ABIOMED Inc (ABMD) 2019 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the First Quarter Fiscal Year 2019 Abiomed, Inc. Earnings Conference Call. (Operator Instructions) As a reminder, this conference is being recorded.

I would now like to turn the conference over to your host for today, Ingrid Goldberg, Director of Investor Relations. You may begin.

Thank you. Good morning, and welcome to Abiomed's First Quarter of Fiscal 2019 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 Todd Trapp, Vice President and Chief Financial Officer. The format for today's call will be as follows: first, Mike Minogue will discuss highlights from first fiscal quarter and then turn to our key operational and strategic objectives; next, Todd trap will provide details on financial results outlined in today's press release. We will then open the call for your questions.

Before we begin, I would like to remind everyone that this presentation includes forward-looking statements about the company's progress relating to clinical, regulatory and commercial matters as well as government regulation, litigation matters, capital and other expenditures, and financial performance. Each forward-looking statement contained in this presentation is subject to risks and uncertainties that could cause actual results to differ materially from those projected in such statements. Additional information regarding these risks and uncertainties appears under the heading Forward-Looking Statements in the press release issued this morning and our annual report on Form 10-K for the year ended March 31, 2018. The forward-looking statements in this presentation speak only as of the date of this presentation, and we undertake no obligation to update or revise any of these statements. Thank you for joining us.

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

Thanks, Ingrid. Good morning, everyone. Abiomed reported a strong start to our fiscal year '19. In Q1, we delivered another record in revenue of $180 million, up 36% versus prior year. U.S. patient utilization increased by 30% and was driven by Impella adoption in the Protected PCI and cardiogenic shock indications, which grew 24% and 37%, respectively.

European revenue increased 53%, with German revenue up 42%. In our first Q1, in Japan, Impella grew favorably and contributed $2.6 million in revenue. Abiomed is committed to sustainable growth and improving outcomes each quarter. We do this through advanced training, product enhancements and sharing of best practices derived from real-world experience.

We have maintained our disciplined execution on our strategic goals and increased manufacturing capacity while expanding Impella adoption with new products, new indications and new geographies.

In Q1, we also completed enrollment for our FDA STEMI DTU safety and feasibility study. I'm proud of the entire team's continued hard work and dedication to our patients and mission of recovering hearts and saving lives.

For today's call, I would like to highlight 2 topics: first, on our training and education to drive adoption and improve clinical outcomes; and second, I will provide an update on key strategic initiatives around Japan and our FDA study.

To start, the adoption of Impella is a function of training, data and time. This quarter, we maximized our resources in training and education across the globe and set new records for physician and employee engagement. We trained more internal people in Q1 than ever before, with nearly 500 employees at our commercial kickoff meeting and added 52 new global employees, including 14 people in the U.S. commercial distribution. Training first this quarter include hosting our first German Impella RP course, our first Tokyo heart recovery hemodynamic course and our first Women's Initiative Heart Recovery Advisory Board meeting. We educated over 750 physicians through on-site training, symposia or headquarters collaboration at our heart recovery institutes in Danvers, Massachusetts and Aachen, Germany.

Additionally, we trained 28 Protected PCI coordinators, and there are now approximately 60 hospitals with a dedicated role. Protected PCI coordinators will help identify appropriate patients, facilitate heart team collaboration and conduct outreach programs to help find undertreated, advanced coronary artery disease patients in the community. We believe our focus and investment on training will translate to increased Impella adoption and improved patient outcomes. Increased patient survival with native heart recovery not only allows for improved ejection fraction and quality of life for our patients, but also lowers overall health care costs.

A recent patient story reinforces this concept. Eric Braga, an active 47-year-old father and husband, began feeling shortness of breath and chest pain while playing laser tag with his kids. After his wife drove him to the emergency room at Clovis Community Medical Center in Fresno, California, Eric collapsed and coded at the entrance. The hospital staff performed CPR and shocked Eric multiple times. A catheterization confirmed a 100% occlusion in the LAD artery, a major source of blood flow to the left ventricle of the heart. Dr. Michael Gen implanted the Impella CP to provide Eric's heart hemodynamic support and placed stents to open the blocked artery. After 2 days of support, Eric's heart recovered, and the Impella pump was weaned and removed. Today, after 6 months, Eric's heart function has returned to normal, with an EF of 65%, and he continues to enjoy an active life with his wife and 3 children. Eric's story highlights the clinical benefit of percutaneous cost-effective solutions that promote both survival and a native heart recovery.

