Q2 2022 Profound Medical Corp Earnings Call
Welcome to the profound medical second quarter 2022 financial results Conference call. My name is Daryl and I will be your operator for today's call. At this time all participants are in a listen only mode. Later, we will conduct a question and answer session. During the question and answer session. If you have a question. Please press zero.
One on your Touchtone phone I will now turn the call over to Stephen Kilmer Investor Relations Steven you may begin.
Thank you Darryl and 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 <unk> current beliefs assumptions and expectations.
And relate to among other things expectations regarding the efficacy of the Companys treatment technologies results of future clinical trial.
Ability to obtain coding and our reimbursement from third party payers anticipated financial performance business prospects strategies regulatory developments market acceptance and future commitments.
Such statements involve known and unknown risks uncertainties and other factors that may cause actual results performance or achievements to be materially different from those implied by such statements. No forward looking statement can be guaranteed.
Those 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 statement, whether as a result of new information future events or otherwise.
That is required by law.
For the benefit of those who are new to the profound story I would also like to take a moment to summarize our business.
Profound develops in markets customizable incision free therapies for the Appalachian.
Disease tissue.
We are currently commercializing Tulsa pro a technology that combines real time, MRI robotically driven transfer urethral ultrasound and closed loop temperature feedback control.
The technology is designed to provide customizable and predictable radiation free ablation, the other certain defined prostate volume.
Protecting the urethra and rectum to help preserve the patient's natural functional mobility.
Tulsa Pro is CE marked health care that approved and 510 cleared by the FDA.
In the U S. We employ a pure recurring revenue model for Tulsa pro whereby we charge customers on a per procedure basis for Tulsa pro consumables leased to medical devices and services associated with the extended warranty.
Besides of the United States, we partner, we primarily deploy capital and consumable sales and service model separately as the situation warrants that.
We are also commercialized and finally, an innovative therapeutic platform that the CE mark for the treatment of uterine fibroids and palliative pain treatment of bone metastases.
Finally, if it has also been approved by the China National Medical products administration for the noninvasive treatment of uterine fibroids and has recently obtained FDA approval under a humanitarian device exemption for the treatment of oxalate osteoma.
The business model.
We have systems, it's currently a onetime sale of capital equipment.
On the call today, representing the company are Dr megawatt Confounds, Chief Executive Officer, and Richard Sue on the company's Chief Financial Officer.
With that said I'll now turn the call over to Richard.
Good afternoon, everyone and welcome to our second quarter 2022 conference call.
On behalf of the management team and everyone at profound.
I'd 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 in a moment for an update on our commercial activities.
However, before I do I would like to provide a brief update on our second quarter 2022 financial results.
To streamline things.
All of the numbers, we will refer to have been around it. So they are approximate.
For the three months period ended June 32022, the company recorded revenue of $2 million.
With 116 million coming from recurring revenue.
And 864000 from the onetime sale of capital footprint.
This represented revenue growth up 48% sequentially over the previous quarter driven.
Driven by a 14% increase in recurring revenue.
The first time North American sale.
<unk> systems.
Q2, 2022 revenues decreased 600000 from the same period in 2021.
Due primarily to lower onetime sales of the capital equipment in international markets.
Total operating expenses in the 2022 second quarter, which consists of R&D G&A and selling and distribution expenses were eight 7 million an increase of 15% compared with seven 6 million.
In the second quarter of 2021.
Breaking that down further.
Expenditures for R&D increased 8% on a year over year basis.
$7 million.
<unk> increased by 7% to $2.6 million.
And selling and distribution expenses increased by 39% to $2 4 million.
Primarily due to higher foreign exchange gain net finance income for the 2022 second quarter was one nine.
$9 million.
This compared to a net finance cost.
<unk> hundred $2000 in the same three months here of 2021.
Overall, the company recorded second quarter 2022 net loss of five.
$9 million or 28 cents per common share compared with a net loss of <unk>.
$7 million.
Already five cents per common share for the same three month period in 2021.
As at June 32022, profound had cash of $53 2 million.
With that I will now turn the call over to Bill.
Thank you said.
As you know our primary focus for the past several quarters has been on the U S commercialization.
Our next generation prostate disease treatment technology.
Paul.
That focus continues.
We have not forgotten about autonomy.
And its potential importance to our future as a company over a longer time.
Like telephone.
<unk> combines real time magnetic resonance imaging and thermometry with thermal ultrasound to enable precise and efficient fleet ablation of disease tissue.
The major difference between the two therapeutic platform.
How ultrasound energy applied to the diseased tissue.
<unk>.
Sunbeam be high intensity focused ultrasound.
And our HIFU.
We're a small area is abated with real time visualization.
Tulsa, where the thermo ultrasound is delivered directly to them.
Like a blade.
Shipping pattern contacting large volume of tissue.
Minimal time.
Profound.
Only company that has both technology capabilities.
One of the reasons.
The directional blade ultrasound in Tulsa.
Cause in the prostate application.
Blades at about 10 times faster than HIFU technology.
Up until recently.
We have been exclusively commercializing suddenly in all.
All U S markets for the treatment of.
Uterine fibroids.
The near term pain treatment of bone metastasis.
In mid 2020.
Received FDA approval.
The humanitarian device exemption or.
<unk> HD for the treatment of oscillated Osteoma.
Afterward, Osteoma is a noncancerous board tumor.
Occurs most often in the femur and tibia of young children.
Okay.
In Australia, the Osteoma causes a dull aching pain that is moderate intensity, but ken worsen and become severe especially at night.
<unk> guided FRE is currently the most commonly used afterward, osteoma treatment, but it is invasive.
And exposes young patients to radiation.
Suddenly offers these patients for treatment that can be performed.
<unk>.
Clinical improvement.
But without any decisions needles or optimizing.
Some exposure.
While the Allstate Osteoma market is small.
I'm pleased to tell you that the capital sales that we recorded in Q2.
Represents the sale of two suddenly system.
Two of the most prestigious pediatric health care centers in North America.
The National Children's Hospital in Washington, DC, and the hospital for sick children in Toronto.
These were the first sales.
The platform in the United States, and Canada, respectively.
Not only will these institutions use the system.
Austin Osteoma.
But they will also further conduct clinical studies for <unk>.
Other applications.
Severe unmet need arises.
<unk> patients.
<unk> treatment of cancer.
And now let's talk about Tulsa.
As you may recall.
The Tulsa systematic review paper.
That was published online in March by the general.
And those urology provided level to evidence the highest available in support of Tulsa.
Demonstrating the Tulsa is safe and effective for treating privately prostate cancer.
Current prostate cancer.
And locally advanced prostate cancer.
As well as.
For the simultaneous treatment of prostate cancer and the lower.
Sorry.
