Avinger Inc (AVGR) 2015 Q2 法說會逐字稿

Good afternoon, ladies and gentlemen.

My name is Jonathan and I will be your host operator on this call.

After the presentation, we will conduct a question-and-answer session.

Instructions will be provided at that time.

(Operator Instructions).

Please note that this call is being recorded today, Tuesday, July 28th, 2015, and will be available one year on the Investor Relations section of Avinger's website at investors.avinger.com.

I would now like to turn the meeting over to Leigh Salvo of Westwicke Partners.

Thank you, and thank you, all, for participating in today's call.

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

Earlier today, Avinger released financial results for the second quarter ended June 30, 2015.

Before we begin, I'd like to remind you that management will be making 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, July 28, 2015.

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

Thanks, Leigh.

Good afternoon, everyone, and thank you for joining us today.

As a reminder, Avinger's goal is to become the leading provider of image-guided medical devices for physicians treating vascular diseases.

During the quarter, we continue to make significant progress on each of the key strategic initiatives we laid out for the year.

These initiatives include 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 our sales and marketing infrastructure in anticipation of the Pantheris launch in 2016.

I'm very pleased with the progress we've made today as we remained on track to achieve these goals.

During our call today, we'll discuss the highlights of the quarter including comments from

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 momentum with Pantheris and our VISION clinical study.

I'll then cover some updates on our operations, commercialization progress and objectives for the second half of the year.

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

Starting with our goal to complete the VISION clinical program and optimize Pantheris for broad-scale commercial launch, we're encouraged with the progress we've made towards completion of our VISION IDE clinical trial.

This study which began in July 2014 is designed to evaluate the safety and efficacy of Pantheris for atherectomy in the peripheral arteries while for the first time ever allowing physicians to use real-time intravascular imaging to aid in the removal of plaque from diseased lower extremity arteries.

As we highlighted on our last call, we completed enrolment of 134 patients for the trial in mid-March slightly ahead of schedule.

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

In May, we reached another major milestone with the presentation of 30-day data at two major industry events.

During EuroPCR in Paris, one of our principal investigators, Dr. Arne Schwindt of St.

Franziskus Hospital in Muenster, Germany, shared details on trial demographics, lesion characteristics and all acute endpoints including safety and efficacy.

The following week, one of our lead clinical study enrollers made the first US presentation of 3-day data including additional details from the VISION study at the New Cardiovascular Horizons or NCVH annual conference in New Orleans.

As Dr. Simpson will discussion in more detail, these interim results confirm that the primary efficacy endpoint has been surpassed along with very encouraging early safety results.

During the quarter, we received the CE Mark for Pantheris which provides us with a great opportunity to gain additional clinical experience with Pantheris which provides us with a great opportunity to gain additional clinical experience with Pantheris in Europe prior to broad commercial availability in the US

Physician investigators in Germany and Austria are currently using Pantheris in providing invaluable feedback on new features designed to enhance ergonomics and user interface.

Following FDA approval of the clinical device and an initial limited launch anticipated early next year, our strategy is to be well-positioned to file a special 510K on the enhanced commercial version of Pantheris and then move quickly into a broad-scale commercial launch within the first half of 2016.

Dr. Simpson is currently in Europe observing cases utilizing Pantheris, so at this point, I'd like to turn the call over to him to provide more detail on the 30-day results as well as his firsthand observations of the impact and feedback from physicians in the field who are realizing the benefit from Pantheris image-guided technology.

Dr. Simpson?

Thanks, Jeff.

So obviously, it's really a pleasure to be on this call.

I apologize, I am in Austria and so it turns out that I -- I'm in Graz, Austria which many of you may know is Arnold Schwarzenegger's birthplace.

So there are connections to American politics, let's say, in Graz.

We're so fortuned to be here with Marianne Brodmann, Dr. Brodmann, who is really an expert in evaluating new technologies and I'll comment on her experience with their devices shortly.

But yes, I cannot be more pleased with the progress that we've made, what a great time to be at Avinger, is, you know, we're really on track to meet all of our key milestones and I feel confident as Jeff has already alluded to and stated not being fairly clearly.

We're on track to file our 510K application in the second half of this year.

So we definitely excited about that.

And then I think everybody knows that this -- the VISION trial is our current registry, if you will, which characterizes the performance of the Pantheris.

And this VISION -- so the trial is not blinded, so Avinger has had the fortunate situation, we're in a very fortunate situation where we can see all the acute angiographic, I call this the OCT outcomes, and looked at the tissue histology.

And as many of you may know, it's sort of this black line hypothesis that says that if can avoid the black line then you get a much better chance of getting -- certainly, you get no chance of causing a perforation but you have a much better chance and better long-term outcomes.

So I think everything that we see currently in the VISION trial and even the experience over the last two days with the brand new users absolutely confirms the value of this onboard imaging.

And that the capability and what that does, it enables a physician to actually see and target, remove plaques obstructing, you know, peripheral arteries with the level of precision that before Pantheris was not available to any of the interventions that are out there.

