Morning, and welcome to the Sidoti & Company June Investor Conference. The next company to present is Allurion Technologies. With us, we have the CEO, Shantanu Gaur, and the CFO, Christopher Geberth. As always, this will be a 30-minute presentation. We should have some time at the end for Q&A, so if you do have a question, you can type them into the Q&A tab at the bottom of your screen. And, it's all yours, Shantanu. Thank you very much, Jim, and thanks for having us present at the conference. As Jim mentioned, I'm Shantanu Gaur, Founder and CEO of Allurion. I'm joined by Chris Geberth, our CFO, and looking forward to telling you a little bit more about our company and technology. Just to start, we are in the obesity space, and I founded Allurion over a decade ago, actually, while I was a medical student at Harvard Medical School, studying to become a doctor, and got very interested in everything related to obesity and metabolic disease. It's the biggest unmet medical need in the world right now. The estimates are obesity will be between a $50 billion and a $100 billion revenue opportunity by 2030. A lot of the prominence of obesity and the rise of obesity has been driven by the rise of GLP-1s. But we have a technology that's incredibly differentiated, that is fundamentally different in terms of its safety and efficacy profile, and it really works. Our gastric balloon technology drives a 14% total body weight loss with just one balloon cycle, and with a second balloon cycle, patients achieve over 20% total body weight loss with an excellent safety profile. And I'll go into greater detail on the technology in a few slides. We have an existing business that is growing $53 million in revenue last year, with very attractive gross margins. And with some of the initiatives we took in the second half of 2023, we now have a clear path to profitability and eventually cash flow break even. We've also, amidst all of the hype and growth in GLP-1s, we've been able to maintain a very impressive growth in our procedural volume. Last year, our procedural volumes grew by 30%. This year, we're forecasting a growth of 20% year-over-year, and I believe the best is yet to come for Allurion. We have significant catalysts ahead of us, including the FDA AUDACITY trial readout expected at the end of this year. Keep in mind that all of our revenue on the balloon side of our business, up until then, is gonna be coming from outside the United States. The U.S., in and of itself, is most likely gonna be the biggest market in the world. It's an $18 billion revenue opportunity, according to our market research, where we will be able to serve at least 10 million adults in the United States, if approved by the FDA, of course. Then finally, we have a really compelling technology on the balloon side, but that balloon technology is complemented and paired with an AI-powered digital platform that is designed to turbocharge the balloon, provide remote monitoring to all of the patients who are getting the balloon. What we have realized is that digital platform and the behavior change program that comes along with it actually is a perfect complement to GLP-1 therapy and bariatric surgery. We've actually launched the digital platform in the U.S. market, leveraging some of the tailwinds that we are seeing in the GLP-1 space to help those patients who are getting GLP-1s achieve better outcomes, and also help the providers who are offering GLP-1s handle all of the volume that they are seeing. That's exactly what our software was designed to do. The obesity problem is massive. We expect that according to analyst estimates, the revenue opportunity for obesity is gonna be between $50 billion and $100 billion by 2030. Even putting obesity aside, where, you know, there's one billion people around the world who have obesity, just looking at bariatric surgery for a second, which really is designed for patients with severe obesity, there's approximately 600,000 of those surgeries done every year around the world, which is only 1% penetration in that specific market, carving out a lot of the patients with obesity who don't qualify for bariatric surgery. So there is a massive opportunity in this market. It's also incredibly underpenetrated, which makes room for a lot of entrants and a lot of success stories and winners eventually in the obesity space. Now, there have been devices for weight loss that have come before Allurion's, and many of them have failed really for the following reasons. It's important in this space to not just deliver a device or a drug, or a surgery to a patient, but to wrap a program around it. And we've done that at Allurion by providing remote monitoring through our digital platform and a behavior change that's delivered through our mobile app and through our digital platform at scale. Previous devices did not have that. That is a brand-new element that we have brought to this space. Second, because of our balloon not requiring procedures, no endoscopy, no anesthesia, no surgery, it becomes a much safer proposition for patients and much easier for providers to deliver. So a lot of the high risks that you see with previous weight loss devices or surgical interventions just aren't present with the Allurion balloon. Third is economics. With most of obesity therapy actually being out of pocket, bariatric surgery can cost up to $30,000 for a patient. Previous weight loss devices that required endoscopy or anesthesia were between $8,000-$10,000. We all know that the GLP-1s in the United States are costing patients around $1,000 a month, and there's limited insurance coverage in the space. So, all in, when you're able to