Q1 2020 Earnings Call
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Frankly.
First thing David.
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Its name round.
Hello.
Okay.
Hi can you. Please tell you first name.
First name David Deep Avi I'd.
Okay and you last night.
Brown, we are older bullion.
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Thank you all company do workforce.
An ira.
Hi, Rob.
A I.E.R.A.
Okay, Thank you and which comped pulled you'd like to listen to you.
Inspire medical systems.
Thank you.
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All Americans.
We will expand on each of these shortly.
Given the rapidly evolving environment and the uncertainty regarding when and how quickly activities will resume at hospitals.
We can you indicated a few weeks ago that we have withdrawn previously announced all year 2020 financial guidance.
At this did.
We remain on unable to accurately estimate the impact of the pandemic on our business and financial result.
Now turning to our operating results in the first quarter, we added 28, new U.S. implanting centers and ended the period with a total of 327.
To qualify as a new center the criteria has always been when those sites completes training has potential patients and is ready to proceed with inspire procedures.
As many of the new centers in process have also been put on hold during a pandemic that timing of them opening will vary state by state.
We will continue to identify new centers, including ambulatory surgical centers or esses.
Our focus on the training and contracting assay centers and we will complete the process. Once they are again scheduling surgical procedures.
Finally recruiting additional expenses will be a focus moving forward as inspire procedure is an outpatient procedure and as we will discuss shortly the reimbursement within SCS has improved.
We believe assay is may provide some additional capacity for the surgeons and many of our existing surge as also have privileges at an assay.
I'd also like to highlight a national purchase agreement, we entered into with 150 Hospital system that operates in 20 states in the district of Columbia.
Inspired therapy is offered in only a couple of their facilities today and this agreement provides the potential for training many additional hospitals as well as several lses operated by the system.
Moving on we created nine new territories in the U.S., which brings our total to 82.
In addition, we added three regional managers and now have a total of 17 at the end of the first quarter.
These new centers and territory and regional managers will have a positive impact on our long term growth and will drive continued growth in therapy adoption.
As we previously discussed in order to focus on growing utilization that existing centers. We continue to increase the number of deal clinical representatives or FC hours available for case coverage to provide training an implant support the clinical professionals.
We ended the first quarter with 28 Fcr up from 22 at the end of 2019.
We intend to continue targeting regions that could benefit from additional FC ours, but Intel inspire fuzzy procedures resume at a more normalized rate, we will limit the number of fcr as we hire in the near future.
Let's switch gears to market access or reimbursement.
We continue to execute on our two key strategies, which are to expand the number of positive written coverage policies and concurrent with this process continue to obtain individual prior authorizations.
First though let me begin with the significant progress recently achieved with Medicare.
I am pleased to report that during the first quarter five of the seven Medicare administrative contractors or Max.
Issued their final local coverage determinations or lcds.
Which are in which our effective and cover patients in 37 states.
Just recently, Wisconsin physician services announced that they are draft LCD will be formerly issued any effective June 14th.
That leaves just one Mac Palmetto, which covers seven states in the southwestern part of the us to issue their policy and we expect this to happen in the near future.
Once published these seven Maxwell essentially have issued national coverage for the Medicare aged population.
There are approximately 40 million Medicare patients and an additional 20 million lives under commercial Medicare plans known as Medicare advantage.
In addition.
We currently have 53 positive policies for inspire therapy, representing approximately 165 million covered lives.
As a point of reference we had approximately 83 million covered lives at this time last year.
We expect that our momentum with these positive coverage policies will continue throughout 2020.
Now that we have a significant number of positive coverage policies are focused turns to standardizing indications across these policies.
For example, just today, we learned that United Healthcare published an off schedule update to our coverage policy raising the BMI limit from 32 to less than 35.
Which is consistent with the standardized Medicare BMI indication.
Our market access team will continue to work towards standardizing policy policies with other commercial health plans.
Turning to the prior authorization metrics.
As I noted earlier, we continued to prepare and submit prior authorizations throughout the quarter as we're able to work remotely with clinical sites and patients.
As such in the first quarter, our internal reimbursement team supported 929 prior authorization submissions.
This kind of compares favorably to the 722 submissions in the first quarter of 2019.
And is down only modestly from the 988 submissions in the fourth quarter of last year before the impact of the pandemic.
In terms of prior authorization approvals.
761 patients received approval in the first quarter.
This represents a substantial increase of over 71% compared to the 443 approvals in the first quarter of 2019.
And despite the covered 19 related disruption is a slight increase from the 751 approvals in the fourth quarter of last year.
As a reminder, we will continue to report on these prior authorization metrics in 2020, but as revenue as we have said previously our long term goal is to reduce the burden of individual prior authorization by working with commercial payers to develop positive coverage policies, thus given the growing number.
For a positive coverage policies, our commercial health plan. In addition to the progress achieved with Medicare These metrics will likely become less meaningful in evaluating the overall progress of our business going forward, we do not intend to continue to report on them. After this year.
