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Axonics Modulation Technlogs INC (NASDAQ:AXNX)
Q4 2019 Earnings Call
Mar 04, 2020, 4:30 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Axonics fourth-quarter 2019 results conference call. [Operator instructions] I would now like to hand the conference over to your speaker today, Neil Bhalodkar. Please go ahead.

Neil Bhalodkar -- Investor Relations

Thank you, operator, and thanks, everyone, for joining the Axonics quarterly results and update call. I'm thrilled to have recently joined Axonics as vice president of investor relations. Presenting on the call this afternoon are Raymond Cohen, chief executive officer; and Dan Dearen, president and chief financial officer. Ray and Dan will provide prepared remarks and commentary on the fourth-quarter financial results, U.S.

commercial progress and a general business update, followed by a Q&A session. Before we begin, I'd like to remind listeners that statements made on this conference call that relate to future plans, events, prospects or performance are forward-looking statements as defined under Private Securities Litigation Reform Act of 1995. While these forward-looking statements are based on management's current expectations and beliefs, these statements are subject to a number of risks, uncertainties, assumptions and other factors that could cause results to differ materially from the expectations expressed on this conference call, including the risks and uncertainties disclosed in Axonics' filing with the Securities and Exchange Commission, all of which are available online at www.sec.gov. Listeners are cautioned not to place undue reliance on these forward-looking statements, which speak only as of today's date, March 4, 2020.

Except as required by law, Axonics undertakes no obligation to update or revise any forward-looking statements to reflect new information, circumstances or unanticipated events that may arise. With that said, I'd like to now turn the call over to Raymond Cohen for his remarks.

Raymond Cohen -- Chief Executive Officer

Thanks, Neil, and welcome to Axonics. We're looking forward to your contributions in what we expect is going to be a busy year. And I'd like to thank everyone who's dialing in for today's call and for those of you who may listen to the webcast. Since our last call in 2019, a lot has changed for Axonics as we have transitioned to a full-blown commercial company with significant operations in the United States.

Case in point, in Irvine, California, we now have over 70,000 square feet of manufacturing and facility space, along with our 11,000 square foot training center. Our employee headcount is now over 142 persons. The U.S. field sales team consists of 11 sales managers and 100 salespeople.

And since January, we have doubled the size of our field clinical specialist force that as of the end of March will number 68 individuals. That's a team of nearly 180 dedicated professionals calling on physicians and institutions and covering cases in the United States. Now we just returned from our first post-FDA approval commercial exhibition at a major medical congress. This was the Society for Urodynamics, Female Pelvic Medicine and Urogenital Reconstruction.

It was in Scottsdale, Arizona, attended by over 650 physicians. Dr. Kevin Benson, a KOL working at Stanford Health care system in SUFU, South Dakota and one of the ARTISAN-SNM pivotal study investigators, presented our one-year clinical results, demonstrating 89% efficacy. At this conference and other conferences, these results are now being referred to as the best ever to be reported in this particular category.

Now the results of our initial U.S. launch in the fourth quarter of 2019 have even exceeded our own optimistic expectations, resulting in $8.4 million in sales with physicians in over 200 hospitals and ambulatory surgery centers having implanted patients with our sacral neuromodulation system in November and December alone. There was no stocking during this particular quarter. And in fact, just to add some color, most hospitals these days are reluctant to stock product in any case.

So our momentum has continued into the first quarter. We have an additional 100-plus centers that are now implanting our product. So to date, we have approximately 30% of the top 1,000 centers that practice sacral neuromodulation implanting our product. This includes national and regional IDNs, large urology groups and ambulatory surgery centers.

So I'm going to provide some more information and a little more color on today's call. But first, similar to our past quarterly calls, Dan Dearen, our president and CFO, will start by reviewing our Q4 and fiscal 2019 results. Dan?

Dan Dearen -- President and Chief Financial Officer

Thank you, Ray. For the fourth quarter of 2019, we reported net revenue of $9.9 million. This compares to $494,000 in the fourth quarter of 2018. Net revenue for the fourth quarter of 2019 was derived primarily from the sale of our r-SNM systems to customers in the U.S., England, the Netherlands, Germany, Switzerland, and Canada.

The gross profit for the fourth quarter of 2019 was $5.4 million, representing a gross margin of 54.4%. We are pleased with the gross margin we have seen out of the gate and at this level of sales. As processes to ramp manufacturing are implemented, we anticipate gross margin expansion commensurate with volume and scale. Since it's likely to be a question, I would like to note that Axonics does not manufacture any of its products in China.

All of our products are made in the United States, either in our Irvine facility or a contractor based in the U.S. Therefore, we have minimal exposure in manufacturing to the coronavirus situation. Total operating expenses for the fourth quarter of 2019 were $28.1 million, which is an increase of $18.4 million compared to the same period in 2018. The increase was primarily due to higher personnel costs for the U.S.

commercial team and across the organization related to increased headcount to support the commercial launch of the company's r-SNM system in the United States. Given the strong traction we are seeing to the rollout of our system, we will continue to hire clinical specialists and support personnel as needed to ensure physicians and their patients continue to receive best-in-class service and clinical support from the Axonics team. We will also be adding manufacturing personnel to increase capacity and keep up with demand that has exceeded initial launch expectations. Operating losses for the fourth quarter of 2019 were $22.7 million as compared to operating losses of $9.5 million in the fourth quarter of 2018, driven by the same factors discussed above.

