Q4 2023 Stereotaxis Inc Earnings Call
Operator: Good afternoon. Thanks for joining us for Stereotaxis' fourth quarter and full year 2023 earnings conference call. Certain statements during the conference call and question and answer period to follow may relate to future events and expectations and, as such, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements involve known and unknown risks, uncertainties, and other factors which may cause the actual results, performance, or achievements of the company in the future to be materially different from the statements that the company's executives may make today. These risks are described in detail in our public filings with the Securities and Exchange Commission, including our latest periodic report on Form 10-K or 10-Q. However, we assume no duty to update these statements.
Good afternoon.
Thanks for joining us for stereotactic fourth quarter and full year 2023 earnings conference call.
Certain statements during the conference call and question and answer period to follow neighbours look to future events expectations and as such constitute forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995.
Such statements involve known and unknown risks uncertainties and other factors, which may cause the actual results performance or achievements of the company in the future to be materially different from the statements that the company's executives may make today. These risks are described in detail in.
Our public filings with the Securities and Exchange Commission.
Including our latest periodic report on Form 10-K or 10-Q.
We assume no duty to update these statements.
Operator: At this time, all participants have been placed in a listen-only mode. The floor will be open for your questions and comments following the presentation. As a reminder, today's call is being recorded. It is now my pleasure to turn the floor over to your host, David Fischel, Chairman and CEO of Stereotaxis. Thank you, operator. Good afternoon, everyone.
At this time all participants have been placed on a listen only mode. The floor will be opened for your questions and comments. Following the presentation. As a reminder, today's call is being recorded.
It is now my pleasure to turn the floor over to your host David Fisher, Chairman and CEO of stereo taxis.
Thank you operator, and good afternoon, everyone.
David Leo Fischel: It's been a very exciting, productive, busy, challenging, and promising period for Stereotaxis. We are glad to be entering this year having made significant progress towards realizing our strategic transformation. Given where we stand, we have high confidence in the key puzzle pieces of this strategy coming together in the coming months, putting Stereotaxis on a solid strategic foundation and providing line of sight to when commercial breakouts are possible. We are driving this progress against the backdrop of various challenges, which highlight the merit of our strategy. It is always helpful to view one's position in a broader context.
It's a very exciting productive busy challenging and promising period for stereotactic.
We are glad to be entering this year, having made significant progress towards realizing our strategic transformation.
Given where we stand we have high confidence in the key puzzle pieces of the strategy coming together in the coming months, putting stereotactic on solid strategic foundation and providing line of sight to one commercial breakouts are possible.
We are driving this progress against the backdrop of various challenges, which highlight the merits of our strategy.
It is always helpful to view once position in a broader context.
David Leo Fischel: This being our annual call, I want to use the occasion to step back and provide that perspective. I'll then share specific updates on our innovation and commercial efforts. Kim will then provide details on our financial results, and we will open the line to questions. Stereotaxis' overarching mission is to improve minimally invasive endovascular surgery with the precision, safety, and unique capabilities of robotics.
It's being our annual call I want to use the occasion to step back and provide that perspective.
Then share specific updates on our innovation and commercial efforts.
Jim will then provide details on our financial results and we will open the line to questions.
Okay.
Stereotactic. This overarching mission is to improve minimally invasive endovascular surgery with the precision safety and unique capabilities of robotics.
David Leo Fischel: We are the pioneer and global leader in endovascular robotics and have demonstrated the clinical relevance and value of our technology in robust, real-world use at over 100 hospitals that have treated 150,000 patients. However, despite having pioneered a highly differentiated and advanced technology that works reliably in the real world and provides meaningful clinical value, Stereotaxis has a long history of commercial struggle.
The pioneer and global leader in Endovascular Robotics, you have demonstrated the clinical relevance and value of our technology and robust real world use at over 100 hospitals that have treated 150000 patients.
Despite having pioneered a highly differentiated and advanced technology that works reliably in the real world and provides meaningful clinical value stereo, Texas has a long history of commercial struggles.
After joining stereotactic I recognize that these struggles could be traced the structural weaknesses with our product ecosystem.
David Leo Fischel: After joining Stereotaxis, I recognized that these struggles could be traced to structural weaknesses in our product ecosystem. These weaknesses put Stereotaxis in a challenging position, with commercial disadvantages and strategic dependencies, and made adoption of robotics very difficult, even for our strongest adversaries. We identified three key structural issues.
These weaknesses puts stereotactic in a challenging position with commercial disadvantages and strategic dependencies and made adoption of robotics very difficult even for our strongest advocates.
We identified three key structural issues.
First in our core existing market electrophysiology cardiac ablation procedures for the treatment of a Whitney as we built our business dependent on Johnson <unk> Johnson.
David Leo Fischel: First, in our core existing market, electrophysiology, cardiac ablation procedures for the treatment of arrhythmias, we built our business dependent on Johnson & Johnson. We were only integrated with their diagnostic mapping system, and they manufacture the ablation catheter used in every one of our procedures. That dependency limited the ability for patients and physicians to benefit from continuous innovation, created commercial challenges, and provided Johnson & Johnson rather than Stereotaxis with the majority of the economic value from every robotic procedure. Second, installing our robotic system in a cath lab is a significant construction process, requiring architectural planning, room shielding and reinforcement, special electrical work, and hiring contractors, which all add complexity, time, and effort. This process leads to very long sales cycles and a high bar for adoption. The vast majority of interested potential customers ultimately never succeed in getting a system.
We were only integrated with their diagnostic mapping system and then manufactured ablation catheter used in every one of our procedures.
That dependency limited the ability for patients and physicians to benefit from continuous innovation created commercial challenges and provide a johnson <unk> Johnson, rather than stereo taxes with the majority of the economic value from every robotic procedure.
Second installing a robotic system in a capsule is a significant construction process.
Acquiring architectural planning room, shielding and reinforcement special electrical work and hiring contractors, which I'll add complexity time effort and expense.
This process leads to very long sales cycles, and a high bar for adoption. The vast majority of interested potential customers ultimately never succeed in getting system.
David Leo Fischel: Third, while Stereotaxis' robotic technology is designed as a platform technology enabling the treatment of a broad spectrum of complex endovascular procedures, the company did not offer the interventional tools to allow for this expansion of indications. Being limited to one specific procedure, as large and attractive as the cardiac ablation market is, doesn't provide for healthy diversification and full appreciation of our opportunity.
Third while stereotactic robotic technology is designed as a platform technology, enabling treatment of a broad spectrum of complex endovascular procedures. The company did not offer the interventional tools to allow for this expansion of indications.
Being limited to one specific procedure as large and attractive as the cardiac ablation market is doesn't provide.
<unk> for healthy diversification and full appreciation of our opportunity.
Being clear eyed and intellectually honest was the first step and improvement.
David Leo Fischel: We worked hard over the subsequent years to formulate a comprehensive and elegant strategy to address these weaknesses. The strategy was creative and required significant innovation but was realistic for us to accomplish while controlling technological and financial risk. It was attractive in providing strategic independence and the opportunity for substantial commercial breakout.
We worked hard over the subsequent years to formulate a comprehensive and elegant strategy to address these weaknesses.
Strategy, what's creative and required significant innovation, but was realistic for us to accomplish while controlling technological and financial risk.
It was attractive and providing strategic independence and the opportunity for substantial commercial break out.
