ImpediMed Ltd

ASX:IPD

Earnings Call Transcript 2024-Q3

[Operator]

Thank you for standing by, and welcome to the ImpediMed Q3 results call [Operator Instructions]. I would now like to hand the conference over to Dr. Parmjot Bains, Managing Director and CEO. Please go ahead.

[Parmjot Bains, executive]

Good morning, and thank you for the opportunity for us to present and discuss our Q3 FY '24 results review. As usual, with me today is McGregor Grant, our interim CFO and Executive Director, also joining us today is our Chief Medical Officer, Dr. Steven Chen. On this call, I will provide an overview of the activities for the last quarter. Dr. Chen will then discuss the update to the NCCN guidelines and the recent publication of this technology on the National Cancer Institute web page and explain why this is important for ImpediMed.

He will also provide an update on the recent American Society of Breast Surgeons Meeting. I will then hand over to McGregor to talk through the financials. And after that, we'll open the line for questions.

The business has made a significant progress in the last quarter to build the sales pipeline and to manage our cost base. As announced on the 27th of February, 2024, ImpediMed has been introducing measures to grow sales and more tightly manage cash flow and establish greater cost discipline in the business with the aim of reducing annualized operating costs by 10% to 15% by the end of FY '24.

On the 17th of April, 2024, we implemented a range of organizational changes that will support increasing sales and reducing costs. Following these changes, I am pleased to announce our new executive leadership team. This team has the necessary skills and experience in sales, marketing, medical affairs, R&D, finance and operations, and I am confident that we are well positioned to accelerate the growth of this business.

I am very pleased to welcome Mr. Tim Benkovic to the role of Senior Vice President, Sales and Customer Success base in the United States. Tim in a theory, highly capable health care sales executive with over 30 years of experience working for organizations, including Fresenius [indiscernible] and most recently [indiscernible] where he led a large team of sales professionals organized in a corporate structure across North America, which achieved significant growth.

At ImpediMed, we have organized our sales teams now into four regional [ plots ] and recruited two new business development resources who will support these [ pods ] in building our lead pipeline. As part of the organizational changes implemented on the select of April, Director, Andrew Grant has been appointed as Vice President of Product Development and Customer Solutions in an interim capacity.

It is expected that Mr. McGregor Grant will serve in this role for up to 6 months. During this period, one of Andrew's car responsibility will be to lead the development of ImpediMed new product roadmap and commercialization strategy and to ensure that the company has the appropriate organizational structure and capabilities in place to deliver on its plan.

The key commercial highlights for Q3 include the publication of the 2024 NCCN survivorship guideline, which continue to reference that were available. The addition of [indiscernible] as a modality to diagnose lymphedema on the national conference [indiscernible] web page. The continued growth in reimbursement coverage was 140 million covered lives in 16 states at critical math and attendance at five key conferences, including ASCA, [Mommy's Breast] and the first time attendance and conferences, which aim to reach new stakeholders, including the national consortium of breast centers and the association of community cancer centers.

It is important to note that attendance at these conferences is critical to our lead generation activities. March was a lymphedema month. And in our presentation, we have highlighted the numerous activities undertaken during this month to raise both patients and health professional awareness of lymphedema.

As a result of these activities in the last quarter, our new leads generated have increased by 50% compared to quarter 2. The new team and leadership will continue to validate and close these leads as well as continue to our build lead generation activities over the future quarters to build and maintain a strong pipeline.

We continue to refine our operations to accelerate our sales lead time to take these leads to execution faster. Most recently, we established a dedicated capability to support customers in IT implementation when the customer solutions lead as a key point of interface with customers. During this last quarter, I continue to visit customers in the field, including our key customers across Texas in April that represent 80% of the Texas market.

ASBS is also a very critical event where we met our key opinion leaders as well as the surgical leaders of large and granted delivery networks. Now continuing these conversations to support clinicians and building a lymphedema problems across the U.S..

