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spk06: Good afternoon and welcome to the Pulse Biosciences fourth quarter and full year 2021 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Philip Taylor of Investor Relations. Please go ahead.
spk02: Thank you, Operator. Before we begin, I would like to inform you that comments and responses to your questions during today's call reflect management's views as of today, March 31st, 2022 only, and will include forward-looking statements and opinion statements, including predictions, estimates, plans, expectations, and other information. Actual results may differ materially from those expressed or implied as a result of certain risks and uncertainties. These risks and uncertainties are more fully described in our press release issued earlier today and in our filings with the Securities and Exchange Commission. Our SEC filings can be found on our website or on the SEC's website. Investors are cautioned not to place undue reliance on forward-looking statements. We disclaim any obligation to update or revise these forward-looking statements. We also discuss certain non-GAAP financial measures. Disclosures regarding these non-GAAP financial measures, including reconciliations with the most comparable GAAP measures, can be found in the press release. Please note that this conference call will be available for audio replay on our website at pulsebiosciences.com on the news and events section on our investor relations page. With that, I would now like to turn the call over to President and Chief Executive Officer, Darren Uecker.
spk04: Hello, and thank you all for joining us. On today's call, I will highlight Pulse Bioscience's 2021 developments, discuss our 2022 growth strategy, including the evolution of our commercial focus, and cover plans to advance our clinical and regulatory pipeline. Sandy will detail the financial results, then I will conclude and open the call for Q&A. In 2021, we achieved regulatory approvals for the CellFX system in the U.S., Europe, Canada, and Australia, initiated the controlled launch program, and onboarded 70 participants, closed our first commercial system sales, continued to generate clinical data illustrating the capabilities of nanopulse stimulation technology, and engaging the scientific community while advancing additional applications for the CellFX system. On the corporate side, we strengthened our commercial leadership team, board of directors, and balance sheet. These accomplishments have laid the foundation to drive cell effect system adoption and utilization in dermatology and other medical specialties. We believe the cell effect system presents an attractive opportunity for clinics to pioneer a new solution to address the clearance of benign lesions they previously did not treat because of the lack of treatment options that could produce aesthetically pleasing outcomes. Clinics are motivated to cultivate new business opportunities. Based on the number of patients with the nine lesions, the patient's perceived value of treatments, and the time required for dermatologists to perform treatments, we feel this category is positioned to be a significant revenue and profit-generating service line in their practice. To introduce the CellFX system to aesthetic dermatologists, in early 2021, we initiated a controlled launch program across the US, Europe, and Canada 70 key opinion-leading aesthetic dermatologists committed to participate in the controlled launch program. In exchange for sharing extensive data and observations about our patients and their own experience with treatments, clinics earned credits towards the purchase of their system. A number of learnings have come out of the controlled launch program. First, the controlled launch program has helped us better understand the variation in dermatology clinic types, from cosmetically procedure-focused to medically procedure-focused, and how best to target clinics and optimize the integration of the CellFX system into the clinic, depending on this mix of cosmetic and medical procedures performed by the clinic. It's also become clear that many of the clinics we are working with are generally at capacity, especially with patient demand coming back strong from the slower period impacted by the COVID-19 virus. And integrating CellFX procedures introduces an opportunity cost that we must demonstrate will drive long-term value creation for the clinic. We must work with clinicians and staff to integrate cell effects procedures into this already busy workflow in order to optimize the potential for utilization and minimize workflow disruption. On the positive side, cell effects treatment candidates present themselves in clinics every day, so we remain confident of the potential efficiency of the cell effects integration. The control launch program has increased our belief and confidence that the benign lesions that are being treated using the cell effects system, such as non-genital warts, sebaceous hyperplasia, seborrheic keratosis, and increasingly dermatofibroma represents valuable opportunities for