Ladies and gentlemen, good day, and welcome to the InspireMD Second Quarter 2020 Financial Results and Corporate Update Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Participants of this call are advised that the audio of this conference call is being broadcast live over the internet and is also being recorded for playback purposes. A webcast replay of the call will be available approximately one hour after the end of the call through November 4, 2020. I would now like to turn the call over to Scott Gordon, President of CORE IR, the company's Investor Relations firm. Please go ahead, sir.

Thank you, Stanford. Good morning, everyone, and thank you for joining us for the InspireMD second quarter 2020 financial results and corporate update conference call. Joining us today from InspireMD are Marvin Slosman, Chief Executive Officer of InspireMD; and Craig Shore, Chief Financial Officer. During this call, management will be making forward-looking statements, including statements that address InspireMD’s expectations for future performance or operational results, particularly in light of the COVID-19 pandemic. Forward-looking statements involve risks and other factors that may cause actual results to differ materially from those statements. For more information about these risks, please refer to the risk factors described in InspireMD’s most recently filed periodic reports on Form 10-K and Form 10-Q, the Form 8-K filed with the SEC today and InspireMD’s press release that accompanies this call, particularly the cautionary statements in it. The content of this call contains time sensitive information that is accurate only as of today, August 5, 2020. Except as required by law, InspireMD disclaims any obligation to publicly update or revise any information to reflect events or circumstances that occur after this call. It is now my pleasure to turn the call over to Marvin Slosman, Chief Executive Officer. Marvin?

Thank you, Scott, and thank you all for joining the call and webcast today. As I reflect back on our first quarter earnings call, I talked about uncertainty in the world amid the COVID-19 pandemic and the global challenges it’s created. I'm happy to report that even as the pandemic persists, our team continues to respond and deliver with great poise and commitment to fulfilling our customer's needs. Despite the continued rise in COVID-19 cases, placing pressure on healthcare operations globally, specifically with regard to volume of elective procedures, included carotid stent placement, we're still providing critical and life-saving products that are proven superior in safety and producing effective outcomes, although at a slower pace than pre-planned pandemic. However, these lower volumes are tempered by the gradual reopening of facilities and practices throughout Europe, as well as expanded territories, which I will discuss shortly. To be sure, our Q2 financial results were adversely impacted as a result of the healthcare system, diverting attention and resources to fighting COVID-19. Government’s implemented restrictions on elective procedures and people avoided seeking treatments even for emergency conditions. We are, however, seeing a resurgence of elective procedures in our key markets, and expect we'll continue to see gradual resumption as the impact of the pandemic is better managed and controlled. We've also taken proactive measures to implement policies and procedures that will ensure that we emerge from this crisis as strong as possible; including continuing to look at ways to operate more efficiency and lower our operating costs. We're encouraged by the fact that prior to COVID, our 2020 trajectory was very positive and shaping up to be a meaningful year, which we hope to reemerge after the recovery. I would like to now share three significant achievements for our company, milestones we've anticipated for…

Thank you, Marvin and to everyone joining today. Here are some key financial highlights for the second quarter of 2020. For the three months ended June 30, 2020 revenue was $313,000 as compared to $1,354,000 during the three months ended June 30, 2019. This decrease was predominantly driven by 76% decrease in sales volume of CGuard EPS from 1.1 million during the three months ended June 30, 2019 to $300,000 during the three months ended June 30, 2020. This decrease as Marvin mentioned, was mainly due to the fact that procedures with CGuard EPS, which are generally scheduled in non-emergency procedures were mostly postponed as hospital shifted resources to patients affected by COVID-19. The decrease is also due to large shipments of CGuard EPS that we made during the three months ended June 30, 2019, a backlog that accumulated in the three months ended March 31, 2019, that we were unable to ship previously due to our former third-party sterilizer equipment failures. Those large shipments did not recur during the three months ended June 30, 2020. In addition, there was an 82% decrease in sales volume of MGuard EPS from $238,000 during the three months ended June 30, 2019 to $42,000 during the three months ended June 30, 2020, mainly due to similar reasons I've just mentioned. The company recorded a gross loss for the quarter ended June 30, 2020 of $120,000 compared to a gross profit of $442,000 for the same period in 2019. This decrease in gross profit resulted primarily from $448,000 decrease in revenues, less the related material and labor costs. And a decrease following the receipt of $135,000 compensation received in the quarter ended June 30, 2019 from our former third-party sterilizer for the delays related to the product sterilization interruption during the three months ended…

Thank you. [Operator Instructions] The first question comes from Benjamin Haynor from Alliance Global Partners. Please go ahead.

Good morning, gentlemen. Thanks for taking the questions and congrats on all the recent progress. Just first off for me on the Brazil approval, what is super easy plan regarding launching there and what does the timeline kind of look like?

Yes, Ben, thanks for the question. It's an important transition. As we prepared for the registration approval, we were in constant contact with both SUPRI as well as their sub-distributors. Brazil, geographically, is a very large market, so there are sub-distributors within the context of their organization. And so we did much of the pre-training and effort in advance of the registration approval to prepare for this, most of which, as you can imagine, was online, and Brazil has been particularly hard hit by the pandemic. So all of the contracts are now in place, and now it's about really beginning to embed CGuard into the marketplace. And they feel very comfortable and confident because of our pre-planning, that they will be able to go ahead and initiate CGuard procedures pretty aggressively as they rollout the product. So we feel well prepared within the context of, obviously, this new normal, and we'll have to see how that progresses accordingly. And hopefully, as the COVID issue resolves itself, it will become much more of a hands-on effort than much of the video work that's been done.

