Profound Medical Corp. (PROF) Q4 2021 Earnings Call Transcript

Profound Medical Corp. (PROF 0.50%)
Q4 2021 Earnings Call
Mar 03, 2022, 4:30 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Hello. Thank you for standing by, and welcome to the Profound Medical Q4 and full year 2021 financial results conference call. At this time, all participants are in listen-only mode. After the speaker presentation, there will be a question-and-answer session.

[Operator instructions] I would now like to hand the conference over to your speaker today, Stephen Kilmer, investor relations. Please go ahead.

Steve Kilmer -- Investor Relations

Thank you. Good afternoon, everyone. Let me start by pointing out that this conference call will include forward-looking statements within the meaning of applicable securities laws in the United States and Canada. All forward-looking statements are based on Profound's current beliefs, assumptions and expectations and relate to, among other things, expectations regarding the efficacy of the company's treatment technologies, results of future clinical trials, the ability to obtain coding and/or reimbursement from third-party payers, anticipated financial performance, business prospects, strategies, regulatory developments, market acceptance and future commitments.

Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from those implied by such statements. No forward-looking statement can be guaranteed. Listeners are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this conference call. Profound undertakes no obligation to publicly update or revise any forward-looking statements whether as a result of new information, future events or otherwise, other than as required by law.

For the benefit of those who are new to the Profound story, I would like to also take a moment to summarize our business. Profound develops and markets customizable, incision-free therapies for the ablation of diseased tissue. We are currently commercializing TULSA-PRO, a technology that combines real-time MRI, robotically driven transurethral ultrasound and closed-loop temperature feedback control. The technology is designed to provide customizable and predictable, radiation-free ablation of a surgeon-defined prostate volume while actively protecting the urethra and rectum to help preserve the patient's natural functional abilities.

TULSA-PRO is CE marked, Health Canada approved and 510(k) cleared by the FDA. In the U.S., we employ a pure recurring revenue model for TULSA-PRO, whereby we charge customers around $8,000 on a per procedure basis for TULSA-PRO consumables, lease of medical devices, procedures and services associated with extended warranties. Outside of the United States, we also primarily deploy a procedure model, but we also sell capital and consumables separately if the situation warrants that. We are also commercializing Sonalleve, an innovative, therapeutic platform that is CE marked for the treatment of uterine fibroids and palliative pain treatment of bone metastases.

Sonalleve has also been approved by the China National Medical Products Administration for the noninvasive treatment of uterine fibroids, and has obtained FDA approval under a Humanitarian Device Exemption for the treatment of osteoid osteoma. The business model for Sonalleve Systems is currently a onetime sale of capital equipment. On the call today representing the company are Dr. Arun Menawat, Profound's chief executive officer; and Rashed Dewan, the company's chief financial officer.

With that said, I'll now turn the call over to Rashed.

Rashed Dewan -- Chief Financial Officer

Good afternoon, everyone, and welcome to our fourth quarter and full year 2021 conference call. On behalf of the management team and everyone at Profound, I would like to thank you for your ongoing interest in our company. For those of you who are shareholders, we appreciate your continued interest and support. I will turn the call over to Arun in a moment for an update on our commercial activity.

However, before I do, I would like to provide a brief update on our fourth quarter 2021 financial results. To streamline things, all of the numbers we will refer to have been rounded, so they are approximate. For the three-month period ended December 31, 2021, the company recorded revenue of $1 million, down from $2.9 million in the fourth quarter of 2020. Despite COVID headwinds, recurring revenue increased 67% from $600,000 in Q4 2020, reflecting the success of our ongoing rollout of TULSA-PRO in the United States.

However, that more than offset by the fact that there were no onetime capital equipment sales in Q4 2021 compared to $2.3 million recorded in Q4 2020. Total operating expenses in the 2021 fourth quarter, which consists of R&D, G&A, and selling and distribution expenses, were $10.2 million, an increase of 69% compared with approximately $6.1 million in the fourth quarter of 2020. Breaking that down further. Expenditure for R&D increased 87% on a year-over-year basis to $4.7 million.

This was primarily driven by increased spending on R&D initiatives for new designs, technology improvements and different magnet compatibility, options awarded to employees, additional headcount and increased travel for off-site MRI business. G&A expenses increased by 80% to $3.2 million due to options awarded to employees, increased insurance costs, increased legal and accounting fees, increased license cost for the enterprise resource planning and customer relationship management software and an overall increase in general expenses as offices continue to reopen from COVID-19 restrictions. Finally, selling and distribution expenses increased by 32% to approximately $2.3 million. Overall, the company recorded a fourth quarter 2021 net loss of $10.2 million or $0.49 per common share compared with a net loss of $7.5 million or $0.38 per common share for the same three months period in 2020.

At December 31, 2021, Profound had cash of $67.2 million. With that, I will now turn the call over to Arun.

Arun Menawat -- Chief Executive Officer

Thank you, Rashed. Before getting started, I would like to take this opportunity to congratulate Rashed on his promotion to CFO. As referenced in today's press release, this formalizes the additional responsibilities that he took on when Aaron Davidson transitioned to SVP corporate development last spring. Speaking of Aaron, it is better suit for me to announce that he will finish his employment with Profound at the end of March, but will be available as needed on a consulting basis.

I will miss his daily presence and wise counsel, but also wish him well as he begins his well-deserved retirement. With that, there's a lot to talk about today. We're all tired of talking about COVID and no one is happier that its impact is finally subsiding than the Profound team. As we analyze our data, our recurring revenues only grew by 37% year over year, and that was primarily through utilization at 14 sites that operated throughout the year.

