Q1 2021 Profound Medical Corp Earnings Call
Thank you for standing by and welcome to profound medical first quarter 2021 conference call. At this time, all participants are in listen only mode.
And then just speaker's presentation, there will be a question and answer session.
Ask a question during the session you will need to press star one and your telephone. Please be advised that today's conference is being and the content. If you require any further assistance. Please press star zero and I would now like to hand, the contracts over to your speaker today, Steve and Kim with <unk>.
And Investor Relations.
Thank you.
Afternoon, everyone.
Let me start by pointing out that this conference call will include forward looking statements regarding profound.
Which may include but are not limited to expectations regarding the efficacy of profound technology and the treatment of prostate cancer, BPH uterine fibroids palliative pain and osteoarthritis.
Often but not always forward looking statements can be identified by the use of words, such as plans is expected expects.
And 10 contemplates anticipates believes proposes or variations, including negative variations of such words and phrases or state that certain actions events or results may could would might or will be taken occur or be achieved.
Such statements are based on the current expectations of management and.
The forward looking events and circumstances discussed in this conference call may not occur by certain specified dates or at all and could differ materially as a result of known and unknown risk factors and uncertainties affecting the company, including risks regarding the medical device industry economic factors, the equity markets generally and risks associated with growth and competition.
Although profound has attempted to identify important factors that could cause actual actions events or results to differ materially from those described in forward looking statements there.
And there may be other factors that cause actions events or results to differ from those anticipated estimated or incentive.
No forward looking statement can be guaranteed.
Except as required by applicable securities laws forward looking statements speak only as of the date and once they are made and profound undertakes no obligation to publicly update or revise any forward looking statements, whether as a result of new information future events or otherwise other than as required by law.
For the benefit of those who are new to the profound story I would like to take a moment to summarize our business profound develops and markets customizable incision free therapies for the ablation of disease tissue.
We are currently commercialized and Tulsa pro and technology that combines real time, MRI robotically driven trends urethral ultrasound and closed loop temperature feedback control.
Technology is designed to provide customizable and predictable radiation free ablation of a surge and defined prostate volume while actively protecting the urethra and rectum to help preserve the patient's natural functional abilities.
Tulsa Pro is CE marked health, Canada approved and five 10-K clearance by the FDA.
We are also commercialize and thoughtfully and in <unk>.
Innovative therapeutic platform that CE marked for the treatment of uterine fibroids and palliative pain treatment of bone metastasis.
So I believe has also been approved by the China National Medical products administration for the noninvasive treatment of uterine fibroids and has recently obtained FDA approval under a humanitarian device exemption for the treatment of Osteo Osteoma.
While we do not expect this SBA hte approval to have a material impact on revenues and the near term and this is a significant milestone for our company and we are making preparations for U S. Commercial launch later in 2020 one.
On the call today, representing the company are Dr. Arun megawatt per pounds, Chief Executive Officer, and Aaron Davidson, The company's Chief Financial Officer, and senior Vice President of corporate development.
But that said I will now turn the call over to Aaron.
Good afternoon, everyone and welcome to our first quarter 2021 conference call on behalf of the management team and everyone at profound I would like to thank you for your ongoing interest and our company for those of you who are shareholders. We appreciate your continued interest and support.
And I will turn the call over to a run in a moment for an update on our commercial activities. However, before I do I'd like to provide a brief update on our first quarter 2021 financial results.
A quick reminder, that we changed our presentation currency from the Canadian dollar to the U S. Dollar to streamline things all day numbers, we will refer to cope and rounded so our proxy.
Our first quarter 2021 sales performance was significantly negatively affected by COVID-19 impacts, particularly in the months of January and February resulting in our first revenue decline since Q1 and 2018.
For the three months period ended March 31, 2021, the company recorded revenue of $711000 down 41 per cent from $1 $2 million and the first quarter 2020.
As we mentioned in today's press release.
Began to rebound in March so far that positive momentum and Tim has continued into the current quarter, while we do not provide formal quarterly or annual financial guidance and we continue to be cautious about the scope and pace of U S. Tulsa true commercial adoption and the near term.
<unk> factoring in the recent uptick and procedures at existing sites and what we already have and our Tulsa systems agreement pipeline. We believe that we have the potential to make up for the Q1 revenue shortfall during the remainder of 2000 from 21.
Total operating expenses and the 2021 first quarter, which consists of R&D and G&A and selling and distribution expenses were $6 $8 million and increase of 47 per cent compared with approximately $2 $1 million and the first quarter of 2020.
Breaking that down further on a year over year basis expenditures for R&D increased 47% to $3 $1 million. This was primarily driven by higher spending for R&D initiatives and projects options awarded to employees additional head count and an overall increase to general expenses partially.
