ABIOMED Inc (ABMD) 2013 Q4 法說會逐字稿

Good day, ladies and gentlemen, and thank you for standing by. Welcome to Abiomed, Inc. Q4 2013 earnings conference call.

(Operator Instructions)

As a reminder, this conference call is being recorded.

I'd now like to turn the conference over to your host, Susie Lisa, Senior Director of Corporate Development and Investor Relations. You may begin.

Thanks, Mercy, and thanks, everyone, for joining us for the Abiomed fourth quarter fiscal 2013 conference call. I'm joined here this morning by Mike Minogue, Chairman, President and CEO, and Bob Bowen, Chief Financial Officer of Abiomed.

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

Before we begin discussing the fourth quarter fiscal 2013 results, it's necessary to remind you that during the course of this call we will be making forward-looking statements, including statements regarding development of Abiomed's existing and new products, the Company's progress toward commercial growth, and future opportunities and expected regulatory approvals.

The Company's actual results may differ materially from those anticipated in these forward-looking statements based upon a number of factors, including uncertainties associated with development, testing and related regulatory approvals, including the potential for future losses, complex manufacturing, high quality requirements, dependence on limited sources of supply, competition, technological change, government regulation, litigation matters, future capital needs, and uncertainty of additional financing, and other risks and challenges detailed in the Company's filings with the Securities and Exchange Commission, including the most recently filed Annual Report on Form 10-K, and Quarterly Report on Form 10-Q.

Listeners are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date of this 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 release, 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 fourth quarter of fiscal 2013, as compared to the fourth quarter of fiscal 2012, or fourth quarter fiscal 2013 as compared to the prior third quarter of fiscal 2013.

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

Thank you, Susie. Good morning, everyone.

We are proud to report another record quarter and record fiscal year in both number of patients supported and total revenue. Abiomed grew 17% year over year in total revenue for the fourth quarter, to $43.7 million, and set Impella usage records within the quarter for highest day, highest week and highest month in Impella history. We grew 25% for the fiscal year, with total revenue at $158.1 million, and grew Impella 31%, to $140 million. The clinical demand exists for patients requiring percutaneous hemodynamic support because of the size, demographics and complexity of the heart failure population.

This fiscal year demonstrates the Company's ability to execute our strategic goals while driving operational excellence, with a 10 times increase in net income over prior year and customer satisfaction. Today I will summarize our first three corporate goals for the year and provide an update on our regulatory status.

So, goal number one was on revenue growth. This quarter, Abiomed achieved double-digit sequential and year-over-year revenue growth, driven by strong Impella usage. We have now grown sequentially in six of the last seven quarters and achieved year-over-year double-digit growth for 14 straight quarters, with record patient utilization, prophylactic and emergency support represented 48% and 41%, respectively, of total usage. We continue to invest significantly in resources to provide clinical onsite support and training. We also have an increasing net number of independent cases each quarter, supported by our expanded, 24x7 call center.

Our second goal was on clinical publications. There were 11 publications regarding Impella within the quarter, and over 40 for the fiscal year, including the PROTECT II in circulation, and, announced yesterday, the PROTECT II cost-effectiveness study in the American Health and Drug Benefits Journal. We believe that many of these new publications will strengthen the medical society guidelines. To remind everyone, Impella is now incorporated into four different guidelines.

The number three goal was around executing on our clinical and regulatory processes. This quarter we initiated the Impella CP rollout and started enrolling Impella RP patients in our FDA study. There is a strong clinical need and growing physician demand for both the Impella CP and the Impella RP, or our right-side device. These two products have unique capabilities recognized by the experts in the field. We believe Japan also remains on track for an end-of-calendar-year PMDA approval for Impella and our new AIC console, with reimbursement to follow in six months.

Now I'd like to provide an update on the topic of the 515 FDA panel meeting held last December. It was recommended that Impella remain a Class III device and that all existing and future temporary ventricular assist devices will require a PMA. In advance of our scheduled post-panel FDA meeting, the agency requested that Abiomed submit a briefing document describing the totality of the Impella data. This summary includes 685 patients, including the Impella registry, and also references 201 publications, covering 1,877 patients.

Within the clinical literature, amongst the four largest Impella high-risk PCI studies, a total of 564 patients have been studied and published, 225 of whom were under FDA IDE protocol and randomized to a control arm. In addition, we are planning to do more analyses from existing databases and continue to collect data from our registry and single-center studies and have ongoing communication with the FDA on multiple subjects.

We can confirm there was a face-to-face meeting in February between Abiomed and the FDA, and it was positive. Abiomed Impella submission criteria must meet the PMA standard of reasonable assurance of safety and effectiveness. The PMA that Abiomed intends to submit to the agency will contain all reasonably known information, which includes extensive real-world experience and readily available medical device reporting, or MDR, safety records. Unlike standard PMA submissions, our Impella PMA submission describes a product that has been cleared on the market since 2008 and has hemodynamically supported over 14,000 US patients.

