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ClearPoint Neuro Inc. Common Stock (CLPT -3.27%)
Q4Â 2020 Earnings Call
Mar 04, 2021, 4:30 p.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
Prepared Remarks:
Operator
Greetings. Welcome to the ClearPoint Neuro full-year 2020 financial results conference call. [Operator instructions] Please note this conference is being recorded. Comments made on this call may include statements that are forward-looking within the meaning of securities laws.
These forward-looking statements may include, without limitation, statements related to anticipated industry trends; the company's plans, prospects, and strategies, both preliminary and projected; and management's expectations, beliefs, estimates, or projections regarding future results of operations. Actual results or trends could differ materially. The company undertakes no obligation to revise forward-looking statements for new information or future events. For more information, please refer to the company's annual report on Form 10-K for the year ended December 31, 2019, and the company's quarterly report on Form 10-Q for the quarter ended September 30, 2020, both of which have been filed with the Securities and Exchange Commission, and the company's annual report on Form 10-K for the year ended December 31, 2020, which the company intends to file with the Securities and Exchange Commission on or before March 31, 2021.
All the company's filings may be obtained from the SEC or the company's website at www.clearpointneuro.com. I would now like to turn the conference over to Joe Burnett, chief executive officer. Please go ahead, Mr. Burnett.
Joe Burnett -- Chief Executive Officer
Thank you, Brock, and thank you to all of the investors in ClearPoint listening to today's call. I'm joined here by our chief financial officer, Danilo D'Alessandro. 2020 taught us all a lot about ourselves, from friends and family to work and life balance to everyday priorities and attitudes. We, at ClearPoint, learned a lot about who we are and how we respond to challenges beyond our control.
In short, we make the best of the situation in front of us, and we want to lead by example. Our goal back in March of 2020 was to exit the pandemic stronger than we had entered it, and I'm proud to be able to say that we have done exactly that. And while we continue to see disruptions in case volumes and evaluations as many hospitals are still limiting surgical procedures, we are encouraged by the rapid deployment of vaccines and believe that we will return to pre-COVID case volumes in the second half of this year. We are almost there.
During the past year, however, we did not stand by ideally waiting or hoping for cases to return. We kept our team fully intact and redeployed our resources to further our development programs and bring new partners in both the biologics and medical devices parts of our business. Our innovative pipeline of products is more exciting than it has ever been, and we are now in a position to prove our role as innovators with a cadence of annual product releases that solve real problems for both surgeons and for patients. Further, our successful capital raise just a few weeks ago leaves us with more than $65 million in cash on our balance sheet as of today to ensure the funding of these portfolio programs is something that is fully in our control.
I will now turn the call over to Danilo for the financial detail from 2020, after which I will provide additional commentary on our continued four-pillar growth strategy. Danilo?
Danilo D'Alessandro -- Chief Financial Officer
Thank you, Joe, and good afternoon, everyone. Let me start by looking at the full-year 2020 results. ClearPoint Neuro total revenues were $12.8 million for the year ended December 31, 2020, a 14% increase over revenue of $11.2 million in 2019. Our revenue is made up of three components: functional neurosurgery navigation and therapy, biologics and drug delivery, and capital equipment.
Functional neurosurgery navigation and therapy revenue, which consists primarily of disposable product sales related to cases utilizing the ClearPoint system, decreased 12% to $6.3 million in 2020 from $7.1 million in 2019. Revenues here reflect the continuing impact of the COVID-19 pandemic on elective procedures. Biologics and drug delivery revenue, which includes sales of services related to customer-sponsored clinical trials utilizing the ClearPoint system and related disposable products, increased 109% to $5 million in 2020, up from $2.4 million in 2019. This increase was due primarily to an increase of approximately $2.7 million or 302% in biologics and drug delivery services.
Capital equipment revenue, consisting of sales of ClearPoint reusable hardware and software and of related services, decreased 10% to $1.5 million in 2020 as compared with $1.7 million for 2019. While revenues from this product line historically have varied from quarter to quarter, we believe that many hospitals have postponed capital equipment acquisition activities due to the COVID-19 pandemic as evaluations of new technology have been postponed. We achieved a gross margin of 71% on sales for 2020 compared to a gross margin of 65% for 2019. This increase was due primarily to our revenue mix shifting toward higher-margin service revenues in 2020 relative to 2019.
Research and development costs were $4.7 million for 2020, compared to $2.8 million in 2019, an increase of 66%, resulting primarily from cost increases in additional personnel, collaborative research, intellectual property, including amortization of acquired license rights. Sales and marketing expenses were $5.4 million for 2020, compared to $4.8 million in 2019, an increase of 13%, resulting primarily from an increase in base compensation costs, attributable primarily to headcount increases in our clinical and marketing teams that were partially offset by decreases in travel costs and incentive-based compensation. General and administrative expenses were $5.3 million in 2020, compared to $4.3 million for 2019, an increase of 22%, resulting primarily from increases in compensation, consisting primarily of stock-based compensation and transition costs, occupancy costs, and legal fees. I will now turn to the fourth-quarter 2020 results.
