ABIOMED Inc (ABMD) 2014 Q4 法說會逐字稿

Good day ladies and gentlemen, and welcome to the ABIOMED fourth-quarter earnings conference call. At this time all participants are in a listen-only mode. Later we will conduct a Q&A session, and instructions will be given at that time. (Operator Instructions). As a reminder this conference call is being recorded. I will now introduce your host for today's conference Aimee Genzler Manager of Corporate Communications, you may begin.

Thank you. Thanks everyone for joining us for the ABIOMED fourth-quarter fiscal 2014 conference call. I am Aimee Genzler, Manager of Corporate Communications, and I am joined today 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 we will then open up the call for your questions.

Before we begin discussing the fourth-quarter fiscal 2014 results, it is 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 towards 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 approval 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 as 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 the 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.

Also we remind our participants that the products discussed in this call including the Impella 2.5 and Impella 5.0 and Impella CP are 510(k) cleared for partial to full circulatory support for periods less than six hours, and during critical procedures that do not require cardiopulmonary bypass. Other products discussed, including the Impella RP, Symphony and Impella Pediatric, are currently investigational devices and are limited to investigational use.

Finally, 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 2014 as compared to the fourth quarter of fiscal 2013, or fourth quarter of fiscal 2014 as compared to the third quarter of fiscal 2014.

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

Thank you Aimee. Good morning everyone. ABIOMED delivered another strong quarter, with a 15% increase in total revenue of $50.4 million, driven by record patient utilization, and 200% growth in Impella CP patients. Impella utilization was also robust with the highest number of reported patients treated in a month, week, and day.

We have grown topline revenue double-digits for 18 straight quarters, supported over 19,000 US patients, maintained profitability and generated $118 million in cash without incurring debt.

Impella is now the most widely-used heart pump in the United States, with approved and standardized DRG and CPT codes for hospital and physician reimbursement from Medicare and major commercial insurers. Impella is in approximately 859 US hospitals with over 2,000 physicians trained.

For the full fiscal year, ABIOMED had solid Impella growth of 19% with overall revenue of $183.6 million. And set new records for patients supported and quantity of clinical publications.

On the regulatory side, we completed our Impella 2.5 PMA submission, and our Impella RP FDA trial. We are proud of our execution this fiscal year and grateful to our stakeholders.

On today's call we will cover two of our four corporate goals, so we can devote the majority of time discussing our specific progress on our US regulatory goals. So starting with our second goal; achieving significant patient and revenue growth.

Patient growth was 15% year over year, and increased double-digits sequentially. As a percentage of total case mix, prophylactic support and emergency support each represented 44%, with the remaining 12% distributed in the all other categories of total usage.

To be clear, all Impella prophylactic and emergency procedures are considered high risk, because our patients have poor hemodynamics and require complex treatment. Impella CP is in the sweet spot of addressing the clinical needs of our physicians, and it now accounts for approximately half of our patients.

Over the over last the several months we have had 28 Impella publications on both the clinical and cost-effectiveness data. One important recent publication: Health Economics of Percutaneous in a Treatment of High Risk Cardiac Patients, is published in expert reviews and encompasses' a systemic review of Impella, and demonstrates reduced days in-hospital stay and overall cost effectiveness.

Now we will spend the rest of the time on our fourth and final goal, executing our clinical and regulatory processes, in order to achieve approvals in Japan and the United States. We continue to progress in Japan as planned, so for today's call we will focus on the US Impella 515 PMA submission, and briefly cover the Impella RP study.

This is the first time many investors have experienced the 515 process, and we would encourage all to review on the FDA website for more details on the long history. As a reminder of what the 515 process is, I will quote the FDA website.

The FDA will reclassify devices types into Class 1 or 2, or sustain the classification of Class 3, and call for PMA applications, end quote.

These devices are FDA 510(k) cleared, and are routinely being used by physicians in the practice of medicine, even though most devices have not completed any FDA studies. All temporary circulatory support devices such as Impella, the intra-aortic balloon pump, all adult ECMO devices, TandemHeart, and CentriMag, are included within the 515 process.

