Q4 2019 Earnings Call
Ladies and gentlemen, today's conference scheduled to begin shortly please continue to standby. Thank you for your patience.
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Ladies and gentlemen, thank you for standing by and welcome to the fourth quarter 2019, Viewray Inc. earnings conference call at this time.
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I would now like to hand, the conference over to your speaker today.
Mccandless Galena. Please go ahead.
Thank you Sarah good afternoon, everyone and welcome to be Rais fourth quarter 2018 financial results conference call joining.
Joining me today, it's Scott Drake, our President and Chief Executive Officer.
Earlier today, we issued a press release in presentation for today's call. The presentation can be viewed live on our web cast or downloaded Sci Fi neutral event and Webinars portion of our Investor Relations website at Www dot investors dot be right Dot com.
Today's call is being broadcast and what cap wise and a replay will be available on the website for 14 days.
Before we begin I would like to caution listeners that comments made by management. During this call may include forward looking statements within the meaning of federal Securities laws.
These statements involve material risks and uncertainties and actual results could differ from those projected and any forward looking statement due to numerous dr.
We're just cooking these risks and uncertainties, we see the rate current and future reports filed with the Securities and Exchange Commission, including annual report on form 10-K for the fiscal year ended December 31, 2018, as well as the company's other filings with the FCC.
Furthermore, the content of this conference call contains time sensitive information accurate only as of today March 12 2020.
Iran undertakes no obligation to revise or otherwise update any statements to reflect events or circumstances. After the date of this call I will now turn the call over to Scott.
Thank you Mccain good afternoon, everyone and thanks for joining our call.
Today, we provide or 2020 guidance and disgusting impacted corona buyers.
You are companies mission and the progress we have made on this path.
Sure Roadmaps for wonderful economic and strategic value proposition review, our financial and then we look forward to answering your question.
Okay were shared there's an investor presentation on our website, there will be referring to one this call.
Please go to our website to download or view the slides on our webcast.
Let me start me to combat Ancona virus as it is top of mind for our team customers and investors.
We're actively monitoring in scenario planning.
We intend to balance the need to driver business forward, while preserving capital in this time of uncertainty.
We want to stress that even though we have a fortified balance sheet. We are highly mindful of the ongoing need to deploy resources thoughtfully. She was the situation prolong.
Where we are today, we do not intend to go to public markets in 2020 or 2021.
Our aspirationally goal is to be able to stay the same for 2022.
Our ability to achieve these goals will be dependent on how our business evolves I'll provide more detail on guidance in just a moment.
We're now in the second full year with the company and believe we have built a solid foundation.
Michigan is clear.
Free improve what others can't.
Clinical interest in Meridian is high and growing.
The ability to track tumors in soft tissues in real time combined with the ability to safely deliver ablative doses in fiber you were productions is a unique valuable therapy that patients need and customers desire.
We have no demonstrated meridians clinical use in greater than 8000 patients.
And its merits of been documented in hundreds of peer reviewed journals and abstracts.
We have demonstrated significant capability improvements across our operations and installations and now have 34 systems in the market.
We have also exerted effort around training customers to quickly leverage the full capability set of meridian.
A recent example is Munich treating several patients per day right out of the gate.
In the first several weeks post conditioning, all but one patient, which treat it'd be a high dose SPR Ti in fiber you were corrections.
So I shared with us that the majority of these patients would not have been treated to a comparable level on another system.
One patients lung tumor whats successfully treated despite having previously lost his contralateral one.
This type of high risk patients would not typically be treated by radiation as any damage to the launch could cause significant complications.
Clinically and operationally, we're making big strides in progress will continue.
We have shared that our most important metric in the near term is orders.
This remains true, but we recognize this was a lagging indicator.
On this call we will provide market vetted, leading indicators that we believe will drive therapy adoption.
We will break down this voice of market work into our clinical strategic and economic value proposition.
Let's first discuss our 2020 guidance.
As you recall when we raised capital in December we shared that we did not expect our backlog to accelerate in the near term.
As you can see on slide four we expect 2020 revenue to be in the range of $58 million to $95 million and cash use to be in the range of $60 million to $80 million.
Let me provide some context on this guidance.
Most notably there was uncertainty around Corona virus in the near term.
Our commercial and operational activities are being impacted today and maybe further impacted depending upon how the situation unfolds.
