ReShape Lifesciences Q2 2023 Earnings Call Transcript

Quartr
Provided by Quartr
August 7, 2023

There are 6 speakers on the call.

Operator

Afternoon, and thank you for joining the ReShape Lifesciences Second Quarter 2023 Conference Call. I would like to turn the call over to Michael Miller from Rx Communications.

Speaker 1

Good afternoon, and thank you for joining the ReShape Lifesciences' Q2 2023 earnings call. I'm pleased to be joined today by Paul Hickey, President and Chief Executive Officer and Tom Stankovich, Chief Financial Officer. Inc. Paul will provide an overview and update on the company's activities, which will include a discussion with Doctor. Christine Renfielding, a member of ReShape Scientific Advisory Board.

Speaker 1

Inc. Then Tom will review the financial results for the period. He will then turn the call back over to Paul for some closing remarks, After Rich, we'll open the call to a question and answer session. As a reminder, this conference call as well as ReShape Lifesciences' SEC filings and website, including the Investor Information section of the website, contains forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Inc.

Speaker 1

Actual results could differ materially from those discussed due to known and unknown risks, uncertainties and other factors. And A. These and additional risk factors and uncertainties are described more fully in the company's filings with the Securities and Exchange Commission, Inc. Including those factors identified as risk factors in the company's most recent annual report on Form 10 ks. Inc.

Speaker 1

As an additional reminder, ReShape stock is listed on NASDAQ, trading under the symbol RSLS. I'll now turn the call over to Paul Hickey, President and CEO of ReShape Lifesciences. Paul?

Speaker 2

Thank you, Mike. I'd like to thank all of you for joining us this afternoon for our Q2 2023 earnings call. After I provide an overview and update on ReShape's activities, will be joined by a member of our scientific advisory board, Doctor. Christine Renfielding, Professor of Surgery at NYU Grossman School of Medicine, Director of the NYU Legone Weight Management Program and Chief of the Division of Bariatric Surgery. As an expert and Key opinion leader in her field.

Speaker 2

I have asked Doctor. Rimm Fielding to provide her clinical insight on LAP BAND, the adoption of GLP-1s and the impact on the bariatric market. You'll hear from her a little bit later during this call. Before I recap our second quarter highlights, I'd like to discuss and comment on important events occurring within the obesity market today. I will assume that all of you listening understand the size of the obesity markets, Research.

Speaker 2

That obesity is a lifelong disease and it has an alarming growth rate globally as well as the significant medical repercussions and associated economic Costs. Further, I am sure you are aware of the adoption of GLP-1s worldwide and the prominence of the related big pharma's marketing efforts we are exposed to weekly, if not daily, on television and other media channels. The expanding popularity of GLP-1s has brought significant benefits to those suffering from Type 2 diabetes and the use for weight loss has helped to normalize the stigma that often occurs around obesity and medical intervention. There is no doubt That's the related big pharma marketing efforts we're all seeing today have significantly increased the number of overweight and obese individuals who have previously avoided surgery, and A. Now actively seeking medically managed weight loss.

Speaker 2

While in the past obesity has been a sensitive topic and treatment has not been normalized, We are pleased to see this shift in perception as well as a greater awareness and acceptance of how critical obesity care is for both adults and children. Research. Shortly, I'll have Doctor. Renfielding speak to her personal experience. But across the U.

Speaker 2

S, physicians are telling us that the GLP-one adoption, and Auryxia. While potentially delaying surgical consults in the short term, we'll ultimately increase the number of patients seeking out bariatric surgery to augment or replace the GLP-one therapy and its known limitations. We feel very confident with our LAP BAND and the expected future offering of our LAP BAND 2.0, we are uniquely positioned with having the least invasive, safest and Durba weight loss option for these patients that have historically had an aversion to medically managed weight loss and surgery. Inc. Now turning back to a discussion of our Q2 highlights and growth initiatives.

