Yahoo Finance Profound Medical Corp. (NASDAQ:PROF) Q4 2023 Earnings Call Transcript
Profound Medical Corp. (NASDAQ:PROF) Q4 2023 Earnings Call Transcript March 7, 2024
Profound Medical Corp. isn't one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Good day, and welcome to the Profound Medical Fourth Quarter and Full Year 2023 Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Stephen Kilmer, Investor Relations. Please go ahead.
Stephen Kilmer: Thank you. Good afternoon, everyone. Let me start by pointing out that this conference call will include forward-looking statements within the meaning of applicable Securities Laws of the United States and Canada. All forward-looking statements are based on Profound's current beliefs, assumptions, and expectations and relate to, among other things, expectations regarding the efficacy of the company's treatment technologies, results of future clinical trials, the ability to obtain coding and/or reimbursement from third-party payers, anticipated financial performance, business prospects, strategies, regulatory developments, market acceptance, and future commitments. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance, or achievements to be materially different from those implied by such statements.
No forward-looking statement can be guaranteed. Listeners are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this conference call. Profound undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, other than as required by law. Representing the company today are Dr. Arun Menawat, Profound's Chief Executive Officer; Rashed Dewan, the company’s Chief Financial Officer; and Dr. Mathieu Burtnyk, Profound's Chief Operating Officer. With that said, I'll now turn the call over to Rashed. Thank you. Good afternoon, everyone.
Rashed Dewan: Good afternoon, everyone, and welcome to our fourth quarter 2023 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 Mathieu in a moment to provide updates on TULSA clinical publications, utilization trends and the CAPTAIN clinical trial. However, before I do, I'd like to provide a brief summary of our fourth quarter 2023 financial results To streamline things, all of the numbers I'll refer to have been rounded, but they are approximate. For the three-month period ended December 31, 2023, the company recorded revenue of $2 million, with the full amount coming from recurring revenue.
This was at the top of the range we provided when we announced preliminary fourth quarter revenue numbers at beginning of January 4. Fourth quarter 2023 revenue increased 60% from 1.3 million from the same period in 2022. Total operating expenses in the 2023 fourth quarter, which consists of R&D, G&A and selling and distribution expenses, were $9.8 million, an increase of 5% compared with $9.4 million in the fourth quarter of 2022. Breaking that down further. Expenditures for R&D increased 28% on a year-over-year basis to $4 million. G&A expenses increased by 41% to $3 million, and selling and distribution expenses increased by 74% to $3 million. Net finance cost for the 2023 fourth quarter was $400,000, compared to $500,000 for the same three-month period of 2022.
Overall, the company recorded a fourth quarter 2023 net loss of $8.9 million or $0.42 per common share, compared with a net loss of $9.5 million or $0.46 per common share for the same three month period in 2022. As of December 31, 2023, Profound had cash of $26.2 million. That amount does not include a [indiscernible] gross proceeds from a public offering in the U.S., and a private placement of common shares in Canada completed subsequent to year end. As a result of those financings, Profound had cash of $45.4 million as January 31, 2024. With that, I will now turn the call over to Mathieu.
Mathieu Burtnyk: Thank you Rashad and hello everyone. In the fourth quarter, there were many poster and podium presentations featuring TULSA that continued to demonstrate the unique pixel by pixel precision of the technology, the flexibility to treat a variety of patients and customize the treatment plan to what is best for the patient, and the durability of efficacy and safety outcomes. I would like to take a few minutes to highlight a few of these. The positive five-year TACT data was presented at some major meetings, including presentations by Dr. Wagner [ph] from the University of Chicago at the Annual Meeting of the Society of Urological Oncology in Washington, D.C. UCLA's Dr. Raymond at the Radiological Society of North America, or RSNA, meeting in Chicago and Dr. Futterer from Radboud University Medical Center in the Netherlands at the European Congress of Radiology meeting in Vienna, Austria.
In addition, Dr. Busch gave two presentations in November where he and his colleagues at the Busch Center examined TULSA outcomes in men with specific prostate cancer characteristics that are known to be challenging with other treatment modalities. One is patients with very large prostate volumes and the other is those with extreme apical cancers. The first was a poster presentation of a retrospective analysis of TULSA in men with prostates larger than 90 cc presented at the Frontiers in Oncological Prostate Care and Ablative Local Therapy Meeting in Chicago, 34 men with pre-TULSA prostate volumes greater or equal to 90 cc were identified, where about half had prostates greater than 120 cc and the largest prostate included in the analysis was 275 cc.
