Q3 2019 Earnings Call
Thank you all for participating in today's call. Joining me are done Godshall, President and Chief Executive Officer, Shockwave Medical and Dan Pocket, Chief Financial Officer Chocolate medical.
Earlier today Shockwave released financial results for the quarter ended September Thirtyth 2019.
A copy of the press releases available on the company's website.
Before we begin I'd like to remind you that management will make statements. During the call include forward looking statements within the meaning of federal Securities laws, which are made pursuant to the safe Harbor provisions.
Habit Securities Litigation Reform Act 1995.
Any statements contained in this call that relate to expectations or predictions of future events results or performance are forward looking statements.
Forward looking statements, including without limitation, our examination operating trends, so future financial expectations, which includes expectations of hiring growth in our organization and regulatory affairs and guidance for the revenue in 2019.
Our based upon our current estimates at various assumptions.
These statements involve material risks and uncertainties that could cause actual results or.
Material differ from those anticipated or implied by these forward looking statements. Accordingly, you should not place undue reliance on these statements for list and description of the risks and uncertainties associated with her business. Please refer to the risk factor section or S. One on file with the FCC and available on Edgar.
Shockwave 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 is accurate only as of the live broadcast today November 7th 2019.
I'll turn the call Ebrahim Doug.
Thanks, Debbie good afternoon, everyone and thank you for joining us today.
I'm pleased to welcome you to shockwaves call to review our results for the third quarter of 2019.
We reported 11.3 million in revenue for the quarter, which was up 1.3 million over the park. We're in an increase of $7.7 million for over three times, the third quarter 2018 revenue.
Before turning the call to Dan to provide more financial details. There are few highlights that I would like to share starting with a quick somebody allover progress over the past few months.
We completed the commercial launch of our S. Four blur the needed product earlier this week.
Made encouraging progress on our Cadthree U.S. study enrollment.
Initiated the CAD four study in Japan also this week.
We presented and published data from our CAD two study.
We received breakthrough designation RC to our coronary product.
We started our pad three randomized clinical trial and expanded the pad three registered on by 50%.
We move production into our new facility in Santa Clara.
In a nutshell the team has been very busy.
A lot your best for is being well received at the Veeva Conference. This week and a follow the rigorous limited market release, we have been managing over the past few months.
The launch includes a three three and a half and four millimeter sizes.
And we have almost completed the limited release of the two and half millimeter frozen version, which has also gone very well thus far.
Assuming all continues to go as planned.
We will add the two and half millimeter to the launch by the end of the year.
As a quick reminder, shockwave as far as our low profile Ivy L. catheter, specifically designed to access and treat challenging calcified lesions and below the knee arteries.
That are frequently associated with critical limb ischemia or see ally.
We estimate that there are over 300000 procedures per year for below the knee lesions, roughly 65% of which are heavily calcified.
Many of these patients do not respond well to alternative endovascular treatments, leading to repeat procedures or even limb amputation.
There's a growing consensus in the clinical community that one of the leading causes a recent notices and below the knee vessels is vessel recoil.
Which occurred shortly after the initial procedure and is likely caused in part by the high incidence of calcium.
Anecdotally many of the physicians, who have used S. Four thus far I've commented that they are seeing less recall than they are accustomed to seeing with traditional therapy.
Which had been or hope when design the device.
Since the Golden Seal I procedures is to restore flow quickly and with as few complications as possible.
Exceptional safety profile in calcium specific therapy, we deliver makes for a compelling combination and we look forward to continued feedback and data generation as we expand the clinical experience with us for.
The core of our U.S. business is still driven by or large diameter and five system for calcified peripheral disease and medium sized vessels.
Which has now been used in over 10000 patients.
Usage continues to grow them and that's a page, but as growing even more rapidly in the other peripheral applications such as iliac common femoral public fuel arteries resin terex and the like.
The vast majority of our U.S. sites now have the 300 poll software from five.
And the improved procedural and efficiency enabled by having the extra pulses and ability to treat lot longer more complex lesions with one catheter has been seen as a major upgrade almost like an entirely new product.
We spent a great deal of effort on product development and we also continue to ramp our investment in clinical research both for regulatory purposes.
As well as to support the expanded use of Ivy Hill.
And we made significant progress in several studies during the quarter.
