Profound Medical Corp. Q1 2023 Earnings Call
You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. 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 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 profound current beliefs, assumptions, and expectations, and relate to, among other things, expectations regarding the efficacy of the company's treatment technologies, results of future clinical trials, the ability to obtain coding and or reimbursement from third-party payers, anticipated financial performance, business prospects, strategies, regulatory developments, market expectations, and other
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 other than is required by law.
For the benefit of those who are new to this webinar story, I would also like to take a moment to summarize our business.
profound development markets customizable and vision free therapies for the population of the disease tissue.
We are currently commercializing TulsaPro, a technology that combines real-time MRI, robotically driven trans-urethral ultrasound, and closed-loop temperature feedback control.
The technology is designed to provide customizable and predictable radiation-free ablation of assertion-defined phosphate volume while actively protecting the urethra and rectum to help preserve the patient's natural functional abilities.
TulsaPro is CE marked, Health Canada approved, and $5,000 cleared by the FDA.
In the US, we employ a pure recurring revenue model for Tulsa Thrall, whereby we charge customers on a perforced or basis for Tulsa Pro consumables, lease of medical devices, and services associated with extended warranties.
Outside of the United States, we primarily deploy a capital and consumable sales and service model separately as the situation warrants that.
We are also commercializing sonnilies and innovative therapeutic platform that is being marked for the treatment of uterine fibroids and talismanine treatment of bone metastasis.
Satellite has also been approved by the China National Medical Products Administration for the non-based treatment of uterine fibroids, and has recently obtained FDA approval under humanitarian device exemption for the treatment of osteoarthly osteoma. But this is model for satellite systems as currently a one-time sale of the capital equipment.
On the call today, representing the company, our Dr. Arun Manawa, from the Armstrong-Chief Executive Officer, and Rashad Duan, the company's chief financial officer.
With that said, I'll now turn the call over to Reshed.
Good afternoon everyone and welcome to our first quarter 2023 conference call. On behalf of the management team and everyone at the phone, 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 for an update on our commercial activity.
to errone in a moment for an update on our commercial activity. However,
Before I do, I would like to provide the brief update on our first quarter 2020 financial results. To streamline things, all of the numbers will refer to have been rounded, so they are approximate.
For the three months cured and then March 31, 2023, the company recorded revenue of $1.9 million.
presenting an increase of 36% from $1.4 million in the same period of 2022.
Recording revenue increased 43% to $1.5 million.
while the one-time sale of capital equipment increased 16% to $400,000.
Total operating expenses in the 2023 first quarter, which consists of R&D,
G&A, and selling and distribution expenses were $8.1 million, an increase of 4%, compared with $7.7 million in the first quarter of 2022.
Breaking that down farther.
Expenditures for R&D worth $3.8 million.
and increase of 21% compared to the first quarter of 2022.
DNA expenses decreased by 10% to $2.1 million and selling and distribution expenses decreased by 4% to $2.1 million.
Net Finance income for the 2023 first quarter was $145,000.
compared with net final cost of $892,000 in the same three-month period of 2022.
Overall, the company recorded paper's quarter of 2023 mid-last of $6.8 million for 32-centicted vraiment partners share.
Compared with the mid-loss of 10.5 million or 40 cents per common share for the same three months cured in 2022.
As at March 31, 2023.
profound cash of $43 million. With that, I will now turn the call over to Arun. I will now turn the call over to Arun.
on that cash of $43 million. With that, I will now turn the call over to Arun. Thank you, Seth.
Beginning with art financial performance, our recurring revenue can feed its upward trend increasing 43%.
to 1.5 million compared to Q1222. In the quarter, our focus was on getting our new sites operational, and while we did not add any new sites, our pipeline remains strong.
Based on this, we expect to see an increase in the number of sites as the year progresses, with the achievement of 50 systems in the United States by the end of 2023 remaining very possible.
We're also confident that we will continue to see an increase in recurring revenue going forward while capital sales from all US markets will remain lumpy. As I am indicated before.
Our main focus now is driving adoption of Telfa in the United States.
I would now like to turn to the very well attended AUA 2023 annual meeting that took place from April 28 to May 1 in Chicago.
