Q3 2021 ICAD Inc Earnings Call
Ladies and gentlemen, pardon the interruption this call will begin in one minute.
[music].
Thank you for standing by this is the conference operator, welcome to the Ikat, Inc. Third quarter 2021 earnings Conference call.
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I would now like turn the conference over to Brian Ritchie from lifestyle advisors.
Please go ahead.
Thank you operator, and good afternoon, everyone.
Yesterday from Mike, Adam Michael Klein, Chairman, and Chief Executive Officer, Stacey Stevens, President and Charles <unk>, Chief Financial Officer.
Earlier this afternoon I can't it issued announced financial results for the three and nine months ended September 32021 in the press release, which is also available on the <unk> website before we begin I would like to caution that comments made during this conference call by management contain forward looking statements involve <unk>.
Risks and uncertainties regarding the operations and future results of <unk>, yet I would also note that management may refer to certain non-GAAP financial measures management believes that these measures provide meaningful information for investors and reflect the way they view the operating performance.
The company you can find a reconciliation of our GAAP to non-GAAP measures at the end of the earnings release I encourage you to review the company's filings with the Securities and Exchange Commission, including without limitation.
The forms 10-Q and 10-K.
Which are which identify specific risk factors that may cause actual results or events to differ materially from those described in the forward looking statements.
Furthermore, the content of this conference call contains time sensitive information that is accurate only as of the date of this live broadcast November night, 2021, I cant undertakes no obligation to revise or update any statements to reflect events or circumstances. After the date of this conference call.
With that said, it's my pleasure to turn the call over to Michael Klein Mike. Please go ahead.
Thank you Brian Good afternoon, and thank you for joining us on our third quarter update call today.
I'd like to begin with some high level comments on our performance and achievements in the third quarter and provide an update on the current business and operating environment.
Enter into the fourth quarter of the year.
I will then pass the call over to Charlie who will provide a detailed financial review, which will be followed by stacie is more granular business update.
As presented in our earnings release I can its total revenue for the third quarter was $9 4 million, which represented a 20% increase sequentially and a 31% increase over the third quarter of 2020.
Third quarter 2021 revenue was driven by sequential and year over year growth in both detection and therapy.
In detection, we achieved growth of 26% over the second quarter of 2021, and 14% year over year and therapy, we generated an increase in revenues of 10% as compared to the second quarter of this year and 83% year over year growth.
In the third quarter.
Detection product sales were driven by sequential and year over year increases of 41% and 15% respectively.
U S product AI detection revenue growth of 56% over Q2 importantly, we expect this sales momentum to continue with the recent commercial launch of our new three D risk assessment, offering, which stacie will highlight.
Shortly.
Overall, despite the continued impact from a slightly elongated sales cycle, which we saw emerge in Q2, we saw a recovery in detection sales momentum in Q3.
We did see modest headwinds in the OEM portion of our detection business as a supply chain issue or the underlying hardware manufacturers impacting the OEM mammography vendor shipments previously order imaging equipment.
Had a modest temporary effect on our AI product sales in Q3.
The growth in our therapy business during the third quarter was driven by sequential and year over year increases in product revenues of 34% and 188% respectively.
Another key indicator of the strength in our business the significant growth in therapy was the result of several factors, including the sale of 28 soft controllers year to date, the majority of which were due to the continued surge in dermatology controller installations, which are being propelled by.
The emergence of positive shifts in reimbursement payer coverage and regulatory changes Tracy will provide additional detail on this momentarily turning now to cash management, our ability to prudently manage cash in Q3 was an important focal point as revenue momentum rebounded.
We expanded $2 1 million of cash in the third quarter of 2021, leaving us with a strong cash position of 35.8 million to support our continued top line growth.
In summary, despite the complex business environment characterized by a slightly longer enterprise sales cycle in our detection business.
Modest supply chain trickle down effect.
Any perceptible, yet waning COVID-19 environment. We are pleased to continue on a balanced growth trajectory, while appropriately managing costs. While we are excited about the formal launch of an entirely new product category, a risk assessment of offering for three D mammography, which looks one and two years ahead.
That launch occurred in the final few days of Q3, just before breast cancer awareness month in October and we're looking forward to leveraging the benefits of this product as it matures in 2022 further information on this exciting product offering will be the cornerstone of ICANN.