Tract symptom normally caused by BPH.
This publication.
Also completed the clinical requirement for us to quantify to file a CPT category, one application, which we did in mid June .
We are cautiously approaching upcoming CPT editorial panel meeting in September .
Our caution emanates from the fact that history has shown some CPT application for a new.
Game changing technology like Tulsa.
Taken an extra year before the <unk> advanced them further.
That said.
We are pleased that what is the unique aspects of the Tulsa application is that it is co sponsored.
<unk> filed with support from multiple societies.
In any case.
Very pleased to see that CMS has recently proposed a 5% increase in the reimbursement for <unk> 73 for the <unk>.
Temporary code that is currently being ruined by hospitals for telephone.
The new proposed national payment is 13274.
This will be finalized by the end of September .
We believe that the proposed payment.
Efficient to help further advance.
<unk> of Tulsa.
In the near to mid term.
And I would state.
Yes.
To maximize.
Credible opportunity we see.
Ahead for both telephone and suddenly it's vital that we continue to foster the growing interest.
<unk> all patients have shown.
Ablative technologies.
True.
The generation of additional post market clinical data.
Participation in relevant medical Congresses, and execution of our own professional marketing initiatives.
With respect to clinical data.
Our sponsored kept on file which is the first level one study.
Ever conducted.
Comparing and emerging technologies head to head with radical prostatectomy.
In men with prostate cancer continues to progress well.
To date <unk>.
<unk> sites have been activated.
And currently recruiting patients.
We have increased the number of target sites.
Eight to 12 in the U S.
As there is strong interest and participation.
We do have two sites in Canada.
Again, Q2 interest we may add one or two sites.
Europe .
We still expect that the vast majority of patients in this study will be U S patients.
Turning to medical.
And marketing initiatives.
<unk> had an exciting few months.
For example.
Tulsa Pro was front and center at the American Urological Association's 2022 annual meeting in May.
Of note Dr.
Dr. Ken Goldberg from UT Southwestern Medical Center performed semi dive Tulsa procedure.
Doing one of the preliminary sessions.
The AUO designated this activity.
T R category one credits.
Which requires that a physician led content review committee.
Chairman the education to be valid.
Fair balanced scientifically rigorous and free of commercial buyer.
Also.
Doing an earlier primary session Dr.
Dr. Scott <unk>.
City of Chicago.
<unk> the pulse up to C J.
And tact pivotal study follow up data in his presentation.
In addition to.
Foucault University hospitals, Dr. Mikhail <unk>.
A moderated poster presentation.
Which included updated results.
Our phase one two.
Clinical studies.
Evaluating the use of telephone to treating patients.
Suffering from BPH.
The study reported.
Six months improvement in patient quality of life.
Sexual function.
And your flow metering.
With all men.
<unk> the BPH medication.
Finally.
<unk>.
Daily product demonstrations.
We unveiled our Tulsa pro software release.
$2 11.
Which included.
Two new features.
The first.
The multi parametric MRI vision.
It is designed to help physicians more confidence.
<unk> targeted prostate tissue.
Between malignant or benign.
And guide Sterling as well as to identify.
And avoid intra prosthetic calcification.
This feature can be helpful, particularly in defining margins.
If they are performing subtotal, prostate ablation or more commonly known as focal therapy.
The second is an optimized data.
Suppression algorithms, which was developed in.
Response to both U S based physicians, having moved from Super TV pathways mission in favor of the retro or Foley catheters.
Thank you.
Both telephone and suddenly enjoyed high profiles at the society of Interventional radiology.
In June .
Among the many presentations mentioned.
One or two of the technology platforms.
Doctor, Steve Friedman from UCLA presented.
Three year follow up data from tact.
Bush.
Orientation on his initial experience with <unk>.
And in the presentation titled HIFU.
The epic applications current and future applications, Dr. Coon Sharma from the children's National Hospital reviewed Austin, Austin that treatment data and discussed plans for an upcoming trial of tunneling designed to examine the skus.
And treating pediatric patients for hypothermia prior to radiation treatment.
Finally, we hosted our inaugural pro top live event in Chicago, a few weekends ago.
These types of events.
We moved very effectively in my previous company.
Designed to bring together, both experience and potential physician users.
Good day of face to face presentation and discussions.
Quite simply education by existing users.
Great way to sell to future uses and Tulsa is an ideal product for that strategy.
Since.
This was the first protest live.
We purposely kept it relatively small with approximately 40 positions.
Participating.
<unk> 12 of whom were existing users.
Potential users.
Based on the extremely positive feedback we have received from the first event, we're planning on hosting additional larger meetings as we go forward.
Yes.
To summarize.
Awareness and adoption of our unique ablative technologies continues to grow.
We sold our first tunneling system in the U S and Canada during the first quarter during the second quarter.
As expected these.
Our CPT category, one application for Tesla in June .
Enrollment in the capital and the Captain trial.
Pairing Tulsa to RP.
It is progressing.
Now, let me briefly touch on the dreaded word COVID-19.
The kinds of activities.
And the results that I described to you today.
What it always takes to bring adoption of a new game changing technology to market.
But for about two years.
When we could not do many of them because of the pandemic it affected our introduction of Tulsa to the market.
While lingering effects, particularly with respect to supply chain remain.
We're environment, how to overcome them and reduce the timeframe from installation to effective use.
Superior training significant podium presentations at society meetings.
<unk> filing.
These sponsors.
CPT applications.
All important aspects of driving adoption.
Also.
Now finally.
With the progress.
We focused our Q2 sales efforts.
The new sites that were installed in Q1.
We remain comfortable that we will achieve a total of 35 <unk> sites in the U S. Before the end of 2022.
And that the number of patients treated quarter over quarter will continue to increase and the pace of adoption will continue to accelerate into 2023.
This ends our prepared remarks for today.
With that said and I are happy to take any questions you might have.
Operator.
And if anyone has a question you can press zero then one on your Touchtone phone.
Once again that zero one on your Touchtone phone, if you wish to be removed from the QE compression zero too.
And our first question.
Comes from Frank to Canon go ahead Frank.
Hey, Arun here appreciate it thanks for taking my questions. Congrats on all the solid operational progress.
Apologies for starting off with a little bit of a naive question I think I may have missed it but did you guys call out the number of placements that occurred in the quarter and and where that stands I heard the 35 guide, but was just curious where that is standing at right now.
Frank Thank you first of all.
We have.
Additional contracts that we did not place additional system because as I mentioned in the prepared remarks, we've really focused on getting the new sites running.
We as I said in the prepared remarks are pretty comfortable that we will have at least 35 sites operational.
And at the end of this year.
Okay. That's good color I appreciate that and then maybe just one more on profound.
On the reimbursement sorry on pulse on the reimbursement.
Process.