Cash, cash equivalents, and short-term investments on the balance sheet were approximately $183.7 million as of December 31, 2019. And I'll now turn the call back over to Ray.

Raymond Cohen -- Chief Executive Officer

Thanks, Dan. Commercial feedback from physicians and patients based on well over 1,000 commercial implants has confirmed that our thesis that we have delivered a device that is preferred by both physicians and patients and that our field team can compete on a first-class basis, whether it'd be supporting cases in the OR programming our device. So we feel really good about the initial feedback that we have gotten to date. As I've mentioned numerous times over the past year, we expect to not only compete, but over time, to become the dominant player in sacral neuromodulation.

Moreover, we fully expect more patients to choose sacral neuromodulation as the preferred third-line therapy to treat urinary and fecal dysfunction given the characteristics of a long-lived MRI-compatible system that is fundamentally FUS-free. And we also expect the U.S. market for sacral neuromodulation to grow substantially over the next few years as sacral neuromodulation becomes less of a secret, and more patients are saying yes to the therapy. This is the No.

1 way that this market is going to grow. We believe that the clinical data and our ease-of-use product is of critical importance to the customer base made up of urologists, urogynecologists, and a smaller group of GYNs and some colorectal surgeons that actually implant sacral neuromodulation devices. Our fourth-quarter seminar series suggested this, and this is proving out actually in the field. Anecdotally, physicians report that patients are having better symptom relief than they have seen in the past.

Additionally, in just 120 days, we are seeing this trend come to fruition, reinforcing our bullishness about the long-term prospects for this market. As mentioned earlier in the call, our momentum has continued into the first quarter of 2020, with now over 300 centers located all over the U.S. now actually implanting our product. This represents about 30% of the top 1,000 centers that actually practice sacral neuromodulation accounting for approximately 80% of all the implants that are done in America.

Now this group includes some of the largest national IDNs, as well as regional IDNs, large urology group practices, as well as ambulatory surgery centers. Moreover, we have a significant number of additional facility agreements that are actually in process, and we expect to have substantially all of our targets under contract by the end of Q2 2020. Our strategy of having our local reps execute these value-added committee or VAC meetings and pricing our system at parity have proven to be successful in getting these agreements in place quickly. Now in addition, our new website, our public relations and social media campaigns are helping to bring more attention to the millions of women who are suffering in silence with these conditions.

As I've stated many times, to date, sacral neuromodulation has been a secret therapy. And the vast majority of Americans have no idea that there's such a thing as an implant that can dramatically improve the quality of their lives. Our goal is to bring attention to this problem and to grow the market with the view that the expansion of this market will accrue to the benefit of patients, providers, as well as Axonics. With all that said, Axonics is highly motivated.

We're fully prepared to support our new customers. We're not resting on our laurels and we'll continue to be the leading innovator in this field. We have proven that we know how to work with the FDA, as evidenced not only by our PMA approval for all clinical indications but also the recent PMA approval of our enhanced programmer. We continue to make regular supplemental filings with the FDA to gain approval for additional product enhancements, including expanding full-body MRI capability to include 3T Tesla scanners.

So just to wrap up this section of the discussion, I'd like to say that we're making excellent progress in the first 120 days of our U.S. launch and our other strategic initiatives. We're confident about the future prospects for Axonics, and we are working diligently every day to fulfill our vision. So at this point, we'd be happy to answer any questions that the folks on the phone would have, and we'll turn it to the operator now to announce the first person who has some questions.

Questions & Answers:


Operator

[Operator instructions] Our first question comes from the line of David Lewis with Morgan Stanley. Your line is now open.

David Lewis -- Morgan Stanley -- Analyst

Good afternoon. Thanks for taking the question. Just a few for me. First, just maybe focus on guidance.

I know you've been very clear, you're not going to provide guidance, but can you just sort of tell us broadly. Are you currently comfortable with the consensus numbers for 2020? And then more specifically, actually, for the first quarter, where there's a lot of variability, street consensus is sort of $14.5 million, $15 million. Are you roughly comfortable with those first quarter and 2020 outlook as they stand today? And I had a couple of quick follow-ups.

Raymond Cohen -- Chief Executive Officer

Sure. The short answer is absolutely yes.

David Lewis -- Morgan Stanley -- Analyst

On both, right?

Raymond Cohen -- Chief Executive Officer

Yes, sir. Absolutely, yes. Yes, yes.

David Lewis -- Morgan Stanley -- Analyst

OK. That's very clear. And two more things, right? I know it's early, but can you give us any sense of growth as it relates to kind of new account penetration versus reorder sales? Or any broader comments you can make on reorders is number one. I'll just ask my second question now.

Our analysis suggested in the fourth quarter, there was some modest market expansion, maybe 4% became 6%, 7%. Can you just talk to us about, on an account level, are you seeing -- you're obviously seeing evidence of share capture, but can you comment at all about the level of share capture or if you're seeing any significant practice expansion? So there's two points of the great reorder in the second question.

Raymond Cohen -- Chief Executive Officer

Thanks, David. I appreciate the question. So I'm going to take them in reverse, actually. So I think that the reality is that we are seeing the market grow.

And it's happening in a very, very simple way. The physicians are telling us that more patients are saying yes to the therapy. They're presenting the therapy, the characteristics of the long-lived implant, the fact that nobody has to worry about getting anything explanted for an MRI, that that is -- before people actually understand that we have an easy-to-use product or a patient remote is easier, those are the things that patients are going to talk about later. They're going to reinforce with their physicians and the nurses in the practice later.

