Q2 2023 ClearPoint Neuro Inc Earnings Call

Greetings and welcome to the Clearpoint Neuro, Inc. Second quarter 2023 financial results Conference call.

At this time, all participants are in listen only mode.

And the answer session will follow the formal presentation.

If anyone should require operator assistance during the conference. Please press star zero on yourself and keep that.

As a reminder, this conference is being recorded.

Comments made on this call may include statements that are forward looking within the meaning of securities laws. These forward looking statements may include without limitation statements related to anticipated industry trends the comp.

These plants prospects and strategies, both preliminary and projected besides a total addressable markets or the market opportunity for the company's products and services and managements expectations beliefs estimates or projections regarding future results of operations.

Actual results or trends could differ materially.

The company undertakes no obligation to revise forward looking statements or new information or future events for more information. Please refer to the company's annual report on Form 10-K for the year ended December 31, 2022, and the company's quarterly report on Form 10-Q for the three months ended March 31 2023.

Both of which have been filed with the Securities and Exchange Commission and the company's quarterly report on Form 10-Q for the three months ended June 30th 2023.

The company intends to file with the Securities and Exchange Commission on or before August 14 2023.

The company's filings may be obtained from the SEC or the company's website at www Dot Clearpoint neuro dotcom.

I'd now like to turn the call over to your host Joe Burnett Chief Executive Officer. Please go ahead.

Thank you and thank you to all of the investors and analysts on today's call.

And thank you also for being a part of clear points vision and journey, our mission and our priority is to help restore quality of life to patients and their families who are suffering from some of the most debilitating neurological disorders imaginable.

In the second quarter of 2023, the company returned to double digit growth and delivered record revenue of $6 million in the quarter.

We have also continued to make progress across our four pillar growth strategy, including pillar, one biologic and drug delivery pillar two functional neurosurgery navigation pillar, three therapy and access product and pillar four achieving global scale.

I will now turn the call over to nobody Alessandro our CFO to review our financial performance in the quarter after which I will add some detail to our four pillar growth strategy and expectations for the second half of 2023 Daniela.

Thank you Joe and thank you all for joining us today.

Looking at the second quarter 2023 results.

Total revenue was $6 million for the three months ended June 30th 2023, and $5 2 million for the three months ended June 32022, which represents 14% growth versus the second quarter 2022.

As a reminder, our revenues made up of three components biologics in drug delivery functional neurosurgery navigation therapy and capital equipment and software.

Biologics in drug delivery revenue include sales of disposable products and services related to customer sponsored preclinical and clinical trials utilizing our products.

Logics in drug delivery revenue increased 40% to $3 4 million in the second quarter up from $2 $4 million in 2022.

This increase was fueled by 155% increase in biologic and drug delivery service revenue as we expand our service offering to pharmaceutical customers.

Logics in drug delivery service growth was partially offset by $8 9 million dollar decrease in product revenue.

Functional neurosurgery navigation revenue consists of commercial sales of disposable products and services related to cases, utilizing the clearpoint system to deliver medical device therapy to the desired target. This revenue segment increased 1% to $2 $2 million for the second quarter.

Capital equipment, and softer revenue consisting of seals, a clear point reasonable hardware and software and related services decreased 38% to $4 million in the quarter from point $6 million for the same period in 2022, reflecting fewer placements of Clearpoint capsule in software.

Gross margin for the second quarter, 2023 was 53% as compared to a gross margin of 63% for the second quarter 2022. The decrease in gross margin was primarily due to an increase in biologic and drug delivery preclinical services, which to date have had a lower margin than product sales as we increase our presence in this space.

Increased and duplicate costs related to the transition to the new manufacturing facility also contributed to the decrease in gross margin in the quarter.

Research and development costs were $3 $6 million for the three months ended June 30th 2023, compared to $2 4 million for the same period in 2022, an increase of $1.2 million or 50% the.

The increase was due primarily to increases in personnel costs, including share based compensation of $8 million increase in product development cost of $4 million as we invest in our technology platforms, particularly our software and biologics and drug delivery offering.

Sales and marketing expenses were $3 $5 million for the second quarter compared to $2 4 million for the same period in 2022, an increase of $1 1 million or 46%. This increase was due to additional personnel costs, including share based compensation as we expand our commercial reach in preparation for multiple new product launches over the next 18 months.

