Q4 2021 Pulse Biosciences Inc Earnings Call
[music].
Good afternoon, and welcome to the pulse Biosciences fourth quarter and full year 2021 earnings conference call all participants will be in listen only mode.
Should you need assistance. Please signal a conference specialist by pressing the star key followed by zero.
After todays presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one on your telephone keypad to withdraw your question. Please press Star then two.
Please note. This event is being recorded I would now like to turn the conference over to Philip Taylor Investor Relations. Please go ahead.
Thank you operator before we begin I would like to inform you that comments and responses to your questions. During today's call reflect management's views as of today March 31, 2022, only and will include forward looking statements and opinion statements, including predictions estimates plans expectations and other information.
Actual results may differ materially from those expressed or implied as a result of certain risks and uncertainties. These risks and uncertainties are more fully described in our press release issued earlier today and in our filings with the Securities and Exchange Commission or.
Our SEC filings can be found on our website or on the SEC's website investors are cautioned not to place undue reliance on forward looking statements. We disclaim any obligation to update or revise these forward looking statements. We will also discuss certain non-GAAP financial measures disclosures regarding these non-GAAP financial.
Measures, including reconciliations with the most comparable GAAP measures can be found in the press release.
Please note that this conference call will be available for audio replay on our website at pulse Biosciences Dot com on the news and events section on our Investor Relations page with that I would now like to turn the call over to President and Chief Executive Officer Darrin Nuker.
Hello, and thank you all for joining us on today's call I will highlight pulse Biosciences 2021 developments discuss our 2022 growth strategy, including the evolution of our commercial focus and cover plans to advance our clinical and regulatory pipeline.
Sandy will detail the financial results, then I will conclude and open the call for Q&A.
In 2021, we achieved regulatory approvals for the cell effects system in the U S Europe , Canada, and Australia initiated the controlled launch program and on boarded 70 participants closed our first commercial systems sales continued to generate clinical data illustrating the capabilities of nano pulse stimulation technology.
And engaging the scientific community, while advancing additional applications for the <unk> system.
On the corporate side, we strengthened our commercial leadership team board of directors and balance sheet.
As a complement accomplishments have laid the foundation to drive cell effects system adoption and utilization in dermatology and other medical specialties.
We believe the cell effects system presents an attractive opportunity for clinics to pioneer a new solution to address the clearance of benign lesions. They previously did not treat because of the lack of treatment options that could produce aesthetically pleasing outcomes.
Clinics are motivated to cultivate new business opportunities based on the number of patients with benign lesions the patient's perceived value of treatments and the time required for dermatologists to perform treatments. We feel this category is positioned to be a significant revenue and profit generating service line in their practice.
To introduce this telephone system to aesthetic dermatologists in early 2021, we initiated a controlled launch program across the U S. Europe , and Canada 70 key opinion, leading aesthetic dermatologists committed to participate in the controlled launch program in exchange for sharing extensive data and observations about our patients.
And their own experience with treatment clinics earned credits towards the purchase of their system.
A number of learnings have come out of the controlled launch program first the controlled launch program has helped us better understand the variation in dermatology clinic types from cosmetically procedure focus to medically procedure focused and how best to target clinics and optimize the integration of the cell effects system into the clinic, depending on this mix of cars.
<unk> and medical procedures performed by the clinic.
It's also become clear that many of the clinics. We are working with are generally at capacity, especially with patient demand coming back strong from the slower period impacted by the COVID-19 virus and integrating cell effects procedures introduces an opportunity cost that we must demonstrate will drive long term value creation for the clinic.
We must work with clinicians and staff to integrate cell ex procedures into this already busy workflow in order to optimize the potential for utilization and minimize workflow disruption.
On the positive side cell effects treatment candidates present themselves in clinics every day. So we remain confident of the potential efficiency of the cell effects integration.
The controlled launch program has increased our belief and confidence that the benign lesions that are being treated using the cell effects system, such as non genital warts sebaceous hyperplasia February keratosis and increasingly dramatic fibroma represents valuable opportunities for all dermatology clinics.
