Q2 2021 Axonics Inc Earnings Call
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Good afternoon, ladies and gentlemen, and welcome to the Phonics second quarter 2 of the Pal from 'twenty..1 results conference call. At this time all participants are in a listen only mode. Later, we will conduct the question and answer session and instructions will follow what debt.
Time, if anyone should require assistance during the conference. Please press Star then zero on your Touchtone telephone I would now like the turn the conference over to your host Mr. Neil The lead car. Please go head.
Thank you Jerome good afternoon, and thank you for joining <unk> quarterly results and update call presenting on today's call of Raymond Cohen, Chief Executive Officer, and Dan Dearen, President and Chief Financial Officer, Bryan Dan will provide prepared remarks on second quarter financial results commercial progress in the <unk>.
<unk> business update followed by a Q&A session before we begin I would like to remind listeners that statements made on this conference call that relate to future plans events prospects or performance of our forward looking statements as defined under the private Securities Litigation Reform Act of 1095, while these forward looking.
Are based on management's current expectations and beliefs. These statements are subject to a number of risks uncertainties assumptions and other factors that could cause results to differ materially from the expectations expressed on this conference call. These risks and uncertainties are disclosed in more detail in <unk> filings with the securities and exchange.
The commission all of which are available online at Www Dot SEC Dot Gov.
The centers are cautioned not to place undue reliance on these forward looking statements, which speak only as of today's date August 5.2021, except as required by law Exxon ex undertakes no obligation to update or revise any forward looking statements to reflect new information circumstances or unanticipated events that may arise.
Now I'd like to turn the call over to Ray for his remarks, Thank you Neil.
I'd like to welcome everyone joining the conference call. This afternoon.
In the second quarter of 2021, I am proud to report that we exceeded our commercial objectives and made important progress on several other key initiatives starting off with our commercial results Exxon X generated record excuse me record revenue of $45.9 million in the second quarter.
Representing an increase of 33% on a sequential basis and over 200% increase.
As compared to last year's Covid impacted second quarter.
In sacral Neuromodulation, we experienced strong momentum in the United States and generated record quarterly revenue of $40.2 million.
And this was up from $33 million in Q1 of this year.
We continue to add new customers and we're also seeing growth within our existing base of implanting physicians, who are performing more procedures than they have in the past given the return of a more normalized the elective procedure environment and the overall expansion in the second 1 on modulation market.
As we have discussed in the past and each physician practice. There are hundreds of patients that had been differentially diagnosed with urinary FICO or mixed incontinence.
Many of these patients have taken prescription drugs to treat overactive bladder with limited success. The clinical literature indicates that over 80% of patients who are prescribed drugs discontinue these medications within 6 months over.
Over the last 2 decades millions of patients have been suffering in silence or simply decided not to pursue cycling of the modulation therapy due to the shortcomings of the legacy offering.
Thankfully this is changing.
Due to our presence in the market physicians are now discussing the benefits of cyclical modulation with their patients more often.
The discussion now is less about whether the product is rechargeable or non retargeting, it's more about the longevity in the body and significant symptom relief that can be expected.
The facts are that <unk> has made cycling on modulation and attractive therapy proposition. It is clinically proven with higher efficacy than ever seen in this category. It provides the durable long lasting relief, it's easy to use MRI compatible and very safe.
Moreover, we are working diligently with physicians to increase awareness among patients via our DTC and marketing efforts.
As a result, there is little doubt that the cycle second on modulation market is growing and Exxon X has been caused in the matter.
Turning to bulk of MIT.
We generated $5.7 million of revenue in the first full quarter since acquiring the product on the last day of February <unk>.
Physician response of the product is overwhelmingly positive and the expanding offering has elevated <unk> his stature within the urology and eurobond oncology community.
Clinicians are enthusiastic to offer the safe efficacious long lasting best in class Bulking agent to the large and rather underpenetrated population of women suffering from stress and mixed urinary incontinence.
And as hypothesized bulk of med is opening doors, providing <unk> with an opportunity to sell more sacral neuromodulation.
We are already seeing physicians, who for 1 reason or another didn't come our way in the last 18 months now, giving us a chance to demonstrate the superior clinical results of our <unk> product and the mission driven dedication and high quality service of our field based team.
Now during the second quarter, we trained our entire U S field team on bulk of it and we are now executing a broad rollout to physicians across the United States. We scheduled 5 regional seminars this summer to introduce physicians to bulk of med and provide proctor wet lab training.
