Profound Medical Corp

TSX:PRN

Earnings Call Transcript 2021-Q2

[Operator]

Good day, and thank you for standing by. Welcome to the Profound Medical Second Quarter 2021 Financial Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions]I would now like to hand the conference over to your speaker today, Stephen Kilmer, Investor Relations. Please go ahead.

[Stephen Kilmer, Investor Relations]

Thank you. Good afternoon, everyone. Let me start by pointing out that this conference call will include forward-looking statements regarding Profound and its business, which may include, but is not limited to, expectations regarding the efficacy of Profound's technology in the treatment of prostate cancer, BPH, uterine fibroids, palliative pain and osteoid osteoma.Often, but not always, forward-looking statements can be identified by the use of words such as plans, is expected, expects, scheduled, intends, common place, anticipates, believes, proposes or variations, including negative variations of such words and prices or state that certain actions, events or results may, could, would, might or will be taken, occur or be achieved. Such statements are based on the current expectations of management.The forward-looking events and circumstances discussed in this conference call may not occur by certain specified dates or at all and could differ materially as a result of known and unknown risk factors and uncertainties affecting the company, including risks regarding the medical device industry, economic factors, the equity markets generally and risks associated with growth and competition. Although Profound has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results to differ from those anticipated, estimated or intended. No forward-looking statement can be guaranteed. Except as required by applicable securities laws, forward-looking statements speak only as of the date on which they are made, and Profound undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, other than as required by law.For the benefit of those who are new to the Profound story, I would like to take a moment to summarize our business. Profound develops and markets customizable incision-free therapies for the ablation of diseased tissue. We are currently commercializing TULSA-PRO, a technology that combines real-time MRI, robotically driven transurethral ultrasound and closed-loop temperature feedback control. The technology is designed to provide customizable and predictable radiation-free ablation of a surgeon-defined prostate volume while actively protecting the urethra and rectum to help preserve the patient's natural's functional abilities. TULSA-PRO is CE marked, Health Canada approved and 510(k) cleared by the FDA.We are also commercializing Sonalleve, an innovative therapeutic platform that is CE marked for the treatment of uterine fibroids and palliative pain treatment of bone metastasis. Sonalleve has also been approved by the China National Medical Products Administration for the noninvasive treatment of uterine fibroids and has recently obtained FDA approval under our Humanitarian Device Exemption for the treatment of osteoid osteoma. While we do not expect this FDA HDE approval to have a material impact on revenues in the near term, it is a significant milestone for our company, and we are making preparations for its U.S. commercial launch later in 2021. On the call today representing the company are Dr. Arun Menawat, Profound's Chief Executive Officer; and Aaron Davidson, the company's Senior Vice President of Corporate Development.With that said, I'll now turn the call over to Aaron.

[Aaron Davidson, Senior Vice President of Corporate Development]

Good afternoon, everyone, and welcome to our second quarter 2021 conference call. On behalf of the management team and everyone at Profound, I would like to thank you for your ongoing interest in our company. For those of you who are shareholders, we appreciate your continued interest and support.I will turn the call over to Arun in a moment for an update on our commercial activities. However, before I do, I'd like to provide a brief update on our second quarter 2021 financial results. As a reminder, we have changed our presentation currency from the Canadian to the U.S. dollar. To streamline things, all of the numbers we refer to have been rounded, so are approximate. For the 3-month period ended June 30, 2021, the company recorded revenue of $2.6 million, up 156% from $1 million in the second quarter of 2020.As we mentioned in today's press release, the U.S. TULSA-PRO business rebound that started in March continued through the second quarter, driving 145% sequential increase in recurring revenue. Total operating expenses in the 2021 second quarter, which consists of R&D, G&A and selling and distribution expenses were $7.6 million, an increase of 74% compared with approximately $4.4 million in the second quarter of 2020. Breaking that down further, expenditures for R&D increased 99% on a year-over-year basis to $3.4 million. This was primarily driven by increased new and existing clinical trials, increased spending for R&D initiatives and projects, travel restrictions being removed, options awarded to employees, additional headcount and overall increases to general expenses, partially offset by decreased consulting fees.G&A expenses increased by 49% to $2.5 million due to additional headcount, increased salaries and directors' fees, higher NASDAQ and TSX listing fees, increased legal and accounting fees and options awarded to employees.Finally, selling and distribution expenses increased by 74% to approximately $1.7 million. Overall, the company recorded a second quarter 2021 net loss of $7 million or $0.35 per common share compared with a net loss of $5.3 million or $0.33 per common share for the same 3-month period in 2020. As at June 30, 2021, Profound had cash of $73.8 million.With that, I'll now turn the call over to Arun.

