Ladies and gentlemen, thank you for standing by. Welcome to the Second Sight Q1 2017 Results Call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded Wednesday, May 3, 2017. I’ll now turn the conference over to Lisa Wilson, Investor Relations.

Thank you, George. Good afternoon and welcome to Second Sight’s first quarter 2017 earnings call. This is Lisa Wilson of In-Site Communications Investor Relations for Second Sight. With me on today’s call are Dr. Robert Greenberg, Chairman of the Board of Directors; Will McGuire, President and Chief Executive Officer; and Tom Miller, Chief Financial Officer of Second Sight. At the close of market, the Company issued a press release detailing financial results for the quarter ended March 31, 2017. The press release can be accessed through the Investor Relations section of the Second Sight website at secondsight.com. You can also access the webcast of this call from there. Before we get started, I would like to remind everyone that any statements made on today’s conference call that express a belief, expectation, projection, forecast, anticipation or intent regarding future events and the Company’s future performance, may be considered forward-looking statements as defined by the Private Securities Litigation Reform Act. These forward-looking statements are based on information available to Second Sight’s management as of today and involve risks and uncertainties, including those noted in this afternoon’s press release and Second Sight’s filings with the SEC. Such forward-looking statements are not guarantees of future performance. Actual results may differ materially from those projected in the forward-looking statements. Second Sight specifically disclaims any intent or obligation to update these forward-looking statements except as required by law. A telephone replay of the call will be available shortly after completion of this call for the next two weeks. You’ll find a dial-in information in today’s press release. The archived webcast will be available for one month on the Company’s website, secondsight.com. For the benefit of those who may be listening to the replay or archived webcast, this call was held and recorded on May 3, 2017. Since then, Second Sight may have made announcements related to the topics discussed. So, please reference the Company’s most recent press releases and SEC filings. And with that I’d like to turn the call over to Second Sight’s Chairman, Dr. Robert Greenberg.

Thank you, Lisa. And thank you all for joining the call this afternoon. I’d like to update you on our progress and key objectives for 2017 that we outlined on our last call. Our first objective is validating our recently implemented Centers of Excellence commercial model in the U.S. in order to demonstrate adoption. Our second objective is demonstrating our ability to treat better-sighted individuals in 2017 in order to expand our treatable population beyond bare light perception Retinitis Pigmentosa. And our third objective is implanting the Orion I in humans during 2017, creating the opportunity to treat up to 6 million blind individuals worldwide who today have no options. And I’m very pleased to report that we’re making significant progress on all three fronts. We had a strong start to 2017 with sequential and year over year growth in the total number of implants performed during the first quarter. Implant volume doubled to 14 during the first quarter of this year compared to seven implants during the sequential prior quarter. Eight of those implants were in North America. We remain focused on execution and expect continued momentum in North America in the second quarter. Concurrently, we plan to remain at the forefront of technological advancement. We’re committed to treating better-sighted individuals and those who are blinded by causes other than RP so that we can expand our addressable market. We are moving forward with protocol submissions in England and Germany to initiate clinical trials to include better-sighted individuals. Additionally, you may recall that in late 2016, we supported the first successful implantation and activation of a wireless visual cortical simulator in a human subject, providing the initial human proof of concept for the ongoing development of our Orion I prosthesis. While this implant did not have a camera, the wireless 8-channel nerve stimulation system that was implanted on the visual cortex allowed the subject to perceive and localize individual phosphenes or spots of light from every electrode with no significant adverse side effects. We are very encouraged by these early results in this subject. With our animal studies now completed and the implant and external hardware now developed, we expect to finish our extensive hardware testing and file this summer with both the FDA and with a regulator outside the U.S. And we intend to implant the first Orion I later this year. At this point, I’d like to turn the call over to Tom Miller, our CFO, who’ll review our first quarter results. Tom?

