Q1 2022 Profound Medical Corp Earnings Call
Good day, and thank you for standing by and welcome to the profound medical first quarter 2022 financial results Conference call.
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After the speaker's presentation, there will be a question answer session.
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I would now like to hand, the conference over to your Speaker today, Steven Kilmer of Investor Relations. Please go ahead.
Thank you good afternoon, everyone. Let me start by pointing out that this conference call will include forward looking statements within the meaning of applicable securities laws of the United States and Canada.
All forward looking statements are based on pro Pound's current beliefs assumptions and expectations.
Plate to among other things expectations regarding the efficacy of the Companys treatment technologies.
Lots of 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 are both 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 statements 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 profile.
Developed markets customizable incision free therapies for the ablation of disease tissue.
We are currently commercializing Tulsa pro a.
Technology that combines real time, MRI, robotically, driven trends erythrol ultrasound and closed loop temperature feedback control the <unk>.
Technology is designed to provide customizable and predictable radiation free ablation searching to find prostate volume while actively protecting the urethra and retrofit from Cal preserved paste is natural functional ability.
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 primary.
These employee pay per procedure model, but we also sell capital and consumable separately, if the situation warrants that.
We are also commercializing <unk>, an innovative therapeutic platform that is CE marked for the treatment of uterine fibroids and palliative pain treatment of bone metastases. Finally, thats also been approved by the China National Medical products administration for the Nevada pace of treatment of uterine fibroids and has recently obtained FDA approval under a humanitarian device exemption for the treatment of <unk>.
Ladies and gentlemen.
The business model Personna leaves systems is currently a one time sale of capital equipment.
On the call today, representing the company are Dr. <unk>, <unk>, 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.
Welcome to our first quarter 2022 conference call.
On behalf of the management team and everyone at profound I would.
Like to thank you for your ongoing interest in our company.
For those of you who are shareholders. We appreciate your continued interest and support.
I will turn the call over to Arun.
A woman or an update on our commercial activities.
However.
Before I do I would like to provide a brief update on our first quarter 2020 financial results.
To streamline things.
All of the numbers, we will report two have been rounded.
Proximity.
For the three month period ended March 31 2022.
The company recorded revenue of $1 4 million.
Up 92%.
711000 in the first quarter of 2021.
Regarding revenue increased 15% from 477000 in Q1 2021.
While one time equipment sales increased 45%.
Compared to the 234000 recorded <unk> one 2021.
Total operating expenses in the 2020 to first quarter.
Please.
R&D.
<unk>.
Selling and distribution expenses.
$1.7 million an increase.
The increase of 13% compared with approximately $6 eight.
$8 million in the first quarter of 2021.
Breaking that down partner.
<unk> for R&D increased 2%.
Year over year, RBC to $3 2 million.
This was primarily driven by captain trial enrollment.
Zinc oxide MRI testing and flight installation and additional head count.
G&A expenses increased by 10%.
$2 $3 million due to additional head count.
Increased legal accounting and.
Recruitment fees.
Increased travel as we continue to be lifted.
Increased license costs.
Our enterprise resource planning and customer relationship management software.
Finally.
<unk> and distribution expenses increased by 39% to approximately $2 2 million.
Overall the company recorded.
First quarter 2022 net loss.
$8 2 million or <unk> 40 cents per common share.
Compared with a net loss of $7 5 million or <unk> 37, or common share for the three months.
In 2021.
As of March 31, 2022 profound affect cash.
$61 million.
With that.
I will now turn the call over to Irwin.
Thank you Richard.
Before I talk about our Q1 2022 achievements.
And outlook for the rest of the year.
I'd like to provide a little more color on research financial discussion alright.
Alright installed base.
It has grown to 24 customer pool system.
Our goal of 20.
And while we said on our last call that we thought some international one time capital sales would start to trickle in the second half of this year I am pleased to report that.
Those deals have already begun with approximately 340000 worth of equipment sales recorded in Q1 2022.
Our worldwide install base is now.
<unk>.
We believe that the direct impact of COVID-19 has subsided with respect to our ability to access new U S site to install Tulsa Pro systems.
But we still see some lingering effects.
The supply chain, primarily in the form of delayed deliveries of new MLR Unix to the site, where we have Tulsa agreements.
The good news is that we expect this to eventually correct itself.
We are seeing the trend to increase utilization in our installed base.
Accordingly.
Appendant of future installed we continue to believe that the pace of utilization will accelerate meaningfully in the second half of this year as the newly installed sites get up.
