Q1 2021 Pulmonx Corp Earnings Call
Okay.
Good day and thank you for standing by welcome to the from Monarch Q1, 2021 earnings Conference call. At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask the question. During the session you will need to press star one on your telephone if you recall.
And any assistance. Please press star zero and I would now like to hand, the conference over to your first speaker of today, Brian Justin with the margin group, Sir you may begin.
Thanks, operator.
Good afternoon, and thank you all for participating in today's call joining me from <unk> or Glen French President and Chief Executive Officer, and Derrick sung Chief Financial Officer.
Earlier today <unk> released financial results for the quarter ended March 31, 2021, a copy of the press release is available on the company's website.
Before we begin I would like to remind you that management will make statements. During this call that include forward looking statements within the meaning of federal Securities laws, which are made pursuant to the safe Harbor provisions of the private Securities Litigation Reform Act of 1095.
Any statements contained in this call that relate to expectations or predictions of future events results or performance are forward looking statements.
All forward looking statements, including without limitation those relating to our operating trends and future financial performance the impact of COVID-19 on our business and prospects for recovery expense management expectations for hiring growth and our organization market opportunity guidance for revenue and gross margin and operating expenses commercial expansion and product pipeline.
<unk> are based upon current estimates and various assumptions.
These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward looking statements Accordingly, you should not but.
Not place undue reliance on these statements for a list and description of the risks and uncertainties associated with our business. Please refer to the risk factors section of our public filings with the Securities and Exchange Commission, including the annual report on form 10-K filed with the SEC on March 15th 2021.
This conference call contains time sensitive information and is accurate only as of the live broadcast today may 4th 2021, Pulmonic Corporation disclaims any intention or obligation except as required by law to update or revise any financial projections or forward looking statements, whether because of new information future events or otherwise and with that I'll.
I'll turn the call over to Glenn.
Thanks, Brian.
Good afternoon, everyone and welcome to the first quarter 2021 earnings call.
And here with me today is Derrick sung our Chief Financial Officer.
Today, I will share a few highlights from our first quarter results and outlook for the remainder of the year before reviewing our progress relative to commercial execution and longer term objectives.
Overall, we've been pleased with our financial performance and the resilience of our business despite COVID-19 related headwinds.
In Q1, we recorded worldwide sales of $9 $2 million buoyed by an acceleration of U S revenues and the final weeks of the quarter as COVID-19 hospitalizations dropped outside the United States, We saw a modest recovery and the early part of the quarter stalled by another wave of Lockdowns in many parts of Europe, which.
Presents the majority of our international business. Despite these regional variations, we remain optimistic that the global rollout of vaccines COVID-19 will no longer be a significant impediment to our growth trajectory for the second half of the year.
Through the quarter, we also made substantial progress and expanding our commercial team and our base of treatment centers saw growing momentum and indicators of demand for zephyr valve treatments and were successful in securing incremental payment coverage. These trends along with our Q1 performance leave us more calm.
<unk> and and our ability to deliver on our full year 2021 revenue guidance. Despite continued near term uncertainty relative to regional COVID-19 headwinds as such we now expect full year 2021 revenue to be and the range of $48 million to $50 million up from our prior guidance of 46 to 50 million.
And.
Moving now to review.
And a review of each of the areas of progress.
This quarter, we have meaningfully expanded our commercial infrastructure in the U S. We met our objective to expand our sales management team from six to nine regional directors, while adding six new sales territories, bringing our total number of U S sales representatives to 51, we continue to expect.
To end of the year with 55 territories and the U S.
Internationally, we expanded our sales management team in Europe, and intend to continue to expand our teams selectively and key growth geographies. We continue to receive strong interest from prospective new treating centers eager to start using that for valves. Another sign that the underlying clinical need and demand for our procedure room.
<unk> strong in the U S. We added 12, new treating centers during the first quarter, bringing our total U S. Treating centers to 160, we continue to target offerings Zephyr valves and at least 200 total treating centers in the U S. By the end of the year on.
On the reimbursement front, we are gaining further traction with Blue Cross Blue Shield plans and we see a change to a positive policy for our Zephyr valve procedure June one from Blue Cross Blue Shield of Massachusetts, The largest health plan and the state covering nearly 2 million lives, while we do not see reimbursement is of.