I would now like to introduce our Chief Medical Officer, Dr. Steven Chen. Dr. Chen is a practicing surgeon, past President of the American Society of Breast Surgeons and presently serves on committees for professional societies, including the American Medical Association, the Society of Surgical Oncology and the American College of Surgeons. Dr. Chen will discuss the recently updated NCCN guidelines and the publication of the Breast technology on the National Cancer treatment page and why this is important. We will also provide an update from the recent ASBS meeting. Steven?

[Steven Chen, executive]

Thank you, Parmjot. So to start with the NCCN. So the National Comprehensive Cancer Network is in alliance of 33 leading cancer centers across the United States who publish evidence-based guidelines for the treatment of cancer. These are widely referenced and arguably the most prominent guidelines utilized in both academic and community hospitals with over 15 million downloads of their 85 total guidelines in 2023 alone. Their committees meet regularly to update these guidelines and inclusion is a stamp of acceptance for both physicians and payers due to the prominence and reputation for independence.

This was first added to the survivorship guidelines in 2023, and we're pleased that they are once again included in the 2024 guidelines as a tool for objective monitoring for lymphedema for those at risk. This guideline does apply across multiple tumors, although obviously, at ImpediMed, our commercial focus to date has primarily been on breast cancer. This also continues to gain exposure in other venues, perhaps most prominently this year on the National Cancer Institute's cancer.gov website. The NCI is the U.S. federal government's principal agency for cancer research and training and operates a website for patient information that includes information on cancer and its treatment. Being added to their patient-facing website as a test that can find lymphedema, including where it states that the tool is sometimes used to help prevent lymphedema in patients who are at risk, will likely be seen by many people and referenced by other websites over time.

Again, having this mentioned by these independent sources is a method to detect and prevent lymphedema will help continue to move the needle on patient awareness that can generate the demand for -- with providers and aid with payment from payers.

Moving on to other conferences. The American Society of Breast Surgeons meeting is a key conference for ImpediMed as it's the largest gathering of surgeons who have a strong interest in breast disease in the country with over 1,700 attendees, most of whom are surgeons as well as some of them are nurse practitioners and physician assistants. This meeting is an opportunity to hear the latest research discussed and debate unresolved breast cancer treatment topics and to network and build relationships with each other and with industry supporters.

In addition to exhibiting ImpediMed also takes the opportunity to meet and discuss topics with leadership with ASBS as well as with other key opinion leaders through its support of the society as part of its industry relations council. This allows for exposure of our progress to these leaders as well as to receive their feedback as to future directions for ImpediMed. Even beyond those meetings, though, ImpediMed presence was felt in a number of ways at a pre-meeting course for surgeons involved in lymphatic surgery, attendees had an opportunity to use SOZO devices and see how they might integrate into their practices.

We also sponsored and gave us product spotlight and of course, and also aimed at nurse, practitioners and physician assistants who are often the ones who primarily perform the exams for breast cancer survivors. In the main program, authors from our original PREVENT trial as well as myself presented a poster to detail the timing of lymphedema triggering in the PREVENT trial over time, demonstrating that even as far out as 3 years, which is as far out of the trial follows people, lymphedema events continue to occur, further depastrating the need for regular routine surveillance. We hope to get these results published in a peer-review journal as well. Having research presented at these meetings and published will continue to be a cornerstone of expanding the reach of ImpediMed's products. These presentations and publications form the backbone of evidence that becomes incorporated into future guidelines that reinforce the importance of lymphedema detection.

We're also gratified to have been approached by a variety of physicians in various fields, both in surgical oncology and other areas with ideas how ImpediMed technology for fluid detection and body composition measurement can be helpful in treating a variety of other diseases from lymphedema -- from treatment for other cancers such as melanoma or gynecologic cancers to a variety of other uses in monitoring for various disease states.

ImpediMed is looking to encourage physicians to utilize our devices in their studies as appropriate, and we'll work to build the infrastructure to support trials with devices or assistance of analysis where we can. Finally, as Parmjot noted earlier, lymphedema awareness month was during this quarter. And during this time, we really made a concerted effort to further increase lymphedema awareness with a primary message that presymptomatic lymphedema is detectable and the intervening early can yield benefits for patients and have a higher likelihood of preventing long-term chronic lymphedema. I'll now hand this back over to McGregor to cover the financials.

