ABIOMED Inc (ABMD) 2007 Q1 法說會逐字稿

Good day everyone and welcome to the ABIOMED Fiscal First Quarter of 2007 Earnings Result Conference Call. This call is being recorded. At this time for opening remarks and introductions I would like to turn the conference over to Liza Heapes of ABIOMED's Corporate Communications Department. Miss Heapes, please go ahead.

Good evening and welcome to ABIOMED's Fiscal First Quarter of 2007 Earnings Conference Call. This is Liza Heapes of ABIOMED's Corporate Communications Department. I'm here with Mike Minogue, ABIOMED'S Chairman, President, and CEO, Dan Sutherby, our Chief Financial Officer and Dr. Karim Benali, Chief Medical Officer.

The format for the call will be as follows. First, Mike will provide you with some strategic and operational highlights for the quarter. Dan will then provide a summary of the financial results for the quarter and then we will open the call for your questions.

Before we begin discussing Q1, it is necessary to remind you that during the course of this call we will be making forward-looking statements including statements regarding future financial performance, product development efforts, ABIOMED's strategic operational initiatives and market response to our new products. ABIOMED's actual results may differ materially from those anticipated in these forward-looking statements based upon a number of factors including uncertainties associated with development, testing and related regulatory approval, competition, technological change, future capital needs and other risks detailed in our SEC filings. Investors are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date of today's release. The Company undertakes no obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect events or circumstances that occur after the date of this conference call or to reflect the occurrence of unanticipated events.

In addition, today we will be discussing our Impella Products and the AbioCore. The Impella 2.5 and 5.0 are approved in the U.S. for investigational use only. Our other Impella products and the AbioCore are not FDA approved and are not yet available for sale in the United States.

I am now pleased to introduce Mike Minogue.

Thanks Liza. Good evening everyone and thank you for taking the time to join us today. This has been an exciting quarter for ABIOMED strategically and financially and we continue to generate positive momentum especially with the AB5000 sales and the FDA progress in the U.S. We're pleased with our results this past quarter.

Revenues are $13 million, a 55% increase compared to Q1 of last fiscal year. In Q1, we had the highest number of patients ever supported worldwide on our life saving AB5000 technology. Additionally, AB5000 console sales were up 459% even as we continued to rent a double-digit amount of AB consoles. Our disposable revenue increased 35% as we shipped 590 units. We're seeing positive trends in the U.S. for the BVS and AB disposable sales even with the transition occurring to AB ventricles and to note, we are just starting the U.S. Impella trials and completing the local hospital investigational review boards. It usually takes anywhere from 45-90 days for the local IRB approval once the FDA approval is granted.

We're encouraged by Q1 results and I want to thank the team at ABIOMED for their hard work during the record first quarter and for the dedication to our customers and patients.

Today, I'd like to comment on our fiscal year '07 goals, specifically number one, increase our global distribution. Number two, establishing heart recovery as a standard of care for acute events. Number three, expanding our product portfolio by making regulatory progress.

So first, on our global distribution, we continue to make progress. In Q1, we added four field personnel to our worldwide team of sales and clinical experts. We have the largest sales and clinical team in the VAD industry with over 35 professionals in the U.S. and over 14 in Europe. In addition to this team, we continue to invest in our service and marketing teams to provide world-class best practice sharing to our customers and our patients.

Excluding our two veteran sales representatives, our median number of months that new sales hires have been with ABIOMED is 10 months and the average is 12 months. This figure demonstrates our future growth potential as these reps gain experience and traction in the market. Fueling this growth of course will be new hires going forward as we plan to continue to add two to four worldwide field members each quarter for fiscal 2007. We are focused on identifying and hiring top talent with proven track records and strong clinical relationships.

The sales and clinical teams made very good progress increasing our penetration rates in the U.S. at open heart and transplant centers. Our AB5000 console is now in 46 out of the 119 transplant centers or 39% and 102 out of the 867 open-heart centers or 12%. In total, we're roughly 15% of combined transplant and open-heart centers, so a long way to go.

The AB5000 console is also now in 9 of the top 10 U.S. News and World Report ranked cardiac surgery hospitals and 16 out of the top 20.

On progress outside the U.S., we're excited this quarter to have our first Impella orders in Mexico and China; and our first AB Consoles sold in Mexico and Australia. We signed new distributor contracts for Impella in India, Pakistan, Sri Lanka and Bangladesh and we'll continue to expand our global sales and distribution because acute heart failure impacts over 3 million people worldwide every year with well over 1 million in the U.S. alone.

Globally, Heart Recovery from acute heart failure is the best solution for the patient and most cost effective for the healthcare system. Through our investments in global distribution we believe we're increasing recovery awareness to change the standard of care and drive revenue growth.

This brings me to my second goal of establishing Heart Recovery as a standard of care for acute events. We've made progress on several fronts. Recently, we announced the addition of Dr. Dan Raess as a full-time employee. He has a wealth of knowledge and experience from 18 years as a heart surgeon in Indiana. He has helped ABIOMED develop the BVS and AB5000 products over the last 15 years and had an 87% recovery rate with the AB5000. He's the newest addition to our Healthcare Solutions Team that provides expert advice to centers and hospitals on best of care protocols to drive strong recovery outcomes but also increase awareness of reimbursement codes using ABIOMED systems.

We hosted a Webcast on May 18th that educated administrators on our billing codes and processes. The Webcast is available on-line and to date over 100 people have listened to the call. Recently, CMS validated once again our recovery outcomes by maintaining or AB and BVS products in DRG 103, which is heart transplantation. We're currently planning another call in September to update the hospitals on guidelines for recovery reimbursement.

The most effective way to establish a new standard of care is to utilize evidence based medicine. We're continually writing and submitting papers on our technology and to date we've already submitted more papers year-to-date than all of last fiscal year. And again, this is the report for our Q1. This quarter we presented three papers at EuroPCR, eight papers at American Society for Artificial Hearts, or Artificial Organs, two at AMSEC and one at Society of Cardiovascular Angiography and Interventions, as well as several others. We continue to compile, assess and publish clinical data showing that recovery is the most likely outcome with ABIOMED solutions. Specifically, for AMI, post cardionomy, cardiogenic shock and myocarditis, heart recovery for AV VAD survivors is the most likely outcome with recovery rates in excess of 60%.

In addition, this quarter we had ten hands-on training sessions across the country for cardiovascular surgeons to begin using our technology. Our continued recovery successes resulted in numerous AB5000 recovery stories in both print and televised media around the country. For instance, we had stories in Buffalo, Atlanta and Kentucky. We were also honored to be one of the 25 technologies chosen out of 1300 companies by the advocacy group AdvaMed.