Notice. It was it was two code application for imaging as well as treatment can you maybe just talk through some of the intricacies to that process.
And who can use which codes urologists versus radiation oncologist and how this could impact.
Commercialization of the product over time.
Yeah, absolutely and I am happy to provide.
A bit of color on this.
So.
We're working very closely with societies on this.
And.
One of the feedback that we received was that this could be a procedure that could be done jointly with a radiologist and is of allergists.
And so based upon those recommendations.
We divided the application into two.
Subsets, where we're seeking one code that is more.
About the imaging aspects of the treatment.
Treatment, which could then be used by a radiologist and the second part which is more about insertion of the catheter and the.
Treatment planning and assessment of the treatment and that is more of a urology activity and so that could be used by the urologist.
And the way the societies have put this together.
Both of those codes tended to use individually by one of the specialties or if one.
Specialty is.
Physician is using doing the whole thing.
That physicians could use both codes.
So it gives us a lot of flexibility to how the technology can get adopted because.
Large hospitals in some cases, we're hearing the two physicians are using this together and they really like the fact that they can do that and they will have the flexibility to continue to do that.
And in smaller hospitals, where the signal physicians doing the whole thing.
More like a urologist doing it.
Then they will be able to use both codes, so I think that.
That's certainly part of the color.
<unk>.
It is a very comprehensive plan that is going on there's a lot of <unk>.
Now this is going on with the <unk>.
At the moment, so we are going through it.
Game changing technology, we're optimistic overall obviously.
We're thrilled with the caliber of advice we are getting.
The independents are fighting.
Let's see how it goes in.
We'll continue to do it but I think the other part of the color to be honest.
We were really really thrilled with the fact that while most reimbursements continue to go down and we saw that for other urology procedures, particularly prostate cancer for years.
Many have come down.
But the ablative treatment like ours, the <unk> 74, which was already well.
The target payment was already pretty good has actually gone up 5%.
Finally meets the final editing and gets finalized by end of September .
And HIFU, which is also a ablative procedure went up so I think that.
<unk>.
The fact that the CMS and other societies are recognizing the value of ablative technologies, we're quite thrilled with that I think we can drive adoption with the C code.
Well going forward.
Okay really helpful. Maybe if I can just sneak one more given all the extra commentary on and finally this quarter could you maybe just try and frame up how we should be thinking about capital.
<unk> in the back half of the year and on a go forward basis.
Yes, again, thank very good questions.
So again.
No.
Our 99% of our priority is Tulsa.
What we are driving.
We were pleasantly surprised with the attention that finally received at the.
Intervention radiology meeting in Boston in June this year.
We are obviously thrilled with the two the phase of two devices.
This quarter.
Think that.
My suggestion in terms of going forward.
Is quite frankly concerned about that.
I would not assume that we would sell more devices.
In U S. This year for these applications I think that there is a lot of interest, but theyre going to have to budget them and so on and I think these two sites.
Provide.
References to a number of pediatric sites in the United States that will hopefully convert into sales in 2023, So thats.
Our thinking process.
The capital model that we do apply particularly for suddenly in the international market I think is to come.
Coming back.
Slowly.
China in particular is really really still.
Not quite there so I would still be cautious on this but I think strategically I think we're thrilled with this and I do think it bodes well for the mid to longer term.
Okay perfect I'll stop there thanks for taking my questions.
Thank you Frank.
Our next question comes from Zach Wiener go ahead Zach.
Hey, guys. Thanks for taking the questions I just wanted to confirm one thing and then one more broader question.
The commentary on placements through the second half of the year.
No.
Or is the expectation there and then.
What's the thought on Covid headwinds and maybe impacting those placements coupled.
A couple of follow ups.
Sure Jack Im assuming youre talking, particularly about Tulsa in the United States and adoption.
Yes, yes, sorry about that.
Yes, no I think that.
As I mentioned in the prepared remarks.
I'm really thrilled with the fact that now that the society meetings are going on the publications are coming out.
Amount of attention on Tulsa.
Now significantly better than what we had over the last two years.
The reason is.
So critical is that that is where and how you build awareness.
So I think the awareness level of Tulsa is significantly higher today than it was even a year ago.
And so.
I think what we will continue to see is we.
We will continue to install more sites, we're debottlenecking all of the reasons why it has taken longer.
We are.
Pretty confident about 35 sites this year.
We're pretty confident that the usage, we will continue to increase it has been increasing in double digits quarter over quarter I think the pace of.
Increase is.
Going to continue to also increase.
Perhaps by the end of this year that you will start to see that so I think on the Tulsa side.
It's more like.
Things are on track.
This is going up patient continue to give us positive feedback.
Youll continue to see more publications, you'll continue to see more and more usage and adoption continues to go up we will continue to see additional sites going up.
The pace is.
At the moment, but I think you will continue to see improvement in the pace of adoption.
Over time also I.
And I think Jack looking the other point that were made in the prepared remark is after <unk>.
Long time, we have had our first proton live recently and that's why we brought in like 40 physicians.
So.
Now the Colgate is subsided to certain extent like and we see that those activities are going to pick up where we can get more engaged with our.
TV shouldnt be and at the same time make more physicians are aware of the technology and we can educate them and start guiding them towards our technology exactly.
We're happy to provide a lot of color on these things.
We've had good science as you know the quality of our sites in the U S is very high.
But.
Number of users.
Some of them are using it for.
Firstly for recurrent.
10 years.
Some of them are using for focal therapy. Some of them are using for whole gland and when we brought the users together they could see how others are using it more broadly and so on so I think these activities will lead to.
Higher usage, even at existing sites.
Over time.
That's why we're kind of excited that we're finally able to.
Cost.
Benchmark cross fertilize the knowledge across our users and.
Many many non users.
Very good feedback that these guys are now ready to move forward with their own adoption of Tulsa.
Thanks, and if I could just sneak one more in your comments on.
Sure the inflationary pressures that are facing broader med tech space.
Curious what you guys are seeing.
And Jeremy Thanks.
In the broader med tech to be honest.
I don't have much comments, Jack I think that we have a very.
A one track mind were very focused on our technologies.
And.
Kind of small at the moment so some of those macro things are.
Not as critical to us I think the biggest thing.
As we've already described was the lack of contact lack of ability to cross fertilize people.
That is what we're thrilled about.
I think I would continue to say.
When we visit customers.
We do not work out of those meetings with them, saying they don't see the value. They don't think that they should do it they should wait more and so on.
Generally speaking.
Urology community is ready to adopt this technology.
Yes, thanks for taking the question.
Thank you Doug and once again, if you have a question is zero one on your Touchtone phone and our next question comes from Raul Sorry, guys here from Raymond James Go ahead Raul.
Hi, good afternoon.
