ABIOMED Inc (ABMD) 2010 Q2 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the second-quarter 2010 Abiomed Incorporated earnings conference call. My name is Shanelle and I'll be your operator for today. At this time, all participants are in listen-only mode. Later, we will be conduct a question-and-answer session. (Operator Instructions) As a reminder, this conference is being recorded for replay purposes.

I would now like to turn the conference over to your host for today's call, Mr. Michael Minogue. Please proceed.

Good morning and welcome to Abiomed's second quarter of fiscal 2010 earnings conference call. This is Aimee Maillett of Abiomed's Corporate Communications Department. I'm here with Mike Minogue, Abiomed Chairman, President, and Chief Executive Officer and Bob Bowen, Vice President and Chief Financial Officer.

The format for today's call will be as follows. First, Mike will provide you with strategic highlights for the second quarter. Next, Bob will provide details from the financial results outlined in today's press release. We will then open up the call for your questions.

Before we begin discussing the second quarter, 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, market response to our new products, our progress towards commercial growth and future opportunities.

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 approvals, competition, technological changes, anticipated future losses, complex manufacturing, high-quality requirements, dependence on limited sources of supply, government regulation, 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 conference call. 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.

Lastly, comparative references made financially in this call to revenue, expenses, gross margin, or other increases or decreases will be indicated by references to second quarter of fiscal 2010 as compared to the second quarter of fiscal 2009, or second quarter of fiscal 2010 as compared to the prior first quarter of fiscal 2010.

I am now pleased to introduce Mike Minogue, Abiomed Chairman, President, and Chief Executive Officer.

Thanks, Aimee. Good morning, everyone. We are proud to report our fiscal second-quarter results. These results are especially significant for our summer quarter. We are pleased with the quality of Impella revenue growth with the major contribution coming from Impella reorders and patient use, allowing for less reliance on new account inventory. We have received excellent customer feedback on our new product enhancements and continue to gain transparency into the clinical effectiveness of Impella with the results of our patient registry in the US and the MACH II three-year look.

On this call, I will highlight three metrics around driving the achievement of our corporate goals. Number one, we doubled the US Impella commercial revenue to $12.1 million from $6.2 million last Q2 with less dependence on stocking new accounts. We added 50 new Impella 2.5 sites this quarter, bringing our total to 326 hospitals with 85 or just over 25% having supported 25 -- or having supported five or more patients. This is an increase of 77 hospitals or nearly ten times since Q2 last year and up 24 hospitals, or 39% since last sequential Q1 quarter. We continue to see hospital PAR levels at two to three catheters on the shelf for patient support, which matches our initial startup order.

The reorder metric is key to our business annuity focus and our reorders alone this quarter of 6.6 million was greater than the total of all of last year's Impella US commercial revenue of $6.2 million. Worldwide Impella revenues was $13.2 million, up 26% from last year and a new high as well. We remain confident in our fiscal year forecast for Impella at $55 million to $58 million, an increase of 55% over last year with the majority of revenue coming from reorders with very solid gross margins. These rates alone establish the Impella product as one of the premier performers in the industry.

Our second metric involves patient utilization. The summer quarter is historically our slowest for the fiscal year based on cath lab schedules and customers' vacations. This summer quarter we tripled our patient support into 338 from 100 last year. We also maintained a sequentially flat rate from our busier Q1 on supported patients. As a reminder, this Q2 included TCT in September, which pulled the majority of leading interventional cardiologists away from the labs for a full week.

Our third and very important metric involves the continuation of presenting our clinical data. There is a different between 510(k) and PMA launches, primarily based on the level and timing of clinical data. In our case, we are a 510(k) Company with one of several applications under a PMA study. This quarter provided a catalyst for the Company with the first presentation of the US Impella registry called USpella. Four quarters ago, we invited the Impella hospital sites with more than four patients to be included in the registry under IRV within a defined timeline for a TCT presentation. Once a hospital was entered in the registry, every patient was included on every application per site.