AdvaMed selected the ABIOMED recovery story of David Jones to highlight their profiles in progress you can see events in Washington D.C. It was well attended by members of Congress and the keynote speech was by the FDA Acting Chair, Dr. von Eschenbach. At 52, David was admitted to a local hospital in North Carolina where he seemed to be having a heart attack. He was transported to Presbyterian Hospital in Charlotte where he was diagnosed with viral myocarditis and placed on ABIOMED Bivent support. David was then transferred to a transplant hospital where he was expected to receive an implantable bridge to transplant VAD and eventually a transplant.

However, the center allowed more time for his heart to recover and it did after 11 days of AB5000 support. He left the hospital 16 months ago with his own heart and has maintained his quality of life void of wires coming out of his skin or portable drivers. David did not have to go back to the hospital for heart transplantation surgery, undergo another lengthy rehabilitation process, return for ongoing biopsies or need to take immunosuppressant drugs for the rest of his life, which can cost over $50,000 a year. David came to Washington at AdvaMed's request to represent the best in patient outcomes and advanced technology.

Finally, in line with our recovery awareness mission this past quarter we launched our rebranding initiative. You may have noticed the new look on our annual report or our new Website. We've also added the new tag line, which captures ABIOMED's strategic focus, "Recovery Hearts, Saving Lives." This is indicative of our continuing transformation to accompany focus on revenue growth through a portfolio of breakthrough-advanced technologies in circulatory care.

Next I'd like to cover our goal of expanding our product portfolio by making regulatory progress. We received conditional FDA approval on our investigational devise exemptions for the Impella 2.5 and 5.0 technologies this quarter. We recently announced that the first U.S. patient was treated successfully during the high-risk angioplasty procedure with the Impella 2.5 at William Beaumont. The patient was initially referred to William Beaumont by his cardiologist for clinical evaluation for a possible heart transplantation given his poor cardiac condition and the high risk for mortality associated with any intervention on his native heart.

At the time of the procedure, the patient presented with very poor cardiac function and deteriorated clinical status. For example, as his wife described, he was exhausted walking to the mailbox and back at his own house. The procedure, the angioplasty procedure, was performed on Thursday and the patient returned home on Saturday and since the procedure he has enjoyed two rounds of golf and said that it's one of his better scores.

The selective sites for the 2.5 and the 5.0 trials are at world-renowned centers and ABIOMED is focused on successful execution of these trials. We believe that Impella will change the standard of care in the cath lab and drive growth for ABIOMED. Please be advised that on today's call I will not comment on the estimated or expected end points of the trials nor will I comment on any details outside of what has been disclosed in the press releases.

As already stated, the local hospital approval process, the investigational review board, can take up to 90 days. So we're only now seeing approvals across the majority of the sites. We are planning to hold a call sometime in the future to discuss the progress of Impella trials in detail and will allow the users to talk about their experiences.

We also recently announced the FDA approval of our off-pump Cannula technology that has the potential for off pump with minimally invasive procedures and is designed to integrate with ABIOMED's AB5000 and BVS circulatory support systems. The new Cannula system is easier to implant, easier to explant and is expected to standardize surgical procedures for acute heart failure patients. ABIOMED's new Cannula System provides an enhanced benefit since patients will not require a second stratotomy during off-pump explantations. Off-pump, which is also referred to as beating heart techniques provides potential benefits for shorter hospital stay, recovery time, less bleeding, less potential for infection, and less trauma.

We're also continuing to wait on our decision for the AbioCore HDE and we believe we've provided all the data to address the FDA's concerns.

In summary, this has been a very strong first quarter with positive momentum and good progress towards achieving our goals. The entire ABIOMED organization is committed to saving lives and driving growth to enhance shareholder value. Now I'd like to turn over the call to Dan.

Thanks Mike. As Mike mentioned, we are very pleased with our progress and results this quarter driving strong revenue growth as we continue to expand our global distribution and invest in new products. If you turn to the P&L attached to our press release I'll provide some details on our results for the quarter.

First of all, whenever I refer to a number going up or down I'm referring to the increase in that figure in the fiscal first quarter of 2007 compared the fiscal first quarter of 2006 unless I indicate otherwise. Also please note that we adopted FAS 123R during this quarter and therefore, our results for the first fiscal quarter of 2007 include stock option expense. Our press release issued earlier this evening outlines the financial effect of stock option expense during the first quarter and I will provide some additional details during this call.

If you turn to the P&L, first to revenues, revenues for the first fiscal quarter ended June 30, 2006 were $13 million and were up 55% reflecting the investment in our global distribution. Console revenues were up 398%. Disposables were up 35% while service, training and other revenues were up 57%. Q1 revenue from disposables, service and training represented approximately 84% of total revenue for the period. From a revenue trending perspective, all product lines were up during the quarter.

Turning to gross margins, our fiscal Q1 '07 gross margins were 73%, up 100 basis points over the first quarter of fiscal '06. Our strong mix of disposables generated strong gross margins during the quarter and we continue to implement cost savings and productivity initiatives to lower our cost base and maximize the leverage from our growth.

During the quarter, we made good progress on our various programs to improve operational efficiencies such as supply chain management, cross training to provide flexibility to meet growing demand and we continue to evaluate outsourcing opportunities to lower costs while maintaining quality in all manufacturing processes. Also, our newly implemented SAP System will be a key tool to provide enhanced visibility into our operations and provide data and analysis to drive process improvements that in turn can lead to improvements in gross margins going forward.

On research and development expenses for the quarter, in Q1 '07 R&D expenses were $5.4 million, up $1.5 million from Q1 of '06. R&D expense for the first fiscal quarter of '07 includes stock option expense of $500,000. R&D expense for Q1 also included the additional R&D efforts on Impella products and expenses related to our efforts to obtain regulatory approval for our Impella devices in the United States.

As a reminder, our Impella technologies are CE marked in Europe and our Impella 2.5 and 5.0 products are approved for pilot trials in the U.S. but approved only for investigational use in the United States. Our other Impella products are not yet available for sale in the United States.

Now to discuss SG&A expenses; during Q1 '07 we continued to execute well on our plans to increase global distribution, and as Mike mentioned, we increased our sales and clinical headcount by four. Global sales and clinical headcount at the end of fiscal Q1 '07 was 49, representing an increase of nearly 60% since June 30th of 2005. SG&A expenses for fiscal Q1 '07 were $9.4 million compared to $ 7.3 million in the same period of fiscal Q1 '06. SG&A expenses for the first fiscal quarter of 2007 included stock option expense of 1.1 million.

You will note on the P&L statement attached to our press release that we recorded a charge related to acquired in process R&D of 800,000 or approximately $0.03 per share.

