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spk09: Ladies and gentlemen, thank you for standing by, and welcome to the MODIS GI Holdings Incorporated fourth quarter 2020 financial and operational update. At this time, all participants are in a listen-only mode. There will be a presentation by the MODIS management team, followed by a question and answer session. I must advise you all that the conference is being recorded. I'd like to turn the call over to Garth Russell of LifeSci Advisors. Please go ahead, sir.
spk00: Thank you, operator, and thank you, everyone, for joining us for the Modus GI fourth quarter 2020 update call today. Representing the company are Tim Moran, Chief Executive Officer, Andrew Taylor, Chief Financial Officer, and Mark Pomerantz, President and Chief Operating Officer of Modus GI. Before I turn the call over to management for the opening remarks, I would like to take a minute to remind you that this conference call and webcast will contain certain forward-looking statements about the company. The statements are subject to risks and uncertainties that could cause actual events to differ. Please note that these forward-looking statements reflect our opinions only as of the date of this call. We will not undertake any obligation to revise or publicly release any results of any revisions to these forward-looking statements in light of new information or future events. factors that could cause actual results or outcomes to differ materially from those expressed or implied by such forward-looking statements are discussed in greater detail in our recent filings on Form 10-K and other periodic reports on Form 10-Q and 8-K with the SEC. I would now like to turn the call over to Tim Moran, CEO of Modus GI. Tim, the floor is yours.
spk05: Thank you, Garth, and thank you, everyone, for joining us today for Modus GI's fourth quarter and full-year 2020 earnings call. I'll start today's call by discussing our performance in the fourth quarter, provide detail of what we're seeing in the broader US hospital market, as well as discuss four upcoming value creation drivers that we believe have the potential to greatly enhance our business. I'll then turn the call over to Andrew, who will provide a review of our financial performance. At the end of our prepared remarks, we will open the call to take your questions. As a result of COVID-19, 2020 was a tumultuous year for everyone. However, as I reflect on the last 12 months, I am pleased to say that despite these challenges, our team exhibited impressive resilience, which allowed us to advance our strategy and establish a foundation for pure view in the market. It's important to remind everyone that we are in the early stages of tapping into the opportunity before us. In terms of market size, With more than 50 million procedures per year, colonoscopy is one of the single largest procedures in all of med tech. The unmet need associated with poor bowel prep is universally recognized, both from a clinical and economic perspective. The thesis which motivated me to join MODIS as its CEO two and a half years ago has not changed. Our PureView system has clear first mover advantage meaning we believe we currently have no direct competition and we continue to protect our core technologies through a growing portfolio of granted patents. The task at hand is now focused on establishing our entry position in this market and changing long-standing behaviors, both of which are challenging tasks that require focus, patience, and deliberate execution. We're asking physicians and their staff to think differently about patient flow with the goal of eliminating archaic and unnecessary delayed hospitalizations due to poor bowel prep. This shift in mindset requires an enhanced commitment to improving patient care and a focus towards fixing the unprofitable economics for the hospital under the current standard of care. Moreover, addressing unmet needs and solving these clinical challenges requires physicians, nurses, and support staff to adopt a new technology and learn to utilize it effectively in cases they encounter on a regular basis. My experience tells me that changing behaviors doesn't happen overnight. It requires tenacity, telling the story each and every day, and being highly targeted in our approach to influencing one physician at a time. While this process may take longer than we'd like, it doesn't change what we're playing for here. establishing peer view as a new standard of care in the large global colonoscopy market. I am confident that our shareholders, our customers, and their patients will greatly benefit as we execute toward our goal of long-term success. I'd like to highlight the decisive and disciplined approach we have taken in our business since COVID-19 began one year ago. We acted with urgency in March and April 2020, cutting our quarterly cash burn by about 50% as the year progressed. We streamlined our areas of focus and our internal projects, continuing only those projects that we believed would enhance our business and help build medium and long-term shareholder value. We strengthened our base of shareholders and our balance sheet in 2020 and early 2021, bringing in more than $20 million of additional equity capital. And finally, we continued to build strong customer relationships and gained evaluations at more than two dozen targeted hospitals across the U.S. Despite current market-related headwinds, which are mainly attributed to COVID-19, we are in the strongest financial position since Modus GI was established and are well-situated to come out of the other side of this pandemic. We believe our sales and marketing team's nimble approach to remain engaged with key physicians has been very effective, particularly when considering a unique environment with lockdowns and social distancing requirements. In the third quarter, we saw a nice rebound in our business, primarily driven by an uptick in procedure volume and having onsite access to most of our hospitals. While that trend continued into early Q4, the resurgence of COVID-19 in specific geographies particularly California and Texas, created a slowdown in our momentum in November and December. With that said, I'm pleased that from a revenue perspective, despite the uptick in COVID-19-related issues in Q4, we sold more disposable sleeves than in Q3 and conducted roughly as many peer review procedures. In Q4, we also successfully negotiated two new 12-month committed contracts at prominent medical