IceCure Medical Q1 2024 Earnings Call Transcript

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May 28, 2024

There are 8 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 Olivier.

Operator

Please go ahead.

Speaker 1

Thank you, Yoni, and welcome to iSecure Medical's conference call to review the financial results for the 3 months ended March 31, 20 24 and provide an update on recent operational highlights. You may refer to the earnings press release that we issued earlier this morning. Participate on today's call are iSecure Medical's CEO, Eyal Sameer CFO and COO, Ronen Zimmerman and VP of Business Development and Global Marketing, Talith Busse Telethazor. Before we begin, I will now take a moment to read the statement about forward looking statements. This call and the question and answer session that follows are contained 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.

Speaker 1

Words such as expects, anticipates, intends, plans, believes, seeks, estimates and similar expressions or variations of such words are intended to identify forward looking statements. For example, we're using forward looking statements in this presentation when we discuss the achievements we expect to accomplish as we continue to advance our growth strategy and sales goals by positioning to make significant commercial advances in key markets. The pursuit of regulatory approvals in various jurisdictions, including the expectation that cryoablation for breast cancer will be available to women in the U. S. This year, expansion of clinical applications including continued adoption of ProSense for many indications, potential market adoption and future sales of iSecure's minimally invasive cryoablation technology, advancing regulatory and commercial strategies that we expect to continue positive response from the medical community as commercial footprint and that a positive regulatory outcome in the U.

Speaker 1

S. For breast cancer would boost commercial traction for the treatment of breast treatment through cryoeligoration. Because such statements deal with future events and are based on NYSEQure's current expectations, they are subject to various risks and uncertainties and actual results, performance or achievements of IsoCare could differ materially from those described and or implied by the statements during this call. The forward looking statements contained or implied during this call are subject to other risks and uncertainties, many of which are beyond the control of

Speaker 2

the company, including those set forth in

Speaker 1

the Risk Factors section of the company's annual report inform 20 F for the year ended December 31, 2023 filed with the SEC on April 3, 2024, which is available on the SEC website at www.sec.gov. The company disclaims any intention or obligation except as required by law to update or revise any forward looking statements whether because of the information, future events or otherwise. This conference call contains time sensitive information and speaks only as of the live broadcast today, May 28, 2024. In addition, during the course of this call, we will discuss certain metrics that are non GAAP measures and we refer you to the reconciliation tables and other information about these non GAAP measures included in the earnings press release that we issued earlier this morning. I will now turn the call over to Icetro Medical's CEO, Eyal Sameer.

Speaker 1

Eyal, please go ahead.

Speaker 2

Thanks, Michael, and hello, everyone, and thank you for joining us today. I'm pleased to report that in the Q1 of continued to see consistent growth in sales. Product sales were up 30% for the Q1 of this year compared to the same period in 2023, demonstrating the ongoing adoption and utilization for our cryoabation system worldwide. Ronen will go over the numbers in more details. The continued positive trend is very encouraging and an indicator of the need and the demand for process.

Speaker 2

While we may see fluctuation in revenues quarter over quarter, we strongly believe that the major catalysts we achieved during the Q1 of 2024 and recently have the potential to significantly move the needle for us. Test catalysts, including the completion of our I3 study, the publication of the I3 study data and submission to the full set of the I3 data set to the FDA. During Q1, we completed the 5 years follow-up of our last patient in our I3 study, a 10 year long rigorous clinical study, the largest of its kind in the U. S. And to our knowledge, the 1st cryoablation without excision study for breast cancer that is being completed.

Speaker 2

The results, we believe, were excellent. ProSens offer the advantages of a faster, lower cost and more accessible clinic based outpatient procedure as compared to open surgery in the hospital. Per the I3 analysis at the 5 years follow-up evaluation, 96.3 percent of the subgroup of patients treated with process cryoablation followed by hormone therapy were estimated to be free from local recurrence. 100 percent patient and physician satisfaction was reported. Along with these results, ICE reproduced a wealth of data that we believe is supportive of the ProSUN's adoption globally, especially in countries in which it is already approved for breast cancer.