Favorable efficacy and safety outcomes were reported following treatment with TULSA, including an improvement in urinary quality of life with median IPSS improving 60% from 17 which is moderate LUTS or lower urinary tract symptoms, to six which is mild LUTS. The second was a podium presentation of another retrospective analysis of TULSA, but this time in men with prostate cancer lesions at the extreme apex presented at RSNA. Patients with apical lesions are particularly challenging because of the proximity to the external urinary sphincter. It is difficult to maintain urinary continence when treating prostate cancer at the extreme prostate apex using robotic surgery, radiation and focal therapy devices such as HIFU, Cryo and IRE. Further, while limiting apical treatment can minimize morbidity in the focal therapy space, it conversely increases the risk of cancer recurrence.
For example, one study by Dr. [indiscernible] in BJU International reported that when a six millimeter apical margin was applied with HIFU, 60% of the recurrences were identified at apical sextants on biopsy. With TULSA, the surgeon has the ability to deliver controlled directional and precise ultrasound energy in a perpendicular plane from a transurethral device that is positioned in the prostate with sub-millimeter accuracy based on intraprocedural high resolution MR imaging. Specifically, the unique combination of urethral cooling and dual frequency capabilities which allows a higher ultrasound frequency with shorter wavelengths, enable tight margins and treatment right to the apical plane while limiting the amount of sound energy being absorbed in the external urinary sphincter.
This retrospective analysis of 42 men with lesions abutting or involving the apical sphincter demonstrated promising safety and efficacy of TULSA in patients with extreme apical lesions, notably preserving pad-free urinary continents in all patients despite ablation near the external sphincter. Moving to real world utilization trends as highlighted in today's press release, we also continue to see TULSA providers treat an unrivaled variety of prostate disease patients. With respect to indications, approximately 67% were treated for primary prostate cancer, 23% were hybrid patients suffering from both cancer and BPH, 7% were salvaged treatments and 3% were men with BPH only. Further within the salvage group, roughly one half of the men were radio recurrent prostate cancer and about half were salvaged treatments after focal therapies such as HIFU and laser.
Overall in 2023, we saw that TULSA is increasingly being used in patients who are diagnosed with prostate cancer, but also have symptoms of BPH, with an approximate doubling as a proportion from utilization trends in 2022. We continue to see TULSA as the only minimally invasive option for such patients. More and more urologists are starting to include a transition zone in addition to the cancer lesion in such hybrid patients for two reasons. The first is the added benefit to the patient of lower urinary tract symptom relief which improves their quality of life, and secondly, because in doing so there is no additional procedural complexity and minimal increase in ablation time. So in a way, there is no real downside for the treating physician and provider with a lot of benefit for the patient.
Finally, I would like to provide a brief status update on our ongoing CAPTAIN post-market study. The CAPTAIN randomized trial comparing the TULSA procedure to radical prostatectomy is the first and only level one study comparing head to head, a new technology to a standard of care treatment in men with localized prostate cancer. It is designed to demonstrate that the efficacy of the TULSA Procedure is not inferior to radical prostatectomy, while also demonstrating superior quality of life outcomes. We are pleased to report that the rate of recruitment is continuing to increase with investigator experience and onboarding of additional sites. As a result, we believe we remain well positioned to complete enrollment of the CAPTAIN Study this year which would allow publication of preliminary data in the first half of 2025, followed by the full one-year primary safety outcomes in early 2026 and three-year primary efficacy outcomes in early 2028.
Now I will turn the call over to Arun.
Arun Menawat: Thank you, Mathieu, and good afternoon everyone. I'm pleased to report that we successfully executed against key strategic priorities in 2023. The most important of those was to continue laying the groundwork for TULSA to become one of the three mainstream treatments for prostate cancer alongside radical prostatectomy and radiation therapy. In addition to what Mathieu just reviewed, there are three main pillars of that I would like to focus my remarks on today. First is to build a high quality installed base. I'm pleased to report that we now stand at 50 TULSA-PRO sites comprised of early adopters, independent and corporate centers, and top tier hospitals. While our team has done a really good job with all three, the penetration we have achieved into the latter really stands out as truly exceptional at the stage we're in today.
