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Executives

Robert C. Coradini - Interim Chief Executive Officer, Director, Chairman of Nominating Committee and Member of Compensation Committee

Claudia Beqaj

David K. Stone - Chairman and Member of Audit Committee

Analysts

Joshua T. Jennings - Cowen and Company, LLC, Research Division

Dalton L. Chandler - Needham & Company, LLC, Research Division

Rudy Balseiro

Jeffrey Berg

MELA Sciences, Inc. (MELA) Business Update Conference July 11, 2013 4:30 PM ET

Operator

Good day, ladies and gentlemen, and welcome to the MELA Sciences Business Update Conference Call. [Operator Instructions] As a reminder, this call may be recorded. This presentation includes forward-looking statements within the meaning of the Securities Litigation Reform Act of 1995. These statements include, but are not limited to, our plans, objectives, expectations and intentions and other statements that continue -- contain words such as expects, contemplates, anticipates, plans, intends, believes, assumes, predicts and variations of such words or similar expression that predicts or indicates future events or trends or that do not relate to historical matters. These statements are based on our current beliefs or expectations and are inherently subject to significant known and unknown uncertainties and changes in circumstances, many of which are beyond our control. There can be no assurance that our beliefs or expectations will be achieved.

Actual results may differ materially from our beliefs or expectations due to financial, economic, business, competitive market, regulatory and political factors or conditions affecting the company and the medical device industry in general, as well as more specific risks and uncertainties facing the company, such as those set forth in its reports on Forms 10-Q and 10-K filed with the U.S. Securities and Exchange Commission, the SEC. Factors that may such a difference include whether MelaFind achieves market acceptance or becomes commercially viable.

Given that uncertainties affecting companies and the medical device industry, such as the company, any or all of these forward-looking statements may prove to be incorrect. Therefore, you should not rely on any such factors or forward-looking statements. The company urges you to carefully review and consider the disclosures found in its filings with the SEC, which are available at www.sec.gov and www.melasciences.com.

I would now like to turn the conference over to MELA Sciences Interim President and CEO, Robert Coradini. Sir, you may begin.

Robert C. Coradini

Thank you. Good afternoon, and thank you for participating in today's call. My name is Bob Coradini, the Interim CEO of MELA Sciences. Joining me from MELA Sciences are David Stone, Chairman of the Board; Richard Steinhart, Chief Financial Officer; as well as other members of the MELA Sciences leadership team, including Jeff Wallace, Senior Vice President of Development and Innovation; Claudia Beqaj, Director of Commercialization; and Mrinalini [ph] Roy, Director of Medical and Clinical Affairs.

On today's call, I would like to share with you a brief business update on MELA Sciences and certain preliminary activities that the leadership team is undertaking. What you'll hear is that we are striving to achieve commercial success of MelaFind, drive meaningful revenue acceleration and manage expenses thoughtfully with the goal to eventually deliver profitability.

Before I start, I want to be clear that we are not addressing or commenting on second quarter results at this time, and that is not the purpose of this call. Our second quarter financial results will be announced in typical course in August, in connection with our second quarter earnings call. The sole purpose of this call is introduce our leadership team and to provide a high-level update on the company's business, as well as our current vision on our long-term strategy.

As many of you have widely seen in our recent press release, Joseph Gulfo resigned as Chairman, President and CEO from MELA Sciences effective June 15, 2013. We are thankful to Joseph's leadership over the past 9 years, as the company has undergone a successful transformation from its product development stage through the FDA approval process to early commercial launch of MelaFind. I am serving as the company's interim CEO as the Board conducts a search for new CEO. David Stone, our Chairman, along with the Chair of our Nominating Committee, Mindy Meads, is spearheading this process.

By way of background, I have been an active member of the MELA Sciences Board for the past 1.5 years. I have over 20 years' experience in the health care industry, leading and managing businesses for Johnson & Johnson and GE Medical Systems, which is currently known as GE Healthcare, and most importantly, have significant experience and relationships in the dermatology sector.

While at J&J, I was President of various subsidiaries and was most recently responsible for the OrthoNeutrogena division, currently known as Ortho Dermatologics, which was acquired by Valeant Pharmaceuticals. It was while I was in that position over 4 years ago that I first became aware of MelaFind while the product was still in development.