Speaker 2

Clalit will speak to this point today. The I3 data was very well received by the breast surgeons at the American Society of Breast Pendulum Annual Meeting, where it was presented by the I3 investigator, Doctor. Richard Feint. Surgeons Annual Meeting, where it was presented by the I3 investigator, Doctor. Richard Feint.

Speaker 2

In fact, in oral presentation 1, the American Society of Breast Surgeons Scientific Impact Award demonstrating the significance of Croson's cryoablation and its potential to see a new standard of care. Last month, we submitted the full and final data set to the FDA and requested marketing authorization for ProSens for the indication of treating patients with early stage T1 invasive breast cancer with a guile of cryoablation and adjuvant hormonal therapy. We are in continued discussions with the FDA as they clears process for marketing, we believe delivering alternative surgery free options to women in the U. S. This will have a significant impact on treating patients with breast cancer.

Speaker 2

We believe that this will also lead to a substantial growth in product sales, especially as we intend to continue to work on more reimbursement coverage and our commercial team in the U. S. Is ready for a rollout. We see a demand building ahead of a potential approval in the U. S.

Speaker 2

At the American Society Breast Surgeons Annual Meeting, a lot of positive talks and interest were created following 2 data presentation centered around breast cryoablation. We had many surgeons come to our booth to learn more and we continue to engage with them as they consider incorporating cryoablation into their practice. Further validation, the finding of our I3 data and the progress in the U. S, recent independent study in Italy and Japan published similar results. The Italian study found 100% tumor reduction in early stage breast cancer at the 6 to 12 months following cryoablation.

Speaker 2

In Japan, where our distributor Terumo, announced to file the regulatory approval of persons for the breast cancer in the second half of 2024, a study reported 0 local recurrence following treatment with ProSens. To comment further on our global commercial development, I would like to turn the call over to Khalid.

Speaker 3

Thank you, Iyal. Indeed, the growing number of independent studies in breast cancer as well as other clearly demonstrates physicians' enthusiasm about using PROSENCE. In addition to the breast cancer studies that Eyal mentioned, an endometriosis study conducted in France found that after 3:20 process, women reported pain reduction from a median of 7 on a scale of 0 to 10 to a median of 1 with some patients even reporting 0. In additional evidence of aspicasine endometriosis in this study included the disappearance of hemorrhagic signals and development of necrotic changes. This adds to the endometriosis data from other independent studies.

Speaker 3

Endometriosis is a very large indication for which there is not a good treatment alternative on the market today. In addition to our focus in breast cancer, we are exploring other indications in women's health. Circling back to breast cancer, we believe the full I3 data set helps establish PROSENCE as the gold standard for breast cryoablation globally, particularly in many countries in which Protense already has regulatory approval for breast cancer, such as Europe, India and Brazil. In general, doctors around the world are very interested in data that comes out of the U. S.

Speaker 3

Trial and they closely watch for FDA approvals. Certainly the case with the PROSENCE. This data also supports more utilization of PROSENCE as we recently saw the 1st breast cancer procedures performed in Brazil and Romania. During and just after the Q1 of 2020 4, PROSENCE was featured in I3 data were presented at medical conference across the world, including the American Society of Resurgence and Society of Interventional Oncology Annual Meetings in the U. S.

Speaker 3

Globally, ProSense was featured for physicians training sessions at conference in India and Japan. At the European Conference of Interventional Oncology, which took place last month, there was a strong interest in the artery data. 4 abstracts featuring process were accepted for presentation at this conference, 2 of which from Germany and France were for breast cancer and 2 more from Hungary and India were for benign breast tumors. We are also seeing more doctors and researchers submitting a abstract and poster and presentation of their PROSENCE studies to various other medical conference. We have a very full conference scheduled for the remainder of 2024, and we expect continued positive response from the medical community as our commercial footprint expands.

Speaker 3

We are optimistic about continued adoption of PROSENCE worldwide for many indication as we look ahead for the FDA's decision. A positive regulatory outcome in the U. S. For breast cancer, we believe, would boost commercial traction for this indication worldwide. I will now turn the call over to Ronnen to go over the financial results.

