Q3 2020 Profound Medical Corp Earnings Call

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Good day, ladies and gentlemen, and welcome to the profound medicals third quarter Twentytwenty Financial result conference call and webcast.

Lines have been placed on a listen only mode and the floor will be open for questions and comments following the presentation.

And require assistance throughout the conference. Please press star zero on your telephone keypad to reach a live operator at this time. It is my pleasure to turn the floor over to your host Stephen Kilmer, Sir the floor is yours. Thank you operator, and thank you all for joining us on prevention Bio's third quarter financial results Conference call.

Joining todays call from the prevention bio team Ashley Palmer, although executive off Hello, Cofelice, Yeah, Oh, yeah.

Yes.

I remind you that various remarks that we will make okay hold on forward looking statements.

These include statements about our future expectations clinic.

Clinical results development.

Apologies.

This is not the first time.

No.

Okay.

Okay.

That's scheduled intense contemplates anticipates believes proposes or variations, including negative variations of such words and phrases or states that certain actions events or results may could would might will be taken occur or be achieved such statements are based on the current expectations of management, the poor looking events and circumstances.

And this conference call may not occur by certain specified dates or at all and could differ materially as a result of known and unknown risk factors and uncertainties affecting the company, including the rest of regarding the medical device industry economic factors, the equity markets generally and risks associated with growth and competition.

Although profound has attempted to identify important factors that could cause actual actions events of results to differ materially from those described and forward looking statements. There may be other factors that caused options events of results to different from those anticipated estimated are intended no forward looking statement can be guaranteed acceptance guaranteed by Apple, except that's required by applicable.

[noise] Securities laws forward looking statements speak only after the day then once they are made and profound undertake no obligation to publicly update or advise any forward looking statement, whether it's a result of new information future events or otherwise that's what I'll.

Other than is required by law.

On the call today, representing the company our Doctor in Matawan profound streets Executive Officer, and Erin Davis, and the company's Chief Financial Officer, and senior Vice President of corporate development with outside I'll now turn the call over to Aaron.

Good afternoon, everyone and welcome to the third quarter of 2020 conference call on behalf of the management team and everyone had profound I would like to thank you for your ongoing interest in our company and for those of you who are shareholders. We appreciate your continued support.

I'll turn the call over to a room in a moment for an update on our commercial activities. However, before I do I'd like to provide a brief update on the third quarter of 2020 financial results to streamline things all the numbers I will mention have been rounded and are therefore approximate.

For the three month period ended September 30th.

2020, the company recorded revenue of $3 million, an increase of 337% from $682000 from the third quarter of 2019.

[noise] expenditures for research and development increased $1.3 million for the three months ended September 30th 2020 compared to the same period in 2019.

The increase was attributed to higher spending a materials and R&D projects for technology improvements and upgrades options of where to two employees and R&D personnel.

In addition to the Ineligibility of scientific research and education, and scientific research and experimental development or a shred credits tax credits from the government of Canada. This was offset by Drake decreases in consulting fees and travel.

General and administrative expenses for the third quarter of 2020 were higher by $427000 compared to the three months ended September 30th 2019.

Cash of $110.4 million I'd like to close by saying that our performance this quarter speaks to the strength of our technology and our business model, but we remain cautious in the near term mainly due to the uncertainty surrounding COVID-19.

With that I'll now turn the call over to over it.

Thank you Aaron.

As we mentioned in today's press release announcing the Q3 results. Our recent financing combined with the increasing interest in our technology from opinion, leading hospitals and independent imaging centers enables us to strategically and responsively lay the groundwork to.

Drive significant adoption of the total procedure.

We're bolstering our management team sales.

Force clinical development programs and manufacturing capacity.

With respect to adding talent we.

We recently welcomed two very experienced senior management team members Jacquie.

Accordingly.

Our new VP of marketing and business development.

Leading patient recruitment and digital marketing strategies as well as relationships with our AMR partners.

John joined Us from Philips, where he was weepy of sales and marketing of one of the healthcare Division he.

He has more than 25 years of experience in global leadership roles.

In depth knowledge of global imaging systems market.

Including health care I team.

And a broad network of contacts at leading edge hospitals and healthcare organizations within the United States.

Most importantly, joc and I have worked together in the past and have known each other profit per.

Personally for over 20 years.

Welcome John.

In addition.

Im very pleased to welcome Michael Michael who joins us.

As of Monday, as VP head of global market access.

And we'll take and on the dedicated role of leading coal sales lead.

Reimbursement strategies.

