Q4 2023 CVRx Inc Earnings Call
Participants
Nadim Yared; President, Chief Executive Officer, Director; CVRx Inc
Jared Oasheim; Chief Financial Officer; CVRx Inc
Presentation
Operator
Greetings and welcome to the CVRx Fourth Quarter 2023 earnings call. (Operator Instructions) As a reminder, this conference is being recorded. It is now my pleasure to introduce [Mike Vallie] Investor Relations for CVRx. Thank you. You may begin.
Good afternoon. Thank you for joining us today for CVRx's fourth quarter 2023 earnings conference call. Joining me on today's call are the company's President and Chief Executive Officer, Nadeem Yared; and Chief Financial Officer, Jared Oasheim.
The remarks today will contain forward-looking statements including statements about financial guidance. Statements are based on plans and expectations as of today, which may change over time. In addition, actual results could differ materially due to a number of risks and uncertainties, including those identified in the earnings release issued prior to this call and in the Company's SEC filings, including the upcoming Form 10-K that will be filed with the SEC.
I would now like to turn the call over to see the CVRx's President and Chief Executive Officer, Nadim Yared.
Nadim Yared
Thank you, Mike, and thanks, everyone, for joining us. I'll begin today's call by providing an overview of our fourth quarter performance, followed by our operational update and a review of our financial results by our CFO, Jared Oasheim. Then I will conclude with our thoughts for the rest of the year before turning to Q&A.
We are immensely proud of the achievements of our team in 2023. It's been an important year for CRx marked by significant progress in all our strategic initiatives, which have driven increased adoption and utilization of better system.
This is reflected in our worldwide revenue, which has shown substantial growth, primarily attributed to the impressive 97% annual expansion in our US heart failure business. As we wrapped up 2023, we did so on a strong note showcasing consistent and effective execution across various aspects of our business in the fourth quarter. This underscores our team's skill in accelerating the adoption of better stem through our commercial and marketing efforts.
Now let's dive into the details of our performance. Starting with the review of the quarter. Worldwide revenue was $11.3 million, 58% increase over the fourth quarter of 2022. This was primarily due to the execution within our US heart failure business.
The increase was primarily driven by continued growth as a result of the expansion into new sales territories and new accounts, as well as increased physician and patient awareness of Patterson.
Turning to an update on our operational progress during the fourth quarter. As a reminder, our focus areas for 2023 were the continued expansion of our commercial infrastructure and the expansion of our clinical body of evidence.
Starting with expansion of our commercial infrastructure. We've grown our commercial reach by adding three new sales territories in the United States as expected, bringing our total to 38. We continue to add high caliber talent, which we believe is due to the enthusiasm around better STEM in the market.
Additionally, we've been making continued and consistent headway with our marketing efforts, including our direct to consumer and patient education programs. As we press forward, we continue to expect and refining these initiatives to drive awareness among both patients and health care providers.
Shifting to our second focus area, which is the growth of our clinical evidence, which has driven both reimbursement and regulatory progress. In November, the Center for Medicare and Medicaid Services, CMS three assigned Verastem to new technology, APC. one five eight zero with an average payment of $45,000, which went into effect on the January 1, 2024.
As a reminder, in 2023 better stimulus under the APC. five four six five with an average payment of $29,000 plus the transitional pass-through payment. We believe that this reassignment to APC. one five eight zero will make the best of therapy more accessible for Medicare patients, dealing with heart failure by simplifying the reimbursement landscape and ensuring fair reimbursement for facilities offering the procedure.
In late December, the FDA approved expanded labeling for better stem by revising the instructions for use for better stem and incorporating key long-term clinical data from the BEAT HF randomized clinical trial. The new labeling includes the following conclusion in the clinical section in both premarket and postmarket phases.
The primary safety endpoint was met and confirmed the three markets I showed positive results across all effectiveness endpoint, indicating six month improvements in six minute walk quality of life, NYHA class and NT Pro-BNP post market phase effectiveness, endpoint of cardiovascular mortality and heart failure morbidity was not met.
