Q2 2019 Earnings Call
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I would now like to turn the conference over to your host Mr. Mackay Luckily not head of Investor Relations Ma'am you may begin.
Thank you operator, good afternoon, everyone and welcome to the rate second quarter 2019 financial results Conference call.
Joining me today is Scott Drake, our president and Chief Executive Officer.
Earlier today Viewray issued a press release announcing its second quarter 2019 financial results. The release is available on the Investor Relations portion of our website at Www Dot the re dotcom.
This call is also being broadcast live over the Internet via our Investor Relations site and a replay of the call will be available on the website for 14 days.
Before we begin I would like to caution listeners that comments made by management. During this call may include forward looking statements within the meaning of federal Securities laws.
These statements involve material risks and uncertainties and actual results could differ from those projected in any forward looking statements due to numerous factors, including those discussed in the risk factors section of new Res Form 10-Q for the quarters ended March 30, Onest and June Thirtyth 2018, and any subsequent reports filed with the Securities and Exchange Commission, including our Form 10-K for the year ended December 31 2018.
Furthermore, the content of this conference call contains time sensitive information accurate only as of today August eight 2019.
The rate undertakes no obligation to revise or otherwise update any statements to reflect events or circumstances. After the date of this call.
I will now turn the call over to Scott.
Thank you my Kayla good afternoon, everyone and thanks for joining our call.
Today, we will provide revised 2019 revenue and cash guidance I'll announce executive and board changes provide context on the maturation of our business one year into my role will review financials and open the line for questions.
Let's start with guidance, we are updating our 2019 revenue guidance to be between 80 and $95 million with 12 to 15 installations and three upgrades.
The reduction in our guidance is partially offset due to one system moving into 2019, as we will be able to recognize a significant portion of revenue at the time of delivery of that system.
This guidance reduction is chiefly the result of three systems, taking longer than anticipated in the vault planning and permitting process and the lack of certainty around the timing of two distributor orders.
Although we are disappointed in this reduction we believe it's the right course of action.
Let me share detail on why these time frames have elongated.
Regarding installations as we've shared we have built a vault readiness team to reduce variability lower customer cost and speed the path from PEO to first patient treated.
Our stated target has been to reduce this timeframe from approximately 18 to 12 months.
This is a worthy goal for the benefit of patients customers and shareholders.
Generally speaking installations fall into one of two scenarios.
In the first scenario planning construction and installation generally go as anticipated and no significant issues reside outside of our control.
In these instances our team has met or exceeded our 12 month goal in fact in a recent instance, the PEO to commissioning took only 261 days.
The second scenario is when circumstances impacting the timeline are largely outside of our control.
The majority of the delays that were unable to mitigate our associated with customer planning permitting and construction timelines, we're working to get earlier line of sight on these items and take appropriate action.
Delays that were unable to mitigate resulted in three installations potentially being pushed from this year to next.
Our ability to recognize revenue for these systems is pushing up against the 2019 year end timeframe and we feel it's appropriate to reduce guidance under these circumstances I want to reiterate we built a highly effective team that is well positioned to scale, but we must recognize the degree to which these items are difficult to mitigate.
Further on revenue guidance, we have removed to other systems due to a distributor potentially not fulfilling their commitment this year.
Theres end customer demand at both the clinical and executive level of these two hospitals, we will ensure that we have the right strategic partner to not only fulfill these two orders but to address growing demand in this market.
We are working to resolve this issue, but are not sure we will be able to do so by year end.
We believe all five of these systems will be successful meridian centers in due time, but perhaps not in 2019.
Turning to cash our forecasted burn is impacted by the delay of revenue.
Our updated cash usage guidance for 2019 is $80 million to $90 million.
We used approximately 24 million in Q2.
We have weekly rigor on operating expenses and working capital and remain focused on managing cash.
Along with inventory reduction Aer in HP management, we're exploring various sales models that could positively impact working capital needs financing partners and customers are working with us to shape. These models in order to facilitate the acquisition of Meridian systems.
Moving onto executive and board changes.
RJ Boncel, our CFO will be leaving the company effective September Thirtyth 2019.