And if it can barrier to adoption of our treatment. We continue to celebrate our policy wins, particularly removal of negative policies like this one because they validate these wins validate the clinical acceptance of our technology reduce headwinds the patients may perceive in order to obtain access to the.
Technology and most importantly, they reduced the time to pre authorization approval and therefore time to treatment.
Turning to a key driver of future growth you may recall that our zephyr valve treatment is designed to reduce hyperinflation amongst patients without collateral ventilation, who have a complete separation of the targeted loeb with the adjacent Loeb for patients not currently eligible for valves due to collateral ventilation.
We are developing a second therapy Arris seal, which is of polymeric foam that is designed to be delivered via a bronchoscope two of targeted region of the lung.
Erez seal received designation as a breakthrough device by the U S food and drug administration and December of 2020 and we are currently exploring two potential applications of arris seal to treat collateral ventilation positive emphysema patients.
The first application involves using aerocele to essentially seal off the Fisher GAAP that is responsible for generating the collateral ventilation and thus turning patients who were not zephyr valve candidates into those who are we are currently and early stages of exploring this application of Arris seal and a multi center international.
The trial that recently began enrolling patients. We are also exploring era of steel as a standalone treatment for emphysema patients with positive collateral ventilation and which are of seal is delivered directly into the airways of the target region of the lung in order to achieve lung volume reduction.
For the Standalone application. We are currently in active discussion with F. D. A to determined necessary biocompatibility testing required to commence the trial and the United States. Despite our progress with Arris seal to date is and it is important to note that we are still in the early stages of development <unk>.
Developing our clinical and regulatory strategy before we determine how best to bring this product to market and we remain several years away from commercializing this technology.
Finally, I'd like to highlight some recent additions that we have made to strengthen our senior management team.
As announced earlier today, we are pleased to welcome Michael Ryan as Vice President of corporate strategy and business development Michael.
Michael joins us from Boston Scientific where he was vice president of business development directing all business development and investment efforts across five of the company's seven business units he's been deeply involved and the pulmonary space for more than a decade led Boston scientific's prior investments and pulmonic and was an observer on the.
<unk> board of directors for more than five years, we look forward to working with Michael is the advances our vision for strategic growth. In addition, my tab for Tammy recently joined our team as Vice President of regulatory Affairs and quality assurance. My tab also brings deep experience and the pulmonary space.
Having spent nearly a decade developing interventional pulmonology technologies, while working with new Vera and Bronchus technologies. Lastly, we are fortunate to have brought on David Lehman as our general Counsel, David brings nearly 20 years of public company medical device experience to his role.
Having previously served as general counsel for intersect E N T and Thoratec with these management additions the significant progress we've made and building our commercial team and footprint and the advancement of our development pipeline, we are better positioned for growth than ever before while COVID-19 remains of trans.
Z and headwind, we remain confident and our outlook as we emerge from this pandemic and work toward establishing ourselves as the global leader and trusted partner and the assessment and treatment of severe lung disease with that said I'll now turn the call over to Derek to provide a more detailed review of our first quarter <unk>.
Results.
Thank you Glenn and good afternoon, everyone.
Total worldwide revenue for the three months ended March 31, 2021 was $9 $2 million, a 7% increase from $8 $6 million and the same period of the prior year and an increase of 2% on a constant currency basis.
U S revenue and the first quarter was $4 $3 million, a 5% decrease from $4 $5 million during the prior year period.
The decrease and U S revenue resulted from the winter COVID-19 surge impacting the ability of U S hospitals to schedule procedures. During the first two months of the quarter.
International revenue was $5 million, a 20% increase from $4 $1 million during the same period last year.
On a constant currency basis international sales increased by 10% driven by a relative recovery of procedures and select markets as compared to the start of the pandemic last year.
Gross margin for the first quarter of 2021 was 71.5 per cent compared to 65, 6% and the prior year period.
The increase resulted primarily from an increase in the overhead absorption as production output recovered from the temporary manufacturing slowdown at the start of the pandemic.
For the remainder of 2021, we expect gross margin to be in the 71 to 72 per cent range, increasing modestly towards the end of the year.
Yeah.