We recognize that the FDA views percutaneous LVADs as a future new segment of technology that provides hemodynamic support for minimally invasive procedures and actively unloads the heart. Because this new product segment has the potential for broad applications, we understand the FDA assessment requiring PMA-like controls and postmarket monitoring. While many details remain to be worked through, we are pleased to offer the following specific updates.

Number one -- Abiomed intends to submit a modular PMA submission for Impella by the end of our fiscal year. Our proposed modular PMA will have the following three components -- preclinical testing, manufacturing and quality systems and clinical data and conclusions. A modular PMA allows for a parallel submission of preclinical and manufacturing data for review while still preparing the clinical module.

Abiomed appreciates the FDA's flexibility to review the submission, as this will allow us to leverage prior work completed under 510(k) clearances and our Japanese submission. The review clock starts when the final module is submitted, and the expectation is for 180 days without a panel requirement and 320 days with it. Until this is completed, everything is business as usual for Abiomed and our Impella 510(k) clearances.

Number two -- FDA has also requested that we work interactively to refine and complete the analysis of existing clinical data from PROTECT II and our US Impella registry.

Number three -- as noted at the panel meeting and in our communications, the FDA has expressed the desire to work with Abiomed to complete the process. The FDA is not interested in pulling Impella from the US market, provided Abiomed makes efforts to complete the process.

Moving forward and independent from our PMA submission, Abiomed is committed to maintaining our postmarket surveillance and expanding the IRB-approved USpella registry, both in terms of the number of sites and the data collected at each site. This registry will continue to be a source of scientific analyses to generate peer-reviewed publications around both safety and effectiveness for patient populations.

In summary, we believe an Impella PMA approval will provide a significant long-term benefit for the Company in our quest to become the new standard of care for percutaneous hemodynamic support.

Our company culture is motivated by our ability to impact the lives of our patients and support our customers. Our company has transformed into a resilient commercial organization that is profitable, debt-free and expanding the number of exclusive regulatory approvals, breakthrough innovative products and geographical reach. This has been an exciting fiscal year and has increased our confidence and commitment to our company mission. Thank you to all our stakeholders for your support.

I will now turn the call over to Bob Bowen, our Chief Financial Officer.

Thank you, Mike, and 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.

Today I will provide some brief comments on our fiscal year 2013 fourth corporate goal, namely, operational excellence, as well as provide guidance for fiscal year 2014.

As noted in our press release on April 17, as well as this morning's full earnings release, record fiscal fourth quarter revenue of $43.7 million increased 17% from last year and increased 14% from the prior sequential quarter on record Impella patient utilization. Worldwide Impella revenue grew 22%, to $39.3 million. Service revenue grew 17%, to $2.6 million, and legacy product revenue decreased to $1.7 million.

An additional 30 new Impella 2.5 sites were opened, compared to 26 in the prior year, and an additional 55 hospitals purchased Impella CP, bringing the total Impella CP sites to 106, or approximately 14% of the overall installed base of 748 US Impella 2.5 customer sites. Impella CP represented nearly 20% of overall reported patient usage during the quarter, compared to approximately 10% in the prior sequential quarter, reflecting strong demand for this higher flow device.

The average hospital-owned Impella 2.5 and CP catheter inventory on the shelf was consistent with prior quarters, at the low level of approximately 2.4 catheters per site. In general, hospital sites are increasing unit catheter inventory levels by approximately one catheter when adding Impella CP to the mix.

On a full-year basis, revenue increased 25%, to $158.1 million, which exceeded the high end of the revenue range guidance we provided during last year's conference calls.

The gross margin rate for the quarter was 79.8%, compared to 81.8% in the year-ago period and slightly above the 78.7% in the prior sequential quarter. Our gross margin rates are sensitive to the number of console placements in the quarter for new site openings, expanded use needs or AIC upgrades. During fiscal Q4 we placed a record number of Impella consoles, totaling 216 units, compared to 102 in the prior year and 149 in the prior sequential quarter. Our current thinking, given the improved ease of use of the AIC, is to continue this aggressive pace of AIC replacements for the older MPC units through fiscal year 2014 and largely complete this replacement cycle. As such, the gross margin rates for the most recent two quarters are likely to persist through fiscal year 2014.

For the full year, gross margin rates were 80%, compared to 80.6% in the prior year. We placed 640 Impella consoles during the year, compared to 455 Impella consoles in the prior year, a 41% increase, to support 117 Impella 2.5 US site openings, compared to 110 in the prior year, and to support the Impella CP launch, increase our international business and support the AIC replacement process.

In addition, we've completed the successful startup of the Impella CP production, increased our safety stocks to provide six months of risk mitigation, and increased manufacturing capacity. Our manufacturing organization adapted as necessary and successfully executed each and average challenge.

