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Second Sight Medical Products (EYES)

Participants
Lisa Wilson Investor Relations
Will McGuire Chief Executive Officer
John Blake Chief Financial Officer
Amit Dayal H.C. Wainwright
Call transcript
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Operator

Greetings, and welcome to the Second Sight Second Quarter 2019 Results Call.

During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded, Tuesday, August 6, 2019.

I would now like to turn the conference over to Lisa Wilson, Investor Relations for Second Sight. ahead. go Please,

Lisa Wilson

through President welcome Call. and Second Sight's Quarter Officer Will Second With John Officer; Good Chief Blake, is to Lisa Results Financial for section market, McGuire, press ended months June are the call This XXXX. on Second The close Sight. for issued website Chief press three At Wilson, XXXX of at the Relations release Executive me the a can and afternoon, of today's the be Second Sight accessed release Company of the Second detailing Investor and Investor Sight. financial results secondsight.com. Relations XX,

of can access You from there. this the webcast also call

that Securities information or press and future performance Before SEC. statements events those Litigation would that Second involve as forward-looking risks to we in Reform uncertainties, These Second Company's statements everyone intent by with filings and Sight's started, expectation, of the and considered and be remind like as afternoon's this to the management defined I projection, noted available forecast, a regarding Private express belief, today conference future anticipation Act. on release including made based statements forward-looking get call may the are Sight any on today's

Such differ performance. future materially are the forward-looking may statements. statements not Actual from in results guarantees of forward-looking those projected

intent shortly weeks. call to A for these update next obligation forward-looking after any the this as be or of telephone replay law. two specifically required the except completion disclaims by Second call Sight statements will of available

one webcast month archived release. secondsight.com. for information on available find in website, dial-in You'll press be The today's the Company's will

made recorded this held and may who replay announcements SEC to reference related the the topics filings. so have most the Second XXXX. please or press the and archived X, of call discussed, webcast, recent For August may then, Company's releases Since listening to Sight benefit be was on those

CEO, turn Will Second the call McGuire. over that, Sight's to with I'll And

Will McGuire

you, afternoon. an for I joining laid our development clinical are during Orion Thank this to all provide we We on Lisa, overall update strategy our progress the call as call, in we this of like with On for and the thank and the made the would our past call. regulatory strides great out XX days. developing Orion execute QX the platform strategy making

We completed written – Devices agency. in-person developed as Breakthrough meeting of Maryland program, the in a to received our pre-submission sorry, FDA the FDA response the am held from an the most with a and pre-submission to part recently I

R&D programs to on adding remain Orion with talent also track support key teams. while our We our and clinical

the Orion a subjects these I look pathway CMS call topics the well Finally, created study forward lastly, more payment feasibility in details early with a breakthrough and devices during performing sharing today. for on designation. are to our

our update Let me study. feasibility early on an begin with

for We improvement measures. year are six their the Five to visual to Most continue success six the show encouraged a they subjects had Orion and than test. of continue be subjects. finding everyday now for more across by performance implants subjects of with importantly, multiple have our

is and top-line The Meeting. On Neurosurgery June outcome at presented Society from of XX XXth, primary World investigators measure results Functional Annual Stereotactic the UCLA the the study’s and for principal Baylor study months safety.

functional life. of the subjects visual phosphenes, Secondary of in vision the device quality function, and terms and include of the functionality to outcome measures ability produced the evaluate long-term assess benefit

the or first to the reported events surgery mark total safety six have both one-year from the executing adverse clinical first, the at say primary follows: device that safety data been a a The a and of job pleased have are team for perspective, or AEs and measures performance fantastic done study the am results and outcome secondary Current for I safety been has related to five as positive. this subjects.

These first six an such serious first three no in participants study subjects the in events subjects, year. the the other classified four of the XX the feasibility the SAE. been By by two the five of year experiencing as of surgery this was experienced events or of classified or AEs related with device two Only experienced subjects total with first two comparison, SAEs. have as one AE in those to

the about talk let’s Now, endpoints. efficacy three

orientation and and the the home environment. of each Functional functional Low-vision subject’s to Assessment assess independent and FLORA we importantly, or Observer think impact Orion mobility in and most First, on Rated utilizes their specialist vision well-being certified

Orion’s impact, mild specialists impact, points living impact, rating various daily mild neutral impact, and At assess independent or assign time impact. a positive negative impact subject’s each on negative the of positive

mild pleased subjects report has one of not benefit sixth positive. very at first all subject rated fifth yet benefit I daily XX system from out as to received positive the subject of rated the five this as using the a Four received point. received five benefit reached Remember, year that in living am the and subjects months.

