Q3 2020 Motus GI Holdings Inc Earnings Call
[music].
Ladies and gentlemen, thank you for standing by welcome Tim.
Holdings incorporated third quarter 2020 financial results and operational update at this time all participants are in a listen only mode. There.
There will be a presentation by modest management team followed by a question and answer session.
I must advise you that.
The conference today is being recorded I would like to turn the conference over to Bob You did have life site advisors. Please go ahead Sir.
Sure operator, and thank you everyone for joining us for the modus G <unk> third quarter 2020 update call.
Representing the company are Tim Moran.
Executive Officer, Andrew Taylor, Chief Financial Officer, Mark Pomerantz, <unk>, President and Chief operating Officer Modus G.
Before turning the call over to management for their opening remarks.
I'd like to take a minute to remind you that this conference call and webcast will contain forward.
Looking statements about the company. These statements are subject to risks and uncertainties that could cause actual results to differ please.
Please note that these forward looking statements reflect our opinions only as of the date of this call. We will not undertake an obligation to revise or publicly release.
The results of any revisions to these forward looking statements in light of new information or future events.
Factors that could cause actual results or outcomes to differ materially.
From those expressed in or implied by such forward looking statements are discussed in greater detail.
Now in our most recent filings on form 10-K, and other periodic reports on form 10-Q, and 8-K filed with the FCC with those prepared remarks, it's my pleasure to turn the call over to Tim Moran CEO Tim. Thank.
Thank you.
Hi, Ben Thank you everyone for joining our call today I Hope you and your families remain healthy and safe.
I will begin by providing a business update and discuss modus G.I.s performance in the third quarter.
I will then turn the call over to Andrew who will review our financial results.
At the end of our prepared remarks, we will open.
On the call to take your questions.
I'd like to start by discussing the current environment, we are seeing in U.S hospitals, specifically as it relates to.
Inpatient, calling us can be procedure volume.
Sales rep, and clinical support access to hospitals and procedures.
Physician mindshare.
Bart relate to evaluating a new technology like the peer review system.
And value analysis committee or Vac timelines.
It goes without saying that the COVID-19 pandemic created significant challenges for U.S. hospitals.
During the second quarter, the New York Society for G.I. Endoscopy.
We published a report showing endoscopy volumes have declined by 57% to 96%.
This massive reduction in endoscopy procedures significantly hindered our commercial introduction of pure view in the first half of 2020.
With that said I'm pleased to report that we saw a positive turn in.
Our commercial progress towards the end of Q3.
Speaking to our G.I. customers, we saw inpatient Colin asking me volumes ramp up to approximately 80% to 90% of pre pandemic levels and we are resuming the trajectory. We started in Q1 prior to the COVID-19 pandemic.
As procedure volumes started to return to more normal levels in August and September we began to see a positive turn in our results in terms of pure view utilization.
We now have on site sales rep and clinical support access at about 80% of our accounts.
All of our accounts have implemented strict.
Your controls.
But gaining on site access is critical when launching a new product, particularly as it relates to conducting efficient successful evaluations.
While the remote access support tools, we have developed have been very useful we believe in person sales and support is simply more effective with a new product launch.
Okay.
We have also seen positive momentum in physician mindshare at our targeted accounts.
We have provided our investors and analysts a window into the traction we're building with various physicians and hospitals through our podcast series that began in the third quarter.
This theory is currently has four episodes.
Launch featuring leading Gi physicians from across the U.S.
For anyone who hasn't had a chance to review this material. Please visit the modus JCI Youtube channel.
In addition, we recently held the KNL event for the investment community with Dr. Seth gross of end why you Llangollen health.
Dr Gross Todd.
Just on a number of topics, including the unmet needs and challenges associated with inpatient calling us compete the benefits to patients and reducing time in the hospital and mitigating increasing costs to hospitals due to delayed or incomplete procedures.
A replay of the webcast for this event is available on the events page in the Investor.
Section of our web site.
The key takeaway from these events as it pertains to you our investors is our belief that we have established a solid foundation of leading guys that are vocally supporting the use of our system.
Finally, it is important to note that since the pandemic started our overall so.
Sales process, taking longer than expected specifically related to delays in the hospital value analysis Committee process.
This is the result of the burden the pandemic has put on hospital staffing and priorities.
However, with each month, our sales team continues to conduct shorter and more effective evaluations, which helps to.
Mitigate some of these delays.
There have been a number of notable wins in Q3 and I'd like to take a moment to highlight one in particular.
I mentioned earlier, the K well call, we conducted with Dr. Seth gross at N.Y. you last.
Last week, we also announced our partnership with and why you with an aim of.
Of improving the management of inpatient kalinowski piece.
Let me provide some background on how this came together.
In Q3 through our collaboration with Dr. gross and Dr., Melissa Latour director of inpatient Dji services. We conducted an evaluation that was completed in just two short weeks.
Following.
A positive experience pure view was submitted to their value analysis Committee for review.
