Earnings Transcript for MOTS - Q4 Fiscal Year 2020

Company Representatives: Tim Moran - Chief Executive Officer Andy Taylor - Chief Financial Officer Mark Pomeranz - President, Chief Operating Officer Garth Russell - LifeSci Advisors

Operator: Ladies and gentlemen, thank you for standing by, and welcome to the Motus GI Holdings Incorporated Fourth Quarter 2020 Financial and Operational Update. At this time all participants are in a listen-only mode. There will be a presentation by the Motus management team, followed by a question-and-answer session. I must advise you all that the conference is being recorded. I’d like to turn the call over to Garth Russell of LifeSci Advisors. Please go ahead, sir.

Garth Russell: Thank you, Operator, and thank you everyone for joining us for the Motus GI, Fourth Quarter 2020 Update Call Today. Representing the company are Tim Moran, Chief Executive Officer; Andy Taylor, Chief Financial Officer; and Mark Pomeranz, President and Chief Operating Officer of Motus GI. Before I turn the call over to management for their opening remarks, I would like to take a minute to remind you that this conference call and webcast will contain certain forward-looking statements about the company. These statements are subjects to risks and uncertainties that could cause actual events to differ. Please note that these forward-looking statements reflect our opinions only as of the date of this call. We will not undertake an obligation to revise or publicly release any results of any revisions to these forward-looking statements in light of new information or future events. Factors that could cause actual results or outcomes to differ materially from those expressed or implied by such forward-looking statements are discussed in greater detail in our recent filings on Form 10-K and other periodic reports on Form 10-Q and 8-K with the SEC. I would now like to turn the call to Tim Moran, CEO of Motus GI. Tim, the floor is yours.

