VRAY (2020 - Q4)

Ladies and gentlemen, thank you for standing by and welcome to the ViewRay Fourth Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers presentation there will be a question-and-answer session. [Operator Instructions] As a reminder, today's program may be recorded. I'd now like to introduce your host for today's program, Michaella Gallina. Please go ahead. Michaell

Thank you, operator. Good afternoon, everyone and welcome to ViewRay's Fourth Quarter and Full Year 2020 Financial Results Conference Call. Joining me today are Scott Drake, our President and Chief Executive Officer; and Zach Stassen, our Chief Financial Officer. 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 the Financial Events & Webinars portion of our site at www.investors.viewray.com. Today's call is being broadcast and webcast live and a replay will be available on our website for 14 days. Before we begin, I would like to caution listeners that comments made by management during this call may include forward-looking statements within the meaning of federal securities laws. These statements involve material risks and uncertainties and actual results could differ from those projected in any forward-looking statement due to numerous factors. For a description of these risks and uncertainties, please see ViewRay's annual report on Form 10-K for the fiscal year ended December 31, 2019, and its quarterly reports on Form 10-Q as updated periodically with the company's other SEC filings including its Form 10-K for the fiscal year ended December 31, 2020. Furthermore, the content of this conference call contains time-sensitive information accurate only as of today, March 4, 2021. ViewRay undertakes no obligation to revise or otherwise update any statements to reflect events or circumstances after the date of this call. I will now turn it over to Scott.

