Q3 2020 Clearpoint Neuro Inc Earnings Call
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Caucus I'm out.
I would like to give a clear point.
<unk> wants it.
And I have your first and last name please.
[noise].
David Brown.
[laughter] and having a company name as well.
Okay.
IR.
Thank you so much I was writing.
Forward looking statements may include without limitation statements related to anticipated industry trends, the company's plans prospects and strategies, both preliminary and projected and managements expectations beliefs estimates or projections regarding future results of operations.
Actual results or trends could differ materially.
Company undertakes no obligation to revise forward looking statements for new information or future events.
For more information please refer to the company's annual report on form 10-K for the year ended December 31st 2019, and the Companys quarterly report on form 10-Q for the quarter ended June Thirtyth Twentytwenty both.
Both of which have been filed with the Securities and Exchange Commission and the company's quarterly report on form 10-Q for the quarter ended September Thirtyth, Twentytwenty, which the company intends to file with the Securities and Exchange Commission on or before November 16th 2020.
All the Companys filings may be obtained from the FCC or the company's website at www Dot Clearpointt neuro dot com.
I would now like to turn the conference over to Joe Burnett Chief Executive Officer. Please go ahead Sir.
Thank you Brad and thank you to everyone participating in today's call I'd like to start by saying that during the third quarter. We are encouraged by the return of many elective and pseudo elective procedures, leading to our case volume rebounding just 200 cases covered here in the United States.
I continue to be very proud of our essential employees in manufacturing and in our field clinical support team.
Despite personal risk to themselves and repeated travel challenges our team was able to ensure that every hospital and patient that requested the use of Clearpointt received it we continue to show up when these very sick patients need it the most.
I'm also very excited as we have continued to make progress in all four of our strategic growth pillars, including neurosurgery navigation biologics and drug delivery.
The house therapeutic and creating global scale.
With all the uncertainty the last three months of offered we all kept our heads down to ensure our development and strategic pipeline continued to move along even when much of the world was pause.
By no means that we put the this pandemic behind US. We currently have a number of hospital customers that have reduced surgeries due to higher cobot hospitalizations and the number of patients in high risk categories that continue to be reluctant to leave their homes to get treatment.
Nonetheless, we are confident in our team and in our direction and we continue to believe that Clearpointt will exit this pandemic in a stronger position than when we started.
I will now turn the call over to how to provide detail on our financial performance after which I will highlight some progress across our four strategic growth pillars before answering questions al.
Thanks, Joe.
Total revenues were $3.5 million for the third quarter of 2020 and $2.9 million for the same period in 2019.
This represents an increase of $592000 or 20%.
Drilling down on the components of revenue.
Functional neurosurgery navigation revenue, which consists of disposable product commercial sales related to cases utilizing the clearpointt system.
Decreased 1% to $1.8 million for the third quarter of 2020.
From $1.9 million for the same period in 2019.
This decrease reflects the continuing effects of the COVID-19 pandemic.
In which elective surgical procedures that were postponed or cancelled at the outset or the pandemic have resumed albeit at volumes that have not yet reached pre pandemic activity.
Biologics and drug delivery revenues, which include sales of disposable products and services related to customer sponsored clinical trials utilizing the clearpointt system.
Increased 162% to $1.5 million for the third quarter of 2020 from $564000 for the same period in 2019 Prime.
Primarily due to an increase in biologic and drug delivery service revenues.
This increase in biologics and drug delivery service revenues is attributable to the establishment of additional relationships with biologic and drug delivery companies that include period based retainers preclinical services in support of such companies respective clinical trials.
Capital equipment and software revenue consisting of sales of Clearpointt reuse of all hardware and software and related services decreased 48% to $200000 for the third quarter of 2020 from $400000 for the same period in 2019.
While revenues from this product line historically have varied from quarter to quarter.
The company believes that many hospitals have postpone capital equipment acquisition activities.
Due to the COVID-19 pandemic.
The company achieved a gross margin of 80% on its sales for the third quarter of 2020 compared to a gross margin of 66% for the same period and 2019. This.
This increase was due primarily to a shift in the mix of revenues by line of business there.
