Avinger Inc (AVGR) 2015 Q1 法說會逐字稿

Good day ladies and gentlemen and welcome to the Avinger 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 may be recorded.

I would now like to turn the conference over to our host of today's call, Ms. Leigh Salvo of Investor Relations.

You may begin.

Thank you.

And thank you all for participating in today's call.

Joining us today is Avinger's CEO Jeff Soinski, Executive Chairman John Simpson and Chief Financial Officer Matt Ferguson.

Earlier today, Avinger released financial results for the quarter end at March 31st, 2015.

Before we begin, I'd like to remind you that management will make statements during this call that include forward-looking statements within the meaning of federal securities laws which are made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995.

Any statements contained in this call that are not statements of historical fact should be deemed to be forward-looking statements.

All forward-looking statements including without limitation, our examination of historical operating trends and our future financial expectations are based upon our current estimates and various assumptions.

These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements.

Accordingly, you should not place undue reliance on these statements.

For a list and description of the risk and uncertainties associated with our business, please see our filings with the SEC.

Avinger disclaims any intention or obligation except as required by law to update or revise any financial projections or forward-looking statements whether because of new information, future events or otherwise.

This conference call contains time-sensitive information and is accurate only as of the live broadcast today, May 6, 2015.

I'd now like to turn the call over to Jeff.

Avinger's goal is to become the leading provider of image-guided medical devices for physicians to treat vascular disease.

I'm pleased with the meaningful progress we've already made in 2015 on the key strategic initiatives we laid out for this year including successfully completing the VISION clinical trial to support a 510K submission for our Pantheris Image-Guided Atherectomy Device in the second half of 2015.

Increasing the installed base and penetration of our lumivascular platform and driving utilization of our currently available image-guided catheters for CTO crossing and building ourselves in marketing infrastructure and anticipation of the Pantheris launch in 2016.

During our call today, we'll provide a brief overview of our business and operational accomplishments in each of these three strategic areas including comments from Dr. Simpson on our continued progress with Pantheris and our VISION clinical study.

Matt will then review the financials for the first quarter of 2015 and following that, we'll open the call for your questions.

Our objective is to position our lumivascular platform as the standard of care for vascular disease.

Our approach is based on the premise that real-time visualization will allow physicians the ability to precisely target the disease portion of an artery thereby, minimizing disruption at the more normal arterial structures and as a result significantly improve the safety and efficacy of endovascular procedures in patients with peripheral arterial disease or PAD.

One of the key elements in our growth strategy is the successful introduction of Pantheris which combines state of the art directional atherectomy with real-time intravascular imaging.

It's estimated that only about 5% of PAD patients are currently treated with interventional therapy.

This provides a tremendous opportunity for Pantheris since we believe that we'll significantly increase our overall market penetration as well as expand the addressable market for our devices.

We are laser-focused on the completion of our VISION IDE clinical trial which is designed to evaluate the safety and efficacy of Pantheris for atherectomy in the peripheral arteries.

As we highlighted on our last call, we completed enrollment in VISION on March 12, ahead of expectation with 134 patients successfully enrolled.

The VISION study design requires follow-up data collection at two time points, 30 days posttreatment and six months posttreatment.

At this point, I'd like to ask Dr. Simpson to provide an update on the recent very positive results we've seen from our vision clinical trial as well as our plan for sharing these results with the clinical community.

John?

So today, I'm pleased to announce that we have achieved another major milestone in our VISION trial by surpassing the primary efficacy endpoint defined in the study and as adjudicated by an independent core lab using quantitative and geography.

This endpoint requires that we remove sufficient plaque so that the residual stenosis after a standalone Pantheris treatment is less than 50% and at least 87% of the patients had the privilege in it, really a genuine privilege to personally absorb most of the Pantheris case in the VISION trial and to see first hand the precision provided by real-time onboard imaging.

This feature enabled all physicians, even from their very earliest cases to actually see, target and remove plaque obstructing the artery.

I'm not surprised by the strength of our data and achieving this primary efficacy endpoint.

And it's important for our step toward seeking FDA approval for the Pantheris.

Now, we have achieved our primary efficacy endpoint, the next step of course is to achieve our primary safety endpoint.

This endpoint requires a 6-month follow-up and will be adjudicated by an independent clinical events committee or CEC as part of the clinic program, agree to with the FDA.

We look forward to share more details around these findings with you in the coming month.

While our primary safety implement requires the completion of 6 months follow-up data, we're thrilled with the acute safety data as well.

Combined in the primary and rolling cohorts, division investigators have treated over 190 stenosis or lesions in the blood vessels with zero perforations.

