Imricor Medical Systems, Inc. (IMR) Earnings Call Transcript

Ladies and gentlemen, thank you for standing by, and welcome to the 2022 Annual Meeting of Imricor Medical Systems. [Operator Instructions] It is now my pleasure to introduce Imricor's Chair and CEO, Steve Wedan.

Thank you. Once again, I'd like to welcome everyone to the 2022 Annual Meeting of Imricor Medical Systems. My name is Steve Wedan, Imricor's Chair and CEO. During the course of today's meeting, our stockholders and their proxies will have the opportunity to ask questions and register votes if you haven't already done so. CDI holders will also have the opportunity to ask questions but are not entitled to vote at the meeting, except as a proxy, for CHESS Depositary Nominees. You can submit your questions at any time during the meeting as outlined in our meeting guide, and I will address these questions throughout the meeting. Voting today will be conducted by way of a poll on all items of business, and I shortly will open the voting for all resolutions. Once the voting is open, if you're eligible to vote at this meeting, a polling icon will appear on your screen. Selecting this icon will open a list of resolutions and present you with the voting options. To cast your vote, simply click on the appropriate option. Once you select an option, the vote is automatically recorded. You have the ability to change your vote at any time up until I declare voting closed, and I will provide the meeting with a warning before I close voting. Please also note that there are a number of voting exclusions that apply to the resolutions being put to today's meeting, and these have been outlined in the Notice of Meeting. I now declare voting open on all items of business. I'd like to take a moment to introduce 2 of my fellow directors who are also joining us today: Mark Tibbles and Peter McGregor. And online, we also have our CFO, Lori Milbrandt; Company Secretary, Kobe Li; and Jenna Vanderzanden from our audit firm, Baker Tilly. Jenna will be available later in the meeting to answer questions you may have regarding Imricor's audit report for the 2021 financial year. I've been advised that a quorum is present. And therefore, I declare this meeting open and authorized to transact business. I'd like to commence today's meeting with an overview of the financial and operational performance of Imricor during 2021 as well as provide an update on our activities during the current year. The foundations of our mission to change the standard of care for cardiac catheter ablation and other life-changing and life-saving interventions are based on 3 key drivers. First, we're growing the number of customer base sites that have Interventional Cardiac Magnetic Resonance capabilities, or iCMR capabilities, and are performing procedures with our products. Secondly, we're working to increase the number of different types of ablation procedures known as indications that doctors can perform with our products. This happens through product development, like making new devices that are needed for procedures and working with third parties to develop other required equipment and by gaining regulatory approval for the new indications. And thirdly, we're working to broaden our geographic reach of our products by pursuing regulatory approvals outside of our core European markets, such as in the U.S., Australia and New Zealand. And while the challenges of the pandemic slowed our site rollout plans over the past year, they have not slowed our progress toward expanding our geographies beyond Europe such as FDA approval. They have not slowed our progress toward expanding our indications for use, in particular, delivering a solution for ventricular tachycardia ablation, nor have they slowed the product development that supports these initiatives while improving margins. Since our IPO and through the challenges of the last 12 months, we have maintained a clear focus on our strategic plan, and we find ourselves well positioned as we enter 2022. I'd now like to move to Slide 7 to provide a business update, starting with the outward-facing highlights of 2021. In 2021, we were pleased to announce that we contracted 5 new sites across Europe, bringing the total number of sites signed to 14 at year-end. And although planned procedures were largely stalled throughout 2021, we still had a total of 4 sites that were operational on and off. The company announced first procedures at the South Paris Cardiovascular Institute and the recommencement of procedures at the Helios Leipzig Heart Center, the Dresden Heart Center and Maastricht University Medical Center. Following the end of the period, the company announced the signing of Policlinico Casilino as its 15th site and the commencement of first cases at Münster University Hospital in Münster, Germany. And since that time of the announcement, first cases have also commenced at the Helios Hospital Berlin-Buch in Berlin, Germany. Most recently, the company announced the 2 additional sites, the Lausanne University Hospital or CHUV in Switzerland and the Heart and Diabetes Center NRW in Bad Oeynhausen in Germany are currently