They're learning curves and increase utilization.
While we are a medical device company as you already know we have chosen to charge on a per patient basis in the United States for bundled services that include the use of our device the onetime disposable and the genius services.
We provide to support cases.
Because we deploy this unique business model in the U S.
We also wanted to clarify how we recognize revenue.
We recognized no revenue pump installation of good transfer pool system.
Nice part of the revenue upon shipment of the disposable and defer about 24% of the port.
<unk> revenue until the actual usage of the disposables or the treatment of the patient.
We believe that this is the winning model is it creates a true partnership between us and the health care provider.
In the first quarter of 2022.
We continue to see that.
Physicians are using telecom for whole go ahead partial gland, where focal therapy and salvage cases.
Two sets of significant dataset.
Yes.
One was the publication on use of Tulsa in patients who have had traditional markers.
In their prostate due to prior.
Our T radiation treatment.
The authors concluded.
That Tulsa Blasian, what's possible in these patients as long as precautions were taken.
The publication continues to enhance the proposition the Tulsa is it safe modality for salvage patients.
In addition, Dr.
Dr <unk>.
Recently reported.
50 patients.
At Ut southwestern.
That received focal rather than whole gland treatment.
With a variety of treatment plans.
<unk> partial gland ablation of intermediate risk patients.
Current treatment of <unk>.
Ph, along with lesions for men with BPH or lower urinary tract symptoms near.
Near whole gland treatment for men with multifocal disease.
And partial gland ablation of.
Localized.
Radio recurrent prostate cancer.
Are the outcomes show that at 12 months following treatment Psa.
<unk> declines.
An average of 63%.
Prostates shrink and average of 19%.
In terms of quality of life outcomes.
Only 6% to 8% of patients reported worsening avoiding erectile dysfunction, respectively.
Six months post treatment.
Notably <unk>.
No recurrence of cancer have been reported.
Overall, Ut southwestern reported minimal adverse event with high rates of potency.
In continence preservation.
And again.
<unk> to treat a wide variety of prostate disease patients.
These include those I just mentioned.
Well Ed.
Very large prostates up to 260 <unk>.
Oregon can find high risk cancer.
And Toledo cases to improve quality of life.
UT southwestern has experience.
Firms that Telcel is the best way to implement focal therapy.
It can be used to treat malignancy.
Anywhere within the prostate.
Which is.
Just one of the ways that Tulsa helps customize treatment hope the whole or partial gland.
Ut southwestern.
One of the seven top opinion, leading U S hospitals that are currently using the Tulsa pro system.
Already they are presented as an example of how we expect the opinion leading sites to adopt Tulsa.
They started first five cautiously analyzing the outcomes and feedback of their old patients.
And now.
See promising results there.
We're on track to expand.
<unk>.
Another significant development during the quarter was the confirmation of Tulsa Pro's compatibility with GE, making the system compatible with the big three medical technology companies in the global MRI space, which comprise.
More than 90% of the installed base of MRI in the U S.
This is an important achievement.
Is it significantly increased our available opportunity.
In addition to the agreement that we announced.
Brigham and women's hospital, we now have two additional agreements for the EMR sites to be installed in Q3 this year.
Okay.
I would now like to turn to our sponsored captain trial, which stands for a comparison.
Tulsa procedure versus radical prostatectomy.
RP.
Which treated its first patient in January and continues to progress.
To date <unk>.
<unk> sites have been activated.
And are currently recruiting patients.
Expected total of eight or more sites in the United States and two sites in Canada.
We remain on track to be able to finish enrollment in the second half of 2023 and anticipate.
The first readout.
Early data in Q4 2023.
We remain on track to be able to finish enrollment in the second half of 2023 and anticipate.
First readout.
Early data in Q4 2023.
We also continue to await full data on the <unk> trial.
Whose robotic RP arm is similar to that of our captain trial.
Is this single site level, one study conducted at Oslo University hospital that compared whole gland RP, two focal therapy, moving either HIFU or telephone.
Should be RFP outcome and captain match.
In fact.
We believe there is potential to demonstrate clear superiority, even though the captain trial has been designed with a non inferiority.
Mike.
Broadly speaking.
We are conducting the captain trials to increase awareness and adoption of Tulsa Pro.
One has to support coverage by payers.
To further support.
The first part for physical.
Profound will be very much front and center.
American Urological Association meeting in a few days.