We continue to build our library of clinical data and cost-effectiveness studies for patients like Eric. This quarter, the American Heart Journal published survival data on 15,259 AMI cardiogenic shock patients in the Impella quality and assurance database, what we call the IQ.

Multivariate analysis revealed that survival was a function of best practices, such as Impella as a first support strategy, hemodynamic monitoring and Impella experience with implantation volume. This paper confirms the 70%-plus survival rates we see at top Impella sites, with cardiogenic shock protocols that require Impella be implanted pre-PCI. As evidenced by this publication, real-world data is being accepted and published by the clinical community. It is exciting to see independent physician-led initiatives like the National CSI, improving awareness and impacting survival and heart recovery around the U.S.

Turning to outside the U.S. In June, I visited Japan with several members of our senior management team. In Japan, we opened 8 new sites in Q1 and are on track to have 45 sites by the end of the fiscal year. As of July, 131 hospitals have downloaded the Impella application. 71 are currently approved by the government committee, and we have opened a total of 21 Japanese sites to date. Our first hemodynamic course in Tokyo was a great success, with nearly 100 physicians in attendance, representing both interventional cardiology and heart surgery.

I also had the opportunity to visit multiple hospitals, and it remains clear that the Japanese physician community both appreciates and understands the clinical need for hemodynamic support and native heart recovery.

Additionally, we've been planting the seeds in new countries over the last year, and we've treated patients in Hong Kong, Australia, Singapore, Israel and, most recently, in India.

To be clear, U.S., Germany and Japan remain our priority, but we are moving forward with heart recovery centers of excellence in select hospitals in specific countries.

Moving to our regulatory progress. I'm pleased to announce that we have completed enrollment for our FDA STEMI DTU safety and feasibility study ahead of schedule in mid-June. We've reviewed the data and are working with the FDA to establish a time line for submission and analysis of the results. As a company protocol, we do not publish or submit abstracts until the FDA has had the opportunity to review our studies. We anticipate more dialogue with the FDA and the steering committee on next steps in August. As a result, we are targeting November for publication and release at the American Heart Association conference.

In closing, we are on track to create the field of heart recovery as we penetrate the U.S. market and become the global standard of care over time. We believe our focus on sustainable growth with improving clinical outcomes will enable us to remain one of the fastest-growing GAAP-profitable medtech companies, with a strong balance sheet and extensive intellectual property portfolio. After Q1, we are well positioned for success in fiscal '19 and currently focused on execution in Q2. I would like to thank our customers for their commitment to advancing the standard of care and recognize our shareholders for their investment. The secret of our success and execution remains our commitment to our purpose of recovering hearts and patients' first values within our culture.

I will now turn the call over to Todd.

Thanks, Mike, and good morning, everyone. In the first quarter, we delivered revenue of $180 million, an increase of $48 million, or 36%, versus last year, with performance across all geographies. U.S. Impella revenue rose 32% to $152 million, driven by a 30% increase in patient utilization.

Outside the U.S., revenue totaled $22 million and was up 75% versus last year due to the continuous strength in Germany, which saw revenues increase 42% and our Japanese launch. We are pleased with our controlled rollout in Japan where revenue totaled $2.6 million for the quarter as we opened up 8 new sites. Additionally, worldwide service revenue was $6.3 million in the quarter, up 19% versus prior year.

In the U.S., at the end of our fiscal Q1, the Impella 2.5 and the Impella CP have been placed at roughly 1,200 sites. Additionally, the Impella 5.0 and the Impella RP are currently at 540 and 320 sites, respectively. We expect to see continued demand for the 5.0 and RP in the coming quarters.

Reorder performance also continued to be strong in the quarter. U.S. reorder revenue was $145 million, which translated into a reorder rate of approximately 100%. Average combined inventory at the hospitals for the Impella 2.5 and the Impella CP rose slightly from 3.8 units per site to 4.0 during the quarter.

Gross margin in Q1 was 82.9% compared to 83.5% in the same period of the prior year. The decrease was mainly due to product and geographic mix as well as incremental manufacturing investments to support our future growth object -- initiatives.

R&D expense for the first quarter was $21 million, a 26% increase from the prior year. The bulk of the increase was driven by investments for new products and enhancements, such as smart assist, Impella 5.5, ECP and BTR as well as clinical cost for the STEMI trial and cVAD Registry studies.