After receiving approval from their back and while you placed their first purchase order for pure view sleeves and began full implementation.
In addition to adding and why you to our base of key reference sites, we are thrilled to be.
Supporting their new clinical protocol that incorporates pure view for the effective management of inpatient colonoscopies.
And why you as indicated they will now utilize peer view for any patient that presents with an inadequate Bal prep, which we believe will improve their overall clinical and health economic outcomes.
We.
We believe the success of them why you illustrate several points that align with our strategy first and foremost the implementation of a proactive protocol for the effective use of pure view is significant we.
We believe this will allow and why you to optimize the use of pure view for patients who would otherwise be delayed.
For motorists we believe.
Leave it will provide more predictable and consistent usage because it will allow us to train additional physicians and staff based upon the hospitals protocol, helping to ensure optimal use of the peer review system.
Next winning it and why use flagship hospital and leveraging their clinical and economic.
Data can provide us a clear path to expand to other hospitals within the end why you system.
This is part of our land and expand strategy, which we plan to replicate across other health systems in order to accelerate future growth.
As it relates to strategically, adding new hospitals, our team is doing.
DSO by implementing a meticulous pre evaluation planning and site qualification process to ensure optimal success.
As an example in advance of initiating an evaluation at a large Midwestern hospital. This past quarter, we worked with the site to track their inpatient calling on Skippy is for a 30 day period.
Doing here to kicking off.
In their analysis, they found that 50% of their inpatient calling us could be patients presented with poorly prep colins, resulting in 21 additional nights of unnecessary hospitalization, which represented substantial additional cost to that hospitals that are typically not reimbursed by comer.
Commercial insurers for Medicare.
This data was critical to supporting the hospital decision to move forward with an evaluation of the peer review system, which will conclude in the fourth quarter.
Employing learning such as this will be paramount towards driving efficient and sustainable results in the quarters ahead.
I am pleased to see that our efforts are beginning to bear fruit as we had several new hospitals initiate evaluations and several existing hospitals resume and complete their evaluations in Q3.
I am encouraged by the renewed engagement, we saw from our targeted customers and expect continued momentum in Q4 and in 2021.
We currently have more than 20 major hospitals, who have pure view on site and in Q3, we initiated new evaluations at additional target institutions.
As I reflect on the quarter I want to reiterate the incredible opportunity. We believe is before us that modus JCI.
We've created a solution that is.
John This is a significant unmet need associated with inpatient colonoscopy in a market that comprises approximately one and a half million annual procedures in the U.S. and approximately 4.8 million every year worldwide.
We believe the pure view system continues to demonstrate the potential to improve outcome.
Address and lower cost for hospitals by reducing the time to a successful Colin asked be minimizing delayed and incomplete procedures and improving the quality of an exam.
We've protected our technology with a robust global patent portfolio and believe we have first mover advantage in the large addressable NP.
You can call and ask the market.
Clearly the pandemic slowed us down, but I am encouraged by the renewed enthusiasm, we're seeing from our targeted physicians and hospitals.
We have now become a lean and efficient organization adapting to changing market conditions and we plan to continue our focused efforts.
It's to build upon the positive indicators, we saw at the end of Q3.
I believe Q4 is off to an excellent start and I expect we will see clear indicators of acceleration of our Q3 progress at our next quarterly results and beyond.
As it relates to our strategic outlook, we continue to.
Evaluate all potential options, including commercial partnerships with large medical device companies that can provide scale to bring peer reviewed to customers more quickly.
We also view these potential strategic partnerships as a means of expanding the commercialization of the peer review system and sleeves to Europe Asia.
In other markets.
Finally, as it relates to the resurgence of COVID-19 cases across the us our hospitals have indicated that they have a greater confidence in their ability to respond to cove. It based on their experience principally in Q2 and are implementing safety measures to avoid another period of lockdown.
We will continue to monitor this closely and respond with efficient and effective commercial strategies.
I will now ask Andrew to recap our financial results for the third quarter.
Thank you Tim and thank you everyone for joining us today we.
We reported revenue for the third quarter of approximately 33.
$2000, primarily from the sales of pure view single use lease.
As Tim discussed we continue to grow our number of peer review procedures, each month as well as new system placements working with hospital value analysis committees to finalize commercial contracts at these sites, we expect to see a content.
Stimulation of our progress and momentum in the fourth quarter.
For the three months ended September Thirtyth 2020, we reported a net loss of approximately $3.9 million or a net loss per diluted share of 13 cents compared to $5.2 million or a net loss per diluted.
Alluded share of 18 cents for the same period last year.
During the third quarter net cash used in operating activities and for the purchase of fixed assets was $2.7 million as compared to $4.8 million for the same period of 2019.
As reflected in our year over year comparisons of net loss and cash spend activity the.
The results of our previously announced cost cutting measures have been and continue to be impactful. This.
This plan has now been fully implemented significantly reducing our cash burn by approximately 50.
