IceCure Medical Ltd (NASDAQ:ICCM) Q3 2024 Earnings Call Transcript

IceCure Medical Ltd (NASDAQ:ICCM) Q3 2024 Earnings Call Transcript November 26, 2024

Operator: Good morning, and thank you for standing by. [Operator Instructions]. Please be advised that today’s conference call is being recorded. I will now turn the conference over to Michael Polyviou. Please go ahead.

Michael Polyviou: Thank you, Joni, and welcome to IceCure Medical’s conference call to review the financial results as of and for the 9 months ended September 30, 2024, and provide an update on recent operational highlights. You may refer to the earnings press release that we issued earlier this morning. Participating on today’s call are IceCure Medical, CFO and Chief Operating Officer; Ronen Tsimerman; and the company’s VP of Business Development and Global Marketing, Tlalit Tel-Tzure. Additionally, IceCure VP of Regulatory and Quality Affairs, and Clinical Applications, Shay Levav, will also join the call for questions-and-answer session. IceCure CEO, Eyal Shamir is unable to join today’s call due to a personal matter and ask that I wish everyone in the U.S., a Happy Thanksgiving on his behalf.

They all will be attending next week’s radiological Society of North America or RFNA Annual Meeting in Chicago, and I’m sure some of you will be seeing him there. Before we begin, I will now take a moment to read our statement about forward-looking statements. This call and the question-and-answer session that follows that 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, intend, plans, believes, seeks, 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 the belief that the company’s financial results demonstrate growing adoption traction for its cryoablation system worldwide.

The prospective timing of the FDA decision concerning potential marketing authorization for Process the belief that the FDA Advisory Panel Meeting is a final milestone prior to the FDA’s decision on the marketing authorization. The potential benefits from receiving a marketing authorization that believe that the growing body evidence on process safety and efficacy across indications gives doctors and patients confidence and supports the company’s commercial efforts. The belief that the company has several upcoming catalysts that are value enhancing the Terumo Corporation expected to file regulatory approval of Process with breast cancer in Japan in 2025. The belief that the company’s balance sheet positions it well to execute on revenue growth opportunities worldwide to the FDA grant marketing authorization in the first quarter of 2025 in early-stage breast cancer.

Any expectation that should the FDA grant clearance to ProSense, prospective sales in the U.S. as a result will further add momentum to its current upward trend in revenue. 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 the statements on this call. The forward-looking statements contained or implied during this call 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 of the year-end December 31, 2023, filed with the Securities and Exchange Commission on April 3, 2024, which is available on the SEC’s website, www.sec.gov.

The company disclaims any intention or obligation, except as required by law, to update or revise any forward-looking statements, whether because of new information, future events or otherwise. This conference call contains time-sensitive information only as of the live broadcast today, November 26, 2024. In addition, during the course of this call, we will discuss certain metrics that are non-GAAP measures, and we refer you to the reconciliation tables and other information about these non-GAAP measures included in the earnings press release that we issued earlier this point. I will now turn the call over to IceCure Medical’s VP of Business Development and Global Market, Tlalit, please go ahead.

Tlalit Tel-Tzure: Thanks, Michael. Hello, everyone, and thank you for joining us today to review our 9 months 2020 results. This has truly been a transformative year for asset both in terms of milestones, improving financial metrics and our growth trajectory. During the first 9 months of 2024, process continent drop sales increased by 36% and non-GAAP gross profit more than doubled, growing by 104% and non-GAAP gross margin increased to 40% from 27% as compared to the same period last year. Our financial results demonstrate growing adoption traction for our cryoablation system worldwide, and Ronen will go over the numbers during his prepared remarks. In April 2024, we successfully completed our trial. Following this, the impressive data for ProSense as an alternative to lampextomine early-stage low-risk breast cancer patients were published in highly prestige peer-reviewed publication and were presented at leading conference, including the influential, American Society of Breast Surgeons the positive outcome of the FDA advisory corner earlier this month, bring us one step closer towards potential marketing authorization for process.

We believe this is the final milestone leading up to the FDA’s decision on marketing authorization. We remain engaged FDA both regarding the authorization and to ensure the opinion of the panelists are addressed in the labeling of process. We continue to expect that the FDA decision will occur in the first quarter of 2025. The marketing or sortation is received, it would potentially allow us to offer women in the U.S. a nonsurgical alternative to lumpectomy as early in the next few months. Our U.S. sales team and infrastructure are ready and poised to deliver. We have already established a reimbursement code for facility expense. Upon marketing authorization, we will be applying for additional reimbursement, including the physicians expense, widely known as the CPT 1 code.

