ABIOMED Inc (ABMD) 2015 Q1 法說會逐字稿

Presentation

Good day, ladies and gentlemen, and welcome to the ABIOMED Incorporated Q1 2015 Earnings Conference Call. At this time all participants are in a listen-only mode. Later we will conduct a question and answer session and instructions will follow at that time. (Operator Instructions) As a reminder, this conference call is being recorded.

I would now like to introduce your host for today's conference, Aimee Genzler, Director of Corporate Communications. You may begin.

Thanks, Nicole. Good morning. Thanks, everyone, for joining us for the ABIOMED First Quarter Fiscal 2015 Conference Call. I'm Aimee Genzler, Director of Corporate Communications, and I'm 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 first 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 first quarter fiscal 2015 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 approval.

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 10K and quarterly report on Form 10Q.

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.

Also, we remind our participants that the products discussed on this call, including the Impella 2.5, Impella 5.0 and Impella CP are 510k cleared for partial to full circulatory support for periods less than six hours and during clinical 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.

Lastly, comparative references made financially in this call to revenue, expenses, gross margin or other increases or decreases will be indicated by references to first quarter of fiscal 2015 as compared to the first quarter of fiscal 2014 or first quarter of fiscal 2015 as compared to the fourth quarter of fiscal 2014.

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

Thank you, Aimee. Good morning, everyone. ABIOMED delivered revenue growth of 14% and patient growth of 16%. We have grown top line revenue double digits for 19 straight quarters year over year. Impella CP grew 96% in patients, is in half of our sites, and is supporting half of our total patients.

This first quarter is really marked by our significant progress on execution of our strategic plans for regulatory approvals and intellectual property advantage. For today's call I will highlight our steps forward on four initiatives, the Impella 2.5 PMA approval, the Impella RP HDE approval, and Impella Japanese approval, and last, the ECP acquisition.

So, starting with our Impella 2.5 PMA submission, we are pleased to report the successful completion of our FDA audits at six hospital trial sites and our ABIOMED headquarters clinical audit called GCP lasting seven days. The FDA has already responded to our official submission and we are working to develop the specific wording for the proposed indicated around high-risk PCI and hemodynamic instability. We are pleased with our progress and interaction with the FDA and as a result we are reducing the timeline range for a panel and PMA approval by two months for a projected approval by March 2015.

The FDA 2014 and '15 strategic priorities and April FDA draft guidance stressed the need for balancing pre-market and post-market data collection for devices. This document references the 515 process and post-market monitoring as a way to provide ongoing confirmation of the assertions made in PMA submissions. In addition to ABIOMED's three FDA studies, over 200 clinical publications, and clinical use in over 20,000 US patients, we're looking forward to further augment the totality of the data and real world experience. Therefore, ABIOMED after discussions with the FDA has submitted a written proposal describing the use of our US Impella registry or USpella for post-market data collection and supplemental submission on Impella CP and Impella 5.0 as well as submission for expanded indications. Until these supplemental submissions are approved, the products remain on the market under the existing 510k indications of circulatory support for up to six hours.

In parallel to our 515 process, the Impella RP approval moves forward and the physician interest grows in anticipation of approval. The US Impella RP sites -- trial sites have submitted their patient data sets for our Humanitarian Device Exemption or HDE. We have shipped a few pumps to sites that have completed the required steps to continue enrolling under the FDA CAP or Continuous Access Protocol approval. We intend to submit the final clinical report to the FDA in September. For the timeline for HDE approval, we reiterate our projected approval timeline by March 2015.

As the industry and FDA look to build incentives and programs for companies to do early US feasibility studies, the Impella RP is a great example of this success around FDA collaboration and predictability. This trial has been a very positive experience for ABIOMED and some of the data has been utilized for approvals outside of the US.