Even though, we had contractual agreements to install over 30 systems last year. It was not until late in Q4 that finally we're able three new installs, again in U.S. This finished the year with 17 sites in U.S. and 21 worldwide.

Our international business that primarily comprised of capital sales in Asia was effectively nonexistent as our team was not even able to visit the country. That was 2021, but new installs are continuing in Q1 2022, and we fully expect to achieve an installed base of 25 systems in the U.S. by end of the current quarter, bringing our worldwide installed base to 29. Similarly, we're beginning to see more activity in the international markets as a few of the capital projects have been revived.

Both suggest a faster growth in recurring as well as total revenue in 2022. In spite of the macro environment in 2021, there were many positive accomplishments that also bode well for '22 and beyond. As you know, we are targeting three major types of end users. Early adopters, independent imaging center companies and opinion-leading teaching hospitals.

That strategy has essentially worked. Most notably, we are already in seven of the top 16 opinion-leading U.S. hospitals, including the prestigious institution we announced earlier this week. In addition, I'm pleased to share that we now also expect to launch TULSA programs in less populated states, including the Southwestern states and appropriately, a TULSA system is being installed in Tulsa, Oklahoma.

I'm particularly excited about this one as they will use the imaging center model of having multiple projects bring verification to one site and drive utilization. Our clinicians continue to utilize the flexibility of TULSA-PRO to treat an unrivaled variety of patients. In the fourth quarter of 2021, the majority of patients treated with TULSA, about 85% had treatment-naive localized prostate cancer with another 12% receiving Sonalleve TULSA after prior radiation failure or failure after other types of therapies and 3% had BPH, but no cancer. Of the patients with prostate cancer, approximately 75% had intermediate-risk localized prostate cancer.

Another 10% were high risk and 15% were at low risk. In terms of treatment plans, approximately 38% were customized whole-gland where physicians targeted 95% of the gland, but precisely carved out margins at the sphincters to save continents, nerve bundles to save erectile function or even the ejaculatory ducts when possible to save vital fluid. Another 36% had large subtotal ablations covering more than half their prostate and 26% had more focal ablation, meaning having the ablation or [Technical difficulty]. This quarter, the largest prostate treated with TULSA in the U.S.

was 130 cc, whereas the smallest was only 15 cc. The simple fact is that no other established or emerging technology can safely and effectively treat as many different prostate disease patients as TULSA done. Based on this, and prior data, we believe that TULSA has unique potential to capture a meaningful portion of the overall prostate disease market. In terms of that long-term potential, if one assumes an average price of $8,000 per procedure and 250,000 prostate cancer cases annually in the U.S., that translates to a total addressable U.S.

market of $2 billion. If one were to add a small subset of what we call the extreme BPH cases, patients with very large prostates who would otherwise need a simple prostatectomy, the market size effectively increases to over $5 billion. Of course, TULSA will not capture this entire market, but these numbers give us an idea of how significant the opportunity is based upon how the product is being used today. For us, 2021 was about establishing that beachhead, a foundation to ultimately capture a meaningful portion of that market opportunity.

Although growth in the U.S. has been impeded due to the pandemic, medical technology databases report that in 2021 the number of patients treated with each high scoop and high ablation was similar to the number of patients treated with TULSA. Based on these data, we believe we have already achieved a treatment rate similar to that of other ablative technologies that have been used for more than a decade. Taken together, we believe that TULSA not only has the potential to become the leading ablative therapy, but given that TULSA has been used to treat patients with such a wide variety of prostate diseases, we see TULSA becoming a primary modality of choice in the future.

And that provides a good segue to our sponsored CAPTAIN trial, which treated its first patient in January. We expect CAPTAIN, which stands for a comparison of TULSA procedure versus radical prostatectomy, or RP for short. In participants with localized prostate cancer will be performed at eight or more sites in the United States and two sites in Canada. To date, six sites have been activated and are currently recruiting patients.

Notably, this is the first Level 1 study ever conducted comparing an emerging technology, TULSA in this case, head-to-head with RP in men with prostate cancer. CAPTAIN will compare the safety and efficacy of the TULSA procedure with RP in men with organ consigned intermediate risk, Gleason score 7 prostate cancer, with the goal of demonstrating that the efficacy of the TULSA procedure is not inferior to RP. The trial also aims to demonstrate TULSA's superior quality of life outcomes. The post-market CAPTAIN trial will enroll 201 patients with 134 patients randomized to receive one or two TULSA procedures and 67 patients randomized to receive RP.

The trial's primary safety endpoint is the proportion of patients who preserve both erectile potency and urinary continent at one year after treatment. CAPTAIN's primary efficacy endpoint is a proportion of patients who are free from any additional treatment for prostate cancer by three years after treatment. Secondary endpoints include comparison of rate of complication, cost-effectiveness and timing of the return to baseline activity with long-term follow-up data gathered for up to 10 years after treatment. We are conducting the CAPTAIN trial to increase awareness and adoption of TULSA-PRO and to support coverage by payers.

As I mentioned in our last call, we are awaiting full data in the FARP trial, a single site Level 1 study conducted at Oslo University Hospital that compared whole-gland RP to focal therapy using either HIFU or TULSA. The robotic RP arm of this study is similar to that of our CAPTAIN trial, and we are very encouraged by the initial results of that trial, as well as by the fact that Oslo University Hospital purchased the TULSA system from us for commercial use, identifying it as the clear technology of choice. Should the RP outcomes in CAPTAIN match what was seen in FARP, we believe there is potential to demonstrate clear superiority even though the CAPTAIN trial has been designed for a non-inferiority endpoint. Another feature of TULSA-PRO that we believe will significantly increase its adoption is a systems compatibility with the U.S.

installed base of MRI machines. To date, we have been working with two MRI manufacturer partners, Siemens and Philips, to commercialize TULSA-PRO. Just this week, we were pleased to confirm TULSA-PRO's compatibility with GE, the remaining of the big three medical technology companies in the global MRI space and the biggest of the big three in the United States. Together, Siemens, Philips and GE comprise more than 90% of the installed base of MRI in the U.S.

