© 2024 Alpha Spread Limited. All Rights Reserved.
www.alphaspread.com is not operated by a broker, a dealer, or a registered investment adviser. Under no circumstances does any information posted on www.alphaspread.com represent a recommendation to buy or sell a security. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The information on this site is in no way guaranteed for completeness, accuracy or in any other way. In no event shall Alpha Spread Limited be liable to any member, guest or third party for any damages of any kind arising out of the use of any content or other material published or available on www.alphaspread.com, or relating to the use of, or inability to use, www.alphaspread.com or any content, including, without limitation, any investment losses, lost profits, lost opportunity, special, incidental, indirect, consequential or punitive damages. Past performance is a poor indicator of future performance.
You don't have any saved screeners yet
Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Good day, ladies and gentlemen, and welcome to the SANUWAVE 2017 Annual Earnings Call. All lines have been placed on a listen-only mode. [Operator Instructions]
At this time, it is my pleasure to turn the floor over to Lisa Sundstrom. Ma’am, the floor is yours.
Thank you and good morning. We appreciate your interest in SANUWAVE and in today’s call. SANUWAVE will now provide an update of our most recent activities as well as our 2017 annual financial results. Our annual report on Form 10-K will be filed with the SEC later today, March 29, 2018. If you would like to be added to the Company’s distribution list, please call SANUWAVE at 770-419-7525 or go to the Investor Relations section of our website at www.sanuwave.com.
Before we begin, I would like to caution that comments made during this conference call by management will contain forward-looking statements that involve risks and uncertainties regarding the operations and future results of SANUWAVE. We encourage you to review the Company’s filings with the Securities and Exchange Commission, including without limitation our Forms 10-K and 10-Q, which identify specific factors that may cause actual results or events to differ materially from those described in the forward-looking statements.
Furthermore, the content of this conference call contains time-sensitive information that is accurate only as of the date of the live broadcast, March 29, 2018. SANUWAVE undertakes no obligation to revise or update any statements to reflect events or circumstances after the date of this conference call.
With that said, I’d like to turn the call over to our Chairman of the Board, Kevin Richardson. Kevin?
Thanks, Lisa. And thank you everyone for joining our call today. We last updated you in early January, after receiving notification from the FDA about our de novo approval for the dermaPACE system in treating diabetic foot ulcers. This update is to review the Q4 2017 results and 2017 as a whole, and we’ll provide some direction on our plans for 2018, specifically around our expected rollout of the dermaPACE system. As normal, we do not plan to provide any financial guidance.
Let me start with our stated goal, which is to ultimately place the dermaPACE device anywhere and everywhere a DFU is treated, and eventually any advanced wound. I am going to pause for a second to let that sink in.
The market is vast and unfortunately growing both domestically and internationally. The number of locations in the U.S. where DFUs are treated is greater than 10,000. To implement this goal, we will need to follow a playbook that other successful companies have implemented. We have to make the patient happy with the outcomes, the payer happy with the cost of treatment, the doctors happy with how they’re compensated, but more importantly with the results. The approval is the first step needed to implement the plan. We will discuss in detail today and over the next conference calls, how we will execute and how we’re progressing against that plan. We’re excited with the opportunity ahead of us and believe this technology will make a dramatic impact on the lives of millions of people worldwide.
Let’s quickly review the highlights of 2017 before I turn the call over to the team, where Lisa will review our financials, Pete will review the FDA and operations and touch on clinical work about to commence, Iulian will discuss R&D, patents, and spend a moment discussing our successful symposium in December and André will discuss the results for 2017 on the international front, and importantly what we look forward in 2018.
We obviously received de novo clearance from the FDA December 28, 2017 for use of dermaPACE system in treating DFUs. This was our big event. But, we also signed a Brazilian joint venture with MundiMed worth north of $25 million in net present value, during the fourth quarter of 2017. We expanded our international footprint from 9 countries to 14 countries in 2017. We added experienced international healthcare expert to the Board of Directors in Britt Kaltloff. We added senior military doctor Col. Pat Sesto to the science advisory Board. We hosted our annual symposium in December with over 20 reps from five countries. We were also awarded three additional patents. We launched numerous international clinical studies to support growth. These studies have been and are beginning to be published, and you will see more in 2018, and they will be featured at various conferences we attend. We also presented at MEDICA and other medical conferences. We launched the Shock This blog, which has guarded tremendous industry response. In 2017, its focus was education of the shock wave. I’ll come back at the end to discuss some of the plans for 2018.
