Profound Medical Corp. (NASDAQ:PROF) Q2 2023 Earnings Conference Call August 9, 2023 4:30 PM ET

Company Participants

Stephen Kilmer - IR
Arun Menawat - CEO
Rashed Dewan - CFO

Conference Call Participants

Rahul Sarugaser - Raymond James
Nelson Cox - Lake Street Capital Markets
Ben Haynor - Alliance Global Partners
Joshua Jennings - TD Cowen

Operator

Good day and thank you for standing by. Welcome to the Profound Medical Second Quarter 2023 Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to Stephen Kilmer, Investor Relations. Please go ahead.

Stephen Kilmer

Thank you. Good afternoon everyone. Let me start by pointing out that this conference call will include forward-looking statements within the meaning of applicable securities laws of the United States and Canada.

All forward-looking statements are based on Profound's current beliefs, assumptions, and expectations and relate to, among other things, expectations regarding the efficacy of the company's treatment technologies, results of future clinical trials, the ability to obtain coding and/or reimbursement from third-party payers, anticipated financial performance, business prospects, strategies, regulatory developments, market acceptance, and future commitments.

Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance, or achievements to be materially different from those implied by such statements. No forward-looking statement can be guaranteed.

Listeners are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this conference call. Profound undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, other than as required by law.

For the benefit of those, who are new to the Profound story, I would also like to take a moment to summarize our business. Profound develops and markets customizable incision-free therapies for the ablation of diseased tissue. We are currently commercializing TULSA-PRO, a technology that combines real-time MRI robotically-driven transurethral ultrasound and closed-loop temperature feedback control. The technology is designed to provide customizable and predictable radiation-free ablation of a surgeon-defined prostate volume, while actively protecting the urethra and rectum to help preserve the patient's natural functional abilities. TULSA-PRO is CE marked, Health Canada approved, and 510(k) cleared by the FDA.

In the U.S., we employ a pure recurring revenue model for TULSA-PRO, whereby we charge customers on a per-procedure basis for TULSA-PRO consumables, lease of medical devices, and services associated with extended warranties. Outside of the United States, we primarily deploy a capital and consumable sales and service models separately if the situation warrants that.

We're also commercializing Sonalleve, an innovative therapeutic platform that is CE marked for the treatment of uterine fibroids and palliative pain treatment of bone metastases. Sonalleve has also been approved by the China National Medical Products Administration for the non-invasive treatment of uterine fibroids and has recently obtained FDA approval under Humanitarian Device Exemption for the treatment of osteoid osteoma. The business model for Sonalleve Systems is currently a one-time sale capital equipment.

On the call today, representing the company are Dr. Arun Menawat, Profound's Chief Executive Officer; and Rashed Dewan, the Chief Financial Officer.

With that said, I'll now turn the call over to Rashed.

Rashed Dewan

Good afternoon everyone, and welcome to our second quarter 2023 conference call. On behalf of the management team and everyone at Profound, I would like to thank you for your ongoing interest in our company. For those of you, who are shareholders, we appreciate your continued interest and support.

I will turn the call over to Arun in a moment for an update on our commercial activities. However, before I do, I would like to provide a brief update on our second quarter 2023 financial results. To streamline things, all of the numbers we'll refer to have been rounded, so they are approximate.

For the three month period ended June 30, 2023 the company recorded revenue of $1.6 million with the full amount coming from recurring revenue representing an increase of 38% from $1.2 million in the same period of 2022. Total revenue in the last year second quarter was $2 million with 864,000 of that coming from one time sale of capital equipment in international market.

Total operating expenses in the 2023 second quarter which consists of R&D, G&A and selling and distribution expenses were $7.5 million, a decrease of 14% compared with $8.7 million in the second quarter of 2022.

Breaking that down farther, expenditures for R&D were $3.2 million, a decrease of 14% compared to the second quarter of 2022. G&A expenses decreased by 21% to $2.1 million, and selling and distribution expenses decreased by 6% to $2.3 million.

Net finance costs for the 2023 second quarter were $884,000 compared with net finance income of $1.9 million in the same three month period of 2022. Overall, the company recorded the second quarter 2023 net loss of $7.4 million, or $0.35 per common share compared with net loss of $5.9 million, or $0.28 per common share for the same three month period in 2022. As of June 30, 2023 Profound net cash of $39.3 million.

With that, I will now turn the call over to Arun.

Arun Menawat

Thank you, Rashed. And good afternoon, everyone.

