Q1 2024 Asensus Surgical Inc Earnings Call

Operator: Good afternoon, ladies and gentlemen, and welcome to the Asensus Surgical First Quarter Financial and Operating Results call. At this time, all lines are in a listen-only mode.

Good afternoon, ladies and gentlemen, and welcome to the census, surgical first quarter financial and operating results call.

Operator: Following the presentation, we will conduct a question-and-answer session. If at any time during this call, you require immediate assistance, please press star zero for the operator. This call is being recorded on Tuesday, May 14, 2024. I would now like to turn the conference over to Mark Klausner from Westwick Partners. Please go ahead.

Speaker Change: At this time all lines are in a listen only mode.

Speaker Change: During the presentation, we will conduct a question and answer session. If at any time during this call. The required immediate assistance. Please press star zero for operator.

Speaker Change: This call is being recorded on Tuesday May 14 2024.

Speaker Change: I'd now like to turn the conference over to Mark Klausner from Westlake Partners. Please go ahead.

Mark R. Klausner: Good afternoon, everyone, and thank you for joining us for the Asensus Surgical first quarter business and financial update conference call. On the call with me today are Anthony Fernando, President and Chief Executive Officer, and Shameze Rampertab, Chief Financial Officer.

Mark R. Klausner: Good afternoon, everyone and thank you for joining us for the <unk>.

Mark R. Klausner: It's a surgical first quarter business and financial update conference call.

Mark R. Klausner: On the call with me today are Anthony Fernando President and Chief Executive Officer, and she leaves wrapper cab Chief Financial Officer.

Mark R. Klausner: Before we begin, I would like to caution listeners that certain information discussed by management during this conference call, including any guidance provided, are forward-looking statements provided under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Actual results could differ materially from those stated or implied by our forward-looking statements due to risks and uncertainties associated with the company's business, including any geopolitical factors beyond our control and the uncertainty of whether a definitive merger agreement can be successfully negotiated with Carl Storz and, if executed, will be approved by our stockholders.

Mark R. Klausner: Before we begin I would like to caution listeners that certain information discussed by management. During this conference call, including any guidance provided are forward looking statements provided under the safe Harbor provisions of the private Securities Litigation Reform Act of $19 95, actual results could differ materially from those stated or implied by our forward looking.

Speaker Change: Due to risks and uncertainties associated with the company's business.

Speaker Change: <unk> any geopolitical factors beyond our control and the uncertainty of whether a definitive merger agreement can be successfully negotiated with Carl Schwartz and if executed will be approved by our stockholders.

Mark R. Klausner: The company undertakes no obligation to update the information provided on this call. For a discussion of risks and uncertainties associated with the Asensus Surgical business, I encourage you to review the company's filings with the Securities and Exchange Commission, including the 2023 Form 10-K, filed in March 2024, and the Form 10-Q, expected to be filed later today, and any other filings we make with the SEC.

The company undertakes no obligation to update the information provided on this call.

Carl Schwartz: For a discussion of risks and uncertainties associated with the census, surgical business I encourage you to review the company's filings with the Securities and Exchange Commission, including the 2023 Form 10-K filed in March 2024, and the Form 10-Q expected to be filed later today and any other filings we make with the SEC.

Mark R. Klausner: During this call, we will also present certain non-GAAP financial information related to adjusted net loss attributable to common stockholders and adjusted net loss per share attributable to common stockholders. Management believes that these non-GAAP financial measures, taken in conjunction with U.S. GAAP financial measures, provide useful information for both management and investors by excluding certain non-cash and other expenses that are not indicative of the company's core operating results. Management uses non-GAAP financial measures to compare our performance relative to forecasts and strategic plans, to benchmark our performance externally against competitors, and for certain compensation decisions.

Management: During this call. We will also present certain non-GAAP financial information related to adjusted net loss attributable to common stockholders and the adjusted net loss per share attributable to common stockholders management believes that these non-GAAP financial measures taken in conjunction with U S GAAP financial measures.

Management: Good useful information for both management and investors by excluding certain noncash and other expenses that are not indicative of the company's core operating results management uses non-GAAP financial measures to compare our performance relative to forecast and strategic plans to benchmark our performance externally against competitors and for <unk>.