Good afternoon. Thanks, so much for taking our questions.
So my.
My first question is clearly this is a fourth quarter potentially consolidation consolidation of awareness.
The reimbursements.
Et cetera et cetera.
And so.
When we look at the current installed base of our 25, and then guidance for 235 by the end of the year, probably the most important lever that we then need to essentially we'll be looking at looking at will be the utilization rate per device.
So I wouldn't I believe you had alluded to that increasing.
Could you please give us a little bit more color in terms of how you're seeing utilization per device. Currently how do you see it trending going forward given the current CPT current T code environment, and then evolving CPT code environment, and then wrap that all up to the challenges that hospitals are currently having particularly with nursing and potentially limit.
Their ability to adopt new technologies.
Yes.
I'm very happy to provide more color on this.
And I think these are very important questions.
So.
And then let me kind of share a little bit more detail views here.
<unk>.
If you recall when we.
Introduced the product into the market.
We talked about.
<unk> unique channels, we said we were going to go after.
The early adopters are going to go.
<unk> imaging centers and we will go after teaching sites because those teaching sites.
Not necessarily going to be high volume sites available to provide the kind of podium presentations that we are starting to see now and they will provide the support that we need for the CPT application right.
Right.
So I think those goals are being achieved.
And there is not just about the.
Same store sales at the moment, but I think that in addition to achieving those goals.
Now with being able to have these face to face and the cross fertilization as I described what we are starting to see is that even the teaching hospitals, saying, okay. What this site has treated a number of patients who have done.
This unique type of cancer.
Another site has done another unit type or.
A lot of our sites are cash pay.
And how do you present the product.
Two the cash pay customer.
A number of sites have different ways of follow ups and so I think what we saw from the prototype and number of dividends that these societies.
France is that they are now talking to each other and they are all talking about how do we learn from each other rather than just from our own experience. So I do expect that same store sales will be increasing over time.
So.
Generally speaking I think that you will see in our recurring revenue numbers not only from the increased number of sites, but also from increased usage per site.
And I would still again as you guys know me well enough cautious enough to be able to say don't expect to happen in one quarter, but I do think that the trend is there already.
The conversations that we're having with the University.
We are telling us that there is a strong desire to continue to increase the usage.
And so I think the pace of adoption will increase.
The increase quarter over quarter.
I think.
And it will it may be a bit linear at the moment, but I do think that you will see acceleration in that linear.
<unk> more exponential.
Terrific. Thank you.
That's really helpful color, particularly on your strategy and how its playing.
<unk>.
Your presentations on the CPT code so.
Now following on from from your final comment about these things playing through to increased utilization, which of course, then translate to revenue.
I guess, maybe we're looking at 2022 as this really consolidation you're building awareness et cetera, getting pieces together for reimbursement.
Now looking forward to 2023 as you put all of these important pieces to get as you are currently putting the important piece together again reimbursements and as awareness.
Relatively well established installed base teaching hospital, how should we be thinking about the revenue ramp in 2000 2023, particularly given also the cash position of around $53 million right now that burn of around $7 million a quarter could you give us some color again, how your projections on revenue.
<unk> thousand 23 relative to your cash and how you look to potentially maybe filling any gaps maybe maybe adapt or otherwise.
Yes.
Well to be honest I don't have.
Enough.
<unk> ability to gig.
Guidance for next year yet.
I do.
I think that.
Bye.
Year end conversations into 2023 that we may have enough visibility to be able to provide a lot more.
Forward visibility into the.
Revenues and so on for 'twenty, three but I think this is really Q2 is really the first.
Sort of normal quarter.
Right and.
Hi.
I do understand that.
We need to get there and we will as soon as we turn to slide three we put content about 35 and as soon as we feel confident that we will share that with you we will do that.
So.
I think that that's timing.
In the in the works and familiar to me.
And comfortable we'll do that.
With respect to.
Bill.
Cash position and so on.
But I still feel we are in very good shape I don't expect that.
Bernie is going to increase.
I think that our gross margin.
Decent place I think as the revenues continue to increase I think you will also see an increase in gross margin because as you know manufacturing is all about volume the volumes kick in costs come down.
And our overhead costs.
We will also.
<unk> fairly constant so I think that.
It's.
We are in that cost at the moment.
And I think that.
Slowly, but surely moving to progress on all of this metric.
I wish I could tell you more at.
At the moment, but I would just rather wait until we have the data to show you.
Okay perfect. Thanks. Thank you and then if you don't mind me asking.
One more question now.
So im asking them.
One more one more optimistic one.
So given that your.
Color around CPT application, you alluded to multiple societies.
Supporting the application and sort of your relative optimism around the application could you give us any more color there potentially around the societies.
That provides for your optimism because of course. This is one of the most important catalyst in this year.
Sure.
Again, I'm happy to provide more color.
I think that.
There are two aspects to this that are both critical.
Number one.
I'm really really proud of our team.
Yes.
Clinical data came in on time.
Hi.
Commercial team connected with society and help them.
Learn and get up to speed on our technology on our clinical data and I think our team has done as good as it can get.
So.
Pat.
Alright.
That is in our control.
Very good about.
I cannot give you demands of the society and more colors than this.
Because we did signed confidentially agreements.
With them and thereby.
Obviously with abide by those agreements.
But to the extent that I can tell you. These are multiple societies that have that we work very closely with.
To get to these decisions about looking for two codes versus one code.
Framing the.
Application getting them to help us with it all of that has been done very well.
Now as you know me well enough.
Look at data for everything.
And one of the pieces of data that is in a phase strongly is that game changing technologies like these go.
Go through significant.
Scrutiny by the EMA.
And <unk>.
More often than not.
It takes longer than a year to get through them.
So.
I don't want to ignore that reality.
And we want to work with the army helped them as well, but I don't want to get ahead of reality either.
And part of the reason is and I think the more important part of the message.
Is the fact that our C code.
Is being paid today.
And it has actually gone up 5%.
<unk> then it becomes final rule it will go up 5% so.
We're in pretty good shape to drive adoption.
It is not like.
Lots of companies were until they get to that typically they can go they cannot go anywhere.
Okay.
Patients are willing to pay.
<unk> are interested in adopting it.
A C code is working and is paid it has gone up.
We're in good shape, we're in good shape.
So that's the color.
Great well, thank you very much and Richard and congratulations to your team for their efforts.
For their yeoman's work.
Thank you.
Once again, if anyone has a question is zero and then one on your Touchtone phone once again that zero one.
Standing by for questions.
And we don't have any questions at this time I will turn it back to our room for closing comments.
Thank you so much and again, thank you for your interest in profound.
And we look forward to.
Third quarter meeting.
Thank you again, thanks a lot.
And thank you ladies and gentlemen. This concludes today's conference. Thank you for participating you may now disconnect.