At the beginning of the year, we identify certain goals that we want to achieve this year to achieve our main objective of driving adoption of the TULSA procedure for patients with prostate diseases in the United States.

At this mid-year point, I would like to start by discussing where we are against these goals. First and foremost, we indicated that we anticipated that the growth of the TULSA procedures in the United States would kick up to about 5% per month in 2023. By failing it as a monthly basis, part of our intention was to highlight the predictability of our recurring revenue business model.

As compared to Q1 2023, the U.S. recurring revenue grew by 21% in Q2 2023. Comparing the first half of 2022 versus the first half of 2023, the U.S. recurring revenue grew by 63%. Based upon these results, we remain comfortable that our U.S. business will continue to grow at a similar or better pace in the second half of this year delivering U.S. revenue growth of about 70% over last year.

We realize that these numbers have a small base but our benchmarks indicate that acceleration of the growth rate in the upper double digit is the right expectation at this stage of the company where the primary mode of payment remains cash pay. 70% of our patients today remain cash share patients and are typically paying over $30,000 per procedure.

The second expectation was that we would apply and receive approval of Category 1 CPT codes specifically for the TULSA procedure and as you already know, that goal was achieved in June. With sponsorship and support from multiple physician specialty society, the AMA established three new Category 1 codes for TULSA, which will be effective on January 1, 2025.

The first code is for a procedure performed by a specialist such as a urologist without assistance from another specialist. The other two codes are for a procedure performed by two physician, such as a urologist and a radiologist. We believe having multiple codes gives our physician users the flexibility to either do the whole procedure or collaborate and get reimbursed for their part of the service.

The next step of the CPT application process involves the relative value scale update committee, or RUC sending questionnaires to TULSA users to determine the physician work related value units or RUVs associated with the TULSA procedure. Both the SIR and the AUA will be very involved in this process, which along with reviewers by the center of Medicare and Medicaid Services, or CMS will ultimately determine the TULSA procedure payment amount.

For reference, the U.S. hospitals performing the TULSA procedure on Medicare patients are currently utilizing HCPCS code C9734 established by the U.S. centers for Hospitals Outpatient Prospective Payment System and reimbursement to a hospital billing under this code is $13,048. The proposed recommendations are expected to be published in the Federal Register in August 2024 finalized in October 2024 and come into effect as of January 2025.

The third goal was about increasing the size of the installing given that our U.S. business model is about getting paid on a per patient basis in larger install base in preparation of January 25 when the Category 1 CPT code will become effective will be important to drive faster growth in the future.

Today, we have an installed base of 38 system, an additional 7 contracts to be installed and a pipeline in the final stages of 15 additional installation. All together this gives us confidence that we will be expected install base of 50 systems by the end of this year.

Indeed, none of the U.S. business objectives or deliverables for the remainder of 2022 have changed. The non-U.S. business however is all about capital revenue, which is always unpredictable in the early stages and is even more so, in our case, since we have chosen to increase our sales and marketing investments in the U.S. and not in the international market. Having said that, we do expect that our install base in certain country, including the important market of Japan will increase in the second half of 2023.

Turning to our utilization metric. Over the last two quarters, I have talked about the variety of patients that are being treated using TULSA technology. We continue to see that more and more sites are increasing the variety of TULSA patient they are achieving.

With respect to indication, approximately 66% were treated for prostate cancer, 25% or hybrid patient suffering from both cancer and BPH, 7% are salvage and 2% for men with BPH only. TULSA is increasingly being used in patients who are on active surveillance or diagnosed with low grade cancer but also have symptoms of BPH. We to see TULSA as the only minimally invasive option for such patients.

For cancer grade, approximately 14% was Grade Group 1, 60% was Grade Group 2, 17% was Grade Group 3, and 9% was Grade Group 4 and Grade Group 5. In terms of abrasion, around 60% were whole gland, 24% was greater than 50% but less than 100% and 16% was focal therapy.

For prostate size, approximately 4% or less than 20 cc, 34% were between 20 cc to 40 cc, 37%, were between 40 cc to 60 cc, 20% are between 60 to 100 cc, and 5% were over 100 cc. Based upon these results clearly TULSA continues to be used in a wide variety of patients with prostate disease and we continue to believe that the total addressable market for TULSA is about 600,000 patient which is larger than that of any other technology that can be used to treat patients with prostate cancer.