Speaker 2

A key takeaway from today's call and beyond. Let me remind you of our 3 primary growth strategies or pillars for growth. Inc. The first pillar is to operate our business with a disciplined metrics driven approach to drive predictable revenue expansion through a scalable and sustainable business model. Our second pillar is to continue to expand our product portfolio and pipeline across the care continuum.

Speaker 2

And our last, our third pillar is to continue to validate our evidence based weight loss solutions, leveraging our Scientific Advisory Board for key insights on strategic initiatives. Now let me provide you more specifics on our first pillar progress. You will see in our numbers that executing this growth pillar has impacted almost every department as we maintain discipline and adhere to key P and L metrics. As a direct result of our focus on Pillar 1, I am pleased to report that we are able to recognize a 53% reduction in operating expenses compared to last year's Q2. Inc.

Speaker 2

Further, in July, in response to the company's revenue shortfall caused by GLP-one adoption and other market factors, and Company. We made additional operational improvements with annualized savings estimated to total more than $4,000,000 Inc. We expect to continue to further optimize our organization to positively impact our operating expense level throughout the remainder of this year and into 2024, Inc. Ultimately, allowing us to extend our cash runway, while we continue to invest in our growth initiatives. Research.

Speaker 2

Our progress with our first growth pillar is also evidenced by our revamped digital lead generation and a patient reengagement initiative. We are steadily seeing our new marketing efforts yield higher quality and lower cost patient leads in specific markets that align with surgeon advocates. Key to this improvement is our recently signed exclusive agreement with Hyve Medical Accessing lead optimization software that will improve patient engagement and increase patient volume by utilizing an AI SMS patient self Service Technology. Importantly, data generated during our testing of the Hyatt platform in the Q1 at select LAP BAND Accounts, where we also have co op marketing, revealed an impressive 107

Speaker 3

and A.

Speaker 2

Percent plus increase in medical consultation scheduling over the prior quarter. In conjunction with our highly targeted direct Consumer Marketing Campaign. The Hyve platform allows individuals to quickly and easily navigate new patient intake hurdles and book an appointment with a medical professional at any time. Based on our learnings to date, we anticipate that adoption of our co op marketing and Hyatt platform will result in approximately 50% improvement in lead generation at sites executing these best practices. Research.

Speaker 2

As a part of our strategy to target key touch points in the patient's decision process for surgery, We continue to develop an improved website experience, which we are on target to launch towards the end of the third quarter. Inc. This new platform will provide for improved customer lead capturing and lead conversion with our shift in tone to joyful, dotcom. The platform will also include comprehensive lead routing automation, leveraging text, email, web chat and calendar integration to qualify and connect every lead that comes in. We are building these core marketing competencies in house, including our call center to align with the high marketing automation and lead nurturing efforts.

Speaker 2

Inc. This nimble marketing strategy will allow us to be more responsive to better address patient leads. Taken together, we believe this strategy will better address patient and Company. We are pleased with the intent of increasing conversions and ultimately more LAP BAND surgeries. Now let's discuss our progress executing our 2nd growth pillar.

Speaker 2

In June, we submitted a PMA supplement application Auryxia. To the FDA for our next generation LAP BAND 2.0, develop physician feedback to improve the patient experience. Similar to our current LAP BAND, the LAP BAND 2.0 is adjustable post operatively to increase or decrease the opening of the band in order to optimize an individual's eating habits and Comfort, thereby improving therapy effectiveness. At the same time, a new feature of the LAP BAND 2.0 is a band reservoir technology that serves as a refill. Pieces of food that are too large to pass through the narrow passage created by the current lap band can pass through because the new feature allows the band to relax momentarily and then return to its resting diameter.

