Q4 2020 Clearpoint Neuro Inc Earnings Call
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Greetings and welcome to the Clearpoint neuro full year 'twenty 'twenty financial results Conference call.
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Comments made on this call may include statements that are forward looking within the meaning of securities laws.
These 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.
The 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 31 2019.
And the company's quarterly report on form 10-Q for the quarter ended September 30th Twenty-twenty, both of which have been filed with the Securities and Exchange Commission and the company's annual report on form 10-K for the year ended December 31st 2020, which the company intends to file with.
The Securities and Exchange Commission on or before March 31, 2021.
All the company's filings maybe obtained from the S E C or the company's website at Www Dot Clearpoint neuro dotcom.
I would now like to turn the conference over to Joe Burnett Chief Executive Officer. Please go ahead Mr. Burnett.
Yes.
Thank you Brock and thank you to all of the investors and Clearpoint listening to today's call I'm joined here by our Chief Financial Officer Danilo the Alessandra.
2020 taught us all a lot about ourselves from friends and family to work and life balance to everyday priority is an attitude. We had clearpoint learned a lot about who we are and how we respond to challenges beyond our control.
In short we make the best of the situation in front of Us and we want to lead by example.
Our goal back in March of 2020 was to exit the pandemic stronger than we had entered it and I'm a proud to be able to say that we have done exactly that.
And while we continue to see disruptions in case volumes and evaluations as many hospitals are still limiting surgical procedures. We are encouraged by the rapid deployment of vaccine and believe that we will return to pre Covid case volume in the second half of this year, we are almost there.
During the past year. However, we did not stand by idly waiting or hoping for cases to return.
We kept our team fully intact and redeployed our resources to further our development programs and bringing new partners and by a lot in both the biologics and medical devices parts of our business.
Our innovative pipeline of products is more exciting than it has ever been and we are now in a position to prove our role as innovators with a cadence of annual product releases that solve real problems for both surgeons and for patients.
Our successful capital raise just a few weeks ago leaves us with more than $65 million in cash on our balance sheet as of today to ensure the funding of these portfolio programs is something that is fully in our control.
I will now turn the call over to Danilo for the financial detail from 'twenty 'twenty after which I will provide additional commentary on our continued four pillar growth strategy Danilo.
Thank you Joe and good afternoon, everyone.
Let me start by looking at the full year 2020 results when Euro total revenues were $12 8 million for the year ended December 31, 'twenty 'twenty, a 14% increase over revenue of $11 2 million in 2019.
Our revenue is made up of three components functional neurosurgery navigation of therapy, biologic and drug delivery and capital equipment.
Punctual neurosurgery navigation in therapy revenue, which consists primarily of disposable product sales related to cases, utilizing the clearpoint system decreased 12% to $6 3 million in 2020.
From $7 1 million in 2019.
Revenue was here reflect the continuing impact of the COVID-19 pandemic on elective procedures.
Biologics and drug delivery revenue, which include sales of services related to customer sponsored clinical trials utilizing the clearpoint system and related disposable products increased 109% to $5 million in 2020 up from $2 4 million in 2019.
This increase was due primarily to an increase of approximately two 7 million or 302% in biologics and drug delivery services.
Capital equipment revenue, consisting of sales of Clearpoint reusable hardware and software and other related services decreased 10% to $1 5 million in 2020, as compared with $1 7 million for 2019.
While revenues from this product line historically have varied from quarter to quarter. We believe that many hospitals have postponed capital equipment acquisition activities do you view, the COVID-19 pandemic as evaluations of new technology heavy spot.
We achieved a gross margin of 71% on sales for 2020.
Compared to other gross margin of 65 per cent for 2019. This increase was due primarily to our revenue mix shifting toward higher margin service revenues in 2020 relative to 2019.
Research and development costs were $4 7 million for 'twenty, and 'twenty compared to $2 8 million in 2019, an increase of 66%, resulting primarily from cost increases and additional personnel collaborative research intellectual property, including amortization of acquired license rights.
Sales and marketing expenses were $5 4 million for 2020 compared to $4 8 million in 2019, an increase of 13%.
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Yeah.
General and administrative expenses were $5 3 million in 2020 compared to $4 3 million for 2019, an increase of 22%, resulting primarily from increases in compensation, consisting primarily of stock based compensation and transition costs.
Kopinski cost and legal fees.
I will now turn to the fourth quarter 2020 results.
Total revenues were approximately $3 7 million for three months ended December 31, 2020, an increase of 16% over $3 2 million in the fourth quarter 2019.
Functional neurosurgery in therapy revenue decreased 5% to $1 6 million for the fourth quarter of 2020 from $1 7 million for the same geared in 2020 due to the previously mentioned effects of the COVID-19 pandemic.
