Q3 2022 Profound Medical Corp Earnings Call
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Good day, and thank you for standing by welcome.
Welcome to the profound medical incorporated third quarter 2022 conference call.
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After the speaker's presentation, there will be a question and answer session.
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I would now like to hand the conference.
Over to your speaker today, Stephen Kilmer Investor Relations.
Please go ahead.
Thank you good afternoon, everyone let.
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 current beliefs assumptions and expectations.
And relate to among other things expectations regarding the efficacy of the Companys treatment technology.
For future clinical trials, the ability to paint coatings and our reimbursement from third party payers.
You have to pay to financial performance.
Prospects strategies regulatory developments market acceptance and future commitments.
Such statements may 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.
Listeners are cautioned not to place undue reliance on these forward looking statements, which speak only as of the date of this conference call.
<unk> undertakes no obligation to publicly update or revise any forward looking statement, whether as a result of new information future events or otherwise other than as required by law.
For the benefit of those who are new to the profound story I would also like to take a moment to summarize our business.
Profile develop and market customizable incision free therapies for the ablation of disease tissue.
We are currently commercializing Tulsa pro technology that combines real time, MRI robotically, driven transfer anthro ultrasound and closed loop temperature feedback control.
The technology is designed to provide customizable and predictable radiation pretty ablation of a surge of defined prostate volume while actively protecting the eureka and direct them to help us serve the patient's natural functional abilities.
Tulsa Pro is CE, Mark how can our troops at 510 cleared by the FDA.
In the U S. We employ a pure recurring revenue model, but also a trial, where we charge customers on a per procedure basis for Tulsa pro consumable medical devices and services associated with it.
Outside of the United States with primarily deploy our capital in consumable and service models separately as the situation warrants.
We are also commercializing <unk> and.
Innovative therapeutic platform that is CE marked for the treatment of uterine fibroids and palliative pain treatment of bone metastases.
Finally, it has also been approved by the China National Medical product administration for the noninvasive treatment of uterine fibroids and profound recently obtained FDA approval under Paragon device exemption for the treatment of Australia.
The business model for final lease system is currently at one time felt that the capital equipment.
On the call today, representing the company are Dr room, NOI profound Chief Executive Officer, and Richard <unk>, The company's Chief Financial Officer.
With that said I'll now turn the call over 2%.
Good afternoon, everyone and welcome to our third quarter 2022 conference call.
On behalf of the management team and everyone at profound.
I would like to thank you for your ongoing interest in our company.
For those of you who are shareholders we.
Appreciate your continued interest and support.
I will turn the call over to Arun in a moment.
<unk> on our commercial activity.
However.
Before I do.
I would like to provide a brief update on our third quarter 2022 financial results.
To streamline things.
All the numbers, we will refer to have been rounded.
Proximity.
921 revenue of $2.5 million.
Primarily to <unk>.
It'll equipment in international markets.
Total operating expenses in the 2022 third quarter.
Which consist all.
R&D.
<unk> and.
Selling and distribution expenses.
$9.3 million.
Increase of 8%.
Compared with $8.6 million.
In the third quarter of 2021.
Breaking that down Parker.
Expenditures for R&D.
Increased 17%.
On a year over year basis to $4.7 million.
<unk> expenses decreased by 5%.
Two $2.4 million.
And selling and distribution expenses increased.
By 8%.
$2.2 million.
Primarily due.
Due to the higher foreign exchange gain.
Net finer income.
Four 2022 third quarter.
$3.3 million.
Compared to $1.7 million in.
In the same cream month period of 2021.
Overall.
The company recorded.
<unk> 2022, net loss of $5 million.
Or 24 are common sure.
Compared with a net loss of.
6 million.
<unk> 29, so far common share for the same three month period in 2021.
At September 30th 2022.
Profounder cash or $46 $2 million.
We believe that.
These combined with the 10 million Canadian dollars term loan.
Entered into today with CIBC.
Will be sufficient to support our operations.
Early 2025.
With that.
I will now turn the call over totaled.
Thank you <unk>.
As usual.
I would like to start with a key highlights home decor.
First and most important to drive clinical adoption.
Technology.
It is about clinical data.
Keep them options.
Is one of the top to.
