InspireMD - Earnings Call - Q4 2024

Executive Summary

• Q4 revenue hit a record $1.95M, up 10.7% YoY, and above S&P Global consensus of $1.82M*; GAAP EPS was ($0.19), modestly better than ($0.20)*; gross margin was 24.1% vs 28.7% YoY as OpEx ramped ahead of a U.S. launch.
• Management reiterated an anticipated H1 2025 U.S. PMA approval and launch for CGuard Prime; global Q4 stent units were 3,512, and management framed this as a sizable U.S. revenue opportunity at prevailing ASPs.
• U.S. commercialization build is underway: HQ established in Miami, >12 sales professionals onboarded (including four regional directors), and VAC readiness work progressing pending approval.
• TCAR pipeline advancing: CGUARDIANS II is enrolling; management targets early 2026 for the TCAR supplement approval and 2H 2026 for SwitchGuard NPS clearance; next IDE (C‑GUARDIANS III) expected to initiate in Q2 2025.
• Liquidity of $34.6M at year-end; PMA approval would trigger a $17.9M milestone tranche, providing additional funding for the U.S. launch and pipeline execution.

What Went Well and What Went Wrong

• What Went Well

  • Record quarterly revenue ($1.95M) and units (3.5K) on sustained OUS growth; CEO: “2024 was a year of tremendous progress… toward potential U.S. approval”.
  • Regulatory momentum: interactive PMA review with FDA and on-track H1 2025 approval/launch; “We remain on track for an anticipated U.S. approval and launch… in the first half of 2025”.
  • Commercial readiness: new U.S. HQ and field buildout; “We are not just prepared but ready to aggressively execute a robust… launch plan”.

• What Went Wrong

  • Gross margin compression: Q4 GM 24.1% vs 28.7% YoY; full-year GM 21.5% vs 29.1% in 2023, driven by higher materials/labor and scaling costs.
  • OpEx surged 56% YoY in Q4 to $9.8M on hiring and U.S. launch prep; full-year OpEx +52.5% to $35.0M, increasing losses.
  • No formal revenue guidance, limiting near-term visibility; CFO highlighted continued OpEx growth in 2025 due to sales/R&D investment.

Transcript

Operator (participant)

Hello, and welcome to InspireMD's fourth quarter 2024 earnings conference call. Currently, all participants are in a listen-only mode. We will be facilitating a question-and-answer session towards the end of today's call. As a reminder, this call is being recorded for replay purposes. I would now like to turn the call over to Webb Campbell from Gilmartin Group for introductory disclosures. Please go ahead.

Webb Campbell (VP)

Thank you for joining us for the InspireMD Fourth Quarter 2024 Conference Call. Joining us today from InspireMD are Marvin Slosman, Chief Executive Officer, and Craig Shore, Chief Financial Officer. During the 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 in our current 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, March 12th, 2025. 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, please go ahead.

Marvin Slosman (CEO)

Thank you, and good morning. We're pleased to welcome everyone to the call today. I'd like to start by highlighting our strong fourth quarter and full-year performance. CGuard's revenue reached a new quarterly high of $1.95 million in the fourth quarter, reflecting a 10.6% growth year-over-year, with $7 million in revenue for the full year 2024. Translating our momentum in unit sales of 3,512 CGuard stents sold for the quarter and 12,100 units for the full year, thus benefiting thousands of patients in our end markets suffering from carotid artery disease. These results contribute to more than 60,000 implants sold to date, as a testament to our strong global commercial foundation and real-world experience as we build toward anticipated approval and launch of CGuard Prime in the U.S. I'm pleased to share that we remain on track for an anticipated U.S.

approval and launch of CGuard Prime in the first half of 2025. With the potential approval, I'd like to illustrate how our global Q4 sales would translate in U.S. market revenue to help frame the potential opportunity. With 3,512 stents sold internationally during the fourth quarter, had this number of stents sold in the U.S., they would have generated over $16 million in revenue, assuming a balanced mix between CAS and TCAR sales at current U.S. market ASPs. To put this in perspective, we estimate that more than 7,000 U.S. TCAR procedures were performed in the fourth quarter, making our global unit sales close to 50% of the U.S.-only TCAR market before we've even entered the market with both CAS and TCAR solutions. Therefore, with the U.S. market entry of both CAS and TCAR platforms, we are confident in the significant revenue expansion upon regulatory approval.

