Good afternoon, everybody. My name is Rick Wise, Stifel , MedTech Analyst. It is my distinct pleasure to welcome the management of Profound Medical to my immediate right, Arun Menawat, Chairman and CEO, and to Arun's right, Mathieu Burtnyk, President. I have to say, Arun is the good looks at the company. I'm still, Mathieu, I won't ever forget going to a TULSA- PRO meeting in Las Vegas and watching you moderate and lead the discussion and just feeling throughout the day, just seriously—I am not saying this—I have to flatter Arun, but seriously impressed with your knowledge and the breadth and depth of your experience and your relationships with the physicians. It was really impressive, memorable.
I appreciate that.
More officially, I'd like to welcome you both. It's going to be an interesting opportunity to hear about Profound's paradigm-changing prostate cancer and BPH treatment therapy. The company's TULSA- PRO system, their prostate ablation system, promises to deliver outcomes as good as standard of care surgery and radiation technology while offering far better, impressively better quality of life. We've heard many testimonials from patients about the impact of the therapy on their lives. With the ongoing CAPTAIN randomized trial, Profound is pushing to prove out that exciting potential. It's a story I've followed for many years. I've watched Arun pioneer other technologies in his previous life. It feels now, here with TULSA-PRO approved, Medicare reimbursement in place, commercial team ramping, the company is on the cusp of rapid growth and increasing TULSA adoption.
In third quarter, Arun, you've pre-announced with excellent 85% revenue growth, expansion of TULSA installed base now to 67. Maybe you'll update us today. It just feels like a really exciting moment for this story. It's great to have you here. Thank you so much. Arun, why don't you take us away from here?
Rick, thank you so much. I agree with you. You have the looks and the brains together today for the first time. It's great to have. There's no doubt that I'm very proud of Mathieu. I also wanted to sort of start by saying you do have the knack to find the future growth companies. I'm here to prove you right.
Thank you.
That's exactly what my purpose is. The number one question that people have been asking us over the last six weeks is, you did produce this first quarter with over $5 million revenue. Is it really happening? My first answer to that question is, it is happening. It really is happening. I'm going to go through a little less on the technology, a little more on the business side at this point in terms of how it is happening. TULSA, as you said, is paradigm changing. We're starting to see adoption at multiple sites in prostate cancer. We anticipate that we will also have adoption on the BPH side as we introduce more software to make it more valuable for that purpose. We have never talked much about the second product we have, which is called Sonalleve.
It is, particularly in the last three, four months, there's quite a bit of activity in that space because there are companies that have been highly valued. We're getting quite a bit of incoming calls. It has been a bit of a skunk works. I'll certainly talk a bit more about this product because it's very real. We're treating patients outside of the U.S. for this product as well. I think together, this really is about bringing incision-free surgery to the mainstream. We think we have the ecosystem to be able to make that happen. TULSA- PRO, what's unique here is we use the precision of the MR. It is really important to be able to then visualize the cancer, visualize the boundaries of a prostate in real time.
We do thermography, meaning we are able to visualize the temperature maps of the prostate. We supply sound energy, and that energy then gently, one degree at a time, heats the tissue. It automatically stops at 55 degrees or 57 degrees in that range. No boiling, no charring. The AI-driven treatment plans are very, very real. I think there is just nothing that is even close to it. There is no other heating system like this. That allows us to then not just treat a part of the prostate, but we can do whole gland treatment. We can do near whole gland treatment. We can certainly do focal treatments. It is very interesting technology that can be mainstream because of its flexibility and capability.
From 2020, when we started, to 2024, most of our patients, pretty much all patients, were cash pay patients. Even during those days when a patient typically was paying $35,000, we treated over 3,000 patients in that phase. This year, with reimbursement coming in, we're finally starting to get the adoption because obviously most patients are not going to pay $35,000. Hospitals are now starting to see our history. They're starting to see our data. We're growing the install base. We're very confident of getting to at least 75 this year. The rate of the pace of adoption is definitely increasing. 2025 certainly has been the transition year for us. As I said, it is really starting to happen. Very quickly, there are really two technologies that are used mostly today. It's radical prostatectomy or it's radiation.
Twenty percent of the men, at least, become incontinent. Fifty percent lose their erectile function. What we're trying to do is solve for that and, at the minimum, keep the clinical outcomes the same, although a number of sites that have used our product have now started to publish that, in fact, they can improve the clinical outcomes also and significantly improve the clinical outcomes. These are the three subcomponents of the TULSA technology: the real-time use of the MR, the thermometry or thermography and the sound that we use from the center of the prostate to heat the tissue, and then the AI software where we have modules because prostates are really unique. We're able to really customize based on what the patient actually needs.