So I think this is the special contribution that Avinger is making.

I mean as Jeff noted and described, the 30-day data in VISION suppressed our primary efficacy endpoint which somebody would say, We had to use the Pantheris in all the patients we had -- or in the patients first to candidates, the success we had to reduce the damage stenosis to less than 50%.

And some people say, Well, that's not -- that's not very difficult.

You had to do it in more than 90% of the patients.

I think for us, it was 92%, 87% officially but with the confidence here, it was 92%.

Anything you're asked to do, anything in patients with -- you know, with that kind of, you know, more than any something percent, our comment on that is a very high bar where you achieve that in 96% of our lesions treated which is I think a confirmation.

Again, as the value of onboard imaging, the only way you could do that I think would be let's take advantage of that.

And then our major adverse event rate was also -- will look very low.

And if you add up all the events in the first 30 days, it was 7% which is very favorable compared to the 10% to 15% which is more typical for patients that are treated with the PAD, the kind of PAD we're talking about.

Then the 30-day results for Pantheris related to adverse events occurred, they were only in three patients, that's 2% of the population that we studies and these were all embolic events or things that we've been unable to capture all of the tissue in the device.

We're able to aspirate the fragments that we -- and effectively escaped the device without any consequence to the patient.

So there were no negative impacts associated with those events.

But kind of cutting to the chase, the two most striking important findings probably in the study so far have been -- have been no perforations, zero -- I mean zero situations where we actually cut a hole in the artery

And not that that is so common with the existing technology but it certainly does occur.

And we also had no Pantheris dissections out of 164 lesions.

So it puts us in a really, really, really company.

And so I'm confident that this would translate into real benefits for the PAD patients because it's all about precision, it's all about real-time imaging, and adjusting the -- what you're doing based on what you're seeing on the -- with the camera.

I mentioned this -- a sad story before one of our FDA reviewer, gosh years ago, said that she thought that this camera -- it was unfair advantage to our competition and so we certainly feel like that is the case.

It started to show up I think in the numbers in the data.

You know, granted it's early then our experience but I can't say that anything is headed in the direction of the -- going to be happy with.

So -- and -- but it also addresses into that if you have a very low perforation rate or dissection rate then the requirement for stents, for example, would be -reduced -- so only 4% of the lesions treated in the study receives stents, and that is a pretty striking departure.

The kind of areas that we treated probably, the stent rate would have been 30% to 40% for the number of total patients that we treated, they almost always get stented.

And then I think we had one in about 30 patients that have (technical difficulty) actually be stented.

So -- then, of course, as Jeff has already mentioned and summarized that we have CE Mark (technical difficulty) for the Pantheris now.

And this should mean that's why that I'm hearing in Austria like Dr. Brodmann.

But the CE Mark really allows us to, you know, get smaller iteration changes in the device which will always occur.

Excuse me.

I know that we had to be very proper about how we do this.

We have (technical difficulty) made some improvements in the design of the device which will show up in our commercial devices, you know, in the US and it's a great place to test it.

We need the testing settings in centers where we got physicians in the hospitals were committed to doing and giving the best outcomes for the devices.

But also in this particular setting, Dr. Brodmann said they had no previous experience with the device, otherwise, two days actually.

Then she has been successful with all of the cases that she treated both with outside and the Pantheris.

So -- and it sort of goes back to another comment that we heard from Dr. Schwindt recently in their team.

And they have it on videotape because he videotaped all the cases.

He looked almost stunned and after this last case, he gave an interview, and maybe he looks almost like stunningly confused when he looks at the outcome.

The [HPF] outcome wasn't so, assume he just said amazing just to put in perspective, you know, these are unscripted comments.

Dr. Brodmann said this is cool, this is cool.

Today, she said she never had a device in her hand before that gave her the same kind of information, the kind of feeling she got from treating the patients today.

So all of these, you know, comments from, you know, a few physicians, but I think they ultimately will reflect the comments of the physician population at large.

So we cannot be more excited about how things are progressing.

So with that information and with that -- with those insights then I'll turn it over to Jeff to continue his review of the Q2 highlights.

So Jeff?

Thank you, John.

It's really exciting to hear the experiences from Austria firsthand and in real-time here on the call today.

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

Our FDA-cleared lumivascular product offerings today include our lumivascular imaging console and our Ocelot family of catheters for CTO crossing.

The addition of Pantheris in the US combined with the Lightbox imaging console allowed real-time, high-definition imaging inside the vessel during higher volume atherectomy procedures.

Our objective is to build sales on a true platform approach with all our current and future image-guided catheters leveraging and expanding installed base lumivascular accounts.

We made significant progress in building our top-line in the second quarter with total revenue of $3 million representing a 46% increase over the first quarter.

We've been gaining momentum in establishing new lumivascular platform sites.

And in the second quarter, we were successful in adding six lumivascular accounts, up from three accounts added in the prior quarter.

This resulted in installed base of 69 lumivascular accounts at the end of the second quarter.

