Greetings, and welcome to ClearPoint Neuro's 2020 third quarter financial results conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. Comments made on this call may include statements that are forward-looking within the meaning of securities laws. These forward-looking statements may include, without limitation, statements related to anticipated industry trends, the company's plans, prospects, and strategies, both preliminary and projected, and management's expectations, beliefs, estimates, or projections regarding future results of operations. Actual results or trends could differ materially. The company undertakes no obligation to revise forward-looking statements for new information or future events.
For more information, please refer to the company's annual report on Form 10-K for the year ended December 31st, 2019, and the company's quarterly report on Form 10-Q for the quarter ended June 30th, 2020, both of which have been filed with the Securities and Exchange Commission, and the company's quarterly report on Form 10-Q for the quarter ended September 30th, 2020, which the company intends to file with the Securities and Exchange Commission on or before November 16th, 2020. All the company's filings may be obtained from the SEC or the company's website at www.clearpointneuro.com. I would now like to turn the conference over to Joe Burnett, Chief Executive Officer. Please go ahead, sir.
Thank you, Brock, and thank you to everyone participating in today's call. I would like to start by saying that during the third quarter, we are encouraged by the return of many elective and pseudo-elective procedures, leading to our case volume rebounding to 200 cases covered here in the United States. I continue to be very proud of our essential employees in manufacturing and in our field clinical support team. Despite personal risks to themselves and repeated travel challenges, our team was able to ensure that every hospital and patient that requested the use of ClearPoint received it. We continue to show up when these very sick patients need it the most. I'm also very excited as we have continued to make progress in all four of our strategic growth pillars, including neurosurgery navigation, biologics and drug delivery, in-house therapeutics, and creating global scale.
With all the uncertainty the last three months have offered, we all kept our heads down to ensure our development and strategic pipeline continued to move along, even when much of the world was paused. By no means have we put this pandemic behind us. We currently have a number of hospital customers that have reduced surgeries due to higher COVID hospitalizations and a number of patients in high-risk categories that continue to be reluctant to leave their homes to get treatment. Nonetheless, we are confident in our team and in our direction, and we continue to believe that ClearPoint will exit this pandemic in a stronger position than when we started. I will now turn the call over to Hal to provide detail on our financial performance, after which I will highlight some progress across our four strategic growth pillars before answering questions. Hal?
Thanks, Joe. Total revenues were $3.5 million for the third quarter of 2020 and $2.9 million for the same period in 2019, which represents an increase of $592,000, or 20%. Drilling down on the components of revenue, functional neurosurgery navigation revenue, which consists of disposable product commercial sales related to cases utilizing the ClearPoint System, decreased 1% to $1.8 million for the third quarter of 2020 from $1.9 million for the same period in 2019. This decrease reflects the continuing effects of the COVID-19 pandemic, in which elective surgical procedures that were postponed or canceled at the outset of the pandemic have resumed, albeit at volumes that have not yet reached pre-pandemic activity.
Biologics and drug delivery revenues, which include sales of disposable products and services related to customer-sponsored clinical trials utilizing the ClearPoint System, increased 162% to $1.5 million for the third quarter of 2020 from $564,000 for the same period in 2019, primarily due to an increase in biologic and drug delivery service revenues. This increase in biologics and drug delivery service revenues is attributable to the establishment of additional relationships with biologic and drug delivery companies that include period-based retainers for clinical services in support of such companies' respective clinical trials. Capital equipment and software revenue, consisting of sales of ClearPoint reusable hardware and software and of related services, decreased 48% to $200,000 for the third quarter of 2020 from $400,000 for the same period in 2019.
While revenues from this product line historically have varied from quarter to quarter, the company believes that many hospitals have postponed capital equipment acquisition activities due to the COVID-19 pandemic. The company achieved a gross margin of 80% on its sales for the third quarter of 2020, compared to a gross margin of 66% for the same period in 2019. This increase was due primarily to a shift in the mix of revenues by line of business that resulted in service revenues, which bear higher gross margins in comparison to other product lines, representing a greater contribution to total sales for the third quarter of 2020 relative to the same period in 2019. Operating expenses for the third quarter of 2020 were $4.1 million, a 43% increase from operating expenses of $2.9 million for the same period in 2019.