[McGregor Grant, executive]

Thanks very much, Steven. During the quarter, ImpediMed recorded unaudited revenue of $2.6 million compared with $2.3 million in the quarter ending 31 December 2023. The company sold a total of 18 SOZO units during the quarter, of which 13 units were sold in the U.S. This compares with a total of 37 units sold in the preceding quarter, of which 13 units were sold in the U.S. The value of new contracts signed during the quarter, which we refer to as total contracted value or TCV was $2.2 million compared with TCV of $1.6 million signed during quarter 2 FY '24. The existing contracts in place as at 31 March 2024 are expected to generate core business annual recurring revenue, or ARR, of $10.8 million for the 12 months to 31 March 2025. This compares with the ARR as at 31 December 2023 of $10.1 million and $9.3 million as of June 2023.

During the quarter, the company had net operating cash outflows of $6.3 million compared with $3.6 million in quarter 2 FY '24 and $3.1 million in quarter 1. The operating cash outflows in the quarter included severance payments of $1.4 million. It should also be noted that in Q1 FY '24, it included receipts associated with the federal government's R&D credit scheme of $2.1 million. And in Q2 included receipts of $1.3 million associated with the U.S. government's employee retention credit scheme.

Cash and cash equivalents at 31 March 2024 were $30.7 million compared to $36.9 million at 31 December 2023. As mentioned earlier, we have implemented measures to more totally manage cash flow and establish greater cost discipline in the business. As a result of these and other changes, after allowing for one-off costs incurred in FY '24. The company anticipates annualized operating costs on a cash basis in FY '25 will be lower by 10% to 15% compared with FY '24.

With that, we will now open the call for questions. Thank you.

[Operator]

[Operator Instructions] your first question comes from Tom Godfrey from Ord Minnett.

[Thomas Godfrey, analyst]

Maybe if I could just start with the uptick in leads generated for the quarter. Parmjot, if you're happy to sort of just give us a bit of color around where those leads are coming from? Are they in states that have hit critical mass? And are they potentially in sites across your installed base already? Or are they new customers? Maybe just a bit of color on where that's coming from?

[Parmjot Bains, executive]

Absolutely. They're really comfortable range of areas, but promising from a number of larger IDNs. We're now expressing interest in rolling this device out across their systems. A lot of the lead with significantly generation during ASBS. They really vary across the network. But positively, we are now starting to see for a significant interest from those larger IDNs and clinical mass states.

[Thomas Godfrey, analyst]

Got you. And you mentioned in your prepared remarks, you've been spending a bit of time with some of the bigger systems in Texas. That's obviously a state that hasn't hit the critical mass threshold yet. I mean just any sort of insight you can give us in terms of how they're thinking about full lymphedema prevention programs? Will they wait for it to hit critical mass? How do we sort of think through the timing there?

[Parmjot Bains, executive]

Absolutely. No, we are obviously -- we're in discussions with [indiscernible] amount of time there. They are interested in the program at the end in the convention program, and we really have doctors within Texas using the device, including MD Anderson, the Texas Breast Network, Houston Methodist. So we already have who have validated the technology and show and that they are getting reimbursement that does company costs. And so we have interest from providers within that date even prior to changing critical mass. -- we are working closer with a number of those systems to see how we can expand.

[Thomas Godfrey, analyst]

Got you. Maybe next one for me. McGregor sort of pointed out that the TCV stepped up quarter-on-quarter, but sales are pretty flat, so to speak, to some increased renewal rates, I suppose the question was just around what you're seeing in terms of repricing when you are getting contract renewals, particularly in critical mass states. Are you seeing that sort of pricing uplift come through on the SaaS?

[McGregor Grant, executive]

Yes, we are. I think as reimbursement increases across the U.S., our ability to get an uptick in pricing is coming through as we are reviewing contracts. So generally speaking, that is the case.

[Thomas Godfrey, analyst]

Got you. And then last one for me, McGregor, just around the cost out, it sort of sounded like that was mid-April that a lot of that was put through. But will we be able to see sort of some of the annualized 10% to 15% in the fourth quarter. Is that more, do we wait for first quarter '25?