Average domestic Impella catheter selling prices were slightly higher than the prior year and slightly higher than the prior sequential quarter, largely as a result of favorable mix from the addition of the Impella CP, which is a higher priced catheter than the Impella 2.5. Our pricing strategy is to differentiate pricing between the Impella CP and Impella 2.5 while maintaining the overall Impella catheter ASP at approximately current levels.

Total operating expense in the fiscal fourth quarter was $30.7 million, compared to $27.6 million in the prior year, or up $3.1 million, or 11%, on a 17% increase in revenue. Included in Q4 fiscal '13 SG&A expense was $2.3 million of outside legal fees related to the DOJ and shareholder matters.

In the fiscal fourth quarter, income from operations totaled $4.1 million, or 9.5% of revenue, up 41% compared to $2.9 million, or 7.9% of revenue, in the prior year. On a full-year basis, including $3.1 million of legal fees related to the DOJ and shareholder matters, operating margin totaled $16.5 million, or 10.4% of revenue.

GAAP net income for the fiscal fourth quarter was $3.7 million, or $0.09 per diluted share, up 42% compared to GAAP net income of $2.6 million, or $0.06 per diluted share, in the prior year. This is our seventh straight quarter of GAAP profitability.

Year-to-date GAAP net income of $15 million, or $0.37 per diluted share, was 10 times higher than the GAAP net income of $1.5 million, or $0.04 per diluted share, in the prior year. This is a major accomplishment for our company, particularly at this revenue level, and reflects the discipline of the management team and commitment of all employees.

As a reminder, we have a US federal net operating loss carryforward of approximately $190 million, which is fully reserved for accounting purposes.

The balance sheet remains in excellent shape. Accounts receivable of $22.9 million equated to 52% of quarterly revenue, compared to a balance of $20.5 million in the prior year, or 55% of quarterly revenue.

Inventory of $14.9 million equated to 34% of quarterly revenue and compared to inventory of $11.1 million, or 30% of quarterly revenue, in the prior year. We have explicitly increased Impella disposable and console inventory levels during the year with the addition of Impella CP as well as a planned effort to increase safety stock levels and maintain safety stocks at both our Aachen, Germany and Danvers, Mass. facilities for risk mitigation purposes. We are fortunate to have the financial flexibility to take these precautionary actions.

We ended the quarter with cash, short- and long-term marketable securities of $88.1 million. During the quarter we generated cash of $7.6 million from operating activities, used $0.8 million for CapEx and used $4.4 million to repurchase approximately 324,000 shares to complete our $15 million stock repurchase program.

On a fiscal year-to-date basis, we have generated cash of $26.4 million from operating activities, used $2.8 million for CapEx and $15 million to repurchase stock. In fiscal year '12, we generated $3.6 million of cash from operating activities, compared to $26.4 million in fiscal year '13. This improvement in operating cash flow is a remarkable achievement by the team.

As a reminder, we have no debt.

Turning to guidance, full-year revenue guidance for fiscal year '14, as noted in our press release, is in the range of $180 million to $185 million, with Impella growth expected to be approximately 20%. Consistent with prior years, we expect 45% to 50% of revenues to fall in the first half of the year and 50% to 55% to fall in the second half of the year.

Including currently estimated outside legal costs associated with the DOJ and shareholder matters in the range of $6 million to $8 million, we expect operating margins to be in the range of 7% to 8% as we continue to invest in growth and our product pipeline. As previously stated, operating margins could vary outside that range in any individual quarter.

We will now open the call to questions. Operator, would you please open up the line for questions?

Thank you.

(Operator Instructions)

Our first question is from Matthew O'Brien, from William Blair. Your line is open.

I was hoping to start off with the FDA commentary that you provided, Mike. And if you wouldn't mind, just you mentioned having to refine and complete the PROTECT II study, can you just give us a sense for what that will entail, and then your thoughts on whether or not you'll need the panel?

So the first point, Matt, is we are working with the FDA, and, as I stated, there's more details to be worked out. But we are going to continue to do data analysis on PROTECT II, which could mean that we're looking at patient populations that were prespecified, such as atherectomy/non-atherectomy or triple-vessel disease or even the learning curve, as well as any other requests they have looking at that profile from high-risk PCI perspective, whether it's risk levels like STS scores or things like ejection fraction.

We're also looking to validate and correlate that information and how it applies to our registry, both what's been published to date on the Europella as well as the USpella, as well as the data that exists in the registry that's -- that gets us up to in the 1,000-patient range, and we're continuing to do that, as well.

And then last is we're just continuing to make sure that we meet the analysis and we meet the requirements for reasonable assurance of safety and effectiveness, so where they want us to add more input or even follow up patients through the PMA, postmarket analysis, like our own registry, we're open and we're supportive of any action that gives them more confidence around reasonable assurance.

And then the last piece on the panel, I would always assume to be conservative and say it may require a panel, but that's a decision that they'll make in the future, as well.

Okay.

But the most important thing is during the entire process it is business as usual. We have the 510(k) clearances, and it's clear that that's how we'll operate in the meantime.

