Good day, everyone, and welcome to today's EDAP TMS Third Quarter 2024 Earnings Conference Call. At this time all participants are in a listen-only mode. Later you will have an opportunity to ask questions during the question-and-answer session. [Operator Instructions] Please note, this call is being recorded and I will be standing by if you need any assistance. It is now my pleasure to turn today's program over to John Fraunces of LifeSci Advisors.

Good morning. Thank you for joining us for the EDAP TMS third quarter 2024 financial and operating results conference call. Joining me on today's call are Ryan Rhodes, Chief Executive Officer; Ken Mobeck, Chief Financial Officer; and Francois Dietsch, Chief Accounting 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 would now like to turn the call over to EDAP's Chief Executive Officer, Ryan Rhodes. Ryan?

Thank you, John, and good morning, everyone. In the third quarter, we reported total worldwide revenue in U.S. dollars of $14.4 million, representing currency-adjusted growth of 11.6% on a year-over-year basis. Our core Focal One HIFU business continues to experience strong growth with a 48.2% year-over-year increase in revenues, reflecting continued adoption of Focal One of the global urology community. We placed three Focal One systems in the third quarter, which included a system placement, Virginia Commonwealth University, as well as placements in Italy and Spain. All three placements were cash sales, and the Focal One sale to Virginia Commonwealth University was our first placement in the State of Virginia. Virginia Commonwealth University is also one of only two National Cancer Institute-designated comprehensive cancer centers in Virginia. As noted on our second quarter earnings call, a growing number of leading U.S. cancer treatment centers are now using Focal One based on our technology's proprietary robotic platform that targets cancer cells in the prostate while sparing the surrounding healthy tissue. As a remainder, last year in the third quarter, we saw several engage customers delay their purchase of Focal One to the fourth quarter. We are experiencing a similar pattern of purchasing behavior this year. And as such, we expect to finish 2024 with a strong fourth quarter performance. As positively noted, we have already closed a Focal One sale in the U.S. early in the fourth quarter with St. David's Hospital in Austin, Texas. St. David's is part of HCA Healthcare, the nation's leading provider of health care services, comprising of 186 hospitals and approximately 2,400 care sites in 20 states and in the United Kingdom. The cash sale at St. David's Hospital came at the conclusion of a successful evaluation period that demonstrated positive clinical outcomes, high procedure volumes…

Thanks, Ryan, and good morning, everyone. Please note that all figures except for percentages are in euros. For conversion purposes, our average euro-dollar exchange rate was 1.101 for the third quarter of 2024. Total worldwide revenue for the third quarter of 2024 was €13.1 million, an increase of 11.6% as compared to total worldwide revenue of €11.7 million for the comparable period of 2023. This was a record for third quarter revenue performance. Looking at revenue by division, total revenue in the HIFU business for the third quarter of 2024 was €4.5 million as compared to €3 million for the third quarter of 2023, which represents growth of 48.2% year-over-year. We placed three Focal One systems in the third quarter, and all three placements were cash sales. Third quarter worldwide HIFU disposable revenue grew 35.3% on a year-over-year basis, reflecting strong U.S. procedure growth. Total revenue in the distribution business for the third quarter of 2024 was €6.6 million as compared to €6 million for the third quarter of 2023. Distribution revenue was driven primarily by recurring revenues from laser sales. Total revenue in the LITHO business for the third quarter of 2024 was €2 million as compared to €2.7 million for the same period in 2023. The decrease in LITHO revenue was due to selling three lithotripsy units in the third quarter as compared to seven units sold in the third quarter of 2023. Gross profit for the third quarter of 2024 was €5.2 million compared to €4.2 million for the year ago period. Gross profit margin on net sales was 39.4% in the third quarter compared to 35.5% in the year-ago period. The increase in gross profit margin year-over-year was due to a favorable shift in Focal One product mix and positive absorption in the factory. Operating expenses…

Thanks, Ken. As we look outward, we are making significant investments to capitalize on the growing focal therapy market opportunity with the most advanced technology platform and a growing installed base of Focal One systems at leading institutions and hospitals. We are achieving this strategic objective as we build an important new treatment category for prostate cancer that lies between active surveillance and radical therapy. While building a new treatment category takes time and effort, there is no question that this paradigm shift in the treatment of prostate cancer is taking place. And we believe Focal One is fast becoming the leading technology platform that will dominate this new treatment category for years to come. As we grow, we continue to deploy our talent and capital in a highly strategic manner for the purpose of building relationships across a continuum of stakeholders, including all the urology, major practices, large hospital networks and urology fellowship programs. Through these efforts, we are creating world-class robotic HIFU treatment programs to ensure that Focal One is being fully utilized and that more urologists are being trained early in their careers to use this important technology. As discussed in my prior comments, we are also attending the most relevant urology-focused scientific conferences around the world and integrating cutting-edge new technologies such as AI to further extend our market and technology-leading position. These combined efforts are translating into commercial success, as demonstrated not only by our consistently strong year-over-year procedure growth in the U.S., but also by the strong Focal One adoption amongst the most well-recognized cancer treatment centers. In fact, Focal One is now installed in over one-third of the National Cancer Institute-designated comprehensive cancer centers, and we expect that percentage will continue to grow. As more urologists embrace Focal One, higher utilization will lead…

[Operator Instructions] And we will take our first question from Michael Sarcone with Jefferies. Please go ahead, your line is open.

Good morning and thanks for taking the question. I guess just to start – can you elaborate a little more on what you're seeing just in the – among the hospital customers and the F One pipeline, three placements this quarter. I think last quarter, you said you were expecting second half placements to exceed first half. Is that still the case? So yes, basically, the pipeline, what you're seeing in the hospital environment and then 2H versus 1H placement? Thank you.