Investor Day that is scheduled for next Thursday November 18th.
And we will provide additional color on both the detection and therapy segments of our business. This event will feature exciting product developments and entities with several new key opinion leaders with that I will now turn the call over to Charlie for our detailed financial results Charlie.
Okay.
Thank you Mike good afternoon, everyone.
I'll now summarize our financial results for the three months ended September 32021 third quarter 2021, total revenues were $9 4 million, which represented an increase of $1 $5 million or 20% over last quarter's total revenues of $7 8 million third quarter.
2021 total revenues also represent an increase of two $2 million or 31% over total revenues of $7 1 million recorded in the third quarter of 2020.
Third quarter 2021 detection revenues were six zero million, which represented an increase of $1 2 million or 26% over last quarter's detection revenues of $4 8 million driven by a 41% increase in detection product revenue offset by a modest 4% decline.
<unk> service revenue fewer product placements last quarter drove the decline in service revenues in the third quarter of 2021.
Third quarter 2020 warm detection revenues also represented an increase of zero point $7 million or 14% over detection revenue for the third quarter of 2020.
Therapy revenues were $3 $4 million in the third quarter of 2021, representing an increase of 10% over last quarter's therapy revenue of $3 million.
Driven by a 34% increase in therapy product revenue offset by a 10% decline in service and supplies revenue third quarter 2021 therapy revenue also represents an increase of 82% over the third quarter of 2020, driven by 188% increase in therapy product revenue and a 20.
5% increase in service and supplies revenue.
Moving onto gross profit on a percentage of sales basis gross profit was 72% for the third quarter of 2021 compared to 71% for both the second quarter of 2021 in the third quarter of 2020 on a pure dollar basis gross profit for the third quarter of 2021 was $6 $7 million.
Which was $1 2 million or 21% greater than last quarters gross profit of $5 5 million.
Gross profit for the third quarter of 2021 was also $1 7 million or 34% greater than the second quarter 2020 gross profit of $5 million.
Changes in gross profit were related to product mix effects and revenue increases.
Total operating expenses for the third quarter of 2021 were $8 9 million, an increase of $45 million or five 8% over last quarter's operating expenses of $8 4 million.
Total operating expenses for the third quarter of 2021 also represented an increase of $2 2 million or 33% increase from $6 $7 million in the third quarter of 2020 during which a number of employees remain furloughed due to the COVID-19 pandemic.
Our operating expenses continued to be focused on supporting top.
Important growth of top line revenues.
Moving on our third quarter net loss was $2 2 million or <unk> <unk> per share, which is $1 1 million or 34% less than last quarter's net loss of $3 $3 million or <unk> 13 per share third quarter 2021, net loss was $4 million.
Or 21% less than the third quarter 2020, net loss of $1 8 million or eight cents per share.
Non-GAAP adjusted EBITDA for the third quarter of 2021 was the loss of $1 4 million, which represented a decrease of $8 million or 35% compared to last quarters loss of $2 1 million third quarter non-GAAP adjusted EBITDA represented an.
<unk> loss of zero point $4 million or 40% over the third quarter 2020 loss of $1.0 million, which reflected a number of employees remaining furloughed due to the COVID-19 pandemic.
Non-GAAP adjusted net loss for the third quarter of 2021 was $2 $2 million or <unk> <unk> per diluted share, which is a reduction in non-GAAP adjusted net loss of $6 million or 22% from $2 8 million or 11 cents per diluted share for last quarter.
This also represents a non-GAAP adjusted net loss decrease of $5 million or 28% compared to non-GAAP adjusted net loss of $1 $7 million or <unk> <unk> per share for the second quarter of 2021.
This metric for the third quarter of 2021 reflects immaterial adjustments to GAAP net loss, while there were adjustments primarily for severance and furlough expenses incurred in <unk> response to COVID-19 business conditions in the third quarter of 2020, and the noncash recording of a loss on debt extinguishment in the second quarter of 2021.
Related to the Companys elimination of its long term debt.
Moving to the balance sheet as of September 32021, the company had cash cash equivalents of $35 8 million compared to cash and cash equivalents of $27 $2 million at December 31, 2020, and $37 $9 million at June 32021, we will continue to manage our cash.
