TLSI - NASDAQ

Good afternoon, and welcome to TriSalus Life Sciences Second Quarter 2025 Earnings Conference Call. [Operator Instructions] As a reminder, this call is being recorded for replay purposes. I will now turn the call over to Jeremy Feffer, Managing Director with LifeSci Advisors. Please go ahead, sir.

Thank you, operator, and thank you all for participating in today's call. Joining me today from TriSalus Life Sciences are Mary Szela, President and Chief Executive Officer; David Patience, Chief Financial Officer; and Dr. Richard Marshall, Medical Director. Ms. Szela will provide an overview of the company's second quarter results and strategy for the balance of the year, and then David will review the financial results for the quarter in detail. Following their prepared remarks, Dr. Marshall will join the call to help address questions from covering analysts. Earlier this afternoon, TriSalus released its financial results for the quarter ended June 30, 2025. A copy of this press release is available on TriSalus's website. Before we begin, I would like to remind you that management will make statements during this call that includes forward-looking statements within the meaning of federal securities laws, which are made pursuant to the safe harbor provisions of the Private Securities Reform Act of 1995. Any statements contained in this call other than the statements of historical fact are forward-looking statements. All forward-looking statements, including, without limitation, statements relating to our sales and operating trends, business and hiring prospects, financial and revenue expectations and future product development and approvals are based upon our current estimates and various assumptions. These statements involve material risks and uncertainties, including the impact of macroeconomic conditions and global events that could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements. Accordingly, you should not place undue reliance on these statements. For a list and description of the risks and uncertainties associated with our business, please refer to the Risk Factors section of our Form 10-Q on file with the SEC and available on EDGAR and in other reports filed periodically with the SEC. TriSalus disclaims any intention or obligation, except as required by law, to update or revise any financial projections or forward-looking statements, whether because of new information, future events or otherwise. This conference call contains time-sensitive information and is accurate only as of the live broadcast today, August 12, 2025. And with that, I'll turn the call over to Mary.

