performed anywhere in the world with market-approved devices. At this time of the year last, however, the world changed rapidly as a result of the COVID-19 pandemic and the associated containment measures put in place by governments all over the world. Moving to Slide 6. For Imricor, these effects were felt most directly in the delays we experienced to our planned rollout of new clinical sites and the broad suspension of elective medical procedures. Due to the hospital closures associated with the strict COVID-19 containment measures implemented across our key geographies of Germany and the Netherlands, Imricor experienced delays in signing agreements with new clinical sites in 2020. We also saw lower procedure volumes as a result of restrictions on elective procedures, which resulted in lower consumable sales. Despite these constraints, we've been working closely with contracted sites to schedule installation and training in preparation for commencement of cases as COVID-19 restrictions ease. We have the training and installation teams established in Europe that are supported by teams based in the United States so that we can move quickly and efficiently. We've also made adjustments to our operations, redeploying some of our manufacturing personnel to product development to help build new devices for testing and for upcoming clinical trials. While we are yet to see an industry event resume in face-to-face format, we have continued to participate in medical congresses, educational events and training seminars online to support growing market awareness of our products. Moving to Slide 7. As you can see on this chart, with the passing of the first COVID-19 wave last year, we made solid progress in signing agreements with new clinical sites, closing 5 new agreements in a 6-week period during September and October. Over in the second wave of COVID-19 in Europe, followed by an unanticipated resurgence in late 2020, slowed our progress. Across our key target geographies of the Netherlands and Germany, containment measures have been both strict and prolonged. These countries implemented hard lockdowns in mid-December, causing further delays in our site rollout plans. However, the combination of early vaccinations and falling daily case rates resulted in restrictions easing in February and March. Elective procedures were once again allowed in certain geographies, and we saw the first cases being carried out at one of our newest sites, the Maastricht University Medical Center, in the Netherlands in mid-February. In March, cases started at the Leipzig Heart Center for the first time since the clinical trial that we did there that resulted in the CE mark certification. This week, we are pleased to announce that we had added a second Helios hospital to our installed base as Berlin-Buch joined the Helios Leipzig Heart Center in adopting iCMR-guided ablations. This makes Berlin-Buch the 10th site to establish an iCMR lab to perform ablations with Imricor's products. While Europe continues a gradual recovery into a post-COVID-19 era, we're very happy to be able to continue growing the number of centers enabled with Imricor solution for the future of cardiac electrophysiology. As you're likely aware on Slide 8, a new wave of COVID-19 in late March and early April resulted in reinstatement of stricter containment measures in Europe, including the prohibition of elective procedures. Unfortunately, the vaccination programs in the Netherlands has been disappointing, and Saxony, Germany, where Leipzig is, has been particularly hard hit with new infections. As a result, elective procedures at both institutions are again on hold. We are encouraged to see the COVID-19 vaccinations presently gaining momentum, though, across Europe with 20% of the population in Germany and the Netherlands now having received at least 1 dose. As vaccinations continue to accelerate, we expect elective procedures to recommence later this quarter. Moving to Slide 9. In July of 2020, we established our sales agreement with Philips to further fuel our pipeline. This agreement enabled our capital product, the Advantage-MREP Recorder and Stimulator System, to be sold as part of a Philips comprehensive iCMR lab installation package. In effect, this enables the extensive Philips sales force to contribute to driving growth in site adoption, allowing us to focus on supporting product utilization, growing our portfolio of consumable devices and expanding our indications for use. In November, we commenced training the Philips European sales force on Imricor's technology and products, and that training will continue with another session this June. The sales force will become active in the field as COVID-19 restrictions allow, and we will expect this to drive a material increase in our installed base in 2021. We continue to work closely with Siemens and are currently working towards establishing a similar agreement. Notably, Imricor remains the exclusive provider of our consumable devices in Europe. And currently, we continue to supply capital equipment to Siemens sites. We've also executed other strategic agreements in 2020 and early 2021. The most recent of those was in March this year with the regional health care group out of Sydney, expanding Imricor's reach into Australia and New Zealand. Under this agreement, Regional Health Care Group will be the exclusive distributor of Imricor's consumable products in Australia and New Zealand and the nonexclusive distributor of Imricor's capital equipment. Importantly, they will help facilitate the necessary regulatory approvals in support of Imricor's products in Australia and New Zealand. We expect first approvals to be by year-end 2021. Developing our product line to support expanding indications and margin improvements is a key growth driver for us in the future. The ablation market has a tremendous growth potential with the key avenue being through the expanded -- expanding the approved indications for our products to procedures in the left side of the heart, including ventricular tachycardia and atrial fibrillation. We believe the benefits of MRI guidance will help further fuel this growth. It's the opportunity to perform these ventricular tachycardia and atrial fibrillation ablations in the iCMR lab that is significantly adding to the clinical interest in our products. Our strategy around expanding indications is supported by our research and development pipeline, in particular, the transseptal puncture kit