Biologics and drug delivery revenue increased 40% to one 5 million in the fourth quarter of 2020 from $1 1 million net in the same period in 2019.
This was primarily due to an 81% increase in biologics and drug delivery services.
Capital equipment product and related service revenue increased 41% $2 6 million for the fourth quarter of 2020 as compared with <unk> 4 million in the same period in 2019, due primarily to an increase in system placements in the fourth quarter of 2020 relative to the same period in 2019.
We realized a gross margin of 61% on sales from the fourth quarter of 2020 compared to a gross margin of 69 per cent for the same period in 2019.
Due primarily to a one time year to date reclassification of certain costs previously classified during 2020 as operating expenses into cost of revenues.
Research and development costs were $1 8 million for the fourth quarter of 2020 compared to <unk> 8 million for the same period in 2019, an increase of 120%, resulting primarily from cost increases in compensation collaborative research intellectual property, including amortization of acquired license rights.
Sales and marketing expenses were $1 5 million per the fourth quarter of 'twenty 'twenty compare compared to $1.5 million for 2019, due primarily to decrease in travel costs and incentive based compensation, which were offset by increases in compensation costs due to headcount increases in our clinical and marketing teams.
General and administrative expenses were $1 3 million for the fourth quarter of 2020 flat from fourth quarter 2019 levels.
Cost increases in compensation occupancy and legal fees were offset by the onetime reclassification of costs previously mentioned.
With respect to our cash position at the end of December 2020, we had cash and cash equivalent balances of $20 $1 million compared with $5 7 million at the end of 'twenty N T.
Our cash increase resulted primarily from the issuance of senior secured convertible notes in January and December 'twenty 'twenty in the aggregate amount of $25 million, which resulted in net proceeds to us totaling approximately $24 3 million.
I will now turn the call back to Joe.
Thank you Daniela I now want to add some additional color to our four pillar growth strategy.
First let's talk about biologics in drug delivery.
We continue to maintain and grow our relationship with more than 25 individual customers in the drug and gene therapy, and stem cell space, providing them with products and services to support the various regulatory phases prior to commercial approval.
In addition to those twenty-five relationships, we have identified more than 75 additional potential customers based on their narrow target and their mechanism of action, where we believe clearpoint technology can help.
We now have a team in place that is actively reaching out to those companies and academics that centers as we speak.
In 2020, all of our partner preclinical and clinical trials were put on hold for at least a while driven primarily by restrictions caused by COVID-19, and in most cases those trials stoppages lasted throughout the year.
We are encouraged that at least five of our pharma partners have resumed enrolling patients already in 2021, which is a step in the right direction and enables us to resume our clinical revenue stream of products used during those procedures.
More importantly, it restarts the crucial clinical timelines and progression through these necessary regulatory trials.
One example is the treatment of a a D C deficiency syndrome patients in France under their compassionate use program led by our partner PTC Therapeutics.
This was highlighted in a recent news article published in France is a M. On one of the top news day newspapers in France.
At the request of some partners, we do not publicly disclose all company names, we do expect multiple new clinical trials to be initiated here in 2021 now that the COVID-19 fears seem to be subsiding with the global distribution and access to vaccine.
Now where our sales into clinical trials declined in 2020, our expansion into clinical and development services grew and our entire segment of biologics in drug delivery more than doubled as a result.
Examples of such services, including development of custom drug delivery cannula and needles.
Top protocol, writing and steady execution clinical case support and site training and pre commercial launch planning.
These are turnkey solutions that can prevent drug companies from having to replicate the same expertise and expense within their own organizations.
The expansion of these services are not only meant to provide a meaningful revenue opportunity for clearpoint, but are also meant to start our engagement with these pharma partners much earlier in the development process.
When our products are used early in development. It makes them much more likely to be used throughout the regulatory trial and commercialization process as well.
The specific skill set of many new hires will continue to expand these service offerings and make a relationship with clearpoint more valuable and stickier than ever before.
Each year of engagement with a pharma company generally comes with a larger service revenue potential and as mentioned before we now have more than 25 customers progressing through that growing revenue opportunity.
Moving on to pillar number two which is functional neurosurgery navigation, we saw a decline in year over year cases, and revenue once again driven by the impact of COVID-19 on elective procedures.
The majority of our hospitals once again put in place at least some restrictions in the fourth quarter to limit and prioritize elective procedures or to halls procedures entirely until substantial ICU beds were available.
Many of these closures have persisted into the first quarter of 2021 in case volumes have continued to be depressed in January and February of this current quarter.
On the bright side, we have seen hospitals reopening their doors.