[Arun Swarup Menawat, Chairman & CEO]

Thanks, Aaron. As many of you know, COVID-19's negative impact in the beginning of 2021 was severe, not only for Profound, but across the U.S. medtech space. That was followed by a late March rebound, which, as Aaron mentioned, continued through the second quarter.On our last call, I focused my remarks on explaining why the disruption in Q1 has not translated into our being any less bullish on our business. On this call, I would like to reiterate that. In fact, in a few minutes, I will share with you some real-world utilization data that I believe really serves to underscore the tremendous opportunity that TULSA represents.But first, let me update you on our continuing progress in laying the groundwork to drive adoption of TULSA-PRO in the United States. The first pillar of that is building a high-quality U.S. install base, targeting 3 major types of end users: early adopters, independent imaging center companies, and opinion-leading teaching hospitals. Each of these are expected to play different roles in supporting both short-term and long-term adoption. Our early adopter TULSA-PRO sites have continued to treat a growing number and an increasing variety of patients. With respect to the imaging center companies, RadNet's Liberty Pacific West Hill Center in Los Angeles is treating patients using TULSA after initially experiencing delays related to COVID-19.Midway through Q2, we also announced a U.S. multicenter TULSA-PRO agreement with Akumin, which currently has 79 operating clinics in Florida and a total of 134 sites across its network in 7 states. We expect to install TULSA-PRO systems and up to 10 Akumin's health centers across Florida, Texas and Pennsylvania over the next year or so, with the first site anticipated to be operational in the fourth quarter of 2021. Based upon the success of the first 10 installations, we hope to expand our relationship in the future to include additional Akumin centers.Moving to the third type of end users. As I highlighted in our last call, we now have agreements with renowned institutions like UCLA, Stanford, Johns Hopkins, Yale Cancer Center, WellSpan Advanced Prostate Cancer Center, Mayo Jacksonville and Mayo Rochester, MGH Cancer Center, UT Southwestern, Memorial Hermann and Methodist San Antonio. That list continues to grow nicely. In fact, I'm pleased to report that in Q2, our team signed 6 additional new agreements with hospitals for installations later this year. The price point of all agreements remain the same at $7,710 or higher per patient.To summarize, the installed base status of TULSA in the United States. Today, we have about 14 installs and 10 of those sites were treating patients in Q2, plus we have enough contracts on hand for over 20 new installs over the next 12 months. Upon that, we continue to anticipate approximately 25 installed TULSA-PRO systems in the United States by the end of this year.As we saw previously during initial limited commercial launch of TULSA in Europe, as U.S. physicians are becoming more confident with and accustomed to the technology, they are using it in a wide range of patients. We believe this confirms TULSA-PRO's flexibility and suggests that the available market is as large, if not larger, than what we first envisioned.Based on a utilization analysis. Our confidence is growing that TULSA will be adopted as a mainstream technology rather than a highly specialized tool that can only be used in a small subset of patients. Let me share some of the raw patient characteristic data with you. All of this comes from the U.S. TULSA sites composed of all 3 end-user types that actively treated patients in the first half of 2021. 86% of patients received completions of greater than 50% of the prostate. 63% received old land, 28% partial land, 6% BPH only and 1% salvage. As an aside, and as some of you know, I personally make up part of that BPH group, having successfully undergone TULSA a few weeks ago.On the prostate cancer patients treated, 11% were grade group 1 or low risk, 53% were grade group 2 or low intermediate risk, 28% were grade group 3 or high intermediate risk, and 8% were grade group 4 to 5, which is considered high or very high risk. With respect to the size of prostates treated, 75% were greater than or equal to 33 cc, and many were greater than 100 cc. To put that in perspective, especially with respect to TULSA's relative ability to become a mainstream treatment, the vast majority of prostate cancer patients and pretty much all prostate of BPH patients, are greater than 30 cc.Summarizing, the analysis shows that TULSA was used in all grades of cancer, ranging from low-risk to the highest-risk patients. And the percentage of patients treated in those risk categories roughly corresponded with that -- what we see in the real world with respect to patient population distribution. In addition, recent publication on clinical outcomes of patients who have been treated in real-world settings continue to show that TULSA patient experienced minimal side effects, such as urinary incontinence or severe erectile dysfunction.Coupling the two, we have increasing confidence that of all the emerging technologies for prostate disease, TULSA is the most flexible. It can be used in the widest variety of prostate disease for customized whole or partial treatment with demonstrated superior outcomes.In order to maximize the opportunity that we see out of that, there is no question that the successful execution of our reimbursement strategy will be key. To that end, as I mentioned in our last call, we have initiated dialogue with relevant societies, including the American Urological Society and the American College of Radiology, to get initial feedback on the requirements to qualify for our CPT1 application. Based upon their feedback, we continue to believe that the clinical publications on the TULSA procedure and the publications that we anticipate later this year will likely be sufficient to meet the requirements for the application by the end of this year.If the adoption of TULSA usage continues to increase, as we anticipate, we may get the support that we need to file in 2022. Our strategy is to not only continue to pursue the CPT1 application with the combination of clinical data that already exists, and that will likely be published by end of this year, but also support a planned Level 1 study called CAPTAIN, that will run in parallel with the filing of the CPT 1 application. While the CAPTAIN study is not a requirement to obtain the code, it may further support coverage by insurance payers and will also provide additional clinical data to support significant adoption. The planned CAPTAIN trial will enroll 201 prostate cancer patients across approximately 10 to 12 sites. Patients will be randomized 2 to 1, to receive the TULSA procedure or a radical vasectomy. The primary endpoint will include safety and efficacy, including measurements of side effects and non-inferior progression-free survival over time. This trial will primarily be run in the United States, and we continue to anticipate patient recruitment to the end -- before the end of this year.In the meantime, TACT 2.0 continues to progress well, and we anticipate that patient recruitment will be completed by the end of this year. We also anticipate that 3-year data from the initial TACT trial will be published later this year. In addition, we are aware of 1 additional Level 2A study and 2 additional Level 2B study that will be submitted for publication later this year.So to summarize, our team has been executing well. We have been signing additional TULSA-PRO site agreements at an increased pace over 2020. We expect to install new TULSA-PRO systems at a rate of approximately 4 to 6 per quarter going into 2022, with that accelerating once COVID is fully behind us. We are continuing to see broader TULSA adoption, both in terms of procedure volumes and types of patients treated, utilization data points to TULSA becoming a mainstream treatment in the U.S., providing us with a large market opportunity. And we are progressing TULSA-PRO's reimbursement strategy by conducting additional studies to apply for a specific CPT code and, ultimately, a reimbursement determination.This ends our prepared remarks for today. With that, we're happy to take any questions you might have. Operator?