To recap our regulatory status in the U.S., in September 2024, we submitted the final module of our premarket approval, our PMA application to FDA, and have since engaged in an interactive review process. We are optimistic for a timely and positive decision, which would enable our U.S. market launch of CGuard Prime, triggering the commercialization of our best-in-class stent platform in the U.S. While our review continues with FDA, we've been diligently building a world-class commercial and operational engine to support our highly anticipated U.S. launch. We are not just prepared, but ready to aggressively execute a robust commercial and operational launch plan. We believe CGuard Prime is poised to redefine carotid artery disease treatment and stroke prevention and plan to fully capitalize on the shift toward an endovascular-first approach. Our new headquarters in Miami, Florida, is strategically positioned to support the anticipated U.S.

Launch and commercialization of CGuard Prime upon approval. This state-of-the-art facility represents our commitment to scaling operations in the U.S. and further strengthens our ability to execute on a national level. Contingent upon U.S. approval, we also believe we are well-positioned to meet robust demand for CGuard Prime, as our infrastructure and operations will support significant growth and success in the U.S. market. In addition to building the support functions of marketing and commercial operations, we have onboarded more than a dozen world-class field sales professionals and will continue to build our field sales presence with intention over the next 24 months. There is overwhelming interest from highly talented seasoned professionals interested in joining our organization at this pivotal time, reflecting the potential of CGuard Prime and the shifting change in the landscape of carotid revascularization.

Given us confidence in our submission and the pending approval of CGuard Prime is the overwhelmingly positive one-year data from the C-GUARDIANS pivotal clinical trial, first presented at the Leipzig Interventional Course in 2024. This trial evaluated the safety and efficacy of CGuard and CGuard Prime in treating carotid artery stenosis, enrolling 316 patients across 24 trial sites in the U.S. and Europe. The C-GUARDIANS results demonstrated an unprecedented primary endpoint with major adverse events rates of just 0.95% through 30 days and 1.95% through 12 months post-procedure, making this the lowest event rate ever reported in a pivotal study of carotid stent or embolic protection device. As a reminder, receipt of pre-market approval from the FDA would also trigger the second of four milestone-based financing tranches pursuant to the transformational private placement of up to $113.6 million that we originally announced in May of 2023.

If fully exercised, the second tranche would raise an additional $17.9 million in gross proceeds for the company, like the first tranche, which was triggered this past July upon the presentation of positive one-year C-GUARDIANS pivotal data. After pre-market approval, the remaining two milestones would each trigger additional tranche financings, including receipt of FDA clearance for the SwitchGuard TCAR neuroprotection system, along with our TCAR-indicated CGuard Prime stent, and the completion of four quarters of commercial sales of CGuard Prime in the United States, which we anticipate in the back half of 2026, pending the approvals I mentioned earlier and based on our current plans. Shifting gears to our clinical pipeline, as a reminder, in October, we received the FDA approval for an investigational device exemption, or IDE, application to begin the C-GUARDIANS II pivotal study of our CGuard Prime carotid stent system and TCAR procedures.

This study is intended to evaluate the safety and effectiveness of our novel CGuard Prime stent platform in a short TCAR-indicated version compatible with commercially available neuroprotection systems for TCAR procedures. I'm pleased to share that we are enrolling very well in this study as we progress into 2025. We've also engaged with FDA in the filing of our CGuard Prime IDE for the investigation of our complete TCAR solution, including the CGuard Prime 80 stent and SwitchGuard neuroprotection system, and anticipate approval to initiate the study in the second quarter of this year. With more than 30,000 TCAR procedures performed in the U.S. annually, TCAR is a large market opportunity that remains strategically important as we build a comprehensive approach to carotid revascularization.

Our ongoing investments in both CAS and TCAR are aimed at serving the broadest physician base, positioning us to lead as product innovation and procedural reimbursement continue to shift toward an endovascular-first standard of care. At this point, I'd like to turn the call over to Craig to review the financials. Craig.

