Opsens Inc
TSX:OPS
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
2.85
2.9
|
| Price Target |
|
We'll email you a reminder when the closing price reaches CAD.
Choose the stock you wish to monitor with a price alert.
This alert will be permanently deleted.
Opsens Inc
You don't have any saved screeners yet
Good morning and welcome to the OpSens Inc report Second Quarter 2023 Financial Results Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note that this event is being recorded.
I'd now like to turn the conference over to Robert Blum with Lytham Partners. Please go ahead.
All right. Thank you very much and thank you all for joining us today for the Opsens second quarter fiscal year 2023 conference call for the period ending March 28, 2023.
With us on the call representing the company today are Louis Laflamme, Opsens' President and Chief Executive Officer; Brad Davis, Company's Chief Commercial Officer and John Hannigan, the Company's recently appointed Chief Financial Officer. At the conclusion of today's prepared remarks, we will open the call for a question-and-answer session.
Before we begin with prepared remarks just a couple of comments. Today's call will contain forward-looking statements that are based on current assumptions and subject to risks and uncertainties that could cause actual results to differ materially from those projected and the company undertakes no obligation to update these statements, except as required by law. Information about these risks and uncertainties are included in the company's filings, as well as periodic filings with regulators in Canada and the United States, which you can find on SEDAR and Opsens' website.
Today's discussion will include adjusted financial measures, which are non-IFRS measures. These should be considered as a supplement to and not as a substitute for IFRS financial measures. Finally, today's event is being recorded and will be available for replay through both the webcast and conference call dial-in information provided in the press release.
With that said, let me turn the call over to Louis Laflamme, President and Chief Executive Officer for Opsens. Louie, please proceed.
Thank you, Robert, and good morning to all of you. We are excited to speak with you today following another strong quarter of growth across all of our business lines. Let me also take a minute to greet the French speaking audience. [Foreign Language]
At a high level, I'm pleased with the results of the quarter, which reflect record quarterly revenues of $10.8 million up to 33% from the same period last year, driven by all three key components of our medical segment, including our OptoWire for coronary artery disease, SavvyWire for structural heart TAVR procedure, as well as our optical sensors for business partnership.
This was also an increase of 5% sequentially from the first quarter, which was at that time our previous record high quarter. So the positive momentum continues to build. With coronary artery disease, performance has been solid in North America with a 24% increase compared to the second quarter of 2022.
The product portfolio synergies we discussed last quarter by now having both OptoWire and SavvyWire in our commercial teams offering has been supporting the effort of our broader team. EMEA and Asia Pacific markets served through distributors generated a 13% increase despite headwinds from currency exchange rates and other factors.
Japan has been a challenging market recently. In the current quarter, this territory was up 61% compared to second quarter 2022 and also up 64% on quarter one 2023. The comprehensive period for Japan were quite low and we still have work to do to get back to our historical peak levels.
Nonetheless, it is encouraging to see progress being made in this key market, which accounts for about a quarter of our OptoWire sales. On the structural heart side of the business, we remain on track with our commercialization plan, which we have outlined to you previously. Last week, we achieved a significant milestone for the company as the SavvyWire has been successfully used by physicians in 1000 procedures.
Our sales team is operating at a high level as they indicate challenges on the benefits of the SavvyWire to expand the number of accounts and drive adoption. As the world's first and only sensor guided TAVR solution, we have taken a step by step commercialization approach following our clearances in the US and Canada.
The approach started with a limited market release in Canada and the US, which then moved to a more an extended but still controlled market release. As stated previously, we are taking a similar strategy that many other companies have successfully taken with recently cleared devices by moving very systematically in the early commercialization process to ensure complete success by the physicians.
We are now ramping up our commercialization plans for this concept in TAVR achieving Two Live Cases at the CRT conference during the second quarter, which was a great achievement at such an early phase of commercialization. These events are preparing the market for the next stage of our commercialization plan coupled with new GPO agreements are expected to drive continuous incremental growth in the coming quarters.
We all recognize rapid sales growth is very important. We clearly believe this is coming. However, from a long-term business perspective, we want to ensure complete physician satisfaction in these early stages, so that the word of mouth around the physician community is positive, which has a throttling effect on near term growth. That said, it doesn't mean we are not growing sales, which were up 31% on quarter one, 2023.
It just means we want to do it in a measured and controlled way initially before we fully unleash our sales team. To that point, following what we believe were successful early steps in the controlled market rollout, we are now moving forward with a more expanded market release.
I have once again ask Brad Davis, who leads our global commercial team and has a strong track record of launching new medical device products into the market that have ultimately achieved market share leadership to share some insights on the commercial strategy. I will state, however, that going forward, we are expecting to see continuous growth each quarter as we at the same time look to extend adoption, but also make sure that we are achieving complete success along the way.