With the first quarter results presented.
Let's discuss how we are preparing for a more normalized operating environment.
First we have worked with all of the implanting centers to maintain a detailed list of all postponed cases, and all approved cases that have not yet on schedule.
Once the impact of covert 19 on the health care system begins to subside we.
We're highly confident that our business is well positioned for significant further growth.
There are key number of key reasons for this first.
For previously scheduled preceding years, we expect the vast majority of these to be rescheduled as these patients.
As these are patients who are clearly committed defining relief for the obstructive sleep apnea.
They have been through US needs study tried and failed CPAP taken the time to learn about inspired therapy and are committed to moving ahead with our implant.
We firmly believe that most of these patients will return to the schedule when it is possible to do so.
Second well some hospital in certain parts of the POS like New York, and New Jersey, having inundated with covered 19 patients many others have not.
Therefore, the postponement of a significant number of surgical procedures has been highly detrimental to hospital revenues as such we expect hospitals to be motivated to schedule more profitable surgical procedures as expeditiously as possible when they are able.
Inspire therapy can certainly be considered a higher margin procedure for hospital due to the reimbursement level for the impact procedure that is done on an outpatient basis.
As a reminder, the national average Medicare payment increased to 29000 of the beginning at 2020.
Commercial reimbursement at centers is approximately 1.4 times the Medicare payment.
Moreover.
The average payment to surgeons from inspire implant increased $450 following the finalization of the Medicare Lcds.
This increase is further work to implant assessing lead which is the add on code and previously did not carry any payment.
The average Medicare reimbursement for the base code was approximately six to $800 and therefore this $450 increase is significant for the Aunties.
The other major change that the Covidien over 19 pandemic has mandated is the use of virtual tools and tele medicine to safely connect patients to health care providers.
As I as I've noted earlier during this time, we have continued our patient outreach program, albeit in a new manner.
With stay at home orders, we limited spending on radio and focus more on digital communication, including Google ads on Facebook.
We leveraged to revise television campaign focused only on smaller markets and those not at a significantly impacted by the pandemic.
We also utilized a web site to focus on the use of virtual tools and highlighted in the physician finder to identify which physicians are able to use tele medicine.
Another key change was converting previously in person community health Tox.
To virtual Hell tax with the same effectiveness, yet in a safe and convenient location.
We believe many of these tools will remain effective even after the pandemic.
In the first quarter of 2020, the number of visitors to our web site was approximately 1.5 million, which is an increase of 69% year over year.
In addition, there were over 14000 physician contests contacts established via the web site, representing an increase of 48% year over year.
However, as we've said previously even with all the web traffic.
We believe a relatively small percentage of patients reaching out to the healthcare providers and up within inspire implant.
Therefore, we initiated a call center concept called the inspire adviser care program.
As a reminder, the primary purpose of this program is to assist patients in connecting them with the appropriate healthcare provider based on their specific needs.
Which in turn should improve our overall conversion rate.
We are pleased with the results of the program in the initial two markets during the first quarter and have since expanded to an additional seven markets.
Regarding our international activity.
Patient flow was steady and improved from fourth quarter levels at centers in Germany in the Netherlands.
In the Netherlands impact that implant activity resumed in the first quarter. Following the formation of the required oversight Committee to review and approval inspired therapy cases.
As in the US all inspire procedures were suspended due to the pandemic, but the encouraging news is that cases have resumed in Germany in April.
And we're hopeful the number of schedule cases will increase throughout the remainder of 2020.
We continue to drive towards a reimbursement decision in Japan and remain actively engaged with the authorities there.
We remain confident in achieving a mutually agreeable solution and while again delayed due to the pandemic.
Due to that cover 19 pandemic.
We recently met with the Ministry of Labor Health and welfare to renew the documentation review.
We also continued to achieve progress with regulatory authorities in Australia, we expect to receive regulatory approval in that country and 2021 and are working to obtain reimbursement concurrently, although we cannot assess the timing nor the effects from the covered 19.
Here in the United States.
We were excited to recently announced that the FDA has approved and expanded age range for the inspired therapy to include 18 to 21 year old patients.
As compared to the previous minimum age requirement for patients to be 22 years old.
Based on our discussions with the FDA. We believe that this is the initial step in the pediatric approval process with the potential for further expansion to lower age groups.
We will conduct additional research on the specific characteristics of all say in the pediatric population, including continuing the ongoing clinical study for adolescents with down syndrome.
Switching gears again.
You will note that our R&D expenses increased year over year on the first quarter as we continued to invest and enhancing our technology platform.
The inspire cloud project, our cloud based patient management system continues to progress with the addition of many centers in the US in Europe, who are using this tool.
We intend to launch the inspire apps on patient smartphones, shortly which will take the next step in involving patients in the managing the old say.
