All right, let's get started. My name is Ross Osborne. I'm the MedTech Life Science Tools and Diagnostics Analyst at Cantor. Today we have Nanox, and with the company, we have Erez Meltzer and Ran Daniel. So with that being said, could you please provide an overview of the company for those less familiar with the story?
The company?
Yes.
So what's the, what was the question?
Let's start with a quick overview of the company.
Ah.
- and then dive into both of your backgrounds.
Okay. So, the story of Nanox starts about 10 years ago, a little bit more, when a technology that was taken from Sony, the media company. We developed a special chip, which takes a nano beam X-ray, nano X-ray beam to be included in a tube, and this is part of an ARC system that is trying to change the X-ray world from 2D only to add another third dimension to the X-ray and make it a three dimension. This is based on the ARC system. This is what we developed, cleared 510(k) from the FDA.
And based on this, we scan the patient, create thirty images from the five tubes that we're taking. And based on a reconstruction, provide a three-dimension image. This actually gives us the ability to be very close to what the CT is providing, not only the X-ray and but the CT as well. The idea of Nanox is based on a few acquisition that we made about two, two and a half years ago, is to provide an end-to-end solution from predictive to preventive and from diagnosis all the way to the end. So we have the ARC, which is doing the scanning and changing the standard of care to the tomosynthesis.
We have, in addition, the marketplace, which is the terminal for all the images which are being created and navigate. We have the AI company, Nanox.AI, which is providing both AI solution for the ARC to enable the reading without a radiologist, and the next one is to provide population health, three applications: the cardiac calcium scoring, the fatty liver, and the bone density. That all of them are being installed in IDNs and hospitals and provide what the predictive medicine can go to preventive medicine, and the IDN can treat the patients and on economic point of view, to add more revenues to the IDN, but on the other hand, to provide more better health for the population.
From the technology point of view, it's a real game changer, where the chip and the source is providing the idea. We have a roadmap based on which we are also sign an agreement with Varex, the largest tube manufacturer company in the world, that we develop a roadmap for future products. One of them is going to be, one of them we gave a promo in the last earnings, and we're going to disclose or to give more information on Friday.
The third piece of this end-to-end solution is the teleradiology based on USARAD, which not only indicates the fact that we can in those places that we are doing the scanning provide the reading as well. We showed it, and in addition, USARAD is part of the value chain and the sales force that we currently have in the US for the deployment. About a year ago, we got the first FDA clearance for MSK. We are just about to finalize the process to get the CE, which will open the door for the ARC to be installed in Europe.
We have submitted in the U.S. about a few months ago the next submission for the 510(k) for the FDA with the...
general use.
The general use, including chest, of course, and the next ARC will be submitted as well to the. So all the process of the regulation is going, and we are. We have lately also got another five FDA clearance for the new version of the CCS. In terms of the deployment, we are in the process of deployment. We can talk about it a bit later. Just to give a background, as you ask, I'm almost forty years as a CEO in various global companies in all kinds of industries. Ten years ago, I was the chairman. I became the chairman, the Executive Chairman of Hadassah Medical Center, one of the largest hospitals in Israel.
About three year, four years ago, I'm with Nanox, first as a board member, second as an active board member, two and a half years ago as a CEO, and last year in 2024 as the chairman as well. My background is mainly management and leading companies to scale, and in addition, I'm teaching in the university for almost 20 years on crisis management.
... Great. Hi, my name is Ran. I'm the CFO of Nanox since August of twenty twenty-one. My experience started from Ernst & Young, of course, as an auditor, but then I evolved, served as a CFO of multiple public companies, in Israel and the US. My academic background is accounting and economics, and an MBA from the Jerusalem University.
Perfect. So excitingly, you are now commercial globally. Would you walk through the various payment models that you have?
You mean the business models? So first of all, based on the experience that we already gathered in the U.S. market and other markets, and especially with the clinical value that we can see, that we can bring them to the market, we have four business models. The first one, of course, is the MSaaS. It's actually a per-use scan. The advantage of this model, especially when we talked about our industry, that you know, capital sales require you to go through a long sales cycle, to go through budget committees and et cetera, while you go on a OpEx model, the sales cycle is quick, can even be several weeks. It's a major advantage for the customers.
They don't have to put the huge capital outlay in the equipment itself, and et cetera. Of course, our model is a multi-year model. The economic life of our machine is the current version, seven years. The next version of the ARC X, as Erez mentioned, it's eight years. Under this model, we charge in the U.S. $30 per scan. That derives from the CPT code. We'll detail it later. Outside of the U.S., it's $14-$17. Our backlog right now outside of the U.S. is more than 7,000 units, but all of it relies on multi-year agreements with distributors in multiple geographies.
