Profound Medical Corp

TSX:PRN

Earnings Call Transcript 2021-Q4

[Operator]

Hello.

Thank

you

for

standing

by

and

welcome

to

the

Profound

Medical

Q4

and

Full-Year

2021

Financial

Results

Conference

Call.

At

this

time,

all

participants

are

in

a

listen-only

mode.

After

the

speaker

presentation,

there

will be

a

question-and-answer

session.

[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, Head-Investor Relations, Profound Medical Corp.]

Thank

you.

Good

afternoon,

everyone.

Let

me

start

by

pointing

out

that

this

conference

call

will

include

forward

-looking

statements

within

the

meaning

of

applicable

securities

laws

in

the

United

States

and

Canada.

All

forward-looking

statements

are

based

on

Profound's

current

beliefs,

assumptions

and

expectations,

and relate

to,

among

other

things,

expectations

regarding

the

efficacy

of

the

company's

treatment

technologies,

results

of

future

clinical

trials,

the

ability

to

obtain

coding

and/or

reimbursement

from

third-party

payers,

anticipated

financial

performance,

business

prospects,

strategies,

regulatory

developments,

market

acceptance

and

future

commitments.

Such

statements

involve

known

and

unknown

risks and

uncertainties

and

other

factors

that

may

cause

actual

results,

performance

or

achievements

to

be

materially

different

from

those

implied

by

such

statements.

No

forward-looking

statement

can

be

guaranteed.

Listeners

are

cautioned

not

to

place

undue

reliance

on

these

forward-looking

statements,

which

speak

only

as

of

the

date

of

this

conference

call.

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

also 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

from

– to

preserve

the

patient's

natural

functional

abilities.

TULSA-PRO

is

CE marked,

Health

Canada-approved

and

510(k)

cleared

by

the

FDA.

In

the

US,

we

employ

[indiscernible]



(00:02:26)

recurring

revenue

model

for

TULSA-PRO,

whereby

we

charge

customers

around

$8,000

on

a

per

procedure basis for

TULSA-PRO

consumables,

lease

of

medical

devices

and

services

associated

with

extended

warranties.

Outside

of

the United

States,

we

also

primarily

deploy

a

pay-per-procedure

model,

but

we

also

sell

capital

and consumables

separately

if

the

situation

warrants

that.

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

metastases.

Sonalleve

has

also

been

approved

by

the

China

National

Medical

Products

Administration

for

the

non-invasive

treatment

of

uterine

fibroids, and

has

recently

obtained

FDA

approval

under

a Humanitarian

Device

Exemption

for

the

treatment

of

osteoid

osteoma.

The

business

model

for

Sonalleve

systems

is

currently

a

onetime

sale

capital

equipment.

On

the

call

today

representing

the

company

are

Dr.

Arun

Menawat,

Profound's

Chief

Executive

Officer;

and

Rashed

Dewan,

the

company's

Chief

Financial

Officer.

With

that

said,

I'll

now

turn

the

call

over

to

Rashed.

[Rashed Dewan, Chief Financial Officer, Profound Medical Corp.]

Good

afternoon,

everyone,

and

welcome

to

our

fourth

quarter

and

full-year

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

activity.

However,

before

I

do,

I

would

like

to

provide

a

brief

update

on

our

fourth

quarter

2021

financial

results.

To

streamline

things,

all

of

the

numbers

we

will

refer

to

have

been

rounded

so

they

are

approximate.

For

the

three-month

period

ended

December

31, 2021,

the

company

recorded

revenue

of

$1

million,

down

from

$2.9

million

in

the

fourth

quarter

of

2020.

Despite

COVID

headwinds,

recurring

revenue

increased

67%

from

$600,000

in

Q4 2020,

reflecting

the

success

of

our

ongoing

rollout

of

TULSA-PRO

in

the

United

States.

However,

that's

more

than

offset

by

the

fact

that

there

were

no

onetime

capital

equipment

sales

in

Q4

2021

compared

to

$2.3

million

recorded

in

Q4

2020.

Total

operating

expenses

in

the

2021

fourth

quarter,

which

consists

of

R&D,

G&A,

and

selling

and

distribution

expenses,

were

$10.2

million,

an

increase

of

69%

compared

with

approximately

$6.1

million

in

the

fourth

quarter

of

2020. Breaking

that

down

further,

expenditure

for

R&D

increased

87%

on

a

year-over-year

basis

to

$4.7

million.

This

was

primarily

driven

by

increased

spending

on

R&D

initiatives

for

new

designs,

technology

improvements

and

different

magnet

compatibility,

options

awarded

to

employees,

additional

head

count,

and

increased

travel

for

offsite

MRI

testing.

G&A

expenses

increased

by

80%

to

$3.2

million

due

to

options

awarded

to

employees,

increased

insurance

costs,

increased

legal

and

accounting fees,

increased

license

costs

for

the

enterprise

resource

planning

and

customer

relationship

management

software,

and

an

overall

increase

in

general

expenses

as

offices

continue

to

reopen

from

COVID-19

restrictions.

Finally,

selling

and

distribution

expenses

increased

by

32%

to

approximately

$2.3

million.

Overall,

the

company

recorded

a

fourth

quarter

2021

net

loss

of

$10.2

million

or

$0.49

per

common

share,

compared

with

a

net

loss

of

$7.5

million

or

$0.38

per

common

share

for

the

same

three-month

period

in

2020.

As

at

December

31, 2021,

Profound

had

cash

of

$67.2

million.

With

that, I will now turn the call over to Arun.

[Arun S. Menawat]

Thank

you,

Rashed.

Before

getting

started,

I

would

like

to

take

this

opportunity

to

congratulate

Rashed

on

his

promotion

to

CFO.

As

referenced

in

today's

press

release,

this

formalizes

the

additional

responsibilities

that

he

took

on

when

Aaron

Davidson

transitioned

to

SVP, Corporate

Development

last

spring.

Speaking

of Aaron,

it

is

bittersweet

for

me

to

announce

that

he

will

finish

his

employment

with

Profound

at

the

end

of

March

but

will

be

available

as

needed

on

a

consulting

basis.

I

will

miss

his

daily

presence

and

wise

counsel

but

also

wish

him

well

as

he

begins

his

well-deserved

retirement.

With

that,

there's

a

lot

to

talk

about

today.

We're

all

tired

of

talking

about

COVID

and

no

one

is

happier

that

its

impact

is

finally

subsiding

than

the

Profound

team.

As

we

analyze

our

data,

our

recurring

revenues

only

grew

by

37%

year-over-year,

and

that

was

primarily

through

utilization

at

14

sites

that

operated

throughout

the

year.

Even

though

we

had

contractual

agreements

to

install

over

30

systems

last

year,

it

was

not

until

late

in

Q4

that

finally,

we're

able

[ph]

to begin (00:09:05)

new

installs

again

in

US.

This

finished

the

year

with

17

sites

in

US

and

21

worldwide.

Our

international

business,

that

primarily

comprised

of

capital

sales

in

Asia,

was

effectively

non-existent

as

our

team

was

not

even

able

to

visit

the

country.

That

was

2021,

but

new

installs

are

continuing

in

Q1

2022,

and

we

fully

expect

to

achieve

an

installed

base

of

25

systems

in

the

US

by

end

of

the

current

quarter,

bringing

our

worldwide

installed

base to

[ph]



29 (00:09:54).

Similarly,

we're

beginning

to

see

more

activity

in

the

international

markets

as

a

few

of

the

capital

projects

have

been

revived,

both

suggest

a

faster

growth

in

recurring

as

well

as

total

revenue

in

2022.

In

spite

of

the

macro

environment

in

2021,

there

were

many

positive

accomplishments

that

also

bode

well

for

2022

and

beyond.

As

you

know,

we're

targeting

three

major

types

of

end

users:

early

adopters,

independent

imaging

center

[ph]



companies (00:10:38), and

opinion-leading

teaching

hospitals.

That

strategy

has

essentially

worked.

Most

notably,

we

are

already

in

7

of

the

top

15

opinion-leading

US

hospitals,

including

the

prestigious

institution

we

announced

earlier

this

week.

