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EDAP EDAP TMS

Participants
Marc Oczachowski Chairman and CEO
François Dietsch CFO
Jeremy Feffer Managing Director, LifeSci Advisors
Brooks O’Neil Lake Street Capital Markets
Andrew D’Silva B. Riley Securities
Swayampakula Ramakanth H.C. Wainwright
Call transcript
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Operator

Greetings, and welcome to the EDAP TMS Third Quarter 2020 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions].

As a reminder, this conference is being recorded. to conference like host, to now Mr. would turn over the your I Director LifeSci Feffer, of Jeremy Managing Advisors. you. Thank

may You begin.

Jeremy Feffer

Thank you XXXX Chief François for we Officer the results and and joining call. Financial will EDAP for good conference the Oczachowski, TMS Officer. morning, hear and Chairman from third Chief today's of Dietsch, quarter On financial Marc operating thank and call, you Executive us and Board;

which forward-looking may include a EDAP's like to over regarding remind cause that that contain would Before forward-looking limited Commission. Marc and begin, Oczachowski. cause today statements, such statements. management's now current growth statements filings I Marc? are the not would Exchange to company's materially subject Factors difference expectations we call Chief those Such but and the risks of turn from such to actual described in that Executive with I are statements and number Officer, on management's the Chairman could like everyone to to, and plans. results company's are described remarks may expansion include, a uncertainties and to based those differ Securities in the

Marc Oczachowski

morning, operational good to the and will Jeremy, a financial I performance. brief our review you, Thank over to with update start turn then Dietsch and everyone. call François

We are pleased with our third quarter results.

the the While is was our so terms quarter in year of business the of quarter this quarter third it strongest planned softest far. volumes, year seasonally

the in revenue as €X.X lift, the back did quarter normal. procedures million or towards compared €X.X cannot delayed XXXX. while prostate second Europe So million began period. $XX.X in million $XX.X a see Obviously, restrictions in Total shift million of gradual to was elsewhere in the we quarter or and these to be

X% overall HIFU in of Focal slightly QX we compared division, interesting we in sold sign the in that treatment-driven last units. quarter third of revenues year our same of recurring the a higher decrease revenues amount to the this number despite an year, was fact Another generated and One

first medical and our we year, important half that in difficult are AB few to the Medica Italy. medical are largest fourth expand world, already and a with leader performance. are So rates an with we days of familiar Italy market. distributor following We to this are our already pleased into monitoring line. of climbing leading infection distributes we portfolio in a access parts technology entered of U.S., quarter Europe to in key with the many carefully most of are is able COVID be recognized pleased in agreement we a AB ExactVu, again a so technologies the Medica, announced just markets. the market partner significantly and ago a European the including with third product they

are seeing We pandemic. a the positive as impact to modest on volumes again on focus hospitals continue

development programs halfway sales continue the One soft this time at can potentially advancing can through that benefit into prospects, say build we indications Focal new business while the HIFU. to High of challenging or that our and Intensity of However, fourth very I Focused pipeline ExactVu environment, same Ultrasound quarter, from tissue against

EDAP to a sales were of One team maintain the was during in validated announced, the able value purchase Focal recently of to number third our times. testament the the is This further we these pandemic. we challenging by As clinical that despite successful quarter the entire

look ultrasound. that or Exact and a Similar the resolution we is of micro-ultrasound third quarter, One ExactVu improvement partnership over represents MRI Imaging. During conventional this also at evade image. our the better and sales can biopsies and success seen visualize can result imaging of the resolution prostate other marketing real and consumes that that use included solution urologists Using modalities. allows suspicious Focal which are the to on or transrectal transperineal now where lesions comparable micro-ultrasound system two in high see XXX% as high in this announced rate the with ExactVu we Recall details suspicious it target MRI, to regions one technology, biopsies perform targeted the They than a time. within urologists to the