Okay. And then a question for Bob on the guidance, and I know there are some moving pieces here with the Impella outlook for the year, but just as I do the calculations I'm getting something around utilization per center at around nine catheters for the full year, and that's pretty similar to what you did in fiscal '13, even though you've increased by about one catheter per center over the last couple of years. First of all, am I doing the math right? And then, secondly, if that were the case, why would you be generating catheter levels like that?

Matthew, I think I'm going to have to take that offline with you. I'm not quite sure I understand --

Okay, just to try to simplify it, the catheter per -- the utilization per center just seems to be flat year over year, whereas you've been increasing the last couple of years. Just not sure why that would be the case given the interest that people seem to have in CP and just general utilization trends have been improving.

Well, I don't think we've specifically said how many centers we would be adding for fiscal year '14. We think -- the Impella business grew 22% in the last couple of quarters, and we think that given the fact that it's a bigger number to grow off of that the 20% target that we mentioned in the press release and the call is within the circle of reasonableness.

Okay. Thank you.

Thank you. Our next question is from Greg Simpson, from Wunderlich Securities. Your line is open.

Good morning, guys. I'll limit my question on the FDA front to just one, then move on to some other things. Mike, I appreciate the very detailed update you gave us and realize you're still probably a little bit limited, but my takeaway from listening to what you said, there were a lot of nuances in there, but it seems to me, and this has been my opinion all along, so I'm trying to read into something that agrees with my own opinion, but it seems to me that the risk of having to do another randomized trial, from what I'm hearing from you, seems really low. And I don't know if you want to go on record with that, but it just strikes me, especially given the existing data and the randomized data that you already have, it seems to me what I read into your comments was that the FDA is very open to using this existing data to get to the finish line here. Is that a fair assumption, or is that something you'd want to touch?

So, Greg, I think the feedback at the December panel meeting from the physicians and also the FDA indicated there could be the potential of sufficient existing data to file for a PMA without doing another trial. But, again, we may be asked to do additional work, which could be potentially the single-arm study, prospective study, or just more additional registry work or postmarket analysis of tracking the patients and following the reports. And so we are in discussions with the agency requiring these requirements.

Just kind of as a reminder, Impella has 262 patients that were studied under IDE already. And if you look at other LVADs, implantables and permanently implanted devices, including our own surgical devices, those have been approved under -- compared to a performance criteria, not randomized, and those studies range from 65 to 150 patients enrolled.

The other component is what's different about this is this PMA submission will include the real-world data. And so Impella has a very strong safety record. If you go and look at our 8-K that was filed, I think, December 7, it shows the Impella has very comparable, good MDR rates. You can also look at in the slides the comparison to the balloon pump.

And I think what people should remember is the PROTECT II was really designed for superiority, but the process we're going through is to utilize that data to show reasonable assurance of safety and effectiveness, which means that you can look at prespecified endpoints. You should be looking at 90-day endpoints as well as some of the post hoc analysis along with the totality of the data, which is, again, the ongoing registry and all the other publications.

Okay. All right. Great. Thank you. And to follow up on that just a bit, is it fair for us to look at the FDA's proposal for AEDs and draw any parallels to what this -- based on your meeting, face-to-face meeting with them -- is it reasonable for us to look at that and draw some takeaways?

Well, I think what the AEDs shows is you have technology that's been out there for a while that does have clinical data and extensive real-world use, and if you look at that it kind of talks about the path for products that do have that extensive real-world utilization. They have not completed this segment, but certainly we believe that in our case we do have a lot of existing data, a lot of patient support in the US and very good safety records. So, yes.

Okay, great. Thank you. And, moving on, could you break down the procedural mix? I didn't hear that, but high risk versus emergent?

So prophylactic was 48% and the emergency was 41%, and the rest is the all other bucket, and the biggest component of the all other bucket is probably the application of hemodynamic support during a VT ablation.

Okay. And then just one more and then I'll get back in line. Trying to look at the use of CP, and I continue to get great feedback on that device, and you talked about how maybe 20% of Impella procedures were the CP in the quarter, do you have any even kind of rough kind of guess -- it seems like -- I'm a little surprised by how many doctors are moving towards the CP for their high-risk PCI procedures, not just AMI, which seems kind of obvious. But can you maybe talk about that dynamic? How significant is that transition and the use of the CP in high-risk PCI?

So, Greg, there's tremendous demand for the Impella CP. Of the 750 sites, a little over 400 have the AIC, which is required to run the CP, and we've already penetrated a quarter of them in really our first quarter, but we're going to continue to do it the way to have the best protocols, the best training, the best outcomes for patients.

Relative to the decision on hemodynamic support, the product choice, we look at it as protocol driven by physician preference based on potentially the need for more flow as well as the size of the patient. And what we're really trying to do is allow the physicians to practice medicine and allow them to use the preferential flow rates that they want, which also includes the Impella 5.0, and we'll continue to work with them to support their patient outcomes.