Total revenues were approximately $3.7 million for the three months ended December 31, 2020, an increase of 16% over $3.2 million in the fourth quarter of 2019. Functional neurosurgery and therapy revenue decreased 5% to $1.6 million for the fourth quarter of 2020 from $1.7 million for the same period in 2019 due to the previously mentioned effects of the COVID-19 pandemic. Biologics and drug delivery revenue increased 40% to $1.5 million in the fourth quarter of 2020 from $1.1 million in the same period in 2019. This was primarily due to an 81% increase in biologics and drug delivery services.
Capital equipment product and related service revenue increased 41% to $0.6 million for the fourth quarter of 2020 as compared with $0.4 million in the same period in 2019, due primarily to an increase in system placements in the fourth quarter of 2020 relative to the same period in 2019. We realized a gross margin of 61% on sales for the fourth quarter of 2020 compared to a gross margin of 69% for the same period in 2019 due primarily to a one-time year-to-date reclassification of certain costs previously classified during 2020 as operating expenses into cost of revenues. Research and development costs were $1.8 million for the fourth quarter of 2020, compared to $0.8 million for the same period in 2019, an increase of 120%, resulting primarily from cost increases in compensation, collaborative research, intellectual property, including amortization of acquired license rights. Sales and marketing expenses were $1.5 million for the fourth quarter of 2020, compared to $1.5 million for 2019, due primarily to decrease in travel costs and incentive-based compensation, which were offset by increases in compensation costs due to headcount increases in our clinical and marketing teams.
General and administrative expenses were $1.3 million for the fourth quarter of 2020, flat from fourth-quarter 2019 levels. Cost increases in compensation, occupancy, and legal fees were offset by the one-time reclassification of costs previously mentioned. With respect to our cash position at the end of December 2020, we had cash and cash equivalent balances of $20.1 million compared with $5.7 million at the end of 2019. Our cash increase resulted primarily from the issuance of senior secured convertible notes in January and December 2020 in the aggregate amount of $25 million, which resulted in net proceeds to us totaling approximately $24.3 million.
I will now turn the call back to Joe.
Joe Burnett -- Chief Executive Officer
Thank you, Danilo. I now want to add some additional color to our four-pillar growth strategy. First, let's talk about biologics and drug delivery. We continue to maintain and grow our relationship with more than 25 individual customers in the drug, gene therapy, and stem cell space, providing them with products and services to support the various regulatory phases prior to commercial approval.
In addition to those 25 relationships, we have identified more than 75 additional potential customers based on their neuro target and their mechanism of action where we believe ClearPoint technology can help. We now have a team in place that is actively reaching out to those companies and academic centers as we speak. In 2020, all of our partnered preclinical and clinical trials were put on hold for at least a while, driven primarily by restrictions caused by COVID-19. And in most cases, those trial stoppages lasted throughout the year.
We are encouraged that at least five of our pharma partners have resumed enrolling patients already in 2021, which is a step in the right direction and enables us to resume our clinical revenue stream of products used during those procedures. More importantly, it restarts the crucial clinical timeline and progression through these necessary regulatory trials. One example is the treatment of AADC deficiency syndrome patients in France under their compassionate-use program led by our partner, PTC Therapeutics. This was highlighted in a recent news article published in France's Le Monde, one of the top newspapers in France.
While at the request of some partners, we do not publicly disclose all company names, we do expect multiple new clinical trials to be initiated here in 2021, now that the COVID-19 fears seem to be subsiding with the global distribution and access to vaccine. Now, where our sales into clinical trials declined in 2020, our expansion into clinical and development services grew, and our entire segment of biologics and drug delivery more than doubled as a result. Examples of such services, including development of custom drug delivery cannulas and needles, benchtop protocol writing and study execution, clinical case support and site training, and pre-commercial launch planning. These are turnkey solutions that can prevent drug companies from having to replicate the same expertise and expense within their own organizations.
The expansion of these services are not only meant to provide a meaningful revenue opportunity for ClearPoint but are also meant to start our engagement with these pharma partners much earlier in the development process. When our products are used early in development, it makes them much more likely to be used throughout the regulatory trial and commercialization process as well. The specific skill set of many new hires will continue to expand these service offerings and make a relationship with ClearPoint more valuable and stickier than ever before. Each year of engagement with a pharma company generally comes with a larger service revenue potential.
And as mentioned before, we now have more than 25 customers progressing through that growing revenue opportunity. Moving on to Pillar No. 2, which is functional neurosurgery navigation. We saw a decline in year-over-year cases and revenue, once again, driven by the impact of COVID-19 on elective procedures.