all dermatology clinics. While the real-world delivery of NPS technology through the CellFX system has proven to clear benign lesions in clinical studies, we have learned that the market development for benign lesions and the integration of this procedure into practice workflow will require a high-touch model to generate the system utilization we are expecting. We initially expected clinics to complete the controlled launch program requirements in three to five months. However, the average time for clinics that have completed the controlled launch has been seven months. Upon completion, we have seen some clinics accelerate their commercial use, while others' utilization has slowed. It is now our priority to address this dynamic and drive more consistent and increased commercial utilization of CellFX systems and turn these early commercial customers into CellFX reference centers for future purchasers of the system. In the fourth quarter, 17 dermatology practices that were participating in our control launch program opted to acquire the CellFX system, bringing the cumulative total as of December 31, 2021, to 29 commercial conversions. We also had six clinics opt out of the program as of December 31, 2021. In the first quarter, we expect 10 clinics to convert to commercial use, and another five clinics have opted out of the program, bringing the total commercial conversions to 39, with a total of 11 having opted out. Therefore, we expect to have 20 clinics still in the controlled launch program at the end of the first quarter, and those clinics will continue to move through the program throughout 2022. Our focus has now shifted to ensuring that our commercial cell effects clinics are integrating routine use of the CellFX system in their clinic workflow, and we have made it our priority to partner with these clinics and drive commercial utilization in 2022. To do this, we will more actively engage with our current commercial clinics, providing increased training, education, and marketing support on all aspects of the CellFX system and its integration into the clinic. In the first quarter, average commercial clinic utilization has increased from month to month. and currently our commercial clinics are averaging 10 patient treatment sessions per month with their CellFX system. Our goal for the end of the year is to increase that to 40 patient treatment sessions per month at our current commercial clinics. To drive this increased utilization and emphasis on education, training, and marketing at our current accounts, we have implemented changes to our commercial leadership, restructured our commercial field organization, and modified our strategy in support of our utilization focus and reduce emphasis on new system sales in the near term. As a result of this focus, we have initiated operating expense reduction programs across the company. These programs include a reduction in headcount, which we expect to be between 15% and 20% of the workforce, along with reductions in other expenses, which we expect will lower total operating expenses by approximately 20% from the current run rate. Outside of the controlled launch, three practices, two in the fourth quarter and one in the first quarter, have made the first three commercial purchases of CellFX systems. We do not expect new system purchases will be a significant contributor to revenue until we achieve our utilization goals. We remain confident in the long-term opportunity for the CellFX system and NPS technology in dermatology and other medical specialties. Our commercial strategy will now focus on going deeper with the accounts we have and ensuring they're able to build viable benign lesion franchises within their practice. Spearheading our commercial efforts will be our newly appointed Chief Commercial Officer, Kevin Danahy, and Joe Tallarico, our newly appointed Vice President of North American Sales. Kevin and Joe are healthcare industry veterans with proven track records of building exceptional commercial teams and implementing strategies to drive market penetration and significant growth with new medical technologies across a variety of medical disciplines. They are uniquely qualified to take on these roles at Tulsa Biosciences as we grow the cell effect system business in dermatology and expand into new applications and markets. And we look forward to the impact they each will have on expanding the commercial footprint for the cell effect system. Ed Ebers, former EVP and general manager of dermatology, is serving in a consulting role during this transition. We thank Ed for his service and contributions. To supplement our commercial marketing efforts, we continue to stay engaged in the scientific communities to support cell effect system clinical evidence generation and promote the latest discoveries with the technology. In December, Dr. George Haruza from St. Louis, past president of the American Academy of Dermatology, presented an overview of MPS technology at the Cosmetic Surgery Forum, a multi-specialty educational symposium that covers the latest research, treatment, and techniques