Thank you, Michaella. Good afternoon everyone, and welcome to our Q4 call. Today, we will recap our fourth quarter results, share detail on our clinical pipeline and how it's driving therapy adoption. Zach will cover our financials in more detail and we look forward to answering your questions. I'll be referring to slides from the presentation on our Investor Relations site. Turning to Slide 3. Our mission is to treat and prove what others can't. Through year-end, MRIdian has treated over 11,500 patients with more than 3,000 of them having clinically reported outcomes. This growing body of data is critical to changing and improving the paradigm of care we'll share more depth later in the call. Let's turn to our Q4 results on Slide 4. We ended the year with solid performance across the business. In the quarter, we received five MRIdian orders. We are pleased with our commercial traction and how our value propositions are resonating. Evidence of MRIdian's clinical, strategic, and economic value is evident in our recent achievements. In the Eindhoven region of the Netherlands, the largest and prestigious Catharina Hospital purchases MRIdian. As a top training facility, we're excited about the patient impact they will have. Amsterdam UMC and SNUH in South Korea both surpassed the 1,000-patient milestone. Penn State and Henry Ford each added their second MRIdian system and Hoag Hospital and Thomas Jefferson University treated their first patients. Turning to revenue. We recognized $18.5 million primarily from three revenue units, including one system upgrade. Q4 also marked our fastest installation to date at 39 working days. We continue to improve operationally. In particular, we're focused on better training and serving our customers. Our backlog has grown to about $241 million. We removed one system in the quarter and continue to have zero order cancellations due to COVID-19. Regarding cash, we used approximately $7 million. Over the past few years, financial discipline has driven significant progress on reducing cash burn. Our recent capital raise topped off the balance sheet and provides us runway to make significant progress on our clinical innovation and commercial pipelines. As we look back on 2020, we executed solidly in the face of the pandemic. However, due to the ongoing uncertainty, we feel that it is prudent to not provide 2021 guidance at this time. What I can say, is that MRIdian is driving top and bottom line economics for our customers, we're seeing more customers purchase incremental MRIdian systems, we've driven process rigor and are installing systems faster, we've significantly improved our cash burn and allocating capital to protect and extend our clinical and innovation lead. In summary, I believe that we have a solid setup for driving meaningful therapy adoption and shareholder value over the next several years. Turning to slide 5. Our innovation and clinical pipelines accrue to commercial traction. On the innovation front, we are driving toward our goal of sub-20-minute treatment times and improving workflow and automation. In the future, you can expect enhanced MRI imaging, increased dosing, a brain treatment package and remote access. We are concurrently driving cost efficiencies to improve margin over time. With that broad context, let's go deeper into our clinical work as it is central to driving therapy adoption. Moving to slide 6. The number one thing our customers desire is meaningful clinical data. They have also been very clear about how they define clinical success. Ablative dose, tight margins, no implants five or fewer fractions and low-to-no grade three toxicity. These elements represent the critical MRIdian 5. Customer input has shaped our clinical pipeline and goals which are, number one, to expand the utilization of MRIdian SMART and number two, become frontline therapy. Slide seven demonstrates how MRIdian expands the utility of radiation therapy. As it stands today, radiation has been underutilized in soft tissue tumors due to the risk of radiating healthy tissue and organs at risk. Conventional technology yields high levels of customer concern about the trade-off of dose delivery versus healthy tissue toxicity. MRIdian is shifting the paradigm to include patients that were generally not candidates for radiation therapy. At the same time, MRIdian expands the opportunity for treating with SBRT in cancer types that have historically been limited to IMRT, due to the old paradigm and trade-off. It's important to note on slide 8 that customers consistently share how this clinical value translates into strategic and economic value in the form of adding patients they wouldn't or couldn't treat on other systems, adding patients who travel for treatment from outside catchment areas and increasing in in-network referrals. A couple of examples. Prior to MRIdian, AUMC had not treated kidney cancer with radiation therapy. They are now treating patients that were generally not candidates previously. Moffitt, a leading cancer center in the US treated few pancreas patients with radiation prior to MRIdian. And now, it's a key tumor site in their practice. Slide 9 depicts how MRIdian enables the shift from IMRT to SBRT. The overall market is organically moving to SBRT, as customers believe high-dose, short-course treatments, drive improved outcomes. Clinical data, the pandemic, the RO APM and patient desire will likely accelerate this trend. You see even in the early days of MRIdian, our customers utilized SBRT over 30% of the time versus the overall market of about 14%. As customer knowledge and confidence grew, the percentage of SBRT increased dramatically. Today, nearly 80% of MRIdian patients are treated via SBRT over five times the market rate. It is remarkable that our customers are utilizing IMRT nearly as sparingly as the market utilizes SBRT with conventional systems. The market is driving toward what MRIdian enables safe, ablative, completely noninvasive short-course treatment. As Dr. Steinberg has said, MRIdian is "the ultimate SBRT machine". And Dr. Haas-Kogan has shared that just this two dimensional x-rays were replaced by CT-guided radiotherapy, so will MR-guided technology render CT obsolete. On Slide 10 it's interesting to note the dramatic growth of patients treated on MRIdian, which has grown at a CAGR of 85% since day one. We believe this to be a precursor to future business growth. Our customers are demonstrating that one successful MRIdian program can and increasingly does lead to another. Our clinical and innovation pipelines will continue to drive therapy adoption. Turning to Slide 11. Let's take a step back to view our clinical strategy. Our customers have led this journey by demonstrating the value of MRIdian in tough-to-treat tumors. They believe MRIdian stands out and there is an unmet clinical need in our beachhead targets of prostate, pancreas, lung and brain. We aim to generate meaningful data in these key areas that also signal application in adjacent cancer types. As an example, by proving value in prostate, customers have expanded to kidney. Staying at the macro level on Slide 12, we view the process of developing clinical proof longitudinally. Phase I represents feasibility work that can result in an interesting signal that leads to Phase II confirmatory trials. When required, effort progresses to definitive Phase III. Other than the SMART pancreas trial, our pipeline is predominantly investigator led. Currently customers are conducting over 60 trials. The breadth and depth of this work reflects extraordinary clinical curiosity. Let's view an example of how this road map takes us down the path to frontline therapy. Slide 13 depicts how customers are driving clinical proof in pancreas. This multiyear process began with a high low-dose Retrospective trial. The signal was powerful. Customers delivered ablative doses and grade three or higher toxicity not only went down but went to zero. Also very importantly, two-year survival for high-dose patients was about 50% more than double conventional systems. This signal led to the SMART trial. The aggregate body of work in pancreas has led to two randomized controlled trials that span the spectrum of the disease. The first is in late-stage metastatic cancer where standard of care chemotherapy is compared to standard of care plus MRIdian SMART. The second is for medically inoperable patients that compares symptom management the typical protocol versus MRIdian SMART. We intend these data to establish MRIdian as frontline therapy for pancreatic cancer patients operable or otherwise. Slide 14 is a boiled down view of our robust pipeline. As we just shared in pancreas, let's discuss the prostate road map. There are two key clinical targets: first for intact patients, UCLA has opened a head-to-head randomized controlled trial to assess MRIdian SMART versus conventionally delivered SBRT. Second, for post prostatectomy patients, Cornell has opened a randomized controlled trial to compare 20 fractions at conventional dose therapy versus five fraction MRIdian SMART. Like pancreas, we believe that expanding the spectrum of disease can position MRIdian as a frontline therapy. Next, we're moving through the execution phase for confirmatory studies in metastatic and lung cancers. Finally on Slide 15, patients are pushing for shorter courses of effective treatment. Our technology allows clinicians to move along the continuum from IMRT to SBRT to MRIdian SMART. Our customers are now leading us to exploratory work with single fraction MRIdian SMART. The SMART ONE trial opens enrollment this year for single fraction therapy in both primary tumors and oligomets located in lung, pancreas, liver, kidney, adrenal and lymph nodes. In summary on slide 16, our clinical value drives strategic value, which yields economic value. Our customers share that they are attracting net new patients in the form of patients that wouldn't or couldn't be treated on another system, patients who travel for treatment from outside catchment areas and increasing in in-network referrals. The proof is in multiple customers buying incremental MRIdian systems. We have made meaningful progress across our business, value propositions and pipelines. We are well positioned to improve cancer care for patients globally. With that I'll now turn it over to Zach to discuss our financials.