Indeed, as many of you know a semi live Tulsa case will be presented during the plenary session.
We are limited in what we can say ahead of that but.
But you should expect us to provide more details closer to the event.
As for our ongoing reimbursement strategy.
Our Tulsa systematic review paper that was published online in March by the Journal and Bill Urology completed the clinical requirements to qualify to five ppt one application.
It also provides the highest level of evidence available in support of telecom in this case <unk>.
Demonstrating that Tulsa is safe and effective for treating primary prostate cancer recurrent prostate cancer and locally advanced prostate cancer as well.
The time will take his treatment of prostate cancer and the lower urinary tract symptoms normally caused by BPH having.
We remain on track to file the application.
End of June .
This application will be up for consideration.
Fall 2022 meeting.
If approved the CPT one code would be effective in January 2024.
To summarize.
To date.
Over 2000 Tulsa procedures.
<unk> performed by more than 100 positions.
And we anticipate that this number will continue to increase.
As the new install base begins to ramp.
We also see more activity in the international market as the year progresses.
A few onetime capital tailed projects.
Revived.
As a result.
We anticipate higher recurring and total revenue growth for the remainder of the year.
We are pleased to see the clinical data presented recently by UT southwestern has established that Telstra is the best way to perform focal therapy.
Cancer continues to be unrivaled in its.
Flexibility to provide whole gland partial grant or focal or salvage ablative treatment.
In any size or region of the prostate.
We are seeing early indications.
Wholesale compatibility with all three major manufacturers.
Our scanners.
Siemens and Philips is increasing our market access.
And we continue to be on track for.
We're filing our CPT one application for Tulsa Pro.
June .
This ends our prepared remarks for today.
With that Michelle and I are happy to take any questions you might have.
Operator.
Thank you we will now be conducting a question and answer session.
As a reminder to ask a question you will need to press star one on your telephone.
Draw your question press the pound key please stand by while we compile the Q&A roster.
Next question comes from Rommel Stargazer with Raymond James Your line is open.
Good afternoon, everyone understood. Thanks, so much for taking our questions.
So looking at first at the at the revenue recognizing that about $1 million of it was recurring and we saw about $1 million last quarter of recurring.
And given that you're now at 24 installed devices.
You're very close to your target could you give us a sense for how the utilization rates are balancing to provide for that.
Similar.
Revenue quarter over quarter, and how should we be thinking about those utilization rates hopefully increasing to drive that number upward.
Sure Robin good afternoon.
Yes.
Yes, so the recurring revenue in Q1 is primarily on the original installed base.
Impact.
The.
Currently our view.
The number of patients treated in the new installed base is still relatively limited.
And as I mentioned in the prepared remarks.
We differ.
If we have shipped.
Disposables, we still defer a good bit of revenue until the patients have been treated so it is higher actually about 5% to 10% higher than last quarter and I know in rounding off.
It may not show up as much.
Just fine but.
The.
The way I see this as I mentioned I've mentioned in prior calls.
We are building opinion, leading sites and I think that.
UT southwestern as an example, where feedstock.
Chart cautiously, we're still a new technology and then they will grow over time.
So I think to answer your question first question.
The revenue is primarily coming from the original installed base and number two.
I think as I said in the last call I think you should expect at least doubling of those by end of this year or maybe sooner because this installed base will now produce revenue then you will see impact in Q2 also but you'll definitely see significant improvement in the second.
As these sites do there first.
This is in a very cautious way and then they start to expand usage over time.
Perfect. That's very helpful. Thank you very much.
So you started referring to the installed base growing through that through the remainder of the year. So could you. Please give us a sense for how the funnel looks.
For the remainder of 2020.
Yes, so we.
We have.
No.
Still have.
At least another 10 agreements that we have not installed.
In addition to what we have done.
And as I mentioned in the prepared remarks some of these delays.
Two the fact that.
The sites, where MRI already existed.
And the hospitals away bottlenecking those are behind us and we were able to place the systems in their.
Starting but at least.
<unk> sites, where they had ordered new MRI and typical delivery of these <unk> are running about six months behind schedule.
So.
I think that has been with MRI has come in we should be able to continue to see an increase.
In the rest of this year, let's say at least another 10 or so this year.
Great. That's very helpful. And then if you don't mind I'll just ask one more question recognizing that the trial should hopefully readout sometime this summer and we're looking forward to those results.
Do you have a sense for whether on the captain trial, we may be able to anticipate some interim readouts before the <unk> 23.