[Operator]

[Operator Instructions] Our first question comes from the line of Rahul Sarugaser with Raymond James.

[Rahul Sarugaser]

Arun and Aaron, congratulations on strong results today. I guess my first question is just sort of the details -- a little more detail in terms of the new sites that you were talking about. So you mentioned 14 installed, 10 treating. We recognize that there are about 9 sites listed on the TULSA-PRO website. How should we be thinking about visibility on the sites that are being installed as well as the ones that are coming online, and then also with the total 25 that you expect to come online through -- to be installed through the remainder of the year?

[Arun Swarup Menawat, Chairman & CEO]

Yes. So I think that what put on the TULSA-PRO procedure website are really those sites where we have permission from the hospital or the admitting center to be able to provide the main -- in public domain. And so there are certain sites which we do not have permission yet. So in some cases, it can be a leading indicator because some sites would like to put their name out so they can start recruiting prior to even installation. And to be honest, in some sites, they have a pretty good start and they tend to sort of want to wait until they have treated a few patients before they go there. So I would suggest that we not look at that site as only -- as a leading indicator but as a site that where full commercial activity is taking place at this point. I did mention a couple of new names when I listed the number of leading hospitals that are either signed up or are using the technology. And I -- to be honest, I think that it is very impressive. Look at this early stage of our company. And I think what I can tell you is in the second half of this year, you will continue to see and we will be announcing as these hospitals come on stream other big name hospitals, big name cancer centers.So as you know, we sort of talked about those 3 channels. It's important for us to not just have only the leading hospitals, but the imaging center channels where we get off to a good start with the 2 companies that we've signed up with. And with early adopters. And you will see additional early adopters also, and you will see more sites coming on stream with different kind of companies.So to be honest, fairly, I hate to use word excited all the time or anything. I don't almost never use it, but I'm pretty excited about the fact that we are really marching to the strategy that we put together. And I think you will continue to see 4 to 6 new sites every quarter, and that they will be representing the full range of the 3 channels that we talk about.

[Rahul Sarugaser]

Terrific. Arun, that's great clarity. I guess my next question is, this is the first time you've really been talking about really broad utility of the device you've initially talked about. Of course, the prostate cancer and then BPH and salvage patients, but you really are talking about a much broader workhorse type of scenario here. So when those numbers that you talked about get to that whole, 28% partial, et cetera, et cetera, when should we expect to see some of the data coming out of this to illustrate everything that you were just talking about?

[Arun Swarup Menawat, Chairman & CEO]

Yes. So as you know, we analyze everything to confirm that, hey, whatever we are doing is actually producing the kind of results that we're anticipating, and if we're not to be able to ingest ourselves to fit better -- provide better execution.So answer your first question directly, you will see additional publications that will be coming out within the next 6 months, which will include this broader variety of patient usage. You will also see that in addition to the CAPTAIN trial, we will announce additional smaller trials that will start focusing on the subset of patients. Because the data that we see, we're quite pleased to see that we are not only treating a full variety of the patients, but the other part that we are seeing is that our patient population tends to be more on the larger prostate side, which are the more difficult patients to treat. So if we can treat the more difficult patients, certainly, we'll be able to treat the average diseased patients.And so I think not only that we -- when we sort of analyze this data over the last 18 months, we are feeling very comfortable that we can treat the full range of the cancer population and a pretty large subset of the BPH population. But we're also finding comfort in the sense that patients who tend to be more complicated. The larger the prostate, the larger -- the more complicated the procedure is. And in fact, if you do an analysis on larger prostate, you will find that the side effects become even more critical in those larger prostates, where we're delivering, in fact, quite phenomenal results with almost no side effects in larger prostate. That's really where the confidence is coming from. And you will absolutely see this in publications. And as we begin to unravel more and more of this data, we will, in fact, support additional specific trials to make sure that our community -- urology community has everything that they need to drive adoption.

[Rahul Sarugaser]

Great. And if you would indulge us one last question. So given the broadened utility and now that you have essentially 10 treating sites and hope you get the additional 4 to be installed to be coming out very soon, can you maybe speak to utilization rates that you're seeing specifically given the breadth of applications?