For the rest of the year, we believe we'll have double-digit top line growth in Q3 and Q4. As I stated last quarter, our goal is to avoid any major unforeseen hiccups in the initial rollout. Once we enter full market release, we certainly expect sales to ramp beyond this. Furthermore, we are seeing some commonality in terms of customers who are using both SavvyWire and OptoWire products.
This aligns with our commercial strategy. We believe our playbook is sound and based on the initial positive feedback from physicians, we continue to believe we have an absolute winner on our end with SavvyWire. Transitioning to our business partnership division. We continue to experience strong performance as end market demand for key products within this division shows signs of growth.
Led by our multi-year supply agreement of our second generation fiber optic sensing technology for ventricular assist devices. Sales in this division were up 43% to $3.4 million, a new record for this division. For those not familiar, we have a multiyear relationship to supply sensors into Abiomed Impella heart pump, including a four-year extension of the recent signing of a critical supply agreement that runs through April 2028.
We believe this step up in revenues which started last quarter should be sustainable going forward based on the positive conversation we are having with our current customers. Our industrial business continues to operate in a consistently strong manner with sales of $0.9 million.
While this was down marginally from the past few quarters, this division continues to operate profitably and is well positioned to be at the leading edge of some revolutionary new applications that have the potential to be big winners in the industry, including in the world of fuel monitoring for aeronautics.
So again, at high level, I'm pleased with the progress made this quarter. On the top line, we had record revenues once again with strong progress across all of our medical divisions. Operationally, we are making great progress moving through the stages of our commercialization strategy for SavvyWire, which Brad will expand on here in a moment.
And finally, something important that I will expand on shortly is the continued improvement in our gross margins, which were up 5.4% on quarter two, 2022, highlighting the leverage in the model as we improve product mix coupled with more direct sales and overall higher volume sales.
With that, let me now turn it over to Brad Davis, our Chief Commercial Officer, to expand on the success we are seeing in our SavvyWire commercialization strategy. I will then return to add some additional color to his comments and review the financial results in more detail.
Brad, please proceed.
Good morning, everyone. I'm excited to expand upon Louis' comments regarding the SavvyWire launch and will share some insights from our controlled market release and will first provide some comments on the overall TAVR market.
As you know, the TAVR addressable market served by SavvyWire is large and growing. The current global TAVR market is estimated to be over 200,000 procedures and expected to double in the next five years driven by aging population and indication expansions from ongoing studies for moderate aortic stenosis and asymptomatic patients.
As treated patients get younger, the importance of standardized invasive hemodynamics provided by SavvyWire and related lifetime patient management will only continue to increase. Opsens is well positioned to capitalize on this large and growing market opportunity with the world's first and only sensor guided TAVR solution.
We have doubled the size of our direct sales force, conducted robust training, and are executing our launch plans to ensure long-term commercial success. In Q2 2023, we expanded from our initial limited market releases in Canada and the US to expand to a controlled market release in each country where this excitement from the physician community remains strong and continues to build.
One example is from the CRT Conference in February, where the first Two Live Cases were successfully performed with SavvyWire in front of a global audience of hundreds of health care professionals. Dr. Tom Waggoner from Tucson Medical Center highlighted the procedural efficiency and workflow gains from SavvyWire in a balloon valvuloplasty procedure to reduce time and device exchanges.
Dr. Lowell Satler, another physician from Washington Hospital Center, chose to use SavvyWire in a TAVR procedure where there was extensive discussion about the benefits and insights provided by real time standardized invasive hemodynamics, as well as the benefits of a reliable left ventricular rapid pacing.
These are just but a few examples of the momentum building with SavvyWire and the physician community that we also continue to highlight as part of our broad based digital and social media strategy to drive awareness and adoption. As part of our controlled market release, we have refined our launch process to include device display and procedure training, monitor installation and procedure rooms, software upgrades and coordination with administration to achieve maximum penetration in each account.
Our field team spends approximately one month at each hospital to train physicians and staff ahead of their first SavvyWire cases. Then partners with them during dedicated TAVR days where we in the procedure room for cases to reinforce best practices. We gained valuable lab access from these dedicated TAVR days at each account, which allows us to reinforce the benefits and cycle through educating the various teams of techs and nurses that are supporting the cases.
Our goal is to get the hospital TAVR teams fully functional and independent to conduct the cases successfully themselves. This allows our field team to then partner with their next target customer to repeat the same in-depth launch process to ensure clinical and commercial success.
I'm very pleased to share that we achieved several important commercial milestones in Q2 as part of our controlled release. First, as Louis mentioned, we recently announced an important patient milestone that over 1000 patients have been served with SavvyWire demonstrating robust adoption for our game changing technology.
