Good day, ladies and gentlemen. Welcome to the Axonics corporate update conference call. At this time, all participants are in listen-only mode. Later, we'll conduct a question-and-answer session, and instructions will follow at that time. If anyone should require operator assistance, please press star and the zero key on your touchtone telephone. As a reminder, this call may be recorded. I would now like to introduce yours for today's conference, Jill Bertotti at W2O Group. Please go ahead.
Thank you, operator, and thank you everyone for joining the Axonics corporate update conference call. Joining me on the call today from Axonics are Ray Cohen, Chief Executive Officer, Dan Dearen, President and Chief Financial Officer, Karen Noblett, Chief Medical Officer, and John Woock, Chief Marketing Officer. Ray will provide prepared remarks and commentary on FDA approval, U.S. commercial plans, and a general business update, followed by a Q&A session in which the other team members will be available. Before we begin, I'd like to remind listeners that statements made on this conference call that relate to future plans, events, prospects, or performance are forward-looking statements as defined under Private Securities Litigation Reform Act of 1995.
While these forward-looking statements are based on management's current expectations and beliefs, these statements are subject to a number of risks, uncertainties, assumptions and other factors that could cause results to differ materially from the expectations expressed in the conference call, including the risks and uncertainties disclosed in Axonics' filings with the Securities and Exchange Commission, all of which are available online at www.sec.gov. Listeners are cautioned not to place undue reliance on these forward-looking statements, which speak only as of today's date. Except as required by law, Axonics undertakes no obligation to update or revise any forward-looking statements to reflect new information, circumstances, or unanticipated events that may arise. With that said, I'd now like to turn the call over to Ray Cohen for his remarks. Ray, good morning.
Good morning. Thanks, Jill, thank you to everyone who's dialing in for today's call or for those of you who may listen to the webcast. We're pleased to announce that the U.S. Food and Drug Administration approved the Axonics Miniaturized Rechargeable Sacral Neuromodulation System designed to treat bladder and bowel dysfunction. The Axonics system is now the first rechargeable SNM system approved for sale in the U.S., Europe, Canada and Australia. As stated in today's news release, the FDA approval grants Axonics the right to market its products in the U.S. for the clinical indication of fecal incontinence. The approval includes the claim of a 15-year functional life in the body and the ability of patients to undergo full-body MRI scans without the necessity of having the device explanted. This is the first of two FDA approvals we anticipated in the September-October timeframe.
We have an additional PMA filing, which is also under review with the FDA in the urology division for the clinical indications of overactive bladder, which include urinary incontinence, urinary frequency, as well as the opposite of the problem, which is urinary retention. As previously announced, we anticipated that the two separate divisions of the FDA would issue their determination letters on different dates. With respect to the second PMA for the urinary indications, the FDA has confirmed there are no outstanding technical or clinical deficiencies to resolve. I can therefore confirm with a high degree of confidence that there is nothing the company is aware of or has been informed about that would interfere with the ability to gain FDA approval for the overactive bladder clinical indications.
We will, just as we have to date, continue to work with the agency and the reviewers in the urology division on the summary of safety and effectiveness data and the words that will appear in print in our operators and instruction manuals. As such, we anticipate a determination on the second PMA in the near term. The exact timing of the second FDA approval is 100% dependent on when the FDA completes their internal work and obtains the various internal sign-offs.
The safety and effectiveness of the Axonics sacral neuromodulation system was based on the company's technical data, published clinical studies of fully implantable, commercially available SNM systems, as well as the safety data for the Axonics system from the ARTISAN-SNM study, which, as we've discussed numerous times, was a pivotal study conducted under an FDA-approved IDE in which 129 patients with urinary urge incontinence were implanted with the Axonics system. The FDA utilized the outcomes of the ARTISAN-SNM study for the evaluation of the safety of the Axonics SNM system at six months post implantation and therapy activation. In the FDA-approved physician-facing IFU or indication for use, it refers to the peer-reviewed Journal of Urology paper, which details the clinical and safety results of the ARTISAN-SNM study.
The review process with the agency has been collaborative and interactive. We were impressed with the vigilance of the reviewers. What's next? Our fully trained U.S. commercial team of 145 territory managers, clinical specialists, and sales managers will be calling on physicians and hospitals around the United States to market the product for the treatment of fecal incontinence. We will be careful to avoid any off-label marketing during this period between today and the urinary approval. The company will also be exhibiting at the American Urogynecologic Society Congress set for September 24th to 28th in Nashville, Tennessee. We plan to begin shipping product to U.S. physicians and hospitals by the middle of the fourth quarter of 2019, following the fulfillment of customary pre-launch regulatory requirements.