Percent.
At September Thirtyth 2020, we held approximately $23.7 million in cash and cash equivalents. This included the $8 million from our 2019 term loan agreement with Silicon Valley Bank.
During the third quarter the company bolstered its balanced.
Through the sale of equity Securities, which raised net proceeds of approximately $9.2 million.
The company believes its cash balance will be sufficient to meet its anticipated needs into 2022, and ensure compliance with the Silicon Valley Bank liquidity covenant into.
Q3 2021.
And with that ill now turn the call back over to Tim.
Thanks, Andrew.
And before taking questions I'd like to summarize just a couple of key points.
While the current COVID-19 environment continues to present challenges, we saw a positive turn in our.
Herschel progress at the end of Q3.
The combination of a rebounding Colin asked can be procedure volume rig.
Regaining on site access and steady gains in both repeat and new sleeve purchase orders is encouraging and we expect this momentum will continue in Q4.
It's important not to lose.
Coming out of what we are playing for here.
When you consider the proven efficacy of our pure view technology.
Our first mover advantage and the size of our addressable market. We believe modus operandi remains well positioned to create shareholder value as we bring pure view to patients across the us.
I will now ask the operator to open the call for questions.
Thank you.
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Our first question is from Matthew O'brien with Piper Sandler Oneill.
Okay. Thank you afternoon. Thanks for the questions I guess for starters.
Can you talk about what you saw throughout Q3, and especially as we kind of exited Q3 in terms of utilization of pure view and just maybe that building.
Interest in using the technology more frequently going forward.
Yes, Matt Thank you for that.
The extension.
So what was very encouraging is September was our best month as it relates to pure view utilization and Thats both measured by then.
The number of sleeves that were consumed via purchase as well as evaluation. So that was really encouraging.
Well I'd say the early part of the quarter was still very difficult.
In July and August as it related to.
Access and also just priorities of these hospitals in terms of getting back to new technology, we really start to see it ramp up in the middle of August and then September They said was very encouraging.
Im not we won't get into the details of.
I would for but.
We saw a very positive continuation of that in October so that was.
That was really really nice to see as you recall, we reduced the size of our sales team.
But this group has done an excellent job being very very productive.
Driving a lot of procedures and.
I think part of it Matt is driven by what these accounts have experienced in the conversations that we had with a variety of different chant k. all champions throughout the the downtime about.
Seeing this opportunity to get pure view in and being prepared so if there is a resurgence that they've got a technology that really allows them to Italy.
At least as it relates to dji patients eliminate unnecessary delays. So we're encouraged by what we're seeing as I said I mean, it's it's good to see the restart.
Gordon cautiously optimistic.
As it relates to Q4 and coated but.
So far with what we saw in the early part of the fourth quarter seem.
Seems.
To be continuing nicely.
Okay, and I don't want to put words into your mouth, Tim but it sounds like you know July August probably minimal in terms of revenue contributions you probably saw most of it in September.
And then it sounds like its carrying through here in October so as we're thinking about Q4 from a modeling purpose.
Respective.
You did about 100000 last year is that kind of a ballpark, what you're thinking or it could even be a little bit better than that.
So so Matt what I will tell you on the first part is.
You know you're right in terms of your view in assessment based on my comments of Q3, right. So is there very much.
At the end of the quarter. So September was the really strong month for us.
I won't give you know I'm not going to give guidance as you know for the fourth quarter, but based on what we're seeing we.
We do expect that we're going to see sequential improvement Q4 over Q3 for sure I don't want to talk about the specific numbers, because we havent given guidance.
And we're not we're not ready to do that.
But what I will tell you is some of the drivers that I think were.
We're looking at is captured.
Capital has been very difficult due to cove. It we do have some capital deals in the works and I think as you know we look to those coming through in the fourth quarter that can really kind of changed that.
The factory so I.
I don't think thats out of the realm, but I'm not going to comment specifically on an exact number.
And you Didnt have any capital deals in Q3.
Thats correct.
Okay got it and then as far as New York goes.
That commentary about you know the protocol now.
In place to be using using pure view for every single quarterly prepped case.
How how you know how big of a just an opportunity is new York a low.
Again, given the feedback that they just they just provided.
Sure So what I'll say is.
You know we were really pleased.
With with the work that was done to them why you and I'll answer your question, but I want to provide a little bit of color too.
Beyond just getting an account prominent account like and why you.
Using pure view and what comes with that in terms of the K well support and Dr. grows from doctoral to tore you know really proud to have them on board as.
Advocates for the technology.
But the protocol development.
Actually having a plan for the utilization is something that you know of course, we've been working on with all of our accounts in the pipeline.
Not every account is the same and there's different numbers of GE eyes, and how they manage their inpatient.
And but we're really pleased to get that in place because what that does for us as I said in the prepared remarks is one that allows us to train around a protocol so everyone understands from the nursing floors down to the G.I. unit.
Exactly how.