centers, University of Texas and NYU, which are both in effect for 2021. In both instances, the customer made a commitment to minimum quarterly purchases for our PureView sleeves, and for doing so, we are allowing the early adopters, what we are calling centers of excellence, to utilize our capital equipment at no additional cost while these minimums are met or exceeded. We believe deploying this razor razor blade model works well in instances where capital funding is currently unavailable, as it permits the customer to expand use of the PureView system while providing us with more predictable sleeve volumes. Given the current capital environment, we expect to complete additional agreements like these with early adopter hospitals in the first half of the year. You may also recall that University of Texas and NYU are two locations that have implemented a protocol that identifies clear clinical circumstances where the Peerview system should be utilized, which is also resulting in more consistent usage patterns. Replicating similar patient identification protocols in additional Peerview sites is the key focus for our commercial team. In the fourth quarter, we also expanded our business by initiating product evaluations at new accounts, most notably the Mayo Clinic in Phoenix, and Mass General Hospital in Boston. While we may not see the current environment begin to normalize immediately, we believe as hospital access returns and GI procedures rebound to pre-pandemic levels, we are poised to drive an acceleration of PureView utilization. Due to the pandemic, we've yet to benefit from having all of our hospitals fully up and running at any one time over the past year. As part of our fiscal discipline, we are currently fielding a small customer-facing team. This team is doing a great job driving the results that I summarized, and as we see a more favorable environment emerge, we will look to thoughtfully invest in expanding our commercial organization with the goal of driving faster utilization and revenue growth. I want to switch gears to upcoming catalysts for the business. We have identified four value creation drivers that we believe have the potential to meaningfully enhance and accelerate our business in 2021 and beyond. They are reimbursement, product innovation, clinical data, and strategic partnerships. Let me start with reimbursement. In the back half of 2020, we began to develop a comprehensive strategy aimed at positioning Peerview for reimbursement coverage in both the inpatient and the outpatient setting. While there are many pathways to achieve both public and private coverage, we are initially focused on CMS programs designed to provide payment for new and unique technologies. In the fourth quarter, we submitted an application to CMS for a new technology add-on payment, sometimes referred to as NTAP. this program could provide reimbursement for Pureview during inpatient colonoscopy. As part of this submission, we also applied for an ICD-10 code. As you may have seen in a recent press release, on March 9th we participated in CMS's coordination meeting where I am pleased to share that they recommended Pureview to be considered for an ICD-10 code. CMS is now conducting an open comment period and then the final decision will be made through a subsequent clearing process. If a code is awarded and subsequently NTAP coverage, we believe adoption and utilization of Pureview in the inpatient market can be accelerated. We also submitted an application for CMS's transitional pass-through payment. This program could provide reimbursement for traditional outpatient procedures. We believe high medical need patients that can't successfully complete their pre-procedural bowel prep would benefit greatly from PureView. Securing pass-through coverage for our system could be a significant catalyst for our business as it would provide economic incentive for physicians to use PureView on the roughly 5 million high medical need procedures each year in the U.S. It would also mark our first entry into the large outpatient market. Next, I'd like to discuss new product innovation. I am pleased to report that our product development effort to launch our first PureView system for use in upper GI endoscopies is on track, and we expect to submit a 510K application to the FDA by early Q3. This would potentially position us with an approved and available product on the market by early Q4. We view this as a significant opportunity and believe our technology can potentially address a serious unmet need in the market as it relates to visualization and the treatment of upper GI bleeding, which has an estimated mortality rate of approximately 10%. There are roughly 400,000 upper GI procedures in the US annually, and we continue to receive significant inbound interest from GI physicians who are eager for a solution that allows them to clear adherent blood and clot from their field of view during this critical procedure. Next, let's discuss clinical data generation. I'm excited to announce today that we recently began enrollment in a study with the Cleveland Clinic, which will evaluate the clinical and economic benefits of using the PureView system in patients with emergent lower GI bleeding that are treated in the ICU or the rapid inpatient endoscopy suite. This study is designed to enroll at least 20 patients to undergo minimal bowel prep in order to provide patients a much faster diagnosis as compared to the current period of 24 to 36 hours or more typically required to complete a full bowel prep. The outcome we receive from this study could begin to challenge the current standard of care for emergent lower GI bleed patients who are facing urgent need for diagnosis and treatment but are currently delayed. We expect to have this study fully enrolled before the end of 2021. And lastly, I want to talk about strategic partnerships. As it relates to our strategic options, we've spent time evaluating a number of potential pathways during the back half of 2020 and into 2021. Our objectives in considering any potential partnership would be aimed at opportunities that could accelerate our commercial efforts and enhance our technology development. Any partnership would also need to unlock clear shareholder value. As we continue to grow awareness and uptake of the PureView system, we will consider which options best fit our criteria and are actionable. I will now ask Andrew to review our financial results for the fourth quarter and the full year. Andrew?
