Acutus Medical, Inc. (NASDAQ:AFIB) Q2 2020 Results Earnings Conference Call September 17, 2020 4:30 PM ET
Caroline Corner – Investor Relations
Vince Burgess – President and Chief Executive Officer
Gary Doherty – Chief Financial Officer
Conference Call Participants
Robbie Marcus – JPMorgan
Bob Hopkins – Bank of America
Bill Plovanic – Canaccord
Marie Thibault – BTIG
Margaret Kaczor – William Blair
Ladies and gentlemen, thank you for standing by. And welcome to the Acutus Medical Inc. Second Quarter 2020 Earnings Conference Call. At this time all participant lines are in a listen-only mode. After the speaker’s presentation, there will be a question-and-answer session. [Operator Instructions] We ask that you please limit yourself to one question and one follow up. Please be advised that today’s conference may be recorded. [Operator Instructions]
I would now like to hand the conference over to your speaker today, Caroline Corner,
Investor Relations. Please go ahead.
Thank you operator. Welcome to Acutus’s second quarter 2020 earnings call. Joining me on today’s calls are Vince Burgess, President and Chief Executive Officer and Gary Doherty, Chief Financial Officer. This call will include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements made on this call that do not relate to matters of historical fact should be considered forward-looking statements. Factors that may cause results to differ from these forward-looking statements are discussed under the forward-looking statements section in Acutus’s Form 8-K filed with the SEC today, and are also discussed in more detail under the risk factors section in Acutus’s most recent filings with the SEC, including the risk factors described in Acutus’s Form S-1 and in Acutus’s quarterly report on Form 10-Q for the second quarter ended June 30, 2020.
Any forward looking statements provided during this call, including projections for future performance are based on management’s expectations about today. Acutus’s undertakes no obligation to update these statements except as required by applicable law. Acutus’s press release for second quarter of 2020 results is available on the Acutus’s website, www.acutusmedical.com under the Investors section and includes additional details about Acutus’s financial results. The Acutus’s website also has the latest SEC filings, which you are encouraged to review. A recording of today’s call will be available on the Acutus’s website by 5 PM Pacific time today.
Now I would like to turn the call over to Vince for his comments on second quarter 2020 business highlights.
Thank you, Caroline. And thank you, everyone for joining us today on our first earnings call as a public company. Hopefully most of you saw the news that we had our successful IPO on August 5th and now trade on the NASDAQ Exchange under the symbol AFIM.
Well, we have only been public for just over a month, and we’re private for all of Q2, I’m pleased to provide an update on our business today, before I turn it over to Gary to review the Q2 financial results.
Before the business update, I’d like to provide an overview of Acutus for those who newer to the story, and why our company’s mission to improve the way cardiac arrhythmias are diagnosed and treated is so important to us and to patients and to the physicians in the electrophysiology community.
To review, Acutus Medical was founded in 2011, in Carlsbad, California, as a pure-play electrophysiology company, or as we say, an EP company. Our company is committed to helping physicians manage irregular heart rhythms or arrhythmias and to advancing the EP field with an array of products and technologies, which enable more physicians to treat more patients more efficiently and effectively.
Through internal product development, acquisitions, in-licensing technology, distribution agreements and global partnerships, we have established a global sales presence delivering a portfolio of highly differentiated EP products. Our goal is to provide our customers with a comprehensive solution for the treatment of cardiac arrhythmias in each of our geographic markets.
Our foundational product is our AcQMap, Imaging and Mapping System. This system offers a unique approach to mapping the electrical impulses of the heart and finding the source of arrhythmias with unmatched speed and precision. Our AcQMap system can readily and accurately identify targets so physicians can ablate tissue to interrupt errant signals, and enable normal heartbeats.
We can also help confirm both ablation success and procedural completion in real time. Additionally, with our system, the electrophysiologist can quickly perform patient specific iterative treatment methods where they map and ablate, map and ablate and map and ablate. This is in-market contrast to the conventional contact mapping approach currently used by our competitor imaging companies, which do not facilitate rapid whole chamber, mapping and imaging.
Our system is also unique, and then it can map any atrial arrhythmia, from the most basic to the most complex, irregular rhythms, which allows the clinician to use our single platform broadly across their EP patient population as a true workhorse system.
Let me help frame our opportunity a bit. The global electrophysiology ablation market is large and has historically been dominated by a few large companies and we have seen limited innovation with products or progress, with outcomes over the past decade. We estimate that in 2019 Global EP ablation product revenues were approximately $5.7 billion annually, which corresponded to about 1.1 million ablation procedures performed during the year.
Heart arrhythmias are generally correlated with advancing age, and are often a lifestyle driven condition. With demographics and our Western lifestyle at play, as large as the market is today, it grew at an impressive 13% per year from 2016 to 2019. If you were to extrapolate this growth, it suggests Global EP ablation product revenues in excess of $10 billion by 2024.