constructing Interventional Cardiac Magnetic Resonance labs or, again, iCMR labs as we call them. So today, Imricor has 6 operational sites, 2 additional sites where installation is complete and 7 sites that are preparing for installation. In addition, we expect to add the 2 new sites under construction to our contracted site list later this year. Additional highlights are on the next slide. In the first half of the year, we appointed Regional Health Care Group as our local agent in Australia to help facilitate TGA approval in Australia and Medsafe approval in New Zealand. So far, we've received Medsafe approval for all of Imricor's products in New Zealand, and all our products are now registered in the WAND database for medical devices there. We have also received TGA approval for Imricor's Advantage-MR system. And achieving these approvals represents an important milestone in our geographic expansion plans. We also entered into a distribution agreement with Regional Health Care Group and under the terms of which they are the exclusive distributor of Imricor's consumable devices and nonexclusive distributor of Imricor's capital equipment both in Australia and New Zealand. We're working closely with Regional Health Care Group and other third-party equipment partners to deliver iCMR ablation solutions to the ANZ region as soon as possible, once all of those devices are approved. Our U.S. expansion plans also focused and progressed well in 2021 with the completion of our pre-submission meeting with FDA and the filing of our application for an Investigational Device Exemption, or IDE, to commence a clinical trial for iCMR atrial flutter ablation. In September, the company successfully raised AUD 16.5 million via an oversubscribed institutional placement. And in October, the company raised an additional AUD 1 million in an oversubscribed security purchase plan. The funds raised have been and will continue to be used to support the company's product development pipeline, support clinical and regulatory efforts and provide working capital support for general business activities. Lastly, we have continued to promote iCMR site adoption and indication expansion through strategic partnership agreements. The company entered into 2 new sales distribution agreements this year, with NordicNeuroLab and MiRTLE Medical. In late November, we announced a small but strategic investment in MiRTLE, further deepening our relationship with the company. In March of this year of 2022, the company announced a new development agreement that was signed with Mammendorf Insitute for Physics and Medicine or MIPM, an established German manufacturer of MRI-compatible monitoring equipment to promote MRI-compatible -- or provide, I should say, MRI-compatible defibrillators, the last piece of the third-party equipment that's needed for real-time iCMR ablations of ventricular tachycardia. I'll discuss these agreements in greater detail in a moment. But first, moving on to the next slide, we'll focus on the current status of our site expansion plans. As mentioned earlier, Imricor signed 5 new agreements in the year. These sites include Helios Hospital Berlin-Buch, the second Helios Hospital added to our installed base, and Semmelweis University Heart and Vascular Centre, which is our first site to be established in Hungary. I should note that the iCMR program at Semmelweis is being led by Dr. Béla Merkely, the receiver of the prestigious Széchenyi Prize last year, a prize that honors the greatest scientist in Hungary alive today. In Germany, we added The German Heart Centre Berlin and Charité Medical University Virchow-Klinikum Campus, both in Berlin. These 2 sites -- these are 2 sites that have well-established facilities and programs like the MRI Core Lab at the Charité and the CMR Academy at the German Heart Center Berlin. And lastly, the Henry Dunant Hospital Centre, which is one of the largest and most technologically advanced hospital centers in Southeast Europe, became our latest site and the first Imricor hospital in Greece. Most recently, we signed our first site in Italy, the Policlinico Casilino, which is in Rome. As you may have read in our first quarter 2022 update recently, this site will be an influential site in generating interest for iCMR ablations throughout Italy. Imricor now then has a total of 15 sites signed across Germany, the Netherlands, France, Hungary, Greece and Italy. And this year, we will continue to grow our number of iCMR sites as the effects of this pandemic continue to diminish. For example, I already mentioned the CHUV in Lausanne, Switzerland and the Bad Oeynhausen Heart and Diabetes Center NRW, who are constructing new iCMR facilities now. Imricor and the CHUV have had a research collaboration agreement in place since 2019, and that site is expected to be a research and training center of excellence for Imricor, where other physicians can learn iCMR ablation techniques. Meanwhile, the electrophysiology department at the Heart Center and Diabetes Center in NRW in the Bad Oeynhausen is led by High Professor Philipp Sommer, who is a world-renowned key opinion leader in the field of