ABIOMED Inc (ABMD) 2004 Q3 法說會逐字稿

Welcome to the ABIOMED third quarter and fiscal financial results 2004 conference call. At this time all participants are in a listen-only mode. (OPERATOR INSTRUCTIONS). As a reminder, this conference is being recorded today, February 10, 2004. I would now like to turn the conference over to Dr. Edward Berger. Sir, you may begin.

Thank you. Good morning, everyone, and thank you for joining us today. With me are Dr. David M. Lederman, ABIOMED's Chairman and Chief Executive Officer; Chuck Haaser, our acting Chief Financial Officer; and Gene Rabe, our Senior Vice President for Sales.

During the call, gene will join me with additional comments on important developments in the quarter ended September 30th in support of the financial highlights for the quarter. David had planned to prepare -- to present a portion of our formal statement, but he is under the weather today and he is in attendance and will participate in the question and answer period, which will commence after our formal presentation.

First, however, let me remind you that during this conference we will make forward-looking statements, including statements regarding development of ABIOMED's existing and new products, plans, timing and clinical results of the AbioCor trial, timing and approval of the AbioCor, and the Company's progress towards commercial growth. The Company's actual results may differ materially from those anticipated in these forward-looking statements based upon a number of factors, including -- uncertainties associated (technical difficulty) development, testing, and related regulatory approvals; anticipated future losses; complex manufacturing; high-quality requirements; dependence on limited sources of supply; competition; technological change; government regulation; future capital maids; and uncertainty of additional financings, and other risks and challenges detailed in the Company's filings with the Securities and Exchange Commission, including the annual report filed on Form 10-K.

Listeners are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date of this conference. The Company undertakes no obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect (indiscernible) events or circumstances that occur after the date of this conference, or to reflect the occurrence of unanticipated events.

I would first like to say that we are very enthused about the progress we made in the quarter and the prospects ahead. To measure that progress, we used the program we described in detail in our last annual report to shareholders. We said at that time that we were entering the next chapter in ABIOMED's corporate development, moving from our historic research and development focus to a more market, product, and customer-driven focus, and we provided a timeline for important product related milestones. We ask that you look back at what has happened since then and measure us by our performance quarter-to-quarter.

We are very pleased to be able to say we are executing effectively to achieve the milestones we defined at the beginning of the year. We have already met our commitments to bring the AB5000 console and the AB5000 blood pump into commercial distribution, and we remain on track to achieve initial market introduction of the AbioCor Replacement Heart under a Humanitarian Device Exemption by the end of this calendar year.

This performance was made possible by excellent contributions from our workforce and from our management team. New hires in many key functions continue to strengthen our capabilities and our team. In the past six months, we have added three individuals to senior marketing functions in the Company. In the past month alone, seven additional individuals joined our teams across various functions in the Company. We expect to continue to add top and middle management resources in our organizational realignment to become the strongest customer-driven organization in our business area.

We are also extremely pleased with our financial performance over recent quarters. We have dramatically reduced our cash consumption while delivering higher revenues and meeting our goals and milestones on time. We have progressed to the point where we expect that our existing business activities -- consisting of BVS 5000, AB5000, and AbioCor -- should not consume more cash than we expect to generate from operations during the coming 12 to 15 months.

With regard to the AbioCor program and clinical trial, I think it is important for you to understand that we have progressed to the point where our forward-looking research and development is now clinically driven, not technology driven. Our R&D effort emphasizes reliability and patient electronics for comfort. Tom Christensen's experience was a significant milestone in this regard, including by the way, the low financial burden born for the discharge patient. And we look to what we learned from his time at home to point this in the direction of making the electronics and the quality of life better for all future patients.

The durability of the hydraulic membrane has been increased by stricter component sorting derived from analysis of membranes in systems that have now gone longer than three years in our reliability laboratory. This performance in the reliability laboratory points us towards operational systems that we believe are progressing to the two year reliable durability level and beyond.

