Hello.
Thank
you
for
standing
by
and
welcome
to
the
Profound
Medical
Q4
and
Full-Year
2021
Financial
Results
Conference
Call.
At
this
time,
all
participants
are
in
a
listen-only
mode.
After
the
speaker
presentation,
there
will be
a
question-and-answer
session.
[Operator Instructions]
Please
be
advised
that
today's
conference
is
being
recorded.
[Operator Instructions]
I
would
now
like
to
hand
the
conference
over
to
your speaker
today,
Stephen
Kilmer,
Investor
Relations.
Please
go
ahead.
S
Stephen Kilmer
Head-Investor Relations, Profound Medical Corp.
Thank
you.
Good
afternoon,
everyone.
Let
me
start
by
pointing
out
that
this
conference
call
will
include
forward
-looking
statements
within
the
meaning
of
applicable
securities
laws
in
the
United
States
and
Canada.
All
forward-looking
statements
are
based
on
Profound's
current
beliefs,
assumptions
and
expectations,
and relate
to,
among
other
things,
expectations
regarding
the
efficacy
of
the
company's
treatment
technologies,
results
of
future
clinical
trials,
the
ability
to
obtain
coding
and/or
reimbursement
from
third-party
payers,
anticipated
financial
performance,
business
prospects,
strategies,
regulatory
developments,
market
acceptance
and
future
commitments.
Such
statements
involve
known
and
unknown
risks and
uncertainties
and
other
factors
that
may
cause
actual
results,
performance
or
achievements
to
be
materially
different
from
those
implied
by
such
statements.
No
forward-looking
statement
can
be
guaranteed.
Listeners
are
cautioned
not
to
place
undue
reliance
on
these
forward-looking
statements,
which
speak
only
as
of
the
date
of
this
conference
call.
Profound
undertakes
no
obligation
to
publicly
update
or
revise
any
forward-looking
statement
whether
as
a
result
of
new
information,
future
events
or
otherwise,
other
than
as
required
by
law.
For
the
benefit
of
those who
are
new
to
the
Profound
story,
I
would
like
to
also take
a
moment
to
summarize
our
business.
Profound
develops
and
markets
customizable
incision-free
therapies
for
the
ablation
of
diseased
tissue.
We
are
currently
commercializing
TULSA-PRO,
a
technology
that
combines
real-time
MRI,
robotically-driven
transurethral
ultrasound
and
closed-loop
temperature
feedback
control.
The
technology
is
designed
to
provide
customizable
and
predictable
radiation-free
ablation
of
a
surgeon-defined
prostate
volume
while
actively
protecting
the
urethra
and
rectum
from
– to
preserve
the
patient's
natural
functional
abilities.
TULSA-PRO
is
CE marked,
Health
Canada-approved
and
510(k)
cleared
by
the
FDA.
In
the
US,
we
employ
[indiscernible]
(00:02:26)
recurring
revenue
model
for
TULSA-PRO,
whereby
we
charge
customers
around
$8,000
on
a
per
procedure basis for
TULSA-PRO
consumables,
lease
of
medical
devices
and
services
associated
with
extended
warranties.
Outside
of
the United
States,
we
also
primarily
deploy
a
pay-per-procedure
model,
but
we
also
sell
capital
and consumables
separately
if
the
situation
warrants
that.
We
are
also
commercializing
Sonalleve,
an
innovative
therapeutic
platform
that
is
CE marked
for
the
treatment
of
uterine
fibroids
and
palliative
pain
treatment
of bone
metastases.
Sonalleve
has
also
been
approved
by
the
China
National
Medical
Products
Administration
for
the
non-invasive
treatment
of
uterine
fibroids, and
has
recently
obtained
FDA
approval
under
a Humanitarian
Device
Exemption
for
the
treatment
of
osteoid
osteoma.
The
business
model
for
Sonalleve
systems
is
currently
a
onetime
sale
capital
equipment.
On
the
call
today
representing
the
company
are
Dr.
Arun
Menawat,
Profound's
Chief
Executive
Officer;
and
Rashed
Dewan,
the
company's
Chief
Financial
Officer.
With
that
said,
I'll
now
turn
the
call
over
to
Rashed.
R
Rashed Dewan
Chief Financial Officer, Profound Medical Corp.
Good
afternoon,
everyone,
and
welcome
to
our
fourth
quarter
and
full-year
2021
conference
call.
On
behalf
of
the
management
team
and
everyone
at
Profound,
I
would
like
to
thank
you
for
your
ongoing
interest
in
our
company.
For
those
of
you
who
are
shareholders,
we
appreciate
your
continued
interest
and
support.
I
will
turn
the
call
over
to
Arun
in
a
moment
for
an
update
on
our
commercial
activity.
However,
before
I
do,
I
would
like
to
provide
a
brief
update
on
our
fourth
quarter
2021
financial
results.
To
streamline
things,
all
of
the
numbers
we
will
refer
to
have
been
rounded
so
they
are
approximate.
For
the
three-month
period
ended
December
31, 2021,
the
company
recorded
revenue
of
$1
million,
down
from
$2.9
million
in
the
fourth
quarter
of
2020.
Despite
COVID
headwinds,
recurring
revenue
increased
67%
from
$600,000
in
Q4 2020,
reflecting
the
success
of
our
ongoing
rollout
of
TULSA-PRO
in
the
United
States.
However,
that's
more
than
offset
by
the
fact
that
there
were
no
onetime
capital
equipment
sales
in
Q4
2021
compared
to
$2.3
million
recorded
in
Q4
2020.
Total
operating
expenses
in
the
2021
fourth
quarter,
which
consists
of
R&D,
G&A,
and
selling
and
distribution
expenses,
were
$10.2
million,
an
increase
of
69%
compared
with
approximately
$6.1
million
in
the
fourth
quarter
of
2020. Breaking
that
down
further,
expenditure
for
R&D
increased
87%
on
a
year-over-year
basis
to
$4.7
million.
This
was
primarily
driven
by
increased
spending
on
R&D
initiatives
for
new
designs,
technology
improvements
and
different
magnet
compatibility,
options
awarded
to
employees,
additional
head
count,
and
increased
travel
for
offsite
MRI
testing.
G&A
expenses
increased
by
80%
to
$3.2
million
due
to
options
awarded
to
employees,
increased
insurance
costs,
increased
legal
and
accounting fees,
increased
license
costs
for
the
enterprise
resource
planning
and
customer
relationship
management
software,
and
an
overall
increase
in
general
expenses
as
offices
continue
to
reopen
from
COVID-19
restrictions.
Finally,
selling
and
distribution
expenses
increased
by
32%
to
approximately
$2.3
million.
Overall,
the
company
recorded
a
fourth
quarter
2021
net
loss
of
$10.2
million
or
$0.49
per
common
share,
compared
with
a
net
loss
of
$7.5
million
or
$0.38
per
common
share
for
the
same
three-month
period
in
2020.
As
at
December
31, 2021,
Profound
had
cash
of
$67.2
million.
With
that, I will now turn the call over to Arun.
A
Arun S. Menawat
Thank
you,
Rashed.
Before
getting
started,
I
would
like
to
take
this
opportunity
to
congratulate
Rashed
on
his
promotion
to
CFO.
As
referenced
in
today's
press
release,
this
formalizes
the
additional
responsibilities
that
he
took
on
when
Aaron
Davidson
transitioned
to
SVP, Corporate
Development
last
spring.
Speaking
of Aaron,
it
is
bittersweet
for
me
to
announce
that
he
will
finish
his
employment
with
Profound
at
the
end
of
March
but
will
be
available
as
needed
on
a
consulting
basis.
I
will
miss
his
daily
presence
and
wise
counsel
but
also
wish
him
well
as
he
begins
his
well-deserved
retirement.
With
that,
there's
a
lot
to
talk
about
today.
We're
all
tired
of
talking
about
COVID
and
no
one
is
happier
that
its
impact
is
finally
subsiding
than
the
Profound
team.
As
we
analyze
our
data,
our
recurring
revenues
only
grew
by
37%
year-over-year,
and
that
was
primarily
through
utilization
at
14
sites
that
operated
throughout
the
year.
Even
though
we
had
contractual
agreements
to
install
over
30
systems
last
year,
it
was
not
until
late
in
Q4
that
finally,
we're
able
[ph]
to begin (00:09:05)
new
installs
again
in
US.
This
finished
the
year
with
17
sites
in
US
and
21
worldwide.
Our
international
business,
that
primarily
comprised
of
capital
sales
in
Asia,
was
effectively
non-existent
as
our
team
was
not
even
able
to
visit
the
country.
That
was
2021,
but
new
installs
are
continuing
in
Q1
2022,
and
we
fully
expect
to
achieve
an
installed
base
of
25
systems
in
the
US
by
end
of
the
current
quarter,
bringing
our
worldwide
installed
base to
[ph]
29 (00:09:54).
Similarly,
we're
beginning
to
see
more
activity
in
the
international
markets
as
a
few
of
the
capital
projects
have
been
revived,
both
suggest
a
faster
growth
in
recurring
as
well
as
total
revenue
in
2022.
In
spite
of
the
macro
environment
in
2021,
there
were
many
positive
accomplishments
that
also
bode
well
for
2022
and
beyond.
As
you
know,
we're
targeting
three
major
types
of
end
users:
early
adopters,
independent
imaging
center
[ph]
companies (00:10:38), and
opinion-leading
teaching
hospitals.
That
strategy
has
essentially
worked.
Most
notably,
we
are
already
in
7
of
the
top
15
opinion-leading
US
hospitals,
including
the
prestigious
institution
we
announced
earlier
this
week.
In
addition,
I'm
pleased
to
share
that
we
now
also
expect
to
launch
TULSA
programs
in
less
populated
states,
including
the
Southwestern
States,
and
appropriately,
a
TULSA
system
is
being
installed
in
Tulsa,
Oklahoma.
I'm
particularly
excited
about
this
one
as
they
will
use
the
imaging
center
model
of
having
multiple
[ph]
urologists
(00:11:30) bring
their
patients
to
one
site
and
drive
utilization.
Our
clinicians
continued
to
utilize
the
flexibility
of
TULSA-PRO
to
treat
an
unrivaled
variety
of
patients.
In
the
fourth
quarter
of 2021,
the
majority
of
patients
treated
with
TULSA,
about
85%
had
treatment-naïve
localized
prostate
cancer,
with
another
12%
receiving
[indiscernible]
(00:12:02) TULSA
after
prior
radiation
failure
or
failure
after
other
types
of
therapy,
and
three
percent
had
BPH
but
no
cancer.
Of
the
patients
with
prostate
cancer,
approximately
75%
had
intermediate
risk
localized
prostate
cancer,
another
10%
were
high risk,
and
15%
were
low risk.
In
terms
of
treatment
plans,
approximately
38%
were
customized
whole
gland,
where
physicians
targeted
95%
of
the
gland,
but
precisely
carved
out
margins
at
the
sphincters
to
save
continence,
nerve
bundles
to
save
erectile
function,
or
even
the
ejaculatory
ducts,
when
possible,
to
save
vital
fluid.
Another
36%
had
large
subtotal
ablations
covering
more
than
half
their
prostates,
and
26%
had
more
[ph]
focal
laser ablations (00:13:16),
meaning
[indiscernible]
(00:13:19).
This
quarter,
the
largest
prostate
treated
with
TULSA
in
the
US
was
130
cc,
whereas
the
smallest
was
only
15
cc.
The
simple
fact
is
that
no
other
established
or
emerging
technology
can
safely
and
effectively
treat
as
many
different
prostate
disease
patients
as
TULSA
have
done.
Based
on
this
and
prior
data,
we
believe
that
TULSA
has
unique
potential
to
capture
a
meaningful
portion
of
the
overall
prostate
disease
market.
In
terms
of
that
long-term
potential,
if
one
assumes
an
average
price
of
$8,000
per
procedure
and
250,000
prostate
cancer
cases
annually
in
the
US,
that
translates
to
a
total
addressable
US
market
of
$2
billion.
If
one
were
to
add
a
small
subset
of
what
we
call
the
extreme
BPH
cases,
patients
with
very
large
prostates
who
would
otherwise
need
a
simple
prostatectomy,
the
market
size
effectively
increases
to
over
$5
billion.
Of
course,
TULSA
will
not
capture
this
entire
market,
but
these
numbers
give
us
an
idea
of
how
significant
the
opportunity
is
based
upon
how
the
product
is
being
used
today.
For
us,
2021
was
about
establishing
that
beachhead,
a
foundation
to
ultimately
capture
a
meaningful
portion
of
that
market
opportunity.
Although
growth
in
the
US
has
been
impeded
due
to
the
pandemic,
medical
technology
databases
report
that
in
2021,
the
number
of
patients
treated
with
[indiscernible]
(00:15:31)
and
cryoablation
was
similar
to
the
number
of
patients
treated
with
TULSA.
Based
on
these
data,
we
believe
we
have
already
achieved
a
treatment
rate
similar
to
that
of
other
ablative
technologies
that
have
been
used
for
more
than
a
decade.
Taken
together,
we
believe
that
TULSA
not
only
has
the
potential
to
become
the
leading
ablative
therapy,
but
given
that
TULSA
has
been
used
to
treat
patients
with
such
wide
variety
of
prostate
diseases,
we
see
TULSA
becoming
a
primary
modality
of
choice
in
the
future.