We have nine plan installations in 2020 in regions that have travel restrictions currently in place.
We cannot predict when onboard projects will resume and Wendy other plant installations will commence.
We're monitoring the situation very carefully and following CBC State Department and other sources daily.
He made safety is a top priority and the full impact of Corona virus on 2020 simply on no.
As of today with just over two weeks left in Q1, we have recognized approximately 10 million in revenue.
We have one additional system that is scheduled to ship this month to win affected area, which could be delayed.
We have received two meridian orders, thus far in Q1.
As previously shared the situation is impacting our commercial activities.
We have not had any order cancellations due to corroded virus, but the situation is inhibiting our ability to conduct business for example, Astro and Orissa, just postpone their conferences and several key accounts are no longer, allowing psych business and many hospitals are limiting access.
As we look beyond the quota virus uncertainty we're confident in the capabilities, we have built and believe we're well positioned relative to industry trends.
The current treatment paradigm life's primarily in the formal Biomark t. therapy.
Well many centers utilize SPR T in some form they treat a relatively small percentage of patients in this way due to the limitations of conventional systems.
Advance meridian centers treat with high jokes SBR T approximately 75% to 100% of the time.
Customer feedback bundled payment in clinical data are demonstrating the need for SPR t. capable machines.
Our customer interactions in market survey work indicate that customers desire to treat with high doses in fewer fractions, we're very well positioned for these trends.
The limitations of conventional technology or non trivial.
Evidence demonstrates that 75 to 100, great biological effective dose or be easy 10 isn't ablative dose that drives more favorable outcomes, yet coalitions balance the need for ablative doses and tumor coverage versus the risk of toxicity, Oregon.
And healthy tissues at risk.
Conventional systems limits, the ability to deliver blatant doses, while protecting healthy tissue.
These limitations stands in Stark contrast to the capabilities of Meridian, which represents a no compromise solution.
Real time soft tissue imagery enables real time adaptation, which allows for tiger treatment margins.
In real time tracking enables our automatic being gating.
The aggregate effective. These features provides the confidence to deliver later doses and reduce treatment margins to avoid toxicity.
Again Meridian offers a no compromise solution that is differentiated in the market.
We intend to rise above the noise and misinformation in the industry by leading with clinical proof.
We're working to prove that Gudino is not good enough.
In other large segments of the med tech landscape definitive clinical data dictates therapy.
Our goal is to move the radiation oncology space. The a prospective randomized data that will separate meridian in the market.
Key opinion leaders believe that delivering of late of doses, while preserving healthy tissue is the future up the space.
As such Meridian is the future.
Take for example, tumor margins and treatment volumes.
On the right is a market leading ctdna treatment plan and on the left is meridian.
Both plans are overlaid on an MRI image for comparison.
On the right you see conventional treatment margins of 15 to 30 millimeters, while meridian has margin of three to five millimeters.
In a reasonably sized tumor this would result in approximately 50% less treatment volume on meridian.
In simple terms I think of a tumor that is the size of the golf ball.
If just 10 millimeters of margin is added to create a conventional treatment plan for motion that cannot be accounted for the plan target volume increases to the size of the tennis ball.
The larger the treatment volume the larger the risks to healthy tissues.
Conventional Linux simply cannot account for the dynamic movement of the tumor and organs that risk and thus are frequently handcuff to treating in low doses.
Radian, However gets clinicians the confidence to escalate dose to the full tumor even in the presence of tumor in Oregon motion.
I will now share context of the clinical work that has been done on meridian.
The clinical data it is yielded.
And how we intend to build a comprehensive compendium of compelling clinical proof.
Meridians recorded data is a strong signal and is let our customers to do deeper work.
Let me share a few notable examples from just this past month.
Wash you had a paper accepted in the Red Journal reporting results of a prospect of clinical trial on single dose treatment for breast cancer after lumpectomy.
The paper highlighted APV I treatment time reductions from 10 fraction down to a single treatment on meridian enabled because the <unk> treatment margins.
As the author state Meridian cool provides a convenient less toxic and more feasible option for breast cancer patients post surgery and quote.
Another publication from the Lancet oncology journal identified Edmar guided therapy as a quote practice changing technology that allows for precise delivery, Ohio dose in liver and elsewhere and quote.
Lastly, everyone sees publication in the Red Journal demonstrated a large series of complex high risk lung cancer patients treated with high dose SBR T meridian with low resulting toxicity.