In

addition,

I'm

pleased

to

share

that

we

now

also

expect

to

launch

TULSA

programs

in

less

populated

states,

including

the

Southwestern

States,

and

appropriately,

a

TULSA

system

is

being

installed

in

Tulsa,

Oklahoma.

I'm

particularly

excited

about

this

one

as

they

will

use

the

imaging

center

model

of

having

multiple

[ph]



urologists

(00:11:30) bring

their

patients

to

one

site

and

drive

utilization.

Our

clinicians

continued

to

utilize

the

flexibility

of

TULSA-PRO

to

treat

an

unrivaled

variety

of

patients.

In

the

fourth

quarter

of 2021,

the

majority

of

patients

treated

with

TULSA,

about

85%

had

treatment-naïve

localized

prostate

cancer,

with

another

12%

receiving

[indiscernible]



(00:12:02) TULSA

after

prior

radiation

failure

or

failure

after

other

types

of

therapy,

and

three

percent

had

BPH

but

no

cancer.

Of

the

patients

with

prostate

cancer,

approximately

75%

had

intermediate

risk

localized

prostate

cancer,

another

10%

were

high risk,

and

15%

were

low risk.

In

terms

of

treatment

plans,

approximately

38%

were

customized

whole

gland,

where

physicians

targeted

95%

of

the

gland,

but

precisely

carved

out

margins

at

the

sphincters

to

save

continence,

nerve

bundles

to

save

erectile

function,

or

even

the

ejaculatory

ducts,

when

possible,

to

save

vital

fluid.

Another

36%

had

large

subtotal

ablations

covering

more

than

half

their

prostates,

and

26%

had

more

[ph]



focal

laser ablations (00:13:16),

meaning

[indiscernible]



(00:13:19).

This

quarter,

the

largest

prostate

treated

with

TULSA

in

the

US

was

130

cc,

whereas

the

smallest

was

only

15

cc.

The

simple

fact

is

that

no

other

established

or

emerging

technology

can

safely

and

effectively

treat

as

many

different

prostate

disease

patients

as

TULSA

have

done.

Based

on

this

and

prior

data,

we

believe

that

TULSA

has

unique

potential

to

capture

a

meaningful

portion

of

the

overall

prostate

disease

market.

In

terms

of

that

long-term

potential,

if

one

assumes

an

average

price

of

$8,000

per

procedure

and

250,000

prostate

cancer

cases

annually

in

the

US,

that

translates

to

a

total

addressable

US

market

of

$2

billion.

If

one

were

to

add

a

small

subset

of

what

we

call

the

extreme

BPH

cases,

patients

with

very

large

prostates

who

would

otherwise

need

a

simple

prostatectomy,

the

market

size

effectively

increases

to

over

$5

billion.

Of

course,

TULSA

will

not

capture

this

entire

market,

but

these

numbers

give

us

an

idea

of

how

significant

the

opportunity

is

based

upon

how

the

product

is

being

used

today.

For

us,

2021

was

about

establishing

that

beachhead,

a

foundation

to

ultimately

capture

a

meaningful

portion

of

that

market

opportunity.

Although

growth

in

the

US

has

been

impeded

due

to

the

pandemic,

medical

technology

databases

report

that

in

2021,

the

number

of

patients

treated

with

[indiscernible]



(00:15:31)

and

cryoablation

was

similar

to

the

number

of

patients

treated

with

TULSA.

Based

on

these

data,

we

believe

we

have

already

achieved

a

treatment

rate

similar

to

that

of

other

ablative

technologies

that

have

been

used

for

more

than

a

decade.

Taken

together,

we

believe

that

TULSA

not

only

has

the

potential

to

become

the

leading

ablative

therapy,

but

given

that

TULSA

has

been

used

to

treat

patients

with

such

wide

variety

of

prostate

diseases,

we

see

TULSA

becoming

a

primary

modality

of

choice

in

the

future.

And

that

provides

a

good

segue

to

our

sponsored

CAPTAIN

trial,

which

treated

its

first

patient

in

January.

We

expect

CAPTAIN,

which

stands

for

A

Comparison

of

TULSA

Procedure

vs.

Radical

Prostatectomy,

or

RP

for

short,

in

Participants

with

Localized

Prostate

Cancer,

will

be

performed

at

eight

or

more

sites

in

the

United

States

and

two

sites

in

Canada.

To date,

six

sites

have

been

activated

and

are

currently

recruiting

patients.

Notably,

this

is

the

first

Level

1

study

ever

conducted

comparing

an

emerging

technology,

TULSA

in

this

case,

head-to-head

with

RP

in

men

with

prostate

cancer.

CAPTAIN

will

compare

the

safety

and

efficacy

of

the

TULSA

procedure

with

RP

in

men

with

organ-confined,

intermediate-risk,

Gleason

Score

7

prostate

cancer,

with

the

goal

of

demonstrating

that

the

efficacy

of

the

TULSA

procedure

is

not

inferior

to

RP.

The

trial

also

aims

to

demonstrate

TULSA's

superior

quality

of

life

outcomes.

The

post-market

CAPTAIN

trial

will

enroll

201

patients

with

134

patients

randomized

to

receive

one

or

two

TULSA

procedures

and

67

patients

randomized

to

receive

RP.

The

trial's

primary

safety

endpoint

is

the

proportion

of

patients

who

preserve

both

erectile

potency

and

urinary

continence

at

one

year

after

treatment.

CAPTAIN's

primary

efficacy

endpoint

is

a

proportion

of

patients

who

are

free

from

any

additional

treatment

for

prostate

cancer

by

three

years

after

treatment.

Secondary

endpoints

include

comparison

of

rate

of

complications,

cost

effectiveness,

and

timing

of

the

return

to

baseline

activity

with

long-term

follow-up

data

gathered

for

up

to

10 years

after

treatment.

We

are

conducting

the

CAPTAIN

trial

to

increase

awareness

and

adoption

of

TULSA-PRO

and

to

support

coverage

by

payors.

And as

I

mentioned

in

our

last

call,

we

are

awaiting

full

data

in

the

FARP

trial,

a

single-site

Level

1

study

conducted

at

Oslo

University

Hospital

that

compared

whole

gland

RP

to

focal

therapy

using

either HIFU

or

TULSA.

The

robotic

RP

arm

of

this

study

is

similar

to

that

of

our

CAPTAIN

trial,

and

we

are

very

encouraged

by

the

initial

results

of

that

trial,

as

well

as

by

the

fact

that

Oslo

University

Hospital

purchased

the

TULSA

system

from

us

for

commercial

use,

identifying

it

as

the

clear

technology

of

choice.

Should

the

RP

outcomes

in

CAPTAIN

match

what

was

seen

in FARP,

we

believe

there

is

potential

to

demonstrate

clearer

superiority,

even

though

the

CAPTAIN

trial

has

been

designed

for a

non-inferiority

endpoint.

Another

feature

of

TULSA-PRO

that

we

believe

will

significantly

increase

its

adoption

is

the

system's

compatibility

with

the

US

installed

base

of MRI

machines.

To date,

we

have

been

working

with

two

MRI

manufacturer

partners,

Siemens

and

Philips,

to

commercialize

TULSA-PRO.

Just

this

week,

we

were

pleased

to

confirm

TULSA-PRO's

compatibility

with

GE,

the

remaining

of

the

big

three

medical

technology

companies

in

the

global

MRI

space,

and

the

biggest

of

the

big

three

in

the

United

States.

Together,

Siemens,

Philips,

and

GE

comprise

more

than

90%

of

the

installed

base

of MRIs

in

the

US.

This

is

an

important

achievement

that

has

already

yielded

exciting

results.

Shortly

after

confirming

TULSA-PRO's

compatibility

with

GE,

we

signed

the

first

agreement

for

a TULSA-PRO

system

interfaced

with

a

GE

scanner

with

Boston's

renowned

Brigham

and

Women's

Hospital.

Construction

agreement

has

been

signed

since

then

with

an

imaging

center

in

Florida.

I'll

now

turn

to

our

ongoing

reimbursement

strategy

which

is

a

critical

priority

for

Profound.

