Q2 2020 Acutus Medical Inc Earnings Call
Second quarter 2020 earnings conference call at this time, all participant lines are in a listen only mode.
After the speaker's presentation, so that will be a question and answer session to ask a question. During the session you will need to press Star then one on your telephone we ask that you. Please limit yourself to one question and one follow up please.
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I would now like to hand, the topics over to your speaker today, Caroline corner and Investor Relations. Please go ahead.
Thank you operator, welcome to acute <unk> second quarter 2020 earnings call. Joining me on today's call Urban Burgess, President and Chief Executive Officer, Gary Doherty Chief Financial Officer.
This call will include forward looking statements within the meaning of the private private Securities Litigation Reform Act of 1995, all statements made on this call that do not relate to matters of historical fact should be considered forward looking statements factors that may cause results to differ from these forward looking statements are discussed under the forward looking statement section and acute as a form 8-K.
<unk> filed with Sep today and are also discussed in more detail under the risk factor section and acute as his most recent filings with the FCC, including the risk factors described in the cutest the form S. One and an acute as its quarterly report on form 10-Q for the second quarter ended June Thirtyth 2020.
Any forward looking statements provided during this call, including projections for future performance are based on management's expectations I thought today accuses undertakes no obligation to update these statements except as required by applicable law.
I just was press released its second quarter 2020 result is available on <unk> website, Www Dot Akita's medical dotcom under the Investor section and includes additional details about accuse us of financial results.
Because its website also has the latest SEC filings, which you are encouraged to review the recording of today's call will be available on the cutest website My five P.M. Pacific time today now.
Now I would like to turn the call over to Vince for his comments on second quarter 2020 business highlights.
Thank you Caroline and thank you everyone for joining us today on our first earnings call as a public company.
Hopefully most of you saw the news that we had our successful IPO on August 5th the no trade on the NASDAQ exchange entered the acute.
The symbol <unk> said.
Well, we have only been public for just over a month and were probably that for all of the Q2 I'm pleased to provide an update on our business today.
Before I turn it over to Gary to review the Q2 financial results.
Before the business update I'd like to provide an overview of acute is for those who are newer to the story.
And why our company's mission to improve the way cardiac arrhythmias are diagnosed and treated is so important to us and to patients and to the physicians and the electrophysiology community.
To review the Cutest medical was founded in 2011 in Carlsbad, California, as a pure play Electrophysiologist company, whereas we say an EPA company or.
Our company is committed to helping physicians manage regular hurt rhythms or arrhythmias and to advancing the E. P field with an array of products and technologies, which enable more physicians to treat more patients more efficiently and effectively.
Through internal product development acquisitions in licensing technology distribution agreements and global partnerships.
We have established a global sales presence delivering a portfolio of highly differentiated E P products.
Our goal is to provide our customers with a comprehensive solution for the treatment of cardiac arrhythmias in each of our geographic markets.
Our foundational product is our acumen imaging and mapping system. This system offers a unique approach to mapping be electrical impulses are the heart and finding the source of arrhythmias with unmatched speed and precision.
Our argument system can readily and accurately identify targets, so physicians kind of bleed tissue to interrupt Aaron signals and enable normal heartbeats.
We can also help confirm both ablation success and procedural completion in real time.
Additionally, with our system. The Electrophysiologist can quickly perform patient specific integrative treatment methods, where they may.
Were they map and ablate map, an employee and mapping to Blake.
This isn't market contrast to the conventional contact mapping approach currently used by our competitor imaging companies, which do not facilitate rapid whole chamber mapping and imaging.
Our system is also you need and then it can map any ATRIO arrhythmia from the most basic to the most complex irregular rhythms, which allows the clinician to use our single platform broadly across their E. P patient population as a true workhorse system.
Let me help frame our opportunity a bit.
The global Electrophysiology ablation market is large and has historically been dominated by a few large companies and we have seen limited innovation with products or progress with outcomes over the past decade.
We estimate that in 2019 global E. P. Ablation product revenues were approximately 5.7 billion annually, which corresponded to about 1.1 million ablation procedures performed during the year.
Heart arrhythmias are generally correlated with advancing age and are often a lifestyle driven condition with.
With demographics, and our west Western lifestyle play as large as the market is today. It grew at an impressive 13% per year from 2016 to 2018.
If you were to extrapolate this group it suggests global E. P ablation product revenues in excess of $10 billion by Twentytwenty four.
Much of our recent focus has been on patients with recurrent arrhythmias, including conditions known as persistent atrial fibrillation eight.
A typical flutter and complex cardiac.
These patients often have endured multiple ablation procedures, yet still suffer from their irregular heart rates with accompanying shortness of breath.
Rick risk of stroke risk of heart failure, and overall low quality of life.
These various arrhythmias can really be disabling conditions and many patients and these patients frequently spend time being treated and retreated to limited avail.
With that backdrop I'd like to share with you a recent case, which underscores the utility and importance of our disruptive paradigm shifting technology.
This case involves a 55 year old male patient who was a former professional cyclist with a long history of heart arrhythmia is complicated by another condition pulmonary beans the notices.