Thank you, Scott. For the fiscal quarter ended December 31st, 2020, total revenue was $18.5 million, primarily from three revenue units including one upgrade compared to $16.5 million primarily from three revenue units including one upgrade for the same period last year. Total revenue for the full year 2020 was $57 million compared to $87.8 million for the full year 2019. The decrease in sales year-over-year is largely attributable to the impact of the COVID-19 pandemic. Total gross profit for the three months ended December 31st, 2020 was $0.2 million compared to a loss of $3.9 million for the same period last year. Total gross profit for the full year 2020 was a loss of $4.1 million compared to a loss of $5.5 million for the full year 2019. The full year increase in gross profit was the result of improvement in our service margin. This improvement was more than offset by lower system margin as the lower system revenue is absorbing our full installation infrastructure. We maintained our installation infrastructure to preserve capacity, positioning the company to respond to an anticipated recovery in installation volume. Total operating expenses for the three months ended December 31st, 2020 were $25.5 million compared to $28.5 million for the same period last year. Total operating expenses for the full year 2020 were $101.9 million compared to $115.3 million for the full year 2019. The full year decrease in operating expenses reflects our cash savings initiatives as well as significantly lower travel expenses as a result of COVID-19. Operating loss for the quarter was $25.3 million as compared to $32.4 million for the same quarter last year. Operating loss for the full year 2020 was $106 million as compared to $120.8 million in 2019. Finally, net loss for the three months ended December 31st, 2020 was $26.1 million or $0.18 per share compared to $35.2 million or $0.31 per share for the same period last year. Net loss for the full year 2020 was $107.9 million or $0.73 per share compared to $120.2 million or $1.18 per share for the full year 2019. Turning now to orders and backlog. As Scott mentioned earlier, in the fourth quarter of 2020, we received five new orders for MRIdian systems totaling approximately $24 million compared to four new orders totaling approximately $21.2 million in the same period last year. As of December 31st, our backlog stood at $241.3 million as compared to $227.3 million as of December 31st, 2019. One system was removed from backlog in the quarter. To-date, we have not removed any orders from backlog due to COVID-19. Regarding cash, we used approximately $7 million in the quarter reflecting continued progress on our cash usage. We made solid strides in reducing our working capital primarily through continued leaning out of inventory levels. We finished the year with $156.7 million in cash immediately prior to commencing our public offering of common stock in January where we ultimately raised net proceeds of $53.5 million. We feel well positioned that this cash runway allows us to focus on achieving sub-20-minute treatment times, improvements in workflow and ease of use move well down our clinical pathway and ultimately commercial acceleration. With that operator, we will now open the line for questions.

[Operator Instructions] Our first question comes from the line of Jason Bednar from Piper Sandler. Your question, please. Jason you might have your phone on mute. We're still not hearing you, Jason. Would you like me to move on to the next?

Yes please.

Certainly. Our next question comes from the line of Suraj Kalia from Oppenheimer. Your question, please.

Good afternoon, Scott. Good afternoon, everyone. Can you hear me all right?

We sure can. Hi, Suraj.

Hey. So Scott, a lot of incremental information in your presentation today. Let me just start from the last few slides. Can you give us the timing of the Phase II, Phase IIIs for pancreas? And the SMART-1 trial, there are a bunch of tumor types included in that. It's a pretty fascinating approach to have just one radiation. Essentially, you're taking it to go up to the extreme on hypofractionation. I was wondering if you can just give some additional details on how to facilitate the SMART-1, or is it too early to be talking about it?

Yes. Suraj, let's take those in reverse order. Regarding the SMART-1 trial, we'll begin enrollment this year. So it's a little bit premature to give too much information at this time. We anticipate that we'll be sharing first data sometime in the 2022 time frame, if enrollment goes as planned. And secondarily, regarding the pancreas trials that I mentioned here, first data will be likely in 2022 for SMART and for the two other pancreatic trials that I mentioned, likely a 2023 time frame for the randomized controlled data for those two studies. But you're right, Suraj, we're sharing more data here on the clinical road map. It's candidly 30 years in the med-tech industry. I think what we're experiencing from a clinical curiosity perspective and customers initiating over 60 studies, is quite extraordinary. And not infrequently, these are patients that they say wouldn't or couldn't be treated on any other system. So as I think you're quite well aware, since we got here, we have really led clinically and that's where we're going to keep the conversation going, because ultimately we think that's what matters most and that's the precursor to the business growth that we look to drive in the future.