And we offset by decreased travel expenditures due to COVID-19 restrictions.
G&A expenses decreased by 6% to $2 $1 million due to lower salaries and benefits as a result of bonuses earned by management and the prior year and <unk>.
Any differences associated with the accruals.
Partially offset by increases to consulting fees and share based compensation for.
Mainly selling and distribution expenses increased by 70% to approximately $1 $6 million overall the company recorded a first quarter 2021, net loss of $7 $5 million 37 per common share compared with a net loss of $2 $6 million for 'twenty, one cents per common share.
For the same three month period from 2020.
And as at December 31, and 2021 profound had cash of $78 $5 million.
With that I'll now turn the call over to a range.
Thanks Erin.
I would like to start by addressing the revenues in Q1.
As Aaron discussed they were lower than expected.
But as you will see.
That has not translated into are being less bullish for the year.
Let me highlight the key reasons why.
First.
As per your sell side analysts have noted this earnings season.
Similar pattern and more.
First across the med tech space and the first quarter.
And even the most established companies seeing COVID-19 impact in January and February followed by a late March resurgence.
We saw a similar pattern.
However, since we are a game changing technology.
And that requires full training for treating and DMR suite.
And a relatively R&D and the U S commercial rollout of telecom.
Our procedure decline and the first two months of the quarter was likely a little steeper and the recovery and March wild noticeable.
Wasn't robust enough to make up the shortfall.
Second word.
And we're starting to gain traction and building a high quality U S installed base.
And as a reminder.
Our U S market entry strategy for Tulsa Pro targets three types of end users.
One early adopters, which includes urologists specializing and cutting edge alternative prostate disease treatment.
Two independent imaging center companies.
And three opinion, leading teaching hospitals each.
Each of these are expected to play different roles and supporting both short term and long term adoption.
Our early adopter Tulsa pro sites were not as impacted significantly by COVID-19 and the first quarter.
While still slowed by travel restrictions they continue to treat a growing number and and increasing variety of patients.
And at the beginning of 2020, we estimated that after the first six months to 12 months of being operational and the average run rate would be 40 procedures per year.
Essentially growing to 100 procedures or more after that.
Today these centers have exceeded those targets by about 50% achieve.
Achieving an average run rate of 60 procedures per year, and we believe that the run rate will continue to increase as COVID-19 recovery continues.
With respect to the second group the imaging Center company.
Red necks and Liberty specific Westfield Center in Los Angeles is now actively treating patients using Tulsa. After initially experiencing delays in 2020 and early 2021 related to COVID-19.
As most of you know we also.
A U S multicenter Tulsa Pro agreement with acumen and last week and thank you.
And currently has 79 operating clinics in Florida, and a total of 130 for sites across its network and seven states.
We expect to install Tulsa pro system and up to 10 acumen centers over the next year or so with the first site anticipated.
To be operational and the fourth quarter of 2021.
Acumen is making a significant investment to impressively outfit these centers to focus on men's health.
The initial geographic focus of their new men's health centers will be in Florida.
And where their first Tulsa pro install will be.
Texas, and Pennsylvania are expected to follow.
Based upon the success of the first time installs and we hope to expand our relationship in the future to include additional acumen and men's health centers.
I'm pleased to highlight that as part of the third group debt.
We are targeting we have agreement.
Agreements with top tier hospitals, and geographic locations that represent the largest markets for prostate care in the country.
In California, Florida, and the northeast, we have agreements with renowned institutions like UCLA and Stanford Johns Hopkins Yale Cancer Center World.
And well spend advanced prostate cancer Center.
And Mayo, Jacksonville, and Mayo Rochester.
In Texas, we have University of Texas southwestern.
And memorial Hermann and Methodist San Antonio.
A couple of these are listed on our patient site, Tulsa procedure and dotcom yet.
But they will be added once they are up and running.
From the perspective of signing new U S stocks up for commercial agreements the first quarter was our best yet.
All the leading hospitals that I mentioned with the exception of Rochester.
And I expect it to go live in the summer timeframe, while Rochester would become active around the end of the year.
And as I mentioned before the first acumen site.
I used to go lives in Q4.
The price point of all agreements remains the same at $7710 or higher per patient.
While we continue to expect teaching hospitals to be relatively lower volume at first and we have seen these institutions being particularly impacted by COVID-19.
We still believe they are best positioned.
To drive long term adoption of Tulsa pro by training the next generation of urologists.
Presenting at medical conferences, and publishing papers and relevant journals.
