Second Sight Medical Products (EYES)

Lisa Wilson In-Site Communications, Investor Relations
Will McGuire President and Chief Executive Officer
John Blake Chief Financial Officer
Amit Dayal H.C. Wainwright
Call transcript
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Greetings, and welcome to the Second Sight Third 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, Thursday, November 14, 2019.

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

Lisa Wilson

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

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

would release with events Act. remind statements to future get the Before Securities expectation, everyone call express I future we on performance made be forward-looking defined based are forecast, forward-looking a those started, to regarding and as Private Second not on management any of Sight involve information today performance. Reform projection, afternoon’s These filings Such intent are and that Second this statements press and the in belief, conference as today’s considered by Sight’s Company’s of uncertainties, may or that anticipation future forward-looking noted the risks including SEC. available Litigation and statements guarantees like statements

in those forward-looking from results projected the may materially differ Actual statements.

McGuire. Sight specifically to Second CEO, gap] Sight’s [audio Second Will

Will McGuire

of and early share joining call Good Thank today. everyone for patients Today afternoon, I’ll our status on current you, updates our study. and you thank feasibility the Lisa. the

toward and user programs the future to underway development various trial, Orion reimbursement FDA the pivotal with Orion. a engagement the for as the for enhancements we and landscape experience progressed Our research

building our make on to our progress development and continue focused advancing research clinical good on all program. and fronts Orion remain platform and out We

Breakthrough the of the to we had the Devices for agent on another trial ongoing have of pivotal FDA the During discussions as design part we pre-submission the completed consensus with Program this quarter, Orion. and reach to

well These Congress begin conferences injury. the early of as to a in American retinopathy, Angeles me from have UCLA feasibility College including at been know many in US Ronald with additional Baylor Let the retinitis and update to community study, disease artificial at nerve glaucoma, shared on the very Center there’s Orion’s and those October, including is data Reagan In Medicine feasibility ability early in positive growing blind being of the diabetic eye profoundly scientific Los of interest key Medical at the in and study the by which brief presentations conducted of Academy the Neurologic a received important forums pigmentosa, and for you scientific we our number vision from optic blind provide and Surgeons useful, Society of leaders and Neuroscience. Ophthalmology, individuals the opinion Houston.

subjects me to-date results of and five of subject. six results includes that share a the line six just results XX top sixth month study the from Let the for months for few the

period. a have SAE. surgery experienced or did remain wanted the category. and In concern was six subjects resolved event related serious to device from or the AEs adverse safety good of stay we a quickly The and First, this require events to adverse profile. a or total over of to and he let expected the SAE time all a he was any the not Two where one the considered One that this has. in me greatest that note hospital events study subject adverse was

encouraging. quite also is data efficacy the Second,

of Here we look measures function. visual at three

when it touch The of in a are to of screen touch asked within front first sit appears. and square subjects Orion is square the localization where boundaries

direction second, of motion to lines subjects where a on asked emotion the screen. The of The direction the and direction identify are motion.

visual adapted measure grading is a that acuity third is acuity, for very visual The of low vision.

or stands the symmetrically On off. subjects Assessment. of five important better orientation independent who all subject the On with of spends efficacy the to subject low more ability perform square determines This the can three specialist Observer each The visual our none of on acuity, measurable in asks a then it in the specialist task observes six visual series time each Low the task. we off. sources, with Rated the specialist if and direction test on an hurting system living questions actually The has XX it light for finding perhaps assessment or as home. The one daily if side scale is performed with final is localization third versus a a this vision device Vision walk FLORA party feasibility on perform then most study neutral and motion, sorting also such the with of then performing performed following off. call six better providing the by a it or if them laundry. grading do benefit, this acuity an measurement is and who on mobility In their which Functional device system

the all XX-month benefit per that report FLORA mark to who’ve five the subjects are reached receiving assessment. measurable thrilled We’re

this discussing note session I’d is the of or there adverse improved conversations, a with of FDA subject. event sixth device in subject medical to loss that a October XXXX, we from The showed recent indication defect. no perception Though like a device Before the perception. testing our most with observed most

be possible for updated in related, or everyone to this may be device these investigating may status or to not keep updates. future not currently permanent. of We and which changes plan may causes it as calls may We’re subject the

and be We path. engaged clinical to in the FDA the with regarding continue actively discussions regulatory

last mentioned for Orion. two we’re I quarter, As considering paths potential

To-date the involve FDA followed first consideration a our device obtaining first The under on approval exemption PMA would approval. Premarket with track focused preferred track. our a approval, PMA option the efforts PMA remain which is is or humanitarian second by

