Avinger Inc (AVGR) 2015 Q3 法說會逐字稿

Good afternoon, ladies and gentlemen.

My name is Bridgette and I will be your host operator for this call.

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

Instructions will be provided at that time.

(Operator Instructions)

Please note that this call is being recorded today, Thursday, November 5th, 2015.

It 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, Bridgette, 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 third quarter ended September 30th, 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 were made pursuant to the Safe Harbor provisions 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.

Forward-looking statements, including without limitation, are 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 risks 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, November 5th, 2015.

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

Thanks, Leigh.

Good afternoon and thank you all for joining us.

Over the past several months, we've achieved several important milestones toward our goal of becoming the leading provider of image-guided medical devices for the treatment of vascular disease.

At the beginning of the year, we outlined three strategic initiatives to guide our progress; first, the successful completion of our VISION clinical trial to support a 510(k) submission for our Pantheris image-guided atherectomy device; second, increasing the installed base and penetration of our Lumivascular platform and driving utilization of our currently available image-guided catheters for CTO crossing; and third, building our sales and marketing infrastructure in anticipation of Pantheris launch in 2016.

As I'll share with you in a minute, we've made significant progress this quarter on each of these key initiatives and I'm pleased to report that we're on track to achieve our most important objectives.

After I review our progress, Dr. Simpson will provide perspective on the six-month results from the complete patient cohort in our VISION clinical trial which were presented at VIVA earlier this week.

We'll also provide an update on the progress we're making with enhanced durations of our Pantheris device and discuss next steps related to our early 2016 launch of Pantheris in the US.

Matt will then review the financials and our 2015 outlook.

And following that, we'll open the call for your questions.

Starting with Pantheris.

As most you on the call know, we filed our 510(k) submission with the FDA in August, a couple of months ahead of schedule.

And in October, just over 60 days after submission, we received 510(k) Clearance from the FDA to begin US commercialization.

This earlier than expected submission and clearance was based on the strength of the six-month data from an interim cohort of 93 patients in the VISION trial.

These data were presented in October at the Transcatheter Cardiovascular Therapeutics, or TCT medical conference, by a principal investigator for VISION, Dr. Arne Schwindt of St.

Franziskus Hospital in Munster, Germany.

As previously reported, Pantheris surpassed the primary safety and efficacy endpoints in this cohort.

Just this Monday, at the Vascular Interventional Advances, or VIVA annual conference in Las Vegas, Dr. Schwindt presented six-month data from the complete patient cohort of a 130 patients treated per protocol in the VISION trial.

Dr. Simpson and the Avinger team have worked very closely with the physician investigators participating in the our VISION study as well as physicians currently using our enhanced Pantheris devices in Europe.

At this point, I'd like to turn the call over to Dr. Simpson to provide his perspective on the VISION results and our continued improvement of Pantheris.

John?

Thank you, Jeff.

Of course, a lot of this will go without saying but I am exceptionally pleased by the clinical and scientific outcome of the VISION trial.

This is such a special time in Avinger's history.

In my almost decades-long endeavor to combine intravascular imaging with directional atherectomy, this is really a momentous time for me.

I want to sincerely thank the entire Avinger team and all the docs, the physicians, the patients who participated in the clinical studies, provided such valuable feedback on our technology and helped us really refine some of the elements in our current devices.

Full VISION result demonstrates successful achievement of all of our primary and secondary safety and the effectiveness endpoints.

Notably, the primary safety endpoint related to the incidence of major adverse events, or MAEs, was 17.6%, measuring well below the pre-defined study limit of 43.2%.

There were zero Pantheris-related dissections or perforations across all lesions treated, which is also quite notable.

Target lesion revascularization, or TLR rate, through six-month follow-up was just 8%.

As previously reported, the primary efficacy endpoint of residual stenosis less than or equal to 50%, just using the Pantheris alone for treatment, was achieved in 96.3% of the lesions; so significantly outperforming the pre-defined study goal of 87%.

Data and analyses from the complete patient cohort of 130 patients treated for protocol have been filed with the FDA to supplement the 510(k) Clearance for the Pantheris with the smaller data set.