Thank you, Bob. For the first quarter of 2017, net sales were $1 million compared to $1.1 million in the first quarter of 2016. Of the 14 implants in the quarter, nine were recognized for revenue in Q1, two were deferred for recognition until Q2, and three related to no charge units which are sometimes offered to centers as part of a sales arrangement or in markets where centers are seeking to gain patient experience while establishing reimbursement coverage. There was no deferred revenue from prior quarters recognized in Q1. While the average revenue recognized per implant dropped to $72,000 in the first quarter of 2017 from a $105,000 a year ago, the average invoice price for implants in the quarter excluding the no charge units was approximately $106,000 which is in the range we would expect, and compares to the $94,000 average invoice price for the first quarter of 2016. Once the deferred items are recognized, we should see a higher recognized revenue per implant in Q2. We still expect that our average revenue per implant will be in the range of $100,000 to $120,000 for 2017, depending on the geographic mix of implants and the prevalence of no charge units. Cost of sales in the first quarter of 2017 increased to $1,127,000 compared to $912,000 in the prior year. The higher cost of sales is primarily due to higher unabsorbed overhead costs that resulted from our reduction of manufacturing activity, starting in the second quarter of last year. Cost of sales in the first quarter of 2017 consisted of $950,000 of unabsorbed overhead costs and approximately $180,000 of costs related to warranty and scrap. There were virtually no product costs in the first quarter of 2017 because of the cost of the 14 units implanted in the quarter…

Thank you, Tom. We began 2017 ready to leverage our foundation building work in 2016. As expected, implant volumes are growing in the U.S. as a result of a revised Centers of Excellence strategy, while our footprint is expanding outside the U.S. as we open new markets with the distribution partners. In the U.S., our revised Centers of Excellence strategy is definitely gaining traction. We are committed to establishing a network of high-quality surgical centers that will perform at least four implants per year, possess the ability to do patient screening and post-surgery programming and are capable of managing the artificial vision we have processed. As stated earlier, we completed eight implants in North America during Q1, which is 2X our best quarter in 2016. Q2 is also shaping up to be another strong quarter in North America, and I am pleased to see that several centers have scheduled multiple surgeries. As discussed in the past, achieving consistent volume at our centers is a central component of our strategy to build a profitable business model. A key focus is our outreach efforts in order to assure a steady flow of patients. We continue to run radio ads and have expanded our efforts to medically screen prospective patients. Early results indicate that we can add 10 to 15 highly qualified patients to our U.S. database every quarter. In fact, we have added approximately 15 highly-qualified patients to our database in the last 60 days. Currently our database has 262 potential patients that have passed an internal phone screen, so that’s a phone screen with people hear at Second Sight. Of that 262, 33 have further passed a phone screen by medical professional and will eventually move to the next step of being evaluated at an implanting center. Finally, five of the…

[Operator Instruction] Our first question comes from the line of Amit Dayal. Please go ahead with your question.

Let me just start with this better-sighted RP offering that we’re bringing to the market. Could you give us sort concrete sort of milestones or timeline events that we should expect to see in completing this process? And as a follow-on, I read in the press release, we are targeting the UK and Germany, just wanted to clarify whether we are also targeting the U.S. as well?

Sure. Thanks, Amit. This is Will. Let me make a few comments regarding again what we are trying to do there and then I think Bob can probably add additional color on what we are doing technically. So, again, what we are doing here is trying to really address what we think is a much larger patient population, and that’s RP patients who have vision that’s better than no light or bare light perception. And we think this is important because it’s definitely our nearest, or best nearest term opportunity to significantly expand our treatable patient population. The market data is not really available to detail what that patient population is, but we think a conservative estimate is that at least 2X what can treat now. In fact we were out at a meeting in Europe last week and we spoke with one of our accounts in Europe who has a pretty large data base. And their estimate was that just treating hand motion patients would expand our market by 3X. So, again, we think that 2X is a conservative estimate and something that’s definitely achievable. To answer your question about the markets we are pursuing, yes, we would be pursuing the U.S. as well as Europe and other markets. What we talk about though is just kind of what our strategy is and it’s kind of two-fold. First, we are planning to conduct two clinical trials, one of those is in England and one is in Germany. We would then use that data, Amit, to help us address and pursue really all markets. But each of these trials will be treating better-sighted RP patients with our current technology. And that will be the first kind of readout that we are going to get. And the reason we are doing…

