ABIOMED Inc (ABMD) 2015 Q3 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Abiomed third-quarter 2015 earnings conference call. (Operator Instructions). As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Ms. Ingrid Goldberg, Director of Investor Relations. Ma'am, you may begin.

Good morning and welcome to Abiomed's third-quarter of fiscal 2015 earnings conference call. This is Ingrid Goldberg, Director of Investor Relations for Abiomed, and I'm here with Mike Minogue, Abiomed's Chairman, President and Chief Executive Officer, and Bob Bowen, Vice President and Chief Financial Officer.

The format for today's call will be as follows. First Mike will discuss strategic highlights from the third quarter and then turn to our key operational and strategic objectives. Next Bob will provide details on the financial results outlined in today's press release. We will then open the call for your questions.

Before turning the call over to Mike I would like to remind everyone on the call that this presentation includes forward-looking statements about the development of Abiomed's existing and new products; the Company's progress towards commercial growth and future plans for performance; as well as future opportunities and expected regulatory approvals.

Each forward-looking statements contained in this presentation is subject to the risks and uncertainties that could cause actual results to differ materially from those projected in such statements.

Additional information regarding these factors appears under the heading, Forward-Looking Statements, in the press release we issue this morning in Part 1A -- in Part 1, Item 1A Risk Factors in our annual report on Form 10-K for the year ended March 31, 2014 and Part 2, Item 1A risk factors in our quarterly report on Form 10-Q for the quarter ended December 31, 2014, both of which are filed with the SEC and are available at www.SEC.gov and on our website at www.Abiomed.com.

The forward-looking statements in this presentation speak only to the original date of this presentation and we undertake no obligation to update or revise any of these statements. Thank you for joining us. I am now pleased to introduce Abiomed's Chairman, President and Chief Executive Officer, Mike Minogue.

Thank you, Ingrid. Good morning, everyone. Abiomed had a breakout quarter on every financial and clinical metric and achieved our best ever results with $62 million in revenue and 34% in growth. US patient utilization set new highs with a robust 46% growth rate driven by a record number of patients in every region of the United States and in all three categories of patient support, prophylactic, emergent and other.

These outstanding results are a testament to our customers, our Impella technology and our dedicated team. It demonstrates the growing clinical need for percutaneous heart pumps that improve patient care and enable minimally invasive procedures.

This quarter revealed a leap into this adoption curve with a net $10 million sequential increase over last quarter's revenue. Abiomed has now grown top-line revenue double-digits year over year for 21 straight quarters. And our results this quarter demonstrate a glimpse into the potential of becoming the standard of care in the United States.

We are committed to this ultimate long-term goal and we will continue to prioritize and invest in our field and headquarters capabilities. So while we are pleased with the progress, we remain focused on operational discipline and executing our plan.

For today's call we will provide an update on the continued progress of our regulatory processes. In regard to our Impella 2.5 PMA submission we are pleased to report today that Abiomed has passed all the FDA operational and manufacturing audits for both Impella 2.5 and Impella RP in both our Danvers, Massachusetts headquarters and Aachen, Germany manufacturing facility.

As we announced last quarter, the FDA has agreed on the indication for use in high risk PCI for the Impella 2.5 premarket approval and Abiomed no longer anticipates the requirement for an FDA panel before our PMA approval projected for February or March 2015.

To remind our investors, our stated plan has been to submit for PMA approval for high risk PCI for the Impella 2.5 and complete all the mandated FDA audits for clinical data, operations and manufacturing. Following approval of the Impella 2.5, the Impella 5.0 and CP will be submitted as PMA supplements. Until the 515 process is completed, the Impella 5.0 and CP will remain on the market under the existing 510(k) clearances.

At Abiomed we have long believed that the road to the standard of care requires training and clinical data. And a potential Impella PMA approval allows for more flexibility and focus on these initiatives. We have amassed a library of clinical data with over 225 publications from FDA studies, our physicians and our Impella registry. In addition, Impella was referenced in our sixth AHA/ACC guideline for acute coronary syndromes, as noted in detail in the press release.