And
that
provides
a
good
segue
to
our
sponsored
CAPTAIN
trial,
which
treated
its
first
patient
in
January.
We
expect
CAPTAIN,
which
stands
for
A
Comparison
of
TULSA
Procedure
vs.
Radical
Prostatectomy,
or
RP
for
short,
in
Participants
with
Localized
Prostate
Cancer,
will
be
performed
at
eight
or
more
sites
in
the
United
States
and
two
sites
in
Canada.
To date,
six
sites
have
been
activated
and
are
currently
recruiting
patients.
Notably,
this
is
the
first
Level
1
study
ever
conducted
comparing
an
emerging
technology,
TULSA
in
this
case,
head-to-head
with
RP
in
men
with
prostate
cancer.
CAPTAIN
will
compare
the
safety
and
efficacy
of
the
TULSA
procedure
with
RP
in
men
with
organ-confined,
intermediate-risk,
Gleason
Score
7
prostate
cancer,
with
the
goal
of
demonstrating
that
the
efficacy
of
the
TULSA
procedure
is
not
inferior
to
RP.
The
trial
also
aims
to
demonstrate
TULSA's
superior
quality
of
life
outcomes.
The
post-market
CAPTAIN
trial
will
enroll
201
patients
with
134
patients
randomized
to
receive
one
or
two
TULSA
procedures
and
67
patients
randomized
to
receive
RP.
The
trial's
primary
safety
endpoint
is
the
proportion
of
patients
who
preserve
both
erectile
potency
and
urinary
continence
at
one
year
after
treatment.
CAPTAIN's
primary
efficacy
endpoint
is
a
proportion
of
patients
who
are
free
from
any
additional
treatment
for
prostate
cancer
by
three
years
after
treatment.
Secondary
endpoints
include
comparison
of
rate
of
complications,
cost
effectiveness,
and
timing
of
the
return
to
baseline
activity
with
long-term
follow-up
data
gathered
for
up
to
10 years
after
treatment.
We
are
conducting
the
CAPTAIN
trial
to
increase
awareness
and
adoption
of
TULSA-PRO
and
to
support
coverage
by
payors.
And as
I
mentioned
in
our
last
call,
we
are
awaiting
full
data
in
the
FARP
trial,
a
single-site
Level
1
study
conducted
at
Oslo
University
Hospital
that
compared
whole
gland
RP
to
focal
therapy
using
either HIFU
or
TULSA.
The
robotic
RP
arm
of
this
study
is
similar
to
that
of
our
CAPTAIN
trial,
and
we
are
very
encouraged
by
the
initial
results
of
that
trial,
as
well
as
by
the
fact
that
Oslo
University
Hospital
purchased
the
TULSA
system
from
us
for
commercial
use,
identifying
it
as
the
clear
technology
of
choice.
Should
the
RP
outcomes
in
CAPTAIN
match
what
was
seen
in FARP,
we
believe
there
is
potential
to
demonstrate
clearer
superiority,
even
though
the
CAPTAIN
trial
has
been
designed
for a
non-inferiority
endpoint.
Another
feature
of
TULSA-PRO
that
we
believe
will
significantly
increase
its
adoption
is
the
system's
compatibility
with
the
US
installed
base
of MRI
machines.
To date,
we
have
been
working
with
two
MRI
manufacturer
partners,
Siemens
and
Philips,
to
commercialize
TULSA-PRO.
Just
this
week,
we
were
pleased
to
confirm
TULSA-PRO's
compatibility
with
GE,
the
remaining
of
the
big
three
medical
technology
companies
in
the
global
MRI
space,
and
the
biggest
of
the
big
three
in
the
United
States.
Together,
Siemens,
Philips,
and
GE
comprise
more
than
90%
of
the
installed
base
of MRIs
in
the
US.
This
is
an
important
achievement
that
has
already
yielded
exciting
results.
Shortly
after
confirming
TULSA-PRO's
compatibility
with
GE,
we
signed
the
first
agreement
for
a TULSA-PRO
system
interfaced
with
a
GE
scanner
with
Boston's
renowned
Brigham
and
Women's
Hospital.
Construction
agreement
has
been
signed
since
then
with
an
imaging
center
in
Florida.
I'll
now
turn
to
our
ongoing
reimbursement
strategy
which
is
a
critical
priority
for
Profound.
I'm
very
excited
to
share
that
our
TULSA
systematic
review
paper
has
been
published
online
by
the
Journal
of
Endourology.
It
is
available
on
our
website
or
you
can
ask
Steve
Kilmer
to
send
it
to
you
after
this
call.
Publication
of
this
paper
is
a
key
milestone
as
it
completes
the
clinical
requirements
to
qualify
to
file
a
CPT-1
application.
We
have
met
with
the
relevant
societies
since
the
publication
and
we
remain
on
track
to
be
able
to
file
our
application
this
summer
for
consideration
by
the
AMA
during
their
fall
2022
meeting.
Although
there's
no
guarantee
of
approval,
should
the
AMA
approve
our
application
at
their
fall
meeting,
this
would
be
an
incredible
accomplishment
as
the
CPT
code
would
be
effective
by
January
2024.
Another
reason
this
paper
is
one
of
Profound's
most
important
publications
to
date
is
that
it
generates
the
highest
level
of
evidence
available
in
support
of
TULSA,
in
this
case
Level
2a.
The
paper
itself
systematically
consolidates
all
of
the
available
evidence
on
TULSA-PRO
into
a
single,
peer-reviewed
manuscript
and
supports
that
TULSA
is
safe
and
effective
for
treating
primary
prostate
cancer.
The
evidence
also
supports
the
use
of
TULSA
to
treat
recurrent
prostate
cancer
and
locally
advanced
prostate
cancer,
as
well
as
the
system's
ability
to
simultaneously
treat
prostate
cancer
and
alleviate
lower
urinary
tract
symptoms
normally
caused
by
BPH.
In
addition,
the
paper
confirms
that
TULSA
is
customizable,
offering
a
treatment
plan
that
can
be
tailored
to
match
individual
disease
characteristics
and
patient
preferences.
Importantly,
this
represents
a
shift
from
the
focal
versus
whole-land
paradigm
established
by
other
ablative
modalities.
Finally,
the
paper
concludes
that
TULSA
is
a
single,
flexible
tool
that
can
treat
multiple
indications,
including
those
where
minimally
invasive
alternatives
are
limited.
In
addition
to
its
real-time
MR
visibility
and
thermometry
that
differentiates
TULSA
from
other
ablative
modalities,
we
believe
the
system's
customizability
will
enable
patients
to
achieve
better
outcomes
in
the
real
world.
We're
looking
forward
to
using
this
paper
as
a
tool to
support
system
launches
and
utilization
initiative
and
to
initiate
and
inform
conversations
with
physicians
and
patients
so
they
can decide
on
treatment
options
and
plans.
And
last
but
certainly
not
least,
you
know
how
proud
I
am
of
the
Profound
team.
Abbey
and
Hartmut
are
leading
sales,
and
Mathieu
and
Golddy
are
leading
product
management.
Mike
has
advanced
reimbursement
efforts
significantly,
and
Jacques
has
developed
the
relationships
with MR
companies.
All
in
all,
this
is
a
world-class
team.
And
now,
I'd
like
to
extend
a
warm
welcome
to
Ken
Knudson,
our
new
Chief
Commercial
Officer,
who
will
be leading
initiative
for
Profound's
worldwide
sales,
marketing,
and
reimbursement
activities
for
both
TULSA
and
Sonalleve.
Ken's
executive
management
career
spans
more
than
25
years,
during
which
he
has
accelerated
growth
for
emerging
start-ups
and
Fortune
500
companies
alike.
Ken
joins
us
from
Perineologic,
a
company
pioneering
a
new
and
disruptive
approach
to
prostate
cancer
biopsy,
where
he
served
as
CEO.
He
previously
served
as
Executive
Vice
President
of
Global
Sales
and
Marketing
for
Boston
Scientific
Corporation,
where
he
helped
drive
annual
sales
of
SpaceOAR
Hydrogel,
a
biodegradable
material
that
is
injected
between
the
rectum
and
prostate
to
decrease
patient
exposure
to
rectal
radiation.
Ken
has
extensive and
demonstrable
record
of
accomplishments
in
helping
to
commercialize
new
medical
technologies
in
urology
and
has
an
in-depth
knowledge
of
the
men's
and
women's
health
markets.
Please
join
me
in
welcoming
Ken
to
the
team
where
he
will
be
invaluable
as
we
continue
to
execute
our
commercial
strategy.
To
summarize,
although
our
growth
was
hampered
by
COVID,
we
believe
we
are
at
the
verge
of
accelerated
growth,
with
our
installed
base
expected
to
increase
significantly
by
quarter's
end.
Not
only
does
the
TULSA
opportunity
remains
intact
but
the
substantive
number
of
complex
and
unique
cases
build
our
confidence
in
capturing
a
broad
portion
of
the
total
prostate
cancer
cases
as
well
as
a
material
segment
of BPH
cases.
We
are
thrilled
that
TULSA
is
now
compatible
with
all
three
major
manufacturers
of MRI
scanners,
GE,
Siemens
and
Philips,
increasing
the
span
of
our
market
access.
Our
reimbursement
strategy
is
working,
and
we
are
excited
about
the
expected
filing
of
CPT-1
application
in
2022.
We
are
pleased
to
have
initiated
our
sponsored
CAPTAIN
clinical
trial,
which
should
produce
initial
readout
in
Q4
2023.
This
ends
our
prepared
remarks
for
today.
With
that,
Rashed,
Arun
and
I
are
happy
to
take
any
questions
you
might
have.
Operator?
Operator
Thank
you.
[Operator Instructions]
Our
first
question
comes
from Frank
Pinal
with
Jefferies.
You
may
proceed
with
your
question.
F
Frank Pinal
Analyst, Jefferies LLC
Hi,
guys. Thank
you
for
taking
the
question.
I
guess
off
the
top,
you
touched
on
installs
increasing
significantly
in
the
quarter.
So,
wondering
if
you
could
sort
of
unpack
that
a
little
bit?
Was
there
sort
of
a
speed-up
there
in
the
conversion
process?
And
then
on
the
capital
side,
with
capital
being
lower
in
the
quarter,
was
that
mostly
due
to
COVID?
I
think
it
was.
How
is
that
currently
trending?
Are
you
seeing
COVID
headwinds
kind
of
increase
or
are
they
leveling
off
as
we're
now,
I
guess,
several
weeks
into
2022?
And
I
have
a
follow-up
after
that
and
I
apologize
for
asking
about
COVID.
A
Arun S. Menawat
No.
No
problem.
I
appreciate
your
questions.
So,
I
think
to
your
first
question,
yes,
we
are
seeing
an
accelerated
installation
rate.
We
did
see
it
a
little
bit
in
Q4, but
we
are
certainly
seeing
it
in
Q1.
And
I
think
that
unless
there
is
another
resurgence
of
this
pandemic,
I
think
based
upon
our
pipeline,
I
do
think
that
we
will
continue
to
increase
the
installed
base
this
year.
Which,
by
the
way,
gives
us
a
lot
more
confidence
on
where
we're
going
this
year
as compared
to
the
uncertainties
that
we
faced
last
year.
So
yeah,
I
think
generally
speaking,
I
think
just
again
to
be
cautious,
all
the
installed
base
is
going
to
be
meaningful
in
– just
that
fast. They're
all
going
to
take
their
time
growing
and
so
on.
But
I
do
think
things
are
happening
at
much
faster
pace
than
they
did
in
Q1.
To
your
second
question,
in
Q4,
there
was
zero
capital
revenue.
Absolutely
nothing.
And
a
good
bit
of
it
is
that
we
have
–
we
identified
a
certain
set
of
countries
in
Asia
in
particular
where
we
feel
that
we
can
build
scalable
models
where
we
can
create
a
profitable
revenues
and
really
create
long-term
growth.
And
among
those
countries,
particularly
were
China,
Japan,
and
we
have
not
even
been
able
to
visit
those
countries.
And
so,
things
have
been
delayed
there.
However,
as
I
mentioned
in
the
prepared
remarks,
we
do
see
a
revival.
I
think
it's
going
to
be
slow,
but
I
think
we
will
start
to
see
capital
revenues
trickling
in.
But
I
do
think
in
the
second
half
of
2022,
you
will
start
to
see
some
of
the
programs
that
were
delayed
in
2021
will
come
back.
And
we
are
certainly
optimistic
from
that
perspective
that
the
top
line
growth
will
also
be
there
from
capital
revenue.
So,
please
feel
free
to
ask
the
next
question.
F
Frank Pinal
Analyst, Jefferies LLC
Thank
you
for
that,
Arun.
I
guess
picking
up
on
the –
on
sort
of
the
regional
aspect
there,
you
commented
during the
call
that
you
were
spreading
out
regionally
within
the
US. I
was
wondering
if
you
could
just
unpack
that
a
little
bit.
Are
there
regions
that
you're
currently
focusing
a
little
bit
more
on
right
now?
And
so,
and
how
do you
see
that
strategy
evolving
as
you
play
forward
say,
over
the
next
year
or
two?
And
just
quickly,
just
one
data
point,
just
if
you
can
– volumes
during
the
quarter,
I'm
not
sure
if
I
heard
it.
If
I
missed
it,
if
you
could just
touch
on
that.
