Motus GI Holdings, Inc.
Q1 2020 Earnings Call Transcript
Published:
- Operator:
- Ladies and gentlemen, thank you for standing by and welcome to the Motus GI Holdings Inc. First Quarter 2020 Fiscal and Operational Update. At this time, all participants are in a listen-only mode. There will be presentation by the Motus management team followed by a question-and-answer session. I must advise you all that today's conference is being recorded.I'd now like to turn the call over to Paul Arndt of LifeSci Advisors. Please go ahead sir.
- Paul Arndt:
- Thank you, operator. And thank you everyone for joining us for the Motus GI first quarter 2020 update call today. Representing the company are Tim Moran, Chief Executive Officer; Andrew Taylor, Chief Financial Officer and Mark Pomeranz, President and Chief Operating Officer of Motus GI.Before turning the call over to management for the opening remarks, I would like to take a minute to remind you that this conference call and webcast will contain forward-looking statements about the company. These statements are subjects to risks and uncertainties that could cause actual results to differ. Please note that these forward-looking statements reflect our opinions only as of the date of this call. We will not undertake an obligation to revise or publicly release the results of any revisions to these forward-looking statements in light of new information or future events. Factors that could cause actual results or outcomes to differ materially from those expressed in or implied by such forward-looking statements are discussed in greater detail in our most recent filings on Form 10-K and our other periodic reports on Form 10-Q and 8-K filed with the SEC.With those prepared remarks, I'd now like to turn the call over to Tim Moran, CEO of Motus GI. Tim?
- Tim Moran:
- Thank you, Bob and good afternoon everyone. Thank you for joining us today for our Q1 2020 earnings calls. I would like to start by providing a business update before turning the call over to Andrew to review our financial results for the first quarter. At the end of our prepared remarks we will open the call for Q&A session.I'd like to cover three key topics today, provide an update on our launch progress through the first quarter, share our view of the impact of COVID-19 and how we are preparing to be successful in the new normal and then discuss the progress we have made with execution of the cost reduction program announced on March 30.We entered the first quarter of 2020 with positive momentum as we built a foundational group of large influential hospitals and health systems who have begun utilizing the Pure-Vu System. The feedback from these early adopter hospitals has continued to be very positive further confirming what we believe is the value that our system offers GIs in providing improved patient care while also reducing hospital costs and increasing efficiencies as it relates to inpatient colonoscopies.Our launch of the Pure-Vu system into the U.S. market is focused on accomplishing four key objectives; generating demand at target institutions in leading hospital networks, developing value assessment committee approval for the Pure-Vu System at these targeted institutions, driving utilization at top national health systems that can influence the market and building brand awareness of the value the Pure-Vu technology provides as a solution in busy hospital GI labs.I'm pleased to report we are executing it again each of these four objectives though at a pace that reflects the current market conditions. As we discussed on our last call at the end of March, our progress was hindered in the back half of the first quarter as the COVID-19 pandemic gained momentum and severely constrained our customer's ability to perform colonoscopies using Pure-Vu, pursue new product evaluations or commit to new equipment investments.As the threat of COVID-19 became a clearer and more pronounced and in order to ensure the health and safety of our employees and customers we complied with CDC guidelines and enacted social distancing thereby requiring our sales team to work from home.Despite these challenges, we have gained approval and placement of the Pure-Vu system in 19 major hospitals since our Q4 2019 launch. These prestigious hospitals includes several of the top-ranked GI centers in the United States including the Cleveland Clinic, UCLA, the University of Texas, Geisinger Medical Center and Memorial Hermann Health System. Each of these hospitals continue to move through the sales process from evaluation to approval to building utilization which typically ranges from four to six months.Despite losing part of the first quarter due to the COVID-19 lockdown, I am pleased to report that we've now trained more than 75 physician champions on the Pure-Vu Systems. We believe that hospitals will begin to reactivate broader elective and non-elective procedures towards the end of Q2 and that the COVID-19 crisis has the potential to amplify the important role that Pure-Vu can have on assisting sites as their GI labs begin to ramp back up. As it relates to the significance of the unmet need in the market for our technology, we are encouraged by our ability to gain evaluation approvals as we approach accounts on our target list. We are batting a thousand in VAC approval so far and have been pleased by the economic, clinical and overall utility acceptance of the Pure-Vu