Craig Shore (CFO)

Thanks, Marvin. For the fourth quarter of 2024, total revenue increased 10.6% to $1.9 million from $1.7 million during the fourth quarter of 2023. This increase was predominantly driven by growth in existing and new markets. Gross profit for the fourth quarter of 2024 decreased by $36,000, or 7.1%, to $469,000, compared to a gross profit of $505,000 for the fourth quarter of 2023. This decrease in gross profit resulted from an increase in cost of goods sold. The increase was primarily due to an increase in material and labor costs driven mainly to higher sales volume and increased compensation expense for new and current employees. The increase of goods sold was offset by an increase of revenues. Gross margin decreased to 24.1% during the three months ended December 31st, 2024, from 28.7% during the three months ended December 31st, 2023, for reasons just mentioned.

Total operating expenses for the fourth quarter of 2024 were $9.8 million, an increase of $3.5 million, or 55.8%, compared to $6.3 million for the fourth quarter of 2023. This increase was primarily due to increasing expenses related to salaries and share-based compensation associated with our expected launch into the U.S. market, offset by a reduction in clinical trial expenses as we near completion of the CGuard Prime trial. Total financial income for the fourth quarter of 2024 was $252,000, a decrease of $216,000, or 46.1%, compared to $468,000 for the fourth quarter of 2023. This decrease was primarily due to less interest income from investments in marketable securities and money market funds.

Net loss for the fourth quarter of 2024 totaled $9.1 million, or $0.19 per basic and diluted share, compared to a net loss of $5.4 million, or $0.16 per basic and diluted share for the same period in 2023. For the full year 2024, total revenue increased 13% to $7 million from $6.2 million during the full year of 2023. This increase was primarily driven by growth in existing and new markets. Gross profit for the full year 2024 decreased by $301,000, or 16.7%, to $1.5 million, compared to a gross profit of $1.8 million for the full year of 2023. This decrease in gross profit resulted from an increase in cost of goods sold. This increase was primarily due to an increase in material and labor costs driven mainly to higher sales volume and increased compensation expenses for new and current employees.

The increase of cost of goods sold was offset by an increase of the revenues. Gross margin decreased to 21.5% for the full year 2024 from 29.1% during the full year 2023 for reasons just mentioned. Total operating expenses for the full year 2024 were $35 million, an increase of $12 million, or 52.5%, compared to $22.9 million for the full year 2023. This increase was primarily due to increases in expenses related to the salaries and share-based compensation associated with our expected launch into the U.S. market, offset by a reduction in clinical trial expenses as we near completion of the CGuard Prime trial. Total financial income for the full year 2024 was $1.6 million, an increase of $265,000, or 20.5%, compared to $1.3 million for the full year 2023. This increase was primarily due to an increase in interest income from investments in marketable securities and money market funds.

Net loss for the full year 2024 totaled $32 million, or $0.76 per basic and diluted share, compared to a net loss of $19.9 million, or $0.82 per basic and diluted share for the full year 2023. As of December 31, 2024, cash and cash equivalents in marketable securities were $34.7 million, compared to $39 million as of December 31, 2023. Regarding our future expectations and roadmap for growth, we're optimistic for an exciting year ahead. However, please note that we're not providing any forward-looking revenue guidance today. We look forward to doing so as our Catalyst pathway advances following a potential U.S. FDA approval in the first half of the year. This concludes our prepared remarks. We'll now open the call for questions. For the Q&A segment, we'll be joined by Shane Gleason, InspireMD's Chief Commercial Officer. Operator.

Operator (participant)

Thank you. As a reminder, ladies and gentlemen, if you would like to ask a question, please press star one on your telephone keypads. If you would like to remove yourself from the queue, please press star two. Again, that is star one for a question. While that queue builds, we will take our first question from Adam Maeder from Piper Sandler. Please go ahead.

Adam Maeder (Managing Director and Senior Research Analyst)

Hi, good morning, Marvin, Craig, Shane. Thanks for taking the questions. Congrats on the quarter and the progress in 2024. A couple from me, maybe just to start on U.S. approval timing for CGuard Prime, the stent product. Just wanted to see if there's anything more you can really kind of share around visibility into approval, the dialogue or discussion that you're having with reviewers, and anything to mention or call out, just given some of the macro backdrop and the headlines with potential changes at FDA. Should we expect an impacted timing or still feeling pretty good about first half 2025? I had a couple of follow-ups. Thanks.