Outlined and that's all for me and I'll get back in the queue. After this sure.
Right.
Most certainly I think the start trial should read out in July and August this year.
I think that.
Hmm.
The captain trial is not blinded to us.
It is randomized.
It's a device it is not blinded.
Given that one patients will undergo prostatectomy. The other one that we're going to tell us that it's hard to do.
Blind, it's impossible to blinded.
So if.
If we were to stay completely loyal to the level. One concept, we would have to wait until all patients were treated.
However.
And I think we will certainly deferred to the.
Travel coordinators and the lead author is ultimately, but I do think that.
Given that this is more about adoption and about.
Coverage.
The opportunity presents itself, we would certainly look to do that the worst cases Q4 2003.
I hear your point and I think certainly we will discuss it with the with the.
Yes.
Back to Gator's, who are conducting the trial.
Okay, great. Thank you very much and best of luck for the next quarter.
Thank you Rob.
Our next question comes Frank <unk> with Lake Street Capital Your line is open.
Hey, Arun <unk>. Thanks for taking my questions just a couple from me today.
Wanted to start with the commentary around capital equipment sales and how should we be thinking about that sequentially I know I heard your comments about some came into the model. This quarter and then it sounds like there's a good chance of a ramp in capital equipment sales in the back half of 2022, so any color there would be greatly appreciate it.
Yes.
Okay.
Yes.
Thank you.
A year or two ago people with stable.
You have a pipeline and we're going to come back.
And are you losing that pipeline, we are seeing that.
<unk>.
The pipeline did not really disappear.
And that is actually coming back so with the exception of China and to some extent Japan.
Japan, the pipeline that in Europe , and U S. We are selling from systems of song and even the U S.
As well because of the research work that is going on in number of period I think that pipeline does look pretty good.
And so I.
I think that certainly our primary business is still going to be with building the recurring revenue.
Our U S team is 100% focused on that part of the business but.
Hi.
It tends to give you a specific number but I can tell you that I'm more optimistic today than I have been in the prior quarters. I think you will see for example, more capital revenue even in Q2 as compared to Q1.
And I think what we'll do is try to give you color.
Following quarters, instead of giving you the longer term yet.
We think that Q2 is going to be better even on that side of the equation compared to Q1.
Got it Okay. That's helpful. And then wanted to swing back to utilization and ask a little bit more specific on that I think we got a lot of the elements, but wanted to ask a little bit more directly.
Remember there was a kind of a 40 40 6000 concept, maybe 40 procedures annualized in the first six to 12 months. Some power users doing 60 and then.
At scale, there was a potential and thought that you could maybe hit 100 procedures once fully folded into the organization is that still an accurate way to think about that and how have you been seeing that trending with your <unk>.
Initial placements in 2022, so far.
Yes, I think generally speaking track the way you've described it is still the accurate way of looking at it.
And I know everybody is anxious to see.
How quickly we ramp and I think that will happen.
And as I again as I described the Ut southwestern on purpose.
Case example, where they were very slow in the very beginning and then they started to see the feedback from their patients and they started to see that cancer was not coming back and now I think they will expand.
To that run rate 100 run rate.
Certainly by second half of this year I think they will expand to that.
Revenue run rate so that original.
Kind of hypothesis is generally intact.
It might be off by 5% or 10%, but I think generally it is intact.
Okay, perfect and then if I could just squeeze one last one in here.
The 24 systems that you have.
Installed to date, what's the mix of those that are just standalone Tulsa versus.
Introduced alongside our broader prostate cancer treatment program, whether that's da Vinci or radiation, specifically just trying to get a feel if there's some standalone or if theyre, mostly an add on too.
Brought in the offering at a specific clinic.
Yeah.
Frankly, I would say pretty much the majority of them are.
In hospital systems, where they are adding on.
And.
Hum.
Probably 80% of them are already in hospital systems.
That's a very good question and.
We are and as you know also.
Getting how the feedback from patients and what how many patients are actually asking for Tulsa by name and.
We are also continuing to see significant increase in bad debt.
Number of patients who are asking for telephone.
<unk>.
Then the number of hospitals are certainly getting the message that they need to be able to offer.
So in addition to what they offer today.
Got it Okay. That's helpful. I'll stop there thanks for taking my questions and congrats on all the progress.
Thank you so much thank you.
Our next question comes from Josh Jennings with Cowen Your line is open.
Hi, good evening, thanks for taking the questions.
Good evening, good evening, I was hoping to ask.
