ClearPoint Neuro (NASDAQ:CLPT) Q2 2021 Earnings Call

0:00 Greetings. Welcome to the ClearPoint Neuro second quarter 2021 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. Please note 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.

0:50 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 31, 2020, and the company's quarterly report on Form 10-Q for the quarter ended March 31, 2021, 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 June 30, 2021, Thank you, Diego. and thank you to all of the investors and analysts on today's call for being a part of the ClearPoint vision and journey. We are here to help restore quality of life to patients and their families who are suffering from some of the most debilitating neurological disorders imaginable.

2:10 In the second quarter of 2021, we made substantial progress across all four of our pillars of growth, including functional neurosurgery navigation, biologics and drug delivery, ClearPoint therapeutic products, and achieving global scale. Importantly, we made this progress while seeing a return to pre-pandemic case volumes for a new quarterly record of 249 procedures covered, as well as adding multiple new biologics partners to our active list, bringing our total from 30 to approximately 35 today. I will now turn the call over to Danilo, our CFO, to review our financial performance in the quarter, after which I will add some detail to our four-pillar growth strategy. Danilo? Thank you, Joe, and thank you all for joining us today.

2:58 Looking at the second quarter 2021 results, total revenue was $3.4 million for the three months ended June 30th, 2021, and $2.5 million for the three months ended June 30th, 2020, which represents an increase in revenue of $0.9 million, or 38%. Our revenue is made up of three components, functional neurosurgery, navigation and therapy, biologics and drug delivery, and capital equipment. Functional neurosurgery navigation revenue consists of disposable product sales related to cases utilizing the ClearPoint system. This revenue segment increased 74% to $1.9 million for the three months ended June 30th, 2021 from $1.1 million for the same period in 2020. This increase reflects the resumptions in the three months ended June 30th, 2021 of elective surgical procedures which were postponed or canceled during the same period in 2020 due to the COVID-19 pandemic.

3:55 Biologics and drug delivery revenue includes sales of disposable products and services related to customer-sponsored clinical trials utilizing our products. Biologics and drug delivery sales increased 19% to $1.4 million for the three months ended June 30, 2021, from $1.2 million for the same period in 2020. This increase is attributable to increases in both biologic and drug delivery product revenue and service revenue. as our biologic and drug delivery customers reestablish their estimated timelines for initiation or resumption of their clinical trials. Capital equipment and software revenue consisting of sales of ClearPoint reusable hardware and software and of related services were $0.2 million for each of the three-month periods ended June 30th, 2021 and 2020.

4:43 Revenue from this product line historically has varied from quarter to quarter. While interest in the ClearPoint system remains strong, capital headwinds and delayed evaluations due to COVID and IT ransomware concerns continue to slow news site activation. Gross margin for the three months ended June 30th, 2021 was 67% compared to 68% for the same period in 2020. This decrease was due primarily to a decreased contribution in the second quarter of 2021 to total sales of service revenue, which bear higher gross margins in comparison to our product lines. This decrease was substantially offset by an increased contribution from functional neurosurgery navigation disposable product sales, which carry a higher gross margin relative to other product lines.

5:28 Research and development costs were 2.1 million for the three months ended June 30th, 2021, compared to 0.8 million for the same period in 2020, an increase of $1.3 million or 177%. Sales and marketing expenses were $1.6 million for the three months ended June 30th, 2021, compared to $1.1 million for the same period in 2020, an increase of half a million dollars or 42%. Both these increases reflect additions in key areas to our team as we invest in expanding our product line, launching indications, and comply with global standards as installations take place around the world. General administrative expenses were $2 million for the three months ended June 30th, 2021, compared to $1.2 million for the same period in 2020.

6:15 An increase of $0.8 million or 63%. This increase was due primarily to increases in state franchise taxes, insurance expenses, occupancy costs, and share-based compensation. As a benefit of our last rounds of financing, we have hired 15 new employees across the organization since the beginning of the year in order to accelerate product development efforts, commercial support, and global expansion. At June 30th, 2021, we had cash and cash equivalents totaling $61.5 million as compared to $20.1 million at December 31st, 2020, with the increase resulting primarily from the completion of a public offering of our common stock in February of this year. I would like to turn now the call back to Joe.