We also saw an increase in utilization of our lumivascular products by our current customers through better case coverage, clinical training and other programs.

With the introduction of Pantheris, we'll be operating within a favorable reimbursement environment that exists for atherectomy procedures.

And recent external events indicate reimbursement should continue to be a positive driver of our business in coming years.

In early July, CMS released its proposed 2016 reimbursement levels for the outpatient hospital and office-based lab settings.

In each case, the various payments for atherectomy procedures were maintained within 2 percentage points above or below the current levels.

With atherectomy reimbursement ranging from $11,000 to over $19,000, physicians would certainly be able to easily justify decisions Pantheris from an economic perspective.

Also related to reimbursement, on July 22nd, 2015, the Centers for Medicare and Medicaid Services or CMS, convened the panel of the Medicare Evidence Development & Coverage Advisory Committee or MEDCAC.

The MEDCAC panel examined a scientific evidence of existing interventions that aim to improve health outcomes in the Medicare population and address areas where evidence gaps exist related to lower extremity peripheral artery disease or PAD.

As we'd expected, it now seems clear that this was CMS' way of encouraging industry participants and medical societies involved PAD treatment to continue the recent trend towards generating improved clinical evidence for the various forms of PAD treatment.

From comments made at the meeting, we and our advisors do not interpret any indication of material changes in reimbursement should be expected in the near to medium term.

We view this direction from CMS as entirely consistent with our strategy of running rigorous and relevant clinical studies with Pantheris to support its intuitive appeal with objective scientific evidence.

And we believe that over time, the data that we develop will improve our position in the market and help to sustain our long-term growth.

Building awareness of our platform technology as a key component of our sales and marketing approach, at recent events such as EuroPCR, NCVH, SVS and CVC, we secured a strong marketing presence with participation in multiple educational symposiums, light cases and podium presentations.

We saw early adopters presenting successful case studies, and overall, we're recognizing the onset of a groundswell of enthusiasm for the unique benefits of our lumivascular technology and the potential of Pantheris.

We expect to continue this momentum in the second half of the year and plan to participate in the [AMP], VIVA and [VEE International] conferences along with presence of certain regional shows.

In addition, as mentioned earlier, we expect to present our six-month data from the VISION trial for Pantheris at TCT in October and/or VIVA in November.

We expect the pace of new account acquisition to continue to grow throughout the remainder of the year as we start to see a return on investment in sales and marketing and as we approach Pantheris approval.

However, our focus is not just on adding accounts but instead targeting the right accounts that will drive utilization of our currently available Ocelot devices and provide a strong foundation for future Pantheris sales.

To that end, we're committed to enabling our sales representatives to be well-positioned for early success and are putting new programs in place to drive sales and marketing towards both broader awareness of our lumivascular platform as well as increasing utilization of our currently available lumivascular catheters ahead of Pantheris launch.

We're developing new tools for our team, removing potential impediments to adoption and exploring new sales approaches such as rental and leasing options for our Lightbox console.

And as mentioned earlier, we intend to price our Pantheris catheter competitively with other leading atherectomy devices, providing enhanced benefit without incremental costs.

Our third strategic initiative for the year is to build and strengthen our commercial organization.

Before I discuss our progress in this area, I do want to discuss a recent organizational change.

Our VP of Sales, John Borrell, is leaving the company.

Many people at Avinger knew John from Fox Hollow when we were enthusiastic about his -- about his joining the company.

However, after John's first few months at Avinger, we've mutually agreed that his continuing on as VP of Sales would not be a good long-term fit for the company or for him.

John remains a friend of the company and we wish him well as he pursues new endeavors.

We intent to initiate a search for a new VP of Sales and in the meantime, I will assume direct responsibility for managing the sales organization until we name a replacement.

During this interim period, I'm personally excited about the opportunity to be close to the sales initiatives and organization as we prepare for the launch of Pantheris.

And as we continue to drive our commercial efforts forward with a strong group of regional directors and other senior new hires.

During the quarter, we brought onboard two highly qualified individuals to fill new senior positions in our sales and training organizations.

In June, we hired a national accounts director with extensive experience as a corporate account director at Cordis as well as another J&J company.

He has also held senior sales territory management positions directly on our space at Cordis and Boston Scientific.

Given the powerful economic value proposition of our lumivascular approach, we believe we have a highly compelling story for forward-thinking integrated delivery networks or IDN and certain GPOs.

The growing number of Accountable Care Organizations or ACOs and payer-owned or capitated systems including the VA and Department of Defense, we feel it's important to build the right team with the right leader and to start early to develop the data and craft our messaging for these major accounts who are leading the way in providing topnotch care in economically responsible way.

We believe we're well on our way to building a strong foundation for our economic value proposition for Pantheris with competitive pricing and an attractive reimbursement environment, the potential to significantly reduce restenosis and related retreatment rates, the potential to require less need for adjunctive therapy based upon the precision and control of Pantheris and the fact that physicians will have real-time intravascular imaging to help them make decisions on what to do next, and the potential to dramatically reduce intra-procedural radiation exposure to healthcare workers which has a real and direct cost to the healthcare system.

