Greetings and welcome to the InspireMD Third Quarter 2018 Earnings Call. At this time, all participants are in a listen only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions]. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jeremy Feffer. Thank you, Mr. Feffer. You may begin.

Thank you, Devin. Good morning, everyone, and thank you for joining us for the InspireMD's third quarter 2018 business update conference call. On the call with us today is Jim Barry, Chief Executive Officer of InspireMD; and Craig Shore, Chief Financial Officer. At the conclusion of today's prepared remarks, we will open the call for your questions. Before we begin, let me take a minute to note that this conference call may contain forward-looking statements. Forward-looking statements address future events and conditions and therefore involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated in such statements. Such information is subject to known and unknown risks, uncertainties, and other factors that can influence actual results or events and cause actual results or events to differ materially from those stated, anticipated, or implied in the forward-looking information. Listeners are cautioned not to place undue reliance on forward-looking information as no assurance can be given after the future results, levels of activity, or achievements. With that, I will turn the call over to Jim Barry. Jim?

Thanks, Jeremy, and thanks everybody for joining us this morning. During the third quarter, we continued to execute our multi-faceted commercial strategy designed to make our novel best-in-class CGuard Embolic Prevention System which we prefer to as CGuard EPS, the treatment of choice for patients in need worldwide. For those of you who may be new to the story CGuard EPS is a highly differentiated minimally invasive treatment for carotid artery disease designed around our proprietary and elegantly simple MicroNet technology to dramatically reduce or even eliminate the incidence of stroke following carotid artery disease procedures. Worldwide an estimated 15 million people suffer from stroke annually resulting in 5.7 million deaths and five million left permanently disabled. What's more troubling is that the incidences of stroke among young people aged 20 to 64 is increasing rapidly. One of the major risk factors of stroke is carotid artery disease or high grade carotid stenosis. So we believe there exists a need for a new minimally invasive product that addresses the risk of stroke in patients with carotid artery disease that today often leads treating physicians to pursue a more invasive surgical treatment known as carotid endarterectomy. One key part of our growth strategy is expanding our reach in educational initiatives beyond the intervention typically performed carotid stenting procedures to also include vascular surgeries. Approximately 80% of patients with high-grade carotid stenosis are treated surgically with carotid endarterectomy performed by vascular surgeons with all the risks associated with an invasive intervention. From our perspective, this requires a different approach as vascular surgeons so far seem to be hesitant to adopt carotid artery stenting due to stroke risks associated with conventional carotid stents. However, this is a key point of differentiation of CGuard as a result of our proprietary MicroNet mesh technology which…

Thanks Jim. Revenue for the third quarter ended September 30, 2018, was $759,000 compared to $718,000 during the same period in 2017. The increase was primarily due to an increase in sales of CGuard EPS as a result of our transition from our prior exclusive distribution partner for most of Europe to local distributor as well as expanding into new geographies such as India, Mexico, and Vietnam. Total CGuard revenue was $604,000, an increase of 15% from $526,000 in the third quarter of 2017. On a year-to-date basis, through September 30, CGuard grew a robust 72% versus the comparable period in 2017. The company's gross profit for the third quarter ended September 30, 2018, was $198,000 compared to $153,000 for the same period in 2017. The increase in gross profit was largely attributable to the increase in volume of sales. Gross margin increased to 26% in the three months ended September 30, 2018, from 21% in the same period in 2017, driven mainly by a higher average sales price of MGuard Prime EPS and a reduction in cost of one of the main components of CGuard EPS. Total operating expenses for the quarter ended September 30, 2018, were $2.2 million a decrease of over 3% compared to the same period in 2017. The decrease was driven by a decrease in salary expenses primarily due to a salary related accrual in 2017, and a decrease in share-based compensation expenses, partially offset by an increase in quality assurance and regulatory expenses related to annual routine audit activities which included certain validation reviews required every two years. Financial expenses for the quarter ended September 30, 2018, were $32,000 compared to $1,000 for the same period in 2017. Net loss for the quarter totaled approximately $2 million or $0.05 per basic and diluted share…

Thank you. We will now be conducting a question-and-answer session. [Operator Instructions]. Our first question comes from the line of Steve Criberg [ph] from Foresight Investing. Please proceed with your question.

Good morning. I looked at the Investor Presentation and the number you just quoted, you agreed with that about the total potentially full dilution number of shares outstanding of 44 some million, but I'm having trouble reconciling that with the 8-K you filed on July 5th where you said that in the July 29th offering you issued 10.85 million common units which translates to 10.85 million common shares and another 10.85 million Series B warrants to purchase one share for each of the warrants. So that's about 22 million shares and then the 8-K went on to say that in addition you issued 22.48 million pre-funded units, each which represents 22.48 million pre-funded warrants to purchase one share each for each warrant and another 22.48 million series B warrants. And when I add all that up I get way more than 44 million shares, perhaps you could clarify for me what I'm misunderstanding in that 8-K you filed on June 29th.