Speaker 2

Inc. This could allow for increased lap band constriction and result in satiety, while helping to minimize discomfort from swallowing large pieces of food, which may otherwise require emergency and office patient band adjustments. We expect FDA feedback by year end or early 2024 at the latest. As I've noted in the past, surgeons I've spoken with about the improved product believe the LAP BAND 2.0 will allow us to engage new surgeons and reengage many of those who have used the LAP BAND historically. As a part of our second pillar of growth, we continue to expand awareness of our best in class health and wellness program, ReShape Care.

Speaker 2

ReShape Care is an effective virtual health and wellness program that uses video based sessions with Board Certified Health Coaches, all on our convenient, easy to use app providing a holistic approach to lifestyle modification. Research. ReShape Care's initial launch has been focused on patients that are either pursuing bariatric surgery, who already had bariatric surgery, and we have seen positive outcome responses to our program within this patient population. We are also continuing our discussions with several self insured employers to provide ReShape Care to the employees in order to positively impact overall health and thus reduce employers' healthcare costs. Research.

Speaker 2

These discussions have a long sales cycle and are often linked to an employer's benefit enrollment period. Importantly, ReShape Care is on par with what companies are looking for, with a holistic approach that can be customized to meet the needs of the employer and their employees. In fact, some employers have indicated that ReShape Care has the ability to replace or consolidate 3 or 4 vendors from current employer sponsored wellness programs. We'll provide further details and future updates. Excitingly, with our ReShapeCare program, we have recognized that women are seeking healthcare information much more than men and have a unique healthcare needs.

Speaker 2

Inc. This presents an incredible opportunity for us to have a positive impact on women's health issues by tailoring ReShape Care to help women advance gracefully through Life Stages. Lastly, one of our most innovative products under development is our proprietary diabetes blockstim neuromodulation or DBSN device, which I've spoken about in past calls. The DBSN's dual vagus nerve neuromodulation selectively modulates vagal block and stimulation to the liver and pancreas, Inc. Respectively to manage insulin and blood glucose levels.

Speaker 2

We presented compelling preclinical evidence on the BBSN at multiple conferences, including the Keystone Symposia on Type 2 Diabetes in May and the American Society For Metabolic and Bariatric Surgery or ASMBS 2023 Annual Meeting in June, and we'll do so again at the upcoming International Federation of the Surgery of Obesity and Metabolic Disorders or if so meeting later this month. Notably, this promising technology may be able to reduce diabetics dependence on medications in a very individualized manner. Research. We have funded the DBSN with non dilutive NIH grants and will seek additional non dilutive grants to support further development, potentially including in human clinical trials. Progress on our last or third growth pillar was achieved Ourix.

Speaker 2

Our SAB is comprised of internationally recognized experts and surgeons in the obesity and metabolic disease fields. Their insights are already proving valuable for our growth initiatives to drive revenue and expand our product pipeline. Specific to enhancing our clinical data supporting our products, Research. The SAB is fully engaged in helping us develop our strategies to collect and publish data on both our LAP BAND 2.0 and data on LAP BAND patients who are also using GLP-1s as combination therapy. Combination therapies comprising GLP-1s and other and Aircumab.

Speaker 2

We are now in the line of our press release. We are now in the line of our press release. As a result, We're exploring a retrospective study of LAP BAND in combination with GLP-1s with our goal to have this exciting data peer reviewed and published as soon as possible. Research. Well, at this time, I'd like to introduce Doctor.

Speaker 2

Chris Run Fielding from NYU. As previously mentioned, Doctor. Fielding is a member of our Scientific Advisory Board and has been a key opinion leader and expert in the field of bariatric surgery for decades. Chris, I'd like to ask you to give everyone your background and then maybe give your view on the recent changes in the field of obesity treatment, including the GLP-1s and the adoption and the overall impact you feel they'll have on the surgical procedures available today.

Speaker 4

Thanks, Paul. Research. Good afternoon, ladies and gentlemen. As mentioned earlier, I'm a professor of surgery at NYU Grossman School of Medicine. I'm the Director of the NYU Langone Weight Management Program and I'm the Chief of the Division of Bariatric Surgery at NYU Langone Medical Center in New York City.