Total operating expenses for the first quarter of 2021 were $18 $6 million, a 59% increase from the $11.8 million and the first quarter of 2020.
Stock based compensation expense was $2 $2 million and the first quarter of 2021 and accounted for 32% of the increase in operating expenses from the prior year period.
We continue to expect stock based compensation to account for about $9 million of our total operating expenses for the full year 2021.
R&D expenses for the first quarter of 2021 were $3 million compared to $1.6 million and the same period of the prior year.
Aside from stock based compensation. The increase was primarily due to an increase in personnel clinical studies and product development related expenses needed to support our product development and clinical research activities.
Yeah.
Sales general and administrative expenses for the first quarter of 2021 were $15 $6 million compared to $10 $2 million and the first quarter of 2020.
Aside from the stock based compensation and the increase was primarily attributable to personnel related expenses and sales and marketing as we expanded our commercial operations as well as public company expenses related to the scaling of our general and administrative infrastructure.
We continue to expect operating expenses for the full year 2021 to be and the range of $85 million to $90 million as we build out our commercial operations invest and our air seal clinical program and further scale our business.
Net loss for the first quarter of 2021 was $12 million or a loss of 34 cents per share as compared to a net loss of $7 $2 million or a loss of $3.76 per share for the same period of the prior year.
And average weighted share count of 35 4 million shares was used to determine loss per share for the first quarter 2021.
We ended March 31, 2021, with $222 million and cash cash equivalents and marketable securities.
Turning now to our revenue outlook.
We expect full year, 2020, one revenue to be in the range of $48 million to $50 million, representing 47% to 53% revenue growth over 2020 and up from our prior range of $46 million to $50 million the.
This updated guidance reflects increased confidence and our ability to achieve the high end of our prior range given our momentum and the U S. As we exited the first quarter tempered by our expectation of continued COVID-19 related pressures and the international geographies that seem likely to persist through the second quarter of this year.
We expect continued strengthening of our business and the back half of the year and a global recovery fully takes hold.
With that I'd like to thank you for your attention and we will now open the call up for questions.
Operator.
Thank you Sir as a reminder to all participants if you have a question. Please press star one and your telephone keypad and get that star one on your telephone keypad. However, if your question has been answered and you wish to withdraw from the queue. Please press the pound key please and by what we compile the Q&A roster.
Yeah.
Our first question is from the line of Bob Hopkins with Bank of America. The line is open.
Oh, thanks and good.
Good afternoon.
So I'm I'm I'm sure a lot of people would be interested in hearing how things went over the course of the quarter and kind of what youre seeing early in April of especially given the the comments you made on the on the last call about our expectations for from March So any color on kind of how you ended the quarter and and and what.
And what we're seeing in April I think it would be really helpful. So thank you.
Sure Bob.
The quarter ended as we sort of suggested it might.
And as you will recall, we we had is.
The last week of February was quite strong we had our last call at the beginning of March and we had visibility to a couple of weeks of.
A pretty a pretty solid scheduling.
March ended up being a very solid month for us that was really encouraging we've seen this sort of shape before if you will you know we've we've twice before kind of bounced out of things here and the U S. Most particularly in July of 'twenty, and 'twenty and October of 2020 as well so as we were.
Coming out of March typically what happens is you have this massive acceleration going into that that key months and then you have a little bit of a lag and the following months and a two two and I'm not going to get into specifics on a on an.
On April but the.
And the magnitude of the drop off in the month that follows that surge month is usually pretty pretty significant and it was and the last two times, we've pulled out of.
This time, however, as we frankly had anticipated.
April continued as a very strong month. So in contrast to prior periods.
April was strong and March like and those prior periods, probably can contain some sort of pent up demand, which which normally softens. The following month, but that did not present itself and in April.
Okay. So it sounds like April then was was better than March and the March was probably.
And at least 40 per cent of the quarter or is that fair directionally.
I would say the directionally and on both points are you know the the magnitude of the better is not 40%, but it's it is stronger and April and typically at the the the months after that surge month would be down I mean, and the prior to two situations. It was down 25 person.
Sent month over month in April is stronger.
And it came out where we're in we're moving we moved across April stronger than we did in March.
And then so.
Yeah, and I appreciate that.
