Q3 2021 Motus GI Holdings Inc Earnings Call
Okay.
Ladies and gentlemen, thank you for standing by and welcome to the motives GI Holdings, Inc. Third quarter, 2021 financial and operational update.
At this time all participants are in a listen only mode.
There will be appreciate.
There will be a presentation by the motive management team followed by a question and answer session.
Advise you.
The conference today is being recorded.
I'd like to turn the call over to Garth Russell of lifestyle Advisors. Please go ahead Sir.
Thank you operator, thank you everyone for joining us for the motors third quarter 2021.
The call today, representing the company are Tim Moran, Chief Executive Officer, and Andrew Taylor, Chief Financial Officer, Mark Pomeranz, President and Chief operating officer of Otis Gi before turning the call over to management for their opening remarks, I would like to take a minute to remind you that this conference call and webcast will contain forward.
Forward looking statements about the company. These statements are subject to risks and uncertainties that could cause actual results to differ. Please note that these forward looking statements reflect our opinions only as of the date of this call. We will not undertake any obligation to revise or publicly release. The results of any revisions to these forward looking statements in light of new information or future events.
Factors that could cause actual results or outcomes to differ materially from those expressed or implied by such forward looking statements are discussed in greater detail in our most recent filings on Form 10-K, and our other periodic reports on Form 10-Q, and 8-K filed with the FCC.
I would now like to turn the call over to Tim Brandt Motors Gi Tim the floor is yours.
Thanks, Scott and good morning, everyone. Thank you for joining our call today.
I'm excited to share an update on our progress through the third quarter of 2021, which highlights our continued momentum even in these difficult market conditions.
On today's call I will also focus on the key upcoming catalysts that we believe will significantly accelerate our business in 2022.
Following my update Andrew will provide an overview of our financial performance for the quarter and then we will open the call to take your questions with that as an outline let's get started.
I wanted to start by saying that I'm pleased with our commercial team's continued ability to drive new placements of our peer view system in U S hospitals, allowing us to convert more targeted hospitals into active customers.
As a result of their efforts, we delivered revenue growth of approximately 40% in the third quarter compared with the second quarter of 2021 and up more than four fold on a year over year basis.
Notably this represents our fifth consecutive quarter of incremental revenue and procedure growth despite headwinds from the COVID-19 ongoing pandemic.
In Q3, we closed a key new customer agreement with Memorial Hermann Hospital in Houston, which included the outright purchase of our peer view workstation.
This is an important strategic win as we now have earned a license to hunt for potential expansion of peer view within the systems 17 affiliated hospitals.
Through the end of Q3, we now have approximately 10 key customers that have either purchased capital equipment or have signed a committed volume agreement.
In Q3, all customers met their compliance expectations, what's your valued between 60 to $120000 of recurring disposable revenues annually.
As we've discussed previously these agreements require committed quarterly purchases of peer view sleeves in return for use of our capital equipment.
In addition, these volume commitment agreements offer several key long term benefits to motives Gi, including more predictable recurring revenue stronger gross margins additional hospital reference sites and the ability to grow procedure volumes to higher levels by training additional physicians on the use of peer view.
As we bring on more users of the pure vu system, either through volume agreements or outright capital purchases. We are beginning to lay the foundation for a waterfall of cumulative recurring revenues that will contribute to the company's future growth.
Well, we are building momentum I think it's important to remind everyone that we've accomplished this through a very small commercial footprint comprised of just four salespeople and during tumultuous conditions in the market associated with the pandemic, including intermittent sales rep access and unpredictable colonoscopy.
Did your volumes in certain markets.
Given these challenges we are excited about where we can take this business as the hurdles associated with COVID-19 lesson.
We believe we have a very compelling opportunity ahead of us in a position to initiate a significant new period of growth in our company's future.
As such in 2022 we are preparing to lean into this opportunity and an important way with the goal to drive more rapid uptake of our proprietary technology in the U S market.
Let me define what I mean, when I say lean into the opportunity.
To optimize the commercial introduction of our greatly enhanced peer view Evs, we intend to thoughtfully invest in the expansion of our commercial footprint to extend our reach and gain local sales coverage in key U S markets.
By strategically expanding our customer facing team, we will be able to engage more hospitals faster and have the bandwidth needed to spend more time at these accounts growing procedure volumes and long term revenues.
Now, let's discuss progress on our additional value creation drivers first let me provide a bit more detail about our exciting new product development.
As I mentioned earlier, we are preparing for the pending launch of the pure view Evs, which is our third generation of the peer view system.