For the net loss for the period, Q1 '07, the company reported a net loss of 6.1 million or $0.23 per share including total stock option expense of 1.6 million and the in process R&D charge of 800,000. The aggregate impact during the first fiscal quarter of '07 from stock option expense and the IP R&D charge was expenses of 2.4 million or $0.09 per share.

On liquidity and capital resources, as of June 30, 2006 our cash, cash equivalents and investments totaled approximately $25 million. The cash utilization since March 31st of 2006 included payment of our fiscal '06 annual bonuses to employees paid during the first quarter. Investments and our SAP implementation in the US and capital expenditures for capacity expansion in our US operations as we see continued strong demand for our AB5000 products.

We believe we have sufficient liquidity to fund operations and invest in our growth platforms in fiscal '07. Our estimated quarterly cash utilization going forward is expected to be approximately $3 million per quarter.

In summary, we believe our progress through the first quarter of fiscal '07 and our focus strategy to build our global distribution and continue to invest in new products, position ABIOMED for long-term growth that we believe will translate into enhanced shareholder value. I will now open the call to your questions

[OPERATOR INSTRUCTIONS]

And our first question comes from Greg Simpson with Stifel Nicholas.

Thanks, and very nice quarter guys.

Thanks Greg.

Kind of losing my voice and I don't want to annoy the hell out of everybody on the call so I'm just going to limit this to a couple of questions.

Mike, first of all on Impella you mentioned a couple quarters ago that you got reimbursement in Germany and France and last quarter you indicated that really didn't have an impact. Given the very strong revenue number, I'm wondering if that did in fact have an impact in the fiscal first quarter that maybe you can spell out for us a little bit.

Sure, the main impact to the revenue has been in the US and as I stated, the trials go through a process of 60 to 90 days where you're getting the approval but also working through the contract so the majority - the US revenue is based without Impella. Europe as a whole is a smaller number and then Germany as a whole is a smaller number than Europe. We do have approval process in Germany for reimbursement. Some hospitals only now are in negotiations for the actual approval process.

And just to refresh everyone's memory. The process in Europe is first you get CE approval to sell into Europe, then you get country registration approval to sell into the specific country, then you get a reimbursement highlight or approval process and then individual hospitals need to negotiate with their insurance carriers and so they have to do cost benefit analysis and then negotiate.

So, we're starting to see that process in Germany, but again, we're continuing to add more people in Germany to ramp up across the board.

Okay. All right. So it sounds like it was the AB5000 in the US that really drove the quarter.

Correct.

Okay. Second question on the pipeline, you've indicated some of our conversations in the past as the backlog or the log jam at the FDA cleared that would free you guys up to start submitting some additional things that maybe have not been unveiled yet from the R&D process. Can you give us some sense of what the timing might look like on that without getting into specific products?

Sure Greg, the first one is that we've had as pending ID submission as we do have an implantable device for the left or the right side. It's currently being used in Europe as well. So that's one product.

Aside from that, we cannot and will not right now disclose what the new products or upgrades are but it will be disclosed within the next basically next 12 to 18 months.

Okay. Thanks. And then last question on Impella and I know you said you don't want to say too much on the trial, things like that. But once you get the IRBs out of the way, obviously the - certainly the 2.5 trial ought to go pretty quickly. When do you feel you will be in a position when you can give us some sense of maybe the timing of the approval process? Final FDA approval.

Sure, I'll give you in steps and just so - just to ground everyone, when we enter into the trial for the 2.5, that is for a selected, elective screened patient population. So while we've been waiting now, certain centers are starting to screen patients that would qualify as high risk. And so you should be seeing the bulk of - basically there's 7 sites for the 2.5. 3 of the 7 have just recently got approval and we expect the other 4 shortly. And 3 out of the 7 5.0 centers, we're expecting their approvals shortly as well.

So once we get into that and we get more patient data, we are going to then have a call for our investors so they can hear about some of the experiences.

And then, just on a timeline, if you break up everything. Upon completion of a pilot, what you would then do is a submission to the FDA and their response time can be 30 days, that's the timeframe they have but usually there's about 2 reviews. So you should estimate that it could be 30, 60 or 90 days with an average being probably 60 days.

Upon that, with approval, you go into a pivotal phase and then the pivotal phase and the timing for that would be dependant on what we choose to be, our patient population, what we're driving for, what label and that will dictate what the N is for the number of patients. And then once that process is complete we would then submit again. And then you have basically 180 days or 6 months. And in that process you have some feedback usually around the 45-day mark. At the 100-day mark they can give you a letter of deficiency, which you start over again, they could tell you that you're going to go to panel, or they could just continue and move on to give you approval and that approval would have to happen within the 180 days.

So we're confident in our centers, we have recently added one of the centers in Europe or we're in the process of adding one of the centers in Europe, [Dr. Jose Enriquez] who is from Amsterdam Medical Center who as you know published a paper on 18 patients for high risk angioplasty with very positive results recently and he will be one of the potential centers that we're adding going from 5 centers to 7 centers for the 2.5.

The other comment is that this is a category B2, which means all along the lines of the pilot to pivotal, we will be generating revenue and that's also partly why we're ramping up and continuing to ramp up both our sales and our clinical team so that we can manage the demand and manage the launch of this product out into the US where there's tremendous amount of excitement.

Okay, great. Thanks very much Mike.

And from Lazard Capital Markets we have question from Alex Arrow.

Thanks Mike. First we're trying to square the 398% growth in the consoles with our revenue break down and - I'm wondering maybe the BVS 5000 is excluded from those numbers, which is why the year-over-year comparison is as high as it is. Can you say whether it excludes the BVS 5000?

Sure, let me run through that with you. So the revenue for the AB console only was 459%. In the press release we gave the breakout for the revenue for all consoles and that was -

398%.

398%. We are not, and did not have BVS sales and last year when we started the rental program we had a lower number of consoles sold. But this quarter we had the growth in AB, but we also continued to have another double digit of new rentals in the quarter for AB5000 consoles. So effectively we're getting the razor out there and it's also following the very strong Q4 of Box sales as well.

Okay, so in the year ago, the fiscal 106 quarter, were you still selling DV 5000 and did you sell only a few AB5000s then which is why the percentage increase is so high?

I don't believe we sold any BVS last year in this quarter.

It's just hard to - I mean I know that you grew 55% total revenue, but still it's hard to make the numbers work to get a fivefold increase versus what you did last year. Maybe I'll call Dan after the call and see if we can hypothesize some ways it could work.

Sure.

