Q1 2022 Motus GI Holdings Inc Earnings Call

Good day and welcome to the MOTIS GI 1st Quarter 2022 Earnings Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touchstone phone. And 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 Mr. Garth Russell of Lifeside Advisors. Please go ahead.

Good day and welcome to the motives D. I first quarter 2022 earnings call. All participants will be in a listen only mode should you need assistance. Please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one.

You touched on phone and 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 Mr. Garth Russell of lifestyle Advisors. Please go ahead.

Thank you, operator. And thank you everyone for joining us for the MODIS GI first quarter 2022 update call. Representing the company are Tim Moran, Chief Executive Officer, Andrew Taylor, Chief Financial Officer, and Mark Pomerantz, President and Chief Operating Officer of MODIS GI.

Thank you operator, and thank you everyone for joining us for the Motors first quarter 2022 update call representing the company are timber and Chief Executive Officer, Andrew Taylor, Chief Financial Officer, and Mark Pomeranz, President and Chief operating officer of Motor Ci before turning the call over to management for their opening remarks.

Before turning the call over to management for their opening remarks, I would like to take a minute to remind you that this conference call and webcast will contain certain forward-looking statements about the company. These statements are subject to risks and uncertainties that could cause actual results for different pants and pants.

I would like to take a minute to remind you that this conference call and webcast will contain certain forward looking statements about the company. These statements are subject to risks and uncertainties that could cause actual results to differ. Please note that these forward looking statements reflect our opinions only as of the date of this call. We will not undertake any obligation to revise or publicly release.

Please note that these forward-looking statements reflect our opinions only as of the date of this call. We will not undertake any obligation to revise or publicly release the results of any revisions to these forward-looking statements in light of new information or future events.

The results of any revisions to these forward looking statements in light of new information or future events factors that could cause actual results or outcomes to differ materially from those expressed or implied by such forward looking statements are discussed in greater detail in our most recent filings on Form 10-K, and other periodic filings on Form 10-Q.

factors that could cause actual results or outcomes that differ materially from those expressed or implied by such forward-looking statements are discussed in greater detail than our most recent filings on Form 10-K and other periodic filings on Form 10-Q and 8-K filed with the FCC.

8-K filed with the FCC I would now like to turn the call over to Tim Brandt CEO of modest Gi Tim the floor is yours.

I would now like to turn the call over to Tim Rand, CEO of Modis GI. Tim, the floor is yours.

Thanks, Garth and good afternoon, everyone.

Thanks Garth and good afternoon everyone. Thank you for joining our call today. I am pleased to share an update on our business through the first quarter of 2022 as well as provide early insights of what we're seeing in the second quarter.

Thank you for joining our call today.

I am pleased to share an update on our business through the first quarter of 2022 as well as provide early insights of what we're seeing in the second quarter.

Following my updates, Andrew will provide an overview of our financial performance for the first quarter, and then we will open the call to take your questions.

Following my updates Andrew will provide an overview of our financial performance for the first quarter and then we will open the call to take your questions.

So let's get started.

At the end of March, I shared with you on our last conference call my thoughts in terms of MODIS-GI truly being at an inflection point in our pivot towards growth.

At the end of March I shared with you on our last conference call My thoughts in terms of modus G I truly being at an inflection point in our pivot towards growth.

While we discussed during the call the very real impact that the pandemic has had on our business for much of the last two years, I also outlined the important milestones we've achieved during that time, including the significant progress we've made in advancing our technology with the FDA clearance of PureView EVS.

While we discussed during the call the very real impact that the pandemic has had on our business for much of the last two years I also outlined the important milestones we've achieved during that time, including the significant progress we've made in advancing our technology with the F. D. A clearance of peer view easy yes.

establishing a clear plan for pursuing outpatient reimbursement with the development of a large multi-center clinical trial.

Establishing a clear plan for pursuing outpatient reimbursement with the development of a large multi center clinical trial.

And the expansion of our customer facing team through increased investment in commercial resources.

and the expansion of our customer-facing team through increased investment in commercial resources.

Our revenue for the first quarter is not reflective of our potential or any of the key advancements I just outlined.

Our revenue for the first quarter is not reflective of our potential or any of the key advancements I just outlined as.

As we discussed at the end of March, we were impacted in January and February by the Omicron Surge and staffing shortages at hospitals. And March was a transition month as we began to sunset Purview Gen 2 activities and execute initial shipments of our all-new Purview EVS to the first sites.

As we discussed at the end of March we were impacted in January and February by the Omicron surge and staffing shortages at hospitals and March was the transition month as we began to sunset pure view Gen. Two activities and execute initial shipments of our all new peer view evs to the first sites.

So let's look forward.

Approximately six weeks ago I forecasted that we would have the peer view evs place in approximately 12 sites in the near term.

Approximately six weeks ago, I forecasted that we would have the peer view EVS placed in approximately 12 sites in the near term.

As we sit here at the midpoint of the second quarter, we're well on track with that expectation, having already placed EVS in 11 hospitals.

As we sit here at the midpoint of the second quarter.

We're well on track with that expectation, having already placed evs in 11 hospitals.

and based on a review of our activity and backlog, I fully expect we will overachieve this initial forecast.

And based on a review of our activity in backlog I fully expect we will overachieve. This initial forecast.

Moreover, we continue to receive very positive feedback from all accounts, both from the physicians and their staff.

Moreover, we continue to receive very positive feedback from all accounts, both from the physicians and their staff.

As a reminder, our EVS system provides a much simpler user experience.

