Greetings, and welcome to the InspireMD First Quarter 2024 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Chuck Padala. Thank you, sir. You may begin.

Thank you, operator, and good morning, everyone. Thank you for joining us for the InspireMD First Quarter Financial Results and Corporate Update Conference Call. Joining us today from InspireMD are CEO, Marvin Slosman and CFO, Craig Shore. During this call, management will be making forward-looking statements, not historical facts, which are based upon management's current expectations, beliefs and projections, many of which, by their nature, are inherently uncertain. These forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from those expressed in such forward-looking 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 or any updates at our corporate reports on Form 8-K filed with the U.S. Securities and Exchange Commission and InspireMD's press release that accompanies this call, particularly the cautionary statements made in it. This call contains time-sensitive information that is accurate only as of today, Tuesday, May 14, 2024. 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 CEO of Marvin Slosman. Go ahead, Marvin, please.

Thank you, Chuck, and thanks to everyone for joining our call this morning. I'm pleased to report that during the first quarter of 2024, we were able to sustain momentum with which we exited 2023 as we advance toward our mission to be a leader in the carotid revascularization market with our best-in-class CGuard carotid stent platform. Craig will cover the financials shortly, but I wanted to touch on a few highlights from our first quarter performance. We generated total CGuard revenue of $1.5 million, representing growth of nearly 22% over $1.2 million that we reported in the first quarter of 2023. With our formal recertification under MDR now granted, we've derisked this topic and removed uncertainty in our ability to continue to sell in EU certified countries while also enabling our product development pipeline provided under MDR as we continue to build our OUS markets in parallel with our growing U.S. focus. We sold 2,553 CGuard stents during the first quarter of 2024, representing growth of 25.6% over the 2,033 stents sold during the first quarter of 2023. Our real-world experience with CGuard now exceeds 50,000 stents sold to date. Turning now to our ongoing C-Guardians pivotal U.S. trial, which is evaluating the safety and efficacy of the CGuard carotid stent system for the treatment of carotid arterial stenosis. As a reminder, the primary endpoint of this trial is a composite of the incidence of major adverse events including death, all-cause mortality, any stroke or myocardial infarction abbreviated as DSMI through 30 days post-index procedure or ipsilateral stroke from day 31 to day 365 post procedure. Between July 2021 and June 2023, 316 patients were prospectively enrolled in the single-arm study performed at 24 sites in the U.S. and Europe utilizing the CGuard carotid stent system, including our next-generation…

Thanks, Marvin. For the first quarter of 2024, total revenue increased 22% to $1,511,000 from $1,239,000 during the first quarter of 2023. This increase was predominantly driven by growth in existing markets. Gross profit for the first quarter of 2024 was $292,000, a decrease of $81,000 or 21.6% from a gross profit of $373,000 for the first quarter of 2023. This decrease resulted primarily from higher training costs of new hires to build capacity for anticipated increased volume requirements. Gross margin decreased to 19.4% during the 3 months ended March 31, 2024, from 30.1% during the 3 months ended March 31, 2023. Total operating expenses for the first quarter of 2024 were $7.7 million, an increase of $2.9 million or 62.1% compared to $4.8 million for the first quarter of 2023. This increase was primarily due to higher share-based compensation resulting from the recognition of grants made during the second quarter of 2023 and the first quarter of 2024. Total financial income for the first quarter was $382,000, an increase of $257,000 or 206% compared to $125,000 for the first quarter of 2023. This increase was primarily due to $264,000 increase in interest income from investments in marketable securities, money market funds and short-term bank deposits. Net loss for the first quarter of 2024 totaled $7.32 million or $0.21 per basic and diluted share compared to a net loss of $4.256 million or $0.53 per basic and diluted share for the same period in 2023. As of March 31, 2024, cash, cash equivalents and marketable securities were $34 million compared to $39 million as of December 31, 2023. That concludes our prepared remarks. We will now open the call for questions. Operator?

[Operator Instructions] Our first question comes from the line of Adam Maeder with Piper Sandler.

Congrats on the progress here. Maybe to start, I wanted to ask about the C-Guardians trial and the data set that we're going to see later this month at LINC. I guess the question is really more around how quickly can you package that information and submit to FDA. Just trying to get a better sense for when we could see the FDA review process and their clock start? And then I had a couple of follow-ups.