Starting with CAD, three or 442 patient U.S. coronary I'd.
As of the ended the quarter, we had 216 patients enrolled which is exactly twice the enrollment we had at the end of June .
The trial continues to enroll briskly, which has led to let us to pull our projected completion date forward for the second time.
And we now expect to see enrollment completing in the first quarter of 2020, instead of second quarter as we had previously predicted.
As a result, we're now modeling U.S. approval in the first quarter of 2021 versus the second quarter as we had initially <unk> had assumed.
Also in the subject of see too we were pleased to receive the previously announced breakthrough device designation by the FDA.
And while we do not expect us to impact the timing of our approval. It does potentially provide a lower threshold for reimbursement with CMS. Once we are approved.
Ordinarily what about medical devices being assessed for an add on payment CMS looks at three criteria newness substantial clinical improvement to alternative treatments and cost.
However for a device that has been granted breakthrough designation the process has been streamline somewhat.
For hospital inpatient procedures, one option for additional payment is is to secure a new technology add on payment oriented.
For breakthrough devices CMS has wave two of the threeq or criteria, when evaluating evaluating and pep applications newness and clinical improvement.
Leaving only the cost criteria to be met by the product.
Additionally, just last week.
CMS announced that they are also streamlining requirements for breakthrough devices and the outpatient setting when they're evaluating transitional pass through applications.
CMS will automatically deemed breakthrough designation designated technologies to have met the substantial clinical improvement criterion.
However, the device must still meet the newness and cost threshold requirements.
Demonstrating that in a device represents a substantial clinical improvement has traditionally been the most objective and difficult to three criteria.
This does not guarantee we will pursue any of these strategies for inpatient or outpatient payments.
But it does suggest that having a breakthrough designation from F.D.A. could improve then oh could prove beneficial from a coronary reimbursement perspective.
Returning to clinical trials.
We presented data from our CAD two registry to a standing room only crowd at TCT.
The results showed outcomes that confirmed a low complication rates and strong safety and performance we witness in CAD, one but in twice the number of patients and at three times a number of centers.
In the 120 patient CAD two study investigators were able to successfully deliver and use Ivy Hill, and all patients and I've yell facilitated successful sent delivery in all cases.
The primary safety endpoint was met with 94.2% of the patients free from in hospital major adverse cardiac events.
And there were no reports of perforation slow flow no reflow or major sections.
Which is almost identical to the results we witness some CAD one.
The outcomes from CAD to reinforce our confidence in the performance out of Ivy on the corners, and augurs well for the prospects of Cadthree.
We're also happy to have initiated or CAD four study in Japan, which we announced this morning.
We held our investigators meeting in October and began CAD for patient enrollment just this week.
Based on early feedback from our investigators we believe the 64 patient cohort will enroll briskly and we're planning for a mid 2022 approval in Japan as previously discussed.
Japan is likely to be a particularly strong market for shockwave given that as a country.
Of the highest utilization rate of atherectomy in the corners.
On the peripheral side, we restarted the randomized arm of pad three this month and just last week Reenrolled, our 1000 patients in the registry. So it is quite timely that we expanded the registry arm of pad three to include 1500 patients.
We do not yet having a feedback to know how quickly the randomize, our arm will ramp up and what if any.
Impact to the DCB label changes will have on enrollment.
Based on what we know today, our assumption is that enrollment will take about a year and we will of course stimulate enrollment as best we are able.
The expanded registry is likely to enroll more rapidly than the randomized arm as there are very few restrictions on with patients can be enrolled other than the requirement that at least 200 patients in the registry will be treated with us for.
Following up on the earlier mentioned of TCT, our team had a great showing and turn out of the conference in September headlined by the unveiling of our CAD two data.
Along with several other events and presentations.
Overall, the energy around shock wave at TCT. This year was similar to that of PCR in the spring with tons of bugs in multiple symposia three superbly cases, several events and over 25 presentations, which included Shockwave.
The joint Abema training sessions were overflowing and we had good steady attendance at our peripheral training sessions.
Which is something new for TCT as they attempt to enhance their peripheral platform to complement their already strong coronary and structural programs.
Another interesting Ivy Hill presentation at TCT came from Golden Jubilee Hospital in Scotland.