We have completed a comprehensive review of clinical data focused on determining why some patients had strokes and others did not, and believe the most important action required to reduce the potential for strokes is to facilitate the attachment of the AbioCor inflows to the patient's atrial tissue. We have incorporated inflow attachment refinements in the systems built for the next implantations.

Last month, we held a clinical meeting in San Antonio with our investigators, where we shared our findings and exchanged views. We believe that our first generation AbioCor system configuration is sound, and our principal focus today is on the manufacturing of high reliability systems and components to complete successfully the studies necessary to obtain a Humanitarian Device Exemption before year-end.

A new center, Boston's Beth Israel Deaconess Medical Center, has been enrolled, trained, and is now ready to go. We are currently screening patients, and the next implant could happen at any time.

Stepping back to take a longer view. We have just completed a comprehensive assessment of our strategic direction and progress. The entire management team has never been more excited about where we are going as we work to complete our transition away from a technology driven R&D dominated Company, towards a customer-oriented market driven operating company.

In that regard, I would like to take a moment talk to you about an important market segment in which we intend to participate. We have previously announced it is our intent to extend our circulatory assist product offerings by adding a next generation rotary type assist device to address those patients at an earlier stage of heart failure whose failing hearts do not require the full assist capability of existing product offerings in the marketplace. It is our plan to participate in this segment of the circulatory assist market through a strategic partnership or technology acquisition.

Now, to summarize the overall financial results for the fiscal period. The fiscal quarter ended December 31st, 2003 was a very positive and productive one, as we continued to make good progress across the full spectrum of our strategic and operate goals. Details of the quarter may be found in our press release of this morning and our form 10-Q filed with the SEC, also this morning.

Operational results for the quarter demonstrate substantial continued progress towards our goal of profitability from existing business operations. Net loss for the quarter fell to 9 cents per share compared to 13 cents per share in the previous consecutive quarter, and less than half of the 21 cents per share lost in the same quarter of the prior year. This result is in part attributable to continued improvement in operating efficiency in many functional areas, as was the case in the prior quarter.

Perhaps more significant for the future, however, was the contribution of a very strong revenue performance. Product revenues for the quarter were $6.5 million, a 17 percent increase from the corresponding quarter in the prior year. This strong revenue increase reflects the controlled initial introduction of our new single-use AB5000 blood pump for use with the AB5000 circulatory support console, which has been very positively received in the marketplace. As we noted in our filing with the SEC, we reported a backlog of $800,000 as demand outpaced our manufacturing plan for consoles for the quarter. We do not plan a full commercial launch until the first quarter of fiscal 2005, which begins in April 2004.

The AB5000 is ABIOMED's first significant circulatory support product offering since the original introduction of the BVS in 1992. As we have told you previously, this new product is an important element in our plans to increase revenue and improve operating margins in the near-term, and to make the transition into profitability from existing business operations before the end of our next fiscal year. The AB5000 also provides a technology platform which we plan to use to introduce blood pumps, subject to FDA approval, capable of supporting patients for expanded clinical indications. We want to proceed carefully with this product in order to assure that everything is properly in place so as not to compromise its near-term and long-term potential, and we are currently engaged in a carefully controlled initial commercial introduction.

I would like at this time to ask Gene Rabe, ABIOMED's Senior Vice President for Global Sales and Services, to give you his impression of the initial customer reactions to the AB5000. Gene?

Hello everyone. I would just like to provide a brief update regarding the AB5000 product line.

Now just as a reminder, the AB5000 console was FDA approved last April 28, 2003. So that was the official market launch of the console. Since that point in time, we have gained greater than 10,000 patient hours of support with no issues. This clearly demonstrates that this new platform console is very reliable.

In regards to the ventricle, the AB5000 ventricle was FDA approved September 24, 2003, and as Ed mentioned, we are still under a controlled market release until first quarter -- first quarter fiscal year 2005. We are very pleased with the number of hospitals that have purchased and implanted the ventricle thus far.

