Axonics Inc (AXNX) 2023 Q1 法說會逐字稿

Thank you for standing by and welcome to the Axonics' First Quarter 2023 Results Conference Call. (Operator Instructions) As a reminder, today's program is being recorded.

And now I'd like to introduce your host for today's program, Neil Bhalodkar. Please go ahead, sir.

Thank you, Jonathan. Good afternoon and thank you for joining Axonics' first quarter 2023 results conference call. Presenting on today's call are Raymond Cohen, Chief Executive Officer; and Dan Dearen, President and Chief Financial Officer.

Before we begin, I would like to remind listeners that statements made on this conference call that relate to future plans, events, prospects or performance are forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995. While these forward-looking statements are based on management's current expectations and beliefs, these statements are subject to a number of risks, uncertainties, assumptions and other factors that could cause results to differ materially from the expectations expressed on this conference call. These risks and uncertainties are disclosed in more detail in Axonics' filings with the Securities and Exchange Commission, all of which are available online at www.sec.gov. Listeners are cautioned not to place undue reliance on these forward-looking statements, which speak only as of today's date, May 1, 2023. Except as required by law; Axonics undertakes no obligation to update or revise any forward-looking statements to reflect new information, circumstances or unanticipated events that may arise.

With that, I'd now like to turn the call over to Ray.

Thanks, Neil. And I'd like to welcome everyone who's joining this afternoon's call and may listen to the playback. Axonics generated revenue of $71 million in the first quarter, an increase of 46% compared to the prior year period. More specifically, sacral neuromodulation revenue was $55.2 million, representing an increase of 41% compared to the prior year period.

Revenue growth is being driven by a combination of higher utilization of our SNM systems in existing accounts and continued share gains from the addition of newly acquired competitive accounts. Bulkamid revenue was $15.5 million, an increase of 66% compared to the prior year period. Results for Bulkamid were driven by solid reorder rates from existing accounts, the onboarding of new accounts and the addition of new sales representatives focused primarily on promoting Bulkamid. Bulkamid continues to rapidly gain traction in the U.S. and is fast becoming first-line therapy for women with stressed urinary incontinence.

It's also worth noting that despite the sequential step down in revenue from seasonality, we still generated positive adjusted EBITDA in the quarter. Now Dan will discuss our financial performance and outlook in further detail in his prepared remarks. So I would now like to provide some updates on other corporate initiatives.

Last week, we announced the acquisition of a lead placement technology that complements Axonics existing sacral neuromodulation offering. Let me start by saying our business development strategy is to develop or acquire innovative technologies that enhance the physician and patient experience with the goal of increasing the penetration of advanced therapies for this vastly underpenetrated incontinence population.

With that as a backdrop, as many of you know, physicians determine a patient's eligibility for long-term sacral neuromodulation therapy by performing a short 2 or 3-day external trial or peripheral nerve evaluation typically referred to as a PNE. In a PNE, the temporary lead is placed and is often done in an office setting without real-time imaging. Now due to anatomic variability between patients, locating the appropriate sacral foramen closest to the desired route of the sacral nerve can be challenging without fluoroscopy. The acquired technology addresses this challenge with an elegant solution comprising of a software application and a hardware tool that makes the PNE lead placement easier, faster and more accurate.

The technology has the potential to reduce procedure time and facilitate a more accurate placement, which, in turn, can increase physicians' confidence in sacral neuromodulation procedure and drive increased therapy adoption, utilization and the permanent implant conversion rates. With a standard x-ray of the patient's pelvis, a physician can leverage the software to determine the optimal location for needle entry and lead placement based on that patient's specific anatomy. The technology can readily be implemented into existing clinical workflows as it takes only minutes to use and requires minimal training.

Now we believe this solution has the potential to drive increased utilization of sacral neuromodulation therapy and we're eager to get this technology into the marketplace. We expect the product to receive FDA clearance and to be commercially available by mid-2024.

Now turning to an update on our commercial team. We now have approximately 360 field-based personnel in the United States, of which 175 are directly involved in selling or sales management. The balance of our personnel are clinical specialists and field marketing specialists. Internationally, we have a more modest footprint with 25 field-based personnel located in Europe and a handful in Australia. We are well staffed at this time and expect only a modest increase in our commercial team headcount during the remainder of 2023.