The peer review system is going to be utilized and how they can best optimize it and get the benefits from it.
But it also will allow us.
To drive sustainable.
Utilization without having to have you know a rep. There onsite catching cases, if you will right. So I.
I don't want to specifically comment on one customer, but you know Matt I think we're looking at this as absolute.
Absolutely a six figure customer.
You know I'll go that far to kind of give you that.
That that.
That kind of detail they do somewhere call. It in the seven to 800 inpatient procedures a year.
So you can kind of start to model that based on.
Ill call it half or somewhere in that range being poorly prep so.
We're really pleased it's the early days, we got that done.
At the end of the quarter, but even in October we saw repeat orders coming in from and why you. So we believe we can really develop that into.
Great site and a great reference account quite frankly.
Got it and then just last one for me Tim.
You know there was a pivot as far as the strategic direction of the company.
Many years ago from us.
Patients I know you're still got work going.
Going on on the outpatient side of things, but.
Given the focus on inpatient given these 20 kind of core accounts are targeting right now.
How do you think about the outlook for the business from an inpatient perspective in that.
Yeah, you know meaningful increase in terms of utilization are those 20 accounts all may all be six figure accounts similar and why you think it can we see you know.
Meaningful pickup as we kind of progress throughout 21, yeah.
Yes.
Yes, great question.
And to your point it listen outpatient the pit.
Pivot was really a focus of entry point as you know, Matt and our investors know that we you know we've talked about this building kind of our beachhead in inpatient where you don't have the kind of headwinds have reimbursement in place was the reason for that and getting this kind of core 2025 facilities built in our first year, which.
Said from day, one has been a priority and we think that foundation is critical for everything that we do next.
But yes, as we look to now kind.
Kind of finalized getting these all of these accounts fully through the system.
And consistent with the protocol like we've seen them why you and we're in we're in development at other sites of protocols will talk more about that in Q4.
But 21 for sure gives us I think the opportunity to really start to scale the business, but.
But you got to get to that 0.1st rate and we've said that and the reason that's important is one it kind of allows us to make some decisions in terms of how does that scale come.
As I mentioned, a few times you know weve continued to have.
A dialogue with strategic partners.
But of course, even to get to a point, where we would enact something like that you've got to have a foundation of accounts that are using the technology and the strategic partner is going to want to see that as well, which is why that was an important first step but it also kind of gives you informed you of okay, well, if youre going to double down in terms.
Cost of sales and commercial resources, where do you do it and what have we learned so we can be as efficient as possible as we kind of strategically build so yes, we would expect the ramp to continue into 21 and start to get to really scale things right. Now we're going at this as you know with a you know.
A very lean team they've done a tremendous job but.
Are we haven't lost sight of what the size of this market opportunity actually is.
Got it thanks, so much.
Thank you Matt.
Our next question is from Steven Lichtman with Oppenheimer and company. Please proceed.
Thank.
Hi, guys can you just talked about and why you and I wanted to ask about some of the higher volume accounts that you currently have in the fold. So you know just utilizing that seven 800 number and saying, 50% or poorly prepped. You know is there a rule.
Reason, why we shouldn't be thinking your ability should be high to get the overwhelming majority of those coupe of poorly prepped patients or in other words why wouldn't the that 50% not use or not use period, yes, yes sure Steven thanks.
The question. So remember you know as you know the <unk> and I said earlier, the the dynamic city. Each account, obviously, you're not uniform right. So at a place like and why you we've done a nice job with that group getting the protocol in place.
They have very precise plan as.
It's relates to how they manage their inpatient and we were able to get those physicians onboard and agree to implementing the protocol.
Why there's challenges that other other sites in terms of the time right and why we've said in the beginning you know model five to seven procedures, a month, which is you know only a small percentage of the actual available more.
It will get but the reason for that is in many of these large teaching institutions. There's a there's a significant number of GE eyes right. So expanding from one G to the next and kind of quarter to quarter, bringing on more guys doing the procedures allows you to get kind of critical mass and then implement that protocol.
If that makes sense right because it's hard to have a protocol unless you've got kind of the large number of the docs using the technology on a daily basis or off the protocol is difficult to get standardization on so that's one of the dynamics and you know we continue to make progress with some of these sites that have a large number where each quarter, we'll bring on more physicians, but.
But.
Frankly at all and I've said this before when your whenever you're putting a new technology out there. There is it's a bit of a change management. So you have your early adopters and those dynamics, where they want to get on board they want to be leading the way with a new technology that can not only improve the economics, but quite frankly change the way the procedures done in include improved clinical outcome.
In in improve patient satisfaction right, not having a patient set up in the bed and.
Some physicians are very motivated by that others changes something they don't want to do right. So it's it's you know it's a constant focus on trying to drive to more physician. So I would say thats the biggest difference between some sites versus others and.
