ImpediMed Ltd

ASX:IPD

Earnings Call Transcript 2020-Q2

[Operator]

Thank you for standing by, and welcome to the ImpediMed Limited quarterly results investor conference call. [Operator Instructions]I would now like to hand the conference over to Mr. Richard Carreon, Managing Director and CEO. Please go ahead.

[Richard Carreon, MD, CEO, President & Executive Director]

Thank you, Rachel. Welcome, and thank you for joining us today. We're hosting this conference call to discuss our 4C for the financial quarter ending December 31, 2019.Before I begin, we at ImpediMed would like to convey our deepest sympathies to all of Australia that you continue to battle the destructive fires that have ravaged your beautiful country. The loss of life and the sheer magnitude of the damage is beyond comprehension. Our heartfelt thoughts and prayers go out to you all.On today's call, I'll be referencing the 4C we lodged earlier this morning, Australian time. Joining me is Cathy Kingsford, our Senior Vice President of Clinical and Regulatory Affairs; and Tim Cruickshank, our Vice President of Finance. As we usually do, we'll be taking questions following my comments.We've refined our guidance to the low to mid-range of what we provided to the market at the beginning of the year. As you'll recall, we stated that to achieve the mid- to high-end range, we would need to see the incorporation of our technology in the NCCN guidelines and the private payers to start reimbursing for SOZO testing. Vanderbilt has not yet heard as to the outcome of their NCCN application. And we have not been provided any definitive answers from the private payers we have been working with, other than request for additional information. And although we remain positive on the progress of these 2 growth accelerators, it is unlikely we'll see material revenue from these initiatives this financial year. Accordingly, the low to mid-range guidance range is more applicable.The financial results for the quarter ending 31 December 2019 were as follows. Total revenue for the quarter was $1.5 million, up 63% from the previous corresponding period and up 7% quarter-over-quarter. Of important note is continuing growth in SOZO SaaS revenue, which is up 216% from the previous corresponding period to $0.8 million and up 14% quarter-over-quarter.Our contracted revenue pipeline is the revenue to be recognized over the remaining life of the contracts; increased to $9.6 million, up 36% from the previous corresponding period and up 4% quarter-over-quarter. The gross margins for this future contracted revenue pipeline remains at 90-plus percent. Annual recurring revenue is the SaaS revenue we would contractually expect to receive over the next 12 months. This increased to $4.2 million, up 70% from the previous corresponding period and up 7% quarter-over-quarter.We sold 37 new SOZO devices during the quarter, now bringing the total number of SOZO devices sold to over 480. These 37 units, 16 of which were results of our land and expand strategy through the Lymphedema Prevention Program.Our churn rate remains negligible at less than 0.5%. The renewal rate on expiring contracts remains at 100% since we launched SOZO. We believe this metric shows the stickiness of our technology within the large hospital systems. To highlight this: We have 6 contracts renewed for the quarter.Cash receipts from customers for the quarter increased to $1.4 million, and cash on hand as of 31 December 2019 was $13 million. Net operating cash outflow for the quarter was $4.4 million.We noted in the 4C that we launched several initiatives that caused a short-term disruption in the quarter. During this period, we launched the Lymphedema Prevention Program; had new and more aggressive reimbursement initiative, an uplift and realignment of the sales, clinical and marketing teams and a focus on long-term strategic opportunities. Now while these initiatives are critically important to the future success of the business and should provide a step change in revenue over time, they did absorb a significant amount of resources. We will, therefore, ensure we remain focused on achieving a better balance between the short- and long-term goals for the remainder of the year.Although we acknowledge the allocation of resources was not optimal, there are a large number of successes that I am proud to update you on during this quarter. We continue to see strong adoption of our technology. To date, our customers have conducted more than 90,000 patient tests, with almost 21,000 completed in Q2 alone. Now this is an increase of more than 15% quarter-over-quarter. In Q3 FY '20, we quickly -- we will quickly surpass 100,000 patient tests live to date on SOZO. This is an early but exciting milestone for