Thank you, Jeremy, and good afternoon, everyone. Thank you for joining us for our review of our second quarter 2025 results. Before we begin, I'd like to personally welcome David Patience to the TriSalus team as our Chief Financial Officer. David joins TriSalus with deep expertise in capital markets and a proven track record of financial leadership and operational excellence. His strategic insight and executional strength will be instrumental as we accelerate into our next phase of growth. We're thrilled to welcome him to the team. David will follow my remarks to provide a more in-depth review of our financial results for the quarter. With that, let's begin. I'm pleased to report that our second quarter results were strong with $11.2 million in net sales, a 52% increase compared to Q2 2024 and a 22% sequential gain over our first quarter 2025 results. During the quarter, we also announced the launch of the TriNav FLX infusion system, successfully completed a $22 million private placement with health care-focused institutional investors, pursued new clinical applications, expanded our market opportunity and simplified our capital structure through the successful completion of our exchange offer and consent solicitation for preferred stock. This additional capital raise strengthens our balance sheet and provides the resources needed to invest further in our commercial strategy. TriSalus remains sharply focused on executing a strategy that expands the clinical and commercial potential of our pressure-enabled drug delivery, PEDD platform across multiple solid tumor types and novel interventional procedures. In parallel, we are advancing partnership discussions for nelitolimod to support its development across several high-value oncology indications. These initiatives are central to unlocking long-term value, and we're encouraged by the growing momentum across our programs. Our strategic priorities include driving adoption of PEDD across a broad range of solid tumors, advancing new clinical applications for TriNav, expanding our TriNav product portfolio with the launch of the TriNav FLX Infusion System, along with new TriNav devices specific to future indications where needed, improving operational performance in manufacturing and gross margins and continuing to build a high- growth, scalable organization. Specific to our commercial strategy and TriNav adoption, we've maintained strong momentum in the quarter, gaining further penetration in the complex liver embolization market while continuing to expand the TriNav platform into new clinical settings. In April, we announced that the Centers for Medicare and Medicaid Services issued [indiscernible] code C8004, providing coverage for simulation or mapping procedures using TriNav. This new code allows clinicians to use TriNav for both treatment planning and delivery and radioembolization, effectively doubling the reimbursable use of our technology and supporting broader adoption. We see the key requirement for interventional radiologists to effectively treat a broad range of tumors is access to a portfolio of devices that address varying anatomical and delivery challenges. TriSalus continues to expand our product suite to meet these needs, offering a range of technologies with differentiated features and sizes tailored to the complexity of the tumor vasculature. As part of our innovation-driven strategy, we recently launched TriNav LD and TriGuide, enabling pressure-enabled drug delivery PEDD in larger vessels. Additionally, we are pleased to announce the full commercial launch of TriNav FLX, formerly TriNav 2.0, which has demonstrated improved trackability and is engineered specifically for use in torturous vascular anatomy. This next-generation device strengthens our PEDD platform and enhances our ability to support interventional radiologists in addressing some of the most challenging clinical scenarios. We will continue to invest in the TriNav product portfolio to further deliver superior drug penetration, reduce complications and expand patient eligibility for TriNav usage. Initial sales since launch are exceeding our internal projections, which we're pleased to see our continual investment within our product suite is further fueling our commercial momentum. We believe TriNav is well positioned to become the standard of care in liver embolization for complex patients. To accelerate this trajectory, we are executing a focused strategy centered on 3 pillars: strengthening the clinical evidence base, deepening engagement with key medical societies and driving sustained commercial expansion. These efforts are critical to establishing TriNav as the preferred solution in complex embolization procedures and unlocking its full market potential. Moving to an update on our development on nelitolimod. Following the successful completion of our Phase I trials for nelitolimod, we announced last quarter our strategic shift to a partnership-focused approach. This transition will eliminate all development-related expenses for nelitolimod by the end of 2025, while preserving the long-term value of the program. It also enables us to focus internal resources on the more immediate and expansive opportunities within our PEDD device technology platform. Phase I studies in multiple liver tumor types, which include metastatic uveal melanoma, hepatocellular carcinoma or HPC, and cholangiocarcinoma are now complete. Additionally, enrollment has concluded in PERIO-03, our Phase I trial evaluating nelitolimod in patients with locally advanced pancreatic cancer. We remain on track for final data from PERIO-03 in the second half of 2025. Currently, we're in the midst of preparing final reports and data presentations to support future partnership interactions. The completion of patient enrollment and closure of these trials are anticipated to result in a meaningful reduction in R&D expenditures, particularly in the second half of 2025, with no further development spend projected for 2026. While early days, we see strong tailwinds from our strategic shift to partner nelitolimod development and focus on near-term investment in both expanding our TriNet product portfolio as well as our clinical body of evidence to further support our commercial efforts. We see this as an example of our prudent capital allocation strategy as we continue to streamline expenses and focus on meaningful near-term growth. Now turning to our strategy and new clinical applications for the TriNav product portfolio. Last quarter, we launched the PROTECT Registry, a multicenter effort led by Sarasota Memorial and others, evaluating PEDD for patients with thyroid nodules or goiders, who are not candidates for surgery, radioiodine or ablation. The goal is to assess disease-related quality of life, thyroid function and outcomes following PEDD-based thyroid artery embolization. This novel approach called PED-TAE was pioneered by Dr. Juan Camacho. Dr. Camacho has now treated over 40 patients and presented outcomes at NASA and SAR, and we're encouraged by the growing interest in this application. A preliminary readout has been published in the Journal of Endocrine Society for this minimally invasive vascular intervention for patients with large non-cancer thyroid nodules using a pressure-enabled device. The primary outcome was the successful embolization via the inferior thyroid artery, volume reduction of thyroid and normalization of thyroid function. The results were quite impressive with 100% technical and clinical success, no neurovascular complications, 81% of patients experienced mild pain or discomfort, all of which were resolved within 2 weeks, 73% thyroid shrinkage and 71% achieved normal thyroid function. We're extremely encouraged by these results as this minimally invasive procedure is now available to patients in lieu of a complicated Thyroidectomy surgery. Additionally, we've now launched a pilot registry within the emerging space of Genicular artery embolization or GAE, which provides patients with an alternative pain management and mobility option with minimally invasive procedure to potentially delay total knee arthroplasty. Now turning to our operational performance. We're reiterating our guidance of 50% revenue growth to reflect our confidence in future growth. As stated last quarter, we remain committed to improving EBITDA performance while also making a deliberate decision to invest in strategic areas of the business. As discussed, we have accelerated development of new clinical applications as well as expanding our commercial organization, which we believe will expand our addressable market and drive significant long-term value while delaying being EBITDA positive or cash flow positive until 2026. As always, we remain a science-driven organization, committing to putting patients at the center of everything we do. Our progress is making a real difference for people living with liver, pancreatic and other solid tumors. Looking ahead, we're entering the second half of 2025 with strong tailwinds. Our strategic priorities are clear: deepening penetration in the liver embolization market, advancing the TriNav platform for multiple indications focused on the interventional radiology call point, generating and publishing new HEOR and clinical data, improving operational performance in manufacturing and gross margins, and continuing to build a high-growth, scalable organization. And with that, I'll turn the call over to David.