7:03 Thank you, Danilo. As mentioned earlier, our clinical specialist team enjoyed a record quarter for procedures supported. We added multiple new biologics partners and new services to our active list and portfolio, and two exciting new partnerships with BlackRock Neurotech and Adior were announced, showing our progress in reaching further and further into the operating room to complement our MRI-guided strategy. Let's break down that progress into our four growth pillars. First, functional neurosurgery navigation continued to rebound with 249 cases covered by our specialist team in the quarter versus 126 a year ago during COVID, a growth of about 98%. We had previously communicated that we believed case volume would return to these levels in the second half of 2022. So on the positive side, we see that this return happened about a few months early. We are not fully out of the woods yet, however, as we are aware of a number of hospitals in states like Texas, Kansas, Louisiana, Florida, and Georgia that have communicated that elective procedures may once again be put on hold due to the COVID Delta variant and the growing number of hospitalizations.

8:15 At this point, at least one hospital has halted elective procedures and one hospital has limited them. All other communication to this point has been a warning so far. From a development standpoint, we continued progress across our portfolio and solidified budgets, schedules, and team members using the significant capital infusion in the first quarter of this year. As mentioned on the last call, we did receive FDA clearance for the Smart Frame Array, which is meant to streamline workflows and help ClearPoint to cross over into the operating room. We will continue our limited market release through the second half of 2021 and remain on track for a full market release in the first half of 2022. We have continued development across the rest of our pipeline as well, including the 2.1 ClearPoint software, the Maestro brain model, the Orchestra multi-trajectory headframe, our co-developed MER system in collaboration with BlackRock, and our robotic-assisted system called ClearPoint Revolution in partnership with D&K Engineering. We feel that we have an exciting cadence of new and improved products over the next few years, which will continue to demonstrate ClearPoint as one of the true innovative companies in the neurosurgery space.

9:29 All of our previous timelines remain intact, and after completing our first clinical cases with SmartFrame Array, which was accomplished in the second quarter, we continue to expect first cases of ClearPoint 2.1 and Maestro in 2022, and Orchestra, MER, and Revolution in 2023. Our recent announcement to enter the brain-computer interface navigation segment with BlackRock Neurotech is a very exciting one. There is tremendous potential around the future of BCIs, both for medical and communication purposes, as you can tell by the significant investment taking place in this space. BlackRock is one of the first and most experienced BCI implant companies, with 29 cortical impacts completed to date in human subjects.

10:16 Their recent infusion of capital is designed to accelerate the clinical and commercial launches of their pipeline of BCI tools. Under this agreement, we are leveraging our existing ClearPoint platform to build a custom smart frame solution and software to make the BCI implementation faster, more precise, and more repeatable across multiple surgeons and hospital sites. I think of this partnership as very similar to the work we do with our pharma partners. where we provide a system, disposables, and clinical support during the infusion of a drug. In this example, we are placing the BCI as a target instead of the infusion cannula, but the business relationship is very similar. Our intention is to sell this navigation system directly to hospitals through our commercial channel and see this as another disposable spoke on the ClearPoint Hub platform.

11:08 Importantly, while MRI images are used for many if not all BCI applications, The surgery itself is designed to take place in the operating room. So this is another application that we are focused on that is not reliant on MRI access, but rather an additional crossover technology for ClearPoint into the operating room. We also just announced yesterday an agreement with Adior, a leader in surgical drill solutions based in Germany. This partnership has two important elements. First, a distribution agreement allowing ClearPoint to sell and support the Adior portfolio of power drills designed for the operating room here in the United States. This is an impressive portfolio of products that has been quite successful across Europe and just recently gained FDA clearance.

11:53 We expect training and limited market release activities to begin in the fourth quarter of 2021 with a full market release in the first half of 2022. The second element of our agreement with Adior is that Adior will build an MRI conditional device based on their current Velocity Alpha design and upon this successful development, ClearPoint will be the worldwide exclusive distributor of the MRI conditional drill. This drill is an important addition to our portfolio as it is designed to eliminate the need for a slower hand twist drill and could save anywhere from 15 minutes to more than an hour of surgical time during each procedure, depending on the numbers of trajectories. This is especially relevant for our drug delivery partners as multiple trajectories and infusions are quite common.

