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spk08: Thank you. Thank you for watching. you Thanks for watching! Ladies and gentlemen, thank you for standing by. Welcome to MODIS GI Holding Incorporated Third Quarter 2020 Financial Results and Operational Update. At this time, all participants are in a listen-only mode. There will be a presentation by MODIS management team followed by a question and answer session. I must advise you that the conference today is being recorded. I would like to turn the conference over to Bob Edith of LifeSite Advisors. Please go ahead, sir.
spk01: Thank you, operator, and thank you, everyone, for joining us for the MODIS GI third quarter 2020 update call. Representing the company are Tim Moran, Chief Executive Officer, Andrew Taylor, Chief Financial Officer, Mark Pomerantz, President and Chief Operating Officer of MODIS GI. Before turning the call over to management for their opening remarks, I would like to take a minute to remind you that this conference call and webcast will contain forward looking statements about the company. These statements are subject to risks and uncertainties that could cause actual results to differ. Please note that these forward looking statements reflect our opinions only as of the date of this call. We will not undertake an obligation to revise or publicly release the results of any revisions to these forward looking statements in light of new information or future events. Factors that cause actual results or outcomes to differ materially from those expressed in or implied by such forward linking statements are discussed in greater detail in our most recent filings on Form 10-K and other periodic reports on Form 10-Q and 8-K filed with the SEC. With those prepared remarks, It's my pleasure to turn the call over to Tim Moran, CEO. Tim?
spk03: Thank you, Bob, and thank you, everyone, for joining our call today. I hope you and your families remain healthy and safe. I will begin by providing a business update and discuss MODIS GI's performance in the third quarter. I will then turn the call over to Andrew, who will review our financial results. At the end of our prepared remarks, we will open the call to take your questions. I'd like to start by discussing the current environment we are seeing in U.S. hospitals, specifically as it relates to inpatient colonoscopy procedure volume, sales rep and clinical support access to hospitals and procedures, physician mind share as it relates to evaluating a new technology like the peer review system, and value analysis committee or VAC timelines. It goes without saying that the COVID-19 pandemic created significant challenges for US hospitals. During the second quarter, the New York Society for GI Endoscopy published a report showing endoscopy volumes had declined by 57 to 96%. This massive reduction in endoscopy procedures significantly hindered our commercial introduction of PureView in the first half of 2020. With that said, I'm pleased to report that we saw a positive turn in our commercial progress towards the end of Q3. In speaking to our GI customers, we saw inpatient colonoscopy volumes ramp up to approximately 80% to 90% of pre-pandemic levels, and we are resuming the trajectory we started in Q1 prior to the COVID-19 pandemic. As procedure volumes started to return to more normal levels, In August and September, we began to see a positive turn in our results in terms of Pureview utilization. We now have on-site sales rep and clinical support access at about 80% of our accounts. All of our accounts have implemented stricter controls, but gaining on-site access is critical when launching a new product, particularly as it relates to conducting efficient, successful evaluations. While the remote access support tools we have developed have been very useful, we believe in-person sales and support is simply more effective with a new product launch. We have also seen positive momentum in physician mindshare at our targeted accounts. We have provided our investors and analysts a window into the traction we are building with various physicians and hospitals through our podcast series that began in the third quarter. This series currently has four episodes featuring leading GI physicians from across the US. For anyone who hasn't had a chance to review this material, please visit the Motus GI YouTube channel. In addition, we recently held a KOL event for the investment community with Dr. Seth Gross of NYU Langone Health. Dr. Gross touched on a number of topics, including the unmet needs and challenges associated with inpatient colonoscopy, the benefits to patients in reducing time in the hospital, and mitigating increasing cost to hospitals due to delayed or incomplete procedures. A replay of the webcast for this event is available on the events page in the investor section of our website. The key takeaway from these events as it pertains to you, our investors, is our belief that we have established a solid foundation of leading GIs that are vocally supporting the use of our system. It is important to note that since the pandemic started, our overall sales process has taken longer than expected, specifically related to delays in the hospital value analysis committee process. This is a result of the burden the pandemic has put on hospital staffing and priorities. However, with each month, our sales team continues to conduct shorter and more effective evaluations, which helps to mitigate some of these delays. There have been a number of notable wins in Q3, and I'd like to