A couple of quotes from very prestigious cardiovascular surgeons. One states -- the new AB5000 console is everything you said it would be and everything I want it to be. Another physician said that the AB5000 is increasingly important to have in our armamitarian (ph). Our patients are getting much sicker, and if a patient does not recover while on the AB5000 ventricle, we can stage them to BTT and/or destination therapy.

All feedback from implanting surgeons has been -- it is just as easy to use as the BVS technology. We have also had five hospitals that have had two patients on concurrently. Some feedback from the CTICU nursing staff are as follows -- it is just as easy to operate as the BVS. You don't even know you have a patient on a (indiscernible), and most importantly, it just works.

Thank you.

Thank you, Gene. One further significant operating highlight for the quarter ended December 31 was a continued improvement in our rate of cash consumption. At the end of the quarter, our total of cash, cash equivalents, short-term securities and long-term investments stood at $47.4 million. Cash consumed by operating activities in the first nine months of our fiscal 2004 has been $7.4 million, a 42 percent decrease over cash consumed by operations in the comparable period of the prior year.

You will note that $19.1 million of our investments has been classified as long-term. We decided during the past quarter to invest a portion of our funds in marketable securities with maturities staggered over a period longer than one year. This decision was made -- this was made possible by our consistently improving financial performance, and yields a higher rate of return on our cash reserves without compromising a high degree of security. This investment decision is one small reflection of our belief in the stability of our operational trends and our progress toward our principal strategic goals.

To summarize, we will begin full commercial rollout of the AB5000 in the first quarter of our fiscal 2005. We continue to plan for, and believe we can achieve initial market introduction of the AbioCor to address a defined patient population under a Humanitarian Device Exemption by the end of this calendar year.

We are committed to competing in the market for the new generation of implantable assist rotary blood pumps. We are exploring opportunities for participating in that exciting technology arena through a strategic alliance or investment. Our path toward profitability from current business operations -- defined as the combination of our BVS and AB5000 products in the market, and our AbioCor products under development -- is clearly defined, and we believe it is achievable. Our cash resources, together with cash generated from operations, are adequate to get us where we need to go in the near-term.

That concludes our prepared remarks, I would now like to open the call to your questions.

(OPERATOR INSTRUCTIONS). Joe Pratt, AG Edwards.

Where can we find marketing literature on the AB5000 ventricle? For example, medical literature or marketing literature. Is that on your Webpage? I have been looking for it, but not able to find it so far.

We expect that we will have much more full (indiscernible) documentation (technical difficulty) for the market once we begin our full commercial launch. Okay? We thought it wise not to broadly disseminate those material while we are in our controlled launch.

But I assume -- could you quantify how many medical papers have been -- in other words, (indiscernible), how many clinical papers should we be able to find on the clinical performance?

I don't believe -- I don't believe you'll be able to find any at this point, as the first clinical experience is only a few months old.

Along the same lines, Joe, we also know that some of the procedure surgeons that have already implanted the device are already preparing abstracts. So that should be forthcoming soon.

Steve Emerson, Emerson Investment Group.

Congratulations, gentlemen. How many of your clinical centers are currently approved to restart the AbioCor trial?

How are you? It's Ed. At present there are six -- there are six centers which are formally part of the AbioCor clinical trial. Three of those centers are actively engaged in screening patients, and could be characterized by the statement that I made earlier as possible to enroll patients at anytime.

Excellent. Going into your new BVS product, how much of the quarterly revenues were from the pre-launched new product?

I think that we said in our 10-Q that approximately 50 percent of our revenues in the quarter were derived from sales of the older BVS blood pump. And sales of BVS consoles are relatively minor at this point.

Okay. Can you give us some flavor as to how much the market has expanded by your new product? I have no way to understand with a full launch, what incremental range of revenues we are dealing with?