But initially, what the conversation between the patient, excuse me, we've seen the physician and the patient is, I think, sacral neuromodulation would be very helpful. This could significantly reduce your symptoms. Let me show you what we have. Let's talk about this new product that's available.

This is a device that's easily to last 15, 20, maybe more years in your body and you don't have to worry about MRIs or anything else you might have heard. So the fact is that they're telling us that this is a better and more attractive proposition for the patients and their bottom line is patients are saying, yes, more often. So this is anecdotal. It's difficult to measure.

But the physicians themselves are experiencing this in real time as it's happening, and we're getting that feedback. And they're almost surprised, right? So they're happy to share this data with us or to tell us about this. So we're seeing it's happening on an account-by-account basis, kind of one-on-one with patients. And when we talk about this notion of share capture, it's not a static market.

It's not like there's so many devices that are going to be placed in hospitals and have this kind of budget and so forth. This is very dynamic. The reality is tomorrow, there are zero deals for sacral neuromodulation in America, zero. There is no business, right? The business occurs, conversation by conversation, physician to their patients.

So this is a very interesting and very dynamic market, and it's not static. And with full reimbursement for Medicare and all private insurance companies, there's no barriers in the way to getting more patients access to this therapy, OK? We hope to be able to have more data and be able to try to measure this in a more meaningful way as we go forward. Now in terms of reorders, what I would tell you is every single account that we have opened, every single account we have reopened in the United States has reordered product from us multiple times. There is no question that they're finding the product easy to implant and the feedback coming from their staff and their patients is very positive.

We just have not had anybody who has ordered once from us or did one implant and then decided that it's not working out or we're not providing the support that they would have expected, OK? So that's a nonissue for us. And every single day, I mean, literally, every single day now, we have new customers that are coming to Axonics for the first time. This is happening on a daily basis. And this is why we now have over 300 centers that are implanting our product.

We do not expect this to stop. We're out in the field -- we got a big force out there, and we're calling on everybody. That's doing any kind of volume. And I just want to reinforce, and I'll stop talking in one second.

But we're only calling on physicians that have experience implanting sacral neuromodulation. We're not going out to other physicians, trying to bring them to the therapy. We may do that in 2021, but that is not our objective today. It's not to say that some physicians are not coming back to the therapy who may have abandoned the therapy for BOTOX, as an example, for a number of reasons that we won't necessarily dive into today.

The top one is, I thought that the product that was available up until now was fussy. It was more trouble than it was worth. I only presented it to the patients that had no other alternative. Or I didn't like the wrap, any one of a number of other things that they may have done.

So anyway, that's the story. So David, I'd just tell you, if you get the sense that I'm quite enthusiastic about what's happening for Axonics, then that's the right reading.

David Lewis -- Morgan Stanley -- Analyst

Now that makes sense. Right. Thank you and I'll jump back in queue.

Raymond Cohen -- Chief Executive Officer

Thank you.

Operator

Thank you. Our next question comes from the line of Bob Hopkins with Bank of America. Your line is now open.

Bob Hopkins -- Bank of America Merrill Lynch -- Analyst

Great. Thank you. Just a couple of quick questions. The 300 centers that you're in, what percentage of the U.S.

market do you think that represents right now?

Raymond Cohen -- Chief Executive Officer

I think it -- so we've always said, Bob, the way we looked at the market is we identified that there were about 1,000 accounts that were doing approximately 80% of all the implants, so we look at it through that filter. There may be literally hundreds of other physicians that are kind of dabbling in the therapy. Those are not people that we're focused on at the moment. So we think it represents, in effect, about 30% of the people that really matter in the United States.

Bob Hopkins -- Bank of America Merrill Lynch -- Analyst

OK. And then I'm just curious. This is a high-class problem kind of question. But given the current trajectory of the company, the growth rate you're experiencing, do you have enough inventory on the end to reach where the business is going in 2020? Or do you need to scale up there? Is that a limiting factor, in other words?

Raymond Cohen -- Chief Executive Officer

Well, I mean, I could tell you, if 60% of all the customers in America only want to buy from Axonics, then yes, we'd have some trouble meeting that level of demand. So the only realistic answer I can give you is that we're working very diligently to increase our capacity. This is the reason why we've expanded our facilities and added another 35,000 square feet of manufacturing facilities. We haven't necessarily reported our headcount every single call, but we've added probably 75 or 80 people in the last three months alone.

So we are doing everything we can to scale up manufacturing without compromising quality and which is obviously the No. 1 most important thing, and we're planning for success. We're being successful. We're planning for more success, and we're going to do everything that we can to meet demand.

At some point, if it continues at this rate, there will be a limiting factor.

Bob Hopkins -- Bank of America Merrill Lynch -- Analyst

But is there a sense -- like, if you hit your scale up plans for this year, what's the maximum revenue you could do? I'm just trying to get a sense of what that level is where we've become limiting.

Raymond Cohen -- Chief Executive Officer

I can't really answer that question right now because we have a plan. And our plan that we made was to overachieve the consensus, right? So we've planned to overachieve that. But it's kind of a fluid situation. So it's difficult to answer that question.

I'm trying not to be coy about it. It's just that we're going to build as much as we possibly can and get that out into the field. And there are some limitations in terms of how quickly we can scale up. But we just didn't --the consensus is -- I think David suggested it was more than $14 million.