Although, robotic prosthetectomy and radiation are seen as the current mainstream technology,
It was very clear.
as the meeting that you are all of this are starting to view our new ablative therapy, Tau Saab, as a potential alternative.
or a third major option.
We performed live demonstrations to show how Telsa employs real-time MRI imaging.
and thermometry as well as directional ultrasound from inside the prostate.
gently heating tissue to kill temperature without causing unnecessary cell charring or boiling that can result from other types of ablative therapies.
Many urologists explicitly indicated that they are ready to meet the implementation of Tulsa at their sites.
And that based on our demonstration.
They clearly understand the clinical value of our gentle and fast ablation technology as well as its customization capabilities.
They also indicated that they are more comfortable using MR even without a radiologist.
Tau Sao is a particular interest because of its ability to treat a large variety of patients, including holograms.
or sub-grant or focal and can thereby become a mainstream technology.
As an example of the increasing interest, Dr. Dora, the lead author of the CalSans Level 2A Review article.
was specifically recognized by the Journal of Ending Erology.
on April 30th for his authorship as it was the most downloaded article over the last 12 months.
further illustrating the medical community's interest in Tulsa. Tulsa was the subject of four posters at the AUA meeting scientific program, one of which covered the Pivotal's packed trials four years follow-up data.
That was first shared in September .
The second poster covered a real-world outcome study of 180 men with recurrent prostate cancer and a subgroup with VPH. The largest single cohort presented today.
The results demonstrated that vision targeted tell some.
is associated with promising midterm on ecological outcomes.
and a minimal functional satisfied profile with the flexibility to treat localized prostate cancer in primary salvage or recurrent settings of DPH.
through a patient tailored, whole land or lesion targeted approach.
The third poster, assessed one rear complication.
in 206 patients where 131 received treatment from focal abrasion either Tulsa or high school and 75 received treatment with robotic assisted naproscopic prostatectomy or RALP.
This landmark study is one of the first to establish a head-to-head comparison between radical prostatectomy and minimally invasive therapies, as well as the first source of level of evidence that includes HRSA.
The study showed that TOSA had lower complications compared to RALP and no grade 4 complications like the two seen with RALP or PISO. The final poster assessed.
the safety and efficacy of Towson in men with BPH.
outcomes for the 27th period in the study demonstrated that early symptom relief as three months was doable to 24 months. At 12 months
International prostate symptoms, quality of life, urinary symptoms, and uroflonitri scores improved despite 23 of the 27 men discontinuing symptom management medication.
These presentations reiterated TALSAD's safety, efficacy, durability, and flexibility, which we believe will further drive TALSAD towards becoming a mainstream treatment for a broad spectrum of patients.
with prostate disease. In that regard,
If you haven't already done so, I encourage you to look at the current investor presentation.
on our website and slide 16 entitled Telstra Pro Utilization Trends.
on our website and slide 16 entitled Tells Up Pro Utilization Trans. Commercially treated patients.
in particular. This is not just theoretical anymore. We're seeing it in the data from patients that have been treated in the commercial setting.
While that slide includes all commercial patients since FDA clearance of Telsapro, let me provide some metrics for just those treated so far in 2023.
With respect to indication, approximately 72% were treated for prostate cancer.
23% were hybrid patients suffering from both cancer and BTH.
3% were hypotrasians suffering from both cancer and BTH and 5% were solved.
We're seeing a trend that Phalsa is increasingly becoming used in patients who are on active surveillance or diagnosed with low grade cancer but also have symptoms of VPH.
We believe that TALSA is the only minimally-many-way option for such patients.
For cancer grade, approximately 13% were grade group 1, 58% were grade group 2, 19% were grade group 3, and 10% were grade group 4 and 5. In terms of ablation.
around 56% or whole land, 26% or greater than 50% but less than 100% of the land.
and 18% for focal therapy, again demonstrating the versatility of our technology.
Thank you.
34% were between...
or each 60cc, 23% or between 60 to 100cc and 2% were over 100cc.
Going forward, these are some of utilization metrics that we will be reporting on a quarterly basis.
This real world data demonstrates also a unique flexibility which we believe translates into an unrivaled tan for us.
And into our reverse-erenced strategy ...
