Greetings, welcome to the EDAP TMS Third Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please not, this conference is being recorded. I will now turn the conference over to your host Glenn Garmont, Investor Relations. Mr. Garmont, you may begin.

Thank you, [Arnold]. Good morning and thank you for joining us for the EDAP TMS third quarter 2019 financial and operating results conference call. On today's call, we’ll hear from Philippe Chauveau, Chairman of the Board; Marc Oczachowski, Chief Executive Officer; and François Dietsch, Chief Financial Officer. Before we begin, I would like to remind everyone that management's remarks today may contain forward-looking statements, which include statements regarding the company's growth and expansion plans. Such statements are based on management's current expectations and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in such forward-looking statements. Factors that may cause such a difference include, but are not limited to, those described in the company's filings with the Securities and Exchange Commission. I'd now like to turn the call over to EDAP's Chairman, Philippe Chauveau. Philippe?

Thank you, Glenn. Thank you everyone for joining us today. During this third quarter, we were able to sustain the significant momentum that carried us through the first half of the year. We recorded yet another strong quarter in terms of revenue, our strongest third quarter to date and drove meaningful gross margin expansion that allowed us to achieve our fourth consecutive quarter of profitability. As Mark will discuss in more detail shortly, we achieved these strong results largely as a result of the continued adoption of Focal One among leading health care executions having sold an additional two units during the quarter and none through the first nine months of the year. All our leading indicators remain strong, particularly our growing backlog of potential Focal One adopters in the U.S. Based on our year to date results, we believe we are well-positioned to finish the year strong with a strong tailwind entering year 2020. As I said last quarter, but best repeating, we remain excited about the potential of Focal One. To disrupt the current prostate cancer treatment paradigm and believe we are well-positioned to deliver strong and long-term value to our shareholders while offering superior outcomes to prostate cancer patients. With that, I would like to turn over the call to EDAP’s Chief Executive Officer, Marc Oczachowski. Marc?

Thank you, Philippe. Good morning and thank you for joining our call. As Philippe highlighted, we had a strong third quarter. This is reflected not just in the financial results, but also the progress that we continue to make in increasing our Focal One market penetration in the U.S. and worldwide. Our results through the first nine months of the year confirm that we are successfully repeating on a commercial plan by generating high growth in both our revenues and margins. Everything looks to be in order for a strong end of the year and significant momentum entering 2020. We are very pleased with the high rate of growth in our year to date HIFU revenues at the end of the third quarter having increased 67% as compared to the same nine months per year of 2018. This performance was driven by a combination of both machine revenue growth and treatment revenue growth. The strong traction and momentum during the quarter was mainly due to our continued progress penetrating the U.S. market. The major highlights this quarter was definitely the sale of the Focal One unit to the world renowned Mayo Clinic. The number of machines sold is an important metric, but the quality of each institution also demonstrates the great potential of Focal One. In this case, this is a very high quality deal and certainly resonate and help influence other centers with which we're currently discussing Focal One deal. This is also fully in-line with a strategy of targeting restaurants and academic centers to continue to build Focal One’s credibility and position in the treatment of prostate cancer worldwide. We continue our efforts to add additional world-class hospitals and centers to our prestigious list of Focal One users, both in the U.S. and abroad. Taking a step back,…

Thank you, François. Again, we are very excited and encouraged by the following: one, the high growth rate of HIFU revenues; two, the fourth consecutive quarter of profitability for EDAP; and three, a full pipeline of potential sales activity, which we believe sets the stage for strong full-year results and positive momentum entering 2020. Again, we remain in the early stages of commercializing Focal One, but the positive feedback we continue to receive from urologists for this novel technology continues to be encouraging, as we focus on growing this franchise in the U.S. and in key markets around the world. I will now turn the call to question-and-answer. Operator?

At this time, we will be conducting a question-and-answer session. [Operator Instructions] Our first question is from Brooks O'Neil, Lake Street Capital Markets. Please proceed with your question.

Thank you, and good morning. Congratulations on the terrific results, and I'm particularly excited that other people in Minnesota can recognize the power of your technology.

Good morning, Brooks. Thanks.

Yes. So, Marc, can you give us a little more color on the Mayo order? I'm particularly interested to know sort of a little color about the number or the sort of the state of the doctor advocates within the Mayo in terms of enthusiasm for your machine and how that might translate to other reference centers around the United States?