Topics research by prostate cancer patients.
They undergo any procedure.
And clinical data is very important to them and making connections.
Connections.
The four year follow up data from our tech pivotal clinical trial.
A whole Glenn oblations represented by Dr. Lawrence clubs.
Why does this study's investigators at the recent <unk> 2022 conference in September .
As you may recall.
The primary efficacy and safety endpoints of pack, where PSA production at one year.
And the frequency and severity of adverse events respectively.
At one year Psa decreased.
95%.
A medium.
Three treatments baseline value of six three <unk>.
<unk>.
Two year of 0.34.
Four years.
Medium PSAT Dear.
Further declined to 0.28.
Importantly.
<unk> production.
Was durable over the extended follow up period.
Increasing just 0.23.
From five three.
One year.
286.
<unk> at four years.
The one year Tech data.
Road.
Following treatment <unk>.
No great four or higher adverse events.
<unk> or injury and more.
Procedural complications.
Is the four year follow up there were no new device or treatment related adverse events.
Tax.
<unk> <unk>.
Needed progression two additional treatment for prostate cancer.
And functional side effects.
Only associated with current prostate cancer therapies, including erectile and urinary functions.
At four years.
Only 16% of patients in the tech trial underwent additional intervention for prostate cancer.
This percentage compares very well two additional intervention needed after the current standard therapies.
In terms of functional side effects over the four year follow up period.
Not a single patient experienced.
Erectile dysfunction.
And 87% of previously putting patients reported directions.
Five minutes.
<unk> four penetration demi.
Demonstrating continued improvement from 75% at one year.
Urinary function.
Doable over the four year follow up period with 99% of patients.
<unk>, you're very confident.
Nor urinary tract symptoms were stable improving from medium international profit symptom score of seven at pre treatment baseline to five and four years.
I would like to emphasize that.
This was the first trial conducted in the United States.
Using the <unk> technology.
Most of the physician.
Who are part of this study at.
Never performed the Tulsa procedure before.
And that this was.
<unk> study.
Despite that these.
These are outstanding results.
Although this was a single arm trial.
The results compare favorably to any other type of treatment, including <unk> already Asian.
In addition.
I loved the title of Dr classes presentation.
Put it eloquently.
M R guidance counselor.
Not just another photo therapy.
Local therapy has its place.
But it's applicability is limited.
Limited to 15% to 25% of the patient population at best.
Yeah.
After class discussed with examples.
<unk> is applicable to majority of the patient population.
Could easily be used for whole Glen therapy.
That makes sense.
Or.
Therapy.
Six cents instead.
Indeed that unique flexibility isn't.
Just theoretical.
About 3000 patients have been treated with cancer so far.
About 50 per cent of those have been <unk>.
And the other half local patient.
This quarter.
Mark a milestone in the stock study.
Single Center investigator initiated randomized controlled study of total oblivion versus radical prostatectomy.
Intermediate risk prostate cancer conducted by Tucker Edouard.
<unk>.
And team at Oslo University in all day.
One year follow up.
When completed.
For the entire patient cohort of 213 men.
Biopsy proven.
MRI visible.
Unilateral prostate cancer.
<unk> to receive either <unk> as in Tulsa.
Hi, Sue.
Robot assisted necroscopy technique or R. A L P.
One.
The first report from this study.
With the complete cohorts outpatient has been submitted to the European Association of Urologists.
R E a U annual meeting next year.
This first report focuses uhm comparing post operative complication.
Demonstrating a statistically significant reduction.
Serious complications.
The focal ablative arm.
Additional reports.
Patient reported quality of life.
Such as erectile dysfunction and your name confidence.
I expect it to be presented along with early efficacy outcomes at additional consciousness plan in 2023.
Finally, we're continuing to make good progress.
In our sponsors Captain trial, which is the first novel one study ever conducted comparing emerging technologies.
Head with medical profession, and men with prostate cancer.
To date eight sites have been activated and currently recruiting patient.
Turning to the next tee highlights uhm.
I'm pleased to tell you.
That we have now installed.
<unk> system.
The United States and remain on track to achieve thirty-five install system by January 2023.
I'm also peeved to report that most of the additional system.
That will come online by January .
The result of an agreement.