long System not deals closed whether the delayed numerous affect we third of to a its that York users One-ExactVu through as the a HIFU benefits or stand-alone the remain and of Sinai combo solution in notably most in Focal existing deal treatment process. bundled quarter, long-term the short-term of During so patients, [indiscernible]. of we Therefore, can optimistic new we momentum impact accounting diagnosis HIFU such Mount eight configurations, by as ExactVu and Health to sold New different the life patient. for only cancer quality of adoption Prostate will be COVID market the

prostate September in opportunity Health Opinion We a stay from two prostate Klotz cancer while leaving The spoke One treatment; ExactVu intact. virtual to Key that Dr. our on tissue Centre. sessions glands Laurence can continue Focal These urologists of efforts the Sciences on have extremes call Methodist we and featuring front Brian of with Miles radical surveillance of in host key active current Sunnybrook outreach Leader prostatectomy other to from With Houston distributors, and the us Dr. hosted exists and side side. and the the stakeholders. and be allowed education significant HIFU, on between one visual suspected ablated

is long-term are available technology population. to infection challenges are mission noted, stayed broadest increasing and the which As and other tracking the possible point, this sanitation this to rates restrictions. make To true we have to COVID’s our we

in continue as to inventory we a as position able ship systems to soon so them. ship we build We that are are to

rule we as reimbursements, the of expect to Regarding final of XXXX CMS indicated by year. publish end last the this quarter,

available. for will is code rule January provide effective CPT to an and the continue prepare once We update Category final X, additional I we

XX August, of HIFU of program. later. trial the clinical treatment treatment patient will first Phase period. granted the French initiate France a assessed In follow-up endometriosis our we enrolled by study the Authorities approval across deep the major we invasive to women be X of completed quickly six-month five full and just few in to at for total a hospitals endometriosis. and And over were Turning treated A Health weeks

During can study so investigators to shift results from lithotripsy To And away an we X the our patient study, scheduled just and and will technology. this of we as six endometriosis enrolled pathology. safety date, course, in that patients continuing example evaluate HIFU should one of toward business HIFU. three have consistent strategic Phase from with work Phase X benefit of Endometriosis is December. for of additional treatment be efficiently program. and far of our the this non-invasive have will we the legacy positive, enrollment initiate is a we condition The this program is a believe advancement efficacy

to opportunities to our of significant exploring into a see forward indications. very opportunity. we efforts. HIFU keeping market our efforts So in you data expand our pipeline other in apprised large ongoing global look R&D Publications HIFU key are sales clinical to We of

years prostate in successful to study Peer-Reviewed on represents publication technology we quarter, XXX conducted Miami up the third XXXX. cleared outcomes Journal partial-gland to two and first follow-ups two detailing the During papers treat The FDA patients. of on University of the in since U.S. cancer the This and USC studies at the and using Urology. patients combined report Procedures ablation published HIFU the of

prominent what patient results was radical baseline our mirror accuracy another now, majority U.S. quickly some of provides longer or our market a reference milestone Importantly, follow-up in François in will our levels. results. publishing financial European further impotence to centers our data These technology demonstrating vast details incontinence and penetration surgery our avoided cohorts and strategy. participants. HIFU potency unmatched And larger in periods. prior CFO, important studies Dietsch, observed already of we and provide involve marks returned that And study François? Seeing of avoided that were have

François Dietsch

are and except for all Thank euros. note that figures, Marc, you, everyone. morning, in good percentages, Please

the quarter total of XXXX. a nine conversion the revenue and €XX.X euro-dollar of for period same was first For for our in compared million to of third months of rate average third the the XXXX million, Total €X.X was purposes, X.XXXX X.X% XXXX. exchange of XXXX revenue for decrease X.XXXX quarter for

on of XXXX quarter revenue of impact ongoing the reflects for XXXX third revenue decrease the a of €X.X Total third XXXX. pandemic sales. in the million, quarter equipment COVID-XX was X.X% the Third business €X.X for quarter HIFU million to the compared