So in addition, based in our 30-day follow- up data to be presented at the EuroPCR in Paris this month, we believe we continue to be on track to meet our exceed our primary safety endpoint once all 6-month data follow-up data are available.

As a reminder, the primary safety endpoint for [division study] requires a less than 43% of the patient's experience in major adverse event or an MAE such as death to keep myocardial infarction, vessel perforation, dissection or target lesion revascularization also known as TLR, a surrogate for restenosis through a 6-month follow-up as adjudicated by the previously mentioned CEC.

Today, the Pantheris safety profile and both the role and primary cohort remains quite compelling.

And we look forward to sharing these results at upcoming conferences as well.

As mentioned, our 30-day data has been accepted for presentation on the May 20th at the upcoming EuroPCR in Paris.

During the event, one of our principal investigators will share the details of the trial demographics for the patients, [leaching] characteristics, as well as all-acute endpoints that were derived from the study.

This would include safety and efficacy.

Supplementing this late-breaking trial presentation on May the 27th, one of our lead focus study enrollers will make the first US presentation of the 30-day data including additional details from the VISION study.

This presentation will occur at the New Cardiovascular Horizons Annual Conference in New Orleans.

Early in the forth quarter, we plan to present our 6-month data at the relevant clinical conferences here in the US.

I personally think Avinger has made an exceptional progress in the development and refinement of Pantheris and the results continue to exceed my expectations.

As one physician commented -- this onboard real-time imaging is like cheating.

It's like having the answers before the test.

I love it.

This is a game-changer.

So as we continue to collect the FDA required VISION data, I remain very confident we're on track to meet our goal of completing data collection and analysis for the VISION trial by the end of the third quarter thus, enabling us to submit our 510K clearance from the FDA during the second half of this year as planned.

Assuming a typical FDA review cycle for a 510K submission and based on what we expect to be a strong data coming out of our 6-month follow-up period, we believe we continue to be on track for FDA approval in early 2016.

So with that information, now I'll turn the call back to Jeff to continue the review of our Q1 highlights.

Jeff?

Thanks, John.

A second key initiative for us is raising awareness of our lumivascular platform and its advantages compared to conventional therapies, expanding the number of lumivascular counts and driving utilization of our currently available image guided catheters.

As expected, we saw some seasonality, typical of capital equipment purchasing patterns that are heavier towards the yearend in lieu within the first quarter.

We were successful however in adding three new accounts during the quarter resulting in an installed base of 63 lumivascular counts of March 31st.

Our current sale efforts have been gaining momentum and establishing new lumivascular platform sites by marketing our products to physicians and hospitals administrators.

Our initial lumivascular product offerings include our Lightbox imaging console and our Ocelot family of catheters which are designed to allow physicians to cross chronic total occlusions or CTOs which are total blockages in an artery.

Our currently marketed Ocelot family of catheters along with our Pantheris atherectomy device interface the Lightbox imaging console to provide real-time high-definition imaging inside the vessel during an endovascular procedure.

This is a platform technology.

All of our current and future image-guided catheters leveraging our growing installed base of lumivascular accounts.

Through our sales and marketing and medical affairs programs, we are building awareness of our revolutionary lumivascular approach to the treatment of vascular disease.

We are exhibiting, we are on the podium at several important clinical conferences this year including as John mentioned, EuroPCR and NCVH, plus The Society for Vascular Surgery, CVC, TCT, VIVA and [VEE] along with other key clinical conferences and society meetings.

Through the expansion of our sales force which I'll discuss in a minute, we are increasing our direct sales effort while at the same time refining our selling process and messaging.

Perhaps the most important, the more successful experience that our early adopters continue to have with our currently available lumivascular products, and the more proficient they become in image interpretation, the more awareness grows with the benefits this technology can bring to the clinical community.

I believe we're only beginning to scratch the surface of the large market opportunity available for our lumivascular product.

All of our efforts combined are paving the way for increased sales of our lumivascular platform throughout the rest of this year as well as preparing our organization for Pantheris approval.

These efforts are also paying off as we are seeing an increase in the use of our lumivascular products by our current customers through better case coverage, clinical training and other programs.

While our overall disposable sales were down year over year as we focused our selling efforts almost exclusively on our lumivascular products and away from our legacy non-imaging devices.

We were pleased to see an uptake in lumivascular disposable product usage as customers find value in the safety, efficacy and information our lumivascular products provide.

Our third strategic initiative for the year is to continue to build our sales and marketing infrastructure in anticipation of Pantheris launch in early 2016.

I'm delighted that John Borrell has recently joined us to lead our sales organization.