Andre will remain available to help us with the smooth transition.
We thank him for his service and wish him well we are in the midst of a retained search to find his replacement.
Regarding our board of Directors Dr., Ted Wang has retired from service and we thank him for his many contributions. We also recently announced that Dr. Gail will lynskey has been appointed to our board.
Gail as an impressive leader with an extensive track record in health care.
Among other things she served in the Bush 41 White house as a senior advisor on health and welfare and directed the Medicare and Medicaid programs. She also currently serves on several boards, including United Health Group and Quest diagnostics, we're very pleased to welcome Gail.
Let's turn our discussion to orders and commercial pipeline.
In the second quarter, we took three orders for Meridian systems.
This was the first full quarter that our newly built US team was in their territories and we continue to enhance our direct and distribution network internationally.
While this is a relatively light number of orders we remain confident that we will demonstrate the momentum of our growing pipeline and end customer demand moving forward.
To provide color.
We're calling on a significantly higher number of customers and have put in place training and process rigor to both sell systems and drive therapy adoption.
For example, this quarter, we sold the freestanding customer its second meridian system.
Also it is notable that we have increasing interest for multi system deals.
Integrated networks for profit chains, and academic centers expanding their meridian footprint all represent active multisystem opportunities. Finally, I will share that we have demonstrated the potential to speed up the decision making process with certain customers. Traditionally we have seen in 18 to 24 months sales cycle, but in a few instances we have move customers to reach positive purchasing decisions much more quickly.
On the other hand academic centers have more time intensive processes in Q2, several orders move beyond the end of the quarter, but are generally on track.
We remain focused on the long term opportunity versus short term variability in summary, the quantity diversity and speed of our pipeline continues to improve.
I will now shift to provide remarks on the newly proposed APPM and how we made benefit in a bundled environment.
As Dr. Steinberg and I spoke about at Astro last year. The market is heading to noninvasive therapy shorter treatment times and the mitigation of side effects from legacy treatment modalities.
Meridian is swimming with the tide and trends of the market and we believe this proposal is favorable.
Under the draft JPM meridians, economic and clinical benefits are potentially even more compelling to patients providers and physicians.
Additionally, as the payment is site neutral, we see an incentive for freestanding centers to adopt the therapy, whereas they were previously incentivized to treat more fractions.
Furthermore, our clinical evidence aligns nicely with EMS proposed 90 day treatment window.
Hospitals will take on associated cost of complications related to the limitations of prior generation technology.
Shorter treatment times improved outcomes and better quality of life are critical for patients.
Weve treated approximately 5000 patients and have hundreds of papers abstracts and posters on meridians clinical use and we have consistently demonstrated very low to zero grade three or higher toxicity.
What further sets us apart in this model is our ability to treat and higher than conventional SPR t. doses without the typically expected increase in toxicity.
SPR T. cases inherently take longer than I MRT due to the incremental care required on potentially harmful doses.
We are able to deliver our full suite of capabilities, including on table adaptation during SPR t. treatments in the same amount of time that conventional nx treat SBR TV without meridians precision and accuracy.
Our competitors are attempting to optimize technology, that's been in the marketplace for many years, we on the other hand are operating at the very early stages of paradigm shift and our innovation pipeline is focused on optimizing the speed and workflow of our system.
Let me briefly take a step back and provide context on where we are in our journey.
At the highest level when we joined the company, we viewed view ray as both the turnaround and a scale up.
One year end I think this assessment was correct on both fronts.
We built a robust commercial team and created a vault readiness organization from the ground up.
We also built out our field service clinical training operations reimbursement and policy teams and fortified back office functions.
Our innovation team is intensely focused on protecting and extending the technology lead that we enjoy today.
I believe we have built the team worthy of the opportunity to change and improve the standard of care for cancer patients around the world.
In closing, we are driving more accurate and precise personalized therapy that yields better outcomes shorter treatment times and attractive financial returns for our customers, we are well positioned to deliver what patients physicians providers and payers seek.
I will now turn the call over to michela to discuss our Q2 financials.
Thank you Scott.
For the fiscal quarter ended June 32018, total revenue was $30.2 million, primarily from five revenue unit as compared to $16.4 million and three revenue units in the same period last year.
