I'd like to introduce our second speaker of the day, Arun Menawat from Profound Medical. Followed by his presentation, there'll be a five-minute Q&A. Take it away, Arun.
Good morning. I'm delighted to be here. Bloom Burton does an amazing job every year. You know, I've been presenting Profound for a few years, and I've talked about technology. Today I wanna talk more about where we're going, what milestones we have achieved, and what milestones are coming up. I will spend 5 minutes or so in the technology just in the beginning, but most of the time, I wanna really talk about the commercial strategy at this stage. As you know, I'm sure, this is a game-changing technology. It is so game-changing that, you know, it's entirely new way of treating a patient. It's an entirely new location of where the treatment takes place. The physicians who treat, they don't learn how to do something like this in their residencies and so on.
Every aspect of a technology commercialization, I think, is new and different. We've run a very disciplined approach to achieving milestones. I think that most of not all of these things are actually starting to fruit. I'm actually very comfortable with where we are and what the milestones that are coming up for us. The theme of our company is really taking the technology from, you know, open surgery to minimally invasive to robotics, which is now 20-year-old technology, to totally incision -free. No incision, go home the same day. You know, I think three, four, five years ago, it was a bit of a dream. People would thought, "Okay, well, go treat some patients before we believe you." Now we are treating patients, and I'm gonna talk about the quality of patients that we're treating also.
As you know, our first product actually is in prostate cancer, and there are about 290,000 patients total that are diagnosed with cancer in 2023, is the expectation. The market is growing at about 5% per year, and the BPH side of the market is growing at about 10%-11% per year. As the population ages, the market certainly is growing the large population. Early on, we estimated that we could treat about 200,000 of those prostate cancer patients. I'm gonna show you some data that I think that number, if anything, is a little bit conservative. Then we're just getting started on the BPH side, and I'll show you some of the data also.
The reason I show you this schematic is because historically, the current treatments are really about saying, "Well, if prostate has cancer, I'm gonna take the whole thing out, so what's inside doesn't really matter." They can either remove it using, typically in U.S., robotic prostatectomy, or they can kill it in its place using radiation, which is also quite lethal. And with radiation, they don't even know the side effects that take place on day one, but they know about it and their long-term implications a year or two years down the road are actually quite severe. No matter what the advancements are, the energy source is still the same. This is one of the most credible publications in prostatectomy that has come out in the last couple of years.
You can clearly see that what's most interesting here is you can see that incontinence, 20% patients are incontinent when you do robotic procedure, and about 50% of the patients have sexual dysfunction. Severe numbers. What's even more interesting is that there's no difference whether you do it robotically or you do it without the robot or open surgery, the outcomes are the same. If you think about that, what that says is, in the last 40 years, there has been no change. There's no change in clinical outcomes. When I say that to the urologist, it's almost like, "Wow, you're really being blunt about it." I really am being blunt about it 'cause that is the reality of this. If you look at radiation and so on, there are lots of publications, but these are considered among the most credible publications.
Even with ablative whole gland, other technologies like HIFU, you see the outcomes tend to be actually quite severe. There has been a lot of attempt to look at many technologies. I think my first message to you is, I think TULSA, our product, is the first one on the horizon that has the potential to treat majority of the patients. You know, just to give you a little bit of an idea of the technology, and what we've really learnt is we place the patient in the MRI, and the fact that we can visualize in real-time makes a very big difference because pixel by pixel, we can ablate the tissue. The second difference is that we are measuring the temperature in real-time, and we're not boiling or charring the tissue, which is what ablative technologies do.
I've started to talk about the fact that even though we call ourself ablative, we're really not ablative. We're gentle heating. We're gently heating the tissue to kill temperature. That makes a big difference because when you start to look at clinical data. The images that you see at the bottom are prostate tissues shrink over time because the body simply says, "Well, I have some dead tissue, I need to reabsorb it." 92% reduction in the size of the prostate is a very big deal. It also is the reason why we don't see the kinds of side effects that you see with other type of ablative technology, because this is really gentle heating technology. For the first time, I can start to show you know, our clinical outcomes in the TACT trial are pretty good.
