Profound Medical Corp. Q3 FY2022 Earnings Call

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 may 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 transmeatal 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 cleared by the FDA. In the U.S., we employ a pure recurring revenue model for TULSA-PRO, where we charge customers on a per-procedure basis for TULSA-PRO consumables, lease of medical devices, and services associated with extended organs. Outside of the United States, we primarily deploy a capital and consumable sales and service models separately as the situation warrants. We are 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 noninvasive treatment of uterine fibroids, and Profound has recently obtained FDA approval under a humanitarian device exemption for the treatment of osteoid osteoma. The business model for Sonalleve Systems is currently a one-time sale of the capital equipment. On the call today representing the company are Dr. Arun Menawat, Profound's Chief Executive Officer; and Rashed Dewan, the company's Chief Financial Officer. With that said, I'll now turn the call over to Rashed.

Good afternoon, everyone, and welcome to our third quarter 2022 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 activity. However, before I do, I would like to provide a brief update on our third quarter 2022 financial results. To streamline things, all the numbers we will refer to have been rounded, so they are approximate. For the 3 months period ended September 30, 2022, the company recorded revenue of $2 million, with $1.2 million coming from recurring revenue and $800,000 from the one-time sale of capital equipment. Third quarter 2022 revenue was consistent with the previous quarter and decreased from Q3 2021 revenue of $2.5 million due primarily to lower one-time sales of capital equipment in international markets. Total operating expenses in the 2022 third quarter, which consists of R&D, G&A and selling and distribution expenses, totaled $9.3 million, an increase of 8% compared with $8.6 million in the third quarter of 2021. Breaking that down further, expenditures for R&D increased 17% on a year-over-year basis to $4.7 million. G&A expenses decreased by 5% to $2.4 million. And selling and distribution expenses increased by 8% to $2.2 million, primarily due to a higher foreign exchange gain. Net finance income for 2022 third quarter was $3.3 million compared to $1.7 million in the same 3-month period of 2021. Overall, the company recorded a third quarter 2022 net loss of $5 million or $0.24 per common share compared with a net loss of $6 million or $0.29 per common share for the same 3-month period in 2021. At September 30, 2022, Profound had cash of $46.2 million. We believe that this, combined with the CAD 10 million term loan we entered into today with CIBC, will be sufficient to support our operations through early 2025. With that, I will now turn the call over to Arun.