The second component of that is we do see a price differentiation between the Impella 2.5 and the CP, and so we think that that will also allow for those that are more cost-conscious to make those decisions, whether it's for prophylactic or for emergency basis.

Okay. All right. Great. I'll get back in line, and congratulations on an adventurous but a great fiscal year.

Thank you, Greg.

Our next question is from Jayson Bedford, from Raymond James. Your line is open.

Good morning, and thanks for taking the questions. Just a few kind of follow-ons. I appreciate the color on the 515 process. I guess my question is when do you expect to have full clarity on what exactly the FDA wants?

So, Jayson, the meeting we had was a face to face, but we're having weekly communication with them. We're doing multiple deep dives on different segments. And I think what the important part is under a modular submission two out of the three components we believe we have clarity. That's the preclinical testing as well as the manufacturer quality systems. So that we have five plus Impella 510(k) clearances, and we had the Japanese submission, where we had a lot of work done. So we're going to move forward on two out of the three.

And then on an ongoing basis we're going to be working with them to, again, complete our submission before the end of this fiscal year for the PMA. So it'll be an ongoing basis, but, again, the point of doing the briefing document, the point of doing the shell work with them, is to come to clarity around what they are looking for to really give them confidence in safety, reasonable assurance of safety and effectiveness. So, obviously, before the end of the fiscal year when we're going to submit, we believe we'll have that clarity, because we're working together in collaboration to make sure that the final submission meets that objective.

Okay. That's helpful. And then it looks like usage is growing a little faster in the emergent setting than it is the high-risk PCI. Is that largely a reflective of the introduction of CP and the mix associated with that, or is there a more concerted effort to emphasize use in the emergent setting?

Well, we did see a nice sequential bump this quarter on prophylactic use as well as the emergency use. I think it's really driven around a couple of things. One is the appropriate use criteria, and there are many patients that just don't have maybe surgical options, and, again, there's publications around the benefits of PCI for this patient population.

The second is the SHOCK II study that was published on the intraaortic balloon pump that demonstrated that it did not provide additional hemodynamic support as compared to no support. So I think there's some discussion over that. I think you even saw in California there was a tech assessment done where they recommended for this tech assessment not to reimburse or not to support the use of intraaortic balloon pumps in cardiogenic shock.

And then I think the last is just as the AIC, as our new console gets out there, the ease of use really helps us to make sure that the techs and the nurses are more comfortable, which leads to, in our mind, better outcomes for patients when they have more rigor around the patient treatment.

Okay. That's helpful. And then, I guess, just lastly for me and I'll get back in queue, on the folks using CP, are they using it more than they were the 2.5?

For the ones that are doing it, it's a bit of a transition. It really depends on their personal preference. But certainly as we've introduced their products we've seen an increase of overall patients. And our focus as a company is not to drive one product versus the other. It's really to allow for the physicians and their practice of medicine to incorporate the right level of hemodynamic support for their patient population. But what we're seeing is an increase of overall patients supported. You still there, Jayson?

Yes. Thank you. That's all for me.

Thank you.

Our next question is from Anthony Petrone, from Jefferies. Your line is open.

Good morning. A couple on the comments on the FDA guidance and PMA process, Mike. Just one on timing -- you mentioned that all three modules you think possibly could be sort of finished by the end of the year or that you'll only have two, the preclinical and manufacturing side, and that the clinical data and conclusions will take a little bit longer?

We believe that all three will be completed and submitted before the end of our fiscal year.

Before the end of this. So that's -- a follow-up there is that if -- in the absence of formal guidance from the FDA similar to what they've issued for DADs, how are you sort of looking to proceed on the clinical front without that actual formal industry-wide guidance? And then sort of if you don't have that, is the process sort of stuck in limbo, similar to the AED experience?

Yes, that's a good question, Anthony. We expect that they will have that completed before the end of the fiscal year. If they do not have it completed, we're still working interactively with them to prepare for the formal PMA and to still address the concerns they have so that we can provide evidence of reasonable assurance of safety and effectiveness.

Okay, so just in timing -- okay, so there is an expectation that this all can be done by the end of this fiscal year, but it's contingent upon that formal industry guidance, and there is hope, based on your conversations with the FDA, that that formal industry-wide guidance will be out sometime before the end of the fiscal year.

Correct. But in our case the FDA has already agreed to work with us, and they are working with us now for our formal PMA submission, partly because of the extensive data we have and that we're trying to get ahead of it. And we'd like to be one of the first success stories in the industry that's converted from a 510(k) through the 515 process to a PMA. And we're excited to kind of be the role model. And they're -- they've agreed to start working with us on the process.

All right, great. And then I guess just switching gears a little bit to SHOCK II. It wasn't mentioned here on the call yet, but there was a competing pump company that mentioned falloff in balloon pump volumes in Germany, actually, after SHOCK II has been digested here and out in the wild a bit here about a year. I know international is not a big focus right now, but in light of some geographies potentially shifting as it relates to SHOCK II, what is your sort of international approach outside of Japan?

