Q4 2023 Profound Medical Corp Earnings Call

Okay.

Operator: Good day, and welcome to the Profound Medical fourth quarter and full year 2023 financial results conference call. At this time, all participants are in a listen only mode.

Good day and welcome to the profound medical fourth quarter and full year 2023 financial results Conference call. At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question you will need to press star one on your telephone.

Operator: After the speaker's presentation, there will be a question and answer session. To ask a question, you will need to press star 11 on your telephone; you will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 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.

You will then hear and automated message advising your hand is raised to withdraw your question. Please press star. One 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.

Stephen Kilmer: 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's 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 acceptance, and future. Such statements involve known and unknown risks, uncertainties, and other factors that may cause actual results No forward-looking statement can be guaranteed.

All forward looking statements are based on per pounds current beliefs assumptions and expectations.

Relate to among other things expectations regarding the efficacy of the Companys treatment technologies results for future clinical trials.

To obtain coding and our reimbursement from third party payers and anticipated financial performance business prospects strategies regulatory developments market acceptance and future commitments.

Such statements involve known and unknown risks uncertainties and other factors that may cause actual results performance or achievements to be materially different from those implied by such statements.

No forward looking statement can be guaranteed.

Stephen Kilmer: Listeners are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this conference call. Profound undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, other than as required by law. Representing the company today are Dr. Arun Menawat, Profound's Chief Executive Officer; Rashed Dewan, the company's Chief Financial Officer; and Dr. Mathieu Burtnyk, Profound's Chief Operating Officer. With that said, I'll now turn the call over to Rashed.

Listeners are cautioned not to place undue reliance on these forward looking statements, which speak only as of the date of this conference call.

Undertakes no obligation to publicly update or revise any forward looking statements, whether as a result of new information future events or otherwise other than as required by law.

Representing the company today are Dr. Arun megawatt per pounds, Chief Executive Officer.

<unk>, one the Companys, Chief Financial Officer, and Dr. Matthew Britvic Propounds Chief operating officer.

That said I'll now turn the call over to Richard.

Rashed Dewan: Good afternoon, everyone, and welcome to our fourth quarter 2023 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.

Good afternoon, everyone and welcome to our fourth quarter 2023 conference call.

On behalf of the management team.

We wanted to profile.

I'd like to thank you for your ongoing interest in our company.

For those of you who are shareholders. We appreciate your continued interest and support.

Rashed Dewan: I will turn the call over to Mathieu in a moment to provide updates on calls for clinical publication, utilization trends, and the Captain Clinical Trial. However, before I do, I'd like to provide a brief summary of our fourth quarter 2023 financial results. All of the numbers I'll refer to have been rounded, so they are approximate.

I will turn the call over to Matthew in a moment.

Updates on Costco clinical publications equal.

Utilization trends.

And the captain clinical trial.

However.

Before I do.

I would like to provide a brief summary of our fourth quarter 2023 financial results.

To streamline things.

All of the numbers I'll refer to have been rounded.

Proximate.

Rashed Dewan: While the three-month period ended December 31, 2023, the company recorded revenue of $2 million, with the full amount coming from recurring revenue. This was at the top of the range we provided when we announced preliminary fourth quarter revenue numbers at the beginning of January. Fourth quarter 2023 revenue increased 60% from $1.3 million from the same period in 2022. Total Operating Expenses in the 2023 fourth quarter, which consists of R&D. GNA, and selling and distribution expenses were $9.8 million, an increase of 5% compared with $9.4 million in the fourth quarter of 2022. Breaking that down, expenditures for R&D increased 28% on a year-over-year basis to $4 million. Unknown Attendee, Rahul Sarugaser, Scott McAuley, Rahul Sarugaser, Nelson Cox, Mathieu Burtnyk Overall, the company recorded a fourth-quarter 2023 net loss of $8.9 million, or $0.42 per common share, compared with a net loss of $9.5 million, or 46 cents per common share, for the same three-month period in 2022.

For the three month period ended December 31 2023.

The company recorded revenue of $2 million.

With the full amount coming from recurring revenue.

This was at the top of the range, we provided when we announce preliminary.

Quarter revenue numbers at the beginning of January.

Fourth quarter 2023 revenue increased 60% from $1 3 million from the same peer in 2022.

Total operating expenses in the 2023 fourth quarter, which can flip flop R&D.

Yes.

And distribution expenses were 9.8.

$8 million, an increase of 5% compared with $9 four.

$4 million in the fourth quarter of 2022.

Breaking that down further.

Span meters for R&D increased 28% on a year over year basis to $4 million.

G&A expenses increased by 41% to $3 million.

Selling and distribution expenses increased by 74% to $3 million.

Net finance costs for the 2023 fourth quarter was $400000 compared to 500000 for the same three month period of 2022.

Overall.

The company recorded a fourth quarter 2023 net loss.

<unk> $8.9 million.

Our 42 cents per common share.

Impaired with a net loss of nine point.

$5 million or <unk> 46.

Our common share for the same three months period in 2022.

Rashed Dewan: As of December 31, 2023, Profound had cash of $26.2 million, that does not include graded gross proceeds from a public offering in the U.S. and a private placement of common shares in Canada completed subsequent to U.S. As a result of those finances, Profound had cash of $45.4 million as of January 31st, 2021. With that, I will now turn the call over to Matt. Thank you, Rashed, and hello, everyone.

As of December 31, 2023 profound at cash up $26 2 million.

That amount does not include a Greg good gross proceeds from a public offering in the U S.

And the private placement of common shares in Canada completed.

Subsequent to year end.

As a result of this financing.

<unk> had cash of $45 4 million ads.

<unk> January 31 2024.

With that.

I will now turn the call over to Matthew.

Thank you Richard and Hello, everyone.

Mathieu Burtnyk: In the fourth quarter, there were many poster and podium presentations featuring Tulsa that continued to demonstrate the unique pixel-by-pixel precision of the technology, the flexibility to treat a variety of patients and customize the treatment plan to what is best for the patient, and the durability of efficacy and safety outcomes. I would like to take a few minutes to highlight a few of the, The positive five-year TAK data was presented at some major meetings, including presentations by Dr. Egner from the University of Chicago at the annual meeting of the Society of Urological Oncology in Washington, D.C. UCLA's Dr. Raymond at the Radiological Society of North America or RSNA meeting in Chicago, and Dr. Futterer from Radboud University Medical Center in the Netherlands at the European Congress of Radiology meeting in Vienna, Austria.

In the fourth quarter, there were many poster and podium presentations featuring Tulsa, but continued to demonstrate the unique pixel by pixel precision of the technology the flexibility to treat a variety of patients and customize the treatment plan to what is best for the patient and the durability of efficacy and safety outcomes.

I would like to take a few minutes to highlight a few of these.

The positive five year Tech data was presented at major meetings, including presentations by Dr. <unk> from the University of Chicago at the annual meeting of the society of Urological oncology in Washington D C.

UCLA Dr. Ramon at the Radiological Society of North America, or <unk> meeting in Chicago.

And Dr Footer from Radboud University Medical center in the Netherlands at the European Congress of Radiology meeting in Vienna, Austria.

Mathieu Burtnyk: In addition, Dr. Bush gave two presentations in November, where he and his colleagues at the Bush Center examined TULSA outcomes in men with specific prostate cancer characteristics that are known to be challenging with other treatment modalities. One was patients with very large prostate volumes. And the other is those with extreme apical cancer. The first was a poster presentation of a retrospective analysis of Tulsa and men with prostates larger than 90 cc presented at the Frontiers in Oncological Prostate Care and Ablative Local Therapy meeting in Chicago. 34 men with pre-Tulsa prostate volumes greater or equal to 90 cc were identified, about half had prostates greater than 120 cc, and the largest prostate included in the analysis was 275 cc.

In addition, Dr. Bruce gave two presentations in November where he and his colleagues at the birth center examine Tulsa outcomes in men with specific prostate cancer characteristics that are known to be challenging with other treatment modalities. One is patients with very large proxy volumes and the other is those with extreme apical cancers.

First was a poster presentation of a retrospective analysis of Tulsa in men with prostate larger than 90 <unk> presented at the frontiers in oncological prostate care and ablative local therapy meeting in Chicago.

34 men with pre Tulsa, prostate volumes greater or equal to 90, <unk> were identified whereabout handset projects greater than 120, <unk> and the largest prostate included analysis was 275 cc.

Favorable efficacy and safety outcomes were reported following treatment with Tulsa, including an improvement in year on year in quality of life with median ipso's, improving 60% from 17, which is moderate loads are lower urinary tract symptoms two six which is mild.

Mathieu Burtnyk: Favourable efficacy and safety outcomes were reported following treatment with TULSA, including an improvement in urinary quality of life, with median IPSS improving 60% from 17, which is moderate LUTs, or lower urinary tract symptoms, to 6, which is mild LUTs. The second was a podium presentation of another retrospective analysis of Tulsa, but this time in men with prostate cancer lesions at the extreme apex, presented at RSNA. Patients with apical lesions are particularly challenging.

The second was a podium presentation of another retrospective analysis of Tulsa, but this time in men with prostate cancer lesions at the extreme apex presented at RSA.

Patients with apical lesions are particularly challenging.