Finally, I would like to provide an update on the TACT Pivotal Study, which has reached the end of five year follow up duration and the results demonstrate the predictability and durability of the TULSA procedure. By five years, median prostate specific antigen or PSA was 0.63 nanograms per milliliter and only 21% of patients received additional treatment for prostate cancer without unexpected complications. The letter outcome is especially compelling as it falls in line with the one year biopsy data and compares well with similar rates reported after radical prostatectomy intermediate with men in several publications including the pivot randomized controlled trial and the capture registry, one of the largest databases of prostate cancer in the United States.

Although this outcome was achieved despite the fact that a second TULSA ablation was not permitted by protocol. Since the early days of TACT, physician experience and protocols for patient selection and treatment have been refined, and on review, the risk of failure is mitigated by modern management approaches. Additionally, we have been able to demonstrate that data from intraprocedural thermal MRI imaging and our early clinical follow-up can indeed predict the risk of salvage therapy by five years.

The five year outcomes in the TACT study also establish the durability of the favorable safety and functional outcomes that were achieved by one year. For urinary continence 92% of patients who were pad-free before TULSA remain so at five years stable from one year. This is consistent with natural decline in function typically observed in men of this age over this time period, as reported, for example in the observation arm of a pivot randomized controlled trial.

For erection function, zero men experienced grade 3 severe erectile dysfunction where medication is not helpful and 87% of men preserved baseline erection sufficient for penetration by the five year visit. There were no attributable Grade 3 severe or serious adverse events reported from two to five years.

To summarize, most of the boxes for increased adoption of TULSA-PRO has now been checked. Our reporting of preliminary five year results from the TACT file comes within the context of increased awareness of the high incontinence and erectile dysfunction, side effect rates with radical prostatectomy and radiation treatment.

The preliminary five year TACT data demonstrates that one year safety, efficacy, functionality and salvage therapy risks outcomes are predictive of the same outcomes at five years. This is encouraging, as we expect in Q1 2025 initial data from our ongoing level 1 CAPTAIN clinical trial.

TULSA continues to the unrivalled in the types and numbers of prostrate disease patients that urologist are using to treat prostate disease safely and effectively. With 38 TULSA-PRO comprised of top tier hospitals, independent corporate centers and opinion leading practices, we now have a large number of experienced physicians, especially urologist who are ready to lead adoption of TULSA-PRO.

We remain on track to grow our install base to 50 TULSA-PRO sites by the end of 2023 and at least 75 by the end of 2024. TULSA-PRO offers a price point of over $8,000 per patient. Our recurring revenue has grown for five consecutive quarters and we expect that to continue going forward. Our recurring revenue model already yields high gross margin of around 55% and we think they will potentially exceed 75% in future with increased volume.

We are delighted with the AMA's establishment of three new CPT Category 1 codes for TULSA which will be effective on January 1, 2025 and look forward to the next stage of the CPT process.

Finally, we continue to believe that the establishment of the permanent reimbursement codes combined with the initial data from the CAPTAIN clinical file will serve as a significant catalyst for TULSA adoption in the U.S. beginning in the first quarter of 2025.

This ends our prepared remarks for today. With that, Rashed and I are happy to take any questions you might have. Operator?

Question-and-Answer Session

Operator

Thank you [Operator Instructions] Our first question comes from Rahul Sarugaser from Raymond James. Please go ahead.

Rahul Sarugaser

Good afternoon, Arun. Good afternoon, Rashed. Thank you so much for taking our questions. And let me start by saying congratulations on getting the CPT codes this quarter. So my question is sad to see the growth from 34 to 38 devices this quarter. And so looking that, you'll need to grow by an average of six more devices per quarter to get to the yearend goal of 50. And also given that now that you have the CPT codes in hand, and granted that they'll come into force and over a year from now. Are you seeing growing - momentum among hospitals and doc's for the escalation that you think will be a tailwind to the ventilation?

Arun Menawat

Hi. Good afternoon, Rahul. Yes. I think we done message is even relatively new. But it is definitely impacting the pipeline that we're building. The pipeline that I talked about, in the prepared remarks of, about the 15 systems that are in the final stages, or the seven contracts that we additionally have. That I would say, because work that was done prior to that news. But yes, I think the answer to your question, short answer is definitely we're seeing very positive feedback about the permanent code. And more certainly more and more of the neurologists are interested in learning about it, and also getting trained on it.

Rahul Sarugaser

Terrific, thanks for that, Arun. So my second question is focusing on reimbursement is - there was some discussion last time about potential expansion of the existing C code 9734 to ambulatory centers? Would you be able to perhaps share an update on that?

