Good day, ladies and gentlemen, and thank you for your patience. Welcome to the Pulmonx Third Quarter 2020 Earnings Conference Call. At this time, I would like to turn the conference over to Mr. Brian Johnston of the Gilmartin Group. Thank you. Please proceed.

Thanks, operator. Good afternoon, and thank you all for participating in today's call. Joining me from Pulmonx are Glen French, President and Chief Executive Officer; and Derrick Sung, Chief Financial Officer. Earlier today, Pulmonx released financial results for the quarter ended September 30, 2020. A copy of the press release is available on the company's website. Before we begin, I'd like to remind you that management will make statements during this call that include forward-looking statements within the meaning of federal securities laws, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements contained in this call that relate to expectations or predictions of future events, results or performance are forward-looking statements. All forward-looking statements, including, without limitation, those relating to our operating trends and future financial performance; the impact of COVID-19 on our business and prospects for recovery; expense management; expectations for hiring; growth in our organization; market opportunity; guidance for revenue, gross margin and operating expenses; commercial expansion; and product pipeline development are based upon our current estimates and various assumptions. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements. Accordingly, you should not place undue reliance on these statements. For a list and description of the risks and uncertainties associated with our business, please refer to the Risk Factors section of our public filings with the Securities and Exchange Commission, including the final prospectus filed with the SEC pursuant to Rule 424(b)(4) on October 1, 2020, in connection with our initial public offering. This conference call contains time-sensitive information and is accurate only as of the live broadcast today, November 10, 2020. Pulmonx Corporation disclaims any intention or obligation, except as required by law, to update or revise any financial projections or forward-looking statements, whether because of new information, future events or otherwise. And with that, I'll now turn the call over to Glen.