This is an important achievement that has already yielded exciting results. Shortly after confirming TULSA-PRO's compatibility with GE, we signed the first agreement for a TULSA-PRO system interface with a GE scanner with Boston's renowned Brigham and Women's Hospital. The second agreement has been signed since then with an imaging center in Florida. I'll now turn to our ongoing reimbursement strategy, which is a critical priority for Profound.

I'm very excited to share that our TULSA systematic review paper has been published online by the Journal of Endourology. It is available on our website or you can ask Steve Kilmer to send it to you after this call. Publication of this paper is a key milestone as it completes the clinical requirements to qualify to file a CPT1 application. We have met with the relevant societies since the publication, and we remain on track to be able to file our application this summer for consideration by the AMA during their fall 2022 meeting.

Although there is no guarantee of approval, should the AMA approve our application at their fall meeting, this would be an incredible accomplishment as the CPT code would be effective by January 2024. Another reason this paper is one of Profound's most important publications to date is that it generates the highest level of evidence available in support of TULSA, in this case, Level 2A. The paper itself systematically consolidate all of the available evidence on TULSA-PRO into a single peer review manuscript and supports that TULSA is safe and effective for treating primary prostate cancer. The evidence also supports the use of TULSA to treat recurrent prostate cancer and locally advanced prostate cancer, as well as the system's ability to simultaneously treat prostate cancer and alleviate lower urinary tract symptoms normally caused by BPH.

In addition, the paper confirms that TULSA is customizable, offering a treatment plan that can be tailored to match individual disease characteristics and patient preferences. Importantly, this represents a shift from the focal versus whole-gland paradigm established by other ablative modalities. Finally, the paper concludes that TULSA is a single flexible tool that can treat multiple indications, including those where minimally invasive alternatives are limited. In addition to its real-time MR visibility and thermometry that differentiates TULSA from other ablated modalities.

We believe the system's customizability will enable patients to achieve better outcomes in the real world. We're looking forward to using this paper as a tool to support system launches and utilization initiatives and to initiate and inform conversations with physicians and patients so they can decide on treatment options and plans. And last, but certainly not least, you know how proud I am of the Profound team. Abbey and Hartmut are leading sales, and Mathieu and Golddy are leading product management.

Mike has advanced reimbursement efforts significantly, and Jacques has developed the relationships with MR companies. All in all, this is a world-class team. And now I'd like to extend a warm welcome to Ken Knudson, our new chief commercial officer, who will be leading initiatives for Profound worldwide sales, marketing and reimbursement activities for both TULSA and Sonalleve. Ken's executive management career spends more than 25 years, during which he has accelerated growth for emerging start-ups and Fortune 500 companies alike.

Ken joins us from Perineologic, the company pioneering a new and disruptive approach to prostate cancer biopsy, where he served as CEO. He previously served as executive vice president of global sales and marketing for Boston Scientific Corporation, where he helped drive annual sales of SpaceOAR hydrogel, a biodegradable material that is injected between the rectum and prostate to decrease patient exposure to rectal radiation. Ken has extensive and demonstratable record of accomplishments in helping to commercialize new medical technologies in urology and has an in-depth knowledge of the men's and women's health markets. Please join me in welcoming Ken to the team, where he will be invaluable as we continue to execute our commercial strategy.

To summarize, although our growth was hampered by COVID, we believe we are at the verge of accelerated growth with our installed base expected to increase significantly by quarter's end. Not only does the TULSA opportunity remains intact, but the substantive number of complex and unique cases build our confidence in capturing a broad portion of the total prostate cancer cases, as well as a material segment of BPH cases. We are thrilled that TULSA is now compatible with all 3 major manufacturers of MRI scanners, GE, Siemens and Philips, increasing the span of our market access. Our reimbursement strategy is working, and we are excited about the expected filing of CPT1 application in 2022.

We are pleased to have initiated our sponsored CAPTAIN clinical trial, which should produce initial readout in Q4 2023. This ends our prepared remarks for today. With that, Rashed, Aaron and I are happy to take any questions you might have. Operator?

Questions & Answers:

Operator

Thank you. [Operator instructions] Our first question comes from Frank Pinal with Jefferies.

Frank Pinal -- Jefferies -- Analyst

I guess off the top, you touched on installs increasing significantly in the quarter. I was wondering if you could sort of unpack that a little bit. Was that -- was there sort of a speed up there in the conversion process? And then on the capital side, with capital being lower in the quarter, was that mostly due to COVID? I think it was -- how is that currently trending? Are you seeing COVID headwinds kind of increase? Or are they leveling off as a -- we're now, I guess, several weeks into 2022? And I have a follow-up after that. And I apologize for asking about COVID.

Arun Menawat -- Chief Executive Officer

No, no problem. I appreciate your questions. So I think to your first question, yes, we are seeing an accelerated installation rate. We did see it a little bit in Q4, but we are certainly seeing it in Q1.

And I think that unless there is another resurgence of this pandemic, I think based upon our pipeline, I do think that we will continue to increase the installed base this year, which, by the way, gives us a lot more confidence of where we're going this year as compared to the uncertainties that we faced last year. So yes, I think, generally speaking, I think just again, to be cautious, all the installed base is not going to be meaningful in just that fast. They're all going to take their time growing and so on. But I do think things are happening at a much faster pace than they did in Q1.