deliver a balloon program like ours under a $5,000 price point, that's a fundamentally different price point for the middle-class consumer that makes it much more accessible. And then finally, with devices and surgeries that are complex and require a skilled set of hands, it really limits the number of channels that a company can sell through. With our balloon being as easy and procedureless as it is, it is something that can be done by almost any type of provider in almost any type of outpatient setting anywhere in the world. The balloon can literally be delivered in a 15-minute office visit, start to finish. The balloon technology itself is really a breakthrough, and quite revolutionary. The balloon comes in a capsule, and it's attached to a very thin tube. It's designed to be delivered in a 15-minute office visit without any procedures. The balloon is filled through the tube. Again, no anesthesia, no sedation. Patient's awake during all of it. Once filling is done, you end up with a 0.5-liter-sized balloon inside the stomach that makes the patient feel full immediately, and also helps them learn portion control and really drives early satiety so that they have time and space, and the ability to change their behavior and their lifestyle during the four months that the balloon is inside of them. The balloon lasts in the stomach for four months, and after four months, there's a special valve in the balloon that opens, the balloon empties, and passes out of the body. That valve, among other features of the balloon, is covered by over 50 patents now around the world. It's the valve itself is made from a biocompatible polymer that's designed to degrade over the four-month period. The balloon itself is also made from a biocompatible polyurethane, which is incredibly smooth, thin film that's very gentle on the stomach lining, which makes it a much more comfortable experience for the patient and a much safer experience for the patient. Our serious adverse event rate is 10 times lower than other liquid-filled balloons. Our intolerance rate, where the balloon may need to be removed because the patient is having persistent symptoms, is also an order of magnitude lower than previous balloons. So all in all, the balloon that we have designed while it is a weight loss device, is fundamentally different. It's delivered really in a pill and disappears four months later, and as a result, because there are no procedures, provides a fundamentally different patient experience. And the balloon is just one part of our program. As I mentioned, the balloon is paired with a digital platform. The patient gets our mobile app, which syncs with our connected scale. The scale measures body weight, body fat percentage, muscle mass, bone mass, several other biometrics. All of that data is synced inside the app so that the patient can see it. The patient can also do a telehealth visit with their coach. They can do a secure messaging session with their coach, and really importantly, they can also message our coach, our AI-powered coach, Coach Iris. Coach Iris is on 24 hours a day, seven days a week, and is powered by the same technology that underlies ChatGPT. But we've taken that technology and actually fine-tuned it so that Coach Iris is really delivering evidence-based guidance and counseling to patients. It's delivering, balloon-specific advice, and it's also delivering advice that we have vetted as best-in-class advice for our types of patients. And it's on 24 hours a day, seven days a week, and, has really been a game changer from a patient engagement, and patient outcome standpoint for us. And our providers actually have access to their own set of software called Allurion Insights, that effectively is a real-time remote monitoring system that provides real-time analytics on patients. We have now treated 150,000 patients with the balloon technology, and hence, you can imagine, we have millions of data points that we've been able to train machine learning algorithms on, that also provide real-time analysis and analytics to providers so that they can focus their time and attention on the patients who need the most care, and while letting others really go on a glide path to success. Our clinical data is, at this point, quite comprehensive and really supports the efficacy profile that we're able to deliver to patients. In one balloon cycle, our patients will lose 15% of their total body weight, which is substantial and significant over what they could lose with lifestyle intervention alone, as you see in the graph on the left-hand part of this slide. That weight loss is fast. It happens over four months, and you might be wondering what happens after the balloon passes. Well, our patients will maintain 96% of that weight loss one year after the balloon has left their body. This is really a testament to the fact that we are not just delivering a balloon to a patient, we're delivering a balloon with a behavior change program that's delivered through scale, through our digital platform, with the goal of changing their lifestyle, changing their habits, changing their behavior, so that once that balloon is gone, unlike when you stop taking Ozempic and all your weight comes back on, with our program, that weight actually stays off in the long haul. For patients who want to lose additional weight, they can come back for a second balloon. With a second balloon cycle, over the course of one year, our patients will lose over 20% of their total body weight, which is, you know, significant and actually starts to approach what they could achieve, even with bariatric surgery, in terms of weight loss after one year. And the effect