Profound Medical Corp.
Q1 2021 Earnings Call Transcript
Published:
- Operator:
- Thank you for standing by and welcome to the Profound Medical First Quarter 2021 Conference Call. At this time all participants are in a listen-only mode. I will now like to turn the conference over to your speaker today Stephen Kilmer with Investor Relations.
- Stephen Kilmer:
- Thank you. Good afternoon everyone. Let me start by pointing out that this conference call will include forward-looking statements regarding Profound and its business, which may include, but is not limited to, expectations regarding the efficacy of Profound’s technology in the treatment of prostate cancer, BPH, uterine fibroids and palliative pain and osteoid osteoma. Often, but not always, forward-looking statements can be identified by the use of words such as plans, as expected, expects, scheduled, intends, contemplates, anticipates, believes, proposes or variations including negative variations of such words and phrases or states that certain actions, events or results may, could, would, might, will, be taken, occur or be achieved.
- Aaron Davidson:
- Good afternoon, everyone, and welcome to our first quarter of 2021 conference call. On behalf of the management team and everyone at Profound, I would like to thank you for your ongoing interest in our company. For those of you who are shareholders, we appreciate your continued interest and support. I will turn the call over to Arun in a moment for an update on our commercial activities. However, before I do, I’d like to provide a brief update on our first quarter, 2021 financial results. A quick reminder that we’ve changed our presentation currency from the Canadian dollar to the U.S. dollar to streamline things all of the numbers we will refer to have been rounded so or approximate. Our first quarter, 2021 sales performance was significantly negatively affected by COVID-19 impacts, particularly in the months of January and February resolving in our first revenue decline since Q1 2018. For the three month period ended March 31, 2021, the company recorded revenue of $711,000 down 41% from $1.2 million in the first quarter of 2020. As we mentioned in today’s press release business began to rebound in March so far that positive momentum has continued into the current quarter while we do not provide formal quarterly or annual financial guidance and we continue to be cautious about the scope and pace of U.S. TULSA-PRO commercial adoption in the near-term to the pandemic factoring in the recent uptick in procedures at existing sites and what we already have in our TULSA systems agreement pipeline. We believe that we have the potential to make up for the Q1 revenue shortfall during the remainder of 2021. Total operating expenses in the 2021 first quarter, which consists of R&D, G&A, and selling and distribution expenses were $6.8 million, an increase of 47% compared with approximately $2.1 million in the first quarter of 2020. Breaking that down further on a year-over-year basis, expenditures for R&D increased 47% to $3.1 million. This was primarily driven by higher spending for R&D initiatives and projects opt-ins awarded to employees, additional head count and an overall increase to general expenses partially offset by decreased travel expenses due to COVID-19 restrictions. G&A expenses decreased by 6% to $2.1 million due to lower salaries and benefits as the result of bonuses earned by management in the prior year and timing differences associated with the accruals partially offset by increases to consulting fees and share-based compensation. Finally, selling, and distribution expenses increased by 70% to approximately $1.6 million.
- Arun Menawat:
- Thanks, Aaron. I would like to start by addressing the revenues in Q1. As Aaron discussed, they were lower than expected, but as you will see, that has not translated into our being less bullish for the year. Let me highlight the key reasons why. First, as various sell-side analysts have noted this earnings season is similar pattern emerged across the medtech space in the first quarter with even the most established company seeing COVID impact in January and February followed by a late March resurgence. We saw a similar pattern. However, since we are a game changing technology that requires full training for treating in the MR Suite and are relatively early in the U.S. commercial rollout of TULSA. All procedure declined in the first two months of the quarter was likely a little steeper and the recovery in March while noticeable wasn’t robust enough to make up the shortfall. Second, we’re starting to gain traction in building a high quality U.S. installed base. As a reminder, our U.S. market entry strategy for TULSA-PRO targets three types of end users; one, early adopters, which includes urologists specializing in cutting-edge alternative prostate disease treatment; two, independent imaging center companies; and three, opinion leading teaching hospitals. Each of these are expected to play different roles in supporting both short-term and long-term adoption. Our early adopter TULSA-PRO sites were not as impacted significantly by COVID in the first quarter, while still slowed by travel restrictions they continue to treat a growing number and an increasing variety of patients. At the beginning of 2020, we estimated that after the first six to 12 months of being operational, the average run rate would be 40 procedures per year, eventually growing to 100 procedures or more after that. Today, these centers have exceeded those targets by about 50% achieving an average run rate of 60 procedures per year, and we believe that their run rate will continue to increase as COVID recovery continues. With respect to the second group, the imaging center company RadNet’s Liberty Pacific West Hills center in Los Angeles is now actively treating patients using TULSA after initially experiencing delays in 2020 and early 2021 related to COVID-19. As most of you know, we also announced a U.S. multi-center TULSA-PRO agreement with Acumen last week. Acumen currently has 79 operating clinics in Florida and a total of 134 sites across its network in seven States. We expect to install TULSA-PRO systems at up to 10 Acumen centers over the next year or so with the first site anticipated to be operational in the fourth quarter of 2021. Acumen is making a significant investment to impressively outfit these centers to focus on men’s health. The initial geographic focus of their new men’s health centers will be in Florida, where they’re first TULSA-PRO install will be. Texas and Pennsylvania are expected to follow, based upon the success of the first ten installs we hope to expand our relationship in the future to include additional Acumen men’s health centers.