Moving overseas to Japan, we have successfully completed our full PMDA submission as well as both pre-clinical and clinical data audits. However, the PMDA approval timeline has recently pushed three to five months from our original expectation. This delay was caused by ABIOMED's prioritization of our FDA submissions. The important point to note is our confidence on the overall approval remains high and the clinical community and physician society support remains strong. Last week at the main Japanese interventional cardiology conference, CVIT, we had several hundred participants at four scientific presentations on Impella. We remain our expected reimbursement approval to occur six to nine months from the PMDA approval which leads to a commercial launch forecast of June to December 2015.

Finally, ABIOMED is positioned to be the long-term leader in the field and our intellectual property plays an important role in maintaining that innovative advantage. Last quarter we announced the Opsens agreement. Opsens is the most advanced sensor available and is the size of the human hair. Short-term it will assist with improved positioning of the Impella. Long-term it will help provide a dashboard for physicians to monitor the patient and degree of myocardial recovery.

This quarter we acquired ECP, a medical device Company based in Germany. ECP is developing a product that is a percutaneous expandable catheter pump which increases blood circulation from the heart with an external drive shaft. The pump design offers a potential flow rate of up to 4.5 liters per minute and then insertion radius for the impeller and the catheter of less than 10 French. While the ECP pump could not operate without infringing on some of our Impella patents it holds an extensive amount of patents or patent applications in expandable technology with over 40 patent families valid with expirations up to year 2033. The ECP expandable pump patents will be added to approximately 100 patent and patent applications from the Impella device. The ECP commercial offering is still far enough away that we are not forecasting timelines but we can disclose our plans to run a version of it on our Impella AIC console. We will utilize this 20 person team and technology to enhance our innovative advantage beyond the next 10 years.

In summary, we are on track to receive FDA approvals for our Impella 2.5 and Impella RP and have a plan for the remaining supplements. We are also on track with a slight delay for our Japanese PMDA Impella approval. Our investment in our clinical research and patent portfolio along with our disciplined approach and execution have provided ABIOMED with the opportunity to become the new standard of care and recognized leader in percutaneous circulatory support. We believe that our regulatory approvals, new products, and expanded geography will provide many years of growth in revenue and shareholder value. As always, we want to thank our stakeholders for their support and all our employees for their hard work and dedication to our mission. We look forward to continued execution this year and meaningfully impacting the lives of our patients.

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

Thanks, Mike. And good morning, everyone. As noted in this morning's earnings release, fiscal first quarter revenue was $48.8 million, an increase of 14% or $6.1 million from $42.7 million in the prior year. To summarize the most important parts, Impella patient growth in the US was up 16%. Impella reorder revenue growth in the US was up 16%. Impella revenue growth outside the US was up 55%. And service revenue growth was up 27%.

The year over year revenue headwinds included slightly lower new site or initial product stocking revenue and lower legacy product revenue. Compared to last year's first fiscal quarter, worldwide Impella revenue increased 16% to $45 million. Service revenue increased 27% to $3.3 million. And our one remaining legacy product, the AB5000 decreased $0.9 million to $0.4 million.

The breakdown of worldwide Impella revenue of $45 million was as follows. First, US Impella reorder revenue of $34.1 million increased 16%. The increase was driven by 16% year over year growth in US reported patient use which was up from 14% and 15% year over year growth in the past two quarters respectively. Average hospital-owned unit inventory of Impella 2.5 and Impella CP combined was equal to the prior sequential quarter and up 2/10 from last year's average of 2.4 units.

Second, initial new site or new product stocking order of Impella 2.5, CP, or 5.0 totaled $5.8 million which was $0.3 million lower than the $6.1 million in the prior year. The details of these initial stocking orders by product which will vary from quarter to quarter are as follows. Revenue of $2.1 million from opening 24 new Impella 2.5 sites was $0.3 million lower. Revenue of $2.9 million from placing Impella CP at 62 sites was $0.3 million lower. And revenue of $0.8 million from placing Impella 5.0 at 12 sites was $0.3 million higher.