And except for the intra-aortic balloon, all of these products are proposed by the FDA to remain Class 3, and required to complete a PMA submission. Per the FDA 515 guidance, all products remain on the market under existing 510(k) clearances, until each company complete its respective PMA process, and demonstrates reasonable assurance of safety and effectiveness.

The 515 category in which Impella is covered is called non-roller type cardiopulmonary bypass blood pump, or NRP. And it's one of 26 categories encompassing hundreds to thousands of products. The FDA 515 proposed order creates a new category within NRP defined as temporary ventricular support devices which includes Impella. Therefore, we believe our future PMA indication will broadly encompass this function of temporary support, and will be based on the totality of the clinical data and discussion with the FDA.

Immediately following our 515 panel in December of 2012 ABIOMED worked interactively with the FDA to leverage our three FDA studies and the US Impella registry, to create the most comprehensive clinical analysis on the totality of the Impella data.

The FDA formally approved outlined or shell last February, which identified information necessary to support the filing and approval of Impella 2.5 as a Class 3 product. The overall submission included the components of pre-clinical and engineering testing, manufacturing and quality systems, and clinical data. ABIOMED submitted the fifth and final module to the FDA as planned last quarter.

Our PMA submission alone is a major achievement for our Company. The package contains thousands of pages of documents, and represents more than eight years of clinical research after an investment of greater than $35 million.

Now what is new, and what is different from regular PMA submissions? With credit to the FDA, the initial decision in 2008 to grant Impella the 510(k) clearance post the PROTECT I study, has provided over 19,000 Americans access to this unique innovation. Impella technology has also supported thousands of patients in Europe since approval in 2004 for multiple indications.

These six years of real world clinical experience in the US combined the with EU experience, allows for a rare record of data unavailable to any routine PMA product approval, because controlled clinical studies alone do not fully represent the benefit/risk profile in clinical practice.

The totality of the data in our PMA submission contains clinical data from 215 publications, references 1,638 Impella 2.5 patients, includes two FDA studies PROTECT I and PROTECT II, and for the first time announced 791 new high risk Impella patients from the US Impella registry.

The US registry is an existing ongoing multi-center propose retrospective registry, with data from approximately 40 sites in the US and Canada. Our PMA submission under the 515 program also provides the FDA with real world data demonstrating the safety record under the medical device reporting analysis, or MDR from 13,981 Impella 2.5 patients.

Additionally, the PMA analysis encompasses clinically accepted hemodynamic science described in the literature, and validated in computational modeling, with a variety of pre-clinical and clinical studies. We believe the totality of the data supports reasonable assurance of safety and effectiveness of the Impella for temporary ventricular support.

Concerning the practice of medicine, Impella has been evaluated for multiple uses by physicians that determine protocols and reimbursement policy based on the medical guidelines and clinical publications, along with cost-effectiveness data available.

To be more specific, Impella is now incorporated into five guidelines for high risk PCI; PCI with cardiogenic shock, stemi and cardiogenic shock, acutely decompensated heart failure, patients with multi-organ failure, and bridge for patients with profound hemodynamic compromise. These recommendations from ACC,AHA, SCAI, and ISHLT range from Class I to Class IIa and IIb. And all of these guidelines were released before our most significant publications from PROTECT II and the US Impella registry were available.

We expect the overall 515 process to last between 12 to 14 months before completion of a panel and a potential Impella 2.5 PMA approval. However, it's hard to predict because there are no historical comparisons for the 515 process. ABIOMED will submit data for the Impella CP and the Impella 5.0 as PMA supplements. Until each product completes the 515 process, ABIOMED will operate under its existing 510(k) clearances for Impella 2.5, Impella CP, and Impella 5.0.

Now changing topics to our Impella RP study to support humanitarian device exemption, or HDE submission, we have completed enrollment of 30 patients from up to 15 hospitals. The FDA support for this IDE study has been outstanding, and we have already submitted for a continuous access protocol approval, in order to continue enrolling appropriate patients. We recently announced approval of the Impella RP CE Mark in Europe, and anticipate US FDA approval by March 2015.

