Irras AB

STO:IRRAS

Earnings Call Transcript

[Operator]

Hello, and welcome to the IRRAS Q2 Report 2021. [Operator Instructions] Today, I am pleased to present Will Martin, President and Chief Executive Officer. Please begin your meeting.

[Will Martin, President & CEO]

Thank you very much, operator. Good morning, everyone. Thank you for joining us today for the IRRAS Q2 2021 report. My name is Will Martin, President and CEO of IRRAS, and I'll be walking you through today's presentation to highlight our team's accomplishments during the second quarter. I'll be joined for the Q&A session at the end of the presentation by Griffen Stapp, our Interim CFO; and Sten Gustafsson, our Head of Investor Relations. On the next slide, you will see the standard disclaimer statement that highlights that I may make forward-looking statements during today's discussion. Moving forward to Slide 3. I'd like to begin by highlighting the significant events that occurred both during and since the end of the second quarter. To begin, I'd like to highlight that the second quarter was IRRAS' fourth consecutive quarter of revenue growth. The Q2 revenue of SEK 5.1 million showed sequential growth of 27.5% from the first quarter. And for the first half of this year, total revenue equaled SEK 9.1 million, which was growth of 225% from the first half of last year. This revenue growth was driven by continued growth in our IRRAflow capital equipment footprint, and during the quarter, the total number of systems shipped globally and the number of commercial systems in the United States again increased. Additionally, during the quarter, new clinical evidence was published in a peer-reviewed journal to support the clinical superiority and use of IRRAflow, and it was published by a world-renowned group of neurosurgeons in Buffalo, New York. On the next slide, we'll continue the significant recent events. And I'll highlight that during the quarter, IRRAS accomplished a number of steps to strengthen the company's balance sheet. During the quarter, the company received full forgiveness on a SEK 6.9 million loan that was received through the U.S. government's COVID-19 payroll relief program. And beyond that, the company completed a directed share issue that resulted in proceeds of SEK 66 million prior to fees. And since the close of Q2, IRRAS has announced that we have signed a non-dilutive loan agreement with the European investment Bank that provides access up EUR 10 million to support product development and clinical data generation within the European Union. Beyond that, on July 1, the company completed the previously announced leadership transition that resulted in my assumption of the role of CEO. And finally, DEKRA, our notified body that oversees global quality and regulatory activities, completed its audit of our quality management system and in-house manufacturing facility during the second quarter. And those activities resulted in the certification of our compliance with European MDR ISO 13485:2016 and the Medical Device Single Audit Program requirements, all significant validation of our quality system readiness to grow into additional meaningful markets moving forward. For the second quarter, the key financial data is shown on the next slide, Slide 5. SEK 5.1 million of revenue was generated during the quarter. That resulted in earnings before interest and taxes of negative SEK 26.1 -- excuse me, SEK 26.7 million and earnings per share of negative SEK 0.4. Cash flow during the quarter was negative SEK 31.6 million, and each of these metrics compares favorably to the company's results over the past several quarters. At the end of Q2, liquid funds equaled SEK 125.6 million, which also does not include any of the funds that can be now accessed through the EIB partnership that I just discussed. Transitioning now away from the Q2 highlights and significant recent events. It's important to remind our investors that at IRRAS, our focus is on providing innovative solutions for neurocritical care and, more specifically, patients suffering from intracranial bleeding and traumatic brain injury. Our lead product is IRRAflow, which is the world's first irrigating intracranial drainage system. IRRAflow combines needed fluid drainage with automated recurring irrigation as well as continuous pressure monitoring. This irrigation helps to prevent blockage formation that can disrupt and slow needed fluid removal, and it also helps to dilute toxic materials within the intracranial space that has to be removed to improve patient outcomes. At the same time, we also promote a complementary product line, Hummingbird, for the assessment of traumatic brain injury. Hummingbird uses a proprietary air bladder that gauges the elevation of pressure within the brain tissue, essentially the blood pressure of the brain, if you will, the intracranial pressure, and this air bladder mechanism of action results in what is considered to be the easiest to use and most accurate option for measuring that intracranial pressure. On Slide 7, you can see the total market opportunity for our 2 product lines. The intracranial bleeding and traumatic brain injury market combined create an attractive opportunity for IRRAS of more than USD 1.5 billion in the EU and U.S. alone. Hemorrhagic stroke or active bleeding in the brain only makes up a small percentage of total strokes, but it does account for a much larger percentage of overall stroke death. Chronic subdural hematomas or bleeding between the brain and the skull is projected to be the most widely performed neurosurgical procedure over the next decade. And it's estimated that between these 2 pathologies, more than 350,000 patients can benefit from treatment with IRRAflow in the EU and U.S. alone. When you look at the traumatic brain injury opportunity on top of that, it adds another USD 400 million in market size, and that's driven by the percentage of patients hospitalized each year due to brain injury that ultimately requires invasive pressure monitoring. So when we look at that $1.5 billion-plus market opportunity, on Slide 8, it's important to highlight how our products have been designed to address the meaningful shortcomings of legacy traditional technology, and these shortcomings have been well documented in published literature. Our experience to date has confirmed the ability of IRRAflow and Hummingbird to improve upon this shortcoming. Published case series with IRRAflow has shown reduction in needed treatment compared to passive drainage -- in needed treatment time rather. The overall length of stay and required treatment time has been reduced. And after 250 patients, our customers have yet to experience a catheter occlusion when IRRAflow irrigation function is actively employed. With legacy external ventricular drainage, with legacy