IceCure Medical Q4 2023 Earnings Call Transcript

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April 3, 2024

There are 7 speakers on the call.

Operator

Good morning and thank you for standing by. Currently, all participants are in a listen only mode. After management's discussion, there will be a question and answer session. Please be advised that today's conference call is being recorded. I would now like to turn the conference over to Michael Poliviou.

Operator

Please go ahead. Thank you, Yoni,

Speaker 1

and welcome to Life Care Medical's conference call to review the initial results for the 12 months ended September 31, 2023, to provide an update on recent operational highlights. You may refer to the earnings press release that we issued earlier this morning. Participating on today's call are ICU Pure Medical's CEO, Eyal Shamir CFO and COO, Ronit Zimmerman VP of Sales North America, Chad Good and Talit Ozoor, VP of Business Development and Local Marketing.

Speaker 2

Before we begin, I will now take a

Speaker 1

moment to read a statement about our outlook statement. Litigation Reform Act of 1995 and other federal securities laws. Words such as expects, anticipates, intends, plans, believes, seeks, estimates and similar expressions or variations of such words are intended to identify a forward looking statements. For example, we are using forward looking statements in this presentation when we discuss the achievements we expect to accomplish as we continue to advance our growth strategies, our positioning to make significant commercial advances to market, pursuit of regulatory approval in various jurisdictions, including with respect to the appeal we have filed requesting review of its de novo classification of ProSense, which earlier was granted. Expansion of clinical applications, release of results from our clinical results, potential market adoption and future sales of IQOS minimally invasive cryoablation technology, advancing regulatory and commercial strategies, strategic plans and our belief that we are in a position to meet our primary goals in 2024.

Speaker 1

Because such statements deal with future events and are based on Heitzberg's current expectations, they are subject to various risks and uncertainties in actual results, performance or achievements. The vice chair concludes or materially

Speaker 3

from these described or implied by the statements

Speaker 1

during this call. The forward looking statements contained or implied during this call are subject to risks and uncertainties, many of which are beyond the control of the company, including those set forth in the Risk Factors section of the company's annual report on Form 20F of the year ended December 31, 2023, filed with the SEC earlier today, April 3, 2024. It's available on

Speaker 2

the SEC website at www dotsec.com.

Speaker 1

The comments disclaims any intention or obligation, except as required by law, to update or revise any forward statements whether because of new information, future events or otherwise. The conference call contains time sensitive information and is based only as of the live

Speaker 2

go ahead.

Speaker 4

Thanks, Michael, and hello, everyone, and thank you for joining us today to review our 2023 year end operating results along with other key development has been achieved to date in 2024. The results were in line with our preliminary results we published in early January and Ronen will review this during his prepared remarks. I will focus my remarks on the achievement to date in 2024 and the expectation over the coming quarters, which are anticipated to make this a pivotal and exciting time for IQ. As a combination of 10 years of rigorous clinical study, our iQ3 trial for PROSENCE for the treatment of early stage low risk breast cancer is now complete, following a 5 years follow-up on our last patient. This is a significant achievement and our knowledge is the first time a cryoablation without excision study for breast cancer has been has been completed, which seek to provide the women with a safe effective minimally invasive treatment, redefining a women experience in early stage breast cancer.

Speaker 4

This timing, for instance, well with our FDA de novo filing request for marketing clearance for treating patients with free rate, similar to the interim results we published in 20 22 and validated by a numerous independent study performed by leading physicians globally. We are preparing the full data set and expect to submit the data along with the real world data to the FDA also requested later this month. In conjunction with this filing, data from the study will also presented at the upcoming American Society of Breast Surgeons Annual Meeting by leading breast surgeons in 2 separate sessions. As we wait the FDA decision, we are continuing to prepare our commercial readiness plan of process for early stage breast cancer in the U. S.

Speaker 4

We know there is a significant market need for an alternative to lumpectomy, one that benefit women and reduce cost for payers. We believe the breast cancer market represents a major value driver for our company and to share our commercial plans is Shag Good, Vice President of Sales for North America. Schad's primary responsibility is to build out a sales infrastructure in anticipation of a broader commercialization of the company's processing system in the U. S. And Canada.

Speaker 4

Thad, please go ahead.

Speaker 5

Thanks, Eyal. I'll start off with a little bit about my background. I previously spent 18 years working in the breast cancer, diagnostic and surgical space. Most recently, I led the U. S.

