Johan Andersson - Director of IR
Tomas Puusepp - CEO
Professor Frederik Wenz - Director of the Department of Radiation Oncology of the University Medical Center Mannheim
Dr. Dheerendra Prasad - Professor of Neurosurgery and Radiation Oncology, at Roswell Park Cancer Institute, Buffalo, New York
Kevin Brown - Head of Research
Todd Powell - EVP of Elekta Software
John Lapré - Head of Brachytherapy Operations
Jay Hoey - EVP, North America
Amit Bhalla - Citi
Johan Unnerus - Swedbank
Hans Mähler - Handelsbanken
Justin Morris - Bank of America
Elekta B Shs (GM:EKTAF) Capital Markets Day at ASTRO September 23, 2013 9:00 AM ET
Ladies and gentlemen, warmly welcome to Elekta’s Capital Market Day here at Astra 2013.
My name is Johan Andersson, I am Director of Investor Relations and the moderator for today. I would also like to specially welcome Professor Wenz and Professor Prasad that will give you an overview of the Elekta product from a usage prospective today.
We will start with the presentation from Tomas Puusepp and then in the first block we will also go through Elekta Oncology with professor Wenz and some other members of the Elekta management. Then we will have a break with the Q&A and coffee and then we will start with the second session.
By that, I once again warmly welcome you here and let’s give the word over the Tomas Puusepp.
Thank you very much and warmly welcome to our Capital Market Day here in Atlanta and it has a special place in my heart because actually around in our office here for three years and this is also our headquarters actually here in Atlanta for the North American markets so it’s really great to be back here again.
To give you a little bit of background, as that was happened because I just also drive back from [indiscernible] meeting in Europe. We have 500 of our users there and represented quite encouraging data. Nevertheless, we are regarding the newly launched Versa HD because they are little bit [indiscernible] out because we get the clearance earlier in Europe so actually have started to get those some clinical data and its very encouraging to see how fantastic that product has turned out and really-really good response back from that and also carried also here.
So during the Astro meeting it's because we actually see the same feedback here as well now. So it’s really a successful launch of that product.
So it actually inspire me a quite lot actually and I am very proud and very pleased also to run the company with such a very strong product portfolio and very excellent.
So then looking from the last year, when I stood here during the Astro meeting last year, we have actually strength and our sales quite significantly [indiscernible] when you look into the three things over the term, mature market which has made enough that mature, I will show you later on but [indiscernible] mature market where we really strength in ourselves with a incredible strong product portfolio but also an organization and solid business support to our customer which has been outstanding and [indiscernible] probably now we have received many awards for that. But then also of course about emerging market which is growing very, very rapidly and today actually our turnover in the emerging market 35% of total turnover and it’s really a very-very interesting to see how well our products and services and organization as well has been received by that and actually China today is the second largest country for us if we look in turnover.
[indiscernible] along, we are going faster than our competitors which sounds good but we also see an high bigger, interest in general if you are looking into radiation oncology throughout the whole world, and I think that is even more important. I strongly believe that you will see that this segment…
even more important. I strongly believe that you will see that this segment radiation oncology will grow within the oncology field quite significant as well.
So as a result all the investment we have done we have actually achieved very strong corporations. So if you look in that compound average growth during the last nine years has been, we did see earlier is 16%, but only profitability compound that was growth of 24%.
So by this investment and by the dedication we have actually achieved a very strong corporation indeed. And it is not only product I would say, and if you interact with our user I am sure that they will also confirm that we have a very good interaction with our installed base and our user base. And we have a great pleasure and honor to have Prof. Benson and Prof. Prasad here with us, and also collaborative partners in developing our tools and that is how we work, it's not just we're deciding things and then trying to install and see how it works in the clinic.
The actual part of the [indiscernible] from day one when they had the idea on these commercial release train their people to work. So the focus on us, [indiscernible] patient focus, innovative product, integrated product but actual services the patient and close collaboration without the users. More about that our R&D investment which we have [indiscernible] have started to pay off and you will also hear more about the [indiscernible] but also in other areas as well. We have a very strong product but we also have a very strong pipeline on new products coming out as well and you will see a few of those also today and the coming days also during the tour you will have.
And look into what is actually driving our business in general is of course the number of counter patients increased rapidly during the next coming years. So by 2030 it will 21 million new patients. And what which don't take into account is actually that [indiscernible] become much more chronic. So that means that it is good news and the survival is longer. And they have been a part of that effort in the market.
So what happened is that it became more chronic disease, people live longer and get more treatment. So it's only new cases, it's also that the existing cancer will accumulate over the years. So it's actually quite encouraging to say you that we actually can contribute to the patients, and be careful [indiscernible] really true. However it's actually even more challenging as of course them are already, 70% of all death in cancer is actually [indiscernible] where they have very limited cancer care or no cancer care whatsoever. And that is an area where we're working really hard together with our users, throughout more mature markets, to actually share the experience and the competence back into the emerging markets that they have good cancer care.
We would definitely like to set the standard in the market for cancer care today and also years to come. It is actually, hopefully you will join us for the inauguration of our training center, I will come back to that, that's a model which will be used throughout the whole world.
Next thing I mentioned about mature markets and emerging markets, mature market is not really mature. So it's the only country I would say in the world that you can say that have achieved what benefit we believe should be done the 63% of all the cancer treated with radiation that is actually U.S., actually rest of the world is far behind. So for example, Japan is somewhere between 20% to 30% in Canada 32% and all these countries now are looking into expanding radiation therapy and expanded radiation therapy in oncology because of the very cost efficient way to treat cancer.
So when we talk about maturity, it's not that mature, lots of things need to be done even in the markets which we might feel that it's highly advanced, but they are not very advanced in this particular field. So what this adds to the market drivers, I would go clock wise, expand the solution and what is that? One thing which is clear and have to do in the last five years, is not only that would like to have integrated solution because that is the case for sure. And all our products except the [indiscernible] because it's in different area is actually now hooked up for the most, so that is the core of all our products and they are always liked, so we have a seamless solutions for logically to have everything we actually provide for best cancer care for the patient.
And so that is one area, but the other area which is also an integration issue, is actually that our users and potential users would like to have a closer collaboration with us, so the way we get more integrated in the cancer process with our users and that is the trend which has rapidly moved in what I think is the right direction. So we’re actually moving in forward into the customer value chain because what they would like to do is really to treat the patient in the best way in annual day. So we have actually started to add values and the first step in that direction was actually in 2005 when we acquired IMPAC because we know that this will the case because cancer is a very complicated treatment that 1,000 [parameters] for each and every patient and we know that if you don’t have a very good workflow it will not be possible to fully utilize the power in our systems delivery being for patients and execute their cancer cells and actually avoids essentially to kill actually the healthy cells so we actually see a dramatic shift and I mentioned also during our last call that we also see larger deals coming through and that is also based on this transformation from delivering products delivering actually to clinical solutions. The next thing is the mark-to-market as I mentioned the success we’ve had there and with continued success is that they invest ahead of the chart we started all [indiscernible] in China and we are doing that now country by country. We’ve established our own organization, our own resources, our own service, to ensure that we can actually provide the best support for these countries and this market and really to [indiscernible] in many cases altogether with government representatives to really set the right standard on a high standard for cancer [carrying] in the emerging market. And actually it is not acceptable that [indiscernible] is actually there and nobody are able to actually provide the right services.
We have a dose based medicine as another thing also and together with our medical affair and together with our user we are building more and more protocols common protocols to ensure that they can actually provide the evidence why radiation therapy should stay very closed and expand so this is a protective but it’s also an way for us to actually further enter into long [indiscernible] because we don’t get what we desire to be honest and within the therapy and you will hear that also from Professor Wenz and Professor Prasad, they’re actually here to share their views. We actually don’t and the reason why we don’t get for those is because we don’t having not provided the evidence for that yet but that is we are in the process to do it. All of us know that it’s there but we really need to make that happen and that is also coming through our system we have 6,000 hospitals actually who start more or less to our software solutions so it is really, really interesting area to further explore you will hear more about that also from [indiscernible].
And then last but not least efficiency and that is also linked into the evidence-based managed income around the value, what value that we contribute to the society’s outcome divided by cost and it is very, very cost efficient way to [indiscernible] and that’s why actually emerging market is really focusing on radiation therapy versus other treatment mortalities. So this is the driver of business and as I mentioned also we have heavily invested in R&D actually this year we increased investment R&D by 20% so that represents about 10% on net sales. But this is probably best investment we can do, this is really good return to corporation but also to our shareholder and as you know you will hear more about that the ground breaking MR Linac the search program is really, really taking off and we have a track to the absolutely the top clinical centers, cancer centers in the world to participate in R&D who are really going to make a huge difference so call it a game changer in cancer care.
And then of course we have all the data and you have seen also, you will hear more about that radiotherapy, we have let’s say officially launched high extreme [indiscernible] you will hear more about that and then of course also everything to do with Versa HD and the clinical kits and all that so you will hear more that also from the [indiscernible] all other things we have done really, really make a huge difference for the patients out there and that will continue to support [indiscernible] to stay in the profitable growth today but also in the future.
So really some of you I know you have already pass-through or those have seen the launches of the new product having mostly into details because you will actually hear more about that today. But actually I am very proud and very pleased that we are been able actually to launch a clearer four new products during this meeting and that’s really encouraged me and I really proud all the team that we have there who have made this happen. And last but not least is we have inauguration today Elekta Learning and Innovation Center I think at 7.30 this evening. This is a model which is taking us quite some time to build up but now we have build the model with which we can actually replicate throughout the whole wall. This is the model for us and this is the model for everywhere in the world where we would like to really to promote both learn about innovation through the centers. It has everything the workflow it’s like a clinic, it’s like a mini clinic but it can actually run the different programs and really see how well our staff works in the cancer centers. So it is very encouraging indeed and I hope that some of you at least will join us into these inauguration and I almost sure that we’ll be very impressed of what they’re been able to achieve there.
So by that I would like to make a very short comment regarding how the market outlook look like in the North and South America you’ll hear also more about that from Jay Hoey but it has to be a little bit slower because there is also of lots of discussion around the reimbursement and Obama Care but you’ll actually see that appetite start to increase again.
So, this market actually support by seeing a little growth, there is no question about that if you look at mid long term. Europe, Middle East and Africa, the same thing there. All the area in that region which I would say probably not that strong is Southern European region, all the rest is actually doing very well, very robust, I’ve seen that for many years but it’s also seeing a little growth market. Asia Pacific as you know is un-served market regarding radiation oncology and cancer care growing by double digit for now and also from years to come.
So, it is actually very encouraging market dynamics indeed and we haven’t changed as you know our guidance and that we have to stick to also for this year, but will definitely see that in the coming years that we’ll also actually support very good growth for us as well.
So, by that I would like to take the opportunity to hand the mic to Professor Wenz who is actually the Professor and Chairman of Department of Radiation Oncology, University of Medical Sciences Mannheim and also University of Heidelberg. And Professor Wenz is counting the number of periods involved because [indiscernible] many more than 300 [indiscernible] one of the top I would say, absolutely top radiation oncologist in Europe and in the world. So, it’s really great honor and a great pleasure to invite them, Prof. Wenz. Please give him a big hand.
Professor Frederik Wenz
Thank you Thomas for almost flattering introduction. Ladies and gentlemen, my name is Frederik Wenz, I was asked by Elekta to give you a short overview where we actually stand in radiation oncology and where the field is moving. Just to give you a little bit of background information, my home university is University of Heidelberg, it’s the oldest university in Germany which has celebrated 625 years of existence a couple of years ago and we are always open for the future also we are relatively old.
University of Medical Sciences of Mannheim is a located close to the Neckar river in the historic city of Mannheim. It’s a full academic hospital with 1,400 beds and we have some figures steady growth of inpatients over the last years and we are still among the few academic hospitals in Germany who are actually in the black, most of the academic hospitals have trouble with reimbursement and refinancing, we have been doing a pretty good job. Also our total revenue is probably not that what’s would be interesting for you as investors, but still we are doing good.
So, some background information, the medical faculty Mannheim of Heidelberg University has four research [indiscernible] of course we have the common diseases like oncology, neuro and cardiac that what is specific to us is we have a research focused on medical technology. This is also based on the environment where we have lot of small and medium size companies in that field and we have a institute for medical technology with dedicated professors in molecular imaging, medical physics, bioinformatics, microsystems and so forth. What is also special is we have a so called [indiscernible] is a research organization but it’s funded by the German Government, it’s non academic, it’s oriented through translation of the research and through product development and so we are very happy to have them because they give us a background in biomedical engineering and in these type of things.
We have a one of the research campus model designated from the German Ministry of Education and Research, there are 10 of this industry on campus models in Germany, two are in the medical field and one of this is actually on our campus, but it’s also specially also for medical education for our medical students we offer them the possibility of doing medical school to attend additional courses for example in medical physics.
So, at the end, we have couple of our medical students how are qualified in medicine and also in medical physics and medical technology and these master courses are also open for international participation and we have been using this over the last 10 to 12 years, also to educate guest students from especially the developing countries in medical physics because we as an academic institution see the necessity to spread the knowledge about radiation and oncology to the emerging counties and to the third world countries. And because we see the situation that many governments in these countries have identified the necessity to invest in radiation oncology so they buy equipment, but they have no trained personnel and that’s one of the reasons why we established this in the national courses to educate people from these countries to use the equipment properly.