The reality is that the latest software is such that if the surgeon looks at the AI-based recommended treatment design and accepts it, they also then accept the treatment phase during that. You can literally do this procedure now in two hours. We have had cases where you can do that. If you're going to make some changes and so on, it'll take a little bit longer. I think as our software continues to advance, as we do incremental changes to our hardware, I also think it's going to be one of the fastest procedures as well. The procedure itself is pretty straightforward. There's a catheter you insert into the center of the urethra. You get images in real time. The surgeon always sits in the control room, comfortable. The AI recommends the treatment plan. They basically watch the screen.
If there's a problem, they intervene. If there's no problem, the patient is basically done. It is really autonomous. You can put all kinds of adjectives here. Autonomous. You sit there. You can literally drink coffee while the patient is being treated, which is quite unusual to say, obviously. Let's talk about the market. People are thinking about, Okay, whole gland treatment is the standard of care, which is where robotics and radiation lie. The other end of the spectrum is focal therapy, where you're treating typically about 25% or less of the prostate. In principle, the idea is if you can just kill the visible part of the lesion, you can save all those nerve bundles or not have the side effects. TULSA is really positioned to be able to manage both sides of that equation.
The majority of our clinical data is on whole gland, which is why we see primarily, really, our competition is on the robotics or radiation side. There is no doubt that we can treat focal patients, frankly, faster, better than anybody can. 80% of the patients are on the side of whole gland or near whole gland. 20% are on the focal side. Focal sort of sounds interesting. The reality is the majority of the patients are on the side of needing treatment, majority of the gland. We are really the only ablative option that exists. On top of this, we are about to introduce, fully launch our BPH software, which will then allow a physician to use it for cancers of all kinds and use it for BPH. This is not just increasing our TAM.
Obviously, our TAM will significantly increase because of this. It is also about scheduling. If a physician can treat a wide variety of patients, they can schedule five or six cases. From a practical business point of view, this makes a lot of sense to provide them with that flexibility. They do not have to think about, do I take this patient as a TULSA patient, or do I take this patient as something else? The vast majority of their patients can be treatable with this technology, which is why we think it is going to drive to mainstream in the future.
Just while you're on it, Arun, where are you in terms of approvals and launches? What have you said about timelines?
On the timeline, we did a soft launch earlier this year. We are ready to do a full launch in the next four weeks. We expect to announce that at the RSNA meeting this year. We have had a few sites that have been running. Our fastest case on BPH has been less than 45 minutes. The longest has still been a couple of hours. We think our goal has been to be able to deliver a BPH treatment in the 60-75 minutes. We are very comfortable that we can achieve that goal. We also find that a number of these patients are not just BPH patients, but they have some early stage cancer lingering on. That just gives them confidence that they can use this technology to treat that patient population.
We're starting to see, even before we introduced the product, that the percentage of patients we're treating on the BPH side used to be like less than 1% of the patients. Now we're starting to see 2%, 3%, 4%, 5% patients in our patient population is BPH.
Not to get too much in the weeds, but why are you doing this at RSNA, Radiological Society of North America? A diagnostic meeting, not a urology or cancer treating meeting. Why there?
There are two conferences we attend. One is the AUA, which is urology. The second one is the radiology. It just happens to be that this is the time when it's ready. There's nothing particular about it. The whole area of interventional radiology is growing. There is a lot of interest from interventional radiologists also to be able to want to do interventions. We think it's related to that. In fact, the early launch has been primarily with urology. Just very quickly, there's plenty of data to what I've been saying, that this is the most flexible technology. You can treat a wide variety of patients. That body of evidence continues to grow. As you may already know, we sponsored a clinical trial called CAPTAIN.
This is the first time a true level one study has been done on comparing head to head TULSA technology with robotic prostatectomy. We are treatment complete. We have announced our perioperative data, will continue to show more and more data. Sometime by next summer, we're going to start to see the first set of clinical outcome data. From what we can tell you so far is, number one, certainly we can now statistically tell you there's no blood loss to worry about with our technology. We can statistically tell you that there's no hospital to say there's about almost a 24-hour difference in how much time a patient has to spend. Most of our patients feel good enough they can go out to dinner with their family or sit at the dining table with their family.
