Zynex Inc. (ZYXI)

[CID1957]

Interesting Q&A regarding the BVM & marketing plan, from the Zynex Q4 2019 Earnings Call Transcript. Supports an optimistic outlook for the future.
https://www.nasdaq.com/articles/zynex-inc-zyxi-q4-2019-earnings-call-transcript-2020-02-28

Sandgaard, CEO: The latest news as you've heard is that the FDA just now decided to clear our CM1500 non-invasive blood volume monitor for sale in the U.S. We have already obtained patent protection in both the U.S. and Europe. And while we have obtained FDA clearance in the U.S., we are still working with the European notified body to obtain CE Marking. We will continue to update everyone as we are building out this division.

We continued to see great potential in both of our product divisions. Our existing revenue generating area for pain management, as well as the huge unmet potential for Blood Volume Monitor. As most of you probably already know, we managed to get FDA clearance for our CM-1500 Blood and Fluid Monitor, a few days ago. The CM-1500 is a noninvasive monitor intended to monitor patients fluid balance in hospitals and surgical centers. We expect to initially target ORs and surgeries that typically display substantial blood loss, as well as recovery rooms and ICUs were internal bleedings today are common and difficult to take -- to detect until serious complications occur. We believe this product will lead to safer surgeries, fewer complications and less mortality, one of the biggest unmet needs in hospitals today. Until now, our effort has primarily been in -- on engineering, regulatory and clinical research. The product works well.

• We have so far produced three dozen of these devices,
• we get all the packaging, production procedures and everything
ready to go for a market launch.
• we will initially focus on developing key opinion leaders of KOLs in
the medical hospital and research communities
• building an organization of business development people, marketing
will be increasing the clinical research
• expand our production capabilities for this product line.
• Even though this is a very different call point then our pain
management business, and therefore a separate business unit, we will
initially be able to leverage and take advantage of the synergies from
our well-established production lines, Human Resources, quality
control, etc.

Questions and Answers:

Q: Boobalan P. -- H.C. Wainwright – Analyst
A: Sandgaard CEO

Q: For the blood volume monitor, how large of a sales force do you consider to launch?

A: Yeah.
• Technically, you could say that we have already launched now
• we have the ability to sell.
• I expect that we will start adding some business development people
that can start working with key opinion leaders and potentially also
start selling direct to some hospitals say initially
• but that's something that's probably going to develop slowly.
• But it's happening separate from our existing sales force and separate
from the rest of the organization.
• We are working -- already looking for additional space just for that separate division.

Q: And what is the estimated time frame for the launch of blood volume monitor and how many hospitals would you like to target in the initial phase?

A:CEO
• Well, we don't have a specific number of hospitals there.
• We will be targeting write-off [Phonetic].
• We still have a month or two, I believe, of getting settled with the
whole sales and marketing and business development of that division.

Q: And with regards to the price level, what's the approximate price level? And maybe you can talk about the gross margin of the device? And then how many units, would you like to -- or do you expect to deliver in 2020?

A:CEO
• We don't have a number on how many units we expect to deliver, but we
expect the MSRP to be $30,000 or right around that level,
• both in the U.S. and later more or less the same price level in
Europe.
• There is going to be an element of consumables that go with the product, and we are still to settle on the pricing of those. But they'll obviously –
• the consumables will add to the revenue stream, as well long-term.

Q: Jeffrey Cohen -- Ladenburg Thalmann – Analyst
Hi. Thomas and Dan, how are you?

Q: Firstly on BVM can you talk a little bit about your physical facility there were four floors? How many floors may be added and how many square feet? It sounds like you're going to do all the assembles there in front and manufacturing. And could you talk about, perhaps from Dan's side, how you're planning on reporting it out for [Indecipherable] 10%, will you be reporting it separately or not?

A:(Moorhead – CFO) -
• Once we get to that level, we'll definitely report it separately.
• Obviously, initially, it's going to be less than that.
• So when it becomes material, it will be a segment that we report.

A: (Sandgaard)
And we're looking for somewhere between 10,000 and 20,000 square feet initially for that group.
• But in a setup, where we can be pretty agile in terms of growing out
this base.
• We obviously have a pretty good experience with building these
devices.
• It's not that different from building our NexWave and NeuroMove and
InWave devices.
• And that shouldn't be that -- so the production won't be the bottom
line. [Speech Overlap]

Q: Will it be in your same building or same campus?

A: (Sandgaard)
• We hope to keep things in the same campus.
• It's a good question. Obviously, the production part of it can stay
here in the -- at least initially, in the same building.

Q: Okay. And then, Thomas, you talked about in the past previous terms when you've talked about this BVM with me. So how do we think about this? There is 4000, 5000, 6000 hospitals of which units could be highly utilized in a number of departments.

A: (Sandgaard)
• Right. So, ideally, I would like to -- eventually, have sold up to a
about 20 of our devices to an average hospital or surgical center.
• And that -- if that all comes true and it all had a $30,000
price point.
• We're obviously talking about $3 billion.
• That's -- that would be an ideal scenario.
• We'll see how it works out