Okay.
Okay.
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Okay.
Yes.
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Welcome to the profound medical second quarter 2022 financial results Conference call. My name is Daryl and I will be your operator for today's call. At this time all participants are in a listen only mode. Later, we will conduct a question and answer session. During the question and answer session. If you have a question. Please press zero 190 or touched on.
On the phone I will now turn the call over to Stephen Kilmer Investor Relations Steven you may begin.
Thank you Darryl and 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 in the United States and Canada.
All forward looking statements are based on per pounds current beliefs assumptions and expectations.
And relate to among other things expectations regarding the efficacy of the Companys treatment technologies results of future clinical trial.
Ability to obtain coding and our reimbursement from third party payers and anticipated financial performance business prospects strategies regulatory developments market acceptance and future commitments.
Such statements involve known and unknown risks uncertainties and other factors that may cause actual results performance or achievements to be materially different from those implied by such statements. No forward looking statement can be guaranteed.
The notes 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 statement, whether as a result of new information future events or otherwise.
That is required by law.
For the benefit of those who are new to the profound story I would also like to take a moment to summarize our business.
Profound develops and markets customizable incision free therapies for the Appalachian.
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 technology is designed to provide customizable and predictable radiation free ablation, the surgeon defined prostate volume.
Protecting the urethra and rectum to help preserve the patient's natural function of mobility.
Tulsa Pro is the marked health, Canada approved and 510 cleared by the FDA.
In the U S. We employ a pure recurring revenue model for Tulsa pro whereby we charge customers on a per procedure basis for Tulsa pro consumables leased to medical devices and services associated with the extended warranty.
Outside of the United States, we partner, we primarily deploy our capital and consumable sales and service model separately as the situation warrants that.
We are also commercialized and finally, an innovative therapeutic platform that the CE mark for the treatment of uterine fibroids and palliative pain treatment of bone metastases.
<unk> has also been approved by the China National Medical products administration for the noninvasive treatment of uterine fibroids and has recently obtained FDA approval under a humanitarian device exemption for the treatment of oxalate osteoma.
The business model for <unk>.
<unk> systems, it's currently a onetime sale of capital equipment.
On the call today, representing the company are Dr. Ray megawatt Confounds, Chief Executive Officer, and Richard <unk>, The company's Chief Financial Officer.
With that said I'll now turn the call over to Richard.
Good afternoon, everyone and welcome to our second quarter 2022 conference call.
On behalf of the management team and everyone at profound.
I'd 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 owning a moment for an update on our commercial activities.
However, before I do I would like to provide a brief update on our second quarter 2022 financial results.
To streamline things.
All of the numbers, we will refer to have been rounded. So there are proximate.
For the three month period ended June 32022, the company recorded revenue of $2 million.
With 116 million coming from recurring revenue.
And $864000 from the one time sale of capital equipment.
This represented revenue growth up 48% sequentially over the previous quarter.
Driven by a 14% increase in recurring revenue.
The first time North to Mike Hill del.
Suddenly systems.
Q2, 2022 revenues decreased 600000 from the same period in 2021.
Primarily to lower onetime sales of the capital include men in international markets.
Total operating expenses in the 2022 second quarter, which consists of R&D.
And Ed and selling.
<unk> expenses were eight 7 million, an increase of 15% compared with seven six.
In the second quarter of 2021.
Breaking that down further.
Andy chairs for R&D increased 8% on a year over year basis to $3 7 million.
<unk> increased by 7% to $2.6 million.
And selling and distribution expenses increased by 39% to $2 4 million.
Primarily due to higher foreign exchange gain net finance income for the 2022 second quarter was one nine.
$9 million.
This compared to a net finance cost of $602000 in the same three months here of 2021.
Overall, the company recorded a second quarter 2020 to a net loss of five 9 million or 28 of our common share.
Paired with a net loss of <unk>.
$7 million.
<unk> five per common share for the same three month period in 2021.
As at June 32022 profiling had cash.
$53 2 million.
With that I will now turn the call over to <unk>.
Thank you said.
As you know our primary focus for the past several quarters.
<unk> has been on the U S commercialization of our next generation prostate disease treatment technology.
While that focus continues.
We have not forgotten about autonomy.
And its potential importance to our future as a company over a longer time.
Like telephone.
<unk> combines real time magnetic resonance imaging and thermometry with thermal ultrasound to enable precise and efficient fleet ablation of disease tissue.
The major difference between the two therapeutic platforms.
Now the ultrasound energy applied to the diseased tissue.
<unk>.
Finally, the high intensity focused ultrasound or HIFU.
We're a small area.
Abated.
Real time visualization.
Tulsa, where the thermo ultrasound is delivered directly like a blade three.
Pattern.
Contacting a large volume of tissue.
Minimal time.
Profound.
Only company that has both technology capabilities.
One of the reasons.
The directional blade ultrasound in Tulsa.
Cause in the prostate application.
Blades at about 10 times faster than HIFU technology.
Up until recently.
We have been exclusively commercializing suddenly in all U S markets.
The treatment of <unk>.
It won't fibroid.
The near term pain treatment of both metastasis.
In mid 2020.
<unk> FDA approval.
A humanitarian device exemption or HPE for the treatment of oscillated osteoma.
<unk> is.
There is a noncancerous broad tumor.
It occurs most often in the femur and tibia of young children.
Dalton.
And afterward, Osteoma causal dull aching pain that is moderate intensity, but ken worsen and become severe especially at night.
<unk> guided FRE is currently the most commonly used offload osteoma treatment, but it is invasive.
And exposes young patients to radiation.
Suddenly offers these patients for treatment that can be performed.
<unk>.
Clinical improvement.
But without any incisions needles or <unk>.
<unk> exposure.
While we ask data osteoma market is small.
I'm pleased to tell you does.
So the capital sales that we recorded in Q2.
<unk> represents the sale of two suddenly system.
To two of the most prestigious pediatric health care centers in North America.
The National Children's Hospital in Washington, DC, and the hospital for sick children in Toronto.
These were the first sales of the platform in the United States and Canada, respectively.
Not only will these.
Institutions use the system to treat osteoporosis TMR.
But they will also further conduct clinical studies for other applications.
Severe unmet need arises.
<unk> patients including treatment of cancer.
And now let's talk about Tulsa.
As you may recall.
The Tulsa systematic review paper.
Was published online in March by the general.
And those urology provided level to evidence the highest available in support of Tulsa Denver.
Demonstrating that Tulsa is safe and effective for treating privately prostate cancer.
Current prostate cancer.
And locally advanced prostate cancer.
As well as.
For the simultaneous treatment of prostate cancer and the lower.
Sorry.
So.
Symptoms normally caused by BPH.