Okay. On a related question, I know that in the past the sales of the AB5000 platform have been related to convincing the clinical community of the outcomes of getting patients to return home with their own heart and that some clinicians have commented that the data was almost too good to be true or too good to be believable and you have a series of publications coming out and you mentioned some of the data in your prepared remarks, can you say whether the data is now in the minds of docs to the extent that it's driving the AB5000 growth or is that still another shoe to drop when that does start to becoming accepted?

Well, I think there's 2 types of customers. So, the first is the transplant surgeons who are more familiar with VADs and one of the things that we went back and when we showed the data specifically on AMI, is the common mindset out there was that if somebody had a cardiac index of less than 2.2, they were basically a patient that was going to die and that was reinforced by the SHOCK trial in 2000 where the patients that died had a cardiac index of 2.2.

Most recently we did purchase that data. We did a comparative and we found that our patients that lived had a cardiac index of 1.7, 1.8 as compared to the 2.2 and remember lower is worse. And of those that lived, two-thirds recover their own heart.

Since that time Dr. Benali has been, as I stated, writing lots of papers. One of the benefits of having Dr. Dan Raess join was to get another surgeon who could go out there and train the centers, whether they're transplant centers or open heart, really focused on recovery and just on a numbers basis, the transplant centers are coming around as you heard, 16 out of the 20 have purchased AB but there's 900 approximately open heart centers. So it's a tremendous opportunity and we're today only in about 12% of those centers.

So we're matching the clinical data with the reimbursement with the marketing and the patient awareness side to really drive more growth and as you're seeing, as you said the math does work as far as the consoles are selling and that's why we're - that's also why we announced that we did more patients on AB5000 than ever before and we're actually seeing, even tough there is a transition occurring to AB5000 over BVS we're still seeing in the US positive trends on BVS but the main reason is the AB just gets better recovery, patients can get up and walk around and it has higher flows. And we now know that patients can take more than 5 to 10 days to recover and that's why the AB5000 is the preferred VAD for heart recovery - and Dr. Karim Benali, if you'd like to comment on any of the papers.

Actually I'm going to just in probably some comment I mean the - as a follow up if there is a - and we see that a trend today is because there is really a crucial need in terms of for those patients that they don't have any other alternatives. So the VAD, the plays role in way that is really used as a last resort where - when all other say conventional therapies have failed and actually when it comes after and the data suggests a very good outcome we discharging the patient with his own heart or her own heart, that really will make a difference and that's what I think will expend the trend that we're seeing today.

Okay. Thanks. Are you commenting on how the installed base is split up between BVSs and AB5000s?

We can, we did commented on the percentage, but basically the - as we stated about 39% of the transplant centers have the AB with exception of maybe another 10% that don't have it, the rest have BVS and then if you go to the open heart centers, it's around 12% now that have the AB5000 and around 40, 45% that don't have - or another 40, 45% have the BVS as well.

Do you anticipate that you're eventually going to be able to completely transition everybody who has a BVS to an AB or are there some that are still going to be price sensitive and maybe 60 or 70% is the ultimate conversion you'll arrive at?

We believe that everyone should upgrade to the AB5000. They still have the option to use the BVS disposable but the console gives them the capability to switch to the AB to go longer term and it's very easy to operate and you can also get the patients up and walking a moving around and riding a bike for rehab with that console in the AB5000 VAD. So we believe they will. We also believe that we've shown a positive path for them on the financial side with our reimbursement, whether it's insurance or CMS and we also think there's a great opportunity for them to market within their own community for hard recovery, which is why we have a lot of media events where people are going home with their own heart.

We - thanks, would you be willing to update us on the ASBs for each for - well for what the AB is now commanding this ASB.

Go ahead Dan.

Yes, I mean on an ASB basis we didn't see any significant deterioration in fact we're seeing some slight appreciation quite frankly Alex, quarter-over-quarter, year-over-year. BVS is holding in there and again as Mike mentioned from a product line perspective everything is trending up year-over-year.

Okay, would you be willing to be dollar specific or just the -

Yes, the list price on the AB is 95,000 and then at our discretion we're giving trade ins for BVS 5 to 10,000, depending on what model.

The price point for AB, for clarity for others is for the console for the AB. And the ASP for the ventricle is 45,000 per.

Okay. And 45,000 for what - for one patient even if you use both sides?

Per disposable. So bi-VAD would be 90.

As much as the whole console. Okay thanks you. Maybe if I can squeeze in one more question. You brought up reimbursement briefly, the recent announcement about what the '07 reimbursement will be for DRGs 525 and 103, can you comment on how that - any and every way that you think that might affect your business?

Yes, if you look at the net of the DRGs we play in, and this is all subject to the area and academic settings, but DRG 103 essentially is up around 2% and 525 is up around 7%. But you also to realize that only 30% approximately of our patients are CMS, but that drives behavior. The average payment for our insurance patients is actually higher than both of those DRGs. It's averaging around 165 -- $165,000.

So I - it used to be that these were loss leaders, now there's some profitability for hospitals doing this. Can you comment on how profitable these are?

Well we believe that hospitals that have a recovery program can profit and if you - the HHS secretary, Mike Leavitt, one of his quotes in the press release was "hospital payment should promote the best care for all patients" and what they're drying to do is drive the process for pay per performance. And if you look at what CMS did last year and what they did again this year is they're paying a heart transplant reimbursement for folks that can implant, explant our Cannula for the purpose of recovery because they know it essentially saves a lot more money, avoids another transplant and it's much better for the patient. So we're very pleased with the outcome. And we believe that this is just going to continue the momentum we're already seeing in the field.

So that counts as 103 if you use an AB5000 with Cannulas. That's a 103 charge?

If you implant or explant either the BVS or AV in a patient then you get DRG 103 provided they're a CMS patient.

So do you ever have to use 525 given that [inaudible].

You would use 525 if a patient - you would use 525 only in the case of where a patient had it switched and then transported to another hospital that was a transplant center. So that an open heart center that put in the device they would then get DRG 525. If a patient at the transplant center doesn't recover they can stay on the device for other options and essentially if they then go onto a transplant they get DRG as well.

And if you look at the most likely outcome for survivors it is recovery. So for the majority of these patients they're recovering so they get DRG 103. And if those that don't recover stay on the device and go on to other options or transplants they also would get DRG 103.

Okay great. Okay thanks Mike.

Thanks.

And our next question comes from Clay Wilson of Needham and Company.

Thanks a lot for taking my call and congratulations on the quarter. I just had a couple quick housekeeping questions. Did you say that 84% of the total revenues right now were disposables, training and I guess service?

Yes, so the non-console revenue Clay during the quarter was 84%.

Great. And disposables were up about 39% this quarter?

About 35%.