Thank you, Rashed. As usual, I would like to start with the key highlights on the quarter. First and most importantly, to drive clinical adoption of TULSA technology, it is about clinical data. Treatment options is one of the top two topics researched by prostate cancer patients before they undergo any procedure and clinical data is very important to them in making the right selection. The 4-year follow-up data from our TACT pivotal clinical trial of whole gland ablation were presented by Dr. Laurence Klotz, one of the study's investigators at the recent FOCAL 2022 conference in September. As you may recall, the primary efficacy and safety endpoints of TACT were PSA reduction at one year and the frequency and severity of adverse events respectively. At one year, PSA decreased 95% from a median pretreatment baseline value of 6.3 nanograms per milliliter to a nadir of 0.34. By four years, the median PSA nadir further declined to 0.28. Importantly, PSA reduction was durable over the extended follow-up period, increasing just 0.33 from 0.53 at one year to 0.86 nanograms per milliliters at four years. The one-year TACT data showed that following treatment with TULSA-PRO, there were no grade four or higher adverse events, no rectal fistula or injury and no intraprocedural complications. At the four-year follow-up there were no new device or treatment-related adverse events. TACT's secondary endpoints included progression to additional treatment for prostate cancer and functional side effects commonly associated with current prostate cancer therapies, including erectile and urinary functions. At four years, only 16% of patients in the TACT trial underwent additional intervention for prostate cancer. This percentage compares very well to additional intervention needed after the current standard therapies. In terms of functional side effects, over the four-year follow-up period, not a single patient experienced severe erectile dysfunction and 87% of previously potent patients reported erection firmness sufficient for penetration, demonstrating continued improvement from 75% at one year. Urinary function was durable over the four-year follow-up period with 99% of patients preserving urinary continence. Lower urinary tract symptoms were stable, improving from median International Prostate Symptom Score of 7 at pretreatment baseline to 5 at four years. I would like to emphasize that this was the first trial conducted in the United States using the TULSA technology. So most of the physicians who are part of the study have never performed the TULSA procedure before, and this was a whole gland ablation study. Despite that, these are outstanding results. And although this was a single-arm trial, the results compare favorably to any other type of treatment, including medical prostatectomy or radiation. In addition, I loved the title of Dr. Klotz's presentation as he put it eloquently, 'All guided TULSA, not just another focal therapy.' Focal therapy has its place, but its applicability is limited to 15% to 25% of the patient population at best, whereas Dr. Klotz discussed with examples that TULSA is applicable to the majority of the patient population as it can easily be used for whole gland therapy, where that makes sense, or focal therapy where it makes sense instead. Indeed, that unique flexibility isn't just theoretical. About 3,000 patients have been treated with TULSA so far. About 50% of those have been whole gland and the other half focal patients. This quarter also marked a milestone in the SPARC study, a single-center, investigator-initiated, randomized, controlled study of focal ablation versus radical prostatectomy for intermediate risk prostate cancer conducted by Dr. Edward Taco and team at Algo University in Norway. One-year follow-up has been completed for the entire patient cohort of 213 men with biopsy-proven MRI-visible unilateral prostate cancer who were randomized to receive either focal ablation using TULSA or HIFU or robot-assisted laparoscopic prostatectomy. The first report from this study with the complete cohort of patients has been submitted to the European Association of Urologists or EAU Annual Meeting next year. This first report focuses on comparing postoperative complications and demonstrates a statistically significant reduction of serious complications in the focal ablation arm. Additional reports with patient-reported quality of life, such as erectile dysfunction and urinary incontinence, are expected to be presented along with early efficacy outcomes at additional conferences planned in 2023. Finally, we're continuing to make good progress in our sponsored CAPTAIN trial, which is the first Level 1 study ever conducted comparing emerging technologies head-to-head with medical prostatectomy in men with prostate cancer. To date, eight sites have been activated and are currently recruiting patients. Turning to the next key highlights, I'm pleased to tell you that we have now installed 30 systems in the United States and remain on track to achieve 35 installed systems by January 2023. I'm also pleased to report that most of the additional systems that will come online by January are a result of an agreement we recently signed with HALO Diagnostics for the installation of four TULSA systems at four sites, two in California and the other two in Florida. As you may recall, Dr. Scionti was one of the earliest adopters of the HIFU technology. To our knowledge, he has conducted more HIFU cases than anyone else in the United States and for many years was the lead educator and proponent of the technology to the urology community. He was also the first to use TULSA in a commercial setting in the U.S. and has performed approximately 90 procedures so far. Dr. Scionti is now the Medical Director of HALO's prostate program and he recommended that TULSA become HALO's primary prostate cancer treatment modality going forward, and HALO agreed. We expect these to be higher volume sites with three of the four operational by year-end and the fourth that requires a new MRI coming on stream in January 2023. We're also happy to share that despite a slow start, RadNet is currently installing the system at their second site in Phoenix, which should be operational by year-end. Similarly, Paragon Imaging, another company with whom we have signed a multi-site agreement, came on stream in the third quarter. So with 30 sites currently installed, we expect to reach 34 by year-end and the last of our 2022 target of 35 sites coming online at the beginning of 2023. While we remain confident that TULSA will change the standard of prostate care, I will be the first to admit that adoption at this early stage has been progressing more slowly than what we had hoped. Reflecting on our market entry strategy, our first target for early adopters, Dr. Scionti's practice treatment volumes and his successful recommendation to HALO is a case in point of the success of that strategy. Our next target were teaching sites of which we currently have over 15. We recognize that these would not be high volume sites, but we saw the value in their ongoing research to be presented to the urology community, conducting education programs for residents and other practicing physicians, and providing the necessary support to the societies and payers for reimbursement. Indeed, that has also panned out very well. We had an excellent showing at the American Urological Association's 2022 Annual Meeting. Now we're expecting five podium presentations later this month at the world's largest radiology conference, the Radiological Society of North America or RSNA's annual meeting, which will further increase awareness of TULSA. The final target group, which is now our focus is higher volume imaging centers like RadNet, HALO, and Paragon as we have signed multi-site agreements with all of them and we're excited about their potential in 2023. So while the pace of adoption has not been as fast as we would like for a variety of reasons, there's no doubt that the strategy overall is working and that usage will continue to pick up. Turning to our reimbursement strategy, we announced in September that we withdrew our CPT Category 1 application for TULSA from consideration at the September 2022 CPT editorial panel meeting as the application only contains 2021 usage data. The withdrawal was due to the complete usage dataset not being available early enough for consideration at that meeting. We plan to submit an updated application with support from the same society in 2023 which will include all 2022 utilization. In the meantime, 11 hospitals are currently using the existing C-Code C9734 and are getting paid for their TULSA procedures. Earlier this week, the final OPPS reimbursement rule for calendar year 2023 was released, which, as expected, will increase reimbursement to a hospital billing under C9734 by approximately 3.6% to $13,048. With that change taking effect on January 1, 2023, we're pleased with this hospital payment level. Finally, the increasing number of TULSA sites and a growing set of utilization data affords a higher level of predictability of our U.S. TULSA business such that we expect to be able to provide some level of guidance beginning in 2023. To summarize, we are very pleased with the 4-year TACT data, which are even more compelling and demonstrate the durability of the TULSA treatment. We continue to get positive feedback from urologists regarding TULSA's flexibility that they can use it routinely for ablative treatment of whole gland or focal therapy or even for patients who have a combination of BPH and early-stage cancer. We will achieve our 2022 goal of 35 active sites in January with the newest sites expected to be higher volume than the teaching sites. We will re-file our CPT Category 1 application for TULSA in 2023 and have a higher level of confidence in being successful. While adoption has been taking longer than we originally expected, we believe that our overall strategy is working and that a few of the new sites that are coming on stream now are expected to be higher-volume sites. We look forward to providing some level of street guidance in 2023. This ends our prepared remarks for today. With that, Rashed and I are happy to take any questions you might have.