In addition to these excellent clinical results, I'm particularly encouraged by some of the more detailed trends reported in the study.

And for example, the 31 CTOs, or the chronic total occlusions, treated in this study, only one stent was used, and this is quite remarkable.

The TLR rate of this subgroup was just 6.5% which also is quite remarkable.

And nearly all of these CTOs were crossed with Ocelot prior to treatment with the Pantheris.

So the results suggest that if you stay intraluminal and the true lumen using the Lumivascular technology, a better result can be achieved in the CTOs reducing recurrence and also reducing requirements for stenting.

We're also encouraged by trends across a number of key metrics as investigators gained experience with Pantheris.

After the operators' first couple of cases, lesion length tended to increase, so the doctors were willing to do longer lesions, evidentitial damage or resection, if you will, have decreased, and then the TLR rates also decreased.

To put numbers on that last point, after five procedures the TLR was 2.9%.

And then after 10 procedures for an individual operator or physician, the TLR rate was actually zero.

So while I'm thrilled with the initial results of the VISION trial, we have reasons to believe that Pantheris outcomes may get even better from here.

As we mentioned on our last conference call, Pantheris received CE Mark approval during the second quarter of this year, which provides an excellent opportunity for us to gain additional clinical experience in Europe with an enhanced versions of the Pantheris design to improve user interface and to streamline the procedure.

Physician investigators in Germany and Austria are currently using the newest version of the Pantheris, if you will, providing viable feedback on the features and designs that we have incorporated as to primarily improve and enhance ergonomics.

With the FDA approval of the clinical version of Pantheris completed, we are continuing to test CE Mark devices to get feedback from our collaborators in Europe as we prepare for our filing of a special 510(k) on the commercial version of the Pantheris that we anticipate will be available in a broad-scale product release within the first quarter of 2016.

The improvements in the commercial Pantheris include lower catheter profile, simplified physician control and improvements in manufacturability.

I've now been in most the recent cases with these Pantheris catheters and with these enhancements in place as they had been evaluated.

I can tell you the general feedback from the physicians performing the procedure has been really very positive.

Beyond the feedback on the actual enhancements, the physicians were equally impressed by Avinger's ability to listen to their concerns and quickly address them with creative solutions.

As some of you have heard me say before, we can't muscle the big companies in our space that's pretty well established there.

So, we have to outrun them, and that is my commitment and that has always been one my missions.

So -- and of course, we're not stopping here, not even close, so we were making great progress on devices with improved calcium cutting, also with the version of the Pantheris sized for below-the-knee treatment and looking forward to getting these devices into clinical testing as soon as possible.

With that, I'll turn the call back to Jeff to continue the review of the Q3 highlights.

Jeff?

Thanks, John.

I'd now like to update you on the progress we've made on our other two key strategic initiatives.

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

Our FDA-cleared Lumivascular product offerings include our Lightbox imaging console, our Ocelot family of catheters for CTO crossings, and now Pantheris.

As we've mentioned on previous calls, our objective is to build sales on a true platform approach with all our current and future image-guided catheters leveraging and expanding our installed base of Lumivascular accounts.

During the quarter, we've gained significant momentum in establishing Lumivascular platform sites and driving catheter utilization.

We achieved a 10% increase in catheter sales compared to Q2 through our efforts at existing as well as new accounts.

In total, we added 14 Lightbox imaging consoles to our installed base including a second Lightbox added to an existing account.

This increased our installed base by 13 to a total 82 Lumivascular accounts at the end of the third quarter.

We believe that executing on a strategy to expand our account base by targeting higher volume institutions will be key to our long-term success.

During the quarter, we began piloting some different programs for Lightbox acquisition including a placement-to-purchase option in order to more rapidly increase our installed base of productive Lumivascular accounts.

Of the 14 Lightboxes acquired this quarter, five were sold and nine took advantage of one these pilot programs.

We're encouraged by the early response to these expanded programs and pleased that we were able to more -- we were able to more than double the number of new accounts compared to the second quarter.

As we progressed towards Pantheris commercialization, we intend to continue to refine and formalize the ways that hospitals and outpatient labs can acquire Lightbox.