We are already starting to see the impact of that with Tulsa will be featured on the March 2021 cover of the journal of Urology.
To summarize the adoption status or outside the United States.
We have 10 operating site.
And they are looking to increase usage and the remainder of 2021 and beyond.
We have a significant number of opinion, leading sites, which we believe is also an early indicator of future adoption.
And finally Q1 was our best quarter, yet in terms of new Tulsa Pro system agreements signed and hospital administrations were still functioning and as a result.
We now have more contracts for installations and all.
Our hands than our current installed base.
These are the primary reasons, why we remain confident and regaining our momentum.
Despite of the COVID-19 effect on our Q1 RASM.
Although we remain cautious.
We continue to also be pleased that the leading hospitals are utilizing the C code to bill for total procedure.
And that's generally what we are hearing is that the hospitals are getting paid.
This again continues to be our interim strategy until a full C. P. T. What application for Tulsa can be filed and supported by the American Medical Association.
Next I would like to provide and update on the status of the plant CPT one application.
We have initiated dialogue with relevant societies, including the American neurological Society, and the American College of radiology.
To get initial feedback on the requirements to qualify for the CPT one application.
Based upon their feedback.
We continue to believe.
And the clinical publications on Tulsa procedure.
And the publications that we anticipate later this year.
Likely be sufficient to meet the requirements for.
The application by end of this year.
If the adoption of Tulsa usage continues to increase as we anticipate.
We may get the support that we need to file in 2020 two.
In short our CPT strategy remains intact.
Our strategy is to not only continue to pursue the CPT one application with the combination of clinical data that already exists and that will likely be published by end of this year.
But also support if flow level, one study specifically for treatment of prostate cancer.
This study.
Will it be run in parallel with the filing of the CPT one application and.
The study is not a requirement to obtain the code.
Let me further support coverage by insurance Payors and will also provide additional clinical data to support significant adoption.
To briefly describe the level one study.
The trial that will be called captain.
And is designed to compare the Tulsa procedure against radical prostatectomy and equals 201 random.
Randomized two to one that is 130 for Tulsa procedures.
For 67 radical prostatectomy.
The trial design was developed in conjunction with our clinical Advisory Board.
And it has already been approved.
By a central IRB.
The primary endpoints will include safety and efficacy, including measurements of side effects and non inferior progression free survival over time.
The trial will primarily be run in the United States and we anticipate patient recruitment to begin in Q4 this year.
We are targeting about 10 to 12 sites.
And they will include both sites that were part of tact and.
Well as new sites.
We will continue to keep you informed on a periodic basis.
The trial will be on clinical trial dot Gov about the time patient recruitment and again.
In the meantime tact.
<unk> two point the old recruitment is coming along well and we anticipate that patient recruitment will be completed by end of this year.
The majority of patients will be in the U S.
We also anticipate that three year data from the initial type trial will be published later this year.
In addition, we're aware of one additional level two eight study.
And two additional level to be studies that will be submitted for publication later this year.
So to summarize.
I'd like to Echo Aaron's comments that while there remains uncertainty with respect to the Tulsa procedures adoption rate.
And the very near term.
Due mainly to COVID-19 impact.
We believe that we have the potential to make up the revenue shortfall, we experienced in Q1 throughout the remainder of the year and remain bullish about our business.
In spite of the impact of COVID-19, and macro event.
Our team has been executing well.
We have been signing additional Tulsa pro side agreement at an increased pace over 2020.
We are continuing to see broader Tulsa pro adoption.
Both in terms of procedure volume and types of patients treated in centers not as impacted by COVID-19.
And we are progressing Tulsa pro's reimbursement strategy by code.
Ducting and additional studies to apply for a specific CPT code.
And ultimately and reimbursement determination.
This ends our prepared remarks for today.
With that we're happy to take any questions you might have.
Right.
Thank you and as a reminder to ask a question you will need to press star one and your telephone to withdraw your question press the pound or hash key.
Based on dialogue, we compile the Q&A roster.
As you do that operator, I should comment that I said, our cash at December 31, 2021 was $78 5 billion I should have said March 31, and 2021 was $78 5 million. Thank you.
Thank you Sir.
And we do have a question from the line up Anthony Petrone with Jefferies. Your question. Please.
Yes, Hi, this is briana on for Anthony and thank you for taking our questions I have a couple.
Regarding the five newly contracted price and backlog as of last quarter. When do you expect these sites up and running and then my follow up for that question would be given the delays and one quarter.
And the first quarter are you still targeting roughly 25 installed by year end.
Well, yes.
And good afternoon.
So most of the sites that I described.
All are slated to be operational.
This summer so I would anticipate that.
And by the end of June at the latest by end of July.