Many of our customers, who had halted cases altogether in Massachusetts, California, Arizona, Texas, Oklahoma, and Kansas have all started to schedule cases again for March and April.
At this point, we believe that we will be able to return to pre COVID-19 volumes sometime in the second half of 2021.
Similarly, we expect to begin a number of new site evaluations, starting this summer, which will which will return us to growth and its functional neurosurgery segment.
As a point of reference given that we are already two months into the first quarter. We now expect case volume for Q1 of 2021 to be in the range of 190 to 200 cases up from the 175 cases, we saw in the fourth quarter of 2020.
While our case volume was certainly impacted we did make substantial progress on our development pipeline and portfolio.
As announced recently, we have been developing a next generation smart frame array, which is designed to not only simplify our existing workflow and save time, but also to enable expansion into the operating room for certain parts and eventually all of the procedure.
In the future, we will no longer be an MRI only company, but rather have a portfolio of operating room and MRI suite products to enable the site and the surgeon to choose which technology is most appropriate for each individual patient.
Our newly announced partnership with Blackrock Microsystems, and Salt Lake City, Utah will add an additional operating room tool to our portfolio in micro electric recording or N E. R. N E. R is a commonly used in complementary navigation tool for DBS cases today.
Emily We recently announced our license and development agreement with Philips on our Maestro brain model, which will become our foundational navigation engine across our portfolio of products.
Do you want to be viewed as an innovator and a central navigation company focused in neurosurgery and our proposed cadence of new products over the next 24 months will help us to prove that to the market.
We expect first cases of array in 2021 first cases of the Maestro brain model in 2022, and the first cases of our N E. R platform in 2023.
Moving on to pillar number three which represents Clearpoint therapeutic program star.
Starting first with our partnership in laser interstitial therapy or less we continue to make progress on our own neuro laser platform for intracranial and spine application.
While COVID-19 did impact our timelines due to supply chain disruptions and temporary closures of companion testing facilities. We are back at full speed in the development process and now expect first clinical cases to be performed in the first half of 2022.
Given that our partner C. L. S does have FDA clearance and CE Mark for non neuro applications. We are continuing to gather experience with a similar version of this system, which will give us more confidence going into a neuro release in 2022.
For our pursuit aspiration device, we have temporarily halted in commercial activity as neuro aspiration for inner cerebral hemorrhage is less of a market share activity and more of a market development activity attempting to train hospital staff and physicians on a new technique is simply not a priority during this pandemic and we expect to reevaluate.
This priority in early 2022, when the bolus of delayed elective procedures has caught up.
We also recently announced an additional agreement with Blackrock for what.
What we describe as a smart biopsy needle we will continue to make progress on this new market for Clearpoint and provide updates in the second half of 2021.
And finally looking at pillar number four which is global expansion and scale, we recently announced our first year of patient European cases here early in 2021, and we'll continue site expansion as Covid travel and hospital restrictions resolved.
Our expansion into Europe is crucial as it enables many of our new and potential pharma partners to begin enrolling patients in Europe P N and other sites outside of the United States.
We have also added capacity to our clinical specialist team with five additional head count currently going through training.
In the second half of this year, we expect to have the capacity to cover approximately 3000 cases per year at our current operational burn rate.
We also recently announced our robotic assistance platform designed to automate certain parts of our procedures. This approach will help surgeons and their teams increased capacity and be able to monitor multiple patients at the same time in multiple rooms. All of these technologies will be available for simulated use testing and training at our new education facility.
The Cove into long Beach, California, where we expect to open our first courses later this summer as travel begins to resume.
The narrowing of higher now happy to answer any questions that are out from the field.
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Yeah.
Our first question today is from Andrew to Silver from B Riley Securities. Please proceed with your question.
Good afternoon, congrats on the progress and thanks for taking my questions just to start I'd be very interested in additional color into your moving to the operating room and I'd really be curious on maybe a little bit on the margin profiles are.
As it relates to differences between the or versus the MRI suite and then.
How significant will be human capital overlap b.
Should we expect material differences between decision makers are or should we expect you to have to hire additional sales force to be able to address that or field team.
Hey, Thanks for the question Andrew Soda.
Kind of break that question into a few different parts here you know first it's important to think about what those target types of procedures are.
So where we say that we will have a navigation system that is appropriate for the operating room. It does not necessarily mean that every type of our procedure would migrate there or that we would participate there again live MRI guidance is sort of you know are our bread and butter and where we began and we still believe that that is the most accurate way.
So not only navigate a procedure, but also to monitor their procedure. So procedures for example, like laser ablation.