John has more than 25 years of sales and marketing experience in medical technology, primarily in peripheral vascular and coronary product.

He has extensive background in the launch, commercialization and growth of medical devices for the treatment of PAD, includes highly relevant experience from executive leadership for all cardiovascular systems where he served as Vice President of sales and marketing in Fox Hollow Technologies where he was US Director of Sales.

As many of you are already aware, both Fox Hollow and CSI are peripheral atherectomy companies that achieved extremely rapid commercial uptake following FDA clearance of their respective products.

John was integral to both of these success and we're pleased to have him in a position to drive our commercial programs here at Avinger.

In addition to John, we were also successful in bringing onboard three new sales representatives in the first quarter, bringing our total sales headcount to 35 including capital and disposable product sales people and sales management.

These individuals all bring relevant industry experience to Avinger and have already begun the training process.

We expect to accelerate our pace of sales force expansion throughout the remainder of this year with the goal of building the sales organization to approximately 45 fully trained sales professionals by the end of 2015.

We've refined our hiring profiles and significantly enhanced our training programs in advance of this planned expansion.

Following Pantheris approval, we expect to be well-positioned to leverage this expanded sales force in our growing network of lumivascular accounts for future growth.

In addition, we continue to make progress on our product line extension strategy for Pantheris as well as developing pathways for new product applications of our lumivascular technology.

Given the profound acute safety profile of our current lumivascular devices in our preclinical and clinical experience today, we're convinced that our technology platform can provide the basis for important new devices for the treatment of vascular disease in the peripheral and coronary arteries.

In summary, Avinger is in a unique and exciting position today.

We have a base business that includes a growing installed base of healthcare institutions purchasing our lumivascular platform product.

We already have significant visibility into the positive clinical results of our Pantheris VISION trial and we have a lot of room to take competitive share and provide meaningful market expansion in a significantly undeserved market.

With that, I'd like to turn the call over to Matt to discuss our financials.

Thank you, Jeff.

Total revenue with $2.1 million for the first quarter ended March 31st, 2015, consistent with the first quarter of 2014.

Lightbox imaging console sales were $0.6 million which was a 72% increase over the same quarter in the prior year.

Our revenues from disposable devices were $1.5 million, a 14% decrease compared to the first quarter of 2014.

The revenue results reflect the company's commercial focus on its lumivascular program in order to broaden physician exposure to optical coherence tomography or OCT image interpretation and build the Lightbox installed base prior to Pantheris availability.

Growth margin for the first quarter of 2015 was 38%, an increase of 9 percentage points compared to 29% in the same quarter of the prior year.

The increase was primarily attributable to operational efficiencies achieved in our lumivascular manufacturing processes.

Operating expenses for the first quarter of 2015 were $10.2 million compared to $7.0 million in the first quarter of 2014.

This growth was primarily attributable to increase investments in our commercial infrastructure, costs associated with operating as a public company and expenses associated with our VISION clinical study.

Loss from operations for the first quarter of 2015 was $9.4 million compared to $6.4 for the first quarter of 2014.

Adjusted EBITDA which is a non-gap measure with a loss of $7.9 million for the first quarter of 2015 compared to $5.8 million loss for the first quarter of 2014.

Net loss attributable to common stockholders for the first quarter of 2015 was $12.8 million compared to $8.0 million in the first quarter of 2014.

And you'll see in our financial statements that this metric for the first quarter of 2015 included a $2.4 million adjustment in that income.

This was a non-cash, non-recurring charge related to an amendment to the company theory of a preferred stock purchase agreement which occurred prior to our IPO.

Turning to our balance sheet, cash and cash equivalents totaled $69.4 million as of March 31st, 2015 compared to $12.3 million as of December 31st, 2014.

In January of 2015, we closed down an additional $6.2 million in our last round of funding as a private company and also, on January 29th, we completed our IPO which generated approximately $56.9 million in net proceeds.

Including the shares issued in these two financings, our post-IPO share count is 12.2 million shares.

However, since the IPO is close partway through the quarter, the weighted average share account for Q1 as shown in our financial statements was 8.4 million shares.

Turning now to our financial guidance, we continue to expect revenue for 2015 to be in the range of $12 million to $14 million which represent year over year growth ranging from 7% to 25%.

And we continue to expect adjusted EBITDA to be in a loss in the range of $31 million to $33 million as we continue to invest in the development of our lumivascular platform and commercial infrastructure expansion.

And with that, we will now open the call for you questions.

Certainly.

(Operator Instructions)

And our first question comes from Josh Jennings and Cowen and Company.

Your line is open.