We also have long history of training course also to get up with Elekta where we train clinical physicians in radiation oncology again to make the safe use of the high tech equipment possible in developing and nurturing countries. Background information about the department as you may know in Europe the radiation oncology departments are more the centralized, so the average size of the radiation oncology departments two linear accelerators. We have the advantage that we have four linear accelerators in our center to work adjacent to Synergy machine and by tele-radiation oncology connected trough more site.
We run through satellite so we have a total of six linear accelerators right now. We are in the process of installing a Gamma Knife for radiosurgery and the results are different and the situation in Europe is that as radiation oncology we have inpatients so we give radiochemotherapy, we give antibodies and other things so we’re also qualified in systemic treatment and of course we participate in many multidisciplinary tumor boards and this is really the entrance for patients into the department that we have clinical evidence that we have good data to support the indication the use of radiation oncology and by this we will treat patients and for treatment.
Academic situation is that we have three full professors and five assistant professors in the department and about 20 physicians, radiation oncologists, 15 clinical physicists, and then we have a very strong research department with more than 30 scientists and of course it’s medical physicists and radiobiologist but also it is more and more important for radiation oncology that we have computer scientists in our department to develop software solution. In addition to the standard radiation oncology devices, we have very long experience with intraoperative radiotherapy using [indiscernible] and that’s one of the reason why I’m really excited about the presentation of [indiscernible] because I see huge potential for this machine not only for skin cancer treatment but also for other applications that can be developed like intraoperative radiotherapy.
For hypothermia for image guidance we have of course the Cone-Beam CT system that was ultrasound imaged guidance and radiotherapy. So what is the vision the development half of radiation oncology where are we going, and we have, of course, the three aspect that we have to cover. We have the clinical radiation oncology field. We have the medical physics and medical technology field and we have also radiobiology. The world where we moving to -- radiation oncology has taken very rapid development over the last 10 to 15 years.
So if 10 years ago we have this kind of linear approach in radiation oncology where we acquired one set of imaging data, CT before treatment, it is our treatment planning, we transferred planning data with the x-ray simulator onto the patient and then we treated with 3D conformal radiotherapy and we assumed that the geometry of the patient and the anatomy is not changing over 6 weeks or 7 weeks time period and so we were kind of [indiscernible] what was going on, but still radiation is very successful and that was steady growth but methods where compared to today really crude.
We eliminated the x-ray simulator as early as 10 to 15 years ago from this treatment chain and went to virtual simulation of the CT and then in the early 2000 intensity modulated radiotherapy was introduced, which means that we went to away from 3 to 4 entrance portals that were homogenous [indiscernible] to 5, 7, 9, 11 portals, so it’s multiuse technology with sub-segments and these sub-segments some of in three dimensional space to very conformal dose distribution, so we allow actually it’s tidal conforming of the isodoses to the target volume, and we can also conform our isodoses to concavities which was not possible with 3D conformal.
So that was really a step forward about 10 years and that a problem was in the beginning it took very long time. In the initial years, we had like 30, 35 or 40 minutes of time that we needed for delivery and over the last couple of years about five years ago with the advent of these rotational develop treatments technique like [indiscernible] we actually came down in the range of 3 to 4 minutes for treatment delivery, and We cut down the monitor units, which mean that we have left (leakage) also to the patient, and conformity and homogeneity was still excellent. And that know makes IMRT really available to a lot of patients because of limitations of machine time and everything and in a department like ours the percentage of intensity-modulated radiotherapies in the range of 40% to 50% that the real breakthrough came about 5 years ago with the…
But the real breakthrough came about 5 years ago, with the introduction of image guidance. As I said intensity-modulated radiotherapy confirms the isodoses to a standard planning target volume, so we spare normal tissue, but we are still to target the same target volume concept. With the introduction of image guidance completely changed all our workflow and we had the opportunity now because we image daily to reduce our safety options and then use IMRT to confirm the isodoses really tightly to this reduced target volume and by this sparing a lot of normal tissue, reducing toxicity and having the same or even better tumor control.
So we move today from this linear approach now to an adaptive close loop approach. That’s the way how we deliver radiation oncology today. We still have one third of imaging in the beginning. But then we have daily imaging in treatment per patient. Immediately before treatment we look inside of the patient, we visualize our target. We can correct, we can replan within seconds. We verify our treatment, if online definitely, and so it’s really a close look now. And that’s really one of the major breakthroughs in oncology leading to reduced toxicity and increased tumor control.
So this is how things look now. When we have a look in our treatment room, there is a lot of technology in it. This is one of the few Versa HD machines where we have our imaging units, the [indiscernible] CT, we have ultrasound for precisioning and also for tracking we have surface laser scanner which we can also use for tracking. And putting all these things together with the utility multileaf collimator here in the treatment head, with a high dose delivery with a breath-hold, and other things; it’s really a granted leap forward. It’s not only an incremental step.
So what is Agility. Agility is the new multileaf collimator here in the treatment head. It has a high resolution, very thin leaf, the possibility of this leads to interdigitate, the leaf speed is increased, the leaf precision with the specific optical technology has been improved. And what is really relevant for the patient is that it has extremely low transmission. So the normal tissue outside of the treatment region receives a lot less radiation exposure, better radiation than before and this translates into reduced rate of secondary cancers which ease the biggest challenge for radiation oncology. Then with rapid leaf speeds we really are significantly faster and this cuts on the time the patient needs to stay on the table and it increases patient comfort and it also increases precision of the therapy because the patient has less time to move which would be a problem for precision of the deliveries.
Then the second step, second component of the Versa HD is the so called flattening filter free beam delivery. This may sound like a technical detail. But again this is really a major breakthrough. In a standard linac accelerator which generate our beam up here and then because the beam would be inhomogenous we have the so called flattening filter to get a flat beam beam profile hitting the patient which was really necessary in the days when we delivered our treatment with 3D conformal radiotherapy. By removing this flattening filter, we have an inhomogenous build profile which can be false mathematically, for intensity-modulated radiotherapy. But we can increase our dose rate by a factor of 2 to 3, again cutting down treatment time increasing patient’s comfort, and with this high dose rate we can really also treat very complicated target volumes in breath-hold which is very important.
And then when we take off, you have some physical advantages. Again we have less variation of the beam, of course you have less scatter because every piece of metal here in the beam causes scatter and again scatter eases risk of less regions which is also very important again for the risk of secondary cancers. So there are estimates that just flattening filter free approaches basically reduced secondary cancer risk by at least a factor of two, maybe even more with treatment time in the range of several minutes, even for very-very complicated target volume, like brain metastasis, or lung cancer.
We treated off a patient in March, and the whole team was so excited about this new approach that in the first month, we treated already more than 10 patients and now it’s really on a basis, that we have almost already hit the hundred patients in less than half a year. Then this demonstrates you that this just new machine, we are really changing workflow in radiation oncology, I want to demonstrate this in two examples. This one is for brain therapy. This was how it was done before when we did a stereotactic radiosurgery, we had this imaging system. It was very cumbersome and then we had to transfer the isocenters with this VoLO system on the patient and then we tried to hit everything with a specific micro multileaf collimator. This took more than an hour and it’s very inconvenient for the patient [indiscernible] like and now with the new approach with image guidance, you can take a very all this VELO systems and the guidance systems and with the specific high resolution fast multileaf collimator, we don’t need dedicated micro multileaf collimators anymore and we can treat patients also in a less invasive successions with the flexible thermoplastic head marks, and also for stereotactic radiotherapy in the body we don’t need these cuts anymore which we are used to fixate the patient we can basically put the patient under treatment couch and this is thing that I want to demonstrate you. Now this is a case of stereotactic body radiotherapy for lung cancer. This is a real time movie.
Lung cancer is common about 30% of our patients are more than 70 years old, typically smokers so they are poor risk for surgery. So stereotactic body radiotherapy for the small peripheral lung lesion is increasingly huge because it’s a non-invasive method. Try to imagine, you have a lung cancer, you are with the poor surgical risk, you have to undergo surgery open chest and everything or you go for basically outpatient five sections of radiotherapy, non-invasive so this is really an increasing segment that we see.
So what we do is of course, lung cancers are moving so this is one of the biggest challenges how can we do everything and freeze the motion. We do it with Safehold system, this also called ABC-active breathing coordinator. So the patient sees also (ph) in the treatment room on increasing cough to take gets the patient command for breath-hold and this is now the imaging phase where we actually rotate our [indiscernible] onto patients to acquire 3D CT, a cone beam CT this takes still about two minutes and the thing I would comment on this later and there we work on the concept where we can do this also in 15 seconds but with repetitive breath hold we can actually get a good local efficient and there are mathematical models to use only the images that are acquired during breath hold to reconstruct the CT so that we have a high precision locally patient [indiscernible] CTs.
Here in the phase of imaging and then we will see, now the test is going into the treatment room. You see that here is the acquired cone beam CT, reconstruction was done just in second so this is a very fast thing. We have done the comparison of the plain CT and the cone beam CT, plain CT is the position where the patient should see, cone beam CT is the position where the patient is right now, where the tumor is right now and you can see that the tumor is now moved into the optimal position. Then it takes about 30 second to a minute and then we see now the technician is coming out of the treatment room again. He loads, this is sort of table correction. Now we can note the treatment parameters and this can also be done within the seconds so everything is integrated in one positive system. The patient gets breath-hold command. Now you can see actually how the delivery of treatment in this high dose rate mode goes. So we typically have 6 or 7 of these beam angles for stereotactic body radiotherapy. So we need 6 or 7 breath holds, so everything can be done in 5, 6, 7 minutes. So this is really quick right now and even for old patients with poor pulmonary function this can be done in breath hold because everybody is able to hold the breath for 15 to 20 seconds.
So as I said with the SBRT-Stereotactic Body Radiotherapy which is the fastest growing segment of the patient as we see in our department right now. We are down with the treatment delivery to breath hold. So everything is very fast. The time limiting step right now is the imaging because that takes about 2 minutes and currently working together with the team from Elekta and this is one of the competition that we had, they are actually people from Elekta are involved in this project, where we use the [indiscernible] where we only rotate 90 degrees so it’s a very fast exhibition and this can also be done in 15 seconds and this is really close to finish project so that it will be available pretty soon that therefore cone beam CT can be acquired in 15 seconds and then you need 6 or 7 breath holds for the whole delivery, so the patient can be treated within 15 minutes as an outpatient and I think this is really a grateful huge advantage for the patient for lung cancer and lung metastasis.
What is upcoming and what is necessary to do develop is of course is that we image during treatment that we [indiscernible] on two minutes. There are several approaches available already, are ultrasound base approaches like the auto scan from clarity which is an Elekta product, we have been working out on some dedicated small ultrasound users to get over with the German ministry and of course MRIs will also be one of the tracking options of the future but for ultrasound tracking is already there.
What else do we need in the future? I think there is huge potential in the development of software. The electronic medical record, the MOSAIQ system was initially just a passive record and verifier system that did the documentation of the daily (dose) and it has now expanded to become a complete electronic medical record.
But I think the next step will be that it’s really a solution, an assistant system, a support system, a system that is used for quality assurance and can also be used for training, because of course we have a huge data base, worldwide thousands and thousands of patients are treated every day; treatment parameters are documented in MOSAIQ; outcome parameters are documented in MOSAIQ. So you can really use the system, you can develop the system into an active feedback system, giving the physician feedback about what he does.
So if your target volume is too large, MOSAIQ can remind him, the rest of the world has only 250 milliliters in this situation; we have 350, what are you doing? Those descriptions that can be (libraries) especially for people in the emerging and developing countries. So that they don't start from scratch, they have already reference plan which can be used. Plan acceptance again, standup parameters or at least the distribution of the parameters is to begin [indiscernible], and if some of your parameters are standard deviation above or below but the rest of the world is doing, you can be reminded or alarmed are you sure what you are doing?
Again treatment delivery of course is controlled and then I think which is the biggest challenge is to develop the MOSAIQ system into a combination of outcome and treatment parameters where you actually can tell the physician, if you do this outcome of the patient will be that. And I think by this is really an active support system; feedback system cannot be used with the documentation to support clinical study to get population based data. So I think there is a huge potential in that field.
The next field or growth and this 3D, this is a new segment of patients that you see in Oncology, the patients you call the oligometastatic patients. Before it was really black and white, there was a patient with a localized tumor underwent local therapy through a [indiscernible] then they had the patients with metastatic disease undergoing systemic therapy and [indiscernible] so no cure achievable. As we have learned in the last couple of years that there more and more of these patients which have handful of metastasis, three, five probably seven there are local treatment or additional local treatment can actually achieve cure in these patients by methods of local ablation, live radiotherapy, the adapted body radiotherapy or interventional radiation oncology.
There has been a recent review just published earlier this year about the curative potential of radio therapy in these patients and you see that long term survival cure in 30% to 60% of the patients can be achieved if radio therapy is used. So this is one of our cases our patients that we treated for lung cancer here, patient had already reflection of contralateral lung and this patient was treated with stereotactic body radiotherapy and you see it as more [indiscernible] no other tissue reactions and you can actually achieve long term survival in these patients.
So we have tools like stereotactic body radiotherapy which we can offer these patients with oligometastatic disease typically identified CT scanning. But there are also situations where we need more refined approaches like radiotherapy or minimal invasive approaches. And this is one of the projects that we work on and I think there is a huge potential to use radiotherapy outside of [indiscernible] where you can deliver these seeds for other types of radiotherapy in all sides of the body that you can reach with a long needle.