System.Although we have implemented a targeted downsizing as part of our previously announced cost reduction program, we continue to build a strong pipeline of pending evaluations. A particular note our number of significant upcoming evaluations including the Mayo Clinic, UC Irvine, the University of Pittsburgh Medical Center and Northwestern University Medical Center. We currently anticipate these evaluations to begin during June and July.During the last few months we've maintained a high level of communication with our GI champions despite the impact that COVID-19 has had on their departments. Most of their hospitals have been fully dedicated to addressing COVID-19 patients limiting other activities in order to keep non-COVID-19 patients safely out of the hospital. Well, inpatient colonoscopies typically are not an elective procedure we have seen a meaningful reduction in cases at most sites. It is our understanding that patients not exhibiting severe active bleeding at the hospital have had their procedures postponed as the hospitals wait for the COVID-19 cases to plateau.With the unusual and extended lull in GI procedures resulting in many physicians working from home it has afforded us the opportunity to spend more time with them discussing the advantages that the Pure-Vu System can provide when they return to some degree of normalcy in the coming months. GIs have informed us that they expect at least initially to be treating a larger than usual number of sick patients as they begin to reactivate their department.The largest concern we've heard has been the importance of avoiding any extended hospitalizations canceled or boarded procedures due to insufficient bowel prep. We shared their concern and have amplified our messaging to remind them of our belief that the single largest benefit of the Pure-Vu System is to allow for a successful procedure the first time through.This is just one example of how we are approaching hospitals as a value-added partner offering a solution with the potential for high impact as they adapt to a new normal. I have made it a directive for our commercial team to not wait for the GIs and hospitals to lead the way but instead I expect the Motus GI team to be proactive and find solutions for our hospital customers as their activities begin to ramp back up.Let me share a few new initiatives we've enacted and are beginning now to roll out. As a result of access to on-site visits being limited or not available, we have initiated a virtual support program for inpatient procedures. This program can become a valuable tool for us and GIs have expressed their appreciation for this level of flexibility. As part of our virtual support we just launched a new mobile app that is now available on both iOS and Android devices. This app provides chaptered and narrated video support that covers the setup and use of the Pure-Vu System.As in-person meetings for discussions about the Pure-Vu System with new target hospitals are currently not possible we have established a virtual Pure-Vu training room that demand five days a week eight hours a day based on our Florida facility where live system demonstrations and in-services are available utilizing real-time video technology.We are also evaluating the idea of providing off-site training to GIs and their staff from the Pure-Vu systems with the goal to conduct this training in either an ambulatory center or a nearby hospital where it maybe a safer and more convenient environment. We believe we have an opportunity to position Pure-Vu as an even more valuable tool in the GI suite as hospitals proactively consider how to improve patient flow and eliminate the costly burden of extended hospitalizations.Looking outside the U.S., we recently announced receiving CE mark approval in Europe as well as Israeli approval for the second generation Pure-Vu System. We are also actively evaluating potential strategic partnership opportunities with established medical device companies and distributors that have a global commercial footprint and scale. While Europe and Asia are both interesting markets for partnerships we also continue to evaluate potential opportunities to accelerate our launch in the U.S. market should the right opportunity present itself.In terms of the cost reduction program we announced on March 30, I am pleased to tell you that the team has rallied together to execute this plan in rapid fashion. We are confident that we will achieve our objective of reducing our quarterly cash burned by approximately 50% or approximately $3 million per quarter beginning on July 1, 2020. This program was designed to allow us to successfully navigate the uncertainties of the market during this unprecedented time while continuing to advance our commercial and strategic objectives.Before I turn the call over to Andrew let me summarize our recent accomplishments. We continue to make steady progress against our commercial objective of generating demand most importantly by building a solid foundation of key reference centers and KOL support across the U.S. We have decisively adjusted to the new environment created by the COVID-19 pandemic and are prepared to continue to access the market with an innovative approach. And finally we have taken the necessary steps to ensure financial stability for the company during these times.I will now turn the call over to Andrew to discuss our first quarter financials. Andrew?