As a result, it in service revenues, which bare higher gross margins in comparison to other product lines, representing a greater contribution to total sales for the third quarter of 2020 relative to the same period in 2019.
Operating expenses for the third quarter of 2020 were $4.1 million, a 43% increase from operating expenses of $2.9 million for the same period in 2019.
This increase was comprised of research and development costs, which increased 59% due primarily to increases in headcount and increased project activity.
Sales and marketing expenses, which increased 40% due primarily to increases in head count of the Companys clinical specialist team to prepare for case volume growth anticipated in 2021.
And general and administrative expenses, which increased 33% due primarily to an increase in company wide share based compensation and.
And the reduction of the allocation of shared departmental resources to production due to the reduced manufacturing activity as an effect of the COVID-19 pandemic.
Net interest expense for the third quarter of 2020 was $201000.
Compared with $213000 for the same period in 2019.
Primarily due to a decrease in the amortization of the discount associated with notes, we repaid and retired during the first quarter of 2020.
And to the repayment and retirement of other notes in June 2019.
This decrease was substantially offset by the increase in interest expense associated with the secured convertible notes we issued in January 2020.
Operating loss for the third quarter of 2020 was $1.3 million compared with $900000 for the same period in 2019.
Cash and cash equivalent balances at September 30, 2020 were $14.7 million.
With that I will now turn the call back to Joe.
Thanks Al we're thrilled with the financial progress we saw in the third quarter, where we rebounded to a new record in revenue, particularly through our diversification into the biologics and drug delivery space, where we were able to show progress in the face of coated related challenges.
Now add a little additional detail detail about that progress toward our four pillar growth.
[noise] for pillar number one functional neurosurgery navigation, we saw both cases and revenue rebound to almost pre pandemic levels of 200 cases, and approximately $1.8 million in revenue.
As I highlighted earlier in the call the impact of COVID-19 has not fully behind us and it does vary moment, we had lost cases due to hospitals overwhelmed by cobot hospitalizations as well as in some cases key hospital staff being quarantined themselves while.
While we do not expect a full shutdown as we saw back in March and April of this year. We do continue to expect to see a certain hospitals open and close periodically until the time when a reliable vaccine for high risk patients and hospital staff is readily available.
On a case standpoint, our best estimate is that we are currently operating at about 80% to 85% of where we would expect to be had the pandemic not rooted itself in some of our hospitals.
We did use this time, however to continued progress on our pipeline of additional navigation tools.
In the last three months, we successfully entered full market release for two new products first our inflection had fixation frames, which enables easier trajectory by safely pending the patient on their back before rotating them over that's making existing workflows faster and further enabling two procedures a day.
Second we expanded our accessory kit by offering now a five French and seven French kit to complement our historic for French kit.
This allows larger devices to benefit from a peel away. She that can keep an open channels to the target.
This is important because every time you pass a device through healthy brain tissue, you risk additional hemorrhage and side effects and these sheets allow a single path to create an entry point for multiple steps of the procedure.
We're also encouraged.
That the freeze on new product evaluations has somewhat subsided and that we will again be able to introduce new sites to the clearpointt portfolio and while we do not expect significant capital sales the rest of Twentytwenty by starting these evaluations over the next three to six months. It allows us to get back into the hospitals capital budgeting process to close.
By the end of next year.
[noise] for pillar number two biologics and drug delivery, we've added five additional customers since the pandemic began and resulting in approximately 25 active biologics partners.
Again, Cogut has certainly had an impact on enrollment in these trials as well as starting new centers globally. However, we have made progress developing custom cannulated custom needles and custom software for the gene therapy in stem cell space and look forward to incorporating these tools into formal clinical exploration in the future.
All in all our biologics business is when it is the one pillar that is growing faster than we expected going into the pandemic. Despite these clinical delays.
[noise] pillar number three therapy products, we continue to be encouraged by our partnership with CLS in Sweden.
CLS successfully earn CE mark for their laser system, the tranberg for use outside of neurosurgery.
Now while this does not allow us to do any cases today to treat Newark, narrow disorders or tumors. It does allow our team to begin to get clinical experience in Europe and other parts of the body with a similar system that will undoubtedly allow us to continue improvement and began necessary field education.