Tim Moran: Thank you, Garth, and thank you everyone for joining us today for Motus GI's fourth quarter and full year 2020 earnings call. I'll start today's call by discussing our performance in the fourth quarter, provide detail of what we're seeing in the broader U.S. hospital market, as well as discuss four upcoming value creation drivers that we believe have the potential to greatly enhance our business. I'll then turn the call over to Andrew, who will provide a review of our financial performance. At the end of our prepared remarks, we will open the call to take your questions. As a result of COVID-19, 2020 was a tumultuous year for everyone. However, as I reflect on the last 12 months, I am pleased to say that despite these challenges our team exhibited impressive resilience, which allowed us to advance our strategy and establish a foundation for Pure-Vu in the market. It's important to remind everyone that we are in the early stages of tapping into the opportunity before us. In terms of market size, with more than 50 million procedures per year, colonoscopy is one of the single largest procedures in all of Med Tech. The unmet need associated with poor bowel prep is universally recognized, both from a clinical and economic perspective. The thesis which motivated me to join Motus as its CEO two and a half years ago has not changed. Our Pure-Vu system has clear first mover advantage, meaning we believe we currently have no direct competition and we continue to protect our core technologies through a growing portfolio of granted patents. The task at hand is now focused on establishing our entry position in this market and changing longstanding behaviors, both of which are challenging tasks that require focus, patience and deliberate execution. We're asking physicians and their staff to think differently about patient flow, with the goal of eliminating archaic and unnecessary delayed hospitalizations due to poor bowel prep. This shift in mindset requires an enhanced commitment to improving patient care and a focus towards fixing the unprofitable economics for the hospital under the current standard of care. Moreover addressing unmet needs and solving these clinical challenges requires physicians, nurses and support staff to adopt a new technology and learn to utilize it effectively in cases they encounter on a regular basis. My experience tells me that changing behaviors doesn't happen overnight, it requires tenacity, telling the story each and every day and being highly targeted in our approach to influencing one physician at a time. While this process may take longer than we'd like, it doesn't change what we're playing for here, establishing Pure-Vu as a new standard of care in the large global colonoscopy market. I am confident that our shareholders, our customers and their patients will greatly benefit as we execute toward our goal of long term success. I'd like to highlight the decisive and disciplined approach we have taken in our business since COVID-19 began one year ago. We acted with urgency in March and April 2020 cutting our quarterly cash burn by about 50% as the year progressed. We streamlined our areas of focus and our internal projects, continuing only those projects that we believe would enhance our business and help build medium and long term shareholder value. We strengthened our base of shareholders and our balance sheet in 2020 and early 2021, bringing in more than $20 million of additional equity capital. And finally, we continue to build strong customer relationships and gained evaluations at more than two dozen targeted hospitals across the U.S. Despite current market related headwinds, which are mainly attributed to COVID-19, we are in the strongest financial position since Motus GI was established and are well situated to come out of the other side of this pandemic. We believe our sales and marketing teams’ nimble approach to remain engaged with keys positions has been very effective, particularly when considering the unique environment with lockdowns and social distancing requirements. In the third quarter we saw a nice rebound in our business, primarily driven by an uptick in procedure volume and having on-site access to most of our hospitals. While that trend continued into early Q4, the resurgence of COVID-19 in specific geographies, particularly California and Texas created a slowdown in our momentum in November and December. With that said, I'm pleased that from a revenue perspective, despite the uptick in COVID-19 related issues in Q4, we sold more disposable sleeves than in Q3 and conducted roughly as many Pure-Vu procedures. In Q4 we also successfully negotiated two new 12 month committed contracts at prominent medical centers, the University of Texas and NYU, which are both in effect for 2021. In both instances the customer made a commitment to minimum quarterly purchases for our Pure-Vu sleeves and for doing so, we are allowing the early adopters what we are calling centers of excellence to utilize our capital equipment at no additional cost, while these minimums are met or exceeded. We believe deploying this razor blade model works well in instances where capital funding is currently unavailable, as it permit the customer to expand use of the Pure-Vu system, while providing us with more predictable sleeve volumes. Given the current capital environment, we expect to complete additional agreements like these with early adopter hospitals in the first half of the year. You may also recall that University of Texas and NYU are two locations that have implemented a protocol that identifies clear clinical circumstances where the Pure-Vu system should be utilized, which is also resulting in more consistent usage patterns. Replicating similar patient identification protocols in additional Pure-Vu site, is a key focus for our commercial team. In the fourth quarter we also expanded our business by initiating product evaluations at new accounts, most notably the Mayo Clinic in Phoenix and Mass General Hospital in Boston. While we may not see the current environment begin to normalize immediately, we believe as hospital access returns and GI procedures rebound to pre-pandemic levels, we are poised to drive an acceleration of Pure-Vu utilization. Due to the pandemic, we've yet to benefit from having all of our hospitals fully up and running at any one time over the past year. As part of our fiscal discipline, we are currently fielding a small customer facing team. This team is doing a great job driving the result that I summarized, and as we see a more favorable environment emerge, we will look to thoughtfully invest in expanding our commercial organization with the goal of driving faster utilization and revenue growth. I want to switch gears to upcoming catalysts for the business. We have identified four value creation drivers that we believe have the potential to meaningfully enhance and accelerate our business in 2021 and beyond. They are reimbursement, product innovation, clinical data and strategic partnerships. Let me start with reimbursement. In the back half of 2020, we began to develop a comprehensive strategy aimed at positioning Pure-Vu for reimbursement coverage in both the in-patient and the out-patient settings. While there are many pathways to achieve both public and private coverage, we are initially focused on CMS programs designed to provide payment for new and unique technologies. In the fourth quarter we submitted an application to CMS for a new technology add-on payment, sometimes referred to NTAP. This program could provide reimbursement for Pure-Vu during in-patient colonoscopy. As part of this submission, we also applied for an ICD-10 code. As you may have seen in a recent press release, on March 9 we participated in CMS's Coordination Meeting where I am pleased to share that they recommended Pure-Vu to be considered for an ICD-10 code. CMS is now conducting an open comment period and then the final decision will be made through a subsequent clearing process. If a code is awarded and substantively NTAP coverage, we believe adoption and utilization of Pure-Vu in the in-patient market can be accelerated. We also submitted an application for CMS's transitional pass-through payment. This program could provide reimbursement for traditional outpatient procedures. We believe high medical need patience that can't successfully complete their pre-procedural bowl prep would benefit greatly from Pure-Vu. Securing pass-through coverage for our system could be a significant catalyst for our business, as it would provide economic incentives for physicians to use Pure-Vu on the roughly 5 million high medical need procedures each year in the U.S. It would also mark our first entry into the large out-patient market. Next, I'd like to discuss new product innovation. I am pleased to report that our product development efforts to launch our first Pure-Vu system for use in Upper GI endoscopy is on track and we expect to submit a 510-K application to the FDA by early Q3. This would potentially position us with an approved and available product on the market by early Q4. We view this as a significant opportunity and believe our technology can potentially address a serious unmet need in the market as it relates to visualization and the treatment of Upper GI bleeding, which has an estimated mortality rate of approximately 10%. There are roughly 400,000 Upper GI procedures in the U.S. annually and we continue to receive significant inbound interest from GI physicians who are eager for a solution that allows them to clear adherent blood and clots from their field of view during this critical procedure. Next, let's discuss clinical data generation. I'm excited to announce today that we recently began enrollment in a study with the Cleveland Clinic, which will evaluate the clinical and economic benefits of using the Pure-Vu system in patients with emergent lower GI bleeding that are treated in the ICU or the rapid inpatient endoscopy suite. This study is designed to enroll at least 20 patients to undergo minimal bowel prep in order to provide patients a much faster diagnosis as compared to the current period of 24 to 36 hours or more, typically required to complete a full bowl prep. The outcome we receive from this study could begin to challenge the current standard of care for emergent Lower GI bleed patients who are facing urgent need for diagnosis and treatment, but are currently delayed. We expect to have this study fully enrolled before the end of 2021. And lastly, I want to talk about strategic partnerships. As it relates to our strategic options, we've spent time evaluating a number of potential pathways during the back half of 2020 and into 2021. Our objectives in considering any potential partnership would be aimed at opportunities that could accelerate our commercial efforts and enhance our technology development. Any partnership would also need to unlock clear shareholder value. As we continue to grow awareness and uptake of the Pure-Vu system, we will consider which options best fit our criteria and are actionable. I will now ask Andrew to review our financial results for the fourth quarter and the full year. Andrew.