The Impella RP operates on a same AIC console as the other Impella products, and will be introduced into our established hospital installed base. As a reminder, there is no other product like the Impella RP, and for the first time it enables percutaneous right heart and bi-ventricular support for heart failure.

In summary, we are on track to transform into an FDA PMA and Japanese PMDA company. Our portfolio of products and applications continues to expand to a growing population of high risk patients and developing global installed base.

As always we want to thank our shareholders for their support and all our employees for their hard work and dedication to our mission. We look forward to continued growth this year, and meaningfully impacting the lives of our patients.

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

Thank you Mike, and good morning everyone. As noted in this morning's earnings release, fiscal fourth-quarter revenue was $50.4 million, an increase of 15% from $43.7 million in the prior year. Worldwide Impella product revenue grew 17% to $46.1 million, off of a difficult prior year comparable of $39.3 million.

The components of fiscal fourth-quarter worldwide Impella revenue include: US Impella reorder revenue of $35.6 million compared to $29.6 million in the prior year, a year-over-year increase of 20%; US Impella revenue of $2.1 million from opening 23 new Impella 2.5 sites, compared to revenue of $2.8 million from opening 30 sites in the prior year; US Impella revenue of $3.7 million from placing Impella CP at 77 existing sites, compared to revenue of $3.2 million from 60 sites in the prior year; and OUS Impella revenue of $4.3 million, compared to revenue of $2.8 million, or up 54% from the prior year.

On a unit basis reported US Impella patient use, again exceeded unit reorders, as total US Impella units reorders were approximately 95% of reported patient use. As previously noted, this reorder rate of less than 100% of patient use is largely due to the initial CP stocking at new sites, combined with hospitals maintaining lean Impella catheter inventory levels.

Hospital owned unit inventory level of Impella 2.5 and Impella CP combined averaged 2.6 units per hospital, compared to 2.5 units per hospital in the prior sequential quarter. At the outset of the year the average was 2.4 units per hospital. So we have seen a slight increase over the course of the year as expected, with the introduction of the Impella CP at an increasing number of sites.

45% of US customers now have the Impella CP. 48% of reported patient use was with the Impella CP in Q4 fiscal 2014, and 55% of US Impella revenue was from the Impella CP. This reflects the continued strong demand of this higher flow device, along with growing emerging patient use which as noted by Mike was 44% of overall patient use during the quarter.

Worldwide service revenue grew 23% to $3.1 million, as a result of the increased installed base of Impella AIC consoles and related service contracts.

Legacy products revenue which is largely the AB5000 product totalled $1 million in the most recent quarter. We expect to experience continued declines in legacy product revenue, due in part to cannibalization from the Impella CP and 5.0.

For the full year, worldwide revenue total $183.6 million, an increase of 16%, and worldwide Impella revenue totalled $167 million, up 19%. Also notable is that we grew sequentially in each of the past three quarters.

Gross margin for the quarter of 79.9% was essentially equal to 79.8% in the year-ago period. Taken together R&D and SG&A expenses totalled $36.6 million compared to $30.7 million in the prior year, and reflect our continuing investment in developing and bringing products to market, along with investments in field personnel, training, and customer support.

During the quarter we incurred $2.9 million in stock compensation expense, and $1.3 million related to the DOJ investigation. The comparable numbers in the prior year were $2.6 million of stock compensation expense, and $2.4 million of DOJ and shareholder litigation related outside legal costs.

GAAP operating margins for the quarter were 7.3% and on a total year basis were 4.6%. GAAP net income for the fiscal fourth quarter was $3.6 million, or $0.09 per diluted share, compared to GAAP net income in the prior year of $3.7 million, or also $0.09 per diluted share.

The balance sheet remains in excellent shape, and we continue to prudently manage working capital, which is reflected in our growing cash position. We ended the quarter with cash, short and long-term marketable securities of $118 million, up $30 million from the start of the fiscal year. And we have no debt.