in dermatology and cosmetic surgery. At the recent American Academy of Dermatology meeting, the cell effect system was mentioned in multiple scientific presentations. And at the upcoming American Society for Laser Surgery and Medicine meeting in April, we anticipate additional presentations on the cell effect system, including positive clinical data. Transitioning now to our clinical and regulatory pipeline. As we have mentioned, we are taking a stepwise regulatory approach to expand the cell effect system's indications for use, which would in turn enable us to assist clinics with marketing the cell effects for treatment of specific lesions in addition to general benign lesions. The first specific indication we are seeking FDA clearance for is the treatment of sebaceous hyperplasia, which we are approved to treat under our CE mark and Health Canada approval. Following the submission of the 510 to the FDA in the fourth quarter, we received an additional information request letter from the FDA. In the AI letter, the FDA stated it did not believe the company had provided sufficient clinical evidence at this time to support the expanded indication for use and that the company had not met the primary endpoints of the SH-IDE study. The company anticipates meeting with the FDA to discuss the contents of the AI letter and potential next steps, which may require additional clinical data and potentially a new 510 submission. This 510 process to include a specific indication has no impact on the existing 510 clearance for the CellFX system, which is a general indication for ablation and resurfacing of the skin, including for use on benign lesions. While this represents potential setback, this does not change our fundamental outlook. A second specific indication we are targeting is for cutaneous non-genital warts. In the third quarter, we completed enrollment of our 150 patient FDA IDE approved pivotal comparison study. We are currently analyzing the study data, and we are anticipating a 510K submission during the second quarter. We have also completed follow-up in our basal cell carcinoma feasibility study. This data is also being analyzed, and we anticipate meeting with FDA to discuss a potential pivotal study for a specific indication to treat basal cell carcinoma lesions with the cell effect system later in Q2 or early Q3. On the development side, we will continue to pursue research on additional benign lesions to grow the CellFX Systems application portfolio where it makes the most sense for dermatologists. As we mentioned on the third quarter earnings call, dermatofibroma is an example of a new lesion of interest emerging from controlled launch participants. Dermatofibroma are small benign lesions typically found on the extremities, especially the lower legs. We surveyed 100 medical and cosmetic dermatologists and found that they see 15 to 25 patients per week with dermatofibroma. Currently, the only treatment option is to excise the lesion, so dermatologists typically elect to leave the lesions untreated. Now I will turn the call over to Sandy.
spk05: Thank you, Darren. Hello, everyone. For the fourth quarter of 2021, revenue was $844,000. Revenue was driven by the conversion of 17 controlled launch participants opting to purchase their CellFX systems following completion of the program, as well as the first two commercial sales of the CellFX system. System sales were $699,000, approximately $600,000 recognized on a non-cash basis, and $100,000 recognized as cash. Revenue related to cycle units was $145,000 for cycle unit purchase for commercial systems. Revenue in North America was $777,000, representing 92% of total revenue. For the year ended December 31st, 2021, revenue was $1.4 million. Revenue was driven by the conversion of 29 controlled launch participants opting to purchase their cell effect systems following completion of the program, as well as two additional commercial sales. System sales were $1.2 million, while revenue related to cycle units was $229,000. Revenue in North America was $1.2 million, representing 83% of total revenue. Moving down the income statement, I'll focus my comments on our adjusted or non-GAAP results to provide insights into the underlying trends in our business. Please refer to today's press release for a detailed reconciliation of non-GAAP measures with the most comparable GAAP measures. Since our shift to a commercial organization in the third quarter of 2021, all uncapitalized manufacturing operation costs have been recorded in cost of revenue. Previously, these costs were recorded in research and development expense. Non-GAAP gross loss in the fourth quarter of 2021 was $302,000. For the year ended December 31st, 2021, non-GAAP gross loss was $415,000. Gross loss is calculated as total revenues less cost of revenues. For the fourth quarter of 2021, non-GAAP operating expenses representing research and development, sales and marketing, and general administrative expenses were $11.2 million compared to $11.1 million for the prior year period. The year-over-year increase in operating expenses was