spk01: Thank you, Tim, and thank you, everyone, for joining us today. We reported revenue for the fourth quarter 2020 of approximately $36,000, primarily from the sales of PureView single-use sleeves. As Tim discussed, our small commercial organization has been focused on single-use sleeve sales with early adopter hospitals that are starting to implement PureView patient protocols. Growth in the fourth quarter was impacted by the surge in COVID-19 cases. and the effect on new technology utilization in the inpatient environment. Over the course of 2021, we expect to grow our number of new system placements and work with hospital value analysis committees to finalize commercial contracts at our active sites. We anticipate new and reorders of PureView sleeves to increase during 2021 and to pursue capital equipment purchases, leases, or rentals with targeted accounts. For the three months ended December 31, 2020, we reported a net loss of approximately $4.4 million, or a net loss per diluted share of 12 cents, compared to $5.9 million, or a net loss per diluted share of 21 cents for the same period last year. During the fourth quarter, net cash used in operating activities and for the purchase of fixed assets was $2.8 million, as compared to $5.6 million for the same period of 2019, a reduction of 50% year over year. For the year ended December 31st, 2020, we reported a net loss of approximately $19.3 million or a net loss per diluted share of 60 cents compared to $23.1 million or a net loss per diluted share of 92 cents for the same period last year. net cash used in operating activities and for the purchase of fixed assets during the year ended December 31st, 2020, totaled $17.1 million as compared to $20.4 million for the same period of 2019. As reflected in these comparisons of net loss and cash spent activity for 2020, as compared to 2019, the results of our cost cutting measures, which we initially put in place at the end of the first quarter, have contributed to our significantly extended cash runway. At December 31, 2020, we reported $20.8 million in cash and cash equivalents. This included the $8 million from our 2019 term loan with Silicon Valley Bank. In January 2021, we further strengthened our cash position through the execution of a warrant exchange agreement with an existing institutional investor, which raised net proceeds of approximately $11 million. We believe that with this bolstered balance sheet, we are poised to execute on our upcoming value creation drivers laid out for 2021, ensure compliance with our Silicon Valley Bank liquidity covenant through the first quarter of next year, and meet our overall anticipated cash needs further into 2022. And with that, I'll now turn the call back over to Tim.
spk05: Thank you, Andrew, and let me summarize the key takeaways from today's call. We are pursuing a global market opportunity for our peer-reviewed technology and believe we currently have no direct competition. While this leaves us with the challenges of being a first mover and changing physician behavior, we continue to make steady progress in creating market awareness and adding new hospitals and physicians. As COVID-19 hospitalizations decline, We believe we will be operating in a more normalized environment, which will improve procedure access for our sales team and enable more opportunities to drive utilization, which will lead to increased demand for the Peerview system. Finally, we are excited about the four value creation drivers I discussed in my earlier remarks, including reimbursement, product innovation, clinical data, and strategic partnerships. Each of these catalysts offer important opportunities for us to enhance our portfolio, broaden our addressable market, and unlock value for our customers, their patients, and our shareholders. I will now ask the operator to open the call for your questions.
spk09: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Thank you. Our first question comes from Matt O'Brien with Piper Sandler. Please proceed with your question.
spk07: Hi, guys. This is Drew on for Matt. Thank you for taking the questions. I just want to start on the sleeve minimum agreement. You know, maybe you could share a little bit more detail on how those are structured. You know, how many sleeves do you expect those two centers to order, or I guess how many do they have to order to reach those requirements? And then, you know, how should we be thinking about that from, you know, maybe a revenue or a quarterly cadence perspective?
spk05: Yeah, Drew, thanks for your question. Thanks for joining today. So, you know, first of all, we're really excited to be able to ink these first initial committed agreements. You know, my prepared remarks, the capital environment is very difficult, right? And at the end of the day, you know, our conviction is all around driving this procedure, getting physicians trained and getting them comfortable using the device and, you know, really improving patient care. So this is a way to get the product in when they don't have a capital budget but also gives us a commitment back, much more predictable volumes, at least initially. While we're not going to give out specific, you know, contractual details that we have with these customers, what I can tell you generally is we've talked before about, you know, first-year utilization we feel is typically going to be in the seven to ten procedures a month. and these agreements are written to fully cover that. And we expect them actually to grow much larger than that because in most of these situations we have, you know, just a small number of the physicians who are actually doing the procedure. So hopefully that gives you a little bit of feel. You can kind of, you know, model that out. But that's the way they're structured today. And, you know, what we'd likely expect over time is as their capital budgets free up, I would think that most of these customers would end up then, you know, moving to either an outright purchase of the capital or, you know, a lease agreement. But right now, this is a great way to get them up and running with the product.