Excuse me too.
Who had sadly gone through seven prior ablation procedures.
A few months ago, the patient began experiencing multiple daily symptomatic episodes.
What is called each real ticket Cartier and atrial flutter.
In other words every day this patient was experiencing suffering from wildly regular heartbeats.
After seeking medical advice due to his extensive history of prior ablation. He was told to in quotes lived with it.
Frustrated the patient reached out to acute as chief Technology Officer, greed and baby. He met during one of his earlier ablation procedures years prior to learn more about the new system.
Great and then referred the patient to a nearby physician training on the document system, who felt that the ultra high resolution maps created by the acute a system can help identify the trouble spots and more accurately guide be ablation do.
During the procedure, which was performed in Brussels ultrasound was used to reconstruct a CTO quality right ATRIO anatomy once mapping was underway.
Atrial Tech Cardia was easily seen and the data to map. The electrical impulses were were was recorded over 30 seconds.
Thank you Matt system, then produce three maps from three different time points, each requiring only three minutes to create the maps consistently reproduce the same conduction patters and the same locations the areas, causing me aberrant patterns within a belated terminating neutral tactic Cartier.
And returning the patient to normal rhythm.
I'm happy to tell you that 24 days post procedure the patient happily remains in normal sinus rhythm.
As a side bar, we have daily internal reviews for our entire company, where we share the salient points of important cases done the previous day from around the world. This.
This serves several purposes, such as keeping our development teams updated with daily feedback from the field, but most importantly, and most notably keeping the entire akitas team grounded and the most important thing we do help physicians provide great outcomes for their patients.
Now that I've explained a bit about who we are I would like to now turn to our second quarter performance and walk you through some highlights.
First as I'm sure you've seen with virtually all medical device companies. The second quarter of Twentytwenty provided some truly unique challenges due to the ongoing pandemic here.
Tiered acute as our team responded quickly and start to make the most out of a very difficult situation.
Actions during the pandemic, we're first and foremost to keep employees business partners and customers since well.
While maintaining safety front of mind, we formulated and executed on plans to improve employee and condition clinician training maintain frequent contact with our customer base, including both existing customers and those in our pipeline and negotiated console placement contracts after.
Eight temporary manufacturing pause to ensure worker safety during a reorientation of our assembly line.
We also successfully built inventory and safety stock to ensure continuity of product availability in the event of future supply challenges, which thankfully have not materialized.
Remarkably we also conceived designed and conducted our own three day online Electrophysiology 3.0 symposium in just five weeks following the announcement of the cancellation of the any person heart rhythm Society meeting due to Covance.
The team in May.
Our internal screening efforts are highly focused on our field clinical personnel, who attend each case and operate the mapping system for the Electrophysiologist we were.
We refer to these operators as mappers the math.
The map or is an integral component of the procedure and works closely with the clinician and the nursing staff.
When fully trained Mappers work alongside the clinicians during the cases.
Provisional Mappers are trained on the system, but are still working alongside a more tenured mapper during the case.
At the end of June we had 17 fully certified and six provisionally certified Mappers worldwide. This is up from the 13 fully certified and zero provisionally certified Mappers on March 31st.
As of today, we have 24 fully certified Mappers eight provisionally certified Mappers and five new hire mappers in various stages of evaluation and training.
Please note that it is not our intention to update these figures on future calls, but we elected to do so here to provide a snapshot of our company and where we stand with the build out of our commercial team given the headwind headwinds around coded and our early launch.
Stage.
Well some parts of our business, such as hiring and training Mappers country.
Continued with minimal interruptions, we did see impacts from the pandemic.
We saw a significant decline in the number of procedures during March and April timeframe as many of the E. P labs, where we have our consoles in the us and Europe ceased or severely curtailed operations.
We also experienced reduced access to hospitals for Mappers commercial teams, although our preparations enabled our team to quickly respond as facilities reopened and will be regained access to the P. labs.
Generally electrophysiology services at hospitals returned to procedural activity ahead of other specialties as patient discomfort and the progressive nature of the disease motivated physicians and patients to find ways to safely reopen.
Cobra drove substantial financial pressures for hospitals, and the beneficial cash flow hospitals see from E. P procedures acted as a further tailwind for the return to activity for each key labs.
Moving on from our Cobot response, I would like to frame the main revenue drivers for our business and our growth plans.
A major focus today on the commercial side is to grow our installed base of vacuum up systems growth in our installed base is foundational to our revenue expansion plans over time. It is simply put the razor of our portfolio of razor blades.
We are also focused on driving increased utilization of the consoles. This.
This includes both the number of procedures and the types of procedures performed by clinicians using our system.
Increased utilization feeds into our third growth driver expanding the range of acute is supplied disposable products used per case. This involves various mapping therapy access septal crossing.
Domestic catheters.
Moving on I'd like to review our progress with the pack you Matt console placements.
During the second quarter of Twentytwenty, we grew our installed base by a net of seven consoles to reach a worldwide total 38, consistent with what we disclosed in our IPO prospectus.