Speaker 3

Ronnen?

Speaker 4

Lalit, as I have mentioned earlier, our product sales continued their consistent growth. For the 3 months ended March 31, 2024, Process Systems and disposable probe sales increased by 30 percent to $733,000 compared to $573,000 for the 3 months ended March 31, 2023, driven primarily by higher sales in the U. S. And Japan. Total revenues for the 3 months ended March 31, 2024, was 733,000 dollars compared to $710,000 for the 3 months ended March 31, 2023, an increase of 5% due to an increase in the sales of ProSense products, which was partially offset by the end of revenue recognition from the exclusive distribution rights agreement with Iruma Corporation in Japan, for which no revenue was recognized in the 3 months ended March 31, 2024.

Speaker 4

Gross profit for the 3 months ended March 31, 2024 was 260 $9,000 compared to $320,000 for the 3 months ended March 31, 2023. Gross margin for the 3 months ended March 31, 2024 was 36% compared to 45% for the 3 months ended March 31, 2023. Non GAAP gross profit for the 3 months ended March 31, 2024 was 269,000 dollars compared to $183,000 for the 3 months ended March 31, 2023, an increase of $86,000 or 47%. Non GAAP gross margin for the 3 months ended March 31, 2024 was 36% compared to 32% for the 3 months ended March 31, 2020 23. Total operating expenses for the 3 months ended March 31, 2024 were approximately $3,900,000 compared to approximately $4,300,000 for the 3 months ended March 31, 2023.

Speaker 4

The decrease is attributable mostly to reductions in research and development and general and administrative expenses. Net loss for the 3 months ended March 31, 2024 was approximately 3.6 $1,000,000 or $0.08 per share compared to a net loss of approximately $3,800,000 or 0 $0.08 per share for the same period last year. As of March 31, 2024, the company had cash and cash equivalents, including short term deposits of approximately $11,000,000 the same as on December 31, 2023. As of May 28, 2024, the company had cash and cash equivalents of approximately $10,800,000 During the Q1 of 2024, we raised approximately 3 $1,000,000 in gross proceeds from the sales of ordinary shares under our ATM offering facility. We continue to manage our resources and cash well while supporting sales growth through commercial activities worldwide as well as achieving key value driving

Operator

The first question is from Kempe Dulliver of Brookline Capital Markets. Please go ahead.

Speaker 5

Thank you and good day. So first question relates to the application with FDA and your interactions with them so far. Can you characterize the communications since you have filed the application?

Speaker 2

Hi, Kem. Good morning. This is Eyal. We have continued discussions with them on the data set that we have submitted last month, regular Q and A. While they are working, we are waiting and providing any information that they additionally ask.

Speaker 5

Great. Thank you. And with regard to any U. S. Sales so far of the systems as opposed to the probes, Are there any patterns that you're seeing yet with regard to how practices the structure of the transactions are these are they purchasing them outright?

Speaker 5

Are they leasing them? What are you finding there is the nature how they're trying to finance

Speaker 6

bringing the system in house? It's

Speaker 2

a combination of purchasing the system. It's a combination of leasing and also a placement for a minimum monthly quantity of probe for a higher price. So from the business model point of view and what we see actually in the market is a combination of the different business models.

Speaker 5

Great. Thank you. That's all I have for the moment.

Operator

The next question is from Anthony Vendetti of Maxim Group. Please go ahead.

Speaker 2

Thank you. I was wondering if you could

Speaker 5

just talk about the distributor relationship in Japan with Terumo. And then in terms of payments you're expected to receive for them from them, is there a schedule for that? How is that expected to play out this year?

Speaker 2

Yes. Thank you, Anthony. The agreement with Terumo is a strategic distribution agreement. Terumo is busy to finalize the submission to the PMDA, which is the Japanese FDA, with our support, of course. They will use the IH3 data, including other local Japanese data.

