Q3 2021 Pulse Biosciences Inc Earnings Call
[music].
Greetings and welcome to pulse Biosciences third quarter 2021 earnings conference call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad Azure.
This conference is being recorded I would now like to turn this conference over to your host Mr. Philip Taylor Investor Relations. Thank you. Sir you may begin your presentation.
Thank you operator before we begin I would like to inform you that comments and responses to your questions. During today's call reflect management's view as of today November 15, 2021, only and will include forward looking statements and opinion statements, including predictions estimates plans and expectations and other information actually.
<unk> results may differ materially from those expressed or implied as a result of certain risks and uncertainties. These risks and uncertainties are more fully described in our press release issued earlier today and in our filings with the Securities and Exchange Commission or SEC filings can be found on our website or on the SEC's website.
Investors are cautioned not to place undue reliance on forward looking statements, we disclaim any obligation to update or revise these forward looking statements. We will also discuss certain non-GAAP financial measures disclosures regarding these non-GAAP financial measures, including reconciliations with the most comparable GAAP measures can be found in the press release.
Please note that this conference call will be available for audio replay on our website at pulse Biosciences Dot com on the news and events section of our Investor Relations page with that I would now like to turn the call over to President and Chief Executive Officer Darrin yogurt.
Hello, and thank you all for joining us this afternoon.
2021 has proven to be a transformational year for pulse biosciences.
Highlighting by our first recognized revenue in the third quarter.
Today's call, we'll be discussing some of our recent accomplishments and plans to drive growth as we expand cell effects system and commercial efforts.
I will also touch on our clinical and regulatory pipeline then Ed will provide details from the field on a controlled launch program and the planned ramp up of commercial activities.
Andy will then share details around our financial results and then I will conclude and open up the call for Q&A.
Our product the cell effects system with cell effects cloud connect is a multi application platform for the delivery of our novel and proprietary nano pulse stimulation or NPS technology.
Most electrical energy delivered by herself X system directly impacts cellular structures, leading to the clearance of cells, while sparing non cellular structures such as college at the.
The differentiated non thermal modality has been shown to clear benign skin lesions with a more favorable healing profile in a stack outcome than the thermal modalities currently used in dermatology practices today.
In the third quarter 12, dermatology practices that were participating in our controlled launch program after to purchase their cell effects system and order initial cycle units to begin performing cell if X procedures commercially.
<unk> features and benefits of the cell if X system are enabling these clinics to launch a new category in dermatology the treatment of benign skin lesions.
These industry leaders took the time to learn and experience. The unique features and benefits of the <unk> system and have determined that offering this unique procedure to clear common spot bumps and growths in a fashion that is not only acceptable aesthetically pleasing for patients well, meaning meaningfully enhance the offerings at their practice.
Previously dermatologists were hesitant to address these lesions currently available throw all modalities because either they were concerned about not being able to adequately clear the lesion or about the resulting aesthetics skin appearance.
Benign lesion market is readily accessible by dermatologists as these patients are typically already visiting their practices for other treatments.
But it remains largely untapped due to the lack of an adequate solution cell.
Self ex procedure is unlocking what we believe is a currently addressable $3 billion market contemplate cell up ex procedures on a few benign lesions sebaceous hyperplasia separately keratosis and non genital warts.
Just on patient's perceived value of these treatments and the time required for dermatologists to perform them, which is roughly 15 minutes. This category is positioned to be one of the strongest revenue and profit generating service lines in their practice.
To simplify the economics to the clinic and the patient we have created innovative utilization based model.
Facilitated by the cell effects cloud connect infrastructure cell effects consoles download purchase cycle units via our E Commerce store to power the use of the cell effects system in each treatment.
Each lesion treated requires the use of cycle units. The number of cycle units used per lesion generally depends on the size and type of the lesion being treated.
By offering cycle units, rather than charging a fixed price for consumable procedure based accessories.
Actions can charge patients on a per lesion basis, just how patients prefer to pay and also directly aligns with the clinic costs.
We believe this model will facilitate utilization and remove obstacles that can occur with traditional medical device consumable based business model.
As we begin to grow our commercial installed base through controlled launch participant conversions and commercial sales cycle units will represent the key recurring revenue stream associated with each cell effects system G.
Q3 marked the first cycle unit purchases by clinics converting to commercial use of their cell effects system.
And the long term, we expect utilization of the self X system to increase along with clinician experience as they become more comfortable with the procedure and new applications are introduced.
As a reminder cell effects cloud connect is not only the backbone of our business model that offers clinics, an array of services and practice management tools to track utilization data and other metrics, having the software connected to our internal customer relationship management system and enterprise resource planning system provides us and the clinics with crucial insights.
Into the productivity and profitability of the self X system.
Turning back to the commercial launch we are now in the final phase of Onboarding remaining clinics that have been selected to participate in the controlled launch program.
We started the program in Q1 and to date have successfully on boarded 68 clinics across the U S, Canada and the EU.
Due to administrative delays in a couple of European countries. We believe we will onboard the remaining clinics in Q4, taking the total number of clinic participants to approximately 75.
At this point the initial controlled launch clinics are actively completing program requirements and converting to commercial use by opting to acquire their cell if X system.