And third, outside the US, Impella revenue grew 55% to $5.1 million. In the first fiscal quarter the indications for use were 44% of patient use was in the prophylactic setting, 44% was in the emergent setting, and 12% was all other indications, the largest piece of which is EP. The prophylactic setting where the majority of use is the Impella 2.5 has been the most challenging and has experienced single digit growth rates in each of the past two quarters. We look forward to being able to focus on this application post-PMA as it requires a planned approach to creating awareness in the clinical community. For example, many patients have poor ejection fraction and are turned down for surgery and may never get the option of hemodynamically supported PCI.

The emergent patient setting has grown in the mid-20% range in each of the past two quarters. We anticipate continued strong growth in the emergent patient setting at existing and new sites with the continued roll out of the Impella CP. As of the end of the quarter, only 50% of US customers have the Impella CP and only 38% of US customers have the Impella 5.0. In the all other patient setting, the largest piece of which is EP, we experienced 44% year over year patient growth in the first fiscal quarter and we expect to see continued strong growth in this patient population.

Gross margin for the quarter expanded 600 basis points to 80.2% compared to 79.6% a year ago largely due to fewer placements of the AIC consoles which totaled 166 this year versus 191 in the prior year. As of the end of the quarter, 84% of Impella sites have the AIC console.

Operating expenses totaled $40.3 million compared to $35.3 million in the prior year. The R&D expense included a $1.5 million payment which was made on the signing of the Opsens license agreement. Essentially all of the increase in SG&A was related to continued investment in our field personnel, training, and customer support. GAAP net loss for the quarter was $1.7 million compared to a $1.7 million loss a year ago.

Our balance sheet remains in excellent shape and we ended the quarter with cash and short and long-term marketable securities of $121 million compared to $118 million at March 31, 2014.

Turning to guidance, as noted in our press release we have reiterated our full year revenue guidance to be in the range of $205 million to $212 million which represents a growth rate of 12% to 15%. Consistent with the past two years we expect the second half of fiscal year revenue to be stronger than the first half. This year TCT is in September whereas last year it was in October. Since many of our Impella users will be at TCT and not in the cath lab treating patients for that week, our thinking is that our Q2 revenue may be just slightly higher than Q1. As in the past two years, we believe first half revenue will be 47% to 48% of total year revenue.

We admit difficulty in forecasting legal fees associated with the DOJ investigation. We now expect total year legal expense levels to be $3.5 million to $4 million range which is $1.5 million to $2 million higher than I noted on the previous earnings call. In addition we estimate the incremental expense from the ECP acquisition to be approximately $4 million for the year or approximately $1 million per quarter.

Overall for Q2 and the full fiscal year we now expect operating margins to be in the range of 1% to 4%. As previously noted, operating margins could vary outside of the total year expected range of 1% to 4% in any individual quarter.

Lastly, just to reiterate Mike's comments, we are investing in our distribution to position the business to capture and leverage an enormously attractive market opportunity with the advantage of an FDA approved Impella 2.5 PMA, and FDA approved Impella RP HDE, and a Japanese PMDA approval, all of which is combined with a strong intellectual property portfolio.

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

(Operator Instructions) Matthew O'Brien, William Blair.

Good morning. Thanks for taking the questions. Mike, I was hoping we could start off with the 515 commentary that you provided. I just want to make sure I'm understanding this correctly. The label that you're proposing to the agency at this point, it still seems like it's a fairly broad label even though you did mention high-risk PCI. Is that the right way to view this? And then within that question, what was it with your discussions with the agency that made you feel comfortable in moving the timeframe up by a couple of months?