While the real world delivery of NPS technology through the <unk> system has proven is proven to clear benign lesions in clinical studies, we have learned that the market development for benign lesions and the integration of this procedure into practice workflow will require a high touch model to generate the system utilization we are expecting.
We initially expected clinics to complete the controlled launch program requirements in three to five months. However, the average time for clinics that have completed the controlled launch it's been seven months.
Upon completion, we have seen some clinics accelerate their commercial use while others utilization has slowed.
It is now our priority to address this dynamic and drive more consistent and increased commercial utilization of cell of X systems and turn these early commercial customers into cell effects reference centers for future purchasers of the system.
In the fourth quarter 17, dermatology practices that were participating in our controlled launch program opted to acquire the cell phone system.
The accumulative total as of December 31, 2021 to 29 commercial conversions.
Also had six clinics opt out of the program as of December 31, 2021.
In the first quarter, we expect 10 clinics to convert to commercial use and another five clinics have opted out of the program, bringing the total commercial conversions to 39 with a total of 11, having opted out.
Therefore, we expect to have 20 clinics still in the controlled launch program at the end of the first quarter and those clinics will continue to move through the program throughout 2022.
Our focus has now shifted to ensuring that our commercials cell effects clinics are integrating routine use of the cell effects system in their clinic workflow and we have made it our priority to partner with these clinics and drive commercial utilization in 2022 to.
To do this we will more actively engage with our current commercial clinics, providing increased training education and marketing support on all aspects of the cell effects system and its integration into the clinic.
In the first quarter average commercial clinic utilization has increased from month to month and currently our commercial clinics are averaging 10 patient treatment sessions per month with their cell effects system.
Our goal for the end of the year is to increase that to 40 patient treatments sessions per month at our current commercial commercial clinics.
To drive this increased utilization and emphasis on education training and marketing at our current accounts, we have implemented changes to our commercial leadership restructured our commercial field organization and modified our strategy in support of our utilization focus and reduced emphasis on new system sales in the near term.
As a result of this focus we have initiated operating expense reduction programs across the company.
These programs included a reduction in head count, which we expect to be between 15% and 20% of the workforce along with reductions in other expenses, which we expect will lower total operating expenses by approximately 20% from the current run rate.
Outside of the controlled launch three practices two in the fourth quarter and one in the first quarter have made the first three commercial purchases of cell effects systems.
We do not expect new system purchases will be a significant contributor to revenue until we achieve our utilization goals.
We remain confident in the long term opportunity for the <unk> system, and NPS technology in dermatology and other medical specialties. Our commercial strategy will now focus on going deeper with the accounts, we have and ensuring they're able to build a viable benign lesion franchises within their practice.
Spearheading our commercial efforts will be our newly appointed Chief commercial officer, Kevin Danaher.
And Joe Talerico, our newly appointed Vice President of North American sales.
Kevin and Joe our healthcare industry veterans with proven track records of building exceptional commercial teams and implementing strategies to drive market penetration and significant growth with new medical technologies across a variety of medical disciplines.
They are uniquely qualified to take on these roles at pulse Biosciences, as we grow the cell effects system business in dermatology and expand into new applications and markets and we look forward to the impact they each will have on expanding the commercial footprint for the <unk> system.
Ed Ebbers, former EVP and general manager of Dermatology is serving in a consulting role during this transition we thank Ed for his service and contributions.
To supplement our commercial marketing efforts, we continue to stay engaged in the scientific communities to support <unk> system clinical evidence generation and promote the latest discovery discoveries with the technology.
In December Dr. George <unk> from St. Louis past President of the American Academy of Dermatology.
Scented and overview of NPS technology at the cosmetic surgery for him and multi specialty educational symposium that covers the latest research treatment and techniques and dermatology and cosmetic surgery.
At the recent American Academy of Dermatology meeting the cell effects system was mentioned in multiple scientific presentations.
And at the upcoming American Society for laser surgery, and Medicine meeting in April we anticipate additional presentations on the cell effects system, including positive clinical data.