Resources to drive topline growth and expand our global product and service penetration to our primary markets breast cancer detection.
As a therapy.
This concludes the financial highlights of our presentation I will now pass the call over to Stacey Stacey.
Thank you Charlie and good afternoon, everyone. We remain encouraged by the overall performance of our business in the face of the ongoing pandemic related operating dynamics that have continued to affect so many companies worldwide. We continue to experience balanced performance and believe we have significant opportunity for <unk>.
Their growth across both the detection and therapy segments of our business with a robust portfolio of advanced technologies for the detection and treatment of cancer.
With that let me now provide some color on the drivers of our third quarter results beginning with detection as you recall in the second quarter total revenue was negatively affected by longer than expected enterprise sales cycles, which impacted the timing of several large transactions at that time, we said that our expectation was that these deals would close.
By year end, so not all in the third quarter. This is indeed, the scenario that played out in the third quarter as we were successful in closing many but not all the enterprise deals that were not completed in the second quarter. Importantly, these enterprise sales opportunities, which will remain an important part of our pipeline increase our average deal size there.
While these enterprise deals are more complex and extend the sales cycle. We strongly believe that the benefits greatly outweigh the potential for somewhat elongated timelines to close.
Another critical aspect of these large transactions is that the enterprise customers represent a call point that links the clinical economic and now I T centric decision makers, usually a CIO who is often quarter backing. These discussions these CIO inclusive deals present us with a highly receptive AI center.
And knowledgeable customer that provides a clear advantage to ikat. This relationship allows us to speak a common language and engage in more informed discussions it even provides us the opportunity to illustrate our clinical performance superiority workflow improvements and a broad health care economic value proposition across all of I Catched pro.
Found AI offering.
Also add that I T departments within hospitals now often have their own budgets that we can access as opposed to solely relying on the radiology capital equipment budget. This of course reduces the competition for budget dollars for us.
In order to adapt to this evolving sales environment, we have been reorganizing our sales force and in an effort to optimize our engagement with these new decision makers by redeploying more enterprise related personnel to the customer facing sales process.
Significant enterprise customers will now be a priority call point for our new three D risk assessment men offering, which as Mike Prefaced, we launched at the end of September just ahead of breast cancer awareness month. The launch of the latest version of profound AI risk was a significant achievement for ICANN as this leading edge technology is the word.
Its first commercially available clinical decision support tool that provides an accurate short term breast cancer risk estimation that is truly personalized for each woman.
Is easy to implement solutions provide superior insights that empower clinicians to tailor a woman's breast screening regimen and potentially identify cancers earlier.
The latest version of profound AI risk offers the flexibility to work with two D and three D. Mammogram images with unprecedented accuracy with over a 20% improvement relative to conventional lifetime risk models in AUC, which is a metric that combines sensitivity and specificity and even 10 <unk>.
Were sent higher than our own previous version of the technology. Our two year risk model that was released last year. The latest version offers superior performance and accuracy and assessing short term risk compared to both its predecessor and traditional commonly used lifetime breast cancer risk models.
Additionally, this technologies globalize by design, which with its ability to provide a one two or three year risk estimation as well as country specific screening guidelines in incidence and mortality rates further personalizing the results.
<unk> version of profound AI risk also now offers the ability to factor an ethnic and racial backgrounds in the assessment of the score offering an inclusive approach to precision screening.
The COVID-19 pandemic expose multiple weaknesses in our health care system, including racial disparities in breast cancer screening. The pandemic also highlighted the need for risk based screening when at the height of the pandemic last year several medical societies recommended that women of average risk <unk>.
Postpone mamograms until the threat of Covid had passed as mammography screening begins to evolve from what is an age based screening protocol to more of a risk based screening protocol in the years ahead ikat is on the leading edge of this shifting new paradigm. Additionally on our last call. We noted that we had recently received F D.
A clearance for profound AI version three point O for TAMO, which offers enhanced clinical performance benefits, including up to a 10% improvement in specificity performance, while maintaining an industry leading high sensitivity level.
We have now released the two D version of the improved algorithm, which showed similar improvement over the previous version into the European market. As we have discussed previously two D is still a growing market O U S and that's new to D version of profound AI should help us further penetrate the market in Europe.