target, high out Orion as locate of with off by localization. square measured five first on, four a to Next, the better the demonstrated contrast system significantly ability the system the subjects then with

As period. the a boundaries repeatedly subject test reminder, square this the on a given the by to in of screen requires touching a locate each within square

high lines first to system of on the a with the of of contrast identify test direction determine them. with significantly of motion front out system demonstrated subject across five ability screen the each better subjects the repeatedly requires the This the off. to direction target moving of and emotion in four Lastly, the

forums and We throughout expect that Orion the of data remainder at meetings will scientific be presented additional year. the major

you what XXXX an our in read or release Baylor College encourage think like of quotes by would participants the know dated Houston of Daily you one a study Mail to July six XXth, I participants. June the Medicine press article XX, XXXX recent that Orion, in of to dated If see

first describes device. Stories his A joy we at Sight people’s time who reminder a blinded the can nine, of at have on truly three, XX motivate three year and our impact old this wife Second at of pediatric the seeing with glaucoma of father the provide like lives. the team his daughters for and by age

Much Let’s externals turn believe impact the Changed changes we and be on electronics that current to of for reduce resistance. to the our to to focus on case work our thickness improve implants commercialization. centered is necessary Orion R&D. and the implants

planning are not materials. the to array We change design or electrode the

are for memory and next Improvements the future complete functionality and improved to a to in the ability our implant capabilities the and aligned visions, or None year. resistance processor teams on externals the of Orion water and impact proposed impact to improved faster and externals ergonomics. changes work the focused more softer expanded confident the

we’ve of continue also eye By are and completed by utilizes enhance advanced the projects obstacle intended research artificial thermal advance to systems We imaging. filtering multiple to with stereo provided develop or that Orion, end vision Argus detection system that we capabilities. two prototype aim a and also the the recently and cameras tracking allows partners for year, to distance prototype

all I calls. our technologies with very excited vision our could integrated experience. be significantly to progress and potential forward the these of artificial user reporting in about improve to look future Ultimately, technologies their we remain

our and to during the feedback the overall our regulatory agency written in U.S. the Orion discussions clinical mid-June, clinical trial and path regulatory the we great from past week. few strategy proposed and made with to defining FDA In months a for we Turning progress received FDA, the pre-submission the completed last

To by manufacturer prior obtain feedback an a submission clarify, for can a pre-submission is actual a mechanism FDA which premarket to approval.

on agency update held the the in the in-person on our six to the early July FDA meeting efficacy subjects. We study data progress, specifically and Orion with an early feasibility also safety

discussed response was to we our helpful pivotal strategy. to be our and submission very As very data in towards study. supportive informing written believe a in-person and and The earlier, the meeting to clinical this regulatory positive advancing

start Depending Broadly the or two paths one feasibility additional for various is speaking, to it PMA would The determined we that of to proceeding data of aspects to resolution study, pivotal is a timing still approval pivotal are be in evaluating our pivotal trial. order projected collect Orion, upon the number the requirements. post-approval is a study before of path study study early different possible the study. pending of pre-market we expand and

a requirements approval by preferable into will PMA would Device followed the the a approval. path future. involve two obtaining push become the HDE too Humanitarian PMA far of pivotal start number Path Exemption if or This study first the

regulatory focus Our as understand path XX days next strategy. is as well implications and the in to over commercial each for finalize the clinical specific Orion’s regulatory related order to the requirements

an fiscal innovative On FDA In week. last rule, or to the technologies its designation. prospective CMS its proposal breakthrough pathway IPPS an final front, alternate system device finalized payment CMS payment year XXXX released reimbursement rule this for with create in-patient

to shorten to after patient access improve potential significant We This reimbursement commend and for has significantly improve transformative this commercialize ultimately approval. CMS path decision for to ability our the step to Orion truly to devices. regulatory the