primarily driven by the expansion of commercial and operational infrastructure, including increased headcount to support commercialization activities. offset by uncapitalized manufacturing costs now recorded in cost of revenue. For the year ended December 31st, 2021, non-GAAP operating expenses were $46.9 million compared to $38.8 million for the year ended December 31st, 2020. The increase was primarily due to the expansion of commercial and operational infrastructure, including increased headcount to support commercialization activities and investments to expand the use of the cell effect system outside dermatology. Non-GAAP research and development expenses decreased by approximately $1.3 million from a year ago to $5 million for the three-month period ended December 31, 2021, primarily due to the reclassification of uncapitalized manufacturing costs to cost of revenues, offset by an increase in personnel-related costs in support of our FDA submissions and new application development. For the year ended December 31, 2021, non-GAAP R&D expenses increased by approximately $1 million year-over-year to $23.3 million. The increase was primarily due to additional personnel, clinical trial costs, consulting, and outside services in support of our FDA submissions and new application development. These additional costs were largely offset by uncapitalized manufacturing costs now recorded in cost of revenue. Non-GAAP sales and marketing expenses increased by approximately $1.6 million from a year ago to $3.6 million for the three-month period ended December 31, 2021, primarily due to increased personnel, consulting, and outside services to support commercialization activities not conducted in 2020. Sales and marketing expenses in the fourth quarter of 2021 include approximately $640,000 of non-cash expenses related to our controlled launch. Prior to receiving FDA clearance and CE mark approval for the cell effect system, sales and marketing expenses were included in general administrative operating expenses. For the year ended December 31, 2021, non-GAAP sales and marketing expenses increased by approximately $5.9 million year-over-year to $12 million. The increase was primarily due to additional personnel consulting, and outside services to support commercialization activities not conducted in 2020. Sales and marketing expenses also includes approximately $1.8 million of non-cash expenses related to our controlled launch for the full year period. Non-GAAP general administrative expenses were largely flat year over year. decreasing by approximately $100,000 to $2.6 million for the three-month period ended December 31, 2021. For the year ended December 31, 2021, non-GAAP general administrative expenses increased by approximately $1.1 million year-over-year to $11.6 million. The increase was primarily due to additional personnel from a year ago to support the transition to commercial operations. Other increases included public company-related expenses, including D&O insurance, all partially offset by a reduction in consulting services. Non-GAAP net loss for the fourth quarter of 2021 was $11.5 million compared to a net loss of $11.1 million for the fourth quarter of 2020. For the year ended December 31, 2021, non-GAAP net loss was $47.9 million compared to a net loss of $38.7 million for the year ended December 30, 2021, excuse me, 2020. Cash equivalents and investments totaled $28.6 million as of December 31, 2021 compared to $20.5 million as of December 31, 2020 and $42 million as of September 30, 2021. Cash used in the fourth quarter of 2021 totaled $13.4 million compared to $9.2 million used in the same period in the prior year and $13.8 million used in the third quarter of 2021. We did not issue any shares under the at-the-market equity offering program during the fourth quarter. Excluding net proceeds from equity offerings, cash used in the full year of 2021 totaled $52.9 million compared to $34.9 million used in 2020. As Darren mentioned earlier, we have begun to implement a plan to better align our workforce and anticipated commercial and development spend with our capital resources and the needs of our business while we focus on utilization at our current commercial accounts. Workforce and program reductions across all areas of the organization are expected to lower total costs by approximately 20%, from the current run rate beginning in the second quarter of 2022, resulting in full-year 2022 operating expenses in line with 2021 levels. As a result of our commercial team's near-term focus to increase utilization at our commercial clinics, we do not expect new system sales to be a significant contributor to revenue until we achieve our utilization goals. We expect cash usage in the first quarter of 2022 to increase incrementally over prior quarter levels with reductions in cash usage to begin in the second quarter of 2022 until utilization rates increase. We remain committed to investing in development activities and additional studies to support indication expansion with the FDA. Now I'll turn the call back to Garen for final remarks.