35. And you said that about 590 units, did I hear that correctly?

Yes.

And were those both in Impella and Europe and the AB, BBS units in totality, all mixed together for that 590 number?

Yes.

Okay. Thanks a lot. And also can I ask about 1 question about the trials with the 2.5 and the 5.0, is all that data eventually kind of going to mix together or is all that going to be very separate in terms of the trial process.

It's a good question, I'll let Dr. Benali answer that.

You mean for the patient population, the trial right?

Yes, right. Because some of them will be 2.5 and some of them will be 5.0 and my question really is will all that data be able to mix together to have one pool of data to apply for approval or will each one have to be separated and approved separately?

As you may probably know, we have right now 2 patient populations targeted for 2 devices, 2.5 is a high risk [PCI] which is induced by cardio just in the Cath lab, the other one is more for the low cardiac output after post cardiotomy and that is for the surgeons.

That's the 5.0?

That's the 5.0. Which is - these are 2 patients' populations, which is - going to be like 2 data sets separate - separate data sets and the results are going to be separate for 2 different trials.

Uh huh. I see. So okay, got you. So that will go through - those 2 will go through maybe in parallel but separately.

Yes, the 2 trials running right now, we enroll up to 20 patients each as I mentioned. One by in the cath lab and the other one in the operating room.

Okay, right. Okay that's helpful. And also I had a question about Europe sales - Impella sales in Europe. I believe on June 27th you said that 250 patients had been treated with Impella over in Europe, can you tell us - give us an update as to how many now have been treated?

What we've said is there's over 600 patients have been treated with Impella technology.

So that - since - so that's over 600 now compared to about 250 on June 27th?

Yes. On the June 27th this year we did not make any statement specifically, so I'm not sure where you're getting that from.

All right.

Yes.

Okay. Sorry. And the situation in Europe, how are clinicians using and reacting to Impella and what do you see as sort of the European overall uptake with regard to Impella. How is that going?

The Impella in Europe is mostly used today for the high-risk angioplasty patients and that's obviously the path we chose to take on the FDA trial. And that's - the reason is they get used to it, they understand what's it's capable of doing and it's something that's scheduled during the day where they do their high risk angioplasty.

From that point, once they get comfortable then they start to look at using it for other options such as AMI reduction of heart attack, reduction of the infarc. So that is the next phase of - we have certain centers now that are starting to look at that population, to image the infarc itself and to see if they can see any signs that by unloading the ventricle you can reduce the infrac and have a positive outcome on the patient's recovery.

Dr. Benali, any other comments?

I think that's the right comments. Actually, yes, what we saw is really the - high risk BTI is really what drives the initial usage in the cath lab and it's really after that, the extension we see more and more new indications as people get familiar with the device.

Okay. And could you also mention with regard to the couple - just quick financial housekeeping questions. You mentioned that - one thing that I was wondering, with regard to the net operating losses. I guess those have been expiring and I was wondering if you could give us an update as to sort of what level that was right now?

Yes, right now we have about $70 million of net operating losses available to offset future taxable incomes.

Okay. And will those be around for a while?

Yes, you are right, you can carry them back 3 years and forward 15, so they do expire as years tick by, but we believe we4've got some nice NOLs available to offset future taxable income.

Great. And you said that the cur right now is about 3 million a quarter going forward and you basically see a sufficient cash to carry you through 2007.

Correct.

And I think that might be most of what I have right now. Thank you very much I appreciate it.

Thanks Clay.

Thanks Clay.

And our next question comes from Harish Aiyar of Dawson James.

Good quarter Mike, Dan. Just a follow up on the AD consoles. Can you just comment on - you said I think the rental program kind of performed as it has been in the last couple of quarters. How many of just the outright console sales kind of converted from rentals or were they just new sales or new placements all together?

Sure, let me explain it. So if we call something a rental for the quarter it means that they rented it and they continue to rent it during the quarter. If they start4ed as renting and converted to an order or sale then we don't consider that a rental within the quarter, that's just an outright sale.

And then what we've been seeing is a mix depending on the quarter, depending on the centers. About a year ago we started the rental program because we were adding all new sales reps, hospitals have a budgetary process that takes a bit of the year in advance to budget. And we had sales force that was new, was introducing themselves to surgeons being the purchasing agents etc. So we wanted to give that flexibility.

The good thing is that we're continuing to see centers opt to go the rental route so they can utilize our technology, our disposable technology, which they're buying, and we're generating revenue and at the same time, we start to see transition over a period where they'll then convert that rental to an acquisition.

Now it doesn't happen every time and in some centers they may be renting because they've already got 2 or 3 consoles in house and they nee4d it for another patient. And so it's been a very positive trend and one that we're going to continue, but again what's nice to see is that the sales are continuing to grow much like in Q4 we had a great quarter on box sales, plus we're seeing the utilization of the patients as well.

Great. That's helpful. And just finally, we're getting into a lot of the scientific conferences in fall I suspect that we should see some presentations and abstracts etc at like heart failure and European cardiac plastic surgery meeting.

Correct and I'd say probably the biggest one on the specific Impella side would be TCT coming up in October.

Okay great. Congrats again on the quarter. Thank you.

Thanks Haresh.

And next we'll take a question from Matthew Scalo of Cannacord Adams.

[inaudible] quarter. Hey, I wanted to ask in regards to the 10 training sessions, how many docs attended those sessions in general. Is there a way that we can track maybe the immediate benefit or longer term benefit of those surgeons, i.e. were they - are they de novo customers. Are they experienced with it and they're just looking for a refresher course, maybe a little bit more detail on that side.

Sure I mean we do track it and there is a way to track it and what you would say is usually there's 4, could be 6, could be 3 and we depend on what we're doing in the area. And a lot of times it's surrounded, you have a transplant center which we call the hub surrounded by spokes the open heart centers. And so we may have champion at a transplant center that will then invite in 8 other hospital surgeons so that they can put in the BVS or AB and if patients don't recover they can then send them on to the transplant center.

So we absolutely do track that. There's a process to it the way that you request it, the clinical people are there. And it does take a lot of work but it's shown to be a great technique to generate utilization. In addition this quarter we got approval of our minimally invasive off pump cannula and what that gives the capability to do is for centers like - that are open heart centers that may not have implanted in a while or may not implant except for a couple times a year or just - they're not used to it. It's a step by step kit that allows them to be able to put it in off pump and gives them the option to remove it off pump and avoid a second sternotomy if it's been up to 30 days where there could be some scar tissue.