We can now say that in a way that is statistically significant. The other thing we can also say is it takes a TULSA patient 24 hours. They feel pretty good. Versus a robotic prostatectomy patient gets to the same level in over two weeks. That is pretty tangible. Two weeks is not a small amount of time in today's world. We think that we expected this would happen. This is, frankly, even better than what we saw in our first trial, tech trial. We also think that the results, as we go forward, are going to sort of match or be better than what our first clinical trial was. We are pretty excited about the fact that we could do it. Most people thought it could never be done. We are there.
Again, a lot of clinical data on other technologies, just so you have it. I won't spend too much time on this. This is the other page that is my favorite page. We talk about this all the time on purpose, which is TULSA. It's not just talk. TULSA is being used today on a wide variety of patients. You can see at the bottom bar, treating a wide variety of grades, grade group, very small portion of grade group one because it's typically not metastatic cancer. Most of the patients typically fall in grade group two and three, which is why it's the biggest group of patients. We are starting to get more and more of grade group four and five, which is the most advanced stage of cancer.
In some cases, some of these patients get combination treatments as well, which we're very happy with, variety of sizes. When you look at the ablation bar, you'll see about 80% of the patients are getting more than 40%. Half of them are whole gland. Another 30% or so are 50% or more. We do have 20% who are focal. You can see this is not just talk. This is what real data looks like for us. The AI is big. It's here to stay. It's not a fad. It's going to continue to get better. From the first time when we introduced in 2024, it was pretty good. The second version we introduced this summer has been extremely well received. Statistically, it shows it's actually better than a urologist, as good as a radiologist. It gives radiologists a lot more confidence.
We're starting to see urologists now saying, hey, I get it. I can do it. I don't need a radiologist to assist me. We're going to continue to advance the AI modules. You'll see more and more of this every few months when we introduce the next module. Primarily, as I said, we're competing with robotics. What we're saying is that our goal is to really work with existing MRs in the near term. There are about 5,000 MRs in the United States that we are already compatible with. Our primary first short-term goal is to get to 200 sites. As you know, we're already at 67. We'll get to 75. We think our break even is well below 200 sites. Getting to 200 sites, we think our revenues will be significant, a high-margin business. We don't need anything else.
We've got all the boxes checked: good reimbursement, good clinical data, and good physician engagement. Now, in the medium term, as you may know, Siemens is already now marketing their interventional MR. Cook has an agreement with them. We have an agreement directly with Siemens. This whole idea, we think, is that the future OR is, in fact, interventional MR. Just like we saw a wave that came in that talked about bringing surgery from open surgery to robotic. Robotic operating rooms were established. CAT labs were established for minimally invasive. We think the next wave is interventional MR operating suites, where multiple types of procedures will be done. We're excited about the fact that these large multi-billion dollar companies are on this. They're already out there installing these. I think that the way to justify them is through the TULSA app.
I call ourselves the king application. We're the king app of interventional MR. We can justify those MRs very, very easily. Again, great flexibility. We can show hospitals that even Medicare patients can be profitable because of the reimbursement. Finally, it obviously takes some time. We're finally starting to get real data from hospitals where they have been getting the payments. They are showing that, indeed, they can be profitable. That's one of the reasons why I'm quite confident that it's happening, because now that economic data is coming in, patients have always loved TULSA. We can also show a urologist that they can do four or five cases and all this mixing and matching of different types of cases, which makes it for a very comfortable day for them.
Mathieu, maybe just quickly talk about some of the commercial progress. I know that Arun hired Tom Tamberrino as Chief Commercial Officer. Maybe give us some more color on new account opening. More specifically, as I told you, I visited Johns Hopkins last week. I know there's a major account here in New York City that you're opening. Maybe just give us some color about that experience. Why are they getting involved?
Yeah. Absolutely. As you know, in our Q3 and our Q2, sorry, in our Q3, we announced that we went from 60 to 67 sites. And that we are on track for 75 sites by the end of the year. Seven new sites in Q3. We are targeting at least eight sites in Q4. I think reimbursement hit January 1st. Some people expect that to be like a delta function, like from one day to the next, all of a sudden, the floodgates open. The truth is, the hospitals need time to sort of digest that information, start using the code, get feedback that they are getting paid on the code, so on and so forth. It takes usually about two quarters for that to happen.
I think that's what we start to see in Q3 with some of that opening of the gates a little bit with the seven systems. We're seeing interest across the board, whether it's really high-end institutions. You mentioned Johns Hopkins. We're planning to go live there in December. We have a major site here in New York that we're planning to go live in this year as well. Also, down to more local hospitals. We see some urologists that are really private practice urologists that are now looking to partner with hospitals so that the hospital can charge the code and get the facility fee from Medicare or private insurance. The physician can still charge their rate to the patient. The cash pay rate in those cases would decrease substantially from a $35,000 price point down to maybe a third of that.