Let's just say, it's $14 million. I mean, obviously, we didn't plan to only build $14 million worth of product, right? We're planning for success. We're planning to overachieve. But once again, there is a limit to that.

Bob Hopkins -- Bank of America Merrill Lynch -- Analyst

And then lastly, just real quickly on Medtronic. Anything they're doing in the deal that's surprising you at this point?

Raymond Cohen -- Chief Executive Officer

I would say there's really no surprises at all. Nothing really is new. Nothing has changed. We're just out there heads down, doing everything we can to acquire these new accounts, to provide the level of support and service that we need, to provide the marketing tools and to do the other things that people are looking for.

So I think that the physician community is really kind of appreciating that Axonics has taken really a fresh look at this market and that we've been extremely responsive to things that they've been asking for, for a long time. And providing the tools in the practice that are necessary, or I shouldn't say necessary. The tools in the practice that are desirable to be able to have patients have a better understanding of what the therapy is and so forth. I mean, this is basic blocking and tackling.

But heretofore, there's never been a social media campaign about sacral neuromodulation. Nobody ever brought patient ambassadors to a medical trade show before, but we have, so we're doing a lot of things like that. I think that we're moving really fast. And we're competing against the company that, let's face it, they've had this market all to themselves for 20 years.

So I think if anything, they're maybe a little bit surprised by the velocity in which things are happening in the marketplace.

Bob Hopkins -- Bank of America Merrill Lynch -- Analyst

Thanks very much.

Raymond Cohen -- Chief Executive Officer

Thank you. Welcome, Bob.

Operator

Our next question comes from the line of Kristen Stewart with Barclays. Your line is now open.

Kristen Stewart -- Barclays -- Analyst

Hi, guys. Thanks for taking my question. I was just wondering if you could comment on what you're seeing in the individual accounts just in terms of the uptake of your product as a percentage of implants because I know there was a little bit of question just in terms of what the percentage of non-rechargeable implants would be for physicians practice. I'm just curious if you have a good sense of what that number is on general account basis.

And then I have a couple of follow-ups as well.

Raymond Cohen -- Chief Executive Officer

Thanks, Kristen. That's kind of a difficult question for us to answer because, once again, it's not a static situation, right? I mean, this is fluid, right? Patients are coming in every day and they're talking or not talking about sacral neuromodulation. And then what we're -- here's what they're telling us. Maybe this is the best way to answer the question., that when they're offering sacral neuromodulation to their patients and if they're one of the groups that is actually offering both products -- and I would say, by the way, that's a minority.

Then patients are choosing our product significantly, significantly higher percentage than they are the short-lived non-rechargeable device, OK? So that's what we're hearing. That's what they're telling us. Our sense is that when we're in a practice and we've gotten things going and 30 days or 60 days has passed, right? Because in the first 30, 60 days, they may have some patients they already trialed with the competitors' product. And if they've done that, they may want to continue to go down that path, not to confuse the patient.

But as time goes on, there's no question that we get the lion's share of the implants in that practice. And some practices have just fundamentally switched wholesale to Axonics. They have no interest in working with the older product. And especially when they get reinforcement from their patients and their staff that things are going really well, and they are doing well clinically and that the staff is saying, look, this is really easy to use.

I mean, we don't have the reprogramming that used to have prior and things like that. So it's an interesting phenomenon that -- when you speak to physicians, you may get one impression. When you speak to their staff, that's really when you learn about how well our product stacks up.

Kristen Stewart -- Barclays -- Analyst

And I guess what's been the experience, too -- just as you're going out, trying to open accounts, to what extent has not having a non-rechargeable device been a roadblock? And where do you stand just on your next-generation products with a non-rechargeable version? And then also, where do you stand with getting the 3T labeling? And then also the compatibility with existing leads as well? And any particular color that you can share from a European perspective on the competitive front with Medtronic with their product, too? And that's all the ED questions for me. Thanks.

Raymond Cohen -- Chief Executive Officer

You know, I mean, that's way too many questions for me to try to remember, but Dan's made a few notes here, so we'll do our best. OK. Yes. Yes.

OK. I'm going to work backwards. Dan, if you've got the notes, I'll work backwards. So number one, 3T, right? We had a pre-sub meeting with the FDA recently to talk about expanding the labeling to include a three Tesla device or scanner.

We expect to be filing shortly with the agency, who reviewed our technical data and encouraged us. We would expect that toward the latter half of this year, right, that will come on board. I want to remind people that in the United States of America, less than 15% of all the MRI scanners are 3T, OK? So we live in a 1.5T world and, in some cases, less than 1.5. So this is really, in a way, and I don't mean this -- take this in the wrong way.

This is kind of a silly conversation. I mean, this market, physicians have never sent a patient ever for an MRI. They sent them to the OR to explant the product. So you know -- so if anybody is bringing up this notion of we have full body MRI, but it's only for 1.5T, well, it's been a planted comment by the competitor, right? They don't have this capability at all.

So it seems to me kind of in a bit a little silly. But once again, there are 3T systems out there. And if a certain hospital happens to just have the 3T, we don't want to disadvantage them. We've done the work.

We're not afraid to invest the money to get this capability, and we will have it. This notion about charging or recharging or non-rechargeable, once again, this is a topic that has come up because before we entered the market in the United States, no urologists or urogynecologist had ever worked with a rechargeable product. So of course, if you've never seen a rechargeable product, then you've got to say, well, gee, I wonder if my patients are going to be willing to recharge, OK? I mean, that was a question that came up 120 days ago, OK? That question does not come up anymore. That is a moot point.