- Operator:
- Thank you.
- Aaron Davidson:
- As you do that operator, I should comment that I said our cash at December 31, 2021 was $78.5 million. I should have said March 31, 2021 was $78.5 million. Thank you.
- Operator:
- Thank you, sir. And we do have a question from the line of Anthony Petrone with Jefferies. Your question please.
- Brianna O'Toole:
- Yes. Hi, this is Brianna on for Anthony. Thank you for taking our questions. I have a couple. So regarding the five newly contracted sites and backlog as of last quarter, when do you expect these sites to be up and running? And then my follow-up to that question would be given the delays in one quarter – in the first quarter, are you still targeting roughly 25 installed by year end?
- Arun Menawat:
- Yes. Brianna, good afternoon. So, most of the sites that I described are slated to be operational this summer. So, I would anticipate that by the end of June at the latest by end of July, most of the sites, there are two sites that will be operational in Q4. One of them is Mayo, Rochester. The other one is the first site that we signed the agreement with for Acumen. To your second question as I mentioned, we have about 10 sites that are operational. We have more agreements already in our hands. And so getting to 25 at the moment, we do not see a problem with that. We think, we should be able to quite frankly, do better than 25 this year. And because of the fact that we already have these agreements is one of the reasons why we do believe that we will be able to make up a good this Q1.
- Brianna O'Toole:
- That’s very helpful. And then just regarding the Acumen deal, how many systems will be installed in the initial 10 centers across Florida, Texas, and Pennsylvania. And then looking ahead, what is the potential to expand across Delaware, Illinois any other States?
- Arun Menawat:
- Yes, so majority of the systems or the first few systems are most certainly slated towards Florida. And then there are likely to be, I would say at least half of the systems will be in Florida and the remaining other five would be in the other two States, that we – as we mentioned, Texas and Pennsylvania. The strategy let me just quickly talk about the strategy. And I think it’s more of an Acumen strategy than ours, but it is I think a pretty important strategy and an impressive strategy. The idea is that we are focusing on the States that has the majority of prostate cancer patients or prostate disease patients. And they happen to be California, Florida, Texas, and the Northeast. And then Arizona is another one that we will focus on later on. So by focusing on these large States, I think that as the awareness increases, we want to make sure that sufficient centers have TULSA-PRO availability, so that people will become aware of it and they can go get treated. And as the awareness grows in the state and we are higher and higher numbers, we think we will be able to then supply sort of mimic those strategies from one state to the next. So rather than try to, scatter these around the whole country, the idea is that we’re putting them in, key States in the beginning and leveraging all of our resources. Does that answer your question Brianna?
- Brianna O'Toole:
- Yes. That’s very helpful. And I have one more question on the procedure mix. So, with the procedures that have been done through 1Q and even into 2Q, are you – what is the mix of BPH off-label and then intermediate prostate cancer then moving into high-risk and low-risk prostate cancer?