Where they compared the resource utilization Shockwave cases with those in Rotablator cases.
While this was an assessment of two distinct datasets. The analysis suggests that Ivy l. cases consume fewer resources than rotor blade procedures.
We do not expect these data will till use in our direction as we see Rota, an ideal generally treating differently types of lesions.
But it does give us a sense of what we might be able to show in a prospective analysis, which could help with international reimbursement in the future.
Turning to our U.S. sales organization.
The expansion in our number of regions has enabled us to more efficiently recruit top talent in sales and clinical rules and to enhance our execution.
As a result, the performance of our U.S. tell sales team is even stronger and more balanced than had been at the beginning of year for the sales growth being more broad based across the country.
We've already reached our target of having 60 professionals in the field this year.
So a few more roles we were like we are actively recruiting for.
Internationally, we are seeing the immediate benefits from the addition of art to market development specialists, who are helping to strengthen the performance of our 18 distributor partners entered broaden and deepen relationships across customers sites many geographies.
Some of our distributors are beginning the next step we were hoping to see.
And that is at once Ivy Hill for Coronaries becomes well installed in a country, they're moving to peripheral starting with large for access and planning to turn to below the knee next year.
That said in most countries outside the U.S., we expect peripherals will be more of a market development effort than corner has been.
Since peripheral interventions are generally performed at a much higher rate and U.S.
Whereas cornea procedures are much less U.S. centric.
On the patent front.
We have had seven new U.S. patents issued year to date, bringing our total 35.
We have 19 applications awaiting office action by the U.S.P.T. O.
As you are likely aware Ts I initiated initiated an inter parties review or IP, our three of our patents at the end of last year.
All of which were instituted a few months back.
This week, we submitted our initial response responses related to the IP, Arkansas enough as three months to submit their response, which will be followed by a trial in April or May and the final decision by the court in the July August 2020 timeframe.
If we prevail VIP our process will be complete and if not we'll have the right to an appeal, which will then take another year or so.
Now that we've had a chance to put our responses and Pete we are even more confident in the strength of our portfolio.
Both the patents in question and the dozens of others issued and in process.
All of this progress requires great people working effectively together.
And at the end of the quarter, our employee account count was at 260 compared to 162 at the beginning of the year.
And we would not be surprised to break 300 by year end.
As we mentioned on the last call we had a very successful move to our new facility in Santa Clara and while we had initially planned opening two new clean rooms. This year demand has been so strong that we have moved forward with plans to equip and staff. It third cleanroom ahead of schedule.
Which we expect will be coming online this quarter.
And with that we'd like to turn the call to Dan.
Thank you Doug good afternoon, everyone.
Parkway Medicals revenue for the three month ended September Thirtyth 2019 was $11.3 million.
215% increase from $3.6 million and the same period of the prior year.
U.S. revenue was $6.2 million in the third quarter 2019, growing 204% from $2.1 billion in the same period last year, all of which was derived from our peripheral products.
This increase in U.S. revenue was driven by the expansion of our sales Force addition of new customers in greater utilization at existing sites.
International revenue also saw strong increase in the quarter growing 229% to $5.1 billion in the third quarter of this year from $1.5 million in the same period last year.
The main driver of this growth was further penetration in existing countries and expansion of our international distributor channel.
Looking at revenue by product line peripheral products accounted for $7 million of the total revenue.
Compared to $2.5 million in the same period last year.
Coronary products accounted for two or 4.2 million of revenue compared to $1 billion in the same period last year, all of which was international.
In addition, the sales of generators, most of which was international contributed $8.2 million and revenue in the third quarter is this year compared to <unk> point $1 billion in the same period last year.
Gross profit for the third quarter, 2019 was $6.9 million compared to $1.6 million for the third quarter of 2018.
Gross margin for the third quarter, 2019 was 61% as compared to 45% in the same period last year.
Contributors to gross margin expansion included continued improvement in production processes to drive efficiencies and greater absorption of fixed fixed costs from increased production.
Total operating expenses for the third quarter, 2019, or $20 million, 71% increase from $11.7 million in the third quarter of 2018.
R&D expenses for the third quarter, 2019 were $8.4 million compared to $5.5 million in the third quarter of 2018.
The increase was primarily attributable to clinical study costs associated with Cadthree I'd and CAD four study in Japan.