Our first question comes from Michael Sarcone with Jefferies.

So my first one, a really nice quarter on the system placement front. It seems like you're making some real good headway in the imaging center channel. I was wondering, can you talk about quantitatively the utilization potential for these imaging center systems and how that stacks up to utilization that you're seeing at your teaching sites?

I'll start. I think the teaching sites all started with a very narrow focus, and they had typically assigned one urologist to basically treat patients. They were careful and generally wanted to see their own outcomes before they would increase usage. But I think with these multisite agreements that I described, you will see multiple urologists who will begin to treat patients at the same time. So obviously, we're just getting started with a couple of these sites. The Paragon and the HALO sites are just getting started. But I would anticipate that we would do at least twice as good compared to the teaching sites that we're doing. And I think that the momentum, given that they have access to more urologists, will pick up over time also.

Great. That's really helpful. And just a follow-up. I was wondering if you could talk about the hospital environment and how things are trending there just in terms of your ability to continue to install more systems at those teaching sites?

Mike, I think that we are, at the moment, pretty small. And the teaching sites, generally, we are actually continuing to see good reception. And we are continuing to see that the teaching sites are now also opening up the usage to additional urologists. And a few of the top leading sites among the top 10 in the country are actually starting to open the dialogue about installing interventional MRIs. I think the idea that MR-guided therapy is likely to have a big place in treating patients in the future, some of the teaching sites are already strategically starting to align to that idea. So I have not seen a big change in terms of the reception from the hospitals. Where we are seeing an impact is that a number of the patients, because we are more than 80% cash pay patients, I think the macro environment, certainly, I think in Q3, I saw a bit of an impact of that. I think we're certainly seeing that a little bit. But I don't see an impact on the reception for our technology.

Great. That's really helpful. And if I could just sneak one more in on that front. Given that we are heading into a recession in the U.S. at some point in 2023, how do you think about your patient volumes through 2023, just given that there's going to be a lot of people that may not be able to come out-of-pocket for an expense like this?

Yes, I agree with you. I think we are looking to balance a lot of this. So I think, as I already mentioned, the cash pay model could have a little bit of an impact from the recession. But at the same time, I'm really pleased with the fact that the C-Code is paying. At the teaching sites, in some of the leading sites, it's paying as much as $17,000 per patient. So I think what we are looking to do is drive adoption everywhere we can and mitigate and balance considering what's going on. So I do think that the utilization and the number of patients that we would treat in spite of the potential recession will continue to increase, partly because the sites are increasing, partly because the payment in the hospital setting is decent, and partly because of increased awareness that this is a serious disease. So I think there are a number of positive factors that I do think that we will continue to increase. But yes, I agree with you, we will be careful and assess how the recession is affecting us and we'll adjust ourselves accordingly. Strengthening our balance sheet a little bit in this quarter is part of that preparation to make sure that we have the runway to last till early 2025.