successful primary I’m assessed have pleased agreement trial. for to endpoint that with regarding the in instrument developed Orion FDA of FLORA this we version of be believe appropriate demonstrating the efficacy new revised early technology. impact the for we’ve the pending instrument a pivotal the We an the XXXX. is will inform validation the for the endpoint; purpose you, world reached Efficacy of with real

with the by safety our focusing and FDA hope reach the now end on to of the agreement the We’re year. primary attention endpoint

include work of and the aesthetics proposed current and externals to externals implant trial to or ergonomics, resistance. include improving to now Improvement the electronics current the on Turning functionality. to Orion the changes required our ultimately reducing for impact thickness focused robustness. case impact None design of pivotal commercialization. iterations Improvements the implant to R&D, on and is the for

We half expect this R&D the in to XXXX. work second be completed

will the of the externals. not patients trial implanted all, be that majority Orion is pivotal improved implant and if the expectation Our with

that the selectively have includes In artificial working are scan system, thermal it or We a been Depth-based that would view have allow the case, distance specific their that of use other than past would human only discussed exciting in moving their space evaluate with with partner These by decluttering research that technology we’re at the and to heads. projects focus stimulate user patients can objects, only isolate underway eyes is when certain [indiscernible] the technologies their our vision users the filters tracking on eye which within would a within sensor. calls which object images optimally. to and imaging could faces a aimed that rather warrant the experience. integrate that processing image so individual each in enhancing are ultimately

the Additionally, to and X APL develop Technology into or of and National NIH in million, $X.X localize known Spatial landmarks is is received of SLAM. SLAM Laboratory exciting collaboration the Orion. it the of unfamiliar integration real-time. Health users speed with surroundings Physics objects is we Orion Applied navigate to University grant on announced to goal intended from generations a The Localization a give in and future October the Institutes as This ability to we Hopkins that joint initiative or X-year Mapping John

environment demand changer doctor’s One to day, ability have life. independence a technology. and navigate that daily blind through be of using fitness to may to the individuals who center reconnect users on them the could for different like maps game our real help load store, advancement or office gain to Such the world save grocery seek

Let once in designation reimbursement is it for This pathway path our within such ability a commercialize improving shorten Orion to improve and for me an Payment turn to now Prospective XXXX or to FDA CMS reimbursement, create payment proposal finalize patient to in as device its technologies rule. significant to Inpatient the fiscal devices Orion. year approved. alternate transformative innovative could final IPPS breakthrough this step System access

technologies, While pathways the refining, CMS coding great still certainly made and innovative coverage is on process fully not payment has progress addressed. for

[ph] day of as certainty pieces and Orion study Avamed recently spent advocate such reimbursement the proposed the Capitol Orion. team that medical would of And efforts of being our address reimbursement Hill of breakthrough development to Fortunately discussing devices. for and HR devices, with the [ph] importance legislation there breakthrough are for XXXX S a participant on two we to coverage XXXX innovative technologies

users independence places we’ve Orion Through post-surgical instrumental first allowing how of training, with greatest their critically to that the artificial with daily to reimbursement what series future the people, rehabilitation onsite interpret patients the Additionally, will possible training perceive. to understanding to to of is benefit while This we likely moved the activities. enhancing achieve important life a thoroughly recently CMS in had interactivity, visual pathway by important discuss they and pixilated greater be meetings the and vision for users. training

the potential the We’re of the surgical to for therefore advocating device with training procedure, path clear and the rehab. a the programming have reimbursement of CMS follow-up

our with expectations data to and supporting also requirements Orion. engagement on CMS reimbursement for in to addition with understand discussions reimbursement, private of we’re their the In payers

average Orion a large portion instruments expect the will given the of younger coverage private age have population Orion of patient candidates. We

for readiness in as critical will a component significantly market. commercialize payers Our larger private we a be

previously approval. centers. of our camera intent a to generation course quarter These have we at for the recent over platform technologies year, more upgrades stop of on Regulatory plan some better the FDA Turning to quarter, powerful do product the includes In a the to four II, two Argus and manufacturing Argus of we submit mentioned externals fourth render will to as testing notified the glasses, now Argus the the implanting next and other most centers VPU device stated year. of II to Argus this US the and Argus to our the our II In been S earlier. devices implanted

that blind progress individuals. pursue market powerful technology billion Second the are at I’m XX. efforts on pleased making opportunity garner a we us of profoundly plus the well as All CBS community almost morning as this scientific to interest help Sight starting to $X we’re coverage also with thrilled all the a in on as on our media that are including widespread September segment aired

