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Q&A Highlights

• iSecure Medical (TASE:PMCN) believes ProSense will become essential for various medical professionals and patients.
• CFO and COO Ronen Zimmerman expects U.S. sales to boost revenue trends upon FDA clearance.
• VP of Regulatory and Quality Affairs Shay Labov discussed the importance of working closely with the FDA for post-marketing controls to ensure product safety and efficacy.

As iSecure Medical continues to develop its ProSense system and prepare for potential market expansions, the company's financial health appears to be on a positive trajectory. With key regulatory decisions on the horizon and strategic market plans in place, iSecure Medical is poised to potentially transform the treatment landscape for early-stage breast cancer and beyond.

Full transcript - Icecure Medical Ltd (NASDAQ:ICCM) Q3 2024:

Conference Operator: Good morning and thank you for standing by. Currently, all participants are in a listen only mode. After management's discussion, there will be a question and answer session. Please be advised that today's conference call is being recorded. I will now turn the conference over to Michael Polaview.

Please go ahead.

Michael Polaview, Unspecified Representative, iSecure Medical: Thank you, Yoni, and welcome to iSecure Medical's conference call to review the financial results as of and for the 9 months ended September 30, 2024, and provide an update on recent operational highlights. You may refer to the earnings press release we issued earlier this morning. Participating on today's call are iSecure Medical's CFO and Chief Operating Officer, Ronen Zimmerman and the company's VP of Business Development and Global Marketing, Talip Rouje Del Kazor. Additionally, iSecure's VP of Regulatory and Quality Affairs and Clinical Applications, Shay Labov, will also join the call for questions and answer session. ISecure's CEO, Eyal Shamir, is unable to join today's call due to a personal matter and ask that I wish everyone in the U.

S. A happy Thanksgiving on his behalf. Eyal will be attending next week's Radiological Society of North America, or RSNA, Annual Meeting in Chicago, and I'm sure some of you will be seeing him there. Before we begin, I will now take a moment to read a statement about forward looking statements. This call and the question and answer session that follows that contain forward looking statements within the meaning of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995 and other federal securities laws.

Words such as expects, anticipates, intends, plans, believes, seeks, estimates and similar expressions or variations of such words are intended to identify forward looking statements. For example, we are using forward looking statements in this presentation when we discuss the belief that the company's financial results demonstrate growing adoption and traction for its cryoablation system worldwide, the prospective timing of the FDA decision concerning potential marketing authorization for ProSense, the belief that the FDA advisory panel meeting is final milestone prior to the FDA's decision on the marketing authorization, the potential benefits from receiving FDA marketing authorization, the belief that the growing body of evidence on Pro SENT's safety and efficacy across indications gives doctors and patients confidence and supports the company's commercial efforts, the belief that the company has several upcoming catalysts that are value enhancing that Terumo Corporation expects to file regulatory approval of Pro for breast cancer in Japan in 2025. We believe that the company's balance sheet positions it well to execute on revenue growth opportunities worldwide to the FDA grant marketing authorization in the Q1 of 2025 for ProSens in early stage breast cancer and the expectation that should the FDA grant clearance to ProSens prospective sales in the U.

S. As a result would further add momentum to its current upward trend in revenue. Because such statements deal with future events and are based on iSecure's current expectation, they are subject to various risks and uncertainties and actual results, performance or achievements of iSecure could differ materially from those described in or implied by the statements during this call. The forward looking statements contained or implied during this call are subject to other risks and uncertainties, many of which are beyond the control of the company, including those set forth in the Risk Factors section of company's annual report on Form 20 F at the year end December 31, 2023, filed with the Securities and Exchange Commission on April 3, 2024, which is available on the SEC's website, www.sec.gov. The company disclaims any intention or obligation except as required by law to update or revise any forward looking statements whether because of new information, future events or otherwise.

This conference call contains time sensitive information and speaks only as of the live broadcast today, November 26, 2024. In addition, during the course of this call, we will discuss certain metrics that are non GAAP measures and we refer you to reconciliation tables and other information about these non GAAP measures included in the earnings press release that we issued earlier this morning. I will now turn the call over to ICER Medical's VP of Business Development and Global Marketing, Talith. Please go ahead.