There is an important sense in which we all -- and we've tried to be very clear about this in the past -- that given our current labeling for the AB5000 product, there is from the regulatory perspective, no widening of the market. The device continues to be labeled for short-term acute recovery. The critical issue with the AB5000 is -- number one, its improved functionality in important ways, and therefore, the potential for our current customers to substitute, in some degree, the new product for the old one; and the fact that it provides a platform, which we believe that we can develop over a relatively short time frame, to get changed labeling -- subject to FDA approval -- to treat expanded indications and to treat patients for longer periods of time. And while it is very difficult to estimate precisely the size of that market, we are looking at one that is probably a multiple of 4 times what the potential of the BVS was.

Excellent. And do you have a feeling at this time when you might be submitting your data to expand the labeling?

I believe that our product milestone plan puts that -- that is identified as the so-called AB5000 S, and I believe that that is sometime -- it's certainly in the first half of next calendar year.

Excellent. I will go back in queue.

Randy Howell (ph), U.S. Alliance (ph) Securities.

Just before I ask the question, I noticed what might be an inadvertent blending of the quarter's results with the nine month results in the press release that you put out this morning. And I just bring this to your attention because I'm a little confused on what the burn rate was, Ed? I noticed that on the release it says highlights of financial results of operations for the quarter include, and the last item is cash consumed by operations, 7.4 million. And I think I understood you to say a moment ago that the burn for nine months was 7.4 million.

The final statement is correct, Randy. We will check that, and if it needs to be technically corrected, we'll do so.

When I first read it I said gee, that is a lot of burn for 7 -- 7.4 million for one quarter. I felt that was incorrect. On to my question. Ed, I'm a little bit confused on the rate -- or the position, I guess I should say, of the Company with respect to the rate of enrollment of patients in the current clinical trial. I remember back to the last quarter of last year, it appeared that you were going to begin -- based on your studies of the history of the first 11 patients, you were going to begin from that data and analysis of that data, a revised methodology in the clinic and start enrolling patients. But my sense from what your comments were earlier was that there were still some engineering things that needed to be done that would have prevented implant patients over the last six months. Is that correct?

Let me take that (indiscernible). This is David Lederman. We have been screening patients throughout the last six months, even if we have not implanted any. So that while the data review was going on, and a reevaluation was ongoing and (indiscernible) in fact sharing of what we thought needed to be done was going on, we were still screening patients. So we have a fairly good idea of what the number of patients are that are coming to us. At this point in time, as Ed mentioned before, we have concluded, in our view, that the methods that we used to attach the AbioCor inflow to the atrial tissue is the critical area we needed to focus on. We have implemented actions, we have discussed them with our clinical investigators, and we now have systems ready to go. So as we continue our screenings, at this point in time the green light is to go ahead. Now, that does not mean that we wouldn't have done a patient in the last six months -- okay? If the right patient, and we felt comfort that we could overcome some of the issues that we now knew we could improve on, we would have done it. But we feel more ready now than before.

Thank you for that, David. Apparently then, the emphasis was shifted from patient device management -- which was the category, one of the three categories you had mentioned way back after the Houston study, or the Houston meeting ; patient management interaction was the area to focus on -- back to device implementation. Apparently you found some revealing information that has caused you to change that, is that right?

Well, let me say this. (indiscernible) the exclusion of our -- it's a question of priorities. We continue -- we have come to a conclusion that there are a lot of continuous refinements and improvements. This is why we're doing the clinical trial. So we are going to improve, as we learn, both patient and device management. But what we have come to a conclusion is that the number one priority right now is to focus on providing our surgeons with a better mechanism for attachment of the AbioCor. And I would like to perhaps expand a little bit and digress just for one minute, despite the fact that my voice is -- I am losing my voice -- is the fact that with some very important implantable (indiscernible) ventricular assist devices that are currently in existence -- if you go back many, many years, you will remember that some of them, the technology seemed pretty good, but they had some difficulties in the attachment. And I think that in general with this technology, this seems to be an area where it needs -- and especially with an artificial heart -- it needs a great deal of attention. We look not only at those patients that suffered strokes, but also at those patients that did not. And we tried to -- sometimes you focus on the ones that did very well, to see what is it that was different between them. And we now believe that that is the first line, the most important action we can take, but not at the expense of the others. It is (indiscernible) as important.