I'm pleased to share that our CPT category one application, Port HealthFile, which was sponsored by the Society of Interventional Regology, or FIR, and strongly supported by American Neurological Association.
as well as by several users who added positive comments to the application.
was considered by the AMA's CPT editorial panel on May 4th. We're very satisfied with the discussion that took place and remained optimistic about the panel's decision and easily awaited.
the publication of the meeting minutes on or before June 2nd.
The CPP application that was filed.
Request three codes. The first code is for a procedure performed by a specialist.
such as a urologist without assistance from another specialist.
as a urologist without assistance from another specialist. The other two codes.
are for a procedure performed by two physicians.
such as age neurologist and age radiologist. We believe having multiple codes gives our physician users the flexibility to either do the whole procedure.
or collaborate and get reimbursed for their heart of the service.
The next step of the CPT application process involves the relative value scale update committee or RUC.
sending questionnaires to tell-side users to determine the physician work relative value unit.
or RdU.
associated with the Tau Sapper feature. Both the SIR and the AUA.
will be very involved in this process, which, along with reviewers by the Center of Medicare and Medicaid Services, or CMS, will ultimately determine the TELSA procedure payment amount. The proposed recommendation...
are expected to be published in the Federal Register in August 2024.
5 light, October 24, and come into effect as of January 2025.
five light in October 24th and come into effect as of January 20th, 2025. By that time,
Assuming our CPT application is approved, and the preliminary result of the level one Captain Trial are positive. We anticipate a large install base of 75 or more sites across the United States. With this major milestone now on the horizon.
We're working to build a larger national sales team to close on our strong pipeline of prospects. In the meantime, we will stay focused on the captain's file, which is the first ever level one.
prospective randomized clinical trial comparing the clinical outcome of Towsaw with radical introductory multifacetedboo.
Recruitment continues to progress as planned, such that we expect to report pin the main results and...
Particularly functional side effects.
such as ED and U of Nurem continent in Q1 2025.
This includes an electronic unit that had a
Urologists are looking for superior technology to treat prostate disease and we believe that tells our ability to treat such a wide range of patients.
safely and effectively will solidify as a mainstream treatment.
We are very encouraged by the discussion at the AMA's editorial panel meeting.
that took place last week and looked forward to the publication of the panel's final decision regarding our CPT category one code application in the coming weeks.
Assuming the permanent code is approved, we believe that this combined with initial data from our ongoing Captain Clinical Shire will be a significant catalyst for a health health adoption in the United States.
beginning in the first quarter of 2025. At the start of that quarter, we expect to have 75 or more US TELCASIQ up and running. This ends our repair remarks for today. With that,
Rashad and I are happy to take any questions you might have. Operator here. At this time, we will conduct a question-and-answer session.
As a reminder, to ask a question, you will need to press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 1 again. Now please stand by while we compile the Q&A roster.
So my first question is, is that the CPG code that was considered by the AMA, assuming it is granted, would it be applicable to BPH as well as sort of the specifically given the broadening utility of Tulsa that you talked about around?
Yes. Good question actually. So the way our application is written, they are for omplation of
about
So, they do not specify whether the emblazon is for cancer or for BPH reasons. That is for the physician or the surgeon to decide.
do not specify whether the emblazion is or cancer or for BPH reasons. That is for the physician or the surgeon to decide.
The advice that we have received so far from our legal experts who specialize in reimbursement is that these codes are very likely to apply for both types of diseases.
We will work with insurance companies and so on. We go, but most certainly the codes at the moment we believe that these codes do not have to be revised. Great, that's very helpful. And then a following question from that is, you previously indicated that every C code.
profound is looking to expand to end-to-the-tory centers. Perhaps give us an update on that, what the process is like, and any sort of timelines associated with it.
Yes, all that I didn't cover that in the prepared remarks, but we have separate from this CPT activity. We have applied directly with CMS to expand the use of the C code at ASC. We have applied the C code at ASC.
As you know, there are over 5,000 of those in the United States. Many of them already have MRs.
And based upon the clinical data and the commercial data that we submitted to the CMS, it clearly shows that it is a daytime procedure. And because there is no infusion in this procedure, the risk of needing a hospital in emergency is.
very low. And so the meeting did take place in March. From our perspective did go well. The CMS will publish their proposed remarks.
by end of July or early August this year and finalize them by October this year. And if indeed they accept that our recommendation that will actually become applicable as of January 2024.
