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spk01: Welcome to ICE Cures' first quarter 2022 results conference call. Management will provide an overview of ICE Cures' financial results as well as clinical and operational highlights. On the call today are ICE Cures' CEO, Eyal Shamir, and CFO, Ronen Zimmerman. They are joined today by Dr. Richard E. Fine. Dr. Fine is a trial investigator for ICE Cures' ICE-3 clinical trial on trioblation of small, low-risk breast cancer. Dr. Fine is also a past president and chairman of the American Society of Breast Surgeons, program director of the Breast Surgical Oncology Fellowship, and director of research and education at the West Comprehensive Breast Center in Germantown, Tennessee. Following the presentation, Ice Cures Management and Dr. Fine will be available for a question and answer session. I will now take a brief moment to read the safe harbor statement. This presentation contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and other federal securities law. Words such as expects, anticipates, intends, plans, believes, seeks, estimates, and similar expressions or variations of such words are intended to identify forward-looking statements. For example, ISCIR is using forward-looking statements in this presentation which it discusses pursuit of regulatory approval in FDA review strategic plans, commercial growth, expansion of clinical applications with its minimally invasive tribulation technology, advancing regulatory and commercial strategies, and expected quarter-over-quarter revenue variations for future periods. Because such statements deal with future events and are based on IceCure's current expectations, they are subject to various risks and uncertainties in actual results, performance, or achievements of IceCure, could differ materially from those described in or implied by the statements in this presentation. The forward-looking statements contained or implied in this presentation are subject to other risks and uncertainties, many of which are beyond the control of the company, including those set forth in the risk factors section of the company's annual report on Form 20F for the year ending December 31, 2021, filed with the FCC on April 1, 2022, which is available on the FCC's website at www.fcc.gov. The company undertakes no obligation to update these statements for revisions or changes after the date of this release, except as required by law. I will now turn the call over to iSCURE CEO Eyal Shamir.
spk02: Hello everyone and thanks for joining our first quarter 2022 call today. We will start with a review of our significant business development since the beginning of the year. Then I will turn the call over to Ronen for an overview of the financial results. We will then turn the call over to Dr. Richard Fein. We are grateful to him for sharing his time with us today. Dr. Fein is an investigator of our I3 clinical trial who uses ProSense with his patients. He can provide valuable insight on process and how it can potentially optimize treatment in a low risk and early stage breast cancer. On the commercial front, we started the year strong due in large part of the reopening of post-pandemic travel, making in-person business and clinical visits a reality again. Several new process systems were installed with our global customer base. I will remind listeners that process is approved for various indications in 14 countries. We have a commercial presence in 20 countries, including the U.S. We have CPT-1 code for coverage of cryoablation procedures as well. such as kidney, liver, lung, and bone cancer, fibroadenoma, which is the nine breast tumors. We have also CPT-3 code for breast cancer. We have resumed in-person practitioner site visits and have been conducting hands-on demos and training sessions. Our business development team is now more effectively able to pursue and close on cells opportunity. We are happy to report that our cells in the U.S. increased in Q1. Process was extremely well received at three very important oncology conferences in the U.S. and Europe. Though two data presentations and on demos and symposia. we have generated a great deal of excitement for process. Notably, at the 23rd Annual Meeting of the American Society of Breast Surgeons in April, iSKILL publication regarding our i3 Breast Cancer Cryoablation Study Interim Results, originally published in the scientific journal, The Annals of Surgical Oncology, was chosen as one of the best papers of 2021 from thousands of breast cancer articles published annually. Dr. Ellen Pass, the past president of the American Society of Breast Surgeons, presented the paper as part of an annual address at the conference. The American Society of Breast Surgeons is a highly regarded and influential organization that sets the treatment guidelines, and standard of care for breast cancer in the U.S. These presentations of our study is very significant in our view, and it's point to the potential improvement persons can deliver in the standard of care in a low-risk, early-stage breast cancer. Dr. Pass' presentation was made to a large audience of breast surgeons and related medical professionals who were attending to the conference in person and online. During the second quarter, we continued to work towards U.S. FDA approval for process in early stage breast cancer. We had previously filed our press submission package with the FDA in the end of November of last year. In our final submission, we plan to suggest a novel classification including requests for a spring discussion under the FDA procedure. The proposed intended use is for early-stage breast cancer patients at high risk for surgery. Our continued discussions with the FDA is part of our breakthrough device designation we were granted last year. Our published I3 interim trial results in this indication show clear benefit, including that almost 98% of the patients who received the PROSEN system cryoablation treatment are recurrence-free, with 76 patients having reached five years post-treatment. 98% of the doctors and 95% of the patients reported satisfactions with the cosmetic results. I will now turn the call over Ronen for the financials.