Matt, thanks for the question. The totality of the data and the clinical information we have is what makes or gives us the indication around high-risk PCI and hemodynamic stability. That's always been what our intent of this first PMA for the 2.5 and they have been -- their response time is better. That's part of why we've moved it up a little bit which we do appreciate. As far as what we're disclosing, it's not prudent to give too much information but what we're trying to do is give the information that's pertinent to what you all want to hear from the investment perspective which is on the timeline, the indication, and the supplements. So, what we also believe is that we have a comprehensive plan and it matches to the strategic priorities of the FDA and again we feel based on the totality of the data we can demonstrate reasonable benefit for safety and effectiveness.

Okay. But they haven't given you a specific timeframe for the panel yet?

They have not. But what we've incorporated into our estimate is time for the panel and the PMA approval. We've moved it up from a 12 to 14 month range to a 12 month range.

Just a couple more. On the US business, when I look at the number of CP sites that you're adding and I know that there's some inventory work downs when you add that product to those hospitals versus the new centers that are starting on 2.5, I think that's the reason for the disconnect between your revenue number and the patient utilization number. Should we anticipate that delta to continue probably for -- I don't know, maybe 4 or 8 more quarters?

The reorder rate in the most recent quarter was 93% of patients whereas in the prior 2 quarters is was 95%. It's going to move around a little bit within that range. It was a little bit softer in the last quarter which we view mostly just as timing but I think that in general that reorder rate is going to persist as long as we're feathering the field with a new PC line.

Thanks. One last one for me. The international strength in the quarter, is that -- was that specific country again that was driving a majority of that growth? Can you give us a sense on the sustainability there? Just again the performance off a really difficult comparison was pretty compelling.

Sure, Matt. We are bullish on Europe. We also specifically see and we pointed out last year that the bulk of that strength and growth is in Germany where you have our newer products, our investment in the distribution, and the area that actually engineered and published the SHOCK II paper on the intra-aortic balloon pump. So, it's been -- we've been pleased with the progress. And we have more growth to go.

Got it. Thank you.

David Lewis, Morgan Stanley.

This is actually James in for David. Thanks for taking the question. First, Mike, I'm interested to hear a little bit more about ECP and in particular was the more important driver of that deal for you the intellectual property position? Or was it gaining a potentially differentiated product? As a second part of that, obviously you've talked about you have some plans to run a version of the ECP product on your console. How do you think that might be differentiated versus what Impella is offering today?

A little bit of history, James, on ECP is part of that portfolio was owned in part by the original Impella systems and the Chief Scientist, Thorsten Siess, the inventor of Impella actually had worked on that. When they had some financial difficulty, some of that IP got away and we retained a bulk of that intellectual property and then that independently has been developed over the last eight years by Berlin Heart. The reasons that we were interested in acquiring it was, one, to enhance the current platform because what makes Impella unique is that you can actually put the motor and the pump on the inside of the patient which gives you the flexibility to make it smaller and also to position it and not to have a drive shaft outside the body that can generate vibration and energy and potentially a rubbing sensation on the aortic valve.

So, we think that platform will give us some more flexibility as we expand a version of it running off of our same console. And then the other comment I made is this technology while it has in depth and probably the most comprehensive IP around the expandable pump concepts, it also had some challenges getting by the operation and how it would put into use with a patient to get around the Impella IP. It's a combination of those things but really the way we look at it is we want to have an innovative advantage beyond ten years and we think now where we are we've got a very secure and solid position around axial and expandable percutaneous heart pumps.

Got it. Thanks. And then, Bob, if I recall correctly, last quarter you said that you expect some modest level of pre-launch spending in Japan. I think it was $300 million or $400 million to fall in this year. Any change in the timing or magnitude of that planned spending?

Yes, James, we've adjusted it modestly at this point. But we're still going to have preparatory costs in the back half of this year.

Okay. That's all. Thanks, guys.

Thanks, James.

Brooks West, Piper Jaffray

Thanks for taking the question. Morning, Mike. I apologize, I'm jumping back and forth between calls. Sorry if you addressed some of this. But I was trying to get I guess your longer-term perspective on how you've been able to engage the US market with Impella. You think about you've been limited by the 510k approval. You maybe got your wrist slapped a little bit and had to pull back. Now with the label that you're anticipating, can you just talk about maybe looking over the last five years then looking forward how you're going to be able to sell this thing in the market?

