Q4 2021 Profound Medical Corp Earnings Call
Hello, Thank you for standing by and welcome to the profound medical Q4, and full year 2021 financial results Conference call. At this time, all participants are in a listen only mode.
After the speaker presentation there'll be a question and answer session. Southgate question. During the session you will need to press star one on your telephone. Please be advised that today's conference is being recorded if you require any further assistance. Please press star zero I would now like to hand, the conference over to your speaker today, Stephen Kilmer Investor Relations. Please go ahead.
Thank you good afternoon, everyone. Let me start up by pointing out that this conference call will include forward looking statements within the meaning of applicable securities laws in the United States and Canada.
All forward looking statements are based on pro Pound's current beliefs assumptions and expectations and relate to among other things expectations regarding the efficacy of the company's treatment technologies.
The future clinical trials, the ability to obtain coding and reimbursement from third party payers and anticipated financial performance business prospects strategies regulatory developments market acceptance and future commitments.
Such statements involve known and unknown risks and uncertainties and other factors that may cause actual results performance or achievements to be materially different from those implied by such statements. No forward looking statement can be guaranteed.
Listeners are cautioned not to place undue reliance on these forward looking statements, which speak only as of the date of this conference call.
Profound undertakes no obligation to publicly update or revise any forward looking statements, whether as a result of new information future events or otherwise other than as required by law.
For the benefit of those who are new to the profound story I would also like to take a moment to summarize our business profound develops and markets customizable incision free therapies for the ablation of disease tissue.
We are currently commercializing Tulsa problem, a technology that combines real time, MRI robotically driven trends erythrol ultrasound and closed loop temperature feedback control.
The technology is designed to provide customizable and predictable radiation free ablation of a surgeon to find prostate volume while actively protecting the urethra and rector them from tell preserved the patient's natural functional abilities.
Tulsa Pro is CE marked health, Canada approved in five 10-K cleared by the FDA in the U S. We employ a pure recurring revenue model for Telcel trial, whereby we charge customers around $8000 on a per procedure basis for Tulsa pro consumable lethal medical devices and services associated with extended warranties.
Outside of the United States, We also primarily to employee pay per procedure model, but we also sell capital and consumable separately, if the situation warrants that.
We are also commercial ideas and thought and the innovative therapeutic platform that is CE marked for the treatment of uterine fibroids and palliative pain treatment of bone metastases.
I believe it's also been approved by the China National Medical products administration for the noninvasive treatment of uterine fibroids and has recently obtained FDA approval under a humanitarian device exemption for the treatment of possibilities at speed on that.
The business model Personna leave systems is currently a one time sale of capital equipment.
On the call today, representing the company are Dr. <unk> really matter, what Propounds, Chief Executive Officer, and Richard <unk>, The company's Chief Financial Officer with that said I'll now turn the call over to Richard.
Good afternoon, everyone and welcome to our fourth quarter and full year 2021 conference call.
Well on behalf of the management team and everybody wanted profound I would like to thank you for your ongoing interest in our company.
For those of you who are shareholders.
<unk> your continued interest and support.
I will turn the call over to a rule in a moment.
For an update on our commercial activity.
However, before I do.
I would like to provide a brief update on our fourth quarter 2021 financial results.
To streamline things.
All of the number we will refer to have been rounded.
Providence.
For the three months ended December 31 2021.
We recorded revenue up $1 million.
From $2 9 million in the fourth quarter of 2020.
Despite COVID-19 headwinds.
<unk> revenue increased.
7% from Q4 2020.
Reflecting that.
But all of our ongoing rollout of Tulsa pro in the United States.
However.
More than offset by the fact that there were no one time capital equipment.
In Q4, 2021 compared to $2 3 million.
<unk> in Q4 2020.
Total operating expenses in the 2021 fourth quarter, which consist of.
R&D.
G&A and.
Yeah.
We showed expenses like pinpoint.
Pinpoint $2 million, an increase of 69%.
Compared with approximately $6 1 million in the fourth quarter of 2020.
Breaking that down partner.
Expenditure for R&D increase.
87% on a year over year basis to $4 $7 million.
This was primarily driven by increased spending on R&D initiative.
Our new design technique.
Technology improvements.
You find a magnet compatibility.
Option to awarded to employees.
So head count.
And increased travel outside MRI scan.
G&A expenses increased by 80% to $3 2 million due to options awarded to employees.
<unk> costs increased legal and accounting fees increased license costs for the enterprise resource planning tool and customer relationship management software.
And overall increase in general expenses.
Occupancy continues to be open from COVID-19 with Greece.
Finally.
And distribution expenses increased by 32% to approximately $2.3 million.
Overall, the company recorded a fourth quarter of 2021 net loss.
Pinpoint $2 million.
<unk> 49, and our comments here.
Compared with a net loss of $7 5 million or 38 cents or published.
Sure.
The same three month period in 2020.
At December 31, 2021.
We had cash of 67 $2 million with that.
We'll now turn the call over.
Thank you Michelle.
Before getting started.
I would like to take this opportunity to congratulate Chris on his promotion to CFO .
And as referenced in todays press release.
This formalizes the additional responsibilities that he took on when Aaron Davidson transitioned to ask VP corporate development last spring.
Speaking of Erin.
It is bittersweet for me to announce that he will finish his employment with profound.
End of March, but we'll be available as needed on a consulting basis.
I will miss his daily presence.