Expect many of the controlled launch clinics to be through the program by the end of the fourth quarter and the remainder will complete in Q1 of 2022.
While we anticipate a high percentage of the controlled launch participants will convert to commercial use we have had a few clinics opt out of the program due primarily to the resource commitment required to participate in the program.
Generally speaking those that have opted out of done so early in the controlled launch process, while those that follow through to the end of the program had been converting this was anticipated and we believe bodes well for future conversions.
In addition to continued controlled launch conversions. We also anticipate initial commercial sales of the cell effects system in Q4, marking our transition from a controlled launch to a broad commercial launch as we enter 2022.
The leading aesthetic dermatology clinics in key opinion leaders, who have participated in the program.
Two to purchase have provided very positive feedback and the deep relationships. We have built with these key opinion leaders will form our foundation for growth as we expand our commercial efforts.
An important development coming out of the controlled launch program as the physicians understanding of the cell affects system and its underlying mechanism of action.
Through hands on experience with the cell effects system and observations of the treatment and healing process physicians are beginning to identify new applications to address additional unmet needs.
We expect to use of the cell of X system would naturally facilitate uncovering new opportunities to treat benign lesions and are pleased to see this is playing out as anticipated.
One example of a new lesion of interest emerging from the controlled launch utilization is the is the treatment of a dramatic fibroma.
A matter of fact, Roma small benign lesions typically found on the extremities, especially the lower legs.
These persistent and sometimes painful growths are fairly common with dermatologists reporting seeing as many as 30 patients presenting with them per week.
However, the current treatment rate is low due primarily to the lack of available treatments.
Current standard of care surgical excision is used infrequently because it typically results in undesirable scarring.
There are currently no energy based devices, they're regularly used to treat dermatophyte bromont and for this reason we believe this could potentially be a large market opportunity and a viable cell if X procedure performed with the current available treatment tips.
That brings us to our current clinical work the.
The advancement of specific indications in dermatology for cell effects system in the U S is a top priority for pulse biosciences.
As we have stated previously we have implemented a stepwise regulatory strategy in the U S under which we are pursuing specific indications for high value applications.
First specific indication we are seeking regulatory clearance for the treatment of sebaceous hyperplasia, we completed the FDA approved IDE study for the treatment of sebaceous hyperplasia earlier in the year and recently finalized all of the necessary analysis. We are pleased to report five 10-K will be submitted this week J F D. A.
The second specific indication we are targeting is for cutaneous non genital awards in the third quarter. We completed enrollment of 150 patients F. D. A I D approved pivotal comparison study.
After the appropriate follow up visits are completed which should occur in early Q1 2022. The data will be analyzed and we are anticipating a five 10-K submission in the first half of 2022.
We will continue to pursue additional benign lesion clearances to grow their cell effects systems application portfolio, where it makes the most sense for dermatologists.
The early datasets for sharing and knee bi or common malls are promising we will provide updates on our progress with these lesions as we approach pivotal clinical trials.
Outside of or benign lesion pipeline, we have completed enrollment of all 30 patients in our F. D. A idea approved treat in resected basal cell carcinoma BCC feasibility study.
We believe that MTS technology in itself X system can be used to treat smaller BCC lesions with improved outcomes in cosmetically sensitive areas such as on the face.
Because BCC is the most frequently occurring form of cancer in the U S and the current treatment of V. C. C is wide margin surgical excision, which typically results in undesirable cosmesis and he is a very attractive market opportunity.
In accordance with the BCC study protocol, we expect to complete the excision of the treated BCC lesions by the end of this year with the analysis of the tissue by the study pathologists taking place in the first quarter of 2022.
In addition, we plan to meet with the FDA in the first half of 2022 to discuss the details of a potential pivotal study for a specific indication to treat BCC lesions with the cell effects system.
At this time it is difficult to estimate what FDA may require for a pivotal study and therefore the timeline for an FDA submission is also difficult to estimate. However, we remain encouraged by the potential of this opportunity for the cell effects system.
Our pipeline philosophy is to target the most prevalent and compelling conditions to realize the true potential of the cell effects platform and maximize the value of NPS technology, whether its clinical and regulatory work to be done before we can commercially launch traditional applications. We believe it is beneficial to our physicians and patients to invest our resources, where there's the greatest potential.
And improving their lives.
On the global regulatory front, we were pleased to report that we have recently received approval to market and cell to cell effects system in Australia.
Represents another validation of the safety of the cell effects system from regulators.
The first country in the Asia Pacific region that we have received approval to ship. It marks the beginning of our Asia Pacific commercialization at.
At this time, we expect our first shipment to Australia in early 2022, as we begin working with the top kols in that country. This.
This is the first step to entering this territory and although we do not anticipate significant shipments to this region in 2022, It will set a foundation for expansion in 2023.
As we have mentioned previously we continued to invest in investigational areas outside of dermatology.
Early successful research initiatives have created tangible opportunities and for that reason we are pleased to have Mitch Levinson joined the company as Chief strategy Officer. In addition to serving on the board, which he has done for several years.
He has over 30 years of experience developing and launching novel medical device technologies across multiple medical disciplines, including dermatology wound care surgery diagnostics patient monitoring and digital health.