With that, let me turn it back to Lisa to review the financials.
Thank you, Kevin. Revenues for 2017 were $739,000 a decrease of $638,000 or 46% from the prior year. Our revenues resulted primarily from sales in Europe, Asia and Asia Pacific of our orthoPACE devices and related applicators and the upfront distribution fee from our Brazilian distribution agreement with MundiMed. The decrease in revenue for 2017 was primarily due to a decrease in sales of orthoPACE devices in Asia Pacific and the European community as compared to the prior year, as well as lower sales of new and refurbished applicators.
Research and development expenses for 2017 were $1.3 million, an increase of $164,000 or 15% from the prior year. Research and development expenses include the costs associated with the dermaPACE submission to the FDA, which incurred costs related to the responses to questions from the FDA including the hiring of an independent consultant to perform software updates. In addition, medical device and separate technical audits were performed related to our ISO certification in 2017.
General and administrative expenses for 2017 were $3 million, an increase of $331,000 or 12% from the prior year. The increase in general and administrative expenses in 2017 as compared to 2016 was due to an increase in Board of Directors fees related to adding a member to the Board, cost associated with the symposium hosted in December 2017, increased cost associated with Investor Relations consultant and increased non-cash stock-based compensation related to stock options and stock warrants issued to employees in 2017.
Net loss for 2017 was $5.5 million or $0.04 per share compared with a net loss of $6.4 million or $0.06 per share in 2016, a decrease in the net loss of $901,000 or 14%. The decrease in the net loss was primarily a result of the decreased loss in the warrant valuation that is partially offset by increase in operating expenses in 2017, which I just discussed.
Looking at cash flows, as of December 31, 2017, we had cash on hand of $730,000 compared with $134,000 at December 31, 2016. Net cash used by operating activities was $1.5 million for 2017 compared with $3.2 million for 2016. The decrease for 2017 in cash used for operations was primarily due to increase in accounts receivable, accounts payable and accrued expenses.
We continue to project that our cash burn rate from operations will be approximately $150,000 to $225,000 per month in 2018 as we continue to expand our international market, prepare for the commercialization of dermaPACE including hiring of new employees and continue research and development of non-medical uses of our technology.
Now, let me turn the call to Pete Stegagno for FDA and operations update.
Thank you, Lisa, and good morning everyone. In July 2007, SANUWAVE enrolled the first patients in the dermaPACE clinical trial for the treatment of diabetic foot ulcers, DFUs. Little did we envision that it would take 336 subjects enrolled across two trials, a PMA submission and finally a de novo petition to FDA that would spread across 10 years. As Kevin said, FDA issued their affirmative decision on the de novo, allowing SANUWAVE market to dermaPACE system for the treatment of DFUs in U.S. as a Class II device.
When I recall this journey to friends and colleagues, one of the most asked questions is, why did you stay? The answer is simple. Everyone here in SANUWAVE believes in the product and its ability to manage and heal difficulty to treat wounds. We all feel this device is a game-changer in the wound care market. It took 10 years to get here. So, now, our work is even more urging to bring this device to market and to begin influencing the quality of life to millions of people affected with diabetic foot ulcers.
Our immediate goal is to bring the dermaPACE system to market in a carefully planned and thought out manner, covering all aspects including targeted initial rollout, product positioning, reimbursement, further clinical proof of effectiveness in treating the DFUs expanding indications and claims, and listening to the customer for product improvement. We're excited about our clinical pipeline, which is being designed to support growth of the DFU claim and expanded indications. We expect to begin enrolling patients in Q2 into a case study series designed to bolster our claims for dermaPACE and its mechanism of action.
We are working with key opinion leaders or KOLs, here in the U.S. and abroad to develop initial investigation comparing dermaPACE with other products to validate our expectations that the use of dermaPACE in conjunction with other modalities can further improve the ability to manage and heal wounds. We are also looking at performing studies to compare effectiveness of dermaPACE with other modalities already in the wound care arena.
Late last year, a group of Australian researchers published a paper describing their work and results in using dermaPACE to treat Venous Leg Ulcers or VLUs. This case study series described promising results in using dermaPACE with these wounds, and the group is excited to further the work they started. We expect to kick off a significant clinical trial in treating VLUs by early 2019. In the meantime, we will continue our preliminary work towards this end.
