ABIOMED Inc (ABMD) 2010 Q3 法說會逐字稿

Good day, ladies and gentlemen. Welcome to the third quarter 2010 Abiomed, Incorporated earnings conference call. My name is Latrice, and I will be your operator for today. At this time, all participants are in listen-only mode. Later we will 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, Mr. Steve McEvoy, Vice President and General Counsel. Please proceed sir.

Good morning. Welcome to Abiomed's third quarter fiscal 2010 earnings conference call. This is Steve McEvoy, Vice President and General Counsel to Abiomed. I am here with Mike Minogue, Abiomed's 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 third quarter. Next, Bob will provide details on the financial results outlined in today's press release. We will then open up the call for your questions.

Before we begin discussing the third 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 in the call to revenues, expenses, gross margin, or other increases or decreases, will be indicated by references to third quarter fiscal 2010 as compared to the third quarter fiscal 2009, or third quarter of fiscal 2010 as compared to the prior second quarter of fiscal 2010.

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

Thanks Steve. Good morning everyone. Q3 was an outstanding quarter for Abiomed, and our best ever on several measurements. We achieved record total revenue of $22.8 million, up 32%; total Impella revenue of $15.9 million, up 81%; US Impella commercial revenue of $14.5 million, up 116%; and gross margin at 75%. Utilization was strong with 425 Impella patients, up 166% year-over-year, and 26% sequentially. And reorder revenue was $8.2 million, up 173% and 24% sequentially.

Operationally the Company excelled. We delivered these significant results while reducing cash burn to $600,000, and upgrading 80% of the installed base to the new Impella platform, with enhanced performance and a quicker set-up time. The upgrade process requires three days and includes additional on-site training.

The general feedback on the new platform is very positive, and set-up time has been reduced from approximately 11 minutes to two minutes. For your review, there is a webcast online at Abiomed.com of an Impella procedure at Mount Sinai with customer comments on this upgrade.

On today's call, I would like to highlight where we are in terms of our strategy and execution. So first on our strategy. There is a clinical need for recovering heart muscle. This is not a new concept, just one that has been a challenge for interventional cardiologists, due to the pre-Impella inability to provide true hemodynamic support in the cath lab.

The standard of care for heart attack revolves around the cath lab, and focuses on opening up the blockage in the coronaries of the heart within 90 minutes, with the hope that the muscle will start to work again and pump blood. The medical community recognizes that in the immediate hours after an acute event like a heart attack, heart muscle will either recover or die within hours to days.

Today, there is no cure for dead heart muscle, and approximately 1 million people suffer a heart attack each year, with 151,000 in-hospital deaths. Survival results are poor for a relatively young population. The statistics show within five years of survival from a first heart attack, 33% of men and 43% of women will die.

In addition to emergency patients that need hemodynamic support, there are those that need prophylactic hemodynamic support. Chronic heart failure patients have had their hearts wear out over time, some from a prior heart attack. These high-risk chronic heart failure patients have limited treatment options, due to their hemodynamic instability.

Recovering heart muscle has been Abiomed's core competency since 1992 with the BVS, the first FDA-approved VAD. Today we believe Abiomed and the Impella better address this clinical need for four reasons. Number one, Impella pumps blood and is small enough to be inserted percutaneously on a catheter; number two, it is designed for ease of use; number three, has the potential to reduce mortality, recover heart muscle, and improve patient quality of life; and number four, is cost-effective.

In the European MACH II study and the USpella registry for emergency support, the Impella arms continue to demonstrate a 10% to 20% improvement in heart muscle performance in the initial months, and a 35% improvement at the three year follow-up in MACH II. Heart muscle recovery offers patients the potential to avoid the escalating expensive cascade of therapies, such as ICDs, surgery, transplants, and drugs.

According to the 2009 AHA Heart Statistics Report, the average hospital charge for heart surgery is $100,000, as compared to the cath lab PCI at $48,000. In pure dollars we believe heart muscle recovery has the potential to be the most cost-effective treatment.

Also as referenced some chronic patients have limited options, and Impella support allows for the potential of a successful treatment of those turned down by heart surgery, based on their risk profile, or patients deciding against surgery in favor of a minimally invasive cath lab procedure. As an example, currently half of the patients in the USpella registry are turned down by heart surgery, and are on average 70 years old.