Mitch has experience in medical devices, and with pulse biosciences, and his expertise, bringing new technologies to market make him uniquely qualified to be leading our efforts to expand the applications of the cell effects system and NPS outside of dermatology.
As evidence of our early research success preclinical data was recently presented on the use of the N. P. S technology platform in the field of Gastroenterology by Dr. Robert cans at the annual meeting of the American Forgets Society.
Presentation, titled Nano Pulse stimulation technology, as a promising new energy modality for Barents esophagus.
Was extremely well received by this group of physicians.
Doctor games as a key opinion leader in this field and one of the foremost experts on the treatment of Barents esophagus using ablative technologies.
Parents esophagus is a complication of gastro esophageal reflux disease or GERD base by approximately 10% of people with chronic GERD symptoms, which the tissue lining the esophagus becomes dysplastic or precancerous as a result of the damage caused by the chronic acid reflux.
The dysplastic cells are associated with an increased risk of the soft gel cancer and for that reason are typically removed or destroyed using thermal energy modalities.
The proceed study presented by Dr. Again demonstrated that the cell effects system, using our novel and proprietary esophageal applicator can remove the esophageal epithelium and submucosal glands without causing significant fibrosis or evidence of stricture, suggesting that N. P. S may provide unique safety and efficacy benefits for the treatment.
It's a soft goes over currently used thermal ablative technologies that can sometimes lead to adverse outcomes such as soft deal stricture scarring pain and re treatment.
Importantly, as evidenced also demonstrates that the proven mechanism of action of M. P. S and skin can be applicable to other tissues of similar architecture such as in the esophagus.
This early preclinical work represents one new potential application area for the cell effects platform and N. P. S technology outside of dermatology and while we believe there are exciting potential applications across many medical specialties for the cell effects platform, we remain committed and focused on execution of our commercial launch in dermatology.
Going forward, we will continue to be disciplined with our pipeline strategy to prioritize R&D efforts based on comprehensive consideration of factors like the most important clinical unmet needs for patients and commercial opportunities as plans and developments materialize, we will share our progress.
Overall, we have made excellent progress across the business in 2021 in the third quarter, we continued to execute our strategic initiatives now.
Now I will let Ed provide a more detailed update on the cell effects system launch.
Thank you Darren.
I will start by reviewing the success, we've had with the controlled launch.
As of September 32021 over 1800 procedures were completed on the South Bank systems across 67 clinics in North America and Europe.
To date progress with a controlled launch is tracking largely in line with expectations.
And we could not be more pleased with the overwhelmingly positive feedback from kols on the cell phone system and how it is enabling a new avenue of expansion for their practices.
Just as importantly, carrawell feedback on best clinical and commercial practices from the controlled launch experienced well laid the foundation of acceptance for the next wave of early adopters in the coming quarters.
The controlled launch continues to provide us with many important learnings regarding real world utilization Bill.
Business model and franchise development.
Technical training and the account on boarding process, we've already begun utilizing some of these lessons to advance the doctors and providers through the controlled launch process faster than the initial participants.
Our sales force.
Also had a unique opportunity to build understanding of the adoption dynamics with both physicians and consumers.
Developing a process of best practices to drive both utilization.
And future capital equipment sales.
The lessons from a controlled launch will continue to reinforce the foundation for our future business as we look to scale and expand our commercial operations.
The application of these lessons will continue to support our kols and customers in the field as the next phase of our broader launch is rolled out.
That's part of the controlled launch we are collecting vast amounts of data.
Feedback from both physicians and patients.
We are seeing high physician satisfaction with the system functionality and treatment outcomes.
We also saw exceptional patient satisfaction with procedure experience procedure time and treatment results.
The high level of patient satisfaction translated to a high likelihood to recommend the self ex procedure to friends and family.
From a qualitative perspective, the results from patient and provider surveys, where a major success for us and hit our expectations for the program.
These factors reinforced our conviction in our commercial launch process and NPS technology.
We will continue to provide a high level of commercial support to our kols and their patients as they've already become our biggest advocates as we can.
Tend to target other clinics in North America and Europe.
As we complete conversion of controlled launch participants to commercial users. We are simultaneously transitioning to a broader commercial launch targeting early adopters.
This requires us to build out our sales force as our base of users increases.
Our current sales reps are focused on driving procedures and supporting kols participating in the controlled launch.
In addition to these efforts and to comprehensively address this large market. We are now actively hiring and training a team of capital sales specialists.
On new system sales.
Going forward, we plan to have two integrated sales teams.
Clinical application specialists and capital specialists.
Clinical application specialists will continue working with the current customers to drive utilization and implement some opex treatment workflow best practices across clinics and provide marketing support to help capture the large market for benign lesion clearance.
Capital specialist smoker who's responsible for actively qualifying.
And engaging potential system customers to expand our installed base. Among these early adopter prospects.
They are actively qualifying the known aesthetic technology purchasers.
The sales force structure will enable us to scale and maintained the top tier service our controlled launch participants lauded in their feedback.
As of September 30th 2021, we had 11 North America commercial field personnel and six commercial field personnel in Europe.
They won't be pursuing the prospect funnel of top opportunities in the coming quarters to put yourself X systems and drive utilization revenues.