Hi good evening, gentlemen, thanks a lot for taking the questions and congratulations on hitting the primary safety endpoint - sorry, the efficacy endpoint, excuse me.

Just real quick, I don't think that this is in play but is there a continued access program available for some of the investigator sites?

Yes.

So the continued access program actually has been approved just in the process currently of achieving IRB approvals from the different sites for continued access.

And then we base on the improvements in the Pantheris since the trial was completed.

So if we go into continued access with the device that we use in the VISION trial or a slightly improve device, we would need to kind of start the process to negotiate some of that with the FDA.

Like data access is important.

We do plan to do that.

And we also have a [CMR] opportunity we believe to do some work in Europe which is a little bit -- you can almost think of as continued access but maybe expand a little bit beyond that.

Okay.

Great.

And assuming approval early next year in terms of the early launch, some of the feedback you've gotten from the investigator sites.

I mean, how should we be thinking about those sites in early adoption, the majority of the centers?

And then how many centers were in the trial again, if you could remind us?

Okay.

So if I understand your question correctly, you're asking -- Okay.

I may say this first, I think it's 21.

21.

Right.

21 centers in the trial.

So that would be 20 in the U.S. and one in Europe.

And we would expect that those -- based on my experience in the past, those would be the size that would start off the most briskly with the device and would not drive an option next year but I don't think it will be just exclusive to those sites.

Okay And then in terms of -- the drug-coated balloons have kind of risen to the forefront in the peripheral space over the last number of month and the definitive AR 12 month trial was presented -- that sharing across -- again, it had been presented at VIVA I believe late last year.

But is there any senses in the Avinger team that a study with Pantheris and a drug-coated balloon is necessary, or how are you're thinking about that combo therapy drug therapy?

So we did have a meeting with the scientific advisory board about two weeks ago, no, maybe three weeks.

And we had a lot of discussion about what they would like to do because we're very committed to head to head trials going forward.

We're excited about that opportunity to be honest and we believe that there would be an opportunity to do head to head trials against the existing atherectomy system that are out there.

But also head to head trial with our device versus a drug-eluted balloon or our device in combination with a drug-eluted balloon in sort of a three arm randomized trial.

I think the group was -- we had about 15 docs there and I think they were somewhat divided on the importance of which group to do.

But the drug-eluted balloon trials are something that we're definitely committed to do and then comparing ourselves to our device standalone or our device in combination with these drug-eluted balloons.

That's going to be something well-received by the clinical community and kind of the expectation is that that will be an important evaluation.

All right, great.

Thanks a lot gentlemen.

Your next question comes from Jason Mills of Canaccord.

Your line is opened Jason

Thank you.

Good afternoon everyone, can you hear me okay?

We hear you fine Jason.

Go ahead Jason.

Super.

Congratulation also for me for meeting the primary efficacy endpoint.

And John, you mentioned as well in your prepared remarks the fact that in the trial, you saw no perforations.

And obviously, it's something you see typically in atherectomy at some level and would have impacted the safety arm which you're still following up to those patients.

But I'm wondering if you could give us somewhat of a dissertation on the average sort of rates we'd normally see and sort of having no perforations, what kind of confidence that gives you in combination with the other things that are in the endpoint to meet or exceed the level that you require to meet for the safety endpoint.

Yes.

So about perforation, so if you look at all the reported data currently, the average number of perforation sort of ranges depending on the device sort of in the 5% to 10% range.

This is not always mean giant flagrant perforations, it can be local [disdain] where there's some [expert] data try to save it from the artery locally and it's in dissections.

And so I think it's sort of in the 5% to 10% range.

Really large perforations that would require a covered stent is more likely in 1% to 2% range I would think.

But a zero perforation rate in the launch of our brand new technology I think is really exceptional.

And it gets to the point and speaks directly to the point that if the physicians can see what they're doing, they can do it more safety and more judiciously.

And our biggest absolute confirmation that onboard real-time imaging is something that is trainable, that even physicians from the very earliest outset could actually achieve really unique and special results that speaks to that.

One thing that we did notice, I think I've commented on this before that the early case took a little bit longer but achieving the primary efficacy endpoint was the same and the rolling cohort and the primary cohort.

So that is I think really exceptional.

But beyond that, in a way, this is the part that Dr. Mark said where we cheat because we also get to know what the tissue looks like from all of those patients which then gives us enormous confidence that what we are seeing lines up nicely with [Pkosh Tristan's] reports of -- that we've alluded to in our public presentations that say that if you cut down deeply into the artery wall, the recurrence rate will be high.

If you stay out of the deep [component] artery wall, the recurrence rates will be low.