Andrew Taylor: Thank you, Tim, and thank you everyone for joining us today. We reported revenue for the fourth quarter 2020 of approximately $36,000 primarily from the sales of Pure-Vu single-use sleeves. As Tim discussed, our small commercial organization has been focused on single use sleeve sales with early adopter hospitals that are starting to implement Pure-Vu patient protocol. Growth in the fourth quarter was impacted by the surge in COVID-19 cases, and the effect on new technology utilization in the in-patient environment. Over the course of 2021, we expect to grow our number of new system placement and work with hospital value analysis committee to finalize commercial contract at our active sites. We anticipate new and reorders of Pure-Vu sleeves to increase during 2021 and to pursue capital equipment purchases, leases or rentals with targeted accounts. For the three months ended December 31, 2020 we recorded a net loss of approximately $4.4 million or a net loss per diluted share of $0.12 compared to $5.9 million or a net loss per diluted share of $0.21 for the same period last year. During the fourth quarter, net cash used in operating activities and for the purchase of fixed assets was $2.8 million as compared to $5.6 million for the same period of 2019, a reduction of 50% year-over-year. For the year-ended December 31, 2020, we recorded a net loss of approximately $19.3 million or a net loss per diluted share of $0.60, compared to $23.1 million or a net loss per diluted share of $0.92 for the same period last year. Net cash used in operating activities and for the purchase of fixed assets during the year ended December 31, 2020 totaled $17.1 million as compared to $20.4 million for the same period of 2019. As reflected in these comparisons of net loss and cash spend activity for 2020 as compared to 2019, the results of our cost cutting measures which we initially put in place at the end of the first quarter have contributed to a significantly extended cash runway. At December 31, 2020 we reported $20.8 million in cash and cash equivalents. This included the $8 million from our 2019 term along with Silicon Valley Bank. In January 2021 we further strengthened our cash position through the execution of a warrant exchange agreement with an existing institutional investors, which raised net proceeds of approximately $11 million. We believe that with this bolstered balance sheet we are poised to execute on our upcoming value creation drivers laid out for 2021, to ensure compliance with our Silicon Valley Bank liquidity covenant with the first quarter of next year and meet our overall anticipated cash needs further into 2022. And with that, I'll now turn the call back over to Tim.

Tim Moran : Thank you, Andrew and let me summarize the key takeaways from today's call. We are pursuing a global market opportunity for our Pure-Vu Technology and believe we currently have no direct competition. While this leaves us with the challenges of being a first mover, and changing physician behavior, we continue to make steady progress in creating market awareness and adding new hospitals and physicians. As COVID-19 hospitalizations decline, we believe we will be operating in a more normalized environment, which will improve procedure access for our sales team and enable more opportunities to drive utilization, which will lead to increased demand for the Pure-Vu system. Finally, we are excited about the four value creation drivers I discussed in my earlier remarks, including reimbursement, product innovation, clinical data and strategic partnerships. Each of these catalyst offer important opportunities for us to enhance our portfolio, broaden our addressable market and unlock value for our customers, their patients and our shareholders. I will now ask the operator to open the call for your questions.

Operator: Thank you. [Operator Instructions]. Our first question comes from Matt O'Brien with Piper Sandler. Please proceed with your question.

Drew Stafford: Hi guys! This is Drew on for Matt. Thank you for taking the questions. I just want to start on the sleeve minimum agreement. You know maybe you could share a little bit more detail on how those are structured. You know how many sleeves do you expect those two centers to order and – or I guess how many do they have to order to reach those requirement. And then, you know how should we be thinking about that from, maybe a revenue or quarterly cadence perspective.

Tim Moran: Yeah Drew, thanks for your question, thanks for joining today. So, first of all we're really excited to be able to ink these first initial committed agreements and as I mentioned, you know in my prepared remarks the capital environment very difficult, right, and at the end of the day our conviction is all around driving this procedure, getting physicians trained and getting them comfortable using the device and really improving patient care. So this is a way to get the product in, when they don't have the capital budget, but also gives us a commitment back pretty much more predictable volumes at least initially. While we're not going to give out specific, you know contractual details that we have with these customers, what I can tell you generally is we've talked before about you know first year utilization, we feel is typically going to be in the seven to ten procedures a month and these agreements are written to fully cover that and we expect them actually to grow much larger than that, because in most of these situations we have just a small number of the physicians who are actually doing the procedure. So hopefully that gives you a little bit of feel. You can kind of model that out, but that's the way they're structure today. And you know what we’d likely expect over time is that their capital budgets free up. I would think that most of these customers would end up then you know moving to either an outright purchase of the capital or you know lease agreement. But right now this is a great way to get them up and running with the product.