The breadth and clarity of this clinical data has led the deeper work in understanding the importance of be easy 10, or delivering latest doses, while maintaining local control preserving healthy tissue, reducing toxicity and improving quality of life.
On slide nine you can see the demonstration of safe ablative doses on meridian with significantly lower toxicity than conventional technology.
In pancreas, one of the most difficult cancers to treat we reported zero grade three toxicity wall conventional therapy reports over 12%.
Similarly in a ligand match, we report zero grade three toxicity walk conventional therapy reports up to 29%.
The data is demonstrated again and liver and again in central long.
What competitors are often says that they can do 95% of what we can do what evidence demonstrates is different story.
Good enough is not good enough.
Our coalitions value the combination of both features that enable safe ablative doses.
Dr. Charles recently shared quote.
Somebody prescribed very high dose, but allow the target coverage to be potentially horribly low.
This is how toxicity might be mitigated, but on the other hand, they are not giving ablative doses to most or all of the tumor in some instances.
I am able to treat with ablative doses to all or nearly all of the tumor with meridian and still cause almost no major toxicity and qual.
Dr Chunk captures the essence of you're right.
Turning to slide 11 for clinical roadmap.
We have 26 clinical collaborators with more than 30 physician initiated projects in 2020 alone.
All pointed out the powerbar technology to reduce toxicity and improve outcomes.
Building upon existing data and these projects our goal is to open several multicenter prospective phase two in phase three trials the approval what others can't.
Safely delivering laid up doses, while reducing toxicity in such areas as pancreas central long prostate ligaments and liver.
Included in this plan our head to head studies.
Quality of life measures cost effectiveness analyses feasibility of new indications and more.
We are in the process of working with a strategic partner to build out this roadmap for short term evidence and longer term follow up intended to definitively position meridian as the treatment of choice.
Our strategy incorporates ubiquitous cancers, such as breast and prostate and also includes more difficult to treat cancers that I've highlighted.
We believe our capabilities combined with definitive clinical data will enable us to change and improve the paradigm of care.
As we pursue additional clinical evidence, we intend to augment proof of this strategic and economic value of Meridian.
As it stands today Meridian provides added economic and strategic benefits to cancer programs.
Customer shared that they are treating many patients that would be untreatable on other systems.
Additionally, shorter courses of treatment and fewer side effects from patients to travel for our therapy.
Between the strategic differentiation and operational efficiencies of our system customer share that they are attracting new patients due to meridian.
Based on customer feedback, we believe sites me at approximately 80, new patients to their program over the course of year.
This equates to real economic value to our customers and clinical value to their patients.
In 2020, we intend to develop more definitive economic prove to share with our customers.
Lets highlight an example of the efficiency and economic value of Meridian.
On slide 13, you can see the throughput and economic benefits of being able to treat prostate with high dose SBR tea.
Traditional item, our t. treatments take between 28 and 44 fractions.
If each fraction takes 15 minutes. The total time to patient is on the table is between 420 and 660 minutes.
The majority of our customers treat in five fractions, including two adaptive treatments that requires a patient to be on the table only 180 minutes on average of potential increase inpatient throughput.
2.3 to 3.7 times that have a conventional system.
This is to say nothing about how disruptive 40 versus five treatments are to the patient flight.
Turning to slide 14 customer feedback is clear in terms of what will further improve our economic positioning to win in the marketplace.
First customers are asking us to simplify workflow and reduce treatment times.
Our goal is to reach so 30 minute fractions in breast and prostate.
This timeframe is that the low end up how competitors to lever there less sophisticated version of SPR tea.
Second we're working with Alexa on appropriate higher reimbursement for MRV guided technology in the U.S., Japan and select European countries.
Third we are offering customers alternative methods of acquiring version.
We will reduce our cost of goods by over $1 million in the next three years to enhance our flexibility on this front.
We believe the combination of these efforts will drive economic value for our customers.
We are seeing positive early signs of moving the market as our clinical strategic and economic value propositions resonate with customers.
In Florida, and the northeast U.S., we have clusters of accounts due to competitive pressures that meridian programs have built.
Since our commercial team was up and running in Q2 last year, we've added several hundred new prospects to our pipeline.
The sales cycle is lengthy and many of these accounts are in the early stages of our process.
In summary on slide 15, we embedded what it will take to move the market to meridian.
