Q1 2021 Neuropace Inc Earnings Call
Good morning, and welcome to Neuro Paces first quarter earnings Conference call. At this time, all participants are in a listen only mode.
And we'll be facilitating a question and answer session towards the end of today's call.
As a reminder, this call with me and recorded for replay purposes.
I'd now like turn the call over to net back so from Gilmartin group for a few introductory comments.
Thanks, operator, good morning, and thank you for participating in today's call joining me from neuro pace or Mike Babich, CEO, and Rebecca and CFO earlier today Neuropace released financial results for the quarter ended March 31, 'twenty 'twenty 1.
Copy of the press release is available and the company's website before we begin I'd like to remind you that management will make statements. During this call and include forward looking statements within the meaning of federal Securities laws, which are made pursuant to safe Harbor provisions of the private Securities Litigation Reform Act of 1995 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 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 in our organization market opportunity revenue guidance commercial expansion and product.
Pipeline developments are based upon our current estimates and various assumptions.
These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those implied by these forward looking statements. Accordingly, you should.
Should 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 Exchange Commission, including the final prospectus filed with the SEC pursuant to rule 424 before on April 23rd 2021.
In connection with our initial public offering.
The conference call contains time sensitive information and is accurate only as of the live broadcast on June 3rd 'twenty 'twenty, 1 neuropace 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 with that I will now.
I'll turn the call over to Mike.
Thanks, Matt Good morning, and thank you for joining us before we get into the details I would like to take a moment to acknowledge that this is our first earnings call. Since we completed our IPO and listed on NASDAQ and April.
I would like to take this opportunity to say, thank you to all who participated and the offering which raised approximately $105 million and net proceeds and to those who are invested and the company.
I'd also like to again, thank the entire Neuropace team, our board of directors and most of all our patients and the clinicians who care for them.
And with all of your support we are well positioned to take the next steps toward our goal of making rns therapy standard of care for drug resistant epilepsy patients.
While many of you had a chance to hear our story during our IPO process I'll start today's call with an introduction to neuropace before moving on to cover our recent updates and our vision for the future.
Lastly, Rebecca will provide an update on the financial results before we open the lines for questions.
Neuropace as a commercial stage medical device company focused on transforming the lives of people suffering from epilepsy by reducing or eliminating the occurrence of debilitating seizures rough.
Roughly $3.4 million people and the United States are living with epilepsy, while anti epileptic drugs are available as a first line treatment approximately 1 third of people with epilepsy are considered drug resistant since medications are unable to control their seizures.
As a result are there there are approximately 1.2 million people living with drug resistant epilepsy, and the United States. Many of these individuals have been struggling with the effects of epilepsy for years, often decades, moving from 1 failed drug therapy to another struggling with the medication related side effects and the limitations that seizures put on their line.
Yes.
As a company, we strive to help epilepsy patients regain their lives and reach their full potential.
And our rns system is the first and only commercially available brain responsive neuromodulation platform designed to reduce or eliminate the occurrence of debilitating seizures or.
Our device continuously monitors brand activity and as programs were recognized patient specific patterns associated with seizures.
Devices able to close the loop by responding and real time to deliver personalized treatment at the source preventing seizures before they start.
Our rns system also records ongoing brain activity as patients live their normal lives, giving physicians unprecedented visibility and to patients unique seizure pattern, thus providing insights they can use to optimize therapy outcomes.
And while comprehensive epilepsy centers or cec's offer a variety of therapies for drug resistant epilepsy and clinical practice specific therapy choices are typically based on the patient's type of epilepsy and location of seizure onset.
Surgical resection or ablation can be considered for patients with well identified seizure onset locations. However, only approximately 20% of drug resistant epilepsy patients are candidates for surgical resection or ablation, because for most patients from moving or destroying brain tissue at the location of their seizure onset would be too.
Damaging for the patients are unwilling to undergo the procedure.
In addition to our rns system. There are 2 neuromodulation devices approved by the FDA to treat drug resistant epilepsy vague.
Vagus nerve stimulation or VNS and deep brain stimulation or DBS. These alternative neuromodulation devices provide continuous duty cycle stimulation throughout the day and night to a fixed anatomical location not specific to where the season starts.
Only the neuro pace rns system provides targeted personalized therapy that responds to a patient's abnormal electrical activity delivering real time stimulation, only when and where it is needed without causing stimulation related side effects only the rns system from neuro based records of brain signals associated with abnormal.
All events and provides physicians with information about seizure patterns and trends, helping them to optimize therapy.
