ABIOMED Inc (ABMD) 2002 Q4 法說會逐字稿

Good morning ladies and gentlemen. Welcome to the ABIOMED quarterly earnings conference call. At this time, all participants are in a listen only mode. At any time, you may press '1' to get into the queue to ask questions at the end of the remarks. You may only ask questions via telephone. If anyone should require assistance during the call, please press the star followed by the 0 on your touch-tone phone. As a reminder ladies and gentlemen, this conference is being recorded. I would like to introduce your host for the day's conference call, Mr. John Thero, Senior Vice President of Finance and Chief Financial Officer. Please go ahead sir.

I welcome everyone to ABIOMED's Investor Analysts conference call regarding the results of our fiscal quarter, fiscal year-ended March 31 2002. I will introduce, I am John Thero, ABIOMED's Chief Financial Officer. I am joined today by Dr. David Lederman, ABIOMED's President and Chief Executive Officer, also by Dr. Edward E. Berger, ABIOMED's Vice President responsible for Strategic Planning including responsibilities regarding Products Reimbursement, Eugene Rabe, Senior Vice President responsible for product sales and marketing, and Dr. Robert Kung, our Senior Vice President and Chief Scientific Officer.

Our agenda for this call is in four segments. First David Lederman will cover operational highlights including an update of AbioCor clinical trials. Second, Eugene Rabe will comment on our BVS sales results, and third, I will make some comments and provide some guidance regarding our financial performance and then fourth, we will open the call to have questions from analysts. Before turning things over to David Lederman, I should caution our investors that this Conference Call will include forward-looking statements covering aspects of ABIOMED's plans, objectives, expectations, and intentions and particularly we will make statements regarding the potential timing and results of the AbioCor clinical trial and future levels of company's revenues, expenses, and cash. These statements speak as of today only. ABIOMED's actual results may differ materially and are subject to numerous risks and uncertainties. May this risks ABIOMED's filings with the SEC and investors are urged to consider these risks and caution not to place them to rely on these forward-looking statements. Now let me turn things over to Dr. Lederman for comments. David.

Thank you John and good morning everybody. I am going to really focus on the AbioCor's trial. Eugene Rabe, as John mentioned will, address formally the busiest business progress and then after John completes with his formal statements, we will open it up for Q&A.

What I would like to start up with regards to the AbioCor is to tell you that this has truly been at its first stage has been improved and the most rewarding for me and I think for the entire team of ABIOMED, in terms of medical achievements by our team. At the same time, it has been the most frustrating and painful perhaps in terms of the unsure market conditions are the corresponding lack of correspondence between our trial success and the recognition that the market has given us for the success or lack of recognition. Let me try to focus on what the data shows about the trial and what it's start up is and again I am going to go over it because I have perceptions about what has been achieved and where we are. So, I will take a little bit of time to summarize where we are.

Number one, six teams have been trained and are ready for AbioCor implants in the United States. One team has been trained in Europe and a second one will be trained by mid June. Seven patients have been involved and implanted at four US centers. Five patients have actually been supported with the AbioCor. The support duration has ranged from 56 days to 245 days and by the way this is ongoing. 245 days is approximately 42 million beats. There are two patients alive. One for over eight months and the other one for six-and-a-half months. In terms of technical performance, I have to tell that it has, the AbioCor has far exceeded my own expectations for the initial patient group and I think those of everybody else for we comprise it. The cumulative support duration has been approximately 2.2 patient years or 786 patient days and again, I think, it's important technically to tell you that about a 136 million patient beats and nearly five billion revolutions of the AbioCor engines in these patients without malfunctions. We have efficacy of the systems for those patients who have successfully proposed it and I have to limit my comment to what has disclosed for the public, but I want to that number one, no patient has died from a device malfunction and second significantly the support has been effective in all patients without exception. There has been no device related in friction or sepsis. This is very very important, because I want to remind you that long-term devices that do not have a confirmed system that does not peels the skin have not stayed well with regards to and friction.

