Greetings, and welcome to Nanox Imaging Ltd. Third Quarter 2020 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Bob Yedid with LifeSci Advisors. Please proceed.

Thank you, operator, and thanks to everyone for joining Nanox Imaging Third Quarter Conference Call. On today's call, we will hear from Ran Poliakine, Chairman of the Board of Directors and Chief Executive Officer; and Itzhak Maayan, Nanox' Chief Financial Officer; Lydia Edwards, President of Nano-X U.S.A., will join the team for the Q&A at the conclusion of the management's prepared remarks. Before we begin, I'd like to remind everyone that management's remarks may contain forward-looking statements regarding the company's financial results, research and development, manufacturing and commercialization activities, regulatory process, operations, the impact of COVID-19 on its business and other matters. These statements are subject to risks, uncertainties and assumptions and are based on the top management's current expectations as of today, and may not be updated in the future. Therefore, these statements should not be relied upon as representing the company's views as of any subsequent date. Factors that may cause such a difference include, but are not limited to, those described in the company's filings with the Securities and Exchange Commission. We will also refer to certain non-GAAP financial measures to provide additional information to investors. A reconciliation of non-GAAP to GAAP measures is provided in our press release, with the primary differences being stock-based compensation expense adjustments. With those prepared remarks, it's my pleasure to turn the call over to Nanox' Chairman and CEO, Ran Poliakine. Ran?

Thank you very much, Bob, and thank you, everybody, joining our first quarterly conference call as a public company. It's very exciting times. As Bob mentioned, also joining me on the call this morning is Itzhak Maayan, our Chief Financial Officer; Lydia Edwards, our President of Nano-X U.S.A., is also on the call and will join us for the Q&A session. Now on August 25, we closed a very successful initial public offering, including the full exercise of the underwriters' option, which raised gross profits to the company of approximately $190 million. This transaction, which was the result of tireless work on behalf of the entire Nanox team, together with a successfully crossover financing round that closed in July, provides capital for Nanox to continue to execute on our vision: to increase early detection of medical conditions that are discoverable by X-ray and significantly expand access to medical screening globally. Our investors include strategic partners such as SK Telecom, Foxconn and Fujifilm as well as new institutional investors that share and support management's long-term vision of the company. Now let's talk a bit about the need, so -- the market needs. So we founded Nanox to address a significant unmet need in medical imaging. There has been a lack of meaningful innovation in legacy analog X-ray systems since the invention by Wilhelm Röntgen more than 120 years ago. High-end X-ray products are very expensive and complex, resulting in machines that are very expensive to purchase, maintain and operate, not to talk about the large -- very large footprint. In short, these machines are too costly and complex for most global deployment. As a result, it is estimated that approximately 2/3 of the world population has no meaningful access to medical imaging, while the remaining 1/3 of them experience long waiting…

Thank you, Ran. So let's turn to the large market that's now [ imaging in full swing ]. The estimated size of the X-ray-based medical imaging market is approximately $21 billion and to a large extent, it is dominated by many large multinational organizations, including GE, Philips and Siemens. So one may wonder how a relatively small company such as ours can compete effectively. Our strategy is to expand the medical imaging market so that we are not competing with and do not intend to take away market share from those existing players, but instead, we intend to increase the size of the pie. The existing dominant players in the medical imaging market primarily target hospitals and large medical imaging centers. We intend to target other places that deliver health care services that are not able to afford expensive medical imaging systems, such as urgent care units and outpatient clinics in countries where most of the population does not have meaningful access to medical imaging because there are simply not enough imaging machines. We are ultimately offering availability and affordability with the Nanox.ARC. We will aim to target many health care providers who do not have medical imaging capabilities and thereby increase the size of the market, while avoiding head-to-head competition with the big players in the market that already exists. A distinct advantage of Nanox is our flexible business model. The MSaaS model allows health care providers to pay on a per scan basis, avoiding the significant upfront capital expenditures, sometimes measured in millions of dollars per machine that are associated with legacy X-ray technology. Even with the guaranteed minimum services fees that are included in our customer contracts at 7 scans per day and $14 per scan to Nanox, the initial outlay is far less for the Nanox…

[Operator Instructions] Our first question comes from Suraj Kalia with Oppenheimer.

So Ran, a bunch of questions. On the 510(k) application for the single source, I know it's just been a few weeks, when do you expect any feedback from the FDA, if at all?