12:42 Like in the BlackRock agreement, this also provides yet another crossover technology for ClearPoint to help penetrate the operating room as well. Second, our biologics and drug delivery team continue to add additional partners and services in the second quarter. We currently have approximately 35 individual pharma and academic partnerships across multiple indications, up from approximately 30 a quarter ago. As a reminder, it is common that each customer or partner has a drug platform of their own, meaning they are not planning to use their drug or vector for only one indication. Our decision to expand into Europe has already helped us win additional European-based pharma business and academic researchers. We plan to continue adding partners and still believe that an initial commercial gene therapy approval for Neuro could take place in the year 2022.

13:36 As you have likely seen from recent press releases, the enrollment of patients into these trials has restarted after COVID, and we fully expect multiple partners to continue enrollment and initiate new trials here in the second half of 2021. It is also important to note that the majority of our investment into the navigation system mentioned in Pillar 1 applies also to biologics and drug delivery. That is the beauty of our platform strategy as much of the investment is applied across many indications in both biologics and medical device navigation. This is crucial from a training standpoint as well. Every biopsy case, laser ablation case, or deep brain stimulation case a hospital does with ClearPoint today is in fact training and preparing them to do biologics cases in the future.

14:27 For our third pillar, We have continued our development progress and remain on schedule for our previously communicated timeline. The ClearPoint exclusive laser ablation system that is in development with CLS in Sweden and IGT in France continues to make progress and collect data, and we are still planning for a submission in the second half of 2021 to the FDA, despite some COVID-related delays. We did announce an installation and clinical partnership in Paris at Rothschild Hospital a couple weeks ago. The primary clinical data that will be collected will be on pediatric tumors using the complete ClearPoint CLS IGT laser solution with the expectation of the first patients being enrolled in the first half of 2022. Our biopsy platform similarly is planned for first human cases in 2022 and remains on track today.

15:22 Finally, our fourth pillar of achieving global scale has made progress as well. Our quality system has been successfully updated to be compliant with the new European MDR rules that went into effect in May of this year. This is not a small task and has been daunting enough to some companies that they have decided not to sell certain products in Europe under these new regulations. Although compliance is challenging, we believe our investment is the right one and the simple fact that we have one of our clinical specialists present at our procedures helps us with that compliance and market surveillance. We have also relocated key personnel to Europe and are preparing to do additional installations like the one that was just announced in Paris later this year. Based on the second quarter results, we are continuing to stand by our prior forecast of between 16 and 17.5 million in revenue for the year.

16:15 and a range of 900 to 1,000 cases covered by our clinical team. The last comment I would like to make is about our team. We have successfully added about 15 exceptional team members across clinical, development, quality, legal, finance and production over the past six months and I want to make sure I underline how special this team is. We have a vision of where we want to go, we are well capitalized and we have a motivated and very capable team Thank you. And at this time, we'll be conducting our question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad.

17:03 A confirmation tone will indicate that your line is in the question queue. You may press the star key followed by the number 2 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 while we pull for questions. Our first question comes from Frank Takanan with Lake Street Capital Markets. Please state your question. Hey, guys. Thanks for taking my questions. I wanted to first ask on the fiscal year 21 guidance reaffirmed, Where should we expect the reacceleration to come to drive the sequential growth through year end?

17:48 With the report here, it's modeled in to be growing through the end of the year, so I was just hoping you could give us a little bit more color on the drivers to drive the sequential growth through the back half of the year. Yeah, I'm happy to, and thanks for the question, Frank. So as you mentioned, we have reiterated our forecast. And obviously, that does imply that the second half of this year has significantly more revenue than the first half. So we are expecting to see that and see that pick up in the third quarter. Again, you know, when you're growing things off of a smaller revenue base, even a week of a delay of a delivery to a biologics customer, or, you know, for example, we had a very a large number of cases the last two weeks of June. So a lot of those replenishment orders took place in the first two weeks of July.

18:33 So really just timing at where the quarter happened to end, I think maybe brought the revenue numbers for Q2 down, but it's certainly been replenished here in Q3. And in fact, to date, July has been our most successful month ever from a biologics and from a case volume standpoint. So we do expect that acceleration to start back up in Q3 here. Got it. That's helpful. Thank you. Moving over to Ray, maybe speak to the opportunity you guys see with this product in your 60 established sites. Do you feel this is something all 60 sites would benefit from implementing at their practice? Is it a portion of those? Is it more than 60? Just trying to get a feel for the opportunity to sell into the established market right now.