Physician interest was such that the 5 seminars were fully booked in 1 week and we recently added and filled a 6 seminar.
All in 1 day.
We have already hosted 2 of the seminars in July with the third program scheduled for this weekend.
On the excitement and positive feedback from attendees is phenomenal in all we expect to train over 350 physicians on Bocom Ed at the seminars vs.
<unk> also provide us with an opportunity to introduce our cycling of modulation system to physicians, who are less familiar with <unk> and have them hear firsthand from colleagues who have already experienced the difference of working with Exxon X.
Now looking ahead based on our strong commercial momentum we are increasing our calendar year 2021 revenue guidance to a range of $186 million to $188 million.
Impaired to our prior guidance. This is the $9 million increase at the midpoint and implies growth of approximately 68% on a year over year basis now of Dan will provide further details on our updated on our updated guidance in his prepared remarks, but I'd like to talk a little bit about our clinical.
And regulatory situation.
It's notable that we've received to our regulatory approvals during the quarter and also made a submission to the FDA for our long lived non rechargeable implantable implantable stimulator.
So to provide some more details in mid May we received CE mark approval to market, our second generation rechargeable.
The implantable device and an updated patient remote control in Europe, you may recall that we previously received FDA approval for this particular IPG and remote control during 2020.
Now this version reduces how frequently of patient needs to recharge their cycling of modulation device to just once a month from approximately 1 hour.
Now also in mid May we received FDA approval, allowing the use of detachable extremity coils for patients undergoing $1.5 T or <unk> MRI scans now you may. Additionally, recall that the FDA previously approved both $1.5 of <unk> MRI conditional labeling for us using head.
And full body transmit coils. So with this additional approval for these extremity coils Exxon X now offers the widest range of FDA approved the MRI conditions in sacral Neuromodulation, notably we have also surpassed the MRI conditions allowed for products in the spinal cord stimulation market.
And in late June we filed the PMA supplement with the FDA for our newly developed long lived non rechargeable or recharge free cycling of modulation system now.
We designed this new implantable device to replicate the key features of our currently marketed FDA approved rechargeable system. Once approved the new Exxon X system will be the first fully recharge free <unk> system and it will have the following attributes.
<unk>.
A primary cell battery with an expected life of at least 10 years, which is approximately 2.5 times longer lived than the legacy offerings from Medtronic.
The device will be of relatively small and thin and it will measure only 11 Ccs and volume.
It will include the benefits of constant current stimulation.
And it has an intuitive easy to use recharge free patient remote control.
And lastly, it will it will be born with full body MRI compatibility with both 1.5 and <unk> <unk> scanners.
Now, we anticipate receiving FDA approval during the first half of 2022 at which time, we expect to begin shipping the new product to customers in the United States.
Now we're confident that the introduction of our new non rechargeable device will continue to drive market expansion and will also advance us on our path to cycling on the modulation market leadership.
As I Trust you can tell we've had a very busy and incredibly productive second quarter of 2021.
With that I'd like to turn the call over to Dan to review <unk> second quarter 2021 financial results Dan.
Thank you Ray in the second quarter of 2021, Axon X generated net revenue of $45.9 million. This represents.
The increase of 202% compared to $15.2 million in the prior year period.
So from Neuromodulation net revenue was $40.2 million of which $39.2 million was generated in the United States and the remainder in select international markets.
Bulk of Med net revenue was $5.7 million of which $2.4 million was generated in the United States and the remainder overseas.
Profit for the second quarter of 2021 was $28.7 million, representing a gross margin of 62, 6% compared to 44, 4% in the prior year period.
Total operating expenses for the second quarter of 2021 were $44.7 million Inc.
<unk> and operating expenses are $6.3 million of stock based compensation expense and $2.2 million of intangibles amortization of.
Operating expenses totaled $26.2 million in the prior year period.
Net loss for the second quarter of 2021 was $25.1 million compared to a net loss of $19.8 million in the prior year period.
Turning to the balance sheet, we completed an equity follow on offering in mid may that generated net proceeds of approximately $190 million.
In June we paid back in full the $75 million Silicon Valley Bank term loan debt. We had used in February to finance the bulk of net acquisition.
Cash and cash equivalents were $231 million as of June 32021.
Before discussing our updated guidance I would like to note that we're closely monitoring the impact of the Covid Delta variant on elective procedures.