We have also developed and extensive body of clinical evidence demonstrating that the rns system dramatically reduces seizure frequency and improves quality of life for adults living with drug resistant focal epilepsy and.
And the largest and longest prospective neuromodulation study conducted in epilepsy are rns system demonstrated significant seizure reduction through 9 years of follow up and provided enduring improvements and quality of life and cognition.
And more recently published results from a real World retrospective study conducted after FDA approval showed even better results faster specifically.
Specifically the study reported and 82% median seizure reduction at 3 years of follow up demonstrating the utility of our unique brand recordings and driving improvements and therapy effectiveness across patient cohorts over time.
We continue to learn and innovate by leveraging our comprehensive brain recording dataset, which includes approximately $6.6 million intra cranial Pega records.
These recordings, along with our data analytics capabilities allow us to improve our products and offerings such as through our insight platform, which provides clinicians with actionable information to help them monitor patient progress optimize programming parameters and better counsel their patients.
After its recent launch over 60 centers are already using the insight platform and their practice.
We believe the capabilities of our rns platform provide a competitive advantage, which allows us to continue to improve therapy effectiveness for people living with drug resistant epilepsy and <unk>.
Additionally, we believe that our platform has the potential to offer and more personalized brain responsive solution for people suffering from other neurologic brain disorders, resulting in improved outcomes.
Neuro pace participates in a large market today with potential to significantly increase the addressable market over time.
The $1.2 million drug resistant epilepsy patients and the United States represented $26 billion total addressable market.
From this group of drug resistant epilepsy patients about 50000 are referred into Cec's every year for treatment by epilepsy specialists.
Those 50000 patients approximately 24000 meet our current indication for use.
And represent an annual core market opportunity of $1.1 billion.
Over time, we intend to expand our indication and to broader set of patients with drug resistant epilepsy. We.
And I day approval for a clinical study to expand our indication and to drug resistant focal Epsilon epilepsy patients ages 12 to 17 and <unk>.
Expect to begin enrollment later this year.
Additionally, we intend to expand our indication and to generalized epilepsy. The second most common type of epilepsy.
We were recently granted FDA breakthrough device designation for the RMS system, and idiopathic generalized epilepsy, which we believe will help be helpful and expanding our indication into this underserved patient population.
We expect to submit for approval of the clinical study and this population later this year indication expansion into all drug refractory epilepsy patients and the United States with double the size of our addressable market.
Market expansion is also possible by increasing referring physician and patient awareness of the advanced therapeutic options available at the Cdc's.
Market expansion can come through and increase and the number of epilepsy specialists and cec's treating patients with drug resistant epilepsy and through expansion into markets outside the United States.
Turning to commercial we haven't built a direct sales organization across the United States with 43 field representatives, consisting of therapy consultants and field clinical engineers deployed across 21 territories and.
And 2020.132 of the approximately 200, CEC and the United States implanted our Rms system.
Our commercial efforts include increasing the number of CEC and planting our rns system and we intend to have 140, <unk> and planting our rns system by the end of 2021.
Today, only a small fraction of the drug resistant patients coming through the Cdc's that meet the rns system indication for us are getting treatment beyond medication. We believe this represents a significant growth opportunity that can be achieved by having more of the epilepsy specialists at the Ccs routinely prescribe the Rms system.
The appropriate patients.
Once the PUC Ah patient typically goes through and inpatient diagnostic evaluation within and epilepsy monitoring unit or EMU to determine the appropriate therapy option.
And it typically takes 6 months from the EMU diagnostic evaluation until the implantation of our and that system.
Because of Covid, there was a significant reduction and the number of patients coming through <unk> for these diagnostic evaluations.
And recent months, we have started to see a recovery and the number of patients coming through and used for the diagnostic evaluation.
Because of the lengthy timeline from initial and you admission to rns system implant. This recent improvement does not impact our business in Q2, but we believe this is an encouraging trend for the second half of 2021.
And in spite of the delayed impact on Covid recovery for our business, we expect second quarter revenues to increase low single digits compared to Q1.
With regard to reimbursement most of our patients are younger adults with commercial insurance, we have positive written coverage policies from commercial payers addressing over 200 million covered lives and the United States and addition, Medicare and Medicaid regularly provide coverage.
Overall, less and 1% of patients had been denied coverage for the RMS system implant and with these positive policies in place obtaining approval has become routine.
Lastly, I would like to discuss the transition we made in 2018, when we introduced a new version of our device that extended the battery life to an average of 8 years doubling the battery life with the prior generation.