Our platform of Impella products gives us the ability to make efficient investments in technology, which will lay the groundwork for improving clinical outcomes and sustaining long-term growth.

SG&A expense for the quarter totaled $81 million, an increase of $21 million, or 34%, versus prior year. The variance was due to additional training programs, incentive compensation, our Japanese launch and the expansion of our industry-leading commercial team. We will continue to make these investments as we are still in the early stages of market penetration.

Operating income grew 41% to $47 million in the quarter, which translated to an operating margin of 26%. The 26% was a Q1 record for the company. Our margin expansion of 100 basis points was due to higher volume, which more than offset our growth investments.

We are on track to invest in our training and educational programs as well as to add commercial employees at a faster pace in the first half of this year. We believe the early investment will be advantageous as we head into the second half of 2019.

GAAP net income for the quarter was $90 million, or $1.95 per share, up 141% versus Q1 of '18. The company saw a benefit of $54 million, or $1.17 per share, of excess tax benefits relating to employee share-based compensation awards, which are recorded as a reduction of income tax expense.

We expect excess tax benefits to have the largest impact on the first quarter, given our investing schedule, and we'll likely see smaller adjustments in the final 3 quarters of the year.

Our balance sheet remains debt free, and we ended the quarter with $367 million of cash and marketable securities. Our standard practice is to use cash to pay employee withholding taxes when ours use (inaudible) instead of settling shares in the market. As a result, in Q1, we utilized $68 million of cash to reduce dilution from stock compensation. Our top priority for cash remains to support organic growth initiatives and to continue to build our intellectual property advantage.

Before turning to full year guidance, I'd like to remind investors of the seasonality of our fiscal year. Q2 is typically a slow quarter for cardiovascular devices due to the summertime slowdown in the catheterization labs and physician vacations. As a result, we expect Q2 revenue to be slightly below Q1. With that said, given our strong performance in the first quarter and our confidence in the outlook for the remainder of the year, we are now raising the low end of our full year revenue guidance by 2 points, or $15 million, and expect revenue to be in the range of $755 million to $770 million, up 27% to 30% for the year.

In summary, we continue to execute across all markets and geographies while making the necessary investments to support our growth objectives. We are well positioned to deliver our plan for the remainder of fiscal year 2019 and beyond.

Sonia, please now open the line for questions.

(Operator Instructions) Our first question comes from Danielle Antalffy of Leerink Partners.

Congrats on a good quarter and also completing the STEMI feasibility study. Just a question on the seasonality of Q2. I just wanted to follow up on that because at least over the last 3 years as I look at the model, Q2 has actually been flat to Q1 or even very slightly higher. Is there something different this second quarter that we need to be cognizant of -- that would be driving a dip in seasonal sales -- in quarterly sales?

TCT is in September this year; in prior years, it's been in October, so there may be a little bit more of an impact. And then of course, the labs are slower, people are taking more vacations, and it's just prudent for us to suggest that it'll be slightly down because we spend -- we also take advantage of the slow time to do additional training.

Got it. That makes a lot of sense. Okay. And then a question for you guys on the expanded FDA indications. You talked about the inaugural women's initiative. I'm just wondering if you're seeing any impact yet in volumes from these expanded indications, whether you can help quantify that at least directionally for us. And if not yet, when do you expect to start to see this take hold?

Danielle, we believe we are seeing some benefit from the expanded indications for both the moderate and mildly reduced ejection fraction patients in high-risk PCI and also cardiomyopathy and shock. However, we're still in the early stages of educating and training everyone on these new indications, and we do expect to see more of these patients to continue to grow for the next couple of years. Incrementally, cardiomyopathy was up and myocarditis was up and postpartum cardiomyopathy was up as well at higher levels than previously.

Our next question comes from Matthew O'Brien of Piper Jaffray.

I think if we could start off on the quarterly results, what's probably going to get a little bit of attention is the 2-year Impella stack with one of the lowest levels we've seen over the last couple of years. And so Mike, if you could just talk a little bit about all the training that you did in the quarter and if that had somewhat of an impact on that U.S. Impella number. And then Todd, if you can talk a little bit about the investments that you're making on the commercial side of things and exactly where that is and how that should benefit things in the back half, that would be helpful.

