Q4 2021 ViewRay Inc Earnings Call
Thank you for standing by and welcome to the Q4 2021 earnings Conference call. At this time, all participants are in a listen only mode.
After the Speakers' presentation, there'll be a question and answer session.
You ask a question at that time to start Star then one on your Touchstone telephone as.
As a reminder, today's conference call is being recorded.
I'd now like to turn the conference over to your host Mr. Matt Harrison.
Director of Investor Relations, Sir you may begin.
Thank you operator, good. Thank you operator, good afternoon, everyone and welcome to view Reis fourth quarter Conference call. Joining me today are Scott Drake, our president and Chief Executive.
Officer, Zach Stassen, our Chief Financial Officer, and call strong our vice President of clinical Affairs.
Earlier today <unk> issued a press release and presentation for today's call. The presentation can be viewed live on our webcast or downloaded from our website today's call is being broadcast and webcast live a replay will be available on our website for 14 days.
Before we begin I would like to remind you that the discussion. During this conference call will include forward looking statements.
<unk> that could cause actual results to differ materially are discussed in the company's most recent filings with the SEC.
I'll now turn the call over to Scott.
Thanks, Matt Good afternoon, everyone and welcome to our call today I will highlight our business results and provide an update on our exciting clinical innovation and commercial pipelines Xactly will cover our results in more detail along with 2022 guidance and we'll open the line to Q&A.
I am pleased to report we finished the year with 48 systems installed in about 18000 patients treated.
This represents a doubling of active systems and more than quadrupling the number of patients treated in the three years since I joined the company.
These rapid growth rates for our installed base and therapy adoption represents significant wins for our customers patients and company.
We anticipate again doubling the number of meridian programs and quadrupling patients treated in a relatively short timeframe.
Turning to slide four we built momentum in 2021 and finished the year with 28 orders, which represents 65% growth over prior year.
This strong performance drove our backlog over $300 million, which bodes well for future growth.
Revenue grew 23% for the full year.
This commercial momentum is very much complimented by our accelerating clinical and innovation pipelines. We are on the cusp of launching meridian <unk> III and have groundbreaking clinical data in hand and forthcoming.
This solid performance sets the foundation for rapid growth in 2022 23 and beyond.
Slide five the catalyst for our success is the clinical value of Meridian delivers.
Last week, the interim Mirage data was presented by Dr. <unk> from UCLA. The results are stunning and very well received by customers.
<unk> is the first head to head phase III randomized controlled trial, comparing meridian to conventional therapy.
The accuracy and precision of Meridian are on full display.
Highlights are remarkable and include number one meridian cut GE <unk> toxicity and half number two meridian reported zero grade two Gi toxicity versus the conventional arm at about 14% number three meridian cut treatment margins in half number.
For Meridian cut treatment volumes by about 30% number five meridian avoids the invasive implantation of fiduciary markers and six patients treated on meridian reported significantly superior quality of life scores.
These results were so statistically powerful that the trial was closed early and the number of patients enrolled was about cut in half.
This is a huge win for our customers, who wanted to deliver ablative dose therapy with tight margins in five or fewer fractions with no fiduciary and no or low toxicity.
This is also a huge win for patients just five trips to the hospital for treatment and the mitigation of terrible side effects associated with healthy tissue toxicity.
These data will help position meridian as first line radiation therapy in prostate cancer. The second most prevalent cancer type treated by radiation.
All of this is made possible by the real time imaging real time tissue tracking and automatic beam gating available only on meridian.
These remarkable data in patient experience has changed how UCLA a world renowned cancer center treat prostate patients again. This is a huge win for patients customers and our company.
On slide six our customers are delivering groundbreaking clinical results in both the toughest to treat and more ubiquitous cancers more exciting readouts are right in front of us, including Scimitar and smart pancreas.
<unk> is designed to demonstrate the feasibility of treating postop prostate with by fraction SPR T versus standard six to seven weeks of conventional therapy.
These data will be released March 10 at Acro.
Smart pancreas data will follow midyear, we intend this to be yet another proof point for low toxicity and ultimately excellent patient survival.
Again, our clinical results are driven by the confluence of meridian's diagnostic quality imaging.
Daily adaptive planning and automatic been gating.
These studies punctuate a long list of 80, plus Meridian trials, we said three years ago that we would lead and differentiate via a meaningful clinical data and we are delivering.
