Profound Medical Stock

Profound Medical Corp. operates as a commercial-stage medical device company. The company focuses on the development and marketing of customizable, incision-free therapeutic systems for the ablation of diseased tissue utilizing its platform technologies. The company’s lead product, the TULSA-PRO system, combines real-time MRI, robotically-driven transurethral sweeping action/thermal ultrasound and closed-loop temperature feedback control to ablate whole gland or physician defined region of malignant of benign prostate tissue. The TULSA-PRO system has shown in clinical and commercial settings to be an effective tool for physicians who are treating prostate diseases, including cancer and other conditions such as benign prostatic hyperplasia (BPH).

In August 2019, the TULSA-PRO system received FDA clearance as a Class II device in the United States for thermal ablation of prescribed prostate tissue, using TULSA based on the company’s TACT whole gland ablation pivotal study. It is also CE Marked in the EU for ablation of targeted prostate tissue (benign or malignant). The TULSA-PRO system was approved by Health Canada in 2019.

The company’s Sonalleve system is CE Marked in the EU for the treatment of uterine fibroids and palliative pain relief associated with metastases in bone and is also approved in China for non-invasive treatment of uterine fibroids. In November 2020, the Sonalleve system received HDE approval from the FDA for the treatment of osteoid osteoma.

The company’s systems are designed to be used with MRI scanners and is compatible with certain MRI scanners manufactured by Philips, Siemens and GE Healthcare. As of December 31, 2022, the company had primarily generated revenues from the commercialization of its systems in the EU and Asia and from the introduction of TULSA in the United States in Q1-2020. The company continues to pursue additional regulatory approvals in international jurisdictions and invest in research and development and in clinical studies designed to increase the body of evidence necessary to support customer coverage and reimbursement by third-party payors, including government programs and private health insurance plans in order to increase commercial adoption of its products. The company may also consider synergistic strategic acquisitions to expand the applications of its platform technology and expand its commercial footprint.

Technology Platform

TULSA-PRO delivers its ultrasound energy through a transurethral catheter, a one-time-use device that is placed in the patient’s prostate through a natural orifice. Sonalleve delivers its ultrasound energy via a disc located outside the patient. Its ultrasound energy is focused to create small cylindrical hot spots a certain distance into the patients.

Products

TULSA-PRO

In March 2014, Profound completed enrollment and treatment of 30 patients in the Phase I TULSA multi-jurisdictional safety and precision study. Based on the Phase I clinical trial results, in April 2016, Profound received a CE Certificate of Conformity for the TULSA-PRO system from the company’s Notified Body in the EU, and in the fourth quarter of 2016, Profound initiated a pilot commercial launch of TULSA-PRO in key European markets where the CE Mark is accepted.

Profound received FDA clearance for the TULSA-PRO system in August 2019 for transurethral ultrasound ablation of prostate tissue, based on the company’s TACT Pivotal Clinical Trial. The TACT Pivotal Clinical Trial is a prospective, open-label, single-arm pivotal clinical study, of 115 treatment-naïve localized prostate cancer patients across 13 research sites in the United States, Canada and Europe, which enrolled patients between August 2016 and February 2018.

CAPTAIN (A Comparison of TULSA Procedure vs. Radical Prostatectomy in Participants with Localized Prostate Cancer) is a prospective, multi-centre randomized controlled trial of 201 patients aimed at comparing the safety and efficacy of the TULSA procedure (performed with the TULSA-PRO system) with radical prostatectomy in men with organ-confined, intermediate-risk, Gleason Score 7 (Grade Group 2 and 3) prostate cancer. In the CAPTAIN trial, 134 patients will be randomized to receive one or two TULSA procedures and 67 patients will be randomized to receive radical prostatectomy. The trial is expected to take place at eight or more sites in the United States and at two sites in Canada. Of those, nine sites have been activated to date and is recruiting patients.

Profound’s Sonalleve system combines real-time MRI and thermometry with focused ultrasound delivered from the outside of the patient to enable precise and incision-free ablation of diseased tissue. Profound acquired the Sonalleve technology from Philips in 2017.

The Sonalleve system is CE marked in the EU for the treatment of uterine fibroids and palliative pain treatment of bone metastases. The uterine fibroids application is also available for sale in Canada. In 2018, the Sonalleve system was also approved in China by the National Medical Products Administration for the non-invasive treatment of uterine fibroids. Philips Oy registered Sonalleve in several Middle East, North African, and South Asian countries. In 2020 Sonalleve also received HDE from the U.S. FDA for the treatment of Osteoid Osteoma.

Osteoid osteoma is a relative rare, painful bone tumor that typically occurs in the cortex of long bones, especially in children and adolescents, and accounts for approximately 10% of all benign bone tumors.

Business Strategy

Through the implementation of Profound’s detailed business continuity plan, the company transitioned a significant portion of its employee base to work from home. Throughout these challenging circumstances, the company has continued to serve its customers, quickly adapting to the current environment.

Profound generates revenues from capital sales, one-time-use devices and related services, in the EU (principally in Germany) and Asia. For the year ended December 31, 2022, approximately 51%, 27% and 22% of revenues were generated in the United States, E.U. and Asia. Revenue on a quarter over quarter basis is expected to fluctuate given the company maintaining a limited European commercial effort and remains primarily focused on the U.S. market.