Speaker 4

I actually created the bariatric surgery division in 2000 with myself being the 1st bariatric surgeon at NYU. Research. I was fresh out of training and I was recruited to build a division. It was the following year in 2,001 when the LAP BAND was FDA approved that I became one of the first surgeons in the U. S.

Speaker 4

To be trained on how to implant and manage the device. So within 2 months after and Aker's approval, I became one of the busiest and most prominent surgeons performing LAP BAND Surgery. In the 1st 10 years after FDA approval, Inc. I implanted approximately 5,000 LAP Bands. I became a consultant for Bioenterics and sat on their clinical advisory board.

Speaker 4

Research. I trained other surgeons on lap band surgery by running workshops and being a proctor. I lectured on lap band surgery at other academic institutions, at other training workshops and at national and international conferences. I've published over 45 scientific research articles specifically involving LAP BAND Surgery outcomes in an effort to improve quality and decrease complications. And continued my consulting roles with the subsequent companies that owned LAP BAND, those being InMed, then Allergan and now ReShape Lifesciences.

Speaker 4

Research. Over the past 23 years, I have grown the bariatric surgery division at NYU and it now consists of 6 bariatric surgeons, and A. 5 nurse practitioners, 3 registered dietitians, 2 psychologists and 1 social worker. And we as a group perform approximately 1,000 bariatric operations a year that includes sleeve gastrectomy, gastric bypass and lap band surgery. And A.

Speaker 4

However, about 30% of our operations are revisions or corrective operations, to treat weight regain or complications. Research. Over 10 years ago, I also created the medical weight management program by hiring an obesity medicine and A. And she's grown our non surgical weight management practice, specifically utilizing diet plans, Kneal Replacement and Medications. This program complements our surgical practice on many levels, and it includes helping patients who had undergone bariatric surgery, but did not reach their weight loss goals and by referring patients for surgery who exhaust and A.

Speaker 4

Our medical weight loss program is so successful that we have been involved with clinical trials of new weight loss medications with and Novo Nordisk, the maker of liraglutide and semaglutide, otherwise known as Saxenda, Victoza, Ozempic and Wegovy. And we've also been involved with Eli Lilly, maker of tirzepatide or munjaro. In fact, we have just received 2 new grants from these companies to trial new medications, which are not on the market yet. There is no doubt that GLP-1s are a game changer in the obesity treatment arena and are here Care. Firstly, they really work.

Speaker 4

The efficacy of these medications on appetite control and Hyattie with non serious side effects is fantastic. There are about 7 other medications that have been and can be used for weight and A. Secondly, they validate obesity treatment other than diet and exercise, and A. Which when used alone have proven ineffective. Patients realize that medical interventions allows them to be successful with weight loss and destigmatizes their condition.

Speaker 4

And A. However, many factors are making an impact on the utility of GLP-1s, primarily cost. And A. The majority of insurance companies do not cover these medications, which run about $1,000 a month. In addition, there have been and continue to be major Auryxia's supply chain issues, which lead to shortages of medications.

Speaker 4

Our practice writes over 1500 prescriptions a month for these medications, Research. But at least 30% of patients do not start or continue them because pharmacies have no stock. The only way to maintain weight loss and A. In addition, many patients are becoming tolerant to the effects of the GLP-1s, where they no longer feel the drug is working and then are switching from Ozempic or Wegovy to Monjaro. Research.

Speaker 4

But the problem here is that the indication for menjaro presently is to treat diabetes and not obesity, which continues to be provide patient access problems. Finally, there are many patients who cannot or will not take GLP-1s because of the side effects or contraindications. The most common side effect is nausea. However, the most serious side effects on gallbladder attacks, which require surgery for removal and pancreatitis attacks. Women who are pregnant or trying to get pregnant to not use GLP-one agonist.