Management: Certain compensation decisions reckon.

Mark R. Klausner: Reconciliations from U.S. GAAP to non-GAAP results are presented in the tables accompanying our earnings release, which can be found in the Investor Relations section of our website. With that, it's my pleasure to turn the call over to Asensus Surgical's President and Chief Executive Officer, Anthony Fernando.

Management: Reconciliations from U S. GAAP to non-GAAP results are presented in the tables accompanying our earnings release, which can be found in the Investor Relations section of our website.

Management: With that it's my pleasure to turn the call over to our census, Surgical's, President and Chief Executive Officer, Anthony Fernando.

Anthony Fernando: Thanks, Mark, and thank you all for joining us today. To start, I'll give a summary of our recent performance and notable accomplishments in the first quarter of 2024, then Shameze will dive into a financial. After that, I'll discuss what lies ahead of us in 2024. And finally, we'll open the floor for any questions you may have.

Anthony Fernando: Thanks, Mark and thank you all for joining with US today to start give a summary of our recent performance and notable accomplishments in the first quarter of 2024.

Anthony Fernando: <unk> will dive into our financial results.

Anthony Fernando: Following that I'll discuss what lies ahead of us in 2024, and finally, we'll open the floor for any questions you may have.

Anthony Fernando: First, I'd like to provide an update on a recent development for the company. In early April, we entered into a non-binding letter of intent with Karl Stoltz regarding a potential acquisition of Asensus. Under the proposed terms, Karl Storrs would acquire 100% of our outstanding common stock for $0.35 per share in cash. As a reminder, Karl Storrs is a global leader in the medical technology industry, offering state-of-the-art endoscopes, medical instruments, and devices for minimally invasive procedures across various surgical specialties.

Mark R. Klausner: First I'd like to provide an update on our recent development for the company.

Anthony Fernando: Karl Storz is an independent family-owned company with a strong global presence and is committed to visionary design, precision craftsmanship, and clinical effectiveness. We believe that this potential acquisition by Karl Stotz provides an attractive opportunity to deliver unmatched clinical value coupled with state-of-the-art robotics and digital solutions to the operating room. Cars towards a global presence and scale, resources, and commercial capabilities could enable a broader adoption of our combined digital surgery solutions and maximize the potential of Luna and the ISU.

Mark R. Klausner: In early April we entered into a nonbinding letter of intent with cause thoughts regarding a potential acquisition.

Mark Klausner: Yes.

Cause Thoughts: Under the proposed terms caused starts would acquire 100% of our outstanding common stock for 35 cents per share in cash.

Cause Thoughts: As a reminder, Colorado stores as a global leader in the medical technology industry offering state of the art and the scopes medical instruments and devices for minimally invasive procedures across various surgical specialties.

Cause Thoughts: Commscope with an independent family owned company with a strong global presence and is committed to visionary design.

Cause Thoughts: Craftsmanship and clinical effectiveness.

Cause Stuart: We believe that this potential acquisition by cause Stuart's provides an attractive opportunity to deliver unmatched clinical value coupled with state of the art robotics and digital solutions to the operating group.

Commscope: <unk> global presence and scale resources and commercial capabilities enable broader adoption of our combined digital surgery solutions and maximize the potential of Luna and the ICU.

Anthony Fernando: As previously disclosed, we have granted call stores a 10-week exclusivity period to conduct due diligence and negotiate a definitive merger agreement. This exclusivity period started on March 28, 2024, and is ongoing. During the exclusivity period, Karl Stoltz is providing us with up to $10 million in financing through a fully secured promissory note to support our operations, and if a definitive merger agreement is successfully negotiated and executed, an additional $10 million will be available to us as we pursue all necessary approvals.

Commscope: As previously disclosed we have granted caused at Tenby exclusivity period to come.

Tenby: Duct due diligence and negotiate a definitive merger agreement.

Tenby: This exclusivity period started on March 28, 2024 and is ongoing.

During the exclusivity period caused stopes is providing us with up to $10 million in financing through a fully secured promissory note to support our operations and if a definitive merger agreement has successfully negotiated and executed.