Total cost of revenue was $26.9 million compared to $16.4 million for the same period last year.
Total gross profit was $3.2 million compared to zero point $1 million for the same period last year.
Total operating expenses were $29.5 million as compared to $18.3 million in the same period last year.
Net loss in the quarter was $30.8 million or 32 cents per share compared to $22 million or 30 cents per share for the same period last year.
Turning now to orders and backlog.
In the second quarter of 2019, we received three new orders from Meridian systems totaling approximately $18 million compared to orders totaling approximately $35 million in the second quarter of 2018.
As of June 32018, our backlog stood at approximately $219 million compared to approximately $200 million as of June 32018.
In Q2, we used approximately $24 million of cash we ended the quarter with total cash and cash equivalents of approximately $122 million.
Lastly, and as discussed earlier, we are updating our guidance for 2018.
Prior guidance expected revenue in the range of $111 million to $124 million, primarily from 17 to 19 revenue units and three upgrades. We now expect total revenue to be in the range of $80 million to $95 million driven primarily by 12 to 15 revenue units and three upgrades.
Regarding cash our prior guidance with usage of $65 million to $75 million for the year, we now expect to use $80 million to $90 million in 2018.
And with that we will now open the line for questions.
Thank you ladies and gentlemen, if you have a question at this time, Please press star and the number one on your Touchtone telephone. If your question has been answered or you wish to remove yourself from the queue. Please press the pound key.
Our first question comes from the line of Anthony Petrone with Jefferies. Your line is open.
Great. Thanks for taking the questions I think you know there's clearly three moving parts here this orders backlog installations.
I think though from a higher level standpoint is if we look over the past 90 days.
Well clearly this is nearly a 180 in basically all of those kind of indicators for the business.
So maybe just kind of looking at the past 90 days seems like a confluence of headwinds hit the business.
So maybe just a little bit more on the the totality of the change and then maybe we'll have a couple of individual follow ups.
Yes, Anthony I would say.
That in the last 90 days.
A few things number one I think the the pipeline.
Of commercial activity.
Which the street doesn't have visibility to has improved.
The number of customers that were calling on is higher.
The number of multi system deals is higher.
Our ability to in a few instances speed customers through.
The purchasing decision historically.
10% to 24 months, we've been able to achieve that more quickly.
So I feel better about the overall pipeline than I did previously I do think there is a potential that the ATM is getting customers to pause a bit in terms of their decisions.
So I think that may be a difference from 90 days ago to today and I would also say that the biggest learning would be.
In those instances where.
In bolt planning and permitting and construction were largely those things are outside of our control we've hit some delays that neither customers nor we anticipated.
So that's probably the biggest difference.
Those two things today versus 90 days ago, and the final one would be a distributor that is.
Gone through a management change is doing some portfolio management work and we're probably going to have to find a new distribution partner in that market and don't know whether or not we're going to be able to do that quickly enough to satisfy the end customer demand here in COVID-19.
So the five systems, where revenue is coming down by.
Is is not ultimately whether or not they will be meridian systems in our estimation.
It's more the timing of that and it's quite possible that those systems.
We will push into 2020 versus taking place in this year and that obviously has an impact on cash consumption.
Great. So maybe just to go in to some of those moving parts. So on the installation cycle.
The target was 12 months I think it was hovering around.
18 months exiting last quarter, there was a goal to get to 12.
You mentioned, some unforeseen hurdles even at the hospital level. So what is the realistic target here now as to where the installation installation cycle can go to win.
When do you think the company can you get there.
Yes, I think.
What we've done is built the team as you know thats proactively engaging in bulk preparation and the goal of that work has been to get that.
PEO to first patient treated timeframe down from about 18 months to 12 months and generally speaking theres two scenarios. There is one where things go generally as planned.
And you see that we've been able to successfully bring that timeframe down inside of 12 months.
Two recent installations took place one in 330 days and the other one and 260.
261 days, so we feel good about that in the majority of instances, but then there's instances where.
Things are just outside of our control.
And it's taking a bit longer and weve got to be.