As as rule, criteria. medical likely requirement part meet add-on qualify evidence as least for new them Orion of substantial designated upon CMS for the will weigh add-on years, they breakthrough devices technology new get as finalized clinical devices two on This such approval. and tech would FDA for improvement breakthrough at payments the regulatory long means cost payments that

continue or including team breakthrough Manufacturers for working further towards access proven AdvaMed policies the in conjunction improvements be devices. payer market of who themselves leader a our And and believe MDA devices Device has for Orion. will groups reimbursement as industry such advocating Association in I to in with transformative Medical

will and parallel continuing discussions reimbursement expectations in supporting our not payers only to strategy data their with understand CMS, top-tier private a for we for of are conducting are develop to Orion. reimbursement internally engage with outreach Orion, also and comprehensive but work with we We consultants

to younger fact of as patients some which or are will working, working. fast We by and driven the age how population as population primarily that insurance may the average still coverage larger the that related Orion much that be a the compared expect Argus have of private percentage Orion

be will readiness commercialize private in critical payers as markets. Our larger we significantly driver of a the with value

to for continue to payment the procedure device claims rate our like we II. approved decision Argus applaud Also, multiple for and the its commercially artificial sincerely appropriate thank using would with of years division to CMS data determine

methodology payment a This low procedures in outpatient for allows stable rate setting setting. a performed rate volume more for

the XXXX. has associated year CMS hospital XXXX, procedure, a same for II proposed $XXX,XXX Argus as the calendar of and surgical for outpatient calendar year Medicare rate of For average

In a performance review second John quarter moment, in the detail. will financial company’s

the the quarter, we does, eleven the II he that I would note like second in outside Before Argus devices, to during four seven U.S. and implanted U.S.

All to manufacturing Argus centers the course the our start product been have year. notified implanting over of our the intent of of

the our Some options lack RP. from blind disappointed are of are who in centers decision individuals understandably given for

some continue centers for performing forward, elected period stop time. have Going will to others while a implants, of Argus

for objectives and Number Orion’s and one, projects; clinical expand and half second number key outline with discussions engage regarding externals CMS the path; FDA three, with private number Finally, of finalize to R&D I’d and implant like while comprehensive approval; two, regulatory for high regulatory next-generation and in five payers, execute agreement volume strategy Orion XXXX. developing Orion a Orion FDA manufacturing. develop plan our the to four, the U.S.; submit U.S. number talent program reimbursement externals a support to key Xs, our for number add Argus for and the

emphasize I want again dedication. for want to the work Sight our hard around to thank Second that we supporting team globe and the remain their I Argus-X continued committed to at and users

review With financial second quarter that, now XXXX results. John John? will our

John Blake

Will. you, Thank

Net on with our results XXXX. to of price are in period in Revenue was XXXX organizational selling Our quarter average second the ASP shift $XXX,XXX $X.X were an implants we same the recognized $X.X compared of of basis XX GAAP in of million sales with in million XXXX a of for quarter the in devices period same expectations ten Orion. XXXX. compared an quarter with for financial the as focus second in with the $XXX,XXX to line second as

second net headcount of second was We costs of make the to additional expect sell quarter the $X.X The we sales of existing development Research net grants in produced in compared decline and and $X.X our Argus primarily reflects funding as million XXXX through increase received XXXX. million quarter expense from internally inventory II. to as our prototypes. of to

Orion NIH the million the quarter our the of Orion and the of to This expect million from and is funds transition $X.X expenses Clinical both XXXX in to quarter net with We development increase decreased that second costs $X.X regulatory expense, $X.X the we research as period. decrease cost million from to and platform. of offset to grant attributable decreased study XXXX. grants funding in associated in second accelerate feasibility the from our

the experience. in as and clinical related to cost user trials for we future expect and conduct regulatory increase We to clinical Orion enhancements additional our

second second marketing million in XXXX. Selling in million $X.X $X.X compared XXXX of to the was the expense quarter of and quarter

II expect existing sell We marketing selling as commercial reduce inventory. decrease activities and to we Argus expense our and our through

General and is quarter of was of million expense for in the XXXX to quarter remain remainder and $X.X XXXX of XXXX. administrative consistent in the the million $X.X expected second compared second to

During quarter Argus severance other million XXXX, II. benefits, as of of plans restructuring to impairment inventory cash in and the a on consisting well our second charge recorded related million employee $X.X suspend to million $X.X connection of as we $X.X termination with charges

As cash of $XX.X had and million. XX, we of XXXX, equivalents June cash

hand and fund to quarter was operations $X.X Our cash to quarter our XXXX. we second XXXX second burn million for the of cash the into continue on expect of

introductions. questions. the go Operator, call ahead the with open I’ll With that, please to

Operator

our Please first question And ahead. Amit from H.C. is Dayal go with Wainwright. [Operator Instructions]

Amit Dayal

Hi question. you. Thank taking guys. for you Thank my

Will McGuire

Hi, Amit.