- Arun Menawat:
- Yes. So I think that in general it’s a very general comment Brianna, these are not perfect numbers, but I think that the number of BPH patients that we are treating is increasing my best guess is that about 20% of the patients being treated right now are in the BPH category. I think in Europe, that number is probably a little higher, maybe 35% in Europe of the patients that are prostate cancer patients. That’s an interesting question, because I think what we are seeing is that in the teaching institutions, which were undoubtedly very low in Q1, but I think what we’re seeing in the teaching institution, they are looking to follow the clinical trials that have been done. So they’re sticking more to Gleason 7, which is mid-grade cancer patients, the early adopters, which are continuing to increase as well. They are actually treating patients that are, that may be as much as a patients they may have a slightly extra capsular activity or even patients where, they are relatively high risk patients, where they think that there might be a need for a combination treatment. And they’re looking to upgrade the bulk with TULSA and then, leave the rest for another combination. So, we are seeing a pretty good variety. And even in BPH, I was actually talking with a physician just 15 minutes before we started today. And he was telling me, they treated today, a patient with a 270 CC prostate, the largest prostate that has been treated with TULSA. So, they are definitely testing the limits. And I think that is certainly another reason for the confidence that the versatility and the flexibility of this technology is that, we do believe that a large majority of the patients can be treated with TULSA.
- Brianna O'Toole:
- Great. Thank you so much.
- Aaron Davidson:
- Brianna, I just want to comment, this is Aaron. That BPH is not off-label. We’re approved for the ablation of prostate tissue, not specific to whether it’s malignant or benign.
- Brianna O'Toole:
- Right. Thank you for the clarification.
- Aaron Davidson:
- Okay.
- Operator:
- Thank you. Our next question comes from Rahul Sarugaser with Raymond James. Your question please.
- Rahul Sarugaser:
- Good afternoon, Arun and Steve, thanks so much for taking our questions today. So, thanks for addressing the revenue upfront that isn’t even helpful. So it would be recognizing that you don’t provide revenue guidance and we’ve sort of talked about the 25 install-based goal or hopefully beating that by the end of the year. Are you able to give us a little more visibility in terms of, going from the 10 currently operating to how many we expect to be installed in Q2 and Q3, and then as a result, we can then do our own math to figure out, what that rep would look like?
- Arun Menawat:
- Yes. So Rahul, I think I would say two things. One is we are, where the hospitals are open, as we talked about in our prepared remarks. We saw March was better than January, February and April has been better than March. We are able to go to hospitals now and start installing. So, if you do the math, I think we have enough agreements to do – I mean, we have enough agreements to be, double-digits already. So, you would see quite a bit of activity in the next four to – from here to September, we’ll be installing, I would say at least one to two system month, probably isn’t it my best can. Again, it’s a little bit still unpredictable, but I would say, we will be installing 75, a quarter is a reasonable expectation.
- Rahul Sarugaser:
- Terrific. That’s excellent visibility. Thank you very much for that. And then now moving to the utilization rates you referenced the early adopter sites, operating at this relatively high level over 60 per year annualized. When we look at the – when we kind of reconcile that with the revenue number, it’s – there seems a bit of an asymmetry there. So, because then if – then we back calculate for the rest of the installed base teams that they’re essentially doing few to none. So, how should we be thinking about an average utilization rate across the installed base, recognizing that, of course, we attenuated as you install devices and get them trained up? How should we be thinking about that rate as an average?