To your second question, in Q4, there were zero-capital revenue, absolutely nothing. And a good bit of it is that we have -- we identified a certain set of countries in Asia, in particular, where we feel that we can build scalable models where we can create a profitable revenues and really create long-term growth. And among those countries, particularly where China, Japan, and we have not even been able to visit those countries. And so things have been delayed there.

However, as I mentioned in the prepared remarks, we do see a revival. I think it's going to be slow. But I think you will -- we will start to see capital revenues trickling in. But I do think in the second half of 2022, we will -- you will start to see some of the programs that were delayed in 2021 will come back, and we are certainly optimistic from that perspective that the top-line growth will also be there from capital revenue.

So please feel free to ask the next question.

Frank Pinal -- Jefferies -- Analyst

Thank you for that, Arun. I guess picking up on the -- on sort of the regional aspect there. You commented during the call that you're spreading out regionally within the U.S. I was wondering if you could just unpack that a little bit.

Are there regions that you're currently focusing a little bit more on right now? And how do you see that strategy evolving as you play forward, say, over the next year or two? And just quickly, just one data point. Just if you can -- volumes during the quarter. I'm not sure if I heard it. If I missed it, if you could just touch on that, that would be helpful.

Thank you so much.

Arun Menawat -- Chief Executive Officer

Yes. Absolutely. So first, with respect to the geography within the United States, there are two aspects. One is that we have an eye toward increasing, obviously, utilization because that's what translates into revenue for us.

But we also have an eye toward really qualifying for CPT application. And one of the things that AMA looks for is how widely is the product being used and who is using it. So on one end of the spectrum, our product is being used by leading hospitals, and that is an important criteria. On the other end of the spectrum, they want to see that it is being used by mainstream even in rural areas as well.

And so part of our objective has been to satisfy those requirements also. But the interesting thing is that Abbey and the team were able to partner with a new group called the Paragon Group in the Southern Midwest and it is turning out to be an amazing group. I'm really excited about them actually. So they are placing -- they will be placing systems in Louisiana, Missouri, even certain rural parts of Texas and then the one that I mentioned in Tulsa, Oklahoma.

So we're now -- we have presence now in upper Northeast, lower Northeast. We certainly -- as you know, we have presence in Florida, quite a bit. We have presence in Texas, growing presence in Arizona, California, but now we're adding presence in these lower mid-western states, we do have in our pipeline upper Midwest also. So that's the plan.

And I think it covers -- it sort of is very methodically planned and it covers the -- our ability to increase the utilization. It reduces the amount of travel our patients have to do. One of the things that we analyzed last year is really exactly where our patients are coming from. And I think that the installed base is beginning to reflect where the patient population resides because what we saw in 2020 and 2021 was that over 75% of our patients had to travel well over four hours to get to the TULSA site.

So I think this will help reduce that margin for our patients. With respect to the numbers in terms of the utilization, we're in that range where September -- sorry, October, November were actually not bad months for us. They were meshing with what we saw in September time frame. December was not a very good month at all.

In fact, very, very quickly we had -- we saw significant delays and primarily driven by lack of anesthesia. So our numbers, I think compared to Q3 are up because you can see Q3 to Q4 numbers in terms of recurring revenues are up quite a bit. But overall, still very lower. I mean I think 37% growth in our lease state is not enough, and we are certainly looking to do much better than that in 2022.

Frank Pinal -- Jefferies -- Analyst

Great. Thank you so much. Thank you. Take care, everyone.

Arun Menawat -- Chief Executive Officer

Thank you.

Operator

Thank you. Our next question comes from Rahul Sarugaser with Raymond James. You may proceed with your question.

Rahul Sarugaser -- Raymond James -- Analyst

Good afternoon. Arun, Steve, Rashed. Rashed, congratulations on your appointment to CFO. Arun, my first question is just to drill a little bit further on the deployments and utilization rates.

So you talked about 25 by the end of this quarter, which I believe is quite well-lined up with the pipeline you had talked about in the previous quarterly calls. Can you give us a little bit more visibility into sort of how the pipeline has shaped up sort of beyond Q1 for deployments? And how should we also be looking at the annualized utilization rate? I believe it was around 60 procedures per year per installed device given that a bonus device is now coming online, how should we be thinking about that average rate?

Arun Menawat -- Chief Executive Officer

Yes. Rahul, we do have a very good pipeline. We continue to have a good pipeline. And particularly now that we have GE compatibility established, I think that pipeline will, in fact, continue to grow.

We have not specifically given a number, but it is far bigger than our installed base that might give you at least a general idea of how big it is. As you could tell from the significant amount of clinical information I provided the fact that the existing sites are using this product for a variety of different types of patients. I think that message is coming through. And that is the key reason why pipeline is not a problem for us.

Our surgeons really want to use this product. With respect to the utilization is stuff, I think that is a very important question because I think that the utilization at the sites that we had utilization in 2021 will continue. And if anything, I think there will be starting increases. And I think as the quarters go by, I think we'll have a lot more visibility in terms of how much the increase will be because I can certainly tell you every site is looking to increase utilization.

I just don't feel comfortable sharing us yet what is the rate going to be because they have -- the impact of COVID just subsiding. And hopefully, I can be more transparent in the second quarter on that particular point. But with respect to the new sites, which is -- as you can see from the numbers, really, half of the sites in Q2 will be new sites effectively. And I think I do want to make sure that people recognize that it's not going to get to 60% utilization in one quarter.