And finally pillar number for achieving global scale, we successfully hired the first members of our clinical support team in Europe. This will allow us to begin supporting biologics cases in Europe for pharma partners that are based in CE Mark countries, who will now be able to include clearpointt into their study protocols as our team will be present on that continent.
This is a significant strategic investment that you can see has impacted our opex to some extent, but we believe the time is right and necessary for us to be viewed as the premier partner for biologics and drug delivery. If we do not have an active presence in Europe than we cannot meet our full potential.
Furthermore, you can see that our gross margin for the quarter grew to 80% now while we do not think this a sustainable right now quarter to quarter as it reflects a disproportionate mix of disposables and clinical services compared to capital sales I think it does provide a good indicator of the margins possible for the razors in our razor Razorblade model.
Cool.
In total we believe that barring a massive shutdown of hospitals here in the U.S. for elective surgeries that we will exit 2020 with revenue between 12 and $12.5 million for the year.
With that I would like to open up the call to any questions that the participants might have.
Thank you at this time, we'll be conducting a question and answer session.
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One moment, please while we poll for questions.
Our first question today comes from Andrew Dsilva of B. Riley Securities. Please proceed with your question.
Hi, Thank you very much I'm glad to hear but he is doing well and just a few quick questions from me I'm, sorry, I have to start to.
Hey has gone thank you on.
On a book keeping strong is it possible to get a Rev break as it relates to the product and service a breakout by a by category as it would relate to biologics and drug delivery and then if there is a breakout for therapy revenue and or capital equipment and and then.
While how is pulling that Joe could you give any color around how many clinical trials you're involved in currently I mean, you mentioned, adding five new clients. That's that's a really good cadence I'd be curious how that's translating into clinical trials and has there been any color on why does expire.
Good for your first biologics partner to obtain an approval.
Oh.
Oh sure. It's Lee let me, let me start with the addition of new partners I think what we the comments I just made show that I. We added about five additional relationships. If you want to say since the coveted ER situation began so the you know the cadence there is about one every six weeks or so give or take.
Many of these start in a much more foundational time and what I mean by that is the sites themselves or the relations that slipped to themselves as a company that has just received funding or is well along in the formulation of their biologic itself and is now move to the next step up how do we actually deliver it.
So it's very common that when a customer shows up on our count of the 25 relationships that we have it normally begins with a number of consulting calls and regulatory called and has progressed at least until the point, where they have actually purchased some products or services from us So maybe they purchase.
And can you list to do their first preclinical data maybe they've asked us to do some hydration experiments are viscosity experiments for them, but effectively some transaction as at least place taking place to get to that point now as you can imagine getting from there to a human.
Clinical patient generally does take some time so what we're constantly doing is fostering all of those relationships through through the process.
I believe I think in the since covert began so let's say in the last six months anyway.
Our products have been used in two additional clinical trials.
At least ones that I could think of right away. However, we have not necessarily listed those because again, we try to keep it confidential as our partner, sometimes sometimes requests we do until an appropriate point, that's kind of where we are on the the biologics relationship side.
How do you do you by any chance of any of the data available Oh, sorry, Helena or not in the same location sorry, I can't look at many I asked him [laughter] no worries okay.
Oh.
You might be on mute.
Yeah, Andrew while waiting for how then can you what was that there was a third question to you guys.
Guys I was on mute I apologize okay.
Andrew I was going to say, we will have a very nice table laid out in the 10-Q that will be filing in a couple of days, but suffice it to say for now that substantially all of the service revenue.
You see a on the income statement that accompany the press release was represented by biologics and drug delivery.
Okay. So there really wasn't much in that regards a therapy revenue either as it relates to services or or product nor was there much capital equipment revenue as it relates to services or products.
A there was a little bit but.
But as I say substantially all of that line item was a biologics and drugs Dorothy.
Okay, Andrew when we when we talk about services in the two buckets, so services in biologics and drug delivery a that the two most common flavors of that is again, a company hiring us to support their cases, clinically and handle infusions or co branding or marketing or things like that that's sort of one type of clinical service.