As a reminder, our E. P. S system provides a much simpler use your experience spanning the staff, who sets up and breaks down the product to the physician, who navigates through the colon to conduct a high quality exam.

spanning the staff who sets up and breaks down the product to the physician who navigates through the colon to conduct a high quality exam.

A prominent physician who leads the GI department at a major academic medical center recently commented that PureView EVS is, quote, night and day easier than the last generation system. He said, set up is simple and intuitive and the slimmer sleeve design allows me to do everything I need to do during the procedure.

A prominent position who leads the GI department at a major academic Medical Center recently commented that pure view E. V. S is quote night and day easier than the last generation system. He said set up is simple and intuitive and the slimmer sleeve design allows me to do everything I need to do during.

The procedure.

When you have a great product you also need a right sized talented sales team to gain the critical mass required to close opportunities in the pipeline.

When you have a great product, you also need a right-sized, talented sales team to gain the critical mass required to close opportunities in the pipeline.

As such, we accelerated our commercial expansion in Q1 and now have eight field sales leaders strategically positioned across the U.S.

As such we accelerated our commercial expansion in Q1, and now have eight field sales leaders strategically positioned across the U S. We.

We have every major region covered and each of the new salespeople come with proven track records of selling GI products at many of the world's largest medical device companies.

We have every major region covered in each of the new salespeople come with proven track records of selling Gi products at many of the worlds largest medical device companies.

While several of our salespeople just recently were brought on board, we believe they will make noticeable positive impact as we penetrate our backlog of qualified accounts.

While several of our salespeople just recently were brought on board. We believe they will make noticeable positive impact as we penetrate our backlog a qualified accounts.

In addition, now that we've expanded to new geographies, we are already conducting evaluations at hospitals that have not had any previous interactions with our kids.

In addition, now that we've expanded to new geographies. We are already conducting evaluations at hospitals that have not had any previous interactions with our team.

When you couple this activity alongside our existing Gen two customers and those who had been waiting to evaluate evs. It gives us the confidence that driving quarter over quarter revenue growth is well within our sights.

When you couple this activity alongside our existing Gen 2 customers and those who have been waiting to evaluate EVS, it gives us the confidence that driving quarter over quarter revenue growth is well within our site.

Let's discuss some of the early indicators and metrics that we believe are key to tracking our progress moving forward.

Let's discuss some of the early indicators and metrics that we believe are key to tracking our progress moving forward.

Of course, the overall number of sites is the starting point, but that's only part of the equation.

Of course, the overall number of sites as the starting point, but that's only part of the equation.

The trajectory of our long-term growth will be determined by how many procedures are performed at an individual site on a weekly, monthly, and quarterly basis utilizing our system.

The trajectory of our long term growth will be determined by how many procedures are performed at an individual site on a weekly monthly and quarterly basis utilizing our system.

This is why we believe it is equally or perhaps even more important that we are also seeing positive initial indicators around utilization, including.

This is why we believe it is equally or perhaps even more important that we are also seeing positive initial indicators around utilization, including, one, more procedures being performed per month by our customers and evaluation sites than with our previous generations.

One more procedures being performed per month by our customers and evaluation sites than with our previous generation.

As a result, we saw very strong procedure volumes in April at both closed and accounts that are under evaluation.

As a result, we saw a very strong procedure volumes in April at both closed and accounts that are under evaluation.

Two the number of procedures being done independently by a physician without a modus sales rep on site, which is growing now that the required training has been dramatically reduced.

The number of procedures being done independently by a physician without a modus cells rep on site.

growing now that the required training has been dramatically reduced.

Three, the system being used as an on-demand tool, meaning after a physician starts a case and sees that the patient was not prepped well, they intuitively ask for peer view to salvage the procedure.

Three the system being used as an on demand tool, meaning after a physician starts a case and sees that the patient was not prep well. They intuitively asks for pure view to salvage the procedure.

And for.

Continued positive user experience from the entire GI suite on the simplicity of the solution to deploy during their normal procedural workflow.

Continued positive user experience from the entire Gi suite on the simplicity of the solution to deploy during their normal procedural workflow.

To that point, nothing speaks more about the potential of a product than real-world customer feedback.

To that point nothing speaks more about the potential of our product then real world customer feedback let.

Let me take just a minute to highlight feedback from a new account who is currently evaluating PureView EVS.

Let me take just a minute to highlight feedback from our new account, who is currently evaluating peer of U E. P. S.

Dr. Brian Hansen, Acting Section Chief of Gastroenterology and Hepatology at the Minneapolis VA Medical Center, stated, and I quote,

Doctor Bryan Hanson acting section chief of Gastroenterology, and Herpetology at the Minneapolis, VA Medical Center stated and I quote.

PureView has allowed us to achieve a complete quality colonoscopy in patients that would have otherwise been canceled or aborted.

If your view has allowed us to achieve a complete quality colonoscopy in patients that would have otherwise been cancelled or aborted.

This is an important service to our patients who have complicated medical comorbidities and often travel great distance for procedures.

This is an important service to our patients who have complicated medical comorbidities and often travel great distances for procedures.

With a growing number of VA hospitals are evaluating the peer view Evs, we believe the overall VA system in the U S, which consists of approximately 170 medical centers across the country represents a high yield opportunity for adoption of the peer view E. B S system.

With a growing number of VA hospitals evaluating the PureView EVS, we believe the overall VA system in the U.S., which consists of approximately 170 medical centers across the country, represents a high-yield opportunity for adoption of the PureView EVS system.

Now, let's discuss our progress on key upcoming catalysts.