Thanks, Brian. Good afternoon, everyone, and welcome to our third quarter 2020 earnings call. Here with me today is Derrick Sung, our Chief Financial Officer. Before I get started, I'd like to thank two important groups of people: first, our pulmonary and critical care customers around the world who have been on the front lines combating COVID-19; and second, the entire Pulmonx team that has persevered through and delivered during this particularly challenging time across the country and in the pulmonary space in particular. Thank you all. As many of you are aware, this is our first earnings call since we completed our IPO and listed on NASDAQ in October. Before I begin, I'd like to say thank you to all who participated in the offering, which raised approximately $201 million in net proceeds to the company; and to those of you who have invested in the company since. With your support, we are now well positioned to take the next steps in our journey toward establishing ourselves as the global leader in minimally invasive treatments for lung disease. While we had the chance to tell our story to many of you through our IPO process, I'll start today's call with an introduction to Pulmonx and our platform solution before moving on to cover our recent updates and vision for the future. Pulmonx is a commercial-stage medical technology company that provides a minimally invasive treatment for patients with severe emphysema, a form of chronic obstructive pulmonary disease, or COPD. Our platform solution, anchored by our Zephyr Endobronchial Valve, treats patients who, despite medical management, are still profoundly symptomatic and either do not want or are ineligible for surgical approaches. As background, emphysema accounts for approximately 25% of all COPD patients and is a debilitating and life-threatening disease. More specifically, it progressively destroys lung tissue, resulting in a diminishing ability to breathe and engage in the most basic daily activities, leading to a high mortality rate. From a market perspective, approximately 3.8 million patients in the United States were diagnosed with emphysema as of 2018, of which roughly 1.5 million had severe emphysema. Of these 1.5 million severe emphysema patients in the U.S., we estimate that approximately 500,000 patients would qualify for treatment with our Zephyr valves. After taking into account an additional roughly 700,000 Zephyr patients outside the U.S., we believe our global addressable market is approximately $12 billion. This represents our opportunity today and does not account for any additional patients who we may be able to treat in the future with technologies under development. We expect to capitalize on this significant addressable market because there is an urgent clinical need for a safe, effective and minimally invasive solution for patients with severe emphysema, and this is what our platform offers. Current treatment options include either medical management and pulmonary rehabilitation, which are non-invasive but limited in their efficacy, or the more invasive treatments of lung volume reduction surgery or complete lung transplantation, which bring with them significant morbidity and mortality, and thus, are simply not an option for most patients with severe emphysema. Our solution is comprised of the Zephyr Endobronchial Valve, the first FDA-approved implant to reduce hyperinflation associated with severe emphysema, the Chartis Pulmonary Assessment System, and the StratX Lung Analysis Platform. Zephyr valves are indicated for bronchoscopic treatment of adult patients with hyperinflation associated with severe emphysema in regions of the lung that have little to no collateral ventilation. During the one-time bronchoscopic procedure, the valves are placed in the airways to occlude the most diseased parts of the lung, allowing trapped gas to escape until the target lobe is reduced in size. The intended result is a reduction in lung volume and hyperinflation in the target lobe, thereby allowing healthier parts of the lung to expand and take in more air. The StratX platform and the Chartis system are treatment planning and patient identification tools designed to enhance outcomes with our solution. StratX facilitates the analysis of existing CT scans to help identify target lobes and to plan the Zephyr procedure. Chartis is used to effectively simulate the procedure immediately ahead of valve placement and to definitively identify the patients most likely to benefit from this treatment. It does this by determining the presence of collateral ventilation, an exclusionary criterion that is naturally present in approximately 50% of people. Using these tools together is the best way to identify and treat patients who will most likely benefit from Zephyr valves. These patient assessment and treatment planning tools represent a significant competitive advantage, and we believe they will allow us to establish our platform as the standard of care for the treatment of well-selected patients with severe emphysema because they enable us to deliver better average outcomes. Consistent results across four randomized controlled clinical trials and over 100 scientific publications demonstrate that patients selected with the Chartis system and successfully treated with Zephyr Valve show clinically meaningful and statistically significant improvements in lung function, exercise capacity, and quality of life compared to medical management alone. As a result, Zephyr valves have been indicated in the treatment guidelines for COPD worldwide. The quality of evidence for treatment with endobronchial valves has been graded A by the Global Initiative for Chronic Obstructive Pulmonary Disease, widely known as GOLD. Further, the United Kingdom's National Institute for Health and Care Excellence, also known as NICE, has included our treatment as part of standard measures for COPD and recommended all qualifying patients be evaluated for eligibility. The consistent and significant results of our clinical trials have enabled us to establish reimbursement in major markets, and this furthers our confidence in our ability to execute. In the U.S., roughly 75% of our patient population is covered under Medicare, which pays for our medically necessary solution. The remaining 25% of our patient population is covered by commercial plans. Here, we have made significant progress in securing positive coverage decisions with national commercial payers such as Aetna and Humana. Most recently, Health Care Service Corporation, the second largest Blue Cross Blue Shield plan, covering 16 million members across five states, issued a positive coverage policy for the Zephyr Valve effective November 1. SelectHealth, a health plan serving 900,000 members across three states, also recently issued a positive coverage decision for our treatment. In all, we are very pleased with where we stand in terms of reimbursement and believe this is not a significant barrier to adoption of our treatment at this time. For perspective, even payers without positive policies have generally been approving pre-authorization requests for our technology in more than 90% of cases. Outside the United States, our solution is covered by major health systems across Europe and Asia Pacific. In the last two years, we materially improved our reimbursement situation in Austria and Germany and established national reimbursement in Belgium and France. Just last week in the United Kingdom, a commissioning decision was published by NHS England that enables access to routine funding for our Zephyr Valve treatment in experienced treatment centers. This decision is based on the advice of doctors, health experts, and patient and public representatives, further cementing the recognized clinical benefit of our procedure. It is noteworthy that the NHS England decision is specific to the design of our Zephyr Valve and does not apply to other valves of different design. Finally, just earlier today, the Scottish Health Technologies Group, a national health technology assessment agency that provides evidence support and advice to NHS Scotland on the use of new health technologies, published a report recommending endobronchial valves be made available to all eligible patients in Scotland. Now that I've provided some background on the platform and the market, I'll shift to an overview of our commercial approach. For perspective, the Zephyr Valve is now commercially available in more than 25 countries, including the U.S. Over 80,000 valves have been used to treat more than 20,000 patients globally to date. The U.S. market lends itself to a particularly efficient commercial model, given the relatively small number of U.S. hospitals and leading pulmonologists that are high-volume interventionalists. We believe we can serve substantially all of the patients in the U.S. with just 500 centers of excellence, which represent less than 10% of all U.S. hospitals. And as of the third quarter, we've already begun procedures in 135 of these target accounts. We are creating an entirely new market. To fully unlock the opportunity, we have three key elements to our commercial strategy. First, we have to train new physicians and open new hospitals, setting them up in a way that they can scale easily. Second, we have a coordinated playbook to work with the physician champion and their hospital to reach out to local community physicians with high concentrations of COPD in their practices and build awareness and referral networks. Third, as we get these elements in place, we leverage geo-targeted digital and social media to bring patients into the conversation and help them to advocate for themselves. We've been piloting this approach in specific geographies and have already seen tremendous growth in interest. While we do not see direct-to-patient as essential to our near-term success, we believe that healthcare will continue to become more patient-driven and see this as an important component of long-term growth. From a global perspective, we sell primarily through a direct sales model with more than 90% of sales through our 70 sales representatives around the world. As of the end of September, we had 42 sales reps in the U.S. and 28 sales reps focused on our international business. We find that our value proposition resonates with both providers and patients across the world, particularly because the platform is a new service line with potential economic benefits for hospitals. The procedure is emotionally rewarding for physicians given high procedural success and limited alternatives. Chartis and StratX allow physicians to select patients who are most likely to benefit, which improves the likelihood of positive results. And the procedure's minimally invasive nature translates to fewer complications and quicker recovery versus invasive alternatives. Collectively, these factors have all played a role in driving our success. Turning to our results. We were very encouraged by the strong rebound of Zephyr Valve procedures in the third quarter following the significant drop in sales that we experienced in the second quarter when our business nearly ground to a complete halt during the initial weeks of the COVID pandemic. Our worldwide sales of $10.6 million in the third quarter represent the highest quarterly sales we've achieved to date. We saw continued signs throughout the third quarter that the underlying clinical need for our treatment is durable and that a recovery in our business is underway. For example, since the onset of the pandemic in the second quarter, there continues to be strong interest from new accounts in adopting our treatment, and we've opened 21 new accounts during this time period. We have also seen StratX report activity largely return to pre-COVID levels in the third quarter, and we have seen a resumption of inbound patient calls into hospitals and into our reimbursement support service. We believe these indicators are representative of the underlying demand for our treatment and validate the significant unmet need that we are addressing for severe emphysema patients who have limited alternatives. That said, we remain cognizant that our business is uniquely sensitive to the impact of COVID. Our procedure requires a three-night inpatient stay. Our pulmonologist customers remain at the forefront of the COVID response, and our patients remain at high risk from this virus given their weakened respiratory status. Accordingly, we expect that COVID will continue to impact our business over the next few quarters, and we remain cautious against the current backdrop of increasing COVID cases and regional and national lockdowns across the globe. Nonetheless, despite COVID-related headwinds, the underlying demand in our business gives us strong confidence that we will see a relatively quick return to pre-COVID activity across our accounts once the pandemic subsides. Looking even further ahead, we remain focused on our key strategic priorities designed to fuel our growth. First, we plan to continue expanding our commercial organization by recruiting and training talented sales professionals to drive adoption of our Zephyr valves within our existing markets. Next, we intend to continue opening new accounts in the U.S., collaborating with leading hospitals and physician champions to build emphysema centers of excellence. And finally, we're focused on promoting awareness of our Zephyr Valve therapy through the training of referring physicians and the education of patients. Longer term, we are investing in new technologies to broaden the patient population that can be treated with our products. As stated earlier, Zephyr valves are an effective treatment in patients who have near or complete divisions between the lobes in their lungs, and thus, little to no airflow between the lobes. We refer to these patients as being collateral ventilation negative or CV negative. However, nearly 50% of patients with severe emphysema are collateral ventilation positive and thus are not candidates for Zephyr valves. For these CV-positive patients, we have commenced clinical research of AeriSeal, a polymeric foam that is delivered via a bronchoscope to a targeted region of the lung as a possible treatment for CV-positive patients. This patient population is incremental to, and nearly the same size as, the population we are able to treat with Zephyr valves and thus represents a significant potential increase to our total addressable market. Together, we believe these commercial and product development initiatives will help us build on our success to date and enable us to fully realize our goal to be the global leader in minimally invasive treatments for lung disease. With that said, I will now turn the call over to Derrick Sung, our CFO, to provide a review of third quarter results.