our technology. Our growing patient database now has more than 315 million individual data points. And this has allowed us to, one, increase the accuracy of SOZO; two, automate key protocols; three, improve our current algorithms; four, create new algorithms; and five, provide real-world data to the FDA for regulatory clearances. The release of our heart failure data was a significant milestone for the company. It not only opens up a large second indication but more importantly demonstrates that SOZO is now a platform technology. This data led to a number of requests for a detailed technology review of SOZO across multiple indications. The Lymphedema Prevention Program increased sales in testing and existing customers. Q2 of this year was dominated by expanded sales to current large cancer centers and to new sales to large high-value cancer centers.Our reimbursement efforts were significantly bolstered by our partnership with [ MCRA ] and which was -- which allowed us to contact 16 additional regional and national payers in the quarter. As stated previously, it is our intent to increase the pressure on private payers in key markets by appealing each test they reject for payment. This increased pressure and awareness, along with the new clinical data coming out, should lead to payments for L-Dex testing. We also focused additional resources in key markets to drive medium- to long-term growth. And for the first time, we have put resources focused solely on national opportunities.The PREVENT trial paper evaluating the 2-year data for bioimpedance spectroscopy versus tape measure was submitted and is currently in the peer review process ahead of acceptance and publication. The meta-analysis manuscript evaluating bioimpedance spectroscopy, combining data across multiple studies, was submitted and awaits review and publication. This manuscript evaluated 50 studies comprising more than 17,000 patients. Once these 2 papers are publicly available, we will immediately submit them to the NCCN as well as to the insurance companies we are working with to obtain payments for SOZO testing. The heart failure manuscript using bioimpedance as a tool in the clinical assessment and treatment of heart failure patients is being finalized and is expected to be submitted for peer review and publication in the coming months.The FDA is currently reviewing our application for the removal of the contraindication, enabling the use of our device in a patient with a pacemaker. The heart failure publication and the removal of the contraindication for pacing devices will allow us to move into the first phase of commercialization for our heart failure indication.SOZO was the first medical device to receive FDA clearance for the indication of protein calorie malnutrition. Today, protein calorie malnutrition is not easily diagnosed. And if it is, it's normally in the late stages, which makes it difficult and expensive to treat. Patients undergoing cancer treatment are especially prone to developing protein calorie malnutrition. SOZO offers an objective way to measure several key body parameters and provide an objective assessment to clinicians. This is one more in a growing number of new capabilities and indications for our SOZO technology. It is our objective to make our technology a vital part of the care continuum in cancer care. SOZO is the only bioimpedance device to receive FDA clearance for body composition measurements in an unhealthy patient population. Obtaining this clearance is significant. All other bioimpedance devices for body composition are only able to be used in a healthy patient population. This is one more clinical distinction for our technology and will force potential competitors to show clinical evidence they can actually measure body composition in unhealthy patients.One of the most prestigious cancer centers in the U.S., Memorial Sloan Kettering, published an independent study in the cancer journal. The study stated that "L-Dex score was found to be the most rapid and reliable noninvasive method for detecting early-stage lymphedema in this study."Let me briefly summarize the initiatives we've undertaken and the importance to the company's future. Our key initiatives are all interwoven to increase the clinical utility of our technology in hospital systems. Our ability to easily and inexpensively obtain clearances for new critical indication drives adoption and expands our footprints in leading centers. It also drives adoption across multiple medical specialties. And combined, these establish strong customer loyalty to our technology and build significant barriers to potential competitive entry.And Rachel, that concludes my remarks. I would now like to open up the lines for questions, please.