Speaker 5

Sales organization in the launch of an emerging technology, the wire free device for home ProSens. Again, our U. S. Commercial team currently includes 4 people, myself, 2 people in sales and 1 clinical application specialist. Despite the limited sales footprint, we are having success as we continue to increase system sales and utilization.

Speaker 5

We also plead upon the FDA's decision we can achieve our initial post launch sales goals with the current team. We have been very active with medical conferences and direct sales of ProTense for the indication for which it is already approved in the U. S. We've experienced strong interest in ProSense from breast surgeons and radiologists. However, we also believe while ensuring we have we are putting the pieces in place to support a larger sales team in anticipation of potential FDA clearance in early stage breast cancer.

Speaker 5

That includes a phased approach, build out our sales organization, grow utilization with our existing installed base and expanding system sales with breast surgeons and radiologists. This go to market strategy includes working with medical society to increase adoption through educational programs and hands on training. If FDA clearance is granted, our aim is the essential integration of Procent into standard of care as well as having appropriate reimbursement. We have a very clear reimbursement plan. At a recent Society of Interventional Oncologists Master Class, breast paralyzation received high levels of attention and interest.

Speaker 5

Doctors travel from across the country to come to these sessions to learn about breast car ablation. We believe that upon approval, many of these doctors will integrate ProSense into their practice. The published I3 study data is compelling. The groundwork has been laid and we are ready to serve the market for early stage breast cancer with our current sales, clinical and distribution organization. I'll turn the call back over to Eyal.

Speaker 5

Thank you.

Speaker 4

Thank you, Chad. Doctors in the U. S. Are very aware of the use of and data coming from breast surgeons, interventional radiologists and breast radiologists in Europe and Asia. Similarly, we expect potential FDA approval will have a very positive impact on global of PROSENCE for early stage breast cancer.

Speaker 4

Lalit, who lead the global marketing effort, will provide some comments on our initiatives. Lalique, go ahead.

Speaker 3

Thank you, Eyal. We believe the publication of the full dataset from I3 and the FDA approval in early stage low risk breast cancer will be a major catalyst for increased commercial adoption globally, particularly in Europe, India and Brazil. We remain very active at medical conference for a range of specialties including breast surgeons, breast radiologists, interventional oncologists and interventional radiologists. These conferences are featuring educational sessions about breast cancer cryoablation and are being conducted by key opinion leaders who are using ProSense. Furthermore, numerous independent studies have been presented on PROSENCE safety and efficacy in treating breast cancer.

Speaker 3

Beyond the major international conference in each market, we are collaborating with our distribution partners to engage the local medical community where the U. S. Data is highly regarded and influential. The increase in product driven revenues in 2020 3 was driven by our efforts in the United States as well as in other territories where we are growing our distribution network such as in Europe. We saw a marked increase in usage by interventional radiologists who comprise the majority of our customers in Europe and in Asia in the treatment of other clinical applications such as kidney, bone and soft tissue.

Speaker 3

Our distribution partners and large audience of doctors are awaiting full data from the ASHRI trial, which we expect to be a catalyst for accelerated growth to add breast cryoablation to the treatment they offer today. Internationally recognized medical societies were processed already approved for early stage breast cancer, we are experiencing continued increase in demand. I will now turn the call over to Ronen, who will go over the financial results. Ronen?

Speaker 2

Thank you, Lalit. In 2023, we were encouraged by the sales growth as we continue to transition from R and D to commercially focused company. For the 12 months ended December 31, 2023, revenues from sales of process systems and disposable increased by 26% to $3,000,000 compared to $2,300,000 for the 12 months ended December 31, 2022. This increase was driven primarily by higher sales in the U. S.

Speaker 2

And other territories. Total revenues for the 12 months ended December 31, 2023 were $3,200,000 relatively flat compared to $3,100,000 in the prior year due to the increase in revenue from sales systems and disposables, which was partially offset by the decrease in revenue recognition from the exclusive distribution rights agreement with the Rumor Corporation. Gross profit was $1,300,000 for the 12 months ended December 31, 2023 compared to $1,400,000 for the 12 months ended December 31, 2022. Gross margin was 40% in 2023 compared to 47% in 2022. The decrease in gross margin was primarily attributable to the decrease in revenue recognition from the Terumo distribution agreement, which was partially offset by sales increase of our systems and disposables.