Speaker 2

So this is supposed to be on the 2nd semester of this year. As part of the $5,000,000 distribution rights that we announced after we signed the agreement, we're supposed to get some additional swing milestones that we will get by the submission time, by the regulatory approval and also by the submission of the reimbursement in the Japanese Health and Welfare Office, which could be after the submission. So we have another milestones to get some distribution rights. And then, of course, they will be behind back to their commitment to buy conscious of drugs.

Speaker 5

Okay. And then I was wondering if you can elaborate a little bit on the cryogen slow control patent in Japan. How is that differentiated from your competitors? Like, do you see that as an advantage? And if why?

Speaker 2

The only competition that we could see now in Japan is the older Argonne and Helium Technologies that they have regulatory approval in the kidney only. This is a very complicated and a very expensive system. For the console price point of view, the cost of argon is pretty expensive. And more importantly, Japan is very strictly following the role that you cannot put the patients and the Arvon gas in the same room because this is considered as a high risk gap. They didn't do and they didn't do any try in breast, not in the U.

Speaker 2

S, not globally and not in Japan. So we are not seeing them going to the breast. So from prior observation point of view, at this stage, we don't see any competition.

Speaker 5

Okay. I know the focus obviously is on early stage breast cancer, but the PROSENT system obviously could be used for other tumors and fibroids and so forth. Can you do you have any update on the potential, the 4 ProSense to be used for endometriosis?

Speaker 2

Yes. We are even now under our G and I indication, we are treating endometriosis now in the U. S, same as we are doing in Europe as well. And we had some publication that the Prussence was part of it. So we as part of our interventional oncology indication, we would like to look after women as which it will be breast endometriosis and in the future also uterine fibroid.

Speaker 2

And the start of our interventional radiology indication, we would like to look mainly, but not only on lung, which is a quite big unmet need And the new action system that we submitted to the FDA as a general 510 will allow us also to have an opportunity to develop a flexible probe, which will be able to compatible also some of the bronchoscope assistant robotics that we will be able to work into the nodules of the lung. Okay.

Speaker 5

And then last question is on the sales force. I know in anticipation of FDA approval for early stage breast cancer, you've started to build the sales team. Can you tell us where that's at and what the plans are for the rest of 2024? Yes.

Speaker 2

As we mentioned and announced about 7, 8 months ago, we hired Mr. Chad Good as our Vice President Sales for North America. Chad is bringing with him almost 20 years of experience in the breast field coming from Johnson and Johnson, Mametom and other. So Schad is building the current team that we have in the U. S.

Speaker 2

And just before clearance, Shard will continue to build the team. So this new team that will add to the current team will be able to support the growth that we plan for 2025 and on. Okay, great.

Speaker 5

I'll hop back in the queue. Thank you.

Operator

The next question is from Ben Haynor of Lake Street Capital Markets. Please go ahead.

Speaker 7

Good day, gentlemen. Thanks for taking the questions. And congrats on the data into the FDA on breast cancer submission. I was curious about the XHANCE submission and the commercialization in the U. S.

Speaker 7

Once you get clearance there. I mean it sounds to me like that could be on a similar timeline as the breast cancer clearance. Any thoughts there on how you might commercialize both the system and with the new indication?

Speaker 2

Yes, you are right, Ben, and thank you for the questions. We expect to get clearance on the XANT early 20 25. We are building now, together with Mr. Shad Goud, the launching activities that we will start most probably early 2025. And this system that has a lot of advantages, not just the size of the footprint and the weight of the system, which is half of what we have now.

Speaker 2

And footprint in clinics, it's always an issue. This is really state of the art liquid nitrogen technology that will give some additional benefit like much longer continuous freezing ability. And again, as I mentioned, the XHANCE will be a platform for additional indication and also will allow us to consider a development of a flexible probe, which will give also additional indication. But we believe that during 2025, we will start to launch XENZ in the U. S.

Speaker 2

Market.

Speaker 6

Okay,

Speaker 7

great. And then just remind me, once you get that clearance, do you need to do anything special if the breast cancer clearance has already come? Or is that would that kind of be covered under the FDA rules?