The AbioCor has maintained normal circulation for life. Despite the occurrence of very abnormal physiological conditions in many of these patients, that they have been encountered that . Four of these patients have been ambulated and they have been walking alone. Three actually have multiple out of hospital excursions and this is in excess of 53 outside of the hospital excluding those patients who have been discharged. Two of the patients have been discharged and one has been discharged for home. This is the first ever one on the electrically powered total Implantable Replacement Heart. This is in fact the first ever of on artificial heart.

Now more specifically, among the patients reported, Robert Tools, who was first patient lived for five months, 151 days and died for bleeding after having experience of stroke. Tom Christerson, patient number 2, implanted at Jewish Hospital in Louisville, Kentucky today has been supported for 245 days. As I mentioned before, it's more than 8 months. He is living a very satisfying life. He is engaging in routine daily activities. He plays cards with his friends. He . He dines in and out. He has been discharged almost a month and what is more significant is that he is living at home with the support of his family without any support from ABIOMED or hospital personnel except for the fact he does come back on a weekly basis to do for medical check up. Two patients, one supportive of UCLA and one of Texas Heart, we supported one for 56 days and the other one for nearly five months who are no longer alive. On our fifth patient, James Quinn, who is alive has lived now for approximately six-and-a-half months. He has been discharged to an out of hospital facility in a hotel, but has also been readmitted due to pulmonary disease. They were immediately postoperatively. One was due to what is known as an intraoperative coagulopathy which basically means uncontrollable bleeding and the other which was more recently performed on April 10th, died from pulmonary competitions attributed by the into a drug reaction.

In terms of complications, clinical complications, we have not encountered severe for any patient supported for the first 60 days. Two patients did experience strokes that were severe and the third one had a list of neurological event that results. Two of the patients have suffered non-neurological complications. The current status of the trial: The trial is on, it has been on, and from the point of view of FDA it has not been stopped contrary to what some, I think, somewhat , but not intentionally reports in the media. We activity primarily during the months of January, February, and March of this year. What we were reviewing is the clinical data, reviewing the cause of those two patients who had strokes, any patients who have been in neurological event, and while we discuss the data with both our clinical collaborator and also with the FDA. We found that we have stated to the public that there was a potential service , which is a component that is external to the AbioCor Heart, but a part of it is for the attachment to the atria to the upper chambers of the heart and this part has been identified as . At the same time, I would like to point out that we have patients who have separate non-neurological events who are living with systems that have these components. This is part of the reason why we wanted to review very carefully the clinical data and what the data shows that even if this part was not removed whenever the patients can tolerate well the indicated anticoagulation therapy, they remain free of strokes or complications. So, again our effort is on trying to remove any potential force, but at the same time, it is important to note that if the patient can be properly and therapeutically maintained on a reason level of anticoagulation comparable really to what recipients receive, then even the presence of that component is not likely to create adverse neurological effects.

Now, I want to say something about trial enrollments. We entered this trial with a regulatory strategy that allowed I assume those of you who know us know that we are first very open with the FDA and second that we are very strong on conducting a clinical trial openly with the FDA and also being flexible enough from the beginning so that we can assure ourselves that even if we make changes the endpoint, which is not a regulatory milestone but really commercial entry is not delayed. As I stated before, we have discussed the status of our trial with the FDA regularly and we have made a number of refinements so of which are as a result of our . Now, given our vastly increased knowledge about the clinical performance of the AbioCor, we are today far more selective and this is primarily because of success we have raised at par on our immediate clinical and regulatory is now not only on implanting and supporting life on a patient but also in discharging them home and proving the world and to ourselves, to ourselves and to the world perhaps in that order, that people can lead a reasonably normal life after the removal of the natural heart and the placement of the AbioCor. This is critical for our commercial future. Now, I want to reiterate that this mid-course correction, if you want to call it or strategic refinement as been created by the fact that patient No. 2 hasn't able to go home and based on what we see the technology can do for our patient like him. We have, again I want to stress that we have raised at par and we have fit our focus on discharging patients home as one of the primary objective of the trial and I should tell you that this totally and , if you look at any technology in the past even if there ever any that is as substantial as this one after removal of the natural heart that few have been able to achieve discharge to home of a patient into our clinical trial.