This publication also completed the clinical requirement for us to qualify to file a CPT category, one application, which we did in mid June .
We are cautiously approaching the upcoming CPT editorial panel meeting in September .
Our caution emanates from the fact that history has shown some CPT application for new.
Game changing technology like Tulsa.
Taken an extra year before the <unk> advanced them further.
That said we are pleased that what is the unique aspects of the Tulsa application is that it is co sponsored.
<unk> filed with support from multiple societies.
In any case.
Very pleased to see that CMS has recently proposed a 5% increase in the reimbursement for <unk> 73 for the.
The temporary code that is currently being consumed by hospitals for telephone.
The new proposed national payment is 13274.
This will be finalized by the end of September .
We believe that the proposed payment.
Sufficient to help further advance adoption of Tulsa.
In the near to mid term.
The United States.
To maximize.
Incredible opportunity.
Ahead for both telephone and suddenly it's vital that we continue to foster the growing interest physicians all patients have shown.
Latest technologies through.
The generation of additional post market clinical data participation.
Participation in relevant medical Congresses, and execution of our own professional marketing initiatives.
With respect to clinical data.
Our sponsored captain trial, which is the first level one study.
Ever conducted.
Comparing and emerging technologies head to head with radical prostatectomy.
In men with prostate cancer continues to progress well.
To date <unk>.
<unk> sites have been activated.
And currently recruiting patients.
We have increased the number of target sites.
Eight to 12 in the U S.
As there is strong interest and participation.
We do have two sites in Canada.
Again, Q2 interest we may add one or two sites.
Europe .
We still expect that the vast majority of patients in this study will be U S patients.
Turning to medical meetings and marketing initiatives.
They have had an exciting few months.
For example.
Tulsa Pro.
Was front and center.
At the American Urological Association's 2022 annual meeting in May.
<unk>.
Of note.
Dr. Ken Goldberg from Ut southwestern Medical Center.
Formed a semi live Tulsa procedure.
Doing one of the plenary session.
The AUO designated this activity.
T R a category one credit.
Which requires that a physician led content review committee.
Chairman the agitation to be valid.
Fair balanced scientifically rigorous and free of commercial buyer.
Also.
Doing an earlier primary session Dr.
Dr. Scott had another $10 billion.
What city of Chicago.
<unk> the Tulsa procedure.
And tact pivotal study follow up data in his presentation.
In addition to.
Foucault University hospitals, Dr. Mikhail Antimony.
Is there a moderated poster presentation.
Which included updated results.
Our phase one two clinical.
Clinical study.
Evaluating the use of Tulsa to treating patients.
Suffering from BPH.
The study reported.
Six months improvement in.
Patient quality of life.
Sexual function.
Your flow metering with all men.
Similarly, the BPH medication.
Finally in advance of.
Daily product demonstrations.
We unveiled our Tulsa Pro software release, $2 11, which included two new features.
The first.
The multi parametric MRI vision.
It is designed to help physicians more confidently delineate targeted prostate tissue.
Between malignant or benign.
And guide Sterling as well as to identify.
And avoid intra prosthetic calcification.
This feature can be helpful, particularly in refining margins.
If they are performing sub total prostate ablation or more commonly known as focal therapy.
The second is an optimized later.
Suppression algorithms, which was developed in response to both U S based physicians, having moved from Super TV pathway inhibition and <unk>.
Favre of withdrawal or Foley catheters.
On the heels of EUA, both telephone and suddenly enjoyed high profiles at the society of Interventional radiology meeting in June .
Among the many presentations mentioned, one or two of the technology platforms factor, Steve Friedman from UCLA presented.
Three year follow up data from tact.
Dr. Bush will presentation on his initial experience with <unk>.
And in the presentation titled HIFU.
The ethnic applications current and future applications, Dr. Coon Sharma.
The childrens National Hospital reviewed Austin, Austin that treatment data and discuss plans for an upcoming trial of tunneling designed to examine its use in treating pediatric patients for hypothermia prior to radius.
<unk> treatment.
Finally, we hosted.
<unk> Pro top live event in Chicago, a few weekends ago.
These types of events, which we used very effectively in my previous company.
Designed to bring together, both experience and potential physician users.
A day of face to face presentation and discussions.
Quite simply education by existing users is a great way to sell to future uses and Tulsa is an ideal product for that strategy.
Since.
This was the first protest live.
We purposefully kept it relatively small with approximately 40 positions.
<unk>.
About 12 of whom were.
Existing users.
West potential users.
Based on the extremely positive feedback we have received from the first event, we're planning on hosting additional larger meetings as we go forward.
To summarize.
Awareness and adoption of our unique ablative technology continues to grow.
We sold our first tunneling system in the U S and Canada during the first quarter during the second quarter.
As expected these.
Our CPT category web application for Tesla in June .
Enrollment in the capital and the Captain trial.
Pairing Tulsa to RP.
It is progressing.
Now, let me briefly touch on the dreaded word COVID-19.
The kinds of activities.
And the results that I described to you today.
What it always takes to bring adoption of a new game changing technology to market.
But for about two years.
And we could not do many of them because of the pandemic it affected our introduction of Tulsa to the market.
While lingering effects, particularly with respect to supply chain remain.
For environment.
Overcome them and reduce the timeframe from installation to effective use.
Superior training significant podium presentations at society meetings.
Filing a society sponsored.
CPT applications are all.
All important aspects of driving adoption for Telcel.
Now finally thrilled with the progress.
We focused our Q2 sales efforts and starting new sites that were installed in Q1.
But we remain comfortable that we will achieve a total of 35 <unk> sites in the U S. Before the end of 2022 and that the number of patients treated quarter over quarter will continue to increase and the pace of adoption will.
<unk> accelerated into 2023.
This ends our prepared remarks for today.
With that said and I are happy to take any questions.
You might have.
Operator.
And if anyone has a question you can press zero then one on your Touchtone phone.
Once again that zero one on your Touchtone phone, if you wish to really remove from the QE compression zero too.
And our first question.
Comes from Frank tool can go ahead Frank.
Hey, everyone here.
For taking my questions. Congrats on all the solid operational progress.
Apologies for starting off with a little bit of a naive question I think I may have missed it but did you guys call out the number of placements that occurred in the quarter and and where that stands I heard the 35 guide, but was just curious where that is standing at right now.
Frank.
First of all we.
Have.
Additional contracts that we did not place additional system because as I mentioned in the prepared remarks, we've really focused on getting the new sites running.
We as I said in the prepared remarks are pretty comfortable that we will have at least 35 sites operational.
In the end of this year.
Okay. That's good color I appreciate that and then maybe just one more on profound.
On the reimbursement sorry on pulse on the reimbursement.
Process node.
