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Good morning, and welcome to the Opsens Incorporated First Quarter 2023 Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note that this event is being recorded.
I would now like to turn the conference over to Robert Blum from Lytham. Please go ahead.
All right. Thank you very much and thank you all for joining us today for the Opsens first quarter fiscal year 2023 conference call for the period ending November 30, 2022.
With us on the call representing the company today are Louis Laflamme, Opsens' President and Chief Executive Officer; and Brad Davis, Chief Commercial Officer. At the conclusion of today's prepared remarks, we will open the call for a question-and-answer session.
Before we begin with prepared remarks just a couple of comments. Today's call will contain forward-looking statements that are based on current assumptions and subject to risks and uncertainties that could cause actual results to differ materially from those projected and the company undertakes no obligation to update these statements, except as required by law. Information about these risks and uncertainties are included in the company’s filings, as well as periodic filings with regulators in Canada and the United States, which you can find on SEDAR and Opsens' website.
Today’s discussion will include adjusted financial measures, which are non-IFRS measures. These should be considered as a supplement to and not as a substitute for IFRS financial measures. Finally, today's event is being recorded and will be available for replay through both the webcast and conference call dial-in information provided in the press release.
With that said, let me turn the call over to Louis Laflamme, President and Chief Executive Officer for Opsens. Louie, please proceed.
Thank you, Robert, and good morning to all of you. We are excited to speak with you today following another strong quarter of growth across all of our business lines. Let me also take a minute to greet the French speaking audience. [Foreign Language]
On a financial perspective, we are pleased with the strong growth we achieved across our entire operating platform this quarter with $10.2 million in sales, a new record for the company, which was up 26% compared to the year ago first quarter and up 12% sequentially. Beyond the quarterly financial performance, I could not be more pleased with where we are as a business and the opportunity for the future of our assets.
On the structural heart side of the business, we are highly encouraged about our sensor guided TAVR initial commercialization business, SavvyWire is more than a wire. It is the world first and only sensor guided TAVR solution, it provides a three-in-one solution for stable aortic valve delivery and positioning, continuous accurate hemodynamic measurement during the procedure and reliable left ventricular pacing without the need for adjunct devices or venous access.
I have asked Brad Davis, our Chief Commercial Officer to join us this quarter to share his thought on the success of the launch and why we believe this is truly a game changing product. For coronary artery disease, performance has been strong across nearly every geography besides Japan, which we will chat about in a moment. Our OptoWire is a pressure guidewire design for contemporary clinical practice, allowing navigation through complex anatomy, delivery of a stent without guidewire exchange. Choices among different [indiscernible] resting, and this is to assess coronary physiology and confirmation of treatment with easy and reliable post-PCI measurements.
Geographically, U.S. OptoWire sales were up 38% compared to the year ago quarter, a new U.S. record quarter. Growing the U.S. has been a key focal point for us with OptoWire and of course, our new SavvyWire and will be a key theme as I think you will see through our operation in fiscal 2023. I will expand more on this in a moment.
Importantly, the commercial synergy between OptoWire and SavvyWire has already been seen in Canada and U.S. We also expect to have positive effect in EMEA and Japan down the road. As we look longer term, our R&D activities are working on various complementary technologies through the OptoWire and SavvyWire that we believe will support further market penetration for our products.
Within our business partnership divisions, we are becoming increasingly excited about our performance and perspectives. Our customers are growing and we are growing with them. Sales were up 42% to $3.4 million, a new record for this division. Based on our conversation with our current customers we think this elevated level of sales can be sustainable going forward. In addition, we have a large pool of existing customers and pipeline that will generate further growth.
Our second generation fiber optic sensing technology is high demand due to its accuracy, small size, and reliability. Our Industrial business exceeded our short term expectations. Similar to past discussion on Industrial, we remain cautious on future quarters as most of the current Industrial revenues are nonrecurring. Meanwhile, we continue to see this business unit revolution and doing a revolution in the world of fuel monitoring for aeronautics, which may provide that recurring revenue component. But clearly, the most exciting growth opportunity we have as a company is SavvyWire, our new innovative guidewire for TAVR within the structural heart market.