Much of our recent focus has been on patients with recurrent arrhythmias, including conditions known as persistent atrial fibrillation, a typical flutter and complex tachycardia. These patients often have endured multiple ablation procedures, yet still suffer from their irregular heart rates with accompanying shortness of breath, risk of stroke, risk of heart failure and overall low quality of life. These various arrhythmias can really be disabling conditions in many patients, and these patients frequently spend time being treated and retreated to limited avail.
With that backdrop, I’d like to share with you a recent case, which underscores the utility and importance of our disruptive and paradigm-shifting technology. This case involves A 55 year old male patient, who was a former professional cyclist, with a long history of heart arrhythmia’s complicated by another condition, pulmonary vein stenosis, and – excuse me, who had sadly gone through seven prior ablation procedures.
A few months ago, the patient began experiencing multiple, daily symptomatic episodes of what is called atrial tachycardia and atrial flutter. In other words, every day this patient was experiencing and suffering from wildly irregular heartbeats. After seeking medical advice, and due to his extensive history of prior ablation, he was told to, “live with it”.
Frustrated, the patient reached out to Acutus’s, Chief Technology Officer, Graydon Beatty, who he met during one of his earlier ablation procedure years prior to learn more about the news system. Graydon then referred the patient to a nearby physician trained on the AcQMap system, who felt that the ultra, high resolution maps created by the Acutus’s system could help identify the trouble spots and more accurately guide the ablation.
During the procedure, which was performed in Brussels, ultrasound was used to reconstruct a CT quality, right atrial anatomy. Once mapping was underway, atrial tachycardia was easily seen and the data to map the electrical impulses or work was recorded over 30 seconds.
The AcQMap system then produced three maps from three different time points, each requiring only three minutes to create. The maps consistently reproduced the same conduction patterns in the same locations. The areas causing the aberrant patterns were then ablated terminating the atrial tachycardia and returning the patient to normal rhythm, I’m happy to tell you that at 24 days post procedure, the patient happily remains in normal sinus rhythm.
As a sidebar, we have daily internal reviews for our entire company, where we share the salient points of important cases done the previous day from around the world. This serves several purposes, such as keeping our development teams updated with daily feedback from the field. But most importantly, and most notably keeping the entire Acutus team grounded. And the most important thing, we do help physicians provide great outcomes for their patients.
Now that I’ve explained a bit about who we are, I would like to now turn to our second quarter performance and walk you through some highlights. First, as I’m sure you’ve seen with virtually all medical device companies, the second quarter of 2020 provided some truly unique challenges due to the ongoing pandemic.
Here at Acutus, our team responded quickly and sought to make the most out of a very difficult situation. Our actions during the pandemic were first and foremost, to keep employees, business partners and customers safe, while maintaining safety at front of mind. we formulated and executed on plans to improve employee and clinician training, maintain frequent contact with our customer base, including both existing customers and those in our pipeline and negotiated console placement contracts.
After a temporary manufacturing pause to ensure worker safety during a reorientation of our assembly line, we also successfully built inventory and safety stock to ensure continuity of product availability in the event of future supply challenges, which thankfully have not materialized.
Remarkably, we also conceived, designed and conducted our own three day online electrophysiology 3.0 Symposium in just five weeks, following the announcement of the cancellation of the in-person Heart Rhythm Society meeting due to COVID-19 in May.
Our internal training efforts are highly focused on our field clinical personnel who attend each pace and operate the mapping system for the electrophysiologist. We refer to these operators as mappers. The mapper is an integral component of the procedure and works closely with the clinician and the nursing staff. When fully trained, mappers work alongside the clinicians during the cases.
Provisional mappers are trained on the system, but are still working alongside of more tenured mapper during the case. At the end of June, we had 17 fully certified and six provisionally certified mappers worldwide. This is up from the 13 fully certified and zero provisionally certified mappers on March 31. As of today, we have 24 fully certified mappers, eight provisionally certified mappers and five new hire mappers in various stages of evaluation and training.
Please note that it is not our intention to update these figures on future calls. But we elected to do so here to provide a snapshot of our company and where we stand with the build out of our commercial team, given the headwinds around COVID and our early launch stage.
While some parts of our business, such as hiring and training mappers continued with minimal interruptions, we did see impacts from the pandemic. We saw a significant decline in the number of procedures during March and April timeframe, as many of the EP labs where we have our consoles in the US and Europe ceased or severely curtailed operations.
We also experienced reduced access to hospitals for our mappers and commercial teams. Although our preparations enabled our team to quickly respond, as facilities reopened, and we regained access to the EP labs. Generally, electrophysiology services at hospitals returned to procedural activity ahead of other specialties, as patient discomfort and the progressive nature of the disease, motivated physicians and patients to find ways to safely reopen.
COVID drove substantial financial pressures for hospitals, and the beneficial cash flow hospitals see from EP procedures acted as a further tailwind for the return to activity for EP labs.
Moving on from our COVID response, I would like to frame the main revenue drivers for our business and our growth plans. Our major focus today on the commercial side is to grow our installed base of AcQMap systems. Growth in our installed base is foundational to our revenue expansion plans. Over time, it is simply put the razor [ph] of our portfolio of razor blades.