passive technology, catheter occlusions, or regular Dusen and literature highlights them up to 47% of the time. So with legacy technology, almost half of the time, a catheter blockage can occur, and with IRRAflow, we've yet to see one in more than 250 patient treatments to date. That experience thus far leads itself to the fourth consecutive revenue growth that's now shown on Slide 9. As we shift to discuss the quarterly results, Q2 was the fourth consecutive quarter of growth after our most significant disruption due to COVID-19. The quarterly revenue of SEK 5.1 million represented quarter-over-quarter growth of 27.5%. And whereas the growth during the first quarter of this year was heavily driven by commercial stocking orders from new U.S. customers. It's important to note that the second quarter was more heavily driven by reorders from U.S. customers, showing continued patient treatments and wanting to continue to use and reorder the disposable products in a recurring fashion. Beyond that, we continue to expand our network of global distribution partners, setting ourselves up for continued international global growth as market activity resumes. In Europe, in our direct European market, we continue to see an increase in commercial activity as COVID-related restrictions are -- begin to be reduced. But like everyone, we're closely monitoring the Delta variant and adjusting our activities accordingly to make sure that disruption is minimized. Looking in more detail on Slide 10. I'd like to highlight some additional commercial highlights from the quarter. I referenced that the revenue during the second quarter was more heavily driven by reorders from U.S. customers. 54% of the revenue during the second quarter from U.S. customers was driven by reorders versus 16% during the first quarter of this year. We received disposable reorders from 4 different U.S. commercial accounts as well as 3 international distributors, and during the quarter, we continued to drive a small amount of service revenue as well as an additional source of revenue. Globally, continued expansion of new distribution partners as distribution partnerships in the Baltic countries, the United Arab Emirates, Portugal and the expansion of our Latin American partner into Mexico all occurred during the second quarter. In the U.S., a disposable stocking order was received from Ohio State University as our newest U.S. commercial customer. And we also received disposable orders to support 2 additional upcoming U.S. evaluations, and we also initiated 2 new Hummingbird evaluations in the United States. So across all elements of our business, during the second quarter, we saw a broad revenue contribution, which led to the 27.5% quarter-over-quarter revenue growth. As we navigate through the third quarter, as I mentioned, we're watching the Delta variant closely. In many parts of the United States and in other countries, the spike in COVID cases over the last several months is something that has disrupted activity as ICU bed space has been reduced again. Several regions of the United States have gone back into restricted access to hospitals, and we're prioritizing our activity and focusing upon evaluations in areas where normal activity remains possible. We still have approximately 7 U.S. hospitals that had previously evaluated IRRAflow, where the evaluations have not yet resumed due to COVID, and we're continuing to focus on newer account opportunities while waiting for the opportunity to reengage these customers. That activity in those commercial contributions show increased growth again in the number of commercial systems that are in place in the U.S. on Slide 11. Whereas in Q1, we saw growth from 9 commercial systems to 19 in the U.S., after Q2, we now have 22 systems commercially driving revenue in the United States, and the number of evaluation systems also increased during the quarter to 30 as we initiated 2 new hospital evaluations. In Europe, our partnership that was previously announced with Aarhus University in Denmark is now coming to fruition. Training has been complete, and our team is on site in Denmark this week working with the team there to initiate patient treatments, and we're very excited about moving forward with that partnership in more detail, and we'll discuss that in coming quarters. But after restricted movement and restricted activity, most of our commercial team globally is now fully vaccinated as vaccinations have become more widely available, and that's allowed in-person training and treatment to support to return back to normal levels in many facets. On Slide 12, you can see that, again, a large portion of our commercial strategy is continuing to increase the overall global footprint of our capital equipment. This is the initial element of our razor blade model, and during the quarter, we saw total shipments of IRRAflow systems growing from 84 to 98. That represents the growth in the U.S. that I discussed on the previous slide as well as the addition of those new global distribution partners in new markets. Of those 98 systems that have been deployed globally, we're pleased to show you the specific breakdown there. 30 of those systems are supporting U.S. evaluations, including those that have not resumed post COVID. 22 of these systems are considered commercial systems driving disposable reorders in the U.S. 8 systems are now with EU direct customers, supporting patient treatments and navigating our way through treatments to drive reorders there. And we have 38 systems that have been sold to distribution partners in a variety of markets in Latin America, Europe and the Middle East. These 38 systems that are in the hands of distribution partners, most of these at this point are still focused on driving customer interest and training the distributions commercial support staff. But in coming months, these systems will begin to support a growing number of patient treatments in each respective market. At the same time, our global installed base for Hummingbird also increased during the quarter with those 2 new evaluations that were initiated in the United States. As we shift over to Slide 13, it's important to note that this growth is continuing with an increased focus on cost consciousness. The last 18 months have been impactful for all organizations, especially one of the size of a company like IRRAS. And it's important for us to note that since the beginning of 2019, our operating expenses have remained relatively stable, and it actually decreased slightly, even though the size of our commercial team has started to grow again, and even though the number of employees supporting our business has grown from 31 to 52 over the last 2 years. So even with 20-plus employees having been added to support IRRAS' growth, our operating expenses have dropped