Most of the sites to sites that will be operational in Q4, one of them is male Rochester. The other one is the first site that we signed the agreement but for Atkins.
To your second question.
And as I mentioned, we have about.
About 10 sites that are operational and we.
Have more agreements already in our hands.
And so getting to 25 at the moment, we do not see a problem with that and we think we should be able to quite frankly do better than 25 net.
Sure.
And because of the fact that we already had these agreement is one of the reasons why we do believe and we will be able to make up a good bit of this this Q1.
That's very helpful. And then just regarding the act and India.
How many systems will be installed and the initial 10 and carries across Florida, Texas, and Pennsylvania, and then looking ahead, what is the potential to expand across Delaware, Illinois, and the other thing.
Yes.
So majority of the systems and other.
Few systems are most certainly slated towards Florida.
And then there are likely to be.
I would say at least half of the systems will be in Florida, and the remaining other fi would be and the.
Other two states and we have it.
You mentioned, Texas and.
Pennsylvania.
For the.
Strategy, Let me just quickly talk about the strategy and I think it's more of an acumen and strategy that then.
And hours, but it is a I think a pretty and.
Important strategy and.
And impressive strategy.
The idea is that we are focusing on the states that has the.
The majority of prostate cancer patients for prostate disease patients and they happen to be California, Florida, Texas.
And the northeast and then Arizona is another one that we will focus on later on so by focusing on these.
Large states.
Thank you.
As the Oh.
Awareness increases.
And we wanted to make sure that sufficient.
Centers.
And have Tulsa pro availability, so that people will become aware of it and they can go get treated and.
And as the awareness grows and the state and we are and.
And are higher.
Higher and higher numbers, we think we will be able to then.
Plot.
Sort of mid day, those strategies from one state for the next so rather than try to.
<unk> these around the whole country.
The idea is that we're putting them in key.
Key states and the beginning and leveraging all of our resources.
Does that does that answer your question and banner, Yeah, and that's very helpful and I have one more question on and the procedure mix.
Yeah with the procedures that have been done through one Q and even into <unk> are you what is the net.
And the BPH off label, and then intermediate prostate cancer and and moving into high risk.
Okay.
Yeah. So.
I think debt.
In general it's a very general comment B, a night and these are not perfect numbers, but I think that.
The number of BPH patients that we're treating historic day.
Increasing my best guess is that.
About 20 per cent of the patients being treated right now.
And the BPH category.
In Europe that number is probably a little higher maybe 35%.
And in Europe.
Of the patients that are.
Prostate cancer patients.
That's an interesting question because I think what we are seeing is that in the teaching institutions.
Which which word.
Undoubtedly very low in Q1, but I think what we're seeing and the teaching institutions. They are looking to follow the.
Clinical trials and have been done so theyre sticking more to Gleason, seven which is mid grade cancer patients.
The early adopters, which are continuing to increase as well they are actually treating patients.
And all that are you know.
That maybe as much as.
Patients they may have.
Likely extra capsular activity or even Ah patients were.
They are very hot and relatively high risk patients, where they think that there might be a need for a combination treatment and they're looking to ablate the bulk.
And with Tulsa, and then leave.
Leave the rest for the other combination.
So we are seeing a pretty good variety and.
Even in BPH.
And secondly, talking with a physician just 15 minutes before we started today and he was telling me they treated today, a patient with a 270 <unk> prostate with largest prostate.
<unk> has been treated with Tulsa, so they are definitely testing the limits.
And I think that is certainly another reason for the confidence that the.
Versatility and the flexibility of this technology and stuff that we do believe that and large majority of the patients can be treated with Tulsa.
Great. Thank you sound like.
And prion and I just.
And when a comment this is Aaron.
BPH is not off label.
We are approved for the ablation of prostate tissue not specific to whether it's malignant and <unk>.
Alright, Thank you for the clarification.
Okay.
Thank you for your next question. Thank you. Our next question comes from gravel Saragossa with Raymond James.
Question for me.
Good afternoon, everyone, there and Steve Thanks, so much for taking my questions today.
No.
So and so thanks for addressing the revenue upfront.
And so you'll be recognizing that you don't provide revenue guidance.
And we've sort of talked about the 25.
25 and installed base.
Hopefully, beating that by the end of the year.
Are you able to give us a little more visibility in terms of.
Going from the 10 currently operating.
How many we expect to be installed for Q2 and.
Q3, and then.
And then.
And we can do our own sales.
With that.
Yeah, So raul and I think.
And I would say two things. One is we are you know where the hospitals are open and as we've talked about and are.
Prepared remarks, we we saw March was better than January February and April has been better than March.