- Andrew Taylor:
- Thank you Tim and thank you everyone for joining us today. We reported revenue for the first quarter of approximately $28,000 from sales of the Pure-Vu single-use suites. As Tim discussed we continue to gain new system placements and increase our training of GIs early in the quarter prior to the impact of COVID-19. The majority of these centers were operating under an evaluation period during which several were paying for disposable but not the Pure-Vu workstation. We continue to work through capital equipment purchases, leases or rentals with many of these accounts.For the three months ended March 31, 2020 we reported a net loss of approximately $6.5 million or a net loss per diluted share of $0.23 compared to $6.3 million for a net loss per diluted share of $0.29 for the same period last year. The first quarter of 2020 included non-cash expenses of approximately $600,000 principally related to stock-based compensation compared to $1 million of non-cash expenses for the same period of 2019.As was the case in the first quarter of 2019 the company's cash flows from operating activities this period included certain one-time annual expenditures related to personnel, insurance and other compliance fees. The amount of these specific cash outflows totaled approximately $1.6 million.With respect to our cost-cutting measures, as Tim mentioned, these are tracking to plans and are expected to largely be implemented by the end of the second quarter resulting in a significantly reduced cash burn run rate on a go-forward basis. We continue to estimate that total one-time charges associated with this program will be in the $1 million to $1.5 million range. At the end of the first quarter we expensed approximately $600,000 as a portion of these charges. We held approximately $21.5 million in cash and cash equivalents as of March 31, 2020. Additionally we recently entered into a deferral agreement with Silicon Valley Bank whereby our term loan was extended by six months to June 2024 with the interest only period now in place through June 2022 providing additional financial flexibility to the company.And with that I'll now turn the call back over to Tim.
- Tim Moran:
- Thank you Andrew. In closing we are pleased with our sales team continues to find innovative ways to effectively stay engaged with our target GI and hospitals during the COVID-19 pandemic. We see an opportunity to engage additional GIs and train them on the Pure-Vu System while they work through this unique slowdown in their hospitals. And we are working with hospitals and GIs to plan for ramping up inpatient colonoscopies with an influx of at-risk patients who have had their procedures delayed and would benefit from the Pure-Vu system.\We've created a compelling technology that addresses a large procedural market. We've established first mover advantage and are pleased with the positive impact we believe we can have as it relates to improving patient care and health economics particularly in the wake of the COVID-19 pandemic.I will now ask the operator to open the call for questions.
- Operator:
- Thank you. At this time we'll be conducting a question-and-answer session. [Operator Instructions] Our first question comes from the line of Steven Lichtman with Oppenheimer. Please proceed with your question.
- Steven Lichtman:
- Hi, thanks. Can you mention the emergent active bleeding patients not getting referred certainly as much as others? What percent of the inpatient colonoscopies would you estimate falling in into through that category?
- Tim Moran:
- So Steve, thanks for the question. Let me start by just saying in general what we've seen in talking to our physician is in many cases their overall colonoscopy volume has been down by up [reserves] anywhere between 75% and 85% during this period of time. That said as you know we focus on critical colonoscopies which if you look at the total colonoscopy procedure for inpatients roughly about 60% of those are a bleed. What we've seen, though so you kind of scratch your head and say okay well these patients still exist but in talking to our physicians what they've told us is due to the redeployment of many of their units to treat COVID patients they've basically assessed these patients and if their bleed was not significant they've actually postponed them either to an outpatient center or postponing the procedure to take place at a later date. So they've changed their protocols as it relates to managing even these critical colonoscopies that they typically wouldn't have discharged.
- Steven Lichtman:
- Okay. Got it. And then in just the last few weeks you continue to build out the pipeline. Can you remind us how you define a pipeline opportunity as you put a new hospital in that bucket?
- Tim Moran:
- Sure. Yes. So in my mind the general pipeline are accounts that we've targeted and we've had some degree of interaction with and if you look at that universe Steve, it's about a 150 hospitals but then from there we prioritize based on the profile that we think best meets our strategic objective as well as where those hospitals are in terms of their ability to prioritize the evaluation of the Motus product.So I would say that we probably have 60 accounts that are in our backlog and we continue now to just add those as we move forward. So as I mentioned in my earlier remarks we've been cultivating these opportunities at places like Mayo Clinic and northwestern. We added a couple new ones that I don't think we've talked about before but UPMC which as you know is a very large system that we've been in dialogue with and now we have approval to move forward with an evaluation as well as the Methodist system in Houston.So we continue to take them from initial contact, discussion with GIs to approval actually through their VAC to do an evaluation and those are the ones that we really focus on as it relates to pipeline accounts.
- Steven Lichtman:
- Got it. Okay and just last one I'll jump back in queue, how many of the 19 hospitals where you place how many of those have gone through a full VAC at this?
- Tim Moran:
- Yes sure. Great questions. So what we found in most of the processes are there's an initial VAC approval required to do an evaluation and bring the equipment on site and everyone obviously of those accounts have gone through that. I would say generally speaking about half of those accounts have gone through the full VAC approval and as I alluded to earlier so far we've received that approval in each of those. What I will note is in most of those cases now they're starting to purchase the disposable sleeves we are still working through the capital process, as you know the capital funding is not always available at the time of VAC approval. But hopefully that gives you a little bit more color Steve on the conversions.
