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Jeffrey Soinski

Thank you, Matt, good afternoon and thank you all for joining us in the third quarter. We achieved notable improvements in operating efficiency and made meaningful strides toward our strategic objectives. This progress highlights our dedicated efforts to streamline our peripheral operations, focusing on high value accounts and channelling resources into what we believe could be a groundbreaking advancement in the treatment of coronary artery disease.
In June, we implemented a cost savings program that reduced our overall head count by 24% including a one-third reduction in our commercial team. The September quarter marks the first full operating period, reflecting these savings with a direct reduction in operating costs and cash needs as well as improved efficiency and gross margin and revenue per sales head.
Our field sales team now comprising 16 professionals is focused on supporting our most active peripheral clinical sites. These sites demonstrate steady case activity and a strong commitment to utilizing our best in class technology to achieve superior patient outcomes, especially for complex peripheral artery disease or PAD.
Despite a much leaner sales team, we maintained approximately 90% of revenue in the third quarter compared to both the prior quarter and the same period. Last year, we remain dedicated to supporting our user sites and expanding the tools available to provide the best therapeutic solutions for patients.
This includes the ongoing commercialization of our Tigereye crossing catheter and the full commercial launch of our new Pantheris LV, large vessel, peripheral atherectomy, catheter, Pantheris LV is designed to streamline the costly procedure and paired with our portable lightbox three imaging console.
Expand the mainstream appeal of our image guided platform in August. We announced the appointment of Dr, Tom Davis, a highly experienced interventional cardiologist and Director of cardiovascular Research at St. John Hospital and Medical Centre in Detroit. As our Chief Medical Officer joined by key opinion leaders in vascular intervention. Dr, Davis hosted a physician focused webinar in October titled new approaches to treating peripheral artery disease below the knee and promising new BTK data.
During the session, Dr Davis presented updated interim data from the image BTK post market study which evaluates the use of pantheris SV for treating advanced disease in the smaller vessels below the knee. The study continues to demonstrate exceptional clinical outcomes in this challenging patient population showing 100% freedom from major adverse events at 30 days. 97% freedom from target lesion revascularization, an indicator of restenosis and 94% primary patency as assessed by duplex ultrasound at 12 months.
Turning to our coronary program, we've made substantial progress on developing our first coronary product application, an image guided CTO crossing system based on our proprietary optical coherence tomography or OCT guided platform.
Since our last earnings call, we have successfully completed all phase three verification and validation testing necessary to support an investigational device exemption or IDE application with the FDA. Working closely with our coronary physician advisers. We've defined the clinical study parameters including inclusion exclusion criteria, study endpoints treatment protocol and patient follow up requirements.
We've also completed a biostatistical analysis to determine the optimal sample size for our study targeting 110 patients with a 30 day follow up period to maximize alignment with the FDA. We opted to submit a pre submission package in September ahead of the IDE application. This approach enables us to seek FDA feedback on our study design target patient population and choice of predicate device for an anticipated 510-K regulatory pathway.
Once the pre submission process is complete, which we anticipate in the fourth quarter, we'll be ready to file the IDE. In the meantime, we are actively engaging high volume clinical sites for participation in the trial with five identified and discussions underway with several more. We expect to expand to 10 or more sites ahead of study initiation and are planning to begin patient enrolment upon receiving FDA approval of the IDE which is anticipated in the first half of 2025.
We're excited to complete this process and advance this revolutionary new technology through the clinical study and regulatory approval process. We believe our coronary device has the potential to redefine a large and underserved market crossing chronic total occlusions or CTOs and coronary arteries is currently a complex time consuming and costly procedure with a documented high failure rate.
By harnessing our proprietary image guided technology. We aim to provide physicians with a superior streamlined and more effective solution for crossing coronary CTOs. Our technology is deployed within a low profile catheter system, integrating real time OCT guidance with the precise control and steer ability needed for an integrated approach.
We expect this to significantly reduce procedure times and improve crossing success rates while remaining within the true lumen similar to our peripheral devices. Our coronary system also incorporates precise vessel measurement capabilities, enabling positions to accurately size balloons or stents prior to placement critical factor for optimal patient outcomes.
The design of our unique image guided system is expected to allow positions to cross coronary CTOs with less dependence on specialty wires support catheters and re entry devices. Use of real time OCT imaging minimizes X-ray radiation exposure and iodine based contrast eye usage which pose significant health risks to both physicians and patients.
Our extensive animal and cadaver studies along with our experience with OCT guided therapy and peripheral applications support our confidence that this combination of onboard image guidance and vessel specific directional control will deliver a strong safety profile in clinical practice.
We expect our coronary CTO crossing system to benefit from favourable reimbursement dynamics upon FDA clearance. Our device would immediately qualify for existing high value reimbursement codes for coronary CTO crossing and OCT diagnostic imaging. This advantage sets it apart from peripheral markets where dedicated reimbursement codes for CTO crossing and diagnostic OCT imaging are not available.
Additionally, our system is expected to drive substantial cost savings for hospitals by reducing crossing times lowering contrast media usage and minimizing the need for accessory devices. These benefits enable a more favourable cost profile allowing hospitals to treat more cases or allocate resources more efficiently. We look forward to sharing our continuing progress in the development of this exciting new clinical and business opportunity in the coming quarters.
Before I turn the call over to Nabeel, I'd like to take a few minutes to update you on our strategic partnership with Zylox-Tonbridge, a leader in the peripheral vascular and neurovascular markets in China. This relationship consists of three important components, first investment alignment. Earlier this year, Zylox made a substantial equity investment, Avinger aligning their interest with ours as shareholders in our future success.
Second market access, our agreement has paved the way for introducing our image guided devices to the vast and growing greater China market through Zylox is extensive and well established sales and marketing network and third cost effective manufacturing. The partnership provides a pathway for lower cost offshore manufacturing of our devices for use in worldwide markets.
We're excited about the rapid progress Zylox is making in expanding access to our proprietary image guided products for the estimated 50 million people in China affected by peripheral artery disease. Our team has been working closely with Zylox to support their efforts in completing regulatory filings for our high speed peripheral catheters and the Lightbox three imaging console in China.
Before the end of this year, with registration clearance anticipated in 2025 related to these efforts, Zylox recently received the prestigious innovative medical device review designation for our pantheris device in China akin to the breakthrough device designation in the US. This recognition enables priority regulatory review and underscores the impact of our technology in this important new market.
We are also supporting Zylox professional education initiatives and initial premarket promotion activities in China. Our products were presented for the first time at the China endovascular course, CEC the leading clinical conference for Chinese endovascular surgeons where many physicians expressed strong interest in our image guided technology.
In addition, we are working with Zylox Operations Group to support the development of manufacturing capabilities for Avinger products at their state of the art manufacturing facility in Hangzhou China. We anticipate that Zylox will complete its full manufacturing scale up for our devices by mid 2025 which is expected to enhance production efficiency and provide the opportunity for additional cost reductions in the future.
As a reminder sales of Avinger products in the Zylox territory will be royalty bearing for Avinger. Following regulatory approval, we will sell finished goods to Zylox until their self manufactured products are available for sale in China. We're excited about the potential of this partnership and the positive impact it could have on our growth.
At this point. I'd like to turn the call over to Nabeel Subainati, our principal financial officer to take us through the financial results. Nabeel.