In the southeast United States and a few other markets. We've had some cases canceled in July and in early August due to patient reluctance or in certain areas of Florida, where facilities of temporarily restricted elective procedures.
Our updated guidance incorporates what we're currently seeing in the field and assumes that the situation with Covid does not further deteriorate over the balance of the third quarter.
As Ray mentioned earlier, we are increasing our 2021 revenue guidance. We expect total net revenue to be in the range of $186 million to $188 million representing growth of approximately 67% of 69% of our fiscal year 2020 net.
<unk> of $111.5 million.
This compares to our prior net revenue guidance of $176 million to $180 million.
Sacral Neuromodulation net revenue is expected to be in the range of $166 million to $168 million and bulk of net net revenue is expected to be $20 million.
Gross margins are expected to improve to an average of approximately 64% in the second half of 2021 and expand further in 2022.
I will now turn the call back over to Ray for closing remarks. Thanks, Dan. So in closing we remain confident that our best in class in continent solutions will continue to deliver strong clinical outcomes and high levels of the patient satisfaction. We expect this to drive expansion in the highly underpenetrated cyclical modulation and stress urinary incontinence markets.
And provide durable growth for <unk> in both the near term and for many years to come we remain grateful for the trust the physicians patients and shareholders have placed the <unk>. We'd also like to thank our field team and our colleagues in Irvine for their diligent efforts and dedication to fulfilling our mission of changing the lives of patients suffering from bladder and balance.
Function so with all of that said at this time, we're happy to take some questions. We will turn it to the operator.
Yeah.
Ladies and gentlemen, if you have a question at this time please.
Press the Star and then the number 1 key on your Touchtone telephone. If your question has been answered or you wish to remove yourself from the queue. Please press the pound key your first question comes from Chris Pasquale with.
Guggenheim Your line is open.
Thanks, and congratulations on a nice quarter.
Ray I wanted to touch first on the comments you made about the sort of evolving COVID-19 landscape because it is still a little bit of the concern as we look at the the outlook here for the back half of the year can you just go into little more detail on.
How what youre seeing today compares to.
Maybe the situation late last year or at other points here and just how.
Much of the variable you think that is in terms of predicting the performance of the business over the next few months here.
Thanks, Chris.
I appreciate the question I think debt.
This time around it feels very different sure. We've had some cases canceled we've had some patients that have some reluctance and so forth, but this is nothing as compared to what we saw back in late last year of late to 2020, and then obviously pales in comparison to what we saw.
At this time.
During last year on the summer so.
We're paying close attention I think it's I'm sure as many other company.
The companies have stated this time around the problem is really.
How should we say.
The isolated to a large extent to certain places in Florida.
And then.
New Orleans, and a couple of other spots in the southeast and I think that what we have seen is a reaction where there's been some reduction in access to elective procedures in certain of these markets, but this is not affecting the country or our business in a broad way.
Where we've got good momentum in the business. We obviously are monitoring the situation every day, but we're also monitoring revenue as it's coming in every day and so far things things continue to go well for us So I am hoping that we can power through this.
And not have had the same kinds of disruptions that we've seen in the past.
That's helpful. Thanks, and then just on bulk of net when we got together 3 months ago, you were just a little bit of caution on the <unk>.
The <unk> outlook for that product because of our apps, we're going to be out of the field. Because there is training that needed to happen. Obviously the result, there was better than expected can you just go into.
What drove that.
What's happening faster than maybe you might have predicted.
How that colors your outlook for the product.
As you really scale it up across your sales organization.
Yes.
Again, I appreciate that question as well.
The.
The most obvious comment to make is that yes, we were a bit surprised also by the uptake in the product and Thats the.
In Q2.
So a couple of things 1 is that the.
On the facts are that the early adopters of the product who started during 2020 during the pandemic have simply use the product more often.
Than expected so the same store sales if you may from those first 100.
Customers.
Has been really positive and theres been such demand that despite the fact that we did not unleash our entire the entire fields sales force during Q2.
Fundamentally training, we still managed to bring on about another 100 customers and once again, they've taken to the product in a really big way. So I think it's.
It's always great when you are.
The surprise right that people are utilizing of product more than you would have expected and that you are gaining more customers quicker than you expected.
So.
We were very cautious and I think appropriately so but once again the ability to generate.
$2.4 million in the United States.
In our first real 3 months.