Clinical application specialists will support 10 to 20 couch.
Initially and ramping to potentially 40 accounts at scale.
These clinical application specialist will drive utilization and be incentivized to improve utilization rates as we place new systems, we anticipate scaling the commercial team is necessary to support this growth.
Supplementing our commercial marketing efforts, we continue to stay engaged in the scientific community to support the South Texas system clinical evidence generation.
For example, recently, Dr. Brian Bison, a leading expert in eye lid and facial surgery and based in Nashville, and a member of pulse Biosciences Scientific Advisory Board presented feasibility study results of NPS technology for treating certain gama.
Annual symposium of the American Society of ophthalmic plastic and reconstructive surgery.
In front of a highly specialized audience.
Hello facial plastic surgeon.
Sure in Goma.
It's a benign overgrowth themselves from sweat claims that occur in clusters in the upper and lower pilots, causing a difficult to treat cosmetic condition that has high value to patients.
We are equally pleased to announced that Dr. <unk> will be on the virtual podium presenting these early clinical results I'm sure in Golar at the annual meeting of the prestigious American Society of Dermatologic surgery, or a S. D S in the coming days.
The high clearance rate ensure healing periods as demonstrated in this early study are encouraging signs of Mps's technologies broad applicability in dermatologic conditions, even in these most delicate areas of the face.
These promising early results will lead to the additional studies of efficacy and safety data to pursue an indication for this lucrative new application for self X technology.
The steering Goldman application is another demonstration of how the cell specific mechanism of action of the self X platform will apply to many common lesions that have high value in the cash paying aesthetic procedure market.
Our scientific presence continues in December with Doctor George Russo.
St. Louis and past precedents are the American Academy of Dermatology, who will be presenting an overview of M. P. S technology at a cosmetic surgery for them.
Which is a multi specialty educational symposium that cover somebody whose research treatment and techniques in dermatology and cosmetic surgery.
We are thrilled.
With the early results of the first commercial use of the cell system.
And are excited to execute our strategy to drive a worldwide system installed base and increased utilization with this installed base.
Thank you and now I will turn the call over to Sandy.
Thank you Anne.
Darren mentioned in the third quarter, we recorded our first revenue as a company.
For the third quarter of 2021 revenue was $574000 revenue was driven by the conversion of 12 controlled launch participants opting to purchase their cell effects systems. Following completion of the program.
System sales are $490000 were recognized on a noncash Nathan.
And related to cycling and it was $84000 recognized in past for the initial cycle units purchased for commercial systems.
Revenue in North America, with $405000, representing 71% of total revenue.
Moving down the income statement I'll focus my comments on our adjusted or non-GAAP results to provide insights into the underlying trends of our business. Please refer to today's press release for a detailed reconciliation of non-GAAP measures with the most comparable GAAP measures.
As we have now shifted to make commercial organization recognizing revenue.
All I'm capitalized manufacturing operation costs are now recorded in cost of revenue.
Previously these costs were recorded in research and development expense.
Non-GAAP gross loss in the third quarter of 2021 was $113000 gross loss is calculated as total revenues less cost of revenues.
For the third quarter of 2021 non-GAAP operating expenses, representing research and development sales and marketing and general and administrative expenses were $12 $3 million compared to $10 million for the prior year period, an approximate $2.3 million.
Increase year over year.
The year over year increase in operating expenses was primarily driven by the expansion of commercial and operational infrastructure, including increased head count.
To support commercialization activity.
Non-GAAP research and development expenses increased by approximately $3 million to $6 million for the three month period ended September 32021, primarily due to increases in personnel and clinical trial costs and consulting and outside services in support of <unk>.
Our FDA submissions and new application development.
These additional costs were largely offset by Uncapitalized manufacturing cost now recorded in cost of revenue.
We expect to incrementally elevated research and development expenses compared to the prior year period to remain at approximately these levels for the remainder of the year as we continue doing best Intel effects system application expansion initiatives.
Non-GAAP sales and marketing expenses increased by approximately $1 $9 million to $3 $3 million for the three month period ended September 30, 2021, primarily due to increased personnel consulting and outside services to support commercialization Act.
Tiffany not conducted in 2020.
And marketing expenses in the third quarter of 'twenty 'twenty. One include approximately $600000 of noncash expenses related to our controlled launch program.
To receiving FDA clearance and CE Mark approval for the cell effects system sales and marketing expenses were included in general and administrative operating expenses.
We expect sales and marketing expenses will continue to incrementally increase as we invest in activity to support our full commercial launch and the cell effect system.
Non-GAAP general and administrative expenses increased by approximately $1 million to $3 million for the three month period ended September 32021, primarily due to increases in personnel from a year ago to support the transition to commercial operations.
Non-GAAP net loss for the third quarter of 'twenty, 'twenty, one with $12.4 million compared to a net loss of $10 million in the third quarter of 'twenty 'twenty.
Cash cash equivalents and investments totaled $42 million as of September 32021, compared to $47 4 million as of June 32021.
Cash used in the third quarter of 2021 with $13 $8 million. Excluding net proceeds received under the June 2021, private placement of which $8 $4 million was recorded as related party receivable at the end of the second quarter we.