That
would
be
helpful.
Thank
you
so
much.
A
Arun S. Menawat
Yeah,
absolutely.
So
first,
with
respect
to
the
geography
within
the
United
States,
there
are
two
aspects.
One
is
that
we
have
an
eye
towards
increasing
obviously
utilization
because
that's
what
translates
into
revenue
for
us.
But
we
also
have
a eye
towards
really
qualifying
for
CPT
application.
And
one
of
the
things
that
AMA
looks
for
is
how
widely
is
the
product
being
used
and
who
is
using
it.
So,
on
one
end
of
the
spectrum,
our
product
is
being
used
by
leading
hospitals
and
that
is
an
important
criteria.
On
the
other
end
of
the
spectrum,
they
want
to
see
that
it
is
being
used
by
mainstream,
even
in
rural
areas
as
well.
And
so,
part
of
our
objectives
has
been
to
satisfy
those
requirements
also.
But
the
interesting
thing
is
that
at –
Abbey
and
the
team
were
able
to
partner
with
a
new
group
called
the
Paragon
Group
in
the
southern
Midwest,
and
it
is
turning
out
to
be
an
amazing
group.
I'm
really
excited
about
them
actually.
So,
they
are
placing
– they
will
be
placing
systems
in
Louisiana,
Missouri,
even
certain
rural
parts
of
Texas,
and
then
the
one
that
I
mentioned
in
Tulsa,
Oklahoma.
So,
we're
now
–
we
have
presence
now
in
upper
northeast,
lower
northeast.
We
certainly,
as
you
know,
we
have
presence
in
Florida
quite
a
bit.
We
have
presence
in
Texas,
growing
presence
in
Arizona,
California,
but
now
we are
adding
presence
in
these
lower
midwestern
states.
We
do
have
in
our
pipeline
upper
Midwest
also.
So
that's
the
plan,
and
I
think
it
covers
– it
sort
of
is
very
methodically
planned
and
it
covers
our
abilities
to
increase
the
utilization.
It
reduces
the
amount
of
travel
our
patients
have
to
do.
One
of
the
things
that
we
analyzed
last
year
is
really
exactly
where
our
patients
are
coming
from.
And
I
think
that
the
installed
base
is
beginning
to
reflect
to
where
the
patient
population
resides.
Because
what
we
saw
in
2020
and
2021
was
that
over
75%
percent
of
our
patients
had
to
travel
well
over
four
hours
to
get
to
the
Tulsa
sites.
So,
I
think
this
will
help
reduce
that
burden
for
our
patients.
With
respect
to
the
numbers
in
terms
of
the
utilization,
we're
in
that
range
where
September, October
–
sorry,
October,
November
were
actually
not
bad
months
for
us.
They
were
meshing
with
what
we
saw
in
September
timeframe.
Now,
December
was
not
a
very
good
month
at
all.
In
fact,
very,
very
quickly
we
had
a
–
we
saw
significant
delays
and
primarily
driven
by
lack
of
anesthesia.
So,
our
numbers
I
think
compared
to
Q3
are
up
because
you
can
see
Q3
to
Q4
numbers
are,
in
terms
of
recurring
revenues,
are
up
quite
a
bit.
But
overall,
it's
still
very,
very
lower.
I
think
37%
growth
in – at
early
stage
is
not
enough,
and
we
are
certainly
looking
to
do
much
better
than
that
in
2022.
F
Frank Pinal
Analyst, Jefferies LLC
Great.
Thank
you
so
much.
Take
care,
everyone.
A
Arun S. Menawat
Thank
you.
Operator
Thank
you.
Our
next
question
comes
from
Rahul
Sarugaser
with
Raymond
James.
You
may
proceed
with
your
question.
R
Rahul Sarugaser
Analyst, Raymond James Ltd.
Good
afternoon,
Arun,
Steve,
and Rashed.
And,
Rashed,
congratulations
on
your
appointment
as
CFO.
Arun,
my
first
question
is
just
drill a
little
bit further
on
the
deployments
and
utilization
rates.
So,
you
talked
about
[ph]
25% (00:38:20) at
the
end
of
this
quarter
which
I
believe
has
quite
well
lined
up
with
the
pipeline
you
had
talked
about
in a
previous
quarterly
call.
Can
you
give us
a
little
bit more
visibility
into
sort
of how
the
pipeline
has
shaped
up
sort
of
beyond
Q1
for
deployments?
And
how
should
we
also
be
looking
at
the
annualized
utilization
rate?
I
believe
it
was
around
60
procedures
per
year
per
installed
device.
Given
that
the
[ph]
bulk of (00:38:48)
devices
is not
coming
online,
how
should
we
be
thinking
about
that
average
rate?
A
Arun S. Menawat
Yeah.
Yeah.
Rahul, we
do
have
a
very
good
pipeline.
We
continue
to
have
a
good
pipeline.
And
particularly
now
that
we
have
GE
compatibility
established,
I
think
that
pipeline
will,
in
fact,
continue
to
grow.
We
have
not
specifically
given
a
number,
but
it
is
far
bigger
than
our
installed
base.
That
might
give
you
at
least
a
general
idea
of
how
big
it
is.
As
you
could
tell
from
the
significant
amount
of
clinical
information
I
provided,
the
fact
that
the
existing
sites
are
using
this
product
for
a
variety
of
different
types
of
patients.
I
think
that
message
is
coming
through,
and
that
is
the
key
reason
why
pipeline
is
not
a
problem
for
us.
Our
surgeons
really
want
to
use
this
product.
With
respect
to
the
utilization
itself,
I
think
that
is
a
very
important
question
because
I
think
that
the
utilization
at
the
sites
that
we
had,
utilization
in
2021,
will
continue.
And
if
anything,
I
think
there
will
be
certain
increases.
And
I
think
as
the
quarters
go
by,
I
think
we'll
have
a
lot
more
visibility
in
terms
of
how
much
the
increase
will
be,
because
I
can
certainly
tell
you
every
site
is
looking
to
increase
utilization.
I
just
don't
feel
comfortable
sharing
just
yet
what
is
the
rate
going
to
be
because
they had a – it sort
of just
–
the
impact
of
COVID is just
subsiding.
And
hopefully,
I
can
be
more
transparent
in
the
second
quarter
on
that
particular
point.
But
with
respect
to
the
new
sites,
which
is,
as
you
can
see
from
the
numbers,
really
half
of
the
sites
in
Q2
will
be
new
sites
effectively.
And
I
think,
I
do
want
to
make
sure
that
people
recognize
that
it's
not
going
to
get
to
60
sites
– 60 utilization
in
one
quarter.
It's
going to
take
their
normal
course,
which
last
year,
took
about
six
to
nine
months
to
really
get
the
sites
to
utilize
them
and
train
them
and
have
them
use
the
different
types
of
patients
so
that
they
could
understand
the
full
potential.
So,
I
think
that
unfortunately,
I
mean,
it's
just
a
transitionary
phase
that
average
utilization
per
site
overall
will
actually
be
less
in
Q1,
Q2
perhaps.
But
over
the
longer
haul,
it
will
be
significantly
higher,
obviously.
So,
and
once
the
installed
base
grows
and
the
number
of
new
installs,
that
ratio
becomes
much
smaller
than
what
it
is
today,
then
I
think
this
phenomenon
will
go
away,
as
you
can
imagine,
[indiscernible]
(00:41:56) on
that.
So,
I
hope
that
gives
you
some
decent
color
into
how
we're
seeing
things.
R
Rahul Sarugaser
Analyst, Raymond James Ltd.
Great.
That's
helpful
and
should
help me
out
with
our
model.
I
want
to switch
a
little
bit, switch
gear
a
little
bit
to
data,
you'd
already
put
the data.
And
we
have
seen
some
recent
data
from
Meridian
and
the data
they
presented
– the
[indiscernible]
(00:42:19)
data
they
presented
at
ASCO. Do
you
have
any
thoughts
on
that?
And
also
because
they're
going
after
localized
prostate
cancer
as
well?
A
Arun S. Menawat
Yes.
So,
of
course,
we
are,
quite
vigilant,
and
we
certainly
read
all
of
the
clinical
information
out
there.
And
it's
interesting
that
you
mentioned
this
one
because
it
–
I
think
there
are
some
strategic
aspects
to
this
and
then
there
are
certainly –
I'll
comment
on
some
of
the
data.
One
of
the
things
that
is
going
on
on
the
radiation
side
is
that
there
are
a
couple
of
companies
that
are
now
selling
MRI,
real-time
MR
imaging-guided
radiation
treatment
or
SBRT
treatment.
And
that
in
itself
in
some
ways
is
kinship
because
we
are
the
company
that
on
this
sort
of
on
the
other
side
saying
real-time
MRI
is
a
good
thing.
And
so,
when
another
study
shows
that,
hey,
using
real-time
MRI
is
better
than
using
real-time
CT
or
CT for
radiation
treatment,
I
think
you
can
clearly
see
the
benefit
of
the
imaging
modality
that
we
are
using
and
that
principle
of
using
our
MRI
imaging
modality
I
think
translates
to
us also.
Now,
having
said
that,
I
think
if
you
look
at
their
data,
the
publication,
I'm
just
pulling
it
up
as
we
speak
here.
What
their
data
showed
was
that
they're
what
they
call GU
toxicity,
which
is
the main
end
point. It
is
basically
going
from
47%
down
to
22%
using
MRI.
So,
it's
about
half
of
what
it
is
with
SBRT.
But
think
about
the
numbers,
47%
toxicity
to
22%
toxicity.
If
you
look
at
the
TACT
data,
you
would
see
[ph]
equal
and
better (00:44:29)
toxicity
down
to
6%.
So,
as
much
as
I
think
it's
great
to
see
using
MRI,
I
think
the
TACT
data
and
particularly
this
new
study
clearly
shows
another
order
of
magnitude
difference
when
TACT –
when TULSA
is
used
and
there's
no
radiation,
there's
no
impact
of
long-term
impact
of
radiation
because
we
use
heat
as
our
energy
source.
So,
I don't
know if
that
helps,
but
that's
sort
of
a
quick
summary
of
how
we
interpret
that
data.
R
Rahul Sarugaser
Analyst, Raymond James Ltd.
That's
really
helpful.
Thank
you.
Thank
you,
Arun.
And if
you
would
indulge
just
one
more
question
since
we
talked
about
radiation
and
we
could
switch
a
bit
to
the
comparison
to
surgery
as
you
referred
to
the
CAPTAIN
trial. We know
that
the
FARP
trial
should
be
reading out
sometime
this
summer.
So
just
for
us,
how
should
we
be
thinking
about
interim
readouts,
when
should we
be
expecting
data
from
these
trials,
and particularly
given
sort
of
the
interplay
between FARP
and
CAPTAIN? That would be appreciated.
A
Arun S. Menawat
Yeah.
Yeah.
So,
I
think −
so
first
of
all,
you're
right.
FARP,
we
hope
to
see
full
data
this
summer.
For
CAPTAIN
at
this
point,
our
expectation
is
that
RSMA
2023,
which
is
typically
in
November,
[ph]
it
will be (00:45:55) we'll
have
the
first
set
of
data.
Because
we're
treating
patients
now,
so
the
patients
who
are
being
treated
this
year
and
by
that
time
by
RSMA
2023,
we
should
be
able
to
complete
full
recruitment.
So,
there
should
not
be
any
biases
and
all
that.
But
that's
all
behind
us
and
we're
just
monitoring
the
patients.
But
by
that
time,
we
should
be
able
to
show
6
to
12
months'
data
and
if
the
statistics
hold
similar
to
FARP,
we
should
be
able
to
start
to
see
differences
as
early
as
that.
R
Rahul Sarugaser
Analyst, Raymond James Ltd.
That's
terrific.
Thank
you
very much.
And
I'll
get
back
in
the queue.
A
Arun S. Menawat
Thank
you,
Rahul.
Operator
Thank
you.
Our
next
question
comes
from
Josh
Jennings
with
Cowen.
You
may
proceed
with
your question.
J
Joshua Jennings
Analyst, Cowen & Co. LLC
Hi,
good
afternoon.
Thanks
for
taking
the
questions
and
appreciate
all
your
help
over
the
years
and
good
luck
in
your next
chapter.
And, Rashed, congratulations
on
the
official –
getting
to
see
you
officially.
Arun,
I
was
hoping to
just
ask
about
you
mentioned
capital
projects
reviving
international equity. I
just
want
to
get
a
sense
of
how
we
should
be
thinking
about
the
international
channel
in
2022. Any
further
details
would
be
great.
A
Arun S. Menawat
Yeah,
yeah.
Josh, I know
that's
a
great
question.
And
I
think
what
I
can,
in
terms
of
providing
more
detail,
what
I
can
tell
you
is
projects
were
delayed
and
maybe
except
for
one
or
two
here
and
there,
generally
nothing
was
cancelled.
And
even
some
of
the
installations
on
some
of
the
sites
that
are
installing
MRIs
or
upgrading
their
hospitals
in
Asia,
they
were
all
delayed.
And
verbally,
what
we
are
hearing
is
things
should
be
in
fairly
good
shape
in
the
second
half
of
2022.
So,
I
think
from
that
perspective,
we
are
quite
optimistic.
And
I
think
from
the
perspective
that
projects
are
not
cancelled
but
just
delayed
is
certainly
the
– positive.