Slide seven on the innovation front, we're guided by a deep voice of customer work the.
The recent clearance of Meridian <unk> III allows us to deliver our customers top desires.
The new features expand clinical utility with enhanced brain treatment technology <unk>.
<unk> III streamlines on table adaptive workflow by allowing clinicians to auto contour, Ottawa adapt and auto gate intelligently.
The newly automated remote and parallel workflow features complement auto contour and tools.
These innovations address our customers' desire for faster treatment times and increased patient throughput.
Customer feedback is profoundly positive.
As I mentioned at the front end over the past three years, we've doubled the number of meridian programs and more than quadrupled the number of patients treated.
During that time, we built or rebuilt virtually every aspect of the company.
The pandemic has heightened the degree of difficulty, but our team is delivering.
Our clinical innovation and commercial pipelines are accelerating.
The strongest position of the company's history, and we are changing the paradigm of care.
I'll now turn the call over to Zack.
Thanks, Scott today, I will cover our full year and fourth quarter business results, along with our guidance for 2022 full.
Full details can be found in today's press release, and we will be filing our 10-K tomorrow morning.
Turning to slide nine.
For the quarter revenue grew 10% to $20 million.
Driven by three revenue units versus three units, including one upgrade in the same period last year.
Service revenue grew 24%, reflecting continued growth in our installed base and great work and innovation by our service team.
For the full year revenue grew 23% to $70 million driven by 10 revenue units versus nine units, including two upgrades in 2020.
Service revenue grew 29% and we ended 2021 with active service contracts and essentially 100% of accounts.
During the quarter, we received seven orders versus five in the same period last year totaling a gross order value of $41 million.
This represents a 40% order quantity increase and a 70% order value increase over the same period last year.
Asps for the quarter was $5 8 million.
Order ESP is always the best reflection of how customers currently value the meridian system.
As stated before we anticipate maintaining asps and aimed to improve asps as we continue to innovate and deliver clinical value.
For the full year backlog ended at $313 million, a 30% increase over the same period last year. We added 28 orders to the backlog during the year, representing a net increase of $72 million. As we have previously discussed we are very disciplined when it comes to our backlog and review it regularly to assess the <unk>.
<unk> being made on all systems.
As a result of these reviews, we removed five systems from backlog over the course of 2021.
We feel very confident that what we report as backlog will ultimately convert to revenue.
Turning to slide 10, you can see our financial highlights.
Gross profit during the quarter was negative $200000 and a positive $300000 for the full year, an improvement of $4 million over 2020, driven by fixed cost leverage and efficiencies.
As we move through 2022 and into 2023, we expect to improve on and solidly turned gross margin positive on an annual basis.
Since 2019, we've made a lot of progress on gross margin through a combination of both growth and direct cost reduction.
We are confident that we will continue to make significant progress in the coming years on our journey to industry standard margins.
Operating expense was $29 million in the quarter and $104 million for the full year, an increase of only 2%.
We continue to be disciplined with our investments and the ultimate returns they drive going forward, we expect revenue growth to significantly outpace operating expense growth.
Turning to cash use.
Excluding the net proceeds from our equity financing in November we used $7 million during the quarter.
For the full year, excluding equity financing proceeds we used just under $67 million. We finished the year with approximately $218 million in cash on the balance sheet and feel our most recent raise strengthens our balance sheet and gives us the opportunity to get to cash flow breakeven.
Now, let's turn to 2022 full year guidance on slide 11.
We expect to deliver revenue in the range of $84 million to $104 million. This represents year over year growth ranging from 20% to 48% and reflects our confidence in the current operating environment, along with room for system revenue variability of roughly two units.
Regarding cash use we expect to utilize between $68 million and $83 million. This.
Resent that increase in cash use of 1 million to $16 million due to commercial and R&D investment. This range is primarily driven by our revenue guidance and variability in the timing of cash collection.
Moving beyond 2022, we expect cash use to reduce substantially in 2023 and again in 2024, as we continue to grow and realize the benefits of our cost reduction efforts.
We are excited for the prospects of 2022 and the opportunity for it to be a record revenue year for <unk>, we are well capitalized and our team has worked incredibly hard to manage through the pandemic and position the company to deliver on the growth ahead.
The next several years show promise as we make material gains on revenue gross margin and cash flow and continue to deliver innovation and clinical data with that I will now open the call to Q&A.