So the idea is that, you know, we are, you know, majority of our patients today are cash patients, but I think that we could be transitioning to using the C code more effectively as of January 2024.
and then by 2025, if the AMA accepted the application, then the permanent code would become effective. So I think that's sort of the series of events that we're looking forward to.
Great, that's very helpful and it's a good to understand that sequence of reimbursement. And if you'll indulge this one last question, of course there is the balance between increasing utilization as well as increasing the install base. You talked about no need to point out this quarter. However, recurring revenue has gone up by, just on my back of the envelope, about 15%. So, could you give a sense for...
you know, the rate of increase quarter over quarter and how we should be thinking about that recurring revenue escalating, particularly given your guidance that you expected to continue growing. Yeah, I think that, you know, as if you remember, you know, from Q4 to Q1, the number of sites increased. And I think what you're seeing
increases usage. So definitely the mumble patient being treated is increasing. And I think that going forward, the requirement that new will increase due to two factors.
One is that all the sites gave the newer sites have been more and more experienced. They will use the device more. Just like we saw a couple of years ago, when we started the sites that are two years longer are certainly using the device more today.
So I think you will see an increase partly because the sites will get more experience and they'll increase utilization. But we do expect that we will have additional sites coming on in the stream. We did sign, for example, at least four new contracts. We already had some existing contracts.
so that we will be placing more systems in Q3, Q4 timeframe. And that will increase the utilization as well. So I think the combination of the two is the reason why I remain fairly comfortable that you will continue to see more systems in Q3.
increases in recurring revenue, you know, even in the 2023 year.
Great, thank you. That's all for me today and we'll certainly be looking forward to that AMA decision on June 2nd.
Thank you. One moment as I prepare for the next question.
Our next question comes from the line of Michael Sarcone from Jefferies. Your line is now open. Thanks. Good afternoon, Arun, Rashid, and Steven, and thanks for taking my questions.
So do you think you could just give a little more color on the Tulsa system funnel and how you think installations could trend through the course of 2023? I think for Raul you just mentioned placing some more systems in 3Q and 4Q, but would love to just get some more color on how you view the cadence through the year to get to that.
50 systems that is still possible. Yeah. Michael, I mean, we have a number of contracts. As I said, even in Q1, we signed additional contracts. For at least for additional contracts. I think we will continue to sign those contracts.
But I would say part of the reason we've been pretty comfortable with the number is that, you know, as I mentioned, the AUA this year was particularly very well attended. And we walked away with... There was a 2nd attempt for a long way to go.
that are in triple digits. And so I think that given that new leads is a very large number, given that we already have pretty good line of sight of what – where those 50 systems are going to be installed, which includes a number of existing – —
contracts and we're just basically in the process of putting them in. That's kind of where the other confidence is coming from. I think Michael, the main theme I guess is that
just basically in the process of putting them in. That's kind of where the confidence is coming from. I think, Michael, the main theme, I guess, is that, you know,
And a blade of therapy as an alternative to existing therapies is now here to stay. And our technology is the most versatile.
of all of those and as I mentioned in the prepared remarks, certain types of cases, such as those hybrid cases where they have low grade cancer and their own active surveillance, and they also have BPH, those patients really have very limited sizes. And so I think in this quarter we saw an increase.
in the usage in that category of or subset of patients. And so I think it's
The trend is starting to sort of flow in our direction that certain types of patients will get treated more and more with this technology. More and more sites are going to have to have an ablative option. I think that door is opening.
And I think the existing contracts and the pipeline is what's giving us the confidence Michael. I've got it. That's helpful and that makes sense and congrats. Triple digit leads. That's pretty impressive. And I guess just one more for me. I think last quarter you mentioned. And you know.
one of the initiatives you have is kind of teaching existing sites how to optimize reimbursement and coding. And I think you might have mentioned 12 or 13 teaching sites that were now, you know, appropriately using your temporary C code to get reimbursement. Do you have any updates on how things there are trending?
I think that what I said last time still holds, you know, at the AUA, you know, there were a couple of sites that indicated, in fact, that their administration has basically given them green light to treat particularly Medicare patients that were sea cold can be used.
that the sites are administration doesn't feel that they are in any difficulty with the amount that they are receiving and they're, you know, we're, as I said, starting to see some of these administration giving green light to their urologists to treat the Medicare patients with the C-Color.
