Exhibit 99.2**11/8/2007 3:35PM****Operator:**Good afternoon ladies and gentlemen and welcome to the TranS1 third quarter 2007 results conferencecall. As a reminder this conference is being recorded.It is now my pleasure to introduce your host, Mr. Mark Klausner, of Westwicke Partners**Mark Klausner, Investor Relations, Westwicke Partners**Thanks operator.Joining us on today’s call are TranS1’s President and CEO Rick Randall and the Company’s ChiefFinancial Officer, Mike Luetkemeyer.Because TranS1 is still within the post IPO quiet period, we will not have a question and answersession following today’s presentation. The Company does anticipate having question and answersessions on future calls.Before we begin, I would like to caution listeners that certain information discussed by managementduring this conference call will include forward-looking statements which are subject to risks anduncertainties associated with the company’s business. These forward looking statements are basedon the company’s expectations as of today and the Company undertakes no obligation to updateinformation provided on this call. For a discussion of risks and uncertainties associated withTranS1’s business, I encourage you
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to review the Company’s filings with the Securities and Exchange Commission, including theRegistration Statement on Form S-1.With that it’s my pleasure to turn the call over to TranS1’s President and CEO, Rick Randall**Rick:**Thanks Mark. Good afternoon and thank you for joining us today to discuss TranS1’s third quarterresults. On today’s call I will provide you with an update on our business and then Mike willprovide you with the details on our financial results.We are very pleased with our results from the third quarter. Worldwide, 469 TranS1 procedures wereperformed in the quarter and we generated $4.3 million in revenue from those procedures. Both ofthese numbers reflect significant increases from the comparable period a year ago and point to thecontinued adoption of our technology.As most of you are aware, this is our first quarterly call as a public company. At the end ofOctober we successfully completed our initial public offering. After the underwriters’ exercisedtheir over-allotment option we sold over 6.3 million shares of common stock at $15 per shareresulting in net proceeds to the company of approximately $86 million.
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I know that many of you on the call are familiar with TranS1 and may have participated in meetingson our IPO road show. However, for those of you that may not be completely familiar with us, I’dlike to begin by providing you with a brief overview of the Company.TranS1 designs, develops and markets products that utilize a proprietary trans-sacral access routeto the lower lumber spine to allow surgeons to treat degenerative disc disease in a “leastinvasive” fashion.Through this approach, a surgeon can access the lower lumbar spine through an approximately 1 inchincision adjacent to the tailbone and can perform an entire fusion procedure through a small tubethat provides direct access to the L5/S1 and in Europe the L4/L5/S1 degenerative discs.The benefits of this approach relative to open fusion or other “minimally invasive” approaches isthat our access route allows us to access the spine and treat degenerative discs without damagingany bone, ligament, muscle or important soft tissue surrounding the spine. We believe that thisallows surgeons to perform fusion surgery with low complication rates, short procedure times, lowblood loss, short hospital stays, fast recovery times and reduced patient pain.There were over 138,000 patients in the United States who obtained a fusion surgery in 2006 torepair damage which included the L4/L5/S1 discs. At our current list prices this
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represents approximately a $1.4 billion market opportunity for our products. Importantly, thesepatients who sought treatment utilizing traditional fusion technologies represent only about 4% ofthe six million people in the United States alone who suffer every day from lower back pain. Webelieve that our “least invasive” technology and the potential to definitively treat low back painwith minimal complications and quick recovery time will allow our technology to expand the currentmarket by attracting sufferers that have been unwilling to seek definitive treatment with opensurgical techniques. Surgeons who are currently performing our procedure have shared with us thatthey are already experiencing this market expansion effect.We have developed and currently market in the United States and Europe, two single- level fusionproducts, AxiaLIF and the AxiaLIF 360, which address the L5/S1 region. Both products utilize ourAxiaLIF procedure to restore disc height, relieve nerve pressure and provide fixation, while theAxiaLIF 360 also utilizes our percutaneous facet screws to provide additional posteriorstabilization. In the United States, the AxiaLIF sells for $7,995 and the AxiaLIF 360 sells for$9,995. In Europe we also currently market the AxiaLIF 2L product which allows us to treattwo-level disease affecting the L4/L5/S1 discs. We are currently conducting additional testing insupport of a 510(k) clearance for this product in the US. We expect to obtain this clearance andlaunch this product in the United States in 2008.We currently sell our AxiaLIF products through a combination of direct sales personnel andindependent sales groups in the United States. At the end of the third quarter we
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employed 23 direct sales personnel and utilized 20 independent sales groups. We have begun theprocess of expanding our direct sales force, and as we shared on our roadshow, our current plansare to more than double our direct sales force in the United States to 50 professionals by the endof the second quarter of 2008. In Europe, our products are sold through 7 independentdistributors.We believe that our revolutionary access platform provides us with the opportunity to expand ourproduct line in the future. We are currently developing two additional products that utilize theTranS1 approach — a Percutaneous Nucleus Replacement, or PNR, and a Partial Disc Replacement, orPDR. We expect to move into a pivotal trial for the PNR outside the US in 2008 and expect to filean IDE with the FDA in 2008 to allow us to enroll US patients in this trial. Further, we expect toreceive a CE mark and begin to commercialize this product in Europe in the second half of 2008.I look forward to keeping you up to date on this exciting product as it progresses through clinicaltrials.I would now like to turn the call over to Mike to review our third quarter financial resultsand provide guidance for the fourth quarter.Mike?**Mike:**Thanks Rick and good afternoon everyone.