This increase was comprised of research and development costs, which increased 59% due primarily to increases in headcount and increased project activity. Sales and marketing expenses, which increased 40%, due primarily to increases in headcount of the company's clinical specialist team to prepare for case volume growth anticipated in 2021, and general and administrative expenses, which increased 33%, due primarily to an increase in company-wide share-based compensation and a reduction of the allocation of shared departmental resources to production due to the reduced manufacturing activity as an effect of the COVID-19 pandemic. Net interest expense for the third quarter of 2020 was $201,000 compared with $213,000 for the same period in 2019, primarily due to a decrease in the amortization of the discount associated with notes we repaid and retired during the first quarter of 2020 and to the repayment and retirement of other notes in June 2019.
This decrease was substantially offset by the increase in interest expense associated with the secured convertible notes we issued in January 2020. Operating loss for the third quarter of 2020 was $1.3 million compared with $900,000 for the same period in 2019. Cash and cash equivalent balances at September 30, 2020 were $14.7 million. With that, I will now turn the call back to Joe.
Thanks, Hal. We are thrilled with the financial progress we saw in the third quarter, where we rebounded to a new record in revenue, particularly through our diversification into the biologics and drug delivery space, where we were able to show progress in the face of COVID-related challenges. I will now add a little additional detail about that progress toward our four pillar growth. For pillar number one, functional neurosurgery navigation, we saw both cases and revenue rebound to almost pre-pandemic levels of 200 cases and approximately $1.8 million in revenue. As I highlighted earlier in the call, the impact of COVID-19 is not fully behind us, and at this very moment, we have lost cases due to hospitals overwhelmed by COVID hospitalizations, as well as in some cases, key hospital staff being quarantined themselves.
While we do not expect a full shutdown as we saw back in March and April of this year, we do continue to expect to see certain hospitals open and close periodically until a time when a reliable vaccine for high-risk patients and hospital staff is readily available. On a case standpoint, our best estimate is that we are currently operating at about 80%- 85% of where we would expect to be had the pandemic not rooted itself in some of our hospitals. We did use this time, however, to continue progress on our pipeline of additional navigation tools. In the last three months, we successfully entered full market release for two new products. First, our Inflexion Head Fixation Frame, which enables easier trajectories by safely pinning the patient on their back before rotating them over, thus making existing workflows faster and further enabling two procedures a day.
Second, we expanded our accessory kits by offering now a five French and seven French kit to complement our historic four French kit. This allows larger devices to benefit from a peel-away sheath that can keep an open channel to the target. This is important because every time you pass a device through healthy brain tissue, you risk additional hemorrhage and side effects, and these sheaths allow a single pass to create an entry point for multiple steps of the procedure. We are also encouraged that the freeze on new product evaluations has somewhat subsided and that we will again be able to introduce new sites to the ClearPoint portfolio.
While we do not expect significant capital sales the rest of 2020, by starting these evaluations over the next three to six months, it allows us to get back into the hospital's capital budgeting process to close by the end of next year. For pillar number two, biologics and drug delivery, we have added five additional customers since the pandemic began and resulting in approximately 25 active biologics partners. COVID has certainly had an impact on enrollment in these trials, as well as starting new centers globally. However, we have made progress developing custom cannulas, custom needles, and custom software for the gene therapy and stem cell space and look forward to incorporating these tools into formal clinical exploration in the future. All in all, our biologics business is the one pillar that is growing faster than we expected going into the pandemic despite these clinical delays.