The expanded hiring reflect the learning curve required to train and educate on expanding <unk> product portfolio, which will be targeting new physician customers and new surgical arena within hospitals.

General and administrative expenses were $3 $2 million for the second quarter compared to $2 7 million for the same period in 2022, an increase of $25 million or 19%. This increase was due primarily to an increase in share based compensation of point $2 million and an increase in the allowance for credit losses of $22 million.

Net interest income for the three months ending in June 2023 was <unk> 1 million compared to 1.2 point 1 million net interest expense for the same geared in 2022.

With respect to our cash position as of June 32023, we held cash cash equivalents and short term investments of $26 $5 million compared to $37.5 million as of December 31, 2022.

While our operational cash burn in the second quarter was broadly in line with the prior year, we expect our operational cash burn injuries meaningfully in the second half of 223 compared to our first half of 2023.

The reduction in operational cash burn will be driven by one the easing of supply chain conditions that allows us to gradually reduce inventory Q operating leverage due to higher revenue and three our existing head count should be sufficient to support our business into 2024.

In addition in the second quarter 2023, we invested $23 million to set up our new manufacturing site in Carlsbad, California.

With that I'd like now to turn the call back to Joe.

Thanks Daniela.

The second quarter of 2023 was a record quarter for Clearpoint neuro with 6 million in sales driven by 40% plus growth in our biologics and drug delivery business, which is where the majority of our hiring and investment has taken place in 2023.

Let's start the conversation with that first pillar of growth biologics in drug delivery.

We continue to gain traction and earn business for more than 50 pharma and academic partners, who are using our clearpoint neuro products and services we.

We expect these partnerships to not only grow in number but in scale and sophistication.

A perfect example of that is a recently signed agreement for a multi platform gene therapy program.

This is a blueprint strategic partnership whereby clearpoint neuro will earn a cash payment for milestones tied to the clinical and regulatory success of the drug product itself.

Importantly, these milestones do not begin at commercial approval of the drug but they are out the drug development process, where clearpoint neuro specialists play an integral role.

This agreement is a clear and concrete example of how a drug candidate successfully navigating the regulatory process can contribute meaningfully to our results.

This would only be possible because of our focus and our investment in a preclinical touch point that starts very early in the drug development process and is yielding terrific results thus far.

While delays or even cancellations that some programs are expected, we believe our unique product portfolio and our expanded yet narrow focus service offering make us the premier partner for drug companies in the state for.

For perspective, one partnerships could generate more than $10 million per program and potential revenue to clear point in products services and milestones before the drug is ever commercially available.

If all 50 current partners were to progress through phase III trials for their drug candidate and the potential for Clearpoint neuro could be in the hundreds of millions of dollars in years, just from preclinical and clinical work there.

The key message here is that we are not depending on commercial drug approval to reach operational cash flow breakeven and can achieve that key milestone prior to any large incidents drug approvals.

One example of this progression through the regulatory pathway is the announcement earlier. This morning from one of our clinical stage partner companies Aspen Neuroscience, who are based here in San Diego They.

They announced I D E approval from the FDA for their phase one to a clinical trial to treat moderate to severe Parkinson's disease. We are thrilled to be working with them on this important clinical study.

Now in the event that a drug company achieved commercial approval then the potential is much greater.

We need to remember that the goal of many of these advanced gene and cell therapy is not only to address symptoms, but you sometimes hear the underlying disease itself.

It's a one time administration of the drug could safely charities debilitating diseases like Huntington's disease, Parkinson's disease, epilepsy et cetera, and the demands for these treatments will be much greater than for the device and surgical intervention used today that sometimes simply control the symptoms.

As an example, there are over 1 million patients in the United States alone living with Parkinson's disease, and yet only about 7000 are treated annually with deep brain stimulation to control the symptoms that.

That is less than 1% of the total population struggling with this disease.

We believe that proven drug alternatives that are endorsed and even prescribed by the more common neurologists and not just the neurosurgeon will dramatically expand the number of patients seeking or even demanding treatment.

The neurologist is key to driving that education on demand.