As well as create interconnectivity through the inspire club.
We also have active projects to improve the physician programmer and the patient remote control.
Longer term the design activity for our fifth generation inspired Neurostimulator is ongoing.
As I have said previously we anticipate that this will be a multiyear effort to develop the inspire five device and gained regulatory approval.
We are actively conducting feasibility trials with several technology innovations, which will make the inspire five neurostimulator stadiums yard and expect that it will further improve the performance of the system, including simplifying the implant procedure.
Importantly.
The strong long term fundamentals of our company that I've just reviewed our well supported by a solid balance sheet that was recently further strengthened by the successful equity financing, which generated 124.7 million of net proceeds.
And closed in mid April.
We are appreciative of the sport from all the investors that participated in this offering and intend to utilize this capital to continue executing on our growth strategy.
Which is primarily focused on the us market.
And with the objective of first increasing patient flow at existing centers and second training and opening new implanting centers.
In summary, despite the negative short term impact from covered 19, we're very encouraged about the direction of our business along with our focus on improving utilization and our conversion rate further advancements in reimbursement, including Medicare that builds upon our recent positive coverage.
Decisions, a growing body of clinical evidence and a robust R&D platform.
We are confident that we remain well positioned for the long term success.
With that I'd like to turn the call over to Rick.
As detailed review of our financials.
Yeah.
Thanks, Tim.
As Tim noted we were extremely pleased with our financial performance in January and February prior to the outbreak of the coveted 19 virus in March.
For the first quarter of 2020 total revenues were 21.3 million at 31% increase over the 16.2 million generated in the first quarter of 2019.
US revenue in the first quarter was 19.3 million an increase of 34% over the 14.4 million in the first quarter of 2019.
This increase was volume driven from both existing territories and the addition of new implanting centers.
In the first quarter European revenue increased 9% to $2.1 million.
Our us average selling price in the first quarter was $24000.
Compared to 23400 in the prior year period.
The European ASV was 22300 during the quarter, which was consistent to the first quarter of 2019.
Our gross margin in the first quarter was 84.6% compared to 82.4% in the first quarter of 2019.
This notable improvement was primarily due to manufacturing efficiencies, which led to cost reductions with our third party contractors.
Despite the ongoing covert 19 pandemic, we have not experienced a direct disruption in our supply chain and maintain sufficient levels of inventory.
Total operating expenses for the first quarter were 34.5 million, an increase of 56% as compared to 22.2 million in the first quarter of 2019.
This planned expense increase this plant increase was primarily due to the expansion of the us and European sales organizations.
As well as increased direct to patient marketing programs.
Continued product development efforts and general corporate costs.
In light of the ongoing uncertainties, we are taking a thoughtful approach to our spending but expect operating expenses to increase as we continue to invest in these initiatives.
Our net loss for the first quarter was 16.1 million compared to a net loss of 8.2 million in the first quarter of 2019.
The diluted net loss per share for the first quarter of Twentytwenty was 67 cents per share compared to 35 cents per share in the same period last year.
The loss of revenue in March due to the cobot 19 pandemic negatively impacted the net loss in the first quarter. Despite our improved gross margin.
As of March 31, 2020, our cash and investments totaled 142 million compared to 156 million at December 31 2019.
As Tim mentioned on April 16th.
We completed a follow on offering in which we sold 2.3 million shares of our common stock.
And received net proceeds of $124.7 million.
We view this financing in the current environment, which included several top tier healthcare investors as validation of the significant long term potential of our business.
As communicated on April 13th we have withdrawn our previously announced full year 2020 financial guidance due to the rapidly evolving healthcare environment and continued uncertainties, resulting from the impact of covered 19.
At this date inspire cannot predict the extent or duration of the impact on our financial results.
We will continue to evaluate the impact of the co bid 19 pandemic on our business and intend to provide additional information in the future.
The weighted average number of shares outstanding for the first quarter was $24.2 million.
We anticipate the weighted average number of shares for the second quarter will be approximately 26.3 million.
In summary, despite the recent impact of the Cobot 19 outbreak, we're confident that the long term fundamentals of our business remains solid.
With our strong balance sheet, we are well position to continue executing our growth strategy and navigate through this challenging period.
With that we are concluded with our prepared remarks.
Doug can you. Please open the call for questions.
Thank you ladies and gentlemen at this time, we will be conducting a question and answer session. If you'd like to ask your question you made press star one on your telephone keypad a confirmation total indicate your line is any question Q.
You May press Star too if you would like to remove your question from the Q.
For participants using speaker equipment, it may be necessary to pick up your handset before pressing star Trek.
Our first question comes from the line of Jon Block with Stifel. Please proceed with your question.
Thanks, guys. Good afternoon to for the we captured cases of those that are deferred.
Certainly agrees with you, but can you talk about any challenges from a capacity standpoint.