Scott, dumb question. SMART-1 wouldn't be yet on clinicaltrials.gov, right?

I don't believe so.

Because there's so many different tumor types and it will be interesting to see what is measured on each. We can take it off-line. Scott, I don't believe you gave an update on the PO to rev rec trend. Any color there would be great. And maybe just to tag along on that question, sort of, take a step back, just give us a perspective of the structural dynamics and the pricing dynamics, what you're seeing in the competitive front also?

Yes. Happy to, Suraj. So as it relates to your first question on PO to rev rec, I would say, we continue to make really solid progress operationally. We highlighted here on this call that even in the midst of the pandemic we achieved in Q4, the fastest installation yet that the company has had at 39 working days. We put that out there, just kind of as an anecdote of the progress that we're making. At the same time, I would tell you, the pandemic has been probably most nettlesome to us in terms of our ability to get into certain countries. And therefore, hospitals to do the desired installation work. So that's not helpful, as it relates to that overall time frame. But where we have control, we're just getting better and better on that front. Suraj, remind me the second part of your question, please?

More on a higher level what you're seeing from a structural pricing competitive dynamic perspective, with what's going predominantly Elekta I would say, but just that non-Siemens zones Varian?

Yes. Suraj, I would tell you that I feel very good about what is happening competitively for us in the field. I think there is a deeper and deeper understanding as time goes by in terms of the clinical applicability of MRIdian and the number of patients we're able to treat and the kinds of patients. And I think our customers view that as a pretty unique solution. They connect that to the strategic and economic value chain that we've highlighted now on the past several calls. And from an ASP perspective, generally speaking, our ASP is steady. I just looked at ASPs for Q1 orders that we'll report on, obviously, when we do our Q1 call. But they remain pretty steady as they have over the past couple of years, at least since I've been with the company at around $6 million. The distortion that you see from quarter-to-quarter is primarily driven by three things; number one, new business models that our customers are starting to appreciate and we've had some success with. So think in terms of maybe a lower upfront price but some kind of shared economics on the back end. Number two, the proportion of our orders that are direct versus through distribution. And number three, like, we had in this quarter an upgrade. Upgrades are often give or take $2 million versus an ASP for a new system at $6 million. So, I feel like we're in a pretty good place there. And hopefully, that gives you some color on variability that you'll see from quarter-to-quarter.

Got it. Got it. Hey, Scott, I'll just throw in a couple quick and hop back. Scott for you, you give just piggybacking on what you just said about shared revs. What are the status of discussions, because I know this has been bantered around for some time. Are we at the point where this is going to become a reality? And just like what Intuitive is doing in DaVinci we could see MRIdian in a similar sort of a leasing or shared revenue format. And Zach quickly for you, what is the average age of the 40 or so units in backlog? And are we -- is it pretty much LIFO or FIFO based right now? Any color there would be greatly appreciated. Thanks for taking my questions.

Thank you Suraj. Let me touch on the first part of your question. Regarding those alternative business models, I would say a couple of things. Number one, we've had some success. I don't want to overstate that. We've had a couple of freestanding centers take advantage of models that we have worked with them. And it has kept some conversations going during the pandemic, while capital budgets have been pressured. We have not I don't believe cracked the code on what ultimately the model will be. I think we're some time away from really solving for that Suraj. But I do think we have a portfolio of different opportunities for customers to acquire MRIdian. And actually did another one with a for-profit chain here recently that was pretty creative as well. So I don't think we have a big enough N to define what ultimately our model might be, but we are being appropriately flexible, because we really do believe in this therapy in terms of what it means for cancer patients and also the return strategically and economically for our customers. And to your point, I'll let Zach touch on the second component.

Yes. So as it relates to backlog, we don't comment specifically on average age of the backlog. But I can tell you, we assess it with a rigorous process every quarter primarily driven by the level of activity we see at end users. You got to keep in mind that some of the orders we take are for cancer centers at systems that are kind of slated for construction far out into the future sometimes. So we really look at it on an activity and progress level with each system and make a call. So, we -- in order to stay in backlog we need to see activity and signs that the project's moving forward. Otherwise we evaluate whether or not to take it out at that point.

Thank you.

Thank you. Our next question comes from the line of Anthony Petrone from Jefferies. Your question please.