We expect the accelerated pace of new account acquisition to continue throughout the remainder of the year as we continue to build awareness of the unique benefits of our Lumivascular platform and get closer to the anticipated broad-scale launch of Pantheris in early 2016.

While we delivered faster-than-planned expansion of the installed base of Lumivascular accounts in the quarter, we had more accounts opting for a Lightbox placement rather than a purchase at the time of initial use.

While this accelerated the process for targeted customers to begin gaining experience with our Lumivascular platform through utilization of our Ocelot catheters which we believe is the ideal preparation for Pantheris, it does push out the potential purchase of the Lightbox and associated revenue to a later date.

This is a strategic choice on our part and we expect it will more efficiently yield target accounts along with a more predictable stream of recurring revenue from catheter sales over time.

With our commercial launch of Pantheris fast approaching, our third strategic initiative for the year is to build and strengthen our commercial organization.

During the third quarter, we continued to make progress in building our field sales force, increasing our total sales headcount of 41 at the end of the quarter.

We continue to be strategic in building our sales and marketing team, and have been successful in bringing a number of professionals into the organization with significant vascular experience from companies like Boston Scientific, Covidien, Abbott and CSI.

We're committed to supporting these new team members with the training, tools, and support they need to get up the speed quickly and be successful in driving adoption and utilization of our Lumivascular products.

With the earlier-than-anticipated approval of Pantheris, we've increased the pace of hiring in the fourth quarter and now expect to end the year with approximately 55 people in our sales organization compared to our previous target of 45 by yearend.

During the quarter, we also engaged in a process to identify a new senior leader for the sales organization.

Here, too, we've attracted candidates with exceptional experience and credentials.

We're focused on selecting an individual who's a strong cultural fit with our existing organization and who also has the capacity to lead our commercial efforts into the future.

We look forward to completing this process in the next few months and will announce our selection once he or she is onboard.

Before I turn the call over to Matt, I want to build on Dr. Simpson's earlier comments on where we see future product development going.

We're making good progress on our Pantheris' product line extension strategy.

Pantheris is configured today as best suited address PAD treatment in the larger vessels above or behind the knee such as the SFA 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.

On a longer-term basis, given the impressive acute safety profile of our current Lumivascular devices and our pre-clinical 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 coronary arteries and see a tremendous benefit for CTO crossing and true atherectomy in the coronary arteries.

In summary, I'm pleased with what we've accomplished so far in 2015 but I also recognize that in many respects we're just getting started to realize the benefits of our Lumivascular approach.

We've executed against our three key strategic initiatives, including successful completion of the VISION trial and 510(k) Clearance for Pantheris, the continued increase the number of Lumivascular accounts and programs to drive utilization and the development of our sales and marketing infrastructure.

I believe we're well positioned to move towards the next stage of growth driven by the broad-scale commercial launch of Pantheris in the early 2016.

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

Thanks, Jeff, and good afternoon everyone.

Total revenue for the third quarter was $2.7 million, a 3% increase compared to the third quarter of 2014.

Lightbox imaging console sales were $0.9 million, a 16% increase compared to the third quarter of 2014.

Revenues from disposable devices were $1.8 million which is a 2% decrease compared to the third quarter of last year.

As Jeff alluded to, these revenue results reflect a higher number of Lightbox placements and the lower number of upfront sales as the Company focuses on driving utilization and growing its total installed base in anticipation of the Pantheris launch.

Our increasing flexibility on deal structures whereby a qualified account can acquire a Lightbox reflects conscious decisions on our part.

We firmly believe our willingness to evolve our business model will translate to a larger installed base of high utilization accounts, compared to a strategy that only allows the option of outright purchase of the Lightbox at the at time of initial use.

Gross margin for the third quarter of 2015 was 36%, down from 44% in the comparable quarter of 2014.

The decrease was primarily attributable to the increased manufacturing overhead expense as we invest in operational infrastructure to support anticipated growth and increases in manufacturing capacity in preparation for the launch of Pantheris in early 2016.