Moving on the supply chain issues affecting businesses globally have not surprisingly impacted some of our OEM customers the pace at which some of these OEM customers sell mammography hardware systems into the market has slowed somewhat during recent months a trend that we expect to continue throughout at least the fourth quarter to help.
This into context, approximately 30% of ikat fails are to Oems. So there is some modest but just furnivall filtered down to our business. We are continuing to monitor and manage through through the supply chain issues of our OEM customers.
I should note that we have no direct supply chain issues ourselves, we have been able to source product without delay and anticipate continuing to be able to do so for the foreseeable future. In addition to these modest supply chain issues, our European business in particular continued to experience some COVID-19 related slowdown in Q3.
Now moving on to the therapy side of our business. We continue to generate strong revenue growth driven by our current applications and skin and breast cancers, and we remain focused on advancing emerging applications such as neuro through our clinical trials registry kols sites and pre commercial efforts in Q3.
The soft business recorded $3.4 million in revenue and has now shipped 28 controllers through the third quarter of 2021, the breakdown of the seven new systems. In Q3 was the mix from the U S and O U S markets in the skin and breast <unk> segments as well as for breast IOR T systems.
That went to China.
The skin business continues its resurgence with sales in key states, such as Florida, the launching of our new partner covering the west coast in Derma Cure R. T and a pipeline that continues to grow significantly quarter to quarter, our growth in dermatology, it's being driven by more favorable reimbursement trends as well as the easing of certain state limb.
Taishan, requiring radiation oncology onsite monitoring of treatments due to these beneficial operating trends in dermatology. We are restarting the collection of the five year data from our skin study, which was initiated in 2017.
The objective is to complete this exercise in 2022 and begin leveraging this data with a negative policy private payer networks and key societies to build consistency of reimbursement across the Medicare and the private payer network in the U S.
Moving on to emerging clinical applications for soft new data supporting soft brain IRR T was presented at the American Association of neurological Surgeons 2021 annual scientific meeting in August and we issued a press release at that time detailing the promising results. We are very pleased to report.
This research has now been accepted for publication in a peer reviewed journal surgical neurology International Ah.
Additionally, we have started the execution of new neuro sites with our <unk> clinical trial, we consented patients. This week and we expect to treat our first patient. This month. The initiation of this trial has taken longer than expected largely due to COVID-19 recovery in hospitals impacting the process related to the startup of clinical trials.
Our commercial launch with this FDA cleared offering is now tracking for the second or third quarter of 2022.
So as we reflect upon our progress and achievements for the first three quarters.
We look ahead to Q4 and 2022 with continued enthusiasm we look forward to providing you with additional updates as we continue to advance our business in technology drive sustained market leadership and create additional shareholder value. We will now open the call for questions operator.
Thank you we will now begin the question and answer session.
He's limit yourself to one question and one follow up any of you have and if you have any further questions you're more than welcome to requeue.
To join the question queue. You May Press Star then one on your telephone keypad, you will hear a tone acknowledging your request. If you were using a speakerphone. Please pick up your handset before pressing any keys.
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We will pause for a moment as callers join the queue.
The first question comes from per Ostlund, with Craig Hallum Capital Group.
Please go ahead.
First mover advantage and we often say a bit of a so advantage and that the competitive landscape for a I in terms of the results that we generate.
With our trifecta results put us in a bit of a unique position in terms of sensitivity disease.
Sure the specificity meeting fewer callbacks and reading time, we have had very minimal.
Very minimal competitive dynamics and.
And virtually all of the situations that we're referring to with an elongated itself cycle.
Uhm, sometimes we do here now that there is another offering they could be looking at but we have really we we do not know of a single a a case, where we have lost or had a significant delay even in the in the procurement cycle the classic.
The competitive dynamics, just giving me clear differential between this offering and others that are out there specifically on the elongate it cycle itself I'll, let Stacy economy, one more specifically on that.
Yeah sure. Thanks, Mike So I think I I'd had a couple of things to what Mike said pair you know I really the competitive environment is largely unchanged right. We still have substantial superiority and kind of put performance and work flow and one dynamic we're seeing that's very positive if we're seeing more cuss.
<unk> separating the purchase decision of the AI software from the purchase of the hardware and and the the mammography Gantry Uhm. We're also seeing some R. F PS and the U S that are specifically sourcing a I software separate from the gantry. So you know the combination of our latest improve.