It's going to take their normal course, which last year took about 6 to 9 months to really get the site to utilize them and train them and have them use the different types of patients so that they could understand the full potential. So I think that, unfortunately, I mean it's just a transitionary phase that as utilization per site overall will actually be less in Q1, Q2 perhaps. But over the longer haul, it will be significantly higher, obviously. So -- and once the installed base grows and the number of new installs, the ratio becomes much smaller than what it is today, then I think this phenomenon will go away, as you can imagine this doormat.

So I hope that gives you some decent color into how we're seeing things.

Rahul Sarugaser -- Raymond James -- Analyst

Great. That's helpful and should hopefully help with our model. I want to switch a little bit to -- a little bit to data you already put the data, and we have seen some recent data from MERiDiAN and there -- the data they presented -- the Phase 3 data they presented at ASCO. Do you have any thoughts on that? And obviously, because the going after localized prostate cancer as well?

Arun Menawat -- Chief Executive Officer

Yes. So of course, we are quite vigilant and we certainly read all of the clinical information out there. And it's interesting that you mentioned this one because I think there are some strategic aspects to this, and then there are certainly I'll comment on some of the data. One of the things that is going on, on the radiation side is that there are a couple of companies that are now selling MRI real-time MR imaging guided radiation treatment or SBRT treatment.

And that in itself, in some ways, is kinship because we are the company that on the -- sort of on the other side, saying real-time MRI is a good thing. And so when another study shows that, hey, using real-time MRI is better than using real-time CT or CT radiation treatment, I think you can clearly see the benefit of the imaging modality that we are using. And that principle of using our MRI imaging modality, I think translates to us also. Now having said that, I think if you look at their data, the publication, I'm just pulling it up as we speak here.

What their data showed was that their -- what they call GU toxicity, which is the main endpoint is basically going from 47% down to 22% using MRI. So it's about half of what it is with SBRT. But think about the numbers, 47% toxicity to 22% toxicity. If you look at the TACT data, you will see equal in their toxicity down to 6%.

So as much as I think it's great to see using MRI. I think the TACT data, and particularly this new study clearly shows another order of magnitude difference when TACT -- when TULSA is used, and there is no radiation, there's no impact of long-term impact of radiation because we use heat as our energy source. So I don't know if that helps, but that's sort of a quick summary of how we interpret that data.

Rahul Sarugaser -- Raymond James -- Analyst

That's really helpful. Thank you. Thank you, Arun. And then if you would indulge just one more question since we talked about radiation and we can switch a bit to the comparison to surgeries that you referred to the CAPTAIN trial.

We know that the FARP trial should be reading out sometime this summer. So just for us, how should we be thinking about interim readouts when should we be expecting data from these trials, particularly given sort of the interplay between FARP and CAPTAIN?

Arun Menawat -- Chief Executive Officer

Yes. So I think -- so first of all, you're right. FARP, we hope to see full data this summer. For CAPTAIN, at this point, our expectation is that RSNA 2023, which is typically in November when we will have the first step of data because we're treating patients now.

So the patients who are being treated this year. And by that time, by RSNA 2023, we should be able to complete full recruitment. So there should not be any biases and all that. So that's all behind that and we're just monitoring the patient.

But by that time, we should be able to show six to 12 months data. And if the statistics hold similar too far, we should be able to start to see differences as early as that.

Rahul Sarugaser -- Raymond James -- Analyst

That's terrific. And I'll get back to the queue.

Arun Menawat -- Chief Executive Officer

Thank you, Rahul.

Operator

Thank you. Our next question comes from Josh Jennings with Cowen. You may proceed with your question.

Josh Jennings -- Cowen and Company -- Analyst

Hi, good afternoon. Thanks for taking the question. All your help over the years, Aaron, and good luck on the next chapter and say congratulations on the official -- officially. Arun, I was hoping to just ask about -- you mentioned capital projects reviving internationally.

I just wanted to get a sense of how we should be thinking about the international channel in 2022? Any further detail would be great.

Arun Menawat -- Chief Executive Officer

Yes. Yes. Josh, I know that's a great question. And I think what I can -- in terms of providing more detail, what I can tell you is projects were delayed and maybe except for one or two here and there, generally, nothing was canceled.

And even some of the installations or some of the sites that are installing MRIs or upgrading their hospitals in Asia, they were all delayed. And verbally what we are hearing is things should be in fairly good shape in the second half of 2022. So I think from that perspective, we are quite optimistic. And I think from the perspective that projects are not canceled, but just delayed is certainly positive.

And I think the best I can share with you is second half of this year, we should see a revival of the capital revenue. I guess the other detail -- a little detail that I can share with you is that in the last three, four months, we have certainly seen that the sites in Asia that are running like in China or South Korea, that the number of patients that they have treated during these last three, four months has certainly increased in double-digits. So the fact that they are -- there is some revival in terms of the patients treated. It is starting to show that they are coming on stream.

And I think China, as you know, is really now remaining one of the few countries and Japan, a few countries that where travel is still incredibly restricted. But we are very hopeful that, that will open in the second quarter, and I personally plan to visit and really check this out, so I can really, really provide much more concrete information. But I do think second half this year at the moment is a fair bet.

Josh Jennings -- Cowen and Company -- Analyst

Great. Thanks for that. And just had a follow-up on U.S. reimbursement landscape.

And just -- I mean hospitals still having success summing for payment for TULSA cases using the preexisting code. Or how is that faring -- it's become more widespread?

Arun Menawat -- Chief Executive Officer

Yes. Josh, we have had at least 10 hospitals that have used the C code. Pretty much all of the key hospitals have used it. And pretty much everyone is getting paid.