I'm

very

excited

to

share

that

our

TULSA

systematic

review

paper

has

been

published

online

by

the

Journal

of

Endourology.

It

is

available

on

our

website

or

you

can

ask

Steve

Kilmer

to

send

it

to

you

after

this

call.

Publication

of

this

paper

is

a

key

milestone

as

it

completes

the

clinical

requirements

to

qualify

to

file

a

CPT-1

application.

We

have

met

with

the

relevant

societies

since

the

publication

and

we

remain

on

track

to

be

able

to

file

our

application

this

summer

for

consideration

by

the

AMA

during

their

fall

2022

meeting.

Although

there's

no

guarantee

of

approval,

should

the

AMA

approve

our

application

at

their

fall

meeting,

this

would

be

an

incredible

accomplishment

as

the

CPT

code

would

be

effective

by

January

2024.

Another

reason

this

paper

is

one

of

Profound's

most

important

publications

to

date

is

that

it

generates

the

highest

level

of

evidence

available

in

support

of

TULSA,

in

this

case

Level

2a.

The

paper

itself

systematically

consolidates

all

of

the

available

evidence

on

TULSA-PRO

into

a

single,

peer-reviewed

manuscript

and

supports

that

TULSA

is

safe

and

effective

for

treating

primary

prostate

cancer.

The

evidence

also

supports

the

use

of

TULSA

to

treat

recurrent

prostate

cancer

and

locally

advanced

prostate

cancer,

as

well

as

the

system's

ability

to

simultaneously

treat

prostate

cancer

and

alleviate

lower

urinary

tract

symptoms

normally

caused

by

BPH.

In

addition,

the

paper

confirms

that

TULSA

is

customizable,

offering

a

treatment

plan

that

can

be

tailored

to

match

individual

disease

characteristics

and

patient

preferences.

Importantly,

this

represents

a

shift

from

the

focal

versus

whole-land

paradigm

established

by

other

ablative

modalities.

Finally,

the

paper

concludes

that

TULSA

is

a

single,

flexible

tool

that

can

treat

multiple

indications,

including

those

where

minimally

invasive

alternatives

are

limited.

In

addition

to

its

real-time

MR

visibility

and

thermometry

that

differentiates

TULSA

from

other

ablative

modalities,

we

believe

the

system's

customizability

will

enable

patients

to

achieve

better

outcomes

in

the

real

world.

We're

looking

forward

to

using

this

paper

as

a

tool to

support

system

launches

and

utilization

initiative

and

to

initiate

and

inform

conversations

with

physicians

and

patients

so

they

can decide

on

treatment

options

and

plans.

And

last

but

certainly

not

least,

you

know

how

proud

I

am

of

the

Profound

team.

Abbey

and

Hartmut

are

leading

sales,

and

Mathieu

and

Golddy

are

leading

product

management.

Mike

has

advanced

reimbursement

efforts

significantly,

and

Jacques

has

developed

the

relationships

with MR

companies.

All

in

all,

this

is

a

world-class

team.

And

now,

I'd

like

to

extend

a

warm

welcome

to

Ken

Knudson,

our

new

Chief

Commercial

Officer,

who

will

be leading

initiative

for

Profound's

worldwide

sales,

marketing,

and

reimbursement

activities

for

both

TULSA

and

Sonalleve.

Ken's

executive

management

career

spans

more

than

25

years,

during

which

he

has

accelerated

growth

for

emerging

start-ups

and

Fortune

500

companies

alike.

Ken

joins

us

from

Perineologic,

a

company

pioneering

a

new

and

disruptive

approach

to

prostate

cancer

biopsy,

where

he

served

as

CEO.

He

previously

served

as

Executive

Vice

President

of

Global

Sales

and

Marketing

for

Boston

Scientific

Corporation,

where

he

helped

drive

annual

sales

of

SpaceOAR

Hydrogel,

a

biodegradable

material

that

is

injected

between

the

rectum

and

prostate

to

decrease

patient

exposure

to

rectal

radiation.

Ken

has

extensive and

demonstrable

record

of

accomplishments

in

helping

to

commercialize

new

medical

technologies

in

urology

and

has

an

in-depth

knowledge

of

the

men's

and

women's

health

markets.

Please

join

me

in

welcoming

Ken

to

the

team

where

he

will

be

invaluable

as

we

continue

to

execute

our

commercial

strategy.

To

summarize,

although

our

growth

was

hampered

by

COVID,

we

believe

we

are

at

the

verge

of

accelerated

growth,

with

our

installed

base

expected

to

increase

significantly

by

quarter's

end.

Not

only

does

the

TULSA

opportunity

remains

intact

but

the

substantive

number

of

complex

and

unique

cases

build

our

confidence

in

capturing

a

broad

portion

of

the

total

prostate

cancer

cases

as

well

as

a

material

segment

of BPH

cases.

We

are

thrilled

that

TULSA

is

now

compatible

with

all

three

major

manufacturers

of MRI

scanners,

GE,

Siemens

and

Philips,

increasing

the

span

of

our

market

access.

Our

reimbursement

strategy

is

working,

and

we

are

excited

about

the

expected

filing

of

CPT-1

application

in

2022.

We

are

pleased

to

have

initiated

our

sponsored

CAPTAIN

clinical

trial,

which

should

produce

initial

readout

in

Q4

2023.

This

ends

our

prepared

remarks

for

today.

With

that,

Rashed,

Arun

and

I

are

happy

to

take

any

questions

you

might

have.

Operator?

[Operator]

Thank

you.

[Operator Instructions]



Our

first

question

comes

from Frank

Pinal

with

Jefferies.

You

may

proceed

with

your

question.

[Frank Pinal, Analyst, Jefferies LLC]

Hi,

guys. Thank

you

for

taking

the

question.

I

guess

off

the

top,

you

touched

on

installs

increasing

significantly

in

the

quarter.

So,

wondering

if

you

could

sort

of

unpack

that

a

little

bit?

Was

there

sort

of

a

speed-up

there

in

the

conversion

process?

And

then

on

the

capital

side,

with

capital

being

lower

in

the

quarter,

was

that

mostly

due

to

COVID?

I

think

it

was.

How

is

that

currently

trending?

Are

you

seeing

COVID

headwinds

kind

of

increase

or

are

they

leveling

off

as

we're

now,

I

guess,

several

weeks

into

2022?

And

I

have

a

follow-up

after

that

and

I

apologize

for

asking

about

COVID.

[Arun S. Menawat]

No.

No

problem.

I

appreciate

your

questions.

So,

I

think

to

your

first

question,

yes,

we

are

seeing

an

accelerated

installation

rate.

We

did

see

it

a

little

bit

in

Q4, but

we

are

certainly

seeing

it

in

Q1.

And

I

think

that

unless

there

is

another

resurgence

of

this

pandemic,

I

think

based

upon

our

pipeline,

I

do

think

that

we

will

continue

to

increase

the

installed

base

this

year.

Which,

by

the

way,

gives

us

a

lot

more

confidence

on

where

we're

going

this

year

as compared

to

the

uncertainties

that

we

faced

last

year.

So

yeah,

I

think

generally

speaking,

I

think

just

again

to

be

cautious,

all

the

installed

base

is

going

to

be

meaningful

in

– just

that

fast. They're

all

going

to

take

their

time

growing

and

so

on.

But

I

do

think

things

are

happening

at

much

faster

pace

than

they

did

in

Q1.

To

your

second

question,

in

Q4,

there

was

zero

capital

revenue.

Absolutely

nothing.

And

a

good

bit

of

it

is

that

we

have

–

we

identified

a

certain

set

of

countries

in

Asia

in

particular

where

we

feel

that

we

can

build

scalable

models

where

we

can

create

a

profitable

revenues

and

really

create

long-term

growth.

And

among

those

countries,

particularly

were

China,

Japan,

and

we

have

not

even

been

able

to

visit

those

countries.

And

so,

things

have

been

delayed

there.

However,

as

I

mentioned

in

the

prepared

remarks,

we

do

see

a

revival.

I

think

it's

going

to

be

slow,

but

I

think

we

will

start

to

see

capital

revenues

trickling

in.