Part of our commercialization efforts was you know you need these flagship you need these who's who facilities and the tail of that come along with that because getting physicians out there talking about the technology, writing papers getting on podiums is a really important early part of commercialization, but we also now look to and have started to add some other.
Are there more regional kind of community a large centers. If you will that you know looking at the economics and getting things done more quickly may maybe more feasible. So that will be part of our blend you know as we talk about new accounts I would expect even in Q4 and Q1, you know you'll hear some some names emphasis facilities that may not be they use the academic.
Part of that is because we think we've gotten to know a lot of those key sites are ready in our in our are kind of target reference base. If you will.
Got it Okay and then.
Can can you talk to us at all about the pipeline of potential accounts any color you can provide.
In terms of you.
Your targets looking forward here over the next 12 months in terms of potential new accounts would be helpful.
Sure. Yes. So this isn't a really important point that I'm glad you asked them. So you know right now we there's a balance that we need a balance of a few things that were that were.
Matter, we're working through right. So one obviously seen procedure volume come back in the market was critical for US it's hard to introduce new technology when procedures were down so much in the quarters and months leading up to.
Q3.
But we're also balancing the ratio of the number of folks that we have out in the market.
<unk> and.
How you know how many accounts they can manage to be effective.
And part of our strategy that we said from the beginning was we target. These 20 to 25, we get into the flagship site. So the main.
Hospital within that health system, and then once we have them on board.
Which would it gives us is it gives us a vac approval.
Typically will cover the system.
The peer view becomes a vendor in the you know the purchasing the loss and systems right. So someone can actually order the sleeves from from the purchasing system at another site it.
It gives us the data from their own system in terms of you know.
Economic and clinical outcome improvements.
That gives us the reference that comes within their site. So they can talk to a K well in a physician a colleague in another location and talk about their experience. So we talk about this land and expand so we are now just starting to see the ability to move from the flagship two other affiliated or sister sites.
We've.
I think the valuations that are scheduled now in Q4 that are part of some of our original systems and that's the approach that we're taking so we want to go deeper in existing sites. We want to ensure protocol. So we're getting same store sales were getting consistent revenue, we're beating the five to seven per month and have that grow and then move to the other affiliated sites because we think winning in those sites will.
Be easier than when you get the first one if that if that makes sense. If you put that kinda altogether.
You look at these 25 give you another call. It 100 to 150 additional affiliated sites that are part of these systems that were calling on and we think right now see.
Got it that's kind of the right target to stick with so go deeper get these accounts to be consistent and then move to their affiliated sites and that you know that gives you the hundred hundred for the accounts that you can look at and what the size of the current team that's more than we can get to but it allows you to kind of get ready for scaling of the business with more resources as we look at 2020.
Steve one.
Great I hope that that health it yeah, yeah. It does and then just lastly for me great to hear that you have a a couple of.
Outright purchases teed up here potentially in the fourth quarter, how should we be thinking about that overall as you look out over the next.
12 to 24 months to me that the percentage of placements that will be outright purchases and any help you can provide in terms of how how you're thinking about.
What percentage that would be.
Yes, so with it it's it's I'll get it I'll give you my view of of today right. This.
This disruption with Cove it.
Puts a bit of a twist and that dynamic on you know kind of the crystal ball of what that would look like but but I think Andrew and I believe right now is.
Probably 75%, 25%, meaning 75% of the accounts will be covered under.
Whether it be a volume based.
Remit, where theyre committing to.
You know a a certain number of pure view sleeves on a quarterly basis in order to have the capital.
And or an outright lease.
I think 25% will probably fall into the we've got the budget and we can pull the trigger and we can spend the 68 five on on the capital equipment.
That's our best view today.
We will we will have some we should have some deals to talk about in the fourth quarter as it relates to volume based agreements that seeming to be of interest to many of the sites that were there today that don't have capital.
<unk> dollars to spend at least not until the end of the year.
I think we've been working on on that but I think thats, probably the right ratio to think about Steve in terms of modeling.
What I will say is we'll give more color you know as we start to do leases.
And depending on certain parameters of the lease we maybe able to recognize that revenue in full but I think it's a little bit early to start.
Making predictions on how many we can record.
Recognize the full revenue and how much how many we can't and we will but we'll give you more color on that in the coming quarters.
Great. Thanks, Tim.
Thank you Steve.
Our next question is from.
Yes.
He and company. Please proceed.
Hi, good evening, Thanks for taking my questions and thanks for the update here.
Apologies if I missed this but as we look out.
Over the next couple of quarters.
What sort of catalyst or milestones should we be watching for for example, I think the expedite trial wrapped up so potentially a publication on it another trial.
Under way, but in terms of clinical milestones or collaborations are all U.S. activity, just trying to get a sense of what to keep an eye on.
Yes, Kyle Thank you. Thank you for your questions.
Why don't we start let me ask Mark to provide just a quick update as it relates to our clinical.
Relativity to some some really good things happening there and then I'll come back and a little bit of color and other areas. So so mark if you can just provide some feedback here on clinical that'd be great.