We have clarity on or clinical strategic and economic value propositions to drive therapy adoption.
As highlighted we will lead the way with clinical data as we work to improve the paradigm of care.
At the same time, we are actively monitoring scenario planning and working to mitigate the impact of Corona virus, we intend to balance the need to drive our business forward, while preserving capital in this time of uncertainty.
As I shared earlier, we do not intend to go to the public markets in 2020 or 2021.
Our aspirationally goal is to be able to save the same for 2022, but this will be dependent on how our business evolves.
We are obviously in a highly dynamic situation and we are focused on executing with excellence on the things we control.
2020 performance will be dependent upon our ability to travel and gain access to hospitals.
Beyond this year, we're focused on executing on the Roadmaps, we have highlighted designed to yield steady growth and value creation going forward.
Our team is highly motivated to deliver on behalf of patients and shareholders with that I'll turn it over to my Kayla.
Thank you Scott.
Fiscal quarter ended December 31, 2018 total revenue was 16.5 million dollar primarily from three revenue units, including one system upgrade as compared to $20.7 million and for revenues units, including one system upgrade in the same period last year.
Total cost of revenue was $20.4 million compared to $20.1 million in the same period last year.
Total gross profit was a loss of $3.9 million compared to a profit of zero point $6 million over the same period last year.
Total operating expenses were $28.4 million as compared to $22.1 million in the same period last year.
Net loss for the quarter was $35.2 million or 31 cents per share compared to $16.7 million or 17 cents per share for the same period last year.
Turning now to orders and backlog.
In the fourth quarter 2019, we received four new orders for Meridian systems totaling approximately $21 million.
Compared to eight new orders totaling approximately $49 million in the same period last year.
As of December 31st 2019, our backlog stood at approximately $227 million as compared to approximately $212 million as of December 31st 2018.
Two systems were removed from the backlog in Q4 and in total for systems were removed from the backlog in 2018.
Regarding cash excluding or December offering, we used approximately $3 million in the quarter.
As compared to prior quarters. The loop on rate was the result of effectively managing working capital aided by heavy cash collections quarter as well as managing our cash based operating expenses.
Lastly, our guidance for 2020, it for revenue to be in the range of $58 million to $95 million and cash used to be in the range of $60 million to $80 million.
As far shared we are actively monitoring the kind of virus situation and we intend to balance the need to drive okay. This forward with preserving capital in this type of uncertainty.
Well, we sit today, we do not intend to go to the public markets in 2020, or 2021, and our operational goal is to be able to stay the same for 2022.
Ability to achieve these goal will be dependent on how the business of all.
And with that we will open up the line for questions.
Thank you.
Ladies and gentlemen task. The question. Please press Star then one when you touched on telephone.
One of them claims.
Our first question comes from Chris Pascal of Guggenheim. Your line is open.
Hi, Thanks, and this guy I appreciate all the detail around the plans for this year I wanted to ask what about the first quarter. Because we are almost here in mid March just wanted to make sure I heard you right. So $10 million in revenue recognized and then he said you had one additional system, where there was maybe little bit up in the air about weather.
That which would be delivered on time.
That's correct Chris.
Okay and could you just talk little bit about how the Corona virus situation is impacting the commercial side of the business beyond potentially getting them away at installations, because you have trouble getting people to the rate areas are you seeing hospitals pulled back in terms of.
Orders were focusing on on a capital acquisitions, because they are distracted by other things that are going on.
Yeah, I think the what I can tell you definitively Chris is that hospitals have corona virus on on.
Very top of their mind.
We have had virtually all of our.
Site visits sites shut down to any visitors and accounts are frequently shut down to any kind of commercial activity at this point.
It's difficult to tell how long that persists and when things will free up.
So it it's difficult to quantify it for you here, we do have people in the U.S. in various countries around the world right now conducting commercial activity.
But it's getting increasingly difficult and the situation is remarkably fluid.
As you see happening not only in health care, but in every part of of public life, so difficult to call. It definitely our customers are distracted.
But we have ongoing activity at this point in time.
That's helpful. And then just last one for me on the guidance.
Very wide range there does the bottom of the range. So that those nine planned installations that are in areas that are potentially problematic because of the travel restrictions do not get installed and at the high end assumes they do or what accounts for that wide range, maybe just help us with the assumptions there.