Matt, could you just clarify the comment on the U.S. numbers, what's -- whether you're talking about margin or you're talking about utilization?

Yes, so if you look at the revenue number on a 2-year stack basis versus this time last year and then the past several quarters, it's one of the "slower," it's still really good growth numbers that we've seen in a while. So that might get some attention from investors today, as there are things slowing down a little bit in the U.S. So if you can just talk a bit about that. And it sounds like there was a fair amount of training that was done in Q1. Did that impact some of the selling efforts of U.S. Impella during fiscal Q1?

Sure. So just to kind of ground the numbers, in Q1 the prior year, we grew 27% in patients; in Q1 this year, we grew 30% in patients. So we're -- incrementally, we're up from a growth rate. From a revenue rate, we're at 36%, which is also up from the prior Q1 as well. So -- and the numbers are significantly bigger and very similar to Q1 from 2 years ago, with, obviously, much bigger net numbers. So for the growth, I think we are seeing a bit of an acceleration. Our forecast this year is higher than the prior year. And I do think that we're continuing to make progress on the training data and time. So I would just want to be clear and understand the question on the numbers. On the operating margin, the operating margin is also higher than the prior Q1 where we tend to make certain investments and bring on additional heads quicker because we're trying to get people through the training cycle and get a good start for the year. This first year or in fiscal '19, we've got -- we're a little bit ahead of the prior year where we've got more people and more investments in place in Q1, and we think that's appropriate based on the opportunity we have in the second half. So if you want us to clarify something else, just let me know or let Todd know what else can we answer.

Sure. Just a quick follow-up just to be specific. It sounded like there was a lot more training that was done in fiscal Q1 than you've done in the past. Is that a fair statement? And were your reps out of the field for a while and maybe not selling as much as they had this time last year?

Yes. So we did do a record number of training. We trained more people, more internal people. We did training across the globe. We did it in Japan, Germany. And in the U.S., it's a record number based on both customers, and it's also a record number on our own internal employees, but we feel pretty good about the growth, the numbers and, again, see it as an acceleration over the prior Q1 and -- but we are positioning this year to get ahead of some of the ramp and get people in place and trained before the second half.

Our next question comes from Chris Pasquale of Guggenheim.

Mike, just a follow-up on the investments you guys are making in terms of training and sales force expansion. Previously, you talked about a hiring pace of about 10 reps a quarter in the U.S. Has that changed? And how should we think about what this higher level of investment means for both the pace of top line growth you can comfortably sustain and the pace of margin expansion we should expect going forward?

Chris, in the past, we said 5 to 10 and then in the prior year we changed it to about 10 commercial people a quarter. This quarter, it was 14, so a little ahead of schedule. If you look at how we've done it over the last 2 years, it's a little bit always been if we find the right people, we'll do more than 10. In some quarters, we didn't meet our profile. So I don't think you're hearing any change in the pace, but we're glad to be out ahead in Q1. And since we do so much training in Q1 and part into the summer quarter, if we get people in place now, it does simplify, make us more productive so we don't have to do additional sessions for new people later in the year.

That's helpful. And then just one quick one on the pipeline. Could you update us on the expected timing of first-in-man implants with ECP?

First-in-man implants for ECP are this fiscal year. The 5.5 is now passed first-in-man. It's CE marked. I was in Germany in June and did program reviews on both products, and I was fortunate enough to spend some time in the hospitals and see some of the patients that are on now the 5.5. So we're really excited about that technology. There's a lot of new literature coming out about the benefits of unloading for both acute and chronic patients. And to remind all our investors, the 5.5 is a heart recovery pump because it is minimally invasive approach. It's currently CE marked for 30 days. Patients can get up and walk around. You can wean people off the pump without having the risk of retrograde flow. It does provide pulsatility as you wean it down, and it's going to give these patients more than 6 liters of peak flow. So it's really a new type of pump that can be put in without requiring a sternotomy and coring out of the left ventricle. So we're excited for both the Impella 5.5 and the ECP as a platform to do 4 liters on a 9-French pump, which could be ideal for Protected PCI.

Our next question comes from Raj Denhoy of Jefferies.

This is Anthony in for Raj. I'm going to start, Mike, with Japan, just a couple of questions there. So $2.6 million is sort of in line with our expectation and very much tracking to the $10 million for the year. But I'm just wondering how do you think this plays out in terms of the controlled rollout that you have in place. How long will the controlled rollout phase take in Japan? And then it looks like the expansion into hospitals is going to significantly accelerate this year. So how do you think this plays out on a center-by-center basis? How will those stack in terms of high users versus, say, medium users and low users over time? And then I have a follow-up.