Now let's review the execution of this strategy and the steps required to move forward. As already noted our execution has generated record Q3 results, Impella revenue up 64% year-to-date, and with the lowest quarterly cash burn in five years. We have also transitioned the product portfolio, created a cath lab distribution channel, and maintained strong gross margins.

In Q3, we booked 66 new hospitals as a result of a successful and exciting TCT. We have proven that demand exists for Impella in a tough economic climate, quickly establishing an installed base of 392 hospitals out of the 1,000 heart hospitals.

Our new account sales funnel currently includes more than 200 hospitals. However, based on our recent product upgrades, and achieving a critical mass of customers, we will transition our efforts to going deeper into existing Impella accounts.

The majority of Impella use today is for prophylactic hemodynamic support, and this creates the ideal environment for scheduled cases. However, the bigger opportunity exists with the 75,000 non-scheduled emergency patients requiring hemodynamic support per year. Going deeper on training will enable our customers to operate independently in an emergency situation.

We have prepared for this opportunity. There have been two critical steps required to support emergency patients. First, we needed to reduce the setup time by the cath lab technologists. Our engineering and clinical teams worked with our customers over the last 12 months and improved this process. This is a significant achievement and one we will continue to enhance.

Secondly, we needed to provide US Impella clinical data. We addressed this by releasing the USpella Registry at TCT, and completing 15 publications and abstracts in 2009. We plan to update the USpella registry this quarter, and are expecting 300 patients from 40 hospitals under IRB-approved investigation.

Already in 2010 there have been two new publications. First is in the Journal of Heart and Lung Transplantation titled 'Facilitated Cardiac Recovery' by Dr. Anson Cheung from the University of British Columbia, and the second is from the Journal of Cardiovascular Electrophysiology titled 'Use of Impella for Ablation of Hemodynamically Unstable Ventricular Tachycardia,' led by the team at the Mayo Clinic.

With our momentum, we are continuing to add to our US distribution in both sales and clinical support, to capitalize on our progress. Abiomed now has 134 sites that have supported five or more cases, up 58% sequentially from 85 sites last quarter.

In summary, we are well-positioned with our strategy and execution in Q3, and we believe Impella addresses a significant clinical need. Our customers are learning about the platform Impella provides for patients that need hemodynamic support with less invasive therapies, in the cath lab, EP lab, hybrid lab, and surgery suite.

As we move forward, we will continue the education of the science, the US registry data, and onsite training, with the goal to support more emergency patients. Today, Abiomed has ceded a third of its potential $2 billion market opportunity, and we are confident in our future.

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.

As Mike noted, we posted a great fiscal third quarter with record revenues of $22.8 million, driven by an 81% increase in Impella revenues to $15.9 million. As importantly, we continue to feel very positive going forward, and we believe that during the third quarter we began to see the positive effects of the USpella data presented at TCT, and the product enhancements released throughout the quarter.

Worldwide non-Impella or legacy revenues and total international revenues improved compared to fiscal Q2 2010, but both were lower than the prior year. Our non-Impella revenues of $6.9 million were up 1% sequentially, and total international revenues, which represented approximately 9% of total revenues, were up 28% sequentially.

Gross profit percent for the quarter was nearly 75%, and was nearly 1 point higher than the prior year, and nearly 2 points higher than the second quarter of fiscal 2010.

We believe there is potential for improvement over time as unit volumes grow, but I would caution there will be some headwinds to improvement, as our manufacturing strategy calls for shifting of sub-assembly work from our German manufacturing facility and outside vendors to our Danvers facility, as well as expansion of our Impella manufacturing capacity, and these adjustments involve pre-production costs.

R&D expenses of $6.4 million compared to $5.2 million in the prior year, with the increase driven by development costs associated with the Impella product enhancements, and costs associated with the Protect II clinical trial and the USpella registry. Clinical trial expense including registry costs in Q3 fiscal 2010 was $1.8 million, compared to $1.3 million in the prior year.

As noted in our press release, 24 patients were enrolled in the Protect II study during the quarter, bringing the total enrolled to date to 314 patients, or 48% of the 654 patients required.

Selling, general and administrative costs of $15.2 million, compared to $13.2 million in the prior year, an increase of 15%, compared to a revenue increase of 32% with the SG&A increase driven by the expansion of our domestic commercial organization, and support of the commercial launch of the Impella platform in the US.