Now let's discuss our progress on key upcoming catalysts.

Let me first review our clinical study activity and outpatient reimbursement strategy.

Let me first review, our clinical study activity and outpatient reimbursement strategy.

Our European outpatient clinical study is fully enrolled, and we just recently announced that the top line results from this study are expected to be presented during Digestive Disease Week 2022, which will take place in person and virtually May 21st through the 24th.

Our European outpatient clinical study is fully enrolled and we just recently announced that the topline results from this study are expected to be presented during digestive disease week, 2022 which will take place in person and virtually may 21st through the 24th.

DDW is the world's premier meeting for physicians, researchers, and industry in the fields of gastroenterology, hepatology, endoscopy, and gastrointestinal surgery.

D. D. W is the worlds Premier meeting for physicians, researchers and industry in the fields of Gastroenterology, Hepatology endoscopy and gastrointestinal surgery.

As a reminder, this study is evaluating the clinical outcomes in patients with a history of poor bowel preparation using a low volume prep with limited diet restrictions and the peer view system.

As a reminder, this study is evaluating the clinical outcomes in patients with a history of poor bowel preparation using a low volume prep with limited diet restrictions and the pure Vu system.

The investigator-initiated study is being conducted at two health centers in the European Union and has enrolled all 44 patients.

The investigator initiated study is being conducted at two health centers in the European Union and has enrolled all 44 patients.

The primary endpoint for the study is improvement of the bowel preparation from baseline to post-procedure as assessed by the Boston Bowel Preparation Scale.

The primary endpoint for this study is improvement of the bowel preparation from baseline to post procedure as assessed by the Boston bowel preparation scale.

As previously discussed, we have developed a multi-pronged strategy to position peer view for outpatient reimbursement.

As previously discussed we have developed a multipronged strategy to position pure view for outpatient reimbursement.

There are approximately 18 million outpatient procedures conducted in the U.S. each year, and currently, approximately 4.7 million of these patients struggle to get a high-quality prep prior to their procedure.

There are approximately 18 million outpatient procedures conducted in the U S. Each year and currently approximately $4 7 million of these patients struggle to get a high quality prep prior to their procedure.

This can lead to delayed, aborted, and repeat procedures, which puts a burden on the healthcare system and the patient, both from a clinical and economic perspective.

This can lead to delayed aborted and repeat procedures, which puts a burden on the health care system and the patient both from a clinical and economic perspective.

A critical step in this process is generating key clinical and economic outcomes via a large multi center clinical trial.

A critical step in this process is generating key clinical and economic outcomes via a large multi-center clinical trial.

based on data from the aforementioned EU study and through input from a group of world-class opinion

Based on data from the aforementioned EU study and through input from a group of World class opinion leaders, we've been working diligently in the design and detailed protocol for this study, including recently meeting with CMS to solicit their feedback for incorporation into the design.

We've been working diligently in the design and detail protocol for this study, including recently meeting with CMS to solicit their feedback for incorporation into the design.

We expect to initiate this study before the end of 2022 and will keep you apprised of our progress.

We expect to initiate this study before the end of 2022 and we will keep you apprised of our progress.

One additional commercial point as it relates to selling pure view into the outpatient setting we are making progress in hospital based outpatient units as well as the previously mentioned veteran affairs medical centers without having specific reimbursement in place.

One additional commercial point as it relates to selling peer view into the outpatient setting, we are making progress in hospital based outpatient units, as well as the previously mentioned veteran affairs medical centers without having specific reimbursement in place.

In terms of ongoing product innovation as I have discussed on previous calls we've initiated a project to add upper Gi capabilities to the new peer view Evs platform.

As I have discussed on previous calls, we've initiated a project to add upper GI capabilities to the new PureView EVS platform.

some of the key enhancements in the EVS system, such as a much larger suction channel, more efficient irrigation jets, and more efficient irrigation systems.

Some of the key enhancements in the E V S system.

She is a much larger suction channel more efficient irrigation jets.

A smaller profile and improved flexibility will be further optimized to allow the system to provide broad utility in an EGD procedure.

Smaller profile and improved flexibility will be further optimized to allow the system to provide broad utility and in E. G D procedure.

As we've discussed previously, this utility is especially important in the 400,000 upper GI bleeding cases where not only stomach content, but blood and blood clots can impair the field of view.

As we've discussed previously this utility is especially important in the 400000 upper Gi bleeding cases, where not only stomach content, but blood and blood clots can impair the field of view.

Finally, turning to potential strategic partnerships and collaboration.

Finally, turning to potential strategic partnerships and collaborations.

As we build momentum and adoption in U.S. hospitals in 2022 and our revenue begins to ramp, we believe that the relationships we've built with potential strategic partners could become actionable.

As we build momentum and adoption in U S hospitals in 2022, and our revenue begins to ramp we believe that the relationships. We've built with potential strategic partners could become actionable. We continue to keep these partners abreast of our progress with the aim of exploring opportunities for potential commercialization.

We continue to keep these partners abreast of our progress with the aim of exploring opportunities for potential commercial and or product partnerships that advance our strategy and accelerate value for our shareholders.

<unk> N door product partnerships that advance our strategy and accelerate value for our shareholders.

With that, I will now turn the call over to Andrew to provide detail on our Q1 2022 financials.

With that I will now turn the call over to Andrew to provide detail on our Q1 2022 financials.

Andrew.

Thank you, Tim, and thank you, everyone, for joining us today.

Thank you Tim and thank you everyone for joining us today.

We reported revenue for the first quarter 2022 of $20,000 compared to $51,000 for the same period last year.