[Operator]

[Operator Instructions] Your first question comes from Shane Storey at Wilsons.

[Shane A. Storey, Senior Analyst]

Can you hear me?

[Richard Carreon, MD, CEO, President & Executive Director]

I can, Shane.

[Shane A. Storey, Senior Analyst]

Yes, yes. A couple of questions from me. The first, you just mentioned just there at the closing remarks, Rick, some of the longer-term sort of opportunities that absorbed some resources in the current period, yes. I'd just be interested in -- yet I think you mentioned that some of those were national kind of initiatives. I'd just like a bit more detail on that, please.

[Richard Carreon, MD, CEO, President & Executive Director]

Yes. So I think there's a couple things. The -- what we did during that period, if you think about it, first of all, as you know, we used the proceeds from our last capital raise to increase the emphasis on reimbursement. So [ MCRA ], we hired them, as we stated last time, and what we wanted to do there was really start to put pressure on our centers in key markets -- excuse me, the insurers in key markets in conjunction with the key centers. And so that took time to coordinate that and we're still continuing to do that. Now again we believe that's going to help because we now have a number of key centers who are pushing back on every denied claim. And then [ MCRA ] is starting to fight those denied claims, and we see that as a really key pressure point for us.We introduced the Lymphedema Prevention Program, as you know, last quarter. And the Lymphedema Prevention Program was specifically designed to increase the testing protocols in these major centers and then to start to expand beyond what they were routinely doing. So the objective there was to launch this program for the prevention of lymphedema, which means increasing the total number of patients so that they were testing and then putting them on a protocol. So we went back to all of our existing customers and introduced this program. We launched this, as you recall, in October of last year, so mid-October of last year, so it's only a few months old now. And that did take time. The good news is that a large number of our devices that we sold this quarter were sold into existing accounts who agreed that they needed to do more testing and took on additional devices. And we did start to see an increase in testing in December even though we had a large holiday period there, and we would expect to see that continue in the current quarters and going forward. The other one we talked about was an uplift in the sales. We talked about how we were going to start hiring a larger sales organization, so what we did is we realigned some markets to ensure equity across the board there. We had our clinical teams who are now focused on the lymphedema program ongoing, and then our marketing teams of the group that developed the Lymphedema Prevention Program and our outreach program with that. So again, that took considerable resources.And then in the long-term strategic opportunities. I mentioned the fact that once we published the heart failure data, that we started to get a number of inquiries inbound of our technology. What could it do beyond lymphedema? And heart failure, as you know, is a big area and is the largest single health care market in the world. And people are looking for [ areas ]. So not only were people looking at heart failure, but they were also looking at, if we could do lymphedema, we could do heart failure, what else could we do with this technology. Because even though we only have a number of clearances in the U.S., we have twice as many outside the U.S. So again a lot of interest since the publication of the heart failure data came out. So that consumed a lot of resources across the board.

[Shane A. Storey, Senior Analyst]

Great. I mean just let me just talk there about heart failure. I mean you also mentioned stage 1 of the commercial launch which, I guess, you're planning for the -- later this year. I'm interested to know, I mean, how you segment that initial part of the market that you'll focus on and then what sort of SG&A investment you will need to address that.

[Richard Carreon, MD, CEO, President & Executive Director]

Well, the good news here is that we believe the early stages of heart failure can be self-funding to a point, and let me explain that. Really when we break it up into stages here, we've talked about the fact that we don't need to change of the device, all right? The device is the same device. And we've been able to prove it in at home as same as clinic, so really the early stages would be to start getting the early adopters to start to evaluate the software, much like they did with SOZO in the early stages for lymphedema, evaluate the software. Are we presenting the information that's clinically relevant to the treating clinicians? So what kind of information do they want? How do they want it presented? And then how will they use that to intervene? So as you know, our studies clearly show that we can detect small fluid shifts that are medically meaningful. And when there is medical intervention, we can track that fluid change. So what Scripps is doing, as we've talked about, is they're going to be putting reference ranges. Part of their paper is to talk about reference ranges and how we will do that. So really the increased expense for us is really just from a software development standpoint, which we have been working on since the initial studies we were doing at Scripps to work with the clinicians down there. So we're not seeing -- we're not going to see a dramatic uplift in that in the beginning. So as we phase this in, it really is to go the early adopters; get their feedback; ensure what we have can be used across the board in both the clinics, heart failure clinics, cardiologists, even the emergency rooms; and then expand that to the at-home population. So that's how we would see that moving in phases.

[Shane A. Storey, Senior Analyst]

My last question was -- I'm encouraged to see that the PREVENT 2 publication has been -- well, the manuscript has been submitted. Look, my question around that is -- and I know we're speculating here, but I mean, given all the interaction that you've had with payers and key opinion leaders in relation to the first year of PREVENT data, I mean, what do you most hope to see play out in PREVENT 2? I mean in terms of helping overcome any residual objections or pushback that you've sort of encountered in relation to that first tranche of data, just bearing in mind, of course, it prevents the 3-year primary endpoint.

[Richard Carreon, MD, CEO, President & Executive Director]

Yes, I'll you what. First of all, the reason I asked Cathy to come on the line, I'm going to ask her to take that. And then I'll give you my take on it after she is able to address the first part of that, Shane, but that is a very good question. Cathy, do you want to take that?