And wise counsel.
But also wish him well as he begins his well deserved retirement.
With that.
There's a lot to talk about today.
We're all tired of talking about Covid.
And no one is happier that its impact is finally subsiding and the profound team.
As we analyze historic data.
Our recurring revenues only grew by 37% year over year and that was primarily through utilization at 14 sites that operated throughout the year.
Even though we had contractual agreements to install over 30 systems last year. It was not until late in Q4.
I believe we're able in new installs again in <unk>.
Yes.
This finished the year with 17 sites in U S and 21 worldwide.
Our international businesses, primarily comprised of capital sales.
Asia.
Secondly, non existent as our team does not even able to visit the country.
That was 2021.
But new installs are continuing in Q1 2022.
And we fully expect to achieve an installed base of 25 systems in the U S.
The current quarter, bringing our worldwide install base 29.
Similarly, we're beginning to see more activity in the international markets.
A few of the capital projects have been revived.
Both suggest a faster growth in recurring as well as total revenue in 2022.
In spite of the macro environment in 2021.
There were many positive accomplishments that also bode well for 'twenty two and beyond.
As you know we're targeting three major types of end users.
Early adopters.
Independent imaging centers.
Yes.
<unk> opinion, leading teaching hospitals.
That strategy has essentially worked.
Most notably.
We are already in seven of the top 16 opinion, leading U S hospitals.
Putting the prestigious institution, we announced earlier this week.
In addition, I am.
Pleased to share that we now also expect to launch Tulsa programs.
Less populated states, including the southwestern states and appropriately our Tulsa system is being installed.
<unk>, Oklahoma.
I am, particularly excited about this one as they will use the imaging center model.
Having multiple gist.
<unk> patients to one site and drive utilization.
Our tradition continued to utilize the flexibility of Tulsa pro to treat an unrivaled variety of patients.
In the fourth quarter of 2021.
The majority of patients treated with telkom.
85% had treatment naive localized prostate cancer.
Another 12% receiving solve it.
Uh-huh after prior radiation failure.
Failure after other types of therapies.
And 3% had BPH, but no cancer.
Of the patients with prostate cancer.
Approximately 75% intermediate risk localized prostate cancer, another 10% or high risk.
And 15% were low risk.
In terms of treatment plants.
Approximately 38% more customized hoagland, whereas physicians targeted 95% of the Glen.
But precisely carved out.
At the centers to stave continent.
Bundles to save erectile function or even the inject batori ducks when possible to save vital fluid.
Another 36% had large sub total oblations covering more than half their prostate and 26% had more vocal.
Meaning has the ablation.
This quarter, the largest prostate treated with Tulsa in the U S was 130 <unk>, whereas the small list was only 15 cc.
The simple fact is that no other established or emerging technology can safely and effectively treat as many different prostate disease patients as intelsat guns.
Based on this.
And prior data, we believe the Tulsa has unique potential to capture a meaningful portion of the overall prostate disease market.
In terms of that long term potential.
If one assumes an average <unk>.
$8000.
T J and 250000 prostate cancer cases annually in the U S.
That translates to a total addressable U S market of $2 billion.
If one were to add a small subset of what we call the extreme BPH cases patients.
Very large prostates.
Who would otherwise need a simple cost effective in the.
The market size effectively increases to over $5 billion.
Of course, Healthsouth will not capture this entire market.
But these numbers give us an idea of how significant the opportunity is based upon how the product is being used today.
For Us 2021.
Establishing that beachhead.
Foundation to ultimately capture a meaningful portion of that market opportunity.
Although growth in the U S.
Been impeded due to the pandemic.
Medical technology databases report that in 2021.
The number of patients treated with each HIFU and cryo ablation with similar to the number of patients treated with Telstra.
Based on these data.
We believe.
We have already achieved a treatment rate similar to that or other ablative technology.
That had been used for more than a decade.
Taken together, we believe the telephone not only has the potential to become the leading ablative therapy.
But given that Tulsa has been used to treat patients with such wide variety of prostate diseases.
We see Tulsa, becoming a primary modality of choice in the future.
And that provides a good segue to our sponsored captain trial.
Which treated its first patient in January .
We expect captain which tends for a comparison of telephone procedure versus radical prostatectomy or RFP for short.
In participants with localized prostate cancer will be performed.
At eight or more sites in the United States and two sites in Canada.
To date six sites have been activated and are currently recruiting patients.
Notably this is the first level one study ever conducted comparing an emerging technology.
Tulsa in this case head to head with RP in men with prostate cancer.
Captain who compare.
Safety and efficacy of the Tulsa procedure with RP.
<unk>.
Oregon confined intermediate risk.
<unk> score seven prostate cancer with.
With the goal of demonstrating that the efficacy of the Tulsa procedure is not inferior to RP.
The trial.
<unk> aims to.
Great.
A superior quality of life outcomes.
The post market Captain trial will enroll 201 patients.
134 patients randomized to receive one or two types of procedures.
67 patients randomized to receive RP.
The trials primary safety endpoint is the proportion of patients.
Who preserve both erectile potency.
And urinary continents at.
One year after treatment.
Captains primary efficacy endpoint is <unk>.
The proportion of patients were free from any additional treatment for prostate cancer.
Three years after treatment.
Secondary endpoints include a comparison of trade of complications.
Cost effectiveness and timing of the return to baseline activity with long term follow up data gathered for up to 10 years after treatment.