With the active support of my fellow board members, I spent the past 3.5 weeks with my sleeves rolled up, getting more deeply involved at MELA Sciences. I have had the opportunity to speak with almost every employee of the company, several dermatologist customers and many other key stakeholders. We are taking this opportunity to reevaluate the company's business strategies, operations and resources and to make adjustment and changes as are appropriate and desirable within the context of the company's current environment in order to maximize shareholder value.

While it is too soon for me, along with the leadership team, to announce complete strategy going forward based on current condition, we have several observations that we would like to share with you, as we progress in developing a long-term action plan with immediate areas of focus and change.

Let me start by acknowledging that the board and I are as concerned as our shareholders with our results today, which have fallen below our expectations. We are frustrated by the slow pace of the system uptake we have experienced, as well as the varied utilization rate demonstrated across dermatology practices that have obtained the MelaFind system. At this time, we are focusing intensely on, not only addressing expanded system placement and utilization, but on managing the company's resources carefully with an intent to adjust the level of spending to be commensurate with our stage of commercialization.

The MelaFind technology is fundamentally sound, and we believe it has the potential to break success in the marketplace. With a view towards achieving this success, the company is committed to realigning its strategies and operations by following reasoned priority and a business plan based on facts and managing by metrics. So let me share with you some preliminary observations from my very brief time here at the helm of MELA Sciences.

First, as many of you know on this call know, MelaFind is the world's first FDA-approved optical diagnostic device, the melanoma detection, that we launched in March of 2012. It is also mark -- CE Marked in Europe. MelaFind is a noninvasive, painless point-of-care device. The Cleveland Clinic named it one of the Top 10 Medical Innovations for 2013.

Given that it is a novel, first-in-class device, it was our intent when we launched to do so in a controlled, deliberate and staged approach in order to understand the drivers of success in the clinical setting and to validate our business model. While we have established a significant and steadily growing base of customers throughout the U.S. and Germany, as I mentioned earlier, we believe that actual placement and usage performance to date have not approached the potential for this metric inherent in this innovative device and remained short of our expectations. We are not satisfied with this situation, and we intend to address it.

As our marketing and experience with our customers matures; it has become clear to us that not all placements are equal in value to the patients, to the practicers and to us at MELA Sciences. Successful placements are ones in which the system is utilized frequently and consistently. Our goal is to achieve meaningful adoption of MelaFind, which means optimizing placements through better site selection and advanced preparation of the office and clinical staff. We are working to identify the key issues that are hampered on more successful rank, and we'll describe later in this call some specific, immediate actions that we are taking. We plan to provide a more detailed long-term strategy, along with associated business metrics, in upcoming months.

Our second and important observation is that, despite the shortcomings in achieving our year-long launch objectives, we remain extremely confident in MelaFind and the role it can eventually play as a routine tool in the arsenal for dermatologists in the fight against melanoma.

Through conversations with the dermatologist customers, we have received feedback that validates the technology. Here are 3 quotes from customers, and while we realize we still have some heavy lifting to increase broad utilization, comments like tease are becoming more common.

So here is one from Dr. Kimberly Cayce from Colombia, Missouri: "I knew the science behind MelaFind was notable, but my real-life experience has made me a true believer. During our prescreening to commence melanoma awareness month, MelaFind brought melanoma in situ to our attention. This patient has been hesitant to come to the office but did due to the persuasion of his wife. We were able to easily treat his lesion at a curable stage and the patient is very thankful to saving his life."

Here is another quote, this one from Dr. Monica Scheel from Kona, Hawaii: "Of all the 230 moles that were scanned, 10% have a high reading and were removed. Of those removed, 35% were pre-melanomas or dysplastic nevi. These are moles that I would have otherwise monitored. I am very excited to have this technology and feel that we are catching more early pre-cancers with it."

