Q2 2022 ViewRay Inc Earnings Call
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Okay.
Good day My name is Melanie you know I'll be your conference operator today at this time I would like to welcome everyone to the view rate E Q2, 2022 conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If he would like to ask a question. During this time simply press star.
Followed by the number one on your telephone keypad, if you would like to withdraw your question again press the star.
Followed by the number one thank you.
At this time I'd like to turn the call over to Matt Harrison Director for Investor Relations You May begin your conference.
Thank you operator, good afternoon, everyone and welcome to view Reis second quarter Conference call. Joining me today are Scott Drake, our President and Chief Executive Officer, Zach Stassen, Our Chief Financial Officer, and Paul Ziegler, Our Chief commercial officer earlier today <unk> issued a press release and presentation for today's call. The presentation can be viewed.
Live on our webcast or downloaded from our website today's call is being broadcast and webcast live a replay will be available on our website for 14 days.
Before we begin I would like to remind you that the discussion. During this conference call will include forward looking statements factors that could cause actual results to differ materially are discussed in the company's most recent filings with the SEC I will now turn the call over to Scott.
Thanks, Matt Good afternoon, everyone and welcome to our Q2 call today I'll begin by providing an update on key patient and financial metrics. We will share our strategy is working as designed and driving commercial traction I'll reaffirm our commitment to significant P&L leverage and the path to cash flow breakeven with our current balance sheet.
Zach will go into depth on our financials and provide an update to our 2022 guidance.
As of the end of Q2, we've treated about 25000 patients and the ramp is accelerating we have several systems that will exceed 300 patients treated this year and a handful that are on track to do 400 plus.
The vast majority of meridian patients are treated with an ablative dose no fiduciary in fiber fewer fractions with outstanding outcomes and very low to no grade three or higher toxicity.
These metrics will be accelerated with <unk> III and stand in Stark contrast to any other system in the market.
We will share more on <unk> III in a moment, but we are now the first and only system in the world that tracks in real time in three planes and automatically gate the beam.
Workflow and throughput enhancements are exceeding expectation in the first brain treatment.
<unk> treatments have been successfully delivered.
We're excited about our innovation and clinical leadership and progress is accelerating.
Meridian therapy is being delivered at 53 sites around the world with about 70 more in some stage of planning or installation.
Please turn to slide four.
In Q2, we added eight more orders and the backlog increased to $353 million up.
Up 27% versus prior year.
Revenue grew 47%, resulting in gross margin of roughly 5%, a 600 basis point improvement versus last year.
Gross margin expansion is simply a consequence of the backlog, we built and the revenue growth we're committed to delivering.
Cash used in the quarter was $22 million.
A step down from Q1, and we expect to continue nice progression through the second half of the year.
We finished the quarter with $161 million of cash on hand, which we believe gets us to cash flow breakeven.
As previously stated we expected the first half of 2022 to look a lot like 2021, and then ramp into the back half of the year.
Results are unfolding as anticipated and positioned us well for the balance of the year and set us up for an exciting 2023.
Let's pivot to slide five and discuss how our strategy is driving commercial traction.
We said about four years ago that we would lead and differentiate with meaningful clinical data and lead the market in innovation.
We also stated that our clinical and innovation pipelines would feed and fuel our commercial pipeline.
This is happening as we speak.
We and our customers also believe that market awareness is critical to our success pace.
Patients deserve and demand shorter courses of highly effective treatment with fewer negative side effects.
Patients travel for Meridian therapy, and we now have the footprint to warrant modest but effective market awareness efforts.
Let's break down each component of our strategy and provide a brief update.
On slide six on the clinical front, our mission is to treat and prove what others can't we have a defined clinical beachhead strategy designed to prove value in both the toughest to treat and more common cancers alike.
So simply stated in tough to treat cancers, we strive to extend survival and in common cancers, we strive to enhance quality of life.
Long others tough to treat cancers include pancreas, liver kidney ligaments central and ultra central long known as the no fly zone for other forms of radiation therapy.
In these tough to treat cancers. Our goal is to meaningfully extend survival increased local control and have very low or no grade three or higher toxicity.
We now have thousands of patients treated with compelling and consistent reported outcomes. These data are highlighted by Dr. Michael Chung's Multicenter pancreas trial, where median survival was 26 months on meridian or about double that versus conventional therapy.
