Ladies and gentlemen, thank you for standing by. Good morning, and welcome to InspireMD Third Quarter 2020 Financial Results and Corporate Update Conference Call. [Operator Instructions] Participants of this call are advised that the audio of this conference is being broadcast live over the Internet and is also being recorded for playback purposes. A webcast replay of the call will be available approximately 1 hour after the call ends through February 9, 2021. I'd now like to turn the call over to Mr. Scott Gordon, President of Core IR, the company's Investor Relations firm. Please go ahead.

Thank you, Nick, and good morning, everyone. Thank you for joining us for the InspireMD Third Quarter 2020 Financial Results and Corporate Update Conference Call. Joining us today from InspireMD are Marvin Slosman, Chief Executive Officer of InspireMD; and Craig Shore, Chief Financial Officer. During this call, management will be making forward-looking statements, including statements that address InspireMD's expectations for future performance or operational results, particularly in light of the COVID-19 pandemic. Forward-looking statements involve risks and other factors that may cause actual results to differ materially from those 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, the Form 8-K filed with the SEC today and InspireMD's press release that accompanies this call, particularly the cautionary statements in it. The content of this call contains time-sensitive information that is accurate only as of today, November 9, 2020. 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's now my pleasure to turn the call over to Marvin Slosman. Marvin, please go ahead.

Thank you. Great. Thank you, Scott, and thank you all for joining the call on the webcast today. While we remain in uncertain time, specific to the ongoing COVID-19 pandemic, revenues for the third quarter of 2020 grew both quarter-over-quarter from 2019 levels and sequentially versus Q2 2020 levels, thus restoring a cautious optimism in our business direction and market recovery. We understand the unpredictable nature of how this pandemic will affect our customers going forward but feel more prepared to address market needs, having accelerated a higher level of awareness and communication with our channel partners. Investing time over the last 2 quarters in online training and customer outreach programs have provided us a stronger foundation and transfer of knowledge, which we will continue during this recovery. Through it all, our team remains committed and optimistic, and we are thrilled to have announced the addition of new leadership to drive goal attainment and growth objectives. As for the third quarter, this resurgence of elective procedures in our key markets yielded a 213% increase in total third quarter sales versus the second quarter of 2020, with nearly 50% of those sales occurring in the third month of the quarter. This in no way relaxes our resolve to continue to implement proactive policies and procedures to ensure continued strong performance, including the continued search for more efficient operations and cash management. However, this reinforces our assumption that CAS procedures remain a necessity, notwithstanding the timing delays associated with the COVID-19 outbreak. As for other meaningful milestones, on June 25, 2020, the U.S. FDA granted conditional approval of our Investigational Device Exemption, or IDE, application to initiate a pivotal study of CGuard EPS. During this quarter, we received the final approval of the IDE application and have begun preparations for the pivotal…

Thank you, Marvin, and to everyone for joining today. Here are some key financial highlights for the third quarter of 2020. Revenues for the 3 months ended September 30, 2020, were $980,000, an increase of 4.4% or $41,000 compared to $939,000 for the 3 months ended September 30, 2019. This increase was mainly driven by a 69% increase in sales volume of MGuard EPS from $87,000 during the 3 months ended September 30, 2019, to $147,000 during the 3 months ended September 30, 2020. This increase was mainly due to the timing of shipments to one of the distributors for a tender recently won. This increase was offset in part by a 2.2% decrease in sales volume of CGuard Prime EPS from $852,000 during the 3 months ended September 30, 2019, to $833,000 during the 3 months ended September 30, 2020, largely driven by procedures for CGuard EPS, which are generally scheduled or non-emergency procedures, only beginning to return to normal levels towards the end of the quarter as hospitals began to re-shift resources to non-COVID-19 patients. Gross profit for the 3 months ended September 30, 2020, was $298,000, an increase of 133% or $170,000 compared to $128,000 for the 3 months ended September 30, 2019. This increase in gross profit resulted from a $94,000 increase in revenues for reasons I just described, less the related material and labor cost; a $56,000 decrease in write-offs, which were driven by a component supply issue during the 3 months ended September 30, 2019, which did not reoccur during the 3 months ended September 30, 2020; and a decrease of $20,000 in miscellaneous expenses during this quarter. Gross margin increased to 30.4% during the 3 months ended September 30, 2020, from 13.6% during the 3 months ended September 30, 2019, driven by the…

[Operator Instructions] First question comes from Benjamin Haynor of Alliance Global Partners.

First for me. Congrats on all the personnel additions. It seems like quite the roster you've been able to assemble there. And I know Dr. Roubin, that's pretty high profile. I think investors in the space are -- know him or know of him. Can you talk a little bit about how that get came about? How are you able to get him on the Board and as an investor?