These pre-launch requirements apply to every device company and include submission of UDI labeling, which is barcoding, and validation of MDR reportability software into the FDA database. As you can imagine, we have been preparing for this day since the first day that we founded the company and first financed the company in the spring of 2014. We believe that we are well-positioned to not only effectively compete in the SNM market in the U.S., but over time to obtain the leadership position in this under-penetrated market. To that end, we believe the number of patients seeking sacral neuromodulation treatment will expand dramatically over the next few years, given our fuss-free, long-lived, full-body MRI compatible device, and we intend to be a cause in the matter of growing the market. Bottom line, we are highly motivated and ready to launch.
In closing, I'll state that Dan Dearen and I look forward to presenting and holding one-on-one meetings with U.S. institutional investors at the Morgan Stanley Global Healthcare Conference on September 11th in New York City. In closing, we are confident about the future prospects for Axonics, and we are working diligently every day to fulfill our vision. At this time, we're happy to answer any questions that folks may have, and I'll turn it over to the operator.
Ladies and gentlemen, if you have a question at this time, please press the star and the one key on your touchtone telephone. If your question has been answered or you wish to remove yourself from the queue, please press the pound key. To prevent any background noise, would you please place your line on mute once your question has been stated? Our first question comes from the line of Larry Biegelsen with Wells Fargo. Your line is now open.
Good morning, and congratulations. Can you hear me okay?
Perfectly. Thank you, Larry.
Hey, Ray. One tactical, one strategic, and one pipeline question. Ray, just could you compare the size of your sales force to Medtronic's?
Sure. As we understand it, the Medtronic group includes approximately 150 individuals who are supporting customers in the United States. We are roughly equivalent in terms of a team.
Perfect. Ray, how do you want people to think about the Axonics story more as share capture or more market expansion? How are you going to allocate resources? I had one additional question.
Sure. I appreciate the question. I think it's actually pretty straightforward. The way to think about this is that every single customer that we will be calling on and hopefully convert to use the Axonics product or implant the Axonics product for their patients. We believe that each individual physician has the ability to increase the number of procedures they're doing and have patients say yes more often to sacral neuromodulation. I think the key there is that we're giving people the reasons to want to do this therapy, right?
Where you've got a long-lived device for a chronic problem, you no longer have to make a decision between suffering or having to sign up for multiple surgeries over your lifetime or be concerned that if you need an MRI on your back or your legs or somewhere else on your trunk or your body, you have to get the device explanted, to have easy-to-use accessories and so forth. The key is we believe that every single discussion that takes place with a patient who has urinary or fecal incontinence, the physicians are going to be able to offer a much more attractive alternative. Therefore, if you have a typical doctor who, say, is doing 25 or 30 procedures a year, there's no reason why that physician can't at least double the number of procedures in their practice. Certainly, the patients are out there and looking for solutions.
I think that to separate the concept of market share and increase in the size of the market is a little bit of a misnomer, because I believe it'll happen organically on a customer-by-customer basis.
That's very helpful. Just last for me, Ray, on the pipeline. Could you remind us of the status of the IPG that's compatible with the Medtronic lead and your pathway for your non-rechargeable system? Thanks for taking the questions.
Sure. Thanks, Larry. I appreciate the question. As we've mentioned a couple of times in the past, the company is not sitting on its laurels. We have additional products that are currently under development in our product development pipeline. The first device that we would expect to hit the market would be our second-generation implantable neural simulator, which will be compatible with the already implanted Medtronic lead. We've obviously modified our lead as well to accept the new header. We'll also have some other additional features that will be part of that. We expect that product to be in the market in 2020. At this point, we're not providing guidance on what quarter. That product already exists, and it is in testing and validation at this point.
The next product up on the hit parade would be a non-rechargeable device, which is currently in product development, and we're hopeful that we could have that product in the market sometime in 2021.
Perfect. Thanks for taking the questions.
Thanks so much. Bye.
Thank you. Our next question comes from the line of David Lewis with Morgan Stanley. Your line is now open.
Hi, this is Mason on for David today. Thanks for taking the question. Just one from us. What are you seeing in terms of uptake ex-US since 2Q? What does FI versus OAB implant rate look like ex-US? Thanks very much.
Well, thank you for the question. It's an interesting question. With respect to European sales in the current quarter that we're in, this particular quarter is a tough print. I think as everyone knows, in Europe, August is a very difficult month with most people on holiday. It's slower in this particular quarter than we might otherwise see. Things continue to go well for us, and we're pleased with the continuing uptake and the response from customers and more importantly, the effectiveness of the product with patients. Internationally, there seems to be more patients, or at least more physicians who come from the colorectal side, particularly in England, given that fecal incontinence was approved in that country to begin with.
Interestingly enough, there seems to be kind of an equal number of implanters who are almost exclusively focused on fecal incontinence and the other half are the typical urologist and urogynencologist, which just treat patients who are presenting with any one of a number of these clinical indications. It's an interesting phenomenon, but in the end of the day, all of these patients pretty well fall into the same basket and can be treated with a sacral neuromodulation device considering irrespective of what the patient presents with, it's the same product implanted in the exact same location next to the sacral nerve and programmed in the exact same manner. In the end, the execution and the actual implantation of these devices are not affected, I should say, by whatever the clinical indication that the patient might present with.