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I am pleased to report that in the third quarter of 2007 we generated revenue of $4.3 million.This represents a 217% increase over the $1.4 million of revenue generated in the third quarter of2006 and a sequential increase of 6% over the $4.1 million of revenue generated in the secondquarter of 2007.For the third quarter of 2007 we generated 90% of our revenue, or $3.9 million, in the UnitedStates. In the comparable period in 2006 we generated 88%, or $1.2 million, of our revenue in theUnited States.The primary factors driving the significant increase in revenue in the United States were anincrease in procedures performed and an increase in average selling prices.During the third quarter of 2007, 409 procedures were performed in the United States utilizingTranS1 products. This represents a 174% increase over the 149 procedures performed in the thirdquarter of 2006 and a sequential increase of 2 procedures over the 407 procedures performed in thesecond quarter of 2007, despite the fact that the third fiscal quarter is a seasonally slow quarterfor our business due to surgeon and patient vacation schedules.Also, during the third quarter of 2007, we trained 60 surgeons in the United States, bringing thetotal number of U.S. surgeons trained to 563. The active surgeon base in the United States,defined as a surgeon who has done at least one procedure in the last 12
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months, increased from 191 at June 30, 2007, to 213 at September 30, 2007. As of September 30,2006, the number of U.S. surgeons trained was 273, and the active surgeon base in the U.S. was 89.Our average selling price, in the United States, for the third quarter of 2007 was $9,500. Thisrepresents an increase of $1,400 over the comparable quarter of last year and a sequential increaseof $100 over the second quarter of 2007. The increase in average selling price has primarily beendriven by the increasing traction of our AxiaLIF 360 product. For the third quarter of 2007, 190 ofthe 409 AxiaLIF procedures performed in the United States, or about 46.5%, were AxiaLIF 360procedures. The AxiaLIF 360 procedure was introduced in the third quarter of 2006 and in thatquarter only 6 of our 149 procedures performed in the United States, or about 4%, were AxiaLIF 360procedures.Gross margin was 82.6% in the third quarter of 2007. This represents an increase from 75.6% in thethird quarter of 2006 and from 78.7% in the second quarter of 2007. The increase in gross marginwas primarily the result of increased efficiencies associated with higher production and salesvolumes and the increasing mix of AxiaLIF 360 procedures.Turning to expenses,
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Total operating expenses for the third quarter of 2007 were $5.9 million, an increase of $2.2million from the $3.7 million for the third quarter of 2006 and $0.1 million from $5.8 million inthe second quarter of 2007.Breaking that down by major function:R&D costs were $1.3 million for the third quarter of 2007. This compares to $1.0 million for thethird quarter of 2006 and $1.4 million for second quarter of 2007.Sales and Marketing costs were $3.8 million in the third quarter of 2007. This compares to $2.4million in the third quarter of 2006 and $3.8 million in the second quarter of 2007. The increasefrom the comparable quarter in 2006 was due to the continued build out of our sales and marketingorganization and increased commissions as a result of increasing sales volumes.General and administrative costs increased from $0.3 million in the third quarter of 2006 and $0.6in the second quarter of 2007 to $0.8 million in the third quarter of 2007. The increase wasprimarily due to the addition of personnel and increased legal and professional fees.Other and Interest Income, which primarily consists of interest income, was $125 thousand for thethird quarter.
