VRAY (2021 - Q4)

Thank you for standing by and welcome to the Q4 2021 ViewRay 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 conference call is being recorded. I would now like to turn the call over to your host, Mr. Matt Harrison, Director of Investor Relations. Sir, you may begin. Matt Har

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 represent 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 timeframe. 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 control 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 and half. Number two, MRIdian reported zero 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 five or fewer fractions with no fiducials and no or low toxicity. This is also a huge win for patients. Just five 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 real-time imaging, real-time 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 five 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 MRIdians, diagnostic quality imaging, daily adaptive planning and automatic beam gating. The studies punctuate a long list of 80 plus MRIdian trials. We said three 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 auto-gate intelligently. The newly automated remote and parallel workflow features complement auto contouring tools. These innovations address our customer's desire for faster treatment times and increased 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'll be filing our 10-K tomorrow morning. Turning to Slide 9. For the quarter, revenue grew 10% to $20 million, driven by three revenue units versus three units including one 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 two upgrades in 2020. Service revenue grew 29% and we ended 2021 with active service contracts in essentially a 100% of accounts. During the quarter, we received seven orders versus five 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 had 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 five 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 costs 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 use $7 million during the quarter. For the full year excluding equity financing proceeds, we use 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 two 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.

Thank you. [Operator Instructions] Our first question comes from Frank Pinal with Jefferies. Your line is open.

Hey there, guys. 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 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 an 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 two-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 manning -- 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 ramped 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 to 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 is similar to '21 and back half, material gain on in terms of number of units.

Great. Thanks on that. And then on MIRAGE, what do you sort of hearing and seeing from oncologists? Obviously, 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'd be helpful. Thanks.

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 two-thirds of customers didn't think there would be any difference between MRIdian therapy and conventional therapy. And obviously, there was a remarkable difference. So, I think that sets us up really well. And it's a bit of an aha moment for our customers that are out there. And we're having a lot of fun sharing it far and wide with customers all around the world. As it relates to upcoming data sets, specifically within prostate, we've got SCIMITAR coming up here in early March, which we're very excited about. And then we have SHORTER, and FORT, which will follow SCIMITAR, and the aggregate effect of the studies is designed to do a couple of things. Number one, prove the safety and effectiveness of very short course treatment first getting to by fractions and then getting ultimately to two fraction therapy and show that it's not only complimentary to surgery in the form of post-op prostate, but also show that MRIdian can be a frontline therapy, where if everything goes the way we hope, two 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, that hopefully this clinical data will unlock.

Great. Thanks, guys. Appreciate it.

Thank you, Frank.

Thanks, Frank.

Thank you. Our next question comes from Rick Wise of Stifel. Your line is open.

Good afternoon, Scott. Hi, Zach. Maybe I'll start off with the product innovation pipeline and recent launches. MRIdian A3i I 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 is 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 the MRIdian system. And in A3i, what we heard very clearly from 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 will be doing a beta launch here in the front half of the year. And then looking to open that up in the back half of the year and driving it around the world to customers who very much want to receive these new capabilities from MRIdian. Rick as it relates to 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 forward 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 very importantly, taking seven 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 probably '24, '25 timeframe when we're coming out with that new set of packages and features on the system. But you will see some 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 are couple 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 seven, and maybe even moving it up to eight? 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. We have 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 impact 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 that 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. I'll give you two quick examples. In Florida, from Orlando South, we've got four active MRIdian programs, which led to two more, an incremental MRIdian system being ordered by Baptist Health and GenesisCare order. So, we'll have six systems in the southern part of the state. Then go across the country to California, we currently have three active MRIdian programs. And those three have agitated that market and we now have Stanford coming online, two freestanding centers at BASS, and UC another one in Southern California. So, we'll have seven 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 and 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 our performance in '22 and beyond.

Great. In fact, could just [indiscernible] sneak in one more and 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 it each quarter positive or more than the second half? And it just -- you mentioned a couple of factors, but what are the top two drivers? Is it just purely volume? Thank you.

Yes, I think it’s a level we're at with kind of three 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 improve 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 the number of revenue units recognized in any given quarter.

Got you. Thank you very much.

Thanks, Rick.

Thank you. Our next question comes from Jason Bednar of Piper Sandler. Your line is open.

Hi, everyone. Congrats on a nice finish to the year here. Scott, just maybe looking at your book-to-bill, it's tracked well above one year hold time [ph] at ViewRay. And that's obviously a good thing. Is orders are kind of 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 your backlog conversion 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 system's installed in '23? Or just something like that?

Yes, Jason, great question and thanks for the compliment 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 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 from the 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 a state of kind of slow analysis of the system. And then because they were losing patience 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 frequently now is that customers want to get the systems in the ground, and a higher 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 that we're seeing more frequently. So, I think over time, we will have some shortening of that the time -- average time that a -- 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. They have been quietly improving here in the last several quarters. Really, probably the most critical part to the P&L to narrowing that operating loss and cash burn for the business going forward. I think I recall a couple years ago, you talking about that 1 million per system net of cost that came out of the MRIdian system. Scott, actually, you mentioned that here again, just now in response to Rick's question. So, I guess it's safe to say we're still at the early stage of that journey. And is there a timeline you'd be willing to put on getting to normal industry gross margins as Zach reference 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 timeframe. And I think you're going to see those big chunky kind of improvements, when you 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 timeframe. 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 and so kind of with that macro backdrop all is like Zach to make any comments he wishes.