Yeah, Chris This is something as you would imagine we spend a lot of time on if you go back to the December timeframe, when we raise capital.
We were very clear with investors at that point in time that we did not anticipate that our backlog would accelerate.
In the near term.
And that's what you see in the high end of our guidance range.
On the low end of the range to your point we're contemplating.
Not installing the systems that we've highlighted.
But frankly, there is risk to systems that we intend to.
It's a paid installing this year.
It's a very fluid environment, we are giving the street everything that we can here.
So investors have great transparency into our operations.
But we do so with the caveat that situation is changing.
Very dynamic way literally day to day.
Thanks for that.
Of course.
Thank you. Our next question comes from Matt O'brien of Piper family. Your line is open.
Hi, This is Jason on for Matt Hi, Scott I appreciate the quarter I heard the color there on a word on revenue, but I'm. Just wondering if you can speak to maybe the state of existing conversations with the conversations that were happening prior to the risk the travel restrictions by shutting down a lot of activity and where those conversations developing in a bigger way with non ACA non academic institutions.
And then has there been any greater traction with multi unit orders.
Yeah, I would say, Jason that largely speaking and I referred to it and in prepared remarks.
The the commercial pipeline continues to get larger and larger and interest in meridian is growing.
I think we're doing a better job of telling our clinical strategic and economic value proposition story I think people are seeing how we're performing.
Even in new accounts I mean, I've highlighted previously the work that our team has done at Moffett at Dana Farber I mentioned in Munich on the call Theres another.
Customer that I learned about this morning that has been treating patients just for two months and they've already treated give or take 50 patients. There ahead of their pro forma they're thrilled with the clinical results and they're taking patients from competitive hospitals.
This is a for profit provider.
So these are the kinds of stories that are getting out there.
And that market pressure that we anticipate is happening in certain instances, so why would say globally prior to the unrest of the Corona virus.
We're very pleased with the work that our commercial team is doing.
Selling our value propositions and that pipeline is growing nicely. So hopefully that's responsive to the prior part of your question certainly included in that are Multisystem deals.
And deals across academic centers community hospitals freestanding centers, I think we're getting smarter and smarter how to sell to freestanding centers and I I would say overall pleased with the progress of the pipeline. We're looking forward to the on site.
Certainty around a P.M. being lifted.
And I think our team is generally speaking just getting better and better.
All right, that's really helpful and that I wanted to touch on maybe deal like to collaboration there and just the lobbying for reimbursement thing that you'll be doing together I mean, how should we be thinking about how that this process develops or are there any timelines that you're willing to talk about just yet or are you at a point, where you can discuss what you expect CMS is going to be working for the four granting this higher reimbursed.
Huh.
Well I would say a couple of things broadly number one the collaboration with elect is going on in a very positive way.
We're pleased with where we are both there and with Medtronic candidly and on two different fronts I recognize your question here is more on the reimbursement front.
I don't have anything more specific to share in terms of timeframe.
It's going to take us a bit.
For our efforts to bear fruit.
But I would tell you see the depth and breadth of the clinical work that has been done on meridian.
30, new physician initiated studies being kicked off in 2020 and the phase two in phase three studies that we highlighted on the call that kind of information that kind of data.
He is not only going to help us commercially, but it's going to help us from a reimbursement perspective.
So hopefully you see how the whole strategy knits together here.
Great. Thank you.
Thank you.
Thank you. Our next question comes from Anthony Petrone Jefferies. Your line is open.
Hi, This is briana on for Anthony I, just have a couple of question I'm. So on the install cycle. How many projects are being delayed and then what does the average length of time to complete these projects and then just more of like the capital allocation of hospitals, our cost was talking about the capital budgets in light of Corona virus.
So in in terms of the the active installations.
I'm going to let chart take some of the detail, but right now.
We have two that are pause that were active installations, we have seven others in traveled restricted areas generally speaking we have the capability currently to do somewhere in the four to six range concurrently.
So hopefully that gives you a little bit of context, and our installations a win win it's our team and control are taking anywhere in the 45 to.
60 day timeframe to complete the installation itself.
Sure any color that you want to add yeah, I think to their what Scott's point was earlier as far as fluidity and the situation, where literally monitoring daily with with the various hospitals and who which.
I'll say traveler restricted a teammates from various countries can and cannot go in there. So that's just been kind of moving things around to make sure. We can address the need and that's where I know, they're having construction delays in certain cases, or they're just saying look let's just postpone the installation.