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Our GAAP net loss for the third quarter was $2.2 million or $0.87 per share. On a non-GAAP basis,adjusting for non-cash stock compensation charges of $714,000 in the quarter and the assumedconversion of our preferred stock to common stock, our net loss was $1.5 million or $0.11 pershare.At the end of the quarter we had $7.4 million in cash, cash equivalents and short-term investments,with no debt. As Rick noted, our IPO generated net proceeds to the company of approximately $86.2million putting us in a strong financial position to execute on our growth strategy. Our operatingcash burn for the third quarter, defined as cash used in operating activities and investment infixed assets, was $2.9 million.With regard to guidance for the fourth quarter, we anticipate revenue to be in the range of $4.5million to $4.7 million, and based on estimated average shares outstanding for the quarter ofapproximately 16,739,000, the GAAP loss per share to be in the range of $0.13 to $0.11. We expectthe non-GAAP loss per share, based on a share count of 19,785,000, to be in the range of $0.07 to$0.05. The non-GAAP share count assumes the conversion of preferred shares of 10,793,000 and theissuance of the IPO common shares of 6,325,000 for the entire quarter.I would now like to turn the call back over to Rick for a few closing comments.Thanks Mike. For those of you who know me or met me on the roadshow you know that I tend to berelatively open in addressing any potential questions about our business. To
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this end, I’d address a question we have been asked regarding the safety profile of the AxiaLIFprocedure. I’d also like to close by updating you on the North American Spine Society Meetingwhich concluded on October 26 in Austin, Texas.During the IPO roadshow, and recently at NASS, Mike and I were surprised by the number of questionswe got about the safety profile of the AxiaLIF procedure, and in particular the severity andfrequency of injuries to the bowel. Since it seems like there is some misinformation in themarket, I would like to take a moment to provide all of you with the facts regarding the frequencyand severity of complications associated with AxiaLIF.Typically, when surgeons are initially exposed to the AxiaLIF procedure, they have two concernsbased on their history with other “minimally invasive” spinal procedures: First, they worry about asteep learning curve and second they are concerned about an increased exposure to complications.This is due to the fact that historically, MIS fusion procedures have been difficult to master, andaccess through the anterior aspect of the spine has usually been performed with an access surgeonto limit exposure to complications.However, as surgeons are trained on our technique they quickly realize that AxiaLIF is a relativelyeasy procedure to perform and our surgeon users report a typical learning curve of only 2 to 5procedures. Our didactic training program makes them aware that the only significant anatomicalstructure that could potentially be encountered with our transacral
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access, which would be of safety concern, is, in fact, the bowel. All major vascular and neuralstructures, which are a safety concern with other approaches to the lumbar spine, are positionedwell away from the TranS1 access route and have not been a source of complication in proceduresperformed to date. Consequently, the bowel injury is really the only area of concern related tothis novel approach.Let me review our safety profile with a specific focus therefore on the bowel. To date, there havebeen over 2,100 AxiaLIF procedures performed globally. The current overall complication rate isapproximately 1%. This compares favorably to published data from all other fusion approaches. Ourglobal complication rate related to injury to the bowel across all 2,100 procedures is currently 1/2of 1%. Since the initial commercialization of AxiaLIF in early 2005 we have learned from clinicalexperience and developed pre-operative, intra-operative, post-operative techniques and protocolguidelines as well as device related modifications which have dramatically reduced the already lowincidence rate of bowel related complications. As evidence of this trend, the bowel injuryincidence for the initial 1,000 patients treated was 8 patients or 0.8%. Since incorporatingtraining and device modifications we have now reduced the incidence rate to about 1/4 of 1% in themost recent 1,100 patients treated since February 2007. Furthermore, not one patient treated withthe AxiaLIF procedure has suffered a permanent complication of any type. In summary, rather thanbeing obstacles to adoption, we believe that our short learning curve and remarkable safety profilewill actually be reasons that surgeons continue to embrace this novel approach.
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As many of you know, NASS is a key show for us each year. This year, we had a very strong meetinghighlighted by several AxiaLIF presentations, surgeon training and robust exhibit traffic duringour four days in Austin. We kicked-off the meeting on Tuesday with a well attended pre-NASS lumbarfusion session. Dr. Izzy Lieberman,of the Cleveland Clinic, presented on his AxiaLIF experienceand then was assisted by Dr. Jonathon Hyde of Miami in an AxiaLIF training lab. We were pleased bythe number of surgeons at the session that gravitated to our table to learn more about ourprocedure. The next morning, we sponsored a Sunrise session with presentations by Dr. WilliamTobler and Dr. Neel Anand. Bill presented his initial 50 patient one year AxiaLIF results whichshowed impressive pain relief and equally impressive fusion rates. Neel then detailed his earlyadult scoliosis results utilizing AxiaLIF in combination with XLIF and a new percutaneous pediclescrew system. Typically, these older patients have not been surgical candidates due to thesignificant trauma associated with surgery. However, this totally minimally invasive approach waswell tolerated and patients recovered quickly. Wednesday afternoon, Dr. Larry Khoo presented hisAxiaLIF results from the NASS podium highlighting immediate leg and back pain relief with 94%fusion rates at 1 year. Finally, during the meeting, we shuttled over 45 spine surgeons to anoff-site facility for full AxiaLIF training. All-in-all, NASS capped off an exciting October forTranS1 and created a new surge of momentum and excitement about our business as we move into thefourth quarter of 2007 and beyond.
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As we noted at the beginning of this call, due to our IPO quiet period we will not be conducting aquestion and answer session today, although we do plan to have question and answer sessions onfuture calls.Let me close by thanking all of you for taking the time to join us on our call today. We sincerelyappreciate your interest in TranS1 and look forward to updating you on our continued progress.
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