Our next question comes from Rahul Sarugaser with Raymond James.

My first question was just a follow-on a little bit from Michael's questions on utilization. So you indicated that now that you're bringing on more teaching sites, those will be about twice the volume of the teaching sites. So how should we be thinking, sort of on aggregate, about the escalation of utilization per quarter? And also, maybe you could give us a quick update as to how you've seen escalation in utilization between Q2 and Q3, given that you have seen approximately 15% to 20% quarter-over-quarter in the several previous quarters?

Yes, Rahul, we are operating the business with a strategic approach. I recognize that when we began commercialization, we first encountered COVID, and now we are facing a potential recession. This makes it challenging to forecast our numbers. However, I believe that starting next year, we will be in a position to offer some guidance. In the meantime, I can share insights into what we are learning and the potential we see, which may help illustrate our optimism about growth. For instance, take our teaching sites. These sites initially began with one urologist focused solely on focal therapy. As they monitored patient outcomes, they started to increase usage by incorporating different patient types and disease variations. One notable university, a leading teaching institution, has been progressing for about two years and now performs around 25% of its procedures using TULSA compared to radical prostatectomies. This means they are already doing one TULSA for every three radical prostatectomies, and they are fully booked for at least four to six months for the capacity they have set aside for TULSA. We have learned a lot about how they manage operations, communication, training for technologists and technicians, and how patient workflows differ significantly. These are accomplishments we’re proud of. Looking ahead to 2023, our goal is to replicate these models across more sites, which is why we remain optimistic about growth in the near to midterm. I hope that addresses your question adequately.

It's actually a great transition to my second question. Now that you have 30 sites established and are on track to reach 34 or 35 by the end of the year, I assume that, as you mentioned regarding physicians, they are taking their time to learn before expanding their usage. Could you share your insights from your installed base? Are there standard operating procedures that you can begin to replicate from a select group of reference sites to apply to your current installed base and your pipeline?

Yes. That's a great question. And you're right, that's kind of where our head is at, is that it did take a lot for a couple of these universities to start doing these operating protocols. How do you decide which patient is a TULSA patient versus still a prostatectomy patient? If you decide that's a TULSA patient, how do you then bring them into the hospital setting? And how do they go through from beginning to the end? And as I said, because it is a very different procedure compared to what they're used to, it took them some time. I'm happy to share with you other examples. So the other site, which is a big teaching hospital on the West Coast, they started the same thing. They said, well, we're going to sign one person only for focal therapy. Even within focal therapy, they were focusing on only a certain type of patients. And then they saw, for example, the other hospital doing these, starting to open up to a variety of patients. And now they are also starting to open it up. Last week, we heard that they are doing their first even palliative patient. So I think that concept you just mentioned that we now have a much better idea of what the workflow should be and that we can now take these best practices and start to move them to other hospitals. I think that is a very viable strategy for us to follow. While I made it, I'm happy to share more examples because there is a tremendous amount of information that we're getting and we're absorbing and we're moving it forward. Historically, we've talked a little bit about BPH. About three weeks ago, one of our sites in Texas did a case of a patient who had BPH. This patient actually had the UroLift technology about five years ago. They had the usual clips put in, and the prostate continues to grow. The urologist basically took the clips out and did TULSA on the patient, and the patient is doing very well post-TULSA. We are basically taking these examples and we're talking about the flexibility and the potential of this technology. We're making sure that future urologists don't have to just rely on their own experiences, but they now have benchmarks and can talk to the other physicians who have already done these things, and thereby, we can begin to accelerate adoption of the technology.

That's terrific. Yes, those are three very good examples. And so given what you're saying about these real early glimmers of traction starting to take hold, and you start to apply these best practices across your existing pipeline, and we've talked about the existing, perhaps maybe you can talk about what your forward-looking pipeline looks like. You said 35 by January. What should we be looking like for 2023? Any further details in terms of on-the-ground work that the team has been doing you set up for 2023?