spk07: Okay. That's super helpful. And congrats on a couple new product evaluations. Can you just remind us of how, you know, some of those processes are structured, I guess, especially during COVID? COVID here? I mean, what's the requirement from training? What's the requirement from, you know, as far as having a salesperson on the ground or anything like that? And then, you know, how long does it typically take with some of those accounts? I mean, obviously, we've talked about NYU in the past before you start seeing meaningful utilization of peer review.
spk05: Yeah, you know, it's been an interesting year, right? That's an understatement. So there's probably not a one-size-fits-all answer in terms of the approach that each of these sites have asked us to kind of work within as it relates to the impact of COVID on their staff and protocols and things like that. Typically, the structure that we believe optimizes our success is if we can be there on site and do initial training for the entire staff that will be associated with the product, as well as, of course, the physicians involved. and have kind of a kickoff meeting, if you will. And then everyone's on the same page as it relates to what the technology does, what the benefit is. We make sure that we coordinate with the nursing floors, right? So if you've got these patients that are up on the floor waiting to have a colonoscopy done, they fully understand or educated that now there's a solution down in GI that allows them to do the procedure despite the patient being ready. So there's a lot of coordination that needs to be done. So in an ideal situation, we're there on site initially doing all of that organizational work, if you will. And that has continued in several sites. As a matter of fact, our evaluation in Boston that we just did here at the end of the year and into the first quarter, We were able to be on site despite what was happening with COVID. There were protocols allowed for that, so we followed that very approach, and we had a rep and clinical training folks on site. But in some of the other accounts, and it's been a little bit of an elongated process throughout this year, we've not been able to be there, so we've had to use remote tools. And we've talked about this before in the past, but we really digitized all of our materials, so now we're able to do things very effectively over the phone, via Zoom. You know, there's chaptered narrated video that the staff has in front of them so they can see exactly how the system sets up. And, you know, it's worked. It's worked well. It just takes a little bit longer to try to manage it that way. So the sales process, you know, I would say has been taking probably upwards of, you know, six months plus, given some of those hurdles. You know, and then on the back end, the value analysis committees have been, you know, on and off meeting. It's been kind of stop and go. So I would say this is a very unusual last 12 months as it relates to the typical timing that it would take to get these deals done.
spk07: Yep, that makes perfect sense. Just last one for me, the upper GI indications. Maybe you could just lay out the value prop there. You know, how similar or different is that to your current poorly prepped market? And then how should we think about that indication as far as impact your business in maybe 2022 maybe? Thank you. Yeah.
spk05: Yeah, we're really excited about this. And as I mentioned earlier, the team, our internal team, has done a terrific job from an R&D and engineering perspective to continue to hit all of our milestones on the project. So we're on track with getting ready for submission to the FDA. We'll have a product on the market this year. The way we're positioning this – not dissimilar to the lower GI, but obviously this is utilized for bleeding, typically for bleeding in the upper GI tract. And what we've heard really time and time again from our customers, very important influential customers that are doing these types of procedures on a daily basis is, is that they struggle with blood and adherent blood clots that can form in the stomach and the duodenum, and visualization becomes a problem. So it parallels the lower GI at the end of the day. It's all about visualization so you can see what you need to then treat. So we will have the product on the market. Our initial plan is to do a very targeted, I would call it kind of a soft launch as soon as we get it out there. We will have those accounts lined up. We'll have the positions lined up, and we'll get feedback from the market initially, and then we would move into a broader launch. But we're very excited about that. We're not going to comment on specific revenue projections at this point, but what I will say is there are approximately 400,000 of these procedures a year done in the U.S., primarily all in hospitals. So it adds, you know, call it roughly another 25% to our kind of total adjustable opportunity that we're focused on today in the hospital environment. And their synergy, because you're talking about, you know, same hospitals, same physicians working And we think that this is going to be a really nice add-on to the portfolio. Thank you. Thanks, Drew.
spk09: Thank you. Our next question comes from Kyle Bowser with Collier Securities. Please proceed with your question.
spk03: Great, thanks. Good afternoon. Thanks for all the updates today. Sorry if I missed this, but can we walk through – the kind of upcoming clinical trial cadence and data readout timings. I know you just started the pilot study at the Cleveland Clinic, which is great. I just want to make sure I understand how things will shake out this year from a catalyst perspective.
spk05: Yeah, sure, Kyle, and thanks for joining. Yeah, we're really excited about this new trial that we just enrolled the first patient. I'm going to pass it over to Mark and have him outline kind of the overall clinical view, if you will. Mark?
spk04: Great.
spk05: Thanks.