Transitioning now to our clinical and regulatory pipeline.
As we have mentioned, we're taking a stepwise regulatory approach to expand the cell of X systems indications for use which would in turn enable us to assist clinics with marketing the cell effects for treatment of specific lesions. In addition to general benign lesions.
The first specific indication we are seeking FDA clearance for the treatment of sebaceous hyperplasia, which were approved to treat under under our CE, Mark and health Canada approval.
Following the submission of the 500 10-K to the FDA in the fourth quarter. We received an additional information request letter from the FDA in.
In the AI letter the FDA stated it did not leave the company had provided sufficient clinical evidence at this time to support the expanded indication for use and that the company had not at the primary endpoint of the <unk> <unk> study the company anticipates meeting with the FDA to discuss the contents of the AI letter and potential next steps, which may require additional clinics.
Data and potentially a new 500 10-K submission.
This five 10-K process to include a specific indication has no impact on the existing five 10-K clearance for the cell effects system, which is a general indication for ablation in researching the skin, including for use on benign lesions. While this represents potential setback. This does not change our fundamental outlook.
The second specific indication we are targeting is for cutaneous non generous rewards in the third quarter, we completed enrollment of our 150 patient FDA approved pivotal comparison study. We are currently analyzing the study data and we are anticipating five 10-K submission during the second quarter.
We have also completed follow up at our basal cell carcinoma feasibility study. This data is also being analyzed and we anticipate meeting with FDA to discuss a potential pivotal study for a specific indication to treat basal cell carcinoma lesions with the cell effects system later in Q2 or early Q3.
On the development side, we will continue to pursue research on additional benign lesions to grow the cell effects systems application portfolio, where it makes the most sense for dermatologists.
As we mentioned on the third quarter earnings call Dermatophyte Bromine is an example of a new lesion of interest emerging from controlled launch participants dramatic fibroma are small benign lesions typically found on the extremities, especially the lower legs.
We surveyed 100 medical and cosmetic dermatologist and found that they see 15% to 25 patients per week with dramatic fibroma.
Currently the only treatment option is to excise the lesion, so dermatologists typically elect to leave the lesions untreated.
Now I will turn the call over to Sandy.
Thank you Darrin Hello, everyone for the fourth quarter of 2021 revenue was 844000 revenue is driven by the conversion of 17 controlled launch participants opting to purchase their cell effects systems. Following completion of the program as.
As well as the first commercial sales of the cell effect system.
System sales were $699000 approximately $600000 recognized on a noncash basis and $100000 recognized as cash.
Revenue related to cycle units was $145000 for cycle units purchased for commercial systems.
Revenue in North America was 777000, representing 92% of total revenue.
For the year ended December 31st 2021 revenue was one 4 million revenue was driven by the conversion 29 controlled launch participants often get purchased their cell effects systems. Following completion of the program as well as two additional commercial sales.
System sales were $1 2 million, while revenue related to cycle units with $229000 revenue in North America was $1 2 million, representing 83% of total revenue.
Moving down the income statement I'll focus my comments on our adjusted or non-GAAP results to provide insights into the underlying trends in our business. Please refer to today's press release for a detailed reconciliation of non-GAAP measures with the most comparable GAAP measures.
Since our shift to a commercial organization in the third quarter of 2021, all on capitalized manufacturing operation costs had been recorded in cost of revenue.
Previously these costs were recorded in research and development expense.
non-GAAP gross loss in the fourth quarter of 2021 with $302000 for the year ended December 31, 2021, non-GAAP gross loss was $415000 gross loss is calculated as total revenues less cost and revenues.
For the fourth quarter of 2021, non-GAAP operating expenses, representing research and development sales and marketing and general and administrative expenses were $11 $2 million compared to $11 1 million for the prior year period.
The year over year increase in operating expenses was primarily driven by the expansion of commercial and operational infrastructure, including increased head count to support commercialization activities.
Offset by I'm capitalized manufacturing costs now recorded in cost and revenue.