take a moment to highlight one in particular. I mentioned earlier the KOL call we conducted with Dr. Seth Gross at NYU. Last week, we also announced our partnership with NYU with an aim of improving the management of inpatient colonoscopies. Let me provide some background on how this came together. In Q3, through our collaboration with Dr. Gross and Dr. Melissa Latour, Director of Inpatient GI Services, we conducted an evaluation that was completed in just two short weeks. Following their positive experience, Pureview was submitted to their value analysis committee for review. After receiving approval from their VAC, NYU placed their first purchase order for Pureview Sleeves and began full implementation. In addition to adding NYU to our base of key reference sites, we are thrilled to be supporting their new clinical protocol that incorporates Pureview for the effective management of inpatient colonoscopies. NYU has indicated they will now utilize PureView for any patient that presents with an inadequate bowel prep, which we believe will improve their overall clinical and health economic outcomes. We believe the success at NYU illustrates several points that align with our strategy. First and foremost, the implementation of a proactive protocol for the effective use of PureView is significant. We believe this will allow NYU to optimize the use of Peerview for patients who would otherwise be delayed. For MODIS, we believe it will provide more predictable and consistent usage because it will allow us to train additional physicians and staff based upon the hospital's protocol, helping to ensure optimal use of the Peerview system. Next, winning at NYU's flagship hospital and leveraging their clinical and economic data can provide us a clear path to expand to other hospitals within the NYU system. This is part of our land and expand strategy, which we plan to replicate across other health systems in order to accelerate future growth. As it relates to strategically adding new hospitals, our team is doing so by implementing a meticulous pre-evaluation planning and site qualification process to ensure optimal success. As an example, In advance of initiating an evaluation at a large Midwestern hospital this past quarter, we worked with the site to track their inpatient colonoscopies for a 30-day period prior to kicking off. In their analysis, they found that 50% of their inpatient colonoscopy patients presented with poorly prepped colons, resulting in 21 additional nights of unnecessary hospitalization, which represented substantial additional costs to that hospital that are typically not reimbursed by commercial insurers or Medicare. This data was critical to supporting the hospital's decision to move forward with an evaluation of the peer review system, which will conclude in the fourth quarter. Employing learning such as this will be paramount towards driving efficient and sustainable results in the quarters ahead. I am pleased to see that our efforts are beginning to bear fruit, as we had several new hospitals initiate evaluations and several existing hospitals resume and complete their evaluations in Q3. I am encouraged by the renewed engagement we saw from our targeted customers and expect continued momentum in Q4 and in 2021. We currently have more than 20 major hospitals who have peer review on site, and in Q3, we initiated new evaluations at additional target institutions. As I reflect on the quarter, I want to reiterate the incredible opportunity we believe is before us at MODIS GI. We've created a solution that addresses a significant unmet need associated with inpatient colonoscopy in a market that comprises approximately 1.5 million annual procedures in the U.S. and approximately 4.8 million every year worldwide. We believe the PureView system continues to demonstrate the potential to improve outcomes and lower costs for hospitals by reducing the time to a successful colonoscopy, minimizing delayed and incomplete procedures, and improving the quality of an exam. We've protected our technology with a robust global patent portfolio and believe we have first mover advantage in the large addressable inpatient colonoscopy market. Clearly, the pandemic slowed us down, but I am encouraged by the renewed enthusiasm we are seeing from our targeted physicians and hospitals. We have now become a lean and efficient organization adapting to changing market conditions, and we plan to continue our focused efforts to build upon the positive indicators we saw at the end of Q3. I believe Q4 is off to an excellent start, and I expect we will see clear indicators of acceleration of our Q3 progress in our next quarterly results and beyond. As it relates to our strategic outlook, we continue to evaluate all potential options including commercial partnerships with large medical device companies that can provide scale to bring PureView to customers more quickly. We also view these potential strategic partnerships as a means of expanding the commercialization of the PureView system and sleeves to Europe, Asia, and other markets. Finally, as it relates to the resurgence of COVID-19 cases across the U.S., Our hospitals have indicated that they have a greater confidence in their ability to respond to COVID based on their experience principally in Q2 and are implementing safety measures to avoid another period of lockdown. We will continue to monitor this closely and respond with efficient and effective commercial strategies. I will now ask Andrew to recap our financial results for the third quarter.