Overall, I think study movement. Okay, thanks a lot, Arun. Sounds good, Michael.
Thank you. One moment, please. Our next question comes from the line of Ben Hainer from the line's global partners. Your line is now open.
Good afternoon gentlemen, thanks for taking the questions. Just a couple few for me. On the CPT code applications, applying for three codes and kind of having the mix between the urologist, a single specialist doing it, and then performing with assistance of another specialist.
What's your expectation in terms of how often each of those codes as they've been applied for might be used, presuming that you ultimately get all of them?
what's your expectation in terms of how often each of those codes as they've been applied for might be used, presuming that you ultimately get all of them? Yes. Ben, that's a great question actually.
You know, one of the things that at the AUA we heard repeatedly was that the urologists are increasingly comfortable and really want to take charge of doing TELSA all by themselves. They don't feel they need the urologists anymore, particularly those who have done maybe 20 to 30 cases.
treating the patient, you're looking at the boundaries of the prostate, you're looking at the vital organs, you know, where's the urethra, where are the nerve bundles, you know, where's the ejaculatory duct, and how do you save those, and where's the cancer compared to those. So they're really addressing an entirely different set of questions in the treatment process as compared to the diagnostician who is...
really looking at whether or not there is cancer or if there is cancer. What grade of cancer it is, they're less concerned about where it's located.
looking at whether or not there is cancer and if there is cancer and what grade of cancer it is, they're less concerned about where it's located. So number one, I think that.
the urologists are really, really ready to take charge. And so on that basis, our thinking is that as this product goes more and more into community hospitals and suburban hospitals and so on, outside of teaching facilities, our expectation is that urologists will do this procedure all by themselves, and in that case, they will use that code all for themselves.
I think the early months will do the whole time in the future.
Okay, so it kind of depends on sort of the type of possible facility. Yes. Exactly. The type of facility. Yeah, the type of facility. You know, I think you've probably seen that. I know I've seen that in my past in other environments when there's a new technology, they will bring a second special case.
to help them with certain unique aspects. And I think having these separate codes makes it easier for them to invite the second specialty to do that. And I think if anything, it will help during the early stage of the Tulsa development. OK, so I mean it makes sense. And why they would do it the way that they do it.
you know, hopefully you get all of them so there isn't anyone that feels left out. Secondly for me, you know, looking, you know, obviously you had a great, a lot of great data at the AUA that got presented. I noticed the AltaClinic real-world data, at least for the side effects, looks better than CAC does in a lot of ways.
constant team and this is why I'm beginning to feel fairly comfortable that this technology should go into the mainstream.
Because.
Because when we did the tag trial
you know, we were governed by the FDA requirement to do whole-grant therapy. Versus in the real world, we're seeing constantly that they're making the decision on what's best for the patient. And in some cases they are doing whole-grant, which is, you know, over 50% of the time. And then they're doing between 50 to 100% in some cases. And then they're doing truly focal therapy, which is very small portion of the plan in small percentage of patients.
And I think that flexibility is the reason why you're seeing actually better outcomes in commercial settings as compared to the clinical trial, because those were all whole gland therapies. And when you get to that whole gland, you end up in a higher risk situation where with these partial glands, you can.
save a lot of functions even more carefully. Part of why I feel really good about this is if you think about radical prostatectomy, the only choice.
that that surgeon has is to remove the whole gland. Versus with TALSA, they have the choice of killing the whole gland or killing the partial gland, whichever is best for the patient. So I fully expect that over time, that theme will become stronger and I think that's what the patients want and I think that's what's resonating with the urologist community.
Okay, got it. And then last thing for me, I know at a recent conference you kind of mentioned, you know, how doctors are going to, you know, the families after procedure and saying, look, I've taken care of the cancer because I can see it on the imaging, so I'm real confident that I got it.