Hey, the patient wants to move forward, but you had previously alluded to some capacity challenges. So is there anything that you guys need to proactively do you sort of help ensure that the backlog of patients moves through that pipeline effectively.
That's a great question John added that you really summarize a key challenge going forward. Good day period voiced by the way the.
With a backlog of patients as site start to come back online a lot of the surgeons have just their own dedicated all our time and it's very competitive for them to find additional or time solids. It is going to be.
Little bit of.
Challenge for the surgeons to find enough time to schedule the backlog at cases that they have.
So hence one of the avenues, we're looking at in some of these surgeons have access to SCS.
And big because thats easier for us to open up the is season that we don't have to train the staff right. Because they are already trained on inspire we just need to work through the contracting process. So thats one opportunity. Other surgeons are looking for odd hours of cars, I think youre going to start saying procedures occurring on SAP.
Today's and even scheduling.
More than two cases on a given day, so things will continue to evolve there, but that is a focus we are working.
Right now and spending time reviewing with each of the regional managers because most of them all have their centers coming back online and scheduling cases.
And the challenges they're going to run into is how in a timely manner can they work through these backlogs now let me highlight one other thing also remember that the number of prior authorization authorization submissions started to slow down at the end of the first quarter and the reason is.
Because we have to do that sleep endoscopy procedure and those are also suspended and so we also have to come back and start redoing the sleep andaz copies. So theres a little bit of a time, where they can work through the backlog as they continue to build up.
New cases with the statement basket, we procedures. So at some that are staff is so diligently working right now with the physicians.
Got it great color thanks for that.
The second question for pediatric.
It was there a way to size I don't know that incremental market call is 18 to 21 year old and maybe more importantly, part b that question would be if I remember correctly adequately 19, when you've got some of the blues on board from a reimbursement perspective.
Really impressive is at several of the Blues also at that time went ahead and stamped the reimbursement for pediatric downs, if I remember correctly you. So for pediatric 18 to 21 and I don't think it's specific to pediatric down due to do is reimbursement policies from the blues are those still win.
Packed or do you have to go ahead and pioneers some incremental policies from those guys hopefully that makes them. So yes, no that makes great sense again, I mean, when we said what we've been saying all along as our focus is dealing with.
Adoption of inspire therapy in the general population and we did give to request years back to start the work with the pediatric and specifically with the down but thats a very small population. So when we started working with the FDA. We wanted a broader indication the FDA agrees with that but they wanted.
The going a step wise function. So we started out with just lowering the age down to 18.
There are probably.
Less than 20000 patients.
From a from a prevalent standpoint.
In 18 to 21 with.
Our level of AI, maybe a thousand or those have down syndrome.
To expand on that to go down to a lower age would obviously increase at market are considerably, but then as far as the insurance companies go we need to go back and as I mentioned earlier standardizing policies and you saw United just went up to be am I 35, we also need to go back to them.
I would say now the age group 18 to 21 is approved by FDA will you update the policy to go to 18.
But as you mentioned now Bluecross Blueshield most of those are in fact specific for down syndrome, because those were prepared in the middle of 19, and we will need to go back to them as well to get as a more broader indication for the 18 to 21.
Okay perfect. Thank you Don guys.
You bet John Thanks.
Our next question comes on the line of Larry Biegelsen with Wells Fargo. Please proceed with your question.
Hi, Thanks to its lifelong calling fillet and thanks for taking my question I'm, just like when Clinton thought about procedures on starting to come back in the UK and Germany.
Based on what you see now.
Can you provide color on how you think about Q3 Q4 should we expect some level of normalcy in those quarters or some sense of growth in the back half a year.
Yes, we.
We see the procedures coming on nine may batch of now we have cases casual and 10-K right now we believe the majority Mccain Pedro.
Back to operating.
By the end of the year on reconfigure now.
So we've got that feedback, but we continue to expect Ron growth.
Once we get the centers opened up with a with a commitment to first work through the backlog, but we've been continuing to build the practices and bringing in more patients. So yes. We're excited about the back half of the year again, we haven't really been able to celebrate Medicare because we're in the middle of the.
Pandemic and all of those policies came online except for these final seven states.
That when we give you the pandemic youre going to see a greater impact from the Medicare and the physician payment has significantly increased as well. So there's a lot of key things that are going to drive adoption of implants in the second half the year.
Quick question comes from the line of Christmas quality Guggenheim. Please your question.
Thanks, Tim wondering how you think about the resumption of surgeries versus the resumption of sleep studies days procedure. Some of the other work that has to happen for patients to work their way through the funnel.
Curious, whether we can run into a situation where perhaps some of the submissions that were already approved those patients of getting treated but they're ends up being a gap in the funnel.
That could then hurt you down the road.
As a great great perspective, I think we have.
The number of patients that have been delayed or is suspended and the new approvals from Q1.