We're seeing the impact of the reimbursement codes impact all channels that we have in terms of our customer segments. I think this is just sort of the beginnings of what we're going to see in Q3 into Q4 and into 2026.
Arun, do you have a pipeline at this point? I mean, when you give us clear 2026 guidance, I mean, is that going to be based on that pipeline or orders already in hand? Or how are you thinking about all that?
Yeah. As you know, we are a very disciplined company. We have a five-stage selling process. Anything that we consider to be pipeline is in the last two stages of our sales process. If you think about it from that perspective, our pipeline, in just those last two, is well into the very high double digits.
I'm sorry. High double digits in terms of numbers?
The numbers of sites that our potential sites are working with. I cannot tell you if they'll close in one quarter or two quarters. I think our people think that statistically, that number is a minimum of 50% chance they will all close, more likely than not, because we're generally in these are sites where clinical work is already crossed. The hurdle has been crossed. Economic hurdle has been crossed. Now it's more about the timing of when the hospitals can start the program, the workflow changes, and so on. We do not see them as very high risk. We just see them as timing issues. Pretty good pipeline building. I think, as Mathieu said, Johns Hopkins has started. There is a site here. I do not know if you heard of it called Mount Sinai or something like that.
Something like that.
They're starting pretty soon. MD Anderson is starting. Some of the big names, we already had Harvard and all those. UCLA and Stanford already have it. They're already increasing their usage. Now some of the other big names are starting as well.
That's great.
Quickly, the reimbursement for 2025 is superior to that of any other treatment. Amazing statement to make. 2026 looks pretty much the same for us. Not all the numbers are out yet, but from what we know, same thing for physicians. We didn't suffer any changes. If anything, they're slightly higher for next year. We're in a good place. We talked about the number of sites that are starting are all pretty heavy-duty sites. We're excited about that. Just one couple more things. The way we look at this growth is short, medium, and long term. I already talked about it a little bit. Our number one short-term goal is to get to 200 sites.
If we get to 200 sites and each site averages about 50 cases, that means about $55 million in recurring revenue per patient, another $10 million in service, and about 40 systems per year is. I have laid it out for those analysts who need some help with arithmetic here, Rick. It is very, very clear that we can achieve that goal. I think it is very, very clear that if we can get to—we are already at over 70% margin. It is pretty clear that that could be really amazing. In the medium term, as I mentioned before, interventional MRIs are coming. In the long term, I think you will see significant integration between TULSA and the interventional MRI. They are going to start to look like one big device that can be used for multiple purposes. We are delighted.
I'm really, really honored that Leonard Wheeler has chosen to become the brand ambassador for us. He's an amazing guy. I just relate to him so well. His whole family is into it. He's done a number of TV spots already. He's prolific on social media. We're revamping our tulsaprocedure.com website. You'll see a new website with a lot more information. A lot of patients are coming. Our PRO-Talk Live! are coming along very well. We had amazing attendance this September. A lot of surgeons are already talking about an MR-centered prostate care strategy, where you can screen the patients early on instead of just PSA test. You can really start to walk them down the pathway where MR plays a central role. TULSA, obviously, becomes a key part of the treatment.
This is my favorite slide, the one. Because it really is MR adoption in more sites, particularly ambulatory settings, I would think. I mean, that you couldn't, it's not just one procedure. It's all these.
All these things.
All these aspects of this program.
With the economics of this together, it becomes really compelling. That ASC is happening. It's going to happen. We'll share it with you as soon as we get there. Again, very quickly, Sonalleve is the second asset. The best-kept secret is that, actually, we have treated about 4,000 patients already. It is commercial outside of the United States, in Europe, China, and South Asia. We sold it primarily as capital. You do not see the revenues from it on disposable. We are going to evolve this to, ultimately, you will see this recurring revenue, similar business model to TULSA and far more integrated over time. The other thing that we have never talked about is that there has been about $10 million that has been invested through research grants into this product over five years.
Now we have a product that already is being used for women's diseases like adenomyosis and uterine fibroid. There is clinical work going on for pancreatic cancer and liver and other types of body systems, so oncological diseases. The interest level in this has really, really skyrocketed in the last few months. It is very flexible. We have phenomenal IP. We are evaluating what is the best way to start thinking about it. That is kind of in summary. We think we are on our way with TULSA-PRO. We think we have a second product behind the scenes that is going to build a long-term growth company. Thank you so much for that.