Because of the proximity to the external urinary synced or it is difficult to maintain urinary continents, when treating prostate cancer at the extreme positive feedbacks, using robotic surgery radiation and focal therapy devices, such as HIFU cryo in IRT.

Further while limiting apical treatment can minimize morbidity and the focal therapy space and Conversely increases the risk of cancer recurrence. For example, one study by Dr. Bucci at all and BJ you International reported that when the six millimeter apical margin was applied with HIFU, 60% of the recurrences were identified.

Mathieu Burtnyk: Because of the proximity to the external urinary sphincter, it is difficult to maintain urinary competence when treating prostate cancer at the extreme prostate apex using robotic surgery, radiation, and focal therapy devices such as HIFU, Cryo, and IRE. Furthermore, while limiting apical treatment can minimize morbidity in the focal therapy space, it conversely increases the risk of cancer recurrence. For example, one study by Dr. Bouchier et al. in BJU International reported that when a 6mm apical margin was applied with HYSU, 60% of the recurrences were identified at apical sextants on biopsy.

<unk> on biopsy.

With Tulsa, the surgeon has the ability to deliver controlled directional and precise ultrasound energy and a perpendicular plane from a transit rethought device that is positioned in the prostate with sub millimeter accuracy based on intra procedural high resolution MRI imaging.

Specifically the unique combination of your repo cooling and dual frequency capabilities, which allows our higher ultrasound frequency with shorter wavelengths enabled tight margins and treatment rate to the apical plane, while limiting the amount of found energy being absorbed in the external year nearing sphincter.

This retrospective analysis of 42 men with lesions, a budding or involving the apical sphincter demonstrated promising safety and efficacy of Tulsa in patients with extreme apical lesions, notably preserving pad treat urinary continents, and all patients despite ablation near the external sector.

Mathieu Burtnyk: With TULSA, the surgeon has the ability to deliver controlled, directional, and precise ultrasound energy in a perpendicular plane from a transurethral device that is positioned in the prostate with submillimeter accuracy based on intraprocedural high-resolution MRI. Specifically, the unique combination of urethral cooling and dual frequency capabilities, which allows a higher ultrasound frequency with shorter wavelengths, enable tight margins and treatment This retrospective analysis of 42 men with lesions abutting or involving the apical sphincter demonstrated promising safety and efficacy of TULSA in patients with extreme apical lesions, notably preserving pad-free urinary continence in all patients despite ablation near the external sphincter. Moving to real-world utilization trends, as highlighted in today's press release, we also continue to see TulSA providers treat an unrivaled variety of prostate disease patients. With respect to indications, approximately 67% were treated for primary prostate cancer. 23% were hybrid patients suffering from both cancer and BPA.

Moving to real world utilization trends as highlighted in today's press release. We also continued to see Tulsa providers treat an unrivaled variety of prostate disease patients.

With respect to indications approximately 67% were treated for primary prostate cancer.

23% were hybrid patient suffering from both cancer and BPH.

7%, where salvage treatments at 3% for men with BPH only.

Further within the salvage group roughly one half of the men with radio recurrent prostate cancer.

Hats, where salvage treatments after focal therapy, such as HIFU and laser.

Overall in 2023, we saw that Tulsa is increasingly being used in patients who are diagnosed with prostate cancer, but also have symptoms of BPH.

With an approximate doubling as a proportion from utilization trends in 2022.

We continue to see talk is the only minimally invasive option for such patients.

More and more urologists are starting to include the transition zone. In addition to the cancer lesion and such hybrid patients for two reasons.

The first is the added benefit to the patient of lower urinary tract symptom relief, which improves their quality of life.

And secondly, because in doing so there is no additional procedural complexity and minimal increase in ablation time. So in a way there is no real downside for the treating physician and provider with a lot of benefits for the patient.

Finally, I would like to provide a brief status update on our ongoing captain post market study the captain randomized trial comparing to Tulsa procedure to radical prostatectomy is the first and only level. One study comparing head to head a new technology towards standard of care treatment in men with localized prostate cancer.

Mathieu Burtnyk: 7% were salvage treatments, and 3% were men with BPH only. Further, within the salvage group, roughly one half of the men were radio recurrent prostate cancer, and about half were salvaged treatments after focal therapies such as HIFU and laser. Overall, in 2023, we saw that TULSA is increasingly being used in patients who are diagnosed with prostate cancer but also have symptoms of BPH, with an approximate doubling as a proportion from utilization trends in 2022. We continue to see TULS as the only minimally invasive option for such patients.

It is designed to demonstrate that the efficacy of the Tulsa procedure is not inferior to radical prostatectomy, while also demonstrating superior quality of life outcomes.

We are pleased to report that the rate of recruitment is continuing to increase with investigator experience and onboarding of additional sites.

As a result, we believe we remain well positioned to complete enrollment of the Captain study this year, which would allow publication of preliminary data in the first half of 2025, followed by the full one year primary safety outcomes in early 2026, and three year primary efficacy outcomes in early 2028.

Mathieu Burtnyk: More and more, urologists are starting to include the transition zone in addition to the cancer lesion in such hybrid patients for two reasons. The first is the added benefit to the patient of lower urinary tract symptom relief, which improves their quality of life. And secondly, because in doing so, there is no additional procedural complexity and minimal increase in ablation time.

Now I will turn the call over to Aaron.

Thank you Matthew and good afternoon, everyone.

Im pleased to report that we successfully executed against key strategic priorities in 2023.

Mathieu Burtnyk: So, in a way, there is no real downside for the treating physician and provider with a lot of benefits for the patient. Finally, I would like to provide a brief status update on our ongoing Captain Postmarket Study. The CAPTAN randomized trial comparing the TULSA procedure to radical prostatectomy is the first and only Level 1 study comparing new technology to a standard of care treatment in men with localized prostate cancer.

The most important of those was to continue.

The groundwork for Tulsa to become one of the three mainstream treatment for prostate cancer, alongside radical prostatectomy and radiation therapy.

In addition to what Matthew just reviewed there are three main pillars of that.

I would like to focus my remarks on today.

First is <unk>.

Build a high quality installed base.

Arun Swarup Menawat: It is designed to demonstrate that the efficacy of the TULSA procedure is not inferior to radical prostatectomy, while also demonstrating superior quality of life outcomes. We are pleased to report that the rate of recruitment is continuing to increase with investigator experience and the onboarding of additional sites. As a result, we believe we remain well positioned to complete enrollment in the Captain's Study this year, which would allow publication of preliminary data in the first half of 2025, followed by the full one year primary safety outcomes in early 2026 and three year primary efficacy outcomes in early 2028. Now, I will turn the call over to Arun. Thank you, Mathieu, and good afternoon, everyone.

Pleased to report that we now stand at 50, Tulsa Pro sites comprised of early adopters independent and corporate centers.

And top tier hospitals.

While our team has done a really good job with all three.

The penetration we have achieved into the latter.

Really stands out is truly exceptional at the stage we're in.

Today.

Tulsa Pro is now already installed at or contracted with 10 of the top 20 cancer centers in the United States.

These include prestigious institutions, such as MD Anderson.

<unk> clinic Rochester.

<unk> Medical Center, Brigham and Women's Hospital, Johns Hopkins Hospital, and Cleveland Clinic.

On others.

Moving forward we.

Arun Swarup Menawat: I'm pleased to report that we successfully executed against key strategic priorities in 2023. The most important of those was to continue laying the groundwork for Telsa to become one of the mainstream treatments for prostate cancer, alongside radical prostatectomy and radiation therapy. In addition to what Mathieu just reviewed, there are three main pillars of which I would like to focus my remarks today. First, to build a high-quality installed base. I'm pleased to report that we now stand at 50 TELSA Pro sites comprised of early adopters. Independent and Corporate Centers, and Top Tier Hospitals. Our team has done a really good job with all three.

We continue to expect our installed base to grow to 75 by the end of 2024, and we anticipate that Tulsa usage.

Which is primarily based upon cash pay today.

We'll be transitioning to the payer pay model at the start of 2025.

Speaking of that transition.

Second pillar is the execution of our U S reimbursement strategy for Tulsa in record time.

As you all know.

In mid 2023.

American Medical Association.

<unk> three new CPT category, one codes for Tulsa.

Following that.

Part of the process.

Relative value scale update committee or <unk> for short.

Questionnaires to Tulsa users to determine the physician work relative value units or RV use.

Arun Swarup Menawat: The penetration we have achieved into the latter really stands out as truly exceptional at the stage we're in today. TulsaPro is now already installed at or contracted with 10 of the top 20 cancer centers in the United States. These include prestigious institutions such as MD Anderson, Mayo Clinic Rochester, UCLA Medical Center, Brigham and Women's Hospital, Johns Hopkins Hospital, and Cleveland Clinic, among others.

Associated with its Tulsa procedure.

Based on the user feedback the center for Medicare and Medicaid services or CMS is working with the societies that sponsored the CPT category, one code application to determine the Tulsa procedure payment amount.

That will be attached to the permanent codes.

Arun Swarup Menawat: Moving forward, we continue to expect our installed base to grow to 75 by the end of 2024, and we anticipate that Tulsa usage, which is primarily based upon cash pay today, will be transitioning to the payer pay model at the start of 2025. Speaking of that transition, The second pillar is the execution of our U.S. reimbursement strategy for Tulsa in record time. As you all know, in mid-2023. The American Medical Association established three new CPT Category 1 codes for Telsa.