Despite cobot headwinds. Please note that we installed 10 of our Gen. Two councils during the period, bringing the total worldwide total to 21 Gen. Two councils effectively doubling our gen two population.
Three of the Gen. Two councils placed during the quarter were swaps for the Gen. One consoles already in service.
As a reminder, our gen. Two console is our recently launched full commercial platform with features and functions that surpassed the capabilities of our first generation consoles.
As the second quarter began we saw essentially complete worldwide shutdown, a VP centers due to covance.
As was previously mentioned, we turned our attention to several activities with a goal of generating console orders that we could quickly bring into service once hospitals began returning to normal operations.
As the quarter progressed, we did see hospital access return it and by June we were able to work with many of our existing customers as well as new customers at levels close to what we observed before the pandemic.
In summary orders per console placements that we generated early in the quarter were largely worked through by the end of the quarter.
To provide a bit more recent color in the third quarter of 2020, we are seeing continued recovery in terms of you E. P lab operations and we feel comfortable saying, we expect to see a steady cadence of console placements, while acknowledging that there could of course be sporadic.
Cobot impacts on our plans.
Moving now to case volumes, we saw similar interruptions and similar recovery late in the quarter.
As we executed on our full commercial launch plans early in the first quarter of 2020, both January and February were tracking well and we experienced steadily growing procedural activity.
Given our European presence, we saw initial procedural cobot driven cancellations begin in late February and.
And further deceleration during March which is when the U.S. also saw cancellations and EPA.
Let them.
As you would predict procedural activity for E. P slowed dramatically going into April as hospitals prioritize resources towards combating the pandemic with resulting delays and rescheduling of non emergency procedures.
Due to the time sensitive treatment needs of arrhythmia patients as well as the favorable cash flow from these EPA procedures for hospitals E.
He was one of the first hospital based specialties to see recovery.
With these factors at play we saw May move towards normalcy and by June we were seeing levels of Peru.
Seadrill activity returning to the pre Cove at levels that we had seen early in the year in many accounts.
More recently, we saw July and August TP lab activity comparable to what we observed in June although we did see some normal seasonality impacts due to European summer vacations, which we would also expect in future years.
I would also note that we have a significant presence in the UK, which you may know has lagged the rest of Europe somewhat in restarting normal hospital at EPG Lab operations. We are now seeing reopening and most of our UK sites and are hopeful we will see them quickly rigs.
In their prior procedural activity levels.
I would I would like to now turn briefly to our revenue per procedure.
Our us revenue per procedure was approximately $5500 for the second quarter of 2020.
Please note that we won't be providing a quarterly update on this number but wanted to give you a baseline number so you can understand our business.
It is our goal to increase this number as we get into more procedures with more products to that end, we have been increasingly able to sell our transseptal access accurate introducer sheath products alongside our acumen catheter and act you guide catheters into procedures, we are guiding with.
Mapping system.
It is our goal that revenue per procedure will increase as we add additional products to our sales forces bag overtime.
During the second quarter of 2020, we entered into an expansive global alliance with a Buck and bidirectional distribution agreement with bio tronic, a large privately held German cardiology company that focused primarily on cardiac rhythm management.
Summit and sells devices, such as cardiac keeps space pacemakers and implantable defibrillators.
With this agreement in place, we are able to make definitive progress towards addressing developed markets around the globe by leveraging bio tronics substantial sales distribution infrastructure and global reach has.
As just one example, we can now more readily access major markets, such as Australia, and do so far sooner than we otherwise would have been able to do on our own.
As we will discuss later, we generated our first revenue associated with our Biotronic agreement in Q2, and we are really pleased with the relationship so far.
For the distribution of acute as spot products by Biotronic, we kicked off a series of launch calls with the five countries bio Tronics is launching into initially and began our engagement with local biotronic teams in those markets or hand off of existing accounts.
Elsewhere in the business or clinical and regulatory teams have been diligently working through the process to initiate three separate I'd. He studies for our therapy catheter lines and received a key regulatory clearance in Q2.
As we previously disclosed for the US market, we plan to submit two separate trials for accumulate gold tipped irrigated radio frequency for sensing ablation catheters with both expected to commence in the next six months.
But first which is seek seeking a REIT atrium flood or indication is expected to take about two years to complete and obtain premarket approval or pms.
Based on current timelines, we expect that to be commercially commercially available in late 2022.
The second is seeking a paroxysmal and persistent atria fibrillation indication in the us market and will take approximately three years to complete.
And obtain a premarket approval, which means we currently expect to enter the U.S. market potentially in late 2023.
The final trial involves our partnership with Biotronic and relates to acute as private label versions of a series of Biotronic source platinum Iridium gold tip ablation, catheters, which should take approximately two and a half years to complete which me.
Which means we expect to receive pre market approval around the first half of 2023.
Last week, we announced a pre clinical update regarding our post field ablation or PFS <unk> also known as Electroporation program.
P.F.A. is an emerging ablation modality that delivers therapeutic energy faster and more selectively with minimal collateral damage when compared to traditional thermal ablation.
Our product development team team coupled the use of our acumen system Arkema mapping system with Pierre Fabre delivered using a version of our gold ablation catheter and demonstrated the potential to substantially shorten procedural times well enhance.