I want to conclude by saying two things. No.1 that in a presentation by Dr. Robert Dowling from Jewish Hospital at the recent meeting of the American Association of Neurological Surgeons, we drew thousands of clinicians and , Dr. Dowling pointed out No.1 that this technology and this patient would not have survived any existing therapy. No.1, he explained how remarkable the performance has been, he indicated that this may become the therapy for this patient and in response to a question addressed to him, he pointed out that at this point in time, the relative number of patients that could benefit from the AbioCor versus any other therapy is likely to be known only when both are available clinically because clearly many of the, most of the patients, not most of the patients all of the patients that we have supported so far would not have survived any existing therapy. I wish I could play back his talk and the comments that he made after his talk. I hope some of you were able to attend the meeting. I want to say personally that from my point of view and from the point of view of the company we are more confident than ever that we will succeed and we are very confident that despite the slowdown in patient enrollment, we have a strategy that will bring us through AbioCor sales in the USA clearly in calendar year 2004. Thank you. I would like now to pass on the mike to Eugene Rabe, our VP for Sales and Marketing.

Thank you David. Good morning everyone. I am very encouraged by our fourth quarter results. It clearly was the best quarter that we have had with our BVS business and this is even more true when we recognize that most of our revenue growth came from shipments of BVS Blood Pump whereas our best quarters in the past have often reflected significant sales of BVS consoles to new customers. Our BVS product revenues for both Q4 and fiscal 2002 were record levels. As I look back on this past fiscal year, the fourth quarter revenue increase is particularly gratifying. You all recall that we had a good first quarter or June quarter followed by a disappointing September quarter from which we rebounded in third quarter and then with a very good fourth quarter. It certainly to our revenue growth in the past quarter and fiscal year was not only increased shipments of DVS Blood Pump in the US, but also increased sales internationally led by Europe and Japan. In Europe, over the past year, we assembled a nucleus of a very good sales and clinical support team and their results are beginning to take hold. In Japan, regulatory approval for the BVS was obtained in late calendar 2001 and earlier this year, we received notice that the BVS will be covered by medical insurance in Japan. In both Europe and Japan, there is considerable work to be done to introduce and train cardiac surgeons on the BVS, but these initial results are very encouraging. In US, the use of the BVS has somewhat flattened out with respect to our historical core market of postcardiotomy support. However, as a result of an effort started a couple of years ago, we are seeing increased usage of the BVS for patients with AMI cardiogenic shock. This, more recent area of growth, could provide much larger area of BVS usage than our historical core market, which requires us to become more involved with cardiologists in additions to cardiac surgeons. I continue to feel privileged by working the many experienced and knowledgeable people in our clinical, sales, and marketing group. I thank them for all their contributions over the past year. It continues to amaze me, how dedicated they are to our business and to the life-saving support of the BVS. We begin our new fiscal year with optimism. Thank you. John.

Eugene, thank you. Before turning things over to questions and answers let me make a few comments with regard to our financial results. As Eugene indicated, our product revenues while variable throughout the past year achieved record levels for both the quarter and year ended March 31, 2002. All of our product revenues were derived from sales of our BVS cardiac system to existing at new customers. These product revenues totaled 6.9 million in the quarter ended March 31, a 17 percent increase over product revenues of 5.9 million in the same quarter last year. For the fiscal year ended March 31, 2002, product revenues were 22.5 million, a 2 percent increase over product revenues of 22 million even last year. The increase in BVS revenues primarily reflect increased shipments of BVS Blood Pumps while revenues grew to 9 percent to total product revenues in fiscal 2002. The United States remains our largest market for the BVS. In the US, the BVS continues to be the most widely used product in its markets and we believe that we are well positioned to maintain this leadership position based upon a number of factors including the BVS' proven life saving record. It is easy to use in its flexibility in supporting a broad range of patient population. The growth of BVS product line is likely to come from increased use of the BVS in the US particularly related to AMI cardiogenic shock patients and from international expansion. Internationally, while we anticipate continued growth, our new efforts in Europe and Japan may still require some time to take further route before growing more substantially. Revenues from funded research and development were approximately 400,000 dollars in the quarter just ended, which is consistent with the earlier quarters of the fiscal year we are just ending and reflect our temporary focus away from government-funded research and development while we concentrate on the AbioCor clinical trial provided that the AbioCor clinical trial continues to demonstrate positive clinical results we may renew our efforts in funded R&D with initiatives in new but related technical areas prior to the end of our new or current or ongoing fiscal year.