Thank you again, ladies and gentlemen, if you'd like to ask a question. Please press Star then one on you touched on telephone again to ask a question. Please press Star then one.
One moment please.
Our first question comes from Frank <unk> with Jefferies. Your line is open.
Hey, there guys. Congrats on a nice quarter here also congratulations on the strong interim data from Raj really get to see that.
Just I guess first question then I have a follow up.
On guidance what sort of.
What sort of included there what are the puts and takes that should get us to the higher side of that guidance and the lower side and then how should we think about.
The cadence of revenues and.
And operating spend and I have a follow up to that.
Yes.
Back here.
I think this year I had mentioned in.
Our prepared remarks.
The <unk> system.
Sort of swing kind of positive or negative I feel we're set up really well for this year.
In terms of what we see from a demand.
Point of view, so it's really just effectively manning managing projects and as we get later into the year to kind of answer your cadence question.
We've commented before that the first half of the year looks a lot like kind of 'twenty, one and then we ramp.
In the back half of the year I think that the.
The guidance is really more back end weighted in terms of the.
The potential of it.
It still out of the back end of the year.
From a revenue recognition standpoint, something along those lines.
But I think the cadence you'll see a steady ramp Q.
Q1, two three and four.
Q1, and Q2 similar to 'twenty one in back half.
The period gain on in terms of number of units.
Great. Thanks on that and then.
On a mirage.
Yes.
What are you sort of hearing and seeing from from Oncologists, Obviously, obviously really strong data.
You guys touched on earlier.
And how should we think about the data release there for the full set and perhaps if you can touch on some of the next milestones in that overall prostate program that would be helpful. Thanks.
Yes happy to touch on it Frank.
I think the data has been incredibly well received by our customers and I know some investors follow some of the key opinion leaders.
Twitter and other social media platforms, and what was interesting coming into Mirage.
Was the fact that something like two thirds of customers didn't think there would be any difference between meridian therapy and conventional therapy and obviously there was a remarkable difference. So I think that sets us up really well and it's a bit of an.
A moment for our customers that are out there and we're having a lot of fun sharing it.
Far and wide width with customers all around the world.
As it relates to upcoming datasets.
Specifically within prostate.
We've got scimitar coming up here.
In early March.
Which we're very excited about and then we have shorter and Ford.
Which will follow scimitar.
In the aggregate effect of these studies is designed to do a couple of things.
Number one prove the safety and effectiveness of very short course treatment first getting the buy fractions and then getting ultimately to two fraction therapy and.
And show that it's not only complementary to.
Surgery in the form of Postop prostate, but also show that meridian can be a frontline therapy.
Where if everything goes the way we hope.
Two fraction completely noninvasive meridian therapy will compete with invasive surgery and the patient having a catheter.
A week to 10 days, so we think thats, a very attractive alternative that hopefully this clinical data will unlock.
Great. Thanks.
Guys I appreciate it.
Thanks Frank.
Thank you. Our next question comes from Rick Wise of Stifel. Your line is open.
Hi, good afternoon Scott.
Maybe I'll start off with.
<unk>.
The.
Product innovation pipeline and recent launches.
<unk>.
Limited launch comfortable launching.
You said some positive comments, Scott, but maybe.
Maybe talk to us about what.
This package means in terms of building the order pipeline in terms of throughput what impact is this going to have on the business. This year next year.
And maybe just as you are talking about all this talk about what else we might see from the new product pipeline over the next 12 months.
Yes happy to share it Rick and thanks for the question.
I think our innovation pipeline is critically important to driving the commercial success of the company the way we see it from a macro perspective is first.
Proving.
Treating improving what others can't is the mission of the company. So everything begins with the clinical value that we represent and then we see the innovation pipeline.
Feeding and fueling the commercial pipeline and what we do Rick as I referenced in our prepared remarks is really deep work with our customers to understand exactly what it is that they would like to see from the meridian system and in <unk> III, what we heard very clearly from our.
Customers as they wanted to expanded clinical capability and moving meridian into brain treatment. So that is a key feature of <unk> III and the other prevailing feedback that we've heard from clinicians if they wanted to simplify.
And streamlined workflow to ultimately drive more patient throughput getting treatment times down under 20 minutes. So thats a lot of what we're going to be delivering with <unk> III.
We'll be doing a beta launch here in the front half of the year.
And then looking to open that up in the back half of the year and driving it around the world that customers, who very much want to receive these new capabilities.