Good afternoon, everyone, and thank you, Mary, for the warm introduction. I'm truly excited to join TriSalus Life Sciences at such an inflection point in the commercial trajectory of TriNav. As we build on this momentum, I've committed to seizing growth opportunities while maintaining the financial discipline needed to achieve near-term cash flow positivity. As Mary stated earlier, results for the quarter were strong. Revenue for the period was $11.2 million, which is an increase of 52% year-over-year and an increase of 22% quarter-over-quarter. We also increased the number of unique ordering accounts by 28% year-over-year as well as increased TriNav utilization per unique ordering account. This is consistent with our expectations as we expand our reach within existing accounts, leveraging physician champions and broadening the product portfolio to increase both physician adoption and usage. Gross margin was 84% for the quarter compared to 88% for the second quarter of 2024. This year-over-year decline was primarily driven by lower manufacturing efficiency associated with the newly launched products, a dynamic we expect to improve as production scales and processes mature over the course of the year. Research and development expenses for the second quarter were $3.9 million compared to $4.7 million in the second quarter of 2024. During the second quarter, we incurred approximately $500,000 of nonrecurring expenses related to the nelitolimod closeout of clinical trial sites. As previously noted, we anticipate concluding the nelitolimod-related expenses by year-end. Moving forward, our focus will be on device innovation and expanding our rapidly growing clinical body of evidence with TriNav to further support market penetration in the liver embolization market and new applications of TriNav to further drive revenue growth. This strategic transition will reduce our ongoing R&D run rate expenses. Sales and marketing expenses for the second quarter were $7.2 million compared to $6 million in the second quarter of 2024. The increase reflects our previously communicated investment in the expansion of our commercial organization to scale our sales and marketing efforts for continued commercial momentum and growth. General and administrative expenses for the second quarter were $5.7 million compared to $4 million in the second quarter of 2024. The increase in G&A costs were primarily driven by approximately $1 million of nonrecurring legal and audit professional service expenses for our auditor transition and our various registration statements filed during the period. Moving forward, we plan to streamline G&A costs to meaningfully reduce the run rate expenses. Operating losses for the second quarter were $7.3 million compared to operating losses of $8.2 million in the second quarter of 2024. The reduction in operating losses were due to increased sales and reduced R&D expense associated with the ramp down of nelitolimod clinical trial spending. Adjusted EBITDA loss for the second quarter of 2025 was $5.3 million compared to $6.7 million in the second quarter of 2024. The decreased loss can be attributed to increased sales, reduced R&D expense and higher noncash stock-based compensation in 2025. At quarter end, cash and cash equivalents were $26.5 million, which includes approximately $22 million in gross proceeds through the private placement we conducted in April. We have sufficient liquidity to fund operations throughout 2025 and expect to become cash flow positive in early 2026. As part of the private placement, we reached agreement with 55% of preferred shareholders to proceed with the exchange offer and consent solicitation completed in July with 99% of the outstanding preferred shares being tendered. Preferred shareholders exchanged preferred share for 3.3 common shares. Non-tendered preferred shares were automatically converted and the exchange settled on August 1, 2025. This results in approximately 50 million basic shares outstanding, eliminated the 2027 reset provision and better aligned our long-term investor base with a more simplified capital structure moving forward. With that, we are ready to open the line for questions. Operator?