19:20 Yeah, I do believe it is an opportunity for not only existing customers, but maybe even more for new customers. that would like to use some of ClearPoint's technology, especially when our laser is available and our MER system is available, but simply can't do that today because we're still waiting for that solution. But I do think it's something that applies broadly. I don't think it's specific to a hospital, and I think it becomes more specific the timing to an indication. So what I mean by that is if you're doing a laser ablation procedure, using the array system makes a lot of sense. because it's faster, it's simpler, it's a little bit easier to make adjustments. And if you're doing multiple trajectories in the same patient, which is very common for tumors, it makes that workflow a little bit simpler.

20:09 So I think the adoption of array into laser procedures will be sooner. If you're wanting to use the arrays for a procedure like a deep brain stimulation case, This is really required to use something like microelectric recording or MER in the operating room. So what I mean by that is that timing of array adoption for deep brain stimulation might have to wait until our MER system is available closer to 2023. So it really depends on what it is the site is looking to use our technology for. Got it. Okay. And then last one for me, I wanted to ask, and I heard your commentary about you still are expecting your first biologic approval this year that is using the ClearPoint system. Can you speak to this approval?

20:57 I want to say it's PTC, AADC in the European market, but I want to say that they also may have pushed out the U.S. BLA submission. So could you just update us on this partner, one, if that's the correct partner, and two, their latest development timeline that they're expecting? Yeah, so I believe what they've communicated is that they're still expecting to submit their BLA here in 2021 with a potential approval in 2022. So I do believe that that commentary from PTC is effectively what we're presenting here today. There is the potential for a European commercial approval to take place sooner than 2022 or sooner than the United States. But whether it happens in the second half of this year or the first half of next year, I think it kind of remains to be seen.

21:49 We need to remember that it's going to be a very significant milestone whenever it takes place because it will be the very first gene therapy approved for a neuro indication. However, being the first is always challenging when the FDA-notified bodies are continuing to work through all of those different requirements. We know many of the challenging requirements have been taking place related to manufacturing and replication of the drugs themselves since many of these facilities are set up for the first time, but we'll be ready whenever that clearance is available. One other thing I'd build on that comment, however, is that there are also some other opportunities for orphan disorders that could take place in 2022 as well. So while PTC is one of the partners we work with where we've announced the name and we're doing a lot of pre-launch activities and planning for them, it does not mean that that's necessarily always going to be the first one.

22:47 There are other opportunities in 2022. Got it. Okay. That's helpful. That's all for me. Thanks for taking my questions. All right. Thanks, Frank. Our next question comes from Andrew DeSilva with B Riley Securities. Please state your question. Hey, good afternoon. Thanks for taking my questions. Apologies to answer any of these. I was jumping between calls. The first question for me is about Europe. Just curious how things are progressing from a site activation or just ability to get into sites from the sales and marketing standpoint faster. I did see a couple installs here today, which looks good, but obviously Europe seems like it could be approved from a commercial standpoint first.

23:33 and the majority of the navigation for Montreal is domestic. I'm just trying to get a sense of how support there from ClearPoint will look once approvals and launches start happening. Okay. Now, thanks for the question, Andrew. And, yeah, so Europe is starting to open up again. However, there's obviously some additional challenges worldwide with the Delta variant that we're seeing. However, the installation process seems to have resumed. As I think you pointed out, we've had three installations in Europe that have taken place so far this year in Denmark, in Poland, and in France. I would say by the end of the year, we expect to have at least two or three additional installations take place as we prepare not only to do laser ablation procedures or potentially deep brain stimulation procedures, but also prepare to do some of the drug delivery cases either under some sort of commercial approval, as you pointed out, or as we extend into clinical trials with some of our partners that are starting to enroll in European sites. So I think, you know, it's the ability to have some support from the pharmaceutical side of things for clinical trials to get our equipment in certainly helps us to accelerate the process of installation because we generally have a champion at each one of these centers that, you know, really, really interested in being the first in their country or certainly the first in their city to be able to participate in this kind of exciting new procedure.

