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Q1 2023 Earnings Conference Call
spk01: Good morning and thank you for standing by. Currently, all participants are in a listen only mode. After management's discussion, there will be a question and answer session. Please be advised that today's conference call is being recorded. I would now like to turn the conference over to Todd Curley. Please go ahead.
spk05: And then March 31st, 2023, and provide an update on recent operational highlights. You may refer to the earnings press release that we issued early this morning. Participating on this morning's call are IceCure Medical's CEO, I.L. Shamir, VP of Business Development and Global Marketing, Elite Bucy Taugere, and the company's CFO and CO, Ronan Zimmerman. After the prepared comments, management will be available to address your questions. Before we begin, I'll take a moment now to read a statement about forwarding statements. This call and the question and answer session that follow it contain forward-looking statements within the meaning of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. Words such as expects, anticipates, intends, plans, believes, seeks, could, estimates, and similar expressions, or variations of such words are intended to identify forward-looking statements. For example, we are using forward-looking statements in this presentation when we discussed during this conference call that we will hold courses or master classes as part of future conferences or our plans to exhibit our technology at future conferences and our belief that there will be a rapid adoption of ProSense for the indication of early stage with high-risk surgery breast cancer if it receives FDA approval. Because such statements deal with future events and are based on ice-fierce current expectations, they are subject to various risks and uncertainties and actual results, performance, or achievements of ice-fierce could differ materially from those described in or implied by our 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 end of December 31st, 2022, filed with the SEC on March 29th, 2023, which is available on the SEC's website at .scc.gov. The company undertakes an obligation to update these statements for revisions or changes after the call, after the date of this call, except as required by law. I now turn the call over to ice-fierce medicals CEO, I.L. Chenier. I.L., please go ahead.
spk02: Thank you, and hello everyone, and thanks for joining us today. We will start this review of our significant business development for the first quarter of 2023, followed by an overview of financial results for the three months ended March 31st before opening the call for Q&A. IC was benefited significantly from the growing awareness and influence of in cryoablation, part of a broader trend towards minimally invasive treatment. ProSense, we believe, is the go-to cryoablation system of choice for physicians, including breast surgeons, breast radiologists, and interventional oncologists. Our focused commercialization and marketing efforts in the US are creating great benefits in North America, as well as carrying over the momentum into global markets. We continue to engage with the FDA through ongoing discussion that are part of the regulatory submission process. In a major milestone, we received approval in China, where our systems and cryoprops are now fully approved for commercial use. An independent study, which I still did not sponsor in any way, was conducted in France using ProSense and another cryoablation technology to treat endometriosis. We were very pleased to learn that the results which were published in the Journal of Vascular and Interventional Radiology, showing a .8% efficacy in avoiding secondary surgery. In what may be one of the most significant milestones for cryoablation in the treatment of breast cancer, the American Society of Breast Surgeons, or ASBRS, the leading medical society comprises 3,000 healthcare providers for breast surgery, shared its plan for a cryoablation trial at the Society's annual meeting. We believe such a trial could potentially establish a new minimally invasive standard for the treatment of early stage breast cancer. Importantly, it will support our commercialization process at ASBRS members, participate in the trial, gain experience with performing cryoablation treatment, and see the benefits of its use firsthand. I will now turn the call over to Tlalit, who will elaborate on our commercial activities.
spk00: Thank you, Eyal. Hello, everyone. Over the past few months, ISCUR has been busy attending Professional Medical Society Conference across the globe, and we are very pleased and encouraged by the number of symposium and professional training programs for breast cryoablation procedures being led by the society. We see this as the best endorsement of our process technology. Most notably, this year was the first time ever that the ASBRS annual meeting offered a continuing medical education course on breast cryoablation. The sold-out course used our process system, presented results from our I-STREET trial, and gave breast surgeons hand-on experience with our system. In addition to the course, cryoablation and specifically the I-STREET data were mentioned very favorably many times throughout the five-day conference. Dr. Natalie Johnson, ASBRS outgoing president herself, spoke highly of cryoablation during her keynote speech, which ended in a beautiful song she sang that included cryoablation and delighted the audience. As Eyal mentioned, the ASBRS revealed plans for a study to evaluate cryoablation as a treatment for early-stage breast cancer for women between the ages of 55 to 85. This inclusion criteria would broaden the indication beyond what we have applied for with the FDA. We believe there is a high interest in the study based on the larger number of breast surgeons who visited our booth at the annual meeting and participated in more hands-on demos with us. We received a similarly high level of interest when process was also demonstrated in hands-on training at the ASBRS Breast Fellow Course in January. We very recently attended the Society of Breast Imaging annual meeting in Maryland and had a lot of traffic to our booth from breast radiologists across the globe. The symposium featured talk on breast cryoablation, including ablation, the time is now but how to start, by Dr. Luz Venta and by