Going to carry us forward through Q2 into Q3, and and that allows us time to be restarting the days procedures at the same time. The the physicians have a significant backlog add days just as they do on the surgical procedures and they're looking for improved ways to be able to do some of those.
Keep endoscopy procedures, including doing some of those at SCS.
As well.
Feed studies I think the pandemic is really kind of reinforce the purpose of using home sleep studies and I think you'll see a continued growth in HST fees.
But you're also seeing some of the sleep labs come back online, but I think it's safe to say that most patients right now would really prefer to have a HST at home right. Then go into an overnight sleep lab at least in the near future and really the focus is going to be on disposable units. So there's some opportunities there as well.
But I think we'll be able to get everybody back online and remember a lot of patients that call and have active.
Sleep studies or a sleep study performed within a year. So they don't necessarily have to go back and have another speed study.
As part of their diagnosis process.
Thats helpful. Thanks, and just curious how much visibility you feel like you have into the surgical calendar at your customers now that things are starting to ramp back up.
What kind of visibility you have as you look out here you being early may on on what the next.
30 to 60 days looks like.
Chris changes daily it changes daily we're in Minnesota, right now in a governor still kicking around when we can start doing procedures.
The male clinic is kind of put a date on a calendar for which they can start scheduling. We also have the university of Minnesota here.
As I mentioned 13 states have already scheduled cases, either already performed or within the next couple of weeks and as we work through every state, including New York, We're scheduling cases in May.
So we.
As things progress, we get more and more clarity when the centers start to accept scheduling of the cases.
And then we need to work with the surgeons to get their priority to get their cases prioritized and scheduled so it's going to be an ongoing challenge for the territory managers theyve been geared up for it theyve been working over the last six weeks.
With the with the physicians to make sure they're ready to schedule. These cases, we kept everybody.
Warm and ready to to proceed.
Thanks.
Okay. Next question comes on the line Richard Newitter was SVB Brean. Please proceed with your question.
Hi, Thanks for taking the questions.
I wanted to go back to the at the.
Tom and Jerry and it sounds like this answer.
John's question earlier about.
Capacity is clearly going to have some backlog work down.
I was hoping you could give a little more contracts as to what's involved in getting your current installed base or account base and then my admitted or more comfortable doing these procedures mesquite setting what has been the bottleneck just in the reimbursement which is now clearly there.
Or is there something else and if you could also just.
I don't know if you have in hand, but what the current percentage of cases that are performed at and T. today or what percentage of Implanters, Let's just say your high volume and pledges are already doing it in a key city precluded.
Fantastic Thanks rich.
Let me back up and talk about fundamentals that allow us seized to really start doing procedures in the limitations that prevented them previously.
So last year, when we're dealing with.
The prior authorization process member would take a private practice physician three or have any physician three to four months to get a prior authorization approval, while as we develop the policies in the 155 million covered lives and now with the Lcds from Medicare the FID.
Additions can now focus on practicing medicine, and not necessarily being and insurance agent. So when patients come in they can immediately take them directly to the.
Surgical center or to the Omar.
The second thing that helps the private practice is that Medicare was only paying for.
On average half the cases, because they didnt have policy.
So you hear a lot of the academic centers or do Medicare because the surgeons for the most part are on salary and they're not as concerned about private practice they need to get paid for the work that they performed and so now that the policies are in place. They can be assured of getting the six to $800 offer the base code.
But now with the advent of the payment for the.
$450 for the sensor that has increased that payment 50%. So there is sure to give you that getting paid and the payment as 50% higher now from the AMC facility payment as the National average Medicare payment went up for facility is it also went up for as season then.
National average Medicare payment for AMC is $24000 now are as P is 23830 or.
Such.
So theres not a lot of margin there, but when you get two key cities and geography that AMC payment is higher.
And the commercial payment.
His more than the 1.4 and close in fact, sometimes it's closer to.
1.8.
Times, the Medicare, which makes it much more profitable to the assay to be able to do a two hour outpatient procedure and at two hours. They can schedule three cases in a day. So there is also on the economic benefit and if the mix from commercial to Medicare as stays close to what we.
Have been running which has lost 60% commercial 30% Medicare 10% BA that really is a good situation.
For the SCS.
And with the reduced burden of the physician it so it makes it more beneficial to streamline cases in the air sees.
Keep going because I think I know your follow on question was talking about the number of agencies that we have.
At the end of Q1, I think we only had 27 SCS out of our total number of centers, which was 327. So it's a very small percentage today, but I think thats, what you're going to see the greater increase as we turn the attention to the SCS to be able to do more and more procedures.
And there are several centers.
Such as K., you that sometimes they've already been using their as C.
To to support increased capacity.
Wanted to go back to the sleep and occupancy.
Is there anything just in the weaker coded and the fact is the the respiratory disease.
So much of the patients either on the providers side the key customers.
Changes of protocols or I know that's it that's a procedure.
That might actually provokes anxiety potentially promotes remains ideas.
Patients are under and there.