Sure. To start off with our 510k is for circulatory support for up to six hours. And that's a hemodynamic indication. As far as the clinical practice of medicine, a lot of that is dictated by guidelines and the way it has evolved over the last five or six years is we went from zero guidelines to 5 guidelines and effectively when you're looking at the emergency patient population you're looking at a class one recommendation. And when you're looking at the prophylactic population you're looking at the 2A and the 2B populations which to date has not included any of our Protect II or US registration publications. So, as we look forward to your question we see strong growth around the inclusion of clinical papers and guidelines but we've been really confined to look at a patient population that's already in the cath lab where they're comparing hemodynamic support for high-risk PCI.

As we have a PMA for something along the lines as we're discussing high-risk PCI, it gives us the ability to talk about safe and effective which is what a PMA states is it's safe and effective and it allows us to go look at and educate our customers on a population that they may not ever see today. So, effectively there are patients out there that have poor ejection fraction, they have triple vessel disease, and just poor heart function with ischemic disease and many of these patients may not ever even get the opportunity and know about the option of hemodynamically supported PCI and that's where the PMA will really allow us to go out and to really educate folks on our clinical data.

As a comparison, if you think about the percutaneous valve market, they really didn't know how many patients would qualify for that because there was many patients that were just too sick or not given the option of a surgical valve. But now that people know about it and they're screening about it and there's clinical data there is a large population. So, to some extent we think the PMA allows us to go look at patients that today never even make it to the cath lab.

Thanks for that. Once you have the PMA base are you guys going to run -- do you have the opportunity to run or do you have the appetite to run I guess post-market approval studies that could be expansive to the label?

That is what we are going to do. I did cover this a little bit in my script. What we've proposed to the FDA is to use our US Impella registry for both post-market data collection as well as supplemental submissions on the Impella CP and Impella 5.0 as well as expanding the indications for use.

Okay. And then I guess last question for me, can you just talk about the ECP product? I'm not as familiar with that. It sounds a little bit like the PHP product. Can you just talk about that, compare and contrast those products? Thanks.

The ECP has 40 patents on an expandable pump platform. It is less than 10 French and when it deploys across the valve it opens up at 16 to 18 French. The other product you mentioned is a 12 to 13 French catheter which can tend to drive leg ischemia that's similar to all the studies on the balloon pumps. When the balloon pumps got below 10 French, that's when you saw significant drop off in leg ischemia and complications which is one of the reasons the Impella pump is at 9 French. And when that other pump deploys on the valve it would be 22 to 24 French with a mesh cage that has an external drive shaft that can generate some vibration. Those two products are a little bit different both in the size of the catheter and the sheath but what we're planning to use is some of that intellectual property to work into the Impella platform to have kind of a better and newer hybrid approach. The last point about the ECP is when it was originally in the portfolio of ABIOMED or the Impella Corporation through the Chief Scientist there was certain intellectual property it depended on but when it left the Impella system it still required to use some of the original platform patents in place.

Thanks, Mike.

Thanks, Brooks.

Anthony Petrone, Jefferies.

Thanks. Good morning, guys. Maybe just to start on CP, it's been a significant driver, pretty much since the launch. It's now in over 50% of your own base. I'm just wondering when you look outward where do you see penetration into your existing base? And how much of a tailwind would you classify that for emergency cases?

Hi, Anthony. It's Bob. Yes, we're in 50% now and we've been pretty consistently placing the CP. It's 60 to 70 sites first quarter. And that's our game plan for the balance of this year. What we see at those sites that get the CP is an overall increase in usage and it certainly is a major driver to the emergent patient population use.