David Leo Fischel: Most importantly, it fundamentally improves and broadens our product offering for the patients, physicians, and hospitals that rely on us. Stereotaxis has advanced this comprehensive innovation strategy over several years through the development process. 2024 is the year in which we expect all the key puzzle pieces to come together, setting us up with multiple shots on goal for breakout growth in 2025. A few updates on the key innovation efforts followed. In our existing cardiac ablation market, our key effort has been to address our strategic dependency, develop a proprietary ablation catheter, and create an open ecosystem around our robot. We were delighted today to announce initial clinical results and regulatory submissions for the MAGIC catheter, a proprietary, advanced, robotically navigated ablation catheter. Following our earnings call last November, we received approvals to initiate a human clinical trial of magic in both Lithuania and Denmark. Vilnius University in Lithuania enrolled its first patients at the start of this year and completed enrollment of the 20th patient in January.
Most importantly, it fundamentally improves and broadens our product offering for the patients physicians and hospitals that rely on us.
Stereo taxes has advanced this comprehensive innovation strategy over several years through the development process.
<unk> thousand 24 is the year in which we expect all of the key puzzle pieces to come together.
US up with multiple shots on goal for breakout growth in 2025.
A few updates on the key innovation efforts Buffalo.
In our existing cardiac ablation market. Our key effort has been to address our strategic dependency develop a proprietary ablation catheter and create an open ecosystem around our robot.
We were delighted today to announce initial clinical results and regulatory submissions for the magic catheter, our proprietary advanced Robotically navigated ablation catheter.
Following our earnings call last November we received approvals to initiate a human clinical trial of magic in both Lithuania in Denmark.
Juliet University in Lithuania enrolled its first patient at the start of this year and completing enrollment of the 20th patient in January.
David Leo Fischel: The results from these initial procedures were stellar and were summarized by the physicians in a manuscript recently submitted for publication in a prominent electrophysiology journal. Across these 20 patients, ranging in age from young adults to the elderly and suffering a range of arrhythmias, there was 100% acute success in treating the arrhythmias and no adverse events or device or procedure-related safety events. Additional patients beyond these 20 have been treated in both Lithuania and Denmark with consistently positive results. Beyond the stellar clinical outcomes, qualitative commentary from all the physicians who participated in the trial was very positive, reinforcing our confidence in the impact MAGIC will have on patients and physicians. We resubmitted the MAGIC catheter to the European Notified Body and believe the data fully addresses the request made last summer when we were told clinical data would be necessary to be granted the CE mark under the more rigorous MDR requirements. We also submitted the MAGIC catheter for U.S. regulatory approval as a PMA supplement to the FDA. The clinical data adds to a substantial body of bench, pre-clinical, and published clinical literature supporting the value of robotic cardiac ablation generally and the safety and effectiveness of MAGIC specifically.
The results from these initial procedures were stellar.
And were summarized by the physicians and a manuscript recently submitted for publication in a prominent electrophysiology journey.
Across these 20 patients rending ranging in age from young adults to the elderly and suffering a range of arrhythmias. There was 100% acute success in treating the arrhythmia and no adverse events or device or procedure related safety events.
Additional patients beyond these 20 had been treated in both Lithuanian Denmark with consistent positive results.
Beyond the stellar clinical outcomes qualitative commentary from all the physicians who participated in the trial was very positive reinforcing our confidence in the impact magic will have on patients and physicians.
We resubmitted the magic catheter to the European notified body and believe the data fully addresses the request made last summer. When we were told clinical data would be necessary to be granted CE mark under the more rigorous MDI requirements.
We also submitted the magic catheter for U S regulatory approval as a PMA supplement to the FDA.
The clinical data adds to a substantial body of bench preqin political and published clinical literature supporting the value of robotic cardiac ablation generally and the safety and effectiveness of magic specifically.
David Leo Fischel: While there is always uncertainty with any regulatory submission, we believe we have made strong submissions and have received feedback to that effect from experts in our field. We look forward to working collaboratively with the regulatory bodies in the coming months to ensure the MAGIC catheter becomes available for the patients and physicians who depend on it. The launch of MAGIC will benefit from our strong collaboration with Abbott and last year's successful launch of mapping integration with Abbott's InsightX mapping.
While there is always uncertainty with any regulatory submission.
We made strong submission and have received feedback to that effect from experts in our field.
We look forward to working collaboratively with the regulatory bodies in the coming months to ensure the magic catheter becomes available for the patients and physicians who depend on it.
Okay.
The launch of Magic will benefit from our strong collaboration with Abbott and last year's successful launch of mapping integration with Abbott and <unk> mapping system.
David Leo Fischel: We are seeing continued expansion in the adoption of our integrated technologies in both the U.S. and Europe. This is a significant strategic collaboration in its early phases, and we are delighted with how it's progressed. The second major initiative in our innovation strategy was to address the challenges and complexities of adopting robotics. We developed a smaller self-shielding robot that significantly enhances its accessibility by removing the requirement for cath lab construction.
We are seeing continued expansion in the adoption of our integrated technology in both the U S and Europe.
This is a significant strategic collaboration in its early phases, and we are delighted with how it's progressing.
Okay.
The second major initiative in our innovation strategy was to address the challenges and complexities of adopting robotics.
We developed a smaller self shielding robot that significantly enhances its accessibility by removing the requirement for Cath lab construction.
David Leo Fischel: We discussed on the last call our balanced approach to the timing of a regulatory submission such that approval of the robot aligns approximately with market availability of magic. The robot has gone through design freeze and now begun formal testing. We are confident in regulatory submissions in both the United States and Europe in the second quarter and expect regulatory clearance in Europe mid-year. Our experience selling Genesis gives us daily visibility into the timeline shifts and hospital construction delays that slow adoption, even at sites that are most motivated to build a robotic program. This experience reinforces our confidence that the availability of a smaller and more accessible robot, something that can be installed without construction, will serve as a significant structural improvement to the pace and scale of adoption.
We discussed on the last call our balanced approach to the timing of our regulatory submission such that approval of the robot aligns approximately with market availability of magic.
The robot has gone through design freeze and now begun formal testing.
We are confident in regulatory submissions in both the United States and Europe in the second quarter and expect regulatory clearance in Europe mid year.
Our experienced selling Genesis gives us daily visibility into the timeline shifts and hospital construction delays that slow adoption even at sites that are most motivated to build a robotic program.
This experience reinforces our confidence that the availability of a smaller and more accessible robot something that can be installed without construction will serve as a significant structural improvement to the pace and scale of adoption.
David Leo Fischel: Following approval, we plan to use the current year to demonstrate the reality of the robot in real-world use, enhance the robot's compatibility with various x-rays, and prepare our supply chain, manufacturing, installation, and commercial processes for a full launch in 2025. Our third strategic innovation effort is the development of a family of interventional guide wires and guide catheters that expand the benefits of our robots into new endovascular indications, with five specific multibillion-dollar opportunities being targeted. Neurointerventions, Coronary Angioplasty, Peripheral Interventions, Tumor Embolization, and AAA graft.
Following approval, we plan to use the current year to demonstrate the reality of the robot in real world use.
Enhance compatibility of the robot with various X rays, and prepare our supply chain manufacturing installation and commercial processes for a full launch in 2025.