Now turning to the Axonics Find Real Relief DTC advertising campaign. Many of our customers continue to tell us that patients come into their practices asking about Axonics therapy after seeing our ads on television or on the Internet. The campaign continues to generate goodwill with our physician customers as they are grateful that we are helping to ensure that adults with these conditions are being seen by a clinician and advancing along the care pathway.

Qualified leads are those individuals that complete a symptom questionnaire on the website. We continue to generate over 10,000 leads each month and have found that over half of those individuals filling out these questionnaires are treatment naive, underscoring the notion that people don't know that it's not a normal part of aging to leak urine and that advanced therapies do exist to treat incontinence. Our call center continues to work diligently to connect qualified leads with a physician specialist in their local community.

Now turning to product development initiatives. We recently received regulatory approval for the Axonics R20 rechargeable neurostimulator from the FDA in the month of January. The device utilizes the same small 5 cc form factor as the R15 and requires recharging just once every 6 to 10 months for 1 hour. The device has an expected useful life in the body of at least 20 years. Feedback from customers that have implanted device has been overwhelmingly positive. That said, the long-lived F15 recharge-free system continues to represent a significant portion of SNM sales in the United States.

Now this past week, we also introduced an electronic diary called myAxonics, which is now available for download for free in the Apple and Android app stores. While anyone can use the electronic diary, we developed it to move patients from paper diaries to an electronic format that allows us to upload diary results into our cloud-based patient care management portal. Since diary results are used to confirm the patient's eligibility for sacral neuromodulation, being able to store these records for our customers is a nice service and is helpful with pre-authorization and reimbursement processes.

Now, in closing, we feel like we are just scratching the surface of what is possible in the large, underserved, underpenetrated markets in which we participate. Our mission-driven team remains committed to innovating and supporting our dedicated physician customers and their patients as well as raising awareness of our best-in-class therapies.

So with that said, I'd like to turn the call over to my colleague, Dan, for his detailed remarks on financial results. Dan?

Thanks, Ray. As Ray noted, Axonics generated net revenue of $70.7 million in the first quarter of 2023. This represented an increase of 46% compared to the prior year period. Sacral neuromodulation revenue was $55.2 million, of which 98% was generated in the United States. Bulkamid revenue was $15.5 million, of which 75% was generated in the United States.

Gross profit for the first quarter of 2023 was $52.5 million, representing a gross margin of 74.3% compared to 68.7% in the prior year period. Higher sales volume, Bulkamid sales and a product mix weighted towards the F15 neurostimulator contributed to a favorable gross margin compared to the prior year period.

Operating expenses in the first quarter of 2023 were $66.9 million. Included in operating expenses is a $1.8 million non-cash charge for the change in the fair value contingent consideration related to the Bulkamid acquisition. Excluding acquisition-related charges, adjusted operating expenses were $65.1 million in the first quarter of 2023 and $56.8 million in the prior year period.

Net loss in the first quarter was $9.2 million compared to a net loss in the prior year period of $22.7 million. In the first quarter, Axonics generated $900,000 of adjusted EBITDA. We are pleased to note that this marks the fourth quarter in a row that Axonics has generated positive adjusted EBITDA. The attractive financial profile of the company and the inherent operating leverage in our business model is becoming more evident in our financial results.

As of March 31, cash, cash equivalents and short-term investments totaled $357 million, which is unchanged from December 31, 2022. On a related note, I wanted to mention one housekeeping item. Our existing shelf registration is expiring at the end of this week. And so we will be filing a new shelf registration statement tomorrow. I want to be very clear, we are making this filing as a corporate finance best practice and we have no need or intent to raise equity capital for the balance sheet going forward, considering our strong cash position and progress towards breakeven and ultimately profitability.

Turning to fiscal year 2023 guidance. Our updated outlook is as follows: total company revenue of $348 million, an increase of $6 million compared to prior guidance. This represents an overall revenue increase of 27% compared to fiscal year 2022. We now anticipate sacral neuromodulation revenue of $280.5 million, an increase of 26% compared to fiscal year 2022 and Bulkamid revenue of $67.5 million, an increase of 31% compared to fiscal year 2022.