We look forward to continuing to develop the story and making inroads in these important accounts.

Another significant new hire in our commercial organization this June was the addition of a director of training and education.

The woman we hired for this position brings a number of years of experience to Avinger from a career-focused explicitly on healthcare sales and in physician training at companies like Maquet Cardiovascular, Integra LifeSciences and ConvaTec.

Over the years, Avinger has developed effective training tools and programs for our sales force and treating physicians.

However, as we ramped our hiring process for new field sales representatives accelerate our pace of new account acquisition and prepare for the launch of Pantheris, we felt that it was important to bring onboard a highly experienced and forward-thinking leader for what I believe is one of the most important functional areas for a company at this stage in our launch cycle.

Our goal is to make a good program much better, and in working with our sales and marketing teams to expand our capabilities in this area, including leveraging our current user experience with our lumivascular platform and currently available Ocelot catheters for CTO crossing as preparation for early success with Pantheris at commercial launch.

I'm looking forward to working closely with these two new members of the commercial leadership team as we build these important programs and functions which will be critical to our success with Pantheris.

In addition to these individuals, we're also successful in bringing onboard several new sales representatives in the second quarter, bringing our total quarter-end sales headcount to 38.

I'm encouraged by the quality and level of directly relevant experience these new hires bring to Avinger with years of endovascular experience at companies like Boston Scientific, J&J, Abbott, Medtronic, Fox Hollow and CSI.

We're not interested in just putting bodies on the field, but attracting and recruiting the right people with the right backgrounds in the right markets.

And then providing them with the training tools and support they need to be successful in driving adoption and utilization of our lumivascular platform products.

As stated in our last conference call, our target for sales headcount by yearend is approximately 45 qualified sales professionals.

And based on the programs we have in place and the quality of candidates we're seeing, I'm optimistic we'll not only reach our target by yearend but could possibly exceed it.

Before I turn the call over to Matt, I want to make a few comments on where we see future product development going.

We're progressing on our Pantheris product line extension strategy as well as development pathways for new applications of our lumivascular technology.

Given the impressive acute safety profile of our current lumivascular devices and our preclinical and clinical experience to-date, we are convinced that our technology platform can provide the basis for important new devices for the treatment of vascular disease in the peripheral and the coronary arteries.

Today, Pantheris is best suited to address PAD treatment in the larger vessels above or behind the knee such as the SSA and popliteal.

This segment includes the highest volume today and accounts for the largest number of atherectomy procedures.

In addition, we have active R&D programs underway to develop lower profile devices for use in procedures below the knee as well as devices that will be effective in cutting heavily calcified lesions for above and below the knee application.

And as mentioned earlier, given the very positive acute safety profile of Pantheris and our currently available lumivascular CTO crossing catheters, we're excited about the future potential of applying lumivascular technology for CTO crossing and true atherectomy in the 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 and products.

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 underserved market.

We're very encouraged by the progression of the VISION trial and by the feedback we continue to receive from physicians about their excitement for Avinger's lumivascular technology as well as our recent clinical experience with Pantheris in Germany and Austria.

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

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

Okay, thanks, Jeff.

Total revenue was $3.0 million for the second quarter ended June 30th, 2015, a 46% increase from the first quarter of 2015 and a 10% decrease compared to the second quarter of 2014.

Lightbox imaging console sales were $1.4 million, a 126% increase from the first quarter of 2015 and an 11% increase compared to the second quarter of 2014.

Revenue from disposable devices were $1.6 million, a 13% increase in the first quarter and a 22% decrease compared to the second quarter of 2014.

These revenue results reflect the Company's continued focus on driving utilization of its currently available lumivascular products and expanding the installed base of the lumivascular accounts in anticipation of Pantheris's commercial availability in 2016.

Growth margin for the second quarter of 2015 was 46%, an increase of 400 basis points compared to 42% in the same quarter of the prior year.

The increase was primarily attributable improvements in operational efficiency and the increasing proportion of revenue coming from the Company's lumivascular products.

Operating expenses for the second quarter of 2015 were $10.5 million compared to $6.9 million in the second quarter of last year.

This growth was primarily attributable to Pantheris' development expenses, expansion of the Company's commercial organization and increased expenses associated with operating as a publicly traded company.

Loss from operations for the second quarter of 2015 was $9.1 million compared to $5.5 for the second quarter of 2014.

And adjusted EBITDA which is a non-GAAP measure with a loss of $7.5 million for the second quarter of 2015 compared to $5.0 million in loss for the second quarter of last year.

Net loss attributable to common stockholders for the second quarter of 2015 was $10.2 million compared to $7.1 million in the second quarter of 2014.

Turning to our balance sheet, cash and cash equivalents totaled $60.7 million as of June 30th, 2015 compared to $12.3 million as of December 31, 2014.