I’d our will now thank unwavering their for Finally, team like at that, their to With continued John financial quarter, mates Second and support. results. investors our Sight John? my for dedication review XXXX third

John Blake

Will. Thanks

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

We inventory as we II. decline sell Argus of our existing expect net sales our to through

$X.X quarter $X.X third million in expense Research the increase compared Orion prototypes. was The in cost third primarily of million to of reflects quarter the make and development XXXX. XXXX to

cost our product transition to research accelerate the that development to will as and be such activities expect including personnel activities. Orion previously platform as expenses to facilities Orion to development We we increase transitioning the and related our

associated with Clinical and third decrease XXXX XXXX. to slightly quarter expense feasibility attributable the the $X.X This regulatory decreased to the of of decrease Orion million in study. early in third is quarter from million cost $X

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

quarter to year-over-year XX% third remain commercial the Selling on to and $X million the due that track. XXXX, quarter of in XXXX marketing in a compared expense was $X.X restructuring our reduction million efforts third of

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

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

had we million. XXXX and of equivalence As XX, cash September cash of $XX.X

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

to With $X our bid compliance NASDAQ. with respect price

comply to NASDAQ split $X attain of listing price to share XX a reverse our closing January XX, days or deadline order Our maintain of XXXX. higher our must In consecutive is implement stock. common per for we a

not update been has and an has once respect decision to our an regain made board Our plans with compliance provide made. we will decision to the affirmative

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


[Operator Instructions] comes with Wainwright. Please Dayal And line ahead. Amit first our the from question of H.C. go

Amit Dayal

little new was? the what versus this Can criteria about you old FLORA a FLORA talk

Will McGuire

that. glad this Will. be Amit, is I’ll to question. address the Thanks for

for and case it the specialist completed some then in France had task and is the reimbursement all we’ve an with over now market these the observer, we’ve and warning really just clinical and focused used an interview, had all by had three what observer they So and years as observer the had original so they done we’re a was was study three in trial. specifically functional in in-depth FLORA narrative a of independent studies study taken parts, Argus also had related revised low or the used in task section. FLORA, vision been vision endpoint Argus, party It’s were there observer on rated the an post it the for third this it

independent Orion well or observer task will benefit, it how either performing required the provides more user and observe benefit, certain then they makes system it to give do would task with without difficult. this the these it’s performed entail, actually as given on [indiscernible] – that a and to task them and what the and number it then it So a neutral rating be will is the of it’s

daily most this validation possible can multiple also the also, important chose tool then of provide it’s it about is among the it’s it someone and to because section this because things, we the very to measuring other measures life actually because how impact of independent goes we our consistent Again, validate their that the the when think of important that’s experts really technology important is and administer measurements then FDA technologies because instrument the ensures the impact. and

through original process they life Hopefully, up impact the the and then and that, FLORA of of of that So go accurately users, that. also it. we the three again multiple the in of we it’s perform measure a how about that one taken expands same going validation validating sections section with think in end, this that, their answer. and – on out it’s kind section the can with to that we can to prove go daily we’re people and our be assessment come We technology think on able helps by the

Amit Dayal

very definitely was that Yes, helpful.

So design right? was with this FDA, to just the in clarify consultation

Will McGuire


in point as with well, daily it with as think so like to would was their what I to at consistent a it. to to series through the different then can on the with benefit to the we how refine with it’s questions results designed the validation show case, consultation and not only going the the designed requested validation demonstrate went perceive FDA, something refine measurement from or comfortable but that of so they that patients was we observers. look of discussions also the answer get and kind that developed the we’re with the and go we to this FLORA with tool, and life tool, they’re early they at then something some original we in So Argus The FDA

we I in certain we And the through and a remarks, go got written to in in then this as is, process we’re endpoint went agreement through we also of and as with use mean basically prepared go and can – it this specifically happened validation what as FDA use FDA we it mention with the that doing will the primary what serial. kind a

forth you it. where the the and So year, endpoint and going safety very very before and resolution can hopefully of point, through about the similar we’re accurately a that now we we endpoint feel jointly benefit and reflecting and FDA safety on now, with we we the provide on resolved and this so we’ll a going this be back about similar got what to good the good communicate and the be end would have at We feel we that efficacy tool, agree also others. endpoint we process

Amit Dayal

this. set are based undergoing [indiscernible] new then and sort performing of FLORA I are expectations that of already these this they criteria, right this mean, just All all on with under of subjects criteria?