25:01 Okay, great context. Thank you very much for that. Last question is just related to direct to patient marketing potential for a sleep DBS procedure in the MRI suite. Where are we on that, or what should we think about as next steps? Yeah, I think we're actually making quite a bit of progress there. In fact, there was an article just published this week out of the Brigham and Women's Institute that talks about the accuracy of sleep DBS placement. And some of the materials from different DBS companies are starting to indicate more and more usage of really leaving it up to the physician as to whether the patient should be awake or asleep for these procedures. We continue to gather this data and organize it in a fashion and expect to start doing some basic education directly with neurologists as well as physician providers on some techniques on how the ClearPoint procedure is used and, again, whether that patient needs to be awake or asleep for those procedures at the physician's discretion.

26:05 So I think things are absolutely looking positive there. Great. Great. Hey, thank you very much for taking my questions. Congrats on the progress and good luck going forward. Okay. Thanks, Andrew. Thank you. Our next question comes from Dijon Nguyen with Ten Times Capital. Please go ahead. Hey, Joe. We have been following the progress of ClearPoint, and it's really exciting to see how the story is unfolding, and I continue to be a strong supporter of what you do. So I just want to touch on the recent partnership that ClearPoint formed with Adio Medical, and it's definitely great news. Could you share with us on how you feel this will be complementary to ClearPoint's existing solutions and how would this partnership value add to ClearPoint's current offering as well as for both the functional neurosurgery and the biologics and drug delivery partners? Thank you.

27:07 Thanks for the question, Bjorn. I'll cover the second part first, which is really the strategic rationale for this. which heavily relies on our ambition in the biologics and drug delivery space how we truly want to be a leader there and continue to be a leader and not relinquish that lead once we have it. So what the drill solution will allow us to do, the one that is currently in development, is it will allow us to replace our twist drill which is currently in our kit and is used during these clinical trials. So if you can imagine the difference of Drilling inside of an MRI environment. So remember, you can't have any heavy metals there. You have to use titanium drill bits and things like that. So the primary solution that's used in that MRI environment today for these drug delivery cases is putting a hand drill, so effectively like moving your arm in a circle to actually rotate the drill bit and drill through the skull. And if you have...

28:07 Thank you for having me. So in some clinical trials, you can imagine you're not only doing two holes, you could be doing four, you could be doing six, you might even want to do more than that. So the thought of 10 to 15 minutes for each one of those holes can be a pretty daunting one. It can also be tiresome for the surgical team that's doing the procedure. So having an automated version that's similar to the ones available in the operating room today, you could effectively do that same exact work in less than a minute for each one of those holes. So anything we can do to shorten the procedure time, to take up less time in the MRI magnet itself, and to ensure that when the patient is asleep under general anesthesia, we're not keeping them under anesthesia too long.

29:11 These are crucial, crucial elements to all of our drug and pharma partners. So it's a very, very important project, and we feel we've partnered with the best company to kind of deliver on this ambition. So that's the strategic part of the development partnerships. The first part, which is the more immediate opportunity, is the U.S. opportunity to distribute the Velocity Alpha, which is the high-end precision surgical drill that Adior makes and distributes throughout Europe. So this is a tool. It's an existing $200-plus million market here in the United States. If you look across all the indications, including orthopedics and spine and cranial, intracranial for neuro, dentistry and things like that, Obviously, our channel is not focused on things like dentistry today, but our presence in the hospital and this intimate relationship we have with the neurosurgery community certainly gives us a chance to go after cranial and spine immediately and actually potentially play in orthopedics as well. So our focus is going to be on the customers that we know and the relationships that we have today.

30:14 However, we are going to explore the ability to expand into some of these new markets as well. But even if you just look at the All right. Thank you. That sounds really exciting. So I just got one more question relating to our biologics and drug delivery partners. It's great to hear that we added another five partners in this quarter. So do you expect that we will continue adding partners at a similar pace? And could you share with us some color on how our biologics and drug delivery business will make up for any potential impact due to the COVID Delta variant?

30:59 Thanks, Joe. Yeah, I'm happy to. I think we enjoyed a very nice pace here in I'll say the second quarter, but I'm including sort of the recent news from this week. So really the month of July as well. I think Voyager made an announcement today where they were discontinuing their surgical approach relative to their drug delivery platform. So obviously that's the subtraction of one of those partners, at least temporarily. It still remains to be seen if they're interested or willing to sell off that asset to another partner and restart some of the clinical work. But The way that we think about counting these partners is there's some addition that takes place and there's also some attraction. So if we think about what took place in the last three to four months, effectively we added about seven partners and then subtracted two relative to the Voyager and Neurocrin sort of departure from this space. So it was a net of five, and that's how we continue to make this count. I would say that that's more on the high end of what I would expect to kind of bring on seven new partners in just three or four months.

