Good morning, and thanks for joining us to have a conversation with Ryan Rhodes, CEO of EDAP TMS. EDAP TMS is a French medical device company that's a global leader in HIFU technology that has been designed for treating prostate cancer and commercializes its advanced FocalOne platform. Recently, management made a strategic change to focus entirely on the HIFU business segment while de-emphasizing their lithotripsy and distribution businesses. To that effect, management has initiated programs to expand HIFU into additional indications such as endometriosis treatment. To discuss this new strategy and the expected growth in 2025 and beyond, let's get started with Ryan. Ryan, glad to see you this morning, and thank you for accepting our invitation to talk to our audience today. Ryan, I know that this morning you have prepared a small presentation so that you can orient us towards your new vision of EDAP TMS. If you don't mind, please go ahead and get started. Thank you. As mentioned, we have, as a company, made a strategic shift from legacy technologies such as extracorporeal shockwave lithotripsy that is treating kidney stones and distributing products from other manufacturers to really a sole source, sole direction transformation to be the global leader in robotic HIFU therapy. To lead that effort, we must talk about the technology FocalOne-i, which is our latest, most advanced platform in the market today that was launched in April of this year. The great thing about FocalOne-i is it was an improvement on our existing platform, FocalOne, but unlocks additional clinical value and capability. A couple of key areas: we are really agnostic to imaging. We can bring in imaging from multiple sources, whether it's an MRI, PSMA, PET image, a biopsy map from a multitude of companies or products, and even using AI technology today. We're already using that with FocalOne-i. Additionally, this platform has a five-axis robotic positioning system that allows for precise delineation and contouring around targeted lesions. With that, the dynamic focusing probe allows pinpoint accuracy of ablating clinical structures in a very efficient way. In fact, the FocalOne is the fastest treatment platform of its kind in the market today. It's an integrated workstation, and it can be stored and moved around within a hospital. When we look at the prostate cancer market, it's really important to understand this is the largest cancer diagnosed in men globally. Nearly 1.5 million cases around the world each year. New data that was published in April of last year from the Lancet Commission on Prostate Cancer states that this market will double by the year 2040. Within 15 years, it'll be nearly 2.9 million cases with an increased mortality rate of 85%. It is a very large addressable market. When we think of FocalOne and we think of answering to the market, we think really about the disease. Prostate cancer is a heterogeneous cancer. It's not one cancer; it's millions of cancers. Upon risk stratifying those patients today, they're typically put into a category of low risk, intermediate risk, or high risk. If you see here, low risk could mean active surveillance or no treatment. High risk could be commonly surgery or radiation. There's quite a large gap across the middle of these treatment categories that is unsolved. We solve an immediate problem when we think of where FocalOne can be positioned. If you think of FocalOne, we cross the boundaries of low risk, intermediate, and high risk disease. This is, you know, the problem we answer today. There's this large gap from going from no treatment to radical treatments that have higher morbidity, higher complications, and higher risk for these patients post-treatment for loss of urinary control and loss of sexual function. Additionally, if you look at patients who are treated with primary radiation therapy, we know that there is a high recurrence rate, anywhere from 15% onwards to 30% in the clinical literature. We are also an excellent solution for these patients as a salvage therapy. We have a large market opportunity in front of us, and FocalOne can solve in these areas. What's also important is you look at the market. Traditional market, as I stated, was always active surveillance or radical treatments such as surgery and radiation. The new emerging market is already in play today. That is the emerging market of focal therapy led by FocalOne robotic HIFU. If you look to the far right, the future market potential is very large. It mirrors the standalone categories of surgery and/or radiation as a treatment. There is a large opportunity here for the growth of this market. When we look at the data, we already see this shift happening. This is HIFU data from the calendar years of 2022 through 2024. Three years of data reported out of Medicare CMS database. It's already showing that HIFU is growing exponentially, where other treatments are either flat or declining. Those are cryoablation, brachytherapy, and even surgery being flat in its growth cycle. We're already making an impact with FocalOne around the United States and outside the U.S. Looking at this map, you can see here we are in the largest of cancer centers around the country. All the big-name hospitals have adopted FocalOne and are continuing to adopt both academic centers and community hospitals. Our install base is in excess of 70 FocalOne systems, with more systems being placed on a quarterly basis. We now have large institutions buying second FocalOne systems. This last quarter in Q2, we presented Meridian Hackensack Health in New Jersey, purchased a second FocalOne system. New York Presbyterian here in New York City purchased a second FocalOne system, and the Baptist Health System in Florida also purchased a second FocalOne system. We're starting to see regional integrated delivery network hospitals buying second FocalOnes. We expect this growth to continue, as noted. When we turn our attention to the data, there's some highly compelling data. The HiFi