As the result, USpella includes 181 patients reported for support for multiple applications from 16 hospitals with data collected under IRB approval. At a high level, the USpella data demonstrates the goal if Impella to increase high-risk PCI patient eligibility for the cath lab, with 64% not having the option for surgery, improve PCI patient outcomes relative to reducing syntax score and increasing injection fraction, and what continues to remain constant, that the device has very low to zero adverse events. It is important to note that these are the very first patients ever supported for commercial use at these hospitals.

We are expanding the registry by collecting data from more hospitals for the next update. The interventional cardiologists are embracing the science of human dynamics and becoming advocates, especially around patients that are high-risk PCI and have been turned down for open-heart surgery and those with heart attacks. The pre and post PCI ejection fraction improvements in the USpella patients are significant in demonstrating both the clinical quality-of-life outcomes and financial spectrum for cost effective treatment.

At TCT, another significant study was presented. The three-year follow-up on MACH II from the Academic Medical Center in Amsterdam revealed that the injection fraction improvements on Impella patients were sustained and continued to increase to 51% or a net increase of 23 ejection fraction points as compared to 7% in the control arm with inotropes and intra-aortic balloon pumps. This improvement in EF was correlated to improve quality of life and activity. As all of the studies suggest, Impella is a platform that has broad capabilities for patients that benefit from hemodynamic support and either prophylactic or emergent use, and in the cath lab, hybrid lab, or surgery suite.

Overall, our US commercial application mix continues to be in the 63% range for prophylactic PCI use and 37% in urgent or emergent use. 90% of the patients were supported in the cath lab and 10% were supported in the surgery suite. We also released product enhancements in the quarter related to a new introducer and sheath, as well as a quicker setup kit with automated software. The customer feedback is very positive on both.

We have now supported over 1,200 US commercial Impella patients. As our field team gets more experienced and the number of independent users grow, we expect to see increases in productivity for our representatives and patients per hospital. We believe our current US hospital coverage has the capacity to support greater than 60% more patients per week and our plans are to continue to add two field representatives per quarter as needed. We will maintain opening new accounts at a rate of 40% to 50% per quarter.

We acknowledge that with the increase of independent users each quarter, we have less visibility to every patient supported and will continue to report patients quarterly for this fiscal year. Over time, the reorder rate will be better for visibility to patient usage, which we already track in detail.

In summary, in the US since last Q2 as compared to this quarter, Abiomed has doubled the commercial US Impella revenue, tripled the number of patients in the quarter, and tripled the reorder revenue number. We have also cut our cash burn in half while ramping up our expanded US field team, releasing new product enhancements, and releasing our most robust clinical data to date at the premier customer TCT meeting. We like our position and strategy and are confident in our people, technology, and execution.

I will now turn the call over to our CFO, Bob Bowen.

Thanks, Mike. Good morning, everyone. Before I get started, I would like to refer you to the Safe Harbor language noted at the outset of the call as well as the risks and uncertainties noted in our SEC filings, particularly our most recently filed 10-K and 10-Q.

We are very pleased with what the organization accomplished over the typically weaker summer months and we feel very positive going forward given the clinical data presented at TCT, the product enhancements currently being released to the field, and the continued education and training of our field personnel and physicians. As expected, our legacy and non-USA revenues were soft during the quarter. However, despite this we had record overall revenues driven by record US commercial Impella revenues.

Overall, revenues for the second quarter of fiscal 2010 totaled $20 million. Of the $20 million, revenues of $12.1 million were US Impella commercial revenues, which nearly doubled from the prior year. This increase was mostly attributable to higher reorders of Impella disposables, which at 6.6 million were 230% or 4.6 million higher than the prior year.

Our primary focus is on driving adoption and utilization in the US of the Impella platform to training, education, and demonstration of clinical utility across a variety of indications, while moving toward cash flow break even. Outside the US, we have refocused our resources and we are executing a more targeted key account, lower cost selling strategy aimed at the most promising growth opportunities.

Revenues outside the US were approximately 8% of revenues in the second quarter of fiscal 2010 compared to 14% of revenues in the prior year. The decline was largely in distributor markets where ordering patterns tend to be lumpy. Gross profit percent for the quarter at 73% was 3 points lower than the prior year. In this second fiscal quarter, we recorded inventory reserves for portions of our legacy product line due to the lower volume we have experienced in recent quarters, and we incurred higher costs as a result of increased demand for demonstration disposables provided to customers as part of the enhanced level of customer training compared to last year.