Having the product we are quite impressed with that the numbers internationally are more or less historical right that those are numbers that are consistent with what we had seen prior to the acquisition before we bought it so not as much as the surprise there now going forward in Q3, I think we do have once again a little.
<unk> in terms of expectations simply because of the fact that Europe is in their traditional holiday mode and that of course as <unk> heard from many other Ceos, there's issues right in certain countries, and particularly Germany and other countries in Europe, where they are just coming out of lockdown and theres been a lot of COVID-19 disruption, so having said that.
As you have noticed I mean, we've increased the guidance from $14 million of $20 million.
With that product line, so we're quite bullish about it and it looks like our projection of $50 million in 2024 may turn out to be conservative.
Great. Thank you.
Thanks, Greg.
And your next question comes from Travis Steed with Barclays. Your line's open.
Hey, Ray and Dan Thanks for the questions.
You look at the <unk> guidance for the second half I know you talked about you're assuming from Covid impact curious if theres any other assumptions that you have.
Baked in like summer vacations or potential for some short term distraction as you rollout bulk of amid the FM sales force just curious if theres anything else that youre, assuming in the second half on the on the US <unk> guidance.
Yes, I appreciate the question, let me just say this.
Know that this we've gotten this question numerous times about potential disruption of having bulk of that it's completely the opposite.
Bulk of it is not a distraction.
As a door opener for us.
And it is creating an enormous amount of enthusiasm and as I mentioned in my prepared remarks, we of over 350 physicians coming.
Coming to <unk>.
To undergo wet lab training for bulk of men and then also hear about kind of what the latest is with respect to sacral nerve modulation. So bulk of it is actually an accelerator for us as opposed to some sort of distraction.
We've obviously added more feet on the street more salespeople and so forth. So we've got plenty of capacity now to be able to.
Handle the increase in that activity.
I just wanted to make that Super clear right.
It is far from a distraction this is actually paying big dividends for the company in terms of <unk>.
Physicians, who had not done business with the before now giving us the second look for sacral neuromodulation because they are so excited that <unk> now has the bulk of that asset.
Which obviously they really like.
In the second half of the year, we haven't.
We're not tempering our projections.
Will it be a little choppy in this Q3 share of a little choppy, but we expect to finish sequentially up and we are really bullish about the potential for Q4 as we now get into the best quarter of the year in the medical device business because people have met their deductibles and we're hopeful of course that this delta Varian Peters itself out.
As opposed to becoming a major problems so all of those things.
Taking into consideration.
I want to get this point of cross we're extremely bullish about our prospects in the second half of 2021, and then Super excited about the potential in 2022 is our new product comes online.
When you look at bulk of them Ed on kind of curious as you've I think almost doubled or more than doubled your user base. What are you. What are you seeing as these doctors get trained or are they continuing to use the product in.
On the feedback that we've heard of some of these doctors are going to use this basically of frontline therapy. So curious what the rate limiting factor is here do you have enough of manufacturing capacity of this product really really ramps up.
So we have capacity we are planning for success.
With all of our products and.
Dare say, if you look at our balance sheet, you can see we've got plenty of inventory.
On both sides certainly on cycling of modulation as well as bulk of it. So we're really not concerned about that.
And I think.
Cut right to the chase with the question maybe that you didn't ask which is.
Every 1 of the seminars we survey the <unk>.
And the fact is that 95% of the people who are coming to the seminars indicated they want to start using low commit immediately.
Now immediately means let's just say within another weeks, some weeks or a month or so right of when the attended the seminar just from logistics right. The logistics of getting back in and getting those first patients scheduled but this is unbelievable and I'll share it because it is the fact and.
We are blown away by this I mean, when you run programs like this you think well if we can get 70% 80% of the people to be enthusiastic about using the product right of way then that would be fantastic. So this once again has exceeded our expectations, but more importantly.
And the the most important message I want to get across today is theres a lot of these people that are coming to the seminars more than half of them are not our existing customers.
So this is the real big opportunity for US now to have opened up their eyes to who acts on X is the way we go about doing business.
The quality of our products and these folks are open to giving us the opportunity to earn their business and I think that's what's really going to move the meter for us in the years to come.
Great. Thanks for taking the questions and congrats on a on a good quarter. Thank you. So much appreciate it.
And your next question comes from Adam <unk>.
<unk> with Piper Sandler Your line is open.