I mean, from our point of view, our expectation is that in the very -- very soon in a matter of weeks, actually, we will hear something from -- through the third-party evaluator. I think in the FDA matter, it's very hard to predict. So I would say that we feel that we completed our submission and we answered the additional information in a good manner. And therefore, the feedback should be coming soon. But of course, we cannot know that for sure.

Got it. And Ran, the devices to be commercialized by our partners are multisource. When do you all expect to provide prototypes to your partners for their individual review?

Yes. So in terms of process, as we speak right now, we are assembling about 10 of those devices in Israel. Those devices will need to go through a ruggedized test right now. And we will conduct some tests that also will impact the submission of the FDA, like safety and other type of test. Once this will be concluded, we will ship some of the devices to our partners in order for them to be educated by Nanox.ARC and get training of how we operate it. That -- all of that should be done as soon as those testing will get done, which is in the coming, I would say, months.

Got it. And Ran, I'll have 2 final questions, and I'll let others jump in then. The ceramic tube, can you give us a status update on the ceramic tube? That is first. And the second and the last question, at least from my side, Ran, obviously, there has been a lot of speculation on the viability of the platform. At your RSNA live demo, what is the one thing that you would advise investors and skeptics per se, and say, you know what, have a look at this, this is what the core competency that we bring, and this is, in essence, going to be a paradigm shift you need to watch out for?

Okay. So I mean, as you know, I think the tubes are being made by glass and ceramic, we're on our way to actually produce ceramic tubes, getting ready to serial production, so we can ship a lot of them. That's happening in -- mainly in Korea, and that's going well. In terms of skepticism, I think it's not my role to tell skepticism what they -- how to assess. I do believe that seeing is believing. We do have a solid technology. We believe that we're going to demonstrate our technology and explain the differences between our technology and the analog technology, and it should, I believe, provide a lot of comfort because you can see the device, you can see it taking images, you can see some radiologists talking about it. And overall, again, seeing is believing. So that's why we're going to feed live from one of the prominent places in Israel here, and I think -- and I hope that, that will be a good demonstration of Nanox technology and the platform that we are building.

Our next question comes from Steve Halper with Cantor Fitzgerald.

Two questions. So in terms of the FDA single-source submission, how important is that relative to the development on the multisource, whether it's the prototypes or the next application? And then on an unrelated question, could you just talk to us about where you stand with Foxconn and your ability to -- or their ability to ramp up assembly of the ARC devices, assuming you get the multisource approval?

Okay. Thank you, Steve. Well, I think that the single-source, multisource is part of the one strategy, where we bring our X-ray source, which is the novel thing and put it in a device that has a predicate. It's not a precondition for the multisource, but we feel that while we had the single source, it was a good idea to take it through regulatory path alongside with the multisource, but it's not a precondition that one will stop the other. So that's kind of as to the strategy there. And what was your second question, I'm sorry, Steve?

Ramping up production from Foxconn for the ARC devices?

Yes. So Foxconn is fully on board. We have routine meetings, engineers to engineers. It's important to them, all the way to the Chairman of Foxconn, our supply chain management and R&D are based in Korea and Israel. As you know, they're working very, very closely with Foxconn. The next step for them is for us to complete in Israel the 10 prototypes that will also go through regulatory clearances while ramping up production. I do not expect any big issues in terms of ability to ramp up so that we can deliver the expected quantities in the second half of next year.

Our next question comes from Ravi Misra with Berenberg Capital.

So first on the commercial strategy. Can you just walk us through how you guys go about identifying some of the partners and how that process plays out in terms of how long it takes and kind of what is the back and forth that you have between some of these customers?

Sure. Itzhak, do you want to take this one?

Yes, absolutely. And it's a really good opportunity to speak about those service providers because we feel that we had a very good process of selecting partners that both have the experience as well as the capabilities of taking our offering to the respective market. And it's important that we give some very visible examples, okay? So we've been speaking about a 1,000-unit agreement that we have for the market of Australia, New Zealand, Norway, that came with an agreement with the Gateway Group. And Gateway Group is one of Australia's largest independent product distributor, as you know. And they only distribute things like health, wellness, medical supplies and devices. And they reach over 20,000 locations with presentation of medical device and so they're bringing very good experience, a very good presence in that particular market. And that's a 3-year deal for 1,000 units. Another good example is a company by the name of Promedica and that's for the Italian market. Promedica is a very interesting company that already provides more than 25 years of experience, representing diagnostic imaging vendors, such as the Fujifilm, Siemens Medical, GE Healthcare and so forth. And they also manage commercial strategic activities for multinational companies in the -- for the marketing of systems, such as MR-guided focused ultrasound, a company by the name of InSightec, that many aren't familiar with, and robotic system for interventional radiology procedures such as iSYS. So those are only 2 examples, okay, and I can speak more. So if I need to summarize my answer to your question, we are looking for service providers that both come with -- in terms of accessibility to the market, they come with strong capabilities. And most importantly, believe in our vision and they come to Israel, all of them came to Israel, they've been to our demo launch, they played with the device. They've seen the prototype, and they came to recognition that in terms of the development stage of our device, they feel extremely comfortable that if we'll collaborate and work together in the respective market, bringing this MSaaS model on a per scan basis, pay per scan basis, it will be extremely successful.