Recently signed with Halo diagnostics for.
For the installation of four chocolate system at <unk>.
Two in California and.
And the other two.
Sure.
As you May recall, Dr. CIP was one of the earliest adopters of the hyphen technology.
To our knowledge he has conducted more hyphen cases.
Anyone else in the United States.
And for many years.
The lead educator and proponent of the technology.
<unk>.
He was also the first to use in a commercial setting in the U S.
And has performed approximately 90 procedures so far.
Dr <unk>.
Now the medical director of Halos prostate program.
And he recommended that Tulsa becomes tables primary prostate cancer treatment modality.
Going forward and Halo agreed.
We expect these to the higher volume site with three of the four operational my ear and and the fault that requires a new MRI coming on stream in January 2023.
We're also happy to share.
Despite a slow start Rodney.
<unk> net is currently installed in.
System.
Site in Phoenix, which would be operational by year end.
Similarly.
<unk> imaging another company with whom we have signed a multi site agreement.
Came on stream in the third quarter.
So with 35 currently installed we expect to install it for about a year and and the last of our 2022 target of 35 sites coming online at the beginning of 2023.
While we remain confident that Tulsa will change this time of the prostate care.
You'll be the first to admit that adoption at this early stage has been progressing more slowly than what we had hoped.
Reflecting on our market entry strategy.
My first target for early adopters.
Dr <unk> practice.
Practice treatment volumes.
Andrew successful recommendation to Halo is a case in point of the success of that strategy.
Oh next targets, we're teaching sites.
Which we currently have over 15.
We recognize that these would not be high volume sites.
But we saw the value and their ongoing research can be presented to the urology community conducting education programs for residents and other practicing physician.
And providing the necessary support to the societies and pairs for reimbursement.
Indeed that has also panned out very well.
We had an excellent showing the American Urological Association 20 twenty-two annual <unk>.
Now we're expecting five podium presentations later this month at the walls.
<unk>, maybe the allergy confidence.
Eligible society of North America.
R R. As in a annual meeting, which will further increase awareness of Tulsa.
The final target group, which is now our focus.
Is higher volume imaging centers like bread that.
Hello, and Paragon as we have signed multi side agreements with all of them and we're excited about their potentials in 2023.
So while the.
Case of adoption has not been as fast as we would like.
For a variety of reasons.
No doubt the strategy overall is working.
And the usage will continue to pick up.
Turning to our reimbursement strategy.
We announced in September .
<unk> R CCP category one application.
<unk> from consideration.
After September 2022, CPT editorial panel meeting.
The application only contains 2021 usage data.
Cause withdrawal was due to the.
<unk> usage.
<unk> not be available.
Really enough for consideration at that meeting.
We plan to submit an updated the application with support from the same society.
And which will include all 2022 utilization in 2023.
In the meantime, 11th hospitals.
Currently using the existing C code 39734 and are getting paid further telsar procedures.
Earlier this week.
B M X released its final or P. P F reimbursement for.
For calendar year 2023.
As expected.
The rule.
Will increase reimbursement to a hospital billing under C 9734.
Approximately 3.6%.
$13048.
With that change.
Taking effect on January one 2023.
We're pleased with this hospital payment level.
<unk>.
The increasing number of Chaucer site.
Going set of utilization data affords a higher level of predictability.
R U S.
<unk> business.
That we expect to be able to provide some level of guidance beginning in 2023.
To summarize.
We are very pleased with a four year cap data.
Which are even more compelling and demonstrate.
<unk> of the cost of treatment.
We continued to get positive feedback from urologists.
Already colorfast flexibility.
That they can use it routinely.
Ablative treatment of hoagland or photo therapy, or even for patients who.
You have a combination of BPH an early stage cancer.
We will achieve our 2022 goal of 35 at this site in January .
The newest site expected to be higher volume and the teaching sites.
We will refile are CPT category, one application for tell Sir.
123, and have a higher level of confidence in being successful.
While adoption has been taking longer than we originally expected.
You believe that.
That our overall strategy is working.
A few of the new sites that are coming on stream now are expected to be higher volume.
We look forward to providing some level of street guidance.
2023.
This and are prepared remarks for today with that.