Previously you had talked about percentage of accounts that were active and some I'm.
And as to where we are now on that front and the U S. And then lastly, I Wonder if you could just give us the comment on Europe are things kind of getting worse, they're slowly getting better there and stable. There you know just kind of where are we in Europe right now and where are we in terms of the U S and terms of percentage of accounts that are active.
Yeah, well the first part of your question is is a much simpler question and the second part of your question, because Europe is Soho and heterogeneous, but I'll try to be.
The concise on the second part the first part in terms of active accounts as you certainly imagine it's strengthening we talked specifically sort of on a month by month basis and the last call and we said we're going to do that on the one time basis. So let me re Orient you to sort of quarterly expectations. If you look across so and and <unk>.
Active account as one that orders during that period and.
And in the pre COVID-19 phase on a quarterly basis about 90% of our accounts, we're active in any given quarter.
So when we look across.
The the first quarter of this year, we were quite a bit short of that and.
And we were less than 70% of our accounts were active but you might recall the numbers that we talked about and it was 32% and you know kind of low thirties to mid thirties in January and February. So you can imagine we much we do we did strength and quite a bit in March and we continue to see that strength into April so.
We would expect that the second quarter will step up off of that.
68% on a quarterly basis and.
Terms of active accounts so the good news there.
With regard to Europe, Yeah, it's great question, and it's a little bit complicated obviously Europe got hit by a wave that we did not of COVID-19 that we did not get hit by here and.
And the.
Our rate limiter as ICU capacity. So if you think about the way that wave builds there's about a four to six week four to eight week delay on clearing the the ICU beds and so that you can sort of start doing the procedures again, because most of the most accounts anywhere in the world are have an issue with with executing the.
These procedures without sort of the appropriate number of beds. So the the delay and we've just peaked in Europe in terms of the sort of the incidence of the of COVID-19 in various different markets its different and different markets and this is where it gets complicated obviously and the U K the shape of that curve looks very much like the.
U S curve, because they got vaccines out quickly.
So that's that was sort of an early January getting on the other side of things and on the downslope and of course as you look across.
Italy is sort of and the next cohort they by mid March they were they were basically on the back side of the COVID-19 curve and then in the.
France was the next about two weeks later as of about April 1st they got on the backside of that curve, but again they've got a.
And.
At least of four to eight week lag to clear the ICU beds. So when we look at Europe right now we see ourselves as is really pulling out in the third and fourth quarter, whereas in the U S. We see the second quarter as sort of the commencement of the pull out so we got.
The quarters, two three and four and the U S where I think you should expect sequential sort of acceleration of our growth and I think and Europe will probably going to be large you know were you I wouldn't expect to see that and the second quarter, but wood and the third and fourth.
Great very helpful. Thank you.
Yeah.
The next question is from the line of mirrors the voice with Morgan Stanley. Your line is open.
Hi, This is Mario <unk> from Morgan Stanley and can you hear me.
Yes.
Okay great.
Well thanks, so much for taking my question.
Can you comment any further on the volume of ex Java ex scans that youre seeing today relative to.
And maybe February and March and then.
And you touched on this but our valve placement.
Associated more with patients from the backlog to your point about pent up demand.
Are patients who have had the scammer recently thank you.
Great question.
So the.
I think the simplest answer to your question on strategy is that the scans are up.
And they're there they're looking strong as we look ahead so.
That's good news as far as pent up demand typically at least you know.
And it's a little bit hard to tease this out, but our clear sense, having like I said gone through this at least a couple of times last year and going through it now we expect that most of our pent up demand was realized in March.
And so that's that's one of the reasons why we're particularly encouraged by the sort of the shape of things and April.
Because we think we cleared a lot of that so we are and I think good shape from a strategy perspective as it relates to sort of forward looking per.
Procedures that we're anticipating.
Okay, great. Thank you.
The next question is from the line of Larry Vigil from that with Wells Fargo. Your line is open.
Good afternoon, and thanks for taking the question. This is Kevin on for Larry today.
My question is as we think about modeling Q2.
And the U S.
The March or even the April run rate the right way to think about Q2, and then given the headwinds you're experiencing O U S and Q2, how should we think about that should we think about that is stepping down from Q1 and I just have one follow up thank you.