We believe ProSense will become an indispensable tool for breast surgeons, interventional radiologists, interventional oncologists and patients alike. We believe that the large and growing body of evidence on present safety and efficacy in breast cancer as well as in other indications, gives doctors and patient confidence and support our commercial efforts. Since the start of the third quarter, an astonishing 11 independent studies have been published and presented on process, most of which were for breast cancer. We are particularly pleased that Process was recently chosen as the exclusive cryoablation system in one of the world’s largest breast cryoablation study to date. The PRECISE study which is financed by the Umberto Veronesi Foundation and the Italian Ministry of Health and led by multidisciplinary collaborators will treat 233 patients at the Prestige European Institute of oncology.

Interestingly, this study will expand on the treatment population in our ICE3 study. PRECISE will treat younger women, age 50 and older and will also treat patients with both luminal and luminal A breast cancer. Looking ahead at the rest of the year to 2025, we believe that we have several upcoming catalysts that are value enhancing. Interim results from our ICESECRET study are expected in early December. ICESECRET is a prospective multicenter single-arm clinical trial of ProSense for the treatment of kidney cancer. Prior interim results demonstrated an 89.5% recurrence-free rate at a mean follow-up of 22.2 months. Our partner in Japan, Terumo Corporation is expected to file for regulatory approval of process for breast cancer in Japan in 2025 with the aim of receiving clearance.

We also expect that numerous additional third-party data on Process will be published in medical journals and presented at prestige medical conference throughout 2025. Now I will turn the call over to Ronen to go over the numbers. Ronen?

Ronen Tsimerman: Thank you, Tlalit. As Tlalit mentioned earlier, growth momentum continues for process sales. for the 9 months end September 30, 2024. ProSense Systems and disposable probe sales increased by 36% to $2.32 million compared to $1.7 million for the 9 months as at September 30, 2023, driven primarily by higher sales in Europe, the U.S. and Japan. Total revenue when including revenue recognition and other services from our Terumo Corporation agreement in Japan grew by 22% to $2.42 million for the 9 months ended September 30, as compared to $1.97 million for the 9 months ended September 30, 2023, a due to the increase in sales of ports and systems and disposables, which was partially offset by a decrease in revenue recognition and other services in Japan of $100,000 and $274,000 in the first 9 months of 2024 and ’23, respectively.

Gross profit increased by 41% for the 9 months ended September 30, 2024, to $1.03 million compared to $731,000 for the 9 months ended September 30, 2023. Gross margin increased to 4% for the 9 months ended September 30, 2024, compared to 37% in the 9 months ended September 30, 2023. We are pleased to report that non-GAAP gross profit, which represents gross profit from sales of our products, not including revenue recognition from distribution agreement more than doubled for the 9 months ended September 30, 2024, to $934,000 from for the 9 months ended September 30, 2023, an increase of 104%. Non-GAAP gross margins for the 9 months ended September 30, 2024, and increased to 40% from 27% for the 9 months ended September 30, 2023. Reconciliations of these non-GAAP figures are included in the earnings press release that are issued earlier today.

Total operating expenses for the 9 months ended September 30, 2024, decreased to $12.21 million compared to $12.89 million for the 9 months ended September 30, 2023. The decrease is attributable mostly to a reduction in research and development and general and administrative expenses. Net loss narrowed during the 9 months ended September 30 $10.84 million or $0.022 per share compared to a net loss of $11.66 million or $0.26 per share for the same period last year. As of September 30, 2024, company had cash and cash equivalents of approximately $10.7 million. And as of October 31, 2024, the company had cash and cash equivalents of approximately $10 million. During the first 9 months of 2024, we raised $8.1 million in net proceeds from the sales of ordinary shares under our the market facility.

We believe that the expected milestones position us well to execute on revenue growth opportunities worldwide and particularly sales in the U.S. should the FDA grant marketing authorization the first quarter of 2025 for processing early-stage breast cancer. Operator, we will now open the call for Q&A.

Q&A Session

Operator: [Operator Instructions]. The first question is from Anthony Vendetti of Maxim.

Anthony Vendetti: Thank you. So I want to talk about first, the U.S. and then Japan. Based on the 9 to 5 ADCOM meeting both for — in favor for ProSense. In your discussions with the FDA, is it likely — have they given you guidance that they would likely make a decision before the end of March? Could it be soon or could it be later? And then in Japan, I know you mentioned in the press release that you expect to romo, your partner to file for regulatory approval in 2025, is that in the first half ’25, second half of ’25? And then what’s the approval process there once they file for approval?

Ronen Tsimerman: Hi, Anthony, and thank you for your questions. I will start with the FDA in the U.S. with your questions regarding that. So the FDA didn’t provide us exact timing for providing clearance. But we do believe, based on our discussions that we should expect to receive the final answer somewhere in Q1. Of course, when we have more data, we’ll be happy to share with the public. As far as in Japan, we know that Terumo are working on the submission we’re assisting them. We’re working with them very closely. They are using the trial data, and they are planning to do it in 2025. We’re not on the date. But again, we will probably update everyone as we go forward in our work with Terumo.