of the Allurion program doesn't just stop at weight loss. It also impacts comorbidities, including diabetes. In one study, in 518 patients, we showed that in diabetics, Hemoglobin A1C actually drops from a diabetic level, over 7%, down to an average of 5.5%, which is in the normal range. Similarly, for pre-diabetics, we're able to take their average A1C down from close to 6%, down to close to 5%, again, putting patients back into a normal range, really, putting their diabetes and pre-diabetes into remission in just four months. And it's not just diabetes. Our patients will see resolution of hypertension, which is high blood pressure, or obstructive sleep apnea, again, just in the course of four months of therapy with the Allurion program. And from a safety standpoint, we've covered some of these points already, but the balloon was specifically designed to be much gentler on the stomach lining, to actually conform to the stomach, which improves the tolerance that a patient has to the balloon. And the actual construction of the balloon, because it is gentler on the stomach lining, we have fewer issues with ulceration, gastritis, and other things that may irritate the stomach. And the data bears it out. I mentioned earlier that our adverse event rate is an order of magnitude lower than previous endoscopic balloons, and our intolerance rate also is an almost an order of magnitude lower than those previous balloons. As I mentioned earlier, we are already commercial in over 50 markets that represent about 40% of the global population that is overweight. Ahead of us are two large markets, the U.S. and China, where assuming we get FDA approval in the U.S., we will be able to launch in a market that, as I mentioned earlier, is one of the largest markets in the world for obesity and weight loss. We estimate that approximately 10 million adults in the U.S. representing an $18 billion annual revenue opportunity, you know, is right center of the bullseye for the Allurion program. In terms of our commercial performance and financial performance, we've been at this for a while. We went commercial in 2016 with the product after receiving CE mark. Over the past seven years, we've treated over 150,000 patients across approximately 1,500 clinics. We have an extremely attractive gross margin, close to 80%, and we have several catalysts ahead of us. As I mentioned, you know, the expansion of our digital platform, entry into the U.S. market after U.S. FDA trial readout and submission to the FDA. But then also just continued growth in our existing base business, where we're continuing to see that our existing accounts are increasing their productivity, and we're also opening up new accounts to expand the business in existing territories. You'll see that our revenue from 2016, really through 2022, was growing at a 100% growth top line year-on-year. And in 2023, we saw a bit of a downshift in revenue from $64 million down to $53 million in 2023. That was driven primarily by macro headwinds that we faced, specifically in parts of the world like Latin America, that were really impacted by high inflation, high interest rates, also parts of Europe that were impacted by the same. But also the craze and hysteria around GLP-1s, I think certainly prolonged a patient's pathway through our funnel, where they learn about the Allurion balloon and eventually get it. They may have taken a pause in that journey to explore GLP-1s, which certainly represented a headwind for us in the second half of 2023. But when you really double-click on the performance in 2023, while revenue dropped from $64 million to $53 million, our procedural volumes actually grew by 30%. And what that is reflective of, I think, is rising levels of inventory in the field in 2023 that now need to be destocked. So we started that destocking in Q4, and what we saw in Q1 was continued growth in procedural volume, some sequential growth in revenue from Q4 to Q1. And we expect the destocking to be mostly complete by the end of Q2, and in the second half of the year for our revenue to really move in lockstep with procedural volume. We've also right-sized the business in the second half of 2023. In Q4, we dramatically, significantly reduced our operating expenses and reduced our cash burn. Last year, we burned $64 million. This year, we're forecasting a $30 million burn. And just going from Q4 to Q1, in Q4, we burnt $22 million, in Q1, we burnt $8.4 million. Again, pointing towards our ability to manage cash closely, but also leverage our high gross margin to take this company to profitability and eventually to break even. And just to double-click a little bit on Q4 to Q1, where we see some green shoots here. You'll see that our revenue grew sequentially from Q4 to Q1 by 14%. New app users, which is how we estimate our procedural volume, grew by 22%. Again, indicative of destocking taking place in the market. If you actually do a theoretical calculation, so this is a non-GAAP measure of procedural revenue, where you're actually taking our procedural volume and multiplying it by our ASP, you see that our procedural revenue in Q4 was $11.4 million, and in Q1, $13.9 million. Obviously, higher than the revenue that we reported, again, indicative of destocking taking place in the field. And we expect these numbers to really match up much more closely in the second half of 2024, now that destocking is mostly complete. We already touched a little bit on the U.S. as a major catalyst ahead of us. Our market research indicates that it's an $18 billion annual revenue opportunity with approximately 10 million adults, which is a conservative measure, given our market research