From Meridian.
As it relates to other innovations I think 2022 is largely going to be defined by <unk> III, but I think you will continue to see us.
As we go forward driving the personalization and precision.
And simplicity of care with Meridian.
We hear from our customers is they want us to continue.
To be as disruptive as we are clinically, but not be disruptive really in any other way and those are the things that you can expect from us along with very importantly, taking seven figures out of the cost of meridian.
Here over the next two to three years as we're working on a significant cost down program, you're not going to see a lot of impact until we get into the probably 'twenty four 'twenty five timeframe when we're coming out with.
That new.
Set of packages and features on the system, but you will see some progression along the way here in 'twenty, two and 23. So hopefully that gives you a little context in terms of our innovation and product pipeline.
It certainly does.
And maybe if I could turn back to the.
The order.
Trends discussion.
Scott.
One of your key competitors highlighted quoted COVID-19 related.
Sure is.
Earlier today, leading to softer than anticipated orders and install rates during the quarter.
It currently didn't have an impact on your fourth quarter results.
A couple of months almost through the first quarter.
How do we think about.
How do we think about <unk>.
That backdrop.
Obviously January .
Lot of discussion about January omicron pressures things are getting better. So the question is right, saying all that how do we think about the first quarter order rates install rates the flow of that through the year.
Is your.
Should we be confident that you are.
Seven and maybe even moving it up to a can that happen this year.
Yes, Rick I would say from a macro perspective.
Im really pleased with the way the team has performed throughout the whole course of the pandemic.
We have shared that we've had challenges from time to time getting into countries or specific hospitals to do.
Installations and we are.
Being very I think creative.
As it relates to mitigating any impact from a supply chain perspective.
Would tell you we feel really good about our order pipeline here early in 'twenty, two and frankly, we hope and anticipate that will continue throughout the full year.
I really think the clinical data that we have in hand, and that which is forthcoming the innovation pipeline. We've talked about just a moment ago is really having the desired effect and Rick the other thing that I would highlight that feels really good to us.
Is the fact that that market pressure that.
That market agitation patients traveling to be treated on meridian systems.
Is really beginning to take hold in more and more market. So I'll give you two quick examples in Florida from Orlando South.
We've got four active meridian programs, which led to two more in incremental meridian system being ordered by Baptist Health.
Genesis care orders. So we will have six systems in the southern part of the state then go across the country to California. We currently have three active meridian programs and those three have agitated that market and we now have Stanford coming on.
Line, two freestanding centers at bass and you see.
Another one in southern California, So we will have seven systems.
In that state and Youre going to see this and more and more parts of the United States Youre seeing it happen in the U K, we're seeing it happen in France in Germany and Italy.
Really need to apply more more pressure in Japan, but I think youre going to see more and more of this and I think that's what gives us a little bit of confidence as it relates to our performance in 'twenty two and beyond.
And if I could just selfishly.
And one more in.
Let's let Zach answer this maybe.
With him on the spot gross margins that you highlighted your optimism that the turn positive in 2020.
How do we think about each.
Each quarter positive or more in the second half.
Yes.
You mentioned a couple of packages, but.
What are the top two drivers is it just purely volume.
Thank you.
Yes, I think I think.
Level, we're at with kind of three <unk>.
Three revenue units a quarter right now it's a little.
Choppy we have.
Installation expenses that spillover from quarter to quarter.
Clearly we've said this a bunch, but we really think about our business on an annual basis.
<unk>.
The quarterly cadence I expect gross margin.
To kind of improve throughout.
Throughout the year much like in line with revenue.
So.
Not getting too specific I think.
Got it kind of similar similar in terms of directly related to a number of revenue units recognized in any given quarter.
Okay. Thank you very much.
Thanks, Greg.
Thank you. Our next question comes from Jason Bednar with Piper Sandler Your line is open.
Hey, everyone. Congrats on a nice finish to the year here.
Scott just maybe looking at your book to Bill.
<unk> all above one year hold time and Bureij.
That's obviously a good thing as orders are kind of leading indicator for revenue for your business I guess, how do you see that metric unfolding here moving forward over the next few years as your backlog conversion, presumably improves and then maybe as we think out to the <unk>.
Revenue growth potential for the business over the next few years is there a rule of thumb, we should all be using as far as like orders that were booked in 'twenty, one will be roughly equivalent to the systems installed in 'twenty, three or just something like that.