Nabeel Subainati

Thank you, Jeff.
Total revenue for the third quarter of 2024 was $1.7 million down slightly from $1.8 million in both the previous quarter and the same period last year. This aligns with our strategic decision to concentrate field support on higher volume user sites while significantly reducing the peripheral sales team as part of our cost savings initiative.
Gross margin for the third quarter of 2024 was 26% increase from 20% in the second quarter of 2024 and 21% in the third quarter of 2023 reflecting improved operating efficiency. Following our strategic realignment, operating expenses for the third quarter of 2024 declined to $4.1 million compared to $4.5 million in the second quarter of 2024 and $4.4 million. In the third quarter of 2023.
In June, we reduced our head count by approximately one-fourth as we streamlined our peripheral operations and directed resources to the development of our coronary artery disease program. Reflective of these actions, selling general administrative expenses decreased by close to $0.6 million or 16% in the third quarter of 2024.
While research and development expense increased by approximately $0.2 million or 20%. Compared to the prior quarter. Net loss and comprehensive loss for the third quarter of 2024 was $3.7 million reflecting a 15% improvement compared to $4.4 million in the second quarter of 2024 and 17% improvement compared to $4.5 million in the third quarter of 2023 adjusted EBITDA as defined under non-GAAP financial measures provided in today's press release was a loss of $3.4 million a 12% improvement compared to a loss of $3.8 million in the second quarter of 2024 and 10% improvement compared to a loss of $3.7 million in the third quarter of 2023.
For more information regarding non-GAAP financial measures, please see non-GAAP financial measures and the reconciliation of non-GAAP measures to the nearest GAAP measure provided in the tables in today's press release, cash and cash equivalents totalled $5.9 million as of September 30.
At this point, I'd like to turn the call back to Jeff for Q&A.