spk02: Thank you, Tim, and thank you, everyone, for joining us today. We reported revenue for the third quarter of approximately $33,000, primarily from the sales of PureView single-use sleeves. As Tim discussed, we continue to grow our number of PureView procedures each month, as well as new system placements, working with hospital value analysis committees to finalize commercial contracts at these sites. We expect to see a continuation of our progress and momentum in the fourth quarter. For the three months ended September 30th, 2020, we reported a net loss of approximately $3.9 million or a net loss per diluted share of 13 cents compared to $5.2 million or a net loss per diluted share of 18 cents for the same period last year. During the third quarter, net cash used in operating activities and for the purchase of fixed assets was $2.7 million. as compared to $4.8 million for the same period of 2019. As reflected in our year-over-year comparisons of net loss and cash spend activity, the results of our previously announced cost-cutting measures have been and continue to be impactful. This plan has now been fully implemented, significantly reducing our cash burn by approximately 50%. At September 30, 2020, we held approximately $23.7 million in cash and cash equivalents. This included the $8 million from our 2019 term loan agreement with Silicon Valley Bank. During the third quarter, the company bolstered its balance sheet through the sale of equity securities, which raised net proceeds of approximately $9.2 million. The company believes its cash balance will be sufficient to meet its anticipated needs into 2022 and ensure compliance with the Silicon Valley Bank liquidity covenant into Q3 2021. And with that, I'll now turn the call back over to Tim.
spk03: Thanks, Andrew. And before taking questions, I'd like to summarize just a couple of key points. While the current COVID-19 environment continues to present challenges, we saw a positive turn in our commercial progress at the end of Q3. The combination of a rebound in colonoscopy procedure volume, regaining on-site access, and steady gains in both repeat and new sleeve purchase orders is encouraging, and we expect this momentum will continue in Q4. It's important not to lose sight of what we are playing for here. When you consider the proven efficacy of our PureView technology, our first mover advantage, and the size of our addressable market, We believe MODIS GI remains well positioned to create shareholder value as we bring peer review to patients across the U.S. I will now ask the operator to open the call for questions.
spk08: Thank you. If you would like to ask a question, please press star one on your telephone keypad. Confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. And for participants using speaker equipment, It may be necessary to pick up the handset before pressing the start key. Our first question is from Matthew O'Brien with Piper Sandler. I'll join you in.
spk04: Okay. Thank you. Afternoon. Thanks for the questions. I guess, Tim, for starters, can you talk about what you saw throughout Q3 and especially as we kind of exited Q3 in terms of utilization of PureView and just maybe the building interest in using the technology more frequently going forward?
spk03: Yeah, Matt, thank you for the question. So, what was very encouraging is September was our best month as it relates to PureView utilization, and that's both measured by the number of sleeves that were consumed via purchase as well as evaluation. So that was really encouraging. I would say the early part of the quarter was still very difficult in July and August as it related to access and also just priorities of these hospitals in terms of getting back to new technology. We really started to see it ramp up in the middle of August and then September, as I said, was very encouraging. I won't get into the details of Q4, but we saw a very positive continuation of that in October. So that was... That was really nice to see. As you recall, we reduced the size of our sales team, but this group has done an excellent job being very, very productive, driving a lot of procedures. I think part of it, Matt, is driven by what these accounts have experienced and the conversations that we had with a variety of different KOL champions throughout the downtime about you know seeing this opportunity to get pure view in and being prepared so if there is a resurgence that they've got a technology that really allows them to um at least as it relates to gi patients um eliminate unnecessary delays so you know we're encouraged by what we're seeing as i said i mean it's it's good to see the restart um we're cautiously optimistic um as it relates to um you know q4 and covid but um you know so far with what we saw in the early part of the fourth quarter seems to be continuing nicely.
spk04: Okay, and I don't want to put words into your mouth, Tim, but it sounds like, you know, July, August were probably minimal in terms of revenue contributions. You probably saw most of it in September, you know, and then it sounds like it's carrying through here in October. So as we're thinking about Q4 from a modeling perspective, you know, you did about $100,000 last year. Is that kind of the ballpark that you're thinking, or could it even be a little bit better than that?