Very thoughtful about that as we move forward.
I think its important context to realize that we've got.
28 systems total that are clinically in the ground. So a lot of the places that we're going into our new geographies and new governments that we're dealing with and we've got to take into account.
Those things that are outside of our control or generally outside of our control as we go forward.
The last one from me I'll, let others jump in is just on orders you mentioned the PM, if the pm or not.
Announced.
Where do you think the orders would have been.
And how much of a chilling effect.
Do you think is having another words.
Or are these now.
Orders that kind of get pushed into next year.
Or is this just short of a moment in time and it sort of is transitory. Thanks.
Yes, I think it's I think it's transitory I actually think the PM in the long run is going to be a tailwind for us.
I think the market generally speaking was moving toward SP arty for clinical reasons.
We highlighted that both Dr. Steinberg and I at Astro of last year.
And I think the PM is going to now provide an economic incentive to move in the direction that clinicians ultimately want it to go win anyway.
So I think in the long run it's a it's a tailwind we had a customer that we were very close.
Kind of down to the red lining and they indicated that.
Maybe we don't want to just buy one system, we want to buy multi and so now we're in broader negotiations with that customer so.
Difficult in the short run maybe better in the long run for Us and again, we're focused on the long term opportunity.
And impossible for me to share with you if that didnt happen what would orders be.
But again I feel very good about the pipeline going forward and we're we're very much focused on driving that.
Thanks.
Okay.
Thank you and our next question is from the line of Chris Best Pascal with Guggenheim. Your line is open.
Thanks, Scott and new orders had been steadily ramping I think that probably belies some of the volatility given the low number of systems that are involved.
But I think the expectation was that the changes that you've put in place. Since you came on board was certainly cause a positive inflection. There. So this number is going to strike people is as surprising and the big concerning can you just sort of give us a point in time today on how you feel about the commercial organization you touched on the boat readiness team, but the other aspects of the commercial side of the business are they where you want them to be to drive the kind of positive order growth that I think we would have thought we'd see some of this quarter.
Yeah happy to Chris I think I would I'd take a quick step back and say from a macro perspective I feel very good about number one the team that we've built the training that they are going through and the coverage that we have.
And and evidence of that is the number of customers that are in our pipeline where theyre at within our.
Kind of rigorous sales process.
I mentioned, the number of multi system deals and in some instances being able to kind of move customers through to a positive purchasing decision more quickly than historically.
The company has been able to do.
I would remind us of what I've said on.
Many occasions, which is Q Q2 was the first full quarter that that team with seeded and Thats, our us team and so I think it makes sense to give them a little bit of time thats going to take some time for them to be fully trained and getting to know customers in their territory and again as I've said before I think we'll get more and more effective overtime and to your point, we're kind of dealing with the law of small numbers and so.
While I understand that this is a relatively light quarter versus two recent ones its.
Right in line with where we were a quarter or two before that so we're going to have.
Some lumpiness up and down but I feel very good about the work that the team is doing and the trajectory that we're on.
Thanks, and then the other number that stands out to me is the cash use and I know that sort of goes hand in hand with the revenue line.
But you mentioned exploring some different sales models, so different things that could.
Positively impact your cash needs.
How soon could we see some of that put into effect and how are you thinking about trying to close that Cabot the burn.
Gap that exists today.
Before you start to get to the point you need to consider.
Another round of financing.
Yes, so I would say first relative to cash and generally you are right. It just goes hand in hand with revenue in terms of.
Our reduction in revenue guidance, it's pretty straight line between those two things.
As I've shared we're very focused on cash we have weekly rigor on not on the operating expenses, but inventory a RFP and.
Also as you highlighted we're working with customers and financial partners on various models to kind of speed the path to purchasing meridian systems', what's extraordinary about the last year that I've had with the company is I've never had a bad conversation.
With a customer from a clinical perspective, I've never gotten to a no clinically.
Where theres friction is on the economic side, so we're trying to figure out ways.
And provide our customers some flexibility on that front.
To reduce some of that friction.
So we're in the midst of.
Just being in the early stages of that and for competitive reasons I don't want to go too deep into it.
But if.
