IceCure Medical Ltd (ICCM) Earnings Call Transcript & Summary

Good morning, and thank you for standing by. [Operator Instructions]. Please be advised that today's conference call is being recorded. I would now like to turn the conference over to Todd Kehrli. Please go ahead.

Thank you, operator, and welcome to IceCure Medical's conference call to review the financial results for the 12 months ended December 31, 2022, and to provide an update on recent operational highlights. We ask that you refer to this morning's press release and 20-F to review the audited 2022 year-end financial results. Participating on this morning's call are IceCure Medical's CEO, Eyal Shamir; and CFO and COO, Ronen Tsimerman. After the prepared comments, Eyal and Ronen will be available to address your questions. Before we begin, I'll take a moment to read a statement about forward-looking statements. This call and the question-and-answer session that follow it contain forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. Words such as expects, anticipates, intends, plans, believes, seeks, estimates and similar expressions or variations of such words are identified are intended to identify forward-looking statements. For example, we are using forward-looking statements in this presentation when we discuss the achievements we expect to accomplish as we continue to advance our growth strategy, our position -- positioning to make significant commercial advances in key markets, pursuit of regulatory approvals in various jurisdictions, expansion of clinical applications, release of results from our clinical trials, potential market adoption and future sales of IceCure's [ Medical ] and basic cryoablation technology, advancing regulatory and commercial strategies, strategic plans and our belief that we are well capitalized as to be on commercial opportunities to increase shareholder value. Because such statements deal with future events and are based on IceCure current expectations, they are subject to various risks and uncertainties and actual results, performance or achievements of IceCure could differ materially from those described in or implied by statements in this presentation. The forward-looking statements contained or implied in this presentation are subject to other risks and uncertainties, many of which are beyond the control of the company, including those set forth in the Risk Factors section of the company's annual report on Form 20-F for the year ended December 31, 2022, filed with the SEC on March 29, 2023, which is available on the SEC's website, www.sec.gov. The company undertakes no obligation to update these statements for revisions or changes after the date of this release, except as required by law. I'll now turn the call over to IceCure Medical's CEO, Eyal Shamir. Eyal, please go ahead.

Thank you, Todd, and welcome, everyone. My comments will be brief and will focus on the significant achievements we accomplished during the year as well as those we expect over the coming months as we continue to advance our growth strategy. I will begin with yesterday's development, the receipt of the regulatory approval in China for our disposable cryoprobes. The latest approval allow us to use the IceSense3 Disposable Cryoprobes in combination with our previously approved IceSense3 console. This is exciting catalyst, and we believe that this will generate increased commercial activities in China. This will be driven by our exclusive distributor agreement in China with Shanghai Medtronic Zhikang Medical Devices Company Ltd. and affiliates of Medtronic plc and Beijing Turing Medical Technology Company, LTD. If you recall, the initial 3 years period of this agreement includes minimum purchase targets of $3.5 million. In the U.S. market, which we believe represents the sizable addressable market, the revenue trend we are currently expensing are encouraging. And consumable sales represented 20% of our 2022 revenues, almost double the 11% reported in 2021. Globally, our consumable sales accounted for 43% of our 2022 revenue, up from 29% in 2021 indicating increased physician awareness of our system. On the regulatory front, we are waiting the U.S. FDA response to our regulatory filing for ProSense in treatment of early stage breast cancer. We believe based on our data emerging from our ICE3 trial, ProSense is highly beneficial in minimally invasive option for physicians treating breast cancer to address the initial indication market of 43,000 women in the U.S. annually. Moreover, last year, we received an initial reimbursement code from the Center of Medicare and Medical Services to help offset some of the cost for the treatment with respect to the facility fee. Globally, we're expecting responses to applications filed in several other countries, including Brazil, Vietnam and Canada. On clinical fronts, we reported positive interim results from the ICESECRET study, which continues to validate the ProSense is a safe and effective in treating kidney cancer tumors with an 89.5% recurrence-free rate. In summary, our results demonstrate that we are a well oriented company, and I believe we are well capitalized to execute on commercial opportunities in the U.S. and globally to increase shareholder value. With that, Ronen and I are ready to take your questions. Operator, we would like to open the call for questions.