And
I
think
the
best
I
can
share
with
you
is
second
half
of
this
year, we
should
see
a revival
of
the
capital
revenue.
I
guess
the
other
detail,
little
detail
that
I
can
share
with
you
is
that
in
the
last
three,
four
months,
we
have
certainly
seen
that
the
sites
in
Asia
that
are
running, like
in
China
or
South
Korea,
that
the
number
of
patients
that
they
have
treated
during
these
last
three
or
four
months
has
certainly
increased
in
double
digits.
So,
the
fact
that
they
are
– there
is
some
revival
in
terms
of
the
patients
treated,
it
is
starting
to
show
that
they
are
coming
on
stream.
And
I
think
China,
as
you
know,
is
really
now
remaining
one
of
the
few
countries,
and
Japan,
few
countries
that
where
travel
is
still
incredibly
restricted.
But
we
are
very
hopeful
that
that
will
open
in
the
second
quarter
and
I
personally
plan
to
visit
and
really
check
this
out
so
I
can
really,
really
provide
much
more
concrete
information.
But
I
do
think
second
half
this
year
at
the
moment
is
a
fair
bet.
J
Joshua Jennings
Analyst, Cowen & Co. LLC
Great. Thanks for
that.
And
just had
a
follow-up
on
US
reimbursement
landscape
and
just –
I
mean,
are
hospitals
still
having
success
submitting
for
payment
for
TULSA
cases
using
the
preexisting
code
or
how
is
that
fairing? Is
it
becoming
more
widespread?
A
Arun S. Menawat
Yes. Josh,
we
have
had
at
least
10 hospitals
that
have
used
the C-Code.
Pretty
much
all
of
the
key
hospitals
have
used
it
and
pretty
much
everyone
is
getting
paid.
The
average
payment
is
approximately
$12,500.
And
just
as
a
comparison,
the
average
payment
for
radical
prostatectomy
is
just
under
$10,000
today.
So,
the
$12,500
that
the
hospitals
are
getting
paid
is
in
the
right
realm
from
what
we
can
tell.
We
continue
to
charge
just
a
little
over
$8,000
per
patient.
And
that
fund,
those
moneys
are
coming
from
that
$12,500
that
they
are
receiving.
And
given
the
fact
that
the
treatment
is
done
in
an
MR
suite,
which
is
a
lot
less
expensive
than
the
operating
suite,
we
believe
that
the
bottom
line
for
the
hospitals
is
positive.
At
least
that's
the
feedback
we're
getting.
So,
I
think
on
that
front,
we're
pretty,
pretty
happy
with
what
we're
seeing.
And
quite
frankly,
on
the
other
side,
where
you
will see
the
concierge
service
where
we
have
these
early
adopters,
people
are
paying
the
$30,000
and
then
they're
flying,
as
I
mentioned
earlier,
over
70%
of
the
patients
are
literally
flying
to
these
sites
to
get
treated.
J
Joshua Jennings
Analyst, Cowen & Co. LLC
Great. Thanks.
So, just
last
questions on,
just
thinking
about
the
TULSA-PRO
system
in
its
current
form
and
just
what
is
your
team
working
on?
Or
when
would
we
hear
anything
about
the
next-generation
system
and
what
type
of
enhancements
are
you
pursuing?
Thanks
for
taking
all the
questions.
J
Joshua Jennings
Analyst, Cowen & Co. LLC
Sure.
Sure.
That's
a
good
question,
Josh.
So,
we
have
actually
introduced
our
new
features
in
Europe
already
commercially.
We
have
submitted
some
of
these
with
the
FDA.
We
think
another
three
to
six
months
we
should
be
able
to
introduce
these
into
the
US.
But
there
are
a couple
of
features
that
are
very
interesting.
One
in
particular
that
I
want
to mention
is
that,
at
the
moment,
if
you
are
thinking
about
radical
prostatectomy or
surgical
prostatectomy,
usually
it
is
done
on
patients
who
have
what
we
call
organ-confined
disease,
which
is
what
I
mentioned
in
the
prepared
remarks.
So,
as
long
as
cancer
has
not
gone
out
of
the
prostate,
you
can
do
a
radical
prostatectomy.
But
in a
number
of
cases,
that
cancer
sort
of
rubs
on
the
sides
and
there
is
maybe
a
millimeter
or
so
involvement
of
the
muscle
tissue
that
is
just
outside
of
the
prostate.
And
because
we
use
the
real-time
MRI,
physicians
know
where
the
boundaries
are
and
physicians
have
a
pretty
good
idea
that
they
actually
wanted
to go
beyond
that
capsule
or
the
prostate
boundary.
And
so,
we
introduced
a
concept
that
we
call
thermal
boost,
meaning
that
in – if
there is
a
region
where
the
physician
wants
to
go
a
millimeter
or
two
beyond
the
prostate,
that
they
can
activate
that
thermal
boost
and
they
can
actually
kill
that
side,
that
section.
There's
a
slight
involvement
of
the
muscle
tissue,
perhaps.
And
number
of
cases
have
been
done.
As
I
said,
in
Europe,
it
is
now
commercially
available.
It
is
very
well
received,
by
the
way.
And
the
benefit
here
is
that,
again,
you
can
tell
we're
very
clinical
data
focused.
And
if
you
look
at
clinical
data
in
radical
prostatectomy,
over
20%
of
the
patients
were in
studies,
it
has
been
shown
that
they
leave
cancer
behind
in
those
edges.
And
so,
this
one
particular
feature
gives
us
that
potential.
Obviously,
we
need
to
get
more
data
and
so
on.
But
it
certainly
gives
us
the
potential
that
we
could,
in
fact,
at
some
point,
begin
to
treat
patients
who
may
have
a
little
bit
of
that
extra
cancer
that
is
there.
And
that –
again,
we
will
need
long-term
data
for
this,
but
physicians
think
that
this
is
a
very
interesting
new
development
that
we
are
– that
we
have.
It
is
commercial
in
Europe.
We're
in
FDA
in
US
and
we
hope
to
bring
it
out
later
this
year
in
the
US.
So,
that's
just
one
example.
And
I
think
you
will
see
at
least
one
more
very
interesting
technology
and
we'll
talk
about
it
yet.
We
are
discussing
it
with
the
FDA.
But
it
is
designed
to
make
it
more
reproducible,
and
it
is
designed
to
reduce
the
treatment
time,
which
already
is
pretty
good,
but
it's
designed
to
reduce
the
treatment
time
in
the
future.
J
Joshua Jennings
Analyst, Cowen & Co. LLC
Great.
Thanks,
Arun.
A
Arun S. Menawat
Thanks,
Josh.
Operator
Thank
you. Our
next
question
comes
from
Frank
Takkinen
with
Lake
Street
Capital.
You
may
proceed
with your
question.
F
Frank Takkinen
Analyst, Lake Street Capital Markets LLC
Hey.
Thanks
for
taking
my
questions.
Not
sure
if
I
missed
it
or
not,
but
did
you,
by
chance,
to
share
how
many
installs
have
occurred
so
far
in
the
first
quarter?
Just
trying
to
get
a
feel
for
the
lift
from
that
17 sites
at
the
end
of
the
year
to
get
to
25
by
the
end
of the
quarter.
How
many
of
those
are
left
to
be
installed
yet
in
the
last
four
weeks
of the
quarter?
A
Arun S. Menawat
Yeah.
Frank,
we
have –
we
didn't
provide
that
much
granularity
because
it's
sort
of
week-to-week.
But
what
we
feel
pretty
comfortable
with
that
is
that
we
will
be
at
25
sites by
end
of
this
month
basically.
So,
it's going
to
take
time
for
these
to
start
the
utilization.
But
I
think
that
once
the
installation
is done,
I
think
we
will
start
to
– you will start to see
utilization
slowly
going –
starting
in
the
second
quarter
and
some
of
it
you
will
see
in
the
first
quarter
also.
So
so
far,
certainly,
January
was
a
better
month
than
any month
in Q4.
And
I
think,
we
do
see
increased
usage
in
Q1.
But
again,
let's
see
how
the
quarter
ends.
But
certainly,
we're
starting
to
see
slow
increases.
And
I
think
we're
pretty
confident
about
the
25
sites, and
we're
pretty
confident
that
from
here
forward,
as
long
as
there's
nothing
unusual
that
comes
about,
that
we
will
continue to see
increase
in
utilization
as
well
as
new
installs.
F
Frank Takkinen
Analyst, Lake Street Capital Markets LLC
Okay.
That's
helpful.
And
I
was
hoping
you
can
provide
a
little
update
on
Akumin. How
are
things
going
there?
Do
you
have
any
installs
mapped
out
for
them
in
2022
yet?
A
Arun S. Menawat
Yeah.
That's
a
very
good
question,
Frank,
because
Akumin
actually
is
stalled
at
the
moment.
There
have
been
a
number
of
changes
that
have
gone
on
at
Akumin.
And
so,
we
have
–
the
numbers
when
we
have
provided
to
you,
we
have
actually
not
included
that
contract
so
far,
but
we
have
replaced
those
with
other
contracts,
and
as
I
mentioned,
one
of
them
is
a
multi-site
agreement
with
a
group
called
[ph]
The
Paragon
Group
(00:57:59) that
is
installing
their
first
system.
In
fact,
in
the
next
–
it's
actually
being
shipped
now.
And
I
think
that
Akumin
will –
that
[indiscernible]
(00:58:16)
get
replaced
by
some
of
these
other
imaging
companies.
I
do
think
that
long term,
Akumin
is
a
very
good
potential,
particularly
because
they
now
also
own
certain
oncology
hospitals
where
this
technology
would
be
a
very
good
fit.
But
I
want to
make
sure
that
they
have
the
time
that
they
need
to
do
their
integration.
And
we
have
plenty
of
work
to
do
in
the
meantime.
F
Frank Takkinen
Analyst, Lake Street Capital Markets LLC
Okay.
That's
helpful.
I'll
stop
there.
Thanks
for taking
my
questions.
A
Arun S. Menawat
Thank
you.
Thank
you,
Frank.
Operator
Thank you. Our
next
question
comes
from
Brian
Gagnon
with
Gagnon
Securities.
You
proceed
with
your
question.
B
Brian Joseph Gagnon
Hi,
guys. Can
you
hear
me
okay?
A
Arun S. Menawat
Yes,
Brian.
Good
afternoon.
B
Brian Joseph Gagnon
You
talked
about the
pipeline,
you
talked
about
the
backlog,
but
can
you give
us
an
idea
of
how
many
signed
contracts
you
have
that
have yet
to
be
installed?
A
Arun S. Menawat
Yeah,
very
good
question.
My
best
guess
is
that
we
have
over
40
contracts
at
the
moment,
and
we
have
a
pretty
good
pipeline
in
addition
to
that.
B
Brian Joseph Gagnon
And
that
doesn't
include
Akumin
and
RadNet?
A
Arun S. Menawat
It
includes
RadNet.
I
think
you
will
see
the
other
sites
that
RadNet
will
come
on
stream
this
summer,
but
it
does
not
include
Akumin.
B
Brian Joseph Gagnon
Okay.
You
filed
the
shelf
today.
Any
plans
to
use
it
or
is
that
just
corporate
housekeeping
for
replacing
the
shelf
that
you
had
from
last
year?
A
Arun S. Menawat
Brian,
that's
a
very
good
question.
We
have
over
$67
million.
Actually,
let
me
turn
that
question
over
to
Rashed
to
answer.
R
Rashed Dewan
Chief Financial Officer, Profound Medical Corp.
Thank
you,
Arun.
Brian,
thank
you
for
the
question.
So
as Arun
said,
we
announced
that
we
have
over
$67
million
in
the
balance
sheet
as
of
end
of
the
year.
And
this
is
just
a
pure
housekeeping.
Our
previous
shelf
expired
November
2021.
So,
we
decided
to
update
the
shelf
this
morning.
We
just
believe
it's
a
prudent
thing
to
do
for
the
company
and
a lot
of other
companies
maintain
a
base
shelf.
B
Brian Joseph Gagnon
Okay.
Got
it.
Reimbursement,
and
I
think
you
said
$8,000
per
procedure.
Wasn't
that
$7,400
last
quarter?
What
changed?
And
then,
I
want
to
have a
couple
of questions
about
reimbursement.
A
Arun S. Menawat
Sure.
So
we
-as
you
know,
when
we
started
the
program,
we
did
– we
also
were
learning
how
to
price
it
properly.
So
in
2020
and
2021,
there
were
certain
agreement
that
were
in
that
$7,000
to
$7,500
range.
But
every
agreement
has
been
updated
and
every
new
agreement
is
over
$8,000
per
patient
at
this
point.
B
Brian Joseph Gagnon
That's
great.
Okay.
So
on
reimbursement,
congrats,
it
sounds
like
you're
making
very
good
progress
with
the
CPT
code.
And
are
you
getting
good
reimbursement
from
the
ones
that
are
in
the
hospital
today?
And
then,
if
you
would
layer
into
that,
any
success
you're
having
from
commercial
payers
and/or
other
government
systems
for
reimbursement
and
what
your
thoughts
are
there?
A
Arun S. Menawat
Yeah.
So
Brian,
with
respect
to
using
the
C
code,
it
is
– has
worked
out.
The
strategies
that
we
articulated
early
– more
than
a
year
ago,
I
think,
in
2021
certainly
worked.