Our third strategic innovation effort is development of a family of Interventional guide wires and guide catheters that expand the benefits of our robot into new Endovascular indications with five specific multibillion dollar opportunities being targeting neuro intervention coordinate.
NGL plasty peripheral interventions tumor embolization and AAA grafts.
David Leo Fischel: The first guidewire is fully designed, and in conjunction with our contract manufacturer, we've been grinding through the challenges of establishing high-quality and robust manufacturing processes. We expect to complete the manufacturing and testing of the significant number of guidewires necessary for a regulatory submission in the middle of this year and still expect commercial availability of the guidewire later in the year. Once we have made regulatory submissions, we will host an innovation day to allow several key physicians from multiple specialties to share their perspective and experience with where our robotic technology can add critical value in the broader field of endovascular surgery. These three innovations, the magic catheter, newer mobile robots, and endovascular devices, are our strategic response to the three structural limitations described earlier.
The first Guidewire is fully designed and in conjunction with our contract manufacturer we've been grinding through the challenges of establishing high quality and robust manufacturing processes.
We expect to complete the manufacturing and testing of the significant number of Guidewire is necessary for a regulatory submission in the middle of this year and still expect commercial availability of the guidewire late in the year.
Once we have made regulatory submissions, we will host an innovation day to allow several key positions from multiple specialties to share their perspective and experience with where our robotic technology can add critical value in the broader field of Endovascular surgery.
Okay.
These three innovation that magic catheter newer mobile robot and Endovascular devices are our strategic response to the three structural limitations described earlier.
David Leo Fischel: We have line of sight to them attaining key regulatory approvals and commencing commercialization in 2024 with growing commercial impact in 2025. Beyond these big three innovations, we were fortunate to nurture two additional opportunistic growth drivers that are synergistic and additive to our core efforts. In China, we entered into a strategic collaboration with Microport to establish a China-specific EP product ecosystem. Mike's report recently submitted to China's NMPA regulatory body the robotically navigated ablation catheter we developed together.
We have line of sight to them retaining key regulatory approvals and commencing commercialization in 2024 with growing commercial impact in 2025.
Beyond these big three innovations we were fortunate to nurture to additional opportunistic growth drivers that are synergistic and additive to our core effort.
In China, we entered into a strategic collaboration with Microsoft to establish that add to establish a China specific product ecosystem.
Mike report recently submitted to China's NPA regulatory body. The Robotically navigated ablation catheter, we developed together, we've completed mapping integration with their Columbus mapping system and Genesis as expected received Chinese regulatory approval midyear.
David Leo Fischel: We have completed mapping integration with their Columbus mapping system, and Genesis is expected to receive Chinese regulatory approval mid-year. As this core product ecosystem is available, we expect to benefit from Microport's substantial commercial footprint, already servicing hundreds of hospitals. Our second synergistic and opportunistic venture is a digital surgery platform that enables broad operating room connectivity, both alongside our robotic platform and independently in non-robotic labs. The Sync cloud-based connectivity app has been released internally for our team in preparation for an external release.
As the core product ecosystem is available we expect to benefit from my report substantial commercial footprint already servicing hundreds of hospitals.
Our second synergetic and opportunistic venture if a digital surgery platform that enables broad operating room connectivity, both alongside a robotic platform and independently and non robotic lines.
The sink cloud based connectivity App has been released internally for our team in preparation for an external release.
We are still finalizing remaining hardware firmware and software efforts with the synchrony integrated display capability, but expect to begin formal regulatory testing in the second quarter, followed by submissions in summer.
David Leo Fischel: We are still finalizing remaining hardware, firmware, and software efforts with the Synchrony integrated display capability but expect to begin formal regulatory testing in the second quarter, followed by submissions in the summer. We will continue a soft launch of Sync till then, but plan for a full launch of Sync and Sync Pro as a combined solution, enabling streamlined workflow, connectivity, and collaboration broadly for any audience. The Synchrony hardware will provide an incremental upfront capital sales opportunity, while Sync will be available with a freemium SaaS business model with premium subscriptions for hospitals, medical devices, sales forces, and physician users. I recognize our progress has taken longer than expected and faced unforeseen challenges. With key regulatory submissions and technology developments done, we see the puzzle pieces falling into place this year. While there is risk and uncertainty with any regulatory process, our strategy is de-risked with multiple shots on goal. In each of our three key geographies, the United States, Europe, and China, we have the opportunity for a full ecosystem coming together and driving breakout growth. The opportunity in any individual geography can dwarf our current entire world.
We will continue a soft launch of zinc till then but plan for a full launch of synchrony in sync as a combined solution, enabling streamlined workflow connectivity and collaboration broadly and any operating room.
The synchrony hardware will provide an incremental upfront capital sales opportunity, while sync will be available with a freemium SaaS business model with premium subscriptions for hospitals medical device sales forces and physician users.
I recognize our progress has taken longer than expected and faced unforeseen challenges with key regulatory submissions and technology developments done we see the puzzle pieces falling into place this year.
While there is risk and uncertainty with any regulatory process. Our strategy is derisked with multiple shots on goal.
In each of our three key geographies, the United States, Europe, and China, we have the opportunity for a full ecosystem coming together and driving breakout growth.
<unk> in any individual geography can dwarf our current entire business.
We are driving this innovation transformation, while working hard to ensure our commercial momentum and financial strength are preserved.
David Leo Fischel: We are driving this innovation transformation while working hard to ensure our commercial momentum and financial strength are preserved. We continue to see signs of commercial progress with positive feedback and utilization of Genesys as well as capital interest in Genesys from both existing users and completely new customers. In the fourth quarter, we were excited to receive a genesis order from a Grunfeld hospital in Germany. Germany as a country was one of the most enthusiastic, earliest adopters of the first NAOBI system and then also, unfortunately, the region with the strongest backlash for robotics given that the first NAOBI systems were launched prematurely.
We continue to see signs of commercial progress with positive feedback and utilization of Genesis as well as capital interest in <unk> from both existing users and completely new customers.
In the fourth quarter, we were excited to receive a Genesis order from a Greenfield hospital in Germany.
Germany is a country was one of the most enthusiastic earliest adopters of the first <unk> system and then also unfortunately the region with the strongest backlash for robotics, given that first niobe systems were launched prematurely.
David Leo Fischel: To see our installed base grow with new physician users in Germany is particularly encouraging given that historical context. The order represented our 12th greenfield robotic order globally since the launch of Genesis and our 24th order overall. We begin 2024 with $14.7 million in backlog from orders that have been received but not yet shipped or installed. While we continue to see a healthy pipeline of greenfield and replacement cycle customers for Genesis, overall progress is slow. Beyond the well-understood challenges of closing a substantial capital sale for a system that requires hospital construction, several electrophysiologists have expressed their concern with the recurring catheter shortages of Johnson & Johnson and the awareness of the dependency on J&J's catheters in the absence of our own MAGIC catheter as a replacement. While this has not deterred some hospitals from moving forward, it serves as an additional risk item that extends due diligence and delays purchase decisions.
The CRM installed base grow with new physician users in Germany is particularly encouraging given that historical context.
The order represented our 12 Greenfield robotic order globally since the launch of Genesis and our 24th quarter overall.
We begin 2024 with $14 $7 million in backlog from orders that were received but not yet shipped and installed.
While we continue to see a healthy pipeline of Greenfield and replacement cycle customers for Genesis.