spk03: So, Matt, what I'll tell you on the first part is, you know, you're right in terms of your view and assessment based on my comments of Q3, right? So it's very much the end of the quarter, so September was a really strong month for us. I'm not going to give guidance, as you know, for the fourth quarter, but based on what we're seeing, we do expect that we're going to see sequential improvement Q4 over Q3 for sure. I don't want to talk about the specific numbers because we haven't given guidance and we're not ready to do that. But what I will tell you is some of the drivers that I think we're looking at is, you know, capital has been very difficult due to COVID. We do have some capital deals in the works, and I think as we look to those coming through in the fourth quarter, that can really kind of change the trajectory. So I don't think that's out of the realm, but I'm not going to comment specifically on an exact number. And you didn't have any capital deals in Q3? That's correct.
spk04: Okay, got it. And then as far as New York goes... That commentary about a protocol now in place to be using Peerview for every single poorly prepped case, how big of just an opportunity is New York alone, given the feedback that they've just provided?
spk03: Sure. So what I'll say is we were really pleased with the work that was done at NYU. And I'll answer your question, but I want to provide a little bit of color, too. Beyond just getting an account, a prominent account like NYU using Pureview and what comes with that in terms of the KOL support and Dr. Gross and Dr. Latour, you know, really proud to have them on board as advocates for the technology. But the protocol development, actually having a plan for the utilization is something that, of course, we've been working on with all of our accounts in the pipeline. And not every account is the same, and there's different numbers of GIs and how they manage their inpatients. But we were really pleased to get that in place because what that does for us, as I said in the prepared remarks, is one, it allows us to train around a protocol so everyone understands from the nursing floors down to the GI unit exactly how the peer review system is going to be utilized and how they can best optimize it and get the benefits from it. But it also will allow us to drive, you know, sustainable outcomes. utilization without having to have, you know, a rep there on site, you know, catching cases, if you will, right? So, I don't want to specifically comment on one customer, but, you know, Matt, I think we're looking at this as, you know, absolutely a six-figure customer, and I'll go that far to kind of give you that kind of detail. They do somewhere call it in the 700 to 800 inpatient procedures a year, so you can kind of start to model that based on you know, call it half or somewhere in that range being poorly prepped. So, you know, we're really pleased. It's the early days. We got that done at the end of the quarter. But even in October, we saw, you know, repeat orders coming in from NYU. So we believe we can really develop that into, you know, a great site and a great reference account, quite frankly.
spk04: Got it. And then just last one for me, you know, Tim, when You know, there was a pivot as far as the strategic direction of the company years ago from outpatient to inpatient. I know you've still got work going on on the outpatient side of things, but, you know, given the focus on inpatient, given these 20 kind of core accounts you're targeting right now, how do you think about the outlook for the business from an inpatient perspective and that, you know, meaningful increase in terms of utilization? Are those 20 accounts all going to be six-figure accounts? from NYU, and can we see a meaningful pickup as we kind of progress throughout 21? Yeah.
spk03: Yeah, great question. And to your point, listen, outpatient, the pivot was really a focus of entry point, as you know, Matt, and our investors know, that we've talked about this, building kind of our beachhead in inpatient where you don't have the kind of headwinds of reimbursement in place was the reason for that. And getting this kind of core 2025 facilities built in our first year, which we've said from day one has been a priority, and we think that foundation is critical for everything that we do next. But yes, as we look to now kind of finalize getting all of these accounts fully through the system and consistent with the protocol like we've seen at NYU and we're in development at other sites of protocols, we'll talk more about that in Q4, but 21 for sure gives us, I think, the opportunity to really start to scale the business. But you've got to get to that point first, right? And we've said that. And the reason that's so important is, one, it kind of allows us to make some decisions in terms of how does that scale come. As I mentioned a few times, we've continued to have good dialogue with strategic partners. But, of course, even to get to a point where we would enact something like that, you've got to have a foundation of accounts that are using the technology, and a strategic partner is going to want to see that as well, which is why that was an important first step. But it also kind of gives you, informs you of, okay, well, if you're going to double down in terms of sales and commercial resources, you know, where do you do it and what have we learned so we can be as efficient as possible as we kind of strategically build. So, yes, we would expect, you know, the ramp to continue into 21 and start to be able to really scale things. Right now we're going at this, as you know, with a very lean team. They've done a tremendous job, but we haven't lost sight of what the size of this market opportunity actually is. Got it. Thanks so much. Thank you, Matt.