So, Europe has been producing our best results driven on patients. I'll be at PCR. It is this month. And we're seeing really nice progress over there and also in Germany, and we're continuing to add the right heads, but the patterns and the trends are all positive. We're very excited and kind of doing a bit of a prelaunch or a mini-launch of the Impella through the new console as well as the CP.

So is it safe to say that there's share gain opportunities from the pump in Germany or other geographies in Europe? Thanks again.

Well, I don't know if I'd call it share gains. I'd say that we are seeing an increase in usage on Impella. Whether or not they're not using the balloon or they're failing on the balloon pump is a -- it's a combination. But we are seeing our best progress in Europe, and we're definitely seeing that in Germany, as well.

All right, thanks.

Our next question is from Brooks West, from Piper Jaffrey. Your line is open.

Good morning. Thanks for taking the questions. Mike, I wanted to circle back to the label discussion. And could you talk a bit about what your goal for the Impella label is at the end of this process? And I'm thinking about specific therapeutic indications. And then I've got a follow-up.

Sure, Brooks. So, this is -- this remains an area of discussion with the agency, but what we think or what we believe is the most likely path is to submit a PMA for a temporary hemodynamic support label or indication for high-risk patients and/or procedures. As we get more specific on other types of indications, that could take the shape of HDEs or more registry submissions on collection of data, or it could be specific indications from single-arm studies compared to a performance criteria such as bridge to recovery, which we've talked about in the past. But we'll work with the FDA on whatever their preferred path is. But, again, what our device does is it provides hemodynamic support to enable a minimally invasive procedure and/or it improves the hemodynamic stability of the patient and helps their organs.

So then you would be left with a label that would look something like what you have without a superiority claim, right, just broad circulatory support? And then I asked the question because I know I'm going to get it -- as you think forward, then, to the reimbursement arena, how do you think about your kind of labeling progression with the FDA as you relate it to the payers?

Yes, I guess I would -- I don't think your assessment is what we think we're going to end with. We think we're going to end up with something that is more specific, and we think we'll be able to augment it with other things like HDEs or registry submissions, so you can even be more specific on the specific applications like bridge to recovery.

In the case of superiority, there's not an FDA study that exists in 30 years compared to hemodynamic devices like VADs that say superiority over a balloon pump. Patients that got prior VADs always failed a balloon pump and went to either our devices or the competitor's devices, because the balloon pumps are not ventral assist devices, therefore it hasn't been seen from a hemodynamic perspective to specifically call out superiority.

And, again, Brooks, in the end I think that this is -- it comes back to the practice of medicine. And what we're looking to show is that Impella provides superior hemodynamics and is safe to increase hemodynamics, whether it's used prophylactically or emergently. And we'll give more guidance as we go, and that's what we're working with the FDA on, as well.

Okay. So thanks for that, Mike, and just one more on that so I make sure I understand. So this sounds like, then, a step process, where maybe the first -- your first outcome is the more general label and then you would run a kind of a series of modular approach, so to speak, to define the specific label. Is that correct?

Well, not modular approach. It can be general, it can be broad or it can be specific. And, for example, if you look at the balloon pumps or if you look at our prior VADs is they start with an indication and then over time with submissions either from registries or from single arm or even HDEs they continue to add to those. And that's been the pattern. That's essentially the way balloon pumps and all VADs have kind of worked in the past around recovery or just hemodynamic support.

And then from a clinical practice perspective, I think really what you would be looking on the way things are used or your question on CMS or even reimbursement, I think those folks look more to the data and they look more to the guidelines. And what we really believe is we're currently in four guidelines, but many of those guidelines don't cover and don't incorporate yet PROTECT II and some of our other publications. So as that continues to get strengthened I think we just -- we'll continue to work with the right agencies to address their specific concerns.

Thanks, Mike. And then just one for Bob. Bob, could you give us the revenue mix within the Impella product line for the quarter? So what was 2.5, what was 5.0, what was CP?

I can give you that. Just hold on one second. So for Impella, for US Impella, 2.5 was 22.3, CP was 9.8, 5.0 was 4. The rest was consoles, a little bit of consoles.

Thank you very much.

Thanks, Brooks.

Our next question is from Charles Croson, from Sidoti & Company. Your line is open.

Hi, guys. Thanks for taking the questions. Most of mine have been answered, so I'll just be brief. Can you hear me okay?

We can hear you fine, Charles.

Great. Thanks. So kind of changing gears here from all that's been discussed, have you had any insight into what CMS might actually do with some of these listed items that were a big issue a couple quarters ago? And, if so, are they moving forward with that, or do you have any idea what the discussions have been?

So, Charles, you're referring to our --

Yes, the NCD on the non-roller pump -- or the roller pumps, the potential to get that.