Hi, good afternoon and congratulations on a strong year. I hope everyone's staying healthy. I've got a couple Scott on just maybe COVID implications as to where we sit today and then I'll have a follow-up on clinicals. On the COVID front, maybe can you give us an update as to how much of a near term headwind do you view COVID at the start of the year as it relates to capital purchases at hospitals? But then as we sort of look ahead to vaccine rollouts and a potential second half recovery which most companies have been talking about. How do you view the pent-up demand here in a post-pandemic setting as we look to the second half and perhaps 2022? And then I'll have a follow-up on clinicals.

Yes. Anthony, thank you. We're well here and hope same for your family. In terms of COVID, I kind of think about it and break it down in two ways. One is from an order pipeline perspective and the second lens we put on it is installations. I would say I think it's reasonable to state that the environment has improved already and will likely continue to improve as we go throughout the year. And I think to your point, vaccines are having a significant impact on the psyche of everybody. And also our customers are seeing their way through the real crisis that we originally had and that reemerged here at year-end. We have had customers -- maybe the most concrete example I could give you would be customers that very overtly and intentionally hit the pause button on conversations with us who have said, hey we're ready to reengage. So, we are seeing improvements on that front. And I think on the order side, things will likely improve in terms of the environment. The area that's been the most frustrating for us is on the installation front. We are still having challenges in certain parts of the world getting travel visas to get in and do the installation work. I would point to that as being the primary reason why we don't believe we're in a position to guide today. As you know one or two systems really can swing things for us from a revenue standpoint. So, I think we need just a little bit of time here to get more line of sight to those Q4 planned installations. And countries need to sort out can vaccinated teammates of ours travel to do that kind of work. That's what we really -- that's the clarity that we need here. But I do believe to your macro question, I think the commercial pipeline is improving.

And then when you -- just to pressure there a little bit just on the post-pandemic sort of situation on orders in particular, I mean do you kind of get a sense that you mentioned hospitals coming back and now wanting to negotiate. But overall is there a way to think about how much pent-up demand there is broadly for radiation therapy, and in particular, MRIdian?

Yes, I do. I think there's demand. I mean when you look across the landscape as I know you do you saw reasonably healthy orders from others in the space and you saw a little bit of progression from us even in the last three quarters of 2020 and we'll be reporting on Q1 and beyond here as we move forward. So, hopefully, we'll be able to show that progression in a tangible way. So, I feel good about that. The thing that's different about MRIdian as you know Anthony is the size of these overall programs. Our ASP is higher. Our installation cost and time frame is more significant than a conventional linac. So, they're probably viewed a little bit differently. The big thing that I think is sinking in in the marketplace is the clinical utility of the system. Our customers are willing to share with prospective customers, the number of patients that they're treating, how MRIdian is helping their programs stand out strategically, primarily in the three buckets that we highlight. Patients they wouldn't or couldn't treat on any other system, patients traveling for MRIdian therapy, and also an increase in in-network referrals, and they seem to be pretty pleased with the economics. If this was just marketable technology, you would only need one. And we've got a nontrivial number of our customers that have already purchased a second, now perhaps a customer purchasing their third. So, I like where we're at there, and I think it portends good things. But I don't think, you can really look at ViewRay at this point in terms of the overall market reflecting, what we're doing. I think what we're doing is more unique to us given the system, given the clinical benefit, and given the overall expense to put a MRIdian program in place.

That's helpful. And last on the clinical one would be, just referring to slide 14, I want to make sure we have this correct. On prostate specifically, should we be viewing this as a simultaneous enrollment on Phase 2 and Phase 3 starting together? And when you think about Phase 3, how large do you think the enrollment will be? Thanks.

Yeah, you got it. So relative to prostate overall there's – the studies that are happening at UCLA and Cornell are happening in concurrent fashion. I anticipate from UCLA, we may see data as early as this year. So I think we're going to get some very interesting signals from our clinical program, specifically in 2021, and even more narrowly from a prostate perspective. We'll get some pretty interesting head-to-head data here from UCLA and also, we'll see how complementary MRIdian therapy is post robotic surgery. Both of those I think are pretty relevant.

Thanks, again.

Thank you.

Thank you. Our next question comes from the line of Marie Thibault from BTIG. Your question, please.

Hi. Thank you for taking my questions. Just two quick ones from me. Scott, I was intrigued by the discussion of hospitals buying second systems. Can you talk to us a little bit about what a center needs to be seeing in their practice in order to kind of pull the trigger on a second system?