Got it. So the groundwork's completely in place there and just kind of waiting for everything to get out there. Great. So – go ahead, sorry.

Yes. That's correct. The orders – that's okay. The orders were placed as soon as the registration was completed. So, all the groundwork was firmly established.

Excellent. So then, you also mentioned that you're pursuing kind of the dual pathway in France with the standard reimbursement and then at the same time, pursuing the special reimbursement. Can you kind of give us a sense on how those pathways work, and the upcoming developments we should expect on the France front?

Sure. So what we identified with our consulting firm in France was sort of two pathways that exist; one is in the existing reimbursement format that they have in France for carotid stents. We were able to pursue what we believe to be a much more aggressive timeline in order to get approval based on the data that we've already achieved and our approval within the CE Mark. But that doesn't preclude us from going after the special designation for CGuard and asking for a higher reimbursement level. So, this will take a bit more time, and there are registry obligations that are a part of that in terms of enrolling patients and having a deeper level of scrutiny by the health authority in order to approve a new code as opposed to working off the backbone of their existing code. So our decision was to pursue both because they're not mutually exclusive. And if we receive the existing reimbursement code sooner, then we're prepared to launch and develop our commercial strategy there. Our thought is to go on a direct basis in France as it is. And so, I think that fits well within the context of that strategy for being able to take advantage of the full amount of reimbursement in the ASP.

That makes sense. And then, what would the timeline look like on the special reimbursement, if it does come?

We’ve been told that that it's somewhere in the 9- to 12-month range. So we've begun to accumulate the data, understand the protocols and put in place the necessary components of that, but I think it's probably in a 12-month window. We hope that the standard reimbursement will go much sooner.

So it's still fairly quick, though.

Yes, absolutely.

Got it. So then, just kind of thinking about the big picture, and you kind of mentioned how traditionally open procedures have converted over to less invasive endovascular procedures over the years. And it seems like somewhat of a mystery as to why carotid revascularization has not – sounds like there have been a number of things that have conspired, maybe traditional carotid stenting requiring prior authorization than the open procedure. Can you maybe talk about some of the things that may have held carotid stenting or carotid revascularization in a less invasive fashion back over the years? And maybe how you envision these things changing in the not-too-distant future?

Yes, great question, Ben. I think in the context of that first generation carotid stents, open cell stents that weren't protected with our MicroNet mesh covering, frankly, just did not perform according to expectation against carotid endarterectomy or open surgical procedures. I mean, there was great expectation that stenting would perform clinically at a much higher level. And I think that was probably the first disappointing area of evidence that they just did not. And so, I think that's what's most meaningful about our comparative data and what we're discovering from a clinical performance perspective. It's not only are we advancing beyond the standard open cell first generation stents, but as measured against endarterectomy and surgery, we're seeing the same level of superiority in terms of less post-procedural events. And I think what is also important to understand is in stenting, many of the events that occur are post-procedurally, so they fit well in the context of our MicroNet being able to prevent these embolic showers from occurring post-procedurally, which is where many of these issues occurred. So I think there's a certain level of technology, innovation and advancement to go along with the accumulated data that we've demonstrated and through CGuard EPS, we think we have the best solution there. Clearly, the focus is also to advance our efforts with vascular surgeons and get them more comfortable with our system and the endovascular delivery system that we have as opposed to open surgical procedures, which we're doing through our centers of excellence and other commercial activities.

Okay. That’s helpful. And then correct me if I'm wrong, but in terms of embolic protection devices being used on some of those early kind of the first generation of carotid stents, my recollection is they weren't always used in those types of procedures. Is that the case?

Most of the time there is embolic protection through a filter system during the procedure itself. I was referring to the actual MicroNet mesh, which covers our CGuard stent, and being able to provide that extra level of protection. The early version of open cell stents did not have a mesh covering for post-procedural when the stent is embedded in the artery.

Right. But I guess I was referring to the filter kind of embolic protection devices that were – now they are pretty much used…

Correct.

In some fashion or another. But early on, the carotid stents that kind of were first generation, my recollection was the filter devices weren't always used in those procedures, at least early on. Am I misremembering that? Okay.

I think that's correct. Right.

Got it. And then you mentioned the peri-procedural device or devices that you're advancing into development. Is there any more you can share on that? And if you do develop those, and I would assume those would fall under 510(k) with the FDA, is that correct as well?

That's correct. We're looking at advancing a number of different options within the context of our carotid portfolio. I mean, those can run a full gamut from filters through other advanced opportunities, shorter catheters and other things. So we're continuing to look at all the opportunities that are available to us to make the CGuard much more available and much more user-specific into the vascular surgical community, as a part of just broadening our portfolio in general.

Okay. Great. Well, that's all I had this morning, gentlemen. Congrats again on the progress, and I'm sure we'll be in touch soon.

Thanks Ben.

Thank you. [Operator Instructions] This concludes the question-and-answer session of the call. I will now return the call to Marvin Slosman for closing comments.

Thank you. Let me conclude by saying that I hope everyone is staying safe and healthy, and our thoughts are with the many people have been affected by the COVID-19 pandemic I'd like to recognize the incredible heroism, resolve, and sacrifice of the frontline health care workers in fighting COVID-19, as well as our employees who are supporting them. Many of these frontline healthcare workers are our customers and our friends, and we are continuing to be inspired by their selfless efforts and care for others. As has been said, this pandemic represents the world with an unprecedented challenge, which requires unprecedented response, and that includes our team at InspireMD. We stand ready to respond to the market, and we all look forward to the normalization for us all, and thank you very much for your support.

Thank you very much. Ladies and gentlemen that concludes the conference call for today. You may all now disconnect.