We had a couple of one-time items below the line this quarter including a $0.3 million gain associated with the final payment from our previous investment in the Columbia Fund, and a $0.2 million R&D related cash tax credit. The GAAP net loss was $4.6 million, and the GAAP per share earnings for the quarter were a loss of $0.12 compared to last year's GAAP net loss of $7.7 million, and the GAAP per share loss of $0.21.

Turning to the balance sheet, we continue to do a very effective job managing our inventory and Accounts Receivable balances. Inventory as a percent of quarterly revenue were 55% this quarter, compared to 103% in the prior year, and Accounts Receivable as a percent of quarterly revenues were 63%, compared to 82% in the prior year.

We ended fiscal Q3 with cash, cash equivalents, and short and long-term marketable securities of $51.7 million, compared to $52.3 million at September 30th, representing a cash usage of $0.6 million, and we believe our cash position is sufficient to get us to cash flow breakeven.

Turning to guidance to date, we have opened 392 Impella 2.5 sites, 66 in the most recent quarter, and 163 year-to-date. We believe this demonstrates the high demand levels for this technology, and we expect nearly all cath labs will have the Impella platform in the future.

As indicated by Mike, we have a large new potential account funnel in excess of 200 accounts. However, for the fourth fiscal quarter, we are directing our commercial resources to continue to leverage the USpella Registry data and the quick set-up kit, and focus on Impella training and utilization at existing sites, rather than new site openings and the legacy business.

As noted in our press release, we are not changing the full year revenue guidance for Impella revenues in the range of $55 million to $58 million, which represents a growth rate of 50% to 60%. However, we our changing overall revenue guidance from the previous guidance of $86 million to $91 million, to current guidance of $84 million to $86 million, to reflect the assumption of fewer Q4 Impella site openings relative to the prior sequential quarter and the legacy business.

We will now open the call to questions.

(Operator Instructions). Tim Lee with Piper Jaffray.

Good morning, guys. Thanks for taking the question. First in terms of new site or new Impella center openings here in the fourth quarter. What should we think about it, is it like 30 centers, 20 centers? If you could help us with that one first.

Yes, Tim, I mean we don't really want to get substantively locked into a number, because we do have this large funnel of 200 customers that we have been working with that are interested in the technology. But we are going to try and constrain the number, and I guess we would tend to think it is going to be down toward the lower end of the range that we had previously outset at the beginning of the year.

We had said 40 to 50 sites per quarter. We have done 163. By the end of the year if we end up somewhere around what the high end of that annualized number would be, that is kind of what our thinking is.

Then how do you balance your customers' needs and wants? I mean if you have a queue of 200 hospitals that want to be trained, given your revised training rate they could be waiting on the list for a year. Do you alienate customers at that point, do you get them upset, how do you balance that?

Tim, these are not accounts that purchased and they are waiting for training, just to clarify. We are going to honor contracts that are out there. We are going to honor folks that have already put it in the budgets, and we do have some orders coming in of people who are telling us they have to have it, they want to have it, so we will go through a prioritization.

But we also want to continue to take advantage of the new quick setup, the new platform and the registry data, and getting more physicians trained at existing sites. While this is going on we are going to continue to add to our distribution for sales in the clinical team, and where we see the most demand for more of these new orders, we will push the bulk of the resources to that area.

Two more quick ones if I may. In terms of your increased focus on greater utilization, is this a one quarter phenomenon, do we expect this strategy for a couple of quarters in terms of lower reduced center adds? I am trying to think about how should we think about fiscal '11 here which is just a quarter away? How should we think about the transition on that front?

As you already pointed out, we can't just stop taking orders, so this is a very positive thing in the Impella product in that we can sell a lot of them every quarter. So what we are going to be doing is more of a change of a mindset which will carry into next year, and it is really about getting deeper into the existing accounts, getting to more of those emergency patients, and taking advantage of the feedback we are seeing on the quick set-up kit.

Okay. I will let other some folks ask questions, and I will get back in line, thank you.

Thanks Tim.

Greg Simpson with Stifel Nicolaus.

Thanks, good morning guys. Yes, Tim hit on the ones that I wanted to, but Mike if I could ask this. The importance of the quick set-up guide, is there maybe anything you can add to maybe the experience, the accounts that got it first, maybe -- I don't if you want to get real specific with the numbers or not, but the accounts that got the quick set-up guide first, what that has maybe done to utilization, anything anecdotal?