This third quarter also demonstrated the growing trend in the field to identify a new population of patients for the cath lab that can benefit from extensive revascularization and may require hemodynamic support for high-risk procedures. Some of this patient population has likely been turned down or not considered for surgery by a heart team because of age or prior surgical risk factors. And with an FDA approval Abiomed will now be able to assist in this appropriate patient identification process.

In many ways the heart team approach enacted for the percutaneous valve procedure will act as a platform for the screening and treatment of high risk PCI as well as right side heart failure. To address this heart team concept we will continue to invest in our US and German distribution and expand our educational and training resources.

Today we are also pleased to announce the FDA approval of the Impella RP ahead of our projection. For the RP launch the heart team will also be the key to our approach. We will host the entire heart team encompassing the heart surgeon, heart failure cardiologist, interventional cardiologist and lead nurse of each hospital at our headquarters to complete our two day training course followed by a rigorous certification process at their hospital.

We will have a controlled introduction of new hospital sites each quarter to ensure appropriate patient selection and optimal clinical outcomes. This model will follow the success release of the Impella CP introduction which grew 106% this quarter.

There is no other product like the Impella RP and it will require physician teamwork for the multiple types of patients requiring hemodynamic support to the right side of the heart. The Impella RP headquarters training has already been scheduled for the next several months for the initial 20 hospital sites selected.

Moving overseas to Japan, the interaction with the PMDA has slowed somewhat in their response time for the completion of the submission. Therefore an additional delay of three months may occur. We expect a controlled commercial launch by December 2015 to March 2016.

In summary, we are financially sound and operationally prepared for the long-term success while managing the details of our quarterly tactical plan. Our investment in clinical research and our extensive patent portfolio, along with our disciplined execution, provide Abiomed a $2 billion opportunity to make Impella the new standard of care for percutaneous circulatory support.

We want to thank the FDA and all our stakeholders and convey our incredible excitement for our future. Based on the growing population of high-risk patients requiring hemodynamic support, and pending catalysts of regulatory approvals and new geographies, Abiomed anticipates many more years of double-digit growth.

I specifically want to thank all our employees for their hard work and dedication to our customers and patients. As a Company we are motivated and committed to meaningfully impacting the lives of our patients and achieving our epic goal. I will now turn the call over to Bob Bowen, our CFO.

Thank you, Mike, and good morning, everyone. As noted in this morning's earnings release, fiscal third-quarter revenue increased 34% to a record $62 million from $46.2 million in the prior year.

To summarize the most important parts of third-quarter revenue, Impella patient use in the US was up 46%. Impella reorder revenue in the US was up 51%. Impella revenue outside the US was up 28% and up 39% on a constant currency basis and service revenue was up 30%.

Worldwide Impella product revenue of $57.4 million grew 37% from $42 million in the prior year. In the US Impella revenue of $51.9 million grew 38% from $37.7 million. The largest piece of US Impella revenue was from Impella catheter reorders totaling $46.4 million, up 51% from $30.8 million. Outside the US Impella revenue grew 28% to $5.5 million or up 39% on a constant currency basis.

Average Impella 2.5 and Impella CP combined unit inventory levels at hospital sites was 2.65 units compared to 2.60 in the prior sequential quarter and 2.52 units in the prior year.

With regard to the breakdown of patient utilization, 46% of patient use was in a prophylactic setting and this segment grew 38% from last year. 45% was in an emergent setting and this segment grew 58% from last year and 9% was all other. This segment grew 35%.

Gross margin for the quarter expanded to 84.1% compared to 79.5% a year ago due to fewer placements of AIC consoles, which totaled 93 this year compared to 178 in the prior year, as well as the benefit from higher unit catheter revenue and production volume. The lower number of console placements contributed 160 basis points of margin increase. As of the end of the quarter 90% of the US Impella sites have the AIC console.