- Steven Lichtman:
- Yes. That's helpful. Thanks Tim.
- Tim Moran:
- Thanks.
- Operator:
- Thank you. Our next question comes from line of Jeffrey Cohen with Ladenburg Thalmann. Please proceed with your question.
- Unidentified Analyst:
- Hi this is actually Destiny on for Jeff. Thank you for taking the question. I just real quick wanted to confirm that we would see approximately $0.5 million to $1 million in one-time charges in Q2 related to the COVID expense reductions. Am I understanding that correctly?
- Tim Moran:
- Yes. So we had outlined that we expected the total charge to be anywhere between $1 million and [$1.5 million]. I would say right now Destiny that we will come in on the low end of that range.
- Unidentified Analyst:
- Okay. Perfect. Thank you for clarifying.
- Tim Moran:
- Yes. Just to clarify that one point, sorry, just to close the loop. There was about $600,000 associated with the one-time charges that was booked in Q1 of that range. So it's not incremental. Okay.
- Unidentified Analyst:
- Okay. Got it. Yes. Thank you very much. And then I just want to touch on inventory levels. I'm wondering what they may look like for the remainder of the year? I know you mentioned briefly in your press release. So I'm wondering if it'll be similar to Q1 or slightly above?
- Tim Moran:
- Sure. Let me just make a kind of a color commentary on that first, Destiny. As we looked at what was happening with the impact of COVID and the expected slowdown in these facilities and as part of our cost reduction program, we made sure that we were running the business as efficiently as possible but also balancing to ensure that we have enough inventory to meet our needs. I will tell you that we're very comfortable that we have the appropriate number of both work stations as well as disposable both slim an adult to meet both the existing needs but upcoming in terms of what we expect in terms of conversions at new facilities. Mark if you want to just chime in with a little bit more detail as it relates to that please feel free.
- Mark Pomeranz:
- Thanks Tim. I think you said it well. I think we're in a very good position from an inventory perspective and we have extending this good shelf life on our product so that with any ups and downs that happened it should be in a very good position and we have really no concerns at all from a supply chain perspective.
- Unidentified Analyst:
- Okay. Got it. Thank you. And then I'm just curious for your virtual program, what kind of mix are you seeing as far as attendees? Are you seeing physicians that have been using it and are looking to get a better like understanding and additional training or you seeing more pipeline accounts? And then are you also considering maintaining these virtual options physicians? I know we've talked to a number of companies that have been doing that?
- Tim Moran:
- Yes. Destiny. That's actually -- it's really exciting the way I look at this. We've really digitized if you will our go-to-market model and some of this was in the works prior COVID. One of the things that we've always looked at with this business is over time getting hospitals self-sufficient on doing the Pure-Vu procedure once we've come in and done all the training and are no longer at the site on a daily basis we want to be able to provide the appropriate tools to allow them to do cases without us there. So what I would say is the silver lining here with COVID is it accelerated our time and effort in these areas. So as I mentioned earlier we have been as you'd imagine utilizing some of the standard tools like Zoom and webinars. We also created this virtual training room which I think is going to be very interesting where you can call in and see a live demonstration without having to have a sales rep there.I talked about the app which we've gotten tremendous early feedback on what we put into that app in terms of content and the fact that you can go through an in-service on the device but we've chaptered it with commentary. So if there's just one part of the system set up or disposable removal at the end that you want to remind yourself or get a refresher on you can go right to that section and just watch call it 30-minute clip. There's a few other things that we hadn't mentioned but we have a new whiteboard animation tool that's going to be launched here in the next two weeks and this really outlines the importance of the system, how it's utilized and some specific case studies that we think is going to get good attention both at the hospital level but also in social media.So there's a lot of these things that they're now ready and they're starting to be utilized in the market. We will absolutely continue to support this and I would say even add to it over time. In terms of where we've targeted this, as I look at our business right now and I've said this before the pipeline because of this unmet need and because of the fact that we are the only technology in the market that can meet this need, we have not had a difficult time getting interest and having facilities want to do an evaluation. So we're focused now ongoing a bit deeper before we go wider if you will. So the focus of a lot of this remote work has been on existing customers trying to get them through the remainder of the sales process as well as the immediate kind of on the customer. So these are facilities that either have our device on-site and we're about to start a trial or had received approval for a trial and will be starting now in June and July. We spent most of our time with those folks over the course of the last 60 days.