And so I think that's going to be a great benefit because what we hard from our best transplant centers was that we needed to support raining open heart centers because when they would put in the BVS and then transition them to the open heart centers or to the transplant centers they would have issues with the way the cannula was placed or something that was done so we're all helping each other but I'd also tell you that some of our best users are not necessarily at the transplant centers, they're at open heart centers and they have a good relationship with cardiologist and I think we just got one of the best ones with Dr. Dan Raess

Okay. And is there a target number of training sessions we should expect say by year-end or in 2007? What's - once a month? Is this kind of?

Well we did 10 in the quarter. So 3 a month and then it just depends on how comfortable they are. The other benefit of the learning curve is many of these people have put in BVS for the last 10 years. And the cannula is very similar, the process is very similar, the AB is just easier to manage, it's an on/off button on the console and the VAD itself had higher flows and lower adverse events. So we're doing both in conjunction.

Okay. And then I wanted to go back to just BVS. Did you state that there were no consoles sold but the disposable growth is still appropriate even, maybe even in line with that 35% disposable growth or was it? -

Yes, all the disposable lines are growing. And we actually are seeing a transition from BVS to AB. So we're seeing a larger increase in AB. But even with the transition occurring, we're still seeing a positive trend on BVS in the US.

Okay and let me switch gears a little bit on the AbioCor, can I just ask when the FDA has last asked questions or maybe the last conversation, time line per se, not so much conversation?

Sure and I'll give you a - a very specific answer. We believe we have given them everything that they need to address their concerns and we've documented that we believe we've given them everything they need. However, if they were to come back with another question or issue then we would then respond again.

But it's been over a year since the panel meeting and to remind everyone the panel voted at one point to approve a contingency approval but couldn't decide on anticoagulation in the data registry and so what the panel did was give a recommendation and then the FDA follows that and what they were converted with is anticoagulation and patient quality of life.

To be a humanitarian device exemption we have to prove safety and probably benefit and as a company we believe we've proven that.

Okay guys. And last just - real quick last question here. As far as this rebranding effort. Is there a dollar amount that's material enough to detail for us on this and does that include maybe even direct to surgeon type advertising in journals - you talked about the website revamp and a new marketing slogan.

Yes, we're doing the shows, we're public - we're advertising in cardiology events and magazine. We are getting a lot of stories. We had a story in [VIVO] Times about the company. We've had stories in - the [Mean] Magazine publications and we're also spending money building a dedicated team that goes to these centers and certifies them as recovery experts and then when they get the local media events we coordinate with them for celebration of his life on patients.

To date we've done over - I believe over 7 centers have been certified and we're trying to do 3 to 5 a quarter provided they have the results on recovery.

Okay. Thanks a lot guys. Good quarter.

Thanks.

Next we'll take a question from Amy Stevens of SIG Financial.

Yes, hi good evening, thanks for taking the question. I just wanted to ask a little bit more about the sales and marketing. You said that you would be adding 2 to 4 field members in each quarter for the remainder of 2007. I just wanted to see if you thought that at that point you would be at some sort of steady state in terms of an appropriate field force.

And then, beyond that, I wanted to know whether those were all expected to be - I'm assuming the bulk of those are in the United States, or all and then within that are they meant to be targeting mostly transplant centers, mostly open heart centers, more open heart centers. Kind of what's the break down given the disparity in penetration that you pointed our before.

And then, final question, just related to the R&D expense, whether or not you anticipate - how you anticipated the spread to be for the remainder of the quarters given the trials that you gave on going. Should it be fairly equal for each of the remaining quarters of '07? And that was it.

Thank you Amy. Very detailed good questions so I'll try and walk you through and hopefully I hit all your points.

First of all, on the sales force we did not believe at the end of this year we'll be at a steady state. We do believe we will likely be continuing to add, but adding selectively. And I'll explain why. The majority of those heads up to date have been in the US, which is a big market, but we're continuing to expand outside the US as much as possible

Acute heart failure is - it's over 3 million people worldwide -- and we have some static on the phone if someone would hit mute or I don't know what the issue is here. Hopefully, everyone can hear me.

So we have a global force and for the majority we'll have certain distributors but we also want to have is a core competency patient that have acute failure. So that's the high level and we will continue to add in the US.

Now specifically to your question. How will we focus them? We'll work down through the numbers. There is about 119 transplant centers and clearly we're dedicated to the surgeons there and to the cardiologists, heart failure and interventional cardiologists.

Then there's about another 900 open heart centers and we're clearly going to be focused on those centers both in the surgery suite as well as in the cath lab because people have heart attacks all around open heart centers, not specifically the transplant centers alone.

And then last, if you look at just cardiology cath labs. There are 1700 hospitals in the United States that have cath labs. And so you can imagine big circles. The first circle of transplant will have 100 with a bigger circle around it of 900 with another bigger circle around it of 1700 cardiology hospitals and we want to be selling to every single hospital that has a cath lab and has a surgery suite and we believe then that as patients suffer acute events anywhere in the United States or any developed country, whether they're in the cath lab or in the surgery suite, we're going to have a product and a protocol to help keep them alive and send them home with their own heart.

One other thing as we expand into the FDA trials, we're going to go from potentially 7 centers to 40 plus and then from that point we do have more products in the pipeline that will be coming in and we want to make sure that we're planne4d on having the right distribution for the portfolio of products we have.

I hope that answered all your questions.

It did, I just - one other thing, do you have an issue in terms of the - when the purchasing decision is being made, is it - are you pretty much 90, 100% of the time if you convince the surgeon and/or the cardiologist to be using your system is then the decision over and that's what gets purchased as adoption or how often do you really need to convince the purchasing officer as well and has that changed - is that a changing thing. Is it evolving for '06 to '07?

I haven't seen any changes from '06 to '07. I will tell you that over the last 5 years the purchasing agents have become very effective at negotiating with vendors.

Right.

And in our case, we respect them, we know what they're trying to do. They're trying to make their hospitals better and more profitable but we also know that we have a very good value statement that has potential to generate revenue, in fact maybe make a profit, but also help the hospital reduce mortality, increase their marketing capability. And surgeons understand the life or death scenarios of these patients. And if you look at the FDA approvals for recovery, we're the only company that has indication approvals for all recovery type of events in the United States.

Okay. And is there any regional difference in terms of the influence of the purchasing officers.

Oh I think that there's regional, I think there's hospital. I think it really depends on the personality of purchasing, and the tenure and all those involved.

Yes. But you - do you use that information then to sort of guide your marketing?

We use that information to get the best sales people that they can figure it out and work on - at the account and maintain great relationships but also get us an order.

Okay, thank you.

Our next question comes from [Alan Gottleib] with Morgan Keegan.

Mike again great quarter. Congratulations. I've been here a long time with this company.

Please comment on your available bank lines. How much availability. And where we stand on that. Thank you.