We did not issue any shares under the ATM equity offering program during the third quarter.
Cash usage will continue to increase incrementally as we invest in activities to support our growing commercial operations, including building a commercial team in Europe.
Increasing inventory levels and conducting additional studies to support indication expansion with the S. T a.
Inventories were $4 $3 million as of September 32021.
We remain focused on our commercial launch and wrapping up the enrollment of the controlled launch program in the fourth quarter.
We continue to make calculated investments to drive long term adoption of the cell effects system and our proprietary NPS technology.
Nonetheless, we continue to anticipate incremental revenue generating systems will come online throughout the remainder of the year as participants in the controlled launch program and birth or system commercially following completion of the program commitments.
Now I'll turn the call back to Darren for final remarks.
Thank you Sandy.
2021 continues to be a transformational year for pulse Biosciences is the business recorded its first ever revenues.
As we wrap up enrollment in our controlled launch program, we're taking the lessons we learned from our participating clinicians and their patients to build the foundation for our business in 2022 and beyond.
Q4 is continuing to shape up into an exciting quarter as those kols that participated in the controlled launch program begin to convert to commercial use and we look forward to our first commercial sales of itself X system as we capitalize on the positive feedback and momentum we have received from the controlled launch program.
Our dedication to developing new applications for the cell if X system for the benefit of both patients and clinicians is unwavering and we were pleased with the recent cadence of development.
We look forward to providing more details around our commercial launch and clinical trials on our next earnings call.
Before we open the call to questions, we want to welcome Maureen de Bono to our board of directors.
She is an experienced healthcare executive who has been successful driving strategy and operational excellence at several medical technology and aesthetics companies, we look forward to her contributions.
And with that joining me for Q&A are Ed Ebbers, Executive Vice President and General manager Dermatology, and Sandy Gardiner Executive Vice President and Chief Financial Officer, Operator, Please open the call for questions.
At this time, we'll be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May press star two to move your question from the Q.
Since using speaker equipment, it may be necessary for you to pick up your handset before pressing the star keys, one moment, while we poll for questions.
Our first question comes from the line of S. K with H C. Wainwright you May proceed with your question.
Thank you.
Good afternoon downturn and sandy.
This is RK from HC Wainwright.
So they are coming out here.
Good good congratulations on regarding your first quarterly sales.
That is really exciting.
So I.
I truly apologize for asking a kind of a negative question, but that's just my own didn't negative question I promise.
Thank you for that.
There were some clinics that opted out.
Just wanted to understand you know them well.
Just had few I'm just trying to figure out what that means.
Yeah. So that's OK RK, it's a good question and.
At the end of the quarter I think we had had two clinics that had opted out and like I mentioned those are those.
Those clinics I think we developed a you know what we believed was.
A pretty detailed process for selecting clinics and setting expectations with clinics and getting them involved you can imagine there's a lot of interest in a new technology like this.
That we feel has a lot of.
<unk> unique capability in applications and Theres a lot of interest on the clinician side, but I think even with all the.
The filtering and seal activity that we did.
I think some clinics as you as you begin to.
Get them involved in the program they start to realize sort of how much we're asking of their time in terms of not just using the technology, but surveys from the patients from physicians from the staff mhm.
And how much we want to work with him and I think there you know there is a handful of clinics.
And as I mentioned too in the early going that sort of opted out and said look were.
This is a lot for US right now, we're probably not in a good spot to be able to take on a new technology participating in a program like this.
But of course, we think there'll be excited too.
To take it on later in the process. So I think it was it's more.
Our observation is that it's more kind of that.
Process, that's going on with some of these early clinics as opposed to anything else.
Okay. That's fantastic so as opposed to those to the toll that converted into.
And two commercial you know a couple of things come to my mind as to how how long.
Did it take for these folks after they completed their their trial period to decide to go commercial.
So you know.
Do you think.
What these 12 clinics are experiencing.
Experiencing you know both from their side on from your side is sort of the typical.
Students that the clinics that are coming onboard.
We continue to do a handle I'm just trying to go.
Understand.
That process is working.
Yeah, it's good question and unfortunately.
Maybe I'll answer it as.
You know each clinics, a little bit different as you know so it's.
A little tough to generalize.
On all 12 of those but I would say that you know for the most part entering kind of the first part of your question, which was how long after kind of going through the program.
These clinics <unk> to acquire the system and begin to use it commercially and I would say that for the most part.
Clinics as soon as they completed we're pretty much ready to go now it took a different amount of time for each one of these clinics to get through the program which is.
<unk>.
What very much what we're experiencing across the board so some clinics come on.
They go through their 40 sessions very quickly maybe in two to three months and they're ready to convert.
Others take a bit longer.
Lot of that again has to do with their.
Their own clinic dynamics and the amount of time they have to spend on these things and I think we've mentioned on previous calls the controlled launches.
It is a very measured program.
And from our perspective, we try to keep it as a very controlled program, meaning that.
We want to be there kind of a high touch high service every step of the way. So we go in and do initial training and education of their staff.
And we want to be present both.
During all treatments, if we can be.
As well as at 30 day post 60 days post treatment observations and so we spend a lot of time with our clinics. During this process and so the amount of time it takes them to get through the program can vary generally I would say between you know two to three months for some of them.