Drew Stafford: Okay, that that's [inaudible] and congrats on a couple of new product evaluations. Can you just remind us of how you know some of those processes are structured; I guess especially during COVID here. I mean what’s the requirement from training, what's the requirement from you know as far as having a sales person on the ground or anything like that. And then you know how long does it typically take with some of those account. I mean obviously we’ve talked about NYU in the past, before you start seeing meaningful utilization of Pure-Vu.

Tim Moran: Yeah, you know it's been an interesting year, right, that's an understatement. So there is probably not a one size fits all answer in terms of the approach that each of these sites have asked us to kind of work within, as it relates to you know the impact of COVID on their staff and you know protocols and things like that. But typically, the structure that we believe optimizes our successes. You know if we can be there on-site and do initial training for the entire staff that will be associated with the product, as well as of course the physicians, you know and have kind of a kick off meeting if you will and then everyone's on the same page as it relates to what the technology does, what the benefit is. We make sure that we coordinate with the nursing floors right. So if you got these patients that are up on the floor, waiting to have a colonoscopy done, they fully understand they are educated that now there's a solution down in GI that allowed them to do the procedure despite the patient being ready. So there is a lot of coordination that needs to be done. So in an ideal situation, we are there on-site, initially doing all of that organizational work if you will. And that has continued in several sites. As a matter of fact our evaluation in Boston that we just did here at the end of the year and into the first quarter, we were able to be on-site despite what was happening with COVID. Their protocols allowed for that, so we can follow that very approach and we had a rep and you know clinical training folks on site. But in some of the other accountant and it's been a little bit of an elongated process throughout this year, we've not been able to be there. So we had to use remote tools and we talked about this before in the past, but we – you know we really digitized all of our materials, so now we're able to do things very effectively over the phone, via Zoom, you know there’s chapter narrated video that our staff has in front of them, so they can see exactly how the system set up and you know it's worked, it's worked out well. It just takes a little bit longer to try to manage it that way. So the sales process, you know I would say has been taking probably upwards of you know six months plus given some of those hurdles, and in the back end the value analysis committees have been on and off meeting; it's been kind of stop and go. So I would say this is a very unusual last 12 months as it relates to the typical time that it would take to get these deals done.

Drew Stafford: Yeah, that makes perfect sense. Just last one from me, the Upper GI indication. Maybe if you could just layout the value prop there? How similar or different is that to your current Pure-Vu market and then how should we think about that indication as far as impact your business and maybe 2022 maybe. Thank you.

Tim Moran: Yeah, we’re really excited about this, and as I mentioned earlier, the team, our internal team has done a terrific job from an R&D and engineering perspective to continue to hit all of our milestones on the project. So we're on track with getting ready for submission to the FDA; we’ll have a product on the market this year. The way we're positioning this, not dissimilar to the Lower GI but obviously this is utilized for, bleeding, typically for bleeding in the Upper GI tract, and what we've heard really time and time again from our customers, very important influential customers they're doing these types of procedures on a daily basis, is that the struggle with blood and adherent blood clots that can form in the stomach and the duodenum and you know visualization becomes a problem. So it parallels the Lower GI’s. At the end of the day it's all about visualization, so you can see what you need to then treat. So we will have the product on the market. Our initial plan is to do a very targeted – I would call it a kind of a soft launch as soon as we get it out there. We will have those accounts lined up, we’ll have the physicians lined up, and will get you know feedback from the market initially, and then we would move into you know a broader launch, but we're very excited about that. We’re not going to comment on specific revenue projections at this point, but what I will say is there are approximately 400,000 of these procedures a year done in the U.S., primarily all in hospitals, so it adds – you know call it roughly another 25% to our kind of total addressable opportunity that we're focused on today in the hospital environment and their synergy, because you're talking about you know same hospitals, same physicians and we think that this is going to be a really nice add-on to the portfolio.

Drew Stafford: Thank you.

Tim Moran: Thanks Drew.

Operator: Thank you. Our next question comes from Kyle Bauser with Colliers Securities. Please proceed with your question.

Kyle Bauser: Great! Thanks. Good afternoon. Thanks for all the updates today. Sorry if I missed this, but can we walk through the upcoming clinical trial cadence and data read out timings. I know you just started the pilot study at the Cleveland Clinic, which is great. I just want to make sure I understand how things will shape out this year from a catalyst perspective.

A - Tim Moran: Yeah, sure Kyle and thanks for joining. You know we're really excited about this new trial that we just enrolled the first patient. I'm going to pass it over to Mark and have him outlined kind of the overall clinical view if you will, mark?

Kyle Bauser: Great!

Mark Pomeranz: Thanks Tim. Hey Kyle!

Kyle Bauser: Hey Mark!