Thank you, Glen, and good afternoon, everyone. Total worldwide revenue for the three months ended September 30, 2020, was $10.6 million, a 17% increase from the $9.1 million in the same period of the prior year and an increase of 15% on a constant currency basis. U.S. revenue in the third quarter was $5.3 million, a 57% increase from $3.4 million during the prior year period. The year-over-year increase in U.S. sales was primarily driven by increasing commercial traction from the launch of our Zephyr Valve as we continued to expand our sales force and drive adoption into new accounts. International revenue was $5.3 million, an 8% decrease from $5.7 million during the same period last year. On a constant currency basis, international sales decreased by 11%, as our business continued to be impacted by the COVID pandemic. Gross margin for the third quarter of 2020 was 70.3%, relatively flat compared to the prior year period and back to the level that we experienced prior to the COVID pandemic. As we look ahead, we plan to continue driving gross margin expansion and operating efficiencies by spreading fixed overhead costs across increasing production volumes as we meet the growing demand for our products. Total operating expenses for the third quarter of 2020 were $12.8 million, a 28% increase from $10 million in the third quarter of 2019. R&D expenses for the third quarter of 2020 were $2 million compared to $1.4 million in the same period of the prior year. The increase was primarily due to an increase in personnel and clinical study-related expenses needed to support our product development and clinical research activities. Sales, general and administrative expenses for the third quarter of 2020 were $10.8 million compared to $8.6 million in the third quarter of 2019. The increase was primarily attributable to personnel-related expenses in sales and marketing as we continued to expand our commercial team as well as expenses related to building out our general and administrative infrastructure and support staff as we scale operations. Net loss for the third quarter of 2020 was $3.9 million or a loss of $1.37 per share as compared to a net loss of $4.3 million or a loss of $2.41 per share for the same period of the prior year. Net loss in the third quarter of 2020 includes a noncash gain of $3.3 million from a decrease in the fair value of the liability associated with outstanding convertible notes and a noncash charge of $0.8 million, resulting from an increase in the fair value of the liability associated with an IPO-related success fee from a prior term loan. Note that the weighted average share count of 2.8 million shares, used to determine loss per share for the third quarter of 2020, does not reflect new shares issued in connection with the closing of our IPO on October 5. New shares issued in connection with the closing of our IPO include 11.5 million shares issued through the offering, 17.8 million shares issued upon conversion of convertible preferred stock into common and 2.6 million shares issued upon conversion of the aggregate principal amount of outstanding convertible debt plus accrued interest. These shares will be incorporated into the weighted average share count for the fourth quarter of 2020. We ended the third quarter of 2020 with $39.8 million of cash and cash equivalents. This does not include net proceeds of $201.4 million from our IPO. Now, our financial outlook for 2020. We expect full year revenue to be in the range of $31.5 million to $32 million. While this factors in an expectation for continued pandemic-related impact on our sales, the recent rise in COVID cases and lockdowns occurring in many geographies around the world could present additional uncertainty to our outlook. That said, we expect to see a solid return to growth as transient headwinds from the pandemic subside and the underlying strength of our business shines through. With that, I'd like to thank you all for your attention, and we will now open up the call for questions.