We are conducting the captain trial to increase awareness and adoption of Tulsa pro and to support coverage by payers.
And as I mentioned last call we are.
Leading full data in the start trial single site level. One study conducted at Oslo University hospital that compared whole gland RP.
Focal therapy, using either high school or telephone.
The robotic RP arm of this study is similar to that of our captain trial.
And we are very encouraged by the initial results of that trial as well as by the fact that Oslo University Hospital purchased the Tulsa system from us for commercial use.
Defining it as the clear technology of choice.
Should the RP outcomes in captain match.
What was seen in <unk>.
We believe there is potential to demonstrate clear superiority, even though the captain trial has been designed for non inferiority endpoint.
Another feature of Tulsa Pro that we believe will significantly increase adoption.
The system's compatibility with the U S installed base of <unk>.
MRI machines.
To date, we have been working with.
Two MRI manufacturer partners, Siemens and Philips to commercialize Tulsa pro.
Just this week we.
We were pleased to confirm Tulsa pro's compatibility with GE.
The remaining of the.
Big three medical technology companies in the global MRI space.
The biggest of the big three in the United States.
Together.
Philips and GE comprise more than 90% of the installed base.
MRI in the U S.
This is an important achievement that has already yielded exciting results.
Shortly after confirming Tulsa pro's compatibility with GE we.
Signed the first agreement.
At Tulsa Pro system, interfaced with a GE scanner with Boston renowned Brigham and Womens Hospital.
The second agreement has been signed since then.
Imaging Center in Florida.
I'll now turn to our ongoing reimbursement strategy, which is a critical priority for profound.
I am very excited to share that our <unk>.
Systematic.
Paper has been published online.
Juggle Endo urology.
It is available on our website or you can ask Steve Kilmer to send it to you after this call.
Publication of this paper is a key milestone as it completes the clinical requirements to qualify.
A CPT one application.
We have met with the relevant societies since the publication and we remain on track to be able to file our application. This summer.
Our consideration by the HMA during their fall 2022 meeting.
Although there's no guarantee of approval should the EMA approved our application at their fall meeting.
This would be an incredible accomplishment as the CPT code will be effective by January 2024.
Another reason this paper is one of profound most important publications to date is that it generates the highest level of evidence available.
<unk> in support of cultural and.
In this case <unk>.
Level two.
To pay for itself systematically consolidates all of the available evidence on Tulsa pro into a single peer review manuscript and supports the telephone is safe and effective for treating trauma prostate cancer.
Evidence of this.
<unk> supports the use of telephone to treat recurrent prostate cancer and.
And locally advanced prostate cancer.
As well as.
The system's ability to simultaneously treat prostate cancer.
And alleviate lower urinary tract symptoms normally caused by BPH.
In addition, the paper confirms that Tulsa is customizable offering a treatment plan that can be tailored to match individual disease characteristics and patient preferences.
Importantly.
This represents a shift from the focal forces homeland paradigm established.
Other ablative modalities.
Finally paper concludes that <unk>.
<unk> is a single flexible tool that can treat multiple indications, including those where minimally invasive alternatives are limited.
In addition to its real time visibility and thermometry differentiates <unk> from other ablative modalities, we believe the systems' customize annuity.
Enable patients to achieve better outcomes in the real world.
We're looking forward to using this paper as a tool to support system launches.
And utilization initiatives.
And to initiate an informed conversation with physicians and patients.
So they can decide on treatment options and plans.
And last but certainly not least.
You know how proud I am of the <unk> team.
Abby and Hartman.
Our leading sales.
And Matthew and holding our leading product management.
Mike has advanced reimbursement efforts significantly.
<unk> has developed the relationships with Emaar companies.
All in all this is a world class team.
And now I.
I would like to extend a warm welcome to cabinets.
Our new Chief commercial officer.
Who will be leading initiatives for profound worldwide sales marketing and reimbursement activities for both telephone hands on them.
Kent Executive management career spans more than 25 years during which he has accelerated growth.
Emerging startups and fortune 500 companies alike.
Ken joins us.
From every new deal logic.
A company pioneering a new and disruptive approach to prostate cancer biopsy, where he served as CEO .
He previously served as executive Vice President.
Global sales and marketing.
For Boston Scientific Corporation, where he helped drive annual sales of space or hydrogel a buyer.
Degradable materials that is injected between the rectum and prostate.
Two decreased patient exposure to rectal variation.
Ken has extensive and demonstrated record of accomplishment.
In helping to commercialize new medical technologies in urology and has an in depth knowledge of the men's and women's health markets.
Please join me in welcoming Ken to the team.
He will be invaluable as we continue to execute our commercial strategy.
To summarize.
Although our growth was hampered by Covid.
Believe we are at the verge of accelerated.
Accelerated growth.
With our installed base expected to increase significantly by quarter's end.
Not only does the Tulsa opportunity remains intact, but.
But the substantive number of complex and unique cases.
Our confidence.
In capturing a broad portion.
Of the total prostate cancer cases.
As well as a materials segment BPH cases.
We are thrilled that Tulsa is now compatible with all three major manufacturers of MRI scanners, GE Siemens and Philips.
Increasing the span of our market access.
Our reimbursement strategy is working and we are excited about the expected filing of CPT one application in 2022.
We are pleased to have initiated our sponsor captain clinical triangle.
Which should produce initial readout in Q4 2023.