R&D expenses of $6.8 million decreased from $6.9 million in the prior year. Clinical trial expense in Q2 fiscal year '10 was $1.9 million compared to $2.3 million in the prior year. The decrease in clinical trial expenditures was primarily associated with lower site costs, as we have enlisted most of the hospitals expected to participate in the PROTECT II study. Partially offsetting the lower trial costs were higher R&D program expenditures, largely related to product enhancements of the Impella platform. As noted in our press release, 28 patients were enrolled in the PROTECT II study during the quarter, bringing the total enrolled to date to 290 patients or 44% of the 654 patients required.

SG&A costs of $14.8 million compared to $13.9 million in the prior year, with the increase driven by the expansion of our domestic commercial organization in support of the commercial launch of the Impella platform in the US. The GAAP net loss was $7.7 million and the GAAP per share earnings for the quarter were a loss of $0.21. The non-GAAP loss and per share earnings, which excludes stock compensation expense of $2 million and amortization expense of $0.4 million were a loss of $5.3 million or $0.14 per share.

Turning to the balance sheet, inventory and accounts receivable balance have trended lower since our fiscal year ended March 31, 2009, and have improved as a percent of revenues. The increase in goodwill, which is recorded on the books of our German subsidiary, was related to the final Impella milestone payment of $5.6 million triggered by the April 510(k) clearance of Impella 5.0, and to the translation effects of a stronger euro in fiscal 2010.

We ended fiscal Q2 with cash, cash equivalents and short and long-term marketable securities of $52.3 million compared to $54.5 million at June 30, 2009, representing a cash usage of $2.2 million, which is down to about one-half the cash burn level incurred in the prior year. Just to be clear, we excluded from the calculation of last year's cash burn amount the $42 million of proceeds from issuance of stock. We believe our cash position is sufficient to get us to cash flow break even.

Lastly, as noted in our press release, we believe we are on track with our plans for the full fiscal year 2010 and we are reaffirming total year revenue guidance of annual growth in the range of 17% to 24% or revenues of $86 million to $91 million.

We will now open the call to questions.

(Operator Instructions) Your first question comes from the line of Tim Lee of Piper Jaffray. Please proceed.

Hi, guys. Good morning. Thanks for taking my questions. In terms of USpella, I mean are you starting to see a pull through effect on that in terms of new clinics calling you, saying, hey, please come in, details on Impella because of the data that we've seen. Are we starting to see some of that yet?

Tim, we don't comment within the quarter, but the reaction has been very positive by the physicians. I believe specifically if you look at two-thirds of our patients that get the high-risk PCI today are folks that are either turned down by surgery or turned surgery down. So this is a new population for them in the cath lab. If you look at the outcomes-based, the improvement in EF and the reduction of SYNTAX is pretty significant. And then if you look over at the AMI patients, this is definitely compelling information in that 68% of the patients are already failing balloon pumps, inotropes, and revascularization.

So I think that's how you initially start is you get people to understand and move to the next therapy. And then overall to your first component of the question is, are we hearing new people asking. I think we've had an incredibly fast ramp up of new hospitals, and for a small company to be adding now 50 -- even 50 a quarter is still pretty significant. So the demand is definitely there.

Great. That's very helpful. And in terms of your Quick Set, the clinical feedback that we've been getting has been very positive on that front. Has that been fully rolled out yet or is it still being metered out? Just any color on that front.

Could you clarify, you mean on the registry information?

No, no, in terms of your Quick Setup Kit for the --

Okay. Yes, what we did is we went to the Quick Setup Kits by targeting those that are doing the highest volume and specifically those that are treating AMI patients. We're about a third of the way through the installed base and we expect to have 100% of the sites, including the ones that we just added a week ago or two weeks ago from the end of the quarter, we'll have everyone hopefully updated by the end of January.

