Release Date: August 13, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Second quarter revenue increased by 25% sequentially to $11.8 million, indicating strong demand for the Allurion program.
- Procedure volumes grew by 12% year-over-year and 4% sequentially, setting a new record for the company.
- Operating expenses and loss from operations reduced significantly by 21% and 30% respectively, compared to the prior year period.
- Raised $22 million in gross proceeds through a public offering and private placement, strengthening financial footing.
- Significant strides in advancing the digital platform, including onboarding the first patients onto the Virtual Care Suite (VCS) in the United States.
Negative Points
- Year-over-year revenue decreased by $1.2 million due to macroeconomic headwinds and credit risk management.
- Sales of the Allurion balloon were suspended in France, representing approximately 15% of the company's business over the past two quarters.
- Facing macroeconomic headwinds in Latin America and Asia Pacific, leading to slower procedure growth and conservative inventory stocking.
- General and administrative expenses increased by $0.9 million due to $1.9 million in financing costs.
- Cash burn during the quarter was approximately $10.4 million, highlighting ongoing financial challenges.
Q & A Highlights
Q: Can you provide more details on the impact of the French regulatory authority's decision to suspend sales of the Allurion balloon in France?
A: (Shantanu Gaur, CEO) The French regulatory authority suspended sales due to concerns about advertising, patient follow-up, and physician education processes. We are cooperating fully and have submitted a remediation plan. France represents about 15% of our business over the past two quarters. This decision is not based on new scientific evidence, and no other regulatory authorities have taken similar actions.
Q: What are the key drivers behind the sequential revenue growth in the second quarter?
A: (Shantanu Gaur, CEO) The sequential revenue growth of 25% was driven by strong demand for the Allurion program, particularly in direct markets like Europe. We also saw reordering in many distributor markets where inventory levels have normalized following destocking.
Q: How are you addressing the competition from low-priced GLP-1 drugs?
A: (Shantanu Gaur, CEO) Despite the availability of low-priced GLP-1 drugs, we believe they are not the ideal therapy for all obese patients. Issues like muscle mass loss and low adherence rates make other treatments necessary. We are exploring partnerships to offer Allurion to patients for whom GLP-1 drugs have not been effective.
Q: Can you elaborate on the operational efficiencies achieved in the second quarter?
A: (Chris Geberth, CFO) We achieved a 21% reduction in operating expenses and a 30% reduction in loss from operations compared to the prior year. These efficiencies are the result of cost reduction and efficiency improvement activities undertaken at the end of last year.
Q: What is the status of the audacity trial for the Allurion balloon?
A: (Shantanu Gaur, CEO) We successfully treated the last patient with their second balloon in the second quarter, keeping us on track to complete the trial by the end of the year. This is a pivotal study for FDA approval.
Q: How is the company positioned financially after the recent public offering and private placement?
A: (Chris Geberth, CFO) We raised $22 million in gross proceeds, bringing our cash position to approximately $37 million at the beginning of July. This strengthens our financial footing and supports our goal of achieving profitability by the end of next year.
Q: What are the future growth projections for procedure volumes and revenue?
A: (Shantanu Gaur, CEO) We have adjusted our full-year procedure volume growth forecast to between 10% and 15% and expect full-year revenue to range between $40 million and $45 million. This takes into account macroeconomic headwinds and the situation in France.
Q: Can you discuss the advancements in your digital platform and its impact on the business?
A: (Shantanu Gaur, CEO) We have made significant strides in advancing our digital platform, particularly the Virtual Care Suite (VCS). The VCS offers remote patient monitoring, predictive analytics, and telehealth, which we believe will help clinics and providers meet growing patient demand and maintain positive outcomes.
Q: What are the long-term plans for the Allurion program in terms of clinical data and market expansion?
A: (Shantanu Gaur, CEO) We plan to continue pursuing additional clinical data to support the safety and efficacy of the Allurion program, particularly regarding long-term outcomes. We are also exploring partnerships to expand our market presence and offer our solutions to a broader patient base.
Q: How is the company addressing the issue of muscle mass loss associated with GLP-1 therapy?
A: (Shantanu Gaur, CEO) We have observed that patients on the Allurion program actually gain lean mass while losing weight. This is supported by a recent study showing an average lean mass gain of 5.6% while losing 14% of total body weight at four months. This underscores the importance of real-time monitoring and personalized recommendations through our AI-powered platform.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