spk08: Our next question is from Steven Lichman with Oppenheimer and Company. Please proceed.
spk06: Thank you. Hi, guys. Ken, you just talked about NYU, and I wanted to ask about some of the higher volume accounts that you currently have in the fold. So, you know, just utilizing that 7 to 800 number and saying 50% are poorly prepped, you know, is there, a reason why we shouldn't be thinking your ability should be high to get the overwhelming majority of those poorly prepped patients? Or in other words, why wouldn't that 50% not use peer review?
spk03: Yeah, sure, Stephen. Thanks for the question. So remember, you know, as you know, and I said earlier, the The dynamics in each account obviously are not uniform, right? So at a place like NYU, we've done a nice job with that group getting the protocol in place. They have very precise plan as it relates to how they manage their inpatients. And we were able to get those physicians on board and agree to implementing the protocol. Why there's challenges at other sites in terms of the time, right? And why we've said in the beginning, you know, model five to seven procedures a month, which is, you know, only a small percentage of the actual available market. But the reason for that is in many of these large teaching institutions, there's a significant number of GIs, right? So expanding from one GI to the next and kind of quarter to quarter bringing on more GIs doing the procedures allows you to get kind of critical mass and then implement that protocol. if that makes sense, right, because it's hard to have a protocol unless you've got kind of a large number of the docs using the technology on a daily basis or else the protocol is difficult to get standardization on. So that's one of the dynamics, and, you know, we continue to make progress with some of these sites that have a large number where each quarter we'll bring on more physicians. But, you know, quite frankly, and I've said this before, whenever you're putting a new technology out there, it's a bit of a change management. So you have your early adopters and those dynamics where they want to get on board. They want to be leading the way with a new technology that can not only improve the economics, but quite frankly, change the way the procedure is done and include improved clinical outcomes and improve patient satisfaction, right? Not having a patient sit up in the bed. And, you know, some physicians are very motivated by that. Others, change is something they don't want to do, right? So it's It's a constant focus on trying to drive to more physicians. So I would say that's the biggest difference between some sites versus others. And part of our commercialization efforts was you need these flagship, you need these who's who facilities and the KOLs that come along with that because getting physicians out there talking about the technology, writing papers, getting on podiums, is a really important early part of commercialization. But we also now look to and have started to add some other more regional kind of community large centers, if you will, that looking at the economics and getting things done more quickly may be more feasible. So that'll be part of our blend. you know, as we talk about new accounts, I would expect even in Q4 and Q1, you know, you'll hear some names and facilities that may not be the academic medical centers because we think we've gotten to, you know, a lot of those key sites already in our kind of target reference base, if you will.
spk06: Got it. Okay. And then, Tim, can you talk to us at all about the pipeline of potential accounts, any color you can provide in terms of your target, you know, looking forward here over the next 12 months in terms of potential new accounts would be helpful.
spk03: Sure. Yeah. So this is a really important point that I'm glad you asked. So Right now, there's a balance of a few things that we're working through. One, obviously seeing procedure volume come back in the market was critical for us. It's hard to introduce new technology when procedures were down so much in the quarters and months leading up to Q3. But we're also balancing the ratio of the number of folks that we have out in the market and how many accounts they can manage to be effective. Part of our strategy that we set from the beginning was we target these 20 to 25, we get into the flagship site, so the main hospital within that health system, and then once we have them on board, which what it gives us is it gives us a VAC approval that typically will cover the system. The peer review becomes a vendor in the purchasing, the Lawson systems, so someone can actually order the sleeves from the purchasing system at another site. It gives us the data from their own system in terms of economic and clinical outcome improvements and it gives us the reference that comes within their site so they can talk to a KOL and a physician, a colleague in another location and talk about their experience. We talk about it as land and expand. We are now just starting to see the ability to move from the flagship to other affiliated or sister sites. We've got evaluations that are scheduled now in Q4 that are part of some of our original systems. And that's the approach that we're taking. So we want to go deeper in existing sites. We want to ensure protocol, so we're getting same-store sales. We're getting consistent revenue. We're beating the five to seven per month and have that grow, and then move to the other affiliated sites because we think winning in those sites will be easier than when you get the first one, if that makes sense. If you put that kind of all together, you look at these 25 sites. give you another call it 100 to 150 additional affiliated sites that are part of these systems that we're calling on. And we think right now, Steve, that's kind of the right target to stick with. So go deeper. get these accounts to be consistent, and then move to their affiliated sites. And that, you know, that gives you the 100, 150 accounts that you can look at. And with the size of the current team, you know, that's more than we can get to. But it allows you to kind of get ready for scaling of the business with more resources as we look at 2021.