This is the molecular intervention environment that we’re building right now in our center, where we have imaging capability in the intervention for particular system for this minimal invasive treatment. And of course and this is almost my final slide we need to come up with training methods and Thomas has told you about the link, the training center that is build [indiscernible] earlier this year. And we're working also on a training system for radiotherapy that we actually used patient data in a virtual reality situation to train physicians to safely do this complex procedure.
So what the customers require from Elekta; what do we want from Elekta want to expand just a little bit because this is really important. What the customer and the patients with cancer require from Elekta? Because as always your physicians we have to start thinking from the patient’s point of view, from the patient’s demand. We have situations in cancer where the cure rate is high. So we have established treatment approaches; so what do we need? We need high quality equipment, safe treatment, reliable treatment, low downtime and good curing methods. Of course in this situation we need evidence based medicines; what is the best available treatment; what is the best treatment option and this can only be generated by clinical data, by outcome data. So this is very important for these situations where the cure rates are high.
Nevertheless, one should not rest, one should move forward. So innovation it’s always necessary to decrease especially the toxicity and I have demonstrated to you that we have gone a long way of successful development with IMRT, with the Versa HD machine, Image Guidance and everything that I think that has become less toxic and more effective. And what is really important we have many, many patients where cure is not optimal right now. So we have to be innovative; we have to come up with new approaches, new tools and minimally invasive methods because cancer patients are elderly patients.
And so I think innovation and R&D is really necessary for all of us. And then what I think is also very important and this is one of the features that we have also in our department I told you about that if we have to stretch the knowledge because the growth is really; we have to see the growth on a global scale and developing in emerging countries are very important. There is huge a (share) there and I think therefore training concerts, simulators and other things are really necessary to stretch the knowledge.
With that I want to conclude presentation.
Thank you very much Professor Wenz for that very fascinating insight into how Elekta innovations are used in the clinic. Good morning, everybody. My name is [indiscernible] and Head of the Oncology Business Line for Elekta. I am here with you for short time to introduce Versa HD with which some of you are familiar. We also have a [indiscernible] to fill in any gaps within my presentation. We introduced Versa HD earlier this year in March in Atlanta, and in the short six months since that launch it’s really exceeded our expectations. We’ve now shift Versa HD to 13 countries throughout the globe.
Versa HD really harnesses many of the innovations that you heard Professor Wenz talking about. Most of the image guided radiation therapy, Volumetric Modulated Arc Therapy, Agility, the world’s most unique and advanced beam shaping system and the leveraging and flattening filter free technology to provide high dose rates. Within Versa HD, we’ve now combined all of these innovations to provide our customers with a truly multifunctional [manac] a perfect complement for Leksell Gamma Knife Perfexion. This system enables our customers to treat from conventional radiation therapy techniques all the way through to the more advanced stereotactic techniques such as dose escalation and high dose rate mode, all within one system, one solution on the limited possibilities.
As you have just heard target conformance really is the really critical success factor for radiation therapy the ability to conform tightly to the target volume, minimize toxicity to the patient and improve patient outcome using this very cost effective radiation therapy technique. The heart of Versa HD is Agility. Agility is a novel new designed multi-leaf collimator with several [patented] aspects. It provides a full field high resolution leafs; the full field element is very important enable to remove any constraints when wanting to deliver very effective beam shaping technique.
We have an example here that you can see where with a single isocenter a single field you can really leverage the [indiscernible] ability of this new generation of multi-leaf collimators to tightly control in any part of the field without having to split the field or actually produce a plant with multiple isocenters so this is a much more effective mechanism of being shaping. We have a unique factor of Agility is the leaf base, the agility system has a unique sets of dynamic leaf guides which mean that it can move up to 6.5 centimeters a second. This is very important as you want to deliver those dose escalated techniques using the high dose rate mode and I have a simple diagram to further explain that.
On the left hand side of the diagram, you can see that for some techniques the 3 centimeters a second speed of a conventional multi-leaf collimator is potentially enough to deliver high dose rates. Because these field shapes do not require the MLC to move any faster. So the [indiscernible] approach in time where you want to escalate dose and deliver more effectively where that parameter becomes a real consideration and potentially a constraint to delivery so the Leksell unique multi-leaf collimator agility and the ability to move at the faster speeds, we can now take the high dose rate mode into new domain to deliver field such as head and neck which require quite intensive modulation.
But [indiscernible] confront multiple stereotactic targets as I showed in that previous example very effectively to truly leverage the high dose rate combination [indiscernible] Versa HD differentiated about any available system. We also took the opportunity with Versa HD and collaboration with our clinical partners to put the, got them together a number of personalized solutions. These solutions are positioned around the most commonly treated anatomical areas. The intention here is to leverage the product solutions that we provide but also importantly to streamline work flows and enable customers to adopt this new technology in more sophisticated manner.
You heard education and training so important but I think it’s also very convenient to this point to start offers clinical packages so that people really understand the intension of our product. You heard about Active Breathing Coordinator of accessory products to be able to really bring some nice utility of this technology.
With that, [indiscernible] in 2013 to introduce XCi5. XCi5 harnesses all of the strengths of our image guided solution together with the latest release of MOSAIQ to give our customers a truly integrated system for true image guidance. We now have the capability with XCi5 to actually image during beam on. Just giving another layer of confidence for dose escalated techniques and stereotactic but also taking now a generation of image guidance through to the next level not only for 2D systems but also for 3D imaging and 4D imaging. As you also have the ability with XCi5 to match certain previously taken images to 2D-2D, 3D-3D and 4D-4D at the time of treatment and this is treatment and this is an absolutely unique phase with XCi5 and would be delighted to show you more in detail when you visit the base later on today.
So just to summarize the short presentation about Versa HD, the key takeaway is the Versa HD has twice [indiscernible] speed any commercial multileaf collimator. We can deliver dose rates three time higher than massive previous generation systems and we have twice the field definition sales wise of any commercial available multiuse collimator available today. This gives us greater versatility within Versa HD for delivering as I said a wide range of combined treatments. It improves efficiency and work flows now with the integration of imaging through MOSAIQ and we hope to contribute significantly through this technologies to high quality of patient.
With that I’d like to handover to my colleague Kevin Brown, who is Head of Research at Elekta. Thank you.
Good morning. It’s my pleasure to be able to talk to you about an exciting new project that we have regarding the use of MR in radiation therapy, MR at the time of treatment. What you can see here on this slide is an MR image. Now that MR image enables the physician to see the anatomy of the patient in real time. Now that MR image in itself is nothing spectacular powerful effect that this MR image was actually acquired not on a conventional MR but on a novel system that we’re working on that integrates radiation therapy with MR in a single machine. That would enable the physicians to see the tumor in real time as the treatment is going on. This work is building on a decade of research and collaboration that Elekta had with the university medical center in [indiscernible].
As you know this is Elekta’s style of working so Professor Wenz mentioned introduction of cone beam CT which was the result of the collaboration between Elekta and our partners 10 years ago, and this is the next step, the next breakthrough in image guided radiation therapy.
So, we are still together a group of centers so it’s our bringing in all sorts of expertise, expertise in MR imaging, expertise in image guided radiation therapy and expertise in running large clinical trials to demonstrate the value of this technology. The system that we have at [indiscernible] is not a product it’s a test demonstrating the technology. And what we’ve got there is we’ve got MR magnet at 1.5 Tesla; the nontechnical amongst you, that’s the standard straight field strength used in diagnostic radiology today. So, this image is produced on this system will be images that a radiologist is used to see. We’ve got next to the MR system which is the large can effectively see on here, is LINAC, which is able to radiate and mostly collimate, able to move leafs and all of that on the [indiscernible] able to rotate so then [indiscernible] patient.
So, that is so to the nontechnical, we’ve actually really discussing to the MR systems and [indiscernible] are not good company. The MR system and linear accelerators are not good company. The MRI system will affect the linear accelerators and stop it working effectively.
The linear accelerator will affect the images on the MRI system, but we’ve invested a large amount of work in effectively isolated these two systems, so that they’re able to be right next to each other and yet not interfere with each other. That’s how we get those good images that we seen earlier. So our MRI consortium is going to work together to demonstrate the improved patient benefits of this technology. And that can come two different sources of ways we think, one way will be for us to treat the existing indications that are treated radiation therapy but the treatment better and the other thing that we expect will happen although this yet to be proven is the indication that we there not treat with radiation therapy today we’ll be able to be treated with radiotherapy because we’ll have the confidence to place the dose in the right place.
So each of consortium members are going to be receiving one of these pilot MRI systems, they will be identifying the clinical benefit, they will be working the technical challenges associated with that and conducting that clinical research to demonstrate the value of this exciting new technology. Thank you.
Thank you very much Kevin and let’s have the next speak Todd Powell.
Thank you very much and good morning everyone, it’s my sincere pleasure to be with you here this morning to give you brief update on our software products and some new things that we’re showing this year at ASTRO. One of the things I want to start off by talking about is really relating back to the installed base and in fact one of the our unique capabilities is provided through our ability to -- provide a framework to our customers rather than individual in separate applications and it’s through this framework and the customization and ability and technology within that framework to develop applications that allow them to interact with and automate many complex administrative and clinical activities within their department and thereby increasing the strength and stickiness of that installed base to automate complex workflows.
And in fact one of the workshops that was among most highly attained at ASTRO where those workshops that were dedicated to allow our customers to show what they’ve done and to express to other customers and to us as well, the work that they’ve been able to achieve through collaboration with us using this framework again called IQ scripts. I think that looking forward you’ll continue to see an increase level of activity as customers interact with this framework to develop increasingly sophisticated an interesting application to further automate their complex workflows and it probably goes with that same but one of the reasons that it is important for them to be able to do that is that as new technology comes into cancer centers and their worlds are changing and becoming more and more complex, the need to automate and make simpler and to standardize their practices within their centers become increasingly important, so ultimately allow them to attain the efficiency they need so they taken intern spend more time with patients.
Now, you’ve heard a lot of about MOSAIQ being the platform through which Elekta products are connected and brought together and integrated, I am happy to report that over the last year we have of course integrated the workflow of Versa and the Agility into MOSAIQ, but we have also gone alive with integrated solutions for our brachytherapy products as well Leksell Gamma Knife including the launch of the registry dedicated to Gamma Knife patients. Now, Tomas talked earlier about increasing deals and deals becoming large more complex (Jan) I’m sure talking about that as well in term of consolidation and the way cancer centers are coming together.
One of the things that comes out of that is the need for cancer centers to be able to support workflows over geographically broadened diverse environments with multiple cancer centers often times involving facilities that maybe tens or even hundreds of miles away and the ability to have single patient infrastructure, single framework, single database and to be able to allow data interactions between those geographically diverse cancer centers in common framework and they ultimately be on the support and follow the data through that entire framework regardless of the physical location of the cancer centers, no longer within the single set of world wars.
And MOSAIQ is very well positioned to use support this trend throughout the marketplace and in fact we have a very long track record of being able to support this type of environment through very responsive virtualization where new cloud based solutions and ASP and hosted solutions all of which are taking on increased interest around the world and in the United States in particular. Just to briefly touch upon several of the trends that will be continuing to invest heavily on in the period looking forward, and I think it is interesting that Professor Evans talked about taking data and using the data within MOSAIQ not just within a single cancer center, but within that broad community again thinking back to all of the cancer centers working together, and that’s really what we mean when we talk about personalized care because obviously the personalized care you have to understand how that unique patient fits into a broader framework of a co-ward of patients with the similar condition. And so we will be spending a great deal of time and energy to leverage the large install base we have in the infrastructure of data that supports those customers and to pull that together and not just talk about data but to go from data to knowledge and to ultimately get to knowledge networks and other population based studies and opportunity to provide active feedback to clinicians using that leverage in a very efficient effective way.
Of course open systems, is and has always been something that we pay regular attention to and our commitment to open systems is stronger than ever. And I think part of personalized care obviously relates directly back to physician, so physician intent which is really asking the question about what does the physician want to do? And then providing some highly specialized and optimized tools to allow that physician to document that in an effective way and then track their intent through the course of therapy and manage those plans and all the related activities when plans need to change because of a variety of conditions related to the patient maybe not going in the way that was predicted. Those plans need to evolve.
And so our view of physician intent is creating the suite of tools to optimize that workflow, and again automate it in some very interesting ways we will spending a great deal of time on that looking forward as well. And then finally all of this is supported with a new and broadening initiative within Elekta software to really focus on human centered design. And we have created a new organization within our organization to specifically look at this and to again collaborate with our customers around the world to ensure that we are kicking all of the latest trends in healthcare into account to produce the most optimum.
Now I want to talk a little bit about one of the big announcements that we have. You’ve heard others, this morning talk about our treatment planning portfolio. And if you look at it from the product dimension and as it exists today, you’ve probably noticed that we have quite a few treatment planning products. And I think that it’s because of this, and the fact that each of these actually has very wonderful strength and capabilities in their own life. But the challenge of course is taking this and bringing it down to a single platform.
Now last year we talked about evaluate. And evaluate, if you are not familiar, is for multi-plan review and evaluation and approval of treatment plans regardless of where those treatment plans come from. You can see that in the booth today. And I’d recommend you take a look at it. But the real big announcement that we’re going to make, and I am sure, this year is Monaco 5. And Monaco 5 is an entirely new stuff together, all of the strength and capabilities of our entire installed product portfolio and pulls it into a new completely redesigned single platform. And so this has all the treatment modalities IMRT and VMAT that were always very strong in Monaco, but adds to that 3D conformal capabilities as well as SRS, SRT, including [indiscernible] support, some other things that really dramatically improved the calculation speed with GPU and CPU based architectures. And an entirely new redesigned using our interface again going back to that human design concept that we talked about earlier.