Irina commercial team focused on neurologists is a very expensive endeavor and difficult to scale.

Clearpoint neuro has the benefit of many pharmaceutical partners that already have a neurology channel to get the face time and presence we need to build awareness and build the market itself.

The commercial economics nuclear point narrow can change as well in a commercial setting.

This is due not only to our expertise our experience and our intellectual property, but also for regulatory reasons.

When the PTC drug that stater was granted CE mark approval for commercialization the clear point narrow smart flow cannula was written directly into the label of the drug as part of the European marketing authorization.

To say it differently, our smart flow is the only cannula that has to be used for delivery of it stays a into the brain and the European Union.

The regulatory reason for this is the battery of bench preclinical and clinical testing that is done to show drug compatibility with the delivery device all of which we gather and organize for the notified body or for the F. D. A.

This is not a small task and is essential to documenting the safety and predictability of the drug and device interaction.

Here's where fairpoint naira has over a decade of experience gathering this data refining our product and even adding to our portfolio and IP as you saw with our recent announcement of a cell therapy version of our delivery technology.

In the future you will see Clearpoint neuro with multiple routes of administration to diverse targets in the brain spine and central nervous system, which will unlock new pharma partners that are prioritizing these alternative target to the deep brain as we do today.

So why is there a point investing so heavily into that biologics drug delivery space.

We believe our technology, our experience and neurosurgery navigation and our significant head start puts us in a unique position that is worthy of maintaining and even expanding that lead.

It is also very beneficial to have a more diverse customer base, where we are not just depending on the hospitals themselves to purchase our products.

We are often working with large and well capitalized pharma companies that are already investing hundreds of millions into the state.

Temporary downtrend in hospital procedures are capital spending can be offset by development and service revenue from pharma, who value our head start and have access to capital even in challenging environment.

If we think about the true potential of this strategy, let's imagine that Clearpoint neuro is existing partners not new one, but the 50 or so that we have today achieved commercial approval for their drugs.

That would be 50 different gene and cell therapy drugs available treating more than 30 different neuro indications.

Patients around the world would be speaking with neurologists, who have been educated by their pharma sales rep about getting treated.

Now imagine that each of these drugs is co labeled with one of our multiple different cannulize. So we have become an essential part of the pharma company supply chain.

The very high switching costs necessary to move to a different delivery device because of the significant testing and clinical work necessary is a barrier for new entrants.

And because of this the central nature, we are able to not only protect pricing of our devices and navigation systems, but even expand commercial a S P, which even at several times our current a S. D would be a fraction of the overall cost of the procedure.

We would be in a position to earn not only milestones as already announced but potentially also royalties increased commercial device pricing and even package sales to pharma companies that want to kick the delivery device along with the drug itself and take the hospital out of the procurement equation for that procedure.

If the future Israel than every leading neurosurgery center will need a clear point near our relationship and our installed base will further expand.

We will grow roots and be in a central part of this new standard of care.

We believe many hospitals will start working not only for commercialization by for participation in our clinical trial work itself, which is why we feel confident in our ability to reach an installed base of 100 surgical site by the end of 2025.

That is the rationale as to why we did continue to invest in the space, which you saw in Q2 relative to R&D spending and temporarily lower gross margin.

On the R&D side, we've continued development not only for these new routes of administration catheters Cannula is a needles as already discussed but we have also continued development on new headframe like our orchestra frame, new advanced drug delivery software to agile our maestro platform and other technology is designed to make the procedure faster simpler.

And more predictable like MRI conditional drills and dedicated infusion pump solutions.

On the gross margin side in an effort to build our presence and reputation in the preclinical space. We performed a few projects at lower margins to show the value and responsiveness, we bring to our partners.

As we look ahead, we believe that this too has been the right investment and is giving us valuable experience as we jumpstart. This exciting part of our business that lead directly to strategic partnerships mentioned before and is already yielding results.

Now that was a lot of detail, but let's move on to our second growth pillar of functional neurosurgery navigation.

That's part of the business was relatively flat year over year as the growth we saw in deep brain stimulation navigation procedures was somewhat offset by the navigation of laser procedures, particularly laser ablation for epilepsy.