slightly, and the overall ratio of OpEx compared to sales has dropped dramatically. And that's an overall testament to the judicious way in which we're running our business as well as the cost that has been driven out of our manufacturing process that we've discussed previously. And this is a trend that we look forward to continuing to share with you as interested parties, because this is a key element of how we're growing our business but doing so in a judicious fashion. On Slide 14 and 15, I wanted to take a minute to highlight the other important progress that was made during the quarter to highlight clinical evidence supporting the use of IRRAflow. We've discussed previously the fact that growing our clinical evidence base is a significant driver of future market leadership. During the quarter, having the case report from Buffalo General that highlighted the use of IRRAflow after the failure of a traditional EVD, having the case documenting that it demonstrated clear radiographic and clinical superiority of the IRRAflow system compared to a standard EVD and documenting for the first time in published literature the ability to deliver targeted thrombolytic medication to support a patient's positive outcome or all significant outcome of this published case report from Buffalo General. To build upon this evidence, we're now beginning to finalize and initiate 4 large-scale clinical trials, several of which will be direct head-to-head comparators of IRRAflow versus traditional therapy. The ARCH study will look at IRRAflow versus EVD and will also incorporate the use of intraventricular thrombolytic medication. That trial is being conducted in conjunction with Helsinki University and Johns Hopkins University. Our partnership with Aarhus University in Denmark is initiating a comparative study of IRRAflow versus EVD. And we're also partnering with Ohio State University to essentially look at IRRAflow versus EVD in all different patient types within neurocritical care. Each of these will have interim checkpoint for us to be able to assess, before the total enrollment of the trial, the progress towards superiority with IRRAflow. And we feel that at this point in the company's history and progression, it's important to take the next step in terms of clinical evidence. And even beyond that, within the last couple of weeks, 2 additional data points, 2 additional pieces of clinical evidence have been released. The team at University of California, Irvine published another case report showing treatment of chronic subdural hematoma but, more specifically, looking at their treatment methodology of assessing net drainage even with aggressive irrigation showing that this patient was discharged on day 2 compared to the average length of stay of 6 days. And then this past weekend, the team at UCI showed the long-term follow-up of their first 6 chronic subdural hematoma patients. This data was previously reported, showed a 50% reduction in overall treatment time. Less than 2 days actively were spent in the ICU. And in the chart you see here, you can see that each of these patients from the time they left the operating room to the time that they had IRRAflow treatment continued, that irrigation further washed out, collected blood and reduced the size of the overall hematoma and even after the long-term follow-up showed no recurrence to date. The growing pool of evidence is a significant piece of our long-term strategy to position IRRAflow as the standard of care, and we're excited to continue to publish more and more of this evidence. Now as I wrap up on the last couple of slides, I wanted to highlight again the key upcoming corporate milestones. This slide, Slide 16, is the slide that we've shown for multiple quarters now, highlighting our focus on commercial adoption, continuing revenue growth. That is ongoing, as we've seen for 4 consecutive quarters now. We're continuing to expand that clinical evidence. We're making progress with DEKRA on the CE Mark review of Hummingbird. And we're in the final stages of rolling out the fourth of our product or line extensions that we've referenced. So on Slide 17, we wanted to update these key upcoming milestones and focus on not only continuing to drive commercial adoption. We want to keep you updated on the initiation of these clinical trials and report progress accordingly. We plan to finalize the Hummingbird CE Mark process and begin to generate European revenue and finalize the transition of IRRAflow. Our CE mark is still valid until 2024, but we will complete the process of upgrading that approval to the new MDR regulations and, in doing so, launch the latest version of our control unit in Europe. These are the key things that we are focused on, but again, they are all driven by continued revenue growth across the board quarter-over-quarter. And we feel that we continue to position the company appropriately to be able to continue such growth. And on Slide 18, the summary is that the IRRAS investment thesis remains strong. We have products that address significant unmet needs by overcoming shortcoming of legacy treatment options. We're seeing the expansion of the number of systems deployed globally, and increasing reorders from commercial customers confirm that the products are being well received in the market. We have key regulatory approvals in place, and the needed quality certifications have been completed that allow us to seek the next wave of country approvals. And we're constantly listening to our customers, bringing out enhancements, expansions, line extensions to continue to exceed their needs so that we can treat more patients and capture the clinical evidence to document our product superiority. And then finally, over the past quarter, we've taken meaningful steps to strengthen our balance sheet. That works to extend our runway and give us the opportunity to fuel and fund this growth and controlling more of these factors of production, focusing on building the business correctly in a judicious manner will continue to impact our profitability in a positive fashion and continue to improve OpEx metrics moving forward. So based on all of those elements, the various departments of IRRAS have been derisked in many ways, and our company remains focused on commercial execution and revenue growth, and we look forward to continuing to share that story with you in coming quarters. On Slide 19, we strongly encourage you to continue to connect through with us through our social media channels, our IRRAS radio podcast series; and most importantly, our IRRAS Academy interactive application that's available on all smartphone platforms. That's the easiest way to stay up to date on all of the exciting accomplishments of IRRAS. And with that, operator, I would like to open the phone line up for questions.