And we know from our histology analysis which is ongoing that our [depot] components are low and those have been previously reported.

Thanks for that John.

Just to follow up so I'm clear, with respect to perforations, you mentioned major and sort of minor perforations.

Does the MAE associated with VISION, does it count both of them?

And then second part of the question on the data, with respect to the tissue that you're extracting, you did put in your S.1.

a really low rate for that at the acute phase.

I'm wondering if you have any updated statistics with respect to what you've seen since that original data was made public.

So well that's the first question first about major adverse events.

With a minor perforation or a major perforation, either one of them would be recorded in the data requirement to the FDA.

I'd say yes, that either one of them would have been reported but there were none, either minor or major.

Okay

So I do not recall a single case where there was [di-extravasation], even kind of locally from the artery where you might not have called a perforation, maybe you would've called it something else, there were none of those and Jason, I've said a million times, if you perforate an artery with this device, you fell asleep, the images that are onboard tell you to stop and if anything maybe -- you would maybe stop sooner, then we might -- going forward in the future.

But it also help us in a dramatic way continue to improve and refine, let's say, the device.

Improve the blood flow management, move it more toward a single operator device and continue to support the ongoing trials to make them smaller below the knee where all of that ongoing.

And the advantage of just having to deal with an optical fiber is this imaging component, it takes up those space.

It gives us the opportunity to downsize this in a dramatic way to use it below the knee as well as use in your -- of course, my training is -- background is cardiology space, so we want to focus on cardiology as well.

Everything is lining up in my mind to say that we should be confident in our ability to achieve our FDA milestones.

We're not allowed to say.

We haven't achieved them yet because we haven't collected all the data.

But I really like the track.

Okay, that's helpful.

And Jeff, one for you.

The fact that you're adding new lumivascular counts, some are remarkable given to Pantheris is still several months away from approval.

Obviously, you're selling Ocelot but it's a bit smaller market opportunity and probably a bit less excitement than Pantheris, that's fair.

So I'm just curious the sort what you're funnel looks like for new accounts this year in advance of the Pantheris approval in sort of a cadence of what John and his team are seeing there in terms of the potential new accounts shall be adding pre-Pantheris.

Thanks guys

Okay, thanks, Jason.

As you know, we ended the year with 60 accounts and that was even with Pantheris being further out.

We have a fundamental value proposition here around lumivascular, not only because with the case of our Ocelot catheters do we provide highly effective and safe CTO crossing, but we provide a lot of information.

And I think the more physicians work with Ocelot, the more experienced they get with image interpretation, the more clinical benefit they see of that information as well.

So this truly is a platform play.

Clearly, we're not in any way promoting Pantheris.

However, we certainly are talking about the overall benefits and overarching benefits of image-guided therapy for our lumivascular platform and the safety and efficacy that that provides.

There are physicians who want to be part of a new and exciting technology and a new approach to the treatment of vascular disease.

We also know that the more a physician has experience with our devices and the more proficient they become over time with image interpretation, and we've seen this with our clinical investigators, the more ready they are going to be to make an immediate impact for the patient but also their own practices with Pantheris.

So we would anticipate as we build our sales force, as we've now brought a new leadership, as we develop and test new programs for even increasing the pace of new lumivascular account adoption that we will continue to ramp and grow our installed base throughout the year.

Also, frankly, the fact that Pantheris is getting closer probably doesn't hurt either.

But this is a very, in my mind, a very compelling signal for us about the benefit provided by our lumivascular approach and kind of a good precursor or [lead-in] to the ramp-up once we've launch Pantheris.

Thank you.

(Operator Instructions)

Our next question comes from Chris Cooley of Stephens.

Your line is opened.

Hey good afternoon everyone.

Let me echo the positive [summons] as well.

Congratulations on the progress on VISION.

If I could, could you maybe give us just a little bit more color on the plan sales hires through the balance of the calendar year?

Obviously under John's leadership now, help us think about maybe the type of candidates that you'll be recruiting and maybe, as a result of their prior experience, how we should think about the gating of those hires, I mean, are they [garden] leads that will be in place?

I'm assuming not that extensive of a ramp-up in terms of their exposure to the space.

So just kind of help us think about those ads and how they come on and kind of characterizing those ads, and I have one quick follow-up.

Yes.

So we've spent a lot of time in the first quarter and now with John onboard refining our hiring profiles and targets for our sales force.

So first of all, we're focused on getting the right people with the right kind of training and background.

So we added, as you may remember Chris, quite a few, what we call lumivascular sales people who are more about selling the lumivascular program in the latter part of last year.