Okay. And then just one last one if I may. In terms of any pricing trends in the quarter that you can comment on?

I think we're pretty consistent. We're staying about where we had projected for the year.

Great. Thank you.

Thanks, Tim.

Your next question comes from the line of Greg Simpson of Stifel Nicolaus.

Yes, thanks. Good morning, guys. Let me actually start with a little follow-up on Tim's question, I guess. A little different take on it though, Mike. Any anecdotal feedback coming out of TCT in terms of leads, interests from new centers? And I know you're talking about targeting 40 to 50 new centers each quarter, but it seemed to be that other than the transcatheter valves, I mean you had quite a buzz going there. I'm just kind of your take, not getting into guidance, but your take about what you got on TCT.

Sure. So there's two big catalysts. First is the US registry data. The second is the Quick Setup and the new introducer. So you've got information for the doctors to look at, and we've made it a lot easier for them to put in and to even reduce any of the other adverse events. So I think both of those are positive. For those sites that we're already in, the goal here is to go from having two to three advocates to basically getting ten to 20 implanting interventional cardiologists. And so this information, I believe, is going to help us at the sites we're already at, as well as help us recruit new folks. So I do think it's very positive, and we'll have to wait until the end of this quarter to give you all those specifics.

Okay. That was going to actually be my next question. You know I've asked you that before about, at the 320 plus centers that you're in right now, is there any way to categorize the number of doctors trained in these centers. Can you kind of layer it out for us in any way? Is that possible?

Yes, I mean I don't think we have it specifically per site, but we're trying to track first patient use by doctor. I'd say on average it's probably two to four docs that are comfortable at the sites that are doing -- that have Impella and they're doing patients. And that's what we're trying to start -- look at is what drives other doctors to feel comfortable with it. And it goes back to the same three components. You have to give them data, which a registry addresses. You have to make it easier for them to put in, which I think the new introducer and the Quick Setup does. And then you have to have the infrastructure support for them, and that means that their cath lab techs and their ICU nurses are going to be comfortable with monitoring their patients. And that's what we're doing.

Okay. And then to kind of bring those two questions kind of full circle, I'm not trying to lapse off all the edge, but coming out of TCT where you had a lot of exposure are you finding that the early centers that adopted the technology, that the other doctors at those centers now -- are your early users becoming advocates? And are you getting significant interests from additional doctors at your earliest centers?

I think that's a good question and point, and I would say yes, we are seeing that. Specifically a lot of times, folks have been getting wound up on the balloon versus Impella. And what the registry data shows is that two-thirds of these patients have kind of been through the cath lab already, gone onto surgery. In the 64% that didn't have surgery as an option, majority, 85% of them were turned down by surgery and the other percentage, 15% of that is they turned down, the patient turns down surgery.

So these are new patients coming into the cath lab, which does increase awareness and the focus by the interventional cardiologists who are looking for another edge to do more patients and get better outcomes.

Okay. Last question. Bob, real quickly on gross margins, can you break out the impact of the inventory reserves from the old core product line?

The inventory reserves were about a point.

Okay. All right. Great. That's it, guys. Thanks.

Your next question comes from the line of Bob Hopkins of Bank of America.

Hi. Thanks very much for taking the question. A couple things. First, you mentioned that the ASPs in the quarter were relatively stable and I think if I remember correctly, you were saying that the -- running about 22.5 and then about 26,000 for 5.0. Is that right?

Yes, Bob, that's approximately correct.

Okay. And then I think you also said last quarter that in terms of implants for 5.0 you had roughly in the neighborhood of 30 in the first quarter in terms of implants. And I was wondering what that number was in this quarter.

Yes, I don't think we said we had 30 implants in the first quarter. I think we might have said we had about that many placements. You know we have the surgical suites at hospitals that have the 2.5 who have been ordering the 5.0 as well as some of the cath labs themselves.

Okay.

Yes, so I think there's a misunderstanding, Bob. We haven't given out the specific number and broken out the 5.0. It's a smaller controlled rollout where we're going to centers that have both the Impella 2.5 in the cath lab and have been working with us on BVS or AB5000.