Speaker 4

There are many patients who do not want to take these medications long term for fear of unknown complications such as cancer. And Associates. So we are now seeing a growing number of patients who are frustrated with these issues and want a more permanent Solutions in the form of bariatric surgery. The unreliability of GLP-one supply and A. Along with the long term alliance and oftentimes development of tolerance will be the driving force for obese patients to come for surgery.

Speaker 4

And A. GLP-1s will be the gateway drug for patients to come for surgery because they have had a taste of successful weight loss utilizing modern medical Intervention. Bariatric surgery has also been a modern medical intervention since the 1960s, but has been vastly underutilized. And A. However, people are naturally afraid of surgery.

Speaker 4

And in fact, less than 2% of patients with obesity who qualify for bariatric surgery actually have surgery. And A. The most common operations being performed presently are sleeve gastrectomy and gastric bypass. But these operations require surgically removing the stomach for cutting and rearranging the stomach and intestines. Although sleeve gastrectomy and gastric bypass are very safe, Research.

Speaker 4

There are surgical and nutritional complications that can occur and people are afraid. The safest operation by far and A. As proven by multiple large population studies and vast personal experience. This was the primary reason for the rapid initial intake and Uptake of LAP BAND Surgery in the 2000s. Patients loved it because it was an outpatient procedure with quick recovery time that allowed them to lose more weight every time they came in back to the office for their band to be tightened.

Speaker 4

It also gave them accountability and long term connection with the practice, which motivated them. Childbearing women have been very successful with weight management during pregnancy and weight loss and A. After delivery because of the adjustability of the band. The band could be loosened during pregnancy and then retightened after delivery. Research.

Speaker 4

To this day, I still have hundreds of patients who have had their LAP BAND attack for over 15 years and have maintained a 100 pound weight loss. Research. However, over time, there were issues with management of the band afterwards in regards to adjusting it, particularly when it required urgent loosening to relieve Food Obstruction. Both surgeons and patients became frustrated and eventually became disenfranchised with the device. Research.

Speaker 4

I believe that LAP BAND 2.0 will address this issue because of the ability for self correction utilizing an internal reservoir system. Research. In addition, weight regain has been an issue after LAP BAND surgery, primarily because it has been utilized for over 20 years and the natural condition of the obese patient is eventual weight regain for reasons not clearly understood. This holds true for all of our operations as well, which is why GLP-one agonists have been utilized widely by bariatric surgeons such as myself to help their patients with weight regain. GLP-1s have been shown to complement and augment weight loss after sleeve gastrectomy and gastric bypass.

Speaker 4

Research. We personally have seen this in our practice after LAP BAND surgery. Multimodal therapy is now becoming mainstay in the bariatric surgery field, which may make LAP BAND surgery more attractive to patients who would otherwise never have a more invasive operation. I believe that the combination of improvements to the LAP BAND device and the tremendous GLP-one use will result in a greater interest and demand for LAP BAND surgery. And Auryxia.

Speaker 4

There are over 130,000,000 obese Americans who qualify for GLP-one and who also qualify for LAP BAND surgery. And A. A significant percentage will develop tolerance to GLP-one or will not be able to continue them or will not want to be dependent on medications long term. Research. These are the people who will be looking for a different long term sustainable option, which is surgery, and the safest surgery available today is LAP BAND surgery.

Speaker 4

Research. I hope my insights into the bariatric world has been helpful. I will now pass the call back to Paul.

Speaker 2

Inc. Thank you, Chris. You provide excellent insight to our listeners. So our listeners know I've asked Chris to stay on for our Q and A session and A. Well, it should be evident with today's call that with the known limitations of behavioral modification, side effects and durability issues surrounding pharmaceutical therapies such as GLP-1s, along with the anatomy altering and irreversible nature of other bariatric surgical approaches That there is a substantial need for a less invasive adjustable and reversible LAP BAND.