For pillar three, therapy products, we continue to be encouraged by our partnership with CLS in Sweden. CLS successfully earned CE mark for their laser system, the TRANBERG, for use outside of neurosurgery. While this does not allow us to do any cases today to treat neuro disorders or tumors, it does allow our team to begin to get clinical experience in Europe in other parts of the body with a similar system that will undoubtedly allow us to continue improvements and begin necessary field education. Finally, pillar four, achieving global scale. We successfully hired the first members of our clinical support team in Europe. This will allow us to begin supporting biologics cases in Europe for pharma partners that are based in CE mark countries, who will now be able to include ClearPoint into their study protocols as our team will be present on that continent.
This is a significant strategic investment that you can see has impacted our OpEx to some extent, but we believe the time is right and necessary for us to be viewed as the premier partner for biologics and drug delivery. If we do not have an active presence in Europe, then we cannot meet our full potential. Furthermore, you can see that our gross margin for the quarter grew to 80%. Now, while we do not think this is sustainable right now, quarter to quarter, as it reflects a disproportionate mix of disposables and clinical services compared to capital sales, I think it does provide a good indicator of the margins possible for the razors in our razor-razorblade model.
In total, we believe that barring a massive shutdown of hospitals here in the U.S. for elective surgeries, that we will exit 2020 with revenue between $12 million and $12.5 million for the year. With that, I would like to open up the call to any questions that the participants might have.
Thank you. At this time we will be conducting a question and answer session. If you would like to ask a question please press star one on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions. Our first question today comes from Andrew D'Silva of B. Riley Securities. Please proceed with your question.
Hey, thank you very much. I'm glad to hear everybody's doing well. Just a few quick questions from me.
Yeah.
First, to start Hey, how's it going? Thank you. On the bookkeeping front, is it possible to get a rev break as it relates to the product and service breakout by category as it would relate to biologics and drug delivery? If there is a breakout for therapy revenue and/or capital equipment? While Hal is pulling that, Joe, could you give any color around how many clinical trials you're involved in currently? You mentioned adding five new clients. That's a really good cadence. I'd be curious how that's translating into clinical trials. Has there been any color on when it's expected for your first biologics partner to obtain an approval?
Sure. Let me start with the addition of new partners. I think the comments I just made showed that we added about five additional relationships, if you want to say, since the COVID situation began. The cadence there is about one every six weeks or so, give or take. Many of these start in a much more foundational time. What I mean by that is the sites themselves or the relationships themselves is a company that has just received funding or is well along in the formulation of their biologic itself and has now moved to the next step of how do we actually deliver it.
It's very common that when a customer shows up on our count of the 25 relationships that we have, it normally begins with a number of consulting calls and regulatory calls and has progressed at least until the point where they have actually purchased some products or services from us. Maybe they've purchased 10 cannulas to do their first pre-clinical data. Maybe they've asked us to do some hydration experiments or viscosity experiments for them. Effectively, some transaction has at least taken place to get to that point. Now, as you can imagine, getting from there to a human clinical patient generally does take some time. What we're constantly doing is fostering all of those relationships through the process.
I believe, I think since COVID began, so let's say in the last six months anyway, our products have been used in two additional clinical trials, at least ones that I can think of right away. We have not necessarily listed those because, again, we try to keep it confidential as our partners sometimes request we do until an appropriate point. That's kind of where we are on the biologics relationship side. Hal, do you by any chance have any of the data available? Sorry, Hal and I are not in the same location, so I can't look him in the eye and ask him.
No worries. It's okay.
You might be on mute.
Andrew, while we're waiting for Hal then, there was a third question, too.
Okay. Guys, I was on mute. I apologize.
Okay. No worries.
Andrew, I was going to say, we'll have a very nice table laid out in the 10-Q that we'll be filing in a couple of days. Suffice it to say for now that substantially all of the service revenue that you see on the income statement that accompanied the press release was represented by biologics and drug delivery.
Okay, there really wasn't much in the regards of therapy revenue either as it relates to services or product, nor was there much capital equipment revenue as it relates to services or products.
There was a little bit, but as I say, substantially all of that line item was biologics and drug delivery.