Stopes: An additional $10 million will be available to us as we pursue all necessary approvals.

Anthony Fernando: Since announcing the potential transaction on April 3rd, we have been working closely with Karlsdorf to facilitate the due diligence process. As of today, we have drawn the first 7 million of the 10 million branch of the Lord, which has provided liquidity for operations.

Stopes: Since announcing the potential transaction on April eight.

Caused Stopes: We have been working closely with caused stores.

Caused Stopes: To facilitate due diligence process.

Caused Stopes: As of today, we have drawn the first $7 million of the $10 million.

Caused Stopes: <unk> of the Lotte, we test provided liquidity for operations.

Anthony Fernando: To evaluate the potential terms of the transaction and make a recommendation to stockholders, our board has formed a transaction committee. While there is no assurance that a transaction will be completed, we believe exploring this opportunity with Karl Storch is in the best interest of the company and our stockholders. If we are able to finalize the definitive merger agreement with Karl Storch, we will move expeditiously to secure stockholder approval for the proposed acquisition.

Lotte: To evaluate the potential.

Board: <unk> of the transaction and make a recommendation to stockholders our board.

Lotte: <unk> has formed the transaction committee.

Board: While there is no assurance that transaction will be completed we believe exploring this opportunity with <unk> is in the best interest of the company and our stockholders.

transaction committee: We are able to finalize the definitive merger agreement with cause stores, we will move expeditiously to secure stockholder approval for the proposed acquisition.

Anthony Fernando: Further updates will be provided as appropriate. Despite the ongoing diligence activities, we remain focused on our business and, in particular, the continued growth of the SENHAN system and ongoing development of the LUNA system and ISU. In the first quarter, the 10-hand system was used in nearly 900 procedures worldwide.

Speaker Change: Slide updates will be provided as appropriate despite.

Speaker Change: Despite the ongoing diligence activities, we remain focused on our business and in particular the continued growth of this enhanced system and ongoing development of the Luna system Nisu.

Speaker Change: In the first quarter. The fed has system used in nearly 900 procedures worldwide.

Anthony Fernando: By continually capturing data from these surgeries, our machine learning capabilities improve, allowing us to provide increasingly valuable clinical insights to surgeons through the intelligent surgical unit in the future. With specialized 3mm and 5mm instruments, the Senhan Surgical System is uniquely designed for the delicate nature of paediatric procedures. As more pediatric surgeons recognize Asensus' unique system design, which not only preserves minimally invasive surgery but also advances laparoscopy and robotics with digital surgery solutions, we expect the number of pediatric procedures performed using St. Hans and the ISU to continue to grow. Moving to new program initiation

Speaker Change: By continually capturing data from these surgeries are machine learning capabilities improve allowing us to provide increasingly valuable clinical insights to surgeons through the intelligent surgical unit in the future.

Speaker Change: With specialized three millimeter in five millimeter instruments. The <unk> surgical system is uniquely designed for the delicate nature of pediatric procedures.

Pediatric Surgeon: As more pediatric surgeons recognize sensor's unique system decide which not only preserve minimally invasive surgery, but also advanced laparoscopy and robotics with digital solutions. We expect the number of pediatric procedures performed using sand heads in the ies.

Speaker Change: Q2 continue to grow.

Sand Heads: Moving to new program initiations in.

Anthony Fernando: In April, we announced that Sendai Tokushukai Hospital in Japan entered into an agreement to lease and utilize one of our Senhan Surgical Systems. This represents the second institution within one of Japan's largest private hospital systems to adopt our technology. I view this as further validation of the growing trust in our Senhan system in the Japanese market. In summary, the first quarter saw steady growth in the adoption of our digital surgery solutions and continued progress in enhancing the capabilities of the Senhance platform.

Speaker Change: In April we announce that Sendai Troubleshoot Guy hospital in Japan entered into an agreement to lease and utilize one of us in his surgical systems.

Speaker Change: This represents the second institution within one of Japan's largest private hospital systems to adopt our technology.

Speaker Change: I view this as further validation of the growing trust in US and has system in the Japanese market.