Great. Thanks very much.
Thank you. As a reminder, ladies and gentlemen, if you would like to ask a question, please press star and then the one key on your touch tone telephone. Our next question comes from the line of Mike Matson with Needham & Company. Your line is now open.
Morning. Thanks for taking my questions. I guess I sort of have a similar market question just on the fecal opportunity. If you're quoting the market as being around $650 million currently, how much of that do you think is fecal versus urinary?
I appreciate the question. It's almost an impossible question to answer because, as you may know from clinical papers, it's quoted in clinical literature that over a third of all the patients who present with incontinence, urinary incontinence, also have fecal incontinence or accidental bowel leakage. These patients are not typically that distinct from each other. Also, as you might imagine, patients that are more shy to talk about fecal incontinence as opposed to urinary incontinence. What I would like to do, since I have Karen Noblett on the line, is maybe, Karen, if you don't mind, you could add a little more color to that and then talk about what we actually saw also in our own clinical study. That may help to clarify this question for not only Mike, but others listening in. Karen?
Yeah. Absolutely, Ray. Thank you very much. Yeah, Ray's correct. We see a lot of these patients presenting with urinary complaints, also having concomitant fecal incontinence or what we're terming accidental bowel leakage. They are very shy. It's a much more difficult subject to bring up. They're very embarrassed by it. They're happy to talk about their bladders, but are reluctant then to talk about their bowels. In our trial, we collected data on fecal incontinence using a validated questionnaire, and we found that one third of our cohort actually reported fecal incontinence as well, even though the trial wasn't designed to study that as a primary outcome measure. That's what we would see in our clinical practice as well. Many physicians see that patients come in for maybe a urinary complaint, but then also have the fecal incontinence, what we call dual incontinence.
It's a very common issue, as Ray said, up to one third, and that's probably a conservative measure.
Okay, thanks. That was very helpful. Just with regard to the launch for the urinary approval. Assuming you get the approval in the timeframe you're expecting, sort of September or October timeframe, when would you actually start shipping that product? You've got about a half a quarter, I guess, delay here because these added steps that you've got to go through. I'd assume that kind of put it in that early to mid first quarter of 2020 timeframe. Is that reasonable?
Let me just try to be as clear as I can. I think in my prepared remarks, I indicated that we would begin shipping in the middle of the fourth quarter. It's going to take from this point forward, approximately six to eight weeks for us to comply with the post-approval regulatory requirements. We will do that. We will begin to ship product in the middle, let's say, of the fourth quarter. Q4 will be a bit of a sloppy quarter for us since we're just getting started and we've got to get out and call on customers and get green cards from some of the large institutions, et cetera. We're going to get started. Our team will be out marketing. As you also restated, we do expect the urinary approval to come in the September-October timeframe.
Things will line up very nicely for us by the time we're shipping the product. In terms of expectations, I think that the analyst community has gotten it right for us, which is the expectations are really geared towards Q1 of 2020, which will be our first full quarter marketing the product in the U.S. Hopefully that kind of clarifies what the expectations would be in the short run.
Yeah. No, that's very helpful. I guess what I was getting at is if you have the six to eight week kind of timeframe between the approval and the actual shipment of the product for fecal use, will there be a similar six to eight week timeframe between when you get the approval for the urinary use?
Okay.
Shipping of that?
Okay.
I mean, it's the same product, I guess, but yeah.
Yeah. No, I'm sorry. I didn't understand that was your question. These things that we need to do post-approval are a one-time thing. Okay?
Okay.
We do these one time. We comply with the regulations for MDR, bar coding and so forth, and we are good to go. I want to make a really important point. The FDA has approved our product. The product is approved. We have an ability to promote and market the product for the initial indication during this sub-period. Okay? The product is approved with the appropriate claims that we would have expected. This is a one-time thing. We'll be in a position to ship product middle of Q4 and have obviously big expectations for 2020.
Okay, great. That's all I have. Thank you.
Thank you so much. Appreciate those questions.
Thank you. I'm not showing any further questions at this time, so I would now like to turn the call back to Raymond Cohen for any further remarks.
Okay, that's great. Thank you, operator. I appreciate it. Look, thanks everyone for calling in or listening in this morning. As you can tell, we're quite enthusiastic for this significant milestone to be accomplished for Axonics. I think things are unfolding as we would have expected. Would've been better to have two approvals at the same time, but we'll take them one at a time based upon the way the agency has chosen to work with us. We thank you for your interest and support in the company and look forward to talking with you further in the near future. Thank you and have a nice day.
Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program. You may all disconnect. Everyone have a wonderful day.