Greetings, and welcome to the InspireMD Fourth Quarter 2019 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Jeremy Feffer, Investor Relations for InspireMD. Thank you. You may begin.

Thank you, Melissa. Good morning, everyone, and thank you for joining us for the InspireMD fourth quarter 2019 business update conference call. On the line with us today are Marvin Slosman, Chief Executive Officer; and Craig Shore, Chief Financial Officer. We’ll start with an overview of the company’s results and our recent highlights and we’ll then open up 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. Having addressed that, it’s my pleasure to turn the call over to Marvin Slosman. Marvin?

Thank you, Jeremy, and thank you for joining us on the call today and the webcast. This is my first quarterly call since assuming the role as Chief Executive Officer on January 1, and I’m pleased to have the opportunity to both recap our progress during the past quarter and year and also lay out my vision for the company going forward. I would first like to take a moment and share my relevant background. I have 33 years leadership positions in the medical device markets with both large blue-chip companies including GE Healthcare and Cordis J&J, as well as several early-stage companies in the vascular space. Much of my experience and a big part of what drew me to InspireMD was based on my commercial background, advancing many novel and life-changing technologies. I would place CGuard firmly in this category. The CGuard embolic protection system is an advanced platform solution designed to deliver the flexibility of the traditional open-cell stent with what we believe to be the most advanced protection from periprocedural and postprocedural embolic events caused by plaque prolapse through the stents struts, which can lead to stroke. CGuard’s unique MicroNet technology mitigates this prolapse and associated embolization and has shown superior clinical outcomes for patients against alternative stent types, conventional or next-generation double layered stents as well as invasive procedures such as endarterectomy, a major surgical procedure. CGuard has created a new dimension and protected treatment of carotid artery disease with the potential to truly establish a new standard of care for management of carotid artery disease and stroke prevention. In January, I was able to witness the growing support by the medical community for CGuard EPS at the International LINC Congress in Leipzig, which brings together leading interventionalists and vascular surgeons from around the world. The…

Thanks, Marvin. For the 12 months ended December 31, 2019, revenue increased by $120,000 with 3% to $3.7 million from $3.6 million for the same period in 2018. This increase was predominantly driven by a 10% increase in revenue of CGuard EPS from $3 million during the 12 months ended December 31, 2018, to $3.3 million during the 12 months ended December 31, 2019, as a result of our continued focus on expanding existing markets such as Poland, Switzerland, Italy and Spain, and expansion into new geographies, such as Australia and South Africa. This increase was offset by a 28% decrease in revenue of MGuard Prime EPS from $631,000 during the 12 months ended December 31, 2018, to $456,000 during the 12 months ended December 31, 2019. In addition, the overall increase mentioned above was offset across the board by shipment delays, and the three months ended March 31, 2019, associated with the company’s decision to switch its third-party sterilizer. The transition to the new sterilization company was completed in early April, and the company does not currently anticipate any future disruptions in fulfilling new orders. The company’s gross profit for the 12 months ended December 31, 2019 was $756,000, compared to a gross profit of $995,000 for the same period in 2018. This decrease in gross profit resulted from a $142,000 write offs, predominantly driven by a nonrecurring component supply issue of CGuard EPS and slow-moving MGuard Prime EPS inventory. An additional $69,000 of expenses related to upgrades made to our production facilities and $48,000 of expenses pertaining to annual and new employee training of production workers and offset by a reduction of $20,000 in miscellaneous expenses. Gross margin decreased to 20% in the 12 months ended December 31, 2019, from 28% in the same period in 2018. Total…

Thank you. [Operator Instructions] Our first question comes from the line of Vernon Bernardino with H.C. Wainright. Please proceed with your question.

Hi guys, thanks for taking the question, and congrats on getting through a challenging 2019. Just a few questions, if I may, and I’ll get back in the queue. Could you talk again about the India backlog? Just a few more details or recap what is going on there?

Vernon, I think maybe you’re referring to the backlog of physicians for the Centers of Excellence? Is that – was that specific to your question?

Yes.