We are also focused on driving increased utilization of the consoles. This includes both the number of procedures and the types of procedures performed by clinicians using our system. Increased utilization feeds into our third growth driver, expanding the range of Acutus supplied disposable products used per case. This involves various mapping, therapy, access, septal crossing, and diagnostic catheters.
Moving on, I’d like to review our progress with the AcQMap console placements. During the second quarter of 2020, we grew our installed base by a net of 70 [ph] consoles to reach a worldwide total of 38, consistent with what we disclosed in our IPO perspectives.
Despite COVID headwinds, please note that we installed 10 of our Gen 2 consoles during the period bringing the total – the worldwide total to 21 Gen 2 consoles, effectively doubling our Gen 2 population. Three of the Gen 2 consoles placed during the quarter were swapped for the Gen 1 consoles already in service.
As a reminder, our Gen 2 console is a recently launched, full commercial platform with features and functions that surpass the capabilities of our first generation consoles.
As the second quarter began, we saw essentially a complete worldwide shut down of EP centers due to COVID. As was previously mentioned, we turned our attention to several activities with the goal of generating console orders that we could quickly bring into service once hospitals began returning to normal operations.
As the quarter progressed, we did see hospital access return it and by June we were able to work with many of our existing customers, as well as new customers at levels close to what we observed before the pandemic. In summary, orders per console placements that we generated early in the quarter were largely worked through by the end of the quarter.
To provide a bit more recent color, in the third quarter of 2020, we are seeing continued recovery in terms of EP lab operations. And we feel comfortable saying we expect to see a steady cadence of console placements, while acknowledging that there could of course be sporadic COVID impacts on our plans.
Moving now to case volumes, we saw similar interruptions and similar recovery late in the quarter. As we executed on our full commercial launch plans early in the first quarter of 2020, both January and February were tracking well, and we experienced steadily growing procedural activity.
Given our European presence, we saw initial procedural COVID-driven cancellations begin in late February and further deceleration during March, which is when the US also saw cancellations and EP lab shutdowns.
As you would predict, procedural activity for EP slowed dramatically going into April, as hospitals prioritized resources towards combating the pandemic, with resulting delays and rescheduling of non-emergency procedures. Due to the time sensitive treatment needs of arrhythmia patients, as well as the favorable cash flow from these EP procedures for hospitals, EP was one of the first hospital based specialties to see recovery.
With these factors at play, we saw May move towards normalcy, and by June we were seeing levels of procedural activity returning to the pre-COVID levels that we had seen early in the year in many accounts.
More recently, we saw July and August EP lab activity comparable to what we observed in June. Although we did see some normal seasonality impacts due to European summer vacations, which we would also expect in future years.
I would also note, that we have a significant presence in the UK, which you may know has lagged the rest of Europe somewhat and restarting normal hospital and EP lab operations. We are now seeing reopening in most of our UK sites and are hopeful we will see them quickly regain their prior procedural activity levels.
I would like to now turn briefly to our revenue per procedure. Our US revenue per procedure was approximately $5,500 for the second quarter of 2020. Please note, that we won’t be providing a quarterly update on this number, but wanted to give you a baseline number, so you can understand our business.
It is our goal to increase this number as we get into more procedures with more products. To that end, we have been increasingly able to sell our transseptal access and AcQRef Introducer Sheath [ph] products, alongside our AcQMap Catheter and AcQGuide Catheters into procedures we are guiding with our mapping system. It is our goal that revenue per procedure will increase as we add additional products to our sales forces bag over time.
During the second quarter of 2020, we entered into an expansive global alliance with a bidirectional distribution with Biotronik, a large, privately-held German cardiology company, that focuses primarily on cardiac rhythm management and sells devices, such as cardiac pacemakers, and implantable defibrillators. With this agreement in place, we are able to make definitive progress towards addressing developed markets around the globe, by leveraging Biotronik’s to substantial sales, distribution infrastructure and global reach.
As just one example, we can now more readily access major markets such as Australia and do so far sooner than we otherwise would have been able to do on our own.
As we will discuss later, we generated our first revenue associated with our Biotronik agreement in Q2 and we are really pleased with the relationship so far. For the distribution of Acutus products by Biotronik, we kicked off a series of launch calls with the five countries Biotronik is launching into initially and began our engagement with local Biotronik teams in those markets for handoff of existing accounts.
Elsewhere in the business, our clinical and regulatory teams have been diligently working through the process to initiate three separate IDE studies for our therapy catheter lines, and received a key regulatory clearance in Q2. As we previously disclosed for the US market we plan to submit two separate IDE trials for AcQBlate gold-tipped, irrigated radio frequency force sensing ablation catheters, with both expected to commence in the next six months.
The first, which is seeking a right atrial flutter indication is expected to take about two years to complete and obtain pre market approval or PMA. Based on current timelines, we expect that to be commercially available in late 2022.
The second is seeking a paroxysmal and persistent atrial fibrillation indication in the US market and it will take approximately three years to complete and obtain pre market approval, which means we currently expect to enter the US market, potentially in late 2023.
The final trial involves our partnership with Biotronik and relates to Acutus private labeled versions of a series of Biotroniks source, platinum-iridium and gold-tip ablation catheters, which should take approximately 2.5 years to complete, which means we expect to receive pre-market approval around the first half of 2023.