We reported revenue for the first quarter 2022 of $20000 compared to $51000 for the same periods last year.

As Tim discussed earlier, the impact of both the Omicron variant early in the quarter, as well as our controlled phase-out of Gen 2 and launch of EVS later in the quarter, significantly affected our first quarter results.

As Tim discussed earlier, the impact of both the Amazon variant early in the quarter as well as our controlled phase out of Gen. Two and launch of Evs later in the quarter.

Significantly affected our first quarter results.

We believe that these specific factors will be less impactful though in the second quarter of 2022.

We believe that these specific factors will be less impactful in the second quarter of 2022.

And beyond.

for the three months and in March 31, 2022, we reported a net loss attributable to common shareholders of approximately $4.8 million or $0.09 per basic and diluted share.

For the three months ended March 31, 2022, we reported a net loss attributable to common shareholders of approximately $4 8 million or nine cents per basic and diluted share.

compared to a net loss attributable to common shareholders of $10.8 million or $0.25 per basic and diluted share for the same period last year.

Compared to a net loss attributable to common shareholders of $10 $8 million or 25 cents per basic and diluted share for the same period last year.

which included the impact of a non-cash deemed dividend for warrant issuance of $6.1 million.

Which included the impact of a noncash deemed dividend from warrant issuance of $6 $1 million.

During the first quarter, 2022, net cash used in operating activities and for the purchase of fixed assets was $5.2 million, compared to $4.7 million for the same period of 2021.

During the first quarter 2022, net cash used in operating activities for the purchase of fixed assets was $5 $2 million compared to $4 $7 million for the same period of 2021.

As is the case each year, first quarter cash expenditures include certain one-time annual outflows associated with compliance and corporate matters, this year totaling approximately $1.8 million, which is not expected to occur in future quarters this year.

As is the case each year first quarter cash expenditures include certain one time annual outflows associated with compliance and corporate matters. This year totaling approximately $1.8 million, which is not expected to recur in future quarters. This year.

At March 31, 2022, we reported $23 million in cash and cash equivalents, which includes our fully funded $12 million credit facility with <unk> capital.

And March 31, 2022, we reported $20.3 million in cash and cash equivalents, which includes our fully funded $12 million credit facility with Creos Capital.

there are no financial or liquidity covenants associated with this facility.

There are no financial or liquidity covenants associated with this facility.

Our current cash and cash equivalents allow us to continue executing on our near-term catalysts and are expected to meet our overall anticipated cash needs into the first quarter of 2023.

Our current cash and cash equivalents allow us to continue executing on our near term catalysts and are expected to meet our overall anticipated cash needs into the first quarter of 2023.

And with that, I'll now turn the call back over to Tim.

And with that I'll now turn the call back over to Tim.

Thanks, Andrew, and thank you, everyone, for joining our call today. We believe we are at a key turning point in our business with the headwinds of COVID diminishing and the investment in our commercial footprint, launching the all new Pureview EVS.

Thanks, Andrew and thank you everyone for joining our call today.

We believe we are at a key turning point in our business with the headwinds of Covid diminishing and the investment in our commercial footprint launching the all new pure view E D S.

We believe we are well positioned to positively impact the inefficiencies inherent in the current standard of care for colonoscopy procedures, and in doing so, are expected to create shareholder value by driving adoption and generating sustainable revenue growth in the future. I'll now ask the Operator to open up.

We believe we are well positioned to positively impact the inefficiencies inherent in the current standard of care for colonoscopy procedures and in doing so are expected to create shareholder value by driving adoption and generating sustainable revenue growth in the future.

I'll now ask the operator to open the call for your questions.

Thank you. We will now begin the question and answer session. To ask a question, you may press star then 1 on your touchtone phone. If you're using a speaker phone, please pick up your handset before pressing the keys. And to withdraw your question, please press star then 2. And at this time, we'll pause momentarily to assemble our roster.

Thank you we will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone if youre using a speakerphone. Please pick up your handset before pressing the keys and to withdraw your question. Please press Star then two and at this time, we'll pause momentarily to assemble our roster.

And the first question will come from Steven Lichtman with Oppenheimer. Please go ahead.

And the first question will come from Steven Leitschman with Oppenheimer. Please go ahead.

Thank you. Hi, guys. Hey, Steve. So, Kim, congratulations on the first tranche of hospitals here. I was wondering if you could update us on what the backlog looks like, your target hospital numbers, how that's building, you know, consuming beyond these first 11.

Thank you hi, guys.

Hey, Steve.

Tim Congratulations on the first tranche of hospitals here I was wondering if you could update us on what the backlog looks like your target hospital numbers.

How that's building.

Assuming beyond these first 11.

Sure, Steve. Yes. Thanks for the question. So we're really pleased with how fast the team has gotten out of the gates with the new device. So let me kind of recap that for you. So I said, we've got 11.

Sure Steve Yes. Thanks for the question. So we're really pleased with how fast the team has gotten out of the gates with a new device. So let me kind of recap that for you. So I said, we've got 11 sites that are approved for use.

sites that are approved for use. If you break that 11 down, five of them are closed, meaning they're under a capital agreement.

Can you break that 11 down five of them are closed meaning there they're under a capital agreement.

and they're purchasing the new EVS leaves. Six of the 11, so the remaining six are nearing the end of their evaluation, and we expect we'll close before the end of the second quarter.

And they're purchasing the new Evs leaves.

Six of the of the AR of the 11th so the remaining six are nearing the end of their evaluation and we expect will close before the end of the second quarter.