Our first question or comment comes from Bob Hopkins from Bank of America.

Great. I appreciate all the commentary that you guys made as an intro. But I was just wondering if you could maybe give us a little bit more of a detailed sense for what you're seeing out there right now and whether or not that Q4 guide assumes that things kind of deteriorate from where you are right now or basically stay the same from where you are right now. And I apologize for the short-term oriented nature of the first question, but it's obviously a unique time.

Thank you, Bob. It's a really interesting time. We're receiving updates almost daily. We've dealt with similar situations in the U.S. before, but the current scenario is notably different as things are evolving. You're likely looking at the same data I am. In the U.S., we see a number of cases being rescheduled, particularly in certain hotspots, which we also experienced in the third quarter and even more so in the second quarter. Currently, the central U.S. is one of these hotspots, forming a U shape around the country from the West Coast, down South, and across the East Coast, where most accounts are still scheduling and carrying out procedures. This is encouraging since it represents a large part of our business. However, it's uncertain whether the situation will extend from the center of the country. As you know, about 50% of our business in the third quarter was in the U.S., with the other half outside, predominantly in Europe, which constitutes 85% of that international business. You're aware of the circumstances in Europe; elective procedures in France are halted until early December, and over 20 countries are experiencing varying degrees of lockdown. In our key markets, Germany continues to perform procedures, though there are hotspots affecting rescheduling. Some countries have implemented measures that will undoubtedly complicate patient access to hospitals. We've made our best efforts to factor in these variables, but the implications are complex. Currently, France is the only major market that has suspended elective procedures, projecting a return in early December, while we continue assessing patients there, including a few hospitals that are still operating at a reduced level.