study was published last year in the high-impact journal European Urology. This is the largest prospective comparative multicenter clinical comparison for localized prostate cancer study ever conducted in the history of treating prostate cancer. It was published, stating 3,328 patients, we're talking about 46 centers. This study cost the French government €22 million or equivalent $25 million. It was exclusive to EDAP TMS, our company's technologies, and we did not pay for this study. What's great about it is the cancer control outcomes, though clinically better, the study was a non-inferiority study. We met our primary endpoint, as noted here. We also met our secondary endpoints of being superior, clinically superior in the functional outcomes. That is, preservation of urinary continence and preservation of erectile function. What the study doesn't show is probably the differences that you would see in morbidity. It would be obvious to assume the morbidity would be much less for the HIFU-treated patients. This is a very powerful data set. Additionally, this year at the AUA meeting, the largest urological meeting in the world, data was presented from the FARP, Focal Ablation versus Radical Prostatectomy Clinical Trial. This is an RCT, randomized controlled trial, that involved treatment of 213 patients. Similar to the HiFi study, we showed superior but clinically important functional outcomes after focal ablation. We met the equivalency in terms of oncologic control. We're showing exactly what you want to see. The cancer control outcomes are not inferior to a gold standard treatment like surgery, but the patients do far better on the functional equation post-treatment. That is, preservation of sexual function and preservation of urinary control. Another key data point with this study is 25% of the patients who were randomized for surgery refused surgery and opted to be treated with FocalOne robotic HIFU or focal ablation. We hope to see this published in the coming months, a very important high-impact study that further validates the efficacy of treatment using HIFU therapy. Lastly, I just want to talk about the HIFU opportunity beyond prostate. We're also involved in a new indication, developing a new indication in BPH. As we know, BPH is a very large market opportunity. We have a clinical study going on in Europe, and we're also in the early stages of recruiting patients for a clinical study in the U.S. Additionally, endometriosis, which is a woman's health condition, stage IV endometriosis, we received CE Mark in April of this year in CE Mark countries, and we're in a limited launch now as we use FocalOne in these stage IV endometriosis patients. All these opportunities highlighted in white are all relevant to FocalOne. Very, very large, large market opportunity. I'll stop there. Thank you very much, Ryan. Certainly, that was helpful. Starting off from the patient opportunity or market opportunity with the patients, as we think about prostate cancer, more and more men are being put under active surveillance, right, before they're taken into treatment. How is that kind of helping out in HIFU trying to carve a market out of this active surveillance population? Yeah. Active surveillance has been a great thing for men, really having an option where we can risk stratify them and not overtreat the disease. It's good for men, but it's also good for our story because at about five years, approximately 50% of men will come off of active surveillance and they'll need to move to some form of treatment. FocalOne HIFU is a great option for these men. Their disease may be progressing slowly and growing, but not at a stage where it may need a radical intervention. We think it's a really, really timely opportunity for us. A lot of men, you know, once you're treated, you can go back on an active surveillance type protocol. We're moving away from that generation of overtreatment, and that's why focal therapy is at a really critical crossroad for adoption and growth. Okay. In the recent earnings report that you put out, especially for the second quarter, that was an unusual second quarter in terms of placements of HIFU devices because normally we don't see a growth of placements in the second quarter. What was helping that? Should we think of this as like a new paradigm shift or is this suddenly hospitals realize like, oh my God, my neighbor is eating away my lunch? Yeah, very good question. Again, we reported a 77% increase in HIFU revenues year over year, so a great quarter for us. I think what we're seeing, if you go back to the stakeholders, you look at the patient, you look at the physician as provider and hospital as point of care, there is a value equation for each of them. Patients are looking for efficacious treatments that treat the disease but give them a high quality of life outcome, meaning that they maintain the quality of life pre-treatment. We're an excellent option for them. No cutting, no surgery, no radiation, no blood loss. That's one. The other is physicians themselves have to be active and competitive to see where the market is moving and must answer to the call of focal therapy. I'd say, to your point, the hospitals need to be thinking about what are the developing changes in how we treat this very common cancer. If we're moving in a new direction, hospitals need to respond. I think to your question, it's really all three of those stakeholders are driving the demand here. I'd like to think that we're on an upward growth cycle because we are seeing more activity, more interactions. Even the scientific meetings are talking more about HIFU therapy, and they're talking more about the use of focal therapy in general. Okay. Talking about your latest vision and the strategy in terms of de-emphasizing the ESWL business and also the distribution businesses, when you start considering the operating margins of HIFU versus the business that you're de-emphasizing at this point, what additional revenue run rate do you need to achieve with