Sales and marketing expenses for the third quarter, 2019 were $8.2 million compared to $4.8 million in the third quarter 2018.
The increase was primarily due to sales force expansion in U.S. and internationally as well as increases in marketing program spending.
General and administrative expenses for the third quarter 2019 were $3.4 billion compared to $1.4 million in the third quarter of 2018.
This increase was primarily due to expenses associated with being a public company and legal costs related to the IP ours.
Net loss for the period was $13 million as compared to net loss of $10.2 million and the same period last year.
Net loss per share for the third quarter 2019 was 46 cents.
We ended the third quarter 2019, with $114.1 billion and cash cash equivalents in short term investments.
Turning to our outlook for 2019 and based on the trends we've seen so far this year. We now expect full year 2019 revenue to be in the range of 41 million to $42 million.
Which would represent growth of 234% to 242% over full year 2018.
At this point I'd like to turn the call back to Doug for closing comments.
Thanks, Dan.
And thank you again for taking the time to join us today.
In closing we are encouraged by our third quarter results, which reflect the continued commitment of each member of the Shockwave team to execute at the highest level.
Their accomplishments and outperformance not just on the topline, but on the clinical and product front and particularly this quarter.
Continues to impress me every day.
The enthusiasm we hear from the clinical community about the difference we are making for patients is what really keeps us all gone.
There's a lot of work ahead of us as we continue to build what we believe is a strong foundation that is necessary to achieve what we're striving for.
To provide the safest most effective solution for patients with calcified cardiovascular disease and to globally facilitate the enhanced outcomes Ivy Hill is uniquely able to deliver.
With that I would like to open line for questions.
Ladies and gentlemen, if you have a question or comment at this time. Please press the star than the one key on your touched on telephone. If your question has been answered you were seeing reversal from the Q. Please press the pound Keith.
Our first question comes from David Lewis with Morgan Stanley .
Good afternoon, you Doug just a couple of questions from me. The first is your Three Q2 dynamics, obviously, you're well telegraphed specifically a outside the U.S., but the fourth quarter guide is much better than expected obviously about the street above us. She can you just bridge us to what you're seeing commercially from the third quarter to the fourth quarter.
Yes sure so.
As a as you indicated the and as we anticipated.
We saw a meaningful softening in procedures in the summer, particularly in Europe . So.
Specifically July August with a.
Very encouraging recovery.
Frankly, overshooting, what we expected the recovery would be in in September .
And so where we are anticipating that that that.
Expansion in procedures.
And the fact that we have a.
Broader footprint with more users now both in the U.S. and internationally that we should benefit from what we believe will be a more sort of September like procedure volume.
And so it's a it's the.
Culmination of of the expansion both in terms of number of centers number of reps number of distributors.
The we think we'll have we'll we'll benefit will accrue to our benefit in the fourth quarter.
Okay, very clear and then Doug I know its.
Earlier, but just given the early stage nature of the commercial build out in the relative growth rates are so high is there anything you can share qualitatively on on 2020, I mean, you added $30 million of absolute revenue here in 19 is that kind of contribution possible in a in 2020, then I'll I'll get back in queue. Thanks, so much.
Yes, so so if you.
If you look at how the year has performed to date, we're certainly encouraged with the progress we've we've witnessed.
If you look at your own model and any other models on the street, there's a there's a.
Sizable contribution embedded for S. Four.
We feel very comfortable with that poor performance, but it is.
It's still early in the and the launch so before we.
Provide an update on on 2020 guidance, we want to we want to get a little bit more experience under our belt with us for to make.
And and to finish out the year.
Before we give a.
Sort of quantitative response relative to sort of where the street consensus is right now so we're.
We're finalizing our internal.
Our internal financial models, and we'll be in a position.
Into this year to be providing beginning next year. So after we finish here to dry guidance on next year.
Okay. Thanks, so much.
Our next question comes from Robert Hopkins with Bank of America.
Oh, Hey, Thanks for taking my question. This is Kyle Petchey on for Bob just a quick question to kind of follow up to David.
Earlier this month to announce a below the news now Datawatch then.
Several geography is and I, just kind of wanted to get a sense of what the role that rollout is going to look like by geography and.