But

I

do

think

in

the

second

half

of

2022,

you

will

start

to

see

some

of

the

programs

that

were

delayed

in

2021

will

come

back.

And

we

are

certainly

optimistic

from

that

perspective

that

the

top

line

growth

will

also

be

there

from

capital

revenue.

So,

please

feel

free

to

ask

the

next

question.

[Frank Pinal, Analyst, Jefferies LLC]

Thank

you

for

that,

Arun.

I

guess

picking

up

on

the –

on

sort

of

the

regional

aspect

there,

you

commented

during the

call

that

you

were

spreading

out

regionally

within

the

US. I

was

wondering

if

you

could

just

unpack

that

a

little

bit.

Are

there

regions

that

you're

currently

focusing

a

little

bit

more

on

right

now?

And

so,

and

how

do you

see

that

strategy

evolving

as

you

play

forward

say,

over

the

next

year

or

two?

And

just

quickly,

just

one

data

point,

just

if

you

can

– volumes

during

the

quarter,

I'm

not

sure

if

I

heard

it.

If

I

missed

it,

if

you

could just

touch

on

that.

That

would

be

helpful.

Thank

you

so

much.

[Arun S. Menawat]

Yeah,

absolutely.

So

first,

with

respect

to

the

geography

within

the

United

States,

there

are

two

aspects.

One

is

that

we

have

an

eye

towards

increasing

obviously

utilization

because

that's

what

translates

into

revenue

for

us.

But

we

also

have

a eye

towards

really

qualifying

for

CPT

application.

And

one

of

the

things

that

AMA

looks

for

is

how

widely

is

the

product

being

used

and

who

is

using

it.

So,

on

one

end

of

the

spectrum,

our

product

is

being

used

by

leading

hospitals

and

that

is

an

important

criteria.

On

the

other

end

of

the

spectrum,

they

want

to

see

that

it

is

being

used

by

mainstream,

even

in

rural

areas

as

well.

And

so,

part

of

our

objectives

has

been

to

satisfy

those

requirements

also.

But

the

interesting

thing

is

that

at –

Abbey

and

the

team

were

able

to

partner

with

a

new

group

called

the

Paragon

Group

in

the

southern

Midwest,

and

it

is

turning

out

to

be

an

amazing

group.

I'm

really

excited

about

them

actually.

So,

they

are

placing

– they

will

be

placing

systems

in

Louisiana,

Missouri,

even

certain

rural

parts

of

Texas,

and

then

the

one

that

I

mentioned

in

Tulsa,

Oklahoma.

So,

we're

now

–

we

have

presence

now

in

upper

northeast,

lower

northeast.

We

certainly,

as

you

know,

we

have

presence

in

Florida

quite

a

bit.

We

have

presence

in

Texas,

growing

presence

in

Arizona,

California,

but

now

we are

adding

presence

in

these

lower

midwestern

states.

We

do

have

in

our

pipeline

upper

Midwest

also.

So

that's

the

plan,

and

I

think

it

covers

– it

sort

of

is

very

methodically

planned

and

it

covers

our

abilities

to

increase

the

utilization.

It

reduces

the

amount

of

travel

our

patients

have

to

do.

One

of

the

things

that

we

analyzed

last

year

is

really

exactly

where

our

patients

are

coming

from.

And

I

think

that

the

installed

base

is

beginning

to

reflect

to

where

the

patient

population

resides.

Because

what

we

saw

in

2020

and

2021

was

that

over

75%

percent

of

our

patients

had

to

travel

well

over

four

hours

to

get

to

the

Tulsa

sites.

So,

I

think

this

will

help

reduce

that

burden

for

our

patients.

With

respect

to

the

numbers

in

terms

of

the

utilization,

we're

in

that

range

where

September, October

–

sorry,

October,

November

were

actually

not

bad

months

for

us.

They

were

meshing

with

what

we

saw

in

September

timeframe.

Now,

December

was

not

a

very

good

month

at

all.

In

fact,

very,

very

quickly

we

had

a

–

we

saw

significant

delays

and

primarily

driven

by

lack

of

anesthesia.

So,

our

numbers

I

think

compared

to

Q3

are

up

because

you

can

see

Q3

to

Q4

numbers

are,

in

terms

of

recurring

revenues,

are

up

quite

a

bit.

But

overall,

it's

still

very,

very

lower.

I

think

37%

growth

in – at

early

stage

is

not

enough,

and

we

are

certainly

looking

to

do

much

better

than

that

in

2022.

[Frank Pinal, Analyst, Jefferies LLC]

Great.

Thank

you

so

much.

Take

care,

everyone.

[Arun S. Menawat]

Thank

you.

[Operator]

Thank

you.

Our

next

question

comes

from

Rahul

Sarugaser

with

Raymond

James.

You

may

proceed

with

your

question.

[Rahul Sarugaser, Analyst, Raymond James Ltd.]

Good

afternoon,

Arun,

Steve,

and Rashed.

And,

Rashed,

congratulations

on

your

appointment

as

CFO.

Arun,

my

first

question

is

just

drill a

little

bit further

on

the

deployments

and

utilization

rates.

So,

you

talked

about

[ph]



25% (00:38:20) at

the

end

of

this

quarter

which

I

believe

has

quite

well

lined

up

with

the

pipeline

you

had

talked

about

in a

previous

quarterly

call.

Can

you

give us

a

little

bit more

visibility

into

sort

of how

the

pipeline

has

shaped

up

sort

of

beyond

Q1

for

deployments?

And

how

should

we

also

be

looking

at

the

annualized

utilization

rate?

I

believe

it

was

around

60

procedures

per

year

per

installed

device.

Given

that

the

[ph]



bulk of (00:38:48)

devices

is not

coming

online,

how

should

we

be

thinking

about

that

average

rate?

[Arun S. Menawat]

Yeah.

Yeah.

Rahul, we

do

have

a

very

good

pipeline.

We

continue

to

have

a

good

pipeline.

And

particularly

now

that

we

have

GE

compatibility

established,

I

think

that

pipeline

will,

in

fact,

continue

to

grow.

We

have

not

specifically

given

a

number,

but

it

is

far

bigger

than

our

installed

base.

That

might

give

you

at

least

a

general

idea

of

how

big

it

is.

As

you

could

tell

from

the

significant

amount

of

clinical

information

I

provided,

the

fact

that

the

existing

sites

are

using

this

product

for

a

variety

of

different

types

of

patients.

I

think

that

message

is

coming

through,

and

that

is

the

key

reason

why

pipeline

is

not

a

problem

for

us.

Our

surgeons

really

want

to

use

this

product.

With

respect

to

the

utilization

itself,

I

think

that

is

a

very

important

question

because

I

think

that

the

utilization

at

the

sites

that

we

had,

utilization

in

2021,

will

continue.

And

if

anything,

I

think

there

will

be

certain

increases.

And

I

think

as

the

quarters

go

by,

I

think

we'll

have

a

lot

more

visibility

in

terms

of

how

much

the

increase

will

be,

because

I

can

certainly

tell

you

every

site

is

looking

to

increase

utilization.

I

just

don't

feel

comfortable

sharing

just

yet

what

is

the

rate

going

to

be

because

they had a – it sort

of just

–

the

impact

of

COVID is just

subsiding.

And

hopefully,

I

can

be

more

transparent

in

the

second

quarter

on

that

particular

point.

But

with

respect

to

the

new

sites,

which

is,

as

you

can

see

from

the

numbers,

really

half

of

the

sites

in

Q2

will

be

new

sites

effectively.

And

I

think,

I

do

want

to

make

sure

that

people

recognize

that

it's

not

going

to

get

to

60

sites

– 60 utilization

in

one

quarter.

It's

going to

take

their

normal

course,

which

last

year,

took

about

six

to

nine

months

to

really

get

the

sites

to

utilize

them

and

train

them

and

have

them

use

the

different

types

of

patients

so

that

they

could

understand

the

full

potential.

So,

I

think

that

unfortunately,

I

mean,

it's

just

a

transitionary

phase

that

average

utilization

per

site

overall

will

actually

be

less

in

Q1,

Q2

perhaps.