The majority of our hospitals once again put in place at least some restrictions in the fourth quarter to limit and prioritize elective procedures or to halt procedures entirely until substantial ICU beds were available. Many of these closures have persisted into the first quarter of 2021 and case volumes have continued to be depressed in January and February of this current quarter. On the bright side, we have seen hospitals reopening their doors. Many of our customers who had halted cases altogether in Massachusetts, California, Arizona, Texas, Oklahoma, and Kansas, have all started to schedule cases again for March and April.
At this point, we believe that we will be able to return to pre-COVID volumes sometime in the second half of 2021. Similarly, we expect to begin a number of new site evaluations, starting this summer, which will return us to growth in this functional neurosurgery segment. As a point of reference, given that we are already two months into the first quarter, we now expect case volume for Q1 of 2021 to be in the range of 190 to 200 cases, up from the 175 cases we saw in the fourth quarter of 2020. While our case volume was certainly impacted, we did make substantial progress on our development pipeline and portfolio.
As announced recently, we have been developing a next-generation SmartFrame Array, which is designed to not only simplify our existing workflow and save time but also to enable expansion into the operating room for certain parts and eventually all of the procedure. In the future, we will no longer be an MRI-only company, but rather have a portfolio of operating room and MRI suite products to enable the site and the surgeon to choose which technology is most appropriate for each individual patient. Our newly announced partnership with Blackrock Microsystems in Salt Lake City, Utah, will add an additional operating room tool to our portfolio in Microelectric Recording, or MER. MER is a commonly used and complementary navigation tool for DBS cases today.
Similarly, we recently announced our license and development agreement with Philips, on our Maestro Brain Model, which will become our foundational navigation engine across our portfolio of products. We want to be viewed as an innovative and essential navigation company focused in neurosurgery, and our proposed cadence of new products over the next 24 months will help us to prove that to the market. We expect first cases of Array in 2021, first cases of the Maestro Brain Model in 2022, and first cases of our MER platform in 2023. Moving on to Pillar No.
3, which represents ClearPoint's therapeutic program. Starting first with our partnership in laser interstitial therapy or LITT, we continue to make progress on our own neuro laser platform for intracranial and spine applications. While COVID-19 did impact our timelines due to supply chain disruptions and temporary closures of companion testing facilities, we are back at full speed in the development process and now expect first clinical cases to be performed in the first half of 2022. Given that our partner CLS does have FDA clearance and CE Mark for non-neuro applications, we are continuing to gather experience with a similar version of the system, which will give us more confidence going into a neuro release in 2022.
For our PURSUIT aspiration device, we have temporarily halted commercial activity as neuro aspiration for intracerebral hemorrhage is less of a market share activity and more of a market development activity. Attempting to train hospital staff and physicians on a new technique is simply not a priority during this pandemic, and we expect to reevaluate this priority in early 2022 when the bolus of delayed elective procedures has caught up. We also recently announced an additional agreement with Blackrock for what we describe as a smart biopsy needle. We will continue to make progress on this new market for ClearPoint and provide updates in the second half of 2021.
And finally, looking at pillar No. 4, which is global expansion and scale. We recently announced our first-year European cases here early in 2021 and will continue site expansion as COVID travel and hospital restrictions resolve. Our expansion into Europe is crucial as it enables many of our new and potential pharma partners to begin enrolling patients in European and other sites outside of the United States.
We have also added capacity to our clinical specialist team with five additional headcount currently going through training. By the second half of this year, we expect to have the capacity to cover approximately 3,000 cases per year at our current operational burn rate. We also recently announced our robotic assistance platform designed to automate certain parts of our procedures. This approach will help surgeons and their teams increase capacity and be able to monitor multiple patients at the same time in multiple rooms.
All of these technologies will be available for simulated use testing and training at our new education facility, nicknamed the Cove in Solana Beach, California, where we expect to open our first courses later this summer as travel begins to resume. Danilo and I are now happy to answer any questions there are from the field.
Questions & Answers:
Operator
Thank you. [Operator instructions] Our first question today is from Andrew D'Silva of B. Riley Securities. Please proceed with your question.
Andrew D'Silva -- B. Riley Securities -- Analyst
Good afternoon. Congrats on the progress. Just to start, I'd be very interested in additional color into your move into the operating room. And I'd really be curious on maybe a little bit on the margin profile as it relates to differences between the OR versus MRI suite? And then how significant will the human capital overlap be? Should we expect material differences between decision-makers, or should we expect you to have to hire additional sales forces to be able to address the OR field team?
Joe Burnett -- Chief Executive Officer
Thanks for the question, Andrew. So to kind of break that question into a few different parts here. First, it's important to think about what those target types of procedures are. So where we say that we will have a navigation system that is appropriate for the operating room, it does not necessarily mean that every type of our procedure would migrate there or that we would participate there.