<unk> progress is slow.
Beyond the well understood challenges of closing a substantial capital sales for our system.
<unk> hospital construction several electrophysiologist have expressed their concern with the recurring catheter shortages of Johnson <unk> Johnson and the awareness of the dependency unchanged <unk> catheters and absence of our own magic catheter as a replacement.
This has not deterred some hospitals for moving forward. It serves as an additional risk item that extends due diligence and delayed purchase decisions.
David Leo Fischel: We believe our regulatory submissions for MAGIC will partially help, and that obviously, receipt of approvals will address this concern. Despite this pressure, we expect a continued pace of robotic system orders and sales with expected growth for both in 2024 compared to 2020. Our recurring revenue was also impacted by the catheter shortage from J&J, which impacted procedure volumes, as well as the loss of royalty payments from J&J, which created a $2 million headwind to both our top and bottom line revenues. We continue to see inconsistent availability of the JMJ catheter flare up in various geographies and accounts, but expect overall recurring revenue in 2024 to be consistent with 2023. Our burn rate in 2020-2023 was lower than in 2022, despite these revenue challenges, so the absolute burn rate was still higher than what we expected.
We believe our regulatory submissions of magic will partially help and then obviously receipt of approvals, we'll address that concern.
Despite this pressure we expect the continued pace of robotics system orders and sales with expected growth for both in 2024 compared to 2023.
Our recurring revenue was also impacted by the catheter shortage from J&J, which impacted procedure volumes as well as the loss of royalty payments from J&J, which created a $2 million headwind to both our top and bottom line results.
We continue to see inconsistent availability of the J&J catheter flare up in various geographies and accounts, but expect overall recurring revenue in 2024 to be consistent with 2023.
Our burn rate in 2000, 2000, 22023 was lower in 2022. Despite these revenue challenges. So the absolute burn rate was still higher than what we expected.
David Leo Fischel: Our balance sheet remains strong with approximately $20 million in cash and no debt. We are cognizant of the importance of financial prudence and are confident our existing balance sheet allows us to advance our transformative product ecosystem to market and fund its commercialization. We have already invested in significant inventory and have directed commercial teams globally that are well suited to launch the new products as they become available. We expect a lower burn rate in 2024 compared to 2023, driven by increased Genesis robotic revenue and reduced cash outflows, as some of the most significant R&D spending is behind us, and we taper inventory purchases. Kim will now provide additional commentary on our financial results, and then I will make a few financial comments as well before opening the call to Q&A.
Our balance sheet remains strong with approximately $20 million cash and no debt.
We are cognizant of the importance of financial Prudence and are confident our existing balance sheet allows us to advance our transformative product ecosystem market and fund its commercialization.
We have already invested in significant inventory and a direct commercial television globally and are well suited to launch the new products as they become available.
We expect a lower burn rate in 2024 compared to 2023, driven by increased Genesis robotic revenue and reduced cash outflows as some of the most significant R&D spending is behind us and we taper inventory purchasing.
Tim will now provide additional commentary on our financial results and then I will make a few financial comments as well before opening the call to Q&A Kim.
Kimberly R. Peery: Thank you, David, and good afternoon, everyone. Revenue for the fourth quarter of 2023 totaled $4.6 million compared to $7.3 million in the prior year fourth quarter. System revenue was $0.1 million, and Recurring revenue was $4.5 million compared to $2.2 million and $5.1 million in the prior year fourth quarter. System revenue was abnormally weak due to delays in hospital construction schedules and no shipments being made as a result.
Thank you David and good afternoon, everyone revenue for the fourth quarter of 2023 totaled $4 6 million compared to $7 3 million in the prior year fourth quarter.
System revenue was $1 million in recurring revenue was $4 5 million compared to Q2 million and $5 1 million in the prior year fourth quarter.
System revenue was abnormally weak due to delays in hospital construction schedule and no shipments being made as a result.
<unk> revenue was in line with recent quarters, but below the prior year level due to stereo taxes, no longer see any royalty payments from Janssen inherently.
Kimberly R. Peery: Recurring revenue was in line with recent quarters but below the prior year levels due to Stereotaxis no longer receiving royalty payments from Johnson & Johnson. Revenue for the full year 2023 totaled $26.8 million compared to $28.1 million in 2022. Full Year System Revenue was $8.7 million compared to $6.8 million in the prior year, reflecting increased system delivery and installation. We started 2024 with a system backlog of $14.7 million. Full-year recurring revenue was $18 million, compared to $21.3 million, reflecting the continued absence of J&J royalties and periodic capital shortages by Johnson & Johnson. Gross margin for the fourth quarter and full year 2023 was approximately 60% and 56% of revenue. For the full year 2023, we reported gross margins of 79% on recurring revenue and 8% for system revenue.
Revenue for the full year 2023 totaled 28.
$8 million compared to 21, 28 1 million in 2024.
<unk> system revenue with $8 7 million to cure to $6 8 million in the prior year, reflecting increased system delivery and installation.
We started 2024 with system backlog of $14 7 million.
Full year recurring revenue was 18 million compared to $21 3 million, reflecting the continued absence of the J&J royalty and purion. Thank catheter shortages by Johnson <unk> Johnson.
Gross margin for the fourth quarter, and full year, 2023, where approximately 60% and 56% of revenue for.
First of all year 2023, we reported gross margin of 79% on recurring revenue and 8% per system revenue.
System gross margins continue to reflect relatively low production volumes combined with significant allocations to fixed overhead and related expenses.
Operating expenses in the fourth quarter were $8 million, excluding <unk> 6 million and noncash stock compensation expense adjusted operating expenses in the current quarter were $5 4 million compared to prior year adjusted operating expenses of six <unk>.
Kimberly R. Peery: System growth margins continue to reflect relatively low production volumes combined with significant allocations of fixed overhead and related expenses. Operating expenses in the fourth quarter were $8 million. Excluding $2.6 million in non-cash stock compensation expenses, adjusted operating expenses in the current quarter were $5.4 million compared to prior year adjusted operating expenses of $6.2 million. Adjusted operating expenses for the full year 2023 were $26.2 million, compared to $26.8 million in the prior year. Operating loss and net loss for the fourth quarter of 2023 were $5.3 million and $5 million, respectively, compared to $4.3 million. 4.5 million and 4.2 million in the previous year. Adjusted operating loss and adjusted net loss for the quarter, excluding non-cash stock compensation, were $2.7 million and $2.4 million, compared to $1.9 million and $1.6 million in the previous year.
Adjusted operating expenses for the full year, 2023, or $26 2 million compared with $26 8 million in the prior year.
Operating loss and net loss for the fourth quarter of 2023 were five 3 million and $5 million.
Sure.
$4 5 million $84 2 million in.
In the previous year.
Adjusted operating loss and adjusted net loss for the quarter, excluding noncash stock compensation expenses were $2 7 million and $2 4 million compared to $1 9 million and $1 6 million in the previous year.
For the full year 2023, adjusted operating loss of $11 3 million.
And adjusted net loss of $10 2 million compared to an adjusted operating loss of $8 3 million and an adjusted net loss of $7 8 million in the prior year.
Negative free cash flow for the full year 2023 was $9 1 million compared to 10 8 million for the full year 2022.
At December 31st we had cash and cash equivalents of $26 million and no debt.