Last week, we announced a pre-clinical update regarding our pulsed field ablation or PFA, also known as electroporation program. PFA is an emerging ablation modality that delivers therapeutic energy faster and more selectively, with minimal collateral damage when compared to traditional thermal ablation.
Our product development team coupled the use of our AcQMap system, our AcQMap mapping system, with PFA delivered using a version of our gold-tip ablation catheter and demonstrated the potential to substantially shorten procedural times, while enhancing safety.
Post steady analysis indicates that durable non-conductive lesions were created without damage to collateral structures, confirming our hypothesis that our PFA may be highly tissue selective. We are very excited with the possibilities here, and what our efforts could lead to for the field of electrophysiology.
In the second quarter of 2020, we received important regulatory approvals and made a number of submissions to the FDA. We also received a key clearance this week that we want to call your attention to.
I’ll run through a few highlights now. We submitted our AcQMap catheter 2.0 510-K applications during the second quarter of 2020. This is a key product evolution for us, as it will combine a meaningful production cost reduction with enhanced capabilities, including improved torque ability, handling and faster acquisition times.
At is a late breaking development, I am very pleased to tell you that we received this 510-K clearance from the FDA just this week. And we provide more detail in the press release that went out today.
In Europe in the second quarter, we received CE Mark for our accurate AcQRef Introducer Sheath. This product has integrated electrodes that eliminate the need for other introducers and a quadripolar reference catheter, saving time and money during a procedure and further improving the accuracy and consistency of our mapping system.
We also completed our Patient Electrode Kit 5.0 510-K submission in the quarter. This evolution and our hydro gel patches improved conductivity, while at the same time reducing size, which provides patient and procedural workflow benefits.
Looking ahead, we are excited by the opportunities before us as we continue to roll out our AcQMap system. We foresee continued expansion of our installed base of AcQMap consoles, further progress with our distribution agreement with Biotronik, and we are working closely with our customers to further accelerate our utilization and EP cases.
With that, I’ll now turn it over to Gary Doherty, CFO for our financial results. Gary?
Thank you, Vince. And good afternoon, everyone. Our revenues for the second quarter of 2020 were $1.1 million, compared to $1.6 million for the first quarter of 2020 and up $0.4 million from $0.7 million for the same period of the prior year. Q2 revenue was within the preliminary range we disclosed in our IPO perspective. The revenue increase observed the second quarter of 2020 relative to the same period in the prior year was driven by the expansion of our installed base following our full commercial launch, which began at the tail end of the fourth quarter of 2019.
As Vince mentioned, COVID-19 drove a procedural decline during the second quarter of 2020 relative to the first quarter of 2020, and was the primary driver for the decline in revenue between the periods. As with many other medical technology companies, our results during the second quarter of 2020 improved from a bottom during the March and April timeframe as we progressed through the quarter.
Gross Margin was negative 135% for the second quarter of 2020 compared with negative 232% in the second quarter of 2019, and negative 102% for the first quarter of 2020. Over time and in advance of our full commercial launch, we have made significant investments in our manufacturing infrastructure to support future requirements and position us to scale production in-house as our business grows. As volumes increase, we expect to see the benefit of these investments and improvements to our margin profile.
Gross margin during the second quarter of 2020 was positively impacted by greater production volume and comparatively greater efficiency in direct labor and manufacturing overhead absorption versus the second quarter of 2019.
COVID-19 negatively impacted production levels during the second quarter of 2020, relative to the first quarter of 2020 with direct labor and manufacturing overhead absorption levels declining. As a result, operating expenses were $17.9 million in the second quarter of 2020 compared with $12.2 million for the same period of the prior year.
R&D expense was $8.2 million in the second quarter compared with $5.2 million for the same period of 2019. The increase in R&D expense was primarily driven by console enhancement and catheter development projects. SG&A expense was $9.1 million in the second quarter of 2020, compared with $6.9 million for the same period last year. The increase was primarily due to the expansion of our commercial team in conjunction with our full launch and increase in G&A incurred in anticipation of our becoming a public company.
I do want to call out one non-cash item of our operating expense, which was a $635,000 increase to our contingent consideration liability for our expected revenue based earnouts to Rhythm Xience. The primary driver of this increased liability was an improvement in our implied credit rating, as a result of improving broader market conditions and our subsequent successful public offering.
These two factors had the effect of lowering our discount rate and increasing the contingent consideration liability, which drove the non-cash P&L charge. We want to emphasize that our underlying assumptions around Rhythm Xience product performance, particularly the revenue expectations for the acquired product line did not change and remain very strong.
We wish to note that future rate movements could result in entries of a similar non-cash nature during our normal quarterly evaluation process going forward. Though, it would be unlikely to see two significant events like the pandemic rebound and an IPO in the same quarter.
Net loss for the second quarter of 2020 was $23.2 million, compared with a net loss of $30.3 million for the same period of the prior year. The net loss during the second quarter of 2020 reflects a $2.5 million fair value remeasurements of our common and preferred stock warrant liability, given proximity to our public offering. Much like the contingent consideration discussion a moment ago, as the quarter progressed transparency around a successful public offering improved and we reduced the discount rate used in the computation.