Are those sites also purchasing additional 2.5 catheters and are they using those as well? Or is it exclusively at this point they're just purchasing CP?

There is a mix but I think most sites have both the Impella CP as well as the Impella 2.5. There are -- and some will take advantage of the price difference between the two catheters. There are some physicians who use only the Impella CP for all indications.

That's helpful. And maybe on the 515, Mike, maybe with the totality of the data increasing and certainly it sounds like the comfort level from the standpoint of the Company has increased, presumably this is also based on feedback from the FDA. Maybe why in your opinion is the FDA still looking to move ahead with a panel at this point? And maybe just one follow up to that.

I think we look at this as it's the first of its kind PMA criteria. So, everything after this and likely as a comparison this will be the first PMA approved percutaneous cardiac pump. So, we think it's more of a technical component rather than anything else.

Again, thanks for the updates on timing, but just on the supplements specifically, you are increasing the data submissions to the FDA. So, is the timing on the supplemental submissions and then approvals there after also can we assume that's pushed up as well or being that there's now more data that is being submitted, does that actually push back some of the timing for the supplemental I guess even submissions and thereafter approvals.

You can assume that pushes up the timing overall. That's why we've been working with them to develop the post-market plan and the use of the registry. But again, until all those other supplements are approved, everything remains as is. The important part is to make the Impella platform a PMA and it also does apply to the Impella RP. There's many of the things now, the testing, the components, the software, the materials, the console that we're able to utilize from the Impella 2.5 submission for the Impella RP submission.

So, RP then would not be a PMA supplement? That would --

Correct. RP will be a separate HDE submission and approval and it turns out its expected approval time is the exact same time as the Impella 2.5.

Great. Thanks a lot.

Thanks, Anthony.

Danielle Antalffy, Leerink.

Thanks so much. Good morning, guys. Congrats on the timeline moving up. That's really good news. I was wondering, Mike, obviously short of the obvious answer which is FDA not requiring a panel, are there any -- is there any potential the timeline could move up even further from here or is this really where you think it's going to shake out?

Danielle, thank you for the question. Right now that's based on our ongoing discussions. And that's what we're comfortable talking about.

Okay. Great. So, maybe let's talk about the FDA -- the potential FDA panel? You're obviously in constant communication with FDA and so you're getting good feedback from them. What do you think will be the point of contention that FDA raises at the panel? Where do you think the focus will be and what will your guy's response to that be? Obviously you have a significant amount of clinical data. Just trying to parse out what to expect as far as FDA questions at the panel.

I think the real question is what does the totality of the data demonstrate relative to reasonable safety and effectiveness and what the FDA has today is an unprecedented data set of percutaneous heart pumps. Just to reiterate, it's 1,600 patients in either FDA studies, registry, or publications. And as a comparison basis to full VADs that are implanted including ABIOMED's, those studies have ranged from 65 patients to 150 patients and the majority of them are not randomized because they're compared to a performance criteria. So, the first -- the component of Impella, it's the most -- it's the largest data set for heart, any heart pump ever submitted. We have over 20,000 patients supported in the United States which again is the most used heart pump in the United States in the history of VADs.

We have in the MDR, the Medical Device Reporting through the safety records of the MDR database, there's 14,000 patients that are in there and we have probably the -- we do have the safest numerical rate compared to balloon pump and ECMO and other types of VADs and we have significantly lower than the more invasive approaches that provide similar flows. So, it really comes down to the clinical data and we believe that the totality of the data from the FDA studies to the registry data to the real world use demonstrates that benefit.

Okay. So you think it will be more focused on the data they have in hand, it won't really be about a labeling discussion or anything like that? You're having those discussions now? Is that fair to say?

Correct. I think one important point to that is that this again is a 515 process which by itself is very unique to most Company's investors. It doesn't happen that companies come out through a PMA submission and actually know how the device will operate in the real world in less controlled environments. The FDA already knows that information now since we've been out there for six years. The other part is when products come out, they don't come out with the same level of usage and clinical support through the guidelines and you have to remember that since this device has been in the market, we're currently in five guidelines and we expect that more of these publications will continue to strengthen what's already a pretty extensive data set.