HIFU million of the third quarter quarter the loss driven to in the compared loss the of third million in third QX a million, million compared sales of sales sold of XXXX primary Focal XXXX year. for revenue compared €X.X compared third XXXX we XXXX million the to the quarter share year-ago million, XX.X% distribution profit €X.X million of was due by to was profit for versus development. quarter quarter €X XX.X% to revenue quarter as to €X.X or diluted diluted XXXX the net third the decrease of of The period. executive for the per to year-ago XXXX. Operating to thanks profit quarter, the €X.X net XXXX. million million was compared €X.X or mainly the €X.XX the LITHO X.X% management the of in €X.XX Gross Total €X.X Gross €X.X the year-ago decline third was per period. During Net increase an gross XXXX, the for XXXX in million XX% margin lower was Total income for to business two operating period. for One period profit as year-over-year compared €X.X sales on third a last in in business share two in to year-ago quarter for was €X.X of for the was compared third in of COVID-XX. the

total Total the nine XXXX. of the revenue months million, decrease revenue to the €XX.X same a first in of XX.X% for XXXX to months €XX.X of nine period was Turning million compared XXXX. of for

was business to to for was by operating an Gross compared the lower sales in loss nine XXXX period. year-ago year-ago the in net the €X.X mainly ongoing the million or year-ago the first COVID-XX. profit €X.XX to nine for Net million diluted of €X.XX share period. of on €X.X same €X.X of decline of months of gross months of nine sales of was share to XXXX. profit XXXX XXXX a HIFU XX.X% profit net company’s nine as the period. or first in the for €XX.X compared million €X.X impact XXXX loss Operating driven income compared first compared XXXX of for diluted million the first due first per the Gross per As pandemic margin XX.X% months for months million was of for in nine million year-over-year to revenue The the mentioned, the COVID-XX reflects was the on €XX.X the months activities. period profit

quarter we September balance. treasury rate Finally, €XX.X the short-term very of cash the a end and of XXXX $X.XXXX. cash $XX.X using including strong conversion Cash equivalents, third million million with finished of at investments, a euro-dollar were of

received we second an loan already and Protection we years. received of is extended interest X.XX% government that, Program program, for the €X.X with years. from added earlier, COVID-related to U.S. first the announced million during favorable as carries and loan the a year repayable loans rate COVID-related quarter. repayment can carry in you by of our Paycheck loans €X.X COVID-related Japanese the €X interest received beginning These very granted third X.X% We As totaling of another quarter probably which be two is a which at assistance during terms one know, received million [indiscernible] French towards year and French million. from This term XX the two rates assistance

back me to turn now the Let call Marc.

Marc Oczachowski

the François. XXXX. the Thank grow efforts by of in the the COVID-XX believe that We positioned to ongoing well sales pipeline was despite thus challenges far, our strong pandemic. cash the quarter you, our third closing, strongest have and us year position posed In globally

your questions. Operator? open to will call We now the

Operator

Thank Instructions]. time, session. a [Operator conducting we'll be this you. At question-and-answer

Brooks O’Neil Markets. of with Our Lake Please comes Street Capital from question. your first with question line the proceed

Brooks O’Neil

I too Lyon COVID not guys. are crisis. morning, things in hope you during Good for the difficult

Marc Oczachowski

it. morning, the Well, it's we're for Good Thanks busiest, through asking. Brooks. not and navigating but managing

Brooks O’Neil

you for guys. Good

prostate able sell So a physician continue environment challenging have you ways the you're obviously, in on But to for how find I'm HIFU generating any if going? it's to curious comments if interest to and that's systems.