presence user Dr. Robert Ward, both of whom mentioned ice-free data favorably. SBI intends to have a breast cryoablation course as part of next year's meeting and they have already requested ISQ to take an active part in this course and workshop. Now we have seen a growing interest in cryoablation from US breast surgeons and breast radiologists but also a remarkable interest from across the globe by interventional radiologists and interventional oncologists who wants to add breast cryoablation to their practice. The interventional radiologists and interventional oncologists are already familiar with cryoablation procedure in general and they are eager to add breast tumor treatment as a new clinical application to their practice. The US-based Society of Intervention and Oncology, SIO, also featured ice-free trial and entering data in its annual meeting during the breast session led by doctors, some of whom are currently using the system. ProSense was also demonstrated throughout the duration of the conference at our booth where interventional oncologists engage with the system and expressed great interest. SIO has already announced they are planning a breast cryoablation masterclass to be offered as part of their January 2024 conference. They have requested that ProSense be part of the hands-on section of the course and the ice-free trial data will be presented in the didactic part. The announcement of the course has already generated a lot of buzz and interest globally. Additionally, yet another medical group, the Society of Intervention and Radiology annual conference featured ProSense in a session titled Chest Ablation Inside and Outside led by ice-free trial co-primary investigator and a former guest on one of our prior earning calls, Dr. Kenneth Tomkovic. Breast cryoablation was also discussed throughout the European Conference of Intervention and Oncology meeting. In the second half of 2023, ISQ is planning to exhibit and host Liquid Nitrogen Cryoablation Symposium with key speakers at the Cardiovascular and Interventional Radiology Society of Europe Conference, CRC, and for the first time exhibit at the European Society of Breast Imaging Conference, USOBI. All of this exposure and physician education builds the foundation for what we believe will be a rapid adoption rate of ProSense for the indication of early stage with high risk to surgery breast cancer should we receive a favorable FDA response to our marketing authorization submission. Overall, the key takeaway is that interest in breast cryoablation is high and physicians and professional organizations are coming to ISQ because of our strong clinical data in breast cancer cryoablation and our process system. I will now turn the call over to Ronen for a summary of the quarter's financial results.
spk06: Thank you, Tlaelit. For the three months ended March 31st, 2023, revenues was $710,000 compared to revenues of $750,000 for the three months ended March 31st, 2022. Sales increased in the US and Europe during the first quarter of 2023 relative to the same quarter last year. Gross profit was $320,000 for the three months ended March 31st, 2023 compared to $430,000 for the same period last year. Gross margin was 45% in the first quarter of 2023 compared to 58% for the first quarter of 2022. The decrease in gross margin compared to the same period last year mostly resulted from an increase in manufacturing costs. Research and development expenses for the three months ended March 31st, 2023 were approximately $2.1 million compared to approximately $2.4 million for the three months ended March 31st, 2022. The decrease was primarily due to a decrease in development expenses for our next generation single-prop system, partially offset by an increase in clinical and regulatory activities. As a result of our expanding commercialization efforts, sales and marketing expenses in the first quarter of 2023 were approximately $1.1 million compared to approximately $750,000 for the first quarter of 2022. General and administrative expenses for the three months ended March 31st, 2023 were approximately $1.1 million compared to approximately $1.72 million for the same period last year, mainly due to a decrease in cost of directors insurance. Total operation expenses for the three months ended March 31st, 2023 were approximately $4.3 million compared to approximately $4.9 million for the same period in 2022, due primarily to a decrease in R&D expenses and directors insurance costs. Net loss for the three months ended March 31st, 2023 decreased to approximately $3.8 million or $0.08 per share compared with the net loss of approximately $4.4 million or $0.12 per share for the same period last year. As of March 31st, 2023, cash and cash equivalents, including short-term deposits, were approximately $20.5 million compared to approximately $23.7 million as of December 31st, 2022. Operator, we would like to now open the call for questions.
spk01: Thank you. Ladies and gentlemen, at this time we will begin the question and answer session. If you are dialing in via phone, please press star one to ask a question. If you wish to cancel your request, please press star two. If you're using speaker equipment, kindly lift the handset before pressing the numbers. If you join the call via link, please click raise hand at the bottom of the screen and we will open your audio to ask a question. You can also click on the chat button and send your question. Before the question, please write your full name and company. The first question is from Yi Chen. Please go ahead.
spk03: Hey, everyone. This is Chait on behalf of Yi Chen. I have a couple of quick questions. The first one on your potential, any potential insights on your potential into your discussion with the FDA for the approval in early stage low-risk breast cancer and also any potential guidelines, timelines for approval.
spk02: Yeah, thank you. This is Ayel. We have a continuous discussion, dialogue with the FDA. They ask for additional information. We provide whatever is required and it's an ongoing discussion. And we believe that in the next few months, we will get a reply from them, but it's ongoing discussion.
spk03: Excellent, thank you. And also previously you indicated a minimum purchase target of 3.5 million for the initial three years in China with your exclusive distributors. Just figuring out if that is still on track and any color on that would be helpful.