Anthony, we're on track for our first full year in Japan. So as we've said, this year is going to be all about opening the right centers, putting protocols in places and, most important, getting very good outcomes for our patients. We feel confident that we're there. We have 3 more quarters to go. And as we've said, the following year, that would be year 2 and going into year 3, as long as we're pacing at the right approach that we're growing and getting good outcomes, we'll start to go at a much faster pace. This pattern or this process could be matched with what we've done with the Impella CP and, to some extent, what we've done with the Impella RP. So we like the model and, again, we're trying to launch into Japan directly so that Japanese government understands that heart recovery and unloading is a new therapy. We will be submitting for the Impella CP and the RP and then in the future the 5.5. And we want to make sure that we have a great reputation, that they trust the integrity of the company because we're thinking about Japan along the terms of the next 20 years and being the standard of care.

Very helpful. And the follow-up, just sticking with the OUS theme, and I have one on STEMI. The announcement today on India, congratulations there. Just thoughts on why this country ahead of, say, other European markets? And then what your plans are for rollout in India over time? And then on STEMI, just as we look at the -- a readout later this year, the primary outcome there is infarct size as a percent of total mass, but you have several secondary endpoints, which -- and you have 2 time frames on those endpoints, a 3- to 5-day measure and then a 30-day measure. One of those is all-cause mortality. So I'm just -- what do you think will resonate across all of those endpoints? Clearly, the primary will drive some attention, but there's a lot of secondary endpoints in there as well. So what is going to be most interesting when you get that read on STEMI?

Sure. So the first question was on India and the prioritization. So as I commented in my prepared remarks, we are planting seeds outside the U.S., but our main focus is still the U.S., Germany and Japan. That's our priority. There are centers of excellence out there in certain countries. There is interest, and we will continue to work with those sites to help drive a relationship with the government to establish reimbursement as -- for heart therapy -- for heart recovery. So this is a new concept and that's what Germany has recognized, the U.S. FDA has recognized, and that's what Japan has recognized. And so where we find partners and we work with the governments to bring this technology together, the best way to do that is to have the right key opinion leaders and researchers within the country. This matches the way we entered other parts of Europe, and we'll continue to follow that formula. On your question on STEMI, the study was a safety and feasibility study because the concept was somewhat radical that we were asking people to precondition the left ventricle, which means that they were unloading for 30 minutes before opening up the blockage. That's something that isn't done today. We're not recommending it commercial in any way. It is a study that we can utilize to then get to a pivotal because we think that there's 2 benefits of unloading. One benefit is preconditioning the myocardium before revascularization because we think it creates a cascade of events that reduces the apoptosis process, which means it can keep the heart muscle from dying or risking the infarct size. And then the second benefit is unloading during the procedure and after what we've done is -- and what we've proven is that it does unload, it does reduce the oxygen demand and work on the myocardium. So those 2 things were in play. We've always intended to go to a pivotal, but as I mentioned, we do have a strict policy that we don't talk about our studies until the FDA has the chance to review it. There's also the academic integrity of the information. Before it will be announced, it has to be kept confidential. And we are excited to continue to advance the science. The one thing I would reference or note for investors if they want to understand or read more about the solid science behind this. There's a publication that just came out in JACC. It's called Left Ventricular Unloading Before Reperfusion Promotes Functional Recovery After Acute Myocardial Infarction, and Dr. Kapur is one of the lead authors. So it does explain a lot of what you're asking about is what will people be most excited about. But certainly, what we're trying to do is prevent heart failure for patients that have heart attack, leave the hospital alive, but within 5 years, 70% have heart failure. So that's more to come on that as the publication and the information gets released.

Our next question comes from Bruce Nudell of SunTrust.

Mike, just on the STEMI trial. We counted 125,000 STEMIs with PCI without cardiogenic shock. Just to follow up on Anthony's question, do you feel that once you get into the pivotal and those results are available, it's going to be the short-term measures will be significant enough to kind of drive adoption? Or do you have to -- or you think the longer-term outcomes of heart failure onset, et cetera, are going to be determinative?