No, I know. I'm just trying to really track the launch of 2.5 and I know you're giving these implant numbers, and I think included in these implant numbers are 5.0 implants. And so I just wanted to get a sense for what kind of contribution 5.0 making -- might make so we can exclude that to really track just 2.5's alone. So it sounds like you're not going to give that number?

It's a relatively small number. We haven't broken out yet. If that's something in the future that's important, we'll probably start breaking it out. But right now, it's not the same priority as the 2.5, but it is included in the total patient support in the Impella number.

Okay. And then can you just give us a sense in the quarter for -- of the implants, where they went. And I'm sorry if I missed it. Just kind of break it down by high-risk PCI versus AMI versus other.

Sure. So the number is essentially flat from last quarter. So it was 338 patients and then if you look at the breakdown, 63% is in the range of prophylactic use of high-risk PCI and 37% is in the urgent, which is the bulk of that is AMI, but also included there is acute-on-chronic heart failure, and then some of those are patients that are postcardiotomy cardiogenic shock.

As far as the placement, which I think will help you also with your -- the surgery versus cath lab, 90% of the patients were supported in the cath lab and 10% were supported in the surgery suite with Impella.

Okay. And post the trial results or the registry results, do you expect that those percentages and mix might change going forward, or do you see things at least over the next couple quarters remaining fairly stable in terms of the mix?

Yes, I think the mix is going to continue in general in this path for a while, partly because they're new patients. Remember, two-thirds of the patients we're seeing in the cath lab are more coming from either turned down from surgery or turning surgery down themselves. And it also is an ideal training ground for the site and for us. So I think there's always going to be an element of high-risk PCI. However, if you look at what's the number one use of balloon pumps in the United States, it's more for emergent use and that's the AMI or acute-on-chronic and that continues to trend up as compared to a year ago. If you just do the simple math of last summer and when we got started, 76% of the patients were high-risk PCI. This quarter, it's 63%.

And then last question. On trial enrollment, I understand it was a summer period, but do you expect to get back up to the rate that you saw in the first quarter going forward? Or do you think 20 to 30 patients per quarter is now more likely?

What we're focused on is getting the sites that are committed to the study, and as we've said, we're going to continue to focus on those that have the ability to randomize and enroll patients. So we're going to continue to scale back. But I think the number we gave as of now we're still going to stick with of 30 to 40 per quarter.

Okay. Thanks so much.

Your next question comes from the line of Duane Nash of Wedbush.

Hi. Good morning. This is [Akiva Felton] for Duane. Just given the full-year, fiscal-year guidance of $86 million to $91 million suggests that the next two quarters are going to run between $23 million and $25.5 million on average. What degree of confidence do you have that revenues for the second half of fiscal 2010 will be that high?

Well, I mean we are anticipating a pickup in patient volume as a result of all the initiatives that have recently been put into place, the publications at TCT, the new introducer, which was introduced throughout our second fiscal quarter and the Quick Setup, which is being introduced throughout our third fiscal quarter, and the continued training and -- of our field sales force and physicians. So that is what we anticipate will drive the number.

All right. Thank you.

Your next question comes from the line of David Lewis.

Hi. Good morning, guys. It's Ryan Bachman on for David. Can you hear me okay?

You're fine, Ryan.

Great. Thanks. First question on utilization during the quarter. Despite adding around 50 new centers, the number of implants were flat. And I was wondering if you could give us a little more color on that, and specifically have you seen any impact from a potential slowdown in PCI volumes?

Ryan, I think the sequential number compared to our fiscal Q1 during the busy season we see as a positive. If you think about the cath lab and what happens during the summer, August is usually incredibly slow. A lot of folks plan their schedules. In Europe, they essentially take off the month of August and then TCT happening in September also took a lot of people out of the cath lab for a week. So we feel very confident that we were able to catch up a little bit with training new centers. We were also pleased to see that it was pretty sequentially flat compared to our fiscal Q1.

Okay. And just following up on the PCI volume commentary that we've heard from some other companies in the last few weeks, what have you seen in the cath lab in terms of elective PCI volumes?