Again, it is important to note this is a non-cash valuation driven accounting entry that, given our subsequent successful public offering will not be recurring. We effected a 149.724 reverse split of our capital stock on July 28, 2020 in anticipation of our IPO. We have retrospectively adjusted shares to reflect the impact of the reverse stock split for all periods presented.
The net loss per common share for the second quarter of 2020 was $32.24, with weighted average basic and diluted shares of 719,421 compared with a net loss per share of $45.70, with weighted average basic and diluted shares of 663,972 for the same period of the prior year.
It is important to note these figures are based on share counts that do not reflect the conversion of 16.6 million shares of convertible preferred stock to common, nor the issuance of 10.1 million common shares at the IPO. Beginning in the third quarter of 2020 these additional 26.7 million shares will be included in our calculation of weighted average basic and diluted share counts, which will significantly reduce our net loss per share for future reporting periods, as compared to reporting periods prior to our IPO.
Finally, before I close up the P&L discussion, I want to make note of an expense that will occur in the third quarter of 2020. More specifically, as we completed our technical accounting review of the IPO and related activities in August and September, we determine the need for a one time $3.8 million stock compensation expense entry associated with performance-based restricted stock awards, where performance conditions were met upon our IPO.
Given the size of this expense, we wanted to foreshadow this chart for you now as it will be reflected in our third quarter 2020 statements. Again, to be clear, this is a non cash chart that will not recur as it was triggered by the successful completion of the IPO.
I’d now like to move on to a few balance sheet updates. Our total cash balance at the end of the second quarter of 2020 was $29.5 million. During the first six months of 2020, our cash flows from operating and investing activities were negative $35.5 million compared to negative $22.1 million during the first six months of 2019.
The increased cash consumption stems from investments in the expansion of our commercial organization, R&D project expenses, and other expenditures related to our full commercial platform launch. As a reminder, our August 5th Public – Initial Public Offering yielded $169.9 million in proceeds net of underwriter commissions, and we believe the resulting cash on hand is sufficient to fund our current operating plans.
With that, I’ll now turn it back over to Vince for closing remarks. Vince?
Thank you, Gary. In closing, I’d like to acknowledge and thank our senior management team, out employees, our board members, advisors and our investors and in particular, our physician partners for everything everyone has done to bring Acutus to where it stands today.
In my view, to build what we have is something of an accomplishment and speaks to the vision and operational capabilities of this team. We are excited by the future and pleased to now have the resources from our recent public offering to fuel our plans to bring much needed change and innovation to the field of electrophysiology.
With that, I’d like to thank you for your attention. And I’ll now turn the call over to the operator for your questions.
Thank you. [Operator Instructions] Our first question comes from the line of Robbie Marcus with JPMorgan. Your line is now open.
Great. Thanks for taking the question. And congrats on the first call as a public company.
You know, maybe we can start with what you’ve seen so far. Maybe in third quarter if you’re willing to comment the world [ph] a lot different than it was, even at the end of June, you know, we continue to hear that trends are moving in the right direction. It’s also been several months in some of your initial placements with the second Gen system has had some time to mature. I was wondering if you could give us just some color on the trends you’ve seen so far, in third quarter hearing feedback on the second Gen system?
Yeah, thanks. That’s great question. So, the – you know, obviously we’ve had our – we’re pretty busy in July during the IPO. Had our ear to the ground, you know, very, very carefully with our commercial teams in Europe, in the US with out partner and Biotronik just trying to keep track of and get a sense of what’s going on in hospitals, in our markets and the EP services more specifically, during the summer months, et cetera.
And, you know, really got pretty – quite consistent feedback, and really encouraging feedback from all those inputs. In terms of EP services, figuring out a way to get back on line because particularly in the US, and in some European markets, you know, physicians are just really eager to get back to work and took some pretty aggressive and extraordinary measures to get their hospitals and EP labs back up and running, figured out a way to just discharge patients same day, so patients families didn’t have to worry about overnight stays in hospitals. And you know, all – any manner of different small and large steps they could take to get back on line.
So that was really encouraging and we were hearing kind of the same things in Europe and in the US. An exception, I would say to this is the UK. The UK has been slower to come back on line. It just had trouble. Obviously we’re very hard hit over there. And in many ways kind of tuned a lot of really modern hospitals into field hospitals, in anticipation of and – into reality of dealing with the outbreak.
They’re starting now, and I think most of our hospitals in the UK are back or back up to speed for the most part, at least fully, you know, fully operational and may not be at 100%. In addition to just having our ear to the ground, I’ve actually personally spent a good chunk of the last three weeks in Orlando, where I am today, where you might have heard the thunder and lightning in the background, actually, in green’s [ph] doing cases, talking to doctors, administrators, just to understand what’s going on, and make sure we have – you know, our finger on the pulse of this business.