For a certain time period.
Because of Corona virus in the priorities at a hospital. So there's not an exact timeframe on each one of these delays were hoping we'll get back to business.
And more of a normal course in the short term and if we do in the short term.
I think that there there's good probability that many of these projects are completed in a reasonable timeframe. They are corona virus does extend further that then I think it just puts it at risk for this calendar year as will reach some capacity constrained. So I think it's a balance there right now that we're trying to.
Good day by day assess and manage.
Okay. Thank you and then my last question, we noticed that you have a new 13. The filer can you walk through how the dialogue is trending between the company and then you filer.
Yeah, I'd be happy too.
I have known these investors for a considerable amount of time across multiple different companies.
The dialogue is highly constructive and welcome.
We are pretty confidential about conversations that we have with.
Any individual investor So I wouldn't go any deeper than that.
But I would say highly constructive and we welcome.
There there entre into the stock and we welcome the dialogue between the us in them.
Okay. Thank you so much thank you.
Thank you next question comes from Craig with Joe.
Cantor Fitzgerald your line is open.
Good afternoon, guys. Thanks, Thanks for taking the question.
We started just for the clarification on the the nine plans installations are those all outside the U.S. and if that is the case then.
I guess any anymore color on how to think about the potential impact to installations in the U.S. as corona spreads here.
Yes, Craig. Thank you there are of the nine seven of them.
Our in Asia two of them are in Italy.
And you know the real question is when are they going to allow our team to have access.
To the accounts as I mentioned, a couple of them were ongoing and and have been paused at the current point in time as I mentioned to Chris is question earlier. The situation is obviously very fluid there are some positive signs in China at.
A moment.
We've not restarted anything there, but if if we get good news that would be just wonderful.
Italy seems to be a little bit more challenged at the moment.
And we'll be tracking obviously very closely and Ashar mentioned literally on a daily basis.
What were what we're able to do a sharp would you add anything to that.
Exactly right so.
Vast majority of the ones that are at risk or in a in Asia Pacific again, there theres hospitals in the U.S. that are putting various restrictions on but.
We're moving forward with the installations, we have right now so it has not stopped anything as of this moment.
Got it that's that's helpful guys. Thank you.
Maybe secondly wanted to ask you do have a bit of arrange for your cash burn as well 60 to 80.
So.
Maybe just trying to understand what could put you at either side of the range and then what happens if beyond those nine system installations, what happens if you see some other pressure or how does that impact your cash for 20.
Yeah, I think the most intense part of your question hopefully.
Keeping it correctly, Craig would be around before at the low end of our of our range I would say we're at the higher end of our cash burn and in that instance, if you contrast, what we did.
Last year in 2019.
We burned about $80 million doing 15 revenue units. So we would have a similar burn on five fewer revenue units. It gives you a sense of the levers.
That were already pulling and the the modeling and scenario planning that we're doing.
To your point could it get worse it could indeed, but that situation that we're highlighting.
At the low end is is a relatively.
Negative situation.
But again I'll just repeat it is very fluid and changing literally on a daily basis.
If we were fortunate and we were at the higher end of the range.
From a revenue and installation standpoint, and clearly we would be at the lower end of the cash burn range or Conversely, there.
Hopefully that is a responsive to your question.
No. That's a very very helpful. Thanks, Thanks for taking the questions guys of course, thank you.
Thank you. Our next question comes from Surajit CLIA of Oppenheimer and company Alaska.
Good afternoon, everyone. Thanks for taking my questions.
Good afternoon psoriasis.
So Scott do appreciate I know, it's a very tough environment for everyone and I think suit you guys are one of the few companies right now.
Giving us the current impact of Corona virus.
Business ops. So appreciate it.
Scott, Let me, let me belabored one of the things that people have already asked.
The nine units to easily seventies, you got it understood.
Guidance seems to be on the low end 10 installs.
And on the upper in 19 installed so that we get it.
Specifically on the lower end on the tenants towards let's say two I'd be done in this quarter.
The meeting eat better factored into guidance.
How many of those a U.S. species comedy Oh, U.S. space I guess I'm, just trying to understand if you roll kind of <unk>.
Waving a hands right now trying to figure out what the sole Corona virus thing.
What gives you the confidence and the low end and could Corona virus.
Influenced that even more.