We have spoken about a high cancellation rate of procedures that increased during COVID-19 due to illness staff shortages and supply chain issues. It.

It seems that the cancellation rate has come down for many of our navigation procedures, but it has remained elevated or even increase for these laser epilepsy procedures.

This seems to be stemming from reimbursement denials for procedures in this half of the laser ablation market.

The appeal process is common and sometimes successful however, the denial often takes place a couple of days before the surgery itself and it is often not possible to find another suitable patient to fill that scheduled MRI time.

The result is that we miss out on the case for that day.

This is something we are certainly paying attention to as we look to build our own laser business in the future where it seems laser cancellations for tumor cases has not been nearly as common and the number of procedures continues to grow.

The other delay on the neurosurgery part of the business is that one of our brain computer interface partners had to place our co development programs on pause due to their internal constraints with which also negatively impacted revenue in the quarter and likely for at least the next couple of quarters, depending on the timing and availability of additional funds.

Similarly, our capital revenue for the quarter was down which can happen from quarter to quarter based on timing and installation date.

What I will mention of note is that we have launched a new capital subscription process as another tool for capital placement.

This tool allows the hospital to sign up for a multiyear commitment that spreads the investment out over five years.

The economics are very similar however, there is a delay in revenue recognition in the first year as it act as more of a service or rental agreement than a capital purchase which would all be recognized day one of the placement.

We have now had five hospital sign up for the subscription service as part of our pilot and we believe this will be a popular option in the years ahead.

As a result, the catheter line of our earnings will likely be flat or maybe decrease in the future where the subscriptions are rentals will increase the service line of the capital business.

On another positive note we have had success on multiple new navigation technology that we plan to submit to the FDA before the end of the year.

These technologies will not only improve workflow for MRI procedures.

But also represent our first navigation tool that is designed to be used start to finish in the operating room and not require the MRI at all.

As a reminder, more than 95% of all D. D S and laser procedures are performed in the operating room and not the MRI suite today.

This tool will allow us to compete where the vast majority of procedures are already taking place and not rely on moving users from the operating room into the MRI, which is often a completely new environment for the physician and for the hospital.

We see this as a potential product transition to clear point that can be stack and with fewer barriers because of the more familiar workflow deployed today.

Yeah.

For our third pillar of growth therapy, and access products, we have made progress with the new installs of prism as part of the limited market release for our first laser therapy system.

We currently have five systems installed worldwide and expect up to five more by the end of this year as part of the limited market release, where we test our system on multiple MRI scanners and software types as well as in multiple indications, including epilepsy and tumor.

These cases gives us experience and help us build educational materials for a broader launch in 2024.

We have identified and began the training of our dedicated clinical specialist team, which will be able to support complete laser cases, including including both navigation and therapy by the end of this year.

While we are very early in the limited release, we are pleased with the ease of use and the capability of our system.

Of all the installations performed to date the clinician feedback has been very encouraging and we expect higher utilization of the system in the future.

Laser ablation for narrow applications represents an approximately $30 million market today.

The prism product.

Combined with the capability of our team and our platform should give us a competitive advantage as we have multiple applications supported including deep brain stimulation biopsy laser ablation brain computer interface, and biologics and drug delivery.

The exciting part of these first three pillars that we plan for each pillar to be a growth driver in the next two to three years.

Biologics in drug delivery will drive most of the growth in 'twenty, three and 'twenty, four and narrow navigation, especially in the operating room as well as laser therapy will contribute more substantially in 2024 and 2025.

If all three of these pillars achieve our development milestones and modest expectations for market growth. We expect to exit Q4 of 2025 at operational cash flow breakeven, which again would represent about 50 hospitals doing 50 cases a year.

The contribution of our biologic and drug delivery services.

This really represents pillar number four of achieving global scale and profitability, which is something we think about frequently and prioritize.

While we do have $26 5 million in cash available we want to make sure that we hit that inflection point and move toward profitability.

As mentioned earlier we.

We have made substantial investments in our quality system regulatory capabilities, and our operations, including a new manufacturing facility in Carlsbad, California.

This investment was for a clear purpose as well ensuring that all of our sophisticated pharma companies.

As a reliable partner and supplier.

With more than 50 active pharma partnerships you must understand that we are audited by these companies on a monthly if not weekly basis.