Talip Rouje Del Kazor, VP of Business Development and Global Marketing, iSecure Medical: Thanks, Michael. Hello, everyone, and thank you for joining us today to review our 9 months 2024 results. This has truly been a transformative year for us at ICU, both in terms of milestones, improving financial metrics and our growth trajectory. During the 1st 9 months of 2024, ProSols consulant drop sales increased by 36%, non GAAP gross profit more than doubled growing by 104% and non GAAP gross margin increased to 40% from 27% as compared to the same period last year. Our financial results demonstrate growing adoption traction for our cryoablation system worldwide and Ronen will go over the numbers during his prepared remarks.

In April 2024, we successfully completed our I3 trial. Following this, the impressive data for PROSENCE as an alternative to lumpectomy in early stage low risk breast cancer patients were published in highly prestige peer reviewed publication and were presented at leading conference including the Blue Angel American Society of Breast Surgeons. The positive outcome of the FDA advisory partner earlier this month bring us one step closer towards potential marketing authorization for PROSENCE. We believe this is the final milestone leading up to the FDA's decision on marketing authorization. We remain engaged with the FDA both regarding the authorization and to ensure the opinion of the panelists are addressed in the labeling process.

We continue to expect that the FDA decision will occur in the Q1 of 2025. If marketing authorization is received, it would potentially allow us to offer women in the U. S. A non surgical alternative to lumpectomy as early as in the next few months. Our U.

S. Sales team and infrastructure are ready and poised to deliver. We have already established a reimbursement code for facility expense. Before marketing authorization, we will be applying for additional reimbursement, including the physicians' expense, widely known as the CPT-one code. We believe ProSens will become an indispensable tool for breast surgeons, interventional radiologists, interventional oncologists and patients alike.

We believe that the large and growing body of evidence on PROSENCE safety and efficacy in breast cancer as well as in other indication gives doctors and patient confidence and supports our commercial efforts. Since the start of the Q3 an astonishing 11 independent studies have been published and presented on PROSENCE, most of which were for breast cancer. We are particularly pleased that PROSENCE was recently chosen as the exclusive cryoablation system in one of the world's largest breast cryoablation studies to date. The PRASAN study, which is financed by the Umberto Veronese Foundation and the Italian Ministry of Health and led by multidisciplinary collaborators will treat 233 patients at the prestige European Institute of Oncology. Interestingly, this study will expand on the treatment population in our I3 study.

PRECYNE will treat younger women aged 50 and older and will also treat patients with both luminal B and luminal A breast cancer. Looking ahead to the rest of the year to 2025, we believe that we have several upcoming catalysts that are value enhancing. Interim results from our ICE (NYSE:ICE) Secret study are expected in early December. ICE Secret is a prospective multicenter single arm clinical trial of PROSENCE for the treatment of kidney cancer. Prior interim results demonstrated an 89.5% recurrence re rate at a mean follow-up of 22.2 months.

Our partner in Japan, Terumo Corporation is expected to file for regulatory approval of PROSENCE for breast cancer in Japan in 2025 with the aim of receiving clearance. We also expect that numerous additional third party data on process will be published in medical journals and presented at Prestige Medical Conference throughout 2025. Now I will turn the call over to Ronnen to go over the numbers. Ronnen?

Ronen Zimmerman, CFO and Chief Operating Officer, iSecure Medical: Thank you, Talit. As Talit mentioned earlier, growth momentum continues for ProSense sales. For the 9 months ended September 30, 2024, ProSense systems and disposable probe sales increased by 36% to $2,320,000 compared to $1,700,000 for the 9 months ended September 30, 20 23, driven primarily by higher sales in Europe, the U. S. And Japan.

Total (EPA:TTEF) revenue when including revenue recognition and other services from our Terumo Corporation agreement in Japan grew by 22 percent to $2,420,000 for the 9 months ended September 30, 2024 as compared to $1,970,000 for the 9 months ended September 30, 2023 due to the increase in sales of products and systems and disposables, which was partially offset by a decrease in revenue recognition and other services in Japan of 100 $1,000 $274,000 in the 1st 9 months of 2024 and 2023, respectively. Gross profit increased by 41 percent for the 9 months ended September 30, 2024 to $1,030,000 compared to $731,000 for the 9 months ended September 30, 2023. Gross margin increased to 43% for the 9 months ended September 30, 2024 compared to 37% in the 9 months ended September 30, 2023. We are pleased to report that non GAAP gross profit, which represents gross profit from sales of our products, not including revenue recognition from distribution agreement, more than doubled for the 9 months ended September 30, 2024 to $934,000 from $457,000 for the 9 months ended September 30, 2023, an increase of 104%. Non GAAP gross margins for the 9 months ended September 30, 2024 increased to 40% from 27 percent for the 9 months ended September 30, 2023.