We're successful with that and it takes hold will certainly be sharing that with the street.
Okay. Thank you.
Thank you.
And our next question comes from the line of Craig Bijou with Cantor Fitzgerald. Your line is open.
Okay.
Good afternoon. Thanks, Thanks for taking the questions Scott wanted to maybe dig a little bit deeper into your comments about the.
And the impact that it potentially had on orders.
I was wondering if you could.
Maybe provide a little bit more color on the discussions with facilities and.
And.
I I understand you guys think that it's going to be.
Could be a benefit over the long run.
But I guess the concern here would be that in the short term.
It could still impact orders.
Whether it's the second half or or or even longer. So I guess I just kind of wanted to get a sense for the discussions you've had.
If any have been in detail with some of the facilities and then.
What gives you confidence that it's not going to be a lingering.
Potential impact.
Yes, I don't want to overemphasize it Craig I do think it's potentially a component here.
I mentioned that one customer that we were kind of down to the goal line and they wanted to broaden and talk about a multisystem deal.
You know so bad short term good long term.
But again I would I would look at the big picture here and recognize that we've built a team very quickly and this was the first quarter that they were in their territory. So I don't want to overweight one variable versus another.
I would just tell you that I feel very good about the commercial pipeline that we're building, it's very difficult for me to predict and we've we've tried to stay away from predicting when exactly we might hit a steeper part of the S curve of adoption.
But I believe we're doing all the right things from a commercial standpoint innovation standpoint clinical data standpoint.
To see the long term opportunity a fundamentally changing the standard of care and radiation therapy delivery.
The difference in our technology versus conventional technology is profound and our customers are understanding that more and more clearly as we're out there delivering our clinical message, our economic value proposition and our strategic value proposition to the customer base.
I'd point to Florida, as an example, pretty interesting and noteworthy I think we currently have two systems in Miami, we have one in Tampa one in Orlando.
And we have I think three more systems Jim.
That are probably going to be in the ground in Florida in the not too distant future.
Thats due to the fact that patients are traveling to be treated on the meridian system and there is some competitive pressure that's building in that market and we've got to replicate that in markets all around the world. So.
Those are the things that we're focused on they don't happen overnight.
But I feel like there is theres several different variables here and we're working on the right things.
Okay. That's helpful. Maybe just a follow up on orders I mean is there any difference between what you're seeing in the us versus us.
I mean, it was obviously the order number is lower than we we.
We expected.
But I guess is there anything specific as the U.S. specific over us.
Issue.
You know I don't think so I mean, I think the us team.
Is further along than our international team.
Our our our VP of sales internationally is making really good progress.
Building out that team on a direct basis and also building out our.
Distributor network I referenced the change that we're likely to make in one of our key markets.
So I think the US team is a little bit ahead of where we're at internationally.
And it's a larger direct team that we have in that market, but again, we're dealing with the law of small numbers here I don't think there is a signal to read into.
Either us or internationally in this.
Individual quarter.
Okay, and then just one last quick one.
I think you alluded to some improvements.
On the system in the later half.
And so I guess.
The lower revenue guidance, the higher cash burn I mean any impact on some of the things that you were planning on doing either from a software or hardware perspective in the second half of the year.
Oh no not at all no were.
We're investing in our innovation pipeline very heavily.
They are very exciting things that will positively impact we predict patient care going forward, they're also very exciting things as it relates to making our workflow.
Even faster and more streamlined.
And there's.
All systems go on the clinical front so.
Look I understand.
Kind of the line of questioning we're very much taking the long term approach, it's going to take US time as I've said to capitalize on the opportunity to change the standard of care.
Which frankly I believe our patients and customers are looking for and deserve.
Thanks for taking the questions.
Thank you Craig.
Thank you and our next question comes from the line of Andrew Dsilva with B. Riley FBR. Your line is open.
Hey, good afternoon, Thanks for taking my questions and sorry, if you highlight any of this before I was moving between call. So just let me know if you did and then I'll check it out in the transcript Tonight.
Just a couple of quick bookkeeping right out of the gate.
If you could just let me know stock based comp.
Depreciation and amortization cash flow from operations and Capex was for the quarter.