required to undertake these procedures. We remain on track to begin using these devices for clinical trials to expand indications with the steerable sheath and transseptal needle during 2021. I'm happy to report that our diagnostic catheter has been submitted yesterday for CE mark certification, and I will deliver material -- and that will deliver material improvements in gross margin once approved. The diagnostic catheter is a simplified version of our next-generation ablation catheter, which is currently in development. We expect to see CE mark approval late this year or early 2022 for that diagnostic catheter. Moving to Slide 11. As mentioned earlier, we currently have signed purchase agreements in place across 10 sites in Germany, the Netherlands and France. The Leipzig Heart Center, a Philips site, and the Dresden Heart Center, which is a Siemens site, have been established as training centers of excellence for sites that follow, supporting our future rollout plans. Training and installation are completed at 6 of our contracted sites, and they're ready to commence or recommence procedures as restrictions ease. We're working closely with the remaining sites to schedule training and installation and the commencement of procedures in anticipation of COVID restrictions easing soon. In addition, our pipeline remains very strong. And our agreement with Philips, along with our collaborative relationship with Siemens, better enable us to develop a long-term pipeline that is aligned with capital cycles at clinical sites. In the short term, we have several agreements that are well advanced, and as such, we expect to start gaining traction again later this quarter as evidenced by the Berlin-Buch signing. We further expect site adoption to accelerate in the second half of 2021. Moving to Slide 12. Another key driver of our future growth is geographic expansion. Our strategy to gain FDA approval in the United States is progressing very well. We have now completed our third presubmission meeting with the FDA, and we are confident our clinical trial study design is fit for purpose. The next steps are to lodge a submission for an investigational device exemption or IDE from the FDA with the lodgment expected in July. And once the IDE is approved, the clinical trial to support FDA approval will commence. We're still targeting late 2021 or early 2022 to undertake the clinical trial. As mentioned earlier, we have appointed a local agent, the Regional Health care Group, to facilitate TGA approval and the eventual distribution of our products in Australia. We do not expect clinical trials to be a requirement for TGA approval, and we are hoping for approval before the end of the year. On Slide 13, despite the disruptions associated with COVID-19, we continue to grow our workforce across all functional areas and have been fortunate to welcome a number of talented individuals from high-caliber organizations within the medical technology sector to further build our organizational strength. In December, we promoted our Vice President of Operations, Mr. Gregg Stenzel, to Chief Operating Officer. Gregg has over 20 years of medical device experience and has been a key member of the Imricor team since 2007. Gregg is leading the execution of our strategic plan across the most functional areas of the business, providing even greater capacity to help drive an acceleration in site adoption across Europe in 2021. We've continued to selectively expand the capacity and capability of our personnel to support our commercialization and growth strategies. Today, we employ a workforce of over 70, more than triple our size since our IPO in August of 2019. We're fortunate to have a team of very talented people who importantly have really leaned into the challenges that COVID-19 has thrown at us, remaining focused on our future success and on delivering great outcomes for patients and health care professionals. While the COVID-19 pandemic has disrupted our early commercialization plans, I'm very pleased with our positioning as we move into 2021. Our focus remains on site adoption across Europe, and we expect to gain momentum in the second quarter as COVID restrictions ease and to deliver an acceleration in adoption during the last half of the year. We will continue to pursue opportunities to grow our pipeline at potential sites, working collaboratively with Philips and Siemens to drive adoption and grow market awareness through education and through our direct sales and marketing activities. With the Philips sales force to become active in the field as COVID-19 restrictions ease and with further expansion of our team to occur in 2021, we expect this relationship to significantly enhance our pipeline and further accelerate our adoption plans as we move forward. As I mentioned earlier, we will continue our R&D focus on products to expand our indications and deliver margin improvements while also pursuing regulatory approvals in Australia and the United States, supported by our strategy around clinical trials. It's important to reiterate that while we have experienced delays due to COVID-19, the outlook for Imricor is exciting, particularly as we pursue opportunities to expand our future indications and geographies and to drive accelerated growth. We have great opportunities ahead of us, and we look forward to keeping you updated on our progress throughout the year. On behalf of the Board and management of Imricor, I'd like to thank our stockholders and CDI holders for your ongoing support. I 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. And 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 by 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 the voting. Prior to commencement of this meeting, valid votes have been received, representing approximately 41.32% of Imricor's issued capital of 51,924,003 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, have 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. Given the current COVID restrictions, you are encouraged to make a prior arrangement with either myself in the U.S. or with Kobe Li, Imricor's Company Secretary in Australia, should you like to view the register. I'm on Slide 16. Yes. Thank you. Before we move to the agenda items, I'd like to address the questions in relation to the presentation I made today or any other business of the company. I will defer questions on any items -- 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. Are there any questions at this time?

