ClearPoint Neuro(CLPT) - 2020 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total revenues for Q3 2020 were $3.5 million, an increase of 20% from $2.9 million in Q3 2019, reflecting a growth of $592,000 [5] - Gross margin improved to 80% in Q3 2020 from 66% in Q3 2019, primarily due to a higher contribution from service revenues [7] - Operating expenses rose by 43% to $4.1 million in Q3 2020 compared to $2.9 million in Q3 2019, driven by increased R&D and sales and marketing costs [8] Business Line Data and Key Metrics Changes - Functional neurosurgery navigation revenue decreased by 1% to $1.8 million in Q3 2020 from $1.9 million in Q3 2019, impacted by COVID-19 [6] - Biologics and drug delivery revenues surged by 162% to $1.5 million in Q3 2020 from $564,000 in Q3 2019, due to new relationships with biologic companies [6] - Capital equipment and software revenue fell by 48% to $200,000 in Q3 2020 from $400,000 in Q3 2019, attributed to postponed capital acquisitions [6] Market Data and Key Metrics Changes - The company reported a case volume rebound to 200 cases in the U.S. during Q3 2020, although still below pre-pandemic levels [3] - The company is currently operating at about 80% to 85% of expected case volumes had the pandemic not occurred [12] Company Strategy and Development Direction - The company is focused on four strategic growth pillars: neurosurgery navigation, biologics and drug delivery, in-house therapeutics, and achieving global scale [4] - The company aims to strengthen its position post-pandemic, believing it will exit in a stronger position [4] - The company has successfully hired clinical support team members in Europe to support biologics cases, marking a significant strategic investment [18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the recovery of elective procedures, despite ongoing challenges from COVID-19 [4] - The company anticipates exiting 2020 with revenues between $12 million and $12.5 million, barring significant hospital shutdowns [19] - Management highlighted the importance of developing custom products and services for biologics and drug delivery, which are expected to grow despite clinical delays [16] Other Important Information - Cash and cash equivalents at September 30, 2020, were $14.7 million [9] - The company is actively working on new product evaluations and expects to re-enter the capital budgeting process in hospitals [15] Q&A Session Summary Question: Revenue breakdown by product and service categories - Management indicated that substantially all service revenue was represented by biologics and drug delivery, with minimal contributions from therapy revenue or capital equipment [25][26] Question: Clinical trials involvement and expected FDA approvals - Management noted that they have added five new partners since the pandemic began, with ongoing relationships fostering clinical trials, although specific trial details remain confidential [22][23] Question: R&D expenditure expectations - R&D expenditures are expected to remain above $1 million in Q4 2020, but the rate of increase will not be as high as in Q3 [36] Question: Impact of new laser solution on revenues and margins - The new laser solution is expected to follow a similar razor/razorblade model, potentially doubling revenue per case from current levels [39][40] Question: Expansion into other therapeutic areas - The company is primarily focused on neurosurgery but has done some work in spine and prostate areas, though these are not current strategic priorities [62]