spk04: Thank you, Sandy. Looking back on 2021, we had success with regulatory approvals in the US, Europe, Canada, and Australia, onboarding 70 controlled launch program participants, converting 29 clinics to commercial clinics, and our first commercial sales. Entering 2022, we will remain focused on partnering with our CellFX commercial clinics to increase their utilization and to create CellFX reference centers. that will further validate the development of the benign lesion market and set a foundation for future growth. We have a better understanding of the requirements to help clinics develop the benign lesion market and are creating a strategy for them to establish viable cell effects franchises. We remain committed to developing new applications for NPS technology in dermatology and beyond. We are dedicated to bringing this proprietary technology to more physicians and clinics across various fields within healthcare. This requires calculated investment that we believe can unlock additional large market opportunities where NPS technology can become standard of care. There are always challenges introducing a category-creating technology. We have learned an incredible amount in the past year, and these learnings will be important for our future success. We believe the opportunity for Pulse Biosciences and the capability of our novel NPS technology to improve patients' lives is immense. and we are excited to execute and deliver value to all our stakeholders in 2022. On a final note, I would like to personally thank our team members whose positions have been eliminated through our expense reductions for their contributions to Pulse Biosciences and wish them future success. And with that, joining me for Q&A is Sandy Gardner, Executive Vice President and Chief Financial Officer. Operator, please open the call for questions.
spk06: We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. And our first question comes from Chris Cooley of Stevens. Please go ahead.
spk00: Good afternoon, Darren and Sandy. Thanks for taking the questions. Two for me to start off, if I may. First, you guys provided a great deal of detail about not only the accomplishments you achieved during 21, launching the CellFX system, but also how you're now going to move forward based upon the learnings you've accumulated throughout the course of the year. I was hoping you could just maybe start us a little bit with, I guess, a little bit greater clarity as I'm trying to better understand driving utilization, what kind of specific goals you have at these practices before we should start to think about an expansion from a systems or an install-based perspective. And similarly, if anything has changed, when we just think about the cadence for the various indications that you were previously working on, and it sounds like you still are, but I just want to make sure that all of the initially outlined indications are still kind of tracking as expected. And then I have one quick follow-up on OPEX.
spk04: Sure, yeah. Thanks, Chris. Thanks for the questions and for listening in. As your first question, just in summary, I think, yeah, so we've been going through the controlled launch, as you know, through 2021 and converting clinics to commercial at the end of the year with 29 of those having converted and then to commercial sales for a total of 31 entering the first quarter. And as we progressed through the first quarter, I think what we realized was that we needed to focus more on driving utilization at those commercial clinics in order to get them to levels that we felt they needed to be at to be productive, that we wanted them to be at, and that they would then be reference centers for new clinics. And I think what we've observed and I tried to touch on was that I think while the controlled launch allowed many of the clinics to treat patients and see clinical outcomes, it was really less focused on how best to integrate the cell effect system into the clinic from a commercial perspective. And so I think our focus now is really going to be on these commercial centers and working very closely with them to increase our training, as we said, and education and marketing to help them with integration into you know, the clinic workflow to more efficiently be able to use the CellFX system. I think one of the things I touched on are, you know, these clinics are extraordinarily busy. Lots of patients every day are going through the clinics. And so a new technology and in many ways a new category of treating benign lesions requires them to develop kind of a new workflow for those patients. And so I think one of the things we recognized in the quarter is that we really need to focus attention on that and working with clinics to kind of optimize the best workflow for driving cell effects utilization. And I also touched on the identification of clinics that, you know, we think are optimal for the cell effects system. And those are ones that have a good mix of both cosmetic, you know, and medical dermatology which will span the different benign lesions that we're currently treating. So I think it's those elements that we've decided to structure our field sales force around, our field commercial team around, to really get in and work closely with clinics to begin to drive those utilization levels. And what I mentioned in the prepared marks is We did see in the first quarter that utilization increased from the beginning of the quarter to the end of the quarter, and we exited the quarter with clinics, on average, doing about 10 patient treatment sessions per month. Our goal for the end of the year is to have those clinics at 40 patient treatment sessions per month. We think it's a stretch goal for us. It's something that we're going to strive for. and we think we can achieve. And as we begin to see achievement of that, I think that's when we'll start to look at driving more system sales into the market. But until we begin to see that, we felt that it was the right thing for us to do to really focus our commercial team on driving utilization to those levels. And so... Yeah, so that's, you know, I think in a nutshell, you know, that's our strategy going forward. And I would, on the indication side, yeah, I think you're absolutely right. We haven't slowed down on that. We have a lot of activities with regard to indication expansion and driving indications. We talked about dermatofibroma on today's call, but certainly there are other indications that we've mentioned that you know, we continue to have interest in from physicians. And as those get further along, we'll be providing more information on it.