Arun Menawat

Sure. Well, I would call it sort of work in progress. I think we will know sometime in October, early October. As I mentioned before, the data supports the expansion. And so, we are in dialogue, we're continuing to be in dialogue with CMS. It's kind of hard to put the odds in - at the moment, it could be that, hi, they're saying, well, a year from now, you'll have a permanent code, which will be effective in ASCs, and so on, also.

So, they may feel like this is generic code, and they don't want to go there. But on the other hand, the data strongly supports the request, and it's not a major change for them to make. So, I think I would say stay tuned. I certainly don't think that it's a lost cause. I think it's just work in progress. And we do have a strong case.

Rahul Sarugaser

Terrific. Thanks very much. And if it does, one last quick question. It's interesting to see the - broadening use, right, through active sales BPH through salvage, and, of course, the range and sizes of prospects that are being treated. So now some translating this to the captain trial, and of course, your recruitment. How do you see recruitment playing out in that trial? Are still looking at early 2025 for initial read on that data? And what can we be looking for in these utilization numbers that you've outlined today? And hopefully we'll continue to do to as sort of leading indicators leading into that into that Captain readout?

Arun Menawat

Yes, well, that's a great question, actually. First of all, we are really, really focused on the U.S. business at this point. And so the growth rates that I've talked about our U.S. growth rates, and the - as the experience of the U.S. community is increasing. I explicitly. Thank you, you're right is that we're finding that there's a subset of population, which is actually a very large subset, which is patients who have BPH symptoms, and need a procedure, but also have cancer.

And that happens to be low grade cancer. So normally, they don't get treated, and they're on drugs, and they're suffering from the psychological trauma of having cancer, and they're suffering from the symptoms of BPH. That subset, we think, is an amazing sweet spot for TULSA. So, I think we are going to see more and more of that. But the CAPTAIN clinical trial is really because it's designed to be a level one study head-to-head with prostatectomy.

The patient population in that trial is more aligned with what more traditional intermediate risk or higher risk patients. So, I think, at some point, we will be publishing more data on the other subset of the population. But the CAPTAIN file itself is actually more of a head-to-head against radical prostatectomy. So the patient selection criteria there is similar to normal prostate cancer patients who would be treated.

And finally, you're right, we will, we do expect that we will have results, the preliminary results in early to early 2025. And again, just to highlight one more thing, again, that the most important thing that we learned from TACT that I talked about in the prepared remarks, is the predictability of the results. So that we'll be able to discuss with peers as well as your urologists about the fact that, hi, the data was predictable, in fact, there's no reason why that should not be changed, even the early results should be impactful

Rahul Sarugaser

That's an important distinction. Thank you very much. Thank you again, for taking our questions. We'll get back in the queue.

Arun Menawat

Thank you, Rahul.

Operator

Thank you. One moment for our next question. Our next question comes from Michael Sarcone from Jeffries. Please go ahead.

Unidentified Analyst

Hi, guys, This is Chris on from Mike, thanks for taking the question. I was wondering if you could give an update on the broader macro environment and the backdrop for our system installs. Any challenges or bright spots to call out there?

Arun Menawat

Chris, good afternoon. I think I mean, I don't know if I have too much of a commentary. I think that the pipeline is pretty strong. I don't think the macro environment is affecting us that much. I think that the recognition that this technology is flexible, and has tremendous potential from this variety of patients, which I'm which I talk about all the time with our urologist and here. I think that message is definitely resonating. And the kinds of startup related issues of you know, finding the MRI training, the anesthesiologist, upgrading the system, the MRI to unable to use .

I think most of those things are now sort of such that we know how to resolve them, compared to a year ago. And that is why, you know, I think we're seeing increased usage. And that is what I think is driving the pipeline. So. I have been in summary, Chris, I don't see any headwinds from the macro environment.

Unidentified Analyst

Awesome. Understood. Thanks.

Operator

Thank you. One moment for our next question. Our next question comes from Frank Tekken from Lake Street Capital Markets. Please go ahead.

Nelson Cox

Hi, this is Nelson Cox on the phone for Frank today. Thanks for taking the questions. So in prior quarters, you've talked about Mr. time being a challenge to come by and resulting in some backlog, can you maybe update us on that dynamic in the most recent quarter and month?