Yeah, and that's another very important point actually. They do that right away.
because they can see it on the image and they can make a printout of that image. So any tissue that no longer has blood.
flowing will show up in dark conditions. And it has not only that they immediately know the quality of the work they've done. The other part of this is that in case they did miss and they see like, hey, I need to kill another layer of cells because I missed it.
they can actually do that before they wake up the patient. So that feature is starting to also become really important to them. It gives them confidence to say, okay, I know I have done this or, okay, I know I have done this or,
Hey, I left something and I'm going to fix it before I wake up to patient and and they can then easily go to the family and say here the image here before the procedure you can see this large prostate and here dark prostate and they can actually start projecting the rate with which that prostate will start to shrink and how
their urinary symptoms back pretty quickly and suddenly they will do an image later to confirm the cancer, but they certainly would give the patient pretty good confidence. And I think that's a driving factor for patients.
Yeah, I mean, the big stuff they would do that. That's what I'm talking about in color, Ben. It's like I'm what we're almost talking about. Also, Pro actually has a very robust reporting tool that we don't talk about, but once the procedure is done, the position can actually print out the various.
good before that can be given to patients that shows what was done and what is the outcome. Okay, great. Well, thanks for calling guys and appreciate the taking the questions gentlemen.
and begin the session that shows what was done and what is the outcome. Okay, great. Well, thanks for the call, guys, and appreciate taking the questions, gentlemen. Thank you. Thank you.
Thank you. One moment as I prepare the next question. Our next question comes from the line of Joshua Jennings from TD Cowan. Your line is now open. Hi, good afternoon. Thanks for taking the questions. I wanted to follow up on one of your last answers, Arun, in just about the building of patient demand. I mean, I think we're getting closer and closer to early 25. We all have Captain Data.
under your belt, you know, reimbursements in place, and there'll be a lot of advantages for total pro-treatment. But you'll be going up against becky myths of radiation oncology and prostratech, we've said you were a biotic prostratech. But patient demand could be an ex-factor in terms of allowing you to capture a bunch of share. Maybe you share with us where do you, are your centers seeing a lot of just patient, direct patient inquiries from word of mouth, and how does your team plan to build blood? That's the best thing about it. That's said, initiative, patient concerned education education. Thank you. Thank you.
I guess this patient demand aspect of as we head out towards the 2025 period. Yeah. Yeah. Gosh, you're absolutely right. We are very, very aware of the market that we are playing in.
And we do, we have a very strong direct marketing strategy that is playing out very well. In fact,
And we do, we have a very strong director marketing strategy that is playing out very well. In fact, about
What we are hearing from many sites that at least a third of the patients that they see asks or tells on by name already.
And I think as we get to the official word on the CPT and so on, we think that that course will certainly become louder because there are certainly, you know, most patients who are able to pay the $30,000 plus they are doing it.
But I think there are a number of patients who are basically waiting for the insurance or the CMS, the Medicare plans to kick in. So I do think that patient education is a large part of how we plan to gain adoption.
The other side of this, I think there are two other factors that I think are also equally important if not more important.
And those factors are that we're also giving the urologist a tool that they don't have today. You know, it is not like having one type of robot and another type of robot that they can buy. It's still a robot and it still will do whole-grant removal. But in our case, we're giving them a choice.
that if the patient does not need whole gland, that they can actually treat partial gland also. In fact, they can make that decision on the fly. They typically do, in fact, make that decision on the fly of how much of the prostate and which part of the prostate should they be taking out.
Is there well over a million patients?
that are on active surveillance in the United States. So these are patients who have been diagnosed with...
have very limited choices today. None of them are good. So I think it's a combination of the flexibility and being able to treat certain sub-settopations.
I think even if we just get that, I think we will be one of the three mainstream technologies.
And even if we just get that, I think we will be one of the three mainstream technologies. So I hope that addresses your question.
Absolutely, absolutely. And one follow-up, sorry if you've spoken about this already on this call, but just thinking about the TAC data, the CAPT and Trial data, which is overall efficacy of PILSA PRO, and how boost could improve efficacy on the margin.
Is that something we should be thinking about and our commission's thinking about that as well? Thanks, Laura. Yes, most certainly. We did not talk about it today because we had talked about it in the last quarter. But the thermal boost capability that allows them to make sure.
that the margins are clean. Basically, that's the bottom line. The margins are clean by doing so. And that itself gives them assurance. And again, because they're using the MRI, they can actually see that. I've got information concern
as they're performing the procedure. Whereas if you're doing a robotic surgery, it is well accepted that 20% margins are not clean, but the physicians don't know that when they're doing a procedure, unless they take sample of the margin and they send it to the lab and it takes.
over 45 minutes to get the results. So in our case, if the suspected the margins are involved, thermal boost is a great way to do it. In Europe , where thermal boost is available and has been for about a year already.