[Arun Swarup Menawat, Chairman & CEO]

Of the application? Yes. So yes, a good question because we -- I didn't have that in the prepared remarks. But number one, certainly, in the early adopters, we're seeing that the run rate -- we've talked historically about 60, where we thought it would be 40. But in reality, this is pretty good. I can tell you that, that number of 60 is increasing in those sites. So I think 6 months from now, I anticipate that I'll be able to give you a number that will be higher run rate than 60 in those sites.On -- in the teaching hospitals, one of the things I've talked about in the guidelines that they provide that are sort of agreed upon in the urology department, they typically will not deviate from those guidelines. And so for the TULSA installs, they have sort of developed an initial criteria of what type of patients they will be treating in the beginning. But I can already tell you that they are starting to broaden those, in fact.And so I think that the rate with which as you -- as we've talked about before, in the teaching hospitals, we thought the first year will be sort of in the range of 30-ish and maybe it will go to 40, 50 in the second year. At this point, I would anticipate that we will grow at a little bit better, faster pace even in the teaching hospitals. And a couple of the teaching hospitals, as an example, are already doing 3 procedures in 1 day. And as you know, longer term, our goal is to be at 4 procedures per day. But within the first 6 months, we're starting to see that at least a couple of these teaching hospitals are already at 3 procedures per day also.So generally, I think that, again, we want to be cautious. We don't want to overshoot or anything. But I would say, generally speaking, the utilization story is certainly continuing to be better, or at least as good as we anticipated. And I think it is reflecting in the fact that between Q1 and Q2, you saw a certain -- pretty good increase in the recurring revenue dollars.

[Operator]

And our next question comes from the line of Josh Jennings with Cowen.

[Neil Chatterji, Vice President]

This is actually Neil on for Josh. Congratulations on the quarter. You talked a little bit about the CPT reimbursement path. Can you maybe just provide a little more detail in terms of what the process looks like with those societies you're talking about?

[Arun Swarup Menawat, Chairman & CEO]

Absolutely. Absolutely. Part of the reason that it's an important topic is that one of the things that we want to convey is that we are off to a pretty good start from our perspective in the -- with the current situation that we have. But getting that CPT1 remains a key priority for us. So with the way the process has been working, we've had multiple meetings with both the American Urological Association and with the RSNA, which is the radiology association. That is a sister organization. And we're meeting with -- the American Urological Meeting is coming up, the annual meeting is coming up in September in Las Vegas this year. We have another meeting planned with them.And so what we're doing is we're keeping them fully abreast of the progress that we're making, the clinical data that is coming out. And we're finding that both of these societies are generally quite positive in the way we are presenting the information, the clinical data publications that are -- that they look -- what they look like. And so at least our interpretation is that both of these subsidies are likely to be supportive as we prepare the applications in the first half of 2022.And that is, in terms of the process, a really important goal because once the societies support the adoption of a new technology, the -- ultimately, the decision comes from the AMA, the American Medical Association. And that, if -- they look for the support from these societies. So obviously, I cannot guarantee that we have it, but certainly, based upon our current dialogue, it looks positive. But the process would be that we would then work with the societies. They will either provide a support letter or they may, in fact, cosponsor. We'll see how that goes. Typically, societies provide support letters. And with that, we would be in a position to file for the June meeting of AMA. If that -- that decision then will come in the fourth quarter of 2022.And once we know what that decision is, if it is positive, then it's sent over to the rec committees to determine the RVUs and so on. And that process typically takes about a year. And so the effective code, if they are assigned, will become effective for treatment by January 2024. So 2023, they will do the analysis. So from today, it's about a 2.5-year process.

[Neil Chatterji, Vice President]

Great. Great. Just one follow-up just in terms of the -- your visibility into the sales funnel for the imaging center side, any updates there in terms of your partnerships with Akumin and RadNet?

[Arun Swarup Menawat, Chairman & CEO]

Yes. I think as I've said in the last quarter, overall, our pipeline continues to be strong. And the fact that some of the leading hospitals are now treating and giving us good feedback. I think that, as you know, urologists would like to talk to their colleague. And I think that dialogue is beginning to sort of take place. Even though our installed base, as you know, is still relatively small, but that dialogue is starting to take place. And we're starting to see more and more urologists wanting to become what we call authorized users, meaning, you want to get trained and be able to start using the technology in existing sites whenever it's possible, even if they have to travel a little bit in the early days so that they can get firsthand experience and then be able to then work with their own hospital system to be able to adopt the technology.So overall, I would say, certainly, the pipeline is better. Our sales methodology is stronger today than it was 6 months ago even. And I think that you will see that in the imaging center channels that more than one urologist will start using it, so that the original concept that we will, over the long term, be able to drive adoption without necessarily increasing the number of sites, I think that, you will start to see in the next 6 months, will start to come become reality.And I also think that a number of early adopters who have been using other specialized technologies, you will begin to see that they will start to gravitate more towards using TULSA as compared to other specialized technology. So I know -- I'm sorry, I'm giving you a bit of a more general response here, but that's sort of how we look at the landscape.

[Operator]

And our next question comes from the line of Anthony Petrone with Jefferies.

[Anthony Charles Petrone, Healthcare Analyst]

Great. And Arun, glad to hear that everything is going well with your health, and good luck. And I'm glad to hear it all went well with the procedure a few weeks ago. Question on our end would just be when you look at a total of 14 TULSAs installed, a little bit at the midpoint of the year, 11 more to go in the back end, how should we think about installations between 3Q and 4Q? I would assume there would be more heavy weighted toward 4Q.And as you sort of look at the funnel, 8 to 9 contracts you mentioned last quarter, that could represent sort of even a multiple of units over a multiyear period. How do you -- how should we think about how that funnel will evolve into the second half of the year? And then I'll have one follow-up.