I’ve been doing cases in Las Vegas and in Orange County as well, in last few weeks, just trying to get your minds [ph] on things. And, you know, I’ll tell you it’s really encouraging that centers are really back up and running. We have some centers, Robbie that I think are probably operating at above prior capacity. We have some that are getting pretty close to at capacity. There are there are some that are still, you know, maybe it’s a 60% to 70% level in the US. So, you know, that’s really encouraging and I think we’re benefiting proportionally to the overall trend there.
To your question around the Gen 2, we are really pleased with how those installs are going. Our teams have just done really miraculous things to get those units installed. It’s you know – it certainly takes some gumption, if you will, to get with administration that’s dealing with these different hospitals, dealing with all manner of distractions from COVID related issues and financial stresses and whatnot to get people to focus on contracting for placements and the like. But our team’s done a terrific job doing that both in the US and in Europe and in the UK.
So, we’re very happy with that. The installs once they go in, I think these are generally going well. If you recall, the Gen 2 system has expanded functionality. We can plug in virtually anything they use into an EP lab, into these consoles. And these consoles also are upgraded with our most advanced and state of the art, SuperMap Imaging Software. And now just as of the last couple of weeks now our commercial grade Contact Mapping Software, which really turns this mapping console, which back when we were really a – with our Gen 1, we were really focused on the segments of the market that described as persistent AFIB and redo procedures, or three do’s or four do’s in some cases.
Here the new system with the new software really is – it’s a workhorse and over the last couple weeks I’ve seen physicians who are between contact and non-contact mapping during the case I’ve seen non-contact cases convert to or contact during a case I’ve seen people seeing physicians start with a standard [indiscernible] paroxysmal contact mapping case using our software and they see some kind of a funky tachycardia in that case, and they convert over – an open up one of our baskets, put it on the table, put it in the patient and tackle what they thought might be a red atrial flutter turned to be – turned out to be a left atrial flutter, with speed and efficiency and just terrific outcome. So we’re very happy with, you know, kind of how the plan is playing out.
Great. Maybe a quick follow up Gary, the second Gen mapping catheter, which just got approve all and my understanding is that comes along with a much better cost profile for you. How should we think about that rolling into financials? Now that’s approved?
Sure, you are correct, it does have a favorable profile as far as the direct costs of the units are concerned. And we’ve discussed this in our in our TWW meetings and other forums, and it’ll be immediately at least 25% cheaper on a direct cost basis. We will be rolling that out into production in the very near term. And there’s something of an LMR strategy around it to ultimately supplant all the Gen 1 catheters that we have out in the world. So we’ll be seeing that margin pickup in future periods. But we’re very confident, we’re very happy with it, the reception around it from a late development stage point of view was outstanding. And so we’re really looking forward to getting this going.
Great. Appreciate the time. Thank you.
Thank you. Our next question comes from the line of Bob Hopkins with Bank of America. Your line is now open.
Thanks, and good afternoon.
Hey, thanks for taking the question. Just you covered a lot of around in your prepared remarks and the answer to Robbie’s question. So I just have two quick ones. I mean, regarding what you said about the third quarter, you know, given where we are at 85% through the third quarter, just about, so I’m just curious, you know, consensus is around $3 million in sales and around 51 units. Are you guys roughly comfortable with those numbers, given what you’re seeing this far through the quarter?
Yeah, I mean, this is a call to focus on our – number one to, just give full color to the Q2 numbers and also educate folks that come into the stock and, you know, maybe didn’t understand the full story. So we’re really focusing there. As I mentioned in my earlier response to Robbie, we’re very happy with how the plan is working right now.
So I can’t comment on exactly where we are. But we’re very pleased with the commercial execution of our team and the performance of the products and feel like the plan is working.
Okay. Maybe ask it a different way. Like are there anything that’s you know, over the course of last couple of months, giving it such a unique volatile time with COVID in the early stage nature of your rollout? Anything that’s surprised you, in terms of what you’re seeing in UK being a little worse than expected or seasonality or things kind of playing out as you thought. Just curious if there’s any things that have transpired that are different?
Yeah, I mean, it’s kind of a one of those small numbers kind of an issues and we don’t have thousands of the consoles there, we don’t have hundreds of consoles. We’ve got our installed base out there. We do – we are seeing, I’ll just call them puts and takes right. So on the one hand, the other seasonality which we anticipated, there’s obviously waxing and waning of COVID in certain centers on the one hand.
On the other hand, we are seeing really encouraging adoption at some of our centers. And I think, you know, in the past, we’ve talked about looking for things like you know, one case a week and on balance, and we have some of our centers that have – where things have really taken root. And we’re starting to see very significantly higher case volumes than that. Because they – once they get their hands on the contact mapping capabilities, it’s the back and say, wow, this is something that I can – I can use this on my bread and butter cases. And so that’s pretty exciting.
The other thing that’s working for us right now is you know, we have an addition to our consoles and the consumables that feed off of those consoles. We also have our left heart [ph] access and septal crossing product portfolio and our AcQRef catheter, that both of those product families are actually being taken in by centers that don’t even have our mapping system, and in many cases by centers, not from the electrophysiology service, but from the structural heart interventional cardiology service, where they’re finding utility in procedures like the MitraClip procedure and LAA [ph] Watchman type procedure.