As we've discussed during our year end call, we are ahead of our original expectations for the commercialization strategy originally outlined. We started with a limited market release in Canada and U.S. and have recently moved to a bit more of an [expanded] (ph), but still controlled market release. We are taking a similar strategy that many other companies have successfully taken with recently [created] (ph) device by moving very systematically in the early commercialization process to ensure complete success by the physicians.
Brad Davis leads our global commercial team and has a strong track record of launching new medical device products into the market that have ultimately achieved market share leadership. We believe our playbook is sound and based on the initial positive feedback from physician, we have an absolute winner on our end with SavvyWire.
Let me turn the call over to Brad to share some of his thoughts on the launch.
Thank you, Louis, and good morning, everyone. I'm excited to expand upon Louis' comments regarding the SavvyWire launch and share some early insights. As you know, we achieved both regulatory approval from Health Canada and clearance from the FDA ahead of our guidance.
Prior to our early regulatory success, we had developed a robust commercialization plan to ensure long term commercial success. The key aspect of the plan was to double the size of the U.S. sales organization to capitalize on the large market opportunity, which we have now done. We also completed the limited market releases in both Canada and the U.S. ahead of schedule which are now being followed by controlled market releases in each country and we will then progress to full market release in the second half of fiscal 2023.
The speed at which we completed the limited market releases is one thing, yet the excitement from the physician community has been another. Importantly, customer feedback from the limited market release has validated that SavvyWire has demonstrated excellent performance over their current TAVR guidewire, while reducing the number of device exchanges and improving procedural workflows.
We have refined our account launch process for the controlled market release, including device and procedure training, monitor installation and procedure rooms, software upgrades and coordination with administration to ultimately achieve maximum penetration in each account. So what does the controlled market release really mean? We will work with an account to schedule 10 to 20 cases over a one month span, we in service and train both physicians and staff ahead of their first SavvyWire cases, then partner with them during dedicated TAVR days where we are in the procedure room for cases to reinforce best practices.
We gain valuable lab access from these dedicated TAVR days at each account which allows us to reinforce the benefits and also roll through educating the various teams of technicians and nurses that are supporting the cases. Our goal is to get the hospital TAVR team fully functional and independent to conduct the cases successfully themselves. This allows our field team to then partner with their next target customer to repeat the same in-depth launch process to ensure a clinical and commercial success at each account.
As you know, getting new products approved in the current healthcare environment with the value analysis committees at hospitals can be lengthy and challenging. Based on our value proposition of creating sensor guided TAVR category with SavvyWire being more than a wire, we have been successful in driving premium pricing by demonstrating the value to the overall TAVR procedure. We are confident we will continue to achieve price premiums over standard TAVR guidewires that do not provide rapid pacing or efficient standardized invasive hemodynamics.
Our strategy is to also go deep at each account and become their primary provider of TAVR guidewires. Another key enabler to our go deep strategy is that our same OptoMonitor now supports both OptoWire and SavvyWire cases. This allows us to leverage the efficiency of our field footprint and capital deployment to improve the decision making process for installation and adoption, which is exactly in line with the strategy that's been shared over the years. This supports our long term commercialization vision to sell multiple products to the same customer group and it's part of the reason we have made investments recently into our sales and marketing efforts.
At the end of the quarter, we also successfully completed the first TAVR procedures using SavvyWire in New Zealand, which represents the third commercial market for Savvy after the U.S. and Canada, which are covered by our direct sales force. We consider entry into New Zealand to be of strategic importance as this territory provides the optimal combination of condition they will help us validate our commercial distribution model, which we will look to replicate in EMEA and parts of Asia, while also providing an initial entry into the rapidly growing Pacific region.