I have no questions. Arun, you mentioned the benefits of the AI software you're implementing in terms of turning it into more of a one-doctor procedure and also from an actual time perspective. Could you just go into a little more detail, one, on the time savings and, two, of the accounts where you're actually having just one doctor or one urologist in the room as opposed to both urologist and radiologist?
Great question. The question you're asking is, how is AI really making it simpler and faster? I think that there are a few teaching sites where the radiologists just love this product. They show up. Outside of that, I would say all the private practices, majority of the regional hospitals, and many of the even teaching hospitals, I would say, it's now a urology practice. There are some sites where it's an interventional radiologist who does the whole thing as well. I would say 80% we're getting to one physician. With respect to the time, if you look at our treatment planning time, historically, it has been about one hour. When we do a head-to-head comparison, we think we can save at least 20 minutes.
The reality is that just solving AI helps us solve a number of other steps that they have to do. As we evolve, we think, ultimately, we should be able to reduce that to even half of 45 minutes. That is why I do think that AI is going to continue to help us over time.
That's the planning phase you're talking about?
The planning phase.
Planning phase. That's sort of like for every procedure. We did this pilot launch of the volume reduction software that's more specific for BPH procedures. That's where we can see even further reductions in time down to that sub-60 minutes that Arun talked about. There, we're talking about planning. We're also talking about the actual ablation delivery as well. Because it's BPH, it's a simpler disease. There are additional things there that we could take advantage of.
Do you have a sense of how many procedures or what percentage of procedures at this point just take the AI plan as is and move forward without having to make adjustments?
That's a great question. How many are they just accepting? I kind of equate that to this analogy where these autonomous cars are coming. A lot of people say, "Wait, wait, wait. I got to be in control." To some extent, I do see urologists saying, "Wait a minute. Am I really willing to lose control?" I can tell you there are two trends. The first trend is, I think, once they've done 10-20 cases, they're starting to feel more and more to leaving it go. I think you will see that impact over time.
The second trend that I'm seeing is that originally, they were all saying, "Well, I'm going to minimize how much ablation I do." Now we're starting to see that they're actually gravitating more towards doing more and more of the prostate ablation because they see that there's no problem with the side effects. I think the answer to your question is, it's not a technology question. It's more about the psychology. I think they will get there. I really think that there will be a day when they will look at it and say, "I trust it," and click, it's ready, and then click, it's now treating. It's just going to get a fast procedure.
Arun, analysts at this time, if you're always like to ask a question that CEOs don't like to answer. It's a strange phenomenon. Thinking about the year ahead, I just don't want to put you on the spot. My 2026 revenue projection is always thoughtfully, I hope prudently conservative, is $32 million. I see consensus is $36 million. Both are ambitious in reality. In a sense, you'd be generating immense growth if either number or anywhere in between happens. How should we feel about those numbers? How should I feel? I don't care about anybody else.
Yeah. I mean, I think if I look at the pipeline numbers and if I look at Q4, what's on the horizon, I feel pretty good about next year and comfortable. I think the caveat is we did produce the third quarter, which is pretty good. That's only one data point. I do think the fourth quarter is also important. That's just because I'm an operator, Rick, you know. I'd like to see more numbers, obviously. If you look at our data based on pipeline and based upon the excitement of our sales team and based upon the increasing utilization of existing sites, I'm not pressed about it. I'm not worried about next year at all.
Great. I think that's a good place to stop, unfortunately. Go ahead, Erik. Go ahead. Ask another question.
I'm just curious. It sounds like you have a pretty high closure rate of cases or potential sites in the pipeline. If it doesn't close, what's the reason why?
It's just timing. If it doesn't close, it's primarily because the hospital is saying, "Hey, I have something else to do this quarter." It's not related to the pushback that we get is never about clinical data. We're beginning to get to a point where it's not about economics either. The pushback really has historically been, "Okay, I got to go find which MR, what times, how much time do you need, how do I change the workflow, who needs to be trained?" It's more about how do I get to the program and less about the technology.
Is the availability of MRs a bottleneck at all?
No. As I said, we're compatible with over 5,000 today. Finding 200 MRs that have MR time, I mean, this is the perspective I wanted to put in. It's like if you look at high level, you say, "Oh, MR availability," but we're looking for 200 MRs. That's not a big task. If they give us one or two days a month on that MR, we can treat 100 patients.
Wow.
Right.
Those are big numbers. Okay, we're over a little bit. Thank you so much to you both, Arun and Mathieu. Appreciate it. Be very excited to see what the next quarter and the next year bring.
Thank you.