Having a strong team and manufacturing facility in place to pass these audits with flying colors is another advantage, we have when working with the pharmaceutical industry that can separate us from the competition.

Similarly, we've expanded our global regulatory footprint to include multiple new countries beyond only the United States and the European Union.

The investment is real but it is also a powerful tool with pharma customers when they see this capability to expand to broader and sometimes underserved market. It is one more reason to choose the clearpoint offerings.

I'm happy to report that our Carlsbad facility is ahead of schedule and we actually completed construction of the new clean room here in the second quarter.

We believe that we will be able to produce sellable and inspected product by the end of this year and wind down our redundant operations in Irvine, California by the end of 2023.

As seen in 2022 based on the timing of some larger cash. It then we expect the operational cash burn in the second half of 2023 to be lower than in the first half.

While our margin dipped down in Q2, we do not expect this to be a long term issue, but more of a reflection that we are currently launching new products and services and biologics and drug delivery laser therapy access devices and operating room navigation.

All new product introductions have some level of ramp up efforts at launch that takes some time to scale.

We believe we have a portfolio of products that can achieve 70% plus gross margin in aggregate in the years ahead, especially when the growth of products. Once again overtake services with all of these new product introductions.

We continue to see an exciting opportunity in front of us and have worked incredibly hard getting all the puzzle pieces in place over the past couple of years.

Now our focus is putting our existing strategy and resources to work to gain scale and leverage.

As mentioned, we have $26 5 million in cash at the end of the quarter and expect our operating burn to meaningfully decrease in the second half of this year as the vast majority of our head count is already in place and we will wrap up the transition to our new manufacturing facility.

We remain focused on executing our key value, creating milestones over the next six to 12 months, including new strategic biologic partnerships.

Initiation of new drugs clinical trial.

Submission of the first DLA using clear point technology to the FDA for commercial approval.

Expansion into the operating room.

And exiting in a limited market release for our prison laser therapy system.

That's a lot to digest, but let's take a break and open up the floor to any questions.

Thank you the floor is now open for questions. If you do have a question. Please press star one on your telephone keypad at this time.

Question has been answered you could remove yourself from the queue by pressing one again, ladies and gentlemen that star one please hold while we poll for questions.

And our first question comes from Frank <unk> from Lake Street Capital Go ahead Frank.

Hi, This is Nelson Cox on the phone for Frank today, Thanks for taking the questions. So it sounds like growth in Opex during the quarter was mostly related to the new facility and it should be lower in the second half of the year just trying to think about.

How opex should be moving forward.

Is that.

Something that we should look at Q1 for more of a baseline moving forward or how should we think about that.

Well I would think.

For the question Nelson I think had a little bit differently than that.

You know as I mentioned, the biggest part of our Opex is really labor and personnel were up to about 115 employees I think worldwide.

That's the number that we sit here in Q2 that fell into the operating expense line plus some into the cost of goods obviously.

Being a standard feature moving forward.

Yes, I would say UCB is one example of the multiple deals that we have either signed or that are in term sheet.

Status or actively being negotiated right now it just happens to be one of the ones that we announced.

But from that standpoint, yes. These these are the large incidents.

Our relationships and target.

Drug markets that require not just quite a bit of preclinical and clinical work, but the clinical trials themselves, sometimes can be upwards of 100 or 200, even more patients so selling products into the clinical trial prior to the commercial approval is certainly something that drives that and the larger the incidence level.

As well as the larger the number of alternative treatments that are available the more detailed the FDA is going to be is going to require to go ahead and improve the efficacy of the drug as well as the economics of the drug itself. So.

UCB as an example, but we've got multiple other programs in the works that could potentially exceed that $10 million number if all of the milestones as well as the trial revenue was successful.

Yes.

Got it and then one more quick one if I can is there do you see any opportunities to restructure some previous partnerships to include debt driven milestone payment structure.

I think absolutely.

In fact, as we have continued to add biologic services. There is there is a larger part of the menu that we can offer and many of our existing partners.

Stage things as a reminder.

One level of a partnership could simply just be some initial bench top testing followed by some consulting services consulting hours and things like that so year, one might only be $2000 $30000 give or take.