Clinically, we continue to make good progress with our European SAFE-TAVI study focused on SavvyWire for left ventricular pacing and TAVR procedures. This study is important because it supports our pre CE Mark clinical strategy that will lead to the commercialization of SavvyWire in Europe. It will also build on our medical evidence for reliable, rapid pacing, which is necessary to decrease pressures and stabilize the heart during most TAVR procedures. The SAFE-TAVI study will enroll 118 patients at up to eight hospitals in Spain and Canada. And to date, we have enrolled 32 patients in four hospitals. We're also planning to conduct various post market studies in North America to further advance the medical evidence supporting SavvyWire benefits.
In summary, we are very pleased with overall SavvyWire performance and are out of the gate extremely strong and ahead of expectations. We are approaching 500 total SavvyWire cases across four countries and we have launched in over 20 hospitals in North America. I would like to thank our talented global commercial team for their passion, commitment and launch execution for this game changing technology.
I will now turn the call back over to Louis.
Thank you, Brad, for that overview. Clearly, one of the biggest questions we all have is, how quick the ramp up will be? Based on the feedback of physician and the broader medical opportunity we think this will be a big opportunity for us, but we need to make sure we don't have any initial operational hiccups that prevent the widespread adoption we are expecting. It is the reason why we are in a controlled market release and being so involved with each of the accounts in the early stages.
We are following the playbook of many other medical device companies, moving systematically from a limited market release to a controlled release and then to a full market release. At this point, we are projecting to enter full market release mode in the second half of fiscal year 2023. This most recent quarter with just over a marked of U.S. limited market release and our Canadian controlled market release, we had sales of about $400,000 which was ahead of our internal expectations.
Going forward, we are expecting to see continuous growth each quarter as we look to expand adoption, but also make sure that we are achieving complete success along the way. Again, our goal is to avoid any major unforeseen hiccups in the rollout. Once we enter full market release, we certainly expect sales to ramp rather significantly. So on the one hand, we are purposely throttling growth in fiscal year 2023. On the other hand, we are making sure we have complete success in the marketplace from physicians that will lead to SavvyWire becoming the gold standard guidewire option for patients undergoing TAVR procedures. We think this is the best strategy for long term commercial success.
Transitioning, let me circle back on our OptoWire solution. As mentioned, we had a very strong quarter in the U.S. with sales up 38% as we continue to add a strategic focus to increase sales in the country through both direct sales and group purchasing agreements. Further, the coupling of SavvyWire with OptoWire in the future will lead to continued growth as well.
In EMEA, sales were up 13% year-over-year and up 15% sequentially as we continue to see our distribution partners in the region highlight the benefit of OptoWire. You may recall that we made a concerted effort about a year ago to retrain our partners, which have certainly paid us. In Canada, we were basically flat sequentially and down 6% compared to the year ago first quarter. We continue to benefit from a multiyear contract we received where we were selected as the main coronary pressure guidewire for the eastern part of the province of Quebec, which has now been in place for over a year.
The weak spot for OptoWire is clearly Japan, where sales were down 31% compared to the first quarter of 2022 due to increased inventory level with the distributor following a large shipment in the third quarter of fiscal 2022, coupled with slower demand than expected. As a whole, excluding Japan, OptoWire sales were up 15% year over year, which we feel good about. But clearly, we need to improve our performance in Japan.
As I started off with in our partnership segment, we had record performance during the quarter with sales up $3.4 million compared to $2.4 million in the year ago quarter, driven mostly by a step up in our deliveries to Abiomed to supply sensors into their Impella heart pump. With the recent announced acquisition of Abiomed by Johnson & Johnson, an expectation for growth in this area, we believe this will hopefully be a new sustained level going forward.
For those not familiar, recall that we have a multiyear relationship to supply sensors into Abiomed Impella heart pump including a four year extension of the recent signing of a critical supply agreement that runs through April 2028. All told, we are very pleased with our start to fiscal 2023.