Using the published paper from Australia as impetus, we have challenged our international distributors to become more involved in pushing for further research and clinical work and publications. This is beginning to manifest into productive work whereby there will be four presentations by our KOLs at the upcoming European Wound Management Association show in Kraków in May, which Iulian will get into more detail later.
We have at least two sets of investigations planned for Canada to begin in the next few months, and we are expecting two papers out of South Korea very shortly, describing work in the DFU area in that country.
Operationally, we are in very good shape in being able to make short and long-term production capabilities. Personnel and infrastructure needs are continually being identified and addressed. We feel we’re in a great shape to meet the challenges coming our way in this year and into the future.
With that, I will turn it over to Iulian Cioanta to discuss research and development. Iulian?
Thank you, Pete, and good morning, everyone.
In year 2017, we continued to reinforce our patent portfolio and trademarks. The number of patents and patent applications expanded from 64 to 68 with three new U.S. patents being issued in 2017, as follows: The U.S. patent 9522011, titled Shock Wave Applicator with Movable Electrode; U.S. patent 9566209, titled Shock Wave Electrodes with Fluid Holes; and the U.S. patent 9840313, titled Cleaning and Grooming Water Submerged Structures using Acoustic Pressure Shock Waves. The new issued patents and patent applications are reinforcing the protection of our new design for the medical field and new indication for the shock wave technology. In 2017, we also renewed our SANUWAVE PACE, which means Pulsed Acoustic Cellular Expression, and dermaPACE marks in the U.S and in countries all over the world.
Many misconceptions still exist in the medical community about what a shock wave is and is not. This is why education of the patients, healthcare professionals and clinicians on focused shock wave technology was one of the key activities for us in 2017. For that, we launched the blog Shock This that reached the broad audience and has gotten a tremendous industry response. In six separate blogs, we explain what focused shock waves are, how they operate, and how they significantly differentiate from ultrasound, radial pressure waves and on focused pressure waves.
In 2018, we already posted a new blog, which is part of a series of blogs with interviews with pioneers and influential personalities who have had significant contributions in advancing shock wave technology in the medical field. Also, we will continue to post differences in between focused shock wave and other technologies that use energy in medical treatment.
As Kevin said, in December 2017, we communicated our education and activities by organizing a clinical and science symposium on advanced wound care with over 20 representatives from U.S and five countries from four different continents. Our distinguished guest speakers were Dr. Maria Siemionow and Dr. Ching-Jen Wang.
Dr. Maria Siemionow is a Polish transplant surgeon and scientist who performed the world’s first near-total facial transplant successfully at Cleveland Clinic. She presented at the symposium her research regarding the use of dermaPACE system for improving microcirculation, which can be a key factor in chronic wound healing. Among numerous awards, Dr. Siemionow is a recipient of the Commander's Cross Polonia Restituta Award given by the President of Poland in 2009; and in 2014, she received the Great Immigrants Award for Carnegie Foundation of New York.
Dr. Siemionow is now affiliated with the University of Illinois at Chicago College of Medicine as a Professor of Orthopedic Surgery and Director of Microsurgery Research.
Dr. Ching-Jen Wang is the worldwide distinguished researcher in medical applications or extracorporeal shockwave. From 1997 to present, Dr. Wang is Professor of Orthopedic Surgery at Chang Gung University College of Medicine, and Chang Gung Memorial Hospital in Taiwan. He was the former President of the International Society of Musculoskeletal Shockwave Therapy or ISMST, which one of the conferences where shockwave research is presented. He is practically one of the gurus in the shockwave medical field. Dr. Wang presented at the symposium his research result in shockwave, which are considered the foundation for numerous applications of shockwave in the medical field and wound care, cartilage, regeneration and combination of shockwave and stem cells to name a few.
Overall, the symposium offers the opportunity to have constructive discussions about the research and the future of shockwave technology, and also in laying the foundation for the national and international collaboration and expansion of shockwave technology in new countries all over the world.
Broadly speaking, from the science and technology point of view, in 2018, we are dedicated to continue our educational efforts and to improve our product platforms and implement these changes over time in a methodical way. The promotion and exposure of our products and technologies will be done by participating as exhibitors at Symposium on Advanced Wound Care, SAWC in the spring and fall, at European Wound Management Association, EWMA Conference in Kraków, Poland, at the American Professional Wound Care Association Conference in Baltimore or the Canadian Association of Wound Care Conference, just to name a few of them.
I will now turn the discussion to André Mouton for the update on the international markets. André?
Thanks, Iulian. Good morning, everyone.