The proposed recommendations are expected to be published in the Federal Register at the end of July and finalized in November and.

Into effect as of January 2025.

Okay.

The third pillar is.

To continue to innovate.

With the overall.

Of increasing treatment efficacy improve.

Improving workflow efficiency.

And expanding technology access to deliver an even better Tulsa treatment experience for urologists.

And their patients.

On that front.

We continue to aggressively build the Tulsa AI Brian.

Arun Swarup Menawat: Following that, as part of the process, the Relative Value Scale Update Committee, or RUC for short, sent questionnaires to TELSA users to determine the physician work relative value units or RVUs associated with its TULSA procedure. Based on user feedback, the Center for Medicare and Medicare Services, or CMS, is working with the societies that sponsored the CPT Category 1 code application to determine the TELSA procedure payment amount that will be attached to the permanent code. The proposed recommendation is expected to be published in the Federal Register at the end of July and finalized in November and come into effect as of January 2025. The third pillar is to continue to innovate, with the overall aim of increasing treatment efficacy, improving workflow efficiency, and expanding technology access to deliver an Even Better Tulsa Treatment Experience for Urologists and their patients on that front.

Thermo boost.

We received five 10-K clearance from the FDA.

In Q3 2023 was the first Tulsa AI module.

It is now routinely used in about 50% of patients being treated and physicians report increased confidence and shorter time in treatment.

We have recently submitted the second AI module, the contouring assistant to the FDA.

This Tulsa AI module is about automating the treatment design.

Controlling assistant users passed treatment designs.

And recommends a design and a new procedure based upon that knowledge.

As our treatment and outcome database grows.

The knowledge of the AI will continue to increase.

And as a result.

Turing assistance proposed treatment designs will continue to improve thereby and hunting clinical outcomes.

Arun Swarup Menawat: We continue to aggressively build the Tulsa AI brand. Thermal Boost, for which we received 510k clearance from the FDA in Q3 2023, was the first Telstra AI module. It is now routinely used in about 50% of patients being treated, and physicians report increased confidence and shorter time in treatment. We have recently submitted the second AI module, the Contouring Assistant, to the FDA.

While also reducing treatment times.

Studies conducted to validate the AI technology.

<unk> achieved the anticipated endpoint.

If the FDA concurs clearance.

Clearance for the <unk> assistant module could be granted this summer.

MRI imaging is now being used routinely in diagnosing patients for prostate disease.

We believe that this trend naturally extends to the use of the <unk> also for the treatment of prostate.

Arun Swarup Menawat: This TELSA AI module is about automating the treatment design. Contouring Assistant uses past treatment designs and recommends a design in a new procedure based upon that knowledge, as our treatment and outcome database grows. The knowledge of the AI will continue to increase, and as a result, Contouring assistance proposed treatment designs will continue to improve, thereby enhancing clinical outcomes while also reducing treatment time. Studies conducted to validate the AI technology have achieved the anticipated.

Thereby we have also begun work to build closer relationships with emaar companies to help maximize the tremendous opportunity for our technology that we see ahead.

The first such collaboration.

Which we announced last week.

With cement.

To work toward bringing a complete therapeutics solution, combining our Tulsa pro system with its magnetron free Max MLR scanner to market will be a profound on salesforce.

Not only.

Arun Swarup Menawat: If the FDA concurs, clearance for the contouring assistant module could be granted this summer. MR imaging is now being used routinely in diagnosing patients, for Prostate Disease. We believe that this trend naturally extends to the use of the MR also for the treatment of prostate. Thereby, we have also begun work to build closer relationships with MR companies to help maximize the tremendous opportunity for our technology that we see ahead, the first such collaboration, which we announced last week was with Siemens Healthineers to work toward bringing a complete therapeutic solution combining our Telstra Pro system with its Magnetron Freemax MR scanner to market via Profound's own sales Not only, is this arrangement non-exclusive, but we will also continue to market TulsaPro as a stand-alone offering, providing our customers with the flexibility to use the technology with the MR hardware of their choice.

Is this arrangement non exclusive but we will also continue to market Tulsa pro as a stand alone offering providing our customers with the flexibility to use the technology with the MLR hardware of their choice.

The aim of the collaboration with Siemens health in years.

Is to create and market a total diagnostic and interventional EMR solution that can streamline workflow.

Optimized cost of care.

And most importantly help ensure tulsa can be integrated in additional settings, such as urology clinics.

<unk>.

And hospital surgical departments that may not be suitable sites for placing large traditional MRI scanners that are relatively expensive both in terms of acquisition.

Arun Swarup Menawat: The aim of the collaboration with Siemens Healthineer is to create and market a total diagnostic and interventional MR solution that can streamline workflow, optimize Cost of Care, and most importantly, help ensure TELSA can be integrated in additional settings, such as urology clinics. ASCs and hospital surgical departments that may not be suitable sites for placing large traditional MR scanners that are relatively expensive, both in terms of acquisition, inflation costs, and ongoing operating costs.

Installation costs.

And ongoing operating costs.

It will also allow profound to begin adding some U S capital sales to our total revenue mix.

We will provide more details closer to when profile missing its sales of the combined solution in 2025.

In the meantime, we also hope to be able to announce additional technology partnerships. This year.

Arun Swarup Menawat: It will also allow Profound to begin adding some U.S. capital sales to our Tulsa revenue. We will provide more details closer to when Profound initiates sales of the combined solution in 2025. In the meantime, we also hope to be able to announce additional technology partnerships this year. To summarize. Tulsa is not just for focal therapy; there continues to be significant evidence from clinical trials, as well as from commercially treated patients, that we believe that Tulsa is on its way to becoming one of the mainstream technologies for the treatment of prostate cancer. We are eagerly awaiting.

To summarize.

Tulsa is not just for focal therapy.

There continues to be significant evidence from clinical trials as well as from commercially treated patients.

We believe that Tulsa is on its way to becoming one of the mainstream technologies.

The treatment of prostate cancer.

We are eagerly awaiting.

A positive CMS decision regarding the Tulsa reimbursement rate to be made at the end of July.

Arun Swarup Menawat: A positive CMS Decision regarding the Tulsa reimbursement rate to be made at the end of July. We are thrilled that even at this early stage, when most patients are cash-pay patients, adoption continues to increase. We are also excited by the increasing use of MR in the Care Continuum of Prostate Disease Management. Today, hardly any prostate diagnosis is complete without MR imaging.

We are thrilled that even at this early stage when most patients are cash pay patients adoption continues to increase.

We are also excited by increasing use of MLR.

The care continuum of prostate disease management.

Today hardly any prostate diagnosis is complete without <unk> imaging.

We believe that an MLR centric strategy for prostate management is the future.

Operator: We believe that an MR-centric strategy for prostate management is the future, and we're working with the leading MR manufacturers to further support this modern treatment pathway. And finally... We're delighted with the progress of patient recruitment in the Level 1 Clinical Trial that compares the TELSA procedure with radical prostatectomy. We believe that the success of this trial has the potential to gain Tulsa's inclusion in the society guidelines, which is always a key driver for new technology adoption. This ends our prepared remarks for today. With that, we're happy to take any questions you might have. Operator.

And we are working with the leading MLR manufacturers.

Further support this BARDA and treatment pathway.

And finally.

We're delighted with the progress of patient recruitment in.

In the level one clinical trial.

That compares the Tulsa procedure with radical prostatectomy.

We believe that the success of this trial.

Has the potential to gain plus size inclusion in the society guidelines.

Which is always a key driver for new technology adoption.

This ends our prepared remarks for today.

With that we're happy to take any questions you might have.

Operator.

Operator: Thank you. At this time, we'll conduct the question-and-answer session. As a reminder, to ask a question, you will need to press star-one-one on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again.

Thank you at this time, we will conduct a question and answer session. As a reminder to ask a question you will need to press star one on your telephone and wait for any.

To be announced to withdraw your question. Please press star one again, one moment for our first question.

Rick Wise: One moment for our first question. Our first question comes from Rick Wise with Stiefel. Please proceed with your question. Good afternoon, Arun.

Our first question comes from Rick Wise with Stifel. Please proceed with your question.

Good afternoon Arun.

Arun Swarup Menawat: And thanks for taking the question. Just to start off with the CPT code progress, you're being very clear about the timing, and it sounds like the timelines are exactly as you've hoped and expected them to be. Can you just add any color to your perspective?

And thanks for taking the question.

Just to start off with the CPT code.

You've been very clear about the timing and it sounds it sounds like.

The timelines are exactly as you have.

You have hoped and expected they might be.

Can you just add.

Add any color.

To your perspective have you had any interaction with CMS.

Rick Wise: Have you had any interaction with CMS? Have they had any questions? How confident are you about both the timing and or the potential possible amounts that they might pay? Do you have any additional color or perspective to offer there? Rick Schor, good afternoon.

They have any questions.

Has your confidence about.

Both the timing and or the potential possible amounts that they might pay do you have any incremental color or perspective to offer there.

Sure good afternoon.