This concludes our prepared remarks, and I will now turn the call back over to Neil.

Thanks, Dan. At this time, we are ready to begin the Q&A session. We would like each analyst to have an opportunity to ask a question. So we request that you please limit yourself to one question. If you have an additional question, please reenter the queue and we will take additional questions if time permits.

With that, Jonathan, please begin the Q&A session.

(Operator Instructions) And our first question comes from the line of Chris Pasquale from Nephron Research.

Dan, maybe I'll just start where you finished with around the guidance. You talked about top line. Curious how you're thinking about gross margin and operating expenses for the year, given the strong start you guys got off to here from a margin perspective?

No, great, great question. So from a revenue standpoint, what we did is we've guided up. If you break it down by SNM and Bulkamid, what you can see is we increased the SNM number by $3 million or 1% total and on Bulkamid 3% or 4.6%. And so in aggregate, that represents a 1.7% increase in the revenue guidance for 2023. The gross margin for the quarter came in in accordance with plan. We've been talking for a long time about mid-70s margin, 74.3%, is slightly ahead of what we projected for the quarter as we ramp through the rest of the year. Since we're bringing new products online, we don't want to change that guidance. And OpEx remains unchanged for the remainder of the year for the next 3 quarters.

Okay. That's helpful. And then, Ray, I would just love your latest thoughts on what you're seeing out there in the market. You guys continue to do a lot of work on market development. Do you feel like that's starting to pay dividends and you're seeing some of these patients come through that funnel that you're starting them on the journey towards?

No doubt. So our DTC efforts continue to yield dividends. I think the difference today May 1 as compared to where we were a year ago when we started this, is that now patients have had an opportunity to kind of work through the care pathway. And so we're starting to see and yield a lot more procedures as a result of the advertising. So what we had hoped for is actually happening and is measurable now in terms of us getting a return on the invested dollars that we put forth. We don't track the Bulkamid names as we do the sacral neuromodulation names, because there's just so many patients coming through the process on Bulkamid. But we're getting a lot of Bulkamid procedures as a result of the DTC advertising also because just to remind people, our ads are not specific.

We're not selling product in our ads either on Facebook or on television. We're just saying that if you have this problem, then we can get you with a physician and get you a consult. So that's the game for us is to just get these patients in with doc, let them morph them up and figure out what the appropriate therapy is. But it's working really, really well and we're going to continue to invest in this activity.

And our next question comes from the line of Richard Newitter from Truist Securities.

Maybe just to start on Bulkamid, nice performance there. You've owned this product for 2 years now. I'm curious where you are on the kind of the -- getting deeper into your existing accounts there versus going -- how many more your guys are to go after. And I'm just curious how you or when do you plan to start targeting gynecologists?

So thanks for your question. So we have some GYNs that are customers of ours, but it's not been a main target and we have talked about it that that this is an area that we'd like to put more energy behind. And this year, we do anticipate to focus a bit more, if you may, on calling on and marketing to GYN practices. I mean let's face it, they should be doing Bulkamid. I mean these women are coming into the practices and that would be a great place for them to get treated. Having said that, Bulkamid has been an incredible product for us; and is really capturing, the imagination of any physician, who treats women. We have over 1,500 physicians now injecting Bulkamid across the United States. This is over and above what the base kind of international business that we inherited. So it's going well and we expect that this will continue to grow. And what's most important is that the existing customers that we have seem to be doing more and increasing clinical same-store sales. So this thing is going great and we don't see anything at this point that's going to slow the adoption of this product down.

Great. And if I could, on SNM, over the next few quarters or the next year or even what's contemplated in your updated guide, what do you expect more growth to come from share capture or the market expansion side? I know you have both levers to kind of get to your forecast over the long run.

Yes. It's interesting. We understand the comment around share capture. But in our business, it's a little bit different because it's not like there's budgets and we're selling capital equipment and so forth. So people are just walking through the door every day that are candidates for our therapy. And every physician practice that we work with has literally hundreds, if not thousands, of patients that could benefit from sacral neuromodulation. So here's what I would say. We're just coming right out of the American Urological Association meeting, where there were 18,000 urologists that went to that particular Congress.