The
average
payment
to
the
hospital –
and
first
of all,
there
are
at
least 10
hospitals that
have
been
doing
it.
So,
I
think
that
there
is
sufficient
volume
there.
And
the
average
payment
is
in
the
range
of
$12,500,
which
we
think
is
the
right
place
to
be.
So,
we're
pretty
happy
with
that.
And
with
respect
to
other
payers,
actually,
there are
two
things.
One
is
certainly,
there
are
a
number
of
private
payers,
and
most
– many
times,
the
hospitals
are
looking
for
preauthorization,
and
generally,
that
strategy
is
working.
But
the
one
that
actually
I
haven't
mentioned
is
that
in
number
of
cases –
in
certain
number
− some
of
our
hospitals
have
actually
been
authorized
by
the
Veterans
Administration
also
and
they
are
paying
full
amount.
So
for
example,
one
of
the
hospitals
on
the
East
Coast
has
been
fully
authorized
by
veterans
already,
which
normally,
veterans
sort
of
lags
behind
everything
else.
There's
another
hospital
in
the
West
Coast
that
is
fully
operational
and
treating
veterans
patients.
We
have,
in
fact,
veteran
−
one
of
the
veterans
hospitals
that
is
an
opinion-leading
veterans
hospitals
in
Cincinnati,
we
have
a
contract
with
them.
That
system
will
be
going
in
this
summer
in
the
hospital
itself
and
we
are
pleased
that
the
veterans
are
getting
served
early
since
this
is
a
older
men
disease.
And
we
have
a
couple
of other
hospitals
that
have
applied
for
their
local
authorization
and
the fact
that
we've
already
established
a
few
hospitals
that
are
getting
it,
we
are
pretty
optimistic.
So,
I
think
we
have
not
talked
about
veterans
before,
but
yeah,
that
is
another
one
that
we
see
− we
are
pretty
happy
to
see.
B
Brian Joseph Gagnon
Arun,
can
you
give
us
a
sense
as
to
what
the
VA
will
be
paying
per
procedure
at
these
hospitals?
And
is
that
an
indication
of
what
reimbursement
could
look
like
in
the
future
from
other
government
entities
and/or
commercial?
A
Arun S. Menawat
Yeah.
So
I
think
at
the
moment,
from
the
best
we
can
push
people
together,
it's
well
over
$20,000
per
patient
that
VA
is
paying.
I
think
to
your
other
question,
Brian,
the
C code
is
probably
a
good
parallel
because
usually,
C codes
are
developed
based
upon
the
relative
value
units
when
the
CMS
works
on
those,
and
they
sort
of
adjust
those
numbers
annually
based
upon
the
costs
that
they
see
at
hospitals.
So,
I
think
if
that
– that
probably
is
the
best
surrogate
that
we
can
see.
And
if
they
are
paying
the
$12,500,
that
is
not
a
bad
place
to
be.
B
Brian Joseph Gagnon
Okay.
And
last
question
for
me,
with
over
40
contracts
signed,
do
you
have
enough
people
and
teams
in
place
to
do
the
installs
and
get
through
that
group
this
year?
And
it's
only
early
March,
and
you
talked
about
a
very
strong
pipeline.
So,
does
that
mean
that
you're
going
to
be
trying
to
catch
up
with
some
of
these
installs,
and
the
numbers
that
we
see
today
for
install
are
just
very
low
to
where
they'll
be
12
months
from
now?
A
Arun S. Menawat
Yeah.
We're
working
on
that,
Brian. We
are
adding
sales
team.
So
far,
it
has
been
sort
of
senior
team,
Abbey,
Mathieu,
and
in
some
cases,
myself,
where
we
sort
of
did
the
initial
evangelical
sales.
But
now,
with
Ken
joining
us,
he's
already
helped
put
together
a
sales
and
marketing
organization,
adding
professionals
to
be
able
to
service
the
installed
base
and
to
create
a
disciplined
model
for
new
sites.
So,
we're
adding
people
in
the
field.
Same
thing
on
the
service
side,
and
also
our
manufacturing
team
has
been
evaluating
all
of
the
supply
side.
We
had
a
very
good
conversation
with
our
board
about
that
today
this
morning
that
we
are
tracking
and to
make
sure
that
we
have
all
the
supplies
that
we
need
to
be
able
to supply
the
disposables,
in
particular.
And
we
feel
– so
far,
we
don't
have
a
lot
of
cushion
in
our
system
at
the
point
– at
this
moment,
but
we
do
believe
we
will
be
able
to
service
the
agreements
that
we
are
signing.
B
Brian Joseph Gagnon
Excellent.
Thank
you
very
much. Look
forward to
what
comes
next.
A
Arun S. Menawat
Thank
you,
Brian.
Operator
Thank
you.
Our
next
question
comes
from
Ben
Haynor
with
Alliance
Global
Partners.
You
may
proceed
with your
question.
B
Benjamin Haynor
Analyst, Alliance Global Partners Corp.
Good
afternoon,
guys.
I'll
be
quick,
just
a
couple
from
me.
You
mentioned,
Arun,
the
utilization
of
HIFU
and
cryoablation
and
how
TULSA,
if
I
heard
you
correctly,
has
already
kind
of
surpassed
that.
Do
you
have
an
idea
of
how
many
HIFU
and
cryoablation
installs
are
out
there
at
present?
A
Arun S. Menawat
Ben,
so
what
we
are
–
our
future
is
really
about
number
of
patients
treated
in
the
end,
and
we
will
– we
have
not
made
the
specific
number
public,
but
we
will.
That's
our
plan
to
do
that,
as
the
numbers
get
to
a
predictable
level,
if that's
the
only
thing
that's
preventing
us.
I
know
that's
not
your
question,
but
I
think
that's
an
important
thing
to
mention,
is
that
it's
just
that
with
this
COVID,
the
unpredictability
has
been
the
reason.
But
as
we
get
to
these
higher
installed
base
and
the
pandemic
effect
continues
to
subside
and
we
get
to
the
predictable
level,
we
will
make
that
public
so
that
it's
really
easy
to
track
our
company's
progress.
But
what
we
did
was
we
looked
at
the
government
databases.
And
so,
we
think
that
those
numbers
are
in
the
400,
500-patient
range,
in
fact.
And
so,
we
think
that
for
us
to
get
into
the
range
of
that
kind
of
run
rate
within
the
first
two
years,
and
the
two
years
have
been
pandemic-driven
two
years,
we
think
that's
pretty
good,
especially
as
I
said,
I'm
not
happy
with
the
37%
year-over-year
growth,
but
that's
kind
of
where
we're
coming
from.
It's
just
to
put
a
perspective
in
place.
And
I
think
the
more
important
point,
Ben,
is
that
it
is
because
of
that
flexibility
of
the
technology
that
it
can
be
used
in
high
risk
patients
and
lower
risk
patients.
And
as
I
mentioned
in
the
product
development
remark
that
we
will
want
the
thermal
boost
cleared
by
the
FDA.
We
will
actually
be
able
to
treat
patients
where
they
may
have
a
little
bit
of
involvement
beyond
the
prostate.
I
think
that's –
so,
I'm
trying
to
triangulate
then
make
sure
that
we
don't
miss
anything
as
we
drive
adoption
of
our
technology,
and
that's
the
reason
why
I
kind
of
mentioned
that
those
points
that
we,
from
a
benchmark
perspective,
we
are
doing
pretty
good.
And
I
think
this
year,
we
should
be
able
to
exceed
all
of
those,
and
thereby,
we
can
start
to,
for
the
first
time,
as
you
may
have
noticed,
I've
mentioned
that
we
are
poised
to
become
one
of
the
mainstream,
at
least,
that's
what
we
believe,
and
this
is
what
the
data
is
telling
us.
And
the
fact
that
reimbursement
is
coming
along,
the
fact
that
the
clinical
data
is
there,
the
fact
that
we
can
find
– we
are
on
track
with
CPT,
all
of
this
is
sort
of
telling
us
that,
yeah,
we've
got
a
unique
technology
that
can
be
mainstream.
B
Benjamin Haynor
Analyst, Alliance Global Partners Corp.
Yeah.
[ph]
That sounds really great (01:11:16).
And
also,
what
[ph]
I was
partially (01:11:17)
getting
at
there
is
the
number
of
HIFU
and
cryoablation
installs
that
are
out
there,
presumably
if
there's
X
hundred
centers
that
are
doing
these
HIFU
or
cryoablation
cases,
they'd
obviously
be
candidates
for
TULSA-PRO.
Do
you
have
an
idea
of
how
many
folks
out
there
are
doing
those,
right,
in
terms
of
center...
A
Arun S. Menawat
Yeah. Yes. I mean, I
– that's
right.
And
I
think
there
are
–
of
the
centers,
and
particularly as
we
go
to
the
bigger
numbers,
I
think
you
will
– you
are –
I
can
tell
you
we
have
had
a
couple
of
sites
that
were using
FLA
or
laser
fiber
that
switched
to
TULSA.
I
can
tell
you
there
are
at
least
a couple
of
sites
that
were
using
HIFU
that
have
switched
to
TULSA.
So,
it's
early
stage.
So,
I
think
we
have
to
be
real.
But
I
do
think
that
–
and
there
are –
there
is
at
least
one
site
where
they're
using
HIFU
for
that
very
localized
– if
there
is
a
patient
with
one
little
cancer
in
one
place,
they
are
still
using
HIFU
technology
because
that
technology
really
does
fit
that
type
of
patient.
But
for
other
type
of
patients,
all
the
rest
of
them,
it
sort
of
has
increased
their
practice
because
now,
they
can
treat
a
larger
variety
of
patients.
And
so,
they're
using
both
technologies.
B
Benjamin Haynor
Analyst, Alliance Global Partners Corp.
Okay.
That makes
sense.
And
then,
just
lastly
for
me,
now
that
you
guys
have
reached
the
big
time
with
the
TULSA-PRO
heading
to
Tulsa,
I
mean,
is
there
any
differential
that
you
expect
in
terms
of utilization
of
these
more
rural
centers
with
kind
of
a
feeder
model
versus
kind
of
the
centers
that
you've been
installed in so far?
A
Arun S. Menawat
Yeah.
Right.
No,
I –
as
I
mentioned,
Ben,
I'm
pretty
excited
about
that
possibility.
I
think
[ph]
The
Paragon
Group (01:13:21)
understands
the
model
very
well.
I
think
that
we
have
–
we
haven't
really
seen
the
best
implementation
of
that
model
yet.
I
know
the
site –
[indiscernible]
(01:13:40),
for example,
is
starting
to
do
that.
And
I
think
they
are –
they're
going
to
install
the
other
systems
later
this
year
and
I
think
they
will
get
there.
But
I
think
this
particular
one,
I
think
they
are
looking
for
utilization
on
multiple
days.
So,
a
little
bit
cautious
and
wait
till you
see
how
it
goes.
B
Benjamin Haynor
Analyst, Alliance Global Partners Corp.
Sure.
A
Arun S. Menawat
But
I
think
certainly,
that
concept
is
intact
and
we
just
need
to
validate
that
with
this
site.
And
if
it
does,
I
think
that
will
be
a
very
big
topic
for
us.
B
Benjamin Haynor
Analyst, Alliance Global Partners Corp.
Excellent.
Well,
I mean,
it sounds
like
you
guys
have
made
a
lot
of progress
on
the
things
that
you
can
control,
so
congrats
on
that.
And
I'll
leave
it
there
and
thanks
a lot
for taking
the
questions,
gentlemen.
A
Arun S. Menawat
Thank
you.
Thank
you
so
much,
Brian –
thank
you
so
much,
Ben.
Operator
Thank
you. And
I'm
not
showing
any
further
questions
at
this
time.
I
would
now
like
to
turn
the
call
back
over
to
Dr.
Menawat
for
any
further
remarks.
A
Arun S. Menawat
Thank
you.
I
know
Aaron
is
on
the
call.
Aaron,
if
you
wanted
to
say
something,
please
go
ahead.
Aaron?
Okay.
So
if
there
are
no
other
questions,
thank
you
so
much
for
listening.
Thank
you
for
the
questions.
And
I
hope
that
we
will
be
able
to
have
a
pretty
good
Q1
and
be
able
to
report
on
that
for
you
in
the
Q1
call.
Thank
you
so
much.
Have
a
great
evening.
Operator
Thank
you.
This
concludes
today's
conference
call.
Thank
you
for
participating.
You
may
now
disconnect.
Hello. Thank you for standing by and welcome to the Profound Medical Q4 and Full-Year 2021 Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions]
I would now like to hand the conference over to your speaker today, Stephen Kilmer, Investor Relations. Please go ahead.
Thank you. Good afternoon, everyone. Let me start by pointing out that this conference call will include forward -looking statements within the meaning of applicable securities laws in the United States and Canada. All forward-looking statements are based on Profound's current beliefs, assumptions and expectations, and relate to, among other things, expectations regarding the efficacy of the company's treatment technologies, results of future clinical trials, the ability to obtain coding and/or reimbursement from third-party payers, anticipated financial performance, business prospects, strategies, regulatory developments, market acceptance and future commitments. Such statements involve known and unknown risks and uncertainties and other factors that may cause actual results, performance or achievements to be materially different from those implied by such statements. No forward-looking statement can be guaranteed.
Listeners are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this conference call. Profound undertakes no obligation to publicly update or revise any forward-looking statement whether as a result of new information, future events or otherwise, other than as required by law.