All of this paved the way for the next step of MOSAIQ RTP. And in fact the best way to get an early heads up look at what MOSAIQ RTP is like is to take a view in the booth today when we do a tour to the lab a little bit later this morning. So please-please spend some time look at Monaco 5. We are just tremendously excited by it. I think it’s also worth mentioning that upgrade potential within our thousands of installed sites with the products that you see at the top is tremendous. So great deal of activity throughout the year has been ensuring that our regional capacity is in place, to provide those upgrades to provide the installations and then training them to make that go smoothly and effectively.
Very quickly let’s take a look at a Monaco video.
[Audio Video presentation]
So we are tremendously excited about this new platform and so, please you come by and take a look at it today. It's interesting, the demos at Astro are going very well and the traction is remarkable and in fact we did more demonstration of Monaco yesterday then we did all of Astro last year and we actually even had the [indiscernible] one of the flat panel displays in the booth and turn it into an extra Monaco work station because we just don’t have enough space in the booth to show off the products.
Just in quick summary again it was all the best capabilities of our entire [indiscernible] plane portfolio closing into a single platform as all of the commonly used treatment techniques and includes that within that platform all within a new compelling users interface focusing on human center design with a new calculation engine where depending on the algorithm we chose, you can actually get calculations of plans in literally seconds. So, combined take a look at this we really excited to show at you. Thank you.
Thank you very much (Kevin) and now we completed the first session, so we will have first Q&A session as well. So would like to welcome Tomas, [indiscernible] Kevin and Professor Wenz to the stage for the first Q&A session.
Lot to do with the questions, so let’s start with Veronica and we have a microphone on each table so please hold the microphone and speak into it.
Thank you very much. I have one question for professor Wenz about SBRT and you mentioned potential for new indications, when as you look at SBRT today what proportion of patients receive an SBRT type of treatment and then if you look five or ten years down the line what do you think an [indiscernible] then I have a question for Tomas and Dee about the Versa HD uptake. You to mention that it’s exceeding your expectations and wondering if you can give us any more clarity on the scale from 1 to 100 or 1 to 10 where do you think it is?
And my last question is on the MR Linac and really just some big picture question this is quite an extensive project and I am wondering if what gives you the confidence that this is the right thing to be investing in given the cost of the system, the cost to you of developing it and then the potential cost to hospitals to acquire it? Thank you.
Unidentified company Representative
So regarding SBRT we are approaching about 5% and with the share of patients with the oligometastatic disease increasing rapidly, we estimate that’s about 50% to 20% of our daily test load will be SBRT.
Regarding the Versa, it’s still the pickup and as I mentioned and it has exceeded our expectations and [indiscernible] it has been following us. It’s actually the first 60 days, so any introduction of any product is a very crucial talk with them and sooner we receive 30 orders for first 60 days and that’s very good sign. We have not seen and exchange in the expectations if we are looking going forward so I am very encouraged and I strongly believe that you will see, we will see also internally that it will exceed all the expectations in years to come. So what we plan and [indiscernible] when we actually started the proactively we will definitely see that.
And regarding MR, now the question is, it’s kind of combination between Kevin and myself. If you look in the investment point of view, no of course we wouldn’t invest in this if we don’t think that is a breakthrough system in the market. So that is actually being communicated also to get, before we actually started needed to take the next step from, we have been from concept to prototype but before we actually move it to into a bit more pilot level, because that’s actually interactive.
But it’s a leading centers in the world, with many of them is actually part of our consortium today and they are, I would say they are, it’s important [indiscernible] that we are actually in that respect they actually strongly believe that this will have a major impact in the clinics whenever that is finished it’s a clinical product point to you, so we are very encouraged. I absolutely believe that this is probably one of the best investments we can do. It’s the biggest investment we have done, but it is also the huge potential in the market place.
Unidentified Company Representative
I think you shouldn’t be concerned about the cost to the end customer because we believe that the benefits will actually be cost effective. So that’s the benefit the healthcare system movie to the positive run [indiscernible] expensive treatment.
Next question, Amit?
Amit Bhalla - Citi
Tomas one question for you and one for Kevin. Tomas, when you say deal sizes are getting larger, more complex, can you talk about the geographic impact and then from the market standpoint, how do you think that impacts overall market pricing and timing of order flow?
What we are seeing actually during the last couple of years is that our users become much more partners with Elekta. They would like us to work together with them and actually take spend and it rule their practice into the best cancer care which is around, we have to see larger deals that would like to have actually everything we're doing, we become much more consultative, the machine is important but it's also important the confidence we can bring together with our existing use as a corporation into that society, so that is larger. So when looking on what could happen between the different quarters, yes it could actually have an impact that order intake between the different quarters can be more erratic we have seen in the past.
But that hasn't had any impact on sales, because the sales all the time that we will deliver the machine, so that's very good in the end of the day for the corporation, because we can plan that way. But you can actually see is more elastic order intake also [indiscernible] that would definitely good impact on Elekta.
Amit Bhalla - Citi
And just a quick follow up for Kevin, can you say anything about the MR timelines for project and anything from a technical side that would be different from the other MR products that are also in development from your competitors.
There is no comment being made on timelines right now, there is still lots of work to be done, investments to be made. With regards to competitive comments, if that what you mean?
Amit Bhalla - Citi
You are not the only one in developing a MR LINAC so what can you say from.
I think may be destroying your attention to the 1.5 tesla versus lower field alternatives. And that affects each quality and the speed with which you can acquire images. So a rule of thumb is that the speed with which you can acquire images goes as the square of the ratio fields strengths between two MR systems. So if you had one MR system of 0.3 tesla and ours of 1.5 tesla then that's 5 square, 25 times faster acquisitions at the same quality of images. But the other thing is that they are used to seeing images, around 1.5 tesla, so we think the market acceptance with that image quality will be much broader and quicker than an alternative.
I think other comment also that run from a concept or prototype, that's huge that has taken many, many years to get there. So I shall not underestimate the work which has been done prior to where we're today. And we’re significant to head to anybody in this field that was a major challenge which we had to face. I think that's why we feel very confident but when we look from a technology point of view but of course it would take longer time before you see all this clinical benefits. And traditional as you can see our way to introduce products, we always have that in the clinic for quite some time.
When we look, when they are flat [indiscernible] by one of our competitor, we had that already in the clinic but we did see at that time without the multi [indiscernible] to support the FFF it was no reason to launch it because the clinical [indiscernible] so that is the way we're doing it. And so we will not launch commercial launch but currently we’re absolutely damn sure that it creates value in the clinic.
Unidentified Company Representative
The next question Michael.
Good morning I have three questions. Firstly for Prof. Benson, why is it you don't any sort of very interactive machines in your clinic. May be I am mistaken, I didn't see any, so this tree is why you chose to go with Elekta for the entire portfolio? And the second question for you is what you think about MR Linac? Is that something you think would make commercial sense? Or is it ore of a niche product? And then I have got a question for, you mentioned very clearly how Versa HD is, but have you had any problems liability issues, after market concerns about the device? Anything of that matter would be very useful. Thank you.
Regarding the portfolio of machine and vendors we have, it's only Elekta but it has been the other way around. So we had impact before Impac was part of Elekta. So we were the first Impac customer in Europe and later on Elekta basically brought in, so we a single vendor situation right now.
Regarding the MR LINAC I think yes it will be a niche product, not every LINAC in the future will be an MR LINAC. But there are estimates and I think this is based on solid research and other gut feelings from physicians like me that probably every fourth, every fifth LINAC will be an MR LINAC. So in department of (onsite), we will definitely have one or two of the LINAC if they will work, which I expect. And of course it always has to do with, but that's the estimate for us as well.
And I think as I mention during my talk, tracking is really the next step that we have to do, we have a history of ultrasound development in our department, therefore we have been concentrating on this prototypes of ultrasound but MR is definitely also an option.
Just about, did you mentioned before that you had a different Linac4 in the chain because of IMPAC or was it always Elekta and now you chose to go with a different software package?
So we had [indiscernible] from Elekta before and switch completely to Elekta and IMPAC was probably one of the most important cornerstones for this type of business decision at that time.
Unidentified Company Representative
Yes [indiscernible] you made out illustration on reliability. As Tomas said what we tend to do is do the clinical collaborators so we have a triple S technology which we proven and Agility had also been working in the background and we’ve done a lots of work with the collaborators and a lot of work within the factory before we actually combined all of these products to launch Versa HD earlier this year. So the answer is no, we have not had any issues with reliability.
And one question I have is how expensive can MR Linac be before using it [indiscernible] would say we can’t afford it. Is it 5 million of the 10 million? Have you had some thoughts on that?
I mean it has something to do with the business case. As I said I mean hospitals are businesses and especially our situation is academic hospital we area a so called GmbH so we are a company and we have to make a business case out of this. And depending on the reimbursement on throughput of patients we calculate and if it makes sense. Of course we try to get it we are not in a profession that we can do as money on things but I think I mean what I’ve seen in [indiscernible] and everything throughput of patients will be in the 20, 25 minute time slot so I think that’s reasonable.
And if there is some reimbursement for this type of image guidance and tracking, I think then you can talk about refinancing the investments. If it’s then EUR2 million or EUR3 million, EUR4 million or up to $4 million $5 million, I don’t know yet, it depends. We have to calculate also probably construction cost [indiscernible] MRI maybe an issue but you have to look at the complete package.
Unidentified Company Representative
Okay, the next question, Johan.
Johan Unnerus - Swedbank
Yes. Johan from Swedbank, couple of questions and first on the MR project. What’s the models with [indiscernible] are they, should we guide them as a supplier then will they be paid as a supplier or in royalties? And second question is on the R&D I mean this is obviously an example of R&D and then you also investing in training. How do you treat that and what level to capitalize? And then finally on the [touch] points of the ten (plates) and knowledge base what sort of constraints are there, are there legal constraints such as the databases and are there other constraints?
Johan, when look into our investments I mean take for [indiscernible] how they capitalize so we probably have IFRS rules so some of that we’re forced to do that so that’s an [indiscernible] question if we would like to do not the way it has to be done. So that is how we capitalize all our R&D projects and examples for the question you had.
Unidentified Company Representative
Well, a sense of proportion I guess [indiscernible] about percent what level, what base?
It depends where you’re in the project so we have certain projects which I have to follow when we would actually capitalize the R&D so it depends on where you’re in the different target so that’s how it is, it is no difference to all other R&D projects we are doing we are following certain projects, we start certain target where the target if I remember that now so that was when we capitalized it so that is probably in the IFRS rules [indiscernible].
Unidentified Company Representative
In a sense it’s a green field I mean it’s completely new technology array for these new solutions and technology and that.
Yes, I guess no I mean [indiscernible] is not know and where the [indiscernible] I guess not new, what is new is like to have be able I mean looking in outer part it’s other MR Linac product but where you have an MR on the ways which is not really this time of course but this is of course to put this piece and pieces together that’s is a unique thing and it’s a known technology so then I guess known, the MR is known the treat is actually to put all this piece and pieces together so in that respect you can say that is a unique R&D product which we have right now is that really to show and demonstrate that it actually works.
Unidentified Company Representative
Okay, Hans Mähler.
Hans Mähler - Handelsbanken
First a question for, on the XVI5, what can you say about the image quality do you have a lot of scattered from the treatment in MR can you use those images beyond motion management? And my second question for Tomas if you have seen any impact on demand in emerging markets where we’re seeing significant weakness in some of the many recurrences there over the past three months?
Unidentified Company Representative
A key profitable project with XCi5 particularly from [indiscernible] imaging during treatment was to verify that the images weren’t perturbed. So we’ve had early experience with our first doctors our clinical collaborators and most [indiscernible] seeing comparable image of quality through that before having to be more beam on. So no it’s not been an issue.
Hans Mähler – Handelsbanken
So they are comparable with the traditional [indiscernible].
Unidentified Company Representative
Unidentified Company Representative
And in many market, I mean it’s not a conclusion for one thing I tell everybody [indiscernible] have been doing since last nine year. You cannot do conclusion from one single quarter so we are not showing our view on the market or we don’t place it on the single quarters, so even if it’s relativity weak in that respect have nothing to do with our view on the market.
Hans Mähler – Handelsbanken
I’m more asking regarding the currency if you look on the South African Rand and Indian Rupee [indiscernible] significance and I get that really impacted by [indiscernible] from these countries haven’t you see anything happening there.
Unidentified Company Representative
Well India is not there, it’s of course have not been very large market for us and if you look in large market like China and Japan and Japan has in slightly weak. The impact we had seen is of course on the [indiscernible]. So that’s why, we have not any seen any change in the demand in these markets. And India of course their value [indiscernible] but it has never been really a good market for us, not for anybody.
First question actually was, just related to MRA. I appreciate you have given too much data but at least help us understand which geographies you to see initial acceptance and do you think it’s going to be more likely see initial penetration in Europe for immerging countries [indiscernible] get some sense of that.
The second question was actually for Todd, just related to [indiscernible] introduction. You mentioned a lot about geographic and [indiscernible] geographic, then the old competitors now in the treatment planning have a cloud based adaptation looking for market. There is something what’s important for Elekta so in the [indiscernible] for you guys.