Speaker Change: In summary, the first quarter saw a steady growth in the adoption of our digital surgery solutions and continued progress.

Speaker Change: Enhancing the capabilities of the <unk> platform.

Anthony Fernando: We are excited about the potential opportunity to join forces with Karl Storz to accelerate our mission of digitizing the surgical environment. As we work towards a potential transaction, our team remains focused on executing against our key initiatives, including driving further adoption through new program initiations, increasing procedure volumes, expanding our clinical registry, and advancing our Luna platform development. We believe we are well positioned for continued momentum in 2024. With that, I would like to turn the call over to Shameze for a financial update. Thanks, Anthony.

caused starts: We are excited about the potential opportunity to join forces with caused starts to accelerate our mission of digitizing the surgical environment.

Team: While we work towards the potential transaction our team remains focused on executing against our key initiatives.

Speaker Change: <unk> driving further adoption through new program initiations, increasing procedure volumes.

Speaker Change: Expanding our clinical registry and advancing our lunar platform development.

Speaker Change: We believe we are well positioned for continued momentum in 2024.

Speaker Change: With that I would like to turn the call over to <unk> for a financial update.

Shameze Rampertab: Anthony, turning to the first quarter, for the three months ended March 31, 2024, the company reported revenue of $1.1 million as compared to revenue of $1 million for the three months ended March 31, 2023. Revenue in the first quarter of 2024 included $0.5 million in lease revenue, $0.3 million in instruments and accessories, and $0.3 million in services.

Speaker Change: Thanks Anthony.

Anthony Fernando: Turning to the first quarter for the three months ended March 31, 2024, the company reported revenue of $1 1 million as compared to revenue of $1 million in the three months ended March 31 2023.

Anthony Fernando: Revenue in the first quarter of 2024 included <unk> $5 million in lease revenue <unk>.

Speaker Change: <unk> $3 million in instruments, and accessories, and <unk> $3 million in services.

Shameze Rampertab: For the three months ended March 31, 2024, total operating expenses were $22.7 million, as compared to $20.4 million in the three months ended March 31, 2023. For the three months ended March 31, 2024, the net loss attributable to common stockholders was $22.5 million, or $0.08 per share, as compared to a net loss attributable to common stockholders of $22.2 million, or $0.09 per share, for the three months ended March For the three months ended March 31, 2024, the adjusted net loss attributable to common stockholders was $18 million, or $0.07 per share, as compared to an adjusted net loss of $22 million, or $0.09 per share, for the three months ended March 31, 2023.

Speaker Change: For the three months ended March 31, 2024, total operating expenses were $22 7 million as compared to $24 million in the three months ended March 31 2023.

Shameze Rampertab: Adjusted Net Loss is Gapped Net Loss, adjusted for the following item, amortization of intangible assets. Change and Fair Value of Contingent Consideration, and Change in Fair Value of Warrant Libraries, all of which are non-cash charges. Adjusted net loss attributable to common stockholders is a non-GAAP financial measure. Reconciliation from gap to non-gap measures can be found in our earnings release.

Speaker Change: For the three months ended March 31, 2024, net loss attributable to common stockholders was $22 5 million.

Speaker Change: Our <unk> per share as compared to a net loss attributable to common stockholders of $22 2 million or <unk> <unk> per share in the three months ended March 31 2023.

Speaker Change: For the three months ended March 31, 2024, the adjusted net loss attributable to common stockholders was $18 million or <unk> <unk> per share as compared to an adjusted net loss of $22 million or <unk> <unk> per share in the three months ended March 31 2023.

Speaker Change: Adjusted net loss as GAAP net loss adjusted for the following items.

Speaker Change: Amortization of intangible assets.

Speaker Change: And fair value of contingent consideration.

Speaker Change: And change in fair value of warrant liabilities, all of which are noncash charges.

Speaker Change: Adjusted net loss attributable to common stockholders is a non-GAAP financial measure reconciliation from GAAP to non-GAAP measures can be found in our earnings release.