It's usually like, a contract for four to six years, with the minimum scans of seven scans per day throughout the year. Other than this, we may also offer, a regular capital sales, sale. Of course, it depends on the opportunity and the nature of the, of, of the transaction. And we also, we're going to offer an hybrid model, which is going to combine those two models together. Another source of income can be also our, OEM or licensing our technology, which, as you know, we already have started with, the one of the U.S. agency, and we still have some pilots that are in the making.
Great. And then how have installations progressed year to date? Do you see the rate of placements inflecting in the back half of this year?
You mean the installation that we currently have? So altogether, I think that one of the unique advantage of our value proposition is that we are providing various segments of the market, not only the hospitals and not only the huge medical imaging centers. We are providing solution for orthopedic clinics, to chiropractors clinics, to emergency units, to specific hospitals that would like to have something on the in the department in the orthopedic department, that they will have something on hand, that they don't have to go all the way to the to the radiology center. So from...
If we analyze all the installations that we have so far, including the medical imaging chains that we started the first units in each one of them, including the multi-specialty medical centers, including all of these places, we see it all in the installed units, and we see it in the pipeline that we currently have in the deal flow, that it's pretty similar. We are actually taking the to enable the medical imaging services to cover areas which previously have not been covered, and to take the segments outside of the hospital and not only in the hospital. This goes, by the way, both the US and the others.
I think that the uniqueness of our solution, the fact that it's by far smaller footprint, no need for CapEx in order to get it. The less regulation, about friction or tenth of the energy which is required to operate a system. The fact that right now we have almost a plug-and-play, you don't have to do a lot of changes in the place. The fact that we have both in the new version, we have the 2D as well, synthetic 2D as well, in addition to the three dimension that we are offering. The fact that in the new softwares that we're installing, we have a lot of image enhancement solutions that we currently have.
All of these actually create the ability to access to other segments of the market and to make this one a very unique value proposition to what we offer. Even if we analyze the fact that we are based all of our value on clinical evidence, and we are improving all the time, new protocols and new clinical use. So this is part of the offering, this is part of the clinical trials that we are doing in a few of the hospitals. And the fact that we are adding the AI and the end-to-end solution add another dimension to this offering. So-
Sounds great. You mentioned clinical trials. Would you walk us through some of the clinical trials you have ongoing?
Yeah. So currently, we have one clinical trial at Shamir Medical Center in Israel. This was the first one. This is the one that we did with MSK. This is the place that we're going to do the next version of the ARC. We have another one in Rabin Medical Center, Beilinson Hospital, in which we do chest and pulmonary diseases, and this is another one. Part of the multi-site clinical trial, we do one in the UGMC, University of Ghana Medical Centre. We're going to have one of the medical chains here in the US.
We are going to have a clinical trial, and we have already mentioned that we will have another clinical trial in another hospital in Israel that will probably use part of the clinical use that we do.
Great. Switching back to the U.S. commercialization plan, would you walk us through the size of your sales force and where you need that number to go?
Yes, of course. So first of all, we have to consider the fact that since the FDA clearance, we started the commercialization in the US market, so which means that we are working in parallel, first of all, to realize our strategy in the US market, in the same time, also building the infrastructure. And then on the other end, we're also looking for future collaborations, within the market and outside the market. Having said that, you have to remember that we also acquired the USARAD in late 2021, which has actually provided us a footprint in the market. In terms of the assets that they already acquired, they already operated in the market for several years.
It's from the aspect of the assets that they have built, which means customers like imaging centers, clinics, and et cetera, which gives us a footprint in those customer base. And on the other end, also, the chain of radiologists that they already have been built up as well. So it's not only the chain itself, it's also the relationship that they acquired, and we can leverage on those. So going back to your questions, right now, we have approximately 15 people that are salesperson in the US, whether agents or other people. Out of them, we have 4 salaried people. And of course, as we're growing, we're also going to recruit and to expand this network and infrastructure.
Our goal is to be with 30 to 40 people by the end of 2025. That will provide sales, marketing, and support to the U.S. operations.
Great. And then maybe moving to your FDA 510(k) application for full body scans, would you walk us through this?
So the full body was submitted about six weeks ago, or I think-
Six weeks.
Yeah, almost six weeks. Right now, there is a unique feature in the FDA that you can monitor or follow the process where you are. So we are in a really advanced process. We got some questions, which we answer, so we are in a continuous dialogue with them. If under the assumption that basically the 90 days are going to be, it's going to be sometimes in November. With respect to the CE, right now, we have addressed the technical and the clinical question that they have, so we don't right now see a reason why it shouldn't be clear shortly, namely this quarter or the next one.
Okay, great. And then, you know, if you were to receive an expanded indication for full body, what does that process look like for current users? So if someone already has an ARC system, is that a hard update for them? Do they have to buy a new system?
This is something that I mentioned. Due to the fact that the whole system is cloud-based, all the information and all the data is being done electronically or remotely. For example, we wanted to install a new protocol for spine. We did it overnight to install in all the units that were installed without even going to the site. If we get the chest clearance or the full body, it will be done remotely, and we don't have to go to all the places. Everything is going to be done automatically. It's the same with software versions, new clinical protocols, new developments that we do.