We anticipate filing our five 10-K submission for Evs to the FDA by the end of this calendar year.
The peer view Evs system provides significant enhancements compared to our current version of the device that we believe will improve both ease of use and speed of deployment.
First related to ease of use peer view Evs is designed for rapid setup, which we expect will take less than 90 seconds and can be done easily in the procedure room.
This is something our customers have been asking for since our launch of Gen. Two.
As part of the enhancements we've eliminated our reusable loading fixture from Gen. Two and incorporated a simple disposable loading design.
This allows a physician to load the peer view sleeve onto a dirty scope, meaning they could make the decision during a procedure to use pure view to complete a case.
This along with rapid setup of the system should facilitate the use of peer view in a broader number of cases as our technology can be used on demand with no preplanning necessary.
Second despite already possessing excellent irrigation inception capabilities, we've enhanced our sleeve design to now consist of an even larger suction channel and added an additional water jet.
In doing so we've also removed four of the five existing tubes and have moved to a multichannel single tube, which removes bulk from the over sleeve and provides for even greater control and ergonomics that enhance the physician's ability to navigate through difficult anatomy.
Third we have reduced the size of our workstation by approximately 40%.
It allows for easier transportation as well as a more streamlined fit into smaller Gi procedure rooms.
And finally, the new Evs design substantially lowers our overall cost of goods, which provides for enhanced margins and greater flexibility for more price sensitive segments, such as outpatient and O U S markets.
I'd like to now provide an update on our pilot cases for the pure view upper Gi sleeve that we began in Q2.
The purpose of this controlled series of procedures is to demonstrate clinical utility while also gaining real world procedural learnings.
To date, we've had positive feedback that peer view provides on demand visualization without disrupting the working channel of the physicians gastroscope.
This is important as a significant challenge when treating an upper Gi bleed can be the lack of visibility due to blood blood clots and stomach contents.
Our pulse vortex irrigation and smart sense suction provide the needed utility to improve visualization during diagnosis and treatment.
While we plan to continue pilot cases through the remainder of Q4. The initial feedback is validating and we expect the enhancements, we're making and the new peer view Evs design will be beneficial in the upper Gi application of our technology.
We will provide additional updates next quarter as it relates to timing on the anticipated launch of peer view upper Gi in 2022.
Next let me discuss our strategy for outpatient reimbursement and the generation of new clinical data.
As discussed previously we have developed a multi pronged strategy to secure reimbursement of the pure vu system by both private and public payers.
Over time, if we can secure reimbursement it would help to further accelerate our commercial expansion into the large colorectal cancer screening market for outpatients.
As such we are currently working on the design of a large multicenter randomized controlled trial <unk>.
<unk> robust data in the outpatient market with clearly identified endpoints will be necessary to optimize our eventual plan submission of an application to CMS for a level one CPT add on code.
And November 2021 we convened an advisory board of key opinion leaders to help support the appropriate study design and assist in our planning efforts.
Moving now to active clinical studies I am pleased to announce that the European outpatient clinical study is enrolling patients and remains on track.
This study is evaluating the clinical outcomes in patients with a history of poor bowel prep using a low volume preparation with limited diet restrictions and the pure Vu system.
The independent study is being conducted at two health centers in the European Union and will enroll approximately 44 patients.
The primary endpoint for this study is improvement of the bowel preparation from baseline to post procedure as assessed by the Boston bowel preparation scale.
If successful this study could help change the management of patients who struggled to get an adequately prepared colon due to their age or medical condition.
In the U S. The investigator initiated study evaluating the clinical and economic benefits of using the pure vu system in patients with the emergent lower Gi bleeding continues at the Cleveland clinic.
In this study patients will not receive standard bowel preparation is the physician will utilize just to tap water. Adam is in conjunction with peer view, allowing for faster time to diagnosis compared to the current 24 to 36 hours typically required to complete a traditional bowel prep.
The outcomes we receive from this study could begin to challenge the current standard of care for critical lower Gi bleed patients.
And finally, we recently announced the results of an independent study of pure view performed at the University of Texas Medical Center in Galveston, Texas.
Of the 40 procedures that were completed the pure Vu system was used as an adjunct to traditional prep to allow for completion of the patient's colonoscopy in 37 patients Mauro.
Moreover, three procedures were actually completed without any bowel prep in patients who presented with lower Gi bleeds.
So 100% of the patients in this study we were able to have a completed procedure.
Also of note in this study peer view was used on 14, inpatients and twenty-six outpatient procedures.
The findings were presented at the American College of Gastroenterology annual meeting in late October.
Now turning to potential strategic partnerships.