Last, but not least, let me share a quote from a recent conversation I had with Dr. Marcella Coleman [ph] of Munich, Germany: "Using MelaFind over a period of a year has helped increase my sensitivity to detecting more early-stage melanomas or melanomas in situ on patients. In particular, it has helped me with my younger-aged patients, a demographic where one usually doesn't expect to find melanomas. I routinely use MelaFind daily on about 50% of my patients who've come for a mole check. Additionally, with video dermoscopy on lesions that are as concern to me, the additional helpful information that MelaFind provides helps me navigate through the difficult world of mole management. In my experience, MelaFind is a very helpful medical technology for the dermatologists that also has a great patient acceptance, because most patients are quite impressed by this technology and the additional information it gives to the doctor and the patient."

The bottom line: MelaFind works. It works as it was intended to and as was proven in a controlled clinical study used to obtain regulatory approval. We are the only FDA-approved device that can see 2.5 millimeters under the skin and provide dermatologists information that they currently do not have when evaluating an atypical, clinically ambiguous lesion so they can better determine whether to perform a biopsy or not. Remember, biopsies are painful, leaves scars behind and are not appreciated when the result comes back negative, as any of your family or friends, who may have experienced this, and what they would give for a painless, non-invasive way to assess whether a biopsy is required. Most of all, MelaFind is the only FDA-approved optical diagnostic device for melanoma detection.

If you not have yet -- if you have not yet seen how easy and painless a MelaFind exam is, please go to the Video section on melafind.com or melasciences.com. When there, please view the recent video from a Fox News story on June 19 called Innovative Tool Helps in Early Detection of Melanoma. There are also other recent news stories on our site as well.

So where does that leave us today? In light of information we have now learned during the commercialization phase, we are in the process of developing a thoughtful and strategic plan in order to achieve long-term success for MelaFind. Simultaneously, we are taking steps towards its action plan to articulate a sound, robust and sustainable business model, including a clear and compelling pricing formula to drive proper utilization and increase revenue. The development of this strategy and associated activities includes scrutiny, focus and improvement in: one, operational activities; two, marketing and commercial execution; and three, financial discipline.

We intend to establish clear and simple metrics by which we will evaluate our business, metrics which are data-driven and measurable. While we are continuing to better understand the business and address the issues with the facts, data and analysis, our goal is to build a sustainable and predictable revenue stream and successful company. We need to drive adoption, which means placements with utilization, not just one or the other, as well as manage our expenses to the realities of the business. This includes prioritizing our spending on projects with near-term results. So while it is too early to communicate a complete strategy, here are some immediate actions that we are embarking upon.

On the operational front. We are focused on continuing to make significant cost and reduction improvements, which are under way and which we believe could reasonably be expected to reduce significantly the cost to manufacture and deploy systems while also vastly improving human practice and acceptance.

The 2 design areas we are working on that we believe will improve usage are: one, the calibration process that must be done at the start of the day whenever a system is used; and two, the cart design to allow the maximum flexibility in offices that generally are already pressed for space.

We are also in the process of making changes to the user interface software to incorporate usage of billing info right into the system. So physicians in their practice can view and monitor their usage and progress simply and reliably.

On the marketing and commercial fronts, we have begun the process to establish a more formalized key opinion leader group, as well as the user advisory board to help with the creation and continual evolution of a clinical and commercialization strategy. We will also be reassessing our publication and PR approach to get information about MelaFind out succinctly and to targeted dermatologists, their staff and their patients. We will be revamping our patient education to make it simpler for the dermatologists to discuss with their patients whether MelaFind is appropriate to use in their particular case. We will also be reassessing our pricing program to better align usage with revenue creation, so as not just create arbitrary barriers, discouraging usage when and where appropriate. When MelaFind is indicated to use, we are committed to ensure it is being used and used appropriately.

We recognize that favorable insurance reimbursement could have a significant impact on MelaFind's adoption and commercial success. We intend to more actively focus on the issues relating to obtaining medical coverage, identifying appropriate coding and establishing adequate payment. After all, we want MelaFind to be a vital tool in the fight against melanoma and do not want patients or dermatologists to be discouraged from using it due to costs.

We will also be focusing on improvement commercial execution. We are evaluating our collective relationships with the dermatology community and are looking to build, enhance and improve those relationships. As part of this, we will re-prioritize our target list of dermatologists and their practices in the near term based on their geographic location and the proper level of support we can provide based on where our reps and field specialists are located.