Yeah sure I was just this child try to answer that I I'd say of the.
Got it or overall of the systems I'd say, a decent number and that has been historically our revenue as well is international.
So from from the ones that you're saying are affected there's those and then there is some additional systems are international on top of those again.
Feeling confident on some of those we do have international teammates. So it's not all U.S. mace teammates that would be during the installations. We have teams in Europe and their teams for the U.S. So we think from a local perspective as long as theres not a stoppage of.
Personnel entering hospitals I think we can assemble teams that can get into most hospitals again, there's always risk depending on what kind of restrictions specific hospital puts in I think to your point overall, we're feeling at this point confident that those other units will move forward.
But again, it's might change depending on what level of restrictions either U.S. hospitals or other European hospitals may take place and strategy I don't I just wanted to make sure I heard your numbers correctly, let let me chime in here really quick on on what we're projecting at the low and high end.
At the low end, we're talking about eight installs in two upgrades.
And at the high end 12 installs in three upgrades.
You know normally we're not so granular, but we feel.
That this time is such that we've got to give investors.
Everything that we can so they can make appropriate decisions and think about our operations in the right way hopefully thats helpful to you.
So forgive me again Scott.
Twin installs on the upper end plus X number of upgrades.
So the math, how do we get to 95 million, sorry, I'm, a little loss because.
In Q4, the 40 unit orders for 21 million. So it seems like S piece, a slightly softer or.
Just partly all if that's for me and it's because I'm, having a difficult time connecting the dots here.
I think I think ASP is pretty similar and then you on top of the ASP with with the installations, you've got service growing a bit this year, a andy upgrades on top of it we're happy to offline kind of walk you through.
Bought more of a detailed version.
Fair enough and finally Scott.
Our guided reimbursement golar working with elect though is that outside the confines of an E P M or.
Any any additional color there would be greatly appreciate it. Thank you for taking my question.
Yeah happy to it so.
Sure Raj the ATM, thanks for asking that the ATM right now is with ORKAMBI I think some investors may be aware of that others less so.
And we're hoping for a 2020.
Rule here I'm not sure with Corona virus, you know how engaged they might be on this particular issue. So.
Probably some fluidity on on that front.
But I believe be the reimbursement efforts that were engaged in.
Would would be in both in the U.S. market and in the international markets, whether or not it would impact the ATM I doubt it at this point given how much work has already been done there.
But I think it would apply to the vast majority of patients treated if in fact, we were successful with those efforts in the U.S. market.
Thank you again, ladies and gentlemen, she'd like to ask the question. Please press Star then one when you touched on top of.
Our next question crushing defeat Yang of Mizuho Securities last though.
Hi, This is Dan Clark on for Steve Thanks for.
A question.
I guess to start.
Just to start.
I know you're Chief commercial officer left in January and just wondering how his responsibilities have been split up and if you've enacted any strategic changes since then.
Yeah, I would say the we essentially elevated.
The person who was running the U.S. market for us.
You asked sales and marketing to take on global responsibility. So in essence. It was just a position elimination there.
And we're pleased with how things are going commercially as I mentioned in response to a previous question. So hopefully that answers your question.
Okay. Thanks. That's helpful. Then just one more.
Customers that you're hoping to get in this year and install what have you received any sort of timeline from them on when they think you could you could be in there or is it yourself fluid, they're not committing to anything.
We have very frequent contact the installation process from a the permitting and planning process that our customers go through to vault preparation to the installation itself. It is a very high touch.
Kind of activity that we program manage.
Now with our customers so.
There is very frequent contact and then in the instances where theres not a you know kind of the Corona virus effect. If you will there's activity going on as we speak so it's not as if there's everything is frozen by any means at all.
Okay. Thanks.
Of course.
Thank you. Our next question comes from Andrew Dsilva B. Riley FBR. Your line is open.
Hi, good afternoon. Thanks for taking my questions and just let me now if you touched on any of this earlier I was jumping between calls so no need to repeat yourself I'll just read the transcript but.
As far as if you have goes or has there been any sort of a narrowing from CMS related and timeline I know that we're talking about 2022, a fairly recently as a more likely date then sometime this year.
Any any color there would be some somewhat useful as you start to think about no out your adoption trends.
Yes, Andy Thanks for the question the ER.
ATM is currently at Olin be as we speak a so we we don't have any reason to believe that things would be delayed beyond 2020 at this particular point in time, we've got the big caveat there.