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

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

And with that, we will now open the call to your questions.

Certainly.

(Operator Instructions).

Our first question comes from the line of Jason Mills from Canaccord.

Your question please?

Hi, guys.

Congrats on a good quarter and great progress.

Can you hear me Okay?

Yes, we can, Jason.

Super.

I apologize with fiver earnings calls to close tonight, I'm bouncing back and forth, so please forgive if you've already gone over this.

But I wanted to start with the lumivascular capital.

You've got a really good quarter, doubling our expectation for the number of placements you would have.

I'm wondering if you could give us a sense for the profile of those accounts.

Jeff, again, apologize if you've already gone over this.

And then also sort of the pipeline of new potential lumivascular accounts that you have in the funnel and what the second half may bring in terms of new placements.

Yes, thanks.

Thanks, Jason, thanks for your question.

Yes, we were very pleased with -- again, as we're getting closer to Pantheris but especially as we continue to hone our message and get the word out about our lumivascular current product offerings and benefits especially coming off of some of these shows where we really were I think the big news.

The profile of the new accounts that were added in the quarter were primarily hospital accounts, however, as we developed our pipeline going into the -- or third quarter which we're well into here, we also are engaging in a more wholesome way with the office-based labs.

And we're exploring certain programs to accelerate adoption and what we believe will continue to be an important segment of the market.

So, you know, as we said in our opening comments, we're also exploring, you know, different ways to may be break down some of the potential impediments and shorten the purchase cycle of our Lightbox platform, and that's being met with some success.

So again, it's all about learning, about continuing to develop our programs and our people and to expand this installed base prior to the launch of Pantheris.

You know, as Dr. Simpson said before, as we think one of the best things we can do to set up a physician for immediate success with Pantheris is to give them experience with the Ocelot catheter for CTO crossing because that real-time experience with image interpretation is invaluable to prepare our physicians and their institutions for the eventual launch of Pantheris.

So did that answer your question or is there any other detail you'd be looking for?

No, that's fantastic color, Jeff.

I'll move on to the next question, kind of a multi-part question, but there is obviously a lot of discussion in the peripheral artery disease realm about drug-eluting technologies but there's also, you know, a lot of discussion about preparation of the artery for that.

I'm wondering just, guys, you're talking -- as your reps are talking with the accounts and out there in the field, what they're seeing or hearing with respect to how the interventional market is shaping up in the area of drug-eluting balloons and what you -- whether or not you expect DEBs to augment your business once Pantheris hits the market.

And secondly, on the MEDCAC panel, there is a lot of discussion about durable results.

And, you know, one of the things that Dr. Simpson has talked a lot about is having a durable result, reducing restenosis and retreatment, and do you think you can do that with Pantheris?

I'm wondering what your takeaways were from what was discussed at the MEDCAC panel and how that sort of dovetails with your business profile.

Thank you.

And so --

Jeff, I'm going to let you -- Jeff, I'm going to let you take the MEDCAC panel thing but I would like to maybe just Jason just respond a little bit to the drug-eluting balloon.

Perfect.

This question, so the -- when we look at our VISION trial, we had maybe -- also maybe 30 patients who received drug-eluting balloons and then the physician, Dr. Brodmann here in Austria is also a very enthusiastic drug-eluting balloon person.

But she did -- we had -- so over the four patients we treated today or the last couple of days, two of them would have had a drug-eluting balloon historically.

I mentioned the angiogram [guy] and she did not do it because it actually looks too good and she didn't see what the advantage would be, like a gross, you know, tiny series what is kind of stupid maybe even for me to comment on such a limited experience except that she's very, very enthusiastic DEB person.

And the fact that very early on, she could actually have an outcome that was so impressive to her and she kept saying, they are cool, the devices were, this is cool, cool, cool.

That to me says that we wouldn't have impact but we will also require a study I think eventually to prepare ourselves to drug-eluting balloons and that could be a very important part of what we will be doing going forward.

And I think she -- everybody have sort of seen that they would respect that or would expect maybe a study and I'm -- we're very supportive of that, but also keeping in mind that there is nothing that we do that would limit the ability of anybody that wanted to deploy drug-eluting balloons, so it sort of dealer's choice at that point.

And I see it as at one point, some people I think thought of this as maybe, you know, a threat to [asterectomy].

I see it almost the difference with -- if anything is threatened, we probably threatened the drug-eluting balloon community.

But they can always be used in conjunction with each other and I think that would be something that you could expect to see.

So I think my current read, tiny read but with several of the investigators are doing a lot of drug-eluting balloons stuff is that these things will likely to be used really frequently together.

And I don't think -- I don't know, if anything we -- almost like I would say maybe they both help each other.

And once you [debulk an Ardif] they're going to put a drug in it and then you are much less likely to have a dissection when you deploy the drug.

So back to the vessel, this is real vessel prep, sometimes I think you would hear some companies are alluding to the fact that they're doing vessel prep.

I would probably dispute that.