We continue to engage with several potential strategic partners. The focus of this exploration is to evaluate potential pathways that could accelerate and expand our commercial efforts in the U S and targeted regions outside the U S.
We also continue to screen opportunities for product line expansion.
Which may also allow us to leverage call point synergies N G I.
Moving ahead, we will continue to evaluate strategic options that fit our criteria and are actionable and provide updates as appropriate.
With that I'll now turn the call to Andrew to provide detail on our Q3 financials.
Andrew.
Thank you Tim and thank you everyone for joining us today.
We reported revenue for the third quarter 2021 of approximately $141000 as compared to $33000 for the same period last year and more than Forex increase.
As Tim mentioned this quarter also represented an approximately 40% increase of our reported revenues compared to the second quarter 2021.
For the three months ended September 32021, we reported a net loss of approximately $4 $8 million or 10 cents per basic and diluted share compared to a net loss of $3 $9 million or 13 cents per basic and diluted share for the same period last year.
During the third quarter net cash used in operating activities and for the purchase of fixed assets was $3 $1 million as compared to $2 $7 million for the same period of 2020.
At September 32021, we reported $23 $7 million in cash and cash equivalents.
This balance includes $9 million of an up to $12 million credit facility with <unk> capital.
It was put in place during the third quarter.
There are no financial or liquidity covenants associated with this credit facility.
Our current cash balance allows us to continue executing on our value creation drivers and is expected to meet our overall anticipated cash needs through 2022.
And with that I'll now turn the call back over to Tim.
Thanks, Andrew.
In summary, Q3 marked another important quarter of market development and commercial growth for the company and we are excited as we look forward to the key upcoming catalysts that can propel our business in 2022 and beyond we believe our disciplined and focused approach during the pandemic has allowed us to emerge.
In a strong position to build the business and capitalize on our value creation drivers moving ahead.
I'll now ask the operator to open the call for your questions.
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Our first question comes from the line of Matthew O'brien with Piper Sandler. Please proceed with your question.
Good morning, Thanks for taking the questions.
Am I the commentary about Wany enduring 22 on the sales and marketing side of things can you just provide a little bit more color as far as you know what that May mean in terms of.
In terms of you know head count or I guess said another way you know it seems like now as you're really track no pun intended.
To really drive growth in the business hearings in 'twenty two so how do we think about what that translates into in terms of the top line outlook for the business.
Thanks, Matt Thanks for the <unk> for the question Yeah, you could hear in my comments. We're we're very excited about where we're at on on several fronts and it's kind of culminating in this this ability to lean in as we get into 'twenty. Two so first and foremost the development of the <unk>.
E V S system as I outlined a little bit more detail today.
We think that brings down.
Several of the barriers are that that we've faced in the market and can really start to deploy the device at a at a much faster speed so with that and also considering COVID-19. We think it's time to now start to build out the sales and commercial organization to a broader scale as you know we've gone.
With you know primarily three salespeople throughout most of last year and added a fourth last quarter.
But just to give you a little bit of color. There, we're adding a couple additional salespeople as we speak so I would anticipate you know I'm, having you know getting to the kind of the mid single digits before the end of the year and then have a plan to continue to add on a quarterly basis as we see them you know some of the kind of forward looking metrics.
That we're expecting upon the launch of the Evs system. So maybe the way to think about it and we'll give updates as we go but getting back to kind of pre pandemic levels. When we had a sales team that was roughly around around 10 folks. So that's the way we're thinking about it now we certainly can go a lot faster than that Mad if we see the ax.
Celebration that we're expecting.
Expecting and if you know if Covid lingers then you know we'll be just cautious with our with the deployment, but right now we're ready to really ready to lean into the opportunity for 'twenty two.
Okay excellent and then going back to memorial Herman can you talk about your ability to access accounts right now just given the environment and then I know, it's a hunting license for memorial Hermann but any sense for you know.
Other technologies that have started there and then how they have been adopted and how we can think about you know what you could do it in that system from a placement versus a sale perspective. Thank you sure yeah. So far on the first part of your question you know what I think you've you've probably heard some of this feedback and from others in the industry.
We're really expecting for just the continued lessening of Covid through the end of the the year end and were a bit surprised by.
Some of the impact of the surge in certain parts of the country. So we saw we saw some pressure put on Texas, where we do have a obviously you just mentioned memorial Hermann but we have other installations in Texas and some delays that occurred in the Midwest and in Arizona, specifically with Covid, So that did impact access and to some extent procedural volume and some of those accounts for.
Quarter.