Poking around.
Some was up or Airways.
Anything to be to be watchful there. Thanks.
Absolutely when.
There are the concern for the year teases when answered a nasal scope and excites tissue in the nasal fairings they connect site airborne.
Pathogens, including coven, so theres a concern there so what the Ian tier the international sleep Surgical Society did as they got a group together and the real guidelines in guidance for surgeons on how to operate and properly and safely conduct SCS there had been.
Other instruments that have been introduced to.
To ease that process, but again it comes down to making sure they do proper testing, but even with the testing the NTS are going to use fold PPD when they perform those procedures and as I don't think it's going to be a long term challenge, but it is going to be something that the aunties need to be aware of as we start back up and they've already device.
Yup.
Those guidelines.
Our next question comes on the line of Adam meter with Piper Jaffray. Please proceed with your question.
Afternoon, it's actually met on for Adam Thanks for taking my questions just Jim for starters.
You talked about the pediatric opportunity that you guys haven't funny can you bundle that together with you in h. lowering the BMI rates as well as JB getting access to Dts, what that does for your market opportunity and then you know there's been some questions around your market opportunity.
Moving now to me as et cetera that where this the technology can actually be used to these sharpen their pencil on that.
Matt second part of the question a little bit finer in response to that.
Yeah, well this fact, let's talk about that.
From the beginning.
When we laid out our Tam I made we always talked about the 2 million.
Patients are up for grabs prescribed see path for every year and that originated from a very solid source. When we started talking about the FCC reports from Raz Madden Respironic and we can look at the number of of prescribed.
Devices, and then literature clearly talks about.
The percent of the population that is compliant a month after being prescribed to see path and then we have the data from the star clinical trial that showed the number of patients that we screened out using sleep endoscopy and it is related to be a mine. So in the clinical study we see.
Green to add a BMI, a 32 and less than 32, we screened out 28% of the population.
We know the therapeutic be had can be effective as we go higher to a BMI at 35, but only if they don't have complete concentric class.
The level of the soft pallet, but we also know that when you increase the be amazed at 32 to 35, you have a chance to have increased lateral wall collapse. Therefore, you will screen out a higher percentage of patients.
Estimated to be in the mid thirtys percent because of concentric left so we can treat higher BMI as long as they have the proper.
Anatomy, so when we look it up in my 35 that has a.
Bob NYSE benefit when we get approvals from.
United Healthcare, but here's the point.
The Tam is so large that the challenge is not finding patients are challenges on the opposite side. It's a ground up building of the number of centers and physicians that can handle the capacity to treat this population. So if you look at the penetration rates that we have today.
It's it's extremely small.
So as we continue to add more centers and build capacity. It really is a ground up build.
To be able to address the market. So the overall tab doesn't really play but that the key is it's really shows the duration of time for us to continue to grow the adoption of the therapy.
Enhance that was the reason we.
Did a financing it also allows us to do significant increases in our investments and technology to make sure that we keep growing the performance keep growing the adoption and keep tearing down the barriers for patients to be able to get the inspire procedure and testimony to the.
That is just look at the number of patients that come to our website.
On a quarterly basis, and we need to continue to build our capacity to take care of those patients who are looking for an alternative therapy.
That's helpful and that dovetails into my next question, which is just on the.
On the hospital side of things you know I know that's a big focus that you guys have this year you have to go through Vacs I would imagine in most cases for new hospital customers. So how receptive our hospitals at the moment.
Can go through this process should we expected material slowdown and new center as either near term or in subsequent quarters than any any updates on the commercial payer side anthem.
Our Sigma Thank you fantastic gas coupled with good questions in there.
As far as new hospital starts goal.
We we have on quite a backlog of centers in there that have already been through the back without the value add committee, where they look at the code to what the reimbursement is and make sure as a procedure that they want to perform at the hospital and they've been through that we've been through a lot of the training and we're just about to open the centers.
But we don't count a center as being active until they are ready to proceed the implant.
Well with the pandemic, obviously those cases are all suspended too so right out of that we have more case more centers that are going to be able to open right away.
I made mentioned two Ascension health was 150 hospital system that we signed a national.
Contract with we only have a couple of those centers active today and what happened is after two or three those centers started doing inspire a couple other such insights said you know what we wanted to inspire too and that's what led to developing a national contract. It's the same thing that happened with Kaiser and 2019, where.
That's what drives those national contracts.
And so we are now completely through the valued committee with 150 those hospitals, all Bakken opened 150 of them, but it's certainly provides an avenue to get the first four five of those open.
But you wouldn't I'd, what's unique there is essential to also owns and operates a lot of as Ses.
And so that also provides a very quick avenue for us to be able to just do some training to get the is he's going especially in areas, where we need to build capacity.
And your last question Matt was.
The payers any updates.
Oh, it appears while United came out today I mentioned that already.
We continue to work, we pound with Cigna Humana and anthem are the three biggies.