<unk> and I are happy to take any questions.
Might have.
Greater.
Thank you.
At this time, we will conduct the question and answer session.
As a reminder to ask a question you'll need to press star one one on your telephone and wait for your name to be announced.
Please stand by while we compile the Q&A roster.
Our first question comes from Michael Sarcone with Jeffrey.
Thank you for standing by Michael Your line is now open.
Thanks, Good afternoon, and thanks for taking my questions.
So my first one really nice quarter on the system placement front it seems like you're making some real good headway in the imaging Center channel I was wondering can you talk about quantitatively that put the utilization potential for these imaging center systems, and how that stacks up to utilization that you're saying that you're teaching sites.
[noise] good afternoon, My I'll Trust I.
I think the teaching site.
All started with.
Very narrow focus and they had typically assigned.
Urologist to to basically treat patients and they were they had been careful and they are growing.
Careful and generally.
Wanted to see their own outcomes before they will increase usage.
But I think with these.
Multi site agreements that are described.
You will see multiple urology.
Who will begin to treat patients at the same time so.
Obviously.
We're just getting started with a couple of these sites the paragon in the hayloft I'll just carrying will just be getting started but I would anticipate that we would do at least.
Twice as good as compared to the teaching sites.
And I think that the momentum given that they have access to <unk>.
More urologists I think the momentum.
Will pick up over time also.
Great. That's really helpful and just to follow up and I was wondering if you could talk about the the hospital environment and and how things are trending there just in terms of your ability to to continue to install more systems at those teaching site.
Mmm, Mike I think that.
We.
Are at the moment pretty small and.
The teaching sites.
Generally.
We are actually continuing to see good reception.
And.
We are continuing to see.
That the teaching sites are now also opening up.
The the usage two additional urologist.
And a few of the top leading sites.
Among the top 10 in the country.
Are actually starting to open the dialogue about installing.
Directional mr's, so I think the idea that M R guided therapy.
Is likely to have a big place in.
Treating patients in the future I think some of the teaching science are already.
Decreased starting to online to that idea so.
I have not seen.
A big.
Change in terms of the.
Reception from the hospitals.
Where we are seeing an impact.
Certainly that a number of the patients.
Because we are.
More than 80% <unk>.
Cash pay patients I think the macro environment.
Certainly I think <unk> a bit of an impact of that they were certainly seen that a little bit.
But I don't see an impact on the reception.
For our technology.
Great. That's really helpful. If I could just sneak one more ran on on that front.
You know given that that we're heading into a recession in the U S. You know some point in 2023, you know how do you think about.
Your patient volumes through 2023, just given that there's gonna be a lot of people that may not be able to come out of pocket for an expense like that.
Yeah, I agree with you and I think we are we are looking to balance.
A lot of this.
So.
I think as I already mentioned I think that the cash paid model.
Could have a little bit of an impact.
From the recession, but at the same time.
I'm really pleased with the the fact that the C code is pain.
The teaching sites.
And some of the leading sides of paying as much as $17000 per.
Patient so I think what we are looking to do is drive adoption.
Where we can.
And and mitigate and balance.
Considering what's going on.
So I do think that the.
Utilization and the number of patients that we retreat.
Five of the potential recession will continue to increase partly because the sites are increasing partly because the payment in the hospital setting is decent.
And partly because of increased awareness and and this is a serious disease.
I think there are a number of positive factors that I do think that we will continue to increase but yeah. I agree with you we will be careful and assess how recession is assessing and will adjust ourselves. According to that obviously we.
Strengthening our balance sheet a little bit.
In this quarter is part of that preparation to make sure that we have the the runway.
To last until early 2025.
Got it that's really helpful. Thanks, a bunch of around.
[noise] excellent. Thank you mind.
Thank you.
Our next question comes from <unk> with Raymond James Thank.
Thank you for standing by <unk>. Please go ahead.
Thank you have good afternoon over and I wish I had Steve. Thanks, So much for taking our questions. Today. My first question was this is a follow on a little bit from from Michael's questions on utilization. So you indicated that now that you're bringing on more teaching more a high volume site that those will be about twice the volume.