Turning to guidance. Full-year revenue guidance for fiscal year 2015 as noted in our press release is in the range of $205 million to $212 million, or a growth rate of 12% to 15%. We have not at this time included Impella revenue from Japan in our guidance, and we have included very modest Impella RP revenue in our US Impella estimates, related only to expected approval from the FDA of a continuing access protocol, now that enrollment in the trial is complete.

Consistent with the past two years we expect 47% to 48% of revenue to occur in the first half of the year, and at present we expect the fiscal first quarter to be essentially equal to the fiscal fourth quarter of last year.

Our expense plan for the year includes what I would describe as a placeholder for DOJ related legal expense of approximately $2 million. The submission of document stage has essentially been completed.

We do not expect the recent request for information from HHS to materially affect our spend profile. The requested data is limited in its time frame, and is pretty much readily available, and we believe we will be able to provide the requested information promptly.

We expect to incur pre-revenue start-up costs in Japan of approximately $3 million to $4 million, most of which will occur in the second half of the year.

Also, please note that our stock compensation expense tends to be the highest in our fiscal first quarter. In addition, in Q1 we will incur a $1.5 million R&D expense related to the initial payment of the Opsens agreement.

For the full year we expect operating margins to be in the range of 5% to 7%, and we expect to start off the year at about breakeven and improve operating margins as we progress through the year. Last year we had a $1.3 million loss from operations in fiscal Q1. As previously noted, operating margins could vary outside the total year expected range of 5% to 7% in any individual quarter.

We will now open the call to questions. Operator?

Thank you. (Operator Instructions). Our first question comes from Matthew O'Brien of William Blair. Your line is open.

Morning. Thanks for taking the questions. I was hoping we could start off and excuse my voice, with the prophylactic performance in the quarter, Mike, it was about 44% of total sales of units. And it seems to be, even though the number of hospitals continues to grow, kind of stabilized at about this 950, 960 unit number. Can you just give us a little bit more color as to why we have seen that taper off here somewhat, and then maybe next inflection points we should expect?

Sure, Matt. So starting off with the mix, as we said, was 44%, 44% and 12%, and on the prophylactic support it was up single digits, high single digits, it was about 7% over the prior year, and it was up as well a little more significantly it was up sequentially as well.

The growth in the emergency population was in the mid-20% range, and in the all other it was in the high-20% range. But we want to point out that it's not necessarily really a binary definition between a prophylactic and an emergency patient or all other. Some of our patients have extremely poor heart function, and putting them on a table for a procedure when they lay flat they can potentially go into active heart failure. So we break it out as best we can so that you can see the mix of that elective type of approach versus the emergency, but as you've seen they're all growing together double-digit, and sequentially they grew double-digit as well.

Okay. Fair enough. And then heading into guidance, there's a lot of -- the first look at it was a bit below what we were thinking. But digging in a little bit more, it seems like there was some things that were kind of tailwinds for fiscal 2014, be it a little bit higher inventory levels at your hospitals, and then some CP benefit as well. When we look at actual just patient number and volume growth there, is it fair to say that growth of that metric should be pretty similar in fiscal 2015, as far as what we saw in 2014?

Well, our guidance is our guidance and we don't necessarily want people to get ahead of us, and we want to have an execution where we can deliver in the $205 million to $212 million range. That being said, our big focus really is on the Impella PMA approval, the Impella RP HD approval, and the Japan approval. And in that guidance you don't have any revenues or any type of benefit associated within that fiscal year, so if those come along obviously that would be upside.

And then back on the growth rate, what you're seeing is that the Impella CP is an accelerator or a catalyst. And what we've tracked internally is when the sites receive that their overall volume on average goes up, so it drives more utilization. And if you think about our entire installed base there's probably 1,300 potential accounts, so we have got a long way to go for just the 2.5 where we're at today in the mid-800s. We've got an even longer way to go with the CP and then the RP as well as the 5.0.