Mark Pomeranz: Yeah, so as Tim mentioned, we're really excited about the study in the Cleveland Clinic and it's really doing something that’s you know fairly unheard of with doing colonoscopy with basically you know purgative-based preps, so these significant leaders that you know time is of the essence to get in their to find the source of a bleed and thus creating the spaces if possible. You know we're looking at getting in these patients with no standard purgative. Just a couple of tap water anomalies and they are going in with Pure-Vu to cleanse the colon to find the source of the bleed. We anticipate being able to enroll in this study and complete enrollment later this year, and the reality is probably the actual read out of the data you know will be in early ‘22 as far as you know any publications, etcetera, happening from it. But again, it's a really unique trial of – we’re going forward in these critical patients where there was no crafting, being able to get in there quickly, especially these folks who are in the ICU, if we can you know not only help to get them out of the hospital quicker, but certainly just downgrading them into a regular board can be incredibly significant for the treatment of patients and the cost of hospital.

Kyle Bauser: Okay, got it. And might we see any other kind of cuts at the previous data that’s already being collected from you know a reduced or expedite, maybe there'll be some data read outs at D.W., anything else out there we should keep an eye on?

Tim Moran: Yeah, so we do anticipate in the coming months some additional data read out from some of our prior trials you know, and we're always looking to it, to continuing to push and publish you know some interesting case studies that we're seeing as well, that sort of help this team was talking about. You know adding fuel to the fire for the protocol adoptions for folks as they look at the various patient population, so we can also augment our data with some of the interesting case studies that are happening as well.

Kyle Bauser: Sure, okay, got it. And lastly if I may, can you talk a little bit about the recent updates to the GEN2 systems, so – I know that they are the latest enhancements are now cleared in Europe and the U.S. and I think it has to do with ergonomics and software, but I guess just any other color there would be appreciated.

Tim Moran: Yeah, great. Mark, if you can take this one as well please.

Mark Pomeranz: Sure, so yeah, it’s a great question Kyle. So we’re actually excited a lot of these things just rolled out toward the end of last year with some of the upgrade. You know probably the most impactful one was even though our GEN2 already significant will streamline the loading, we made some enhancements that made that even quicker and easier for the techs to do, so continuing to drive that. Also helping with removal of the scope post procedure, some enhancements to make that simpler as well, and then added some things to that streamline, the software and position some more flexibility as they are looking after using different modes in the system and how to work through that in a little bit easier and more streamlined fashion, just to accelerate the procedure time as well.

Kyle Bauser: Great! No, that’s helpful and thanks for all the updates. That it for me.

Tim Moran: Okay, thanks Kyle.

Operator: Thank you. Our next question comes from Steven Lichtman with Oppenheimer. Please proceed with your question.

Unidentified Analyst: Hey guys, thanks for taking the question. This is David on for Steve. Just going back to the COVID dynamics in the quarter and early on here and heading towards the end of the first quarter, any additional color you could talk about in terms of the impact on [inaudible] and you're sales reps ability to get active decisions and are you able to talk about anything on how the in-patient colonoscopy volumes have trended better to pre-COVID levels? Thanks.

A - Tim Moran: Yeah, sure David, thanks and thanks for joining. So it's been interesting. You know Q3 was definitely a marked point where we saw a procedure volume come back to – you know I think in Q3 I talked about – you know call it 80% to 85% of pre-pandemic levels, kind of was the feel we had from speaking to our customers and you know that really for the most part continued into Q4 and you know I think that's what – you know if we look at Q1, it feels about the same. So I wouldn’t say that we've seen a significant improvement, but there hasn't been a terrible decline either. I think in the back half of Q4, in November-December we talked earlier about how things flattened out a little bit. It was very specific to geographies. You know California where we have several installations, Texas where we have several installations that were just getting hit hard, you know it impacted procedure volumes. I think Q1 is probably looking similar to what we saw in Q3 and Q4, but we are optimistic now as I think everyone is you know with the roll out and really an acceleration of the rollout of the vaccinations that you know we are expecting to see improvement in Q2 and you know in talking to physicians in our key hospitals, they've kind of echoed that, so. You know we’re bullish on what we would expect to see procedurally in Q2 plus with access, right, because right now we probably have access to you know about – you know real access to about 40% to 50% of our account. What I mean by that is we can go in you know without a lot of trouble and be there and be in procedures, but the others have a lot of protocols in place that make it very, very difficult to be there and to get into different units and we still have certain types that we can't get in at all. So again, we're hopeful that as we get into Q2 that'll start to improve.

Unidentified Analyst: Okay, great, that's really helpful. And then I was wondering if you could talk about some of the recent progress with your collaborations and what you’ve been doing? How has that been doing? And have you seen that trend over time toward that 50% of the in-patient requirement, colonoscopy patients that are poorly prepped. Is it trending towards that direction?