So, we believe after -- and we've put this out in an 8-K -- after our normal communication and our yearly review, which happened in February, with CMS, that there is not a pending national coverage decision on Impella. We don't think there is a consideration for it. We were named to the potential list I think among 33 other types of products or technologies, and I think they do less than 10, or potentially five to 10 per year for all the products in the entire industry. So if you're on the list it doesn't necessarily mean there is a pending question.

But where we were listed was also along with the intraaortic balloon pump. And we think that there may be some analysis being done on that side, as well, because that's been around for a long period of time and has had some recent publications that are not very favorable. So if and when we hear that we believe something like this is coming, we will bring it up. We will let you all know that.

And we also think that, based on the criteria to become a national coverage decision, we're still a small number and we don't meet that criteria, because there isn't controversy with the regional people. We continue to have regional payment in all the regions within the country and have had so since 2008. And maybe the most common outcome which would give a first look at some work being done would be seeing things like a med tech panel or a draft local coverage, whichever one get in advance, similar to what happened with NHIC two summers ago, where they did the analysis, and they do pay for Impella. So we'll continue to give transparency to that process.

We also believe that when it comes to medical devices we do believe we have the best cost-effectiveness data in the industry, and just to draw your attention to we've had a bunch of recent publications around that. The European cost-effectiveness publication was in the Journal of Medical Economics in January. The budget impact model was published in the Journal of Managed Care Medicine in February of 2013. Yesterday we announced the PROTECT II cost-effectiveness paper, which was published in the American Health and Drug Benefits. And then we also -- at ACC there was an abstract about percutaneous cardiac assist devices compared to surgical hemodynamic support devices.

So we're going to continue to publish around the clinical value, but we also believe that our focus on trying to help patients get safer and more complete minimally invasive procedures, that that goal will lead to really good quality of life outcomes and cost-effectiveness. And that's really the goal of what we do and what differentiates us from pretty much every other company that's in the space.

Okay. That's very helpful, Mike. I appreciate that detailed answer. And then, lastly, any update that you can give us -- I know you probably can't really talk much about it -- but the investigation that you had come about last year? Just anything would be helpful, if you can.

Sure, Charles. So the first, the important part is we did announce this quarter that we received a closeout letter from the FDA, the Office of Compliance, with respect to its previous FDA warning letter from 2011. The closeout letter stated that the Office of Compliance has completed its evaluation and they obviously had looked at our processes and audited our past practices. So we're glad that that has been closed out.

As regard to the subpoena, we'll continue to work to resolve the issue and cooperate, and we'll continue to do so. We don't have any other comments on that.

Relative to the shareholder lawsuits, we believe that the suit has no merit, and we are vigorously defending against it.

And then relative to the derivative lawsuit, we have also filed a motion to dismiss that suit. The plaintiff's brief was due in, I think, in mid-April, and ours was due at the end of the month, and that's one of the reasons we released our quarter and our full-year revenue prior to the brief in order to demonstrate Abiomed's continued to have strong execution and positive results.

Okay. That's helpful. And one last quick one, on the subpoena, then, do you have any idea on when you might be able to give us a little bit more clarity?

You know, I think the way these things work is they can continue to go on for an extended period of time or they can go away or they can come to resolution. And right now we'll continue to work with them to provide any and all data and continue to be compliant as a company. And, as we move forward -- we're a smaller company, I know a lot of bigger companies can have three to five of these going on at one time -- we're just going to follow their path and have confidence in our ability to work with them and to resolve it one way or the other.

Okay, great. Thanks.

Our next question is from David Lewis, from Morgan Stanley. Your line is open.

Good morning, everyone. It's Steve Beauchaw here for David. I had one just on the P&L into '14. The -- I guess for Bob -- on the $6 million to $8 million of spend that you called out in the press release this morning, should that be fairly evenly spread over the course of the year or more biased toward one half or the other? And how does that compare to the run rate, let's call it, in the second half of fiscal '13?

So, Steve, we incurred $2.3 million worth of outside legal costs in fiscal Q4, and $3.1 million for the year, so about $0.8 million in the prior quarter when it was just getting started up. Some of the those costs in fiscal Q4 were related to setting up the information architecture to be able to provide data in an efficient manner. And right now our current thinking is is it's kind of like $1.5 million to $2 million a quarter spread across the year. But it's, I would say, best estimate. And what we will -- we'll spend what it takes to get through the process in a positive manner. But that's about as much as we know right now.

Got it. Very helpful. And then a couple for Mike. Number one, well, Mike, you made some comments on PCI volumes last quarter that were, well, frankly, ahead of the curve. You called out a couple of issues that I think others have spoken to since. So, I mean, given that we have the heart team out there becoming more of a consideration, and AUC, which has gotten more attention since you mentioned it, I wonder if you could give us your latest thoughts on what's going on in terms of broader PCI volumes. Are we at a stable rate year on year, or is there something that could take us one direction or the other going forward?

You know, Steve, we don't look at it from the overall PCI, but based on our insight is what's happening is that the patient populations today are older, more complex, and many of the physicians are looking for alternatives, including a number of surgeons who potentially are not able or not willing to operate in what's considered to be the highest risk area of appropriate use criteria.