Well, I mean, we did a regular sale to the Mayo Clinic and actually, the machine was delivered to the Scottsdale Mayo Clinic in close to Phoenix. This is where they apparently had the most volume of prostate cancer treatments. Of course, I mean, they were very excited and enthusiastic in giving the machine, that's why they signed the contract and purchase order. We are now very anxious and very excited in getting started in the first cases. We don't have yet fixed date for that, but the machine was delivered and installed and we waiting for them to get trained and start the first patient, but there is a very high-level of excitement among the urologist of Mayo Clinic and more specifically, the team in Scottsdale.

Great. That's very helpful. Secondly, you mentioned, obviously, continued progress with endometriosis and if I was listening correctly it sounded like your primary effort, right [indiscernible] concentrated in France, do you have plans to work on that indication in the U.S. anytime soon?

Absolutely, I mean the ambition again here is global, but again the clinical trials for logistic reasons and research reasons as well are being done in France and as I said, we are discussing with the French authorities to get the approval of starting our second study Phase 2 trial here in France and we have good hope that this could get started somewhere next year probably at the beginning of the year.

Okay. And then perhaps for François, congratulations on the profitability and the continued sequence in profitability, do you think you can maintain profitability as you begin to scale the HIFU business over the next 12 months? François Dietsch: As explained, the profitability is directly linked with the expansion of HIFU and the gross. We have a year or so, as long as the momentum on HIFU will be maintained we will maintain profitability.

Okay great. Thank you very much and again, congratulations.

Thanks, Brooks.

Our next question is from Sean Lee, H.C. Wainwright. Please proceed with your question.

Good morning guys, and thanks for taking my questions. My first question is on the Endo-UP system, it just sounds like a very innovative and convenient way for [indiscernible] so, what additional steps are there before you can bring this up to production and commercialization?

Like I said, we were very pleased to have the Endo-UP presented in the quite specialized work [indiscernible] few weeks ago. Now, we are polishing I would say the end of the development working on the regulatory approvals of [C-markings] and others so that we can get it sold and commercialized. So, these are the next steps to get it sort of proof for commercialization, which again we expect to get that – so we can get started and deliver the first unit in 2020.

Okay. So, you expect to file for [C-mark] soon?

Yes.

Okay, great. And my second question is on the CPT hold for HIFU, I know you guys were assigned a CPT hold by the American Medical Association back in June, so I was wondering what is the progress towards on that front to getting a reimbursement, especially from the CMS? Have you been collecting data on valuation, what’s the process expected to be like? If you could provide a bit more color that would be great?

Sure. We are not collecting data. Actually, that’s being done by the AUA and the AMA, I mean that’s part of the process and we noted in doing that of the summer and we’ve got, I mean so far we got no feedback on the valuation or the registration itself, but we know that that is a work in progress and we will definitely bid the market as soon as we have some information about that. The next milestone would be officially the inscription of – in the security book of that security code and that will be the CPT book registration will be next year in 2020. So, we will also keep the market updated as soon as we know something there.

Great. That’s all I have. Thanks again for taking my questions.

Thanks Sean.

[Operator Instructions] Our next question is from [Scott Gamble, Gardner Financial]. Please proceed with your question.

Good morning. I have two questions. I know it is early, but with some of the HIFU systems you placed earlier this year, do you have any – have you noticed any change in utilization rates? Can you talk about that a bit?

Well usually it stopped. When a new system is based in the hospital, they usually get started with the training program, which again is pretty straight-forward and easy, and they usually have a little time where they wait to see the first results and the first feedback of the first safety and then they ramp up the number of cases and that’s what we are starting as well in the U.S.

So, we are still in that bill segment of the time.

Sure.

Can you mention as to when you might or you would expect to see, again some of these early adopters kind of move into where now they are – everyone is trained and you start to see or able to start measuring utilization rate consistently? Do you think that’s going to occur next year sometime for instance?

Sure. And again as we are building the markets, it’s going to be sort of linear because we will have experimented users and we will have also new users so it’s going to be a combination of both, but we definitely again see the increase in utilization as they get more – as they get first trained and then more confident in the use of the device.

Okay. My other question is about with the – some clinical work coming up in the ramping on your sales with Focal One, do you feel comfortable with the cash position the company has at this time. Do you think that’s adequate to carry us through this next year?

Yes. Like we’ve been saying in the past, I mean, we had a pretty solid cash position of about – almost $20 million, which get us – cash efficient to run our current marketing sales and development programs.

Okay, great. Thank you.

Thanks Scott.

We have reached the end of the question and answer session and I will now turn the call back over to Marc Oczachowski for closing comments.

Well, thank you operator and thank you again everyone for joining us today on our third quarter conference call. We are looking forward to a very active and strong fourth quarter and we will keep the market updated as we have some further views and announcements. Thank you very much and you all have a good day.

This concludes today’s conference. You may disconnect your lines at this time. Thank you for your participation.