Before I turn it over to your question, let me hit on a few other key items. First, as you all aware, with Robin Villeneuve [indiscernible] in mid-December, we are continuing with our comprehensive search for a new CFO. A mandate has been given to an executive search firm to ensure recruitment of a new CFO that will support Opsens future growth. In the interim, we have a strong finance team in place that has afforded us stability in our internal controls and reporting structure. We hope to be able to make an announcement in the coming months.
Since the CFO normally would get on a few of the pertinent items on the income statement and balance sheet, let me fill in this quarter and touch on a few areas. As I mentioned, the first quarter was highlighted by record revenue of $10.2 million, an increase of 26% compared to the year ago quarter. Growth from our Optical Medical Products segment coupled with the addition of TAVR sales were key drivers.
As we look to the second quarter, we continue to make strong progress in a number of our key geographies. We look forward to building on the trend of this most recent quarter with second quarter growth expecting to be up more than 20% compared to the year ago quarter.
On gross margin, first, the gross margin was 57.6%, an increase of 670 basis points compared to 50.9% during the prior year period. The increase was driven by more direct sales compared to distribution sales, better product mix and strong industrial business. On a midterm basis, as we see more sales coming from areas where we sell direct, such as the U.S. and Canada and as we see growth in SavvyWire, we expect to see gross margin continue to rise. We are also benefiting from critical mass in the factory, which is driving operational improvements. That said, we are making certain investments in our manufacturing facilities going forward to improve the manufacturability of our devices going forward and to meet higher demand from our customers.
From an operating expenses standpoint, overall our operating expenses were $9.7 million compared to $6 million in the first quarter of 2022. Breaking this down, sales and marketing was $4.6 million versus $2.1 million, R&D was $2.5 million versus $1.8 million and G&A was $2.6 million versus $2.1 million. So the $3.7 million increase was primarily due to an increased sales and marketing activity, including an increase in our direct U.S. sales force in advance of the launch of SavvyWire, an increase in nonrecurring administrative expenses coupled with an increase in R&D due to structural heart and coronary artery disease projects.
Looking forward, we think that sales and marketing will be pretty similar to the most recent quarter and likely increase slightly due to the increased commission expenses on sales growth as we make continued investment to capitalize on the opportunities to accelerate growth of our OptoWire and SavvyWire. For administrative expenses it should be lower in the remaining quarters of fiscal year 2023. For R&D, it will be similar for the remaining quarters of fiscal year 2023, we will continue to be a company that is innovating. One key opportunity we see as a possible next stage of growth, will be generating value added information and data using artificial intelligence in future products and technologies.
We are investing in products that will likely be coming to market in the next 24 months. I hope to be able to share more with you in the future on this topic. Additionally, Opsens has been invited by key physician and leading life science company to participate in clinical studies to access the SavvyWire for actionable TAVR procedures. We believe these studies could open new market opportunities for the company.
On the balance sheet, we ended the quarter with $17.5 million in cash, subsequent to the end of the quarter we raised $11.5 million growth and above deal financing. Based on our outlook and guidance it is our belief that we have sufficient capital to reach breakeven unless we are presented with new opportunities for growth.
So to wrap things up, we are extremely pleased with the progress made during the first quarter on nearly all fronts. First half revenues were a new quarterly record. We had strong operational performance with record OptoWire sales in our key U.S. market. We are seeing a step up in our optical medical product division, which we believe will be sustainable in the future. We achieve or surpass every operational metric we had in the approval and early commercialization plans for SavvyWire with very strong end market response. Our gross margin increased by 670 basis points as we are capturing synergy in our operation and the benefits of the investments we are making in sales and marketing.