Okay. So it sounds like you're assuming from kind of where you were in October and early November that you assume that things do get a little worse rather than stay the same just in terms of the guidance you provided?

Yes, I think we are expecting some impact from this. However, we managed to navigate through it in the third quarter. If the situation improves, there are indications in Belgium and France that they may have already reached their peak, and other countries are hopeful they won't be far behind. We will know much more in a week.

Right. Right. Dynamic times. So the other quick question I wanted to just get a sense, another kind of data point is, in the U.S., what percentage of the centers that were kind of up and running and operative pre-COVID are up and running today in the U.S.?

Our active accounts currently represent around 80% of our total accounts. Previously, during the pre-COVID phase, we had around 90% active accounts, which seemed to be the norm. We anticipate returning to that level in the post-COVID phase. This reflects the number of active accounts in the U.S., where we have 135 accounts and about 80% of them are currently active.

Our next question or comment comes from the line of David Lewis from Morgan Stanley.

Glen, you provided some insights into the intra-quarter trends for the third quarter during the road show. While it's not a perfect calculation due to the bar chart, it suggested that if the levels were similar to those in the first quarter about two to three weeks ago, the consistent trend would lead us to the current figures around $10.5 million or $10.6 million. Does that reflect how things were in the latter half of September when conditions were stable? Or did you observe any improvements in the business during that period? Additionally, regarding Bob's question, are you noticing any effects on procedures in the U.S. or outside the U.S., or are you just being cautious about potential impacts?

Yes, we are observing an impact on procedures both in the U.S. and internationally. For example, France, which is our second-largest market, has seen a decline. In the United States, we are noticing some cases being rescheduled and delayed. However, this is not occurring on a large scale and isn't significantly different from what we experienced in the third quarter. We have been managing through COVID hotspots since they emerged, dealing with shutdowns and subsequent waves. Currently, we are not seeing a widespread impact on our business in the U.S. We will have a clearer understanding in the coming weeks. We closely monitor the use of hospital and ICU beds for COVID, as a peak in usage often leads to a reduction in elective procedures. While there are some regional hotspots, we had similar situations in the U.S. during the third quarter.

Going back to your first part of your question, did I address the second part? Yes, sir. And the first part was just the quarter-to-date numbers sort of imply stable trends into the back half of September. I just wonder if that implication is sort of how you saw the business performing in the last few weeks of September.

Yes, that's the summary. We had a really good quarter. There was some pent-up demand at the beginning of the quarter. When we exclude that and examine the actual monthly demand, we observed a positive trend throughout the quarter. In fact, October was a very strong month for us. Overall, things look promising.

Very helpful, Glen. I have two quick questions. First, how are you developing the business? It seems you could add about 40 centers this year. Is that a reasonable way to think about growth? Should we expect a similar number of center additions in 2021 compared to 2020, or will that number change? My second question relates to the vaccine rollout for high-risk patients. Should we consider severe emphysema patients among the first groups to be vaccinated? Apologies for the two-part questions.

Yes, absolutely. To address the first question about our expansion, prior to COVID, we were adding between 15 and 20 accounts each quarter. During the COVID period, that number dropped to around 10. I believe that if COVID is mostly behind us by midyear next year, we could expect to add about 10 centers in the first half of the year, and potentially 15 or more in the latter half. This expectation largely hinges on the impact of COVID, which has distracted our customers and affected our access to hospitals. Regarding the vaccines, I understand that healthcare workers will likely be among the first to receive vaccinations. For patients, those with significant comorbidities at high risk for COVID, such as severe emphysematics, will probably have early access to the vaccine.

Our next question or comment comes from the line of Larry Biegelsen from Wells Fargo.

Glen, could you discuss the timeline and process for AeriSeal? What are the next steps, and how should we perceive that? I also have a follow-up.