What do we should start to think about a bit of a broader rollout in the United States. Another key geographies. So basically just to someone else trying to get a sense for how you see that ramping over the coming month.
Yes, thanks, we.
We are now in full release, albeit three of the four sizes and fully anticipating that we'll be launching the fourth size in coming weeks.
And that's the smaller size.
But but thats not.
Regulating our rollout it's really more.
Sure pure selling blocking and tackling.
Fortunately we have a.
A much more meaningful installed base, obviously then of the M. What as we rollout as for than when we when we first were commercializing the above the knee product.
And so we'll be focusing on existing.
Happy above the knee customers since they should be.
Somewhat of a path at least resistance for the product.
And there were certainly the ones that we utilized for for a limited release.
We did.
This later this or through the summer.
It will be a U.S. centric launch with selective commercialization that really more or less at an account by account rollout internationally.
The there are certain.
Idiosyncrasies of international below the knee volumes like there are few sites in Italy. The do a lot of below the knee volume and then there are other countries, where it's bias very heavily towards amputation or surgery and very little Endovascular procedure. So we'll be very selective.
Sort of country by country account by account.
In our international.
Experience.
But but at this juncture, we have a sales team that has been trained for some some time and eager to have full access to two S. Four.
And we have a sort of compensation structure that assumes that it is an active and active launch and we're anticipating.
That's a fairly strong sort of reception to the technology, albeit there are fewer below the knee cases than there are above the knee cases, so will we anticipate will always be biased towards an overall in the portfolio more above the knee business for the for the.
Coming quarters at least.
Thanks, sorry, just a quick follow up but I just wanted to ask a question to get a sense for where shockwaves being used today.
Or rather where you expect things to go from a vessel preparation perspective, what percent of the time do you think shockwave will be used alone.
What percentage of the Todd you think it'll be in conjunction with some other vessel prep device. Thanks for taking my questions.
Yes so.
I'll try to avoid going through every single vessel because it really is different by vessel in LTX <unk>, it's almost always stent prep.
For your opening up the iliac for TAVR income in femoral it tends to be standalone in the SF say.
Sort of depends on if you use and dcbs are not.
Or if you like using stem some people love them some people item below the knee more likely than not standalone.
We'll see if bard gets there or be becton gets their below the knee.
DCB approved then maybe you'll be used income.
Concert so it really is.
I guess it ago vessel by vessel. So [laughter], it's hard just to give a blanket answer because it depends sometimes standalone often standalone, but also often prep and in the Coronaries, we're always use pre Stan.
Doug.
Our next question comes from Larry Biegelsen Wells Fargo.
Hi, This is Kevin Farr, she on for Larry Biegelsen. Good afternoon, everyone and thanks for taking the questions I guess the first one you you touched on it a bit in the prepared remarks, but just wanted to put a finer point on some of the DCB concerns as it relates to the business you'd updated us on the last call that you'd seen little to no.
In fact, and then a few months ago at the various conferences. You mentioned you have seen some improvement in the market since the F.D.A. letter any updated thoughts on the market and then how are you thinking about the impact of DCB did disrupt pad three going forward again, I know you've touched on in the prepared remarks, but any other color would be.
Pull on the trial. Thank you so much.
Yes, so we don't know.
On disrupt pad three if it will have any impact whatsoever, because we're just getting sites sort of started up this week in fact for for the randomized arm. So.
Sites that we have spooled up have indicated that they are back to using dcbs and they intend to enroll and are enthusiastic about this the restarted the trial.
So at least in the clinical trial context, with a very small sample size we're.
Hopeful that that the sort of warning language around DCB mortality.
Risk does not.
Create a create a.
A governor on enrollment.
But we'll see in terms of the overall market.
Having just been a veeva earlier this week.
The conversations I had with physicians sounded like they were.
Generally using DCB is more than they were.
Few months back, which I think we've all heard that fairly consistently.
I've only bumped into one or two who said now that I don't use dcbs anymore et cetera et cetera. So.
That seems to be much more the exception than the rule and certainly is less common than what I was hearing six months ago. So.
I think.
My My Best guess was Pcbs would be at about 75% utilization relative to they were late where they were at their high watermark.
So in the.
Era of Paclitaxel dcbs prior to Sirolimus dcbs whenever they come available and I think that feels that still feels about right I haven't heard anything that suggests it would be north of that.