Reconciliations of these non GAAP figures are included in the earnings press release that are issued earlier today. Total operating expenses for the 9 months ended September 30, 2024 decreased to $12,200,000 compared to $12,89,000 for the nine months ended September 30, 2023. The decrease is attributable mostly to reduction in research and development and general and administrative expenses. Net loss narrowed during the 9 months ended $10,84,000 or $0.22 per share compared to net loss of $11,660,000 or 0.2 $6 per share for the same period last year. As of September 30, 2024, company had cash and cash equivalents of approximately $10,700,000 and as of October 31, 2024, the company had cash and cash equivalents of approximately $10,000,000 During the 1st 9 months of 2024, we raised 8.1

Shay Labov, VP of Regulatory and Quality Affairs and Clinical Applications, iSecure Medical: 24, we raised

Anthony Vendetti, Analyst, Maxim (NASDAQ:MXIM): $8,100,000 in net

Ronen Zimmerman, CFO and Chief Operating Officer, iSecure Medical: proceeds from the sales of ordinary shares under our at the market facility. We believe that the expected milestones position us well to execute on revenue growth opportunities worldwide and particularly sales in the U. S. Should the FDA grant marketing authorization in the Q1 of 2025 for process in early stage breast cancer. Cancer.

Operator, we will now open the call for Q and A. Thank

Conference Operator: The first question is from Anthony Vendetti of Maxim. Please go ahead.

Anthony Vendetti, Analyst, Maxim: Thank you. So I want to talk about first the U. S. And then Japan. Based on the 9 to 5 ADCOM meeting vote for in favor for ProSense, In your discussions with the FDA, is it likely have they given you guidance that they would likely make a decision before the end of March?

Could it be sooner? Could it be later? And then in Japan, I know you mentioned in the press release that you expect Toromo, your partner, to file for regulatory approval in 2025. Is that in the first half of twenty twenty five, second half of twenty twenty five? And then what's the approval process there once they file for approval?

Thanks so much.

Ronen Zimmerman, CFO and Chief Operating Officer, iSecure Medical: Hi, Anthony, and thank you for your questions. I will start with the FDA in the U. S. With your questions regarding that. So the FDA didn't provide us exact timing for providing clearance.

But we do believe based on our discussions that we should expect to receive the final answer somewhere in Q1. Of course, when we have more data, we'll be happy to share with the public. As far as in Japan, we know that Terumo are working on their submission and we're assisting them, we're working with them very closely. They are using the trial data and they are planning to do it in 2025. We're not on the date, but again, we will probably update everyone as we go forward in our work with Terumo.

Anthony Vendetti, Analyst, Maxim: Just a follow-up on that though. What is the approval process like once you actually file? Is there a clock ticking? I don't know how Japan works in terms of reviewing the actual application.

Ronen Zimmerman, CFO and Chief Operating Officer, iSecure Medical: So I will defer this question to Shay. Shay, can you please answer?

Shay Labov, VP of Regulatory and Quality Affairs and Clinical Applications, iSecure Medical: Yes. Hi, Anthony and others. So taking into account the submission that will be done by TOROMO in Japan with the I3 study data, including the outcomes from the FDA. We expect that it will be approximately a year from submission until the TORUMO will get approval from the PMDA in Japan.

Anthony Vendetti, Analyst, Maxim: Okay, that's helpful. Thanks so much. I'll hop back in the queue. Thanks.

Conference Operator: The next question is from Kemp Dolliver of Brookline Capital Markets. Please go ahead.

Kemp Dolliver, Analyst, Brookline Capital Markets: Hi. Thank you for taking the question. Where do you stand with regard to your U. S. Sales effort?

And as you look into 20252026, assuming the approvals and the timetable you've mentioned, what's the pace of expected pace of build out of the U. S. Commercial team?

Ronen Zimmerman, CFO and Chief Operating Officer, iSecure Medical: Thank you, Ken for the question. We will start the year, we will start 2025 with the same number of sales reps we currently have. And currently, we have our VP, Mr. Schadgood, 2 sales reps and clinical support. As we get the FDA clearance, hopefully, we will continue to grow and add sales reps.

It will be a step approach based on our plans, but we expect that we will finalize 2025 probably at around between 6 to 10 sales reps.