spk04: Thanks, Tim. Hey, Kyle. Hey, Mark. So, yeah, as Tim mentioned, we're really excited about this study in the Cleveland Clinic, and it's really doing something that's, you know, fairly unheard of with doing colonoscopy with basically, you know, no targeted-based prep. So these, you know, significant leaders that, you know, time is of the essence to get in there to find the sources that lead and create hemostasis if possible. You know, we're looking at getting in these patients with no standard purgative, just a couple of tap water enemas and then going in with PureView to cleanse the colon to find the source of the bleed. We anticipate being able to enroll this study, complete enrollment later this year. And the reality is probably the actual readout of the data will be in early 22 as far as any publications, et cetera, happening from it. But again, it's a really unique trial going forward in these critical patients with no crap and being able to get in there quickly, especially these folks that are in the ICU, that you can not only hopefully get them out of the hospital quicker, but certainly just downgrading them into a regular ward can be incredibly significant for the treatment of patients and the cost for the hospital.
spk03: Okay, got it. And might we see any other kind of cuts at the previous data that's already been collected from either Reduce or Expedite? Maybe there'll be some data readout to DDW. Anything else out there we should keep an eye on?
spk04: Yeah, so we do anticipate in the coming months some additional data readout from some of our prior trials, you know, and we're always looking to it to continue to push in the and publish some interesting case studies that we're seeing as well that sort of help, as Tim was talking about, adding fuel to the fire for the protocol adoptions for folks as they look at various patient populations so we can also augment our data with some of the interesting case studies that are happening as well.
spk03: Sure. Okay. Got it. And lastly, if I may, can you talk a little bit about the recent update to the Gen 2 system? So I know that there are The latest enhancements are now cleared in Europe and the U.S., and I think it has to do with ergonomics and software. But I guess just any other color there would be appreciated.
spk05: Yeah, great. Mark, you can take this one as well, please. Sure.
spk04: Yeah, so great question, Kyle. So we're actually excited. A lot of these things just rolled out towards the end of last year with some of the upgrades. You know, probably the most impactful one was even though Gen 2 already significantly streamlined the loading, we made some enhancements that made that even quicker and easier for the techs to do. So continuing to drive that. Also helping with removal of the scope post procedure, some enhancements just to make that simpler as well. And then added some things too that streamlined the software. and gave the physicians some more flexibility as they're looking at using different modes in the system and how to work through that in a little bit easier, more streamlined fashion just to accelerate the procedure time as well.
spk03: Great. It's helpful. Thanks for all the updates. That's it for me. Hey, thanks, Kyle.
spk09: Thank you. Our next question comes from Stephen Lichtman with Oppenheimer. Please proceed with your questions.
spk08: Hey, guys. Thanks for taking the question. This is David for Steve. Just going back to the COVID dynamics in the quarter and early on here and heading towards the end of the first quarter, any additional color you could talk about in terms of impact on utilization and your sales reps ability to get access to physicians? And are you able to talk about anything on how the inpatient colonoscopy volumes have trended relative to pre-COVID levels? Thanks.
spk05: Yeah, sure, David, thanks. Thanks for joining. So it's been interesting. You know, Q3 was definitely marked a point where we saw a procedure volume come back to, you know, I think in Q3 I talked about, you know, call it 80% to 85% of pre-pandemic levels kind of was the feel we had from, you know, speaking to our customers. And, you know, that really, for the most part, continued into Q4, you know, And, you know, I think that's what, you know, if we look at Q1, it feels about the same. So I wouldn't say that we've seen a significant improvement, but there hasn't been, you know, a terrible decline either. I think the back half of Q4 in November, December, where we talked earlier about, you know, how things flattened out a little bit, it was very specific to geographies, you know, California where we have several installations, Texas where we have several installations, that were just getting hit hard, you know, it impacted procedure volumes. I think, you know, Q1 is probably looking similar to what we saw in Q3 and Q4. But we are optimistic now, as I think everyone is, you know, with the rollout and really an acceleration now of the rollout of the vaccinations that, you know, we're expecting to see improvement in Q2. And, you know, in talking to physicians in our key hospitals, they've kind of echoed that. So... You know, we're bullish on what we would expect to see procedurally in Q2 plus with access, right? Because right now we probably have access to, you know, about, you know, real access to about 40% to 50% of our accounts. What I mean by that is we can go in, you know, without a lot of trouble and be there and be in procedures. But the others have a lot of protocols in place that make it very, very difficult to be there and to get into different units. And we still have certain sites that we can't get in at all. So, again, we're hopeful that as we get into Q2, that'll start to improve.
spk08: Okay, great. That's really helpful. And then I was wondering if you could talk about some of the recent progress with your collaboration with NYU Langone. How's that been going? And have you seen that trend over time towards that 50% of the of the inpatient and colonoscopy patients that are poorly prepped? Is it turning towards that direction?