On more common cancers, such as breast and prostate we strive to prove critical quality of life enhancements the <unk>.
<unk> prostate study is a phase III randomized controlled trial directly comparing conventional therapy to meridian.
Meridian was so effective enrollment was stopped early.
Meridian cut margins in half.
Cut healthy tissue toxicity also by about half reduce treatment volumes by about 30% treatments were completed in only five fractions with no fiduciary and patient and physician feedback is remarkable.
Customer state that demand for Meridian therapy is quote skyrocketing.
These data combined with the completely noninvasive nature of Meridian is causing patients to choose our therapy as frontline care versus robotic surgery.
This is a powerful early indicator of future growth.
The drumbeat of clinical data spanning the toughest to treat and more common cancers will continue.
We look forward to the smart pancreas data release in the forthcoming results of lung star for shorter and smart one among others.
We are the only company in the space, leading with meaningful clinical data and we're very happy we put this stake in the ground four years ago.
Slide seven on the innovation front Henry Ford in the Miami Cancer Institute, where the first two customers to upgrade their programs to Meridian <unk> III.
Over 100 fractions have been completed with <unk> advanced workflow treating tumors in the pancreas liver prostate lung and brain.
Feedback has been very positive on <unk>, III, improving treatment efficiencies expanding techniques for delivering an ablative dose enhancing patient experience and increasing meridian's clinical utility by treating cranial targets.
These customers immediately experienced workflow enhancements and reduce treatment times, which will allow for incremental patient throughput.
The broad technical complexity of Meridian is designed to enable one simple yet critical feature that sets us apart from all other radiation devices.
With meridian, the MRI controls the beam.
The MRI acquired images multiple times per second and tracks the tumor and critical organs in real time.
The beam stops automatically faster than human hand eye coordination, if the target moves out of position or healthy tissue is at risk.
We just celebrated our 10th anniversary of these critically important features we remain the only company in the world to offer them an <unk> III extends our lead.
Let's turn to the importance of market awareness on slide eight.
Despite the fact that radiation has been around for a long time. The therapy is perceived poorly as long course treatment and unwanted side effects are front of mind for patients.
Meridian has and is breaking these paradigms and this needs to be broadly understood.
Given the success of meridian programs globally, and the current footprint and forthcoming clinical data. We feel that this is the appropriate time for targeted market awareness efforts for the patient and physician communities.
This includes going beyond radiation oncology, and educating medical oncologists and surgeons as well.
Our goal is to raise awareness so that patients who are told they are outdated or no treatment options may find hope and healing at meridian centers.
We are engaged in a strategic multi year partnership with Katy Kirk media to increase awareness of Meridian smart therapy.
Kt is a passionate trusted and knowledgeable source for cancer patients.
<unk> team has built a network of millions of subscribers and Katie is founded and championed the stand up to cancer movement.
Throughout the engagement kcl, we'll be leveraging their reach to make patients aware that short course, highly effective noninvasive and low side effect therapy is available on meridian today.
On slide nine these strategic pillars clinical data innovation and market awareness drive our commercial pipeline.
I would characterize our commercial funnel in the following way.
One it is ever increasing in size number two the diversity of customers from academic hospitals to freestanding centers is also continuously increasing and number three our customers are more focused on speeding Meridian program launch this is notably true in markets.
We're meridian is enabling competitive accounts to pull patients.
This past quarter is a great example of commercial traction genesys.
Genesis care place Theres six order city of hope is added to the Meridian family. We secured another VA at Ann Arbor, We announced a landmark account at <unk> in Japan and added two more sites in France.
We're frequently asked if our order funnel will sustained long term high levels of revenue growth. We firmly believe the answer is yes.
We have clear line of sight to our back half of 2022 growth and increasing clarity on 'twenty three and 'twenty four.
Given our backlog and prospective customers, we believe our growth prospects are bullish and industry leading.
Let's take a look at how all of these efforts culminated in a market on slide 10.
We view, Florida as an example, previously today, let's take a look at California.
A short time ago, we had three systems in the state UCLA and early Meridian adopter and two community hospitals in the form of end low end hoak.
Successful meridian programs prompted others to move <unk>.