Okay.
Andrew, when we talk about services in the two buckets, services in biologics and drug delivery. The two most common flavors of that is, again, a company hiring us to support their cases clinically and handle infusions or co-branding or marketing or things like that. That's one type of clinical services. This could include preclinical support. This could involve trial design, a number of different things. That's one side of it. The second side that would fit into biologics is also us developing custom products or software. Someone might hire us to develop an application that will do some specific feature during a case in the future, either during their trial or for their commercial launch. Those are the two types of services that generally exist in biologics and drug delivery.
When you see a service line in capital, effectively what that is the service contracts to support the systems themselves. If a system were to break in the field and it's not under warranty, then the customer would've purchased a service contract, at which point we would replace it. That's really the distinction between services that you see.
All right. Great. Thank you very much for that clarification. Then, the last question I had previously asked was just related to any discussion about when it would at least be anticipated for your first partner to obtain an FDA approval.
I always rely on some of the partners' publicly available information to answer that. I do believe PTC has recently communicated, as an example, that they are expecting a commercial approval, at least somewhere in the world in 2021, if not in a couple of major geographies. I think it's also important that they pointed out as well that their efforts have gone on to look for patients, if you will. Again, these are very rare disorders and very sick patients well beyond the core number of countries that they initially began in. I think they were targeting five or six countries to start, and that search for these patients has expanded beyond that.
Whether these patients get treated under a compassionate use protocol in certain countries, which is certainly a possibility, or they get treated under the actual commercial approval, our participation and our support of those cases would be the same in each case.
Okay. Thank you for that. Just my last question, and you did give a little color on this earlier, effectively as it relates to that contract research organization-esque sales channel that you're developing right now. Can you talk around how you see that evolving? Maybe what your discussions are like right now with clients and customers that maybe aren't utilizing you in that function, but what that could possibly mean if they did going forward?
Yeah. I think we have the benefit of, again, working with 25 different companies and understanding their needs, and most importantly, understanding what needs are consistent across all of them. Rather than each and every company trying to recreate the wheel and answer and ask the same questions and contract with different experts in the field, if we can be the accumulation of that knowledge and then provide that as an added service, I think that's something that we're very interested in doing. A lot of it actually begins with not just preclinical design and bench testing, which we're certainly capable of doing the device side of that, whereas we need to grow into more of the biologic side.
Many preclinical tests are in fact testing the infusion, the injection, the mapping, all of those types of things, which is a skill set that our current team of clinical specialists can also provide. Really, it creates quite a bit of leverage for us to be able to have a clinical specialist cover two or three cases one week, and then the next week they might be on assignment working directly with a company in the lab doing some additional work. I think that's something where it doesn't require invention for us to grow into it. I think we now have that base of hopefully satisfied customers, that the word will get out that this is an additional service we can provide.
Roughly, about how many are utilizing that right now out of the 25?
I'd say more than half are using it to at least some level, meaning that, as I brought up earlier on the call, a bench-top viscosity test to determine flow rates through the SmartFlow cannula, similar to some of the targeting software. There's a number of companies that we're actively working with there. I'd say 50% or so right now.
Okay, great. Thank you very much for answering my questions. Congrats on the snap back and good luck closing out the year.
Great. Thanks, Andrew.
The next question is from Sally Yanchus of Brookline Capital. Please proceed with your question.
Oh, hi. Hi, Joe. How are you?
Hey, Sally.
Good. Thanks for holding the call. I have a question. This is probably for Hal. I see R&D in the third quarter was up sequentially a lot from the first quarter to $1.2 million. Do you expect that level to continue in the fourth quarter?
The expenditure level, yes. The rate of increase, no. As I mentioned, the rate of increase was due primarily to additional people and the additional projects for which those additional heads were hired. No, I don't see the rate of increase at nearly that pace.
Will it probably be above $1 million in the fourth quarter?
Yeah, my anticipation would be- that would be my anticipation.