[Arun Swarup Menawat, Chairman & CEO]

Sure. Anthony, these are very good questions. So I think in terms of -- the one of the goals we've talked about is can we get to the 25, and our team has very detailed plans in place to achieve that goal. And it certainly is not limited by contracts that we need to do. We have enough on hand to be able to achieve that goal, and we have 6 more months to go.So -- but I think there is one point that I would like to make because it's an important point. We see a -- big impact of COVID is behind us in terms of driving utilization of sites that are operational, but we do see still a little bit of an impact of COVID in driving the new installed base. And to give you a just specific example, one of our MR lenders has his backorder on some of the routers. And we need the router to be able to install the site with TULSA. And so it has caused about a fixed wing delay for us before we can actually install the site. And so we are seeing a little bit of that supply-related delays. And even in hospitals, a little bit of slowness or sluggishness in getting the labor content in place to be able to do the appropriate modifications. And so that is one of the reasons why I think 25 is still the right -- reasonable goal to be. Even though in terms of the contract, I think we will have more -- many more than that by end of this year.To answer your question in terms of capability. So the way we're looking at it is that for the next 2 quarters at least, I think 4 to 6 installs per quarter is still a reasonable place to be. But then I think in 2022, we are looking to add into -- our resources to be able to increase that capacity perhaps to 7 or 8 per quarter, and then ultimately, maybe in the range of 10 per quarter. And I apologize, I cannot give you specific timing just yet. But that's the plan is that we do think that there is demand. We are seeing that even with the current C-Code and patient pay, there is a robust patient population who is interested in the procedure. So that I do think that we will be increasing that capacity in 2022.

[Anthony Charles Petrone, Healthcare Analyst]

That's helpful. And then 2 quick follow-ups, and I may have missed this up between calls, but the TACT 2 extension study enrollment, it looks like you may have completed enrollment. Just wondering if we should still expect the publication by year-end? And then anything of note on the GE collaboration, how should we expect that collaboration to sort of play out over the next couple of years?

[Arun Swarup Menawat, Chairman & CEO]

Yes. Great questions, Anthony. So the TACT 2 trial has been recruiting really well. The only reason we have not closed it is because there are a couple of sites like Yale that we felt would be good to include them into the TACT 2. So they are now recruiting as well. And so this is why we will more than likely close the recruitment in Q4 as compared to -- originally we thought we would be able to do a little bit earlier than that.But to your question with respect to the publication, a key publication will be coming out at the AUA in September, where there will -- the independent investigators will be presenting 3-year data for TACT. And so that -- 3 years is considered another milestone, and again, the focus will be on those side effects and progression-free survival. And so those are the 3 things that we were looking for in the 3-year data that will be coming out.And then the CAPTAIN trial, which is sort of the Level 1 trial is actually also moving very well. Most of the sites have already identified, the IRBs are generally in good place, and so we feel pretty confident we will be recruiting in Q4 for the CAPTAIN trial as well.

[Operator]

And our next question comes from the line of Frank Takkinen with Lake Street Markets.

[Frank James Takkinen, Senior Research Analyst]

Arun, Aaron, congrats on the progress in the quarter. A couple for me. I'll start with first thinking about the mix of procedures in the quarter. Do you by chance on hand have the mix of patients that were purely cash pay versus those who had utilized the C-Code successfully and whether or not those were partial reimbursement cases or full reimbursement cases? Just trying to get a feel for the figures that happened in the quarter.

[Arun Swarup Menawat, Chairman & CEO]

Absolutely. It's a great question. And to be honest, we are trying to figure out what that ratio is also. And as you can imagine, it's a very difficult ratio to get a handle on because we -- for HIPAA reasons, we don't have access in every case.Having said that, I would say, as a kind of an educated guess is it's probably in the range of 60% to 65% cash paid and 30% to 40% perhaps -- or the rest of it perhaps in the C-code category. We -- what is interesting is we do continue to see patients are willing to travel. We do continue to see that the number of sites that are saying we have enough both population of cash pay. We don't need to bother with C-code, which we are trying to change, in fact, a little bit. And we are also seeing -- so we do see the aggregate data, and we are seeing that wn they do apply for the C-code or even private insurance where they might use other C-codes, but generally, everybody is getting paid.So one of our plans, in fact, is to really double up on our strategy to really educate, particularly the hospital systems on the C-code and really encourage them to use it more often, in fact. But at the moment, that doesn't seem to be the bottleneck here.

[Frank James Takkinen, Senior Research Analyst]

Got it. Okay. That makes sense. Thinking about the mix of low to more severe grade prostate cancer. Understanding that this is a lot in the early days, but I was hoping you could just kind of talk to trends -- use case pattern trends you are seeing from when they start to once they're a little bit more established? Are you seeing them start in the lower grade and then move into some of the higher-grade cases? Or is it vice versa? Just how is that trending in the limited data you have to date?