We will go back to a more controlled and thoughtful rollout based on our ability to provide ongoing support. In conjunction, we are evaluating strategy to optimize selling and supporting functions to the regions within the U.S. and Germany.

Lastly, we will also selectively consider partnerships with companies that have established distribution networks, with reach and relationships with the sales, support and service of our system, if appropriate.

On the financial discipline front, we will be focused on targeting our dollars, time and efforts to those activities where the payback is clear, near-term and highly probable. As I mentioned earlier, we need to reduce the cost of manufacturing and deploying the system considerably. We are sharpening our pencils, as we look to have a clear eye on the budget and cost-benefit tradeoffs of decisions across the business.

In sum, while it is too early to articulate our long-term strategy and metrics by which we will be evaluating our business, we have identified many activities, which we are embarking upon today to start down the path of accelerating our revenue ramp and driving toward eventual profitability. We will provide a more detailed update of these activities and other functional improvements when we report our 2Q results.

Despite the heavy lifting that needs to be done, we are more enthusiastic about MelaFind than ever before. There is nothing here that cannot be managed accordingly. MelaFind works when used according to its indicated label for use. The technology is robust, and the cost improvements are clear. We continue to receive feedback from customers that validate the importance of MelaFind and its success in their practice. I remain confident that MelaFind can and will become a standard of care for dermatologists in their fight against melanoma. You have my commitment that the team and I are working towards that goal.

Before opening up the call for questions, I want to remind you that we are limiting our comments to the management changes here at MELA Sciences, as well as the update that we have provided. We will not be commenting on second quarter results or current business trends at this time. We plan to announce 2Q results in typical course in August.

With that, we will now take a few of your questions.

Question-and-Answer Session

Operator

[Operator Instructions] And our first question comes from Josh Jennings of Cowen and Company.

Joshua T. Jennings - Cowen and Company, LLC, Research Division

Bob, congratulations on taking over leadership of MELA Sciences. A quick one for you, Bob, and just in terms of your enthusiasm about the potential of Mela -- the MelaFind system playing a crucial role in the fight against melanoma and early detection. If you look at the first year results, the question I have is, is demand in the dermatology community driving those results versus an inefficient launch? And if you can give us any color about why you feel that the demand is still there or that will accelerate. And what specifically about the unit will first thrust in the attempted commercial launch, where there were deficiencies? And what can be turned around?

Robert C. Coradini

Thanks, Josh. So let me share with you my perspective. First, companies at this stage of a novel, first-in-class device, there's no history to go on. So when you're going out, you're really the pioneer, and you're blazing new trails. So when you look at the specific things that have gone into what has hampered the success in the first year, there's been a number of things, one, the daily system setup. They're using [indiscernible] and we're addressing that. It's also difficult with a brand-new technology when you have a patient in the clinical setting, where a doctor just spend a lot of time speaking to the patient and convincing a patient why he wants to use something that the patient has not seen before. So again, these are all part of what I shared earlier about improving the patient education and awareness and making sure that it's clear and simple of what this device does and how to use it properly. And the third piece is getting the right pricing and reimbursement model. I mean, clearly, we adjusted our pricing in the first year. I think we have to go back and relook at some of these things. We have to make it clear to the physicians and also the patients because it is, in most cases, an out-of-pocket expense. And they need to understand what they're getting for their money. But I think the key thing, Josh, is when you go speak with the physicians who have used it and are using it routinely, and like anything, when you have something new that you enter into your daily routine, making the change from that daily routine is difficult. But once you incorporate it and use it and understand what you're doing, you will see that the physicians will say that the additional information that they receive help makes them better physicians and better dermatologists.

Joshua T. Jennings - Cowen and Company, LLC, Research Division

Great, and then just additional follow-up, just in terms of getting the information and educating clinicians and physicians to the merits of the technology, how do you change that strategy? I mean, my understanding was that MELA Sciences was at most dermatology conventions. There was a lot of traffic at the booth at the -- at AAD and other scientific meetings -- clinical meetings. What needs to change there in terms of educating physicians? You have your pivotal trial data set. You have reader studies out there. It's just a matter of educating them about the data. It is a matter of them being educated about the system. But what has been lacking in the first year in terms of getting the message out to the clinical community?