You probably know about it. We've talked about flexibility historically. We've talked about how we can potentially use our technology for many types of patients, which is why I'm saying we think we can treat at least 80% of that patient population, which is really important. I wanna just show you some of our images. You can see this is a whole gland ablation, and 44 cc prostate in 38 minutes, complete ablation of the prostate. What's interesting, the second example in the apex of the prostate, you can see the dark lines that you see. The two big thick lines are the sphincter muscles that control the urination function. The physician here is looking to ablate a very small section at the apex of the prostate and wanted to save the sphincters.
Clearly, you can see the yellow lines, yellow section, which is where he ablated, and he was absolutely able to save the sphincter muscles, and the patient has complete continence. This is the data now in real world that is starting to now emerge. You know, the physicians are able to now they're now getting used to this. They can actually see how the ablation is taking place in real time. You know, as I've said before, they are usually watching the screen. They can easily have coffee at the same time because they're not in a operating room in scrubs. The other thing that's really emerging is the fact that at the end of the procedure, if you look at the images at the bottom, they're all dark.
They can actually see exactly what they've accomplished. Right after the procedure, they typically will go out and tell the family, "Hey, I know I have taken care of the cancer 'cause I know exactly what I've accomplished." If they have not done so, they also know that, and they can also start managing that patient from the very beginning. Very much, you know, powerful data is starting to emerge. This is a patient where there's no cancer at the base of the prostate, the physician did not ablate that section. The ejaculatory ducts tend to be in that region, and he's able to save them, the patient not only is continent, has no erectile dysfunction, but also has full ejaculation function, which is what they care about actually.
They have not talked about it historically because there's no other technology that can make that kind of claim. This is a patient that went through radical radiation, failed radiation, and we treated that patient after failed radiation. This is one of our first BPH patients. We're just getting started in BPH. We'll be talking about it. In fact, there is a publication coming up at the end of this week at AUA on BPH. We think that we have a phenomenal solution for BPH patients as well. This is the first thing that I wanted to really start to talk about. What we did is we've treated about 3,000 patients now. What we did is we looked at what type of patients are being treated.
What you look at when you look at this, we're treating the indications that we've treated, we're treating prostate cancer patients. About 75% of our patient population is prostate cancer patients. About 10% of our patient population is patients who have prostate cancer plus BPH. There is no other technology that can make that claim. There just is not. In fact, any BPH technology typically will have a exclusion that it cannot be used on cancer patients, and prostate cancer technologies are pretty invasive for BPH. We're the one who can deliver that hybrid patient, a solution for them. Salvage are patients who fail other treatments. We're treating about 10% of them, and we're starting on that pure BPH side, particularly for large prostates, we're starting to treat those.
The other interesting thing that you see in the second bar is 60% of our patients are whole gland treatment, which is kind of the standard of care today. Prostatectomies and radiations are typically whole gland treatments. Our physicians have the flexibility and the choice to be able to treat patients with, you know, about 25% of these are what we call subtotal, meaning between 50% and 75% or 100%, 80% treatment. About 20% of our patients, we call them focal, which is just killing the cancer because this happens to be early-stage cancer. Prostate size, we are treating large prostates greater than 100 cc, and we're treating prostates smaller than 20 cc. Certainly in terms of grade, different stages, high-risk patients, grade group V. IV and V tend to be high risk.
Typically, about 20%-25% of the patient population expresses as high-risk patients. We're treating about the same level. The variety of patients that we're treating actually reflects the kinds of population or the segments or the different stages of the population. This is quite compelling data. This is one of the reasons why, as I'm saying, this is technology that is a mainstream technology of the future, and we have to do it methodically to make sure we achieve that. Now, when we go to the hospital and talk to the urologist with this data set, that's a very different conversation.
We hear constantly now that number of those hospitals that have been using our product for a year or longer have now actually confirmed that this data set actually makes sense and that the clinical results that they have in real world are in fact at least as good, if not better than the TACT clinical trial data that we did. As I said, you have to do these things methodically to get here. Another thing that's important that I wanna talk about is the business model that we picked. Our business model is very low barrier to entry. In fact, we do not charge upfront for the equipment because our equipment is fairly straightforward. It is a robotic arm. It is designed to be used inside an MRI.