Where we work best is where we kind of follow the guidelines around both the use of hemodynamic support as well as where you look at where appropriate use is. And, again, the most appropriate patients that are in those guidelines are around those getting triple-vessel disease or have poor heart function or high complexity. And that's really where we see our sweet spot.

So I think you are seeing that there's a drop in kind of the bread-and-butter single-vessel type of approach, but that's why I see a subspecialty continuing to grow with our users where they're really specialized on more those complex patients. It's almost -- there is a little bit of a parallel or similarity to those that are focused on the radial approach. It's a subset of physicians that are growing their business looking at certain patient populations and the benefit.

And then on the kind of the process of those building blocks, it's really you have to have the DRG. You need to have a dedicated CPT code. You need to have inclusion in guidelines. And then you want to match that up with really onsite support and training and rigor around patient outcomes, and that's where we're focused.

Got it. Very helpful. And then one question on some of the recent news from the Company regarding the positive policy decisions from some of their private payers. I think we take these on face and say, "Hey, we expect a positive utilization trend to follow." So I wonder if you could put some more color around what you're seeing coming out in the wake of a number of these positive reimbursement decisions. Are we thinking about this the right way? And what kind of utilization trends are you anticipating in fiscal '14 given the positive tailwind there?

Well, I think we are -- we're projecting Impella growth at 20%, which I think puts it in the top tier of products. And I think you are seeing people look at the clinical data and look at the cost-effectiveness, and understanding the way you look at healthcare reform has changed from really quantity of patients at the hospital to quality of the patients 90 days post discharge.

And as people look at quality, they're trying to figure out ways to do it the best the first time, reduce length of stay, reduce readmissions and improve the quality of life and customer or patient satisfaction. And I believe we have lots of data and studies that show that we can influence two out of the three main criteria that CMS is tracking, which is heart failure, AMI and pneumonia. And we do feel confident that the healthcare reform, specifically putting a focus on 90 days post discharge, really plays to the strength of doing a better job the first time.

Great. Thanks so much, everyone.

Thank you. We have a follow-up from Greg Simpson, from Wunderlich Securities. Your line is open.

Okay, thanks. Hey, Mike, since you mentioned the cost-effectiveness data in the press release yesterday, I want to ask a question about that. I actually had a dinner with Dr. O'Neill back in November 2011 when that data first came out. He thought that was a huge positive. And I'm just curious, now that it's in peer-reviewed form, how significant do you think that is? I mean, is that something you can really use to your advantage in the field, or does it matter now that we've kind of jumped out to peer-reviewed fashion?

You know, Greg, I think it always matters to have something in print in a peer review. This journal was specifically chosen because it has one of the largest distributions to -- on the drug side to people that track health performance, and specifically around cost-effectiveness. And I think it just, again, validates the ability of this technology to help physicians do a better job and as well as compare it to other types of technology such as dialysis or surgical VADs or even MRI procedures. So that really -- what it gives us is a way to compare ourselves to other technologies that are being used today that are considered cost-effective.

Okay, thanks. And then just one quick one on guidance for Bob. Came in a little higher than I expected, given that it was my impression you guys probably wanted to be a little extra conservative just after fighting people's concerns about guidance over the past few years, even though you've beaten it consistently. Just a little clarification, I assume, obviously, given the timelines, there's no Japan in there, but what about RP? Any RP revenues from the clinical process?

You're correct. There is no Japan in there. And there is not a material amount of RP in there, either. There's minor revenues from the clinical process.

Okay, thanks.

But it's largely 2.5, CP and 5.0.

Okay, great. Thanks. And just real quick on Japan, Mike, you talked about it, but can you just maybe talk about the clarity you guys have on that process and kind of what's the next step and things like that? You seem pretty confident about the approval timeline.

We are confident, and we're even more excited about the opportunity to go to Japan. We disclosed that the initial introduction and the pull over there was from the societies. We have letters of support from pretty much all the physician societies from cardiology to heart failure to heart surgery to even some pediatrics. And we believe that our technology is custom made for a country that has a smoking population with poor outcomes post-AMI, as well as really not a transplant alternative. So we have a medical advisory board, a group already we're working with. We're identifying what will be the top sites in the training centers. And we're seeing tremendous interest and excitement and will be planning to have a hemodynamic training program and course for our initial users this coming fiscal year.

Okay, and, just to clarify, that approval will be for the entire Impella product line?

That Impella approval will be for the new console as well as the 2.5, and then there will be other supplemental submissions that will follow around the CP and the 5.0. But the main focus initially will be on the new console and the Impella 2.5.

Okay, great. Thanks very much.

Thank you. We have passed the call [start] time. I would now like to turn the call over to Mike Minogue for closing remarks.

Thank you, everyone, for your time today, and we're excited to start a new fiscal year. Have a great day.

Ladies and gentlemen, this does conclude today's conference. You may now disconnect. Thank you.