So we're going to continue to have a focus ongoing deeper. That's why we limit the amount of new sites we open, as well as how many sites can get CP and we will do the similar approach with the RP in the US.

Okay. And then just one more for me, if that's okay. You mentioned Japan, I just want to make sure that generally speaking we're still on track for a summer approval there not necessarily reimbursement but we're still on track for that approval?

We're still on track for late summer and reimbursement to follow within six to nine months.

Great. Thank you.

Thank you. Our next question comes from Danielle Antalffy, Leerink Partners. Your line is now open.

Hi. Good morning, Mike and Bob. Thanks for taking the question. I was just hoping you could help us understand, so one of the issues, not issues but questions has been what's the high risk patient population. What do you have coming down the pipeline from a data perspective that could help better define that market?

So I will make sure I understand the question. You're asking what data publications are coming out around what is the definition of a high risk patient versus an emergency patient?

Right. Exactly. Because one of the pieces of feedback that I get from physicians is that it's tough to figure out what high risk, who is a high risk patient and who is appropriate for an Impella. I know we had talked in the past about a white paper that could be coming, so just wondering if you could comment on that?

Sure. So we've had extensive publications on the PROTECT II study, so we had the first version which covered everything the PROTECT II in circ. Since then we have had a learning curve paper on PROTECT II; we've had the atherectomy paper on PROTECT II; we've had PROTECT II where we have just used the current definition that the FDA uses for a higher rate of MI at 8X, and in all of those you see statistical benefit at 90 days.

The way we would define high risk PCI is the way the FDA has run or accepted the PROTECT II study or PROTECT I study, which is lower EF which the cutoff point would be 35%, relative whether it's triple vessel disease, or unprotected left main, with some type of complex treatment.

Also in that protocol those are the hemodynamics and the anatomy, but what we also ask is the physicians have to believe that the patient requires hemodynamic support, so that would be the third caveat. And that population if you look at what the balloon pump has seen in usage in around 25,000 patients a year. But we believe there is another population of patients that today, or in the past, were not treated in the cath lab, and many today are turned down by surgeons because their risk score from STS or SYNTAX is very high.

And one thing that we have been looking at, is if you look at the SYNTAX study which was done years ago to define patients that should get PCI as compared to CABG, patients that were turned down for surgery were put in the SYNTAX PCI registry. So again these are patients 100% were turned down for surgery, and they're listed and they're noted in the PCI SYNTAX registry, and those patients actually are not as complex as our PROTECT II patients. And we have those broken out based whether you look at rate of heart failure, or diabetes, or prior heart attack. They are not as sick.

And what we believe happens in the future, similar to these other technologies, is that there's going to be a population that we can enable a minimally invasive procedure that potentially the surgeons feel are not appropriate, or they prefer not to treat them with a sternotomy and an open heart. So there will be more to follow-on that, but you can imagine that there is difficulty collecting data and predicting a population that doesn't get treatment today, but generally speaking there is a large class of patients in Class III, Class IV, that have complex disease, that have poor hemodynamics, and are being turned down from surgery.

And just one last point on that, we're also tracking trends. And if you read some of the reports up to 2013, the trends on PCI are significantly down, with exception of patients that are getting PCI for triple vessel disease or have low EF or are getting atherectomy and have low EF. So that's a population we're going for, and this is a population of patients that likely in the past had limited treatment options.

Okay. That's really helpful. And one follow-up question if I could. You have a competitor that's going to start enrolling a CE Mark trial, and then a US trial at some point before year end. Just wondering how we should think about the impact of the 2015 sales growth guidance and what you guys have maybe included in that guidance for the competitor trial?

So the competitor is a good company and makes very nice heart pumps that help a lot of patients live and get to a transplant. So we wish them luck on any technology that helps patients. But just to point out that we did thousands of patients before we of did our first patient in the US, and we have eight years of clinical research.