Shameze Rampertab: Turning to the balance sheet, the company had cash, cash equivalents, and short-term investments, excluding restricted cash, of approximately $8 million as of March 31, 2024. Based on the recent financing received from Karl Storz and our current operating plan, we project that available cash will now sustain operations into Q3 2024. If we signed the definitive agreement with Karl Storz, the additional $10 million that we would be eligible to receive would support operations into Q4 2024, if we secure such financing. I'll turn the call back over to you.

Speaker Change: Turning to the balance sheet the company had cash cash equivalents and short term investments excluding restricted cash of approximately $8 million.

Speaker Change: As of March 31, 2024.

Speaker Change: Based on the recent financing received from Carl Stuart's and our current operating plan, we projected available cash will now sustained operations into Q3 2024.

Carl Stuart: If we signed the definitive agreement with Carl stores, the additional $10 million that we would be eligible to receive would support operations into Q4 of 2024, if we secure such financing.

Carl Stuart: Turn the call back over to Anthony.

Anthony Fernando: Thanks Amy.

Anthony Fernando: Our key initiatives for 2024 center around advancing the development of our next-generation Lunar Surgical System and associated digital solutions while continuing to drive adoption of our current Senhans platform. For Luna, we plan to freeze the system design in Q3, conduct verification and validation testing in Q4, and initiate pilot manufacturing to prepare for regulatory submission. We continue to anticipate Luna's 510K submission in the second half of 2025, clearance in the first half of 2026, and then launch following clearance.

Anthony Fernando: Our key initiatives for 2024 center around advancing the development of our next generation Lula surgical system and associated digital solutions, while continuing to drive adoption of our current centers platform.

Anthony Fernando: For Luna, we plan to freeze the system design in Q3.

Anthony Fernando: Verification and validation testing in Q4, and initiate pilot manufacturing to prepare for regulatory submissions.

Anthony Fernando: We continue to anticipate Luna five 10-K submission in the second half of 2025 clearance in the first half of 2026 and then launch.

Anthony Fernando: Following clearance.

Anthony Fernando: In parallel, our digital roadmap includes integrating advanced analytical tools, innovative training and communication capabilities, and enhanced safety features into the lunar digital ecosystem. On the ISU hardware front, we are ramping up manufacturing with partners for the future Intelligent Surgical Unit, or ISU, configurations, aiming to complete designs for both the integrated Lunar ISU and the standalone ISU by mid-year 2024. For our current SINHAN system, we continue to expect to initiate 8 to 10 new programs globally in 2024 and anticipate 15 to 20% annual procedure volume growth.

Anthony Fernando: In parallel our digital roadmap includes integrating advanced analytical tools.

Anthony Fernando: Training and communication capabilities and enhanced safety features into the Lula digital ecosystem.

Lula: On the I assume hardware upfront, we are ramping up manufacturing with partners for the future intelligent surgical unit to ICU configurations.

Lula: Aiming to complete besides for both.

Lula: The greater Luna ISC and the Standalone ASU by midyear 2024.

Speaker Change: For our current <unk> system, we continue to expect to initiate eight to 10, new programs globally in 2024, and anticipate 15% to 20% annual procedure volume growth.

Anthony Fernando: 2024 will be a pivotal year as we prepare to bring our lunar platform and advanced digital capabilities to market, while sustaining growth with enhanced adoption worldwide. We have a set of strategic milestones to accomplish this year, keeping us firmly on track toward our vision. With that, we would now like to open the line to questions.

Luna ISC: 2024 will be a pivotal year as we prepare to bring our lunar platform, an advanced digital capabilities to market.

Speaker Change: Why is sustaining growth with Sen has an option right.

Speaker Change: We have a set of strategic milestones to accomplish this year keeping us firmly on track towards recent.

Speaker Change: With that we would now like to open the line for questions.

Operator: Thank you. Ladies and gentlemen, we will now conduct the question and answer session. If you have a question, please press star 1 on your telephone keypad and wait for your name to be announced. You will hear a three-tone prompt acknowledging your request. If you would like to cancel your request, please press star 2. Please ensure you lift the handset if you're using a speakerphone before pressing any keys. One moment, please, for your first question. Your first question comes from the line of... Swayampakula Ramakanth from H.C. Wainwright. Your line is now open.

Moderator: Thank you, ladies and gentlemen, we will now conduct the question and answer session.