Sure.
Okay. So everybody.
Just a quick.
Color on what's going on in the clinical world and as.
You mentioned things like expediting some of our other studies are Oh, we're looking to get those that data published in the relative near term. So those things are in the works. So I think you know you'll see some exciting data.
Coming out in the in the relative near future in the next quarter or so.
So I think that will help bolster our efforts to get that.
Data out there and really as we continue to look at our clinical stuff will be starting some exciting trials is really a focus on.
The key emergent.
Patients, which we think you know not only drive significant value.
Value from a healthy.
Novick perspective, but I really critical for these patients that are.
Urgent with significant Gi bleeds in the IC, you type population, which we're getting data out there more and more pushing that arena, we're really make it something that its kind of Paramount for every hospital to not to have to have.
Our system when you look at the ability to treat these these critical need patients as well.
Great. Thanks, Mark Kyle does that does that help on a critical from a clinical perspective.
Thanks, Mark Thanks.
Excellent yeah.
Yeah, and Kyle I think.
I can't really comment as.
That leads to strategic partnerships in from a timeline perspective, but I think we've we've made very good progress in terms of Inc.
Engagement and evaluating a variety of different options that are out there.
And I think together with the board will continue to evaluate those things as we get into call. It the first half of.
3021.
But our key focus right now as you've heard from the call and earlier today is now that we're starting to see.
Things get back on track in our trajectory is really kind of.
Continuing this execution continuing to get more and more of these accounts with the protocol with consistent volume coming through.
Through and I think Thats, a key priority in a in a key thing that were looking forward to be able to communicate to the market to our investors.
And to others and we've got some exciting accounts kind of here in the in the pipeline that we will be able to talk about next quarter that we've been we've been working through sure no. That's great appreciate that and lastly, you guys.
Identified upper Gi eyes, and natural target for expanding the preview indication.
How activities and going here in terms of any modifications to the gen. Two device and maybe even a potential application package that you're working on thank you.
Sure Yeah.
Yeah, well listen where we're interested in this in this opportunity we think and the reason I say that as it can be very natural add on to what we're doing today.
Right. So one of the things that we talk about as a leadership team all the time as keeping our keen focus particularly.
<unk>.
The size of the organization that we have and what we're trying to accomplish given some of the market dynamics as we need.
A great team with great people that are focused on executing our strategy every day. So we don't want to add any distractions. However, when I look at upper G.I. I think it's just a natural extension of what were doing from a call point.
Back to it from a physician perspective.
It overlaps perfectly and this opportunity as I've talked about before was brought to us by a large number of very prominent Gi physicians that have years and years experience dealing with upper Gi scoping and dealing with some of the difficulty.
These when you're presented with an upper Gi bleed case, and you know the esophagus stomach, there's theres very difficult adherent.
Adherent blood clots that can obstruct their field field of view and they just intuitively after using pure view and with our capabilities in terms of all our post for tax irrigation and how.
We have the two very large section ports. They look at that and say this could this could be a really nice fit for upper Gi procedures.
The other thing about upper Gi procedures is.
<unk> mortality rate is significantly higher it's in the 10 call it 10% to 13%. So this is something that is very very serious in terms of a complication.
So with that as I think I've mentioned publicly before you know we have an active R&D project or we are looking to leverage a lot of the work that's already in place in terms of the Gen. Two design.
And.
We're working hard on right.
Right now with some of the.
Get analysis, some of the health economic modeling, which would be required when we kind of go to market with a product like this.
Right now were looking in kind of half first half of 2021.
To be kind of the timing for.
Potential submission to FDA and in all likelihood.
Marty would be a five 10-K or potentially a special five 10-K, so you're not looking at a very extensive.
Kind of approval process. So that's something we're really bullish about and you know as we get a little bit further there's there's certainly more fees feasibility that needs to be done, but we think it's a real natural extension to kind of what we're doing today and could add call.
20, 25% more procedures to our inpatient focus if you will.
I appreciate that color, that's great and thanks for the updates I'll jump back in queue.
Thanks Kyle.
Our next question is from Ben Haynor with the lines Global Please proceed.
Good afternoon, gentlemen, thanks for taking my questions.
First off for me just listen to the commentary so far it really sounds like protocol development may be even more important than one more install.
And just thinking about that you know the hospitals, having very and protocols or you know maybe in some cases even know.
Oh, but how how much weight does it carry you have in the you know the thought leading hospitals like and why you.
I would think it would carry quite a bit within there.
Hospital system Hospital system within.
They are already in but how much.
Much weight does that carry outside of a hospital system, yes to all their accounts.
Yes, Ben Thanks for thanks for the question and yeah. So on the first part.
That balance about kind of what we look at return on investment everyday so important right. So one.
On an or install versus deeper into existing accounts protocol same store sales right. It's an important metric that we that and it's a balance because you want to continue momentum and add more accounts, but but what you don't want is 50 accounts doing very little volume right. You want much rather have 25 accounts that have protocols and are driving significant.