It is completely irrelevant. Any physician who started with us now knows. This is not a big deal. It's very easy.

It's not more difficult than plugging your iPhone in that was not a plug for Apple, by the way, or any smartphone into the wall to charge it. It's not a big deal. And the charging interval that we have today is one hour every two weeks. Or as we heard from one of the doctors, we've got one patient apparently in its practice that likes the brush their teeth and top off their sacral neuromodulation Axonics system, so they charge for three or four minutes every day.

OK, that's fine. We can certainly do that, so we just don't see this issue. Now there are some patients that a physician may decide that this patient may have some trouble recharging. But I would say to you that that's the same patient who's going to have trouble taking the competitors' programmer and plugging two pieces into the wall.

If you can't remember to plug something in the wall or to recharge your stimulator, you're not going to be able to use any of these products. So today, there is nothing available in the market that is not rechargeable, OK? We're making a distinction between the implant being rechargeable or the accessories being rechargeable. We have a rechargeable implant and all of our accessories that the patient comes in contact with, for the most part, they don't really need to be recharged. So anyway, enough said about that.

This notion about ability to plug in, this is a really actually interesting question that you've asked Kristen, because what we're finding oddly enough, is that physicians are yanked and leads out of patients coming back in for "battery replacements" and they're putting our product in. We expected zero business in this particular area. We expected zero business. But the reality is they feel compelled to tell the patient, hey, I've got a new product.

This one, you won't have to come back in in three years, four years or five years to get it replaced. This one is MRI compatible, and patients are choosing our product. And it's irrelevant to the doctor as she pulled the lead, it doesn't pull a lead. It's going to take an extra five minutes in the OR.

To the patient, they are completely oblivious to leads and whether you pull the lead or put a new lead in, it's just not something that they're present to. All they know is my physician offered me this new product. It sounds like that's an attractive alternative, and they're choosing it. So it's interesting.

Look, we really do believe that our ability to significantly impact the replacement market with a device that can plug right into an already implanted lead is the way to go. That's why we've invested our money to develop this additional new version. But it is actually turning out to not be as big of a deal on a day-to-day basis, as we've seen. And I think, Kristen, you've probably now still in half of the other analyst questions, but I'll go to the next one, which was are we seeing any impact based upon the CE Mark of this new micro product.

And the answer is that, to date, what we know is there are three centers in Europe who've done an implant or two, and that's it. So the answer right now is no. There is 0 impact. And our European customers continue to reorder the product in the same basic rate and pace that they had previously.

And just to answer an unsaid question, we said all along, we're happy that we've penetrated a number of these countries. We've said the names, right? But we're not expanding our team in Europe. This is not where the action is. 90% of this business is in the United States.

That's what's going to move the meter. We're going to do a really solid job of continue to support the customers that we have in the Netherlands and England and Switzerland, and now we've just got NUB reimbursement in Germany. So we're going to work to get as many of those 36 centers that apply for the reimbursement to be implanting our product. But we are not looking to expand beyond that.

No, I don't want to insult our Norwegian friends, because we did get a green card to operate in that country, and we have delivered some good orders there. But that's as far as we want to go. The other markets, they're so small that it just doesn't pay for us. And the margins are nowhere near as good in Europe as they are in the United States.

So those are all the reasons. But from a commercial standpoint, we've seen absolutely nothing to-date. Now maybe that will change as time goes on and so forth, but that's where we are as of today.

Kristen Stewart -- Barclays -- Analyst

Thank you.

Raymond Cohen -- Chief Executive Officer

Thank you, Kristen. Appreciate all those questions.

Operator

Thank you. Our next question comes from the line of Larry Biegelsen with Wells Fargo. Your line is now open.

Larry Biegelsen -- Wells Fargo Securities -- Analyst

Hey, Ray and Dan. Thanks for taking the question. Unfortunately, Kristen took all my questions. Anyway, with all seriousness, let me -- just a couple for me.

So if we prorate your U.S. number for Q4, if we get to about 12% share in the U.S., number one, do you agree with that math? And do you believe your share has continued to increase in January and February?

Raymond Cohen -- Chief Executive Officer

Well, 12% of what number, Larry?

Larry Biegelsen -- Wells Fargo Securities -- Analyst

Well, if we prorate what we think Medtronic did in the time that you are on the market in Q4.

Raymond Cohen -- Chief Executive Officer

Yes. But what I'm saying is, I mean, I'm not really sure the numerator and the denominator. I'm not trying to be difficult. I just don't know how to answer the question of 12%, right? So yes, it's at least that, I guess.

But the market is expanding and all that, right? So it's a difficult question to answer because -- we don't have absolute numbers, right? We don't know what Medtronic's annual revenue is. We don't know exactly what that is. The data we have from third parties in terms of looking at the claims data is two years old. It's difficult to get an exact handle on the number of replacement units versus de novo implants.

So we're in an immature market where there hasn't been a lot of data. It's not like spinal cord stimulation, where you guys have perfect information, and you're able to talk about market share numbers, and you understand the size of the market. And I'm not so sure that Medtronic is going to all of a sudden start to publish numbers that we're going to give the analyst community a better way to say how much market share they're losing. I mean, if I had to make a bet, I would bet that you're not going to hear that from them.

So I think it's going to be difficult for us to answer that question out. I'm not trying to be evasive, but I just don't have a good answer.