Our cost of product sold as a percentage of product revenues declined in fiscal 2002 resulting in an increase in gross margin from product sales to approximately 68 percent from 67 percent in the prior year. Research and development spending in the fourth quarter was relatively consistent with the prior quarters of the year just ended and totaled 29.5 million for the full year. This 29.5 million included approximately dollars related to AbioCor development, manufacturing, and clinical trials; 2.5 million related to developing an implantable pipe in heart based upon the technology we required from Pennsylvania State University; about 3.5 million supplied to related to BVS and other products and little over 2 million in the amortization of intangible costs associated with technology. We have about a year and half remaining for these. Intangible costs have been fully written off. The primary increase in R&D spending between fiscal 2002 and fiscal 2001 relates to clinical trials for the AbioCor full versus half year spending related to the Penn State and increased amortization of the intangible costs described above.

We anticipate that our R&D spending for the coming year will be on par with our R&D spending levels for the year just ended included in that spending will be significant emphasis on continued refinement of the AbioCor and further expanding our AbioCor manufacturing capabilities and manufacturing and validation testing of the smaller sized Penn State . As we look beyond the coming year or the current year, we hope to see some reduction in R&D cost as the amortization of intangible costs associated with purchase technologies concluded and portions of the manufacturing cost related to the AbioCor beginning to be classified as cost of sales as opposed to R&D expense. We anticipate that our R&D spending maybe variable from quarter to quarter in this new year with potentially higher weight in our first quarter, as we gear up for four more testing of what we believe will become the next version of the AbioCor or version that doesn't yet take advantage of method to make the device smaller but involve a number of refinements aimed at further improving the reliability and user-friendly nature of the product. Note that the AbioCor refinement and we are making a part of normal processing, increasing make the AbioCor better. For example though it's been our plan to make the AbioCor work reliably for increasing periods of time. In the clinical trial, we have over two years of aggregate patient support without any mechanical failure. In addition, a feedback that we have received from our clinical sizes of the user interface of the AbioCor is already quite and would have been easily used. This is, in our view, is critical to commercial potential of the device.

Fourth quarter selling, general, and administrative expenses were relatively consistent with the prior quarters of the year just ended with some increase reflecting sales commission core to increased produced revenues in the quarter. Compared to last year, our SG&A expenses are up primarily related to increasing sales and marketing efforts including the creation of our new sales team in Europe. While we look to continue to expand our sales and marketing program, we do not currently expect our total SG&A expenses increased in the coming year.

ABIOMED reported a net loss of 6.6 million dollars or about 32 cents per share for the quarter ended in March compared to a loss of 4.2 million or 20 cents per share in the same quarter last year. For the full year ended March 31, 2002 ABIOMED reported a net loss of 26.4 million or dollar 27 per share compared to a net loss of 11.4 million or 55 percent per share in the prior year. Underlying these results to BVS, our product line was profitable again but overshadowed by our R&D spending. We ended March with 71 million in cash and marketable securities, working capital of approximately 75 million and no long-term debt. Our cash burn for fiscal 2002 was approximately 21 million dollars. We anticipate ending our current ongoing fiscal year with a cap position worth of 50 million dollars. We also hope to end our ongoing fiscal year with both commission to sell the AbioCor under CE mark in Europe and some limited sales of the AbioCor to select medical centers under the CE mark. We believe that our cash went down. So, cash and marketable securities is adequate to get the AbioCor to regulatory approval to market in the US. We also believe that once the AbioCor is available for sale in the US that we will position to return to increasing profitability.