Hi, Dan Thanks for taking the questions and congrats on the nice Q2 print.
Wanted to start with the question on DTC was just hoping to kind of get an update there.
On the sacral side when will you be more aggressive with campaigns.
Should we expect the company to pursue the PV.
TV advertisements in the near future just any color there would be great and I guess I'll lump bulk of it in here as well given that that's a large patient population of lot of women, who have this condition any thoughts on direct to consumer for bulk of it and then I had a follow up.
Thanks, Adam I appreciate the question.
So we are increasing.
Our spend with respect to direct to consumer advertising.
In terms of.
Just trying to put a number to it we're probably increasing our spend at about 20% to 25% per quarter over the previous quarter. So once again, Dan and I are a little conservative in this regard, but we continue to increase spend and we are seeing really good results.
On the.
Addition of bulk of med makes our direct to consumer advertising a lot simpler actually because we don't have to then try to make a distinction between the type of income.
Continents that you have and we will and adds you can imagine we probably won't we won't be using that word right. But this is for women who are leaking urine for 1 reason or another so we don't have to try to make a distinction only look for patients who have urinary urge incontinence. So whether you whether you have whether you cough or sneeze or pickup on object and leak.
Some yearend or you're exercising whatever or you have difficulty getting to the bathroom and time than.
You would leak urine that way once again, our messages are going to be more generic and we believe that will help to even increase the the uptake.
The response rate.
From these types of activities. So we've moved.
Through the process, mainly focused on kind of the Facebook advertising, where we're targeting people.
With certain demographics and also in geographic areas, where we know we have centers that we can pass along these interested people to hopefully the become patients and hopefully the eventually get implants.
We are also now testing radio advertising. So we are literally starting that campaign in 10 markets around the country. We're in 50 markets for Facebook advertising and eventually we will go on TV. There is no question that thats in our future.
But as you can imagine we are in that crawl before you walk and walk before you run mode, and we want to test out the the messages make sure of where we're in a good position the measure responses and so from I think the radio advertising will help us in terms of refining what ultimately will wind up doing on TV. So.
We won't be talking about TV ads during 2021, but hopefully we can advance the that stage in 2022. So hopefully that's given you a complete answer to your question Adam.
No that's very clear thanks for the color there and then for the follow up just wanted to take of pulse our ask.
About latest thoughts on competitive landscape in sacral.
Obviously, we see the prints at a really nice quarter for you guys.
Just any change to dynamics of our competitive narrative over the past couple of months. Thanks, So much for taking the questions.
Thank you Adam I think the easiest and.
Simplest thing from me to say is that.
Its pretty quiet out there from a competitive standpoint.
And I have to.
To say more I really just don't have much to say.
So things are quiet or they've quieted down or however, you want to look at it but.
Where we've got our heads down and focused on execution.
That's helpful. Thank you.
Thank you.
Your next question comes from Michael Paula.
From Baird. Your line is open.
Hey, Thank you good.
Good evening.
Just a question on on bulk of them in the U S. Here is the ramp that product.
Really focused on.
Phil of mechanics, and revenue destock customers to get them going as you bring on first time users or.
Or are you.
Total revenue kind of in line with what the spot demand I'm just as we roll. This forward over the next handful of quarters and then the next year I just wanted to be mindful of any kind of potential stocking impacts.
As you as you build welcome Ed Yes.
Yes, so Mike.
Thanks for the question is of good question and I'll answer it in the following the way we have been consistent is the style of doing business that we never sell anything to a customer that they don't anticipate in planting and the patient and in this case injecting in the patients. So that is not our style, we want to be easy to do business with.
We see no reason why anybody needs the stock our products, we've got plenty of product in our inventory and we can get it to any customer within 24 hours and in some cases same day, we have of depot on the East coast. So we ship out of Memphis for the people on the East Coast and we ship out of California for people on the West Coast, and we really disk.
Carriage the notion of stocking of.
The experience for both of the patient and the physician and we feel very fortunate to be able to be participating in that kind of of therapy.
Good color and very clear. Thank you second final 1 annoying spreadsheet question, probably for Dan Dan If you said it I missed it but.
The framework for Opex on the second half of 2021.
We're we're comfortable with the air consensus I think on the last during the call. We also pointed out the.
We do have the ongoing $2 million and change per quarter of an amortization of intangible.