Yes, I think 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 size fix costs, related infrastructure around install teams, and other just -- raw infrastructure costs. So, I think each incremental revenue unit really helps us on the system 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 timeframe. 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 the regional density of our systems, opens up new opportunities from -- just creativity around supporting. Right now we have generally a one 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 I'm getting there may be normal, industry gross margins is that if we're thinking out like that, you've got volume that'll take care of, and 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 the industry gross margins.

Yes, probably bullish. 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 I think ultimately, kind of achieve it in that kind of 4 years' timeframe.

Okay, perfect. And 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 from [indiscernible] once you do have approval in that market? Thanks, guys.

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 in 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 the commercial phase more quickly. I think what we've -- what we felt is appropriate and necessary for us to have somebody on the ground in China to effectively collaborate with Boson [ph], get things done in the same time zone, help us [indiscernible] request. I think whether we're enrolling patients in a trial at certain sites, or for selling MRIdian systems that resource is something we really -- that we need in either event.

All right. Fair enough. Very helpful. Thank you.

Thanks, Jason.

Thank you. Our next question comes from Suraj Kalia of Oppenheimer & Company. Your line is open.

Hey, Scott, Zach. Hope everyone is safe and healthy. So, Scott, would the current [indiscernible] at times. And specifically, how do y'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 hit the second.

Yes. Suraj [indiscernible] you're kind of ordered [indiscernible] to 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 refine timelines with orders in the backlog. I think, prospects when we 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 to 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 rephrase the second part of your question around Europe?

Yes, just curious how you all 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 expensive contingency planning, not unlike what we've done throughout the whole path of the pandemic. But this is something that's a bit more concentrated, but very difficult to predict how far and wide things happen. So, again, our hearts go out to 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 will ask one question, albeit a multi part question. So, the 18,000 patients treated so far, Scott, maybe if you could kind of slice and dice that 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 are 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 are armed with MIRAGE and soon with SCIMITAR and other SMART Pancreas, how do you see the cadence over the next couple of years or so? Gentlemen, thank you for taking my questions.

Thank you, Suraj. Can you clarify that the cadence that you're referencing isn't on the clinical data front? Or what's your question there, Suraj?

Just the utilization, the system, existing system utilization, because now you're armed with data, right? [Technical difficulty] around, right. 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 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 five fraction 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 two and three per patient. So, it -- as a very rough rule of thumb, it's about half of fractions delivered on MRIdian are adapted, something like that in that two to three 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 if 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 one or two 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've 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 one customer that's recently ordered their fifth MRIdian system, and so they're expanding the utilization and the kinds of 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 [technical difficulty]. I think in terms of the clinical data coming, which was in the second half of your question, how that impacts the 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 reach [indiscernible]. 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 remained steady. And then we're starting to see more now with breast cancer. So, [indiscernible] 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 broadening of the tumor profiles that are best suited as many of the patients are triage as they come in to treatment to which technology is best. The data really starts to grow the justification for why the MRIdian Technology. I can't project out to 2 or 3 years 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.

Thank you. Our next question comes from [indiscernible] with Morgan Stanley. Your line is open.

Hey, thanks for taking the questions. This is Kevin on for [indiscernible]. 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 in [indiscernible], so just anything of note there.

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

Yes, just the awareness overall that you've built, but any kind of geographic particular centers since the readout that have that then 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 have Dr. Kishan do kind of a [indiscernible] recording of his 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 to get us 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'll 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 it. Thank you. And I just want to follow-up quickly on the OpEx question. Can you maybe just unpack a little bit on the quarterly cadence, and perhaps the mix across your three-line items throughout '22. Thank you.

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 that ramp a little bit throughout the year, and ultimately reflect the increased investment on both the start of some of these costs down projects this year, in addition to additional renovation 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, if 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 one successful MRIdian program leads to another, if not more, so the success of each of these new programs is incredibly important. And then also just general sales and marketing side to build further awareness both on MRIdian and MR Linac as a technology category, more broadly speaking. So, I think sales and marketing you will see a ramp, it's 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 …

Yep. It does. Thank you.

Thank you. [Operator Instructions] Our next question comes from Justin Walsh of B. Riley. Your line is open.

Hi, thanks for taking the questions. 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 convince physicians who are currently on the fence 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 two-thirds of customers when polled didn't think there would be a difference between the MRIdian arm and the conventional arm in the 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 that 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 the long-term ceiling here, I know that you guys have highlighted the overall market opportunity with 1,000 to 1,250 Linac sold per year. But in the long-term, how many of these do you believe could realistically be replaced by MR Linac, either of yours 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 benefits of MRIdian therapy, the answer uniformly is that 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 when 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. Thanks again for taking the questions and congrats on the quarter and year.

Thanks, Justin.

Thanks, Justin.

Thank you. I'm showing no further questions at this time. I would 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.