Where that changes is once they are happy with our product and they recognize that we are very likely going to be a part of their drug label.

These companies also realize that our experience is valuable our head start is valuable and that theyre going to be working with us for years, if not decades and they want some assurances that we are going to be around and supporting them in the future. So it's normally year, one or year two into a relationship where we began.

Talking through these much more sophisticated in strategic agreements, which can include backup manufacturing. They can include access to IP that can include a lot of different things. So theres a pharma company can ensure control and access to this important part of their supply chain. So it's I would say it's more.

Comment than not that we might have a partner today that will eventually turn into a more sophisticated agreement. That's also a common point, where we would negotiate commercial terms of the device itself, which in many cases can be multiples of the existing.

Sort of briefly given pricing during the development process for for the disposable products. So I'd say.

Much many more of those 50 partners, we still have the opportunity to continue negotiating as they get closer to initiating their clinical trial.

Great. Thanks again, thanks for the color there and congrats on this quarter.

Alright, Thanks al.

Okay, ladies and gentlemen that star one and our next question comes from Neil Chatterji from B Riley go ahead Neil.

Frame it appropriately as well if you look back at our history quarter to quarter based on what revenue gets recognized the gross margin can actually jump around quite a bit but if we look specifically at the second quarter. There were two primary drivers one is the redundant space and facility that we have relative to our prior herbal.

<unk> facility and the new Carlsbad facility, so, bringing carlsbad, having some certain construction, but also having redundancy in travel between the sides and things like that while making the same number of product that is obviously gonna impact gross margins and we certainly saw that in the quarter. The second thing, which is also we believe somewhat temporary is that.

When you launch a new product, we're kind of the new kids on the block and we want to go ahead and demonstrate our services improve our capabilities and in a couple of instances in the quarter. We ran some studies and did some testing for for you know really Mega Kat pharma companies to get our foot in the door and I would say that strategy work. However, you know getting.

A discount on that first study kind of brought some of the the gross margin down as well. So you know what I would say is that the 53 per cent you saw in queue to where we're definitely not gonna flip a switch and be up at 70 per cent Mark, but 53 is probably the lowest that we would expect and add Carlsbad is fully up and running and Irvine kind of chest.

Down by the end of this year you know that's when we'd start seeing a kind of a broader improvement as well but to answer. Your other question. We do absolutely expect continued growth of services. So that gross margin of the service is gonna continue to be a significant factor and while that margin is not going to be as high as typical product is.

<unk> revenues, which we've seen in the 70 per cent before it's also not going to be lower as low as it was necessarily in Q2. So it'll be you know a much more positive contributor to our to our margin moving forward.

<unk>, that's a very helpful. Additionally, and alright.

Correct me, if I'm wrong or maybe even filling the gap you had mentioned that you were going to be potentially <unk>.

<unk>.

Moving into a.

<unk> Eliezer business and tumors would've sounded like you were gonna.

You know really sort of take home on that I guess, you could just sort of flesh that out for me how much a <unk> industry you planning to incorporate into your business strategy.

Yeah, I think it's gonna be a significant focus for us and a number of different ways.

The first comment I would make is that if you look at the hospitals that clear point has a presence in today.

The primary user of our technology, if someone called a functional neurosurgeon.

And this is someone that would treat something like essential tremor, or Parkinson's disease, or epilepsy or things like that this is commonly word deep brain stimulation is used but it's also where laser is a common treatment for epilepsy.

Think about where our screens and most of our relationships are today, it's primarily on the functional neuroscience of the business, which is also laser for epilepsy.

What they truly untapped potential for US is the neuro oncology side of the business, which is generally a different neurosurgeon in a different customer that historically, we you know we've had very little experience with you know we are probably five or so sites that are routinely using us for oncology purposes. Today. So I think the launch of a new laser.

That's designed and software that's designed specifically for tumor application is gonna be a way to be introduced into that tumor market and then similarly, we have a number of drug partners that are also interested in doing work for tumors, not treating epilepsy or huntington's Parkinson's or things like that so add some of those partners move into there.

Clinical trial stage, we have an opportunity to work with those hospitals on either laser therapy or drug delivery or what I think is actually gonna be someone comment is is what I call a hybrid therapy, where the procedure starts with an ablation and then a drug is introduced into the margin to kind of clean up the part that was maybe missed by the ablation itself.