Yes, Jason Great Great question, and thanks for the compliment at the front end there.
I think youre thinking about it in a roughly right way, but if you take orders in any given year that that's going to approximate revenue two years down the road.
I think youre going to see that here in 'twenty, two and again.
Roughly in 'twenty three.
What I find interesting about what's happening right now is this market pressure that I referenced in the prior question.
Really.
Kind of helping us in speeding us up in certain instances.
On one hand.
As we've talked previously we will have customers order a system for a cancer center that they are building from the ground up and that that.
Order may reside in our backlog for an extended period on the other hand here recently.
We had a customer kind of going from a state of kind of.
Slow.
Now, let's just of the system and then because they were losing patients to another meridian program very quickly moved to order and they wanted to be treating patients as quickly as possible and what we're hearing a little more frequently now is that customers want to get these systems in the ground and a higher level.
<unk> of urgency, especially as more and more patients are traveling for meridian therapy.
Don't want to set an expectation that this is with every customer, but it's something that we're seeing more frequently. So I think over time, we will have some shortening of that.
<unk> average time that a and orders in our backlog, but again, it's going to be offset a bit by those instances like I mentioned.
Where somebody wants a flagship piece of technology.
In a cancer center that they are building from the ground up so a little bit of puts and takes but I think your two year average is about right and hopefully it narrows a bit over time.
Okay got it that's helpful.
And then maybe one on gross margins for me.
They had been quietly improving.
Improving here the last several quarters.
Probably the most critical parts of the P&L to narrow and that operating loss and cash burn for the business going forward.
I recall, a couple of years ago, you're talking about that $1 million per system cost that could come out of the iridium system.
Scott I think you mentioned that here again, just now in response to Rick's question. So I guess is it safe to say, we're still at the early stage of that journey.
And is there a timeline you'd be willing to put on getting to normal industry gross margins as that reference today.
Yes, let me let me just touch on it from a macro perspective, and then invite Zach in.
I think if you look at our gross margin journey.
I think this is roughly right that correct me, if I'm wrong, but we improved a little over 700 basis points.
<unk> in the 'twenty, one time frame and I think youre going to see those big chunky kind of improvements when you look at our gross margin on an annual basis.
In 2002 in 'twenty, three and then youre going to get the benefit of the.
Big cost down projects that we're working on out in the 'twenty four 'twenty five timeframe.
And these things aren't mysterious Jason This is engineering work.
And supply work that is very clear to us it's not something that we hope happens is something that we've got a lot of confidence and so kind of with that macro.
Drop all invites active.
Make any comments he wishes.
I think in the.
This year and next year.
Most of our gains will come will be primarily driven by revenue growth.
Absorption of what is a decent size fixed cost.
Related infrastructure around install teams.
In other other interesting raw infrastructure costs. So I think each each incremental revenue unit really helps us on the.
On the systems side as well and then the cost down will kick in and kind of.
Keep that trajectory moving and Scott mentioned that 20% to 25 timeframe on the service side.
Really more of a scale based business in terms of we forward invest in field service engineers.
<unk> new accounts.
As.
Our usual 12 month warranty period rolls off in those.
Those machines roll into kind of full bulk rates service agreements, we will see margin enhancement there and then I think as we as our installed base grows we will get more leverage and then also that the regional density of our systems.
Opens up new opportunities.
Creativity around supporting right now we have generally a one field service engineer term meridian system and I think as our installed base grows we'll have an opportunity to.
Three of the economies of scale of that ratio and more effectively service service our customers.
Okay, and then maybe just a follow up there Zack on the <unk>.
Timing on getting that maybe normal industry gross margins is that if we're thinking out like that you've got.
Volume that'll take care of and maybe the next couple of years and then the costs down in 'twenty four 'twenty five I mean again not to hold you to anything but is this kind of like a five year plan to get the industry gross margins.
I guess probably pretty bullish.
Bullish.
I think there may be some opportunities along the way, but probably youll see us make material gains over the course of the next three years and then I think ultimately kind of achieve it in that.
Kind of for this year timeframe.
Okay, Perfect and then just one more for me.
It looks like you are hiring some local talent in China.
I think we've been waiting to hear whether local clinical trial will be.
We needed in that market.
You have a sense as to when we might have an update on whether that trial will be required.
And then what's the right way to think about the opportunity for marine once you do have approval in that market. Thanks, guys.