Second, we signed our first group purchasing organization contract with SavvyWire with Premier, one of the industry's largest GPOs with 4400 US hospitals. As a reminder, with OptoWire, we have GPO contracts in place covering over 90% of US hospitals and plan on obtaining the same level of coverage with SavvyWire by the end of this calendar year.
Third, while the Value Analysis Committee process can be lengthy and challenging, we have signed our first three-year contracts with several large hospital systems that provide access to a dozen TAVR centers. Moreover, we continue to be successful in achieving premium pricing by demonstrating the value proposition of sensor guided TAVR with SavvyWire and delivering value to the overall TAVR procedure.
Fourth, SavvyWire has now been launched in over 30 hospitals in North America, with strong demand from future customers supporting our future growth. Fifth, another key enabler to our go-deep strategy is that our same OptoMonitor supports both OptoWire and SavvyWire cases.
This allows us to leverage the efficiency of our field footprint and capital deployment to improve the decision making process for installation and adoption. To that end, we are pleased to share a key metric that two-thirds of our SavvyWire hospitals are also OptoWire customers, which we will continue to leverage to drive growth in both franchises.
Finally, from a clinical perspective, we as Opsens are committed to medical evidence that advances the field. We would like to thank Dr. Rodes-Cabau and all European investigators for the rapid completion of patient enrollment in the SAFE-TAVI study, with 120 patients enrolled at nine hospitals, including eight renowned centers in Spain and one in Canada.
As a reminder, the study focused on SavvyWire for left ventricular pacing and TAVR procedures, with results planned to be published by early fall. The study is important because it supports our pre-CE mark clinical strategy that will lead to the clearance of SavvyWire in Europe later this calendar year.
We look forward to sharing information on additional studies demonstrating efficiency in clinical and economic benefits over the coming quarters. In summary, we are very pleased with the overall SavvyWire performance and are out of the gates extremely strong and aligned with our expectations.
With over 1000 total SavvyWire cases across four countries, including over 30 centers in North America. We are well positioned to transition from our controlled release and into a full launch in the second half of this fiscal year to drive double-digit growth for both OptoWire and SavvyWire.
I would like to thank our talented global commercial team for their passion, commitment and launched execution of this game changing technology as we simultaneously grow our core OptoWire business.
I will now turn the call back over to Louis.
Thank you, Brad, for that overview. As you can hear from Brad's excitement, we believe we are systematically executing against and delivering on our commercialization plans. As those of you that have followed the company closely now, we have met or surpassed nearly every key commercialization milestone associated with SavvyWire from Canadian and US regulatory approvals to the completion of our limited market release in Canada and the US.
We are now ahead of our internal expectation for this current stage, with more than 30 hospitals using the SavvyWire with a goal to be fully commercialized at the end of this year. As the world only 3-in-1 solution for stable aortic valve delivery and positioning with continuous accurate hemodynamic measurements during the procedure and reliable left ventricular pacing without the need for adjunct devices or venous access.
We believe our device will ultimately transform the way TAVR procedures are conducted. It is just a matter of time. As Robert mentioned at the introduction to the call. Joining us today is John Hannigan, our new Chief Financial Officer. John is a highly experienced financial executive with more than 22 years of proven financial expertise with domestic and international companies.
John also has experience with healthcare companies and has held various senior financial management positions for a publicly traded company. We look forward to building off the progress made by our finance team as we look at new and innovative ways to advance our financial and overall growth strategies.
John, let me turn it over to you to further introduce yourself.
Thank you, Louis. As you mentioned, I've served in a number of senior finance positions over the past two decades, having started my career at KPMG, Ireland, where I worked with a large number of private and public companies. I then joined the group which had acquired IPL Plastics in Canada.
I moved to Canada in 2017. IPL Plastics listed on the TSX in mid-2018 and was acquired in late 2020. I have followed up since progress for some time now. When I was approached about the opportunity, I immediately was excited by the overall prospects, especially with the recent launch of SavvyWire.
I am excited to participate in Opsens' development with the ultimate goal being to create value for our shareholders by capitalizing on Opsens' unique core competencies and technologies. The company is well positioned to provide its innovative sensing technology to cath labs around the world.
I very much look forward to connecting with all of you investors in the coming quarters. Let me turn it back over to you, Louis.
Thank you, John. We certainly share your enthusiasm. So since John only joined us a couple of weeks ago, I will once again run through some of the key items on the balance sheet and income statement, discuss our outlook for the third quarter and full year and will then turn it over to your question.
As I mentioned, the second quarter was highlighted by record revenues. Revenue of $10.8 million, an increase of 33% compared to the second quarter of 2022. Growth from our optical medical products segment coupled with the addition of TAVR sales were key drivers. As we look to the third quarter, we continue to make strong progress in a number of our key geographies as well as the expanded launch of SavvyWire.