A - Tim Moran: Yeah, so we're very pleased with that relationship. You know obviously we have another update today that they are now also you know signed to a committed volume agreement. The physicians that we work with there are terrific and have really embraced Pure-Vu, so I would say generally speaking it's going very well. And yes, it's going to take time to get to that full penetration point, but I think we're seeing – even if you look in this past quarter, we're seeing consistent reordering, we're seeing them gain a significant degree of independence. So what I mean by that is they are doing procedures when we're not there, which is the goal, right, and they're getting – you know that just shows the comfort level that they have, and you know we're talking to them about some other ways to collaborate over time here. So I think we'll see them as a very important customer for us moving forward. The other thing that’s unique if you will about NYU and I think we've talked about this a little bit is, the way they are structured from a physician's perspective is they have a director of in-patient services, GI Hospital if you will that is on site, on a consistent basis, right. So other facilities will have physicians that are on rotation and if it's a large GI group they might have you know physicians that you know are there doing in-patient rotation once a month or even a longer space between, whereas at NYU you have key physicians that are there each week and their full objective is to work on these in-patients. So obviously that's a captive audience for us and you know it’s a learning that we took over the course of last year, that as we expand our targets, focusing on some of these accounts that are structured that way, can really optimize success and really accelerated success, because you're talking about you know a lot fewer physicians that we need to get up and running, to try to get to you know that standard of care level if you will. So that's been done something that you know we've learned from NYU and we are now replicating in other places, and NYU has been helpful in terms of getting us networked to colleagues in other sites across the country that are structured similarly.

Unidentified Analyst: Okay great. And just lastly from me, any ideas on timing for a publication for the expedite trial?

Tim Moran: I'll have Mark answer that. I think just generally speaking though, that we're expecting something here, call it in the next two to three months, but mark if you can just confirm.

Mark Pomeranz : Yeah, that's correct. You know we are expecting hopefully something in the next few months on the expedite study. Again that was an investigator initiated study by Doctor Jacobson who actually transitioned middle of last year from The Boston Medical Center NGA, so that’s kind of slowed down some of the progress on that and moving that forward. So obviously that's driving that data and that publication, so hopeful that that will happen in the next few months as well.

Unidentified Analyst: Okay, great, thank you.

Tim Moran: Thank you.

Operator: Thank you. Our next question comes from Ben Haynor with Alliance Global. Please proceed with your question.

Ben Haynor: Good afternoon gentlemen. Thanks for taking the questions. Can you hear me okay?

Tim Moran: Yes, we can Ben, loud and clear.

Ben Haynor: Excellent! So just curious on any more color you can provide on the ICD-10 code presentation. Do you have any sense of how that went? You know just kind of looking at the options that are available to the agency. It looks like other than the one that's you know kind of the NTAP supportive one, it almost seems like a decoy option and it only adds intra procedure to the existing coding. I mean what are kind of the thoughts around that?

Tim Moran: Yeah, so why don’t I start and if we want to get into more granular detail, Ben I can pass it to Mark. But, so we did participate in that meeting. I think we did it nice job and represented what we're looking to try to do with Pure-Vu. We did get the recommendation from CMS, so they put forth – there's various options that they can choose from. They put forth a recommendation before it goes out and they are suggesting and recommending that Pure-Vu receive an ICD-10 code. So that's positive right, and now what's happening is, as we mentioned, it will go to an open comment period, where folks can weigh in on any feedback they have on that, and then it will come back in-house and they’ll ultimately make the final decision later this year. But you know that's an important part of the process if you will as we as move towards the NTAP, right, which would actually provide the coverage. So the ICD-10 as you know is a way to track the procedure. So it's important that you kind of get through that initial hurdle and I think we feel like we represented ourselves well in that process. Did that answer your questions Ben?

Ben Haynor: Yeah, I mean that’s what I was looking for and then you know kind of on the open comment period, you wouldn't seem to – you wouldn't expect that you know anyone would be highly motivated to come out against you guys, given there is no competition.

Tim Moran: Yeah, we would not expect that, but obviously they do have to go through their process right and you know we'll see where that ends up, but no, we wouldn't expect that.

Ben Haynor: Okay. That’s helpful. Mark did you have anything to add?

Mark Pomeranz : No, nothing.

Ben Haynor: Steal your thunder or anything.

Mark Pomeranz : No, you’ve covered it well and you know we're optimistic about getting the code, but you know we’ll have to see how things move along with that – in a [inaudible] point the likelihood that somebody would come along and make any comment to the negative use, it was pretty small.

Ben Haynor: Sure. [Cross Talk]

Tim Moran: You know, the way we are looking at this, you know from a reimbursement perspective, you know I'm pleased with the progress that we're making and the team's making. You know the NTAP submission is you know one of the various programs to obtain reimbursement, this being for a new technology and you know that one being specific to in-patient and you know we view that – we don’t have currently headwinds for in-patient from a reimbursement perspective. However, you know we do see that as an accelerator, potential accelerator you know if we were to be awarded that additional coverage, you know that could help, particularly with the value analysis committee, the financial end of that process.