For the year ended December 31, 2021, non-GAAP operating expenses were $46 $9 million compared to $38 $8 million per the year ended December 31 2020 the.
The increase was primarily due to the expansion of commercial and operational infrastructure, including increased headcount to support commercialization activities and investments to expand the use of the cell effect system outside of dermatology.
non-GAAP research and development expenses decreased by approximately $1 3 million from a year ago to $5 million for the three month period ended December 31, 2021, primarily due to the reclassification of Uncapitalized manufacturing costs to cost of revenues.
Offset by an increase in personnel related costs in support of our of our FDA submissions and new application development.
For the year ended December 31, 2021, non-GAAP R&D expenses increased by approximately $1 million year over year to $23 $3 million. The increase was primarily due to additional personnel clinical trial costs consulting and outside.
Services in support of our FDA submissions and new application development.
These additional costs were largely offset by Uncapitalized manufacturing costs now recorded in cost of revenue.
non-GAAP sales and marketing expenses increased by approximately $1 $6 million from a year ago to $3 $6 million for the three months period ended December 31, 2021, primarily due to increased personnel consulting and outside services to support commercialization.
Kennedy not conducted in 2020.
Sales and marketing expenses in the fourth quarter of 2021 include approximately $640000 of noncash expenses related to our controlled launch.
Prior to receiving FDA clearance and CE Mark approval for the cell effects system sales and marketing expenses were included in general and administrative operating expenses.
For the year ended December 31, 2021, non-GAAP sales and marketing expenses increased by approximately $5 $9 million year over year to $12 million.
The increase was primarily due to additional personnel consulting and outside services to support commercialization activities not conducted in 2020.
Sales and marketing expenses also included approximately $1 $8 million of noncash expenses related to our controlled launch for the full year period.
non-GAAP general and administrative expenses were largely flat year over year decreasing by approximately $100000 to $2 $6 million for the three months period ended December 31 2021.
For the year ended December 31, 2021, non-GAAP general and administrative expenses increased by approximately $1 $1 million year over year to $11 $6 million. The increase was primarily due to additional personnel from a year ago to support the transition to commercial.
<unk> other.
Other increases included public company related expenses, including D&O insurance, all partially offset by a reduction in consulting services.
non-GAAP net loss for the fourth quarter of 2021 was 11 5 million compared to a net loss of $11 1 million for the fourth quarter of 2020.
For the year ended December 31, 2021, non-GAAP net loss was $47 $9 million compared to a net loss of $38 7 million for the year ended December 32021, excuse me 2020.
Cash cash equivalents and investments totaled $28 $6 million as of December 31, 2021, compared to $20 5 million as of December 31, 2020, and $42 million as of September 32021.
Cash used in the fourth quarter of 2021 totaled $13 $4 million compared to $9 2 million used in the same period in the prior year and $13 8 million used in the third quarter of 2021.
We did not issue any shares under the aftermarket equity offering program during the fourth quarter.
Excluding net proceeds from equity offerings cash used in the full year of 2021 totaling $52 9 million compared to $34 9 million used in 2020.
As Darren mentioned earlier, we have begun to implement a plan to better align our workforce and anticipated commercial and development spend with our capital resources and the needs of our business, while we focus on utilization at our current commercial accounts.
Workforce and program reductions across all areas of any organization.
<unk> to lower total cost by approximately 20% from the current run rate beginning in the second quarter of 2022, resulting in full year 2022 operating expenses in line with 2021 levels.
As a result of our commercial teams near term focus to increase utilization at our commercial clinics, we do not expect new system sales can be a significant contributor to revenue until we achieve our utilization goals.
We expect cash usage in the first quarter of 2022 to increase incrementally over prior quarter levels with reductions in cash usage to begin in the second quarter of 2022 until utilization rates increase.
We remain committed to investing in development activities and additional studies to support indication expansion with the FDA.
Now I will turn the call back to Gary for final remarks.
Thank you Sandy.
Looking back on 2021, we had success with regulatory approvals in the U S Europe , Canada, and Australia, Onboarding 70 controlled launch program participants converting 29 clinics to commercial clinics and our first commercial sales.