I think in demand.
I think our balances favored towards deeper.
With with strategic wider if you will but to the second part that's one of the things that we're really excited about and it's not only on why you. There's there's other systems that we will be communicating with the market about in the coming weeks and months.
Around protocol development and leveraging those accounts.
For assistance and support and just name recognition of what they've done how they've implemented what what are some of the analysis that they did to make the decision to create their protocol will leverage that and ask for their assistance and support at other sites and we've already gotten some.
Some of it quite frankly, where we brought new accounts on for evaluation in Q3, and Weve had K wells from other sites that are using pure view.
Part of kind of that Onboarding experience and whenever you can have peer to peer engagement. It's so much more important.
And then even coming from the company itself, so thats something for sure that will continue to.
To try to build on and leverage and I think that those are all the right things that we need to be doing right now.
Okay that makes sense and then just the just thinking about how investors should should track protocol is being put in place I mean is that our best but just trying to kind of work out of utilization per system metric or is there some.
Something that you think down the road, you'll be able to disclose a little bit more on that front.
Yes, yes for sure.
I want to keep in.
In perspective, as I said earlier it was really the ended the quarter that we really start to see kind of this turning point and getting back toward our trajectory right and if you listen you can't.
Colby it's not.
It's not something anyone can control right and everyone has been impacted by it.
But you know if you erase the last couple of quarters of Cove. It right I think we would have been a lot further along and that's just the facts but.
We have to move forward from here and I think what we said is like starting to model. These accounts in that five to seven procedure.
Jurors call. It you know.
So 80 to 100 procedures a year is it may be conservative, but I still think that thats. The way, we should be modeling it right now, but as we get more and more of these protocols in place I. Absolutely think we can then start to provide better metrics to the market that are based on trend and you know a.
A larger number of sites to.
To be able to give you that that and the other analysts.
In terms of the modeling and we'll look to do that as fast as we possibly can.
Okay, Great and then lastly for me you mentioned the I think it was a midwestern facility that half the inpatient call and ask B patients, where inadequately prep that let the 21 additional nights.
And the the one month that you guys did the study and you know was that like.
10 patients is that 15 patients is that 20 patients in and you know just on that same front <unk> I guess, you kind of addressed it in the <unk> in response to my previous question, but you know what level of utilization.
Nation needs to be visible or it needs to.
Be apparent that you.
You would need to be running out and installing the system.
So.
Let me take the first part of your question right.
And so that was roughly.
About 20 patients right and that was an analysis that.
They did at their site.
With us as a means of so there was there was two things at play there one they were kind of locked down with covance, so they weren't allowing wrap access or new technology evaluations. So rather.
Rather than lose that time, we talk to the customer about let's track this information, which will only be helpful. When.
One you evaluate the product but to when you go to value analysis Committee, you will actually have data to say.
Here's Here's an example of the dollar impact of this problem.
And quite frankly.
If you look at just one month, there that basically almost pays for the system itself right. So it's really important work and I was really proud of the work that the team did and that's the learning that we continue now to try to employ where we can't at other sites.
So that was really really important but the second part of your question. Ben can you just clarify where you are asking about how many account.
How many procedures they need to see would you just give me a year I mean, well I I guess I was kinda asking I think you mentioned 80 to 100 procedures per year, which was kind of the.
A level that is attractive for you guys is and I guess I was asking.
Is that.
What is the level that.
You need to the volumes that you would need to see to make it attractive to be put.
Putting install out there.
You mean from the new way on the hospital.
Yes, I think from the modus perspective.
Right, well and the hospital perspective, too I suppose or yeah, so listen.
We will.
You look at the total addressable market.
We believe that we will overtime penetrate a large part of this market and.
If anyone.
It was invested in motor she iron other new technologies right. Unfortunately, it just doesn't happen overnight you have you have to go out and you have to build your business and you have to do all.
All of these early foundation building steps to be able to get there and there are numerous examples in the market that you know and we know that.
It takes time in the early days, but we're playing for the full price right and that's that's why I came to modus Gee, that's why our management team is here and why we work hard every day to try to fight.
Fight through some of these.
Market dynamics that we've had to contend with because we know that we've got first mover advantage in.
Quite frankly billion dollar market just in inpatient.
With that we can penetrate.
Starting out with these accounts doing call. It 80 to 100 procedures a year.
In their first year to us.
It's.
It makes sense, because it's less about the revenue and it's more about getting conviction around the procedure because as soon as you have conviction around the procedure and it becomes part of their normal tool that they use in their G.I. unit right things start to get to that tipping point, where that just starts to become routine and then more and more physicians are using it and then you're talking about much much larger numbers.
It's just it's getting through that kind of curve. If you will of of adoption I.
I think from a customer perspective from a hospital perspective. The reality is you know the disposable sleeve pays for itself. After one procedure I mean, just straightforward one night of hospitalization. If you can eliminate that with pure view.