Safety.
Post study analysis indicates that durable non conductive lesions were created without damage to collateral structures confirming our hypothesis that rps say, maybe highly tissue selective.
We are very excited with the possibilities here and what our efforts could lead to for the field of electrophysiology.
In the second quarter of 2020, we received important regulatory approvals and made a number of submissions to the FDA we all.
We also received a key clearance this week that we want to call your attention to.
I'll run through a few highlights now.
We submitted our actually map catheter 2.05, 10-K application during the second quarter of 2020.
<unk> is a key product evolution for us as it will combine a meaningful production cost reduction with.
With enhanced capabilities, including improved torque ability handling and faster acquisition times as.
As a late breaking development I am very pleased to tell you that we received this five 10-K clearance from the FDA just this week and we provide more detail in the press release that went out today.
In Europe in the second quarter, we received CE Mark for accurate Introducer sheath. This product has integrated electrodes that eliminate the need for other introduces the quality quadripolar reference catheter.
Saving time and money during a procedure and further improving accuracy and consistency of our mapping system.
We also completed our patient electrode kit 5.05, 10-K submission in the quarter.
This evolution in our hydrogel patches improved kind of current activity while at the same time, reducing size, which provides patient and procedural workflow benefits.
Looking ahead, we are excited by the opportunities before us as we continue to rollout our acumen system we.
We foresee continued expansion of our installed base of vacuuming consoles further progress with our distribution agreement with Biotronic.
We are working closely with our customers to further accelerate our utilization and ERP cases.
With that I'll now turn it over to Gary Doherty CFO for our financial results Gary.
Right.
Thank you Vince and good afternoon, everyone our reps.
Our revenues for the second quarter of 2020 were $1.1 million compared to $1.6 million for the first quarter of 2020 and up point Fourmillion from point $7 million for the same period of the prior year.
Q2 revenue was within the preliminary range, we disclosed in our IPO prospectus.
Revenue increase observed the second quarter of 2020 relative to the same period in the prior year was driven by the expansion of our installed base. Following our full commercial launch which began at the tail end of the fourth quarter of 2019, as Vince mentioned Coven 19 drove a procedural declined during the second quarter of 2020 relative to the first quarter of 2020.
And was the primary driver for the decline in revenue between the periods.
As with many other medical technology companies our results during the second quarter of 2020 improved from a bottom during the March and April timeframe as we progressed through the quarter.
Gross margin was negative 135% for the second quarter of 2020, compared with negative 232% in the second quarter of 2019 and negative 102% for the first quarter of 2020 overtime and then advance of our full commercial launch we have made significant investments in our manufacturing infrastructure support.
<unk> requirements and position us to scale production in house as our business grows as volumes increase we expect to see the benefit of these investments and improvements to our margin profile.
Gross margin during the second quarter of 2020 with positively impacted by greater production volume and comparatively greater efficiency indirect labor and manufacturing overhead absorption versus the second quarter of 2019 covert 19, it negatively impacted production levels. During the second quarter of 2020 relative to the first quarter of 2020 with direct labor in May.
Refactoring overhead absorption levels declining as a result opera.
Operating expenses were $17.9 million in the second quarter of 2020, compared with 12.2 million for the same period of the prior year.
R&D expense was $8.2 million in the second quarter compared with $5.2 million for the same period of 2019. The increase in R&D expense was primarily driven by console enhancement and catheter development projects.
SGN expense was $9.1 million in the second quarter of 2020, compared with 6.9 million for the same period last year.
Chris was primarily due to the expansion of our commercial team in conjunction with a full launch and an increase in GNS incurred in anticipation of our becoming a public company.
Do you want to call out one noncash item of our operating expense, which was a $635000 increase to our contingent consideration liability for our expected revenue based earn outs to rhythm science.
The primary driver of this increase liability with an improvement in our implied credit rating as a result of improving broader market conditions and our subsequent SEC successful public offering. These two factors had the effect of lowering our discount rate and increasing the contingent consideration liability, which drove the noncash piano charge, we want to emphasize that.
Our underlying assumptions around rhythm science product performance, particularly the revenue expectations for the acquired product line did not change and remain very strong.
I wish to note that future rate movements could result in entries of a similar non cash nature during our normal quarterly valuation process going forward.
It would be unlikely to see two significant events like the pandemic rebound and an IPO in the same quarter.
Net loss for the second quarter of 2020 with $23.2 million compared with a net loss of $30.3 million for the same period of the prior year. The net loss during the second quarter of 2020. It reflects a two and a half million dollar fair fair value Remeasurements of our common and preferred stock warrant liability given proximity to our pud.
Click offering much like the contingent consideration discussion a moment ago as the quarter progressed transparency around the successful public offering improved and we reduced the discount rate used in the computation again. It is important to note. This is a noncash valuation driven accounting entry that given our subsequent successful pop or public.
Offering will not be recurring.
We effected a one for 9.7 to four reverse split of our capital stock on July 28, 2020 in anticipation of our IPO, we have retrospectively adjusted shares to reflect the impact of the reverse stock split for all periods presented the net loss per common share for the second quarter of 2023.