I will now hand, the call back to David.
Thank you Kim.
We are cognizant that accurately guiding revenue has been challenging and there has been significant volatility in quarterly revenue results as any individual robot sale has a significant impact on the quarter.
Humbled by that experience, we're providing specific revenue guidance only for the current first quarter of 2024, and which we expect revenue of approximately $7 million.
David Leo Fischel: For the full year 2023, an adjusted operating loss of $11.3 million and an Adjusted Net Loss of $10.2 million compared to an Adjusted Operating Loss of $8.3 million and an Adjusted Net Loss of $7.8 million in the prior year. Negative free cash flow for the full year 2023 was $9.1 million, compared to $10.8 million for the full year 2022. At December 31st, we had cash and cash equivalents of $20.6 million and no debt. I will now hand the call back to Dave. Thank you, Kim. We are cognizant that accurately guiding revenue has been challenging, and there has been significant volatility in quarterly revenue results as any individual robot sale has a significant impact on the course. Humbled by that experience, we are providing specific revenue guidance only for this current first quarter of 2024, in which we expect revenue of approximately $7 million.
Looking at the full year 2024, we generally expect recurring revenue to remain stable until magic can contribute to disposable revenue growth.
We expect continued growth in system revenue through conversion of our $14 7 million backlog and new system orders with system revenue growth driving overall double digit revenue growth for the year.
We expect our bolus of innovation to play a decisive role in driving breakout revenue growth in 2025 and beyond.
We will now take your questions. Operator can you. Please open the lines for Q&A.
The floor is now open for your questions to ask a question. This time simply press the star followed by the number one on your telephone keypad.
Ask that you please limit yourself to one question and one follow up question, we will now take a moment to compile a roster.
Our first question comes from the line of Frank <unk> with Lake Street Capital markets. Please go ahead.
Great. Thanks for taking the questions maybe to start with the magic catheter submissions in the EU submission, how should we handicap that being our resubmitted file I assume that theres, a little bit more certainty that they'll come back with a clearance on that now that they've had a chance to already review at once and they made their request, but maybe is there.
David Leo Fischel: Looking at the full year 2024, we generally expect recurring revenue to remain stable until MAGIC can contribute to disposable revenue growth. We expect continued growth in system revenue through the conversion of our 14.7 million backlog and new system orders, with system revenue growth driving overall double-digit revenue growth for the year. We expect our bolus of innovation to play a decisive role in driving breakout revenue growth in 2025 and beyond. We will now take your questions. Operator, can you please open the line for Q&A? The floor is now open for your questions. To ask a question at this time, simply press the star followed by the number one on your telephone keypad.
Any way to kind of risk adjust that given its already been looked at once and then two on the FDA side. One was that submitted is that a standard 180 day review or how should we think about the process between now and the clearance expectation you put out there.
Hi, Frank.
Got it thanks for the questions. So generally I want to state that we're in.
We're not going to give a lot of commentary on regulatory submissions or the review during the review period other than that we think we made a strong submission.
Operator: We ask that you please limit yourself to one question and one follow-up question. We'll now take a moment to compile our roster. Our first question comes from the line of Frank Takkinen with Lake Street Capital Markets. Please go ahead.
And obviously, we're going to work collaboratively with the reviewers over the coming months and look forward to working collaboratively with them and your commentary on the EU submission Youre correct.
<unk>.
Is.
Resubmission of the vast vast majority of the information with Justin.
David Leo Fischel: Great. Thanks for taking the questions. Maybe to start with the MAGIC catheter submissions, on the EU submission, how should we handicap that being a resubmitted file? I assume that there's a little bit more certainty that they'll come back with a clearance on that now that they've had a chance to already review it once and they made their request, but maybe there's any way to kind of risk adjust that given it's already been looked at once and then twice When was that submitted, and is that a standard 180-day review, or how should we think about the process between now and the clearance expectation you put out there? Hi Frank.
One of the clinical data.
We are fortunate that the reviewers and are the same with viewers.
Looked at the submission a year ago, and so that should add support the review process in a more efficient.
And there is no statutory time limits of the review. So we are obviously beholden to add to the notified body and when Theyre able to review things, but given given the history, there and given the multiple discussions that took place last year.
We are hopeful and believe it's reasonable to assume that this will be a much more efficient process.
David Leo Fischel: Thanks for the questions. So, generally, I want to state that we're not going to give a lot of commentary on regulatory submissions or the review during the review period. Other than that, we think we made a strong submission, and obviously, we're going to work collaboratively with the reviewers over the coming months and look forward to working collaboratively with them. Your commentary on the EU submission. You're correct. It is a resubmission of the vast, vast majority of the information with just the addition of the clinical data, and we are fortunate that the reviewers are the same reviewers that looked at the submission a year ago, and so that should support the review process in a more efficient fashion. There's no statutory time limit for the review, so we are obviously beholden to the notified body and when they're able to review things, but given the history there and given the multiple discussions that took place last year, we are hopeful and believe it's reasonable to assume that this will be a much more efficient process.
And with the U S. FDA is 180 day PMA supplement and we.
<unk> back to work collaboratively with FDA during the review process.
It wouldn't be surprising if.
If during that review process.
We do kind of have additional questions and discussions with FDA. So we're not I wouldn't.
I think that necessarily the 180 days is.
Has to be the way it is going to play out but overall it is a 180 day PMA supplement process.
Okay. That's perfect and then maybe thinking about once those clearances occur how should we think about how quickly the uptake could occur within the installed base, maybe starting with how many procedures youre doing today would be helpful context, and then how quickly you can roll that the math.
<unk> catheter into your establish site to swap out the old catheter for the new one.
Sure. So we've talked before about at doing under 10000 procedures, a year with approximately 40% 45% of that volume in Europe.
David Leo Fischel: With the U.S. FDA, this is a 180-day PMA supplement, and we expect to work collaboratively with FDA during the review process. It wouldn't be surprising if, during that review process, we do kind of have additional questions and discussions with FDA, so we're not – I wouldn't necessarily think that necessarily is – has to be the way it's going to play out, but overall, it is a 180-day PMA supplement.
40%, 45% of that volume in that in.
In the U S and about 10% 20% of that volume in Asia.
So that's kind of the overall installed base. So we have several thousand procedures a year.
Each in both Europe and the U S.
David Leo Fischel: Okay, that's perfect. And then maybe thinking about once those clearances occur, how should we think about how quickly the uptake could occur within the installed days? Maybe starting with how many procedures you're doing today would be helpful context, and then how quickly you can roll the magic catheter into your established sites and swap out the old catheter for the new one. So we've talked before about doing under 10,000 procedures a year with approximately 40-45% of that volume in Europe, 40-45% of that volume in the U.S., and about 10-20% of that volume in Asia. So that's kind of the overall installed base, so we have several thousand procedures a year each in both Europe and the U.S. We've talked about previously the structural barriers in Europe where in certain geographies, certain countries, certain regions, you do pursue local tenders after you have the CE mark, while in others, really, the only structural barrier is a contract with the hospital and setting a price with the hospital.
We.
We've talked about previously the structural barriers in Europe, where in certain geographies.
Certain countries certain regions you do pursue than local tenders. After you have CE mark while in others really the only structural barrier is a contract with the hospital setting a price with the hospital and generally I would expect given also the fact that we are gaining.