Yeah. Marie, I think what we've heard now on a number of occasions is there – when we've heard it, I would say, 41 times now to be precise. Customers buy MRIdian, because of the clinical value that they perceive. Then they utilize the system for a relatively short period of time. And they have kind of an, aha moment, where they say to us, again, almost invariably, my goodness, there's even more clinical value here than we perceived. And you saw it in the webinars that our customers held. Dana-Farber, as an example in their webinar thought that they might get as high as 50% 5-0 percent SBRT on MRIdian, and I think they shared at that time that they're at 95% SBRT on MRIdian. So you kind of get that initial – we bought it because of clinical utility, oh my goodness, there's more here than we thought, and then they follow-on very quickly, with the recognition that it's helping them stand out strategically in their market. Sticking with the Dana-Farber Brigham and Women's example, they shared how patients are traveling to them in their region across the country and indeed across the world for MRIdian therapy, and how that strategic value then translates into economic value. And what we hear time and again from customers is, not only do we help them drive bottom line productivity, in other words putting a lot of their really hard-to-treat patients on MRIdian freeing up capacity for more kind of bread and butter cases on their conventional Linacs. We are kind of uniquely positioned to help them drive top line. Again, patients they wouldn't or couldn't treat on any other systems, patients traveling from outside the catchment area and increases in in-network referrals. So, this is the story that we hear time-and-time-and time again. And as they get deeper into that progression, that's when we start to have conversations about that second system and now in some instances, that third system. So we've heard now that same story on many occasion. And we hope to really bring a lot of that to fruition.

Okay. That's really helpful, Scott. Thanks for all that detail. One follow-up then, if I can on the clinical side, I think we're all sort of fascinated by the time lines here. When we think about the Phase 2 and Phase 3 prostate cancer studies, how meaningful is this on the business end of things? I know you just said that customers are buying MRIdian for the clinical value. So how much of the proving needs to still be done? And is that, something that could, sort of shift in a major way with Phase 3 data, if we see that in 2023? Just trying to gauge,…

Yeah.

… what this means for orders.

Yeah. Yeah, I know, I hear you. I know that's kind of the ultimate question. We -- there's little question in our mind, that, the clinical data and the outcomes that we're driving is really central to us driving therapy adoption and really driving the pipeline from a commercial standpoint. And I think it's also important to bring into the conversation the innovation pipeline. All of this that I've described for you is, with the current form of MRIdian. If our customers are really pleased with the clinical strategic and economic value, with the way things stand today, imagine how they will feel, when we get to sub-20-minute treatment times, when we get the brain treatment package. And we have more-and-more of this clinical data coming out. So I do believe, Marie that the, clinical value for example, as you mentioned in prostate is really going to matter. They want to see MRIdian be a workhorse, in ubiquitous kinds of cancer. And they also want to see more-and-more data in the toughest-to-treat cancers which are -- we really started in pancreas, we're being led into central lung, ultra-central lung, oligomet, liver, kidney, and not only in MRIdian SMART, but in single fraction therapy. So we feel like we're in the early days and in the early stages of what could be really exciting news for cancer patients and for investors.

That's really helpful. Thank you so much.

Thank you.

Thank you. Our next question comes from the line of Andrew D'Silva from B. Riley. Your question please.

Hey. Good afternoon. Congrats on the progress. And thanks for taking my question. Again sorry, if you touched on any of these, but I was jumping between calls. So, just let me -- just tell me to check the transcript, if you hit on any of these earlier. But I was really just interested in your thoughts about the expected APM trial start, and specifically as it relates to being pushed out about six months. Did that shift in timing change anything on your end either, operationally or with the pipeline?

No. I don't think so, Andy. I think the, pushing back of the APM by six months is helpful for customers in terms of their ability to prepare for the APM, the knowledge that they're in it. And really thinking about, what do, they need to do, to get ready for that. I think the certainty of the APM is more important than the timing. And I think the impact of the APM is really important and frankly very good for ViewRay. We -- our customers would tell you that, clinically strategically and economically they love their MRIdian program. And under the -- in the current reimbursement scheme. And under the APM, I'm reasonably confident, that two things are going to happen. Number one, the organic trend toward shorter courses of treatment is going to continue. And number two, competition for patients is going to increase. Both of those things bode very well for us. You may have seen in the prepared remarks and in the slide deck nearly 80% of MRIdian patients are treated with 5-fraction SBRT and the overall market is at about 14%. So we are just incredibly well suited there. And then you look at the work that's being done on single fraction therapy the importance of throughput the innovation pipeline of getting to sub-20-minute treatment times, all of the clinical data that will substantiate for tumor boards that yes indeed you can treat X, Y, Z cancer in five or fewer fractions with no fiducials tight margins ablative doses all the things that our customers are after. I think we are incredibly well positioned in that APM world.