$2.24 with weighted average basic and diluted shares or 719421, compared with a net loss per share of $45.70 with weighted average basic and diluted shares of 663972 for the same period of the prior year. It is important to note. These figures are.
Based on share count that do not reflect the conversion.
16.6 million shares of convertible preferred stock to common nor the issuance of 10.1 million common shares at the IPO beginning in the third quarter of 2020. These additional 26.7 million shares will be included in our calculation of weighted average basic and diluted share counts, which will significantly reduce our net loss per share for.
Future reporting periods as compared to reporting periods prior to our IPO.
Finally, before I close out the panel discussion I want to make note of an expense that will occur in the third quarter of 2020 more specifically as we completed our technical accounting review of the IPO and related activities in August and September we determined the need for a one time $3.8 million stock compensation expense entry.
Associated with performance based restricted stock awards, where performance conditions were met upon our IPO given the size of this expense we wanted to foreshadow. This charge for you now as it will be reflected in our third quarter 2020 statements again to be clear. This is a noncash charge that will not recur as it was triggered by the successful completion of the IPO.
Oh.
I'd now like to move on to a few balance sheet update our total.
Our total cash balance at the end of the second quarter of 2020 was 29 and a half million dollars. During the first six months of 2020, our cash flows from operating and investing activities were negative 35, and a half million compared to negative $22.1 million. During the first six months of 2019.
Increased cash consumption stems from investments in the expansion of our commercial organization R&D project expenses and other expenditures expenditures related to our full commercial platform launch.
As a reminder, our August 5th public initial public offering yielded $169.9 million and proceeds net of underwriter commissions and we believe the resulting cash on hand is sufficient to fund our current operating plan with that I'll now turn it back over to Vince for closing remarks.
Thank you Gary.
In closing I'd like to acknowledge and thank our senior management team our employees our board members advisors and their investors and in particular, our physician partners for everything everyone has done to bring acute as to where it stands today.
In my view to build what we have is something of an accomplishment and speaks to the vision and operational capabilities of this team.
We are excited by the future and pleased to now have the resources from our recent public offering to fuel our plans to bring much needed change and innovation to the field of electrophysiology.
With that I'd like to thank you for your attention and I'll now turn the call over to the operator for your questions.
Thank you as a reminder to ask a question you need to press Star then one on your telephone to withdraw your question. Please press the pound key we ask that you. Please limit yourself to one question and one follow up.
Our first question comes from the line of Robbie Marcus with JP Morgan. Your line is now open.
Great. Thanks for taking the question and congrats on the first call as a public company.
Thanks, Rob.
Thanks, Rob you know maybe.
We can start with what you've seen so far.
Maybe in third quarter, if you're willing to comment the world's a lot different than it was even at the end of June.
We continue to hear that trends are moving in the right direction.
It's also been several months since some of your initial placements with the second Gen system has had some time to make sure I was wondering if you could give us just some color on the trends you've seen so far and in third quarter hearing feedback on the second Gen system.
Yes, Thanks, that's great great question.
So.
The.
Obviously, we've had are we're pretty busy in July two in the IPO or.
Our.
Hey, ear to the ground very very carefully with our commercial teams in in Europe, and the us with their partner Biotronic, just trying to keep track of and get a sense of what's going on in hospitals in our markets and the T. services more specifically.
During during the summer months et cetera.
You know really got pretty can quite consistent feedback im really encouraging feedback from.
From from all those inputs.
In terms of.
The P. services figuring out a way to get back on line has particularly in the us and in some European markets physicians are just really eager to get back to work.
And took some pretty pretty aggressive in an extraordinary measures to get the hospitals and the peak volumes back up and running figured out a way to kiss discharge patients same day. So patients families didn't have to worry about overnight stays in the hospital.
And.
Any manner different small and large steps that could take to get back on line.
That was really encouraging and we were here in kind of the same things in Europe and and in the us.
One exception I would say to this is the UK. The UK has been slower to come back online and just had trouble.
Yes were very hard hit over there and in many ways.
In many ways kind of changed a lot of really modern hospitals into the field hospitals and anticipation of and the reality is dealing with the outbreak.
[music].
They are starting now and I think most of our hospitals in the UK are back.
Okay just to speak for the most part at least fully.
Fully operational it may not be at 100%.
In addition to just having your ear to the ground Ive actually personally spent a good chunk of the last three weeks in in Orlando, where I am today, where you might have heard that thunder and lightning in the background.
Actually in Greens doing cases talking to doctors administrators, just understand what's what's going on to make sure we have a.
Most of this business have been doing cases in Las Vegas, and in Orange County, as well as all three weeks just trying to get to get my arms around things and ill tell you. It's it's it's really encouraging that synergy.
Centers are really back up and running we have some centers Robbie that I think are probably operating at above prior capacity. We have some that are getting pretty close to add capacity. There. There are some that are still maybe at the 60% to 70% level in the us.
So that that's really encouraging and I think I think we're benefiting proportionately.
To the overall the overall trend there.