For the benefit of those who are new to the Profound story, I would like to also take a moment to summarize our business. Profound develops and markets customizable incision-free therapies for the ablation of diseased tissue. We are currently commercializing TULSA-PRO, a technology that combines real-time MRI, robotically-driven transurethral ultrasound and closed-loop temperature feedback control. The technology is designed to provide customizable and predictable radiation-free ablation of a surgeon-defined prostate volume while actively protecting the urethra and rectum from – to preserve the patient's natural functional abilities. TULSA-PRO is CE marked, Health Canada-approved and 510(k) cleared by the FDA.
In the US, we employ [indiscernible] (00:02:26) recurring revenue model for TULSA-PRO, whereby we charge customers around $8,000 on a per procedure basis for TULSA-PRO consumables, lease of medical devices and services associated with extended warranties. Outside of the United States, we also primarily deploy a pay-per-procedure model, but we also sell capital and consumables separately if the situation warrants that.
We are also commercializing Sonalleve, an innovative therapeutic platform that is CE marked for the treatment of uterine fibroids and palliative pain treatment of bone metastases. Sonalleve has also been approved by the China National Medical Products Administration for the non-invasive treatment of uterine fibroids, and has recently obtained FDA approval under a Humanitarian Device Exemption for the treatment of osteoid osteoma. The business model for Sonalleve systems is currently a onetime sale capital equipment.
On the call today representing the company are Dr. Arun Menawat, Profound's Chief Executive Officer; and Rashed Dewan, the company's Chief Financial Officer.
With that said, I'll now turn the call over to Rashed.
Good afternoon, everyone, and welcome to our fourth quarter and full-year 2021 conference call. On behalf of the management team and everyone at Profound, I would like to thank you for your ongoing interest in our company. For those of you who are shareholders, we appreciate your continued interest and support.
I will turn the call over to Arun in a moment for an update on our commercial activity. However, before I do, I would like to provide a brief update on our fourth quarter 2021 financial results. To streamline things, all of the numbers we will refer to have been rounded so they are approximate. For the three-month period ended December 31, 2021, the company recorded revenue of $1 million, down from $2.9 million in the fourth quarter of 2020. Despite COVID headwinds, recurring revenue increased 67% from $600,000 in Q4 2020, reflecting the success of our ongoing rollout of TULSA-PRO in the United States. However, that's more than offset by the fact that there were no onetime capital equipment sales in Q4 2021 compared to $2.3 million recorded in Q4 2020.
Total operating expenses in the 2021 fourth quarter, which consists of R&D, G&A, and selling and distribution expenses, were $10.2 million, an increase of 69% compared with approximately $6.1 million in the fourth quarter of 2020. Breaking that down further, expenditure for R&D increased 87% on a year-over-year basis to $4.7 million. This was primarily driven by increased spending on R&D initiatives for new designs, technology improvements and different magnet compatibility, options awarded to employees, additional head count, and increased travel for offsite MRI testing.
G&A expenses increased by 80% to $3.2 million due to options awarded to employees, increased insurance costs, increased legal and accounting fees, increased license costs for the enterprise resource planning and customer relationship management software, and an overall increase in general expenses as offices continue to reopen from COVID-19 restrictions. Finally, selling and distribution expenses increased by 32% to approximately $2.3 million.
Overall, the company recorded a fourth quarter 2021 net loss of $10.2 million or $0.49 per common share, compared with a net loss of $7.5 million or $0.38 per common share for the same three-month period in 2020. As at December 31, 2021, Profound had cash of $67.2 million.
With that, I will now turn the call over to Arun.
Thank you, Rashed. Before getting started, I would like to take this opportunity to congratulate Rashed on his promotion to CFO. As referenced in today's press release, this formalizes the additional responsibilities that he took on when Aaron Davidson transitioned to SVP, Corporate Development last spring.
Speaking of Aaron, it is bittersweet for me to announce that he will finish his employment with Profound at the end of March but will be available as needed on a consulting basis. I will miss his daily presence and wise counsel but also wish him well as he begins his well-deserved retirement.
With that, there's a lot to talk about today. We're all tired of talking about COVID and no one is happier that its impact is finally subsiding than the Profound team. As we analyze our data, our recurring revenues only grew by 37% year-over-year, and that was primarily through utilization at 14 sites that operated throughout the year. Even though we had contractual agreements to install over 30 systems last year, it was not until late in Q4 that finally, we're able [ph] to begin (00:09:05) new installs again in US. This finished the year with 17 sites in US and 21 worldwide. Our international business, that primarily comprised of capital sales in Asia, was effectively non-existent as our team was not even able to visit the country.
That was 2021, but new installs are continuing in Q1 2022, and we fully expect to achieve an installed base of 25 systems in the US by end of the current quarter, bringing our worldwide installed base to [ph] 29 (00:09:54). Similarly, we're beginning to see more activity in the international markets as a few of the capital projects have been revived, both suggest a faster growth in recurring as well as total revenue in 2022. In spite of the macro environment in 2021, there were many positive accomplishments that also bode well for 2022 and beyond.
As you know, we're targeting three major types of end users: early adopters, independent imaging center [ph] companies (00:10:38), and opinion-leading teaching hospitals. That strategy has essentially worked. Most notably, we are already in 7 of the top 15 opinion-leading US hospitals, including the prestigious institution we announced earlier this week.
In addition, I'm pleased to share that we now also expect to launch TULSA programs in less populated states, including the Southwestern States, and appropriately, a TULSA system is being installed in Tulsa, Oklahoma. I'm particularly excited about this one as they will use the imaging center model of having multiple [ph] urologists (00:11:30) bring their patients to one site and drive utilization.
Our clinicians continued to utilize the flexibility of TULSA-PRO to treat an unrivaled variety of patients. In the fourth quarter of 2021, the majority of patients treated with TULSA, about 85% had treatment-naïve localized prostate cancer, with another 12% receiving [indiscernible] (00:12:02) TULSA after prior radiation failure or failure after other types of therapy, and three percent had BPH but no cancer. Of the patients with prostate cancer, approximately 75% had intermediate risk localized prostate cancer, another 10% were high risk, and 15% were low risk.
In terms of treatment plans, approximately 38% were customized whole gland, where physicians targeted 95% of the gland, but precisely carved out margins at the sphincters to save continence, nerve bundles to save erectile function, or even the ejaculatory ducts, when possible, to save vital fluid. Another 36% had large subtotal ablations covering more than half their prostates, and 26% had more [ph] focal laser ablations (00:13:16), meaning [indiscernible] (00:13:19).
This quarter, the largest prostate treated with TULSA in the US was 130 cc, whereas the smallest was only 15 cc. The simple fact is that no other established or emerging technology can safely and effectively treat as many different prostate disease patients as TULSA have done. Based on this and prior data, we believe that TULSA has unique potential to capture a meaningful portion of the overall prostate disease market.
In terms of that long-term potential, if one assumes an average price of $8,000 per procedure and 250,000 prostate cancer cases annually in the US, that translates to a total addressable US market of $2 billion. If one were to add a small subset of what we call the extreme BPH cases, patients with very large prostates who would otherwise need a simple prostatectomy, the market size effectively increases to over $5 billion. Of course, TULSA will not capture this entire market, but these numbers give us an idea of how significant the opportunity is based upon how the product is being used today.
For us, 2021 was about establishing that beachhead, a foundation to ultimately capture a meaningful portion of that market opportunity. Although growth in the US has been impeded due to the pandemic, medical technology databases report that in 2021, the number of patients treated with [indiscernible] (00:15:31) and cryoablation was similar to the number of patients treated with TULSA. Based on these data, we believe we have already achieved a treatment rate similar to that of other ablative technologies that have been used for more than a decade.
Taken together, we believe that TULSA not only has the potential to become the leading ablative therapy, but given that TULSA has been used to treat patients with such wide variety of prostate diseases, we see TULSA becoming a primary modality of choice in the future.
And that provides a good segue to our sponsored CAPTAIN trial, which treated its first patient in January. We expect CAPTAIN, which stands for A Comparison of TULSA Procedure vs. Radical Prostatectomy, or RP for short, in Participants with Localized Prostate Cancer, will be performed at eight or more sites in the United States and two sites in Canada.
To date, six sites have been activated and are currently recruiting patients. Notably, this is the first Level 1 study ever conducted comparing an emerging technology, TULSA in this case, head-to-head with RP in men with prostate cancer. CAPTAIN will compare the safety and efficacy of the TULSA procedure with RP in men with organ-confined, intermediate-risk, Gleason Score 7 prostate cancer, with the goal of demonstrating that the efficacy of the TULSA procedure is not inferior to RP. The trial also aims to demonstrate TULSA's superior quality of life outcomes.
The post-market CAPTAIN trial will enroll 201 patients with 134 patients randomized to receive one or two TULSA procedures and 67 patients randomized to receive RP. The trial's primary safety endpoint is the proportion of patients who preserve both erectile potency and urinary continence at one year after treatment. CAPTAIN's primary efficacy endpoint is a proportion of patients who are free from any additional treatment for prostate cancer by three years after treatment. Secondary endpoints include comparison of rate of complications, cost effectiveness, and timing of the return to baseline activity with long-term follow-up data gathered for up to 10 years after treatment.
We are conducting the CAPTAIN trial to increase awareness and adoption of TULSA-PRO and to support coverage by payors. And as I mentioned in our last call, we are awaiting full data in the FARP trial, a single-site Level 1 study conducted at Oslo University Hospital that compared whole gland RP to focal therapy using either HIFU or TULSA. The robotic RP arm of this study is similar to that of our CAPTAIN trial, and we are very encouraged by the initial results of that trial, as well as by the fact that Oslo University Hospital purchased the TULSA system from us for commercial use, identifying it as the clear technology of choice. Should the RP outcomes in CAPTAIN match what was seen in FARP, we believe there is potential to demonstrate clearer superiority, even though the CAPTAIN trial has been designed for a non-inferiority endpoint.
Another feature of TULSA-PRO that we believe will significantly increase its adoption is the system's compatibility with the US installed base of MRI machines. To date, we have been working with two MRI manufacturer partners, Siemens and Philips, to commercialize TULSA-PRO. Just this week, we were pleased to confirm TULSA-PRO's compatibility with GE, the remaining of the big three medical technology companies in the global MRI space, and the biggest of the big three in the United States. Together, Siemens, Philips, and GE comprise more than 90% of the installed base of MRIs in the US. This is an important achievement that has already yielded exciting results.
Shortly after confirming TULSA-PRO's compatibility with GE, we signed the first agreement for a TULSA-PRO system interfaced with a GE scanner with Boston's renowned Brigham and Women's Hospital. Construction agreement has been signed since then with an imaging center in Florida.
I'll now turn to our ongoing reimbursement strategy which is a critical priority for Profound. I'm very excited to share that our TULSA systematic review paper has been published online by the Journal of Endourology. It is available on our website or you can ask Steve Kilmer to send it to you after this call. Publication of this paper is a key milestone as it completes the clinical requirements to qualify to file a CPT-1 application. We have met with the relevant societies since the publication and we remain on track to be able to file our application this summer for consideration by the AMA during their fall 2022 meeting.
Although there's no guarantee of approval, should the AMA approve our application at their fall meeting, this would be an incredible accomplishment as the CPT code would be effective by January 2024. Another reason this paper is one of Profound's most important publications to date is that it generates the highest level of evidence available in support of TULSA, in this case Level 2a. The paper itself systematically consolidates all of the available evidence on TULSA-PRO into a single, peer-reviewed manuscript and supports that TULSA is safe and effective for treating primary prostate cancer. The evidence also supports the use of TULSA to treat recurrent prostate cancer and locally advanced prostate cancer, as well as the system's ability to simultaneously treat prostate cancer and alleviate lower urinary tract symptoms normally caused by BPH.
In addition, the paper confirms that TULSA is customizable, offering a treatment plan that can be tailored to match individual disease characteristics and patient preferences. Importantly, this represents a shift from the focal versus whole-land paradigm established by other ablative modalities.
Finally, the paper concludes that TULSA is a single, flexible tool that can treat multiple indications, including those where minimally invasive alternatives are limited. In addition to its real-time MR visibility and thermometry that differentiates TULSA from other ablative modalities, we believe the system's customizability will enable patients to achieve better outcomes in the real world. We're looking forward to using this paper as a tool to support system launches and utilization initiative and to initiate and inform conversations with physicians and patients so they can decide on treatment options and plans.
And last but certainly not least, you know how proud I am of the Profound team. Abbey and Hartmut are leading sales, and Mathieu and Golddy are leading product management. Mike has advanced reimbursement efforts significantly, and Jacques has developed the relationships with MR companies. All in all, this is a world-class team.
And now, I'd like to extend a warm welcome to Ken Knudson, our new Chief Commercial Officer, who will be leading initiative for Profound's worldwide sales, marketing, and reimbursement activities for both TULSA and Sonalleve. Ken's executive management career spans more than 25 years, during which he has accelerated growth for emerging start-ups and Fortune 500 companies alike.