Greg, as you see from the quarter, we went up from 338 to 425, and while we were getting those numbers we were also upgrading 80% of the installed base. So we still have more to go, but incrementally we believe that this will drive more emergency use. We also believe this will make it easier for physicians to get to independent use.

And there is a good -- there's a case that is on our website where the physician goes through in the beginning of the case and talks about why the technology is new, and why it is more enhanced on some specific elements, and I think that that will make a difference, and we will continue to report the utilization next quarter.

Okay. And then a little different spin on kind of the same question. The accounts that focus more on the emergent patients, in terms of their overall patient base, is there a significant difference in the utilization at those accounts if they are more heavily skewed towards the emergent patients, as opposed to prophylactic?

I think the question is, those folks that can do both, do they do more? Is that the question?

No, those that have a greater percentage of their cases coming from the emergent patient population that have focused on that, as opposed to just using it for prophylactic use?

There are the trends that we see which is that you have to start and you have to really get trained on the prophylactic, because those can be scheduled where they're on site, and it is an ideal environment for training. And then from there we start to see them expand to these emergency cases, or other types of applications, whether it is EP, to someone who has hemodynamic instability.

If you look at our 392 accounts, you will see that some of those are higher end academic centers which tend to have the higher volume of PCIs, but do not have the same level of AMI volumes, and then you have got those sites that are out in the communities that are very busy, and they tend to see a lot of AMI, and less of high risk PCI. What we are trying to do is really balance the applications and what we know is that there is more patients under the emergency bucket, and that is why we need independent usage.

Got you. Okay. And then just to make sure I heard you right, you will update USpella at ACC?

It's going to be within the quarter, whether it is at ACC or at another educational event.

Okay, good enough. And then Bob, one for you on the overall loss in the quarter was obviously smaller than expected. I know you had a couple of items in there, but cash burn was also smaller than I think we had originally expected obviously, and so there is obviously a focus there.

I'm not trying to get you to give any kind of guidance, but with respect to cost controls, and positive cash flow, ultimate profitability, I mean can I get you to just kind of speak openly on that, without pinning you down to anything in terms of specifics?

Sure, I don't see any fundamental change in our cost structure in the near term. We have indicated that we will add to our field sales force two to four people per quarter, to support the growing utilization and site numbers. But we have spent, if you look at our operating expense numbers, we spent about $22 million per quarter for each of the last three quarters, and it could tick up somewhat going forward but not in a substantive way.

We had very good gross margins this quarter and, as you know, that number moves around a little bit based upon production volumes and how we are relocating manufacturing from one site to another.

Okay. Thanks, guys.

David Lewis with Morgan Stanley.

Good morning.

Good morning, David.

Mike, I want to kind of push you a little bit here on a comment you made about Impella and Impella traction. What I am hearing is two different things. The first is that there is significant demand out there for devices, in terms of new centers, and the second thing we are hearing is you need to spend more time training and driving utilization at existing centers.

So given that significant demand and given your burn rate was well controlled this quarter, doesn't that send a very strong statement that you don't have the number of people in distribution that you need?

What it says, David, is that up until the quick set-up and the registry, we were going to get a certain return on our investment on the heads. We have been adding and will continue to add with the demand. So the answer is we do need more people and now we are adding more people, but we are not changing our forecast of how we are adding. We are continuing to add two to four, and we will continue to do that. So that is the first thing.

The second component of this is the people we have added over the last year, which is say more than half or about half have been here for less than a year, there is a productivity element of how many new people we can add and how fast we can get them ramped up, and that is also a correlation to the existing centers we have as they get to independent usage.

So you get this cycle of our people get more productive, the existing accounts get to independent usage, and then we continue to add more people. And then back to your comment, I do agree and that is why we're going to continue to add selectively in the different markets.

You don't think there has to be a step function where the rate of new distribution adds is not going to accelerate next quarter in the future?

It has been accelerating. If you look at the patients, it has been accelerating year-over-year in triple digits, it has been accelerating double digits sequentially, and that is very strong growth. Year-to-date Impella revenue is up 64% and our reorder rate is up over 200%. So I think it is ongoing, but this comes back to the theory and the philosophy of a 510-K versus a PMA.