spk00: Thank you, Eyal. iSCURE has successfully transitioned into a commercial stage company while continuing our innovative clinical and R&D work. Our quarter-over-quarter revenues vary, and we expect this to continue into the foreseeable future due to revenue recognition from international distribution agreements as well as viability in sales. For the three months ended March 31st, 2022, revenue decreased by 48% to approximately $750,000 compared to $1.4 million in the first quarter of the last year. The decrease is due to decreased revenue recognition of approximately $400,000 from the distribution agreements with the rumor for the commercialization of procents to treat malignant breast tumors in Japan, Singapore, and Thailand, and a decrease in sales in the Asia region, which is impacted by COVID searches and associated restrictions on commercial activity. These decreases were partially offset by an increase in sales in the USA, Gross profit was approximately $440 for the three months ended March 31st, 2022, compared to approximately $940 million for the same period in 2021. Gross margin was approximately 58% for the three months period ended March 31st, 2022, compared to approximately 65% for the first quarter of 2021. The decrease in gross margin is mostly attributable to the decrease in revenue recognition from the payroll distribution agreements. Research and development expenses for the three months ended March 31st, 2022 were $2.4 million compared to $1.1 million for the period last year. The increase is attributed to the acceleration in the development of iSCU's next-generation single-probe system and clinical and regulatory activities. Selling, marketing, general and administrative expenses in aggregate for the three months ended March 31st, 2022 were $2.5 million compared to approximately $1 million for the first quarter of 2021. The increase is attributed to the company's expanding commercialization efforts and to the increased Mustang listing related expenses. Total operating expenses for the three months ended March 31st, 2022 were approximately $4.9 million compared to $2.1 million for the same period last year. The increase in operating expenses is attributable to increased development, commercialization, and NASDAQ listing related activities. As a result of lower revenue and increased operation activities, Net loss reported for the three-month period ended March 31, 2022 increased to approximately $4.4 million or $0.12 per share compared with the net loss of approximately $1.4 million or $0.07 per share for the same period last year. As of March 31, 2022, the company had cash and cash equivalents of approximately $22.4 million compared with approximately $25.6 million as of December 31st, 2021. I will now turn the call over to Dr. Fine. Dr. Fine has been a breast surgeon since 1988 and has served as a board member or trustee in organizations including the National Consortium of Breast Centers, the National Accreditation of Breast Centers Program, and the American Cancer Society. Dr. Fine was the president of the American Society of Breast Surgeons in 2003-2004 and chairman of the board there from 2015 to 2018. Thank you.
spk06: I wanted to review, I know that Mr. Shamir mentioned that we had published the interim results of the cryoablation without excision for early stage breast cancer in the prestigious journal Annals of Surgical Oncology this past fall. And it was brought to the attention of the members at the American Society of Breast Surgeons as one of the better papers from the year. The ICE-3 trial, I was actually on the scientific advisory board in designing the trial. The trial goal was to evaluate the safety and efficacy of breast cryoablation in older patients with low-risk, early-stage breast cancer to see if they would benefit from a non-surgical treatment avoiding the surgical risk of going to the operating room for surgical removal of a tumor. This was a prospective multicenter trial. There were approximately 20 sites across the country. Our site in Germantown, Tennessee, at the Margaret West Comprehensive Breast Center, we actually put on 50 of the 194 patients that were received successful cryoablation per the trial protocol. The exciting results at the interim at three years was that only four out of 194 patients, or 2%, had had a recurrence. This was showing that this was a very promising alternative to surgery, but it also offered the benefits of a minimally invasive procedure with minimal risk. I'll be happy to answer at the end any questions about the trial. We also, Mr. Shamir mentioned the coding for cryoablation. With the help of the American Society of Breast Surgeons, as well as other organizations such as the American College of Radiology, a couple of years ago we were very successful in getting a Category 3 new technology code for cryoablation of breast cancer. The reason that's important is because as the utilization increases and continued work on treating patients with breast cancer, we will be able to convert this Category 3 code to a Category 1 code, which already exists, as Mr. Shamir mentioned, for other areas of cancer as well as for benign breast tumors. The last thing that I wanted to mention was the excitement about cryoablation for breast cancer that exists today. The American Society of Breast Surgeons has been working on developing a registry to expand the indications for cryoablation from the ICE 3 trial. We are expanding the age group down to the age of 55. We're also going to more standardize the treatment so that we can evaluate post-cryoablation radiation and its effect on the patient's breast. So it's an exciting trial to answer many questions that were brought up on the ICE-3 trial. The other thing that's exciting is that I have been approached multiple times from centers across the country, including Mayo Clinic in Rochester, as well as the University Washington, they're all interested in creating their own cryoablation registries or trials. So there is a lot of excitement around the country in terms of using cryoablation in the appropriately selected patients for the purpose of avoiding surgery in these patients. So that is a quick summary of the points I wanted to make and I'm happy to answer any questions that those points bring up.