Larry Biegelsen -- Wells Fargo Securities -- Analyst

Fair enough, Ray. And just lastly for me. Obviously, you guys are -- you hit the ground running here pretty hard in the U.S. But one of the key questions surrounding the Axonics story is your ability to kind of continue to take share once Medtronic launches Micro in the U.S.

and in the late spring. But what can you say today that can give investors confidence that you'll be able to continue to take share once they do launch Micro in the U.S.? Thanks for taking the questions, guys.

Raymond Cohen -- Chief Executive Officer

Thanks, Larry. Thanks, Larry. So first thing is that, one would have to check with the Las Vegas odd makers to understand whether spring is the under and over or not, OK? That's the first comment. I understand what that corporation is saying about getting a new PMA approved in 180 days, and I wish them luck with that, but I'm not so sure we're going to see that product in the spring.

And so therefore, it's kind of a mystery product at the moment. We have a little bit of a sense of what some of the elements are of this device now, but it's one of those things where it's a little bit up in the air. Here's the question that I would pose back, and that is that are they coming to the product with a bespoke product that has gone through design, how should we say, design research to determine all the usable aspects of that system, the charger, the patient remote, etc., etc., and is that thing really ready for prime time and so forth. And is it a competitive product with our product, OK? That is a question that we don't really know the answer to, OK? I could speculate, but it's inappropriate for me to speculate.

That's something for them to answer, not for Axonics to answer. Second thing is -- the question is how is that clinical study going with respect to this new product? And the only answer to that question is, oh, there is no clinical study. So my question is, why are we confident that our momentum will not slow down? Because we've got the gold standard data in this market. We've got a 90% efficacy in a pivotal study where we did not even do external trials on these patients, and we just put them right on the table and 129 patients out of 129 patients got our implant, and 90% of them beat the most conservative numbers in terms of efficacy.

We're seeing that actually in reality in our commercial implant. So this is not some one-off because we picked good implanters, and we cherry pick the patients, anybody who would suggest that it's just bump. OK? We have an unavailable study. And the physician community is now pointing to our study as the best-in-class in effect gold standard for urinary -- excuse me, urinary urge incontinence patients for sacral neuromodulation.

So I think our competitor, which we have a lot of respect for, has a lot of wood to chop. And the fact is it's really interesting that they're deciding now to come out with a small rechargeable product. So if nobody wants to recharge, why are you coming out with a rechargeable product? I mean, if long-lived device is not important, then why has that device long-lived? If constant current is not better than voltage control devices, then why is that -- what you're coming out with? And is it really true that all of a sudden, nobody is interested in clinical data? I mean, I can tell you that from trafficking with these physicians now for the last five and a half years that they believe clinical data is important. So I think those are all the reasons.

So if we have to give confidence to institutional investors that we're not going to give back any customers, then here's what I can tell you. Every single day, the No. 1 thing our team is focused on is on making sure patients do well with our therapy. And making sure they get the support that they need, not only in the OR but in programming the patient and that we're responsive to whatever the needs are in the market.

That's the only comfort I can give people. We are not giving up any of these customers once we've gotten them. And we believe, based on what they're telling us, we've created the perfect product for sacral neuromodulation, so it's kind of an easy throwaway line. But my view is, if these guys come out with something that's better than the perfect product for sacral neuromodulation, they deserve to get the business.

But we're not going to give it up. And we worked hard to get to this point. This is not an overnight effort. This is not something we pulled off-the-shelf and dusted it off and are talking about it.

This is something, as you know perfectly well. We spent a lot of time and treasure in developing the product, and we are not sitting on our -- resting on our laurels. We're going to continue to go forward. So I really appreciate this question because I know this is pretty much now the new question that's on everybody's minds in the institutional investor community.

God knows that question has changed over the arc of us becoming public. But we do know that's a question that people have in their minds. And look, there's only one true answer, time will tell. Time will tell.

Larry Biegelsen -- Wells Fargo Securities -- Analyst

That's fair. Right. Thank you for the comprehensive response.

Raymond Cohen -- Chief Executive Officer

Thanks, Larry. Thanks.

Operator

Our next question comes from the line of Danielle Antalffy with SVB Leerink. Your line is now open.

Danielle Antalffy -- SVB Leerink -- Analyst

Hey, good afternoon. Thanks so much for taking the question. Just a follow-up question on the market growth potential here, Ray. I know it's very early.

It's going to be anecdotal. You already gave some anecdotal commentary around it. But if this was a market that has been growing or is this -- maybe let's talk about the centers that you're in. If volumes there have been growing at a certain percentage, do the physicians that you're talking to or selling to, are they seeing two times that growth on a weekly basis? I mean -- and help us maybe quantify what you're seeing.

And then I have one follow-up on the market.

Raymond Cohen -- Chief Executive Officer

OK. So I think the best way to answer this question is really to kind of go back to the work that the analyst community has done. I know that there were three surveys that were done by various different analysts on this call today, where maybe their sample sizes weren't used, but I heard 40 to 50 physicians each were surveyed. They indicated that they expected the market to grow 15% or 20% this year.

When we did our own surveys in the seminars that we did with almost 300-plus -- with more than 300 of the physicians, they indicated that they expected 20% to 40% of revenue. Now I think 20% to 40% may be very optimistic. And granted, our group was more biased because they came to our seminars, but I do believe that this number of 15% to 20% is real. That looks to me about five times what it was historically, and that's kind of what we're hearing.