Or to your question around the the Gen. Two we are really pleased with how those installs are going what are our teams have just done really miraculous things to get those units installed.
It's certainly takes some some.
Some gumption if you will.
To get with administration, that's dealing with these.
Different hospitals that dealing with all manner of distractions from kogan related issues and financial stresses and whatnot to get people to focus on contracting for replacements and the like but our team has done a terrific job doing that both in the us and in Europe and in the UK.
So we're very happy with that the installs once they go in I think these are these are generally going well if you recall the gen two system.
Has expanded functionality, we can plug in virtually anything they use into any p. lab into these consoles.
And.
And these councils also were upgraded with our most advanced and and state of the art.
Supermarket imaging software and now just as of the last couple of weeks now our commercial grade contact mapping software, which really turns this this mapping console, which back when we were really a gym with our gen. One we were really focused on this.
The segments of the market described is persistent afib and redo procedures or three news report is in some cases on.
Here, the new the new system with the new software.
Really it's a workforce and over the last couple of weeks I've seen physicians flip between contact them on Camtek mapping during the case obscene.
Non contact cases convert to.
To contact during the case of seeing people see position start.
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A standard run of the mill paroxysmal contact mapping case using or.
We are and they see some kind of a funky ticket cardio mid case and they convert over and open up one of our baskets put it on the table, putting in the patient and tackle.
What they thought it might be a right atrial flutter turned to be a turn.
Turned out to be a left atrial flutter.
With with speed and efficiency and just terrific outcome. So we're very happy with it.
You know kind of how the how the plan is playing out.
Great maybe a quick follow up Gary the second Gen mapping catheter, which just got approval and my understanding is that comes along with a much better cost profile for you how should we think about that rolling into financials now that's approved.
Sure you are correct. It does have a favorable profile as far as the direct cost of units are concerned and.
And we discussed this in our.
Our TCW meetings, another another a forums and it will be immediately at least 25% cheaper on a direct cost basis, we will be rolling that out into production in the very near term and.
And there is something of an element of our strategy around it.
To ultimately supplant all the Gen. One catheters that we have out in the world. So we'll be seeing that margin pickup.
In future periods.
We're very confident we're very happy with it the reception around it from a late development stage point of view was outstanding and so.
And so we're really looking forward to getting this going.
Great appreciate the time thank you.
Thanks, Jamie.
Thank you. Our next question comes from the line of Bob Hopkins with Bank of America. Your line is now open.
Oh, Thanks, and good afternoon.
Hey, Bob Hey, Yeah. Thanks for taking the question. It just you covered a lot of ground in your prepared remarks, and the answer to Rob's questions. I just have two quick ones I mean regarding what you said about the third quarter.
You know given that we're we are 85% through the third quarter just about so im just curious you know consensus is around $3 million in sales and around 51 units you guys roughly comfortable with those numbers given what you're seeing thus far through the quarter.
Yes, I mean, this just as a call to to focus on.
Our number number one to just give full color to the Q2 numbers and also educate folks that come into the stock and maybe didn't didn't understand the full story. So we're really focusing there as.
As I as I mentioned in my earlier.
Sponsor I'll be we're we're very happy with how the plan is working right now so.
I can't comment on exactly where we are but we're very pleased with the commercial execution of our team and the performance of the products and feel like the plan is working okay. Maybe ask it a different way. They are there anything anything that's you know over the course of the last couple of months given it is that unique volatile time, we've we've code.
Bid and the early stage nature of your of your rollout anything that surprised you. You know you know in terms of what you're seeing in UK being a little worse than expected or seasonality, where you know are things kind of playing out as you thought just curious if there's anything that of your transpired that are different.
Yeah, I mean, it's kind of it's kind of.
It's kind of a one of those so.
Small numbers kind of issues, we don't have thousands of the council that hundreds of phone sales. We've got our installed base out there. We do so we are seeing I'll just call. It puts and takes rates. So on the one hand, the other seasonality, which we anticipated.
There's and there, there's obviously waxing and waning of Covidien certain centers on the one hand on the other hand, we.
We are seeing.
Really encouraging adoption some of our centers you know I think.
I think you know in the past we've talked about.
Looking for things like one one case, a week and fund back.
On balance and we have some of our centers that were two things that really taken root and we're starting to see.
Yes.
Yes.
There's significantly higher case volumes than that.
As they once they get their hands on the contact mapping capabilities sit back and say Wow. This is this is something that I think this is it can you.
Can you just on my bread and butter cases.
And so you know that's pretty.
That's pretty exciting the everything is working for US right. Now is we have in addition to our consoles and the and the consumables that feed off of those consoles. We also have our or left chart access so crossing product portfolio and our Acura catheter.
That both of those product families.
Are actually being taken in by centers don't even have our mapping system and in many cases by centers not from the electric physiology service, but from the structural heart and interventional cardiology service for their fighting utility in procedures like the the mitral equipped procedure.
And only a watchman type procedures. So I guess, Bob it's it's puts and takes we feel like the plans work and.
There are there are moving pieces and levers here and there, but but on balance we're very happy with how the teams doing okay.