<unk> and clinical performance and the launch of our our <unk> offering really we feel is extending our lead relative to our competitors, particularly in the enterprise where they do tend to have you know a lot of interest in the the resolution and the other thing I would say is that we've really adapted to this evolving sales environment and we've now.
<unk> organized our sales force in an attempt to you really optimize our engagement with these new decision makers at the executive level. So we're redeploying some of our folks who have experience selling into the enterprise to really focus specifically on the list of targeted accounts that we're going after them.
And of course, the messaging is a little bit different when you go after an enterprise certainly the clinical pieces important but you know equally if not more so the economic peace comes into play and we're now able to really tailor our presentations unique to those particular enterprise it and be able to show. The you know both the clinical and economic value that.
They can realize within their own system. So I think those are the two things that are putting us very much in a leadership position as we go after those deals.
Okay. Great then that makes a lotta sense I guess like my follow up on that as you also talked about.
The extensive pipeline.
Robust as ever I think I've heard you say in a relatively recent past as it pertains to the enterprise customers.
And you've also talked Mike.
Some of us investor events over the course of the year you know not.
<unk> guiding per se, but talking about some relatively heavy growth rates for the detection business.
How catalytic to converting some of these enterprise customers that are in your funnel, how catalytic to achieving some of the groceries that you've been talking about throughout the year is the three D risk clearance that you've got towards the end of September.
[noise] yeah. It's it is clearly a differentiator pair it.
It is it had has catalyzing effect and that as soon as you pointed out further differentiates it's a value proposition that is uniquely gear to COVID-19 and that the risk some called prediction product not only can help in terms of future follow up.
But also in terms of scheduling cooter bring back when as you know instead of 40 million patients being treated over the last 12 months, it's been less than 30 million and each site is sitting there trying to figure out the best way to prioritize patients to come in first the risk product is often on need.
Offering and going into these account as they try to get patients back to screaming I wanted to add one other point also pair off I could and that is that these enterprise customers. Let's face you may have had been up to send her square earlier also have separate budgets then the hardware budget set.
Often exist one well, let's say going into an account that may be looking at hardware and software. So the separate budgets also acts as a catalytic effect, especially when combined with the risk offered as you were sort of angling towards in your question.
[noise] excellent very good thank you.
Uh-huh.
The next question comes from Dave Kirkley with J M P Securities.
Please go ahead.
Hi, Thanks, Alright, maybe as far as it any way you can help us maybe try to quantify the impact of that cycle and a quarter. I mean, we're talking one two or $3 million or any any size of that would be helpful or maybe how it compared to.
The number that you saw in two two bigger smaller how how much anything like that might be helpful.
You are you, referring David to the to the enterprise customers.
[noise] yeah.
You said you were looking at yeah, specifically that no longer cycle that you're saying, Okay is there a way for you to quantify that and then maybe talk about how it compared to let like it's getting better or is it getting worse.
Yes, it's definitely getting better is in the and we as we indicated.
At the end of Q2, we had a substantial number of deals that that fell from Q2 into Q3.
<unk> may have indicated we gained ground on these deals in Q3 clothing, yeah. The majority of those deals.
The good thing is that more deals also enter the final. So we're definitely gaining ground and one of the reasons, we're gaining grant ground on the cycle is that we put in place in queue to a sales organization specifically geared towards these enterprise customers. It used to be that reps were were allocated on a regional basis now.
We have several reps are allocated specifically for the enterprise customers and they can work with them without being at the expense of some of the other deals that may be working on and and a quarter. So we're definitely gaining ground on this and I think we are going to catch up with this within the next one to two <unk>.
<unk> as we're fully and that would include this quarter.
And.
And again the final continues to grow but.
These enterprise deals, which which are roughly around 30% of our deals that will probably go up to about 35% next year, well, we're very well positioned at this point in time to be able to gain traction on the remaining do you also know that will emerge.
Gotcha, and just as a quick follow up.
How much longer you're talking is it is it like taking an extra month or two months or.
I'm just fine I guess thoughts on you know the actual time that it's getting deferred would be helpful. Thank you.
Yeah, <unk>, they're averaging somewhere between four to five weeks four to six weeks Maxwell. So that's what we thought it was very important to us to track July. It's one of the reasons why we moved our earnings into August to track July will also tracking August so we're looking at somewhere between four and five maybe at the <unk> at the outset six four.