Teaching sites, so how should we be thinking sort of an aggregate about the escalation of utilization per quarter and also that you could give us a quick update as to how you've seen escalation in utilization between Q2 and Q3 given that you at approximately 2015%.
<unk>, 20th third quarter over quarter.
And the several previous quarters.
Yeah.
Uhm Rhonda.
The.
We are running the business party.
It's a good deal of strategy in mind.
And.
Realize we were when we started commercialization.
Covid was the first thing, we faced and I'm facing a potential recession and so on.
So it's kind of hard to.
Predict all the numbers and.
As I said.
I do think that.
Starting next year, we will be able to provide some kind of guidance.
I can I can provide you with some color in terms of what we are learning.
And what the potential is maybe that will help you see how we do remain quite optimistic about the growth. So.
To give you some examples.
Talk about the teaching science and these sites for.
For example started with.
One year <unk> very narrow focus on.
Welcome to repeat only and then they're watching how the.
Patients have done and then.
Increasing the usage by adding different types of <unk>.
Cases patients would have different types of disease in some cases hoagland or does unique asked actually they think Samsung can certainly be used.
I think for example.
One of the University one of the top teaching University that is now coming up to be about two years.
<unk> data I can certainly share with you.
Is that they are already at about.
About 25% pulsar volume compared to radical prostatectomy so for every.
Three radical prostatectomy, they're doing.
Alrighty and they're finally opening it up to everybody and their full for the next four months at least maybe six months to their capacity the lib allocated to Tulsa. So.
There has been a lot of learning for us in terms of how they open the doors, how they created the communication how did the chamber.
Technologists and the technicians and how is the work flow of the patient changes in totally different right. So.
So I think that.
Those are the things we accomplished for granted 23.
What our mindset is is that we want to be able to.
Take these models and uhm.
Expand them two more sites.
And I think that's how we're looking that's why we are kind of continuing to be.
I'm optimistic about growing and and the near to mid term.
Know if that answers your question properly.
That does that does thank you very much and especially perfect segue to to my second question, which is now that you have <unk>.
30 sites established on well on track to 34 35 and have your January .
Uhm I would've <unk> and what you talked about in terms of physicians here I'll. Just you know taking taking their time to learn and then start broadening the utilization.
You may be Hawks talk to your learnings from your installed base or their standard operating procedures that you can now start to replicate from this from a certain subset of reference sites that.
You will then be able to apply to your existing installed base as well as to your pipeline.
Yeah.
That's a that's a great question and that you're right that's kind of where.
Our head is at.
Is that it did take a lot.
For you know a couple of these universities to start doing these operating protocol. So how did you how do you decide which patients is a tough saltation horses.
Prostatectomy patient.
If you decide that settled foundation, how do you then.
Bring them into the hospital setting and how do you how do they go through from beginning to end and as I said because it is.
Very different procedure compared to what they are used to it took them. Some time I can I'm happy to share with you. Other examples so the other side, which is a big teaching hospitals on the west coast.
They started with.
They said well, we're gonna assign one person only for complete everything and even within focal therapy. They were focusing on only a certain type of patients.
Then.
They saw for example, the other hospital doing these.
Starting to open up to a variety of patient and now they are also starting to open it up and.
Last week.
We heard that they're doing their first even <unk>.
Patients. So I think that concept that you just mentioned.
That you know what.
We now have a much better idea of what the workflows should be and that we can now take these best practices and start to move them to other hospitals I think that is.
Uhm viable strategy for us to to to follow.
While I'm at it I'm happy to share more examples because these are.
There's a tremendous amount of information that we're getting and where where absorbing and we're moving it forward.
We have historically, we've talked a little bit about the P. H S.
And I would say about three weeks ago.
One of our sites in Texas did.
A case of a patient who had V P H.
And this patient actually had.
The.
Zero lift technology about five years ago.
<unk> flips put in about five years ago.
And.
The prostate continues to grow and you put those in and so this patient had come back to its original because the prostate had grown and the the urologist basically took the clips out and the Tulsa on the patient and the patient is doing very well.
So.
We are basically taking these examples were taking the <unk>.
Talking about the flexibility and the potential of this technology and we're making sure that.
We can talk about this so that the future your holidays.
Don't have to rely on their own experiences, but they might have benchmarks and they can talk to other physicians, who have you done these things and thereby we can begin to to accelerate.
