ViewRay Inc (VRAY) 2021 Q4 法說會逐字稿

Thank you for standing by, and welcome to the Q4 2021 ViewRay Earnings Conference Call. (Operator Instructions) As a reminder, today's conference call is being recorded.

I would now like to turn the conference over to your host, Mr. Matt Harrison, Director of Investor Relations. Sir, you may begin.

Thank you, operator. Good afternoon, everyone.

Thank you, operator. Good afternoon, everyone, and welcome to ViewRay's fourth quarter conference call. Joining me today are Scott Drake, our President and Chief Executive Officer; Zach Stassen, our Chief Financial Officer; and Paul Strong, our Vice President of Clinical Affairs.

Earlier today, ViewRay issued a press release and presentation for today's call, the presentation can be viewed live on our webcast or downloaded from our website. Today's call is being broadcast and webcast live. A replay will be available on our website for 14 days.

Before we begin, I would like to remind you that the discussion during this conference call will include forward-looking statements Factors that could cause actual results to differ materially are discussed in the company's most recent filings with the SEC.

I will now turn the call over to Scott.

Thanks, Matt. Good afternoon, everyone, and welcome to our call. Today, I will highlight our business results and provide an update on our exciting clinical innovation and commercial pipelines. Zach will cover our results in more detail along with 2022 guidance, and we'll open the line to Q&A.

I'm pleased to report we finished the year with 48 systems installed and about 18,000 patients treated. This represents a doubling of active systems and more than quadrupling the number of patients treated in the 3 years since I joined the company. These rapid growth rates for our installed base and therapy adoption represents significant wins for our customers, patients and company. We anticipate, again, doubling the number of MRIdian programs and quadrupling patients treated in a relatively short time frame.

Turning to Slide 4. We built momentum in 2021 and finished the year with 28 orders, which represents 65% growth over prior year. This strong performance drove our backlog over $300 million, which bodes well for future growth. Revenue grew 23% for the full year. This commercial momentum is very much complemented by our accelerating clinical and innovation pipelines. We are on the cusp of launching MRIdian A3i and have groundbreaking clinical data in hand and forthcoming. This solid performance sets the foundation for rapid growth in 2022, '23 and beyond.

Slide 5. The catalyst for our success is the clinical value MRIdian delivers. Last week, the interim MIRAGE data was presented by Dr. Amar Kishan from UCLA. The results are stunning and very well received by customers.

MIRAGE is the first head-to-head Phase III randomized controlled trial comparing MRIdian to conventional therapy. The accuracy and precision of MRIdian are on full display. Highlights are remarkable and include: number one, MRIdian cut GU toxicity in half. Number two, MRIdian reported 0 grade 2 GI toxicity versus the conventional arm at about 14%. Number three, MRIdian cut treatment margins in half. Number four, MRIdian cut treatment volumes by about 30%. Number five, MRIdian avoids the invasive implantation of fiducial markers. And six, patients treated on MRIdian reported significantly superior quality of life scores.

These results were so statistically powerful that the trial was closed early and the number of patients enrolled was about cut in half. This is a huge win for our customers who want to deliver ablative dose therapy with tight margins in 5 or fewer fractions with no fiducials and no or low toxicity. This is also a huge win for patients. Just 5 trips to the hospital for treatment and the mitigation of terrible side effects associated with healthy tissue toxicity.

These data will help position MRIdian as first-line radiation therapy in prostate cancer, the second most prevalent cancer type treated by radiation. All of this is made possible by the realtime imaging, realtime tissue tracking and automatic beam gating available only on MRIdian.

These remarkable data and patient experience has changed how UCLA, a world-renowned cancer center, treats prostate patients. Again, this is a huge win for patients, customers and our company.

On Slide 6, our customers are delivering groundbreaking clinical results in both the toughest to treat and more ubiquitous cancers. More exciting readouts are right in front of us, including SCIMITAR and SMART pancreas. SCIMITAR is designed to demonstrate the feasibility of treating post-op prostate with 5 fraction SBRT versus standard 6 to 7 weeks of conventional therapy. These data will be released March 10 at ACRO. SMART pancreas data will follow mid-year. We intend this to be yet another proof point for low toxicity and ultimately excellent patient survival.