But

over

the

longer

haul,

it

will

be

significantly

higher,

obviously.

So,

and

once

the

installed

base

grows

and

the

number

of

new

installs,

that

ratio

becomes

much

smaller

than

what

it

is

today,

then

I

think

this

phenomenon

will

go

away,

as

you

can

imagine,

[indiscernible]



(00:41:56) on

that.

So,

I

hope

that

gives

you

some

decent

color

into

how

we're

seeing

things.

[Rahul Sarugaser, Analyst, Raymond James Ltd.]

Great.

That's

helpful

and

should

help me

out

with

our

model.

I

want

to switch

a

little

bit, switch

gear

a

little

bit

to

data,

you'd

already

put

the data.

And

we

have

seen

some

recent

data

from

Meridian

and

the data

they

presented

– the

[indiscernible]

(00:42:19)

data

they

presented

at

ASCO. Do

you

have

any

thoughts

on

that?

And

also

because

they're

going

after

localized

prostate

cancer

as

well?

[Arun S. Menawat]

Yes.

So,

of

course,

we

are,

quite

vigilant,

and

we

certainly

read

all

of

the

clinical

information

out

there.

And

it's

interesting

that

you

mentioned

this

one

because

it

–

I

think

there

are

some

strategic

aspects

to

this

and

then

there

are

certainly –

I'll

comment

on

some

of

the

data.

One

of

the

things

that

is

going

on

on

the

radiation

side

is

that

there

are

a

couple

of

companies

that

are

now

selling

MRI,

real-time

MR

imaging-guided

radiation

treatment

or

SBRT

treatment.

And

that

in

itself

in

some

ways

is

kinship

because

we

are

the

company

that

on

this

sort

of

on

the

other

side

saying

real-time

MRI

is

a

good

thing.

And

so,

when

another

study

shows

that,

hey,

using

real-time

MRI

is

better

than

using

real-time

CT

or

CT for

radiation

treatment,

I

think

you

can

clearly

see

the

benefit

of

the

imaging

modality

that

we

are

using

and

that

principle

of

using

our

MRI

imaging

modality

I

think

translates

to

us also.

Now,

having

said

that,

I

think

if

you

look

at

their

data,

the

publication,

I'm

just

pulling

it

up

as

we

speak

here.

What

their

data

showed

was

that

they're

what

they

call GU

toxicity,

which

is

the main

end

point. It

is

basically

going

from

47%

down

to

22%

using

MRI.

So,

it's

about

half

of

what

it

is

with

SBRT.

But

think

about

the

numbers,

47%

toxicity

to

22%

toxicity.

If

you

look

at

the

TACT

data,

you

would

see

[ph]



equal

and

better (00:44:29)

toxicity

down

to

6%.

So,

as

much

as

I

think

it's

great

to

see

using

MRI,

I

think

the

TACT

data

and

particularly

this

new

study

clearly

shows

another

order

of

magnitude

difference

when

TACT –

when TULSA

is

used

and

there's

no

radiation,

there's

no

impact

of

long-term

impact

of

radiation

because

we

use

heat

as

our

energy

source.

So,

I don't

know if

that

helps,

but

that's

sort

of

a

quick

summary

of

how

we

interpret

that

data.

[Rahul Sarugaser, Analyst, Raymond James Ltd.]

That's

really

helpful.

Thank

you.

Thank

you,

Arun.

And if

you

would

indulge

just

one

more

question

since

we

talked

about

radiation

and

we

could

switch

a

bit

to

the

comparison

to

surgery

as

you

referred

to

the

CAPTAIN

trial. We know

that

the

FARP

trial

should

be

reading out

sometime

this

summer.

So

just

for

us,

how

should

we

be

thinking

about

interim

readouts,

when

should we

be

expecting

data

from

these

trials,

and particularly

given

sort

of

the

interplay

between FARP

and

CAPTAIN? That would be appreciated.

[Arun S. Menawat]

Yeah.

Yeah.

So,

I

think −

so

first

of

all,

you're

right.

FARP,

we

hope

to

see

full

data

this

summer.

For

CAPTAIN

at

this

point,

our

expectation

is

that

RSMA

2023,

which

is

typically

in

November,

[ph]



it

will be (00:45:55) we'll

have

the

first

set

of

data.

Because

we're

treating

patients

now,

so

the

patients

who

are

being

treated

this

year

and

by

that

time

by

RSMA

2023,

we

should

be

able

to

complete

full

recruitment.

So,

there

should

not

be

any

biases

and

all

that.

But

that's

all

behind

us

and

we're

just

monitoring

the

patients.

But

by

that

time,

we

should

be

able

to

show

6

to

12

months'

data

and

if

the

statistics

hold

similar

to

FARP,

we

should

be

able

to

start

to

see

differences

as

early

as

that.

[Rahul Sarugaser, Analyst, Raymond James Ltd.]

That's

terrific.

Thank

you

very much.

And

I'll

get

back

in

the queue.

[Arun S. Menawat]

Thank

you,

Rahul.

[Operator]

Thank

you.

Our

next

question

comes

from

Josh

Jennings

with

Cowen.

You

may

proceed

with

your question.

[Joshua Jennings, Analyst, Cowen & Co. LLC]

Hi,

good

afternoon.

Thanks

for

taking

the

questions

and

appreciate

all

your

help

over

the

years

and

good

luck

in

your next

chapter.

And, Rashed, congratulations

on

the

official –

getting

to

see

you

officially.

Arun,

I

was

hoping to

just

ask

about

you

mentioned

capital

projects

reviving

international equity. I

just

want

to

get

a

sense

of

how

we

should

be

thinking

about

the

international

channel

in

2022. Any

further

details

would

be

great.

[Arun S. Menawat]

Yeah,

yeah.

Josh, I know

that's

a

great

question.

And

I

think

what

I

can,

in

terms

of

providing

more

detail,

what

I

can

tell

you

is

projects

were

delayed

and

maybe

except

for

one

or

two

here

and

there,

generally

nothing

was

cancelled.

And

even

some

of

the

installations

on

some

of

the

sites

that

are

installing

MRIs

or

upgrading

their

hospitals

in

Asia,

they

were

all

delayed.

And

verbally,

what

we

are

hearing

is

things

should

be

in

fairly

good

shape

in

the

second

half

of

2022.

So,

I

think

from

that

perspective,

we

are

quite

optimistic.

And

I

think

from

the

perspective

that

projects

are

not

cancelled

but

just

delayed

is

certainly

the

– positive.

And

I

think

the

best

I

can

share

with

you

is

second

half

of

this

year, we

should

see

a revival

of

the

capital

revenue.

I

guess

the

other

detail,

little

detail

that

I

can

share

with

you

is

that

in

the

last

three,

four

months,

we

have

certainly

seen

that

the

sites

in

Asia

that

are

running, like

in

China

or

South

Korea,

that

the

number

of

patients

that

they

have

treated

during

these

last

three

or

four

months

has

certainly

increased

in

double

digits.

So,

the

fact

that

they

are

– there

is

some

revival

in

terms

of

the

patients

treated,

it

is

starting

to

show

that

they

are

coming

on

stream.

And

I

think

China,

as

you

know,

is

really

now

remaining

one

of

the

few

countries,

and

Japan,

few

countries

that

where

travel

is

still

incredibly

restricted.

But

we

are

very

hopeful

that

that

will

open

in

the

second

quarter

and

I

personally

plan

to

visit

and

really

check

this

out

so

I

can

really,

really

provide

much

more

concrete

information.

But

I

do

think

second

half

this

year

at

the

moment

is

a

fair

bet.

[Joshua Jennings, Analyst, Cowen & Co. LLC]

Great. Thanks for

that.

And

just had

a

follow-up

on

US

reimbursement

landscape

and

just –

I

mean,

are

hospitals

still

having

success

submitting

for

payment

for

TULSA

cases

using

the

preexisting

code

or

how

is

that

fairing? Is

it

becoming

more

widespread?

[Arun S. Menawat]

Yes. Josh,

we

have

had

at

least

10 hospitals

that

have

used

the C-Code.

Pretty

much

all

of

the

key

hospitals

have

used

it

and

pretty

much

everyone

is

getting

paid.

