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

Hello, and welcome to the Annual Meeting of Stockholders for Imricor Medical Systems, Inc. Please note that today's meeting is being recorded. It is now my pleasure to turn the meeting over to Steve Wedan. Steve, the floor is yours.

Thank you very much. I'd like to welcome everyone to the 2023 Annual Meeting of Imricor Medical Systems. Again, 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 this 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'll address these questions throughout the meeting. Voting today will be conducted by way of poll on all items of business, and shortly, I will open the 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. I'll provide a meeting with a warning before the closing of the voting. Please note also that there are a number of voting exclusions that apply to 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 3 of my fellow directors who are joining us today: Mark Tibbles; Anita Messal; and Peter McGregor; as well as our CFO, Jonathan Gut. Online, we also have our company Secretary, Kobe Li, along with Jeff Ostapeic from our audit firm, BDO. Jeff will be available later in the meeting to answer any questions if you have them regarding Imricor's audit report for the 2022 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 strategic and operational performance of Imricor during 2022 as well as provide an update on our activities during the current year. As I've talked about in the past, the foundations of our mission to change the standard of care for cardiac catheter ablation and other life-changing and life-saving interventions are based on 3 key drivers. First, we're growing the number of customer sites that have interventional cardiac magnetic resonance or iCMR capabilities and/or performing procedures with our products. Secondly, we're working to increase the number of different types of ablation procedures known as indications that doctors can perform with our products. And thirdly, we're working to broaden the geographic reach of our products by pursuing regulatory approvals outside of our core European markets, such as in the U.S., Australia, New Zealand and the Middle East. These value drivers are unchanged, but I want to break them down in terms of priority, because they're not all independent. Progress in some areas can promote better success than others, especially in this post-pandemic era. The key message here is that the primary drivers of value today are the second and third items I just mentioned, expanding indications and expanding geographies. Expanding indications is by far the largest value driver we have available to us. Having lost some momentum while our customers were effectively shut down during the pandemic, many doctors and hospitals now want to see that Imricor's iCMR ablation solution is not stuck in the past and will indeed expand beyond atrial flutter and address complex ablation procedures like ventricular tachycardia and atrial fibrillation, where MRI is expected to add great value. This year is when people expect to see those clinical trials, and they are eagerly awaiting the early results. I call this Catalyst #1. Expanding geographies is the next most important thing we can do. As we relaunch iCMR ablations into a post-pandemic world, we need to regain the momentum that was lost. And one way to do that is to expand into geographies, where we didn't have a presence before and thus help rebuild the excitement across the entire world of electrophysiology and interventional medicine. Call this Catalyst #2. Catalyst #1 and Catalyst #2 drive everything else forward, what I'm calling additional drivers of value on this slide. The catalyst creates demand for iCMR sites and promote the growth of our installed base. They provide critical need and the desire for hospitals to establish cardiology-owned, dedicated iCMR labs. Obviously, Catalyst #1, expanding indications inherently increases the number of procedures performed at each iCMR site. And this volume and workflow comfort helps iCMR ablations become the clinical routine at that site. And finally, expanding indications gives both Imricor and our MRI partners good messaging to drive additional growth. In 2022, we are pleased to announce that we contracted 3 new sites across Europe. At the end of the prior year, we had 4 sites that were performing procedures, as I said last year, "on and off with the pandemic." We ended 2022, on the other hand, with 9 active sites, each of which is working to build real-time iCMR ablation of atrial flutter into their routine clinical workflows. I've also touched on recently new challenges on the back end of COVID, particularly in areas of MRI availability at sites where MRI as a shared resource and also the number of patients, who are presenting to their cardiologists today with standalone atrial flutter. In response to the problems of availability of a shared MRI, our sales team is focusing on new sites that are building cardiology-owned, dedicated iCMR labs. This is a longer process than retrofitting a shared MRI resource, so that ablations are possible there. And since new customer construction is required. But we believe now is the time to grow the installed base for a sustained unlimited access to iCMR labs for our doctors just like they have access to their x-ray labs today. Regarding patient populations presenting to their doctors in late 2022 and so far early this year, patients, who presumably did not get treatment for their atrial flutter during the pandemic, have now found that it has progressed to also include other arrhythmias. This means that currently, our iCMR treatment is not available for those patients and conventional ablation has to be used. Just 2 weeks ago, for instance, one of our sites screened over 30 atrial flutter referrals to find patients, who could be treated in the iCMR lab, but none had standalone atrial flutter. Clinical market research on the other hand shows that in the past, over 20% of arrhythmia patients in Europe suffered from standalone atrial flutter. It's expected that these numbers will be true again in the future as things normalize. But for now, the medical community is still working hard to catch up after so many patients didn't get treated during COVID. Keep in mind, though, that while patients with combination arrhythmias can't be treated in the iCMR lab today, that won't be the case forever. As we expand our indications and our product offering, more and more patients with various arrhythmias will be able to be treated and have their ablations performed in the iCMR lab. This reinforces the importance of Catalyst #1, expanding those indications. And nearly every other 2022 highlight on this slide, which I talked about recently at our year-end results briefing, represents progress towards expanding indications. I've mentioned also several times over the past 6 months, the importance of our new Northstar 3D electroanatomical mapping system, and I want to highlight it again here today. Having developed and now growing our own 3D mapping system adds so much value to Imricor in several key ways. First, owning and controlling the development of Northstar allows us to scope out and realize our vision of the future of iCMR procedures and it allows us to move at our pace toward that future. For instance, Northstar currently interfaces with the Siemens MRI scanners, and we are working with GE Healthcare and Philips to interface it to their MRI platforms as well. In the end, we see Northstar as the central component of every iCMR practice, and we want our customers to have the same experience, no matter which MRI system