Just as we called out on this call $6 million unchanged non-cash stock based compensation. So we're continuing to add to the commercial team and pushing forward as Ray mentioned on the.
Rest of the consumer so we will see slight increases in opex as we grow.
But no 1 should be looking towards any of significant or adverse big jump on opex.
Thank you very much.
Thanks, Mike.
And the our next question comes from David the rest cock.
Service Securities your lines open.
Hey, guys congrats on the quarter and thanks for taking on the questions right.
We can get a bit of a break in and get that approved earlier in the year than I think.
<unk>.
There's a lot of Blue Sky ahead of <unk> in that standpoint, if it comes a little bit later until the slower then obviously that will temper.
The growth expectations, but I.
I mean, I can't be more bullish about our prospects and the number of new customers that are coming and the fact that folks who werent, giving us. The look previously are now.
Very interested in working with Exxon at so we think that.
Given all the things that we've done and the investments we've made in facilities and internal processes and increasing the size of our field force the.
Yes.
And the work we've done to reduce cost of goods as well.
We're going to see better margins, we're going to see significantly higher revenue and I think Exxon X is going to continue to be a really great story as we look into 2022.
Okay. That's that's helpful. I guess on the on the.
The training sessions for the bulk of Miller I'd love to kind of sense on how on the first 2 have gone. So far I mean, you mentioned youre expecting to get to 250 sessions by the end of January.
If the conditions by the end of the seminar.
The interesting to hear I guess, how many you.
Kind of the first 2.
How immediately you really are expecting some of these physicians the pick up use of the procedure.
Where youre seeing the biggest interest whether it's in the existing bulking procedures or aware of that could be taking more share from sling.
And then I guess the kind of the last part of that question is are a lot of these versions of our coming there on the existing <unk> physicians that you currently deal with on the SME portfolio or are they new physicians per economics. Thank you sure. Okay. Thanks, So I'll take it backwards and then ultimately my colleagues will help me remember the first 2 parts of your question. So the.
The last part is half of the participants of our attendees at the seminars are not our existing customers. Okay. So that and we think that's fantastic.
So that's number 1.
With the other parts of just what's been the receptivity to the first 2 semi alright receptivity has been great and I would suggest that there was a really great note put out by your former colleague of true as to attended the first seminar in the Flash and wrote a very a very detailed note about what she observed during that session. So people are getting on the bandwagon.
And they want to get started immediately the issue for us is not Oh, yes.
Contact me it was really fun. Thanks for the cocktail no theyre like how quickly can you get in my office I've got patient stacked up.
So we're all over this and we are excited they wanted to get started immediately and we're having our people go out there and make sure that the first set of patients that they do goes what goes well and then just to remind folks that the bulk of it is very different than circle.
1 of the modulation.
We're in every single case for for a second on modulation of where in the or we want to make sure of the implant goes well, we're going to make sure that the programming of the patient goes well with both of them at once the first couple of patients who are treated than they are on their own they don't need us to be there to support cases, so it's more of a recurring revenue or in the annuity.
Wherever you want to look at it with bulk of med that has a light touch once you get somebody trained with the wet lab and.
Hopefully, it's obvious to everybody on the call by doing the seminars look of what we're doing and we can train 50.60 physicians.
From sequentially for the rest of the year.
Well in Q3, it's vacations Covid logistics okay.
But if you do the math.
Given that we're saying $20 million for the year, we're expecting a really big fourth quarter with this product.
So I think.
Maybe that's maybe that's just the answer to your question now I want to point out 1 thing if we talk about doing $75 million and a quarter, which of you kind of get down to it that's what we're looking at in Q4 at 7500 patients.
Okay 7500 patients in 3 months, so there's a lot of people.
That are going to get treated with this product. So I just think that 1 needs to keep that in mind right that if we talk about you talk about $20 million of revenue in 10 months. That's 20 net that's a lot of pain at 40000 patients.
That of gotten treated so now that's great for us because there's 20 million out there that really could use this therapy. So it's the drop in the bucket, but think about the benefit to the practice you of got patients coming in that had been that had been leaking when they do normal activities.
And these of vibrant young people right. These are women, who have had children right who are.
Most of them are not even the middle aged or are they are middle aged so when I am talking about nursing home patients here and.
And the ability for those patients to get dry and then for them to tell their friends about this that's great for a practice and so you can see why we are so excited about adding this to our product line because it makes us it makes axonics that much more relevant that much more of valuable to these customers.