Bruce, I can't comment specifically on the pivotal or the trial, but what I can say in concept is that we believe there's 2 benefits. And the first benefit can be seen short term in an infarct zone with an MRI -- cardiac MRI, and you can potentially see that in 30 days. And then the long-term benefits, unfortunately, for the patients is they do take effect starting in the first year, with 25% going into heart failure and, obviously, they're very poor in 5 years. So we think there's things you can see. There's also if you -- per the paper I referenced, it does talk about some of the things you can test around the expression of genes associated with the cardioprotective response in the heart. So there's other ways to look at and analyze what's happening when you're unloading a patient that has a large infarct area. So we're excited to see the science advanced, and I -- again, to your question, I think there will be both short and longer-term signal there to show benefits to these patients.

And my follow-up is on cardiogenic shock. You're showing great momentum in that space. We counted 150,000 admissions. Maybe 1/4 get mechanical support and most of those are balloon pumps. With regards to the AHJ article you cited, how significant is the 75% survivorship? And are those kind of results very much eye-opening to the clinical community where you have a pretty compelling usage where people are in cardiogenic shock?

I think the -- it is eye opening. I think that's why last year at TCT, there was a call to arms by the physician expert. So there's multiple groups out there. Around the country, there's 40-plus hospitals, some of which have endorsed and put a protocol in place. But again, we're not talking about a 90-year-old only, and we're not talking about 1 less day in the ICU. We're talking about a young population that gets to live and go home with their own heart. And so that's not only one of the most significant outcomes we can produce for a patient, but it's probably one of the highest cost savings that exist in all the medtech because you're talking about patients that they're not going to die immediately, they die organ at a time, and then they die over time with multiple surgeries, potentially implantable devices, followed by a transplant if they're capable, followed by it all over again within 5 to 10 years based on the response to the autoimmune therapy. So this is a profound change in the standard of care. The more science that comes out around unloading and the benefits and the more people see that these protocols, these best practices can have an impact, the more I think it will be demanded by the communities out there.

Our next question comes from Isaac Ro of Goldman Sachs.

Just one for me on the expense side. Todd, wondering if you could help us think through the sequential trend on SG&A versus R&D if we consider some of the programs you talked about between sales force and some of the clinical development programs. You guys reiterated that margin guidance for the year, and so we are expecting a sequential improvement in margin for the rest of the year. Just wanted to make sure we get the discrete items between SG&A and R&D considered within that.

Yes, sure. So in terms of Q1, margins were at 26%, again, as I mentioned in Q1 record. And part of it was driven by just a 36% increase in the volume and -- which more than offsets some of the investments. And as Mike mentioned, we did accelerate some of the investments in the first quarter as it relates to training and educational programs. And we also stepped up the hiring for our commercial team in the U.S., Germany and Japan. And again, we firmly believe that these investments are the right to do, and we'll continue to lay the groundwork for our second half performance. As it relates to R&D versus SG&A, I expect to spend similar amounts in those in Q2, and this should probably kind of level off in the second half of the year. So from an R&D expectations, we continue to look to build those cVAD Registry's data in our IQ database. And as you know, this data has been a great foundation for us to attain expanded indications for our products as evidenced in what we saw last quarter with both high-risk PCI and cardiogenic shock. And we also have an exciting pipeline of new products like the 5.5 and ECP and BTR coming out. So I think when you think about first half, second half, the big drivers, the incremental volume that we're going to see in the second half of the year is going to convert at a variable -- high variable contribution margin, and some of the investments will be leveling off.

Our next question comes from Jayson Bedford of Raymond James.

Just 2 quick related questions. How many -- or what percent of your centers have shock protocols in place? And then where are you in converting your cVAD Registry sites to the shock protocol?

Jayson, we think we have around 200 hospitals that we would say have protocols in place that are more adhered to. As we always point out though that in certain hospitals, the compliance to 100% is somewhat difficult. You can have different hospitals -- different groups of physicians, you have different physicians that have comfort levels with it, but we think 200-plus have these protocols in place. And it does make a difference when people have protocols. We've also seen in the IQ database, and we're excited to see the improvement in the outcomes on a broad scale for all of our sites. So the average survival and recovery continues to increase. And one of the key points of the IQ database is whether they have a lower survival or a higher survival, the net effect for almost all of our survivors is they do improve their ejection fraction, and they do have the opportunity to be discharged with their native heart. For the cVAD Registry, remember, this is now a cVAD Registry study. It is prospective of 1 year follow-up. We use FDA definitions, and we've nested inside of it our post-market FDA study. So we're continuing to track that information, and we'll continue to do that, and it gives us the benefit to look at all patients, all products at all hospitals and also further benchmark best practices under a regulatory footprint. So we're excited to continue to work with those centers to advance care, with more scrutiny over the data.