This ends our prepared remarks for today.
With that rochette heron and not happy.
To take any questions you might have.
Operator.
Thank you as a reminder to ask a question you will need to press star one on your telephone.
Very good question, because the balance sheet.
Our first question comes from Frank <unk> with.
Jefferies. You May proceed with your question.
Hi, guys.
Thank you for taking the question.
Guess off the top.
You touched on installs increasing significantly in the quarter I was wondering if you could sort of unpack that a little bit.
Was that was there sort of a speed up there in the conversion process.
And then on the on the capital side with capital being lower in the quarter was that mostly due to Covid I think it was how is that how is it currently trending are you seeing COVID-19 headwinds.
Kind of increase or are the leveling off.
We're now I guess several weeks into 2022 and I have a follow up after that and I apologize for asking about COVID-19 .
No problem.
Appreciate your questions.
So I think to your first question yes.
Yes, so we are seeing an accelerated.
Installation rate.
I'd see it.
A little bit in Q4.
But we're certainly seeing it in Q1 and I think that.
Unless.
There is another resurgence of this pandemic.
I think based upon our pipeline I do think that we will continue to increase the installed base this year.
Which by the way.
It gives us.
And a lot more.
Confidence of where we're going this year as compared to the uncertainties that we faced last year. So yes, I think generally speaking I think.
Just again to be cautious all the installed base is not going to be meaningful.
Faster I'm going to take their time drilling and so on but I do think things are happening at a much faster pace than they did in Q1.
To your second question in Q4, there was zero capital absolutely nothing.
And a good bit of it is that we have.
Identified a certain set of countries.
In Asia in particular, where we feel that we can build scalable models, where we can create a profitable.
Revenues.
And really.
<unk> long term growth and among those countries, particularly China Japan.
And we have not even been able to visit those countries and so things have been delayed there. However, as I mentioned in the prepared remarks.
We do see.
Bible I think it's going to be slow, but I think it will be.
We will start to see capital revenues trickling in but.
But I do think in the second half of 2022.
We will you will start to see some of the programs that were delayed in 2021 will come back and we are certainly optimistic from that perspective that.
Top line growth will also be their form capital okay.
So please feel free to ask the next question.
Thank you for that for that Ryan.
I guess picking up on the on sort of.
The regional aspect there you commented during the call that you were spreading out regionally within the U S. I was wondering if you could you could just unpack that a little bit are there regions that you are currently focusing a little bit more on right now and so and how do you see that that strategy evolving as you play it forward say over the next year or two.
And just quickly just one data point just.
Just if you can.
Volumes during the quarter I'm not sure if I heard it if I missed it if you could just touch on that that would be helpful. Thank you so much.
Yes, absolutely.
So first with respect to the geography within the United States.
There are two aspects one is that.
We have an eye towards increasing.
Obviously utilization because that's what translates into revenue for us.
But we also have two.
Two words.
Unique quantifying for CPT application.
And what are the things that.
And it looks for is how widely is the product being used and who is using it. So on one end of the spectrum.
Our product is being used by leading hospitals and that is an important criteria on the other end of the spectrum.
Want to see that it is being used by me.
Mainstream.
Even in rural areas as well and so part of our objective has been to satisfy those requirements also.
But the interesting thing is that at Abbvie and the team.
Well to partner with a new group called the Paragon group.
In the southern Midwest and it is turning out to be an amazing group.
Really excited about that actually so they are chasing they will be placing system in Louisiana inventory.
Even certain rural parts of Texas, and then the one that I mentioned in Tulsa, Oklahoma.
<unk>.
Where now we have presence now in <unk>.
Our northeast.
Lower northeast, we certainly as you know we have presence in Florida, not quite a bit we have presence in Texas growing presence in Arizona, California, but now we are adding presence in these lower Midwestern states. We do have in our pipeline Upper Midwest also so that's that's the plan and I think.
It covers it's sort of it's very methodically planned and it covers.
Our ability to increase the utilization it reduces.
Travel our patients have to do.
What are the things that would be analyzed last year is really exactly where our patients are coming from and I think that the installed base is beginning to reflect.
The patient population resides.
What we saw in 2000 22021.
Over 75% of our patients had to travel well over four hours to get to the Tulsa sites. So I think this will help reduce that.
Martin for our patients.
With respect to the <unk>.
Numbers in terms of the utilization.
Yeah.
We were in that range somewhere.
September of Sorry October November .
Actually not.
Not bad months for us they were matching with what we saw in September timeframe.
December was not a very big at all in fact, very very very very quickly we had we saw significant.
Delays and primarily driven by lack of anesthesia.
So.
Our numbers.
I think compared to Q3 are up because you can see Q.
Q3 to Q4 numbers are in terms of recurring revenues are up quite a bit but overall still.
I think 37% growth.
Or at least stage is not enough and we are certainly looking to do much better than that in 2022.
Great. Thank you so much take care everyone.
Thank you.
Thank you. Our next question comes from row, surrogates or with Raymond James You May proceed with your question.
Good afternoon, everyone, Steve ever said and Richard Congratulations on your appointment to CFO .
My first question is just a little bit further on the on the deployment and utilization rates. So you talked about shortly five but at the end of this quarter, which I believe is quite well aligned up with the pipeline you had talked about in previous quarterly calls can you give us a little bit more visibility into sort of how the.
Pipeline has shaped up sort of beyond.