The

average

payment

is

approximately

$12,500.

And

just

as

a

comparison,

the

average

payment

for

radical

prostatectomy

is

just

under

$10,000

today.

So,

the

$12,500

that

the

hospitals

are

getting

paid

is

in

the

right

realm

from

what

we

can

tell.

We

continue

to

charge

just

a

little

over

$8,000

per

patient.

And

that

fund,

those

moneys

are

coming

from

that

$12,500

that

they

are

receiving.

And

given

the

fact

that

the

treatment

is

done

in

an

MR

suite,

which

is

a

lot

less

expensive

than

the

operating

suite,

we

believe

that

the

bottom

line

for

the

hospitals

is

positive.

At

least

that's

the

feedback

we're

getting.

So,

I

think

on

that

front,

we're

pretty,

pretty

happy

with

what

we're

seeing.

And

quite

frankly,

on

the

other

side,

where

you

will see

the

concierge

service

where

we

have

these

early

adopters,

people

are

paying

the

$30,000

and

then

they're

flying,

as

I

mentioned

earlier,

over

70%

of

the

patients

are

literally

flying

to

these

sites

to

get

treated.

[Joshua Jennings, Analyst, Cowen & Co. LLC]

Great. Thanks.

So, just

last

questions on,

just

thinking

about

the

TULSA-PRO

system

in

its

current

form

and

just

what

is

your

team

working

on?

Or

when

would

we

hear

anything

about

the

next-generation

system

and

what

type

of

enhancements

are

you

pursuing?

Thanks

for

taking

all the

questions.

[Joshua Jennings, Analyst, Cowen & Co. LLC]

Sure.

Sure.

That's

a

good

question,

Josh.

So,

we

have

actually

introduced

our

new

features

in

Europe

already

commercially.

We

have

submitted

some

of

these

with

the

FDA.

We

think

another

three

to

six

months

we

should

be

able

to

introduce

these

into

the

US.

But

there

are

a couple

of

features

that

are

very

interesting.

One

in

particular

that

I

want

to mention

is

that,

at

the

moment,

if

you

are

thinking

about

radical

prostatectomy or

surgical

prostatectomy,

usually

it

is

done

on

patients

who

have

what

we

call

organ-confined

disease,

which

is

what

I

mentioned

in

the

prepared

remarks.

So,

as

long

as

cancer

has

not

gone

out

of

the

prostate,

you

can

do

a

radical

prostatectomy.

But

in a

number

of

cases,

that

cancer

sort

of

rubs

on

the

sides

and

there

is

maybe

a

millimeter

or

so

involvement

of

the

muscle

tissue

that

is

just

outside

of

the

prostate.

And

because

we

use

the

real-time

MRI,

physicians

know

where

the

boundaries

are

and

physicians

have

a

pretty

good

idea

that

they

actually

wanted

to go

beyond

that

capsule

or

the

prostate

boundary.

And

so,

we

introduced

a

concept

that

we

call

thermal

boost,

meaning

that

in – if

there is

a

region

where

the

physician

wants

to

go

a

millimeter

or

two

beyond

the

prostate,

that

they

can

activate

that

thermal

boost

and

they

can

actually

kill

that

side,

that

section.

There's

a

slight

involvement

of

the

muscle

tissue,

perhaps.

And

number

of

cases

have

been

done.

As

I

said,

in

Europe,

it

is

now

commercially

available.

It

is

very

well

received,

by

the

way.

And

the

benefit

here

is

that,

again,

you

can

tell

we're

very

clinical

data

focused.

And

if

you

look

at

clinical

data

in

radical

prostatectomy,

over

20%

of

the

patients

were in

studies,

it

has

been

shown

that

they

leave

cancer

behind

in

those

edges.

And

so,

this

one

particular

feature

gives

us

that

potential.

Obviously,

we

need

to

get

more

data

and

so

on.

But

it

certainly

gives

us

the

potential

that

we

could,

in

fact,

at

some

point,

begin

to

treat

patients

who

may

have

a

little

bit

of

that

extra

cancer

that

is

there.

And

that –

again,

we

will

need

long-term

data

for

this,

but

physicians

think

that

this

is

a

very

interesting

new

development

that

we

are

– that

we

have.

It

is

commercial

in

Europe.

We're

in

FDA

in

US

and

we

hope

to

bring

it

out

later

this

year

in

the

US.

So,

that's

just

one

example.

And

I

think

you

will

see

at

least

one

more

very

interesting

technology

and

we'll

talk

about

it

yet.

We

are

discussing

it

with

the

FDA.

But

it

is

designed

to

make

it

more

reproducible,

and

it

is

designed

to

reduce

the

treatment

time,

which

already

is

pretty

good,

but

it's

designed

to

reduce

the

treatment

time

in

the

future.

[Joshua Jennings, Analyst, Cowen & Co. LLC]

Great.

Thanks,

Arun.

[Arun S. Menawat]

Thanks,

Josh.

[Operator]

Thank

you. Our

next

question

comes

from

Frank

Takkinen

with

Lake

Street

Capital.

You

may

proceed

with your

question.

[Frank Takkinen, Analyst, Lake Street Capital Markets LLC]

Hey.

Thanks

for

taking

my

questions.

Not

sure

if

I

missed

it

or

not,

but

did

you,

by

chance,

to

share

how

many

installs

have

occurred

so

far

in

the

first

quarter?

Just

trying

to

get

a

feel

for

the

lift

from

that

17 sites

at

the

end

of

the

year

to

get

to

25

by

the

end

of the

quarter.

How

many

of

those

are

left

to

be

installed

yet

in

the

last

four

weeks

of the

quarter?

[Arun S. Menawat]

Yeah.

Frank,

we

have –

we

didn't

provide

that

much

granularity

because

it's

sort

of

week-to-week.

But

what

we

feel

pretty

comfortable

with

that

is

that

we

will

be

at

25

sites by

end

of

this

month

basically.

So,

it's going

to

take

time

for

these

to

start

the

utilization.

But

I

think

that

once

the

installation

is done,

I

think

we

will

start

to

– you will start to see

utilization

slowly

going –

starting

in

the

second

quarter

and

some

of

it

you

will

see

in

the

first

quarter

also.

So

so

far,

certainly,

January

was

a

better

month

than

any month

in Q4.

And

I

think,

we

do

see

increased

usage

in

Q1.

But

again,

let's

see

how

the

quarter

ends.

But

certainly,

we're

starting

to

see

slow

increases.

And

I

think

we're

pretty

confident

about

the

25

sites, and

we're

pretty

confident

that

from

here

forward,

as

long

as

there's

nothing

unusual

that

comes

about,

that

we

will

continue to see

increase

in

utilization

as

well

as

new

installs.

[Frank Takkinen, Analyst, Lake Street Capital Markets LLC]

Okay.

That's

helpful.

And

I

was

hoping

you

can

provide

a

little

update

on

Akumin. How

are

things

going

there?

Do

you

have

any

installs

mapped

out

for

them

in

2022

yet?

[Arun S. Menawat]

Yeah.

That's

a

very

good

question,

Frank,

because

Akumin

actually

is

stalled

at

the

moment.

There

have

been

a

number

of

changes

that

have

gone

on

at

Akumin.

And

so,

we

have

–

the

numbers

when

we

have

provided

to

you,

we

have

actually

not

included

that

contract

so

far,

but

we

have

replaced

those

with

other

contracts,

and

as

I

mentioned,

one

of

them

is

a

multi-site

agreement

with

a

group

called

[ph]



The

Paragon

Group

(00:57:59) that

is

installing

their

first

system.

In

fact,

in

the

next

–

it's

actually

being

shipped

now.

And

I

think

that

Akumin

will –

that

[indiscernible]

(00:58:16)

get

replaced

by

some

of

these

other

imaging

companies.

I

do

think

that

long term,

Akumin

is

a

very

good

potential,

particularly

because

they

now

also

own

certain

oncology

hospitals

where

this

technology

would

be

a

very

good

fit.

But

I

want to

make

sure

that

they

have

the

time

that

they

need

to

do

their

integration.