they have in their iCMR lab. It's also true that it's hard to have a relevant competitive electrophysiology and ablation product offering without an associated 3D mapping system. Just look at medical device giant Medtronic's acquisition of Affera announced in early 2022, a deal that was worth USD 925 million, including USD 250 million in milestone payments to fill with Medtronic's CEO called, "a gap in mapping and navigation." And building on that point, Northstar is the world's only 3D electroanatomical mapping system that works directly and natively with MRI scanners. It controls the MRI. It receives MR images in real time from the MRI. It displays everything in 3-dimensional space for the user, and it brings together everything needed for a procedure, actively track devices, ablation parameters, intracardiac electrogram data, electroanatomical mapping and more. Northstar is the central hub that brings it all together. And lastly, and so importantly, while we have shown that you can do cardiac ablations in the iCMR lab, we are now through Northstar going to deliver, but why, imagine a future MRI practice where patients are scanned by MRI using Northstar, and internal Northstar AI helps diagnose the patient's condition and form therapy decisions. Then imagine Northstar helps guide the therapy by being that central hub of the procedure like I just mentioned. Imagine Northstar with AI-enabled automatic anatomy segmentation and tissue substrate analysis, helping to streamline and individualize treatment for each patient. And then imagine Northstar with AI-enabled 3D lesion assessment and other therapy verification tools to help physicians know that they got the job done permanently and without complication in the first procedure. This is the promise of MRI-guided interventions. And if we see it, the embodiment of this promise will be Northstar. In the future, it's the future we're developing now, and it's what excites me every day when I go to work. Now let's take a look at where we are and what we're planning next. As you all know, we have 2 major trials that we're preparing to commence in the coming months. First is our ventricular tachycardia ablation trial in Europe, the VISABL-VT trial. We have submitted for the VISABL-VT protocol and the device data for approval to begin in both Germany and the Netherlands. It's a big trial in terms of the number of investigational devices, again, because when you do anything in the iCMR lab, everything has to be MRI compatible. So all the devices are new. There are also several third-party devices such as the defibrillator for instance, from our partner, MIPM out of Germany. The reviews have been accordingly long, but the process is not stalled or blocked. It just takes time. In Germany, we're awaiting documentation from MIPM and from Philips to submit the full response to the German competent authorities' questions. And in the Netherlands, we were awaiting outcome from the Ethics Committee review at the Haga Hospital that took place on May 2. This morning, we received the Ethics Committee response, which included several questions, and our team is currently assessing in detail and will be assigning to individual responsible parties. There are no showstoppers or critical concerns. But we and our third-party partners will have to direct their own responses, which will take a few weeks. And at this point, I think we'll start the VISABL-VT trial sometime in Q3. And we're doing everything we can in the meantime to prepare the sites so they can begin as soon as possible. For U.S. FDA approval, we have received our IDE, the investigational device exemption to commence the worldwide VISABL-AFL trial. We'll also expect to start enrolling patients for this trial in Q3, and we're working through the site contracting and the site approval processes that are needed. These 2 trials embody the most obvious examples of Catalyst #1 and 2, expanding indications and expanding geographies. We're moving as quickly as possible, but also with great care and precision. We always know that our primary objective is to safely and effectively treat patients. Regulatory burden can be frustrating, especially when it comes to time lines, but everyone involved, Imricor, our partners, the doctors and the reviewers. Everyone is working in the best interest of patients. And when your loved when is having and receiving life-saving medical treatment, it's good to know how rigorous of a process it is for new technology to be used. We have a few other notable events that happened so far this year as well. First, we have seen an increase in procedure volumes in the first quarter, compared to the last quarter of 2022. And this is due to a lot of diligent work by our sales team and clinical team and I want to thank them for their efforts. We've also entered into a master service agreement with GE Healthcare. And with this agreement, GE Healthcare will pay us to develop the hardware and software interface to make our products, including Northstar, as I mentioned, operate on the GE Healthcare MRI platform. In March, we hosted our second real-time iCMR ablation Global Summit, and we hosted our first summer in 2021 in Amsterdam, and this year, we gathered potential new customers in Munich to hear presentations for our current users and to engage with our team and each other to learn more about this new field of iCMR ablations. We have found these summits to be very effective, and we will continue holding them perhaps even more in the future. The sales and marketing team also organized and participated in several medical and scientific congresses such as SCMR, EHRA, DGK and next week, HRS. These are important meetings for us as we rebuild momentum and continue to build brand awareness ahead of our VISABL-VT and VISABL-AFL trials. There are many great things on the horizon for 2023, and I look forward to telling you about them as they happen. In summary, our path to scaling the business is unchanged, and you've likely seen this slide before, our opportunity remains significant, and we are progressing every day to realize that opportunity. In terms of focus for the year ahead, this is another familiar slide from our 2022 year-end results briefing. We're still focused on the things that drive value. And with these things, we hope to make 2023 a breakout year for Imricor. In closing, if there's just one idea I want you to take away from this message today, it's this. The post-pandemic medical world is a bit different than it was before the pandemic, but the value MRI brings to cardiac ablation is completely unchanged, and we are closer than ever to delivering that value, certainly much closer than we were in 2019. We have an exciting year ahead of us, and I can't wait for us all to share in the upcoming success. Ladies and gentlemen, we'll now turn to the formal business of the meeting. As I mentioned previously, we 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. Polling 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 19% of Imricor's issued capital for 28,387,322 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 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 our 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 Jonathan Gut, our CFO in the U.S. or Kobe Li, Imricor's Company Secretary in Australia should you have -- should you like to view the register. Before we move to the agenda items, I'd like to address any questions in relation to the presentation I made or any other business of the company. I will defer questions on any items of the business until we come to that particular item. I'll provide you with a moment to ask your questions online.