Although the console upgrade cycle is nearly complete, we expect to continue to be placing consoles as sites increase volume levels and as part of the RP rollout. In addition, we do adjust the pricing of the Impella 2.5 downward when sites receive their first Impella CP order and we expect to incur somewhat higher levels of manufacturing expense related to capacity expansion initiatives.

For the combination of these reasons we believe that the sustainable medium-term gross margin rate will be in the 80% to 82% range.

R&D expense of $8.4 million increased $0.6 million or 8%. The increase from the prior year was attributable to operating expenses of ECP which was acquired in July. SG&A expense of $30.1 million increased $5.7 million or 23%. The increase was attributable to continuing investment in our field personnel, training and customer support, higher stock compensation expense and higher medical device tax expense partially offset by lower legal fees.

Operating profit of $13.7 million was 22% of revenue compared to $4.6 million of 9.9 -- or 9.9% in the prior year. In fiscal Q3 operating profit nearly tripled on a 34% increase in revenue which reflects the substantial leverage of our business model.

GAAP net income for the quarter increased to $12.7 million or $0.30 per diluted share from $4.4 million or $0.11 per diluted share a year ago. Our effective tax rate for the quarter was 7.4% and I would remind investors that we continue to have a large deferred tax asset, which has a full valuation allowance. So our current tax rate does not reflect a normal statutory tax rate.

As noted in our 10-K and 10-Qs, we assess our ability to realize our deferred tax assets on a quarterly basis. Should we determine that the deferred tax assets are more likely than not to be realizable, we would release all or a portion of the valuation allowance.

This would result in a significant one-time increase in earnings in the quarter in which the valuation allowance was released. And our subsequent tax rate would be closer to the statutory tax rate, which, including both federal and state income taxes, would approximate 40%.

For future year modeling purposes this may be the most appropriate rate to use. This accounting adjustment would not affect our cash position or cash flows from operating activities, but would merely reflect our determination that these deferred tax assets have significant value and will be utilized based on future estimates of profitability.

Our balance sheet remains in excellent shape and we ended the quarter with cash and short- and long-term marketable securities of $131 million.

Turning to guidance, as noted in our earnings release, we have increased the full-year fiscal 2015 revenue guidance and the new range is now $223 million to $226 million, an increase of 21% to 23% from the prior year. This new range compares to the previous range of $209 million to $212 million, which represents an increase of 14 -- which represented an increase of 14% to 15% from the prior year. For the fourth fiscal quarter our revenue guidance is in the range of $60 million to $63 million.

We are also increasing our full-year fiscal 2015 GAAP operating margin guidance to be in the range of 9% to 11% compared to the previous range of 1% to 4%. We would also like to remind investors that historically our operating margin has been lumpy and at this stage of our growth opportunity we would expect it to continue to be lumpy. More explicitly, we are not setting our forward going plans to maintain our fiscal third-quarter operating margin of 22%.

We continue to invest in a variety of product-related initiatives as well as in the expansion of our field sales, clinical and training organization as we prepare for a post PMA marketing and clinical environment and will provide more detail on our fourth fiscal quarter earnings call.

Please keep in mind that the Company's fiscal year period ends on March 31, 2015. However, in view of the strong third-quarter performance and the fact that many companies report on a calendar year basis, we wanted to give investors an early look at our thinking for fiscal year 2016.

Currently the Company has estimated fiscal year 2016 revenue in the range of $260 million to $270 million. And upon completion of our fiscal fourth quarter we will provide formal fiscal year 2016 guidance during our fourth-quarter earnings call expected in early May 2015.

Please keep in mind that although we expect to continue to experience strong growth, the third-quarter year-over-year growth rate of 34% is 1 data point and we are not extrapolating the growth curve from that 1 data point alone. Operator, would you please now open the line for questions?

(Operator Instructions). Anthony Petrone, Jefferies Group.