- Unidentified Analyst:
- Okay. Perfect. Thank you so much. I'll jump back in queue.
- Tim Moran:
- Thank you.
- Operator:
- Thank you. Our next question comes from line of Ben Haynor with Alliance Global. Please proceed with your question.
- Ben Haynor:
- Good afternoon gentlemen. Thanks for taking the question. I just had one. You have done a good job providing quite a bit of color so far well. You mentioned some of these procedures being pushed to outpatient centers at the same time that you're seeing the length of stay improvements Pure-Vu really resonate with these hospitals. I mean do you worry at all that some of these that are getting pushed out to the outpatient centers not just in time ultimately do not come back to the hospital and maybe you need to shift the commercialization strategy more towards outpatient centers or any color you can provide there would be helpful.
- Tim Moran:
- Yes. Thank you Ben. I would say that we've talked to a large number of our docs one of the benefits in this period of time has been a lot of the GIs have been working from home. So our ability to interact with them on a much more routine basis has been remarkably high. I would say that the majority of these cases have been postponed as opposed to have been picked up in the outpatient center. I think if it was significant and they were able to do it they did but what we're hearing from our docs is they're expecting a significant influx of these sicker patients as they start to ramp back up and what they've basically told us and we've now shared or we put some of our existing guys in touch with you know docs that haven't had exposure the technology yet to share which is the number one thing that they want to do with these patients is ensure that if they're bringing them into a hospital environment, if you think about the COVID testing that has to be done, the PPE that's going to be consumed by both the healthcare professionals as well as the patient and the fact that there's a risk, there's always going to risk their that patient can catch the virus while they're there.The last thing that they want to do is have that procedure be prolonged or canceled. So the feedback we've received is the value prop will likely be even more important now post-COVID and the awareness on the importance of length of stay reduction. So we really think that this works well in terms of what we've been talking to the market about even before COVID hit.
- Ben Haynor:
- Okay. That's definitely helpful and actually just one more quick one for me. You mentioned the strategic partnership opportunities and the potential may be sign an agreement here for the U.S. market. Any color you can provide on how those discussions that have been going? Whether you think that that is a likely route anything? Any help there would be great.
- Tim Moran:
- Sure. Yes. You listen this, there's only so much as you know Ben that I can comment on now but what I will say just generally speaking is, I'm very pleased with the interest and attention that we've gotten in the market with our product. I think it's being recognized by other folks that either play directly in this space or in a nearby part of the hospital look to try to get into the GI space. I think they see that we've got a technology that's taken us eight or nine years to really perfect that allows a physician to control a procedure that is today very much not controlled well and it's costly the hospitals.We also first mover advantage. So as I mentioned earlier we've protected this asset. We think it's going to be quite some time before someone is in the market competing with us. I think that's gotten the attention of some of these larger companies. So we continue to be an active dialogue. When there's an update of course I will provide that but right now we're really focused on continuing to bring these large centers on board which I think just gives us more leverage as we move forward and continue to have these discussions.
- Ben Haynor:
- Okay. Very helpful. Thanks for taking the questions and keep up that batting average for the VAC approvals.
- Tim Moran:
- Thanks Ben.
- Operator:
- Thank you. Our next question comes from line of Matthew O'Brien with Piper Jaffray, please proceed with your question.
- Matthew O'Brien:
- Good afternoon, thanks for taking the questions. Of those 75 doctors trained are they all at those 19 facilities where you have a system or are there's some that are outside of those 19?
- Tim Moran:
- So Matt I would say the majority are at the sites that we have a system. There's a few that we have spent a little bit of time with that -- we have loaner units that we give to our reps that they can go out and do some training. So when they're creating interest in the market they may have a meeting and they'll train a physician on how to utilize the device but if they're not ready to trial then obviously we're not going to leave it on-site but I would say the large majority are at the facilities that we're working with today.
- Matthew O'Brien:
- Okay and then Tim, as we think about things as they progress throughout the course of the year, I mean capital is definitely constrained. A lot of these hospitals they have a lot of other things to worry about at the moment. They're hemorrhaging money currently. So how do you think about the recovery here for you guys during the back half of the year or is it going to be really difficult until we plug in ‘21 and things have moderated more so or can you be more flexible with your business model?