electrophysiology and Imricor Medical Adviser. Professor Sommer's iCMR lab is expected to be operational in the fourth quarter of 2022, while the CHUV iCMR lab will be completed in early '23. Moving to Slide 10. As stated earlier in the presentation, to promote iCMR site adoption and indication expansion, the company entered into 2 new sales distribution agreements in the year with NordicNeuroLab and MiRTLE Medical. Headquartered in Norway, NordicNeuroLab is a leading maker of MRI compatible in-room monitors. And under the terms of our sales distribution agreement with them, Imricor is a nonexclusive distributor of NordicNeuroLab's so-called InroomViewingDevice, a high-quality 40-inch MRI-compatible monitor for use in the magnet room of an iCMR lab. MiRTLE, the maker of an MRI-compatible 12-lead ECG system, have been a great strategic partner for Imricor since 2017. And under the terms of our sales distribution agreement with MiRTLE, Imricor will be the nonexclusive distributor of MiRTLE's 12-lead ECG system. The sale of MiRTLE's 12-lead ECG system is a very important part of Imricor's strategic plan of enabling iCMR cardiac ablations of complex arrhythmias such as ventricular tachycardia or VT. Entering both agreements streamlines the sales process for all parties and strengthens the range of third-party iCMR lab equipment Imricor offers to our customers. In the case of MiRTLE partnership, it also strengthens our ability to expand our indications to VT ablation. This, in turn, promotes the growth of Imricor's installed base. In late November, we announced a small but strategic investment in MiRTLE, further deepening our relationship with the company. As part of the investment, we received about 2% equity in MiRTLE, along with 3 ECG systems, each with a list price of USD 125,000 for use in our planned VT clinical trial and for customer demonstration purposes. We also received Board observation rights and the right of first negotiation for an acquisition of MiRTLE through November of 2024. We are very pleased to have had the opportunity to deepen our relationship with MiRTLE through this investment, and it's a great example of our planned, purposeful derisking of our strategic goals. In this case, the goal of expanding our indications for use. As I mentioned earlier, in March of this year, we signed a development agreement with MIPM, headquartered in Mammendorf, Germany. MIPM is an established manufacturer of MRI-compatible monitoring equipment and has recently developed an MRI-compatible defibrillator in consultation with Imricor. The defibrillator was tested earlier this year at Imricor's iCMR Design Center here in Burnsville and as part of our preclinical work being performed by the company. MIPM personnel also participated in their preclinical study. And importantly, an MRI-compatible defibrillator is the last piece of third-party equipment needed for real-time iCMR ablations of VT. So in summary, the business has completed 9 strategic partnership agreements, and we are very thrilled to be in a position where we have accessibility to all third-party equipment needed now to expand into our next indication of VT ablations. Moving to Slide 11. On this slide, we highlight that our research and development pipeline remains a clear priority to drive future growth through expanded indications as well as gross margin improvement. We've begun preclinical trials for VT ablation using our second-generation ablation catheter, our steerable sheet and transseptal needle. We are also progressing well with our diagnostic catheter, which will deliver material improvements in gross margin. We expect this device will receive CE mark certification this year and will be our first device to be certified under the new Medical Device Regulations in Europe. I'd now like to move to Slide 12 and briefly review Imricor's market opportunity and strategy. Imricor continues to target a large addressable market, estimated to be over USD 6 billion worldwide, with growth supported by several key drivers, including increased incidence of cardiac disease, a shift towards minimally invasive procedures and the cost effectiveness of catheter ablation treatment options. As you can see on this slide, atrial flutter procedures, our current approved indication in Europe, accounts for around 23% of the ablation market. This provides us with a significant immediate opportunity as well as a significant opportunity to grow through expanding our approved indications to other arrhythmias. And as I mentioned, ventricular tachycardia, or VT, is our next targeted indication. While VT, as shown on the graph, only represent 8% of ablation procedures, there are great opportunities to expand this market by delivering the advantages of ablating in the iCMR lab using our products. The size and forecast growth of the ablation market as well as the ability of our technology to deliver solutions that will expand this market underpins our future growth strategy, and this is overlaid by the fact that we are the only company globally to offer cardiac catheter ablation devices for use in the MRI environment. Moving to Slide 13 and our focus for 