In the case of a 510-K you release the product, you continue to get data out there and you look at growth rates, and we are on the high level of that trajectory. Whereas a PMA you spend years in a study in anticipation of getting that approval, and then you go from zero in commercial revenue to launching the product. So we are somewhere in between there. And we are going to continue to grow each quarter, and that is our focus.

Perfect. And then just thinking about this particular quarter, you had implants per center -- I this we had about 1.1, up slightly sequentially. What is the right number? If you take this out 6 to 12 months what is the ideal number, you think, or realistic number for where implants per center could be?

I think the way I look at this is in three years what will drive the best business, the best quality of revenues, and the maximum amount of revenue total? And that is the way we have looked at this. I understand from a modeling perspective on why this is very important, and we agree with that. However, if we had 50 accounts right now, we could have a much higher rate because we would be living at those accounts, and only supporting a subset of patients.

The problem is that the applications themselves with emergency require to be at beyond 50 accounts. That is also the potential of Impella is that there is 1,000-plus accounts we can get out there to. So the net is we are trying to be at a critical mass, and we are trying to get to a point where you will start to see the acceleration of the patients where it will catch up with the individual rate per quarter per account.

Mike, just to push you a little more, you would expect sequentially for the implant rate per center to increase going forward?

We do, because as you see we are going to slow down on the -- it will take us a process. We are going to continue to slow down. The good problem we have is that a lot of folks want to buy Impella, and as the utilization continues to grow at a very fast pace that you are seeing, that will automatically go in that direction.

Just one last one and I will jump back in queue. Bob, just given the mix in the business where Impella is growing at 3X to 4X the rate of the legacy business, we would expect to see some sort of gross margin inflection here I would imagine, then we have some short term headwinds. But we should expect to see a gross margin acceleration or inflection in the next quarter or two. Are we wrong in that assumption?

I think I would push it out beyond a quarter or two. Yes, I think that we are making a number of changes in the manufacturing area. And those involve costs related, preproduction costs, training, setup, et cetera, et cetera. So I think that is out probably into the second half of fiscal '11.

Great, thank you very much.

(Operator Instructions). Duane Nash with Wedbush Securities.

Good morning.

Good morning.

Is there any change in the ASPs with the quick setup kit?

No.

Okay.

Not of substance, no.

Great. And then I calculated the average as about 1.1 devices per center this quarter. Can you disclose how this breaks down? For example, roughly how many centers are using more than three devices a quarter, or are high use centers? Is that something you can talk about?

Duane, we haven't broken those specific things out, but we have said that you have the standard 80/20 rule with this new technology, and I think what will happen as we go deeper into the accounts, is it will shift down a little bit.

Sure. And then one last question about the training cycle for an Impella center. How long does it typically take a hospital to feel comfortable using the Impella without any supervision from Abiomed? Is there a typical timeframe?

We believe there is a five patient criteria where we think then centers feel comfortable at least to our criteria. The quick set-up kit may make that shorter, but we have used that as a standard five. And then in reality if you look at the quarterly mix, it is usually around 70/30 -- 70% are prophylactic use and 30% are emergency use. So that means that the 30%, we are putting it in or either with phone support or on their own, and we have consistently seen that over the last several quarters.

Do you need a sales rep on call for procedures before the five, and then after the five that is no longer necessary? I am just wondering what sort of infrastructure changes happen?

Sure. The standard protocol had been that they really start off with the prophylactic patients, and they are scheduled. So our folks are there, whether it is a clinical or a sales person. And then from there they get to the area where they can start to operate independently on emergency cases.

Great, thanks very much.

Thanks.

Erik Schneider with UBS.

Good morning.

Hi, Erik.

Would you be willing to estimate again for us the proportion of units used in high risk PCI in the quarter?

Sure. I think it was around 70. I think it is approximately 70%, maybe 68% in the range. It has actually been declining. The number has been going up as a raw number, but the percentage has been declining over the last five quarters as we are starting to see more use independently, and more emergency patients. So AMI individually continues to grow as compared to five quarters ago.

And then it sounded like you were effectively saying that with the renewed focus on center penetration that this should be the floor, in terms of calculated utilization per center. Is that saying too much?

No, I think that is fair, Erik.

Okay. And Bob, could you just review two things. Could you tell me again what the one-time items were in the quarter? And exactly where those were in the income statement?