spk01: Thank you. Ladies and gentlemen, at this time we'll begin the question and answer session. If you have a question, please press star 1. If you wish to cancel your request, please press star 2. If you are using speaker equipment, kindly lift the hands up before pressing the numbers. Your questions will be polled in the order they are received. Please stand by while we poll for your questions. The first question is from Ben Hinesmore of LDS Global Partners. Please go ahead.
spk05: Good morning, gentlemen. Thanks for taking the questions. Just first for me, on the FDA and where you're at with that, you've got the pre-submission package in. You're planning to suggest a de novo classification, and you've got a sprint discussion request in. Is that... And then, you know, when do you expect to submit for Denovo 510 clearance?
spk02: Thank you very much, Ben. This is Eyal, the CEO. We are continuing in process of sharing info and working closely with the FDA in order to lead our submission for clearance. of cryoablation of early stage breast cancer for patients who are in high risk for surgery as a 510K de novo. This is going to be our first approach. We'd like to remind to all of us that the endpoint is the I3 study, which requires a full five-year follow-up which will be completed spring 2024, as the last patient enrolled February 2019, which means for five years will be February 2024. Our approach after we got the breakthrough device designation grant and the spring discussions with the FDA is to get the first indication for low-risk breast cancer and high risk for surgery. As soon as we will finalize this process and we will have a full submission, we will, of course, update the investors accordingly. This is still in process.
spk05: Okay. So you don't have a timeline necessarily either way, Matt. That will be kind of figured out.
spk02: We are still working with the agency, and as soon as we will finalize it, we will be able to make the submission, and then, of course, we will have a full announcement. Okay.
spk05: Got it. And then, on the regulatory front in China, obviously, they've had their more COVID lockdowns. Have those impacted the NMPA as well, and... you know, any update to the clearance timeline in China?
spk02: We expected to have our probe approval by September, October this year. We hope that the lockdown, both in Shanghai and in Beijing, will not delay too much. Our assumption at the moment that it will be before the end of this year. This is the assumption in our discussions with the NMPA, China as well. Okay.
spk05: Got it. And then for Roman, just how do you expect the operating expenses to kind of track throughout this year? I mean, does Q1 kind of look like, you know, a good run rate as we... you know, move forward throughout the year.
spk02: Thank you, Ben.
spk00: So we accelerated our research and development of our next generation single probe and also our next generation multi-probe systems. So as we push forward, of course, the expenses also incline. So I would expect that the burn rate will be in this area, but again, it depends on how strong and how fast we're pushing forward. These decisions are made accordingly and will maybe be made accordingly in the future. Okay.
spk04: Got it.
spk05: And then, Dr. Fine, it sounds like there's some excitement kind of brewing around cryoablation with Mayo and other centers looking to do their own studies. Can you maybe characterize just kind of a general level of awareness and receptiveness to cryoablation amongst your fellow colleagues?
spk02: Yes, Dr. Frank, please go ahead.