Okay. I don't know, Joe, are you going to announce who the new customers are for the drug delivery and gene therapy? Will you release the names of the companies?
Yeah, we're in constant dialogue with these companies as to when-
Okay.
An appropriate time is.
Oh, okay.
As you know, it's a very proprietary piece of information.
Right.
Technologies and strategies, especially when many of our partners might be going after the same indication.
Oh, right. Okay.
Just like to follow their lead, and when they're comfortable with it, that's when we would announce.
Okay, good. All right. Well, thank you, and I'm so glad to see a rebound in this third quarter. Very good news. Thank you.
Yeah. Thanks, Sally.
No more questions.
Appreciate it.
No more questions. Okay.
The next question is from [Mike Lipka] of Hayden Small Caps. Please proceed with your question.
Hey, guys. I have a question about the complete laser solution that you guys are expecting to launch. Have you disclosed how that's going to impact revenues and margins?
I believe what we have disclosed is that it should be a similar razor-razor blade model, and we continue to expect the margins of the razor blade to be, maybe not directly at launch, but be able to achieve that 70% margin on the laser side. We're really replicating it. It really kind of marries itself very well to our technology because our navigation system has a computer, the laser has a generator. They both run similar software. That becomes the new combined razor. Similar on the disposable side, we'll be selling our head frames as well as our laser fibers into the exact same case. That'll be the higher margin part of the acquisition.
If I was to look at the number of cases that you guys do right now, roughly how many cases would that impact?
About 35, probably 35% of our cases today, maybe a little bit higher than that, are laser ablation cases. If you think about what the impact would be again, if you take the capital out of it and the system itself, and you're just looking at the per-case revenue, you'd effectively see a per case going from about $6,000 in revenue for just our navigation, up to anywhere from 12-15 or even more, depending on how many lasers they use during the case itself. You're effectively 2x or 3x revenue opportunity in that particular case versus what we're getting today.
Okay.
That's, of course, if every one of our existing users switched to our laser. We're going to continue to support Visualase's cases, continue to support Monteris' cases. Whatever the patient needs to be treated, we're going to be there for them. Again, we're not developing this product in the dark. We've got active relationships with neurosurgeons that do laser procedure, and they're assisting us in the development of this today.
If we were to estimate roughly how that impacts revenues right now, would it be safe to just say roughly 1/3 of your cases, if you were to switch all over to the new laser, would result in doubling that portion of the revenue?
That's correct. Yeah, with that same assumption that if everyone switched that we're currently working with, then yeah, I think that would be conservative. Yeah.
What compels those people to use the other solutions if you're coming in with your own?
I think there's a number of just streamlined advantages that we would have, and we'll certainly have to compete for each and every one of those. I think above all, ours is going to be a faster, simpler solution is the way that it's designed. Especially when it's used in concert specifically with our navigation system. You've got one workflow as well as one clinical specialist that is now responsible for the success of the entire case. There's no handoff during the procedure. We found over and over again that many surgeons have sort of complimented us on that priority, because they don't like two people being responsible for the same outcome. They'd really like to have one person assisting, and I think that's something that we offer as well.
Okay. I have one other question about the AADC trial that's coming out for PTC. They're estimating that it's going to be approved and potentially launched mid-next year. They mentioned that many of the patients are in Europe, and I know you guys aren't in Europe. How would you be treating those patients? Would you be selling your platform to new sites in Europe?
That's correct. Yeah. We actually, as I mentioned earlier on the call, we have hired our first European employees. COVID has certainly made it a little more difficult to go through the training process, but we are actively working on evaluation and placement contracts with a number of centers across Europe that we see as being these PTC centers of excellence. The preparation to be ready and get those sites familiar with cases doing either deep brain stimulation or biopsy or tumor ablation, so that the very first case that they do is not one of these kids with AADC deficiency. We want to make sure that not just our team is there and present and able to assist, but that the hospitals themselves have had some positive experience with the product.