Entering 2022, we will remain focused on partnering with our cell effects commercial clinics to increase their utilization and to create cell effects reference centers that will further validate the development of the benign lesion market and set a foundation for future growth, we have a better understanding of the requirements to help clinics develop the benign lesion market that are creating a strategy.
For them to establish viable cell effects franchises.
We remain committed to developing new applications for NPS technology in dermatology and beyond we are dedicated to bringing this proprietary technology to more physicians and clinics across various fields within healthcare Theres requires calculated investment that we believe can unlock additional large market opportunities, where NPS technology can become standard of care.
Sure.
There are always challenges introducing a category, creating technology, we've learned an incredible amount in the past year and these learnings will be important for our future success, we believe the opportunity for pulse biosciences and the capability of our novel NPS technology to improve patients' lives is immense and we're excited to execute and deliver value to all our stakeholders.
In 2022.
On a final note I would like to personally thank our team members, whose positions have been eliminated through our expense reductions for their contributions to pulse biosciences and wish them future success.
And with that joining me for Q&A, and Sandy Gardiner Executive Vice President and Chief Financial Officer, Operator, Please open the call for questions.
We will now begin the question and answer session to ask a question you May Press Star then one on your telephone keypad.
If youre using a speakerphone please pick up your handset before pressing the keys.
To withdraw your question. Please press Star then two at.
At this time, we will pause momentarily to assemble our roster.
And our first question comes from Chris Cooley of Stephens. Please go ahead.
Good afternoon, Darin and sandy thanks for taking the questions.
For me to start off if I may 1st.
You guys provided a great deal of detail.
Oh I see.
Not only the accomplishments you achieved during 'twenty one launch into cell FX system, but also how you are now going to move forward based upon the learnings you've accumulated throughout the course of the year.
Hoping you could just maybe start us a little bit.
With.
I guess, a little bit greater clarity as I'm trying to better understand driving utilization what kind of specific goals you have with these practices before we should start to think about an expansion from.
From a from a systems or an installed base perspective.
And similarly, if anything is changed when we just think about the cadence for the various indications that you were previously working on and it sounds like you still are but I just want to make sure that all of the initially outlined indications are are still kind of tracking as expected and then I have one quick follow up on Opex.
Sure Yeah. Thanks, Chris Thanks for the questions and for listening in so as to your first question just in summary, I think.
Yeah, So we've been going through the controlled launch as you know.
Through 2021, and converting clinics to to commercial and the end of the year with 29 of those having converted and then two commercial sales for a total of 31 entering the first quarter and as we progress through the first quarter I think what we really.
<unk> was that.
We needed to.
Focus more on driving utilization at those commercial clinics.
And.
In order to get them to levels that we felt.
Need it to be at to be productive.
We wanted them to be at and that they would then be reference centers for new clinics and I think.
What we've observed and I tried to touch on was that I think.
While the controlled launch allowed many of the clinics to treat patients and clinical outcomes.
<unk> really less focused on how best to integrate the cell <unk> system into the clinic from a commercial perspective, and so I think our focus now is really going to be on these commercial centers and working very closely with them to increase.
Our training as we said in education and marketing to help them with the integration into the <unk>.
Clinic workflow.
To more efficiently be able to use the cell effect system I think.
One of the things I touched on are these clinics are extraordinarily busy.
Lots of patients every day are going through the clinics and so a new technology and in many ways, a new category of treating benign lesions.
Acquires.
Them to develop a kind of a new workflow for those patients and so I think one of the things we recognized in the quarter is that we really need to focus attention on that and working with clinics to kind of optimize the best workflow for driving cell effects utilization.
And I also touched on the identification of clinics that we think are our.
Our optimal for the cell effects system and those are ones that have a good mix of both cosmetic and medical dermatology.
Which will span the different benign lesions that were currently treating so I think it's those elements that.
We decided to structure or our field sales force around our field commercial team around to really get in and work closely with clinics to begin to.