Stanford a world renowned cancer Center is now live and on a great trajectory.
As a freestanding center has its first system treating patients.
UC Irvine is preparing to launch as the city of hope and multiple programs are planning for second systems. All in will go from three meridian programs in California to double digit systems in a short period of time and these successful programs are pulling patients and creating more demand.
This kind of activity is taking place in California, the northeast Seaboard, the upper Midwest, Florida, France, the UK and Italy.
This is our formula this is our strategy and it is working.
On Slide 11, we're often asked also about how does our strategy translate into an attractive sustainable business model.
Answer is simple.
Chronologically orders translate into higher backlog, which turns into higher revenue, which drive significant gross margin expansion and when combined with tight opex control yields P&L leverage which drives our path to cash flow breakeven.
We are looking forward to an investor day in Q4 of this year and we'll provide further clarity on our long term plans and projections for.
For 2022, Zach will provide more detail, but you can expect rapid revenue growth of about 40% gross margin expansion of 750 to 1000 basis points and tight operating expense control and.
And very importantly, we believe we're in a position to get to cash flow breakeven with our current balance sheet.
We're excited about this phase of our company and how quickly we will transform and grow in the next few years I am equally if not more excited for the patient impact that will deliver in the years to come with that I'll turn it over to Zack.
Thanks Scott.
I'll cover our second quarter business results and changes to our 2022 guidance full details can be found in today's press release, and we will be filing our 10-Q tomorrow morning.
During the quarter, we received eight orders the total grocer gross order value of approximately $46 million.
And backlog ended at roughly $353 million a.
A 27% increase over the same period last year.
Interest from Meridian has never been higher and our commercial funnel continues to be robust.
These factors are evidence our commercial strategy is working and give us confidence in the strong revenue growth, we expect for 'twenty, two 'twenty three and beyond.
Revenue in the quarter grew 47% to roughly $22 million driven primarily by four revenue units, including one upgrade versus $15 million driven primarily by two revenue units in the same period last year.
Product revenue was $16 5 million or 51% increase versus the prior year quarter. While service revenue grew 40% driven by the continued expansion of our installed base and upgrades to our enhanced service plans in anticipation of <unk> III.
Gross profit during the quarter was approximately 5% a solid step in the right direction as we work to deliver continued margin expansion into the future.
Excluding the impact of the upgrade unit in the period gross margin was 8% demonstrating the type of leverage driven by additional volume.
As we discussed previously we are currently built for approximately 25 installs per year and have meaningful infrastructure that we are on the path to fully absorbing.
We were pleased to see the significant improvement both year over year and sequentially and system and service gross margin.
This is the result of a lot of hard work by our team driving efficiencies over the last several years.
This work will be augmented by our ongoing cost reduction efforts and gives us confidence in achieving industry standard margins.
Operating expenses were $31 million in the quarter and we do expect growth in opex to moderate throughout the remainder of the year expense.
Expenses in the quarter were impacted by a $1 $8 million impairment charge related to the elimination of one of our mountain view facilities.
We made the decision to consolidate to one facility as a part of a broader cost saving effort.
During the quarter, our teammate retention rate was better than forecasted. This represents positive progress, but did result in moderately higher personnel costs.
Additionally in line with the macro environment, we are experiencing elevated travel costs and we did have our largest and most costly or U S conference escrow in the quarter, we do expect our aggregate travel costs to moderate in the second half.
We are actively balancing the need to be in person with customers against driving leverage in opex.
Turning to cash use we used approximately $22 million in the quarter, our cash burn this quarter was impacted by a combination of receivables and inventory.
We are managing through a challenging supply chain environment and are actively working to mitigate risks.
Since this is risk mitigation requires cash to purchase incremental inventory and deposits to solidify supply.
On a positive note and consistent with our commentary at the beginning of the year. We are seeing improved access for both sales and installation activity similar to prior years, we expect cash burn to moderate in subsequent quarters. As this year's cash collection activity is more heavily weighted to the second half of the year.
We finished the quarter in a strong liquidity position with approximately $161 million of cash and believe this is sufficient to reach cash flow breakeven.
Turning to guidance on slide 14, we are raising the bottom end of our revenue guidance range from $84 million to $90 million. The new range of 90 million to $104 million reflects increased confidence in revenue achievement.