Certainly congratulations on the quarter here. It has been a long road and you guys -- this is well deserved, so congratulations. Mike, maybe on the -- just the -- obviously the jump in growth for Impella in the quarter, if we go back a few quarters ago you had mentioned that sort of the marketing push on Impella was sort of on autopilot as the 515 process was underway. So was that a factor in the quarter, and did that change? And then a couple of follow-ups.

Sure, Anthony. That is a question we have been looking at all quarter. The success was driven by outstanding utilization across the board. So as I mentioned, the prophylactic setting was a 38% growth record high; the emergent setting was 58% record high; and our other bucket was 35%, another record high.

As far as the breakdown, it was about the same for prophylactic and emergent and then the other bucket was 9%. And for the way we look at the quarter is it has like been a process of cutting down a tree. That we have just had so many publications and these publications and the experienced customers have been translating into clinical guidelines. So we have hit our sixth reference in a clinical guideline which we marketed.

In addition, the balloon pump, at least in Europe, has been downgraded in its guideline for emergency patients. So I think that is one of the elements is just the awareness of all the utilization. Two is that there is a lot of use. We have done 25,000 patients now in the US and this training and data has to do with getting use to something as compared to an older technology that has been around for 40 years.

So there is a bit of this awareness, a little bit of it could be the post TCT Impella awareness, but certainly there is just more awareness now, now that we have broken 900 hospitals.

And (multiple speakers) the last -- the last component of this is there was a very significant paper that was put out in [JAC] that we highlighted on our last call, which had to -- it was a healthcare research and quality database, it was nearly 12,000 patients from 2004 to 2011. And it had both hospital outcome data relative to patient mortality as well as cost data analysis. And in that paper it reported some very positive results on the percutaneous VAD technology.

Maybe just a follow-up there. On the tailwind from guidelines, it was a little bit of a delayed effect and of course the increase in publications. I mean is there any way to gauge how long that tailwind could sort of push growth here into sort of this next higher level that we saw this quarter?

So, we are pleasantly pleased to see the continued growth, and again it is in every region of the US, it is in every type of patient we support. So I think that that's -- overall that is a very positive trend. We have said that there is a couple of steps to get to the standard of care. It is clinical guidelines, it is quality of life and cost-effectiveness, publications, it is having established reimbursement for the hospital and the physician and the insurers.

But the remaining piece of the puzzle isn't in place yet and that is the PMA approval for high risk PCI. And we have been on -- basically haven't really been engaged in the process of marketing or promoting for the appropriate patient selection. And we look forward to doing those things and educating the clinical community on our outstanding results.

But we also want to work through the heart team and use the platform that is already in place for the percutaneous valve procedure, which really does provide communication and more options for patients -- and this is a patient population that has pretty limited outcomes and pretty limited options.

And then last one I will jump in. Just on RP, can you give us a sense if that is factored in guidance here in the raise? And just a quick recap on annual market opportunity for RP. Thanks again.

Sure, Anthony. In terms of the guidance, as Mike mentioned in his script, we have got 20 hospitals that we are going to get up and running here over the next couple quarters. And so, we don't have substantial amounts of RP in the guidance numbers, but we will get more granular on our fourth-quarter call. And in terms of the overall opportunity, it is an HDE so the patient population is limited to 4,000 patients in the US initially.

Thanks.

Danielle Antalffy, Leerink.

Congrats on an awesome quarter. I just wanted to touch on the fiscal 2016 guidance. And obviously that came in ahead of consensus, still projecting strong double-digit growth there; I think high teens at the midpoint of the range.

So just wanted to get a sense of sort of what is driving the confidence in that guidance? I assume there is a little bit more RP, I assume Japan. If you could just walk through the difference pieces of that $260 million to $270 million fiscal 2016 guidance and your confidence there.