Sure, I'll let Dan take that.

Yes, we have no debt on our balance sheet. So as I mentioned, we believe the cash and cash equivalents in investments are sufficient to fund our growth through fiscal '07.

What about existing bank credit facilities that are untapped?

We have no debt or lines of credit. We do not believe we need them at this time.

Thank you.

Thanks Alan.

Our next question comes [ Randy Howe] with [Pro Equity].

Good afternoon fellows and let me add my voice of praise to the chorus that's gone before me here. I, like the fellow before me, have been around for a long time. Let me add that I thought your annual report was excellent, I've looked at some 21 of them now but this is clearly the most outstanding, it lays everything out beautifully.

My question Mike is taking a bit of a future look here. You've made a great effort today and I think successfully so in letting out what you have ahead of you for the trial and your building of your sales force and all that sort of thing.

Assuming all the Impella products are approved for launch in the US and in particular in the US, we have the AB5000 out there now. One of the many things that will have to be addressed an in the processes of getting docs to accept this technology and adopt it quickly would be adverse events and we haven't talked about that at all, but I wondered if you could give us a feel for the level of adverse evens, in particular in Europe with respect to the Impella product line and then with the AB in the US and if it - if there had been adverse events have they been within the parameters of what one would deem to be clinically acceptable.

Sure Randy. I'm going to comment on that. First of all, I mean on the Impella side, there now - I mean over probably 40 publications talking about the 2.5 and t3he 5.oh. And when you really go over these publications and you can see a really adverse event is in terms of the single digits. So from that sense forward the technology we're really comfortable from the - the complication rate as compared to other technologies available and I think that is a strong statement by itself.

For the AB, as Mike mentioned several times and the - also we have numerous publications that we refer to the - the adverse event and as compared to other VAD because of the small cannula and also the hemo-compatibility of the device, which is high [value core] it's really bio-compatible and it has really low adverse event and I think it's not only marketing claims but even the data supports that and data has been out there and from different center and really support that fact that there is really low adverse event with the technology.

Okay, great, so clearly that shouldn't be an obstacle of any significance at all in terms of the rollout of the Impella and the advancement and the acceptance of the AB5000.

Right. And just again to reiterate, we have over - over 600 patients now done with Impella technology and we have over 300 - well over 300 patients done on AB technology.

There is instruction for use requirements with the FDA and we can compare our device to the instruction for years by other vendors and we can factually make the claim based on that reported data that we have the lowest adverse event of any paracorporeal VAD in the market.

Great. Okay, my second question is Mike you've made a great effort along with your sales and marketing team and your research team as the AB5000 as a device that would fair better in clinical outcomes if it were used earlier in the process following an acute event. Can you give us kind of a god's eye view of how you think that story is playing in the US and are you seeing trends to where in fact the AB5000 is being utilized within the first 24 hours was what you were looking for. Perhaps it was even less than that.

Yes, I think it's a case-by-case basis but there's a couple main factors that are helping to drive that. So the first is educating cardiology about what recovery is. And we have been publishing, we did present the AB data at the TCT and with the - with the acquisition of Impella we're now dealing with interventional cardiologists and heart failure cardiologists directly with products in the cath lab.

So even if it takes a cardiologists longer or a period of time longer than what we recommend in the protocol to prefer over to surgery, if the have the Impella device in, whether it's the 2.5 or the 5.oh. Their organs are going to be in better condition and the patients not going to be - not have suffered as much damage so that's the first piece - excuse me.

The second piece is now that we do have this relationship we can show and publish protocols with significant P values to show that this is the way to heart recovery. We do have a 10-year database, the biggest database on acute patients and we're really leveraging that to come up with correlations, p values and publish.

And then the third piece of it is, we really have VADs that are different than transplant VADs. They're VADs that can be put in easily, that can be put in in open-heart centers. They can be put in without requiring a heart lung machine and they can be put in with options of down the road of avoiding a second sternotomy. And we're trying to really differentiate a recovery VAD versus a transplant VAD that once you make that decision you potentially are going to damage the heart and reduce the chances of recovery. And that's really the message out there.

We are seeing several big centers that were well known transplant centers that are now starting to transition and focus on recovery more and more and we are seeing lots of open heart centers that are doing this as well and again the proof is the growth of revenue but also the growth of patient utilization on AB.

Great, great. And just a follow up on that - or follow on and add on I thought while you were answering.

Is there a communication, a potential communication breakdown between the first line of defense in the form of the cardiologist and the cardiac surgeon where the cardiac -- cardiologists might not be aware of the - of an ABIOMED VAD like the AB5000. And any effort on your part or do you see any movement to where cardiac surgeons are being counseled with - by the cardiologists on a more or less mandatory basis in hospitals to encourage cross pollenization of ideas and waited to introduce a therapy for patients.

Yes, this is much bigger issue than is specific to ABIOMED. Clearly, in all the hospitals, there is relationship between the cardiologists and the heart surgeons for multiple reasons as way back as stents versus [cabbages] so what our focus is on a patient indication, a patient treatment path and because w have the data we believe we can bridge that gap and we can continue to do it with publications. But it exists Randy and it's bigger than ABIOMED.

Okay, well I'm sure you'll give it a yeoman's try. Thanks very much for your time and we look forward to the next quarterly call.

Thanks Randy.

And now we'll take a question from David Zimbalist with Natexis.

Mike you had a very impressive at [ASIO] this year. A little bit of which was perhaps some new products. I believe there was one other - your synthetic valves involved as well. Can you talk a little bit about what you walked away from that meeting with and also discuss some of the increased visibility, some of your potential competitors in Levitronix and cardiac assist to add there as well?

I guess the question is one show as far as I walked away, or you want a specially do you want a question on the competitive products? I'm not sure I understand David.

Well first I'm wondering if you're willing to talk a little bit more about the artificial value you guys had there and where that might be in your pipeline.

Sure we did talk about a new valve, we are - been working on a valve that would improve it's basically hemocompatibility, open and flow rates and it's something that we've been designing specially for AbioCor 2, but it has the capability to be used in other products that we have.

The value itself, what's unique is whereas most mechanical valves have a metallic plate that flips open and closed like a coin, this device is designed with tri-leaflet and it opens and closes much like the natural tissue valve.

So at that point, other than that, we're not giving any other specifics on the valve itself.

Your other comment was on I think you said Levitronix and Tandem Heart?

Yes.

Levitronix is a technology that's been around a long time. It's a continuous flow type of VAD that sits outside the body, it does not have pulsatility, it does not do high flows, it's used for short term support under a 5, 10K, the patient cannot get up and walk and again, it doesn't have pulsatility, which we believe we've shown provides a higher recovery rate and to date it's been out for a long period of time several years. And the data is available for recovery for people to look at.