So so you're absolutely right you know part of the investment that we are making is to go into oncology with a commercial team now that we've got products and pharma partnerships that can kind of carry some of that burden with us.

Excellent that sounds sounds really good actually <unk>.

<unk>. Additionally, you you've mentioned some of your your milestone deals or at least with a we can do to them can you talk to your ambition about really trying to incorporate these milestone deals where you have a tie to the drug itself and how do you think these will be advancing you know going.

<unk>.

Second half and then later on in development, you know just really going to be a top priority or just any extra.

<unk> details will be appreciated.

Yeah, well I am so I mean, the way I think of it as it is.

You know for the I don't see the first time ever but you know first time and sort of recent recent memory. We have a number of different pharmaceutical companies that are now gonna be dependent on a device of some kind to get their drug to the target. So the decision that they need the make is to say look do we build our own <unk>.

That's really a device company and do we set up our own device quality system and complaint handling and supply chain. All of these different things is that an investment as a farm a company that we want to build up from scratch or do we just partner with a company like clear point that effectively can give them that black.

Box solution of a quality system complaint handling neuroscience, a specialist team that's in the field to help deliver the drug were were really building ourselves into that turnkey solution and that turnkey solution is what we feel earns us a seat at the table as it relates to to getting a piece of the success of the drug itself. It's really you know a risk.

Sharing agreement and the bigger part that we play in the development cycle of the drug you know the more that we should benefit from from some of that risk as well. So I think what you'll see in the future. Our expectation is there's gonna be a bunch of different flavors some might be heavily weighted towards milestones some might be heavily weighted towards commercial pricing of the prada.

<unk> of our devices some might be weighted towards royalties on the drug itself. You know these there might be three or four different flavors, but the concept will all be the same is that we want a longterm relationship with pharma and pharma wants a longterm relationship with us and we feel like we are one of the the the best value waves.

To do it compared to trying to build it yourself.

That makes sense with just a quick follow up.

I know you've mentioned or sometimes has been a bit of a.

<unk> or we <unk>, we don't quite get all the details on on these partnerships the milestones et cetera, and sometimes even who your partners or do you think you'll be giving or providing more color going forward. Just so you know we have a better idea of where to be looking you know as you mentioned option this morning or.

<unk> sorry. This morning, just now you know Woobie will ooh ooh, we be getting better color in the future just curious.

Yeah, I mean, I think that we we don't necessarily do it by our choice you know if if if I if I want it to or if I could I would simply announce all the partners, but I I think what we try to do is most importantly, b a good and loyal partner to these people were working within the pharma industry and if they.

They ask us to keep it secret up until a certain point, we're happy to oblige by that I think the two times that you've seen us really announced these types of partnerships in the past, which I would expect to continue in the future is one maybe where we do a multiplatform type deal like we announced with U C. D that can be one one.

Trigger if you will for an announcement the second one could be the you know announcement of an I D or a first patient enrolled in a trial, it's very time and that you would see a press release from US. It says hey, congratulations happy to be a part of that those are kind of the two key milestones that we've seen in the past, but at the end of the day, we Wanna be good partners and.

And we let the pharma company decide when the right time for them to announce it I can tell you in in some cases, especially with some of the smaller farm and biotech companies the.

The fact that they're able to announce that they're working with clear point actually can benefit them from a fund raising standpoint or from an awareness standpoint, or even when they're recruiting centers or site for their clinical trial, which often starts way before the first patient is enrolled you know having a clear point name attached to them and we believe is a benefit to their brand in their <unk>.

File as well so it's it's possible that that can be accelerated but it's it's probably not going to be something that we drive.

Right.

Oh makes sense and then.

With your lasers, you I know, it's it's it's a limited launch, but <unk> and you've mentioned that you <unk> already installed five <unk> five more just curious should we <unk>. Once you do a full like what would be the.

Maybe year over year growth <unk>, what would be the growth rate or what type of installation is do you think we could be expecting once you have a full release.

Or is it just too early just sort of town.