spk00: Thanks, Darren. I really appreciate all that color. And just maybe just quickly, if we could shift gears, maybe a question for you, Sandy. You know, I appreciate the additional color there on the 20% from the OPEX reduction getting you basically flat with calendar 21 levels and clearly a step up. Sequentially, they're in the one cube, but then starting to drop down. Just curious from a cash burn perspective, do you think there are other opportunities with this shift in the model to free up some cash from either a balance sheet from a working capital perspective or a requirement to carry less inventory maybe on the capital side? Just trying to kind of get to a cash burn number for the year, you know, taking into consideration not only the reduction in OPEX, but maybe a little bit more efficient deployment of the balance sheet. Thanks so much.
spk05: Sure, Chris. Thanks very much on that. You know, I think you're exactly right. So the additional leverage there would be on the inventory side. We closed the year having $5.8 million of inventory on the balance sheet, and with the you know, realignment that we have here focusing on utilization, we'll look to, you know, conserve that cash so that we're not, you know, building additional inventory. And we do feel that the inventory levels that we have certainly will support the near-term usage that we need.
spk00: Thank you both.
spk05: Thanks, Chris.
spk06: The next question comes from Anthony Vendetti of Maxim Group. Please go ahead.
spk03: Yes, thanks. Just wanted to talk a little bit more about the controlled launch. So the 70 KOLs, can you talk about where exactly they're at? You said you thought it would be about seven months. Some have acquired the system, right? So we have 17 that acquired them in the fourth quarter, 10 more in the first. So it's up to 39. And then you had 11 opt out. So if we do the math, there's like 20 left that haven't made a decision one way or another. What's the expectation for those 20? Is that a second quarter decision? By the end of the second quarter, all 20 of them should make a decision one way or another. And then can we talk a little bit more about once that happens, what the commercial launch will look like? And I'll have a follow-up after that. Thanks.
spk04: Yeah, okay. Yeah, thanks, Anthony, and thanks for listening. And so you got the numbers exactly right, which is great. And so the 20 that are now entering the second quarter are You know, I wouldn't want to guess at whether or not all of those will go through and complete the requirements in the second quarter. You know, certainly those are all clinics that have been in the program, you know, since the latter part of last year. So they're already well into the program. I would expect that, you know, a good majority of those will likely get through the program in the second quarter. You know, and our expectations are and continue to be that, you know, a good number of those or a good proportion of those will convert to commercial. And some of those, you know, may opt out, you know, kind of along the lines of the percentages that we have to date. So I think those will continue and, you know, will trend likely the way we've seen the trend thus far.
spk03: And just to follow up on that, Darren, so The ones that are opting out, is it because, and I'm sure there's various reasons, but are they just not utilizing it enough? And before they opt out, is there, you know, before they officially opt out, if they're thinking about opting out, is there a pulse there? clinical team that goes there or, you know, to say, hey, you know, this is how maybe you could be using this more effectively for these lesions, other lesions, or training them or even helping them market so that their utilization could increase to the point where maybe they decide not to opt out?