Got you. Okay.
To put it in perspective, if COVID hadn't hit, I would imagine we would have four or five active European centers already.
Okay.
It's directly a one-for-one month delay so far.
That kind of goes into the next question I had, was on some of the larger trials that are targeting over 100,000 patients, how do you intend to scale up to meet that? Is there a particular plan that you guys have in place to scale up? I don't know if you've disclosed what the capacity is at the 60 sites that you're doing, how many cases you can do with those?
I would think of it in two stages. The first stage is, number one, there's going to be a ramp to get up to any meaningful volume. Even if these sort of larger Parkinson's, Huntington's disease, tumor-related projects, even if they really get all the way to FDA clearance, there's still the process of reimbursement. There's still the process of patient outreach and education of neurologists to be able to refer patients even to get to the surgeon in the first part. It's definitely not flipping a switch, and it takes a little bit of time. However, with those first commercial clearances, which again, could be, at least for the rare disorders, could be next year, as we've already talked about. That really, I think, sort of opens the floodgates as to what if and what could happen and what could these volumes really look like.
In that case, it becomes a lot less hypothetical and more, all right, how are we actually going to solve this problem? I think the reality is that, the future of neurosurgery, probably around the world, is not 250 or 2,000 centers doing one case a month. It's going to be concentrated in a much tighter group of centers of excellence that are trained to do three or four procedures a day and just churn it almost like a lean manufacturing line. I think it remains to be seen exactly who those centers are.
Undoubtedly, it will create an opportunity that will be filled by partnerships and surgeons that want to set up these centers of excellence or co-own joint ventures, with either big iron companies or companies like ourselves, et cetera, that if it really appears that demand is there and real, then it's math and some investment that gets you the rest of the way. I mean, the reality is, the good thing for us is that even though we are active today in MRI scanners, and that's kind of where our world is focused, it doesn't mean we're always going to be only locked to MR. We're also doing some work in the operating room as well. Most importantly, we don't need a seven Tesla scanner to do what we do.
In fact, we can use a 1.5 Tesla scanner, and have exactly the type of imaging we need for these types of procedures. You can imagine a situation in the future.
Question is from Hossein Aram of RGMP. Please proceed with your question.
Hi. Congrats for the results. I have two quick questions in the- competitive landscape. The first one, if you can say about the ROSA's Zimmer Biomet. They announced it in the release that the next year they're expecting the ROSA comes online. I want to just see what's your takeaway or what's your reaction to the ROSA versus your solution. The next one is, the last week we have this news of Biogen and the Alzheimer's solution. I know it's FDA rejected it. They couldn't have the confirmation by FDA. My question is, what would be your reaction if this solution for Alzheimer's was approved? What would be the effect on your long-term approach? Thank you.
Yeah, sure. No, thanks for the question. I'll start with the first one, which is related to the ROSA robotic platform. There are additional robotic platforms out there as well. The Medtronic Mazor is an example of that too. We see ourselves as very complementary to that. What I mean by that is that certain indications and certain types of procedures lend better to a robotic platform versus sort of what we do. To be clear, we are building our own robotic platform, albeit at a much simpler level. We're not trying to replace everything the surgeon does. We're just trying to replace the most annoying parts and time-consuming parts of the procedure. That's something that we are actively doing along with our ClearPoint platform.
To put it in perspective, if you need to deliver an agent or a therapy of some kind to a target deep in the brain, and you only need to use two, three, maybe four trajectories, then you can do it inside the MRI magnet. You can use our tool. This is something for deep brain stimulation. This is for laser ablation of a tumor, those types of things. Where if you're going to go after two or three trajectories, I think that's where our workflow and access to time in the MRI magnet makes a lot of sense. You compare that to something like ROSA, where it's terrific technology, and you think about an application like stereotactic EEG, right?