Anthems annual review I think is August September and so we keep sending them all the latest greatest information but.
With all the other payers in places lot of pressure for anthem to do a positive review, especially where they are underneath the blue Cross Blue Shield umbrella and evidence Street. The tax assessment group for Blues has already written the positive. So we expect that theyre going to write policy in the near future and we certainly are pushing them to write policy this year.
And I will see if they are make us wait another year that being said anthem is a proven cases, although it they do take those.
Make those patients go to DMR for the most part which is unfortunate because it it is that three month timeframe begin approval.
Thank you.
Thank you ma'am.
Our next question comes on the line of Mike with Oppenheimer. Please proceed with your question.
Good afternoon, thank for taking my question.
Is there might be able to convert.
Sure. So we've been able to convert most of your in person patient education sessions into the virtual events mentioned and as it grows b.
How's the attendance if I could at those virtual events, obviously patients are distracted right now but in theory, there's fewer capacity constraints I think the virtual that.
Yes, that's a.
Unfortunately, Mike.
All of our in person community Hell Tox had to be council for good reason right and and those are always quite effective but what all of those have learned to be solo effective with his zoom meetings right and we remain on board calls and all of our team meetings are all on zoom or Microsoft.
James or whatever technology like it really has a nice tool for physicians to be able to communicate with with patients and so the attendance can vary it can vary anywhere from 10 to 12.
People attending a zoom conference towed to more than 20.
And whats interesting enough is after we do that at the.
Virtual health tax.
The first appointment with the physician does not need to be in person right I can do tele medicine with you and I can understand your history and when will you pressed when will you. This.
Diagnosed with sleep apnea and tell me about the different types of see Pat masks that you use on what's your physical characteristics. What's your lifestyle, what other co morbidities, what's your insurance company.
And it could really help to get through the the first educational session with a virtual healthtech get through the first appointment with Tele Medicine, and then once we get through instead scheduling office visits the patient so far down the road.
So I don't have the exact number of virtual health talks that we have scheduled but it's quite a few and if you go to our website on inspired sleep dot com and just type in a few ZIP code you'll be able to see that is readily accessible to attend one of those and you don't have to attend one of those and your hometown and Chicago.
You can go to Arizona you can go into two I think we've been doing some in New York.
That's great. Thanks, much too much I can squeeze in a follow up.
Every since you've updated the total number of patients that have been implanted I know it was recently over 70, okay.
Yes.
8200.
8200.
Alright, thanks much for ticket.
[music].
Our next question comes from the line of Ravi Mizrahi with Baron Bird Capital markets. Please proceed with your question.
Hi, Thanks, how you doing I hope the connections Okay. I hope you guys. Your families are okay.
Great Thanks, driving I.
I think we're all trying to figure out kind of you know what kind of shape. This rebound is and I.
Appreciate that data is low but it sounds like what you're saying is that that procedures and scheduling is coming back online.
Regards to the backlog I mean is a reasonable way to think about it you have these kind of 761 cases that have approvals plus whatever assumption of cases that you didnt get done got done in one Q as.
Kind of the low hanging fruit so to speak over the next couple of quarters and then as we work through the.
Diagnostic process for new patients you get kind of the.
The volume growth to Reaccelerate off.
And then maybe secondly, I'm curious as you get these operating rooms coming back online just what procedures are you competing answer I assume maybe to lack of your satisfaction, they're not all inspire procedures, but I'm just curious what other what are the surgeries or that you think that the hospitals gonna have to.
To go for and how are you guys fighting to get your procedures done.
Absolutely, Okay, Robby I'm going to make a little bit more complex, Florida.
It's not quite exactly the way that we can take the approvals from the first quarter because.
A lot of the implant that we did and you can you can approximate that by looking though by the revenue in the SP and the key is going to be the percent of the cases from Q4, the approvals that actually got schedule implanted in Q1, and how many of those approvals in Q1 have not yet.
Then performed.
In a in a nutshell, yes that is the basis of the backlog.
But there is other cases that are awaiting dice in those other cases that are getting their first deployment. So the backlog goes a lot deeper than that.
But thats a good way to approximate what our challenges as we come out a post pandemic mode and trying to get these things schedule. Okay. So switch gears and start talking about.
Competition have youre.
Interesting enough.
In in the second week of March we actually did two cases that long Island Jewish in New York City.
And the reason was is empty surgeon says this is 90 elective procedure. This has inspired retreating obstructive sleep apnea.
And so have you noticed today, winning is already locked up.
And in a lot of the.
Hospitals that were dealing with we kinda kras at CASM because of the quality of life dealing with sleep apnea the risk comorbidity.
That is not necessarily call than elective procedure and that's our several of the cases are big schedule today and that helps to surgeons a little bit with.
The competitive environment, then again when you start talking about the Ian T. suite, a lot of our surgeons are oncologist right and so they deal with cancer and Thats certainly has a very high priority, especially if they been putting us any of those cancer cases, those are going to take a priority.