Yes, Jason I'll touch on that and again invite Jack to make any comments. He wishes, we still don't have clarity on that front and really don't have anything to announce.
At this point in time.
So.
I don't think there is.
We don't want to create an expectation that we can hit here so I think for.
The.
The specific 2022 year.
Not include anything in our models as it relates to.
US opening up China as a commercial market for us.
We will just keep you apprised as we go forward.
Yes.
Jason I think.
On the local talent side of things.
I think in any event either either.
Either path, whether we have to run a trial or if we have the opportunity to move to the commercial phase.
More quickly I think what we've what we felt.
Appropriate and necessary for us to have.
Somebody on the ground in China to effectively collaborate with Bose and get.
Get things done in the same time zone help us triage request and I think whether we're enrolling patients in a trial at certain sites or or selling radiant systems.
That resource is something we really feel.
That we need in either event.
Alright fair enough very helpful. Thank you.
Thanks, Jason.
Thank you. Our next question comes from Suraj Kalia of Oppenheimer <unk> Company. Your line is open.
Hey, Scott Zac hope, everyone is safe and healthy.
So Scott.
102, Rev Rec times.
And specifically.
Do you factor in some of the geopolitical turmoil.
To influence European installs.
Yes, Jeff do you want to touch on the first part of that question and I'll hit the second yes.
Is there any.
Kind of order.
Rev Rec timing I think historically, we've experienced kind of 18 to 24 months timeframe.
I think we're seeing it.
Beneficial shift in dialogue with customers.
As we talk with both prospects and defined timelines with.
Orders in the backlog.
Inc.
Aspects. When you asked the question when do you want to be treating patients more and more we're hearing.
As soon as possible.
So thats encouraging and we hope that kind of chip away at that 18% to 24 month timeframe, but I think.
Currently that that sort of still stand at this point and then maybe could you restate that.
Part of your question around Europe .
Just curious how youll have factored in some of the geopolitical turmoil.
Fluence yard installments.
Yes, Suraj I would say.
First our hearts go out to.
All of the people impacted by the.
The invasion and resulting war.
The way that we think about it is.
With contingency planning.
We have.
Mike surprised investors the number of.
Active programs that we're working on from an installation standpoint, and so to get comfortable from our perspective, we have to have pretty extensive contingency planning not unlike what we've done throughout the whole path of the pandemic.
But this is something that's a bit more concentrated but very difficult to predict how far and wide.
Things happened so.
Again, our Hearts go out to everyone impacted and we believe at this point in time, our contingency planning is sufficient to mitigate.
Some of the risks that you highlight there.
Fair enough. Thank you Scott.
One question on albeit the multipart question.
So the.
Patients treated so far Scott.
Maybe if you could kind of.
Slice and dice it too.
<unk>.
What percent of required on table adaptive session.
Type of cancers treated.
And if I could last three years since you've been there since you were at the helm lets say I don't know pick a number.
$4 6000, 8000 patients or however, you wanted to find it.
<unk> on our farms and Mirage and soon with <unk> and other smart bankers that how do you see the cadence over the next couple of years. So gentlemen, thank you for taking my questions.
Thank you Suraj can you clarify the cadence that you're referencing is it on the clinical data front whats your question there suraj.
Utilization.
Existing system utilization, because now armed with data right.
Got it.
It gets around rates. So just curious any any directional color would be great.
Yes happy to.
Take a shot at that and Paul strong maybe I'll turn it over to you after I make a couple of comments.
So in terms of percent adaptation.
Average first of all about 90% of patients treated in the United States and about 80% globally are treated in five fraction SBR T on our system.
Dramatic difference obviously between the overall market, which is about 14%. So I think it's important to kind of start at that macro level.
Percent of.
Treatments that are adapted is somewhere between two and three per patient so.
As a very rough rule of thumb, it's about half of fractions delivered on meridian are adapted something like that in that two to three range in terms of the types of cancers treated.
Roughly 20% to 25% of patients treated.
<unk> in pancreas.
And prostate is growing pretty rapidly.
Strong how about if you give us a little bit of a sense for that in just a moment.
<unk> here, how we breakdown with breast prostate etc.
And Suraj, what I would share with you I think you were going to see a broadening.
Of cancers treated on Meridian, where it's really interesting if you go back three years.
It was it was pretty common from.
Our customer to focus on any given.
One or two kinds of cancer that they were treating with meridian.
And it varied across the.