Here's a situation where now you actually have to drill 15 holes in the patient's head, place these electrodes at certain specific depths, and then record the patient over the next three weeks and wait for a seizure to take place in an epilepsy patient. Okay? That's something you're never going to use ClearPoint for, because there's no way you would use our level of precision for something like that, and you likely wouldn't be doing that procedure in the MRI either. We see, I'd say every single one of the hospitals or almost all the hospitals we're in today have both us and another robotic option. It's not to say that they're completely cannibalistic or anything like that. That's how I view it, at least on the first question.
The second question as it pertains to Alzheimer's, again, you think about the things that we do really well is we get a therapy to a very specific target in the most precise manner possible. Okay. That lends itself to functional disorders where it's just one region of the brain is where the disorder is taking place. In an epilepsy patient, the seizure is generally originating in one location. In a Parkinson's patient, you're going after a specific target based on how the patient presents. Alzheimer's is something that all the research seems to indicate there's a much more global phenomenon. It's more likely that a treatment, at least on the pharmacological side, would come from something that could impact the entire brain, almost like bathing the brain in an agent, as opposed to delivering something to one target.
While we are active in some work in the deep brain stimulation side of treating Alzheimer's, on the pharma side, most of our work has been more on these functional disorders today. Hopefully that helps.
Yeah. Okay. Thank you. Appreciate it. Thanks.
Sure.
The next question is from Henry Mellon of Mellon Group LLC. Please proceed with your question.
Hey, Joe. Hal. Well done.
Hi, Henry. Good to hear from you. How are you?
Yeah, likewise. I was wondering if you could shed some color on the PTC AADC, when that does get approved. I know this is me talking, but PTC said they've identified 300 patients. When that gets launched, is it kind of like a snowball effect, meaning you start with one? Can you give a description of what that would look like as far as the launch?
Yeah, I can-
On the numbers.
I can at least add yes for more color, so I can do that.
Yeah.
I can't perfectly do the future.
Even though you're not in control of it, of course, but I realize that.
Yeah.
But I'm trying to understand-
No, I think, yeah.
Because that's a dire disease, and you got 300 of these kids already identified. What does that look like to you as far as the launch?
Yeah. No, I think that's right, and I think the sad fact is a lot of these children are up against the clock to some extent, where to get clearance and then not get treated for three years after that, it's a missed opportunity at added development and, in some cases, extending the life of these children as well. I do think that not just does this have a chance as it's been so far, to be sort of fast-tracked through some of the regulatory processes because there's really no alternative to treat these kids today. I think that certainly helps on the regulatory side and it's for good reason, both on the science and the need that this is likely one of the first treatments to be available.
Once it becomes available, that becomes another question, too, of how is the procedure paid for, which centers, like we've already talked about, are capable of delivering the therapy, et cetera. I do believe that the rush and the excitement to treat these patients will make the sort of getting through that queue of however many patients PTC mentioned, I think you said 300. I think it will go relatively rapidly. I don't want to discount the additional challenges here. Again, there's not a single neuro gene therapy yet approved. This first treatment is possibly going to be the first to go through it, which undoubtedly will find some challenges that we didn't appreciate at the beginning.
Fair enough. Thank you.
As a reminder, if you would like to ask a question, please press star one on your telephone keypad. Our next question is from [Mike Lipka] of Hayden Small Caps. Please proceed with your question.
Hey, guys. I meant to ask this other question. I just didn't want it to take up too much of your time. On the trial partners that you have, how many of those are in gene therapy? How many of those would you consider to be in late stage, so like phase II or later?
That's a good question. Let me see if I can navigate through it. On the gene therapy side, I would say between 50% and 75%, give or take, somewhere there. The other, let's say, 25-plus percent could be a mix of sort of traditional pharma or stem cell, things like that. Its majority is certainly specifically in gene therapy today. Let me see here. As far as the timing of the trials themselves, I would say it's less than a handful that are actually in that late stage, sort of phase II, phase III, I would say. Now, the one tricky part as I'm sort of walking through this is that one partner could potentially have multiple shots on goal.