The gross margin was 56.9%, an increase of 5.4% on the second quarter of 2022. The increase was driven by more direct sales compared to distributor sales, better product mix and strong industrial business. Similar to last quarter, on a mid-term basis, as we see more sales coming from areas where we sell direct such as the US and Canada, and as we see growth in SavvyWire, we expect to see gross margins continue to rise.
We are also benefiting from critical mass in the factory which is driving operational improvements. That said, we are making certain investments in our manufacturing facilities to improve the operating and production efficiencies of our devices going forward and to meet higher demand from our customers.
From an operating expenses standpoint, overall operating expenses were $9.3 million compared with $6.4 million in the second quarter of 2022. Breaking this down, sales and marketing was $4.4 million versus $2.5 million. R&D was $2.5 million versus $2 million and G&A was $2.4 million versus $1.9 million.
So the $2.9 million increase was mainly due to an increase in sales and marketing activities, including an increase in our direct US sales force in advance of the launch of SavvyWire, an increase in administrative expenses coupled with an increase in R&D due to structural heart and coronary artery projects.
Looking forward, we think that sales and marketing expenses will be pretty similar to the most recent quarter and likely increase slightly due to increased commission expenses on sales growth, as we continued, as we make continued investments to capitalize on the opportunities to accelerate growth of our OptoWire and SavvyWire products.
For administrative expenses, it should be stable in the remaining quarters of fiscal year 2023. For R&D, it will be similar for the remaining quarters of fiscal year 2023. We will continue to be a company that is innovating. As I alluded to last quarter, one key opportunity we see as possible next stage of growth will be generating value added information and data using artificial intelligence in future products and technologies.
We are investing in products that will likely be coming to the market in the next 24 months. I hope to be able to share more with you in the future on this topic. Additionally, Opsens has been invited by key physician and leading life science companies to participate in clinical studies to access the SavvyWire for actionable TAVR procedures.
We believe these studies could open new market opportunities for the company. On the balance sheet, we completed an $11.5 million bought deal financing in December, which brought our ending cash balance to $21.9 million. Our working capital balance was $34.6 million at the end of the quarter.
Inventory levels have increased during the quarter due in part to the anticipated sales growth in the two remaining quarters of the year. So to wrap up things, we are pleased with the progress made during the second quarter on nearly all fronts. First half revenues were a new quarterly record, building off a record quarter during Q1. We had strong operational performance with record OptoWire sales in North America with increased sales of 24%.
We are seeing a step up in our optical medical products division, which we believe will be sustainable in the future. We achieved or surpassed every operational metric we had in the approval and early commercialization plans for SavvyWire with very strong end market response.
We saw 31% sequential growth during Q2 and expect continued sequential double-digit increases for the rest of the year. Our gross margin increased by 5.4% as we are capturing synergies in our operation and the benefits of the investment we are making in sales and marketing.
Our balance sheet remains strong. Our outlook for Q3 2023 and the rest of the year shows growth across various operating areas. As always, I want to thank all our employees for their hard work and dedication. We have accomplished important milestones and developments with many more opportunities ahead. Operator, let me now turn the call over to any questions.
We will now begin the question-and-answer session. [Operator Instructions] Our first question will come from Rahul Sarugaser with Raymond James. You may now go ahead.
Hi there. This is Mike Freeman on for Rahul today. Hello, Louis, Brad and welcome, John. Congratulations on setting some new revenue, high water marks all while driving a solid new market release. This is very impressive. Now, my first question is on the first 1000 SavvyWire procedures. I wonder, first of all, congratulations on executing this. Second, I wonder what learnings have come from these your interactions with these physicians that have engaged in these procedures and wondering if the SavvyWire is used has been used solely for TAVR procedures or if there has been some expansion of use through those 1000 procedures? Thanks.
Okay. Well, thank you, Michael. It's good to receive a question for you. In term of learnings, I would say clearly the biggest and I'm not sure it's necessarily a learning, but it was a confirmation. We were impressed about the recognition of the value proposition for the SavvyWire.
So when we think about various example or testimonial from doctors that are seeing listen with the SavvyWire, I really appreciate having real time hemodynamic information that with information that I can trust to do the best work I can for the patient. And in addition to this, I can save time, save steps in the procedure that result in time savings.
So I would say this was probably the biggest conclusion that we got from those first 1000. I would say the second important conclusion that we saw is that, I mean, having an interface, a monitor that is really easy to use is something that is of interest for doctors, as Brad mentioned, I mean, the software that we have right now is already a really, really good product.