We are encouraged by what we see in the market and are focused on delivering top tier growth this year.
Our new revenue guidance implies 28% to 48% topline growth.
We are reiterating our cash usage guidance of $68 million to $83 million as mentioned before we continue to face a challenging supply chain environment that sometimes requires us to deploy more capital near term to solidify vendor supply. Despite these issues. We continue to expect a significant step down in cash burn in the second half.
Of the year and remain confident we are well capitalized to achieve growth and reach cash flow breakeven.
The investments we are making our habit or are driving a positive return the initial feedback on <unk> and the market is strong and pairing that with our clinical data will no doubt no doubt drive meaningful growth.
The increased volume from growth along with our direct meridian cost down efforts will propel the business to an attractive financial profile over the next several years.
We are planning a capital markets day as Scott mentioned in Q4 of this year and look forward to diving a bit deeper on the bright future ahead with that we will now open the line to Q&A.
Thank you as a reminder.
In order to ask a question. Please press Star then the number one on your telecom keypad.
For just a moment to compile the Q&A roster.
Okay.
Your first question comes from the line of Rick Wise with Stifel.
Good afternoon.
Hi, Scott.
Hey, Rick Let me start let me start.
In fact, the season solid quarter, let me start.
To me the most important part the results of all your excellent work.
The order book.
I mean, it's great to see you.
See the order.
Gross orders step up to eight <unk> been at 70 per quarter.
Maybe just help us think through Scott.
Okay.
This a sustainable higher level.
It seems to me when I look at the second half.
A marked acceleration again.
The first half versus last year.
Would suggest.
As I look at.
My numbers for.
23% and 24 that those order rates.
It could be low based on what I'm hearing from you how encouraged for you.
How do we think about the trajectory from here.
Yes. Thank you Rick I appreciate the question and I would say.
A couple of things number one it's really important to know that the commercial funnel that we have now I know I characterized it this way and repair in prepared remarks, but.
It is forever, increasing which is very encouraging.
The diversity of our prospective customers is also expanding.
On a quarter over quarter over quarter basis that feels very good to us more and more of our customers are buying incremental systems.
And when you when you take that fact pattern and you add to with the clinical pipeline of data that we have.
The rollout of <unk> and future innovations that we've not talked about publicly.
You add to that market competition.
That we've highlighted now the past couple of calls and add on top of it the work with <unk> and her team.
We feel really good about the future of this business.
You look at it from a patient standpoint, it seems quite logical to us that patients deserve and demand shock.
Short course highly effective treatment with very low side effects, we think what we deliver is <unk>.
Special in the market and when you look at things through our customers' lens. They see the clinical value translating into strategic and then economic value and we anticipate that this the.
Market competition, and the patient awareness will really propel us as we go forward. So we feel very good about the order funnel that we have and how that impacts the P&L and balance sheet as we go forward.
Great.
Scott you highlighted.
Things that are interesting.
Seeing proved access to hospitals and hospital.
Decision makers.
Accounts I assume.
Yes.
Flesh it out is your answer.
But help us think about the clear momentum you have.
The complex environment.
This is the third week of large cap larger smaller cap Med Tech earnings and we've heard a lot about slowdown in decision in capital purchasing we've I feel like although we've been talking about staffing issues.
As a concern generally broadly or.
Three or four quarters now.
We are starting this.
This quarter see the impact on.
Yes.
So even for innovation innovative technologies, we are seeing the impact of slowdown.
Not acceleration because of staffing shortages.
And similarly on the supply chain.
Companies are unable to get.
Yet there are innovative products out the door because of shortage of <unk>.
Arts and electronic components can you help us understand why you are able to.
Move ahead through all of that I think I can guess, what the answer but and.
To the extent that <unk>.
Capital headwinds staffing supply chain et cetera.
We should not be concerned if you see what I'm getting at thank you, yes, I do Rick Thank you.
There's a lot to unpack there I would say.
My shortest answer is I think the team is really executing at a very high level and frankly I have felt that way throughout the course of the whole pandemic and now we find ourselves in a quasi post pandemic environment.
As it relates to the capital environment.