So there's a strength here of having all of this information, and now this segment of category will require a PMA, but we don't have anything in there for 2015, because this is a long regulatory process. And we wish them luck but no, that will require a lot longer than fiscal 2015 in order to bring that product into a commercial package.

Okay. That makes sense. Okay. Thanks so much.

Thank you. Our next question comes from David Lewis of Morgan Stanley. Your line is now open.

This is actually James in for David. Thanks for taking the question.

Morning, James.

Mike, a follow-up question on the 515 process. You mentioned earlier in the call you expect the future PMA indication to broadly encompass the function of temporary support. In our prior conversations we understood that initially perhaps the FDA would draw a distinction between high risk PCI versus shock. Is that still your expectation?

That is our expectation. We don't expect to have, we're not proposing to get AMI shock. However, we are proposing a type of bail out or emergency support. And when you get into something like shock, now you're talking about a bridge to recovery type of approach. And we will be in discussion with the FDA about using our registry to collect data to reinforce our current submission, but also use it to collect data on smaller populations that are difficult to study, with the hope that we can expand our indications. But remember that our patients that are getting hemodynamic support for PCI, whether they got there through either a prophylactic or emergency nature, what we're providing is temporary support to enable the procedure.

And to the extent that you get a label that does not initially include shock, I mean do you think that creates any marketing or messaging challenges to physicians relative to the current use in those types of procedures?

So any indication we get would be, we have a 510(k) label today just for six hours of use. To have a PMA is really showing that you have reasonable assurance of safety and effectiveness, and again it's for hemodynamics for procedures not necessarily shock. We don't have that today at all.

And again, to point out that the practice of medicine under the 515 is all of these products are already on the market. We've been on the market for six years. So in the practice of medicine and how things are paid for, they do get very specific into indications, and that's what we have been evaluated for, and that's where we're already currently in the guidelines.

Okay. That's helpful. Thanks.

Thank you, James.

Thank you. Our next question comes from Anthony Petrone of Jefferies Group. Your line is now open.

Thanks and good morning. Mike, maybe you could touch on Germany a little bit. That's been a source of strength for Impella post shock. And maybe just the latest trends in Germany, are you still seeing share gains from intra-aortic balloon pump in that market?

Europe and Germany continue to be strong. And again we want to compliment the FDA's support and speed in our Impella RP study allowed us to actually transition from doing the European study to moving directly into the US, collecting data under the US study, and then using that data to submit for the CE Mark. So we're going to be again very diligent in how we roll the Impella RP out, but certainly Germany will be one of the places that we go to first, to start implementing a protocol around Impella RP utilization.

Maybe to stay on RP for a moment. Can you maybe give us a look at what the US market potentially looks like, in terms of uptake across the existing hospital customer base that you have, and then maybe your expectations for utilization of that catheter? I would assume it would be significantly lower than the 2.5 and CP, but maybe just a little bit of color around there that would be helpful.

Sure. So we don't so in the current numbers, but we do perfect to have it at the end of our fiscal year. As far as the demand for it, I would encourage everyone to do their surveys of the 865 hospitals or 859 hospitals in the US, nearly all want it and will likely order it right away.

And as far as utilization, I think what we're going to propose is that under the HDA we have two different discrete populations. Some that are post LVAD and some that are just right-side failure or bi-ventricular failure, so we will approach those in kind.

But our long-term goal is to collect data and submit to the FDA, so we can have a bridge-to-recovery, bi-ventricular PMA approval. That way you can use any Impella device on the left side, and the RP on the right, and you can do bi-ventricular or left or right only. So that's also something we're going to be continuing to collect data on, and work with the FDA for that expansion.

What would be the timing on that expansion just maybe to follow-up there?

It will be obviously after -- our goal right now is to get HDA approved, and then in there you have two discrete populations for the RP, and there were two cohorts in the HDE study. We will give more details as we get further out, but we are already planning to collect the RP data as well in our registry post approval.

That's helpful. Last one for me is just on Japan, I know it's not in numbers here. But maybe expenses early on and sort of entering that market are you going to be incurring expenses this year ahead of the launch? And then as you look at the market, maybe just a review again of the initial target sites you're going after, and your expected utilization in that market as well? Thanks again.