Our present analysis indicates that profitability required annual AbioCor sales in the hundreds of units, not for thousands, as this is a very small percentage of the total potential . We can become cash positive are very low level of saturation of the total market with significant earnings upside beyond that point. Note that thousands of patients die each year in the waiting list for donor hearts. Such patients are primarily excluded from our current trial but might become candidate for AbioCor's support, subject to regulatory approval once the AbioCor becomes more proven and broadly effective.

This concludes my comments on AbioCor's financial results for the fiscal quarter and year ended March 31, 2002. At this time I would like to open the call up to your questions. Thank you.

Very good. At this time, if you would like to ask a question, please press the 1 on your touch-tone telephone, you may withdraw the question at any time by pressing the parent key. Again, to register your question, please press the 1 on your touch-tone phone. We will take our first question from the side of Greg Simpson of A.G. Edwards. Please go ahead.

Yah. Good morning guys. If I could ask actually just question about the trials and I would actually get back in line and then come back with more. David, for you, in the past you guys, I know that the I guess one of the real goals here in the trial would be to do some AMI patients, but from a practical standpoint, it is obviously very difficult to do the patient consent and things like that. The delay, if you want to call that in implants here despite the fact that all patients, it certainly would lead me to believe that maybe the goal is despite how difficult it is to do from a practical standpoint in a clinical trial, the time that you since the implant has taken place would lead me to believe that maybe the ideal patient that you are looking for would be an AMI patient. I mean, someone who wouldn't have a problem with anticoagulation and all these other issues that some of these patients will have. Can you talk about that and is that something that you guys are shooting for here in the next several implants?

Greg. You asked AMI patients are not likely to be more abundant in the early parts that is because we will require that the informed consent signed by the patient and by a proxy and AMI patients don't often have the time but there are some who do and for those who do, we would hope that we would involve some AMI patients. We are not, however, limiting patient involvement to AMI patients. We expect to enroll patients who are in congestive heart failure who are not treatable with left ventricular devices under many . What is happening really is that we are being more selective in both cases for both patient population and that we are looking carefully at their conditions even that we have now focused on implanting them and then improving the probability that we will be able to discharge them to home and that's really the primary consideration that we need to demonstrate them to gain experience in bringing patients home. I believe personally that the reason why the adoption of other technologies technologies have required patients support at home to demonstrate successfully has been because too emphasis has been placed on both the device performance, the surgical procedure and the in-hospital experience as opposed to making a major focus. One needed to be done to ensure that patients can lead a normal life from home and we are early on making sure that we don't make . We learn from the experience of focus correctly on that aspect and this is one of the primary of increased selectivity.

Well, kind of followup with this and if given candidate shift in the patient selection process would imply that instead of it seems like a soft to you that it would imply that if that's case and of this next several patients, more or like Christerson and hopefully have Christerson kind of result. Would that imply a broader and a more significant FDA Approval as opposed to the very narrow one that I certainly assumed when I picked up ?

No, Greg. Actually, we continued to insist on all patients who are enrolled in this trial to be patients who for sure or not for sure, but who have very high probability of death within 30 days and but at the same time you are correct in saying that we are going to select patients, we are going to be more careful in that the patients preoperatively and pre-selection if you wish we will ascertain that they have everything else that is needed to succeed living normally at home and that includes all kinds of pre-existing conditions. So, that I will try to put it back in simple terms nothing that else will help them than induction. We have not relaxed those conditions, but they have to have a much more certain probability of being able to go back home and live a normal life. That's about as much as I can tell you.

Ok. , that's great. Thank you.

Thank you.

We will turn next to the side of Kurt Kruger with Banc of America Securities. Please go ahead.

Hai. This is actually Raj for Kurt Kruger. Just a sort of following of what you were out a second ago. I guess the most recent patient that that device was attempted in was Louis and that patient I guess was, it was the last effort to save the guy and I actually was the man. I guess, the shift to these more viable patients, was that a decision that was based on that particular event or was that something that had already been exception for that one patient?