Okay. That was really, really great insight. Then in January you gave what -- at least what I thought was a very good color about how operations specifically operations as it relates to changes tied to COVID were evolving. I'm paraphrasing a little bit, but I think the statement went around -- while COVID still offered a lot of challenges with various countries or regions having travel restrictions ViewRay believed it was better positioned than ever and certainly was far ahead of what was in the first half of 2020. Do you still believe that statement to be true, or has there been any sort of shift within the last call it two months?

Yes. I believe that to be true Andy. I think we are just better and better positioned. When you look at the three pipelines that we talk about, our clinical pipeline it's extraordinary. Our customers have initiated over 60 studies. Our innovation pipeline is targeted at exactly what our customers want. They want greater throughput so getting down to 20-minute treatment times. They want a brain treatment package. They believe what we bring to brain cancers is really potentially quite compelling. Simplification, ease of use, all of those things they're asking for that's exactly how we're allocating capital. And those two pipelines accrue to our commercial pipeline. And I've been thoroughly impressed with the way that our team has operated really driving the clinical and innovation pipeline throughout and also the operational improvements that we've made. So we just continue to be better and better positioned. The big frustration and I know you're aware of this is our desire to get in and do all of the installation work that both we and our customers want to do. That remains our challenge. And I think that's going to dissipate with the vaccine but we don't have a clear enough vision on that point quite yet.

Okay. Great. So the decision to not provide guidance is really based on unknowns that could come up versus anything specific that you've experienced since you completed the financing in January correct?

That's right. Yes it's all about the externality. We're still haggling with countries to get visas for example to go in and do installation work. And as you know we need real clarity especially on Q4 installations because it's binary, right? We either get credit and the installation happens and we recognize revenue on or before 12/31 or we don't. And one or two systems we're still of the size that that swings things meaningfully for us and we just want to be very prudent and careful on that front. But nothing in terms of the operations of the business or the progress that we're making.

And last question for me. Could you just provide maybe a cadence or at least let us know what you currently have scheduled initially from an install standpoint this year? If you have that kind of granularity that would at least be useful context so we can at least think about how to plan out modeling?

Yes. We'll provide that guidance when we feel like we have more complete line of sight. We have a lot of demand to get out there and install systems. We have a lot of desire and the right level of capacity to do so. But we still have to work through some things to be able to provide you that guidance.

Okay. Understand, well thank you very, very much and best of luck going forward.

Thanks Andy.

Thank you. Our next question comes from the line of Brandon Folkes from Cantor Fitzgerald. Your question, please. Brandon, you might have your phone on mute. Brandon Folkes, we're not hearing you. All right. Our next question comes from the line of David Lewis from Morgan Stanley. Your question please.

Hey. Thanks for taking the questions. This is Calvin [ph] on for David. Just two quick ones from me. The first one is just, could you comment on any updated view on how you see cash earned sequentially throughout 2021? And, whether you still feel good about that staying flat or perhaps improving over the four quarters of -- over the fourth quarter of 2020? And my second question, which I'll just ask right now is, just can you also touch on your OpEx priorities between R&D sales and marketing and G&A, perhaps in the first half? Thanks so much.

Yes. Calvin, I'll touch on your question and maybe ask Zach to provide a little bit of color. I think the best way to look at our cash burn is on an annual basis. You see pretty significant fluctuation from quarter-to-quarter. Let me take you back a little bit, and give you some context. Our cash burn number in 2018 was about $127 million. In 2019, that came down to about $89 million. And last year, that came down to about $70 million. We intend to continue that positive trajectory, but I would strongly encourage you and others, to look at it on an annual basis less so on a quarterly basis, given how chunky this business is. And from an OpEx standpoint, we shared last year that we were prioritizing our innovation and clinical pipelines and really tightening our belt in other parts of the organization. We remain in that posture currently. It is our financial rigor and discipline and the team's ability to operate, that's put us in the position that we're here -- that we are here today. And I think you're going to see a very robust clinical pipeline. I think you're going to see a very robust innovation pipeline. I think that is going to impact our commercial pipeline, but we're going to remain very disciplined, for the time being, as things hopefully loosen up with the pandemic. Zach, any color you want to add?

No, I think much like the commentary around our shifting of a system from quarter-to-quarter payments on those systems, is very much the same. So, as it relates to kind of large undiversified risk with each system, it's both a revenue and a cash impact. That's why we really do manage kind of from an annual perspective try to obviously bring it in as soon as possible. But, it is very -- we use the word lumpy from quarter-to-quarter. So, averaging over the quarters is important.