Amit Dayal

you with what with FDA? are discussing start the and negotiating exactly Just

Will McGuire

Sure, Amit. just probably take the specifics Number This importantly, that. pivotal we Will. most of through working is I’ll the and study. one, are

And what so, items such we the safety are endpoints, do how efficacy define and those? primary as

those well currently R&D themes system are pool the as number as Orion – ability, What endpoints, other things validation like we follow-up now. of and applying in needed some Orion our for current the the is as we for the that’s subjects, right approval type of can from Orion system data when for such

from So, systems? data able different pool we are to two

the well requirements. Those type as of study of market as some things post

well. collect, how subjects, approval, many of post-market, we as follow-up do long need after type So, we and subjects how to data what those do

right well And because are at you plans data enough as talked the looks we’ve devices that’s as your important whole collection if in pretty a Amit. answers breakthrough that determine as post-market the the Hopefully collecting a as past, the the program, agency for in pre-market both question, data. to

Amit Dayal

also paths considering. in to you the regards so Yes, have options two just are you do actually

Will McGuire

Yes.

Amit Dayal

or being internal might is you with discussed of approach FDA in the also that how Is that the FDA. terms more

Will McGuire

at our in discussed We’ve We absolutely in-person FDA level high a the it. meeting. it with discussed

with also of both majority We to our our of the – questions to discussions the we’ve overwhelming paths. be also the to have PMA – some clear, path. relative discussions majority been FDA submitted To the them relative interfaces and

study timing recently majority. a approval. That’s ask have exploring pivotal would we which trial only look today go are a only from said, in like requirement or So, a would standpoint. pivotal we I to where as we PMA HDE what to started the from followed But and and PMA a been an by a

Amit Dayal

terms So, for? in that with we the steps is what this catalyst next or be of should process looking of sort

Will McGuire

the guess, Yes, We to week. as response remarks, response written our so, we a of prepared half we question. second stated I pre-submission came, in good – the that last received last

of So probably a written us we with our would are that FDA still back to own. the and a to working response be for response then through next step respond

questions the to asking they and questions agency. as giving from clarifying additional additional answers include us that well information could But posed as

so back like some that, and – also written Amit. and back could be forth – We forth there

or decide conference request may also in-person to some another – We a request to at point meeting. call

the requirements I’d going sure a understand the sometime end combination written phone for it’s the make correspondence the So, we then well face-to-face make back probably of sometime to or best as as and for being say, to and and completely company. on options of forth, the up each decision

Amit Dayal

kind And partners Understood. all the how can you distance new developing et for features? of experience to respect soon the that with then, are filtering technology cetera, patients, with

Will McGuire

conduct half distance this the testing of so, during do current is would and the with end I Xs year that we the filtering year that Sure. this of we once second Argus sometime Yes, human Good the towards some technology, with Argus can expect question. available. users

take this can we So, technology.

It’s that, imaging keep for this sometime start those the human and with compatible and testing be year, current we’d Argus thermal tracking, to going next would first start some maybe we integrated quarter near end or Xs to The assuming that projects able year of doing eye the probably track. with users. Argus of on and testing

again, current we that users next-gen externals. the with utilizing Xs Argus testing do And Argus or would

technologies could So, data we hopefully, and see we test months data nine to would performance a is and within for from all what have three now, start of six describing the benefit. these we that sharing

Amit Dayal

to And with reimbursement effects respect effect this breakthrough already going to then? this have or the CMS for on is ruling devices the is in

Will McGuire

on Yes, their goes year. fiscal I it think

on effect of in becomes it believe X this I year. October So

So, it was announced.

effect it So final this it of is year. October rule Xst would the in then go and on

So corner. just around the

Amit Dayal

Understood.

grant. regards is me And How if Just grant us? remaining? much used big already one remind NIH one how in could this has and to the been for you final is what

John Blake

I’ll is one. Hi, Amit. This take John. that

So, yes, thanks.

million $X that’s On eligible the calendar expect funding year and are grant, year NIH. annual million by we the to and we on XXXX additional subject approximately $X.X NIH to receive this approximately grant approval that for for of

Amit Dayal

much. have. you so Thank That’s I all Understood.

John Blake

Thank you.

Will McGuire

Alright. you. Thank

Operator

the from No further phone. questions

I’ll the So back call turn to you.

Will McGuire

call joining Have again later forward thanks this day. a good So, our for to updates and further providing we year. today look

Operator

That call disconnect. all does conclude We you our may and conference now participating thank you for today. for