spk06: Oh, sorry. Okay. So I think that, you know, you're right. There's a lot of excitement. And I think that the publication of the interim results of ICE-3 is what a lot of people were waiting for. They wanted to see that patients who did not have their tumors removed and that were treated with cryoablation and followed, that they did well. As of April, 75 of the patients that were entered in the trial have completed five years of follow-up, and there's only been one additional recurrence in that time. So that's showing results that are very equivalent to breast conservation surgery. And with that publication, I think that there's been a lot of excitement. People are recognizing that this is going to be a good alternative for a subgroup of patients, patients that have tumor biology that's more favorable. One of the things that's happened in breast cancer is we've been able to recognize that cancers are different. Some are very aggressive, but there are a lot of them that are not aggressive. And if we can treat the ones that are not as aggressive without having to go to surgery, that's an ideal situation.
spk05: Okay. Makes sense. And then just kind of curious on the receptiveness of your patients when they are – they have a cancer that would be treatable with cryoablation. I mean, do the patients kind of gravitate towards cryoablation over surgery as well?
spk06: I was actually very pleasantly surprised during the years that I was putting the patients on the trial. I didn't have to work very hard at all in terms of encouraging patients to participate. When you mention to a patient the non-surgical option, and you've already explained to them that they have a tumor that has some very favorable features, they gravitate towards a non-surgical option very readily. Even those patients that required going to surgery to check their lymph nodes because they were in the younger age group, even those patients still wanted to have the cryoablation on the breast. And I think it's more about having a scar on the breast, having volume removal from the breast, And those things excite patients about not having to have surgery. So I was actually very pleasantly surprised how women actually were very much excited about being able to participate.
spk05: Okay. So you would expect, you know, once you have the FDA clearance and, you know, hopefully before too long a CPT-1 code for the patients that have would be good candidates. Quite a lot of them are going to choose cryoablation.
spk06: Is that a fair characterization? Yeah, I feel very confident in that.
spk05: Okay, great. Do you have a sense on the timeline, what that would look like to get the CPT-1 code? I mean, is that like 2025? Usually...
spk02: Dr. Fein, he's also the chairman of the CPT and coding for the American Society of Breast Surgeons, and they supported us very much in order to get the CPT-3 code. Firstly, we need to get the FDA clearance, and then to apply to move from CPT-3 to CPT-1 And of course, which will come together with coverage and reimbursement. So I think that 2025, this is possible to have CPT-1 and coverage and reimbursement. This is just an assumption. We need to work with the different partners in that. But I believe that at the beginning, we will be able, all the users will be able even to start with a cash patient who will pay cash for that kind of treatment until that it will be fully covered by CPT and coding and reimbursement and coverage.
spk05: Okay. That's helpful. I think that's all I had, gentlemen. Thanks for taking the questions and congrats on the progress.
spk01: Thank you. Thank you very much. The next question is from Kemp Doliver of Broline Capital Markets. Please go ahead.
spk03: Hi. Good day to everybody. First question relates to the FDA discussions. Previously, the impression we were getting was that you thought you would be able to file with FDA sometime this calendar year or maybe early next year. Has the tenor of the discussions changed? Because you also mentioned having the five years of data available in early 24. So can you provide more detail regarding the status of the discussions and where you're thinking?
spk02: Yes. Thank you very much. As I mentioned, our intention, our plan and discussions with the FDA, with the agency, is to do the first submission during this year. For the first indication, which I will repeat again, will be for early stage breast cancer for patients who are high risk for surgery. We don't want to wait. until early 2024, when the I3 study will be completed and all patients will pass five years follow-up. So this is still a plan to do the submission this year.
spk03: Got it. So in a way, the way to think about this is first submission would be a subset of the patient population, and then when you have the balance of the data, you would then file for the broader population that was in the trial. Is that a pretty fair description?
spk02: Absolutely. After early 2024, we will be able to do a submission for the indication of low-risk early-stage breast cancer, which is the indication that we started the I3 study.
spk03: Right. Okay, good. And just to follow up on this, and maybe Dr. Fine can give some clarity around it, how significant is that distinction with regard to the patient population that you would be able to treat under the initial submission or indication versus then the second indication that Adoption rates for new procedures typically take several years anyway. These types of submissions are probably a gating factor initially in those adoption rates. So what perspective do you have on that, Dr. Fine?