Operating expenses for the third quarter of 2015 were $10.8 million, compared to $7.3 million in the third quarter of 2014.

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

Loss from operations for the third quarter of 2015 was $9.9 million, compared to $6.1 million for the third quarter of 2014.

Adjusted EBITDA, a non-GAAP measure, was a loss of $8.3 million for the third quarter of 2015, compared to a $5.6 million loss for the third quarter of 2014.

Net loss attributable to common stockholders for the third quarter of 2015 was $13.3 million, compared to $8.8 million in the third quarter of 2014.

The net loss for the quarter includes a $2.1 million, one-time charge related to the debt refinancing we completed in September.

$1.2 million of this charge is a non-cash expenses and the remaining $900,000 relates to a residual obligation with our former lender with the cash payments associated with this expense spread out over the next 11 quarters.

Turning to our balance sheet, cash and cash equivalents totaled $54.8 million as of September 30th of 2015, compared to $12.3 million as of December 31st of 2014.

Quarter-end cash includes the net inflow of $2.8 million as a result of the debt refinancing and equity issuance transactions we completed in September with CRG.

This deal also allows us to draw down an additional $10 million any time through the end of Q2 2016 based on the receipt of FDA approval for Pantheris which has already occurred.

It also provides for a third tranche of $10 million based on achieving a minimum of $25 million in revenue in 2016.

This access to additional capital at the Company's option gives us significant strategic flexibility as to when we return to the equity markets to raise additional capital.

Now turning to our financial guidance, we are updating our guidance of total revenue and adjusted EBITDA to reflect our year-to-date results and a faster-than-planned expansion of new installed base of Lumivascular accounts but with fewer new accounts purchasing a Lightbox at the time of initial use.

2015 revenue is now expected to be in the range of $10.5 million to $11.5 million, representing a year-over-year change from a 6% decrease to 3% growth.

In order to ensure a successful initial launch of Pantheris, we have also brought forward some of the spending and organizational expansion we?d previously anticipated for 2016.

Jeff discussed the accelerated growth of our commercial organization and we are also growing our operations team more aggressively than originally planned.

As a result, adjusted EBITDA for 2015 is now expected to be a loss in the range of $33 million to $35 million, which is a $2 million increase compared to our previous guidance, which called for an adjusted EBITDA loss of $31 million to $33 million for the year.

We firmly believe this additional investment is prudent in light of the great opportunity that we have in front of us for 2016 and beyond.

And at this point, we will now open the call for your questions.

Thank you.

Thank you.

(Operator Instructions).

Your first question is from Jason Mills of Canaccord Genuity.

Your line is open.

Hi.

Thanks for taking the question.

Jeff, can you hear me Okay?

Yes, we can you hear you fine, Jason.

Thanks.

Great.

Congratulations for all the progress on your three initiatives.

I wanted to ask you a question, just with respect to Pantheris and ultimately the launch.

You got approval a couple of months ahead of time for the clinical version, as Dr. Simpson said, and you're towards filing the special 510(k) for the commercial version.

Could you a put a finer point on what sort of processes and milestones that are still left for you to accomplish for you to be able to file that with FDA and your confidence that the pathway will be a special 510(k), and sort of maybe a finer point to the timeline within which you expect to release that to the market?

Okay, great.

Jason, thanks for the question.

Yes, we're very close to filing our special 510(k) and we can say with a lot of confidence we'll be filing this quarter.

As you know, we've been iterating the enhanced the enhanced versions of Pantheris through clinical experience in Europe under CE Mark.

We received two CE Marks this year.

So we have a lot of data on the devices; clinical data is not required for a special 510(k) submission, although of course, we do have completion of all the pre-clinical testing and the animal studies et cetera.

So we are well along in the process to file the special.

As you also know, special 510(k) has a 30-day review period compared to the 90-day review period for traditional.

The determination to file a special or a traditional is really based on the amount of change that you're making to the approved device.

Both based on input from our internal regulatory experts as well as external advisors, we feel confident that this product and the improvements we've made qualify for a special.

However, the final determination of that will be made by FDA.