Okay. Great. Thanks so much.

Thanks, Danielle.

Jan Wald, Benchmark Company.

Good morning, everyone. I guess I have a couple of questions left after the ones that have been asked. In terms of the new hospital openings, how should we understand those going forward? I know it's kind of lumpy. You have 30, you have 24, but how should we understand them going forward?

Jan, our strategy is still to go deep at existing sites and it's a little more complicated now with these other components such as we have to open new sites, we're still swapping out the old console to the new console. We've got about 15% less. And we're also opening now the new CP center. So, we want to make sure that we don't distract the field from the number one goal which is supporting patients and patient growth. So, if we're coming in a little bit less on new sites, it will always take a second priorities to patient support, any upgrades of the Impella CP.

Thank you. Another question is I know you have a CAP for the RP. If I'm correct it's for 22 patients. Do you think that CAP is going to take you up to win the approval is likely to happen? Or will you have to go back perhaps for another CAP?

I can't say with any certainty because the sites have to open up new IRBs and that can take some time. But I would not be surprised if we have to go back for another CAP.

And you think it's likely you would get it?

I think that would be based on a conversation with the FDA but they've been very supportive in this study and in reality we continue to get weekly compassionate use requests for the Impella RP which we have been declining but we're trying to move forward as fast as we can so we can honor those requests in the future.

One last question. In terms of the other category I know that EP utilization is I guess is coming along quite nicely. A large part of that is probably VT ablation. How do you see that moving forward in terms of FDA approvals and things like that?

We would look at that as a prophylactic type of approach and we again have data, there have been several publications on that and we also have been tracking that in our registry at those sites. There's been some new publications that have come out recently along with some more publications on the Protect II that we will be highlighting at TCT.

Okay. Thank you very much.

Thanks, Jan.

Chris Cooley, Stephens.

Good morning. Thanks for taking the question. I apologize, I may have missed this. I've been back and forth between calls. But when you talked about your push out, slight push out there on the Japanese timeline, commercialization I think you were saying in the June to December timeframe. Or was that approval in the June to December timeline? I understand that there's about a 5 to 6 month lag there on reimbursement being established post. I just want to make sure I'm thinking about that timing correctly and then I have just one quick follow up.

Sure. The delay on this, it's for the PMDA approval, the delay is around 3 to 5 months. That's a reflection of our prioritization of our own FDA submissions. It's not a reflection on PMDA. It was a little bit of our delay in getting back to them on certain responses. But however I did cover in the call we have been through and successfully completed the preclinical and the clinical set audits. What we've maintained is that we still expect the reimbursement approval to occur six to nine months after the PMDA approval which leads to the commercial launch forecast of June to December of 2015.

Okay. That makes sense. Super. And then just a quick follow up. Earlier on you mentioned in terms of the mix for the quarter, 44% was prophylactic I think in the fiscal 1Q and you talked about education efforts there to kind of accelerate the growth. I'm just curious what you think you need to show those clinicians regarding that patient population. I know we anecdotally hear questions about how you -- if you could have an algorithm for how much flow you need in that population, what's sufficient. And then over time does that just effectively evolve as a CP market much more than a 2.5 market opportunity for you if there's kind of a lack of a more defined algorithm for how much flow you really need in that patient population? Thanks so much.

Chris, that's a good question. The Impella use, the flow is really dependent on level of need of emergency support, hemodynamic support, et cetera. What we've been seeing is strong growth in the 20 range consistently on the emergency side. The other bucket has also continued to grow. It's been greater than 24%. Last quarter it was 44%. It's a smaller number. But it's growing. And again primarily that is the VT ablation use of Impella for hemodynamic support. But on the high-risk PCI the prophylactic data, what we want to do is go out and educate users and talk about the clinical data.