Anthony Vendetti: Just a follow-up on that, though. Is the approval process like once you actually file? Is there a clock ticking? I don’t know how Japan works in terms of reviewing the actual application.

Ronen Tsimerman: So I will defer this question Shay. Shay, can you please answer?

Shay Levav: Yes. Anthony. So taking into account the submission that will be done by Terumo in Japan with the ICE3 study data, including the outcomes from the FDA. We expect that it will be approximately a year from submission until the Terumo will get approval from the PMDA in Japan.

Operator: The next question is from Kemp Dolliver of Brookline Capital Markets.

Brian Kemp Dolliver: Thank you for taking question. Where do you stand with regard to your — your U.S. sales effort. And as you look into ’25 and 2026, assuming the approvals in the timetable you are — you’ve mentioned what’s the pace of expected pace of build-out of the U.S. commercial team.

Ronen Tsimerman: So thank you, Kemp, for the question. We will start the year we will start 2025 with the same number of sales reps we currently have. And currently, we have our VP, Mr. Shad Good to sales reps and clinical support. As we get the FDA clearance, hopefully, we will continue to grow and add sales reps, it will be a step approach based on our plans, but we expect that we will finalize 2025, probably at around between 6 to 10 sales reps.

Brian Kemp Dolliver: Great. And with regard to your R&D expense it has decreased this year as you expected, though it appeared in this period, the decline was smaller. I’m assuming that was probably spending in preparation of the ADCOM. So as we look into, say, the balance of the year and early next year, do you expect the — any further sequential decreases in R&D spending or somewhere around the current level?

Ronen Tsimerman: So as far as the R&D expenses, we did expect to see a reduction in costs for R&D since we finalized the development of our new accent system. We are working also on new probes, but the costs are definitely not the same as developing a completely new system. In 2025, it’s too early to say right now, but we do expect work. Actually, we did start to work on our multi-prop system. So we will continue to work on that in 2025.

Operator: The next question is from Yi Chen of H.C. Wainright.

Yi Chen: So for those five panelists who do not believe that ProSense benefits upgrade risk and voted no. Do you think the report as valid? And do you think there’s any aspects of process that could be improving the future to address those homeless concerned?

Ronen Tsimerman: Hi and thank you for your question. I will defer to Shay.

Shay Levav: Yes. Thank you for this question. So the five panelists that voted no, actually, they also mentioned it during the explanation to the voting. So three of them said that they would have vote maybe if they could. The main reason for most of them was to encourage FDA to work with ISO closely and to define special controls post-marketing in order to have a control on the continuous control on the safety and efficacy of the product and the way it performed in the field. One of the — an additional one who voted no, it was the statistical person who believed that there are some uncertainties in our II study, and this is something that by getting the approval and start to use the product more widely. We will be — and collecting the data, we will be able to determine that the results that are being seen out there in the field are similar to what we have seen in the three study.

Ronen Tsimerman: I would like that some of the panelists who voted No also said that they are a little bit worried about other companies using our de novo clearance in order to get their own predicate device. And this is some of the special controls that they requested for the FDA to work with us.

Operator: [Operator Instructions]. The next question is a follow-up question from Anthony Vendetti.

Anthony Vendetti: Yes. On the ICESECRET Trial, are you still expecting interim top line results in ’24 by the end of December? And then can you also talk about — because we know the ProSense can treat other tumors. And there’s other indications, liver, lung, kidney, can you discuss the U.S. kidney cancer treatment market, what that opportunity is and how far down the road is that in terms of — I know the breast cancer indication is the priority. But I’m just curious, as we think out in ’25, ’26, what’s the opportunity for kidney?

Ronen Tsimerman: Great. Thank you, Anthony. So regarding the ICESECRET trial, we expect to lease the results or see them on — at the beginning of December, somewhere in the first week. And this is — these are interim results still with about approximately 3 years follow-up. As far as the indication in the U.S., we know that there are about 80,000 new patients every year. So this is also an unmet need, and we’re definitely looking at it but as you said, our first priority is, first of all, to use our process for breast cancer, mostly because the unmet need in breast cancer is extremely high. And we do see the demand, and we also see the utilization in the U.S. and the traction that we have.

Operator: There are no further questions at this time. I will turn the call over to Ronen Tsimerman for a concluding statement.

Ronen Tsimerman: Thanks, everyone, for participating on today’s call and for those listening in the U.S., have a happy Thanksgiving. We look forward to the FDA’s decision on marketing authorization of process in early-stage breast cancer. Should the FDA grant clearance, then we expect sales in the U.S. to add further momentum to our current upward trend in revenues. Also, Eyal and I will be in San Francisco in early January and meeting investors during the JPMorgan Healthcare Conference. Please reach out to Mike if you want to schedule a meeting. Thank you all.

Operator: Thank you. This concludes the IceCure Third Quarter 2024 Results Conference Call. Thank you for your participation. You may go ahead and disconnect.