While the longer battery life provides important benefits to patients revenue from replacement devices will decrease over the next several years as the older devices and replaced with a longer lasting newer model. We expect to replacement revenues to continue to decrease until early 2024 before revenue from replacement devices starts to increase and.
And the newer generation devices start to be replaced and greater numbers.
It is important to point out that we have historically generated a greater than 90% replacement rate, giving us confidence that replacement revenue will be a meaningful source of growth. Following this transition.
To summarize our primary focus is to continue to grow revenue and our current indications. We will do this by continuing to expand into <unk> and the United States driving increased utilization at these centers, increasing referrals and investing and innovations to improve patient outcomes and ease of use we are.
We're also investing to expand our indications to younger patients with focal epilepsy patients with generalized epilepsy and to patients outside the United States.
And finally, we are supporting the early feasibility work that could bring the benefits of response at Neuromodulation therapy to patients with other brain disorders.
With that I will turn over the call to Rebecca Neuro paces Chief Financial Officer.
Thanks, Mike.
And there are patients revenue for the first quarter of 2021 was $11.2 million.
Page 10 million for the first quarter of 2020 and increase and 12%. The increase was primarily driven by an increase in unit sales of our rns fishkin to comprehensive epilepsy centers for initial implant procedures.
And the first quarter revenue from the initial implants was $8.1 million and increase from 23 price strength.
Over the first quarter of 2020.
Revenue from replacement implants, with $3.1 million, a decrease of 8% compared to the first quarter and 2020.
The decrease in revenue from replacement implants was expected and it is the result of the longer replacement cycle as our newer device with an 8 year battery life, which is double the battery life of our previous device.
Mike described.
Gross margin for the first quarter of 2021 was 75, 7% compared to 77% and the first quarter and 2020.
Our gross margin improved and the first quarter at 2021.
Primarily due to lower fixed costs per year net production volume increased and from our ongoing efforts to reduce our product costs and.
And the first quarter of 2020, and gross margin was negatively impacted by a reduction and production volume as a result of the COVID-19 pandemic.
Total operating expenses and the first quarter at 2021 were $12.1 million compared with $12.5 million and the same period of the prior year.
R&D expense and the first quarter was $4.1 million compared with $4.8 million from the same period and 2020.
The decrease in R&D expense was primarily driven by a reduction in payroll and personnel related expenses due to COVID-19 and expense reduction and FX.
SG&A expense and the first quarter, and 2021 was $8.3 million compared with $7.7 million and the prior year period.
The increase and SG&A was primarily driven by an increase and general and administrative expenses, including outside services as we prepare to be a public company and an increase in payroll and personnel related expenses largely due to the adoption of new incentive plan.
The increases were partially offset by reduced sales marketing and field support cost primarily travel and the shift from in person events to virtual events as a result of the COVID-19 pandemic.
Loss from operations was $3.9 million and the first quarter of 2020 line compared to $5.5 million and the prior year period.
The company also recorded a noncash charge of $3.1 million and other expenses due to an increase and fair value of convertible preferred warrant liability, resulting from the initial public offering.
Given the timing of the IPO in late April we expect to incur 1 more charge by convertible preferred and warrant liability and QTL.
Net loss was $8.8 million for the first quarter of 2021 compared to $6.7 million and the first quarter and 2020.
Our cash and short term investments balance as of March 31st 2020, Wang with $30.5 million, while our long term borrowings totaled $49.6 million.
We received approximately $105 million of net proceeds from our IPO, which closed on April 26.
We believe this funding will provide the liquidity and capital resources needed to support and grow our current business for the next few years.
Now I'd like to provide an update to our 2021 outlook.
Our guidance is highly sensitive to assumptions on a global recovery from the Covid pandemic.
We anticipate continued progress on vaccinations, and immunizations, resulting in normalized hospital operations, including and patient admissions for the diagnostic and valuations that precede our and assistant implants.
While the first quarter was a good start to the year, we continue to take a measured approach given the early stages and recovery and recovery.
Based on this we expect second quarter total revenue to increase low single digits compared to the first quarter of 2021.
For the full year, we expect total revenue of approximately $47 million representing growth of 14% compared to full year 2020.
Given the replacement revenue dynamics, Mike mentioned previously we anticipate replacement revenue to be approximately $11 million, representing a decline of 16% compared to full year 2020.