The faster ones and maybe as much as four to six months for some that are taking longer than the 12 that we converted them.
Kind of it's a it's a mixed bag in terms of those different clinics and how long they took to get through the process.
Once they convert.
I think it's it's also a little bit different depending on the clinic. So we've had some clinics convert and begin their kind of commercial use of the system begin treating commercial patients very quickly.
And we are liking what we're seeing in terms of utilization and other clinics will get through the program agreed to acquire the system in cycle units and then they want to begin to set up a launch of the cell FX system within their clinic and kind of to their patient population and so we're.
And that process as well as you can imagine helping them.
Put information on their website if necessary.
Helping to posed to social media, which a lot of them want to do as well as providing them with whatever collateral information we can for use in their clinic and so some clinics are ready to go right away and some Wanna get set up and then begin to market to their to their patients.
You know it varies from clinic to clinic, but I think the good news is is that clinics are getting through the program and we're converting them.
That conversion means their agreement to basically take ownership of the system as well as purchase cycle units for use with the system as they begin to use it on.
On their patients and are kind of more traditional commercial environment.
Okay.
One question to Sandi.
Sandy you stated that 70% of the plan and 74000 came from from North America.
This is 70% also the representation of the 68 clinics that you have gone out and Dundee Dundee and as you know our initial beta launch is that is that how we should think off or just sort of happened.
70% of this happened to be in North America.
No I actually think that that's how you should roughly think about it when you think about the geographic regions that we're in you know roughly 70% to 75% and we will continue to be in North America, and the remaining 25% to 30% will be in in the E U.
Okay.
One last question for.
And then I'm done.
So when you're looking at this expansion the 10-K filing that youre going in and I'm, assuming it's a 90 day review period.
Tower on the on the other end of it you know that's once you have a positive.
Decision on this.
How should we think about the dynamics in terms of your usage will it be a you know a lot different than what you are expecting without it.
Just trying to understand.
How we should think about the dynamics of usage of cycle times.
Yeah.
It's also a good a very good question so with regard to the review time.
Thank the one expectation I would set as.
We really not sure in terms of the overall timing of this review from FDA, So you're right.
On F D. A five 10-K reviews.
It's 90 days is what they try to hit and that's the that period of time that they are on their review clock. There's usually time and that has also taken up by whatever questions. They may ask the company and so the only reason I bring that up as you know this is the first sort of.
FDA approved I D E study.
10-K that we're submitting to FDA for the cell effects system, and so I think I would temper some expectations, it's probably going to be longer than 90 days I think many of these can go 120, maybe out to 150 days so.
I think we're excited to start getting this data and the FDA and get into the review process.
And be able to engage with them but.
I think we would expect they would take their 90 days in and then also have questions for us. So that's just on.
The timing side as it relates to what the impact will be in the market.
I think what we believe are.
From the beginning is that in the U S. We certainly believe that it's important to get specific indications on lesions that we think there's a significant opportunity and getting those specific indications is really for the purposes of allowing the clinics.
To promote the specific indications more directly to their patients and.
At large.
<unk>.
But I think what we said before is we don't really think that you know through the controlled launch and even in to some of the early adopters, which we're now starting to talk to them, it's not as it's.
It's not as important to them I think a lot of those clinics are very savvy in terms of how to incorporate a new technology into their clinic and theyre very used to talking to patients about new technologies and new applications. So I think it's a little bit more of a downstream need as we kind of reach past the early adopters into.
The larger population.
These aesthetic physicians in clinics.
But we do think it's important as we get to those to those.
Clinics to have these indications and to give them the ability to market to their patients in that way. So I think it's these are milestones.
Along the path of commercialization.
We already have as you know these indications outside the U S. So both in Europe and in Canada, and so this is sort of a step wise.
Expansion I guess in the U S.
Thank you. Thank you all thanks for taking my questions.
Yeah. Thank you RK I appreciate it.
Our next question comes from the line of Chris Cooley with Stephens. You May proceed with your question.
Good afternoon, and let me Echo those positive sentiments on the generating your first revenues that's great news.
If you just for me a big picture question and then just maybe a clarification one.
On the Big picture side.
Help us think a little bit about how you're prioritizing.
And queuing potential new indications for use clearly cell with X system has a significant potential use in a number of different indications.
I'm, just kind of curious how you're assigning focus and kind of putting these all fell into the funnel and then.
Sort them out such that you cannot only.
To advance the pipeline not only within dermatology, but outside of dermatology, but also do so in a cost effective manner and targeting those published those syndications with the highest probability of approval and also a highest probability of commercial success and I've got a quick follow up.
Yeah sure Thanks, Chris.
Thanks, a lot for joining the call and a good question and and for congratulating us on the revenue. We're we're certainly excited about it so.
With regard to the pipeline, it's a very good question.
As you can imagine and I think you know we've talked about we get a lot of inbound from physicians.
On various indications that they're excited about and I think the more we've.
We've been out in sort of a commercial and an early commercial environment.
In the U S and in Europe, and in Canada, the more inbound we get from physicians about their interests and our new lesions. So our internally I think we really try to focus.