Arun Swarup Menawat: Yeah, no, I think Rick, everything has moved along as we anticipated. We've had two meetings with CMS already this year in January. We have been in communication with them about any questions and so on. So I think we are pretty comfortable with the dialogue with CMS. You know, obviously, it's hard to predict what their final decisions will be, but I think the logic and the data that is available to us, I think, continue to support the theories that we have that we should be able to have, you know, appropriate Reimbursement Amounts for this application. And another question, Arun.

Yes, no I think everything has moved along as we anticipated we've had two meetings with CMS.

Already this year in January.

We have been in communication.

With them on any questions and so on so I think.

Yes.

We are pretty comfortable with.

Dialog with CMS.

Obviously, it's hard to predict what their final decisions will be but I think the logic and the data that is available to us I think continues to support the theories that we have that we should be able to have appropriate.

Reimbursement amounts for this application.

Yeah.

And.

Another question around.

Arun Swarup Menawat: Any comments on the Revenue Guide or Outlook for 24? You know, we, at this point, without, you know, we're just thinking our own thoughts or thinking about something in the 12 million or so kind of range and given the numbers you're talking about, Growing Installed Base in the Service, Associated, etc. etc. Is that a reasonable place or a midpoint of a range, or how would you, you know, guide us so we can do it thoughtfully? Novick I.

Any comments on the revenue guide or outlook for 'twenty four.

At this point without.

Just thinking your own thoughts are thinking about something in the $12 million or so kind of range and given the numbers you are talking about here.

Our growing installed base and the service associated et cetera et cetera.

Is that.

A reasonable place or a midpoint of a range or how would you.

Guide us so we can do.

Yes.

Arun Swarup Menawat: First of all, I really do appreciate the question. Uh, and I think, if I look at history, I think our growth rate today is about 60%. And I think if we extrapolate, I think that, you know, the fact that the utilization per site is growing, the fact that new sites are coming on board. I don't, I don't have the ability to provide, you know, decent guidance at this point, but I, I think I can tell you that our team is, you know, continues to be excited about the growth. There are a couple of pluses and minuses with respect to, you know, 2024.

No Rick.

First of all I really do appreciate the question.

And I think.

If I look at history, I think our growth rate today is about 60%.

And I think if we extrapolate.

I think that.

Well.

In fact that the utilization per site is growing the fact that new sites coming onboard.

I don't I don't.

We have the ability to provide.

No.

Decent guidance at this point.

I think I can tell you that our team.

<unk>.

Continues to be excited about.

The growth.

There are a couple of pluses and minuses with respect to.

2024.

Arun Swarup Menawat: The pluses are that, you know, sites are going to be increasing. And we think that, based upon reimbursement and the feedback that we're getting, we will start to mix some capital revenue with our recurring revenue going forward, which, generally, as you know, can actually ramp the top line a little bit faster. So I think directionally, I think we're feeling okay, feeling fairly okay. But I think the negative side because, as you know, we're building a game changing technology, and there are always all kinds of different things that go on. And I think the negative side, I guess, is that, you know, the majority of our patients today are cash-pay patients.

The pluses are that the sites are going to be increasing.

And we think that based upon.

Reimbursement and the feedback that we're getting.

We think we will start to mix.

Some capital revenue with our recurring revenue going forward, which generally as you know can actually ramp.

The top line.

A little bit faster.

So I think Directionally I think we're feeling okay.

Okay.

I think the negative side.

Because as you know.

Building, a game changing technology and Theyre always all kinds of <unk>.

Different things that go on and I think the negative side I guess is that.

It will.

The majority of our patients today.

Cash pay patients.

So.

Arun Swarup Menawat: And so, this is also the year where, certainly in the second half, there will be sites that will be looking to transition to the pair pay model. And if these are hospitals, they will start to really use the temporary code and start to streamline the reimbursement coding, and so on. And certainly, once July happens and they know what the numbers are gonna be, I think that the dynamics of how they look at utilization will change. And so I think that is certainly one of the things we're looking at and watching is, how is that going to affect it? But, generally speaking, we're feeling fairly comfortable with continuing to increase the top line in 24.

This is also the year where.

Certainly in the second half.

Will be sites that we'll be looking to transition to the payer pay model.

And if these are hospitals, they will start to really use the the temporary code and start to streamline the.

Reimbursement coding and so on.

Certainly.

Once the July happens and they know what the numbers are going to be I think that the dynamics.

<unk>.

And how they look at utilization will change.

I think that is certainly one of the things we're looking and watching is how is that going to affect it.

But I think generally speaking.

We're feeling fairly comfortable with continuing to increase the top line and 24.

Arun Swarup Menawat: So you're saying, just to make sure I understand your comment. So you're saying that hospitals might slow down as they wait for the code to be installed. And so the second half might be softer, or I should make sure I'm understanding your intent in there. Yeah, yeah, no, you know, you know, I want to just share everything in properly.

So you are saying.

Just to make sure I'm understanding your comment so youre, saying that hospitals might slow down.

As they wait for the code to be installed in the second half might be softer.

You can make sure I'm understanding your urine test on there.

Yes, no no no.

I wasn't sure.

Arun Swarup Menawat: I think that, you know, what it is is that, As I said, the majority of the patients are cash pay, so the question is really... The concierge practices that are set up for cash pay will continue. They're not going to change, because to them, the benefit is that they will still charge the same amount, but the patient will then have the information that the patient will, on their own, contact their insurance, and they'll get paid for the net-net outlay of cash to the patients will be reduced, but the concierge practitioners will continue to make the same amount of money. So I don't anticipate any issue there, and that, in fact, will be a positive in 2025, where I think that the big cash pay patients will be, and they might be wondering, well, gee, do I keep advertising or doing this, or do I wait another quarter or two, and so on. You know, I don't know how big that risk is. I'm not sure if there is any risk involved there.

Everything properly.

<unk>.

What it is is that.

As I said the majority of the patients are cash pay so.

The.

Question is really.

The concierge practices.

Our setup for cash pay I think they will continue they are not going to change because to them.

Benefit they will still charge the same but the patient will then have the information that the patient on their own contact that insurance and they will get paid so that net net outlay of cash to the patients will be reduced.

The concierge practice numbers will continue to make the same amount of money. So I don't envision any.

Issue there.

And that in fact could be.

It will be a positive in 'twenty five.

Where I think that.

Let's see how it goes.

In the hospitals, where they're not necessarily.

Big on cash pay.

Patients in there they might be wondering well Gee do I.

Advertising or doing this or delay.

Wait another quarter or two and so on so.

Don't know how big that risk is I'm not sure if it has.

Arun Swarup Menawat: I just think that it's something that we're cognizant of. Thank you, Arun. One moment for our next question. Our next question comes from Rahul Sarugaser with Raymond James. Please proceed with your question. Good afternoon, Arun, Rashed, Mathieu, and Mathieu. Please accept our congratulations on your recent promotion.

Any risk there.

I think that it's something that we're cognizant.

Thank you Eric.

One moment our next question.

Our next.

<unk> comes from Rahul <unk> with Raymond James. Please proceed with your question.

Good afternoon, everyone understood Matt.

Congratulations on your.

Home promotion.

Rahul Sarugaser: So, my first question is, we see that sales and marketing costs are ramping, and so could you provide a bit more color on the expansion of the sales team, specifically the balance between sales folks focused on installing new devices versus those focused on increasing utilization of each site within the existing install base? Sure. I think, Rahul, that's a great question because one of the things that we have been working towards is to build a great, you know, sales team. So, over the last... For a long time. And we have regional managers so that the regions have, you know, focus with a manager. We have four regions. And then underneath each of those, we have about five positions with each, so we'll have about 16 to 20 people in each of those regions. We have about four or five open positions at the moment. I think the expectation is that the ratio of hunters versus farmers is about 50-50.

So my first question.

We see that sales and marketing cost ramping.

<unk>.

So could you provide any more color on the expansion of the sales team specifically the balance between sales folks focused on installing new devices.

Versus those focus on increasing utilization of each site.

Within the existing installed base.

Sure.

So.

I think relative it's a great question, because one of the things that we.

<unk> been working towards is to build.

Great.

Sales team so over the last four months or so.

We have.

We built the infrastructure number one so we have obviously, we have a fantastic VP of sales with Adam.

And.

We have regional managers, so that the regions have.

Focus with a manager.

We have four regions and then underneath each of those we have.

About our plan is to be about.

Five with each so we will have.

16 to 20 people.

<unk>.

In the in each of those regions, we have about four or five open positions at the moment.

And.

The expectation is that the ratio of the Hunter versus farmer is about 50 50.

Arun Swarup Menawat: So that we will, you know, the farmers are driving the usage, and the hunters are looking for new agreements. So, and then we think that this structure is a scalable model. And so we will start to scale as the revenues, you know, ramp in each week. Great, that's a really helpful color.

Hum.

So that we will.

Farmers are driving the usage and the Hunter. So we're looking at.

Sure.

New.

Agreements.

So and then we think that this structure is a scalable model and so we will start to scale as the revenues ramp in each region.

Great that's really helpful color. Thanks, Brian.