To drive those utilization levels and you know what I mentioned in the prepared remarks as well.
We did see in the first quarter that utilization increased from from the beginning of the quarter to the end of the quarter and we exited the quarter with clinics on average doing about 10 patient treatment sessions per month.
Our goal for the end of the year is to have those clinics that 40 patient treatment sessions per month and we.
We think it's a stretch goal for us it's something that we're going to strive for and we think we can achieve.
And as we begin to see achievement of that I think that's when we'll start to look at driving more system sales.
Into into the market, but until we begin to see that we felt.
It was the right thing for us to do to really focus our commercial team on driving utilization to those levels.
And so.
So that's I think in a nutshell.
Thats our strategy going forward.
On the indication side, yes, I think youre absolutely right. We we haven't slowed down on that and we have a lot of activities.
With regard to indication expansion and driving indications, we talked about dramatic fibroma.
On today's call, but certainly there are other indications that we've mentioned that we continue to have interest in from physicians and.
And as those get further along.
We will be providing more information on it.
Thanks, Darren I really appreciate all that color and just maybe just quickly if we could shift gears, maybe a question for you Sandy.
Appreciate the.
Any additional color there on the 20% from the Opex reduction getting you're basically flat with calendar 'twenty, one levels and clearly a step up sequentially. They are in the <unk>, but then starting to drop down.
Just curious from a cash burn perspective do you think there are other opportunities with this shift in the model to free up some cash from either our balance sheet from like a working capital perspective or requirement to carry less inventory maybe on the capital side I'm, just trying to kind of get to.
Our cash burn number for the year.
Taking into consideration not only the reduction opex, but maybe a little bit more efficient deployment of the balance sheet. Thanks, so much.
Sure Chris Thanks, very much on that.
Thank you you're exactly right.
So the additional leverage there would be on the inventory side, we closed the year, having $5 $8 million of inventory on the balance sheet and Mr.
Realignment that we have here focusing on utilization.
Well look to conserve that cash so that we are not building additional inventory and we do feel that the inventory levels that we have certainly well.
Part of the near term.
Usage that we that we need.
Thank you both.
Thanks, Chris.
Yeah.
The next question comes from Anthony Vendetti of Maxim Group. Please go ahead.
Yes. Thanks.
Just wanted to talk a little bit more about the.
Controlled launch so the 70.
The 70 Kols.
Can you can you talk about.
Where exactly that you said was.
You thought it would be about seven months some have acquired the system right. So we have 17 that acquired them in the fourth quarter 10 more than the first.
So it's up to 39, and then you had 11 opt out so if we do the math, there's like 20 left that haven't made a decision.
One way or another.
What's the.
What's the expectation for those 'twenty is that is that a.
Second quarter by the end of the second quarter, all 20 of them should should make a decision one way or another and then can we talk a little bit more about.
Once that happens with the commercial launch will look like.
And I'll have a.
A follow up after that yes, okay, yes, thanks, Anthony and thanks for listening and so.
You got the numbers exactly right.
Which is great and so the 'twenty that are now entering the second quarter.
No.
I wouldn't want to guess at whether or not all of those will go through and complete the requirements in the second quarter.
Certainly those are all.
Clinics that have been in the in the program.
The latter part of last year, so they're already well into the program.
I would expect that.
The majority of those will likely get through the program in the second quarter.
And our expectations are and continue to be that.
A good number of those or a good proportion of those will convert to commercial and some of those.
May opt out kind of along the lines of the percentages that we have to date. So I think those will continue and.
Well trend likely the way we've seen the trend thus far.
And just to follow up on that Darin.
The ones that are.
Are opting out is it is it because I'm sure there's various reasons but are.
Are they just not utilizing it enough and before they opt out is there.
Before they officially opt out if theyre thinking about opt out.
Opting out is there a pulse.
Clinical team that goes there or to say hey, this is how may be you could be using this more effectively for these lesions other lesions or training them.
Or even market, helping them market, so that their utilization could could increase to the point where maybe the.
They've decided not to opt out yes, yes, that's a great.
That's a great question so.