Um, and right now, if you look at our backlog, we have roughly around 90 hospitals in our kind of qualified backlog.

And right now if you look at our backlog, we have roughly around 90 hospitals in our kind of qualified backlog, but the team has generated so I think we will initiate I would say another eight to 10 evaluations in May and June . So we will have a lot happening over the course of this quarter and the teams.

that the team has generated. So I think we'll initiate, I would say, another eight to 10 evaluations in May and June . So we'll have a lot happening over the course of this quarter and the team's done a great job to date. Really, I am getting to about 12 closed accounts by the end of Q2, Steve. So basically taking the 11, we've got five closed already, six are nearing the end of their evaluation, get them through the process.

Done a great job to date really eyeing I'm getting to about 12 closed accounts by the end of Q2, Steve. So basically taking the 11, we've got five closed already six are nearing the end of their evaluation get them through the process.

And we'll have, of course, a lot more happening in terms of evals that, as I just mentioned, we'll start in May and June and we'll carry into Q3. So if we can put 12 closed accounts on the board by the end of Q2, I think we fully expect to be able to do more than that in terms of closes in Q3 and more than that in Q4. So it kind of gives you a bit of a sense of what it looks like for full year total accounts.

And and will have of course, a lot more happening in terms of eval that as I. Just mentioned will start in May and June and will carry into a into Q3. So if we can put 12 closed accounts on the board by the end of Q2, I think we fully expect to be able to do more than that in terms of closes in Q3 and more than that in Q4, so kind of.

You're a bit of a sense of what it looks like for full year total.

Total accounts.

Got it.

Shifting to our patient. I think Kim, you said that you're having some success. I believe you mentioned the VA even pre reimbursement here. Can you expand on that a little bit?

Shifting to outpatient I think Tim you said that you're having some success I believe you mentioned the E U.

Even pre reimbursement here can you expand on that a little bit.

Yeah, so what we're seeing, and we saw some of this with Gen2, where if you kind of evaluated

Sure Yeah, so what we're seeing and we saw some of this with Gen, two where where if you kind of evaluated the use cases with pure view at our hospital installations, some procedures, where outpatient but what we're finding now with E. V. S is having the product on site. These physicians are targeting on.

The use cases with peer view at our hospital installations, some procedures were outpatient, but what we're finding now with EVS is having the product on site. These physicians are targeting on an outpatient basis.

Outpatient basis.

at the hospital, the kind of frequent flyer patients that have had a history of poor prep, right? So in one case, they'll say I know that this patient typically has an issue with prepping, maybe it's due to a medical condition, they'll proactively use PureView for their screening procedure to ensure they get a high quality exam. So that's one example. But what also has been enabled through EDS, as we talked about on the last call, because they're able to...

At the hospital the the kind of frequent flyer patients that have had a history of poor prep right. So in one case, they'll say I know that this patient typically has an issue with prepping, maybe it's due to a medical condition they'll proactively use pure view for their screening procedure to ensure they get a high quality exam. So that's one example, but what.

Also is has been enabled through Etfs as we talked about on the last call because they're able to load.

the device onto a dirty scope, they're going in to start a procedure on an outpatient basis finding that the patient is in prept well and saying, give me peer review, put it on in less than 60 seconds and completing that a case where in the past they would have either had a struggle through it and try to get the case done or cancel that procedure and bring the patient back. So, both of those are really kind of the use cases that we're seeing from an outpatient perspective. And I think because it's on site.

The device onto a dirty scope, they're going into startup procedure on an outpatient basis, finding that the patient isn't prepped, well and saying give me pure if you put it put it on in less than 60 seconds at completing that a case where in the past they would have either had to struggle through it and try to get the case done or cancel that procedure and bring the patient back so.

Those are really kind of the use cases that we're seeing from an outpatient perspective, and I think because its onsite Steve.

that, you know, the kind of reimbursement for the fact that it's technically an outpatient case isn't really coming into play. They're basically just using it because it's available for them.

Steve that you know the kind of reimbursement for the fact that it's technically an outpatient case isn't really coming into play there basically just using it because it's available for them.

Well just to add to that Steve. This is mark you know, especially in places like the VA, which are closed systems. Obviously for them you know if they've got to bring them to a repeat and bring a patient back that's still on their dime. So the reimbursement is really not the critical nature on there because they're closest.

Just to add to that, Steve, this is Mark, you know, especially in places like the VA, which are closed systems, obviously for them, you know, if they've got to bring to a repeat and bring a patient back, if it's still on their dime, so the reimbursement is, you know, really not the critical nature on there because they're closest.

Thanks, Mark. Maybe lastly, and then I'll jump back in Q, just given the movement you're seeing now internationally with the data coming up here. Tim, can you remind us of where you guys are?

Got it thanks, Thanks Mark.

Maybe lastly, and I'll jump back in queue, just given the movement, you're seeing now internationally with the with the data coming up here.

Tim can you remind us of where you guys are well.

No potential distribution partnerships your overall thoughts on on partnering obviously.

you know, potential distribution partnerships, your overall thoughts on partnering, you know, obviously, particularly outside the U.S., but also in the U.S. potentially as well.

Particularly outside the U S. But also in the U S potentially as well.

Yeah, so, you know, we've we've talked about this a bit before. We've absolutely invested a lot of time and effort into building, I think, very productive and kind of high quality relationships with both large potential strategic partners, medical device companies, as well as some other.

Yeah. So you know we've talked about this a bit before we've absolutely invested a lot of time and effort into building I think are very productive and kind of high quality relationships with both large potential strategic partners medical device companies as.