Again, our clinical results are driven by the confluence of MRIdian's diagnostic quality imaging, daily adaptive planning and automatic beam gating. These studies punctuate a long list of 80-plus MRIdian trials. We said 3 years ago that we would lead and differentiate via meaningful clinical data, and we're delivering.

Slide 7. On the innovation front, we're guided by our deep voice of customer work. The recent clearance of MRIdian A3i allows us to deliver our customers' top desires. The new features expand clinical utility with enhanced brain treatment technology. A3i streamlines on-table adaptive workflow by allowing clinicians to auto contour, auto adapt and autogate intelligently. The newly automated remote and parallel workflow features complement auto-contouring tools. These innovations address our customers' desire for faster treatment times and increase patient throughput. Customer feedback is profoundly positive.

As I mentioned at the front end, over the past 3 years, we've doubled the number of MRIdian programs and more than quadrupled the number of patients treated. During that time, we built or rebuilt virtually every aspect of the company. The pandemic has heightened the degree of difficulty, but our team is delivering. Our clinical, innovation and commercial pipelines are accelerating. We're in the strongest position of the company's history, and we're changing the paradigm of care.

I'll now turn the call over to Zach.

Thanks, Scott. Today, I will cover our full year and fourth quarter business results along with our guidance for 2022. Full details can be found in today's press release, and we will be filing our 10-K tomorrow morning.

Turning to Slide 9. For the quarter, revenue grew 10% to $20 million driven by 3 revenue units versus 3 units, including 1 upgrade in the same period last year.

Service revenue grew 24%, reflecting continued growth in our installed base and great work and innovation by our service team.

For the full year, revenue grew 23% to $70 million, driven by 10 revenue units versus 9 units, including 2 upgrades in 2020. Service revenue grew 29%, and we ended 2021 with active service contracts and essentially 100% of accounts.

During the quarter, we received 7 orders versus 5 in the same period last year, totaling a gross order value of $41 million. This represents a 40% order quantity increase and a 70% order value increase over the same period last year.

ASP for the quarter was $5.8 million. Order ASP is always the best reflection of how customers currently value their MRIdian system. As stated before, we anticipate maintaining ASP and aim to improve ASP as we continue to innovate and deliver clinical value.

For the full year, backlog ended at $313 million, a 30% increase over the same period last year. We added 28 orders to the backlog during the year, representing a net increase of $72 million. As we have previously discussed, we are very disciplined when it comes to our backlog and review it regularly to assess the progress being made on all systems. As a result of these reviews, we removed 5 systems from backlog over the course of 2021. We feel very confident that what we report as backlog will ultimately convert to revenue.

Turning to Slide 10. You can see our financial highlights. Gross profit during the quarter was negative $200,000 and a positive $300,000 for the full year, an improvement of $4 million over 2020, driven by fixed cost leverage and efficiencies.

As we move through 2022 and into 2023, we expect to improve on and solidly turn gross margin positive on an annual basis. Since 2019, we've made a lot of progress on gross margin through a combination of both growth and direct cost reduction. We are confident that we will continue to make significant progress in the coming years on our journey to industry standard margins.

Operating expense was $29 million in the quarter and $104 million for the full year, an increase of only 2%. We continue to be disciplined with our investments and the ultimate returns they drive. Going forward, we expect revenue growth to significantly outpace operating expense growth.

Turning to cash use. Excluding the net proceeds from our equity financing in November, we used $7 million during the quarter. For the full year, excluding equity financing proceeds, we used just under $67 million. We finished the year with approximately $218 million in cash on the balance sheet and feel our most recent raise strengthens our balance sheet and gives us the opportunity to get to cash flow breakeven.

Now let's turn to 2022 full year guidance on Slide 11. We expect to deliver revenue in the range of $84 million to $104 million. This represents year-over-year growth ranging from 20% to 48% and reflects our confidence in the current operating environment along with room for system revenue variability of roughly 2 units.

Regarding cash use, we expect to utilize between $68 million and $83 million. This represents an increase in cash use of $1 million to $16 million due to commercial and R&D investment. This range is primarily driven by our revenue guidance and variability in the timing of cash collection.