Is this could include preclinical support this could involve trial design a number of different things. So that that's one one side of it or the second side that would fit into the biologics is also us developing custom products or software so someone might hire us to develop an application that will do some specific feature during the case.
And the teacher either during their trial or for their commercial launch. So those are the two types of services that generally exist in biologics and drug delivery. When you see a service line in capital effectively what that is is the service contracts to support the systems themselves. So you know if they system were to break in the field and it's not under warranty.
And the customer would have purchased a service contract at which point, we would replace it but that's really the distinction between services that you see.
All right great. Thank you very much that clarification and then the last question I had previously asked was just related to any or any discussion about when it would at least be anticipated for your first partner to obtain an FTC approval.
You know I always rely on some of the partners sort of publicly available information to to answer that I do believe PTC has recently communicated as an example that they they are expecting a commercial approval.
Somewhere in the World in 2021, if not in a couple of major geographies I think it's also important that they pointed out as well that you know their efforts have gone on to.
Look for patients. If you will again these are very rare disorders, and very sick patients well beyond the core number of countries that they initially began and I think they were targeting five or six countries to start at a that search for for these patients is actually expanded beyond that so whether these patients get treated under a compassionate use protocol in certain countries, which is.
Only a possibility or they get treated under the actual commercial approval.
You know our participation in our support of those cases would be the same and in each case.
Okay. Thank you for that and just my last question I mean, you did give a little color on this earlier.
Effectively as it relates to that contract research organization Esq sales channel.
That you're you're developing right now can you talk around how you see that evolving.
Maybe what your discussions are like right now with clients and customers that maybe aren't utilizing you in that function, but what that could possibly mean, if they did go on board.
Yeah, I mean, I I think we have the we have the benefit of again working with 25 different companies and understanding their needs and most importantly understanding what needs are consistent across all of them, so rather than each and every company trying to recreate the wheel and answer and asked the same questions and contracts with different experts in the field.
If we can be the accumulation of that knowledge and then provide that as an added service I think that's something that we're very interested in doing a lot of it's actually begins with not just preclinical design and bench testing, which we're certainly capable of doing the device side of that whereas we need to grow into more of the biologic side, but not many.
Clinical tests are in fact testing the infusion the injection the mapping all of those types of things, which is a skill set that our current team of clinical specialists can also provide so really it it creates quite a bit of leverage for us for us to be able to have a a clinical specialist a cover two or three cases, one week and then the next.
Squeaked, they might be on assignment working directly with the company in the lab doing some additional work. So I think that's that's something where it doesn't require intervention for us to grow into it and I think we now have that a base of you know hopefully satisfied customers that would you know the word word we'll get out that this is a an additional service we can provide.
And roughly about how many are utilizing that right now out of the 25.
[noise] I'd say more than half are using it to at least some level meaning that.
As I brought up earlier on the call you know a bench top.
Viscosity test to determine flow rates through the Smartflow can you similar to some of the software targeting software you know theres a number of companies that were actively working with there, but I'd say I'd say, 50% or so right now.
Okay, great. Thank you very much for answering my questions and congrats on the snap back and good luck close enough here.
Great. Thanks, Ed.
The next question is from Sallie youngest of Brooklyn Capital. Please proceed with your question.
Oh, Hi, Hi, Joe.
Yeah exactly.
Thanks, Thanks for holding the call.
I have a question this is probably for how I see R&D in the third quarter.
It was up sequentially a lot from the first quarter to 1.2 million.
Do you expect that level to.
Can you in the fourth quarter.
The the expenditure level, yes, the rate of increase to know.
The as I mentioned, the the rate of increase was due primarily to additional.
Additional people and and additional projects.
For which which those additional heads were hired.
But but no I don't see the rate of increase to nearly.
Nearly that pace it should be a well that probably about <unk> million in the fourth quarter.
Yeah, My my motivation would be [noise].
No that would be my anticipation.
Okay.
Uh huh.
And then I don't know Jeff are you going to Joe are you going to announce who the new customers are for the drug delivery and gene therapy, We released the names of the.
The company [laughter].
Maybe if we yeah.