Pretty much as you just said at the end there, which is what are the indications where we see a significant clinical unmet need.
Thinking in dermatology. This is along the lines of things, where physicians are telling us I don't really have a good treatment for this or you know the treatments that I have don't really work very well and so.
Some of our early indications.
Sebaceous hyperplasia is one where you talk to physicians and we know by our our surveys that largely 60% to 70% of these patients go untreated and and this is physicians telling us.
They just feel like they don't have good solutions and so they steer their patients away from those treatments.
And another one I would say is worse and worse is slightly different than I think most people can understand that at.
Words can oftentimes be treated with cryo some some form of cryo spray in liquid nitrogen.
But I think most people also realize that.
That is not a very good solution for awards in the sense that those words often come back and.
And physicians will say that they'll see patients month after month I'm trying to figure out how to treat their rewards and so I think our award solution is one that we feel like is is very exciting and it's one that.
Is going to give physicians, a new way to approach works with their patients.
They can be very confident in talking about the efficacy of getting rid of those words.
In one to two treatments total and we hear stories all the time about patients.
Who have spent years trying to get rid of their awards with a whole variety of different treatments. So we first look at where.
Where can we apply our unique mechanism of action in.
Lesions that don't really have good solutions today.
And then like you said, we have to look at what are what is the probability and timeline for getting them kind of through the regulators and getting some type of an indication for it if that's what's necessary and so I think we try to balance those.
We talked about today that a new lesion kind of popped up in commercial use this is dramatic fibroma.
This is one where physicians tell us sort of the when we ask how they treat dramatic fibroma. They basically say they don't because really the only the only reliable thing to do is to exercise them, which they don't want to do for a benign lesion.
So.
We're excited about that one that one is quickly I would say rising to the top of our list based on that clinical unmet need and based on some anecdotal data that we're hearing from physicians that the treatments are going fairly well. So we're starting to line up clinical research to look more.
Closely at Dermatophyte Brahma.
And I think that.
On a yearly basis, we will have in our pipeline.
A couple of lesions most likely that will be in larger trials may be that we would call a pivotal trial.
Then, we'll probably have a couple of applications that might be in feasibility and that's sort of how we kind of think about it today as our business grows I think we can grow that so that we can take on more but I think today you know as you've heard last this last year, we had a and S. H I T E study Awards I D.
<unk> study those are going to be going in to FDA. So we'll bring some more on this year and probably some more feasibility study. So it's sort of I think how we think about it on the dermatology side in and outside of Dermatology I think.
You know I talked about it in the prepared remarks.
An interesting application that we had some preclinical data presented at a scientific meeting and I think you know as we've said in the past we are beginning to look at some of these applications outside of dermatology and.
And Theres a lot of exciting being generated I think with the kols in these various fields. It will take a measured approach to these we brought up the.
The treatment for various esophagus today because.
We felt like the preclinical data was was at the right point, where.
Presenting it on the podium at a scientific meeting made sense and we had a kols we wanted to present that in.
And so it's in the public domain now and we felt like it was worth mentioning so we'll continue to do that as that preclinical data gets to that level and certainly as things advance outside of dermatology.
And we begin to look for regulatory clearances or other human clinical studies will be we'll be talking about those milestones.
Super and then maybe just very very briefly for me maybe just clarification.
Sandy.
Look at the systems, the 12 systems.
I'm just looking back through the model in the first and the second quarters can you confirm that there are no more systems that were on boarded during the <unk>.
Which have not flipped and I guess, maybe as the offshoot to that.
I know in the past you've mentioned that there's been some learnings here in these initial stages that would help you go faster in some select markets I'm just curious.
Based upon that is that still holding true.
And so that you think as you onboard.
This last wave and the potential to flip those to commercial is in a shorter fashion.
And those initial ones.
And that's and I'll hop back in queue. Thanks, so much.
Yes. Thank you think of that question Great question I'll start with the last portion of your.
Question first.
Indeed, the early lessons of a controlled launch are being applied to the more recently installed sites and we are seeing an acceleration of the adoption.
Because they are applying the lessons of their predecessors, and we're seeing a more rapid transition to a willingness to charge. Our revenues are charged for price to the patient.
During the controlled launch because they have other superseded them sort of set the stage for the commercial value of our cosmetically elegant clearance of these various benign lesions. So I'd say generally speaking we're seeing the benefit of the early pioneers on the.
Later participants in the controlled launch it we certainly anticipate that going forward and I think Canada actually is a great example.
Where we have the full labeling the ability to promote.
All the tools that you need to help someone build the business, we see that moving moving moving quickly.
Generally speaking the U S sites that are seeing others show success, and we're able to show them more things both.
Cynically them commercially.
We're seeing a more rapid uptick so I would say that it's sort of a bell shaped curve in terms of.
The distribution of early converters versus late converters. Some people just have different scheduling challenges than others.
But generally the more recently installed.
<unk> are going faster.
Thank you.
Yeah.
Our next question comes from the line of Anthony Vendetti with Maxim Group You May proceed with your question.
Thank you.
Most of my questions have been answered just on the <unk>.
Specific learnings from the Ah Kols launch was there anything specifically that you learn during this process that has caused you to tweak.
A protocol or the system.