So, Danielle, the potential PMA approval for high risk PCI, which we have projected for February or March, we believe will be a catalyst for growth for the high risk PCI patient population. And as we continue to roll out the RP we will follow a model similar to the CP so it will be a controlled rollout.

And the confidence overall is just in our ability to execute based on the fundamentals of executing around patient support, clinical data and also making sure our product is easy to use and our customers are comfortable with it.

So one of the things we have been doing is adding components for training so there is an app now at the Apple Store about quick setup and tips and tricks for use of Impella. We have got a call center that is 24x7. We have a selective site remote diagnostics where we can go online and look at the console and what is happening.

We have also invested in simulator technology where we have set up some cath labs, there is four of those and we have one on a mobile truck that is going around the country. So it is really about just again creating more awareness and the basics of how Impella works.

And the more folks are educated and are comfortable with the technology the more they have the ability to treat different types of patients that need support. And I think what this quarter showed is that there is a clinical need and it is growing.

Great, that is helpful. And just to follow up on that, Mike. We have talked in the past about at TCT this year, there was sort of a new initiative about high risk PCI and raising awareness at medical meetings.

I was wondering if you could highlight any major upcoming events potentially at ACC and/or Europe PCR, where we should see some more talk about high risk PCI and specific dedicated sessions to high risk PCI.

Sure, Danielle. So the initiative you're referring to is a CRF initiative, that is the group out of Columbia, New York. The CHIP initiative stands for complex high risk interventional procedures. It has to do with complex lesions, CTOs, patients that need hemodynamic support.

There is a course that is happening in Florida at the end of this week. There will be references and talks at PCR and there will be continued initiatives throughout the year that will again through ACC and lead up to another TCT where they now have a criteria and a function or a group function called CHIP where you can find these type of talks.

Perfect. Thank you so much. And congrats again.

Jayson Bedford, Raymond James.

Congrats as well. This was a very nice quarter. I guess just in explaining the acceleration this quarter, do you think from a -- did anything change from a competitive standpoint? Meaning do you think there were fewer balloon pumps, fewer ECMOs in the quarter? Was there something around the economics of either that you may have benefited from?

You know, I think it has to do with the overall publication and the history of the balloon pump itself and what is happening in Europe as far as people looking for new options. I think that is a high level.

On the micro perspective I think there is a need, there is a growing opportunity here for patients that want to have intervention that might not have other options and might be turned down for surgery.

And then the last is certainly again a lot of people brought the JAC paper on the use of percutaneous heart pumps for the -- from the 12,000 patient population from the health research and quality database. That was an independent assessment. And again, a lot of physicians that we talked to were very interested in it because it had both mortality data as well as cost data and it was very supportive of our technology.

Okay. Just switching to the regulatory front here. When you file the supplements for the CP and the 5.0, is it your expectation that you will get an expanded labeling to include [shock] or will the CP label initially share that same high risk PCI label?

So, Jayson, right now our only focus is completing the PMA for high risk PCI. But what we have guided to is that both the CP and 5.0 will be supplements and all other indications will also be supplements off of the initial PMA. We will give more details to that as we move past the PMA.

Okay. And then when you look at your mix of volume next year, with the PMA approval in hand do you expect the mix to change? Meaning, do you expect to see I think what -- 2.5 was tracking to about a third of Impella revenue. Do you expect it to be a bigger contributor next year given the FDA approval?

We are focused on the clinical data and not necessarily one product over the other. It is really a family of products and I think some physicians have a preference, but certainly the Impella 2.5 has a role in the -- more the prophylactic setting. But we will let our physicians decide what their preference is for those different types of pumps per the application.

Okay, thank you.

Ben Andrew, William Blair.

Bob, if you could talk a little bit about fourth-quarter guidance. I think you led us toward sort of a flat sequential performance and typically you all see a nice uptick in the quarter. What are the moving pieces there that could lead you beat that or just come in line, please?