But our R&D team found different ways to make this even faster and easier to use for nurse and doctors. So we are going to roll out this in the next few months. So this was probably the second conclusion. And regarding your question about where it has been used, I would say probably 95 or 98% of the cases were TAVR cases. So transcatheter aortic valve replacement.
You can include in there some balloon valvuloplasty, some valve and valve procedure. What's missing between the 98% and the 100%? There was a couple of mitral cases that were done using the SavvyWire. Our product is cleared for such application, even if it's not necessarily the primary focus of our commercial team, because right now our focus is really to demonstrate the benefits of our solution in TAVR.
Excellent. I appreciate that and that cross compatibility is really interesting. Now my second question is perhaps for Brad talking about the launch of the SavvyWire recognized that the until now the launch has been somewhat restricted looking to move into the next phase and there was a mention of being fully commercialized by the end of this fiscal year. Right now you say you're operating in, you're active in 30 hospitals. What would that number be, by what you call being fully commercialized? And are there other metrics you'll be measuring to gauge whether you are indeed fully commercialized?
Sir. Good morning and thank you for the question. And to clarify my comment was that we're moving into our full launch after being in a controlled release. So we're in 30 -- over 30 hospitals now in North America. We would anticipate by the end of the year that we would approximately double the number of accounts that we're in to achieve our goals and metrics for the balance of the fiscal year. And so in terms of other key metrics, while still early, we look to achieve full penetration in each account which we would define as being the primary TAVR wire used in that account. And then we'll certainly look at reorder rates as those become more meaningful. And we have quarters of orders under our belt from each one of the customers.
Excellent. I appreciate that clarity. And if I could just wedge one more question is I wonder if you have seen any benefits from the GPO agreements that include the SavvyWire so far and any benefits related to the bundling of the OptoWire and the SavvyWire? Thank you very much.
Sure. And in terms of GPO agreements, as I mentioned, we're on the Premier agreements. We'll be on all of the major GPO contracts here by the end of the year, which really gives us the license to hunt, if you will, and the opportunity to then sign local agreements. So we've already seen that has resulted in part of our strategy that we have two-thirds of our SavvyWire hospitals also ordering OptoWire.
And as I mentioned, also those types of contracts give us the access to sign more local deals. For example, the hospital systems where we've signed contracts now that are three-year contracts with pricing in place to provide access to a dozen hospitals that do large volumes TAVR. So those are a few of the early indications of both the opportunity for committed contracts as well as the benefits from cross-selling.
All right. Excellent. Thank you very much. Congratulations. I'll jump back in the queue.
Thank you.
Our next question will come from Doug Miehm with RBC Capital Markets. You may now go ahead.
Yeah. Thanks very much. First question just has to do with the launch and the company's ability to start to change launch characteristics in terms of ramping up. And I guess my first question is, are you still going to have to spend a month in each site to achieve what you need to or is that a period going to decrease, as you expand the offering to more hospitals?
Thank you. Thanks for your question, Doug. We should clarify this one thing is that I mean, we are not spending one month full time in the hospital, but some of our customers, they have one day dedicated to TAVR. So this may represent when we say a month, it's over a period of a month, but it may cover just four or five days.
And this being said, as we do more training, education with our team, with doctors and nurses, we are confident that the left ventricular pacing component will become more known in North America. As you know, it's well used in Europe, while in North America it's fairly new or the use is really limited.
So, to your question, yes, we are confident we can get the customer independent faster and really quickly to have a business model that would provide shareholder value, that would provide gross margin growth and with reasonable cost. So we don't see any issue with this. As I mentioned, having a software that is really easy to use will also be a value driver to make this happen.
Okay, that's helpful. Next question just has to do with clinical trials that the devices being used in post-approval certainly in North America. And then what type of presentations of incremental data may we see through the year?
Okay. I mean, we -- right now we are hoping, as we mentioned, we have advanced discussion with different key opinion leaders around the world that are driving or that are going to drive soon clinical studies where those studies are based on the interest in having a more dynamic information.
So I'm confident that we should be in a position to make some announcement before the next conference call on this at least for one, I mean, really, really important study in the field. In term of data that will be produced on clinical studies solely driven by Opsens. Clearly, the SAFE-TAVI, as you saw, we completed the enrollment.
So we were really glad about the capability to enroll 120 patients quickly in Spain. And I mean we are hoping that the principal investigator will be able to publish those data somewhere before the end of the fiscal year 2023 or really early at the beginning of 2024.
Okay. Perfect. I think I will leave it there for now. Thanks very much.
Okay. Thank you, Doug.
Our next question will come from Justin Keywood with Stifel. You may now go ahead.
Good morning. Thanks for taking my call. I just want to circle back on the expectation for double-digit growth, if I heard that correctly. Would that be consolidated revenue? And I assume that's on a year-over-year basis?