The reality is that all of the trick is in the design of the system, not in the hardware itself. Our cost of making the hardware is not significant, but the primary technology is in that design and it's in the software. We charge on a per-patient basis. Again, when you're going with a game-changing technology, charging on a per-patient basis works, but it also works from a business point of view. Our gross margins, even as early as this stage we're at, is in that 50% range, and we expect that over time, as the volumes start to increase, our gross margins will be north of 70-75%. We're looking to be a high-margin, recurring revenue, pay-per-patient business model, which is a business model that I think investors typically want to see in companies like ours.
We do have a temporary code that we use today, which is a C -code. In fact it pays very well. It's paying over $13,400, $13,000 on average nationally. The reality is majority of our sites tend to be teaching hospitals today. They're actually getting paid well over $16,000 today. We're actually pleased with the way the C -code is working. It is not an easy situation to be using C -code because professional fees, the doctors don't get paid. They do have to charge the patient or cover it through their hospital overhead in some form. The fact that they are getting paid and they're getting paid the amount that they think is reasonable to them as well.
Over the last three years since we've introduced the product, one of the other things that we're really proud of is that we had a very disciplined market entry strategy, and one of them was we're going to go after teaching hospitals. Today, I can tell you among the top 25 teaching hospitals for urology, we are in 15-17 of those hospitals already. Most of them have done a minimum of 30 cases, and many of them have done, you know, 50, 75, a few of them have now done 100 cases. Every one of these hospitals are now trying to figure out how do we now mainstream this product line. Early on, the conversation was, well, how do you get radiology and urology to work together?
We think we're at that cusp of being able to resolve those things because they have finally figured out how to make that workflow happen and how do you distribute the economics to make sure it's beneficial to both of them. We also partnered with some of these independent corporate centers, and these are corporate centers that typically only diagnose patients. They never went into the treatment side, which is a totally different ballgame. You know, diagnosis is all about high volume, you know, $500 per patient, high volume. Treatment, in fact, you're now making $30,000 per patient, you really have to change the way you think about the whole thing. It's more about caring for the patient, pre-op, post-op, and per patient, far more profitable than the $500 patient.
The margins in those, the diagnostic business are very low. Now we have three partnerships. All of them are certainly continuing to advance, and so that market entry strategy has really paid out for us, and we think that as we are now ready to start to roll out in general market. We have 35 sites that we've installed. About 25 of them are, you know, a year or longer, and they are doing very well. The newer sites are just coming on stream, and we have no reason to be of any concern, but I think these are sites that are relatively new. We are growing at about 5% per month.
I think as these new sites begin to have more experience and the barriers continue to drop and there's more and more data coming out, I think that the utilization rate will continue to increase. It's kind of hard to predict quarter-over-quarter, but I think year-over-year, most certainly we are growing faster this year than we did last year on recurring revenue. I think next year should be even better because again, the install base is going to continue to grow. The next thing is really what about the permanent code? Most of you might know we have filed for the permanent code. The application is up for consideration in about two weeks. We are on pins and needles, but I can tell you we are pretty comfortable with where we are.
There has been quite a bit of dialogue, continuous dialogue. We are on the agenda. We plan to stay on the agenda. Of course, it's ultimately their decision, but I think we meet all of the requirements. We are sponsored this time. We did not co-sponsor the application, the lead societies have taken them on their own to make sure it gets it done this time. Hopefully, the way the schedule is, the meeting is between May 4th - May 6th. We, you know, we'll know if there's a problem right at the meeting, but the official minutes of the meetings will be published on or before the second of June. We will know officially by the 2nd of June where we stand, and see where it goes.
The other thing is that given the results that we see from commercial settings, we decided to take the step to conduct the first Level 1 study in prostate cancer for the CAPTAIN trial with the CAPTAIN trial. We are a medical device company, but we behave like a biotech in several ways. It is a comparative randomized study, randomized two to one, 201 patients total. 67 of those patients will be radical prostatectomy, and the rest of them will be TULSA patients. We're actually recruiting at a pretty good pace for a trial like this. We anticipate we'll complete recruitment in about by another year, so by next summer, we expect, and we should be able to have preliminary results by January 2025. The Category I code application, all that coordinates with January 2025.
