TELA Bio(US:TELA)2020-05-13 04:50Financial Data and Key Metrics Changes - Revenue for Q1 2020 increased by 13% year-over-year to $3.7 million, driven by new sales and increased penetration within existing accounts [11] - Gross profit as a percentage of revenue improved to 59% from 54% in the prior year, attributed to higher revenue and reduced charges for excess and obsolete inventory [12] - Loss from operations was $6.5 million in Q1 2020, compared to $5.2 million in the prior year [14] - Cash, cash equivalents, and short-term investments at the end of Q1 2020 totaled $46.7 million, expected to be sufficient for at least the next 12 months [15] Business Line Data and Key Metrics Changes - Sales and marketing expenses rose to $5.3 million in Q1 2020 from $4 million in Q1 2019, due to higher salaries and commissions from sales expansion [13] - R&D expenses decreased to $0.9 million in Q1 2020 from $1.7 million in Q1 2019, due to reduced licensing payments and lower laboratory expenses [14] Market Data and Key Metrics Changes - The company experienced a significant decline in surgical volumes, with a reported 70% decline in April compared to pre-COVID-19 levels, improving to about 50% in early May [37][38] - The majority of procedures in the portfolio can be deferred, but complex hernias will eventually require surgery, indicating a potential rebound in volumes as elective procedures resume [20][21] Company Strategy and Development Direction - The company is focused on ensuring employee and customer safety, conserving capital, and driving quality engagement with customers through virtual programs [22][23] - Plans to leverage recently awarded GPO contracts to drive adoption of OviTex and OviTex PRS products, with a focus on cost savings for hospital customers [30] - The company aims to expand its surgeon network and continue developing new generations of OviTex products [32] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the uncertainty caused by the COVID-19 pandemic and its impact on elective procedures, but expressed optimism about recovery as hospitals begin to resume surgeries [18][21] - The company has implemented cash conservation strategies and is monitoring cash burn relative to revenue [15][25] - Management remains confident in the fundamental strength of the business and its ability to achieve sustainable growth in the long term [34] Other Important Information - The BRAVO clinical study has shown promising results, with a 0% hernia recurrence rate at 24 months in the first 20 patients studied [28] - The company has maintained its entire commercial organization during the pandemic to ensure readiness for recovery [66] Q&A Session Summary Question: How did the quarter progress, particularly in April? - Management noted that April started slow with a 70% decline in surgical volumes, but there was improvement as the month progressed, with May showing a 50% decline compared to pre-COVID levels [37] Question: What is driving growth despite the pandemic? - The company has seen success with virtual surgeon VIP programs, leading to commitments from surgeons to use their products [40] Question: What are the plans for operating expenses? - The company aims to cut variable expenses by 20% to 25% and has implemented salary reductions to conserve cash [44][46] Question: What is the split between OviTex and PRS products? - The mix was approximately 91% for OviTex and 9% for PRS, with a focus on managing inventory effectively [49] Question: How will the company approach market share movement? - The company plans to leverage virtual programs to engage surgeons and drive implementation of their products, especially in the complex ventral and PRS areas [62] Question: What is the status of the BRAVO study data? - The next update on the BRAVO study is expected in Q3, with ongoing presentations during virtual VIP events [79]