Yeah, I mean, we're in constant dialogue with these companies as to when an appropriate time is.
Okay, but as you know it's a you know it's a very proprietary piece of information as you know technologies and strategies, especially when many of our partners might be going after the same indication. So we really just like to follow their lead and when there are compelling with it that's when that's when we're able to now.
Okay. Good all right well, thank you and I'm, so glad to see a rebound.
In this third quarter very very good news.
Yeah, no. Thanks, I'll have to get it all my questions. Okay.
The next question is from Mike look out of hidden small caps. Please proceed with your question.
Hey, guys I have a question about the complete laser solution that you guys are expecting to launch.
Have you disclosed how that's going to impact revenues and margins.
I do not.
I do not believe I believe what we have disclosed is that it it should be similar razor razorblade model and we continue to expect the margins of the razorblade.
ER to be or maybe not directly at launch, but you'll be able to achieve that 70% margin on the on the laser side.
So it's you know were really replicating it really kind.
Kinda married itself very well to our technology, because you know our navigation system has a computer laser has generator a they both run similar software so that becomes the new combined razor and then similar on the disposable side, we'll be selling our head frames as well as our laser fibers into the exact same case. So the so that'll be the higher margin part of the yeah.
Position.
So if I was to look at.
The number of cases that you guys do right now is roughly how many cases would that impact.
Ah so about 35 or 35% of our cases, they may be a little bit higher than that our laser ablation cases. So if you think about what the impact would be for I mean again, if you take the capital out of it and the system itself and you're just looking at the per case revenue a you'd effectively see a per case going from about six.
Thousand dollars in revenue for just our navigation up to anywhere from 12 to 15 or even more depending on how many lasers. They use during the case itself. So we're effectively to access or three x. revenue opportunity in that particular case versus what we're getting for that.
Okay. So that's not so of course, if every one of our existing users switch to our laser you know we're going to continue to support a visual AIDS cases continue to support Ontario's cases, you know whatever the patient needs to be treated were going to be there for them.
But again, we you know we we're not we're not developing this product in the dark we we've got active relationships with neurosurgeons I do laser procedure and their their assisting us in the development of this today.
Okay. So if we were to estimate roughly how that impacts revenues right now.
Would it be safe to just say.
Roughly 30% of the roughly one third of your cases would result, and if you were to switch all over to the new laser would result in doubling that portion of the revenue.
That's correct I think that I think that what that same assumption that if everyone switch that we're currently working with a then yeah I think that would be conservative yeah.
What what compels <unk> those those.
People to use the other the other solutions, if you're if you're coming in with your own.
I think there's a number of just streamlined advantages that we would have and we'll certainly have to compete for each and what each and every one of those I think above all ours is going to be a faster simpler solution as the way that its design.
And especially when it's used in concert specifically with our navigation system. So you've got one work flow as well as one the clinical specialists that is now responsible for the success of the entire case. So there's no handoffs during the procedure, we found over and over again that many surgeons of.
Sort of contemplate complimented us on that priority because they don't like to people being responsible for the same outcome they'd really like that one person assessing and I think that's something that we offer as well.
Okay and then.
One other question about the.
Do you see your trial, that's coming out for PTC.
PTC, they're estimating that its going to be approved and potentially launched mid mid next year.
But they mentioned that many of the patients are in Europe, and I know you guys aren't in Europe.
How would you be treating those patients would you be selling your platform to new sites in Europe.
Ah that's correct yeah. So we actually as I mentioned earlier on the call. We have hired our first European employees.
Covenants, certainly [laughter] made it a little more difficult to go through the training process, but we are actively working on evaluation and placement contracts with a number of centers across Europe that we see as being these PTC centers of excellence, so, though the preparations to be ready and get those sites familiar with cases doing either deep brain stimulation.
One or biopsy or tumor ablation, so that the very first case that they do is not you know one of these kids with AIDC deficiency. We you know we want to make sure that not just our team as they are in present and able to assess but that the hospitals themselves have had some some positive experience with the product.
Got you, Okay, and then but to put it in a little bit in perspective, if cobot Hadnt hit I would imagine we would have four or five active European centers already and it's OK.