Moving beyond 2022, we expect cash use to reduce substantially in 2023 and again, in 2024 as we continue to grow and realize the benefits of our cost reduction efforts.

We are excited for the prospects of 2022 and the opportunity for it to be a record revenue year for ViewRay. We are well capitalized, and our team has worked incredibly hard to manage through the pandemic and position the company to deliver on the growth ahead. The next several years show promise as we make material gains on revenue, gross margin and cash flow and continue to deliver innovation and clinical data.

With that, I will now open the call to Q&A.

(Operator Instructions) Our first question comes from Frank Pinal from Jefferies.

Congrats on a nice quarter here. Also, congratulations on the strong interim data from MIRAGE. Really good to see that. Just I guess first question, then I have a follow-up. On guidance, what's sort of included there, what are the puts and takes that sort of get us to the higher side of that guidance and the lower side? And then how should we think about the cadence of revenues and operating spend? And I have a follow-up to that.

Yes. So it's Zach here. I think this year, I mentioned in our prepared remarks, kind of a 2-system sort of swing kind of positive or negative. I feel we're set up really well for this year in terms of what we see from a demand point of view. So it's really just effectively managing projects. And as we get later into the year to kind of answer your cadence question, we've commented before that the first half of the year looks a lot like kind of '21 and then we ramp into the back half of the year. I think the guidance risk is really more back-end weighted in terms of the potential of a system that spill out of the back end of the year from a revenue recognition standpoint, something along those lines. But I think the cadence you'll see a steady ramp kind of Q1, 2, 3 and 4. Q1 and Q2, similar to '21 in back half material gain on -- in terms of number of units.

Great. And then on MIRAGE, what are you sort of hearing and seeing from oncologists? Obviously, really strong data that you guys touched on earlier. And how should we think about the data release there for the full set? And perhaps if you can touch on some of the next milestones in that overall prostate program. That would be helpful.

Yes. Happy to touch on it, Frank. I think the data has been incredibly well received by our customers. And I know some investors follow some of the key opinion leaders on Twitter and via other social media platforms. And what was interesting coming into MIRAGE was the fact that something like 2/3 of customers didn't think there would be difference between MRIdian therapy and conventional therapy, and obviously, there was a remarkable difference. So I think that sets us up really and it's a bit of an aha moment for our customers that are out, and we're having a lot of fun sharing it far and wide with customers all around the world.

As it relates to upcoming sets, specifically within prostate, we've got are coming SCIMITAR here in early March, which we're excited about. And then we have SHORTER and FORT, which will follow SCIMITAR. And the aggregate effect of these studies is designed to do a couple of things. Number one, prove the safety and effectiveness of very short course treatment first getting to 5 fractions and then getting ultimately to 2-fraction therapy and show that it's not only complementary to surgery the form of post-op prostate but also show that MRIdian can be a frontline therapy, where if everything goes the way we hope, 2-fraction completely noninvasive MRIdian therapy will compete with invasive surgery and the patient having a catheter for a week to 10 days. So we think that's a very attractive alternative, hopefully, this clinical data will unlock.

Our next question comes from Rick Wise of Stifel.

Maybe I'll start off with the product innovation pipeline and recent launches. MRIdian A3i limited launch cusp of launching, you said some positive comments, Scott. But maybe talk to us about what this package means in terms of building the order pipeline, in terms of throughput? What impact is this going to have on the business this year, next year? And maybe just as you're talking about all this, talk about what else we might see from the new product pipeline over the next 12 months?

Yes, happy to share it, Rick, and thanks for the question. I think our innovation pipeline critically important to driving the commercial success of the company. The way we see it from a macro perspective is first, proving -- treating and proving what others can't is the mission of the company. So everything begins with the clinical value that we represent. And then we see the innovation pipeline really feeding and fueling the commercial pipeline. And what we do, Rick, as I referenced in our prepared remarks, is really deep work with our customers to understand exactly what it is that they would like to see from system. And in A3i, what we heard very clearly our customers is they wanted expanded clinical capability and moving MRIdian into brain treatment.