2017 was a very positive year with interest in our products but also very frustrating with governance and changed legislation in different countries. We have seen an increase of five more countries during the year. This will be surpassed [ph] this year, given the interest received from Southeast Asia as well as the focused wound care rollouts. We expect placements of units in at least four countries by the end of second quarter. We increased the focus in Europe toward wounds where we traditionally had an orthopedic focus via our distributors. We also had to reeducate our distributors within the wounds arena to ensure we spread the great unified message on dermaPACE.
Internationally, the big event in 2017 was done in Brazil. The Mundi team has been interacting with our team constantly and open [ph] to remain on track for the fiscal rollout in 2018. This also helps us with designing and getting comfortable with our JV deal structure, which includes upfront payments as we approach the bigger identified markets. We’ve identified and finalized relationship with more distributors in Europe. These companies all have the track record in wound care and already have access to the key opinion leaders and established relationships within the wound management market. Germany, Austria, UK and the Nordic countries will be added to our country distribution list. The relationship these distributors have to scale out will also enable us to explore further study and poster participation from them.
These companies are also working closely with our team to ensure we overcome the barriers of entry and not to get involved with price wars, which established players over there. The issuance of [indiscernible] country is going slower than normal due to some backlogs in the Europe administrative process. This [indiscernible] affected our Asia and Southeast Asian markets. Once completed, we shall have indications [ph] registered in Taiwan, Indonesia and Thailand. Wound registration only now will be for Singapore, Hong Kong, Malaysia, Cambodia and Vietnam. We have greatly expanded the relationship, which will lead to further opportunities for Mexico, South America, excluding Brazil, Costa Rica and the Middle East. We are finalizing relationship with potential introducers for India, Pakistan and China. These big markets will be similar to Brazil where we have a JV with an upfront payment of our Company. Our exposure in Canada is growing by the day. It also enhanced our medical approach and communication with direct caregivers. We registered the orthopedics indication as well as well as two different groups will handle the dermaPACE and orthoPACE device distribution.
We are also engaged more directly with identified key opinion of leaders and work with them for market access and potential placements of our units. Our strongest markets are still Italy and Korea. Their success is mostly due to the passion of the distributors and the personnel. We are keen to foster this transition with our new distributors to ensure more success for this work. The foundation that we laid in 2017 will be proved 2018.
That being said, I will turn the discussion back to Kevin for concluding remarks.
Thank you, André. As we said in the past, this has been a long journey but we have stayed true to the technology that can and will impact millions of lives. The team and the investors are all have debt of gratitude for sticking with this Company there in the darkest hours, but now we're prepared to reap the benefits of this long struggle.
When, I was a senior partner of Blum Capital, we were involved in a similar wound company, Kinetic Concepts, KCI. KCI felt that they had an innovative wound product called the VAC, basically a vacuum on the wound. But, were heavily levered and had to fight their lenders tooth and nail to continue down the path to get their product to market. Ultimately, the product went from minimal revenue to $500 million in just five years. I shared this story because SANUWAVE today shares many similarities with that path KCI took to success. dermaPACE is an innovative product, the VAC was innovative; dermaPACE was started with one indication, the VAC started with one indication; dermaPACE started with the file 510(k), the VAC started with the 510(k). And what we plan to do is follow that playbook that KCI did, so we can have similar success as we move forward in the wound care market.
Our stated goal is to deliver dermaPACE system to every location that is treating a DFU. If we can achieve this goal by delivering value to the practitioners, payers and patients, then we too can see the rapid adoption that occurred for Kinetic Concepts. To do so, we will need to execute implementation of the following plan: Develop relationships with key opinion leaders as we expand our clinical work; have the proper equipment financing in place; select the right partners to manage the various channels; continuing extensive clinical work to support the gold standard study that was part of the FDA approval process; extend the number of wound indications beyond DFU; add more wound experience to the board and science advisor level; hire the right driven people in several key positions; attend the various conferences to build the brand, develop a service-driven culture that can meet the need of the practitioners, payers and patients; develop more JV relations like the Brazil MundiMed deal; and then, collaborate with all the partners internationally.
The task ahead is daunting yet exciting. The key mantra around the office has been and will continue to be focus. It is easy to get distracted with other opportunities in various indications. But, right now the goal we have set for 2018 is to establish the infrastructure and business model to repeat what other successful wound and sound companies have achieved before us. As we progress through 2018, you should expect to see revenue growth accelerate throughout the year with the first quarter being up at least 100%.
