TranS1, Inc. Q1 2010 Earnings Call Transcript

TranS1, Inc. Q1 2010 Earnings Call Transcript
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TranS1, Inc. (TSON)

Q1 2010 Earnings Call Transcript

May 4, 2010 5:30 pm ET


Mark Klausner – IR

Rick Randall – CEO

Joe Slattery – EVP & CFO

Ken Reali – President & COO


Brian [ph] – Cowen and Company

Matt Miksic – Piper, Jaffray & Company

Michael Matson – Wells Fargo



Good day, ladies and gentlemen, and welcome to TranS1 first quarter 2010 earnings conference call. (Operator instructions)

I would now like to hand the conference over to your host, Mr. Mark Klausner. Sir you may begin.

Mark Klausner

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Thanks, operator. Joining us on today’s call are TranS1’s Chief Executive Officer, Rick Randall; President & Chief Operating Officer, Ken Reali; and Chief Financial Officer, Joe Slattery.

Before we begin, I would like to caution listeners that certain information discussed by management during this conference call will include forward-looking statements covered under the Safe Harbor Provision of the Private Securities Litigation Reform Act of 1995.

Actual results could differ materially from those stated or implied by our forward-looking statements due to risks and uncertainties associated with the company’s business. The company undertakes no obligation to update information provided on this call. For a discussion of risks and uncertainties associated with TranS1’s business, I encourage you to review the company’s filings with the Securities and Exchange Commission, including its annual report on Form 10-K for the year ended December 31, 2009.

With that, it’s my pleasure to turn the call over to TranS1’s CEO, Rick Randall.

Rick Randall

Thanks Mark. Good afternoon and thank you for joining us today to discuss TranS1’s first quarter results. On today’s call, I will discuss the key highlights of the quarter, and our new CFO, Joe Slattery, will provide you with the details of our financial results. I then would like to share with you some additional perspective on the key developments in our business, after which Ken, Joe, and I will take your questions.

Worldwide, 692 TranS1 procedures were performed, and we generated $6.7 million in revenue during the first quarter. While we are encouraged by the case of revenue performance in the quarter, as Joe will detail in a few minutes, we benefited from the limited release of our AxiaLIF 2L plus and Avatar products, which will transition to full release later this year. We are continuing to take a cautious stance towards the business as we see how our new products gain traction, and we work with our surgeons as well as the spine societies and payers on reimbursement.

Before I turn the call over to Joe, I would like to highlight some recent operational developments, which I will detail after Joe discusses our financial performance. One of the most important accomplishments of the year so far is a significant addition we have made to our senior management team, Ken Reali joined us as President & COO in January; Dwayne Montgomery joined us in March as our Vice President of Sales; and Joe Slattery joined as recently as our Executive Vice President and CFO.

Ken, Dwayne, and Joe all bring significant operating and medical device industry expertise to the team, which will help us execute on our business strategy. On the product front, we have commenced the limited market release of the AxiaLIF 2L plus, along with both the Avatar pedicle screw system, and our next generation Vectre facet screw system. Early cases have gone well and surgeon feedbacks have been strong.

We continue to have early success in the complex spine market. We held our first Association of Pre-sacral Spine Surgeons or APSS meeting, focused on deformity surgeons in January, and intend to hold another one in June. In addition, we are beginning to see some good clinical data published on the use of our products in this area.

We continue to work through reimbursement as our reimbursement personnel work with our current and prospective surgeon users, the payers, and the spine societies. We recently had one peer reviewed paper published, and have been informed of an additional peer reviewed paper that has been accepted for publication, which will build upon the strong clinical evidence supporting the use of our products.

I would now like to turn the call over to Joe to review our financial results. Joe.

Joe Slattery

Thanks, Rick. Good afternoon everyone. Let me start by conveying how excited I am to join the team here. Having been involved as a board member over the last couple of years, I been able to hit the ground running since joining the company last month, and I look forward to working with you all.

Revenues in the first quarter of 2010 were $6.7 million, an increase of approximately $400,000 or 7% over the fourth quarter of 2009. Versus the prior year's first quarter revenues were down about $2 million or 23%. The decrease from the prior year's Q1 was due to the impacts of the reimbursement environment, which began to cause a headwind in the second quarter of 2009.

Within the $6.7 million revenue figure, US revenues were $6.0 million, an increase of $100,000 or 1.5% above the fourth quarter of 2009. As we mentioned we initiated our AxiaLIF 2L plus limited release during the quarter. We have already met our minimum enrolment requirement and will continue selling under our limited release program in the second quarter.

Based on historical 2L case run rates, we believe that the limited release contributed about $300,000 in revenue in the quarter that may be non-recurring in the second quarter because we will be awaiting data and preparing for a full launch in the beginning of Q3. Since it will take some time to train our existing surgeon base, as well as new surgeon users, following the launch we expect the fourth quarter to be the first in which we see the full impact of the 2L plus product.

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