Hai Raj. Robert Kung. This is Robert. No, we actually did not change any of the criteria for selection of this patient. This patient actually on a chronic basis, in other words is doing the evaluation period. He criteria and he was, sort of chronically stable, but remember all these patients have complained going to a condition that lead them to death and the in this case is predicted. He is going to die within 30 days and it just so happened right before the surgery. He was getting into that stage. So, in other words he was chronically ok, but then acutely he ran into that phase and as the decision was already to implant him and that happened by the way. There are going to be patients that are going to fit into the trial and so, that's what happened in that particular case. It's not that we were relaxing or making it less or more stringy.

If I can sort of summarize what Bob just said, you know the prospect for his recovery were great and in fact, fit our revised profile, but acutely went into a condition that put him at high risk and bear in mind that if we do not succeed in supporting and life of this patient, it as a result of our drug reaction that was something that could not have been predicted before. So, it was not that if we .

I guess there is other followup. Can you give us a sense of the rate at which you are looking at patients or patients to put these things in because given that it has been a month since the last time we an activity? I imagine there are patients that are coming up that your are assessing and deciding not to proceed with or I guess, give a sense of when we might see the next one? I hope you can help us about that.

Raj. It is very tough to give you a precise number. We are continuing to review patients and it is hard to tell because our experience even last year was that you may go through a period of three or four weeks when you don't see any of the fixed criterion and then you may find some that suddenly they are many who do. So, this really is very friendly function of how the patients are referred to the surgeons and what happens is it is very hard. What we do know because on a longer time , we can predict better is that we do believe that we will be able to enroll the patients that we need to enroll on provision time to demonstrate that they can be discharged home. We have to demonstrate, we have to essentially show the can be repeated consistently and when we demonstrate that with some number of patients, that is a new number that we have that we will be able to go and persuade the FDA that we should be given approval for this segment of the patient population and the other thing I can tell you by way of time is that we have analyzed the numbers in such a way that the rate of enrollment that we think is likely to happen. We would be able to do all that is necessary to get the regulatory approval and be able to begin sale in early 2004 calendar.

Ok. ask one more question and I will get back in line. I guess I am curious about your from Mr. Christerson, I know it hasn't been that long since he has been discharged in home. But, I know the question is about battery life and some other things and I wonder if you give any sort of information that might be valuable from what has happened so far?

Ok. Well, one of the more exciting things that we have learnt is that we can lead a normal life without having the support of anyone from and that's very important for commercial reasons. We have also learned that . So for the first week or the first two weeks, they didn't get any call and I don't know what the standard is today, but they didn't any call. Bear in mind that it has to back for checkups on a weekly basis . But that's pretty impressive. The fact that his family, his wife, and all others have been able to learn the process of supporting him in the battery changes and re-charges and so forth is very impressive to us. In fact, the userfriendliness from the, if you wish lack of complaints about system when patient is in a home environment is to us very encouraging because that's really the most important aspect. We had convinced that success will be determined by our ability to make the system about as userfriendly as it is possible more than anything else. When we started the trial, we thought that we have never implanted an AbioCor in a living entity or person or animal that would stand up and turn over and roll and we had all kinds of questions and eventhough, we and studied and tested and analyzed, we have never demonstrated that and now we know that the person can go out, can sleep, can take showers, can do really the and that the support that is required in terms of what needs to be done to modify their for example so that we can with an additional power source to re-charge. One of those things have confirmed what we have we can do it and we are refining more and more. In fact, if you were to ask me what is the focus of many of the refinements to the system that is already in clinical trial, the majority are outside the body making things more flexible like the making the garments more userfriendly to improve quality of life, making the battery longer lasting. Yes, we have learnt quite . As we all know that batteries that are re-chargeable don't like not to be used so that if you don't use them for a while it don't operate as well as if you repeatedly use them. So, we are introducing that teach the patients that should go on the battery routinely even if they don't think that they need it and even if they are thinking a shower and all of those things who are learning, one more specific detail but those are examples.

It even helps a lot. I guess I will get back in . Thanks a lot.

Next is Alex Arrow with Ladenburg, Thalmann, please go ahead.

Thanks. I will break the trend. First one I ask about the BVS. You had mentioned that the growth in BVS sales in this quarter was impressive and that was more from the consumable pump revenue rather than the growth in consoles than it has been in the previous quarters. Can you be quantitative in anyway about that? Give us the sense of the breakdown between consumables and consoles.