Okay. Anthony, yes. We have three $3 million to $4 million set aside in our plan for this year, most of which is going -- I mean some of which is currently ongoing, but most of which is we expect to occur in the second half of the year. And these are pre-revenue start-up costs with regard to getting our infrastructure in place, along with clinical personnel and related training of clinical personnel. We're also at early stage of doing some training at the physician level.

And we plan to open initially 10 to 20 sites that will be across the country. Key sites for us that will be training sites for us, and we will serve those on a direct basis. And then subsequently, use a partner for servicing the remainder of the cath labs in Japan.

And then just on the execution again, we plan to have a hybrid model in Japan, where we have a direct team covering the top 15 to 20 sites, and then we will partner with strategic to cover the rest of Japan.

Thank you.

Thanks, Anthony.

Thank you. Our next question comes from Jan Wald of Benchmark. Your line is open.

Hi. This is Erica in for Jan. I just have two quick questions for you. The first is on the time frame for the 515. Is the panel within that 12 to 14 months, or do you expect that to be after that 12 to 14 month period?

We expect the panel within that 12 to 14 months, but as we said, it's hard to predict since this is the first of its kind type of approach.

Okay. Thank you. And then the second question is about the HHS investigation. Is that something that's related more around the Massachusetts laws, where it's inappropriate to buy someone a coffee, or is this on a more national basis just coming out of the Boston office?

It's more national, but we received a subpoena late Friday, so as we're investigating this it's been a fairly discrete set of materials for a fairly limited period of time. However, we believe our physician reimbursement policy has been and is compliant, and so we have to be prepared for this type of business in this regulatory world, and we are. And just as a point in the future, the Sunshine Act will -- this type of data will be posted on the website for all companies, so we'll cooperate and move on.

Okay. Thank you very much.

Thank you. Our next question comes from Jayson Bedford of Raymond James. Your line is now open.

Hi this is Mike calling in for Jayson. Thanks for taking the question. Just first on the 2.5 PMA process, once you get approval do you expect to see a change in practice patterns in terms of utilization? And then a follow-up to that, do you expect to change your marketing strategy at all, in terms of aggressiveness with doctors?

So, Mike, we sell very clinically today and that's why you see the amount of publications that we have, and what I do think it will make it a little easier for us to market. We're uber-conservative as of today, because our focus is really just to get to the PMA and to move on, and I think it will allow us a little bit more freedom. But from a general sense, I don't think you'll see a change in our kind of policy of how we interact with physicians or the hospitals.

Okay. Great. Thanks. And then I'm sorry if I missed this, but when we look at the 2015 guidance, I was hoping you can give us an idea of what some of the underlying assumptions were for Impella sales growth both US and OUS, and then what sort of rate of new center adds we should be assuming?

Yes. So I mean I think essentially right now the business is largely an Impella business. I mean most of the service revenues come from the AIC consoles which are Impella controllers. And the only non-Impella piece of the business is the AB5000, which is about 3% of the overall. So I think you can think of the guidance to be basically Impella-based guidance.

We haven't specifically split OUS from US, although we are expecting to continue to see strong growth out of OUS. And we would expect to open about the same number of Impella 2.5 sites as we have in each of the last three years, so that's somewhere around 110 or so sites. And we would expect to continue to see the existing sites with the Impella CP at about the same rate as we did in the most previous year, so it's probably going to be around 240 to 260 units or sites.

Okay. That's helpful. Thank you.

Thanks, Mike.

Thank you. I am not showing any further questions in queue. I would like to turn the call back over to Mike Minogue for any further remarks.

Thank you. So just to remind our investors, our goal is to become the new standard of care for percutaneous circulatory support. We believe we are on track, and we look forward to another record year. Thanks for your support.

Ladies and gentlemen, thank you for participating in today's conference. This concludes today's program, you may now disconnect. Everyone have a great day.