Speaker Change: If you have a question. Please press star one on your telephone keypad.

Operator: And wait for your name to be announced you will hear at retail budgeting your request.

Speaker Change: If you would like to cancel your request. Please press star two please.

Operator: Please ensure you lift the handset if you're using a speaker phone before pressing any keys one moment. Please for your first question.

Speaker Change: Your first question comes from the line of <unk>.

Speaker Change: <unk> <unk> from H C. Wainwright your line is now open.

Swayampakula Ramakanth: Thank you. Good afternoon, Anthony and Shameze.

Speaker Change: Thank you.

Speaker Change: Good afternoon, Anthony and chemise.

Swayampakula Ramakanth: So, I know you can't talk too much about your discussions with call stores. However, I just would like to understand a little bit of the timeline. So when exactly did the 10-week exclusivity period start? When would it end, and what needs to happen for them to sign a letter to actually go through the transaction and acquire you?

Speaker Change: So.

Speaker Change: I know you cant talk too much about your discussions with called stores.

Speaker Change: Our.

Anthony: I, just would like to understand a little bit of the timeline.

Speaker Change: Okay.

Speaker Change: So.

I: When exactly did that 10 week period exclusivity period stock.

Speaker Change: When will it end.

Speaker Change: <unk>.

Speaker Change: And.

Speaker Change: What needs to happen towards them.

Speaker Change: Two.

Speaker Change: To sign a letter.

Speaker Change: To actually go through that transaction.

Speaker Change: <unk> you.

Anthony Fernando: Hi Aki, thanks for your question. So, as you said, we continue to collaboratively work with CalSTRS. We are currently seven weeks into the 10-week exclusivity period, and the exclusivity period began on March... [inaudible] So, as you said, we can't comment further. But the work's going on, and the diligence is.

Speaker Change: Okay. Thanks for your question.

Speaker Change: <unk>.

Speaker Change: So as you said, we continue to collaborate deeply.

Costco: With Costco.

Speaker Change: We are currently.

Costco: Seven weeks into the 10.

Costco: Exclusivity period.

Costco: Exclusively to be it began on box.

Costco: 28.

Speaker Change: So as you said, we can come in.

Speaker Change: <unk>.

Speaker Change: But it looks going on in the diligence is ongoing.

Anthony Fernando: diligence is ongoing. And that's kind of where we are currently.

Speaker Change: And that's kind of avionics.

Swayampakula Ramakanth: So, I mean, obviously, we are wishing for the best for the shareholders and the company, but I am playing the devil's advocate. If something happens in such a way that they are not going to go through this transaction, then what is the process? Does that mean this $10 million that you got becomes a promissory note, and you go on with your business in terms of generating funds and maintaining operations? I'm just trying to put together a what-if scenario here.

Speaker Change: So.

Speaker Change: I mean, obviously, we are we are wishing for that for the best.

Speaker Change: <unk> for the shareholders.

Speaker Change: Company.

Speaker Change: However, playing Devil's advocate if.

Speaker Change: Something something.

Devil's advocate: Happens such a way that they are not going to go through this transaction.

Speaker Change: <unk>.

Speaker Change: Then what's what's the process.

Speaker Change: Does that mean.

Speaker Change: $10 million that you got become Sir.

Speaker Change: Promissory note and.

Speaker Change: You you go on with your business in terms of generating funds and maintaining operations are.

Speaker Change: I'm just trying to put a what if scenario here.

Anthony Fernando: That's correct, RK. It's a secured promissory note, and we would be able to continue operations as we would otherwise.

Speaker Change: That's correct.

Speaker Change: Right.

Speaker Change: It's a secured promissory note and we would be able to continue.

Anthony Fernando: as we would have otherwise.

Speaker Change: <unk>.

Speaker Change: Who would have otherwise.

Swayampakula Ramakanth: Okay, so in terms of operations itself, normally when some transactions like this are in progress, or obviously, you have to come out and publicly talk about it, which is kind of unique. In situations like this, are you in the field? Are you sensing anything at all in terms of people being a little bit hesitant to go through transactions that they might have started? And how is it really affecting your operations?