spk05: Yeah, so we're very pleased with that relationship. You know, obviously we had another update today that they're now also, you know, signed to a committed volume agreement. The physicians that we work with there are terrific and have really embraced peer review. So I would say Generally speaking, it's going very well. And, yes, it's going to take time to get to that, you know, full penetration point. But I think we're seeing, even if you look in this past quarter, we're seeing consistent reordering. We're seeing them gain a significant degree of independence. So what I mean by that is they're doing procedures when we're not there, which is the goal, right, and they're getting, you know, that just shows the comfort level that they have. We're talking to them about some other ways to collaborate over time here. I think we'll see them as a very important customer for us moving forward. The other thing that's unique, if you will, about NYU, and I think we've talked about this a little bit, is the way they're structured. from a physician perspective, is they have a director of inpatient services, a GI hospitalist, if you will, that is on site on a consistent basis, right? So other facilities will have physicians that are on rotation, and if it's a large GI group, they might have physicians that are there doing inpatient rotation once a month or even a longer space between, whereas at NYU you have key physicians that are there each week and their full objective is to work on these inpatients. So obviously that's a captive audience for us, and it's a learning that we took over the course of last year that as we expand our targets, So focusing on some of these accounts that are structured that way can really optimize success and really accelerate success because you're talking about, you know, a lot fewer physicians that you need to get up and running to try to get to, you know, that, you know, standard of care level, if you will. So, you know, that's been something that, you know, we've learned from NYU and we're now replicating in other places. And NYU has been helpful in terms of getting us networked to, you know, colleagues and other sites across the country that are structured similarly.
spk08: Okay, great. And just lastly for me, any ideas on timing for a publication for the expedite trial?
spk05: I'll have Mark answer that. I think just generally speaking, though, that we're expecting something here, you know, in the next two to three months. But, Mark, if you can just confirm.
spk04: Yeah, so that's correct. You know, we're expecting hopefully something in the next few months on the expedite study. Again, that was an investigator-initiated study. by Dr. Jacobson, who actually transitioned middle of last year from the Boston Medical Center to MGH. So that's kind of slowed down some of the progress on that and moving that forward. So obviously he's driving that data and that publication, but we're hopeful that that will happen in the next few months as well.
spk08: Okay, great. Thank you. Thank you.
spk09: Thank you. Our next question comes from Ben Hainer with Alliance Global. Please proceed with your question.
spk06: Good afternoon, gentlemen. Thanks for taking the questions. Can you hear me okay? Yes, we can, Ben.
spk05: Loud and clear.
spk06: Excellent. So just curious on any more code you can provide on the ICD-10 code presentation. Do you have any sense of how that went? Just kind of looking at the options that are available to to the agency, it looks like, other than the one that's kind of the NTAP supportive one, it almost seems like a decoy option in that it only adds intra-procedure to the existing coding. I mean, what are kind of the thoughts around that?
spk05: Yeah, so why don't I start, and if we want to get into more granular detail, Ben, I can pass it to Mark. So we did participate in that meeting. I think we did a nice job and represented, you know, what we're looking to try to do with Peerview. We did get the recommendation from CMS, so they put forth – There's various options that they can choose from. They put forth a recommendation before it goes out, and they are suggesting and recommending that Peerview receive an ICD-10 code. So that's positive, right? And now what's happening is, as we mentioned, it'll go to an open comment period so folks can weigh in on any feedback they have on that, and then it'll come back in-house, and they'll ultimately make the final decision later this year. But, you know, that's an important part of the process, if you will, as we move towards the NTAP, right, which would actually provide the coverage. So the ICD-10, as you know, is a way to track the procedure. So it's important that you kind of get through that initial hurdle. And I think we feel like we, you know, represented ourselves well in that process. Does that answer your question, Ben? Okay.
spk06: Yeah, I mean, that's what I was looking for. And then, you know, kind of on the open comment period, you wouldn't expect that anyone would be highly motivated to come out against you guys, given that there's no competition.
spk05: Yeah, we would not expect that. But obviously they do have to go through their process, right? And, you know, we'll see where that ends up. But, no, we wouldn't expect that.
spk06: Okay, that's helpful. Mark, did you have anything to add? Steal your thunder or anything?
spk04: No, Tim covered it well, and we're optimistic about getting the code, but we'll obviously have to see how things move along. But to Tim's point, the likelihood that somebody would come along and make any comments to the negative is pretty small.
spk05: Sure, makes sense. And then on the – go ahead, sorry. As you know, the way we're looking at this, from a reimbursement perspective, I'm pleased with the progress that we're making and the team's making. The NTAP submission is one of the various programs to obtain reimbursement, this being for new technology and that one being specific to inpatient. And we view that if we – we don't have currently headwinds for for inpatient from a reimbursement perspective. However, you know, we do see that as an accelerator, potential accelerator. You know, if we were to be awarded that additional coverage, you know, that could help, particularly with the Value Analysis Committee, the financial end of that process.