Yes. Thanks, Ben. Thanks for the question. We're thrilled to have Gary Roubin as a part of the organization and having accepted a director role. The connection actually came indirectly through Christina Brennan -- Dr. Brennan at Northwell, who I've known for a number of years. And I think everyone in this industry has known Gary Roubin, either personally or by reputation. Christina Brennan and Gary go way back in their history and worked together. And so when we made the connection with Christina, there was just some follow-up discussion, and I connected with Dr. Roubin and just found his interest and insightfulness to be incredibly valuable. And as we dug deeper into the discussions, it just appeared that he had more than just a casual interest. And we felt it would be a great addition to the Board with his lengthy experience in the industry and knowledge. So we're thrilled to have him a part of the organization. And as you said, I think the roster of talent continues to grow and build toward helping in all aspects.

Excellent. And then it sounds like you have a little bit more read through than you've had in the past from your distributor customers or your channel partners. Can you talk about how that might change how you strategically moved the business during COVID or otherwise?

Yes, Ben. I think we have always set into place a strategic direction in the beginning of the year to be a commercially focused, customer-driven, outwardly thinking company. And I think this is just the next step and the next level in both bringing talent to the organization that understand the distribution model. But most importantly, the COVID-19 scenario has given us an opportunity to really dig deeply into making sure that the served markets that we're in are being covered by the best partners available and to go into a depth of knowledge and understanding to try to make sure that CGuard EPS rises to the top of the bag and our partners sort of list of opportunities. So absolutely the right pickup here, which is a fundamentally R&D-based company. We're making a shift to a commercially-focused organization. And a lot of that is on backbone of all of the clinical results and value that are coming from our studies. We have great -- a great storyline to tell, and we need to do a much better job of getting that information disseminated through our channel partners ultimately to the customer. So that will continue to be a priority for Andrea, in particular, as he leads the sales and marketing group going forward.

Okay, and that's helpful. And then does that also help you kind of be able to convert surgeons from carotid endarterectomy over to CAS or doesn't that necessarily help you at all?

Yes. I think it certainly does, Ben. I mean, this is a tough business. I think we all understand that this is one customer at a time, one procedure at a time. The credibility of what we sell and what we do has really manifested itself in how we connect directly with customers to make a change in their practice. And so we are definitely focused on the surgery community, the interventional neuro radiology community and cardiology as well. It's an interesting setup because we have a very broad range of operators who sort of follow carotid artery disease as a primary part of their practice, and they used different tools to get there. And so ultimately, our goal is to make sure that CGuard is the stent that's used and that CAS is promoted and developed as first-line therapy for the disease. So our priority continues to certainly be on our existing customer base but has been and will continue to be on the vascular surgeon as well.

Okay. Got it. And then you mentioned in the press release the advanced tool set of adjunctive delivery options that you're working on. I guess, how far have these advanced tools advanced in the development? And are these things that could see regulatory clearances and be marketed in the geographies that you're in, say, next year? Or what does the time line look like at this point?

Yes, Ben, fundamentally, InspireMD has done its best work as an R&D organization. We have a great team of people that are constantly looking at our tool set and looking at our products and trying to develop those next-generation levels, whether it's within an existing part of the portfolio or something outside of that. And so we have this multi-generational product development plan underway for a variety of different areas, and we certainly hope to have those products to market in a time frame that's meaningful within 2021 potentially. And it really depends on the area that we're talking about. We've been working on a new transfemoral delivery system for a while and are making great progress on that. So we look to be able to provide next level of detail in terms of how that rollout will occur, but we're making great progress in the number of different areas to really drive CGuard as the primary stent.

Okay. Got it. And then just with the FDA trial, I know that you got the IDE in place. When do you expect the CGuard trial to kind of enroll the first patient? Excuse me.

So we're in the final touches of being able to make some decisions on a CRO partner as well as a primary investigator, principal investigator for the trial and also site selection, what percentage we'll use in the U.S. versus Europe and otherwise. And so we're down to the sort of the last details on making those selections, and then we'll have a much more clear schedule as to how we begin patient enrollment. But we really felt fundamentally that we wanted to get all of these pieces solidly in place because the performance of the trial really depends on how well you prioritize this on the front end, and we've got some tremendous names being discussed right now in terms of principal investigators and people very interested in participating and enrolling. So hopefully, in short order, we'll have a detailed schedule of how that rollout looks in patient enrollment. But we're making great, great progress in finding the right pieces and putting those in place with our CRO partner and investigators.

Sure. That's helpful. And then obviously, I would imagine from the additions that you've been able to make on the personnel front that the Rolodex is there to get you in front of the right people.

It's very comprehensive. So it's good and bad. So a lot of people are interested, so we're really excited about having the interest [ coming through ].

You have to -- yes. So you actually have to worry about upsetting people.

Well, we hope to please everyone, but yes, that's right. It's a great place for us, though.

[Operator Instructions] This concludes our question-and-answer session. And I'd like to turn the conference back over to Mr. Marvin Slosman. Please go ahead.

Great. Thank you. Let me conclude by saying that in spite of the setbacks associated with the COVID-19, we are tremendously optimistic for our future. CGuard EPS continues to outperform other competitive carotid stents, and we will continue to drive this awareness with our customers to provide the absolute best clinical and patient outcomes. We're investing in a very bright future and are singularly focused as a company on maintaining our commitment to offering these best options for stroke prevention and carotid artery disease management. Thank you very much for the call today and for your support.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.