[Arun Swarup Menawat, Chairman & CEO]

Yes. Yes. No, very good question. So we sort of encourage them to start with their sweet spot. And for example, WellSpan started with nothing but salvage cases. because that was their biggest connect need. And now they're moving on to sort of intermediate risk. And then they -- that ends. So I think every site, we sort of customize the plan based upon their patient population and what they see as the most compelling unmet need.University of Texas, as an example, started with -- they wanted to do more focal therapy cases. What we are seeing from this data analysis that we did in this quarter is that they start wherever they start, but they're starting to gravitate more towards whole land therapy, which we're really pleased to see. And that they're starting to recognize that they can literally dial in -- I call it dial in because I see it happen pixel by pixel, to amazing accuracy of 1 to 1.5 millimeters, where they can literally dial in what to ablate and when not to ablate.And so when -- just to answer your question regarding, for example, the higher risk, which we were not necessarily anticipating that will go that -- there this early is when -- we've seen cases where there is external involvement. So there might be some involvement beyond the capsule of the prostate, and they're able to sort of incorporate that into the boundaries and be able to ablate. And that ability to be able to really define that boundary is why -- at least, we believe, is why we're starting to see that in certain cases, they are going after some of the higher-risk patients.And I think that the patient demand, even in those cases, really is, hey, can you say by nerve bundle. So yes, we've seen examples where on one side, the nerve bundles are involved in the cancer, and they are going to ablate it. The other side of the prostate, they will save the nerve bundle to make sure that the patient can still have erectile function. And so that flexibility, I believe, is what's driving this change. And we've seen quite a few cases now where they can really, really customize that treatment to be able to make sure that the clinical procedure from the cancer outcome perspective is completely intact, but at the same time, they're able to save these vital functions by guiding it in the right places.So again, I agree with you that it is a little bit early, but we're certainly encouraged. And as I said before, I think you will start to see some more attention that we would pay in towards that over the next 12 months.

[Operator]

And our next question comes from the line of Ben Haynor with Alliance Global Partners.

[Benjamin Charles Haynor, Analyst]

First off for me is, I guess, more of a kind of housekeeping one. On the capital revenue, what was that comprised of? I mean, is that TULSA-PROs in Europe? Is that Sonalleve? And then just from -- thinking about the capital pipeline, what does that look like in the remainder of the year?

[Arun Swarup Menawat, Chairman & CEO]

Yes. Aaron, we're on the call, did you want to take this one?

[Aaron Davidson, Senior Vice President of Corporate Development]

Sure. So Ben, we don't provide guidance by policy at this point because our revenue is not predictable enough. And as such, we don't provide the outlook for the remainder of the year on capital sales outside -- anywhere. And to date, we have not provided a breakdown of Sonalleve versus TULSA. Again, when it gets predictable, we'll do that. At this point, the numbers are too small to be predictable, so we don't want to get people chasing down rabbit holes. So we haven't been doing that, and we're not going to start.

[Benjamin Charles Haynor, Analyst]

Okay. I understand. And then there's the progress that you've made and obviously, there's publications out there, there's data out there and more to come. But what have you seen from some of the treatment modalities that are out there? I mean what's been the reaction from the folks that are doing cryoablations or all the types of HIFU or things like that to TULSA-PRO?

[Arun Swarup Menawat, Chairman & CEO]

Sure. Yes. So I think -- well, let's start with cryo. Cryo typically is used in salvage patients And we have seen that in those who have actually used TULSA for salvage patients are generally quite pleased with that. And so I think we're certainly encouraged that I think that -- it's a very niche area, relatively small volumes, but I do think that urologists are gravitating towards the TULSA procedure for salvage.And the big difference, I think, here is the control money. You can literally design the whole -- those prostates tend to be very irregular in shape and quite unique for each patient because they've been radiated, and they behave uniquely for each patient. So the fact that we can draw pretty intricate boundaries and still maintain that decision is one of the things that's driving them.And I think that to -- I guess, to go to the next one, the HIFU, we are seeing more dialogue going on with HIFU. I understand the companies that are providing HIFU have been marketing quite aggressively. I think in terms of our technology versus any other technology, and I think -- to me, cryo, HIFU and these technology have been out there for 7 to 10 years, in fact. And what -- at least, historically, what you've seen is the types of prostates that they're treating are in the range of maybe 30 ccs or less. And the clinical data has to be is generally in that smaller prostate phase because for larger prostates, because of that distance from the trans -- rectal distance you have to travel, you have certain limitations and that you tend to -- you may need a part prior to that, which sort of defeats the purpose a little bit.Now the other difference is that the speed with which we can do whole land is about 3x to 4x faster because we're right in the center of the prostate. We blast the ultrasound, and we can rotate that catheter pretty quickly. So I think when you're talking about whole land, when you talk about larger prostates, I think that TULSA is inherently a technology that I think is superior to a number of these niche technologies.Now I think it's a marketplace. I think the technology has evolved, and we'll see how it goes. But at least, historically, I would say, the ability to treat whole land enlarged prostates, single-procedure, high-speed, gentle heating in the sense that we're not boiling or charring the tissue, which means basically, no -- virtually no pain and literally be able to work the same afternoon if you're having the procedure in the morning. I think there are several functional benefits and clinical benefits to TULSA and the fact that you can treat the full range, I just think that the urologists would like to have a technology that has the versatility to be able to treat more of those patients because they don't want to learn a tool that they will use once a month or twice a month. They want to have a tool that they can use routinely.

[Benjamin Charles Haynor, Analyst]

That makes a lot of sense. And then just kind of thinking about it from the imaging center standpoint, a lot of these guys are used to doing just a ton of imaging studies, relatively low margins. Do they tend to grasp the economics fairly -- TULSA-PRO procedures and how does that look? I mean, do you need to kind of lead the horse to the water? Or is that something that they get up immediately?