Rahul Sarugaser: Thanks for that. So my second question is, you know, back on the team's collaboration, are you able to share any more color on what you're hearing from current and prospective ASC and Luxa customers about their needs? specifically how, you know, such a one-stop solution may ease or shorten the sales cycle, both for these ASCs, but also potentially for others. So, Rahul, it starts with what we are calling the modern treatment pathway, and the AUA guidelines are now basically saying that MR should be done to properly diagnose the patient, and there are clinical publications, and these publications are basically saying that If a cancerous lesion is visible on the MR, it should be treated.

So my second question.

The rapidly in collaboration.

Are you able to share any more color on what you're hearing from current and perspective.

<unk>.

Customers about their needs specifically, how such a one stop solution may ease or shorten sales cycle, both for <unk>, but also potentially for hospitals.

Yes.

So let's start with what we are calling the modern treatment pathway.

And.

The <unk> guidelines are now basically saying that.

<unk> should be done to properly diagnosed a patient.

And then a clinical publications and.

These publications are basically saying that.

If a cancerous lesion is visible on the MLR it should be treated.

Arun Swarup Menawat: And so there is a shift in the sense that historically we've looked at the Gleason scores to determine whether or not it's an early stage and should we wait before we treat these patients and or if it's a Gleason score 9 or higher that we should, you know, perform radical procedures on these patients. The idea that there's a lot of clinical data that is supporting is that perhaps we should even screen patients with MR and most certainly diagnose the patients with MR and then if the lesion is visible on the MR then the patient should be treated and obviously it's a natural progression for them to say, well, if I'm screening and diagnosing with MR and if I'm particularly looking at lesions that are MR visible then why would I not treat with TELSA which uses the same real-time MR.

And so there is a shift in the sense that historically, we've looked at the gleason scores to determine whether or not it's an early stage and should we wait before we treat these patients.

Or if it's a.

Gleason score nine or higher that we should.

Perform radical procedures on these patients the idea that there's a lot of clinical data that is supporting us that perhaps we should even.

On screen patients with Emaar and most certainly diagnosed the patients with EMR and then if the lesion is visible on the EMR then the patient should be treated and obviously.

Natural progression for them to say well, if I'm screaming in diagnosing with EMR and if I'm, particularly looking at lesions that are our MRI visible then why would I not treat with Tulsa, which uses the same real time MRI. So if you put all this together.

Arun Swarup Menawat: So if you put all this together, that's one pathway, that is. Emerging at the moment, the second thing that is going on is that MR technology is evolving also. So the new MRs that are coming out are generally considered minimal helium or helium free. And helium is a big return because it forces a lot of maintenance costs on MRs. And so now the new ones that are coming out, particularly one that we've signed on for Siemens, are effectively helium free or minimal helium. It's a closed loop helium system.

One.

Pathway that is.

Emerging at the moment.

The second thing that is going on is that the <unk> technology is evolving also so the new <unk> that are coming out are.

Generally considered minimal helium or helium free and helium is a big time, because it forces a lot of maintenance costs on Mars and so now the new ones that are coming out, particularly when we sign non forward Siemens is effectively helium free or men.

Julien that's a clue.

Those leukemia system.

Arun Swarup Menawat: And with software technology and the latest hardware technology, they can actually go to a lower magnetic strength; Tesla is how they measure it. Lower magnetic strength. And so the bottom line to all this is the new MRs can give you diagnostic quality images, but they weigh, for example, a third of the weight of a regular MR. What we internally talk about is, it's less than 8,000 pounds, which is like, you can use a Ford F-250 to tow these devices. And you don't need that kind of foundation.

And with the software technology in the latest hardware technology. They can actually go to a lower.

Magnetic strength Tesla measure it lower magnetics trend and so the bottom line to all of this is the new <unk> can give you diagnostic quality images, but.

For example, a third of the weight of the irregular tomorrow, we internally talk about it is like it is.

Less than 8000 pounds, which is like you can use a Ford F 250 to all these devices and.

And you don't need the kind of.

Foundation, they don't need to be separated from the hospital or an ASC. So if you put all of this together what youre seeing is that an ASC or even at La Porte Hospital practice, and then own the whole thing they can own an EMR that.

Arun Swarup Menawat: They don't need to be separated from the hospital or an ASC. So if you put all of this together, what you're seeing is that an ASC or even a Lugpa hospital practice can then own the whole thing. They can own an MR that is of this new generation, and they can do screening diagnosis. They can own the whole patient pathway, and you can imagine how game-changing and how big this has the potential to be. And so this is the beginning of this first relationship we've done with Siemens. This is the beginning of that idea that they can own the patient from the beginning; they can do all of this. They will send the images to the radiologist to do the diagnostic part, but they can make money on the facility payments for all of these procedures.

This new generation and they can do.

Screening diagnosis, they can own the whole patient pathway and you can imagine how game changing how big this has the potential to be.

And so this is the beginning.

First relationship was done with <unk>.

<unk> is this the beginning of that.

That they can own the patient from the beginning they can do all of this the radio they will suddenly images to the radiologists to do the diagnostic part, but they can make money on the facility payments on all of these procedures. So we think that there is control of the patient base.

Arun Swarup Menawat: So we think that there's... the patient, the smoothing of the workflow, we think that there is an economic model here that's pretty compelling. And so that's, that's what this is all about. And, as we indicated in the prepared remarks, we think this is the first of many such things. And we will, you know, we'll be talking with you in the public domain about when we expect the first such site that can perform all of these procedures and be able to provide this new, modern treatment pathway. I know this is a little long-winded, but I hope it is helpful.

Moving of the workflow.

That there is an economic model here, that's pretty compelling.

So that's that's what this is all about and I think as we indicated in the.

Our prepared remarks, we think this is the first of more of such things and we will we'll be talking with you in the public domain about when we expect the first of such site that can perform all of these procedures.

And be able to provide this new modern treatment pathway.

I know, that's a little long winded, but I hope it is helpful.

Arun Swarup Menawat: That's very helpful. Thanks for watching that very closely. And if you don't mind indulging us one last important question. So one of the main questions we get is about the amount of reimbursement. You've already provided a lot of color on the process with the rough. So, yes, given that the investment in robotic surgery is in the $17,000 range, based on what you're hearing from the old scientists.

That's very helpful. Thanks, very much I know you're watching that very closely.

If he doesn't mind indulgence.

Good question. So what are the main questions. We get is on what the amount of reimbursement.

So you've already provided a lot of color on the process with the rocks.

So, yes, given that investment.

Robotic surgery.

$1000 range based on what you're hearing.

Rahul Sarugaser: Is there a range of reimbursement that you might be able to, you know, say that you're confident that Tulsa should be? Yeah, so I know Rick was asking something similar to that. So maybe I can elaborate a little bit. I think the bottom line, I don't imagine that there will be a negative impact on the economy, whether it's radical prospectomy or not. I think that there's logic and a lot of data that support that we will be in the same league.

All right.

Is there a is there a range of reimbursement that you might even see say that you're confident that Tulsa should secure.

Yes.

So I know Rick was asking something similar to that.

So maybe I can elaborate a little bit.

So.

I think the bottom line I don't envision that.

There will be a.

Negative impact too.

The economics, whether it's radical prostatectomy or Tulsa.

I think there is logic and a lot of data that supports that we will be in the same league.

Arun Swarup Menawat: And I think that, so that's certainly one of the points. The second point, I think, is that. As we've talked before, there is a temporary code, a C code, and Leading Hospitals are using that SQL. And in 2023, that C code, the payment amount of that C code, it changes kind of every year, but in 2023, that C code was paying $12,700. And that amount was based upon the cost analysis that was done by CMS for the patients that were treated with TAMSA. So. Logic, and I want to emphasize the word logic because, basically, the analysis that the CMS does for the Permanent Code is fairly similar to the analysis they do for the Temporary Code. So the logic is that it should not be very different from where we are in the temporary phase.

And I think that so thats certainly one of the points there.

Second point I think is that.

As we've talked before there is a temporary code C code and leading hospitals are using that C code.

In 2023 that C code.

Payment amount of that C code it changes kind of every year, but in 2023.

That key code was paying 12 $700.

And that amount was based upon the cost analysis that was done by CMS.

So on the patients that were treated with Tulsa.

So.

Logic.

Underscore the word logic because.

Basically the analysis that the CMS does for the permanent code is fairly similar to the analysis, we do for these temporary codes.

So the logic is that it should not be there.

Different from where we are and the temporary phase having.

Arun Swarup Menawat: Now, having said that, I want to emphasize explicitly that ultimately, CMS can do anything they want; they do. And so I cannot promise you that that's where it's going to be, but I can. This is the best I can provide. I do think that there won't be anything that will be negative as compared to radical prostatectomy. I feel fairly confident. Dr. Raghuram G. Rathkar, Ph.

Having said that I want to emphasize explicitly that ultimately CMS can do anything they want they do and so I cannot promise you that thats, where it is going to be but I can this is the best I can provide that I.

I do think that there won't be anything that will be negative as compared to medical prostatectomy.

Arun Swarup Menawat: D., Ph. D., Chief Executive Officer, Center for Medical Research and Development in India. And I think that the logic, at least, is that we will be in the same range as where the temporary code is. That's very helpful. Thanks very much, everyone, and I'll be back.

Fairly.

Well with that.

I think that the logic at least that we will be in the same range as where the.

Temporary code is.

That's very helpful. Thanks very much.

Back in the queue.

Thank you.