And that.
Level of enthusiasm, obviously bleeds over to the entire product line for for the company. So that's the key we talk about we want the physicians to experience what it's like to work with Axonics because the 1 thing that we say and it's true.
Is that they've never experienced the quality of service and support that they get from some really super high quality highly motivated individuals who by the way of all shareholders and are all interested in the overall success of our enterprise so.
I think there's a method to the madness and there was some skepticism about us doing this deal and when we did it but hopefully now we are ready proven that this was the smart play for us and it's got really good legs, and it's going to help us going forward.
I.
Date of all of that no. That's all that's all very helpful for that just 1 follow up here for for us.
So just wanted to focus on the primary spelled the base, maybe just wanted to give you a chance to talk about how maybe what the ramp looks like what.
Accounts, you might be looking at first for that product or maybe what your senses from the excitement of that among doctors, who you might not already be working working with today.
Thank you that's a good question the.
The number 1 target is anybody who's not doing business with us today and the reason they are not doing business with us today is because for 23 years. The only thing the new with respect to seconal modulation with a nonrechargeable primary sell device. That's what they know that's what they think cyclical modulation is they think some of.
Of those stocks think that all of their patients are not gonna be able to recharge or some other stuff.
The stuff that's been stuck in their head by the competition. So these are the targets and the good news is we are getting a chance to as you have heard.
There'll be none of 170.580 of those the physicians hanging around with US spending a Friday night and the Saturday with us throughout the summer. So that's the target those of the folks that.
Who who of not embraced a rechargeable neurostimulator, whether it would be from axonics or from the the competitor.
So the or the number 1 target. These are the ones that these are the folks that I think this is going to make the most impact on and then of course for our existing customers.
This is going to help them in the sense that if they've got a patient. That's older you got a 75 year old patient you want to treat well it makes perfect sense put of product in there that's going to last at least 10 years fundamentally the rest of their life. They don't need to to do anything not nothing that we sell needs to get plugged in you don't need to replace batteries or any of that so.
It'll be a really cool product and I think how it's going to go is you're going to find that the older patients. The physicians will move them towards that product and then the younger patients.
We'll go with the longer lived.
15, 20, or more year rechargeable device, which now by the way since you only have the recharge it once a month for an hour I mean this is the least burdensome arrangement that you could imagine so.
That's kind of how we view it and hopefully that's a good.
Fulsome answer to your question.
Your next question comes from Larry Big Wilson with Wells Fargo Caroline's open.
Hi, I play, calling on file and thanks for taking my question.
He talked about on Bulk-mail being on the wide open at an accelerated at.
Can you can you talk about whether you'd actually recognized cultural revenue on the.
And keep clean.
Any of that second half of it adding a second half of 21 guidance.
The the simple answer is absolutely.
We have already signed up and have started working with.
More than a couple of handful.
More than a couple of handfuls of accounts of based upon the fact that we are now offering bulk of it and that those physicians have embraced both of them at in and have given us the opportunity to earn their cyclical modulation business. So this is not a hypothesis any longer this is actually happening on a regular basis.
Day to day right now.
So.
Yes, now that I think about it I didn't I didn't say anything and we didn't add that into our remarks.
We have been aggressively adding field people aggressively and.
You got me a little bit off guard, so I won't give an exact number but I would say that we probably added in the quarter in Q2 at least 10%, maybe even 15% more people we have over 250 people now in the United States.
Our.
Out there.
Either as a clinical specialist or as a quota carrying sales person and we will continue to add more resources as.
We go on so we're all about bringing new talent to the party and we've been very fortunate that the words out that <unk> is a great place to work and that people are making good money here and they get great support from the company.
And so on so forth. So we are actively bringing new.
The revenue producing individuals to the party and then as has been our custom we're going to continue to add clinical support so that there's never ever of question of whether we can cover every single case that of physician might have.
Okay, Great. Thanks, and then my second question would just be about the international sacral Neuromodulation business.
It's the kind of sticking around the 1 million dollar number for a while.
And I guess, what I'm wondering is it is there anything you can do to really get that business to grow and if not I mean at $1 million of quarter or does it really makes sense. The continue selling this product in outside the U S sort of Europe.
Yes, so that's an interesting question Mike.
Look I think debt.
<unk>.
I think 1 has to keep.
In their mind is that.
You can't sell product win.
When there is.
In Germany in the Nordic countries, when we acquired Contura.