spk06: Great.
spk03: I hope that helps.
spk06: Yeah, it does. And then just lastly from me, great to hear that you have a couple of – outright purchases teed up here potentially in the fourth quarter. How should we be thinking about that overall as you look out over the next 12 to 24 months? The percentage of placements that will be outright purchases and any help you can provide in terms of how you're thinking about what percentage that would be.
spk03: Yeah, so listen, I'll give you my view of today, right? This disruption with COVID puts a bit of a twist and a dynamic on kind of the crystal ball of what that would look like. But what I think Andrew and I believe right now is probably 75%, 25%, meaning 75% of the accounts will be covered under COVID. whether it be a volume-based agreement where they are committing to a certain number of peer-reviewed sleeves on a quarterly basis in order to have the capital. and or an outright lease. I think 25% will probably fall into the we've got the budget and we can pull the trigger and we can spend the $68,500 on the capital equipment. That's our best view today. We should have some deals to talk about in the fourth quarter as it relates to volume-based agreements. that's seeming to be of interest to many of the sites that were there today that don't have capital dollars to spend, at least not until the end of the year. And we've been working on that. But I think that's probably the right ratio to think about, Steve, in terms of modeling. What I will say is we'll give more color. As we start to do leases, Depending on certain parameters of the lease, you know, we may be able to recognize that revenue in full, but I think it's a little bit early to start, you know, making predictions on how many we can recognize the full revenue and how many we can't, but we'll give you more color on that in the coming quarters.
spk06: Great. Thanks, Tim.
spk03: Thank you, Steve.
spk08: Our next question is from Kyle Bowser with Doherty and Company. Please proceed.
spk07: Hi, good evening. Thanks for taking my questions and thanks for the updates here. Apologies if I missed this, but as we look out over the next couple quarters, what sort of catalysts or milestones should we be watching for? For example, I think the expedite trial wrapped up, so potentially a publication and other trials underway, but in terms of clinical milestones or collaborations or OUS activities, I'm just trying to get a sense of what to keep an eye on.
spk03: Yay, Kyle. Thank you. Thank you for your questions. Why don't we start? Let me ask Mark to provide just a quick update as it relates to our clinical activity. There's some really good things happening there, and then I'll come back and add a little bit of color in other areas. So, Mark, if you can just provide some feedback here on clinical, that'd be great.
spk05: Sure. Hi, Kyle. Hope everything's going well. Hi, everybody. Just some quick color on, you know, what's going on in the clinical world and As you mentioned, things like Expedite and some of our other studies, we're looking to get that data published in the relative near term. So those things are in the works. So I think you'll see some exciting data coming out in the relative near future, in the next quarter or so. So I think that will help bolster our efforts to get that data out there and Really, as we continue to look at our clinical stuff, we'll be starting some exciting trials with really a focus on, you know, the key emergent patients, which we think, you know, not only drive significant value from a health economic perspective, but are really critical for these patients that are, you know, urgent with significant GI bleeds in the ICU type population, which, you know, we're getting data out there more and more pushing that arena. will really make it, you know, something that is kind of paramount for every hospital to have to have our system when you look at, you know, the ability to treat these critical need patients as well.
spk03: Thanks, Mark. Kyle, does that help from a clinical perspective?
spk07: Thanks, Mark. Excellent.