As you as you move to the commercial launch and then on the commercial launch.
I understand it is starting this quarter I know most of the commercial launch will be in 'twenty two.
But we're halfway through this quarter so.
Has the commercial launch actually started or are you expecting to start it between now and the end of the year.
Yeah, Hey, Anthony.
So good questions I'll jump in and then maybe I'll toss it to Ed for a bit.
Just in terms of tweaking and learnings I think.
You you mentioned the system and protocols I think from the system perspective, I would say not really I mean, certainly we're always looking to improve little things here and there in terms of the user interface and and.
And how physicians interact with the system, but there hasnt been anything significant I think Fortunately that we've had to really change in terms of the the hardware or the software.
Outside of sort of continuous improvement in particular in the software, which you know were.
Company that.
It has I think.
We have the hardware piece, which is the cell effect system.
We a lot of the kind of a value that we add I think is on the software side.
<unk> in the system, but also in the cloud as we've talked about and so we continue to do a lot of.
And on the software side, whether it's sort of algorithm development.
Graphical user interface or even into the cloud and how we display some of that data. So I think nothing major has come out of that except for as you go through the process you learn things and you're continually improving the system in terms of protocols, we've certainly learned things.
<unk> will share different techniques as they begin to see kind of how the tissue response, what the healing responses like with.
With different lesions and.
And different patients and so.
There's nothing specific that I would point to but I would say.
There are certainly things that physicians try as they begin to learn the system that we appreciate and.
And we share those learnings across across the board.
The most significant is learnings about treating different types of lesions, so I mentioned dermatophyte realm.
I'll just bring it up again I mean, that's something where you know a physician.
Or two sort of said look this is a benign lesion I think it's very interesting I think you know this based on what I'm seeing.
I have a good feeling that cell effects would would work well in these types of lesions and so we've kind of gone down that path and seeing some good anecdotal evidence and it will begin to.
Put some resources behind it in terms of the clinical research. So I think fundamentally those are probably done the things that.
In terms of the system in the protocol and then just in terms of overall clinic adoption, maybe I'll hand, it over to Ed.
Let him talk a little bit about that and sort of the economics, because I think there have been some important learnings there as well.
Okay great.
And I think he might be on mute.
I'd say thanks for the question.
I'd say first of all purpose our degree of confidence to take.
A physician in their practice from nothing too significant significant activity has grown.
Part of it is that our sales team gets a sense for how the workflow.
Works in their practice and how we can adapt what's required to move a patient through their clinics.
Quarterly and organized fashion.
By specifically, citing other physicians and how they are doing it.
And of course, these things only learned through observation and iterative learning that.
So I think especially the workflow management we.
Are you able to go there with a clipboard and sort of take charge and say to make these patients move through.
Through your system, most efficiently in terms of consultation.
Anesthesia.
Actual treatment.
Billing.
And post treatment management in terms of communications and and other activities.
We've just gotten a great deal more confidence in applying the lessons of the early participants to more.
Participants so.
Theres nothing really major but in combination all of these little tweaks take.
Taken together lead to a more commercial like experience that happens earlier and earlier with each newly installed site, which is what we planned for and expected with the controlled launch is to have this learning curve.
<unk> applied to the subsequent installations and we certainly see.
Continued incremental learning and.
Each new lesion is its own little lesson plan of what's going to happen next so as Derek mentioned dermatofibroma as a as a new lesion that where we're still learning on and physicians are still teachers' teaching us about where.
Once we feel like we've made a lot of progress really fast and physicians are picking up on it and seeing the kind of impressive.
Impressive clinical results and.
Commercial victories are patients, saying I've had worked for years and years and this is the first time.
I've been able to get treated and have it go in a single treatment session.
And talk about paying more money than physicians thought was possible for war treatment because of those impressive results. So.
Those are the kind of lessons that when physicians pass them on to other positions.
The impact on the adoption curve.
Yeah.
Okay and then.
Yeah, Yeah, I'll, let I'll touch on the you know the commercial progress question. So I think it's it's.
Not sort of a binary transition I would say from a sort of a controlled launch program too.
What we would call kind of broad commercial launch so we're sort of phasing down as we've described in the controlled launch as COO.
Clinics get through the program and.
And we're converting them.
That'll continue through this quarter and into the next quarter and likewise, we've already started with our field personnel.
Out talking to kind of early adopters and you can imagine that.
As those clinics hear about and see whether it's on social media or otherwise.
Their colleagues and local clinics using the cell cell effects system, we get inbound and so we've started you know.
Talking to those early adopters those clinics that are outside of the controlled launch program and we expect that we'll see some commercial traction in this quarter. Our field team is really focused on a controlled launch and making that a.
And it's as successful as we can but we are spending some time as we begin to sort of roll into the full commercial launch.
Excellent thanks for that color I appreciate it.
Yes.
Ladies and gentlemen, we have reached the end of today's question answer session I would like to turn this call back over to Mr. Darin you go for closing remarks.
Alright, Thank you operator, and thank you everybody for participating in the call. We really appreciate it we're excited about where we're at and we look forward to the next investor call, where we can update you. Thank you.
Thank you for joining US today. This concludes today's conference you may disconnect your lines at this time.
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