<unk> elongation, what typically had been a 90 day cycle send out can be about 100 to about 120 to 135 days at the at the longest for those specific 30% of customers that are enterprise customers.
Thank you.
The next question comes from Francoise Grandpa with Oppenheimer.
Please go ahead.
Alright, thanks, and just to to hit on that the when you say that 30% that of enterprise customers is that some of these customers were not always enterprise or were they always enterprise I'm in the process over there to change with time.
[noise] you know <unk> I'm glad you raised that Frank cause it gives me a chance to clarify we still look at the market was having two cor segments and that is the sort of academic sites. We group you know, it's either there or what we'll call. The entrepreneurial sides academic sides tend to have let's see more of a desire for clinical data.
<unk>, you'll have to put on all sides tend to be faster moving the enterprise customers can exist in both of these situations both of those segments have economic buyers when I say, both I mean, the academic buyer and they also have I'll have the economic buyer and the medical clinical buyer, but what you need.
Nick about the <unk>, what's unique about enterprise customers that can exist in both segment as they have the third Decisionmaker a chief information officer, that's trying to harmonize data work with the ethics cerner with their pet system. So it's now what was a two personally is now a triangle it.
Of decisions. So these enterprise customers represent about 30% in both of these segments and they do have more time, but the good news is they have their own budgets for AI. They know exactly what they're looking for they know the differentiation between us and anyone else you can't fool them.
And they are very very sticky when they make decisions they make decisions for the long run and to grow. So when we look at accounts like a soulless or a sign of med. These are big account could have more and more of these information officer types. These are these accounts plan to significantly grow and their chief information officers when locked in give us an off.
Tony for Tonight is stickiness, if you will probably that clarifies okay. The difference between the segments and let's say the style of buying.
Yeah that makes sense. So it's not that the enterprise is new is the position of Chief information officer or his involvement in the deal is is no.
Yes, and this also I'll say why do people say where did these come from they were always there, but they catapulted forward in the late first and second quarter. As a result of a lot of cyber security concerns ransomware concerns et cetera, as well as an opportunity for folks to take advantage of.
Productivity dynamics during a relatively slower time of screening. So then when it came time to catch up which is happening now these productivity dynamics would be in place.
That that's extremely helpful. And then on the O E M impact the supply chain issues, you don't seem to be having supply chain issues, but the clients.
Can you just give any more color on that and begin pet.
That it made might've had you know percentage wise are kind of a ballpark on your numbers in in this quarter.
Yeah, I'm gonna, let Stacy handle that cause he was front and center on this dynamic this quarter.
Yeah sure. So you know what hey, how are Ya, so what I'm I mentioned, a little bit and then the script is that some of our O M partners have been facing supply chain issues relative to the mammography systems themselves right and so that in Pac has trickled down to us in <unk>.
Some cases due to the fact that in some of these cases right. The sale of our a I is tied to a new gantry sale.
But it wasn't everywhere you know it was a it was a modest impact and we estimate that the impact on our business in Q3 with in the neighborhood of about $500000 and it was related to one O M partner.
Okay, great and it is that kind of a hiccup like the enterprise sales of the last quarter is that something you you would expect it to not be a problem going forward or is it very difficult to say uhm have you supply chain issues could be resolved here.
Yeah, I think what we're hearing from some of our O M partners and they've reported this publicly is that the expectation is that the supply chain issues will persist at least through the next quarter maybe into the very beginning of 2022, but again you know we don't expect it to have a major impact your right. It. It's you know R O N.
Am businesses about 30% of our overall business and we're talking about one one O M. You know within that so it. It's a it's a modest impact I think we'll see a little bit of it in Q4, and then hopefully it should start to subside as we get into next year.
Okay. Thank you.
You're welcome.
The next question comes from Frank to Kennon with Lake Street capital markets.
Please go ahead, hey, thanks.
Perfect day, Thanks for taking my questions I wanted to start with a level of southern question on the installed base, maybe just give us an update where total profound users stand today and then if you could give us a taste for just some would be penetration of the different products into those accounts as well as the inherent.
Selling of risk into some of the I accounts and vice versa. If that's the case as well.