Marc Oczachowski

and generate also of COVID-XX a available as to lot to even difficult webinar hospital it's using that everything true it's Actually more Yes. we pretty revenue activity or taking the of equipment sessions educational is management. as focused much do time we on the urologists. the But explained, in from continue the opportunity

a leads also continue lot by our lot of or a prospects, our and to marketing users communication of distributors. So all do to we and

again, involved of positive of of for more COVID education that's of So most directly time also or doctors the have one and technology. or the is discussion in that for those part that management for not really on new training

as leads, – a we've pipeline which is of increase in projects and of a that's So continued that, seen result our good.

the access management, hospital able Now be the new can so purchasing to to legal we is, that prospects will those question we deals? department, bring in

Brooks O’Neil

Right. better would the is Is schedule on pleased say like you than less going sounds you even It Are partnership question ExactVu $XXX or That's with for hoped? had everybody. well. it or that? it's with going the you more

Marc Oczachowski

build as products anticipated pipeline as And and some very second to allowed here. sold of from during helping we quarter started we very urologists kind three as second the June, got Well, of, from us attention the good eight were the and get pleased expectations. said, is we to has aggressive we also the drive of in probably projects deals vendor is in And, we it's and synergies are offering another machines terms really very or everything of like we happy. really things. these Again, between like the which quarter It well our It's the hospitals. to of and during it. kind with had

Brooks O’Neil

great. That's

in a that's for the or of I for guys. you big to live from My then specific reimbursement that CPT you it probably timeframe is there folks Is Marc, So of December expectation code anything going deal mentioned, Category in or is be going heard FDA terms here you've the and feeling the the January? in of code. figures sort that expected just sometime dollar

Marc Oczachowski

– around is So the again, CMS by normal in process released rule usually that's final following the [indiscernible]. somewhere

the We expect year delays some proposed this rules. was as for it

have might somewhere numbers in next probably for December, So year. final we all the

Brooks O’Neil

Great. -- And then

Marc Oczachowski

keep And we’ll some again, news. you updated have we once guys

Brooks O’Neil

for guys Yes, you deal I that will be think. big a

have And can other curious you of might able about need but for when alluded So endometriosis get and think additional of have HIFU thinking just you And one be are you the to you an maybe that through sort to trial, you indication you’d endometriosis? – I talked can beyond the you – curious all of you I give don't I'm even where specifics, but if I'm applicability? example two indications areas endometriosis. could HIFU if even an think for or

Marc Oczachowski

Sure.

development and Now stage also cancer, and are other pancreas, includes for we working metastasis. earlier indications that research on pancreatic programs liver

earlier we developments yet patient not treatments. are these So are terms in and stage of

Brooks O’Neil

is Sure. endometriosis? on And what timing the

Marc Oczachowski

that Sorry, again? can say you

Brooks O’Neil

long for how What's the be? And the X endometriosis for would timing trial a then Phase Phase X?

Marc Oczachowski

we have patients. started And are France. planned we be another X have and treat said, treated to Phase got we six already enrolled patients in December. – that in institutions as the So in and five – I we've already in treated XX been to September We've three

only of to probably six be end the uncertainty environment completing we'll studies approved on Authorities the period XX the that by good as patients anticipate the of year. French makes the the really around was exact that follow-up the Health news it in But the is protocol So is well clinical the enrollment. on Then conducting by time difficult the months.

X. and the pretty follow should based Phase X, what So from conduct will overall, achieve be up. it we again, certainly we short on an a study Phase then enrollment And a on

Brooks O’Neil

I Congratulations. environment. Sure. progress. making it difficult tremendous But Thank you you're much. it's know like a very sounds

Marc Oczachowski

Thank you, Brooks.

Operator

you. Thank

of proceed with comes with Andrew Riley question D’Silva B. Please from Securities. line question. your next Our

Andrew D’Silva

taking the much and for progress. very my on questions Thanks congrats morning. Good Yes. Hi.

Marc Oczachowski

Andy. morning, Good

Andrew D’Silva

you morning. much. very Good Thank

you start, were what just if comp HIFU ESWL the much additional you you So possible? curious quarter, stock-based was just know the let to I quarter. very the as and us financial I appreciate and placements information know me this was let what And then if quarter? systems provided Could also could during during possible,

Marc Oczachowski

you Can of Sorry, Andy? question, I repeat the beginning didn’t well. you the hear

Andrew D’Silva

No worries.

curious was? Just system the quarter? then were and could you it that just if the ESWL me have if know placements just HIFU And stock-based let for also quarter, what what figure compensation, you doing

Marc Oczachowski

on stock-based So, François the you answer compensation. will

far – One call, in sold Focal As earlier said we quarter, unit think we last the same I sold we number the And as similar year. units the as two placements, during as see should you --

François Dietsch

In this the of middle [indiscernible]. four sold we devices year

Andrew D’Silva

no there – was And placed? Okay. Ablatherm systems Ablatherm

François Dietsch

No.