So that is a key feature of A3i. And the other prevailing feedback that we've heard from clinicians is they want to simplify and streamline workflow to ultimately drive more patient throughput, getting treatment times down under 20 minutes. So that's a lot of what we're going to be delivering with, A3i. We'll be doing a beta launch here in the front half of the and then looking to open that up in the back half of the year in driving it around the world to customers who very much want to receive these capabilities from MRIdian.

Rick, as it relates other innovations, I think 2022 is largely going to be defined by A3i. But I think you will continue to see us as we go toward driving the personalization and precision and simplicity of care with MRIdian. What we hear from our customers is they want us to continue, to be as disruptive as we are clinically, but not be disruptive really in any other way. And those are the things that you can expect from us, along with importantly, taking 7 figures out of the cost of MRIdian here over the next 2, 3 years as we're working on a significant cost down program.

You're not going to see a lot of impact until we get into the '24/'25 time frame when we're coming out with a set of packages and features on the system, but you will see progression along the way here in '22 and '23. So hopefully, that gives you a little context in terms of our innovation and product pipeline.

It certainly does. And maybe if I could turn back to the order trend discussion. Scott, one of your key competitors highlighted COVID-related pressures earlier today leading to softer-than-anticipated orders and install rates during the quarter, particularly in the U.S. It clearly didn't have an impact on your fourth quarter results. We're couple of months almost through the first quarter.

How do we think about ViewRay with that backdrop? Obviously, January, we heard a lot of discussion about January Omicron pressures, things are getting better. So the question is, when I'm saying all that, how do we think about the first quarter order rates, install rates, the flow of that through the year? And is your -- should we be confident that your 7 -- and maybe even moving it up to 8. Can that happen this year?

Yes, Rick, I would say from a macro perspective, I'm really pleased with the way the team has performed throughout the whole course of the pandemic. shared that we've had challenges from time to time, getting into countries or specific hospitals to do installations, and we are being very, I think, creative as it relates to mitigating any from a supply chain perspective. I would tell you, we feel really good about our order pipeline here early in '22. And frankly, we hope and anticipate that will continue throughout the full year. So I really think the clinical data we have in hand and that which is forthcoming, the innovation pipeline we talked about just a moment ago is really having the desired effect.

And Rick, the other thing that I would highlight that feels really good to us is the fact that, that market pressure, that market agitation, patients traveling to be treated on MRIdian systems is really beginning to take hold in more and more markets, so I'll give you two quick examples.

In Florida, from Orlando South got 4 active MRIdian programs, which led to 2 more. An incremental MRIdian system being ordered by Baptist Health and GenesisCare order. So we'll have 6 systems in the southern part of the state. Then go across the country to California. We currently have 3 active MRIdian programs. And those 3 have agitated that market, and we now have Stanford coming online, 2 freestanding centers at BASS, and you see another in Southern California. So we'll have 7 systems in that state. And you're going to see this in more and more parts of the United States. You're seeing it happen in the U.K. We're seeing it happen in France, in Germany, in Italy. We really need to apply more pressure in Japan. But I think you're going to see more and more of this. And I think that's what gives us a little bit of confidence as it relates to performance into 2 and beyond.

Great. And if I could just selfishly sneak in one more. And let's let Zach answer this maybe put him on the spot. Gross margins, Zach, you highlighted your optimism that they'll turn positive in 2020, how do we think about it? Is each quarter positive or more in the second half? And just, you mentioned a couple of factors, but what are the top 2 drivers? Is it just purely volume?

Yes. I think at the level we're at with kind of 3 revenue units a quarter right now, it's a little choppy. We have installation expenses that sometimes spill over from quarter-to-quarter. It's really -- we've said this a bunch, but we really think about our business on an annual basis. I think the quarterly cadence, I expect gross margin to kind of improved throughout the year, much like in line with revenue. So without getting too specific, I think kind of similar -- yes, similar in terms of directly related to a number of revenue units recognized in any given quarter.

Our next question comes from Jason Bednar of Piper Sandler.