Marvin Slosman (CEO)

Good morning, Adam. Thanks for the question. Yeah, we remain optimistic on the first half approval, as we've previously noted, and of course, are building our resources appropriately to build toward an effective launch following the approval. I would say that we've been having a very productive, interactive approach with FDA, which has been helpful, as has been the modular approach that we selected to take from the beginning, allows us to organize the PMA submission in an efficient manner. No direct impact related to sort of the macro view and some of the unprecedented things that FDA is going through, and nothing material other than just continuing to work through what is generally a very complex process, as you know, for PMAs in general. We remain committed to that timetable.

Adam Maeder (Managing Director and Senior Research Analyst)

Yeah. Okay. Perfect. That's great to hear. For the second question, you had some comments in the prepared remarks around CGuard Prime two and three, but wanted to go a little bit deeper there. In terms of CGuard Prime two enrollment, it sounds like that's going well. In terms of timing for integration into the competitor neuroprotection system, is that still tracking to early 2026? For the second part of the question, CGuard Prime three, it sounds like you're going to initiate that study in Q2 of this year. Is first half 2026 still a good assumption for SwitchGuard approval and launch in the U.S.? I had one more. Thanks.

Marvin Slosman (CEO)

Yeah. To answer the first question, Adam, enrollment is going well, and we're holding the timeline related to that supplement being approved in early 2026 for commercial launch. We're still very enthusiastic about the feedback that we've received from the physicians using the product and look forward to entering the TCAR space with that strategy. Everything remains on track related to that piece. For the second part, timeline also remains consistent on SwitchGuard in the second half of 2026. Again, we're anticipating an approval and initiating enrollment. Many of the same sites and physicians are going to be enrolling in both of those. We're enthusiastic and optimistic for both of those entries as we get closer to the TCAR space.

Adam Maeder (Managing Director and Senior Research Analyst)

Okay. Fantastic. Marvin, sorry, just one clarification for SwitchGuard. First half 2026 approval and launch or second half 2026?

Marvin Slosman (CEO)

Second half, sorry. I was referring to initiating the trial part of this in the first half of 2025, I guess. Had my years mixed up.

Adam Maeder (Managing Director and Senior Research Analyst)

Okay. Just one last one on the guidance front. Sorry. I know you don't have guidance, but just wanted to ask how you're thinking about the business at a high level. The international business has done well, probably doesn't get enough attention. Obviously, a lot of the focus is on the U.S., and you're getting closer and closer there. Just how do we think about the business at a high level for 2025, U.S. versus OUS? Just any color you could offer up there would be much appreciated. Thanks again.

Marvin Slosman (CEO)

Yeah. I'll take a pass at that. Of course, you've got Shane in the room here, so he can certainly offer color to that as well. The OUS business continues to be strong and growing, and we continue to focus our resources around that established market. It provides us a tremendous amount of value at many different levels. The shift toward the U.S. focus will obviously continue, but the second half post-approval of 2025 is really a foundational building time for us. We're getting new reps into territories. We're having to go through administrative VAC committees and otherwise. I would sort of think about this as a foundational building time as we get through the second half of 2025, and we can get level set into 2026. We're also building our commercial team with a pretty predictable cadence of training classes and onboarding reps.

We hope to take full advantage of the enthusiasm of CGuard Prime and what the market has indicated, but at the same time, have to remain realistic about how quickly we can actually get into hospitals and into cases. We, of course, want to follow a very predictable approach to how those cases perform. Okay. Thanks. Go ahead.

Adam Maeder (Managing Director and Senior Research Analyst)

That's helpful. Thank you.

Operator (participant)

Thank you. As a reminder, ladies and gentlemen, that is star one for a question. We'll take our next question from Frank Takkinen with Lake Street Capital Markets. Please go ahead.

Frank Takkinen (Senior Research Analyst)

All right. Thanks for taking the questions. Congrats on the progress. Maybe to start on kind of the commercial launch process of things, is there anything you can be doing with the value analysis committees today to start preparing for launch? Also, kind of a separate but related question. Once you are launched and on the market, maybe speak to kind of expectations around adoption at a specific site. Do you feel like they test it for a quarter or two, or do they kind of jump in two feet first, given the clinical data that's out there, and kind of shift over their whole business in one swoop?

Marvin Slosman (CEO)

Good morning, Frank. I'm going to let Shane handle that one.