spk03: Yeah, and Kyle, you know, I think... Can't really comment as it relates to strategic partnerships from a timeline perspective, but, you know, I think we've made very good progress in terms of engagement and evaluating a variety of different options that are out there. And, you know, I think together with the board, we'll continue to evaluate those things as we get into, you know, call it the first half of 2021. You know, but our key focus right now, as you've heard from the call earlier today, is now that we're starting to see you know, things get back on track and our trajectory is really, you know, kind of continuing this execution, continuing to get more and more of these accounts with a protocol, with consistent volume coming through. And, you know, I think that's a key priority and a key thing that we're looking forward to be able to communicate to the market, to our investors, and to others. And we've got some, you know, exciting accounts kind of here in the pipeline that we'll be able to talk about next quarter that we've been working through.
spk07: Sure. No, it's great. Appreciate that. And lastly, you've identified upper GI as a natural target for expanding the preview indication. How have activities been going here in terms of any modifications to the Gen 2 device and maybe even a potential application package that you're working on? Thank you. Sure.
spk03: Yeah, you know, listen, we're interested in this opportunity. We think, and the reason I say that is it can be a very natural add-on to what we're doing today, right? So one of the things that, you know, we talk about as a leadership team all the time is keeping our team focused, particularly the size of the organization that we have and what we're trying to accomplish given some of the market dynamics is we need a great team with great people that are focused on executing our strategy every day. So we don't want to add any distractions. However, when I look at upper GI, I think it's just a natural extension of what we're doing. From a call point perspective, from a physician perspective, it overlaps perfectly. And this opportunity, as I've talked about before, was brought to us by a large number of very prominent GI physicians that have years and years experience dealing with upper GI scoping and dealing with some of the difficulties when you're presented with an upper GI bleed case in the esophagus, stomach. There's very difficult adherent blood clots that can obstruct their field of view. And, you know, they just intuitively, after using PureView, and with our capabilities in terms of our pulse vortex irrigation and how we have the two very large suction ports, they look at that and say, this could be a really nice fit for upper GI procedures. The other thing about upper GI procedures is the mortality rate is significantly higher. It's in the 10, called 10 to 13%. So this is something that is very, very serious in terms of a complication. With that, as I think I've mentioned publicly before, we have an active R&D project. We are looking to leverage a lot of the work that's already in place in terms of the Gen 2 design. We're working hard on, right now, some of the market analysis, some of the health economic modeling, which would be required when we go to market with a product like this. Right now, we're looking in the first half of 2021 to be the timing for potential submission to FDA. In all likelihood, it would be a 510 or potentially a special 510 . You're not looking at a very extensive you know, kind of approval process. So that's something we're really bullish about. And, you know, as we get a little bit further, there's certainly, you know, more feasibility that needs to be done, but we think it's a real natural extension to kind of what we're doing today. And, you know, could add, call it 20, 25% more procedures to our inpatient focus, if you will.
spk07: Ed, I appreciate that caller. That's great. And thanks for the updates. I'll jump back in queue.
spk03: Thanks, Kyle.
spk08: Our next question is from Ben Hainer with Alliance Global. Please proceed.
spk00: Good afternoon, gentlemen. Thanks for taking the questions. First off, for me, just listen to the commentary so far. It really sounds like protocol development may be even more important than, you know, one more install. And, you know, just thinking about that, you know, hospitals having varying protocols or, you know, maybe in some cases even none at all But how much weight does it carry having the thought leading hospitals like NYU? I would think it would carry quite a bit within their hospital system within that they're already in. But how much weight does that carry outside of the hospital system to other accounts?
spk03: Yeah, Ben, thanks for thanks for the question. And yeah, so in the first part, that balance about you know, that kind of we look at return on investment every day is so important, right? So one more install versus deeper into existing accounts, protocol, same store sales, right? It's an important metric that we, and it's a balance because you want to continue your momentum and add more accounts, but what you don't want is, you know, 50 accounts doing very little volume, right? You want, much rather have 25 accounts that have protocols and are driving significant demand. So I think our balance is favored towards deeper with strategic wider, if you will. But to the second part, That's one of the things that we're really excited about, and it's not only NYU. There's other systems that we will be
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