We are in the process and have trained about half of those individuals on cyclical modulation. So we do expect as we look to 2022 God willing and the Covid variance in all of the rest of being equal to see an increase in revenue in these markets, but I want to remind folks.
That when you are working in a country.
Where it's a single payer system and we're selling a quality of life product non of life sustaining product that there are limits to the amount of money that any of these countries are willing to spend on second on modulation and we've said this before.
The country like the Netherlands.
Is going to be maybe 350 procedures done in the whole year and so if axonics. If we're getting of 150 or so of that business. Today, It's just not worth it for us to add more resources to go after the incremental business in those countries. So we came out of the box and a couple of those markets we picked up 25.
30% of the business.
We've kind of maintained our footprint and it's fine.
We are not going to withdraw from Europe, that's not our plan, we're going to look to increase the business incrementally and.
It is important that.
We continue to provide service to those customers as well so I understand the question I appreciate it.
Disappointed that the.
The revenue is not there, yes, but on the other hand, I can't squeeze blood out of Iraq.
If there is no oh, our slots and people are not doing elective procedures is not much that we could do.
With our team out there.
Okay now that that's helpful. So you feel like there is the there is a growth opportunity. There. It's just it's just been.
Disrupted by ongoing shutdowns from Covid and things like that.
No doubt no doubt and historically Mike.
Inc. As you May remember when you did the original research into the market.
For even for Medtronic It was only about 10% of their overall revenue in this category came out of the the international markets All international markets.
The business really for cyclical modulation has historically been a U S phenomenon and it just based upon the fact that we have more of a laissez faire healthcare system and so on and so forth. So so I think we need to keep we are very mindful of that.
Now eventually will will we look to expansion in countries, like Australia, or Japan, or China, and things of that nature and the answer is of course, we will but once again when you can do more business in the state of Mississippi than you can in any 1 of these countries.
That does help clarify 1 of the mind.
Got it thanks.
Any of our next question comes from from back how long.
S E mail Lily Caroline's okay.
Hi can I turn it back on I will take care of 9 cafe. Thank you for taking the culture and 1 day and can you give us an update on your.
I'm thinking of accounts I think the last time you provided.
That you have 610 games and K as I'll spend quite a bit of Ken K 10-K.
I guess that what size of that low hanging fruit.
Hi, Robyn 10 cash.
By the end around 80% of the market now you can average, okay, Mac and gain access to like Honey Sanchez, So and minoring a K can provide.
Can you provide the update on how many accounts can ahead now and then what what percentage of the 1000 high volume of Santa is do you think you can eventually that now.
Have opportunity to flat recounting of comments. Thank you for taking the question.
Sure No that's nice to hear from you and thanks for the question. This is Dan.
We used to report we used to report out specific numbers quarter by quarter, because as we launched we thought it was important for.
The shareholders to hear how we were doing and so we were reporting up out of the 600.700 range. While we've gone through lately is just to say that we continue to add accounts quarter by quarter of.
Obviously, when we launched the product in back of at the time of the IPO, we talked a lot of out the thousand accounts of made up of approximately 80% of the unit volume in the United States now what's happened over time is this landscape is changing and it's changing rapidly. So there's the approximately 2500 to 3000 urologist in your gynecologist to do.
This procedure and we've captured.
Our fair share of those numbers to date, but what we're seeing real time and we're sure our competitors seeing this as well, which is we've re energize the space with innovation and so now for the first time on over 20 years doctors of talking to patients confidently about the reasons to have the axonics device implanted and as a result of your seeing <unk>.
Lower volume physicians doing higher volumes and now what we're seeing in our company is physicians that have not been in planning SNF contacting us to learn more about it and to get trained so that they can use our product and so it's really a moving target which is why we moved away from reporting out on the hard number and it's why we no longer.
The the universe of potential customers as the static number of of thousand it's really 2500 and growing which is why we've consistently said we see this as of 1.5 to 2 billion dollar business in the next 3 to 5 years.
Alright, I'm showing no further question. The first time I would not like the kind of conference back to Raymond Cohen.
Thank you operator, thanks for all of the analysts for your questions. Today, we really appreciate it helps us get the story out.
We appreciate your support and your attention to Axonics and we look forward to speaking with you again have a good day.
Ladies and gentlemen, this concludes the <unk> conference. Thank you for your participation and have a wonderful day. He may I'll disconnect.
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