Again, live MRI guidance is sort of our bread and butter and where we began, and we still believe that that is the most accurate way to not only navigate a procedure but also to monitor the procedure. So procedures, for example, like laser ablation, those procedures are always eventually done in the MRI suite because the MRI is what gives you the information on how hot the temperature is getting inside of the body. Drug delivery, I think, very similarly, there's a huge advantage to being able to monitor the drug infusion and be able to see how much drug is penetrating the patient during the procedure. So that's something else where I think in the MRI suite, that's still going to be the primary arena.
So what we are talking about doing more in the operating room are procedures like biopsies, like deep brain stimulation as well, where the procedures are a little bit more predictable because you know the target going in, and there's kind of -- I don't want to say more room for error, but there's other ancillary navigation products like MER, like smart biopsy needles that can actually increase the level of precision in the operating room as well. So where some of our procedures, I think, are destined to stay in the MRI suite and grow there, this new tool in the Array system will enable us to penetrate some sort of existing biopsy and DBS markets in the operating room. From a human capital standpoint, it will be very consistent as far as the type of clinical specialists that covers the case. But as I shared with you before, part of the design for Array is for these simpler or more predictable procedures where less troubleshooting is involved, and less anatomical differences are involved.
That gives us the arena where we may not need to always have a clinical specialist present. So as I mentioned in some of our remarks, that we're opening the Solana Beach Cove office, which will serve not only as a training center, but it will also be our hub for remote support. So instead of maybe flying a person out to help with a biopsy case, we would be able to support that case remotely and just answer questions if the site comes in with any issue. So as we move more and more into the operating room, I do believe that that same clinical specialist team will be there for initial training and for the first five to 10 cases.
But the goal is to be able to remove that person from some of those simpler procedures and have those specialists focus on laser, drug delivery, and other areas where we are providing the therapy itself.
Andrew D'Silva -- B. Riley Securities -- Analyst
OK. That's great color. And moving over to just the new Philips Maestro brain model partnership. Can you give a little color on the efficiencies and advantages you expect to unlock relative to the legacy platform? And then I'd also be interested to know just how involved will Philips be during the development and commercialization process?
Joe Burnett -- Chief Executive Officer
Sure. Yeah. I think one of the biggest differences of our system and our approach is not just the sense of validation that has gone into Philips developing this tool over the past decade or so, but it also has to do with the speed of the approach. And many of the similar type of segmentation algorithms that are available out there today is very common that you need computer accelerations, a GPU of some kind, and you also need time, anywhere from 14 to 20 minutes is pretty commonplace to do some of the segmentation analysis.
With our system, we believe it's fast enough, sub-1 minute for the analysis itself each time to be able to unlock these peri-procedural applications, where if you're running multiple scans for a procedure, it now becomes practical to rely on this model for navigation because you're not waiting 20 minutes after each scan. You can actually do it in one minute or so. So I think that's a big tool that we're going to use to unlock it, not to mention all of the additional advanced algorithms that we're building that will be layered on top of the segmentation tool itself. So the future as it kind of plays out is that in early 2022, we expect to launch the baseline segmentation tool, sort of the engine itself, and then have a cadence of every six to 12 months after that, that a new application is sort of being launched to work with it.
And the priority of those applications will sort of be dictated by not only the advancements that we make but also the ones that will benefit our own therapeutic products the most, as well as other ones that our partners have really decided are crucial for them. And in some cases, some of our pharma partners may very well be helping to fund some of these development efforts as well. So that's kind of the vision of the brain model itself. Your second question had to do with Philips involvement.
In parallel to the license of the model itself, we also signed a development agreement with Philips, which effectively gives us access to some of their engineering team talent, primarily from the Philips research team. So some of the work we can kind of do ourselves as it relates to turning our own applications into skins that ride on top of the brain model and then some fundamental changes to the brain model that we need to add functionality, those are things that we have a conduit in Philips to help us with.
Andrew D'Silva -- B. Riley Securities -- Analyst
OK. Perfect. Thanks for that. And just last question for me.
As we think about your continued expansion within the biologics and drug delivery segment, what additional overhead really should we expect to see as you look to capitalize on the translational service opportunity that you referenced, particularly as you expand internationally? And then you also talked about the 75 new target partners. How many studies do you think that actually equates to versus partners? That's it. Thank you very much.
Joe Burnett -- Chief Executive Officer
Sure, Andrew. Yeah. On the kind of the scale and expansiveness of those translational services, I don't believe we need to go too much further because we will continue to sort of reach into other company's expertise. So for example, I never expect us to, at this point, to own our own animal center or anything like that rather partner with other companies that do this already and have those resources, where we're going to focus most of our time is on the strategy and then execution of those protocols, whether it's a regulatory strategy, whether it's a benchtop toxicology test.