Andrew D’Silva

the find able comp And are you a more or Okay, do perfect. little you time? to stock-based need

Marc Oczachowski

had Maybe if you question. another

Andrew D’Silva

with since with customers have historically came has see what what there, just discussions typically it potential kind And reimbursement And or and that payers evolve have little with from curious a while there proposed previous or reimbursement get finalized Also the is to the private any proposed out? and out? traction? been been the to payers you came sense what does experiences, of to since reimbursement mature give start it proposed out wait maybe reimbursement like actually engagements been the like of private customers is do

Marc Oczachowski

Usually the different discussing you when that with the insurances. that's released And you you and that the getting we payers in MAX various then CPT you CMS and No. year. rule when process around the the get next commercial will will and be be country. code it, when start submitted getting the use, then enforced the start start January is enforced the point then coverage that to the get [ph] claims can to using the and and be will final And lobbying and of

on started all So be within to those from – kind six temporarily, we but weeks we'll actions. get of it able was now,

Andrew D’Silva

fourth it to to you situation but bit that? fourth sure recognition the in the I color earlier holidays the give you last my take just if a place around Are of in is the And traction quarter-over-quarter, seen know a with the wasn't sales is that's in equipment typically you any quarter? change seeing couple maybe or heavy the much come I related of useful. quarter. where weeks? of quarter typically, expect revenue cadence Can very trend the the the quarter, in to question lifting from relates in Okay, as in than fourth little last placements

Marc Oczachowski

results. fourth in usually Well, the yearly again, a is see We lot of excitement. critical is – terms of strongest is quarter and them of course, the the there very

pressure is of well the and get to year, by there of a of – deals is lot will course, important as quarter the done everything month Of the December. end the most again,

So everything will – And end December. of of until month done of the be it go things month, be will like will a lot usual. during the the

of traction. is there and working offers also close There in also not that terms We've condition in – partners end year. been of deals before terms interesting more working but customers making to on and our in of financings to the they aggressive the as make only very excitement. offer lot well in So conditions of is terms help very a of can decisions with so the context

– next And weeks. that trying we're of we'll So in field six the deals. see close the everybody's again, on the and to results

Andrew D’Silva

customers, isn't with like that the engagement year, quarterly that likely of would or the anecdotally just the trend the you case? pipeline quarter fourth it being speaking believe strongest as most as do will quarter as this far with you feel year that anecdotally the same continue But seasonality looks and

Marc Oczachowski

is there things. our leads speaking, of a your been that it’s or and question, And which to pipeline two has projects big. answer different year of it that fourth Anecdotally One unpredictable. never completely COVID-XX quarter are makes

projects of plenty have to on. we work So

the activity close healthcare deal Now system the the the navigate and business environment. is current the ability or for within uncertainty normal the to hospital to ability

environment. said, I done of have and kind trying right purchase and of healthcare hospitals be help the we're as the those a creative get and to So despite lot make to to initiatives the systems decision

of the situation unknown up be best to and our with COVID-XX. So again, doing facing come context But challenge real the that solutions. unpredictable within and the that will probably we're we're

Andrew D’Silva

much. very you Thank Great.

have stock-based I don’t you take the just comp, can it If offline.

Marc Oczachowski

that. answer to ready is François do. We

François Dietsch

Yes. impact on €XX,XXX. is the The quarter

Andrew D’Silva

repeat more one Could time? that you

François Dietsch

the On quarter €XX,XXX. is

Andrew D’Silva

Best Thank very, much. on congrats quarter. this Okay. luck very you the year. third of progress And the during

Marc Oczachowski

Thanks, Andy.