Lastly, we expect initial implant revenue of approximately $36 million representing growth of 29% compared to full year 2020, as enrollment and our clinical studies picks up we will be breaking out clinical steady revenue, but given the.
The uncertain timing of when these trials will start enrolling our initial implant revenue guidance of 36 million and includes a small clinical study revenue contribution.
At this point I'd like to turn the call over to the operator, who will open the line for questions.
Thank you to ask a question we need to price from.
From your telephone to withdraw your question press the pound key.
We ask that you please limit yourself to 2 questions and 1 follow up you may re queue for any additional questions.
Our first question comes from Robbie Marcus with Jpmorgan. Your line is open.
Great Good morning, and congratulations on the first call as a public company.
Thanks Robby.
And maybe just to start.
And I know first quarter, it seems like a million years ago and everybody is focused on the future I'd love to see if you'd be able to comment.
You gave guidance for second quarter that was coming in a little better than I was thinking up low single digits versus first quarter. So we'd love to get a sense of what youre seeing out in the field today.
And our operations getting back to normal close to normal above normal and.
There is potentially a lot of patients.
Building up and the pipeline would love your thoughts I'll just give you both my questions upfront.
On the potential backlog of patients here that could should would be treated and <unk>.
21 and 2022.
Thanks Robby.
And are seeing as we put in and.
Forecast sequential growth from Q1 to Q2, and Thats really driven by increased adoption and utilization within the centers not really driven by Covid recovery.
As we stated a little bit earlier, the patients that are coming through the diagnostic process at the hospitals go through and inpatient stay and the epilepsy monitoring unit.
Is it a precursor to becoming a candidate and then ultimately being scheduled for and Rns implant procedure, we are seeing and hearing from our customers that those number the number of patients coming through that process is increasing but on average it's about a 6 month delay from the time that they first come in for that and patient couple of FC monitor.
And United stay until they get the rns device implanted and so that's giving us confidence that we will continue to see growth through the second half of the year and really get that Covid recovery.
With growth that we're seeing today again, just coming from increased adoption and utilization at without the benefit of that Covid recovery.
There is a backlog of patients that we hear from our customers that are waiting to get into these epilepsy monitoring unit. So as that as those centers get up to full capacity.
And that really prime is the pipeline for us and the future and excited about what that means for the business as we go forward.
Great and maybe just a quick follow up.
And it was really helpful. You gave guidance for initial implants and replacements I know there is a bit of dynamic with replacement.
And just how do we think about the cadence of those 2 going through the rest of the year and anything to point to that stands out in second third and fourth quarter. Thanks.
The general trend for replacement revenue is going to be declining replacement revenue over the course of the next few years as we go through that transition from the 4 year average battery life to the newer eager and battery life that we started and planting in 2018.
What we will expect to see a little bit of unevenness from quarter to quarter, depending on the timing of when certain devices or when individual devices reached that and and a battery life replacement, but the general trend is going to be declining revenue over the course of the next few years.
Great. Thanks, a lot and congrats.
Thanks Ravi thanks.
Thanks, John.
Our next question comes from drew Ranieri with Morgan Stanley. Your line is open.
Hi, Mike and Rebecca and thanks for taking the questions and congrats on the on your first quarter as a public company.
Just to.
Maybe start on new accounts for a moment.
I think you ended 2020 of around 130 active accounts and Mike Correct me if.
And if I'm wrong, but I think I heard 148 by year end.
Think you've noted before that there might be another 40% and have.
And going through the committee process, but can you give us a better sense of timing on those accounts of 1 that could become active.
Could you see even better account onboarding beyond the 148, and 2021 or is kind of this year and more of a focus on driving.
Prescriber adoption at your current active accounts.
Thanks true yes.
And had 132 centers that implanted and 2020.
And I expect that that will increase to 148 share through 2021. So by the end of 2021 will have had 148 centers and.
And we're on pace to that and so continue to feel confident and the ability to add additional sensors throughout the course of the year, that's driven by the comment that you made that we do have.
And that we've already identified that have gone through the contracting process.
Identified interest and implanting yarn system and their patients and it takes a different amount of time per centers to be able to come up on line with that and and that.
Number of centers that 40 centers compared to last year that have contracts in place that gives us confidence not only and the ability to get into those 148 centers. This year, but it's also the pipeline as we expand through 2022.
We'll focus on continuing to do that the bulk of our the bulk of our growth. As you mentioned is really coming from additional utilization increased utilization at the centers that are already using the product.
That said the new centers are an important catalyst for us as we continue to move forward and are doing the <unk> for putting in the effort and having the results around expanding those number of accounts through 2021.