Jeffrey Soinski

Thanks Nabeel. We made significant progress across the company in the third quarter, realizing significant cost savings and improved operating efficiency following our strategic realignment in June, expanding our Pantheris LV large vessel Atherectomy system to full commercial launch, advancing the development of our first coronary product entry, which we believe will be a game changer for the safe and effective treatment of coronary CTOs and supporting Zylox commercialization efforts for entry into the vast and growing greater China market.
We appreciate the commitment of our team as we look forward to achieving critical milestones in these and other areas and remain dedicated to our mission of radically changing the way vascular disease is treated.
At this point, we'd like to open the call to your questions.

Question and Answer Session

Operator

Certainly, the floor is now open for questions. (Operator Instructions)
Your first question is coming from RK with H.C. Wainwright. Please put your question. Your line is live.

Thank you. Good afternoon. Jeff and then a deal, a couple of quick questions. The first one is from Pantheris. I just said this is the first full quarter of commercialization. So, what are you hearing from the physicians? How would they like things? how should we think about the future adoption?

Jeffrey Soinski

No, Thanks RK. So, first of all, you're referring to the, the full commercial launch of the Pantheris LV in the third quarter and obviously we announced that late in the quarter and so it's still early days. But we're very pleased with the response we're getting in the market from a clinical perspective. I think physicians are very pleased with the simplicity of operation.
As you know, we had made changes versus our current large vessel device to simplify and streamline the procedure, to make it easier for new physicians to pick up the device and have success with it more similar to other directional ay products that they may have used before. And picking up on a lot of the advances and improvements we made in Pantheris SV, which as you know, is developing.
It has been a very strong product for us but is also delivering outstanding clinical data. And one of the primary motivators for Pantheris SV is in combination with our portable Lightbox three imaging console to really broaden the mainstream appeal of our technology. And so, and maybe as a kind of a more tangible expression of the early success with the product, although we didn't expand until the latter part of the quarter, our Pantheris LV revenue did increase over 20% versus the sales in the second quarter.
So a good start. We have not seen because we were in limited launch for a pretty significant amount of time, we were able to make some improvements in the product before expanding the full commercial launch. So, so very pleased with the performance and what we're seeing so far.

Good, The other question is on the on your collaboration. So how sure are you that Zylox could get the approval in time and also how much more additional work do they need to do to get the commercialization going?

Jeffrey Soinski

Yes. So, first of all, we've been very, we have been working very closely with Zylox through this process. And so, we have good visibility on what is happening in China and with their filings to NMPA, one of the major steps in China, first steps is to go through an extensive and rigorous what they call type testing process. All of our products have now been through the type testing process successfully in which is a kind of a verification, validation type of testing protocols that are very rigorous.
They've all successfully completed that testing and several of the Filings have already been made and we are told and we are confident that the remainder of Filings for our catheters and products will be completed prior to the end of this year. So, we're projecting a regulatory approval in China in the second half of '25.
In the meantime, Zylox is developing their own manufacturing capability for our products. We actually have people over in China right now including our CTO helping them establish their manufacturing lines. We've been supplying parts and [jigs] and fixtures and components to help bring their lines up. So again, there again, I believe that they are right on track with their internal plan and right on track with our expectation to have completed their manufacturing scale up process by, the middle of next year and to qualify that facility.
That's important for us because it could provide the opportunity for us to source from Zylox following FDA registration of their facility and bring our cost down. Not only on our cost of goods but provide other cost savings opportunities. It also would provide a foundation for them to pursue approval for a for a domestically manufactured version of our product.
But the initial regulatory process and pathway as we talked about before will be the first to get our product improved. As an imported product, we will supply product to Zylox following approval and then when they have their own self manufacturing, self manufactured product, cleared, provide the opportunity for them to, to fulfil their own market needs.
We did have a presentation of the products and demo sessions that were very well attended by physicians that Zylox hosted at the Chinese end of vascular conference. We also had people in attendance supporting those efforts. And again, we have been incredibly impressed with the professionalism of their organization, the capabilities of their organization and how well they've embraced us in the process.
So we have high hopes that this massive market will be unlocked. By Zylox with these very innovative products and as we talked about on the call, they've received the innovative medical device designation which should help accelerate their regulatory review and approval process as well. So, all good things coming out of China over the past several months.

Thank.

Jeffrey Soinski

Alright, thank you RK.

Operator

There are no questions in queue at this time. I would now like to turn the floor back over to Jeffrey Soinski for any closing remarks.

Jeffrey Soinski

Well, thank you again for joining our call this afternoon. We very much appreciate your interest in our company and look forward to reporting our further progress when we present our year end results. Thank you.

Operator

Thank you, everyone. This does conclude today's conference call. You may disconnect your phone lines at this time and have a wonderful day. Thank you for your participation.