Kemp Dolliver, Analyst, Brookline Capital Markets: Great. And with regard to your R and D expense, it has decreased this year as you expected, though it appeared in this period the decline was smaller. I'm assuming that was probably spending in preparation of the adcom. So as we look into say the balance of the year and early next year, do you expect the any further sequential decreases in R and D spending or somewhere around the current level?

Ronen Zimmerman, CFO and Chief Operating Officer, iSecure Medical: So as far as the R and D expenses, we did expect to see reduction in costs for R and D since we finalized the development of our new XCell system. We are working also on new probes, but the costs are definitely not the same as developing a completely new system. In 2025, it's too early to say right now, but we do expect to work actually we did start to work on our multi probe system. So we will continue to work on that in 2025.

Kemp Dolliver, Analyst, Brookline Capital Markets: Super. Thank you.

Conference Operator: The next question is from Yi Chen of H. C. Wainwright. Please go ahead.

Yi Chen, Analyst, H.C. Wainwright: Thank you for taking my questions. So for those 5 panelists who did not believe that process benefits outweigh the risk and voted no, Do you think the point is valid? And do you think there's any aspects of process that could be improving the future to address those panelists' concern?

Ronen Zimmerman, CFO and Chief Operating Officer, iSecure Medical: Hi, and thank you for your question. I will defer to Shay. Yes.

Shay Labov, VP of Regulatory and Quality Affairs and Clinical Applications, iSecure Medical: Thank you for this question. So the 5 panelists that voted no, actually they also mentioned it during their explanation to the voting. So 3 of them said that they would have vote maybe if they could.

Anthony Vendetti, Analyst, Maxim: The

Shay Labov, VP of Regulatory and Quality Affairs and Clinical Applications, iSecure Medical: main reason for most of them was to encourage FDA to work with ICU closely and to define special controls post marketing in order to have a control on the continuous control on the safety and efficacy of the product and the way it performed in the field. One of the additional one who voted no, it was the statistical person who believed that there are some uncertainties in our I3 study. And this is something that by getting the approval and start to use the product more widely, we will be and collecting the data, we will be able to determine that the results that are being seen out there in the field are similar to what we have seen in the I3 study.

Ronen Zimmerman, CFO and Chief Operating Officer, iSecure Medical: I would like to add that some of the panelists who voted no also said that they're a little bit worried about other companies using our de novo clearance in order to get their own predicate device. And this is some of the special controls that they requested for the FDA to work with us.

Anthony Vendetti, Analyst, Maxim: Okay. Thank

Conference Operator: The next question is a follow-up question from Anthony Vendetti. Please go ahead.

Anthony Vendetti, Analyst, Maxim: Yes. Hi. On the PACEQUID trial, are you still expecting interim top line results in 2024 by the end of December? And then can you also talk about because we know the PROSENCE can treat other tumors and there's other indications liver, lung, kidney. Can you discuss the U.

S. Kidney cancer treatment market? What that opportunity is and how far down the road is that in terms of I know the breast cancer indication is the priority, but I'm just curious as we think out in 2025, 2026, what's the opportunity for kidney? Thank

Ronen Zimmerman, CFO and Chief Operating Officer, iSecure Medical: you. Great. So regarding the iSECRET trial, we expect to list the results or see them on at the beginning of December, somewhere in the 1st week and these are interim results still with about approximately 3 years follow-up. As far as the indication in the U. S, we know that there are about 80,000 new patients every year.

So this is also an unmet need and we're definitely looking at it. But as you said, our first priority is first of all to use our process for breast cancer, mostly because the unmet need in breast cancer is extremely high and we do see the demand and we also see the utilization in the U. S. And the traction that we have.

Anthony Vendetti, Analyst, Maxim: Okay, great. Thank you for that color. I'll hop back. Great. Thank you.

Conference Operator: There are no further questions at this time. I will turn the call over to Ronen Zimmerman for a concluding statement.

Ronen Zimmerman, CFO and Chief Operating Officer, iSecure Medical: Thanks everyone for participating on today's call and for those listening in the U. S. Have a happy Thanksgiving. We look forward to the FDA's decision on marketing authorization of process in early stage breast cancer. Should the FDA grant clearance, then we expect sales in the U.

S. To add further momentum to our current upward trend in revenues. Also Eyal and I will be San Francisco in early January and meeting investors during the JPMorgan (NYSE:JPM) Healthcare Conference. Please reach out to Michael if you want to schedule a meeting. Thank you all.

Conference Operator: Thank you. This concludes the ICE CURE Third Quarter 2024 results conference call. Thank you for your participation. You may go ahead and disconnect.

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