ICCM - IceCure Medical Ltd (ICCM) Q4 2022 Earnings Call Transcript
2023-03-29 13:33:06 ET
IceCure Medical Ltd (ICCM)
Q4 2023 Earnings Conference Call
March 29, 2023 10:00 a.m. ET
Company Participants
Eyal Shamir - CEO
Ronen Tsimerman - CFO & COO
Todd Kehrli - EVC Group, IR
Conference Call Participants
Kemp Dolliver - Brookline Capital Markets
Ben Haynor - Alliance Global Partners
Chaitanya G. - H.C. Wainwright
Presentation
Operator
Good morning, and thank you for standing by. [Operator instructions]. I would now like to turn the conference over to Todd Kehrli. Please go ahead.
Todd Kehrli
Thank you, Operator, and welcome to IceCure Medical’s conference call to review the financial results for the 12 months ended December 31, 2022, and to provide an update on recent operational highlights. We ask that you refer to this morning’s press release and 20-F to review the audited 2022 year-end financial results. Participating on the call are IceCure Medical’s CEO, Eyal Shamir; and CFO & COO, Ronen Tsimerman. After the prepared comments, Eyal and Ronen will be available to address your questions.
Before we begin, I will take a moment to read a statement about forward-looking statements. This call and the question-and-answer session that follow it, contain forward-looking statements within the meaning of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. Words such as expects, anticipates, intends, plans, believes, seeks, estimates, and similar expressions, or variations of such words, are intended to identify forward-looking statements. For example, we are using forward-looking statement in this presentation when we discuss the achievements we expect to accomplish as we continue to advance our growth strategy, our positioning to make significant commercial advances in key markets, pursuit of regulatory approvals in various jurisdictions, expansion of clinical applications, release of results from our clinical trials, potential market adoption and future sales of IceCure's minimally-invasive cryoablation technology, advancing regulatory and commercial strategies, strategic plans, and our belief that we are well-capitalized to execute on commercial opportunities to increase shareholder value. Because such statements deal with future events and are based on IceCure’s current expectations, they are subject to various risks and uncertainties, and actual results, performance, or achievements of IceCure could differ materially from those described in or implied by statements in this presentation. The forward-looking statements contained or implied in this presentation are subject to other risks and uncertainties, many of which are beyond the control of the company, including those set forth in the Risk Factors section of the company’s Annual Report on Form 20-F for the year ended December 31, 2022, filed with the SEC on March 29, 2023, which is available on the SEC’s website, www.sec.gov. The company undertakes no obligation to update these statements or revisions or changes after the date of this release, except as required by law.
I will now turn the call over to IceCure Medical’s CEO, Eyal Shamir. Eyal, please go ahead.
Eyal Shamir
Thank you, Todd, and welcome, everyone. My comments will be brief and will focus on the significant achievements we accomplished during the year, as well as those we expect over the coming months as we continue to advance our growth strategy. I will begin with yesterday development, the receipt of regulatory approval in China for our disposable cryoprobes. The latest approval allow us to use the IceSense3 disposable cryoprobes in combination with our previously approved IceSense3 console. This is exciting catalyst, and we believe that this will generate increased commercial activities in China. This will be driven by our exclusive distributor agreement in China with Shanghai Medtronic Zhikang Medical Devices Co. Ltd, an affiliates of Medtronic PLC, and Beijing Turing Medical Technology Co. Ltd. If you recall, the initial three years period of this agreement includes minimum purchase targets of $3.5 million. In the US market, which we believe represents the sizable addressable market, the revenue trend we are currently experiencing are encouraging and consumable sales represented 20% of our 2022 revenues, almost double the 11% reported in 2021. Globally, our consumable sales accounted for 43% of our 2022 revenue, up from 29% in 2021, indicating increased physician awareness of our system. On the regulatory front, we are waiting the US FDA response to our regulatory filing for ProSense in treatment of early stage breast cancer. We believe, based on our data emerging from our ICE3 trial, ProSense is highly beneficial, invasive option for physicians treating breast cancer to address the initial indication market of 43,000 women in the US annually. Moreover, last year we received an initial reimbursement code from the Center for Medicare and Medicaid Services, to help offset some of the cost for the treatment with respect to the facility fee. Globally, we’re expecting responses to applications filed in several other countries, including Brazil, Vietnam, and Canada. On the clinical front, we reported positive interval results from the ICE Secret study, which continues to validate that ProSense is safe and effective in treating kidney cancer tumors, with an 89.5% recurrence-free rate. In summary, our results demonstrate that we are a results-oriented company, and I believe we are well-capitalized to execute on commercial opportunities in the US and globally to increase shareholder value.