Alex this is John Thero. We have not provided in the past those types of direct breakdown in terms of units. I think it is fair to say that somewhere in 75-80% of our revenues for the quarter related to. We used the product that existing medical scientists are supposed to, as opposed to new business.

Okay, great. It sounded like from the comments earlier on this call that that was higher than normal.

That's true, particularly related to the fourth quarter, may up something more to do with commission plans and anything else. Typically in fourth quarter, we tend to sell a lot. We tend to sell a lot of hardware so that proportions have been different in past four quarters with it. I think, having break in the 50-50 mark, we went back 2 1/2 years ago we in 50% hardware to disposables. About 2 1/2 years ago, we broke the point where these polls will became the dominant pieces, eventually increasing ever since then but in four quarters the hardware tends to jump up. with new customers in the past quarter. I think we are, but as comments were. We were particularly gratified by the very strong feeling on the pump shipments. Did that help?

Can you say whether it is most single sided or bi-sided or did you comment on that?

Alex, when we looked it shortly at our business, approximately half of the patients we support are in biventricular failure and the support from the BVS and approximately the other half are bed necessary support.

Ok, thanks. A question for John, you were going over the 71 million in cash and how long that was expected to get? I understood correctly you said that it wasn't upto get the CE mark and begin some in the Europe, but it sounded like you have stopped sort of saying that that would be enough to get it through the US FDA. Will it be enough to submit to the US FDA? Did I understand correctly that you are predicting how far along the regulatory be getting?

I am very great that you brought it up. My comments were clear there. My comments for a candidate suggest that we would end the year with 50 million in cash and we believe that the cash balance that we have today is a pitch into not to give it to the point where we have regulatory approval relative to our initial patient population in the US.

Ok, and then...

That's the mention, but regulatory approval, which means permitting to begin selling.

One last question. We have been, I think, operating under the assumption that if we don't hear a press release about a patient that there hasn't been yet implanted. Is that going to continue to be true or in other words no news means no new implants and also there has been no reported problem with events on or events like that? No news is good news for the results of previous stations and it also means and we can believe that there haven't been any new implant. Is that going to continue to be the case?

This is Ed Berger. With regard to existing patients, I think, it's reasonable to say that no news indicate the absence of any true clinically significant adverse event. With regard to future implants, it has. In fact to be in that case that everyone of the implants has been publicly acknowledged within a few days of the event. It is in fact always been our policy and continues to be our policy. To maintain really a quite period around implants. Until such time, as all concerned parts - the medical team and the patient's family are comes to book with public announcement. So, that portion of your expectation is intact contrary to our pre-existing and continuing policy.

Ok, Thank you.

Next in the side is Steven with Sigma Capital, please go ahead.

Hi! I have two questions, one general and one specific. Still struggling with the overall concept of the complete replacement of heart and so forth has been showing interesting data where even some heart which has been thought to as never recoverable can in fact recovered and you have been explaining these things. Also, the heart has a complicated neuroharmonal system with and so forth. What type of patient need to have the entire heart removed in your device?

Is that your first question?

Yes.

Because you said you have two....

The second one is specific about the removal of the thrombogenic ?

Ok, you started out by saying that you are struggling with the concept of ....

What do you need to remove the entire heart? What kind of patient population would require there rather than an design?

Well, for one thing if you have the heart of disease stay from bacterial or viral type of reasons and doesn't do anything. Why would you want to leave it in place? It's a source of lymph for a clot, for infection, and for all kinds of problems. Even if you could support it, which is not clear that you have to be right heart failure plus complications of the right-sided speculation like liver or pulmonary. Why would you want to do that? I have to tell you that I struggle with the concept and without, let me just say that, I am that the removal of the heart is a concept for some today. Ok, it is a difficult concept, much like the end of the 19th century.

Will have to rule out which heart....

Can I please answer and then go...In the 19th century people started with the concept of replacing a heart by training. I mean, the earlier part of the 20th century people started with the concept of replacing plane by plane.