Right. Okay, thanks for your question. So the numbers you're quoting are actually fully diluted. I'm talking about the common shares outstanding. So for just two things, one you also talk a little bit about the sue that was issued by Wainwright which is not included in the numbers I quoted. So we basically have 44.7 million shares outstanding but then there's another 40.1 or 40.7 million warrants outstanding. So if you would actually look at our fully diluted number is actually 86 million shares. I think that’s what you’re alluding to. I'm just talking about the shares outstanding and the actually underlying shares are the Preferred B and C and the prefunded are actually almost identical for underlying shares anyway, that's why we like to include them as this better shares outstanding.

So if all warrants in Series D warrants and pre-funded warrants if everything's converted, there's really 86 million shares -- there would be 86 million shares, is that right?

Exactly.

Okay. Thank you for clarifying that for me. Who is your main competitor making carotid stents and is there any technology embedded in their stents that would have the same functionality as your stent, the CGuard?

Yes, I put them into two different categories, there is manufacturing of conventional carotid stents which has been around really stents the mid-90s for intensive purposes and they hadn't really have not changed at all and that's basically from all of the major manufacturers out there, Boston Scientific, Medtronic, Abbott, all have conventional carotid stents. In and those come associated with the risks of stroke and that's why physicians have tended to shy away from those stents in many of the patients treated for carotid artery disease. There's a next-generation group that comes in which I include ourselves among which has -- we obviously have a mesh covered stent, there is another company called Terumo Medical which is a Japanese multinational, they have what I would call a dual layer stent. So it's almost a stent within a stent again trying to meet the same objective of reducing embolic particles going to the brain. And then there is a private company called W. L. Gore who has a platform technology of PTFE and they try to put a PTFE mesh on their stent. So far all of the clinical data that's available to all of us publicly is I don't think either of those two holds a candle to us never mind the conventional stent. So our clinical data has been and continues to be excellent, consistent, solid, and I think all of our competitors have sort of skin their knee along the way in different aspects…

Got you. The addressable market you talked about 600,000 interventions per year, it's so much for stent, that assumes one stent per procedure but I think I read some place that some procedures require more than one stent maybe two or even three.

That's right, believe it or not, we actually use an average of 1.5 stents per patient in that number.

Okay. So to get the addressable market you use 1.5?

That’s correct.

Okay. And how much do you expect it will cost you to get the IDE filed and then once the IDE is filed you still got to go through clinical trials for the FDA. You know order of magnitude what kind of cost you anticipate having to expand get through that process?

Yes, so we have about $1 million of expense in front of us to file the IDE and then upon IDE approval the clinical trial that we're currently looking at although again nothing has been totally finalized yet, we could be looking at anywhere from $12 million to $15 million.

So you're going to need to raise more capital and at some point most likely?

That's correct.

Okay.

If I may just add on to that, I mean there is number of ways that could happen, right. I mean if we continue to perform as we're performing commercially in Europe and get further validated with an IDE approval in the U.S. that may take numerous entities attention and there may be other ways of getting that file funded without having to go to the public markets.

Got you. You've done some significant clinical trial work already, does the FDA -- will the FDA recognize any event, will that allow you to kind of shortcut traditional clinical trial process?

Yes, no, unfortunately not. I mean look we've already had as we've said in the past we've already had a pre-IDE meeting with the FDA and we brought in both our U.S. investigators and our European investigators who have actually conducted clinical trials over in Europe and I would tell you the FDA has been pretty impressed with the data that we've been -- that's been coming out of Europe but I think that only just facilitate let's call it facilitates getting approval, we still have to do a trial for U.S. approval.

Okay. What countries are you approved in right now?

I mean we're approved, I mean basically all over the world with the exception of North America, China, Japan. I mean we're basically in Europe, Western Europe, Eastern Europe we have some markets in Asia, Latin America, that's pretty much it.

You can look in our recent filing and you can see a complete list.

Okay, thank you. What's the addressable market and where you're approved right now?

If you look at it it's probably let's call it I would say it's about 50:50 between North American and the rest of the world.

But rest of the world includes Japan and China and some places where you're not approved. So I'm just wondering and those are the biggest markets typically. So the countries where you're actually approved right now in selling, what ballpark would you think the addressable market is?

We have about a third of that I would say.

One-third, so somewhere in the $300 million range is.

Somewhat, yes. That's correct.

Okay. And you're still a fraction of that? And so the third quarter revenues showed a market -- the growth rate in the third quarter revenue showed a market deceleration from the first half of the year. But one would expect the opposite to be the case that growth rate should really be accelerating if the data is as good as you say. Could you comment on why we saw a deceleration in the growth rate in the third quarter and what your expectations are going forward for the market you're already approved in?

Yes, so not on expected for Q3 seasonally outside of the United States. Carotid artery stenting is an elective procedure and given the summer months in Europe, it's quite typical to have a bit of a soft quarter and that's what we saw. But again the good news is we saw an increase over last year's third quarter. So we remain quite bullish on certain things. We think our commercial strategy is going to continue to accelerate growth appropriately.

Thank you. [Operator Instructions]. There appear to be no further questions at this time. I'd like to turn the floor back over to Mr. Barry for closing comments.

Okay, thanks Devin. And that concludes today's call. Thanks again for all of you -- to all of you for joining us this morning and we look forward to providing additional updates in future quarterly calls.

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