But with that said, we were able to continue to at least you know get the process finalized at the main hospital within Memorial Hermann as we mentioned they they purchased their capital which is a nice commitment.
To the technology and the way, we're looking at it and from day. One we have said kind of the second phase of our strategy as we get that primary location and then we grow it within that system and it's typically easier to grow because we have more champions they have data that they've seen within their own institution.
And you have a vac approval that you can work with in terms of a license to hunt.
One of the things specifically, Matt that we've already now done with memorial Hermann in cultivating a couple of I would say very powerful K O L relationships that have seen the technology used it in and seeing the benefit of it they're now conducting them kind of cross facility meetings to share their experience with the device on our behalf.
Which is great so getting the Gi community together within that system talking about the benefits of pure view, you know given the visibility, but you know from the customer's mouth right. So we will then with our sales organization go and follow up on those opportunities and try to get the next couple memorial facilities ready for an evaluation. So that's absolutely our intent to grow within the system and I.
You'll see that we'll be able to do that as we as we get into 2020 two.
Great. Thank you.
Thank you Matt.
Our next question comes from the line of Steven Lichtman with Oppenheimer and company. Please proceed with your question.
Guys I'm Tim.
Here with some of these larger institutions.
Are there any plans for a single center.
Studies that Youre aware of that are you at conferences or other that we could see getting presented as these larger institutions are able to share their experience with that with other potential customers.
Sure, Yes, Steve Thanks for the question so.
So you know on the heels of the ACG conference, the which just took place in October and as you've probably seen and hopefully other saw we put out a release on this we did have a single center study that was done at University of Texas Medical branch in Galveston, and that that was the study that I talked about.
Earlier really nice because it's independent there at active user of the technology and you saw the results where we're were fantastic. They completed all 40 patients in the study so absolutely we're encouraging and supporting those efforts I think peer to peer education and that that is in.
Dependent can be very very helpful. For us. So we have a few other things that are actively in the works right now that we're probably not ready to outline but in a couple of these larger standards that are active close customers of of a purer view of motive G. I.
Mark I'll I'll I'll kick it over to you if there's anything else you want to add just in the broader kind of clinical strategy to to Steve's question.
Yeah, I think Tim you hit it pretty well, but you know we do have a several centers that were talking to that are you know.
At investigator initiated studies you know.
Both in and outpatient and inpatient opportunities and.
Ultimately in the upper indication as well. So you know I think you'll see a lot of activity for us and I think part of Athene and the commercial side too with us being more active in our clinical group to to work with physicians, especially with the pending E.
UBS device coming out to really enhance our clinical footprint as well.
Oh.
Great. Thanks, guys and then on the outpatient study I know, it's not set yet, but any broad parameters that you can provide in terms of you know.
Yeah, potentially number of patients and how long follow up might might need to be or is there anything you can provide us initially in terms of what that may look like.
Yes, Steve I'll, let mark also.
Provide some some detail that we can provide today, but what I'll tell you just kind of a strategic approach. This is obviously an important investment in apartments important study for the for the company. So convening in putting together this physician advisory Board, which we just kicked off and as I said had our first meeting I'm actually at ACG with the group.
It's all around making sure that we get this right. We think about protocol. We think about you know how we power it and what are the endpoints that will be necessary to ultimately optimize our potential to get reimbursement. So this is something that you know were being very careful and thoughtful about to ensure that we get it right, but mark maybe you want to provide just a little bit.
More detail about how we're thinking about the RCT.
Yeah, Yeah, absolutely you know and I think it's timber line you know one of the key aspects of that is around reimbursement and we're pretty happy with the interactions.
We've had with CMS, because we really have some clear guidance from them.
You know what they need to see from US you know to really ultimately hopefully drive that level. One code. So really going after a stuffy that as you know a randomized trial against standard of care, which is basically just climbing to a colonoscope.
Because being on a population, which can be a significant portion of the a colonoscopy or a higher need to tend to have a predisposed for inadequate. Perhaps you know like diabetics like folks that are kind of constipation issues in opioid users you know in a litany of other comorbidities.
Really can then facilitate us to really make not only an impact to get reimbursement, but really you know a lot of those patients that need it. The most is well on its also you know kind of the key targets, where the physicians are most motivated to want to use the technology in as well. So we do see it being a significant trial you know we haven't fully finished the design to tell you exactly.
You know what the end will be but it will be a you know a fairly large trial, especially for the Gi community.
As with US, which I think is nice as we do not need any.
Long term type of follow up we don't believe so you know stuff more safety endpoints within.