[noise], Yeah, we reported Frank at the end of last year that we were crossing over the 1000 threshold and as of the end of Q3, we're a little bit north of 1300 or 250 installed for a profound AI and that would be both two D and three D. A certain number of our.
Accounts also would have our density product, which is sold as a a separate offering that goes into some of those installations and as we know launch.
Both two D and three D. A I what we obviously intend to do is go back to our installed base of let's say 1300, 50 profound detection systems and install into those as low hanging fruit.
Looking forward risks slash predictions software, but by the same token. These also represent the risk prediction. This assessment product represents an opportunity for us to go into Nathan accounts, where we don't have three D.
Uhm profound AI detection at all and a lot of cases that is now becoming our door opener, especially since we just launched this product on three D. A long awaited laski lost it right at the end of September right before breast cancer awareness month. So I think we'll be saying a blend of what you might say.
Same store sales in the sense that or upgrade to of existing profound detection install and then some newer accounts Nathan accounts that we hadn't penetrated at all.
In many parts, leading the way will be the risk Ah the risk prediction product.
Got it that's helpful and then secondly.
What's the size of the selling organization right now and how much is that grown since the beginning of this year as well as what portion of those are now dedicated enterprise sales folks.
Yep.
The South Forest today is Oh counting management 13, 13 people in the U S.
We have additional additional people outside the U S in Europe on the ground and countries like France, and if we get into place in Germany and in the UK. We'd also kind of a 2020 countries by with distributors. We also have other chat.
<unk> that we cover as well those are our direct salespeople. We have people that are dedicated to working with our packs channel R. O M channel.
And and also working with our distributors. So we do have people who are allocated for both direct sales, which were made about 70 per cent of ourselves.
And the other channels in total about 30%.
That should give you a feel for the amount of sales us we've deployed and I do want to say that as we expect ourselves to continue to grow.
Uhm that that we feel like we're pretty built out on the on the south side and that we instead of building out horizontally stratified the sales team and I should I should I should double back on your questions say that I'm, those 13 people, including management in the field. They are about three to four of those.
People that are dedicated to the enterprise sales so that'd be another way of saying that 10 people are geographically bound and three people are focusing on the enterprise <unk> wherever they are at this really unlocked sales productivity because we're now able to have somebody calling on the.
Local you might call them single double trouble in terms of hits account and then someone that could be working on the longer cycle home run two and three or four letter homers on the enterprise thigh and then can be working at the same geography without borrowing from each other's time and that was something we didn't you too and it was one.
The things that we really wanted to adapt to.
With the enterprise Sal cycle. So hopefully that gives you an answer towards the sales mix you were looking for.
Yeah, that's perfect I'll stop there thanks for taking my questions.
The next question comes from Chris <unk> with Guggenheim.
Please go ahead.
Thanks, Mike I, just Wanna Circle back on the <unk> trial, and the I O T neuro indication.
I see you're just consented. The first couple of patients you're talking about a commercial launch basically six nine months from now [noise].
What's the gating factor on the commercial launch in terms of data that you want to have in hand at that point and can you talk a little bit about milestones along that path. When we should expect to start to get some data give it the enrollment has a gun up a little bit of a slower start and you were hoping.
Oh, because space is gonna be pardon sat around this issue next week at our Investor Day I'll, let her take that question.
Yeah sure Hi crash. So you know as I mentioned in the script and it took us a little longer than we expected to actually get the trial started us and everybody house sits trying to launch clinical trials. During this time, but we were really pleased to see some patients consented. This week and we feel very confident that we should.
Should begin treating patients over the next couple of weeks in terms of having initial data we expect to have some initial data in about six months. You know this is a very different indication from say something like breast, where you need to have years of clinical.
Clinical data right before you are able to start convincing clinicians to shift treatment paradigms you know unlike some of these other cancers glioblastoma such a deadly cancer, where patients have such a poor prognosis and the average length of time that they live is between 10 and 12 months. So you really don't need a ton of.
Data in order to convince people to you know for this to be a viable treatment option for patients. We Wanna have about six months of data you know sort of replicating. This Russian study that we already have very promising data out of before we do a full commercial launch now that doesn't mean that we can't sell narrow systems today.