[McGregor Grant, executive]

Yes, we'll need to wait for the first quarter '25 to see the benefit of that flow through.

[Operator]

Your next question comes from Shane Storey from Wilsons Advisory.

[Shane Storey, analyst]

Just a couple of questions on the critical mass state additions. We've been impressed by the rate of growth there. I just wanted to know whether the 3 that were added in the period came from the 4 that you called out at the last quarter in belonging to that sort of 11 states lease of the setup and awareness is appropriate to support success.

[Parmjot Bains, executive]

The three additions were not under 3 critical mistakes. So we're -- they are in states that are looking at increasing uptake. So of the critical mass [indiscernible], the key effect that we want prior states 8 of 11 have now got critical mass and we continue what would pay to get those other 3 over the line. And then there was 3 additional outside of those that have come across.

[Shane Storey, analyst]

It feels like that activity is sort of kind of progressing on its own a car in a way. I mean can you sort of -- can you maybe describe the assistance of resources that you're applying to that? Do you have any -- do you have much visibility in terms of the sort of states you'd hope to add over the next, say, 6 to 12?

[Parmjot Bains, executive]

Yes. No, absolutely. So we have a market access, risen market access, who works very closely with various payers as they go through a policy review both in cycle and out of cycle. So she looked to really see what data and information we can provide, Steven from the medical side, we work with -- helps us work with society to provide leaders in support or not with leaders of support to these payers to show that is on the guidelines and that societies are supporting. There's a lot of work that's going on.

And then in States where we are looking to convert across also work with our health care providers to get letters of support from them that gets through the policy community. So there's a lot of work that goes on behind the scenes to work with the various positive committed insurance. And then the other key thing is and [indiscernible], there isn't reinvestment, we would encourage our providers that are using the device to build because as these health insurance seen billing coming through, and that's when the demand being generated in the system. So it really is a multipronged if that bet goes on. But ultimately, it's up to the policy committee to make their decision. So we do what we can do, and then we kind of rely on them to use the technology for patient care.

[Shane Storey, analyst]

And finally, just an early one for me. Just when you look at the scan volumes, say, from within the critical mass states where private pay coverage is happening for you. What are you seeing there in terms of the mix? Are you seeing a decent portion come through this other than say breast cancer related lymphedema -- are you seeing lower lymph, for example?

[Parmjot Bains, executive]

Yes. And I think we did put it on head at last -- in the last results indicated between the local versus global 9% to 13% are being used on lower than. So we are seeing news in other areas than [indiscernible] . We can't differentiate upper limit could be Bristol Melanoma, but we really can't differentiate them on our we just see the measurement tenders for those. But there is yes, we just see a [indiscernible].

[Operator]

Your next question comes from Ian Hyde Private Investor.

[Unknown Analyst]

Just Parmjot, if we can get some clarification just around exactly what you mean by leads. I know there's a number of things that would go into that. But is that just, say, a hospital doctors inquiring -- or is it something that's formally in your process and systems to actually work to actually getting completed? I assume there's probably a number of either and more, but just something around that as to see how strong the leads that you're talking about actually are.

[Parmjot Bains, executive]

No, not at the inquiries have been leaving that as to the thing it worked through. So Yes, they're all strong and they will get worked through as to look adopters and quote and they'll go to the normal prices of the lead coming in, and then it will further cession of budget availability and then go to contracting through the kind of execution process, which, as you know, it takes up to 6 months. So it's a strong lead pipeline, the lead pipeline has been built strong.

[Unknown Analyst]

Okay. So -- and if the leads are up 50%, it's easy to say we've got over 450 leads that stands now based upon the 300 you said in February?

[Parmjot Bains, executive]

Yes, but roughly around that amount.

[Unknown Analyst]

Okay. Something for Dr. Chen. You're still on the call.

[Steven Chen, executive]

Yes.