As well as some other.

non-U.S. licensing opportunities. We continue to cultivate both of those. I think, Steve, the reality is, now that we've got our EVS product and we've put some more salespeople on the street.

Non U S licensing opportunities we continue to cultivate both of those I think Steve. The reality is now that we've got our evs product and we put some more salespeople on the street.

as we start to put, you know, the revenue up here in Q2 and then continue to grow that revenue, I think those opportunities become a lot more actionable for us. Now, some of the other things that we're working, you know, like a licensing in an OUS geography that, you know, may not be on our radar anytime soon, those things, you know, we're continuing to try to accelerate forward. And what we like about that is it could get us, you know, commercial acceleration, but also potentially some non-dilutive funding into the company. So both of those things are actively being worked. And...

As we start to put the revenue up here in Q2, and then continue to grow that revenue I think those opportunities become a lot more actionable.

For us are now some of the other things that we're working you know like a licensing in our in our O U S. Geography that you know may not be on our radar anytime soon.

Those things you know, we're continuing to try to accelerate forward and what we like about that is it could get US you know commercial acceleration, but also potentially some non dilutive funding into the company. So both of those things are actively being worked and I think as as we have now are you now gotten the product out to the market a lot of these folks are looking and watching to see our progress here and.

I think as we have now gotten the product onto the market, a lot of these folks are looking and watching to see our progress here, and we'll keep you posted as things develop.

We will keep you posted as things develop.

Great. Thanks, Tim.

Thanks, Steve.

The next question will come from E. Chen with H C. Wainwright. Please go ahead.

The next question will come from Yi Chen with A.T. Wainwright. Please go ahead.

This is Bob Allen dialing in for H N can you hear me okay.

Yes. Hi, Bhuvalan. Hi. So, a few questions from our end. So, firstly, with respect to your upcoming outpatient study, can you kind of provide some sense of the enthusiasm level of the CMS? Obviously, you guys met with CMS recently. So, how are they, you know, what's the pulse and how enthusiastic are they in terms of your upcoming outpatient study?

Yes, Hi, Bob.

Hi, So a few questions from our end so firstly with respect to your upcoming outpatient study can you kind of provide some sense of the enthusiasm level of the CMS. Obviously, you guys made to see it. Most recently so how are they you know what's the what's the person how enthusiastic they are they are in.

Your upcoming outpatient study.

Sure.

Sure, so let me start with just a little bit of

So let me let me start with just a little bit of a.

kind of color, and then I'll ask Mark to comment a little bit more on the study itself. First of all, to answer your question directly, you know, I think it's

Kind of color and then I'll ask mark to comment a little bit more on the study itself first of all to answer your question directly.

Think it's it's a bit atypical for CMS to necessarily so enthusiasm upfront, but what they are and what theyre proving to do is be very helpful to us in terms of giving us access to go through our thinking around study design and what we're trying to achieve and making sure that you know collaboratively we're heading down.

It's a bit atypical for CMS to necessarily show enthusiasm up front, but what they are and what they're proving to do is be very helpful to us in terms of

giving us access to go through our thinking around study design and what we're trying to achieve and making sure that, you know, collaboratively we're heading down the right path to ensure that if we're going to make this investment, it's going to ultimately hopefully yield the right information that they're looking for. But Bubbalon, I'll just remind you and other folks listening, you know, why this is so important.

On the right path to ensure that if we're going to make this investment it's going to ultimately hopefully yield the right.

Information that they're looking for but Bubel I'll, just remind you and other folks listening you know why this is so important.

for the company in terms of a kind of an upcoming catalyst is, you know, this is strategically important to allow us to unlock obviously reimbursement and hopefully gain access to the very large outpatient market as we talked about before, over 18 million procedures a year.

For the company in terms of a kind of an upcoming catalyst as you know this is strategically important to allow us to unlock obviously reimbursement and hopefully gain access to the very large outpatient market as we talked about before over 18 million procedures a year.

But it's also very important, kind of piggybacking on Steve's last question, I think it's strategically important to potential partnerships having access to the outpatient market. So this is an important investment. We're excited about it. I think the team's made great progress.

But it's also very important kind of piggy backing on Steve's last question, Yeah, I think it's strategically important to our potential partnerships I'm, having access to the outpatient market. So this is an important investment we're excited about it I think the teams made great progress in moving the ball forward. So I'll kick it over to Mark and see if there's any additional color that you'd like to add.

in moving the ball forward. So I'll kick it over to Mark and see if there's any additional color that he'd like to add.

Thanks, thanks, Tim. Yeah, I'll just add a couple of things, you know, as you know, and discussing the CMS that we feel pretty good about having in the trial design. So, you know, some of the things that CMS is looking for is first is making sure that.

Thanks, Tim Yeah, I'll, just add a couple of things you know as we know.

When discussing with CMS that we feel pretty good about having in the trial design. So you know some of the things that CMS is looking for is first is making sure that they.

The study results and the population use are generalizable, so we're really looking at that, making sure, too, that we're thinking about how this works in underserved populations, which is a big interest for CMS, you know, for the Medicaid population. And actually, one of the nice things for us is the issue of inadequate prep and poor visualization, you know, is significantly worse in underserved populations. So it actually lines up very nicely for a target for the technology.

The study results in the population use of general Generalizable. So we're really looking at that making sure too that we're thinking about how this works in underserved populations, which is a big interest for for CMS for the <unk>.

Medicaid population.

And actually one of the nice things for US is the issuer of inadequate prep and poor visualization.