- Tim Moran:
- Yes. So as you know Matt we've talked about this, I mean capital has kind of always been tight and I think it just got a bit tighter and at least in areas that have been hit the hardest and we've heard that feedback, in particularly even with some of our existing accounts that we're on the cusp of releasing funds to purchase the workstation and now that's been put on hold at least temporarily but what I will say is, I think we have the flexibility to really partner with these sites and be creative in terms of how we structure our programs and we've already had some of those discussions and there's things and we'll talk in more detail as they are actually enacted but volume based agreements where some sites have said hey we can make a commitment on the number of procedures will do but we may not be able to pay for the capital now and in our mind and I've said this before the capital has value of course.However, getting these sites to the point where they are doing repeat procedures we're getting repeat disposable orders and our product has become just a standard tool in their toolbox within the GI lab is really where we need to be and what we're focused on. So we will not let capital slow down these conversions but we think we can get creative as it relates to the way we go about the partnership and including the disposables.
- Matthew O'Brien:
- Okay. Thanks and then one for Andrew just the level of cut is definitely necessary given what's going on. Can you talk about where the majority of those cuts are really focused on and then how that could impact you as you head into ‘21 as far as trying to grow the business?
- Andrew Taylor:
- I will comment generally and I'll hand it over to Tim to talk about general impact on strategy and our commercial objectives but the short answer Matt is really across the board. As we talked about last quarter we had some cuts in the commercial department a little bit more than 50% in that regard and then in other areas it was anywhere between 30% to 50% nearly across the board and Tim if you want to comment on sort of how that sets us up for the remainder of the earning for ‘21?
- Tim Moran:
- Yes. What I will say is one of the most important things when we made that decision was we wanted to be decisive. We wanted to ensure that it was meaningful enough to allow us to weather the storm to get through this period of time and the unknowns in terms of when hospitals would start to get back on line and we also one of the kind of tenets of the process was we didn't want this to be ongoing. So doing the best of our ability ensure that there wouldn't be additional cuts and right now I feel comfortable with at least the view that we have that's getting a little clearer that there wouldn't be additional cuts.What we did do though is Matt is we looked at the overall organization and we trimmed in areas where we may be placing a bet that's much longer-term and we said okay does this meet our immediate objectives and the number one immediate objective for Motus GI is demand generation in the market commercially with our product building out that foundational group of hospitals that then really become the proxy for what this market can be either as we add back more salespeople and grow that business ourselves or we look at a strategic partnership. I think that's the critical priority.The other key objective that we thought about when we made the cuts where the technical expertise of the company ensuring that we can drive some of the opportunities that we see that are in the nearer term. So next generation ideas around our disposable sleeve which have been in the works as well as the upper GI opportunity that we talked about in last call. So we made that we didn't impact those key priorities but we did have to make some hard decisions on things that we can add back as we see things getting a little bit more positive in the market. But I feel very comfortable that we're able to achieve the most important objectives. So hopefully that makes sense and if you look around the market and I've heard from colleagues and others that have had to make much worse decisions and some of that are questioning whether they can weather this storm and I'm really pleased that we took quick action in terms of what we did.
- Matthew O'Brien:
- Okay. Just quick follow-up on that. Tim how many sales reps do you have at the moment? And how are you thinking about end of the year?
- Tim Moran:
- Yes. So we -- as I, think I mentioned this in the last call, we made about a 50% reduction in terms of our headcount. So roughly Matt, we have five customer facing field people and we've really focused them on Central, West and East with our key relationships in many of those sites. We also have support in Texas where we've got some good installations of product and of course our head of sales. So that's the way the commercial team is structured now and then in terms of marketing and the other key support areas we've peeled off a few folks but we've kept our key employees there.
- Matthew O'Brien:
- Got it. Thank you.
- Speaker:
- Thanks Matt.
- Operator:
- Thank you. Our next question comes from the line of Kyle Bauser with Dougherty & Company. Please proceed with your question.
- Kyle Bauser:
- Hi Tim and Andrew thanks for the updates here and taking the questions. I know as you mentioned, it's more important now than ever to get the colonoscopy done in the inpatient setting on the first try and I understand that even these non-elective inpatient colonoscopies are being pushed out. So it's hard to get into the new hospitals but given the size of the early adopting hospitals it seemed like the sales reps could stay quite busy making sure all the GI docs and support staff have been in serviced and trained in. So if you look at these 19 hospitals with Gen 2 just kind of curious roughly what percentage of the targeted clinicians that these hospitals have been trained in?