Adam, thanks for the question. So as it relates to our approach with FDA, we've chosen a modular submission approach, which we felt like was the most efficient and expeditious that gives us the fastest pathway to approval. So once we present this data, it will then be processed and goes into the final module, which we anticipate to be shared with the FDA sometime around the August or September time frame right now. So that right now seems to be the date that we've all landed on, and hopefully, that submission will take place then. FDA is certainly familiar with our submission and our stent. And so we hope that this is the most efficient way to get to approval in the first half of next year.

And for the next question, I wanted to switch over to the SwitchGuard or your TCAR product. I just wanted to confirm that those time lines continue to track. So are you still expecting to commence enrollment in the C-Guardians II study by the end of the year? And then are you still anticipating a late calendar year 2025 approval for SwitchGuard in the U.S.? Is that correct?

Yes. So let me present the landscape, I guess, for all approvals here. So our plan is to have approval for the CGuard Prime first half of 2025, our CAS system followed by a TCAR indication for CGuard Prime in the second half of '25. And finally, the clearance of SwitchGuard neuroprotection with the full accessory kit in the first half of '26. So we've gathered a lot of feedback from our vascular surgeons performing TCAR and they've encouraged us to continue to build on the enhancements and feature set from our offering and to establish a new gold standard of what they believe they expect from their TCAR procedures. So we've built a little bit of time into that effort. And of course, with the unknowns of the regulatory pathway, we feel comfortable with that approach and how we're handling the progression, both from CAS then transition to our CGuard Prime with the TCAR indication and then finally, the SwitchGuard.

C-Guardians II, is that still expected to start later this year by year-end?

Yes, that's our plan. That remains consistent. Yes.

And then moving over to the tandem lesion early feasibility study. I think I heard correctly, first patient enrollment is expected here in Q2, maybe just can you confirm that? And then how quickly do you expect the trial to enroll? And when should we expect to see that data? And then lastly, these are very sick patients. And maybe just kind of help the audience Wall Street community kind of understand or level set? What do good outcomes look like for a study like this? And then I have a couple more follow-ups.

Thanks, Adam. Great question. So let me start with the fact that our focus through the EPS with the Tandem trial is really to refocus the attention to the neuro community as a whole. So notwithstanding our objective in trying to look for a label specific to Tandem. Our goal is to make sure we continue to focus on the neurocommunity. So the EFS is scheduled around 15 patient enrollment. And we anticipate that, that first patient will be enrolled, as we said, in the second quarter. FDA has cleared that approach. It is a very different set of objectives. And as you mentioned, the standard by which we're measuring success is quite different because by the nature of these patients are in an acute stroke scenario. So we're trying to measure that, obviously, against what's considered to be sort of standard carotid stenting, measured success and we'll have to work through that because it's a really important segment of the population. I think it's become a big highlight of the neurocommunity with all the thrombectomy that's being done, but it definitely speaks to a different outcome in terms of how we define success in the protocol and what those outcomes look like. So we're going to work hard to make sure that, that's clear and that as we present the data and get feedback, especially from the EFS that we'll present that accordingly.

Good color there, Marvin. Just a couple more, if I may. Just maybe switching over to the P&L. Gross margin for Q1 was just a little bit light. Anything to call out there. Should we expect that to kind of rebound to the high 20s near 30% level in subsequent quarters? Just trying to think through the cadence of gross margin for '24 and then for '25, any broad strokes that you want to offer up on gross margin at this juncture?

Yes, I'll take that, Adam. We're starting to hire more people and train them for increased forecast for growth. So that goes to the cost of goods sold, and that's the main reason for the increase in Q1. We are expecting an upturn in some of the later quarters, they'll actually get much higher in 2025 when we start launching in the United States where the prices are much higher. Don't forget we're currently selling via distributors in Europe, we're only getting 50% of the end user price. When we go to the United States will actually be selling directly, and we also have a much higher end user price compared to Europe.

And then just one more for you, just on the OpEx spend. How aggressively are you going to kind of start to build up the sales force ahead of the U.S. launch in the first half of 2025. I mean how do we think about OpEx spend going forward, Craig.

Yes, it's definitely going to go higher as we get closer and closer to the launch in the United States. I mean we're anticipating about a 60-person sales force over the next 3 -- over 3 years of operations in the states. So we'll be adding more and more people each quarter, but also manufacturing and people for the U.S. facility is also going to increase our OpEx costs as well.

Any other questions, operator?

At this time, we have no further questions. I would like to turn the floor back over to management for closing comments.

Okay. Thank you very much. I'd like to thank everyone for taking the time today to join the call and for the ongoing support. We've begun 2024 with significant momentum and look forward to continuing to create value as we get later in the year. Thanks for participating.

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