Michael Anthony Sarcone: One moment for our next question. Our next question comes from Michael Sarcone with Jefferies. Please proceed with your question. Hey, good afternoon. And thanks for taking the question. First one is Michael. Yeah, I just had a clarification on one of your responses, Arun, to one of Rick's questions.

One moment our next question.

Our next question comes from Michael Sarcone with Jefferies. Please proceed with your question.

Hey, good afternoon, and thanks for taking the questions.

I just wanted to Michael.

Yes, just had a clarification on one of your responses to one of Rick's questions.

Arun Swarup Menawat: You know, when you were talking about the kind of pluses and minuses for 2024, it sounded like, or I thought I heard you say, you might start to see a mix of capital and recurring revenues, which could ramp up the top line a little faster. But then, in some of your prepared commentary, I thought you might have mentioned sales of the combined solution with Siemens Healthineers might start in 2025. So I just wanted to get some clarification there.

When you were talking about the kind of pluses and minuses for 2024.

It sounded like or I thought I heard you said you might start to see a mix of capital.

Recurring revenues, which can ramp the topline a little faster, but then in some of your prepared commentary I thought you might have mentioned.

Sales of the combined solution with Siemens health in the areas might start in 2025, So just wanted to get a clarification.

Clarification there.

Arun Swarup Menawat: Yeah, no, I think that's a good question. So I think, you know, what we are beginning to hear, Michael, first of all, we now have multiple sites that are now, you know, increasing their usage. And that was one of the reasons, obviously, Q4 was, you know, in terms of usage and revenue. But we're starting to certainly hear from a number of sites that they might very well be interested in the more of the standard medical device model where, you know, you're paying a certain amount for the upfront system, and then you're paying perhaps slightly lower amounts for the disposable part of this. And so we have evaluated a number of these models.

Yeah, No I think thats a good question.

Thank you.

What we are beginning to hear me.

Michael first of all we're now we have multiple sites that are now increasing their usage and that was one of the reasons, obviously Q4 was.

In terms of the usage and the revenue was a decent number but we are starting to certainly hear from number of sites that they might very well be interested in the more of the standard.

Medical device model, where.

You are paying a certain amount for the upfront system and then you are paying for.

<unk> slightly lower amount for the disposable part of this and so we have evaluated a number of these models and so I think that my comment related to the Siemens and my comment related to the the capital plus recurring are two separate things.

Arun Swarup Menawat: And so I think that my comment related to Siemens and my comment related to capital plus recurring are two separate things. So my point is that I think even in 2024, we're likely to see that we will start to see some capital revenue starting to come in for those hospitals that have already budgeted for this and will have budgeted for it even in 2024. I think some of those will close this year.

So my point is that I think even in 2024, we're likely to see that we will.

We will start to see some capital revenue.

Starting to come in for those hospitals that already budgeted for this and we will have budget in 2020 for I think some of those will close this year. So that is related primarily to Tulsa business and then second half of 2025.

Arun Swarup Menawat: So that is related primarily to Tulsa business. And then, second half of 2025, I think at that point, when we get closer to it, we'll sort of describe the business models in more detail. But that's it.

I think at that point, when we get closer to it a little sort of describe the business models in more detail.

But that's a separate thing.

Arun Swarup Menawat: I see that it's really helpful. Thank you. So I guess just, you know, to stay on that topic, you're expecting to end the year at 75 Tulsa systems. So, could you give us any color, you know, just as we update our models for 2024, right? That's an incremental 25 systems from where you are today. What portion of those systems could be sold under this kind of revised capital sales model?

I'd say, that's really helpful. Thank you so I guess just.

To stay on that topic.

We're expecting to end the year at 75, Tulsa system. So I mean could you give us any color just as we update our models for 2024 right. That's an incremental 25 systems from where you are today.

What portion of those systems could be sold under this kind of <unk>.

Capital sales model and then any color you could provide on where you think system ASP might.

Michael Anthony Sarcone: And then any color you could provide on, you know, where you think system ASPs might be for some of these new arrangements you're going to have with some of these sites. Yeah, Michael, for today, I only wanted to give the heads up that you will start to see some capital revenue. I think our plan is that as that evolves, I think we will try to provide more color every quarter. But I think, all in all, you know. At this point, what we're saying we grew 60% last year, and we grew about the same the year before that. And I think we're sort of in that league at the moment, and the mix of how we get there could be a little bit different if it changes. As we get to, you know, the quarters, I think we will; we want to, but we just don't think that we have time.

It might be.

For some of these new arrangements youre going to have with some of these sites.

Yeah.

Michael start today I only wanted to give the heads up that you will start to see some capital revenue.

I think what our plan is that as that evolves.

I think we will try to provide more color every quarter, but.

All in all.

No.

At this point, what we're saying we grew 60% last year. We grew about the same the year before that and I think we're sort of in that lead at the moment.

And the mix of how we get there.

Could be a little bit different.

And that.

If it changes.

As we as we get to.

The quarters I think we will we want to we just don't think that we have enough history to be able to provide that type of guidance just yet Michael.

Arun Swarup Menawat: Enough history to be able to provide that type of guidance just yet. Okay, totally fair. I understand. And then I guess, you know, one last one on the topic, and that'll be good for me. You know, what are the reasons that some of these systems that, you know, you're working with now are saying they'd prefer to pay up front, you know, versus the higher-priced consumable model? You know, what's making them change their tune now?

Okay totally fair I understand.

And then I guess, just one last one on the topic.

And that'll be good for me.

What are the reasons that some of these systems that.

You're working with now are saying they prefer to pay upfront.

Versus the more higher priced consumable model.

What's taken them change their tune now.

Michael Anthony Sarcone: I think it's just usage. They're finding that they're using it more frequently. They can start to see that once the reimbursement comes in, that the usage can increase. So it's more related to, hey, we want to go to more standard models and service agreements. Harold Davidson, Ph.

I think it's just usage, they're finding that they are using it more frequently they can start to see that once the reimbursement comes in that the usage can increase.

So it's more related to hey.

We want to go to more standard models and service agreements.

Applications for the product.

There's nothing unusual I think it's just.

Hospitals, saying, Hey, we want to go to a standard model and our product is much more.

Arun Swarup Menawat: D. Necessarily updating software every day as compared to when we started, where lots of things were changing. Now, it's pretty stabled. And I think we are also looking at it from a perspective that when we introduced it, the best way to do so was with recurring revenue. And as we bring new technologies like Telsa AI, we are trying to figure out how we monetize some of that innovation. It's, as I said, at the moment. I just wanted to sort of give you a heads up that it's something that we're evaluating. And so you might see some changes in the mix. But I don't think, Michael, there's anything unusual with respect to, you know, what the hospitals are asking or what we will evolve into. Okay, I got it. Thanks a lot, Arun. Super, thank you.

It stabilizes since they were not.

And that's necessarily updating software everyday as compared to when we started.

Lots of things are changing it's pretty stabilized.

And I think we are also looking at it from the perspective there.

That.

Yeah.

When we introduced it the best way to do so was with a recurring revenue.

And as we bring new technologies like Tulsa AI.

We are trying to figure out how do we monetize some of that.

That innovation so.

As I said at the moment.

Wanted to sort of give you a heads up but it's something that we're evaluating.

So you might see some changes in the mix, but I don't think Michael there is anything unusual.

With respect to what the hospitals are asking or what we will evolve into.

Okay got it thanks a lot.

Super Thank you.

Michael Anthony Sarcone: One moment for our next question. Our next question comes from Brian Gagnon with Gagnon Securities. Your line is open.

One moment our next question.

Our next question comes from Brian Gagnon with Gagnon Securities. Your line is open.

Brian Joseph Gagnon: Hi guys, a couple of questions. I'm going to stick with this capital sale thing. I understand completely as to why it's beneficial, because there are capital budgets out there for this. On the disposable side of things, in our minds, should we be thinking about a relatively small discount from where your current disposable prices are?

Hey, guys.

Couple of questions I'm going to I'm going to stick on this capital sale thing.

I understand completely as to why it's beneficial because there are capital budgets out there for this on the disposable side of things in our mind should we be thinking about a relatively small discount from where your current disposable prices are.

Arun Swarup Menawat: Yes, I think so, Brian. I think that, But the other way that would be helpful is, you know, we've talked about the fact that our margins are decent even at low volumes. And I think that what We've talked about the fact that as the volumes increase, our margins will be 70% plus, 70 to 75% rate. And I think from that perspective. I, we are still very comfortable that as volumes increase, our margins will be in that 70-75% range. So whatever that discount will be, it will not affect the margins of our business.

Yes, I think so Brian I think that.

The other way that would be helpful. As we've talked about the fact that our margins are decent even at these low volumes.

And I think that what we.

We've talked about the fact that as the volumes increase our margins will be 70% plus 70% to 75% range.

And I think from that perspective.

We are still very comfortable that as the volumes increase.

Our margins will be in that 70% to 75% range. So whatever that discount will be it will not affect the margins of our business.

Brian Joseph Gagnon: Great. That's excellent at this point in the game. Can you talk at all about new contract signings for 23? You know, kind of how many did you do? What are you thinking about for 24? You signed some very big ones that are multi-year.

Great.

But.

That's excellent at this point in the game.

Can you talk at all about new contract signings for 'twenty three.