It's significantly worse and underserved population. So it was actually lines up very nicely for a target for the technology.

Then, you know, we want to make sure that we are showing the right things around substantial clinical improvement, which we discussed as performance factors with CMS.

And then we want to make sure that we are showing the right things around substantial clinical improvement.

We discussed the performance factors with CMS.

So we think we're in a good position from that perspective.

We think we're in a good position is that from that perspective, and last is making sure that we're helping to help quantify the size of the problem as well so they realize the importance of this so I think all of those aspects I think we had pretty strongly in the study design and.

And last is making sure that we're helping to help quantify the size of the problem as well. So they realize the importance of this. So, I think all those aspects, I think we hit pretty strongly in the study design. And, you know, so we think we're fairly aligned with what CMS is looking for.

So I think were fairly in line with what CMS is looking for.

Great, that's really helpful. And secondly, obviously the current U.S. market environment is pretty tough for any industry. So I would like to hear your thoughts or maybe if you can comment on how the current market environment changed your thinking of your near-term and long-term commercialization plans for PureView EVS.

Great that's really helpful.

Secondly, obviously the current U S market environment is pretty tough for any industry. So.

So I would like to hear your thoughts or maybe if you can comment on how the current market environment changed your thinking of your near term and long term commercialization plans for Q U E. P. S.

Yeah, so it's a great question, obviously the environment has certainly had an impact.

Yes, it's a it's a great question, obviously the environment has certainly had an impact on our our planning and decision making over the last really two two years as you know.

on our planning and decision-making over the last really two years, as you know, really running with a very, very lean commercial team.

Really running with a very very lean commercial team what I think we have kind of line of sight to right now is the the impact of Covid.

What I think we have kind of line of sight to right now is the the impact of COVID has really diminished significantly. So we're not hearing about the delays.

<unk> has really diminished significantly so we're not hearing about the delays in Vac committee process or as many of the you know kind of comments about not being able to prioritize new technologies because of being short staffed so it's.

in that committee process or as many of the, you know, kind of comments about not being able to prioritize new technologies because of being short staff. So it's starting to feel like that is getting behind us. The early part, as you can hear in our enthusiasm of Q2, has been very, very positive. We've been able to go and execute on the things that we plan to execute on without a lot of kind of obstacles in our way.

It's starting to feel like that is getting behind us. They're early part as you can hear in our enthusiasm of Q2 has been very very positive and we've been able to go and execute on the things that we plan to execute on without a lot of kind of obstacles in our way and we are as you know and we said.

And we are, as you know, and we said, we've accelerated really our investment in commercial expansion. We're now up to eight salespeople. We fully intend to continue to invest over the next few quarters. And I would say probably somewhere in the low double-digit number. I think that's the critical mass that's needed to kind of deliver on the revenue expectations for the company.

We've accelerated really are our investment in and commercial expansion. We're now up to eight salespeople, we fully intend to continue to invest over the next few quarters and I would say probably somewhere in that low double digit number I think that's the critical mass that's needed to kind of deliver on the revenue expectations for the company, but from a overall.

But from a overall pandemic perspective, I think that the thinking has changed, and I think we're trying to capitalize on our messaging where, one, the most obvious is PureView is, you know, one of the devices, the new innovative devices that are now available to ensure that you don't have a patient tying up a hospital bed any longer than they need to be, right? And we've discussed that many times. So the patient's in a bed prepping for their colonoscopy for two.

Pandemic perspective, I think that the thinking has changed and I think we're trying to capitalize on our messaging where one of the most obvious is pure view is you know one of the devices. The new innovative devices that are now available to ensure that you don't have a patient tying up a hospital bed any longer than they need to be right.

Discussed that many times so the patients in a bed prepping for their colonoscopy for two days you need to have pure view on site. So you can get that done in 24 hours and be able to.

You need to have pure view on sites. You can get that done in 24 hours and be able to.

built to get them moved along and ultimately out of the system. That's very, very important, particularly when these hospitals start to get overrun with patients during a pandemic. The other area, Bubalon, that we think kind of plays in our favor is definitely a tailwind now, is there's a significant backlog of colonoscopies that have not been done due to the pandemic. And those have to get done. So we hear this from our physicians all the time that they're, you know, they're scheduling three or four months out on these screening colonoscopies.

Built to get them moved along and it ultimately out of the system. That's very very important, particularly when these hospitals start to get overrun with patients during a.

Pandemic the other area Bubel on that we think kind of plays in our favor is definitely a tailwind now is there's a significant backlog of colonoscopy that have not been done due to the pandemic and those have to get done. So we hear this from our physicians all the time that they're you know they're scheduling three or four months out on these screening colonoscopy.

So, if you think about that patient that has waited for a month and then come in and not prepped well and they, you know, God forbid, have to have their procedure aborted and come back again, that's a real issue. So, we think peer view fits right into, you know, the value prop necessary to help our customers, but also really help the patients at the end of the day. So, that's the way we're kind of thinking about things now from a U.S. perspective.

So if you think about that patient that is weighted four months and then come in and not prepped well and they you know God forbid that you have to have their procedure aborted and come back again.

That's a real issue. So we think pure view fits right into you know the value prop necessary to help our customers, but also really helped the patients at the end of the day. So that's the way we're kind of thinking about things now from a U S perspective.

Thank you. On one final question, this is for Andrew. So how do you expect SGNA and R&D to potentially change for the remainder of the year? Thanks.

Thank you and one final question. This is for Andrew So how do you expect SG&A and R&D to potentially change for the remainder of the year. Thanks.