Even so, whether this is a -- you know, we believe it will be a 30-day review period, but if it were to some -- for some reason, be extended to a 90-day, it would still put approval within the first quarter, that's why we feel very confident making the statement that we'll be launching the enhanced version of Pantheris in a broad commercial basis in the first quarter.

Okay.

That's helpful.

And then my final question, just on the Lumivascular placements, as you know, I've been somewhat opinionated about having a mix, and so it's actually gratifying to see that you have evolved to a placement-to-purchase model.

We've seen that work for other companies in your space so that's not a surprise to me.

I guess my question is related to the type of accounts that you're getting into now.

I think you beat our expectation for placement this quarter by 2x, so I'm just wanting to know the composition of those accounts, sort of what sort of volumes they're doing in atherectomy.

And I guess ultimately, what this means for your growth trajectory in 2016, so I know you haven't given guidance, but maybe relative to some of the expectations the Street that is out there in terms of your Pantheris uptake.

Thanks, Jeff.

I'll take those in a couple of parts and ask Matt to jump in as well.

But you know, we are prioritizing as I think -- you know, hopefully, came across in our opening statement, prioritizing, getting Lightboxes into higher volume target accounts so that we can really establish a strong installed base in advance of Pantheris, also so that we can get clinical experience or give our physicians clinical experience with image interpretation and Lumivascular using our Ocelot catheters.

So we're really thrilled with how much we were able to accelerate the growth of the installed base, especially when you consider that was in the third quarter, which is typically a tough quarter for capital equipment.

As it relates to the hospitals and institutions we?re in, largely our current base is a mix of community hospitals that are performing a lot of procedures and teaching hospitals, but we've had very limited presence in the OPL.

In the third quarter, we really -- we added a number of community hospitals.

We added in the teaching hospital areas as well.

But there were five outpatient labs that were added to our installed base.

So one of our objectives going into quarter was to get more experience in outpatient?s labs.

As you know, that's becoming a more and more important part of the equation as it relates to endovascular treatment of vascular disease.

So our mix is evolving a little bit in the third quarter relative to the past.

But you know, overall, our installed base is still heavy on hospitals.

But we're gaining valuable experience and learning already in the outpatient labs and I think we'll continue to learn from our experience across all segments to refine our approach.

We do plan on even expanding further options for capital acquisition and platform acquisition so that we can build that installed base most efficiently in the targets that are going to drive the volume for us with Pantheris.

Okay.

Just adding on to that a little bit, Jeff thinking about Q4 and even beyond that a little bit.

We've clearly seen a nice acceleration as we've moved through the year Q1 to Q2 to Q3 in the number of new accounts that we've been able to bring onboard, and I think it truly made a big difference for us, being open minded and being flexible on the deal structures that we allowed for in Q3.

And I think you really saw that result come through in the 13 new accounts that we were able to open up and 14 Lightboxes that we're able to get out in the field.

I would expect that to accelerate in Q4 further.

You know, I don't think we count on doubling every quarter.

But we would expect to increase from what we were able to do in Q3, both because it's more of a strong quarter seasonally, but also because we're right on the verge of the commercial launch of Pantheris and we actually have approval to go out and market Pantheris and talk to customers about it in a way that we're really not allowed to do prior to that approval in October.

So, Jason, I don't think we're quite ready to give numbers for 2016, but I think directionally, we are seeing this acceleration quarter to quarter, and I would expect that to continue in Q4 and continue in 2016 in terms of the number of accounts.

And probably, the next most important question to ask is, what we're giving next of placements versus purchases, and that again is very hard to predict but I think that the ratio that you saw in Q3 is probably a good indicator of what we could think about going forward, so that was just right around one-third purchased out of the total number of new units that went out.

Thank you for that.

That was my follow up.

I'll get back in queue.

Okay.

Our next question is from Chris Cooley with Stephens.

Your line is open.

You can hear me okay?

We can hear you fine, Chris.

Great.

I just want maybe to follow on to Jason's line of questioning there a little bit.

You know, in the prior calls, you?ve kind of given us some color regarding pricing on the systems and, yes, I don't want to be myopic here looking at the quarter, but do you think it might be helpful to help us frame up maybe what the transition to the -- to the more flexible as shall we say to the quarter have (technical difficulty) but also help us a little bit as we think about our modeling into the fourth quarter, then I just had a quick follow up.