Kind of how many did you do what are you thinking about for 'twenty. Four you signed some very big ones that are multi year and then if you would layer into that what your pipeline looks like and how youre doing on executing against the pipeline that's there.

Arun Swarup Menawat: And then if you would layer into that what your pipeline looks like and how you're doing at executing against the pipeline that's there, yeah. Um, so. Then, you know, I think that we have. We have publicly said we have had multiple corporate agreements, and if we add those up, I think we're going to have some pretty positive results. So, I'm going to end it there. I want to thank all of you for participating with us. It has been wonderful.

Yes.

So.

I think that we have.

We have.

Obliquely said, we've had multiple corporate agreements and if we add those up I think we.

Feel very comfortable with the number 75.

But having said that I think historically it's been.

Arun Swarup Menawat: And I look forward to seeing you all next year. What a wonderful experience it has been. Thank you so much. And thank you for having me. It's been great. It's been great having you. So, I look forward to seeing you next year. Thanks a lot.

It's taken some time to get them installed and even in some cases, even after they're installed to getting them going with respect to decent treatment rates has taken.

Arun Swarup Menawat: Bye. Bye. Bye. Bye. Bye. Bye.

Six months or longer in some cases, and we've talked about that historically as well so.

Arun Swarup Menawat: Bye-bye. Thank you. Bye.

I would say again, it's an estimate or guesstimate that.

Arun Swarup Menawat: Thank you. Thank you. Thank you. Bye. Bye. Bye. Bye. I feel very comfortable with the number 75.

We think that at least half of the 25 will come from the contracts that we already have.

Arun Swarup Menawat: But having said that, I think historically it's taken some time to get them installed, and even in some cases, even after they're installed, getting them going with respect to decent treatment rates has taken, you know, six months or longer in some cases. And we've talked about that historically as well. I would say, again, it's an estimated estimate that we think that at least half of the 25 will come from the contracts that we already have. And the other half will probably come from the pipeline that we have, which continues to build. That's probably sort of a reasonable overall estimate.

And the other half will probably come from the pipeline that we have which continues to build that's probably a.

Sort of a reasonable overall.

Estimate.

I think that.

We.

I think at least logically.

Reimbursement.

Data unfolds I think it's possible that some of those commercial contracts or the corporate contracts could start to accelerate.

Arun Swarup Menawat: I think that, us. You know, I think at least logically, as the reimbursement data unfolds, it's possible that some of those commercial contracts or the corporate contracts could start to accelerate. It's so, I think it is one of those inflection year points where a lot of the rate of adoption is likely to depend upon the data at the end of July. But I do think that coming into 2024, we're coming in with a pretty good set of contracts that we should be able to, you know, meet the target of 75. Okay, if you would, can you talk a little bit more about your pipeline and how it's looking for you at this point?

So.

I think it is one of those inflection the airplanes, where there's a lot of the rate of adoption is likely to depend upon the data. So at the end of July.

But.

I do think that coming into 2024, we're coming into a pretty good set of contracts that we should be able to meet.

The target of 75.

Okay.

You would can you talk a little bit more about your pipeline and how its looking to you at this point.

Yeah.

Arun Swarup Menawat: I think this year, we're primarily focusing on hospitals at this point. Part of it is because a lot of Medicare patients tend to go to these hospitals, and so. Most of our pipeline at the moment is for Hospital. I think you will continue to see further adoption in the leading hospitals. Because we've had such a good uptick in the pristine hospitals, I think you will continue to see that trend. But I think this year you will see mid-tier hospitals also adopting the technology. And part of this is that we will be talking with ASCs, and we'll be talking with LUDCAS about the full motor treatment pathway and getting their feedback for this year. And if this whole concept makes sense, I think AFCs and blood piles are more ripe for the 2025 strategy.

I think this year.

Primarily focusing on hospitals at this point.

Part of it is because.

The a lot of the Medicare patients tend to go to these hospitals.

And so.

Most of our pipeline at the moment.

As for hospitals, I think you will continue to see.

Further adoption in the leading hospitals.

Because we've had such a good uptick in the prestige hospitals I think you will continue to see that trend, but I think this year you will see.

Mid tier hospitals also adopting the technology.

And part of this is that we will be talking with <unk>, we will be talking with.

What about the full monitor treatment pathway.

And getting their feedback for this year.

And if this whole concept makes sense I think than ASC and La Paz more ripe for 2025 strategy. So 2024, our thought processes more focusing primarily on.

Brian Joseph Gagnon: So 2024, our thought process is more focusing primarily on, you know, continuing to focus on hospitals. Okay, last question for me. It's always been a good indication for me on a technology if there are multiple installations within an institution. And I think you have multiple installations at Mayo, Radnet, and Halo. One, confirm that for me.

<unk> continued to focus on hospitals.

Okay last question for me, it's always been a good indication for me on a technology. If there are multiple installs within an institution and I think you have multiples at Mayo Radnet and Halo.

One confirm that for me and two are there others like Cleveland that you could see multiple installations being completed by the end of the year.

Arun Swarup Menawat: And two, are there others, like Cleveland, that you could see multiple installations being completed by the end of the year? Yes, most certainly, I think. Probably by the end of this year, we'll probably have them all.

Yes, most certainly I think.

Probably by end of this year, we'll probably have five or six maybe seven institutions, where we will have multiple systems.

Arun Swarup Menawat: Five or six, maybe seven institutions where we will have multiple systems. I agree with you. That is something we've been looking at. Also, just to see, you know. I think the Mayo was a very good example, where they started with a very conservative start at the Florida site, and then it went on to the Rochester site, which is doing very well. And I think Cleveland Clinic, I expect, will happen the same way. I think the Harvard system with both Brigham and Women and Massachusetts General, they're now the same system, so on. So you will absolutely see, and I agree with you, that is a good Arlene. Is Cleveland installed and up and running, their first one?

Terrific I agree with you that is something we've been looking at also I mean, just to see I think the mail was a very good example, where they started very conservative start at the Florida site and then it went on to the Rochester side, which is doing very well.

<unk>.

And I think Cleveland clinic.

I expect will happen in the same way I think.

The hardware system with both bringing in women and messages in general they are now the same system somewhat so you will absolutely see that.

And I agree with you that is a good early indicator.

As Cleveland installed and up and running the first one.

Arun Swarup Menawat: Yes, Cleveland is installed and up and running. Yes. Terrific. Thank you very much, gentlemen. Thank you. One moment for our next question. Our next question comes from Chris Potter with Northern Border Investments. Please proceed with your question. Hi, Arun.

It's yes, Cleveland is installed and up and running yes.

Perfect. Thank you very much gentlemen.

Thank you.

One moment our next question.

Our next question comes from Chris Potter with Northern border investments. Please proceed with your question.

Hi, Arun.

Unknown Attendee: Are your various sites starting to see a backlog of patients who want or need the procedure but are choosing to wait till 2025 when the Permanent Code isn't in effect? Yes, Chris, that's a very interesting question. Actually, I can share two things with you.

Sure.

Various sites starting to see a backlog of patients who want or need the procedure, but are choosing to wait till 2025 one.

The permanent code isn't an effect.

Yes, Chris that's a very interesting question actually.

I can share two things with you.

Arun Swarup Menawat: One is that we are now, this is for the first time, seeing patients at multiple sites that are being scheduled 60 to 90 days in advance. So I think that we are starting to see more streamlining of how they bring the patient into the Tulsa pathway, and then they're scheduling them based upon a fixed schedule. That actually was and has been an issue because we're such a new technology that getting to routine pathways has been, you know, one of the things we've had to overcome. The second thing is that if I look at the number of patients that get educated or come to our website, from where they get educated on Tulsa. That number is 10 to 20,000 a month; it's a huge number.

One is that we are now this is the for the first time, we're seeing patients at multiple sites that are being scheduled 60 to 90 days in advance.

So I think that we are starting to see more streamlining of the.

How they bring the patient into the Tulsa pathway and then their scheduling them base.

Based upon a fixed schedule of that actually was and.

It has been an issue because we're such a new technology that getting to routine partly as had been one of the things we've had to overcome.

The second thing is that if I look at the number of patients that get educated or come to our website.

Where they get educated on Tulsa that number is.

10% to 20000 a month.

Use number.

Arun Swarup Menawat: And yet, you can see that the number of patients being treated is still very modest. So our belief is definitely that there are a number of patients who are interested but are not able to get the treatment because it is pretty expensive. Today, and yes, we are hearing because we talk to three, four hundred patients a month. And so what we do hear from them is, hey, I really want Telsa, but, you know, if it's only Gleason 7, can I wait six to nine months for reimbursement to kick in? So, you know, this is all early stage; this is all indicative data. But yeah, I think it's a great question.

And yet you can see the number of patients being treated is still very modest. So our belief is definitely that there are a number of patients who are interested but are not able to get the treatment because it is pretty expensive today.

And yes, we are hearing because we talk to three or 400 patients a month.

And so we do hear from them is that it.

Really.

Once Tulsa, but.

If it's only <unk> seven can I wait six months to nine months.

For reimbursement to kick in so.

This is all early stage. This is all indicative data, but yes, I think it's a great question and it is something that we are.