For example, a company like PTC is not only working on AADC, they're also making progress on Friedreich's ataxia and Angelman syndrome, other sort of rare inherited disorders. One partner might have two or three trials, for example. I think the reality is that there's probably five or less that are in what we would call later stage one. Now, the one other thing to keep in mind, Mike, is that some of the indications we're going after might not need a phase II or phase III, depending on what the application looks like. For AADC, for example, again, there's no alternatives. It's really more of a compassionate use standpoint for commercialization. That might not require something like a phase III trial, and that the data already collected in its first phase could be enough to at least give these kids a chance.
That's the other thing to keep in mind.
Okay. One other question I had about when you expand into these other trials, and let's say a couple of them actually pass through FDA approval. How does that change your SG&A? Is it safe to assume that essentially all of the heavy lifting after it's approved, so marketing and all that stuff is done by the trial partner, and then you guys are just kind of going along for the ride, or do you expect a bump up in SG&A?
I don't think a significant one. I think in some cases, expansion to a geography creates one. As I mentioned, in Europe, we have to put some feet on the street there. Really, the most impactful SG&A spend is really on the clinical specialists that are there to support the case themselves. It's one thing to do a calculation of saying, "Well, if we're going to do this many cases, and you can support this many cases per week." It's not quite that simple, because again, in some of these cases, they're very sick patients that need to be treated urgently, so we need to have excess capacity. We always have someone we can fly in in an emergency. Above and beyond that's our biggest SG&A. From a marketing standpoint, I think some of it is, like you said, paid for by the other companies.
Really, where we're looking to take the reins is in the neurosurgical community. If you think about all these companies that we've listed that we work with, their primary customer historically has been a neurologist in a small molecule setting. They wouldn't necessarily go to the ASSFN Functional Neurosurgery Congress, and we will be there. I can certainly see an opportunity where we might have an exhibit or sponsor symposiums, and then some of our partners would be co-sponsoring it with us and things like that. I don't think it's things that we already do. It's not something that's a massive addition.
On the sales side, this is an important thing too, is that I don't think we need a massive sales organization either, because as I mentioned, I don't know if you heard the response earlier, the future, I think, looks like a lot of procedures anchored into true centers of excellence that are doing a lot of them. It's more likely there's 100 super high volume centers in the United States, as an example, not like cardiology, where you have 1,500 hospitals. We don't need sort of a sales team much larger than the team we have today to be able to cover that number of accounts.
All right. Got you. I know you guys have mentioned spine, and I think it was prostate potentially down the road. Is that still too far off to even consider expanding into, or are you guys just completely focused on the neuro side right now?
We have done some work with biologic partners in spine for certain products. Similarly, the CLS laser that we've acquired the neurosurgery license to. That includes both cranial and spine. There's some need for laser ablation in spine tumor, for example. I'd say it's definitely not the highest priority right now. It's pretty much a cranial play for us. The prostate work that you've heard before is something that we do have a role in. It's not sort of the strategic core. It's us helping out CLS, who will continue to market and sell their laser outside of neuro on their own. What I mean by that is, we own the license for neuro and spine worldwide. They also signed us as a distributor for, like you said, prostate in North America.
In that sense, we're kind of helping them by facilitating installs and leveraging our clinical team to support cases and do training. We're not really involved in clinical trial design or reimbursement or marketing in that prostate space. We leverage what CLS has. CLS still does not have clearance in the U.S., today, we're not really doing much with it.
Okay, great. Thanks again.
Okay, sure.
There are no additional questions at this time. I would like to turn the call back to Joe Burnett for closing remarks.
All right. Thanks, Brock. As always, thank you all for your interest and for your support of the entire ClearPoint team, including the surgeons and patients that we are serving on a daily basis. We work here at ClearPoint because we know we are helping patients and their families during some of their darkest times, and honestly, we're thrilled to have you as a part of this journey with us. Thank you very much, and please feel free to reach out with any questions in the future. Thank you.
This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.