[Catherine Kingsford, Senior Vice President of Medical Affairs]

I will. Thanks, Shane. I believe it will answer some of the questions. We've been showing that the first year's data is continuing to show separation with the second year data, so those trajectories will likely hold out. And I think that will really show that that longer-term data is really supporting our case. So I think really those questions still are that it's not long enough, that 1 year wasn't long enough. So the 2-year data will support that. We do need to follow these patients for 2 years, and we are seeing separation between the 2 groups at 2 years.

[Shane A. Storey, Senior Analyst]

Great. And then so...

[Richard Carreon, MD, CEO, President & Executive Director]

Yes. And I will say -- okay, well, my take on it, Shane, do you want to have?

[Shane A. Storey, Senior Analyst]

Absolutely, yes. Fire away.

[Richard Carreon, MD, CEO, President & Executive Director]

Okay. No, that's fine. I would say this. I mean here is the exciting thing. The PREVENT trial has opened up a number of doors for us. One, it's gotten the discussions going on in the payers. Nobody has said no to us. If anything, we're having to provide additional information, clarity. In my opinion, it's not going as fast as we would want, but it's also not closing any doors. And I think the 2-year data is going to be important but more -- but in conjunction with that, we're going to see the meta-analysis come out. And remember that's 50 studies, 17,000 patients that had been statistically analyzed to try to make apples-to-apples comparison; and we believe that data is going to be very compelling as well. So you'll see the 2-year data that we believe will continue to show strong separation between the clinical utility and the necessity of using L-Dex and the tape measure and how poor really a tape measure's performance is over time. And then you'll have a meta-analysis where, for the first time ever, they're going to be able to level set 50 different studies and 17,000 patients. So I think the data is going to become overwhelming, and I think you'll start to see the cracks start to appear in the reimbursement front. I mean we already know there are -- some insurance companies, and we've said this before, are starting to pay not routinely but are paying, starting to pay with some of our hospitals. And it's just because the amount of pressure. They don't have a written policy, so we've not reported that. And it's not that everyone that submitted gets paid, but there is enough movement starting. So I believe these are really going to help us really get those last issues over the line.

[Operator]

Your next question comes from [ Ian Moore ], a private investor.

[Unknown Attendee]

Rick, I think Shane might have covered this about the changes in your -- I think you used the words "a more aggressive reimbursement strategy." Some of these clinics are pushing the insurers on claims that don't get up. I mean, is it -- I guess, a couple of questions. Why wasn't that done earlier? And can you add anything to that information?

[Richard Carreon, MD, CEO, President & Executive Director]

Yes. So let's step back a quarter. If you recall, we decided to hire [ MCRA ] because they have the resources. We could never afford to put the amount of resources necessary to push back on every -- and also we didn't have enough key centers onboard who were testing an expanded portion of their patients. If you recall, we only had places like KU that have several thousand patients they were following. Now we're starting to see a large number of centers starting to test more and more. So they would have an abundance of claims to be putting in that were non-Medicare. So one, the environment wasn't right. Two, we didn't have the resource or really the budget to do that. And once we did, we announced that alliance with [ MCRA ]. So what they've done is they geographically picked the markets with the biggest users of our technology; and the most prestigious centers, so those centers that have national recognition in the U.S. And then what they're doing is meeting with the champion of the facility who has to request a meeting with the insurance company, and then they have to be willing to allow [ MCRA ] to fight every single case. So again this is just in the early stages, but we believe this is what [ MCRA ] has used in the past with their clients in order to gain enough traction to push this through and starting to get routine payments on their technology. So again I think it was the timing, it was the environment, and then finally been able to partner with somebody the magnitude of [ MCRA ], with their national presence, to be able to do this.

[Unknown Attendee]

Okay. I presume that's costing a few bob. And I presume you can't disclose very much, that is, but if you can, how much is it costing?

[Richard Carreon, MD, CEO, President & Executive Director]

Well, I'll put it this way. Here is how I -- here is how we stated it on the last conference call. It's not as expensive as me hiring a vice president of reimbursement. So it's less than I would spend annually on that, so we think that is a very good use of the funds. This isn't millions of dollars. This is a very focused, targeted approach in large centers to get regional payers and some national payers to start paying; and then that ball will tumble very quickly. And at that time, it just becomes we would be more than willing to put more into it, but for us it's a very cost-effective means where I have access to dozens of experts at the cost of having one person here who would not nearly have those many contacts with those many resources at their disposal.