Robert C. Coradini

Well, a couple of things, Josh. And I also have -- our Chair, I think, wants to also say a few words. But as he's -- oh, you wanted me to address it to our Director of Marketing. I will do that in a moment, Chair [ph]. But one of the things, just -- let me just say this, Josh, in the -- when you come out with the new product, and yes, we were at the shows, and yes, we have a lot of interests. A couple of things, first, you still need to get additional papers published, right? You still need to have -- the users will have experience sharing with other users, who are interested what's going on. And so when I earlier mentioned a more formalized key opinion leader group, we have not brought the doctors around the table all at the same time to have that formalized discussion on a routine and recurring basis. We're going to do that. We're going to do that with the user advisory panel. So there are things to do. There are ways to get out there. And again, at the end of the day, it's about putting a business model, not only for MELA Sciences, but for the dermatology practice that they can understand how this fits in. And we need to do that with clear metrics and analysis that they understand and can incorporate. So I'm going to ask Claudia to also share a few perspective, as she is the Director of Commercial Strategy.

Claudia Beqaj

So Josh, thank you for the question. And I think, in addition to the comments that Bob made about establishing a more robust KOL network and the user advisory board. In addition to that, through the first year, we received a lot of feedback from our customers as we learn how to work with them and how to streamline our medical message. I think upon the first few months of our launch, we were very focused on getting all of the clinical data out there. And I think that the message became a little bit complicated for doctors and dermatologists, and it set the wrong expectations for the product. So we circled back, worked with medical affairs, got better papers out there and more robust literature, and we were able to streamline the messaging as a result of that. And we already started to see results.

Robert C. Coradini

And I would also just like to add, Josh, in closing on that messaging. Give us time, you will see -- may not at the summer meeting, which is only in 2 weeks, but clearly, as we get into the fall meeting, both the fall derm meeting in Vegas, I think you will see the kind of messaging that Claudia is speaking about in action.

Operator

And our next question comes from Dalton Chandler.

Dalton L. Chandler - Needham & Company, LLC, Research Division

You mentioned that you're disappointed with where you stand in the launch today. Could you just give us some sense or some maybe order of magnitude of where you think you should be today?

David K. Stone

We are -- and this is David Stone, the Chairman of MELA Sciences. I think we all felt that it would be easier for dermatologists to figure out how to use the device. It's a very simple procedure. It takes about a minute. Give some information, and dermatologists see patients very fast [indiscernible], as you know, if you have been to a dermatologist's office recently, their cycle time is about 6 minutes. So we feel it wouldn't be hard to capture the number of cases each day. But for the reasons that we've been discussing, you have to find your way into that workflow and make it just as easy to incorporate MelaFind into that rapid cycle and efficient delivery to the patient, as all the other things they do. And that's the nut that we haven't cracked effectively. So thinking in terms of the number of exams that a doctor does every day, many times an hour, and the [indiscernible] cases where we think MelaFind can be useful, usage ultimately should be a lot higher when it's a routine tool. We're -- actually, we landed in the first year, hopes for higher, then weren't met. I think everybody [indiscernible] to give a number in retrospect. It doesn't help very much, but we clearly see a viable, valuable commercial business here. Otherwise, we wouldn't be still alive and enthusiastic as we are.

Robert C. Coradini

And I'd like to add one other point of perspective. One of the things I like to do is benchmarking. I benchmark externally with other companies and other products that have launched. I also like to benchmark internally. When I look at the data between our German placements and our U.S. placements, based on the amount of resources applied, the results are different. And the bottom line is we can do better. And so that is what the team is working on, and we will work on. And it will be based on benchmark, on metrics and on managing.

Dalton L. Chandler - Needham & Company, LLC, Research Division

Okay. So to be clear, your disappointment is more on the utilization side than it is on the unit placement side?

David K. Stone

It's both.

Robert C. Coradini

It's both.

David K. Stone

It's both. We'd like to see more systems in the field, and assistance in the field [indiscernible]. It's an encouraging thing. And this isn't new news that the company's commented on this before. We now have examples of customers who are doing what we thought more customers should be doing, which is to incorporate the technology routinely in their practice. So our task is to figure out what does clinicians have learned and communicate that message to others so they -- so that other clinicians can see how they incorporate MelaFind with that kind of routine level of use.