With that, Ronen and I are ready to take your questions. Operator, we would like to open the call for questions.
Question-and-Answer Session
Operator
[Operator Instructions] The first question is from Kemp Dolliver of Brookline Capital Markets. Please go ahead.
Kemp Dolliver
Hi. Thank you and good morning. I'll ask a couple of questions and go back into the queue. Now that you have the approval in China, how will the rollout proceed? And some of these decisions, I acknowledge, may be in the hands of your partners, but I'm assuming they'll - I mean, are they contemplating pursuing government reimbursement at some point, or strictly focused on the cash pay market? I'll start with that.
Eyal Shamir
Thank you, Kemp. We are very excited about the opportunity in China. We always believe China will be a growth market for IceCure. Our partner in China, which is both mainly Shanghai Medtronic Zhikang, and together with Turing Medical, they will approach public hospitals mainly at the beginning, because most of those cases will be done in hospitals, and later they will go for private clinics. Even in public hospitals, they will be able to start with some co-payment by the patients, and in parallel, they will pursue for reimbursement in China.
Kemp Dolliver
Okay, very good. Thank you. And just switching to the US, you have been evaluating partnering versus self-distribution. How's that thought process evolving over the last few months?
Eyal Shamir
Yes, we are still in process on that. I think that it might be a combination of a direct sales team with some partners, but this is still under evaluation as we did a strategic market approach and market plan in order to enter the market. But it might be some level of combination.
Kemp Dolliver
Would that be by geography or some other criterion?
Kemp Dolliver
It'll be by geography, but also by some other partnering that will have some benefits with specific organizations, DNAs, and other aspects that will help us to make the market penetration.
Kemp Dolliver
Okay. Very good. Thank you. I'll go back in the queue.
Operator
The next question is from Yi Chen of H.C. Wainwright. Please go ahead.
Chaitanya G.
Hey, everyone. This is Chait on behalf of Yi. And I'm sorry if I missed some of the information in your prepared remarks. My call was in and out, but any guidance on the anticipated sales of - in China this year or even next year would be helpful. And also again, please bear with me if I've missed it. Any guidance for 2023, topline guidance for 2023. And also, on ICE Secret and other - any other indications? Are there any future data presentations that may happen this year? Would be very helpful. Thank you.
Eyal Shamir
So, thank you very much. On China, we are not giving a specific guideline on specific sales every year. The minimum quantity agreement that we signed, the triangle agreement with Shanghai Medtronic Zhikang, and with Turing Medical, is a minimum of $3.5 million for the next three years. Other than that, we are not giving a specific guideline on sales every year. IceCure is running two sponsor trials. One of them is the ICE3 breast cancer cryoablation trial that we did the file, that we filed on October last year. And we have the interim results on the kidney that we published on last December. At this stage, we don't have other sponsored study. There are some other studies that they are investigational studies, and they will make their publication and results according their own study and time.
Chaitanya G.
Thank you. And if I may sneak in one more quick question, also could you provide some color or elaborate on the impact that the CPT Category III code that was assigned to you by the CMS in November, 2022? How has that impacted your marketing efforts or the uptake or adoption that you've seen in the US? Any trends would be very helpful after you've received the CPT code.
Eyal Shamir
Yes. So, as you mentioned, November 1 last year, we got a payment assignment on our CPT III code for breast cancer in a level of $3,428 for the first time ever. And this will be effective after we will get the first FDA clearance, and this will be for a facility fee. So, it'll be able to offset some of the cost. After we will get the FDA, we will be able to start the process to move from CPT III code to CPT I code, which will include also the physician fee.
Chaitanya G.
Excellent. Thank you so much.
Operator
The next question is from Ben Haynor of Alliance Global Partners. Please go ahead. Ben Haynor, could you ask your question?
Ben Haynor
Sorry. Can you hear me, gentlemen?
Operator
Yes. Now we can hear you clearly.
Ben Haynor
Got it. So, for me, I apologize, I'm jumping between calls here, but just on the submission for a category one - CPT I code, do you think you'll have enough societies’ support and usage data to submit that next year, and could we expect a code to be in place come 2025? What's the current timeline thinking on that?
Eyal Shamir
Yes, thank you very much, Ben. On 2019 when we did the submission to the AMA in order to create the CPT III code, we had five societies. Of course, the first one, and the most important one is the American Society of Breast Surgeons, but other four societies, including interventional radiologists, supported that. And we are working very closely and participating to the interventional radiology societies meetings, and they would like to adopt cryoablation for breast cancer. So, they told us that they are going to fully support us for this application moving from CPT III to CPT I code. And I believe that during ’24, we will be able to make this process and to make the submission after we will collect all the relevant data in front of the AMA, which they need to make the decision to move to CPT I.