Chris, you broke up in the middle of the question there but I think you're asking about just general -- the general structure to the placement approaches or --

Yes, (technical difficulty) the most flexible purchase option for the Lightbox during the course of the quarter, you wouldn't seen that mix shift, can you help us kind of think about what the incremental revenue might have been in the third quarter?

I'm just trying to think about that as we didn't triangulate for our models for the fourth quarter.

Yes, I think I understood the question, thinking of a couple of parts there as I understood it, kind of what the opportunity for additional revenue might have been maybe if we had had a more rigid program of only selling Lightboxes as opposed to the placement program that we started piloting in the end of the quarter.

And I think your other question had to do with pricing and what we have seen and we could expect on forward there.

So maybe you can speak to that and if there are follow-ups, we can start to take them.

Yes.

As we looked at the quarter, we definitely are still interested and we are setting up these programs for the ability to convert to a purchase.

But part of what's driving us here is there's just so much value in this Lumivascular approach and we're so confident that as physicians get this platform in their hands, they're going to start to realize that benefit, combined with the fact that we now can aggressively go out and speak about Pantheris and the benefits that that will provide.

It's kind of hard to quantify, Chris, what was the impact on revenue -- just because we're moving these processes forward, maybe there were a couple of Lightboxes that could have been impacted.

But that's a small tradeoff compared to the dramatic acceleration in the installed base.

So as we go forward we're still being very thoughtful and we're being very careful to qualify accounts, do a better job of targeting accounts and get the kind of buy in and commitment upfront including in negotiating Ts and Cs, et cetera, that lead naturally to a purchase.

So, again, maybe take this as a lot of confidence in our platform and the experience we know that we can deliver with Lumivascular, but also to give ourselves a chance to spend more time getting doctors ready in advance of Pantheris.

So one thing I realized too, and this isn't a direct answer to your question, but we continue to make a significant amount of progress in our discussion and dialogue with large national accounts highly compliant GPOs, big healthcare systems.

Because this whole economic value proposition that we?ve talked about I think on past calls with reasonable pricing, competitive pricing on our catheters in light of strong reimbursement for atherectomy, limiting harm to the vessel and the need for re-treatment, providing a great standalone result with -- as you saw 4% bailout stenting, less need for adjunctive therapy.

And especially, we are almost surprised at just how strong the response is to the benefit we provide in radiation reduction and reduction and exposure to contrast media for patients.

You know all of that really wraps up together into a very compelling proposition, and we find these large forward-thinking systems and national accounts are really responding well to that story, want to partner with us to help develop that model.

So, I'm confident that that set of benefits will really help us continue this acceleration, as Matt said, going into the fourth quarter and beyond, and this is just part of our whole strategy of identifying and removing any potential impediment to adoption because we want to drive that recurring revenue stream and fulfill Dr. Simpson's vision of getting this advanced therapy into the hands of the most physicians as possible.

Thank you.

The only thing I'd add on to that, Chris, is that I know you -- I think part of your question was about pricing and that I would just say that what we experienced in third quarter, we had the five Lightbox units that were sold and we recorded approximately $900,000 in revenue and I think that's a good guide of where pricing is on average for a Lightbox.

There are a lot of factors that go into the situation at each individual account, and each individual sale.

But I think that's a good indicator and I wouldn't say that we see a lot changing in terms of the pricing on a unit basis for Lightboxes when they are in that sale category.

Understood.

And if I could just quickly follow up clearly, we were at VIVA earlier in the week, tremendous six-month data there.

When we think about early adoption as you start to launch as we go on to 2016, how do you envision utilization transitioning over to Pantheris from existing devices?

Will this be relegated to more lipid-laden plaque in the early stages, obviously, in the larger vessels, but I'm just trying to think about (technical difficulty).

So yes, this is John.

I would be honest to say that we'll be a little bit mysterious.

But certainly, I have to say that focal disease like you've said lipid-laden -- relatively, focal stenosis and/or a moderate CTOs will be particularly popular, that's where the transition will start really quickly.