You reach to a months post procedure should probably suffice for what we're looking at but again, we have completed the design. So that's what we're thinking at this point.
Yes.
That's helpful. Thank you guys.
Thanks, Steve.
Our next question comes from the line of Jeffrey Cohen with Ladenburg Thalmann. Please proceed with your question.
So hard to Marc and Andrew how are you.
Hi, Jeff Good morning.
Just a couple of questions from Aaron So.
If you could talk about the workstation for.
Yeah, the nextgen or EPS workstation would that be the same for upper Gi as well.
Yeah, Jeff where are you know we're really excited about this as you could hear in our commentary, but specific to the workstation. So it's a it's a completely redesigned workstation the footprints much smaller as we said approximately 40% we've removed some of the complexity from the first device. So a number of pumps and things.
Of that nature, which then you know the downstream benefit of that is there's less connection points so faster setup.
But yes. This workstation will support both lower Gi colonoscopy as well as upper Gi in one in one piece of capital equipment.
Okay and do you expect that the went introduce war about B are out there replacing current platforms.
Yes, that's our intention you know we're putting together a plan a rollout plan is as you'd expect I'm. So all existing customers, we will upgrade them to the new device and then obviously you know be going much broader and wider to two new customers that are in our pipeline, but yes, we don't anticipate.
To support having both devices on the market for you know for all that long.
Right, Okay, and then could you talk about the.
The pipeline if you will.
Is your focus now or will your focus be with her bolster your commercial organization to go deeper into current accounts or water into more accounts.
Sure Yeah, so it's going to be both if that that's the reality so.
Today, you know with the with the small team. There's there's been a focus on trying to go deeper right training positions at sites, where we already have the product that's been purchased but also covering a strategic opportunities in other parts of the country, which required you know travel.
Oftentimes you know flying to other places and it was the right approach during COVID-19 because of the kind of stops and starts that we saw with access.
But now I'm, adding more people to the team covering more of the strategic Gi markets across the U S. It's going to allow us to go deeper because these folks are going to be able to remain in kind of an assigned territory, but also wider for sure because we're going to put people on the street in places that you know we've had limited visibility you know we've we've done a lot from a market.
Development perspective over the last year year, and a half, but if you look at the broader opportunity in the number of hospitals in colonoscopy as that are occurring on a daily basis, you know that the the upside here is huge you know we've got we've already got well over 100 accounts in our pipeline that we've had contact with.
Relative to getting them lined up for evaluation and on schedule in 2022 for for for Evs. So I.
I would say, it's a combination of both Jeff.
Okay, and then lastly for us on the.
That you reference is some percentage of that Oh person or currently it's all focused on our inpatient and hospital networks.
So so I would characterize it this way.
The focus is absolutely hospitals and hospital networks, but with that being said if we look back over our current customer base that we've established here in almost every instance, where we're getting some hospital outpatient procedures with pure view so.
Far and away you know the our primary focus has been on that inpatient that can't you know prep and has delayed procedures or visualization is so difficult in the Doc needs are our technology to be able to complete the case, but once they've gotten comfortable using the device and become just a tool kind of in their G. I Arsenal if you will they immediately.
We start to think about that you know frequent flyer outpatient that has had a history of poor prep or due to a medical condition or comorbidity cant prep well and they will the device over to the hospital based outpatient they'll get that procedure done. So I think you'll see a combination of both and you know and hopefully with some of the things that we've a dip.
Floyd here into the E V. S system, you know potentially start to see even more workstations being deployed at a hospital, so youre not having to move it between two sites of care within the institution, but I think we'll see we'll see both of that happening.
But I just wanted to draw the line there. So the focus is hospital as opposed to you know today going into the ASC is if you will.
Just a little at a little bit to that just you know about a close to a third of all outpatient procedures are in hospital outpatient departments. So you know there's still a large portion of the market there and they also tend to have the more difficult patients because a lot of the folks in the ASC, if somebody's got comorbidities and all that they'd rather refer them to the hospital because they.
Don't want to.
The issues were taking longer procedure times. So we think you know the.
Mount of utility from a percentage of cases in the hospital outpatient Department will also be greater for us.
Super very helpful. Thanks for taking our questions.
Thanks, Jeff.
Our next question comes from the line of Kyle Boser with Colliers Securities. Please proceed with your question.
Great. Thanks for the updates here and nice to see the progress.
Maybe on the EPS application is that a special five 10-K.
We expect to submit by year end or is it just a traditional and.
I guess more broadly on this next gen device was it largely a function of our position in administrative feedback that you got to help kind of inform the new design.