And real world clinical experience with the catheter currency through the clinical trial I would expect a relatively.
Okay.
Quicker ramp in catheter adoption as it becomes available as the things that we have to do in tandem with gaining regulatory approval is in scaling up manufacturing and building of sufficient stock for for a commercial launch and then also the work that we're doing with Abbott to act.
To convert existing users, which historically were predominantly using Johnson <unk> Johnson's mapping system to using the current integrated offerings with that with Abbott that will also be beneficial in accelerating adoption and so those are the things we think about it as we think about adoption, but overall expect to see a relatively.
David Leo Fischel: And generally, I would expect, given also the fact that we are gaining real-world clinical experience with the catheter currently through the clinical trial, I would expect a relatively. There are a lot of things that we have to do in tandem with gaining regulatory approval, such as scaling up manufacturing and building sufficient stock for a commercial launch and then also the work that we're doing with Abbott to convert existing users, which historically were predominantly using Johnson & Johnson's mapping And so those are the things we think about as we think about adoption, but I overall expect to see a relatively rapid transition over, let's say, a handful of quarters. Okay, that's helpful. I'll stop there.
Rapid transition.
Oh for sure.
Let's say a handful of quarters.
Okay. That's helpful. I'll stop there thanks for taking my questions. Thank.
Thank you.
Our next question comes from the line of Jason witness with Roth <unk>. Please go ahead.
Hi, Thanks for taking the questions and congrats on the submission here.
In terms of.
You just kind of highlight a little bit but in terms of.
This year's outlook should we expect anything from magic this year or so is really a 2025 of that.
Okay.
We didn't discuss and things.
So joining us Jason and glad to have you on the calls again and we we didn't incorporate any revenue from magic in the in the commentary we provided in terms of how we generally think about this year's revenue and that said it would be surprising if we do not generate some revenue.
David Leo Fischel: Thanks for taking the question. Thank you. Our next question comes from the line of Jason Wittes with Roth MKM. Please go ahead.
<unk> from that for magic in the back half of this year and it will really be dependent on the timing of that regulatory approval in terms of how much how much to expect and so I think until we don't until we don't have that approval in hand.
David Leo Fischel: Hi, thanks for sharing the questions and congrats on the submission here. In terms of, you just kind of highlighted this a little bit, but in terms of this year's outlook, should we expect anything from MAGIC this year, or is this really a 2025 event? We didn't discuss, and thanks for joining us, Jason, and glad to have you on the calls again. We didn't incorporate any revenue from MAGIC in the commentary we provided in terms of how we generally think about this year's revenue.
It's hard for us to estimate how much to contribute but at but I would definitely expect that we get that.
At least one approval prior to the end of this year, what's the chance for magic to start to contribute to recurring revenue.
Okay. That's helpful. Thanks, and also I appreciate the backlog information of $4 seven.
$7 million roughly what is your expectation in terms of how long those take to get placed.
David Leo Fischel: That said, it would be surprising if we do not generate some revenue from MAGIC in the back half of this year. It will really be dependent on the timing of regulatory approval in terms of how much we expect. So I think until we don't have that approval in hand, it's hard for us to estimate how much to contribute. But I would definitely expect that we get at least one approval prior to the end of this year with the chance for MAGIC to start to contribute to recurring revenue. Okay, that's helpful. Thanks. And also, I appreciate the backlog information of 4.7 million. I mean, roughly, what is the expectation in terms of how long those take to get placed? in a hospital
In our hospital.
Sure so and so just that it is $14 7 million okay.
If I said that wrong I apologize.
And then and so overall, we would estimate our looking at Tim right now she wants to correctly.
Typically you would estimate that approximately 80% of that will be recognized as revenue I'm getting a thumbs up so that seems correct. We're about 80% of that should be recognized within a given year. We have seen scenarios, where hospitals that were planning to take delivery at a specific date pushed.
Back that date during due to their own challenges and so there is that theres not guarantees of that playing out as we've seen even up till the fourth quarter obviously.
And the results of our fourth quarter, but generally that 80% within one year for backlog.
David Leo Fischel: Sure, so just, it is $14.7 million. Okay, yep, if I said that wrong, I apologize, yep. No, it's fine.
David Leo Fischel: And so overall, we would estimate, and I'm looking at Kim right now, she wants to correct me, that typically, you would estimate that approximately 80% of that will be recognized as revenue. I'm getting a thumbs up, so that seems correct. About 80% of that should be recognized within a given year. We have seen scenarios where hospitals that were planning to take delivery at a specific date push back that date due to their own challenges. And so there's not any guarantees of that playing out, as we've seen even up till the fourth quarter, obviously, in the results of our fourth quarter.
As a general rule that holds.
Okay. That's helpful. And then last question just in terms of supply issues with the current catheter.
Are there any updates from your supplier or is there any.
Change in outlook or how should we be thinking about this for 2024.
Yeah. So so just to be clear the catheter shortages are not from a supplier of ours, nor from a country that we have any control over this is all related to the dependency, which I described before where Johnson <unk> Johnson independently manufactures.
David Leo Fischel: But generally, that 80% within one year for backlog is a general rule that holds. Okay, that's helpful. Then last question, just in terms of supply issues with the current catheter, are there any updates from your supplier, or is there any, you know, change in outlook, or how should we be thinking about this for 2024? So, just to be clear, the catheter shortages are not from a supplier of ours, nor from a company that we have any control over. This is all related to the dependency, which I described before, where Johnson & Johnson independently manufactures, sells, and supplies the magnetic ablation catheters that are used alongside our robot. And so, we do not have control over them, or even influence over them, in the same way that we would have influence over a supplier that we have hired and worked with. We have seen these crop up over a year ago now, about a year and a half ago.
<unk> and supplies the magnetic ablation catheters that are used alongside a robot and so we do not have control over them and origin influence over than in the same way that we would have influence with with the supplier that we hired in one place.
We have seen this crop is cropped up over a year ago now about a year and a half ago, we have seen.
Continued shortages.
Polaris up in various specific geographies various accounts and there is a randomness to it though it does definitely pressure.
Physicians and hospitals that rely on our technology and create disturbances to their normal practices and so I think given where we stand right now.
It seems like.
The intensity and distribution of those flare ups hasnt seen worse than it was a year ago and so it seems like overall.
David Leo Fischel: We have seen continued shortages that flare up in various specific geographies and on various accounts. There is a randomness to it, though it does definitely pressure the physicians and hospitals that rely on our technology and create disturbances to their normal practices. I think given where we stand right now, it seems like the intensity and distribution of those flare-ups doesn't seem worse than it was a year ago, and so it seems like overall, the numbers this year should look similar to last year, but there is an aspect of dependency, and that again speaks to how valuable and important having magic on the market is. Great, thanks. I'll jump back in the queue.
The numbers this year should look similar to last year, but there is an aspect of dependency there and that again speaks to how and how valuable and important having magic on the market will be.
Great. Thanks, I'll jump back in queue.
Thank you very much Jason.
Our next question comes from the line of outlet Nowak with Craig Hallum. Please go ahead.
Okay, great. Good afternoon, everyone continuing the manufacturing question there just with regards to the magic. If you do get the approvals, let's just say second half of this year for both Europe and U S. How quickly can you ramp up manufacturing.
Hi, Alex Thanks, and good afternoon, and so overall that is something that we've been working with our contract manufacturing partner in Germany.