What we find is that about half of the cases being done in Europe are actually using the thermal boost capability of our product. So it is, we already know it is very useful. We already know that it will be, give the urologist a lot of confidence. And we already know from the data that was presented at the AUA.
that because of these capabilities, that the commercial patient clinical outcomes are actually superior to that of TACT. So we are in FDA process. I think that we will get it done by end of this year, this thermal boost, as well as the AI capabilities that we announced in the last quarter.
And I think those in the 24 or 25 times, and will also help with adoption cars.
those in the 24, 25 time frame will also help with adoption curves. Excellent. Thanks for all your room.
Thank you, Josh. Thank you. One moment, please. Our next question comes from the line of Frank Tekkonen from Lake Street Capital Markets. Your line is now open. Hey, thanks for taking the questions. Last quarter I think you were…
Speaking to a backlog building for some of your users of up to three to four months, can you speak to that dynamic? And if that continues to be the case, and if there are any specific bottlenecks to working through that backlog, or if you think it's going to be kind of a rolling backlog on a go forward basis.
I think that in some of the teaching sites that backlog continues and a couple of sites since that quarter have gone to administration and they have been allotted additional MR time could.
in at least one of the hospitals, it had grown to six months. And so they have been able to add MR time and reduce that backlog to about three months. And I think there's another hospital that just got agreement with administration to add an extra day to kill that backlog. But I think that dynamic.
Certainly is one of the reasons why we're starting to see increased usage of the in the existing sites. So, so, yeah, for sure.
Okay, that's helpful. And then just wanted to ask for kind of a broad characterization of the broader environment. I know there's been some elements over the last couple years, macro-related, that have made installations challenging, or at least predicting the timing of those installations challenging. Can you maybe speak to how you feel the environment is right now and how that's playing into your culture?
cadence of quarterly placements throughout 2023? Yes, Frank, good question. So we do have, you know, maybe three sites where they have ordered MRIs and the timing of delivery of those MRIs have been in question. And at this point...
We are certainly getting the feedback that our customers are getting definitive answers. And I think all those three sites are likely to be operational well before the end of this year, more likely than not in Q3 this year. I do think the environment is getting better and we are getting better.
much better feedback in the US. I think the environment in all US is still a little bit unpredictable, particularly in Asia, but I think certainly the US is starting to get on-stream. Okay, then maybe last one, I think the last quarter you mentioned Captain was about 25% enrolled. Can you update us on that figure? Well, Frank, I don't have the exact number because we on purpose try to keep that.
you know, inside the clinical team. But I think that certainly we are recruiting at a reasonable pace and the number of sites will actually increase by about four to five sites by end of this year. So we are getting more and more interest and we will probably be in the neighborhood of about 14 to 15 sites in the next three to four months.
So I think the recruitment will actually continue to improve, recruitment rate will continue to improve. So I'm sorry I don't have the exact number, but I think that the recruitment, I mean, I do think that we will be able to finish the recruitment sometime by the middle of next year. Okay, got it. I'll stop there. Thanks for taking the questions. Thank you. Thank you. One minute.
quarter of cash.
So that's right, it's a little bit, it's a little bit hard. Right, I think the burn, yeah, go ahead and reset. It takes a safe to actually about five and a half million, but we've put in 2.4 million dollars from water to take their shots.
Okay, got it. And you said that you signed at least four new contracts in the first quarter?
Got it. And you said that you signed at least four new contracts in the first quarter? Yes. Okay.
Okay, so it seems to me and actually last thing before I ask a real question. The gross margin in this quarter, do I have this right that it's 65 percent? Done.
Yeah. Is that a normalized number going forward or was it something special in there that made this quarter look terrific?
in the product mix, right? So like, and we do have capital revenue from Tulsa Pro sales this quarter. And that one is fairly high margin as our cost is low for that one. But average our, our recurring revenue is doing 50%. And as we said before, we will continue it.
to see that going better as the volume increases. Okay. All right. So my real question is you guys are a small company and it seems like all roads are marching to 1125 to get reimbursement and possibly 1124 if you get reimbursement in the ASCs.
so that they're not doing the first patient and saying, I've done one. They want to have 40 or 50 done before January of 25. So how are you guys thinking about growing your installation team, your sales team, your clinical team to really drive towards having a big installed base and big user base by the time you get there?