Yeah. I mean the -- if the comparative revenues for Q3 2022 is $10.1 million. And I mean the confidence of Opsens of having double-digit growth over that number is really good. So, yeah, so when we compare, it means that we'll have again in Q3 a record quarter from a revenue standpoint and we see this happening for Q3 and Q4.
Got it. That's clear. And then on the gross margins, obviously pretty strong in the quarter. And I was surprised to hear that there's still opportunity to expand. And I also assume that this is related to the SavvyWire and getting better pricing. My question is, how do you balance accelerating sales with that pricing equation? If the pricing is received pretty favourably right now, would you keep it the same and continue to sell at the rate you're going or would you perhaps lower the pricing to accelerate SavvyWire sales at a greater rate?
I can respond at high level and after that Brad can possibly add some additional insight on our strategy with customer. But at high level, when we release the Q1 results with the gross margin of 58%, at that time, the financial market said to us, well, you've done it only for one quarter because if you compare with the previous year where we were around 50%.
So we are glad to show that this is clearly a new level for us and there was various drivers behind this. You can think about obviously our plan is to have SavvyWire being a product that will drive higher gross margin than our average gross margin that we have on our product or if you compare this only with OptoWire.
So SavvyWire is having a positive impact. We are also seeing with the investment in the team in direct markets in US and Canada. The weight of direct sales is increasing and this is having a positive impact on the gross margin on a consolidated basis. And you can add also on this that I mean having higher sales volume is giving us some additional efficiency from a manufacturing standpoint.
So we feel that the current gross margin is good. It's in line with our plan. We are seeing in the future opportunities to do more. Because let's say if I take the example of SavvyWire, we are still in the early phase from a manufacturing standpoint and we are seeing various opportunities to reduce the cost of goods sold of that device. And we are seeing this, I would say, in general on the overall product portfolio for Opsens.
So I would stop there. Brad, maybe you can add on your, the vision that the strategy that you are executing from a pricing standpoint when we have to manage a volume and pricing.
Sure. Thank you, Louis, and thanks, Justin, for the question. I would first start out with reiterating that to date in the launch, we've had significant premium pricing over what would be considered standard TAVR guidewires that are in the market today because we're really creating an entirely new category of devices that doesn't exist since we're covering both delivering the valve, doing hemodynamics and doing pacing that today you have to buy three different and multiple components to support that as part of accessories for the procedure itself.
So our value proposition really is supported by a comparison and reduction in what the -- what devices might not be used as part of the procedure plus time savings and then also the procedural benefits of avoiding complications that occur with RV pacing. So that's what's allowed us to drive the value proposition that we have in the market.
And to Louis' point, what we are seeing now is the opportunity with the excitement around SavvyWire to drive committed volume agreements where in exchange for a higher share level that we would provide reduced pricing associated with that based on the share and the volume for the account as well as the opportunity to then bundle that in with OptoWire as well.
So we're still very early on in the launch with that in terms of getting through the initial evaluations and customer interest and feedback. But that is the direction that we had and we have plenty of room to run to be able to hit our gross margin targets while simultaneously driving committed volume deals that will provide predictability to our revenue growth.
Great. Thank you for the thorough answer.
Our next question will come from Scott McAuley with Paradigm Capital. You may now go ahead.
Good morning and thanks for taking the questions. I wanted to start across the pond in Europe. Great to see that trial wrapping up and potential for getting the CE mark in the not too distant future. In terms of the commercial strategy for SavvyWire in Europe, have the current OptoWire distributors kind of already put up their hands saying that they're interested in Savvy. Are you looking for new distributors? Can you talk a bit about that strategy going forward?
Louis, would you like for me to answer?
I'll take the answer and Brad you can complement if you want. Scott, the idea here is really in general, as Brad mentioned, the strategy is to use the same commercial channels. So for both products, because we are seeing a synergy with customers with the using the same monitor. So same thinking should apply to the distributor selection in Europe.
There is maybe a couple of cases where for different reason a distributor may be good for OptoWire and not as good for SavvyWire. In those cases we may select different partner, but overall the idea is to use similar team.
And the only follow-up that I would provide on that is the we're taking all of the learnings from how you first on-board and train first our reps and now in this case distributors and have been able to do that as part of the SAFE-TAVI trial as well to start getting them up to speed. And then we're going to be doing our first cases here in the Middle East with distributors here in Q3. So we'll be able to make sure that we take those learnings and how we launch effectively at accounts in North America and apply those same learnings as we launch through distributors into Europe and the Middle East.
That's great. For the current 30 plus hospitals that are currently using SavvyWire in North America. Do you have a sense of what the proportion of cases that they're doing are using SavvyWire? I know you say the goal is to kind of become the dominant wire that they use in each account, but currently is that 10%, 25%. Can you kind of speak to the percentage for the moment?