The average payment is approximately $12,500. And just as a comparison, the average payment for radical prostatectomy is just under $10,000 today. So the $12,500 that the hospitals are getting paid is in the right realm from what we can tell. We continue to charge just a little over $8,000 per patient.

And that fund -- those monies are coming from that $12,500 that they are receiving. And given the fact that the treatment is done in an MR suite, which is a lot less expensive than the operating suite, we believe that the bottom line for the hospitals is positive, at least that's the feedback we're getting. So I think on that front, we're pretty happy with what we're seeing. And quite frankly, on the other side, where you see the concierge service, where we have these early adopters, people are paying the $30,000 and then they're flying -- as I mentioned earlier, over 70% of the patients are literally flying to these sites to get treated.

Josh Jennings -- Cowen and Company -- Analyst

Just last question is on just thinking about the TULSA-PRO system in its current form and just what is your team working on or when would we hear anything about next-generation system? And what type of enhancements are you pursuing? Thanks for taking all the questions.

Arun Menawat -- Chief Executive Officer

Sure, sure. That's a good question, Josh. So we have actually introduced new features in Europe already commercially. We have submitted some of these with the FDA.

We think another three to six months, we should be able to introduce these into the U.S. But there are a couple of features that are very interesting. One in particular that I want to mention is that at the moment, if you are thinking about radical prostatectomy or surgical prostatectomy, usually it is done on patients who have what we call organ-confined disease, which is what I mentioned in the prepared remarks. So as long as cancer has not gone out of the prostate, you can do radical prostatectomy.

But in a number of cases, that cancer sort of rubs on the size, and there is maybe a millimeter or so involvement of the muscle tissue that is just outside of the prostate. And because we use the real-time MRI, physicians know where the boundaries are and physicians have a pretty good idea that they actually want to go beyond that capsule or the prostate boundary. And so we introduced the concept that we call thermal boost, meaning that if there is a region where the physician wants to go a millimeter or two beyond the prostate that they can activate that thermal boost and they can actually kill that side, that section where there is a slight involvement of the muscle tissue perhaps. And a number of cases have been done -- as I said, in Europe, it is now commercially available.

It is very well-received by the way. And the benefit here is that, again, you can tell we're very clinical-data focused. And if you look at critical data in radical prostatectomy, over 20% of the patients in studies, it has been shown that they leave cancer behind in those edges. And so this one particular feature gives us that potential.

Obviously, we need to get more data and so on. But it certainly gives us that potential that we could, in fact, at some point, begin to treat patients who may have a little bit of that extra cancer that is there. And that, again, we will need long-term data for this, but physicians think that this is a very interesting new development that we are -- that we have. It is commercial in Europe.

We're an FDA in U.S., and we hope to bring it out later this year in the U.S. So that's just one example. And I think you will see at least one more very interesting technology. I won't talk about it yet.

We are discussing it with the FDA, but it is designed to make it more reproducible and it is designed to reduce the treatment time, which already is pretty good, but it will -- it's designed to reduce the treatment time in the future.

Josh Jennings -- Cowen and Company -- Analyst

Great. Thanks Arun.

Arun Menawat -- Chief Executive Officer

Thanks, Josh.

Operator

Thank you. Our next question comes from Frank Takkinen with Lake Street Capital. You may proceed with your question.

Frank Takkinen -- Lake Street Advisors -- Analyst

Hey, thanks for taking my questions. Not sure if I missed it or not, but did you, by chance, share how many installs have occurred so far in the first quarter? Just trying to get a feel for the lift from that 17 at the end of the year to get to 25 by the end of the quarter. How many of those are left to be installed yet in the last four weeks of the quarter?

Arun Menawat -- Chief Executive Officer

Yes. Frank, we have -- we didn't provide that much granularity because it's sort of week-to-week. But what we feel pretty comfortable with that is that we will be at 25 by end of this month basically. So it's going to take time for these to start the utilization.

But I think that once the installation is done, I think we will start to -- you will start to see utilization slowly going -- starting in the second quarter. And some of it, you will see in the first quarter also. So far, certainly, January was a better month than any month in Q4. And I think we do see increased usage in Q1.

But again, let's see how the quarter ends. But certainly, we're starting to see slow increases. And I think we're pretty confident about the 25. And we're pretty confident that from there forward, as long as there's nothing unusual that comes about, that we will continue to see increase in utilization, as well as new installs.

Frank Takkinen -- Lake Street Advisors -- Analyst

OK. That's helpful. And I was hoping you could provide a little update on Akumin. How are things going there? Do you have any installs mapped out for them in 2022 yet?

Arun Menawat -- Chief Executive Officer

Yes. That's a very good question, Frank, because Akumin actually is stalled at the moment. There have been a number of changes that have gone on at Akumin. And so we have -- the numbers when we have provided to you, we have actually not included that contract so far.

But we have replaced those with other contracts. And as I mentioned, one of them is a multi-site agreement with a group called the Paragon Group that is installing their first system, in fact, in the next two -- it's actually being shipped now. And I think that Akumin will that -- the grade will get replaced by some of these other imaging companies. I do think that long-term Akumin is a very good potential, particularly because they now also own certain oncology hospitals where this technology would be a very good fit.

But I want to make sure that they have the time that they need to do their integration, and we have plenty of work to do in the meantime.

Frank Takkinen -- Lake Street Advisors -- Analyst

OK. That's helpful. I will stop there. Thanks for taking my question.

Arun Menawat -- Chief Executive Officer

Thank you, Frank.