Ken joins us from Perineologic, a company pioneering a new and disruptive approach to prostate cancer biopsy, where he served as CEO. He previously served as Executive Vice President of Global Sales and Marketing for Boston Scientific Corporation, where he helped drive annual sales of SpaceOAR Hydrogel, a biodegradable material that is injected between the rectum and prostate to decrease patient exposure to rectal radiation. Ken has extensive and demonstrable record of accomplishments in helping to commercialize new medical technologies in urology and has an in-depth knowledge of the men's and women's health markets. Please join me in welcoming Ken to the team where he will be invaluable as we continue to execute our commercial strategy.
To summarize, although our growth was hampered by COVID, we believe we are at the verge of accelerated growth, with our installed base expected to increase significantly by quarter's end. Not only does the TULSA opportunity remains intact but the substantive number of complex and unique cases build our confidence in capturing a broad portion of the total prostate cancer cases as well as a material segment of BPH cases.
We are thrilled that TULSA is now compatible with all three major manufacturers of MRI scanners, GE, Siemens and Philips, increasing the span of our market access. Our reimbursement strategy is working, and we are excited about the expected filing of CPT-1 application in 2022. We are pleased to have initiated our sponsored CAPTAIN clinical trial, which should produce initial readout in Q4 2023.
This ends our prepared remarks for today. With that, Rashed, Arun and I are happy to take any questions you might have. Operator?
Thank you. [Operator Instructions] Our first question comes from Frank Pinal with Jefferies. You may proceed with your question.
Hi, guys. Thank you for taking the question. I guess off the top, you touched on installs increasing significantly in the quarter. So, wondering if you could sort of unpack that a little bit? Was there sort of a speed-up there in the conversion process? And then on the capital side, with capital being lower in the quarter, was that mostly due to COVID? I think it was. How is that currently trending? Are you seeing COVID headwinds kind of increase or are they leveling off as we're now, I guess, several weeks into 2022? And I have a follow-up after that and I apologize for asking about COVID.
No. No problem. I appreciate your questions. So, I think to your first question, yes, we are seeing an accelerated installation rate. We did see it a little bit in Q4, but we are certainly seeing it in Q1. And I think that unless there is another resurgence of this pandemic, I think based upon our pipeline, I do think that we will continue to increase the installed base this year. Which, by the way, gives us a lot more confidence on where we're going this year as compared to the uncertainties that we faced last year. So yeah, I think generally speaking, I think just again to be cautious, all the installed base is going to be meaningful in – just that fast. They're all going to take their time growing and so on. But I do think things are happening at much faster pace than they did in Q1.
To your second question, in Q4, there was zero capital revenue. Absolutely nothing. And a good bit of it is that we have – we identified a certain set of countries in Asia in particular where we feel that we can build scalable models where we can create a profitable revenues and really create long-term growth. And among those countries, particularly were China, Japan, and we have not even been able to visit those countries. And so, things have been delayed there. However, as I mentioned in the prepared remarks, we do see a revival. I think it's going to be slow, but I think we will start to see capital revenues trickling in. But I do think in the second half of 2022, you will start to see some of the programs that were delayed in 2021 will come back. And we are certainly optimistic from that perspective that the top line growth will also be there from capital revenue. So, please feel free to ask the next question.
Thank you for that, Arun. I guess picking up on the – on sort of the regional aspect there, you commented during the call that you were spreading out regionally within the US. I was wondering if you could just unpack that a little bit. Are there regions that you're currently focusing a little bit more on right now? And so, and how do you see that strategy evolving as you play forward say, over the next year or two? And just quickly, just one data point, just if you can – volumes during the quarter, I'm not sure if I heard it. If I missed it, if you could just touch on that. That would be helpful. Thank you so much.
Yeah, absolutely. So first, with respect to the geography within the United States, there are two aspects. One is that we have an eye towards increasing obviously utilization because that's what translates into revenue for us. But we also have a eye towards really qualifying for CPT application. And one of the things that AMA looks for is how widely is the product being used and who is using it. So, on one end of the spectrum, our product is being used by leading hospitals and that is an important criteria. On the other end of the spectrum, they want to see that it is being used by mainstream, even in rural areas as well. And so, part of our objectives has been to satisfy those requirements also.
But the interesting thing is that at – Abbey and the team were able to partner with a new group called the Paragon Group in the southern Midwest, and it is turning out to be an amazing group. I'm really excited about them actually. So, they are placing – they will be placing systems in Louisiana, Missouri, even certain rural parts of Texas, and then the one that I mentioned in Tulsa, Oklahoma. So, we're now – we have presence now in upper northeast, lower northeast. We certainly, as you know, we have presence in Florida quite a bit. We have presence in Texas, growing presence in Arizona, California, but now we are adding presence in these lower midwestern states. We do have in our pipeline upper Midwest also.
So that's the plan, and I think it covers – it sort of is very methodically planned and it covers our abilities to increase the utilization. It reduces the amount of travel our patients have to do. One of the things that we analyzed last year is really exactly where our patients are coming from. And I think that the installed base is beginning to reflect to where the patient population resides. Because what we saw in 2020 and 2021 was that over 75% percent of our patients had to travel well over four hours to get to the Tulsa sites. So, I think this will help reduce that burden for our patients.
With respect to the numbers in terms of the utilization, we're in that range where September, October – sorry, October, November were actually not bad months for us. They were meshing with what we saw in September timeframe. Now, December was not a very good month at all. In fact, very, very quickly we had a – we saw significant delays and primarily driven by lack of anesthesia. So, our numbers I think compared to Q3 are up because you can see Q3 to Q4 numbers are, in terms of recurring revenues, are up quite a bit. But overall, it's still very, very lower. I think 37% growth in – at early stage is not enough, and we are certainly looking to do much better than that in 2022.
Great. Thank you so much. Take care, everyone.
Thank you.
Thank you. Our next question comes from Rahul Sarugaser with Raymond James. You may proceed with your question.
Good afternoon, Arun, Steve, and Rashed. And, Rashed, congratulations on your appointment as CFO. Arun, my first question is just drill a little bit further on the deployments and utilization rates. So, you talked about [ph] 25% (00:38:20) at the end of this quarter which I believe has quite well lined up with the pipeline you had talked about in a previous quarterly call. Can you give us a little bit more visibility into sort of how the pipeline has shaped up sort of beyond Q1 for deployments? And how should we also be looking at the annualized utilization rate? I believe it was around 60 procedures per year per installed device. Given that the [ph] bulk of (00:38:48) devices is not coming online, how should we be thinking about that average rate?
Yeah. Yeah. Rahul, we do have a very good pipeline. We continue to have a good pipeline. And particularly now that we have GE compatibility established, I think that pipeline will, in fact, continue to grow. We have not specifically given a number, but it is far bigger than our installed base. That might give you at least a general idea of how big it is. As you could tell from the significant amount of clinical information I provided, the fact that the existing sites are using this product for a variety of different types of patients. I think that message is coming through, and that is the key reason why pipeline is not a problem for us. Our surgeons really want to use this product.
With respect to the utilization itself, I think that is a very important question because I think that the utilization at the sites that we had, utilization in 2021, will continue. And if anything, I think there will be certain increases. And I think as the quarters go by, I think we'll have a lot more visibility in terms of how much the increase will be, because I can certainly tell you every site is looking to increase utilization. I just don't feel comfortable sharing just yet what is the rate going to be because they had a – it sort of just – the impact of COVID is just subsiding. And hopefully, I can be more transparent in the second quarter on that particular point.
But with respect to the new sites, which is, as you can see from the numbers, really half of the sites in Q2 will be new sites effectively. And I think, I do want to make sure that people recognize that it's not going to get to 60 sites – 60 utilization in one quarter. It's going to take their normal course, which last year, took about six to nine months to really get the sites to utilize them and train them and have them use the different types of patients so that they could understand the full potential. So, I think that unfortunately, I mean, it's just a transitionary phase that average utilization per site overall will actually be less in Q1, Q2 perhaps. But over the longer haul, it will be significantly higher, obviously. So, and once the installed base grows and the number of new installs, that ratio becomes much smaller than what it is today, then I think this phenomenon will go away, as you can imagine, [indiscernible] (00:41:56) on that. So, I hope that gives you some decent color into how we're seeing things.
Great. That's helpful and should help me out with our model. I want to switch a little bit, switch gear a little bit to data, you'd already put the data. And we have seen some recent data from Meridian and the data they presented – the [indiscernible] (00:42:19) data they presented at ASCO. Do you have any thoughts on that? And also because they're going after localized prostate cancer as well?
Yes. So, of course, we are, quite vigilant, and we certainly read all of the clinical information out there. And it's interesting that you mentioned this one because it – I think there are some strategic aspects to this and then there are certainly – I'll comment on some of the data. One of the things that is going on on the radiation side is that there are a couple of companies that are now selling MRI, real-time MR imaging-guided radiation treatment or SBRT treatment. And that in itself in some ways is kinship because we are the company that on this sort of on the other side saying real-time MRI is a good thing. And so, when another study shows that, hey, using real-time MRI is better than using real-time CT or CT for radiation treatment, I think you can clearly see the benefit of the imaging modality that we are using and that principle of using our MRI imaging modality I think translates to us also.
Now, having said that, I think if you look at their data, the publication, I'm just pulling it up as we speak here. What their data showed was that they're what they call GU toxicity, which is the main end point. It is basically going from 47% down to 22% using MRI. So, it's about half of what it is with SBRT. But think about the numbers, 47% toxicity to 22% toxicity. If you look at the TACT data, you would see [ph] equal and better (00:44:29) toxicity down to 6%.
So, as much as I think it's great to see using MRI, I think the TACT data and particularly this new study clearly shows another order of magnitude difference when TACT – when TULSA is used and there's no radiation, there's no impact of long-term impact of radiation because we use heat as our energy source. So, I don't know if that helps, but that's sort of a quick summary of how we interpret that data.
That's really helpful. Thank you. Thank you, Arun. And if you would indulge just one more question since we talked about radiation and we could switch a bit to the comparison to surgery as you referred to the CAPTAIN trial. We know that the FARP trial should be reading out sometime this summer. So just for us, how should we be thinking about interim readouts, when should we be expecting data from these trials, and particularly given sort of the interplay between FARP and CAPTAIN? That would be appreciated.
Yeah. Yeah. So, I think − so first of all, you're right. FARP, we hope to see full data this summer. For CAPTAIN at this point, our expectation is that RSMA 2023, which is typically in November, [ph] it will be (00:45:55) we'll have the first set of data. Because we're treating patients now, so the patients who are being treated this year and by that time by RSMA 2023, we should be able to complete full recruitment. So, there should not be any biases and all that. But that's all behind us and we're just monitoring the patients. But by that time, we should be able to show 6 to 12 months' data and if the statistics hold similar to FARP, we should be able to start to see differences as early as that.
That's terrific. Thank you very much. And I'll get back in the queue.
Thank you, Rahul.
Thank you. Our next question comes from Josh Jennings with Cowen. You may proceed with your question.
Hi, good afternoon. Thanks for taking the questions and appreciate all your help over the years and good luck in your next chapter. And, Rashed, congratulations on the official – getting to see you officially. Arun, I was hoping to just ask about you mentioned capital projects reviving international equity. I just want to get a sense of how we should be thinking about the international channel in 2022. Any further details would be great.
Yeah, yeah. Josh, I know that's a great question. And I think what I can, in terms of providing more detail, what I can tell you is projects were delayed and maybe except for one or two here and there, generally nothing was cancelled. And even some of the installations on some of the sites that are installing MRIs or upgrading their hospitals in Asia, they were all delayed. And verbally, what we are hearing is things should be in fairly good shape in the second half of 2022. So, I think from that perspective, we are quite optimistic. And I think from the perspective that projects are not cancelled but just delayed is certainly the – positive. And I think the best I can share with you is second half of this year, we should see a revival of the capital revenue.
I guess the other detail, little detail that I can share with you is that in the last three, four months, we have certainly seen that the sites in Asia that are running, like in China or South Korea, that the number of patients that they have treated during these last three or four months has certainly increased in double digits. So, the fact that they are – there is some revival in terms of the patients treated, it is starting to show that they are coming on stream. And I think China, as you know, is really now remaining one of the few countries, and Japan, few countries that where travel is still incredibly restricted. But we are very hopeful that that will open in the second quarter and I personally plan to visit and really check this out so I can really, really provide much more concrete information. But I do think second half this year at the moment is a fair bet.
Great. Thanks for that. And just had a follow-up on US reimbursement landscape and just – I mean, are hospitals still having success submitting for payment for TULSA cases using the preexisting code or how is that fairing? Is it becoming more widespread?
Yes. Josh, we have had at least 10 hospitals that have used the C-Code. Pretty much all of the key hospitals have used it and pretty much everyone is getting paid. The average payment is approximately $12,500. And just as a comparison, the average payment for radical prostatectomy is just under $10,000 today. So, the $12,500 that the hospitals are getting paid is in the right realm from what we can tell. We continue to charge just a little over $8,000 per patient. And that fund, those moneys are coming from that $12,500 that they are receiving. And given the fact that the treatment is done in an MR suite, which is a lot less expensive than the operating suite, we believe that the bottom line for the hospitals is positive. At least that's the feedback we're getting. So, I think on that front, we're pretty, pretty happy with what we're seeing. And quite frankly, on the other side, where you will see the concierge service where we have these early adopters, people are paying the $30,000 and then they're flying, as I mentioned earlier, over 70% of the patients are literally flying to these sites to get treated.
Great. Thanks. So, just last questions on, just thinking about the TULSA-PRO system in its current form and just what is your team working on? Or when would we hear anything about the next-generation system and what type of enhancements are you pursuing? Thanks for taking all the questions.