spk06: It becomes a lot easier. Yeah. Got it. And then on the Cleveland Clinic study with the, you know, the double enema protocol, you know, 20 patients, so, I mean, it's kind of a pilot study. How come you think it'll take, you know, so long to enroll? Yeah,
spk05: So, Ben, what I'll say is we're just not going to put a hard date on it only because it's an investigator-initiated study, so we don't fully control that. But I think given the size of the institution and the number of patients that we outlined here, It certainly has the potential to move relatively quickly. But at this point, until we have a better line of sight, which I think we will, by next quarter we'll know how many that we've done and what the pace looks like. We can provide probably a more specific targeted date. But for now, we wanted to keep it general.
spk06: Okay, that's fair. And then finally on the minimum sleeve purchase commitments, I know some of these are obviously larger institutions with more than one location. As you start out, you have kind of seven to ten procedures a month that you're doing at maybe the main location. What happens when, you know, they say this is great, let's expand these protocols to System Y, we want more of these. How do you handle that? I mean, is it kind of, you know, that 7 to 10 procedures per hospital, or you do it on a bigger basis, or how would you think about structuring that, you know, down the road should things go well?
spk05: Yeah, so it's a great question. So, one, that was, you know, one of the reasons why we've decided to make these 12-month agreements, right? So they're not, you know, three years or something because things will change. And, you know, I think as a new technology in the market, you know, as we're out there, you know, as I said earlier, really our biggest objective, right, and challenge is changing behavior, right? So we're asking physicians and staff to do something differently today. than they've done in the past, right, any type of new technology. So getting the product in the door and having them have access to it, you know, we're comfortable with the minimums that we put in for this first 12 months based on, you know, as I said, a smaller number of physicians utilizing it because we believe that as you have it on site, you know, it's our job to be on site training additional physicians and and they will immediately, as they start to do cases for the first time, they'll see the value, right? So I think the minimums that are put into these agreements from our perspective, you know, will get outdated pretty quickly, you know, if we can get this in the hands of additional physicians. And at the end of the 12-month period, you know, we'll look at what that next agreement might look like. I could see in the future potentially having options where it's either just an outright purchase or a lease or a rental, or we might have different minimum requirements 12 months from now. But we wrote them as 12-month agreements, so we have flexibility.
spk06: Okay. That makes a lot of sense. That's all I had, gentlemen. Thanks for taking the questions.
spk05: Thank you, Ben.
spk09: Thank you. Our next question comes from Jeffrey Cohen with Leidenberg Thalmann. Please proceed with your question.
spk10: Hi, this is Destiny on for Jeff. Thank you for taking my questions. I hope you all are well. I guess I'd like to start with revenue. I saw in some of your commentary that you mentioned a portion was from new accounts and a portion was from existing accounts. I'm wondering if you could help us understand what those proportions look like, even just at a high level. It doesn't have to be super specific, but perhaps a range.
spk05: Yeah, sure. Destiny, thanks for joining. Yeah, so we definitely don't want to, you know, start to break it out to that level of detail, but I would say that a large portion of the, you know, the early revenues that we're seeing here are coming from existing repeat orders and So what that would look like is in any given quarter, you know, the majority of the revenue is coming from repeat orders, and then you're going to potentially get a couple initial orders to get going. And I think that happened here in the last quarter. So we had an account that, you know, switched and got approval right at the end of the quarter and placed their first paid purchase. But that's obviously a small majority of the revenue that we're seeing right now.
spk10: Right, and with some of these, well, these two contracts, that could change maybe just slightly, but nothing. It'll still look pretty similar to how it's been for the last two, three quarters, you'd say?
spk05: In terms of the amount or the breakout between new and existing?
spk10: The breakout, yeah, the breakout.
spk05: Well, you know, I do think that that will start to pick up because we have several of these types of agreements that are pending, you know, that we've been actively working, you know, really into the end of Q4 and it got delayed with some of the COVID issues and here in Q1. So, you know, just depending on when they make the commitment and place their first order, that amount could change. could certainly change. And, you know, I think as procedure volume comes back, just kind of going back to what I was saying earlier, you know, we expect many of these existing sites that have been evaluating and have had elongated evaluations, you know, to get fully converted and start purchasing. So, yeah, I think that that certainly will start to ramp up in terms of new purchases coming in as opposed to the repeat orders that we're getting from our earliest sites right now.
spk10: Okay, got it. And then could you just remind us of your efforts OUS? Is there anything going on, even the R&D that we should be aware of?
spk05: Yeah, so if we think about OUS, we have had several activities. We talked about some of the regulatory, the updated CE mark, which is obviously important. We have done, I would say, high-level exploration and diligence into Europe and into Asia as it relates to the opportunity for Peerview. And we've had inbound requests from several different entities interested in either selling or, you know, having access to Peerview in their market. So we're evaluating those. I think right now our focus is very much, as you know, on the U.S. So to access Europe or to access China or Japan, obviously we would be most interested in doing that with a partner. And as I said earlier, we've had significant dialogue with a variety of different entities, both large kind of manufacturers, medical device companies, as well as key distributors in certain regions around the world. So we continue to evaluate, have discussions, kind of do our diligence. So we're laying the foundation for an eventual entrance into those markets. But right now, you know, given COVID and, you know, balancing our cash burn, the focus is obviously heavily on the U.S.