I am geting that...

At the analogy, similar in terms of the once I get over that I will now tell you that if you prove it some will have a nut shell heart with us and our valves. If you support a patient like that with an appeared, that valve is going to clot and that's all what you want to do.

Number two, if you have very high pulmonary vascular resistance or severe right heart failure, you have a problem that will result in the congestion of the liver because three quarters of the blood supply to the liver comes from the right side and that's from the left side. So, the patient is going to die from multiple organ failure. I can go on and on. If you have severe arrhythmias on the heart, you cannot indefinitely support a patient with the left side. There are many patients among those many who are in AMI has sudden AMI shock fibrillation where the first part affected happens to be the apex of the natural ventricle. When that happens you cannot attach very readily. That doesn't mean there aren't patients with AMI who have not been supported with but many cannot be supported with . There are also the issues that we have for us. As I mentioned before, many patients do have certain amount of pulmonary compromise and if the natural right heart cannot overcome the resistance of the lungs, that's not a good things. Because ultimately you end up with severe...

...can you just all...

If they can, I don't know how?

...by biventricular valve...

Well, there is no such thing about ventricular that's implantable. If they one, I would like to understand how that fit it in the patient and even if we were able to fit it in the patient, I would like someone to explain to me why that would be more reliable than replacing the two ventricles. Why would that make even? We have more experience than anybody else by the and support. I think you will agree with our BVS, but it is an external system. We are talking about the different patient...

I guessed it. I don't want to get onto allow that. What about...

agreed to...tell me...specifically how because you can...

...because there are biventricular all that and so forth. I will just explain to you finally... The second question I have for you..

...I really would appreciate. I am sorry, but if you are going to be allowed to ask question and I am going to respond to your question, I would also appreciate very much. When I asked with a question, if you could respond because you are making statements which are absolute nonsense. It happens to be an argument meeting, and I would like to answer my questions. Tell me which implantable biventricular system exist?

I didn't say implantable.

If it's not implantable, you are talking about the differnet patient population...

Okay. Some of your leading surgeons have implanted devices. Say the cage has been removed causing the thrombus. Now that at least the problem of the left atrium somewhat with the appendage sort of sucking and during and so forth. Is that a problem now?

That's definitely not a problem because the usually tied off anyway. They do that in a regular procedure. What's that tied off is generally not a problem for.

This was a presentation done at the ATC, there was comment, a doctor from made it...I guess you call that as machine and then it is sort of blocking out. So that's not an issue?

It's not an issue if we don't if you tied off the appendages, which are skin move around. You know about the atrial ventricle. That's a little bit of tissue that's a patch through the atrium that can be actually quite free. So, that's usually tied off. If you tie that off, that's not an issue.

Ok, thanks very much.

I want to answer one other question that you have asked, but has not been answered. You did mention recovery with that.

How can you rule out which patients your move may have recovered?

Yeah, let me answer your first question. Number one: Where is your patients who have shown recovery? Number two: The majority have viral myocarditis. The first critical experience to show the world that patient with viral myocarditis can recover with our own experience with BVS and I agree. For those patients one should support with an external device. They have been very of course over a long term and they have been largely done by Prof. in Berlin. I think that this point in time one cannot because this has not been shown in any other not predictable. We cannot say that it's proven. We are seeing that these patients are but if these exceed whom we regard very highly can show or of this impact can be done with patients who are very sick. I think this should be uploaded and we should do that. It doesn't take a way from the majority of the patients that we are targeting with the AbioCor system. If they seem to do I would absolutely recommend that if a patient has a heart that is recoverable that one should do that now. Your mixed question was how can you predict one . It's not clear to me that one can, but I can tell you that in the case of all the patients that we have supported and that we for the AbioCor, they are hemodynamic, they are unstable and became rapidly and all of them have been biventricular failure and both patients, I don't think, will fit in that category. Again, I am quoting those for in his address of the I think that we will learn all these devices perhaps even of the new generation devices on the BVS, the AbioCor, and . We will only know which is more clinically effective for which patient population when they are all available and they are not.

Okay, thank you very much.

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