Speaker 2

As Chris noted, our product has proven to be safe, effective and Durable Solutions providing long term weight loss. Additionally, due to the growing evidence That weight loss with pharmacological therapies alone results in plateaus and can often lead to notable non compliance due to their currently known side effects. We believe ReShape Care with resources including the personalized health coaching Inc. I'd like to now turn the call over to Tom Stankovich to provide a recap of our financial performance. Tom?

Speaker 2

Inc.

Speaker 5

Thanks, Paul. And once again, thank you all for joining our webcast this afternoon. Inc. As a reminder, a full discussion of our financials is available in our press release and 10 Q. Before I discuss some of our financial details, Inc.

Speaker 5

I want to point out the overall reduction in our operating expenses of $6,000,000 or a 53% improvement reported in the 2nd quarter Inc. Compared to the Q2 of 2022 and an $8,400,000 reduction or 41% and Company. Thank you, Michael Miller. Thank you, Michael Miller. Thank you, Michael Miller.

Speaker 5

Thank you, Michael Miller. Thank you, Michael. Thank you, Michael. Thank you, Michael. Thank you, Michael.

Speaker 5

Thank you, Michael. Thank you, Michael. Thank you, Michael. Thank you, Michael. Thank you, Michael.

Speaker 5

Thank you, Michael. And Company. Additionally, in July, we further reduced

Speaker 3

and Company.

Speaker 5

These reductions, Inc. Combined with our expectation for increased revenue resulting from our targeted digital media campaign focused on geographies Rx. Near bariatric surgery centers at Selva LAP BAND System combined with the rollout of the Hyve platform are expected to and

Speaker 2

A.

Speaker 5

Inc. Moving on to other key financial metrics for the Q2 ended June 30, 2023. Our revenue totaled $2,300,000 for the 3 months ended June 30, 2023, which represents a reduction of $600,000 compared to the same period in 2022. Inc. The primary reason the decrease in sales volume was throughout the U.

Speaker 5

S. And in Europe. During the 3 months ended June 30, 2023, Inc. The company focused on its new strategies for marketing through a targeted digital media campaign near bariatric surgical centers, while reducing cost and increasing efficiencies. We expect that during the second half of twenty twenty three, these efforts and executing our growth pillars will help drive growth through the remainder of 2023.

Speaker 5

Gross profit for the 3 months ended June 30, 2023 was $1,200,000 Incorporated, compared to $1,900,000 for the same period in 2022, a decrease of $700,000 Gross profit as a percentage of total revenue for the 3 months ended June 30, 2023 was 53% compared to 65% for the same period in 2022. Inc. The decrease in gross profit percentage is primarily due to the decrease in volume of sales. Sales and marketing and Company's Q4 expenses for the 3 months ended June 30, 2023 decreased by $2,500,000 or 53 percent, down to $2,200,000 Inc. Compared to $4,600,000 for the same period in 2022.

Speaker 5

The decrease is primarily due to a decrease of $1,600,000 in advertising and and Company. There were also reductions in payroll expenditures, including commissions, Stock based compensation, travel and consulting related services, all totaling $900,000 and Company. General and administrative expenses for the 3 months ended June 30, 2023 decreased by $2,900,000 or 53 percent to approximately $2,500,000 compared to $5,400,000 for the same period in 2022. Inc. The decrease is primarily due to a $1,900,000 reduction in legal related expenses and other decrease and Company.

Speaker 5

Our next question comes from the line of Michael Miller from Rx. Please go ahead. Thank you, Michael. Thank you, Michael. Research and development expenses for the 3 months ended June 30, 2023 declined by $200,000 or 22 percent to 600,000 Inc.

Speaker 5

Compared to approximately $800,000 for the same period in 2022. The decrease is primarily due to lower payroll expenses along with consulting and Clinical related expenses. We ended the quarter with $4,700,000 in cash and cash equivalents and remain debt free and Company's Chief Financial Officer on our balance sheet. As we continue in 2023 and beyond, we anticipate our revenues increasing and a continued reduction in our operating expenses. And A.