But additional post-market phase analysis such as the win ratio and freedom from all-cause mortality analysis suggested the favorable effect of better stent therapy. The totality of 6-, 12- and 24-month data demonstrated symptomatic improvements for heart failure patients.
All of this data is now included in the instructions for use and can be used by our sales team when educating physicians on our therapy. The updated indication statement in the instruction for use now specifies that Verastem is indicated for patients who are NYHA Class three or Class two with the recent history of Class three, despite treatment with guideline directed medical therapies who have a left ventricular ejection fraction of less than or equal to 35% in NT Pro-BNP, less than 600 picograms per milliliter.
Vial system delivers better reflects activation therapy to improve patients' heart failure, functional status, six month hallmark and quality of life. As a result of these changes, we estimate that the U.S. annual market opportunity for baricitinib has increased to include patients considered by physicians based on this new long-term safety and efficacy data as well as our commercial experience and to account for the new reimbursement assignment for baricitinib.
We believe the U.S. annual market opportunity is now $2.2 billion or 76,000 new patients annually as compared to our earlier estimate of $1.4 billion or 55,000 new patients, representing increases of approximately 60% and 38%, respectively.
I want to express my gratitude to all the patients, investigators, research teams, executive steering committee and FDA personnel, who have supported our efforts in conducting this study over seven years, especially considering the challenges encountered during the COVID-19 pandemic.
Looking back at 2023, it was a great year for CVRx. Throughout the year we continued to support the growth of better stem in the United States for our commercial and marketing efforts, underscoring the benefits that Verastem can provide to health care professionals and patients dealing with cardiovascular disease.
The year wrapped up on a positive note, including the expanded better, some labeling and CMS's decision to reassign better stem two a new APC code.
Before turning the call over to Jared, I want to address my decision to retire from CDRAX. While that is never a perfect time for a leadership transition, the recent completion of BTHF., the expanded labeling and the recent reimbursement decision, there is a window that now exists before the company embarks on the next phase of growth.
I believe now is the right time to bring in a CEO who can build on the achievements of the company and steer CVR extra great success. I'm confident and see that excess future given the proven benefits of better stent therapy, our strong commercial traction and our outstanding leadership team.
The Board and I are committed to a seamless transition, and I will continue in my current role until a new CEO is appointed. The Board has engaged a leading executive search firm to assist in this process.
I'll now turn the call over to Jared to review our financials. Jared?
Jared Oasheim
Thanks, Nadeem. In the fourth quarter, total revenue generated was $11.3 million, representing an increase of $4.1 million or 58% compared to the same period last year. Revenue generated in the US was $10.3 million in the current quarter, reflecting growth of 72% over the same period last year.
Heart failure revenues in the US totaled $10.2 million in the current quarter on a total of 330 revenue units compared to 6 million in the fourth quarter of last year on 193 revenue units. The increase was primarily driven by continued growth as a result of the expansion into new sales territories and new accounts, as well as increased physician and patient awareness of Verastem.
At the end of the current quarter, we had a total of 178 active implanting centers compared to 106 on December 31, 2022, and 159 on September 30, 2023. We also had 38 sales territories in the US at the end of the current quarter compared to 26 on December 31, 2022, and 35 on September 30, 2023.
Revenue generated in Europe was $1 million in the current quarter, representing a decrease of 15% compared to the same period last year. Total revenue units in Europe decreased from 68 in Q4 of 2022 to 52 in the current quarter.
The number of sales territories in Europe remained consistent at six for the three months ended December 31, 2023. Gross profit for the three months ended December 31, 2023, was $9.6 million, an increase of $3.9 million compared to the three months ended December 31, 2022.
Gross margin for the current quarter increased to 85% compared to 79% for the same period last year. Gross margin for the three months ended December 31, 2023, was higher due to a decrease in the cost per unit and an increase in the average selling price.