- Arun Menawat:
- Yes. So Rahul, I understand that where you’re going with the question. And let me just start one more time. I think part of the reason what we said that we do have confidence in the growth rate returning after this COVID, part of it is coming from the fact that, that we already have enough contracts to be able to go install systems. So, we know, we think we can get to the installed base. And so along those lines, I would say, we’re going to end up with more new systems very, very soon then the older systems, which is more than a year old. So, I think I do want to be very, very open and clear about that also is that initially the run rate of these new systems is not going to be in that 60 per year rate right away. It’s going to take six to 12 months before we get there. And the second thing is that, I do want to continue to emphasize the point that we have a very, very disciplined market entry strategy that looks after those three types of what I call channels or customers. And every one of them is going to behave differently. And so the early adopters, they’re 60 plus I actually think this year they’ll do better than that. Even with the first quarter, I think overall, they’re going to do better than that. I think the hospitals are actually going to be relatively, even more disciplined. Those channels are going to say, I’m going to do a five or 10 Gleason 7 before I go to a higher risk, or I’m going to train three or four different physicians before I really ramp up, or I might want to look at, a couple of outcomes on my own patient in spite of the clinical data that I see. So, I do think that we should be, realistic with respect to the run rate at the large teaching hospitals. Now again, having said that I can give you another, again, any belittle example, we, WellSpan is one of the hospitals that we started that we signed the contract late last year. Again, they got delayed, they did their first patient in March. The second patient, they did the physician put the whole patient and the whole thing on his own LinkedIn website with the whole, like the, all the information and the images of the treatment itself, it’s all done by the physician. So it gives me confidence that they are liking what they see, but at the same time, they’re still saying, look, I’m, I really like what I see, but I’m going to be very measured in the way I, increase the types of patients I treat. And on the imaging center side, I think we’re off to a very good start with RadNet with the delays. And I think Acumen, we should do even better than that, but they’re not going to start until Q4. So, I realized that this is a little bit of pluses and minuses here, but I want to be very clear and open about this and the reasons why it is and why we remain midterm volition, short-term cautious about things? And again, every quarter we’ll share with you more and more details on the adoption rates and so on. So, I hope that helps.
- Rahul Sarugaser:
- Yes, that’s excellent. Thank you for that clarity. And if you’ll indulge, just one more question around reimbursement.
- Arun Menawat:
- Sure.
- Rahul Sarugaser:
- Last quarter, you talked a little bit about the C-Code and you, of course, are always very cautious around speaking around the C-Code. Are you able to give us a little bit more update on how the rollout of C-Code is whether it’s starting to be adopted by broader jurisdictions other than the initial? And then also just as the second part, this is great to hear that the, some clarity on the CPT code strategy, given that you’re looking at an application hopefully towards the end of this year, but you also talked a little bit about maybe 2022. Can you give us a bit more clarity in terms of distinguishing between end of this year and 2022 for that submission of that CPT application?
- Arun Menawat:
- Yes, I’m very happy to. So Rahul, in terms of the C-Code to be honest, there’s not a lot to add in the sense that the patients who are being treated at hospitals who are Medicare patients, they continue to get paid. The patients who are in, who are applying through private insurances, majority of those patients are getting paid something. The hospitals that we have signed new agreements with are comfortable with the strategy, the same reimbursement strategy, and it’s becoming fairly clear that strategy is likely to work – continue to work. And I would say again, soft measure, I can see hospitals becoming, comfortable with billing for this new technology and the outcomes that they’re seeing and in cases where they need to present more clinical data to get the insurance payer to pay. I think all that is continuing to happen. And we continue to remain pretty comfortable. On the CPT-1 side, again, to be honest, we’re pretty good, fairly happy with the way it’s progressing. As I said, in the prepared remarks we were looking to engage with the various chapters, the reimbursement chapters are the top societies like American Urological Society and the American College of Radiology, which is a chapter of RSMA. And we’re getting very positive feedback in terms of the strategy we’ve picked and that if we can deliver what we believe we can, that the support that we would need from the societies that they believe that it’s going to be available to us. And so our goal was that we want to be able to get to that point where we qualify by end of this year. But to be honest, it’s a little bit more, or a little bit more positive in the sense that not only do we believe we will be, we’ll get to the qualification point where we also think that we are more comfortable, that we will get supported by the society. Then, I was maybe four months ago. And so what that means is that once we qualify them, the application and all the administration process will start in early 2022. And by end of 2022, we should have some kind of ruling from the American Medical Association. So that’s kind of the process. And overall, as I said, these are not hard numbers or anything, but I think that the direction we remain pretty comfortable with.
- Rahul Sarugaser:
- Great, thanks so much for taking my questions, I’ll get back in the queue.
- Arun Menawat:
- Thank you, Rahul.
- Operator:
- Thank you. Our next question is from Josh Jennings with Cowen. Your question, please.
- Josh Jennings:
- Thank you. Good afternoon Arun and Aaron. I was hoping to ask about the sales funnel and the status here, congratulations on the record, TULSA-PRO new agreements in the first quarter. I just was hoping you could just give us an update on with that success, where the sales funnel sits today in each of those three channels that you talked about earlier?