Yes. It's a question everyone asks, what does your pipeline look like? I've been thinking about what's the way to sort of talk about that in a quantifiable way. One is, I think, number one, we have a small but very effective team. I'm very proud of the sales team that we're building. But to answer your question, I think one tangible way I can share with you the strength of our pipeline is that when we are talking with sites and they are looking to install a TULSA system, at some point, when it gets to be serious enough, we actually send one of our service people to do a site assessment in the MR-compatible environment. Does it have the right software version? Is there a workflow where a patient can be moved in and out? Is there a recovery area? Is the anesthesia working because we're converting an MR from diagnostics to intervention and so on? So there's a lot of work that we actually assess upfront, and we give the site a report on what needs to be upgraded and changed for them to be ready for TULSA. I can tell you there are at least 25 sites where we have completed this site assessment. Not everyone is going to convert, but I do think that it gives us a fair amount of confidence in terms of what the installed base could grow going forward.

That's great color. And congratulations on getting to 30 sites and on the trajectory to 35, and I'll get back in the queue.

Our next question comes from Brian Gagnon with Gagnon Securities.

So I want to talk about comps in the sites that you have today. So I understand that docs will do a few procedures, see how the patient does, and then if they see success, they'll adopt it more quickly and begin to roll out. What are you seeing, and how are you tracking, for lack of a better term, comp store sales for your customers?

We divided the sites into different categories because it's quite challenging to make comparisons. We have early adopters, hospitals, and newer sites. Combining them into a single category is difficult, especially because the average decreases with the increased number of new sites. From what I observe when separating them, I believe that at least one or two of the teaching sites will reach 100 procedures per year next year. The early adopters, like Dr. Scionti and Dr. Busch in China, are very likely to focus on TULSA and are expected to achieve that volume. Dr. Busch recently marked his 200th case, which shows progress in this group. The teaching hospitals have original goals that seem realistic as we take benchmarks and adjust them. However, I have some reservations about the new sites, as their growth has been slower than anticipated, and their learning curves have been conservative. It may take another year for these new sites to reach significant volumes. Nevertheless, I remain hopeful that the multicenter sites will accelerate their learning from one another more quickly than the teaching sites.

Okay. So if I take what you had said about you have at least 25 sites that completed a site assessment, and I know not everybody will convert, but in your past history, what percentage of sites went through this whole process of an assessment and then went through with the contract for installation? Is it 50%, 80% or better?

I mean I think that it's more than likely between 25% to 50%. Usually in the tight duration of time either, it takes a few hours to do that, and they have the dedicated resources to it. So it's sort of middle of the pipeline. And maybe over time, the conversion rate would increase. Some of the reasons why I said 25 to 50 is sometimes, particularly in this year, there have been a lot of supply delays and so on, particularly MR installation. There are at least four or five sites that we have agreements where the MRs are delayed as much as a year. Those could be among the reasons why if we find that the MR versions are not tried, or they need MR-compatible anesthesia equipment, which is in short supply right now. Those could be the reasons why they could get delayed. But I think that the conversion rate over time as those supply chain issues become less important, is probably will go up. But for now, 25% to 50% is probably not a bad place.

Okay. I know you have a backlog of existing systems to install with contracts you've already signed. And do you also get to see what the backlog of patients is in your centers? Because obviously, you have to shift them kits well ahead of time. And if so, do you see that number continuing to improve?

Yes. We do have some level of forward visibility. The numbers I would say, at least 80% of site is continuing to improve. Some sites might be doing one case a month and it will go to two cases, which is improvement. It's still not a very high number. But yes, I think that there are at least 10% of our sites, maybe more than 10%, but certainly a number of sites where they are booked for at least the next four months, maybe longer than that. We are definitely starting to see that portion of it. As I said, I think our numbers are still small, but most definitely, we see ourselves as the sort of the marathon man. We're looking at every site. We're finding out where the bottleneck is and we are working with the site to resolve them. The reason I say this, and I think the reason this is different and important is, none of our sites have any concerns or questions related to the technology or the clinical value or, in fact, they are seeing value because when you think about it, even the C-code is paying a reasonable amount of payment. It's $13,000 in a C-code is a good number. I think the issues that we face are not issues related to just bringing the technology that is a better mouse trap and you're seeking from one to the other. The issues that we face are related to how do you educate the physician on assessment of patient selection, how do you give them comfort by having them do the variety of cases, how do we educate the patient with the uniqueness of this technology, how do we educate the technicians to look at imaging, not as diagnostic, but as therapeutic. So those are things that game-changing technologies have to do, and that's what we are doing, and that's the difference.