Procedures are always eventually done in the MRI suite because the MRI is what gives you the information on how hot the temperature is getting inside of the body drug delivery I think very similarly, there is a huge advantage to being able to monitor monitor the drug infusion and be able to see how much drug is penetrating the patient during the procedure.
So that's something else, we're I think in the MRI suite.
That's still going to be a primary arena. So what we are talking about doing more in the operating room or procedures like biopsies are like deep brain stimulation as well, where the procedures are a little bit more predictable because you know the targets going in and.
And there's kind of a I won't say more room for error, but there's other ancillary navigation products like M. A R. Like smart biopsy needles that can actually increase the level of precision in the operating room as well. So so where some of our procedures I think are destined to stay in the MRI suite and grow their this new tool in the array system.
<unk> will enable us to penetrate some sort of existing biopsy and DBS markets in the operating room.
From a human capital standpoint, it'll be very consistent as far as the type of clinical specialists that covers the case, but as I shared with you before part of the design for array is for these simpler or more predictable procedures were less troubleshooting is involved and less anatomical differences are involved.
That gives us the arena, where we may not need to always have a a clinical specialist present.
I think you know as I mentioned in some of our remarks that we're opening in the Solana Beach Cove office, which will serve not only as a training center, but it'll also be our hub for remote support so instead of maybe flying a person person out to help what they biopsy case.
We would be able to support that case remotely and just answer questions. If the if items if any issue. So as we move more and more into the operating room I do believe that you know that St clinical specialist team will be there for initial training and for the first five to 10 cases, but the goal is to be able to remove that person from some other simpler procedures and.
Have those specialist focus on laser drug delivery and other areas, where we are providing the therapy itself.
Okay, that's great color moving over to the new Philips Maestro brain model partnership can you give a little color on the efficiencies and advantages do you expect to unlock relative to the legacy platform and then I'd also be interested to know just how involved.
Well Philip speed during the development and commercialization process.
Sure Yeah, I think one of the one of the biggest differences of our system and our approach is not just the extensive validation that had gone into Phillips developing this tool over the past decade or so.
But it also has to do with the speed of the approach.
Any of the similar type of segmentation algorithms that are available out there today, it's very common that you need a.
Computer acceleration of GPU of some kind and you also need time. Many you know anywhere from 14 to 20 minutes is pretty commonplace to do some of the segmentation analysis.
With our system, we believe it's fast enough.
Sub one minute for the analysis itself each time to be able to unlock these peri procedural applications, where if you're running multiple scans for a procedure. It now becomes practical to rely on this model for navigation, because you're not waiting 20 minutes. After each scan you can actually do it in a minute or so so I think that's it.
That's a big tool that we're going to use to unlock it not to mention all of the additional advanced algorithms that we're building that will be layered on top of the segmentation tool itself. So you know the future is it kind of plays out is that in early 2022, we expect to launch the baseline segmentation tool sort of the engine itself.
And then how the cadence of every six to 12 months after that that a new application is sort of being launched to work with it.
And the priority of those applications will sort of be dictated by not only the advancements that we make but also the ones that will benefit our own therapeutic products. The most as well as other ones that our partners have really decided are crucial for them and in some cases some of our pharma partners may very well be.
Helping to fund some of these these development efforts as well that's that's kind of the vision of the brain model itself. Your second question had to do with Philips involvement and in parallel to the license of the model itself. We also signed a development agreement with Philips, which effectively gives us access to some of their engineering team talent.
From the Philips research team. So some of the work we can kind of do ourselves as it relates to turning our own applications into skins that ride on top of the brain model and then some fundamental changes to the brain model that we need we need to add functionality. Those are things that we have a conduit and Philips to help us with.
Okay perfect. Thanks for that and just last question from me as we think about your continued expansion within the biologics and drug delivery segment.
What additional overhead.
Should we expect.
To see as you look to capitalize on the transition translational service the opportunity that you you referenced, particularly as you expand internationally and then you also talked about the 75 new target partners.
How many studies do you think that actually equates to versus where she as partners and that's it for me. Thank you very much.
Sure Andrew Yeah. The on the on kind of the scale and Expansiveness of those translational services I I don't believe we need to go too much further because we will continue to sort of reach into other other companies' expertise.
For example, I would never expect us to at this point to own our own animal center or anything like that rather partner with other companies that do this already and have those resources, where we're we're going to focus most of our time is on the strategy and then execution of those protocols are whether it's a regulatory strategy, whether it's a bench top toxicology tests.
You know just having the knowledge of a partnering with 20, some odd companies and being able to learn from their successes and failures on what's the right approaches are I think that's something that's going to benefit you know a number of our partnerships in the future. So so similarly to our partnership with Blackrock for physiology, and our partnership with the L. S for laser and our partnership.