And it just gets back to more patients saying yes. I think, really, that's the issue. So I think that that's the -- if I'm modeling and I'm trying to model, I think that that's probably the right zip code.

Danielle Antalffy -- SVB Leerink -- Analyst

OK. That's really helpful. And then just a follow-up longer term. And I don't know if you can answer the question or not, but as we think about -- this is third-line therapy at this point.

I mean, you finally are driving innovation in the sacral neuromodulation market. And I guess I'm just curious about your thoughts as to whether this could move up from third-line therapy. And if so, what's necessary? Do you already have -- I mean, you have very strong data in hand. Is that enough to eventually get it further up the curve, or do you need to do registry data? Maybe talk about the potential there, if there is any.

Raymond Cohen -- Chief Executive Officer

Yes. It's just not our focus. We're not in the business of changing the practice of medicine. It's really kind of beyond our reach.

It's the American Urological Association, the AUA is the one that have to change the guideline. And we don't have the resources to start lobbying efforts. Will it change over time? Yes, probably, but it's unknowable. The reality is that if you just look at the number of patients right now today, under the current guidelines, we estimate that there's probably 5 million or 6 million patients in America, primarily women, average age 55 years old, that have gone through a differential diagnosis.

They have overactive bladder or do incontinence or fecal incontinence. If they had the OAB, then they've been given some drugs, maybe one, maybe two. They may have gotten some BOTOX injections, they may not. These are the candidates for our therapy right now.

This is a huge market opportunity. If you look at it, this rivals what the folks at Inspire Medical are talking about in terms of the $6 billion opportunity, it exists today. No changes to third line-therapy guidelines or AUA. That is the reality today.

And I think if there's one piece of the puzzle that institutional investors have not fully appreciated is that this is an untapped market, with lots of potential for growth. And this market is going to expand. And we have -- Dan and I have been saying this since the first day we met with any institutional investors back in May of 2018. We believe this market is going to double.

And whether that takes three years or four years or five years, I mean, mark our word, that's what's going to happen. We've seen it. We've been around for a while. We've been at this game for almost four decades.

We've seen this happen time and time again. This has all the characteristics of a breakout market. But it all starts with competition, innovation, right? You can't increase a market with a fussy product in a monopolistic environment, right? That's what's going on. So we're all in on sacral neuromodulation.

Danielle Antalffy -- SVB Leerink -- Analyst

Thank you so much.

Raymond Cohen -- Chief Executive Officer

You're welcome. Thank you.

Operator

Thank you. Your next question comes from the line of Kaila Krum with SunTrust. Your line is now open.

Kaila Krum -- SunTrust Robinson Humphrey -- Analyst

Thanks for taking our questions. So you mentioned you had 200 accounts on board in Q4. And then you're in over 300 institutions now in the U.S. So my question is, how many accounts do you think you need to hit the full-year consensus estimate of $88 million? And then should we expect that you continue to add centers at this rate going forward? Or how do we think about that metric that drives our model?

Raymond Cohen -- Chief Executive Officer

Sure. I think we needed about 220 to make our numbers is the calculation that we had, so now you can get a sense about why we're bullish about the annual number. Every single day, we're adding new accounts, every single day. And as I mentioned, I didn't give hard numbers, but we have literally dozens and dozens of IDNs, ambulatory surgery centers, group practices that are still in the hopper with us, right, that we don't yet have a green card to do business in their facilities.

We're not getting resistance, it's just that it takes time to be able to work through all these agreements. So we got a lot of blue sky ahead of us. We expect to continue to add accounts. I fully expect that you'll hear bigger numbers from us when we report our first-quarter results.

And so we're quite confident and bullish. I mean, bottom line is, and I know, Kaila, you recently been at one of our events. I mean, you've seen it with your own eyes. I mean, the docs like our product, and they want to use our product.

And they like our company, and they like our marketing materials, and they like our people. And they find that we're earnest and we're honest and we're hard-working and vigilant about what we're doing and serious about it, and we're 100% focused. We only have one business here at Axonics, and that's sacral neuromodulation, that's it. That's our business.

So I think it's really well appreciated by this physician community. It's been a long time coming. I think they're grateful that we're here. And if we showed up with some stuff that doesn't work, and we didn't provide the support and we weren't giving them a good product at a fair price, it would be a whole different story.

But we're not making these rookie mistakes as a company.

Kaila Krum -- SunTrust Robinson Humphrey -- Analyst

That makes a ton of sense. And then you guys mentioned you doubled the size of your field specialist force, which I think is a big deal and it's a big headcount increase. Can you just elaborate on your strategy there? What prompted that strategy and just how that helps you guys scale and compete more effectively? Thanks, guys.

Raymond Cohen -- Chief Executive Officer

Yeah. Thanks. That's a really good question. We started the year with 32 clinical specialists.

And we have a slightly different philosophy, I think, maybe than some others in that our salespeople are -- their job is to go out there. They're all experts. They can support counts. They can do procedures.

They can program the patient. But in the end of the day, we want them selling. We don't want them stuck in the OR, OK? I mean, that's the wrong place. Sure, they have to be there for the first couple of procedures with the new account that they opened, make sure that they introduce the account properly to the clinical specialists, of course.

But they need to then move on to the next and the next and the next. So the key thing for us is to have clinical specialists. These are different kinds of people, right? These are people who, first of all, are usually nurses. There are 99% of them have come from the spinal cord stimulation business, so they know how to program.