Yes, so I think the trend for if the volumes are going to go down for elective PCI actually favors something like Impella because what it means is that interventional cardiologists are looking for ways to treat more patients in the cath lab and they're looking for ways to distinguish themselves from some of the other hospitals. So I think it's a very positive trend. I think there is some decline, but I think the decline right now is too early to call because you're looking at the summer months decline. The next two quarters, if there is a decline I don't necessarily -- it hurts us in any way. In fact, it could be a benefit for something like Impella.

Okay. Thanks, Mike. That's helpful. And Bob, one quick follow-up for you on the inventory reserve. Do you expect any more reserves in the next few quarters for the legacy business?

Well, Ryan, I mean we do an evaluation at the end of every quarter and as of the end of our fiscal second quarter, I think we're in pretty good shape.

Okay. So your target for 75% gross margins plus or minus a point is still valid for the remainder of the fiscal year?

Yes, I mean through this first half in total we are at 74%.

Okay. Great. Thanks, guys. I'll get back in queue.

Thanks, Ryan.

Your next question comes from the line of Eric Snyder of UBS.

Hi. Good morning. I think just one remaining question after those that have been asked so far. If you -- our data for PCI utilization by hospital suggests that each block of 50 centers uses on average, say, 10% to 20% fewer stents or does 10% to 20% fewer procedures than each proceeding block of 50. So how far down that curve do you think it makes sense to go in opening up new centers? What do you think the real number of centers that are economically approachable are for Impella?

So Eric, I know you and I have had this discussion. I think the real number is 1,000 hospitals and I'll give you the reason why. Any type of new technology that's rolled out, a lot of times people will say there's an 80/20 rule. So 20% of the accounts to 80% of the volume. The numbers we disclosed on the 85 give you a feel that it's more like a 30/70. So right now, about 30% of our centers are generating 70%, 60% to 70% and that's a rough estimate. It really starts with two things. First, you have to get the consoles to the centers and then second, you have to get them using.

So we initially outsold our clinical support infrastructure with last summer's 108 orders. That was a lot of pent up demand and now what you're seeing is that it's starting to continue to grow with both the data and now of course making the device easier to put in. And I think that's what's going to continue. If you think about all the applications, we have high-risk PCI reported. We have AMI. We have acute on failure. We've got some EP cases being done with low EF. We've got postcardiotomy cardiogenic shock. We have use in hybrid labs for off pump.

So this is really a platform for a heart hospital and now that they have the 5.0 and down the road, we'll be introducing a right-side percutaneous and a pediatric, I can't imagine a reason why a heart hospital would not have Impella in both a cath lab and the surgery suite.

And just tactically, as you go to lower volume hospitals, will you begin charging for the consoles again or continue to place them on anticipated utilization?

So that's something we'll evaluate, Eric. And then on top of the 1,000 heart hospitals there's another 500 to 600 hospitals that just have cath labs without surgical backup, and for those centers we may have the option that we charge for the consoles or they give us a commitment to the volume.

So I do think that we're just getting started and we're just scratching the surface, and over time we're going to continue to grow. And I think you're going to see more centers, more applications, and that's why we're very confident right now in our future.

Okay. Great. Thanks.

Your next question comes from the line of Josh Jennings at Jefferies & Company.

Hi. Good morning, guys. Thanks for taking the question. I guess just to follow up on the console question, how is, in placing them on consignment, have you had to take any back because of low utilization or sort of all those future disposable orders within given timeframes coming through?

Yes, Josh, to my knowledge we haven't had a single hospital that has given us back the consoles and so I'm -- and I think there's lots of hospitals where we're just in those back to that two to four interventional cardiologists. And really, what it's about is that you have to remember that at some of these centers they can have 12 to 30 interventional cardiologists. They can have more than one group.

So there's lots of folks at the hospital to continue to train and there's lots of applications that I've already mentioned.

Great. And just in terms of your territory managers, sort of prioritizing which centers they're focusing on, are you still sort of tiering that as it's clinical trial centers with general usage first, then clinical trial centers, and then general use centers? Or has that focus shifted a little bit with clinical trial centers sort of getting pushed back and into the sort of third tier?