What's still left for machine learning artificial intelligence in the brain model you know we want to reach into some of these other firms that already have some of these translational services and just know when to tap it and when they can you know when they can solve a problem for us.
That's kind of one bucket there.
Andrea.
Hopefully you're still on the call, but I forgot your second question, if you wouldn't mind repeating that one.
Yeah, that's the 75, new target a drug and biologics partners, how many actual clinical or preclinical studies do you think that equates to.
Yeah, you know, it's a it's a really important question and something something but it's tough to quantify.
I would say each one of those targets is at least one potential trial now the reality is as does every one of those ideas translate all the way into a human patients in a clinical trial no of course, not theres a number of failures along the way there's a number of acquisition consolidation along the way et cetera.
But it's a great starting point and like I said, we each one of these relationships Ross is generally cash flow positive from day, one because of these consulting services regulatory strategy services testing et cetera. So the more that we accumulate the better off that is in and we get more efficient with each one so I think it becomes you know arguably more profitable for us.
Well now it's also time and however that each one of these ideas that you would find in an academic center is a is a platform in itself. So the way it suddenly our platform can be applied to multiple different disease states, where indications. It's very common that one of our partners would also have multiple shots on goal within their portfolio.
You know you could argue that not every relationship makes it to a clinical trial, but you could also argue that one relationship could lead to three or four clinical trials. So you know somewhere in the middle of those two extremes as is the reality.
Oh, sorry, I have one more question you just kind of spur the thought in my head so as far as partnering with you know maybe earlier stage studies that are preclinical with academic institutions. For example, could you like work as a facilitator.
The academic institutions with some of the actual biopharma companies that you're partnered with.
To actually drive some of those products from preclinical studies at academic institutions and debt.
Maybe M&A or joint ventures, with some of your partners I mean, it seems like you'd be.
Yeah, perfect position to actually facilitate a lot of introduction.
Yeah, no. The facilitation is certainly something we do today, obviously, we get permissions of all the parties involved before we try to connect the dots, but it is certainly something that we've kept our eyes and ears open to it as well you know again we.
We sort of a unique chance to kind of peek behind the curtain a little bit and while we don't share any confidential information, it's still knowledge that we have as far as which ideas seem to work and which ones are a little bit challenged. So you know, we'll continue to do that and if the opportunity presents itself.
Participate in some fashion, whether it's through an introduction or through a different risk sharing model of our partnership early for future royalties or something like that those are those more sophisticated models are certainly things that we consider.
Okay. That's super interesting. Thank you very much again, what's on all the progress last year. It was very challenging given that backdrop and best of luck going forward.
Alright, Thanks, Andrew I appreciate it.
The next question is from Frank Talkative of Lake Street Capital markets. Please proceed with your question.
Hey, Thanks for taking my questions and I also echo Andrew's comments on non congrats on a great year in such a challenging environment.
Thanks Frank.
Starting with the the Philips agreement just had a question on thinking about the business model behind the maestro.
I heard your comments about it's a matter of first installing the engine and then Theres. Some algorithm enhancements that you will roll out as needed and as they are developed so maybe you could help us out understanding the economic model. When it's the engine itself is first put in place and then if there's other add on opportunities and how that works.
And then how that could impact the margin profile of the business.
Yeah, It's a question and I I I do want to be clear that we have not released that yet. So we're still building our strategy, but what I can tell you is that some of the similar tools that are commercialized already on the market that day.
Obviously, they take a very different approach.
But their goals are very similar and the fact that they can segments and quantify our regions of the brain and different patients or the same patient over time you know these other.
Things that are commonly used to follow patients. These are things that are commonly used in clinical trials, especially in pharmaceutical trials as well.
Being able to compare a patient at time zero versus time, two years versus time five years in the same way each and every time in a predictable fashion and controlling that variability is something that's out there today and I.
I think it's important to note that if you look at some of the models that are out there the way that a couple of companies have commercialize their product is to sell not just the access to the model itself. The workstation for lack of a better term, but then they also sell an additional service contracts each year and then they also.
An additional per click fee per patient.
It's almost like turning software into a consumable or a disposable in that fashion and I think if that's what the market is accepted at this point, that's certainly something that we are going to consider now that the benefit in a surgical procedure, where we're selling navigation. We're selling lasers were selling cannula is we're selling a biopsy needles you know we have the benefit versus some of these other companies.
Where we have already a disposable product and there but by no means are we eliminated limiting the scope of the deployment of this model only to our own surgical cases really any candidates that could potentially be Ah Ah Ah Ah.