Yes. AeriSeal is something that's off on the horizon. The good news is we have some data on it already. It's an acquired technology. We've done some clinical work. We've got some interesting signals. The meaningful studies are out ahead of us. The first one that we're executing is a European multinational, multicenter study. We have already commenced the process, which I'm sure you know is a multi-step process. The first is to go through ethics committee and then you get those sites initiated and then they start enrolling. And we're in the initiation process right now. We've had several ethics approvals. We're trying to get these sites up and running. What impact COVID has on the initial enrollment is to be determined. We are trying to do the study in places like France and Germany that are presently preoccupied with a good bit of COVID. So we'll have to see sort of how that progresses. But we're expecting to significantly enroll that study across the coming year. So that's where we are OUS. In the U.S., we have already started discussions with the FDA. We expect to gain IDE approval next year. But we're quite a ways out, as you could probably do the math on this, in terms of getting the sites up and running. We'll likely have a one-year follow-up after enrolling the patients and treating the patients, and so you're probably into late 2024 in terms of a technology that's going to be available in the U.S. We'd expect it to be available in Europe before then.

That's helpful. And one more for me. Could you give us an update on geographic expansion? Are there new markets outside the U.S. that you're excited about? And any timelines?

I believe the primary focus should be on Japan, a market where we have engaged significantly with the PMDA. We plan to file there next year and anticipate having both approval and reimbursement by 2023. This is a major market where we currently do not have a presence. It's worth mentioning that our data is quite recent in comparison to some of the European markets where we already operate, which has led us to relaunch in those areas, creating a great opportunity. Some of these markets are relatively new, such as France, which ranks as our second largest market in Europe and third worldwide. Our presence there is still in its early stages, and we are very optimistic about our growth. We recently held a meeting to discuss further investment in several European markets to fully leverage these opportunities. Before the COVID pandemic, China was a significant and intriguing market for us, and although it remains small, we were seeing rapid growth and were ready to deepen our investments there when the pandemic struck. As you may have noticed, the COVID situation has had a profound impact on our business, with Asia largely closing down, halting our expansion plans in China. However, we are now exploring ways to restart those investments moving forward, and we remain excited about the potential in that market.

Our next question or comment comes from the line of Rick Wise from Stifel.

Maybe starting off with reimbursement. Obviously, really excellent news on the BCBS front with HCSC now covering. And you made the point, obviously, that 90% of cases get reimbursed without coverage. But I've got to believe that's a positive. Could you just remind us the impact that a decision like that has on doctors, patients on you guys, then how we should think about it?

Yes, that's a great question, and I appreciate it. Our challenge isn't with our reimbursement team; they are incredibly tenacious. We have four randomized controlled trials published in top-tier journals, and all the data from these studies is consistently strong. Our main issue isn't securing pre-authorization; in fact, we receive it 95% of the time. The real challenge lies in the time it takes to get approval. For example, if Blue Cross Blue Shield Association is not favorable, it makes HCSC's decision even more interesting since they are the second-largest Blue Cross Blue Shield affiliate and have provided us approval. Groups like Blue Cross Blue Shield can take two to three months for approvals, while we often can expedite prior approvals in less than a month. This creates efficiencies for us. We haven’t seen patients falling out of the process due to waits, but it requires significant effort from us and the plans. While it's great to gain approval from HCSC and SelectHealth, we're currently seeing a rise in pre-authorization requests. For instance, in the third quarter of this year compared to last year, we've experienced a 125% increase in request volume. Additionally, the time to receive pre-authorization has notably decreased. For our average commercial case, the time has dropped from nearly 60 days to about 40 days, a reduction of approximately 18 days or 35%. Even in instances where we face challenges with payers like Blue Cross Blue Shield Association, we've managed to improve our average time from 80 days in 2019 to 68 days. While this reduction isn't drastic, it should improve significantly with HCSC on board. What's particularly noteworthy is our success rate; it has risen from 80% in 2019 with Blue Cross Blue Shield to 95% this year. It can feel like a war of attrition, but we have substantial data to support our cases, and that tends to lead us to success during the review process.

Very helpful. Another key aspect of your commercialization, as you highlighted right upfront, Glen, is training new doctors and adding new representatives. Can you help us think about your training goals for doctors over the next quarter or whatever time frame you prefer? The same goes for representatives. I believe you mentioned having 48 representatives. Where do we see ourselves a year from now? Please walk us through that.