Well, we're not really -- we're not adding any more trial centers at all and what we're trying to do is actually prune back a little bit from centers that don't want to randomize because of the 510(k) or they're not comfortable randomizing the sickest patients. And then what you're left with is high volume centers, and they're going to get the clinical support that they need. If they happen to be one of the clinical sites, they're going to have additional support for the study as well.

Great. And then just lastly, one of your drives -- you mentioned the TCDO has been one of your drives is getting onto the US and European guides, getting Impella onto the US and European guidelines for hemodynamic support. In front of any sort of definitive PROTECT II trial results, what is the pathway there? What steps do you guys have to take and what are your expectations in terms of potential timelines for potentially getting on the US and European guidelines?

Yes, so we haven't forecasted that we'd get it with a timeline. What we said is that we're going to attempt and try to do that. The way the process works is you need publications, and right now the Europella and USpella have been presented, but they're not yet published. We do have PROTECT I, and MACH II, and some other studies that have recently been published, and what we'll do is we'll take the publication of the registry data and we'll go forward and look at adding it to the guidelines.

If you do read the STEMI guidelines for AMI, they really reference the use of the balloon pump just because of the fact that it was used in the SHOCK trial. But there's really nothing quoted in there that shows or talks about a benefit of it. In fact, the meta analysis that's been done on balloon pumps for AMI, they do not show a reduction in mortality, but it does show an increase in stroke and bleeding.

So that's the process. It's a lot of the summation of the clinical data and right now, it's too early for us to put that packet together, but we will continue to push on that for the future.

Great. And so -- I guess we're just looking at the intra-aortic balloon pump data that's out there in the inclusion of the guidelines. Are you fairly confident that with the science behind Impella, with the registry data that you have and the accumulating that you're generating that you'll be able to get on the guidelines without official PROTECT II formal results?

Yes, I think that's a complex question because I would more put it in this term, is circulatory support devices have been approved for 25 years. And they have been recommended and used by heart surgeons for 20 plus years. So Impella is a circulatory support device that just happens to be minimally invasive. It can be put in, in a cath lab. And in addition to unloading the left ventricle, it increases coronary profusion, which is what a balloon pump does.

So you have something now that does the benefit of circulatory support and potentially eliminates the dependence or the need for massive doses of inotropes and the intra-aortic balloon pump. To date, there's never been a single study randomizing a balloon pump to a ventricle assist device because it's not practical when people are dying of organ failure. In fact, if you look at our surgery technology, 90% plus come already on a balloon pump and if you look at the Impella registry, 68% of the patients are already failing and then moving onto Impella.

So over time, the benefit of Impella is it potentially eliminates earlier technology that maybe delays the treatment and costs more money such as inotropes and the balloon pump, and then potentially avoids the follow-on of drugs, and pacemakers, and implantable VADs, and a transplant to get you heart recovery.

Okay. That's helpful. And I guess just lastly just in terms of getting Impella on the guidelines, how important do you think it is in terms of reaching your commercialization potential, or I should say penetration into the hemodynamic support opportunity is getting on the guidelines? I mean, is that a essential for you guys or do you think you can continue to grow commercially without being formally on the guidelines for the US and internationally.

I think we can grow. I think we are growing, and I think that's why we're putting an emphasis on teaching the physiology of how Impella works. Again, the science is real and the circulatory support data suggests that if your cardiac index goes below 1.8 per the SHOCK trial, the patient is dead. The number one correlate to -- this has also been published, the number one correlate to a mortality for AMI patients is cardiac power, which is a component of cardiac output, which again Impella increases.

So there's a lot of information out there and the difference is that Impella has the ability to be mainstreamed in the cath lab, but all of these -- all of this science has already been accepted on the circulatory support ventricle assist device side.

Great. Thanks a lot.

Thanks, Josh.

There are no future questions. I'd now like to turn the call back over to management.

Okay, everyone, we appreciate your time and we enjoyed seeing many of you at TCT and look forward to next quarter.

Ladies and gentlemen, that concludes the presentation. Thank you for your participation. You may now disconnect. Have a great day.