I would say it's a difficult question to answer because all those customers are not necessarily at the same stage where some are doing their first couple of cases while some have been with us with SavvyWire since multiple months. I would say that for more mature customers that have been with us since a couple of months, we are able to achieve, really, really good market share. Something that may be around 35% to 50% of their TAVR volume today.
That's great. And then just lastly for me is on kind of the path to profitability. Great to see the top line growth. Great to see the margin growth and kind of the expected kind of stabilization of expenses. So I don't know if you have just kind of any comments on that. And obviously the strength in balance sheet is great and whether or not the current balance sheet is enough to get you to that point?
Yeah. So, Scott, the vision is as we communicated before, we made significant investment in our sales and marketing team and our R&D team in the last few quarters. When you look forward, those costs should remain stable. And as we continue to grow revenues and gross margin, obviously the net result, the bottom line results will improve. So we feel we are having the right financial position, the right balance sheet position to execute our business plan and to get to this breakeven point.
That's great. Thank you very much.
Our next question will come from David Martin with Bloom Burton. You may now go ahead.
Good morning and congratulations on your progress. First question, looking forward to the SAFE-TAVI results later this year. Since it is a single arm trial, I'm wondering what you consider to beat the hurdles, to beat RV pacing, right ventricle pacing both from the key safety and efficacy endpoints. And then in the 30 hospitals that are using SavvyWire right now, are they all using the LV pacing function?
Yeah. So I will start with the short one. I mean our customer today that are using the SavvyWire, they are all, to my knowledge, using left ventricular pacing over the SavvyWire, which is a great recognition of the value proposition of this feature within our product.
And regarding the SAFE-TAVI endpoint, the spirit of that study is to demonstrate the safety in using the SavvyWire with left ventricular pacing. And -- so historically, I mean, in the overall picture there is a certain maze event rate of when you do right ventricular pacing. So just being non-inferior to that could be positive for doctors in the context of the improved workflow.
Okay, great. So --
If I might add, if I might add one more comment to that, just some of the data that we use is from a randomized controlled trial as well that has already occurred in Europe, whereas, it's the dominant paradigm to left ventricular pace. So that was the easy TAVI study, which was a prospective, multicenter, single-blinded superiority RCT that compared RV pacing to left ventricular stimulation.
And at a high level, the conclusion of that study was -- it was statistically significant that there was a reduction in procedure duration, fluoroscopy time, which is important from a radiation exposure and cost. And it was similar from an efficacy and safety with time savings and lower complication rates associated with LV pacing versus RV pacing.
So we've already seen that in the markets and use those data in the US because we're the only device that's indicated in the US to be able to promote and train for left ventricular pace.
Okay. Thanks for that added color. The 30 hospitals would they mainly be major teaching hospitals? And you mentioned the types of treatment procedures that SavvyWire is being used in. Is it also being used diagnostically?
So, Brad, maybe you can give a high level the profile of our customers.
Sure. We are targeting the largest centers with -- in the US as well as Canada and have had success getting into centers that would be meaningful for us both first from a TAVR standpoint and procedural volume to provide a beachhead then also have an OptoWire opportunity.
So certainly teaching hospitals, large volume reference centers where it's important to get those key opinion leaders and those that are recognized within the field as having efficient programs with good outcomes. So that's been the target for our launch to date. And the second part of your question, I believe, was -- is it being used from a diagnostic standpoint?
And that certainly can use that and use it as a diagnostic pre-TAVR. There's also other data that we're looking at and being able to collect over time of how we might use it to assess aortic stenosis prior to a TAVR procedure independently as well. So certainly our label indication supports that and our focus to date really has been on the TAVR procedure itself.
Okay. Does the economic value proposition work differently in big and small hospitals? And I would imagine it probably works better in the big hospitals. How do you manage that in the smaller hospitals if the economic proposition is not as attractive?
Well, I would say, the --
Oh, go ahead, Louis.
No. You can go ahead, Brad.
As I mentioned, we've put together a fairly robust and sourced budget impact model that customers can use and put their own data in. And so whether it's a small volume center or a large volume center, we see there's benefits across the three areas of the value proposition, which is the direct cost offset, time savings and then the avoidance of complications from RV complicated RV pacing complications.
And so really it's the value proposition is relative to what they're doing today and what kind of outcomes that they've had today and how efficient they are. These smaller centers may be less efficient. They don't do as many TAVRs. And if you don't do that, you may also have more complications potentially on a percentage basis.
And it only really takes one complication to cost the system, anywhere from $30,000 to $60,000. So we see a value proposition for basically all sizes of hospitals. But our target from a commercialization standpoint has been those larger centers because we get the most efficiency from our field footprint in doing so.