- Arun Menawat:
- Sure. Josh, the Acumen agreement has been public domain so we know that 10 system over started Q4 over 12 months. Then I think that there are in the prepared remarks. I think, I described at least another four agreements that are from leading hospitals that are – that we have in our hand that we would be installing in the summer this year. And then I think that there are at least another couple of agreements on what we call the early adopter channel. So, you’re looking at in terms of contracts and then, we have prior quarter contracts that have not been installed. So you’re looking at, to be honest, over 15, already in our hands.
- Josh Jennings:
- That’s excellent. And I started, I hope – it was super clear in my question that, but thank you for that lectured information, but I wanted to also just understand, just making sure that you’re not completing kind of where your sales leads are and that pre-contract funnel where that it’s been, our assumption is that it’s still full. It continues to be added to, as your sales efforts continue to have success. There’s still, I mean, it’s still such early days, but that the funnel pre-contract funnel isn’t being depleted in that still flush.
- Arun Menawat:
- Yes it is. Yes, absolutely. Yes, I don’t see the , Josh I also don’t see, anything changing in terms of feedback from patients or feedback from the urologists. In fact, every site is looking to increase utilization.
- Josh Jennings:
- Excellent. And just to focus on the imaging center channel congrats on that Acumen agreement, I was hoping you could just share any updates on the RadNet agreement on the first center you said was up and running now. And I think there’s a couple other centers that could come on board in 2021, or how should we think about the cadence of RadNet centers having TULSA-PRO into their repertoire over the coming quarters. And then any other imaging center companies or regions, where there’s potential to build on these contracts that are already imposed with RadNet and Acumen to add another one or more than those two.
- Arun Menawat:
- Yes, absolutely. So I think the first site and the RadNet site is up and running and I had the pleasure of attending one of the patients case a few weeks ago. And I think that they are now in the process of educating their whole infrastructure, their whole urology refereeing group, in our imaging center channels, we talk about referring physicians and then treating physicians. So RadNet and now that their first site is running is now educating the referring groups. So it’s not going to happen obviously in one quarter or anything, but slow and steady. I think they will, I believe that they will continue to ramp. And then the other two sites we have, the sites are assigned. And as soon as we know the dates, I think there are some infrastructure things like new MRIs and so on that needs to come on stream. But I would say generally because of COVID, we are, RedNet particularly being in the Southern California was unfortunately really hits hard overall as a region, but we have the other sites identified and I think they are going to be, we should be installing them over the next 12 months or less. And those, I did not even include those in the numbers that I mentioned before. So, and to answer your other question, but I think that, when I look at the warm belt of the United States it basically covers about 40% of prostate cases. So our priority setting is, California, Florida, Texas, Arizona, and then Northeast is the next place. So, I think you will continue to see us focus on the Southern belt a little bit more as we go forward for new agreements.
- Josh Jennings:
- Great. And then just last question, wondering about the any updates on correction in Europe and Japan and how should we think about new TULSA-PRO centers over TULSA-PRO sales, those two weeks? Thanks a lot. Thanks for taking the questions.
- Arun Menawat:
- Yes, Josh, that’s a very good question also because normally we do get, we are selling in capital in outside of the United States and in this particular quarter, we basically had no new capital revenue, which was one of the things that affected the top-line number. But those revenues, we see them as really important revenues also. And Japan in particular is very interesting, because we see those revenues as sort of not to just revenues for the quarter and which is important, but also strategically that Japan, we believe can be a very important market for us. So establishing that beachhead and getting a number of sites going is important to us. And to give you a little bit more color Japan also has been in shutdown mode. We have not been able to travel. So the pipeline that we had last year, as, you know, even with the first wave of COVID, our capital continued to flow, but the fact that over the last six months or so we have not been able to travel in Q1. We had no stale, no closure. That is not to say that the pipeline is not there. It is there. And we are working with the government authorities to get the regulatory approval and we’re working there also on our reimbursement strategy. So, I think you will see international sales come back later in this year, hopefully as early as second quarter. And I think Europe is important. We see change in the European government guidelines that came out earlier just about 60 days ago where they’re moving ablative therapies from experimental two accepted. And I think, again, not in the very near term, but in the midterm, it should have some positive impact. So, bottom line, we – with the travel restriction, so on, I think that Q1 from the international market perspective was did not get the nod was not well represented, but I do think that we see Japan, Europe, and China, and Asia as important as well, and you will see revenues from these countries and the other three quarters of this year for us.