Directly on one for one month to month delay so far.
So that kind of goes into the next question I had was on some of the larger trials that are targeting.
Targeting over 100000 patients.
How do you intend to scale up to meet that or are you guys.
Is there a particular plans you guys have in place to scale up and then and then whats.
No if you've disclosed like what the capacity is at the 60 sites that you're doing how many cases you can do with those.
Yeah, I think there is.
I would I would think of it in two stages. So the first stage is you know number one.
Theres going to be a ramp to get up to any meaningful volume. So even if these are sort of larger parkinsons huntingtons disease, a tumor related projects, even if they they really get all the way to ask a clearance there's still the process of reimbursement, there's still the process of patient outreach and education of neurologists.
Able to refer patients even to get to the surgeon in the first park. So it's definitely not flipping a switch and it takes a little bit of time, however, with those first commercial clearances, which again can be.
At least for the rare disorders could be next year as we've already talked about you know that really I think sort of open the flood gates as to what yes, and what could happen and what could these volumes really look like and in that case, you know it becomes a lot less hypothetical and more all right. How are we actually going to solve this problem and I think the reality is is that.
The future of neurosurgery, probably around the world is not 250 or 2000 centers doing one case a month you know it's going to be concentrated in a much tighter group of centers of excellence that are trained to do three or four procedures, a day and just churn it almost like a lean manufacturing line and I think it remains to be seen exactly who.
Those centers are but undoubtedly it will create an opportunity that will be filled by you know partnerships and surgeons that want to set up the centers of excellence or co owned joint.
Joint ventures.
You know either big iron companies or companies like ourselves et cetera that if it really appears that that demand is there and real then you know it's really just its map and some investment that gets that gets you. The rest of the way I mean, the reality is that a good thing for us is that even though we are active today in MRI scanners, and that's kind of where our world is focused on it.
I mean, we're always going to be only locked to EMR. We're also doing some work on the operating room as well, but most importantly, we don't need a seven Tesla scanner to do what we do in fact, we can use a 1.5 Tesla scanner.
And have exactly the type of imaging, we need for this type of these types of procedures. So I mean, you can imagine a situation that future, where a neurosurgery centre of excellence might have five older 1.5, Tesla scanners and.
And then they become the place that you get referred to and maybe even hop on a plane or travel to get these procedures done.
Okay got you.
That's all the questions.
Okay.
The next question is from hosting interim RG MP. Please proceed with your question.
Hi, Congrats for the good results I have two quick question. Thanks.
Land escape.
First one if you can say about that Roes on the Zimmer Biomet Oh. They now sits in the data release, that's it the next year to expect their Roza comes today comes online.
I want to just see what's your take away what's your reaction today Roseville versus your your your your solution and the next one is the last if we have for this news of.
Biogen and ongoing their solution I know its F.D.A. rejected it they couldn't have tip confirmation by F.D.A. My question is what would be so youre. Your reaction if di solution for all Zimmer. Good approved what's what you did the FICC on going long term.
Approach thank.
Thank you.
Yeah sure. Thanks for the question. So I'll start with the first one which is related to the Rosa robotics platform. You know there are additional robotic platforms out there as well you know the Medtronic msrs or as an example of that too we see ourselves as very complimentary to that.
And what I mean by that is that certain indications in certain types of procedures lend to better to a robotic platform versus what sort of what we do and to be clear. We are we are building our own robotic platform, albeit at a much simpler level, we're not trying to replace everything the surgeon does we're just trying to replace the most annoying parts and.
I'm consuming parts of the procedure Ah. So that's that's something that we are we are actively doing along with our clearpointt platform.
But to put in perspective, you know a if you need a to deliver an agent or a therapy of some kind to a target deepened the brain and you only need to use you know two three maybe four trajectories.
So then you can do it inside the MRI magnet you can use our tool and this is something for like deep brain stimulation. This is for laser ablation of the tumor or those types of things, so where where if you're going to go after two or three trajectory I think that's where our work flow and access to time in the MRM magnet makes a lot of sense.
You compare that to something like Rossa, where you.
Terrific technology, and you think about an application like stereotactic E G.