I'm sure there will be lots of questions. And in full transparency, we will try to answer everything we can. So, why don’t we just turn it over to Q&A. With that, Michelle?
Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] Our first question comes from the line of Brian Marckx with Zacks Investment Research.
Kevin, you walked through a sizeable list of milestones that you hope to hit to eventually be successful. And I understand it's really early on in the process. So, you may not have much in the way of specifics or details in terms of what you are going to do to hit those milestones. But, just kind of wondering where you are today with implementing the U.S. strategy. And then, I guess, what are the first sort of specific steps that you'll do to implement that I guess?
Sure. We're less than 90 days in. So, we’ve got the approval I guess 90 days ago. So, we're still new in the game here. But, I think relative to implementation, I laid out a few of the things that we needed to do. First was getting the right financing in place. And so, with NFS, we got the right equipment financing in place. So, we can expand to 100 devices upto a 1,000. The next piece was finding the right partners from a channel management standpoint. And we recently announced the Premier Shockwave agreement shipped our first order. So, I would actually say that we're kind of implementing the plan and we're executing already on a lot of this. So, I think we will see that in the first quarter where we said we’ll have revenue up over a 100%. So, we're starting on that.
What I think, the things that are going to be challenges are bringing on people as fast as we can, but they have to be the right people. So, we've been interviewing at different senior levels because the team of eight, we’re all stretched as it was and implement something, if your goal is to be in 10,000 locations. I think is important that we -- we think about this to get in kind of one machine at a time, one step at a time, and each time you place a device you need to train, you have to execute against that, you have to install, you have to educate. So, there is work behind that we're going to need to do.
And so you'll see us in our hiring, probably in the second quarter that are pretty extensive, additional science advisors and then Pete eluded some of the KLO work, that we’re doing on the clinical side, that’s all to support it because when you’re in front of a wound doctor, he is going to look at science, he is going to look at what clinical trials, what KLO’s do you have on board because it's an innovative product. This is an, I hate to say, it’s not the 16th negative pressure wound therapy product. It's not the 61th extracellular matrix company. It’s not the 85th banded company on the market. We’re kind leaving with innovation and so there is an educational curve that we have to follow.
So I think those are things I'd be looking for ourselves or are we hiring the right people, we'd bring them on, where we're replacing the devices and studies, where we're replacing the devices and the different channels. I think you'll see us probably over the next quarter or so, start to place U.S outside of the VA market with different locations. And the big push for us as we head into the summer and in the back half of next year where we will hopefully have those people in place so that when we hit the -- hit a lot of the opportunities with the late summer fall conference, we’re something to be reckoned with.
It's really kicking off with Yuma in May for Europe, we got four podium presentations. I mean that’s about its far more than we've ever had. But it's about too more than most companies get and we have a really big backlog of clinicians who want to meet with us. So I feel very positive about things going on in Europe and we just parlay that into the U.S. I don't think will be any drought of clinical work coming our way over the next year to 18 months, which will help support the growth.
I don't know if that answers everything by that kind, I don’t if that’s kind what we’re trying to lay out, but I would start to see we’ve laid the groundwork, we kind following our plan and kind picking of one by one, but we needed the equipment financing them first. So that was a very important milestone for us.
Yes, it does help Kevin, very much appreciated. So in terms of you alluded to potential U.S. sales force. I assumed that you may have just with your background and the location that SANUWAVE was in that you may have some opportunity to pick up resumes from KCI?
Yes, we’ve got I mean, so it's far, we've been, the biggest search underway right now are someone to kind lead the would care team and in that we're very fortunate in that, within 20 miles of our headquarters there is MiMedx and they're been a unbelievably great success story in the wound care space over the last five years. There’s Mölnlycke U.S. headquarters, they're the probably number three global wound care company, and they’re down the street from us. Halyard another big company and so we've been -- since December 28th, we have been inundated with resumes coming in or wanting to join the sales force, wanting to join in the medical side, the R&D side.
So, we just have to sort through a lot of it, I mean we brought on a new employee two weeks ago to be our HR director just because we were dealing with the -- dealing with rapid growth and have an influx of people trying to join on to this. They see the opportunity I mean that’s the one thing, the team went around with a bunch of KOLs a week ago, across the U.S., two weeks ago, and the response we got was fantastic, I mean they have been waiting for this product for a long time. They know where and how it could be used to help heal wounds and are excited to get it in their clinics, so they can start using it and so it's just been a very exciting time down in Georgia.