Speaker 2

Again, I'm not sure that I understood correctly your question, but I will try firstly the breast cancer clearance will be on the process. All the current indication that we have on the process, of course, will be for the axons. But immediately after we will get the clearance on the breast cancer cryoabation for the process, we will be able to add it to the axons. So at the end of the day, both will be with the same indication.

Speaker 7

Okay. You've got exactly what I was asking poorly. Thank you, Ben. Great. And then on the studies that show the boost to the T cell immune response and the advanced cancer benefit, I guess how do you see future investigations going there and applications developing as kind of a forensics?

Speaker 7

How much have you heard say biopharma firms taking notice of the effects that you're seeing there?

Speaker 2

In many or I could say almost in all interventional radiology conferences, conferences, both U. S, Europe or even globally, you could hear now more and more lectures and you could see research on what they call cryoimmunology. The researchers found that after cryoablation and especially after liquid nitrogen, again, even nothing to do with ice cube, this is the physics of liquid nitrogen that allow you to freeze much deeper and much faster. It show the self immune system drugs after cryoablation showing a much better effect. And pharmaceutical companies and researchers try to find some additional treatment that enhance the neurotherapy drugs.

Speaker 2

And it looks like the cryoablation could be one of the basic treatment that will support this future way of improving the immunotherapy drugs

Speaker 6

for patients.

Speaker 7

Makes sense. Excellent. Well, that's all I had. Thanks for taking the questions. Thank

Operator

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

Speaker 6

Thank you for taking my questions. Could you please clarify again, is the I mean, what is the difference between XSENSE and ProSENSE? Are the 2 systems supposed to be on the market together? Or one system, Exane, is essentially supposed to be a plate processed?

Speaker 2

Yes. The Exane's to continuously do freezing for a to continuously do freezing for a much longer time. The whole way of liquid nitrogen management will be totally different, and it will allow us also to use it as a platform for new technologies and new devices like the flexible probe, like the catheter that will allow us to consider additional indication, for example, not just tencutaneous treatment for lung cancer for tumors on the surface of the lung, but it could work with 1 of the compatible robotic assistant bronchoscope that will be will give us the ability potentially to treat tumors inside the lung. So it will open us additional platform of technology or also for additional indications. And to the second part of your questions, we will start with the soft launching in the U.

Speaker 2

S, but gradually, it will replace and the XHANCE will be the main product for the U. S. And of course, we will continue to support and to sell probes for the all ProSense current user in the U. S, but XSENSE in the future will be the leading flagship product of IQ in the U. S.

Speaker 2

And later in other markets.

Speaker 6

Got it. Thank you. And with respect to operating expenses, are the numbers reported for the Q1, the Windows numbers remain relatively stable until you obtain FDA approval and then start marketing process for breast cancer in humans?

Speaker 2

I will now.

Speaker 4

Yes. Thank you, Yi. So yes, we expect that the numbers would stay relatively stable until we have an approval. You can see that there is a steady increase in sales, but again, we believe that the ramp up will be only after we have clearance from the FDA.

Speaker 6

And my last question is once ProSense obtains with the approval, do you plan to start an additional clinical trial for an additional indication or process or

Speaker 2

In some point, we will consider to do some level of additional clinical study, mainly in order to try to get additional indication. For example, endometriosis at the moment, no one of the competitors has a specific indication of endometriosis. So this is something that we will consider after we will get some additional results. We could treat this kind of the hot label as part of the GI indication. But in order to get specific indication, this is something that we will consider in the future or if we will have additional new indications that we would like to treat.

Speaker 4

Got it. Thank

Operator

you. There are no further questions at this time. I'll hand the call back to Eyal to make a concluding statement. Eyal, please go ahead.

Speaker 2

Thank you, everyone, for participating on our call today. While we await to the FDA decision on TruSens for breast cancer in the U. S, our entire team is working full steam ahead to continue our sales growth. Momentum worldwide across many indications, 2024 could potentially bring a major boost to the IQ and the new minimally invasive treatment for women with breast cancer in the U. S.

Speaker 2

Please stay tuned. Thank you.

Operator

Thank you. This concludes the iCecure First Quarter 2024 Results Conference Call. Thank you for your participation. You may go ahead and disconnect.

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