2022. Today, we are successfully managing a recovery from the effects of the pandemic. And now more than ever, things are going very well. Since the last time I spoke to you, we have been moving new sites through our sales process and adding them to our contracted customer base. We've been busy scheduling installations, performing installations and commencing or recommencing procedures at sites where procedures were prohibited during the pandemic. In addition, our sales team is engaging closely with our customer sites to promote increased procedure volumes, and we are essentially getting back to the way things are supposed to work in the field. As we exited the first quarter of 2022, we observed renewed energy from hospitals and physicians, and we are continuing to gain traction. These things are happening not only due to the diminishing effects of the pandemic, but also due to purposeful actions taken by our team. Looking ahead, we will grow our installed base through 2022. Our team is engaging more than ever with electrophysiologists to drive awareness and demand for iCMR, and we will continue to work collaboratively with Philips and Siemens to help drive site adoption. An example of this was our first Realtime iCMR Ablations Global Summit, which we hosted on March 12 in Amsterdam. 15 doctors attended the 1.5-day summit in person as well as representatives from both Siemens and Philips. These people gave up their weekend to go to Amsterdam, learn about Imricor and iCMR ablations, and the group was extraordinarily engaged. Professor Hindricks from the Leipzig Heart Center, who was one of our presenters, contracted COVID the day before the summit. So he drove all the way back to Leipzig from Amsterdam and still gave his presentation virtually from his home the next morning while he was clearly not feeling well at all. What we're doing is that important to these key opinion leaders. Another example was our participation in the European Heart Rhythm Association's annual congress in April. We were unsure if the congress would be well attended, and we were pleasantly surprised to find that it was. Our sales team generated 14 new site leads over 3 days, and things are getting back to normal. And I'm very excited to say that we are completing our VT preclinical work preparing to submit for trial approval and finalizing our preparations to begin the study. Starting the VT trial this year is expected to be a significant catalyst for new site interest and engagement. As I've discussed in the past, the promise and potential of iCMR ablations are centered around complex ablation procedures like VT. Atrial flutter is where you start, but VT is where we expect to make a real impact along with other complex ablation procedures that will follow. In closing, I'll say this, we did what we needed to do in 2021 to continue making progress under very difficult circumstances. And now in 2022, we've hit the ground running, and we're moving at full speed to fulfill our mission of changing the standard of care for interventional medicine. Ladies and gentlemen, we will now turn to the formal business of the meeting. [Operator Instructions] And if eligible to vote at this meeting, you may do so up until I close the voting by clicking on the polling icon on your screen. If you've already sent in your proxy voting instructions or voted by Internet or the telephone before the meeting, your shares have already been voted accordingly. Therefore, stockholders do not need to vote today unless they are voting for the first time or want to change their previous vote. Voting is currently open for all items of business, and I'll provide you with a warning before I move to close voting. Prior to commencement of the meeting, valid votes have been received, representing approximately 28% of Imricor's issued capital of 40,055,037 shares of Class A common stock. As stated in the proxy statement, I intend to vote available -- I'm sorry, all available undirected proxies in favor of all items. Ladies and gentlemen, a copy of the Notice of Meeting and proxy statement, including the explanatory memorandum, have been distributed or made available to all stockholders and CDI holders. If you do not have a copy with you, please be reminded that you can download these documents from the ASX website. I propose that these documents be taken as read. As required by the bylaws, a copy of the full register of stockholders is available for viewing at Imricor's place of business in Burnsville, Minnesota and at Imricor's registered address in Melbourne -- at Melbourne, Australia. Given current restrictions, you are encouraged to make prior arrangements with either myself in the U.S. or with Kobe Li, Imricor's Company Secretary in Australia, should you like to view the register. Before we move to the agenda items, I'd like to address questions in relation to the presentation I made today or any other items or any other business of the company. I will defer questions on any items of the business until we come to that particular item. I'll provide you with a moment to ask your questions online. Aisha, are there any questions at this time?