I think I'm going to I'm going to poll Derrick the expert model are here, so I'm going to pull him into this conversation, but I will tell you that the.
It was an interesting thing we had sort.
Sort of going into the quarter you May remember I think if you were to review the transcript we were anticipating that Europe would end up being stronger than the U S coming out of the first quarter and we had thought that that was going to be fairly significant and and in fact it wasn't.
And and the reason for that is that the U S got a lot stronger and Europe didn't necessarily get a lot weaker but it just sort of stayed kind of where it was so.
The ratios of changed a little bit and I think the the mix will be a little different than we had anticipated and the second quarter, but I think that the you know the net the net numbers will probably be and the same range, but I'll, let derrick get into more specifics around.
Maybe ways to think about modeling.
Yeah, So I think that and separating them out between U S and the U S is a good way to look at it and so.
And in the U S.
And would expect to see and kept blended mentioned the sequential increase starting in the second quarter.
And sort of gradually moving.
And up sequentially by quarter through the remainder of the year.
The likely was a bit of pent up demand in March but again as Glenn mentioned, we saw April come and very strong. So I do think that looking at that and running that forward yes.
And is kind of the right way to look at at least the second quarter for the U S outside the U S.
There's just a lot of uncertainty the T that remains in this.
Second quarter so.
And I don't think that we would expect to see a sequential step up and the second quarter.
Again, it all really depends upon how the recovery plays out, particularly across Europe, but we would sort of remain cautious and the second quarter and then expect that we see kind of a full global recovery and the European regions as well and the back half of the year and start to see a sequential increase from there.
Thank you Bill of Super helpful.
The era of steel comments on the call and I assume you would need two trials one for sealing the theaters and then doing Zephyr and then one per Standalone. The question is are you still planning to submit the ITE and the U S. Later this year for either and with the new application.
Is the bet the best case base case.
And this scenario and U S approval for each and your view.
Yeah, we're in the midst of we're deep into this process right now we're evaluating the the convert.
Protocol.
And then which is the one that we're doing in Europe, which is primarily in Europe.
Which which is the sort of ceiling of the Fisher, if you will to enable us to do more of Zephyr valve treatments.
That's a very intriguing approach, it's a fairly straight line for us because it allows us to use you know just basically take patients that are CV positive make them CV negative and then use valves in those patients.
But we need to get the data back from that trial, and then put together a package to.
And to move forward so.
You are correct. There is theres. Some additional studies that are out ahead of us as it relates to the standalone treatment, which I referenced which we're talking to F. D. A about I think how you know what specifically.
We ended up needing to deliver from of Biocompatibility perspective is likely to impact that timeline.
So I think we commenced clinical research and the United States.
And next year I think on both of those programs and I would say that we're you know we're quite a way of 2025 to get into the U S marketplace sort of timeline.
Thank you.
The next question is from the line of Rick Wise with Stifel. Your line is open.
Good afternoon, and Glenn Hi, Derek.
Glen maybe.
Expanding further on your comments about.
Opening accounts.
And the new accounts.
But maybe.
First talk about <unk>.
As COVID-19 cases.
Subside and doctors are back on you know sort of everyday duties so to speak.
Are you seeing that happen.
Is this process of COVID-19, the trading and docks returning to sort of life hopefully gradually as normal are you having more opportunity of the trained doctors what kind of trends you're seeing from.
On that aspect of the.
The story.
Well, we're definitely in the United States seeing subsiding.
And and again, our target physicians around the world are primarily pulmonary and critical care specialists. So when COVID-19 is hot and the ICU or filled there and they're focused on that and that's why.
We were actually quite impressed by our performance in Europe, given that the magnitude of the of the wave that hit them.
This the situation and I'll talk about the United States.
As of as it relates to what follows.
Has created a.
Truly.
Sort of transformative opportunity for us as it relates to getting face to face and gathering physicians together and respiratory therapists and clinical coordinators and so forth because of the zoom calls are just so easy to do relative to pull and people into a ballroom or into a restaurant or something like that so.
From a training perspective, I think we are training or interacting I'm getting treating physicians with the referring physicians and the like I'm much more than we did and the pre COVID-19 phase and we expect to continue to to push forward on that front.