Yes, we currently have 42 representatives in the U.S. and 28 outside the U.S. Regarding the doctors, they are aligned with the accounts we are targeting, which is approximately 500 accounts and around 800 doctors. This ratio reflects the number of doctors performing the procedure. One positive aspect of the current situation is our ability to conduct remote training. Previously, we would fly people to a training center or send trainers out, but now we can hold multiple online training classes for physicians, which helps us attract a wider range of participants. Additionally, we have successfully started online sessions to train referring doctors, which we found challenging to coordinate previously. Online platforms like Zoom allow us to gather many referring doctors efficiently to enhance their understanding of the procedure. This shift has also improved our rep training; we are currently conducting an online sales training class where participants are learning from home for a week before going into the field to shadow other reps. Regarding the addition of new reps, as I mentioned, we are currently at 42 in the U.S., and we expect to reach approximately 50 next year. While I can't provide an exact number, we believe 50 will enable us to effectively cover the U.S. The decision to add more reps will depend on subdividing major metropolitan areas to achieve greater efficiency in larger regions. I anticipate we will exceed the 50 mark as opportunities arise for optimization in these areas.

That makes sense. One last one for me. Maybe I'll ask the CFO a question. Derrick, you talked about R&D, SG&A, OpEx, et cetera. And I don't know where others were, but you came well below my OpEx expectations. Just maybe can you help us think about R&D and SG&A trends in the fourth quarter? Does it look a lot like the third? Or how do we sort of frame those numbers and the outlook there?

Yes, thanks for the question, Rick. I would say we expect to see an increase in operating expenses in the fourth quarter, mainly in SG&A. Some of this is due to costs associated with being a public company that we didn't incur in the third quarter since we were not yet public. There will also be continued investment in our commercial infrastructure. We anticipate a slight increase in R&D spending, but it should remain roughly at the same level as this quarter. The rise in R&D expenditure will primarily stem from the increased clinical activities that Glen mentioned earlier.

Our next question or comment comes from the line of Bill Plovanic from Canaccord Genuity.

I have a couple of questions. First, thank you for indicating that about 80% of the accounts are up and operational. What level do you believe they are operating at today? Do you think they might be functioning at around 70 to 80 percent capacity? While they are operational, they may not be working at full capacity. I would appreciate your thoughts on this.

Bill, that's a really good question. Yes, you are correct. They are functioning at about 80%. On average, we have about 5 to 6 cases per quarter, whereas we were at around 7% in the pre-COVID phase. So we're in that range.

Okay. And then just in terms of U.S. pricing, has there been any changes? I know there wasn't any commentary and usually when they're not, it means it's stable, but I'd rather ask the question than not.

Yes. We sell at list.

That's good to hear. You've mentioned direct-to-patient efforts. Sometimes companies can overspend in that area, so I'm curious if you could outline the activities, any amounts involved, or at least clarify if it's a small investment, just to help us understand the general plans you have.

Yes, we're currently in the pilot phase and operating in many different regions. Our main goal is to drive traffic to our website and, more importantly, generate leads. We define leads as first-time callers who respond to our outreach and contact hospitals. Additionally, some may opt in via email or take part in our online patient information sessions, which have attracted hundreds of participants. The results have been very interesting, and despite not investing a large amount of money, we have observed significant engagement. Compared to other companies in the industry that are spending much more, we are being cautious about our investments at this stage as part of a longer-term growth strategy. In the third quarter, we experienced a 140% increase in web visitors and a 126% year-over-year increase in leads, indicating strong engagement. We are very encouraged by these early results as we start to analyze the cost associated with these efforts.

Okay. And then the last question, if I may, is just on the new account funnel. COVID, obviously, has an impact on your current customers. But with new technologies kind of getting in there and educating folks and getting them up and running, as you look at the top of the funnel, the new ones coming in, in the last six months, what kind of changes have you seen directionally? And how should we think about that? And that's all I have.

In the last six months, we added around 20 accounts, with most of them coming in the third quarter. We have many others in various stages of the process. It's an interesting situation for us because we are not yet doing business with these new accounts. We are negotiating terms to establish relationships and working step-by-step to set ourselves up. Our funnel looks strong, and as I mentioned earlier, we expect to add approximately 10 new centers each quarter. After COVID is behind us, we anticipate that number will increase.

I'm showing no additional questions in the queue at this time. I'd like to turn the conference back over to Mr. Glen French for any closing remarks.

Well, thank you all for your time. I really appreciate it and your interest and so forth. We wish you all a very good afternoon or evening, depending on where you are. And again, thank you very much.

Ladies and gentlemen, thank you for participating in today's conference. This concludes the program. You may now disconnect. Everyone, have a wonderful day.