TULSA-PRO is now already installed at or contracted with ten of the top 20 cancer centers in the United States. These include prestigious institutions such as MD Anderson, Mayo Clinic, Rochester, UCLA Medical Center, Brigham and Women's Hospital, Johns Hopkins Hospital and Cleveland Clinic among others. Moving forward, we continue to expect our install base to grow to 75 by the end of 2024, and we anticipate that TULSA usage, which is primarily based upon cash pay today, will be transitioning to the payer pay model at the start of 2025. Speaking of that transition, the second pillar is the execution of our U.S. reimbursement strategy for TULSA in record time. As you all know in mid-2023 the American Medical Association established three new CPT Category 1 codes for TULSA.
Following that, as part of the process, the Relative Value Scale Update Committee or RUC for short sent questionnaires to TULSA users to determine the physician work Relative Value Units or RVUs associated with its TULSA procedure. Based on the user feedback, the center for Medicare and Medicare Services or CMS is working with the societies that sponsored the CPT Category 1 code application to determine the TULSA procedure payment amount that will be attached to the permanent codes. The proposed recommendations are expected to be published in the Federal Register at the end of July and finalized in November and come into effect as of January 2025. The third pillar is to continue to innovate with the overall aim of increasing treatment efficacy, improving workflow efficiency, and expanding technology access to deliver an even better TULSA treatment experience for urologists and their patients.
On that front, we continue to aggressively build the TULSA AI brand, thermal boost for which we received 510K clearance from the FDA in Q3 2023 was the first TULSA AI module. It is now routinely used in about 50% of patients being treated and physicians report increased confidence and shorter time in treatment. We have recently submitted the second AI module, the Contouring Assistant to the FDA. This TULSA AI module is about automating the treatment design. Contouring Assistant uses past treatment designs and recommends a design in a new procedure based upon that knowledge. As our treatment and outcome database grows, the knowledge of the AI will continue to increase and as a result, Contouring Assistant proposed treatment design will continue to improve, thereby enhancing clinical outcomes while also reducing treatment times.
Studies conducted to validate the AI technology have achieved the anticipated endpoint. If the FDA concurs, clearance for the Contouring Assistant module could be granted this summer. MR Imaging is now being used routinely in diagnosing patients for prostate disease. We believe that this trend naturally extends to the use of the MR also for the treatment of prostate. Thereby, we have also begun work to build closer relationships with MR Companies to help maximize the tremendous opportunity for our technology that we see ahead. The first such collaboration, which we announced last week, was with Siemens Healthineers to work toward bringing a complete therapeutics solution combining our TULSA-PRO system with its Magnetom Free.Max MR Scanner to market via profound ohm! Salesforce, not only is this arrangement non-exclusive but we will also continue to market TULSA-PRO as a standalone offering, providing our customers with the flexibility to use the technology with the MR Hardware of their choice.
The aim of the collaboration with Siemens Healthineers is to create and Ears is to create and market a total diagnostic and interventional MR Solution that can streamline workflow, optimize cost of care and most importantly, help ensure TULSA can be integrated in additional settings such as urology clinics, ASCs and hospital surgical departments that may not be suitable sites for placing large traditional MR Scanners that are relatively expensive, both in terms of acquisition and installation costs and ongoing operating costs. It will also allow Profound to begin adding some U.S. capital sales to our TULSA revenue mix. We will provide more details closer to when Profound initiates sales of the combined solution in 2025. In the meantime we also hope to be able to announce additional technology partnerships this year.
To summarize, TULSA is not just for focal therapy. There continues to be significant evidence from clinical trials as well as from commercially treated patients that we believe that TULSA is on its way to becoming one of the mainstream technologies for the treatment of prostate cancer. We are eagerly awaiting a positive CMS decision regarding the TULSA reimbursement rate to be made at the end of July. We are thrilled that even at this early stage, when most patients are cash pay patients adoption continues to increase. We are also excited by increasing use of MR in the care continuum of prostate disease management. Today, hardly any prostate diagnosis is complete without MR Imaging. We believe that an MR Centric strategy for prostate management is the future, and we are working with the leading MR Manufacturers to further support this modern treatment pathway.
And finally, we're delighted with the progress of patient recruitment in the Level 1 clinical trial that compares the TULSA procedure with radical prostatectomy. We believe that the success of this trial has the potential to gain TULSA's inclusion in the society guidelines, which is always a key driver for new technology adoption. This ends our prepared remarks for today. With that, we're happy to take any questions you might have. Operator?
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