The primary piece is patient levels, that is really the underlying driver of the business. And I think we had a very substantial uptick in Q3 and we expect to see continued strong growth going forward. But we just don't want to get out over the front of our skis here.

Okay. And then with the small delay in Japan, how significant can that be in fiscal -- I guess it would be 2017 by the time you'd get that. But how do we think about the ramp there when you do finally get into Japan given the nature of that market?

So, Ben, we have said that we are going to start off in Japan through a controlled roll out of the top 20 to 30 centers, which we will be having a direct sales team and clinical team to support.

We currently have a sales office in Japan with six people and we are -- we have a Japanese advisory board and we are prepared to go at the right rate of growth to ensure we get the right outcomes and we can collect data in our registry. So if the delay is another three months, I don't really see it as a significant change from what our current plans were.

Okay. And then what is a realistic sort of quarterly training rate for you guys after the initial roll out here of the new product? Is it still kind of 20 every couple of quarters, can you accelerate that? Because obviously the heart team approach, it is quite an exhaustive effort.

So, Ben, that is a great question and there is a nice platform we build off. Edward has done a great job on the percutaneous valve. There is really a coordinated approach at these hospitals for screening patients and communication across the board between the different cardiology groups.

So as we get started it will be at the 10 plus per quarter. And then over time as we have more training centers and more experience we will be able to accelerate it. It will look a lot like the CP relative to the way we go to sites.

Now the CP is very similar to the 2.5, so the learning curve wasn't nearly the same. But we like the ability to train a group and then get their experience on site and then move on to the next group. And it has really proved to be a model of success. As you saw, the CP grew 106% in patient utilization last quarter.

Right. I mean Edwards ran into some troubles in the ramp there when they were doing certain centers and other centers kind of -- the adoption curves were very different. How long do you think it will take before you have a feel for how each of these is going to adopt? Because that obviously would affect your patient add rates.

That is the key question. And some of these patients will be failed transplant, some will be post LVAD implantation, some will be biventricular or just right side failure -- isolated right side failure.

So as we look at the heart hospitals and we look at their volumes relative to that population, those are the sites we are going to start with. And then we will work our way down and give more updates every quarter as we get closer and closer into the launch.

Great, thank you.

Jan Wald, Benchmark.

Congratulations on the quarter. It was a really -- it looked really good. A lot of my questions have been asked, but in terms of after you get the PMA approval for the 2.5, what should we expect the steps to be? And how quickly will you be able to get up to training, get to training and get patients -- get physicians actually using the system?

So, Jan, this is a little bit different than some of the other PMAs or launches that you all have historically seen. For one piece of this is we were already on the market, have been on the market for six years and have done over 25,000 patients.

As you saw last quarter, the prophylactic setting grew 38% and I think that the macro sense is that there is a focus now in interventional cardiology to try to treat these patients. And as you treat some of the sickest patients there is also a lot of clinical data that talks about the benefits of extensive revascularization.

So there will be a population that the physician community has recognized. But what this will give us the ability to do is to be more involved, provide more education and training and make sure we get the appropriate patient selection and help them. Similar to how Edwards has really evolved -- involved themselves in the communication and education process with the heart team to find the patients that benefit the most from their product.

So maybe the proper way to ask the question would have been, we have been assuming something of an acceleration, but how quickly would we see that acceleration start?

Yes prior to this quarter we had said that we did expect the high risk PCI PMA approval to be a strong catalyst and reignite the prophylactic growth rate. Obviously we had a very good quarter. It is one data point, but we feel confident that in the coming quarters you will continue to see strong growth on that prophylactic setting, which has been lower than our emergent setting which has continued to grow strong and, again, it was 58% last quarter.

So would you say that the -- post PCT last year where there was a lot of interest I think generated in the CHIP program and things like that, that you are seeing the market come to you. And do you have any evidence of that besides the fact that you have seen this bump this quarter?

I think the evidence is in the numbers and in the physician community on what they are talking about in the publications that are out there in regard to the benefits of treating this patient population.