We are able to go to hospitals now and start installing.
You know if you do the math I think we have.
Have enough agreement too.
And we have enough agreement to be.
Double digits already so you would see quite a bit of activity and the next.
For two.
From here to September we'll be installing.
And.
I would say at least one to two system.
Mike.
Probably yes.
And my best that's kind of again, it's a little bit still unpredictable.
But.
I would say.
We will be installing.
75, a quarter is a reasonable reasonable expectation.
Sure and excellent visibility. Thank you very much for that and then.
Now moving to the utilization rate you referenced the early adopter sites.
Operating at this relatively high level for them.
For a year and your lines.
And when we look at the you know when we try and reconcile that with the revenue number.
And there seems to go to and asymmetry there so.
Because then we back calculate for the rest of the install base and that there, especially doing acute and non so how should we be thinking about and average.
And the utilization rate across the installed base recognizing that of course and when your tenure.
And install.
Installed devices and.
Okay and trained up how should we be thinking about that range.
Yes.
Raul I understand where you're going with the question.
And let me just start one more time I think part of the reason why we said that we do have confidence in.
And the growth rate returning after this COVID-19 part of it is coming from the fact that debt we already have enough contracts to be able to go install systems. So we know we think we can get to the installed base.
And so along those lines I would say.
We're going to end up with more new systems very very soon and then the older systems, which is more than a year old. So I think I do want to be very very open and clear about that also is that initially the run rate of these new systems is not going to be.
And that 60 per year right right away, it's going to take six to 12 months before we get there.
And the second thing is that I do want to continue to emphasize.
Point that we have a very very disciplined market entry strategy that looks after those three types of what I call channels and our customers.
And every one of them is going to behave differently.
And so the early adopters.
You know they are 60 plus.
I actually think this year they'll do better than that even with the first quarter I think overall, they're going to do better than that.
I think the hospitals are actually going to be relatively even more discipline. Those channels. We're going to say you know what I'm going to do.
Five or 10 Gleason seven before I go to a higher risk or I'm going to train three or four different position before I really ramp up or I might want to look at.
And.
You know a couple of outcomes of my own patient in spite of the clinical data that I see.
So I do think that we should be.
Realistic with respect to the run rate at the large teaching hospitals.
Well again that having said that I can give you. Another you know again and anecdotal example, we.
And well spend is one of the hospitals and we started our.
And that we signed the contract late last year again, and they got delayed they did their first patient in March.
And second patient and they did the physician put the whole patient and the whole thing on his own.
Linkedin.
Website with the whole like the all the information and the images of the treatment itself. It's all done by the physicians so.
It gives me confidence that they are liking what they see but at the same time, they're still saying look I'm really like what I see but I'm going to be very measured and the way I E.
You know increase the types of patients I treat.
And on the imaging center side, I think we're off to a very good start with radnet with the with the delays and I think acumen, we should do even better than that but they're not going to start until Q4. So.
I realize that this is a little bit of pluses and minuses here.
But I wouldn't be very clear and open about this and the reasons why it is.
And why we remain you know mid term and bullish and short term cautious about things.
And again every quarter, we will share with you more and more details on the adoption rates and so on so.
So I hope that range.
Yes, that's excellent. Thank you for that clarity and if you'll indulge one more question around reimbursement sure sure last last quarter, you talked a little bit about the about the C code and you of course are always very cautious around speaking around and the C code.
Give us a little bit more update on how the rollout C code, whether it's starting to be adopted by broader jurisdictions other than <unk>.
Will.
And then also just for the second part you. This.
And this is great to hear that.
Some clarity on the CPT code.
Strategy, given that Youre looking at and application hopefully towards the end of this year, but you also talked a little bit about maybe 2022 can you give us a bit more clarity in terms of distinguishing between end of this year and in 2022 for that for submission.
Yes.
Are you happy to so well and in terms of the C code.
To be honest and is not a lot to add in the sense that the patients who are being treated at hospitals, who are Medicare patients.
And continue to get paid.
The patients who are in.
Hum.
Applying true private insurances majority of those patients are getting paid something.
The hospital's.
That we have signed new agreements with are comfortable with the Miss.
The strategy the same reimbursement strategy.
And its becoming fairly clear that debt strategy is likely to work continue to work.
And Oh I see.
I would say again soft measure.
And I can see hospitals and becoming.
Comfortable with billing for this new technology, and the outcomes that they're seeing and and cases, where they need to present more clinical data to get the insurance payer to pay I think all of that is is.
Continuing to happen and we continue to remain pretty comfortable.
On the CPT one side.
And again to be honest, we're pretty fairly happy with the.