Research and development expenses for the current quarter were $2.2 million, reflecting a decrease of 26% compared to the same period last year. This change was primarily driven by a $0.7 million decrease in clinical study expenses and a $0.6 million decrease in consulting expenses, partially offset by a $0.3 million increase in compensation expenses, mainly as a result of increased headcount and a $0.1 million increase in non-cash stock-based compensation expense.
SG&A expenses for the current quarter were $17 million, representing an increase of 21% compared to the same period last year. This change was driven by a $1.7 million increase in compensation expenses, a $0.7 million increase in marketing and advertising expenses, a $0.4 million increase in non-cash stock-based compensation expense, and $0.4 million increase in consulting expenses, partially offset by a $0.1 million decrease in D&O insurance costs and a $0.1 million decrease in professional fees.
Interest expense increased $0.4 million for the three months ended December 31, 2023, compared to the three months ended December 31, 2022. This increase was driven by the interest expense on borrowings under the loan agreement entered into on October 31, 2022. Other income net was $1.1 million for each of the three months ended December 31, 2023, and 2022. Other income net consisted primarily of income on our interest-bearing accounts.
Net loss for the current quarter was $9.2 million, or $0.44 per share compared to a net loss of $10.5 million or $0.51 per share for the same period last year. Net loss per share was based on 20.8 million weighted average shares outstanding for the fourth quarter of 2023 and 20.6 million weighted average shares outstanding for the fourth quarter of 2022.
At the end of the fourth quarter, cash and cash equivalents were $90.6 million. Net cash used in operating and investing activities was $39.6 million in 2023. This is compared to net cash used in operating and investing activities of $43.4 million in 2022.
Now turning to guidance. For the full year of 2024, we expect total revenue between $53 million and $57 million. We expect full year gross margin between 83% and 84%. And we continue to expect operating expenses between $86 million and $90 million. For the first quarter of 2024, we expect to report total revenue between $11 million and $12 million.
I would now like to turn the call back over to Nadeem.
Nadim Yared
Thanks, Jared. As we set our sights on 2024, I'm excited about the opportunities that lie ahead for CBRL and the continued expansion of Patterson. Our company is in a fantastic position to capitalize on the opportunities in front of us, thanks to our outstanding leadership team and the consistent execution of our strategic initiatives over the last two years.
I believe CNX is well prepared to continue to execute our strategic plans and drive sustained commercial growth, reflecting on my 17 years as CEO, it has been an incredible experience and a true honor. I am proud of what we have accomplished and believe the future for CRx holds immense promises.
And now I would like to open the line for questions. Operator.
Question and Answer Session
Operator
Thank you. (Operator Instructions)
Margaret Andrew, William Blair.
Hey, good afternoon, guys. Thanks for taking the questions. And Nadim, you've heard my comments at JPMorgan bold to say that publicly, obviously, it's been a pleasure to know you and glad to have CMC of Eurex become what it is today.
Maybe just to start out with you guys are coming off an exceptional year. 70% plus growth overall 95% of U.S. heart failure in U.S. heart failure, yet you kind of look at the first quarter and you're at $11 million to $12 million. So maybe just walk us through the assumptions within that? What are the conservative pieces that you guys used to drive to that guidance range?
Jared Oasheim
Thanks, Margaret. This is Jared. I'll take that one on maybe Nadeem can add some color later. So when we put together our guidance, we're looking at how we've been growing the number of territories over the last few quarters and also how the additions for new active implanting centers have been coming on board.
And then also taking into consideration the utilization we've seen from those centers as they get more and more experience. So after taking all of that into consideration, we came out with the guidance for Q1 of $11 million to $12 million, again, seen a step-up from what we delivered in the fourth quarter of 2023.
The other thing I'll just talk about a little bit is seasonality. We it's not something that we've seen historically at CVRX., but we have seen other companies that have gone through a similar ramp that we have that start seeing seasonality play a factor as you go into Q1.