80% of my time right now is spent on that question. Because I think we have to be ready for this.
And so I think a couple of things. One is that given that this has been a game-changing product,
Quite frankly, it took us some time. What is the best way to structure a sales team? How do we, what's our messaging? How do we present the clinical data in a very comfortable way? How do we educate our sales team and prepare them to make sure that they provide the proper information to our customers and potential customers?
So that certainly is something that we addressed late last year and we have a fantastic team that educates our people and we're very, very pleased with the way they have done that. But the other question is not only scaling the sales team and the service team but also how do we educate the...
who happen to be actually robotic urologists today, but have indicated that they will be flipping primarily to Tulsa as the reimbursement codes become effective. And so they are actually preparing training programs where they will in fact be able to provide
urologists too, urologist training. And so my expectation is that there will be at least two more likely three sites, one in the best post, one in the east post, or both southern, and then one in the Midwest or Northeast. And that we're quite excited about that because we think that...
the best type of training for urologists has to be from existing urologists who are doing it. And so they will basically invite the urologist to their sites and they will educate them.
So that's kind of our plan. We have structured our sales team for hunter-gatherware models. So there is a team that is focused on utilization. There's a team focused on new sites. And then we, as you know, we have a clinical genius team that will continue to perform. And we're looking to scale all of it at the moment.
efficient business model because we get over $8,000 per patient. And as you know, the margins are decent already. I think that we think that salespeople in a company like ours are moreobo producer I am nowhere near as lock core.
will have a return of 12 months or less. So if you look at a 12 month type visibility, I think so. If you look at quarter over quarter, I think, yeah, we're adding people right now and we may have some increase, but I think it will start to come back as the sales people begin to convert their efforts into revenue. Did they're gonna have to go chase those triple digit leads from AUA? Last kind of piece for me. Are you still kind of comfortable that you.
Okay, and then slightly bigger picture question. Do you have any sense, and maybe you said this already during your comments, do you have any sense as to what type of payment might be made if the CPT is fully approved?
like dollar amount? Yeah, dollar amount. I guess the the image we expect to what the payment might be.
I think the best surrogate, Brian , is the current C code. That C code.
Because the analysis is kind of similar in one sense because the payment amounts typically are cost plus. When you're adding payment amounts you're doing it in a colours scale, but got the cost
And the C code payment is cost plus as well. And if you look at 2022, the C code was paying national average about 12,500. And it went up about 5% to 13,000, 50 dollars. And it was only because the primary.
use of that C code is because of TELSA and the cost increase reflected the cost of the TELSA procedure. So if the analysis stays the same and CMS does it the same way they're doing it for the C code, that is probably the best area of information that I think we can look at.
based upon what the hospitals are charging and what their conversion codes are and so on, that seems like in the realm of possibilities.
Okay, so can the doctor make more money doing this procedure than he can doing anything else in prostate cancer? I know it's better for the patient and everything, but you know, can't... Yes. I definitely think, Brian , that we will be in the competitive range.
Is it going to be better or not? I think we're definitely going to be in competitive range is what I think at least.
going to be better or not. I think we're definitely going to be in competitive range is what I think at least.
Certainly, it's a procedure that is much more comfortable for this surgeon to do. There are certain sites like doing three procedures with large phosphates is fairly routinely done today. For some of the sites have done for cases. So I think.
and we'll be compelling. Well, because if a doctor is doing prostitutomy or open, he can really only do about two of those in a day, correct?
Yeah, exactly. Even robotics, typically they're only doing two per day. In some cases, they're doing three. But yeah, I think from that perspective, we will be competitive.
Good. All right. Thank you very much. Appreciate it. Thank you, Brian . Thank you. At this time, I'd like to turn it back to Dr. Menowat for closing remarks.
Good. All right. Thank you very much. Appreciate it. Thank you, Brian . Thank you. At this time, I'd like to turn it back to Dr. Menowat for closing remarks. Thank you so much.
Thank you for the time you spent with us and look forward to reporting on the second quarter. Thank you. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Thank you.