[Unknown Analyst]

Firstly, welcome, it's good to hear you. We haven't really had CMOs talk before. So thank you. It's great. From a layman's perspective, can you please describe just how strong the guidelines from NCCN are, because in the world outside of medical practice, a guideline says, "Oh, here's something you can do, like you don't really have to follow it. So from a medical and practitioner perspective, just how strong robust is the -- or are these guidelines or not? And as a practicing doctor hospital, what have you, how much does this actually say, well, you guys have got to do it or you don't really have to or what have you?" Does that make sense?

[Steven Chen, executive]

Yes, I think so. And if I don't answer it completely, please feel free to follow up. So with the NCCN guidelines, obviously, they are made by this volunteer group of high-impact institutions that all participate in this. And they are the most referenced guidelines across the U.S. and have some international help as well. I would say for programs that have organized cancer programs, we constantly reference them to check our own biases and make sure that we are practicing as well as we can. Having said that, they are guidelines and the -- first of all, are not checked by everyone daily, right? They are updated periodically, but people practice it and sometimes have to be told that they have been updated.

And second, the way the guidelines are structured, these are the recommendations, but it's understood that every patient is different. And so sometimes you will choose to not use this guideline in this particular case because you feel that the evidence that went into that guideline doesn't apply to this patient or another -- for instance, if you're treating chemotherapy, you might choose one versus another based on what side effects a person -- the person in front of you might be most concerned about, right, just as an abstract example.

For the perspective of ImpediMed, the guidelines says that you should check people for lymphedema regularly. And if you have it available, you should use this. And so we have encouraged people to see this as a preference to say, if you should have it available, if you don't have it available, obviously, they want you to use something. But we're trying to hurt people to say, "Hey, it says, if you have available, you should use this." So you should try to get it available for your site. And that's the conversation that our sales team and our medical folks are constantly having. Does that answer?

[Unknown Analyst]

Yes. I wasn't sure how you've got because it's a lot gray in this. So try to understand it. More on a half medical half business. So for a patient now, they get a baseline test and then they have their procedure and then they get tested post that. From a business perspective for the hospital, for the last 12 months, there's 1.1 million cancer patients that are susceptible to developing lymphedema post treatments. Now they've already been treated in the last 12 months. Is there any way as a doctor or a hospital that I know you can't do your baseline test now because they've already had their procedure. But these people are still also at risk of getting lymphedema. So is there some way hospitals, doctors that are actually taking on SOZO can you utilize existing patients that have been tested prior to them setting up to SOZO that they've got a ready-made business model that we can now plug these people in. Is that feasible doable or because you can't do the baseline test because they've already had treatments, that's just no longer possible.

[Steven Chen, executive]

So obviously, we promote using a baseline first because that is going to be your most sensitive way. If you know what someone looked like before they had treatment, then it's far easier to detect if there's been a change. And it sounds like you understand it very well. What you're asking about is for people when we install it, they had all these people who have been treated, and they don't have a baseline. And the answer is yes, you can continue to -- you can also test those patients as well.

Now the difficulty is, of course, that you don't know their baseline. And so we have other recommendations of how to utilize this. But here's where there's some more nuance understanding people's clinical situation because, let's say, it's been 6 months since they got treatment and you just got your first SOZO, they might have already developed lymphedema at that time.

So when you measure them, you might say, oh, this looks high, and you have symptoms, you probably already have lymphedema or you might be mentioning 6 months and they have absolutely no symptoms, their arms look exactly as they did at baseline and you might say, well, this might be your new baseline. And this is where clinical judgment comes into play. However, we do have recommendations that if you exceed a certain amount of distance from the norm that is probably lymphedema even if you don't have a baseline. And so we do teach clinicians how to utilize this data both understanding that we still would maintain that having a baseline is your best method of using it.

[Unknown Analyst]

Okay. And lastly for me, regarding your presentation -- can you summarize just how successful it was, how many federal tenders, feedback, leads, contacts, et cetera?