Thank you and the <unk>.
And for Rebecca just on the gross margin side you posted.
75, 7% gross margin in the quarter, just maybe how are you thinking about gross margins progressing throughout the year.
With new and plants, having a higher gross margin and it sounds like theres going to be a better second half as more patients come onboard but is there any reason why gross margin should dip.
Below the first quarter level throughout the rest of the year.
Thanks true.
We were pleased with how the first quarter turned out our gross margin has been trending up sequentially and having.
Having said that we expect that it will remain and the mid seventy's for the balance and this year.
We do expect that over time with increasing volume that we'll see some modest improvements from future years, but for the remainder of this year, we're expecting to be in the mid seventies.
Thanks, and just 1 last 1 on the and slight platform, Mike you touched on it and your prepared remarks I think you said you were at 60 centers today, but could you go into a little bit more detail about the rollout would you expect to get to all 148 centers by the year and and just how has the feedback been from your.
Current prescribers. Thanks, so much for taking the questions.
Thanks true, yes, the rollout of the insight platform is going really well for us at this point, we're in about approximately half of the accounts have started using I've already started using it for their patients and the adoption continues to grow over time, we expect that over the course of the next.
<unk> quarters that theres going to be utilization and there'll be standard utilization across all of our accounts.
And I'm not something that were specifically tracking to say that it'll be 100% by by the end of the year, but its trending and trending in that direction and we've been really pleased by the uptake as.
As we've talked before the importance of that insight platform, just continuing to bring the power of the diagnostic data. That's provided the brand data that's provided from the device to the physicians and a way that makes it really easy for them to make clinical decisions based on the based on the data coming from the device and the insight platform is a really important tool to be.
<unk> able to do that offering and some new reports since I report and kind of <unk>.
And outcome report and they really make it easy for the physicians and we've been very pleased by the feedback coming back from the centers that have started using it.
Thanks for taking the questions.
Thank you. Our next question comes from Larry <unk> with Wells Fargo. Your line is open.
Good morning, guys and I'll Echo my congratulations on a good start to the year.
So a couple from me Mike.
1 whats the strategy to expand utilization and active prescribers per account.
And capture the patients within the CEC that are appropriate for rns, but don't get treated today.
And secondly, well I'll stop there, Mike and then I had a follow up.
Thanks, Larry.
The focus the primary focus is you just hit on for the expansion and growth of the business is about is coming through increased utilization at the comprehensive flexi sensors and.
The way that we're doing that is broken into step 1 within the center is to expand the number of Apple apologist within that center that are prescribing the RMS system for their patients today, we're at a spot where most of these centers most of the 132 centers that had prescribed and implants and devices last.
Year.
And we're doing that with a relatively small number of the staff of the Apple apologist within those centers, so that expansion to more of those uploads soldiers coming through education.
Of those physicians training of those physicians, helping them identify appropriate patients and feel confident and the therapy from the results of the clinical data and getting that to them is really important and we talked to some and the previous discussions about the outcomes from the real World study that were published last year getting all of that information out to the <unk>.
Physicians and then for those physicians that start to use the device within their patients is about turning that initial evaluation and trial and a few patients to routine utilization and so.
And that's coming through education and awareness of the.
The clinical data supporting the efficacy across a broad range of patients within our indication I'm feeling confident and the system and then that ease of use component is really important for that as well. So it's getting that experience with the advancements we're making like the insight platform make it really simple for the physicians to take that.
Data from the device and apply it back to know how to make the adjustments to the programming how to get the optimal outcomes for their for their patients and so.
That's really the focus and the way that we're driving the growth and your growth at those centers.
That's helpful and Mike you mentioned earlier the majority of the 1 point.
And 1 to $1.2 million.
Patients are outside the level 4 cec's what steps are you taking today to drive more referrals.
Yes, I think thanks, Larry that there are approximately 80% of the $1.2 million drug resistant epilepsy patients that are today being managed by physicians outside of comprehensive epilepsy centers.
And we're today and the early stages of piloting 2 specific efforts 1 of them is around referring physician awareness education. So it's identifying the physicians and the community that are managing those patients and providing.
The information to them about the benefits of therapies that are offered at the comprehensive epilepsy centers.
We're piloting some activities around that starting to do some work with our field team around creating that education and awareness and <unk>.
Creating those referral channels and.
And the other that we're doing which is also and the early stages of piloting.