Yeah, Kyle So let me take the second part and then Mark can talk a little bit how we're thinking about the actual regulatory submission, but but yes. You know we we've always had our product development roadmap right knew that even the second gen that there'd be iterations and things that we felt the market would want.
It would be helpful to the procedure, but also during this period of time, you know we were able to take feedback and you know how I would kind of quantify things is.
We're changing the way.
Colonoscopy procedure can be done right for the better.
However change is always difficult and I would say the biggest hurdle has been just change management and getting you know folks being willing to do something different in a procedure that they do every single day and they've done for years and years. So I would think about this device is something that we've reiterated the ease of use.
In a very very significant way. So just a couple of things that you know, we talked about a little bit earlier, but.
From a from a tech and nursing perspective, you know one of the pieces of feedback that we we've always heard with Gen. Two has been you know, yes, it's simpler than the first generation right, which we didn't commercialize however, it's still taking me you know several minutes to get this ready to go as well as I have to load the scope in.
Different room, because it's a reusable loading fixture so they've got to get that loaded in a different room to then bring into the procedure room, where they're actually doing the procedure. So that was one hurdle that we said okay. We have to make this as simple as possible and as fast as possible to deploy which has clearly been into built into this next generation and then the other was our irrigation our suction.
Capabilities have worked extremely well from day, one right, so being able to clean a colon in a very efficient and safe manner, which is really the primary purpose of the device. You know that has been you know shining shining star through and through however, giving the physician the ability to navigate through the colon and have less bulk on the outer.
Sleeve of the scope you know we felt was an area that we could improve which would allow us to get to even a broader number of physicians and have them more comfortable with navigating the scope. So as I mentioned in the prepared remarks, you know we removed four of the five <unk> inner tubes that are between the scope in our sleeve today going to one multichannel.
Lumen, which is just really an incredible removal of bulk you know early feedback we've gotten from physicians in our animal labs has been this feels very much like a bear scope I can navigate much more easily I have much more control. So it's all built around ease of use are very excited about that but absolutely. It's feedback from customers you know when we look at this as.
The way to really lower the barriers to adoption and to speed up deployment. So hopefully that's helpful color on the device Mark let me kick it over to you in terms of how we're thinking about the the five 10-K.
Sure and just to add a little bit to what Tim mentioned and I think one of our big learnings over the last 18 plus months with Gen. Two as you know we started a lot as you do with new technology and you start with more of the advanced or therapeutic guys that are usually your entry point into the hospital, you know and as we learn with Gen two getting more.
More and more and you're kind of day to day colonoscopy that.
There's less used to new technology.
The importance of all the improvements, we're making with Etfs because you know we've got to kind of get those guys are just you know kind of do colonoscopy is all day long and arent used to new technologies to adopt something so I think that was a big learning for us that we think we've incorporated.
Really kind of a.
You know the general colonoscopy feedback into what we've done with EPS, which we think will make a huge difference in the market as Jim described.
And then just going back to the regulatory strategy and we are looking at this.
A special five 10-K now the basic mechanism of actions of cleansing and how the system works no. It has not changed which is kind of a key criteria as long as you use the basic mechanism of action and your indications you know are the same as a predicate device and you can usually drive a special five 10-K.
Yeah.
Perfect I appreciate that.
And then I guess just to follow up on Tim.
Tim Your answer is the distal tip of the new sleeve does it have a smaller diameter and then.
Maybe moving over to the clinical evidence side of things I mean, given all the data out there on peer review it seems pretty clear that the efficacy is highly compelling or completing a poorly crafted colonoscopy I.
I guess, just wondering are you still getting pushback from physicians and hospital administrators about clinical data I guess my sense was always at any bottleneck to adoption would've been more a function of you know.
Administrative hurdles workflow changes.
And burst men et cetera. Thank you yeah sure yeah, great question regarding the distal tip, absolutely we've reduced the overall diameter. So the the tip is about 20% smaller than the current device. We've also changed the material.
So it's a softer more malleable material, which will be helpful in certain applications.
So that's a that's an important change as well Kyle and obviously, we're putting a lot more information out here today and there'll be other forums that will.
Provide even more detail and kind of visual detail of these changes to the market.
But that's an important change as well as it relates to navigation.
<unk> of the scope.
In terms of the clinical data question you know, it's an intuitive comment that you made so yes, I would tell you that the speed of adoption deployment over the last you know year to 18 months has been primarily a factor of you know, obviously COVID-19 right, which played it has played a real role.