So, like I said, Bob, it’s puts and takes, we feel like the plan is working. You know, there are moving pieces and levers here and there, but on balance, we’re very happy with how the team’s doing.
Okay, fair enough. Thanks so much for taking the questions.
Thank you. Our next question comes from the line of Bill Plovanic with Canaccord. Your line is now open.
Great. Thanks. Can you hear me?
Hi, Bill. How are you?
Hey, good evening. So a couple questions here. Just I think you’ve given us some color, but I was wondering if you could just give us a little more on some of the mapping utilization trends you’re seeing between the three solutions that you’re offering. You’ve given us a little taste to that. But if we could get a little more, I think that’d be great.
And then my second question is on the mappers. You gave us some granularity in terms of the numbers, and I appreciate that. Is that a global number or a domestic number?
Yeah, so what I would say in terms of the utilization rates for the three modalities and you’re referring to our single physician [ph] for complex arrhythmias, our SuperMap for techies [ph] and flutters and contact mapping. I would say, contact mapping is early days, we literally released that product in its commercial form just over a week or two ago. It installs across our entire fleet. It actually can be installed in both Gen 2 and our Gen 1 systems. But there is a training component to that. We have to make sure our mappers are fully trained. And our physicians are in-service and detailed appropriately.
So it’s early days there. But you know, as I said earlier, I wanted to witness this product and see it and feel it with my own eyes. And that’s where I got out in the field over the last three weeks. And I’m really happy with what we’re seeing there. So I think we’re going to do very well there.
SuperMap, this is a rockstar product for techies and flutters. We’ve seen great uptake in Europe, and late last year, early this year when life was normal pre pandemic. And, you know, we really – we got approval for that product, February I think was 13th couple, you know, 14 days or so in the US before the pandemic kind of started to take root.
This product performs extremely well. I’m excited to see what we can do with it when we’re really – as we come fully back online and fully trained mappers and EPs, who aren’t distracted with everything they’ve been distracted with over the coming months. And our single position map for complex arrhythmias, this, this is great. We’ve got some new clinical trial designs that we’re rolling out to our clinician base via some KOL feedback we’ve received over the last couple of months and I feel great about how we’re doing there. So that was the first part of your question.
I think I’m not sure I’m completely on the second part of your question. If you could just repeat it, though. I apologize.
Sure, no problem. It was just on the mappers you provided us with some actual numbers and where you were at the end of June and then where we are today with the certified and the provisional, was that a global number or a US number?
Those are global numbers.
Okay. And then lastly, if I could follow up on the recovery. I think we that your – if I remember there is an update, we might have gotten some data in the back half of this year. And a lot of studies have been slowed down due to COVID. But just kind of curious if he if we’re going to still see that data at the back half of this year, and if I’m correct on that?
I think we’re looking at the first half of next year, we had a slight slowdown, but I think we are now – and I believe that’s probably older. So I think the first half of ’21.
Excellent. Thanks. And thanks for taking my questions.
Thank you. Our next question comes from the line of Marie Thibault with BTIG. Your line is now open.
Hi, Vince. Hi, Gary. Thank you for taking the questions and congrats on your first public call here. I wanted to ask the question around your visibility into the funnel when it comes to console placements, I think you’re a little bit unique in that, you know, there’s the systems are put into a lab point of evaluation process and then you work through the contracting with the administrators. So I’d love to hear a little bit about your certainty around what you can accomplish in terms of that funnel near term?
Yeah, I mean, we’re, we’re being very thoughtful about where we place the units and, you know, we don’t – unit place without proper detailing, without thinking about the profile of the center and their perspective on ablation strategy and whatnot. So we’re – this is not a carpet bomb, kind of a business strategy or philosophy. So we’re very careful about where we place the units.
In the new world that we live in even pricing [ph] systems for a long term demo takes time and you have to go through all, virtually all the same contracting processes and signing contracts and agreeing on purchase owners, everything else that they have to do for a large multi hundred thousand dollar cash purchase.
These processes take time. And, you know, I think it’s probably fair to say that the folks that renegotiate those contracts with our – they have a lot on their plate these days, with COVID and everything else that’s going on. We have seen over the year, 18 months or so we’ve been at this in the United States. We seen that this process can take anywhere from first introduction and a champion physician raising his or her hand saying this is something we must have access to and our EP lab, it might take, you know, historically, 2.5 to 5-ish kind of months to get through that process on, generally speaking.
Certainly we have experienced certain accounts over the summer, and in the spring months where it took a little bit longer than people thought, but I will tell you, we have also experienced again, it’s puts and takes. We’ve also experienced accounts that have come to hear about what we’re doing and what we’re bringing to the party here and moved with inches and including very recently and moved in with lightning speed to get contracting done and purchase orders issue.
So I would say on balance, we’re seeing basically, we’re not seeing any sort of material change in what that overall process look looks like or how long it takes. But if you’ve seen one, you’ve seen one, each interaction is as it takes on its own sort of particularly.