But luckily for us.
Whether they use dcbs are not get it appears to be.
Irrelevant to our business.
Okay. That's there and then you know coming out of either.
Was it was asked but just a on the relaunch of the BTK products you mentioned.
The 2.5 could be added at the ended the year in the prepared remarks I guess the question is what exactly do you need to see in order for that occur to occur and then.
Can you kind of frame things up in terms of you know how reps are feeling and docs are feeling coming out of the Veeva conference.
Yes, so we're trying that I'd say, probably 70% of the folks on my team think to five is ready to go already based on the limited release, we've seen thus far but.
But we are trying to be.
Sort of true to our plan and do enough cases, which we have sort of internal metrics to confirm.
That the durability that we believe we engineered in is is proving out in the clinic.
So far so good and certainly what we witnessed in the in the Threeo.
When we did the limited loose of that and we started with the Threeo first just to make sure. We focused on that we knew we needed to have the 3.0 to launch.
We would prefer to have the two and a half I think we we will.
Sometime later this quarter, but we just want to get through and and be consistent with our.
With a limited release plan before before we launch it.
In terms of the clinician response I think the response, that's more relevant even then the response from physicians coming through the boots are sitting through our symposium yesterday at that vivo, which which went really well.
The.
The response of the physicians, who have used it some of whom we're we're on the panel for us yesterday.
As has been very consistently positive.
They.
Our more often than not encouraged by the deliverability of the system, which.
We have electronics and our system that makes it challenging to created.
The high performing catheter and they're.
More often than not impressed by the deliverability, but they are more impressed by.
The safety and the.
Sort of nice clean open vessels that they see post post treatment.
And as I mentioned earlier at least based on analog anecdotal observation they they're they're feeling like theres less recoil, which is which is a very common phenomenon in.
In below the knee vessels venue just few straight angioplasty. So so.
It would appear at least by their observation it would appear that the.
Active cracking the calcium.
Enables the vessel to stay open at least.
Acutely better than than if you didnt have the lithotripsy.
Perfect. Thanks, so much.
Okay. Thank you could.
Our next question comes from Jason Mills from Canaccord Genuity.
Hi, This is actions to carry on for Jason I, just wanted to ask about the coronary and the strength and saw recently and add three and what's driving that but also just coming out of TCT what type of feedback from physicians have you heard and then just impact that you're seeing in Europe from that data.
Uh Huh CAD two data was.
Validating versus.
Sort of transforming kind of dataset.
A a challenge when you only have 60 patients in the study like we did with CAD, one and it's only five centers.
People are seeing like it but theres always the sort of its only 60 patients.
And so now if you aggregate those 60 with 120 and CAD two.
Now we are 15 centers instead of just five.
It's a it's.
Validates that that that.
Initial study wasn't just luck.
And for anyone who is use it internationally the data is no surprise whatsoever because they.
They experience the safety.
Simplicity and efficacy of our system.
As one of our actually our pie in the U.S. didn't carry I guess when his team started using shockwave for peripheral applications.
He told them all you're just going to have to get used to zeros with Shockwave because you get just gets zeros in terms of complications.
And now of course, we're gonna have some minor ones and from time to time, just because you're doing in intervention procedure, you'll you'll have an adverse event, but but our rates are so incredibly low across all vessel beds.
And I think Thats, that's really what you saw with.
With CAD two.
In terms of Cadthree enrollment, we now have a.
Good.
Member exactly how many sites enrolling now that we're.
We're sort of north of 40 sites enrolling.
The trial really.
Is that a point, where you where you you have a steady drumbeat of cases on a.
On a pretty much daily basis and it's.
It's always good sign products the work well enroll fast products that don't work well.
We'll tend to struggle with enrollment provided that you've got a good a good easy to use protocol.
And and you like to see studies that that pick up momentum over the course of time because the.
Investigators I'll talk to each other and investigators is good experience and then.
They work harder to find patients et cetera. So so the trials doing what you will one would hope to see a trial do.
Great. Thank you and then I guess, if I could just ask about the sales force on where you are currently in the U.S. hitting your plan coming out of Q3 or just what your expectations for 2020 or earn as you look out and then also that with the launch.