Okay, great. And last question. You mentioned in the mature centers, 35% to 50% of the cases. Is that because not all physicians are trained or are they selecting some patients for Savvy and others for their other wires? And on what basis are they selecting patients for Savvy if that's the case?
Brad, do you want to take this one or you want me to take it?
No, certainly I can. And so I think when you look at it, that's the data that Louis mentioned. And I would say it's really it is variable by center. I think Louis was giving some averages there. I think the important thing is that we have some centers where it's the dominant wire and you've shifted the mindset and there is the primary device that they would pull for every TAVR procedure.
There are some exceptions. Then maybe when they look at what's their existing conduction abnormalities or specific patient anatomies where they may want to use and choose a different wire in those one-off circumstances. But by and large, what we've seen is that the primary pull wire that could be used with any patient and then, as you mentioned, on the physician level, sometimes even the staff, it can take some time to make sure to get all physicians to that same level of comfort as well as each TAVR team.
So that's some of the ongoing training and education and best practice reinforcement that we do at each account.
Okay, great. Thank you.
[Operator Instructions] Our next question will come from Maxwell Carr with MPartners. You may now go ahead.
Hi, gentlemen. Hope everyone's doing well. Lots of questions, so I'll try to keep mine brief. Noticing the inventory build over the last few quarters, do you guys feel comfortable that you're able to execute on the full release without leaving any money on the table?
Yeah, sure. I think even we were building this inventory and this was done on purpose in the context where we are seeing growing demand from our customers. And as I mentioned before, we are looking for another record quarter from a revenue standpoint in Q3. So it was important for us to have all the raw material and the finished goods required to support such growth.
This being said, when you look to the rest of the year, I would say most of the investment in inventory has been done. You could even see down the road some decrease in the inventory before the end of the year since we are seeing much more stable supply chain right now compared to what we had not so long ago.
Perfect. And then in terms of the sales team noticing and you mentioned previously that you're looking for the costs associated with the sales team, you're pretty much flat. Is that a result of a more effective team? And then if the team is more effective, do you see stock based compensation increasing for those team members?
I won't go in detail on the way we compensate our sales team, but what I can mention in terms of efficiency is that what we are seeing is that the revenue per territory manager will increase in the next quarters, which will help us to drive growth while maintaining similar sales and marketing expenses.
Perfect. And then lastly here sort of more of a philosophical question. But as we're seeing the proliferation of these weight loss drugs, Ozempic and other drugs. Do you see the market for procedures opening up, as you know, morbidly obese patients are now able to have a TAVR procedure without any unforeseen complications during the procedure?
Yeah, and it's an interesting question because we probably we could put more emphasis on this. But what I would say is that what we are seeing inside Opsens is that TAVR market is going to grow substantially. Brad was mentioning earlier today about the market expanding from severe aortic stenosis to more moderate stenosis, a younger patient.
All those factors. We are seeing this as a positive factors for the SavvyWire. So this this is the part of my response on SavvyWire. And I would also even say that in general what we are seeing in the medical industry is that there is more and more interest in having proper information and proper documentation to support decision that are made.
And this is perfectly in line with our Opsens' core competencies, which are, I mean, having a really, really incredible sensing technology capability to display information in real time to physician. And we think this will help us to create value for shareholders down the road.
Perfect. Thanks, Louis, and congrats on the great quarter.
Thank you, Max.
Our next question will be a follow-up from David Martin with Bloom Burton. You may now go ahead.
Thanks for taking the two quick follow-ups. What do you think is the ideal ultimate size of your sales force? Are you happy with where it is now? Do you expect to expand it? And what will be the triggers to expand it?
I mean, it's a challenging question to answer. I would say right now we still have a couple of positions that are open. We want to be sure to fill those positions with people that are having the right expertise to succeed. But overall, I would say, we are comfortable with the existing team and we think with that we can achieve the different strategic goals that we have. Obviously, down the road, at some point we may need to do another increase on the sales force. But I don't see this happening before the end of the fiscal year 2023 and most probably not also in the first half of 2024.
Okay. And then last question. You recently reported that 1000 patients treated with SavvyWire. Do you have what that number was at the end of February? At the end of the quarter?
I don't have that information, but I would prefer to not to respond this because we'll keep, we'll report our Q3 results, but with the full disclosure on the number of patient. But I would say, yes, of course there was part of those patients that were done in March.
Okay. Thank you.
Thank you, David.
This concludes the question-and-answer session. I would like to turn the conference back over to management for any closing remarks.
Thank you. Thank you to all people that have been asking questions. Many thanks for again, our incredible team. We are seeing a great future for Opsens and looking forward to update you in future calls. Thank you and have a good day.
The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.