Option of the technology.
That's terrific. Thank you [laughter].
Yeah. Those are three very good examples and and so you know given what.
What you're saying about these real early glimmers attraction starting to take hold.
And you you're starting to apply the best practices across your existing pipeline that we've talked about visa stinks, perhaps maybe you can talk about what your forward looking pipeline looks like you said 35 by January what should we be looking like for 2023 any any further details in terms of on the ground.
Work that your team has been doing the setup for 2023.
Yes. It's a question everyone asks what is your first line look like.
And I've been thinking about.
What's the way too.
To sort of talk about that and then quantifiable way and.
I can share a couple of things I guess.
One is.
Number one we have a small but very effective sales team and I'm very proud of it.
The sales team that we're building.
But to answer your question I think one tangible way I can share with you the strength of our pipeline is that when we are talking with site and they are looking to install a telephone system at one at some point when it gets to be serious enough.
When we actually send one of our our service people too.
Do a side effects might emaar compatible.
<unk> software version.
Is there a work slow or a patient can be moved in and out as her recovery area in.
In the anesthesia working because we're converting diagnostics.
Diagnostics to intervention until until there is a lot of work that we actually are upfront and we gave the site a report on what needs to be upgraded and changed for them to be ready for when your telephone.
And I can tell you there are at least 25 sites, where we have.
She completed.
This site.
<unk> assessment.
So not everyone is going to come back.
But I do think that it gives us a fair amount of confidence in terms of what the installed base.
Could grow.
Going forward.
That's <unk>, that's a great color and thank you so much for indulging my questions and congratulations on getting 30 sites in on that trajectory to 35, and I'll get back to the queue.
Thank you. Thank you so much.
Oh.
Thank you.
As a reminder to ask a question you'll need to press star one one on your telephone and what's your name to be announced.
Our next question comes from Brian Gagnon with.
Securities. Thank you for standing by.
Please go ahead.
Hi, guys can you hear me okay.
Good afternoon.
Good afternoon, So I Wanna talk about comps and the sites that you have today, so I I understand the docks will do a few procedures see how the patient does and then if they see success they'll adopted more quickly and begin to roll out what are you, saying and how are you tracking.
<unk>.
For lack of a better term comp store sales for for your customers.
Yeah.
So Bruce.
Segregated them into various categories, because it's kind of hard to do.
Because we have.
Certain early adopters and then then we have some hospitals and then we have some very new sites and so putting them all together into one bucket is really hard to do because the average interesting. If you think about it from a statistics finally, they have it actually comes down down right now because the number of sites that are new is so high.
But if I look at the comms.
From the perspective of segregating them into various buckets.
I think for example.
The teaching site and I've mentioned, a couple of things about it.
These are a couple of sites.
I have no doubt that we will hit the target of 100 procedures per year and at least one or two of the teaching science will be there next year.
I.
I think the early adopters like we've talked about historically DRC onto your Dr. Bush in Atlanta, who are really lucky to be focusing primarily on Tulsa.
I think they will definitely get to the 100 procedures per year logging Bush recently celebrated as 200 case 200 case as well. So I think if I look at the early adopter market I think getting to that hundred is is a reasonable expectation overtime.
<unk> I think the teaching hospitals.
If we can start to to.
Take the benchmarks and move them I think those original goals are realistic to getting to them those numbers.
<unk>.
New site, Brian I.
Little bit cautious to be honest, because I think as I said in the prepared remarks.
Things have gone slower than I expected and the learning curve have been really.
Have been pretty they've been very conservative and how they've grown and.
And so I think the number of the <unk>, probably still take another year before they really get two volumes.
But.
But I am certainly hopeful at the.
The.
The multicenter site.
Will learn from each other faster than how the teaching kids are learning from each other.
Okay. Thank you.
So if I take.
What you'd said about you have at least 25 sites that completed a site assessment and I know not everybody will convert but in your past history.
What percentage of sites went through this whole process.
An assessment.
And then went through with the contract for install is at 50%, 80% or or better.
I mean I think that.
More than likely between 25% to 50%.
Usually in the size of the waste their time either takes a few hours to do this and they have to dedicated resources.