We're focused more now on developing our group of, what we call, area sales managers or ASMs who are focused more on utilization and disposable device sales.

We are recruiting people who have prior endovascular experience who are familiar with the space, know their way around the cath lab and they'd be highly receptive and rapidly trained to our products and programs so they could add value in case coverage right away.

So other things we're doing is we're making sure that we're putting those people on the right places, hiring and building our sales force in areas where there's a high incidence of PAD, where we can make a strong presence and not maybe every where but in markets that really count and then kind of grow out from there.

Another thing we've done this year as we are -- I'm very, very pleased with how well the organization has responded to this, is we saw an opportunity to significantly improve our training programs.

We actually this week started our first new training program where we brought in a highly experienced consultant to help us completely redefine the program.

We know have two weeks of intensive distance learning for people who come in-house, a full week of in-house training that's a very regimented and rigorous program followed by three weeks of discipline field training.

So our goal is to take this time that we have and advance the Pantheris, hire the right people.

As I said, we're increasing the pace of the hiring as we enter this quarter and going through third quarter to give ourselves sufficient time to properly find the right folks, get them in the right places and properly train them so that they can be productive and make an impact concurrent with the launch of Pantheris in the early '16.

Okay, super.

And then just as a follow-up with the discussion here recently about the recently scheduled MEDCAC meeting for July, I would love maybe if you guys could give us your thoughts as to maybe how that proceeds.

And in particular, how you think you may be positioned because clearly, I think one of the actually [sales] in this space historically has been a lack of robust data, yet clearly with what we're seeing in VISION, there's some very beneficial, not only clinical, but also economic data here to think you could be bringing to the table.

So just help us maybe kind of frame that upcoming meeting in terms of how we should think about that from expectations.

Sure, Chris this is Matt, maybe I'll take a crack at that and perhaps Jeff and John would want to add to it.

But overall, we've been very engaged with experts in the field, in some cases, even former CMS people.

So we feel like we're pretty close to the situation.

And we understand that given the growth in PAD procedures over the years and just the overall size of the clinical need here that this is an area that CMS is focusing a bit more on.

But we really see that in many ways, their increased interest in the area probably will play into our strengths where we believe that we'll have the best clinical outcomes over time and the best clinical evidence given the types of data that we're generating right now in VISION, not just acute safety data but also longer term follow-up as well as the histology data and other endpoints that go along with that.

And also our commitment to doing other head to head studies on a post-market basis.

So we think over the longer term -- medium to longer term really just plays right to our advantage.

We understand that any government agency getting involved in an area does sometimes create some uncertainty and concern on the part of the investors.

But ultimately, we welcome this engagement with CMS and we'll be involved in the meeting and we really look forward to it and don't see it as a great concern for us.

Yes, I would add to this, John Simpson.

I would say that if anything, this is really ideal for us because everything is moving more and more toward outcomes-based evaluations of technologies and no one else can really match our outcomes.

And currently, and then it's going to be, I think our device will continue to get better.

So I don't find anything about this meeting to be at all, concerning and I think we are in particularly good shape.

Thank you so much.

Our next question comes from Steven Lichtman of Oppenheimer, your line is opened.

Thank you, hi guys.

Just a follow-up question on the pipeline.

I just want to see if we can get an update on the next generation Pantheris you guys have talked about, post-approval, I think that downsize in franchise.

And also, maybe an update on an expansion to coronaries, any progress there.

Okay.

Yes, John Simpson.

So one of the issues with us in the very first device that we introduced into the VISION trial was that it's a little cumbersome to use.

Everybody like the efficacy of it but then it was kind of cumbersome to set up.

And we also had an inclusion sheet to help block off blood flow.

And so we thought -- and that was kind of big and left a larger insertion sites hole that we wanted.

So what we've done is we have taken the balloon off of that inclusion sheet, we put that balloon on the Pantheris itself to give us much better blood control to the field so we could image and have more effective imaging.

While doing that, we also changed and reconfigured some of the flush elements that were required to manages the blood flow in the fields and that has also reduced the requirement down to one physician.

So I think we are legitimately a single operator device now and that was kind of one of the criticisms in the VISION trial.

They love it but it's kind of complicated.

So now, they get to love and it's not nearly as complicated, I would say would be the perspective on that.

The goal for coronaries, and I do believe that this is very, very legitimate in the sense that all that it requires is some downsizing.

And with certainty, the first device would be a CTO in the coronaries but also [at right within] coronaries.

It is absolutely possible and I think it can be a genuine reality.

It would be inappropriate probably for me at this time to say exactly what the timelines are going to look for that but we have an active program and ongoing.