Sure. Sure. That's a good question, Josh. So, we have actually introduced our new features in Europe already commercially. We have submitted some of these with the FDA. We think another three to six months we should be able to introduce these into the US. But there are a couple of features that are very interesting. One in particular that I want to mention is that, at the moment, if you are thinking about radical prostatectomy or surgical prostatectomy, usually it is done on patients who have what we call organ-confined disease, which is what I mentioned in the prepared remarks.
So, as long as cancer has not gone out of the prostate, you can do a radical prostatectomy. But in a number of cases, that cancer sort of rubs on the sides and there is maybe a millimeter or so involvement of the muscle tissue that is just outside of the prostate. And because we use the real-time MRI, physicians know where the boundaries are and physicians have a pretty good idea that they actually wanted to go beyond that capsule or the prostate boundary.
And so, we introduced a concept that we call thermal boost, meaning that in – if there is a region where the physician wants to go a millimeter or two beyond the prostate, that they can activate that thermal boost and they can actually kill that side, that section. There's a slight involvement of the muscle tissue, perhaps. And number of cases have been done. As I said, in Europe, it is now commercially available. It is very well received, by the way.
And the benefit here is that, again, you can tell we're very clinical data focused. And if you look at clinical data in radical prostatectomy, over 20% of the patients were in studies, it has been shown that they leave cancer behind in those edges. And so, this one particular feature gives us that potential. Obviously, we need to get more data and so on. But it certainly gives us the potential that we could, in fact, at some point, begin to treat patients who may have a little bit of that extra cancer that is there. And that – again, we will need long-term data for this, but physicians think that this is a very interesting new development that we are – that we have. It is commercial in Europe. We're in FDA in US and we hope to bring it out later this year in the US.
So, that's just one example. And I think you will see at least one more very interesting technology and we'll talk about it yet. We are discussing it with the FDA. But it is designed to make it more reproducible, and it is designed to reduce the treatment time, which already is pretty good, but it's designed to reduce the treatment time in the future.
Great. Thanks, Arun.
Thanks, Josh.
Thank you. Our next question comes from Frank Takkinen with Lake Street Capital. You may proceed with your question.
Hey. Thanks for taking my questions. Not sure if I missed it or not, but did you, by chance, to share how many installs have occurred so far in the first quarter? Just trying to get a feel for the lift from that 17 sites at the end of the year to get to 25 by the end of the quarter. How many of those are left to be installed yet in the last four weeks of the quarter?
Yeah. Frank, we have – we didn't provide that much granularity because it's sort of week-to-week. But what we feel pretty comfortable with that is that we will be at 25 sites by end of this month basically. So, it's going to take time for these to start the utilization. But I think that once the installation is done, I think we will start to – you will start to see utilization slowly going – starting in the second quarter and some of it you will see in the first quarter also.
So so far, certainly, January was a better month than any month in Q4. And I think, we do see increased usage in Q1. But again, let's see how the quarter ends. But certainly, we're starting to see slow increases. And I think we're pretty confident about the 25 sites, and we're pretty confident that from here forward, as long as there's nothing unusual that comes about, that we will continue to see increase in utilization as well as new installs.
Okay. That's helpful. And I was hoping you can provide a little update on Akumin. How are things going there? Do you have any installs mapped out for them in 2022 yet?
Yeah. That's a very good question, Frank, because Akumin actually is stalled at the moment. There have been a number of changes that have gone on at Akumin. And so, we have – the numbers when we have provided to you, we have actually not included that contract so far, but we have replaced those with other contracts, and as I mentioned, one of them is a multi-site agreement with a group called [ph] The Paragon Group (00:57:59) that is installing their first system. In fact, in the next – it's actually being shipped now. And I think that Akumin will – that [indiscernible] (00:58:16) get replaced by some of these other imaging companies. I do think that long term, Akumin is a very good potential, particularly because they now also own certain oncology hospitals where this technology would be a very good fit. But I want to make sure that they have the time that they need to do their integration. And we have plenty of work to do in the meantime.
Okay. That's helpful. I'll stop there. Thanks for taking my questions.
Thank you. Thank you, Frank.
Thank you. Our next question comes from Brian Gagnon with Gagnon Securities. You proceed with your question.
Hi, guys. Can you hear me okay?
Yes, Brian. Good afternoon.
You talked about the pipeline, you talked about the backlog, but can you give us an idea of how many signed contracts you have that have yet to be installed?
Yeah, very good question. My best guess is that we have over 40 contracts at the moment, and we have a pretty good pipeline in addition to that.
And that doesn't include Akumin and RadNet?
It includes RadNet. I think you will see the other sites that RadNet will come on stream this summer, but it does not include Akumin.
Okay. You filed the shelf today. Any plans to use it or is that just corporate housekeeping for replacing the shelf that you had from last year?
Brian, that's a very good question. We have over $67 million. Actually, let me turn that question over to Rashed to answer.
Thank you, Arun. Brian, thank you for the question. So as Arun said, we announced that we have over $67 million in the balance sheet as of end of the year. And this is just a pure housekeeping. Our previous shelf expired November 2021. So, we decided to update the shelf this morning. We just believe it's a prudent thing to do for the company and a lot of other companies maintain a base shelf.
Okay. Got it. Reimbursement, and I think you said $8,000 per procedure. Wasn't that $7,400 last quarter? What changed? And then, I want to have a couple of questions about reimbursement.
Sure. So we -as you know, when we started the program, we did – we also were learning how to price it properly. So in 2020 and 2021, there were certain agreement that were in that $7,000 to $7,500 range. But every agreement has been updated and every new agreement is over $8,000 per patient at this point.
That's great. Okay. So on reimbursement, congrats, it sounds like you're making very good progress with the CPT code. And are you getting good reimbursement from the ones that are in the hospital today? And then, if you would layer into that, any success you're having from commercial payers and/or other government systems for reimbursement and what your thoughts are there?
Yeah. So Brian, with respect to using the C code, it is – has worked out. The strategies that we articulated early – more than a year ago, I think, in 2021 certainly worked. The average payment to the hospital – and first of all, there are at least 10 hospitals that have been doing it. So, I think that there is sufficient volume there. And the average payment is in the range of $12,500, which we think is the right place to be. So, we're pretty happy with that.
And with respect to other payers, actually, there are two things. One is certainly, there are a number of private payers, and most – many times, the hospitals are looking for preauthorization, and generally, that strategy is working. But the one that actually I haven't mentioned is that in number of cases – in certain number − some of our hospitals have actually been authorized by the Veterans Administration also and they are paying full amount. So for example, one of the hospitals on the East Coast has been fully authorized by veterans already, which normally, veterans sort of lags behind everything else. There's another hospital in the West Coast that is fully operational and treating veterans patients.
We have, in fact, veteran − one of the veterans hospitals that is an opinion-leading veterans hospitals in Cincinnati, we have a contract with them. That system will be going in this summer in the hospital itself and we are pleased that the veterans are getting served early since this is a older men disease. And we have a couple of other hospitals that have applied for their local authorization and the fact that we've already established a few hospitals that are getting it, we are pretty optimistic. So, I think we have not talked about veterans before, but yeah, that is another one that we see − we are pretty happy to see.
Arun, can you give us a sense as to what the VA will be paying per procedure at these hospitals? And is that an indication of what reimbursement could look like in the future from other government entities and/or commercial?
Yeah. So I think at the moment, from the best we can push people together, it's well over $20,000 per patient that VA is paying. I think to your other question, Brian, the C code is probably a good parallel because usually, C codes are developed based upon the relative value units when the CMS works on those, and they sort of adjust those numbers annually based upon the costs that they see at hospitals. So, I think if that – that probably is the best surrogate that we can see. And if they are paying the $12,500, that is not a bad place to be.
Okay. And last question for me, with over 40 contracts signed, do you have enough people and teams in place to do the installs and get through that group this year? And it's only early March, and you talked about a very strong pipeline. So, does that mean that you're going to be trying to catch up with some of these installs, and the numbers that we see today for install are just very low to where they'll be 12 months from now?
Yeah. We're working on that, Brian. We are adding sales team. So far, it has been sort of senior team, Abbey, Mathieu, and in some cases, myself, where we sort of did the initial evangelical sales. But now, with Ken joining us, he's already helped put together a sales and marketing organization, adding professionals to be able to service the installed base and to create a disciplined model for new sites. So, we're adding people in the field. Same thing on the service side, and also our manufacturing team has been evaluating all of the supply side. We had a very good conversation with our board about that today this morning that we are tracking and to make sure that we have all the supplies that we need to be able to supply the disposables, in particular. And we feel – so far, we don't have a lot of cushion in our system at the point – at this moment, but we do believe we will be able to service the agreements that we are signing.
Excellent. Thank you very much. Look forward to what comes next.
Thank you, Brian.
Thank you. Our next question comes from Ben Haynor with Alliance Global Partners. You may proceed with your question.
Good afternoon, guys. I'll be quick, just a couple from me. You mentioned, Arun, the utilization of HIFU and cryoablation and how TULSA, if I heard you correctly, has already kind of surpassed that. Do you have an idea of how many HIFU and cryoablation installs are out there at present?
Ben, so what we are – our future is really about number of patients treated in the end, and we will – we have not made the specific number public, but we will. That's our plan to do that, as the numbers get to a predictable level, if that's the only thing that's preventing us. I know that's not your question, but I think that's an important thing to mention, is that it's just that with this COVID, the unpredictability has been the reason. But as we get to these higher installed base and the pandemic effect continues to subside and we get to the predictable level, we will make that public so that it's really easy to track our company's progress. But what we did was we looked at the government databases. And so, we think that those numbers are in the 400, 500-patient range, in fact.
And so, we think that for us to get into the range of that kind of run rate within the first two years, and the two years have been pandemic-driven two years, we think that's pretty good, especially as I said, I'm not happy with the 37% year-over-year growth, but that's kind of where we're coming from. It's just to put a perspective in place.
And I think the more important point, Ben, is that it is because of that flexibility of the technology that it can be used in high risk patients and lower risk patients. And as I mentioned in the product development remark that we will want the thermal boost cleared by the FDA. We will actually be able to treat patients where they may have a little bit of involvement beyond the prostate. I think that's – so, I'm trying to triangulate then make sure that we don't miss anything as we drive adoption of our technology, and that's the reason why I kind of mentioned that those points that we, from a benchmark perspective, we are doing pretty good. And I think this year, we should be able to exceed all of those, and thereby, we can start to, for the first time, as you may have noticed, I've mentioned that we are poised to become one of the mainstream, at least, that's what we believe, and this is what the data is telling us. And the fact that reimbursement is coming along, the fact that the clinical data is there, the fact that we can find – we are on track with CPT, all of this is sort of telling us that, yeah, we've got a unique technology that can be mainstream.
Yeah. [ph] That sounds really great (01:11:16). And also, what [ph] I was partially (01:11:17) getting at there is the number of HIFU and cryoablation installs that are out there, presumably if there's X hundred centers that are doing these HIFU or cryoablation cases, they'd obviously be candidates for TULSA-PRO. Do you have an idea of how many folks out there are doing those, right, in terms of center...
Yeah. Yes. I mean, I – that's right. And I think there are – of the centers, and particularly as we go to the bigger numbers, I think you will – you are – I can tell you we have had a couple of sites that were using FLA or laser fiber that switched to TULSA. I can tell you there are at least a couple of sites that were using HIFU that have switched to TULSA. So, it's early stage. So, I think we have to be real. But I do think that – and there are – there is at least one site where they're using HIFU for that very localized – if there is a patient with one little cancer in one place, they are still using HIFU technology because that technology really does fit that type of patient. But for other type of patients, all the rest of them, it sort of has increased their practice because now, they can treat a larger variety of patients. And so, they're using both technologies.
Okay. That makes sense. And then, just lastly for me, now that you guys have reached the big time with the TULSA-PRO heading to Tulsa, I mean, is there any differential that you expect in terms of utilization of these more rural centers with kind of a feeder model versus kind of the centers that you've been installed in so far?
Yeah. Right. No, I – as I mentioned, Ben, I'm pretty excited about that possibility. I think [ph] The Paragon Group (01:13:21) understands the model very well. I think that we have – we haven't really seen the best implementation of that model yet. I know the site – [indiscernible] (01:13:40), for example, is starting to do that. And I think they are – they're going to install the other systems later this year and I think they will get there. But I think this particular one, I think they are looking for utilization on multiple days. So, a little bit cautious and wait till you see how it goes.
Sure.
But I think certainly, that concept is intact and we just need to validate that with this site. And if it does, I think that will be a very big topic for us.
Excellent. Well, I mean, it sounds like you guys have made a lot of progress on the things that you can control, so congrats on that. And I'll leave it there and thanks a lot for taking the questions, gentlemen.
Thank you. Thank you so much, Brian – thank you so much, Ben.
Thank you. And I'm not showing any further questions at this time. I would now like to turn the call back over to Dr. Menawat for any further remarks.
Thank you. I know Aaron is on the call. Aaron, if you wanted to say something, please go ahead. Aaron?
Okay. So if there are no other questions, thank you so much for listening. Thank you for the questions. And I hope that we will be able to have a pretty good Q1 and be able to report on that for you in the Q1 call. Thank you so much. Have a great evening.
Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.