Okay fair enough. Thanks, so much for taking the questions.
Yes.
Thank you.
Then comes from the line of Bill Plovanic with Canaccord. Your line is now open.
Great. Thanks can you hear me.
Hi, Bill how are you Hey, Bill good evening.
A couple of questions here, just I think you've given us some color, but I was wondering if you could just give us a little more on some of the mapping utilization trends you're seeing between the three solutions that you're offering.
Given this a little taste to that but if we could get a little more I think that'd be great and then my second question is on the Mappers you did.
You gave us some granularity in terms of the numbers and I appreciate that is there.
Is that a global number or a domestic number.
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Yes, so what I would say in terms of the utilization rates for the three modalities you refer.
Turning to a single position for complex arrhythmias are Superman protect these inflows and contact map and I would say contact.
Hi Tech mapping is early days, we literally release that that product and its commercial for just over a week or two ago. We once it installs across our entire fleet. It actually can be installed in a full budget into and our gen. One so.
Systems, but.
But there is a training component to that we have to ensure went on hoppers are fully trained.
ER physicians are in service and detailed appropriately. So it's early days there, but as I said earlier I wanted to witness this product and see it and feel it with my own eyes, and that's why I got out in the field over the last three weeks and I.
Really happy with what we're seeing that so I think we're going to do very well there.
Super map.
She is a rock star product for taxes, and splitters Weve seen great uptake in Europe.
Late last year early this year, one like was normal pre pandemic and we believe we got we got approval for that product February I think it's a cheap couple of 14 days or so in the U.S. before the pandemic kind of starting to take root.
This product performs extremely well.
I'm excited to see what we can do with it.
When we review as we come fully back online with fully train members and easy Werent distracted with.
Everything had been distracted with over the over the coming months and our and our single position MEP for complex arrhythmias.
This is doing great. We got some new clinical trial designs that we're rolling out to our our clinician base via some cable feedback we've received over the last couple of months.
And I feel I feel great about about how we're doing there. So that was the first part of your question.
I think I know.
I'm not sure I'm completely on the second part of your question. If you could just repeatability bulges shared no problem. It's just gotten them effort as you provided us with snacks will numbers at where you were at the end of June and then where you are today with the certified in the Provisional was that a global number are you less number.
Those are global numbers.
Okay, and then lastly, if I could follow up on the recovery do you have that.
I think we with that your if I remember there was an update we might have gotten some data at the back half of this year and a lot of the studies have been slowed down due to covance, but just kind of curious if.
Yes, we're going to still see that data at the back half of this year and if I'm correct on that.
I think we're looking at the first half of next year, we had a slight slowdown, but I think we are now.
I believe.
So I think the first half.
21.
Excellent. Thanks, Thanks for taking my questions.
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Bye.
Thank you.
Our next question comes from the line of Maria level.
The T.I. James Your line is now open.
Hi, Vince I, Gary Thank you for taking the questions and congrats.
First public call here.
Right.
Off the question around your visibility into the funnel.
New console placements I think you're a little bit unique in that there's the systems are put into a lab for an evaluation process and then you work through that contracting with the administrator. So I'd love to hear a little bit about your certainty around what you can accomplish in terms of that funnel near term.
Yes, I mean, we're being very thoughtful about where we place to the units and.
So we don't we don't and unit place without proper deep.
Detailing without thinking about the profile of the center and their perspective on <unk> ablation strategy and so were.
This is not a carpet bomb kind of a business strategy or philosophy. So we're very careful about where we place the units.
In in the new World that we live in a even even pricing systems for.
Long term demo.
It takes time and you have to go through all virtually all of this and contracting processes.
And signing contracts and agreeing on purchase orders and everything else has to do for you know a large.
A large multi hundred thousand dollar cash purchase.
These processes take time.
And you know.
I think it's probably fair to say that.
The folks that we negotiate those contracts with.
Or they have a lot on their plate these days.
With that covered and everything else that's going on we have seen over the year 18 months or so we've been at this in the United States.
We are we seeing that this process can take anywhere from from first introduction and a champion physician, losing his or her enhancing its just something we must have access to and our SLM it might.
It might take you know historically.
Historically, two and a half to five ish kind of months to get through that process on generally speaking.
Certainly we have experienced certain accounts over the summer and in the spring months, where it took a little bit longer than people thought, but I will tell you. We have also experienced again, it's puts and takes we've also experienced accounts that have.
Come to hear about what we're doing and what we're bringing to the party here and moved it with increases including hearing recently had moved in with lightning speed to get contracting down to purchase workers issue.
So, yes I would.
I would say on balance we're seeing basically we're not seeing any sort of material change and when what that overall process looks looks like or how long it takes.
But if you've seen one you've seen one I mean, each each each interaction is because it takes on its own.
Set of.
Particulars.
Okay. That's really helpful and speaking of what you bring to the party I'm curious whether there's been any.
James in the competitive landscape given some of the I would say maybe heightened attention around the technology as you've been debuting at this year and possibly some added buzzing around the IPO and things like that if anything's changed with your competition.
Okay.
Well.
Well the I would say.