Target for our one of our device therapies or one of our drug therapies, whether they get the therapy or not is something that we think we can help with.
Got it that's helpful.
Secondly, just a little bit broader question on the biologics and delivery side of the business with just.
There's many moving pieces as they are with the Covid environment as well as you guys continuously adding new partners. All the time I was hoping you could help us just rank and file the opportunities you see based on the size of the opportunity once in indications potentially approved as well as their time to market.
Yeah. There's you know there's really two buckets that I like to think about the opportunities in you know maybe a third bucket all complicate things with at the end.
But the you know the first one are these rare inherited a pediatric disease states like a a D C or predict ataxia, our angelman syndrome or Sanfilippo syndrome. You know these are these.
These are situations, where there's very.
Seldom and effective additional treatment.
And you know these kids their families their health care professionals are all struggling to figure out what to do and many of these cases.
These are the ones that we really see accelerating through the.
And the process a little bit faster, so I'll use PTC as an example, they've already filed our MAA in Europe to get commercial clearance for other E. A D C treatments.
Similarly, I think they just communicated last week that they expect their BLA submission here in the United States to go in sometime in the second quarter. So these are situations, where regulatory regulatory agents are just like look you know we know that this is still experimental and we know that there's a lot more work that could be done but.
You know are we really going to keep a number of these very sick children from getting treated when there is something that could potentially help and if it means that would be post market surveillance is a little bit more stringent and more comprehensive so that we continue to follow these patients closely you know certainly the companies companies like ourselves and certainly the parents.
That's certainly something that day, they seem willing to work with so that's those are the ones that we kind of see happening in the next let's say 12 to 24 months when you start to see maybe those first commercial approvals come through.
And they are as you pointed out sort of smaller opportunities because they are rare childhood disorders, but a lot of these companies are also going through the leg work to improve the diagnostics as many of these children today are often misdiagnosed or theyre in a rural community or are they a swirl in a funnel of neurologists and other other experts that are <unk>.
Not quite sure what to do with them. So as these diagnostic tests continue to evolve as well you know you're going to see the ability to identify these patients sooner.
Improved too.
That's kind of bucket number one bucket number two are these more larger opportunities like Parkinson's like essential tremor.
Like Huntington's disease, where there are in fact, some some additional treatments available or some additional options. So in those searches.
So we can't expect the regulatory bodies to kind of accelerate anything you know theyre going to really want to see all of the science done all the way through so those are the ones that we see closer in that you know 2024, 2025 range as kind of being best cases due to when those start to come to fruition, but again I mean, you're now you're not talking about a much.
Patient population are generally older patients as well certainly adulthood.
Who are more willing to take a take risks as opposed to you know taking that risk for their child. So I think those are things that once the reimbursement is sorted out.
Those things could actually accelerate much faster and again if you if you have the option.
To continue to use a drug that's really failing you after a period of time, where you've built and built up a certain tolerance and you have the chance to do a one time injection through a small you know a three and a half four millimeter birchall.
That's something that cosmetically is not an issue. It's generally a single path. So those are the things I think actually do become very attractive to these these younger patients as opposed to waiting for their bodies to deteriorate.
The third bucket I was gonna mentioned, if something else is it which are we you know we have built prototypes we are working on so.
So I mentioned, we have 25 existing pharma partners today are customers. However, you want to think about it we've got another 75 targets in the neuro cranial space. There's another group of partners out there or potential partners that are operating in the spine area. So not only do we have products that we think are appropriate for spinal infusions in there.
Drug delivery space, but we also have that same channel as it it's very commonly in I think will always be a a neurosurgeon that is actually doing these spinal procedures as well. So really you know we tried to be focus we try not to boil the ocean, but anything a neurosurgeon would do we feel like that's a place that we should be operating as we transitioned in.
The future of of gene and stem cell deliver.
Perfect helpful. Thank you and then last one from me and thanks for taking all my questions.
Just from a.
Regarding the Covid environment I heard your comments about getting back to pre COVID-19 levels in the second half of this year. Just curious if your surgeons are seeing a backlog of patients building and maybe there's a chance to have some outsized growth.
Growth in the coming quarters as that's addressed.
Yeah, I think I mean as with anything if there's kind of a mix because COVID-19 has not impacted the entire country. The same way, although there's certainly some commonalities. There. So there are some hospitals that have continued to schedule and prioritize these procedures.
Other and there's a number of hospitals that have completely stopped and theres that backlog exactly like you described that's right waiting to be cleared. So I think as you know the again the reality is somewhere in the middle of that the important part for US is again, we are not the first one.
When our products are used that is not the first time, a patient sets foot in the hospital.