Okay, that’s really helpful. And speaking of what you bring to the party, I’m curious whether there’s been any change in the competitive landscape, given some of the, I would say maybe heightened attention around the technology, as you’ve been debuting it this year, possibly some added buzz around the, you know, IPO and things like that. If anything’s changed with your competition.
Well, I would say, we’re sure getting a lot of interest from people that work for our competitors that are interested in what we’re doing and are interested in learning more about us for because they’re interested in working for the company that is smaller and more impressive. So that’s exciting for us.
You know, I think the larger companies, you know, they’re on their own trajectory, they’re seeing great growth. They’re seeing the market, you know, they’re seeing big, large, profitable market. And I think they’re pretty locked in on, you know, they’re – how they’re managing each of their individual accounts. I don’t think, well, I’ll say this, I think we’re focused on growing the overall size of the path. We’re focused on helping physicians who might not have ever touched a persistent or long standing persistent case, think for the first time about actually ablating those patients rather than leaving them or watchful waiting, or referring them out to someone else.
So, you know, we think we’re going to help increase that size of the pie first and foremost. Certainly on an account by account basis, if we come in and, you know, take the attention of a physician away from their existing mapper and most common vendor, you know, there’s going to be some tension between reps and mappers. So certainly seen that on the local basis, but I would say we’ve not seen any concerted choreographed competitive response from any of the competitors at this point.
Okay, that makes sense. My final one for you then is, you know, congrats on the recent progress of Pulse Field Ablation. What will we be hearing next? What’s the next steps with that program?
This is an exciting field. We’re very aggressively, including today and tomorrow, back in animal lab with a number of key and leading physicians over the – in the pre clinical environment, working with our catheters and our systems and our software. And I just couldn’t be more excited about this.
It is a competitive environment and where we’re assessing, you know, sort of how open we want to be with our product plans, out clinical plans and our regulatory plans, with other competitors, obviously, racing to that same goal line. So, you know, I’d like to kind of beg [ph] off on signaling just as we sit here today, on what kind of what’s next from a milestone perspective, we’re going to think about that. We’ll share as much with you as I think is advisable from a competitive standpoint as soon as we can. But I’m hesitant to commit anything on that today.
We felt like it was – we felt like it was – yeah, we felt like it was important to – we highlight it a little bit. You know, that’s one in our investor presentations around the IPO, that we were working aggressively in the area. We felt like when we got through just late last month and early this month some really important milestones around the preclinical work and some of the histology data and the time trial data that we had, that we felt like we wanted to kind of let folks know what we’re up to. And that’s why we issued the press release.
Thank you. Our next question comes from the line of Margaret Kaczor at William Blair. Your line is now open.
Hey, guys. Good afternoon. Thanks for taking the questions and squeezing me in. First one, is this a little bit of a follow up on the hiring of mappers, some of the provisional mappers just your comments, I think maybe to Maria’s question recently, but that number one, you know, how quickly can some of these provisional mappers ramped to the come standalone mappers? Are the folks that maybe have some experience and relationships? Or someone that’s newer, that’s got to build those up?
And then just a follow up on Marie’s question, or the answer you gave to her question? Are you guys as you see kind of competitive mappers you know, maybe reach out to join the team? Would you be willing to hire more than kind of traditional plan over the next year or two and what would cause you to do so?
So you know, it’s certainly I think behoves us to hire experienced mappers when impossible. It’s not just mapping, but it’s understanding the nuances of an EP lab and some of the troubleshooting that’s required that connect ology [ph] and cable ology. You know, just understanding how to navigate your way through a busy, active, sometimes chaotic EP lab. Bringing somebody completely, you know, naive to that into this, you know, relatively tall order. So we’re focused on experienced EP personnel for sure. And it’s definitely a bonus if they’ve got, you know, some years of mapping experience.
Yeah, and then, you know, in terms of bringing up the – kind of turning up the dial on the pace of hiring. We’re looking at that very carefully and some strategy here is to do this as much as we can and pods, so as you have folks you know, go on vacation or you just have an overlap of cases you can work logistics so that you’ve got great coverage with great people.
As our console’s, as our console placements continue and ideally as we get more cases per week, per physician and per account, we are you know, it is going to stress our mapper, our core of mappers So, you know, we’re watching that daily, weekly, trying to figure out what is that right mix of mappers and how and when and where do we hire.
But you know, in order to have really successful cases and adoption and build advocacy and comfort amongst our physician customers, you want to have very talented, very familiar mappers there consistently. You don’t have to be moving one member in and out. You know, too often you want a familiar face there and workings over lab.
Got it. Now, it’s very helpful. And then just if I could talk to you guys, maybe on some numerical details, and I don’t know if you ever gave a utilization per count per week, per month, or any kind of clarity around the [indiscernible] system revenue?
Yeah, I think right now on this call, we’re not going to get into that level of detail. And you know, I think our next call be in early November and we’ll assess how much detail we want to disclose there.
Okay, great. Thank you, guys. Appreciate it.
Thank you. Ladies and gentlemen, this concludes today’s question-and-answer session. We thank you for your participation. You may now disconnect. Everyone have a great day.