Sure. In Other Income, investment income was a 0.3 gain related to the final payment and closeout of the Columbia Fund that we had invested in I guess maybe six or so quarters ago, which has been wound down. It was a Bank of America fund. And it was basically just to change a slightly favorable net asset value on the final closeout of the fund. And then we had a $0.2 million cash R&D tax credit.

And that shows up in tax?

That shows up in tax, yes.

Okay. And then last year going from the third to the fourth quarter there was a fairly broad step-up in expenses based across each line item. Is that just a phenomenon with how your accounting works going into the last quarter of the fiscal year, or was that a coincidence for last year that is not something that we should expect to see repeated?

You are speaking of like R&D and SG&A expenses?

R&D, SG&A, yes.

No, that we would not anticipate this year. That was largely particularly in the SG&A area, the build-out of the US commercial organization.

Okay. Great, thank you.

Josh Jennings with Jefferies & Company.

Good morning, gentlemen. Thanks for taking the question. I guess the first one would just be back to sort of physicians becoming independent with Impella use and not utilizing sales reps. Can you just give us out of the 392 centers that you have on board, maybe the approximation of the number of physicians that are actually trained on Impella, and what percentage of those are capable of operating independently?

Sure, Josh. We haven't broken out the numbers by physicians, although we do track that. But we have 134 sites out of the 392 that have supported more than five cases. And so we believe that those folks have the ability to operate independently. Certainly that can be based on, it could be two physicians and then the ideal goal for us is to continue to expand the number of physicians that are inserting Impella.

All right. Just on your guidance, keeping Impella revenues constant in terms of your previous guidance after a strong quarter here, and I am just looking at this and I've been just wondering if I am looking at this the right way. But getting your sites and physicians trained on the quick set-up kit probably took away from their productivity a touch.

And then looking at keeping the performance flat with the performance you have had in the first three quarters, you are suggesting just a slight step-up from Q3 to Q4. And with 80% of your centers trained now on quick set-up maybe some of that productivity comes back in, and any sort of color in terms of keeping that Impella guidance flat for Q4?

Well, I think we are going to have some normal patient growth and we would expect that with the focus that we have given to the commercial organization that some of the gap that gets created by reducing the number of site openings is going to be filled with additional patients. So we still believe we will be within that range. And if we had opened, if we decided to open the same number of sites that we had opened in Q3, it is very likely we would have been above that range.

All right. Thanks. And last question, just in terms of the number of site openings, and that was really that big number, 66 centers in the quarter, was that driven by the TCT presentation of USpella data in MACH II, and can you give us some color on how that flowed through? Was it centers looking to you, or was it just easier for your sales force to present that data and get more traction?

Well, first of all I would like to recognize and congratulate our field team. Nothing is done online, people ordering. So the sales force, the clinical team, the marketing team has been working very hard, and so the 66 represents their hard work and their results. Certainly TCT was exciting, and releasing the new information brought a lot of new hospitals into the Company, and that is also why we have such a big funnel I believe moving forward.

Maybe I could just sneak one last one in. In terms of timing of the interim analysis for Protect II, is that going to come within this quarter and any expectations there?

As you know, we are very close to the halfway point on the numbers, and then there is a 30-day tracking period. So it is probably in the following quarter or two. It really depends on just the collection of the data, and also the number enrolled this coming quarter.

Thanks a lot.

Thanks, Josh.

Tim Lee with Piper Jaffray.

Thanks for taking the follow-up. Just in terms of the independent sites, what is their mix of procedures on the prophylactic versus emergent compared to the non-independent sites?

For the folks that get to the point of independent, you start to see a higher percentage of emergency usage, as compared to a site that is not yet an independent.

But I mean are they doing half their cases emergent and half planned? Or any color on that front?

It is not 75/25. It is less than that. It depends on the individual site and their specialty, whether it is PCI or AMI. But certainly it can range between the 50 and the 65 range urgent to prophylactic.

Got it. And then second, just in terms of Protect II, the 24 patients enrolled during the quarter, it seemed a bit slower than at least what we were thinking of. Does this change your thinking in terms of the trial enrollment? Is there anything else you need to do on that front to potentially accelerate that? Any thoughts on that front, please.