HIFU so that you can make up for some of the base business that what we used to think of base business is not there anymore? Great question. As noted, I mentioned we were up 77% growth. Our HIFU business is accelerating in growth and contribution of revenue. We're going to continue to see that growth happening. We gave guidance at the beginning of the year, and we stand by that guidance. In fact, we increased guidance in Q2. I think right now most people would understand the strategy is right on point, and we're absolutely delivering on the results of this strategy now. We're making those investments and centering our attention to the FocalOne HIFU market opportunity that's in front of the company. We want to accelerate that growth as well. All our activities, focus, energy, and investment are really in this area. Yeah. Talking about investments, you recently introduced the FocalOne-i, which you just spoke about. At the same time, the government also seems to be helping you out with increased reimbursement from the CMS, both on the procedure side as well as for the surgeons, especially starting from January 1, 2026. How are all these working in your favor and how much of a tailwind are you going to get not only in 2026 but also beyond that? Yeah. The reimbursement opportunity to me really is back to market access and patient access to the treatments. The proposed rule came out earlier this year. We'll see the final rule, but it does show a, you know, approximate 5.6% increase at the facility payment level. I think this is all very, very good. To me, what it allows is it allows hospitals to look at this and make an investment because the ROI is there when you look at, you know, the value of the prostate cancer patient. Back to the stakeholder discussion, hospitals see that investment more and more. They understand it more, and the market is already developing and speaking. I like to think today that, you know, when we think clinically and we talk with urologists, urologists look at focal therapy as a must-do activity, and then they look within the category and they look at FocalOne as a best-in-class platform to adopt. If you're going to do focal therapy, the first investment you make is with FocalOne. Talking about trying to expand the business, you're also talking about additional indications to be brought on to the FocalOne or the HIFU therapy. You already have CE Mark for endometriosis in Europe. I believe you're trying to get the label expansion here in the U.S. as well, and you're trying to add the BPH on top of it. For all this to work through, what's the timeline that we should expect these to be on the label? Once you get them on the label, have you started having conversations with providers as to how much they're looking forward to have these additional indications, especially at the hospital level? Yeah, great question. The studies we're doing in BPH, as I mentioned, we're working with some key U.S. centers right now. We're early in that process. As I socialized on our earnings call, we'd like to be into an early part of a clinical study, the early part of next year, 2026. I think we're going to be probably a year out after that, thinking about a new labeling change for us, specific to BPH. That's good because part of this is, we're learning as we're going here too, and we're working with very top centers. While that's going on, we still continue to do the clinical work and the clinical study work in Europe. On the endometriosis front, we have CE Mark since April, and we're in this limited launch phase. In fact, some of the new improvements in the FocalOne-i platform were made to be able to accommodate endometriosis. I think when we look at endometriosis and specifically stage IV endometriosis, women don't have a lot of really good options here. We're talking about surgical resection or surgery and the morbidity of surgery versus a non-invasive transrectal HIFU ablation. We're excited about that. I think as that market starts to mature, we're early here, we'll see more centers wanting to participate in using FocalOne HIFU for endometriosis in those markets. As we continue to learn from that, we'll be bringing more data forward that we can share for a new FDA submission. Perfect. Recently, you have an agreement with the European Investment Bank for a credit facility of €36 million. There are obviously some folks who might think, oh, it's a sign of weakness in terms of working capital, because this is a very capital-intensive entity. What's the real reason that you brought in this facility? I know you're not really taking the money yet, but you have the ability to do it. Yeah. It really goes back, great question, back to what we stated in the beginning, really to become a pure play in HIFU. We want to continue to make the investments there. Those investments are in commercial, clinical development, and even product development. What's great for being a company that has an affiliation being part of the European Union, we have access to favorable financing terms, and that was really why we opted to work with the European Investment Bank. It's an advantage for us to have that potential revenue source for us to continue the investments we want to make here for further growth of HIFU. Last question from me. In the last call, you also said that, you know, you're trying to move the trading part of the stock, you know, into the NASDAQ. How is that working out and what do you expect to gain out of that? Obviously, we would love to have you guys over here. Yeah, this is important for the audience. We will become a domestic filer effective January 1. You know, that's a step in through this process. We trade with the ADR component on the NASDAQ stock exchange. We'll be looking at other strategies. I don't want to get too in front of ourselves for future change, but this is a notable, I think, milestone that will go into play effective January 1. Okay. Fantastic. Congratulations and good luck. Yeah, thank you. Thank you. Thank you.