IceCure Medical Q1 2023 Earnings Call Transcript

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May 22, 2023

There are 3 speakers on the call.

Operator

Good morning and thank you for standing by. Please be advised that today's conference call is being recorded. I would now like to turn the conference over to Todd Kehrli. Please go ahead.

Speaker 1

Ended March 31, 2023 and provide an update on recent operational highlights. You may refer to the earnings press release that we issued early this morning. Participating on this morning's call are Altria Medical's CEO, Eyal Shamir History of Business Development and Global Marketing Alik B. T. Fleisher and the company's CFO and CEO, Ronan Simeon.

Speaker 1

After the prepared comments, management will make will be available to address your questions. Before we begin, I'll take a moment now to read a statement about forward looking statements. This call and the question and answer session that follow contains forward looking statements within the meaning of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. Words such as expects, anticipates, intends, plans, believes, seeks, could, estimates and similar expressions or variations of such words are intended to identify forward looking statements. For example, we are using forward looking statements in this presentation when we discuss during conference call that we will hold courses or master classes as part of future conferences or our plans to exhibit our technology at future conferences.

Speaker 1

And I believe that there will be a rapid adoption of protense for the indication of early stage with high risk search and surgery breast cancer, which received FDA approval. The drug substation appeal of future events and the base on Icefield's current expectations that subject to various risks and uncertainties and actual results, performance or achievements of Icefield could differ materially from those described in or implied by our statements in this presentation. The forward looking statements contained or implied in this presentation are subject to other risks and uncertainties, many of which should be under control of the company, including those set forth in the Risk Factors section of the company's annual report on Form 20 F for the year ended December 31, 2022, filed with the SEC on March 29, 2023, which is available on the SEC's website at www.sec.gov. The company undertakes obligation to update these statements for revisions or changes after the call after the date of this call, except as required by law. I'll now turn the call over to Hyster Medical's CEO, Eyal Shamir.

Speaker 1

Eyal, please go ahead.

Operator

Thank you, and hello, everyone, and thanks for joining us today. We will start this review of our significant business development for the Q1 of 2023, followed by an overview of financial results for the 3 months ended March December 1st before opening the call for Q and A. ICL benefited significantly from the growing awareness and influence of cryoablation, part of a broader trend towards minimally invasive treatment. ProSens, we believe, is the go to cryoablation system of choice for physicians, including breast surgeons, rheumatologists and interventional oncologists. Our focus to commercialization and marketing efforts in the U.

Operator

S. Are creating great benefits in North America as well as carrying over the momentum into global markets. We continue to engage with the FDA through ongoing discussions that are part of the regulatory submission process. In a major milestone, we received approval in China, where our systems and cryoprobes are now fully approved for commercial use. An independent study, which ICU did not sponsor in any way, was conducted in France using protons and another prioritization technology to treat endometriosis.

Operator

We were very pleased to learn that the results which were published in the Journal of Vascular and Interventional Adrenology showing a 92.8 percent efficacy in avoiding secondary surgery. In what may be one of the most significant milestones from primary admission in the treatment of breast cancer, the American Society of Breast Surgeons or ASBRS, the leading medical society comprised of 3,000 headquarter provider for breast surgery, shared its plan for a cryoablation trial at the Society's Annual Meeting. We believe such a trial could potentially establish a minimally invasive standard for the treatment of early stage breast cancer. Importantly, it will support our commercialization process at ASDRX members, participate in the flight, gain experience with performing cryoablation treatment and see the benefits of its needs firsthand. I will now turn the call over to Philippe, who will elaborate on our commercial activities.

Operator

Thank you, Eyal. Hello, everyone. Over the past few months, iStuart has been busy attending professional medical society conference across the globe and we are very pleased and encouraged by the number of symposium and professional training programs for breast cryoablation procedures being led by the society. We see this as the best endorsement of our ProSENCE technology. Most notably, this year was the first time ever that the ASBRS Annual Meeting offered a continued medical education course on breast cryoablation.

Operator

The sold out course used our protein system, presented results from our I3 trial and gave breast surgeons hand on experience with our system. In addition to the course, trial ablation and specifically the I3 data were mentioned very favorably many times throughout the 5 day conference. Doctor. Natalie Johnson, ASBRS outgoing President herself spoke highly of cryoablation during her keynote speech, which ended in a beautiful song she sang that included cryoablation and delighted the audience. As Eyal mentioned, the ASBRS revealed plans for a study to evaluate cryoablation as a treatment for early stage breast cancer for women between the ages of 55 to 85.

Operator

This inclusion criteria would broaden the indication beyond what we have applied for with the FDA. We believe there is a high interest in the study based on the large number of breast surgeons who visited our booth at the annual meeting and participated in more hands on demos with us. We received a similarly high level of interest when process was also demonstrated in hands on training at the ASBRS Breast Fellow Course in January. We very recently attended the Society of Breast Imaging Annual Meeting in Maryland and had a lot of traffic to our booth from breast cardiologists across the globe. The symposium's feature talk on breast cryoablation, including ablation: The Time is Now, But How to Start by Doctor.