Speaker 5

With that, I will now turn the call back

Speaker 2

over to Paul. Thanks, Tom. Before we open the call for Q and A, dotcom. It is important to reiterate that we are committed to improving our marketing systems and bringing critical components in house to ensure optimum lead generation, Lead Nurturing and Lead Conversion, while further reducing lead generation costs. We will continue to develop and offer portfolio, a portfolio that is differentiated from the competition with transformative technologies that consists of a selection of patient friendly, and help patients achieve healthy derba weight loss.

Speaker 2

As Tom detailed, we have significantly reduced operating expenses across all categories, so we can invest in the aforementioned growth strategies. And finally, we will work closely with our world class Scientific Advisory Board to continue our plan for success in a global market that is changing in historic fashion to normalize safe and effective treatments for obesity. Inc. This concludes our prepared remarks. So now we'd like to open the call to your questions.

Speaker 2

Stacy?

Operator

Thank you. We will now conduct the question and answer session. Star 11 on your telephone and wait for your name to be announced. Rx. Our first question comes from Anthony Vendetti with Maxim.

Operator

Anthony, go ahead with your question.

Speaker 3

Bank. Thank you. I was wondering, first question maybe for the doctor on the call, Doctor. Chris. I didn't get your last name, but I was wondering if you could talk just a little bit about what you're seeing in terms of the you said that GLP-one drugs, They're here to stay fantastic with low side effects, one of them being pancreatitis.

Speaker 3

Is brain swelling one of them? And if so, is it so remote that it's really not something you're concerned about? And then just a follow-up. Go ahead.

Speaker 4

No, no, no. Sorry. I didn't want to I just thought you were finished with your question. I apologize.

Speaker 3

Yes. No, no, no. That's fine. And then the follow-up is just, is it possible that You could use the weight loss drugs in conjunction with lap band surgery or is that

Speaker 4

Rx. Okay. So thank you, Anthony for your questions. Brain swelling, Research. I am not familiar with that as a side effect of GLP-1s.

Speaker 4

It's typically the way that GLP-1s work, And I apologize if you already know all this, but it decreases emptying of the stomach, so that the stomach stays fuller and food leaves stomach leaves the stomach in a much slower fashion. So that's why people They get full faster, they aren't as hungry, they'll eat less. And that's why nausea is the most common one. Research. But because of the way it affects the movements of food through the stomach, it also and Aries.

Speaker 4

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Speaker 4

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Speaker 4

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Speaker 4

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Speaker 4

And Auryxia. I have heard of and if it is a side effect, it's extremely rare because I certainly have not seen it personally in any of the patients.

Speaker 5

And Associates.

Speaker 4

Okay. That's helpful. That's

Speaker 3

very helpful.

Speaker 4

And then, to your second question, it is absolutely and A. We've been using GLP-1s and A. In conjunction with patients who've had LAP BAND surgery for years and they get a little bit of a stall and so we'll add GLP-one. The question is, should we start them at the time immediately right after surgery? And You know what, those studies are actively being addressed right now.

Speaker 4

So there is no reason not to start them right away. There are patients who are already on GLP-1s and will perform surgery, will do LAP BAND surgery and they'll just continue to stay on those medications and they actually do great.

Speaker 3

Okay, great. That's very good. Go ahead.

Speaker 2

Anthony, this is Paul. I was just going to add to thank you, Chris, I obviously totally agree. I have two points. I think and Doctor. Bunfield can comment on this as well.