But in this setting, when we clean these arteries out and we can confirm that they are cleaned out by OCTOBER, it's kind of the ultimate vessel prep.

And I think that's where you would -- you will see these technologies used together.

That's a long-winded answer to your question.

Helpful, thank you.

Yes.

And so I'll kind of jump in on MEDCAC and kind of where we see that, and we did address that directly, Jason, in our opening comments.

But basically, the short answer is I think very consistent with the notes that you've written, you know, we see that CMS' way of kind of encouraging those of us in the industry and medical societies to generate improved clinical evidence for the meaningful patient outcomes of PAD treatment.

And as we've talked about with you before, we think this plays directly into what we're doing with Pantheris both in the near term but also our long-term clinical strategy.

We are committed to performing, you know, long-term clinical studies after the commercial launch of Pantheris, and as Dr. Simpson said before, including head to head studies and comparative studies.

So we really believe that what we're doing is so on trend in terms of really a device that will deliver an improved patient outcome, a meaningful patient outcome, a measurable patient outcome and doing an economically responsible way.

So we didn't hear nor did our advisors here anything coming out of MEDCAC that would be concerning as it relates to, you know, reimbursement in the near to medium term.

You know, one of the things that I'm most excited about here and one of the things that we've been talking a lot about as an organization and especially now that we're engaging more directly with these bigger national accounts and new IDNs and ACOs, et cetera, is to really understand the economic value proposition we provide.

And from our perspective, that's multilayered with our lumivascular devices and especially with Pantheris.

You know, you start with strong reimbursement in the reasonable cost but we are seeing already in our clinical trial and we'll see we believe in long-term clinical studies that we can dramatically reduce restenosis.

You know, the hypothesis that Dr. Simpson formed this company around is correct.

If you can enable -- empower a physician to see what they're doing in real-time inside the vessel and they don't do damage, that should lead to dramatically reduced restenosis rates which, of course, would lead to reduced retreatment rates.

We also are seeing already in our clinical study with a very low number of stents placed and we believe this will progress over time that there is going to be much less need for adjunctive therapy with Pantheris.

That's a benefit both as it relates to the left -- you know, left knee for costly stents, et cetera, but also reduce procedure time overall.

I think the other piece of it is the reduced radiation exposure which we all know is a big issue in hospitals and other institutions now and has a direct cost for the healthcare system and even reduce exposure for the patient to contrast media.

So we really see this coming together in a very meaningful way to have a very compelling economic value proposition tied to meaningful patient outcomes.

And so we're excited, you know, we're in this for the long haul, we know it will take a while to continue to develop and build our dataset but we're committed to doing it.

Thank you and congratulations on the progress.

Jeff, let me just -- and Jason, let me just add one other quick comment today that came from Dr. Brodmann.

So she is -- obviously, when the CTO crossing with the Ocelot, you don't use very much radiation.

But she also has confirmed me today that you'll have to have very much radiation during atherectomy with the Pantheris.

So she told her assistant today that anytime on the floor -- and she told them really directly, Stop it, don't do that, because she was -- she -- they were -- they were in the Pantheris without -- because there is no real information on the [first scope] is going to tell you what are you doing, if I had turn to her, her assistant and another interventionist in this room, Stop it, don't do that.

It tells you how empowering this whole thing is I supposed.

It's my impression.

Yes, very intuitive.

Thank you, Dr. Simpson.

Thanks, Jeff.

Thank you.

Our next question comes from the line of Josh Jennings from Cowen & Company.

Your question, please?

Great.

Good evening.

Thanks a lot, gentlemen, and congrats on the CE Mark approval.

And just on that point and with the continuing [access] program in the US, I just wanted to get a sense of how we should be thinking about Pantheris catheter sales for the rest of the 2015 or my assumption is they're not going to be impactful or meaningful with no change in guidance but I just wanted to get an idea of a sense there.

And how should we be thinking about the European opportunity in the near term and long term?

I know you have a lot on your plate for the US commercialization and ramp it but just for the CE Mark, I just wanted to address that.

No, that's a great question.

Thanks for asking that, Josh, because we probably should have clarified a little more around that.

The purpose for getting CE Mark for Pantheris is really to empower our clinical programs so that we can have access to physicians and treatment centers in Europe for continued learning especially as we continue to develop and iterate our device in preparation for commercial launch.

We don't expect any revenue related to Pantheris internationally this year.

That's not in our plan and not really the purpose for our European program.

In the near term and following, you know, FDA approval and commercial launch of Pantheris, we are focused on the US as our primary market opportunity based on the interactive reimbursement environment, based on the way that we're building our direct sales force and distribution capabilities and all the reasons that I think you're well aware of.

We do -- we are in the process now of exploring -- actually JD Simpson, our VP of Business Development, is leading this, exploring international opportunities both for our, you know, non-imaging devices as a way to potentially set up distribution for further expansion or launch of our lumivascular platforms.

But that's in the early stages of kind of strategic development.

I would -- I would expect that the significant revenue ramp in the vast, vast majority of revenue related to our lumivascular products including Pantheris will continue to be in the US market, you know, at least through next year.