Again, I don't think we took that into consideration here for the first quarter guidance and but rather just trying to set the bar at a level that we think we can go out and deliver in this first quarter. When I think about the components of being able to hit the full year guidance, the $53 million to $57 million that we had talked about something we talked about at the JPMorgan conference was really towards the low end of that range.
We're targeting adding about 14 new active implanting centers on a quarterly basis and at the high end targeting adding about 18 new active implanting centers on a quarterly basis. And then from an ASP perspective, in 2023, we were seeing our results of about $31,000 offer an ASP. in the U.S. heart failure side.
And as we go into 2024, the range we're looking at is around $29,000 to $30,000 thinking that as we continue to see more and more volume from our implanting centers that we may see some pressure on pricing and see the request for some payer rebates.
And then from a territory perspective, we've been adding at about three per quarter since the IPO. We feel like that is a pretty good pace to continue on and that's what was factored into that $53 million to $57 million guidance for 2024.
Okay. And so if we take that into context, I appreciate your comments on kind of the center and so on, but that you guys are armed with both a better reimbursement rate as well as the new clinical data. So I know it's early and maybe there hasn't been a big clinical conference at this point in time yet for you guys to start more actively presenting on that.
But where are you I guess in terms of sales force training as well as putting together an educational education program, excuse me, as it relates to them to pushing the new label.
Nadim Yared
Yeah, Margaret, I think this questions So first, thank you for your previous comments. I am going to miss these interactions for should when I retire. I'm not there yet. As we are committed to the transition and hit us longest how long it takes.
I used I used to remember that IT centers, some of the difficult questions that you guys would ask me. But for the time I understood all of the hardware that you put into this into understanding our business. And I end up enjoying these interactions to questions.
You know that we have in between Christmas and New Year's Eve. We got the approval from FDA to be able to communicate all of our efforts right now in January has been about how do we get out and educate patients and physicians.
And we have our global sales meeting actually next week to make sure that all of our sales force is trained and equipped with all of these tools. So this is an ongoing process right now to get the word out to patients and providers and payers about the new data. We're very excited about this next phase.
Okay, great. And just one last question for me. I saw the $7 million burn me on a cash rate at this past quarter. How should we think about that going forward? You know, are you guys going to step on the gas pedal on in terms of expenses that the label and et cetera, are you going to continue to tread and maintain that cash burn around seven or better?
Jared Oasheim
Thank you. Yes, I think thanks for the question. We gave guidance around spend on CapEx, a seen an increase there to get us up to about $86 million to $90 million up. The vast majority of that growth in spend from '23 to '24 will go into the sales and marketing organization, specifically in the US.
So we're going to continue to be opportunistic on where we can to invest in the business to be able to help more and more patients gain access to this therapy and then I think it's a bit of a wait-and-see, right? Let's see how physicians let's see how patients react to the new clinical data.
If a new payment code is a little bit easier for centers to come on board at a little bit of a faster rate than we'll consider making some additional investments. But the guidance we put out, I think is being a little prudent in making sure that we're able to maintain that cash burn at or below the levels we've seen historically.
And overall, we believe that trend will continue where that burn will come down so that we can we use the cash we have on hand to get to cash flow breakeven without needing to go and raise more money.
Operator
Robbie Marcus, JP Morgan. Please proceed with your question.
Matthew O'Brien, Piper Sandler.
Can you guys hear me?
Nadim Yared
Okay.
Fantastic. And the you best of luck to you in the future. Hopefully, it takes a long, long time to find out replacement for you say that selfishly. So just two questions here, and I'll ask them both together. They're a little bit that's long-winded.
So forgive me, but just on the pricing side, Jared, are we assuming pricing essentially flat versus 2023? Or can you take that up given how healthy that code is? I guess I'm not sure why it would go down.
And then the second piece is just on the as I look at the guidance and I look at where the stock is trading and the aftermarket is down a little bit. I think it's on the guide, it's assuming a pretty meaningful slowdown in growth in terms of units sold this year. It's actually it's actually about the same number of units at the midpoint of the range for the math that I have anyway.