Unknown Attendee: And it is something that we are, you know, that gives us more confidence about the future. Thank you. And just, just one other question: Is there anything else you can say about Your Instinct about Utilization, post-January 2025? If I'm doing the math right, I think you're, I think you're, um... Systems are averaging 20 to 25 procedures per year.

That gives us more confidence about the future.

Thank you and just one other is there anything else you can say about that.

Your instinct about utilization.

Post January 2025.

If I'm doing the math right. It thank you.

Thank you.

Systems are averaging 20 to 25 procedures per year could that number be 35, or 40 procedures per year in 2025, when reimbursement as an effect.

Arun Swarup Menawat: Could that number be 35 or 40 procedures per year in 2025 when reimbursement isn't in effect? Yes, I think that You know, we're not like a drug company. So it's not going to just happen in one day. But I do think that the number of procedures per site will increase in a step-change fashion. So we're not out of the realm of possibilities of what you're saying. Thank you, Arun.

Yes, I think that.

We're not like a drug company. So it's not going to just happen in one day.

But.

I do think that the.

The number of procedures per site.

Increase in a step change fashion.

So.

We're not out of the realm of possibilities of what you are saying.

Craig Bereson: Thank you. Please take a moment for our next question. Our next question comes from Craig Bereson with UBS. Please proceed with your question. Good afternoon, and thank you for taking my questions. The last gentleman already asked a few of the questions I was going to ask. So in terms of reimbursement, is there any color, any comments you can make about what physicians or hospital systems are saying to you about what the reimbursement may do to their plans for, Deploying more systems and serving more patients? Are there any color you can give us on that topic from their side?

Thank you Arun.

Thank you Chris.

One moment our next question.

Our next question comes from Craig <unk> with UBS. Please proceed with your question.

Good afternoon, and thank you for taking my questions the last gentlemen.

I asked a few of the questions I was going to ask.

But.

So in terms of reimbursement is there any color or any comments you can make about.

What physicians are hospital systems are saying to you about what the reimburse it may do to their plans for.

Deploying more systems and serving more patients is there any color you could give us on that.

From their side.

Yes.

Yes.

Yes.

Arun Swarup Menawat: I think at the moment, my thinking is that we're probably another quarter to two years away from that. I think we will, we'll get to that color, most likely in the Q2 call. I think we should, by that time, have... Some information to be able to give you some, you know, reliable information. That's fair. I was just curious.

I think at the moment my.

Thinking is that probably another quarter to two years away from.

From that I think.

We will we will get to that color most likely in the <unk>.

Q2 call I think we should be at that time have.

Some information to be able to give you some.

Reliable information.

That's fair I was just curious the last one first.

Craig Bereson: The first part about patient demand and interest this year is very helpful. All right, thank you very much. You're welcome. Yeah, no. I think to the extent that we hear that a number of sites report that many patients are asking for Tulsa by name. I think from that perspective, we're in decent shape. Student.

Part about the patient demand and interest in <unk>.

It's very helpful.

Alright, thanks very familiar.

Welcome.

Yes, no I think to the extent that we hear that the number of sites.

Port that day.

The.

Many patients are asking for Tulsa by name I think from that perspective.

We're in decent shape.

Yeah.

Arun Swarup Menawat: I mean, my humble opinion is, um, I think this is just one person's opinion that there's potential for some, at the time that you guys think is right, additional PR to get the stories out there in the social media, what have you, on just how effective, patient-friendly, payer-friendly, system-friendly these procedures are. And so I think getting the word out, I think you're just starting to touch it. It's just one investor's opinion.

Good.

In my humble opinion is.

I think this is just one person's opinion that there is potential for us.

At the time when you guys think is right.

Additional PR to get the stories out there in the social media, what have you or just how effective patient friendly.

Payer friendly system friendly the procedures are and so I think I think I think getting the word out I think you're just starting to touch it.

When investors.

I think that.

The story there is a read are tremendous.

Craig Bereson: But I think the stories you read are tremendous in terms of the impact on patients' lives. More PR on that, I think, would be to build up the demand. I agree, and I think that we are, we are most certainly number one on the social media for this. And I do think that more of the, you know, the PR, you know, like, for example, late last year, AARP on its own picked up the story. And it really raises awareness. And I think that in 2024, you will see more of the news media picking up on this. And more and more of our urologists are also now talking to their local news media and providing information. But, bottom line, you're right; that is more and more likely in 2024 as well.

In terms of the.

Back on patients' lives. So that's just.

More PR around that I think would be to build up the demand I think.

Agree.

And I think that we are we are most certainly number one on the social media.

On this and I do think that more of the.

<unk>.

PR like for example, late last year.

<unk> on their own picked up the story and it really raised awareness and I think that in 2024, you will see more of the news media picking up more and more of our.

Urologists are also now talking to their local news media and providing the information.

But bottom line Youre right that there is more and more likely in 2024 as well.

Arun Swarup Menawat: Awesome. Thank you. I can't forget to work it out.

Okay.

Craig Bereson: Thanks so much. Thank you. One moment for our next question. We have a follow-up from the line of Brian Gagnon with Gagnon Securities. Please proceed with your question. First off, Mathieu, congratulations on your promotion. It is very well deserved.

Thank you I can't begin to work thanks, so much.

Thank you.

One moment our next question.

Yes.

Okay.

We have a follow up from the line of Brian Gagnon with Gagnon Securities. Please proceed with your question.

First off Matthew Congratulations on your promotion very well deserved.

Brian Joseph Gagnon: My question is kind of a big picture question. So we're talking about the potential for a Siemens kind of full continuum of care and or GE and or Philips at some point, where a patient can walk into a urology practice. And from finding out a modestly high Gleason score, they could go in, get diagnosed, get a biopsy, and get treated in a very short period of time, call it days, if not weeks, and walk out cancer free. That's exactly the plan, exactly the idea. And for a urologist to be in charge from the very beginning to the end, and for all of the imaging to be in one place. So they can see all of the changes going on in the patient and be able to follow the patient for a year, two years, five years.

Mike My question is kind of a big picture question. So we're talking about the potential with a Siemens kind of full continuum of care <unk> Philips at some point.

Where a patient can walk into urology practice.

And from finding out a modestly high Gleason score they could go and get diagnosed get a biopsy and get treated.

A very short period of time call. It days, if not weeks and walk out cancer free.

That's exactly the plan.

Exactly the idea and for urologists to control from the very beginning to the end and for all of the imaging to be in one place.

So they can see all of the changes going on in the patient and to be able to follow the patients for a year two years five years, that's exactly the vision.

Arun Swarup Menawat: That's exactly the vision. And that's exactly one of the reasons why Dr. Emberton was the one who provided the quote, because he's one of the pioneering urologists in the world, really, who is focused on this strategy. But can a urology practice keep an MR busy enough on its own to justify the expense?

And that's exactly one of the reasons why Dr.

Dr. <unk> was one who provide the quote because he is one of the pioneering.

Urologists in the World really who is focused on this strategy.

Kind of urology practice keep an MLR busy enough on their own.

Arun Swarup Menawat: Yes, so we have done some of the initial economic models. And we believe that is very, very likely. And again, part of it is because of the fact that they can have a revenue stream from every visit of the patient that they don't have today. And part of it is that they will, you know, on the patient. So. Unknown Speaker at the end of the morning.

<unk> to justify the expense.

Yes, so we have done the some of the initial economic models.

And we believe that.

Is.

Very very likely and again part of it is because the fact that they can have a revenue stream from every visit of the patient.

That they don't have today.

Arun Swarup Menawat: I'm very excited to be back here with you. And I'm very excited to be back here with you. And I'm. Right now, the patients come in, and some of them will go to radiation and so on. I think they will actually be able to increase that number of patients they can treat with TELSA. And by the way, there's another revenue stream that we have not really quantified, at least so far, is that if they have an MR, there's no reason why they couldn't use it for other procedures like bladder cancer or, you know, cervical cancers and so on. So the answer to your question, most definitely, they will be able to utilize their MR and economically justify it with relative ease.

And part of it is.

Yes.

The fact that they will.

On the patient right so.

Right now the patients come in and some of them will go to radiation and so on I think they will actually be able to increase the number of patients they can treat with Tulsa.

And by the way.

Another revenue stream that we have not really quantified.

At least so far is that if they have an M. R. Theres no reason why that Couldnt Yoga tour.

Other procedures like bladder cancer or.

Cervical cancers and so on so the answer to your question is most definitely they will be able to utilize that EMR and and economically justify it.

Brian Joseph Gagnon: Good. We'll continue to watch and stay interested. Thank you. Thank you so much, Brian. That concludes the question and answer session. At this time, I would like to turn the call back to Dr. Menawat for closing remarks. Thank you so much for listening to the Q&A session, and we're looking forward to updating you at the end of Q1. Thank you. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Subs by www.zeoranger.co.uk

The relative ease quite frankly.

Good we'll continue to watch and stay interested thank you.

Perfect. Thank you so much Brian.

That concludes the question and answer session. At this time I would like to turn the call back to Dr. <unk> for closing remarks.

Thank you so much for listening in the Q&A session and we're looking forward to updating you at the end of Q1. Thank you.

Thank you for your participation in today's conference. This does conclude the program you may now disconnect.

Okay.

[music].

Okay.

Yeah.

[music].

Okay.

[music].