Our next question comes from Margaret Kaczor of William Blair.

So first one for me, and I know it's still early days, but can you give any color on how 5.5 uptake has been so far? Are you signing (inaudible) have more conversations with hospitals about the higher flow rate and longer use? And is it actually allowing current physicians to treat more patients?

Margaret, thanks for the question. We have limited number of sites that have it. I have personally been to the hospitals, both hospitals, and I've seen patients on support. There has been very positive feedback and because it does allow a full-flow VAD to be put in these patients. In Germany, there's a lot of research around patients that have heart failure that are Class III. Some believe in stem cell therapy, which is very -- there's a lot of interest in Japan over that. But also, in Germany, there's a lot of interest in reduction of the inflammatory response. And some of these patients may be treated with autoimmune suppression drugs. There is research that has been out, and there's more to come, showing that by unloading the left ventricle, you can reduce that inflammatory response. And there's a lot of these physicians that are looking at research of providing an extended period of unloading, which can have the ability to, again, have some recovery. There's also another paper that just came out of the Journal of American College of Cardiology, and the main author is Dr. Nir Uriel, who is a heart failure cardiologist in Chicago, and it's on mechanical unloading in heart failures, now chronic patients and also shows that the benefits of unloading can have the -- a potential -- can create a potential improvement in patients that have chronic heart failure. The sweet spot for us is to support these patients before they become Class IV, they become extremely sick, whether in heart failure and having organ failure, but there's more science, and there's a lot more work to do for this product. We have to continue to collect the data the right way, ensure that it's safe, but we know it's an improvement off the 5.0, it is higher flow, it's easier to implant, and it's -- we believe it's just a better pump. So we'll give more details on that as we continue to collect clinical data.

All right. And then just as a follow-up on the RP. What have you guys learned from that rollout to date. Are you still in the controlled launch phase or moving to a broader rollout? And have you begun to push more towards the biventricular procedures?

For the RP, we are in more of a full launch mode. We're continuing now to add 40 to 50 centers a quarter. We are learning things on the product itself, but remember, there's a -- it has multiple types of patients. So some patients are failed transplant, some are having biventricular shocks, some are having RV infarcts. And so it's always comes back to having a protocol, making sure we have a heart team approach and make sure the device is put in timely.

And our next question comes from David Lewis of Morgan Stanley.

It's Jaypreet Chadha in for David Lewis. Can you just talk about the difference in growth or utilization rates between hospitals with shock protocols in place versus hospitals without the protocols in place? And then I have one quick follow-up.

We do believe that we are getting higher volume. I do -- we do get higher volume for places that have best practices in place and also Protective PCI coordinators. But obviously, this is a bit of a self-selecting biased survey because the sites that are doing those things have more resources, more energy around it, and they're creating what we would call heart recovery centers of excellence.

Okay. And could you talk about the market opportunity? I know it's still early, but for Impella BTR. And what the pathway or time line to commercialization for that would be?

The Impella BTR for everyone is a longer-term permanent pump. It's an axial pump that will -- also will be implanted through the axillary artery. So it will have full VAD flows, it's purgeless, and the design is intended to go up to a year with a discharge console. And the new platform we have for all our new products includes an optical sensor, so we get information in real-time while the pump is running. And at 8 hospitals around the world right now, we have them connected to something called Impella Connect, which means that when patients go on, the device transmit through the hospitals Wi-Fi into the cloud, and we are monitoring these patients in real time. The -- it gives us a great ability to help improve outcomes in the ICU. The new algorithms on the console show cardiac power, which will be ideal for weaning patients and managing them. And I think there's a lot of new science and new opportunity that will be able to offer hospitals to help them not only improve outcomes, but be more productive, reduce length of stay and get, ultimately, a better quality of life for the patient.

And ladies and gentlemen, this does conclude our question-and-answer session. I would now like to turn the call back over to Michael Minogue for any further remarks.

Thank you, everyone, for your time today. If you have any follow-up questions, please feel free to reach out. Have a great day.

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