And

we

have

plenty

of

work

to

do

in

the

meantime.

[Frank Takkinen, Analyst, Lake Street Capital Markets LLC]

Okay.

That's

helpful.

I'll

stop

there.

Thanks

for taking

my

questions.

[Arun S. Menawat]

Thank

you.

Thank

you,

Frank.

[Operator]

Thank you. Our

next

question

comes

from

Brian

Gagnon

with

Gagnon

Securities.

You

proceed

with

your

question.

[Brian Joseph Gagnon]

Hi,

guys. Can

you

hear

me

okay?

[Arun S. Menawat]

Yes,

Brian.

Good

afternoon.

[Brian Joseph Gagnon]

You

talked

about the

pipeline,

you

talked

about

the

backlog,

but

can

you give

us

an

idea

of

how

many

signed

contracts

you

have

that

have yet

to

be

installed?

[Arun S. Menawat]

Yeah,

very

good

question.

My

best

guess

is

that

we

have

over

40

contracts

at

the

moment,

and

we

have

a

pretty

good

pipeline

in

addition

to

that.

[Brian Joseph Gagnon]

And

that

doesn't

include

Akumin

and

RadNet?

[Arun S. Menawat]

It

includes

RadNet.

I

think

you

will

see

the

other

sites

that

RadNet

will

come

on

stream

this

summer,

but

it

does

not

include

Akumin.

[Brian Joseph Gagnon]

Okay.

You

filed

the

shelf

today.

Any

plans

to

use

it

or

is

that

just

corporate

housekeeping

for

replacing

the

shelf

that

you

had

from

last

year?

[Arun S. Menawat]

Brian,

that's

a

very

good

question.

We

have

over

$67

million.

Actually,

let

me

turn

that

question

over

to

Rashed

to

answer.

[Rashed Dewan, Chief Financial Officer, Profound Medical Corp.]

Thank

you,

Arun.

Brian,

thank

you

for

the

question.

So

as Arun

said,

we

announced

that

we

have

over

$67

million

in

the

balance

sheet

as

of

end

of

the

year.

And

this

is

just

a

pure

housekeeping.

Our

previous

shelf

expired

November

2021.

So,

we

decided

to

update

the

shelf

this

morning.

We

just

believe

it's

a

prudent

thing

to

do

for

the

company

and

a lot

of other

companies

maintain

a

base

shelf.

[Brian Joseph Gagnon]

Okay.

Got

it.

Reimbursement,

and

I

think

you

said

$8,000

per

procedure.

Wasn't

that

$7,400

last

quarter?

What

changed?

And

then,

I

want

to

have a

couple

of questions

about

reimbursement.

[Arun S. Menawat]

Sure.

So

we

-as

you

know,

when

we

started

the

program,

we

did

– we

also

were

learning

how

to

price

it

properly.

So

in

2020

and

2021,

there

were

certain

agreement

that

were

in

that

$7,000

to

$7,500

range.

But

every

agreement

has

been

updated

and

every

new

agreement

is

over

$8,000

per

patient

at

this

point.

[Brian Joseph Gagnon]

That's

great.

Okay.

So

on

reimbursement,

congrats,

it

sounds

like

you're

making

very

good

progress

with

the

CPT

code.

And

are

you

getting

good

reimbursement

from

the

ones

that

are

in

the

hospital

today?

And

then,

if

you

would

layer

into

that,

any

success

you're

having

from

commercial

payers

and/or

other

government

systems

for

reimbursement

and

what

your

thoughts

are

there?

[Arun S. Menawat]

Yeah.

So

Brian,

with

respect

to

using

the

C

code,

it

is

– has

worked

out.

The

strategies

that

we

articulated

early

– more

than

a

year

ago,

I

think,

in

2021

certainly

worked.

The

average

payment

to

the

hospital –

and

first

of all,

there

are

at

least 10

hospitals that

have

been

doing

it.

So,

I

think

that

there

is

sufficient

volume

there.

And

the

average

payment

is

in

the

range

of

$12,500,

which

we

think

is

the

right

place

to

be.

So,

we're

pretty

happy

with

that.

And

with

respect

to

other

payers,

actually,

there are

two

things.

One

is

certainly,

there

are

a

number

of

private

payers,

and

most

– many

times,

the

hospitals

are

looking

for

preauthorization,

and

generally,

that

strategy

is

working.

But

the

one

that

actually

I

haven't

mentioned

is

that

in

number

of

cases –

in

certain

number

− some

of

our

hospitals

have

actually

been

authorized

by

the

Veterans

Administration

also

and

they

are

paying

full

amount.

So

for

example,

one

of

the

hospitals

on

the

East

Coast

has

been

fully

authorized

by

veterans

already,

which

normally,

veterans

sort

of

lags

behind

everything

else.

There's

another

hospital

in

the

West

Coast

that

is

fully

operational

and

treating

veterans

patients.

We

have,

in

fact,

veteran

−

one

of

the

veterans

hospitals

that

is

an

opinion-leading

veterans

hospitals

in

Cincinnati,

we

have

a

contract

with

them.

That

system

will

be

going

in

this

summer

in

the

hospital

itself

and

we

are

pleased

that

the

veterans

are

getting

served

early

since

this

is

a

older

men

disease.

And

we

have

a

couple

of other

hospitals

that

have

applied

for

their

local

authorization

and

the fact

that

we've

already

established

a

few

hospitals

that

are

getting

it,

we

are

pretty

optimistic.

So,

I

think

we

have

not

talked

about

veterans

before,

but

yeah,

that

is

another

one

that

we

see

− we

are

pretty

happy

to

see.

[Brian Joseph Gagnon]

Arun,

can

you

give

us

a

sense

as

to

what

the

VA

will

be

paying

per

procedure

at

these

hospitals?

And

is

that

an

indication

of

what

reimbursement

could

look

like

in

the

future

from

other

government

entities

and/or

commercial?

[Arun S. Menawat]

Yeah.

So

I

think

at

the

moment,

from

the

best

we

can

push

people

together,

it's

well

over

$20,000

per

patient

that

VA

is

paying.

I

think

to

your

other

question,

Brian,

the

C code

is

probably

a

good

parallel

because

usually,

C codes

are

developed

based

upon

the

relative

value

units

when

the

CMS

works

on

those,

and

they

sort

of

adjust

those

numbers

annually

based

upon

the

costs

that

they

see

at

hospitals.

So,

I

think

if

that

– that

probably

is

the

best

surrogate

that

we

can

see.

And

if

they

are

paying

the

$12,500,

that

is

not

a

bad

place

to

be.

[Brian Joseph Gagnon]

Okay.

And

last

question

for

me,

with

over

40

contracts

signed,

do

you

have

enough

people

and

teams

in

place

to

do

the

installs

and

get

through

that

group

this

year?

And

it's

only

early

March,

and

you

talked

about

a

very

strong

pipeline.

So,

does

that

mean

that

you're

going

to

be

trying

to

catch

up

with

some

of

these

installs,

and

the

numbers

that

we

see

today

for

install

are

just

very

low

to

where

they'll

be

12

months

from

now?

[Arun S. Menawat]

Yeah.

We're

working

on

that,

Brian. We

are

adding

sales

team.

So

far,

it

has

been

sort

of

senior

team,

Abbey,

Mathieu,

and

in

some

cases,

myself,

where

we

sort

of

did

the

initial

evangelical

sales.

But

now,

with

Ken

joining

us,

he's

already

helped

put

together

a

sales

and

marketing

organization,

adding

professionals

to

be

able

to

service

the

installed

base

and

to

create

a

disciplined

model

for

new

sites.

So,

we're

adding

people

in

the

field.

Same

thing

on

the

service

side,

and

also

our

manufacturing

team

has

been

evaluating

all

of

the

supply

side.

We

had

a

very

good

conversation

with

our

board

about

that

today

this

morning

that

we

are

tracking

and to

make

sure

that

we

have

all

the

supplies

that

we

need

to

be

able

to supply

the

disposables,

in

particular.

And

we

feel

– so

far,

we

don't

have

a

lot

of

cushion

in

our

system

at

the

point

– at

this

moment,

but

we

do

believe

we

will

be

able

to

service

the

agreements

that

we

are

signing.