<unk>, we can sell them a commercial now our system today everything is F. D. A cleared there's nothing stopping us from doing that but we feel to have like to do the appropriate full commercial launch we would want to have at least preliminary data and about six months worth from our neural trial before we could go out and and really attacked my market.
And a strong fashion, but it also helps that we're getting the Russian study published in a peer reviewed journal that's something we've been working on for Awhile and just recently were notified that you know that was accepted so that will help us as well. So that's why we say kind of mid next year is that the timeline that we're expecting to really launch it commercially.
Okay. That's helpful and it might just circling back the detection business you have a relatively challenging comp there in the fourth quarter <unk> somebody who's selling cycles is made the middle quality. This year come in a little bit lower then we might have been expecting.
Earlier do you think the business can grow in the fourth quarter, how you see the situation on the ground today and and with all the different macro dynamics Uhm is slowing things down into your into you expect the normal push to be able to generate some growth in that business in the fourth quarter.
Well of course, good question I I look at the.
One of the key numbers that I look at and I'm sure others will as well is the product grow for a detached from business quarter over quarter that 41% quarter over quarter to three over queue to with 56% was the growth in U S detection product World is a very good car harbinger going.
Into the fourth quarter, we saw that at the end of last year and it was the growth in Q3 of two four last year that we're comparing against the back of your specific point.
So yeah, we're feeling.
Notwithstanding the comments mentioned earlier about some of the trickle down supply issues enterprise, we do we are clearly a.
I'd say September through the end of the year company typically.
Uhm notwithstanding.
Dynamics that are out in these markets I do want to also say one other thing Chris on your last question.
I'm, calling back to the Goliaths trial, it will not be the usual thing that stands in the way of adoption that thing reimbursement or F. D. A clearance those are already in place for the for the neural product. So it would be the issue that Stacy was wasn't actually.
Great. Thanks.
Once again, if you have a question please press star one.
The next question comes from Murray at all with B T I T.
Please go ahead.
Hi, Good afternoon, everyone. This is sam either on from Erie, Thanks for taking our questions.
Maybe just on a risk here to start you know about a little over a month since since the launch here you know any color on maybe some how some of those early conversations are gone with enterprise accounts you talked about.
Economic Pizza is starting to come into play a bit you know any talk about alternative payment models, there or any other color that would be great. Thanks.
[noise] Stacy Charlie maybe the two of you Wanna handle the two pieces of that.
Sure I can talk a little bit about risk you know where we're currently in the early adopter phase for rest great and we certainly have some of our top customers already adopting it and implementing it in their clinical workflow, but really our biggest focus right now is on driving the global clinical studies to really pre.
The value as identified in the clinical and workflow benefit said the product relative to being able to allow our customers to segment higher risk women and and you know get them screened earlier get those cancers diagnosed earlier and and really what is that impact on early detection in L. L.
Those women right. So really you know developing a very strong body of clinical data will eventually allow us to get this product included in the clinical they got guidelines and then potentially later on and make a play for reimbursement. So you know we really see this rolling out in phases as the clinical data matures. We're currently can.
[noise] ducting for risk clinical studies globally with an additional several plan next year and we expect to see some results. Some of these studies as early as in 2022 and that will really help us sort of accelerated adoption in in the marketplace. So you know right now.
We're in the phase I've really going after establishing K O L reference sites, creating case studies at the customer level gathering testimonials that kind of a thing that you would do kind of in this first phase or early adopter phase of of the product life cycle. So that was risk and then was the second question alternative payment models.
Yeah, that's right if if that's what it was I put on an.
Conversations.
Yeah, I I think that was that a question yeah. It was that the question was relating more to let's say subscription style.
Potentially was that just want to clarify because we have we have we have we.
You have a different favorite bottle with each yeah. Okay. So on that front the Charlie may want to give some comments in terms of what we maybe looking at in terms of folks who may have an increased tendency to want to pay Wanna as you go basis versus a prompt.
Sorry.
Yeah, I think the the way we're approaching this as the market is is demanding multiple offerings for for various products Mmm, we want to make sure that we provide them what they're looking for and also create a true subscription model rather than doing.
Financing or different arrangements. So we are right now wrapping up the finishing touches on putting together a a market ready subscription offering with the ability to support it and make sure that it is exactly what the customers are looking for so we're going to trickle into.
The market do a couple of early cases in queue for and then we assume that the.