But you know, it seems like you now expanded label and more centers and everything else like that. The absolute number of units should go up this year versus what you did last year in terms of growing total number of units. So why would that why would that be the case, why wouldn't it be even faster? And why wouldn't growth in the US be a little bit more healthy given all these tailwinds that you're seeing?
Thank you.
Jared Oasheim
Hemant on the pricing piece and then go into a little bit easier to cover first on. So we had talked about US heart failure average selling prices being around $31,000 in 2023 and setting expectations with this guidance to be around $29,000 to $30,000.
And I will add we have also seen a list price increase in 2024 for Barrow stem. And so there are opportunities for the price to go up as we go into 2024 from what we saw in 2023 but our assumption from the beginning was that as we continue to see more and more volume, we are going to continue to see more and more pressure from our customers to see bigger discounts and bigger rebates.
And so I think we're just being a little prudent on that price expectations at the beginning of the year to see how it actually plays out with this new code for our customers throughout 2024. So I'm sure we'll continue to monitor what that average is coming in at here in the first quarter and second quarter and then be able to make some updates if it's necessary for the rest of the year.
And then for the guide as far as pure units, yes, we will continue to see growth in the number of patients that are getting treated between from '23 to '24 on seen it, like I said, a slight down tick in that average selling price.
When we come out at the beginning of the year with our guidance, we want to feel confident of being able to go out and meet these numbers and so when we put together the model, we were looking at productivity staying flat because we were able to achieve these levels of about two revenue units per active implanting center per quarter throughout 2023.
So that's a number that we've been able to achieve in the past. And that's a number that we thought was pretty good to set for expectations. As we move into 2024. And then same thing on the new center adds when building out the model, we've been able to deliver about 18 new center adds on a quarterly basis throughout 2023. And I think when you factor that into the model, that's towards the top end of that guidance for the US as well.
One thing I'd just like to address as why is Europe and where we've been seeing a flat quarterly revenue of about $1 million for the last four to six quarters. And so when you look at the overall growth rate for revenue worldwide, that does hinder us a little bit with expectations that there is no growth just hoping for a flat result from '23 to '24 with that, that European revenue that I hope that answers your question.
Yes, understood. Thank you so much.
Operator
Robbie Marcus, JP Morgan.
Great. At banks this time, I'll not hit the hang up button instead of the tax abatement. It first off on the team will congratulations on the retirement or miss you further question.
I was wondering if you could just walk us through what the change, if any and on and hospitals has been since the reimbursement has been finalized end of last year. Has it have you seen any easier times getting into hospitals talking about reimbursement and getting doctors excited, initiation of potential new programs at hospitals. Just any change and the sentiment out there?
Nadim Yared
Bobby, thank you. First, for your nice words and better Great question. And the answer is going to be qualitative at this stage because the code just entered rates January first. And we have we are not couple of weeks and we're not commenting on the results in January at this stage, but qualitatively, we expected and to help, particularly with the site activation, which would lead to the possibly in the future in the less delay between the first two patients they do at a site and patient number three for.
I don't know if you recall, but earlier when after we did the IPO, we tried to explain that phenomenon that you are observing and we kept observing over the past couple of years, which is when a site becomes an actively implanting centers.
After doing the first one or two implants. We notice a pause of three, four months before they start considering patient number three, four and five. And that pause was driven by two elements. One is seeing the effect of the device on their own patients.
And but second, most importantly, and we did not understand the impact of that was understanding the payment level because the TPT. is still seen as a more obscure way of getting payment, the hospitals, the calculation formula for EBITDA is very complicated and very few administrators at hospitals understand how the accounting work for that EBIT. So after doing a couple of patients.
They wanted to wait to see the payments coming back. So at least one of those two elements we expect will be alleviated by having a code with a simple code, simple number just adjusted for the ZIP Code, which is they understand how to how it works. So I cannot answer quantitatively at this stage, it would be the answer would be on the quantitative, Robbie.