And just any additional resources or hurdles or nuances that you expect and teaching.
Positions in that segment versus eight.
Yeah Salesforce were.
I'm very impressed with the and can.
Consistently impressed with the caliber of the the folks that were able to attract to the company.
And that are attracted to the company.
So it's a.
It's it's been a real real encouraging sign that the both the sales clinical specialists and leadership talent that a that has heard about an interesting joining shockwave is.
Is putting us in a great position building a great.
Piece of a team that we can build out on as we move through.
Below the knee launch and into.
And then suspicion of coronary.
So so far so good luck.
We will keep working hard to to find the right folks and continue improving our training programs in terms of the.
Below the knee training.
It's.
The technology the same basically so so it's very easy to train the nuances of below the knee.
Treatments and therapy is different than than above the knee.
But then again above any we've we've created.
Lastly, different above the knee clinical continuum, then is the Norman and.
Peripheral.
Territories anyway, whether its large bore or coming from rules are really act.
Or mesenteric. So we're all the other stuff that we get to do there that are non standard for a lot of.
At least.
Calcium modification type type products.
The.
Thing that will.
Sort of figure out over the course of of this quarter and then moving forward is how how does one balance the.
Longer procedure times of below the knee cases to make sure that we don't sort of get bogged down in the lab for multiple hours in cases and.
And balanced that with some of the easier to schedule cases, like like large more access and.
Kind of excited to use this experience with both above the knee in below the knee as a.
As a test drive in some ways for what it's going to be like when we also have coronary because you're going to have a totally different experience with coronary then you have above the knee just like below the knee is a bit different than.
And above the knee and so.
As we as we continue our plan to have multiple product products flowing through the same.
Sales and clinical specialist team how do we how do we take on a new product.
Roll it out efficiently.
Good adoption as has to be a sticky as possible.
And so that the the.
We are able to continue covering the right number of cases and not be obligated to cover every single cases.
As is the norm for some peripheral products. So so.
We're excited to see the ER and learn about our below the knee rollout because I think it's going to form out we're going to continue to build out the multiple products into the future.
Great. Thank you congrats on the quarter.
Thanks you.
Our next question comes from animator with Piper Jaffray.
Hi, guys, congrats on a quarter and thanks for taking the questions.
My first question was just on the U.S. growth I was hoping you could parse out.
You know new centers versus increase utilization.
And then just hoping to get some context around the number of U.S. centers that you're in today.
How you see that playing out over time and.
Should we think about the roughly 600 U.S. have or centers is the goal for the company or is that not the right way to think about things and then at a follow up.
So most TAVR centers also do peripheral.
I don't know any of that don't but maybe there are.
It's eight that is a helpful subset of the centers that we think are important and relevant to our to our business.
And they are particularly helpful because.
As our sales.
Sales strategy, which we've talked about before using using large bore access.
To facilitate inefficient vac process and purchasing process at the hospital.
But at the end of the day pre TAVR pre eve, our pre Impella et cetera is.
Less than less than 20% of our business, we do more symptomatic iliac cases than we do pre TAVR cases.
Hits.
So usually helpful in terms of accelerating sales process and a very important business for us, but it is not the core of our business.
And so do we use TAVR centers as a targeting.
List sure do we use that as the exclusive list no. We do have centers that don't due to ever and do by Shockwave.
And so.
The universe of the sort of biggest.
Peripheral customers is in the sort of 800, we've always used 800 doesn't number.
We still have.
I think more than half of those yet to go to make them sort of.
Recurring purchasing customers of ours, so we have tremendous upside both at our existing customers too.
Expand users.
From one to three doctors to four or five 610. However, many physicians do peripheral cases that are center.
And so we have.
Looking forward at least.
Lots of new centers that we still intend to and expect to have adopt shockwave.
Well also having meaningful upside both on on above the knee and now, particularly below the knee since that's greenfield.
Utilization.
Over the past quarter, I'd say, our NLC of Dan wants to augment our.
Our growth, which was backend loaded in the quarter because of the summer slowdown, but at least in the U.S.
We picked up.
A good number of new centers some of our new centers have performed exceptionally well.
This year I think in part because we're not more of a known quantity. So once we get adopted some centers can adopt us in start using much faster than they were say a year ago. When they were trying to figure out if shockwave was a real thing or not.