Speaker Change: Okay.

Speaker Change: So in terms of operations itself.

Speaker Change: Normally.

Speaker Change: Some transactions like this.

Speaker Change: <unk>.

Speaker Change: We are in progress.

Speaker Change: Obviously, you have to come out and publicly talk about it which is kind of unique.

Speaker Change: <unk>.

Speaker Change:

Speaker Change: In situations like this are you.

Speaker Change: <unk>.

Speaker Change: In the field are you sensing anything at all in terms of people being a little bit hesitant to go through.

Speaker Change: Transactions that they might have.

Speaker Change: Started.

Speaker Change: How is it really affecting your operations.

Anthony Fernando: I mean, not exactly. I'll try to answer the question anyway. I mean, typically, any transaction one goes through diligence before entering into a definitive agreement, and in our scenario, we announced the LOI on April 3rd, primarily because of the promissory note. So otherwise, you know, the process that's ongoing would have taken place without it. Public Knowledge, right now that's the reason why we disclosed what we had to and then, as soon as we know on now before the 10 week mark, that's when we'll be able to talk and give more details along with the difficulty.

Speaker Change: Let me not sure exactly.

Speaker Change: To answer the question.

Speaker Change: I mean, typically any transaction cost through diligence.

Speaker Change: Before entering into a definitive agreement.

Speaker Change: I'll, let scenario.

Speaker Change: We announced.

Speaker Change: The NOI.

Speaker Change: Pretty good.

Speaker Change #100: Primarily because of the promissory note.

Speaker Change #100: So otherwise the process Thats ongoing would have taken place without any.

Speaker Change #103: Public knowledge.

Speaker Change: Got it right now.

Speaker Change: The reason why we disclosed what we had to and then as soon as the.

Speaker Change: Now before the <unk> Mark.

Speaker Change #102: We will be able to talk in more give more details along with the.

Anthony Fernando: Definitive Agreement

Speaker Change #104: Definitive agreement.

Swayampakula Ramakanth: No, my question was on the commercial front. Are you seeing any hesitancy, or are things happening as they would normally happen, you know, in terms of placements? And so those are the things that I'm asking about.

Speaker Change #107: No no. My question was on the commercial front are you seeing anything any hesitancy.

Speaker Change: Or are things are happening as as they would normally happen.

Speaker Change #106: In terms of placements.

Speaker Change: So those are the things that I'm asking about.

Anthony Fernando: Okay, sorry Arka, I misunderstood the question. Currently, it's ongoing, and we have not seen any challenges. I think, you know, Karl Stotz is a very well-known company among all of our existing and potential future customers, so we have not had any challenges there. I think it's perceived as positive news in the field, and we continue to execute on the pipeline globally. Thank you.

Speaker Change #105: Okay, sorry, I misunderstood the question.

Speaker Change #105: Currently ongoing.

Speaker Change #108: And we have not seen any.

Speaker Change #105: Linzess.

Speaker Change #105: Costco to they're very well known company among all of our existing and potential future.

Speaker Change #105: Estimates.

Speaker Change #105: So we have not had any any challenges there.

Speaker Change #105: I think it's perceived as positive news in the field.

Speaker Change #105: And we continue to execute on the on the pipeline.

Speaker Change #105: Globally.

Swayampakula Ramakanth: Thank you. Thanks for taking all my questions.

Speaker Change #105: Thank you thanks for taking all my questions.

Speaker Change #105: Thank you okay.

Operator: Your next question comes from the line of Ross Osborn from Cantor Fitzgerald. Your line is now open.

Speaker Change #110: Your next question comes from the line of Ross asked burden from Cantor Fitzgerald. Your line is now open.

Ross Everett Osborn: Hi guys, this is Matt taking questions for Ross. Thanks for taking the questions. I just want to start off by asking about your Sunhanse initiation in Japan this past April. Now that you've placed a couple systems in Japan, what trends are you guys seeing in terms of adoption and growth in the region?

Matt: Hi, guys. This is Matt on for Ross. Thanks for taking the question just wanted to start off by asking about your enhanced initiation in Japan. This past April now that you've placed a couple of systems in Japan. What trends are you guys seeing in terms of adoption and growth in the region.