Dalton L. Chandler - Needham & Company, LLC, Research Division

Okay. And you touched on reimbursement strategy a little bit. I know the original plan was to at least wait for reimbursement, if not forego it altogether, as you're thinking on that change.

Robert C. Coradini

Well, Dalton, right? I spent over 20 years in the medical device industry. I've been on products that are what I would call medical products. I've been on products that have been esthetic and cosmetic. There are products that patients need to use and ought to use, and there are products that are nice to have and clearly, based on their own personal preferences. MelaFind should be incorporated in every dermatological case when they're doing the evaluations for melanoma, when they come up to find these clinically ambiguous lesions. And this is my philosophy that whatever is holding us in the way, and what I've heard from a number of my dermatology friends, is that reimbursement is one of the issues. So where we can get the proper reimbursements, it's our obligation to figure out how.

Operator

And our next question is from Rudy Balseiro from Needham & Company.

Rudy Balseiro

Can you walk me through your current stand on a -- on your pricing model, whether it's per lesion or per lesion per session, and how the derms have -- is there a pattern you're seeing more derms flowing into one camp than the other? And then also, if you can apprise me now where you stand on the average time from signing an agreement to installation.

Robert C. Coradini

All right.

David K. Stone

We're -- this is David Stone again. We -- Rudy, we can't give you exact metrics, because the metrics we haven't been -- to the extent we haven't [indiscernible] here from the second quarter, which we're not commenting on at this point. But you can recall that the -- when we first launched the product, it was a card-based pricing model, and the idea was to get the dermatologist to buy a card from us at a price. It was $50 a card, and they could mark that card up to whatever price they wanted to the patients. We thought they probably would double it, about $100, and that was going to include the evaluation of up to 5 lesions, as well as the ability to take a number of other clinical photographs. There are still some physicians who are using that model, who like that model into declining percentage of the business. We've moved to a per-lesion model, where the -- some clinicians can pay us $12.50, I think it is, per lesion. And so they can do just one lesion, and they can pass the $12 to the patient or mark that up, however, they want to do it. And that really lowers the threshold, when there's just one lesion of concern. And it gets that - it gets to be an easier decision, given it's an out-of-pocket expense for the patient or something that the doctor has to incorporate in their practice. And we have a few places where the customer has said, "We like to just pay a flat fee and use the technology as much as we want." And where we think that's the right way to authorize [ph] revenues for the company, we'll negotiate those contracts as well. So it's a changing mix. And the only thing we can say is -- qualitatively at this point is that by having that flexibility and working with customers to try to model what works for them, we're seeing better results than we had previously.

Rudy Balseiro

What's the average time you're seeing from signing an agreement to installation?

David K. Stone

I don't know the average, but it varies. And we have systems that we can deliver. We have a limited number of people, so we can't always deliver the next day. But my understanding from talking with the team is that they're getting the items as most often, making sure that the practice is ready, that the personnel are around so that -- because we want to train most of the -- it's not all the staff in the office but they're part of the process and they're incorporating MelaFind [indiscernible]. It might take a month to schedule an installation even though, in principle, the contract and other things are ready to go because of that schedule element.

Operator

And our next question comes from Jeffrey Berg from Health Care Insights.

Jeffrey Berg

Bob, I want to wish you well with your new role. I am totally convinced that you're the right guy for this position, and I'm excited about it. I think you know that I cover the American Academy of Dermatology meeting in this year for Medical Device Daily and wrote about MELA Sciences and MelaFind. My -- I just recently did a review of companies, which -- drug companies, which are pursuing products or currently remarketing products for melanoma, and this was including the tight likes of Genentech and Bristol-Myers, and GSK just signed a deal. Now all those conditions are -- this advanced, late-stage 3 and 4 melanoma. But looking at the very early stages, I used to write research on DUSA Pharmaceuticals, which is acquired by Sun Pharma in India. And of course, their focus is on the earlier stages or the pre-cancer stages, based on the squamous cell carcinoma or actinic keratosis. This leads me to the question, have you considered lining up with a company like this, where the -- any one who uses their product for diagnosing or treating these conditions would be potentially can [indiscernible] early stage to be using your product as well? So it's the diagnostic pharma joint activity, which exists in the cardiovascular space. Is that something you've considered in terms of growing your business?