Great. And no, that's helpful. And maybe as you think about balancing, as you talked about in prior questions, balancing your cash burn with now the updated label and the finalized reimbursement, how are you thinking about balancing OpEx spend to drive sales rather than just cash preservation? What goes into decisions? Why is the amount of OpEx you're spending the right amount. And if you spent double it, do you think you'd be able to double your sales?
Thank you.
Jared Oasheim
Good, good, good question, Robbie, right. I mean, the simple question is, you know, have we proven the model, right? And I think we have two more years of experience after the IPO showing that we've been able to add three territories on a quarterly basis while continuing to see that overall productivity per territory increase as that number continues to grow.
And as we see more feedback from customers after the new label from FDA. And after the new code has come out, we're going to continue those conversations as we see the results of those conversations and reactions from physicians and patients through our DTC campaigns.
I think that's where we will continue to make some tests, right. And I think some of those investments are baked into the guidance that we gave of the $86 million to $90 million to start seeing is there opportunities to continue to spend a little bit more because the goal at the end of the day for us is to help more and more patients. And if we can do that at a faster pace while not diminishing our cash balance too quickly, I think we'll take advantage of it. But that's something that we'll continue to work on throughout 2024.
Great. Thanks a lot.
Operator
Bill Plovanic, Canaccord
Great. Thanks. Good evening, and thanks for taking my questions. I'm going to start out with you mentioned on just the list price increase in 2024, I guess, and there's always a big difference between list price and the ASB.
Just kind of curious to what extent are the if you could quantify that for us? And then just you were a bit surprised your R & D expenses come down a lot. How should we think about the OpEx spend in 2024 relative to '23 as it relates to the SG&A versus the R & D like so in R&D, are there any major new projects kicking off that we should think about? Or is this kind of the run rate for that going forward?
Jared Oasheim
Yes, good questions, Bill, thanks. Thanks for the questions. On the list price, there was a 10% increase on the list price for the U.S. business. So in seen an increase from a $35,000 list price up to $38,500. So that's where all of the contracting discussions will start as we move into 2024 and then going down to the OpEx guide and the split between R&D and SG&A.
As I mentioned earlier, the vast majority of that increase is going into SG&A. As you can imagine, we saw a bit of sunsetting of the upbeat HF clinical trial as we went throughout 2023. And so that's driving some of that reduction as we march through 2023 and especially into the fourth quarter, seeing that trial closed down, those expenses turn off and we're able to reduce the overall spend in research and development.
What we have going on right now, we'll have some smaller projects within research and development like our post-market registry from continuing to do some investigator initiated research programs with different sites that are proposing them through our program on our website.
And then we continue to do some early work with designing the next clinical trial and the team has talked about this before where we were admitted to an advisory program from FDA for one of our Breakthrough Device Designations, specifically our ejection fraction, about 35% patient population.
And so we'll continue to look at that trial design to see if we can get to a point where we feel comfortable that we can win the trial and not spend too much money and decide at that point in time whether or not we want to kick it off. But at this point, that's not baked into the guidance in the spend for 2024.
Okay. And then if I could also ask, since we're working the P&L here is just on the gross margin. I'm trying to understand the guide on the gross margin is 83% to 84%. You've been solidly at 84% or above for the past three quarters. What are the dynamics that would cause the gross margin to go down next year, especially considering you're likely to have stable to increasing ASPs and higher volumes?
Jared Oasheim
Yes, good question. So as we set the guide for 2024. We're looking at the two different components, right, ASPs and the costs. And first, on the ASPs, we've mentioned that the guide is assuming a reduction in that overall U.S. heart failure ASP. from $31,000 down to closer to that $29,500 at the midpoint. So that can have an impact on the overall gross margin results for '24.
And then the second component is the cost we've talked a lot about as we see the volume increase, we should see an overall trend. I've seen that cost come down. So as we see production go up, the cost should come down.