Ben Haynor: It becomes a lot easier.

Tim Moran: Yeah.

Ben Haynor: Got it! And then on the Cleveland Clinic study, with the double anemia protocol, 20 patients, so I mean that's a kind of a pilot study. How come you think it'll take so long to enroll?

Tim Moran: So Ben, what I'll say is, we are just not going to put up a hard date on it, only because it's an Investigator Initiative Study, so we don't fully control that. But you know I think you know given the size of the institution and the number of patients that we you know outlined here, it certainly has the potential to move relatively quickly. But at this point until we have better line of sight, which I think we will. By next quarter we’ll know how many we've done and what the pace looks like, we can provide a, probably a more specific targeted date, but for now we wanted to keep it general.

Ben Haynor: Okay, that’s fare. And then finally on the minimum sleeve purchase commitments, you know I know some of these are obviously larger institutions, more than one location. You know as you start out, you have kind of seven to 10 procedures a month, and that you are doing at maybe at the main location. What happens when they say this is great, let's expand these protocols system wide? We want more of these? How do you handle that? I mean is it kind of that seven to 10 procedures per hospital or you’d do it on a bigger basis, or how would you think about structuring that down the road should things go well?

Tim Moran: Yeah, so it’s a great question. So one, that was one the reasons why we've decided to make these 12 month agreements, right. So they're not three years or something, because things will change and I think as the new technology in the market, you know as we're out there, you know as they said earlier, really our biggest objective right, and challenge is change in behavior, right. So we're asking physicians and staff to do something differently than they've done in the past, right, any type of new technology. So getting the product in the door and having them have access to it, you know we're comfortable with the minimums that we put into this first 12 months based on, you know as I said a small number of positions utilizing it, because we believe that as you have it on site, you know it's our job to be on site training additional physicians and they will immediately as they start to do cases for the first time, they will see the value right. So I think the minimums that are put into these agreements from our perspective, you know will get outdated pretty quickly. You know if we can get this in the hands of additional physicians and at the end of the 12 month period, you know we'll look at what that next agreement might look like. I could see in the future potentially having options where it's you know it's either just an outright purchase or lease or you know rental or we might have different minimum requirements 12 months from now. But we wrote them as 12 month agreement, so we have flexibility.

Ben Haynor: Okay, that makes a lot of sense. Thanks all I had gentlemen. Thanks for taking the questions.

Tim Moran: Thank you, Ben.

Operator: Thank you. Our next question comes from Jeffrey Cohen with Ladenburg Thalmann. Please proceed with your question.

Destiny Buch: Hi! This is Destiny on for Jeff. Thank you for taking my questions. I hope you are all well. I guess I'd like to start with revenue. I saw in some of your commentary that you mentioned a portion was from new accounts and a portion was from existing accounts. I'm wondering if you could help us understand what this proportion look like, even just at a high level, does have to be specific, but perhaps a range?

Tim Moran: Yeah, sure Destiny. Thanks for joining. Yes, so we definitely don't want to you know start to break it out to that level of detail, but I would say that a large portion of the early revenues that we're seeing here are coming from existing repeat orders. So what that will look like is in any given quarter, the majority of the revenue is coming from repeat orders and then you're going to potentially get a couple initial orders to get going and I think that happened here in the last quarter. So we had an account that you know switched and got the approval right at the end of the quarter and placed their first paid purchase, but that's obviously a small majority of the revenue that we're seeing right now.

Destiny Buch: Right, in with some of these, well these two contracts that could change maybe just slightly, but nothing – it will still look pretty similar to how to fend for the last two, three quarters you say?

Tim Moran: In terms of the amount or the break out between new and an existing.

Destiny Buch: The breakout, yeah the breakout.

Tim Moran: Well, you know I do think that that will start to pick up, because we have several of these types of agreements that are pending, you know that we've been actively working really into the end of Q4 as it got delayed with some of the COVID-19 issue and here in Q1. So just depending on when they make the commitment and place their first order, that amount could certainly change. And you know I think, as procedure volume comes back, just kind of going back to what I was saying earlier, you know we expect many of these existing sites that have been evaluating and have had elongated valuations to get fully converted and start purchasing. So yeah, I think that that certainly will start to ramp-up in terms of new purchases coming in as opposed to the repeat orders that we're getting from our earliest sites right now.

Destiny Buch: Okay, got it. And could you just remind us of your efforts OUS; is there anything going on even you know R&D that we should be aware of?

Tim Moran: So, yeah so if we think about OUS, we’ve had to have several activities. We talk about some of the regulatory, you know the updated CE mark which is obviously important. We have done, I would say a high level exploration and diligence into Europe and into Asia as it relates to the opportunity for Pure-Vu and we’ve had inbound request from several different entities, interested in either selling or you know having access to Pure-Vu in their market, so we're evaluating those. I think right now our focus is very much as you know on the U.S. So to access Europe or to access China or Japan you know obviously we would be most interested in doing that with a partner, and as I said earlier, you know we had significant dialogue with a variety of different entities, both large kind of manufacturers, medical device companies, as well as key distributors in certain regions around the world. So we continue to evaluate, have discussions, kind of do our diligence. So we're laying the foundation for an eventual entrance into those markets, but right now you know given COVID and you know balancing our cash burn, the focus is obviously heavily on the U.S.