Operator

Our next question comes from Brian Gagnon with Gagnon Securities. Please proceed with your question.

Brian Gagnon -- Gagnon Securities -- Analyst

Hi, guys. Can you hear me, OK?

Arun Menawat -- Chief Executive Officer

Yes, Brian. Good afternoon.

Brian Gagnon -- Gagnon Securities -- Analyst

You talked about the pipeline, you talked about the backlog, but can you give us an idea of how many signed contracts you have that have yet to be installed?

Arun Menawat -- Chief Executive Officer

Yes. Very good question. My best guess is that we have over 40 contracts at the moment. And we have a pretty good pipeline in addition to that.

Brian Gagnon -- Gagnon Securities -- Analyst

And that doesn't include Akumin and RadNet.

Arun Menawat -- Chief Executive Officer

It includes RadNet. I think you will see the other sites at RadNet will come on stream this summer, but it does not include Akumin.

Brian Gagnon -- Gagnon Securities -- Analyst

OK. You filed the shelf today. Any plans to use it? Or is that just corporate housekeeping for replacing the shelf that you had from last year?

Arun Menawat -- Chief Executive Officer

Brian, that's a very good question. We have over $67 million. Actually, let me turn that question over to Rashed to answer.

Rashed Dewan -- Chief Financial Officer

So as Arun said, we announced that we have over $67 million in the balance sheet as of the end of the year. And this is just a pure housekeeping. Our previous shelf expired in November 2021. So we decided to update the shelf this morning.

We just believe it's a prudent thing to do for the company and a lot of other companies maintain a base shelf.

Brian Gagnon -- Gagnon Securities -- Analyst

OK. Got it. Reimbursement and I think you said $8,000 per procedure, wasn't that $7,400 last quarter? What changed? And then I want to have a couple of questions about reimbursement.

Arun Menawat -- Chief Executive Officer

Sure. So we -- as you know, when we started the program, we did -- we also were learning how to price it properly. So in 2020 and 2021, there were certain agreements that were in that $7,000 to $7,500 range. But every agreement has been updated and every new agreement is over $8,000 per patient at this point.

Brian Gagnon -- Gagnon Securities -- Analyst

That's great. OK. So on reimbursement, congrats. It sounds like you're making very good progress with the CPT code.

And are you getting good reimbursement from the ones that are in the hospital today? And then if you would layer into that any success you're having from commercial payers and/or other government systems for reimbursement and what your thoughts are there?

Arun Menawat -- Chief Executive Officer

Yes. So Brian, with respect to using the C-code, it is -- has worked out. The strategy is that we articulated early more than a year ago, I think in 2021, certainly worked. The average payment to the hospital -- and first of all, there are at least 10 hospitals that have been doing it.

So I think there is sufficient volume there. And the average payment is in the range of $12,500, which we think is the right place to be. So we're pretty happy with that. And with respect to other payers, actually, there are two things.

One is, certainly, there are a number of private payers and most -- many times, the hospitals are looking for preauthorization and generally, that strategy is working. But the one that actually I haven't mentioned is that in a number of cases -- in certain number -- some of our hospitals have actually been authorized by the veterans administration also, and they are paying full amount. So for example, one of the hospitals in the East Coast has been fully authorized by veterans already, which normally veterans sort of lags behind everything else. There is another hospital in the West Coast that is could be operational and treating veteran patients.

We have, in fact, veterans -- one of the veterans hospitals that is an opinion-leading veteran hospitals in Cincinnati. We have a contract with them. That system will be going in this summer in the hospital itself, and we are pleased that the veterans are getting served early, since this is a older men disease. And we have a couple of other hospitals that have applied for their local authorization and the fact that we've already established a few hospitals that are getting it.

We are pretty optimistic. So I think we have not talked about veterans before, but yes, that is another one that we are pretty happy to see.

Brian Gagnon -- Gagnon Securities -- Analyst

Arun, can you give us a sense as to what the VA will be paying per procedure at these hospitals? And is that an indication of what reimbursement could look like in the future from other government entities and/or commercial?

Arun Menawat -- Chief Executive Officer

Yes. So I think at the moment from the best we can pull together, it's well over $20,000 per patient that VA is paying. I think to your other question, Brian, the C code is probably a good parallel because usually, C codes are developed based upon the relative value units when the CMS works on those and they sort of adjust those numbers annually based upon the costs that they see at hospitals. So I think if that -- that probably is the best surrogate that we can see.

And if they are paying the $12,500, that is not a bad place to be.

Brian Gagnon -- Gagnon Securities -- Analyst

OK. And last question for me. With over 40 contracts signed, do you have enough people and teams in place to do the installs and get through that group this year, and it's only early March, and you talked about a very strong pipeline. So does that mean that you're going to be trying to catch up with some of these installs and the numbers that we see today for installed are just very low to where they'll be 12 months from now?

Arun Menawat -- Chief Executive Officer

Yes. We're working on that, Brian. We are adding sales team. So far, it has been sort of senior team, Abbey, Mathieu and in some cases, myself, where we sort of did the initial evangelical sales, but now with Ken joining us, he's already helped put together a sales and marketing organization, adding professionals to be able to service the installed base and to create a disciplined model for new sites.

So we're adding people in the field. Same thing on the service side. And also, our manufacturing team has been evaluating all of the supply side. We had a very good conversation with our Board about that today this morning that we are tracking and to make sure that we have all the supplies that we need to be able to supply the disposables in particular.

And we feel so far -- we don't have a lot of cushion in our system at the point -- at this point in a moment, but we do believe we will be able to service the agreements that we are signing.

Brian Gagnon -- Gagnon Securities -- Analyst

Excellent. Thank you very much. Look forward to what comes next.