They know how to deal with patients. So we've moved that headcount from 32 to what would be 68 individuals, and we've said all along that that was part of our plan. We're not going to add salespeople. We have 100 territories, that's it.

We have 100 territories. We're not adding more territories. But what we're going to do is continue to add clinical specialists as the case volume grows. So if you've seen that in literally two months of this year, we have doubled the size of our clinical specialist sales team, excuse me, clinical specialist team, that should let people know that we've got a lot of cases to cover.

And we don't want to disappoint our customers. We need to make sure that, if you've got a case, then we're going to get it covered. And if that means that we need to go from 68 to 100 and we need to get to that 100 sooner than later, then we'll do it. We know how to hire good people.

We know how to train people. And these are the right kinds of individuals to really provide the support in these centers. They care about people. They're very sensitive.

This is what we need, so it's important that we have the right kind of individuals and we provide the right kind of support. And at this point, I daresay we got more feet on the street than the other player, and we will continue to make sure that we've got the right head count.

Kaila Krum -- SunTrust Robinson Humphrey -- Analyst

Thanks, guys.

Raymond Cohen -- Chief Executive Officer

Thank you.

Operator

Thank you. Our next question comes from the line of Adam Maeder with Piper Sandler. Your line is now open.

Adam Maeder -- Piper Sandler -- Analyst

Hey, guys, congrats on the quarter. Two for me. First, just on the supply chain. I know you've been focused on building and stocking of inventory and adding second source suppliers.

I think you've already stockpiled some batteries for the rechargeable devices which come from China. But just maybe level set us on how you're feeling about supply chain and just any proactive measures you're taking to prevent any supplier disruption. And then I have a follow-up.

Raymond Cohen -- Chief Executive Officer

Yeah. I just want to make sure that people don't get the wrong impression about what you just said. The battery that goes into our implantable device is not from China, OK? What we have said is that we source a particular battery that goes into our recharging puck, and it happens to come from China. I think it's an important distinction.

With respect to the rest of the comments, Dan may want to add a few words.

Dan Dearen -- President and Chief Financial Officer

Sure. Adam, I think as we've discussed in the past, we built the supply chain and selected certain large-scale, third-party contract manufacturers so that we could place larger purchase orders and increased production quantities from dozens of hundreds of thousands. And this is exactly what we've done. So starting earlier in last year, we started ramping production.

As we've mentioned a number of times on this call and in previous calls, the launch has gone better than expected. And as a result, what we've done is we've really relied on these third-party contract manufacturers, suppliers to just make more subassemblies faster. And so look, we're ramping. We are continuing to focus on this area.

Ray mentioned earlier on the call that we've hired dozens of people in operations and quality to make sure that we're continuing to manufacture units at the quality that we expect. And we are shipping products. So look, it's no surprise for a company in this level of growth at this phase, right? We're waking up every day and just think about manufacturing product, getting it shipped and taking care of these physicians and these patients.

Adam Maeder -- Piper Sandler -- Analyst

OK. I appreciate that color. And then just for the follow-up, maybe one for you, Dan. Can you help us get a better sense for just absolute level of opex spending this year with the additional clinical specialists and manufacturing personnel that you're bringing on board? Just any color there would be much appreciated.

Thanks so much, guys.

Raymond Cohen -- Chief Executive Officer

Yes. No, thanks. So in the previous quarter call, we had mentioned that operating expenses for the quarter had, I think, come out at around $25 million. This quarter, we reported $28.1 million, and what we said before was that that number was stabilized.

And I think stabilization means this, for a certain level of volume, right, that number is going to remain fairly consistent, although with an increase in unit orders and sales. And as we've mentioned, increasing the number of people in operations, quality and in clinical support, what we're going to see is a commensurate increase in opex related to that increase in volume. And so I expect operating expenses to increase, but I don't expect them to increase disproportionate to the rate of the increase in volume. So we are tracking according to plan.

And as we get these additional people fully on board in this quarter and next and are up and running. We'll just continue to report, call it moderate – modest to moderate increases in opex but certainly nothing that I would characterize as significant or unexpected.

Adam Maeder -- Piper Sandler -- Analyst

OK. That's very clear. Thanks again.

Raymond Cohen -- Chief Executive Officer

Thanks.

Operator

This concludes today's question-and-answer session. I would now like to turn the call back to Raymond Cohen for closing remarks.

Raymond Cohen -- Chief Executive Officer

OK. Thank you, operator. In closing, I'd just like to say that we're making really excellent progress in the first 120 days of our U.S. launch and the other strategic initiatives.

We're confident about the future of the company. And we're going to continue to keep our heads down and focus on doing the right thing every single day for our patients and our customers. So we really appreciate everybody's interest in Axonics and the support that we've gotten from the analyst community, institutional investors to date. So thank you very much, and I wish everybody a happy and healthy rest of your day.

Operator

[Operator signoff]

Duration: 61 minutes

Call participants:

Neil Bhalodkar -- Investor Relations

Raymond Cohen -- Chief Executive Officer

Dan Dearen -- President and Chief Financial Officer

David Lewis -- Morgan Stanley -- Analyst

Bob Hopkins -- Bank of America Merrill Lynch -- Analyst

Kristen Stewart -- Barclays -- Analyst

Larry Biegelsen -- Wells Fargo Securities -- Analyst

Danielle Antalffy -- SVB Leerink -- Analyst

Kaila Krum -- SunTrust Robinson Humphrey -- Analyst

Adam Maeder -- Piper Sandler -- Analyst

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