Well, good. If you think that might have been the major culprit in the stroke issue, and you think -- let me understand correctly -- you do believe you have that resolved with this new implantation technique, is that correct?

Yes, it's not just an implantation technique, it's the ability -- you know, whatever happens, Randy -- whatever happens with the AbioCor, it is the responsibility of ABIOMED to make sure that the device is ready. So even when we provide the device to our clinical collaborators, we have to make sure that we optimize their ability to implant it right. Sometimes the configuration is one that is not optimal for them to implant, so -- I don't want to shift attention to surgical, I want to say that we have to think hard with them and look at what is the best way to minimize the potential for blood to stagnate and form a clot before it enters the AbioCor. This is the important point that I want to make, that we believe that nothing that may have happened was caused because the AbioCor created a clot pumping blood, but that rather something from the outside of the AbioCor (indiscernible) then entered the device and then the device pumped it. It takes all parameters for success, and we have had many, many recommendations from our clinical collaborators, not only those participating, but those who are our advisors to us. And we intend to comply with all of their recommendations.

I want to say one more thing. We are optimistic that the major challenges we have identified. But I also want to caution you that while we are confident and optimistic that we are going to be able to prove what we need to prove, which is to duplicate the experience of Tom Christensen, to discharge patients., I don't want any one of you to have an expectation that every patient that we do moving forward is going to be a success. Okay? We need to learn -- and some of them will be a success, and that is what we have to demonstrate to ourselves. Once we do, once we are convinced of that, then we will be able with confidence to convince the FDA. But we have to be convinced first. And we think that we are going to be able to do that this year, and that we are going to be in a position to get an HDE before the end of this calendar year.

Thank you for that, David. And I'm sorry, just one quick follow-on -- I don't want to dominate this. Do you still feel that you're confident with these gains in knowledge and understanding of the process, that you will be able to satisfy your requirements internally with the remaining 4 patients?

The answer is yes, except that I don't want you to limit that to the remaining 4 patients. Because as we have stated to the public, we are now on a track to get an HDE. And strictly speaking, an HDE does not have a patient requirement, in terms of numbers.

I understand. Thank you very much.

Greg Simpson, Stifel Nicolaus.

I actually want to steer the question away from AbioCor, if you don't mind. And David, move to the question -- or a question surrounding, Ed, your comments on the development of rotary blood pumps. Can I try and narrow you down a little bit? It seems to me there are two different courses of action here. Are we talking about taking in-house developments? I have long suspected you guys have been working in this area, but are we talking about taking something that was developed in-house and partnering with a bigger player in the cardiovascular area to fund the development of the device? Or would it be a situation where you would partner with a player currently in the market for cardiac assist devices and maybe bring some of your technology that you have developed with respect to the AbioCor, for example, and use those with devices that are currently being developed by others? Just as an example, the Tet (ph) system, for example -- which would be something that some of the devices in development don't have. Can you narrow it down and give us a sense of which direction we're talking about?