- Tim Moran:
- Yes. Kyle, that's a good question and as I mentioned earlier we kind of had the luxury of many of these physicians working at home. So we've been able to be in contact and I would say with almost every one of those facilities the key GI Champions that either our doc set from the earlier accounts places like UCLA that are doing procedures on a regular basis. University of Texas, they're doing and purchasing sleeves on a regular basis. We've been able to be back in touch with them just to check in but on the facilities that were in the midst of an evaluation or the ones that had not yet started their evaluations we've been in touch with, I can say confidently all of those docs to ensure that we're walking through questions on the system, talking to their staff about setup and also even working through the anticipation of the value analysis committee ensuring that we've got the data necessary to have that be an efficient process once we get back on track.So overall this has been in my mind a pretty effective period of time in terms of we've got a reduced size team but you can get a lot done when people are available and we're doing things over the phone. If you think about it kind of from that perspective and we even had procedures that were taking place in one of our evaluation sites at Sinai Hospital in Baltimore that did seven, eight procedures this past month without us there. And we were able to support them remotely and they're in a early evaluation account. So that was very-very positive.
- Kyle Bauser:
- Interesting. That's helpful. And can you talk about the rental process timeline? It sounds like there's flexibility here with accounts willing to do sort of minimum disposable volumes but how long are you offering the rental option to accounts once they sign up typically?
- Tim Moran:
- So the priority is trying to get these facilities on to some type of capital program whether it be an outright purchase, a rental or a lease or a different creative volume based program really right following the VAC approval. Now at times that is not able to be done depending on the dynamics of the hospital. So we've had instances where we've committed to say okay based on the volume that you're going to give us on a monthly and quarterly basis, we will leave the workstation here for the next three months but at that point we now need to try to get you under some type of an agreement. So we've shown that kind of flexibility and keep in mind it's early. We're call it, we're two quarters into our launch which a month was impacted. So most of these facilities that we talked about are really getting through the final portion of their process. So a lot of dialog in terms of the timing of when they will move to a rental, is really happening real-time if you will.
- Kyle Bauser:
- Got it. And then just lastly I know the clinical trials across the board has largely been put on hold but can you just walk through in a little bit more detail the plans for each of your upcoming and ongoing studies that we should keep an eye on?
- Tim Moran:
- Yes. Sure. Let me make a general comment. So yes they've all been impacted just as everyone else in the market has seen in terms of clinical study activity. You know that we're running the expedited study in Boston and of course Boston had a large number of cases and we've been in very close contact with Dr. Jacobson and they are not really back yet up and running as it relates to the clinical study but we continue to stay in close contact. As you know we are also focused on as you think about 2020 and we've said this the investment that we want to make around clinical studies are all to advance our commercialization efforts.So we haven't yet revealed the details when we will when the time is, when these are approved but we are working with a couple of the largest centers in the U.S. to construct studies that will give us additional data that we don't have today around GI bleeding and the economics associated with using Pure-Vu for the GI bleeds. So we've talked about getting into a GI bleeder with a reduced timeline and some physicians have already done that with very minimal prep. So we'd like to formalize that and we're working with some of the largest centers to do that. I can ask Mark if you'd like to provide a little bit more color as it relates to clinicals please add.
- Mark Pomeranz:
- I think you covered it well, Tim. To Tim's point Kyle we are really looking at those critical patients and developing more data around that so everyone's already fairly aware that we don't want to delight patients in the COVID issues have only accentuated that. So really driving to that whole point especially for those critical bleeds not even waiting overnight to try to prep those patients but really to try to move that to much more rapid colonoscopy experience to really not only for the economic benefits but also have the large potential to show some significant clinical benefits as well.
- Kyle Bauser:
- Got it. Thanks Mark. Thanks Tim and Andrew. Appreciate the updates here.
- Tim Moran:
- Thanks Kyle.
- Operator:
- Thank you. Our next question comes from line of [indiscernible] please proceed with your question.
- Unidentified Analyst:
- Hi this is [indiscernible] dialing in for [indiscernible]. I have got a couple of questions. So I just wanted to make sure the Rescue study you have not initiated, correct? I mean do you have any plans when you plan to initiate that? And are you planning to use the study data for any future indication expansion or some sort of special heightened case clearance?
- Tim Moran:
- Can you just repeat the first part of the question, which study are you referring to?
- Unidentified Analyst:
- Rescue study.
- Tim Moran:
- I am sorry. It was cutting out. The Rescue study, Mark do you want to try a little bit of color as it relates to the Rescue?
- Mark Pomeranz:
- Sure. So the Rescue study, we have currently put on hold which is more of an outpatient focused study and that study we're going to determine probably as we get later into the year depending on how things begin to open up whether that's an area that we want to focus on. That was not a study to help with any indication expansion or any claims or any regulatory process. That was more just for market development reasons into the eventually into that outpatient setting. So not a critical study for us in the shorter term; more for a longer term focus. So we'll pick that up at the appropriate time and may even redesign it based on what we're seeing happening in the COVID world.