They need to be meeting with their neurologist they need to be doing their pre surgery diagnostic MRI scans, you know theres a number of steps that have to take place as well. So in some cases that had some hospitals that helps funnel has actually been somewhat disrupted. So you know we've got some some hospitals that have really been operating in the same we have some with a huge back.
Clog ready to be resolved immediately and then we have some that are going to take even a little bit longer because they have to get all those neurologist and workout visits done before that surgery is gonna be it's gonna be centered so I think you know as we kind of see it I think in the summer of the Q3 of this year. That's when we expect to kind of start releasing some of this those backlog if you will.
Yes.
Perfect. Thanks, again for taking my questions and congrats on a good year.
Alright, Thanks Frank.
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Our next question is from Mike Lipka of hidden small caps. Please proceed with your question.
Hey, Joe good to speak to that Jim.
Hey, Thanks, Mike.
I just wanted to follow up on the other question that Andrew had actually had a couple of questions. But the first one is you mentioned something about potentially negotiating royalties in the clinical trials is that something that you guys are looking at or like a milestone payments.
Yeah, I'd say, it's something we're working on I E.
I mean the the.
The recipe. We're following right now is really to work and help kind of a fee per service model in the preclinical stages, a supply of products that get written into the protocols. During the clinical trial stages, and then additional product supply once commercialized, including our own <unk>.
Nicole services, so an important part of that as I shared before is if you are a pharma company you generally have been calling on a neurologist as far as what your sales channel does you might not know that neurosurgeon very much so the ability to effectively hire us as youre in neurosurgery channel I think there's something else that you know what we're it's not a.
It's not a product that's used it's still a per procedure fee that can drop to the bottom line of our model right. So that's I'd say, that's the kind of the recipe or the blueprint that we've been following a I can say is that you know recently as we started talking with more and more of these earlier stage companies and academic centers I think that.
<unk> is absolutely there where you could say look instead of you know the the partner or the pharma partner or the academic centers, taking on some of that risk in the early stages from a preclinical standpoint, if we were to supply our expertise and take on some of that risk exchange that for a milestone.
Clearance or phase, one trial or even a royalty you know those are the things that you know as we've had some of those preliminary conversations I think the appetite is there although you know its.
The norm is is what I've already described before.
Got you okay.
Hum.
Can you talk a little bit about the sleep GBS, you mentioned that you're going to essentially go for a direct to patient marketing indication.
I'm curious first how long that might take and then what's kind of instigating going after that now.
Yeah.
You know, it's it's a it's always been something that we've wanted to do I mean again, our our anytime a partner or a hospital has a patient that's extremely anxious.
In some cases pediatric procedures as well, where they know it's simply not practical to keep them awake and do that procedure in the operating room.
That's kind of our entry point into a hospital, where even if a hospital doesn't use us for every day DBS procedures. They know that that patient comes along every once in a while and as a result, they are they consider they consider us for that so it's always something that you know we know that the patient would prefer if they were given the option.
The reality is is that patients are in fact, becoming more and more.
Sort of in control of their own health care and you know, it's one thing if you're trying to decide which one of the vaccines to get you know that's a little bit less harmless than maybe you are willing to challenge your health care per our.
Practitioner or a little bit when it comes to neurosurgery I think it's still a situation where the patient and the family you know very much still rely on the expertise of the surgeon or the expertise on the neurologists. So so part of this direct to patient approach that we would like to take a really isn't only gonna be directly to the patient, but it's going to be a little bit more in educating them.
Neurologists as well as to how how much farther the technology has come now in the past, we've always thought of that as a pretty expensive endeavor to go after it and she's solidify all of the clinical evidence and labeling required to do so so we've been somewhat reliant on the budgets are a few of the other day U S companies to kind of pursue it and I think they they.
Have made progress I think even if you look at.
I think it was medtronic and there are other remarks that J P. Morgan our fleet DDS was one of their bullet point priorities. If you will for their DBS platform. So I think it is coming but I think it's also.
It's something that we expect to progress into in the year. You know the years ahead as opposed to just flipping a switch and all of a sudden it being out there you know there's these procedures have been done a certain way for the last 20 years and you know sometimes it does take time to do that but the important part and and you know part of the reason we raised the funds that we did just a couple of weeks.
So it's again put that a little bit more into our control, where we don't necessarily need to follow the DVS companies, but we think you know we have an opportunity to lead there.
Okay, and then so that kind of leads into I know in your Investor presentation, you mentioned the potential addressable market for I think for eligible patients within the Parkinson's population is.
About a quarter million patients that are eligible for DBS.
Our does that that's for.
EPS is that correct and then.
And I think you mentioned Theres only 6000 patients that debt at the year Whats what do you think is the major barrier there.