Hey, Amit. It’s Bob. So yes, absolutely, as Will said, we’re interested in all markets. The reason and then just give a little bit more color on the reason to go to the UK and Germany initially is of course the regulatory system is a little bit more straightforward in Europe, number one. But number two, currently our label in the U.S. is restricted to bare light perception Retinitis Pigmentosa patients whereas in Europe, our label is little bit broader and does allow us to implant patients with better vision. So, yes, maybe also I can give you a little bit more color on what’s involved and what are the steps in proving out these stimulation strategies. We’ve talked before that the goal is to improve the quality of vision through software just like not only for our 200 plus implanted RP patients but also of course patients going forward. So, the steps -- so what are the steps? So, the first step is we need to test the theory in patients. And we’ve actually done that. In the prepared remarks we’ve talked about that we’ve actually tested eight patients so far now with new stimulation strategies. And this initial testing is individual testing on small numbers of electrodes. So, one example of the theory that we’ve talked about before is the theory of current steering where we can create virtual electrodes or pixels between physical electrodes to increase the resolution of the system. So, we’ve tested that and other theories now in these patients. And so, the next step is to take the most promising of these new protocols and to incorporate them into our video processing software. And that we’re doing right now, the engineering work to actually incorporate it into the software. And then, later this year, we’ll actually begin testing the full up system that incorporates the algorithms in patients. And we’ll test those in these new trials that Will mentioned. And so assuming that testing goes to plan, the next step, as Will mentioned, will be to apply for regulatory approval for the new software and then also for a label expansion in the U.S. And the European label already allow implantation of these patients.

Thank you for that color. I was just wondering -- this 150,000 reimbursement grade number against what you’re seeing with your average invoice prices, could you provide any color on what the differences are?

Yes. This is Tom, I can give you a little color on that and Will can fill in also. So, the 150, first of all, is for the device and the hospital costs and it varies by geography, based on certain indexes. And we expect to see that in 2017. A couple of things happened in the first quarter that gives us a slow revenue per implant. One is we had a couple of free goods, and we also had two items that were deferred from Q1 to Q2. And so, when we say we’re counting those as implants but we’re not counting to revenue so that pushes down that average revenue number. We are seeing the average selling price. And remember that that 150 is a U.S. price and we are giving you global numbers. And pricing in the U.S. is a little bit higher. We also had a couple of instances where people purchased items in the U.S. late in the fourth quarter and that impacted our revenue recognized in the first quarter because we had to honor the 2016 pricing. So that won’t happen again. And we will see higher pricing going forward. So, we are pretty comfortable saying that on a global basis, we are going to see revenue per implant in the 100 to 120 range. And that’s a higher price in the U.S. generally than outside of the U.S. but the revenue per implant, the recognized revenue per implant should go up a little bit. I don’t know if that helps to give you a little bit of a feel for it.

That’s what I was looking. I suspected it was something like that but just wanted to confirm. In terms of the patient pipeline, Will, you provided some color. Is this process similar in Europe as well as the U.S.? Is there a different sort of a strategy, are you using abroad versus what you do to recruit these patients?

Yes, it varies; it is. And I think some of the things that we’re -- some of the things that we are doing in the U.S. we have learned from our experience in Europe. In Europe, the two primary markets, Amit, that we do patient outreach are in Germany and in Italy. Given the program we are in, in France right now, we are prohibited actually from the company doing patient outreach work and programs. But in Italy we do a lot of meetings and radio ads and other things to generate a funnel for a center -- our centers in Italy. And then, in Germany, we have actually been doing the same thing, radio ads, information meetings, and we even started doing some television here recently in Germany to see if we can improve our hit rate. But, I would say, backing up maybe, I would say -- I think we are probably learning some things now in the U.S. that we can apply to our efforts outside of the U.S. as well. And one of those would be the data base that we are creating in U.S. where we are tracking all patient inquiries very closely. And then, we have got an automated system if you will to stay in touch with patients, especially patients that are not candidates today but would be candidates a year from now or 18 months from now. So, I think we are getting a much better, more sophisticated way of tracking those patients. And I would expect over time, we will start doing some of those same things and learning what we are doing in U.S. and doing some of the same things in Europe. And although some of that may not result in patients now. If you think ahead, certainly if we are doing a good job of tracking all patients and especially those will be patients one day and you could expect a year from now, 18 months from now some of those patients will come back up and circulate back though and perhaps their vision is at a point then where they would be a candidate for us.

Would these patients qualify for the better-sighted offering that you may bring to the market or what that…

No, that’s a really good question and the answer is a lot of them would. And I would say, generally, Amit, the number one reason that someone passes our initial screen but then ends up not being candidate for surgery today is that their vision is still too good. So, they can still see hand motion, or they could count fingers. So, they end up kind of being put on the sideline, if you will for a later date. So, yes, I mean that’s the other -- the other beauty of this data base is not only is it generating patients for next week and next month and this year but also we are building quite a data base that when we get the clearance to start treating these better-sighted patients, we’ll have a whole host of patients in our data base that we can go back and contact and provide them some good news.