You are paying for the disposable sleeve and saving money on top of that.
If you want to factor in capital you probably need to do call it 10 or less procedures.
To pay for the capital if you amortize that in any given year. So there's very few number of cases that have to have to be done for hospitals actually justify the investment.
Peer view, so I hope I hope that answers kind of both sides of the coin. If you will know that was perfect and exactly what I was looking for so.
Thanks, a lot guys I'll leave it there.
Thanks Ben.
Our next question is from each and with H.C. Wainwright. Please proceed.
Hi, this is violent dialing in for agent can you hear me okay.
Yes, the violin how are you doing.
Great how are you.
Very very well.
I don't have it vac approval process you previously stated that the process could take several months on cancer.
In the quarter driven uncertainties did think it may be time for hospitals to revisit on change in how the deal with the Vac process. It's all what kind of physicians you might have to the hospital approval Committee.
Yes, so as I mentioned in the prepared remarks, you know we are seeing some of these processes take longer.
And you know quite frankly hospitals had a lot on their plate and staffing and I'm, just kind of dealing with COVID-19ien and getting back to some degree of normalcy and then obviously now a bit of a resurgence so.
It's understandable that they have been delayed.
In terms of I'm not sure I can make a recommendation in terms of how a hospital would.
Necessarily overhauled their process internally.
But what I will say is there's things on our end you know that we believe we can do to be more successful in the process and I you know in my many years of leading and building sales teams right. There is a lot of learnings that weve had another.
There is an organization that we're trying to employ so we've put tools in place a value analysis pack that every one of our salespeople use you know that really kind of walks them through a methodical approach of everything that would be needed in order to ensure an approval.
In that meeting when it occurs right see what you don't want to do is have.
Oh wait wait 30 days or 60 days for a meeting to happen where you are on the agenda and then not have all the detail not have the economic support supporting case not have clinical detail not have your champion and you know any references that need to be provided so the committee can have everything that is required to make that decision. So I think just being as efficient as possible on.
On our end some of that pre work that I just talked about that we did in the Midwest you know that things like that separate yourself from other companies that may not be as prepared and allow you to get the approval that day. So we can only control the things on our end, we talk a lot internally about controlling the controllables and thats something that I think we've we've done a good job in every month.
Quite frankly, I think we get we get better and better at that you know as we learn more from our customers. So hopefully that's helpful. But you know those are the kinds of things that we're trying to do to to shorten the process. If you will.
Understood.
Assuming COVID-19 persists for a big chunk of 2021, how do you plan to stay in the business in the future.
Sure and one new steps, there, but not taken into tiny tiny right, we had acquired and 2021.
Yes, so as it relates to the resurgence where we're we've talked as you as you'd imagine to all of our customers quite frankly, and you know right now we have not seen any impact.
In terms of.
Procedure volumes or or access we're.
We're monitoring it closely but our hospitals have indicated that they feel confident that we.
We won't find ourselves in a position we did in March in terms of broad locked.
Lockdowns, but obviously there is a question mark.
That has been communicated to us by several of the guys is you know we might be prepared.
And have all of the measures in place to to ensure we don't we don't get overrun with patients, but patients may make the decision that they're concerned about coming in and maybe procedures that there might be an issue with the patient but.
It's not an emergency they may choose to elect not to come. So we'll have to keep a close eye on that but right now we're feeling good about how how hospitals are managing this and were expecting not to go back into the impact that we saw.
If it does occur I think we learned a lot through the first.
The the first situation.
With digitizing our go to market strategy, we talked a lot about that those tools have been utilized I think they've worked well nothing replaces being in front of the customer, especially when you're creating a new market as opposed to taking share in an existing market. So getting there as I said on the in the prepared remarks and being in front of the physician and the staff is really.
Important, but if we have to do things remotely again, we will.
And I think the thing that we're trying to proactively do right now is reiterate and remind customers that from day. One the minute. We launched this product before anyone even knew about COVID-19, the value prop the big takeaway from our system is.
This is a device to incur.
Increased throughput in a hospital to eliminate unnecessary length of stay and to basically get patients out of the bed that they don't need to be and so we continue to kind of hit that messaging hard.
And hopefully if there was a lockdown facilities would be looking to technology that.
Just allow them to fix their issue, which was you know I see use being over on the patient so.
Those are some of the things that were that that will continue to look at and continue to.
Communicate with our customers if you will.
And that's it from me thank you.
Thanks for the questions I appreciate it.
And never a question and answer session.
To turn the call back over to management for closing remarks.
Great. Thank you operator, and I just want to thank everyone for their calls are there questions their interest in modus JPY.
Today, I do hope everybody remains safe and healthy in the current environment.
And we'll look forward to the next call in Q4 in giving an update on our progress. So thanks again for joining today.
Thank you. This does conclude today's conference you may disconnect. Your lines at this time and thank you for your participation.