Michael joins us from Boston scientific.

Where he was the VP of global market access.

And reimbursement for all of the Companys Urologic products.

Prior to that.

Michael Lab reimbursement strategies.

Augmenix, which developed the spacer device to reduce side effects associated with prostate cancer.

Michael has more than 20 years of startup and large company medical device and health plan reimbursement experience.

Welcome Michael.

The senior management team at profound the flex a good mix of relevant experience and home grown talent.

Resulting in a full complement of the necessary skill set and experience to support profound success.

And I feel particularly honoured to lead such a high performance team.

As you probably know.

Our us market entry strategy includes three types of end users.

We continue to see traction among early adopters, which improves urologist specializing in cutting edge alternative prostate disease treatment.

The second group includes independent imaging Center company, such as Radnet, which I'm pleased to report is still on track to treat their first patient in the current quarter.

Despite initially experiencing delays related to covidien team.

The third group.

Is comprised of opinion, leading teaching hospitals.

And we are delighted with the caliber and the number of hospitals that are now offering the Tulsa procedure.

I invite you to visit our Tulsa procedure dotcom website to see the Lister centers offering the Tulsa procedure.

Which is updated regularly.

As you can see today. The site now includes the Mayo clinic, you'd like University of Texas, Southwestern Medical Center, and Ralph span advanced prostate cancer Center.

We also have additional contracts that are not in public domain yet.

But that we expect to be operational by the end of this year.

We will be adding them to the Tulsa procedure dotcom website as they begin treating patients.

Continued traction in the early adopters segment.

Progress in imaging Center segment.

And an impressive group of top tier hospitals adopting the technology is also an early indicator of our core recurring revenue business model.

Is working.

Hi, good long like to provide an update on the clinical front.

For important studies were published in Q3.

That has added to the evidence establishing.

Establishing Tulsa pro as a safe effective and flexible tool for customized ablation of prostate disease.

First the 12 month outcomes of our tax pivotal clinical trial, which supported ft appearance of the Tulsa Pro last year was published in the journal of Urology.

Official journal of the American Neurological Society Association.

This marks an important milestone for profound and the publication establishes Tulsa approval.

As a.

Minimally invasive procedure for effective prostate cancer ablation with a favorable side effect profile.

Minimal impact on quality of life and low rate.

Residual disease.

Second.

Three year follow up data from the phase one safety and precision study of Tulsa pro or published demonstrating durability of safety efficacy.

Quality of life and functional outcomes.

As well as predictability of oncological follower based upon early imaging and PSC.

Oh without precluding any potential salvage treatment options.

PPSA at three years was stable.

Net 0.8 nanograms per million users.

Whit repeat biopsy findings are consistent with those previously reported at 12 months.

From years, one two year three.

There were no new serious adverse events.

And.

New onset.

Or mild adverse events were rare with little or no change in jewelry sexual or baulk quality of life.

And then retreat a total of 40 patients.

Finally.

Investigators at <unk> University Hospital in Finland have published results.

An investigator initiated clinical trial, demonstrating the safety and visibility of Tulsa Pro.

Four palish and severe urinary.

<unk>.

The tension.

And intractable hematuria and men suffering from symptomatic localized advanced prostate cancer.

Prior to undergoing the Tulsa procedure, all 10 men had continuous characterization and gross hematuria or blood loss.

Requiring frequent hospitalization.

Had one your post Tulsa.

80% of men had been to categorize Asian, 70% were completely cats, right texture free and 100% Mercy of gross hematuria, our blood loss.

Notably and importantly, the average hospitalization time from local complications reduce from 7.3 days and six month period.

Before Tulsa to only 1.4 days in the six month period costume period of time so.

In conclusion, the bundle evidence that Tulsa pro is a versatile.

And flexible technology that can be deployed and customized.

<unk> treatment of prostate disease.

Continues to grow.

And profound remains committed to supporting significant additional studies.

And building the evidence eighth porch out in the future.

To that end.

We are extending the tech trials for the Tech trial for another 35 patient to achieve a total number of patients treated to 150.

The Johns Hopkins University, and U C. L. A R. Among two of the site that are already recruiting in this study.

It is a core strategy of our company to continue to support additional clinical trials, but.

Both in the United States and other parts of the World and we plan to announce additional trials.

As protocols are finalized.

So to summarize.

First.

I would like to Echo parents, concluding comment.

That there remains significant uncertainty with respect to the toss up the seizures adoption rate.

A very near term primarily due to COVID-19.