And then while Thats being pulled.
I would also just like your thoughts on Genesis care.
You had an announcement about them during the fourth quarter last year and it was just announced that they were placing have fairly significant nine order unity system order and and appear to be at a significant discount as well. So just any color on the choice as youre familiar with both platforms to be low diesel.
Hey, Andy I'll run through those numbers for you and then I will hand, it to Scott for your Genesis care question, our stock based comp in the quarter with $4.9 million depreciation and amortization was about $2 million.
Our cash flow from operations was about $25.9 million and we spend about 3 million in capex in the quarter and our key was just filed so you'll be able to pull more detail.
Thank you and Andy regarding the the Genesis care.
Question I would say the following they're a very large and important customer of ours today and I fully anticipate that there will be an even larger and more in cost more important customer for us.
Going forward.
We have I think very clear line of sight.
In terms of how they view our technology.
In the marketplace versus any competitor.
And we've got a lot of confidence in that point of view.
I would also share with you that that they have been clear with us from the get go.
That they want to see how we performed with them within Genesis care facilities, and I think thats, a very fair ask.
And we're working really hard with them on a couple of.
Different bulk preparations as we speak right now and we'll move into the installation phase in the not too distant future and it's our goal just to deliver radical customer delight to them and treat patients.
In an extraordinary way and I think that will earn us more and more business with Genesis care as we go forward.
The other thing that I've said repeatedly since I've been here for 12 months is that in certain instances, where there are a whole bunch of systems kind of legacy systems. If you will.
Within a customer whether it's an individual hospital with multiple bunkers or a customer such as this.
Our competitor has an opportunity to drive an economic value proposition.
Thats beyond what we would do and frankly, they have more levers to pull than we do and in those instances, where our batting average is not going to be as good.
As it is where its just a head to head clinical.
Competition so.
That would be my assessment I would anticipate like I said doing more and more business with them overtime and were going to work really hard to delight that customer going forward.
Okay, great. Thank you and my last question just as it relates to the previously discussed capacity capabilities.
Specifically related to the conductor supply constraints or I guess better what are the limitations.
Have those been resolved yet and if not do you have a plan to resolve that or bring it in house in some manner.
Can you can you clarify that Andy what what's the question about supply constraints is that about us or about a competitor.
No no.
He previously there used to be.
Issues with being able to get the split magnets and enough quantity.
Perhaps to hit some of the longer term projections that you had I was curious if.
That had been resolved.
Yes. This is Charlie yes that has been resolved we work very closely with our.
Many of our partners and our supply chain and from a magnet perspective, they've scaled their system and we've got.
As you can see on our on our books, we've got adequate inventory to address any demand that's out there.
Okay, Great Hey, Thank you very much and Thats. It for me good luck going forward this year.
Thanks, Andy.
And our next question is from Matt O'brien with Piper Jaffray. Your line is open.
Hi, Good afternoon, guys. This is drew on for Matt. Thank you for taking the questions here.
I know on a previous call you mentioned that about eight you're able to 80% of the way there on getting your valve radio net readiness teams in place I guess I wanted to just follow up and kind of see how the progress is going there.
And then try to understand exactly what 100% means in terms of getting that order to install time down under 12 months I guess is it mainly just scaling that team.
Yes, I would share that I think that team is more or less in place I'll. Welcome Shard to go ahead and answer, but whether you're talking about our volte preparation team or installation team I feel very good about the capabilities that we've built and we're in a very good position to scale from that perspective.
Evidence of two recent PEO to commissioning time frames coming in well inside of a years time. So when things are generally inside of our control and go as usual that capability is exist exists and we've been very successful.
What we've experienced in a in a few instances as well that we're highlighting on this call is that some of the regulatory and permitting delays are simply outside of our control and we need to be very thoughtful about that going forward, but I would say the team is in place and I think weve proven our capability on that front Shire anything to add Scott I agree with all of that I think the place where.
As we learn from each one of our installations as Scott mentioned Weve got under 30 installs that we've done.
Actively handler and learn from them and it's really that transfer best practices. So that we can add value to each one of our customers may be.