[Steven Chen, executive]

Yes. So we had a poster up in the poster session. And basically, what we were showing there was that people continue to have lymphedema even at year 2 and year 3. And that's as far as the trial data went and the reason why this was important to show is that there's some perception that lymphedema primarily happens in the first year. And that was true in our study. The 50% of people it occurred in the first 9 months. But another -- the other 50% of people happened further out. And so it's important for people to have a way to measure this and to continue to measure it all the way through. And that's a message that needed to be given and is well received as people hear it. They know it intuitively. They understand it anecdotally, but to have data to be able to tell patients 50% of the time, it happens after month 9 is powerful in having patients remember to come back.

[Operator]

Your next question comes from Elyse Shapiro from Canaccord.

[Elyse Shapiro, analyst]

Back in October, you spoke to about 85% coverage by the end of June 2024. How are you tracking with that metric? Or do you think that, that's going to kind of get pushed back?

[Parmjot Bains, executive]

Still continue to work with the providers for the payers just to see if we can get that coverage. So right now, it's -- we're probably not putting out any guidance on it. Any change in guidance. Other than that, we'll just continue to work with the payers if we can get that target.

And as I mentioned before, we can do what we can do around guidances and working societies and seeing if we can work with policy councils of [indiscernible]. So right now, no change in guidance and just continue to work to that target.

[Elyse Shapiro, analyst]

Got it. And then you've kind of previously also kind of spoken to -- I guess, previous management have spoken to a 9-ish months lead time. you've discussed a few initiatives that you're taking to help accelerate that. Are you able to quantify that lead time in some of those new leads that you do have, just to get a better idea of when they might convert?

[Parmjot Bains, executive]

It's -- we're kind of working on a 6 month lead time. They -- to kind of get these sales across. We do have 20 in mature must services agreement with some large ideas that obviously helps us cut that lead time down because a lot of those agreements and IT systems and things are in place. So 6 months is probably what we're seeing on the average, but we're really working on how we accelerate and maybe get into some of these larger IDNs, it a couple of devices that it could accelerate out because some of that lead time has been shortened down because the contracting ability in place.

But it's been a big focus for us, particularly on that customer success, which is why we've turn coming on and the move into the [ pod ] structure and then having the dedicated IT point of contact. We already are just working on how we accelerate that lead time to bring these sales across the line. So we've been working on that since we started to submit now being 4 months in roll. It's been a key priority just to really streamline our sales process.

[Operator]

Your next question comes from Peter Gregory, Private Investa.

[Unknown Analyst]

I have a couple of questions that I want to ask around on Slide 15, the installed base and patient testing data. And looking at that, I see that the growth that's happened in the U.S. and the rest of the world is quite similar. I think a little bit of difference, but basically the same Also, the number of devices out there is also quite similar.

I'm a bit surprised at the Growth in the U.S. is not higher considering the amount of effort that's been put into the U.S. market and also considering that, as I understand it, the rest of the world is largely through distribution rather than direct. Are you able to comment on that?

[Parmjot Bains, executive]

Maybe I can just start and then McGregor can comment. The rest of the what, a lot of that is in Australia, which has a very large installed base. And we had put the numbers out. I think 345 devices across Australia and Australia has had a very long lead time, very well establishment lymphedema prevention programs very strong, key opinion leaders. And in fact, this week, I'll be at the ALA, Annual lymphedema Conference conference in Adelaide, Wednesday, Thursday.

So there's -- I think it had a very long head start and Australian pricing is quite substantially different. So on a device sale, a one-off sale as opposed to subscription model. So two very different markets when you look at the dynamic. U.S., you are right. It has been slowing. I think the key things here are and it's that it is slower than we expected the sales. But reimbursement really only just come in. There was nothing there in June last year and NCCN guidelines now a year out, are still relatively recent and third year just still has to be a lot of information and communication to the market as part of your product launch, right?

So effectively, the I'd say this product is being launched has been launched for the last year, and there's a going to be a ramp-up to get to peak sales in this device. So we are seeing with growth in leads and after the ASBS conference just significant momentum and increasing discussion around the lymphoedema prevention, question awareness, around the new reimbursement story and then these guidelines, and then NCCN guidelines that are coming through. So I do remain very positive around the growth that the U.S. market will get with those. But maybe McGregor, if you want to add any points.

[McGregor Grant, executive]

I think you've really covered it Parmjot.