With the way, it's progressing as I said in the prepared remarks.
We were.
And we're looking to engage with the with.
With the other.
The various chapters the reimbursement chapters on P T.
Top societies like American Neurological Society, and the American College of Radiology, which is the chapter of our SMA.
And we're.
And we're getting very positive feedback in terms of the start and you would think and debt, but if we can deliver what we believe we can the debt that's of course, and we would need from the societies that he believes that it's going to be available to us and so.
Our goal was to have we want to be able to get to that point, where we quantified by end of this year, but to be honest, it's a little bit more for a little bit more positive in the sense and not only that we believe we will be we will get to the qualification point well. We also think that we are more comfortable debt, we would get supported by the society.
And then you know I was maybe four months ago.
And so what that means is that once we qualified and application and all day administration process will start in early 'twenty, two 2020, two and by end of 2020 two we should have.
Oh, we should have some kind of ruling.
Hum from the American Medical Association.
So that's kind of the process and overall as I said these are not hard numbers or anything, but I think debt to the direction, we remain pretty comfortable with.
Great. Thanks, so much for taking my questions and I'll get back in the queue.
Thank you.
Thank you. Our next question is from Josh Jennings with Cowen Your question. Please.
Thank you for good afternoon, Jordan and air and of course.
So hope it too.
And I ask about the sales funnel and and the status here and congratulations on the record Tulsa Pro new agreements and in the first quarter.
So just was hoping you could just give us and update them with.
And that's where the sales funnel sits today and.
Each of those three channels and you talked about.
Oh sure.
I mean, they're active and agreement has been public momentum remained at 10 and.
Over started Q for over 12 months.
And then.
I think that there are in the prepared remarks, I think I described at least.
And another for.
Agreements that are from leading hospitals that are.
And that we have in our hands and we would be installing and the summer this year.
And then I think that there are at least another couple of agreements from what we called the Hardie and Doctor Channel. So you know youre looking at in terms of contracts and then you know we have for.
Higher quarter contracts that have not been installed so youre looking at you know to be honest over 15 already and our hands.
Okay.
Yes.
And I was Super clear and my question, but thank you for that information.
Understand just making sure that youre, not depleting and where youre.
Sales for each.
Free contract funnel with our assumptions still full and continues to be.
And two as your sales efforts continue and have success.
And it's still such early days, but the funnel pre contract from analysts.
Still still flush.
Yes, it is yeah absolutely.
Yeah, I don't see depletion is.
Josh items so.
Don't see.
You know.
And anything changing in terms of feedback from patients or feedback from the urologists.
Uh huh.
And in fact every site.
And.
He is looking to increase utilization.
Ex.
Just to focus on the imaging Center channel.
And that's on average.
Humans.
Agreement I was hoping you could just share any updates on the red and green.
And for Center, you said was up and running now and I think Theres a couple other centers it could come onboard and 2021 or how should we think about the cadence of redness and understanding Tulsa pro.
Repertoire over the coming quarters.
And then.
Imaging Center.
Companies or regions.
Potential too.
And this context around it.
And then add another one.
And then those two yes absolutely.
So oh, I think the cash site and and.
The retina site is up and running and Oh.
I had the pleasure of attending one of the patients.
Just a few weeks ago and.
And I think that they are now and the process of educating their whole.
Infrastructure a.
Their whole urology.
And group.
Our imaging Center channel.
We talk about referring physician and and treating physicians, so red net and now that their first titles running sales now educating the referring groups. So it's not going to happen obviously and.
And one quarter or anything, but slow and steady I think they will.
And I believe that they will continue to ramp.
And then the other two sites we have you know the sites are assigned and.
And as soon as we know the dates I think there are some infrastructure things like new MRI and so one that needs to come on stream, but.
I would say generally.
Because of COVID-19, we are you know.
Net particularly for being in the Southern California was unfortunately couldn't really hits hard overall as a region.
But we you know we have the other sites.
And fight and I think they are going to be.
And we should be installing them over the next 12 months or less.
And those I did not even include those and the numbers that I'm.
Mentioned before so.
And to answer your other question and I think that.
And when I look at the stuff.
One belt.
For the United States.
Basically covers about 40% of.
Prostate cases, so our priority suddenly is California.
And Florida, Texas, Arizona, and then northeast is the next place. So I think you'll continue to see us focus on on the southern belt, a little bit more as we go forward.
For the new agreements.
Alright, and then.
Just last question.
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Any updates on.
And in Europe, and Japan, and how we should we think about it.
Tulsa pro centers or total.
Sales yeah.
Yes. Thanks.
Yeah.
Yeah, Josh that's a very good question also.