[Operator]

[Operator Instructions] Your next question is from [ Guido Vanderwalden ], a private investor.

[Unknown Attendee]

Yes. Rick, it sounds like things are looking very positive, but it may be more medium term than short term. My concern is that we're burning cash very fast, and at this point, the company is only going to exist for another 2 or 3 quarters. What are we doing about that?

[Richard Carreon, MD, CEO, President & Executive Director]

Yes, great question. So as we always do, the Board and the executive team are cognizant of the cash position. And we've explored a number of potential sources of funding. And as the year continues to unfold and as we see these opportunities and as we're able to take out some of these major obstacles, we'll consider the various options we have. And we're going to make the best decisions that are in the shareholders' interests, and we'll do that at the appropriate time. I mean we're very, very aware of that, and it's something that the Board discusses on every meeting.

[Unknown Attendee]

All right then. I'm somewhat surprised by how high the staff costs and administration costs are, but I'm not completely cognizant of everything the company is doing. But they do seem on the high side for the amount of turnover.

[Richard Carreon, MD, CEO, President & Executive Director]

Yes. I will say there's a couple things here. So if you take a look at the staff costs, remember we transitioned from a capital business where we didn't need software engineers. We didn't need any of that really. And we transitioned to this Software as a Service business which we believe -- and I think the initial data would show that it really was the right move for the long term, but we're also cognizant of the burn. We said that we would start to increase the head count of the sales organization, but we wouldn't increase it overall, so we've held our head count flat. And as we've added additional resources in the field to start to drive these key initiatives, we've taken down other portions of the business, and we will continue to carefully scrutinize that and look at that going forward. I mean we look at productivity. We take a look at every group within the company to make sure that -- if they're going to be critical to the short to medium term that we hold onto them. And if not, then we try to find a home for them, but we certainly want to transition the business to -- and the resources to those opportunities that we believe give us the best chance for long-term success.

[Operator]

Your next question comes from John Hester from Bell Potter.

[John Hester, Senior Healthcare Equities Analyst]

Rick, I just wanted to ask a couple of questions about your position now with relation to heart failure, which is probably the biggest opportunity for the company over the next 3 to 5 years. I've seen the data that you presented from the last year's Annual General Meeting. You've referenced a couple of clinical trials that have been run or are being run at the moment. And I wanted you to outline a time frame for some meaningful progress in the heart failure indication, please.

[Richard Carreon, MD, CEO, President & Executive Director]

Yes. I would say, John, very good question. So here's one of the key points where I think you'll start to see us get traction on that. There's 2 pieces of information -- or 2 pieces that are important for us to be able to launch this. First of all is the pulling of the contraindication, and that's really 2 pieces. One is for pacing devices, which a large number of stage 3 heart failure patients have. So that's critically important for us to pull, and we don't think that's going to be an issue. We meet all of the standards that were set out by the FDA to us. And the second one is going to be the publication from Scripps and that trial that shows the reference ranges in which to manage a patient between. So today, we manage an L-Dex patient and we give reference ranges of where you need to manage those patients within. If you recall the data that we had, we were able to show reference ranges. And so once those are published in a peer review journal articles -- article, then we can put those into our software, reference that and provide that to the FDA. So we believe those are 2 key catalyst points that are coming up. And I'll let Cathy talk about the timing here in a moment, but I think that's where you'll start to see the early adopters take a great deal of interest. I mean, as you know, heart failure is the single biggest health care issue today facing industrialized countries. Two, there is no easy, inexpensive way to do the scales, which is the most widely used or not accurate at all. And the health care system can't afford an implantable device of $18,000 and another $13,000 to $14,000 for the implantation of that device. So they're really torn about these patients who have been using our [ device ] or aware of it feel very strongly that this could become the standard of care over time for heart failure patients. So the first step for us, get the reference ranges and make sure that the data being presented to the heart failure specialists is what they're looking for and so that they can also use them in a greater patient population than they have today. So that's why that -- excuse, the contraindication for patient devices needs to be removed. So Cathy, why don't you go through the timing with John [indiscernible] just so he has an understanding of when we expect the FDA clearance to come through and when we expect the paper from Scripps to be published?