Ben Haynor
Okay, got it. And is there a chance that you guys might not even need to be kind of a sponsor of the CPT I submission? I ran across another company recently in a different space that the society - the relevant societies actually took it - are taking it upon themselves to bring it through the process. Could that be something that happens with you guys as well, do you think?
Eyal Shamir
Yes, the breast cancer and the head of the Coding and Reimbursement Committee of the American Society of Breast Surgeons, they did it with great support, and together with the American Surgery Society. So, they will give us the support, or they will make it by themselves.
Ben Haynor
Okay, great. Yes, I know you guys have a lot of support. It's good to hear that. And then on the $3.5 million in minimum purchase targets for the Chinese distribution agreement with the affiliate of Medtronic, I apologize if this has already been asked, but is that $3.5 million over the next several - in the next three years, in the term of the agreement, or is that just for the current year’s period?
Eyal Shamir
No, the minimum quantity that they committed for the coming three years is $3.5 million.
Ben Haynor
Okay, got it. Okay, that makes sense.
Eyal Shamir
This is the minimum for the next first three years.
Ben Haynor
Okay. Got it. And then obviously there's always considerations when you're setting terms with a distribution partner anywhere, but are there any things that we could - we should be thinking about when it comes to the potential for extending that agreement? Is it something that you guys need to see that they're hitting the ground running and generating a lot of the sales for you guys? Would there be anything that would cause you to try and switch to another partner, or what kind of goes into a potential renewal there, to the extent you can discuss it?
Eyal Shamir
Of course, we would like to evaluate different aspects, of course. And the most important one is future sales relationship with the different societies, creating guidelines, working on the reimbursement, all the educational, staff, all the clinical support that they need to be. It's not only sales. All the KOL support, clinical support, especially for training at the beginning. So, we will evaluate, like any other partner, all that aspect to be sure that they are delivering what we need in order to be very successful in the market.
Ben Haynor
Okay, got it. Well, that's all I had. Thanks for taking the questions, gentlemen. Appreciate it.
Operator
[Operator instructions]. The next question is a follow up question from Kemp Dolliver of Brookline Capital Markets. Please go ahead.
Kemp Dolliver
Hi, thank you. Just quickly, and I know you are reluctant to give specific guidance, but with regard to your spending this year, how should we think about it relative to 2022? And that would be for all three expense buckets.
Eyal Shamir
Ronen?
Ronen Tsimerman
Okay. So, Eyal, would you like me to take the answer? Okay. So, we are expecting that 2023 will be quite similar to 2022. If you will look at the numbers, you will see that we are investing more in R&D and all the regulatory affairs and clinical affairs and also in the marketing. So, from all these aspects, you can expect to see probably the same numbers. We are planning to spend a little bit more on marketing, especially in the US.
Kemp Dolliver
Great. Thank you.
Operator
The next question is from Yi Chen of H.C. Wainwright. Please go ahead.
Chaitanya G.
Hey, this is Chait again on behalf of Yi. Just a quick follow up. I know I’ve seen that you've presented interim study results at the Urological Association Conference in Israel. And please bear with me if you have already touched upon this in your earlier calls, but what was the feedback from the physician community at that conference with regards to the data that you've presented?
Eyal Shamir
I would like to be sure that you refer to the kidney conference interim study that we published on December. This is what?
Chaitanya G.
Yes.
Eyal Shamir
Okay. So, the feedback that we got from the conference itself and with other KOL and physicians that we share this information in some of the events that we exhibited, like on February in the interventional radiology meeting in India, and January, it was the society interventional oncology in Washington, D.C., they believe that the results are very good, and they see the benefits of using one probe instead of multi-probe system. In one probe, which is less costly than two to three probes, that this is how they use when they work with Galil Medical and endocrine, argon and helium cryoablation technology. So, from the results of complication, navigation time, costing, the three probes cost much more. And the reimbursement, for example, in the US, it is same amount if you buy one probe or three probes from the results. They believe that the results are promising in the interim, and they believe that this is indication that they will be more than happy to use it. And actually, we are treating - we are doing this study for clinical evidence. We have the kidney cancer cryoablation as part of our intended use and indication to use both in Europe and also in other countries. So, they believe that the interim results are showing very promising results.
Chaitanya G.
Thank you so much.
Operator
There are no further questions at this time. This concludes the IceCure fourth quarter and full-year 2022 results conference call. Thank you for your participation. You may go ahead and disconnect.
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IceCure Medical Ltd (ICCM) Q4 2022 Earnings Call Transcript