Q1 for deployments and and how should we also be looking at the annualized utilization rate I believe it was around 60 procedures per year per installed device given that a bonus and device not coming online how should we be thinking about that right.
Yeah.
We do have a good pipeline, we continue to have a good pipeline and particularly now that we have G E.
<unk> ability established I think that pipeline in fact continue to grow we have not specifically given a number but it is it is far bigger than our installed base.
Give you at least a general idea of how big it is.
As you could tell from the significant amount of clinical information I provided.
The fact that the existing sites are using this product.
Sure.
Alrighty different types of patients I think that message is coming through and that is the key reason why.
Pipeline is not a problem for us.
Our surgeons, who really want to use this product.
With respect to the utilization itself I think that is a very important question.
Because.
I think that the.
The utilization at the sites that we had utilization in 2021 will continue and if anything.
I think there will be start increases and I think as the.
Quarters go by I think we'll have a lot more visibility in terms of how much the increase will be because I can certainly tell you every site is looking to increase utilization I just don't feel comfortable sharing just yet what is the rate going to be because it just.
Yes.
Impact of Covid, It just subsiding and hopefully I can be more transparent in the second quarter on that particular point.
But with respect to the new site, which is.
As you can see from the numbers really half of the sites in Q2 will be <unk>.
And I think.
I do want to make sure that people recognize that it's not going to get to 60 Psi 60 utilization.
In one quarter its going to take their normal course, which last year took about six six to nine months to really get the site to utilize them and train them and have them use the.
Different types of patients so that they could understand the full potential so I think that.
Unfortunately, I mean, it's just a transition phase.
Average utilization per site overall will actually be less than Q1, Q2, perhaps but over the longer haul it will be significantly higher obviously so.
And once the installed base grows and the number of new installs that ratio.
Becomes much smaller than what it is today then I think this phenomenon.
Go away as you can imagine industrial on that.
So I hope that gives you some decent color.
Into how we're seeing things.
Great that's helpful and should hopefully help with our models.
Such a little bit switch gear, a little bit to data, but the data and we've seen some recent data from meridian.
And there.
The data they presented the Finch two data presented at <unk> do you have any thoughts on that and obviously because they know what they're going to have some localized prostate cancer as well.
Yes.
Of course, we are.
Quite vigilant and we certainly read all of the clinical information out there.
And.
It's interesting that you mentioned this one because.
I think there are some strategic aspects to this and then there are certainly I'll comment on some of the data.
One of the things that is going on on the radiation side.
Is that there are couple of companies that are.
Now selling MRI real time MRI imaging guided.
Ideation treatment, our SBR teen treatment.
And.
That in itself in some ways is.
Ship because we.
We are the company that sort of on the other side, saying real time MRI is a good thing and so when another study shows that hate using real time, MRI is better than using real time, Cte or Cte for radiation treatment I think you can clearly see the benefit.
Of the imaging modality that we are using and that principle of using our MRI imaging modality I think translates to us also.
Now having said that.
If you look at their data.
The publication I'm, just pulling it up.
We speak here.
What their data showed was that there what.
What they called <unk> toxicity, which is the main endpoint.
Is basically going from 47% down to 22% using MRI.
About half of what it is with SPR team, but think about the numbers 47% toxicity.
22% of capacity.
If you look at the tact data you will see equal in their toxicity down to 6%.
So as much as I think it's great to see using MRI.
I think the tact data.
And particularly this new study clearly shows.
Another order of magnitude difference.
When tax intact.
Tulsa is used and.
There is no radiation impact of long term impact of radiation, because we use heat as our emergency rooms.
So.
I don't know if that helps but that's sort of a quick summary of how we interpret that data.
That's really helpful. Thank you. Thank you and if you would indulge just one more question since we talked about radiation business much of it to compare short two to two <unk>.
Surgery, reflecting capstone trial, we know that the Hawk trial should read out sometime this summer so just.
Just for US you know how should we be thinking about.
And Readouts when should we be expecting data from these trials, particularly given sort of the.
Integrating two o'clock and Katherine Yao.
So I think so first of all you're right part, we hope to see full data.
Summer for Captain.
At this point, our expectation is that our SG&A.
2023.
Typically in November and it won't be it will have that.
That data because we're treating patients now so the patients who are being treated this year.
And by that time by our SMA 'twenty to 'twenty, three we should be able to complete full recruitment. So there should not be any biases and all that but that's all behind us and we're just monitoring the patients but by that time, we should be able to show six to 12 months data and.
If the statistics hold.
Similar too far we should be able to start to see differentiation as R&D as that.
That's terrific. Thank you very much and I'll get back in the queue.
Thank you.
Yes.
Thank you. Our next question comes from Josh Jennings with Cowen You May proceed with your question.
Hi, good afternoon, thanks for taking the questions.
Pushing.
Oh, you help over the years.
And your next chapter should congratulations on the official.
Okay.
Officially.
I was hoping to just ask about you mentioned capital projects revising internationally.
Just wanted to give a sense of how we should be thinking about the international.
Channel in 2022.
Any further detail would be great yeah, Yeah, Josh I know, that's a great question and.
I think what I can in terms of providing more detail.
What I can tell you as projects were delayed and.
Maybe.
For one or two here and there generally nothing was canceled.
And even some of the installation so some of the sites that are installing them allies are upgrading their hospitals and so they were all delayed and why I believe what we are hearing is things should be in fairly good shape in the second half of 2022.