Yes, Greg. I will take that question. This is David. Your latter commentary is the correct one. We have looked over the last 2.5, 3 years at our own technology, and we have also looked at all that is known out there with regard to these rotary assist pumps, which we have been observing also what is likely to be the market and carefully analyzing what is the market. And what is the patient indications for those particular technologies. And we have learned that, as we predicted four and five years ago, that the right patients for those devices are patients who need partial assist, not full assist. And I think that the clinical experience of those who are in rotary pumps (indiscernible) that that is the case. Now, we have developed -- we have invested millions of dollars in technology to develop the Tet control systems, as well as some of our own rotary pump technology. And we can leverage, therefore, technologies that others have developed that are very exciting technologies, and together, come up with a best device. We have, again, over the last 2.5 years, looked at many, many, many -- I guess (indiscernible) we have narrowed it down to a shorter list. And right now we are exploring that shorter list, and we expect to execute on that. In short, it is likely to be a technology acquisition to which we add our own capabilities, our existing distribution network, our regulatory expertise, our manufacturing capability, and our technology -- the Tet, the control system, and many of the complementary technologies that we think are going to be required. Have I answered your question, Greg?

Yes. David, can I ask you for a little bit of a clarification though? You mentioned, then, a technology acquisition. Would it be something that you would acquire or a product that is in development in the marketplace now, and then would fund the further development? Or you would partner up with an existing player?

We --

I just want to make sure I'm clear on that.

At this point, this information is confidential, but let me just -- because I know what you are trying to find out. We would have to make an investment to get that technology to the clinic.

Good enough. Thank you very much.

Tom Schwartz (ph), Morgan Stanley.

Congratulations on reaching your financial milestones this quarter. Just a quick clarification question on the trial -- clinical trial enrollment. Obviously, we've had somewhat of a pause since May, in terms of getting new patients. Are you now turning away patients for various reasons that you would service once you get the HDE exemption in place?

The answer is yes.

So obviously the population would grow logarithmically once the HDE is in place?

It would grow, I don't know if it's logarithmically. Let me take this as an opportunity to -- we have not revealed how many patients we have screened, but we are right now taking only the sickest patients. And I want to remind you again, that if we compare the condition of our patients with those of the very pivotal rematch (ph) trial for the Heartmate (ph), that there the half-life of dose controlled patients was about 20 weeks. And the half-life of those patients that were screened for the AbioCor, but either they refused to be implanted or the device was too large for those patients -- but otherwise they met all the inclusion criteria -- the half-life for those patients was two weeks. Okay? So they are a lot sicker. We continue to -- we have enrolled patients that are (indiscernible) than any other clinical trial ever done. At the same time, we have learned from the patients that we have done what are some of the clinical criteria that has led to the demonstration that the device can support a patient, and discharge a patient. So the answer to your question is -- we have a limited number of centers, we have screened many more than we have accepted, and if we had a larger number of centers and we accepted all that could be included, the number would be, of course, much larger.

And one follow-up on a different topic. What are your plans in terms of sort of improving your outreach to Wall Street? As best I can figure right now, there's no analysts covering the stock. Do you have inquiries of this sort? I mean, this would probably be directed more at Dr. Berger.

I would like to make a comment, and then I would like Dr. Berger to answer it. The comment that I want to make is that we do believe and we recognize that there seems to be confusion in the marketplace about market (indiscernible) for the various technologies. And obviously, I want to say that I acknowledge and recognize that for as long as we are not talking with a lot of the analysts, or at least the analysts are not following us -- I (indiscernible) turn it around, because we want very much to talk with them -- there is a certain amount of distortion in what is coming out. And the distortion is really simply neglect of the patient population (indiscernible) could be addressed by the AbioCor. Now I don't mean to say that (indiscernible), but we are being neglected and we need to do something about it. (indiscernible).

Yes, I would just like to say that we do have a series of important investor relations-related goals to increase the portion of our stock that's held by institutional investors, to gain some meaningful coverage from not just one, but several, several respected analysts. And frankly, to make ourselves more visible at conferences and to take advantage of more of the opportunities to tell our story to the wider investing public. We have done a little bit of that recently, and some of you may have seen the interview I gave in the Wall Street transcript, and we hope that there will be significantly more such activity in coming months. We are being aided in that effort by Andrea tenBroek, who joined us just a couple of months ago as a communications specialist, and is adding a lot of professional expertise to some of my less professionally expert efforts in that direction. So we hope you will see some real concrete signs of progress and increased activity in that arena reasonably soon.