Anthony Fernando: Thanks, Beth, thanks for your question. Japan, you know, it's one of our faster growing markets next to Europe, and primarily this site focused on pediatrics, and there are several other sites. So we've seen very good positive momentum in Japan in terms of case volume growth and also system placement, and hopefully, the pipeline also looks pretty good for the rest of the year so that we...

Jeff: Thanks, Matt to answer your question Jeff.

Jeff: Japan is one of them.

Jeff: Faster growing markets next to Europe.

Jeff: And primarily this site.

Jeff: Focused on pediatrics and several other sites so we've.

Jeff: <unk> seen very positive good positive momentum in Japan in terms of case volume growth.

Jeff: And also system placements and hopefully the pipeline also looks pretty good.

Jeff: The rest of the year.

Anthony Fernando: so that we can deliver on the 8 to 10 systems for the full year, but Japan has been a growth driver for us in terms of placements and also case volume.

Jeff: So that we.

Speaker Change #114: It can deliver on the eight to 10 systems for the full year.

Speaker Change #113: But Japan has been.

Japan: Growth driver for us in terms of placements and also case volume.

Ross Everett Osborn: Got it, that's helpful. Just switching gears a bit, I wanted to ask if you guys can provide any insight into how Carl Storrs plans to utilize your assets in terms of maybe just integrating the ISU versus continuing the development of Luna.

Japan: Got it that's helpful.

Japan: Just switching gears a bit I wanted to ask if you guys can provide any insight into how Karl storz plans to utilize our assets in terms of maybe just on screening bias new versus continuing the development of Luna.

Anthony Fernando: Yeah, Matt, unfortunately, I can't get into any of the details because, currently, it's just purely a diligence process and those kinds of plans for integration that will come.

Carl Storrs: Yes, Unfortunately, I can't get into any of the details because currently it's just purely a diligence process.

Anthony Fernando: And.

Anthony Fernando: Those kinds of plans.

Anthony Fernando: Integration that will come next, but not at this time.

Anthony Fernando: Integration.

Anthony Fernando: I'll come come next but not at this time.

Ross Everett Osborn: Got it. Sounds good. And then, I guess just one more follow-up for me. I was wondering if you guys could provide any insight into the timeline and how the potential acquisition and integration may impact your previously guided timeline for Luna.

Anthony Fernando: Got it sounds good.

Anthony Fernando: I guess, just one more follow up for me.

Speaker Change: I was wondering if you guys can provide any insight.

Ross Everett Osborn: Online and how the potential acquisition and integration May impact your previously guided timeline for Luna.

Anthony Fernando: I mean, currently, from a timeline point of view, we are moving ahead, as we've disclosed and shared with all of you on our timeline. So, the LUNA program is making extremely good progress.

Ross Everett Osborn: I mean currently from a timeline point of view, we are moving ahead.

Speaker Change: As we disclosed 10 said with all of you.

Anthony Fernando: Timeline, so the lunar program is making extremely good progress.

Anthony Fernando: and Everything's on track, and we are not anticipating any timeline shifts because of this transaction at all.

Anthony Fernando: Everything's on track.

Speaker Change: And I don't we are not anticipating any.

Anthony Fernando: Timeline shifts.

Anthony Fernando: Because of this transaction.

Ross Everett Osborn: That sounds good. Thanks for the color. Thanks for taking the questions, guys.

Anthony Fernando: Got it sounds good thanks for the color thanks for taking the questions guys.

Ross Everett Osborn: Thank you Matt.

Operator: There are no further questions at this time. I will now turn the call back to Mr. Anthony Fernando. Please continue.

Ross Everett Osborn: There are no further questions at this time I will now turn the call back to Mr. Anthony Fernando Please continue.

Anthony Fernando: Thank you, operator. Thank you everyone for joining today's call, and we look forward to updating you on our progress throughout the year.

Anthony Fernando: Thank you operator, thank you everyone for joining today's call and we look forward to updating you on our progress throughout the year.

Operator: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.

Operator: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation you may now disconnect.

Operator: Okay.

Operator: [music].

Operator: Sure.

Operator: [music].