Just having the knowledge of partnering with 20-some-odd companies and being able to learn from their successes and failures on what the right approaches are, I think that's something that's going to benefit a number of our partnerships in the future. So similarly to our partnership with Blackrock for physiology and our partnership with CLS for laser and our partnership with Philips for machine learning, artificial intelligence in the brain model, we want to reach into some of these other firms that already have some of these translational services and just know when to tap it and when they can solve a problem for us. So I think that's kind of one bucket there. Andrew, hopefully, you're still on the call, but I forgot your second question if you wouldn't mind repeating that one.
Andrew D'Silva -- B. Riley Securities -- Analyst
Yeah. Of the 75 new target drug and biologics partners, how many actual clinical or preclinical studies do you think that equates to?
Joe Burnett -- Chief Executive Officer
Yeah. It's a really important question and something that's tough to quantify. I would say each one of those targets is at least one potential trial. Now, the reality is, does every one of those ideas translate all the way into a human patient in a clinical trial? No, of course not.
There's a number of failures along the way. There's a number of acquisitions, consolidation along the way, etc. But it's a great starting point. And like I said, each one of these relationships for us is generally cash flow positive from day 1 because of these consulting services, regulatory strategy services, testing, etc.
So the more that we accumulate, the better offset is, and we get more efficient with each one. So I think it becomes arguably more profitable for us as well. Now, it's also common, however, that each one of these ideas that you would find in an academic center is a platform in itself. So the same way, our platform can be applied to multiple different disease states or indications.
It's very common that one of our partners would also have multiple shots on goal within their portfolio. So you could argue that not every relationship makes it to a clinical trial, but you could also argue that one relationship could lead to three or four clinical trials. So somewhere in the middle of those two extremes is the reality.
Andrew D'Silva -- B. Riley Securities -- Analyst
Sorry, I have one more question just kind of thought in my head. So as far as partnering with maybe earlier stage studies that are preclinical with academic institutions, for example, could you like work as a facilitator with the academic institutions with some of the actual biopharma companies that you partnered with to actually drive some of those products from preclinical studies at academic institutions and to maybe M&A or joint ventures with some of your partners? I mean, it seems like you'd be in a perfect position to actually facilitate a lot of introductions.
Joe Burnett -- Chief Executive Officer
Yeah. No, the facilitation is certainly something we do today. Obviously, we get permissions of all the parties involved before we try to connect the dots, but it is certainly something that we've kept our kind of eyes and ears open to as well. Again, we sort of have a unique chance to kind of peak behind the curtain a little bit.
And while we don't share any confidential information, it's still knowledge that we have as far as which ideas seem to work and which ones are a little bit challenged. So we'll continue to do that. And if the opportunity presents itself to participate in some fashion, whether it's through an introduction or through different risk-sharing model of our partnership early for future royalties or something like that, those more sophisticated models are certainly things that we consider.
Andrew D'Silva -- B. Riley Securities -- Analyst
OK. That's super interesting. Thank you very much. Congrats on all the progress last year, and it's very challenging given its backdrop.
And best of luck.
Joe Burnett -- Chief Executive Officer
Thanks, Andrew.
Operator
The next question is from Frank Takkinen of Lake Street Capital Markets. Please proceed with your question.
Frank Takkinen -- Lake Street Advisors -- Analyst
Thanks for taking my questions. And I also echo Andrew's comments on congrats on a great year in such a challenging environment.
Joe Burnett -- Chief Executive Officer
Thanks, Frank.
Frank Takkinen -- Lake Street Advisors -- Analyst
Starting with the Philips agreement. Just had a question on thinking about the business model behind the Maestro. I heard your comments about, it's a matter of first installing the engine and then there's some algorithm enhancements that you will roll out as needed and as they are developed. So maybe you could help us out understanding the economic model when the engine itself is first put in place and then if there's add-on opportunities and how that works and then how that could impact the margin profile of the business.
Joe Burnett -- Chief Executive Officer
Yes. It's a question -- and I do want to be clear that we have not released it yet. So we're still building our strategy. But what I can tell you is that some of the similar tools that are commercialized already on the market that -- obviously, they take a very different approach, but their goals are very similar.
And the fact that they can segment and quantify regions of the brain in different patients or the same patient over time. These are things that are commonly used to follow patients. These are things that are commonly used in clinical trials, especially in pharmaceutical trials as well. Being able to compare a patient at time 0 versus time 2 years versus time 5 years in the same way each and every time in a predictable fashion and controlling that variability is something that's out there today.
And I think it's important to note that if you look at some of the models that are out there, the way that companies have commercialized their product is to sell not just the access to the model itself, the workstation for lack of a better term, but then they also sell an additional service contract each year and then they also sell an additional per-click speed per patient. So it's almost like turning software into a consumable or a disposable in that fashion. And I think if that's what the market has accepted at this point, that's certainly something that we are going to consider. Now, the benefit in a surgical procedure, where we're selling navigation, we're selling lasers, we're selling cannulas, we're selling biopsy needles, we have the benefit versus some of these other companies where we have already a disposable product in there.