So.
I think from that perspective, we are quite optimistic and I think from the perspective of that.
You know projects or not.
So just delayed it.
The.
Positive and I think the best I can share with you in the second half of this year.
We should see a revival of the capital.
I guess, the other detail little detail that I can share with you is that in the last.
Three four months.
We have certainly seen that the sites.
Is that all running in.
In China or South Korea.
There are a number of patients that they have treated during these last three or four months has certainly increased in double digits.
So the fact that they are there. They are some there is some revival in terms of the patients treated.
It's starting to show that they are coming on stream.
And I think China is.
Clearly now remaining one of the few countries in Japan too.
Trees that were travel is still incredibly restricted but we are very hopeful that that will open in the second quarter and.
I personally plan to visit and really check this out so I can really provide much more concrete information, but I do think second half this year at the moment, it's a fair bet.
Great Thanks for that.
I had a follow up on U S reimbursement landscape.
I mean, the hospitals still having success submitting prepayment for Tulsa cases, using the pre existing code or how is that fair and is becoming more widespread.
Yes.
Josh.
We have had at least 10 hospitals.
That have used the C code pretty much all of the key hospitals have used it.
And.
Pretty much everyone is getting paid.
Average payment is approximately $12500.
And just as a comparison.
The average payment for radical prostatectomy.
$10000 today.
So.
The $12000 $12500.
Hospitals are getting paid.
Is it the right realm.
From what we can tell.
We continue to charge just a little over $8000 part patient.
And that fund that those moneys are coming from that 12500.
Harvest seating.
And given the fact that the treatment is done.
Our suite, which is a lot less expensive than the.
Operating suite.
We believe that the bottom line for the hospitals is positive.
At least that's the feedback we're getting.
So I think on that front, we're pretty pretty happy with what we're seeing.
And quite frankly on the other side, where you see the concierge service we have these early adopters.
People are paying the $30000 and then Theyre flying as I mentioned earlier.
Over 70% of the patients that literally flying to these sites.
To get treated.
Yes.
Thanks, Joe.
Last question.
Just thinking about the Tulsa pro system and its performance.
What is your team work people wonder when would we hear anything about.
Next generation system, and what type of enhancements are you pursuing thanks for taking my questions.
Sure sure that's a good question Josh.
So we we.
We have actually introduced.
New features in Europe already.
Commercially.
We.
I have submitted.
Some of these with the FDA, we think another three to.
Six months, we should be able to introduce these into the U S. But there are a couple of features that are very interesting.
One in particular that I want to mention is that.
Pat.
At the moment, if you are thinking about radical prostatectomy surgical question.
Usually it is done on patients who have what we call Oregon confined.
Which is what I mentioned in the prepared remarks, so as long as cancer has not gone out of the prostate you can do a radical prostatectomy.
But a number of cases.
That cancer sort of rubs on the sides and there's maybe a millimeter muscle involvement of the muscle tissue that is just outside of the prostate.
And because we use the real time MRI.
Physicians know where the boundaries are and physicians have a pretty good idea that they actually want to go beyond that capsular the prostate boundary.
And so we introduced a concept that we call thermal boost meaning that.
If there is a region, where the physician wants to go and believe me there are two beyond the prostate.
So they can activate that turbo boost and they can actually kill that side.
That section.
There's a slight involvement of the muscle tissue perhaps.
And number of cases that have been done as I said in Europe is now commercially available. It is very well received by the way.
And the benefit here is that again, you can tell where clinical data focused.
And if you look at clinical data in radical prostatectomy.
Over 20% of the patients.
And studies it has been shown that they leave cancer behind in those engines.
And so this.
One particular feature gives us that potential.
It's clear we need to get more data and so on but it certainly gives us that potential that we could in fact at some point begin to treat patients who may have been a little bit up that extra.
Cancer is there and that again, we will need long term data for this but physicians think that this is a very interesting new development than we are.
It is commercial in Europe .
Whereas the F D a.
S and vehicle to bring it out later this year in the U S.
<unk>.
So that's just one example, and I think you will see at least one more very interesting technology I won't talk about it and yet we are discussing it with the FDA.
But it is designed to make it more reproducible and it is designed to reduce the treatment.
Treatment time, which already is pretty good but it will it's designed to reduce the treatment time.
Sure.
Great. Thanks, Ryan.
Thanks, Josh.
Thank you. Our next question comes from Brian Kinion with Lake Street Capital You May proceed with your question.
Hey, Thanks for taking my questions I'm not sure if I missed it or not but did you by chance share how many installs have occurred so far in the first quarter, just trying to get a feel for that.
The lift from that 17 at the end of the year to get to 25 by the end of the quarter. How many of those are left to be installed yet in the last four weeks of the quarter.
Yes, Frank we have we didn't provide that much granularity because it's sort of week to week, but what we feel pretty comfortable.
With that is that we will be at 25 by end of this.
Months basically.
So you know it's.
It's going to take time for these to start the utilization, but I think that.
Once the installation is done I think we will start to you.
You will start to see utilization.
Slowly starting in the second quarter and and some of it you will see it in the first quarter also so so far.
Certainly January was a better month than you know.
Any month in Q4.
And I think we reduced see increased usage and in Q1, but again, let's see how the quarter.
And but certainly we're starting to see slow increases.