We evaluated those devices and more models would be -- actually, we'll do some of that this week.

And I think that we are committed to doing that but not in a way that jeopardize the launch of Pantheris in the peripheral vascular space upcoming.

So we move quickly, we're nimble but we do have limited resources.

So we'll have to be careful about how we prioritize the R&D effort as related to that.

But we will do a very, very good I believe of doing it without any jeopardy of the key element here for us which is the Pantheris launch.

Yes, let me just add a couple of things.

As it relates to timing on the kind of next generation as you called it, Steven, Pantheris because our goal is to be in a position to file a regulatory submission on that device very soon after approval of our clinical version device.

So we're not talking long timeframes, the development effort because of the focus that Dr. Simpson talks about has proceeded extremely well.

We hope to get the experience as he talked about and continued access in XUS which should position us quite well for that product to come quickly on the heels of our initial product approval, at least, the part that's been our control.

Just kind of adding to what Dr. Simpson was saying about coronaries, you know, we've talked a lot about the acute safety profile on how profoundly positive that is for Pantheris.

That really does, in our minds, safety obviously for the coronary.

It's important in the peripheral and the coronary, it's a whole another level higher, the requirement for safety given the potential implications of a perforation or some other problems.

So that positions us I think very well to be first, you know, best in class, CTO crossing and atherectomy in the coronary.

But that will take time.

The other point that I'll make is all of the experience we're getting in terms of making our devices smaller for below the knee also directly plays into and is supportive of our coronary program.

So we see that somewhat as a stepping stone or a process to helping us become proficient in the coronary quicker.

So hopefully that's helpful follow-up.

Great, makes sense.

Thanks guys.

Your last question comes from Charley Jones of Dougherty Market, your line is opened.

Good afternoon, thanks for taking my questions.

Go ahead.

Thanks a lot.

I guess to start, I was hoping to get a couple of statistics on the trial.

I was wondering if you can give us the average lesion link, the percentage of occlusion, how much you are able to remove the length of the average procedure and the average time of your procedures.

I can go through those again if you need.

I'm just trying to get a sense of how you compare with some of the others on those and obviously, safety is important but sometimes, doing nothing is the safest, yet that's obviously not the outcome we want.

So I'm curious if you can kind of help us at least understand where you think we're going with efficacy.

You made some comments earlier about being the best device out there and feeling very confident about that going in the MedPAC, but I guess I'm curious if you could tell us where that confidence comes from on an efficacy stand point whether or not you've seen some one year, two year data with earlier generation devices that's giving you that confidence.

Thanks.

Yes so good - a good question.

I have to say that we're going to present all that information at the PCR, at the EuroPCR.

It would be inappropriate for me to sort of preempt into that and I think that's a part of the agreement that we have with PCR when they were accepted.

But I will say that without giving you any specific numbers which I understand why you would want them, we definitely had -- it was all very, very favorable.

And the reason that I say best in class is that because no one else, I mean, unless you look at what you're doing inside the blood vessels, you will never be able to compete with the device that can see that.

You could argue it's over-confidence on our part but it's because once you see it, Jeff has said a lot and it's kind of hard to go back to not seeing what you're doing.

And I just believe that that gives me a lot of confidence.

And then when we look at the tissue that we've taken out, it all fits the model that we've talked about and I don't see any evidence on the tissue that lead us to believe that our assumptions are not correct and then if you stay away from the black line, you'd get better results than if you do not.

And thus, we've said that forever, we've said it publicly and that is still the case and I think we do have enough -- and you could do the math.

You guys are really good, just better than I am.

You know we have some 6-months data already too as well, right, because the fair number of patients, particularly in the rolling group.

So 6 months.

So you know that those data are out there and we definitely will be presenting those soon and I feel very confident that they reflect very accurately what is happening in our patient population.

It's very exciting to me.

Charley, in addition to the presentation that will be made at EuroPCR, the company will also be issuing a release with data immediately after that presentation.

So look for that on the 20th as well.

And will you include the number of stents in drug-eluting balloons and balloons used in your cases?

So we've already disclosed that we've added 190 lesions I think we use or maybe 134 patient we use for stents.

So the stent utilization was very low because the outcomes with our device was -- those outcomes were very good.

The drug-eluting balloon -- there were a few but I would say it's a little bit more of a handful a drug-eluting balloons.

And then a portion of the patients had adjunct [angioplasty] with just regular balloons more when the trial first started.

And as the trial progressed, that percentage of patients having to -- I'm just go do a little touch-up balloon here thing, that really declined a lot as the trial progressed.