Just about the sales from I know you had some commentary and you're seeing some momentum increased demand.
But I was hoping that you may be able to give us a little bit of color on to different channels.
Your team is pursuing the entrepreneur entrepreneurial urology channel thing that image.
Imaging Center channel the academic Medical center are you seeing a differentiated level of demand or success from your sales team in either of those channels, where it seems to be broad based but I just wanted to check in on that.
And get some incremental yes.
Josh.
A great question and.
First of all I agree with your hyper high level.
Interest.
In in <unk>.
All of the channels that we've talked about historically.
The imaging center I think.
There's been a little bit of a challenged space.
Because the during this period, there basically sort of stayed true to the core part of their business, but I do think that in the next three months to six months you will actually see.
Imaging Center channel actually starting to produce quite quite nicely.
And we are we do have at least three or four systems going into the imaging centers, but the ones that we put in in the last quarter or two.
More heavy towards the hospital settings.
And I think I mean, one of the things that we have we are very confident.
Yeah.
Patients want this product and they are willing to pay for this product and I think the imaging centers, because they're only cash paid as compared to hospitals, where they didn't use the C code.
Imaging centers have been a little bit cautious during this time, but I think that where it is pretty clear that patients are willing to pay and so you will see.
Our thesis with respect to those channels.
Really starting to blossom by the second half of this year.
Excellent. Thank you and just thinking about the per procedure.
Revenue than profound is capturing have there have there been any change I think you've talked on the fourth quarter call that a little bit of a lift potentially but where does that stand now and how how have your customers in each of those channels been responding to to the current I guess per procedure.
The profound is charging.
So we our agreement now.
Typically.
In the range of 83 to $8500. So there is a little bit better than Nic Thompson.
And.
There is I.
I mean first of all we do not offer any other option.
That is the only option and we do not discount on any site for any site. So there is a phenomenal consistency in our purchase agreement and our contracts and that is one of the disciplines that we started with and we plan to stay with.
Because.
We think that it is a hard way to build a business.
Doing but it is working.
It will over the long haul keep our business fairly fairly simple and that is one of the things. We're looking for and we are increasingly seeing that the hospital.
And the imaging centers are not pushing back against this this concept.
Excellent and then last question is just I know you announced earlier in the year about the hiring Ken <unk>, the Chief commercial officer, but just wondering if you could help us understand he is a veteran in the med device space like yourself I'm. Just wondering if you could share any kind of early impacts that that he is having.
On the commercial operations and profound I appreciate you taking all the questions.
Thank you Josh I am very proud of Ken.
Thrilled with.
He joined US in January .
And.
He spent his first.
Total weeks really getting to know our product and the team.
He has already been able to bring a couple of other seasoned executive.
He is already adjusted our sales team to really focus on utilization and later this week in fact, you will see.
The <unk>.
Meeting, we have coming up I think you will see a significant presence from our company.
And it is related to the.
<unk> sales and marketing team.
So you will definitely see significant impact of the team that we've brought in.
In particular Mccann.
Understood understood. Thank you so much.
Thank you and I under to ask a question at this time. Please press Star then one our next question comes from Scott Mccauley with paradigm capital. Your line is open.
Hi, gentlemen, thanks for taking the questions.
Just wanted to kind of follow up again on the.
Pipeline.
I was looking at the recent deck that you presented at the Bloom Burton Conference.
And you specifically mentioned Theres about 15 additional <unk> in place for new systems to go in and I think you just kind of mentioned that shouldn't you have signed contracts for the 10, new systems to kind of go in to move through the rest of the year and.
I just wanted to.
Dig into that Delta is kind of how you define purchase order versus signed contract.
And then kind of what we should be expecting.
For the balance of 2022.
Sure Scott.
It's not a major issue it says that some of the agreements we have are for multiple sites and not every one of those would be installed in 2022.
It's possible that in Q4 that we would accelerate but I think at this point, we're kind of feeling like we could probably get to 10 more this year.
But certainly in terms of the agreements we have multi signed agreements now in.
In place.
And so that's where that difference.
Got it got it.
That definitely helps.
And then on the.
On.
The reimbursement side, obviously upcoming potentially calling that application.
And for consideration potentially in the fall.
Do you know kind of when the results of that kind of MAA consideration would be would be made public.
Kind of in advance of it potentially coming into ex kind of early 2024.
Yes, Scott, we're very excited about the potential.
We have had reviews with the society and we.