And then and I think we're pretty pretty confident about the 'twenty five and we're pretty confident that from here forward.
As long as there is nothing unusual that comes about we will we will continue to see increase in utilization.
Noon stocks.
Okay. That's helpful and I was hoping you could provide a little update on acumen, how are things going there do you have any installs mapped out for them in 2022 yet.
Yeah, that's a very good question, Frank because acumen actually is stalled at the moment.
There have been a number of changes that have gone on at acumen.
And so we have the numbers when we have provided to you. We are actually not included that contract so far.
But we have replaced.
Those with other contracts and as I mentioned one of them is.
And multi signed agreement with a group called the Paragon group debt.
Is installing their first system.
In fact in the next two.
It's it's actually being shipped now.
And I think so.
Pat.
Acumen.
The debt.
Green and kept replaced by <unk>.
Some of these other imaging companies.
I do think that long term acumen is a very good potential, particularly because they now also on certain oncology hospitals, where this technology could be a very good fit but I wanted to make sure that they have the time that they need to do their integration and we have plenty of what to do in the meantime.
Yeah.
Okay. That's helpful. I'll stop there thanks for taking my questions. Thank you. Thank you Frank.
Thank you. Our next question comes from Brian Gagnon with Gagnon Securities. You May proceed with your question.
Yeah.
Hi, guys can you hear me okay.
Yes, Brian good afternoon.
You talked about the pipeline you talked about the backlog, but can you give us an idea of how many signed contracts you have that have yet to be installed.
Yeah.
Yeah very good question.
My Best guess is said we have over 40 contracts.
And we have a pretty good pipeline.
In addition to that.
And that doesn't include acumen and Radnet.
It includes threatened that I think you will see the other sites that radnet will come on stream.
Summer.
It does not include <unk>.
Okay.
You filed the shelf today any plans to use it or is that just corporate housekeeping for replacing the shelf that you had from last year.
Brian that's a very good question.
We have.
<unk>.
Over six to 7 million actually let me turn that question over to Michele.
Oh I'm sorry.
Yeah.
Thank you Laura.
Brian Thank you for the question.
We announced that we have over $6 million and the balance sheet at the end of the year.
And this is just the pure housekeeping our previous shelf expired in November 2021, So we decided to update the shelf this morning.
We just believe it's the prudent thing to do for the company and lot of other companies maintain a base shelf.
Okay got it.
Reimbursement and I think you said 8000 per procedure wasn't that 7400 last quarter, what changed and then I have a couple of questions about reimbursement.
Sure.
So we.
You know.
As you know when we started the program. We did we also we're learning how to price at the pump anything so.
In 'twenty 'twenty and 2021 there were certain agreement that were.
And that 7000 to 7500 range, but.
Every agreement has been updated and every new agreement is over 8000 dollar pension at this point.
Oh, that's great.
Okay. So on reimbursement congrats it sounds like you're making very good progress with the CPT code and are you getting good reimbursement from the ones that are in the hospital today and then if you would layer into that.
Any success, you're having from commercial payers and or other government systems for reimbursement and what your thoughts are there.
Yeah, So Brian with respect to using the C code.
It is has worked out the strategies that we articulated early.
More than a year ago I think in 2021, certainly worked the average payment to the hospital and first of all there are at least 10 hospitals that have been doing it so I think the.
There is sufficient volume there and the average payment is in the range of 12500, which we think is the right place to be.
So we're pretty happy with that.
And with respect to other pairs.
Actually there are two things one is certainly there are a number of private payers and most many times the hospitals are looking for.
Pre authorization and generally that strategy is working but the one that actually I haven't mentioned.
Is that in.
A number of cases.
Some some of our hospitals have actually been authorized by the Veterans Administration also.
And they are paying full amount.
For example.
The one of the hospitals on the East Coast has been fully authorized by veterans already.
Which normally veteran sort of lags behind everything else.
There was another hospital in the West coast that is couldn't be operational and treating veterans patients.
We have in fact.
But one of the veterans hospitals that is an opinion, leading veterans hospitals in Cincinnati.
We have a contract with them that system will be going in this summer.
In the hospital itself and we are pleased that perfection veterans are getting solved.
This is a.
Older men disease.
And we have a couple of other hospitals that have.
Applied for their local.
Hum authorization and the fact that Oh.
<unk> already established a few hospitals that aren't getting it we are pretty optimistic so I think.
We've not talked about veterans before but that is another one that we see.
I'm pretty happy to see.
Arun can you give us a sense as to what the VA will be paying.
Per procedure at these hospitals and is that an indication of what reimbursement could look like in the future from other government entities and our commercial.
Yeah. So I think at the moment from the best we can push people together.
Well over $20000 per patient.
That's the age pain.
I think to your other question Brian .
The C code is probably a good parallel because usually see costar developed based upon the relative value units.
CMS works on those and they sort of adjust those numbers annually based upon the cost that they see at hospitals. So I think if that that probably is the best surrogate that we can see and if they are paying the 12500 that is not a bad place to be.
Okay.
And last question for me with over 40 contracts signed.
Do you have enough people and teams in place to do the installs and get through that.
That group this year and it's only early March.
And you talked about a very strong pipeline.
So does that mean that youre going to be trying to catch up with some of these installs and the the numbers that we see today for install or just very low to where there'll be 12 months from now.
Yeah, we're working on that Brian we are adding sales team.
So far it has been sort of a senior team.