And so I feel like that -- well I have that information -- somewhat, we've already disclosed about very few stents but I don't have any other information to be honest with you that I could think I could share right now.

Yes, that's helpful.

The statistics that Dr. Simpson talks about in terms of the small number of stents used compared to what we all know is typical experience -- some of the other atherectomy devices to me is really compelling from an economic value proposition basis as well.

I mean, when you look at especially a capitated type system where they're very focused on cost, to be able to reduce significantly adjunctive therapy and to leave the lumen in a -- almost the way it started in terms of before the disease came state is really I think extremely important to our future success and builds a very compelling economic story.

Thanks.

I just have one more, I guess two-part question.

I was wondering kind of up to this point into Jason's question I think earlier, a lot of us have looked at the [IVIS] market and I think when we first looked at it, we see [speckled mass] and then we start to see it a little bit.

And it's a little bit easier with OCT.

But I guess I'm curious how long it does take a physician to really get -- or you're comfortable that they're doing it right that way you would want it done.

And then I guess secondly, how long does it really take for them to see the image the way you see it?

And then what percentage of doctors are just saying, you know what, seeing it this way is just -- I'm not used it, I can't do it and I don't want to do it.

Do you get that ever?

And then finally, can give us the cash and the non-cash portion of your cost to goods sold?

How much does it cost to place the system and what percentage or place for sold?

Thanks a lot for all the time, appreciate it.

Yes, I'm going to go - I'm going to turn the cash question over to Matt and to Jeff.

But to say -- it was kind of interesting in the VISION trial, we had one out of the 20 doctors say -- Wow.

This is a lot of information.

I'm not sure they're able to figure this out.

And it was pretty early in his experience.

And then he turned out and he showed some resistance.

It turnout out he was one of our largest enrollers eventually.

I don't want to say that it's seductive if that's the right term, but it is once you become committed to it and learn to understand it.

But your question was more on how long does that take.

Yes.

I would say that overall, we're still talking about a 5, maybe, to 10 patients ramp, if you will, but it's not so much in getting the primary efficacy where you could just get sort of generally what you need.

It's where you need to get to really achieve sort to the better results, if you will.

And I think that it's sort of in the 5 o 10 rate, it's not 0 to 5, it's not the first couple of cases.

I don't think it's much over 10 but that will be very much individual-based.

And the goal here would be try to get the doctors to do more than one a week kind of a thing and that's kind of the threshold I've always used in our practice that if I'm not doing one every week, I get rusty.

And so we're definitely -- and we see it all the time that doctors that are using the imaging technology a lot get really good at it and they do a bunch of them.

The ones that do sort of sporadically, less so.

Charley, I think you had a question on cost to goods sold and cash and non-cash portions of that too.

Without giving an exact breakout, that's not generally the way we look at it.

I would say that most of our COGS is cash-based.

So the two components that wouldn't be cash-based would be depreciation and stock-based compensation.

Stock-based comp in the cost of goods sold line is very small so relatively insignificant there.

And then depreciation itself, you could think about depreciation for the company as a whole being roughly in $1 million range for the year.

And only a portion of that was through COGS.

A lot that just has to do with our fixed assets depreciating within the company.

Sorry for the quick follow-up Matt, but real quick - could you - what I'm really trying to figure out is how much capital it would take to really place these systems out there if you wanted to early next year and trying to figure out how much cash investment that would be to place whatever, 500 systems or whatever.

Thanks

Yes, I guess there again, Charley, probably I wouldn't break down our COGS or our unit cost on a product by product basis.

But I will say that if you do the math on Lightbox the increase in lumivascular accounts and the revenue that we generated from that area, I would also say that the COGS associated with that is actually higher than our -- higher on a percentage basis than our overall COGS.

So that gives you a sense at least of what the unit cost is for the Lightboxes.

Thank you.

Thanks again for all the time.

Okay.

I'm showing no further questions at this time.

I would not like to turn the conference back over to Jeff Soinski.

Thank you for joining our call this afternoon and thanks for all your questions.

We look forward to sharing the details on our 30-day results from our VISION study following a presentation at EuroPCR in May 20th.

In the meantime, we're going to remain focused on completing the 6-month clinical follow-up and data collection and analysis provision and remain on track to file a 510K application for Pantheris in the second half of the year.

We also remain committed to strategically building ourselves in marketing infrastructure and advance the Pantheris launch anticipated to be early 2016.

And for the remainder of this year, we're going to focus our commercial efforts on building our installed base of productive lumivascular account.

We look forward to reporting our continued progress in these key strategic areas in our next call.

And thanks again

Ladies and gentlemen, this concludes today's conference, thank you for our participation and have a wonderful day.