The other good news on the other side of that is we are just a general operating room, we don't have specialty equipment right. We're not in the robot suite were not requiring any.
Equipments, such that we can do our procedures and just a general outpatient suite and lot of times hospitals have their outpatient.
Surgical suite, where we could do our cases, so that provides for a little bit more capacity and with the severity of the disease. It gets a little bit more priority and then unfortunately.
Financing does come into this and this is inspire is profitable to the hospital because as generates a lot of revenue and so that gives us a little bit more priority going forward.
From that standpoint.
Makes sense Ravi Downgrading I think I think you were a little bit more difficult less diplomatic than I was asking the question by really appreciate the appreciate the responds Tim just one more on the kind of financial incentives for the hospital.
The just curious you got to add on code for the lead for the surgeon now.
Is that something that the private insurer has also been paying for I'm. Just curious about the work you need to do there to work beyond the Medicare population on that thanks a lot.
Yes. Thanks.
The answer to that is yes, and so even today with United Healthcare. They list that code in the policy and when you when they look those caused those do get paid and we make sure that we.
Educate the surgeons that when there are dictating theres surgical notes in the all are that they identify inspire procedure in the identify 6456, a mad densify 046, 60 to make sure they get all the appropriate CPT codes, so when the coating people.
But I'll update they capture that and they can get paid for it. So yes, we do have evidence that commercial payers have band paying for that additional work with the pressure.
Nothing lead.
Our next question comes in the line of Kyle Bowzer with Dougherty and company. Please proceed with your question.
Hi, Thanks for squeezing me in here and I hope, you're doing well down the road here Atlas.
So quick quickly.
On the competitive front you know we sat in Nick So a out there doing a funding round I know theres out there what are you sort of see and on.
Regarding data and expected entering into the market.
Well Unfortunately from a competitive standpoint.
All very they are Bolton and a clinical phase, where they need to do clinically and plans to be able to collect data.
And.
Unfortunately, with everybody else all of their cases praveen had to be suspended as well. So I bet. There are working diligently to try and get their clinical sites bad back up and running to be able to start collecting clinical information.
To be able to proceed towards regulatory approvals.
We on the other have been able to spend.
As we talked about with our opex to be able to develop our next generation neural stimulator. So we've been pushing really hard to keep the advancement of that going so maybe maybe in a in a strange way. We can say that we picked up a little bit a time in developing our our technology above our competitors.
Ability to collect clinical research sure right.
Got it and then just for clarification, so kind of following up on John and Matts question. So.
In regards to an expanded indication is is the plan to kind of continue to expand the label into the younger age range or you want to go at it from the other direction in any of you just go after the pediatric down change on market first and then unlock all the pediatrics.
Beyond down syndrome, I mean, how how have you been thinking about it.
Well again I'm going to highlight that our focus is on the general cell population keep growing the adoption, but that being said for indication expansion.
We still want to pursue.
A general sleep apnea indication for the younger age patients.
And as just an example, if I started looking at patients.
Ages 10 to 21 years all.
For the H. I have 15 or Bob we're talking about 50000 patients and of those 50000 patients maybe.
2500 to 3000 or those have down syndrome.
Now it is probably true that the adoption rate in the down syndrome group would be would be higher but that's also a small number patients that are really spread out. So it's an important indication so as to be able to provide an important therapy inspired therapy for that population.
But I think is more important to be able to provided in a general general indications not related specifically to down syndrome. So we worked extensively with.
The FDA, we traveled there to make sure that we understood where the how they were looking at it we had the pediatric NPS traveled to the FDA to make sure. They understood. What FDA is looking for and there is just a basis that that does sleep apnea can resolve.
And in Pediatrics, and we need to do just some more post.
Right retrospective review.
Have a pediatric population not necessarily with inspired to show some of those clarification, but we're going to do that research we're going to continue with down syndrome trial and were kick in that kind of continue to work with the FDA to expand that indication.
Okay got it thanks for taking the questions.
All right. Thank you got.
There are no further questions into Q I'd like to end the call batter management for closing remarks.
Thank you very much for joining the call today as always I am grateful to the growing team of dedicated inspire employees for their enthusiasm hard work and continued continued motivation to achieve strong and consistent patient outcomes.
The inspires team inspired team's commitment to patients remains unmatched and it's the most important element to our success.
I wish to thank all the employees as well as the health care teams further valiant effort. During this pandemic and further resiliency as we begin to reschedule patients have many sites in the euros in Europe.
For all of you on the call. We certainly appreciate your continued interest in and supportive inspire and look forward to providing with further updates in the coming weeks and months.
Please stay safe unhealthy. Thank you very much.
Ladies and gentlemen, this does conclude todays teleconference. Thank you for your participation you may disconnect. Your lines at this time and have a wonderful day.