Um-
... Great. And then you recently announced Nanox.ARC X, and I think we're gonna hear more about it this Friday. But anything you want to tease ahead of the Investor Day?
Yeah, I think I gave some indications. That's, we're going to announce more details this coming Friday. First of all, it's another version of the ARC. It's suitable for places where the footprint is smaller. In terms of the installation, it's very simple to install, so it's kind of a plug-and-play. It's a one system. The part of the electronics is in the drawers underneath the bed. It gives a lot of other applications and more to come on Friday.
Great. Well, looking forward to it. Before we move away from ARC, longer term, you know, and I think you've discussed these numbers loosely, but how many system placements should we think about for you guys to get to a kind of a cash flow breakeven standpoint?
So we have said in the past, and I want to make it clear, it was not indication or any kind of guidance, but we said, it depends on the mix of the revenue, because if you remember, we have the AI, we have the teleradiology. But depends on the mix of the revenue, it will be somewhere around the 1,500 units, fully deployed.
Great, and then switching to your AI business, would you walk us through this business segment?
AI, as indicated, it's something which is internal and some which is external. We have all the internal work that's being done is to provide AI-based solution and integration on the ARC. This is something that is being developed right now, and this is one of the main purposes of the acquisition. We spoke in the past, and I shared with you that about three years ago we thought, and I realized that a company in the medical equipment business that will not have strong software and AI, and deep learning, and machine learning, and algo capabilities will not be able to survive. The main reason for this is because customers are looking not only for the physics for the physical process that of the scanning.
They would like to add to it analytics, they would like to add the, the diagnosis, capabilities, and hopefully with this, to provide better health for, in a patient outcome. And having said that, this is part of one. As you know, we have already, right now, we have been providing AI solution to another product that we are selling, which is the Connect. So the Connect comes with AI application, and two good examples is, in the earthquake in Morocco and in the Middle East, this system has been used, and the reading was done without, radiologists in the, on site. So this one is, it's another one. And last but not least, is the application that we are providing based on all the information.
So once, as part of the acquisition of Zebra Medical Imaging, which is currently Nanox.AI, we actually acquired the database, one of the largest database that I'm familiar with, with 500 million images, all kinds of modalities from 30 million patients over more than a decade. All of this gave us a lot of abilities in terms of the analysis, in terms of developing the AI solutions. We know how to take a PACS of a hospital, those hospitals that we are installing, we have installed our system, and we know how to do the analysis and provide them with the ability to have better access to their customers or patients. One, it proves or improves the misdiagnosis.
It improves the ability to sense and analyze the system and give a kind of a prediction of certain patients that will suffer from the... Right now, we do three application: the heart diseases or severe heart disease, bone density related, so like hip fractures or knee fracture that someone will and you can treat now, or fatty liver that you can treat now and prevent it.
So on one hand, for the hospital and for the IDN, it gives them the ability to diagnose their patients and provide them with better health as part of what we call the population health, and to say, "Yes, we are, you see that this patient, if you don't treat them now, will suffer from in the future." And second, from economic point of view, based on the health system, especially in the U.S., can provide better revenues or income to the hospital based on what we are offering. This is another one, and we have more applications that in the pipeline that we're going to develop in the future. We have part of the go-to-market.
We have both installations in Europe, in Asia, and the Far East, and also in the US. We have a few of them. We had signed agreement for distribution with all the marketplaces, like Nuance, Blackford, Ferrum, et cetera. And part of the deal flow that we currently have is from these efforts. One of our customers is already the third or fourth year that we are renewing the agreement. They are able to provide, to be a benchmark for other customers. We are looking for more strategic and academic collaboration on this one, and we strongly believe that this is part of the offering that we are providing as part of the value to the customer.
Great. A lot of exciting things going on. Any questions from our audience? In that case, Erez, I'll leave the floor to you, for any closing remarks.
Internally, when I talk with employees and when I talk with investors, I think that based on the three elements, first, the first one is the technology breakthrough, doing something that nobody has ever done before in terms of the chip and the tube itself, and the roadmap for the future product, in addition to the ability to understand and to go with the regulation, and last but not least, is understanding the medical side and the clinical side, and understanding the customer interest and value. I think that we have developed something very unique, which is changing the way medical imaging is being provided, and we are tackling all of this, so we are tackling the business model, we're tackling the standard of care.
We enable the service of medical imaging to be provided in areas that currently don't have access to medical imaging. If I look at the future of our products in the roadmap, based on the clinical evidence that we show in the proof of concept that we currently have, I think that we are providing something unique, and it's going to be an interesting journey going forward to change the way medical imaging is being provided and to give access to medical imaging to those who currently cannot afford it.
Absolutely. Well, that sounds like a great place to close. Thank you both for being here. Thank you, Ross.
Thank you.
Thank you!