[Operator]

[Operator Instructions] The first question comes from Ulrik Trattner from Carnegie.

[Ulrik Trattner, Research Analyst]

Looking at, obviously, very, very sort of solid sequential improvement that we're seeing, a fourth consecutive quarter with improved sequential sales. But looking at sort of where the sales is derived, it looks to be mainly in the U.S., and I'm not sure if I'm interpreting this correctly, but stating from your report, it looks like majority of the revenues have been generated from restocking and reordering of consumables from these U.S. clients. Could you help us provide some more granularity on how revenue look like, especially from the U.S., which is essentially driving the growth in this quarter? That would be my first question.

[Will Martin, President & CEO]

Of course. It's great to speak with you again, and I appreciate the question. So I mentioned that the first quarter, we have the commercial stocking orders from Buffalo and West Virginia. During the second quarter, Buffalo had already worked through a decent portion of their initial inventory and got to a place where they already needed to reorder disposables. That's an extremely positive sign that product adoption is continuing there. Beyond Buffalo, other key customers in the U.S. all were at a position with patient treatments. We had a record number of patient treatments during the second quarter that drove additional disposable reorders. The main reason that a larger percentage of our revenue was driven by reorders other than customer loyalty and increased adoption, the 2 evaluations that we completed patient treatments during the second quarter, we're seeing increased scrutiny in many parts of the country on hospital budgets. There's fear and uncertainty due to the spike in COVID cases. And the final buying decision, if you will, at new customers has been lengthened as we're navigating our way through that system. So there were several other -- 2 other in particular U.S. customers that completed their evaluation during the quarter. They just did not reach a final buying decision to place a stocking order. So that's why -- that was another reason why larger percentage was generated by reorders from U.S. customers. Now our European activity in direct hospitals, that is several months behind, I would say, behind our U.S. progress because for a large majority of 20 -- the second half of 2020 and the first part of 2021, the U.S. market reopened to commercial activity a little before what we saw in key markets such as Sweden and Germany. Vaccine availability in the U.S. reached younger populations earlier this year, and that allowed our team to get vaccinated and start to spend more direct selling time. Our team in Germany was vaccinated during the second quarter. Our in-person activity and meetings commenced before the summer holiday period. And we've already made significant progress this quarter to having multiple new German hospitals come on board for resumption of IRRAflow patient treatments and product evaluation. So I think now as the tables have turned a little bit where European is -- European markets have returned to slightly more normalcy, whereas certain parts of the U.S. have slowed down again, we'll start to see more meaningful contribution from both our European direct markets as well as some of our European distribution partners in coming months and quarters.