[noise] and procedural and access volume then the scaling of our organization and keeping it kind of is it a lean place to kind of get through this period of time and then lastly from a customer standpoint like you said, it's change management, you know workflow behavior influencing that change there's not been a lot of pushback to say hey, like this is an important to.
To provide better visualization or the device doesn't do what you're telling me. It can do so I would think about you know listen additional clinical data independent studies are always very very helpful to influence physicians and get them on board with this is something I just have to do is the clinical data is so compelling, but I would look at our investments upcoming in clinical.
Paul.
As much around how do we ensure that we can optimize reimbursement to eventually break into the very very large outpatient market. So I would look at it more about market expansion investment as opposed to you know people need more data to say that this is either working or helpful.
That's great. Thanks for all the updates I'll jump back in queue here.
Thank you Kyle.
Yeah.
Our next question comes from the line of Ben Hayner with Alliance Global. Please proceed with your question.
Good morning, guys. Thanks for taking the questions just kind of a couple of big picture kind of follow up type questions. So when you say that the certain outpatient colonoscopy is with regard to reimbursement a reboot reimbursement are you.
It sounds like that's a you know the diabetic chronic constipation.
I'd users that Mark mentioned.
And it does sure sounds like that fraction would be certainly sufficient to attract.
Attract ER or to make it the product attractive to to the hospital market, but what about the the Acs and all the other facilities that are performing these things on an outpatient basis.
Yeah sure. Thank you Ben for the question.
So you know the way we're thinking about this for ambulatory surgery centers right. The data and then ultimately reimbursement is going to be very important. If you think about the patient profile and just kind of how they run their business. If you will it's you know theyre doing you know 810 procedures per day per room, they they they there.
You know traditionally looking to spend a lot more money on a procedure when they don't have to rates of reimbursement becomes an important part of getting through the initial barrier to have an ambulatory surgery center deploy new technology, but very much as mark was saying earlier about a third of the outpatient population in the U S runs through a.
A lot based outpatient but the rest is running through these ambulatory surgery centers and they have the same issues that they're dealing with rights of the Comorbidities that you highlighted patients that just you know it's not about not wanting to drink the prep or complaining about the prep, it's about true issues associated with not being able to write so they either can't keep it down where they've got.
Motility or mobility issues.
You know and we kind of characterize that market as we've said before as you know about 20 or so percent of the overall outpatient market. So you're talking about a four to 5 million patient market, where you know there's clearly an identified need for these patients to be assisted with their their perhaps so they can get a high quality exam, so theres not.
Now Mrs and Adenomas and you know they can stay on a normal interval of of their their current colonoscopy colonoscopy scheduling. So we think that the value.
You know states in both hospital based as well as you know a S ease over time and it becomes more just about the reimbursement in terms of when we can enter that market in and put the resources behind it.
Okay. That's very helpful. And then secondly for me you know this is kind of a follow up on Matt's question I think but you know just yet do you have kind of internal models on how you might be able to penetrate a.
The additional hospitals and you know kind of a memorial Hermann type situation. You know once you do have that beachhead in or is that something that's kind of you know every hospital system is a little bit different and there's not really a way to.
You know say Oh, well you know we think we can get to full penetration by your three or you know whatever uninterrupted model might say.
And any any additional color there would be helpful.
Sure.
Yeah, you know, it's I think Youre right you know every hospital system the dynamics and requirements are different right, but you know one of the examples that I think you know we're trying to.
Employee is you know how how do you get as efficient as possible about this right and I'm I'm really talking more of a forward looking so as we get into 2022 and we've got you know I think are the appropriate sized commercial team.
So we're not kind of flying all over the country you know trying to just manage opportunities with just a few folks right, but when you've got the appropriate people in the right territories. You know and then also considering you know hopefully the COVID-19 impact, which I think as we get into 'twenty. Two hopefully will be will be a lot better how do we how do we accelerate the us.
Wariness of the device so you're not doing one account at a time within a system right. So this this just kind of town hall approach that I just mentioned earlier that we're we're working on with Memorial Hermann where you can get your physician champions to conduct you know a discussion with their colleagues across.
The system.
Special meeting to say Hey, this is a technology update we want to share with others kind of best practices things that we've deployed that can really allow us to move things much more quickly right. Because then it just becomes okay.
Where within the system do we want to go next based on their interest level in you know ability to evaluate you know and so we'll take approaches like that just all very tactical things, Ben but I think you know to date, it's been it's been less about the you know strategic Knowhow and the way to do that and more about just not having the resources or the environment with COVID-19 to be able to really.
Accelerate that if that makes sense.
No that makes perfect sense and very helpful.