[Operator Instruction] Our next question comes from the line of Dallas Salazar with Atlas Consulting. Please proceed with your question.

I just had two quick ones, and you can be brief here. The first one is, do you expect to see continued momentum in the U.S.? And then, what should we expect from a sequential standpoint regarding just overall momentum that’s U.S.-based?

Hi. This is Will, I’ll take that. Yes. I mean, yes, to answer your question, yes, we expect continued momentum in the U.S. And although we are not giving guidance, I do expect that the U.S. would be up sequentially in Q2, or North America should I say, up sequentially in Q2 versus Q1. And there is a host of reasons but maybe five or six points I would make that give me optimism for what’s happening in the U.S. and for North America. One, of course that we will have some visibility into the second quarter and as was in the -- maybe in the press release or in the prepared remarks, we expect another strong quarter in Q2. But we are going to continue our aggressive patient outreach programs and over time we are going to see this patient data base that’s been referenced, we are going to see that continue to grow and to be a richer data base with more prospective patients in it. We have seen a good response from our existing accounts that are covered in MACs with many of them committing to the Centers of Excellence program and some of them already scheduling multiple implants this quarter. And so we expect continued, consistent implant volume from these accounts. Also, as we stated, we are going to add 5 to 10 new Centers of Excellence in the U.S. this year. We did not add any accounts in 2016. So, just adding these accounts will give us some incremental volume, incremental units and momentum. Another thing that we really haven’t talked too much about that it could become encoded later in the year also is we are increasing the support to accounts that are in non-covered MACs. So, these are accounts that don’t have official Medicare coverage now because the MAC has not made a positive coverage decision. And we are going to provide more support to these accounts to help them pursue reimbursement for Argus patients. So, think of it is us signing in essence business agreement or consulting contract with them. And what we want to do is just give them increased confidence to treat patients and pursue reimbursement and then hopefully also we will increase the odds of them being successful. So, hopefully some of these accounts that have maybe not been implanting because they were afraid of not getting reimbursement, maybe we can get some of these accounts back on board and implanting going forward. And then finally, and we are not necessarily counting on this because it’s less in our control than some of the other items. But we will have some additional upside, should any MACs that we are making, the reconsideration request, should any of those MACs issue a positive coverage decision this year, then our Medicare insurance coverage would expand and of course that will give us more opportunity for growth. I think that’s about it.

Yes. I think any color at this point is helpful and I can appreciate that. The second question here and this is going to be a little bit more subjective, would be, A, can you update us on the Orion I? And then, just kind of give us, if you will, a confidence reading on where you stand -- regarding confidence on execution into that?

Sure. Dallas, this is Bob. So, as you know, I think, I’ve been obviously confident from the beginning that the Orion would work. And I think we have some recent data and progress that increased that confidence even further. So, as we said in the prepared remarks, we’ll be applying to the FDA and a European regulator, which gives us two shots on goal to begin a human feasibility trial this summer and with the first implant planned for later this year. So, why are we more confident now than we were even just a year ago? So, I think there are really three main reasons. One is that we’re obviously leveraging our long experience with the reliable and biocompatible Argus II platform. That platform has now been in patients for over 10 years. So, we have a lot of confidence with the platform, the stability of that platform. And we’ve only had to make relatively minor changes to the -- engineering changes to the implant and the software and other support vertical stimulation. So, I think that’s number one that we have confidence in the platform. Number two is that we’ve had three meetings so far with the FDA to get the buy on a number of aspects of the program. So, we’ve had either for pre-IDE meetings where we go over any possible concerns that they might have, we’ve gone over the clinical protocol and the preclinical testing items to get the FDA’s buy going into that. So, we don’t expect any surprises when we actually apply later this summer. With the FDA, you never know for sure, but at least we’ve done as much pre-work as we could to try to increase the odds of a success quickly on those submissions. And I think the third thing that gives us confidence is the 8-channel nerve stimulator implant that we completed late last year. That implant has gone very well. As we said in the prepared remarks, there have been no significant adverse events; the patient’s able to localize phosphenes on light electrodes. And so, the fact that we actually have human data now proving the concept is super important and greatly increases our confidence. I think all three of these things tell us that we’re on the track and that we should be in place to apply this summer and then have an implant later this year.

I will now turn the call back to the presenters.

So, thank you for your participation on our call today. I’ll look forward to speaking with everyone next quarter. Have a great day.

Ladies and gentlemen, that does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your lines.