Great.

It's very helpful.

And then I just wanted to follow up on your comments, Jeff, on the potential filing of the special 510K for the enhanced version of Pantheris.

I think you spoke on some improvements in ergonomics and I believe Dr. Simpson mentioned on the last earnings call that the move to a single operator approach has been achieved.

Is there anything else that we should be expecting in this application?

And then how should we be thinking about the potential timing of device iteration and incorporate to a cutter specific for highly calcific 1lesions?

So JD, I don't know if you want to talk at all about the kind of some of the improvements of the device from a clinical perspective and then maybe I can take the second half of the question?

Yes, I think we are very, very attentive to all of the issues that we -- all the concerns, I'll say, that physicians had in the VISION trial and they were not extraordinary.

But there's just always ease of use things -- so two operators in every case and nobody wants to go to a single operator, maybe with an assistance from a radiology technician or the [scrub tech] nurse.

And so we've really focused a lot of attention on that and I would say that with Dr. Schwindt in Muenster which I worked with last week and -- what I said today, also Dr; Brodmann, that this whole single user thing is absolutely achievable and we've come really close to it, maybe a few more refinements in that.

It's a matter of ease of use things related to the device which are - would go beyond single user.

We have a much better control or a [bud] flow, much better images than we probably had during the VISION trial.

In addition to those improvements, then the calcium cutter, we do have prototypes that we have evaluated [Cadarva] model that looks, you know, promising.

It would be just gross to say that, you know, we'll be launching that next week.

But I do -- I will say that our team knows a lot about cutting calcium.

The fact that we can see it, look at it, sit on it and cut on it, differentiates us from all the other existing technology that do [in fact they] cutting calcium.

So I think we are making substantial improvements in ease of use that are really, really notable from the physician's perspective and I also think that, you know, smaller devices, [blow the knee] devices, you know, at some point, coronary devices but also, you know, a calcium [current] devices are definitely within the scope of our technology base and the expertise of our engineering group.

And the only thing I would add to that and I think Dr. Simpson mentioned this in our last conference call that based on the improvements in blood flow management, we believe that we have eliminated the need for an occlusion sheath which we see as a substantial improvement in the device overall.

The other thing that, you know, just to get to your second part of your question around timing, you know, we are focused on filing obviously the 510K application for the clinical device just as soon as we possibly can.

Our goal is as soon as we get that approval or soon after we get that approval as plausible that we're in a position to file a special 510K on the -- on the commercial device, kind of this iterative device that Dr. Simpson is talking about.

The changes are not so profound that we anticipate that this will be -- you know, that this will be suitable for a special 510K, of course, that's not ultimately going to be in our control.

But that is the strategy and approach and then what our advisors and our internal experts are guiding us to.

So our -- we will launch, you know, with the devices size for really primarily the SSA and popliteal although, of course, you know, our labeling is about vessel size, not necessarily above or below the knee.

And then we will -- as Dr. Simpson said, we're making great progress both on the lower profile devices for the smaller vessels which typically are below the knee as well as the calcium cutting.

And we haven't guided specifically to timing on that.

But we're making good progress, and our goal is to, you know, file and get those devices launched as soon as we practically can, you know, coming after the initial launched product which will be, Josh, to be clear, in the, you know, larger vessels, in the SSA and popliteal.

Great.

Thanks, Dr. Simpson and Jeff.

Thank you.

Thank you.

(Operator Instructions).

Our next question comes from the line of Chris Cooley from Stephens.

Your question, please?

(Multiple Speakers)

Could you just maybe relay maybe some (inaudible) regarding the changes at the [vanity] level sales side.

Talk to us about maybe how sticky the sales force is here at this critical juncture as you build up before the launch?

Thank you so much.

Yes, thank you, Chris.

It's a little hard to hear you but I think what you had asked about is just a little more texture around the changes in the sales management and just kind of how sticky we feel the sales force is as we -- as we move forward?

So first of all, you know, obviously, it's un fortunate, right, to have to make a management change so quickly in the sales area, but, you know, our philosophy and really, you know, this is the management team, the board and, you know, John Borrell also feel that if we didn't believe this isn't going to be a good long-term fit that we should -- we'd be better off both for him and for the company to move quickly.

And so fortunately, we have a very strong group of regional account directors who have been with us for quite a while.

We also, our regional directors, sales directors, we also have added some very good strong senior talent in the national accounts role who already I see making an impact on our organization.

My background as I think you know is a commercial background.

You know, I built and managed until I brought in management, you know, sales forces at two previous companies in the healthcare space.

So I feel very comfortable in the role.

And kind of selfishly, I do like the idea of being able to get very, very close to the sales process and organization to better define what our needs are and how we -- how we can kind of optimize that higher.

In the meantime, I don't think we'll miss a beep.

We've added really some very strong talent over the last -- over the last quarter.

We have active, you know, racks, (inaudible) our job requisitions open and in process for several more new sales hires in a -- in an important strategic market.