We commence our SAFE-TAVI on the SavvyWire in Europe, which is part of our pre CE Mark clinical strategy. In New Zealand, we successfully completed the first TAVR procedure using the SavvyWire, presenting a third commercial market and the first one being covered by [indiscernible]. We completed $11.5 million bought-deal, which should bring us to breakeven and our outlook for the Q2 2023 shows growth across various operating areas.
As always, I want to thank all our employees for their hard work and dedication. We have accomplished important milestone and developments with many more opportunities ahead.
Operator, let me now turn the call over to any questions.
We will now begin the question. [Operator Instructions] Thank you. Our next question comes from Rahul Sarugaser from Raymond James. Rahul, please go ahead.
Thank you. Good morning, Louis. Thank you so much for taking our questions. And --
Good morning, Rahul.
And congratulations on the strong revenue this quarter. So speaking of that, clearly you have a lot of initiatives and a very strong commercial push, particularly in Brad's comments. And so, many investors, of course, will be looking for the revenue trajectory. We are, of course, want to be able to predict this. And other than the revenue trajectory over the next few quarters, what are the catalyst particularly data, particularly any conferences that could be looked to sort of get the leading indicators off the adoption?
Well, in terms of leading indicators, I would say, us internally we are looking at a number of accounts, reorder from accounts. Also as a catalyst down the road in 2023, we do expect to obtain CE Mark approval on SavvyWire, which would lead to a national path of growth. Down the road, we may share a little bit more about those information. But right now, it's still so early that we feel it's probably better to retain on that. But clearly, when we think about the SavvyWire initial commercialization phase, we are glad about the number of accounts that we had -- we have right now, more than 20 accounts in North America. We are also really glad about the feedback that we are getting from our customer. That is somehow validating the value proposition for this product.
So in summary, to your question, because I talk mostly about [indiscernible] my answer. You can think about also -- I mean, in the business partnership division for our OEM customers, you can expect to as a catalyst or as an indicator of growth just the number of procedure fully recovering from COVID, this should help. And for the coronary artery disease business, we have -- the management is looking exclusively at the market share that we have in U.S. Because as Brad mentioned in the call, we see great opportunity for us to combine, to bundle SavvyWire and OptoWire to really increase the market share of both Savvy and Opto in direct markets.
Terrific. Thank you for that, and we'll certainly be watching for all of that closely. So maybe looking a little bit further ahead, you had indicated, of course, that there continues to be further product development. There had been some discussion about potentially expanding SavvyWire use into other indications within valve replacement, what sort of modifications to the current SavvyWire would be required? And what's the timeline would be looking at expanding its potential applications?
I mean, we -- it's a really good question. And for us, it's an opportunity because SavvyWire has been built for the aortic valve replacement procedure. Some doctors are seeing and it has been mentioned in conference are seeing the opportunity to use the Savvy in other type of procedure, and [indiscernible] valve procedure may be an example of that. We -- the team right now is gathering additional data to better understand multiplication that could be required on the product to have an optimal product for different application.
This being said, we think in general those application would be minor. And in that context, we could bring something in the market in fiscal year 2024 or 2025. On top of that, I would say, part of the R&D is dedicated to single use device, like OptoWire, SavvyWire and sensors. There is also a good amount of energy that is invested into taking the data that we are producing and transforming this into more meaningful information for physicians and customers and doctors. And we think there is also another path of growth for Opsens in that area.
Perfect. Thank you. And then just one last quick question. Given the relatively rapid growth in the OEM business, and now with Abiomed’a acquisition by Johnson & Johnson, are you getting any sense from -- as Johnson & Johnson doubles down in this space, whether there should be potentially higher demand for your optical sensors for the Impella and/or other applications within Johnson & Johnson's portfolio?
Yes. So what I can say and it has been publicly mentioned by Johnson & Johnson is that, clearly, they made the acquisition of Abiomed, because they are seeing additional potential for growth. So as we mentioned and this is applicable for Abiomed or any of our customers in the OEM business, we are growing with them. And we feel that providing them the best optical pressure sensing technology in the world and medical application is giving them an advantage that is helping them to grow faster. So that we are pleased with the result that we got in Q1, 2023 and we are confident that we can either maintain or continue to grow that figure in the next quarters.