Yeah, I mean, I I don't know, we want to give too many details what what I was telling you just to set expectations is that you know getting an installation is not a simple process. You know there's really three three things to consider that are barriers that need to be overcome and and it's really why there's only a couple of companies in this space you know they they've done a lot of hard work too.

To build the market to where it is but it has not been easy you know the the first is that you need to have and be able to show compatibility on all of the different system. So you have to get F. D. A clearance for all of the different system. If you look at our approval today with <unk>, we actually only have approval for three tests less scam.

<unk> that are manufactured by Siemens and by G. E. So we really only have access to part of the known universe and we have to continue with some more testing and another F. D. A submission before we can add Phillips or before we can add 1.5 test pull it to the equation. So so that's one one sort of things that that that rate limits how quickly.

We go.

The second one is that as we shared with our navigation software as well getting any new piece of hardware or software into a hospital is so much harder than it's ever been in in my career, specifically from an I T standpoint, the the level of testing and questionnaires to ensure there's no cyber.

Criminal activity or you're introducing anything to a hospital. The the hoops you have to jump through or are so significantly more severe than they've ever been that any new capital equipment is hard and laser fits into that as well.

And then the third part is that there's quite a bit of testing that actually has to go into and install so let's say we have a hospital that is approved the evaluation or the purchase or the subscription they're ready to go we need to get about you know a couple of days of M. R. I <unk> to do the specific testing for that hospital scanner and make sure we're to operate with their protocol.

<unk> and everything else and just getting that scanner time. Some time some time can be can be slow going as well. So yeah. I think I said in the prepared remarks that you know if the if.

It's the second half of this year, we can install up to five more systems as part of the limited market relief you know by definition I would say the LMR is meant to be slower than a full market relief, but.

You know, there's there's there's a certain governor on how fast we can even go during the F. M. R. So it's not gonna be flip of a switch and we have a massive installed base I think where our focus is gonna be is getting installed at hospitals that have significant volume, where we can compete for that volume. That's already there you know I think that's gonna be a bigger part of our story verse.

Was growing in the market, which which is gonna take a bit more time.

That makes sense I appreciate that and then last question. You you gave her some updates last time and and and here now without your the recent regulatory pathway.

Setting up sites in the E U and then most recently in Brazil, just bleeding maybe mentioned China in the past also just curious where we might be if there's any additional countries that you're sort of currently in the works <unk>, where when we might be expect to see.

Some of these additional operator, sorry operational areas come online.

Yeah, there's probably a few I you know one of the key the key first step was the M. B <unk> certification that our quality system received last year that opens the door for a call from our quality system's standpoint into another number of countries, including Canada, Japan, Australia, Brazil.

A few other ones that are included in that consortium. So that's one place where I think you can have up to that you know you should expect you know sometime in the next couple of years that will be will be expanding are at least starting in the regulatory process.

The priority I would say we had outside of the U S and the E. U is again based on our pharmaceutical partners. So we might have a farm a partner that is based in one particular country in Europe or in Asia, or the middle East that really wants to do some clinical work on their home their home turf if you will.

And is willing to put some funds into that process to go ahead and get that specific regulatory approval. So you know where <unk> you know in a in a world with access to unlimited capital. Yeah. We would go as quickly as we possibly could but again, we Wanna make every dollar counts. These days. So our focus is still growing the strategy and the you.

As in Europe , However, opportunistically when we can satisfy the needs of one of our farm or partners. We're we're happy to oblige.

Got it understood and very helpful. Thanks, Sir I'll jump back into <unk> Mmm.

Mmm Alright thankfully.

Thank you that is our last question I would now like to turn it back to joke Burnout Friday closing remarks.

Once again, thank you to everyone interested in being a part of our teams journey here a clear point at this point, we are in fact sort of reiterating our guidance for the year of revenue between 25, and 27 million, which you saw in our press release. This is an exciting time as we plan for new product and service launches a <unk>.

Cross all four of our gross pillars, we've worked very hard to get to the spot and it excited for our team, but also for the patients that we hope to treat with these new devices and therapies in the near future.

The patient and the family or why we are here and ultimately who we are working for so thank you very much and goodnight.

Thank you. This does conclude today's conference. We thank you for your participation you may disconnect. Your lines at this time and I have a wonderful day.

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