Arun Menawat

Sure, Nelson. As I was saying in the other conversation. We have enough different types of MR that we are compatible with. If we look at our installed base today, I think we use all three magnets from all three companies, almost equal from all three companies. And that variety of MRs being used is continuing to expand. And in terms of the usage time, and availability, I think it's, it's been, because we have temporary code, or cash pay mostly.

Basically what we've learned is, once the patients are scheduled, you know, the communication with the administration to make sure that the MR time is available, it works. So it's more of a matter of how do we take an entirely new technology, and make sure that the right things are discussed at the sites to drive utilization? I think that's what it is. The availability of the MR is really not the issue anymore.

Nelson Cox

Got it. Then one more, quick one, in the past, you're talking about 60 years kind of being the utilization rate. Can you talk about a trend with new users? Have you seen new sites ramping up and how have you seen new sites in the first three months, six months? And then what have you kind of seen for volume as that 12 month mark there?

Arun Menawat

Yes, very good question, Nelson. I do think that we are far better this year, as compared to last year. And in terms of the rent of the sites, for several reasons. One of them is suddenly we know a lot better, our sales team is more experienced and lot better with respect to how to get the startup rolling, how to make sure we educate them properly. And so on like our clinical genius team is quite frankly, great at it.

And I think the second reason is the things that I talked about the fact that now they can see the wide variety of patients. So, they're no longer are saying oh gee, I'm going to treat only this type of patient with this technology, I think they're starting to see that they can to treat more patients. And so, I do think that, the rate of startup, the rate of adoption will increase.

As I mentioned in the prepared remarks, I think the goal that we said U.S. revenue of 70% growth this year is all related to that is what I think is likely to happen. And I also think, our install base, compared to, six months ago, is going to double by the end of this year. So, I also think 2024 should be, even better compared to this year. So, hopefully that helps.

Nelson Cox

Yes, thank you. Congrats on the quarter. It's good to see the progress.

Arun Menawat

Thank you, Nelson.

Operator

Thank you. [Operator Instructions] One moment for our next question. Our next question comes from Ben Haynor from Alliance Global Partners. Please go ahead.

Ben Haynor

Hi guys. Thanks for taking the questions and congrats on the CPT code front. You often - just want to hit on that kind of a couple of big picture comments you made in the prepared remarks. You mentioned that you've been able to get to north of 75% gross margin with enough volume. Just kind of wondering where you're at on sort of a marginal gross margin basis, if you will, or contribution margin basis. Currently, what the - kind of the consumables?

Arun Menawat

That's a great question. That's kind of where the confidence comes from. I think the marginal margins are, already fairly close to that number. So yes, I think it's more about absorption of the overhead. In terms of technology, I don't think we have to do much, even though we have an excellent engineering team, and they're driving the cost of goods, also, and quality. But I think that it's getting to that margin is really more about absorption over a larger volume.

Rashed Dewan

So, I like to add - so from a short-term, the marginal contribution from the increased revenue is going to be in line with what we have been recording in Q1, Q2, but over time, that the volume goes significantly higher, that's when we expect that the margins going to improve north of 70%. Is because again, number one is we're going to have a volume discount that we can negotiate with the vendors. And as Arun mentioned is we can spread out our regular overhead with a lot more product.

Ben Haynor

Okay. Perfect and thanks for the color guy. And then, just on the 50 installs, this year and over 75 at the end of next year. As one of the earlier folks pointed out that that sixish a quarter, which doesn't seem like that heavy lift, given that you now have the CPT codes behind you, I know that it doesn't kick in right away. But it seems to me that that would accelerate fairly easily, or you could get to more than six a quarter, relatively readily. I mean, any commentary there?

Arun Menawat

Ben I think on paper, everything looks great. But I think the reality, getting to where we are, has been a lot of work. And it has not been because of our technology, it has not been, because patients are not happy patients are very happy. It has primarily been, because this is such a unique technology. And the workflow is so different. So, I think I feel far better today that we know how to tackle that workflow than I felt a year ago.

But that's the reason I just want to be very open about this is, I feel we're definitely on the right track, we're growing at the pace that I think is appropriate for us. But I'm certainly not at a point where we're ready to talk about faster growth then what we have.

Ben Haynor

Okay, fair enough. And then lastly, one from me, you mentioned in response to one of the early questions on - that the engineering team is doing a great job. And I apologize if I missed this earlier, but anything new kind of on the R&D front, or that we should be on the lookout and coming soon or I know you had some stuff in the in the deck recently, but just curious on any updates there?