That's really all I had guys and congrats on the progress and thanks for taking the questions.
Thanks Ben.
Our next question comes from the line of why Chen with H C. Wainwright. Please proceed with your question.
Hi, This is Bob Allen dialing in for <unk> can you hear me okay.
Yes, but a lot of good to speak with you.
Hi, Greg Congrats on your progress so just a couple from our end. So you recently engaged and reimbursing consulting partner to her drive solid Unix execution. So can you provide any updates on that front.
Sure I mean, that's obviously an important part of.
Everything we're talking about today right the the appropriate clinical investment understanding the reimbursement kind of pathways and ensuring that we're kind of getting plugged into the REIT stakeholders to influence the right folks in the right order. So mark why don't I kick it to you provide a little bit of detail on how we're thinking about.
You know the reimbursement strategy and and you know outside resources to support us.
Sure. So hi, Bob along so great question, you know, there's a bunch of things that we've already been doing and a lot more that will be doing going forward. So.
I mentioned earlier, you know with the support of our consulting group, we've been getting a good interactions through some formal applications and some informal discussions with CMS to really help us inform us of what we need to do to to really create the right data and trial for moving forward to try to achieve a level one.
The CPT add on code and you know you didn't go into it and add on code strategy.
Things that we've locked into we've also had interactions.
With some of the key I Gi societies as well, so that we and garner their support.
Which our consultants are helping with months to that's really informed that strategy again to push for an add on code.
As opposed to a straight CPT code.
So that's been very helpful for that for that also with their support I think as you're aware, we did get an ICD 10 code issued so we'll be pushing out information to the accounts to be able to to use that for coding which will again help.
S and others see the utilization of the device, which is you know kind of a first step to then inform a potential opportunities for payment in the in the future as well.
And then we'll be looking at really supporting spokes, where private payer side of things.
Helping them to to be able to put in our claims on the utilization of the device and we realized how that works you know early on as you know typically putting in claims.
In many cases and you'll have to go through an appeal process and after you build some momentum with some of your private commercial payers.
Again to push for a coverage decisions et cetera, So we're putting in the infrastructure.
Has the line with Evs to help support all of that as well.
Thanks for the clarity.
One more from us so you're actively running clinical trials in the European Union. So.
And to that what steps might be to quiet the increase feel real visibility in the room.
Yeah. So yes, we are we are running the trials, we're actually very pleased with the physicians and the institutions that we're running the European study, yet, but the way we think about it Google on from a commercialization perspective, and you know the entrance into a into Europe. It really comes down to.
You know focus in resources right. So today, you know obviously with the U S being such a big opportunity and now kind of the culmination of a new product that we think can be deployed quickly, adding commercial resources. Our number one focus is driving revenue and adoption in the U S market.
How we're thinking about Europe is the potential to accelerate the entrance into Europe on a broader scale through a partnership so as I alluded to you know we continue to have discussions evaluate partnership something that could be a global relationship others that could be geographic lease specific I E Europe, right, where there's already a COO.
Commercial infrastructure and engine.
In Europe that would allow us to get our product into the market without having to build you know our own direct sales force, which obviously is expensive.
Expensive and also can take time not to say that at some point in the future. We wouldnt do that but I think in the near term. The next 12 to 18 months, you know I wouldn't envision us putting our time and resources into that so we'll continue to evaluate you know actionable our partnerships that make sense strategically for us and for the partner that we think we can win and win that opportunity.
He comes we'll we'll we'll certainly provide more detail, but that's kind of the way we're thinking about it. So the work that we're doing in Europe now in terms of you know getting having gotten our CE Mark and doing these clinical trials. It's all around just seeding the market. So we have champions and Theres an awareness in the market, but I think really the commercial infrastructure and resources comes.
Most likely at some point through a partnership.
Thanks for taking my questions.
Great. Thank you.
There are no further questions in the queue I'd like to hand, the call back over to Tim Moran for closing remarks.
Yeah. Thank you Doug.
Listen I just want to thank everyone for joining our call today, you know, obviously, where we're pleased with the continued progress we've stayed disciplined and focused on what we're trying to accomplish you know really moving through this.
Period of difficult market dynamics, but developing the market for pure view, we've got an incredible.
Incredible opportunity with you know first mover advantage there is no one else in the market with a device like ours. We know what we've got ahead of US and you know hopefully you saw today and heard you know our excitement about what we can build here as we move into 2022 and beyond So we'll look forward to talking to everyone on next quarterly call and I hope everybody.
Stays healthy and safe.
Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation you may disconnect. Your lines at this time and have a wonderful day.