[Arun Swarup Menawat, Chairman & CEO]

Ben, that's a great question, actually, because you're right, it is a paradigm shift for the imaging center companies. But their mindset, historically, has been volume, right? They want to have more -- they have substantial investment in the ground. These MRIs cost millions of dollars and so on. And so volume is really, really important to them.And so their margins, I think, and volumes is how they make their money, historically. And so when we -- we talk about this kind of explicitly now is that if you are doing a diagnostic MR. Typically, we'll take about 30 to 40 minutes to do it. And typical reimbursement nationally is under $500 now for the diagnostic MR. So if you do 10 patients, you make $5,000 in 10 patients. If 2 of those patients tend to also get a TULSA treatment where they can charge $25,000 per patient, now you're going from 10 patients $5,000 to 10 patients, $60,000. Think about that. It is an amazing paradigm shift, right? Amazing revenue story. But they have to invest in putting anesthesia. They have to really change their mindset from high volume to high quality, and specialized and really working with urologists for treatment application. And then they can bring that patient back for long-term follow-up. So they sort of start to really connect with that patient.So I think the long-term proposition for imaging center is quite amazing. And yes, we -- I mean, that's one of the reasons why those top 2 imaging center companies are working with us. And I believe they understand that proposition. They also -- we also think it's not going to happen in 1 day. But yes, I think that, from a financial point of view, is a very strong proposition.

[Benjamin Charles Haynor, Analyst]

So it kind of chases everything from a kind of a transactional mindset to more of a relationship mindset.

[Arun Swarup Menawat, Chairman & CEO]

Absolutely. That's exactly right. Exactly right.

[Benjamin Charles Haynor, Analyst]

Okay. And then just lastly for me. You mentioned that you recently underwent a procedure, and obviously, not to get too personal, but what was your experience as a patient for of TULSA-PRO?

[Arun Swarup Menawat, Chairman & CEO]

So Ben, I'm happy to talk about it and I can get pretty emotional about it, too. But there are a couple of things I would say that are really interesting that I went through in my mind. So first of all, I really, really had heard about this that patients were saying there's no pain and so on and that they would go home the next day and have dinner or work in the afternoon. I mean, it literally happened that way. When I got up, there really was no pain and really woke up -- within 5 minutes after I woke up from anesthesia, I was in the car. Ten minutes later, we were in the in the hotel room. And it really was amazing. And I did have a UTI, which is -- which happens to less than 10% of the patients, but it really didn't bother me, to be honest. It really has not bothered me at all because the mindset that I went through is really what has really given me a lot more conviction about TULSA.And the mindset really is today, the paradigm is delay the procedure because the side effects are going to really get you don't want those side effects. But there's another side of that story, and that is if you can avoid those side effects, you almost want to get it done sooner than later because the work was going through my mind was, if I wait another 5 years, well, I'm going to be aging, unfortunately, just like everybody else. And based upon history, I could be in a more -- some morbidity condition, maybe you have some heart condition, maybe diabetes, sort of these are progressive conditions that people when they age, that happens. So to me, one of the things that really resonated was my God, I know that I would not have those side effects, why would I wait? So that paradigm shift from waiting until I absolutely need it to, "Oh my God, let me just get it done sooner than later." That's the paradigm shift that I'm really excited about.

[Benjamin Charles Haynor, Analyst]

There's quite a benefit there, overall, to see younger patients, better outcomes that all -- that will show you it will be good for you guys.

[Arun Swarup Menawat, Chairman & CEO]

Exactly.

[Operator]

And our next question comes from the line of [ John Hickey ], private investor.

[Unknown Attendee]

Thanks. I've used your video the other week. It's fantastic. I'm a physician, and I was an early investor, so I'm well aware of how the system works. I've been corresponding with some of my colleagues down in South Texas, and they are going nuts calling each other's hospitals looking for ICU beds. And I reflect that with an aging population, ICU beds were already getting premium before COVID hit, so rather than ask about the system and the installation, I want to ask about the complication rate because that's going to be another big selling point to any hospital administrator.So we know that radical prostatectomy and robotic prostatectomy are highly operator-dependent, and the larger the center they're performed at, the lower the complication rate. I wonder if you know ICU admission rate and number of admission days that occur when there is a complication with your system as opposed to the other systems? Or is that something CAPTAIN hopes to look at in more depth?

[Arun Swarup Menawat, Chairman & CEO]