Congrats on a nice finish to the year here. Scott, just maybe looking at your book-to-bill, it's tracked well above 1 your whole time at ViewRay. That's obviously a good thing as orders are kind of a leading indicator for revenue for your business. I guess how do you see that metric unfolding here moving forward over the next few years as backlog and presumably improves?

And then maybe as we think out to the revenue growth potential for the business over the next few years, is there a rule of thumb we should all be using as far as like orders that were booked in '21 will be roughly equivalent to the systems installed in '23 or just something like that?

Yes, Jason, great question, and thanks for the complement at the front end there. I think you're thinking about it in a roughly right way that if you take orders in any given year, that's going to approximate revenue 2 years down the road. I think you're going to see that here in '22 and again, roughly in '23. What I find interesting about what's happening right now is this market pressure that I referenced in the prior question is really kind of helping us and speeding us up in certain instances.

On one hand, as we've talked previously, we will have customers order a system for a cancer center that they're building ground up. And that order may reside in our backlog for an extended period. On the other hand, here recently, we had a customer kind of going from state of kind of slow analysis of the system, and then because they were losing patients to another MRIdian program, very quickly moved to order and they want to be treating patients as quickly as possible.

And what we're hearing a little more now is that customers want to get these systems in the ground and level of urgency, especially as more and more patients are traveling for MRIdian therapy. I don't want to set an expectation that this is with every customer, but it's something we're seeing more frequently. So I think over time, we will have some shortening of that -- the time -- average time that an order is in our backlog. But again, it's going to be offset a bit by those instances, like I mentioned, where somebody wants a flagship piece of technology in a cancer center that they're building from the ground up. So a little bit of puts and takes, but I think your 2-year average is about right. And hopefully, it narrows a bit over time.

Okay. Got it. That's helpful. And then maybe one on gross margins for me that they had been quietly improving here in the last several quarters. Really probably the most critical part of the P&L to narrowing that operating loss and cash burn for the business going forward. I think I recall a couple of years ago, you're talking about that $1 million per system of costs that could come out of the MRIdian system. Scott, I actually think you mentioned that here again just now in response to Rick's question. So I guess is it safe to say we're still at the early stage of that journey. And is there a time line you'd be willing to put on getting to normal industry gross margins as Zach referenced today?

Yes. Let me just touch on it from a macro perspective and then invite Zach in. I think if you look at our gross margin journey, I think this is roughly, right? Zach, correct me if I'm wrong. But we improved a little over 700 basis points in the '21 time frame. And I think you're going to see those big chunky kind of improvements look at our gross margin on an annual basis in '22, in '23 and then you're going to get the benefit of the -- that big cost down project that we're working on out in the '24/'25 time frame. And these things aren't mysterious, Jason. This is engineering work and supply work that is very clear to us. It's not something that we hope happens. It's something that we've got a lot of confidence in.

So kind of with that macro backdrop, I'll invite Zach to make any comment he wishes.

Yes. I think in the, this year and next year, most of our gains will come -- will be primarily driven by revenue growth and just absorption of what is a decent sized fixed cost related to infrastructure around install teams and the other raw infrastructure costs. So I think each incremental revenue unit really helps us on the systems side as well this -- and then the cost down will kick in and kind of keep that trajectory moving. And Scott mentioned the '24 to '25 time frame.

On the service side, it's really more of a scale-based business in terms of we forward invest in field service engineers to support new accounts. As our usual 12-month warranty period rolls off and those machines roll into kind of full freight service agreements, we'll see margin enhancement there. And then I think as we -- as our installed base grows, we'll get more leverage and then also that regional density of our systems opens up new opportunities from a just creativity around supporting. Right now, we generally a 1 field service engineer per MRIdian system. And I think as our installed base grows, we'll have an opportunity to improve the economies of scale of that ratio and more effectively service our customers.

Okay. And then maybe just a follow-up there, Zach, on the timing on getting to maybe normal industry gross margins is that if we're thinking out like that you've got volume that will take care of it in maybe the next couple of years and then the cost down in '24 and '25. I mean, again, not to hold you to anything, but is this kind of like a 5-year plan to get to industry gross margins?

