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.

[Audio Gap] ended March 31, 2023, and provide an update on recent operational highlights. You may refer to the earnings press release that we issued early this morning. Participating on this morning's call are IceCure Medical's CEO, Eyal Shamir; VP of Business Development and Global Marketing, Tlalit Bussi Tel-Tzure; and the company's CFO and COO, Ronen Tsimerman. After the prepared comments, management will be available to address your questions. Before we begin, I'll take a moment now to read a statement about forward-looking statements. This call and the question-and-answer session that follow 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, could, estimates and similar expressions or variations of such words are intended to identify forward-looking statements. For example, we are using forward-looking statements in this presentation when we discuss during this conference call that we will hold courses or master classes as part of future conferences or our plans to exhibit our technology at future conferences and believe that there will be a rapid adoption of ProSense for the indication of early-stage with high risk for surgery breast cancer if it receives FDA approval. Because such statements deal with future events and are based on IceCure's 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 our 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 at www.sec.gov. The company undertakes no obligation to update these statements for revisions or changes after the date of this call, 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. Hello, everyone, and thanks for joining us today. We will start with a review of our significant business development for the first quarter of 2023, followed by an overview of financial results for the 3 months ended March 31 before opening the call for Q&A. IceCure has benefited significantly from the growing awareness and [ inference ] of in cryoablation, part of a broader trend towards minimally invasive treatment. ProSense, we believe, is the go-to cryoablation system of choice for physicians, including breast surgeons, breast radiologists and interventional oncologists. Our focused commercialization and marketing efforts in the U.S. are creating great benefits in North America as well as carrying over the momentum into global markets. We continue to engage with the FDA through ongoing discussions that are part of the regulatory submission process. In a major milestone, we received approval in China where our systems and cryoprobes are now fully approved for commercial use. An independent study, which IceCure did not sponsor in any way, was conducted in France using ProSense and another cryoablation technology to treat endometriosis. We were very pleased to learn that the results, which were published in the Journal of Vascular and Interventional Radiology, showing a 92.8% efficacy in avoiding secondary surgery. In what may be one of the most significant milestone from cryoablation in the treatment of breast cancer, the American Society of Breast Surgeons, or ASBrS, the leading medical society comprised of 3,000 healthcare providers for breast surgery, shared its plan for a cryoablation trial at the Society's Annual Meeting. We believe such a trial could potentially establish a new minimally invasive standard for the treatment of early-stage breast cancer. Importantly, it will support our commercialization process at ASBrS members participating in the trial, gain experience with performing cryoablation treatment and see the benefits of its [ use ] first-hand. I will now turn the call over to Tlalit, who will elaborate on our commercial activities.

Thank you, Eyal. Hello, everyone. Over the past few months, IceCure has been busy attending Professional Medical Society Conference across the globe, and we are very pleased and encouraged by the number of symposium and professional training programs for breast cryoablation procedures being led by the Society. We see this as the best endorsement of our ProSense technology. Most notably, this year was the first time ever that the ASBrS Annual Meeting offered a continued medical education course on breast cryoablation. The sold-out course use our ProSense system, presented results from our ICE3 trial and gave breast surgeons hands-on experience with our system. In addition to the course, cryoablation, and specifically the ICE3 data, were mentioned very favorably many times throughout the 5-day conference. Dr. Nathalie Johnson, ASBrS' outgoing President, herself, spoke highly of cryoablation during her keynote speech, which ended in a beautiful song she sang that included cryoablation and delighted the audience. As Eyal mentioned, the ASBrS [ drew big ] plans for a study to evaluate cryoablation as a treatment for early-stage breast cancer for women between the ages of 55 to 85. This inclusion criteria would broaden the indication beyond what we have applied for with the FDA. We believe there is a high interest in the study based on the large number of breast surgeons who visited our booth at the Annual Meeting and participated in more hands-on demos with us. We received a similarly high level of interest when ProSense was also demonstrated in hands-on training at the ASBrS Breast Fellows Course in January. We very recently attended the Society of Breast Imaging Annual Meeting in Maryland and had a lot of traffic to our booth from breast radiologists across the globe. The symposium featured talk on breast cryoablation, including Ablation: The Time Is Now, But How to Start by Dr. Luz Venta and by ProSense user, Dr. Robert Ward, both of whom mentioned ICE3 data favorably. SBI intends to have a breast cryoablation course as part of next year's meeting, and they have already requested IceCure to take an active part in this course and workshop. So we have seen a growing interest in cryoablation from U.S. breast surgeons and breast radiologists, but also a remarkable interest from across the globe by interventional radiologists and interventional oncologists who want to add breast cryoablation to their practice. The interventional radiologists and interventional oncologists are already familiar with cryoablation procedure in general, and they are eager to add breast tumor treatment as a new clinical application to their practice. The U.S.-based Society of Interventional Oncology, SIO, also featured ICE3 trial and interim data in its Annual Meeting during the breast session led by doctors, some of whom are currently using the system. ProSense was also demonstrated throughout the duration of the conference at our booth, where interventional oncologists engaged with the system and expressed great interest. SIO has already announced they are planning a breast cryoablation master class to be offered as part of their January 2024 conference. They have requested that ProSense be part of the hands-on section of the course, and the ICE3 trial data will be presented in the didactic part. The announcement of the course has already generated a lot of [ buzz and ] interest globally. Additionally, yet another medical group, the Society of Interventional Radiology Annual Conference featured ProSense in a session titled, Chest Ablation: Inside and Outside, led by ICE3 trial co-primary lead investigator and a former guest on one of our prior earnings calls, Dr. Kenneth Tomkovich. Breast cryoablation was also discussed throughout the European Conference of Interventional Oncology meeting. In the second half of 2023, IceCure is planning to exhibit and host liquid nitrogen cryoablation symposium with key speakers at the Cardiovascular and Interventional Radiology Society of Europe Conference, CIRSE, and for the first time, exhibit at the European Society of Breast Imaging Conference, EUSOBI. All of this exposure and physician education builds the foundation for what we believe will be a rapid adoption rate of ProSense for the indication of early stage with high-risk for surgery breast cancer, should we receive a favorable FDA response to our marketing authorization submission. Overall, the key takeaway is that interest in breast cryoablation is high. And physicians and professional organizations are coming to IceCure because of our strong clinical data in breast cancer cryoablation and our ProSense system. I will now turn the call over to Ronen for a summary of the quarter's financial results.