[Ulrik Trattner, Research Analyst]

Okay. And just to get some more understanding, beyond COVID, what would you call out to be sort of the main constraint for adopting IRRAflow? You're talking about current budget constraints in the U.S. I suppose that is related to COVID to some extent. But beyond sort of the obvious COVID factors, is the limitation in terms of clinical data, which you're generating now? Or is it that it is budget constraints holding back adoption? Or is it just that you need to perform more health economic studies to support installation and adoption of IRRAflow?

[Will Martin, President & CEO]

I think you're thinking about it the right way, and I would say that all of those elements are very closely intertwined. Of course, COVID is by far at the top of the list of all of the concerns and the risk factors, and that permeates through all of the other elements that you referenced. We're expanding our evidence base, absolutely. That's helped tremendously. That's helped build more confidence in our team. That's built more reference accounts and experience for new customers that are considering the technology, but you can never have enough clinical evidence. That's just why we're now moving into a different level of clinical evidence with more head-to-head comparative superiority trials. There are also health economic elements to each of those trials. We have a profound story to tell about reducing ICU stay and reducing the overall cost of care, but we do need more concrete evidence documenting those numbers because otherwise, every hospital has to prove it to themselves, and that just takes time. So it's not a matter of needing to streamline adoption. The interest is there. I think it's the supporting elements that we're constantly putting in place. Until we finally have the comparative level 1 clinical data, there will be certain objections that we have to navigate our way through. And our team has done that, and our team will continue to do that. And I think the other piece is if you compare the size of our commercial teams today compared to the forecasted projected size of our team if we would have had this conversation 2 years ago, our team is much smaller than what we thought it would have been pre-COVID. We've been very judicious in conserving our funds and spending our funds the right way. And now as we start to grow the team again, we'll have more feet on the street to support a larger number of customers, and I think that will allow us, in many ways, to accelerate sales at a different level also.

[Ulrik Trattner, Research Analyst]

Great. And you're talking about structural OpEx savings, and this sort of ties together with the size of your commercial team that is, as you stated, smaller than you were expecting pre-COVID. If we're going to just sort of -- you can start off by breaking this up into at what kind level, given that you're seeing this structural OpEx savings, would you see yourself expecting to breakeven as well as actual we're seeing COVID eventually sort of abating or at least effects abating, do you find -- do you see that your sort of current financing is enough to support an expansion of the commercial team driving the adoption of both the IRRAflow and the Hummingbird?

[Will Martin, President & CEO]

Great questions, and I'll make sure I don't get too far ahead of myself because we haven't put out updated forward-looking financial targets because of the continued uncertainty with COVID. So on that front, it would be difficult for me to give you real guidance on what our current projections are for profitability and cash flow breakeven. In our earlier discussions pre-COVID, we were still several quarters away, several years away, in fact, from that becoming a reality, and that wouldn't have changed with kind of the navigation through the COVID world. Beyond that, the reduction in overall operation expenses has allowed us to manage our cash burn while investing more towards the commercial side of the business. Controlling our own destiny and managing particularly our capital equipment manufacturing has allowed us to reduce the reliance on external partners, bring our cost down. We're also making sure that we're making correct, judicious decisions in all of our financial decisions. So that will allow us to continue to invest in the commercial team. And I think the biggest thing is having access to these funds from the European Investment Bank, those funds are focused on product development, and clinical data generation and extending the available resources for those projects allows us to focus the money that's been raised in the recent equity financing and other things, focus that more on general administrative expenses as well as growth of the commercial team. So I think those factors together and having access to the EIB funds in addition to our reduction in OpEx give us the ability to continue the commercial investment.