Operator

Louis Venta and by ProSense user, Doctor. Rob Ward, both of whom mentioned i3 data favorably. SBI intends to have a breast cryoablation course as part of next year's meeting and they have already requested iQIYSTO to take an active part in this course and workshop. We have seen a growing interest in cryoablation from U. S.

Operator

Breast surgeons and breast radiologists, but also a remarkable interest from across the globe by interventional radiologists and interventional oncologists who want to add breast cryoablation to their practice. The interventional radiologists and interventional oncologists are already familiar with cryoablation procedure in general and they are eager to add breast tumor treatment as a new clinical application to their practice. The U. S.-based Society of Interventional Oncology, SIO, also featured I3 trial and interim data in its annual meeting during the breast session led by doctors, some of whom are currently using the system. ProSens was also demonstrated throughout the duration of the conference at our booth where interventional oncologists engaged with the system and expressed great interest.

Operator

SIO has already announced they are planning a breast cryo basin master class to be offered as part of their January 2024 conference. They have requested that process be part of the hands on section of the course and the I3 trial data will be presented in the didactic part. The announcement of the course has already generated a lot of buzz and interest globally. Additionally, yet another medical group, the Society For Interventional Radiology Annual Conference featured persons in a session titled Chest Ablation Inside and Outside, led by ISO trial co primary investigator and a former guest on one of our prior earnings calls, Doctor. Kenneth Tromkovich.

Operator

Breast cryoablation was also discussed throughout the European Conference of Interventional Oncology meeting. In the second half of twenty twenty three, IQCO is planning to exhibit and host liquid nitrogen cryovations symposium with key speakers at the Cardiovascular and Interventional Radiology Society of Europe Conference, Pearson and for the first time exhibit at the European Society of Breast Imaging Conference, Eusebio. All of this exposure builds the foundation for what we believe will be a rapid adoption rate of PROSENCE for the indication of early stage with high risk surgery breast cancer should we receive a favorable FDA response to our marketing authorization submission. Overall, the key takeaway is that interest in breast cryoablation is high and physicians and professional organizations are coming to Aisture because of our strong clinical data in breast cancer cryoablation in our PROSENCE system. I will now turn the call over to Ronen for a summary of the quarter's financial results.

Speaker 2

Thank you, Khalid. For the 3 months ended March 31, 2023, revenues were $710,000 compared to revenues $750,000 for the 3 months ended March 31, 2022. Sales increased in the U. S. And Europe during the 3rd quarter of 2023 relative to the same quarter last year.

Speaker 2

Gross profit was $320,000 for the 3 months ended March 31, 2023, compared to $430,000 for the same period last year. Gross margin was 45% in the Q1 of 2023 compared to 58% for the Q1 of 2022. The decrease in gross margin compared to the same period last year mostly resulted from an increase in manufacturing costs. Research and development expenses for the 3 months ended March 31, 2023, were approximately $2,100,000 compared to approximately $2,400,000 for the 3 months ended March 31, 2022. The decrease was primarily due to a decrease in development expenses for our next generation silicopro system, partially offset by an increase in clinical and regulatory activities.

Speaker 2

As a result of our expanding commercialization efforts, sales and marketing expenses in the Q1 of 2023 were approximately $1,100,000 compared to approximately $750,000 for the Q1 of 2022. General and administrative expenses for the 3 months ended March 31, 2023, were approximately $1,100,000 compared to approximately $1,720,000 for the same period last year, mainly due to a decrease in cost of directors' insurance. Total operation expenses for the 3 months ended March 31, 2023, were approximately $4,300,000 compared to approximately $4,900,000 for the same period in 2022 due primarily the decrease in R and D expenses and direct cost insurance costs. Net loss for the 3 months ended March 31, 2023, decreased to approximately $3,800,000 or $0.08 per share compared with a net loss of approximately $4,400,000 or $0.12 per share for the same period last year. As of March 31, 2023, cash and cash equivalents, including short term deposits, were approximately $20,500,000 compared to approximately $23,700,000 as of December 31, 2022.

Speaker 2

Operator, we would like to now open the call for questions.

Operator

Thank and we will open your audio to ask a question. You can also click on the chat button and send your question. The first question is from Yi Chen. Please go ahead.

Speaker 1

Hey, everyone. This is Cheit on behalf of WeChat. I have a couple of quick questions. The first one on your potential any potential insight into your discussion with the FDA for the approval in early stage growth, breast cancer and also any potential guideline for approval?

Operator

Yes. Thank you. This is Eyal. We have a continuous discussion, dialogue with the FDA. They ask for additional information.

Operator

We provide whatever is required and it's an ongoing discussion. And we believe that in the next few months, we will get a reply from them, but it's ongoing discussion.