Thank you. Our next question comes from Deepak Khanna from Vulcan Capital. Please proceed with your question.
As you look at launch in the U.S., I was trying to get some more color on the reimbursement scenario that could play out over the next two to three quarters in the U.S. specifically? And then secondly, can you just give us an update on the VA launch as to where it is and the timeline on it?
Thanks Deepak. I’ll start with the VA launch. We’ve sent our initial shipments off to Premier Shockwave, they've received those shipments. They're beginning to place their devices. I was fortunate to be with them in Nashville recently at the Foot and Ankle Surgeon Conference, and there was a lot of interest, we had two fascinated dinners with -- and the focus of the dinners were with the military based doctors and just again a lot of positive response, the benefit we’ve had with Premier is that they’ve already laid a lot of the ground work in educating the military bases in the VA in using shock wave.
And so they use it -- they use an old device of ours is called the [indiscernible] to treat plantar fasciitis and have kind of the -- I don't want to say the landscape kind of laid out, but they understand who the players are, who the right connections are, they’re well-connected in that community, so we expect to have a fairly rapid growth over this year and then we’ll begin receiving revenue on a per treatment basis as treatments begin to ramp. Once, we can see how many times it's being used a day, we’ll share that information with people I mean we’ll -- there’s some expectation that it’s going to be really brought here, it could be as little as twice a day, it could be five times a day.
We really just aren’t sure, I think that's part of the educational curve that Premier and then ultimately SANUWAVE will have to do with the practitioners. So they can understand where and how to use it, how often to use it, where to place it. And so, we’re actually feeling pretty good about that. I’d expect that under their agreement bill, may have a minimum order size over the -- I think it’s a two or three year period, but I'm anticipating that the initial Q2 rollout is making sure everything is working, make sure they get other bugs out of meaning on the educational and training side and then I’d expect that you are going to see a much more rapid increases they bring on some new sales people and service technicians to follow. So that’s with regard to Premier and VA side.
With regard to reimbursement, our strategy is really to work with some of the regional coverage areas where there is a need for our product so it’s a kind of a regional map strategy was engaged, the consulting group to work with us on bringing that to market. We feel that our product is comparable to other products that are being reimbursed in the $6000 $8000 and $12,000 per wound category. And so we are really trying to build a case where we can show the payers that what we do will help affect their change in the wound and the wound management, and it will be quite frankly, less expensive than necessarily going to a hyperbaric chamber. So we have a lot of work to do over the next I’d call it few months, with a goal of having everything pinned together midsummer, late summer so that we can begin a heavy push after that.
So it's again we are taking the same approach the KCI took. You pick one area focus on that region as you get that region figured out then you roll it out nationally and can really hit the accelerator button. For us a lot of it surrounding economics of what we do and what we bring to the wound, I would expect us to focus on wounds that are what I call more advanced or harder to heal as oppose to start because that’s where the payers are going to be a little more open-minded to trying something like us and FDA approved device that’s new. So we will try to use that four to six week walker where if a wound hasn’t shown any improvement on standard of care that's when they are going to make a decision okay, do we go to the VAC, negative pressure wound therapy, do we go to hyperbaric, do we go to skin grafts surgically.
And so that's a big decision point within wound centers is around that four to six week walker so we are going to try to wedge ourselves right in there as an alternative to the very expensive strategies that are out there today.
Our next question comes from James Terwilliger with Paulson Investment Company. Please proceed with your question.
It's only been 90 days since approval and a lot has happened in terms of -- I don’t want to say the launch because I don’t even know if we have launched officially, but a lot has happened in 90 days, usually in my experience when the Company gets regulatory approval like you did, there is kind of three to six months low before we actually have the type of announcements that you've been putting out. So congratulations to you and your team for being well prepared. You are at the top of the first inning I think base ball season is starting pretty soon and the way your company get the top of the first inning. If there is a surprise for me in the press release, and a lot of my questions have been answered, it's really the comment here about adding the international clients or distributors with two being similar to Brazil.
I think the Brazil announcement was a significant announcement a couple months ago concerning the size of the announcement. And I think that's from the press release what is, has cut my eyes the opportunity to have two more deals similar to Brazil so my question is. Can you give me an update on Brazil in terms of the implementation? And how that's going any color there? And then secondly, any additional information concerning that couple of senses in the press release about two other opportunities that could have the size that Brazil did?