But by no means are we limiting the scope of the deployment of this model only to our own surgical cases. Really, any candidate that could potentially be a target for one of our device therapies or one of our drug therapies, whether they get the therapy or not, it's something that we c with.
Frank Takkinen -- Lake Street Advisors -- Analyst
Got it. That's helpful. Secondly, just a little bit broader question on the biologics and delivery side of the business with as many moving pieces as they are with the COVID environment, as well as you guys continuously adding new partners all the time, I was hoping you could help us just rank and file the opportunities you see based on the size of the opportunity once an indication is potentially approved, as well as their time to market.
Joe Burnett -- Chief Executive Officer
Yeah. You know, there's really two buckets that I like to think about the opportunities in, maybe a third bucket, I'll complicate things with at the end. But the first one are these rare inherited pediatric disease states, so like AADC or Friedreich's ataxia or Angelman syndrome or Sanfilippo A syndrome, these are situations where there's very seldom an effective additional treatment. And these kids, their families, their healthcare professionals are all struggling to figure out what to do in many of these cases.
These are the ones that we really see accelerating through the process a little bit faster. So I'll use PTC as an example. They've already filed their MAA in Europe to get commercial clearance for their AADC treatment. Similarly, I think they just communicated last week that they expect their BLA submission here in the United States to go in some time in the second quarter.
So these are situations where regulatory agents are just like, "Look, we know that this is still experimental. We know that there's a lot more work that could be done, but are we really going to keep a number of these very sick children from getting treated when there is something that could potentially help?" And if it means that the post-market surveillance is a little bit more stringent and more comprehensive so that we continue to follow these patients closely. Certainly, the companies, companies like ourselves, and certainly, the parents, that's certainly something that they seem willing to work with. So those are the ones that we kind of see happening in the next, let's say, 12 to 24 months when you start to see maybe those first commercial approvals come through.
And they are, as you pointed out, sort of smaller opportunities because they are rare childhood disorders. But a lot of these companies are also going through the legwork to improve the diagnostics as many of these children today are often misdiagnosed or they're in a rural community or they swirl in a funnel of neurologists and other experts that are not quite sure what to do with them. So as these diagnostic tests continue to evolve as well, you're going to see the ability to identify these patients sooner certainly improve too. So that's kind of bucket No.
1. Bucket No. 2 are these more larger opportunities, like Parkinson's, like essential tremor, like Huntington's disease, where there are, in fact, some additional treatments available or some additional options. So we can't expect the regulatory bodies to kind of accelerate anything.
They're going to really want to see all of the science done all the way through. So those are the ones that we see closer in that 2024, 2025 range is kind of being best case as to when those start to come to fruition. But again, I mean, you're now talking about a much larger patient population, generally older patients as well, certainly adulthood who are more willing to take risks as opposed to taking that risk for their child. So I think those are things that once the reimbursement is sorted out, those things could actually accelerate much faster.
And again, if you have the option to continue to use a drug that's really failing you after a period of time where you've built up certain tolerance and you have the chance to do a one-time injection through a small 3.5-, 4-millimeter burr hole that's something that cosmetically is not an issue. It's generally a single pass. So those are the things, I think, actually do become very attractive to these younger patients as opposed to waiting for their bodies to deteriorate. The third bucket I was going to mention is something else which -- we have built prototypes we are working on.
So I mentioned we have 25 existing pharma partners today or customers, however, you want to think about it. We've got another 75 targets in the neurocranial space. There's another group of partners out there -- potential partners that are operating in the spine area. So not only do we have products that we think are appropriate for spinal infusions in this drug delivery space, but we also have that same channel, as it's very commonly and I think will always be a neurosurgeon that is actually doing these final procedures as well.
So really, we try to be focused. We try not to boil the ocean. But anything a neurosurgeon would do, we feel like that's a place that we should be operating as we transition into the future of gene and stem cell delivery.
Frank Takkinen -- Lake Street Advisors -- Analyst
Perfect. Helpful. Thank you. And then last one for me.
Just regarding the COVID environment, I heard your comments about getting back to pre-COVID levels in the second half of this year. Just curious if your surgeons are seeing a backlog of patients building and maybe there's a chance to have some outsized growth in the coming quarters as that's addressed.
Joe Burnett -- Chief Executive Officer
Yes. I think -- I mean, as with anything, there's kind of a mix. COVID has not impacted the entire country the same way, although there's certainly some commonalities there. So there are some hospitals that have continued to schedule and prioritize these procedures.
The other end, there's a number of hospitals that have completely stopped. And there's that backlog exactly like you described, that's waiting to be cleared. So I think again, the reality is somewhere in the middle of that. The important part for us is, again, we are not the first -- when our products are used, that is not the first time a patient sets foot in the hospital.
They need to be meeting with their neurologists. They need to be doing their pre-surgery diagnostic MRI scans. There's a number of steps that have to take place as well. So in some cases, in some hospitals, that health funnel has actually been somewhat disrupted.