That corona virus could be preoccupied them.
But but our best information is number one it's at Olin B.
Number two.
We're we're thinking and hoping there's something coming.
Here this calendar year.
Okay. Okay fair enough and then you know as we think about just broader adoption and how it impacts your backlog overtime. If maybe one of the reason <unk> year over year growth.
Been fairly flat from for menu order standpoint.
Primarily because of pricing of the product and then you know as it relates to.
The four units that you hadn't orders for a in the fourth quarter.
He previously mentioned it looked like the A.S. piece or have declined below like more normalized levels I'm just curious how much.
Of that reduction and ask Pete is tied to just maybe a strategy are related to you need to get pricing a little bit closer.
To some of the other offerings of market.
Yeah. So let me let me try to address that India, a fair amount to your your thoughtful question here.
I think there are several things that are in play.
As it relates to orders.
First of all I would share and I think you see this with our friends that also have and M. Our guided US system. We are in the early days of commercializing what I believe.
And our customers believe is a paradigm shift in radiation oncology.
And that's a non trivial thing to do.
And to move these kinds of markets.
Often takes time.
In our instance, specifically I would ask everyone to recall that we really see did our U.S. field team in Q2 of last year. So they've been in territory less than a full year at this point and our international team.
Is maturing nicely, but that effort was a bit behind our U.S. team. So I would put that out there number one number two I.
I think there's and reimbursement uncertainty.
Which you know we've been saying I think pretty clearly overtime, but that's not helpful to us.
I believe fervently that the ATM will be a tailwind we highlighted for you on the call today and I recognize you may not have seen it would take a look at the at the slide that shows.
How long it takes to treat prostate patient via I MRT versus high dose SPR tea on meridian. It is a dramatic difference and we're beginning to have a bit more traction in freestanding centers as they looked at the efficiency.
Of Meridian incur informed and we anticipate being able to do better with that.
And the final thing that I would share is I think we get past clinical interest with our customers up pretty quickly frankly and relatively easily because word is just getting out there with 8000 patients treated and hundreds of peer reviewed journals and abstracts on the utility of ours.
System and even these brand new systems that are getting up to speed on track to treat 300 patients in their first year. These stories are non trivial.
But what we're focused on now in addition to building that clinical pipeline of data.
He's telling in economic value proposition story that is clearer and working on the economic value proposition through simplified work flow through shortening treatment times and increasing the alternatives for how our customers can acquire the system. So a.
Justin lots to my answer happy for a follow up there, but hopefully that gives you a sense for where we're at.
Yeah that was great and just last question for me you know for for good six months or so you've really been talking about the cadence going forward I think it'd be two two different at least in near term as it has been maybe over the last 12 months.
And so sitting sitting where I'm at it becomes a little bit different difficult to look at metric to chart success.
If it's fairly flat can you maybe outline what you're looking at internally that a I'd give you confidence in the business and then if you'd give additional color and haven't gross margins should shake out throughout the year that'd be useful to and that's that's all for me.
Yeah happy to happy to share their Andy and again I think some of this week. We may have covered but just to give you high level. We've detailed we recognize that we've been really clear with the street, saying that orders is the most important metric for us.
Absolutely remains the case and I think will be the case for a long period of time, but we also recognize it that's a lagging indicator so what what we shared on our call today is kind of detail around our clinical roadmap around the strategic value proposition Road map.
And also on the economic value proposition roadmap.
And how we're gaining traction there. We also shared in our prepared remarks that 12 months ago give or take.
The number of customers that we had in our pipeline.
Was into double digits.
Now it's into hundreds and and we track in a very precise way of where they are in each stage of our process. So we look at that literally I look at it on a weekly basis. Our commercial team is obviously looking at it on a daily basis. So we have a very clear eyed view.
You have where that back you know where that pipeline is and those are the things that give me confidence along with.
Just customer feedback that I've alluded to when you're in your prior question.
Okay, Great Hey, honestly best of luck going forward and 2020.
Thanks Sandy.
Thank you I'm showing no further questions at this time and I'm, just trying to comp conference back over to Scott Drake for any closing remarks.
Thank you very much operator, thanks for joining our call everyone and we'll look forward to updating you in another quarter [noise].
Ladies and gentlemen, this does conclude today's conference. Thank you participating you may now disconnect.
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