[Operator Instructions] Our first question coming from the line of Frank Takkinen with Lake Street Capital Markets.

This is Nelson Cox on for Frank. Congrats on all the progress this quarter. And I guess we'll start with the new mapping that's now effective since April. Maybe just talk about that a bit more. Any incremental color on the reception in the market there? And what kind of contribution you're starting to see from that would be helpful.

Yes. We're really excited to get that in early April. And I'll even have Dr. Marshall talk about it. This is a really important addition to the reimbursement because previously, we didn't have coverage on the mapping. So people were just using it for treatment. And it's really important to use the same technology, both in the simulation mapping case as well as in treatment. So we're really starting to see physicians really appreciate that we got that so rapidly. And we're -- that's really contributing to some of the momentum that we have underway. I'll have Dr. Marshall comment on it from a user perspective because I think this is such an important addition from a reimbursement perspective.

Thanks, Mary. I can comment a lot on it because I'm part of this. So as you may know, mapping procedures are performed prior to delivering Y90 radiation into the liver. And it's very important to know exactly where that's going to go. And being able to map with the same catheter that you're going to treat with gives the physician a lot of confidence in what they're going to do. Previously, there was some hesitancy when physicians we're mapping patients and thought they might not get reimbursed for the catheter. Now they can reliably use it, map with an apple, treat with an apple. So I think it gives physicians a lot more confidence to pull that and use it when they see fit for it.

Perfect. That's helpful color. And then for David, just one on the operating expense side. I heard the one-timers in there. But maybe just walk us through how you're thinking about some of the OpEx moving forward? What kind of base we should be running off of and the mix we should be -- as we think about modeling through the remainder of the year into cash flow positivity and adjusted EBITDA in next year. And then yes, just directionally with some of the strategic shifts with the partnerships would be helpful.

Yes, of course. Thank you for the question. So yes, we remain confident in having an adjusted EBITDA positivity early next year. With that, we're going to see nelitolimod really, at the end of the day, close out mainly in the third quarter, you'll see the last real numbers coming through. And then from there, we should be thinking closer to a run rate of something in the neighborhood of $2 million, maybe $3 million early next year, moving to $2 million as we focus on the device innovation and building out our clinical body of evidence in R&D. And then sales and marketing, there are some one-timers with shows and the timing of those shows typically are in the second quarter in the summer. But with that, we're pretty confident with the current run rate where it is today. And then G&A is going to be my main focus moving forward, and we think we can get that down back to around like the low 4s here just by improving our audit and reducing our registration statements, and a lot of that is going to be seen here in the coming quarters.

Our next question coming from the line of William Plovanic with Canaccord.

First off, if I could -- In terms of -- I think you said unique ordering accounts was up 28% year-over-year. By my math, that only puts it up like 3% or 4% sequentially. I was wondering if you could comment on that and then maybe give us a little more granularity. And then also just on the investments in the commercial organization, I think you said you're making some investments there. Help us understand that a little better.