[Operator Instructions]. The first question is from Kemp Dolliver of Brookline Capital Markets. Please go ahead.

I'll ask a couple of questions and go back into the queue. Now that you have the approval in China, how will the rollout proceed? And how -- and some of these decisions, I acknowledge may be in the hands of your partners. But I'm assuming they'll -- I mean are they contemplating pursuing government reimbursement at some point or strictly focused on the cash pay market? I'll start with that.

Thank you, Kemp. We are very excited about the opportunity in China. We always believe China will be a growth market for IceCure. Our partner in China, which is both mainly Shanghai Medtronic Zhikang and together with [ Turing med ], they will approach public hospitals, mainly at the beginning because most of those cases will be done in hospitals. And later, they will go for private clinics. Even in public hospitals, they will be able to start with some copayment by the patients. And in parallel, they will pursue for reimbursement in China.

Okay. Very good. And just switching to the U.S. You all have been evaluating partnering versus self-distribution, how is that thought process evolving over the last few months?

Yes. We are still in process on that. I think that it might be a combination of a direct sales team with some partners, but this is still under evaluation as we did the strategic market approach and market plan in order to enter the market. Now it might be some level of combination.

Would that be by geography or some other criteria?

It will be by geography, but also by some other partnering that will have some benefits with specific organization DNAs and other aspects that will help us to make the market penetration.

The next question is from Yi Chen of H.C. Wainwright.

This is Jake on behalf of Yi Chen. And then -- sorry if I missed some of the information in your prepared remarks, my call was in and out. But any guidance on the anticipated sales in China this year or even next year would be helpful? And also, again, please bear with me if I missed it, any guidance for 2023 -- top line guidance for 2023? And also on ICE3 and other -- any other indications, are there any future data presentations that may happen this year would be very helpful?

So thank you very much. On China, we are not giving specific guideline on specific sales every year, at the minimum quantity agreement that we signed, the triangle agreement with Shanghai Medtronic Zhikang and with the Turing med, it's a minimum of $3.5 million for the next 3 years. Other than that, we are not giving a specific guideline on sales every year. I feel it's running 2 sponsored trials. One of them is the ICE3 breast cancer cryoablation trail that we did define -- that we signed on October last year, and we have the interim results on the kidney that we published on last December. At this stage, we don't have other sponsored study. There are some other studies that are investigating studies and they will make their publication and results according to their own study and time.

And if I may sneak in one more quick question. Also, could you provide some color or elaborate on tying back that CPT Category III code that was assigned to you by the CMS in November 2022. How has that impacted your marketing efforts or the uptake or adoption that you've seen in the U.S. Any trends would be [indiscernible] after you received the CPT code?

Yes. So as you mentioned, November 1 last year, we got a payment assignment on our CPT III code for breast cancer in a level of $3,428 for the first time ever, and this will be effective after we will get at the first FDA clearance. And this will be for a facility fee. So we would be able to offset some of the costs. After we will get the we FDA, we will be able to start the process to move from CPT III code to CPT I code, which will include also the physician fee.

The next question is from Ben Haynor of Alliance Global Partners.

Sorry, can you hear me, gentlemen?

Yes. Now we can hear you clearly.

Yes. So for me -- I apologize if I'm jumping between calls here. But just on the submission for a CPT category I -- CPT I code, do you think you'll have enough to primary support and usage data to submit that next year? And could we expect that code to be in place come 2025? Or what's the current time line thinking on that?

Yes. Thank you very much, Ben. On 2019, when we did the submission to the AMA in order to create the CPT III code, we had 5 societies. Of course, the first one and the most important one is the American Society of Breast Surgeons , but other 4 societies, including Interventional Radiology supported that, and we are working very closely and participating to the Interventional Radiology Society's meetings. And they would like to adopt cryoablation for breast cancer. So they told that they are going to fully support us for this application moving onto CPT III to CPT I. And I believe that during '24, we will be able to make this process and to make the submission after we will collect all the relevant data in front of the AMA, which they need to make the decision to move to CPT I.