[Unknown Analyst]

Can I just ask perhaps you McGregor, Parmjot comment about pricing, I assume that the gross margin in the rest of the world is quite a bit lower than in the U.S..

[McGregor Grant, executive]

Yes, because the majority of those units, you mentioned are sold through distributors, and it's a kind of a onetime capital sales. So you don't get that -- you don't get that ongoing annuity revenue at higher margin coming through for that. So yes, it is a different economic money.

[Unknown Analyst]

Okay. But the cost of the hospital or the clinic is similar is it? To the U.S. in Australia?

[Parmjot Bains, executive]

No, no, substantiall less. It's a one-off captial fund, in just in Australia .

[Unknown Analyst]

Okay. I also wanted to ask about patient testing. Looking at the information that's on the chart, my rough calculation is that you're getting about 240 tests per device. And Parmjot this morning, I listened to your Spills the Tea podcast with Grace where you talked about initial testing and then the 3x follow-up a year, which would mean for each patient four tests per year. That would bring it down to about 60 patients being tested by a machine. Would that be valid calculations?

[Parmjot Bains, executive]

It really varies. Stephen I might need you to drop in that as well. We're really seeing a range and we are tracking a number of systems have really just started putting it in, so they're bringing the patients through, it's hugely variable. And we do have a team, the clinical support team that works with each [ install ] and just to make sure that they do track and they are trying to -- they are moving towards protocol, which is those three to four tests the year.

[Unknown Analyst]

Okay. And if you get to all patients going through the, I guess, the testing protocol that you'd expect. I'll ask it another way. Do you have an understanding of what percentage of patients are being tested by a clinic?

[Parmjot Bains, executive]

Not. We don't see the total patient numbers. So we can't see how many are coming in, but we see of those patients, how many -- no, because we can't see their total patient numbers, right? So we don't get a view of what the total clinical volume but we can make an estimate that 80% are applicable to be using this technology. And so when we do the return on investment calculation, for the sites and we put the devices and that's what we based the number and the [indiscernible] treatment goes on.

[Unknown Analyst]

Okay. In terms of the amount of U.S. that's happening within a clinic and the proportion of patients being tested. Is that part of what customer success looks like? And is that part of the accountability for the team?

[Parmjot Bains, executive]

Absolutely, utilization. So we've got a key metric that the customer success team looks at a utilization of the device, just making sure that the device is being used across the clinical, the treatment flow that has been reimbursed that they're basically being the billing on the device, utilization billing and in churn are the key areas that clearly we'll focus on. And so we have a customer success team that's led by Katie, who looks at that people go out and work with each system and stores to attract those metrics.

[Operator]

Your next question comes from Victor Windeyer from Australian Unity.

[Victor Windeyer, analyst]

You're about 4 months we're thinking to what was an interim of performance for 6 months or something with McGregor, I believe. So I just want to understand where we're at in terms of firming up your future participation and ongoing role in the [ business ]. And I guess I wanted to sort of go in and understand is there's a structural governance issue with having so many executive directors and notwithstanding that length on people to be running the business model as moral has it in that structure, I think, which remains a bit unusual, realistic can be to have many -- a majority of executive directors on the board because the potential remains that the benefit that you as executives can bring into the company may not be experience necessarily with the shareholders of the company that might be potential partners [indiscernible]. I mean I know that is all theoretical but I just want to understand where we're at in the transition of the [indiscernible].

[McGregor Grant, executive]

Yes. Okay. Thanks, Vic. I'll take that. So Parmjot and I are in the process of -- in the final stages of the process of confirming our appointment on a permanent basis, and I expect that we'll be able to announced something around that fairly soon. So that's been our intention, and it still is our intention, and I'm sure we'll be able to communicate that shortly.

In relation to the challenges around the number of executive directors and some of the Board size and the like that's come particularly most recently as a result of Andrew's participation in an executive capacity. We're certainly acutely aware of that and the challenges that flow from that. As we've said in the past, we are in the process of discussing and we are in active discussions now with a couple of potential new independent directors to join the Board. So we expect to be able to announce something on that fairly soon. it's a balancing act and we are on a journey.