Perfect. Well, thank you again for taking our questions. Congratulations on the quarter again and I'll get back in the queue.
Thank you, Rahul.
We now have a question from Doug Miehm from RBC Capital Markets. Doug, please go ahead.
Thank you. Good morning, Louis. My question just has to do with -- we've now had 400 or 500 procedures done with the SavvyWire. And I'm just curious as to the observations that the doctors or surgeons may be providing you with or are there any positive observations or any issues or tweaking that you need to do as you complete the rollout and you go into the full component of what you expect to do in the second half of fiscal '23?
Yes, that's a good question. I would say on the positive side, it's clearly around the fact that when they use SavvyWire they can eliminate different steps. As example, they don't need to do another insertion, to use another device for right ventricular pacing. And this is positive in their procedure because, obviously, with that they have the potential to save time. Also some doctors depending on their practice, I mean -- and the type of valve they are using having the real time a more dynamic information is really important, is helping them to be really efficient in their workflow and again eliminate some unnecessary steps.
And for the rapid pacing, that's also an area where doctors were, again, in the workflows some could react [indiscernible] different things that can happen in the procedure. So overall, I mean, the value proposition of having a wire that is performing, that is providing good meaningful pressure information and yet that can be rapid pacing. This has been positively validated by our customers. Where we felt there was some adjustment or improvement that we could do and those are normal. There were different minor things that could be adjusted on the software side, so adding doctors using the software, the display they identified opportunities for this product to be even more useful for them. And we have been doing some release of new version of the software. And we are also seeing some additional improvement coming down the road.
Okay. That's good to know. So, obviously, not any significant hurdles, but just tweaking.
Exactly.
Yes. Excellent. And then when you think about bottlenecks for the rollout, would you say that the device and procedure training that are required as part of the process and given the limited number of people that you have on board that can help with that, will that be the bottleneck or do you see the bottleneck in terms of rollout somewhere else?
No, I think we discussed even during the last call where product depending of the market. And if we take the example of the U.S. market, it's not a market today where less ventricular pacing provided by SavvyWire is frequently used. A good number of doctors are using a right ventricular phasing. So on that area there is some kind of transition education that can be done in collaboration with our customers. So that's an area where we are spending time. We -- I mean, we have the team in place to be capable to do that in a really efficient way with the doctors. But still, we have to be -- to take some care of that there. So I think that's an example. So I would say at high level training and properly convey the information and the way to use our product to customers is key.
Also learning, again, about using the software is another element that is important. So to say that those are bottleneck, I would say, bottleneck maybe a strong word, because it's part of our job, it's part of our knowledge. The team build by Brad is well able to do that, but that's an area that is important. And the good thing behind this answer is that, if I take the example of the OptoWire initial phase, manufacturing was a challenge. The ramp up, I mean, the company was younger, the team was younger, the experience and ramping up production was not as present as what we have to be. Because on the production side right now the team is doing an excellent job, we already have safety stock and so on. So we can operate normally and following the speed that the commercial team is selecting to act.
Excellent. Thanks very much, Louis.
Thank you, Doug.
Our next question is coming from Justin Keywood from Stifel. Please, Justin, go ahead.
Hi, good morning. Thanks for taking my call.
Good morning, Justin.
On the strong gross margins in the quarter, 58%, that was much higher than what we were expecting at around 51%. I know there was comments on the product mix, but was there anything unusual or one time in nature for that strength? And what's a good gross margin number to use going forward?
I mean, first, we were also glad of the gross margin that we got during the quarter. I mean, moving from, as you know, in Q4 2022, we had 48%. So to get 58% is a good improvement in just one quarter. And the drivers behind this, you have the fact where the percentage of direct sales in Canada and U.S. has been more important in the quarter and this is not a surprise because, obviously, we are selling the SavvyWire right now only in direct market, except really minor sales in New Zealand.