Matthew and in some cases myself.
We sort of did the initial <unk> sales, but now with Ken joining us.
He has already helped put together.
Since our marketing organization.
Adding.
Professionals.
To be able to service the installed base and to create.
Our disciplined model for new sites, so we're adding people in the field.
Same thing on the service side.
And also our manufacturing team has been evaluating all of the supply side.
We had a very good conversation with our board about that today. This morning that we are tracking to make sure that.
We have all the supplies that we need to be able to supply the disposables in particular.
And we feel so far.
We don't have a lot of cushion in our system at the point at this moment, but we do believe we will be able to service.
The agreements that we are signing.
Excellent. Thank you very much for what comes next.
Thank you Brian .
Thank you. Our next question comes from Ben Hayden with Alliance Global Partners. You May proceed with your question.
Good afternoon, guys. So I'll be quick just.
A couple for me.
And our own.
Utilization of HIFU, and cryo ablation and how.
Tulsa, if I heard you correctly is already kind of surpassed that do you do you have an idea of how many HIFU and pray ablation installs are out there at present.
Yeah.
Ben.
So what we are.
Our future is really about number of patients treated in the end and we will we have not made the specific number public but we will that's our plan to do that.
The numbers get too.
You know.
Predictable level, that's the only thing that's preventing us.
I know that's not your question, but I think that's an important thing.
To mention is that it's just that put this COVID-19 the unpredictability.
And then the reason, but as we get to these higher installed base and the.
Can I make effect continues to subside and we get to the predictable level of when you will make that public so that it's really easy to track our company's progress.
But what we did was we looked at the government databases.
And so we think that those numbers are in the.
Four of $500, a 100 patient range impact.
So we we think that for us to get into.
The range of that kind of run rate within the first two years.
And the two years have been pandemic driven two years.
We think that's.
Pretty good just as much as I said I'm not happy with the 37% year over year growth, but that's.
That's kind of where we're coming from it's just too.
Put a perspective in place and.
I think the more important point is that.
It is because of that flexibility of the technology that it can be used in high risk patients and lower risk patients and as I mentioned in the product development or mark that we will.
Once the thermal boost is.
Cleared by the FDA, we will actually be able to treat patients where they may have a little bit off.
Involvement.
Beyond the processing.
Thanks.
So I'm trying to triangulate and make sure that we don't Miss anything as we drive adoption of our technology and that's the reason why.
You mentioned that those points that we saw.
From a benchmark perspective, we're doing pretty good and I think this year, we should be able to exceed all of those and thereby we can start to you know for the first time as you may have noticed I mentioned that we are.
We are poised to become one of the main stream at least that's what we believe.
And this is what the data is telling us.
And the fact that you know reimbursement is coming alone. The fact that the clinical data is there. The fact that we can find and we are on track with secret tea.
All of this is is sort of.
Telling us that yes, we've got a unique technology that can be mainstream.
Sounds good.
So what I was personally getting out there.
The number of HIFU and credibly installs that are out there and presumably if there is.
<unk>.
<unk> hundred centers that are that are.
These HIFU or cryo ablation cases that obviously would be candidates for Tulsa Pro do you have an idea of how many folks out there are doing those right.
In terms of center.
That's right and I think.
They are.
All of the centers and particularly as you as we go to these bigger numbers I think you are.
I can tell you we have had a.
A couple of sites that we're using.
F N laser fiber switched to Tesla I can totally in her case couple of sites that we're using.
Hi, food that have switched to Tulsa.
So it's early stage. So I think when you have to be real but I.
I do think that and there are there's at least one site, where they're using <unk>.
HIFU for that very localized if there is a patient with one little cancer in one place. They are still using HIFU technology, because that technology really does fit that type of patients, but for other type of patients all the rest of them. It sort of has increased there.
This because now they can treat a larger variety of patients and so they're using both technology.
Okay that makes sense and then just lastly for me now that you guys had reached the big time with the Tulsa Pro and Tulsa.
Are there any differential there.
We expect in terms of utilization.
All centers with kind of a feeder model versus kind of the.
The service they use.
So I'll, let Bob Barr.
No.
As I mentioned, but I'm pretty excited about that possibility I think the Paragon group.
I understand the model very well I think that.
We have you know.
We haven't really seen the best.
Implementation of that model yet.
I know the type that we had met for example is starting to do that and I think they are they're going to install the other systems. Later this year and I think they will get there, but I think this particular, one I think they are looking for utilization.
Multiple days.
So I wanted to be cautious and wait to see how it goes.
Certainly that.
Concept is intact and we just need to.
Alidade that with with this site and if it does I think that will be a very big topic for us.
Excellent well I mean, it sounds like you guys have made a lot of progress on the things that you can control.
That's on that then.
I'll leave it there thanks, a lot for taking the questions gentlemen.
Thank you so much Brian Thank you so much pain.
Thank you and I'm not showing any further questions. At this time I would now like to turn the call back over to Dr. <unk> for any further remarks.
Thank you I know Aaron is on the call Erin.
If you want to say something please please go ahead.
Erin.
Okay.
So if there are no other questions. Thank you so much for listening. Thank you for.
The questions and I hope that we will be able to have a.
Pretty pretty good Q1 and be able to.
Report on that for you at the Q1 call. Thank you so much.
Thank you. This concludes today's conference call. Thank you for participating you may now disconnect.
Okay.
[music].