On the Protect II our focus is really to get to a core group of people that are willing to randomize the sickest of the sick. We have conducted surveys and worked with a steering committee to identify the sites that will remain in the study. We have had sites that have been asked to step aside by the steering committee based on several reasons, whether it is ethical concerns, or they just want to use the 510-K, or the limitations they have had with the inclusion criteria or exclusion criteria.

And so what we have done over the last two quarters is really making sure that we put better processes in place, and can give better attention to a smaller number of group. And I think we are still on track to what our expectations were for the completion of the study.

Great, thank you.

Bob Hopkins with Bank of America Merrill Lynch.

Thank you, good morning. Can you hear me okay?

We can hear you, Bob.

Great. Thank you. I just wanted to follow up on Protect II and the potential to see the interim result analysis. Could you just kind of remind us as to really what that entails? Is it something like, we will hear from you if it is much better than expected, and then you just stop the trial because it is doing so well, or that it is much worse than expected, and that they have to halt it because it is doing so poorly?

Is it really just we will hear from you if it is one of those two events? Because if it is just status quo and it is kind of projecting along, is that something that will be a press release from your guys? I am trying to get a sense of what exactly what we should expect as you guys do that analysis.

Sure. Bob, with any trial we don't know the details of where we are at. However, our expectations are it will be status quo, and we will just continue through the study, based on the need for the higher end to have a statistical value.

Right.

In the case that in any study you can have it stopped for either the results are that good or that bad. But we don't anticipate either one of those outcomes based on our homework and research on the adverse event rates and the composite end points.

What I would tell you is that we remain confident in the study, and partly because of what we continue to see in the registry data on the outcomes of Impella. And that is why the registry -- USpella is collecting high risk PCI, and looking at a lot of the elements that are in the Protect II study.

If it is just status quo as you expect, and you continue to enroll is that something you will let us know about? So you will say we have conducted the interim analysis, we're continuing to enroll patients. Is that something that you will disclose and talk about after the analysis?

Yes, it will be. I am not sure that will be a catalyst event, because that is already our expectations. But certainly we will let you know that we are moving forward.

Great. I just wanted to make sure that if it is still just the status quo, which it sounds like everyone should expect that that is something that there will be a press release or a comment from you guys on.

Just curious, in the quarter, could you give us a rough sense as to the percentage of the units that you sold from Impella that were 2.5 versus 5.0? In the past you have talked about it in broad terms.

Yes. The 5.0 is around 10% to 15% of the total units.

Okay. And the ASP, in the past you have talked about sort of 26,000 on 5.0, and 22,000 on 2.5, and is that still the rough range?

That is the rough range.

Okay. And then could you give us a sense this quarter -- that the average time that a patient is on the 2.5, has that changed at all? Is it still around the six, seven hour mark?

I think it is a shorter period of time for high risk PCI, and depending on the status of their hemodynamics and it gets longer the more severe they are.

And then just one last sort of longer term question, Mike, for you. One of the things that people are always asking about is the sustainability of the ASP for the device over a long period of time. Is there -- from your perspective is there any update, in terms of your confidence on the long-term outlook for the price that you are asking for for this device?

Are you still confident that somewhere in this area is something that you think going forward is a price that will be maintained? Or should we expect declines going forward, and if so of what magnitude?

Bob, I think one of the strengths of the Company is we have the best cost-effective argument in heart failure. And if you look at, just to give you an example, high risk PCI, a patient going through a CABG at a hospital is charged $100,000, PCI is $48,000.

If you look at emergency patients and you talk about how many folks suffer a heart attack and then live with it, there are 8 million people living in the United States that have had a heart attack. Many of these folks years to come are those Class 3 and Class 4 patients.

And if you look at the guidelines just for ICDs alone on the short-term, taking somebody with an EF of 28 and moving them up to 38, potentially puts them out of the guidelines for an ICD, and an ICD is also a hospital charge of $105,000, not to mention what follows onto that when they get further down the stage of heart failure.

So we as a business will expect and have the flexibility built in to lower the pricing over time as volume goes up. But I think again, we have the value there, that if you can treat these patients minimally invasive, and you can help them go home with their own hearts, you're going to save a lot of money for the system.

Great. Thanks so much. Appreciate it.

And there are no further questions in queue at this time. I would like to turn the call back over to your host Mr. Michael Minogue. Please proceed.

Thank you. Thank you for your time today, and have a great week.

Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. And everyone have a wonderful day.