Speaker 1

Excellent. Thank you. And also previously, you indicated a minimum purchase target of $3,500,000 for the initial 3 years in China with your exclusive distributors. Just figuring out if that is still on track and any color on that would be helpful.

Operator

Yes. After we got the final NMPA approval on our cryoprobes with the previous approval clearance on the consoles. So now the affiliates of electronic high LTV, they could start doing the launching and they are keeping their original plan.

Speaker 1

Excellent. Thank you. And I know you also mentioned symposia in the second half of this year at a few conferences. And I'm sorry, I missed it during the prepared remarks. But could you please provide more color on the upcoming conference presentations that we should look out for in 2023?

Operator

Clarisse, could you please elaborate on that? Yes. We are going to attend this year's conference, which is the European Cardiovascular Interventional Radiology Meeting that will be mid September in Copenhagen. And during the conference, we will host the symposium in which a couple of our key users, interventional oncologists from Europe will share their experience with our ProSense system with multiple applications that will be happening mid September, as I said. And by the end of September, we will exhibit at the European Society of Breast Imaging.

Operator

That will be the first time that Cure will exhibit in this European meeting. And over there as well, we will allow demonstration, talks and provide explanation about our liquid nitrogen cryoablation system, specifically for breast application. Those two meetings are European meetings, and this is the plan for the second half of the year. But I could add as well because of Yalit and I think they are so busy, so maybe she forgot. So for example, on August, at Tialit and the team and the clinical team, we are going to exhibit with our partner in Thailand, Terumo, Thailand, as part of the Thai Breast Cancer Society.

Operator

So the 2 European extremely important conferences that Laveed mentioned, this is like a full European, but we have also some local like the Thai Breast Cancer Society meeting mid August. The next question is from Anthony Vendetti of Maxim Group. Yes. I was wondering if you could just give an update on the initial commercial traction within China that you received the regulatory approval through the high expense probes? And then were there any orders that you took in 'twenty three but weren't able to at Q1 'twenty three, we weren't able to recognize in the Q1 that you expect to recognize in the second quarter?

Operator

So, Ramin, please elaborate on that.

Speaker 2

So for your second question, we recognized almost all of our sales in the Q1. But we do, of course, have customer orders that we will be able to supply on the second quarter.

Operator

Okay. And then Could you repeat please your question regarding China? Yes. Since you received regulatory approval through the probes, have you started selling them yet? If so, what's been the initial traction or response?

Operator

Thank you for that. So from Dumpers, again, the affiliates of Medtronic MDT together with Turin Medical, who is our distributor and our team. For example, we did launching and got very nice attraction at the Chinese liver cancer society. This is quite an important indication in China, and this is part of our very wide range of indications that we have in China, the team started to make soft launching and also to participate to some important attendance that will create sense of the team, which mean putting the distributor together with Medtronic, they are working on that to explore attraction and to create sense. It.

Operator

And then the last question, then I'll hop back in queue. Do you continue to expect to conclude the I3 trial by sometime in the first half of twenty twenty four? Yes. The last patient enrolled February 2019. So in the next 9 months, we have still a small group of patients that need to come for the follow-up.

Operator

And after February 24, we will conclude and validate all the data to finalize and to complete the trial, which is the plan. Okay. Excellent. Thanks for all that information. I hope that can be achieved.

Operator

Appreciate it. The next question is from Kem Stoliver of Brookline Capital Markets. What is the driver of the increased manufacturing costs in the quarter since it compressed margins?

Speaker 2

Thank you for your question. So we are seeing an increase in manufacturing costs, But I believe this is something which is a little bit more onetime costs. So and as long as our sales are still at lower numbers, these issues might influence our gross margin in the next quarters. So as I said, our sales go up, the gross margin, I believe, will stabilize.

Operator

Okay. So it sounds like spreading the fixed costs over the volume? Yes.

Speaker 2

It mainly is fixed costs or fixed. If you have a small peak, then it influences your gross margin. All right.

Operator

Good. And with regard to your revenue this quarter, it looks like there was not any license fee revenue included, correct? And do you have a breakdown of consoles versus probes?

Speaker 2

So we still have revenues from our Teruna deal, which is basically the same as we had in the last quarter of 2022. So there's no change in this revenue. And in the quarters, we don't have the spread of or we don't give the spread of sales between probes and systems. We do see adoption of our system in the U. S.

Speaker 2

Since we have had the systems in place, and we see that doctors are continuing to buy drugs. So we do see the increase adoption in the U. S. Mainly.

Operator

Great. Thank you. There are no further questions at this time. I'll give the call to Eyal for a closing statement. Please go ahead.

Operator

Thank you very much, everyone. We continue to pursue all our milestones that we planned at the beginning of the year for the next 12 to 18 months, and we highly appreciate your support. Thank you. This concludes the Ice Cure First Quarter 2023 Results Conference Call. Thank you for your participation.

Operator

You may go ahead and disconnect.

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Earnings Conference Call
IceCure Medical Q1 2023
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