And the.
So it is.
You know it's.
Middle of the pipeline.
And.
Maybe over time, the conversion rate would increase I think.
Some of the reasons why at 25 to 50, sometimes particularly in this year.
They had been a lot of supply delays and so on particularly emaar installation fees or at least four or five.
Five sites that we have agreements where the <unk> are delayed as much as a year.
So I think those could be among the reasons why we find that <unk>.
Versions are not try it or they need a M are compatible.
Anesthesia equipment, which is in short supply right now those could be the reasons why they could get delayed but I think that.
The conversion rate.
Over time as those supply chain has become less important I think probably will go up but for now 25 to 50 is probably not a bad place.
Okay.
I know you have a backlog of existing systems to install with contract you've already signed and.
And do you also get to see what the backlog of patience is and your centers. Because obviously you have to shift them kids. While ahead of time and if so do you see that number continuing to improve.
Yes, we you know we.
We do have some level of invisibility.
And.
The numbers.
I would say at least an 80 per cent of the site.
Is continuing to improve now some sites might be doing one case, a month and it will go to two cases, which is improvement is still not a very high number but yeah I do think.
There are at least 10 per cent of our sites, maybe more than 10%, but said any number of sites where they are in fact booked for at least the next four months maybe longer than that.
Oh Wow, so we are definitely starting to see.
That portion of it and again as I said.
I.
I think our numbers are still small, but most definitely.
We are we see ourselves as the sort of a marathon man, we're looking at every site.
We're finding out where the bottleneck is.
And and we are working with assigned to resolve them.
And the reason I say this and I think the reason this is different and important is as you know I spent a good bit of time and be prepared remarks on the clinical can you apply.
And so none of our sites have any concerns or questions related to the technology.
Clinical value or in fact seeing any value because.
When you think about it.
When the C code is paying you.
Reasonable amount paying them it's.
And 13000.
<unk> is a good number.
Oh.
I think the issues that we face are not issues related to.
Bringing the technology that is a better mouse trap and you're switching from one to the other the issues that we face related to Ah related to.
How do you educate the physician on.
Assessment of.
Patient selection or do you give them comfort by having them do the variety of cases.
<unk> edged.
Educate the patient with the uniqueness of this technology.
How do we educate the.
Technicians.
To look at imaging not diagnostic but as.
A therapeutic.
So those are.
Things that game changing technology would have to do and that's what we are doing and that's the difference.
Okay, Great two last questions for me if you if you would bear with me Radnet you signed a multi center agreement I'm very glad to hear that the second system is coming online do you have any thoughts as to what their plans are for the next bunch of systems.
We're gonna be rolling this out across the country.
Yes, I had dinner with their chief Medical Officer, a couple of weeks ago. They are fully committed to it in fact.
I think this was maybe yesterday or the day before yesterday.
We're on local Los Angeles television promoting this describing the game changing technology your telephone.
Oh, it's actually I don't know if we can.
We can.
Put it on a website, but I definitely think.
If you look at Radnet, Los Angeles television.
Put out.
There was an interview and the Chief Medical Officer actually was promoting.
The one you know.
A game changing technology for patients so they're very very committed to it no doubt about that.
So we'll definitely had it on T V.
T V station, one is a K a b C and the other one is K P. L. A.
K P L a.
Yeah.
Which is channel five and K E channel stabbed them at the local market.
I'll have to do some Google work.
And lastly C P T code.
Delay can you give us some more color on that and what really gives you the confidence.
That you're going to be able to push this through with the societies and next year.
Sure that's a great question mine.
We.
Mmm, when we met with the societies in spring.
This year.
Their feedback was that 2021 utilization data one.
<unk> they were pretty convinced that this technology.
Is a winning technology.
I only wanted to support it all the way through we said, Okay. We will support the application and they sponsor list and.
And we went through that.
Mmm when we when the application was reviewed by M. A they went to the point of in fact, putting this on the agenda, which is kind of unusual but then they were still asking some questions on usage.
And when we submitted the two data that we had at the time and was pretty good data.
But the technicality.
Was that.
<unk> could only assess.
The application that was submitted they were not going to look at any new information that was submitted to them.
And.
So.