We should be able to produce this data at the same time. By the way, from the install base and the growth, we should be able to also have a pretty good install base in the next 18 months as well. In summary, you know, as I said, we are, we have 35 sites. We're continuing to grow. We expect to be at 50 by end of this year and hopefully about 75 by end of next year. We think that the current growth rate is at about 5%. We are fairly comfortable with where we are on the Category I code at this point.
We think that the step with respect to doing the level one study not only will help with actual coverage and the payments in 2025 when that comes up, but will also help drive adoption. It'll make it much easier for societies to be able to make re-recommendations and so on. I think that the balance sheet and the business model, as I mentioned, we have been pretty good stewards of the way of cash. We have runway till 2025. We have, as I said, a recurring revenue business model. You know, as I finally I said, we think that the size of the opportunity is second to none.
There's no other technology, not robotics, not radiation, not any other ablative technology that can claim the variety of patients that we can treat, which is why I continue to be very excited about our company. Happy to answer any questions. Please.
Good work.
Thank you. Thank you.
With regards to, point number three, I'm not clear on one thing.
Sure.
Is this reimbursement by Medicaid or Medicare in the U.S. , or is it reimbursement by health by insurance companies?
This is the AMA in the United States controls the authorization of permanent codes. This is the meeting of the AMA that will say, "Yes, this product has demonstrated enough clinical value and that there is enough interest in commercial use of this product," and they will basically assign the code to that. That code will be universally applicable to whether it's CMS for Medicare or Medicaid or it's insurance companies. We will have to go to insurance companies individually to make sure that they do cover it, and that's, you know, that process comes after this. That's why it takes about 18 months from the time they approve to the time it becomes effective. This is, to be honest, this is the first one of the most important major milestone that we have to achieve first.
Thank you.
Yes.
Any other questions?
Interesting presentation. Thank you.
Thank you.
You mentioned that, it's not so much, TULSA is not so much ablation.
Correct.
I'm curious to know how you gauge the temperature so as to mitigate the collateral damage.
Yes. There are two things. One is that we measure temperature using the MRI in real time. The colors that you saw, they are bands about 5 degrees. The yellow color is between, you know, is approximately 55 degrees Celsius ±2 degrees. That temperature is the kill temperature that they see. We see it in real time. And I didn't mention it today, but I kind of think of it like a thermostat. We've set the temperature at 55 degrees Celcius, and automatically the software basically sends the sound energy gently to start heating it. That's why I'm saying this is gentle heating. This is ablation. When we think of ablation, it's like shoot and kill. Versus this is gently heating to kill temperature.
You know, if, you know, like I know I've been burnt sometimes, and if it's a little burn, it just makes a little spot, and then the body absorbs the skin. If it's a boil it just makes a big thing. That's exactly what this is. The value of this gentle heating is the body thinks, "Okay, there are some cells that are dead, I just need to absorb it." Versus if it's a real ablation, it says, "Well, I gotta replace it," and that's when all these other complications take place. It's a very important point, and I appreciate your question very much. Yes, please.
Can you talk about the BPH opportunity in terms of both the regulatory issues that are...
Yes.
Impacted there?
Yes.
Also, will this reimbursement code be applicable for BPH as well?
That's a great question also. We are quite excited about the BPH opportunity. Our FDA clearance, the way we apply for it, is about ablation of prostate tissue. Even though the data that we submitted, over 100 patient data that we submitted was on prostate cancer patients, but we also submitted the information on the IPSS, which is the way you measure BPH scores. We have that data also. We don't believe that we need a specific additional indication for BPH patients, and that is also how the CPT application is written. To answer your question, we've been nursing it in the background, but we felt that our strategy was going to be, let's start with the most difficult problem, and then the BPH, we see that actually, quite frankly, a little bit easier to solve.
Now a number of physicians are starting to see the value, and we're just as I said, we're just getting started in this. I think over the next 12 months, you will hear a lot about BPH from us also. Yeah.
Any other questions?
Thanks.
Okay. Thank you.
Thank you, sir.
Thank you, Arun. Appreciate it.
Thank you.