Yes, so it’s just more demand and we have scheduled events at this point. So, it’s something we can certainly control easily. We’ve had an overwhelming amount of interest on the part of physicians to attend these Centers of Excellence. And so, it’s simply an issue of scheduling more and making those available. So we’re suffering from success, I guess, in this case, because we’re seeing a lot of interest in vascular surgeons, in particular, attending these events for training.

I see. And then in France, what again are the requirements for – what are the requirements?

Yes, so in France, there is a reimbursement established for carotid stenting at this time, and we are approaching the French government to try to set up a clinical registry as a unique product definition to see if we can increase that because of the unique capabilities of CGuard, and do it through a registry trial to demonstrate the unique qualities of CGuard, and we feel very comfortable with taking that process on to increase our reimbursement potential in France and open this market.

And one more question, and then I’ll get back in queue. With Brazil, can you remind us again on what are the next steps there? I think it’s still a work in progress, but what are the next steps that need to occur?

Yes. So in Brazil, we’ve concluded the registration paperwork process. We’re simply now waiting for the government to respond with, hopefully, an approval for our registration and the ability to sell in Brazil. We already have signed agreements with distribution partners in the market. And so, it’s simply a matter of getting approval to sell, and we will be ready to execute in that market, and we’re excited about the possibilities of entering Brazil.

Okay. And there’s a few more questions, but I’ll get back in the queue for now. Thank you.

Thank you.

Yes, you are welcome to ask them if you’d like.

Okay. Just hold on a second. So, the gross margin went down, and pardon me if I didn’t catch it or figure it out quickly enough. But what was the driver of the gross margin going down?

So I think I would – go ahead. Go ahead.

Hi Craig.

No, go ahead, Marvin. Sorry.

No I was just going to say, I think, Vernon, it’s a combination of growing our market presence and growing volume in the market and there being some offsetting margin transfer costs to our distributor partners in order to open these new markets and grow that. So I think overall, I would characterize it as just pressure from market pricing offset by volume, and we’re also spending a lot of time focusing on improving our cost of goods as well in order to net higher overall margins. Craig, I don’t know if you have additional…

Yes. We just had some one-time issues with one of our component suppliers, which caused us to have unusual write-off for a couple of months during the year, which we’ve resolved the problem. So that’s behind us. As Marvin said, hopefully, with now volume, we should start seeing improvements in our gross margin.

I see. Okay. That’s all I have the questions for now. It sounds like you got a few things still to work through. One last question. As far as the FDA is concerned, what is the next time perhaps that we could have an update as far as that process is concerned?

We are finalizing the test results, which were required some time ago. And as soon as we have results back from that test – those testing results and submit those back for final discussion with the FDA, we’ll be in touch with any significant details there, but everything is going according to plan, and we’re executing on those test methods that have been requested.

Okay, terrific. And then anything you can say or comment as far as the industry is concerned for – specifically targeted by CGuard? I know you mentioned the 1.6 million people and then maybe still untreated, but anything that’s new as far as developments are concerned?

I think that there is a momentum being gained within the vascular surgeon community of converting to carotid stenting, which is giving us a great tailwind and opening up a lot of conversations. We’re focused on converting those vascular surgeons as a primary mechanism, and obviously continuing to grow share within the current carotid stenting market. So we’re encouraged by the fact that there seems to be a high receptivity on the part of vascular surgeons to learn more to go through our Centers of Excellence and training. And the outcomes that we’re realizing because of CGuard are really resonating at these congresses, and I think that organically, we’re growing because we have great performance characteristics and the data is very solid. So, we’ll continue to work on the conversion of vascular surgeons, and we’re very encouraged by that.

Terrific. Thanks for taking all my questions and my follow-ups.

Thank you, Vernon.

Thank you. Ladies and gentlemen that concludes our question-and-answer session. I’ll turn the floor back to Mr. Slosman for any final comments.

Sure, thank you. So again, thank you. I’m thrilled really to be a part of this opportunity at Inspire. I’ve spent the last 75 days purposefully with our team, our customers, and shareholders, sharing our vision, plans, and directional focus on commercial execution and advancing our technology platform and expanding our global footprint for growth. We know what we want to achieve. We know how to get there, and we really look forward to a bright future, and it’s a great opportunity. So thank you.

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