Yes, of course. So with the unique ordering accounts, I think last quarter, we discussed that it was going to be about 30 accounts from a back approval. So from that standpoint, unique ordering accounts are in kind of the low 300s, while back approvals are mid-300s from an approval standpoint. And then that's driving the increased utilization. Does that answer your question on unique ordering accounts and back approvals?

Well, help us understand what it was in first quarter and what it was in the second quarter? And how much of an increase was that sequentially?

Yes, of course. And so...

Maybe some of the terminology is changing. That's what I'm trying to understand.

Yes. No, fair question. So unique ordering accounts was up about 10% quarter-over-quarter. And then back approvals was up something in the neighborhood of 300, mid-300s. So that's roughly about 10% as well. So the focus for us over the past few years has been really opening a ton of accounts, and now we're shifting that focus to utilization per account as we're building off of our champions in each account and broadening the champion base within the account.

Okay. And then just on the new products, what type of contribution did the large or the Tri-Guide versus the Flex provide? Is Flex more of a second half of the year into next year type of opportunity? And then -- yes, let's go to that, and then I have one last follow- up on prostate.

Yes. So TriNav large was about -- we're estimating that it's around 10% to 15%. So we're getting a nice bump from having that available. And FLX, which we just launched, is actually exceeding our expectations. This was a technology that really addresses tortuosity where physicians when we were in a case, they felt like, wow, I couldn't navigate a TriNav to the location that I'd like. This has really helped giving them a new tool to do that, and I'll have Dr. Marshall comment on that. So -- when we look at the back half of the year and why we're confident in our acceleration in the back half of the year, we contemplated and we knew that FLX would really help us add to that utilization and address some of those missed case opportunities. And maybe I'll have Dr. Marshall just comment on it because we're really excited about this product. It really rounds out the portfolio for us right now. Previously, we just had TriNav, then we added the large. Now that we have FLX, we really have a complete portfolio to offer the interventional radiologists to use TriNav in virtually every case.

Yes. Thanks, Mary. I think this is an important part of our portfolio, and this is a product of physician feedback. Specifically, when physicians look at a case before they start or at the beginning of the case, we do an angiogram and we find out what the anatomy of the arteries is. This addresses the physicians who will look at anatomy and say, "Wow, I don't think I can get a catheter into that tortuous artery. I'm not going to use TriNav in this situation. We heard that from physicians, and now we can give physicians a tool to do that. I use it quite frequently. I actually used it for a thyroid last week, and it worked really well. We can get it around some pretty tight corners, but the real impact is that physician confidence when they pull it, they know that they can go where they want to go.

And then my question on -- was actually on thyroid, which is with that data -- single site data published, does that drive adoption? Or do you need to enroll the DELIVER trial to really get that going?

So that's very exciting data for us. This is the first major publication of this novel application. And I can tell you the buzz is real from physicians around the country. We have inquiries from physicians who want to use it. We are still driving most of our -- we're still pushing our PROTECT registry as our main vehicle for thyroid artery embolization, but we are receiving inquiries about the procedure and physician interest from all over.

Yes. And Bill, what we'd like to do is really build out a robust database. If the physician has interest, we'll train them and get them involved. And I think this is the first publication. So we're really excited about that. And we anticipate impact from thyroid just beginning the back half of the year, but real impact in 2026.

Okay. That's fantastic. And then last question, I promise, is really how do we think about the third quarter in terms of cadence for the back half of the year and the 50% plus growth. I think consensus is somewhere between $11.5 million and $12 million for the third quarter and closer to $13 million for the fourth. Just kind of -- I know you reiterated the 50% plus guidance, but just wanted to kind of zero in more on the third quarter here, if I could.