Great.
And.
You talked about reimbursement and I sort.
And we take your point about so.
And.
And the reimbursements aren't necessarily headwind, but make it easier if you get them and the.
Positive place.
Are there many.
Are there any critical opportunities to make progress on that from the coming up.
Yeah weak so the the only real big.
Sort of gorilla and the spaces. The that's left is Blue Cross Blue Shield, So where we're really focused on trying to move them and the way that we have been moving them as we announced you know we just got Blue Cross Blue Shield of Massachusetts, which goes effective on June one last month, our last call we announced the other situations.
That that rolled positive for us so we're chipping away at it and so you know that.
And that that works well for us because the average time. It takes you know we just put things into perspective keep in mind again 75 per cent of our patients are Medicare patients and twenty-five per center sort of pure commercial patients of those Medicare patients a third of them or 25 per cent of the whole of <unk>.
Managed Medicare so they get fronted by.
Bye bye one of the private payors.
And so.
When we go out and seek.
Preauthorization, we don't have to seek it for Medicare patients.
And there's no problem there the managed Medicare 98 per cent of the time, we're seeking pre authorization we get it.
The commercial payers when we seek just across all commercial payers again, that's 25 per cent of our business we get preauthorization.
And 97 per cent of the time and when you look across Blue Cross Blue Shield affiliates. So this is a this is an association that is negative on our technology and yet they're they keep we keep working with them.
95% of the time, we try to get.
And I E.
The procedure Preauthorized, we are successful and doing so so the issue is not whether we can win and when we go toe to toe. It's the appeal process and so forth. So if somebody has.
If somebody is positive and we go to the commercial payer that's positive we can turn that in two weeks and we got a blue Cross Blue shield it might be 90 days.
And so that these patients are critically ill, it's the taxing process and we want to try to simplify that and shorten that and make it easier for the patient. So we're working very hard and I would say that every blue Cross Blue Shield plan that we flip over underneath that umbrella is a positive and so that's why we celebrate those and particularly.
Got you just one more from me.
On the opening new accounts.
And the fourth quarter, you opened up 13, New U S centers.
Opened up.
Close to a similar amount and the first quarter, how do we think about the cadence of new account openings going forward and things.
And again, that's COVID-19 pay it.
As you expand the.
Your management and sales team generally should we expect that pace of the account openings to accelerate.
Thank you.
Yeah, I think I think in terms of the first half of the year versus the second half of the year, we anticipate that that's going to go up about 50% I mean, we have we have said that we think that.
To do about 10, new accounts per quarter is a is what we anticipate and the first half of this year. So we did 12 I think we did 12 I know you just said 13, but I think it's 12.
So you know 20 per cent more or two more I guess, depending on how you look at it. So you know we're in that ballpark theres a lot of headwinds and things with imagine those will abate a little bit of.
But we're in that neighborhood and then we would expect to be at 15.
Per quarter. So we were targeting this year about 50, so that'd be 10, plus 10, plus 15, plus 15 and and that's what we continue to project and we will do our best.
To Opportunistically beat those numbers, but I think it's super important that if we wanted to to get 100 accounts up and the next whatever we probably could but it's just it's it's super important that we pick the right places we get them deeply engaged we train them you know impeccably and.
And we do we build this foundation and the right way and and so this is not a speed game for us.
Makes sense. Thanks, so much.
Yeah.
The next question is from the line of the Bill <unk> with Canaccord. Your line is open.
Hi, Joe and Eric and Jon on for Bill Tonight, Thanks for taking our questions.
The first one I guess some color on the accounts that are still out of active I know you mentioned about 70% of our active.
And I know of pre COVID-19 was around 90%. So how do you get to 90% of Sip hospitals, reserving ICU bed capacity stall.
So theres of restarting process, and so where we've initiated that with a number of hospitals.
You know I disclosed I don't know if I did earlier and this call, but obviously and the last call we talked about.
I think 32 and 33% of our hospitals were active in June our January and February.
That number actually I changed its 36% so it got a little bit more positive and February but in any case. It was 58% and March so where is the we're moving in and a very nice and positive direction and.
And April will be and the same ballpark and if you throw up sick.
<unk> 60 per cent per month across the quarter than the just.