Okay. Got it. And is there a sense that you guys might not even need to be kind of a sponsor of the CPT I submission. I hope [ that cross ] another company recently in a different space that the society, the relevant societies, actually took -- are taking it upon themselves to bring through the process. Could that be something that happens to you guys as well, do you think?

The breast cancer and the head of the coding and reimbursement committee of the American Society Breast Surgeons, they give it with a great support and -- together with the American Surgery Society, so they will be first to support they will make it by themselves.

Okay. Great. Yes, I know you guys have a lot of support Good to hear that. And then on the $3.5 million in minimum purchase targets for the Chinese distribution agreement with the affiliate of Medtronic, I apologize if this has already been asked. But is that $3.5 million over the next level in the next 3 years in the term of the agreement? Or is that just for the current year's period?

No. The minimum quantity that they committed for the coming 3 years is a $3.5 million.

Ok, Got it.

This is the minimum for the next 3 years.

Okay. Got it. And then obviously, there's always considerations when you put in the term with a distribution partner anywhere. But are there any things that we could -- We should be thinking about when it comes to the potential for extending that agreement? Is it something that you guys need to see that they're hitting the ground running and generating a lot of sales for you guys? Would there be anything that would cause you to try to switch to another partner? Or what kind of goes into a potential renewal there to the extent you can discuss it?

Of course, we would like to evaluate different aspects of [ Codes ] from the most important one is future sales relationship with different societies, creating guidelines, working on the reimbursement, all the educational staff or the clinical support that they need to be a [indiscernible] . This is not only sales, all the KOL support, clinical support, especially for training at the beginning. So we will evaluate like any other partner, all that aspect to be sure that they are delivering what we need in order to be very successful in the market.

[Operator Instructions]. The next question is a follow-up question from Kemp Dolliver of Brookline Capital Markets.

Just quickly, and I know you are reluctant to give specific guidance. But with regard to your spending this year, how should we think about it relative to 2022? And that would be for all 3 expense buckets.

So we're expecting that 2023 will be quite similar to 2022. If you look at the numbers, you will see that we are investing more in R&D. And all the regulatory affairs and clinical affairs and also in the marketing. So from all these aspects, you can expect to see probably the same numbers. We are planning to spend a little bit more on marketing, especially in the U.S.

The next question is from Yi Chen of H.C. Wainwright.

This is [ jate ] again on behalf of Yi. Just a quick follow-up. I know -- I've seen that you've presented internal study results at the Logical Association Conference in Israel. And please bear with me have already touched upon this in your earlier calls, but what was the feedback from the physician community at that conference with regards to the data that you've presented?

I would like to be sure that you refer to the kidney cancer interim study that we published on the December?

Yes.

Okay. So the feedback that we got from the conference itself and we say other KOL and physician that we share this information in some of the events that we exhibited like on February in the Interventional Radiology meeting in India. January, it was the society interventional oncology in Washington, D.C. They believe that their results are very good, and they see the benefits of using one probe instead of multi-probe system. In one probe, which is less costly than 2 to 3 probes that this is how they use when they work with Galil Medical and Endocare Argon and Helium [ tribulation ] technology . So from the results of complications, navigation time, costing the 3 probes, it cost much more and the reinvestment for example, in the U.S., it is same amount if you buy one probe or 3 probes. From the results -- they believe that the results are promising in the interim. And they believe that this is an indication that they will be more than happy to use it. And actually, we are treating -- we are doing this study for clinical evidence. We have the kidney cancer cryoablation as part of our intended views and indications to use, both in Europe and also in other countries. So they believe that the interim results are showing very promising results.

There are no further questions at this time. This concludes the IceCure Fourth Quarter and Full Year 2022 Results Conference Call. Thank you for your participation. You may go ahead and disconnect.