I noticed it was it was a two code application for imaging as well as treatment can you maybe just talk through some of the intricacies to that process.
And who can use which codes urologists versus radiation oncologist and how this could.
The impact commercialization of the product over time.
Yeah, absolutely and I am happy to provide.
Quite a bit of color on this.
So.
We're working very closely with societies on this.
<unk>.
That one of the feedback that we received was that this could be a procedure that could be done jointly with a radiologist and is a 100 tests.
And so based upon those recommendations.
We divided the application into two.
Subsets, where we're seeking one code that is more.
About the imaging aspects of treatment.
Treatment, which could then be used by a radiologist and the second part which is more about insertion of the catheter and the.
Our treatment planning and assessment of the treatment and that is more of a urology activity and so that could be used by the urologist.
And the way the society have put this together.
Both of those codes tended to used individually by one of the specialties or if one.
Specialty is physician is using doing the whole thing.
That physicians could use both codes.
So it gives us a lot of flexibility to how the technology can get adopted because.
In large hospitals in some cases, we're hearing that two physicians are using this together and they really like the fact that we can do that and they will have the flexibility to continue to do that.
And in smaller hospitals.
Signaled physicians doing the whole thing.
More likely urologists doing it then they will be able to use both codes.
I think that.
That's certainly part of the color.
Sure.
It is a very comprehensive plan.
What's going on there.
A lot of <unk>.
Now this is going on with the Anda at the moment.
So we are going through it.
Game changing technology, we're optimistic overall obviously.
We're thrilled with the caliber of advice we are getting.
Independent societies.
Let's see how it goes and.
We'll continue to do it but I think the other part of the color to be honest.
We were really really thrilled with the fact that while most reimbursements continue to go down and we saw that for other urology procedures, particularly prostate cancer for years, many have come down.
But the ablative treatment like ours to <unk> 74, which was already low.
The target payment was already pretty good has actually gone up 5%.
Finally meets the final editing and gets finalized by end of September .
And HIFU, which is also a ablative procedure went up so I think that.
<unk>.
The fact that the CMS and other societies are recognizing the value of ablative technologies, we're quite thrilled with that I think we can drive adoption with the C code.
Well going forward.
Okay really helpful. Maybe if I can just sneak one more given all the extra commentary on and finally this quarter could you maybe just try and frame up how we should be thinking about capital.
<unk> in the back half of the year and on a go forward basis.
Yes, again, thank very good questions.
So again.
No.
99% of our priority with Tulsa.
What we are driving.
We were pleasantly surprised with the attention that finally received at the.
Intervention radiology meeting in Boston in June this year.
We are obviously thrilled with the to the sales of two devices.
This quarter.
That <unk>.
My suggestion in terms of going forward.
Quite frankly concerned about that.
I would not assume that we would sell more devices.
In U S. This year.
These applications I think that there is a lot of interest, but theyre going to have to budget and so on and I think these two sites will provide.
References to a number of pediatric sites in the United States that will hopefully convert into sales in 2023. So that's.
Part of our thinking process.
The capital model that we do apply particularly for suddenly in the international market.
Think it's Stu.
Coming back.
Slowly.
China in particular is really really good still.
Not quite there so I would still be cautious on this but I think strategically I think we're thrilled with it and I do think it bodes well for the mid to longer term.
Okay perfect I'll stop there thanks for taking my questions.
Thank you Frank and <unk>.
Next question comes from Zach Wiener go ahead Zach.
Hey, guys. Thanks for taking the question I just wanted to confirm one thing and then one more broader question.
The commentary on improvement through the second half of the year.
Whereas the expectation there and then.
What's the thought on Covid headwinds and maybe impacting those placement couple.
A couple of follow ups.
Sure Jack Im assuming youre talking, particularly about Tulsa in the United States and adoption.
Yes, yes, sorry about that.
Yeah, No I think that.
As I mentioned in the prepared remarks.
I'm really thrilled with the fact that now that the society meetings are going on the publications are coming out.
Amount of attention on Tulsa.
Now significantly better than what we had over the last two years.
The reason is.
So critical is that that is where and how we build awareness.
I think the awareness level of Tulsa is significantly higher today than it was even a year ago.
And so I.
I think what you will continue to see is we.
We will continue to install more sites, we're debottlenecking all of the reasons why it has taken longer.
We are pretty confident about 35 sites this year.
We're pretty confident that the usage will continue to increase it has been increasing in double digits quarter over quarter.
The pace of.
Increase is.
Going to continue to also increase.
Perhaps by the end of this year that you will start to see that so I think on the Tulsa side.
We are it's more like things.
Things are on track.
This is going up patient continue to give us positive feedback.
Youll continue to see more publications Youll continue to see more and more usage and adoption continuing to go up.
We will continue to see additional sites going up.
The pace is.
At the moment, but I think you will continue to see improvement in the pace of adoption.
Over time also.
I think Jack looking the other point that were made in the prepared remark is posture.
Long time, we have had our first proton live recently and basketball, we brought in like 40 physicians right now.
And all of the Colgate is subsided to a certain extent like can we see that those activities are going to pick up where we can get more engaged with our.
TV shouldnt be and at the same time make more physicians are aware of the technology and we can educate them and start guiding them towards articulate exactly and.
We're happy to provide a lot of color on these things.
We've had good science as you know the quality of our sites in the U S is very high.
Got you.
Number of users.
Some of them are using it for mostly for recurrent.
Failures.
Some of them are using for focal therapy. Some of them are using for whole gland and when we brought the users together they could see how others are using it more broadly and so on so I think these activities will lead to.
Higher usage, even at existing sites.
Over time.
So that's why we're kind of excited that we're finally able to.
Cost.
<unk> cross fertilize the knowledge across our users.
And in many many non users who are there and we got very good feedback that these guys are now ready to move forward with their own adoption of Tulsa.
Yes.
Thanks, and if I could just sneak one more in your comments on sure.
Sure the inflationary pressures that are facing broader med tech space.
Curious what you guys are seeing.
And gentlemen, thanks.
In the broader med tech to be honest.
I don't have much comments, Jack I think that we have.
A one track mind were very focused on our technologies.
And.
Kind of small at the moment. So some of those macro things are not as critical to us I think the biggest thing.
As we've already described was the lack of contact lack of ability to cross fertilize people.
That is what we're thrilled about.
I think I would continue to say.
When we visit customers.
We do not work out of those meetings with them, saying they don't see the value. They don't think that they should do it right.
More and so on John .
Generally speaking.
Urology community is ready to adopt this technology.
Yes, thanks for taking the question.
Thank you Jack and once again, if you have a question. It's zero one on your Touchtone phone and our next question comes from Raul Sorry, guys from Raymond James Go ahead Raul.
Hi, good afternoon.