Got it. Thanks so much. If I could -- sorry, if I could just squeeze in one more. Just I wanted to circle back on the ex-US installation trends that you commented on. I know back in the December timeframe, I think the challenge was around certain regions or countries in Asia and perhaps, some in Europe. So, is that -- I think it sounds like Europe was probably slightly better than China and Japan. Is that still kind of the pattern? Do you -- is kind of China Japan still locked down. And do you see any improvement in Europe as well? I just wanted to see what the latest on that front is. Thanks so much.

Yes. Calvin, you're spot on. And I think it is improving. But, those have been the most challenging spots for us, have been Asia and Europe. You've seen over the past few months, what's happened in Germany, what's happened in France, for example, and we have had challenges there. And in Asia, we've had a real challenge from a visa perspective. Lots of desire on our side and our customer's side to solve these things, and I think we will see things improve and loosen up with the vaccine. But again, we just feel like, it's a little bit early to give the level of specificity that we'd like to provide from a guidance perspective.

Very helpful. Thank you.

Thank you.

Thank you. Our next question comes from the line of Jason Bednar from Piper Sandler. Your question please.

Can you hear me okay?

We can.

Great, great. Good afternoon, everyone. So Scott, I'll come back to a question earlier and maybe take a stab just, kind of, how you guys are thinking about the top-line. And so I think we can all appreciate you just not having the visibility to provide formal guidance right now just with the backdrop being what it is access limitations just being frustrated. And totally understand that. But just from a very general question. I mean, you've been able to pretty consistently install a couple of systems per quarter throughout much of 2020 in spite of these hospital access restrictions. Would you say that's still a reasonable go-forward assumption in the near-term as long as the pandemic is still limiting your access to hospitals? And then as like a follow-up to that once the vaccination rollout has moved further along how quickly do you anticipate hospitals will allow your installation teams in?

Yes. Jason from a macro standpoint, I'll take it up a step. And I would tell you that I think we're putting ourselves in the position of having really attractive revenue growth over time. That I feel very confident in. What we feel less certain of is specifically in 2021, how should we be guiding The Street as it relates to Q4 installations in particular so that's what is holding us back at the moment. Because we don't want to put a number out there and then have things push out that we don't have really good line of sight to. But your a couple of quarter rule of thumb is a very reasonable one, but the demand is higher than that and our intentions are higher than that. But we can't say with certainty given the restrictions that we're going to be able to accomplish that here in calendar 2021.

Okay. That's helpful. And then Scott, I mean, there's clearly been a focus as there should be here on the clinical pipeline. I think you're talking about not updating here today. But the product road map also looks pretty interesting on some of those items you laid out; the improved MRI imaging, increased dosing, the brain treatment package. I mean, can you expand on where these are within your development pipeline maybe the step change each offers in advancing MRIdian both clinically and in bringing that treatment time down?

Yes. Yes, happy to do that. I would say from a timing perspective, we anticipate that it's near-term enough that we're comfortable talking about it publicly here. Don't want to get more specific than that, given the fact that we don't control the full regulatory pathway, but we're deep into development of the items that we have highlighted. And our customers that have helped us along the way this is exactly what they have been asking for from us. Obviously, a lot of things underneath and behind these things that I have highlighted, but the number one thing from a product perspective that our customers want is greater throughput. If you just do the math and I'm not suggesting this will be the case in every instance. But if we're treating 20 patients a day and the vast, vast majority of them are five fractions or fewer. That's 20 patients a week. That's 1,000 patients a year. Now granted our customers tend to put the hardest cases on our system and single fraction therapy may take a longer period of time than that. But I think the point stands that the throughput that our customers seek we believe we have a solution to that that's not too far away. Our customers also believe that we bring something unique to brain cancers and there's been a lot of collaboration on workflow simplification and ease of use elements such as remote access and other items. And I can't tell you how excited we are and customers that have helped us on this journey appear to be very excited as well.

Okay's. That's great. Good to hear. One final quick one for me and then I'll hop back in queue. Could you update us on where you stand with your Chindex relationship? Is there a reasonable time frame to commercialization occurring in China like a 2021, 2022, 2023 dynamic? Just trying to make sure we have our expectations set appropriately with that relationship? Thanks.

Yes. We feel really, really good about the partnership that we have in China. We are working very closely with our partners there on the regulatory pathway. We're not quite ready to share any more specifics there Jason. But once we get a little bit further down the road we will share more specifics. China is the second largest and fastest growing market in the world. And frankly, some of the things that MRIdian helps do clinically are quite needed in China. So we're really motivated to get to market there with our partner.

All right. Great. Thanks so much.

Thanks, Jason.

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

Jonathan, thank you, and thanks everybody for joining us on this call. We'll be back together in the not too distant future reporting on Q1. I hope everybody's well and stay safe. Thanks 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.