I think fundamentally we see an improvement in elective procedures little bit spotty from quarter to quarter, but generally speaking our customers are in a pretty good place there and thats the lifeblood of their P&L.
And when you look at.
What others have said from a reporting perspective, whether youre talking about hospital groups or the larger cap companies.
The data is kind of mixed right. Some are reporting relative strength, others, less so and as it relates specifically to view Ray.
As we've shared before our view re purchase our purchase of Meridian tends to fall within the strategic bucket versus replacement capital.
And the notable points of weakness that I've read about from you and others on the street is more on the replacement capital side than the strategic capital side and in fact, I would tell you that our customers appear to be even more motivated than previously about getting their programs.
Up and alive, and working and Thats, notably true.
In these markets that I've highlighted that have a fair amount of competition. So.
In summary, Rick hats off to our team I think we're operating at a high level and I think these macro headwinds impact us differently than they affect large cap companies.
That's great. Thank you Scott.
Thank you.
Your next question comes from the line.
Marie Campbell with LTI.
Your line is now open.
Hey, good afternoon, Scott and Zach This is Sam on for Marty Thanks for taking the questions and congrats on a nice quarter here.
Maybe I can just dive a little bit deeper on some of the installation environment Zach you'd mentioned some.
Supply chain challenges during the quarter I guess my question is is there any potential impact on installation or.
Even construction timelines going forward.
I don't think so.
There may be some delays here and there just normal course on the construction side of it that may be a little more subject to labor, but generally when we get in there.
We move pretty quickly, where we're kind of we've moved our average significantly down from what used to be.
90 to 120 day install down to <unk> 45 to 50 days and I think we're managing the supply chain.
Issues well.
And making appropriate trade offs to continue to push things forward. So.
Yes, I think we're able to navigate it pretty pretty solidly at this point.
Okay, great to hear.
And then maybe Scott you talked about some getting increased visibility now into 2023 as we sit here in August I know youre, not giving guidance at this time, but.
Any initial thoughts on maybe how we should be thinking about that maybe a similar cadence for 2022, whether it's.
40% plus ish topline growth.
Types of gross margin expansion.
Any other color on maybe how youre starting to think about 2023, it would be great.
Yes, Sam I would say if you take a big step back and you look at where we are.
I would take my head off to the team we built a backlog now of about $350 million on systems. As you are aware you can roughly double that from a service standpoint, so we have give or take $700 million in high confidence revenue as we go forward.
We do have zero to one systems fallout on a quarterly basis, but not not material in light of that $700 million number and we've got clearer and clearer visibility into that as we go forward as we said previously we thought the front half of 2020.
Two would look a lot like 'twenty, one and it did and we said that things would accelerate in the back half of 'twenty. Two so we look forward to hopefully knock wood, putting up a solid Q3, and then being able to share more about our plans and projections as we go forward book without giving.
Any specific numbers I think you can expect to see from us elite levels of topline revenue growth.
That leads to gross margin expansion that I think will unfold very nicely you can expect us to be very disciplined on the opex side.
And all of that leads to that path to cash flow breakeven with the current balance sheet that we have so we will get a little bit more granular with you guys here in a few months, but we feel really good about the position that we're in right now.
Great. Thanks for taking the questions and yes looking forward to the capital markets day.
Thanks Sam.
And your next question comes from the line of Jason Bednar with Piper Sandler Your line is now open.
Hey, good afternoon, guys congrats on another nice quarter here.
Scott I'll follow up on Rick's question, there just bigger picture capital environment.
Two partner here to get going.
First I guess on how you'd characterize.
Victory is the health or stability of the backlog in the current environment at Atms, you addressed that a little bit in Sam's question, there, but maybe just to expand a little bit or make sure. We're all comfortable with kind of the again, the health and stability of that backlog.
And then just in the in the current.
Environment, that's something like Meridian does tend to be longer cycle decision for hospitals. So the conversations youre, having today are likely to show up in orders Neal maybe later this year, but even more so in 2023, so I guess with that in mind can you talk about whether you are noticing any shift in the customer mix and the conversations that youre having today.
Yes, Jason I would I would start by saying, we feel really good about our backlog both on the system side and on the service side.
We take that incredibly seriously we are judicious about what we call an order and very judicious about what we put into our backlog and what remains in our backlog that posture will never change.