The 20, some odd sites that we had back at that time now we've doubled that number of sites and what you've seen now is our customers asking to expand out from those original cancers that they were treating and frequently that's turning into a second meridian system or a third or now even.
Fifth we have one customer that's recently ordered their fifth meridian system and so they are expanding the utilization and the kinds of cancers that they are treating with our system.
Paul strong how about helping fill in a couple of blanks there to Suraj is question.
Sure. Thanks, Scott Suraj, thanks for the call.
I think in terms of the clinical data coming which was in the second half of your question on how that impacts utilization as Scott mentioned there is a large portion of the patients treated are tough to treat.
Tumors with a lot of motion.
Answer being one of the key beachheads and what the clinical data now gives the opportunity for sites to do is look for more ubiquitous cancers that maybe they were treating on their conventional technologies, but now there is an application and justification to treat those with a better safety profile on meridian.
Combine that with the innovation pipeline that Scott talked about with the faster treatment times, and I would anticipate customers to start including more of those.
Ubiquitous cancers.
And get the advantages of the technology based on the fact that Theres now clinical data other tumors just to fill in there there is quite a bit of treatment and liver metastases has been one of the early sites that was treated with meridian and that has made steady.
And then we're starting to see more now with breast cancer, So wash U.
One of the leaders on the technology and treating those patients they published a few years ago.
Their data on reducing impact to cosmesis and toxicity for patients as well as reducing fractionation down to a single fraction. We're now seeing centers starting to adopt that both here in the U S. At Weill Cornell as well as starting to have growing interest in treating those cancer patients.
In Europe . So I think we will start to see the data drive a broadening of the tumor profiles that are our best suited at many of the patients are triaged, if they come into treatment to which technology is best the data really starts to grow the justification for why the meridian technology.
Can't project.
Out to two or three years, what that number will look like.
I just know that based on what we've heard from UCLA just based on Mirage in the market pressures. Scott described I would anticipate that the mix of patients starts to diversify overtime because of the clinical data Scott. Thanks.
Thank you.
Thank you our next question comes from.
Along with Morgan Stanley Your line is open.
Hey, Thanks for taking the question can you comment on <unk> just two quick ones from me first I was wondering if you could expand a little on the aftermath of the Mirage readout, particularly around <unk>.
Awareness, you've built from a from a geographic perspective around access and <unk> just anything of note there.
In terms of.
I'm not sure I Kelvin I understood the question access.
Sorry, it's used therapy.
Yes, just the awareness overall that you've built but any kind of geographic particular centers.
Since the readout that that had some.
But then you would highlight.
Or is it more just kind of broad based awareness interim readout.
Well I would tell you that the response and.
We did that.
We hope the Doctor Kushan.
Twitter.
Recording poster presentation and some Q&A after the fact.
The response.
We have a very global market and very passionate active.
Community of Meridian users and those that are interested in meridian as well and I think the response has been pretty broad base now.
Been more heavily probably U S and Europe in terms of the.
Just the communication aspect, but I think we've seen really positive early returns and enter it.
Specifically from a lot of our U S prospects and then over time I expect that to broaden as we get the word out.
And have an opportunity.
He presented at <unk> I think.
At future conferences become the garage the interim Mirage data will likely be presented again and then ultimately the final dataset at some point in the future. Once that's complete so it'll be kind of a nice drumbeat of clinical data that will supplement.
Meant that or complement that with scimitar and other data throughout the course of the rest of the year. So.
It's yes.
It's been that.
<unk> been good so far.
Got it.
Okay.
Thank you and I just wanted to follow up quickly on the Opex question earlier can you, maybe just unpack a little bit on the quarterly cadence.
Perhaps the mix across our three three line items throughout.
About 22, thank you.
Yes, I think G&A will be kind of more steady run rate throughout the course of the year.
We are.
I would say adequately invested.
Kind of grow with the business on the G&A side I think you can expect on both sales and marketing and R&D for those to ramp a little bit throughout the year and ultimately reflect the increased investment on both.
Start of some of these cost down projects. This year in addition to additional.
Innovation work and then.
Just on the demand, we're seeing in the market and the receptivity of the data.
And a lot of what happened last year, frankly as things open up we see.
We're making incremental investments on the sales and marketing side a lot of that in support of.
Ramping our new accounts.
In light of kind of the one successful meridian program leads to another if not more so.
Success of each of these.