We're trying to be very thoughtful and strategic about how we approach building the organization.

I mean we have several people here this week for an intensive training session.

And I've had the pleasure to spend some good one-on-one time with most of them and I am just blown away by the level of experience that these people bring to the company.

And I think they will ultimately teach us and make us better too but we're still in a development and learning mode.

You see that our commercial programs are bearing more fruit.

We expect that to continue to move forward in a positive way and to, you know, kind of move forward in a better position than we were before.

Any other follow-up, Chris, or --

Thank you.

And our next question comes from the line of Steven Lichtman from Oppenheimer.

Your question, please?

Thank you.

Hi, guys.

Just two questions.

First, how should we think about the cadence of the launch in the first half of next year, you know, before the enhancements are approved and after, what -- how should we be thinking about that initial launch before the special 510K gets approved?

Yes.

I mean I would -- I would think of it, Steve, as more of a limited launch so that we can legally and aggressively start to promote our Pantheris system and program, and then for us to really, you know, advance our efforts further and drive more, you know, real revenue growth on the commercial launch or commercial approval and launch of that device.

I don't know if that -- if that gives you kind of the guidance and direction you're looking for.

But I think, you know, more of a limited launch on the clinical device and then a more -- you know, more of a revenue ramp and broader commercial launch on the next-generation device that we'll file the special 510K on.

Okay, great.

And then -- and then , Jeff, you know, the significant reduction in radiation exposure certainly is a positive for physicians and patients.

How do you see advocacy for that particular aspect of lumivascular up to the C-suite of the hospital?

Do you expect physicians to be the driving force of that particular aspect of the -- of the platform?

Well, I do think it is an issue that is extremely -- that the C-suite is extremely sensitive to because this is, you know, costing so much money in healthcare systems.

There is a -- which I'm sure you're familiar with the radiation safety officers in hospitals are more and more powerful in these institutions and are driving a lot more sensitivity as well.

So, you know, for us, it's aligning with our physician users and champions.

It's aligning with and presenting and building a compelling book of evidence, you know, even beyond some of the smaller scale studies that we've already completed and empowering the radiation safety officer as well to be our partner in the C-suite as we -- as we communicate some of these programs.

You know, I see it as one of many, many benefits that we provide but an important one.

It starts with a great clinical result and patient outcome, reduced restenosis rates, you know, reduced need for adjunctive therapy we believe we can show.

But this is a benefit that is unique to us.

And, you know, I'm honestly a little bit just surprised at just how important this seems to be to position especially, you know, some of the younger physicians who are driving, you know, more and more of the volume and will be the future of the interventionist.

Dr. Simpson, I don't know if you want to add anything to that.

Yes.

So everywhere I go now, I would say that the concern about radiation exposure has finally gone beyond the doctor and the doctors have always had this BS way of managing their radiation exposure but they just they just take off the radiation bags so they don't get as much documented radiation exposure.

But the C-suite guys, the radiation safety specialists now are saying that that's -- that goes away.

And the hospitals are going to be compelled to say, We have an opportunity here to perform interventions with less radiation exposure to everybody.

And that will help out with their hiring policies within the hospital and help out with the referral base and it will help -- it creates a lot of physicians.

I mean one of the doctors today who is not the - worked with Dr. Brodmann said that, I really like the images.

I like being able to.

I do feel like I'm more confident.

I feel like this is safer but I really would look forward to even a further reduction in radiation exposure, and that's really one of the things that motivated him.

And I mean I think that it goes upfront, those guys goes to the C-suite.

I think this is -- will be a growing -- it's already a concern but I think you'll see growing momentum behind trying to do something about it.

But historically, the everybody is being concerned about it but -- the thing they do about it so much so that we're stuck with, you know, better shields, better [lead aprons].

So I think that it's a big deal and I think we're getting -- we're getting an exposure to that.

So it's just having Dr. Brodmann tell the guys to (inaudible) when he put on - stepped on the floor pedal, You know, stop it, don't do that.

It's just like, Whoa, I mean I don't know, maybe it's just fun for me too, I don't know.

And the risk of over answering, you know, I would look two vascular surgeons at SVS who -- one of the reasons that they were really interested in talking to us at that show is both of them had been asked to sit out for two weeks and not perform procedures because their radiation levels had gotten too high.

Boy, that's a real cost, cost to them, cost to the hospital, but anyway, I think we probably -- we probably answered too much here.

You can tell how excited we are about this potential.

Thanks so much.

Thanks for the color, guys.

Thank you.

This does conclude today's conference call.

You may now disconnect.

The question-and-answer session of today's program.

I'd like to hand the program back to Jeff Soinski.

Well, thank you so much for joining in our call this afternoon and especially thank you for your thoughtful questions.

We look forward to reporting on our continued progress on our next conference call and have a great evening.

Thank you.

Thank you, ladies and gentlemen, for your participation in today's conference.

This does conclude the program.

You may now disconnect.

Good day.