So long as we're here as an executive team. So we feel very good about that.
As you've seen from us over now many quarters as we scrutinize things on a quarterly basis on occasion, we will take our system out of backlog because we are unsatisfied with the end.
And customer activity at some point in time, but I think you can expect that to be a very small number of systems on any quarterly basis.
As it relates to the the prospects as we move forward.
As I mentioned Jason.
One.
Anybody to get ahead of us, but we just feel really good about.
<unk> patients demanding this therapy traveling for it without any advertising dollars being spent we've highlighted cornell before their prostate program is up fourfold with zero AD dollars and now with increased market competition for Meridian and an increased investment.
<unk> in terms of market awareness.
I just think we're going to continue to take nice steps as we go forward here and patients were highly motivated for patients to get this therapy.
Alright, great Thats helpful and maybe I'll just get to.
Two more will follow up with that I'll ask them all here together.
There.
One is a follow up there just to confirm I think there was maybe one order from backlog, but as an extension of that can you remind us how currency movements.
Effect.
The P&L <unk> backlog just in terms of quarterly reporting.
And then the second question here.
Sorry, if I missed it just balancing a few calls here but.
I think we're expecting data from the Smart study here soon do you have a planned venue, where youre expecting that to be made available.
And then just bigger picture.
What's what are the next step is going to be for for smart pancreas is a phase III trial in the works.
Something maybe you consider.
And just any sense of what a trial like that could look like from here. Thank you.
Yes, why don't we flipped the orders <unk> I'll take the smart pancreas and you can take the first part of that yes, Jason we have seen the data for smart pancreas.
We've got to be careful because we're trying to maximize the both publication and podium impact of that data.
So we have nothing to share at this point in time until we take a few more steps. There you can expect to see both acute toxicity and an early survival signal when we published that data.
So hopefully that answers your question on smart pancreas and would we consider doing.
A phase III randomized controlled prospective multicenter study in pancreas, we certainly would we have a ton of data at this point on pancreas, but we're certainly not opposed to doing more of it.
But we're going to take this step wise here.
We've got whether youre talking about tough to treat cancers.
Like smart one single fraction.
<unk> therapy and in six of the hardest to treat cancers, whether youre talking about scimitar Mirage shorter fort in prostate.
Lung star for Central and ultra central lung.
We have a trial going on in the ligaments liver kidney you name it.
We love the clinical pipeline that we have in front of US we study it very closely and we're going to continue to be differentiated on that front. So we'll give you more as we get closer to it but we think the next step is to release the data and then make a determination on how much more.
We want to do in pancreas, and those other tumor sites that I mentioned.
Yeah, and Jason just to follow up on the capital markets Day, we are just nailing down details and obviously, we'll make that public.
Public from a scheduling standpoint as soon as as soon as we possibly can.
And then on the backlog side of things I think we did take one system out this quarter.
We've commented in the past its kind of zero to two.
Normal course, so as a part of our are naturally quarter Nash.
Natural quarter process did take the one out and then as it relates to currency.
Generally our exposure to foreign currency is minimal.
Most of our orders are denominated in U S dollars.
And so the exposure within the backlog is very light.
The only instances when we when we contract directly with.
Some government institutions are universities and select foreign countries, where we're direct do we ultimately have to transact in local currency, but I would characterize that is.
A minimal number at this point, so not not a lot of exposure in the P&L.
On the revenue side.
Alright very helpful. Thanks, so much.
Thanks, Jason.
Your next question comes from the line of Cecilia furlong with Morgan Stanley . Your line is now open.
Thanks for taking the questions.
Even Australia, congrats on a great quarter two.
Two quick ones from me.
First is just in the backdrop of sort of a complicated macro environment here as it relates to capital cycle supply chain staffing.
I'm curious what has driven.
<unk> conversations or bookings in centers recently as it relates to sort of what has resonated with centers to greater degree either.
Data standpoint, our upcoming data standpoint, or from a COVID-19 recovery standpoint or something else.
Yeah, Kevin I would say the vast majority of conversations we have with customers now when this stands in contrast to where we were just a couple of years ago. The vast majority of dialogue with our customers surrounds clinical data.
There as we scour the landscape.