spk10: Okay, got it. Thank you. I'll take the rest of my questions offline.
spk05: Thanks, Destiny.
spk09: Thank you. Our next question comes from Yi Chen with HC Wainwright. Please proceed with your question.
spk02: Hi, this is Bubal and dialing in for Yi Chen. Just a follow-up on IC Chen reimbursement code. How do you think this code upon approval will affect your company's top and bottom line? Can you quantify it? Or if it can be quantified now, when would that be possible?
spk05: Thanks, Boubalon, for joining, and thanks for your question. So I would just say generally, you know, the way right now, you know, we don't have, you know, line of sight into what potential reimbursement amount may be, right? So we can't comment on that. But I think generally what we're seeing it as strategically, if you think about the NTAP, it would be an accelerator, right, to adoption. Because if you had some additional reimbursement on the peer review sleeve in the hospital environment, I think it would allow us to work through the value analysis committee financial analysis much easier and because it's reducing, obviously, the overall cost burden. But keep in mind that today, on an individual patient basis, individual procedure, we're showing a return on the investment with one sleeve. So this would just, as I said, serve as more of an accelerator, if you will. So I don't see it having anything but positive upside to revenue uptake, and obviously we wouldn't change our are pricing based on that either.
spk02: That's helpful. And where do you stand on the rescue study? Do you plan to initiate any new clinical studies for this year?
spk05: So I can have Mark talk about, you know, we actually do have another study that we're going to initiate in Europe. So, Mark, do you want to just provide just a quick overview there?
spk04: Sure, Aaron. Thanks. Actually, just to comment, and then you mentioned the rescue study, which was going to be in open label registry, which we did back when we did our cost cutting last year, we did put that study in the back burner. And so right now we're focused on the Cleveland Clinic study that we talked about earlier and those patients in the ICU. And then we are initiating a small study also in in Europe more to see some of the key thought leaders there. And that study is really focused on patients that have what's called a difficulty in prepping in the outpatient scenario and are typically coming back almost on a yearly basis because they never get a good exam. So physicians are examining them constantly just to make sure that whatever polyps they missed on the prior procedure, hopefully as they get larger, They will catch them before they become cancerous problems. So we will be initiating that study coming up in the next quarter or so as well. So, again, it will be an interesting population because, you know, that will also feed into some of the issues in the outpatient in the U.S. for these patients that are on a reduced surveillance interval because they don't get a good preparation and there's a concern of an interval cancer. So it's a nice way for us to get some early data on that, as well as see some of the key thought leaders in Europe as well.
spk02: Great. One final from me. So how many OSPI evaluations are currently underway, and how many new ones do you anticipate to start within 2021? Thank you.
spk05: Yeah, sure. You know, listen, we have the system placed in more than 20 sites. I would say, Boublon, right now, if we kind of think about COVID and access, there's about, I would call, about two-thirds of those that are active. We expect the others to kind of pick back up. We are working with, as I said earlier, a very lean commercial team. So we're remaining very focused on targets that have – the highest potential to close the most quickly and also kind of play a strategic role in the overall foundation setting that we're doing. And I would say that, you know, that's the mode that we're in here, as you know. And I think had we not lost a handful of quarters with COVID, we would have probably been, you know, through that and further along. But, you know, we'll continue to strategically add new sites, I would say each and every quarter. as we just did as we reported in Q4, and we're continuing here in Q1. But we're going to do it smart. And as we look at 2021, we will also think about where we'll expand the commercial organization in targeted geographies that we believe the ROI will be there. And that will allow us to accelerate bringing on additional sites as well. So that's just the way we're thinking about it right now.
spk02: All right, that's it from me. Thanks for your time, and congrats on your progress.
spk05: Thank you very much.
spk09: Thank you. There are no further questions at this time. I would like to turn the floor back over to management for any closing comments.
spk05: Great, thanks, Operator. And I just want to thank everyone for joining us today. We appreciate everybody's interest in MODIS GI. As you can hear, despite the challenging year that we've just encountered, we are very excited about the progress that we're making commercially, really building out the foundation. for our peer-reviewed technology in the market. We're changing behaviors. We're bringing on more physicians. And as you look out across 21, we're very excited about the upcoming catalyst with reimbursement, with product innovation, the new clinical data that we have, a lot of things that we believe can truly accelerate and enhance the trajectory of the business in the upcoming quarter. So thank you again for joining, and hopefully everybody stays safe.
spk09: This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation and have a great day.
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