And what I can tell you is that, then the word is out that Axonics has got the goods. We've got great products. We've got great people. And there's a lot of buzz around folks who've tried our product that might have been working with our competitor previously and the great experience they're having. There's a lot of discussion going around amongst and between these physicians. So we fully expect that more and more physicians will be coming our way in 2023 and adding to this kind of bucket of newly acquired competitive accounts. So we look at it that way, right?

When we talk about market share, we're talking about wanting to get the maximum amount of money -- or excuse me, a maximum amount of procedures out of our existing accounts. We've subsequently kind of mitigated this whole concept that docs are working with both customers. We see more and more docs coming our way and giving us absolutely the lion's share, if not all, of their procedural volumes. So I think there's, a lot of blue sky ahead of us. And the combination of increasing procedures in existing accounts and then having new accounts come our way I think will continue to fuel not only our revenue growth that we're predicting in 2023, but for many years to come.

And our next question comes from the line of Larry Biegelsen from Wells Fargo.

This is Nathan Treybeck on for Larry. So Q1 was generally strong for medtech and your U.S. SNM sales were down 22% sequentially, which you noted was seasonality, but this was more than a decline of 14% last year. Can you just give more color on why the seasonality was more pronounced this year and any color on trends you've seen -- monthly trends you've seen in Q1 and in April?

So it's kind of a late question about seasonality now that we're already into May. What I can tell you is that you quoted a statistic but you quoted this a decrease from our strongest quarter in the history of the company in Q4, which is the strongest quarter in generally in Medtech as patients have met their deductibles, okay? You've reset the clock and you got to start all over again. And as we've explained numerous times in numerous forms, the first quarter is in a highly elective procedure. Once again, this is an elective procedure that we have. We expect to and expect it to have more seasonality in Q1 and that's what we've seen. Having said that, we feel very good about Q1 results. We think 46% year-over-year increase is nothing to sneeze at, whether it includes a seasonal drop from our strongest quarter of the year. So I'm not sure there's much more to say about that. What I can tell you is that things are going great. We've got great momentum in our business and this quarter is looking really strong.

And in terms of -- can you talk about the traction you're seeing with the R20 rechargeable system? How do you expect your mix to play out through 2023?

So we haven't spent a lot of time talking about mix. I mean, I think partially because we're agnostic. I mean, we're happy for our physicians implanting Axonics sacral neuromodulation and using Bulkamid. So whether they use the R20 or the R15, which is still being used and under contract with a lot of accounts or they go with the F15 really makes no difference to us. We got great margins on both of these products. So we don't have a huge incentive one way or another as a company. Having said that, I think that R20 has really captured the imagination of these physicians and I dare say patients. The idea that you can have a rechargeable product that you only have to recharge once or twice in a year is incredible. And it's not burdensome and the advantage of the R20 is the small size.

So and it's going well. I mean, we're selling, I think, the demand for R20 is a little more than, let's say, what we saw in 2022 with R15. Having said that, we are selling more recharge-free systems today than we are rechargeable systems and I think just part of that is the 20-something year legacy of physicians only having access to a non-rechargeable simulator. So they are a little more comfortable, it seems to talk about that product. But R20 has gone really well and I think it really underscores the point. Here's Axonics. We've now had the fourth generation rechargeable product out in the market in 3.5 years. We've got a great winning non-rechargeable device or recharge-free device.

So we are -- the message is out. If you want to make a bet, bet on Axonics. We are the ones that are continuing to innovate and are committed to the space and providing the MACs the best solutions that we can for these patients.

And our next question comes from the line of Adam Maeder from Piper Sandler.

I wanted to start on the guidance. You beat Q1, I think, by $6 million, that's the same amount that you raised the full year guide by. So maybe just walk us through the considerations, the philosophy and maybe the decision to perhaps not get a little bit more aggressive, given that you did have a nice start to the year. And perhaps it's very well just some conservatism, but would love to hear more there. And then I have a follow-up.