However, if we continue to buy components for these devices, we're going to have to go out and negotiate new contracts with new vendors at different times. And at those points in times, we may see a price increase for the components themselves, not necessarily as much focused on the labor and overhead pieces of that. So both of those factored into our decision to guide us at the 83% to 84% for '24.
Okay, great. Thanks for taking my questions.
Operator
Alex Nowak, Craig-Hallum.
Okay, great. Good afternoon, everyone. Now with BDHF. done FDA approval in hand. That's all wrapped up. If holistically, where barrels I'm going to go next year, there's a ton of potential, as you know, in the barrels at their simulation.
Does it makes sense to spend clinical study to go deeper into the left-sided indication and the increase of the injection fraction or change of the BNP requirements? Or does it make more sense to really go after a completely new indication at a high.
Nadim Yared
Excellent question. So we spoke in the past that we believe from the mechanism of action and some previous experiments that the device could have applicability beyond heart failure, particularly, we spoke about hypertension, chronic kidney disease and arrhythmias.
And in the past, FDA has granted us based on previous clinical data that we submitted to FDA to device spray, a breakthrough device designation, BDD. one in heart failure with preserved ejection fraction and one in resistant hypertension.
So when we considered both of those two indications as just a hypotension and FFI. It was probably or likely that one of these two will be the second indication we go after that when we have, we got invited to be one of the 15 initial pilots that FDA started this year with a new program called the top total lifecycle advisory program.
Tap, and that was limited only to breakthrough device designated indications for new products. We started working with FDA about the have past indications. So this is the heart failure indication with ejection fraction above 35%.
It for us, it would make more sense to go after this indications for multiple reasons. One of them is the synergy and the sales and marketing efforts, the physicians will be the same call points would be the same. Even some of the direct to consumer marketing campaign would be the same. Most of education would be the same and so forth. Is it a new indication?
I would say, yes, we got those two diseases are different. And if we are approved in EF above 35% that would significantly and substantially increase the total addressable market of our therapy.
So why we are excited about this opportunity. We are in the early phase of the design of the study. A part of the ADAPT program is the requirement to collect stakeholder inputs before we start the enrollment of the trial. So we need to collect input not only from the regulators and physicians, but also from patients, payers, guideline committees and so forth.
And we are in this process. We actually had a very constructive meeting last week during the heart failure collaboratively with regulators, payers, patients and key opinion leaders and medical societies as well in one single metric. So this is where we are right now on the question of when do we start this program. It's early to know how long it would take to design and finalize the design of the trial.
And then the second question will be the question of spending that John was talking about in there for the you know, the previous question that you got.
Okay. That's extremely helpful. Thank you so much.
And Nadim, obviously congrats on the retirement and going to bear some where it is today. You're obviously on the board on your conversation with them about the transition that will take place here. Is there still a is there a plan for you to remain on the Board? Any views you can kind of give there?
Nadim Yared
Alex, thanks for asking your question. So I listen at the end of the day, I will do whatever is needed in here to ensure that Cybex has the best and smoothest transition possible between me and the next year or so. Yes, I hope the Board in terms of the search we meet with the search committee on a daily basis to identify and look at all of the candidates, internal and external and whether I stay on the Board.
And that is not the point. The question is what is the most effective way for me to be helpful, not only during the transition, but also after this transition depending on what the Board and the new CEO will need from me. And listen, this is my baby. I've been here 17 years.
I'm not going to drop it one day and forget about it. So it's in my best interest to ensure that I we'll dedicate the time needed to ensure as smooth as possible transition and whichever form that takes I it is immaterial, whatever new CEO and the Board want me to do all we do.
Well, that's good to hear. And then maybe just a quick question for Jared. On whenever we get a new code hospitals, those go through a transition process flow for the Q1 guidance. Can we assume that there's a little bit of conservatism built in for hospitals going through that transition where they might be a little more hesitant to buy just because they got to figure out the reimbursement dynamics again?