spk06: Yes. So I feel like that what you've got is the subgroup of patients that we're talking about high risk for surgery. But when we are making this submission, we're trying to keep the high risk for surgery criteria somewhat broad because a lot of the patients that would meet criteria in general are older patients that have, you know, usually will have hypertension, they'll have diabetes, they'll have, if they've been smokers, they've, you know, got lung disease and things like that. So by keeping the criteria and the description, of what makes a patient a higher surgical risk. I think that we'll be able to keep the eligibility of patients to be treated under that narrower indication. We'll be able to keep that eligibility criteria pretty broad. Does that make sense? So we're trying not to make it so narrow that we can only, let's say, you know, treat a patient who is on death's door. We're going to be treating patients who are older that have lots of medical problems. And so that's how we're trying to frame the patient at high risk.
spk03: Right. Okay. Now that, that makes a lot of sense, uh, clinically and, and also to, I think to lay people. Um, so, uh, just moving on to other topics. Um, Tarumo is still a significant contributor to your business. You mentioned the decline in Q1. Is there any sign of a recovery in the Tarumo markets in Q2?
spk02: Thank you, Ken, for these questions. What Ronan mentioned in his explanation If we all remember, ICEQ got some distribution rights from Terumo, Japan, for the distribution agreement that we signed with them for Japan, Singapore, and Thailand. This, according to some rules with accountants, we need to recognize all the time. And, of course, during a period of time, That revenue recognition, you know, is going down. It's a rumor in Japan, especially after the pandemic, they are still extremely busy working for the PMDA application and the regulatory approval in Japan. In Singapore and Thailand, they started to sell. the regulatory approval for that. So just the revenue recognition declined, not from the business perspective. But this is part of the revenue that we did over time according to the appropriate rules. The business from Japan mainly will come in the future like we are growing some of the business from Singapore and Thailand that they started to penetrate the market.
spk03: Okay, so if I can rephrase that, there's an element of the revenue decline that is not related to the actual activity levels because you get revenue from both actual shipments to them. And then I think there, if I remember correctly, there may be some amortization of revenue or recognition of revenue.
spk02: Yeah, for the upfront distribution rights, we got from them nice millions of dollars just as we signed with them. distribution agreement. This is not all according, you know, to sales and day-to-day activities. This is what Ronen explained as the revenue recognition.
spk03: Excellent. Okay. Thank you. This is probably another question for Dr. Fine, but what's the timeframe that you expect for the implementation of the registry and any thinking regarding the institutions that have expressed interest in their registries and trials? How quickly do you expect these processes to start?
spk02: I will start to answer that question. We are working very closely, of course, together with Dr. Fein and the board of the society, the leadership of the society, to finalize the trial that's basically supposed to be under the roof of the society. And after everything will be finalized on that, from the protocol side, from the group side, a number of patients, a special number of sites, then of course we will do a proper announcement, but the society would like to work with ICU very closely, and of course we would like to work together with them, like Dr. Fine mentioned, to reduce the patient age and to make it, you know, quite wide and to work closely with additional sites who will be able to start to work on this study and to continue to collect data which will be additional evidence-based to the medical community and, of course, the future publication. Dr. Fine, if you have anything to add.
spk06: Yeah, okay, I'll add a couple of things. So we have been working on the protocol because we want the protocol for the registry to be very strong. We have already had the society research committee review it, give us some comments back. We've been addressing those comments and also worked with the consultant to make sure that the design of the registry will also be beneficial for the FDA looking at you know the submissions because all of this data that is collected over time is going to be helpful so we're working very diligently to get all these things accomplished I would feel like that our timeline or goal would be hopefully to get this started towards the end of the summer or the beginning of fall so that would be my wishes for that to be the latest
spk03: Fabulous. Thank you. And, you know, just one last question. There was reference in the discussion around G&A to NASDAQ listing costs. Are those costs that are ongoing in nature or were there some one-time expenses in the first quarter?
spk00: Thank you for the question. As you know, insurance costs have raised in the last two years, especially for NASDAQ-listed companies. So we are looking at insurance costs and other costs. I cannot really say what are going to be the insurance costs, for example, in the next insurance submission. But again, I do not expect that these costs will decrease significantly. So I believe you can look at them as a cost that will go on.
spk03: Great. Thank you so much.
spk01: There are no further questions at this time. Mr. Shamir, would you like to make your concluding statement?
spk02: I would like to thank especially Dr. Fein and all the participants for taking the time to join us today. And I wish all of us an excellent and best day. Thank you very much.
spk01: Thank you. This concludes the IceCure Medical Limited first quarter 2022 results conference call. Thank you for your participation. You may go ahead and disconnect.
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