Robert C. Coradini

Yes. Thanks very much for sharing your perspective on the industry. And yes, you have covered the industry. And I have seen you at some of the conferences and have read even some of your writeups. Look, we can't comment yet about partnerships or any collaboration we're doing. But suffice to say, successful companies do that. And we will explore and evaluate at the appropriate time. I've just been here a little over 3.5 weeks. I need to focus on a couple of basic things first. But as you know, from my days at Johnson & Johnson in the dermatology field, I know a number of these players. I know them personally, and we will do what we need to do at the appropriate time we need to do it.

Jeffrey Berg

Right. It's just a suggestion. I also know the people and maybe I can be of some assistance. But to me, that looks likes an opportunity since...

Robert C. Coradini

And maybe -- you may expect a call from me. Thank you.

Jeffrey Berg

Okay, sure. Also send you a report just to give you some background information, maybe of some help to you.

Robert C. Coradini

And that will be helpful. Thank you.

Operator

And our next question comes from Josh Jennings of Cowen and Company.

Joshua T. Jennings - Cowen and Company, LLC, Research Division

I just had one follow-up just on your thoughts around potential partnerships. Is there -- are you pursuing partnerships across all territories of U.S. and Germany and other territory? Can you give a little bit more color in terms of how you're pursuing potential partnerships going forward?

David K. Stone

Josh, we're open to all possibilities. When you have a technology that's attractive to doctors, you might say -- [indiscernible] talking about attractive to doctors, they haven't sold that many systems. But when you look at the -- people line up at the booth and the questions that our podium presenters get when they talk. The doctors -- this is a -- clearly a technology that's of interest to doctors. And that's something that many companies that's calling on dermatologists would like to have in their bag. It's having something new and interesting to provoke a conversation with the physician. You're [indiscernible] and they are helpful. The problem for us is to figure out what the actual mix of our direct sales efforts with the new technology that needs the proper explanation and training and so forth and partnerships with others. It is clear that we're not touching all the places that one could touch to maximize sales of products. But we're open to -- we're thinking about partnership opportunities, both domestic and international.

Joshua T. Jennings - Cowen and Company, LLC, Research Division

Okay. And just lastly on spend in terms of being -- going forward in terms of all these initiatives that you need to pursue to improve on the launch trajectory and adoption of MelaFind, patient education, physician education, KOL committees, et cetera, bigger presence at scientific sessions, how can we -- give us some confidence that you can actually -- to expect a decreases spend or versus incremental increase in spend going forward.

Robert C. Coradini

Thanks. Now that's a fair statement, Josh. Those who have known me from my GE and J&J days, no, I'm a very frugal spender. I believe in focusing on the few things that have the most value and holding my teams accountable for doing the stuff that will demonstrate a return. And so I think you need to just wait over the weeks and months ahead and orders head to see whether or not this team will be doing the same. But I can say this from my first 3.5 weeks here, I am very impressed with the leadership team here. They're stepping up. They're stepping up as leaders. And they're doing the things that one would expect leaders to do. Look, some of them have their -- pushed a little further in their position than they had been before. But that's what leaders do. They rise to the occasion on the challenge. So hopefully, with my guidance and insights and ways that I can provide some support to them through some colleagues and other references that we have in these -- that I've had through my years, that we can move MELA Sciences quickly to where we need to be on the path towards getting us profitable and positioning this as a tool in the fight against melanoma.

Operator

And I'm not showing any further questions. I would now like to turn the call back to Mr. Robert Coradini for any closing remarks.

Robert C. Coradini

Thank you. In closing, let me first start by thanking those of you who joined us on this call today. I hope we were able to provide you with the insights and approach we will use to turn the business around. Even though the road ahead maybe long and bumpy, it is our intent that you'll be able to see some of these results through the second half of 2013 and more meaningfully in 2014. Just note that my team and I remain excited about MelaFind and the value it can offer dermatologists, their patients and our shareholders. We look forward to updating you on our progress. Thank you.

Operator

Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program. You may all disconnect. Everyone, have a great day.

Robert C. Coradini

Thank you.

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