Speaker 2

Non GAAP gross profit and gross margin from the 12 months ended December 31, 2023, which included process systems and disposable prior prop sales, but did not include revenues from the Terumo were $1,000,000 35%, respectively, compared to $700,000 30% in 2022, an increase of approximately 47% in non GAAP gross profit. Total operating expenses for 2023 narrowed to $16,900,000 compared to $18,200,000 for 2022. This was primarily attributable to reduction in R and D expenses and general and administrative expenses, which were partially offset by the increase in sales and marketing expenses. Net loss for 12 months ended December 31, 2023, decreased by 14% to $14,700,000 or $0.32 per share compared with a net loss of $17,000,000 or $0.46 per share for the same period last year. As of December 20 31, 2023, the company had cash and cash equivalents including short term deposit of approximately $11,100,000 our initiative to manage our resources during the year achieved the desired effect and we lowered our monthly cash utilization without having to sacrifice our revenue generating all clinical efforts.

Speaker 2

During the Q1, we raised approximately $3,000,000 in gross proceeds from our ATM and ended the Q1 with cash and cash equivalents of approximately $11,000,000 I believe our continuing efforts to manage our cash and when combined with the prudent use of ATM provide us with the resources to execute our clinical regulatory and commercial objective for 2024. Operator, we will now open the call for Q and A.

Operator

Thank you. Ladies and gentlemen, at this time, we will begin the question and answer session. The first question is from Kempe D'oliver of Brookline Capital Markets. Please go ahead.

Speaker 6

Thank you and congratulations on the progress. First question is, given the ICE 3 trial, you had a U. S. Footprint, what's the current installed base of Pro Sense such that those former trial sites in particular can start treating patients immediately upon approval?

Speaker 4

Thank you, Kempe. This is Eyal, CEO. I will start and then Thad will add some more information. We have our current installed base for users who are treating mainly breast tumors. We have another site that we announced on catering in New York, very important that dealing with endometriosis using our ProSENCE system.

Speaker 4

Chad and his team will continue to grow the market in parallel for our process with the FDA. So we would like to be fully ready for that respect. So, Sart, if you have anything to add?

Speaker 5

No, I don't have anything else to add to your comment.

Speaker 6

Great. And then my next question relates to the X Sense filing announced yesterday. And what are the features of the X Sense rather to Pro Sense?

Speaker 4

Thank you. Pro Sense remain our primary system and we along with our global partners, we are focusing on selling this system to penetrate different market. When XSENS is closer to becoming commercially available, we will have a developed strategy to reduce delays in the decision making. ProxENCE is our next generation liquid nitrogen, single probe cryoablation system. We announced some top patents that we've got around it.

Speaker 4

This is really a state of the art latest technology, and this is also set as a platform that will allow us the future product and pipeline for indication. So the recent filing request for clearance is for all of the indication of the process that we have at the moment and we will have a proper transition commercial phase, but the Xence will open us potential future indication and future platform for different technologies.

Speaker 3

Great. Thank you.

Operator

The next question is from Yi Chen of H. C. Wainwright. Please go ahead.

Speaker 1

Thank you for taking my questions. Could you comment once you submit the application, how what is the estimated expenses for marketing the device in

Speaker 3

the U.

Speaker 1

S? And how do you see the growth may look like in 2025?

Speaker 4

Thank you, Yi. It's Eyal. It's remain unknown regarding timing since this is still a process from the initial application that we submitted in October 2022, it is very important that we not speculate on the timing. However, we believe that it can be any way from a few months to perhaps end of the year or very early in 2025. The FDA didn't open a new clock and is still running under the timing of the original 510k De Novo submission.

Speaker 4

Our goal is certainly to continue our continuous communication with the agency and to work and to prepare ourselves regarding regardless the timing, which mean to prepare the market and our infrastructure. As Shabd mentioned, we are working on reimbursement, working with trial for breast cancer. So we're going to have everything ready for getting the clearance. And after that, Shard will increase the team because we are anticipating much more demand and we would like, of course, to increase the sales. We are not giving at the moment guidance on projection, but we are planning to grow the business importantly from 2025 and on.

Operator

There are no further questions at this time. Mr. Eyal Shamir, would you like to make your concluding statement?

Speaker 4

Yes. Thank you, everyone, for Thank you everyone for participating on our call today. Stay tuned for our i3 full data announcement as well as other major developments. We sincerely thank all of the patients who participated in the I-three study and their families. We hope women who experienced the treatment are enjoying healthy life free of surgical scarring.

Speaker 4

We also are grateful to all our shareholders whose support in helping to bring a much needed minimally invasive solution to women with early stage breast cancer. Thank you very much, everyone.

Operator

Thank you. This concludes

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IceCure Medical Q4 2023
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