[Brian Joseph Gagnon]

Excellent.

Thank

you

very

much. Look

forward to

what

comes

next.

[Arun S. Menawat]

Thank

you,

Brian.

[Operator]

Thank

you.

Our

next

question

comes

from

Ben

Haynor

with

Alliance

Global

Partners.

You

may

proceed

with your

question.

[Benjamin Haynor, Analyst, Alliance Global Partners Corp.]

Good

afternoon,

guys.

I'll

be

quick,

just

a

couple

from

me.

You

mentioned,

Arun,

the

utilization

of

HIFU

and

cryoablation

and

how

TULSA,

if

I

heard

you

correctly,

has

already

kind

of

surpassed

that.

Do

you

have

an

idea

of

how

many

HIFU

and

cryoablation

installs

are

out

there

at

present?

[Arun S. Menawat]

Ben,

so

what

we

are

–

our

future

is

really

about

number

of

patients

treated

in

the

end,

and

we

will

– we

have

not

made

the

specific

number

public,

but

we

will.

That's

our

plan

to

do

that,

as

the

numbers

get

to

a

predictable

level,

if that's

the

only

thing

that's

preventing

us.

I

know

that's

not

your

question,

but

I

think

that's

an

important

thing

to

mention,

is

that

it's

just

that

with

this

COVID,

the

unpredictability

has

been

the

reason.

But

as

we

get

to

these

higher

installed

base

and

the

pandemic

effect

continues

to

subside

and

we

get

to

the

predictable

level,

we

will

make

that

public

so

that

it's

really

easy

to

track

our

company's

progress.

But

what

we

did

was

we

looked

at

the

government

databases.

And

so,

we

think

that

those

numbers

are

in

the

400,

500-patient

range,

in

fact.

And

so,

we

think

that

for

us

to

get

into

the

range

of

that

kind

of

run

rate

within

the

first

two

years,

and

the

two

years

have

been

pandemic-driven

two

years,

we

think

that's

pretty

good,

especially

as

I

said,

I'm

not

happy

with

the

37%

year-over-year

growth,

but

that's

kind

of

where

we're

coming

from.

It's

just

to

put

a

perspective

in

place.

And

I

think

the

more

important

point,

Ben,

is

that

it

is

because

of

that

flexibility

of

the

technology

that

it

can

be

used

in

high

risk

patients

and

lower

risk

patients.

And

as

I

mentioned

in

the

product

development

remark

that

we

will

want

the

thermal

boost

cleared

by

the

FDA.

We

will

actually

be

able

to

treat

patients

where

they

may

have

a

little

bit

of

involvement

beyond

the

prostate.

I

think

that's –

so,

I'm

trying

to

triangulate

then

make

sure

that

we

don't

miss

anything

as

we

drive

adoption

of

our

technology,

and

that's

the

reason

why

I

kind

of

mentioned

that

those

points

that

we,

from

a

benchmark

perspective,

we

are

doing

pretty

good.

And

I

think

this

year,

we

should

be

able

to

exceed

all

of

those,

and

thereby,

we

can

start

to,

for

the

first

time,

as

you

may

have

noticed,

I've

mentioned

that

we

are

poised

to

become

one

of

the

mainstream,

at

least,

that's

what

we

believe,

and

this

is

what

the

data

is

telling

us.

And

the

fact

that

reimbursement

is

coming

along,

the

fact

that

the

clinical

data

is

there,

the

fact

that

we

can

find

– we

are

on

track

with

CPT,

all

of

this

is

sort

of

telling

us

that,

yeah,

we've

got

a

unique

technology

that

can

be

mainstream.

[Benjamin Haynor, Analyst, Alliance Global Partners Corp.]

Yeah.

[ph]

That sounds really great (01:11:16).

And

also,

what

[ph]



I was

partially (01:11:17)

getting

at

there

is

the

number

of

HIFU

and

cryoablation

installs

that

are

out

there,

presumably

if

there's

X

hundred

centers

that

are

doing

these

HIFU

or

cryoablation

cases,

they'd

obviously

be

candidates

for

TULSA-PRO.

Do

you

have

an

idea

of

how

many

folks

out

there

are

doing

those,

right,

in

terms

of

center...

[Arun S. Menawat]

Yeah. Yes. I mean, I

– that's

right.

And

I

think

there

are

–

of

the

centers,

and

particularly as

we

go

to

the

bigger

numbers,

I

think

you

will

– you

are –

I

can

tell

you

we

have

had

a

couple

of

sites

that

were using

FLA

or

laser

fiber

that

switched

to

TULSA.

I

can

tell

you

there

are

at

least

a couple

of

sites

that

were

using

HIFU

that

have

switched

to

TULSA.

So,

it's

early

stage.

So,

I

think

we

have

to

be

real.

But

I

do

think

that

–

and

there

are –

there

is

at

least

one

site

where

they're

using

HIFU

for

that

very

localized

– if

there

is

a

patient

with

one

little

cancer

in

one

place,

they

are

still

using

HIFU

technology

because

that

technology

really

does

fit

that

type

of

patient.

But

for

other

type

of

patients,

all

the

rest

of

them,

it

sort

of

has

increased

their

practice

because

now,

they

can

treat

a

larger

variety

of

patients.

And

so,

they're

using

both

technologies.

[Benjamin Haynor, Analyst, Alliance Global Partners Corp.]

Okay.

That makes

sense.

And

then,

just

lastly

for

me,

now

that

you

guys

have

reached

the

big

time

with

the

TULSA-PRO

heading

to

Tulsa,

I

mean,

is

there

any

differential

that

you

expect

in

terms

of utilization

of

these

more

rural

centers

with

kind

of

a

feeder

model

versus

kind

of

the

centers

that

you've been

installed in so far?

[Arun S. Menawat]

Yeah.

Right.

No,

I –

as

I

mentioned,

Ben,

I'm

pretty

excited

about

that

possibility.

I

think

[ph]



The

Paragon

Group (01:13:21)

understands

the

model

very

well.

I

think

that

we

have

–

we

haven't

really

seen

the

best

implementation

of

that

model

yet.

I

know

the

site –

[indiscernible]



(01:13:40),

for example,

is

starting

to

do

that.

And

I

think

they

are –

they're

going

to

install

the

other

systems

later

this

year

and

I

think

they

will

get

there.

But

I

think

this

particular

one,

I

think

they

are

looking

for

utilization

on

multiple

days.

So,

a

little

bit

cautious

and

wait

till you

see

how

it

goes.

[Benjamin Haynor, Analyst, Alliance Global Partners Corp.]

Sure.

[Arun S. Menawat]

But

I

think

certainly,

that

concept

is

intact

and

we

just

need

to

validate

that

with

this

site.

And

if

it

does,

I

think

that

will

be

a

very

big

topic

for

us.

[Benjamin Haynor, Analyst, Alliance Global Partners Corp.]

Excellent.

Well,

I mean,

it sounds

like

you

guys

have

made

a

lot

of progress

on

the

things

that

you

can

control,

so

congrats

on

that.

And

I'll

leave

it

there

and

thanks

a lot

for taking

the

questions,

gentlemen.

[Arun S. Menawat]

Thank

you.

Thank

you

so

much,

Brian –

thank

you

so

much,

Ben.

[Operator]

Thank

you. And

I'm

not

showing

any

further

questions

at

this

time.

I

would

now

like

to

turn

the

call

back

over

to

Dr.

Menawat

for

any

further

remarks.

[Arun S. Menawat]

Thank

you.

I

know

Aaron

is

on

the

call.

Aaron,

if

you

wanted

to

say

something,

please

go

ahead.

Aaron?

Okay.

So

if

there

are

no

other

questions,

thank

you

so

much

for

listening.

Thank

you

for

the

questions.

And

I

hope

that

we

will

be

able

to

have

a

pretty

good

Q1

and

be

able

to

report

on

that

for

you

in

the

Q1

call.

Thank

you

so

much.

Have

a

great

evening.

[Operator]

Thank

you.

This

concludes

today's

conference

call.

Thank

you

for

participating.

You

may

now

disconnect.