Evaluating and developing some tools for direct to patient awareness, so digital marketing programs to identify patients and the community that are looking for additional treatment options and then helping create that referral pathway that those interested patients can get seen by patient and by physicians at the comprehensive epilepsy centers.
And again, we're in the early stages of piloting and we just started that really in 2021.
We're going to learn from that I'm sure that there is a number of things that we'll learn and make adoption and adapt stations to the way that we're approaching that and then be able to expand as we identify the.
The mechanisms to do that successfully and be able to expand that and the future.
Perfect. Thanks, so much for taking the questions guys.
Thank you. Our next question comes from Danielle and TLC with SCB Leerink. Your line is open.
Hey, good morning, everyone. Thanks, so much for taking the question Ravi.
Ravi sense net congrats on your first 1.
Our quarterly earnings calls and public company very early for you guys over there and that's why I appreciate it.
And just.
First question is a follow up actually to Larry's question and I guess, Mike when you think about where are the points of pushback are you I guess from my seat looking at the clinical data and looking at that.
Net benefits of the device versus other resection or be announced or DBS and.
And what is what are the points of pushback and why was the physician and start using it don't they use this and a lot more patients right away and just trying to understand where the barriers are to getting that position using it and all the appropriate patient is it patient understanding patient selection.
Is it the ecolab Paolo just that's the barrier just love a little more color there.
Yes, Thanks Danielle.
The barrier varies as you would expect from physicians and physician, but I would say in general it starts with the first thing that we need to overcome as the awareness of the clinical data. So I agree with you I think we have outstanding clinical data and it's getting that information about how well this therapy works to reduce <unk>.
<unk> and to improve.
The quality of life, and cognition and mood and getting that information and those published studies to these physicians so that they understand what those benefits are.
Really important because it's about changing the way that they're thinking of managing these patients. So it's moving from a mindset of drug therapy and that that being the primary treatment mode to moving on to additional therapies that are proven effective for those patients that arent able to get a response from drug therapy inadequate response from drug therapy.
For those patients that start for those physicians I'm, sorry that start prescribing the device with and their patients. It's about building their confidence and the way the system works that theyre able to fit it into their clinical practice that ease of use component is really important and so that it can just become a standard part of their routine follow up for these patients that are coming in <unk> <unk>.
Platform is a really important tool to be able to do that and then its patient selection. So it's helping them feel confident that they can identify the patients that are appropriate candidates. They can take that too.
Their case conference for the review that's done and within these centers and be able to identify the appropriate treatment for them. So there's a number of steps, but a lot of it Danielle has to do with getting them confident that this is going to be a standard part of their therapy that they're just presenting routinely to patients as an option for those that arent able to get a response.
From medication.
Got it Okay, and then and thank you for that Mike and then 1 more follow up from me and that is on.
And the refilling of the referral funnel or the refilling up and diagnostic centers that you talked about and should we be thinking about these diagnostic centers as they work through this backlog of patients is operating above 100% capacity and so you have sort of unusually high patient numbers coming into the CEC is maybe in the back half.
For the year.
2022, or do you see it as more of a streamlined like you work through your backlog, but it is.
The way, it's going to funnel through there shouldnt be much of an air pocket.
Of growth once the backlog is worked through just what I tried to make sure I understand the cadence here.
Yes, that's a great question, Danielle and 1 day I'm very anxious to get the cancer too as well what we know is that there are a backlog of patients that are available and interested and coming into these comprehensive epilepsy centers for the diagnostic evaluation, it's yet to be determined whether.
The sensors are going to be able to create surge capacity and.
And increase efficiencies to be able to bring more of those patients through their centers more quickly.
So I don't know what they don't know the answer to that we're very anxious to find out where we're hopeful that the centers will be able to improve their efficiency and have more patients coming through coming through the centers. We do know that historically the capacity of these centers has been going up theres more <unk> that are coming out of fellowship and going into practice and number of these.
<unk> are expanding the number of epilepsy monitoring unit beds and the number of patients that they're seeing within those centers that so that's a longer term trend that's been positive and we expect to continue to be positive or are they going to be able to surge and have a bubble capacity you don't know the answer to that yet.
Totally fair thanks, guys.
Thanks Danielle.
Thank you and I'm currently showing no further questions at this time I'd like to turn the call back from Mike's Abbott for closing remarks.
Thank you again for your time today, Rebecca and I look forward to meeting with many of you and the future and investor and industry conferences as well as individual meetings and I Hope you have a great day.
This concludes today's conference call. Thank you for participating you may now disconnect.
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