Chair, there are no questions at this time.

Thank you. And we will move to our first item of business, the election of a Class III Director, Mr. Peter McGregor. I refer stockholders to the CDI -- and CDI holders to the explanatory memorandum for details of Mr. McGregor's background and experience. The resolution is that Mr. Peter McGregor, being a Director, whose appointment as a director expires at the conclusion of the annual meeting of the company and being eligible, offers himself for election, be elected as a Class III Director of the company. Are there any questions in relation to this resolution?

Chair, there are no questions at this time.

Thank you. I'd like to point out that the laws of Delaware for the company's domicile did not provide forecasting of stockholder votes against certain types of resolutions, including the election of directors. As stated in the Notice of Meeting, the ASX has granted the company an appropriate waiver to enable the company to comply with these laws. The vote required to approve Item 1 is a for vote of the holders of a plurality of the voting power of such voting stock that is present or represented by proxy at the meeting and entitled to vote on such a proposal. Prior to the commencement of the meeting, the company received a combined direct and proxy votes as shown on your screen. I now put the resolution to the meeting and ask you to complete your voting. [Voting]

We will now move to the next item of business, the ratification and approval of the prior issue of CDIs under the September placement. Details of this item are set out in the explanatory memorandum. I ask you to consider and, if thought fit, to pass this resolution as a separate ordinary resolution. That, for the purpose of ASX Listing Rule 7.4 and for all other purposes, the stockholders ratify and approve the prior allotment and issue of 16,500,000 CHESS Depositary Interests or CDIs, equivalent to 16,500,000 shares of Class A common stock in the company and at an issue price of AUD 1 per CDI on the terms and conditions in the accompanying explanatory memorandum. Are there any questions in relation to this resolution?

Chair, there are no questions at this time.

Thank you, Aisha. Prior to the commencement of the meeting, the company received combined direct and proxy votes as shown on your screen. And I now put the resolution to the meeting and ask you to complete your voting. [Voting]

As the next item involves the proposed grant of stock options to me, I will hand the chair to Mr. Mark Tibbles, who is the Chair of the Remuneration and Nomination Committee.

Thank you, Steve. Ladies and gentlemen, the next item of business relates to the grant of options to Steve Wedan, Chief Executive of the company. Details of this option grant are set out in the explanatory memorandum. I ask you to consider and, if thought fit, to pass this resolution as a separate ordinary resolution. That, for the purposes of ASX Listing Rule 10.14 and for all other purposes, approval is given for the company to grant options to purchase shares to the Chief Executive Officer of the company, Mr. Steve Wedan, under the 2019 Equity Incentive Plan as described in and on the terms and conditions set out in the explanatory memorandum. Are there any questions in relation to this resolution?

Chair, there are no questions at this time.

Thank you, Aisha. Prior to the commencement of the meeting, the company received combined direct and proxy votes as shown on your screen. I now put the resolution to the meeting and ask you to complete your voting. [Voting]

Thank you, ladies and gentlemen. I will now hand back to Mr. Steve Wedan to resume as Chair of the meeting.

Thank you, Mark. That gave me a nice opportunity to get a drink of water. We will now move on to the next item of business, the grant of restricted stock award to Nonexecutive Director, Mr. Peter McGregor. Details of this restricted stock grant are set out in the explanatory memorandum. I ask you to consider and, if thought fit, to pass this resolution as a separate ordinary resolution. That, for the purposes of ASX Listing Rule 10.14 and for all other purposes, approval is given for the company to grant a restricted stock award to Mr. Peter McGregor, Nonexecutive Director of the company, under the 2019 Equity Incentive Plan as described in and on the same terms and conditions set out in the explanatory memorandum. Are there any questions in relation to this resolution?

Chair, there are no questions at this time.