I think the current guidelines today are not as strong partly because they don't include most of our recent publications and as we continue to publish more on Protect II such as I think we're on our fifth or sixth publication off the Protect II guidelines, is just to educate folks that this is a patient population that has shown to have an improvement in quality of life, you see that in all the publications we have. You see the EFs going up, it was in 2 FDA studies, Protect I and Protect II. And really gives an option to patients that may not have other options and in some cases are turned down for surgery.

Thank you.

(Operator Instructions) Jayson Bedford, Raymond James.

Hi. This is Mike Rich calling in for Jayson. Can you hear me okay?

We can, Mike.

Great. Thanks for taking the questions. Mike, can you remind us what the target populations are for the Impella RP and give us an idea of what the mix has been for patients that have received the device so far?

Sure. So, Mike, in the study itself that we did with the FDA there were two cohorts. One cohort are patients that are post-implantable LVAD and are suffering from potential right-side failure. The estimate of those patients, it's probably, depending on what paper you ready, anywhere from a third to a quarter of those patients have a challenge after an implantable LVAD. When you have a patient that's been in chronic heart failure and you put one of these very good devices in, either the HeartWare pump or the Thoratec pump that does its job and pumps blood and gets the blood to the rest of the body and the kidneys, what could happen is you can overwhelm the right side which is not used to that level of flow and so in those patients the Impella RP is utilized to stabilize them.

In the study it's approved for up to 14 days. And what we see in this use is that you can get that patient through the critical period of time which is going to allow them to recover so that they can leave the hospital with just the LVAD in them. If you read all the literature and history of LVADs, kind of the Achilles' heel has always been right-side failure. So, the physicians are very excited about it and we look forward to working to develop protocols with the LVAD companies to make sure we can get good outcomes for these patients.

The other cohort were for patients that had isolated right-side failure, RV infarcts or failure of both side, biventricular heart failure. That's another population that has an extremely high risk of mortality and what you're trying to do again is to support the right side, get them through that area or that time of risk, and what we've successfully seen in patients outside of this study, so patients in Canada, is once you can get the right side working again, these types of patients, their right-side function goes back to normal and it also becomes sustainable. So, we're very excited for that population as well.

Okay. That's helpful. And what happens once you get the US HDE approval? Do you plan to go for an expanded label with a broader clinical study?

What we plan to do is to continue to collect any and all patients through the registry, continue to publish papers, and over time if we want to expand the label we'll have the data necessary to do that.

Thanks. In terms of international, are there any new countries that you see coming on board this year besides Japan? Any chance of countries that currently have access to the device but maybe constrained by reimbursement, any chances of getting incremental reimbursement this year?

Mike, we're pretty focused right now on the countries we're in. We like the progress we're seeing in Europe and primarily Germany. We're now preparing and we've added more heads in Japan. We did announce that we had the Chinese approval. So, we've trained that core team over there to get started. We do have an extreme interest both from India as well as our physicians in the US that spend a lot of time in India. So, we'll get to that the next fiscal year. But right now we want to focus on our primary goals.

Okay. Just lastly, housekeeping for Bob. Can you give us some color on ASPs in the quarter? And the outlook for the rest of the year?

ASPs have been relatively consistent. Year over year they are up about 0.5%, the average catheter selling price, all catheters combined. So, as we get more CP penetration, because it's the higher priced device, the mix generally has a favorable effect, but the individual catheter ASPs are relatively constant.

Okay. Thank you.

Thanks, Mike.

I'm showing no further questions at this time. I'd like to hand the call back to Mr. Minogue for any closing remarks.

Thank you. Well, thank you, everyone, for your time today. If you have any follow up questions, please feel free to call in. Have a great day.

Ladies and gentlemen, thanks for participating in today's conference. This does conclude today's program. You may all disconnect. Have a great day, everyone.