Just to give you a sense in the pre COVID-19 phase if you looked at it on a monthly basis.
And that we'd have about 70% of accounts active in any given month and if you looked at it on a quarterly basis, we'd be at about 90%. So we finished the first quarter at 68%.
And we see that strengthening and the second quarter and it's just it's just you know getting.
Getting people back and moving in and getting the pipeline sort of flowing toward treatment and it all gets initiated typically.
When these COVID-19.
Walsh presented themselves and minutes like somebody throwing the switch and most of the hospitals around the world and some cases it was done on the state basis and other cases it was done on a national basis, where they just shut down like literally one day, we're not doing anymore and so to get it restarted typically the restart happens with patients that were already.
[noise] World.
At the time, they threw the switch off and so those of the folks that kind of get the prime the pump and get things going and we tried to get those scheduled as early as we could and we have seen some number of those happen in March of smaller number of those happening in April and then sort of organic growth in that.
April timeframe as well.
Arm of our biggest strongest most active accounts are the ones that typically come back first and the other ones will follow.
Great. Thanks for that color and then I just wanted to turn to the converge trial could you provide us and updates on enrollment.
And the trial itself and Europe.
Yeah, I think we.
Last spoke 60 days ago, and I don't think we had enrolled anybody maybe we had and where you know we're a few patients and it's it's a heck of a time to be enrolling patients and our clinical trial you think therapeutic.
We're down low on the list of things.
In the midst of the COVID-19 Crazy so head.
I'm quite happy with where we sit right now and we have a lot of Ah patients that are lining up and and we would expect that this will this will be accelerating in the not too distant future of this is something that as an organization.
We're super proud of a lot of the things that we do but we have of clinical and regulatory.
A group that's that's that's got a great track record one of the most of the I think arguably the most successful and the entire interventional pulmonology space and and Theyre going to get this thing moving as soon as it's possible and.
And we've got you know the others. The other area that we're particularly proud of is our global commercial footprint, which I think is unmatched by any other company and the interventional Pulmonology space.
And at least on the therapeutic side of the equation and and that that group is chomping at the bit so they're they're they're they're anxious for us to keep pushing things forward and and and as are we so we're pushing hard on that front get those things going.
Great. Thanks, Glenn.
Yeah.
The next question is from the line of Joe and links with Citibank. Your line is healthy.
Good afternoon, and thank you for taking the question.
And I'm curious about how physicians and the centers and move through the process of being opened as you put it are trained for physicians and what their motivation is to start the scheduling patients as the COVID-19 pandemic eases.
Yeah.
Are you talking about new physicians of physicians that are sort of restarting if you will actually have like bolt.
Yeah.
Well the the restarting ones. They normally have some number of patients that were previously scheduled that are chirp and and there are saying one of magazine and my treatment and <unk>.
Patients are Super <unk>.
Interested and if you.
Look on our website or on Youtube or whatever these patients are really fired up.
And and the changes that are being delivered.
You know when the when everything lines up the page that the the magnitude of benefit is really life, changing and and as a consequence I think the newer physicians see this as something they want to be of part of <unk>.
And I think it's super important to acknowledge and and we hear it from from our physicians and sometimes they tear up to be to be perfectly Frank with you because.
Pulmonologists and interventional Pulmonologists in particular, when Theyre doing procedures, you know prior to this treatment and it was almost always in lung cancer patients and they were almost always trying to beat back encroaching tumors to try to keep the Airways open and allow the patient to breathe and invariably there just kind of the.
And they're delivering bad news and it's just the that's the that's a cancer that I don't know what the odds are but something like 95% chance, you're not going to be around and five years. If you get lung cancer. So it's they're they're doing what they can and so there they really like the fact that they can take somebody and turn back the clock when when everything lines up.
And you don't have somebody come in and say Hey, you changed my life. This is this is incredible. Thank you. So I think there is an emotional side to this thing for the physicians because they just don't do anything else that's anything like this.
And from the new physicians and.
Net versus those of the I'm sorry, that's the that's what I was talking about that's what I think that's what the dry is I think the draw the thing that's driving the existing people is probably getting that are that good good feeling again, but also of the people chirping and their ears and the people who are coming on board or are saying. This is new this is important the data are compelling.