Jared Oasheim
Yes, yes, good. Good question. Whenever we put out guidance, we're looking at a lot of different factors, right? And we're always being prudent to make sure that we can put out guidance that we're able to go out and achieve. And so I think we take all of those points into consideration when we put that guide together of $11 million to $12 million for the first quarter.
Our excellent thanks for the update.
Jared Oasheim
Thank you.
Operator
Frank Takkinen, Lake Street.
Great. Thanks for taking the questions. And I'll echo everybody else's comments related to your succession plans, Modine, maybe following up on the question string related to balancing growth aspirations and cash burn. I think there was a comment at the end of that stream related to if we elect to grow more aggressively, we'll think about the strategy to do so at that time.
Can you maybe walk through some of the different areas you would think about prioritizing if you did elect to address it more aggressively, invest it faster headcount growth, more aggressive on AIC. activation direct to consumers maybe think about or help us think about the prioritization if you did grow faster or attempt to grow faster?
Jared Oasheim
Yes, hi, Frank. Just to reiterate, right, I think you know, our plans are always to train and treat as many patients as possible. And we have a lot of people out in the field today with our current number of territories to be able to go out and help more and more of those patients.
And so we think we're going to continue to see growth just from the team that we have out there today and where could we invest faster, right? If we had an open checkbook, there's plenty of opportunities.
And the Nadim talked in depth about the new indications and how this is a platform technology where if we were able to go off and run clinical trials and get approvals from FDA, it opens the door to a whole bunch of new patients that could benefit from this therapy in the more immediate term?
Yes. I mean, it's all of those areas, right? It's do you invest more in more sales reps out in the field you invest more in DTC. in. The key thing for us is doing it in a thoughtful way, right? We don't want to just throw money at things and hope that it works.
We're being very prudent on how we're utilizing our cash to make sure that we there is no need to go raise more money. We can do this on our own without having to go do another financing. And if there is a decision to ever raise more money in the future, it's more us being opportunistic because we've been able to prove out some of those additional that's that we've run as a business.
Okay. That's helpful. And then maybe just one more sticking with the commercial organization as companies progress to progress through this model. There's always a initial influx of onboarding new centers that are implanting that technology manage utilization.
It catches up some time to see a shift to incentivizing the sales force to more aggressively go after improving utilization, just given the leverage effects of doing that, once you have a larger network of active implanting centers.
My assumption is you're still focused more on the activation of implanting centers, but maybe talk to how you think about that progression versus new centers versus eventually being more aggressive on pulling the utilization lever?
Nadim Yared
I can have Frank, actually question. So in our case, it's a little bit of a little bit different because when we activate a center, that's the implanting centers. But the referral network is all around that centers. So yes, we need to ensure that our sales force is focused on training and educating cardiologist in the community, send that patient to that implanting centers that's part of the market development that we do.
So I'm not going to go into detail about incentive plans as we have the global sales meeting next week and our sales doesn't know their assessment of their incentive plan yet, but I think I've given you enough hints about it, it's a it's all about nobody activating the implanting centers, but also building that has got a network around it. So this is after we activate a center, they do their first few implants. Then the key here, the name of the game is get as many referring cardiologists around the hospital to send their patients to the hospital.
Jared Oasheim
Yes. And Frank, I'll just chime into, as I mentioned, with the guidance, the expectation is to continue to add new centers on a quarterly basis as well at a similar pace to what we had seen historically. So we're going to we expect to continue to see growth from both aspects.
Number one, seen new centers come on board number to see those centers get more and more experience. And history has told us the more experience they get the more patients they're treating on average, so seeing higher productivity.
That's helpful. Thanks for taking the questions.
Operator
That concludes your question and answer session. I'd like to hand it back to Nadeem Yared for closing remarks.
Nadim Yared
Yes. Thank you, operator, and thanks again to everyone for joining us for our fourth-quarter earnings call. We appreciate the ongoing support, and we look forward to updating you on our next progress on our next update, actually next month. Thank you.
Operator
Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation and you may disconnect your lines at this time and have a wonderful day.