Well I think the fact that as soon as the patient finds out they have to be a way I think that immediately becomes a barrier and I think we've seen we've seen data there've been a couple of trials in the past, where our registries, where they they tried to enroll patients in between and awake and asleep procedure and when the patient found out that they could be random.
<unk> two asleep they pull themselves out of the trial. So these are the these are the types of reality is where you know if you're awake for US you know a few minutes here or there to do some testing and I think that's something that's absolutely adequate and I think a patient can deal with but the thought of being awake for three to four hour surgery is is you know obviously are a very scary.
Conversation that debt that patient is having so.
That is absolutely one of the barriers you know from from our standpoint.
There's a number of other reasons that are things that can absolutely grow that DBS market and penetrate more of those 240000 patients that youre describing.
There was a great article in the neurologists. They think maybe September of last year, which showed a long term outcomes of patients that had been treated with DDS much earlier into their progression.
So again and you can imagine if you're in a DBS patient or a Parkinson's patient rather you have been taking levodopa or some drugs four five or six years are the more drug you takes the less impactful. It is until finally or you're a non responder and then once you're non responder, you're not sleeping you're not eating well you'd become malnourished.
Your body generally deteriorates pretty quickly and that's when you get referred to DVS when you've already had that deterioration and it's only a last resort. This trial was designed to say look why are we waiting until the very end. After this deterioration has taken place let's treat these patients much earlier and I think the outcomes are absolutely support that being a viable.
Additional thing that we should be looking at clinically today. So that's another way you know if we can get to these patients earlier it actually increases the number of patients that would be a significant significantly benefit as well.
Part of our new strategy, though they don't want to lose sight on is sort of that if you can't beat them join them approach here, where you know on one side. If we could transition every single patient into the MRI suite to do asleep D. B S that would be a huge victory if we can't or if that takes too long. We know are building a product and array and our.
One any our system with Blackrock to be able to replicate all of the other technologies that are used in the operating room today to guide those patients awake, if they needed to so it's almost like saying look it it's almost like an insurance policy, where you say look if we're unsuccessful in doing a sleep on every single patient we have an awake approach as well and what's great is that 95 per se.
Net of the workflow and the software is going to be the same between both procedures. So as more surgeons get familiar with clear point in the operating room. It makes it easier to move them over to the MRI suite down the road as well if they desire.
Got you okay.
And then just last question you mentioned on the clinical trials that there were no I think you said all of the trials were halted does that imply that.
All of the revenues that you generated.
There was no dosing revenues.
Related to you know disposables.
The Kenya was in 2020.
And then.
From there.
When do you expect that to resume or are you expecting that the.
That's resume in 2021.
Yeah, Let me, let me clarify that because you're you're you're dead on your right. There. So I would say all of the trials were halted for some period of time.
And some of them that halt extended all the way through the end of 2020, you know again, if youre a pharma partner and you've got a phase one trial. That's only eight patients in the last thing you want to do is complicate the risk of that patient getting COVID-19 or something at a hospital. So I think the safest route and most appropriate route was to say hey, we need to we need to parse things in.
And sort of wait wait until these things come so.
To answer the rest of your question is we did still have some disposable sales in the biologics are it was almost almost half I think it was $2 7 million of services versus $2 $3 million as kind of non services, where that kind of comes from those non services are often a bench top testing.
So for example, if youre doing the toxicology study you might need 120 of our cannula is to test.
In various situations.
To ensure that there's no.
Sort of crossover effects of the drug with the cannula or something like that so so where are these disposals arent necessarily being used in a patient they're still used very commonly in the in the bench top setting.
Okay got you.
Do you expect that from fully resume in 2021.
Ah I do I think by the second half of the year I think all of our partners will have a certainly a zoom by them like I said like I shared with you I think at least five have actively already in 2021 resumed and.
And we do expect some announcements you know before the end of the year of additional partners kind of enrolling their first patients on trial.
Gotcha, Okay. Thanks, a lot John I appreciate it.
Yeah sure thing Thanks, Mike.
Yeah.
There are no additional questions at this time I'd like to turn the call back to Joe Burnett for closing remarks.
Alright, well once again, thank you to everyone for showing their interest and Clearpoint and attending the call. Today. We thank you for being a part of our important journey to help patients and their families who struggle with some of the most debilitating neurological disorders imaginable. Our company is in the strongest position we've ever been and we look forward to continuing to out there.
Get you on our expansion and execution in the years ahead. Thank you very much.
This concludes today's program you may disconnect your lines at this time. Thank you for your participation.
Okay.
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Hum.
Yeah.
Yeah.
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Uh huh.
Yeah.
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