So we've got some hospitals that have really been operating the same. We have some with a huge backlog ready to be resolved immediately. And then we have some that are going to take even a little bit longer because they have to get all those neurologists and workup visits done before that surgery is going to be centered. So I think as we kind of see it, I think in the summer of -- the Q3 of this year, that's when we expect to kind of start releasing some of this backlog if you will.
Frank Takkinen -- Lake Street Advisors -- Analyst
Perfect. Thanks again for taking my questions and congrats on a good year.
Joe Burnett -- Chief Executive Officer
All right. Thanks, Frank.
Operator
[Operator instructions] Our next question is from Mike Lipka from Hidden Small Caps. Please proceed with your question.
Unknown speaker
Hey, Joe. Good to see you guys again.
Joe Burnett -- Chief Executive Officer
Hey, thanks, Mike.
Unknown speaker
Hey, I just wanted to follow up on the question that Andrew had. Actually, I have a couple of questions. But the first one, you mentioned something about potentially negotiating royalties in the clinical trials. Is that something that you guys are looking at or like milestone payments?
Joe Burnett -- Chief Executive Officer
Yes. I'd say it's something we're working on. I mean, the recipe we're following right now is really to work and help kind of a fee-for-service model in the preclinical stages, supply of products that get written into the protocols during the clinical trial stages and then additional product supply once commercialized, including our own clinical services. So an important part of that, as I shared before, is if you are a pharma company, you generally have been calling on a neurologist as far as what your sales channel does, you might not know that neurosurgeon very much.
So the ability to effectively hire us as your neurosurgery channel, I think, is something else that -- where it's not a widget. It's not a product that's used. It's still a per-procedure fee that can drop to the bottom line of our model, right? So I'd say that's the kind of the recipe or the blueprint that we've been following. I can say is that recently as we started talking with more and more of these earlier stage companies and academic centers, I think that opportunity is absolutely there, where you could say, "Look, instead of the pharma partner or the academic center taking on some of that risk in the early stages from a preclinical standpoint, if we were to supply our expertise and take on some of that risk, exchange that for a milestone, a clearance or Phase 1 trial or even a royalty.
Those are things that, as we've had some of those preliminary conversations, I think the appetite is there, although the norm is what I've already described before.
Unknown speaker
Got you. OK. And then I wanted to talk a little bit about the sleep DBS. You mentioned that you're going to potentially go for a direct-to-patient marketing indication.
Curious first, how long that might take? And then what's kind of instigating going after that now?
Joe Burnett -- Chief Executive Officer
You know, it's always been something that we've wanted to do. I mean, again, any time a partner or a hospital has a patient that's extremely anxious, in some cases, pediatric procedures as well, where they know it's simply not practical to keep them awake and do the procedure in the operating room, that's kind of our entry point into a hospital. Where even if a hospital doesn't use us for every DBS procedures, they know that that patient comes along every once in a while. And as a result, they consider us for that.
So it's always something that we know that the patient would prefer if they were given the option, the reality is that patients are, in fact, becoming more and more sort of in control of their own healthcare. And it's one thing if you're trying to decide which one of the vaccines to get, that's a little bit less harmless, and maybe you're willing to challenge your healthcare practitioner a little bit. When it comes to neurosurgery, I think it's still a situation where the patient and the family very much still rely on the expertise of the surgeon or the expertise on the neurologist. So part of this direct-to-patient approach that we would like to take really isn't only going to be directly to the patient, but it's going to be a little bit more in educating the neurologists, as well as to how much farther the technology has come.
Now, in the past, we've always thought of that as a pretty expensive endeavor to go after it and to solidify all of the clinical evidence and labeling required to do so. So we've been somewhat reliant on the budgets of a few of the other DBS companies to kind of pursue it. And I think they have made progress. I think even if you look at -- I think it was Medtronic in their remarks at J.P.
Morgan, a fleet DBS was one of their bullet point priorities, if you will, for their DBS platform. So I think it is coming, but I think it's something that we expect to progress into in the years ahead as opposed to flipping a switch and all of a sudden that being out there. These procedures have been done a certain way for the last 20 years. And sometimes, it does take time to do that.
But the important part and part of the reason we raised the funds that we did just a couple of weeks ago is to again put that a little bit more into our control where we don't necessarily need to follow the DBS companies, but we think we have an opportunity to lead there.
Unknown speaker
OK. And then so that kind of leads into -- I know in your investor presentation, you mentioned the potential addressable market for, I think, for eligible patients within the Parkinson's population is about 0.25 million patients that are eligible for DBS. That's for awake DBS. Is that correct? And then I think you mentioned there's only 6,000 patients that get it a year.
What do you think is the major barrier there?