On Brazil the update is. It's the processes that we're waiting for in vivo approvals, so similarly that are on FDA, but it should go a lot faster and smoother. We're anticipating that later this year we've trained their initial KOLs, so we will begin a shipment probably June or July timeframe of two devices that they'll start to use for a case study work ahead of the launch. And again when we try to enter new country we try to identify some key opinion leaders in those countries who can begin case work and that way when the launch comes call it three or six months later, you can get the super start up on stage or at a dinner and talk about their experience working with the device.
We've just found and that's the model that works really well for us, so we're that's kind of where we are at with Brazil I mean they were when we talk constantly and the relationships are great I mean they've been doing a super job with us so we expect everything for 2018 to be on track. They have been making their milestones payments every month, so everything there has been good. The two I'd say the two new potential ones the one smaller ones bigger and we've got a pipeline after that that we have not began discussions with Andre and I can only fly so many places.
So these are usually in person full due diligence session for multiple days they tend to come and to visit then look at. In the case of Brazil they went to visit Italy, Switzerland, Georgia so these are pretty extensive when people are coming out of pocket millions of dollars they tend to want to make sure they know that they are buying. So it's a process, I would expect later this it could be Q2 or might be Q3 but it's in that time frame for both of the ones that we have our eyes on right now there is a pipeline beyond that it's probably deeper but I don’t feel it's confident that we will have certain closure on those this year I think some will might slide the next year.
We're hopeful we can get them all of this year I mean it would be great to get them all on board but when we enter a joint venture we do in the way where we get an upfront payment and then we split profits 50-50 that partner gets their payment to us back first so that's kind of like a preferred return what they get but because they are putting up a lot of money their incentive to get to profitability is fast as I can with machine and device placement so we've got a model that works and now it's just a matter of rolling it out and kind of country-by-country.
So we're and I would expect some more other countries as we enter to so it's not just a the big joint ventures but some of them are really sizeable that we have been really reluctant to start down that path yet until we've got one or two more of these under our belt and when I say big thing you think everything by population and then you can trying to multiple by 10% to 15% diabetic and then 10% to 15% Diabetic Foot, so that's kind of how you can a rough way of getting it how many Diabetic Foot Ulcers there are on a country-by-country basis.
Thank you. It's hard to have that type of international visibility, so I understand why you don’t want to get two bogged down in terms of guidance, but at the same time, Q2 and Q3 are greater on the corner. I look for to those hopefully those announcements. Thanks guys and I will jump back in queue. Thank you.
[Operator Instructions] Our next question comes from the line of Terry Thomson [ph] who is a private investor. Please proceed with your question.
Kevin Congratulations. You answered my first question, I wanted to more depth color on your Premier Shockwave, but as kind of a follow-up to that. I’m wondering being in the VA, the Indian Health Service in the military base market. Does that help you in acceptance in other clinical environments?
Absolutely, it's -- I think that's part of the strategy is that they're going to a lot of -- we have to do a good clinical work on the VA side, which we will share. So one of the things, the perfusion study that Pete alluded to you, we will make sure we have two leads on that, one is a VA, one is we'll bring in third VA to help our build up numbers in the Phase 2 of that. So Yes, it helps everywhere helps it's not a -- in the more, getting the right KOLs, doing the right clinical work and then the clinical work has to support what were claiming we can do, we can do but more importantly, how do we position ourselves within healing of the wound. The FDA is very hung up on wound closure. But if you go to wound clinic is more about wound management and if you're talking payers is about how are they managing quality life and so those are different equations and luckily we played well for all that. So I think we have a lot of success in the VA and as we do will share that with others. So I think it's a great first step for us.
[Indiscernible]
Thank you. Our next question is a follow-up from Brian Marckx with Zacks Investment Research. Please proceed with your question.
You've referenced Q1 sales and I think you've mentioned that you expect something about 100%. Is that any of that expect to be in the U.S.?
Yes, having those, the answer is yes. We got some in Italy our normal kind of refurbishment work, we’re doing the payments from Brazil but also this and we launched the Premier in started shipping devices. So, we will be seeing some of that in Q1, and Q2 will follow that line with hopefully more shipments to Premier and hopefully more international stuff that Andre alluded to other U.S activity picked up as well. So and in North America, I mean there is Andre alluded to Canada, but Canada is going to be a nice very nice surprise for us this year.
And then Kevin on the U.S. strategy relative to the use of KOLs, if you remind me how many sites participated in your two U.S. dermaPACE studies? And will any of those sites also be leveraged with the initial KOL focused commercial rollout?