Chair, there are no questions at this time.

Thank you. Well, we will move then to the first item of business, the election of the Class II Director of Ms. Anita Messal. I refer stockholders to -- and CDI holders to the explanatory memorandum for details of Ms. Messal's background and experience. The resolution is that Ms. Anita Messal, being a Director whose appointment as a director expires at the conclusion of the annual meeting of the company and being eligible, offers herself for election, be elected as a Class II Director of the company. Are there any questions in relation to this resolution?

Chair, we have no further questions at this time.

Thank you. I would like to point out that the laws of Delaware, where the company is domiciled, do not permit forecasting of stockholder votes against certain types 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 for -- is the for vote of holders of the plurality of voting power of such 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 you to 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 October placement. 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 a separate ordinary resolution. That 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 12,106,383 CHESS Depositary Interests, or CDIs, equivalent to 12,106,383 shares of Class A common stock in the company at the -- at an issue price of AUD 2.35 per CDI on the terms and conditions in the accompanying explanatory memorandum. Are there any questions in relation to this resolution?

Chair, there are 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]

Very good. As the next item involves the proposed grant of options to me, I will hand the chair to Mr. Mark Tibbles, who is the Chair of our Remuneration and Nomination Committee.

Thanks, Steve. Ladies and gentlemen, the next item of business relates to the grant of options to Steve Wedan, Chief Executive of the company. 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. Steve Wedan, Chief Executive Officer 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, there are 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]

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

Thank you, Mark. We'll now move to the next item of business, the grant of options to Nonexecutive Director, Mr. Peter McGregor. Details of these -- 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 same 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. Prior to the commencement of the meeting, the company has 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 grant of options to Nonexecutive Director, Ms. Anita Messal. 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. Anita Messal, 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, there are no questions at this time.

Thanks. So 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, of course, 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 to 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, there are 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. And I now put the resolution to the meeting and ask you to complete your voting. [Voting]

And then now we will finally -- we will 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, there are 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 to -- present and eligible to vote to be in favor of the resolution. Prior to the commencement of the meeting, the company received a combined direct proxy votes -- direct and proxy votes as shown on your screen. And I'll put the resolution to the meeting and ask you to complete your voting. [Voting]

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

Chair, there are no questions at this time.

I will shortly close the voting system. So please ensure that you have cast your vote on all resolutions. I'll now pause for 90 seconds, which will seem like an eternity, to allow you to have time to finalize those votes. [Voting]

Was I right? That's like an eternity. Thank you, everyone. Voting is now closed. 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 really greatly appreciated. We look forward to sharing the next phase of Imricor's journey with you all. Stay safe and well.