So here's a situation where now you actually have to drill 15 holes in the patients had placed these electrode that certain specific depth and then record the patient over the next three weeks and wait for a seizure that take place in epilepsy patients. Okay. That's something you're never going to use clearpointt for because there's no way you would use our level of precision for something like that and.
You likely wouldnt be doing that procedure and the MRI either so so we see as you know we see I'd say every single one of the hospitals are almost all the hospitals were in today have both us and another medtronic or another.
Robotic option. So it's it's not to say that they're they're completely cannibalistic or anything like that but that's how I view it at least on the first question.
The second question as it pertains to all timers again, if you think about the things that we do really well is we get a therapy to a very specific target us precise manner possible. Okay. So that lends itself to functional disorders, where it's just one region of the brain is where the disorder is taking place in an epilepsy.
Patient you know the the seizure is generating a generally originating in one location in a Parkinson's patient you know you're going after a specific target based on how the patient presents all time or is this something that all the research seems to indicate there is a much more global phenomenon. So it's more likely that the treatment.
At least on the farm and farm pharmacological side would come from something that could impact the entire brain almost like baby in the brain and an agent as opposed to delivering something to one target. So while we are active in some work in the deep brain stimulation side of treating treating all timers.
On the on the pharma side.
Most of our work has been more on these functional disorders today hopefully that helps.
Okay. Thank you appreciate thanks.
Sure.
The next question is from Henry Mellon of Millen Group LLC. Please proceed with your question.
Hey, Joe how Bulldog.
Hi, Henry good to hear from you or yeah. Likewise I was wondering if you could shed some color on the PTC.
Hey, do you see when that does get approved.
I know this is me talking about PTC. So they've identified 300 patients when that gets launched as a kind of like a snowball effect new store was one can you kind of give a description of what that would look like.
As far as the yeah, I mean I can remember.
Okay I can at least that Ah, yes for more color. So I can do that [laughter].
Ah I can't perfectly, even though you're not in control of it of course, but I realize that yeah I understand no I think that's a dire disease. In you know you got 300, these kids or identified but what does that look like to you as far as the launch.
Yeah, No I think that's right and I think that you know the fed back from a lot of these children are up against the clock to some extent, where you know to get clearance and then not get treated for three years. After that you know, it's a missed opportunity at added development and in some cases, a extending the life of these these children as well so.
I do think that the you know not just as this have a chance as it's been so far you know that would be sort of fast tracked through some of the regulatory process easy because there is really no alternatives to treat these kids today.
So I think that certainly helps on the regulatory side and its for good reason.
Both on the science and the need that this is likely one of the first treatments to be available once it becomes available that that becomes another question to US you know how is the procedure paid for which centers like we've already talked about are capable of delivering the therapy et cetera et cetera. So I do believe that the rush and the.
Statement to treat these patients will make you know the.
Sort of getting through that Q of however, many patients PTC you mentioned I think you said 300.
I think it will go relatively rapidly.
But I don't want just count additions found his here and you know again, there's not a single neuro gene therapy that approved. So this this first treatment is going to be the first possibly be the first to go through it which undoubtedly will find some challenges that we didnt appreciate at the beginning.
Fair enough. Thank you.
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Our next question is from Mike Lipka of hidden small caps. Please proceed with your question.
Hey, guys I meant to ask this other question I.
I just didn't want to.
Take up too much of your time, but on the on the trial partners that you have.
How many of those are in gene therapy, and then Hum.
How many of those would you consider to be in late stage. So at phase two or later.
Oh.
It's a good question, let me see if I can navigate through its on the gene therapy side.
I would say between 50, and 75% give or take somewhere there.
And the other two what lets say 25 plus percent can be a mix of sort of traditional pharma or a stem cell things like that but it's it's a joke already is certainly not specifically in gene therapy today.
Let me see here and as far as the timing of the trials themselves.
I would say, it's less than a handful that are actually in that late stage sort of phase two phase three I would say now that the the one tricky part that I have them sort.
Sort of walking through this is.
Is that one partner could potentially have multiple shots on goal.
You know so for example, a company like PTC is not only working on AIDC, they're also making progress and predicts a taxi a an angel than syndrome. Other other sort of rare inherited disorder. So.