Sure. Adam, always good to hear from you. No, look, we're -- look, we're being very measured. We're very happy with where Q1 came in. It was perfectly consistent with the guidance. And I think as we look forward, no surprise here. And you've heard this from us quarter after quarter now, which is, look, both products continued to do extremely well. There's a lot of momentum as Ray said. Bulkamid still manages to outrun even our best expectations. And look, with SNM, we were asked on a previous question if the growth coming from increase in utilization or capturing additional customers, the answer is both. But we're seeing an uptick in procedures per practice. So everything is trending in the right direction and we're trying to be prudent. And so the $6 million increase in the guide is just realistic layering on top of the prior guidance. And really, it's just as straightforward as that.

And maybe just one quick follow-up, if I may. I wanted to actually ask about the evolution of sacral neuromodulation therapy. Clearly, you guys have been very active from an innovation standpoint. You just announced this lead placement acquisition. Are there other ways to further streamline the procedure or the technology? And one question that often I get asked is, do you think over time that sacral neuromodulation could be move to local anesthetic?

Thanks, Adam. This is Ray. Well, I think there's a big -- when you say local anesthetic, you mean just like lidocaine injection in the upper buttocks, maybe when somebody let you -- can you respond? Can you respond Adam, is that what you…?

Yes, sorry, maybe just to change from kind of general anesthesia and just maybe its conscious sedation or just something that's where the patient isn't fully under.

Okay. Understand. So the patients aren't really fully under for our procedure. I think this is a misconception. This is not -- we use the word procedure room, hospital outpatient procedure room, ambulatory surgery center. That's where these procedures are done. This is like a colonoscopy, patients are getting propofol. I mean that's basically it. It's not a big deal. Nobody's going under local -- under a major anesthetic, so and so forth to these procedures. These are fast procedures. I know you know this, Adam. This is a day case. I mean, we talk about a day case. We're talking people go in, they get the procedures done, they're out. It's like the whole thing is 2 hours. So this is not a big deal. And it's the appropriate -- doing it in these outpatient procedure room is the appropriate place to do it. It's -- you've got fluoroscopy there, so on and so forth.

So are there some docs who inject a little lidocaine and when they do the tunneling of the -- creating the pocket or doing the tunneling of the needle, yes, some do it that way. But I think that most people would prefer just to get some propofol. It's a good sleep, nice little rest. You wake up, you don't remember much and you're on your way. So I understand why you're asking this question. But I think that if this notion of somehow people want to have things done in the office, I mean, as if that's going to make it easier for patients or somehow more open to getting something done, I mean, I don't know. I don't think that the average person wants to do something in an exam room, okay? I think you're a lot more comfortable going through a procedure room in the hospital outpatient or an ASC.

So I don't think that's a big deal. It's not something that we're -- is being discussed or being requested. So I appreciate the question. But I think there's a big difference between the fantasy or perception that something is quick and easy and versus doing something that is safe and that you're going to get great outcomes. So -- but I appreciate the question, Adam.

And our next question comes from the line of Michael Polark from Wolfe Research.

I just want to be clear on the model, like you didn't mention a 2Q revenue target. I want to make sure -- the Street is thinking about the sequential phasing correctly. So anything that you disagree with on the Streets build prior to this update, I think, 86 or so million dollars for 2Q. Is that a fair starting point?

Yes, it is.

Here a follow-up on the lead placement technology. Is this -- how impactful is this going to be in mid-'24 and beyond? And is this something that would kind of -- you'd use to enhance your operations? Or is this a product that you would look to commercialize and generate revenue from?

So I'm not really sure about the word operations, because this is something would be used by physicians. We're obviously keen on this approach because what it does is it just -- I mean, as we said in the headline of our news release. It just makes things faster and easier for people to be able to find the S3 foramen women and get the needle placement, the lead placed easier without fluoroscopy. So that's really the key here. If you can do this procedure in the office back to that comment in the office without fluoroscopy, without the physician or a nurse practitioner or RN or whatever their title might be, having to wear lead, it's kind of a big deal.