Good afternoon, rich that thanks, so much for taking our questions.
So my first question is clearly this is a fourth quarter potentially consolidation.
Station of awareness.
Reimbursements.
Et cetera et cetera.
And so.
When we look at the current installed base of about 25, and you're guiding towards around 35 by the end of the year, probably the most important lever that we then need to essentially we'll be looking at looking at will be the utilization rate per device.
And so I believe you had alluded to that increasing.
Could you please give us a little bit more color in terms of how you're seeing utilization per device. Currently how do you see it trending going forward given the current CPT current equal environment, and then evolving CPT code environment, and then wrap that all up to the challenges that hospitals are currently having particularly with nursing and potentially.
Their ability to adopt new technologies.
Yes.
I'm very happy to provide more color on this.
And I think these are very important questions.
So.
Again, let me kind of share a little bit more detail.
Here.
Oh.
If you recall when we.
Introduced the product into the market.
We talked about.
<unk> unique channels. We said we were going to go after the early adopters are going to go.
<unk> imaging centers and we will go after teaching sites because those teaching sites, we're not necessarily going to be high volume sites, but they were going to provide the kind of podium presentations that we're starting to see now and they will provide the support that we need.
The CPT application.
Right, So I think those goals.
Being achieved.
And there is not just about the same store sales at the moment, but I think that in addition to achieving those goals.
Now with being able to have these face to face and the cross fertilization as I described.
We are starting to see is that even the teaching hospitals, saying, okay. Well. This site has treated a number of patients who've done.
This unique type of cancer.
Another site has done another unit type or.
A lot of our sites are cash pay.
And how do you present the product.
Two the cash pay customer.
A number of sites have different ways of follow ups and so I think what we saw from the protocol is a number of meetings at these societies.
Conference is that they're now talking to each other and they're all talking about how do we learn from each other rather than just from our own experience.
I do expect that same store sales will be increasing over time.
So.
Generally speaking I think that you will see it.
In our recurring revenue numbers not only from the increased number of sites, but also from increased usage per site.
And I would still again, you guys know me well enough cautious enough to be able to say don't expect to happen in one quarter, but I do think that the trend is there already.
The conversations that we're having with the University suddenly are telling us that there is a strong desire to continue to increase the usage.
So I think the pace of adoption.
The increase quarter over quarter.
I think in.
It will it may be a bit linear at the moment, but I do think that you will see acceleration in that linear to more exponential.
Terrific. Thank you.
That's really helpful color, particularly on your strategy and how it is.
<unk>.
The presentations on the CPT code.
Now following on from from your final comment about these things playing through to increased utilization, which of course, then translate to revenue.
I guess, maybe we're looking at 2022 as this really consolidation you're building awareness et cetera, getting the pieces together for reimbursement.
Now looking forward to 2023 as you put all of these important pieces to get as you are currently putting it important to be together again reimbursements and as awareness realm.
A relatively well established installed base of teaching hospital, how should we be thinking about the revenue ramp between 2023, particularly given also the.
Cash position of around $53 million right now that burn of around 7 million in the quarter could you give us some color again, how the projections on revenue in 2023 relative to your cash and how you look to potentially may be filling any gaps maybe ABS debt or otherwise.
Yes.
Well to be honest I don't have.
Enough.
<unk> ability to give you.
Guidance for next year yet.
I do.
I think that.
Bye.
Year end conversations into 2023 that we may have enough visibility to be able to provide a lot more.
Forward visibility into the.
Revenues and so on for 2003, but I think this is really Q2 is really the first.
Sort of normal quarter.
Right and.
Hi.
I do understand that.
We need to get there and we will as soon as we turn to slide we feel pretty confident about 35 and as soon as we feel confident that we will share that with you we will do that.
So I.
I think that that timing.
In the in the works and familiar.
<unk> been comfortable we'll do that.
With respect to.
Bill.
Cash position and so on.
I still feel we are in very good shape I don't expect that.
Our burn is going to increase.
Think that our gross margin.
In the same place.
As the revenues continue to increase.
You will also see an increase in gross margin because as you know manufacturing is all about volume and as the volumes kick in costs come down.
And our overhead costs.
We will also remain fairly constant so I think that.
Okay.
We are in that cost at the moment.
And I think that.
Again slowly, but surely needed to progress on all of this metric.
I wish I could tell you more.
The moment, but I would just rather wait until we have the data to show you.
Okay perfect. Thanks. Thank you and then if you don't mind me asking.
One more question now the past about some asking them.
One more one more optimistic one so given that your color around the CPT application you alluded to multiple society.
Supporting the application and your relative optimism around the application could you give us any more color there potentially around the societies.
That provides for your optimism because of course. This is one of the most important catalyst in this year.
Sure.
Again, I'm happy to provide more color.
I think that.
There are two aspects to this that are both critical.
Number one.
I'm really really proud of our team.
Yes.
Clinical data came in on time.
Hi.
Commercial team connected with society and help them.
Learn and get up to speed on our technology on our clinical data and I think our team has done as good as it can get.
So.
That part.
That is in our control.
Very good about.
I cannot give you the names of the society.
More color than this.
Because.
We did signed confidentially agreements.
With them and thereby.
Obviously with abide by those agreements.
But to the extent that I can tell you. These are multiple societies that have that we've worked very closely with.
To get to these decisions about looking for two codes versus one code.
Framing the.
Application getting them to help us with it all of that has been done.
Well.
Now as you know me well enough.
Look at data for everything.
And one of the pieces of data that is in a phase strongly is that game changing technologies like DG go.
Go through significant.
Scrutiny by the EMA.
And <unk>.
More often than not.
It takes longer than a year to get through them.
So.
I don't want to ignore that reality.
And we want to work with DMA helped them as well, but I don't want to get ahead of reality either.
And part of the reason is and I think the more important part of the message.
Is the fact that our C code.
Is being paid today.
And it has actually gone up 5%.
<unk> then it becomes final rule it will go up 5% so.
We're in pretty good shape to drive adoption.
It is not like.
Lots of companies were until they get to that typically they can go they cannot go anywhere.
RK.
Patients are willing to pay.
<unk> are interested in adopting it.
Our C code is working we've paid it has gone up.
We're in good shape, we're in good shape.
So that's the color.
Great well, thank you very much and Richard and congratulations to your team for their for their yeoman's work.
Thank you.
Okay.
Once again, if anyone has a question is zero and then one on your Touchtone phone once again that zero one.
Standing by for questions.
Okay.
And we don't have any questions at this time I will turn it back to our room for closing comments.
Thank you so much and again, thank you for your interest in profound.
And we look forward to.
Third quarter meeting.
Thank you again, thanks a lot.
And thank you ladies and gentlemen. This concludes today's conference. Thank you for participating you may now disconnect.