Will McGuire

directly first we the assessed all FLORA haven’t versus obsessed have new we mark the we’ve and XX-month well. are They the FLORA. current as have subjects at talked, they five against very performed them But the and

one had other about ability we the a the that life the their far positive. on as or as four technology mild think a go positive just strong of daily I impact to their a positive rated were and

at with performed yet So mark really XX-month that as And haven’t would using the new we all well, but looked our test. study or that, FLORA all again the five is FLORA expectation good that current good the look five tool.

Amit Dayal


the end can then, you And you recruiting trial do So safety you’re how of this start and – once to us be? big is finalized endpoints remind now many patients? will the or expecting enrolling the be how by that done, patients year

Will McGuire

Yes, good question.

so efficacy FDA that items understands step with that The to to efficacy us So be first that want two are think point hope safety then biggest both everyone get we would the once we resolve and get the safety. once we will at and resolved. communicate again, safety – for I endpoint and the we next to want first resolve we with to some or the those

be things the get of other The in would agreement number pivotal. then overall the subjects to on

that in think but expect expectations said past should think with XX XXX going is XX that’s the is you here. like still point or to be probably and good I We for we’ve we that starting As it’s don’t at your a fair to least say. did Argus anything what

is drive is of need duration what the is really endpoints we be secondary to not to want collect. because decide We until we any that we in what there efficacy what it will and plans have and FDA the clear we need or safety safety bench we will follow-up, testing would that Although pre-clinical to are are with on agree say then cannot we there’s going hit endpoint to be finalize that – else that number there anything pivotal. we required sufficient start in that, the and confirm be to to have other place that that the before

discussion we the through further approval improved what market We’ll the And we further FDA also or Could post would of the the use to the generation further some are requirements newer before do work finally, upon so additional we likely reimbursement that versions. ultimate Orion. then collect we data what for about, regulatory for Orion, data approval as current if we to comforted with iteration most have FDA study the to pivotal collect want start give and well. not of and regulatory and data the with leverage of

the and if said thing the pivotal best we’ve we to improved things patients the that to in one late trial that be But I done the we could version a ahead. complete look remarks we half do do is, yet complete improved with have need that at the means don’t when you version So be exactly we enroll start design. in of Orion sometime which in we know would is one that that the thing the XXXX the this won’t pivotal not trial second work as on and of those XXXX. until are until mentioned mean the

could and validation to we additional could we on the and support But do doing one data mentioned think that XXXX expand the risk have later the have feasibility and we also made make And new submit with this to we just FDA. would the this the not as that the of that would for thing trial additional sometime efficacy. potentially We tool and of decision first haven’t half decision a spend having there, collect in collect we I FLORA pivotal XXXX discussed it would data the pivotal study would reduce patients. with also early study some the

again for So to and we it be worked seek but FDA gone haven’t that a thing, yet. the would to that we think through approval haven’t good we


Amit Dayal

Understood. Will. I’ll appreciate color. Thank the you, back Thank step the I queue. all in you.

Will McGuire

Thank Great. you.


of Company. question next comes Kyle Sidoti and ahead. with the from our Bowser line Instructions] go [ph] [Operator Please

Q –Unidentified Participant

for about reimbursement reimbursement had Orion. Just the a potentially the being to for talked you Obviously, you designation little bit about able each down strategy to – and road part. have breakthrough

follow and How rehab. but implant, for programming around programming separate not how implant rehab up does the gaining II to and did I’m and or the and factor the So this reimbursements the just Argus whether with have that part? guessing with you the work get

Will McGuire

– now bit did or a three This not a think have like coverage got a yes I’ll we and so we MAC to we ground Contractor. trying but on. of contractors coverage so approval, into not coverage years I We to where start eight coverage do, maybe it. to going had it’s positive by Short MAC established had was regions had had war a get We [indiscernible] and get four XX decision When we MAC and to did Medicare and what we MAC. four still have these and MAC by is There’s it and Argus regions by we that. Will. payment we take problem. had had is a answer, MAC, Administrative early to

proceed two with your and then would would at the they commercialization. that six caution very months uncertainty interjects the around before they many and the we are get centers reimbursement and of did would one It a program case a to equation XX reimbursement nine definitely only and wait, reimbursement months So it uncertainty ones proceed, maybe the into sometimes lot wait they down and hesitant with most, to slows or may continue. or months with even cases do proceed they

it us we So dedicate slow and down too. to something it was a of did quite bit had resources