Thank you. One last question on a different topic. Obviously, Genzyme bought a stake in ABIOMED several years back. And there was talk of working jointly in biomedicine. Obviously, they continue to be a 10 or 11 percent shareholder. Can you characterize the relationship -- is it passive? Are there things being worked on?

At this point in time, the relationship is passive. An excellent relationship, but passive.

I wanted to add a comment to what Ed said about coverage and investor relations. I think -- we have just come back from a review of our strategy across the board. And we are convinced that as we continue to execute on what we have already indicated here in our annual report; and as we begin to show progress with further implants of the AbioCor; and as we launch commercially our AB5000 in April of next year; and as we move along continuing to improve our financial performance; and as we announce (indiscernible) developments that are right now ongoing -- we are going to attract the attention of many more. And really, our strategy right now is performance-induced analyst coverage. There are some of you who have moved from one company to another, and we love very valuable coverage, and we are hoping that some of you will, again, follow us now that you're in your new homes. But I do think that as we show that we are performing now -- it's not our words, but our performance -- we will be able to attract increased coverage, and that will correct itself.

William Frane (ph), UBS.

Getting back to the AB5000, are there any plans, or can and will the AB5000 be used for bridge-to-transplant possibilities?

It's not currently labeled for bridge-to-transplant. Okay? It would need to demonstrate longer operating reliability, and we are in the process of gathering the data so that we can go back to the FDA in order to document and demonstrate longer operating reliability. And with that operating reliability will come the ability to apply the device to more patients with different clinical -- different clinical circumstances. Okay? At that point, I want to stop short of saying that our label will ever say bridge to transplant, but we are moving in the direction of longer support and expanded clinical indication.

We would like to take one last question at this point.

David Rogers (ph), The Benchmark Company.

I have been looking at the story for a while, and it is nice hear the progress and also hear some of the familiar names on the call. Regarding the AB5000/BVS revenues -- I will lump them together -- back on October 2, you had a press release about Medicare reimbursement changes that were announced. Have you seen any quantifiable -- is there any specific quantifiable financial impact that you can discuss about those changes right now, I guess, gene?

Thanks, David. From the standpoint of the market opportunity, all of us that have been in the medical device field realize that the reimbursement side of the equation is a key piece of the puzzle for advanced use of any new technology, such as ventricular assist, DBS, and/or the AB5000 product line. So as it pertains to the financial reimbursement to the hospitals, they have seen a significant payback on these patients, and we have heard from physicians that it certainly eases any potential negative financial review that they receive from administrators or so on, on these patients. So that positive aspect -- as we know it in business, return on investments -- that the hospitals get paid and make money on these patients, is a big part of it. So expanded indications directly -- we have not seen it directly. We've heard that the physicians are very happy, that the hospitals are getting paid. So it is all positive. So I would say it is a positive trend, but it's not measurable at this point in time yet.

Okay. You mentioned that three -- I think, Ed, you mentioned that three centers were currently screening in preparation for implants, that I guess are actively screening. What happened to the other three? Are they resigned from the trial or just inactive, or what is going on with them?

No, they remain members of the clinical trial. And they are part of the team that we gather together when we go over our clinical results and when we review our approaches and the like. Each of them would have different reasons for having not actively stepped up in recent months to screen patients. In some cases, surgeons have moved and the surgical team is not intact. In other cases, there is the possibility that overall institutional resources and priorities are changing somewhat. But those teams have all remained very interested and very involved in our thinking and our evolving strategies.

Thank you all very much for joining us, and look forward to talking to you at our next conference. Thanks again.

Ladies and gentlemen, that concludes your conference call for today. We thank you for your participation, and ask that you please disconnect your line.