You know one partner might have two or three trials for example, but I think for the you know the reality is is that there's probably a less five or less that are in what we would call later stage. One now the one of the thing to keep in mind, Mike is that some of the in.
Indications, we're going after you might not need a phase two or phase three depending on what the application looks like so for AG see for example, again Theres no alternatives, it's really more of a compassionate use standpoint for commercialization of that might not require something like a phase three trial and that the data already collected in its first phase.
Saves could could be enough to at least give give these gives a chance. So that's the other thing to keep in mind.
Okay and then one other question I had about.
When you expand into these other trials and let's say a couple of them actually pass through ft.
Approval.
How does that how does that change your nest.
Yes.
Is it safe to assume that essentially all of the heavy lifting.
After its approved so marketing and all that stuff is done by the the trial partner and then you guys are just kind of going along for the ride or do you expect a bump up in SG and I.
I don't think a significant one I think in some cases expansion to a geography creates one as I mentioned in Europe. You know we have to put some feet on the street, there, but but really the most.
Impactful SGN a spend is really on the clinical specialists that are there to support the case themselves you know because it's one thing to do.
A calculation of saying what we're going to do this many cases and you can come you know or you can support this many cases per week.
It's not quite that simple because again in some of these cases, they're very sick patients that need to be treated urgently. So we need to have excess capacity. So we always have someone we can fly and in an emergency so, but but above and beyond that's our biggest asked DNA from from a marketing standpoint, I think some of it is is like you said paid for by the other.
Company, but really where we're looking to take the ranges in the neurosurgical community. So if you think about all these companies that we've listed that we work with their primary customer historically has been a neurologist in a small molecule setting so they wouldn't necessarily go to the A.S. Estefan functional neurosurgery Congress.
And we will be there. So I can certainly see an opportunity where we might have an exhibit or sponsored symposiums and then some of our partners would be co sponsoring out with us and things like that but I don't think it's a good.
Things that we already do its not something Thats a massive addition, and on the on the sales side. You know this is an important thing too is that you know I don't think we need a massive sales organization either because as I meant I don't know if you heard the response earlier, but you know the future I think it looks like a lot of procedures anchored into true centers of excellence that are doing a lot of them. So.
What's more likely there's 100 Super high volume centers in the United States. As an example, not like cardiology, where you have 1500 hospitals. So we don't need a sort of a sales team much larger than the team we have today to be able to cover that number of account.
All right got you and then so is this is this the core I know you guys have mentioned spine and I think it was across the potentially down the road.
Is that still too far off to even consider expanding into or.
But are you guys just completely focused on on the neuro side right now.
Yeah, I mean, we have done some some work with biologic partners in spine for certain products and similarly, the CLS laser that we've acquired the neurosurgery.
License too.
That includes both cranial and spine, there's some some need for laser ablation in spine tumor for example, but I'd say, it's definitely not the highest priority right now it's pretty much a crane yield play for us the prostate work that you've heard before it is something that we do have a role in however, it's not sort of.
The strategic core it's it's us helping out CLS, who will continue to market and sell their laser outside of neuro on their own.
So what I mean by that is we own the license for neuro and spine worldwide. However, they also signed us as a distributor for like you said prostate in North America. So in that sense, we're kind of helping them by facilitating installs and leveraging our clinical team to support cases and do training.
But we're not really involved in clinical trial design or reimbursement or marketing in that prostate space kind of we leverage what CLS CLS still does not have clearance in the United States. So we're you know today, we're not not really doing much with it.
Okay, great. Thanks again.
Okay sure.
There are no additional questions at this time I would like to turn the call back to Joe Burnett for closing remarks.
Alright, Thanks Brock.
As always thank you all for your interest and your for support of the entire Clearpointt team, including the surgeons and patients that we're serving on a daily basis, we work you're a clear point because we know we are helping to patients and their families. During some of their darkest times and were honestly. We're thrilled to have you as a part of this journey with US. So thank you very much and please feel free to reach out.
With any questions in the future. Thank you.
This concludes today's conference you may disconnect your lines at this time. Thank you for your participation.
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