Approved a preferred suppliers design houses whatnot that they can just accelerate the whole process for our customers. So that I would say is as we get better at that with additional installs and can transfer that best practice, both nationally and internationally, that's really going to be the next leg to just making that whole process more efficient for us and our customers.
Okay very helpful. Thank you and did you disclose what market that problem distributor served.
No no we havent just in respect.
Twoq to that particular partner were going to.
Keep that one to ourselves, but the big the Big point is we're going to have the right strategic partner in that market to not only fulfill.
These two customers demand, but but also more generally fulfill the building demand that exists in that market.
Okay. Thank you very much.
Thank you.
Our next question is from the line of David Lewis with Morgan Stanley . Your line is open.
Hi, This is mason on for David today. Thanks for taking my question. So quick one from me.
You talked about growing install base and driving system placements, obviously remains a top priority. However, I was wondering if you could find the right guidance adjustments change your thoughts on longer term path to profitability. Thanks.
Yes, and I would say, we havent talked about profitability, yet I think that some time out in the future. What we have shared is.
The most important metrics that we have certainly our orders in revenue and cash utilization.
We're highlighting those.
It's a little bit premature for us to be talking about profitability are calling that timeframe. So.
We will stay silent on that for the time being and as we progress we'll keep everybody posted.
All right. Our next question is from Jason Bednar with Baird. Your line is open.
Good afternoon, guys, Scott just to start with you and given your comments around maybe the 18 to 24 months on the decision cycle that your customers have historically had I mean would you still think it's fair.
Then to expect an improvement in the trajectory of your order book as we move into the the stronger seasonal period in the back half of the year just given the comments around the the health of the pipeline.
Or do you think investors should recalibrate expectations for order momentum to be more in 2020, just once your expense sales forces has been in place for over a year and can really stimulate some of that demand and.
And ill have a follow up after that.
Yes, I think thats, a very thoughtful question, Jason I think it's very difficult for us to predict exactly when we're going to just really take hold and traction in the marketplace.
I believe fervently that Jim and his team are doing all of the right things.
Articulating our clinical.
Our economic and strategic value proposition I highlighted the Florida example.
Where I anticipate as many as three incremental orders here in the not too distant future.
And drive that kind of competitive dynamic in multiple markets.
It's difficult for us to predict exactly when that will take place.
But I believe that doing the right things in the short run will lead to the right long term results.
And we will get more and more effective overtime.
We're obviously dealing with kind of the law of small numbers here.
But but.
Convicted that we're doing the right things.
Okay, and then just separate from the the recent Genesis care announcement I mean, your competitor has received several regulatory approvals here just now over the over the past few quarters. I mean are you seen any change in the competitive dynamics be it pricing or sweeteners, they may be adding to deals.
That they may be winning and I just mean anything from your sales force that you are hearing on that regard.
I would say that I think what what's taking place out in the market and I would encourage you to do channel checks I think there are certain.
People that are looking to.
See whether there is a class effect.
In the marketplace with MRF guided systems, and I think our team is clarifying.
The fact that we don't believe there is.
A class effect there are extraordinary differences between our system and every other system that's out there.
We are the only system, that's able to track.
Soft tissues in tumors in real time, where the only system that is able to shape, a very precise dose along with that we're the only system that strikes the tumor automatically when it's in the plan target and stops automatically when the tumor is outside of the target or a vital organ or healthy tissue is in the way.
The aggregate effective that is extraordinarily different from anything else that's offered in the marketplace and the other thing that is being recognized is that the number of patients that were able to treat in a single day on a single system.
Is what others have been able to treat and upwards of the year on a single system. So the clinical utility of our system is becoming more and more known and understood.
And I think the big differences.
Our customers are realizing that there is likely not a class effect.
In the category.
All right. Thank you.
Thank you.
Our next question comes from the line of Difei Yang with Mizuho. Your line is open.
Hi, good afternoon. Thanks for taking my question just a couple.
So the first one is always with regards to the new ordinary.
This time around the it has being weak.
Would you be able to comment to what degree.
Is this number might be.
That typically influenced by competitive dynamics.
Yes, I think Theres I think theres multiple.