On top of that, I mean, adding more critical mass higher revenues is also helping us to get good gross margin. So we are confident that even when we look at mid-term targets, we will even do better than this 58%. To say that 58% will be repeated in Q2, maybe, let's say, positive at this time. We are expecting to do slightly less in Q2. But to your question, was there anything non-recurring? Well, you have the line other in the financial statement, so $300,000 that were kind of revenues more related to development milestone with some of our customers. So those may be really high margin revenues that would not be repeated, but somehow this will not materially affect our performance.
So if I would summarize my answer is that, I mean, gross margin is trending in the direction we want. We are really pleased with Q1, but there is still in our mind opportunity to do better than that.
Understood. Thank you for the thorough answer. And then within the press release, there was mention of the SavvyWire launch having, obviously, good feedback, but also commentary on premium pricing. So is the pricing you're receiving or anticipated to receive better than what you were expecting? And is that the same in all the markets where the SavvyWire is being launched?
Okay. Well, right now, we are getting premium pricing on the SavvyWire in all of the markets where we are. So we are pleased about that. It's above our initial expectation. Even if we knew that the value proposition of this product was really strong. So I would say we are pleased with that. The second part of your question was, I was going to say something -- Can you repeat? I think I missed one component of your question.
Well, if the pricing has been better than expected, which it sounds like it is and then if there's any differences in the markets you serve, for example, the U.S. versus Canada?
Sure. I mean, the economics of TAVR in Canada or U.S. or Europe or Asia is different. So we don't expect to get necessarily the same pricing for our product in all of the geographies. And clearly, I mean, in U.S. the TAVR procedure is growing rapidly. The market is large. For hospitals, they are facing some shortage in personal. So all of those factors are pushing them to have product that can make them saving time or being more efficient. And that's where SavvyWire is falling. So we think the U.S. market is probably the area where we can secure the best average sales price.
Thank you. And then just a clarification question. I believe you mentioned the SavvyWire being in 20 accounts, which I interpreted as cath labs. If that's correct, and I think that compares to 10 accounts, if I'm correct, last quarter.
Yeah. I mean, we -- the number of accounts is a driver. We are glad about the number of accounts we have today. We expect to continue to grow. But again, we want to be -- we are still in the early phase of commercialization and we want to be sure to make things properly in terms of training and knowledge transfer to our customers.
Understood. Thank you for taking my questions.
Thank you, Justin.
Now we have a question from Scott McAuley from Paradigm Capital. Scott, go ahead.
Good morning, gentlemen, and again congrats on the quarter. On the TAVR revenues, you mentioned in the release, I think about $400,000 in sales, which in the first quarter after approval is pretty nice. I was just wondering if you had any comments around how much of this is kind of initial inventory build from some of the new accounts versus kind of ongoing usage? Could this be a bit of an early bump as those early sites are getting their initial SavvyWire orders in kind of as we look to the next kind of quarter or two?
Yes. Well, I would say that our -- the information that we have is that the inventory is really, really low in our customers, because we've been attending to a good number of those cases. So I would say that the revenues that you are seeing right now are reflecting the usage of our product.
That's great. And on your own balance sheet, I noticed there's a pretty big kind of increase in inventory as well kind of quarter over quarter. I imagine that's building up that inventory for TAVR and -- or for Savvy and OptoWire. Is that kind of done for 2023? Do you expect kind of another relatively large increase in inventory over the year? Or are you kind of now set for the rest of that commercial launch?
Yes. Well, I think most of the investment is done right now. We do still expect to continue to grow inventories for both SavvyWire and OptoWire. And this is an investment that is made in the context where, as Brad mentioned, we are anticipating to see growth with those two products. So we -- I’m really comfortable with the investment we are doing in inventory and we feel that we have the funnel, the pipeline of accounts from customers to justify this. But most of the investment has been done, I would say, in the last few months, while we were preparing for this commercialization of the SavvyWire.