- Josh Jennings:
- Great. Thanks again.
- Operator:
- Thank you. And our next question comes from Frank Takkinen with Lake Street Capital. Your question, please.
- Frank Takkinen:
- Hey, Arun, and thanks for taking my questions. I wanted to start with the funnel as well. I want to better understand, hoping you guys can give us a little more clarity on better understanding the conversion time as customers work through the process from a pre-signed agreement, signed agreement trained, installed, and then first patient treated, just looking to get a little better clarity on how long that total process takes on average, given there’s likely significant variation across customers.
- Arun Menawat:
- Yes, yes, it’s a good question. What I would say is that, the best way to kind of gauge that would be – when we did the install prior to COVID looking so big. And obviously in retrospect, we started the market introduction of our product in January, and it’s sort of the COVID here, but I think on what we’ve talked about this before, too though, is that from the time we typically receive an agreement, at the moment, it’s about 75 days to 90 days to get the installation done. And then it’s typically another 30 days to 45 days before we can really start treating patients and so on. So at the moment, I would say, 90 days to 100 days is probably a good average number from the time we sign a contract to first patient treated. We certainly think over time that will diminish maybe by end of this year to 75 days. And then over the long haul, we think it will diminish further to hopefully to 60 days. Some of the agreement that we have at the moment you will see a little bit of a bi-modal distribution from the perspective that a few sites are looking to buy new MRs took place the TULSA system. And so we will have to wait till the MRs get installed. And there are a little bit of delays related to that because of the same things that finding all the labor and all the things done during these times have been a little bit harder. But it will continue to get better over time. So, you will see a little bit of a bi-modal distribution, where we do have a new MR to be installed. It’s going to maybe take closer to six months the ones where we can go to the existing MR it’s probably three to four months.
- Frank Takkinen:
- Got it. That’s helpful. And then following up on the CPT-1 conversation and also understanding this is looking a little far out into the future, but if you stay with your guidelines of around the end – around the beginning of 2022, submitting hearing a ruling by the end of 2022, what – how does that set you up for the CPT-1 going into effect?
- Arun Menawat:
- So once the AMA typically you submit that to AMA by – if we’re going to apply for it, let’s say next year, we will know by before the year is out, if we receive it or not. If we receive it, then it goes into it pretty much of standard process. And the application goes into the recommendations in the committee then start to look at the costs associated with it. And by within 12 months they provide the code and the target reimbursement associated with it. And it becomes effective as of the following January. So in this example, January 2024 we would have effective full reimbursement theoretically. If assuming everything is going well, right? So that’s what we’re working towards at this point. And the other thing that happens typically, again, these are just our own beliefs and assumptions at the moment is that the C-Code strategy, as we’ve talked about before is the interim strategy, and once all these publications are done and the societies are beginning to be onsite, which as I mentioned, we feel pretty good about so far that also will continue to give us confidence with respect to the usage of the C-Code and continued payment against the C-Code. So, I think that’s what you will see in 2022 is, applying for the code, C-Code in the meantime, supporting us society is supporting us. Those are the kinds of milestones that you want to look for. And then if all goes well, then January 2024 to have a full CPT-1 operational.
- Frank Takkinen:
- Great. That’s helpful. Last one from me for Aaron, I saw you broke out revenue a little bit differently than you have in the past to capital equipment and a non-capital recurring. My assumption is that non-capital recurring is the pay per procedure revenues associated with TULSA, but I just wanted to confirm that. And then could you just give us a summary of what’s included in each line? And so we’re sure we’re on the right page.
- Aaron Davidson:
- Yes. So in different parts of the world, we called pay per procedure or other parts, we called disposable sales. To me, that’s all in the same bucket of non-capital recurrent. So, even service contracts and things like that, where it’s recurring, because in different parts of the world, we use slightly different terminology. So, what we tried to do is clean it up to get to, I think, what people really even know. When do we sell a piece of capital and have a one-time sale, versus when do we have sales that we think have a recurring nature give them like disposables paper procedure service. And so we bucketed into those two buckets, because we kept getting lots of questions about this product was confusing for people and tried to just clear it up so that our different terminology, different parts of the world tried to create a clarity of one-time capital and recurring.