Shane Gleason (Chief Commercial Officer)

Yeah. Thanks, Marvin. Good morning. Excuse me. Good morning, Frank and Adam. I think this is one of those places where I use a phrase I might overuse, which is, "All politics is local," and different hospitals act differently. What we can't do is go out and promote a product at this point, but as Marvin mentioned, we had our first cohort of salespeople go through training last week, and they are armed with some really good claims data in terms of knowing about fishing where the fish are. They know where the procedures are happening. We're hiring people that have long-standing relationships, knowledge of these accounts, who can start to form their position in line for VAC reviews.

Most hospitals will not consider a product until it's approved, but we know when their next meetings are over the course of the next months and quarters. In many cases, we're able to kind of hold a place in line so that upon approval, we won't then be queuing up at the back line for consideration. That's probably the best thing we could be doing at this point, holding our place so that we're closer to consideration at the time of approval. On the question about whether people will dabble or jump right in, again, it'll be a little bit of both, but we're seeing a lot of enthusiasm. We've been going to conferences for a couple of years here with this product. The data is becoming more and more understood, and there's more excitement about a next-generation dual-layer mesh-covered stent entering the market.

There are a lot of people at site unseen have told us that they're excited to start using it and using it all the time. Of course, it's our job to go out there and solidify that and make that happen.

Frank Takkinen (Senior Research Analyst)

Okay. That's helpful. Appreciated the comments around the commercial infrastructure. I think you mentioned 14 personnel onboarded so far, and then you referenced kind of a steady cadence of new additions. Can you just maybe bring us a little bit into the split of that 14 of territory managers versus regional managers, and then that cadence of new rep and territory manager additions going forward?

Shane Gleason (Chief Commercial Officer)

Yeah. We have 13 people that were in here last week, and that includes the first four sales directors, West, Central, Northeast, Southeast, and it's their job to build the team going forward. The rest of those are individual contributors, and that's where we'll continue our staffing for the balance of the year, both in territory manager and clinical specialist positions.

Frank Takkinen (Senior Research Analyst)

Okay. That's helpful. Just final one for me. I know you're not providing any guidance on the top line, but was hoping you can maybe speak anecdotally to the OpEx structure as we go forward. Obviously, there's a lot of commercial hiring, but how should we think about OpEx growth throughout 2025?

Craig Shore (CFO)

Yeah. Hi, this is Craig Shore, the CFO. As Shane just mentioned, there'll be significant growth in the sales organization, of course, through the hiring of the territory managers and the sales reps, but we also will have growth in the R&D area as well. We're doing C-GUARDIANS II, C-GUARDIANS III, and we still have completion of C-GUARDIANS I and the PMA submission costs associated as well. You will continue to see growth in the operating expenses.

Frank Takkinen (Senior Research Analyst)

Okay. That's helpful. Thanks for taking the questions.

Operator (participant)

Thank you. Next, we'll go to Richard Nesbitt with InspireMD. Please go ahead.

Richard Nesbitt (Analyst)

I have one simple question for whoever wants to answer. On a scale of 1 to 10, what are your expectations of meeting your goals for this year?

Marvin Slosman (CEO)

Oh, our expectations are always 10. They remain 10 consistently. We're always shooting for the top to meet the expectations we set for the group.

Richard Nesbitt (Analyst)

That's all I wanted to know. You feel very positive about all that you're projecting. Am I correct?

Marvin Slosman (CEO)

Indeed.

Richard Nesbitt (Analyst)

Okay. Thank you.

Marvin Slosman (CEO)

Thank you.

Operator (participant)

Perfect. Now that our Q&A session has ended, I will now turn the call back over to Marvin Slosman with closing remarks.

Marvin Slosman (CEO)

I'd like to thank everyone for joining the call and for the ongoing support of our mission to lead the carotid revascularization market. We're very pleased with our execution in 2024 and look forward to the many milestones ahead in 2025, including the potential U.S. approval and launch of CGuard Prime. We believe InspireMD is uniquely positioned to transform stroke prevention by addressing vast unmet needs with our differentiated technology and strong clinical foundation. With a clear path to market expansion and a commitment to improving patient outcomes, we believe the company is well equipped to drive meaningful impact for patients and providers alike, and we're excited for the opportunities ahead and remain committed to advancing care in this space. Thank you.

Operator (participant)

Thank you. Ladies and gentlemen, that does conclude today's conference. We appreciate your participation. You may disconnect at any time.