[Catherine Kingsford, Senior Vice President of Medical Affairs]

Okay. Thanks, Rick. So as you know, the FDA, the submission that -- for the removal of the contraindication for pacemakers has been submitted to the FDA. So we have been requested for further information, which has been provided. And now it's just up to the FDA to complete their review, which is expected in the next 60 to 90 days. And as far as the manuscript goes, we are just finishing the manuscript, and then it will be submitted to journals for publication. So that timeline is probably in the next 3 months.

[John Hester, Senior Healthcare Equities Analyst]

Okay. So by sort of -- yes, go on.

[Richard Carreon, MD, CEO, President & Executive Director]

Well, I think -- no. Well, John, I just wanted to say, as you can see, that the next 90 days would offer us the opportunity for both of these key things to happen: one, the removal of the contraindication; and two, the reference ranges. And since we already know those reference ranges, it's something that our R&D and software teams are currently developing, so it's not like it's going to be another 6 months from when we get those that they'll roll out. So we're prepared for all of these to come together in the next 90 days.

[John Hester, Senior Healthcare Equities Analyst]

And Rick, if you just wouldn't mind, please. In relation to the clinical work that's been done in heart failure patients, what was the -- what were the key outcomes for physicians and who are treating those patients in terms of sort of benefits for patients? What did the data show us?

[Richard Carreon, MD, CEO, President & Executive Director]

Oh, Cathy, I think we've got a lot of information on that. I -- there's 3 patients that were released. That's the information we can talk about, but I think Cathy is going to be able to tell you exactly what the benefits were once the physicians were unblinded to the data. So Cathy, I think this is a question that you probably have a lot to say about.

[Catherine Kingsford, Senior Vice President of Medical Affairs]

You know me, Rick. I don't have a lot to say about anything. So as far as the data showed and what we did release to the market is that we have the ability to track changes with diuretics so that the diuretic used could have changed earlier. And so that's really I think the key for physicians is to use a metric that can show a patient is truly fluid overloaded. So as you know, patients with heart failure have a lot of other comorbidities, so to be able to aim to say the shortness of breath is due to fluid accumulation and change their diuretics accordingly is paramount. And that's really I think what we show is that differentiation between the symptoms so that patients can be treated appropriately.

[John Hester, Senior Healthcare Equities Analyst]

Okay. And in relation to those revenues from last quarter, how many of those device sales, if any, were attributable to institutions who might have used the SOZO device for heart failure patients if any?

[Richard Carreon, MD, CEO, President & Executive Director]

Well, I will tell you now that none of them can be used for heart failure because we don't have the software available to them. And John, as background: Anytime a measurement is taken, we know the type of measurement. Whether it's going to be for lymphedema unilateral or bilateral or for any number of things, we'll know this, like I can tell you emphatically there's interest in heart failure. I can tell you we've been contacted by several of our large customers about when we're ready to roll it out, they want to take a look at it, especially in their cardio-oncology departments. They're aware of it, but I can tell you today that none of them specifically have it for heart failure. But several of them have already asked. When we get to that point, they would like us to meet with their cardio-oncologists and walk them through what we have. So we're going to be able to -- as we get into these new indications, we'll certainly want to keep the market apprised of how these are going and how we're starting to see the split out of that.

[Operator]

Your question is from [ Jeremy Thompson ] from [ Mcoxley Trust ].

[Unknown Analyst]

Rick, I've been on a number of these calls. And I imagine, like a lot of shareholders, we're hungry to see the acceleration of revenue growth through increased sales. With regard to that, the demand for SOZO seems to be clinician-led, and in turn, that's driven by evidence that you're always pursuing to enhance and the ability to be paid. Has there ever been any consideration to increasing the demand for SOZO's choice by using a high-profile ambassador that might be available in the U.S.?

[Richard Carreon, MD, CEO, President & Executive Director]

Yes. I have...

[Unknown Analyst]

Just to clarify. So that, I mean someone who has suffered lymphedema and has gone public about it.