I think, yes, probably 4-ish. I think there may be some opportunities along the way, but probably you'll see us make material gains over the course of the next 3 years. And then I think ultimately, kind of achieve it in that kind of 4-ish year time frame.

Okay. Perfect. And then just one more for me. It looks like you are hiring some local talent in China. I think we've been waiting to hear whether a local clinical trial will be needed in that market. I guess do you have a sense as to when we might have an update on whether that trial will be required? And then what's the right way to think about the opportunity for ViewRay and once you do have approval in that market?

Yes. Jason, I'll touch on that and again invite Zach to make any comments he wishes. We still don't have clarity on that front and really don't have anything to announce at this point in time. So I don't think there's -- we don't want to create an expectation that we can hit here. So I think for the specific 2022 year, we ought not include anything in our models as it relates to us opening up China as a commercial market for us. And we'll just keep you apprised as we go forward.

Yes. And Jason, I think on the local talent side of things, I think in any event, either path, whether we have to run a trial or if we have the opportunity to move to the commercial phase more quickly, I think what we felt is it's appropriate and necessary for us to have somebody on the ground in China to effectively collaborate with [Boson], get things done in the same time zone, help us triage request. And I think whether we're enrolling patients in a trial at certain sites or selling MRIdian Systems, that resource is something we really feel that we need in either event.

Our next question comes from Suraj Kalia of Oppenheimer & Co.

So Scott, what are current PO2 rev rec times? And specifically, how do you all factor in some of the geopolitical turmoil to influence European installs?

Yes. Zach, do you want to touch on the first part of that question and I'll take the second?

Yes. I think Suraj, on the kind of order to PO rev rec timing, I think historically, we've experienced kind of the 18- to 24-month time frame. I think we're seeing a beneficial shift in dialogue with customers as we talk with both prospects and refined time lines with orders in the backlog, I think, prospects when you ask the question, when you want to be treating patients, more and more we're hearing as soon as possible. So that's encouraging, and we hope that kind of chip away at that 18- to 24-month time frame. But I think currently, that sort of still stands at this point. And then I -- maybe could you restate that -- kind of the second part of your question around Europe.

Yes. Just curious how you'll have factored in some of the geopolitical turmoil to influence your installs?

Yes. Suraj, I would say, first, our hearts go out to all of the people impacted by the invasion and resulting war. The way that we think about it is with contingency planning. We have -- might surprise investors the number of active programs that we're working on from an installation standpoint. And so to get comfortable from our perspective, we have to have pretty extensive contingency planning, not unlike what we've done throughout the whole path of the pandemic, but this something that's a bit more concentrated but very difficult to predict how far and wide things happen. So again, our hearts go out everyone impacted. And we believe at this point in time, our contingency planning is sufficient to mitigate some of the risks that you highlight there.

Fair enough. And Scott, I'll ask one question, albeit a multipart question. So the 18,000 patients treated so far, Scott. Maybe if you could kind of slice and dice it to a couple of layers beneath. What percent required on-table adaptation? What type of cancers were treated? And if I could, let's say, last 3 years since you were there -- since you were at the helm, let's say, I don't know, pick a number, 4,000, 6,000, 8,000 patients or however you want to define it. Now that you'll are armed with MIRAGE and soon with SCIMITAR and other SMART pancreas and how do you see the cadence over the next couple of years or so?

Thank you, Suraj, can you clarify that the cadence that you're referencing, is it on the clinical data front -- or what's your question there, Suraj?

Just the utilization, the system -- existing system utilization because now you'll arm the data gets around, right? So how does that work gets around? So just curious, any directional color would be great.

Yes. Happy to take a shot at that. And Paul Strong, maybe I'll turn it over to you after I'll make a couple of comments.

So in terms of percent adaptation, the average -- first of all, about 90% of patients treated in the United States and about 80% globally are treated in 5 fractions SBRT on our system, a dramatic difference, obviously, between the overall market, which is about 14%. So I think it's important to kind of start at that macro level. The percent of treatments that are adapted is somewhere between 2 and 3 per patient. So as a very rough rule of thumb, it's about half of fractions delivered on MRIdian are adapted, something like that in that 2 to 3 range.