Yes, so, the sites that we had in our studies were fantastic. I mean they’re kind of who’s who, the team did -- and this is prior to my involvement, so at the management level but they did a great job recruiting some, it’s kind of like an all star team. You know those -- if you had to pick kind of your top 50 wound care docs in the country, we got 33 of them in our trial. So it was really fantastic having them and then going back out to them, and a lot of them were like yes, I have been waiting for you guys, thank god you’re back, when can I get the device, how can I help. And so a lot of the KOLs are already embracing it.
In the second quarter, we’ll probably have five or six devices already some of the KOLs working on different clinical work and casework. And so it's -- again, we’re leveraging the relationships we have, the team has done a good job, maintaining those relationships despite not having the FDA approval on the product, so we’ve been communicating, so it's been again in business it's a lot of its locking tackle, but it's been making sure we stay in touch with them, update them, good or bad keep them updated on what we’re doing, even when we had any setback, to let them know here's what's going on.
And then when you get in front of them like we did two weeks ago, they're excited as anything to get a product and start working on some things and some of the ideas that are coming out of our KOLs on work they want to do and explore with their -- I don’t want to say cutting edge, but they’re really forward thinking. One of them is with the doctor that’s looking at any post-closure protocol that would -- so when a wound closes with an amniotic or with a graft, a lot of times the wound appears to be closed with the epithelialization, but underneath it, it’s still a wound.
And when you look at it, using some of the medical imaging technologies you'll see that there's an underlying wound and even though the skin is closed, and in recurrence in wound care is a big-big issue and his study he wants to pursue is, how do we do this as a post-closure treatment which is again a market that we’ve never even really thought of but he is thinking about it as if you’re diabetic foot ulcer patient and you have the propensity to have diabetic foot ulcers, let's treat your foot every six months, kind of like a booster shot, almost like going and getting your teeth cleaned, that type of thinking.
I mean that again would increase usage for us dramatically. But we got do the right clinical work with the right -- with the right facility, with the right KOL, and that’s what we’re putting in place today. And we’re hoping that the results show what we feel right they'll and then you can bring it to the payer community and say by doing the dental visit equation here, we can keep it from turning into something really nasty and really expensive later. So, a lot of forward thinking ideas coming from our KOL community, it's really -- really exciting to hear their thoughts and ideas.
Yes, it's really encouraging from outside perspective to hear the already what sounds like some real significant initial interest. So, great thanks, and I appreciate the answers.
Thanks.
Our next question is a follow-up from Terry Thompson [ph] who is a private investor. Please proceed with your question.
My next question concerns about financing. The $1 million line that you got within NFS leasing, you anticipate that being enough or do you anticipate that go back to the well? If you do have the right to the well or you are going to looking at debt or god forbid [indiscernible].
Yes, I know Terry I mean great question. NFS is a great partner. They've had experienced a medical equipment and they understand as we grow they will grow with us. And it’s a very good dialogue that we have, and I think if we present to them if we got through our initial line with that conversations about expanding it so that we can handle growth on that line to 5 million or 10 million if we needed to over time. But, right now it's about focus it's about one device at a time, it's kind of taking one step at a time. So I really don’t want to get ahead of myself there.
As far as financing goes some of these international joint venture deals, come with an upfront payment so we are pushing very aggressively to bring those in there to help as far as our growth capital that will be required. I’ll also -- we have an asset on the balance sheet that comes due within the next 12 months. That could bring in $7 million to $7.5 million and we are using that creatively to figure out ways to maybe either bringing that money sooner, work with someone and use that as a way to help finance the growth that we're seeing right now.
So, I think there are a number of alternatives that we can look at, but Terry we are always we as a small company and hyper growth mode, we have to be open to what's ahead of us. So right now, we are focused on getting devices out every day, getting them trained and getting them use. So we will figure out the capital thing as we move along but right now we are in fairly good shape.
There are no further questions at this time. I’d like to turn the call back over to Kevin Richardson for any closing remarks.
Great, thank you, Michelle. I appreciate, I appreciate everyone's time. If you have any follow-ups or any questions, please contact us. We will try to answer it as best we can. We will be out of the few industry conferences this year. We may attend few investor conferences and if you want to get together, please let us know.
As always, with shareholders, if you want to come down to Suwanee and be with the Company also, feel free to contact us to do that. We have had some investors over the last few months come by, get to see the product get to see the team, and we'd encourage that people want to do that.
So with that I'll finish. Thanks very much. Have a great day. Bye, bye.