Last question for Prof. Wenz, obviously low class facility from right pioneering and [indiscernible] I noticed you have acquired an established thing within so far in engineering [indiscernible] so, I wonder if you could please comment on where you think treatment planning and software is to help you enable these other [indiscernible] and techniques inside or see perform.
Unidentified Company Representative
To start with [indiscernible] when they one of the most likely market whether will adapt and so far it has always been in U.S. and I think that this probably [indiscernible] in North America, that’s is probably the most likely and that’s also being looking in the [indiscernible] in North America. So, I think that will be, if that trends continue to be the case because it’s a very competitive market and people are very quickly adopting new technology I think that could be because it take little bit longer time in Europe because it’s tentative process, it’s more a public system and that takes usually longer time than what you see in U.S.
And then way is definitely looking to the money market so that is obviously that there comes slightly later than that. So, that is [indiscernible] the way we have seen the patient of IGRT because when we introduced IGRT [indiscernible] we believe that time IGRT will be 30% in the past is now its 90% something like that. So, it’s a very [indiscernible] clinical benefits of that [indiscernible] actually gone through this [indiscernible] that Prof. Wenz demonstrated, it’s huge improvements, all the toxicity and what after than sort of really kind of attack the tumor very precisely and avoid the [indiscernible] and that it has fantastic about development. And this is a [indiscernible] even more enhanced rate of the [indiscernible] to take this opportunity into the consideration.
So I think it’s very much in line in what people would like to see, but it also will [indiscernible] replaced on the LINAC, no absolutely not, but it would definitely be quite an interesting volume for us and give us good return on investment.
And in terms of cloud based deployment, virtual deployments hosted solution and that sort of things. We’ve actually been an early innovator in that capacity. You can go back almost 15 years to when we had our first real-time connections between our products and linear accelerators even in hosted and cloud based deployment. We have had hundreds of customers with different products not just MOSAIQ even registry products another products in cloud based and hosted solution for many years and that will continue to be important for us.
Unidentified Company Representative
Regarding the computer scientists in our department [indiscernible] several levels [indiscernible] testing of the product, so the computer scientist now department of health or physicians to have higher level of knowledge, so I think we give more intelligent answers to the people we worked together then we have real projects slide what I said to [indiscernible] imaging where our computer scientists and medical physicists really worked closely together with 7 and 15 and this team, so this is really a partnership, this is like scientists. I found it’s very fruitful collaboration and stimulating and we’ve got [indiscernible] out of that. And then of course computer scientists they do also like real generic academic projects, so we think about no imaginary construction from phase data which gives us the opportunity or the possibility in the future [indiscernible] CT to acquire less images lower doses, but still have good a reconstruction [indiscernible] doing multicolumn modeling for treatment [indiscernible] also for the KD devices we have in our department, so this maybe interesting for [indiscernible] for example.
And just recently we also came up with a new treatment planning algorithm for iodine complacent, so these are the academic things and if they will be clinically applicable we will know in 5 to 10 years or they will never make it. That’s just a different level.
Unidentified Company Representative
Thank you very much and we have a number of questions, but I think we need to have the break first and then we will get in the second Q&A session and we’ll [indiscernible]. So thank you very much for this first session, and we will have hopefully there in the back and we’ll let’s have a 10-minute coffee break and then we’ll start the second session. Thank you.
Unidentified company Representative
And we will start the second session of today I’ll see that some of you still aren’t having your coffee cups so please come to the table and then we will start and this session will be kicked by Åsa Hedin, executive vice president for our neuroscience business. Welcome, Åsa.
Thank you. I am glad to be here as well. Our main product in neuroscience is the Leksell Gamma Knife which is fully integrated and dedicated solution for this stereotactic radiosurgery in the brain. And since we introduced the Leksell Gamma Knife we are now at the six generation, the perfection which has really unmatched target specificity, efficiency and clinical outcome. And the demand continues to grow and I am particularly proud, if you saw the recent largest order ever of seven Gamma Knife units into China.
To date we have treated 800,000 patients. 55% of those are in benign and functional disorders and 45% of those are metastatic tumors. Most of those patients have multiple lesions. And the development of new indications really goes hand in hand with the development of imaging. And there is a lot of exciting research ongoing in DTI development for example where you can see the cranial nerve much more clearly and that enables us to develop new indications and we think that there are several interesting areas to come over the next 5 to 10 years.
Before I handover to Professor Prasad, I would really like to highlight some key elements of our development philosophy. Over [indiscernible] Elekta today we have around 1,000 engineers working with development across 14 R&D sites. So we have established some key elements and how to guide our philosophy and our passion for innovations.
So the first and foremost one, as Tomas talked about is innovation through collaboration. The input from our users is really fundamental in order to achieve clinically effective solutions. One example is that we would develop the perfection we had a multi-disciplinary task force of radiational [indiscernible] physicist as well as neurosurgeons who messed on a regular basis to define the .
Secondly we strive to make our solutions seamless and user-friendly as possible, this is been true ever since the first unit of Gamma Knife was introduced in 1968 and since a lot of developments for example robotics have allowed us to make our solutions much more user friendly and with the fast patient throughput. A normal procedure today with Gamma Knife is the patient comes in and goes home in one day.
So the third area is really about patient comfort and patient experience, so as I said the fact that the patient can come in have brain surgery and go home in the same day, is of course very important, but we don't want to stop there, we really want to make sure that it's quick and painless and comfortable for the patient.
And the fourth area is the most important area for us really and we have to absolutely continue to build on our clinical outcomes that our users have over the past decade achieved. And one example that [indiscernible] referred to is that we have introduced the Gamma Knife registry which is built on the most [indiscernible] platform. It allows the Gamma Knife to be one part of the cancer care center, and it allows us also to prove data from multiple sites into central repository we can do retro and prospective clinical studies.
So today we have about 8,000 reviewed articles and many interesting presentations here at ASTRO. So with that I really would like to welcome Prof. Prasad who is true pioneers and a leader in this field. Prof. Prasad is professor of neurosurgery as well as radiation oncology at Roswell Park Cancer Institute. And he has performed well over 8,000 clinical procedures with Gamma Knife. Thank you.
So by statistics one in every 100 patient who has been treated with a Gamma Knife walking around somewhere I had something to do with. Especially when you look at me I don't look that great and I don't look that old to be doing all these, but I guess this is what I did all along. And it's an interesting talk in timing for you because you heard a lot about what's new? And then I come and talk to you about something that's been around for 50 years and why is it still there? Why do we still care about it? Why does it still make sense? But Roswell Park the very first cancer center, this is where I work, and it's not a park it's named after Dr. Roswell Park who went to the New York State assembly and said he thought cancer should be a specialty itself, bring all the specialists together and that's when there all kinds of cancer centers in the world sort of follow through.
And I want to point out we're a state supported institution and fortunately have continued to grow and evolve, the global vascular institute that has very major part of a clinical and a technology collaboration, [indiscernible] is a big player there. So we end up being a large team that essentially supports and understands the use of all these new technologies. So I am not alone, I am actually part of a huge group of specialists and university full of computer scientists and engineers who would collaborate with us to come up with the fundamental grains of idea then go on and become technological innovation with collaborators and partners. And yes a bunch of cases of all varieties the fastest growing segment in the United States is clearly the metastatic disease. But I need to point out to almost everyone in this room that even so radio surgery is hugely underutilized, I was at the British Neurosurgery meeting two months and there was this huge debate about which technology to do radio surgery LINAC, radio surgery, Gamma Knife radio surgery and the fundamental truth is the penetration of radio surgery in that market is 6%.
That is the real problem here and really huge growth opportunity and as that occurs I think all technologies that are used to do this will continue to go and then the question is which one then serves as the defendable growth standard to which everything else will be offering. And I will hopefully demonstrate by the end of the stock that it still remains the Gamma Knife which is why despite two [indiscernible] Prof. [indiscernible] has a Gamma Knife on order and entirely variant shops, so that's a change in flavor for you all. But there is the Gamma Knife and it has never been challenged and we do not treat a [indiscernible] brain for radio surgery on anything but the Gamma Knife not on the [indiscernible] not on the existing trilogy platforms and if I had an a platform for the same reason, the Versa HD would do what it does best and the Gamma Knife would do what it does best.
The collaboration that we with Elekta is also long standing, I was fortunate to be taught by a direct group of [indiscernible] and all the way back when I first started doing Gamma Knife version one of Gamma, now I have always been a key partner in helping Elekta improve and develop. And the group you see here is the group of people who go one step further. When you start a new Gamma Knife program anywhere in the world I think this is a unique feature for Gamma Knife radiosurgery that a team of a neurosurgeon and a physicist go and spend the full week with the new set up actually participating in treatments allowing the physician and physics team and those departments to become comfortable with the new device. I don’t think that kind of mentoring model actually exist anywhere else and I am sure that Elekta considers it an expense that is very much well worth it because of the human care angle. And that sort of answers why I have continued to have a collaborative relationship with Elekta and I can also tell you that since 1992 to now there are being many, many occasions on which I have spoken for Elekta and my professor before me and every ones have I been asked to submit a slide ahead of time or don’t know what to say, so what I say to you is my personal clinical experience. And the fact that we have based in our faith in this technology and the value it brings to its patients have been able to grow the program. When I came to Ozone Park in 2005 the unit used to trade about 200 patients a year, we’re up to 420 patients a year now. And the Gamma Knife is unique in the sense that when you have a radiosurgery program there is some [turn] around Gamma Knife you actually have told the market that you are not in this just casually to check a box, you’re in it because you believe that you want this to be a powerful part of your new oncology platform. And that grows the new oncology program. It generates 30 to 40 additional surgical cases for my colleagues. It certainly generates a lot of referrals which changes the way the community views us and even though we are -- we don’t have to prove ourselves to anybody we had an MCI designated cancer center, we’ve right [DNCC] and guidelines. We pretty much tell North American physicians practices what to do and yet we believe that unless we are doing what we preach and project ourselves as such, we really cannot claim to be the thought leaders. And that’s been the reason why it has played such an important part.
And as I dive into sort of comparing for you as much as I can in fairly straight forward terms with various flavors of technology that are out there. I need to let you know that the one thing that I’ve gained for being in this business as long as I have in 11 years of residency and fellowship is that I’ve had the chance to work directly with almost every equipment from every manufacturer that you’ve spoken with or those speak to in the days that follow: Linac, very much of key part of what I do; Tomo, at the University of Virginia; Protons, at Loma Linda; CyberKnife in Houston; Intraplate Radiation, we do at Roseville; and rapid [ARPU] we have. So just so understand that this was not something that I find I read in a book and compare for you, this is something I’ve done hands on. And quite simply I get my coffee and my donuts a whole lot sooner when I’ve worked with Gamma Knife than with anything else, and for me that’s a body not a [indiscernible] but if I was I’d make my tea time more regularly if I’d get Gamma Knife radiosurgery. And I am not making liked of it because the member if I get out early so does my patient and it is a tremendous in position on a cancer patient to be in a hospital as long as they sometimes have to be for radiosurgery done in systems where the QA is day long, you start at 7 in the morning and you finish at 3 in the afternoon, that is not an acceptable situation, by 3’o clock in the afternoon we’ve actually treated five patients with the Gamma Knife.
In all [indiscernible] iterations also mention six versions of the Gamma Knife and all [indiscernible] iterations that has always done one thing and does it exceptionally well which is the ability to produce a lesion that’s just a few millimeters wide, rib precision of the [indiscernible] as millimeter anywhere in the brain and now beyond the brain with the perfection in the head and neck and areas that’s my [indiscernible] the only [red thing] at Gamma Knife in the world the model use we [indiscernible] in aftermarket Elekta would not provide us with a custom color I don’t know why but in the years the model 4C which came after that and the perfection. So all flavors of the Gamma Knife I’ve used but what is the remarkable about the planning system decades ahead of anybody else this is back in version two of LGP before there were even planning systems that were reasonable looking for any other kind of program for radiosurgery is that it has always allowed us to use whatever imaging modality we think is clinically best to the physicians to see the target we’re tracking.
To answer that question about MRI and what role it will play is quite honestly CT [indiscernible] CT even in the best iteration lacks the resolution that you need to distinguish tumor from normal tissue in situations such as say the liver inside a [indiscernible] orgasm separated by [indiscernible] that’s what MR combination with online MR with Linac will change. So its acceptance will actually be larger than most people dare to say in this healthcare environment you always make cautious projections because you wonder if people will be willing to spend the money. The bottom line is the clinical need will drive the [indiscernible] will drive my patients come and ask me why I don’t have a Gamma Knife if I don’t have one. So no matter what we think about it as an institution or as an administration the appetite comes from the -- and need and sometimes you have to make the long investment and most centers that are work their way will make those long investments so [indiscernible] guided Linac is available it will clearly win from an MR guided cobalt source device because of the speed with which the treatment will be done and it will clearly beat any device that has a lower strength magnet because unless you have a clinical usable magnet you can’t do. The Gamma Knife on the other hand has allowed me to use an MRI 1.5 Tesla, 3 Tesla what have you all along not dive down to CAT scanner because I don’t need the information from CAT scan to calculate how the dose will form and this was all at a very high level Monte Carlo verified which lets me treat fairly obscured targets, there is a lot of clinical pictures in my presentation, so that…
Why do I still stick with the Gamma Knife? One of the things that has never changed in all of the hydrations six generations of Gamma Knife and has not yet been achieved by any other radiosurgical system hence down especially for frame has eliminated from the construct. A frame being the rigid mechanical device that holds the patient to the delivery device is the third of a millimeter guaranteed precision out the door and Gamma Knife cannot be sold in the world unless it meets the 0.3 mm radio physical accuracy standard. My personal unit the one that we have at Roseville when it was calibrated, calibrated out at 0.19 mm, which means the weakest link in my delivery chain is my brain and the MRI scanner that I use. If I can think about what to treat patient has not with anywhere. If I can’t see what I have to treat there I have a problem and that’s really the determinant not to machine so the Gamma Knife automatically goes out of the precision equation.