Thank you, Tlalit. For the 3 months ended March 31, 2023, revenues rose $710,000 compared to revenues of $750,000 for the 3 months ended March 31, 2022. Sales increased in the U.S. and Europe during the first quarter of 2023 relative to the same quarter last year. Gross profit was $320,000 for the 3 months ended March 31, 2023, compared to $430,000 for the same period last year. Gross margin was 45% in the first quarter of 2023 compared to 58% for the first quarter of 2022. The decrease in gross margin compared to the same period last year mostly resulted from an increase in manufacturing costs. Research and development expenses for the 3 months ended March 31, 2023, were approximately $2.1 million compared to approximately $2.4 million for the 3 months ended March 31, 2022. The decrease was primarily due to a decrease in development expenses for our next-generation single-probe system, partially offset by an increase in clinical and regulatory activities. As a result of our expanding commercialization efforts, sales and marketing expenses in the first quarter of 2023 were approximately $1.1 million compared to approximately $750,000 for the first quarter of 2022. General and administrative expenses for the 3 months ended March 31, 2023, were approximately $1.1 million compared to approximately $1.72 million for the same period last year, mainly due to a decrease in cost of directors' insurance. Total operation expenses for the 3 months ended March 31, 2023, were approximately $4.3 million compared to approximately $4.9 million for the same period in 2022 due primarily to a decrease in R&D expenses and directors' insurance costs. Net loss for the 3 months ended March 31, 2023, decreased to approximately $3.8 million or $0.08 per share compared with a net loss of approximately $4.4 million or $0.12 per share for the same period last year. As of March 31, 2023, cash and cash equivalents, including short-term deposits, were approximately $20.5 million compared to approximately $23.7 million as of December 31, 2022. Operator, we would like to now open the call for questions.

[Operator Instructions] The first question is from Yi Chen.

This is Jason on behalf of Yi Chen. I have a couple of quick questions. The first one on your potential -- any potential insights into your discussions with the FDA for the approval in early-stage low-risk breast cancer? And also any potential guideline -- time lines for approval?

Yes. Thank you. This is Eyal. We have a continuous discussion dialogue with the FDA that are up for additional information. We provide whatever is required, and it's an ongoing discussion. And we believe that in the next few months, we will get a reply from them. But it's ongoing discussion.

Excellent. And also, previously, you indicated a minimum purchase target of $3.5 million for the initial 3 years in China with your exclusive distributors. Just figuring out if that is still on track, and any color on that would be helpful.

Yes. After we got the final NMPA approval on our cryoprobes with the previous approval clearance on the console. So now, the affiliates of Medtronic Zhikang Shanghai Ltd., they could start doing -- launching, and they are keeping the original plan.

Excellent. And I know you also mentioned a symposia in the second half of this year at a few conferences. And I'm sorry, I missed it during your prepared remarks, but could you please provide more color on the upcoming conference presentations that we should look out for in 2023?

Tlalit, could you please elaborate on that?

Yes, we are going to attend this year's conference, which is the -- European Cardiovascular Interventional Radiology Meeting, that will be mid-September, in Copenhagen. And during this conference, we will host the symposium in which a couple of our key users, interventional oncologists from Europe, will share their experience with our ProSense system, with multiple applications that will be happening mid-September, as I said. And by the end of September, we will exhibit at the European Society of Breast Imaging. That will be the first time that IceCure will exhibit in this European meeting. And over there as well, we will allow demonstration, talks and provide explanation about our liquid nitrogen cryoablation system, specifically for breast application. Those 2 meetings are European meetings, and this is the plan for the second half of the year.

I could add as well. Because Tlalit and her team, they are so busy, so maybe she forgot. So for example, on August, Tlalit and the team and the clinical team, we are going to exhibit with our partner in Thailand, Terumo Thailand, as part of the Thai Breast Cancer Society. So the 2 European extremely important conferences that Tlalit mentioned, this is like full European, but we have also some local, like the Thai Breast Cancer Society meeting mid-August.

The next question is from Anthony Vendetti of Maxim Group.

I was wondering if you could just give an update on the initial commercial traction within China since you received the regulatory approval for the IceSense probes? And then were there any orders that you took in '23 but weren't able to -- first quarter 2023, but weren't able to recognize in the first quarter that you expect to recognize in the second quarter?

So Ronen, please elaborate on that?