In terms of the types of cancers treated, roughly 20% to 25% of patients treated are in pancreas and prostate is growing pretty rapidly.

Paul Strong, how about you give us a little bit of a sense for that in just a moment here? How we break down with breast, prostate, et cetera?

And Suraj, what I would share with you I think you are going to see a broadening of cancers treated on MRIdian. What's really interesting, if you go back 3 years, it was pretty common for a customer to focus on any given 1 or 2 kinds of cancer that they were treating with MRIdian, and it varied across the 20-some-odd sites that we had back at that time. Now we doubled that number of sites. And what you see now is our customers asking to expand out from those original cancers that they were treating. And frequently, that's turning into a second MRIdian system or a third or now even a fifth. We have 1 customer that's ordered their fifth MRIdian system. And so they're expanding the utilization and the kind cancers that they're treating with our system.

Paul Strong, how about helping fill in a couple of blanks there to Suraj's question?

Sure. Thanks, Scott. And Suraj thanks for the question. I think in terms of the clinical data coming, which was in the second half of your question, how that impacts utilization. As Scott mentioned, there's a large portion of the patients treated are tough to treat tumors with a lot of motion, pancreatic cancer being one of the key beachheads. And what the clinical data now gives the opportunity for sites to do is look for more ubiquitous cancers that maybe they were treating on their conventional technologies but now there's an application and justification to treat those with a better safety profile on MRIdian. Combine that with the innovation pipeline that Scott talked about with the faster treatment times and we -- I would anticipate customers to start including more of those ubiquitous cancers and get the advantages of the technology based on the fact that there's now clinical data.

Other tumors just to fill in, there's quite a bit of treatment in liver metastases has been one of the early sites that was treated with MRIdian and that has been steady. And then we're starting to see more now with breast cancer. So WashU was one of the leaders on the technology in treating those patients. They published a few years ago their data on reducing impact to cosmesis and toxicity for patients as well as reducing fractionation down to a single fraction. We're now seeing centers starting to adopt that. both here in the U.S. at Weill Cornell as well as starting to have growing interest in treating those cancer patients. in Europe. So I think we'll start to see the data drive a broadening of the tumor profiles that are best suited as many of the patients are triaged as they come into treatment to which technology is best. The data really starts to grow the justification for why the MRIdian technology.

I can't project out the 2 or 3 years of what that number will look like. I just know that based on what we've heard from UCLA just based on MIRAGE and the market pressure Scott described, I would anticipate that the mix of patients starts to diversify over time because of the clinical data, Scott, thanks.

Thank you.

Our next question comes from Cecilia Furlong of Morgan Stanley.

This is Calvin on for Cecilia. Just two quick ones for me. First, just I was wondering if you could expand a little on the aftermath of just the MIRAGE readout, particularly around awareness you've built from a geographic perspective around access and readout? Just anything of note there?

In terms of -- I'm not sure, Calvin, I understood the question. Access therapy?

Yes. Just the awareness overall that you've built, but any kind of geographic particular centers since the readout that have that you would highlight? Or is it more just kind of broad-based awareness since the readout?

Well, I would tell you the response -- and we did that. We help Dr. Kishan do kind of a Twitter recording of a poster presentation and some Q&A after the fact. I think that the response -- we have a very global market and a very passionate, active community of MRIdian users and those that are interested in MRIdian as well. And I think the response has been pretty broad-based.

Now it's been more heavily probably U.S. and Europe in terms of the just the communication aspect, but I think we've seen really positive early returns and interest specifically from a lot of our U.S. prospects. And then over time, I expect that to broaden as we get the word out and have an opportunity. He presented at ASCO GU. I think as future conferences become the MIRAGE -- the interim MIRAGE data will likely be presented again and then ultimately, the final data set at some point in the future once that's complete. So it will be kind of a nice drumbeat of clinical data and then we'll supplement that or complement that with SCIMITAR and other data throughout the course of the rest of the year. So, it's -- yes, it's been good so far.

Got you. And I just want to follow up quickly on the OpEx question earlier. Can you maybe just unpack a little bit on the quarterly cadence and perhaps the mix across your 3 line items throughout '22.