Okay, thank you very much. Great quarter.

Chris Cooley, Stephens.

Let me just echo everyone else's prior sentiments, phenomenal quarter and it is a great win for the Company and its employees. If I may, I just want to clarify a couple quick things.

Maybe Bob, when you were talking about near-term changes to capacity, with this level of growth that you have seen in this most recent quarter are you now getting close to being capacity constrained? Just trying to get a better feel for what you may or may not be undertaking there and kind of how quickly that gets completed. And then I just have one additional follow-up. Thanks.

Yes, Chris, we are not capacity constrained. Exiting this fiscal year our capacity is about $400 million and it is higher already. Our plans are exiting next fiscal year we are just planning for the future and want to take that issue completely off the table on a go-forward basis for us.

So we are going to continue to build out our capacity. We did rent some additional -- lease some additional space here, our Danvers facility. And so, that is just going to be a continuing focus of the organization.

Super. Then maybe just if I could one other additional question and kind of -- there have been a couple of papers that been published actually this week on the advance line talking about LVADs and their ability to help the heart muscle remodel over time. I know this is something that you guys have discussed for ages.

Does that help from just a broader discussion of remodeling? I mean, clearly you already have a wealth of clinical evidence. But I am just curious kind of how you see that in the overall clinical body of evidence in that scheme of things. Does that help? Is it a non-event at this point? Just your thoughts there, Mike.

So, Chris, the remodeling of patients that have worn out hearts is something that has been talked about for a long time. The challenge with the option of an LVAD is that you have to core the left ventricle, you change the geometry, you remove muscle and it is a very invasive procedure. So even if there is some benefits you've pretty much reduced a lot of your coronary blood flow --.

Right.

And you have had atrophy to the muscle, which is why the European studies use clenbuterol, which is a muscle stimulant that is actually outlawed in the United States and is used in horses and things outside the US.

So what we are talking about is looking at the patient population that may have bad heart function, but it is not necessarily due to the muscle. And what the LVADs do very well is they keep people alive, they give them quality of life and they help many of them to go on to a transplant. So that is great technology for that patient population.

The population we are talking about that we would like to help focus on is patients that have heart failure, but it is due to ischemic disease. So it means that they have got coronary blockage, they have got -- their vessels are not getting enough blood flow into the heart into the coronaries.

And by doing extensive revascularization, as a lot of these PCI studies have shown, with or without (inaudible) support, that is a benefit to these patients. And in all of our FDA studies and all our registry data, the patients that were treated in PROTECT I, PROTECT II, Euro and USpella all saw a sustainable increase in their injection fraction at 90 days and more than half moved out of Class III and Class IV and this has been published and in FDA studies.

So this is a quality-of-life benefit and it is not something that is invasive and it is pretty cost-effective. Most of the patients are in and out of the procedure within a day or two, they are out of hospital.

The other side of this patient population is the acute population. And everyone is talking about a growing epidemic of heart failure. The growing epidemic is because we have gotten very good at keeping patients alive with the plumbing and the electricity with stents and pacemakers and some drugs and that has improved survival.

However, there is also recent papers that are out that show that still around 10% or 7% to 10% will die, but those that live approximately 70% will lose muscle, they will often issue. And of that, 40% to 50% of those patients will be dead in five years from heart failure.

So what we are trying to do is treat a different population to either help avoid having heart muscle die or help the heart function improve by allowing for a minimally invasive procedure. And that is really our focus. But it is in conjunction with what the LVAD companies do.

And in many ways we are working together with them and with the heart surgeons now, whether it is supporting a patient to get them to a level or now in the future using the Impella RP, to help improve their outcomes.

Super. Thanks so much and congratulations again.

Thank you. And at this time I'm showing no further questions and I would like to turn the call back to Mr. Michael Minogue for any closing remarks.

I just want to thank everyone for their time and their support and if there is any questions feel free to follow up. Have a great day.

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