[Richard Carreon, MD, CEO, President & Executive Director]

That is a great point. I will tell you that we're just starting to see -- or Kathy Bates, Academy award-winning actress, last year started talking about our device and wished she would have had our device available so they could have seen the onset of her lymphedema and prevented it from getting to clinical-grade lymphedema. That is an excellent point. I can tell you she's been one of the most outspoken one. I can tell you the LE&RN organization, the largest lymphedema patient advocacy, talks about it on a regular basis, but they have an ambassador. It's not something we have put together where we would have a traveling ambassador to talk about it, but that is a good idea. I mean I do like the fact that we can have it because I've been in meetings before where somebody actually in the meeting has lymphedema but they've never talked about it or continually keep covered up. And they're actually showing their sleeve or their stocking, saying, "I've got lymphedema," and it makes a very powerful statement. I think it's something we should consider. And we're taking a note now here and then I'll certainly bring it up with the marketing department. I mean we've worked with champions, clinician champions, but I think to have, I mean, someone like Kathy Bates talking about it -- we always get a number of phone calls from people that she talks to. Unfortunately, she rarely talks to clinicians. She did last year, and we saw a significant uptick in inquiries and business from that, but her typical audience is to patients. And when they call, we'd have to refer them to a clinician because, according to the FDA, you have to have a prescription to obtain one of our devices. And the average patient obviously can't afford our device, but I do like the idea. I think we're going to have to really start to explore that.

[Unknown Analyst]

Yes, it was Kathy Bates that I had in mind, Rick. And she -- my guess is that, if she were to adopt a more formal relationship with ImpediMed, then it would be driven by -- entirely by altruism, as opposed to any revenue to herself.

[Richard Carreon, MD, CEO, President & Executive Director]

Yes. No, that's true. And we have a very good relationship with her. And for several years, we've asked her to mention our technology. And it was only last year that she actually mentioned it for the first time. She has a hard and fast rule not to endorse any company, but I think it was because of how Bill Repicci, the President of LE&RN, actually approached her. And he was talking about all of the things that we as a company are trying to accomplish to alleviate secondary lymphedema that she actually mentioned it in a formal speech. So we will continue to push on Kathy, but I also think having just an average patient talk about it. I mean, the few patients I've actually heard talk about their struggles, it brings you to tears, of what they've gone through over the years as they've developed clinical-grade lymphedema. Great point, though. I might -- yes.

[Operator]

[Operator Instructions] Your next question comes from [ Ian Moore ], a private investor.

[Unknown Attendee]

Sorry just to come back again. The -- just following on from John Hester's question about you getting this Scripps publication and then putting that to the FDA. I mean, what specific claim would you be wanting to get from the FDA?

[Richard Carreon, MD, CEO, President & Executive Director]

Well, no, yes, a great clarifying question, [ Ian ]. So understand we already have the ability to monitor patients with heart failure. We already have that FDA clearance. Using the reference ranges, the FDA may ask us to review that software. We're not down that road yet. We're not sure if that's going to take place, but that would be a very quick review. This isn't like going from scratch. So it really depends on how we position the software, what's presented that at that point we'll have to see whether that requires an FDA review, but it's not going to be a long 90-day review. And if we do it correctly -- or again it's really going to depend on the feedback we get from the heart failure specialists. It may only require us to put -- notify the FDA of what we're doing and we can move forward. Worst case is we have to submit to the FDA for a review, but it's not to see for heart failure. It's -- does our software meet the requirements for the indications in which they have given us the clearance. Cathy or Mike, is there anything else you want to add to that?

[Catherine Kingsford, Senior Vice President of Medical Affairs]

No. I was -- that was what I was going to say, that we already have a clearance for patients with heart failure, to just monitor them. So it's just the software. So perfect.

[Unknown Attendee]

And just following on some of the cost questions. I mean, what was the PREVENT trial going to cost you this year? And what would be next calendar year? Because I would have thought all the patients will have completed their 3-year follow-up by about Christmas this year. So is that -- are those trial costs going to sort of collapse next year? So what's the cost this year and next year for the trial?

[Richard Carreon, MD, CEO, President & Executive Director]

Cathy, do you want to take that?

[Catherine Kingsford, Senior Vice President of Medical Affairs]

I can't give you the exact numbers, but I can tell you that every year, as hospitals are closing out, those costs are getting lower. And we will recruit our last patient by the end of this calendar year, so those costs will come down significantly.

[Unknown Attendee]

So why can't you tell us the cost of the trial?

[Catherine Kingsford, Senior Vice President of Medical Affairs]

I don't have it right on me at the moment. Sorry, [ Ian ].

[Unknown Attendee]

Yes, okay, roger.

[Timothy Cruickshank, Vice President of Finance]

[ Ian ], thanks for your question. This is Tim Cruickshank. We just haven't broken that out to the specific trial, but if you look, if you refer back to our annual report, we do have in our footnotes some further details of what some of those trial costs are.