And then maybe on Ambra Health and just the infrastructure build that's ongoing right now. Can you maybe help us understand how you perceive the end-to-end chain and kind of where the weak points are -- not necessarily weak points, but where the gaps are that you need to continue to build out similar to the Ambra Health and USARAD partnership? Like what other work needs to be done here? Maybe, Lydia, if you could take that one or Ran or anyone?

Yes, Lydia. No, no, I think Lydia can give a good perspective on the U.S. market. Lydia, please?

Thank you, Ran. So as far as the role USARAD will play in our collaboration, it's pretty simple. The goal of that business agreement is to have USARAD use its strong presence in the U.S. teleradiology market as well as the standard radiology market to deploy our systems. So strong partner for us, 25% owned by Siemens, which in and of itself, gives it a professional component. The deal with USARAD is nonexclusive, and as part of the partnership, USARAD is going to perform the teleradiology services, which would be our Nanox cloud-based platform. And based on the fact that their customers have a really -- I'm sorry, their teleradiologists have a huge presence in the United States, we can use that to build out our sales structure. Now as far as Ambra Health and in terms of the agreement, Ran, do you want to take that? Or do you want Itzhak to take that? Or...

Yes, Itzhak will take this.

Yes. As we explained before, I mean this is a very strong piece of the overall offering. You spoke about the entire platform. I think the Nanox.CLOUD, the best way to describe it, this is a very important switchboard over the cloud that really connects an end-to-end offering that includes, obviously, the service provider, the one with providing the images on the ground using our Nanox.ARC. It connects AI technology partner that is able to provide early annotation to the images, obviously provide the accessibility to the radiologists who are enabling the diagnostics of the images. And the Ambra in addition also provide the connectivity back to the hospital, especially in the U.S. back to the patient medical file, okay? Okay, this is necessary. So what we are currently enabling is really an end-to-end suite of services that is allowing an end-to-end solution to the different service providers.

Great. And then maybe one last one, just on RSNA. Did you guys announce what day the presentation would be on? And then just following that conference, can you help us understand a little bit more -- I appreciate the demo units that you're giving to your partners. But in terms of the clinical build-out, is there any other kind of study or partnerships with hospitals or universities that you're willing to announce here, in terms of how to build out more of the usage and the conversation around that aspect of the device?

Yes. So I think, first of all, in terms of RSNA, this is really -- it's a commercial conference that normally companies are attending to. So like any conference, we're going to have some materials on our science, on our technology. We're going to have some videos of our clinicians, explaining what we're trying to do. We're going to have -- we have partnership with Duke University, so we're going to -- hopefully, someone from there will explain the project that we are running together with them. We're going to have a full technology demo, explaining the chip and then the tube and the one system, multisource system, and the way to acquire images. We are going to show a bit of the very, very unique geometry we have or we could have in order to create reconstruction images that are very, very -- that are very accessible to radiologists. And all of that is part of the normal business when you go to such a trade show. Now we are going to reach out to the big guys. We are already in touch with many of the medical health care companies because we believe that our source can be used also for their usage. So we believe that Nanox as an underlying technology should interest them. And I can confirm that we do have many dialogues with many of the big companies other than Fuji, that, of course, we announced. So we're going to do that. We are going to reach out to service providers, our website and our chief business officer is flooded with many, many companies from different countries that believe in our vision and trying to offer their services or their help under the MSaaS model. So all of these activities are going to be through…

At this time, there are no further questions in queue. I would like to turn the call back over to Mr. Ran Poliakine for closing comments.

Okay. Well, that concludes our call this morning. We hope that we were effective in conveying our enthusiasm for the opportunity that lies in front of us as a potential disruptor in the field of medical imaging, and we look forward to providing updates on our progress along the way, including the conferences that Itzhak mentioned and our year-end update. Thank you again, and have a good day.

This concludes today's teleconference. You may disconnect your lines at this time, and thank you for your participation.