I think I think what we saw early on.
I think we've talked about this on some previous calls is that initial.
Initially.
Clinics adopt it out it was often because.
The controlled launch program is.
It was for them to burdens, meaning that.
In the controlled launch we require a lot of work of the clinic in the form of data collection. So surveys. The physician does survey patients do surveys and we collected a lot of data in the in the clinic itself from the staff kind of as they are working through the controlled launch program in that.
As we've said in exchange.
Four credits that they can use to purchase the system. So.
So early on a number of the clinics opted out and we see this also a little bit recently.
Simply because they were their.
<unk> in terms of how much work would be required.
We're not sort of aligned with how much time, they had and how much they wanted to invest in a new technology like this so they just simply were a bit overwhelmed by the requirements of the controlled launch and just said it's not a good time for them that maybe they don't have the staff to support it.
And they would like to perhaps circle back when the cell effects system is available commercially and not in the controlled launch so I would say that's a significant portion of it.
I think the other thing we've learned through the controlled launches that not all clinics.
And I alluded to this a little bit in the prepared remarks is that maybe not all clinics.
Have the right makeup for the cell effects today. So by makeup I mean kind of mix of cosmetic and medical derm procedures going on so as an example, if the clinic is a 100% cosmetic.
And one of our leading indications these days is non cutaneous warts.
See a lot of work patients and really may not.
Appreciate the value of treating <unk> patients in that setting and so I think we've had some that felt like their patient and procedure mix just wasn't aligned with this idea of treating benign lesions and in terms of where we're at and so I think it has helped us.
Refined.
The clinics that we think are the appropriate targets.
And that's just an example, I think of a couple of those situations that have happened.
Okay, and then lastly for Sandy maybe on the 15% to 20% workforce reduction.
Is that kind of across the board and are there any reductions in the in the sales force or.
What's the Salesforce number and what's the goal.
What should that number looked like throughout this year.
So it is across the board.
10% to 20% reduction is across the board, but I would say it is with the realignment and the focus on utilization.
In lieu of new system sales, if you were to look at the different categories.
Sales and marketing and general administrative would have the larger impact of those reductions so as.
As we go into as well.
Report on the Q1, well actually again a bit more detail in terms of.
Restructuring costs, and where we are at that point in time, we're beginning to implement that's now.
Okay, and then just the sales force just remind me what's the Salesforce number at right now and it is whatever number that is is that kind of what you think you need for the rest of this year at this point.
So what we're doing is we are actually making reductions to the commercial organization as it is today, because we had individuals from our regional directors.
What I would say capital equipment folks territory managers and then the clinical application specialists that we're focused on utilization with our <unk>.
Strategy to where we are only focusing on giving a primary focus I should say to utilization and not the capital equipment sales the ones that would be impacted the most and the realignment would be that the new system sales folks in the capital equipment individuals.
Okay, great that makes sense, okay. Thanks for that color I appreciate it I'll hop back in the queue.
It's Anthony.
The next question comes from Sam Nicola Rama comps of H C. Wainwright. Please go ahead.
Thank you good afternoon.
And Sandy Hi, RK.
I've got a couple of quick questions. The first one.
No.
As part of the controlled launch.
Are you where you are collecting data from all the different clinics that were.
Is that what you're using.
The cell FX.
When would you.
<unk> be able to collect that data into a format.
That you can publish.
As oral presentations are.
Print publications.
Yeah. It's good question RK I don't have a time for that I mean, we're continuing to.
Collate that survey data and we will look for an opportunity to do that in the future.
It's not clinical data in the sense of.
Controlled clinical data.
In terms of lesions and so on and so forth.
It's much more about the experience.
The clinic in the physician and the patient experience.
But we're certainly going to look for opportunities too.
To get that data out there.
Thank you and then.
Four.
<unk>.
For you to for you to get the.
Utilization increased from.
Current 10 sessions per month to 40 sessions per month.
You know what.
Or what do you think.
Some of the you know.
Key criteria are key factors that you'll go to promote to these.
<unk> positions is.