32:07 But I think maintaining a pace of about one a month or one every two months is certainly something that's available. We still believe there's another hundred partners out there across intracranial and spine that would benefit from ClearPoint technology. And I'd say we have active conversations with 20 to 30 of them at this point. But they haven't matured to the point where we would say, okay, that's an official partner at this point. So similar to the way we think about capital equipment placements where we've got a funnel of potential customers and then we look to install, you know, one or two a quarter. Similarly, on the pharma side of things, we're trying to do the same thing. We're starting with a very large base of potential users that would benefit from ClearPoint and looking to convert them into formal partners, you know, on a steady cadence.

32:57 All right, thanks a lot, Joe. It's a privilege to be your shareholder and to be on this journey with ClearPoint. Thank you for all the hard work to you and your team, and have a great day ahead. Okay, thank you, Bart. Just a reminder to ask a question, press star one on your phone. Our next question comes from JH Tan with JH Capital. Please state your question. Hey, Joe. I would like to also congratulate you on the quarter and I'm really happy to see how ClearPoint has been progressing so far under your leadership. So the first question I would like to The Global Expansion It's a great question, Jay. And thank you for your support as well.

34:07 You know, the global expansion we have focused on initially has been in Europe. And to answer your question directly, we absolutely, as a result of this investment and this communication, and not just communication, but achievement of starting these installations, we have already been able to win multiple European-based pharmaceutical partners, which we saw added here over the past three to four months. So, you know, the message of going to these customers who had always been sort of interested in ClearPoint, but simply wanted to do their preclinical work and their clinical work sort of on their home turf across Europe and the UK. For them to now have the opportunity to work with ClearPoint, it's something that absolutely is opening the doors. And that combined with our very broad indication for not just our navigation system, but for our SmartFlow cannula.

35:01 Thank you very much. Again, we don't want to spread ourselves too thin, and we also recognize that the technical complexity and the benefit of having a ClearPoint personnel in the room for the procedure is certainly something we don't want to walk away from just yet. It's something that we want to continue to build on, so we're going to be very careful as to how far we spread ourselves thin, but it wouldn't surprise me in the next 12 to 18 months that you would see one to two installations in Europe for that same reason of being able to help Asia-based pharmaceutical companies install closer to home.

36:09 Thank you for that. That was really insightful. I have just one last question for you. It's good to see that the elective procedures are starting to rebound. Can I just ask how many partners or hospitals are you seeing that have already resumed their trials? and do you see any new clinical trials being initiated and if there is any advancement on existing clinical trials that you see? Thank you. Sure thing. Yeah, so the vast majority of hospitals have absolutely resumed work as a result of COVID. Now, as I mentioned, there's five or six states here in the United States that are struggling with the Delta variant more and have issued warnings, so Thank you very much.

37:26 Some slow down potentially in trial enrollment in some areas. I don't see the same halt in trials like we saw over the past 18 months. So that's, I think, one thing to think about. Further, I do expect, you know, if I were to tell you based on what I know today looking across the 35 active, you know, relationships that we have, I would say that at present the schedules I've seen are involve us continuing enrollment and initiating patients in the second half of this year across phase one, phase two, and phase three trials. So there's quite a bit of demand. You know, a lot of these, no one wants to go faster than our biotech partners want to go. You know, they're absolutely, you know, moving as quickly as they possibly can because their incentives are to do that as well, to get these patients enrolled and show the benefit of their therapy.

38:20 So, you know, like I said, we're trying to be there for each one of our partners and make sure we're ready as soon as they and the hospital are as well. Okay, okay. Thanks a lot, Joe. So, I have no more questions on my side, and I just want to say that I'm confident that Fairpoint can be an even bigger company than it is today under your leadership. And as a shareholder, I'm looking forward to being on this journey with you. Have a great day. Okay, thank you, James. Thank you. There are no further questions at this time. I'll turn it back to management for closing remarks. Thank you. All right. Once again, thank you to everyone interested in being a part of this team's story here at ClearPoint. We believe that we are doing very important work and will continue to put the patient and their family first as we take on greater and greater responsibility for their treatment across our entire portfolio.

39:17 Thank you and have a good night. Thank you. This concludes today's conference. All parties may disconnect. Have a great night.