Sure. John, thank you. Also, thank you for the color. I can tell you that the ICU days post-TULSA are incredibly minor, if any. Particularly in the commercial settings, we have just not heard that. We have heard of -- the range of patients who end up with a UTI is somewhere between 4% to a maximum of 10%. And those patients do not need to be admitted. It's basically identifying which bacteria has infected the patient and really customizing which antibiotic would work. And typically, they go away within 5 to 10 days. So we've not seen patients needing to go back to the hospital.Doing the TACT trial, which was in the original trial, we did have, I would say, 4% of the patients where we needed some care posttreatment. But in commercial setting, we're just not seeing that. So I think -- and I think your other point is really also quite important to recognize that this -- as you said, the procedures that are prevalent today are dependent -- are quite dependent on the physician. And there is sufficient data even in robotics that physicians who have done more than 1,000 cases tend to have better outcomes than those who have done less. Versus here, the surgical planning is really the key part. Once the surgical planning is done, it is an autonomous robot.So -- and you're actually watching it perform during the ablation process. And one of the things that technology that we introduced about a year ago -- or a little over a year ago, is the ability to change the boundary, the design of the treatment on the fly. So when there's edema or some swelling of the prostate, because of the heat coming in, they are able to literally erase the boundaries, and on the fly, change. So that allows them to really have that precision, and reduce the impact of newness in this case.And those who know me well enough know that we will continue to come out with innovations. And I think part of our goal is to continue to make it so that variability from physician to physician will reduce, if any, over time. So I really appreciate your question, but I think that to your point, I think the ICU -- you're absolutely right, they are premium. And I don't -- I think we will have an impact on that. And I also think that over the long haul, we will continue to be a much more reproducible and predictable treatment.

[Operator]

And our next question comes from the line of Scott McAuley with Paradigm Capital.

[Scott McAuley, Analyst of Healthcare and Biotechnology]

I just wanted to quickly touch on the process from kind of signing an agreement to installation, to operation, and kind of how you're seeing that the kind of the timing between those processes change and evolve as you get more of these contracts signed and get more of these installations in. And hopefully, as the COVID impact is kind of potentially lessening or going away and how you see that moving forward.

[Arun Swarup Menawat, Chairman & CEO]

Yes. It's got a very good question. And we think about that every day. So when we started, in fact, I remember talking about it in Q1 last year of 2020, our anticipation has been that from the time we have the contract to the first patient treated, our expectation was about 90 days. And that our plan -- based upon our programs that we were running that we felt that we could reduce that to about 60 days.At the moment, it is actually running closer to 4 months. And it is related to various factors, and they are all very minor things. And some of them if not all of them are that transitory things that sort of pop up because of COVID. There's some bottleneck that shows up that normally, you will not even think about.At the moment, it is running a little bit higher than what we anticipated. And we will overcome that, and our team is getting pretty adept at doing that. But I think over the long haul, I think the original expectation that we will be able to reduce it to somewhere between 60 to 90 days, perhaps in 2022, is still a very reasonable expectation.

[Scott McAuley, Analyst of Healthcare and Biotechnology]

Definitely. No, that's great. And then just to kind of clarify with the -- you mentioned 25 by the end of the year. Do you see that as 25 installations or 25 operational installations, like operational sites?

[Arun Swarup Menawat, Chairman & CEO]

I think that I framed it as installation, but to be honest, that -- once we are installed -- and this is the time frame that we -- from the installation to treating the first patient is really almost never more than a couple of weeks. So we'll probably within the range of the margin of error in there on that.

[Scott McAuley, Analyst of Healthcare and Biotechnology]

Got it. So most of that 4 months is the process from contract to installation. Once installation's in, it's a quick turnaround to first patient? Got it.

[Arun Swarup Menawat, Chairman & CEO]

Yes. I mean, usually, the physicians seem to be -- they typically are pretty interested because, obviously, they will invest in the time. And so they typically, once they know all the bits and so on and they're firm on when the system will be ready, I think about 3 weeks prior to that, they're already sort of starting to explain to screen patient and usually assign a date of the first patient treated. And that date actually works really well because it focuses the hospital and focuses our team to activate the first patient who is going to be treated and we really went backwards from that date at that point.

[Scott McAuley, Analyst of Healthcare and Biotechnology]

Perfect. No, that's wonderful. And then quickly, I mean, maybe looking a bit into crystal ball, but in terms of kind of the rise of the Delta variant and especially kind of in the South, Texas and Florida. Are you seeing that impact any procedure kind of the current procedure volumes like July, August? Or are things kind of chugging along as they were in Q2 when the numbers were relatively low?

[Arun Swarup Menawat, Chairman & CEO]

Yes, it's -- you're right, Scott. It's a bit of a crystal balling. And Florida, Texas, clearly, I read this morning in the general that Florida has more patients at the moment in ICUs and hospitals than ever, even in the very beginning of the epidemic. So so far, we have not seen any major impact. But it's certainly one of the reasons why we are continuing to be cautious because it is unpredictable. We do see a number of patients who are willing to travel, so hopefully, the impact will be -- even if it is patients coming to Florida. And we are -- we're opening sites in other parts of the country. So if we do see one region being down because that, I think there will be some ability to transfer the patient to other areas as well. So we are certainly very diligent. And with our sales team is really, really pretty -- starting to become really good at managing that situation, actually.

[Aaron Davidson, Senior Vice President of Corporate Development]

And we have a couple of factors working in our benefit is the demographics so far have shown that men of the age of prostate disease tend to be vaccinated. And that the states where we operate amongst like Texas and Florida, do not seem like they have governments intended on shutting down the states again for good or bad.

[Operator]

Thank you. And I'm showing no further questions at this time, and I would like to turn the conference back over to Dr. Menawat for any further remarks.

[Arun Swarup Menawat, Chairman & CEO]

Thank you so much, and thank you for the questions. Our company continuous to evolve and we continue to gain strength from what we see, and I look forward to really presenting to you in Q3. Thank you. Have a great evening.

[Aaron Davidson, Senior Vice President of Corporate Development]

Thank you.

[Operator]

That concludes today's conference call. Thank you for participating. You may now disconnect.