For anybody delivering our customers definition of clinical success and as a reminder, five components to that ablative dose tight margins no fiduciary fiber fewer fractions and low to no grade three or higher toxicity, and we don't see that coming from any other system. So.
That is a stunning thing when our customers understand that and then as I've mentioned.
To you before that competitive dynamic that we're seeing in Florida, California, and the other markets that we've highlighted that's really accelerating things for us as well. So I think it's kind of a combination that always begins with clinical data and then you have other influences in their U S customer.
<unk> with long waiting waiting times.
For Meridian therapy, I've talked to a customer yesterday that now is up to a 10 week waiting time on his system. He needs. Another and he also wants to do a hub and spoke kind of thing within his system.
So thats. One example, there other examples would be patients traveling.
Two other systems and then a competitive account is really motivated so beyond the clinical you tend to get different motivations, there, but it always begins with clinical and we feel.
Momentum building in the commercial funnel.
Got it very helpful.
I also just wanted to ask about China, I think to date, you've been dealing with several dynamics in China, including I think first of all travel restrictions and just getting into the country altogether and now in the second quarter. There is the new locked down so.
I'm wondering do you think the worst is behind you what can you share on your outlook in that region.
On out.
Yes.
We really have our eye on in China's preparation for.
Approval in that market for our linac.
And we've been working on that for some period of time as.
As we've said publicly before we anticipate that thats, either a 'twenty two or 'twenty. Three event, we don't have anything new to share there, but we're working with <unk> very closely in preparation for that launch.
There is a bit more access in that market and we are preparing for their big show.
That's coming up here in a little bit later in this year and fingers crossed on getting approval sooner versus later.
Got it thanks, so much.
Thanks Kelvin.
Okay.
Your next question comes from the line of Mike <unk> with Oppenheimer. Your line is now open.
Good afternoon, Scott and Zach I'm on for Suraj, Congrats and thanks for taking our questions.
Great to hear.
Great to here over 100 fractions with Ace III launch at Henry Ford Mci.
You touched on some of that reduce treatment times that are not sure prepared at this early stage, yet to quantify or at least anecdotally any of what youre seeing on the reduce treatment times.
Yes, Mike It is a little bit anecdotal at this point, but I would tell you. We are very pleased with the feedback from both institutions doing adaptive treatment tracking and three planes doing brain.
Brain treatment all of it is very gratifying and I think validates.
The design intent of <unk> III.
It's still early we're only talking about two customers at this point, but if you would have said to me.
Six months ago take the feedback that you have today or not.
And I would take this and run.
We did see Mci come out with.
Their own.
Don't know if there was a press release or what it was but they indicated that treatment for certain patients were reduced by 40% to 50% I think it's still too early for us to put our thumbprint on that I will just let a little more time go here and then look forward to expanding the launch to other customers but.
Again, very very happy and validated the design of phase III with simplification.
Parallel workflow.
Increased throughput all of the things that we were hoping for.
And thus far we're very happy.
That's great to hear thanks for that additional color Scott and then you touched on Astro back in Denmark and May curious if there're any highlights in the 40 or so abstracts there and.
And related to that looking forward on the data side smart pancreas any other data Readouts you expect to fall radiology caustic disaster RSA et cetera.
Yes, I think what was interesting.
At Astro was the amount of activity that we had in our booth in fact, one kind of funny anecdote, we gotten a little trouble on a couple of occasions because.
People paying attention to the presentation is taking place in the boot spilled over into the hallway area and we were asked on a couple of occasions to please try to keep the activity in the.
The scope of our boot so kind of a.
Indicator of how much interest we had there a lot of interest in <unk> a lot of interest in the clinical data.
So much of it that our customers were there to talk about a lot of interest in terms of people understanding not only the clinical data, but hey, how do I get a meridian program live.
So all of that felt very good to us and we look forward to Astro coming up in the not too distant future.
Great. Thanks, so much for taking my questions guys.
Thanks, Mike.
Again, if you would like to ask a question. Please press Star then the number one on your telephone keypad.
There are no further questions at this time, Scott Jake I'll turn the call back over to you. Thanks.
Thanks, operator, and thanks, everybody for joining our call. We appreciate it look forward to checking in with you in another 90 days have a good afternoon.
This concludes today's conference call you may now disconnect.
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