Arun Menawat -- Chief Executive Officer

Thank you, Brian.

Operator

Thank you. Our next question comes from Ben Haynor with Alliance Global Partners. You may proceed with your question.

Ben Haynor -- Alliance Global Partners -- Analyst

Good afternoon, guys. I'll be quick. Just a couple for me. You mentioned, Arun, the utilization of HIFU and cryoablation and how TULSA, if I heard you correctly, has already kind of surpassed that.

Do you -- do you have an idea of how many HIFU and cryoablation installs are out there at present?

Arun Menawat -- Chief Executive Officer

Ben, so what we are -- our future is really about the number of patients treated in the end. And we will -- we have not made the specific numbers public, but we will. That's our plan to do that as the numbers get to a predictable level. That's the only thing that's preventing us.

I know that's not your question, but I think that's an important thing to mention is that it's just that with this COVID, the unpredictability has been the reason. But as we get to these higher installed base and the dynamic effect continues to subside and we get to the predictable level, we will make that public so that it's really easy to track our company's progress. But what we did was we looked at the government databases. And so we think that those numbers are in the 400, 500, 100-patient range impact.

And so we think that for us to get into the range of that kind of run rate within the first two years and the two years have been pandemic-driven two years, we think that's pretty good as much as I said. I'm not happy with the 37% year-over-year growth. But that's kind of where we're coming from. It's -- just to put a perspective in place.

And I think the more important point, Ben, is that it is because of that flexibility of the technology that it can be used in high risk patients and lower risk patients. And as I mentioned in the product development remark that we will -- once the thermal boost is cleared by the FDA, we will actually be able to treat patients where they may have a little bit of involvement beyond the processing. I think that's -- so I'm trying to triangulate and make sure that we don't miss anything as we drive adoption of our technology. And that's the reason why I kind of mentioned that -- those points that we -- from a benchmark perspective, we are doing pretty good.

And I think this year, we should be able to exceed all of those. And thereby, we can start to -- for the first time, as you may have noticed I mentioned that we are poised to become one of the mainstream at least that's what we believe. And this is what the data is telling us. And the fact that reimbursement is coming along, the fact that the clinical data is there, the fact that we can find -- we are on track with CPT.

All of this is sort of telling us that yes, we've got a unique technology that can be mainstream.

Ben Haynor -- Alliance Global Partners -- Analyst

And also what I was partially getting at there is the number of HIFU and cryoablation installs that are out there, presumably, if there's x hundred centers that are doing the HIFU or cryoablation cases, they'd obviously be candidates for TULSA-PRO. Do you have an idea how many pulls out there are doing those right now.

Arun Menawat -- Chief Executive Officer

That's right. And I think there are -- of the centers and particularly as you -- as we go to these bigger numbers, I think you will -- you are -- I can tell you, we have had a couple of sites that were using FLA or laser fiber, they've switched to TULSA. I can tell you, there are at least a couple of sites that we're using HIFU that have switched to TULSA. So it's early stage.

So I think we have to be real. But I do think that -- and there are -- there is at least one site where they're using HIFU for that very localized if there is a patient with one little cancer in one place. They are still using HIFU technology because that technology really does fit that type of patient. But for other type of patients, all the rest of them, it sort of has increased their practice because now they can treat a larger variety of patients.

And so they're using both technologies.

Ben Haynor -- Alliance Global Partners -- Analyst

OK. That makes sense. And then just lastly for me, now that you guys have reached the big time with the TULSA-PRO and TULSA, I mean is there any differential that you expect in terms of utilization at these more rural centers with kind of a feeder model versus kind of the centers that you've been installed so far.

Arun Menawat -- Chief Executive Officer

Right. No. As I mentioned, Ben, I'm pretty excited about that possibility. I think the Paragon Group understands the model very well.

I think that we have -- we haven't really seen the best implementation of that model yet. I know the site at RadNet, for example, is starting to do that. And I think they are -- they're going to install the other systems later this year, and I think they will get there. But I think this particular one, I think they are looking for utilization on multiple days.

So I want to be cautious and wait to see how it goes. But I think, certainly, that concept is intact, and we just need to validate that with the site. And if it does, I think that will be a very big positive for us.

Ben Haynor -- Alliance Global Partners -- Analyst

Excellent. Well, I mean it sounds like you guys have made a lot of progress on the things that you can control. So you congrats on that. And I'll leave it there.

And thanks a lot for taking the questions, gentlemen.

Arun Menawat -- Chief Executive Officer

Thanks so much, Ben

Operator

Thank you. And I'm not showing any further questions at this time. I would now like to turn the call back over to Dr. Menawat for any further remarks.

Arun Menawat -- Chief Executive Officer

Thank you. I know Aaron is on the call, Aaron, if you wanted to say something, please go ahead. Aaron? OK. So if there are no other questions, thank you so much for listening.

Thank you for the questions. And I hope that we will be able to have a pretty good Q1 and be able to report on that for you at the Q1 call. Thank you so much. Have a good evening.

Operator

[Operator signoff]

Duration: 78 minutes

Call participants:

Steve Kilmer -- Investor Relations

Rashed Dewan -- Chief Financial Officer

Arun Menawat -- Chief Executive Officer

Frank Pinal -- Jefferies -- Analyst

Rahul Sarugaser -- Raymond James -- Analyst

Josh Jennings -- Cowen and Company -- Analyst

Frank Takkinen -- Lake Street Advisors -- Analyst

Brian Gagnon -- Gagnon Securities -- Analyst

Ben Haynor -- Alliance Global Partners -- Analyst

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