And also, this is now allowing for a little bit of pre-case planning, if you may. Getting an X-ray is no big deal. It's very easily done. And then the software will basically give you the coordinates of where the anticipated place to drop your needle and the lead is. So this is about moving -- creating efficiency and moving things along faster and easier and more and be more comfortable for the patient and a quicker way to be able to get the external trial executed. So I think it's flat out as we've stated it, right?

I mean the reason we've acquired this is so we can just make it easier for our customers to do the external trial, which is required by insurance companies or private insurance companies or Medicare to be able to get paid. So this is a necessary part of our business. And we thought this was a great opportunity for us to be able to facilitate it. Particularly now as more APPs, more of the advanced nursing practitioners are starting to do these procedures themselves as opposed to the physician. So there's one more example of Axonics being innovative of looking at ways to be able to make this a much more efficient and effective -- not necessarily effective but more efficient procedure and therapy for patients and for our customers.

So we're excited about it. And I can tell you that, man this was a big discussion at AUA. I mean, docs are over the moon about what we've done here and appreciate that we're continuing to innovate. I mean there's, been more changes. And it's unfortunate that this seems to have escaped to a lot of folks. But we've created more changes in the 3.5 years that we've been in this market than the previous 20-something years. So I can tell you that the customers, the physicians themselves really appreciate the fact that Axonics is committed to continually looking at ways to make things faster and easier for them.

And our next question comes from the line of Shagun Singh from RBC Capital Markets.

Congratulations on a strong quarter. Just a couple of questions from me. You did note that SNM sales were driven by high utilization in existing accounts as well as continued share gains. Can you elaborate or provide any quantification there? And then as we look at the beats in the past couple of quarters, it seems like it's more driven by Bulkamid and less by SNM. I'm just wondering if there is anything to read into that or not, any commentary on competition or PTNS products? And then, I guess on Medi-Cal, we were just hearing that they're not reimbursing 2 procedures to trial at the implant. Is that true? And just any response there would be great.

Okay. So you asked 5 or 6 questions there. So I got to -- we're going to have to go one by one. Let's take the last comment that you made. What was the last comment?

So what we were hearing is that Medi-Cal may not be reimbursing 2 procedures, the trial and the implant. Is that correct? And how is it being managed, just any color there would be helpful.

Okay. Okay. So Medi-Cal, which is the Medicaid California Medicaid, they don't pay for sacral neuromodulation at all. So we don't have any customers that are using Medicare or Medi-Cal. So I don't know where that came from, but there is no reimbursement today. It's a nonissue. Okay. There were a few others, Neil, help me.

Yes. So she asked about share if we had any additional color on share gains and utilization increases at accounts.

Look, we have not been that prescriptive. And this is not a really good time for us to start that, I don't believe. What I can say is that there -- I think we mentioned the last time, we're up to a little over 1,000 SNM customers now and they're not all created equal. There's a whole group of legacy folks who dabbled in sacral neuromodulation, because the product that came before us was fussy and it was a bit of a hassle. And it had this reputation of being a therapy of last resort. I've said this before. This is actually what was out there when we entered the market. And so we've slowly but surely now changing that perception. And as physicians that we work with, find it easier, better results, better support, not to mention DTC and the other things that we're doing to normalize SNM technology or get people into these therapies.

People are doing more procedures. I mean, it's flat up. So same-store sales are increasing. And that's happening. And at the same time, the docs who have been resistant to us for sacral neuromodulation, we've penetrated a lot of these accounts with Bulkamid. They get to know Axonics. They realized, wow, these guys got a great product here. This is fantastic. Look at the quality of their people and so on and so forth. Why am I resisting? Sure, I'll give you a try on sacral neuromodulation. I can tell you, once they start working with us, for SNM, they're never going back. And a lot of this has been about rep relationships. I really like my rep and blah, blah, blah.

Okay. Well, fine. But eventually, their eyes opened up and go, well, wait a minute, all the other physicians I know have already switched to Axonics. And they're talking about what a great experience that their patients are having and that they're having working with Axonics. So that's what's going on. And it's not exterior, right? This is just flat out execution, blocking and tackling and doing the right things for customers. So that's in terms of the dynamics. And I'll tell you, I've been saying one more comment. I've been saying, "Oh, no, our objective is to be the market leader in sacral neuromodulation".