Yes, that definitely makes sense. And as you look to kind of that full market release in the second half of the fiscal year, do you have a kind of target goal for the number of centers that you want to hit? As you mentioned before, about 20 in North America right now -- goal and the number you want to hit before you transition into that full market release?
No, there is no specific goal that will trigger that we will move them to a full market release. I would say it's more about having the full understanding of users of SavvyWire by customer to make sure that we can be really efficient and powerful when we convey this technology at large in markets. So it's not driven by number of accounts. It's more about the moment where we will feel that we have seen everything.
Got it. And just lastly from me, in terms of procedure volumes, either for OptoWire or SavvyWire, are you seeing kind of any ongoing issues from staffing or kind of COVID or any of that or have things kind of gotten back to relative normal?
I would say from -- in general there is various market research that went out on this. The market right now is coming close to what we could consider normal in term of procedure. But I would say there is still substantial challenges for [indiscernible] having the staff available to execute this. So I would say they get this done, but it's not easy. And we see this as an opportunity where both SavvyWire and OptoWire are really efficient product to be used in procedures.
That's great. It makes sense. Thanks again for taking the questions and looking forward to a good year.
Thank you, Scott.
[Operator Instructions] And our next question comes from Maxwell Carr from MPartners. Maxwell, go ahead please.
Hi, Louis. How are you? I just had a quick question pertaining to the Industrial segment. Moving forward, do you see [Avionics] (ph) being a binary outcome? Or do you have some better sort of line of sight for us to benchmark?
It's difficult to give really specific figure and timeline on the aeronautic application. Now what I would say there and we had various discussion with customers, with potential partners. And clearly, let's say, if we take the example of the application for measuring fuel, this is going to move to fiber optic. And we have the most, what we think, the most efficient technology to achieve that in those type of applications. So we see this as an application that can drive good value for shoulders. We are careful with time. We've been working on this since many years, so it's not like if we are starting. The good thing is that, we can achieve this substantial development activities within a context where the Opsens solution business, so the industrial business that we have is operating in a profitable manner.
So we feel from a strategic standpoint for Opsens, it's making a great sense where this -- the same optical technology is being used in medical and industrial. We are applying and helping our customers to be either efficient or to optimize their operation in the Industrial business with various sales and various application. And on top of that, we have a project that can a real value driver for us.
Awesome. Thanks. And just another question related to something you mentioned on the call. You're saying the data insights and machine learning, where do you see that moving forward? Do you hire many new people, a few new people, do you have those people on board? Sort of what's -- what do you think about that?
Yeah. The team is already in place. They have been working on various interesting execution from a customer sales standpoint. They also have worked on some application of artificial intelligence that can have an impact on our production. So we see benefit of this knowledge this team has having an impact for us on both on the revenue side and on the cost side down the road.
Perfect. And I guess, lastly, just Japan. What sort of is your game plan fully moving forward? Are you going to increase sales teams there? Are you going to slowly exit? Is it loss of customer to attrition just over time? How is that sort of unfolding?
Yes, the high level plan for Japan, I mean, on one side we are working in collaboration with our partner, our distributor for the OptoWire in Japan. On the other side, we will find also another partner for SavvyWire. And such partner may also be able to provide additional coverage for OptoWire. So let's say on a short term basis, what we can -- what we would like to deliver to the market somewhere in the calendar year 2023 is a really strong partner for SavvyWire. And this should potentially help us in the other areas.
Perfect. Thanks. That's all for me. I appreciate it.
Thank you, Max.
And this concludes our question-and answer-session. I would like to turn the conference back over to management for closing remarks. Thanks.
Okay. Well, many thanks to everyone for participating on today's call. We look forward to hopefully speaking with all of you again shortly.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.