Variables there in terms of what's happening in the marketplace and relative to orders.
Again, it's a little bit redundant I like what I see in our commercial pipeline going forward.
We have competitors that are more apt to do.
Discounting and those kind of things versus how we're selling on innovation and clinical data.
I do think there is a component of that happening in the market, we've been talking about that for.
The last four quarters that I've been with the company.
So I do think thats present, but its not necessarily new.
And I think Theres also other impacts out there not the least of which is a brand new sale sales team that we have.
Recently put in place, let me see if Jim Aleksey wants to make a comment here well. We're I think we're pleased that our us sales forces in place in Q2 and.
The number of accounts that are calling on and bringing into the top of the pipeline is encouraging and there's certainly a timeframe that takes customers to make a decision and and along those lines. There also competitive.
Dynamics in the marketplace, but Scott stated earlier, we feel confident in the response, we've we've received from our prospects that our technology is clearly superior and we feel confident that our that our customers will respond accordingly.
Okay. Thank you for for the additional color and then just changing subject to.
The potential replacement for the CFO .
So startled would you be able to comment what are what would you be looking for in the.
And you'll see us all.
Yes, first I just want to say.
Our regard for Ajay is very high and thank him for the work that he has done over the last three years and we're in the midst of a very amicable separation.
He is availing himself to make a very smooth transition.
We're really looking for the right business partner partner that can scale with this company over time.
Just as we have built in every other functional area.
And I'm pretty confident that we'll be able to find that person and we're in the midst of a retained search on that front. So we will keep you posted and we look forward to welcoming that new team mate, which really represents the last piece of the executive team.
That I've built here over the last 12 months.
Thank you.
Thank you.
Thank you and our next question is a follow up from Anthony Petrone with Jefferies. Your line is open.
Great maybe just.
Follow up on.
On a cash position here you just it's obviously that.
Going a bit lower year I'm, just you know as you look at the on the need for cash and liquidity, maybe just an update there your views.
And then in terms of.
Data, obviously, how important is data.
In the context of the PM.
And maybe just a follow up to that would be timing on prostate and when do you think we'll actually see data from the.
Pancreatic cancer study the smart study thanks.
Yes happy to so so first Anthony regarding.
Cash our burn was about $24 million in the quarter, we've got about $122 million on hand.
I mentioned, the rigor that we have on operating expenses and our balance sheet.
And I feel as though we're in a decent place right now.
There's nothing further on that front that that I care to share it would be premature.
For me to do that.
As as was asked previously on the call we're experimenting with both financial partners and customers. Some things that we can do creatively to drive the adoption of meridian into the marketplace.
More rapidly and so there's there's really nothing more to share on the cash front there.
Regarding APPM I think as I mentioned before it is a tailwind to the company.
Long term.
If we get something similar to what has been proposed.
I think it's going to provide an economic incentive to where the market already wants to go clinically.
And having treatment time frames.
Down inside of 90 days and we can treat many many forms of cancer with high dose SPR t. safely.
With a much smaller treatment volume than many other systems out there on the market. So.
What's good clinically now may be very attractive economically and our ability to treat give or take 400 patients on a system.
In a given year versus a conventional enac at about 250.
Represents a real economic opportunity for our customers.
To take advantage of and forgive me I forget the third component to your question.
Timing on prostate data being published and an update on the timing for the initial data out of the smart study for pancreatic cancer.
Yes on the Smart study.
The timing there is still about the same I think we'll get that.
That first signal on.
The safety signal on the 25 patients some time around.
The end of the calendar year or the beginning of 2020 and as it relates to the prostate data.
It has been submitted for publication.
It's undergone kind of the routine review and re submission.
So were theres positive progress, there and and we're very much looking forward to it being.
In print I don't have exactly when it will be but theres tangible progress and we look forward to seeing it.
Thanks.
Thank you.
Thank you and I'm not showing any further questions I'll now turn the call back over to Scott Drake for closing remarks.
Thank you operator, and thank you all for joining US we look forward to updating you further in another quarter. Thanks very much.
Ladies and gentlemen, this does conclude the program you may now disconnect everyone have a great day.