[Operator]

The next question comes from Oscar Bergman from Redeye.

[Oscar Bergman, Analyst]

Congrats. My first 2 questions relate to the patient treatments and the reordering of the [ in-house insurance ]. First off, I was wondering, how many patients were treated at customer sites during this quarter? And if these reorders, if they were mostly for now finalized patient treatments or if customers are piling up for Q3, potentially offsetting reorders in this quarter.

[Will Martin, President & CEO]

Thanks, Oscar. It's great to speak with you again. Hope you had a great summer. We're still not giving specific details on patient treatment numbers, particularly because some of these things we're still supporting in a remote fashion. So we don't -- we feel we have a pretty accurate representation, but there's always a little bit of plus/minus in there. So I don't -- we're not in a position yet where we'll give specific numbers other than saying that we treated more during the second quarter than any previous quarter in the company's history. And I can say with confidence that our customers -- the reorders that we have discussed and have announced for the second quarter have been based on just inventory replenishment. We typically sell our IRRAflow disposables in quantities of 10. And so as they navigate their way through patient treatment, they place an order, and we resupply what's on the shelf. When I referenced that 50-plus percent of U.S. revenue that was generated by reorders during the quarter, that's all going for commercial customers based on patient treatments, Oscar. Any orders for customers that were stockpiling or preparing for the third quarter or anything like that would have been considered in a different bucket.

[Oscar Bergman, Analyst]

Perfect. And then you already mentioned this in the presentation, but I was wondering if you could give some sort of -- some more updates on how the progression is going with the clinical trials in [indiscernible].

[Will Martin, President & CEO]

Yes. Lots of activity, lots of movement. Lots of that's out of our hands because once you finalize the clinical trial agreement and a protocol, then you are navigating your way through what's called an Institutional Review Board, an IRB, that will approve the protocol and give you the opportunity to initiate the trial and go out and start to do site enrollment, depending upon where the trial is being conducted. And so all the trials that we referenced, I'll go individually. I would say the ARCH trial, the protocol, in all likelihood, will be finalized this quarter, and we'll start that IRB review process. So lots of meaningful work has been done on that front, and we're getting close to the time where we can start to talk about that being an active clinical trial. Beyond that point, the subdural hematoma registry that we referenced there, that is actively being reviewed by -- that protocol is being reviewed by the IRB. And the other 2 -- excuse me, the other trial that was referenced with the hospital, Aarhus in Denmark, that's the -- my goodness, all my names are running together there. That's the active trial. I'm sorry about that. That is also in the process -- that protocol is in the process of being reviewed by the IRB. And then the effect study is in protocol -- final stages of protocol development with the team at Ohio State University. So we're getting close on several, and we would expect and hope that in coming quarters, we'll be in a position where we're actively enrolling patients.

[Oscar Bergman, Analyst]

Okay. Great. And just a final question before I get back into the line. The loan from the European Investment Bank, when do you expect to get the first tranche? And can you give some sort of indication on when you would expect the second tranche as well?

[Will Martin, President & CEO]

That up to us, and that's up to our business needs. We have the opportunity to draw the initial tranche when needed for business activities. We have a process we need to follow with the bank to notify them and go through the established process to transfer the funds. We're not quite there yet. We're making sure that we deploy these funds also in a pragmatic fashion. We're mapping out exactly which of our expenses we would allocate these funds towards and which projects we would prioritize. We want to make sure that we spend these funds in a meaningful fashion and generate the appropriate return on investment. So we haven't made a decision on when exactly we would draw the first tranche. We signed the deal because we're excited about having the money available to us. I would think that it would happen at some point in the foreseeable future, but I can't give you a definitive time line on that piece. And the same would go for the second tranche. We're not going to draw down the funds and initiate other provisions within the agreement until we need the money. So the second tranche will sit out there until there's meaningful need for it. It's just great to have access to that type of liquidity when needed for the right type of projects, Oscar.

[Operator]

[Operator Instructions] We have no further questions, so I will pass back for any closing comments.

[Will Martin, President & CEO]

Thank you, operator. Again, everyone, we appreciate your time and your interest this morning. It was a pleasure to report the Q2 2021 earnings on behalf of our entire team at IRRAS. We were very pleased with the accomplishments during the quarter and look forward to keeping you updated on our forward progress in coming months and quarters. So thank you for the -- thank you very much for your time, and have a great day.