You cut out a little bit.

You cut out a little bit. How do you expect R&D and I didn't hear the rest? Yeah. So how do you expect, yes, DNA and R&D costs to potentially change for the rest of the year?

How do you expect R&D and I didn't hear the rest.

Yeah. So how do you expect SG&A and R&D costs to potentially change for the rest of the year.

Yeah got it. Thank you so we've been pretty consistent since the end of last year and into this into this year that we we look if you're comparing.

Yeah, got it, thank you. So, we've been pretty consistent since the end of last year and into this year that we look, if you're comparing, you know, the last couple quarters of 2021 and now into 2022, we're anticipating an increase over the course of the year.

You know the last couple of quarters of 2021 and now into 2022 we're.

We're anticipating an increase over the course of the year.

Overall, to be in about the 30% range from an OpEx perspective, I would say that on the R&D front, that'll be closer to flat.

Overall to be in about the 30% range from an Opex perspective, I would say that on the R&D front that'll be closer to flat.

and maybe a little bit of an increase with some of the activities that we're doing, future product innovation, some of the work on the upper GI platform. And the bulk of that growth will be in the marketing and sales element. So the S part of the SG&A, probably pretty

And maybe.

Maybe a little bit of a of an increase.

With some of the activities that we're doing future product innovation some of the work on the upper Gi platform.

And the bulk of that growth, we will be in the marketing and sales element. So the S part of the SG&A G&A probably pretty.

consistent as well. But in terms of the sales and marketing elements, I think we're looking at probably closer to a 50% increase if you look at it year over year when you're incorporating both personnel costs.

Consistent as well, but in terms of.

The sales and marketing elements I think we're looking at probably.

Closer to a 50% increase if you look at it year over year, when you're incorporating both the personnel costs and the non labor costs, obviously with.

and the non-labor costs. Obviously, with COVID hopefully mostly behind us, some of the activities on the non-labor side, attendance at trade shows and communications and travel and things like that have a bit of an uptick as well. Obviously, all of that commensurate with our increase in revenue growth that is expected for the remainder of the year.

With Covid, hopefully, mostly behind us some of the activities the non labor side attendance at trade shows and our communications and travel and things like that are have a bit of an uptick as well obviously all of that commensurate with our increase in revenue growth that is.

As expected for the remainder of the year.

Yeah.

That's it from me thanks for taking my questions.

Thanks Pablo.

This concludes our question and answer session I would like to turn the conference back over to Tim Moran for any closing remarks. Please go ahead Sir.

This concludes our question and answer session. I would like to turn the conference back over to Tim Moran for any closing remarks. Please go ahead, sir.

Thanks operator and let me start by thanking everyone for joining our call today and I'll just you know reiterate maybe summarize

Thanks, Operator, and I, let me start by thanking everyone for joining our call today and I'll just reiterate maybe summarize.

What I said earlier, we are excited with the early progress we're now seeing.

What what I had said earlier, we are we are excited with the early progress. We're now seeing in the market and that's a combination of having you know an excellent technology and peer viewed as available to our team, but also a larger team and a couple of the things you know from a kind of early indicator.

in the market, and that's a combination of having, you know, an excellent technology and peer-reviewed. It's available to our team, but also a larger team.

And a couple of the things, you know, from a kind of early indicator.

standpoint that we wanted to see and we've seen over the first eight or so weeks.

Standpoint that that we wanted to see and we've seen over the first eight or so weeks.

is more procedures being done after we train and leave and move on to the next site that are done independently.

<unk> is more procedures being done after we train and leave and move onto the next site that are done independently without a motive G. I wrap there. So we want to continue to see that number grow but the early indications are very positive and why that's important as it allows us to really over time scale. This business, obviously with less people if you don't need to be.

without a MODIS GI rep there. So we want to continue to see that number grow, but the early indications are very positive. And why that's important is it allows us to really, over time,

scale this business obviously with less people if you don't need to be handled.

Handholding procedures and the other is as we look at our our first cases across these 11 sites a large majority of these procedures have been done by a general Gi physician, meaning the.

The other is, as we look at our first cases across these 11 sites,

A large majority of these procedures have been done by a general GI physician.

Meaning, the physicians that are conducting the most colonoscopies on a routine basis day in and day out at the hospital. In contrast to our prior experience with Gen 2, where the majority of our users were advanced endoscopists who were a little bit more comfortable with a more complex device.

The positions that are conducting the most colonoscopy on a routine basis day in and day out of the hospital.

In contrast to our prior experience with Gen two where the majority of our users where advanced Endoscopist you were a little bit more comfortable with the more complex device. So that's telling us that I think the team has done a great job in putting together a product listening to our customers that's really brought down the barrier to.

So that's telling us that I think the team has done a great job in putting

together a product listing to our customers that's really brought down the barrier to navigation and to use it. So we'll continue to track these metrics, but the early indications are strong and right now this group, this organization is in execution mode and we're looking forward to an update with everyone during our next call and we'll be happy to report our progress during Q2. So thanks for joining today and we'll talk to you next quarter.

To navigation and to use it. So we'll continue to track these metrics, but the early indications are strong and you know right. Now. This group. This organization is in execution mode, and we're looking forward to an update with with everyone. During our next call in and we'll be happy to report our progress during Q2, so thanks for joining today and.

We'll talk to you next quarter.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

Okay.

Yes.

Yeah.

Yes.

Yeah.

[music].

I.

The.

Okay.

Yeah.

[music].

Yeah.

Yeah.

Yeah.