Yes. So I think G&A will be kind of more steady run rate throughout the course of the year. We are, I would say, adequately invested to kind of grow with the business on the G&A side. I think you can expect on both sales and marketing and R&D for those to ramp a little bit throughout the year and ultimately reflect increased investment on both the start of some of these cost down projects this year in addition to additional innovation work. And then based on the demand we're seeing in the market and the receptivity of the data, I mean, and a lot of what happened last year, frankly, as things open up, we see -- we're making incremental investments on the sales and marketing side.

A lot of that in support of ramping our new accounts in light of kind of the 1 successful MRIdian program leads to another, if not more. So the success of each of these new programs is incredibly important. And then also on just general sales and marketing side to build further awareness both on MRIdian, but MR Linac as a technology category, more broadly speaking. So I think sales and marketing will be a ramp is a smaller base than R&D throughout the course of the year because some of that is hiring people, and so those will get hired over the course of the year. So I don't know if that answers your question or...

Yes, it does.

Our next question comes from Justin Walsh with B. Riley.

I'm wondering if you can provide some more color on how you see the role of some of the upcoming clinical trials in terms of attracting new customers. Do you see them as answering questions that will convinced physicians who are currently on the sense about the technology or more is providing another piece of data to convince centers of excellence that they're missing out if they don't have a MRIdian system?

Great question, Justin. I would say a little of both, and it kind of depends on the customer and how educated they are on the benefits of MRIdian. I found it to be very interesting. I think I referenced this a little bit ago. The fact that roughly 2/3 of customers when pulled didn't think there would be a difference between the MRIdian arm and the conventional arm MIRAGE data, and yet the difference was nothing short of stunning.

So I think in certain instances, you're really solidifying or further answering a question or a thesis that a customer has. And in other instances, it is just so profoundly better and different that it's kind of shocking and hard for customers to really believe how different the therapy is, but that's really the challenge that we've had over the past 3 years. And we're getting better armed with this data and armed with the innovations that we've talked about to really hopefully accelerate the commercial pipeline as we move forward.

Got it. And my last question kind of jumps off of that, which is, as the clinical data builds and you guys continue to grow and maintain the momentum, I'm just sort of wondering what your thoughts are on the sort of long-term ceiling here. I know that you guys have highlighted the overall market opportunity with 1,000 to 1,250 linacs sold per year. But in the long term, how many of these do you believe could realistically replaced by MR Linacs, either of yours or MRIdians or of your competitor?

Yes. We ask this question frequently of our Medical Advisory Board, the clinical consortiums that we have focused on various different types of cancer. And I would share with you that the answer that comes back very consistently is if a customer had unlimited capacity on MRIdian and unlimited capacity on a conventional linear accelerator, what percentage of patients would they treat on MRIdian. And the answer really across the board with educated customers who know about the benefit of MRIdian therapy, the answer uniformly is the majority or vast majority of patients, they would want to treat on MRIdian.

So I think that translates and speaks to what we ultimately think is going to happen with this technology. It sounds a little bit provocative, Justin, but it's a fair question to say, in what type of cancer and in what patient would you prefer to not know where a deadly radiation beam is going. And I think that kind of sets the stage for the fact that we believe and our customers feed this belief that this will become the standard of care. I think it's going to take us a considerable amount of time to get there. But I think, ultimately, we will look back someday and say, yes, it's quite obvious that we need to know exactly where the dose is being delivered to that patient, and we need to know they are done being treated specifically for that individual patient, not these broad and obtuse rules of thumb that we still use today for cancer treatment. And the MRIdian system is giving our customers the opportunity to ask those questions because of the accuracy and precision of the system. So hopefully, that gives you a little context for your question.

Yes. Perfect. Congrats on the quarter and year.

Thanks, Justin.

Thanks, Justin.

I'm showing no further questions at this time. I'd like to turn the call back over to Scott Drake for any closing remarks.

Yes. Thank you, operator, and thanks, everybody, for joining our call, and we look forward to talking with all of you again in the very near future.

Thank you. Ladies and gentlemen, this does conclude today's conference. Thank you all for participating. You may now disconnect. Have a great day.