And that's exactly what's happening. And it's just a matter of time before we can statistically point to that and so forth. So we're seeing market expansion where Axonics is causing the matter of market expansion. We're seeing more customers come our way and we're seeing increases in procedure volume from our customers.

Now, Dan has a couple of comments he'd like to make.

Shagun, I apologize for saying this because you've heard us say it a thousand times. But the market expanded based on third-party data by 14% per year from 2019 through '22. And so what you're hearing from us and from Ray is that look, we are capturing market share and we're capturing customers. But the same-store sales, is also increasing. And so this is playing out like we projected going back to the time of the IPO, which is we're still forecasting 15% year-over-year market expansion and then some points of market share capture to hit the numbers and it's working on both fronts.

And our next question comes from the line of Mike Matson from Needham.

I just wanted to ask for an update on the patent trial. Is it still what to happen in August? And then I just wanted to gauge your ability or your comfort level with kind of if you were to be found -- be infringing any of the claims and any of those patents, your ability to sort of redesign around that, maybe sell a product does not [influence], again, all hypothetical.

Mike, this is Dan. As we've always said, we don't believe we're infringing any of the patent claims that have been asserted against us. The trial is scheduled for mid-August. And the second part of your question is correct, which is there are ways to make other designs if somehow we were found to be infringing any of the claims, which we continue to maintain, we are not.

Okay. I understand. And then I think Ray early in the call mentioned that you were adding reps that were dedicated to Bulkamid. So maybe you talked about in the past, first I recall hearing that. So can you just talk about that decision and why you're doing that versus having one sales force focused on SNM and Bulkamid?

So Mike, it's not different. I mean so let me try to explain. So we have total around -- I'm going to round down to about 150. We've got 150 people that are not sales managers that are quota carrying, okay? And there -- you can imagine, we started with sacral neuromodulation, right, so some of the folks have been all in on sacral neuromodulation since day 1. And when we brought on Bulkamid, they offered Bulkamid to their existing accounts, okay, as simple as that. But at the time of the acquisition, we also inherited a number of people that we're focused on selling Bulkamid. So what we've done is we've enhanced that group of individuals. And we facilitate a lot of cross-selling between the team.

So it really is one team of individuals. It's just that some of them lead with Bulkamid, others lead with sacral neuromodulation. And then they cross-collaborate or there's cross-selling involved, right? So and what's the reason? If I'm an interested customer for Bulkamid and I haven't used Bulkamid before, I need to get trained. So we want to be able to have those individuals go in and do the wet lab training, right? We bring in pig bladders and a setup and we get them trained.

And then hopefully, at the end of an hour or so, then we've got some live patients that they've scheduled, which is the optimal way to do this. And then we can move from the pig bladder to the actual human -- and observed to make sure that they're executing on the injections and the appropriate technique because this is technique-dependent.

You put the material in the right place. You use the proper amount of material. People have phenomenal results and they get off the table, drive. I mean that's why this is such an amazing product. So nothing different in our strategy. It's just that we have more products to sell and a lot more revenue needs to be generated. So we've just got more people. And once again, some people start with a bias towards Bulkamid, do the heavy lifting there, others a bias towards sacral neuromodulation.

(Operator Instructions) And our next question comes from the line of Anthony Petrone from Mizuho Securities.

A couple of questions here. First one, Ray, would just be on Radian thinking about the peripheral nerve evaluation sort of lead here. Just maybe what are the synergy expectations in the core SNM U.S. business just after this acquisition? And then I'll have one quick follow-up.

So Anthony, I've read your note and the comments that you've made. I think you're right on the money. I mean I think you understand perfectly that this is going to help us. And it further differentiates us from our competition. And anything that does that is a good thing for Axonics and allowing the -- our customers to do things faster, easier and more accurate. That's the goal, simple as that.