On January 10, 2020, Profound announced the signing of its first-ever US multi-site imaging center agreement for TULSA-PRO with RadNet, Inc., an owner and operator of outpatient imaging centers, pursuant to which Profound will install TULSA-PRO systems at three RadNet imaging centers in the greater Los Angeles.

Profound’s TULSA-PRO system is primarily marketed to early adopter physicians who specialize in treatment of prostate disease, including urologists and radiologists at opinion leading hospitals. TULSA-PRO services are available at either independent imaging centers or at hospital-based imaging centers.

Profound is establishing its own direct sales and marketing teams for sales of TULSA-PRO systems and the one-time-use devices related thereto, as well as for Sonalleve systems in the jurisdictions where it is approved. The primary focus of Profound’s direct sales team is to cultivate adoption of the TULSA-PRO technology, support clinical customers with the TULSA-PRO procedures and increase the utilization of the systems and one-time-use devices.

Profound also collaborates with its strategic partners Philips and Siemens for lead generation and distribution of durable equipment, which are available through the Philips and Siemens sales catalogs.

On December 21, 2020, Profound entered into a co-development agreement with GE Healthcare (the GE Agreement) whereby GE Healthcare and Profound have agreed to a non-exclusive, worldwide license that will enable Profound to interface its TULSA-PRO system with certain GE Healthcare MRI scanners. The collaboration with GE Healthcare expands its potential to interface with a significant portion of GE’s new and installed MRI scanners globally. In March 2022, Profound confirmed the TULSA-PRO system’s new compatibility with GE Healthcare’s 3T MRI scanners and signed the first site agreement for a TULSA-PRO system interfaced with a GE scanner.

Alliances and Partnerships

Philips

On July 31, 2017, the company acquired the Sonalleve technology, which it uses in its Sonalleve system.

The company has also entered into several other agreements with Philips, including a supply agreement (the Philips Supply Agreement) dated July 31, 2017 with Philips Medical Systems Nederland B.V. (Philips Medical), pursuant to which Philips is required to manufacture its Sonalleve systems.

Siemens

On February 11, 2019, the company entered into the New Siemens Agreement, effective as of January 21, 2019. Under the New Siemens Agreement, all prior financial commitments and obligations owed to Siemens were released and replaced with a one-time fixed license fee and per annum payments calculated based on annual volume of the company’s systems interfaced to a Siemens MRI scanner.

GE Healthcare

On December 21, 2020, Profound entered into a co-development agreement with GE Healthcare whereby GE Healthcare and Profound have agreed to a non-exclusive, worldwide license that will enable Profound to interface its TULSA-PRO system with certain GE Healthcare MRI scanners. In March 2022, Profound confirmed the TULSA-PRO system’s new compatibility with GE Healthcare’s 3T MRI scanners and signed the first site agreement for a TULSA-PRO system interfaced with a GE scanner.

Knight

Knight acts as the company’s exclusive distributor for TULSA-PRO in Canada pursuant to a 10-year distribution, license and supply agreement initially entered into in April 2015.

Manufacturing and Supply

The company has designed the TULSA-PRO system to be capable of integration with some of the MRI scanners from three of the major MRI manufacturers (Philips, Siemens and GE Healthcare) and the Sonalleve system with one MRI manufacturer (Philips).

Trademarks

TULSA-PRO and SONALLEVE are the trademarks of the company.

Intellectual Property

The company’s intellectual property consists of a broad and world-wide portfolio of patents, patent applications, trademarks, copyrights, trade secrets and other proprietary assets. The company’s intellectual property portfolio is both growing and dynamic and includes approximately 37 patent families representing approximately 144 granted or allowed patents and 33 patent applications in various stages of review and prosecution around the world.

Many of the company’s patents and patent applications claim electronic and mechanical aspects of hardware, software and methods related to ultrasonic ablation of tissue. The intellectual property assets are largely directed to using real time MRI imaging as a tool to plan, monitor or control said ultrasonic ablation; MRI thermometry methods, especially in respect of its ultrasound therapy processes and devices; the phasing, beam-forming, and control of acoustic arrays and similar energy sources; computational method to improve filtering, imaging and analyzing the results of MRI-guided thermal therapy processes; and secondary and support systems, such as active cooling of near-target tissues. The portfolio covers both the TULSA and the Sonalleve families of products, as well as generic technologies and applications and extensions of the company’s products.

The company pursues a global intellectual property strategy, registering for patent protection in all jurisdictions where it intends to carry on business, including the United States, Canada, Japan, major European markets (e.g., Germany, France, the U.K., Italy, Spain and Turkey) and the emerging markets (e.g., Brazil, Russia, India, and China).

Regulatory

The Federal Food, Drug and Cosmetic Act and the implementing regulations govern, among other things, the following related to the company’s products, such as preclinical and clinical testing, design, manufacture, safety, efficacy, labeling, storage, record keeping, sales and distribution, importation, post-market adverse event reporting, recalls, and advertising and promotion.

Under the MDD, legal manufacturers of medical devices, such as the TULSA-PRO and Sonalleve systems, are required to comply with the Essential Requirements laid down in Annex I to the Council Directive 93/42/EEC concerning medical devices, known as the Medical Devices Directive (MDD).

The advertising and promotion of the company’s products in the European Union are subject to the provisions of Directive 2006/114/EC concerning misleading and comparative advertising, and Directive 2005/29/EC on unfair commercial practices, as well as other national legislation in the individual European Union Member States governing the advertising and promotion of medical devices.