And you know, that quotes, at VIVA, from a doctor to say that "I'm going tomorrow to my CEO," and they never said that as it related to the Ocelot.

So there's this kind of really genuine excitement because the Pantheris competes with all the other technologies in general and is really extraordinary in terms this is only one that offers any opportunity at all to reduce radiation exposure.

So I think the enthusiasm is going to be really large.

I don't anticipate that we'll see nearly as much pushback as we kind of -- I would say with the Ocelot.

There's also no really easy, cheap, thing to divert back to if you don't like what you're -- what's happening with Pantheris; so whereas with Ocelot, you have the option to go to a guide wire.

So I think the transition is likely to be -- although the way you've outlined it, it will be more the focal disease or say medium-length CTOs that are still relatively non-calcified.

We are making great progress on the calcified cutter and I think we'll see that.

As soon as we get out there, we're going to see it and I think that there is -- I do not see any major impediments to really pretty rapid adoption and I think even more rapid adoption than we had at (inaudible) to be honest with you.

Thank you.

Your next question is from Josh Jennings with Cowen & Company.

Your line is open.

Hi.

Good evening, gentlemen.

Thanks.

Dr. Simpson just commented on some feedback you got from clinicians at VIVA, I was hoping if you could just build a little bit on that with the impressive data at TCT and then the incremental final data presented at VIVA this week, some of the responses by clinicians and then maybe how your interactions at the booth went earlier this week, would be great.

Yes.

I would have to say that this was -- the VIVA exposure was unique for us.

Historically, we've been a little bit of not featured, let's say at VIVA and not very high on the minds of the physicians and this time, it's totally different.

It was palpable in terms of the different interest that they have in the current technology.

Then driven -- it's still very dramatic because as I just said about this opportunity to reduce radiation exposure and to get better, the acute outcomes, the no perforations, no dissections and the very low stent rate in the CTO was kind of staggering for all of the observers and all of the docs.

And it's third party adjudicated data so it's not really disputed.

So they had to -- and it's exciting to see some of the real skeptics and you would know them by name, were like, wow, huh, I need to get in involved in this and one I don?t know if we?ve already mentioned this or not, said that she's going to right away to her CEO tomorrow, maybe I already mentioned that.

But it's just a very different kind of experience than we have had there at VIVA previously.

A lot of it driven by the combination of the data and then sort of the intuitiveness of it and the case examples that we could show where we could cut down to the median and stop, and do that on purpose over and over again.

I think it became more convincing this year than ever before, mostly because we had Pantheris to offer up alongside the Ocelot.

It's kind of interesting too that the Ocelot utilization, in my mind, would definitely be accelerated now that Pantheris is available because people realize that to cross the CTO and clean it out with the Pantheris, you should be crossing it centrally in the lumen, let's say.

I believe that will be very popular too.

We had -- I think our recurrence rate in the CTOs that we reported was like 6%, now that?s going just from memory.

But --

That's right.

[You were right].

And you know, recurrence rate for the CTOs historically have been the highest reported in our space, and for a recurrence rate of that level speaks to the efficacy of Lumivascular approach to treating vascular disease but sparing the deep wall components, and I think that was the part that was the most convincing.

With the group -- I really -- almost no pushback at all from any of the data that was presented or the opportunity going forward; a lot more enthusiasm that we've seen historically.

Thanks for that.

And then lastly, we talked historically in the past about one of the other technology platforms that generated a buzz at VIVA and at TCT was drug-coated balloons.

I wanted to hear any updated views now that Medtronic has presented two year data just in terms of whether or not you feel that Pantheris will be competing against drug-coated balloons next year upon launch.

And then ultimately, how you see the potential for vessel prep with Pantheris and then followed by a drug-coated balloon deployment.

Thanks a lot for answering the questions, gentlemen.

Sure.

The DCB thing is definitely very interesting.

We definitely will do a trial.

We'll do a head-to-head trial with our device against DCB, maybe DCB alone, or maybe DCB with Pantheris.

There's a huge appetite for that kind of a study.