So it's -- I mean -- and I can tell you, as you'll talk to docs out there. I mean, even they haven't used it yet, right? It doesn't exist yet for them to be able to use commercially. But they understand perfectly what this is about. And the typical reaction is, oh, man, this is great. I've been thinking about something like this. I'm really glad to see that you guys have got this technology now. This is going to really help -- and even the most experienced docs say, "Oh, yes, I've got some cases. I wish I had this for those cases. We had a strange anatomy or I had a very large, a plus size patient because when you have a plus-sized patient, it does change the angle and it does change the parameter." So we're excited about this. And we're anxious to get this approved and out in the marketplace as soon as we can. And I think it's going to further help us. And in the meantime, I got to tell you, we're getting a lot of credit just for doing it, right, and for having it and being committed to making this available. So I know that might be a longer-wind answer than what you're expecting, but I appreciate that question.

No, no, perfect. Then, the follow-ups here. One would just be on Radian. Would it slot into the existing lead placement codes that you have in place? Is that the expectation? And this was another tuck-in M&A by Axonics. Just maybe the updated views on M&A and how you're thinking about transactions going forward within the space.

Okay. Thanks for that question. So look, I think that we're -- look, we're less concerned about a separate billing code or generating a bunch more money because of this. This is directly related. If we can get more PNEs done and they can get done more efficiently and people have a better experience and it's more accurate. Well, then people are going to respond to the therapy and we're going to get more procedures done.

So this is a game about getting permanent procedures done, right? The external trials, this is not a moneymaker for the company. It is just the necessary evil that we need to do. We'll be able to get a little -- a few more dollars? Sure. Okay. But once again, this is not like a separate product. This is just part of the workflow of doing an external trial. And we're making this easier for folks. So I think that's the direct answer to the question.

Help me, Neil, was there a second part?

No.

So thanks, Anthony. I appreciate those questions about this. He did have a second. There was a second.

Thoughts on M&A.

Thoughts on M&A, thank you. Thank you. So look, we're -- as you might imagine, the words out that Axonics is inquisitive, okay? So we have a lot of folks pitching us on all kinds of very interesting things. But we're going to be a very disciplined. And if we're going to acquire something, we -- it has to fit perfectly in our strategy. We've gotten this question many, many times in different forms. We're focused on the incontinence business. I mean, that's where we're focused. There's such an underserved population that we don't want to go often to adjacent markets and pick up other products.

We're obviously biased towards women, just as a general sense, not to say that we're -- if men have incontinence, we want to treat them as well. But you're going to see an approach where we'll tuck some stuff in if it makes sense. And if there's a bigger idea out there, we're not going to be afraid to pull the trigger. But we're being very, disciplined about this. We're constantly looking at what's out there and people are approaching us in the same way. So I don't think we're going to surprise anybody with something like buying a stereo company or something like that.

Our next question comes from the line of Michael Sarcone from Jefferies.

First question, I just have 1 or 2 on the lead placement technology acquisition. Are there any next milestones before getting to FDA approval? Have you already submitted is development already complete?

So we haven't submitted, of course, not. We just acquired the technology a week ago. We have to do the validation, verification testing and have the product "manufacturable". Those are the things that we're now starting to work on. And we're going to look to get a filing to the FDA as fast as possible. So we're anxious to get this done and we'll do it in -- with our standard velocity and care, right? But we don't want to -- we don't want to give a specific time line. I mean we said certainly by sometime next year. Obviously, we're going to work hard to go as fast as we can and get it done as quickly as we can because there's a lot of interest in that product.

And just one last one. Do you have any color on the economics of the device and the potential margin impact for Axonics?

Well, look, let's just say this, the margin won't go down because of this acquisition.

This does conclude the question-and-answer session of today's program. I'd like to hand the program back to Raymond Cohen for any further remarks.

All right. Well, thank you, operator. We appreciate that. So in closing, I'd just like to say that we remain grateful for the trust, the physicians, patients and shareholders have placed in Axonics. And as always, I'd like to thank my colleagues in Irvine and our team in the field for their diligent efforts and dedication to fulfilling the Axonics' mission of improving the lives of adults with incontinence.

And I would just finish by saying, look; we really appreciate the continued interest in Axonics. We appreciate everybody's questions for today. And we look forward to having a strong Q2 and speaking with you after the dust settles. Thank you so much.

Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.