spk04: Yeah, yeah, that's a great question. So, You know, I think what we saw early on, and I think we talked about this on some previous calls, is that initially clinics that opted out, it was often because the controlled launch program is or was for them, you know, too burdensome, meaning that, you know, in the controlled launch, we require a lot of work of the clinic in the form of a data collection, so surveys, the physician does surveys, patients do surveys. We collected a lot of data in the clinic itself from the staff, kind of as they're working through the controlled launch program. And that, as we've said, is in exchange for credits that they can use to purchase the system. So early on, a number of the clinics opted out, and we see this also a little bit recently, simply because they were, you know, their expectations in terms of how much work would be required were not sort of aligned with how much time they had and how much they wanted to invest in a new technology like this. So they just simply were a bit overwhelmed by the requirements of the controlled launch and just said, you know, it's not a good time for them, that maybe they don't have the staff to support it, and they would like to, you know, perhaps circle back when the cell effect system is available commercially and not in the controlled launch. So I would say, you know, that's a significant portion of it. I think the other thing we've learned through the controlled launch is that, you know, not all clinics, and I alluded to this a little bit in the prepared remarks, is that maybe not all clinics have the right makeup for the cell effects today. So by makeup, I mean kind of mix of cosmetic and medical derm procedures going on. So as an example, if the clinic is a 100% cosmetic, you know, and one of our leading indications these days is noncutaneous warts, they may not see a lot of wart patients and really may not appreciate the value of treating wart patients in that setting. And so I think we've had some that felt like, you know, their patient and procedure mix just wasn't aligned with this idea of treating benign lesions in terms of where we're at. And so, you know, I think it's helped us refine the clinics that, you know, we think are the appropriate targets. And that's just, you know, just an example, I think, of a couple of those situations that have happened.
spk03: Okay. And then lastly for Sandy, maybe on the 15% to 20% workforce reduction, Is that kind of across the board? And are there any reductions in the Salesforce? Or what's the Salesforce number and what's the goal? What should that number look like throughout this year?
spk05: So it is across the board. The 15% to 20% reduction is across the board. But I would say it is, you know, with the realignment and the focus on utilization, In lieu of new system sales, if you were to look at the different categories, sales and marketing and general administrative would have the larger impact of those reductions. So as we go into, as we report on the Q1, we'll actually give a bit more detail in terms of restructuring costs and where we are at that point in time. We're beginning to implement this now.
spk03: Okay. And then just the Salesforce, just remind me, what's the Salesforce number at right now? And is whatever number that is, is that kind of what you think you need for the rest of this year at this point?
spk05: So what we're doing is we are actually making reductions to the commercial organization as it is today because we had individuals from regional directors, what I would say capital equipment folks, territory managers, and then the clinical application specialists that were focused on utilization. With our strategy to where we're only focusing or giving a primary focus, I should say, to utilization and not the capital equipment sales, the ones that would be impacted the most in the realignment would be the new system sales folks or the capital equipment individuals.
spk03: Okay, great. That makes sense. Okay, thanks for that, caller. I appreciate it. I'll hop back in the queue.
spk04: Thanks, Anthony.
spk06: The next question comes from Sayampakolor Ramakant of HC Wainwright. Please go ahead.
spk01: Thank you. Good afternoon, Darren and Sandy. Hi, RJ. A couple of quick questions. The first one, you know, as part of the control launch, you know, you were collecting data from all these different clinics that were using the CellFX. When would you be able to collect the data into a format that you can publish, either as oral presentations or in print publications?
spk04: Yeah, it's a good question, RK. I don't have a time for that. I mean, we're continuing to collate that survey data, and we'll look for an opportunity to do that in the future. It's not clinical data in the sense of controlled clinical data in terms of lesions and so on and so forth. It's much more about the experience of the clinic and the physician and the patient experience. But we're certainly going to look for opportunities to get that data out there.
spk01: Thank you. And then for you to get the utilization increased from current 10 sessions per month to 40 sessions per month, what do you think is some of the key criteria or key factors that you got to promote to these physicians? Is it just purely workflow? Is it more than that? Is it advertising dollars by these individual physicians? What sort of things are you thinking about and how much can you help and how much does the clinic itself need to spend time and effort?