Joe Burnett -- Chief Executive Officer
Well, I think the fact that as soon as the patient finds out they have to be awake, I think that immediately becomes a barrier. And I think we've seen data. There have been a couple of trials in the past where -- or registries, where they try to enroll patients in between and awake and in a sleep procedure. And when the patient found out that they could be randomized to sleep, they pulled themselves out of the trial.
So these are the types of realities, where fear of awake for a few minutes here or there to do some testing, I think that's something that's absolutely adequate, and I think a patient can deal with. But the thought of being awake for a three- to four-hour surgery is, obviously, a very scary conversation that that patient is having. So I think that is absolutely one of the barriers. From our standpoint, there's a number of other reasons that -- or things that could absolutely grow that DBS market and penetrate more of those 240,000 patients that you're describing.
There was some great article in The Neurologist, I think, maybe September of last year, which showed long-term outcomes of patients that have been treated with DBS much earlier into their progression. So again, imagine if you're a DBS patient or a Parkinson's patient, rather, you have been taking levodopa or some drug for five or six years. The more drug you take, the less impactful it is until finally, you're a non-responder. And then once you're a non-responder, you're not sleeping, you're not eating well, you become malnourished, your body generally deteriorates pretty quickly.
And that's when you get referred to DBS, when you've already had that deterioration and it's only a last resort. This trial was designed to say, "Look, why are we waiting until the very end after this deterioration has taken place. Let's treat these patients much earlier." And I think the outcomes absolutely support that being a viable additional thing that we should be looking at clinically today. So that's another way.
If we can get to these patients earlier, it actually increases the number of patients that would be significantly benefit as well. A big part of our new strategy, though, that I want to lose sight on is sort of that "if you can't beat them, join them" approach here, where on one side, if we could transition every single patient into the MRI suite to do a sleep DBS, that would be a huge victory. If we can't or if that takes too long, we now are building a product in Array and our own MER system with Blackrock to be able to replicate all of the other technologies that are used in the operating room today to guide those patients awake if they needed to. So it's almost like saying -- it's almost like an insurance policy where you say, "Look, if we're unsuccessful in doing a sleep on every single patient, we have an awake approach as well." And what's great is that 95% of the workflow in the software is going to be the same between both procedures.
So as more surgeons get familiar with ClearPoint in the operating room, it makes it easier to move them over to the MRI suite down the road as well if they desire.
Unknown speaker
Gotcha. OK. And then just last question. You mentioned on the clinical trials that there were no -- I think you said all of the trials were halted.
Does that imply that all of the revenues that you generated, there was no dosing revenues related to disposables on the cannulas in 2020? And then when do you expect that to resume or are you expecting that to resume in 2021?
Joe Burnett -- Chief Executive Officer
Yeah. Let me clarify there because you're dead on, you're right there. So I would say all of the trials were halted for some period of time and some of them, that halt extended all the way through the end of 2020. Again, if you're a pharma partner and you've got a Phase 1 trial that's only eight patients, the last thing you want to do is complicate the risks of that patient getting COVID or something at a hospital.
So I think the safest route and most appropriate route was to say, hey, we need to pause things and sort of wait until these things come. So to answer the rest of your question is we did still have some disposable sales in biologics. It was almost half. I think it was $2.7 million of services versus $2.3 million of kind of nonservices.
Where that kind of comes from? Those nonservices are often benchtop testing. So for example, if you're doing a toxicology study, you might need 120 of our cannulas to test in various situations to ensure that there's no sort of crossover effects of the drug with a cannula or something like that. So where these disposables aren't necessarily being used in a patient, they're still used very commonly in the benchtop setting.
Unknown speaker
OK. Gotcha. And do you expect that to totally resume in 2021?
Joe Burnett -- Chief Executive Officer
I do. I think by the second half of the year, I think all of our partners will have certainly resumed by then. Like I shared with you, I think at least five have actively already in 2021 resumed. And we do expect some announcements before the end of the year of additional partners kind of enrolling their first patients in trials.
Unknown speaker
OK. Thanks a lot and I appreciate it.
Joe Burnett -- Chief Executive Officer
Yeah, sure thing.
Operator
There are no additional questions at this time. I'd like to turn the call back to Joe Burnett for closing remarks.
Joe Burnett -- Chief Executive Officer
All right. Well, once again, thank you to everyone for showing their interest in ClearPoint and attending the call today. We thank you for being a part of our important journey to help patients and their families who struggle with some of the most debilitating neurological disorders imaginable. Our company is in the strongest position we have ever been, and we look forward to continuing to update you on our expansion and execution in the years ahead.
Thank you very much.
Operator
[Operator signoff]
Duration: 54 minutes
Call participants:
Joe Burnett -- Chief Executive Officer
Danilo D'Alessandro -- Chief Financial Officer
Andrew D'Silva -- B. Riley Securities -- Analyst
Andrew DSilva -- B. Riley Securities -- Analyst
Frank Takkinen -- Lake Street Advisors -- Analyst
Unknown speaker