David Leo Fischel: Thank you very much. Our next question comes from the line of Alex Nowak with Craig Hallam. Please go ahead. Okay, great. Good afternoon, everyone. Continuing on the manufacturing question, just with regard to the magic, if you do get the approval, let's just say the second half of this year for both Europe and the US, how quickly can you ramp up manufacturing? Hi Alex.
To improve.
They have significant experience manufacturing.
<unk>.
Units of various intervention devices and so they have the organizational capabilities to do that with every product has its own scaling effort during the.
Formal regulatory testing of magic, we did produce.
David Leo Fischel: Thanks. And good afternoon. And so overall, that is something that we've been working with OSIPKA, our contract manufacturing partner in Germany, to improve. They have significant experience manufacturing thousands of units of various interventional devices. And so they have the organizational capabilities to do that. With every product, there is its own scaling effort. During the formal regulatory testing of MAGIC, we did produce, I believe it was near a thousand units of the catheter.
I believe it was near 1000 a year.
The mix of the catheter so they demonstrate their capability to scale manufacturing at to those to that type of level. We are working with them have been working with them. We'll continue working with them. So that they can scale to.
To the point, where we're able to service the entire European and U S installed base.
Yes, I think thats, probably reaching that level.
Still over the course of this year is probably aggressive, but but that's what we're shooting for and there are all sorts of incentives in place to increase to increase that manufacturing.
David Leo Fischel: So they demonstrated their capability to scale manufacturing to that type of level. We are working with them, have been working with them, and will continue working with them so that they can scale to the point where we're able to service the entire European and U.S. installed base. I think that probably reaching that level still over the course of this year is probably aggressive, but that's what we're shooting for, and there are all sorts of incentives in place to increase that manufacturing.
Okay that is great.
Great to hear maybe expand on the qualitative commentary with the physicians who are using magic in the European study just what do they like about it versus the J&J device specifically.
Sure so.
The good fortune of being able to actually watch at eight procedures when I visited Vilnius University.
In January and then and I think thats kind of.
David Leo Fischel: Okay, that is great to hear. Maybe expand on the qualitative commentary from physicians who are using MAGIC in the European study. Just, you know, what do they like about it versus the J&J device specifically?
Obviously, you recognize then the financial the strategic independence benefits of having the catheter. The fact that the catheter serves as the enabling technology for our mobile robot. So all of those are kind of a more strategic aspects from our side.
David Leo Fischel: Sure, so I had the good fortune of being able to actually watch eight procedures when I visited Vilnius University in January, and I think that kind of, obviously, you recognize that the financial, the strategic, the independence benefits of having the catheter, the fact that the catheter serves as the enabling technology for our mobile robot, so all of those are kind of the more strategic aspects from our side. From a clinician's perspective, how does the catheter benefit the patient and the physician? I'd say that some of the main benefits that were described by the physicians, one was an observation that the stability of the catheter was particularly nice. We are, magnetic catheters are known that one of their key benefits is stability. Oftentimes, that stability is dependent on your approach to the tissue, and they felt that irrespective of how they approached the tissue with the catheter, they had very, very good stability beyond what they typically considered very good stability with the existing magnetic catheters.
From the clinicians perspective, how does the catheter benefit the patient and the physician I would say that that some of the main benefits that were described by the physicians one wasn't observation that the stability of the catheter was particularly nice and we are magnetic catheters are known.
At one of their key benefit is stability.
Often times that stability is dependent on your approach towards the tissue and they felt that irrespective of how they approach the tissue with the catheter that had very very good stability beyond what typically they considered very good stability with the with the existing magnetic catheters that was one thing that was particularly called out.
And.
The ease of navigation and.
And how that was more intuitive than what they were used too was a second observation was called out and then the fact that reduced fluid is required to cool the catheter.
David Leo Fischel: That was one thing that was particularly called out. The ease of navigation and how that was more intuitive than what they were used to was a second observation that was called out, and then the fact that less fluid is required to cool the catheter, which should benefit patients that have renal issues or longer procedures, and that just generally creates a reduced fluid load for patients. Those were some of the things that I remember from our visit and from the discussions with the physicians. I think those are some of the key benefits both for patients and physicians as they switch to magnetic catheters. Okay, great. And then just last question, are you tying up any U.S. studies just in case the supplement, you know, the FDA comes back and requests additional U.S. data? Just how quickly could you turn something like that around?
That should benefit patients that have that renal issues are longer procedures and that just generally that creates that reduce fluid load for patient and so some of those were some of the things that I remember from that from a physician and from the discussions with physicians I think kind of those are some of the key benefits for patients and physicians.
As they switch to magic.
Okay, Great and then just last question.
Are you seeing any U S studies just in case the supplement.
The FDA comes back and request additional U S data just how quickly could you turn something like that around.
I believe in the coming months, we will have a much clearer and feeling coming few months, we will have a much clearer feeling for the regulatory path in the U S and given what we've done in Europe that has been very helpful. In.
David Leo Fischel: I believe in the coming months we will have a much clearer feeling for the regulatory path in the U.S. Given what we've done in Europe, that has been very helpful in educating us and giving us certain infrastructure to run clinical trials more broadly. If you step back and think about Stereotaxis as a company, we have a very, very unique and kind of special capability in terms of building robots. That's something that almost no other company has. Very few companies have demonstrated the capability to build robots that can actually be deployed in real-world clinical settings and can work robustly and reliably there. We have that capability in-house. We did not have any historical expertise or experience in developing interventional devices.
Educating us and given us sorting infrastructure to run clinical trials more broadly.
If you step back and think about stereotactic at the company, we have a very very unique and and kind of a special capability in terms of building robots that some things that almost no. Other company has very few companies have.
It has demonstrated the capability to build robots that can actually be deployed in the real world clinical setting and can work robustly and reliably and there we have that capability in house, we did not have a historical expertise or.
Our experience in developing in prevention of devices and that doesn't just mean, the engineering aspect I mean, the quality clinical regulatory aspects.
Related to intervention or Interbody devices.
And I think that kind of as we've gone through this process both from a regulatory perspective now setting up the clinical trial in Europe and all the testing processes that we went through that all gives us more of an institutional capability in order to replicate those again in the future and so I think there was definitely a benefit for.
David Leo Fischel: And that doesn't just mean the engineering aspect. It means quality clinical regulatory aspects related to interventional intrabody devices. I think that kind of as we've gone through this process, both from a regulatory perspective and now setting up the clinical trial in Europe and all the testing processes that we went through, that all gives us more of an institutional capability in order to replicate those again in the future. And so I think there was definitely a benefit from what we've now demonstrated we can pull off in Europe. And depending on how the next few months go, we'll have a feeling on whether it's necessary to start that in Europe. Okay, great. I appreciate the update. Thank you. Thank you very much, everyone. Our next question comes from the line of Adam Maeder with Piper Sandler. Please go ahead. Hi David and Kim.
What we have now demonstrated were able to pull off in Europe and <unk>.
And depending on how the next few months go we'll have a feeling on whether it's necessary to start that in the U S.
Okay, Great I appreciate the update thank you.
Okay. Thank you very much Alex.
Our next question comes from the line of Adam <unk> with Piper Sandler. Please go ahead.
Hi, David and Ken Thank you for taking the questions here.
Wanted to ask a question on the sales force.