If you look at the Brainlab for instance there is always this single variable that is doubted over a submillimetric but it’s one axis there are three axis of movement at the very least in a patient on a system without a frame and if you take the algebra [indiscernible] square of that it exceeds the millimeter but it’s all shenanigans done with numbers. I hear a lot and I’ve heard again and again and again about the CyberKnife not just in this market but in India where I often trial to help advice people where they should be going with technology and it’s a question of while they are tracking the position of the patient very frequently it’s [indiscernible] looks very sexy, it’s beautiful that they don’t know I’ve seen the CyberKnife evolve from where it made the wrong decision to turn the other way and made a hole in a dry wall to where it is now, very sleeping beautiful, wonderful looking 10 times, once every 10 seconds it verifies where the patient is at you can up that for the time the delivery goes up. So you keep an optimal number of cross checks going. But Gamma Knife runs in the industry standard CAN bus that’s what every smart car you drive today runs on you trust your Mercedes to do a hundred miles an hour in the highway because you know the CAN bus is controlling you.
10 times a second the Gamma Knife props back and forth so fully robotic device in that expression but essentially it has never been limited, we don’t need to verify the position once in a blue moon we’re checking it constantly in fact if there is a slightest and quarter difference the duration will be kicked out and the machine will stop treating. If there is any kind of alteration from what we intended certainly you can go away from [indiscernible] mobilization and I hope future versions of the Gamma Knife will offer that option just because sometimes the frame becomes a bigger deal the people than anything else to a surgeon it’s not a big deal but to a patient it could be. But remember that there are so many aspects to this that are not obviously given and the most important aspect and it would be hard to show but if you bear with me the red concentric circle and that blue line is good dose everything else outside is bad dose that’s the gradient how sloppy is it, how biggest stone do you through in the pond and how bigger those ripples that spread out because that’s how bad does is only going to cross complications and there has been absolutely no device capable of a better gradient than the Gamma Knife for all this time. Including the Versa HD, including the variations of the TrueBeam that are sold by Varian and any of the [Siemens CRT] so what have you.
So therefore in a department when we are treating a complex head and neck cancer that’s going up into the brain, we actually make a combined plan where the part and the face is treated with a LINAC because of the constrains of the perfection without an onboard image it sometimes requires that additional benefit that LINAC can give but once we get to the brain we switch to the Gamma Knife so we can get the tighter gradient [indiscernible] and we can combine all that. If you look at the real reason why is the CyberKnife not as precise it’s because in order to make that linear accelerator capable of being put on a robot that has a weight limit to it you eliminate unnecessary weight, the unnecessary weight in a CyberKnife is shielding. So the first thing you do is take off the [indiscernible]. The moment you do that you make this more likely that the dose will go scattering outside of your primary target region and that has been clearly shown not only does it come from the lack of shielding but as a result of all of this the dose that is coming to the upper [indiscernible] and basically if you are treating brain with a CyberKnife, you are treating much more of the body with scattered dose and lowest trigger there if the Gamma Knife perfection but a good LINAC is very highly shielded as well. So this is not a result of anything magical, it’s simply the byproduct of making the LINAC later light weight. Also to single beam the more complex the plan you make the more you demand from the system time will go up in the very first iterations lung cancer plans with a CyberKnife where as long as nine others.
We’re talking about a patient too sick to undergo surgery a chronic smoker. You really think that length of time is practical on the table, so that’s why the high energy LINAC solutions Versa HD and every variant out there lose out because it can deliver large throughput. So for us for instance this is a question we get to ask all the time. You’re about to reload your Gamma Knife resource once you rather get a CyberKnife we hear good things about it and the answer is pretty simple, I have everything I need to do outside the brain with the high end linac. A Gamma Knife truly complements the missing piece for me and then I don’t need these half solutions which don’t have. With TomoTherapy we could certainly treat multiple brain mets, but this is exactly what it is, the dose wash outside of the target it going to be much more diffuse than with the Gamma Knife plan where almost everything corresponding to light blue is tightly constrained around where you’re treating and then the very-very low dose disperses out and that’s exactly what we want.
So Helical TomoTherapy definitely produces longer treatment times and has more of gradient sloppiness and then there is the big flush enough frame or no frame and I can assure you that if and when we are able treat with the Gamma Knife without a frame. The frame will still remain for anyone with some of the really precise indications, small tumors in the ear canal almost functional patients with trigeminal neuralgia, tremors they will get a frame on. There could be possible larger tumors somebody who can’t tolerate the frame maybe offered the frameless solutions where I will voluntarily make my Gamma Knife a little less accurate and go closer to the exiting frameless solutions. There is no choice take the frame away and it becomes less precise.
If you want some millimeter you got to be based in a frame and certainly from a neurosurgical point of view we have no problem with that. Now remember that any system that uses photons from a linear accelerator for planning requires a CAT scan to calculate how dose will fall. There is way they do it. The Gamma Knife has always been able to work right off an MRI with the Monte Carlo verified algorithm that give doses that are within percent or what would be calculated the long and tedious way using a CAT scan, which therefore allows me to work on the kind of images like to see tumors on and the system to continue to do it.
With the onset along these high end linac which can potentially treat multiple brain mets there is also tendency to prove that they can and some other things come out one of the is this paper from a very erudite academic growth from San Diego where in a month pointed out that he could treat multiple brain mets in one session. Please regard that the fact that dose delivered to the tumor is 70% to 80% line therefore the 50% line represents half of that dose. This ratio volume is what we call gradient. Note that and then note this, this is a patient with 10 brain mets treated with the Gamma Knife and I put the otter most line at the gradient, intervene and brain is fair. The total amount of tumor treated in our those patients since I don’t have exact data I can estimate is around 5 cc to 10 cc of total brain tumor on the 50 cc organ the brain.
The rest of it versus also sloppy dose which is going to cause all the complication we’re trying to avoid. Our patients don’t die in six months anymore. We could get away with whole brain radiation when there was no body living to tell the tale. If the patients going to live beyond a year and that’s the expectation now, they will have side effects from wide spots radiation and the bottom line is that if you do it like this sparing that brain becomes possible and that’s why keep my patient safe, we’re going to apology to all the men in the room, this is a classic situation we spent more energy on prostate cancer, we spent more designing prostate cancer machine and when comes to the brain I treat the whole thing who cares.
That it shows you where we think from, it’s a very simple and I say this in my clinic all the time 55 gm have one over 1500 gm time and time again, but that is the story. I mean we really don’t when it comes to the brain I get the most resistance from my colleagues in sparing as much brain as I can and it’s a message that [indiscernible] very well with those of us who used the Gamma Knife. In terms of extracranial dose it’s been verified again and again that the Gamma Knife is primarily very well shielded and all the beams go inside the cavity, so very little scatters outside into the body. For me essentially, Gamma Knife is critical. It is evidence based. It has a long safety record. I have used it so long now that probably I am the wrong one to say that. I am too old to learn a new trick no that’s not true I know all the new tricks.
Simplicity in set up definitely makes a big difference for the patient. Efficiency and workflow, the new diagnosis that we can treat every time the machine evolves, I had new diagnosis saves a lot of time. It integrates into my environment and now over the MOSAIQ connectivity it is actually available to those in my clinic who don’t treat with the Gamma Knife, they can see what I was doing. Because otherwise I was off in a cave and they had to just ask me. Accuracy is still the best. And it is the single longest track record of doing this. Once the perfection came along, I did not have to stop treating this patient with a melanoma met, in the cavernous sinus, I could actually track all the way down from the top of the cancer along the nerve it was spreading into the jaw with a single session treatment field that you can see and it’s tightly wrapped like a sleeve around the nerve, cannot do this any other device, and we compare plans, some my head and neck group will often come and say here is my plan done with a high end linac and I my case it’s a true beam compare it with the Gamma Knife and run a plan and show me, and we can do that. And when we compared them side by side the decision clearly go with the Gamma Knife. Now we have both, so it just means where the patients go but you don’t have both you make a choice for the patient and for yourself, and that may not be the right choice.
We can also combine now with perfection, treatments of brain tumors and head and neck tumors from the same primary. In this case it’s a rhino site with multiple with mets, very first patient that was actually ever treated in Toronto at Princess Margaret. I was there mentoring them and this is what they pulled out. I said really guys, the first patient you want to do. No one has ever done this before. We want to start with this, and we did. And it worked very well.
So that’s the kind of comfort that this technology has brought to the neuroscience world. You can also use this, very effective for palliation, 89-year-old, clinic -- skilled nursing revenue, one treatment. No need for chemo, no need for anything else. We know we are not curing her, but we also preventing her from having a disfiguring tumor going out of her nose. And that was the idea. We can combine. We can take radiosurgery plans done with the Gamma Knife and match them to IMRT plans with the Linac for wider field treatment. So you don’t have to use one. You use the tool that’s best adapted for every task you do, and it’s incredibly efficient.
Once I have the frame on, and the imaging done and the plan in complete, this whole process would have taken me about 2 hours – 3 hours to complete. Usually with brand new sources it is much less. But every additional metastatic lesion I treat is only 15 minutes more with the same precision all the way through in one plan in one day. And so the more the patients present with more tumors and the more we tried it, as we see change occurs and how we think about brain mets, we stopped treating the whole brain which is the way it’s going to go in radiation medicine. Professor Evans can testify to the fact that more and more we treat smaller volumes to high doses everywhere in the body.
So it’s just a matter of time before we wake up and do the same for the brain. And once that starts to happen there is no question the technologies that provide incremental efficiency as the number of spots you have to treat increase, that’s going to be the way to go. And believe me to the healthcare industry to the dollars and cents guys, there is no difference in the cost. I charge the same for treating one met as 15. It only cost just my time and energy and so far physician time and energy has always been expendable in our healthcare calculation. So it’s going to keep going. We will spent more time, we won’t get paid any more to do this, but it’s the right thing to do. And therefore it will be done.
We also get bad comparisons, I mean this is rather effort to show that there are ways to do this faster. Somebody did this wonderful analysis comparing the Gamma Knife and set 20 minutes for a high end Linac to do what the Gamma Knife takes a 114 minutes to do on the patient, I think that is not even a metastatic patient. It is a completely different pathology, where the planning style is different. So I went and picked one from my collection that had 10 brain mets, 110 minutes to treat 10 brain mets, 11 minutes a lesion. And my source is this is only about 2 weeks ago. My sources at this point are half as strong as they’re when I bought them. So this with a brand new Gamma Knife, would be a 55 minute treatment, and it’s incredibly pain free for the patient to get out of the quickly, half an hour, we are off to the frame comes off, they are on their way home.
I have had people fly internationally after finishing their Gamma Knife. And as already mentioned a large-large number of papers, more than almost any other technology – and this yellow bar represents Linac radiosurgery of all flavors. If I split them up by technique you would have a very-very tiny bunch of yellow rectangles because these are not homogenous techniques.
They are all different. They all use a Linac but the implementations are very-very different. So no question that the Gamma Knife remains that uniform platform, and I will finish by just saying that no matter what indication you take, multiple mets, this is a good way to integrate the neurosurgeon, the oncologist, the radiation oncologist in one room, in Germany it would just be the neurosurgeon and the oncologist because they do their own medical oncology. We need three people talking. They need two people talking, but they come across, they come along together on the Gamma Knife doing a very good job.
Here is our distribution for just a five year sample, 600 odd patients, 1700 lesions, roughly 1.5 procedures per patient and 2.5 lesions per patient treated. So even though we write the guidelines and there is some artificial cutoffs in those guidelines, we have increasingly come to believe counting numbers as not important. What is important is you treat the patient based on how they are going to go. And you can see that this fear that Gamma Knife will make the cost of radiorsurgery go through the roof for our healthcare environment is misguided, misinformed and completely misrepresented, but no one asked me. And I don’t think anybody will, because I don’t matter. As I said my time is free, no matter how much I have to do for it.
What do I achieve in this process? I can promise my patients, almost everything I treat, stops going or disappears and a small number of overtime sale, but a very small number, but if I go back to the last slide, only one third of my patients ever need whole brain radiation. Which means two thirds of the patients are spared, potentially debilitating treatment; can you see the hollow blue with how often mammography should be done because we’re over treating breast cancer.
What’s the threshold of PSA for a biopsy should be because we’re over treating prostate cancer. Oh look at that guy’s, for over treating brains. And they ask no question about it. If we treat them the right way, we don’t have to treat the whole brain upfront which really for a cancer patient whose cancer has spread to the brain is a huge change in quality of life. No hair loss, no body image loss, you don’t even have to cancel too many in golfing teatime. And my patients do golf. And I have seen patients with whole brain who survived two years, who now find the one thing they love doing, they can't do anymore and they’ve beaten that cancer, but they are debilitated by my treatment.