<unk> of all this is that we once we submit the 2022 data.
That issue.
You know hopefully I guess, we can't make the final decision and their decision, but I think that once we submitted of 2022 data with the application next year.
Should be in far better shape and that is what's giving me the confidence.
So if I if I take all this in context, you're delayed on the C. P. T application, you'll have stronger data and much more data that there'll be able to review when you submit an twenty-three.
And.
If I do my math correctly, even by the time you receive reimbursement the likelihood that the captain trial will be.
Fully enrolled and potentially even have.
Early efficacy data is probably pretty high at the same time.
I would say that's very accurate what you're describing is that accurate.
Excellent. Thank you guys talk to you soon.
Thank you Brian .
Thank you.
Our next question comes from <unk> with Raymond James.
Thank you for standing by <unk> line is now open.
Just one last question cause I I had a opportunity so uhm.
I'm glad that Brian asked about the CPT, one and I know you're quite.
Conservative in your estimate there. So he asked about timeline your confidence I'll leave that aside but given that your C. Code is now at $13000. We saw eat apps code just go to about $8000.
One last question is do you have a sense for the offender when the C code is issued.
The general.
Quantum of what that means I sort of look like.
And that'll be all right yeah.
Yeah, I mean, that's.
That's I know that something we really it's hard to predict I just think that.
If you look at.
<unk>.
Comparables.
The Ah the Hydro code is much better now for next year when it was.
And I'm very happy about that I think at recognizing.
Important latest therapy is important.
But.
But I think if you look at the original reimbursement amount as a set.
Pretty close to the C code.
That.
Was being used prior to getting.
Getting this one called.
And then they submitted data.
That showed that the cost was actually.
And then got adjusted based upon the data.
So I.
I think in our case if we're.
13000 range.
Yes.
Logically kind of feel like we should be.
In that range or higher based upon the data that has been submitted by the 11 hospitals that are using the code.
So.
At least theoretically I think we're doing all the things that we can.
To be sure that we.
Submit that the hospitals and the those.
Those who are doing the procedure.
All their account costs.
Correctly.
The amount that are assessed.
Based upon the cost of that procedure.
If you look at 8500.
One of the differences here is.
That we use M R, which is which you know typically.
M R.
If you look at incremental cost of using an amount of the hospital is about $500.
So.
And if you look at.
Two hours of the amount of time.
And the additional cost.
13000.
With all of that is is a very reasonable place to be.
Based upon upon entertain the hospitals.
Should be able to justify and I think that in the meantime, you know Brian was asking like.
We are looking to get things along so quickly.
<unk> had won if we get approval next year.
Becomes effective January 25.
The <unk> the.
Captain data hopefully by that time, we can produce some earlier partitioned data.
As well and then.
That the utilization.
The site continues to increase those are primary focus.
And so I think that as we pull all these three things together.
You know when a hospital is justifying anything new technology. They will look at all three utilization potential paint.
Payment amount and.
Clinical data so.
Suddenly that.
Summarizes our strategy very well.
That's great and I apologize.
One more question.
Recognizing that you just added 10 $10 million of commercial bank debt, which is terrific.
Could you maybe talk to your cash position and your runway and your intentions around cash.
And that'll be it for me today.
Yeah for sure.
Yeah, I mean, our foreign leaders in that neighborhood about 5 million.
And.
We think that strengthening the balance sheet.
<unk> ensures that we will not raise equity in the near future.
We can get across the <unk>.
Hopefully again.
[noise] decision, but really the idea being that we can get across the cat one code.
And you know.
There is a.
Recession next year that we can manage through it. So I think from that perspective, I feel to be honest about little very very good about it because I feel.
We have our balance sheet is a decent place I think that the option is a little slower but is there.
And and so I'm actually.
Looking forward to 2023.
That's perfect. Thank you very much and and best of luck to you for.
Thank you.
Thank you.
I would now like to turn it back to Dr amount of work for closing remarks.
Thank you so much for joining us today. Thank you for the questions.
We're looking forward to updating you at the next year and call have a great afternoon.
Thank you. Thank you thank.
Thank you for your participation in today's conference that does conclude the program you may now disconnect.
The conference will begin shortly to raise your hand during Q&A you can dial star one one.
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