Two last questions for me if you would bear with me. RadNet, you signed a multicenter agreement. I'm very glad to hear that the second system is coming online. Do you have any thoughts as to what their plans are for the next bunch of systems? Are they going to be rolling this out across the country?

I recently had dinner with their chief medical officer, and they are completely committed to this initiative. Just a day or two ago, they appeared on local Los Angeles television to promote it and highlight the groundbreaking technology of TULSA. I’m not sure if we can feature it on our website, but if you check RedNet or Los Angeles television, you will find an interview where the Chief Medical Officer advocated for TULSA as a revolutionary technology for patients. They are definitely very committed to this.

We had it on TV station. One is the KABC and the other one is KTLA.

I'll have to do some Google work. And lastly, CPT code delay. Can you give us some more color on that? And what really gives you the confidence that you're going to be able to push this through with the societies next year?

That's a great question, Brian. When we met with the societies in the spring of this year, their feedback was that 2021 utilization data was sufficient. They were pretty convinced that this technology is a winning technology, and they very strongly wanted to support it. We went all the way through, we said, okay, we will support the application and they sponsored it, and we went through that. When the application was reviewed by the AMA, they were at the point of, in fact, putting this on the agenda, which is kind of unusual, but then they were still asking some questions on usage. When we submitted the 2022 data that we had at the time, it was pretty good data, but the technicality was that the AMA could only assess the application that was submitted; they were not going to look at any new information that was submitted to them. Our understanding of all this is that once we submit the 2022 data with the application next year, we should be in far better shape. That is what's giving us the confidence.

So if I take all this in context, you're delayed on the CPT application. You'll have stronger data and much more data that they'll be able to review when you submit in '23. If I do my math correctly, even by the time you receive reimbursement, the likelihood that the CAPTAIN trial will be fully enrolled and potentially even have early efficacy data is probably pretty high at the same time.

I would say that's very accurate. What you're describing is very accurate.

Our next question comes from Rahul Sarugaser with Raymond James.

Just one last question since I have an opportunity. So I'm glad that Brian asked about the CPG 1, and I know you're quite conservative in your estimates there. So he asked about timeline and you're confident, so I'll leave that aside. But given that your C-code is now at $13,000 and we saw EDAP code just go to about $8,000. One last question is, do you have a sense for if and/or when the C-code is issued, the general quantum of what that reimbursement would look like?

I know that predicting this is challenging. However, if you examine the comparables, the HIFU code for next year looks significantly better than it did previously, which is encouraging. It's crucial to acknowledge the significance of the latest therapy. The initial reimbursement amount was set quite close to the C-code used before HIFU obtained the CAT 1 code. They provided data indicating that the costs were actually higher, leading to an adjustment based on that information. In our situation, being in the $13,000 range seems logical, considering the data from the 11 hospitals using the code. Theoretically, we are doing everything possible to ensure accurate cost submissions from the hospitals performing the procedure. The hospitals should be able to support this, and concurrently, as Brian mentioned, we are working to align everything. If we receive approval next year, it would be effective starting January 25, and hopefully, we can present some early efficacy data by then too. Additionally, our main focus continues to be on increasing utilization at the sites. I believe that effectively captures our strategy.

That's great. And I apologize, I'm going to ask one more question. Recognizing that you just added $10 million of commercial bank debt, which is terrific, could you maybe talk to your cash position and your runway and your intentions around cash? And that will be it for me today.

Yes, absolutely. Our burn rate is around $5 million. We believe that by strengthening the balance sheet, we can avoid raising equity soon and aim to achieve a cost to CAT 1 code. If a recession occurs next year, we are confident in our ability to manage through it. Overall, I feel positive about our situation and our balance sheet is solid. While adoption is a bit slower, it’s still progressing. I'm actually excited about what 2022 will bring.

Thank you. I would now like to turn it back to Dr. Menawat for closing remarks.

Thank you so much for joining us today. Thank you for the questions. We're looking forward to updating you at the next year-end call. Have a great afternoon.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.