[Richard Carreon, MD, CEO, President & Executive Director]

And if you have any questions, [ Ian ], or you have trouble finding that, just give us a call, and Tim can walk you through that.

[Operator]

Your next question is from [ Paul Vocl ], a private investor.

[Unknown Attendee]

Well, yes. Just with -- could you just give us a quick feel for the utilization of the SOZO device? Because I've questioned you on this previously, but given the number of devices now in the market and the number of tests you're doing, the utilization still seems to be very low. If you could perhaps comment on that and then, further, what you expect the utilization to get to.

[Richard Carreon, MD, CEO, President & Executive Director]

Okay. So the utilization, I -- there's a couple things that go into utilization. First of all, the number sold is not the number installed, right, because it takes a while to install these devices, depending on the hospital. So they may purchase them in 1 quarter, and it could be a quarter or 2 before they actually will have them fully installed. And then it's a testing phase and then the protocol writing and so on and so forth. So there is a -- can be up to a large lag when you do that. I think the best way to ensure that it's just not the number of devices we're placing in the marketplace that is driving is what I have my team do on a regular basis is take a look at the number of devices sold in a quarter and look at the moving average over the last 6 to 8 quarters. And so you'll quickly surmise that the number of tests are accelerating beyond the number of devices we're putting on. I use that as a good indicator. The second way to take a look at this is we do have some individual clinicians who are doing only a few tests a week. And we do have places like KU that's obviously following several thousand patients, so I would say the -- we're not close to maxing out the utilization by any means. And that's why the lymphedema program is critically important. And that's what we said last quarter, [ Paul ], that the lymphedema program, our nurses are now going back into these hospitals. They're showing them their utilization. They're actually showing them their protocol adoption. So if they say they're on a protocol, then we can show them is 90% of their patients coming back, 80%, 70%, 60%. And as we show them that, they have these long discussions about how to increase the number of testing patient access to those devices. That's why you're seeing we reported 16 devices going into existing customers already just because we -- the Lymphedema Prevention Program shows the number that [ this ] gets done. And then we will start to follow these devices this quarter on how many are placed, what the utilization is and are they increasing; and then directing the staff to go back in there. But I will say that you should start to see an acceleration even greater than we're -- than we currently have in the future, but understand, as we get the number of indications, we'll increase the number who adopt the product, who then increase the number of patients. I would say -- I couldn't tell you what a good adoption -- excuse me, what a good measurement rate would be at this point because I don't think we're even close to knowing what that would be. I would say today we're on the low side of the testing -- of what the potential should be in a large center because we -- even our best accounts like KU because they have some of their devices in the world market, they may only take several tests a month, where the main campus is doing several hundred a week. So it's going to depend on where they place the device, but they place as much emphasis on that device in a rural setting with very low populations when these cancer patients are coming in. That's just as important to them as the device that sits in the presurgical room or in their survivorship, where they get the preponderance of all of their testing. So I will say we're probably a while off from getting a number that we would feel comfortable with or that I would feel -- because I'm still not comfortable with where we're at. And that's why the Lymphedema Prevention Program, I think, is so critically important. And that's why the metric I use is really that rolling 6, 8 quarter. Are we increasing utilization above the number of devices in the marketplace?

[Unknown Attendee]

So just further to that. So you have 480 devices that you've sold or are, as you described it, in the marketplace. What is the actual installed base?

[Richard Carreon, MD, CEO, President & Executive Director]

We haven't reported that. So I really am not at liberty to say what that is. And by the way, that fluctuates almost on a daily basis from a standpoint of how many devices we've sold, the installation timing and so forth. I mean I can tell you we've got some accounts that are 6 months out. They bought the device. They need to go through their IT process. We have some that buy it. We ship it, and they're up and running several weeks later. So I -- it's really all over the board and it really is a dynamic number. And that's probably one of the key reasons we just have not reported on what that installed base looks like, [ Paul ].

[Operator]

There are no further questions at this time. I'll now hand back to Mr. Carreon for closing remarks.

[Richard Carreon, MD, CEO, President & Executive Director]

Thank you, Rachel. And thank you, everyone, for joining us today. We appreciate your time. And if there's further questions, you can obviously follow up with myself or with Mike Bassett. Thank you.