- Frank Takkinen:
- Got it. In that bucket of being…
- Aaron Davidson:
- Makes sense?
- Frank Takkinen:
- Yes, absolutely. I’m in that bucket of being very appreciative of doing so. Thanks for taking my questions, guys.
- Aaron Davidson:
- Okay. You’re welcome.
- Operator:
- Thank you. Our next question is from Ben Haynor with Alliance Global Partners. Your question please.
- Ben Haynor:
- Good afternoon, gentlemen. Thanks for taking the questions. Just a couple of quick ones for me. First off, Aaron, if I think, if I heard you say that the price point on the newly signed contracts is $7,710 or higher. Is that correct? That there’s an oral higher aspect to that and if so, what’s the variability on – how much higher that can go?
- Aaron Davidson:
- So it is a little higher. We took a price increase in 2021 that took effect about the end of March. And for sensitivity reasons with customers, I don’t really want to talk too much about it. But to assume it’s just like a typical like type of inflationary take the increase you’d expect to see on drugs twice.
- Ben Haynor:
- So like 50% these days?
- Aaron Davidson:
- No.
- Ben Haynor:
- I’m just kidding. But so – and my second one, it really sounds like you guys have a pretty full pipeline, some pretty good visibility into things, but for the folks that may not know about TULSA-PRO and this is more of an opinion question, I suppose, than anything. What do you think opens up their years and it makes them take notice more? Is it something where it’s definitely more clinical data or is it hearing about something like you mentioned earlier where a guy or gal does a 270 cc prostate?
- Arun Menawat:
- Ben, let me make sure I understand the question. So, you’re asking, what is the criteria on which people are signing agreements with us?
- Ben Haynor:
- I’m just thinking about, if people are unaware of TULSA-PRO and maybe that, that the potential customers for the next multiple years are kind of already aware of you and identified and all that stuff, but with a 270 cc, prostate being treated, do you think folks hear about that and say, oh, wow. What is this being able to treat in the fashion that you guys treat, or is it a journal publication that that really makes them say, oh, wow?
- Arun Menawat:
- Oh, I see what you mean. Yes. I mean, I think it’s, to be honest, it’s a combination of things. And a year ago people would say that, hey we want to see the clinical data and we want to see more clinical data. I don’t think that when we go to the hospitals today, that is the lead question. I think people understand the clinical data is there. I think that the concept that they can treat a wider variety of patients with this technology is definitely something that perks them up, because when you just see the PowerPoint that’s not necessarily obvious. And so we are working to create an Atlas and we do the training programs where all of these special cases will actually be proactively presented to our urology community as we go forward. And I think that certainly we believe will be a good driver. I think that that’s certainly one factor. The second factor I really think is again, what is continuing to drive TULSA is the patient response, to be able to go in and within four or five hours go home and be at home and have no pain and the only thing you’re complaining about is the grogginess from the anesthesia and the catheter that’s stuck inside of you for a few days and nothing else, not about the TULSA at all. I think that’s one of the other things that’s driving. And so you, I think you will see, I would – I mean to be honest, I would, Ben, encourage you to look at the LinkedIn side from WellSpan, I think doctors…
- Ben Haynor:
- Yes, I have run across that. Yes.
- Arun Menawat:
- It is – like that’s what driving it. I think that’s what you are seeing is that the physicians, when they treat, they see all this, and then they are excited about this new capability and this is a leading site going on. So, I think that’s, what’s driving.
- Ben Haynor:
- That makes sense. That makes sense. I appreciate the color there. That’s all I have. Thanks a lot gentlemen.
- Arun Menawat:
- Thank you.
- Operator:
- Thank you. And this concludes our Q&A session for today. I will like to turn the call back to Arun Menawat for final remarks.
- Arun Menawat:
- Thank you so much. And again, thank you for your support. And we look forward to the Q2 report. And before that, I guess the AGM that’s coming up later this month. Thank you so much.
- Operator:
- Thank you everyone. This concludes today’s conference call. Thank you for your participation and you may now disconnect.
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