Is it does it.
Is it just purely workflow is it more than that is it does it does.
Advertising dollars by these individual physicians.
Things.
Or are you thinking about and how much can you help on how much does the clinic itself need to need to spend time and effort.
Yeah. It's.
Good question.
I think the.
<unk> comes down to education and training and then we also think marketing is a component of this in terms of.
Helping the clinic.
Create demand in their patients.
And create demand and patients and have them come in into the clinics. So.
We will help certainly will partner with clinics on the marketing piece.
We're starting to do that more and more.
And on the training and education side I think we are.
It is a lot about the clinic workflow.
But it's also just going back and making sure that.
Sufficiently trained.
Everybody in the clinic, who is looking for cell effects potential cell effects patients.
And sufficiently training and educating any provider within the clinic and that may be using the cell effects system and so I think it's across the board. We think there are opportunities to to help the clinics.
The training and education side, both in terms of identifying identifying those.
Those patients and how to efficiently treat those patients and those lesions within the clinic.
But also just simply training continuing to provide education and training to the clinic staff on how to efficiently treat using the technology. So.
We feel like it's an across the board.
Training and education that we can play a large role on and we take responsibility for.
It's up to us to help those clinics.
Be successful and we believe that by doing that we can drive that utilization to those levels.
Alright. Thanks.
Thank you very much for taking my questions and I'll talk to you soon alright.
Alright, Thanks, Eric I appreciate it.
Thanks.
Our.
Next question is a follow up from Chris Cooley of Stephens. Please go ahead.
Oh good afternoon I appreciate you taking the follow up just two quick clarifying questions for me if I may.
First on the utilization target of 40 procedures per month, I am assuming that as an exit rate, but I just wanted to clarify that thats. What you are anticipating exiting the calendar year.
Versus the full year average.
And then secondly, just when we're thinking about this additional support at the clinic level or at the practice level to integrate the technology.
I think as I listened to your responses to their questions. It really sounds like this is more of COVID-19 .
The workflow type issue.
More so than.
Maybe an absolute training on the procedural side I just wanted to make sure.
Picking that up correctly, and if not I want to get on the right path. Thanks, so much.
Yeah. Thanks, Chris.
So on your first question I think our goal is as I mentioned is to get the clinics to.
40 patient treatment sessions per month and to do that this year. So.
Yes, I think it is our goal to get to that by the end of the year so exit at that.
But really our goal is to do that as quickly as we can and that's our focus.
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As to the question in the clinic I think it can be both I mean, I think there is certainly a clinical workflow.
Ponant.
Where clinics are determining how best to integrate with cell effects.
As patients are coming through the clinic so.
For example, if a if a patient is getting a whole body check.
Are they going to.
If they identify a lesion and the patient is interested in cell effects are they going to treat at that time or are they going to schedule that patient later, perhaps perhaps on a cell effects day.
Where theyre going to do a whole bunch of treatments and one day I think those kinds of workflow.
Implementations and questions depend a lot on the clinic and how the clinic is organized and so.
Part of what we're doing is working with all of our clinics to to help them optimize for their clinic and then using those kind of best practices across other clinics.
As it relates to training on use of the system I think we will always work towards improved training of utilization of the system.
It just may mean that.
We're figuring out ways that they can treat faster so they can get a patient in and out faster. If there are ways. We can improve the system will improve the training to do that that in fact could affect their clinic workflow. So I think.
I think we're looking at it from all points of view and at all angles in terms of how we can improve the process.
Improve.
Our system in any way to to help drive utilization I think the things that we see today.
Probably do focus more on the workflow side, but.
But if if we're not doing a good enough job training on how to use the system that will that will certainly impact that so I think there are multiple factors that.
That will be focused on is as we do this.
Thank you.
Yeah.
This concludes our question and answer session I would like to turn the conference back over to Darren Yoga for any closing remarks.
Thanks, operator, and thank you everybody for your participation and support we look forward to communicating again very soon.
The conference has now concluded. Thank you for attending today's presentation and you may now disconnect.
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