spk04: Yeah, it's a good question. You know, I think this always comes down to education, you know, and training. And then we also think, you know, marketing is a component of this in terms of helping the clinic create demand in their patients and create demand in patients and have them come in into the clinic. So we will help. Certainly we'll partner with clinics on the marketing piece. and we're starting to do that more and more. And on the training and education side, I think it is a lot about the clinic workflow, but it's also just going back and making sure that we've sufficiently trained everybody in the clinic who is looking for potential cell effects patients and sufficiently training and educating any provider within the clinic that may be using the CellFX system. And so I think it's across the board. We think there are opportunities to help the clinics on the training and education side, both in terms of identifying those patients and how to efficiently treat those patients and those lesions within the clinic, but also just simply continuing to provide education and training to the clinic staff on you know, how to efficiently treat using the technology. So I think we feel like it's an across-the-board training and education that we can play a large role on and we take responsibility for. You know, it's up to us to help those clinics be successful, and we believe that by doing that, we can drive that utilization to those levels.
spk01: All right. Thank you very much for taking my questions, and I'll talk to you soon.
spk04: All right. Thanks, RK. Appreciate it. Thanks.
spk06: Our next question is a follow-up from Chris Cooley of Stevens. Please go ahead.
spk00: Oh, good afternoon. I appreciate you taking the follow-up. Just two quick clarifying questions for me, if I may. First, on the utilization target of 40 procedures per month, I'm assuming that is an exit rate, but I just wanted to clarify that. That's what you're anticipating, exiting the calendar year versus the full year average. And then secondly, just when we're thinking about this additional support at the clinic level or the practice level to integrate the technology, I think as I listen to your responses here to the questions, it really sounds like this is more of a, of a workflow type issue more so than maybe an absolute training on the procedural side. I just want to make sure I'm picking that up correctly, and if not, I want to get on the right path. Thanks so much.
spk04: Yeah, thanks, Chris. So on your first question, you know, I think our goal, as I mentioned, is to get the clinics you know, 40 patient treatment sessions per month, and to do that this year. So, yes, I think it is a goal to get to that, you know, by the end of the year, so, you know, exit at that. But really, our goal is to do that as quickly as we can, and that's our focus. You know, as to the question in the clinic, I think it can be both. I mean, I think there is certainly a clinic workflow component, you know, where clinics are determining, you know, how best to integrate the cell effects as patients are coming through the clinic. So, you know, for example, if a patient is getting a whole body check, you know, are they going to, if they identify a lesion and the patient is interested in cell effects, are they going to treat at that time or are they going to schedule that patient later, perhaps on a cell effects day? where they're going to do a whole bunch of treatments in one day. I think those kinds of workflow implementations and questions depend a lot on the clinic and how the clinic is organized. And so part of what we're doing is working with all of our clinics to help them optimize for their clinic and then using those kind of best practices across other clinics. As it relates to training on use of the system, I think we will always work towards improved training of, you know, utilization of the system. And that just may mean that we're figuring out ways that they can treat faster, you know, so they can get a patient in and out faster. If there are ways we can improve the system or improve the training to do that, that, in fact, could affect their clinic workflow. So, you know, I think we're looking at it from all points of view and all angles in terms of how we can improve the process and improve our system in any way to help drive utilization. I think the things that we see today probably do focus more on the workflow side, but if we're not doing a good enough job training on how to use the system, that will certainly impact that. So I think there are multiple factors that we'll be focused on as we do this. Thank you.
spk06: This concludes our question and answer session. I would like to turn the conference back over to Darren Uecker for any closing remarks.
spk04: Thanks, operator, and thank you, everybody, for your participation and support. We look forward to communicating again very soon.
spk06: The conference is now concluded. Thank you for attending today's presentation, and you may now disconnect.
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