So we can change things, one patient at a time, sometimes one clinic at a time, and slowly a whole bunch of us start to recognize that’s the way to go. And as you can see on the left, pre-treatment and post-treatment, the tumors disappearing and much more important, this is in the Anderson study, 50% of the patients treated with whole brain had some changes in their cognition, whereas only 20% of those who got radiosurgery, and in this case it was radiosurgery with the Gamma Knife. With surgery needed, here is a surgical cavity in the same patient and tumor that the surgeon did not want to remove my colleague so we treated both those areas and a year later they look identical. So we have actually eliminated the need for want in craniotomy. If it’s really needed, it needs to be done.
We treat brain tumors all the time and they respond beautifully. We treat pituitary tumors making the red zone of which is the high dose get more and more concentrated [indiscernible] right on the tumor about a third of a millimeter precision.
We treat benign tumors like meningiomas and typically if there is one thing you want to take back with you, the Gamma Knife still treats almost anything we treat to an 85% to 90% efficacy positive result with the less than 5% complication profile and you won’t fine numbers dramatically different by any indication. So it’s a good rule of thumb, again here 95% success, 5% patient still continue to go but you will see again and again left to right the responses that we get. We treat vascular malformation, they are not as dangerous as aneurysms but cause of normal vessels while we leave the normal brain circulation totally intact, going and removing the surgically carries a much high morbidities.
There are things that only Gamma Knife truly should be doing because with the frame we get the precision, you need to hit the trigeminal nerve for face pain and certainly when it comes to something like thalamotomy, there is a classic slide of professor [indiscernible] doing thalamotomy in his clinic. But here is what we can produce a lesion like that in the center of the brain, it’s very different from everything else we do. Here we basically destroy a part of the brain, ablated to remove the tremor causing nucleolus that is causing disabling tremor, why do we do it because we can do it successfully and these are sometimes that only patients who can’t get deep brain stimulators because they have a problem with coagulation [indiscernible] and why do we do this.
So here is the gentleman, all he wanted to do was to be able to write to his brother. This was his handwriting before the Gamma Knife and his problem was with the handwriting would often result in the letter coming back. So after his treatment, he was finally able to get letters out to his elderly brother.
Sometimes that’s all that matters, sometime all that it matters is I think go out with friends and get a meal. Here is a person who can’t eat socially because they are out in the restaurant and foods flying all over soon gentleman after he has had Gamma Knife thalamotomy can now show you with the pen that I can hold a fork to my face and I can eat food with friends again.
So at the end of the day, doing radio-surgery makes perfect sense for the brain. It always has, doing it in a time efficient manner is key, doing it in a manner that we will be always sure where the beam is as critical and doing it in a manner that integrates into rest of augment [indiscernible] I have is the reason why we still own one of these while we have everything else and that’s why any clinic that’s really trying to be a complete center. I don’t know why when it comes to medicine it’s always a choice. When you really need the right tool for right things. You can’t go to battle with half of your armory left behind but you can go treat patients with this or that.
We luckily have never been able to, I have never been asked to make that choice, in fact I made my carrier and choice was based on centers that would actually let me use both and that’s the place I would ever go.
Thank you very much professor Prasad and now we have come to the next business area in Elekta and we will introduce to John Lapré head of the brachytherapy operations in Elekta.
Thank you, Johan. I am excited to share with you some of the newest innovations that we developed in brachytherapy. What we have done in the last periods of time as took at our innovation themes, validate with our [indiscernible] leaders and customers and we came to five innovation themes that would relate to directly our technologies and one that has to do with our patient experience.
Treatment certainty, I will look go into detail because so much exciting things to share with you. Treatment certainty, workflow efficiency, how can we make brachy easier to use, access to brachytherapy which is anything from physical access, mark of access regulatory up to being able for patient to get somewhere where brachytherapy is given as a part of radiotherapy.
System integration, Todd already talked about looking up after Lotus to Mosaiq, brachytherapy is an integral part of the [indiscernible] care system. Adaptive combine therapy, we have heard professor Wenz talk about how you optimize radiation oncology imagine adaptive as part of what we see in our innovation themes as well and I said the patient’s experience, it is important to us to have seamless procedure for providing brachytherapy that the patient doesn’t get into situations that is difficult to cope with.
When you look at these six innovation themes and about what we have been doing in our world leading product portfolios innovations, you will probably recognize some of those aspects in all of the innovations.
Our applicators, if you go to the booth, you will see that that’s the candy shop for most of our customers. Lots of people looking around it, looking at things, watching things coming with a lot of suggestions, it’s always very stimulating for me to be there.
We have launched at Astro here two new applicators, one really looking at lung cancer and an another one which is improving imaging capability in a gynecological setting. We also have launched a dose calculation which gives for the future better way of calculating dose into the body, I am not going to go into detail you are welcome to join any discussions.
We have two integrated solutions, one I will talk about in more detail you have heard it already, the other one our prostate solution. Which is a total integrated solution with real time there, we have updated usability but also connectivity for our customers with their systems like ultrasound that they already have.
Flexitron, our versatile afterloader Brachytherapy uses the afterloader to give different types of treatment depending on the applicator that we use and our Flexitron is really our newest platform. It's setting a new industry standard in afterloading, it is safety for simplicity where we have now tailored to the needs of customers they can have a Flexitron with less channels if they only do simple treatments of brachy. We have a new interface where we have very good comments from our validations side and customers about the usability and how easy it is to use. We have many more of those aspects that we have improved.
We have also added Cobalt-60 as an option to this afterloader, to provide access anywhere whether it's a possibility to [indiscernible] Brachytherapy we have a new isotope that gives you the possibility to use Brachytherapy in a longer period of time as the same isotope. The important innovation that we just announced and skin cancer I don't think I have to tell you that it's a rapidly increasing form of cancer. In U.S. 3.5 million new cases a year, mainly you're here is an increase sunshine all those kinds of things. About 2% is melanoma and the rest the new melanoma skin cancer basically two big parts basal cell carcinoma, squamous cell carcinoma and melanoma skin cancer. It's growing rapidly, as you know you see it in the journals every time. And if you just look at it [indiscernible] and you look at a number of skin cancer cases it's more than all cancer cases taken together.
Typically the entrance point for the patient is dermatologist, and the dermatologist feels he can treat a lot of different skin cancer. So only the difficult ones are being referred to radiation oncology. But 1% to 2% of skin cancers and radiation oncology and the recent studies have shown that if you retrospectively talk to dermatologist patients and radiation oncologists that they should just -- in fact it should be up to 19% or 20%, this is a study from Toronto, more than 2,000 patients have been looked out.
So it's a huge possibility here to increase the role of radiation therapy. We talk to patients a lot and what you get back from patients was I wish there was another treatment option on surgery, 70% of the non-melanomas skin cancers are scooped out by surgery scarring, a lot of these are interface, elderly people, people in [indiscernible] typically not able to do a lot of these types of surgery. But the dermatologists are one of the stakeholders, didn't have or will other treatment options.
Radiation oncology had a treatment option for instance electrons but also HDR Brachytherapy. HDR Brachytherapy is a good treatment option for skin cancer, provides a lot of local cure over 95% of local cure. So what was the problem, the patient is here, radiation oncology has to [indiscernible] bunker and we needed to make sure that somehow there is a breach, needed to make sure that the patient was getting a non-threatening treatment experience, dermatology should get to scooping or surgery and radiation oncology should be able to provide the best treatment option, which is also published outside of surgery the best treatment option for non-melanomas skin cancer would be radiation.
If I were a background in HRD Brachytherapy we developed a stay, [indiscernible] is HDR Brachytherapy where we developed specific applicator based on our HDR experience with skin treatments. We develop a dedicated machine, simple to use and made HDR Brachytherapy more accessible. Why? The key element is here, this uses a non-high energy, it's lower energy non-radioactive treatment, it's an x-ray based treatment.
Why is that important? It's using 69 KV, it doesn't require shielding, so now you can take this treatment option that radio oncologist have and bring it to where the patient is towards dermatology.
Unidentified Company Representative
So, where are we now? We are basically -- we have launched Esteya, we have first patient treated in Spain and I am very proud to say that the patient came in close on like you saw in the video and was out after treatment within 15 minutes. So it gives you the possibility to treat a patient quickly have a high throughput which is unfortunately needed given the rising incidence and the large number of patients that will come but it fulfills the expectations of being very user friendly the patients themselves didn’t feel threatened by the treatment and it was easy to use. What you can expect from us from Esteya as I said based on our long experience in [HDR Brachy] it is easy to use, it has all the requirements, wherever needed we can complement that with other safety features like a door lock if that’s need in principal disease as I said low shielding so it’s not required but people can of course rely on our long standing Brachy therapy experience if needed. It will be a comprehensive service program, it will be an education and training program integrated with our offering and it’s a great opportunity to bring radiation oncology surface to bring the [cosmesis radiative] therapy provides with the effectiveness to where the patients are with the dermatology in a non-threatening and non-scaring kind of treatment.
What we see at the [indiscernible] is a lot of traffic, lot of people very interested very good comments even beyond our expectations we saw people had never even had radiation therapy really close to the Brachy therapy close to the come [indiscernible] non-Brachy users, Brachy users but also other people around. So we’re excited about this new treatment. I am excited as well it’s how first steps out of the bunker [indiscernible] like that see many more as Prf. [indiscernible] also indicated possibilities with these types of technology to further enhance that and I am proud of it because we built this machine basically up from the start no components we’re taking from somewhere else it is a complete design that we did ourselves with that I’m standing [indiscernible]. Thank you for your attention.
Unidentified Company Representative
Thank you very much John. And now we have the final speech for today representing Elekta North America, Executive Vice President, Jay Hoey.
Thank you, Jan. I guess I am I am the totally non-technical guy this morning first Prf. [indiscernible] for physical précised thank you so much those were excellent, excellent speeches and I am professor beside one thing I’d like to say to you is since January 1st when one of our industry vendors decided to convince a few Congressmen on they hear about a LINACA in a Gamma Knife were actually the same thing. I have spent about a dozen trips up there trying to convince some other guys and all I can say is I wish would had you with me on those trips that was just excellent, that really what it helped.
All right. Change gears here a little bit we’re going to talk about North America. So let’s define North America as far as the way Elekta looks at it. [Indiscernible] in Canada, United States and Mexico and North America that’s about less than 10% of the world’s population yet there are over 30% of the world’s radiation delivery devices. I believe that this point there is about 2,450 cancer centers in North America that actually provide radiation therapy services and that include about 4,000 machines. So that’s what the market generally looks like. Are we look at it as [indiscernible] markets, Canada, United Sates and Mexico, Canada about 34 million people the incidence of cancer there is about 0.5% and I think Tomas mentioned earlier 32% of those patients we see radiation therapy. There is a national initiative underway to increase that utilization to 50%, so they need more capacity.
In Mexico there is a 115 million people yet they only have 100 or so radiation treatment devices in the whole country. [indiscernible] reported incidents of cancer is just 0.1 1% now obviously that’s wrong and what it really means is they are lacking the infrastructure and the surveillance mechanism to actually even track the cancer that’s in that country. So there is a vast need for improving the infrastructure and building up capacity in order to get this life saving treatment to them. United States, obviously it’s the biggest [indiscernible] on that block [CAT sources] and Europe is about point 46 point 5% and in the United States I think Tomas also mentioned over 60% of patients that have cancer actually receive radiation therapy.
So if we look at the overall market in general we say in North America it’s a replacement market. Probably 12% or less of the treatment delivery units that are sold each year are what we call new machines and when we say new machines that means machines that are either going in to existing cancer centers to increase their capacity or brand new cancer centers. And the fact is of that 12%-13% the vast majority are going into existing cancer centers just to increase their capacity. When we talk about the drivers in North America there is usual suspects in terms of increased population, increased incidences or what not but the other two things that I think are unique to United States recently or one that actually not recently I think Tomas you might have said or maybe was actually [indiscernible] I can’t remember any more.
Technology is important in the United States, new technology, especially in the United States. And the other thing that’s we’ve seen in the last several years is a growing trend towards larger, more complicated, more comprehensive system orders and contracts, partnerships. And I’ll briefly touch on a couple of points that I think are driving that. If you’re in a healthcare system and your objective is to have a world class comprehensive cancer center then when you’re looking at this technology the issue is in which technology should I get, which one should I get in, you need all of them. Because you’re going to see cancer patients with many, many different indications and you need the best tool to treat that indication. We need all of these solutions, not just one of them.
Secondly in the United States, innovation is important when you’re purchasing this equipment your expectation is that it’s going to last for a decade or longer. You’re looking for a vendor a partner that you want to have confidence is going to there, pushing the state of the art. They to know that you’re committed investing the recourses and R&D to make sure that they are not left behind as the years go on and in the United States especially they want to be sure that you’re actually innovating, not just following.
Technology in of itself though isn’t the first solution. This equipment is complicated we’re looking at uptimes beyond 99% on the equipment side and for the IT side a 100%. And what that means, means is you really need superior support we’ve invested a lot of money in North America over the years in service organization and we’ve been seeing the results of that in the last few years on industry surveys, independent industry surveys that consistently rank Elekta number one in virtually all of our product categories, brachytherapy, treatment planning, information systems, neuroscience, and linacs but beyond just support education is important. We have been growing a lot in the last five years in the North America to the point where last year we had moved into new facilities because of our size.
But in preparation for that and I think it’s been all the two years in the marking I’m looking at Christina that she was part of this whole thing. We had a vision about education and we started planning. We knew we’re going to have to move and instead of just moving offices we made sure that we have the space available to build out a new world class education facility. We moved into the new facility I think in December and we opened the doors to our new education centers just few months ago, we call it LINC the Elekta Learning and Innovation Center and our view of LINC is that it’s linking our customers to Elekta and our technology and it’s linking our customer with the each other because that’s where we will continue to move this discipline for us to collaboration and communication.