the did not an have and approaching with out coverage to training when Orion did for your there not the can just the a be launched to other surgical resources landscape get programming or for procedure nor The we did and Orion, kind issue we’re artificial coverage with covered. actual Anything two point. of requires that include and the those for to and we issues rehab you. things. it were well. be have device be one vision as we When related that’s way coverage reimbursement Now has or decision first done, We

for Now procedures of coverage today, the and overtime artificial for programming get we training. vision there’s coverage did as reprogramming no the still

we you of What’s as a we’re there’s that be one sometimes head some things and been included to the number Orion. having time what now right things, in as in Hill the would coverage it payment devices place so, to of has right there. us that’s and visits allows their CMS forward with as we the CMS with have Regulations piece the importance well sometimes move couple automatic for most doing with how designated with coding start upon FDA now meeting as coverage is Senators advocating know staffers we so to place representatives, stated and talking piece good coverage not piece approval, will in Capitol innovative like a give technologies mentioned via and So put about with the

some will Hill what that I and the momentum bills with we of say cannot we would couple there’s and [indiscernible] coverage as think coverage well. as Capitol said a So there’s happen, on certainty do gap plug

provide data years. for during of four One years support to you period additional for would coverage provide three-year the decision other that I coverage bill three permanent think a and get and would would bills the

period a in give So either which collect one time we would would data. additional

for we’re covered, have and place mentioned, what forward saying to our out to path, within and the to artificial we’re and I’d place last get our we and vision this why for by yes, But the reason the CMS starting and training launch the rehab understood need in and follow we that’s also so process we’re try yes, As what the need visit also, say within the was. procedure looking time government device specific they programming we we Orion. covered. to need CMS to really the actual we a vision to training were reimbursement reprogramming there in for figure artificial we reimbursement in going

the the So it next we of the I’m training, it, on procedure to stated would side why would expect year people meetings, I all device if it. not and reimburse money. about seems a positive like place to even take even But waste to over be few say one could with it it hard of multiple understand the it’s say. payers We’ve payer time private I had reimburse conversations a private of going

work bit us time it, it, to just get it’s little through take Kyle. going people to So of a

Q –Unidentified Participant

able and reimbursement through Got regulatory some work that in to – pathways these the to be scale it’s of comment it, you’ll no parallel. both

or but you Argus the a base II new there from – the Sorry about for talked if features a install I gen externals S, about a missed it, more externals? more about existing talk these there bit is – can more importantly little out the of little bit demand you maybe users can next talk bit you

Will McGuire

Yes pleasing. can them give is or XX-year more because the that like introduced mean new The to modern externals, Oakley good question. yes. say, like – some look glasses I for would we They seeing something or very them base install it’s I much design. to looking Ray-Ban’s versus forward more old going aesthetically

comfortable but also, ultimately think and software more more and on – it. additional powerful be aesthetically more they to pleasing, we be we So think advance would which algorithms will run more and

to there a are we them. use to and users of anticipation that So for chance lot these out looking some there have is yes forward

old, the the I XX-year that power seven, it mean software the little more now I’d processing look software that do. what’s say times mentioned eight, and VPU do to we ability kind comfort. the than aesthetics, more the and nine processing different versus that’s with laptop a – all bit difficult very updated like like to old algorithms and or to at makes power I ergonomics new is much complex it more right the complex of really you is would any we more algorithms. about if what other powerful and a modern

So lot and more lot more it just gives us power flexibility. a

Q –Unidentified Participant

And Okay, clinical the you with to Can is over financing ramping up next Thanks more and strategy months? so about on here, initiative. other move much. your to forward that’s XX XX bit you’re a helpful. Orion just as talk lastly what efforts

John Blake

that Kyle, John. I’ll is one. take This

remarks rights affirmed QX, have to grants also ATM that private raised made So continue placements, via of prepared the and XXXX evaluate two although form to and we active today. a to through I our we with can board been But received point non-diluted including offerings, just reminder historically as decision in cash a grants our we’ve has we’ve yet. capital the funding NIH all our we options our runway financing into no

board to and evaluate continue we’ll forms future. you update the in propriety of different our with financing of the the So we’ll

Q –Unidentified Participant

taking for Thanks the and all updates today. understood. Okay, the questions


right. All

this McGuire. back to turn have further I’ll call from time. phone the questions the We at Will no

Will McGuire

today to the in school before morning. this our and signing shooting us at express again Yes, sadness We’d for community our off. thanks joining like

and are their Talk prayers the with and thoughts to their friends. you Our later. families victims,


your you call participation That for that the thank your disconnect you We does conclude please today. lines. for ask conference and