I think now there is reasonably wide consensus there that we are indeed, a real thing.
But in addition to the new centers.
We.
I don't think we have any customer where we feel like.
They are taking full advantage of all the.
Capabilities are shockwave. So we think we can look at every account and say we could do better and we did we did see a nice pickup in utilization of many of our centers as well.
I agree Doug I mean, it's been nicely in the last couple of months that trend that distribution continue on both those so it's exciting.
Okay. I appreciate that color guys and then for my follow up you've obviously been able to put out strong growth. Despite.
On reimbursement dynamics. So my question is how much does reimbursement come up in discussions with administrators are physicians are you getting pushed back there and I think you touched on this a little bit but can you talk about the company's planned.
The delta collect evidence around the economic value of ideal thanks for taking the questions.
Yeah.
I have yet to find anybody who wants us to raise our prices, but I think I could say that about every product of ever sold so.
And in general.
Whereas.
A decade or two ago, you doctors didnt care, what things costs. They never ask you what they cost in hospitals in carry much what the cost either certainly you're going to talk about reimbursement and payment et cetera, almost with almost any product to sell so so it comes up.
I would say comes up.
And is more easily diffused today by an order of magnitude than it was 18 months ago and that's.
For a variety of reasons.
Well as mentioned before we're sort of a known quantity now so many centers are using us.
That that physicians don't feel like they're going out on ilim for a product that they're not sure if they want it or not now they know they want it.
And so part of the reimbursement or payment objection is it's just a way of preventing.
Physicians from forcing hospitals to just buy anything they want.
I think physicians are able to go with much greater conviction now like I have to have shockwave because it can do these things that nothing else can do.
And that's particularly case when it comes to large bore catheter access because it's the sort of economics and clinical benefit ours ours are so profound relative to any alternative at a hospital that that it's hard for anyone to figure out why you would say no.
And make a patient go through a cut down on the carotid or a transco cable or what have you.
When you go Transfemoral everybody wants to go Transfemoral.
Shockwave enables you to go Transfemoral and save cost and hospital stay et cetera.
And so by.
Having large more access be the lead sales strategy that has that has probably done more than anything to diffuse the reimbursement.
Pushback.
Once you're on the shelf.
We aren't used on every single case, because we are.
Sort of generally used for the most complex most challenging cases, which are which also tend not to be particularly profitable for the hospital so having a.
Sort of cost containment very efficient way to treat these calcified patients without complications or runaway costs.
We rarely get pushed back on utilization once we're on the shelf.
And ER and you're able to expand utilization.
In inappropriate clinically appropriate manner.
Long term, we are we are could collecting.
Cost data in our pad three randomized trial, so that will certainly be something we'll be eager to take a look at one we're done with the study and hopefully the combination of great data from that trial, which were hoping to see anticipating seeing as well as.
Cost data will hopefully provide.
Evidence for us too.
To support.
Reimbursement in the future although.
We don't believe we need in the U.S. released.
We don't believe we need a randomized data set for for reimbursement and were.
Sort of actively engaged.
With societies to try to understand.
What strategies, we might embark upon overcoming.
Coming years as they look too.
Or they are asked to reassess codes, which we anticipate will happen sometime in the in the next couple of years, we want to make sure. We have a seat at the table to at least have a shot at that.
Improving improving payment for Shockwave cases.
We're not planning on it we're not depending on it I think we've demonstrated we can build a business under the existing.
Reimbursement architecture.
Could only got better if we get better payment. So we are.
We're keenly aware of that opportunity and working hard on it but but we realize it's not a.
That's not the kind of thing where you can flip a switch and suddenly have a new go next year, that's going to take time and we're putting in the effort now so were the right position in the future.
It's very clear thanks, Doug.
Ladies and gentlemen, does conclude the Q and a portion of today's conference I'd like turn the call back over to the company.
Thank you and thanks, everybody for joining our call.
We're encouraged by the enthusiastic support we continue to see from our customers around the world and and certainly appreciate the support we've had.
For many everyone on this call look forward to sharing.
Results with you as a c. you in coming weeks and and again on our call next quarter. Thanks, very much a buddy.
Ladies and gentlemen, does conclude todays presentation. You may now disconnect have a wonderful day.