Operator

you. Thank

the Wainwright. from with Ramakanth of Our Please next question. Swayampakula H.C. question your with comes line proceed

Swayampakula Ramakanth

Thank you. RK H.C. This Wainwright. from is

Marc Oczachowski

Hello, RK.

Swayampakula Ramakanth

François. and Marc afternoon, Good Hi.

much constraints sales, to growing. as RPPs the And and generate how and creative Within about COVID also like the to than rather able to all go the see to how you you HIFU easier organizations revenues, we with to sales in from also trying much careful think conversations you And HIFU? appetite were outright there? be different to from those are do terms think uncomfortable either device are the for to budgetary do due an that? leases you stable outlay, actually money then these sale, talking What's trying for become leasing especially organizations with being of or it's the out a route able navigate how

Marc Oczachowski

for Actually, have options this capital been the short-term offering we that partner who leading lease design operationally. long-term is to able number even we and lease companies also of or part with we’re with of a

all So broadest hospital from have so the idea terms most other. this can And from is one the us depending we we of the offering financing project answer to of other, potential to to for again, is really in the needs. But that really the one have the options.

Swayampakula Ramakanth

that talking think the announced exactly distribution, distribution part congratulations been is would recently. Also the growing And to you collaboration has of line, on Italian and revenue I about just looking into distribution it. Perfect. adding the certainly it

line becoming really you an revenues, growth beyond? your only for within item when 'XX part look how not is So you to important also of synergy later, benefit? also also And there more revenue see only your much for for of leads but do of working out not at the but that quarter, your that fourth

Marc Oczachowski

Yes.

and ExactVu. ourselves. well works And all, what both distribution between And well to really we usual sales. business equipment in pretty have idea synergy types very are manufacturing really it management did is the gives – because again, offering product again, [indiscernible] cancer, Focal the – the that's unique grow because of the One, And the of think and we the a I product with using big of is treating complement, really a first sales. prostate Focal cancer and thus a works good again of making it's prostate growing the ExactVu lot but which it of us well approach, also on strategy the

two I businesses, we to direction. but the help of new So the think and way help technology also same working upgrading is like implement choose types the products are homegrown our manufacturing and distribution really – also really products, to and as business way decide bring to to distribution we And in the sort of well our upgrading Focal global HIFU One.

Swayampakula Ramakanth

last is on endometriosis. Then Great. question the for me

this have stated for study at You to data XX you or able you to plan women waiting the come before some the point. complete follow you trial in up to the through wait would all without data the six-month see six the women announce go from Do for this completion? interim in to study that the be we to

Marc Oczachowski

confirmation very to very And we've for actually, to been continue hold happy are December. the the three lucky patients in pace on the have on to recruitment it's the as of to do really now And studies clinical slots depend know to and We’ll treatment able able with that be continue and if treat enrollment that. to again on which see. really base, It most depending of the you will have. on the of we're we the context, of other that we

if interim to Then to on give women we if to results. able have not trial, entire want need we're interim then the some takes recruit us might results. may it quickly, go for we if XX to we some time the – recruit So

we of best enrollment again, do six follow time. are And very on depend possible. the treatments. will because as a as effort months period only, to and up it's so our that quickly it short of And So making again, speed is the

So to results we not get optimization. might need interim some

Swayampakula Ramakanth

beyond. Congratulations especially for have what you quarter the Thanks. luck difficult on going good fourth achieved you. the on. so and COVID situation And Thank with far,

Marc Oczachowski

RK. you, Thank

Operator

comments. [Operator concludes you. session. Ladies that Mr. gentlemen, back Instructions]. any I'll for floor Thank question-and-answer turn and our Oczachowski final the to

Marc Oczachowski

Thank you are today. safe you very updating operator. soon you, us we we’re again, everyone for and progress. as forward thank joining stay some Again, making to And looking

have day safe. all stay Bye-bye. nice You a and

Operator

Thank concludes today's you. This conference.

your for lines at you your may Thank time. participation. You disconnect this