Because normally we do get we are selling and capital and outside of the United States and in this particular quarter, we basically had no new capital revenue, which was one other things that affected the topline number.
But those revenues, we see them as really important revenues.
So and Japan in particular is a.
And it's very interesting because we see those revenues and.
Sort of not just revenues for the quarter and which is important but also strategically Mr into Japan. We believe can be a very important market for us so establishing that beachhead and getting a number of sites going is important to us.
And to give you a little bit more color.
And Japan also with it has been and shutdown mode and we have not been able to travel. So the pipeline that we had last year as you know even with the parser wave of COVID-19 our capital.
Continued to flow, but the fact that over the last six months or so we have not been able to travel in Q1, we.
And I had no sales.
No no closure.
And not to say that the pipeline is not there it is there.
And we are we are working with the government authorities to get the regulatory approvals and we're working there also on.
Our reimbursement strategy. So I think you will see.
International sales come back.
And later in this year hopefully as early as second quarter.
And.
I think.
Europe is important we we see.
And change and the European.
Government Oh.
Guidelines that came out earlier and.
And just about 60 days ago, where they are moving ablative therapies from experimental to accept it and I think again, not and the very near term, but and the midterm. It should have some positive impact so bottom line we.
We.
With the travel restrictions and so on and I think that Q1.
From the international market perspective was well it.
And did not get.
And not was not well represented it represented but I do think debt.
We see Japan, Europe, and China and.
And Asia is important as well and you will see revenues from these countries and.
The other three quarters of this year.
Here for us.
Great. Thanks again.
Thank him.
And our next question comes from Frank Packing and with Lake Street Capital. Your question. Please.
Pedro and air and thanks for taking my questions I wanted to start with the funnel as well I want to better understand hoping you guys could give us a little more clarity on better understanding the conversion time as customers work through the process from a pre signed agreement signed agreement trained installed and then.
First patient treated and just looking to get a little better clarity on how long that total process takes on average given theres likely significant variation across customers. Yeah, Yeah, Yeah, no. It's a good question.
And what I would say is that.
The best way to kind of gauge that would be when we did the installed.
Prior to COVID-19 became so big and obviously in retrospect.
We started the market introduction of our product in January and.
And it's total of the COVID-19 yet but.
But.
I think on what we've talked about this before too though is that from the time, we typically receive and agreement at the moment. It's about 75 days to 90 days to get the installation gum.
And then it's typically another 30% to 45 days.
Before we can really start treating patients and so on and so at the moment.
I'd say you know.
9200 days is probably a good average number from the time, we sign a contract to first patient treated.
We certainly think over time that will diminish.
And maybe by end of this year to 75 days and.
And then over the long haul and we think it will diminish further to hopefully to 60 day.
Some of the agreement that we have at the moment.
You will see a little bit of a.
A bimodal distribution.
From the perspective that a few slides are looking to buy new am ours took place the Tulsa system and so we will have to wait till the margin get installed and they are a little bit of delays related to that because of the same things that finding other labor and all the things done.
And these times have been a little bit harder, but it will continue to get better over time. So you will see a little bit other bimodal distribution, where we do have a new and mark to be installed its going to maybe take closer to six months the ones, where we can go to the existing EMR, it's probably.
Three to four months.
Got it that's helpful and then and following up on the CPT one conversation and also understanding this is looking a little far out into the future but.
If you.
Stay with your your guidelines.
Around me and around the beginning of 2022 submitting hearing a ruling by the end of 2022.
What how does that set you up for the CPT going into effect.
So once the debt.
And they typically you submit that to the MAA.
And if if we.
We're going to apply for it let's say next year, we will know by before the year is out.
If we do see we do not and if we.
And you see we've done it goes into a pretty much a standard process and the you know the.
The application goes into Rec committees and the commodity and then start to look at the costs associated with it and buying.
Within 12 months and a <unk>.
Provide the code and the target.
Reimbursement associated with it and it becomes effective as other Apollo and January So in this example January 2020 for.
We would have the effective.
Total reimbursement theoretically if assuming everything is going well.
So that's what we're working towards.
At this point and and the other thing that happens typically again these are just.
And our own beliefs and assumptions at the moment is that.
And the C code strategy as we've talked about before is the interim strategy and once the all these.
Publications are done and the societies are beginning to be onside.
As I mentioned, we feel pretty good about so far.
And that also will continue to give us confidence with respect to the usage of the C code and continued payment against the silicon So.
I think that's what you will see in 2022.
No.
Applying for the code C code in the meantime, supporting our society supporting US those other kinds of milestones that you want to look for and then if all goes well then January 2020 for tableau.