really hones in not only on the patients who are clinically indicated for the technology, but also those that have the right household income, are bothered by their weight, are ready to act within the next two years, and also ready to see a provider to get some sort of intervention. So a pretty detailed analysis of the U.S. market still yields 10 million adults annually who would consider Allurion. And to that end, we've actually designed and fully enrolled our FDA pivotal trial called AUDACITY. AUDACITY was fully enrolled in the fall of last year. It's an open-label study that is randomized, controlled. Patients in the treatment group are eligible actually for up to two balloons over the course of the year that they are in the study, and the control group is just getting moderate intensity lifestyle therapy, which is effectively just a once-a-month visit with a dietician. Important to note here that the AUDACITY study is really just focused on our balloon. FDA really wanted to zero in on the efficacy and the safety profile of the balloon alone, so there's no digital platform, there's no, obviously, the patients are not paying for the technology in this study, and there's no customized or personalized behavior change program here. So it's really just focused on the balloon. The co-primary endpoints have already been negotiated and locked in with the FDA when we got our IDE approved in 2022, and the data is set to read out by the end of this year with the last patient exiting near the end of this year. Just one more technical point on FDA studies in the obesity space. The open-label variety tend to provide higher weight loss in the treatment group than the sham controlled variety. I won't go into all the details, but this is something called the Hawthorne effect, where knowledge of your treatment assignment actually drives better results in the treatment group. And actually, with these previous balloon studies that you see on the slide, you'll see that that really impacts the treatment group and not the control group. The control group tends to lose a similar amount of weight, no matter if it's open label or sham, or sham controlled. So we do believe that that is an added benefit of the open label design that we were able to negotiate and achieve with the FDA. And just a few points on our digital platform. We do see an incremental revenue opportunity here, where the platform now is being used not just to support our balloon patients, but a lot of our customers are now using that digital platform to support their patients who are going through bariatric surgery or GLP-1 therapy. We have partnered now with some of the largest weight loss chains in Europe, Weight Doctors in Germany, Transform in the UK, Lazeo in France, and they are actually using our digital platform to manage all types of weight loss patients. And we have now launched our digital platform in the US to manage patients who are going through GLP-1 therapy and bariatric surgery. And we just released some new features in Coach Iris that allow the coach now to provide 24/7 coaching for GLP-1 patients as well. So, we are now, I think, starting to leverage some of these GLP-1 tailwinds on the digital side of our business to drive incremental revenue to Allurion. And on GLP-1s, 'cause I know that's a really important issue, especially amongst investors. We saw some headwinds from GLP-1s in the second half of last year, but I really believe that those headwinds are turning into tailwinds. Already, 25% of our patients who are getting Allurion have previously tried prescription weight loss drugs. There's clearly a high churn rate happening with the GLP-1s, where only about 22% of them are actually staying on the drugs after one year. In fact, new data from Blue Cross Blue Shield indicates that 30% of GLP-1 patients stop within the first month. 58% stop before they receive any clinical benefit. And so these are all patients who stop, who regain weight, and now are looking for another weight loss solution like Allurion. And why are they stopping? There's adverse events, there's high risks, there's high costs associated with it, and there's poor quality of weight loss. A lot of, you know, almost 40% of the weight that's lost with GLP-1s actually is coming from muscle mass, rather than fat. Which just goes to show you how important it is to even surround a GLP-1 with the right type of counseling and the right type of support, so that patients don't just waste away muscle, they're actually losing fat, when they're losing weight. And, you know, all that being said about GLP-1s being a tailwind for new Allurion customers, they're also being used in combination with our balloon. About half of our providers actually believe that the GLP-1s have boosted awareness, of the Allurion program, and now they're being combined with the Allurion program to drive even more weight loss. And as you see on this graph, when you actually combine our balloon with a GLP-1, you also see much better resolution of comorbidities related to obesity. So what we're seeing really is an ecosystem coming to life, where, people are trying the drugs, then trying other interventions. They're trying things in combination, and these are all gonna be tailwinds for the entire obesity space, we believe, in the years and decades to come. And one final point about GLP-1s. While they've risen in popularity, they need to be paired with a behavior change program. If they are just used in isolation, they need to be used for the patient's entire life. The moment the patient stops the drug, they are going to regain all of their weight and maybe even regain most of it as fat. We provide