Speaker 2

The risk of carrying obesity for years, in terms of that disease and the increased rates of cancers That you have just with being obese, I think are going to balance out any of the potential negative side effects with a risk of cancer with the GLP-1s and not just cancers, there's other obviously As I hear about the paralyzed stomach or wegovy face, wegovy fingers, whatever that there's so many other benefits to losing weight overall that I'm kind of doubtful and that's based on what I've read and obviously talking to our advisory board That these GLP-1s have a short life on the market. I think they're here to stay based on all the benefits they provide. Yes, that was the one comment. And that combination therapy, I think that was the point where we're trying to Collect data retrospectively of patients at NYU and other places that already have GLP-1s and in addition to LAP BAND, so we can study retrospectively how well they've done and Aries. In terms of getting off of that plateau, which is where they don't get the weight loss in several months in a row and then they look for an adjustment, but GLP-1s are kind of a way of giving out the boost to their system, so that obesity is shut down for a bit, making it back on the weight loss Capital.

Speaker 3

Okay, great. And then Paul, just a quick follow-up on LAP BAND 2.0. I know you gave an David, can you give a little bit more of a timeline of when you think that could potentially be approved, Sort of like a window of comments back and then ultimately approval. Sure. Thanks.

Speaker 2

Yes, sure. We're all chomping at the bit, so to speak, with waiting for the FDA. So what we know, with a PMA supplement that we submitted, The day we announced it in June, we actually waited we gave it to the FDA. We waited until they checked all the boxes and looked for sort of our adherence to what they at a minimum, they required. Once they assign a reviewer and they sort of check all the boxes, they tell us it's not going to be rejected.

Speaker 2

So we got past that hurdle. We do have a reviewer that's looking at it. We've had one softball question I think that we've responded to. But we expect over the next several months to start getting more interactive with the FDA in terms of their questions on our submission. And we believe this submission is very comprehensive and but again that's the FDA's job to look at those with high level of scrutiny.

Speaker 2

Our expectation is that by the end of the year and at the latest Q1, we'll have a lot of interaction ongoing with the FDA. And Auryxia. And as we know more of their concerns or questions, we'll certainly share those appropriate. But so far, it's kind of we're just We're waiting for that interaction to ramp up with the FDA, so we can focus on hopefully getting it approved and starting the next phase of it, which should be how to commercialize.

Speaker 3

Okay, great. Thanks for answering all those questions. I'll hop back in the queue. Thanks so much. Inc.

Operator

This concludes our question and answer session. I would like to turn the conference back over to Paul Hickey for any closing remarks. Please go ahead.

Speaker 2

Inc. Sure. I hope you appreciate the candor and transparency shared during this call and hear our enthusiasm and excitement for the road ahead. We continue to streamline organization to be more disciplined, sustainable and scalable, and we will continue to work diligently to build our commitment to provide evidence based personalized devices and therapeutics. A special thanks to Doctor.

Speaker 2

Chris Runfielding for participating in today's call and the Q and A as well. As always, I want to thank our employees, board members, customers, consultant advisors, suppliers, Existing and new shareholders for your continued support of ReShape as we progress on our mission to become the premier physician led weight loss company. Inc. I do look forward to continuing to engage with our stakeholders, healthcare partners and shareholders.

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Key Takeaways

  • The company achieved a 53% reduction in operating expenses year-over-year and implemented an additional $4 million in annualized savings to extend its cash runway while investing in growth initiatives.
  • New digital marketing strategies and an exclusive partnership with Hyve Medical drove a 107% increase in medical consultation scheduling and are projected to boost patient lead generation by about 50% at optimized sites.
  • A PMA supplement for the next-generation LAP-BAND 2.0—which adds an internal reservoir for self-correcting food passage—was submitted in June, with FDA feedback expected by year-end or early 2024.
  • The ReShape Care virtual health and wellness program is being expanded to self-insured employers and tailored toward women’s health, offering video-based coaching to support surgical and non-surgical weight loss.
  • ReShape’s Scientific Advisory Board is planning retrospective studies on combining LAP-BAND therapy with GLP-1 drugs, reflecting confidence that surgery will complement drug-induced weight loss plateaus.
A.I. generated. May contain errors.
Earnings Conference Call
ReShape Lifesciences Q2 2023
00:00 / 00:00