The second one - but that product still requires the sternotomy and it's a standard. You would say that it's a competitive product to the BVS, although the BVS has pulsatility and has the ability to switch to the AB.

The other one was Tandem Heart and we're very happy that Tandem Heart, or cardiac assist is in the market. They're helping to educate interventional cardiologists about the importance of heart support in cases of high risk angioplasty or cardiogenic shock and we believe that their influence on the market has been very positive for out introduction and our education with Impella and specifically I'll turn it over to Dr. [Benali] now, if he wants to comment on the tandem heart procedure.

Well, I'm going to probably few words on the tandem heart. It's certainly a good device and it's really the most right that there is a real need in the cath lab for the [circuit] support. However, the device has really to overcome several challenges and among them are really - not really compatible with the daily routine practice in the cath lab because you -- the device requires a puncture of the septum, has a large cannula, you need to fully anticoagulation for the patient. The time to implantation of the device is much longer points that what you would, for instance the Impella requires. And more important that the high complication rates for the Tandem Heart, I think it's in a really limited [suited], but it's certainly good device and we --- we can see the - all the indications that can be used for - in the cath lab and elective or non elective case.

Okay. Second, can you talk a little bit about the number of center that you have in Europe using the Impella now?

We haven't given a specific number, it's over 70 centers, but we don't have the exact number but it's over 70 centers have been using it -

All right. And in the US, you guys are going to be charging for the Impella product as part of the trials correct?

Right.

So can you give u s some sense of the ASP, I believe that the consensus understanding is that these trials, certainly the 2.5 should roll quickly and to the extent that that's the case that's a nice bonus of use during given quarters, can you give us some range of ASP that you expect to get, would be helpful?

The - what we talked about is a $12,000 price for the 2.5 with a discount in the pilot trials that they'll get for the pilot, so 7.500 just for the pilot. And for the 5.0, what we talked about is a price of $15,000 discounted down from 20 something for just the pilot trials themselves.

Okay.

And these devices will likely be paid for under insurance, under the negotiation or potentially under DRG 104.

Okay. Great, thank you very helpful. I'll - any clarification about the disposable - on disposables revenue if it was European or outside the US revenues that were the primary driver of sales versus AB disposables in the US versus BVS, is there any way for your to rank those in order or give us a? -

Sure, at a high level we've already stated the majority of the revenue was driven by the US and US specifically the 85,000 console and ventricles.

And also you had some sales to distributors outside the US? Could you talk a little bit about how much that represents in user sales and to the extent that those are more demo and start up inventory if you expect to see a pretty smooth transition into those distributor starting to sell or if this is something that's going to be ebbing and flowing over the course of the year as you add distribution.

They were not significant amounts, dollar amounts on the contracts, they were smaller markets, but we're going to continue to drive to get every country possible whether it's direct or distributor and then it's mostly likely going to be the ebb and flow as you've mentioned David.

Okay great. Thank you very much. Most of my other questions were answered by prior - or asked by prior -

Thanks David.

Thanks.

And our next question is a follow up by Alex Arrow with Lazard Capital Markets.

Thanks, if I could just return to the HDE for the AbioCor, I know that you've already answered the question about the latest communication of the questions that are underway. I guess because it's been more than a year and because you've answered everything they've asked, it appears that perhaps it's been into a cycle or a process with the FDA where they don't see the urgency to it or they're just waiting for some other external event to happen. I mean do you - have they - can you say they given you an indication that they are in process or hard at work on it, it could happen any day or do you get more the impression that it's in some sort of file.

You know Alex that seems like an ad hoc question a little bit. But what I would say is the FDA is under great scrutiny. This obviously is going to attract a lot of attention and they are concerned and wanted documentation on anticoagulation and quality of life. I do believe that they're all working hard, and frankly, we know that because they approved 3 other of our devices this quarter. So they're obviously hard at work on our other products as well as other companies. But as far as the logic rationale, I wouldn't be able to comment. I do believe that they are committed to redoing the data and making the best decision for patients.

Yes, that's a good point about the other devices. Point well taken.

Well here's one other thing that may be - you may consider an ad hoc question. You cananswer this with a single word I guess? Did you already say that you're not commenting on the potential start of the Impella for post MI cardiac shock?

We haven't commented on that. If you're talking about the cardiogenic shock, we haven't commented because we still reserve the option to go down the path of the pivotal for 1 to multiple type of patient indications.

Okay, so there's no official guidance as to when indications or multiple indications might get started.

We haven't given anything, what we're going to do during the pilot phase is give a little bit more of a direction of where we think we're going to go for the pivotal itself and what type of patients and multiple type of patients we will trial - try to study.

Okay. We'll look forward to that. Thanks.

Thanks Alex.

And we have a follow up question from Clay Wilson of Needham and Company.

Yes, thank you very much. I just had one quick follow up and that is do you have any guidance - or updated guidance for '07 with regard to revenues and EPS possibly also with regard to SG&A?

Just at a high level. We only have one data point for the year. So we're not - we're going to wait until the end of the second quarter. If we were to do anything. But what we did do is we had given the guidance for the year of 49 to 52 range and as we put in the press release, our estimate is 52, we just eliminated the lower part of the range. So a small revision.

And then on SG&A, I'll turn it over to Dan.

Yes, so our original guidance at the beginning of the year Clay, in addition to the revenue guidance Mike mentioned was that we believed we'll maintain gross margins in excess of 70%. We believe R&D will be in the range of 16 to 20 million dollars and of course that includes the cost of the Impella trials and we believe 2 to 4 sales and clinical hires per quarter in our other investment sin our health car evolutions and recovery awareness programs will lead to an estimated SG&A of between 33 and 36 million for the year.

So specifically to your question we have not updated those other data points and as Mike mentioned, the press release itself, as I'm sure you saw showed the updated revenue guidance for fiscal '07 of 52 million.

Thank you very much.

And there are no further questions at this time so Mr. Minogue I'll turn things back over to you for any additional or closing remarks.

Great. This has been an awesome call. I've really enjoyed my 2.5 years here. I'm very pleased with the team, our direction, our optimism and our focus on recovery and in closing like to thank you for your time and let you know we'll be pre4senting in Boston at Cannacord Adams Conference on Thursday at 8 am. We'll be at the Thomas Weisel Conference in Boston on September 8. We'll be at the Think Equity Conference in San Francisco on September 12th. And we'll be at the UBS Conference in New York City on September 26th.

So thanks again to all the investors and have a good evening.

And that does conclude today's conference call. Again, thank you everyone for joining us.