I believe we will have support.
From them. So there are a number of milestones. The first one is we will trial by end of June .
And so at the next analyst call, we will announce.
The status of that milestone.
<unk>.
<unk> meeting is I believe on the 27th of September and that meeting is a public meeting.
Typically you will be able to hear support and so on and typically.
If there is a major problem youll know on that day.
But the official announcement is typically about six weeks after the meeting.
So in any event by Middle of November we will know if we have to.
Code or we do not.
So and then after that it's just like a cookie cutter stuff that just goes on to the following.
Six to nine months.
And then by the following.
Remember.
You will know what the RV, you are announced and thereby we will have an idea that if it is covered what the payments will be.
So.
September will know.
Kind of an official Lee if there's a problem November we'll know if it's approved the following September we'll have we'll know.
What the likely payments are likely to be associated with it.
So that's the milestone.
Scott I wanted to take one more minute.
As I said I'm very excited about it and I do think that we.
We are actually one year ahead.
<unk> to what we originally thought.
But I also don't want to undermine the fact that.
It gives us this confidence and why we're being disciplined in the way we are approaching this market is that.
Got it.
Patients are willing to pay so we do continue to see it.
Increase in utilization increase in recurring revenue even during this period.
And most certainly we think obviously CPT one is a very very big step for any company, but we do feel that even without that we are going to show you increased utilization and increased number of sites.
Absolutely.
That's great thanks for calling that out.
And just lastly for me in terms of costs.
In terms of.
Increased sales and marketing costs, as you're kind of retooling the team and R&D costs with with captain.
Kind of any color on how you expect kind of the cash burn to increase kind of in the coming quarters.
Yes.
So I think as you saw from <unk> comments.
Our R&D cost are going to fairly level at this point there'll be incremental increases because of casting but not materially significant.
Overhead costs are likely to be fairly stable also.
But the investment is again as I mentioned, we have made into the putting the electronic systems or ERP and CRM and so on is also pretty much behind us and we will have maintenance cost for those things going forward. So the primary increase that you see in our core.
Site is already in the sales and marketing and we will grow.
As the installed base grows.
And so I think.
<unk> kind of linearly to how the.
The recurring revenue installed base growth is probably fair to think about.
And I don't anticipate.
I know our revenue total revenues are pretty low, but as you get to.
The the.
A little bit higher revenue run rates, which I do believe we will this year later this year.
I think you will actually start to see the burn a little bit less than what it is at the moment.
So we are.
<unk> culture.
<unk> also and.
I don't think you should expect that we will continue to increase I think it will be pretty much stabilized. The second half of this year and then hopefully next year, we'll start to see.
Some some improvement.
I think that's what we have said for them. So thank you for clarifying.
As you can see that for Q1, R&D was only 2% year over year right. So look I mean, we are not expecting R&D to increase significantly and capital trial as long as indicated before is spread out over a longer period of time.
You'll see that the.
<unk> expenses are going to significantly increase.
Selling and distribution it will be adjusted as we see fit based on the revenue ramp up so overall the burn rate, we still expect to be similar to last year.
Fantastic. Thanks, gentlemen, thanks for taking my questions.
Our next question comes from Brian <unk>.
Your line is open.
That was close can you guys hear me okay.
Yes, Brian please.
It seems as if the number of new contract signings is continuing to outpace your installations.
What are you guys doing to prepare for a higher level higher level of installations throughout the balance of this year and as you progress into 'twenty three.
Yes.
The number of.
Certainly.
Okay.
The bottleneck at the moment is in these new MLR installation, that's really where the next bottleneck is four one.
But with respect to.
Our ability to install.
Can really.
Have the ability to do twice as much as what we're doing at the moment, we've done pretty well on that end.
We are focused actually to be honest is right now our primary focus is really on getting the new site.
As fast as possible.
So I.
I don't think.
We'll see a bottleneck from.
The installation side.
Think it is more on the EMR installs.
I think where our sales team is really focused is on getting the utilization of the current sites column I don't know if I answered your question completely or not if I didn't please.
Yes.
Yeah.
Brian can you hear me.
Yeah.
And it looks like we've lost Brian I would like to turn the call back over to Dr. <unk> for closing remarks.
Thank you so much and I look forward to we look forward to updating you at the Q2 call and.
If you are if any of your <unk>.
Conference. Please stop by at our Booth, we I would like to share that the boot. Thank you so much.
Thank you.
Please stop for participating you may now disconnect.
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