Yes, Michael. We saw good activity in the third quarter. Of course, we're always building our pipelines. We had a few sales that slipped into Q4, as noted. We are still planning on having a stronger back half of the year, second half of the year. We continue to see momentum and high-level engagement in many of our pipeline customers. And again, coming off of a number of very key scientific meetings and some of the engagement we have, there's been very strong clinical interest from many urologists in attendance to those events. So yes, we do continue to see a strong growth in the second half of the year.

Got it. Thank you. And you're still seeing nice Focal One procedure growth in the U.S. year-over-year. Ryan, I was wondering if you could just maybe elaborate some on how utilization per customer or account has been trending and maybe where that stands today?

Yes. So as we're adding really a new treatment service line when we launch our Focal One program, there's a ramp period. So we look at our accounts objectively as programs. So we build these programs. We launch them, and then there's typically a ramp period. There's a training period and on-boarding period. We continue to see hospitals increasing their procedures, some faster than others. But the commitment is there. And as noted, we made an announcement in terms of reimbursement. Reimbursement continues to be strong. So there's the economics that support the activity. But I think the real thing we see is increased clinical value demonstrated back from a number of our installed users. The data that's been presented at some of the local scientific meetings and national meetings has been very positive. We continue to see some hospitals now turning on more marketing activity to attract a broader patient population. So again, good, healthy growth on procedures. It's something we pay a lot of attention to. We have a bifurcated sales force, meaning, one that focuses on capital and one that focuses on clinical. And we continue to monitor adoption at each account and utilization by each urologist trained on use of Focal One.

Great. Thank you, Ryan.

Thank you.

[Operator Instructions] We'll take our next question from Sean Lee with H.C. Wainwright. Your line is open.

Hi. Good morning, guys. This is Sean here for RK. And thanks for taking my questions. I just have two quick ones on the clinical programs. So regarding the BPH study, when can we expect the initial results from that? And what kind of data would that entail?

Well, as noted, we're on the journey of a Phase I, Phase II study. So results we would not see until sometime later next year. Again, we are combining these two parts of the study really to accelerate our scientific findings around treatment parameters, et cetera. So we've got a well laid-out plan. As noted, we have three sites now that are active, and we have the ability to add additional sites. Once we get through some of the early work we're doing now, we will expand to other sites. So it won't be until later next year. And we'll be excited to obviously present some of that data and those findings accordingly.

Great. One quick follow-up on that. How many patients are expected in the first two parts?

Yes. Well, it really – it's truncated on the protocol. So it's broken down in various numbers. We have a subset of 30 to expand above 30 to 60. It's called out directly in the protocol. I think the thing to understand in this study is that we've combined both parts of the study, right, the Phase I and Phase II parts. And as we look at that, our goal is to accelerate to more sites. Once we look at treatment parameters, including volume, treatment location and really setting up the procedure for a wider group of participants, we'll be able to play with those numbers in terms of what we would like to see as we move forward and write additional new study protocols. So that's where we're at with that. We're excited about this program, and we have other centers that are very eager to participate.

Great. Thank you for that. In the prepared remarks, you mentioned that the company expects to initiate a BPH study in the U.S. next year as well. Would that mirror this French study? Or would you modify it based on what you see in the – this first study?

Okay. Can you repeat that? I can't – we can't hear you here. Sorry.

In the prepared remarks, you mentioned – I think you mentioned that the company expects to start a U.S. clinical study in BPH as well next year. Would that mirror the first French study? Or is it going to – or are you going to modify it based on what you see in first?

Yes. Yes. So I think what we want to do here is take the results of the combined Phase I/II study to expand to multiple sites. While we're doing that, we'll be looking at protocol design to get in front of the FDA some time next year. So again, we're accelerating this process and look to expand it to additional sites. And again, we would be working closely with our investigators to develop the right protocol that would suit the needs for the FDA.

Thank you for that clarification. And my final question on the endometriosis program. So you mentioned that the longer-term effects are more likely to see a benefit for HIFU. So how long are you continuing to follow these patients for longer? And when do you expect to release these longer-term results sometime down the line?

So we've shown again that we, per protocol, have the ability to continue to follow these patients, and we're – we have the ability to follow outwards of 12 months and beyond. So again, we're continuing to monitor these patients closely. I think what we've shown clearly and commented on is that we've shown high safety and use of the technology. We've showed a reduction in the size of the MRI – under MRI visualization, the reduction of lesion size in the HIFU arm. And then we've shown a crossover rate of 85%, meaning that patients who were followed in the original study upon being unblinded, were turning back to their baseline pain scores. So that represents something we've socialized before and made comment to that the follow-up time at three months was probably not adequate to prove the data endpoints that we needed post treatment. So again, I think, what our goal will be is we've got expected meetings with the FDA here before the end of the year. And we will be using the latest data analysis and follow-up to prepare for that conversation with the FDA. We're excited about some of the findings we've had recently as we've uncovered more of this. But clearly, we have high belief in the procedure, and we will continue to look positively outward.

Great. Thanks for taking my questions.

Thank you.

Thank you. [Operator Instructions] And it appears we have no further questions on the phone. I will turn this program back over to Ryan Rhodes for additional or closing remarks.

I want to thank everyone again for joining us on our today's call, and we look forward to seeing you at the upcoming Jefferies London Healthcare Conference on November 19 and the following month at the Piper Sandler Health Care Conference in New York City. Thank you.