Arun Menawat

Yes, Ben again, great point. I think the most important one that is on the horizon is the TULSA AI which will not only use the knowledge of is the few 1,000 cases that have been done, that have been successfully done. And based upon that it will automatically provide a guideline to the physician of where, how to plan the treatment. And so I think that is, of course, there is more that I'm not going to share today, but certainly next year, we will.

But I think the point being that it will not just it's not just a time saver, but I actually think that over time, it has the potential to improve outcomes beyond the threshold of that about 20% of patients always need something else beyond the first treatment. I think that is something quite frankly very exciting to us.

And we will be monitoring how it goes. And we have, we're working according to the guidelines that FDA has provided to us, and I feel very good about being able to deliver that product next year. And I do think that that product will provide some growth in 2024 as well.

Ben Haynor

Okay, great. Appreciate the color there. And that's it for me. Congrats on the CPT prompt and the progress.

Arun Menawat

Thank you, Ben.

Operator

Thank you. Our next question. One moment. Our next question comes from Joshua Jennings from TD Cowen. Please go ahead.

Joshua Jennings

Hi, good afternoon, I was hoping to just start off and ask about, as we look out into 2025, when reimbursement will be in place, and some of these engineering development projects will be the system will enhance the TULSA-PRO system. We need to also just ask about how you're thinking about the advancement of MR technologies, and potentially, some of the large imaging players evolving their systems to better integrate with the delivery of MR guided interventions like TULSA-PRO system?

Arun Menawat

Good afternoon, Josh. Yes that's a very good conversation to have also. So we are in communication with the MR. companies. And as you know, there is a lot of innovation coming along in that space in itself. And I think that, as a general comment, I would say, there is recognition by MR companies also, that moving from, the standard robotics to MRI based incision, free robotics is where the next growth could come from.

Because I think if we go into the ASC, this is one way that we can get to ASCs, where they've always wanted an MRI, where we think we can be one of the one of the key justifications to get one. And so, I think the MR companies also are looking at interventional MRI as a growth opportunity for themselves. And they look at TULSA.

And this, again, the flexibility, and the variety of patients was intrigued as a, potentially a very good driver towards that change. So I do think, Josh, that you will see more and more dialogue. And I think it will come into the public domain, in 2024 timeframe, where you will start to see some alignment with MR companies and TULSA.

Joshua Jennings

No, that's exciting. And then you did mention ASCs or, and I was just hope I didn't miss this, but just the potential for expansion of the C code to for TULSA PRO coverage and ASCs. Maybe next year, any updates there, and then also would love to just hear about and if you can expand on the ASC opportunity. And how that channel could evolve on outside of just the evolution of MR systems and getting MRs into ASCs? Thanks for taking the questions.

Arun Menawat

Yes. Absolutely Josh. So the ASC question I've answered, it's basically work in progress. The data that we have submitted to the CMS strongly supports the expansion. And we have a meeting coming up with them. And I think it's hard to predict exactly where they're going to go. And I was saying before, you know, the beta, usually CMS does, when there is support, but you never know. So on that, from that perspective, I'm optimistic.

On the other hand, the code that we're using is a generic code. And so they might feel like they don't want to change the code. And the fact that we are getting the CPT code is approved, might actually be a bit of a part for them, because they might say, well, they're going to get by '25 anyway, so why do I want to change this genetic code for one year? So I could see arguments on both sides. But I do think that it's not have a big change for CMS to make. And so, I do have some level of optimism that we could get there.

But I think the bigger point that you're making is a very important one, which is that I think ASCs can be a very a prime target for us in the long haul, to drive usage of this technology. Because, you do those procedures at ASCs, where you don't have the possibility of emergencies, or emergencies for the patient. And in our case, because there's no incision, and as I've talked about before, if the lights go out.

They can basically wake up the patient, take the catheters out and tell them to come back in two weeks. And in Europe that has happened, at least once that I know. And so it's not a risky procedure from that perspective. And so, I do think that ASCs are going to gravitate towards this, and MR companies will gravitate towards this. And we think that's where this belongs as well.

So, I think hospitals and ASCs over the long haul are likely to be the best places for this procedure, and it's a great procedure. So, I do think patients will be much happier going to those outpatient places.

Joshua Jennings

Appreciate all the answers.

Operator

Thank you. I am showing no further questions at this time. So now we'll turn the conference back over to Dr. Menawat for closing remarks.

Arun Menawat

Thank you so much. And we look forward to updating you at the Q3 call. Thank you.

Operator

This concludes today's conference call. Thank you for participating, you may now disconnect.