Sure getting a lot of interest from.
People that work for.
Understood are interested in what we're doing.
And.
You are interested in learning more about us.
For because maybe.
Maybe they're interested in working with a company that is smaller and more aggressive so that's exciting for us.
I think I think the larger companies, they're they're on their own trajectory, they're seeing good wage growth, they're seeing the market.
There's a big large profitable Merck with them and.
I think.
They're pretty.
Pretty lucky going on there.
Other managing each of their individual accounts.
I don't think.
Well I'll say this I think.
We're focused on growing the overall size of the pot.
We're focused on helping physicians, who might not have ever touched a persistent and longstanding persistent case.
For the first time about actually blading, those patients rather than leaving them more watchful waiting or referring them out to someone else.
So so we think we're.
We're gonna help increase sets us apart first and foremost certainly on an account by account basis, if we come in.
Take the attention of a physician away from their existing Mapper and most most common vendor.
You know, there's going to be some tension between RUPS and mappers certainly seen that on a local basis, but I would say, we've not seen any concerted.
Choreographed competitive response from any of the competitors at this point.
Okay that makes sense my final one for you that is.
Congrats on the recent progress with Paul field ablation, what will we be hearing next whats the next step for that program.
This boy. This is this is this is an exciting exciting field.
We.
Were there.
Very aggressively including today tomorrow.
In the animal with a number of key opinion, leading physicians.
Over.
In the in the preclinical environment work.
Working with our catheters, and our systems and our software.
And I just couldn't be more excited about this.
It is a competitive environment.
We're.
We're assessing sort of how open them, we want to be with our product plans or clinical plans and our regulatory plans.
With with other competitors, obviously, we're seeing to that same.
So the goal line, so I'd like to kind of beg off on on signaling just as we sit here today.
On what kind of what's next from a milestone perspective, we're going to think about that.
We will share as much with you is I think is advisable from a competitive standpoint as soon as we can.
But.
Hesitant to commit to anything on that today.
Okay. We felt like it was we felt like it was yes.
We felt like it was important to know we.
Highlighted a little bit.
Yes, one.
And our investor presentations around the IPO.
That we were working aggressively in the area, we felt like when we got through just just less.
Late last month and early this month, some really important milestones around the preclinical work and some of the histology data.
And the the time trial data that we.
We have that we felt like we wanted to to put it.
Let let folks know what were they.
And that's why we issued a press.
Thank you.
Thank you. Our next question comes from the line of Margaret well at William Blair. Your line is now open.
Hi, guys. Good afternoon, thanks for taking the questions and squeezing me in.
First one is just a little bit of a follow up on the hiring of map or in some of the provisional Mappers Adnan just your comments I think maybe to Murray's question recently, but that none.
Number one yes, how quickly can some of these provisional mappings ramp to the comp Standalone mapper.
Are these folks and maybe had some experience and relationships.
Or someone that's newer that's got to build those up and then just a follow up on Brians question or the answer you get to your question.
Are you guys as you see kind of competitive mappers.
Maybe reach out T., all add to that to join the team would you be willing to hire more and then kind of traditional plan over the next year or two and what would cause you to do so.
So.
Uh huh.
Certainly I think behooves us to hire experienced mappers when when possible people, it's not just a mapping.
But its understanding the.
The nuances.
Have any T lab and some of the trouble shooting that's required that connect LNG and cable LNG.
Just just understanding how to navigate your way through a busy active sometimes chaotic.
Bringing somebody completely in a naive to that in India. This is relatively tall. So we're we're we're focused on experienced EPA personnel for sure and its definitely a bonus if they've got some.
Some years of mapping.
Yeah.
Yes, and then.
In terms of.
Bringing up the turning up the dial on the pace of hiring.
We're looking at that very sure.
Carefully and and some.
Some.
The strategy here is to do this in as much as we can and pods.
As you have folks go on vacation or are you just have an overlap of cases.
You can.
You can work logistics, so that you've got great coverage with great people.
You know as our counsels.
As our console placements continue and ideally as.
As we get more cases per week per physician per account.
Yes.
We are you know it is going to it is going to stress or.
Or Matt or.
Our core of members. So we're watching that daily weekly trying to figure out what is that right mix and that person, how and when and where to be higher.
But you know what we in order to have in order to have you know really.
No really successful cases, and adoption and build advocacy and comfort amongst our physician customers you want to have varied.
Very talented very familiar mappers there consistently.
You don't want to have to be moving one that were in and out.
Too often you want a familiar face there and those that are worth.
Thanks, a lot.
Got it now it's that's very helpful. And then just if I could you guys maybe on some numerical details and I don't know.
He ever gave a utilization per account per week.
Or any kind of clarity around defaults forces revenue.
Yes, I think I think right now and on this call. We're we're not going to get into that level of detail.
And you know I think are our next call in early November.
And we'll we'll assess how much how much detail we want to disclose them.
Okay, great. Thank you guys appreciate it.
Thank you.
Thank you ladies and gentlemen. This concludes today's question and answer session. We thank you for your participation you may now disconnect.
Everyone have a great day.
Thank you.
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