spk02: After we got the final NMPA approval on our cryoprops with the previous approval clearance on the console, so now with the affiliates of Metronik, Zika, Shanghai, LTD, they could start doing launching and they are keeping the original plan.
spk03: Excellent, thank you. And I know you also mentioned symposia in the second half of this year at a few conferences. And I'm sorry I missed it during the prepared remarks, but could you please provide more color on the upcoming conference presentations that we should look out for in 2023?
spk02: Nathalie, could you please elaborate on that?
spk00: Yes, we are going to attend this year's conference, which is the European Cardiovascular and Interventional Radiology meeting that will be mid-September in Copenhagen. And during this conference, we will host a symposium in which a couple of our key users, interventional oncologists from Europe will share their experience with our process system with multiple applications that will be happening mid-September, as I said. And by the end of September, we will exhibit at the European Society of Breast Imaging. That will be the first time that iSCEUR will exhibit in this European meeting. And over there as well, we will allow demonstration, talks and provide explanation about our liquid nitrogen cryoablation system specifically for breast application. Those two meetings are European meetings, and this is the plan for the second half of the year.
spk02: I could add as well, because Lalit and her team they are so busy, so maybe she forgot. So for example, on August, Lalit and the team and the clinical team, we are going to exhibit with our partner in Thailand, Therumo Thailand, as part of the Thai Breast Cancer Society. So the two European, extremely important conferences that Lalit mentioned, this is like a full European, but we have also some local, like the Thai Breast Cancer Society meeting mid-August.
spk03: Excellent, thank you so much.
spk01: The next question is from Anthony Vendetti of Maxim Group. Please go ahead. Thank you.
spk04: Yes, I was wondering if you could just give an update on the initial commercial traction within China since you received the regulatory approval for the ice fence probes. And then were there any orders that you took in 23, but weren't able, first quarter 23, they weren't able to recognize in the first quarter that you expect to recognize in the second quarter?
spk02: So, well then, please elaborate on that.
spk06: So for your second question, we recognize almost all of our sales in the first quarter, but we do of course have customer orders that we will be able to supply on the second quarter.
spk04: Okay, and then I'll
spk02: - Could you repeat please your question regarding China?
spk04: Yes, since you received regulatory approval for the probes, have you started selling them yet? If so, what's been the initial traction or response?
spk02: Yes, thank you for that. So for example, again, the affiliates of Metronic MDT together with Turing Medical, who is our distributor and our team. For example, we did launching and got very nice attraction at the Chinese Liver Cancer Society. This is quite important indication in China and this is part of our very wide range of indication that we have in China. The team started to make a soft launching and also to participate to some important tendons that will create sales. So the team, which mean Turing, met the distributor together with Metronic, they are working on that to explore attraction and to create sales.
spk04: Okay, thank you. And then the last question that I'll have back in the queue is do you continue to expect to conclude the IC3 trial by sometime in the first half of
spk02: 2024? Yeah, the last patient enrolled February 2019. So in the next nine months, we have still a small group of patients that need to come for the follow up. And after February 24, we will conclude and validate all the data to finalize and to complete the trial. This is the plan.
spk04: Okay, excellent. Thanks for all that information. I'll hop back in the queue, appreciate it.
spk01: The next question is from Kemp D'Oliver of Brookline Capital Markets. Please go ahead.
spk04: All right, thank you. So what was the driver of the increased manufacturing costs in the quarter since it compressed margins?
spk06: Thank you for your question. So we are seeing an increase in manufacturing costs, but I believe this is something which is a little bit more one time costs. So, and as long as our sales are still at the lower numbers, these issues might influence our gross margin in the next quarters. So as we see our sales go up, the gross margin, I believe, will stabilize.
spk04: Okay, so it sounds like spreading a fixed cost over the volume.
spk06: Yeah, it mainly is the fixed costs are fixed. And if you have a small peak, then it influences your gross margin.
spk04: Yep. All right, good. And with regard to your revenue this quarter, it looks like there was not any license fee revenue included, correct? And do you have a breakdown of consoles versus probes?
spk06: So we still have revenues from our Therumodial, which is basically the same as we had in the last quarter of 2022. So there's no change in this revenue. And in the quarters, we don't have the spread off or we don't give the spread off sales between probes and systems. We do see adoption of, our system in the US, since we are having systems in place and we see that doctors are continuing to buy probes. So we do see the increase of adoption in the US mainly.
spk04: Great, thank you.
spk01: If there are any additional questions, please press star one.
spk01: are no further questions at this time. I'll give the call to Eyal for a closing statement. Please go ahead.
spk02: Thank you very much everyone. We are continue to pursue all our milestones that we planned at the beginning of the year for the next 12 to 18 months. And we highly appreciate your support.
spk01: Thank you. This concludes the IceCure first quarter, 2023 results conference call. Thank you for your participation. You may go ahead and disconnect.