And we certainly are aware of the challenges of the situation we've got. But I think -- we're also -- I think we just wanted to make it clear that we're on a journey and we're aware of the challenges, and we're working through it. And I would like to think that by the end of June, going into the new year that we'll have some of these issues completely addressed. It's always a balancing act between overloading the Board. I mean we're obviously needing to be mindful of managing costs and so on, but clearly, having an independent and functioning, truly independent Board is very important as well or we must get to...

[Victor Windeyer, analyst]

I mean is there an alternative to just expanding the Board with some of the -- you coud stand down on the board. But anyway that is...

[McGregor Grant, executive]

Well, I think all of those options are being considered.

[Victor Windeyer, analyst]

What's the driver regard to -- debt in regards to the finance function gets [indiscernible] because have the audit committee and so far, is that being changed? Or has that been changed as we come into the end of the financial year?

[McGregor Grant, executive]

Currently, so I started off as the Chair of the Audit Committee and then as I joined the executive Board, Andrew took that on. And now Janelle is currently Chair of the Audit Committee. So she is independent. That is an area that we do need to address and having the right sort of financial skills on from an independent director is something that we're focused on.

[Victor Windeyer, analyst]

And in terms of regards for [indiscernible] next year. Are you going to provide -- what sort of guidance are you going to provide given -- you also have a [ seasonal churn ] that in a market [indiscernible]. What can we expect in terms of guidance.

[McGregor Grant, executive]

Results -- sorry, we didn't quite get your question in terms of results guidance.

[Victor Windeyer, analyst]

Yes, yes. Like guidance for FY '25 that...

[McGregor Grant, executive]

Look, look, I think at this stage, that's way too early for us to be considering that. I think we are wanting to see the -- we want to get some greater certainty on sales and get some momentum going on that before we start providing some guidance -- and I think that, that will probably -- through the course of the next year or so, we'll just have to see how that plays out.

[Operator]

Your next question comes from Greg Harrison Private Investor.

[Greg Harrison]

I just wanted to ask, look, obviously, a lot of foundational stuff you're building towards sales and focus on it. When do you expect sort of to see a material or a reasonable uplift in sales. How many quarters out are we looking at? I've been investor for about 5 years in IPD. So I've been fairly patient. But I'm just interested in what are your expectations over the next 2, 3, 4 quarters?

[Parmjot Bains, executive]

I'm -- it has been what we see in terms of needs and interest on hospital networks and doctors, I am very positive that we will start to see some [indiscernible] next cycle. Just for that lead cycle -- long lead cycles I kind of highlighted the work has been put into place now 6 months lead cycle. Yes. We will start to see momentum, but we've kind of indicated two to three quarters till we get some money.

[Greg Harrison]

And what sort of conversion -- I mean I know we talked about leads, but is a qualified pipeline versus leads? Are you seeing even in the last couple of quarters an improvement of that? Or...

[Parmjot Bains, executive]

Not yet. Because we haven't done yet until the last quarter. We should see it as soon as we start to try to ramp up the liquidity. But obviously, the team [indiscernible] in the U.S. this quarter and last quarter. show that, that conversion has not happened yet to the extent that we'd expect a good area of focus for...

[Greg Harrison]

Yes. I mean just with 10 salespeople, there's 18 units being sold that's unsustainable.

[Parmjot Bains, executive]

Yes. Yes. No, exactly. Yes. But I think a lot of it is in that product launch phase and really getting that awareness out there and absolutely, we're absolutely aware Greg.

[Operator]

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

[Parmjot Bains, executive]

Well, thank you. Thank you, everybody. And like -- many of you like Greg are long-term shareholders in this business. I really am confident that we became the new team, the flatten structure, the focus on cost and focus on sales that we will start to see some very significant momentum. Look at our org structure, I think almost all of the leadership team is relatively new. We had some significant change, but we've got some really great capabilities. And it's great to have Steven here today to -- for you guys to meet him and really understand, I think, where we're going with the business going forward. So thanks for your support. And hopefully, as this kind of present again in the following quarters, we will start to see the significant momentum.

[Operator]

Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.