Yes, Bill, this is David. Thanks for the question. And we're really proud of where we were for the second quarter with 22% growth sequentially. So we can get low double-digit growth for the next 2 quarters and get to our target. And we've taken a decent amount of that growth out of the equation, if you will. And we're confident we can get there. And just to round out your question on investment in the sales team because what we're doing is really bringing in a lot of structure and process into our sales commercial organization. And so with that, we're investing in sales leadership, process and structure to further improve that account utilization on a per rep basis and a per account basis. And so for us, that's giving us confidence in hitting those numbers.

Our next question coming from the line of Ross Osborn with Cantor Fitzgerald.

This is Matt Park on for Ross today. I guess just starting on gross margin, it came in a little bit softer than what we had. And I know you guys highlighted some lower manufacturing efficiencies as you start to ramp these newly launched products. Can you just walk us through the levers to see incremental margin expansion in the back half of this year and then into 2026?

Yes. No, it's a great point. So we're confident we can get back on track with gross margin after what was a minor setback for the quarter. Where we are is really getting a strong understanding of understanding our business, understanding the product mix from what's going to be TriNav, FLX and LV and then just really getting in that cadence of understanding the use cases for a forecasting perspective and then getting our teams to have an optimal lot size when they're going to be manufacturing. But this is something that we're taking very seriously, and this is something we're confident we can get back on track.

Got it. That's helpful. And then I guess one more for me on these registry trials. So please correct me if I'm wrong, but you initiated a pilot registry in GAE and then discussed previously about initiating one in uterine fibroid. I guess, can you just walk us through what type or level of evidence you need and you believe will be the most compelling to guideline committees as they evaluate TriNav in these procedures?

Yes. What we do is we just did a Phase 0 in GAE, and we did that specifically for collecting just a really broad array of various endpoints. And then we'll sit with our advisory committee, figure out what we think is the most powerful and influential and ones to focus on and then power the registry so we have the appropriate number of patients and follow-up so we can have a robust data set that we can include in guidelines. So our process really is let's collect the initial data, then we sit with our advisory panel. We formulate what we think are the right endpoints to focus on, and then we scale up this study to actually have the appropriate impact. So we did that on GAE. We hope to do that on UE in the fourth quarter of this year. So we're starting quite a number of different studies to actually implement that across this broad array of new applications.

[Operator Instructions] Our next question coming from the line of Suraj Kalia with Oppenheimer.

This is Seamus on for Suraj. Congrats on the nice quarter. To start, I guess, can you -- I know this is kind of reiterating an earlier question, but just trying to get out of a different way. How is mapping usage with TriNav since the mapping code been instituted kind of changed? Like kind of what was -- what percentage of physicians were using that mapping code kind of before that was instituted versus kind of what are you seeing after? And what are you doing to kind of increase that mapping utilization for physicians?

Well, let me take it first with the second point. So how we're helping people increase the mapping utilization is we onboarded a reimbursement consultant called

Got it. Appreciate that. That's helpful color. Just one last one from our end. I know you guys are focusing a partnership for nelitolimod. I guess when could we expect to potentially to hear something? What are you looking for in a partner for a partner that you're going to bring in? And just any color there.

Yes, sure. So on nelitolimod, we're kind of winding down to the end. I know we've been talking about it for a while, but we hope to roll out the data in Q3. And I think what we're looking for in a partner is someone that can advance that to the next stage and bring it to the market. And that would be focused -- a partner that's really focused in the liver and pancreas that has an understanding of this mechanism, the TLR9 mechanism that understands the impact of a reduction in myeloid-derived suppressor cells. We actually have a very clear target list, kind of a first tier, second tier, third target list where strategically, this would be a nice addition to their portfolio. And so once we have the final data and then we're going to begin those discussions in Q3. So we're really excited to begin those. I think the challenge that we have is just the market right now in biotech is not as robust as I would like. But it's hard to find a Phase I asset that has good data. So we're excited to start the discussions and hopefully can move this ahead.

And I'm showing there are no further questions in the queue at this time. I will now turn the call back over to Mary Szela for any closing remarks.

Thank you, everyone. Really appreciate your interest in TriSalus.