With the.
The magic launch and the mobile launch coming down the Pike here when.
When you look to build out the sales force to support those launches.
That a 2025 of that or is the plan to kind of push forward with.
David Leo Fischel: Thank you for taking the questions here. I wanted to ask a question about the Salesforce. You know, with the magic launch and the mobile launch coming down the pike here, we look to build out the Salesforce to support those launches. Is that a 2025 event, or is the plan to kind of push forward with the existing infrastructure? And then add a follow-up. Thanks. Hi Adam, good afternoon. Thanks for the question.
Initial infrastructure sorry, the existing infrastructure and then I had a follow up thanks.
Hi, Adam Good afternoon, and thanks for the question so.
We have done at small incremental hiring in Europe.
Already late last year early this year.
In anticipation of the magic launch and ensuring that we have the ability to launch magic across our installed base with the added level.
David Leo Fischel: So we have done a small incremental hiring in Europe already, late last year and early this year, in anticipation of a Magic launch and to ensure that we have the ability to launch Magic across our installed base with the added level of coverage and service that that would entail. As discussed in the past, as we launch the catheter, initially, we would plan to use our existing sales teams, both in the US and Europe, to cover those accounts to launch Magic. They have all of these accounts, they have the relationships, we have a good team that has good electrophysiology knowledge, and so they are more than capable of launching the Magic catheter in a successful fashion. We would start to reinvest any proceeds from the catheter back into the sales team so that we grow the team and can gradually evolve to something more like the larger players in the space, who oftentimes have one or even more than one individual per account, per hospital customer.
Coverage and in service that that would entail and as discussed in the past as we launch the catheter.
Initially we would plan to use our existing sales teams both in the U S and Europe.
Two to cover those accounts to launch magic.
Our in all of these accounts they have the relationships we.
Have a good team that has good electrophysiology knowledge and so they are more than capable of launching a magic catheter and the successful fashion and we would start to reinvest any proceeds from the catheter back into sales.
Our sales team so that we grow the team and can gradually.
<unk> to something more like as the larger players in the space, who oftentimes have one or even more than one individual.
Per account per hospital customer and so I would see as kind of growing that sales team, but we would do it as we're growing the revenue of the magic catheter and similarly on the capital side I would say that we are we know that with any new robotic system.
David Leo Fischel: So I would see us kind of growing that sales team, but we would do it as we grow the revenue for the Magic catheter. Similarly, on the capital side, I would say that with any new robotic system, the scaling of supply chain manufacturing and deployment of the robot is a process that takes many months, and even with the new robot that doesn't have the construction requirements, there are still those styles of infrastructure, and process improvements that play out over a period of months. And so I'd say that we will probably, as we gain approval, we will probably slightly increase the capital sales capability in And then we'll start to show most of the benefit, though, from having the robot is that our existing capital sales teams should be able to be much more effective because we've reduced the complexity and timelines related to their sales.
Scaling of supply chain manufacturing and deployment of the robot is is a process that takes many months and even with the new robot that doesn't have the construction requirements. There are still styles of.
Infrastructure.
And kind of process improvements that play out over a period of months and so I would say that we will probably as we gain approval we will probably.
Slightly increased the capital sales capability in the relevant geography, and then will that start to show most of the benefit though from having a robot is that our existing capital sales teams should be able to be much more effective because we've reduced the complexity and time lines related to the to their sales work.
David Leo Fischel: And so, as we start to see that playing out, as we start to see the robots being out there in the world, working successfully and well, as we're able to scale our supply chain and manufacturing, and then again, we'll incrementally be building the sales team. And so I think that kind of, you'll see most of that type of real mind-sharing effort in building the commercial team happening in 2025, with some of the preparatory work being done already. That's a great color!
And so as we start to see that playing out as we start to see the robot being out there in the world.
Working successfully in well as we're able to scale our supply chain and manufacturing and then again, we will incrementally be building a sales team and so I think that youll see most of that type of real my I'm sure and effort in building the commercial team happening in 2025 with some of the preparatory work being done already this year.
That's great color appreciate that David Thank you and for the follow up I wanted to switch gears and ask about mobile.
If I heard correctly regulated regulatory submissions both in the U S and Europe for Q2 events.
David Leo Fischel: I appreciate that, David. Thank you. And, you know, for the follow-up, I wanted to switch gears and ask about mobile.
Can you just maybe share whats left to still be done ahead of submission to the <unk>.
David Leo Fischel: If I understand correctly, regulatory submissions, both in the US and Europe, are key to events. Can you just maybe share what's left to still be done ahead of submission to the regulatory agencies and just talk about what's informing the confidence there that you'll be, you know, able to make healthy submissions and ultimately garner regulatory clearance? Thank you.
Inventory agencies, and just talk about what's informing the confidence there that youll.
<unk>.
April to make healthy submissions and ultimately garner regulatory clearance. Thank you.
Sure so we.
We are we have.
The formal the full body of formal regulatory testing that you have to do before you can do a submission and.
David Leo Fischel: So we have the formal, the full body of formal regulatory testing that you have to do before you can make a submission. There is still various testing that needs to be done there. Most of it is done internally with our team. Some of it is done through external testing services that you have to do through an external testing service. And so that is all expected to play out over the next, let's say, month or couple months. And then you obviously have to put together all of the documentation for the submission. And that happens concurrently with testing, but there's always some work after you finish the testing process. Overall, our confidence comes from the fact that we have these are really our expert robots. We went through a process very, very similar to this just about four years ago, five years ago, when we built the Genesis robot. And so we have the organizational infrastructure, the muscle memory, the documentation that we can leverage for these types of processes. And we have a skilled team that has run this playbook before, including very recently.
There is still various testing that needs to be done there most of it done internally with our team. Some of it is done through external testing services that you have to do it through an external testing.
Service and then so that is all and expect it to play out over the next let's say month couple of months and then you have to obviously put together all of the documentation for the submission and that happened concurrent with testing, but theres always some work. After you finished the testing process overall.
Our confidence comes from the fact that we have.
This is really our expertise robots.
We went through a process very very similar to this.
Just about four years ago five years ago, when we can when we submitted the Genesis robot and so we have the.
Organizational infrastructure, the muscle memory and the documentation that we can leverage.
For these types of processes and we have a skilled team that does that has that has run this playbook.
Before including very recently.
That gives us the confidence we've had preparatory discussions with regulators we have clarity on what the regulatory path is and then sold so that gives us kind of have that confidence.
Thank you.
Thank you.
This concludes today's question answer session I would now like to turn the call over to David Fisher for closing remarks.
Okay. Thank you very much earlier thoughtful questions and for your continued support and look forward to working hard on your behalf. This year, bringing about the transformations, we promised and speaking again in a couple of months. Thank you.
David Leo Fischel: So that gives us confidence. We've had preparatory discussions with regulators. We have clarity on what the regulatory path is, and so that gives us kind of that confidence.
This concludes today's call you may now disconnect.
David Leo Fischel: Helpful. Thank you. Thank you. This concludes today's question and answer session. I would now like to turn the call over to David Fischel for closing remarks. All right, thank you very much for all your thoughtful questions and for your continued support. We look forward to working hard on your behalf this year, bringing about the transformations we promised, and speaking again in a couple months. Thank you. This concludes today's call. You may now disconnect.
[music].
Okay.
Yes.