New programs is incredibly important and then.
Also on just general sales and marketing side.
Further awareness.
Both on.
On meridian, but MRI linac in the technology category more broadly speaking, so I think sales and marketing you will see a ramp it's a smaller base than R&D.
Throughout the course of the year because some of it is hiring people.
And so those will get hired over the course of the year. So.
I don't know if that answers your question or.
Thank you.
Okay.
Thank you again, ladies and gentlemen, I'd like to ask a question. Please press Star then one our next question comes from Jeff and loss of B Riley. Your line is open.
Hi, Thanks for taking the questions.
Wonder if you can provide some more color on how you see the role of some of the upcoming clinical trials in terms of attracting new customers do you see them as answering questions that will convince physicians who are currently on the sense about the technology or more is providing another piece of data to convince centers of excellence that they are missing out if they don't have a meridian system.
Okay.
Great question, Justin I would say a little of both and it kind of depends on.
The customer and how educated they are.
On the benefits of Meridian.
I found it to be very interesting I think I referenced this a little bit ago.
The fact that roughly two thirds of customers when pulled didn't think there would be a difference between the meridian arm and the conventional arm in the Mirage data and yet the difference was nothing short of stunning.
So I think in certain instances.
Youre really solidifying our further answering a question or a thesis that a customer has and in other instances.
It is just so profoundly better and different that it's kind of shocking and hard for for our customers to really believe.
How different that therapy is.
But that's that's really the challenge that we've had over the past three years.
We are getting better armed with this data and armed with the innovations that we've talked about.
Hopefully accelerate the commercial pipeline as we move forward.
Got it and my last question kind of jumps off of that which is as as the clinical data builds and you guys continue to.
ROE and maintain the momentum I'm just sort of wondering what your thoughts are on that sort of the long term ceiling here I know that you guys have highlighted the overall market opportunity with a thousand to $12 50, linac sold per year, but in the long term how many of these do you believe could realistically be replaced by MRI linac.
Either of yours, as meridian's or of your competitor.
Yes, we asked this question frequently of our medical Advisory Board.
Clinical consortiums that we have focused on.
Various different types of cancer.
And I would share with you that the answer that comes back very consistently is if a customer had unlimited.
Capacity on Meridian and unlimited capacity on a conventional linear accelerator.
What percentage of patients would they treat on meridian.
The answer really across the board with educated customers, who know about the benefits of meridian therapy.
Answer uniformly is the majority or vast majority of patients they would want to treat on meridian. So I think that translates and speaks to what we ultimately think is going to happen with this technology.
It sounds a little bit provocative Justin but.
It's a fair question to say in what type of cancer and in what patient would you prefer to not know where a deadly radiation beam thats going.
And I think that kind of.
Sets the stage for the fact that we believe and our customers feed this belief.
This will become.
The standard of care I think it's going to take us a considerable amount of time to get there, but I think ultimately we will look back someday.
Yes.
It's quite obvious that we need to know exactly where the dose is being delivered.
To that patient and we need to know when they are done being treated specifically for that individual patient not these broad enough Tus rules of thumb that we still use today for cancer treatment and the meridian system is giving our customers the opportunity to ask.
Those questions because of the accuracy and precision of the system. So hopefully that gives you a little context for your question.
Perfect. Thanks, again for taking the questions and congrats on the quarter and year.
Thanks, Justin.
Thank you.
No further questions at this time I'd like to turn the call back over to Scott Drake for any closing remarks.
Yes, Thank you operator, and thanks, everybody for joining our call and we look forward to talking with all of you again in the very near future.
Thank you ladies and gentlemen, this does conclude today's conference. Thank you.
Okay.
Yes.
Okay.
Yes.
Yes.
Yes.
Yes.
Okay.
Okay.
Yes.
Yes.
Yes.
Yes.
Yes.
<unk>.
<unk>.
Yes.
Okay.
Yes.
Okay.
Yes.
Yes.
Okay.
Yes.
Yes.
Yes.
Okay.
Yes.
Sure.
Yes.
Yes.
Yes.
Yes.
Sure.
Okay.
Yes.
Yes.
Yes.
Sure.
Okay.
Yes.
Okay.
Yes.
Thanks.
Yes.
Yes.
Yes.
Okay.
Yes.
Okay.
Okay.
Okay.
Thanks.
Okay.
Okay.
Okay.
Okay.
Yes.
Yes.
Yes.