And as Tom has mentioned we are having our formal opening of the LINC facility tonight this evening in an open house, I am not sure if any of you going but we’re really excited about it. All right, the only think I would say about reimbursement other than the Gamma Knife which we already talked about is that now we really know what exactly is going to happen, but in the future we all have our ideas. We do think in the next year with this proposed rule nothing drastic either way is really going to happen as far as how it intact us in the short term and that’s something really changes during the common period, but we don’t see that happening. We probably all know right now that the original proposed rule that came out actually increased the Gamma Knife reimbursement. They then made a change and brought that back down, but it’s still significantly higher than what it was as part of the fiscal cliff though so that’s should help.
The medical device tax, yes we’re starting to experience it, this is the first full year that will have to be accounting forward. Fortunately for us, we all know it was coming with Versa HD, we’re seeing generally higher average prices but we’re also spending a lot of time and resources in trying to become more efficient so that we minimize the impact on our operating margin. So, the result of new technology innovation broader product suite excellent service, education -- we continue to twiddle away at market share. Today, we’re about 13% of the installed base is on our treatment delivery devices. We have much higher installed base on our software in our brachytherapy and that installed base is hard to grow. Remember, I said the 400 machine so to grow 1% you need to up the installed base in 40 machines in that so that’s not an easy fast thing to do, but we continue to make progress.
I think more importantly as if we look at the new treatment delivery system we purchased each year of course we continue to gain market share. I think 5 or 6 years ago we were probably a little bit below 20% now we believe we’re something on the other 25%. So in summary, we do think North American the underlying growth mechanics are still in place. We’re still looking at probably mid-single digit growth. We think we will continue to do modestly better than the market grow and we continue to focus on comprehensive solutions as we see larger systems coming into play with the ACoS growing. The [indiscernible] legacy system 400 or so seems linac still offering North America and some them are fairly new but we continue take our share those as they replace, and finally just to continue our leverage strong footholds in both brachytherapy and our oncology information system installed base, that’s all I have. Thank you very much.
Unidentified Company Representative
Thank you very much (Jay) and that was final part in the second session for today. So we will have a final Q&A session so I welcome Tomas, professor Prasad, Jon and Jay to the stage and as you know we’re running a little bit late in the schedule so let’s have a little bit shorter Q&A session and if you can have one question per person and then we’ll have lot of time afterwards to continue with questions to the management teams, so Justin?
Justin Morris - Bank of America
Hi, I am Justin Morris from Bank of America. I just had a question on the electronic brachy obliviously the technology seems to be around for a while and I am just wondering obliviously I appreciate having low shielding requirement means you can maybe have it in a dermatologist office, but I was wondering, are there any other regulatory barriers which prevent the dermatologist from practicing brachytherapy because I guess maybe that’s the real barrier to adoption as it began dermatologist wants to keep the revenue for themselves and to the [indiscernible] refer onto an oncologist?
Yes, I think that’s an excellent point and I’m not going to into detail on the technology, we can have off line of increase may technology advancement here and for us it’s a key that it’s electronic brachytherapy, which means radiation oncologist needs to be involved and we will not give it freely and blindly in the hands of dermatology. What we intend to do is bring radiation oncology services to the dermatologist and I am pleased to say that in the discussions we have in the booth already, it’s starts to become unnatural almost and we have experience in that as well because for our prostate solutions, it’s the urologist working with the radiation oncologist as well.
So we feel confident that this will happen. It is a mindset with the dermatologist. It’s the mindset with the radiation oncologist. But there is something in it for both, including the lesion, identification, and for instance the contouring of the lesions for the dermatologist; the treatment is given by the radiation oncologist. So it is a new treatment option. It will take time to further develop that. But we are confident that this will happen.
Just, a quick followup. Beyond the mindset, I guess, are there actual regulatory barriers in place? Could you maybe just briefly talk to what those are?
Unidentified Company Representative
It depends by, let’s take U.S. by state as well, and as long as we have the radiation oncologist as the key end from this point, with this technology, then there are no regulatory obstacles for this part. The shielding requirements, in some States they don’t need shielding out of State, well you might need out of the room. That can all be accommodated.
Unidentified Company Representative
Okay, next question.
Amit Bahl from Citi, just a quick question for Jay. Jay if I look at your installed base versus new order market share price, it looks like the vast majority of your share is coming from the Siemens, that 9% numbers all transferring to you. Can you just explain a little bit how you are capturing all the Siemens share and how that’s going between and Varian?
We are not capturing all of it, that’s for sure, I wish. But you know, one thing that’s going on is the installed base of Siemens machines in North America, virtually all of them have our software connected to them. LANTIS is really a legacy IMPAC software system, and in fact up until the time they signed their agreement with Varian, they were starting to sell MOSAIQ. So back as I said, an easy, putting the door sort of this big, is very little they have to do in order to switch service to us. And then therefore then when we were talking about replacing Linacs it’s just one less obstacle we don’t have to overcome. What’s happened recently is with the Versa HD introduction, that’s kind of changed the game a little bit where if you look at the spec prospect kind of comparison between the various Linacs out there now, to be comes out on top on a lot of them. So that’s really helped out as well.
Unidentified Company Representative
I have two questions for John. You mentioned before with HDR Brachytherapy that the economics are interesting. Just curious if you can provide some more details what you mean by that? And I think that was for the purpose of the commission, right, when you mentioned that? And then secondly for the purpose of Elekta, how would you sort of make money out of this, specifically? Is it really a profitable business? Because as mentioned that the sales point is quite low. You have to sell these machines, so technically the sales rep or the service person spend a lot of time, going to location, servicing someone when indeed you could actually be servicing Linac. I am just curious, what sort of margin business, as it seems to me it’s quite low, but maybe I am incorrect.
Unidentified Company Representative
I will start with the first question. What we see on the economic profile is the treatment time including set up is 15 minutes. So the throughput of patients is very high. The tube time, we guarantee the tube for 4000 treatments. So basically if you look at the total of the -- and if you calculate the patient throughput, it becomes very attractive. Because reimbursement is based on electronic brachy which is even higher reimbursement than HDR Brachytherapy at this point in time with these electronic brachy. So that’s why we claimed that the economic profile is very interesting. The guaranty, as you said, the source, for 4000 treatments and having the service contract in place. The service part, you don’t have to have a service engineer coming every time. We have an automated QA check. That is done every start of the day, probably 2 minutes. And then if there is a need for the tube to be replaced, that’s where the service engineer will come and check on the machine. So I don’t think there is a lot of extra cost compared to Linac or even HDR brachy. You know with an HDR brachy every three months you have to replace iridium source, and the service engineer has to come there. This is a different type of service that you have to give here. I am not going to talk in detail about margins et-cetera for this machine. But we have invested in this technology. We have a business case, and [indiscernible] see this as a very favorable business region.
Just in the margins, could you highlight whether it’s a, if you look at the old Nucletron margins, is this above the average margin business compared to the traditional nuletron.
Unidentified Company Representative
Unidentified Company Representative
Okay, next question, [indiscernible].
Unidentified Company Representative
I am [indiscernible]. Just a follow up question on Michael’s question regarding the economic positive profile; is that compared only to traditional brachytherapy or is it compared to other modalities because it’s suppose that if the dermatologist do the sort of take out the bad part, they will also receive quite a lot of reimbursement for doing some reconstructive surgery afterwards specially if it’s in the phase for example. So is that taken into account when there is look at financials?
Unidentified Company Representative
Yes, we have looked at those parts and unfortunately for dermatologist scooping out is indeed, he doesn’t get a lot of money for that. Unfortunately for the patient reconstruction is sometimes needed. There is reimbursement for that but that’s not always the same dermatologist by the way who has to do that. If you look at the different parts of what you say good in mole surgery etc, you still see that this is favorable also if we can get the right partnership between radiation oncology and dermatology to flourish. Radiation oncology is of course the one that can gain a lot because they see many more patients that they can treat and dermatology still have a highest throughput for the patients compared to the original surgery or even mole surgery. Mole surgery can take up to six hours in a most surgery in their hand.
Thank you, short follow up with that. We heard I think it was professor Wenz talking about the intra-operative use of the electronic practices, is that something you are looking at and given the design of the system it’s not possible to issue?
Unidentified Company Representative
As I said I am excited about this because this is our first step out of the bunker and obviously IORT is something that happens if we want to make a bigger outside of the bunker. Should be based on [indiscernible] base, low energy which this provides and I will discuss a bit more with professor Wenz about the views and the plans that he has when he saw this device. We don’t have any [indiscernible] on it.
Do we have any final question?
Thank you very much. This question is to professor Prasad. My question is obviously your [indiscernible] of Gamma Knife supported by you know the excellent clinical data that you have gathered at your experience, I am imagining the U.S. neuro-oncology, neuro-surgical community is relatively close net. So I wonder if you could help us understand, are they any of your colleagues that have decided not to recharge their [indiscernible] and then move away from traditional Gamma Knife in the lower reimbursement [indiscernible] for other stereotactic approach and if that is the case, what are the key arguments they give you and for that [indiscernible].
Unidentified Company Representative
I don’t know specific cases but there is no question that as I mentioned earlier some of the modeling in the market was based on exiting used cases that is changing. The moment the radiation oncologists are fully invested and recognizing small filed and treating and the part it’s not part of that stock is not coming from me or the nurse neither the neurosurgeon and me nor that [indiscernible] is driving this, it’s coming from medical oncology. They are more and more coming up for the biologic agents, melanoma is a big case there, it’s a nice paper for [indiscernible] has completely changed the survival of these people. So where the competition is now going to be is whole brain versus biologics leaving the room for radiosurgery to actually grow.
So in this short period while reimbursement is affecting people, it may delay there -- I think I have a Gamma Knife and I wasn’t approved sort, you know I was not a hard time champion, would I talk it away? No because I can always extend my reload timeline and let my case to run a little longer. So I suspect a lot of people who like using the Gamma Knife and I opt for reload will not decommission but they will probably say let’s delay two years and see if its pick up and then we’ll reload. In the meantime, I think both the volume will drive the change and the fact that we’re negotiating to get the reimbursement back where it really should be, because that will get connected. I mean so by the way it doesn’t affect everybody but APC exempt institutions like us actually had an uptick in our revenue.
We’re exceptional because we’re in social security exempt and we therefore were given actually a benefit about $1000 odd per case which actually was good for us. We’re fighting to get the same think back for everyone who is part of the APC technology. So I don’t know specific situations. There is always competing factors. I know one institution whether the recruited chair of neurosurgery had been trained with a colleague who developed another technique and therefore their machine out much [indiscernible] everybody else. So political stuff will happen in any institute but I don’t know if this will change someone who is about to reload this here or that that and next year all they will do is slow this down. They won’t get rid of the machine. The machine by itself still is very appealing especially they have I mean perfections are not quite ready for reload yet.
We are up for next year so as you neighbors down in [indiscernible] those are things that will happen. When we’re not changing [indiscernible] not APC exempt and they’re not changing their track either, so those colleagues I speak to regularly haven’t seen a shift. But I am sure there are people who have always been [indiscernible] maybe because they could not really build the market they want to and I think that any technique you heard from professor Wenz and you heard from me its very clear. If you have a clinical champion in the program survives and does better, but there is a lot of programs that do very well despite not having just one real lead person, and then there are those that didn’t project their market correctly and suffer but that’s true for any technology.
I think we have a final question from Veronica.
I am just wondering Jay if you can comment it on all CapEx environment and as you think about accountable care coming into effect to the U.S., who knows what's happening with volumes, everybody has a theory there. But if you have a sense from the ground as to what's happening to replace [indiscernible] think about 2014 and 2015, what it is that you're exiting?
Unidentified Company Representative
For the treatment devices you can kind of just look at the last, probably if you go back seven to 10 years maybe early 2000 with the exception of the dip during the recession in general the U.S. market it's 250 kind of machine, 300 machines a year, 300 to 350 machines a year. And it boggles up and down, but that's really what it is and we don't see that changing, we really don't, that really looks like what it is in the foreseeable future.
In fact IMD just came out with their 2013 report and that's one of the questions I asked what you are buying look like in the next three plus years and I think that number came out to 330 machines a year.
Unidentified Company Representative
So thank you everyone I will give the word to Thomas for some final remarks, we'll also remember that we have both [indiscernible] today, we will start at 1 o' Clock at the Elekta's booth at the convention center. So please be there and we will show you the new things we have in the booth this year. So with that I will leave the word to Thomas for final remarks.
First of all Thank you so much for coming here and spending actually three hours plus with us, but I wonder that we have to summarize as you can see as a corporation we have innovate, we have patient focus system and clinical solutions where [indiscernible] so whenever you look into our different product we always have patience and focus and that is I would say either proof also some request, so we contribute value to the patient to the society? Absolutely. The other thing I want to say because I had the privilege to do in last two weeks actually to interact with 1,700 of our users, 500 in Europe, 1,200 here in users meeting. And is very encouraging because I had that opportunity, within two weeks I could do that. It's no question about this that we have extremely good support from users, strongly see what we're doing is really right for the patient.
And what is really right for the patient is also really right for our shareholders, because that will support a sustainable, profitable, growth company and that is what Elekta is all about. So thank you much for your attention and we're much looking forward to see you soon again to listening into other new things which will come up from Elekta.
So thank you very much and enjoy also.
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