- Unidentified Analyst:
- Okay. Thank you. So how does the sales of the Pure-Vu [indiscernible] sleeves look like in 2020 before and after the [indiscernible] impacts? Maybe you can give some number and also do you have any expectations or guidance for the rest of the year with respect to the Pure-Vu?
- Tim Moran:
- Surer. Yes. So at this point we have not given guidance as it relates to revenues nor have we obviously then broke out the sales mix but what I can tell you just to provide a little bit of color and we've said this publicly before what we expect initially when an account makes a conversion to Pure-Vu we typically have two to three physicians that are GI Champions in that site that would have been part of the evaluation process and part of supporting the VAC approval with their clinical feedback. We expect those early accounts to ramp up to somewhere between 5 and 10 procedures per month initially and then over time as we continue to expand at that site what we do is we focus on bringing additional physicians in, have them trained and then obviously that drives increased sleeve volume but in terms of modeling we put out detail I think two calls ago, we had talked about five to ten procedures per month initially is what we would expect that these sites can get to and then if you think just kind of longer-term and at a macro level there's about a million and a half procedures done each year in U.S. hospitals.These are the critical inpatient procedures. So about a million and a half procedures and the literature has shown and we've seen in the real world that upwards of 50% to 55% of these procedures are indeed delayed for a night or two which is the perfect target opportunity for us here as we are launching the product to go after.So call that 750,000 -- 800,000 procedures in the U.S. that immediately are target market for us and then of course as you model things over the course of the next couple of years you can look at various penetration rates but we think it's premature to provide specific revenue guidance until we get a couple more quarters under our belt.
- Unidentified Analyst:
- Great. Just one final question. Assuming the pandemic continued for the rest of year what are some of the steps you might have to take to protect your business?
- Tim Moran:
- Yes. So I think largely the big step that we've taken already as you are aware on March 30 we announced the cost reduction program. We just talked about that, I think taking half of our burn out of the quarter on a go-forward basis, gives us more runway to hopefully allow things to get a little bit more concrete in the market.I am pleased that we're starting to see if you look at the concentration of our accounts, we've got a large number of facilities that we have been working with in California. We've got a nice group of installations in Texas and also parts of the Midwest and in speaking for those accounts over the last couple of weeks, it looks like the majority of those will start to get back up and running here in the first half of June.I think some of our facilities in the Northeast, New York, Boston some of the larger cities like Chicago may be a little bit later in the year but we're anticipating that these facilities are going to start to get back up to their normal volume over time.We've even had a few of the larger centers telling us that they're expecting by July to potentially be at a 120% of their volume as they bring back this influx of patients. So we're expecting that things are going to get better as we get into the summer but I think we've stabilized things from a financial perspective. We do of course continue to have dialogue as we discussed with strategic partners both on the commercialization side but also on the financial side in terms of folks that understand our story and could be financial partners in the future for us. So right now I think it's all about execution and we're hopeful that the signs that we're seeing in some parts of the states are going to continue and we can get back on the trajectory that we're on before COVID hit.
- Unidentified Analyst:
- Okay. That's it for me. Thank you so much.
- Tim Moran:
- Thank you.
- Operator:
- Thank you. Ladies and gentlemen this concludes our question-and-answer session. I'll turn the floor back to Mr. Moran for any final comments.
- Tim Moran:
- Great. Thank you. I just want to thank everyone for their time today for the continued interest in Motus. We've got an incredible technology that we are really in the early phases of developing into the market but when you look at this procedural market, our first mover advantage it's that in just two quarters we're able to get our product into. We remain very bullish about the overall future opportunity of the company and we'll look forward to providing updates next quarter. So thanks everyone for participating today.
- Operator:
- Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.
Other Motus GI Holdings, Inc. earnings call transcripts:
- Q3 (2022) MOTS earnings call transcript
- Q2 (2022) MOTS earnings call transcript
- Q1 (2022) MOTS earnings call transcript
- Q4 (2021) MOTS earnings call transcript
- Q3 (2021) MOTS earnings call transcript
- Q2 (2021) MOTS earnings call transcript
- Q1 (2021) MOTS earnings call transcript
- Q4 (2020) MOTS earnings call transcript
- Q3 (2020) MOTS earnings call transcript
- Q2 (2020) MOTS earnings call transcript