But you always keep in mind that there's nothing that we do inside the vessels.

Jeff makes this point a lot.

We don't do anything to limit the use of DCBs or just plain old balloons in its place -- what you want do -- if you want to look at this as vessel prep, you can look at it that way.

But I look at it as kind of a definitive therapy more often than not.

But there will be an evolving assessment and some of it will be a direct trial, but some will just be physicians deriving their own thoughts about how to use DCBs.

My goal would be to be so effective with Pantheris that it would be infrequent that you would need a DCB and you would never need a stent.

So that would be -- but then you have to reflect -- yes, we can reflect on my bias when I answer those questions.

The only thing I would add is a lot of what -- and I think this is seen as very beneficial by the physicians is, we?re really about empowering the physicians with information so they can make their own decisions based on what they see in real time during the treatment, but then is there's anything that they would like to do after treatment with Pantheris.

The data is showing that if you don't damage the arterial wall and the normal arterial structures that the recurrence rates are very, very low.

But there are -- we're about creating options for physicians, not cutting them off through information and continuing to help and work with them to develop algorithms for their own practice and more broadly.

I think that's just a tremendous opportunity.

The power of the information we provide as well as, of course, we capture the tissue and that can be analyzed as well up to help develop those algorithms.

But I think we're just on the forefront of this.

There's a lot of exciting learning and a lot of exciting science to come as we develop the data set and learn more with our partner physicians.

Great.

Thanks for the download.

(Operator Instructions) Your next question is from Steve Lichtman with Oppenheimer & Company.

Your line is open.

Thank you.

Hi, guys.

Just one question from me, given the positive CTO data out of VISION and obviously the expanding Lightbox base, how should we think about Ocelot as you look out over the next couple years?

Should we be seeing some nice pull through, do you think, for Ocelot as Pantheris continues to -- starts rolling out?

Steve, thanks for the question.

So I think as JVS said, we are really excited about the potential for Pantheris, so the enhanced potential for Pantheris after -- I'm sorry -- for Ocelot after Pantheris launch.

This data where we see that we drive equivalent results in treating a CTO as we do for a -- a non-CTO stenosis is extremely exciting, and there was a lot of physician interest in that.

So it's just a natural one, two Lumivascular approach.

Along with a larger installed base, based on the excitement around Pantheris and the stronger reimbursement for atherectomy, so all of that combined, we believe will help drive uptick and uptake of the Ocelot product line of catheters.

We're not at a point where we're ready to make specific projections and all of that for 2016, but I think, again, a combination of installed base, this proven and we'll continue to develop the data one, two punch for Lumivascular for treating CTOs just makes a lot of sense to physicians.

Also, I may be add that one of things that we have learned now using the Ocelot in chronic total occlusions, is you may have a chronic total occlusion that looks like it measures 30 centimeters in length but when you cross it with the Ocelot, you find out that there's proximal cap, a distal cap and maybe a few narrowings in between.

So what looked like 30 centimeters of disease, sometimes turns into 5 centimeters or 6 centimeters of tight disease that need to be treated.

And it's really having that verification of the length of the lesion that is really quite remarkable.

The part that needs to be treated and then having the Pantheris that can go in and treat it and still spare the deep wall, it's a -- to Jeff's point kind of a one, two punch.

I think with without putting any numbers on it, of course, I?d love to give you numbers on sales.

Jeff would really appreciate it if I were to do that.

I know Matt?s really excited over here.

But I would say that the clinically relevant value of these combined technologies is so extreme that I would believe there would have to pull through with the Ocelot.

I would find it really shocking if there's not.

That's helpful.

Thank you, guys.

Thank you.

I'm not showing any further questions at this time.

I'd like to turn the call back over to management for closing remarks.

I just want to thank everyone again for joining our call this afternoon.

It's obviously an extremely exciting time as Avinger is -- we get ready for Pantheris and take advantage of the earlier than anticipated approval.

We appreciate your time this afternoon and your interest in our Company and our progress.

Have a great evening.

Thank you.

Ladies and gentlemen, thank you for participating in today's conference.

That does conclude the program.

You may all disconnect.