a behavior change program and digital platform that we are now leveraging to provide that support to patients. We believe that our program alleviates that concern for GLP-1s and represents an incremental revenue opportunity for us. You know, at the same token, GLP-1s don't really have convincing provider economics. The provider is really just writing a script for these GLP-1s. An important thing to note with the Allurion program is that the provider economics with the Allurion program are fundamentally different. Providers actually generate a substantial amount of revenue from the Allurion program, and it creates an opportunity for these providers to participate in the weight loss space, add some revenue to their practice, and enter into a space that's growing to again support their practice in the long haul. I'll leave you with this slide. You know, we have several priorities over the next 12-24 months, including finishing up our AUDACITY trial, submitting that data to the FDA, continuing to drive procedural volume growth in our existing markets, strengthening our gross margin even further, and tightening up the bottom line to move the company towards profitability and break even. We have, I think, real tailwinds on the GLP-1 side now, both in terms of creating new patients for the Allurion program, but also helping us scale and monetize our virtual care suite or digital platform to serve these patients who are in need of follow-up and care. And, you know, in the short term, normalizing our sell-in and inventory levels, so then in the second half of this year, those two, those two metrics more closely match. Maybe I'll stop there in the interest of time and take any questions from the audience. Great. Thank you. So, yeah, a bunch of questions. What, what percentage of revenue comes from the digital platform? Right now, the digital platform, because it's so new and we just launched it in the United States, makes up a very small percentage of our overall revenue. We're not gonna be breaking it out separately from the balloon revenue until it becomes a more material part of our business. But I think what's important there, setting the revenue aside, is just the amount of demand initially that we are seeing, especially in the US, for this type of software, and also the better outcomes, better engagement, higher NPS scores that we are seeing outside the United States for providers who are using this digital platform, both for their balloon business, but also for other products. You know, we believe that in time, all of those favorable trends will lead to increasing revenue for this part of the business. So there is an opportunity to monetize that with other providers? Correct. Can you just repeat again, you know, the economics for the bariatric surgeon, you know, prescribing this as opposed to prescribing a GLP-1? Yeah, it's a, it's a night and day difference actually. You know, for prescribing a GLP-1, really, doctors get paid nothing. They are just writing a script. And in fact, they cannot get paid for writing a script. For our balloon, you know, patients are typically paying below $5,000 for the whole experience. And, you know, the economics, as you can imagine, for the provider, especially for a 15-minute office visit, are substantial, 'cause they're taking a fraction of that $5,000, and that's going right towards their own practice's revenue and their own bottom line. We obviously take part of that $5,000 when we sell the balloon into the provider, but the economics for the doctor are substantial. This is something that a practice can really build around, versus with GLP-1s, you know, mostly providers are just writing a script. Okay. All right, and with the FDA, is this gonna be a 510(k) approval process, or will this be a PMA? This is a PMA, and in fact, it's a modular PMA submission. We will be submitting modules for the PMA throughout this year, and the final module will really be the clinical data. That's gonna be available after the clinical study reads out at the end of this year. All right, so it's probably around the 12-month approval process at that point? Yeah, it's really... you know, at that point, it's up to the FDA. You know, typically, these PMAs take at least 6-12 months to review. But, but yeah, we're not providing any guidance on FDA approval timeline, 'cause it's really, you know, once the data goes into the FDA, it's up to the FDA. In the four or five countries you're selling the product now, how is that distributed? Do you have independent distributors? Do you have a sales team? And, you know, what do you think you'll do in the U.S. once approval is achieved? Chris, why don't you take that one? Sure. Thanks, Jim. So we do a combination of direct sales, mostly in Europe, and then we also use distributors in other countries, like Latin America, Asia Pacific. We are also direct in Australia. In the US, we will go direct. We will have a direct sales force. We will work directly with our customers. We think the US is an opportunity for a really good margin, as well as ASP, and we're looking forward to working directly with doctors here in the US. Okay. Well, there's a ton more questions. Sorry, we don't have time. You can email them to me or to Shantanu Gaur directly, if you'd like. But, I just wanna say thank you. You know, it's a very interesting presentation. As I said before we started, I think this is a great spot to be in right now, and I think you have a very unique product. So it's very interesting. We hope you come back to another conference, give us an update. Thank you for having us, Jim, and thank you all for joining today. Appreciate it. Okay. Bye-bye.