Sorry, Chair, there are no questions at this time.

Okay. Thanks, Simon. We'll move then to the first item of business, the election of Class I Director, Mr. Mark Tibbles. I refer to stockholders and CDI holders to the explanatory memorandum for details of Mr. Tibbles background and experience. The resolution is this, 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, there are no questions at this time.

Thank you. I'd like to point out that the Laws of Delaware, where the company is domiciled, do not provide for the casting 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, therefore, to approve Item 1 is a for the holders of a plurality of the voting power of the voting stock that's 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'll now move to the next item of business, the approval of 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 a separate ordinary resolution that for the purposes of Section 19.2 of the plan, Exception 13 of ASX Listing Rule 7.2 and for all other purposes, the stockholders approve: one, the issue of equity shares under the company's 2019 Equity Incentive Plan with 3 years from the date of passing of this resolution as an exception to ASX Listing Rules 7.1; and two, an increase in the aggregate number of shares that may be issued pursuant to the awards under the plan such that a total of 26,511,721 shares of Class A common stock will be reserved for issuance under the plan; and three, the consequential amendments to the plan to reflect this increase. 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. So I now put the resolution to the meeting and ask you to complete your voting. [Voting]

As the next item of business involves a proposed grant of options to me, I'll hand the chair to Mr. Mark Tibbles, who is the Chair of the Remuneration and Nomination Committee.

Thank you, 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 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 described in and on the terms and conditions set out in the explanatory memorandum. Are there any questions in relation to this resolution?

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 Steve to resume as Chair of the meeting.

Thank you, Mark. So we'll now move on to the next item of business, the grant of restricted stock award to Non-Executive Director, Mr. Mark -- Mr. Peter McGregor, sorry. Details of this restricted stock grant are set out in the explanatory memorandum. As you consider and, if thought fit, to pass this resolution as a separate ordinary resolution. That, for the purposes of ASX listing rule 10.14 and for all of the purposes, approval is given for the company to grant a restricted stock award 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 related to this resolution?

Chair, there are no questions at this time.