And for CPT one operational.
Great that's helpful.
Last one for me for Air and I saw you.
Broke out revenue a little bit differently than you have and the past two capital equipment and a non capital recurring and my assumption is that non capital recurring is the pay per procedure revenues associated with Tulsa, but I just wanted to confirm that and then could you just give us a summary of what's included in each line item. So for sure we're on the <unk>.
Page.
Yeah, so in different parts of the world, we call pay per procedure or other parts, we call disposable sales to me that's all from the same bucket of non capital recurring.
So and even service contracts and things like that where it's recurring because and different parts of the world. We used slightly different terminology. So what we tried to do was clean it up to get to I think what people don't even know when do we sell a piece of capital and have a one time sale versus when do we have sales that we think have a recur.
During nature and keep them like disposables pay per procedure surface and so we bucket it into those two buckets, because we kept getting lots of questions about the startup was confusing for people and.
Tried to just cleared up so that our different terminology and different parts of the world trying to create.
For clarity of onetime capital.
And recurring.
Got it and extend that bucket of being.
Yep, absolutely I'm in that bucket of being very appreciative of doing so thanks for taking my question for you guys.
Youre welcome.
Thank you and care.
Our next question from Ben Hayner with Alliance Global Partners. Your question. Please.
Good afternoon, gentlemen, thanks for taking the questions. Just a couple quick ones for me first off air and if I think if I heard you right I think I heard you say that the the price point on the newly signed contracts as 70 $710 or higher.
Is that correct that theres and or higher aspect to that and if so you know what's the variability on you know how much higher that can go.
So it is a little higher we took a price increase and 2021 that took effect about the end of March.
And for.
Sensitivity reasons with customers and I don't really want to talk too much about it.
But to assume it's just like a typical.
And what type of inflationary type of increase you would expect to see you on drugs for twice.
50 per cent these days.
And no [laughter], but so and then.
Second one.
It really sounds like you guys have a pretty full pipeline you've got some pretty good visibility into things, but you know for the folks that may not know about Tulsa pro.
And this is more of an opinion question I suppose than anything what do you think opens up there for years and it makes them take notice and more is is it something where.
It's definitely more clinical data or is it here in about something like you mentioned earlier, where you know a guy or Gal does for 270 C C prostate.
And then let me make sure I understand the question.
And so youre asking what.
Is the criteria on which people are signing agreements with us.
And I've just said it just says just thinking about you know if people are unaware of Tulsa pro and and maybe that debt you know the potential customers for the next from you know multiple years are kind of already aware of you and identified and all that stuff, but you know with a 270 C C prostate being treated.
Do you think folks here about that and so you know and say Oh Wow you know what is this.
And being able to treat and.
And the fashion that you guys treat or is it you know the journal publication that really.
Make some say Oh wow.
And I see what you mean, yes.
I mean, I think it's to be honest, it's a combination of things and.
And.
A year ago people would say that.
Hey, we want to see the clinical data and do you want to see more clinical data I don't think that when we go to the hospitals today.
That is the lead question I think people understand the clinical data is there.
And.
I think that the.
Concept that they can treat and wider variety of patients with this technology is definitely something that perks them up because when you just see the powerpoint that not necessarily obvious and.
And.
So we are working to create a.
And Atlas and and we do the training programs, where all of these special cases will actually be proactively presented to our neurology community.
And as we go forward.
And I think that certainly we believe will be a good driver.
I think that's certainly one factor the second factor I really think.
Is again what.
And is continuing to drive Tulsa is the patient response.
The two.
To be able to go in and within four five hours go home and be at home and have no pain and the only thing you were complaining about is the grogginess from the anesthesia and the catheter that stuck inside of you for a few days.
And and.
Nothing else not about the telephone at all I think that's one of the other things Thats driving.
And so.
You I think you will see I would.
And to be honest I would encourage you to look at the linked inside from milestone.
I think it's.
And Dr. Yeah, and I have I have run across that yeah.
And that's what's driving it I think that's what you're seeing is that the physicians when they treat they fielded and then they are excited about this new capability.
And but for the meeting site.
I'm going on and so.
I think that's what's driving.
Well that makes sense that makes sense and I appreciate the color there.
That's really all I have thanks, a lot gentlemen.
Thank you.
Thank you and this concludes our Q&A session for today I would like to turn the call back to Ireland, and then and what for final remarks.
Thank you so much and again, thank you for your support and.
We look forward to the Q2 report and before that I guess, the AGM, that's coming up and later this month. Thank you so much.
Thank you everyone. This concludes today's conference call. Thank you for your participation and you may now disconnect.
And.
Hum.
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