And I can't get you know.
We can't get these kinds of magnitudes of changes with drugs.
I don't do surgery and surgeries way more invasive.
I gotta be doing this and.
And and they want to try to help the patients.
Thank you very much.
The last question is from the line as Jason Bednar with Piper Sandler Your line is open.
Hey, good afternoon, and thanks for taking the questions Glenn I wanted to come back of the discussion of pent up demand.
I guess, one real good to hear the bans and strong year from March into April.
Why wouldn't there be even more pent up demand that comes through these next few months I mean, I guess why would of a single good month of demand be enough to clear of bulk of their patient backlog, that's built up there and especially with all of those accounts that haven't been active here the last three to six months.
Yeah, well like I said, the first few patients that start out of the blocks are.
Are typically patients that are being rescheduled and as I said before the first centers and I'm generalizing, but the first centers that tend to come back online are our biggest and strongest centers. So you add those two things together and say well if the first movers in terms of coming back online happened to and also maybe have the longest string of of.
Ah patients that they're going to bring with them to reschedule then.
You know it makes sense to me anyway, and we've certainly seen it historically.
We're a good bit of that pent up demand has presented itself and we saw.
Huge amount in July and October of last year, and we think that we saw a good chunk of and in March.
You know lumpy and that's not to say that it's all there and we.
And it's very difficult to tease this all out but you might see 50% of it in March and.
You know.
25% of it and in April and you know the rest of it's spread across a couple of months something on that order.
So that that's kind of where we are and why it happens.
And the thing that's.
You know and you can see where this wave happens. So for example going into this really strong months.
I had mentioned July of last year, we had something like 150% increase from June to July. So you see this wave just build very abruptly and it's helped by that pent up demand and it and and then it was followed by a 27% decline in the following months.
And then you know and going into October there was another big.
50% to 100% kind of bolus that comes through and it and it was it's softened and the next month and it's because you've got that COVID-19 backdrop, and I think that that blanket two of large extent, although not fully in the United States, probably not fully until the back half of the year, but primarily.
It's primarily been pulled off the United States and as a consequence, we I think we saw this real demand that was underneath that coming through in April.
And because it didn't go down.
Okay. That's extremely helpful. Thank you for all of that.
And then maybe just shifting gears, a little bit and it looks like Theres. Another study here that that's posted and maybe you should begin soon and maybe it already has the <unk>.
But from are still looks like you're collaborating on it with the academic center.
Looking at the different different interventional approach to achieve Fisher completion, and followed by placement of Zephyr and <unk>.
Maybe it I don't think you've elaborated here today, but could you here just talk about how that study or what would that sort of looks like and then you know what's the right way to think about that study of strategically relative to air steel.
And it's more of a I would call that sort of it's a small study it's called Cove.
Using laparoscopic techniques to complete the Fisher I believe that's what you're talking about the study that's being done and Australia.
And I view that as more of a scientific proof of concept you know sort of we have a history and if you look at the Zephyr valve we of four randomized controlled trials all of which hit on all three of the endpoints and each of those studies builds on each other and so we have of tradition among the people that are here.
And many of them have worked together for decades.
Where we really tried to build a very very solid foundation and so as we moved into.
The convert study, which is using <unk> to complete the Fisher, we wanted to make sure that the whole scientific package held together. So we are we had a proposal that was presented to us that we supported as an investigator sponsored study to.
And to complete the Fisher Laparoscopically and then to put in valves. So.
I think that's the study that you're probably referring to that's ongoing smaller study very small feasibility scientific proof kind of study.
It just didn't look like of smaller study I think this one was out of was out of our out of out of.
Boston and know the complete one study so yeah follow up this line, but okay and it's the same it's well it's slightly different but it's similar it's.
And what I, just said is really the same.
Yeah, Yeah exactly got it thank you very much.
Yep.
Thank you.
That concludes our Q&A session and.
And I'll hand things back over to the Miss your French for closing remarks.
Wonderful. Thank you all for your continued interest and Palm Onyx, we are very excited and encouraged about whats ahead, and we look forward to speaking with you again next quarter. Thank you.
This concludes today's conference call. Thank you for joining you may now disconnect have a great day and stay safe.
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