However, we are energized with the performance in Q3.

Particularly with respect to the new site that have now started their toss up programs.

I Didnt expect that we will be there by now so I would say.

We will update you in the year end call and I do think that by that time, we will have a better update on that front.

Okay. That's that's helpful. Maybe just a second question. There you mentioned the pipeline for new sites I still pretty healthy into the back half severe are there the rest of the you're right. We don't have a month or so two months left.

Yes, you have a sense of where you might settle out. This year. You know you mentioned you're at six sites. I think you also said there on your prepared remarks that you will add them when they start treating so when do you think we'll get additional sites will be treating patients.

Okay.

Thank you.

Sure.

Let me answer your question from the perspective of per site. So certainly the number of total number of procedures in Q.

In this last quarter Q3 is higher than what we had in Q2, but I think that again because were in start up and all of these.

Macro factors at the moment the way we look at it is what's the utilization per site, which we think is actually quite meaningful and I think that we are fairly comfortable that originally we thought that the first 12 months of site will be approximately 40 procedures I think.

The last call we talked about that maybe that number is closer to 50 I think at the moment, we are probably feeling that number might actually be closer to 60 65 for the year. So.

The patients continue to be treated.

The sites continues to increase the variety of patients we are treating.

So I think that might sort of onto your question overall basis that the rate the trajectory is certainly.

In the direction of additional procedure and again I think you could follow the the macro factors there might be some minor ups and downs and we will obviously right through it but.

I think in the long haul.

Achieving.

Higher numbers than what I talked about.

Moments after the installs is we still continue to think that those are our realistic goals.

And you might want to go with your question.

Our next question comes from Josh Jennings from Cowen Go ahead, Josh.

Hi.

John It's right.

Yes, correct.

Yeah, sorry. This is a this is actually on for Josh.

Yes, I think.

A couple of my questions got answered already but.

Just one thing I was going to ask this is about the.

Yes, the payment per procedure model like how that's potentially enhancing the sales process. If you have any color or updates there.

No yeah, no we're happy to.

I think that it's actually a great question because when we started.

Marketing Tulsa in and we treated our first patients in January this year.

Utilization.

We're also to our.

Tulsa procedure Dot com website, and additional efforts underway, helping with patient recruitment and and so on we have added reimbursement support with Mike Michael joining us as well. So there is a circle of offering and we are offering this as a bundled services.

With with this recurring a new charge, that's the model to be scheduled on.

And do you have any other comments.

Yeah, I would just say that we are single deal that was our first or second deal that was not a 100 per cent pay per procedure was rental and pay per procedure. Since then we've only done pay per per reach procedure, we don't anticipate doing anything else.

Starting on the sales funnel I heard your commentary about potentially getting to 10 by the end of the year, albeit with a little bit of can uncertainty due to coal that but was hoping you could talk about the funnel and a little bit longer term basis and see.

More than likely what you will see the next year that additional imaging center sites.

With.

Even larger companies will continue to come on there is in our piping additional early adopters who are.

Who have now seen it in a fan of it quite.

Quite excited about starting their own programs and I think now that we have traction with some of the opinion, leaving site. We do have a pipeline of other other teaching hospitals and you'll hear about them.

Within the next to mine.

90 days or so.

And so I think.

Approach, where we continue to have additional publication and we need a certain number of patients, particularly U S patients.

And all of this is designed to be able to apply for a CPT code.

You know at the right time.

It seemed to have been treated who are radio recurrent cases, we have treated on.

Advanced profit cancer, as well as mid level prostate cancer and those what recall extreme BPH. All of this is designed to ultimately achieve broad coverage and that's our strategy.

Okay that makes sense and then if I could just sneak one more in.

If that's the metaphor you actually absolutely utilization rate is so maybe you can give us a little more clarity there.

Yeah. So we've we've actually that's consistent the way we've been breaking out if you go back through them. The quarterly materials I would tell you I wouldn't read too much into it yet or not providing guidance at this point and I wouldn't read too much into it because frankly some of those lines are a little.

I'm going to.

Used to use the device more <unk> more broadly you need other indications in patient pay procedures.

And and also just gonna. She wanted a second question in there that you know <unk> D. R&D burn has gone up a little bit and should be be here about that be continuing to be a little bit higher because you are continuing to support that R&D and those and those additional clinical trials.

Yes, <unk>. So you know I think.

Yeah, I apologize for coming back in but I just wanted to.

It's skewing the numbers in appropriately.

If you're trying to read into it.

Understood but.

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