Destiny Buch: Okay, got it thank you, I’ll take the rest of my questions offline.

Tim Moran: Thanks Destiny.

Operator: Thank you. Our next question comes from Yi Chen from H.C. Wainwright. Please proceed with your question.

Boobalan Pachaiyappan : Hi! This is Boobalan dialing in for Yi Chen. Just a follow-up ICD-10 reimbursements; how do you think this quote up on approval will affect your company's top and bottom line? Can you quantify, or if it can’t be quantified now, when would that be possible?

Tim Moran: Thanks Boobalan for joining in and thanks for your question. So I would just say generally you know the way – right now we don't have you know line of sight into what the potential reimbursement amount may be, right, so we can't comment on that. But I think generally what we're seeing it as – strategically if you think about the NTAP, it would be an accelerator right to adoption. Because if you had some additional reimbursement on the Pure-Vu sleeve in the hospital environment, I think it would allow us to work through the value analysis committee, financial analysis much easier, you know because it's reducing obviously the overall cost burden. But keep in mind that today on an individual patient basis, individual procedure, we're showing a return on the investment you know with one sleeve. So this would just, you know as I said serve as more of an accelerator if you will. So I don't see it having any anything but positive upside to you know revenue uptake and obviously we wouldn't change our pricing based on that either.

Boobalan Pachaiyappan : That’s helpful. And where do you stand on the REDUCE study and do you plan to initiate any new clinical studies for this year?

Tim Moran: So, I can ask Mark to talk about – you know we actually do have another study that we're going to initiate in Europe. So Mark, do you want to just provide, just a quick overview there?

Mark Pomeranz : Sure, actually just to comment. I mean you mentioned the REDUCE study, which was going to be an open label registry, which we did back when we did our cost cutting last year. We did put that study in the back burner, and so right now we're focused on the Cleveland Clinic study that we talked about earlier, and those patients in the ICU. And then we are initiating a small study also in Europe and we’re going to see some of the key thought leaders there and that study is really focused on patients that have – it’s called a difficulty in prepping in the outpatient scenario and are typically coming back almost on a yearly basis, because they never got a good example. The physician that are examining them constantly just to make sure that whatever calls they missed on the prior procedure hopefully as they get larger, they will catch them before they become cancerous problems. So we will be initiating that study coming up in the next quarter or so as well. So again, it'll be an interesting population, because that will also feed into some of the issues in the out-patient in the U.S. for these patient that are on a reduced surveillance interval, because they don't get a good preparation and there's concern of an inevitable cancer. So it’s a nice way for us to get some early data on that, as well as see some of the key thought leaders in Europe as well.

Boobalan Pachaiyappan : Great! One final from me, so how many hospital allocations are currently underway and how many new ones do you anticipate to start within 2021? Thank you.

Tim Moran: Yeah sure, you know listen, we have the system safe in more than 20 sites. I would say Boobalan right now, if we kind of think about COVID and access, there is about – I’ll call it about two-thirds of those that are active. We expect the others to kind of pick back up. We are working with as I said earlier, a very lean commercial team. So we are remaining very focused on targets that have the highest potential to close. The most quickly and also kind of play a strategic role in the overall foundation setting that we are doing and I would say that’s the mode that we are in here as you know. And I think had we not lost a handful of quarters with COVID, we would have probably been you know through that and further along. But we'll continue to strategically add new sites I would say each and every quarter as we just did, as we reported in Q4 and we're continuing here in Q1, but we're going to do it smart. And as we as we look at 2021, we will also think about where we’ll expand the commercial organization in targeted geographies that we believe the ROI will be there, and that will allow it to accelerate, bringing on additional sites as well. So that's just the way we're thinking about it right now.

Boobalan Pachaiyappan : All right, that's it from me. Thanks for your time and congrats on your progress.

Tim Moran: Thank you very much.

Operator: Thank you. There are no further questions at this time. I would like to turn the floor back over to management for any closing comments.

Tim Moran: Great! Thanks operator. And I just want to thank everyone for joining us today. We appreciate everybody's interested in Motus GI. As you can hear, we are – despite the challenging year that we’ve just encountered, you know we are very excited about the progress that we're making commercially, really building out the foundation for our Pure-Vu technology in the market, we are changing behaviors, we are bringing on more physicians and as you look out across ’21, we are very excited about the upcoming catalyst with reimbursement, with product innovation, the new clinical data that we have, a lot of things that we believe can truly accelerate and enhance the trajectory of the business in the upcoming quarters. So thank you again for joining, and hopefully everybody stays safe.

Operator: This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation and have a great day!